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All Eyes on Jackson holl As the FED kicks off its Economic Symposium. It's the flagship event for the US Central Bank. Vetcher J Powell set to speak tomorrow. Before that, former Federal Reserve Governor Betsy Duke was on Bloomberg Surveillance earlier today. She gave her expectations for the chair speech Friday at the symposium.
Jay Powell, in terms of his legacy, is looking at what happens to his mandate, what happens to inflation, what happens to employment, and how well does he manage that. It's not any single speech. He's one of fos focus primarily on the decision framework and not give any indication of where he's leaning for September. Inflation expectations are going to be the key over the next year.
Or two.
If inflation expectations get out of line, then the FED will be very concerned.
That's Betsy Duke, former FED governor on Bloomberg Surveillance earlier today. Joining us now from Jackson Hole, Wyoming is Bloomberg Surveillance co host Tom Keen. Tom the event it's supposed to be about policy, about economics, about this economy, but happening at the same time the Justice Department signaling possible plans to investigate Federaliser of Governor Lisa Cook.
How is that hanging over the event?
Oh, it's hanging over to exec correct language, There's no question about it. You still have the normal cadence of Jackson Hole. For example, there's six, seven, eight papers that come out. Michael McKee prints them out perfectly, and he reads every page of the academic papers. Guess what I don't do that. I'm talking to the reporters here gathered, and you're right at the top of a pile of topics. Here is Lisa Cook.
So what's what's she's I spoke to Mike earlier. He said she's expected to arrive. She hasn't arrived yet. Does it does it take away from FED chair Powell's message tomorrow. Does it distract from what he says about this economy and what he indicates or not about September.
It's a really fair question. I don't think so. I think Michael McHugh is better at this than I am would say exactly the same thing. What is different here, and our Simon Flint in Singapore absolutely nails it in an essay today. What's different here is the hard facts of the moment are catching up with the Chairman. I don't know if they're rewriting the speech tonight with the stars out above the tetons, or maybe they're writing it
on the airplane. But what is very clear here is the hard facts, as mister Flint says, have caught up. You have the economic today, you got concern about inflation and tim The number one thing I'm launching off the Bloomberg year is the thirty year bend. Once again we're making a dash up near five percent. That's the kind of inflation whispers that have to change the speech.
Tom Of course, you mentioned the Chairman will speak tomorrow at Jackson Hole. Can you just tell us a bit more about what attendees are really looking to hear from him.
It varies every year. There was one year here I'm going to say three years ago. I can't remember where we were prepared for a fifteen minute twenty minute speech, and I believe he spoke for eight minutes. So every year is different. I think the pageantry will be here, there'll be an international audience here, Christin mcguartier, mister Nagel of Germany is here. Bailey of the Bank of England scheduled as well. But what's interesting is within the pageantry,
what do you expect from a speech? And the answer is they'll be looking for certain nuances and certain single sentences that will be different. You're not going to get a lot of is what's he going to do in September? That would be rude. He's not going to do that.
Here.
You mentioned a lot of those international voices, I mean the ECB, We've got Bank of Japan, Emerging Markets. How are they playing a part of the conversation this year?
In particular, Nora, you know my theme.
You're already stealing my theme as we go to tomorrow with Lisa A. Bramo. It's to me the international angle here is the importance point.
William Rhodes Bill Rhoads.
Of City Group Iconic at City Bank, it's called City Bank back then had this great phrase central banker to the world. He took it from academics. This is a Jackson hole where Jerome Powell is the central banker to the world is he defends delicately the way we've done banking for years, pushing against President Trump. The theme internationally here of central bank independence will be key.
I think also the theme of labor tom and it's something that we've spent a lot of time I'm talking about in recent weeks, especially since that shocking report came out earlier this month about those numbers for the month of July, and it's really shifted the conversation about what employment in the United States and what healthy employment numbers look like in the United States where borders are closed, immigration legal and illegal is down, and growth among American
families is not what it was a couple generations ago. What does that picture look like in terms of reshaping the American workforce.
Well in reshaping the speech as well. It's a movable feast right now. Tim. The number one thing is we've seen a trend in the data. The conceit is labor data always lags. Okay, fine, and we've seen this trend, including continuing claims. Today Bramo put out on Twitter, I was stuck in an airport somewhere. Bramo put out on Twitter that great continuing claims chart which shows this explosion up in the weekly data. That's the kind of tea leaves that gets have fed the shift. President Trump wants
them to shift quicker. And let's remember we've got that jobs report early September before Mike McKee's in that press conference September seventeenth.
Well, I want to just talk about the energy. I mean, you've been to so many of these symposiums. What's the energy like on the ground this year? In particular?
Quiet? First thing I noticed when I walked in. There's a whole new quiet tone to the Mike McKinnon. I remember, I remember August of seven, which was I think i'll say seven days after libor or Ois went out four standard deviations. This place was chaos.
My guess is a lot.
Of people are coming in tomorrow morning, and tomorrow morning here at the Jackson Lake Lodge will not be quiet. There'll be a real turnout for the speech. With that said, it's one party, academic, but it is one part about this attack on the Central Bank by President Trump.
Tom'm gonna have to leave it there. We're gonna speak to you throughout in the next couple of time days. Appreciate your time, and we're glad you arrived safely. I know it was a long journey to get there. Tom Keen, Bloomberg Surveillance co host out there at the Jackson Hole Economic Symposium.
Stay with us.
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Also watching the economics imposium in Jackson is Ali McCartney, Managing director of wealth management and private wealth advisor with Alignment Partners at Ubs. She and the team managed just over one billion dollars in assets. She joins us from Rehoboth Beach, Delaware this afternoon. Ali, good to have you back on the program. What do you think Fed Chair Jay Powell will communicate tomorrow?
I think, as usual, you will probably not communicate exactly the things that the market is looking for. But I think that what he will communicate you just spoke about briefly, which is this tension between the dual mandate, specifically that they are now looking more at weakening softening data in a labor market than they are at long term inflation expectations, which although Tom talked about the movement in the thirty year,
seemed to be quite consistent. The last thing I'll leave you with is to remember that last year was in a sense of quite an epic meeting, and that that was the beginning of the long awaited pivot. I think that this meeting will be in a sense less revelatory than that one.
When we look at the market performance this past year thus far, it's we have the S and P five hundred, that's up about eight percent. Of course, that's a bit different from what we saw in the past couple of years where we were seeing double digit gains to end the year here. So what do you think the market really needs to hear to maintain this moment some here as we go into the second half of this year.
So I think we are at we're a bit in a bit of a waiting game, right, that's a normal thing. In late August, volumes are really low. You know, people are on vacation less trading. We also happen to be awaiting Jackson Hole on Friday and in video earnings next week, in video being the largest contributor from a market cap and from an earnings perspective to the S and P five hundred, and that being the conversation that is being you know, discussed now about you know, has AI pulled
back which have been driving the market. My sense is that from an equity perspective, as you said, we've had two twenty plus year return two years of twenty plus year returns. We you know, are up thirty percent from the tariff day low and ten percent as you said, a couple of days ago year to date, and we're at multiples that we really have only seen twice in my trading life, the first being one very unique day during the pandemic and the other during the height of
the Internet bubble. So you know, what we need, I think is stability to keep us in this range and going higher. And I think the bull market will remain in tac I think it will likely be driven by a continued expansion in the AI trade, both in terms of infrastructure buys and builds, data and power picks and shovels. Both margins going up and productivity going up. And I think it will also be very much supported by a
decreasing interest rate cycle. But we're certainly in a more precarious position than we have been in a number of years from a multiple perspective.
Ali, I'm trying to figure this out and I'm hoping you can help help out with this. It's something I've been thinking a lot about lately, and it's this idea of a weakening consumer. And in just a few minutes were actually gonna speaking with the CFO of Kava Trisia Tolliver.
Yeah.
So Cabstock Film, you know, more than twenty percent in a single day last week because the company pulled back its guidance, essentially talking about a fogginess with the American consumer out there. At the same time, you have these high margin AI companies that are essentially just printing money, whether we talk about it from an Nvidia perspective, from a meta platforms perspective, with margins such as those, what's the tension there in a world with a weakening consumer?
I think you nailed it. I think that bifurcation and that tension really exists. I think it exists in terms of goods and services. I think it exists in terms of consumer discretionary ver staples, and I think it exists in terms of, you know, the vast difference in wealth and earning potential in this country. So what I am seeing in my high end clientele, who are looking at portfolios that are the highest they've ever been, and what
I'm seeing in my own neighborhood is the same. People are definitely more reticent to spend, both simply the cost of goods and the tiriff implications which we're starting to get wind of, are real, and people are going to have to make choices and decisions. The consumer has managed on all levels to hold up extraordinarily well. It's like the little engine that could, but it cannot last forever. And so I think that the next number of quarters there is going to continue to be exactly what you
said with this bifurcation. In many ways that you slice the data, whether it's demographics, whether it's earnings, whether it's sector between the haves and the have nots.
What are the opportunities here in the market. How are you advising your clients? What's the safe have in trade right now?
Yeah? So look, I think all of this year it has paid to be diversified, which have not been the case in a very long time. So you see right now, you see equities that have recovered and gone up no matter which area you're looking at and which geography. Largely you see gold, which has done its job at protecting but also continues to provide upside. And you see fixed income you know, ig in the US trading at twenty five year tights as people try to get ahead of
the FED moving down. So there are a lot of opportunities. However, each is very expensive. So I think the first is to continue to be diversified and even though it feels like things are expensive, to continue to be invested. The second is to look for areas that still have room to grow from a relative perspective, whether that's healthcare, whether that's utilities which can also provide some defense, whether that's financials, which again are trading high but have a number of
tailwinds from a regulatory and an interest rate perspective. So there most certainly are opportunities out there, but you know what we've been finding and especially finding this week, is it may not be the time to play all beta or buy the SMP. This may be a time to be much more discreete and disciplined about what you buy and when you buy it.
We only have about a minute left.
But I was talking to a colleague a little earlier and she sort of explained the sense out in Silicon Valley right now when it comes to the AI and the AI race and what private companies are doing. And she described it as being on this roller coaster, but there's this lack of understanding about where we are on the roller coaster on the way up, if we're close to the top or not are we.
It's a really great question. And I have found in my career, being both on the East Coast and the West Coast, that there is always a difference in opinion, o bulliance and understanding of various technologies that are coming out of Silicon Valley. I think that we probably remain in the second early third inning. We are not even
close to there yet. What I think the major difference is by people that live, traffic and work out there, is that they are thinking many steps ahead in storms of large scale effects on data on businesses, whereas I find that my clients and the people that I work with on Wall Street, outside of let's say the analyst community, are much more focused on sort of large language models chat GPT, and that's why I think there is extreme room to run in the next decade.
Alan McCartney, Managing director, Wealth Management and private wealth Advisor at Alignment Partners at UBS.
This is Bloomberg. Stay with us.
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There's been this renewed interest on rare earths and critical minerals as trade attentions between the US and China have flared up. On that We've spent quite a bit of time over the last few months talking about them with CEOs of companies in the space. Jim Litinski over at MP Materials, whose company is set to have the Defense Department take a four hundred million dollar preferred equity stake. For more on rare earths, we're joined by Oliver Friesen,
CEO at Guardian Metal Resources. It's a London based metals exploration and development company. It's looking to bring production of tungsten back to the US. Oliver joins US from Toronto. Oliver, we've been learning a lot about rares lately. I think my geology one oh one professor would be very happy with what we've been talking about. We Gary Evans from US antimony on last week talking about the importance of antimony when it comes to ballistics. That was something that
was new to me. Your focus is tungsten. Why is tungsten important because it's not classified as a rare earth.
Yeah, well, first of all, thanks for having me on, Tim, It's great to be here to talk more about tungsten. Funny enough, you mentioned antimony in the use within munitions and ballistics. It's the same reason you need tungsten. Tungsten is one of the most dense metals on the planet and also has the highest melting point, so it's been used in the production of munitions for decades and decades
and decades. Now that's just one small use case, but effectively, when you look at the entire critical metals supply chain, if even one of those metals isn't there, that can shut down manufacturing in the United States of America. So it's important that we focus on not only just rare earths, which as you mentioned, are very important antimony, but tungsten is definitely up there, considering the fact that we're very reliant on unfriendly adversaries for global tungsten supplies.
So I want to talk a bit more about your company in particular here which end markets you know, maybe eves defense renewables are really driving the most urgency for your business right now?
