Amazon Prime Day Sales Record Expected

US shoppers will spend twelve billion dollars online in two days. Uh, let's get the skinny on that with Punam Goyle, senior US retail analyst for Bloomberg Intelligence. So, Punam, give us a sense for Prime Day. It's we're such a weird in the past fifteen months have been such a weird time for all of us. Everybody's behavior has been disrupted. Give us a sense of how important Prime Day is to an Amazon, you know, maybe versus last year. Sure,

thanks Paul. So Prime Days basically very important for Amazon. It's expected in our view, to bring in about twelve billion dollars and grows merchandise sales. That's built from third party and first party. UM. Now what's interesting here and why it's important is because Amazon Prime Day is when

Amazon gets to sell more of its own inventory. So if you think about the Amazon business, more than half of the business is from third party, but on Amazon Prime Day, two thirds of the business is Amazon's owned business. So that's why it's so important. It's great for them because it's UM they get to promote some of their own products. The other thing is they get to bring

on more Prime members. So Prime members today we have over two hundred million Prime members, with the US having about two thirds of the U S population households each having a Prime member in there, so opportunity to grow. That is where Prime Day helps. Where deals are promoted and consumers who are not Prime members can join Prime, which then creates a more stickier customer for them in the longer term. And I wonder how much this has grown with Amazon because revenue growth at Amazon has been

off the hook. We're talking about a company that made less than two hundred way less than two hundred billion in revenue in and they're gonna make about five hundred billion in revenue this year. So have we seen Prime Day revenue grow at the same pace. We've actually seen it grow much faster than that. So using the same time frame that you just use, prime day sales where two point four billion dollars and we're expecting twelve billion

this year, so that's a sixfold increase almost. But I'm talking to us about the other side of the equation, the supply side, getting stuff to people's doors. We keep hearing lots of stories about supply chain disruptions, and boy, when I think about a company that really realizes upon a global supply chain, it's Amazon dot Com. What are they telling you about being able to get stuff to people's doors. You know, it hasn't been called out as

a hiccup yet in order we see it. But what I have personally seen and I've heard from people is that, you know, the one day the two day delivery that you're used to expecting, maybe it doesn't come in one day anymore anymore. Some items maybe they take two or three days, but they're still getting them out there. You know, if if anyone can do it, we think it's Amazon. They're pretty diversified how they ship. They use carriers, but they also have their own trucks and performent networks to

help them. So we think Amazon can still you know, go past those bottlenecks. We haven't seen, um, those constraints impact them like we have some other companies in retail. By the way, I'm not not totally related to this story, but I always wonder how to look at other no no, no cars man. Uh the weight they're is getting really long for cars and motorcycles. But you know, a lot of times I'll choose Amazon instead of many other online vendors because I want my stuff now. Um, and I'm

probably just a horrible person. But I guess other people I feel the same way. Are our other vendors. Are other online sites hurrying up to try and match that? Yeah? Absolutely. So you know, Walmart and Target, I say, are are both playing in the space more aggressively than they ever have in the past. They now have programs where you can get same day delivery, whether it's through Walmart Plus or whether it's to ship through ship it at Target, so you can get things to your door the same

day today in retail across many other larger retailers. But once again, the inventory there may be a little more limited, um than it is on Amazon. Because they don't necessarily have everything that they have available online for seing day delivery or even next day. All Right, it's a great topic because more and more of us well, it touches so many um and a lot more obviously than it did in two thou two thousand nine, um, and it looks like it's pretty sticky. Punham is a great person

to talk to. She's our senior US retail analyst for Bloomberg Intelligence, so she knows all there is to know about this fascinating and growing story um well and hopefully continues to grow because that means the economy does as well. So that's the story on Prime Day. Get acquainted with it. It's here to stay, Paul and spreading really around the world. This is Bloomberg right now. Let's go to Omar agular ceio of Passive Equity Multi Asset Strategies for Charles Schwab

Investment Management. He joins us. Omar, thanks so much for joining us. You know, when I think about Charles Schwab, I just think of, you know, just the army of individual investors out there, the retail investors, uh that trade on your platform. What are you hearing most from the average. If you have a Charles Schwab investment management client right now, Hily,

good morning. Um. You know, in general, you know what we see um industry wide on in general for retail investors is you know there you know, they're concerned about inflation. Inflation seems to be what is top of mind as continued concerns about the all the work that has been done with prices going up, significant amount of imbalances between demand and supply, and in general, you know what would

that do to interest rates? I think when we see the the data and the volatility around the data, you know, a lot of what comes to investor's head is, well, this is going to affect earnings for companies. Is there's going to be something that affects prices and in general? How is that going to reflect in the volatility of my portfolios? Well you can just tell them, um, you know, if we start to see real inflation and the Fed turns hawkish and the dots rise, they can expect to

