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Markets, Oil, And Retail (Podcast) · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast. What are we looking
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Speaker 1: at here? Is dick cat bounce? Is the bottom? Is it?
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Speaker 1: You know we're setting in some kind of support here,
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Speaker 1: Dan Jenter, he's a CEO, ce IO and chairman, so
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Speaker 1: I guess he kind of runs the whole place. R
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Speaker 1: and C Genter Capital Management. Uh, Dan, thanks so much
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Speaker 1: for joining us here. When you see it, you know,
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Speaker 1: a couple of past days like we've seen, you know
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Speaker 1: where you actually has some green on the screen in
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Speaker 1: the midst of double digit declines in the ESMP and NASDAC.
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Speaker 1: How are you looking at this equity market here? Well, look,
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Speaker 1: I think what we're saying is a market that's generally
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Speaker 1: trying to find its bottom. Frankly, Uh, you know, even
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Speaker 1: though we can make a you can make a good,
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Speaker 1: good case that if you're really wanted to have a capitulation.
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Speaker 1: Certainly we could go off another five, maybe ten percent,
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Speaker 1: but I don't see it at this point. I think
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Speaker 1: we'll hold probably a down five if we don't hold somewhere.
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Speaker 1: And this as a basing battern, and I think it's
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Speaker 1: a pretty normal transition, frankly, of which you typically see
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Speaker 1: when you know they when the FED and other indicators
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Speaker 1: keep telling you what's going to happen. It's always amazing
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Speaker 1: to me that people are still surprised when it does,
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Speaker 1: but then when they finally digest it and realize that
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Speaker 1: multiples are going to have to adjust. You if you're
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Speaker 1: in a situation where you have rising inflation, you have
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Speaker 1: rising interest rates, it's gonna have pushed down GDP, it's
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Speaker 1: gonna push down earnings, and multiples need to adjust. It's
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Speaker 1: pretty well stock valuation one oh one. And and now
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Speaker 1: we've seen that adjustment. I mean, we're at much fairer
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Speaker 1: p s right now based on this economic condition. I
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Speaker 1: think we're in a basing pattern where people should be
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Speaker 1: buying into this um. I like buying into the big
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Speaker 1: days of weakness, especially when there's weakness for no reason
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Speaker 1: you I find that to be an effective deployment of assets,
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Speaker 1: and so I think people should you know, they may
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Speaker 1: not want to jump ahead first, but putting some toes
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Speaker 1: in the water here is a good thing to do.
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Speaker 1: Looking at the next certainly two to three years of
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Speaker 1: not frankly the next year, I guess the concern is valuations,
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Speaker 1: or the concern was valuations. Are you um are you
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Speaker 1: happy that we've gotten down to um a level that
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Speaker 1: is more consistent with history of still pretty strong on
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Speaker 1: the s and P five hundred frankly pe of twenty
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Speaker 1: and change, and especially looking at a FED that's going
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Speaker 1: to raise what another hundred hundred fifty basis points. Well, look,
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Speaker 1: I think that you're right from the standpoint that I
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Speaker 1: truly do believe in the old adage that you can't
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Speaker 1: fight the FED. I mean you, we have definitely transitioned
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Speaker 1: from where we had a tailwind to a cross wind.
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Speaker 1: So you're look, maybe it's not a direct hurricane force
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Speaker 1: head wind, but you're definitely fighting you know, a strong
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Speaker 1: cross when if you will, that is making people DVD
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Speaker 1: off course and it's harder to stay on course. But
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Speaker 1: the but I think the valuations now are are at
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Speaker 1: points that you can get you can get back into
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Speaker 1: the game, if not as a short term trader, but
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Speaker 1: if you're indeed looking at I normally say two to
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Speaker 1: three years, I like to look at the three year
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Speaker 1: time rising now I think it's much stronger, and even
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Speaker 1: looking at one year, because if you look at where
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Speaker 1: the valuations are, I agree, from an SMP standpoint, you
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Speaker 1: could say at twenty, you know, based upon you know
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Speaker 1: somewhere at two thirty on the SMP and two fifty
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Speaker 1: next year in the SMP, you know you're above the
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Speaker 1: fifteen five long term average. But but bear in mind
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Speaker 1: interest rates were still a lot higher when you're looking
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Speaker 1: at that long term average over the last fifteen twenty years.
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Speaker 1: And when you look at where we are, I mean,
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Speaker 1: look at the Russell one thousand value is right now
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Speaker 1: down to a right and it's down from sixteen too,
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Speaker 1: that's normally about fifteen five. Even the Russell growth, which
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Speaker 1: was stratospheric, is at seven and that's down from from
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Speaker 1: thirty point six, and it's averages one. So value stocks
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Speaker 1: are still undervalued, road stocks are now fairly valued, and
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Speaker 1: you know, I don't think you're gonna time the last
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Speaker 1: five of this. He then many of our listeners that
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Speaker 1: they look at their portfolio, probably a big, big chunk
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Speaker 1: of it is made up of some of those big
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Speaker 1: cap technology names. And if I think look at Amazon
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Speaker 1: down thirty year to date, Microsoft Apple fifteen down year
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Speaker 1: to date, do I get back into those names? Do
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Speaker 1: I add to my positions there? How do you think
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Speaker 1: about some of those you know, big big cap tech
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Speaker 1: names have been so good for so long, Well, for
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Speaker 1: those names, I would have a standard position, and so
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Speaker 1: that that to me is somewhere two and a half
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Speaker 1: or three percent position. You're even though they pulled back dramatically,
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Speaker 1: you're still dealing at at very high peas And the
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Speaker 1: fact of the matter is you're just looking at slower
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Speaker 1: growth and and those dynamics you just can't overcome. I mean,
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Speaker 1: if the if the economy is going to grow slower,
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Speaker 1: if GDP is going to be slower, and financing costs
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Speaker 1: and capitalization rates are higher, then earnings come down. You know,
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Speaker 1: it's very straightforward. And if you're in that situation, I mean,
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Speaker 1: you can't can you cannot support a PEG ratio in
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Speaker 1: pe ratios that are at those stratospheric levels. Now, I
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Speaker 1: would not abandon those because I believe that Frankly, there's
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Speaker 1: just so much popularity, there's so much momentum. People aren't
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Speaker 1: going to abandon those names, and they'll probably always sell
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Speaker 1: at a premium pe. But I don't want to be
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Speaker 1: over I don't. It's not a bargain basement. You know,
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Speaker 1: there's not a garage sale going on here, so I
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Speaker 1: wouldn't be overweighting the position. But but having you know,
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Speaker 1: somewhere at three percent average position, I think, is that's
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Speaker 1: where we are with those names. Just quickly, you've been
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Speaker 1: around r n C genders. What's the origin story? If
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Speaker 1: you can wrap it up for us in thirty seconds? Sure,
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Speaker 1: I mean, we we really started in you know, really
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Speaker 1: back before the Pension Reform Act and before investment advisors
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Speaker 1: really were popular, just really in a frankly a pretty
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Speaker 1: fundamental position that we felt it was better to provide
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Speaker 1: investment advice for fees versus commissions. And so we started
6:13
Speaker 1: on a pretty simple premise that you know, we felt
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Speaker 1: if we were charging fees based on assets, which is
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Speaker 1: now popular, that everybody benefited as the portfolios went up,
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Speaker 1: versus charging transaction fees. And we were kind of one
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Speaker 1: of the first to do that, certainly first in l A.
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Speaker 1: And it's worked out well for us. Yeah, at the
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Speaker 1: avant garde, because that's then swept across the industry back
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Speaker 1: when I started working on the street in the nineties.
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Speaker 1: All right, Dan, great stuff, Dan Genter, CEO of RNC
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Speaker 1: Genter Capital Management. When I look at oil, I guess
6:45
Speaker 1: I've got kind of a fixed supply. I've got a
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Speaker 1: reopening global economy, So I guess that means demand is
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Speaker 1: going up, and like any commodity, that should push price
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Speaker 1: of oil higher. That being said, I'm still surprised, maybe
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Speaker 1: shocked to see w A crew did a hundred and
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Speaker 1: fifteen dollars an ounce. So let's bring in an expert
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Speaker 1: maybe explain it to us a little bit better than
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Speaker 1: my simple analysis. Fernando Valley, senior analysts for Bloomberg Intelligence.
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Speaker 1: Fernando again, w t AC crudit hundred fifteen dollars. I'm shocked,
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Speaker 1: slash surprised. Should I be? Well, if you if you
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Speaker 1: wondered if there was any risk from the Chinese lockdowns
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Speaker 1: priced into under a two hundred dollar oil, Uh, you've
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Speaker 1: now found out that there was significant pressure. So as
7:28
Speaker 1: we as soon as we hear there is an easing
7:30
Speaker 1: of lockdowns in Shanghai, both Brent and that we take
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Speaker 1: off and uh, you know, we talked about how Russian
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Speaker 1: supply was going to fall because of sanctions, and we're
7:40
Speaker 1: starting to see that even though Europe and Asia are
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Speaker 1: still purchasing Russian energy, just the lack of of capital
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Speaker 1: and equipment and services from the Western providers has already
7:53
Speaker 1: led to a drop off. We also talked about how
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Speaker 1: production in the US is we want to struggle to
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Speaker 1: catch up because we don't have the people, we don't
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Speaker 1: have the equipment, We don't even have to say to
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Speaker 1: really get to the levels of the that we would
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Speaker 1: need to balance the current demand. Well, and it seems
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Speaker 1: like the industry just isn't willing to get um to
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Speaker 1: put as much capex as would be necessary in to
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Speaker 1: ramp up production, only to have their legs cut off
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Speaker 1: as soon as this thing gets the equilibrium again. Exactly,
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Speaker 1: it's it's difficult to make a five to seven year
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Speaker 1: decision on on building new facilities and making the necessary
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Speaker 1: growth in your company if you don't think that that
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Speaker 1: scenario is going to continue for for such a long
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Speaker 1: period of time. And you have to remember shale didn't
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Speaker 1: really make a lot of free cash flow for the
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Speaker 1: past fifteen years. This is the first they're they're expected
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Speaker 1: to make as much free cash flow in two as
8:48
Speaker 1: they've done for the past fifteen years combined out. Uh.
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Speaker 1: And so when you put that into perspective, they're really
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Speaker 1: paying back their initial investments and what brought us to
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Speaker 1: being close to being energy independent, although we're not technically
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Speaker 1: energy and dependent as of today. So, Fernando, how about
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Speaker 1: OPEQUE plus UM talked to us about production? If OPEC
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Speaker 1: plus say, hey, we wanted to increase production by ten
9:13
Speaker 1: or does it have the capability to do that? Uh?
9:18
Speaker 1: It does, and but they don't really have the will.
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Speaker 1: And the question is for how long can they increase
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Speaker 1: productions for that by that amount? H Saudi Aramco has
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Speaker 1: talked about increasing production to twelve to thirteen million barrels
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Speaker 1: a day by six. It does take time, especially to
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Speaker 1: grow at that magnitude. They're currently producing closest nine million
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Speaker 1: barrels a day of crude oil UM. They could probably
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Speaker 1: go as high as ten to ten and a half. Uh.
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Speaker 1: And they are the largest one on that growth. And
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Speaker 1: then the other ones have political issues. UH. Your Irax,
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Speaker 1: your Irans that they could raise production significantly on an
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Speaker 1: absolute level, but they have have their own issues guaranteeing
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Speaker 1: the security or sanctions the kids to be wrong. You know,
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Speaker 1: we've heard a number of people Paul, you and Tom
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Speaker 1: were talking yesterday, I think to Bill Smead Yep down
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Speaker 1: in Phoenix, and he was saying he loves oil producers
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Speaker 1: right now because they're priced at seventy dollars a barrel,
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Speaker 1: and obviously we're trading far up above that, at least
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Speaker 1: in t I terms, I think one fifteen right now.
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Speaker 1: I also saw Marco Kolanovitch JP Morgan, who was voted
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Speaker 1: the number one Equity Links strategist in II last years.
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Speaker 1: That's a good bump for his bonus, right. He recommended
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Speaker 1: using recent weakness and oil and energy aims to add
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Speaker 1: exposure there as well. Are you starting to see that
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Speaker 1: as a consensus, Fernando, Yeah, it seems like, well, the
10:45
Speaker 1: there's a return to oil, and especially against some of
10:49
Speaker 1: the earlier bell weathers in the sector tech and retail,
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Speaker 1: especially as that sectors that weaken, Oil has come back
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Speaker 1: into preference. And when you can are the free cash
11:00
Speaker 1: that they are generating, and that most of those uh
11:03
Speaker 1: that free cash was being reverted to shareholders. It is
11:06
Speaker 1: a compelling UH distribution yield that dwarfs what the SMP
11:11
Speaker 1: is currently offering. So where do you think oil gets
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Speaker 1: too and over what time frame? Or do we still
11:17
Speaker 1: have more to move higher with the crewed I think
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Speaker 1: in the current conjecture, yes, it remains a question of
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Speaker 1: what the U S does with rates and how demand reacts.
11:29
Speaker 1: I think ultimately we are major concern is that higher
11:33
Speaker 1: a combination of higher rates and inflation will have a
11:36
Speaker 1: significant impact on emerging market demand and we're starting to
11:40
Speaker 1: see some of those cracks in the horizon. That's probably
11:43
Speaker 1: still in the second half of the year UH, but
11:46
Speaker 1: we think there's room to run through the summer, especially
11:49
Speaker 1: as the northern hemisphere gets into its high demand season,
11:53
Speaker 1: and that could be north of one UH for for
11:56
Speaker 1: the w T. I what happens if China UH let's
12:01
Speaker 1: up on the lockdowns. We're seeing I think fewer infections
12:05
Speaker 1: intra community and there's a lot of talk anyway about
12:09
Speaker 1: the fact that the party needs to to let up
12:13
Speaker 1: a little bit. Is that gonna spur the demand side
12:15
Speaker 1: big time? Yes? Again, if we all return to the
12:21
Speaker 1: to the to the our usual situations. Yes, the big
12:24
Speaker 1: question there is supply chains because regardless of UH returning
12:29
Speaker 1: to to normal tomorrow, we still had a massive destruction
12:32
Speaker 1: and a lot of ships that are parked outside of
12:35
Speaker 1: ports in China. UH, and that will lead to that
12:38
Speaker 1: cost inflation that we talked about. So again, in the
12:40
Speaker 1: short term, yes, we think that that that could be.
12:43
Speaker 1: That could mean higher demand as China reopens and experiences
12:46
Speaker 1: something similar slightly less aggressive as we saw in the
12:50
Speaker 1: US in Europe and we reopened UM. But our biggest
12:54
Speaker 1: concern is that the real push from inflation will come
12:58
Speaker 1: in the second half, and especially from emerging markets that
13:01
Speaker 1: are already on the brink. I mean, you can see
13:04
Speaker 1: the situations in Sri Lanka, in Brazil, UH, in Mexico
13:08
Speaker 1: the fiscal situations are worse, and UH the protests are
13:12
Speaker 1: are increasing over the concerns over food and fuel. So
13:17
Speaker 1: I see, just you know, I guess it shouldn't surprise
13:19
Speaker 1: that Saudi a Ramco is said to weigh an I
13:21
Speaker 1: p O of its trading unit amid oil Boom. This
13:25
Speaker 1: seems like a big deal, could be a big I pill,
13:27
Speaker 1: like thirty billion dollars. What do you make of that
13:28
Speaker 1: just a good opportunities to play there Fern end of Yeah, yeah,
13:33
Speaker 1: I agree, but I think it's a it's an opportunity
13:36
Speaker 1: to play. Clearly, sorry, doesn't need the capital right now,
13:39
Speaker 1: but they are trying to increase, uh, the diversification of
13:44
Speaker 1: their economy, and they're trying to get more capital into
13:47
Speaker 1: the kingdom. Uh. You know, the only concerned with trading
13:51
Speaker 1: having a separate trading arm from your integrated oil company
13:54
Speaker 1: is that they ultimately play hand in hand. You're trying
13:57
Speaker 1: to sell your cargoes and sometimes maximize the overall profit
14:01
Speaker 1: by putting that profit in the integrated signs and sometimes
14:04
Speaker 1: at the trading. So they'll have to make it very
14:06
Speaker 1: clear as to how they'll uh what kind of Chinese
14:09
Speaker 1: wall there will be between the two the two entities
14:12
Speaker 1: in order to make this a viable offering to third
14:16
Speaker 1: party investors. All right, interesting stuff again. W T a
14:19
Speaker 1: cood Oil pushing one fifteen a barrel go figure. Fernando Valley,
14:23
Speaker 1: senior analyst for Bloomberg Intelligence covering all things uh energy.
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Speaker 1: All right, let's dig into these Walmart numbers. Stocks down
14:33
Speaker 1: nine percent here. Inflation a big issue for the costs
14:36
Speaker 1: there are in Sunda Rama. He's a senior equity research
14:40
Speaker 1: analysts at cf are A. Joins us Auran. Thanks so
14:42
Speaker 1: much for taking a time here. What's your takeaway from
14:44
Speaker 1: these Walmart numbers? Yeah, yeah, thanks for having me. Yeah,
14:48
Speaker 1: it was it was a rare miss by Walmart. You know,
14:50
Speaker 1: historically they've done Walmart has done a great job managing expectations,
14:54
Speaker 1: so rarely do they miss on earnings. So when they
14:57
Speaker 1: do miss like this, especially about this kind of magnets,
15:00
Speaker 1: you know, you tend to see a pretty big hit
15:01
Speaker 1: to the to the stock price. But you know, the
15:04
Speaker 1: big takeaway that from from from Learning's called today with
15:07
Speaker 1: what I took away is that, you know a lot
15:09
Speaker 1: of the issues that they pointed to was really on
15:11
Speaker 1: the bottom line, and a lot of that can be
15:14
Speaker 1: isolated to the specific quarter, and maybe some of that
15:17
Speaker 1: will flow into Q two. So you know, and argue,
15:21
Speaker 1: you know, don't expect Walmart to continue missing like this
15:23
Speaker 1: because like I said, they rarely do miss on the
15:25
Speaker 1: bottom line, and and you know, historically during periods of
15:29
Speaker 1: tough economic times, challenging times, Walmart his historically outperformed competition.
15:33
Speaker 1: So you know that for for those reasons, we kept
15:36
Speaker 1: our by rating today. We did drop our pull montagrat
15:38
Speaker 1: price to one six two from but we kept our
15:41
Speaker 1: bierrating on the stuff on the shares. The thing is,
15:43
Speaker 1: if I look at you know, if I compare to
15:45
Speaker 1: what happened at Home depot Um, which you know, the
15:48
Speaker 1: beat was all driven by higher prices, they actually had
15:51
Speaker 1: lower unit sales. It looks tough for Walmart since they
15:56
Speaker 1: can't raise prices like that, or at least that's the narrative.
15:59
Speaker 1: I don't know if it's true, but that's this is
16:01
Speaker 1: what I hear. They can't raise prices until they absolutely
16:04
Speaker 1: have have to. Um. Is that actually the case? Yes,
16:09
Speaker 1: So the their average ticket prices in the US was
16:11
Speaker 1: only up three percent. And you know, if you if
16:14
Speaker 1: you assume that their costs cost instlation is probably of
16:17
Speaker 1: double digits for them. So they only increased prices by
16:19
Speaker 1: three percent. So there was a mismatch there. But they
16:22
Speaker 1: know that mismatch on on the call today, and a
16:24
Speaker 1: lot of that was due to fuel costs, because the
16:27
Speaker 1: fuel really started the surge at the end of February,
16:30
Speaker 1: and it was really tough for really a lot of
16:32
Speaker 1: these retailers to manage that that those costs, and I
16:35
Speaker 1: think now they're doing a little bit better job kind
16:38
Speaker 1: of matching pricing and costs. We do expect more pricing
16:41
Speaker 1: to flow into Walmart's income statements over the next few quarters,
16:45
Speaker 1: because because outside the fuel the fuel aspect for you know,
16:49
Speaker 1: things like food and other consumables and even general merchandise items,
16:53
Speaker 1: Walmart is they're noting that they are passing those costs
16:56
Speaker 1: through at least the cost increase. They're not offsetting the
16:59
Speaker 1: margin impact, but the costs are being passed over to
17:02
Speaker 1: the to the consumer, and it seems are in that well,
17:05
Speaker 1: if I'm Walmart, if I can't pass costs increases through,
17:09
Speaker 1: who can Because I mean, where are my customers generally
17:11
Speaker 1: gonna go? I'm so big and have you know, just
17:15
Speaker 1: so many items? Yeah, I mean, And I think that
17:19
Speaker 1: kind of goes to show the state of the overall
17:21
Speaker 1: consumer right now. You know, Walmart is probably over index
17:25
Speaker 1: to the to the lower income consumer, and I think
17:27
Speaker 1: we're starting to see some cracks among the lower income consumer.
17:30
Speaker 1: You know. Walmart noted that some some consumers are trading
17:34
Speaker 1: down some branded products to private label because that tends
17:36
Speaker 1: to be a little bit cheaper. They haven't really seen
17:39
Speaker 1: that among the middle income consumer the upper income consumer.
17:42
Speaker 1: But you know, the longer inflation stays at this elevated level. Uh,
17:47
Speaker 1: you know, it's it's it's it's most most likely we're
17:49
Speaker 1: going to see as more consumers changed their shopping habits
17:53
Speaker 1: trade down from branded to private label shop and more
17:56
Speaker 1: value aren't oriented stores like a Walmart or or a
17:59
Speaker 1: Costco or somewhere somewhere like that. Um, what do you
18:04
Speaker 1: if you if you look across the retail spectrum, are
18:08
Speaker 1: there companies that you think are going to be winners
18:11
Speaker 1: and losers here? I mean, are there some that you
18:14
Speaker 1: feel really strongly about? Yeah, I mean certainly all the
18:19
Speaker 1: We really like the big box diversified retailers, So that
18:23
Speaker 1: includes Walmart, Costco, Target as well. You know, not only
18:29
Speaker 1: do we like them because they're a large big box
18:31
Speaker 1: diversified retailer you know that also prides themselves on value,
18:34
Speaker 1: but they also have these alternative business dreams that are
18:37
Speaker 1: starting to pop up into their business. And it's things
18:40
Speaker 1: like advertising, things like uh, first party and third party marketplaces,
18:44
Speaker 1: fulfillment services, healthcare, financial services, all these things we're kind
18:48
Speaker 1: of non existing for a lot of these companies. Five
18:50
Speaker 1: ten years ago, and these are very uh passet light,
18:54
Speaker 1: high margin businesses, and as these business continue to grow,
18:56
Speaker 1: I think these retailers can continue to invest in the
18:59
Speaker 1: core retail bus in an area like wages and so forth,
19:02
Speaker 1: and continue to grow the bottom line. All right, good
19:04
Speaker 1: stuff are in sunder. I'm senior equity research analyst at
19:06
Speaker 1: cfre A breaking down the Walmart numbers. We had some
19:13
Speaker 1: retail sales numbers come out this morning. Pretty darn solid
19:16
Speaker 1: for the consumer there. Let's break it down, Angie Solanki,
19:19
Speaker 1: National director of Retail Services for the United States for Colliers.
19:23
Speaker 1: Angie again, you know, we kind of had the retail
19:25
Speaker 1: sales numbers. They look pretty good to me. What is
19:27
Speaker 1: your takeaway? I completely agree with you. Um, there's a
19:31
Speaker 1: lot of resiliency that we're seeing, and so as you stated,
19:34
Speaker 1: sales are up, we saw an increase by seven percent
19:38
Speaker 1: year over year, so that's incredible. I think what we're
19:40
Speaker 1: really seeing right now is people are coming back to
19:43
Speaker 1: work and there's been a nice healthy increase in the
19:46
Speaker 1: apparel side, UM, where people are saying, hey, it's time
19:50
Speaker 1: to kind of get back into some new clothes and
19:53
Speaker 1: head on back into the office. Here. Even though it's
19:55
Speaker 1: a shorter week, people still want to look good. Do
19:58
Speaker 1: we not have to be concerned about savings rates? They've
20:02
Speaker 1: dropped back below pre pandemic levels right now we're looking
20:05
Speaker 1: at six point two percent and um. Goldman Sachs, chief
20:09
Speaker 1: economist on hopsis today said that consumers are reaching for
20:12
Speaker 1: leverage again. Um. Are we getting to that kind of
20:15
Speaker 1: good old American place where we spend more than we make?
20:21
Speaker 1: We are? Um? I think there's still a balance between
20:24
Speaker 1: that because I think people are still you know, looking
20:26
Speaker 1: at inflation, what's going on from more macroeconomics. But nonetheless,
20:31
Speaker 1: you know, they've been saving for quite a while now,
20:33
Speaker 1: and so a little spend, not percent, but even just
20:38
Speaker 1: more and spend from their perspective is not a bad thing.
20:42
Speaker 1: I think we need to really look at how we're
20:45
Speaker 1: taking the spend and where we're seeing some of those
20:47
Speaker 1: increases that we look at, For example, the increase in
20:52
Speaker 1: just spending restaurants, it's a nice healthy growth of two.
20:57
Speaker 1: So andre we kind of had a mixed bag in
20:58
Speaker 1: terms of the retail earnings today. Home Depot pretty good
21:02
Speaker 1: to be able to pass along price increases, Walmart not
21:04
Speaker 1: so much, and the stocks down about So as you
21:07
Speaker 1: look at those two big, big retailers, how did you
21:10
Speaker 1: think about that at vs. To be the consumer? You know,
21:14
Speaker 1: I think it's just um, if you really take a
21:16
Speaker 1: look at the consumer and their spends between Home Depot
21:20
Speaker 1: and Walmart, Walmart definitely did see a little bit of
21:23
Speaker 1: a softening. I just I think, in my opinion, what
21:26
Speaker 1: we're seeing here is just a slight shift. I think
21:28
Speaker 1: we're going to see that come back, you know, to spend.
21:31
Speaker 1: You know, the shock of gas prices going up, you
21:34
Speaker 1: know several weeks ago to uh, you know, the lack
21:38
Speaker 1: of certain products. A lot of that takes into account
21:42
Speaker 1: how we're spending or how consumers are spending. I think
21:44
Speaker 1: it's just a a you know, a softening, but not
21:48
Speaker 1: a trend that we're going to continue to see with Walmart.
21:52
Speaker 1: What do you think which which retailers are going to
21:55
Speaker 1: do the best with American consumers this year? I mean, Walmart,
21:59
Speaker 1: call us Co, target, those those retailers that offer consumers discounts,
22:05
Speaker 1: Are they going to be the strongest most? Definitely, grocery
22:09
Speaker 1: is going to still be strong. Our mass merchandisers, the
22:11
Speaker 1: names you just mentioned are going to be continue to
22:13
Speaker 1: be strong. The dollar General and family Dollar brands are
22:18
Speaker 1: going to continue to be quite strong as well. So
22:21
Speaker 1: although we're seeing this um movement towards going back to
22:26
Speaker 1: mass merchandising, buying in bulk, et cetera, that's where you'll
22:30
Speaker 1: see the winners, but we're also continuing to see you know,
22:34
Speaker 1: retail overall still gained momentum. I think this was a
22:38
Speaker 1: really uh, you know, something important to for us to
22:41
Speaker 1: take a look at. You know, NRF just mentioned that
22:45
Speaker 1: US retailers announced nearly seven times as many store openings
22:49
Speaker 1: as closing first quarter of this year. Interesting. So you know,
22:55
Speaker 1: how about the grocery business there, Boy, when you talk
22:57
Speaker 1: about inflation, a lot of the stories we see and
23:00
Speaker 1: here are just extraordinary increases in food prices. How do
23:05
Speaker 1: the grocers kind of deal with that? You know, if
23:08
Speaker 1: you if we think about the grocery segment, their margins
23:12
Speaker 1: are you know, quite tight in terms of pre pandemic.
23:17
Speaker 1: I mean this is going back in my career almost
23:20
Speaker 1: twenty five years ago. That was the talk about, you know,
23:24
Speaker 1: how tight margins are in that sector. And so it's
23:27
Speaker 1: really about volume, loyalty, consumer loyalty, etcetera. I think that's
23:33
Speaker 1: just compounded where we are today mostly due to cost
23:37
Speaker 1: in you know, the supply chain, in labor, cost um
23:42
Speaker 1: and just doing business in general. So you know, in
23:45
Speaker 1: order for grocers to continue to be UM successful and
23:50
Speaker 1: albeit I'm not speaking of costco uh and in the
23:54
Speaker 1: larger brands um in the math margins because they've seen
23:57
Speaker 1: increases year over year around twelve UM. You know, these
24:02
Speaker 1: grocers are still you know, looking out. Okay, how do
24:05
Speaker 1: we differentiate, how do we get in front of the
24:09
Speaker 1: consumer on a consistent basis, And that's why you're seeing
24:13
Speaker 1: more and more you know, online shopping. UM, you know,
24:16
Speaker 1: demand delivery, shortening that demand window from instead of same
24:21
Speaker 1: day too in the next two hours. So we'll continue
24:25
Speaker 1: to see that to just grab that loyalty share from
24:29
Speaker 1: some of these consumers. All right, Angie, thank you so
24:32
Speaker 1: much for that overview. We have a lot of retail
24:35
Speaker 1: sales dated, a lot of consumer a lot of retail
24:37
Speaker 1: numbers coming out of Walmart and home depot. Going to
24:40
Speaker 1: part it all out and break it down, Angie Shalanki,
24:42
Speaker 1: National director of Retail Services for the United States for Colliers.
24:46
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