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US Payrolls Marked Down by Most Since 2009 in Prelim Data · Bloomberg Intelligence

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  Speaker 2: US payrolls marked down by most since two thousand and
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  Speaker 2: nine in preliminary data.
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  Speaker 3: It sounds important to me.
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  Speaker 2: Let's go to Ira Jersey. He's the bond guy. He
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  Speaker 2: covers yours an interest rate strategy for Bloomberg Intelligence. He's
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  Speaker 2: down and oh, I'm going to guess Princeton, New New Jersey.
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  Speaker 2: Why come to the world's financial market? God forbid?
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  Speaker 3: Hira.
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  Speaker 2: Thanks so much for joining us. You're the expert on
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  Speaker 2: this stuff. I love to talk to you about this
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  Speaker 2: US payroll data and about Jackson Hole. How are you
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  Speaker 2: kind of writing about this in your bi research.
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  Speaker 4: Yeah, the data I think Paul is was more or
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  Speaker 4: less what a lot of people that expect, did you know.
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  Speaker 5: Kudos to our colleagues.
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  Speaker 4: Over at Bloomberg Economics who saw a number very similar
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  Speaker 4: to this negative eight hundred and eighteen thousand for the revisions.
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  Speaker 5: Keep in mind this is old, this is going to
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  Speaker 5: be revised.
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  Speaker 4: Again, and also it's not information that's new, right, So
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  Speaker 4: if we think about all that this means is that, yes,
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  Speaker 4: the data was weaker in the economy was weaker between
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  Speaker 4: April of twenty twenty three and March of twenty twenty four.
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  Speaker 5: That doesn't necessarily tell us.
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  Speaker 4: Where we are now or where we're going over the
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  Speaker 4: next couple of a couple of quarters, but it does
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  Speaker 4: show that maybe things weren't quite as rosy as the
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  Speaker 4: preliminary data suggested.
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  Speaker 6: And Hira, I'm glad you brought that up because Paul
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  Speaker 6: and I were talking about a story I wrote ahead
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  Speaker 6: of that data, and it was just to that point
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  Speaker 6: where options traders weren't pricing at a big swing because
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  Speaker 6: they really saw this as backward looking, as basically a
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  Speaker 6: non event for the stock market when we're seeing the
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  Speaker 6: S and P five hundred still higher this morning. But
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  Speaker 6: when it comes to the bond side of things, that
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  Speaker 6: you focus on, what is speculative positioning telling us in
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  Speaker 6: the bond market? Ahead of speaking at Jackson Hole on Friday.
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  Speaker 5: Yeah, I don't think the positioning.
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  Speaker 4: The position really hasn't changed a whole ton over the
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  Speaker 4: last couple of months, and you know, speculators are still
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  Speaker 4: relatively you know, less short than they used to be,
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  Speaker 4: but there's still generally short rates. But that's because you know,
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  Speaker 4: real money investors are long, right, So for every long
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  Speaker 4: there's a short in futures positioning, so you have to
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  Speaker 4: keep that in mind. And a lot of those shorts
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  Speaker 4: are going to be against other things, right, so people
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  Speaker 4: are long credit or people who are trying to del
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  Speaker 4: to hedge options positions for example, So all of those
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  Speaker 4: things go into some of that futures positioning.
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  Speaker 5: So you can't take as.
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  Speaker 4: Much away from that one data set as you can
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  Speaker 4: from say, just the incoming data that we get, you know,
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  Speaker 4: in terms of Jackson Hole, you know, I think that
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  Speaker 4: one thing that this data that we received just a
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  Speaker 4: couple of minutes ago does suggest is that that the
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  Speaker 4: FED is more ammunition to cut interest rates. You know,
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  Speaker 4: people who are worried about them cutting twenty five or fifty,
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  Speaker 4: you know, the market kind of is now back in
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  Speaker 4: in terms of the first cut being maybe twenty five
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  Speaker 4: basis points, but this does give them some ammunition because
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  Speaker 4: they can say, oh, well, you know the economy is
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  Speaker 4: not as strong as we had thought, and because of that,
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  Speaker 4: you know, that gives us at least a little bit
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  Speaker 4: of comfort in the fact that we can slowly start
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  Speaker 4: to reduce the amount of monetary tightening that we've done.
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  Speaker 2: All right, Jackson Hole, Wyoming. Is it better for Truman J.
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  Speaker 2: Powe to just keep it short and sweet and just
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  Speaker 2: let things keep moving.
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  Speaker 4: Well, you know, it's yeah, that's that's a good question.
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  Speaker 4: You know, we get the minutes today at two o'clock,
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  Speaker 4: so I think that he's going to stick to almost
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  Speaker 4: whatever is said in the minutes.
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  Speaker 5: So I think it's gonna be very important to kind.
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  Speaker 4: Of read what a majority or most of the members
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  Speaker 4: of the Federal Reserve had said at the last meeting.
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  Speaker 4: But he I suspect that he is going to hint
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  Speaker 4: that the Federal Reserve is on a path the cutting
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  Speaker 4: interest rates. But he's going to remain and I think
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  Speaker 4: if you recall from his post meeting press conference, he
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  Speaker 4: still said like, look, you know, we haven't made any decisions.
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  Speaker 5: We're doing everything. But we're doing everything meeting to meeting.
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  Speaker 4: But when you look at a preponderance of the data,
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  Speaker 4: I know, the retail sales data last week was pretty decent,
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  Speaker 4: but a lot of the other data that we're getting
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  Speaker 4: is mixed to somewhat lower, and certainly today's employment data
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  Speaker 4: suggests that that, you know, things aren't as rosy as
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  Speaker 4: we had thought. And because of that, I think that
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  Speaker 4: he's going to hint that a cut is on the tape.
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  Speaker 6: Looking at the ten year treasury yield, creating just below
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  Speaker 6: three eighty what's the key levels when you're looking at
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  Speaker 6: the ten year or the two year right now?
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  Speaker 4: Yeah, so three seventy eight, so not too far from
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  Speaker 4: where we are right now is a reasonably important technical
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  Speaker 4: level on the ten year yield, and below that you're
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  Speaker 4: talking about somewhere in the three sixties kind of area.
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  Speaker 4: Three sixty four I think is the next big level. Interestingly,
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  Speaker 4: we've kind of over the last couple of weeks since
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  Speaker 4: I left on holiday, we've been in a more or
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  Speaker 4: lesser range. And because of that range, you've seen momentum
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  Speaker 4: indicators suggests that maybe we're going to stay in that
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  Speaker 4: range until we got something, you know, big that's gonna
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  Speaker 4: knock us out.
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  Speaker 2: It all right, Ira, thanks so much for joining us
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  Speaker 2: our Jersey. He's a chief US interest rate strategist for
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  Speaker 2: Bloomberg Intelligence.
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  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 2: I tell you one of the stocks today again really
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  Speaker 2: jumps out at you is Target. Our friends at Tarje
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  Speaker 2: put up a solid quarter here and the market loves it.
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  Speaker 2: Stocks up thirteen percent, which again for a retailer, that's
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  Speaker 2: right size to have that kind of a move in
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  Speaker 2: a stock really kind of jumps out at you.
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  Speaker 6: And another one I'd point out too TJX YEP up
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  Speaker 6: five percent, trading at an all time high, also on
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  Speaker 6: the back of strong results.
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  Speaker 2: Let's check in with an expert on this stuff, Jen Bartasha.
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  Speaker 2: She's Bloomberg Intelligence senior analyst. She covers all that retail stuff.
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  Speaker 2: I'm not really sure what's going on there, but she's
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  Speaker 2: the expert. So Jen, talk to us about Target. What
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  Speaker 2: are they doing right there?
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  Speaker 7: Good morning, thanks for having me. And with Target, what
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  Speaker 7: we're really seeing is that they sort of reaffirmed their
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  Speaker 7: strategy around creating newness reducing prices and enhancing the value
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  Speaker 7: perception they have with customers. And this second quarter results,
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  Speaker 7: we really see that that is starting to resonate, especially
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  Speaker 7: because they're seeing traffic going back into stores as well
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  Speaker 7: as online. So really, you know, positive early signs from
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  Speaker 7: Target that this momentum might be able to continue.
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  Speaker 6: What about when it comes to consumer package good companies,
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  Speaker 6: because you and I have talked in the past, and
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  Speaker 6: we know that Richmond FED President Tom Barkin watches a
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  Speaker 6: price to mix very closely, and that's a lot of
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  Speaker 6: the data that you crunch over at Bloomberg Intelligence as
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  Speaker 6: far as what that means for inflation and also the
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  Speaker 6: direction potentially for FED policy. What are you seeing on
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  Speaker 6: there as we begin to get more consumer package good
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  Speaker 6: companies reporting as well.
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  Speaker 7: Well. What we're seeing is obviously there's political pressure with
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  Speaker 7: a lot of rhetoric going on right now about the
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  Speaker 7: need to lower prices. We're seeing retailers like Walmart, like Target,
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  Speaker 7: like Krger, like Albertson's pushing back on package food companies.
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  Speaker 7: Who are you know, in some instances still looking to
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  Speaker 7: push through some selective price increases. So there is that
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  Speaker 7: tension that's happening kind of behind the scenes, but overall,
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  Speaker 7: we are seeing prices on the shelf starting to come down,
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  Speaker 7: and that spells relief for consumers. It's just a matter
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  Speaker 7: of how long it takes for them to actually recognize
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  Speaker 7: it and appreciate it and reward it with higher volumes
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  Speaker 7: that they're buying.
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  Speaker 3: What is or I.
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  Speaker 2: Guess, what's Target saying about the consumer? What are the
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  Speaker 2: other retailers that you talk to, Jenny, you follow, what
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  Speaker 2: are they saying about the consumer today? Because I'm I
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  Speaker 2: think as investors we kind of feel like we're getting
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  Speaker 2: mixed messages about the consumer.
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  Speaker 7: Yeah, I think when you're talking about the staple space,
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  Speaker 7: which is you know where these companies that I follow fall,
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  Speaker 7: it's that the consumer is not getting worse, they're not
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  Speaker 7: necessarily getting better, but they're sort of holding study. And
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  Speaker 7: you know, part of that is that we've had some
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  Speaker 7: consumers you kind of trade down into those middle tier
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  Speaker 7: stores or even to some of the discount stores in
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  Speaker 7: order to save a little bit of money. So the
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  Speaker 7: companies in this space are pretty well positioned because they
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  Speaker 7: do well no matter what the economic circumstances are, and
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  Speaker 7: I think that's showing through with the results. But they're saying,
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  Speaker 7: you know, consumers are spending, but it's still very thoughtfully
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  Speaker 7: and so the things that will attract them to spending
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  Speaker 7: is your merchandise mix, your newness, your convenience, the quality
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  Speaker 7: things that will then tempt them into into spending the
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  Speaker 7: dollars that they're managing very carefully.
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  Speaker 6: We only have about a minute left here, but you've
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  Speaker 6: talked a lot about how you're expecting more consumer packaged
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  Speaker 6: good companies to roll out promotions in the second half
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  Speaker 6: of the year, like buy one, get one free, buy one,
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  Speaker 6: get one fifty percent off. What are you seeing so
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  Speaker 6: far with that as far as what companies are saying
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  Speaker 6: on these earnings calls.
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  Speaker 7: Yeah, promotions have definitely accelerated, and we are back at
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  Speaker 7: sort of the levels that we were at before the pandemic.
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  Speaker 7: What's interesting is most of these companies say that they're
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  Speaker 7: able to be more precise so that it's not just
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  Speaker 7: a blanket offer like you used to see on the
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  Speaker 7: front of an insert or a mailer, but they're sort
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  Speaker 7: of targeting promotions to customers based on what they buy,
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  Speaker 7: so they're able to preserve a little bit of profitability
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  Speaker 7: and still offer higher discounts and so I think that's
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  Speaker 7: a pattern that we're expecting to continue through the second
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  Speaker 7: half and probably into twenty twenty five as well.
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  Speaker 2: A Jen, thanks so much for joining us, as I
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  Speaker 2: always really appreciate getting a few minutes of your time.
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  Speaker 2: Jen Bartashis, she's a senior analyst of Bloomberg Intelligence covering
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  Speaker 2: all the retail space, one of the real leaders on
• 9:33
  Speaker 2: Wall Street providing research analysis on.
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  Speaker 3: The retail space.
• 9:38
  Speaker 2: Talking about Tarje Today.
• 9:40
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: weekdays at ten am Eastern on Apple car Playing and
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  Speaker 1: Broud Auto with the Bloomberg Business app. Listen on demand
• 9:50
  Speaker 1: wherever you get your podcasts, or watch us live on YouTube.
• 9:56
  Speaker 2: Jess Meant sitting in for Alex Deale on Paul Sweeney.
• 9:58
  Speaker 2: You're live here in the Bloomberg Interact Broker Studio, streaming
• 10:01
  Speaker 2: live on YouTube as well. Jess, you know someplace I
• 10:03
  Speaker 2: really want to go that is way off the beaten trail,
• 10:06
  Speaker 2: and I probably couldn't even get anybody to go with me.
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  Speaker 3: Santa Fe, New Mexico.
• 10:09
  Speaker 6: Oh, I think very very cool, and he's finding people
• 10:14
  Speaker 6: from there, little Bloomberg Intelligence trip.
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  Speaker 2: Think so, But now I think I might have a reason.
• 10:19
  Speaker 2: Our next guest is from Santa Fe, so we'll go
• 10:21
  Speaker 2: out and visited our good friends at Thornberg Investment Management,
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  Speaker 2: Emily Level, she's a portfolio manager. How she ever got
• 10:28
  Speaker 2: to Santa Fe, New Mexico. I'm sure there's a story there, Emily.
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  Speaker 2: Thanks so much for joining us from Santa Fe, New Mexico.
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  Speaker 2: What do you make in of this market here, Emily?
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  Speaker 2: I mean, boy, we started two weeks ago Monday, a crazy,
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  Speaker 2: crazy day, a big sell off of the market. Maybe
• 10:43
  Speaker 2: some panic in the market, I guess, but boy, we
• 10:45
  Speaker 2: seem to have found our sea legs since then, What
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  Speaker 2: do you make of this market?
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  Speaker 8: It's it's been really interesting, hasn't it. I mean, yeah,
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  Speaker 8: two two and a half weeks ago, it felt like
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  Speaker 8: the bottom was falling out, and you know, we've really
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  Speaker 8: seen a recovery in the strength of the market in
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  Speaker 8: the last couple weeks in return of that momentum factor,
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  Speaker 8: you know, which I think is a really important indicator
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  Speaker 8: of you know, where the market goes from here, and
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  Speaker 8: and some pretty decent data as well. I mean, I
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  Speaker 8: remember part of that weakness was some of the data
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  Speaker 8: that came out, and then since then we've had, you know,
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  Speaker 8: pretty decent data on retail figures, some better data on
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  Speaker 8: jobs numbers, and I think now everyone's looking ahead to
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  Speaker 8: the FED and then obviously what's going to happen in September,
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  Speaker 8: and I think it's just really going to be data
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  Speaker 8: dependent from here.
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  Speaker 6: And we were just talking about Emily how some of
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  Speaker 6: that BLS data on the annual revisions through the year
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  Speaker 6: into through March were delayed. But if you look at this,
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  Speaker 6: US employment rose about one point three percent in the
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  Speaker 6: year through March of this year, BLS is saying as well.
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  Speaker 6: And then also I was looking at Goldman Sachs was
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  Speaker 6: talking about how the release so far points to a
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  Speaker 6: downward revision in the realm of about seventy thousand jobs
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  Speaker 6: per month. So waiting for that full release here, but
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  Speaker 6: wanted to pick your brain because this is obviously backward
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  Speaker 6: looking type data. Also Goldman Sacks, their economic desk, was
• 12:00
  Speaker 6: pointing out how when it comes to because they're looking
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  Speaker 6: at wages and claims data, so it won't include undocumented workers.
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  Speaker 6: So there's about potentially up to a million of them
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  Speaker 6: that wouldn't be included in this data. So when there's
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  Speaker 6: a lot of jitters about say the July slowdown in payrolls,
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  Speaker 6: which is obviously just one month of data. We haven't
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  Speaker 6: seen a trend yet, and looking at how the market's
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  Speaker 6: reacting s and P five hundred is still hired, it
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  Speaker 6: seems like options market wasn't really pricing in a big
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  Speaker 6: move here. So what's your kind of view here when
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  Speaker 6: you're looking at obviously more backward looking data and does
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  Speaker 6: really shape anything? And how much does it really tell
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  Speaker 6: us about the labor market?
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  Speaker 8: Well, I think, you know, from memory, seventy thousand a
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  Speaker 8: monthly revision of about seventy thousand jobs is a little
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  Speaker 8: bit on the lower end of or sorry, on the
• 12:41
  Speaker 8: higher end of what the market was expecting. I had
• 12:43
  Speaker 8: in my mind something between thirty and fifty thousand, you know,
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  Speaker 8: based on some of the estimates from the cell side.
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  Speaker 8: So a little bit weaker, I think, and you know,
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  Speaker 8: probably one of the larger revisions we've had in the
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  Speaker 8: last decade. So, you know, we definitely think that we're
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  Speaker 8: in the later stages of an economic slowdown. I think
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  Speaker 8: this data probably confirms that, you know, we're seeing employment
• 13:04
  Speaker 8: growth slow in the US. I think that's normal considering
• 13:08
  Speaker 8: the big moves in rates that we've had over the
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  Speaker 8: last two and a half years. I think it's unrealistic
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  Speaker 8: that you go from zero percent to five and a
• 13:16
  Speaker 8: half percent rates without any changes in the labor market
• 13:20
  Speaker 8: and you know, sort of aggregate demand figures. So I
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  Speaker 8: think it's reasonable. I think we're in the later stages
• 13:25
  Speaker 8: of a cycle. We see that in some of the
• 13:28
  Speaker 8: mixed consumer data that's coming out as well. I don't
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  Speaker 8: know that it's going to change anything about, you know,
• 13:34
  Speaker 8: how the FED acts. I think they have to thread
• 13:36
  Speaker 8: this needle between you know, being proactive and data dependent
• 13:41
  Speaker 8: but not seeming to panic. And so I think it
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  Speaker 8: probably you know, we still get twenty five basis points
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  Speaker 8: of cuts in September. Probably we get a couple more
• 13:50
  Speaker 8: through the end of the year. But I don't know
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  Speaker 8: that this data really changes dramatically what Powell is going
• 13:56
  Speaker 8: to say on Friday.
• 13:58
  Speaker 2: Emily, you are the portfolio manager of the Thornburg International
• 14:02
  Speaker 2: Growth Fund. Where do you guys erect internationally? Where do
• 14:05
  Speaker 2: you see opportunities outside of Santa.
• 14:08
  Speaker 8: Fe Well, well, it's so introgused. You say that we're
• 14:12
  Speaker 8: almost international here. We used to be part of Mexico,
• 14:16
  Speaker 8: but one of the things that that we've noticed in
• 14:21
  Speaker 8: the selloff is, you know, while the SMP is just
• 14:23
  Speaker 8: a touch off of all time highs, international markets haven't
• 14:28
  Speaker 8: recovered quite as significantly from the selloffs. So the Nike,
• 14:32
  Speaker 8: you know, still off about ten percent from its all
• 14:34
  Speaker 8: time highs. Some of the markets in Europe as well,
• 14:37
  Speaker 8: and as growth investors were really focused on finding the
• 14:40
  Speaker 8: opportunities that are going to be able to grow earning's
• 14:43
  Speaker 8: power throughout an economic cycle. So we actually see some
• 14:46
  Speaker 8: pretty interesting opportunities that have been provided to us by
• 14:50
  Speaker 8: the recent volatility. So we still like the AI theme.
• 14:53
  Speaker 8: We get a ton of exposure and high quality businesses
• 14:56
  Speaker 8: that are key to this infrastructure build out outside of
• 15:00
  Speaker 8: the United States, so companies like ASML in the Netherlands,
• 15:04
  Speaker 8: like Disco in Japan, there are a number of these
• 15:08
  Speaker 8: semi cop TSMC as well in Taiwan. You know, these
• 15:12
  Speaker 8: semiconductor and semicap equipment companies are core to this build out.
• 15:16
  Speaker 8: Another area that we really like and where we see
• 15:18
  Speaker 8: some strong long term winners in international markets is in
• 15:21
  Speaker 8: the healthcare space. So we have Novo Nordisk, we have Astrozenica.
• 15:25
  Speaker 8: You know, these are really best in class high quality
• 15:28
  Speaker 8: businesses that are now trading you know, well off their
• 15:31
  Speaker 8: their all time highs, particularly in the tech space. And
• 15:34
  Speaker 8: then the other thing that's kind of interesting about what's
• 15:36
  Speaker 8: what we've seen in the last few weeks with you know,
• 15:38
  Speaker 8: the recent moves and the pricing and at the FED
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  Speaker 8: cut is a weakening of the US dollar. And what
• 15:42
  Speaker 8: we like to tell our clients, especially as international investors,
• 15:45
  Speaker 8: as you know, you really might want to think about
• 15:47
  Speaker 8: diversification outside of the US. The MAG seven has dominated, obviously,
• 15:52
  Speaker 8: you know, in everybody's minds, and MAG seven's up thirty
• 15:55
  Speaker 8: eight forty percent year to date. But we've got companies
• 15:58
  Speaker 8: outside of the US investors diversification that are up even
• 16:02
  Speaker 8: more than the MAG seven this year. We affectionately dub
• 16:06
  Speaker 8: two companies in Latin America New and Melli the MAG
• 16:09
  Speaker 8: two of Latin America, and they're up a combined fifty
• 16:12
  Speaker 8: one percent in US dollar terms here today.
• 16:14
  Speaker 6: And you were mentioning the s and P five hundred
• 16:16
  Speaker 6: being a whisker away from that all time high if
• 16:18
  Speaker 6: you look great right now, Paul, the SMP's about nine
• 16:21
  Speaker 6: tenths of away from that July sixteenth closing high after
• 16:25
  Speaker 6: falling as much as eight and a half percent after
• 16:26
  Speaker 6: that drawdown, and we sell earlier this month. Suddenly I'm
• 16:29
  Speaker 6: curious because I know you were mentioning how you were
• 16:31
  Speaker 6: managing this growth fund. What are you advising clients to buy?
• 16:35
  Speaker 6: What are you basically suggesting them to sell after we
• 16:39
  Speaker 6: saw such a big drawdown but then a huge bounce back.
• 16:43
  Speaker 8: Yeah, you know, it's been it's been a wild ride.
• 16:45
  Speaker 8: As as we were commenting at the beginning of the show,
• 16:48
  Speaker 8: we really focus on building a diversified portfolio. So we
• 16:52
  Speaker 8: talk about, you know, diversifying those sources of growth, and
• 16:55
  Speaker 8: definitely what we're looking for right now are what are
• 16:57
  Speaker 8: the businesses that can grow earning's power regardless of what's
• 17:00
  Speaker 8: happening with GDP. So we talked a little bit about
• 17:03
  Speaker 8: AI and that copex build out. We think that's going
• 17:06
  Speaker 8: to be pretty resilient and insulated, not totally immune, but
• 17:09
  Speaker 8: pretty insulated from you know, what's going on in the
• 17:12
  Speaker 8: broader macroeconomy. We also think healthcare and some specific areas
• 17:16
  Speaker 8: of healthcare. So you know, we're big holders of Nobonordisk.
• 17:19
  Speaker 8: We think GLP ones have a tremendous runway for growth.
• 17:23
  Speaker 8: There are almost a billion people suffering from obesity today,
• 17:27
  Speaker 8: and when you look at the number of people that
• 17:29
  Speaker 8: have been treated by GLP ones for obesity at this point,
• 17:32
  Speaker 8: we're in the tens of millions. So you know that's
• 17:34
  Speaker 8: going to grow. That demand is going to grow regardless
• 17:36
  Speaker 8: of GDP. Another area that we really like within healthcare
• 17:40
  Speaker 8: is ocular health cataract surgery. A company Alcon that just
• 17:43
  Speaker 8: reported yesterday. You know, they're the leaders in cataract surgery
• 17:46
  Speaker 8: and contact lenses globally, and again, demand for cataract surgery
• 17:51
  Speaker 8: that just grows with an aging population. So inasmuch as
• 17:54
  Speaker 8: investors can get diversification of growth and earnings power that
• 17:58
  Speaker 8: is dependent not on on GDP, we think that that
• 18:02
  Speaker 8: is sort of a wise area to be focusing on
• 18:04
  Speaker 8: at all times, but particularly now when you know there's
• 18:07
  Speaker 8: a lot of mixed messages. I mean, we were talking
• 18:09
  Speaker 8: earlier about the consumer in the United States. You've had
• 18:12
  Speaker 8: pretty mixed data from companies in the consumer space in general,
• 18:16
  Speaker 8: I think pointing to a consumer trading down looking for
• 18:19
  Speaker 8: value for money, and so you know, we're really being
• 18:22
  Speaker 8: cautious in the consumer space and focusing on those areas
• 18:24
  Speaker 8: of growth where we find businesses that can continue to
• 18:27
  Speaker 8: go their earnings power through a cycle.
• 18:29
  Speaker 2: Hey, Emily, thanks so much for joining us. Really appreciate
• 18:31
  Speaker 2: getting your thoughts this morning.
• 18:32
  Speaker 3: Emily Levelle.
• 18:33
  Speaker 2: She's a portfolio manager Thornburg Investment Management, joining us from
• 18:38
  Speaker 2: Santa Fe, New Mexico.
• 18:39
  Speaker 3: I'm putting that on the bucket list. I'm going there,
• 18:41
  Speaker 3: let's do it. I'm going to add, really, it looks cool.
• 18:43
  Speaker 3: I was while you were talking to Emily.
• 18:45
  Speaker 2: I was googling all through about Santa Fe, New Mexic what,
• 18:48
  Speaker 2: not paying attention at all.
• 18:49
  Speaker 3: It looks very very cool out there in the desert.
• 18:52
  Speaker 3: It's got a big arts community and so on.
• 18:54
  Speaker 9: But wait till it gets a little bit cooler.
• 18:56
  Speaker 2: Maybe yes, because it is in the middle of the desert,
• 19:00
  Speaker 2: it seems like a pretty cool place to be. And
• 19:02
  Speaker 2: I don't know any money management firms out there other
• 19:04
  Speaker 2: than Thornburg Investment Management. I know there probably are, but
• 19:08
  Speaker 2: that's the reason enough itself to go check it out.
• 19:12
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 19:16
  Speaker 1: weekdays at ten am Eastern on applecar Play and Android
• 19:19
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• 19:22
  Speaker 1: live on Amazon Alexa from our flagship New York station,
• 19:26
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• 19:31
  Speaker 2: Let's get back to those earnings coming out of the retailers, Macy's, TJX, Tarja,
• 19:35
  Speaker 2: a whole bunch of stuff coming out there.
• 19:37
  Speaker 3: Mary Ross Gilbert she joined us.
• 19:38
  Speaker 2: She's a senior analyst for Bloomberg Intelligence covering retail. She's
• 19:42
  Speaker 2: based in Los Angeles. So Mary's let's start with Macy's here.
• 19:47
  Speaker 2: It just seems like, you know, maybe one or two
• 19:50
  Speaker 2: steps forward, one step back. What'd you take away from
• 19:52
  Speaker 2: Macy's earnings here?
• 19:54
  Speaker 10: Yeah, So, as with any turnaround, and here we are
• 19:58
  Speaker 10: in another iteration of trying to get growth back for this.
• 20:03
  Speaker 10: It's the largest department store, Macy's. They did show traction
• 20:07
  Speaker 10: in the first fifty stores. The comps were up one percent,
• 20:11
  Speaker 10: and that was an improvement from the first quarter, which
• 20:13
  Speaker 10: was up just less than one percent. But the fact
• 20:16
  Speaker 10: is that the rest of the go forward stores were
• 20:19
  Speaker 10: down three point seven percent. This is on a comparable
• 20:23
  Speaker 10: basis and its owned plus license, so it includes license
• 20:26
  Speaker 10: brands that they'll have, you know, within the mix there.
• 20:29
  Speaker 10: So they're showing traction in those little stores. But with
• 20:33
  Speaker 10: the rest of the base, you know, being very weak
• 20:36
  Speaker 10: and as they pointed out, they weren't really getting the conversion.
• 20:39
  Speaker 10: What they're finding is you bring in sales people. Wow,
• 20:43
  Speaker 10: that's really what if you think about department stores and
• 20:47
  Speaker 10: where they came from, that's what they were known for
• 20:50
  Speaker 10: in the past was service. But over the last couple
• 20:53
  Speaker 10: of decades, the service and the salespeople have sort of
• 20:56
  Speaker 10: left the stores. Now they're finding if they bring them
• 20:59
  Speaker 10: back and they bring back the relevant brands, because one
• 21:03
  Speaker 10: of the things that Tony Spring, CEO of the company,
• 21:06
  Speaker 10: indicated is having newness and having the relevant brands that
• 21:10
  Speaker 10: consumers care about. That's where you can get the impulse purchases.
• 21:15
  Speaker 10: And so they're finding bringing in like a Carl wager
• 21:18
  Speaker 10: Field or a Veclove Fee, which is it's like a Parisian,
• 21:25
  Speaker 10: a chic Parisian type brand. It's a US brand, but
• 21:29
  Speaker 10: it has that Paris streetwear aesthetic and that's resonating really
• 21:34
  Speaker 10: well and they're getting very strong conversion.
• 21:36
  Speaker 9: So bringing back.
• 21:37
  Speaker 10: Service levels, bringing back the relative relevant, relevant brands is
• 21:41
  Speaker 10: really making a difference in those fifty stores. So they're
• 21:45
  Speaker 10: going to add another one hundred stores where they're going
• 21:47
  Speaker 10: to bring in service and handbags. They did see some
• 21:50
  Speaker 10: strong sales with handbags again in those stores with the
• 21:52
  Speaker 10: Lauren Ralph Lauren brand. So that's where I think you're
• 21:58
  Speaker 10: going to see some improvements. Is just really better signage,
• 22:03
  Speaker 10: cleaner stores. We've been seeing those improvements in the store
• 22:06
  Speaker 10: that we frequent.
• 22:08
  Speaker 9: They just need to take it across the rest of
• 22:10
  Speaker 9: the base.
• 22:11
  Speaker 6: And it seems like an about face because justin May,
• 22:14
  Speaker 6: when we had heard from Macy's previously, in their prior
• 22:17
  Speaker 6: earnings report, they had beat estimates also raised the company's
• 22:21
  Speaker 6: outlook for the remainder of the year. But as you know,
• 22:22
  Speaker 6: this leadist report comes on the heels of the company
• 22:26
  Speaker 6: turning down that close to seven billion dollars buyout to
• 22:28
  Speaker 6: offer from one of its shareholders, our Coals and of
• 22:31
  Speaker 6: course it's partner Bridgegade Capital Management. Do we have any
• 22:33
  Speaker 6: indication of whether or not that could be back on
• 22:36
  Speaker 6: the table at some point.
• 22:39
  Speaker 9: I don't know if that'll be back on the table.
• 22:42
  Speaker 10: I really think that they weren't able to demonstrate financing.
• 22:47
  Speaker 10: I think that was the problem with that, and I
• 22:50
  Speaker 10: also think that the price was low because even though
• 22:52
  Speaker 10: Macy's is showing very weak results right now, and the
• 22:56
  Speaker 10: market is showing investors don't really like what they're seeing
• 22:59
  Speaker 10: in the court. It's one quarter and it's going to
• 23:03
  Speaker 10: take time before we see real traction.
• 23:05
  Speaker 9: So a year from now the story could.
• 23:07
  Speaker 10: Look very different if they're really able to execute on
• 23:11
  Speaker 10: this plan closing the stores. They haven't closed the stores yet.
• 23:14
  Speaker 10: They're going to close the first fifty five. It was
• 23:17
  Speaker 10: going to be fifty. They up to another five stores
• 23:21
  Speaker 10: are going to close at the end of the year.
• 23:23
  Speaker 10: They always wait until after the holidays because that's when
• 23:26
  Speaker 10: they generate the most cash. And then of course they're
• 23:28
  Speaker 10: going to close another one hundred stores over the next
• 23:31
  Speaker 10: couple of years.
• 23:32
  Speaker 9: But again they might accelerate that, so it's going to
• 23:35
  Speaker 9: take time to show traction.
• 23:37
  Speaker 10: So we'll see how the third quarter and fourth quorder go,
• 23:40
  Speaker 10: especially with some of the changes that they're making to
• 23:42
  Speaker 10: these incremental stores. But nonetheless, you can see who's gaining,
• 23:46
  Speaker 10: and it's on the off price side. That's where, of course,
• 23:49
  Speaker 10: we have TGX numbers out today and of course they beat.
• 23:54
  Speaker 2: Yeah, let's go to t TJX, owner of TJ max.
• 23:56
  Speaker 2: Stock's hit an all time high today.
• 23:59
  Speaker 3: What's TJX. What are they getting right?
• 24:02
  Speaker 9: What they're getting right is they have all those brands.
• 24:04
  Speaker 9: They have the Treasure Hunt.
• 24:05
  Speaker 10: There's fresh merchandise in those stores every week, and the
• 24:10
  Speaker 10: brands range from the very high end, so they'll have
• 24:14
  Speaker 10: Gucci and Chloe handbags, and then they'll also have like
• 24:18
  Speaker 10: a Klin. So they're sort of covering all of the
• 24:21
  Speaker 10: demographics with their assortments and they're making it relevant by store.
• 24:27
  Speaker 7: They have.
• 24:29
  Speaker 9: They have the winning formula.
• 24:31
  Speaker 10: This is an expertise that they have built up for
• 24:33
  Speaker 10: years and they're the largest out there.
• 24:35
  Speaker 9: It's a fifty six billion dollars in sales company.
• 24:39
  Speaker 10: And so in their quarter, of course, they beat with
• 24:42
  Speaker 10: four percent comp sales and the consensus with two point
• 24:45
  Speaker 10: seven and guidance two point you know, sort of in
• 24:48
  Speaker 10: that one to two percent or low single digit range,
• 24:51
  Speaker 10: and of course they raise their guidance. They're now expecting
• 24:54
  Speaker 10: comp sales to be sort of in that three to
• 24:56
  Speaker 10: four percent range, and they raise their EPs by about six.
• 25:00
  Speaker 8: Yes.
• 25:00
  Speaker 2: Interest, Yeah, really solid results, all time high for the stock.
• 25:04
  Speaker 2: As you mentioned, Mary, that really got it right. Mary
• 25:06
  Speaker 2: Ross Gilbert, thank you so much for joining us. Mary
• 25:09
  Speaker 2: Ross Gilbert is a senior ecuady analyst. He covers retail
• 25:11
  Speaker 2: for Bloomberg. Intelligency is located in Los Angeles, California, joining
• 25:15
  Speaker 2: us via that zoom thing.
• 25:17
  Speaker 3: So good news for TJX. Not so much for Macy's.
• 25:21
  Speaker 6: No still on pace. It holds these losses, worst day
• 25:24
  Speaker 6: in about a year.
• 25:25
  Speaker 3: Okay, very good, we'll keep on top of that.
• 25:28
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 25:32
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• 25:36
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• 25:39
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• 25:42
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• 25:47
  Speaker 2: Jess Mention, She's sitting in for Alex steel On Paul Sweey.
• 25:49
  Speaker 2: We're live here in our Bloomberg Interactive Brokers studio or streaming.
• 25:52
  Speaker 3: Live on YouTube. So head over to YouTube dot com.
• 25:54
  Speaker 2: And search Bloomberg Podcast and that's where you will find us. Boy,
• 25:58
  Speaker 2: the auto industry is pulling back big time from the
• 26:02
  Speaker 2: s the EV business. I mean the latest news today,
• 26:05
  Speaker 2: Ford Motor Company scraps electric suv and a one point
• 26:10
  Speaker 2: nine billion dollar hit to its EV ambitions, canceling the
• 26:14
  Speaker 2: fully electric three row utility vehicle Spending on EV's will
• 26:18
  Speaker 2: drop to about thirty percent of CAPEX from forty percent.
• 26:20
  Speaker 2: Steve Man joins is here. He's the global autos analyst
• 26:23
  Speaker 2: for Bloomberg Intelligence. He's done in Princeton, New Jersey. Steve,
• 26:27
  Speaker 2: what's going on with the legacy auto companies and their
• 26:31
  Speaker 2: transition if there is one to EV's, what's going on?
• 26:36
  Speaker 11: Yeah, it's a huge kind of one eighty turn for Ford. Remember,
• 26:41
  Speaker 11: you know, they were probably one of the first Western
• 26:44
  Speaker 11: automakers to actually introduce evs. You're the Mustang mach Ee,
• 26:49
  Speaker 11: the Ford one fifty Lightning and you know they're still
• 26:52
  Speaker 11: selling well. But I think it's they're actually bleeding quite
• 26:55
  Speaker 11: a bit of money in the last twelve months. They've
• 26:58
  Speaker 11: lost five billion on ev So, you know, I think,
• 27:03
  Speaker 11: you know, they need to revisit and see, uh, instead
• 27:05
  Speaker 11: of a market leader in evs, they probably needs to,
• 27:09
  Speaker 11: you know, step back and maybe become a follower until
• 27:12
  Speaker 11: the market recovers.
• 27:13
  Speaker 6: And just looking at it stock Paul and I were
• 27:15
  Speaker 6: talking about this earlier. The taker symbol is f for Ford.
• 27:19
  Speaker 6: When you see the draw down that it had from
• 27:22
  Speaker 6: that peak that we did see earlier, in July dropped
• 27:24
  Speaker 6: as much as actually thirty three percent. Now it's about
• 27:27
  Speaker 6: still ways from that peak that we did see. But
• 27:30
  Speaker 6: what is it that shareholders really need to hear in
• 27:33
  Speaker 6: the messaging from Ford in order to turn that stock around.
• 27:37
  Speaker 11: Yeah, a couple things. So, you know, today the stock
• 27:42
  Speaker 11: is really not reacting to to this news. You know,
• 27:47
  Speaker 11: I think what the investors are looking for is really
• 27:50
  Speaker 11: similar to what GM and Stillentis has done, which is
• 27:54
  Speaker 11: buy backstock. You know, they want to hear that they're
• 27:57
  Speaker 11: you know, they're gonna you know, spend, use the cash,
• 28:01
  Speaker 11: use some of that cash that they're conserving from cutting
• 28:04
  Speaker 11: back R and D, and buy back some stock, return
• 28:07
  Speaker 11: some to the shareholder. So, you know, I think that's
• 28:11
  Speaker 11: why the stock hasn't moved that much today in reaction
• 28:15
  Speaker 11: to this news.
• 28:16
  Speaker 2: All Right, Steve, this kind of goes to the heart
• 28:18
  Speaker 2: of the matter. I think for me and probably a
• 28:21
  Speaker 2: lot of investors in this auto industry is what really,
• 28:26
  Speaker 2: at the end of the day, is consumer demand for evs.
• 28:30
  Speaker 2: Is it fair to say it's not as much today
• 28:33
  Speaker 2: as maybe the industry thought two three years ago.
• 28:37
  Speaker 11: Yeah, I think the estimates out there in the past
• 28:40
  Speaker 11: were probably a little bit frothy, like we're actually expecting,
• 28:44
  Speaker 11: you know, penetration to be around twenty five maybe thirty
• 28:48
  Speaker 11: percent by twenty thirty, but other estimates out there were
• 28:52
  Speaker 11: like fifty seventy five percent penetration rate by twenty thirty.
• 28:57
  Speaker 11: It's a little bit too aggressive. I think we're just
• 28:59
  Speaker 11: coming back through reality from the hype we have. But
• 29:03
  Speaker 11: the other thing is there's a lot of competition out
• 29:06
  Speaker 11: there right. The Chinese are really looking to you know,
• 29:10
  Speaker 11: compete with the legacy auto makers on cost, on technology,
• 29:16
  Speaker 11: and you know, that brings up another question that I
• 29:19
  Speaker 11: think investors have in their mind is, you know, is
• 29:22
  Speaker 11: this the right strategy for Ford really to step back
• 29:25
  Speaker 11: at this moment? Should they Should they be doubling down right,
• 29:28
  Speaker 11: investing more and really compete on a global level. So,
• 29:33
  Speaker 11: you know, so hopefully that answers questions and.
• 29:36
  Speaker 6: You've written about too when it comes to Ford and
• 29:39
  Speaker 6: the rising inventories as well as the increasing price competition
• 29:43
  Speaker 6: when it comes to a profitability headwind here, what as
• 29:47
  Speaker 6: we know as far as what the rest of the
• 29:48
  Speaker 6: year could look like when it comes to those earnings
• 29:51
  Speaker 6: calls that executives have talked about.
• 29:53
  Speaker 11: Oh, there's a lot of risk in the second half.
• 29:56
  Speaker 11: I think we're heading back to pre COVID levels, you know,
• 30:00
  Speaker 11: with the supply chains, booths out, you know, every you know,
• 30:05
  Speaker 11: they're they're they're ramping up, they've been ramping up production.
• 30:08
  Speaker 11: And at the same time, interest rate is still high. Right,
• 30:10
  Speaker 11: there are talks about cutting interest rates to help out
• 30:14
  Speaker 11: the consumers, but you know, we haven't seen that yet,
• 30:17
  Speaker 11: and you know we you know, it probably needs more
• 30:19
  Speaker 11: than a few a couple of cuts before we get
• 30:22
  Speaker 11: to a point where consumer gets more excited about buying.
• 30:25
  Speaker 11: You know, a much more expensive vehicle today than it
• 30:29
  Speaker 11: was three years ago. You know, average price for vehicles
• 30:32
  Speaker 11: fifty thousand dollars now is not thirty five, it's not forty,
• 30:35
  Speaker 11: it's fifty thousand. So you know, monthly cost is a
• 30:38
  Speaker 11: lot higher for consumer, the cost of acquisition, the cost
• 30:42
  Speaker 11: of ownership is much higher today than before.
• 30:44
  Speaker 3: All right, Steve Man, thanks so much for joining us.
• 30:46
  Speaker 3: Really appreciate it.
• 30:47
  Speaker 2: Steve Man, Global autos analyst for Bloomberg Intelligence. He's done
• 30:50
  Speaker 2: at Prince in New Jersey. Appreciate getting a few minutes
• 30:52
  Speaker 2: of his time. They're on forward kind of backing away
• 30:55
  Speaker 2: to some degree, from its ev ambitions.
• 30:57
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• 31:02
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