see the ten year yield fall. Well that seems to be what that's crazy, right, That's just insane. That seems to be exactly how the market, you know, it seems to be reacting to what what I would probably they say was something that the Federal Reserve tried to put together last week, and in an effort to try to reduce the fears of inflation, they actually created more uncertainty

for investors. I think a big significant part of the tone, the hockey shtone that we all heard from jeron Power last week, you know, translated into more volatility around the timing of the tapering program. And I think the market seemed to be now more comfortable thinking that the tapering will happen earlier than later, thinking that the Fed will

be aggressive in reacting to any signs of inflation. So in a way that that inflation discussion created a little more volatility in what we may see down the road. All right, So I guess one of the questions is, if we are going to be in a rising interest rate environment over the next several years, is economic growth our corporate earnings are they strong enough to offset that?

How do you feel about that? Well, economic growth and earnings growth are city to be the for for us, the catalyst of what may upset a little bit of that volatility and inflation components if you actually think about, you know, the numbers that we expect. Even in the second quarter, we're gonna, you know, get to the highest possible numbers we have seen in a while. And granted that there is a base case effect, we're expecting over sixty percent year of a year EPs growth in the

second quarter, which is going to be a record. Um. You know, when you put that together with a potential of you know, over seven percent of GDP growth in one you know, we're talking about something that I don't think we have seen in a long long time. Um. The big question in our minds is, you know, at what point we go through that significant moving to the mid cycle and the deceleration of economic growth and earnings

growth is something that the market feels comfortable. So whether it's the third quarter of this year or whether it's you know, at the end of this year when we're starting to see that deceleration and how fast that deceleration is. This that steepness of deceleration is what I think is going to be some for us to continue to watch. If you had to put your money in one basket or another, would it be value or growth? Well, I think we we continue to tell investors that we have

to be barbelled, we we this. You know, we are in unprecedented charts, you know, in the business cycle and the economic cycles. Again, you know, we have never been you know, in this situation in any you know, these cycles before. Because in a way, this is not even a mid cycle in the traditional sense, because we are reopening.

We're still in that process of reopening. The global economy is not yet fully open, and as such, it is very hard to put a component of saying, well, this is now the cyclical trade is done, and therefore we're going to go to the mid cycle, you know, high quality growth. So our our approach right now until we get a little more clarity on the data is, you know, the cyclical trade still has some room, but you've got to be prepared for the next leg, which is going

into the high quality growth. So, you know, again, a long way to tell you the Barbell strategies to be the most prudent at the moment. All right, thanks so much for joining us. Omar always great to get your inside. Omar Aguilar c I, O of Passive Equity and multi Asset Strategies at Charles Schwab Investment Managers. You know, when we started Bloomberg intelligence, Bloomberg's in house research investment research business. We said, we're going to really focus on the data,

because that's what Bloomberg does. It has the world class best data, and we'll let the data do the talking. In our analysts make lots of great charts and graphs from that data and they tell you what's important. And nobody does that better than Mike McGlone. He's got the best charts, tells fantastic stories that really make you understand what's going on in his business. Uh. And Mike joins us here because we need to talk about bitcoin. And I'm looking at some charts here and it's not a

good chart for XPT. It's off another nine percent today, Mike, So do we start looking at support levels for this type of thing like you do with all the other commodities you follow? Is that important when you look at something like bitcoin. Bitcoin is very technical because it's still a lot of people don't understand it, and there's a lot of traders, and a lot of them are young and inexperience, and there's a lot of bots trading them. I mean, it's so automated. But I look at thirty thousand,

it's pretty good support. It ended last year around twenty nine thousand. Now we might get a little dip below there, just to kind of tweak out the last of the speculative accesses. But what I see here is lower prices are attracting more the longer term bine hole types. And it's last week it peaked around forty thousand, So thirty to forty thousand. I still thinking should get to the hundred thousand this year. The key thing I'm worried about

is what happened last year. Bonnil is collapsing, the stock market declining. It's the macro, and if the stock market goes down and bonnels go down, bitcoin is part of that macro. But in the big picture, what the Fed said, I think, you know, kind of tweaking things a little bit. The the the Fed squawk of that, to me, is actually good and long term for bitcoin like it is

for gold. So you think bitcoin is more of an inflation hedge, Well a, Matt, Well, Well, I mean here's the thing, because if the FED starts to raise rates, Bitcoin and gold don't pay any dividends or have any kind of return like that unless you use some funky yield farming strategies so why well, ultimately it will be inflation hedge. But look at gold in the last ten years, in the last twenty years, it hasn't been an inflation.

