1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,760 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Let's 5 00:00:27,760 --> 00:00:30,160 Speaker 1: start a conversation off this morning with Peter Dixon, Commons 6 00:00:30,160 --> 00:00:34,239 Speaker 1: Bank Global Equities economist. Peter. Great to catch up with you, sir, 7 00:00:34,360 --> 00:00:36,520 Speaker 1: I just want to start with the basic one. Seems 8 00:00:36,560 --> 00:00:39,200 Speaker 1: to me that nobody really wants to sell down risk 9 00:00:39,520 --> 00:00:42,400 Speaker 1: before the first vaccination. Do you share that view, sir, 10 00:00:43,680 --> 00:00:48,480 Speaker 1: M morning, Um, Yeah, it's true. I mean I think 11 00:00:48,520 --> 00:00:50,839 Speaker 1: that at the moment um, you know, all the good 12 00:00:50,880 --> 00:00:53,280 Speaker 1: news is basically being put into the price, but most 13 00:00:53,280 --> 00:00:55,640 Speaker 1: of it anyway, and you know, we're not in kindly 14 00:00:55,680 --> 00:00:57,080 Speaker 1: show how is it going to play out? And we've 15 00:00:57,120 --> 00:01:00,120 Speaker 1: we've had lots of questions, I think, particularly regarding the 16 00:01:00,400 --> 00:01:04,120 Speaker 1: Apresentica situation, but as you said, markets just not willing 17 00:01:04,160 --> 00:01:06,880 Speaker 1: to sell off. Um, you know, at the moment I 18 00:01:06,920 --> 00:01:09,000 Speaker 1: think we're in a bit of a holding pattern. Obviously, 19 00:01:09,240 --> 00:01:14,080 Speaker 1: the holiday disrupted um period has has probably forced investors 20 00:01:14,120 --> 00:01:15,560 Speaker 1: onto the back put a little bit. We're being a 21 00:01:15,560 --> 00:01:18,240 Speaker 1: little bit circumspect now and we still have a couple 22 00:01:18,280 --> 00:01:22,880 Speaker 1: of weeks I guess of trading in this year to come. Um, 23 00:01:22,920 --> 00:01:25,200 Speaker 1: you know, normally you'd expecting to start winding down. But 24 00:01:25,240 --> 00:01:27,240 Speaker 1: I think there are just so many things, so many 25 00:01:27,280 --> 00:01:30,600 Speaker 1: moving parts out there, that I think we can expect 26 00:01:30,600 --> 00:01:34,880 Speaker 1: a very very interesting two weeks. I think the my 27 00:01:35,000 --> 00:01:37,240 Speaker 1: view is that we should be positive. I think we'd 28 00:01:37,240 --> 00:01:39,559 Speaker 1: probably ender you a little bit higher than we are now. 29 00:01:39,920 --> 00:01:43,319 Speaker 1: But um, you know, there's there's many a slip between 30 00:01:43,360 --> 00:01:45,520 Speaker 1: coup lip as you say, and you know there are 31 00:01:45,560 --> 00:01:48,440 Speaker 1: there are lots of downside risks. Well, let's talk about 32 00:01:48,440 --> 00:01:50,720 Speaker 1: the slips that we've had already. Jobless claims moving the 33 00:01:50,760 --> 00:01:53,800 Speaker 1: wrong way last week, jobless claims moving the wrong way 34 00:01:53,920 --> 00:01:56,800 Speaker 1: this week. Peter, I've kept asking a question, how big 35 00:01:56,800 --> 00:01:59,160 Speaker 1: will our tolerance be? How high will our tolerance be? 36 00:01:59,480 --> 00:02:01,960 Speaker 1: As we work our way through some negative data in 37 00:02:02,000 --> 00:02:04,160 Speaker 1: the United States of America. We've shaken off two weeks 38 00:02:04,160 --> 00:02:06,040 Speaker 1: of it. Can we shake off three? Can we shake 39 00:02:06,080 --> 00:02:10,360 Speaker 1: off four? Or five? Six? Um? To fair point? You know, 40 00:02:10,360 --> 00:02:12,880 Speaker 1: when how many how many dat points do you need 41 00:02:13,040 --> 00:02:15,800 Speaker 1: to see a pattern or a trender moving here. UM. 42 00:02:15,800 --> 00:02:18,280 Speaker 1: I mean I think the markets are looking a bit 43 00:02:18,280 --> 00:02:22,120 Speaker 1: further ahead than it. I mean, obviously the labor market 44 00:02:22,160 --> 00:02:24,240 Speaker 1: in the States has taken a massive hit, doesn't need 45 00:02:24,280 --> 00:02:26,320 Speaker 1: has been the casing no other markets around the world. 46 00:02:26,360 --> 00:02:28,480 Speaker 1: But we get more to the data in the US, 47 00:02:28,520 --> 00:02:30,919 Speaker 1: and I think we just put it under the magnifined 48 00:02:30,919 --> 00:02:33,480 Speaker 1: class a little bit more. UM. But it is true 49 00:02:33,520 --> 00:02:36,639 Speaker 1: that it's still some importanment anyway, it's still some tenderly 50 00:02:36,639 --> 00:02:40,160 Speaker 1: shorter where we were back in February. UM. And as 51 00:02:40,200 --> 00:02:42,639 Speaker 1: you said, it's running in the wrong direction. Um. If 52 00:02:42,680 --> 00:02:44,280 Speaker 1: we get to the end of the year we've had 53 00:02:44,320 --> 00:02:47,120 Speaker 1: any major problems, I think markets can can wear that. 54 00:02:47,280 --> 00:02:48,880 Speaker 1: You know, a couple of a couple of small ups 55 00:02:48,880 --> 00:02:51,440 Speaker 1: and a couple of small downs. Broadly ciders and claims 56 00:02:51,639 --> 00:02:55,160 Speaker 1: will be happy. But if if the claims numbers started 57 00:02:55,320 --> 00:02:58,320 Speaker 1: moving the wrong direction of fact to pay, that's the 58 00:02:58,360 --> 00:03:00,760 Speaker 1: point in which I think markets was not to get worried. 59 00:03:00,760 --> 00:03:05,959 Speaker 1: And of course, given the mounting number of COVID cases everywhere, 60 00:03:05,960 --> 00:03:08,359 Speaker 1: but obviously in the United States, I think that certainly 61 00:03:08,360 --> 00:03:10,960 Speaker 1: is a major with Peter, great to have you with us. 62 00:03:11,080 --> 00:03:13,840 Speaker 1: I'm interested by not all markets are made the same. 63 00:03:13,880 --> 00:03:15,280 Speaker 1: At the moment, I'm looking at a board with the 64 00:03:15,320 --> 00:03:17,600 Speaker 1: Russell two thousand. Yes it's only done by tenth of 65 00:03:17,600 --> 00:03:20,760 Speaker 1: a percent, but it's down while the NASDAC outperforms once again, 66 00:03:20,800 --> 00:03:23,799 Speaker 1: this so called rotation trade, which we turn a phrase 67 00:03:23,800 --> 00:03:25,840 Speaker 1: we use too much at the moment, but it's on hold. 68 00:03:26,800 --> 00:03:30,680 Speaker 1: Can we move higher without big tech in leading charge? 