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A US Recession and Retail Report · Bloomberg Intelligence

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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 2: Chris Campbell joins us. He's a Chief Strategisticcroll. He joins
0:58
Speaker 2: us here on a Bloomberg Interactive Broker studio. Chris, what
1:01
Speaker 2: are you telling clients here these days? I mean we've
1:02
Speaker 2: had this you know, rally here in November, and I
1:06
Speaker 2: guess it's in part due to I guess a lot
1:08
Speaker 2: of investors are probably like me, saying, boy, if I'm
1:10
Speaker 2: at peak rates, don't I take on some risks here
1:12
Speaker 2: with my portfolio?
1:14
Speaker 3: Yeah.
1:14
Speaker 4: Look, I think that's it's highly likely that we've probably
1:16
Speaker 4: seen that the the top of the rate interest rate raise.
1:20
Speaker 4: But I kind of concerned myself more of a pessimistic
1:24
Speaker 4: optimist right now, which means I think we're going to
1:27
Speaker 4: be some We're going to go some difficult times. But
1:29
Speaker 4: on the other side of this, it's going to be
1:32
Speaker 4: quite significant. There's you know, trillions of dollars you know,
1:34
Speaker 4: out there in the park and the in the sidelines,
1:37
Speaker 4: with the with the funds and families that we advise,
1:40
Speaker 4: and I think they're looking.
1:41
Speaker 5: For this correction.
1:42
Speaker 4: I think that on the opposite of the correction will
1:44
Speaker 4: be just an enormous amount of money flooding the capital market,
1:46
Speaker 4: flooding the markets, and emerging acquisitions and lots of other
1:49
Speaker 4: things that are goodness will happen.
1:51
Speaker 5: I think probably late next year or earlier the year after.
1:53
Speaker 1: Remember, Paul, you want to buy low, yes, to sell high?
1:58
Speaker 6: Right, buy them and hold them.
1:59
Speaker 1: You like to buy high and hold.
2:00
Speaker 6: I just buy buy the.
2:02
Speaker 2: Mo Yeah, mentum, Well, I mean you can catch on
2:05
Speaker 2: the wrong side of that rush so many times, trying
2:07
Speaker 2: to catch the falling knife.
2:08
Speaker 1: That's a good point. What do you think about that?
2:11
Speaker 5: Yeah, you know, it's probably a good idea to buy
2:14
Speaker 5: low so high typically it's good. It's good good advice.
2:18
Speaker 1: I so you could have caught the falling knife with
2:21
Speaker 1: treasuries at five percent. We were like freaking out. Yes,
2:25
Speaker 1: in this studio.
2:26
Speaker 6: Right's a good point.
2:27
Speaker 2: I mean, right across the curve, we had fives everywhere
2:29
Speaker 2: at seventy two dollars on a barrel of oil.
2:31
Speaker 1: We're freaking out.
2:32
Speaker 6: I had to buy some oil here.
2:33
Speaker 2: Another thing, but I mean Lisa Browma is sitting with
2:35
Speaker 2: a big barrel of oil in her apartment and you
2:37
Speaker 2: got it for negative forty bucks. Negative forty bucks. All right,
2:40
Speaker 2: so we're in the market. Are you looking these days here?
2:45
Speaker 2: I mean, because it seems like do I stick with
2:47
Speaker 2: the magnificent seven that have worked so well? Do I
2:50
Speaker 2: try to find some of the laggards?
2:52
Speaker 6: How are you thinking about it?
2:53
Speaker 4: I think actually you can start diversifying it again, if
2:55
Speaker 4: we're going to see if we're seeing peak or eights,
2:57
Speaker 4: like I do think we're going to be higher for longer.
2:59
Speaker 4: I think that the Fed Reserve is going to try
3:00
Speaker 4: to avoid becoming a rate lowering interest rates next year,
3:03
Speaker 4: and a little bit of a contrarian in this in
3:06
Speaker 4: this regard because I believe that there's you know, it
3:08
Speaker 4: just becomes really political the Federal Reserve. I think that
3:10
Speaker 4: actually the chairman actually has an enormous and out out
3:14
Speaker 4: sized influence in the twenty four four elections because I
3:17
Speaker 4: think it's mostly it's going to be the economy, and
3:21
Speaker 4: so you know, I can think that he'll just be
3:22
Speaker 4: very careful and be cautious about that, and so I
3:24
Speaker 4: think that we're going to be we're in for a
3:26
Speaker 4: tight thout, probably not all in next year. Sob Dan,
3:30
Speaker 4: I think like this this is the time to long
3:31
Speaker 4: the market absolutely and diversify.
3:34
Speaker 1: You were, by the way, a former assistant secretary for
3:37
Speaker 1: the US Treasury Department. You have interacted with Jerome Powell
3:42
Speaker 1: on a wide variety of topics. But I wonder what
3:46
Speaker 1: your thoughts are on the on the Druck and Miller
3:50
Speaker 1: Yellen spat. I mean, could we really have sold much
3:56
Speaker 1: longer maturities at much lower rates. Should we have done that?
4:01
Speaker 7: Yeah?
4:01
Speaker 4: I think there's as in every argument, there's two sides
4:04
Speaker 4: of it.
4:04
Speaker 1: Of course, and also hindsight is twenty twenty. I get
4:07
Speaker 1: that fully.
4:08
Speaker 4: So like I, I try not to look back at
4:10
Speaker 4: my former colleagues and with you know, and try to
4:13
Speaker 4: second guess what they've did. It's it's very difficult. Those
4:16
Speaker 4: jobs are extremely difficult and they're very hard to you know.
4:18
Speaker 5: So there's there. You get pressure from everywhere.
4:21
Speaker 1: All right, So let me ask you this in terms
4:23
Speaker 1: of the FED. For a while, there is this thought
4:27
Speaker 1: that Jerome Powell would do anything not to become another
4:32
Speaker 1: Arthur Burns. That is, he wanted to really crush inflation
4:37
Speaker 1: and stop it in its tracks so that it never
4:39
Speaker 1: reared its ugly head again, or at least you know,
4:43
Speaker 1: during his time. Is that still the case or is
4:46
Speaker 1: he going to start worrying about you know, joblessness and
4:50
Speaker 1: economic slow down. Is he going to start getting a
4:53
Speaker 1: little bit soft and dubvish when the bad data comes out?
4:56
Speaker 2: Yeah?
4:56
Speaker 4: I always compared to me, I think you try to
4:58
Speaker 4: avoid to becoming pulled. I mean, I think it just
5:01
Speaker 4: doesn't want to have, you know, any kind of diflation.
5:03
Speaker 4: I think it's trying to avoid that at all. So
5:05
Speaker 4: I think that tight for longer. Make sure you stamp
5:08
Speaker 4: it out right. I think that there's you know, some
5:10
Speaker 4: FED governors are suggesting, and I think that the FED
5:12
Speaker 4: is looking for us slow down in job job growth,
5:15
Speaker 4: and that's you know, all of that means. I think
5:18
Speaker 4: this is where I'm a little bit pessimistic, if you will,
5:20
Speaker 4: and I think we're going to get see. A bit
5:21
Speaker 4: of a downside is that, you know, the American consumer
5:25
Speaker 4: is kind of running an esteem. I think that they're
5:26
Speaker 4: they're the largest economic engine of the economy, and you know,
5:31
Speaker 4: they've spent their savings and now they're now they're spending
5:34
Speaker 4: our credit cards at record rates, at a very high
5:37
Speaker 4: eye address.
5:38
Speaker 2: So you're also former staff director the Senate Finance Committee
5:41
Speaker 2: at the United States Senate.
5:42
Speaker 6: What did you do there?
5:44
Speaker 4: The committee is in charge of all Medicare, medicaid, social security,
5:47
Speaker 4: tax policy, international trade. So what oversaw seventy percent of
5:51
Speaker 4: US spending one hundred percent in becoming revenue.
5:53
Speaker 2: So is it your job to make sure that when
5:55
Speaker 2: senators are on television questioning witnesses and whenever anybody comes
5:59
Speaker 2: in front of their committee that they sound intelligent.
6:02
Speaker 5: That working very closely with the members and their staff.
6:04
Speaker 5: You know it. It was treading set an agenda that
6:07
Speaker 5: was very difficult. You know.
6:09
Speaker 4: The difficult things about what we are mandate was that
6:13
Speaker 4: they were just all of them are extremely political. You know,
6:16
Speaker 4: I can't think that you know, good people can have
6:19
Speaker 4: arguments about entitlements, you know, Medicare and medicaiding social Security.
6:22
Speaker 4: But the challenge is trying to change trying to actually
6:25
Speaker 4: have a public debate that actually doesn't become highly political,
6:28
Speaker 4: politicized and really scared Americans is really hard on those issues.
6:32
Speaker 4: And then tax policy, of course, is that there's always
6:34
Speaker 4: a give and take where one side typically likes slower taxes,
6:38
Speaker 4: one side likes higher taxes, and it's just you know,
6:40
Speaker 4: you try to find some way to get compromised.
6:42
Speaker 6: But it works between senators. Happens behind the doors.
6:46
Speaker 2: I mean, did they really walk down to the hall
6:48
Speaker 2: and say, let's debate this issue.
6:50
Speaker 6: I want to.
6:52
Speaker 1: Does that happen lately? They just say do you want
6:54
Speaker 1: to fight? Exactly? And I guess the.
6:56
Speaker 2: Reason I was going because I just you know, we
6:58
Speaker 2: look at these committee here, whether it's technology people coming
7:01
Speaker 2: in from or whatever, and our senators in our congressman,
7:04
Speaker 2: they just sound so uninformed. It's really painful slash embarrassing.
7:10
Speaker 2: But I'm just wondering do they debate the issues amongst themselves?
7:14
Speaker 5: They do, and staff does a lot of that work
7:16
Speaker 5: for them as well.
7:16
Speaker 4: But I think it's, you know, like it's it's very difficult,
7:19
Speaker 4: as you know, they're they're they're also pulled everywhere, but
7:22
Speaker 4: the challenges and I don't want to get anyone in
7:24
Speaker 4: trouble because right now in American politics, if you're a
7:26
Speaker 4: Republican talking to a Democrat or Democrat republic and talking
7:28
Speaker 4: to republic and your voters don't like you. But I
7:30
Speaker 4: will say that there's an enormous amount of that happening
7:33
Speaker 4: behind closed doors, and it has to because honestly, genuinely,
7:36
Speaker 4: nothing would get done, and I think nothing's gonna be
7:38
Speaker 4: done now.
7:39
Speaker 2: They have people we talk to are always so bright,
7:41
Speaker 2: so well educated, they know the issues, and then when
7:44
Speaker 2: you see these men and women on TV, they're just
7:48
Speaker 2: the worst.
7:49
Speaker 1: They have to be Like what has to get elected
7:51
Speaker 1: by the American exactly like what happened?
7:54
Speaker 2: Don't this staff like Spoon feed them what to say,
7:56
Speaker 2: what questions they ask? How did they come across so bad?
8:00
Speaker 4: I'll say that, you know, I think that the Congress
8:02
Speaker 4: reflects the mood of the American people that at that time.
8:04
Speaker 6: Yea, I guess that's so.
8:05
Speaker 4: I think that that's you know, I think that the
8:07
Speaker 4: American people get the House represents they want in the
8:09
Speaker 4: sense they want at the time. And of course we
8:12
Speaker 4: have a little bit of a shorter, a longer fuse
8:14
Speaker 4: on the presidency, right, So, but yeah, I think it's
8:16
Speaker 4: going to be interesting to see how this next election happens.
8:18
Speaker 4: I think there's you know, there's a lot of variables
8:20
Speaker 4: at play, and there's significant issues.
8:23
Speaker 6: Do you appine on potential election outcomes for your clients?
8:27
Speaker 4: Everyone wants to know, right, and it matters, I mean, right,
8:31
Speaker 4: the policy under Republican or Democratic administration is going to change,
8:34
Speaker 4: you know, And of course then it matters if it's
8:36
Speaker 4: Trump or Haley or someone else in the Republican side,
8:40
Speaker 4: or if it's Biden another Democrat on the Democratic side.
8:42
Speaker 4: And so yeah, absolutely, I think that there's you know,
8:44
Speaker 4: significant issues. But I believe though that if the economy
8:47
Speaker 4: is such a central component of the election.
8:50
Speaker 5: In twenty twenty four, and we are in a downturn.
8:54
Speaker 4: Likely it's it's a bad time to be in a
8:55
Speaker 4: cumbent in DC at that time, and so i'd likely
8:58
Speaker 4: see a wholesale chain. I think the House maker Democrat
9:01
Speaker 4: that House Senate to makeover republicand and perhaps when may
9:04
Speaker 4: see your republic.
9:05
Speaker 1: Having gone to the Thunderbird School of Global Management, do
9:08
Speaker 1: you have any advice for Duke on how to play basketball.
9:13
Speaker 4: I have friends, I have friends everywhere, So I'm just
9:16
Speaker 4: gonna set up my hands on the.
9:18
Speaker 1: You'll talk politics, talk as you more fun or UCSB.
9:23
Speaker 5: Oh gosh, that's a really good question, Barbara. At least
9:27
Speaker 5: we're underground. I think there's you're not very far from
9:30
Speaker 5: the beach and any anywhere on that campus.
9:32
Speaker 6: So all right, Chris, thanks so much for joining us.
9:35
Speaker 2: Chris Camber, he's a chief strategist at Kroll, talks about
9:39
Speaker 2: this market in politics.
9:41
Speaker 7: You're listening to the team Can's are live program Bloomberg
9:45
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot com,
9:48
Speaker 7: the iHeartRadio app, and the Bloomberg Business app, or listen
9:52
Speaker 7: on demand wherever you get your podcasts.
9:55
Speaker 6: We're joined by Norma Chu.
9:57
Speaker 2: She is the CEO of Day Day Cook the New
10:00
Speaker 2: York stocker change symbols D is David d C. When
10:04
Speaker 2: public today sold three point nine million shares at eight
10:06
Speaker 2: dollars and fifty cents to share. The stocks traininger around
10:08
Speaker 2: six dollars right now, Norma, thanks so much for joining
10:11
Speaker 2: us on a busy day for you guys. Can you
10:13
Speaker 2: tell our audience kind of what Day Day Cook is?
10:17
Speaker 2: What do you guys do over there? Sure?
10:19
Speaker 3: Hi, thanks for having me today. You know, I started
10:22
Speaker 3: the business about twelve years ago, and the whole concept
10:25
Speaker 3: was really to create a platform and brand that can
10:27
Speaker 3: encourage a younger generation to enjoy cooking at home. And
10:30
Speaker 3: right now. We are a food innovator and we own
10:33
Speaker 3: a portfolio of brands, and all of our brands basically
10:36
Speaker 3: provide ready to cook and ready to heat product solutions.
10:40
Speaker 3: We also do a lot of social media marketing, building
10:42
Speaker 3: brands and promoting products and also engaging with our customers.
10:46
Speaker 1: All right, so I have been cooking a lot this year.
10:49
Speaker 1: What do you have for me? What are the products?
10:52
Speaker 1: Give us some examples?
10:54
Speaker 3: Sure, you know, since even though I'd started the business
10:57
Speaker 3: out of Hong Kong a long time ago, so last
11:00
Speaker 3: year we started looking into the US market. This year
11:03
Speaker 3: we just completed our very first acquisition of a brand
11:06
Speaker 3: called Nona Limb. So Nona Limb you can find her
11:09
Speaker 3: products right now in Whole Foods, Kroger, Target, and also
11:13
Speaker 3: a wide selection of online e commerce platform. You can
11:17
Speaker 3: probably try some of our noodle starter kits and also
11:21
Speaker 3: a variety of phone broths. Coming up next, we do
11:24
Speaker 3: have a shelf stable, clean label cup noodle coming to
11:27
Speaker 3: the market, so hopefully you enjoy those as well.
11:30
Speaker 2: So talk to us about how your business, I guess
11:34
Speaker 2: was impacted during the pandemic because I would think everybody
11:38
Speaker 2: was cooking at home and there's a lot of demand
11:40
Speaker 2: for you know, easier ways to cook at home. How
11:44
Speaker 2: did that impact your business?
11:45
Speaker 3: Yeah, that is so true. You know, I started about
11:48
Speaker 3: ten years ago, and at that time, I think a
11:50
Speaker 3: lot of people still wonder, you know, will the younger
11:53
Speaker 3: generation enjoy cooking at home? But since the past few years,
11:57
Speaker 3: I think there are a lot of different trends that
11:59
Speaker 3: we're seeing is really driving the growth of our market.
12:02
Speaker 3: The first one is really structural change and consumer behavior.
12:05
Speaker 3: I think a lot of younger consumer now do you
12:07
Speaker 3: want to cook at home? But you know they want
12:08
Speaker 3: a convenient, delicious meal with minimal effort. Second thing, you know,
12:13
Speaker 3: I think is really the whole work at home social trend.
12:16
Speaker 3: So in general, a lot of families are cooking probably six,
12:19
Speaker 3: seven or eight more meals at home now and that's
12:21
Speaker 3: also really helping you know, our space and really driving
12:24
Speaker 3: the growth that we're seeing.
12:26
Speaker 1: How have you dealt with food inflation? Are your input
12:29
Speaker 1: costs continuing to rise or have you seen the turnaround?
12:34
Speaker 3: Well, the good thing is, you know, we are an
12:35
Speaker 3: asset light model, so we work with a number of
12:38
Speaker 3: you know, manufacturers and experienced partners, so that gives us
12:41
Speaker 3: a little bit of flexibility in terms of you know,
12:43
Speaker 3: sourcing and manufacturing. And the beauty is, you know, this
12:46
Speaker 3: year and looking ahead, we do have a very aggressive
12:49
Speaker 3: plan in terms of growing internationally. And the nice thing is,
12:53
Speaker 3: you know, in markets like the US, Europe and other
12:55
Speaker 3: parts of the world, we are seeing such strong demand
12:58
Speaker 3: for our product which really enable us to price our
13:00
Speaker 3: products with healthier margin. So that's also having a positive
13:04
Speaker 3: impact on our business.
13:06
Speaker 2: So geographically, where where do you do business these days?
13:09
Speaker 2: And what's kind of your your future look like.
13:12
Speaker 3: Yeah, so I started in Hong Kong and twenty twelve
13:15
Speaker 3: and then we're expanding into mainland, trying to market did
13:18
Speaker 3: not last year we started looking into the US and
13:20
Speaker 3: this year with the very first acquisition that we just completed.
13:23
Speaker 3: So we all look targeting about ten to fifteen percent
13:25
Speaker 3: of revenue coming out of the US market this year
13:28
Speaker 3: and looking ahead, you know, we're targeting you know, thirty
13:31
Speaker 3: percent in three years time, fifty percent in five years
13:34
Speaker 3: time of international sales.
13:36
Speaker 2: So I'm just looking at your stock again, six dollars
13:39
Speaker 2: you share? It went public this morning at eight dollars
13:42
Speaker 2: and fifty cents. Any idea what's kind of pushing the
13:44
Speaker 2: stock down here? If you heard from your your bankers
13:46
Speaker 2: or anything.
13:47
Speaker 3: Well, you know, I used to be a stock research analyst.
13:50
Speaker 3: Night there you go, So I typically don't get to
13:54
Speaker 3: hung up on a day to day you know, performance
13:56
Speaker 3: of the stock. I'm more a fundamental research analyst, So
13:59
Speaker 3: I would believe been focusing on our business plan, continue
14:02
Speaker 3: to execute and the stock will just perform on its own.
14:05
Speaker 1: And the proceeds, I guess are for acquisitions. That's how
14:08
Speaker 1: you plan to expand.
14:10
Speaker 3: That's right, a portion, a big portion of this continue
14:13
Speaker 3: to drive business growth, and within our growth strategy really
14:16
Speaker 3: is looking at M and A transactions, amine opportunities to
14:19
Speaker 3: help us establish a more international footprint and also continue
14:23
Speaker 3: to grow our multi brand product portfolio.
14:26
Speaker 2: So I mean you talk about the younger folks, I
14:29
Speaker 2: actually agree. I mean when I was younger, comingut of college,
14:32
Speaker 2: it never cooked. But the kids today, maybe it's just
14:34
Speaker 2: because of the pandemic.
14:36
Speaker 6: I mean they're cooking and they're going all in.
14:39
Speaker 1: I mean, yes, tradience.
14:41
Speaker 2: I mean it's just I mean, is that kind of
14:44
Speaker 2: kind of the market you're looking at.
14:46
Speaker 3: Yeah, I mean it's just so exciting that now I
14:49
Speaker 3: think the younger generation do feel cooking with a lot
14:51
Speaker 3: of passion, and it just makes me so happy to
14:54
Speaker 3: see that, because I mean, cooking has always been a
14:56
Speaker 3: part passion for me. But you know, when I look
14:59
Speaker 3: at this space, I think there's a lot of opportunity
15:01
Speaker 3: in terms of creating clean label products. And there's also
15:04
Speaker 3: one of the criteria that we look for when we
15:06
Speaker 3: look at more growth opportunity because I think, you know,
15:09
Speaker 3: traditionally some consumer might think that Asian food products may
15:14
Speaker 3: be a little bit more processed, maybe a little bit
15:16
Speaker 3: more heavy on the sodium. But if you look at
15:19
Speaker 3: the product, the brand that we just recently acquired, which
15:21
Speaker 3: is known a Limb once again available at Whole Foods, Target,
15:24
Speaker 3: and Kroger, all of the products are clean label, so
15:28
Speaker 3: we really care about the type of ingredients that we use,
15:31
Speaker 3: you know, into our manufacturing process.
15:33
Speaker 2: All right, thanks very much for joining us. Norma Cheu,
15:35
Speaker 2: she's the CEO of Day Day Cook symbol d d
15:38
Speaker 2: C is a ticker symbol.
15:39
Speaker 6: They just went public today.
15:41
Speaker 2: Going to be ringing the closing bell at the New
15:43
Speaker 2: York Sock Exchange later today, So that's exciting for any
15:46
Speaker 2: new company. We appreciate getting a few minutes of your time.
15:48
Speaker 7: You're listening to the tape. Cans are live program Bloomberg
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16:08
Speaker 6: Kevin Tiny joins us.
16:08
Speaker 2: He's a senior autosanalyst with Bloomborg Intelligence, so he can
16:11
Speaker 2: join in on this conversation.
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Speaker 1: know that they have a really cool new logo. Yep,
16:44
Speaker 1: like that, and I'm talking about Akia obviously the new
16:48
Speaker 1: logo Sento. It's been a guys a couple of years
16:50
Speaker 1: since they made that new logo, and I feel like
16:52
Speaker 1: it allows a whole new customer to buy into the
16:56
Speaker 1: story because it just is a way to break is
17:00
Speaker 1: it Korean? To break from the past.
17:01
Speaker 7: Yeah.
17:02
Speaker 1: You know when they first came out Kias and Hyundai's,
17:04
Speaker 1: you thought, okay, this is a great at twenty thousand
17:06
Speaker 1: dollars a conobox, I can driver a few years till
17:08
Speaker 1: it breaks. But now I think it's a very different story. Kevin,
17:11
Speaker 1: let me bring you in here and get your take
17:13
Speaker 1: on you know, the quality of these vehicles, the abilities
17:18
Speaker 1: of these vehicles, and for example, the what's the uh oh,
17:23
Speaker 1: the tell You Ride? The Kia Tell You Ride. I
17:25
Speaker 1: feel like that could be cross shopped with a range
17:27
Speaker 1: drover and it costs like a third the price. So
17:29
Speaker 1: what do you think about Kia?
17:31
Speaker 8: Yeah, you know, that is an interesting story because it's
17:36
Speaker 8: you know, the the two brands, Hundai and Kia have
17:41
Speaker 8: have moved from the entry and move up market to
17:45
Speaker 8: higher price points and intensified their truck versus car mix.
17:49
Speaker 8: You know, they were forty three percent truck as recent
17:53
Speaker 8: as twenty eighteen. Now they're seventy percent. So just think
17:57
Speaker 8: about what that's done for their average transaction price. There, margin,
18:01
Speaker 8: profit and revenue contribution has been significantly strong, stronger than
18:05
Speaker 8: it was when it was known as a countobox brand.
18:08
Speaker 8: And what they did that transition was really motivated and
18:13
Speaker 8: helped and advanced by the idea of the ten year,
18:15
Speaker 8: one hundred thousand mile drive train warranty. Right, so they
18:19
Speaker 8: had a wow.
18:20
Speaker 1: Ten years and one hundred thousand miles on the drive trains.
18:24
Speaker 1: Usually it's like three years and oh on the drive train.
18:27
Speaker 1: So a lot of times those will be five years
18:29
Speaker 1: and sixty thousand or something, right, yeah.
18:31
Speaker 8: Right, So basically it gave people protection that said, you know,
18:36
Speaker 8: if you have concerns about quality, here's how we're going
18:38
Speaker 8: to deal with that. And it's the best warranty in
18:41
Speaker 8: the industry. And then as they've moved up market, which
18:44
Speaker 8: if you think even about Tesla, right, Tesla comes in
18:47
Speaker 8: at the highest price points and then tries to move
18:49
Speaker 8: down and every automaker tried to do that to gain
18:52
Speaker 8: scale and volume. Think about Mercedes moving down market and
18:55
Speaker 8: BMW moving down market. Hanikia did at the opposite, right,
18:58
Speaker 8: they started at the bottom of the market, one loyal
19:01
Speaker 8: customers at the entry and move up level. That warranty
19:04
Speaker 8: was a big part of it. Proved their quality had
19:07
Speaker 8: improved then and now there's even the Genesis brand, which
19:10
Speaker 8: is legitimately competing at the higher end of the market
19:13
Speaker 8: with the land rollers.
19:14
Speaker 1: But Genesis is like, so Honda has what Acura and
19:19
Speaker 1: Toyota has Infinity or Noon has Infinity, Toyota has Lexus,
19:24
Speaker 1: and Genesis is like Hyundai's version of that.
19:28
Speaker 8: Yeah, because what happened was, you know, there was a
19:30
Speaker 8: period where Hyundai Kiya came out with full Sisiedan's to
19:34
Speaker 8: compete with seven series BMW or S class Mercedes, and
19:38
Speaker 8: people kind of laughed it off, like, there's no way
19:40
Speaker 8: I'm spending seventy five eighty thousand dollars for a K
19:43
Speaker 8: nine hundred Kio or or a Hyundai Equis.
19:47
Speaker 1: They wouldn't even do it for Volkswagen Phaeton.
19:49
Speaker 8: Right, So they created this new brand and put all
19:51
Speaker 8: the high end stuff in there, and it's actually worked
19:53
Speaker 8: pretty well. My wife will believe it or not, and
19:57
Speaker 8: she's a kind of strange not car per.
20:01
Speaker 1: Only your wife's not listening.
20:04
Speaker 8: Only by she will.
20:05
Speaker 1: Only really really, so she must be very happy about
20:09
Speaker 1: the progress they've made.
20:11
Speaker 8: You mentioned Tell your Ride, So she has a palisade calligraphy,
20:14
Speaker 8: and it's almost like you can load that thing up
20:17
Speaker 8: with every piece of technology and the warranty and the
20:20
Speaker 8: whole thing, and you're still at a very very reasonable
20:22
Speaker 8: price point.
20:23
Speaker 1: And they look awesome. I mean, you must have seen
20:25
Speaker 1: the Kia Tell your Rides. Oh yeah, yeah, such cool
20:28
Speaker 1: looking vehicles. Now the Sorrento doesn't look quite as cool,
20:32
Speaker 1: but it's got great features. For example, since it's a hybrid,
20:36
Speaker 1: there's a button, a physical button you can press to
20:38
Speaker 1: switch from full EV to hybrid EV. Or when I'm turning,
20:43
Speaker 1: when you're turning left and you can't obviously there's a
20:47
Speaker 1: blind spot, but a screen in your dashboard shows you
20:51
Speaker 1: what's in your blind spot. Same when you're obviously turning right,
20:55
Speaker 1: and it's got a center locking diff like it's got
20:58
Speaker 1: torque vectoring. What you can lock the center diff what's
21:02
Speaker 1: the differential, what's in case you're so that the wheels
21:05
Speaker 1: can move at different speeds, but if you're stuck in
21:08
Speaker 1: a place, you can make them all move the same
21:09
Speaker 1: speed so that you can get better traction. It's got
21:12
Speaker 1: torque vectoring all wheel drive, which is I first heard
21:15
Speaker 1: about torque vectoring when I was a kid, I think
21:17
Speaker 1: reading roadent Track about a Porsche. So it's pretty impressive
21:20
Speaker 1: that Kia has this technology. I mean, really the price point, Matt,
21:25
Speaker 1: I think it's fifty thousand for the loaded up one
21:27
Speaker 1: for the top top trim, and then.
21:31
Speaker 8: If you think forty eight thousand is average in the
21:33
Speaker 8: industry these days, So you know right there and you're
21:36
Speaker 8: and that's the point, is that bang for the buck,
21:39
Speaker 8: it's you're getting all the technology now.
21:41
Speaker 1: They don't correct me if I'm wrong, Kevin, But they
21:44
Speaker 1: don't get a tax credit on the green vehicles like
21:49
Speaker 1: a Ford or a GM would, right, because they're not
21:52
Speaker 1: a union shop, not made in the US, all of them.
21:54
Speaker 8: So the story rules of right, the rules of origin
21:57
Speaker 8: of the components, and things like that. I don't have
22:00
Speaker 8: to believe it or not list memorized off the top
22:03
Speaker 8: of my head, but I believe that would be currect.
22:04
Speaker 1: I pretty much do so, Kevin.
22:08
Speaker 2: Are the Korean and Japanese automakers. Are they as committed
22:11
Speaker 2: to evs as I don't know some of the others.
22:14
Speaker 2: I mean, it just seems give us a sense of
22:16
Speaker 2: where those guys are.
22:17
Speaker 8: Yeah, they've been slower. Look, Khandaikia have EV five, EV six,
22:24
Speaker 8: Ionic five, so they they sort of rushed into the
22:28
Speaker 8: segment a little bit. But what's interesting with some winners.
22:31
Speaker 1: I mean, the Ionic five looks cool. The EV six
22:34
Speaker 1: is fast. I made my buddy Mark White throw up
22:37
Speaker 1: by accelerating so quickly in that thing.
22:41
Speaker 8: But the thing with that is that what's interesting is
22:44
Speaker 8: that when you look at average transaction action price across
22:47
Speaker 8: the brands, it's in the high thirties, right, so below
22:51
Speaker 8: the industry average but then when you look at their evs,
22:54
Speaker 8: they're in the they're above fifty thousand dollars, so it's
22:57
Speaker 8: the it's a way for them to sort of move
22:59
Speaker 8: up more. Mart I don't think they're contented the way
23:03
Speaker 8: say a fifty plus thousand dollars tell your ride or
23:07
Speaker 8: palisade would be. But people are willing to buy, or
23:11
Speaker 8: at least they were until very recently, willing to pay
23:14
Speaker 8: up for the electric versions of some of the Handaikia stuff.
23:18
Speaker 8: We'll have to see how sustainable that demand is going forward,
23:22
Speaker 8: but it's very interesting that you know, that's an automaker
23:24
Speaker 8: that's known for and that's Look, that's a risk for
23:28
Speaker 8: the gm and Fords of the world. As they move
23:29
Speaker 8: their average transaction price above fifty thousand dollars, above the
23:33
Speaker 8: industry average, you're really squeezing out the entry and move
23:37
Speaker 8: up buyer, and you're and you're saying like, hey, look,
23:39
Speaker 8: if you're not really ready to spend, we don't have
23:42
Speaker 8: product for you. And that's where the Asia based manufacturers Handaikea, Toyota,
23:47
Speaker 8: Honda sort of moved down mark and they say, well,
23:50
Speaker 8: we're willing to take you, even if it means losing
23:52
Speaker 8: money on those entry level vehicles because we believe that
23:55
Speaker 8: we'll give you a good enough ownership experience that you'll
23:57
Speaker 8: stay with us up through the portfolio until you are
24:00
Speaker 8: ready to spend some money maybe in the Lexus brand
24:03
Speaker 8: or Infinity or or.
24:05
Speaker 2: I mean the four f one fifty the most popular
24:08
Speaker 2: vehicle out there in the American roads.
24:10
Speaker 6: I mean, what is that list for and can the
24:12
Speaker 6: average person.
24:13
Speaker 1: Get in a one for thirty?
24:14
Speaker 2: You can get into a Ford f one fifty for thirty.
24:17
Speaker 1: Yeah, but that's the lowest trim level. You know, Zach
24:20
Speaker 1: drove the E one at nineteen one hundred thousand. My
24:23
Speaker 1: question is this, you can get so the Sorrento. You
24:27
Speaker 1: can get into a BMW X three for a comparable price.
24:30
Speaker 1: But I've seen people put BMW's up on lifts and
24:33
Speaker 1: they're like over engineered. They're so focused on stiffness and
24:37
Speaker 1: the driving experience. And I guess that has to do
24:42
Speaker 1: like in order to achieve that, you need the longevity,
24:45
Speaker 1: you need the experience in production, right, Kia and Hundai
24:48
Speaker 1: they're just not there yet.
24:50
Speaker 8: Yeah, I look, I you know, I think there's a
24:54
Speaker 8: you know, as a buyer, you would think about do
24:55
Speaker 8: I want to buy you know, the the lower end
24:59
Speaker 8: models of premium brand or do I want to buy
25:02
Speaker 8: the completely loaded version of a volume brand. And that's
25:06
Speaker 8: you know, that's kind of the debate, right, So a
25:09
Speaker 8: decontented X three versus a loaded Sorrento or you know,
25:13
Speaker 8: and and people will have different opinions on that, but
25:17
Speaker 8: you know, you feel like even the ownership experience or
25:19
Speaker 8: dealing with the dealerships when you are you know, the
25:23
Speaker 8: big cheese when you roll it into you know, into
25:25
Speaker 8: the dealership or into the service bay, is like, Hey,
25:28
Speaker 8: this is the this is the owner that's spent up
25:31
Speaker 8: for everything as opposed to being at the bottom of
25:35
Speaker 8: the of the portfolio with a low content vehicle.
25:38
Speaker 6: Matt's in there with the Kia Sorrento. I got the
25:40
Speaker 6: BMW X three.
25:41
Speaker 1: You got the overloaded X three.
25:42
Speaker 2: I'm actually and Kevin, next time I'm done in person,
25:44
Speaker 2: I'll show you the x X three.
25:46
Speaker 6: It's good stuff. I'm very happy with it.
25:48
Speaker 2: That's Kevin Tiny and he covers all the autos for
25:50
Speaker 2: Bloomberg Intelligence at Real Gearhead.
25:53
Speaker 7: You're listening to the tape. Can's are live program Bloomberg
25:56
Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, Bloomberg
26:01
Speaker 7: dot Com, and the Bloomberg Business App. You can also
26:03
Speaker 7: listen live on Amazon Alexa from our flagship New York station,
26:07
Speaker 7: Just say Alexa play Bloomberg eleven thirty.
26:12
Speaker 2: We have Dana Tellsley in studio. She's got her own firm,
26:16
Speaker 2: Dana Telsey. She kind of runs out and I'll tell
26:18
Speaker 2: you what not. Only is she one of the best
26:19
Speaker 2: analysts covering retail on Wall Street, and that's been proven
26:22
Speaker 2: by all the polls and magazines over the years. But
26:25
Speaker 2: what I admire most is she's left a big wall
26:27
Speaker 2: Streem bank set up her own shop when that was
26:31
Speaker 2: pretty rare at the time. So I remember, and that's
26:35
Speaker 2: number one.
26:35
Speaker 7: It was rare.
26:36
Speaker 2: At number two, she's been successful at it even more
26:39
Speaker 2: rare because I've seen a lot of folks that are
26:41
Speaker 2: highly ranked leave the big seat.
26:43
Speaker 6: Go set up a shop and it just doesn't work.
26:45
Speaker 1: But she makes it work enough with the flattery.
26:47
Speaker 6: It's good stuff.
26:48
Speaker 1: By the way, Dana, I heard a stocks reporter on
26:50
Speaker 1: the other side of the office call you a genius today.
26:53
Speaker 9: Oh, thank you, thank you very much.
26:54
Speaker 1: So interesting. Yeah, there you go. So I think you
26:57
Speaker 1: can top that. So why, let's first ask the question,
27:00
Speaker 1: because this is the first earning season I've really noticed
27:03
Speaker 1: how many of the retailers are at the back end
27:05
Speaker 1: of the earnings calendar, and is there a reason for that?
27:09
Speaker 1: Is that just traditional tradition?
27:12
Speaker 9: I mean, typically retailers are on a January fiscal year end,
27:15
Speaker 9: and the reason why is because December is typically one
27:18
Speaker 9: of their busiest months, so you need the month after
27:21
Speaker 9: January in order to put everything together. Plus you got
27:24
Speaker 9: to get rid of the returns in January, so you
27:26
Speaker 9: really know what your inventory looks like at the end
27:28
Speaker 9: of January going into the following fiscal year.
27:31
Speaker 6: And you just thought they were lazy.
27:33
Speaker 9: I don't know, They're not lazy, all.
27:34
Speaker 6: Right, Dannis.
27:35
Speaker 2: So we've had we're kind of getting through the meat
27:37
Speaker 2: of this most recent quarterly earnings period. What were your
27:40
Speaker 2: takeaways from the quarter itself and more importantly looking forward
27:43
Speaker 2: a little bit.
27:44
Speaker 9: I think the big picture takeaway overall is that we
27:47
Speaker 9: have a very discerning consumer, that we have a consumer
27:50
Speaker 9: who's moderated their spend at almost all income levels. And
27:53
Speaker 9: what we're seeing is that retailers the execution has improved
27:57
Speaker 9: everyone's inventory levels are clean, cleaner than what they were
28:01
Speaker 9: At the same time, We're going to have a more
28:03
Speaker 9: promotional holiday season this year is compared to last and
28:07
Speaker 9: when you look at the cadence so far, October sales
28:10
Speaker 9: growth was slower than September by around one hundred bases
28:14
Speaker 9: points or so, and going into November it's remaining the
28:18
Speaker 9: same as October. Consumers are waiting for big events, and
28:22
Speaker 9: we know that a lot of the discounting because it's
28:24
Speaker 9: more promotional this year than last year, even though still
28:26
Speaker 9: less than twenty nineteen. But what we do know is
28:29
Speaker 9: they wait for the events. We had Prime Day in October,
28:32
Speaker 9: Black Friday isn't going to be what it used to be,
28:35
Speaker 9: and with Christmas falling on a Monday, the procrastinators can
28:38
Speaker 9: wait until Saturday and Sunday.
28:42
Speaker 1: So more promotional this year than last year. I keep
28:44
Speaker 1: seeing in earnings releases that they're controlling inventory well or
28:49
Speaker 1: you know, if sales fall, at least they're managing their inventory.
28:53
Speaker 1: Why are they going to be discounting couple.
28:55
Speaker 9: Things you need to discount in order to drive the
28:58
Speaker 9: consumer to get them to convert. Last year, you had
29:01
Speaker 9: too much inventory in many instances given the supply chain
29:05
Speaker 9: issues that you had, and right now some of the
29:08
Speaker 9: price increases from inflation, they're undergoing a little bit of
29:11
Speaker 9: a rollback. But the focus on experiences versus goods. We
29:15
Speaker 9: all know what Taylor Swift did during the summer in
29:18
Speaker 9: terms of boosting span when she was here in the US.
29:21
Speaker 9: You have to give the consumers not only the what
29:24
Speaker 9: to buy, but the how to buy. And one of
29:26
Speaker 9: the things we're seeing the retail experience, it's a social
29:30
Speaker 9: experience too. So watch the physical stores. They're not going away.
29:34
Speaker 2: That's kind of where I wanted to go because I
29:35
Speaker 2: had a hard time getting to my subway last night
29:37
Speaker 2: because out in front of Bloomingdale's they had a big
29:40
Speaker 2: stage set up right in the middle of Electionton Avenue
29:42
Speaker 2: and I think there's some Broadway show.
29:44
Speaker 6: The casters can come and sing a song me.
29:46
Speaker 1: So that's an event. Holiday windows there was a holiday Well.
29:48
Speaker 2: Kay, there you go, thank you. I did make it
29:50
Speaker 2: to the subway. So talk to us about the retail
29:54
Speaker 2: store because there was a narrative that I bought into
29:56
Speaker 2: that E commerces is going to replace everything, no more stores,
30:00
Speaker 2: thing of the past.
30:01
Speaker 6: Where are we today? In that thinking that was.
30:03
Speaker 9: Pre pandemic, thinking yes, the pre pandemic, thinking of there
30:06
Speaker 9: are too many stores and Amazon's going to take over
30:08
Speaker 9: while pandemic happened, And look, Amazon didn't take over everything.
30:12
Speaker 9: Too many stores, you bet. And we had a ton
30:14
Speaker 9: of closures post the pandemic, so that now many retailers
30:17
Speaker 9: store bases, they're more productive, they're in the right locations,
30:21
Speaker 9: and they've even been resized a lot of them. And
30:23
Speaker 9: the other narrative used to be, oh, there are too
30:26
Speaker 9: many retailers, they need to go bankrupt.
30:27
Speaker 1: Well they did.
30:28
Speaker 9: We had ninety six consumer companies go bankrupt really right
30:31
Speaker 9: during a post pandemic. So where you are today, fast forward,
30:35
Speaker 9: we have better stores. You look at four new stores
30:38
Speaker 9: that are opening in Manhattan for Black Friday. Take a
30:41
Speaker 9: look at the Wegmans that just open on Astor Place.
30:43
Speaker 9: Take a look at Creighton Barrel that opened their first
30:46
Speaker 9: new store in Manhattan in thirty years on Broadway, Lululemons
30:49
Speaker 9: remodeled store on Fifth Avenue and seventeenth Street. And then
30:54
Speaker 9: you also have it's Wegmans, it's Lulu, It's Creighton Barrel.
30:59
Speaker 1: About one more interest, what's the deal with Brooks Brothers,
31:02
Speaker 1: Because I'm sure like me, Paul grew up going there.
31:06
Speaker 1: When I got my first suit, it was at Brooks Brothers.
31:09
Speaker 1: I remember going to store number one to get fitted
31:11
Speaker 1: for a formal coat when I was like five. It's
31:14
Speaker 1: and it was the best place to shop for men's clothes.
31:19
Speaker 1: I mean, really an experience. My grandfather got his World
31:22
Speaker 1: War Two, you know, his dress blues at Brooks Brothers.
31:27
Speaker 1: Why did they go bust? And what's happened to them?
31:30
Speaker 1: A couple things.
31:31
Speaker 9: First, it's Target, that's the fourth store that opened on
31:34
Speaker 9: fourteenth Street. Let's go to Brooks Brothers. So look at
31:37
Speaker 9: what everyone's wearing here today? Are you seeing? Are any
31:40
Speaker 9: of the three of you men in a suit?
31:42
Speaker 7: Not? Really?
31:43
Speaker 6: Okay?
31:44
Speaker 1: What did Brooks Brothers sell a lot of suits?
31:46
Speaker 7: Yeah?
31:46
Speaker 9: Okay, there you go. So you got a pivot in
31:49
Speaker 9: order to be able to reinvent yourself. Retailers can do that.
31:52
Speaker 9: We've seen retailers reinvent themselves. You look at Coach reinvented itself.
31:56
Speaker 9: You look at Levi's been around one hundred and fifty years,
31:59
Speaker 9: reinvented it So the fact that if you don't reinvent yourself,
32:03
Speaker 9: it's hard to keep such an expensive piece of real estate.
32:07
Speaker 9: Now they have a coffee shop there. I meet a
32:09
Speaker 9: lot of people there. It's my destination for meetings.
32:11
Speaker 1: Wow, that's cool.
32:12
Speaker 2: It was a sweet sweet spot Brooks Brothers and the
32:14
Speaker 2: Shrewsbury Mall.
32:16
Speaker 1: I now go to Paul Stewart, which is you know
32:18
Speaker 1: next door, you know iron Sure it's are like class six.
32:22
Speaker 7: Well this isn't a Brooks Brothers, but you get the picture.
32:24
Speaker 1: I love those The place was a classic place. Now
32:26
Speaker 1: the other thing, I typically eschew the word barbell. It's
32:31
Speaker 1: like the most cliche phrase on Bloomberg television. But I've
32:37
Speaker 1: noticed that Macy's, for example, Bloomingdale's did better than all
32:42
Speaker 1: of Macy's, and Macy's has some kind of off brand
32:46
Speaker 1: or lower backstage backstage which did much better. So it
32:50
Speaker 1: seems like the higher end consumer is doing well and
32:53
Speaker 1: then everyone else is going as going downscale. Is that
32:56
Speaker 1: the case?
32:57
Speaker 9: Well, when you look at the uber wealthy Amez had
32:59
Speaker 9: doubled sales gains, so they're certainly doing George.
33:02
Speaker 1: Santo's apparently was shopping there with campaign funds allegedly very good.
33:06
Speaker 9: And when you look at the lower end, take a
33:07
Speaker 9: look what you got this week TJX with same store
33:10
Speaker 9: sales up around six percent. You look at Ross Stores yesterday,
33:13
Speaker 9: their same store sales were up around five percent. Value works,
33:16
Speaker 9: and you see many retailers talking about the fact that
33:19
Speaker 9: their outlet stores are performing. Look at Tanger Factory outlet
33:22
Speaker 9: centers and you've seen newness there with their new Nashville
33:25
Speaker 9: opening that they have. So there's a little bit of
33:28
Speaker 9: a barbell, but even that luxury consumer, except for the
33:32
Speaker 9: tippy top, is moderating. Look at Berberis results yesterday where
33:35
Speaker 9: they talked about the fact that they've seen a slowing
33:38
Speaker 9: in global luxury demand. So whether it's the macro, whether
33:41
Speaker 9: it's the stock market volatility, or if focused on experience
33:46
Speaker 9: versus goods, and certainly for the mid tier and lower
33:49
Speaker 9: higher interest rates and inflation are an inhibitor to opening
33:52
Speaker 9: your wallet.
33:53
Speaker 6: Yep, absolutely a right, Dana. Thank you so much for
33:55
Speaker 6: joining us here.
33:56
Speaker 2: Dan Telsey, CEO and chief research officer at the Tellsley.
34:00
Speaker 1: Group, Thanks for listening to the Bloomberg Markets podcasts. You
34:03
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34:07
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Speaker 1: Twitter at Matt Miller nineteen seventy three and I'm Faull Sweeney.
34:15
Speaker 2: I'm on Twitter at pt Sweeney before the podcast. You
34:17
Speaker 2: can always catch us worldwide at Bloomberg Radio