WEBVTT - Holidays Sales Remain Strong Despite Inflation Numbers 0:00:01.840 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:06.800 Tim Stanevic. We're here every day bringing you the latest 0:00:06.840 --> 0:00:11.000 news from the world's of business and finance, clus technology, politics, economics, 0:00:11.039 --> 0:00:14.000 all harnessing the power of Business Week reporters and editors, 0:00:14.160 --> 0:00:17.000 not to mention our journalists and analyst in more than 0:00:17.000 --> 0:00:21.160 one twenty countries. You can download Bloomberg Business weekend iTunes, SoundCloud, 0:00:21.239 --> 0:00:23.279 or Bloomberg dot com. You can also listen to our 0:00:23.360 --> 0:00:25.800 radio show at the two pm Eastern time on Bloomberg 0:00:25.880 --> 0:00:29.960 Radio or stream us live on YouTube and Bloomberg dot com. 0:00:30.000 --> 0:00:32.000 With us, we've got a great force. James Demmert his 0:00:32.159 --> 0:00:35.080 chief investment officer in Main Street Research roughly to billion 0:00:35.120 --> 0:00:37.800 dollars in assets under management, and it joins us via 0:00:37.880 --> 0:00:40.040 zoom here in the United States. So James, good to 0:00:40.040 --> 0:00:43.640 have you here with all of us. Um, how do 0:00:43.680 --> 0:00:45.880 you think about We've just got a few more days 0:00:45.960 --> 0:00:49.720 left here in two that China news. Does that dramatically 0:00:49.800 --> 0:00:55.600 change your thoughts for happy holidays? Um? You know it doesn't. 0:00:55.880 --> 0:00:57.800 And I think that this is the you know, the 0:00:57.880 --> 0:01:02.400 hallmark of two is the markets continue to fool themselves. 0:01:02.840 --> 0:01:05.399 That the fete is done, China is going to reopen, 0:01:05.920 --> 0:01:08.600 uh Inflation is coming down faster than expected, and it's 0:01:08.640 --> 0:01:12.440 this classic bear market rallies, you know, with this head 0:01:12.440 --> 0:01:15.560 fake that we've been going through throughout the year. So 0:01:16.000 --> 0:01:18.480 I don't don't you know, in our research suggests that 0:01:18.560 --> 0:01:20.720 this bear market. Yet we've made a lot of progress, 0:01:21.040 --> 0:01:23.080 you know, I'd say we're two thirds of the way 0:01:23.200 --> 0:01:27.480 through it. But the evaluation of equities versus what's going 0:01:27.520 --> 0:01:30.119 on with FED policy and the economy, there in dis 0:01:30.280 --> 0:01:33.680 equilibrium and that needs to be brought together. And let 0:01:33.720 --> 0:01:36.759 me think it probably happens in the first quarter, right 0:01:36.760 --> 0:01:38.720 before we start a new business cycle on a new 0:01:38.760 --> 0:01:41.320 pool market. Well what's the catalyst for that, though, James? 0:01:41.360 --> 0:01:42.920 I mean when we talk about sort of what sort 0:01:42.920 --> 0:01:45.200 of gets us to that equilibrium? Is it a fat 0:01:45.319 --> 0:01:47.680 pause is at that pivot that everybody is waiting for, 0:01:47.880 --> 0:01:51.840 or is it something else? Thank you? I don't think 0:01:52.080 --> 0:01:54.840 it is as clear as as people like it to be. 0:01:54.880 --> 0:01:57.120 And I think you could go back to a metric 0:01:57.200 --> 0:01:59.600 that we use often when when the fete is in 0:01:59.640 --> 0:02:02.560 this goal, which is you really want the FED funds rate, 0:02:02.560 --> 0:02:05.200 which is now what for and change to be closer 0:02:05.240 --> 0:02:08.720 to the inflation rate, which is seven, so we're far away, 0:02:08.760 --> 0:02:10.799 So that would be one metric I would look at 0:02:10.840 --> 0:02:12.480 and say, you know, those two, those two have to 0:02:12.520 --> 0:02:15.360 come together. Now. That can happen with time, and I 0:02:15.400 --> 0:02:18.120 think maybe a few months might do it, or it 0:02:18.120 --> 0:02:21.840 can come with prices, right, Inflation could come down faster 0:02:21.919 --> 0:02:24.840 than expected. So any of those things could cause the 0:02:24.919 --> 0:02:27.280 FED to be less determined. But we know from their 0:02:27.320 --> 0:02:30.760 last meeting they made it very clear they are determined 0:02:30.800 --> 