69 00:03:30,800 --> 00:03:32,720 Speaker 1: Or do you expect that big tech will once again 70 00:03:32,760 --> 00:03:38,400 Speaker 1: become a game plan for investors? Um? Well, I think 71 00:03:38,400 --> 00:03:41,360 Speaker 1: there would remember this used there all interesting ones. I 72 00:03:41,400 --> 00:03:45,120 Speaker 1: mean in terms of the big picture. Um, you know, 73 00:03:45,200 --> 00:03:48,720 Speaker 1: I do think that the tech universe will move higher, 74 00:03:48,720 --> 00:03:50,720 Speaker 1: but I think we'll have to different chips in those 75 00:03:50,760 --> 00:03:53,360 Speaker 1: parts of the text that we like or would have 76 00:03:53,680 --> 00:03:57,880 Speaker 1: a um you know opposed COVID future and those which 77 00:03:58,000 --> 00:04:00,760 Speaker 1: perhaps have gone well, you know, thanks the lockdown. So 78 00:04:01,160 --> 00:04:04,360 Speaker 1: you know, do you want to stick with Netflix in 79 00:04:04,400 --> 00:04:06,400 Speaker 1: a world in which we're were getting back to some 80 00:04:06,480 --> 00:04:09,840 Speaker 1: Ford normality? Whereas there has been a game change in 81 00:04:09,920 --> 00:04:15,040 Speaker 1: terms of Amazon's revolution of the online trading platform. So 82 00:04:15,280 --> 00:04:17,919 Speaker 1: I think there is there's definitely still value there, but 83 00:04:18,080 --> 00:04:20,200 Speaker 1: whether it will be the same trade that we saw 84 00:04:20,320 --> 00:04:24,800 Speaker 1: prior to the lockdowns, I would question in terms of 85 00:04:25,080 --> 00:04:28,480 Speaker 1: the non tech sector, Um, you know, it is really 86 00:04:28,480 --> 00:04:31,520 Speaker 1: dependent on good news on the vaccines front. I mean, um, 87 00:04:31,680 --> 00:04:33,360 Speaker 1: as I said, I think much of the good news 88 00:04:33,400 --> 00:04:37,159 Speaker 1: was price being very quickly. We need more part of 89 00:04:37,160 --> 00:04:40,200 Speaker 1: the market higher. Um you know, that could happen, But 90 00:04:40,279 --> 00:04:42,600 Speaker 1: at the moment, there's nothing out there which is really 91 00:04:42,600 --> 00:04:47,640 Speaker 1: going to uh, which is been flogging my bolt floating around. 92 00:04:47,640 --> 00:04:50,560 Speaker 1: I mean, the moves have been sensational. The Russell two 93 00:04:50,600 --> 00:04:53,280 Speaker 1: thousand up twenty on the month, a record month, at 94 00:04:53,320 --> 00:04:57,760 Speaker 1: record highs, the Dow at that sacred number thirty thou Meanwhile, 95 00:04:58,320 --> 00:05:01,440 Speaker 1: bonds remain completely ranged and making the US Treasury, which 96 00:05:01,480 --> 00:05:04,400 Speaker 1: never really get above one percential points peter folding the 97 00:05:04,480 --> 00:05:07,240 Speaker 1: yield differentiation here and how much at what point we 98 00:05:07,360 --> 00:05:11,560 Speaker 1: might see people back away from these valuations if the 99 00:05:11,640 --> 00:05:13,719 Speaker 1: yield does just pick up that much higher in the 100 00:05:13,800 --> 00:05:18,280 Speaker 1: US well, I mean, the most question you have to 101 00:05:18,279 --> 00:05:20,320 Speaker 1: ask yourself is is what those central part is going 102 00:05:20,360 --> 00:05:22,280 Speaker 1: to do? And the w belihood is that they will 103 00:05:22,320 --> 00:05:24,719 Speaker 1: stay active for a long time to come. So I 104 00:05:24,760 --> 00:05:27,160 Speaker 1: think we're talking, you know, another six months or there 105 00:05:27,160 --> 00:05:29,640 Speaker 1: about at least before we have to start thinking about 106 00:05:30,120 --> 00:05:33,200 Speaker 1: um significant moves in years. Yes, there might be a 107 00:05:33,200 --> 00:05:37,760 Speaker 1: bit of a pickup UM if we stop UM more 108 00:05:37,800 --> 00:05:41,160 Speaker 1: good vaccine news, I mean much better news we're seeing 109 00:05:41,160 --> 00:05:42,840 Speaker 1: now that that could you know, send you us a 110 00:05:42,839 --> 00:05:45,640 Speaker 1: little bit higher. But I genuinely don't think that years 111 00:05:45,640 --> 00:05:48,600 Speaker 1: are going to go anywhere any time fast. So whatever 112 00:05:48,880 --> 00:05:50,440 Speaker 1: they pick up in the first half of next year, 113 00:05:50,480 --> 00:05:54,839 Speaker 1: they're probably losing. Let's talk about why we want to 114 00:05:54,880 --> 00:05:56,520 Speaker 1: jump in just quickly and get to the bond market. 115 00:05:56,560 --> 00:05:59,279 Speaker 1: At the moment, two's tense thirties yields lower on tens 116 00:05:59,279 --> 00:06:02,000 Speaker 1: were down to bay points to zero point eight six. 117 00:06:02,880 --> 00:06:05,480 Speaker 1: This market is rallied. As Caroline pointed out, we've had 118 00:06:05,520 --> 00:06:08,440 Speaker 1: that great rotation over the last month. This bond market 119 00:06:08,600 --> 00:06:11,240 Speaker 1: yields just haven't come with it. We've been asking a question, 120 00:06:11,279 --> 00:06:13,600 Speaker 1: why do you think it's technical because people believe the 121 00:06:13,680 --> 00:06:15,600 Speaker 1: FED steps in and put a lid on it, or 122 00:06:15,600 --> 00:06:17,480 Speaker 1: do you think it's fundamental. There's some doubts in this 123 00:06:17,520 --> 00:06:20,760 Speaker 1: bond market about that object free for growth, for inflation 124 00:06:21,000 --> 00:06:24,720 Speaker 1: for the years to come. If you ask me to, 125 00:06:25,520 --> 00:06:28,359 Speaker 1: I would expectations of what the ES central banks are 126 00:06:28,360 --> 00:06:33,440 Speaker 1: going to do and said, you know, maybe, um, it's fundamentals. 127 00:06:33,480 --> 00:06:35,640 Speaker 1: I mean, there are some people out there who say, well, actually, 128 00:06:35,600 --> 00:06:39,039 Speaker 1: if the recovery does go at pace over the course 129 00:06:39,080 --> 00:06:42,279 Speaker 1: of the next there's been such damage to the supply 130 00:06:42,320 --> 00:06:44,120 Speaker 1: side of the economy that you might actually see inflation 131 00:06:44,160 --> 00:06:45,800 Speaker 1: start to pick up. I mean, that's not my view, 132 00:06:46,160 --> 00:06:48,360 Speaker 1: but it's out there, so you know, there are some 133 00:06:48,440 --> 00:06:51,120 Speaker 1: modest side this. But I ain generally speaking, I would 134 00:06:51,120 --> 00:06:53,160 Speaker 1: see you know, rate to go in ciders and U 135 00:06:53,240 --> 00:06:55,599 Speaker 1: the Caroline's point, why is the great rotation that happened 136 00:06:55,600 --> 00:06:59,080 Speaker 1: simply because investors we don't see muny violent bonds that 137 00:06:59,400 --> 00:07:01,480 Speaker 1: they continue to pol into Aroviu. Do not think that's 138 00:07:01,520 --> 00:07:03,560 Speaker 