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Bloomberg Intelligence: Black Friday Special · Bloomberg Intelligence

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
0:13
Speaker 1: Eastern on Apple Car playing Android Auto with the Bloomberg
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Speaker 1: Business App. Listen on demand wherever you get your podcasts,
0:19
Speaker 1: or watch us live on YouTube.
0:23
Speaker 2: Caroline Hid and Paul Sweeney, we are live here in
0:25
Speaker 2: our Bloomberg Radio studio here in New York City, Bloomberg
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Speaker 2: HQ special edition of Bloomberg Markets here on this Black Friday.
0:33
Speaker 2: Renowned economist Nouriel Rabini is warning that Donald Trump's agenda
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Speaker 2: of tax cuts and tariffs is shaping up as a
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Speaker 2: double edge sword for the United States. The CEO of
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Speaker 2: Rbini Macro Associates told us more about the potential impacts
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Speaker 2: of Trump's plans on inflation and growth.
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Speaker 3: The economic policies of Trump may lead to high economic growth,
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Speaker 3: to being for business, keeping tax or it's a low
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Speaker 3: dilate economy, but unfortunately many of the other policies are
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Speaker 3: going to have an implication of hiring, inflation and lower
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Speaker 3: economic growth. The first thing he has already announced is
1:09
Speaker 3: going to be tariff against Mexico, Canada and China. And
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Speaker 3: that's only the beginning, he said, we might have up
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Speaker 3: to twenty percent tarif on all our trade partners, up
1:20
Speaker 3: to sixty percent against China. He wants to have massive
1:23
Speaker 3: deportation of people. In the last few years, the increase
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Speaker 3: in migration has kept the lead on wage growth, has
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Speaker 3: increased the labor supply has increased economic growth. So definitely
1:34
Speaker 3: mass deportation is t inflationary. He wants not only to
1:37
Speaker 3: make all those tax cuts permanent, but you made other
1:40
Speaker 3: promises and no taxes on tips, on overtime and so
1:44
Speaker 3: security on income earn abroad, and so on and so on.
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Speaker 3: This estimate that these things we add to the deficit
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Speaker 3: by eight thrillion dollars. Too much demand inflationary. You might
1:55
Speaker 3: want to weekend a dollar that's going to be inflationary.
1:58
Speaker 3: You may interfere with the independence of the FED. Getting
2:02
Speaker 3: out of the Paris Accord is going to make climate
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Speaker 3: change much worse, in create a food price and things
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Speaker 3: of that sort.
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Speaker 4: It's interesting, Nouriel, a lot of things you just said,
2:11
Speaker 4: or what a bitcoiner would say as to why you
2:14
Speaker 4: should buy bitcoin. There's now the Bitcoin etf there over
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Speaker 4: one hundred billion dollars. Clearly a big hit there's talk
2:21
Speaker 4: that it could be a strategic reserve. You have gold
2:24
Speaker 4: in the portfolio. Is there anything that could move you
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Speaker 4: to add bitcoin to your ETF to help accomplish some
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Speaker 4: of these goals.
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Speaker 3: You know, the bitcoin is highly volatile. It can go
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Speaker 3: up by ten percent one day and down ten to
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Speaker 3: fifteen percent another day. If you want to a stable
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Speaker 3: store of value, you will not put bitcoin into your portfolio.
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Speaker 3: The kind of acids we're actually thinking about are all
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Speaker 3: acid that do well when you have over growth and
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Speaker 3: you have higher inflation, whether it's tapes, shortened treasuries. Gold
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Speaker 3: is a hedge against inflation. The basement did Alara shown geopolitics,
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Speaker 3: financial crises, some exposure to a commodities, they're going to
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Speaker 3: do well in a world of inflation, amid change, and
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Speaker 3: environmentally sustainable rids. So it's a diversified pulfolio of acids
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Speaker 3: that historical have done well in these types of tail risks.
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Speaker 3: I'm skeptical for a lot of reasons about cryptocurrency is
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Speaker 3: a bitcoin because they're not currencies. They're not the unit
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Speaker 3: of account, they're not the scale of means of payment,
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Speaker 3: they're not the stable store of value. And if you
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Speaker 3: want well preservation rather than high relativity. You want to
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Speaker 3: stay away from those types of assets.
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Speaker 5: That was Noria Rubini speaking with Blue Bag Intelligence analyst
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Speaker 5: Eric Beltunus. Meanwhile, we want to delve in a little
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Speaker 5: bit more to just these markets and the SP five hundred,
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Speaker 5: of course on a tear one of the best years
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Speaker 5: in history. Tho those investors have just been methodically shrugging
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Speaker 5: off geopolitical risk, of the geopolitical risk of central bank
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Speaker 5: temper concern and inflation perhaps running a little bit warmer
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Speaker 5: than had been anticipated. We've got to sort of try
3:59
Speaker 5: and analyze therefore and market it's been for the money
4:01
Speaker 5: makers out there, the banks in particular, it's not been pleasant.
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Speaker 5: If you've been trying to make these markets in flour
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Speaker 5: X and rates, they've not been having a great year
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Speaker 5: for traders there the hit by title margins by challenging
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Speaker 5: macroeconomic backdrops. We want to get to it with jess Menton,
4:14
Speaker 5: who's been going through what is a great story of
4:17
Speaker 5: how difficult it has been to trade the macro of late,
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Speaker 5: because there's been these shock moves that go against everyone.
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Speaker 6: It really is, and especially because Paul and I have
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Speaker 6: spoken so much over the last couple of years about
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Speaker 6: especially going into not even just this past year, but
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Speaker 6: in twenty twenty three, after we saw the loan, the
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Speaker 6: S and P five hundred and October of twenty twenty two.
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Speaker 6: There's still so much gloom and doom, and a lot
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Speaker 6: of it has been especially when you're coming out of
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Speaker 6: COVID and what the disruptions from the pandemic did, because
4:44
Speaker 6: a lot of people were trading off of playbooks that
4:46
Speaker 6: would have worked maybe prior to the pandemic, but when
4:48
Speaker 6: you have a once in a century pandemic like that
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Speaker 6: and it up ends business activity, it made a lot
4:53
Speaker 6: of the trades tougher to call because there are certain
4:55
Speaker 6: strategies where you would use for instance, if this happened,
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Speaker 6: you'd buy this or only you know there would be
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Speaker 6: one hundred percent track records for certain thresholds where you
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Speaker 6: know you wouldn't see the S and P five hundred
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Speaker 6: hit another low. But there are a lot of things
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Speaker 6: that they had to like throw that playbook out, And
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Speaker 6: I'm sure paul In like your career with a lot
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Speaker 6: of things you saw, especially if you thought about like
5:14
Speaker 6: the housing crisis or I know you were on the
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Speaker 6: floor a couple of weeks before the eighty seven crash,
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Speaker 6: things were very different when you think about pre COVID
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Speaker 6: versus now. So especially on the macro side, if you're
5:23
Speaker 6: looking at the City Economic Surprise Index, particularly for the US,
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Speaker 6: I mean, that's continuing to outpace those expectations. And even
5:30
Speaker 6: if you're looking at fourth quarter GDP growth for the
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Speaker 6: Atlanta Fed GDP now model, I mean, that's above two
5:35
Speaker 6: and a half percent. So still you're continuing to see
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Speaker 6: strong consumer but also on the corporate side of things,
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Speaker 6: for particularly the stock market, that's continued to power things higher.
5:44
Speaker 6: And Gina Martin Adams always talks about that too, So
5:46
Speaker 6: those have been some communicators Caroline, why a lot of
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Speaker 6: these things just haven't panned out for some of these banks.
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Speaker 2: I mean, and some of that it used to be.
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Speaker 2: I'm not gonna used to but some of the biggest
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Speaker 2: profit geners were from the macro traders. They were at
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Speaker 2: the south side firms and then the hedge funds. Particularly
6:01
Speaker 2: you're a macro trader, that just meant you were smarter
6:04
Speaker 2: than everybody else.
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Speaker 7: I didn't think that equities or pods.
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Speaker 2: I think about the macro picture everything and those are
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Speaker 2: the guys and gals that made huge amounts of money.
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Speaker 7: But I've heard that again the performance has not been there.
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Speaker 8: No, they haven't.
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Speaker 2: I have the funds are pulling out, I mean in
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Speaker 2: the fun flows out of that, out of those strategies.
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Speaker 6: So that's a key thing too, because even the S
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Speaker 6: and P five hundred right now, I mean, it's on
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Speaker 6: pace for over twenty percent gain this year. I mean,
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Speaker 6: that's the first time you'd see back to back gains
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Speaker 6: of that type of magnitude since the late nineteen nineties,
6:33
Speaker 6: and we saw that happen twice during the dot com bubble,
6:36
Speaker 6: but continuing to see even going into next year. It
6:38
Speaker 6: seems like every year when the calendar turns, there wants
6:41
Speaker 6: to be this kind of doom and gloom. I know
6:42
Speaker 6: a lot of people are pointing at valuations, say like
6:44
Speaker 6: the S and P five hundred right now trading around
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Speaker 6: twenty two times forward earnings on a blended basis if
6:49
Speaker 6: you're looking in the terminal, if you look at the
6:51
Speaker 6: average over the last decade, es around eighteen. But even
6:53
Speaker 6: if you strip out the Magnificent seven, it's still around twenty.
6:56
Speaker 6: But a lot of traders I speak with, they'll point
6:58
Speaker 6: to how valuations if you look over the last ten years,
7:01
Speaker 6: or even if you want to look at sentiment, that
7:04
Speaker 6: stuff can stay kind of frothy and grow on for
7:06
Speaker 6: weeks once even potentially years there. So they tend to
7:09
Speaker 6: not like to use that for trading strategies right now.
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Speaker 5: What's interesting, I mean, I think it's Coolish and Greenwich,
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Speaker 5: which has been putting together a lot of these stata
7:17
Speaker 5: around the moon music for rates traders and for four
7:21
Speaker 5: X a little bit more optimism if you're trading foreign exchange.
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Speaker 5: But rates is painful in large part because of electronification
7:28
Speaker 5: here as well. I mean, things look very different twenty
7:30
Speaker 5: years ago because there were a few at market makers
7:33
Speaker 5: and most people are still picking up a phone.
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Speaker 6: That's a good point, and it's just a different dynamic
7:37
Speaker 6: of how interconnected the global economy is as well as technology,
7:42
Speaker 6: and when you're trying to make some of these trades too,
7:44
Speaker 6: and so when you're looking at kind of the four
7:45
Speaker 6: X market versus the rates markets too, I mean, especially
7:49
Speaker 6: because the conundrum of when you're seeing yields rise, whether
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Speaker 6: that's okay, was that on a strengthening economy or is
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Speaker 6: that trying to tell you something about federal reserve policy.
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Speaker 8: It's make it a lot.
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Speaker 6: More of a conundrum coming out COVID too, Caroline, So.
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Speaker 2: What's the smart trade for twenty twenty five is or
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Speaker 2: such a thing?
8:06
Speaker 6: I might just buy a Nvidia, right, I know, because
8:08
Speaker 6: especially with that, I mean Nvidia the third quarter I
8:11
Speaker 6: didn't do as well as it had in prior quarters,
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Speaker 6: but still the best stock in the S and P
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Speaker 6: five hundred, not over even just the last year, but
8:18
Speaker 6: the last two years. But something that people are watching.
8:21
Speaker 6: If you look at the ETF that tracks semiconductor companies
8:24
Speaker 6: and chip makers smh, that's important because there's a level
8:28
Speaker 6: around two forty. It's trading around to forty two right now,
8:31
Speaker 6: but the two forty is kind of more of a
8:33
Speaker 6: broad support measure that they're looking at. So you kind
8:35
Speaker 6: of want to look at that as a gauge, not
8:37
Speaker 6: even just for semi conductor companies, but also kind of
8:39
Speaker 6: more broadly for the stock market to see what that
8:41
Speaker 6: could mean because not surprisingly, the big waiting that chip makers.
8:44
Speaker 8: Have good software.
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Speaker 6: Yeah, exactly why there's going to be the need, right,
8:49
Speaker 6: And so that's a big thing too, because it's beyond
8:51
Speaker 6: even just some of the big AI type players there
8:53
Speaker 6: and what. But when I'm speaking with a lot of
8:55
Speaker 6: portfolio managers, that actually is a space like Marion Bartel's.
8:58
Speaker 6: She's on Bloomberg a lot too, but software companies is
9:00
Speaker 6: one of the ones that she continues to plow money into.
9:02
Speaker 2: All right, Jess ESPN dot Com Texas five and a
9:06
Speaker 2: half point favorite little action down there.
9:09
Speaker 6: I mean, you know, I was not able to get
9:11
Speaker 6: a ticket. Unfortunately, we're talking about how expensive there is.
9:14
Speaker 6: I think at the average purchase price was over one
9:17
Speaker 6: thousand bucks.
9:19
Speaker 8: This experiential, right.
9:21
Speaker 2: That's what the kids are doing Texas at Texas A
9:23
Speaker 2: and M College Station Texas.
9:26
Speaker 8: It's going to be great.
9:27
Speaker 6: But just watch it here.
9:28
Speaker 7: Exactly, jess Man, thank you so much. We appreciate it.
9:31
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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
9:50
Speaker 7: Christmas Trees yougo Hill, No, of course not.
9:54
Speaker 2: I buy my Christmas tree honor about my birthday, which
9:56
Speaker 2: is early one yes, but we've gone. I've gone both
10:00
Speaker 2: ways over the years. Because my kids were younger, they
10:02
Speaker 2: had some allergies. We would go for several years we
10:05
Speaker 2: went to fake tree. I'm kind of indifferent.
10:07
Speaker 8: Yeah, we got a bit of both.
10:08
Speaker 5: Do We got like we get one real one for
10:10
Speaker 5: the smell and one fake one for the downstairs.
10:14
Speaker 7: Right five, So let's how you do it, all right,
10:16
Speaker 7: It all works out. People have their their play there.
10:18
Speaker 2: Chris Butler Joints is National Tree Company CEO joining us here,
10:23
Speaker 2: I believe from Cranford, New Jersey, which is a cool
10:25
Speaker 2: little town there. So Chris talk to us about kind
10:30
Speaker 2: of Christmas decorations.
10:32
Speaker 7: What are people doing these days?
10:34
Speaker 2: What's different today versus I don't know, ten years fifteen
10:37
Speaker 2: years ago. It seems like people are going nuts for
10:40
Speaker 2: Christmas decorations.
10:41
Speaker 9: They are going nuts. Yeah, And I like what both
10:44
Speaker 9: of you guys said. You switch between the artificial the reel.
10:47
Speaker 9: Were big fans of real as well as artificial. Obviously,
10:51
Speaker 9: eighty percent of US consumers by artificial trees, and so
10:58
Speaker 9: the reel is definitely the minor. But again, obviously we're
11:01
Speaker 9: big fans of trees in general. But you know, it's
11:04
Speaker 9: the pre lit now, so trees come pre lit. Obviously,
11:08
Speaker 9: there's no mess, they're a lot cheaper, the materials are
11:10
Speaker 9: a lot better. There's a lot of functionality with the
11:12
Speaker 9: lights that you can get today, and so that's really
11:14
Speaker 9: what we're seeing. And there's a lot of extra wreaths
11:18
Speaker 9: and garlands and things being brought as well. And I
11:20
Speaker 9: think with the Instagram generation, the show me generation, people
11:24
Speaker 9: are really now decorating to kind of show their friends
11:26
Speaker 9: and show their followers just how beautiful our homes can be.
11:29
Speaker 9: And so you know, as you said, Carolyn, they have
11:32
Speaker 9: a lot of trees in a lot of different rooms
11:34
Speaker 9: and so you know, maybe the kids have a tree now,
11:36
Speaker 9: the kitchen has a small tree putting the mantlepiece with
11:39
Speaker 9: garlands and small trees. So you know, we're seeing a
11:42
Speaker 9: lot of incremental decorating with a lot of different items
11:47
Speaker 9: and in terms of getting back to that swell thing.
11:49
Speaker 9: So you're right, the main reason people buy a real
11:52
Speaker 9: tree is for that real Christmas smell. We bought a
11:55
Speaker 9: company called Sensicles a few years ago and they are
11:59
Speaker 9: scented ornament which smells just like Christmas. So if you
12:03
Speaker 9: hang your centered ornament on an artificial tree, you get
12:06
Speaker 9: that real tree, that real tree smell as well, and
12:09
Speaker 9: no allergies.
12:11
Speaker 5: Assume I'm looking at god onto your website. First thing,
12:16
Speaker 5: holiday magic begins. Enter a week, win a gift card,
12:20
Speaker 5: Blackout Friday blowout deals up to eighty percent off. How
12:23
Speaker 5: much are you having to think about discounting? How much
12:25
Speaker 5: amid perhaps fear of some that where you're getting your
12:29
Speaker 5: supplies from the cost might have to go up in
12:31
Speaker 5: the future.
12:33
Speaker 9: Yeah, that's a great question. So look, Black Friday through
12:36
Speaker 9: Cyber Monday this year obviously is one week later, so
12:39
Speaker 9: the holiday season is a week later. So I think
12:41
Speaker 9: every retail as ourselves included, are really discounting to make
12:46
Speaker 9: sure that we can take it kind of capture those
12:49
Speaker 9: sales that we might have missed otherwise given given the
12:51
Speaker 9: week's delay. In terms of the tariffs, Look, you know,
12:54
Speaker 9: we've been on a diversification kind of trend over the
12:58
Speaker 9: last few years now any way, trying to diversify ourselves
13:02
Speaker 9: out of just one source of manufacturing, which which would
13:05
Speaker 9: be China. You know, I think if the tariffs go through,
13:08
Speaker 9: who knows what the tariffs will be or when they
13:10
Speaker 9: will go into effect, but you know, from our standpoint, obviously,
13:13
Speaker 9: it's it's impactful, and so we're trying to diversify a
13:16
Speaker 9: manufacturing base between now and you know, now in kind
13:19
Speaker 9: of twenty twenty six. You know, the promotional things we're
13:23
Speaker 9: doing right now really aren't in answer to that. It's
13:26
Speaker 9: really more just to kind of capture those sales for
13:29
Speaker 9: this season. But if you are a consumer and you're
13:32
Speaker 9: looking for a tree and you're thinking of buying a
13:34
Speaker 9: tree or other holiday de corps, this year is a
13:37
Speaker 9: great time to buy it because if those tariffs go
13:38
Speaker 9: into effect, prices will definitely go up in the next
13:41
Speaker 9: year or so.
13:42
Speaker 5: Can you give us a breakdown of sort of how
13:44
Speaker 5: much of your supply chain is dependent on China?
13:47
Speaker 9: Yeah, it's very large today, so I can't give you
13:49
Speaker 9: the exact numbers, but it's very large. But we are
13:51
Speaker 9: diversifying out. We've been on this diversification journey for a
13:53
Speaker 9: few years now, and so you know, probably by the
13:58
Speaker 9: end of twenty twenty six we could be completely out
14:00
Speaker 9: of China, which you know is a significant change.
14:05
Speaker 2: So anything particularly the hot cellar this year, Chris.
14:10
Speaker 9: Yeah, you know, so it's funny. So my wife loves
14:13
Speaker 9: the sparkly trees, the snowy trees, and many consumers love
14:17
Speaker 9: those things. But you know what we see year after
14:19
Speaker 9: year after year is that green triangle, you know, the
14:22
Speaker 9: kind of the staid, good drink green triangle, solid materials,
14:27
Speaker 9: great lights, multi multi function lights. So you know, it's
14:31
Speaker 9: not a trend driven it's not a trend driven industry.
14:35
Speaker 9: I will say this year, disco is back. So who
14:41
Speaker 9: doesn't love a bit of disco with their Christmas trees?
14:43
Speaker 9: So disco is back. So we've definitely seen some sales
14:45
Speaker 9: on some of our kind of disco themed items. But
14:49
Speaker 9: again it is you know, people still do prefer that
14:52
Speaker 9: traditional green tree with either the white lights, clear lights,
14:56
Speaker 9: the multicolor or again we have the dual color functionality.
14:59
Speaker 9: So that's that's what we every year.
15:00
Speaker 2: Are you white lights, Caroline? Are you a different colored I.
15:04
Speaker 5: Think one of ours has multicolored, but I think in
15:07
Speaker 5: general I'm a boring person. I like a white light
15:10
Speaker 5: with only red and gold vibes going on. And then
15:13
Speaker 5: our thing is we collect Christmas decorations from.
15:16
Speaker 8: Any city that we go.
15:17
Speaker 5: So and then you have to remind yourself where the
15:18
Speaker 5: hell you've got some of these random items. But I'm
15:22
Speaker 5: really interested in not just about the idea of what
15:27
Speaker 5: color lights or what you're whether you're doing sparkle or disco,
15:30
Speaker 5: but you must be talking, Chris, to people in your
15:32
Speaker 5: industry that are doing the real tree situation too. How
15:35
Speaker 5: much you're going to have help this year by the
15:37
Speaker 5: fact that we're here in the Northeast, we've had terrible
15:41
Speaker 5: lack of water, We've had droughts, and the local Christmas
15:44
Speaker 5: fruit tree farms next to me have been struggling.
15:47
Speaker 9: Yeah, you know, it's a great question. Eighty percent of
15:50
Speaker 9: like I said, eighty percent of consumers already buy artificial
15:53
Speaker 9: trees versus twenty percent of consumers buying the real trees.
15:56
Speaker 9: So it's a small market already. And yeah, I'm unfortunate
16:00
Speaker 9: with you know, with some climate change or with some
16:02
Speaker 9: just whether in general is definitely hurting. Look, Oregon a
16:05
Speaker 9: few years ago got hit. You know, there's some fungus
16:08
Speaker 9: issues in the Carolinas. So it's it's a tough business
16:11
Speaker 9: to be in making the kind of doing those real trees.
16:13
Speaker 9: And look, we're here to pick up the pieces when
16:17
Speaker 9: when you know they falter with some of their supply chain.
16:19
Speaker 7: Chris is there any regionality in your business.
16:21
Speaker 2: Do people in the South, I don't know, spend more
16:24
Speaker 2: on their decorations per capita than the Midwest or anything
16:27
Speaker 2: like that as a pretty standard across the.
16:29
Speaker 10: Board, it's pretty standard.
16:30
Speaker 9: You know, we do see the coastal towns going more
16:33
Speaker 9: for kind of Christmas by the Sea type themes. But typically,
16:37
Speaker 9: you know, our sales are driven by population centers, so,
16:40
Speaker 9: you know, very good sales in the Northeast, obviously California, Texas, Florida.
16:45
Speaker 9: It's really population driven. We don't necessarily see big regional
16:49
Speaker 9: differences in our sales. Anyway. We sell, you know, most
16:52
Speaker 9: of our sales are online, so we sell through Amazon, wafair,
16:55
Speaker 9: home depot based, et cetera. And so we really see
16:58
Speaker 9: sales driven by, you know, by where people live.
17:02
Speaker 7: Hey, Chris, thanks so much for joining us.
17:03
Speaker 2: Really appreciate it. Chris Butler, National Tree Company CEO, Carolyn,
17:07
Speaker 2: If you noticed differences the way people decorate their houses
17:10
Speaker 2: here in the US versus growing up in England, that's
17:13
Speaker 2: a great question.
17:15
Speaker 8: More is always less here?
17:17
Speaker 5: We're more, right, Yeah, you are more. You are more
17:20
Speaker 5: here in the United States. And I love that there's
17:22
Speaker 5: like a tree for every room, a tree for every
17:24
Speaker 5: person in the family, every animal that you might have.
17:26
Speaker 8: So I'm all in on that.
17:28
Speaker 5: I feel in the UK we were a bit more
17:29
Speaker 5: dependent on real trees right, just as a general I
17:31
Speaker 5: mean we're a smaller country and easier access to them.
17:34
Speaker 2: But is there something that you guys do in England
17:36
Speaker 2: that we don't do here decoration.
17:38
Speaker 8: Wise, so Advent calendars.
17:40
Speaker 5: Advent isn't deemed like a religious taking part in the
17:45
Speaker 5: UK obviously, you know the Queen of England and King
17:47
Speaker 5: of England. I mean generally there is a little bit
17:49
Speaker 5: more focus on on Church of England within the country.
17:53
Speaker 5: But actually the countdown and a twenty four day opening
17:56
Speaker 5: of a calendar, whether there's a suite, candy and active
17:59
Speaker 5: kindness in it, that was something.
18:00
Speaker 8: That I grew up with. I found it much harder
18:02
Speaker 8: to get here and Crackers is my other one. Now
18:05
Speaker 8: suddenly we've getting them everywhere.
18:07
Speaker 5: I'm seeing my local storehouse Crackers has Advent calendars.
18:10
Speaker 8: I'm thankful you're.
18:12
Speaker 1: Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays
18:17
Speaker 1: at ten am Eastern on Affo card playing Android otto
18:19
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18:22
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18:27
Speaker 7: Black Friday. It's important for retailers. This is it, folks.
18:30
Speaker 7: Do you know why it's called Black Friday?
18:31
Speaker 2: Because you're running the red all year and then Black
18:34
Speaker 2: Friday Friday comes into a big advertising year, I mean
18:37
Speaker 2: big sales year, and you kind of go into the black.
18:39
Speaker 2: You become profitable Black Friday. Dana Tellsley knows that better
18:42
Speaker 2: than anybody. Dana Tellsey tells the Advisory Group CEO and
18:45
Speaker 2: Chief re church Officer, the go to voice on Wall
18:49
Speaker 2: Street for all things retail for I'm going to say
18:52
Speaker 2: twenty five years and I'll.
18:53
Speaker 7: Leave it there.
18:54
Speaker 2: Dana, It's been a wild four or five six years
18:58
Speaker 2: for folks trying to figure out how they spend their money,
19:01
Speaker 2: where they go, did they spend it on goods, services, experiences?
19:05
Speaker 2: Give us a lay of the land of retail here
19:06
Speaker 2: on a Black Friday, twenty twenty four.
19:08
Speaker 11: First of all, you're exactly right, and thank you for
19:10
Speaker 11: having me. It is the super Bowl of retail always
19:13
Speaker 11: on Black Friday. Retailer is prepared for months in order
19:16
Speaker 11: to get it right. So what do you do? What
19:18
Speaker 11: is happening right now with retail I think the consumer's resilient.
19:22
Speaker 11: I think a bit it's about product newness that's driving
19:24
Speaker 11: sell through in conversion. Look what you have with companies
19:27
Speaker 11: like a Birkenstock or Ralph Lauren Deckers and on. And
19:30
Speaker 11: then it's also about value because that lower income consumer,
19:34
Speaker 11: they are being very watchful about their dollars given what
19:37
Speaker 11: they're seeing out there, the continued pressure of elevated prices.
19:42
Speaker 11: Inflation might not be going up, but it couldn't come
19:44
Speaker 11: down fast enough for them. And that's why you saw
19:47
Speaker 11: Walmart talk about the fact that most of their share
19:50
Speaker 11: gains came from the higher income consumer. And given that
19:54
Speaker 11: sixty to sixty five percent of their sales come from grocery,
19:57
Speaker 11: you look at Target, which has more coming from discretionary
20:01
Speaker 11: nearly half. That was the headwinds. And then you look
20:03
Speaker 11: at what's happening with gift giving. Who would have thought
20:06
Speaker 11: that the off price was like TJX. They're getting in
20:09
Speaker 11: the throes of gift giving and they're gaining more traffic.
20:12
Speaker 11: But what every retailer is doing this holiday season increasing
20:16
Speaker 11: the marketing. You have a very social consumer who basically
20:19
Speaker 11: is enticed, whether it's by their phone, whether it's by
20:22
Speaker 11: emails or in store. And yes, what we saw this
20:25
Speaker 11: morning so far, because I was at Macy's two already
20:28
Speaker 11: as the mornings come on, you've seen traffic increase, and
20:32
Speaker 11: I think that social engagement with the physical store is helping.
20:36
Speaker 11: We also have a compressed holiday season. Don't discount that
20:40
Speaker 11: Thanksgiving on the twenty eighth last year, it was on
20:42
Speaker 11: the twenty third. The pull forward to promotions led to
20:46
Speaker 11: more conversion earlier in the season, but consumers are still
20:49
Speaker 11: going to spend a lot of them are procrastinators.
20:52
Speaker 7: Am I going to get deals?
20:53
Speaker 6: Dan?
20:53
Speaker 2: And what's the promotional environment like ethic? Cause that impacts
20:55
Speaker 2: the margins for your companies.
20:57
Speaker 10: It does.
20:57
Speaker 11: Average promotion these days seems like around thirty percent. When
21:00
Speaker 11: I did my walkthroughs yesterday, I even found a store
21:03
Speaker 11: that's open because you know me, I have to be
21:05
Speaker 11: in a store every day. Ritzia in Soho was open,
21:08
Speaker 11: just open on Tuesday, brand new store, absolutely beautiful. But
21:11
Speaker 11: overall it's around thirty percent. That's the discounts. Some of
21:14
Speaker 11: them may be higher, some may be a little bit lower.
21:17
Speaker 11: Luxury goods is having a tough time, but you never
21:19
Speaker 11: see discounts at luxury goods. What you need to see
21:22
Speaker 11: on fifty seventh Street is those Louis Vuitton trunks.
21:25
Speaker 8: But overall, yes, beautiful.
21:27
Speaker 11: I think it'll be a resilient holiday of three to
21:29
Speaker 11: three and a half percent increase on the margin side,
21:32
Speaker 11: Increased marketing is planned, the promotional levels are planned. I
21:36
Speaker 11: think there's more stability in the margins, more uncertainty what
21:40
Speaker 11: the top line looks.
21:41
Speaker 8: Like, more uncertainy.
21:42
Speaker 5: If you're starting to think the costs are going to
21:43
Speaker 5: go up because of tariffs, I'll consume is even considering that,
21:47
Speaker 5: because I'm pretty sure the reten is.
21:49
Speaker 11: All the retailers are considering a big time, and the
21:51
Speaker 11: diversification from China is playing at every single retailer. Look
21:55
Speaker 11: what you had this week when even a Abercrombie and
21:58
Speaker 11: Fitch talked about less than ten percent their goods coming
22:00
Speaker 11: from China. Look what you had with Gap talking the
22:03
Speaker 11: same thing on apparel with those who have significant exposure,
22:07
Speaker 11: and a lot of it is footwear companies, they're working
22:09
Speaker 11: to diversify fast because if anything, look at the NRF
22:12
Speaker 11: study where nearly eighty percent of consumer spend dollars would
22:16
Speaker 11: be impacted by tariffs requiring nearly a double digit price increase.
22:20
Speaker 11: Consumers don't want that.
22:22
Speaker 8: They definitely don't.
22:24
Speaker 5: Do they want to be shopping via influencers or do
22:29
Speaker 5: they want to be shopping via their own viewpoint and
22:33
Speaker 5: long term love affair with certain companies and brands.
22:36
Speaker 11: I think influencers create the viewpoints. I think influencers help
22:39
Speaker 11: the consumers overall see what's working for them. The brands
22:42
Speaker 11: also advocate for influencers too, because they want that awareness
22:47
Speaker 11: given to expand their demographics. Because influencers today, it could
22:51
Speaker 11: be for millennials, it could be for baby boomers. What
22:54
Speaker 11: you know is consumers are watching pictures. Pictures are on Instagram,
22:58
Speaker 11: they're on social media, and I think that's going to
23:01
Speaker 11: be one of the bigger themes as we move through
23:03
Speaker 11: twenty twenty five.
23:04
Speaker 7: Dana e commerce versus bricks and mortar.
23:06
Speaker 2: I know the pandemic brought a lot of e commerce
23:09
Speaker 2: market share forward.
23:10
Speaker 7: How's that dynamic? These days?
23:12
Speaker 11: Overall, you need both. You can't have one or the other.
23:15
Speaker 11: It's got to be both. And what you're seeing is
23:17
Speaker 11: the store fills a broader function. They do buy online,
23:20
Speaker 11: pickup and store. They do ship from store, and you
23:22
Speaker 11: know what they do back to that word again, social.
23:25
Speaker 11: They create social engagement. So I think overall, you're continuing
23:29
Speaker 11: to see bigger gains in the holiday season from online
23:32
Speaker 11: should be high single digits this year, but you need
23:35
Speaker 11: that bricks and mortar in order to drive awareness, and
23:38
Speaker 11: you're seeing more retailers invest in their stores. You have
23:41
Speaker 11: more stores being opened in terms of retailers and net openers,
23:44
Speaker 11: but of a smaller sized box than in the past.
23:47
Speaker 11: Go physical is what I'm about. Go physical.
23:50
Speaker 5: I mean even on Thanksgiving, you mind to go and
23:53
Speaker 5: find a store that's open. I mean, I feel that
23:56
Speaker 5: Black Friday deals have been thrown at me for the
23:58
Speaker 5: past week, if not longer. I mean we were reporting
24:01
Speaker 5: on of course eleven and eleven and what happened with
24:03
Speaker 5: the Chinese discounts that just were never.
24:05
Speaker 8: Ending in terms of length that we had for Singles Day?
24:08
Speaker 8: Is this just the new world order? Do we feel
24:11
Speaker 8: like there evident isn't.
24:12
Speaker 11: A discount on I think one of the things that
24:14
Speaker 11: happened this year, it just started earlier the minute Amazon
24:17
Speaker 11: had their their Prime Day, and then you had the
24:19
Speaker 11: Target Circle week in Walmart in October. It was game
24:23
Speaker 11: on for the holiday season because every wanted one, wanted
24:26
Speaker 11: to capture as much as they could of that consumer
24:28
Speaker 11: spending dollar because it's back to school in the fall
24:31
Speaker 11: and it's holiday. That are your two key shopping time periods.
24:34
Speaker 7: Anything the go to gift or item this season.
24:38
Speaker 11: I mean, you're gonna look for Birkenstock closed toe shoes.
24:42
Speaker 11: Told you ag that's going to be a go to
24:44
Speaker 11: that people.
24:45
Speaker 2: Want Birkenstock closed toe shoe as opposed to Birkenstock sandal.
24:50
Speaker 8: Yes, but you know you gotta have both, okay.
24:53
Speaker 11: So and then you know what, look at the Brooklyn
24:55
Speaker 11: bag coach that's been super popular lately on running in
24:59
Speaker 11: their foot that's been working very well too. So we've
25:02
Speaker 11: got and you know what, even some of the private
25:05
Speaker 11: companies with intimate apparel like Skims, you got to watch
25:08
Speaker 11: what they're doing.
25:09
Speaker 8: They have some cool marketing campaigns as well. Daniels is
25:13
Speaker 8: great to have you. Thank you for me, Thank you
25:14
Speaker 8: for pas.
25:14
Speaker 5: Stop up to Bloomingdale's next door, a Dantel going there
25:18
Speaker 5: next and CEO and chief revenue officer and a Telsey
25:21
Speaker 5: advisory group.
25:21
Speaker 8: Always a joy to have.
25:22
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25:29
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25:43
Speaker 7: I haven't seen Gladiator two.
25:46
Speaker 2: I haven't seen Wicked, but I got to do that
25:48
Speaker 2: maybe over the weekend. But that's been some positive story
25:52
Speaker 2: here for the US box office. Daniel Laurier joins US
25:54
Speaker 2: editorial director at The Box Office Company. Dan, you'll talk
25:58
Speaker 2: to us about kind of the of North American box office.
26:02
Speaker 7: Here are people going to the movies.
26:05
Speaker 12: Oh, it's a hot streak, Paul. We've seen great recovery
26:08
Speaker 12: so far this year. Remember we entered the year expecting
26:12
Speaker 12: down season year over year twenty four to twenty three.
26:15
Speaker 12: But really since June it's been a hot streak. We're
26:19
Speaker 12: expecting to finish the year close to even to twenty
26:22
Speaker 12: three after beginning of the year expecting a ten percent slide.
26:25
Speaker 12: So it's been a really, really big recovery thanks to
26:27
Speaker 12: films like this.
26:29
Speaker 5: I mean, Disney just knocking it out the park at
26:31
Speaker 5: the moment they've had winning Formula after winning Formula, how
26:34
Speaker 5: big a deal is Mana Are you going to be?
26:37
Speaker 10: I think it's going to be huge.
26:38
Speaker 12: We just posted the largest Thanksgiving Day ever for a title,
26:43
Speaker 12: Maana Tuo did that yesterday, over eighty million dollars in
26:46
Speaker 12: box office for the first two days in release.
26:48
Speaker 10: For Mawana Too, we're.
26:50
Speaker 12: Expecting maybe two hundred million dollars plus from that title
26:53
Speaker 12: this weekend. To give you an idea, guys, this might
26:56
Speaker 12: be the highest earning Thanksgiving weekend of fall time.
27:01
Speaker 5: And is that because they've got the formula right of
27:03
Speaker 5: this something for everyone as well. When one of my
27:06
Speaker 5: producers she was off to go and see or not
27:09
Speaker 5: to typecast, but she was going to go and see
27:11
Speaker 5: Wicked while her husband was going to go and see
27:13
Speaker 5: Gladiator Too.
27:14
Speaker 8: Everyone there's something for everyone. And then there's the family
27:16
Speaker 8: formula with Mahana two. So we're all satiated.
27:20
Speaker 10: Caroline. I think you nailed it right there.
27:22
Speaker 12: We have something there for every type of audience at
27:26
Speaker 12: the movies this weekend. The Gladiator to opening weekend's opening
27:30
Speaker 12: weekend audience was sixty one percent male, for Wicked seventy
27:34
Speaker 12: two percent female, and obviously, family audiences are coming out
27:37
Speaker 12: to support Moana to on mass. This weekend, those three
27:41
Speaker 12: movies occupy seventy five percent of all showtimes in North
27:45
Speaker 12: America according to our data at the Box Office Company.
27:48
Speaker 12: That's a massive response from theaters to the overwhelming demand
27:52
Speaker 12: from audience is to watch these movies in theaters.
27:56
Speaker 2: So Daniel give us a sense of maybe how the
27:58
Speaker 2: Hollywood movie make he moguls out in LA. How are
28:01
Speaker 2: they thinking about the theater release window versus the streaming
28:06
Speaker 2: and all that kind of stuff today versus pandemic? Is
28:11
Speaker 2: it still what it used to be or is it
28:13
Speaker 2: a different world?
28:15
Speaker 10: It's different from twenty nineteen. But which industry isn't right?
28:19
Speaker 12: The big lesson I think that the entire industry in
28:22
Speaker 12: Hollywood has learned is the overwhelming role that a theatrical
28:28
Speaker 12: release has in promoting your title downstream. So streaming is
28:31
Speaker 12: still very important, but that theatrical performance is crucial. Let's
28:35
Speaker 12: take Mona two for example, a year ago today, that
28:38
Speaker 12: was supposed to be a Disney Plus animated series just
28:41
Speaker 12: for streaming. Today this is a billion dollar plus global
28:45
Speaker 12: box office hit for Disney. Disney now with two huge
28:48
Speaker 12: animated movies, one earlier this year, inside Out two, this
28:52
Speaker 12: one Moana two, and then you have other titles like
28:56
Speaker 12: Deadpool and Wolverine from over the summer and in December,
29:00
Speaker 12: I fas had that Lion King prequel. You have a
29:02
Speaker 12: lot of energy from Disney to go big on theatrical
29:05
Speaker 12: and we see the box office numbers to back that up.
29:08
Speaker 2: Hey, Dan, I'd listened to some of the conference calls
29:09
Speaker 2: from some of the big media companies that Disney's, the
29:11
Speaker 2: Warner Brothers, they're kind of pointing us to twenty twenty
29:14
Speaker 2: five is a really big theatrical release year, you know,
29:17
Speaker 2: do in large part to some of the writers and
29:19
Speaker 2: actor strikes that push some production out.
29:21
Speaker 7: Talk to us about next.
29:22
Speaker 10: Year, Paul, I think you're absolutely right on that.
29:26
Speaker 12: If we look at the at the last four years
29:28
Speaker 12: in production, Hollywood hasn't had an uninterrupted year in their
29:33
Speaker 12: production capabilities since twenty nineteen. You had the pandemic in
29:36
Speaker 12: twenty and the strikes last year. Twenty twenty four is
29:39
Speaker 12: the first full year of production in Hollywood.
29:42
Speaker 10: Since twenty nineteen.
29:44
Speaker 12: So twenty five is going to be a huge bounce
29:46
Speaker 12: back for the theatrical industry. We're right now forecasting between
29:49
Speaker 12: nine point five and ten billion dollars in box office
29:53
Speaker 12: in twenty five and in twenty six we have a
29:55
Speaker 12: ceiling of eleven billion dollars. That benchmark that this industry
29:59
Speaker 12: hit in the latter half of the twenty tens.
30:02
Speaker 8: What is spending like when you're actually going to the theater?
30:06
Speaker 10: I'm sorry, what is suspending like?
30:07
Speaker 5: Yeah, people like embracing it wholeheartedly. How much of margin
30:11
Speaker 5: is accrued to those that are running them movies as
30:13
Speaker 5: well as making them.
30:15
Speaker 12: I think you're seeing a lot more embrace from movie
30:18
Speaker 12: theaters right now in reinvesting back in their theaters to
30:21
Speaker 12: make sure that that experience is as perfect as possible
30:25
Speaker 12: for the audiences. Let's face it, the technology we have
30:28
Speaker 12: at home is great, so the theatrical experience has really
30:31
Speaker 12: invested a lot in making that experience, either inside of
30:34
Speaker 12: the auditorium in advancements inside and sound, or in the
30:37
Speaker 12: lobbies with alcoholic beverages or expanded menus, in making that
30:41
Speaker 12: more of that experience, and I think audiences are responding
30:44
Speaker 12: to that. You listen to some of those conference calls
30:46
Speaker 12: that Paul was saying a second ago. On the movie
30:48
Speaker 12: theater side, you're seeing huge margins on the spending side,
30:53
Speaker 12: on food and beverage that's been a big, big uptick
30:56
Speaker 12: since the pandemic, and formats like premium format that means
30:59
Speaker 12: our friend over at Imax or at a Dolby or
31:03
Speaker 12: other of those companies with a higher ticket price. Consumers
31:06
Speaker 12: are looking for that to have the best possible experience
31:09
Speaker 12: at the movies.
31:10
Speaker 5: The thing is for a Gladiator two or for a Wicked.
31:15
Speaker 5: These movies in particular cost a lot to make, and
31:18
Speaker 5: I'm interested as to the marketing spend that's gone with
31:21
Speaker 5: Wicked or the shit technology effort that was needed with
31:25
Speaker 5: a Gladiator two. Are they making that money back? And
31:28
Speaker 5: then some how much are they managing to crack the
31:30
Speaker 5: code that the movie that they spend a lot on
31:32
Speaker 5: is the one that they bring in a lot of
31:33
Speaker 5: money on.
31:35
Speaker 12: Carolyn, What you just said right now, I think is
31:37
Speaker 12: a big reason why these studios are highlighting and emphasizing
31:42
Speaker 12: a theatrical release. The more release windows you have in
31:45
Speaker 12: different formats, the more of a possibility you have to
31:49
Speaker 12: break even and make more money over the lifetime of
31:52
Speaker 12: a film. If you go to streaming too early, or
31:54
Speaker 12: if you only did streaming, you only.
31:56
Speaker 10: Have one revenue cycle.
31:57
Speaker 12: There one small window to get there with the theatrical release,
32:01
Speaker 12: you could have three months of success at the box
32:05
Speaker 12: office and from there have that amplify your marketing when
32:09
Speaker 12: it goes into streaming to have that second dip in
32:12
Speaker 12: the revenues. So having a long life cycle for films
32:15
Speaker 12: is crucial, and that's why I think a lot of
32:17
Speaker 12: movies and a lot of studios have gone back to
32:20
Speaker 12: this windowing a theatrical first and streaming second to make
32:25
Speaker 12: sure they can hit the numbers they need for their shareholders.
32:27
Speaker 7: Dane talk to us about China.
32:29
Speaker 2: Before the pandemic, China was rivaling North American terms of
32:31
Speaker 2: total box office.
32:32
Speaker 7: It was really a gold mine for Hollywood. Is that
32:35
Speaker 7: still the case.
32:37
Speaker 12: You know, I don't think it has as much of
32:39
Speaker 12: a role as it did in the pre pandemic era. Obviously,
32:42
Speaker 12: the pandemic raised a lot of question marks on who
32:45
Speaker 12: was going to be the box office king. But really
32:48
Speaker 12: from the studios, what we've seen is less of an
32:50
Speaker 12: emphasis to make sure that they lock down that Chinese release.
32:54
Speaker 12: It's just such a gamble, Paul. You don't know what
32:56
Speaker 12: you're going to get from a release in that market.
32:58
Speaker 12: If you get it, it's great. A movie like the
33:01
Speaker 12: third installment of the Venom series is doing fantastically in
33:04
Speaker 12: China right now, but it's far from a guarantee. I
33:06
Speaker 12: think studios agree that having a strong domestic release and
33:10
Speaker 12: the reliable turnout from overseas audiences and markets in Europe,
33:14
Speaker 12: Latin America and in other markets in Asia, that's still
33:18
Speaker 12: the winning formula for most movies.
33:21
Speaker 8: What about AI and whether it will be a doctor next.
33:25
Speaker 12: Year huge talking point, right I think that's still up
33:29
Speaker 12: in the air. There's a lot of things that we
33:30
Speaker 12: need to figure out, and what that means for actors,
33:32
Speaker 12: what that means in labor relations, a big part of
33:35
Speaker 12: the strikes last year. We're around these questions. Like in
33:38
Speaker 12: many industries, AI has a lot of potential. I'm not
33:41
Speaker 12: sure it's a reality just yet.
33:43
Speaker 5: I have so much more to debate on all of that.
33:46
Speaker 5: We thank you so much for joining us. Daniel Laurier,
33:49
Speaker 5: Senior Vice president of Content Strategy and editorial director at
33:53
Speaker 5: The Box Office Company, making us all want to go
33:55
Speaker 5: out and watch some movies.
33:57
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