0:02:33.280 to try to get to two, which we frankly think 0:02:33.919 --> 0:02:37.040 is a recession without question. I mean, you were far 0:02:37.160 --> 0:02:39.760 from to at this point, so they would really have 0:02:39.840 --> 0:02:42.239 to bring the hammer down and they may. And I 0:02:42.280 --> 0:02:45.600 think that's why equity investors need to understand it isn't 0:02:45.639 --> 0:02:47.799 over yet with the bear market now the bullmark is 0:02:47.840 --> 0:02:51.320 not far but price wise, it could be painful before 0:02:51.639 --> 0:02:53.400 well how painful because I know that you and the 0:02:53.440 --> 0:02:57.440 team expect that the market will bottom, perhaps in the 0:02:57.440 --> 0:03:01.639 first quarter of How deep is that bottom, How painful 0:03:01.760 --> 0:03:04.200 is it going to be? And what kind of bull 0:03:04.240 --> 0:03:06.440 market are we expecting in an era of higher rates. 0:03:07.560 --> 0:03:09.680 I think those are great questions and and there's there's 0:03:09.680 --> 0:03:11.240 something that you want to make a New Year's resolution 0:03:11.280 --> 0:03:16.040 about to bring that up. You meditation, do it right 0:03:16.080 --> 0:03:19.200 if you've owned test of stock or the sp whatever, 0:03:19.320 --> 0:03:21.960 use risk management tools and stop losses and all that stuff. 0:03:22.040 --> 0:03:24.760 As we go towards the end of this bearer market, 0:03:25.120 --> 0:03:27.440 and you know, think about it this way. We think 0:03:27.480 --> 0:03:30.000 the odds of a mild recession are very high and 0:03:30.080 --> 0:03:33.359 something deeper possible. So if that's the case, look at 0:03:33.520 --> 0:03:37.440 market history. Indexes typically fall somewhere between thirty eight and 0:03:38.720 --> 0:03:41.440 depending upon which case you want to look at, at 0:03:41.440 --> 0:03:43.840 our worst case, what we were down twenty in the 0:03:43.920 --> 0:03:46.640 large indexes. So we really haven't even if we go 0:03:46.680 --> 0:03:49.760 back to the old low gotten valuations to where we 0:03:50.000 --> 0:03:53.280 normally see a real bottom. And I think on top 0:03:53.360 --> 0:03:56.360 of that, you just haven't seen investor's sentiment get to 0:03:56.400 --> 0:03:58.680 those levels. Also that you know, you sort of want 0:03:58.680 --> 0:04:03.000 to say, hey, valuations, sentiment is awful. This is probably 0:04:03.040 --> 0:04:05.800 marking that bottom that we're looking for. And again, yes, 0:04:05.840 --> 0:04:07.960 we're looking for in the first quarter of the year. 0:04:08.400 --> 0:04:10.880 The cool thing is, at least we do think it's 0:04:10.880 --> 0:04:14.320 cool as as finance geeks, is that the new bowl market. 0:04:14.480 --> 0:04:18.120 Another new Year's resolution you don't need to be as 0:04:18.240 --> 0:04:21.640 heavily in technology, and I think that that's really going 0:04:21.680 --> 0:04:24.200 to be important. I've heard that before, only from people 0:04:24.240 --> 0:04:27.080 to come roaring back into technology. Having said that, James, 0:04:27.120 --> 0:04:29.840 you've seen a lot of market cycles, more than three 0:04:29.880 --> 0:04:33.279 decades worth. Uh Barns has singled you out as a 0:04:33.400 --> 0:04:37.120 top advisor ranking. Um, that's a good place to be 0:04:37.240 --> 0:04:39.960 and it means you know, you've made some really good 0:04:39.960 --> 0:04:43.160 market calls. So in terms of this market environment, does 0:04:43.160 --> 0:04:45.240 it remind you of another how do you see it? 0:04:45.279 --> 0:04:48.760 Is it very opportunistic for investors at this point? Or 0:04:49.000 --> 0:04:51.760 another difficult one and just got about a minute or 0:04:51.760 --> 0:04:55.039 some minute thirty. Yeah, I think it's always there's always 0:04:55.040 --> 0:04:56.919 an opportunity. I mean, you know, if you if you 0:04:57.040 --> 0:05:00.080 owned you know, the healthcare companies as we have the 0:05:00.080 --> 0:05:02.440 consumer stables this year, those were great opportunities and they 0:05:02.440 --> 0:05:05.440 continue to work and I think that's that's what's important. 