Has has been a deflation. Has been working better with yields collapsing, and gold is kicking him right now finally because yields the thirty year drop alow and to one point nine four. Last night I got up and I looked at like, WHOA. So to me, what's happening is it's not inflation. Think of what it's going to take for the Fed. The raised rates. That's a dream right now, and it's started that. They're trying to warn us a litit because they remember what happened last time with the

taper tantrum. It's just classic Fed. They have to do that. But they're still dreaming of raising rates. And then the key thing is if the stock market doesn't go up, deflation is the main problem. You see that most commodities, most of them peak crude oil is still a little bit higher here. Copper peaked at ten thousand dollars, But I kick in. Bitcoin is is replacing gold in portfolios in many cases, but it's not inflation yet. At some point we'll get there. I didn't know when that's what

that's gonna take. But to me, until the stock market, until we get that past that pain, that that period when he had a little bit of an ebbing tide and you see, here's who's wearing clothes kind of kicked in maybe a little bit last week. Is I fully expect golden bitcoin being the two key asses wearing clothes because there's still that I feel that organic and see the organic demand below the market. All right, so we

did see. I'm wondering, like for bitcoin, for those that don't fully understand it as a security, what is it most highly correlated with? Do you think? So what should people be looking at to say, gf bon yields go up? You know, bitcoins? I mean, how should I think about? So? How did you know what I'm researching right now on

the bloom Bird portfolio? Potum, I'm I'm I'm working on what's called port that's our portfolio function that putting bitcoin with the bond market and just taking a US Treasury market portfolio and using bitcoin of ten percent and a lot of people here are doing that. Ray Dally as if you mentioned that he'd rather old bitcoin than bonds, it has zero correlation to most assets. Is a unique

thing about it. Now when markets plunge like we did last year, everything has a high correlation to the stock mark, and that kicked in. You saw that with crude oil, saw that with bitcoin. But no, now it's coming back, and I think that's what people are doing looking forward. Okay, in a gold portfolio, now I have to have a little bitcoin because it's clearly replacing gold unless it fails. But if that trend continues, But in a in a in a in a bond portfolio, it's really a nice compliment.

Say five to ten going forward, zero rates. If we do get inflation at some point, it should kick in. But if you look past performance, very low low correlation, it doesn't really add to volatively in the in the bond portfolio, but it gives you those much better returns. Now that's past performance looking forward. If it just keeps doing what it has been, which I'm too, I'm not smart at the fair to winning, it might change. It should be a good compliment. And for me that's what's happening.

Every day that goes by that it doesn't fail, it becomes more legitimate. Yeah, is there a material risk that bitcoin fails. Yeah, well it lessens every day. It's some kind of you have to have I have to reconsider that because it's new technology something some kind of technological glitch, some kind of you know, the issue with energy where point out how strong it is. So every time you tryd of throw something at it, you kind of get

used to them, like, okay, knocks the price down. Then you look around like, actually, that's a positive thing for bitcoin.

So it's more likely to be beaten than fail, right, I mean that much more likely option is that, uh, the market chooses something else like either well that's the thing, and that's kind of like to say, okay, in a gold portfolio, you have to have bitcoin, but kind of now, don't have to have a little bit of THEORYM in that, because the THEORYM represents a whole building block of all defy and and decentralized financial and it's all risen. By

the way, I'm a little confused. Well it's not that I'm confused, but there there are stories in China that are bad for bitcoin. They're shutting down miners apparently, and they're banning people from accepting it and using it, so it seems like China the government is against bitcoin. On the other hand, people in China own more bitcoin than people in most other countries, and all of these new

unicorn businesses are popping up. I don't know if you read about a group of Morgan Stanley traders that started a company called Amber Group, which trades not only trades bitcoin, but authors a bunch of other fintech solutions with crypto. They have now a billion dollar valuation. Um there's a Chinese crypto lender, Babel Finance. They've raised forty million from investors like Sequoia and tiger Um. The list goes on and on of these new startups in Hong Kong and

on the mainland. Does China love bitcoin? Is it the savior bitcoin? Or do they hate bitcoin? Are they terrified of matt What you described as very very short term bullish and long term very I'm sorry, short term barrass very long term bullis China pushing back and being agnostic

towards the bitcoin makes a lot of sense. Authoritarian society, no free flow cap, do not allow their citizens to have free flow capital and any other currencies outside the currents of the country, and that makes a lot of sense. It's actually showing how how the strength of how good bitcoin is for countries like US and the rest Western world. We have free coal, free flow capital, and discourse where you can exchange different currencies. So it's a savior for

a lot of Chinese citizens. So they're trying to hide it from the government, but it's also extolling the problem Chinese really going backwards the last few years and many people with President Zy this whole concept of trying to you know, eliminate corruption. You know what that means, he's just bringing people who agree with him. So it's to me, what's happening to China is very bullish book for bitcoin. In the short term, it's miners have to leave, they

have to sell because they're getting a little discombobulated. But they're moving more to more renewable sources, a lot of it North America. Gasler in Canada is one of the top attractions right now, and it's all going renewable anyhow because of the costs. So I look at what happened in China is just that's that's the new Cold War and US has already winning organic. All right, Mike, thanks so much, always great check in with you on Bitcoin,

Mike mcgloan there Bloomberg Commodities. We've been talking about inflation a lot recently in the market is trying to get a handle on is it good inflation or perhaps something more longer term and if so, how problematic is that for the market. Let's check in with Brian wash He's a financial advisor at Walsh and Nicholson Financial Group. Brian, if I'm really concerned about evaluation, I'm sorry, inflation. Should I just go out and buy gold as a hedge

boarding and thanks for having me? And my answer to that is no. UM. When you actually look at gold when it was supposed to work in inflationary environment UM in more recent times, and it hasn't UM. When you look at UM, the the correlation with gold to the equity market that has increased over time. So gold is a great buffer when you have a market sell off UM like like we have back in March of last year.

But we're talking about inflation and future inflation. It has not provided a great hedging strategy and in fact UM we at our firm, we are more inclined to look towards commodities such as sugar and wet UM to hedge inflation as it has proved this year to work much better than gold, so you think commodity is also better than And by the way, speaking of commodities, did you look at oils? Yeah? Thanks for you know, we've been looking at this morning, but it just spiked up here.

We've got w t I crude oil two dollars an ounce. I'm a barrel that's up a dollar twenty barrel. It's up almost one percent, So big move up there. Yeah, Brent up one and a half percent to seventy fifty barrel, so big moves up in commodities. What about equities? UM? I wonder Brian, can can you make an argument for equities as good as a good inflation edge? Do you have to look at certain industry groups? Yeah? So, I mean right now, there's really nowhere else to go. I mean,

you have to be in the equity market. You have a supportive you have support of UM physical and monetary policy, UM fixed income is it gonna give you really anything? Right now? So there really is no place else to go other than the equity markets. But if you're looking to hedge inflation UM very similar to hedging interest rates. You know you need to look at quality companies who

have who have a history of increasing their dividends. UM. If you have that and you have higher commodity prices, higher inflation, higher interest rates, those types of companies will fare a lot better. UM. And when you have these high inflationary environments, these high interest rate environments, you need to have cash on hand. UM. Now is not the time,

in our opinion, to be barreling into growth stocks. UM. We think you need to have quality on the balance sheet, UM, quality in your portfolio, and and position a wordingly for for higher interest rates and higher inflation. And you know, short term, obviously we're seeing what the fintas clung a transitory inflation every move. Um. We believe that it's not transitory.

We think we're gonna see it continue um through into three and I think that's when you're gonna start seeing it effect Um the equity markets in a in a bigger, bigger way. Bryan, are you You've you've been in this game a while here, You've got some experience. When you see valuations where they are today, when you see you know, meme stock trading, you know kind of the Reddit traders, when you see SPACs exploding in the end of last year beginning of this year. Does that suggest to you

that there's a lot of froth in this market? I better be a little bit careful. Absolutely, I mean, UM, there's no doubt about it. I have people calling me who have never had questions before about investments calling me asking them about a m C and game stop in bitcoin. So UM, anytime, you know, for me, I see some people, UM, you know, reaching out regarding certain things, Um, you have

to start to wonder. And it's across the board. I mean, there's nothing in this marketplace right now, at least on the US side, that is trading uh in any capacity. Um, that's justified everything to me, you know, is is just a lot of pent up demand, pent up cash that people want to spend. UM. And you know they're they're riding the federal uh FED policy wave right now. And UM, I I really, I truly believe um that you know, the rest of this year will probably be pretty decent

frequity markets. But once two comes around, UM, I think you're gonna see that valuation bubble um start to start to dissipate a little bit. But nothing just dissipate, right, not pop I mean, you co founded walshon Nicholson, so you've been through a real bubble. We see big text docs with huge valuations. You don't think this is gonna be you know, Like again, well, I think it depends on where you're looking. I mean I think, um, you know,

some companies, um, you know, it's a fair better. I mean I think you know, when you look at Amazon, Google's, Microsoft's of the world, Um you know. No, I don't think you're gonna see a pop there. I mean, those are companies that have overtaken our world and overtaken our our you know, the public um interest in general. But some of these smaller UM tech companies with these crazy valuations, UM yeah, I do think you're gonna see um, you know,

more of a pop there. So I think on the on the large end, large cap end of the tech market, it's more of a distipate distipating um reset versus the small and mid cap end. Is is definitely gonna see some the broad of the down the downtre and there. All right, Brian, very cool to get your take. Thanks so much for joining us. Brian Walsh, financial advisor at Walsh and Nicholson talking to us about markets. Thanks for

listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three and on Fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio