Speaker 1: Happy Thanksgiving everybody, and thank you for joining us on
Speaker 1: this special edition of Bloomberg Daybreak. US markets are closed
Speaker 1: for the holiday. I'm Nathan Hager coming up this hour.
Speaker 1: It's been a voladile November for both the stock and
Speaker 1: cryptocurrency markets. We'll look at what's in store for the
Speaker 1: rest of this year and into twenty twenty six with
Speaker 1: Scott Martin, chief investment officer of Kingsview Wealth Management, and
Speaker 1: Bloomberg Intelligence senior commodity strategist Mike mcgloone. Plus, we'll update
Speaker 1: you on the latest anti trust battles facing high tech
Speaker 1: with Bloomberg Intelligence senior litigation analyst Jennifer Ree. But first,
Speaker 1: we are entering one of the busiest and most important
Speaker 1: times of year for retail. How are things shaping up
Speaker 1: as we get said for Black Friday and the countdown
Speaker 1: to the holidays. Let's ask a couple of our senior
Speaker 1: analysts in the retail space, Punam Goyle and Lindsay Dutch
Speaker 1: of Bloomberg Intelligence. Happy holidays to both of you. And
Speaker 1: I think I saw a report going into this conversation
Speaker 1: from the National Retail Federation. They're predicting that holiday spending
Speaker 1: I think could pass a trillion dollars this year. Punum,
Speaker 1: I'll start with you. Do you see those kind of
Speaker 1: levels from consumers?
Speaker 2: Yes? Absolutely. The consumer has been quite resilient all year,
Speaker 2: to our surprise, despite the tariff dwins, and we do
Speaker 2: think that spending will continue into Thanksgiving weekend especially and
Speaker 2: then into December. But that said, spending will be selective.
Speaker 2: Shoppers are conscious price conscious more notably, and they are
Speaker 2: spending where they find the product that they're looking for.
Speaker 1: Lizzie, let's bring you in. What are you seeing in
Speaker 1: terms of consumer behavior and where they could be spending
Speaker 1: as we head into the holidays.
Speaker 3: Yes, I would agree. I think we're seeing resilience, especially
Speaker 3: coming from that higher income consumer, while the lower income
Speaker 3: consumer might be pulling back just a drop when we
Speaker 3: compare that year over year. But as Puna mentioned, you know,
Speaker 3: we do see growth coming into the season, and although
Speaker 3: there is a focus on value and price, consumers are
Speaker 3: splurging on things that they really want or that they
Speaker 3: need so for a best buy. For example, we see
Speaker 3: strength in gaming, computing, phones and the Dick's sporting goods.
Speaker 3: We see strengths continuing on both footwear and apparel for
Speaker 3: sort of those new trendy sports.
Speaker 1: Items now I'll put them. I knowe you cover a
Speaker 1: lot of apparel retailers as well in your focus at
Speaker 1: Bloomberg Intelligence. How are some of those companies set up
Speaker 1: for the holidays.
Speaker 2: I think they're set up quite nicely. I think the
Speaker 2: product there's a lot of fashion, there's a lot of newness.
Speaker 2: In fact, we ran a sneaker survey just earlier this
Speaker 2: month and what we found is that people want to
Speaker 2: buy sneakers for the holidays, So sneakers are a top category.
Speaker 2: Other top categories based on surveys we've seen are apparel, home, and,
Speaker 2: as a Lindsay said, electronics. So these are still the
Speaker 2: top categories in addition to of course toys where people
Speaker 2: will be spending their dollars this holiday.
Speaker 1: Interesting to bring toys in as well, given some of
Speaker 1: the tariff headwinds those types of products could be facing
Speaker 1: not just in the holidays, but into next year as well.
Speaker 1: Could we be seeing tariff headwinds for retail going into
Speaker 1: next year?
Speaker 3: Lindsay Yeah, So the toy backdrop this year is very
Speaker 3: different than most years prior. You know, typically we see
Speaker 3: big retailers like a Walmart or a target. They're taking
Speaker 3: their holiday toy inventory in July, sort of the mid
Speaker 3: mid middle of the year. This year, we saw a
Speaker 3: significant delay in those orders. They kind of fell into
Speaker 3: the fourth quarter, so there was a delay, and they
Speaker 3: also were taking on smaller shipments than historically they've done,
Speaker 3: thinking that they might replenish some product with you know,
Speaker 3: domestic shipments, you know, in that holiday season. So there's
Speaker 3: a lot of uncertainty heading into twenty twenty six for
Speaker 3: the toy makers and that sort of category as a whole.
Speaker 3: Just because we saw us such a significant delay, you know,
Speaker 3: we don't really know where demand is. And if we
Speaker 3: look at twenty twenty five as the whole, really most
Speaker 3: of the demand has not been driven by kids toys.
Speaker 3: It's really been driven by adults their interest in trading cards,
Speaker 3: collectibles and building sets, and the holiday is quite different
Speaker 3: with a focus on kids.
Speaker 1: We're speaking with Lindsey Dutch, a senior retail analyst at
Speaker 1: Bloomberg Intelligence, along with Punham Goyle, also a senior retail
Speaker 1: analyst at Bloomberg Intelligence. Going into the holidays, of course,
Speaker 1: a lot of customers are thinking about deals going into
Speaker 1: Black Friday and beyond how important PUNAM is this weekend
Speaker 1: in particular for the retailers and what kind of deals
Speaker 1: are we seeing.
Speaker 2: This weekend is very important. It actually kicks off holiday
Speaker 2: despite all the deals we've been seeing prior to today,
Speaker 2: so I think deals will be prevalent. We don't expect steep,
Speaker 2: steep discounts. You know, in the past, it's eight years
Speaker 2: ago when there were inventory issues, we saw fifty six
Speaker 2: seventy person off at sometimes. I think we'll probably stay
Speaker 2: in the range of between thirty and forty person off
Speaker 2: on average. That's what we saw last year. So I
Speaker 2: do expect discounts to be similar at most places. But
Speaker 2: you will have those doorbuster deals to get the shopper
Speaker 2: into the store, and we expect those to be there
Speaker 2: at Walmart and Target and some of these department stores
Speaker 2: where that is how they draw in customers. That said,
Speaker 2: today's Thanksgiving Day and stores are closed, so everyone is shopping,
Speaker 2: likely online and spending time with family, and online sales
Speaker 2: we expect to still outpay store sales.
Speaker 1: That's an interesting return to trend to keep the stores
Speaker 1: closed on Thanksgiving. In past years, we've seen some of
Speaker 1: those doorbusters come Thanksgiving night, but Lindsey, if we don't
Speaker 1: see the kinds of deep discounts that there have been
Speaker 1: in the past for the kickoff of holiday shopping season,
Speaker 1: what could that mean for foot traffic?
Speaker 3: So we do still expect, you know, people to come
Speaker 3: out and shop. I agree with Puna Myke the level
Speaker 3: of discounting might be similar to last year, but rolling
Speaker 3: out those discounts and having those special promotions is really
Speaker 3: the key to driving you know, consumers to your store
Speaker 3: or to your website. And in thinking about foot traffic
Speaker 3: to stores, you know, Best Buy sort of discussed that
Speaker 3: they are seeing a strong interest in in store shopping
Speaker 3: coming from gen Z and we see that also in
Speaker 3: our coverage of All to Beauty. So that younger consumer,
Speaker 3: they like to go to the store, they like in
Speaker 3: person shopping, and I think they'll be out for the weekend.
Speaker 1: That's an interesting point as well, is that kind of
Speaker 1: a shift in trend in terms of shopper behavior overall, poonam.
Speaker 2: The mall has become the new hangout spot, and especially
Speaker 2: the malls that are doing really well and have become
Speaker 2: entertainment hubs. So whether it's coming out you know, last
Speaker 2: weekend aired wicket, So there were a lot of teenagers
Speaker 2: in the mall, or if it's just going to a
Speaker 2: restaurant or with the new Dick sporting goods at the
Speaker 2: mall that I went to was the House of Sports,
Speaker 2: a concept where there's entertainment to build into it. That's
Speaker 2: what's attracting these younger people.
Speaker 1: In terms of the overall outlook for retail, we've gotten
Speaker 1: a lot of reports from the companies themselves from their
Speaker 1: earnings just heading into this weekend, Lindsey. Based on what
Speaker 1: we've seen from the earnings reports so far, what does
Speaker 1: that tell us about what we could get into the holidays.
Speaker 3: I think the companies remain pretty conservative in how they're
Speaker 3: thinking about the fourth quarter. They don't want to get
Speaker 3: over their skis when when they're thinking about, you know,
Speaker 3: what the sales might be. You know, we saw pretty
Speaker 3: you know, low outlooks coming out of Best Buy dis
Speaker 3: meaning a deceleration in same source sales growth from the
Speaker 3: third quarter to the fourth quarter. I think that outlook,
Speaker 3: you know, is conservative. They're not really sure on the consumer.
Speaker 3: There is a lot of uncertainty still out there, but
Speaker 3: I think it does leave room for some surprises. You know,
Speaker 3: we have been seen better than expected sales in the
Speaker 3: third quarter, a lot of that being driven by back
Speaker 3: to school, you know, from many retailers across the board,
Speaker 3: and I think there's definitely reason to be optimistic for
Speaker 3: a strong holiday season.
Speaker 1: If we're seeing those kind of conservative outlooks of from
Speaker 1: the businesses punam, does that point to a sort of
Speaker 1: more of a difficulty for these companies to provide the
Speaker 1: kind of, you know, deep holiday discounts that they'd been
Speaker 1: able to do in the past.
Speaker 2: Yeah, I think the conservative outlook stems from the uncertainty
Speaker 2: of just knowing where consumer behavior will be. But in
Speaker 2: terms of the deep discounts, don't get me wrong, there
Speaker 2: will be discounts. It's just you're not going to see
Speaker 2: the store you know, at these deep discounts that we
Speaker 2: were used to seeing, maybe even prior to the pandemic.
Speaker 2: And the reason why you won't see them is because
Speaker 2: inventory is you could imagine this year being a year
Speaker 2: with tariffs and levies added on to retailers, they didn't
Speaker 2: overbuy right so they've been very cautious on how they're
Speaker 2: buying inventory. And for a lot of them, inventory has
Speaker 2: been right sized, which is what's been driving the healthier
Speaker 2: margin and the healthier sales and also healthier full price selling.
Speaker 2: You will find disconsoled. Nike, for example, is still clearing
Speaker 2: out aged inventory and a lot of the at leisure
Speaker 2: brands that are amiss to turn around. That's where you
Speaker 2: find inventory pals, but on old stuff. The new stuff
Speaker 2: I think will be fairly moderate levels.
Speaker 1: Linzie, how do you see retailers weathering tariff impacts into
Speaker 1: next year? We've seen these companies kind of absorb the
Speaker 1: higher costs at least in the in the short term
Speaker 1: some front loading as well as Puna mentioned, But into
Speaker 1: twenty twenty six. What's your expectation there?
Speaker 3: So, I do expect costs generally to continue rising, you know,
Speaker 3: into the next year, at least through the first half.
Speaker 3: So companies will be continuing with their mitigation strategies, whether
Speaker 3: that's you know, continue movement and how they're sourcing, where
Speaker 3: they're selling, the price points, all of those levers that
Speaker 3: they've been pulling sort of this year. I think that
Speaker 3: cost pressure could continue, but we do we have seen,
Speaker 3: as you've mentioned, you know, some resilience on the profit
Speaker 3: line across many retailers, and that is you know, them
Speaker 3: passing some of those costs on or you know, the
Speaker 3: costs haven't come quite to fruition to the levels that
Speaker 3: they were initially expecting. Also, you know, in some of
Speaker 3: the premium brands, like if you think about a Williams Soonoma,
Speaker 3: for example, they are keeping discounts and promotions even for
Speaker 3: the holiday season, very limited and that does allow them
Speaker 3: to maintain such a strong margin even when they're seeing
Speaker 3: some cost.
Speaker 1: Pick up and put them. How do you see some
Speaker 1: of the companies that you cover mitigating tariffs into twenty six.
Speaker 2: Yeah, I think so there's two things that we have
Speaker 2: to think about when we think of twenty twenty six.
Speaker 2: First and the first half of the year, and last
Speaker 2: year didn't have really tariff pressure. We were just speculating
Speaker 2: is what the tariffs could be. So there is more pressure.
Speaker 2: But that said, the reason we've seen so much resilience,
Speaker 2: in my view, is because they're finding opportunities elsewhere. You know,
Speaker 2: when you think about artificial intelligence generative AI and how
Speaker 2: that's really helped streamline operations create efficiencies. I think part
Speaker 2: of the reason they've been able to offset some of
Speaker 2: this pain, in addition to supplier negotiations, is because of
Speaker 2: the benefit that they're getting from.
Speaker 1: AI in our last minute, Lindsey, are there certain items
Speaker 1: that you think are going to find a big competition
Speaker 1: from consumers sort of fighting each other to get into
Speaker 1: the stores to get under the tree this holiday season?
Speaker 3: You know, I think toys is typically a category where
Speaker 3: you might see something like that. When we looked at
Speaker 3: the toy lists, you know, coming out of Walmart, Target
Speaker 3: and Amazon, you know those top toy lists, you know,
Speaker 3: they look very similar to last year. So I don't
Speaker 3: know that there's a real hot item that you have
Speaker 3: to be at the door when they open to get
Speaker 3: or wait in line. Even Nintendo Switch, the inventory on
Speaker 3: that console is much greater than the original Nintendo Switch
Speaker 3: that was rolled out a couple of years ago, So
Speaker 3: the inventory looks appropriate in that. I don't think retailers
Speaker 3: are over inventory this season, but they have enough for
Speaker 3: the expected demand trends.
Speaker 1: All right, Well, happy holidays to both of you. Really
Speaker 1: appreciate you coming on with us. That's put them Goyle
Speaker 1: and Lindsay Dutch, senior retail analysts at Bloomberg Intelligence and
Speaker 1: up next on the special Thanksgiving edition of Bloomberg Daybreak.
Speaker 1: Is December going to bring any relief to stocks and
Speaker 1: crypto Alaska couple experts in both those spaces. As this
Speaker 1: holiday edition of Bloomberg Daybreak continues, I'm Nathan Hager, and
Speaker 1: this is Bloomberg. Thanks for joining us on this special
Speaker 1: edition of Bloomberg day Break. US markets are closed for
Speaker 1: the Thanksgiving holiday. I'm Nathan Hager. Well, after soaring from
Speaker 1: the spring into the fall, the stock market kind of
Speaker 1: took a breather this month. The S and P five
Speaker 1: hundreds on track for its first monthly decline in seven
Speaker 1: So is there more pain ahead or could this be
Speaker 1: a buying opportunity. Let's ask Scott Martin. He's the chief
Speaker 1: investment officer at Kingsview Wealth Management. Happy holiday to you, Scott.
Speaker 1: I think we all remember what happened seven months ago,
Speaker 1: the April tariff announcement. We did get the bounce back
Speaker 1: since then. Can we be set up for a repeat
Speaker 1: of that this time around?
Speaker 4: Yes, it seems you're less similar, actually, Nathan. And as
Speaker 4: we approach the holidays, I'm certainly in a little bit
Speaker 4: more of a market's been a little bit more of
Speaker 4: a giving mood, let's say, with regards to a give
Speaker 4: back in prices and so I believe that this is
Speaker 4: gonna be one of those stress points again that we
Speaker 4: did experience earlier this year where markets feel broken, they
Speaker 4: feel like they're focusing on the bad versus the good,
Speaker 4: and we're seeing that in price action, mostly across tech
Speaker 4: and but also across some other areas of the market
Speaker 4: that have been bled into by the liquidations that happen.
Speaker 4: So I think, similar to what's gone on in April
Speaker 4: and into even many this year, we're starting to have
Speaker 4: some of those weekends get out of the market. Those
Speaker 4: weekends get out of those areas where there has been
Speaker 4: a little bit of froth, and so I think those
Speaker 4: weekends are going to get out and allow these stronger
Speaker 4: hands to come in where you, the investor, could come
Speaker 4: in and find price levels that are built a little
Speaker 4: bit the same, more attractive than they were just a
Speaker 4: couple of months ago. And that's an opportunity for us
Speaker 4: to reallocate, rebalance, and get ready for next year as
Speaker 4: things go up again.
Speaker 1: In our opinion, Okay, well, I'm going to go ahead
Speaker 1: and play a devil's advocate here just a little bit,
Speaker 1: because there is this debate in the market about whether
Speaker 1: you know the artificial intelligence names. The megacaps have gotten
Speaker 1: too stretched in terms of their valuations. Is it just
Speaker 1: froth or could there be more to give back here?
Speaker 4: I think there's probably some more to give back, certainly
Speaker 4: because the markets have shown they need as they get
Speaker 4: extended to the upside. As we get frothy, the markets
Speaker 4: also get too scared, they get too too fighting, let's say.
Speaker 4: And so I think that's going to be the essence
Speaker 4: of what the market is. As investors ourselves, we have
Speaker 4: to remember that not only are markets nonlinear, they're also
Speaker 4: very emotionally driven. And so when fundamentals kind of get
Speaker 4: thrown out the window here with regards to both on
Speaker 4: the upside and downside, that creates opportunity for us. And
Speaker 4: so what we look longer term here, and that's beyond
Speaker 4: obviously five days, ten days, or thirty days. We tend
Speaker 4: to look at these price levels at a price action
Speaker 4: as opportunities, as points where investors who really like the space,
Speaker 4: who really like the tech space, who really like the
Speaker 4: AI space, if it's servers, if it's servers, if it's AI,
Speaker 4: if it's areas in the market that have really been
Speaker 4: strong and really shown, as we saw with Nvidia earlier
Speaker 4: in November that really have the earnings, and they really
Speaker 4: have the potential to deliver what I believe the market
Speaker 4: expects when it comes to profits. For example, I think
Speaker 4: there's a long term story here in that space, or
Speaker 4: in the tech space, especially which has been hit reasonably
Speaker 4: hard in the last day several weeks. There's opportunities there
Speaker 4: for investors to take a steak here and say that yes,
Speaker 4: things could be a little bit more volatile in the
Speaker 4: next month or two, but overall, in the next day
Speaker 4: six to twelve months, it's our opinion that the prices
Speaker 4: will again rebound and they will go higher.
Speaker 1: Is it going to be an opportunity across the tech
Speaker 1: space or do you think it's going to be like
Speaker 1: a stock pickers market in terms of what we see
Speaker 1: in tech.
Speaker 4: That's a great question. I think we've seen from the
Speaker 4: price action so far in Nathan, it's going to probably
Speaker 4: be more of a stock pickers market in the sense
Speaker 4: of some of the tech has been doing okay. If
Speaker 4: you look at some of the Googles of the world,
Speaker 4: and even in Vidia until most recently, and even Oracle
Speaker 4: until most recently, there has been strength. And so if
Speaker 4: you look at some of the names that maybe have
Speaker 4: relatively stayed stable or relatively been maybe against some of
Speaker 4: the big moves in tech in general, those would be
Speaker 4: areas that I think you can find some strengths. But
Speaker 4: then again, if you look at the corwe's for example,
Speaker 4: if you look at say A M D, those are
Speaker 4: areas that have come on with an additional punishment that
Speaker 4: in our opinion looks a little bit overdone. So when
Speaker 4: you pick the stocks here and you look at some
Speaker 4: of the names that have been say irrepidbly punished, I
Speaker 4: think those are areas where investors can find some of
Speaker 4: the most upside going forward, because those are companies too
Speaker 4: that are getting stay unduly punished because of this liquidation,
Speaker 4: and therefore that's probably where most of the upside exists.
Speaker 1: Is there too much focus on the tech sector right now?
Speaker 1: Do you see any opportunities for either broadening in the
Speaker 1: in the a rotation out of tack?
Speaker 4: We do. I think the rotation of the tech, depending
Speaker 4: on how long it lasts, will obviously spread itself into
Speaker 4: different areas where I've seeing that, and say financials, we're
Speaker 4: seeing that in pharmaceuticals. My goodness, healthcare, which was a
Speaker 4: dead space for the last couple of years has come
Speaker 4: on very strong. Utilities, what i'd like to call a
Speaker 4: very boring sector, have stepped up very well. So yes,
Speaker 4: as the tech let's say tech malay spreads through the
Speaker 4: rest of the year here, I think you're going to
Speaker 4: see those areas step up and take leadership. But as
Speaker 4: we've seen in the past days and the real story
Speaker 4: here though, and the real story for growth and the
Speaker 4: real story for investors that want that long term appreciation
Speaker 4: that still remains in tech. If you just look over history,
Speaker 4: if you look at the healthcare space, if you look
Speaker 4: at pharmaceuticals, if you look at utilities, telecom in fact too,
Speaker 4: those areas have stepped up in times when there has
Speaker 4: been this general fullback area, the general pullback sty attitude
Speaker 4: in the marketplace. But the reality is that over the
Speaker 4: long term, it's tech that's going to provide that long
Speaker 4: term growth potential. And so while tech does stay weak here,
Speaker 4: say in the next short term period, there's going to
Speaker 4: be that long term appreciation in tech that we'll rebound
Speaker 4: and we'll reward investors that take a stake in some
Speaker 4: of these names.
Speaker 1: So is it going to be about a return to
Speaker 1: a fundamental thesis here, the idea of fundamentals coming back
Speaker 1: into play, or is there going to be the need
Speaker 1: for the FED to support this market.
Speaker 4: That's the greatest question that we all are waiting for,
Speaker 4: is that we have a FED meeting coming up in December.
Speaker 4: And in my opinion, I've been one of those that's
Speaker 4: been out there saying the FED shoon out of cut
Speaker 4: rates the last two times in fact, and so I
Speaker 4: believe the FED is definitely being relied upon by the
Speaker 4: markets by certainly the administration to come in and see quote
Speaker 4: unquote as you use the words save this market. And
Speaker 4: it's laty to think about that because if you line
Speaker 4: that up with a fundamental story that you initiated there,
Speaker 4: what really is the FED doing here? Because yes, there's
Speaker 4: been some forced liquidation here. There's been some concerns of
Speaker 4: late about bank credits, about private credit and things like
Speaker 4: that being way too extended. It certainly interest rates being
Speaker 4: too high, I guess, But then again, we still have
Speaker 4: inflation that is not teamed considerably. Inflation that's around her
Speaker 4: about three percent floss. We're supposed to get to two percent,
Speaker 4: never got there. That was the target of the three
Speaker 4: Reserve and Jerome Pal's commentary. We also have GDP growth now, Nathan.
Speaker 4: That's certainly above where it was some months ago when
Speaker 4: the FED was concerned about cutting rates to help support
Speaker 4: the economy. GDP growth for our projections for both Q
Speaker 4: four and some of the first parts of Q one
Speaker 4: and two for twenty twenty six looks like it's going
Speaker 4: to be in the range of three and a half
Speaker 4: to four percent. And so with job growth obviously being
Speaker 4: recently strong as we put too a little pause in
Speaker 4: the job on the job numbers are the last couple
Speaker 4: of months we started to see those come in. It's
Speaker 4: our opinion that the economy is strong enough for the
Speaker 4: FED not to cut rates actually, and so the FED
Speaker 4: is going to probably have to be this red herring,
Speaker 4: if you will, or this savior in the face of
Speaker 4: this emotional investment period where I don't think that's necessary
Speaker 4: really for the FED to do that, and so I
Speaker 4: think actually what's going to end up happening is whether
Speaker 4: the FED cuts or not in December. That's not going
Speaker 4: to be a big I guess, patternshift or if you will,
Speaker 4: for our sake of things as investors ourselves, but it
Speaker 4: is something that if the FED does not cut, that
Speaker 4: that could be taken poorly by the market. But I
Speaker 4: believe over and longer term that's the right move for
Speaker 4: the FED is to step back, let the economy breathe
Speaker 4: a little bit, let everybody kind of calm down, and
Speaker 4: then therefore we can be in a period where going forward,
Speaker 4: I think there's going to be a reason for the
Speaker 4: FED possibly to cut some other time, but certainly not now.
Speaker 1: Interesting view on where things could go in terms of policy.
Speaker 1: Thank you for this, Scott, great you having me on
Speaker 1: with us.
Speaker 4: Thank you very much.
Speaker 1: That's Scott Martin, chief investment officer at Kingsview Wealth Management.
Speaker 1: Even harder hit than stocks this month have been crypto currencies.
Speaker 1: Bitcoin is plummeted from its high of one hundred and
Speaker 1: twenty five thousand back just a little more than a
Speaker 1: month ago in early October. So let's look at what
Speaker 1: might be ahead. We're pleased to welcome Bloomberg Intelligence senior
Speaker 1: commodity strategist Mike mcgloan, and I say might be ahead, Mike,
Speaker 1: because it really is hard to predict what's going to
Speaker 1: happen with bitcoin. I got to think it's tough for
Speaker 1: you as well.
Speaker 5: Is it. It certainly is, But sometimes it's best to
Speaker 5: be a contrarian, and sometimes it's good to go with
Speaker 5: a flow. One mistake I did last year as I
Speaker 5: jumped on the contrarian battle and pass at least think
Speaker 5: a little bit too early. But now I think that's
Speaker 5: working in the right way. Bitcoin just got way too
Speaker 5: expensive wit and all the signs of a classic bull
Speaker 5: market peak with the President's flip and then all the
Speaker 5: ETF inflows and everything, and now look, I think we've
Speaker 5: put in a pretty enduring peak. A key thing was
Speaker 5: breaking back down below one hundred thousand and then back
Speaker 5: down in the year, which is around ninety four thousand,
Speaker 5: and now it's hovering below that level, and I think
Speaker 5: bitcoin's just a good indication of a way overdo a
Speaker 5: bull market that's correcting, and it could easily go back
Speaker 5: to fifty thousand, which is still my base case.
Speaker 1: Wow, what makes you think it could get down that
Speaker 1: low from the current levels that we're seeing right.
Speaker 5: Now on the annual chart. Certainly going back to twenty
Speaker 5: twenty one to fifty thousand has been a key pivot.
Speaker 5: It looks like it can easily go back there. And
Speaker 5: the key thing is What has been happening is Bitcoin
Speaker 5: usually doesn't bottom until stock market bolatile also peaks, and
Speaker 5: stock market ballatley is just buried. It's running very low.
Speaker 5: If it ends the year at a current level around
Speaker 5: eleven percent, it'll be the lowest year and since twenty seventeen.
Speaker 5: And bitcoin it's basically the opposite of vis in stock
Speaker 5: market volatile. So to me, that's the key risk that
Speaker 5: goes back there. What can get it to sustain back
Speaker 5: above one hundred thousand, I don't know, but I have
Speaker 5: to stock start with a higher stock market. I think
Speaker 5: the key risk is Bitcoin's warning on this ahead of
Speaker 5: time that we are way overdue for the third down
Speaker 5: year for the stock market. Since two thousand and eight,
Speaker 5: we haven't had that, but every time we've had down years,
Speaker 5: there's only been two twenty and eighteen twenty twenty two
Speaker 5: that's coincided with the bitcoin to gold racial breaking down
Speaker 5: like it has.
Speaker 1: So far this year, we've seen the correlation sort of
Speaker 1: breakdown as well between bitcoin and what the stock market's
Speaker 1: been doing. We've seen this pretty steady decline in bitcoin
Speaker 1: despite some of the fluctuations that we've seen in the
Speaker 1: equity space. What do you think is behind that breakdown.
Speaker 5: The key thing I think is we just rate a
Speaker 5: pretty significant peak in cryptos. The key the bottom line
Speaker 5: is a lot of crypto people will tell you that
Speaker 5: bitcoin is different from the other ones, But I like
Speaker 5: to point out in two thousand and nine there was
Speaker 5: one cryptocurrency, and now on coin market camp there's listed
Speaker 5: twenty seven million. Almost those don't matter, But the bottom
Speaker 5: line is most of those have billions of dollars tracking them,
Speaker 5: and they basically really track nothing. They're you know, So
Speaker 5: I think what we're doing is finally seeing the purge
Speaker 5: of excesses of a bull market.
Speaker 1: So are you thinking that we might not see the
Speaker 1: peak that we saw just a little over a month ago.
Speaker 1: I mean, we've had some analysts that we've heard from
Speaker 1: saying that they see bitcoin getting as high as two
Speaker 1: hundred thousand. Are are you just out of that camp?
Speaker 5: Definitely? Well, those are kind of things you see near peaks.
Speaker 5: And what I'm looking for is every single time we
Speaker 5: reached loaves, I have people calling for zero. No, I
Speaker 5: haven't seen those yet. But when we initially dropped to
Speaker 5: roun one hundred thousand. My first take for twenty twenty
Speaker 5: six was fifty or one fifty, and I stick with
Speaker 5: one to fifty. Now could happen this year, it's just
Speaker 5: normally how it does. Remember, there's a high spectrum of
Speaker 5: digital ASCID with unlimited competition. Now Bitcoin is supposed to
Speaker 5: have a definable diminishing supply, but there's unlimited competition of
Speaker 5: other cryptocurrencies out there, and that's what we're finding out.
Speaker 5: So one good example is also look at ethereum. Ethereum
Speaker 5: is running has been betrayed between two thousand and four
Speaker 5: thousand for almost five years, and it's probably heading towards
Speaker 5: the other end of the lower end the range. So
Speaker 5: I think that's the key thing to remember. These are
Speaker 5: not even commodities. They're just trading the vehicles, and they're
Speaker 5: trading in ranges, and I think the range is heading
Speaker 5: lower now. Particularly Also, let's look at it this way.
Speaker 5: Since the stock market's been resilient, if the stock market
Speaker 5: starts giving back some of it games, well know this
Speaker 5: is a good leading indicator. And also we do have
Speaker 5: to point out it was the day that bitcoin dropped
Speaker 5: to eighty right before Thanksgiving that we started seeing FED
Speaker 5: rate cut expectations tilting towards a cut in the December meeting,
Speaker 5: so it's potentially a good leading indicator.
Speaker 1: So how does activity in spot crypto ETF's play into
Speaker 1: your thesis about where cryptocurrency could be going from here.
Speaker 5: In the run up to the launch of ETFs, my
Speaker 5: primary focus was we will see a peak in cryptos
Speaker 5: when we have widely disseminated ETFs, and we certainly have that.
Speaker 5: It's not just Bitcoin, it's all the ones now. So
Speaker 5: the average price we've heard from since ETFs were launched
Speaker 5: from bitcoin is around eighty nine thousand, and the markets
Speaker 5: drop below that level. So we're seeing those stops, people
Speaker 5: getting stopped down below that average price, and so now
Speaker 5: we're seeing outflows. But to me, the whole crypto, the
Speaker 5: whole ETF space, that was the indication of the peak,
Speaker 5: you know, going from the ogs to the kind of
Speaker 5: more the tech geeks who got it and passing it
Speaker 5: on to the main people who are basically lambs. Look
Speaker 5: at me, I want to do the same thing, make
Speaker 5: a lot of money, And to me, that's part of
Speaker 5: the peak now, and the question is what shifts that.
Speaker 5: That's my outlook, and my outlook now is I think
Speaker 5: we're going to see a bottom in the space, and
Speaker 5: we see a lot of the millions of cryptos that
Speaker 5: basically track nothing. I just pine the sky spec the
Speaker 5: digital assets go to zero and then eleven bottom Bitcoin.
Speaker 5: I'll mention one number nine on the Bloomberg Cryp page
Speaker 5: is Dogecoin. It's still worth, you know, between twenty and
Speaker 5: thirty billion dollars and it's a joke. It was launched
Speaker 5: as a joke and that tracks nothing.
Speaker 1: Wow. All right, well, really appreciate this. Mike again, thanks
Speaker 1: for being with us, Thanks for having me. That's our
Speaker 1: Bloomberg Intelligence senior commodity strategist, Mike McGlone. And coming up
Speaker 1: next on the special holiday edition Bloomberg Daybreak will update
Speaker 1: you on the latest anti trust cases facing big tech.
Speaker 1: I'm Nathan Hager, and this is Bloomberg. Thanks for being
Speaker 1: with us on this special edition of Bloomberg Daybreak. US
Speaker 1: markets are closed for Thanksgiving Day. I'm Nathan Hager, and
Speaker 1: as we head near the close of President Donald Trump's
Speaker 1: first full year of his second term, we thought this
Speaker 1: would be a pretty good time to get an update
Speaker 1: on the administration's anti trust cases against big tech, and
Speaker 1: for that we're pleased to be joined by Bloomberg Intelligence
Speaker 1: Senior Anti trust litigation analyst, Jennifer Ree, Thanks for taking
Speaker 1: some time out of your holiday to be with us,
Speaker 1: Jen And I know we've had a couple of judgments
Speaker 1: already against Google when it comes to search and ad tech.
Speaker 1: Where do those cases stand?
Speaker 4: Right?
Speaker 6: And finally, because if you think about it, these cases, well,
Speaker 6: at least one of them, the Google search case was
Speaker 6: brought during the first Strump administration, so it just shows
Speaker 6: how long it takes to get to an initial decision.
Speaker 6: So on the search case, you know, we're really at
Speaker 6: the tail end. Google lost on my ability. It was
Speaker 6: found to have a monopoly in search and to have
Speaker 6: abused that monopoly position. But the remedy decision was kind
Speaker 6: of I think largely viewed as a win for Google.
Speaker 6: It was pretty mild, you know, with the Department of
Speaker 6: Justice seeking to have Google force to divest Chrome. They
Speaker 6: did not win that. They won some what we call
Speaker 6: behavioral commitments from Google where it has to just change
Speaker 6: some of its conduct. But what the judge ordered was
Speaker 6: really much closer to what Google had offered up, you know,
Speaker 6: as an appropriate remedy than what the Department of Justice
Speaker 6: was seeking. The final touches are being put on that
Speaker 6: remedy right now as we speak. The framework is out,
Speaker 6: but you know, the actual sort of nitty gritty language
Speaker 6: the judge is working on, and I suspect that'll be
Speaker 6: out fairly soon in the next couple months, and once is,
Speaker 6: Google will probably appeal that case, even though as I said,
Speaker 6: it kind of came out pretty well for Google. I
Speaker 6: think they will appeal on the ad Tech case you
Speaker 6: mentioned now. There were just closing arguments on November seventeenth
Speaker 6: for an appropriate remedy in that case, because yes, liability
Speaker 6: was also found and that was about monopolizing these products
Speaker 6: that most of us as consumers don't really know about.
Speaker 6: But it's these digital products that Google owns that put
Speaker 6: advertisers and publishers together. So when you do a searcher,
Speaker 6: you go onto a website and these ads pop up.
Speaker 6: It's the products the software that put those ads in
Speaker 6: front of you when you were looking at that specific website.
Speaker 6: And here again the Department of Justice is seeking a
Speaker 6: structural remedy that is for Google to sell what's called
Speaker 6: its ad exchange. This is kind of the auction area
Speaker 6: where the publishers and advertisers come together and bid for
Speaker 6: space on a website and advertisers by that space. We
Speaker 6: also don't think it's our opinion after listening to the
Speaker 6: remedy hearings, that that's probably not going to happen either,
Speaker 6: that the remedy is more likely to be behavioral and
Speaker 6: about kind of Google unbundling its products right now. It
Speaker 6: sort of bundles everything it has together and forces publishers
Speaker 6: to use its products rather than rival products, and it'll
Speaker 6: this is unreally simplifying, so I'm really your technical market.
Speaker 6: But we think this will be behavioral too, and probably
Speaker 6: get a decision sometime in the first quarter.
Speaker 1: But it's interesting if it's seen that Google was kind
Speaker 1: of given a bit of a slap on the wrist
Speaker 1: when it comes to the search remedy, why would it
Speaker 1: go ahead and appeal that And is there a possibility
Speaker 1: that we could see, you know, something of a stronger
Speaker 1: remedy when it comes to ad tech.
Speaker 6: Well, I think the appeal is because you have a
Speaker 6: liability decision calling your company a monopolist, and it may
Speaker 6: be that the company would want to appeal that piece
Speaker 6: of it. You know, they don't want that opinion now
Speaker 6: out there, especially as we move into the world of AI,
Speaker 6: you know, which many think is going to kind of
Speaker 6: take over for search and general search engines. And Google
Speaker 6: wants the freedom to operate within that AI marketplace and
Speaker 6: may not want this decision out there, but you know,
Speaker 6: they did. It was really pretty good decision for them,
Speaker 6: and maybe they won't, but they have said that they
Speaker 6: are likely to on the ad Tech decision. You know,
Speaker 6: the thing is a harsher remedy than a behavioral remedy
Speaker 6: would be structural, and it's a real tall order to
Speaker 6: ask a judge to do something like that because it
Speaker 6: is complex. It's not a cautious decision. It's a decision
Speaker 6: that could easily get overturned on appeal, and that's not
Speaker 6: really what most federal judges want to do. They're more
Speaker 6: likely to go for something that they view as a
Speaker 6: safer route for a remedy that could withstand an appeal.
Speaker 1: Well, it's going to be interesting to see how these
Speaker 1: final remedies play out on the Google case is given
Speaker 1: what we saw, you know, just recently from the FTC's
Speaker 1: antitrust case against meta platforms. How big a loss was
Speaker 1: it for the FTC to have meta platforms declared not
Speaker 1: a monopoly.
Speaker 6: You know, I think it was a pretty big loss. Now.
Speaker 6: I'll say this case has been controversial since the beginning,
Speaker 6: and the judge has expressed skepticism of the FTC from
Speaker 6: the very beginning in this case. So it wasn't a surprise,
Speaker 6: but it is a loss because, you know, the FTC
Speaker 6: had some very strong evidence in this case. They had
Speaker 6: documents that were Mark Zuckerberg's words himself saying, hey, we'd
Speaker 6: rather buy our competitors than try to compete with them,
Speaker 6: and that is illegal under the antitrust laws. And this
Speaker 6: judge kind of skirted the need to explain away those
Speaker 6: bad documents by just saying, well, the Federal Trade Commission
Speaker 6: did not define a market in which competition takes place properly.
Speaker 6: The FTC said face Book competes with Instagram and Snapchat
Speaker 6: and that's it, and not TikTok or YouTube, and the
Speaker 6: judge just didn't buy it. And once you put TikTok
Speaker 6: and YouTube into that market, Facebook doesn't have in terms
Speaker 6: of market share, doesn't have a monopoly position. And it's
Speaker 6: the first thing you have to prove in monopolization case
Speaker 6: is that a defendant has a monopoly position in a
Speaker 6: properly defined market, and that's where the failure was. So
Speaker 6: the judge didn't get to that next step. Well what
Speaker 6: about all these bad documents? He just didn't go there.
Speaker 1: So do you see the Federal Trade Commission trying to
Speaker 1: appeal this case? Is it going to be more difficult
Speaker 1: given the parameters that the judge put on how he
Speaker 1: used meta market dominance.
Speaker 6: I think it would be a difficult appeal because the
Speaker 6: judge's decision was based on evidence and testimony and how
Speaker 6: he weighed the documents and how he weighed the testimony,
Speaker 6: and an appellate court gives deference to that kind of
Speaker 6: a decision. They didn't hear the testimony, so they give
Speaker 6: deference to the trial court judge. And I also tend
Speaker 6: to think the FTC may not appeal because when this
Speaker 6: case was brought, it was the tail end of Trump's
Speaker 6: first administration, when there were three Republicans and two Democrats
Speaker 6: on the FTC, and two of those Republicans sort of
Speaker 6: vehemently voted no in terms of bringing this case to
Speaker 6: begin with, So it was controversial. Only one Republican voted
Speaker 6: yes and two Democrats, and so three to two the
Speaker 6: case was brought. Now, we have only two Republicans on
Speaker 6: the Federal Trade Commission, and I think they're more likely
Speaker 6: to say, let's just chalk this up as a loss
Speaker 6: and move to our next case, which is ftcv. Amazon.
Speaker 1: Let's get to it ftcv Amazon and give what we've
Speaker 1: seen so far from the Google and Meta decisions, how
Speaker 1: could this one play out?
Speaker 6: Yeah, I don't think this is a very strong case
Speaker 6: for the Federal Trade Commission and therefore possibly possibly could settle.
Speaker 6: There's a lot of time. Trial is not set until
Speaker 6: twenty twenty seven in this case.
Speaker 1: Well, what's an issue here for Amazon?
Speaker 6: Well, this is about Amazon forcing third party sellers in
Speaker 6: the marketplace to use Amazon's fulfillment services if they want
Speaker 6: the good locations to be in the buybox, to be
Speaker 6: right there, front and center for buyers to buy, which
Speaker 6: is something that the sellers want. They get the users
Speaker 6: a lot more when they're in that position. And also
Speaker 6: Amazon forcing sellers to provide the lowest price on Amazon,
Speaker 6: so they can't offer a cheaper and less expensive price
Speaker 6: on some other website outside of Amazon, even if their
Speaker 6: costs are lower to offer on that other website, such
Speaker 6: as their own Dot Com and that causes a price
Speaker 6: raising effect across the entire market, not just on Amazon
Speaker 6: dot Com. These are the allegations, and the reason I
Speaker 6: think it could settle is because there were very similar
Speaker 6: claims made against Amazon in the UK and in the EU,
Speaker 6: and Amazon made concessions. It basically said that we're not
Speaker 6: going to force sellers to use our fulfillment services. They
Speaker 6: can use anyone they want to, and we won't co work.
Speaker 6: We won't force them to offer lower, lowest prices on Amazon,
Speaker 6: and we'll have to see how those play out in
Speaker 6: the marketplace, because if it looks like they've worked, I'm
Speaker 6: not sure why something like that wouldn't be acceptable in
Speaker 6: the US as well.
Speaker 4: Well.
Speaker 1: We have seen some pushback from the Trump administration on
Speaker 1: the European Union's tech regulations. How does that play into
Speaker 1: whether we could see a settlement, particularly for Amazon.
Speaker 6: You know, I don't know that the pushback on the
Speaker 6: EU with respect to its new laws, its Digital Markets Act,
Speaker 6: and how it's sort of targeting a lot of big
Speaker 6: US companies, I don't know that they really operate fairly separately.
Speaker 6: Our laws are different. Our monopolization laws are quite different
Speaker 6: from the abuse of a dominant position rules in Europe.
Speaker 6: And I think that the reason I think that the
Speaker 6: FTC could look to Europe is just to say, hey,
Speaker 6: they've had this settlement in place now for over a year,
Speaker 6: and if it isn't working in the marketplace, well then
Speaker 6: we shouldn't consider it an acceptable settlement. But if it
Speaker 6: is working, maybe that's something that we could accept here.
Speaker 6: But I think also the FTC is going to have
Speaker 6: to weigh out weigh its case. If it keeps taking losses,
Speaker 6: it's not going to look good because because they have
Speaker 6: also recently lost on a challenge to a merger as well.
Speaker 1: And even longer term, it's not just the Federal Trade
Speaker 1: Commission with antitrust cases against big tech. The Justice Department
Speaker 1: is considering action against Apple. What's going on there, Well.
Speaker 6: The Justice Department did bring a suit against Apple. It
Speaker 6: has moved really slowly, even in terms of typical antitrust litigation.
Speaker 6: It's not yet separate trial. Efforts to dismiss it have failed.
Speaker 6: But it's a strange case because it's really about Apple
Speaker 6: not making its hardware and software as interoperable as it
Speaker 6: should with rival hardware and software. And the DOJ claims
Speaker 6: that this is because Apple wants to keep people within
Speaker 6: its ecosystem make it harder for people who have an
Speaker 6: iPhone to switch to an Android phone. So, for instance,
Speaker 6: if you invest in an Apple Watch, you're going to
Speaker 6: keep that iPhone because the Apple Watch works best with
Speaker 6: the iPhone and it doesn't work well with an Android
Speaker 6: or vice versa. This one is really slow, so I
Speaker 6: think when you have that much time ahead of it,
Speaker 6: there also is some possibility for settlement. The other reason
Speaker 6: I think I do think that this is also a
Speaker 6: case that might settle down the road because Apple has
Speaker 6: slowly been making changes on its own and changing some
Speaker 6: of the policies that the Department of Justice has targeted
Speaker 6: as unreasonable or anti competitive. And eventually, if Apple keeps
Speaker 6: doing that, by the time we would get to a trial,
Speaker 6: there may not be in very many claims left. So
Speaker 6: it's possible if Apple keeps kind of making concessions and
Speaker 6: tweaking its rules as we go forward, that that case
Speaker 6: could also settle.
Speaker 1: Now, I wonder, just looking at the Trump administration's overall
Speaker 1: strategy when it comes to antitrust enforcement against big tech weather,
Speaker 1: it might be looking at settlements simply because as you've
Speaker 1: been mentioning it's been facing a lot of setbacks in
Speaker 1: court with the Meta matter as well as Google.
Speaker 6: Yeah, that's what I'm thinking. I mean, we'll have to
Speaker 6: see what happens with some of the if there are
Speaker 6: any more challenges to mergers. I'm not so sure that
Speaker 6: there will be, because it seems that this administration is
Speaker 6: settling an awful lot of the time when they have
Speaker 6: concerns about two companies that are doing a transaction. But
Speaker 6: if they do have concerns that they will lose in court,
Speaker 6: it sometimes you can read the tea leaves. Sometimes it
Speaker 6: judge is fairly obvious about how they're feeling about a
Speaker 6: certain matter. For instance, in FTCB Meta, the judge was
Speaker 6: clearly skeptical. As we go forward with those other two cases,
Speaker 6: the Amazon case and the Apple case. And by the way,
Speaker 6: we can't forget Department of Justice versus Live Nation, because
Speaker 6: that's coming to it may be that they'd be more
Speaker 6: inclined to settle.
Speaker 1: All right, Well, we'll see where things go as we
Speaker 1: head into twenty twenty six and beyond. Thank you for this, Jen,
Speaker 1: really great having you with us.
Speaker 6: Thank you so much.
Speaker 1: That's Jennifer Ree, Senior Litigation analyst for Bloomberg Intelligence. We'd
Speaker 1: also like to extend our thanks to her fellow Bloomberg
Speaker 1: Intelligence colleagues Punam Goyle, Lindsey Dutch, and Mike mcglohon for
Speaker 1: being with us on this holiday program, along with Scott
Speaker 1: Martin of Kingsview Wealth Management. Thanks of course to you
Speaker 1: as well for spending part of your Thanksgiving holiday with us.
Speaker 1: Here's hoping for a full and meaningful long weekend on
Speaker 1: Nathan Haker Stay with us. Top stories and global business
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