0:05:05.560 --> 0:05:08.240 Is this a classic bear market? Absolutely, this is just 0:05:08.320 --> 0:05:11.880 a normal process. We're going towards a new business cycle. 0:05:11.880 --> 0:05:14.400 We're getting rid of the old one. It's based on inflation. 0:05:14.640 --> 0:05:17.680 The inflation will be put away. It's already working and 0:05:17.800 --> 0:05:20.239 once that's done, We're going to start a new business 0:05:20.240 --> 0:05:23.000 cycle new Boomark. It's very exciting. I think is gonna 0:05:23.000 --> 0:05:25.599 be a great year. Maybe not so good at the beginning, 0:05:25.800 --> 0:05:28.600 but gonna end lovely. All Right, we'll be interesting to 0:05:28.680 --> 0:05:31.000 check back in with you next year as we work 0:05:31.000 --> 0:05:33.760 our way through. I guess whatever we're working our wait through. James, 0:05:33.800 --> 0:05:36.400 have a wonderful New Year's. If we don't here, talk 0:05:36.440 --> 0:05:38.560 to you before then. James Demer there helping to kick 0:05:38.600 --> 0:05:43.080 off today's program, Chief investment officer over at Main Street Research. 0:05:50.680 --> 0:05:54.560 Please sees Bloomberg Business Week with Carol Massier and Tim 0:05:54.600 --> 0:05:59.440 Stinebec on Bloomberg Radio. And let's talk to Jeanette Guarantee. 0:05:59.440 --> 0:06:02.520 She's managing director and she's chief economist Robertson Stephen. She 0:06:02.640 --> 0:06:06.680 joins us today from Menlo Park, California. Janette, good to 0:06:06.720 --> 0:06:10.800 have you here on this Tuesday. The economic news that 0:06:10.839 --> 0:06:15.480 we got today, what in particular stands out for you, Well, actually, 0:06:16.080 --> 0:06:20.880 the trade deficit, the trade and numbers are really really interesting. Um, 0:06:21.000 --> 0:06:24.479 it was a big narrowing of the trade deficit. It 0:06:24.560 --> 0:06:28.960 was the largest a little bit more than decline in 0:06:29.000 --> 0:06:33.599 the trade deficit that we've seen in years Uh. And 0:06:33.680 --> 0:06:39.159 the lowest trade deficits since the end of and it 0:06:39.160 --> 0:06:42.839 it shows up, it comes to pass because of a 0:06:42.880 --> 0:06:47.839 decline or deceleration and exports excuse me, and the import 0:06:48.640 --> 0:06:51.400 import exports went down as well, but not as much. 0:06:52.040 --> 0:06:56.200 And and that fits this narrative that the US consumer 0:06:56.680 --> 0:06:59.880 is pulling back on goods and services. Manic, that is 0:07:00.000 --> 0:07:02.719 what you would expect to see. But it's a notable number. 0:07:02.760 --> 0:07:05.960 I realized we're focused a lot on China this morning 0:07:06.000 --> 0:07:09.200 for all the obvious reas but but there's also slow 0:07:09.240 --> 0:07:11.440 down going on out Oh yeah, John, I'm totally on 0:07:11.440 --> 0:07:13.120 board with you. When I saw that drop, I was 0:07:13.160 --> 0:07:15.840 something like seven eight percent here. Uh. And obviously this 0:07:15.920 --> 0:07:17.680 is just one data point. But I am curious that 0:07:17.720 --> 0:07:20.680 when you sort of look at your experience over the years, 0:07:20.720 --> 0:07:23.320 over the decades, when we start to see these types 0:07:23.360 --> 0:07:25.960 of numbers come down, important numbers come down here, is 0:07:26.000 --> 0:07:30.160 that typically indicative of economic pain or economic pressures or 0:07:30.200 --> 0:07:33.520 is there something else at work? Uh? Well, you know 0:07:33.640 --> 0:07:37.120 it can be moved around these days by things like 0:07:37.160 --> 0:07:41.360 oil prices and and and energy flows, commodity flows. But 0:07:41.400 --> 0:07:44.920 I think in this case, i'd say at the time 0:07:45.320 --> 0:07:48.200 when you see a movement like this, it almost always 0:07:48.240 --> 0:07:51.840 traces back to the U S. Consumer consumer spending rising 0:07:51.880 --> 0:07:53.640 a lot. You tend to get an expansion of the 0:07:53.640 --> 0:07:58.240 trade depth sit and and the opposite happens as well. Um, 0:07:58.560 --> 0:08:01.520 so I I you know, I it's it's an interesting, 0:08:01.720 --> 0:08:06.400 big story, but I think for many of us it's 0:08:06.880 --> 0:08:11.040 it's a confirming signal on the some of the slow 0:08:11.080 --> 0:08:16.560 downs that we've been saying in November entrest to October 0:08:17.200 --> 0:08:19.920 on the consumers spending side. Again, much of that concentrate 0:08:19.960 --> 0:08:22.520 on goods and services. The other the other issue in 0:08:22.600 --> 0:08:26.119 play has already been referenced by your previous speakers, which 0:08:26.160 --> 0:08:29.520 is the order book for businesses is moving all around. 0:08:31.360 --> 0:08:34.240 You know. That's that's notable to Jeannette, though, isn't isn't 0:08:34.280 --> 0:08:36.600 this what the FED wants to see? Isn't this what 0:08:36.679 --> 0:08:40.319 Jerome Powell wants to see? A pulling back so inflation 0:08:40.480 --> 0:08:44.360 will leave, so it'll come under control. Uh? Yeah, you 0:08:44.400 --> 0:08:49.439 know what does Chairman Powell want to see these days? 0:08:49.440 --> 0:08:52.880 He seems to want to see a pullback and employment. 0:08:53.679 --> 0:08:56.760 So yeah, you know he's not going to go out 0:08:56.760 --> 0:08:59.319 there and say I want to see the economy decline 0:08:59.400 --> 0:09:01.680 that's not really what he wants to say. So what 0:09:01.760 --> 0:09:03.960 he's saying is I want to see a pullback and employment, 0:09:04.320 --> 0:09:07.400 he's not really tracking it to. Okay, can you tie 0:09:07.480 --> 0:09:12.520 this data to employment at all? Then? Ah, well, you know, 0:09:12.720 --> 0:09:16.360 this is a remarkable economy on the employment side. Uh. 0:09:16.679 --> 0:09:21.280 The the employment numbers which will come out on January 0:09:21.400 --> 0:09:25.600 six for the month of December will be very very 0:09:25.640 --> 0:09:27.680 interesting to watch, but I don't think they're gonna show 0:09:27.679 --> 0:09:30.800 a lot of pullback yet. Maybe the most interesting month 0:09:30.880 --> 0:09:33.480 is going to be January because that's when the decisions 0:09:33.520 --> 0:09:38.040 of businesses to cut labor force really will come into play. 0:09:38.120 --> 0:09:41.679 So we'll see like there's still yeah, there's still a 0:09:41.720 --> 0:09:44.480 lot of help wanted signs out there. And what's interesting 0:09:44.559 --> 0:09:46.520 is I'm just looking at the nuances of the data. 0:09:46.960 --> 0:09:49.720 Imports of consumer merchandise have fallen from a record earlier 0:09:49.760 --> 0:09:52.240 this year, they still there remain well higher than the 0:09:52.240 --> 0:09:54.640 pre pandemic average, so they are high. So we need 0:09:54.679 --> 0:09:57.120 some perspective. I mean, how much of this data point 0:09:57.160 --> 0:10:00.720 potentially is inventory worked at, you know, working down some 0:10:00.760 --> 0:10:02.640 of these inventories. We're seeing that with the retail space, 0:10:02.679 --> 0:10:06.679 no doubt about that. And also just again for US consumers, 0:10:06.760 --> 0:10:10.160 they're shifting from good goods excuse me, to services specifically. 0:10:10.160 --> 0:10:12.760 So I do wonder about the nuances of this data. 0:10:13.800 --> 0:10:17.720 Absolutely great points and especially inventories. I I think when 0:10:17.720 --> 0:10:20.040 we look at some of the numbers that are being 0:10:20.080 --> 0:10:23.720 reported out from some of the real time GDP trackers 0:10:23.760 --> 0:10:27.000 that show very strong growth in in the third in 0:10:27.040 --> 0:10:29.840 the fourth quarter here, some of that is inventory bill 0:10:29.960 --> 0:10:33.600 that occurred in October that is still a reflection of 0:10:33.640 --> 0:10:37.760 the the weirdness of the supply chain. You know. Finally, 0:10:37.800 --> 0:10:41.280 as the supply chain improves, you start to get these 0:10:41.400 --> 0:10:44.680 orders coming in, they go into inventory. But I think 0:10:44.720 --> 0:10:47.840 we start to see in this month and already at 0:10:47.880 --> 0:10:50.440 the end of November some draw down in those inventories 0:10:50.520 --> 0:10:54.760 and and so that's definitely a factor. I want to 0:10:54.760 --> 0:10:56.600 get your thoughts here about what we've been seen in 0:10:56.600 --> 0:10:59.480 the housing market. I mean, obviously the effects of what 0:10:59.520 --> 0:11:03.400 the FED has already been seen there and we continue 0:11:03.440 --> 0:11:06.920 to see significant drops in home prices or home price growth, 0:11:06.920 --> 0:11:10.120 I should say, uh, including the most recent data that 0:11:10.120 --> 0:11:12.840 we got this morning. The sense here that maybe certain 0:11:12.840 --> 0:11:16.319 things have been right size Are you seen it that way? Um? 0:11:16.760 --> 0:11:19.600 Maybe starting to get right sized. I don't think we're 0:11:19.600 --> 0:11:22.480 there yet. That that case Chiller number that we've got 0:11:22.520 --> 0:11:25.520 this morning, the way it's calculated, it has a big 0:11:25.600 --> 0:11:29.000 lag in it. It's really looking backwards in a significant play. 0:11:29.520 --> 0:11:32.000 I think there's going to be quite a bit more 0:11:32.160 --> 0:11:36.040 in the way of price declines. Building permits have fallen 0:11:36.080 --> 0:11:39.560 on this thirty percent in the United States since June, 0:11:39.840 --> 0:11:42.920 and and so the home building is going to fall off. 0:11:44.000 --> 0:11:48.440 That's where the Fed interest rate impact is really hitting. 0:11:48.840 --> 0:11:53.400 Signod and and I and we cannot underestimate the degree 0:11:53.400 --> 0:11:59.559 to which home sales dry soon. We're spending and even 0:11:59.679 --> 0:12:04.720 sir visiness, landscaping, all this kind of stuff get gets 0:12:04.720 --> 0:12:06.720 tied to that. So it's a it has a big 0:12:06.760 --> 0:12:10.200 impact on the economy. Yeah, absolutely well said and really 0:12:10.200 --> 0:12:12.360 great to catch up with your great insights here out 0:12:12.360 --> 0:12:16.160 of Jeanette Garrity, Managing Director and chief Economists over Robertson 0:12:16.840 --> 0:12:28.520 Stephen Please sees Bloomberg Business Week with Carol Massier and 0:12:28.679 --> 0:12:33.760 Tim stinebec on Bloomberg Radio. No better person to have 0:12:33.840 --> 0:12:36.840 this conversation within. Dana Telsea joining us right now in studio. 0:12:36.920 --> 0:12:40.000 She's the founder and CEO of the Telsea Advisory Group 0:12:40.000 --> 0:12:43.720 of brokerage firms serving customers worldwide. I have a lot 0:12:43.760 --> 0:12:46.800 of questions here, Dana, so let's start overall. I'll give you. 0:12:46.880 --> 0:12:48.160 I'll give you the easy one. I mean, I think 0:12:48.160 --> 0:12:51.160 the National Retail Federation said something like six growth in 0:12:51.200 --> 0:12:53.559 holiday shopping. That was their projection. Are we going to 0:12:53.679 --> 0:12:55.640 hit that? Are we going to exceed that one? Well, look, 0:12:55.679 --> 0:12:59.360 we already heard MasterCards number this morning from November one December. 0:13:00.080 --> 0:13:02.840 The seven point one percent a little bit lower than 0:13:02.880 --> 0:13:06.000 there's seven point six percent forecast, but compared to the 0:13:06.040 --> 0:13:07.880 eight and a half percent last year, which was a 0:13:07.920 --> 0:13:10.800 great year last year, it's still up. Was it really 0:13:10.840 --> 0:13:14.559 flattish if you include inflation? Probably, but the consumer is 0:13:14.640 --> 0:13:17.079 much more stress this year than they were last year, 0:13:17.520 --> 0:13:20.280 not having the same amount of dollars from stimulus. And 0:13:20.280 --> 0:13:22.840 you have the high end on the luxury side impacted 0:13:22.880 --> 0:13:26.240 by housing in a volatile stock market, and even we're 0:13:26.280 --> 0:13:28.960 seeing the luxury growth rate moderate from what it was. 0:13:29.280 --> 0:13:32.600 It's a decent season. Retailers have product to move and 0:13:32.640 --> 0:13:34.679 consumers are going to get a bargain this week. Well, 0:13:34.679 --> 0:13:37.199 we were already seeing it from Target there marking down 0:13:37.280 --> 0:13:40.000 and things I think so. I mean, so how do 0:13:40.040 --> 0:13:42.439 you net net it like at this point, because it 0:13:42.480 --> 0:13:44.520 sounds like there's a lot of caveats in which there are. 0:13:44.920 --> 0:13:47.360 And the reason why we may have a good increase 0:13:47.559 --> 0:13:50.040 what it means to the margins the bottom line is 0:13:50.040 --> 0:13:52.600 different than a percentage increase. And I think we're going 0:13:52.640 --> 0:13:55.840 to see retailers have leaner inventories. But could the margins 0:13:55.880 --> 0:13:59.200 be negatively impacted? Yes, And I think next year and 0:13:59.240 --> 0:14:02.560 we as we go three just a couple of days away. 0:14:02.600 --> 0:14:05.720 I think the focus is on expecting the unexpected and 0:14:05.760 --> 0:14:08.200 it requires agility. So I think we're gonna have a 0:14:08.240 --> 0:14:09.960 tough first half of the year. I think we'll have 0:14:10.000 --> 0:14:13.000 a better second half of the year. And these retailers, 0:14:13.120 --> 0:14:15.520 who can be the cleanest on inventory is going to 0:14:15.559 --> 0:14:17.920 be who wins the day. So what's the unexpected to 0:14:18.040 --> 0:14:20.640 expect in the first part of the year. I think 0:14:20.840 --> 0:14:24.680 the positive surprise would be a consumer that's stronger than expected, 0:14:24.880 --> 0:14:27.080 where you have look at the jobless rate and you 0:14:27.120 --> 0:14:30.440 have people going to work again, the labor costs are 0:14:30.520 --> 0:14:33.280 running higher, so are they're going to invest in discretionary 0:14:33.280 --> 0:14:37.200 goods not just experiences? The negative part of it is 0:14:37.440 --> 0:14:39.240 you look at the retailers who are still going to 0:14:39.320 --> 0:14:42.800 have over inventory and we're going to have margin pressure 0:14:42.800 --> 0:14:45.400 in the first half of the year. It's it's it's 0:14:45.480 --> 0:14:47.400 up in the air right now. I am curious about 0:14:47.400 --> 0:14:50.720 the agility where that comes from, specifically on the inventory level, 0:14:50.720 --> 0:14:52.760 because one of the reasons why they're in this situation 0:14:52.840 --> 0:14:54.840 is is that the inventory supply chain. I don't care 0:14:54.840 --> 0:14:56.840 how well you're running your company right now, it is 0:14:56.880 --> 0:14:59.240 still broken. And so I'm just wondering, how did they 0:14:59.240 --> 0:15:00.800 do that, How do at least the good companies, how 0:15:00.800 --> 0:15:02.560 do they find that agility. Well, one of the things 0:15:02.560 --> 0:15:04.400 that we're seeing is when you think about the ordering 0:15:04.440 --> 0:15:07.440 patterns for the first half of twenty three, on average, 0:15:07.480 --> 0:15:11.520 many the wholesale accounts are ordering down ten to the 0:15:11.560 --> 0:15:14.760 reason why to get some pricing power back. And when 0:15:14.800 --> 0:15:16.960 you think about this consumer overall, if we have a 0:15:17.000 --> 0:15:20.160 stock market that's even a little bit steady, that'll help us. 0:15:20.560 --> 0:15:23.360 Balance sheets are pretty strong. One of the interesting things 0:15:23.440 --> 0:15:25.560 I was at one of the real estate conferences earlier 0:15:25.560 --> 0:15:30.320 in the month. Retailers overall, our net store openers, not closers. 0:15:30.680 --> 0:15:33.280 The headwind is the fact that they might not have 0:15:33.360 --> 0:15:37.040 the h VAC equipment or the fixtures ordering in time 0:15:37.080 --> 0:15:41.280 to get the goods there. But we have healthier consumers. Yes, 0:15:41.320 --> 0:15:45.160 the savings rates down, but retailers also have healthier balance sheets. 0:15:45.320 --> 0:15:49.560 Two questions discounting. Did you see it earlier or hit 0:15:49.680 --> 0:15:51.920 the same as typically? I know we talk you're talking 0:15:51.960 --> 0:15:57.400 about remain meet our guest Na tells, But I mean 0:15:57.600 --> 0:16:00.480 in terms of discounting, like did it start allot earlier? 