Yeah, I would say probably the most urgent use cases is a cross defense because of that density, it's ubiquitous, and it's very important in the productions and ammunitions and things like tank armers as well. So really, right now, given the geopolitical landscape, we're seeing a huge amount of a surgeon demand and increasing demand across the defense industry for this metal. But as you pointed out, you know, it's not just a defense metal. This is a metal
that's used in a lot of other industries. Some that come to mind aerospace, automotive, green energy is another one. It's a really important metal. It's almost irreplaceable in a lot of these technologies. So Defense is driving the narrative right now. But the same time, you know, we're hearing major manufacturers in the United States of America are actually saying, we can't get this tungsten. If we don't get it, we're going to be shutting down.
So the Pentagon in July provide it as six point two million dollar ward to Golden Metal Resources. It's the US unit of your company to perform a pre feasibility study for a tungsten mind near Hawthorne, Nevada. Is this is this all the financing that you will need? Will you need more from the DoD, Will you need more from the government? Will you need to raise more?
Yeah, So it's it's part of the puzzle for sure. So that six point two million dollar award that we've received from the Department Defense, which obviously we're very grateful to the current administration for that award, will cover some of the key engineering workstreams as part of that PFS study. But you're right, there are other expenditures associated with bringing
that project and our projects into production. But concurrently with that, with that award from the Department of Defense, we raised twenty one million dollars US dollars, predominantly with existing shareholders, almost all institutional. So we use those funds to then cover the other additional costs and all the funding combined. Really the focus is on delivering two key tungus and minds to the US market, of which it's a metal the US has not mined for over a decade.
Do you need government support when it comes to this project.
We don't.
And you know, for instance, we acquired Pilot Mount, which is a project that's received the award from the Department Defense almost five years ago, so it was a much different market than the land Escape was much different. And even at that time, we acquired it because we felt like it would be an economic tungsten operation. At previous pricing norms, which is around three hundred dollars, what's called an metric ton unit are about thirty thousand dollars a ton.
That being said, the price, you know, fast forward five years, China has completely banned the exports of all tunks into the US market. The price is closer to fifty thousand dollars a ton right now. But even at historic norms, you know, this project in our projects, we believe makes sense.
But obviously you know the tailwinds we're seeing now across the federal funding landscape, but also permitting gives us that much more confidence to push these projects forward and deliver minds in America to the US industrial base and defense partners.
Oliver, let's talk a little bit about China.
You brought it up here.
How do you see China's dominance in the rare earth processing cheaping your strategy here?
Yeah, No, it's a really good point, Noraen. I'm glad you brought it up, because what what sort of sets tungsen apart from you know, the antimonies and the rarest says we've discussed, is the fact that the downstream processing capacity actually fully exists on US soil. It's one of the kind of the very few critical metals of which the US has the ability to actually take what's called a tungsten concentrate and turn it into actual usable finished
products for defense and for industry. So the benefit that we have is that the only thing missing in the US right now is a domestic mind source. You know, we import in the US, all of our concentrates from other countries, and just to give you a data point, China, Russian North Korea combined represent ninety percent of total global supply of tungsen. I'm mean, just let that kind of data point sit in. But the thing that's missing right now in the US is the mind supply. The processing
is there. So as soon as we can plug in R two Nevada based tungs and minds, you have a fully circular tungsten supply chain that exists within the bounds of the United States of America.
So where do you see demand for rare earth materials and all of that, just more broadly over the next say five to ten years.
Yeah, So tungsten specifically, we're seeing very very healthy compound and annual growth rates across the different sectors.
That need it.
Defense is certainly leading the charge right now. You know, we're seeing we're seeing the EU and NATO and the US. You know, defense budgets up or up across the board, So that drives the demand for tungsten, as you can probably imagine. But also you know, we mentioned automotive, aerospace, these are all other other sectors that are the demand for tungsten is increasing quite considerably, so we're seeing healthy
growth across the different growth areas. And another use case that many of your listeners probably are not aware of is nuclear fusion, so not to be completely confused with nuclear fission, but effectively trying to harness the energy of the sun here on Earth. And the only metal with a high enough melting point to contain a nuclear fusion
reactor is tungsten. So we see longer term considerable demand growth from this this very important energy supply excuse me, technology that should be come in line in the next couple of years here in next maybe decade.
One of the most read stories on the Bloomberg Terminal this week was about the Trump administration, or President Trump's new brand of economic state craft deals like you know we might see with Intel, for example, or the Department of Defense deal with MP materials. I mean you could throw other companies into that as well, AMD and Nvidia.
With fifteen percent of certain ship sales in China going to the government, maybe even US steal with that so called golden share that the US government has with US steel. What's in your view, because you've taken some money from the government this year what's the difference between a deal like the one that MP Materials got in which the DoD will take a stake and the stake that the Trump administration is contemplating taking an intel. Do you see a difference in those deals?
Yeah, for sure. So the MP Materials deal is pretty groundbreaking for this sector. And I think this is really a strong signal to the US critical medals industry that that, you know, the administration is serious about mind in America, which is really encouraging to see. So the MP Materials deal, there's lots of different parts to that. One of them is the price floor of the direct investment and also
the federal award as well. So we've received just an award, So this is that this is money that we can go and use to fast track key engineering steps as part of our project. But what I'll say is that you know, there there's you know, there's there's speculation that some of these unique uh and new sort of benefits that MP has had with this deal could could be
applied across the sector. So effectively, the doors have opened up for this this this type of deal to be done across the defense supply chain, but also the critical metal supply chain. So anyways, I think that all in all,
it's it's a really strong signal to the market. It's a really strong signal to myself as a CEO of a critical metals company that the US administration is serious about minds in America and that obviously means that we have these projects at exactly the right time and trying to over this key metal to the US market.
We're speaking with Oliver Freesa and the CEO at Guardian and Metal Resources, to London based metals exploration and development company. It's looking to bring production of tungskin back to the US. Oliver, you mentioned the door is open. Is your door open for an investment from the US government where the government or the Department of Defense would actually take an equity stake in the company.
Would you welcome that?
Of course, yeah, we'd be We'd more than welcome that. Like I said, we all we have right now is the award from the Deity, which is incredibly important for the business. But you know, we're we're we're Our goal here is to deliver these minds to the US market. So anything that we can do to help get support from the current administration and across the industry. We will absolutely have that conversation, but the time is so critical
right now. Like I said, the US has no domestic mind supply, and we believe that we are the leading company when it comes to tungsten expression development. So we're absolutely looking to have any conversation that will help us get to our goal.
Quicker, are you having conversations right now about that?
I can't speak to that. What I can say is that, you know, the award that we received from the Department of Defense was only about three weeks ago, so we're now really focused on getting that money and focusing it in the ground and towards towards creating US jobs at our projects. So that's the focus right now. But obviously, you know, we're looking to tap into anytail ones that can be available to defense and critical metals companies that are focused on US projects.
Oliver, how do you navigate trade tensions and resource nationalism and markets where you operate?
Yeah, I mean we try to get too focused on that. You know, it's uh, there's a lot of noise out there. There's a lot of movement across tariffs and and and you know trade relationships. Right now, I think the main signal to to to our company and to myself is the CEO is that there's a huge push for minds in America. We want to see these metals actually being mined on American soil. So we try not to get too kind of caught up in the day to day. You know, we have a job here, which is to
deliver these projects to the US market. But it's encouraging to see some of these things that I think really once again point to the fact that the current administration is very focused on mind in America and nowhere else in the world. So that's obviously a huge benefit benefit to us as owners of two key tunks and projects that are both on US soil and also in the great state of Nevada, which is a very mining friendly place to be operating.
Oliver, Yes or no, how quickly? Or can I should say the US become rare with independent from China?
Oh man, it's a good question. I mean, yes, we can. I mean there's some great geology here. We need a huge amount of support from the administration, which we're seeing now. We have to carry through. That's the biggest thing. We can't stop start, stop start if we have this same sort of support push forward over five, ten, fifteen years, the landscape will look a lot different and the US will become a lot less reliant on unfriendly countries. For these key input medals.
Oliver Fries and CEO at Guardian Metal Resources, stay with us. More from Bloomberg Business Weekday coming up after this.
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It's been a big week of retail earnings and it's telling us a lot about the state of the US consumer Home depot sales, missed expectations, Walmart reporter rere miss on profit expectations, Target delivered a discouraging full year sales outlook, and the list goes on and on. But we've got two wonderful reporters here to shed light on this and
a lot more this afternoon. Janette Newman, Bloomberg News Consumer reporter, and Jennifer Bartasha's Bloomberg Intelligence Consumer team leader and senior retail staples and packaged foot food analysts are here to discuss that is a long title. Sounds like she does a lot here, But Jeanette, I'll start with you one of the latest retail earnings telling you about the state of the US consumer right now.
I think over all that the US consumer is actually doing okay. I think there's there's a note of caution looking forward because a lot of what's been you know, sold in the in the last couple quarters, price price increases has not hit those goods, and so there's concern about when price increases really do start to flow through, what how consumers will will react. But despite some of the you know what you what you mentioned Noura with the results, I mean, Walmart did have a profit miss
that's very rare. That had to do with some claims, but they actually raised their sales guidance for the year, which was already which was already pretty high. So that shows that there they do have some confidence in the consumer in the year in the year ahead.
A Jen come on in here, because we spoke earlier with the CFO of KAVA, Tricia Toliver joined us and she said last week and she kind of reiterated today that there's this fluid macroeconomic environment that these are her words, she said, it creates a fog for consumers and during those times they tend to step off the gas. Would you say that that the view you have at Bloomberg Intelligence about the consumer, that it's foggy and as a result of that fog, consumers are pulling back a little bit.
Yeah. I think that's a pretty good insight. You know, when we look at the consumer and you look at sort of the bigger numbers in terms of the economy, the consumer is hanging in there. But the consumer has been conservative for a long time. It really started when we had high food inflation, and as soon as that started to roll back, we had pressure from tariffs, and there's just uncertainty. And when that consumer is uncertain, they
still buy the things that they need to buy. They're still going on vacation, but they're just being a little bit more prudent. And until we have a little bit more clarity, we're not expecting that to really change.
Jen, what is the bifurcation that you're seeing at Bloomberg Intelligence when it comes to consumers, those at the higher end of the income spectrum versus what those at the lower end of the income spectrum are doing and We've talked a lot for years about the K shaped recovery. Kind of sounds like we're still there. Maybe it's even more pronounced.
It's pretty pronounced. You know, lower income consumers continue to be pressured when you look at retailers that really have a lot of those customers in their base, and that would be the Walmart's of the world, it would be Dollar Generals of the world. You know, you see that the spending and the average ticket and the traffic into those stores in some instances is a little bit pressured. At the same time, you know, higher income households are
almost kind of going along as normal. They're still seeking value, but they're taking advantage of all the value that's being offered out to the broader economy and they're saving money that way. So it's an interesting thing to track and how those two different parts of the consumer base are really behaving a little bit differently.
And everybody loves a deal, right and Walmart has actually, you know, to what Jen's saying, Walmart has has benefited from everyone loving a deal and is attracting increasingly more higher income consumers and that's part of what's helped boost its its sales and that's been a strategy. You know a lot of those consumers went to Walmart during the pandemic to get groceries and then have increasingly kind of
bought more and more. Walmart is stepping up. You know, it's clothing offering, and so that's also you know, that's helping, that's helping Walmart.
Are those consumers sticky with Walmart?
Yes, they are, They are sticky, and that's been that's been part of the that's been part of Walmart's success because they go to the grocery, they go and they get the groceries, and then they see, actually, like Walmart has great genes. Now Walmart has knows that these consumers.
Well, that was an American Eagle reference, wasn't it.
Know.
We're not going to definitely, we're not going to get We're not aget talking Sidney.
Not moving on. Sorry, go ahead, chapter, next chapter.
And that that also is you know, Walmart has been seizing on that and Target has been missing out. Target has not been doing well. They obviously just appointed a new CEO. He's an insider.
It's an amazing story.
It is an amazing story. It is an amazing story. But the market's not that impressed.
Though, that's what we're seeing. But I mean you also come for companies like Sday Latter. We talked about Walmart. Of course, we know that has a lot of those consumers staples opportunities there. But when we look at Esta Latter and a lot of competitors like that on the more luxury end, what are the contours of consumer spending in that space right now?
You know, beauty overall is doing okay again, kind of still slowing down a little bit, but still writing a post pandemic boom when we all got into you know, lots of different lots of different beauty products at one at one time. But Stay Latter is not doing that well. So that's kind of like even though the consumer right now is okay, a little bit conservative, like like Jen said, but Walmart is doing overall really well. Target is not doing great. That's also because of differences with the two
companies and how they're run. Similarly, Loreal, huge beauty company, obviously is actually doing really well. Stay Latter. No, their sales in the most recent fiscal year that just ended, we're down eight percent, and those are kind of internal internal problems that they've been that they've been dealing with Jennifer. I want to bring you back into the conversation here.
Are we seeing any sense of consumer fatigue right now, especially when we know inflation is super high and if you were to ask the average person, they do think that things are kind of tight right now.
I don't know that we're seeing a lot of fatigue. I think people have sort of adjusted to what is sort of almost a new normal, and that's a little bit post food inflation. They've seen prices come down in different ways, especially on the grocery side and some of the general merchandise, like entry level fashion, and so I think that gives the perception of a little bit of relief.
So I don't think people are really pulling back anymore, but they're not also simultaneously really loosening the purse strings. It seems like we've sort of settled into kind of this new normal, this new normal range. One other note
on Walmart that I think is pretty interesting. When you're talking about retention, you can't you can't not talk about Walmart Plus, which is a huge loyalty program and they're generating a lot of incremental revenue off of it, and people who get in there, they keep renewing and it just locks in loyalty and locks in spending, and we're seeing that across all income cohorts.
Wait wait, wait, can you talk a little bit more about that? And I think, I think what this is not an ad for American Express, but I will say, if you have a certain American Express card, you can get a free membership to the program.
Which one do you want to.
I think it's the Platinum card. I believe, Yeah, I believe that's what it is. Thanks for calling you.
Actually just completed a survey of one thousand Walmart Plus subscribers, and what's really interesting is that eighty three percent of Walmart Plus subscribers also have an Amazon Prime membership, but that doesn't stop them from maximizing their Walmart Plus value. And so I think that it really illustrates how Walmart has very uniquely carved out a survey and a recurring
revenue stream that is really pretty remarkable. And that the fact that a lot of the people who are in that program are making digital orders, that's driving their digital revenue for advertising, and it's really adding to just the overall flywheel of Walmart. So there's a lot of really interesting things happening that are really stemming from some of these intelligent decisions they made maybe five years ago to introduce that Walmart Plus program.
That's a fascinating thing to hear because it was always sort of an out also ran when it comes to Amazon Prime, So it's interesting to hear that. Jen Janette, I want to bring you back in here and talk a little bit about Target. You mentioned the CEO change the news we got earlier this week. You said investors
didn't love it. A lot of the conversation around Target over the last couple of years, well, actually really over the last year or so has had to do with backlash against DEI efforts and to what extent, in your view, that actually affected company sales or the image of what that looked like for consumers.
What do we know about this?
The company executives at Target have said that the backlash, like black, black consumers not shopping at Target, has had an impact on sales. They have not quantified that, and so we don't really know. These kinds of boycotts don't often have a huge effect, but they have said that it had that it had an effect, and I think also more more importantly, even in some of the analyst notes, and you hear investors talking about the staff at Target.
We've had some reporting it's nearly sixty percent of staff at Target are people of color, and so the staff itself has been upset by everything that's been going on with Target pulling back on DEI and that is that is something that some people think is kind of behind some of this tumult with with staff. Job in retail is so difficult, and you need especially now, and you need great staff, and you need people who are going to stick around and they know how.
The stores work.
So that has also been a problem, whereas you don't hear those same complaints from staff at Walmart, for example. Excuse me. They've also been increasing the salaries that they're paying their their top employees, so that is also an issue at Target. Is the issue with staff.
Well, we love talking retail and the consumer with both of you. Thank you so much for joining us. Jene Newman, Bloomberg News Consumer reporter and Jennifer Bartasha's Bloomberg Intelligence Consumer Team leader and senior Retail Staples and Package of Food analysts. Check out Janette's reporting on the Bloomberg terminal and Jennifer's research on the Bloomberg Terminal, also, of course, at bloomberg dot com.
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