1: going to be the theme, certainly for you in a 139 00:07:03,560 --> 00:07:08,000 Speaker 1: month one, Peter Greater, catch up. Appreciate your time this morning, 140 00:07:08,000 --> 00:07:21,960 Speaker 1: Sir Pil Dixon there of Commerce Bank. Camilla Yanaschowski joins 141 00:07:22,000 --> 00:07:25,400 Speaker 1: us now of CFR, a equity research Commilla. I'm trying 142 00:07:25,400 --> 00:07:30,280 Speaker 1: to understand this. Did he increases in COVID positive testing 143 00:07:30,360 --> 00:07:32,520 Speaker 1: rates in the United States of America across the country, 144 00:07:32,520 --> 00:07:37,600 Speaker 1: including hospitalizations? Do they lead to people shopping less or 145 00:07:37,640 --> 00:07:42,000 Speaker 1: just changing how they shop? Shopping less? For sure? Thanks 146 00:07:42,040 --> 00:07:47,040 Speaker 1: for having me fantastic to have you. Let's build on that, then, Comilla, 147 00:07:47,040 --> 00:07:51,160 Speaker 1: where do they shop less in store? I mean, today 148 00:07:51,160 --> 00:07:54,840 Speaker 1: is Black Friday here in the US, and COVID nineteen 149 00:07:54,920 --> 00:07:58,680 Speaker 1: is completely challenging the traditional holiday calendar. I think we're 150 00:07:58,680 --> 00:08:02,120 Speaker 1: going to be seeing very few shoppoholics trending on Twitter, 151 00:08:02,840 --> 00:08:05,720 Speaker 1: uh camping outside a wal Mart, Target or bust by 152 00:08:05,800 --> 00:08:10,600 Speaker 1: today and that very muted outlook we have on Black Friday, 153 00:08:10,640 --> 00:08:14,400 Speaker 1: which traditionally has been one of the biggest holiday shopping 154 00:08:14,480 --> 00:08:17,240 Speaker 1: days of the year, has to do a fear of 155 00:08:17,360 --> 00:08:22,760 Speaker 1: COVID nineteen and daily cases reaching new daily highs. In fact, 156 00:08:22,760 --> 00:08:27,720 Speaker 1: the survey in October found that a little over ten 157 00:08:27,800 --> 00:08:31,240 Speaker 1: percent of consumers said that they were very likely to 158 00:08:31,320 --> 00:08:35,679 Speaker 1: shop in stores on Black Friday. So Committa, the medium 159 00:08:35,920 --> 00:08:38,040 Speaker 1: and the medium of which people choose the shop is 160 00:08:38,080 --> 00:08:41,680 Speaker 1: clearly shifting away from bricks and mortar towards e commerce. 161 00:08:41,720 --> 00:08:44,439 Speaker 1: That's been clear for years and accelerated through this pandemic. 162 00:08:44,679 --> 00:08:46,560 Speaker 1: When I say where will they shop less? I'm trying 163 00:08:46,600 --> 00:08:49,960 Speaker 1: to understand what will people spend money on home depot 164 00:08:50,000 --> 00:08:52,480 Speaker 1: in the home improvement channel that has just been absolutely 165 00:08:52,559 --> 00:08:55,400 Speaker 1: massive through this year. Is that what you see continue 166 00:08:55,400 --> 00:09:00,840 Speaker 1: strength into one even with a vaccine. Resolutely, when we 167 00:09:00,840 --> 00:09:03,480 Speaker 1: look at the survey data, we've seen elevated interest for 168 00:09:03,559 --> 00:09:06,560 Speaker 1: home decker and home furnishings, which doesn't come to us 169 00:09:06,559 --> 00:09:10,880 Speaker 1: as a surprise given that with COVID nineteen cocooning, people 170 00:09:10,960 --> 00:09:14,160 Speaker 1: are taking on more at home living projects. But also 171 00:09:14,360 --> 00:09:17,760 Speaker 1: the data that we've looked at has shown that gift cards, 172 00:09:17,760 --> 00:09:21,400 Speaker 1: the clothing and accessories will continue to be popular categories 173 00:09:21,480 --> 00:09:25,679 Speaker 1: this holiday season. Wow clothing. Finally, because everyone seems to 174 00:09:25,679 --> 00:09:27,600 Speaker 1: have been pretty doom and gloom on that one coming. 175 00:09:27,800 --> 00:09:30,959 Speaker 1: I'm I'm a sucker for an experiential present, you know, 176 00:09:31,000 --> 00:09:32,920 Speaker 1: and you name it a cook re calls some sort 177 00:09:32,920 --> 00:09:36,280 Speaker 1: of cocktail making thing. Are people doing that? I mean 178 00:09:36,320 --> 00:09:38,680 Speaker 1: we've seen a B and B managed to pivot into 179 00:09:38,679 --> 00:09:40,480 Speaker 1: that sort of element of things, but I feel that 180 00:09:40,520 --> 00:09:43,040 Speaker 1: experiential is going to be foot coming off the gas. 181 00:09:44,480 --> 00:09:47,480 Speaker 1: What what is seeing and this is specifically with the 182 00:09:47,559 --> 00:09:53,040 Speaker 1: higher income demographic and why we have a forecast for 183 00:09:53,080 --> 00:09:57,120 Speaker 1: the holiday season of a K shaped economic recovery, is 184 00:09:57,160 --> 00:10:01,000 Speaker 1: that higher income individuals, which have seen after restoration of 185 00:10:01,080 --> 00:10:05,960 Speaker 1: jobs and higher income growth, they're actually shifting spend away 186 00:10:06,000 --> 00:10:11,840 Speaker 1: from pandemic reliance services like travel like entertainment like experiences, 187 00:10:11,880 --> 00:10:15,960 Speaker 1: and that spend is actually shifting into retail this holiday season. 188 00:10:16,440 --> 00:10:19,760 Speaker 1: So our holiday outlook, which is that retail sales for 189 00:10:19,800 --> 00:10:22,760 Speaker 1: the months of November and December will be flat year 190 00:10:22,760 --> 00:10:25,960 Speaker 1: every year, coming in at one point five trillion dollars. 191 00:10:25,960 --> 00:10:31,000 Speaker 1: It's really reliant on how much these higher income individuals 192 00:10:31,000 --> 00:10:34,200 Speaker 1: splurgd this holiday season. This K shaped economy is so 193 00:10:34,240 --> 00:10:37,080 Speaker 1: important to us and the unequal nature of which this 194 00:10:37,160 --> 00:10:41,320 Speaker 1: rebound is occurring. Who benefits by the fact that they're 195 00:10:41,400 --> 00:10:44,959 Speaker 1: unfortunately middle high income brackets who were able to spend 196 00:10:45,000 --> 00:10:47,160 Speaker 1: on a on a piece of jewelry rather than a 197 00:10:47,320 --> 00:10:51,160 Speaker 1: high end luxury travel and who doesn't. Who loses out 198 00:10:51,200 --> 00:10:53,959 Speaker 1: by the fact that those on the who can't manage 199 00:10:53,960 --> 00:10:56,000 Speaker 1: to get back to work at the moment are unable 200 00:10:56,080 --> 00:10:58,480 Speaker 1: to buy for their children in the way that they 201 00:10:58,520 --> 00:11:03,280 Speaker 1: usually would on the retailer. And we did a digital 202 00:11:03,280 --> 00:11:06,840 Speaker 1: traffic analysis. It's an analysis that we run every year 203 00:11:06,920 --> 00:11:10,040 Speaker 1: to forecast or winners and losers. And the reason why 204 00:11:10,080 --> 00:11:13,160 Speaker 1: we look at digital traffic is because we see a 205 00:11:13,240 --> 00:11:16,920 Speaker 1: direct positive correlation between digital traffic and in store traffic. 206 00:11:17,600 --> 00:11:22,920 Speaker 1: And we saw growing momentum of luxury brands like Tiffany's 207 00:11:23,160 --> 00:11:25,880 Speaker 1: entering this holiday season. And then one name that we 208 00:11:25,960 --> 00:11:29,000 Speaker 1: called out in terms of our top five winners was 209 00:11:29,080 --> 00:11:32,959 Speaker 1: Williams Sonoma, which is a digital first home furnishing retailer 210 00:11:33,280 --> 00:11:37,360 Speaker 1: specifically targeted to a higher income demographic. And then in 211 00:11:37,480 --> 00:11:39,720 Speaker 1: terms of losers, I think it comes more on the 212 00:11:40,480 --> 00:11:45,319 Speaker 1: lower income consumer end because we think that this group 213 00:11:45,320 --> 00:11:49,040 Speaker 1: of people are very likely to embrace frugality this holiday 214 00:11:49,040 --> 00:11:52,600 Speaker 1: season as fiscal stimulus starts to run low. There are 215 00:11:52,760 --> 00:11:57,600 Speaker 1: estimates that approximately twelve million workers are facing a jobless 216 00:11:57,679 --> 00:12:02,400 Speaker 1: benefit cliff. On December twenty text, commit to appreciate your 217 00:12:02,400 --> 00:12:04,720 Speaker 1: time this morning. Ready to hope you had a wonderful Thanksgiving. 218 00:12:04,760 --> 00:12:17,240 Speaker 1: Kimilianischewsky there of cf R A, let's bring in our 219 00:12:17,240 --> 00:12:20,600 Speaker 1: guests this morning during Materics MetLife Investment Management, Chief market 220 00:12:20,640 --> 00:12:23,160 Speaker 1: Strategist during Fantastic to catch up with you, mate. Let's 221 00:12:23,160 --> 00:12:24,960 Speaker 1: just talk about the bond market to begin with. We've 222 00:12:24,960 --> 00:12:27,640 Speaker 1: talked through the last ten years in the last cycle, 223 00:12:28,080 --> 00:12:31,319 Speaker 1: and our inability to get yield higher, much higher, our 224 00:12:31,360 --> 00:12:33,839 Speaker 1: inability in Europe to generate any kind of recovery that 225 00:12:33,880 --> 00:12:36,280 Speaker 1: actually lead to higher interest rates. In fact, they kept 226 00:12:36,320 --> 00:12:40,079 Speaker 1: going lower through the cycle. Why is this recovery going 227 00:12:40,120 --> 00:12:43,440 Speaker 1: to be any different route, Well, what I talked to people, 228 00:12:43,480 --> 00:12:46,160 Speaker 1: I think what's different about this recovery is that everyone's 229 00:12:46,200 --> 00:12:49,360 Speaker 1: talking about the risk of inflation going forward. Um. And 230 00:12:49,640 --> 00:12:51,720 Speaker 1: it's actually surprised me because I think when we do 231 00:12:51,800 --> 00:12:53,360 Speaker 1: the math, you know, we come up with kind of 232 00:12:53,600 --> 00:12:57,679 Speaker 1: inflation normalizing post that, post this crisis. UM. But I 233 00:12:57,720 --> 00:12:59,240 Speaker 1: think a lot of people have it in their in 234 00:12:59,280 --> 00:13:03,640 Speaker 1: their minds at the is an inflationary event longer term, uh, 235 00:13:03,679 --> 00:13:05,840 Speaker 1: And that the period we're living in, you know, more 236 00:13:05,880 --> 00:13:08,679 Speaker 1: closely resembles kind of the Vietnam ra and the United 237 00:13:08,679 --> 00:13:11,680 Speaker 1: States that seventies era that led to uh, you know, 238 00:13:11,720 --> 00:13:15,520 Speaker 1: inflation picking up. You have a FED that's very aggressive. 239 00:13:15,840 --> 00:13:19,920 Speaker 1: You have government stimulus, which uh, you know, we already 240 00:13:19,920 --> 00:13:23,720 Speaker 1: had rounds of and we'll probably have more rounds of UM. 241 00:13:23,760 --> 00:13:25,839 Speaker 1: And then of course you have you have a big 242 00:13:25,880 --> 00:13:28,679 Speaker 1: amount of dislocation and things like the labor market um. 243 00:13:29,040 --> 00:13:31,480 Speaker 1: And so you know, you combine those factors and people 244 00:13:31,520 --> 00:13:33,560 Speaker 1: are beginning to worry a little bit more about inflation 245 00:13:33,559 --> 00:13:37,480 Speaker 1: than they used to. Drew got into the eighties at 246 00:13:37,480 --> 00:13:40,400 Speaker 1: the end of the seventies, the tenure yield was about 247 00:13:41,360 --> 00:13:45,040 Speaker 1: right now, it's eighty five basis points. That's a nomenal yield, granted, 248 00:13:45,160 --> 00:13:47,600 Speaker 1: but through where's the concern around inflation? Why is it 249 00:13:47,640 --> 00:13:49,439 Speaker 1: not being priced into this bond market? I know, it's 250 00:13:49,440 --> 00:13:51,440 Speaker 1: part of the conversation. I'm having them daily as well. 251 00:13:51,840 --> 00:13:55,360 Speaker 1: It's not in the market right now, you know, I 252 00:13:55,400 --> 00:13:58,040 Speaker 1: think because people have have kind of you know, this 253 00:13:58,120 --> 00:14:00,880 Speaker 1: is the boy who cried Wolf scenario. People like myself 254 00:14:00,880 --> 00:14:03,200 Speaker 1: have talked about inflation risks coming out of two thousand 255 00:14:03,160 --> 00:14:06,600 Speaker 1: and eight. We were wrong. Um, you know, other people 256 00:14:06,920 --> 00:14:08,920 Speaker 1: you know, talked about it as well, and so people 257 00:14:08,920 --> 00:14:10,760 Speaker 1: have kind of got it into their heads that inflation 258 00:14:10,880 --> 00:14:13,280 Speaker 1: is this thing that you know, the old people in 259 00:14:13,280 --> 00:14:17,120 Speaker 1: Wall Street talk about, but that that doesn't really exist. Uh. 260 00:14:17,160 --> 00:14:19,480 Speaker 1: And I you know, you hate to say, well, this 261 00:14:19,520 --> 00:14:21,320 Speaker 1: time is going to be different, but I do think 262 00:14:21,360 --> 00:14:24,000 Speaker 1: that there are some reasons to believe inflation might tick higher. 263 00:14:24,240 --> 00:14:27,640 Speaker 1: But let's just normalize it, you know, the idea that 264 00:14:28,400 --> 00:14:31,040 Speaker 1: this movement and yields is not part of kind of 265 00:14:31,080 --> 00:14:34,200 Speaker 1: the movement yields we saw for the last couple of decades, right, 266 00:14:34,280 --> 00:14:37,760 Speaker 1: this is this is an aberration across the trend. Uh. 267 00:14:37,840 --> 00:14:40,800 Speaker 1: And it means that most likely, the most likely scenario 268 00:14:40,800 --> 00:14:43,960 Speaker 1: in my mind, is that inflation moves higher, yields move higher. 269 00:14:44,880 --> 00:14:48,320 Speaker 1: We probably don't go above the pre COVID highs. Right. 270 00:14:48,360 --> 00:14:50,440 Speaker 1: Remember at the end of two thousand nineteen ten uar 271 00:14:50,520 --> 00:14:54,000 Speaker 1: US treasure yields were just below two percent, So you know, 272 00:14:54,080 --> 00:14:57,320 Speaker 1: even just a normalization is a basis points um or 273 00:14:57,400 --> 00:15:00,440 Speaker 1: so uh. And I think that's something that's more realistic 274 00:15:00,800 --> 00:15:03,800 Speaker 1: or more reasonable to consider. Um. I'm not worried about 275 00:15:03,800 --> 00:15:06,440 Speaker 1: a four percent ten year yield anytime soon. If you 276 00:15:06,480 --> 00:15:08,680 Speaker 1: want to call that being worried, I think i'd be. 277 00:15:08,720 --> 00:15:11,920 Speaker 1: I'd be moving money at that point one inflation rate, though, 278 00:15:11,960 --> 00:15:13,760 Speaker 1: do you see on the high side, how hot does 279 00:15:13,760 --> 00:15:19,040 Speaker 1: it run. I'm looking for a normalization of inflation, so 280 00:15:19,160 --> 00:15:22,480 Speaker 1: two percent or so. Uh. You know it's um and 281 00:15:22,560 --> 00:15:23,880 Speaker 1: you know it could go a little higher for a 282 00:15:23,880 --> 00:15:26,880 Speaker 1: temporary period of time. But I think the question people 283 00:15:26,920 --> 00:15:29,400 Speaker 1: have is if we see two percent inflation, is the 284 00:15:29,480 --> 00:15:31,600 Speaker 1: FED going to react? And I think pretty clearly the 285 00:15:31,600 --> 00:15:35,200 Speaker 1: answers no, They've told us no. UM. And what worries me? 286 00:15:35,640 --> 00:15:38,840 Speaker 1: And I think what worries other people about that. Is 287 00:15:38,880 --> 00:15:44,600 Speaker 1: this idea that an organization that really couldn't orchestrate an 288 00:15:44,600 --> 00:15:48,720 Speaker 1: inflationary push or you know, has has had more difficulty 289 00:15:48,800 --> 00:15:52,040 Speaker 1: pulling down inflation, moving inflation around the way that they want, 290 00:15:52,960 --> 00:15:56,320 Speaker 1: has the ability to kind of maneuver inflation, you know, 291 00:15:56,480 --> 00:15:59,720 Speaker 1: with that fine degree of precision. And I think you know, 292 00:16:00,000 --> 00:16:02,560 Speaker 1: think it run hot for a while sounds great. How 293 00:16:02,600 --> 00:16:04,520 Speaker 1: do you know when you're supposed to pull back? And 294 00:16:04,560 --> 00:16:06,280 Speaker 1: how do you know what the lag is in terms 295 00:16:06,320 --> 00:16:09,080 Speaker 1: of people believing that you're finally serious about inflation this time? 296 00:16:09,680 --> 00:16:12,320 Speaker 1: So all of those factors are combining to you know, 297 00:16:12,400 --> 00:16:13,920 Speaker 1: the things that are trying to make us feel good 298 00:16:13,960 --> 00:16:17,360 Speaker 1: about the current environment and and keeping policy easy are 299 00:16:17,400 --> 00:16:19,760 Speaker 1: the ones that are making people more concerned about the 300 00:16:19,760 --> 00:16:22,560 Speaker 1: longer term outlook for the inflation move. Where is this 301 00:16:22,640 --> 00:16:25,040 Speaker 1: inflation coming from? There? Drew? Are we importing it? Are 302 00:16:25,080 --> 00:16:30,080 Speaker 1: we fiscal stimulating it? I think people, I think people 303 00:16:30,080 --> 00:16:33,720 Speaker 1: are going back to the idea that it's a monetary phenomenon. Uh, 304 00:16:33,760 --> 00:16:36,880 Speaker 1: you know, the FED has created a gigantic balance sheet. 305 00:16:37,280 --> 00:16:39,280 Speaker 1: But unlike in two thousand and eight, where there were 306 00:16:39,280 --> 00:16:43,000 Speaker 1: regulatory changes that made banks, you know, hold more in 307 00:16:43,000 --> 00:16:45,120 Speaker 1: the way of bank reserves and kind of more of 308 00:16:45,160 --> 00:16:49,080 Speaker 1: that liquid cash. Um, there's nothing on the other side 309 00:16:49,080 --> 00:16:52,240 Speaker 1: of it this time. Uh, there are no regulatory changes 310 00:16:52,280 --> 00:16:54,040 Speaker 1: I've taken place to kind of make people want to 311 00:16:54,080 --> 00:16:57,000 Speaker 1: hold more cash. Uh. You know, people are holding more 312 00:16:57,000 --> 00:16:59,600 Speaker 1: cash because of COVID, because of the risk around the 313 00:16:59,640 --> 00:17:02,320 Speaker 1: econom Me. If you take that away and all that 314 00:17:02,360 --> 00:17:04,439 Speaker 1: money is still sitting out there, people wonder where it's 315 00:17:04,480 --> 00:17:06,800 Speaker 1: going to go. I also think, you know, from a 316 00:17:06,840 --> 00:17:11,480 Speaker 1: psychological perspective, there are you know, the savings rates very high. 317 00:17:11,600 --> 00:17:14,679 Speaker 1: People are kind of tired of being in their homes, 318 00:17:14,800 --> 00:17:18,280 Speaker 1: tired of being locked up. Um, you know, where are 319 00:17:18,320 --> 00:17:21,280 Speaker 1: they going to go spend that money when the all 320 00:17:21,320 --> 00:17:25,080 Speaker 1: clearer is given? Uh? And is there enough capacity in 321 00:17:25,119 --> 00:17:27,400 Speaker 1: the places that they're gonna want to spend that money 322 00:17:27,440 --> 00:17:29,320 Speaker 1: to actually allow them to spend it? And I think 323 00:17:29,320 --> 00:17:31,800 Speaker 1: the answer is no. Right, There's going to be you 324 00:17:31,840 --> 00:17:34,760 Speaker 1: know a lot of demand for a lot of experiences 325 00:17:34,840 --> 00:17:36,679 Speaker 1: and things like that that are just gonna you know, 326 00:17:36,760 --> 00:17:40,520 Speaker 1: it's gonna be whoever wins the bit. The turn of 327 00:17:40,520 --> 00:17:43,080 Speaker 1: the year is a really important time for bookings for airlines. 328 00:17:43,119 --> 00:17:45,520 Speaker 1: Going into a study east of holiday going into spring 329 00:17:45,560 --> 00:17:48,360 Speaker 1: going into the summer, Andrew, you can imagine the competition 330 00:17:48,640 --> 00:17:52,080 Speaker 1: for flights to go on vacations if the vaccinations have 331 00:17:52,119 --> 00:17:53,960 Speaker 1: actually started. I want to check it on the price 332 00:17:54,000 --> 00:17:56,600 Speaker 1: action just quickly through just excuse me for a moment. Equally, 333 00:17:56,640 --> 00:17:59,119 Speaker 1: futures are near session high. So if about ten points 334 00:17:59,119 --> 00:18:01,720 Speaker 1: on five hundred had a brief move on the VIX 335 00:18:01,800 --> 00:18:04,480 Speaker 1: just for a moment sub twenty for the first time, 336 00:18:04,480 --> 00:18:06,520 Speaker 1: I believe, going all the way back to February sub 337 00:18:06,560 --> 00:18:09,679 Speaker 1: twenty just briefly right now twenty eight. Do you just 338 00:18:09,800 --> 00:18:12,040 Speaker 1: returned to the story of rates. You said something really 339 00:18:12,080 --> 00:18:15,600 Speaker 1: important and really quite compelling. The most important question right 340 00:18:15,640 --> 00:18:18,440 Speaker 1: now through one, if we do get anywhere near two 341 00:18:18,440 --> 00:18:21,320 Speaker 1: percent inflation twenty one into twenty two, is how the 342 00:18:21,400 --> 00:18:24,919 Speaker 1: FED response And they've sat up there reaction function really 343 00:18:24,960 --> 00:18:28,640 Speaker 1: really clearly on rates now, Drew, I'm trying to work 344 00:18:28,680 --> 00:18:31,520 Speaker 1: things out and just extrapolate it out a year, two years, three, 345 00:18:31,600 --> 00:18:33,720 Speaker 1: maybe five. So forgive me, but do you think we 346 00:18:33,760 --> 00:18:36,560 Speaker 1: could face a europe style issue where we go through 347 00:18:36,560 --> 00:18:40,479 Speaker 1: a full cycle, a full recovery without ever putting rates up. 348 00:18:42,920 --> 00:18:45,240 Speaker 1: I mean, I think it's possible. I mean, I you 349 00:18:45,240 --> 00:18:47,640 Speaker 1: know it depends on a recovery from what I mean. 350 00:18:47,680 --> 00:18:49,880 Speaker 1: One of the things that you know, I think it's 351 00:18:49,920 --> 00:18:53,600 Speaker 1: easy to lose sight of is most forecasts, including our own. 352 00:18:54,119 --> 00:18:56,600 Speaker 1: You know, I had a recession in one, that's when 353 00:18:56,640 --> 00:18:58,960 Speaker 1: we were expecting a recession. So we were preparing for 354 00:18:59,000 --> 00:19:02,640 Speaker 1: a recession, uh, in the later stages of nine, because 355 00:19:02,640 --> 00:19:05,280 Speaker 1: we saw one coming a year year and a half out. 356 00:19:05,400 --> 00:19:08,320 Speaker 1: Not because of a virus obviously, but you know, if 357 00:19:08,320 --> 00:19:10,760 Speaker 1: you looked at margins, if you looked at the way 358 00:19:10,800 --> 00:19:13,960 Speaker 1: the labor market was behaving, it all suggested that something 359 00:19:14,040 --> 00:19:16,600 Speaker 1: was going to begin to kind of fall apart in 360 00:19:16,640 --> 00:19:20,080 Speaker 1: the in the later half of we'd be staring a 361 00:19:20,160 --> 00:19:24,840 Speaker 1: recession in the face. UM. You know, I don't think 362 00:19:25,040 --> 00:19:28,280 Speaker 1: this is a cycle. This is this is a shock 363 00:19:28,880 --> 00:19:32,320 Speaker 1: the cycle that we're in. UM, you know, probably reset 364 00:19:32,359 --> 00:19:35,520 Speaker 1: actually a little bit right we we've you know, had 365 00:19:35,560 --> 00:19:39,800 Speaker 1: the recession, having the recession, seeing the labor market do 366 00:19:39,840 --> 00:19:43,000 Speaker 1: what's gonna do? UM? I actually think the next economic 367 00:19:43,080 --> 00:19:48,000 Speaker 1: cycle could be something like the um you're seeing. You 368 00:19:48,000 --> 00:19:52,280 Speaker 1: know that there's going to be improvements in productivity, you know. UM, 369 00:19:52,720 --> 00:19:56,360 Speaker 1: think of this as I think of all the technological 370 00:19:56,400 --> 00:20:00,439 Speaker 1: advancements that happened during World War Two. Right, This is 371 00:20:00,480 --> 00:20:03,120 Speaker 1: not obviously World War two, but this is a big 372 00:20:03,160 --> 00:20:06,919 Speaker 1: shock to the global system that required big movements and 373 00:20:06,960 --> 00:20:11,080 Speaker 1: technology that required big changes. We're experimenting with things, we're 374 00:20:11,080 --> 00:20:12,960 Speaker 1: figuring out how things work, and we're doing at a 375 00:20:13,080 --> 00:20:16,080 Speaker 1: very rapid pace. Um. And when we come out of this, 376 00:20:16,840 --> 00:20:19,119 Speaker 1: a lot of the changes that take place are going 377 00:20:19,119 --> 00:20:22,960 Speaker 1: to be ones that are actually productivity boosting. I think 378 00:20:23,000 --> 00:20:26,080 Speaker 1: we need to really think about the positive sometimes put 379 00:20:26,119 --> 00:20:28,879 Speaker 1: my money to work. Then drew in your focus as 380 00:20:28,920 --> 00:20:34,479 Speaker 1: chief market strategist wearing portfolio, are you adding, well, I mean, look, uh, 381 00:20:34,760 --> 00:20:37,680 Speaker 1: you know, don't fight the Fed. The good adage, um, 382 00:20:37,720 --> 00:20:41,439 Speaker 1: you know, I think you know, if you look across um, 383 00:20:41,480 --> 00:20:44,280 Speaker 1: you know, we are a fixed income oriented portfolio. So 384 00:20:44,480 --> 00:20:47,720 Speaker 1: we're you know, we're we're taking our cues from from 385 00:20:47,840 --> 00:20:50,040 Speaker 1: from the Fed. We're taking our cues from kind of 386 00:20:50,680 --> 00:20:53,399 Speaker 1: uh where we think that things you know, should be going. 387 00:20:53,920 --> 00:20:55,879 Speaker 1: But we're also not losing suite of the fact that 388 00:20:55,920 --> 00:20:58,239 Speaker 1: you know, some of the you know, I think some 389 00:20:58,280 --> 00:21:00,320 Speaker 1: of the ideas that are being put forward are or 390 00:21:00,359 --> 00:21:03,560 Speaker 1: maybe getting a little ahead of themselves. Right, people are 391 00:21:03,600 --> 00:21:07,520 Speaker 1: going to go back to offices right. You know, there 392 00:21:07,600 --> 00:21:10,639 Speaker 1: is an efficiency there of people going to offices. There's 393 00:21:10,720 --> 00:21:13,600 Speaker 1: some lack of efficiency there, but there's also I think 394 00:21:13,640 --> 00:21:17,119 Speaker 1: more benefits than not going into an office and interacting 395 00:21:17,160 --> 00:21:19,560 Speaker 1: with people on a daily basis and seeing those interactions 396 00:21:19,560 --> 00:21:22,359 Speaker 1: and what they turn into. UM. Once again part of 397 00:21:22,359 --> 00:21:25,840 Speaker 1: that experimentation process. UM. And I think you know, for 398 00:21:25,880 --> 00:21:27,320 Speaker 1: a long time people are like, why do we need 399 00:21:27,359 --> 00:21:29,679 Speaker 1: to go into offices? What value does it add? I 400 00:21:29,720 --> 00:21:31,720 Speaker 1: think everyone who's more working from home for the last 401 00:21:31,720 --> 00:21:33,479 Speaker 1: eight months and can give you a good idea of 402 00:21:33,520 --> 00:21:35,959 Speaker 1: what actually value is added by going into the office. 403 00:21:36,960 --> 00:21:39,440 Speaker 1: And I'm still some of those stories are very personal too. 404 00:21:39,600 --> 00:21:52,520 Speaker 1: Drew appreciated times dreamatice of Mattlife, thank you. Who are 405 00:21:52,560 --> 00:21:53,920 Speaker 1: the haves and the have nots? When it comes to 406 00:21:53,960 --> 00:21:56,280 Speaker 1: the retail sector, let's dig into that now, Jonathan, ahead 407 00:21:56,280 --> 00:21:58,240 Speaker 1: of your important nine am open show, we're going to 408 00:21:58,280 --> 00:22:00,280 Speaker 1: be talking retail still. Steve say it was with us 409 00:22:00,359 --> 00:22:03,200 Speaker 1: most Card senior advisor and of course former SAX CEO, 410 00:22:03,320 --> 00:22:05,720 Speaker 1: and we heard it from Peter Navarro there. We heard 411 00:22:05,720 --> 00:22:08,600 Speaker 1: it across the aisle, this need for fiscal stimulus. If 412 00:22:08,640 --> 00:22:10,960 Speaker 1: you were still heading up sacks right here, right now, 413 00:22:11,000 --> 00:22:15,000 Speaker 1: how important would some more fiscal stimulus be to you? Oh, 414 00:22:15,080 --> 00:22:19,440 Speaker 1: I think another fiscal stimulus is critical, especially for main 415 00:22:19,480 --> 00:22:23,520 Speaker 1: street retailers. If you're one of the big box Walmart 416 00:22:23,640 --> 00:22:27,480 Speaker 1: targets that were in the needs versus the wants, they're 417 00:22:27,480 --> 00:22:30,240 Speaker 1: doing extremely well. The numbers that they posted during the 418 00:22:30,280 --> 00:22:34,000 Speaker 1: third quarter were pretty stunning. I think the issue is 419 00:22:34,040 --> 00:22:39,679 Speaker 1: for the travel related the restaurants, the small retailers that 420 00:22:39,800 --> 00:22:42,679 Speaker 1: aren't able to play in at the scale and be 421 00:22:42,760 --> 00:22:45,159 Speaker 1: able to do things like buy online, pickup and store. 422 00:22:45,720 --> 00:22:50,879 Speaker 1: Those retailers are really struggling and the stimulus checks for 423 00:22:50,960 --> 00:22:54,560 Speaker 1: the lower income consumers are important. So the bridge that 424 00:22:54,640 --> 00:22:57,440 Speaker 1: you talk about between now and the post vaccine period 425 00:22:57,960 --> 00:23:01,320 Speaker 1: that are really required. Now being said that, the consumer 426 00:23:01,440 --> 00:23:03,919 Speaker 1: overall is really quite strong right now, and we can 427 00:23:03,960 --> 00:23:07,080 Speaker 1: talk about some of the MasterCard spending pulse numbers, but 428 00:23:07,520 --> 00:23:11,000 Speaker 1: the vibrancy of the consumer, especially the high end consumer, 429 00:23:11,080 --> 00:23:14,159 Speaker 1: is really quite remarkable. I talked about the house and 430 00:23:14,280 --> 00:23:16,280 Speaker 1: have knots and nuts. It isn't it. It's the fact 431 00:23:16,320 --> 00:23:18,280 Speaker 1: it's the middle class. The upper class of people who 432 00:23:18,359 --> 00:23:21,800 Speaker 1: have maintained their white color jobs working from home, is 433 00:23:21,800 --> 00:23:24,760 Speaker 1: still able to splash the cash. What are they splashing 434 00:23:24,760 --> 00:23:27,480 Speaker 1: it on at the moment? Steve, Well, the reality is 435 00:23:27,520 --> 00:23:30,560 Speaker 1: what they're not spending on. They're not commuting, they're saying home, 436 00:23:30,680 --> 00:23:33,920 Speaker 1: they're not traveling, so they're not going out to eat 437 00:23:33,960 --> 00:23:38,080 Speaker 1: in restaurants as much. So they're spending on things related 438 00:23:38,119 --> 00:23:44,040 Speaker 1: to their home and uh it could be hardware, home electronics, uh, 439 00:23:44,080 --> 00:23:46,440 Speaker 1: everything to spruce up their house and make it more 440 00:23:46,480 --> 00:23:49,919 Speaker 1: comfortable at home, or just thriving. And they've continued to 441 00:23:50,000 --> 00:23:53,919 Speaker 1: thrive during the pandemic. But I think it's important to 442 00:23:53,960 --> 00:23:56,320 Speaker 1: step back from it and look at where is overall 443 00:23:56,359 --> 00:23:59,520 Speaker 1: consumption Because when we went into the depths of this 444 00:24:00,040 --> 00:24:02,720 Speaker 1: uh sort of pandemic, in let's call it the March 445 00:24:02,840 --> 00:24:06,600 Speaker 1: time frame, overall retail consumption was down minus about twelve 446 00:24:07,080 --> 00:24:09,440 Speaker 1: and I thought, boy, we're really going to have a 447 00:24:09,560 --> 00:24:12,800 Speaker 1: very long recovery. And by May June it was down 448 00:24:12,800 --> 00:24:15,760 Speaker 1: to about a minus five. During the Midsummer it went 449 00:24:15,840 --> 00:24:18,320 Speaker 1: to a flat and over the last two and a 450 00:24:18,359 --> 00:24:21,919 Speaker 1: half months we've been positive. And importantly the month and 451 00:24:21,960 --> 00:24:24,720 Speaker 1: this is all spending post day of the month of 452 00:24:24,760 --> 00:24:28,040 Speaker 1: October was up four and then the first half of 453 00:24:28,119 --> 00:24:31,080 Speaker 1: November was up five point eight percent. So we're on 454 00:24:31,119 --> 00:24:35,280 Speaker 1: a trend where overall consumption is healthy and that's even 455 00:24:35,359 --> 00:24:40,400 Speaker 1: with the stimulus checks having stopped in the last period 456 00:24:40,400 --> 00:24:44,280 Speaker 1: of time. So what you're seeing is an acceleration of 457 00:24:44,400 --> 00:24:49,520 Speaker 1: earlier Thanksgiving promotions. You're seeing pulling it forward. You're you're 458 00:24:49,560 --> 00:24:52,760 Speaker 1: seeing that higher end consumer coming back, and you are 459 00:24:52,800 --> 00:25:00,000 Speaker 1: seeing this kind of home related electronics, uh phenomena, grocery, 460 00:25:00,320 --> 00:25:04,000 Speaker 1: home delivery, things like that are just doing extremely well. 461 00:25:04,440 --> 00:25:07,720 Speaker 1: According to your data that you have, the spending pulse data. 462 00:25:08,080 --> 00:25:11,399 Speaker 1: All those that are able to spend, those fortunate few 463 00:25:11,440 --> 00:25:14,119 Speaker 1: have been well fortunate, many have been able to be 464 00:25:14,200 --> 00:25:17,080 Speaker 1: on the upward trajection of the K shaped economy. Are 465 00:25:17,119 --> 00:25:20,199 Speaker 1: they spending more thoughtfully at the moment, Steve, You know, 466 00:25:20,240 --> 00:25:24,440 Speaker 1: I think there's some qualitative research that's been done by MasterCard. 467 00:25:24,480 --> 00:25:27,159 Speaker 1: In addition to the actual spending pulse, which shows you 468 00:25:27,200 --> 00:25:31,919 Speaker 1: what categories they're buying, it's also showing attitude Lee that 469 00:25:32,040 --> 00:25:35,360 Speaker 1: they they see the pain that's out there. They're shopping 470 00:25:35,400 --> 00:25:38,280 Speaker 1: a lot more locally, or they're looking to shop more locally. 471 00:25:38,320 --> 00:25:42,160 Speaker 1: They're looking to support their communities. You're seeing the less travel. 472 00:25:42,480 --> 00:25:45,239 Speaker 1: You're also seeing seeing a very big uptick and what 473 00:25:45,280 --> 00:25:51,119 Speaker 1: I call socially conscious uh shopping. That's about whether sustainability, 474 00:25:51,320 --> 00:25:55,360 Speaker 1: social responsibility. A lot of this started with the gen 475 00:25:55,480 --> 00:26:00,320 Speaker 1: Z customer. It's expanded more broadly and people are looking 476 00:26:00,320 --> 00:26:03,000 Speaker 1: to do good while they shop as well. And that's 477 00:26:03,040 --> 00:26:06,360 Speaker 1: I think a phenomena that's going to be increasingly important 478 00:26:06,359 --> 00:26:09,240 Speaker 1: as we go into next year. With your must card 479 00:26:09,280 --> 00:26:11,560 Speaker 1: hat on, but also with your experience from Sacks. Do 480 00:26:11,600 --> 00:26:13,359 Speaker 1: you think the likes of Sacks, the likes of the 481 00:26:13,359 --> 00:26:17,440 Speaker 1: big department stores, luxury high end department stores, are pivoting 482 00:26:17,440 --> 00:26:20,240 Speaker 1: to that realization that people want to spend more consciously 483 00:26:20,280 --> 00:26:26,080 Speaker 1: and more responsibly. Oh absolutely, I see it especially well. First. 484 00:26:26,119 --> 00:26:28,840 Speaker 1: I see it in a lot of the smaller direct 485 00:26:28,880 --> 00:26:32,240 Speaker 1: to consumer brands that each have a story to tell. 486 00:26:32,720 --> 00:26:35,639 Speaker 1: I see it in the bigger companies. It's harder if 487 00:26:35,680 --> 00:26:39,760 Speaker 1: you're a large department store carrying thousands of items. I 488 00:26:39,800 --> 00:26:43,800 Speaker 1: see it in the philanthropic work that these companies are doing. 489 00:26:43,880 --> 00:26:46,600 Speaker 1: I see it in what they're promoting. Uh So there 490 00:26:46,720 --> 00:26:49,880 Speaker 1: is an effort being made. It's a little bit, uh 491 00:26:49,960 --> 00:26:51,879 Speaker 1: you know. I think it's on a case by case, 492 00:26:51,960 --> 00:26:56,360 Speaker 1: company by company perspective, but I do see it as 493 00:26:56,359 --> 00:26:59,800 Speaker 1: being an underlying trend that's hitting all of the re 494 00:27:00,000 --> 00:27:04,160 Speaker 1: tailor is not just the individual DTC brands. Steve Moscot 495 00:27:04,200 --> 00:27:08,200 Speaker 1: has such a wonderfully global perspective and what I find fascinating, 496 00:27:08,200 --> 00:27:10,119 Speaker 1: having come from the UK, when I first moved to 497 00:27:10,160 --> 00:27:12,080 Speaker 1: New York, I was as standard that I wasn't able 498 00:27:12,119 --> 00:27:15,520 Speaker 1: to use touchless payment as as freely as I had 499 00:27:15,520 --> 00:27:18,000 Speaker 1: in London. I would never walk without without, never take 500 00:27:18,000 --> 00:27:19,879 Speaker 1: a wallet, I'll just take my phone. And then suddenly 501 00:27:19,920 --> 00:27:21,480 Speaker 1: here I keep having to run back to the office 502 00:27:21,520 --> 00:27:23,600 Speaker 1: to get my salad because I walked out and my 503 00:27:23,640 --> 00:27:26,680 Speaker 1: phone didn't work to pay. Is that happening more? Are 504 00:27:26,680 --> 00:27:30,000 Speaker 1: we seeing that digital divide between say the UK and 505 00:27:30,040 --> 00:27:32,840 Speaker 1: the US in terms of payments shrink. I think you've 506 00:27:32,840 --> 00:27:35,600 Speaker 1: seen a massive change going on over the last let's 507 00:27:35,600 --> 00:27:38,960 Speaker 1: call it eight months, and it's driven by the consumer 508 00:27:39,080 --> 00:27:44,200 Speaker 1: desire for convenience and safety. So anything that relates to safety, 509 00:27:44,280 --> 00:27:49,080 Speaker 1: touchless becoming contactless, becoming one of those elements by online 510 00:27:49,119 --> 00:27:54,840 Speaker 1: pick up, curb side shopping online or having exponential growth. 511 00:27:54,880 --> 00:27:57,800 Speaker 1: You've seen overall internet commerce going from twelve percent of 512 00:27:57,800 --> 00:28:02,240 Speaker 1: commerce to of commerce even today over high base growing 513 00:28:02,280 --> 00:28:07,320 Speaker 1: in the fifty six growth range contactless meaning of to 514 00:28:07,560 --> 00:28:12,560 Speaker 1: let's call it a touchless UH credit card experience that's 515 00:28:12,600 --> 00:28:16,800 Speaker 1: growing exponentially. It's nowhere near the levels that you're seeing 516 00:28:16,840 --> 00:28:19,440 Speaker 1: in let's say in London, and I think that's going 517 00:28:19,480 --> 00:28:23,280 Speaker 1: to be the opportunity. So these trends have been accelerated 518 00:28:23,320 --> 00:28:26,040 Speaker 1: by probably let's call it eight years and change in 519 00:28:26,080 --> 00:28:28,760 Speaker 1: eight months or six years of change in six months, 520 00:28:28,800 --> 00:28:32,120 Speaker 1: and I think that you're the consumers getting comfortable with 521 00:28:32,240 --> 00:28:36,040 Speaker 1: the experience and it's that's the direction it's going. So 522 00:28:36,080 --> 00:28:37,560 Speaker 1: you say it off one of all, have time with 523 00:28:37,600 --> 00:28:41,080 Speaker 1: the Moscott Senior advisor from a sax CEO. Thanks for 524 00:28:41,160 --> 00:28:45,560 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 525 00:28:45,720 --> 00:28:51,479 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 526 00:28:52,040 --> 00:28:55,360 Speaker 1: I'm on Twitter at Tom Keane before the podcast. You 527 00:28:55,400 --> 00:29:00,160 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio a