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Oil Soars on Biden Comments, US Services Activity Expands · Bloomberg Intelligence

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  Speaker 2: Again.
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  Speaker 3: We've been calling out crude oil Brent crude oil up
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  Speaker 3: three point nine percent today, seventy six dollars seventy seven cents,
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  Speaker 3: big big move hire over the last several days to
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  Speaker 3: the Mid East tensions. Here Daboca Krishna Kumar Joints, so
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  Speaker 3: she's a Bloomberg Oil Markets reporter. Debica, thanks so much
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  Speaker 3: for joining us. What's the latest that's moving markets today?
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  Speaker 4: Hi, thanks for having me today. The big question now
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  Speaker 4: is whether Israel's retort to Israel to Ron's missile strikes
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  Speaker 4: will involve oil targets or not. We just had moments
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  Speaker 4: ago comments from President Biden saying that that's currently being discussed.
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  Speaker 5: Now.
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  Speaker 4: The market's obviously on edge because oil infrastructure is critical
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  Speaker 4: when it comes to determining supply and demand going forward.
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  Speaker 4: Iran produces over three million barrels a day, so any
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  Speaker 4: attack on their main export facilities or energy infrastructure could
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  Speaker 4: have significant ripple effects across the market, which is why
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  Speaker 4: we're seeing now prices rise for a third straight day,
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  Speaker 4: because markets are very much on edge about how this
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  Speaker 4: is going to play out.
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  Speaker 6: And just looking at your reporting, you side a City
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  Speaker 6: Group analyst saying that a major strike could take one
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  Speaker 6: and a half million barrels of daily supply off the market,
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  Speaker 6: whereas a minor infrastructure strike on downstream assets would be
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  Speaker 6: closer to three hundred thousand to four hundred and fifty
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  Speaker 6: thousand barrels a day of output. He just put that
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  Speaker 6: into context and what that means for the energy space
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  Speaker 6: and for oil.
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  Speaker 4: Yeah, yeah, of course, we are actually in an interesting
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  Speaker 4: market right now because some people like to call it
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  Speaker 4: an artificial prop up because OPEC members and allies are
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  Speaker 4: basically curtailing production. They were supposed to return supplies to
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  Speaker 4: the market in October, but they took a look at
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  Speaker 4: the market and how demand was looking kind of shaky
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  Speaker 4: because of questions about economic growth in the US and China,
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  Speaker 4: the two biggest economies in the world, and they thought, well,
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  Speaker 4: maybe we should pause and maybe we should kind of
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  Speaker 4: rethink returning supplies to the market. So now the current
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  Speaker 4: plan is to return supplies to the market in December.
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  Speaker 4: So in the market looks at this broadly, the reason
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  Speaker 4: we're not actually seeing more talk about one hundred dollars
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  Speaker 4: oil or an insane spike in prices is because the
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  Speaker 4: market is where that OPEC members like Saudi Arabia, UAE
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  Speaker 4: other Middle Eastern producers could quickly bring on supplies should
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  Speaker 4: we face a major shortage. And obviously there's also the
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  Speaker 4: sense that you know, we need we need to understand
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  Speaker 4: how demand's going to play out. There's still worries about
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  Speaker 4: the economy, both in the US and China, and bear
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  Speaker 4: in mind China is actually a big buyer of Iranian
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  Speaker 4: CREWD so even if we had, even if this doesn't
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  Speaker 4: descend into further missile strikes an all out war, we
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  Speaker 4: might see more tighter economic sanctions, and that's kind of
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  Speaker 4: interesting to see. It'll be interesting to see how that
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  Speaker 4: plays out as well, because it's you could only target
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  Speaker 4: financial components of that trade, and that may not necessarily
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  Speaker 4: result in loss of supply. So in the broad context
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  Speaker 4: of things, there are several moving parts here, and the
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  Speaker 4: market really needs to understand how each component is going
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  Speaker 4: to play out. And it's happening in real time, which
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  Speaker 4: is why we're seeing the volatility and prices.
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  Speaker 3: Devika, thank you so much for your reporting. Really appreciate
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  Speaker 3: getting a few minutes of your time. Devica Krishna Kumar.
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  Speaker 3: She is part of the team that covers a global
• 3:52
  Speaker 3: crude oil for Bloomberg News and they have a good
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  Speaker 3: reporting out this morning. To check it out on the
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  Speaker 3: Bloomberg Terminal and on Bloomberg dot Com.
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  Speaker 7: I'm Paul Swing.
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  Speaker 3: go Bloomberg Live Radio. That's what I did yesterday that
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  Speaker 3: got me right to where I wanted to go. Networked
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  Speaker 3: just just fine.
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  Speaker 2: Here Bailer gets some ism data came out today. It
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  Speaker 2: looks like better than expected. Here looks better than expected.
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  Speaker 6: We see the SMP right now down call it two points,
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  Speaker 6: but major averages pairing losses, if not gains.
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  Speaker 2: Looking at the.
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  Speaker 6: Two year right now at three spot seven percent, So
• 4:46
  Speaker 6: se markets move, all right.
• 4:47
  Speaker 2: Let's get the breakdown of the ISM data.
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  Speaker 3: Steve Miller joins as he's the chairman for the Institute
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  Speaker 3: for Supply Management, joining us via that zoom thing. So Steve,
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  Speaker 3: seems like pretty good numbers. Again, fifty four point nine
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  Speaker 3: was the headline number they consent. This was fifty one
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  Speaker 3: point seven and last period was fIF fifty one point five.
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  Speaker 2: Pretty solid, Yeah, very solid.
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  Speaker 8: We saw over a six percent increase in both the
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  Speaker 8: business activity and the new orders indexes, and that's really
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  Speaker 8: what drove drove the change in the PMI this month.
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  Speaker 6: And see when I'm looking at our Bloomberg headline expand
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  Speaker 6: in September at the fastest pace since February twenty twenty three,
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  Speaker 6: reading too much into that that it's a bullish indicator.
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  Speaker 8: So I'd say it's a bullish indicator because what we
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  Speaker 8: saw is an increase in kind of the broadening of
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  Speaker 8: the expansionary activity, both in business activity as well as
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  Speaker 8: new orders. But putting that in context, you know, we're
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  Speaker 8: ending kind of a lackluster Q three. If you look
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  Speaker 8: at the average PMI for this Q three, it's really
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  Speaker 8: the lowest average since two thousand and nine. So although
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  Speaker 8: we're seeing it was a great number for this month,
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  Speaker 8: but you know, fingers crossed that with the port activity
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  Speaker 8: and such, we'll be able to see that continued growth.
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  Speaker 3: Where would you like to see that that headline number,
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  Speaker 3: that fifty four point nine Again, it seems pretty good
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  Speaker 3: relative to the last period and relative to consensus. Where
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  Speaker 3: would you like to see that?
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  Speaker 8: Yeah, absolutely so if we if we saw consistency fifty
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  Speaker 8: three fifty five range, that would be really that'd be
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  Speaker 8: really healthy improvement coming off of a couple of fifty
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  Speaker 8: ones and then actually contraction before that. We're you know,
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  Speaker 8: we're on the right trajectory. Hopefully we can hold it
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  Speaker 8: all right, Very.
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  Speaker 3: Good, Steve, Thanks so much for joining us for a
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  Speaker 3: few minutes there, Steve Miller, chairman for the Institute for
• 6:33
  Speaker 3: Supply Management.
• 6:33
  Speaker 2: That's im to us. Cool kids there, Billy.
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• 6:52
  Speaker 2: Right now, let's go to market.
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  Speaker 3: Betell, Senior portfolio Managered Offspring Global Investments. Margo, We're going
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  Speaker 3: to get a big jobs print tomorrow, which will be
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  Speaker 3: presumably pretty informative for.
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  Speaker 2: This Federal Reserve.
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  Speaker 3: How are you thinking about the markets these days given
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  Speaker 3: all the economic data that we have had over the
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  Speaker 3: past several weeks.
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  Speaker 9: Well, I think it shows the economy is still growing.
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  Speaker 9: We had a great GDP number, three percent, which is
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  Speaker 9: better I think a lot of people thought, and I
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  Speaker 9: think it says a where to continue to move along
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  Speaker 9: at modest growth rates, probably less than three percent because
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  Speaker 9: some of the numbers, especially for labors next so still positive,
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  Speaker 9: no recession, no boomy upswing in GDP, so a little
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  Speaker 9: more of the same and a little pressure probably on
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  Speaker 9: revenues and profit margins going forward.
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  Speaker 6: And Mary, now that we have the first FED cut
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  Speaker 6: in the rear view mirror and at least the swaps
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  Speaker 6: market pricing in a string through the first half of
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  Speaker 6: next year, how are you positioning in this market, especially
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  Speaker 6: given the expectation that the Fed can navigate us off landing.
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  Speaker 9: Well, we think some things are out of control of
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  Speaker 9: the FED, which is the economy. But I do think
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  Speaker 9: that we'll see another two quarter point reductions in the
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  Speaker 9: FED funds rate over the next few months, which would
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  Speaker 9: be modestly helpful over the long return for the economy.
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  Speaker 9: But basically we think that, as I said, the economy
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  Speaker 9: is growing, it's a sustainable level, but more modest than
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  Speaker 9: perhaps you might like to see. So we think that
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  Speaker 9: says that return some equity will be maybe mid single
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  Speaker 9: digit going forward, as opposed to the double digit types
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  Speaker 9: of rates we've had so far. Is here, So no
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  Speaker 9: changes in the portfolio or outlonger.
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  Speaker 3: So Margan, I'm looking at then GO function of the
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  Speaker 3: Bloomberg Index browser, and I see across the US fixed
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  Speaker 3: income everything's in the green here, solid mid single digit
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  Speaker 3: returns for fixed income investors share. The highlight, though, is
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  Speaker 3: US corporate high yield. How do you think about that
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  Speaker 3: the high yield market? Is there any value left there?
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  Speaker 9: Well, yes, there is this modest value. But actually, ever
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  Speaker 9: since the had began to raise short rates a couple
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  Speaker 9: of years ago, the best performing part of the high
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  Speaker 9: old market has been the fixed income market has been
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  Speaker 9: yield because it just simply pushioned those treasury rate rises
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  Speaker 9: with the extra yield do you get so right now
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  Speaker 9: in double B bonds you get a little over two
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  Speaker 9: hundred basis points two percentage points for single baes, say
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  Speaker 9: three percentage points, But with a backdrop of the economy
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  Speaker 9: growing and defaults looking like they're going to be under
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  Speaker 9: two percent over the next year, that says you're still
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  Speaker 9: getting a bargain for the risk you're taken by being
• 9:25
  Speaker 9: in below investment grade. So we think it's still attractive,
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  Speaker 9: but modest. Certainly, we're not looking for double digit returns
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  Speaker 9: going forward, mid single digits, just basically the coupon.
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  Speaker 6: And so does that impact kind of your allocation to
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  Speaker 6: risk of your debt or how are you thinking about that?
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  Speaker 9: Well, with your spread so narrow and dollar prices pretty
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  Speaker 9: high in the high yeld market, most bonds are trading
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  Speaker 9: pretty close to their face value, maybe ninety eight ninety
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  Speaker 9: cents on the dollar, we think that you pretty much
• 9:54
  Speaker 9: have gotten rid of the extra risk premium that was
• 9:57
  Speaker 9: in the high yeld market when the Fed had rates
• 10:00
  Speaker 9: or high. So we don't think there's a lot of
• 10:02
  Speaker 9: capital appreciation room. So really, if you're looking realistically in
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  Speaker 9: return and say over the next year five six, maybe
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  Speaker 9: seven percent. That says to me that the market really
• 10:13
  Speaker 9: is going to favor stocks where I think we should
• 10:15
  Speaker 9: at least get that much and maybe even a little
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  Speaker 9: bit more if we have growth to stay around that
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  Speaker 9: one two percent level. So basically, low volatility, modest coupon,
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  Speaker 9: and modest return is how we see fixed income in
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  Speaker 9: the high old market right now.
• 10:30
  Speaker 3: And Margie, I guess this month of September it was
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  Speaker 3: a record month for new issuance.
• 10:34
  Speaker 4: What is that?
• 10:35
  Speaker 2: Is that good for the market.
• 10:37
  Speaker 9: Yes, it's excellent because the problem with the high old
• 10:40
  Speaker 9: market is there simply has not been enough supply for
• 10:43
  Speaker 9: all the demand by investors for that extra yield. In fact,
• 10:47
  Speaker 9: we actually had about a year ago or so the
• 10:49
  Speaker 9: market actually shrink because we had new issuance drop off,
• 10:53
  Speaker 9: we had maturities and bond calls, so the whole high
• 10:55
  Speaker 9: old market actually shrunk. So it would be very good
• 10:59
  Speaker 9: to have a big supply. There's a lot of demands
• 11:01
  Speaker 9: that will match that, and to have the high old
• 11:04
  Speaker 9: market grow a bit would add to the liquidity, give
• 11:07
  Speaker 9: investors more choices of names Dubai, So I think more
• 11:09
  Speaker 9: supply would be very positive. There's a saying supply creates
• 11:14
  Speaker 9: and some demand in the bottom market.
• 11:17
  Speaker 3: Yeah, very good at across all of fixed income. A
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  Speaker 3: really really busy September four new issue. And so Margia Btel,
• 11:22
  Speaker 3: thanks so much for joining us market. Bettel is a
• 11:24
  Speaker 3: senior portfolio manager all Spring Global Investment. She's based up
• 11:27
  Speaker 3: there in Boston. Joining us via Zooming.
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• 11:49
  Speaker 3: All right, that port strike. It is still ever day
• 11:51
  Speaker 3: three here, and it's starting to get serious here, and
• 11:53
  Speaker 3: you don't get a sense that there is, you know,
• 11:56
  Speaker 3: a lot of discussion going on here. So the questions
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  Speaker 3: one is going to really start the impact this economy?
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  Speaker 3: And to what degree? Dristic a critical joins is. She's
• 12:03
  Speaker 3: a chief scientist at Workplace Culture. The company is called
• 12:06
  Speaker 3: Culture Partners. Joining us via Sacramento via that Zoom thing. Jessica,
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  Speaker 3: talk about this strike. How do you kind of envision
• 12:15
  Speaker 3: this strike from both sides perspective, what's what's going on.
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  Speaker 2: Here and where could there be movement? Maybe?
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  Speaker 5: Well, this strike comes down to ultimately two issues. It's
• 12:25
  Speaker 5: about wages and it's about automation. So Harold Daggett, who's
• 12:29
  Speaker 5: the president of the ISLA, has said, not only are
• 12:32
  Speaker 5: they wanting seventy seven percent increase, which is significant, they've
• 12:36
  Speaker 5: already been offered fifty percent. They're going to seventy seven,
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  Speaker 5: but they also want to create air tight language quote unquote,
• 12:43
  Speaker 5: air tight language that removes the ability for the ports
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  Speaker 5: to use automation or semi automation. And it's downright archaic
• 12:51
  Speaker 5: what they're asking for. If you want to understand what
• 12:53
  Speaker 5: kind of automation they're saying they refuse to allow. It's
• 12:57
  Speaker 5: not some complicated, new fancy AI technology. We're just talking
• 13:02
  Speaker 5: parking gates going up and down. They're not okay with
• 13:04
  Speaker 5: that kind of automation. They're not okay with time card
• 13:07
  Speaker 5: stamping automation. In fact, right now they have people who
• 13:11
  Speaker 5: are employed as schedulers to write down who is there,
• 13:13
  Speaker 5: when they arrived and when they left, which allows for
• 13:16
  Speaker 5: inaccuracy and time reporting. So they're really holding the port
• 13:20
  Speaker 5: hostage with these demands, and that is why we're at
• 13:23
  Speaker 5: a standstill. I think we could easily get there at
• 13:25
  Speaker 5: the wages. The ports are doing very well. They have
• 13:27
  Speaker 5: the financial capacity to meet the needs of seventy seven percent.
• 13:30
  Speaker 5: But it's really the automation that is the sticking point.
• 13:33
  Speaker 6: Is that just a fear of automation becoming a slippery
• 13:36
  Speaker 6: slope from your understanding.
• 13:39
  Speaker 5: I don't think it's a fear. I think it's a strategy.
• 13:42
  Speaker 5: They have said, quote, I will cripple you are words
• 13:46
  Speaker 5: that have come from the president of the union's mouth.
• 13:49
  Speaker 5: He is intentionally trying to cripple the American economy in
• 13:53
  Speaker 5: an effort to get what they want and to maintain
• 13:55
  Speaker 5: the job security. And it is downright an American. I mean,
• 13:59
  Speaker 5: I believe that we all, every industry has the ability
• 14:02
  Speaker 5: to implement basic technology, basic automations in order to advance
• 14:07
  Speaker 5: and progress as a society. And what's interesting here is
• 14:10
  Speaker 5: if you look at what they're doing, they're actually making
• 14:12
  Speaker 5: the argument for why we need these ports to implement automation,
• 14:16
  Speaker 5: because if they were automated, we wouldn't be being held
• 14:19
  Speaker 5: hostage by this union and the effects of the economy
• 14:23
  Speaker 5: and the American consumer are going to be felt soon
• 14:26
  Speaker 5: and it is going to be widespread. There will be panic.
• 14:29
  Speaker 5: There already is panic. There's already been a run on
• 14:32
  Speaker 5: toilet paper and paper towels, which is completely unrelated to
• 14:35
  Speaker 5: the imports from these ports. So it's interesting that's really
• 14:38
  Speaker 5: just psychological in nature. We're remembering when toilet paper wasn't
• 14:42
  Speaker 5: available at COVID and so people are going to stockpile
• 14:45
  Speaker 5: toilet paper now. But what else will they stockpile? And
• 14:48
  Speaker 5: who else is going to be affected by this and
• 14:50
  Speaker 5: lose their jobs because supplies that they need to do
• 14:52
  Speaker 5: their jobs haven't arrived. It's really going to be devastating
• 14:56
  Speaker 5: if this doesn't get resolved soon.
• 14:58
  Speaker 3: So Jessco, what has anyone on either side quantified the
• 15:02
  Speaker 3: job potential job loss from automation? How big of an
• 15:05
  Speaker 3: issue is this in reality?
• 15:06
  Speaker 2: Do we know?
• 15:08
  Speaker 5: There are a lot of analysts making estimates on the
• 15:11
  Speaker 5: cost that this strike will have and the ranges are
• 15:14
  Speaker 5: significantly wide, so it's unclear and the job costs we
• 15:18
  Speaker 5: can only speak right now philosophically, as construction materials don't arrive,
• 15:22
  Speaker 5: when construction workers are not going to be able to
• 15:25
  Speaker 5: do their jobs, and so they will be laid off
• 15:27
  Speaker 5: or temporarily furloughed, and that impact will be devastating on
• 15:31
  Speaker 5: those workers. So if you think about the union, workers
• 15:34
  Speaker 5: are being very selfish right now, and they do want
• 15:38
  Speaker 5: the American worker and consumer to feel the pain. They're
• 15:41
  Speaker 5: counting on it, they're looking forward to that, and I
• 15:44
  Speaker 5: think one of the devastating things here is that they're
• 15:46
  Speaker 5: saying and don't blame us, blame them, So they're not
• 15:50
  Speaker 5: taking accountability for the strategy. And I also don't think
• 15:53
  Speaker 5: it's very logical because the American worker and consumer is
• 15:57
  Speaker 5: going to become outraged and say, you know what, that
• 16:00
  Speaker 5: we want them to automate because this is a danger
• 16:03
  Speaker 5: to the American culture, society, workplace, labor market, all.
• 16:07
  Speaker 6: Of it Protisica. In terms of the actual dock workers
• 16:11
  Speaker 6: about twenty five thousand at the East Coast and Gulf
• 16:14
  Speaker 6: Coast ports. What percentage or number of those workers would
• 16:19
  Speaker 6: be at risk of losing their jobs if automation were
• 16:22
  Speaker 6: to be implemented at a grand scale.
• 16:25
  Speaker 5: It all depends on what we're talking about with regards
• 16:27
  Speaker 5: to automation. So the schedulers will lose their job if
• 16:30
  Speaker 5: we implement time cards. Right now, there is already some
• 16:34
  Speaker 5: automation if you think about it. I was listening to
• 16:36
  Speaker 5: an interview with one of the union strikers yesterday and
• 16:40
  Speaker 5: he said, you know, decades ago, we were literally offloading
• 16:44
  Speaker 5: one hundred and twenty five pounds of sugar with our hands.
• 16:46
  Speaker 5: So that's not happening anymore. That's because of automation, and
• 16:49
  Speaker 5: I'm sure that they celebrate it. So the where automation
• 16:52
  Speaker 5: is allowed and where automation isn't allowed is exactly what's
• 16:55
  Speaker 5: under negotiation. There is already in their current contract language
• 16:59
  Speaker 5: that prevents new automation. They're not saying that they're okay
• 17:03
  Speaker 5: with that language though, they're wanting to go backwards. They're
• 17:05
  Speaker 5: wanting to remove automation that's already been implemented, and so
• 17:09
  Speaker 5: that's really regressive and not progressive at all.
• 17:12
  Speaker 3: All right, Well, have to see how this plays out
• 17:14
  Speaker 3: where day three and again the tensions are mounting, the
• 17:17
  Speaker 3: risks are mounting for the economy. Jessica Kregel, thank you
• 17:19
  Speaker 3: so much for joining us. We really appreciate getting your
• 17:21
  Speaker 3: thoughts of perspective. Jessica Kriegel. She's a chief scientist of
• 17:24
  Speaker 3: workplace culture on the firm is called Culture Partners. They're
• 17:28
  Speaker 3: based in Sacramento, California, and she's joining us via zoom.
• 17:33
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 17:37
  Speaker 1: weekdays at ten am Eastern on applecar Play and Android
• 17:40
  Speaker 1: Auto with the Bloomberg Business App. You can also listen
• 17:43
  Speaker 1: live on Amazon Alexa from our flagship New York station,
• 17:47
  Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
• 17:51
  Speaker 3: Billy Lipscholtz sitting in for Alex Steele on Paulswuni. We
• 17:54
  Speaker 3: live here on a Bloomberg and Arctive Brookers studio, which
• 17:56
  Speaker 3: on Tucker We're assell streaming live on YouTube dot com.
• 18:00
  Speaker 3: You can find us over there just search Bloomberg Live Radio.
• 18:03
  Speaker 2: You know, we're a little bit.
• 18:04
  Speaker 3: Of a sell off here today, A lot of just
• 18:06
  Speaker 3: kind of mixed trading here, all within one or two
• 18:08
  Speaker 3: percent of the all time highs.
• 18:09
  Speaker 2: I mean why not? I mean, I guess you got a.
• 18:11
  Speaker 3: Fed cutting rates, you got decent earnings. I guess that's
• 18:14
  Speaker 3: a pretty constructive look for this market. I want to
• 18:16
  Speaker 3: how the technicals look. Our next guest, I think can
• 18:18
  Speaker 3: help us a little bit there. Francis Stacy chairwoman of
• 18:20
  Speaker 3: the Global Digital Finance Committee, joining us from Tampa, Florida
• 18:24
  Speaker 3: via zoom. Francis Again, you look at this charge kind
• 18:27
  Speaker 3: of up into the right here. What are the technicals
• 18:29
  Speaker 3: tell you about this market? Anything concerning you?
• 18:34
  Speaker 10: Yeah, So it's very interesting because the technicals actually look
• 18:37
  Speaker 10: quite toppy. And I do think that if the S
• 18:40
  Speaker 10: ANDP gains any kind of momentum and a bit of
• 18:42
  Speaker 10: a sellof which is you know, could be news driven.
• 18:45
  Speaker 10: We've got a big jobs number coming out tomorrow, you know.
• 18:49
  Speaker 10: I think fifty six twenty five is the initial stop
• 18:51
  Speaker 10: for support to indicate that the upward trend is as
• 18:55
  Speaker 10: well in play, and there's nothing that's coming on the horizon.
• 18:58
  Speaker 10: As far as calculating an additional risk, I agree with you.
• 19:01
  Speaker 10: The FED is obviously changed its modality into an easing mode,
• 19:05
  Speaker 10: and that's happening globally. I mean, the global money supply
• 19:08
  Speaker 10: is up seven point three trillion as of September, and
• 19:12
  Speaker 10: just globally we're getting a lot of simultaneous rate cutting
• 19:15
  Speaker 10: and that supports the reacceleration and global growth type mindset.
• 19:20
  Speaker 10: I do think we'll see a little bit more softening
• 19:22
  Speaker 10: in the growth and labor markets here in the US,
• 19:25
  Speaker 10: and we just have to see if there's a catalyst
• 19:28
  Speaker 10: that would indicate a recession, Well, how.
• 19:31
  Speaker 6: Much is that recession risk being priced in. I'm just
• 19:33
  Speaker 6: looking at the swaps market, and at least as it
• 19:36
  Speaker 6: relates to the FED, we're at an implied rate at
• 19:38
  Speaker 6: a round three and a half percent by May of
• 19:40
  Speaker 6: next year. In VideA is kind of the S and
• 19:43
  Speaker 6: P one, if you will, and is seemingly talking up demand.
• 19:46
  Speaker 6: Apple and Microsoftware are relatively bullish as well.
• 19:50
  Speaker 2: Kind of what do you make of those dynamics.
• 19:52
  Speaker 10: Yeah, so absolutely there's no indication and the markets are
• 19:56
  Speaker 10: not pricing in an indication of a recession, which makes
• 19:58
  Speaker 10: this rate cutting and a regressive rate cutting, I would
• 20:01
  Speaker 10: argue globally very interesting. I mean, I think they're cutting
• 20:04
  Speaker 10: rates globally on the orders of magnitude that they did
• 20:07
  Speaker 10: during the you know, the global financial crisis. Without that
• 20:12
  Speaker 10: catalyst in place. It's just basically looking at the yield
• 20:16
  Speaker 10: curve and potential. You know what happens when you have
• 20:19
  Speaker 10: a prolonged and yield curve inversion that is, you know,
• 20:23
  Speaker 10: pretty severe and you have the resteepening quinte essentially that
• 20:28
  Speaker 10: has been an indicator mechanically of an imminent recession. However,
• 20:32
  Speaker 10: there was always a catalyst. You know, in the nineties
• 20:35
  Speaker 10: you had the invasion, you know, the Kuwait situation, and
• 20:39
  Speaker 10: the two thousands you had the tech bubble bursting, and
• 20:42
  Speaker 10: then of course with the GFC you had the housing
• 20:44
  Speaker 10: bubble burst that sort of tipped that domino effect. Right now,
• 20:47
  Speaker 10: there's nothing in the system, and certainly, as you say,
• 20:50
  Speaker 10: not being priced in that that domino effect is ready
• 20:52
  Speaker 10: to be tipped. But you know, sometimes these things happen
• 20:55
  Speaker 10: slowly and then all at once.
• 20:57
  Speaker 3: So overall, I mean here it's it seems like again
• 21:00
  Speaker 3: the backdrop for a lot of the the bull seems
• 21:03
  Speaker 3: pretty simple. I've got decer earnings growth, I got of
• 21:06
  Speaker 3: interest rates coming down. Is the recession risk something that
• 21:11
  Speaker 3: could really be upset that kind of foundation.
• 21:15
  Speaker 10: Yes, certainly if there's a catalyst, and we do have
• 21:18
  Speaker 10: some potential catalysts in our geopolitical environment. I don't know
• 21:22
  Speaker 10: sort of what volatility the election outcome could enter into
• 21:25
  Speaker 10: the system. So we just you know, we just have
• 21:27
  Speaker 10: to watch the catalyst. We have to, as you say,
• 21:29
  Speaker 10: you know, watch the spreads, watch the swaps and see
• 21:32
  Speaker 10: if there's any sort of a reaction there. It's interesting
• 21:36
  Speaker 10: because from the role of my new committee, and I've
• 21:40
  Speaker 10: brought in John Degastino, who's very storied as my co chair,
• 21:45
  Speaker 10: we are looking at the fiscal and debt dynamics around
• 21:47
  Speaker 10: the world, and we are engaging countries and looking at
• 21:50
  Speaker 10: the new prominence of global digital finance and what that
• 21:54
  Speaker 10: algorithm looks like. Because here's the thing. You put a
• 21:57
  Speaker 10: record amount of monetary and fiscal stimulus and you know,
• 22:00
  Speaker 10: pretty much globally, but the most in the US during COVID,
• 22:04
  Speaker 10: and then you know, something like the mechanical implications of
• 22:07
  Speaker 10: the yield curven version. We've seen an elongation of the
• 22:11
  Speaker 10: seasons of these economic cycles, and so the question becomes,
• 22:15
  Speaker 10: have the mechanics fundamentally changed post COVID or do we
• 22:18
  Speaker 10: have the same mechanics in place on a delay. And
• 22:21
  Speaker 10: then also just looking at the liquidity dynamics around the
• 22:24
  Speaker 10: world juxtaposed to the debt and looking at the potential
• 22:28
  Speaker 10: a potential new algorithm for the managing of this, the
• 22:30
  Speaker 10: managing of recession risk, you know, with the integration of
• 22:34
  Speaker 10: the digital finance component, and certainly you know a potential
• 22:39
  Speaker 10: for digital currencies as well.
• 22:41
  Speaker 6: So are you talking we're talking bitcoin?
• 22:42
  Speaker 2: Is that what you're kind of alluding to?
• 22:46
  Speaker 10: Bitcoin will never replace fiat because it has a finite
• 22:49
  Speaker 10: supply and it cannot disrupt the function of the central banks.
• 22:53
  Speaker 10: If it cannot do the function of the central banks.
• 22:56
  Speaker 10: Central banks adjust mone you know, money supply, and you know,
• 23:00
  Speaker 10: in the United States they have their dual mandate of
• 23:02
  Speaker 10: price stability and full employment. They could never accomplish that
• 23:05
  Speaker 10: because they can't manage the supply of bitcoin. But you know,
• 23:09
  Speaker 10: for instance, El Salvador has this hybrid approach between bitcoin
• 23:13
  Speaker 10: and the US dollar, and I do think that it's
• 23:16
  Speaker 10: kind of like trying to make an electric car talk
• 23:18
  Speaker 10: to an internal combustion engine. They have different underlying mechanics,
• 23:21
  Speaker 10: but there is potentially an algorithm possible that bridges that
• 23:24
  Speaker 10: gap and brings in a digital currency. I do think
• 23:27
  Speaker 10: if we see digital currencies, you know, obviously Bitcoin is
• 23:31
  Speaker 10: legal tender and El Salvador, but if we do see
• 23:34
  Speaker 10: digital currencies widely adopted as legal tender, it's going to
• 23:37
  Speaker 10: be the central banking digital currencies because those are the
• 23:40
  Speaker 10: only things that can disrupt what the central bank is doing.
• 23:42
  Speaker 10: The Central Bank has been given all of the legal authority,
• 23:45
  Speaker 10: has all of the legal precedent from Congress, and you
• 23:48
  Speaker 10: know that's you're not likely to unmock that anytime soon.
• 23:52
  Speaker 10: So I do think that there's going to be an
• 23:54
  Speaker 10: opportunity coming up. But that's that's what we're really looking
• 23:58
  Speaker 10: at systemically.
• 23:59
  Speaker 2: Very interesting.
• 24:00
  Speaker 3: Francis Stacey, thank you so much for joining us. Francis Stacey,
• 24:02
  Speaker 3: she's a chairwoman of the Global Digital Finance Committee. Joining
• 24:05
  Speaker 3: US FRO Tampa, Florida.
• 24:07
  Speaker 1: Via zoom you're listening to the Bloomberg Intelligence Podcast. Catch
• 24:12
  Speaker 1: us live weekdays at ten am Eastern on applecar Play
• 24:15
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• 24:18
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• 24:22
  Speaker 1: York station just say Alexa playing Bloomberg eleven thirty.
• 24:26
  Speaker 3: Another big news in the tech spasis, some of the
• 24:29
  Speaker 3: valuations they are coming back, it seems to think in
• 24:31
  Speaker 3: a big ways, particularly if you have anything to do
• 24:34
  Speaker 3: with AI. So if you have a company that's called
• 24:36
  Speaker 3: open ai, that's a pretty good name to happen, a
• 24:39
  Speaker 3: pretty good time to raise capital. OpenAI I just raised
• 24:41
  Speaker 3: six point six billion dollars in the private markets and
• 24:44
  Speaker 3: new funding, giving the artificial intelligence company a one hundred
• 24:47
  Speaker 3: and fifty seven billion dollar valuation as a look to
• 24:51
  Speaker 3: build the world's leading generative AI technology. Check in with
• 24:55
  Speaker 3: it somebody who knows this stuff really well. On a
• 24:57
  Speaker 3: rock run of technology channels for Bloomberg Intelligence from the
• 25:01
  Speaker 3: tech hub of Chicago, Illinois, anurag talks about open Ai.
• 25:05
  Speaker 1: Here.
• 25:06
  Speaker 3: These are some real numbers here on a rock, and
• 25:08
  Speaker 3: there's some real investors investing in this company.
• 25:11
  Speaker 2: At this stage, what do we know?
• 25:14
  Speaker 11: Yeah, open air has really taken a lead over the
• 25:16
  Speaker 11: last three years because of the launch of chat GPT
• 25:19
  Speaker 11: and after that it has become to go to things
• 25:21
  Speaker 11: even for enterprises. We recently did a CIO survey and
• 25:25
  Speaker 11: open Ai Microsoft combination was far ahead than all the
• 25:28
  Speaker 11: other large language models that was out there.
• 25:30
  Speaker 7: So that's on the enterprise side and consumer side.
• 25:33
  Speaker 11: We already know how well they are doing both on
• 25:35
  Speaker 11: the app that they're selling along with the distribution that
• 25:39
  Speaker 11: they what they won with Apple being part of CD
• 25:42
  Speaker 11: when the software upgrade is going to come. So open
• 25:45
  Speaker 11: ai in the world of large language models really at
• 25:48
  Speaker 11: the top of the you know, the top of the
• 25:51
  Speaker 11: mountain at this point, and this is one of the
• 25:53
  Speaker 11: reasons you're getting these high valuations.
• 25:55
  Speaker 6: Yeah, I just want to put into perspective, at one
• 25:58
  Speaker 6: hundred and fifty seven billion dollars, open AI would be
• 26:00
  Speaker 6: larger than uber and at that six point six billion
• 26:03
  Speaker 6: dollars in funding relative to IPOs, it would be the
• 26:07
  Speaker 6: twelfth largest global IPO since twenty eighteen. So anorak, are
• 26:13
  Speaker 6: we in a AI bubble as it relates to private markets?
• 26:18
  Speaker 11: I think, to be very frank with you, I can
• 26:19
  Speaker 11: only answer that five years from now. But we just
• 26:22
  Speaker 11: you know, updated our numbers looking at capital expenditures for
• 26:26
  Speaker 11: the top five six companies. These companies, which includes Amazon, Microsoft, Meta, Oracle,
• 26:31
  Speaker 11: et cetera. In twenty twenty three, they spend about one
• 26:34
  Speaker 11: hundred and ten billion dollars in all the things what
• 26:36
  Speaker 11: we call capital expenditures. In twenty twenty five, they're going
• 26:40
  Speaker 11: to spend about two hundred billion dollars. So that's a
• 26:42
  Speaker 11: massive increase of ninety billion over a two year period.
• 26:45
  Speaker 7: You know, where is that money going to?
• 26:46
  Speaker 11: Expansion of data center, buying more GPUs, buying more hardware,
• 26:51
  Speaker 11: expanding their own large language models. So it really feels real, frankly,
• 26:55
  Speaker 11: as to the amount of money that the big guys
• 26:57
  Speaker 11: are spending it over here, they won't be doing it
• 27:00
  Speaker 11: if they didn't see the demand on the other side
• 27:02
  Speaker 11: of the equation.
• 27:04
  Speaker 3: It's been a turbulent year for the company here. I know,
• 27:07
  Speaker 3: last November the company's board fired and then quickly re
• 27:11
  Speaker 3: hired the CEO, Sam Altman. Following months at a lot
• 27:14
  Speaker 3: of key leaders leave, including the co founder, the chief
• 27:17
  Speaker 3: technology officer. It seems like the market's kind of forgotten
• 27:21
  Speaker 3: all about that, or maybe it's not a problem anymore.
• 27:24
  Speaker 3: How's the market dealing with some of that turmoil we've
• 27:26
  Speaker 3: seen over the last year.
• 27:28
  Speaker 11: I think people tend to forget that who's really behind
• 27:31
  Speaker 11: a lot of backing of this particular company, and that's Microsoft,
• 27:35
  Speaker 11: and you know they have the biggest distribution and among enterprises.
• 27:39
  Speaker 11: So if they are basically telling people, if you want
• 27:42
  Speaker 11: to create an enterprise application using some AI large language model,
• 27:46
  Speaker 11: here is open a model and you can host it
• 27:49
  Speaker 11: on our cloud platform, I think that is resonating very
• 27:52
  Speaker 11: well with customers. So as long as that continues for
• 27:55
  Speaker 11: the next several years, open AI's revenue will continue to
• 27:58
  Speaker 11: go up. And you know, then you can and you know,
• 28:00
  Speaker 11: argue whether the valuations is high or not.
• 28:02
  Speaker 6: And just from the bloom we're reporting Tiger Global put
• 28:05
  Speaker 6: in three hundred and fifty million dollars, Ultimeter putting in
• 28:07
  Speaker 6: at least two hundred and fifty million dollars. But to
• 28:09
  Speaker 6: your point, if Microsoft is able to write such large checks,
• 28:13
  Speaker 6: how does that impact the funding environment for AI companies.
• 28:17
  Speaker 6: I'm just thinking about the biggest competitors for open ai
• 28:20
  Speaker 6: in Anthropic and Xai.
• 28:22
  Speaker 11: Yeah, I mean, Anthropic is backed by you know, Amazon
• 28:25
  Speaker 11: Web Services at this point primarily, and almost all the others.
• 28:28
  Speaker 11: The one thing we heard, you know, from reporting from
• 28:30
  Speaker 11: Bloomberg News is that open ai is asking them not
• 28:33
  Speaker 11: to back up you know, Elon's Xai or others. And
• 28:36
  Speaker 11: I think that's partially the reason you see all the
• 28:38
  Speaker 11: other plays coming in because and by the way, there's
• 28:42
  Speaker 11: not going to be one winner, They're going to be
• 28:43
  Speaker 11: multiple models. They're going to be multiple companies doing well here.
• 28:47
  Speaker 11: And there is no reason Anthropic don't thrive in this way,
• 28:50
  Speaker 11: or Mistral or all the other large language model companies.
• 28:53
  Speaker 3: What do we know about open AI's financials, If anything.
• 28:58
  Speaker 7: It's I mean, I don't have a clear pick on it.
• 29:00
  Speaker 11: I've read as much as you have, and you know,
• 29:02
  Speaker 11: we have seen projections out there for the next several
• 29:05
  Speaker 11: years they can get to I don't know, five billion,
• 29:07
  Speaker 11: ten billion or so forth. So I mean it's it's
• 29:09
  Speaker 11: unless we see the s one when they go public,
• 29:12
  Speaker 11: you know, up till at that point, you know, it's
• 29:15
  Speaker 11: it's it's purely a guess work.
• 29:16
  Speaker 3: Do we have any sense of do they have an
• 29:18
  Speaker 3: appetite to go public? Is it a sense of timing?
• 29:21
  Speaker 3: What are their plans for going public if any?
• 29:25
  Speaker 7: See?
• 29:25
  Speaker 11: My personal view is they don't need to go public
• 29:27
  Speaker 11: at all. They don't need the funding they will you know,
• 29:29
  Speaker 11: the whoever is part of this particular ecosystem is getting
• 29:32
  Speaker 11: rich every day. I think they should figure out how
• 29:35
  Speaker 11: to grab as much enterprise workloads as possible before they
• 29:39
  Speaker 11: think about it, because one thing is for sure, even
• 29:41
  Speaker 11: as they are doing this land grabbing right now, they're
• 29:44
  Speaker 11: at a loss, and they will be at a loss
• 29:45
  Speaker 11: for several years out because the cost of running these
• 29:48
  Speaker 11: workloads is very high and it's going to you know,
• 29:51
  Speaker 11: you're not going to see any free cash flow. You're
• 29:52
  Speaker 11: not going to see any But once you've got public,
• 29:55
  Speaker 11: you know, you really go under the lens when it's
• 29:57
  Speaker 11: about profitability and your margins.
• 29:59
  Speaker 6: Well about thirty seconds. But going back to a story
• 30:02
  Speaker 6: that has been reported out recently in terms of giving
• 30:04
  Speaker 6: Altman a stake in the company that could be worth
• 30:07
  Speaker 6: more than ten billion dollars, what do you make of
• 30:08
  Speaker 6: those conversations and what that could mean for the company
• 30:11
  Speaker 6: and its ambitions.
• 30:13
  Speaker 11: Yeah, I mean he's always talked about how he is
• 30:15
  Speaker 11: doing it for the greater good of the world. But
• 30:17
  Speaker 11: but I guess when you get this much options, you
• 30:19
  Speaker 11: change your mind on that.
• 30:21
  Speaker 7: But it's it is what it is.
• 30:24
  Speaker 2: It is what it is. We always fall back on
• 30:26
  Speaker 2: that one.
• 30:26
  Speaker 3: I love it on a Ragranet technolog channels Bloomberg Intelligence
• 30:29
  Speaker 3: joinings today talking about open Ai again. Just a huge,
• 30:33
  Speaker 3: huge funding round six point six billion dollars raised and
• 30:36
  Speaker 3: giving the company an evaluation of one hundred and fifty
• 30:39
  Speaker 3: seven billion. That's just massive and impressive in and of itself.
• 30:42
  Speaker 3: What's also impressive to me is who's going in there.
• 30:44
  Speaker 3: We're getting some big, big technology companies, including Nvidia, some
• 30:47
  Speaker 3: seriously smart private equity money, private capital money including the
• 30:52
  Speaker 3: Tiger and some others, and Fidelity as well. So a
• 30:55
  Speaker 3: lot of what a lot of folks would call smart
• 30:57
  Speaker 3: money getting in even at this value oation level. That
• 31:01
  Speaker 3: gets your attention here, so we'll keep an eye on that.
• 31:05
  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 31:09
  Speaker 1: weekdays at ten am Eastern on applecard Play and Android
• 31:12
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• 31:15
  Speaker 1: live on Amazon Alexa from our flagship New York station,
• 31:18
  Speaker 1: Just Say Alexa Play Bloomberg eleven.
• 31:21
  Speaker 3: Thirty Barely Lipsholtz sitting in for Alex Steele today, I'm
• 31:25
  Speaker 3: Paul Suonier live.
• 31:26
  Speaker 2: Here in our Bloomberg Interactive Brokers studio.
• 31:28
  Speaker 3: Streaming live on YouTube's at headverd YouTube dot com search
• 31:30
  Speaker 3: Bloomberg Live Radio on this where you will find us
• 31:33
  Speaker 3: which s are from the CEO of Levi Strauss, Michelle
• 31:36
  Speaker 3: Gost talking about the business. Let's do a little bit
• 31:38
  Speaker 3: more retail here, Mary Ross Gilbert. She's a senior equity
• 31:41
  Speaker 3: analyst for Bloomberg Intelligence covering the retail space. She's based
• 31:44
  Speaker 3: out there in Los Angeles. Mary, what did you make
• 31:46
  Speaker 3: of We'll just start with the Levi's story. What did
• 31:50
  Speaker 3: you make of their their quarter, their outlook and kind
• 31:53
  Speaker 3: of maybe some of the reasoning for some of the
• 31:55
  Speaker 3: weakness they're seeing.
• 31:57
  Speaker 12: Yeah, so, Paul, the Levi's earnings out yesterday, I think
• 32:02
  Speaker 12: there was too much focus on some of the negativity,
• 32:04
  Speaker 12: so for example, weakness in China. China is only two
• 32:07
  Speaker 12: percent of the business and still the growth prospects there
• 32:11
  Speaker 12: are tremendous, but we have been hearing that there has
• 32:14
  Speaker 12: been some weakness generally with the consumer. But also I
• 32:17
  Speaker 12: think there's some execution opportunities there. So they did bring
• 32:20
  Speaker 12: in a new leader, so I think we could see
• 32:23
  Speaker 12: things shift, but frankly, it's really really small if you
• 32:27
  Speaker 12: look at what's happening in the bigger parts of the business.
• 32:30
  Speaker 12: The overall Levi's business on a currency neutral basis was up,
• 32:34
  Speaker 12: and if you look at direct to consumer and that's
• 32:36
  Speaker 12: about forty four percent of the business, that was up
• 32:39
  Speaker 12: twelve percent. The USDTC was up twelve percent, Europe was
• 32:43
  Speaker 12: up nine percent, and also the European wholesale business turned
• 32:48
  Speaker 12: positive and comped up four percent, and then they have
• 32:52
  Speaker 12: a strong order book for the fourth quarter. US wholesale
• 32:55
  Speaker 12: though is still you know, trending negative. It's improving, but
• 32:59
  Speaker 12: still noative. So you do have a little bit of
• 33:01
  Speaker 12: headwinds there, but like I said, the big focus is
• 33:04
  Speaker 12: really on DTC, it's on women's. The women's business is
• 33:07
  Speaker 12: about thirty five percent of sales, but that could be
• 33:10
  Speaker 12: half the business that was also of double digits with
• 33:13
  Speaker 12: strong performance you know, across bottoms and tops there. So
• 33:18
  Speaker 12: I think there's some real strong points here. And then
• 33:21
  Speaker 12: the news about the sale of Dockers. That's great news.
• 33:25
  Speaker 12: They've tried to sell this company in the year is passed,
• 33:28
  Speaker 12: and it will be great to get rid of it
• 33:31
  Speaker 12: and really focus on the strength of the Levi's brand
• 33:34
  Speaker 12: and also expanding beyond yoga.
• 33:37
  Speaker 6: Mary, you sound really bullish and the stocks down eight percent,
• 33:40
  Speaker 6: So why is it getting beat so badly? I mean,
• 33:43
  Speaker 6: it's it's returned over the last twelve months fifty one percent.
• 33:45
  Speaker 6: Does it sell the news or is it just that
• 33:47
  Speaker 6: uncertainty From a macro perspective.
• 33:51
  Speaker 12: I don't think so. I think sometimes there's volatility around
• 33:54
  Speaker 12: earnings that don't necessarily reflect the true fundamentals. So I
• 33:58
  Speaker 12: think there there was a miss on the top line,
• 34:02
  Speaker 12: you know, on the revenue miss versus consensus, but of
• 34:05
  Speaker 12: course they beat on the bottom line. But I think
• 34:07
  Speaker 12: the real focus was okay, they said net revenues. Previously
• 34:11
  Speaker 12: the guidance was net revenues to rise one to three percent.
• 34:15
  Speaker 12: Now it's going to be just up one percent. I
• 34:18
  Speaker 12: don't really if anything, I view that as an opportunity
• 34:21
  Speaker 12: to beat. We do have the port strike, of course
• 34:24
  Speaker 12: that's making headlines, but Levi's and a lot of other
• 34:27
  Speaker 12: apparel companies have shifted more of their shipments over to
• 34:34
  Speaker 12: the West Coast and so and when you think about holiday,
• 34:38
  Speaker 12: most of that is already in. They start shipping in
• 34:41
  Speaker 12: July or the ports start the West coast ports start
• 34:44
  Speaker 12: receiving in July, and it goes all the way through September,
• 34:47
  Speaker 12: and September was quite busy for the West coast ports.
• 34:50
  Speaker 12: I checked in with the Port of Los Angeles yesterday
• 34:54
  Speaker 12: on that. So I think there's going to be some impact. Obviously,
• 34:59
  Speaker 12: it really has to do with how long the strike lasts.
• 35:02
  Speaker 12: But I think that Levi's, Macy's and other companies have
• 35:07
  Speaker 12: mitigation measures in place.
• 35:10
  Speaker 3: What does it mean as it relates to the port
• 35:12
  Speaker 3: out and cheer on margins, I mean, presumably their cost
• 35:16
  Speaker 3: will be hired to get some product that was East
• 35:18
  Speaker 3: Coast bound to get it now to the West coast.
• 35:21
  Speaker 2: What does that do to their margins? Of companies given
• 35:22
  Speaker 2: in guidance.
• 35:24
  Speaker 12: Yeah, there's a couple of companies that have indicated, not
• 35:28
  Speaker 12: all of them, so for example, Oxford Industry, so that's
• 35:31
  Speaker 12: the Tommy Bahama, Lily Pulitzer brands. So what they did
• 35:35
  Speaker 12: say is that they expect a freight negative freight impact
• 35:39
  Speaker 12: in the second half of about fifteen to twenty basis points,
• 35:43
  Speaker 12: and in that they did incorporate what they think might
• 35:46
  Speaker 12: be the impact from a possible because again their earnings
• 35:49
  Speaker 12: call was before the strike which just hit this week
• 35:51
  Speaker 12: on Tuesday. They said that that does incorporate that impact,
• 35:56
  Speaker 12: but once again it depends on the duration and just
• 35:58
  Speaker 12: looking back and in previous disruptions with regard to the port,
• 36:04
  Speaker 12: we sort of estimate it could be in that sort
• 36:06
  Speaker 12: of ten to twenty basis points impact on margin, But
• 36:10
  Speaker 12: again it depends on the duration and then also any
• 36:14
  Speaker 12: other mitigation factors that will help offset some of those
• 36:18
  Speaker 12: costs if they're able to.
• 36:20
  Speaker 6: And Mary, you mentioned the duration. How long does this
• 36:23
  Speaker 6: strike have to last for it to start to show
• 36:25
  Speaker 6: up and impact some of these businesses.
• 36:29
  Speaker 12: That is a really good question. When I think about
• 36:33
  Speaker 12: some of the other disruptions and the duration, and of
• 36:36
  Speaker 12: course the last one that happened back in the seventies,
• 36:38
  Speaker 12: I was sixty days, I can imagine the damage must
• 36:41
  Speaker 12: have been pretty extensive, and even just thinking of you know,
• 36:46
  Speaker 12: let's say eight days. Going back to twenty fifteen when
• 36:50
  Speaker 12: the West Coast ports had some you know, shutdowns, so
• 36:55
  Speaker 12: it wasn't actually a strike, but they were called shutdowns
• 36:58
  Speaker 12: at that time, and that that did last for days,
• 37:02
  Speaker 12: but there was an impact that lasted months after that.
• 37:06
  Speaker 12: So there was an impact on margin because if you
• 37:08
  Speaker 12: have a delay in getting your apparel, then once it
• 37:12
  Speaker 12: does arrive, you have to promptly mark it down. And
• 37:14
  Speaker 12: that's exactly what happened with Macy's on off price. They
• 37:18
  Speaker 12: tend to be less impacted to a certain extent because
• 37:21
  Speaker 12: they can just pack it away and bring it out,
• 37:23
  Speaker 12: you know, when the season is right.
• 37:26
  Speaker 3: All right, Mary, thank you so much for joining us.
• 37:28
  Speaker 3: Mary Ross Gilbert, she's a senior equity analysts covering the
• 37:30
  Speaker 3: retail space for Bloomberg Intelligence. To space that Bloomberg's Los
• 37:34
  Speaker 3: Angeles office, joining us of via that zoom thing.
• 37:37
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