0:16:00.680 --> 0:16:02.960 What of course it started earlier. You look at the 0:16:02.960 --> 0:16:05.920 month of October with Amazon having its second Prime day. 0:16:06.240 --> 0:16:10.000 You mentioned Target, Walmart, Old Navy all having goods to move, 0:16:10.360 --> 0:16:13.400 and there's more goods to keep coming and moving. I 0:16:13.440 --> 0:16:16.320 think that the discounting is there. I think it impacts 0:16:16.320 --> 0:16:18.760 the margins, but I think it moves the inventory. You know, 0:16:18.760 --> 0:16:20.560 one of the things I saw in sacks, like on 0:16:20.640 --> 0:16:22.680 Black Friday, was like you spend a certain amount of 0:16:22.720 --> 0:16:24.840 money and you get like seventy five dollar gifts. It 0:16:24.880 --> 0:16:30.560 was crazy. I didn't buy anything. So I mean I 0:16:30.800 --> 0:16:34.080 saw a lot of those discounts prior to Christmas, and 0:16:34.160 --> 0:16:36.320 now just what two days removed from Christmas, I'm not 0:16:36.320 --> 0:16:38.080 getting a ton of stuff in my email box now 0:16:38.400 --> 0:16:41.400 and it's from certain retailers that aren't traditionally known for 0:16:41.640 --> 0:16:44.200 providing big discounts. I won't name them, but I was 0:16:44.280 --> 0:16:46.280 kind of surprised by that, because I felt like there 0:16:46.320 --> 0:16:48.720 was a certain discipline that these retailers has sort of 0:16:48.760 --> 0:16:50.400 gotten over the last couple of years where they felt 0:16:50.440 --> 0:16:51.960 like they didn't need to discount, or at least not 0:16:52.120 --> 0:16:53.920 as heavily in order to get you in the door. 0:16:54.320 --> 0:16:56.360 I think part of it is everyone wants to be 0:16:56.520 --> 0:16:59.240 clean on the inventory to make way for new goods. 0:17:00.080 --> 0:17:02.800 Products don't increase in price the longer they sit on 0:17:02.840 --> 0:17:05.240 the shelf or the longer they sit on the website, 0:17:05.480 --> 0:17:08.760 so moving them out, moving out out early, your first 0:17:08.800 --> 0:17:12.080 markdown is your most productive markdown. So I'm seeing what 0:17:12.160 --> 0:17:15.280 you're saying, fifty six seventy off. Some of it from 0:17:15.280 --> 0:17:17.640 who you'd expect, some of it from who you wouldn't. 0:17:17.920 --> 0:17:19.879 But when they report their earnings, if they want to 0:17:19.880 --> 0:17:22.720 have a stock price that even holds steady, you're better 0:17:22.760 --> 0:17:25.640 be lower on the inventory than last year. Dana, back 0:17:25.680 --> 0:17:28.400 to the strength of the consumer, especially at this time 0:17:28.440 --> 0:17:32.359 as we head into any indication that the strength that 0:17:32.400 --> 0:17:35.240 we saw over the holiday season is perhaps this last 0:17:35.280 --> 0:17:38.840 hurrah from the shopper. One of the things we saw 0:17:39.160 --> 0:17:41.760 is a focus on events. Look at restaurants, which are 0:17:41.800 --> 0:17:45.760 continuing to have double digit increases since many consumers haven't 0:17:45.800 --> 0:17:48.199 celebrated the holidays with their friends and family in the 0:17:48.200 --> 0:17:51.000 past two years. Yes, they've all bought some new clothes, 0:17:51.000 --> 0:17:54.240 they bought some new makeup, but they weren't out celebrating together. 0:17:54.480 --> 0:17:58.280 And don't forget, experiences are what creates memories, So I 0:17:58.280 --> 0:18:00.920 think people want some of these memory is I don't 0:18:00.920 --> 0:18:03.560 think this is the last hurrah for the consumer. I 0:18:03.600 --> 0:18:06.480 think it's the management for the retailer in order to say, 0:18:06.760 --> 0:18:10.600 what looks like three can we deliver an upticking earnings 0:18:10.640 --> 0:18:12.639 on that point with the services versus good What do 0:18:12.640 --> 0:18:14.240 you make of some of these retailers that have tried 0:18:14.280 --> 0:18:16.119 to straddle both words. I think it's sort of like 0:18:16.359 --> 0:18:18.600 r H, which is still selling furniture, but of course 0:18:18.600 --> 0:18:20.800 they have the restaurants and hotels and the cruises and 0:18:20.880 --> 0:18:23.159 something god knows what else. But I mean, is that 0:18:23.240 --> 0:18:25.600 sort of the model that retailers have to follow. I 0:18:25.640 --> 0:18:28.360 think it works. You can't just be a one category company. 0:18:28.600 --> 0:18:30.440 Look what's going to open here in New York City, 0:18:30.480 --> 0:18:33.280 not far from where we are now with Tiffany's opening 0:18:33.359 --> 0:18:35.480 sometime later this year, and there's gonna be they added 0:18:35.480 --> 0:18:37.960 a new floor for the restaurant. You look at Oxford 0:18:37.960 --> 0:18:41.240 Industries with Tommy Bahama and their Marlon Bar. What is 0:18:41.280 --> 0:18:44.880 it doing. They're selling products to women while the men 0:18:44.960 --> 0:18:47.160 are sitting there having a drink or if they're buying 0:18:47.240 --> 0:18:49.840 something else, they're buying both. It's my it's my husband's 0:18:49.840 --> 0:18:52.440 biggest nightmare that there's gonna be like Champagne and Tiffany's, 0:18:52.440 --> 0:18:53.840 and you just go to the floor in mind by 0:18:54.040 --> 0:18:57.280 what's happening? Is a company that I think of with 0:18:57.320 --> 0:18:59.640 this because it's a company that you know, even years 0:18:59.680 --> 0:19:03.000 ago offered yoga classes in the store and the idea, 0:19:03.040 --> 0:19:06.480 of course was that you'd associate the product with these 0:19:06.480 --> 0:19:09.040 services and then you know, create some sort of brand 0:19:09.080 --> 0:19:12.040 loyalty there. What's the actual hard data though, the connection 0:19:12.040 --> 0:19:14.080 that shows this type of thing actually works and leads 0:19:14.119 --> 0:19:16.159 to increased sales. When you look at the Marlin Bar 0:19:16.240 --> 0:19:19.359 and Oxford Industries with Tommy Bahama, there's there can be 0:19:19.400 --> 0:19:22.160 at increase in your sales when you have a Marlin Bar, 0:19:22.560 --> 0:19:24.920 and not just in your sales and men's just the alcohol, 0:19:24.960 --> 0:19:27.720 but it's driving women test driving women's where it's not 0:19:27.800 --> 0:19:29.600 just that. I mean, I think Ralph Lauren also has 0:19:29.600 --> 0:19:33.080 the cafe and alcoholic. They have coffee and other things. 0:19:32.480 --> 0:19:36.120 The room Bloomingdale's right here with the fifty carrots or whatever. 0:19:36.200 --> 0:19:38.520 Forty carrots vanilla is the best life by time that 0:19:38.600 --> 0:19:42.000 the carrots. All right, So we talk retail. We lump 0:19:42.080 --> 0:19:44.840 so much in there is there's what are the retailers 0:19:44.840 --> 0:19:46.800 that are really just knocking get out of the park. 0:19:46.840 --> 0:19:48.680 Which are the ones that you're like, oh, there could 0:19:48.680 --> 0:19:51.040 be still some problems. So I think overall who's doing well? 0:19:51.080 --> 0:19:53.560 I think cosmetics is doing well, ALTA and so we 0:19:53.640 --> 0:19:56.680 talk about for all the time. There's lines there. Sephora 0:19:56.720 --> 0:19:59.240 is owned by LVMH. They don't just have the benefit 0:19:59.240 --> 0:20:01.960 of Sephora, but they have Christian Door and Louis Louis 0:20:02.000 --> 0:20:05.400 Vuitton also. But that's also an experiential shopping moment, right. 0:20:05.440 --> 0:20:07.480 You go in and you try, you know, you try 0:20:07.480 --> 0:20:09.320 on the cosmetics, and you have people there who are 0:20:09.359 --> 0:20:11.479 trained to help you. And that's not something that can 0:20:11.480 --> 0:20:14.880 be replicated online. Nope, you need you need that experience also, 0:20:14.960 --> 0:20:17.560 and I feel like we're talking about something in I 0:20:17.560 --> 0:20:21.359 can't tell you how many times buying different things. We've 0:20:21.359 --> 0:20:24.240 got to look good. Okay, it's important. Look everyone sees 0:20:24.320 --> 0:20:26.800 you gotta look good. What isn't doing well? I think 0:20:26.800 --> 0:20:28.800 overall you're taking a look at something. There's not a 0:20:28.800 --> 0:20:30.840 lot on the watch list that isn't doing well lately. 0:20:31.000 --> 0:20:33.560 We definitely have a slowdown and home given that everyone 0:20:33.640 --> 0:20:37.919 added to their home back in with the pandemic, so 0:20:37.960 --> 0:20:40.439 we're seeing that weakness right now. You have some of 0:20:40.440 --> 0:20:43.640 the regional department stores, like privately held Belks that's having 0:20:43.680 --> 0:20:45.960 its issue. Take a look at bed Bath and Beyond. 0:20:46.240 --> 0:20:49.080