Holiday Shopping to Start Earlier Than Ever

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Hard to believe, but I'm already seeing Christmas merchandise in stores. Doesn't mean you've done your Christmas shopping. Uh No, but I did this week and buy a Christmas holiday shower curtain. That doesn't count at all. I like Christmas everywhere in the house. Something that does not count. No, well, we'll come on. There

were Chris. Did it seem expensive or did it seem like it was at a discount? Were they trying to get rid of it? No? No, no, it was they were introducing Christmas merchandise ordered and adjusted. Oh I think they're just like, hey, start buying. It was a long said the Thanksgiving merchandise alongside, wasn't I don't think there was any Halloween. I think that was gone already. Not

Valentine's Day, alright. Valentine's Day alright. So let's get a look at our retail environment and the all important holiday retail shopping season. For that, we welcome Patrick Brown, VP of Growth, Marketing and Insights at Adobe. He's on the phone from at Burlingham, California. Patrick, Good to have you here with Tim and myself. So let's start macro the very very high level retail. What does it look like right now and what does it tell of us maybe

about the upcoming holiday shopping season. Great to be with you, Carol and him. Really excited, and you're right, some of the holidays trends that we're seeing our continuation of what we saw last year. We're shopping and just starting earlier. And as we look ahead to the holiday season, we're expecting growth your rear of about two and a half percent in the US retail market. But really some of the drivers of the growth they're gonna be a little

bit different. And what we're seeing is people's shopping earlier some of the trends from last year. Last year one of the big drivers as we know, like you were mentioning, supply chain constraints made very weary customers and consumers start to shop earlier. This year, it's really going to be more of a discounting story. And those are some of the trends that will will see carry out through the holiday season. How and why are we going to be

seeing discounting right now? I mean we're talking about a CPI report that on when Thursday, excuse me, is supposed to show US inflation growing at eight point one you I know, but I mean you know, so it's like on in the one sense, we are having certain prices move higher, but in the other sense, uh, you know a lot of the retails. Look, we heard about this three months ago to Carol, right, so so explain what's going on, Patrick? How did it set up this dynamic?

When you're exactly right, and the spread between the core and the non core price, it's just it's just really going to be spreading out, even online. And so for categories that you consider kind of core um inflation, like grocery, we're actually not expecting much of a discount as you might imagine if it's a similar trend online. As a shoppers are buying more and more of their kind of their basket of goods UH their grocery basketting goods online

as well, and they'll still be paying a higher price. However, as supply chain constraints have eased for some of the other products like computers and electronics, we're expecting some really significant discounting because retailers are looking to capture some of the some of the strength that is in the market. And another thing one of the big drivers the last

year as consumers were wary of supply chain. This year again it's really driven by by discounting and things like the Prime early access sales that are starting this week are going to pull sales into mid October starting this week. Frankly, that will then carry through to the through the entire

holiday season. And and the last time there was a Prime day in October, we saw year over year growth it would have been and so we're really watching closely how much sales to get pulled up starting this week. So I don't know if you can, I know, you guys go through a lot of data and track a lot of stuff, Patrick, But are we going to see so that the number dollar amount up year over year ultimately when all of a sudden done, Yeah, you're right,

So we uh we do. We track trillions of actual transactions across the analytics platforms, and we are going to be up here over year. It's gonna be up about three two and a half percent year over year um. But that is looking at a holiday season that really starts in November through to December end of December, and one of the things that we're exploring is you start

to define what the holiday season is. If we're continuing to look at holiday season, start to pull back into October, we have to kind of expand our aperture a little bit and look a little broader. But even in the November to December time frame, we're expecting an increase here over here. And I get just just just a quick follow and is it a case of the number up because there's more individual items being sold or is it because things that are being bought are just more intive?

I guess I'm trying to figure out what it means. Yeah, it's the real nominal question, I think is the one that we're all kind of keeping an eye on. You know, we're expecting what we're going into the holiday season with some of the prices of course elevated as we're seeing everywhere, we are expecting deeper discounts to bring that down. So it shouldn't just be a you know, a revenue story,

it should also be a unit in volume story. For example, in the computers space, last year, we saw discounts of around ten percent, which is really nothing when we're used to something over the holiday season. This year, we're projecting upwards of discounting for computers electronics. We're expecting a change from eight percent last year to nearly So what we're already seeing that in some of the raw data that we're looking at is received few purchasing and prices come down.

So it seems like in certain segments there there will be more kind of unit volume that then supports some of the top line numbers. Interesting to hear this from you, Patrick, and think back to what a month ago and Apple and build its new eye phone and said it wasn't raising the price for that base model. That's an entirely different discussion. We only have a minute left, Patrick, and I'm wondering about the strength of the consumer and what you see in terms of data from Adobe right now

that tell you how strong the consumer is. You know, we've we've seen the continued march to online sales for consumers. I think some of the trends from covid where we got really comfortable buying more categories online, we see those continuing. I mentioned grocery before that continues to make up a larger percentage of our online purchasing overall. You know, the thing we're really watching is how the discounting is going to allow consumers to get more bang for their book

online potentially versus an online like an offline single. So we think it may go back to the days when you can find a better deal online and and that's really what we're watching. And I think that that should create some more bullish consumers from the online sit Patrick really quickly fifteen seconds by now pay later? Are people using more credit or no? You know, that's kind of plateau, frankly, and so we've seen people using it for a lot of a lot of years. Exceller, right, but it started

the slow down a little bit. All right, We're gonna leave with their Patrick, thank you so much, Patrick Brown, VP of Growth Marketing and Insights. Over at Adobe. You are listening and watching Bloomberg Business Week. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim

Stenovic on Bloomberg Radio. Well geopolitical tensions heightening fellowing comments by President President Vladimir Putin, who threatened further missile attacks on Ukraine after Russia hit Kiev and other cities in the most intense barage of strikes since the first days of its invasion, marking a dangerous new escalation in the war that is going on much longer than everybody anticipated.

At the same time, a warning from President bidenough fundraiser in recent days as sending shivers down many people's spines around the world. We've got a great guest with us this afternoon. Angela sten is senior advisor for the Center for Eurasian, Russian and East European Studies. She joins us on the phone from Washington, d C. Her most recent book, Putin's World, Russia Against the West and with the Rest. Angela,

really good to have you with us this afternoon. Where do we begin with the most recent action in Crimea in Russia and of course in Ukraine as well in terms of how this conflict could spread even beyond those borders. So Putin obviously has escalated the conflict since the attack on the bridge to Crimea a couple of days ago. And there was this really indiscriminate bombing all around Ukraine, major cities losing all their electricity and water um, and

some of them still in the dark. So real attacks on infrastructure, but also indiscriminate attacks on civilians. Children's playgrounds blown up, shopping malls blown up. You know, this is not these aren't military targets. So this is Putin's way of saying, um, you know, we're going to really fight back. He's disappointed a new commander of all the troops and the Ukraine operation, a man called General Sua Vicin, who has a reputation for being particularly brutal from this here

in civil war and down. He's even served time in jail, and he you know, didn't waste any time, having just been appointed after Putin was criticized for not doing off in Ukraine. And clearly this is his first act um and as Putine has warned, this isn't the last one. So what does that mean? How do you interpret that? How would you advise world leaders with comments like that? Well,

I think they have to expect more of these indiscriminate bombings. However, we do know that Russia hasn't does not have an infinite supply of these long range weapons, and they may run out of them sooner, maybe than they themselves want to admit. I think world leaders have to, you know, redouble their efforts to support Ukraine. There is going to be more pressure from some people on the Biden administration to supply even more lethal and long range weapons to Ukraine.

Thinks of President Teleski has been asking for and no doubt will ask for again when he has beamed into this emergency G seven summit to discuss us what's happening. So I think that that's where the emphasis will be and there will be have to be a discussion is there more that we could be doing, uh, particularly with air defenses to help y Ukrainian send off these attacks? Angela, As Tim mentioned, your latest book is on Vladimir Putin.

Putin's World, Russia against the West End with the rest um get inside Putin's head as much as you can for us and tell us tell the world what we need to be nervous about right now. Well, the Russians aren't winning this war. I think Putin's grip on power is now weaker than it's been at any time since he came to power twenty two years ago. Uh, he just celebrated the seventieth birthday. He thought he was going to leave this legacy of conquering Ukraine. So he is,

from his point of view, cornered. He's under attack from people who are more hawkish than he is to show that Russia can win. So I think we are a dangerous moment. I think we can expect more escalation, at least in a conventional way, and less concerned about these nuclear threats although uh, you know, President Biden, as you said, alluded to them before. Because Russia can do an enormous amount of damage to Ukraine without going nuclear. Why are

you less concerned about the nuclear threat here? Because it wouldn't you know, using a tactical nuclear weapon. It would set the Ukraine's back a bit, but it wouldn't really accomplish the kind of territorial gains that Plutin is trying to make, and it would really by breaking a taboo like that. It would alienate a number of countries that up till now have supported or be neutral. Would it

begin World War three? Well, it would begin to would world War three if it escalated from one tactical nuclear weapons to strategic nuclear weapons, the ones that can reach the United States. And some people say, we've never had a situation where someone's used to a tactical nuclear weapon, but in fact, it would escalate quite quickly, and then that would be World War three. Servers up my spine

just by even talking about this, Hey, um, Angela. Before we got into this interview, we Tim and I talked about a pro an activist group claiming credit for a series of disruptions that temporarily knocked the websites of some US airports offline. You know, it's traditional warfare, if you will, using you know, ground war missiles and so on, but it's also a cyber war. How do we need to think about that as Russia? As you said, President Putin.

Putin certainly feels cornered at this point, so I think we should expect. In fact, people have wondered why there hadn't been more of these kind of cyber attacks. The German train system in the last couple of lace days were suddenly disrupted in northern Germany. Who did that? So I think we we these kind of asymmetric cyber attacks UM are probably what's going to happen in the future, and we have to be well prepared for that and we have to know how to strike back against that.

So what does this mean potentially for Taiwan, China and everyone else? Well, I think for the Chinese UM were they're watching what's happening in Ukraine and they're seeing how the Ukrainians are fighting back, so they might want to how the Taigwanese, also equipped with American weaponry, might fight back. And then uh, they're watching the sanctions that were imposed on Russia and that presumably those kinds of sanctions would be on impost on China. So I don't think what's

happening it's going to win bold in China. I think it would give them pause for thought before they did anything. All right, thirty seconds left angela potential off ramp for Vladimir Putin? What could it be? I don't see an off ramp at the moment because Putin wants the whole of Ukraine. So there's there's nothing at the moment I think that would work as an off ramp unless Ukraine we're willing to see an enormous amount of its territory, which is not willing to do. Is it just Ukraine

or is there more in his sights? Ten seconds? Oh yeah, I mean he would like to go further than Ukraine, and that was his goal at the beginning. It doesn't look as if that's very likely now, so appreciate you. Angela Stance, Senior Advisors, Center for Eurasian, Russian and East European Studies. Check out her book Putin's World Rush Against the West End with the rest. You're listening to Bloomberg

Business Week on Bloomberg Radio. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. She us on fire recent Bloomberg Business Week cover story and the dollar problem for the world, remember that just recently, and then today out with one of the most red stories on the Bloomberg about how the most powerful buyers in US treasuries are all bailing at once.

It's what I call a wait what moment. Liz McCormick is Chief correspondent for Global macro Markets with Bloomberg News. She's with us right now in the Bloomberg Interactive Broker's studio. Liz, good to have you with us this afternoon. So where are the biggest players going. I mean we're talking about pensions, life insure, life insurers, foreign government's, US commercial banks. Where are they going? Well, a lot of them are sitting

in cash. I mean, of course there's the FED also, who they're not a trader, right, so they're doing q T now, so instead of buying like Quie, they're rolling stuff off. And they were the biggest buyer of treasuries in the last couple of years, right, commercial banks, you know, as deposits are going down, you know, I know you

were talking about Jamie Diamond. But as the FED is pulled back and there's less reserves, deposits are going down also because the interest rates on banks are not so good relative to some of the other high yield things, so they have less money to invest in treasuries, just some of it. There's less money like FED commercial banks, other foreign accounts. Some of the local bond yields are pretty nice. Yeah, And the headshield in the US is

kind of negative. You know, so how much? And I think in your story you say, if it was just one of the overseas buyers, right, it wouldn't maybe be such a story. But you're talking about like all of them? Are most of them? Are? Many of them? Yeah, the major ones, Because you know, sometimes even like in the wonky world of supplying demand, editors will be like, that doesn't matter too much, Let's go away, you know, let's

not a good story. But when it's like the big players are all going in the same direction, that's like a flow story that matters, right, So I think that is the story, like, and JP Morgan has done some good data on it, breaking down that the key by years, and they're saying, we're at a little concerned here. You know, you have these players, especially like commercial banks who who bought so much as all the liquidity came in going

the other direction. I mean, I keep saying to myself, it's a mix of this now supply demand that's working against treasuries. And although we don't know what ends, inflation is still staying hot, although Lyle Brainers said some caution, but the Feds still being hawkish, So they're both a negative for the treasury market. Well, that's what I'm thinking when we think about how high yields are go, right.

I mean, this is a conversation Tim and I have and with our TV colleagues of you know, where's the bottom inequities and where's the top and yields. So that's another dynamic that plays into pushing uppeals even higher exactly. And I feel like my daughter says, you don't do that. You sound old, but like I feel like I've been around for a while, and sometimes I almost like, oh, this peak yield thing, like a three and a half yield when treasury tenure yields were there, Like that's not

so bad if you were around a long time. You know, we're just kind of used to this zero rate era. So I think that's the thing that the door just keep getting blown off, like, oh, we couldn't go above four and now, of course we went above four in yields, and the FED might go to four point six and a long a Bloomberg Economics says five percent of you know, at the terminal rate. So I think that's the hard thing.

Are we at the peak? No? You know it's scary, right, you know, you don't want to buy when you think it could be worse. Right, Well, that's the question, li is. I mean, what gets these institutions, these governments to get off the sidelines and move from cash back into you know, treasuries.

Well as far as the central banks, I think they're backs to the wall, right because they for now have to do this q til though the Bank of England did a finessing thing of a market structure kind of you know, kind of call it financial stability support, as you know, for the long end, I think the foreign private accounts, it depends on when yields get attractive enough, right, maybe when the dollar eases off, because that's making hedging costs more expensive. It's all relative value. If it gets

more appealing, they may come back. Or I mean the US was first and lost like first but fastest with hiking, right, So maybe if if we slowly get signs that they're going to at least and I don't like the word pivot, but maybe slowly from this room, yeah, it's like, you know, I keep thinking, Palasa, let's retire transitory, Let's retire pivot please. You know, week a long time and one of the one of the shows without actually saying I kind of pointed out, but yeah, and I ruined it, brought it back.

But m but that's what I think. What I think we need to see like the whites of the eyes of the Fed actually slowing, you know, like they used to say about inflation. So when maybe they finally do a fifty racist point hike instead us supposedly we're looking for another seventy five that's four in a row. I

mean that's a lot. So is it just a market cycle when it comes to treasuries, because I guess what I always think about is we need foreign buyers to buy US debt, right, That's what you know, keeps the US government going. So is it something more? We've always talked about this with you know, in regards to China. If it gets to be political, we'll trying to stop buying. But is it Is it just a case of where in this is a market cycle we're in right now

and that's why you have foreign buyers pulling back? Or is there something more at playing we need to be concerned? Well, you know, it's interesting on the foreign buyers account um they have been Remember China was such the force and they if you forget about this, this recent stuff. They've been slowly less of a force, you know, number one,

because the Fed is bought a lot. But you know, foreign accounts haven't had as much sway as they had let's say ten years ago, because they were the main force. Everyone was worried like, oh my gosh, if China moves away, um, but they still matter a lot. I mean when I say they have less force, you know, say for months and months their amount of holdings went down, but they still hold a heck of a lot. Right, So I think it's a market cycle and we're eventually going to

have a recession. I mean, I want to say, Bernanke, where's my brain? But Pal is said, we're trying to get about price, so he's all over today. But Pal is trying to pull this off without a recession, maybe a soft landing. But you know, history shows that probably we're going to have a slowdown that will start, Like you're saying, the cycle, let's go down, Investors will come back, Yes, exactly. It's it worth because central banks are in such a

pickle right now. Is it worth distinguishing their goals with the other institutions that usually buy up for in debt, whether it's a sovereign wealth fund, for example, or perhaps a pension fund. Right, absolutely, their their goals and desires are much different, right, And I think that's why a few folks in our story said, whoever these buyers are,

they're more price sensitive because the FED. Although they do models and try to buy the right spots, they're not buying, you know, for like a relative value player or anything. But you're right pension funds because they need these long term investments. And you start to hearing more investors saying I'm starting to like longer term, you know, duration securities. I don't think it's enough of a force that it's moved the market around, although we do have a deeply

inverted deeal curve. Right, that's kind of because the recession coming. But I think you're right, Tim, that pension funds really need this security. But they're very overfunded. Now you've probably talked about that. So they've done very well with stocks before this year, so they have less of a need. But I think that that kind of money is going to come back, because it makes me even think about oh, annuities. It's usually a bad word, but yields are higher. Right.

We may not have grandfather wasn't invested in annuities like it is amazing the things that we're talking about right that we thought kind of had had their day in the sun. Um. I think it's a really powerful story in terms of where we are in the market right now. Um so, Liz, thank you so much. Twenty seconds. Investors should think then about what that Maybe we're going to see even more higher yields. Yeah, I think you can't say,

you know too easy. We're seeing the peak and like you said, buyers are going to come in, but it doesn't seem like right away anytime soon, so a little more cautient. Well, certainly another thing to keep in mind. Let's thank you so much. Liz McCormack, chief correspondent for

Global macro Markets at Bloomberg News. As we mentioned recent cover story Bloomberg Business Week about the higher US dollar and how they didn't care about the impact it was having on the world, so relevant to what's going on right now. Yeah, good to have you back with us. Let's really appreciated. Congratulations on the recent cover. I'm roc journal. Yeah, but you let me drive? Oh no, no, no, please, I want to drive. It's good question. This is the

drive to the clothes on Bluebird Radio. All right, everybody, just got about ten minutes left in today's trading session, just under ten. Bouncing around here. We're definitely off our loads of the session, but we are down certainly across the boarders. You just heard from Charlie when it comes to the major equity averages though tech once again though the underperformer to really eager to hear what Jordan Conn asked to think about it. This is Jordan's is chief

investment officer at a c M Funds. Jordan joins us this afternoon on the phone from Los Angeles. Jordan managed is the a c M Dynamic Opportunity Fund. It's ticker a d O i X, and it's actually outperforming the SMP five hundred this year a year to date, down only eleven point three p versus the SP five hundred slide of close to Jordan's good to have you with

us this afternoon. Help us understand where we are within the context of Wow, the slide that we're seeing in the SMP five hundred this year, and what the Federal Reserve is doing to get inflation under control. Yeah, I mean, I think you know a lot of this started with

the FED. Obviously the side was behind the curve in terms of inflation and characterizing it as transitory, so they had to play catch up and start hiking rates at a pace this year, you know, much faster than we've seen probably in decades, and so that kind of caused valuations to contract, you know, risk assets to start coming down, um,

you know, pretty pretty pretty pervasively. And now what we're getting into is kind of this this second phase of the down leg where earnings estimates, which have held up for most of the year, are only just starting to be revised downward. And so I think that kind of,

you know, weakened the valuation thesis, so to speak. And so this is going to be a really important earning season in the sense that do we see more companies guiding down and taking down numbers, and you know, just how well the market can hold up in the face of that sort of scenario. Hey, your other fun, your a c M tactical income fun. If I look at it um it is in the nine percentile for the past month. If I look at a three year, it's in the eight percentile. And this is you know, you're

investing in bonds, you're looking at floating rate bonds. You look at it, you look at MUNI, high yield UM, foreign and Emerging market issuance UM. Where are the opportunities there? You've you've done well, you're to date and in particular over the past month. What has worked well for you in terms of strategy, So, you know, and that's fun

that you're talking about. In our fixed income fund, we um utilized fixed income ts pretty much across the spectrum, you know, all the different sectors of the fixed income area, and we do so in a tactical fashion. So when when any given area of the fixed income market is in a downtrend, we will move to cash. And so what has really helped us as just being altered defensive recently, you know, we have we have a high amount of cash in that fun and that has kind of really

helped us. A few things that have that have held up, you know, things like bank loans, floating rate UM bombs have held up a little bit better than the rest of the market. We also have am I writing about six in cash right now? I mean I'm looking at

numbers and maybe is that right? And that's not typical. Yeah, And it's just a function of you know, we allocate to sectors that are experiencing up trends in the market, and we kind of add to them as those up trends kind of um take hold and strength and and so right now that those up trends are just so few and far between, that we have a really really high probably the highest cash amount that we've had since mart So a bear would you say is that it is safe to say a bearer stance in terms of

the fun right now? Yeah? I think so. I mean it is a bearer stance just because, like you said, there are so few opportunities. But a lot of these areas of the market and the fixed income market are really getting over sold here that come down quite a bit. Yields are much higher than we've seen in years, and so I think as soon as the market gets a sense that inflation is peaking um and and tenure, you'll start to stabilize more. You know, I think there could

be a lot of good buying opportunities. But for us, you know, we're not gonna put the part before the horse. What is what is your sense of inflation peaking here? Because if he's going from eight point three to eight point one percent, when it comes to c P. I is that evidence that inflation is peaking or has peaked? I think so, you know that they always like to say one data point doesn't make a trend, so you

need to see it persist for a few months. But one of the things you know, people kind of don't often differentiate between inflation is a rate of change measure on a year over your basis. It's not a measure of prices. So even if prices stay high. Right here in l A gas prices are six dollars and fifty cents.

Even if prices were to stay at that level, let's stay for the next year, the the the inflation rate on a year over your basis would start to come down and trend towards zero, you know, as those comparisons came to fruition, But prices would still be high. It still would be difficult for the consumer. But you know

what I mean. So inflation can come down, even though it doesn't necessarily feel like it when you're looking at the average prices is being hey toward your dynamic opportunity fund to UH and correct me if I'm wrong, But according to our data as of the I guess the last update it's about about in cash. You also owned some it looks like Alphabet and Amazon, some Eli Lily, some Microsoft. Um that feels like a high level too.

What will signal to you that it's time to put that cash to work in either of the funds for that matter. But you know, I'm just curious, what do you looking for? What's the trigger? Yeah, and the dynamic funds. You know, we're holding some of those core positions, like you said, the Apples and Googles, but then on the flip side, we use short positions in in e t s and index EPs and that's kind of how we

hedge our exposure. So even though we hold those socks, you know, we have a lot of hedges on the et F side and that has limiting our exposure for us and just helping us act defensive in this down market. So for us, you know, we follow a lot of different indicators. One of the simplest ones for your listeners is we look at the market the major industries, things like the SMP, then mas Back, the Russell and we kind of overlay a series of moving averages on them.

So we're looking at both short term in the utic term as well as long term. Right now, the market is below you know, if you look at the SMP for example, it's below all of its major respective moving averages and they're all actually in downtrends if you look at the smoke of those moving averages. So for us, you know, we just need to see a change in trend. We need need to good market start to break back above the moving averages and for some of them to

actually bottom out and start sloping upward again. You know, that's kind of how we define the trend, the overall trend of the market, And right now it's still just the market just still just stuck in the downturn. When do you what's the signal to you that things are on an upswing and it's not a bear market route? Um, I mean, I think you know, it will be a few things. You know, I mentioned the technical So the

technicals are obviously a big part of it. When we start to see the market to swing back above those moving averages and the slopes change. Also, you know, it's very rare for the market to bottom while the FED is still hiking rate and while the yield curve is still negatively sloped. So a good indicator that we'd be looking for is for the yield curve to bottom out

and move to a positive slope. Right, That would be an indicator at the bottom market at least as pricing and some built ahead, as opposed to right now where it's still forecasting recession. Um. Right, So things like that, All right, Gonna leave it there, Hey, Jordan, Thank you so much. Jordan Conny's chief investment officer and President at a c M Funds, joining us on the phone from

Los Angeles. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News