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Smead's Scherrer on Amazon: Won't Be the Death of Retail(Audio) · Bloomberg Intelligence

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  Speaker 1: Global business news twenty four hours a day, if Bloomberg
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  Speaker 1: Charlie Pellet. We are well off our session lows, with
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  Speaker 1: the Dow Jones Industrial Average now down two hundred fifty
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  Speaker 1: points as the selling continues. The Dow is down one
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  Speaker 1: point four percent at seventeen thousand, one hundred fifty after
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  Speaker 1: shocks of the UK's vote to leave the European Union
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  Speaker 1: continued to reverberate. SMP five hundred index down thirty five
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  Speaker 1: to two thousand one to drop there of one point
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  Speaker 1: eight percent and has stacked down one hundred eleven points
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  Speaker 1: the decline of two point four percent. The tenure up
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  Speaker 1: thirty one thirty seconds yield one point four or five percent,
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  Speaker 1: Gold up seven forty ounce the thirteen twenty nine, a
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  Speaker 1: gain of six tenths of one percent, and crude oil
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  Speaker 1: down a dollar forty six sixty five a barrel and
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  Speaker 1: dropped there of two point one percent. I'm Charlie Pellett.
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  Speaker 1: The gold rushes on after the UK voted to withdraw
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  Speaker 1: height of the two thousand and eight global financial crisis,
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  Speaker 1: year it has been from day one, and I at
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  Speaker 1: the volume today and the performance, I think we see
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  Speaker 1: another two billion into gold in the next week given
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  Speaker 1: the trading volume today, so we're talking about thirteen billion flows.
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  Speaker 1: That's about increase in the size of g l D.
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  Speaker 1: In addition to g l D, other e t F throws,
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  Speaker 1: including the iPath s MP five under VIC short term
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  Speaker 1: futures e t N or v x x IT jump
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  Speaker 1: t F taker t LT also rose up two point seven.
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  Speaker 1: That's your Bloomberg ETF report. I'm Catherine Cawdery, Catherine Cawderie.
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  Speaker 1: Thank you so very much. So the stock market continues
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  Speaker 1: its sell off break. Brexit inks, to put it, mildly
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  Speaker 1: weighing on sentiment. A second days of losses, which the
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  Speaker 1: pride many people who thought that maybe coming in for
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  Speaker 1: a big sell off on Friday, we would get a
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  Speaker 1: little more um of a plateauing in here, perhaps finding
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  Speaker 1: a bottom, but not yet. Joinius Sells twenty sure huge
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  Speaker 1: director of research and co portfolio manager at Snead Capital
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  Speaker 1: Manage in about two and a half billion dollars of
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  Speaker 1: assets under management, joining us from Seattle, Washington, Tony. Welcome back,
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  Speaker 1: Thank you, thanks for having me. Kathleen. Are you feeling
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  Speaker 1: the reverberations in in Seattle on futures down today. I
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  Speaker 1: don't know who is out there that's not stealing some
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  Speaker 1: of the reverberations from all of this. That's Uh, we're
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  Speaker 1: reminded that you want to buy when there's blood in
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  Speaker 1: the streets, and we've got some of that going on
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  Speaker 1: right now. Well, uh, you think people are already buying,
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  Speaker 1: don't you mean you've got the blood in the streets.
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  Speaker 1: I got that part of the sentence wrong. So, but
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  Speaker 1: just step back for a minute. What for you? And again,
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  Speaker 1: you guys always have these longer term very interesting plays.
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  Speaker 1: Yet it's not just about the latest news or twist
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  Speaker 1: and terms in the economy. It's about longer term forces.
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  Speaker 1: But when you look at the market action, do you
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  Speaker 1: get a sense, particularly for the US, that this is overdone,
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  Speaker 1: should be ready for a bounce back or could this
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  Speaker 1: continue for a while? Tony? Yeah, you know, we do.
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  Speaker 1: We do look at the longer term when we own
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  Speaker 1: a stock or buy. It's we're looking for, truly what
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  Speaker 1: it's going to look like in the you know, longest
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  Speaker 1: to five to seven year type time frame, not the
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  Speaker 1: nearer term stuff. Um so, so you know, really what
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  Speaker 1: people should be doing once a more rational kind of
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  Speaker 1: existence comes along. Is is looking at what the Wayne
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  Speaker 1: machine is going to play out to be. And we
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  Speaker 1: think there are some very good companies that are kind of,
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  Speaker 1: you know, being thrown out. And we certainly understand the
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  Speaker 1: the first reaction, which is the Knegric reaction, which is
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  Speaker 1: to just get out and kind of sell everything. We
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  Speaker 1: understand that setiment. But that's exactly what you want to
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  Speaker 1: play into to to take positions in your longer term names.
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  Speaker 1: How about banks? It's just ironic, isn't it that on Thursday,
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  Speaker 1: around five o'clock Wall Street time on the East Coast,
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  Speaker 1: we get the results of the bank stress test in
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  Speaker 1: the Federal Serve all thirty three banks in the US
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  Speaker 1: that are on that list. Past Morgan Stanley has some
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  Speaker 1: question marks over it, said, nevertheless, it passes to and
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  Speaker 1: then Brexit. Yes, we're gonna leave the Euse, says the UK.
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  Speaker 1: And wow, it's not just Italian banks and European banks
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  Speaker 1: getting hammered, so are the U S banks? Does that
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  Speaker 1: make any sense? Is that something you'd look at buying
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  Speaker 1: because it's beaten up? Well, you know, we own some
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  Speaker 1: of the banks. We we like owning some of the banks,
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  Speaker 1: and the banks that we do own are very domestically focused. Um,
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  Speaker 1: I think there's a little bit of guilt by association
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  Speaker 1: going on. When you have the European banks being down
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  Speaker 1: again today, you know, ten to fifteen plus percent, it's
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  Speaker 1: not really all that shocking for again that kneegric reaction
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  Speaker 1: to have even the US domestically oriented banks down, you know,
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  Speaker 1: five or so. There's gonna be more news this week.
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  Speaker 1: It comes on the capital ratio levels, and we think
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  Speaker 1: it's going to be good news. That you mentioned that
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  Speaker 1: the news was good from last week. They definitely passed
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  Speaker 1: pretty much with flying colors, and um, we think they're
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  Speaker 1: gonna be a major beneficiary of what's going to go
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  Speaker 1: on here in the US, which is gonna be a
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  Speaker 1: far stronger economy in our opinion than what we think
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  Speaker 1: the assumptions it is looking like right now today. Can
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  Speaker 1: you tell us a couple that at the top of
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  Speaker 1: your list or a couple of you own what we
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  Speaker 1: owned Bank of America, We owned JP Morgan, and we
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  Speaker 1: owned Wells Fargo. All of those are very again domestically
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  Speaker 1: oriented banks. That you take Bank of America for example,
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  Speaker 1: and they have one of the cheapest depository bases. Uh
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  Speaker 1: here in the US. They have twelve percent of the
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  Speaker 1: depository base in the United States of America, and we
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  Speaker 1: think a well position to be lending towards the home
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  Speaker 1: bind that's going to happen in the next decade as
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  Speaker 1: millennials kind of get their sea legs underneath them. You
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  Speaker 1: are also making the case for consumer discretionary companies and
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  Speaker 1: more specifically retail. Uh, they have been under some cloud.
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  Speaker 1: I mean, we have last earning season, so many disappointments.
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  Speaker 1: Why would you buy retail? Now, let's start there. Well,
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  Speaker 1: the market hates ambiguity. They hate when it's not clear
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  Speaker 1: and they don't know what things look like. And right
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  Speaker 1: now in retail land you've got a lot of that.
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  Speaker 1: Both in terms of the cyclical stuff going on. Everyone
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  Speaker 1: is pretty well discounted the fact that the weather accounted
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  Speaker 1: for weaker than expected retail sales, sales in the in
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  Speaker 1: the Christmas period and kind of the spring. Um. Then
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  Speaker 1: you have some secular issues going on as well, the
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  Speaker 1: question about how big and how large and how much
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  Speaker 1: of a disruptive factor Amazon is going to be for example. UM,
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  Speaker 1: So there's a lot going on right now we and
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  Speaker 1: we think some of it's misunderstood. Ultimately, we think that
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  Speaker 1: it is a primal thing, a human thing, to go shopping.
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  Speaker 1: You know, we came across a quote that Kate Spade.
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  Speaker 1: We don't own the stock, but Kate Spade said that
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  Speaker 1: you start playing dress up at age five and you
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  Speaker 1: never stop. Okay, And when you when you see someone
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  Speaker 1: walk into a department store, there their next their heads
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  Speaker 1: become like swivel heads, right, They're looking around to see
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  Speaker 1: what they need that they didn't know that they needed.
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  Speaker 1: They want to be led towards something new. They want
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  Speaker 1: to be led towards fashion. And we've been in this
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  Speaker 1: fashion dead zone and I think that's a little bit underappreciated.
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  Speaker 1: How much of an effect that's had on on on
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  Speaker 1: the shopping experience, which is why I think you have
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  Speaker 1: mull traffic down maybe more than what would normal. That
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  Speaker 1: that the secular trends. You mean, we need to offer
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  Speaker 1: women more than another pair of spandex to wear as
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  Speaker 1: fashion to get them in the stores, don't you think? Yeah, yeah,
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  Speaker 1: it's one of my pet peeves. But what about Amazon
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  Speaker 1: addressed that? Because I'm with you, I'm that shopper. I
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  Speaker 1: don't go looking for a particular thing. I go just
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  Speaker 1: seeing what's there, what might be on sale, what catches
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  Speaker 1: my eye. I'm more in the moment. Is that opportunistic
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  Speaker 1: shopping as opposed to mission base and that's why often
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  Speaker 1: the online stuff I often would much rather go in
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  Speaker 1: the store. So great example, So do you want to
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  Speaker 1: find that next fashion or that next new thing by
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  Speaker 1: buying ten dresses as it were, and returning nine of them,
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  Speaker 1: which is a total pain to shut to put them
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  Speaker 1: in the packaging tape and FedEx them off and everything else.
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  Speaker 1: Or would you rather go to a department store and
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  Speaker 1: look around and maybe get some expertise and see what's
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  Speaker 1: in fashion. So no, we think that that is overdone.
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  Speaker 1: You might go to Amazon, you and you get the
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  Speaker 1: white T shirt that you need, and maybe it's it's
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  Speaker 1: certainly going to be beyond that, but we don't think
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  Speaker 1: it's going to take over all of retailing, which I
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  Speaker 1: think has become almost this monomaniacal idea, and we think
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  Speaker 1: that that's gone too far. Okay, as you said at
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  Speaker 1: Speed Capital Management out in Seattle, Uh, you if you're
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  Speaker 1: going to buy a stock, it has to be a
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  Speaker 1: company that meets an economic need, etcetera. Who are who
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  Speaker 1: give us a couple of your picks in the retail world. Well,
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  Speaker 1: we do own Norstrooms. We we own, we own it,
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  Speaker 1: it's in the portfolio. We think that all of consumer
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  Speaker 1: discretionary is not a is not an absolute need, right,
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  Speaker 1: I mean it's a That's why it's called consumer discretionary.
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  Speaker 1: But we want to find and we think we own
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  Speaker 1: companies that are they have cult followings. We own home
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  Speaker 1: Depot that's not going away, that's going to become very important,
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  Speaker 1: even more important in the next you know, housing boom,
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  Speaker 1: which we think is in it's very early innings mentioned Northstrooms.
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  Speaker 1: We own Comcast, they have totally addicted customers. Um. We
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  Speaker 1: own some of the old world media and those are
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  Speaker 1: considered consumer discretionary as well. But we think it's actually
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  Speaker 1: a pretty staple like thing to turn on the news
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  Speaker 1: and actually watch you know TV, and of America gets
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  Speaker 1: that our news still by old world kind of news TV, uh,
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  Speaker 1: through through the through the television. So we think the
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  Speaker 1: advertising dollars are going to persist there um and we
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  Speaker 1: think those are we like those stocks as well. Just
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  Speaker 1: a little bit of time left here old world media.
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  Speaker 1: Who do you like in particular, we owned Tegna. We
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  Speaker 1: like Tegna. They own forty six broadcast stations. They cover,
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  Speaker 1: you know, about a third of the United States of America.
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  Speaker 1: Number one NBC and ABCF or at CBS affiliate. We
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  Speaker 1: think they have a lot of um draw if you're
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  Speaker 1: going to want to advertise nationally, So we own them.
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  Speaker 1: We own Cannet as well, which is a very contrarian play.
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  Speaker 1: They're they're a news of course USA today. They're a
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  Speaker 1: newspaper company, and they're a consolidator in the business. Alright,
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  Speaker 1: Tony Sheer, thank you so much. Dr Researchers made capital Management.
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  Speaker 1: They own and still likes of the big banks like
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  Speaker 1: Bank of America, JP, Morgan, and Wells Fargo. And he
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  Speaker 1: likes retailers despite Amazon. Norstrom's is one of his top
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  Speaker 1: picks on Kathleen Hayes and this is taking stock on
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  Speaker 1: Bloomberg Radio.