Sanders Announces Presidential Run: Greg Valliere

pleasure to say that. I also think he's a racist, a sexist, homophobe, a zenophobe, somebody who's getting cheap political points by trying to pick on minorities. That is what Bernie Sanders said in an interview with Vermont Public Radio as he announced his candidacy for the President of the United States. Greg Bellier, chief US policy strategist for a g F Investments, joins us Now, Greg, no surprise, but what do you make of how you rolled out this announcement.

Just think we're going to have a year and a half of this kind of rhetoric back and forth in Trump of Chris hits back even harder. So, uh, welcome to the next election. That's going to be pretty ugly. And Paul, what's interesting, at least for me, is for the last election, like Bernie Sanders was out on a lima his own. Now he's not. Now he's not, he's there's lots of company out on the left limb where

he likes to, uh they play. But Greg, thinking about it, you know, it is a competitive it's it's a very crowded field. We're up to twenty some odd names on the Democratic side. Where do you think Bernie Sanders best positions himself this go around. Well, let's be honest here, He's not a Democrat. He is a self professed Democratic socialist, has never really joined the party, so he's out there. I mean he's well to the left. Obviously Elizabeth Warren will be as well. But there's a huge lane in

the center. I think Klobuchar last night in the town hall tried to take some of that lane. I think Joe Biden well might even be a guy by the name of Bloomberg. So there are a lot of people who might want the middle lane, and Bernie makes it easier for them. And of course Mike Bloomberg is the majority owner uh and founder of Bloomberg LP. UM, So

are we in for this no matter what side? Because if you take away even this sort of populist socialist rhetoric, you also have things like buybacks with Marco Rubio, and you have a Sanders and Schumer on that train to like, either way, we're sort of headed for this sort of collapse of Wall Street versus Main Street. Again, that's a good point, Alex, and I think that even Republicans feel that perhaps the tax cuts went too far for corporations and the very wealthy, so that's going to be fair

game for just about everyone. But when you look at Bernie Sanders in particular and the candidates who were well to the left, I'll be damned if I can figure out how they'll pay for any of this stuff. And it may be a little too exotic. Trump has not lost uh that Uh. He made a speech in Miami yesterday in which like half of it seemed to be talking how about how horrible socialists are. What they've done to venis a whale of us. So he's going to

try to portray the Democrats is all socialists. I don't think it's going to work. So Gregg, what do you think that Bernie Sanders needs to change from the last go round for him? Well, I think that he probably has to do a little bit better with African Americans. That was a weak spot for him. I think that you know, at his age at seventy seven, now he's going to have to show a lot of vigor. You know, he can't get a cold. He's got to He's got to plow right through. I think, uh, energy levels are

going to be important. So also what we're sort of percolating on this is all the rhetoric we heard about these potential auto tariffs from the US. You had the auto European leaders speaking out against it. You know, I spoke to Michael Jays as he runs policy over at Morgan Stanley US Public Policy, and he said, look, it's an issue, but it would be short term. This is

what he had to sand Bloomberg Television earlier today. There is a potential political circuit breaker, which is a couple of different bills that are going through the Senate right now. Um that could take back some of this tariffing authority from the President before it's actually put in the place right now. I don't think that that's going to happen before this becomes more live than it already is. But we have to watch that very carefully because that could

stop it before it starts. So kind of to your point, Greg, is that you know you went too far to one side. Are we seeing a world where the Senate and Congress is going to try and pair back any power that Trump really has to push certain things forward. I think if he went for auto terroris, and there's a secret report that came out over the weekend from Commerce to the President, and if he looks at it and says I'm going to impose auto terris, he could get a

mighty mighty pushback from Congress, and not just from Democrats. So, Greg, mentioning tariffs, what do you expect if anything out of the trade talks with China that contents that are ongoing? You know, I think that we probably have gone a little bit too far, Paul. We've gotten a little bit ahead of ourselves that there's not going to be a deal. In my opinion on March one way, too much stuff

still to be resolved. I do think late spring, early summer there's going to be a big, made for TV splashy theatrical meeting between Presidents Trump and Z and we will get a deal. But for anyone who's hoping for a deal by this much March one deadline, I think that's unrealistic. So you think we'll get an extension then at least, yeah, I do. I don't think there's anything special about that day. They can push it back, you know,

two or three months. It does look like they're making progress, but there's not going to be a final deal without Trump and Z. And it's too soon for them to get together. I think that comes to three months from now. Greg Valieri, Chief US Policy Strategy at a g F Investments, thank you very much for joining us on Bloomberg Radio this morning. Joining us now is the man who can

talk about everything retail berk Littinger, he joins. So from a strategic let me get the name right, I don't want to miss this one up Strategic Resource Group, show off, Strategic Resource Group. I had your bio up, but of course I didn't have the name of your shop. So we managing director of Strategic Resource Group has a long career. Whether you take a look at say PNG, throughout the history and sort of helping boost consumer sales, their marketing

and retailing. You're the guy. So clearly Walmart did well in part because of the push to e commerce, and they're discounting and Alex and Paul. What's really impressive about this quarter that hasn't been reported by other networks is that Walmart's paying higher wages and at the same time they're lowering their prices and generating more revenue and producing higher levels of profits. So they're hitting all four cornerstones

that other competitors are not. And even even Amazon's not doing all that because Amazon's racing prices, and that's one of the reasons Walmart's doing so well well. This quarter's numbers were very interesting. I think investors always focused on Walmart just given its size. By think after the retail sales report from last week that was such a curveball for everybody with retail sales. I guess and you sent

me down reported one point two per cent. What do you make of those that number plus the Walmart numbers today? It's an important question in the issue is that all consumers across the country are facing all ten monthly budget expenditures have gone up over the last twelve months. UH rich people love a bargain, and working people and people on fixed and limited income need and have to have a bargain. And the best place to get a bargain on everything UH she or he buys as the consumers

is Walmart. It's the easiest place to return and UH Amazon is good if a product doesn't weigh a lot, or if it's not big in size, but if it's something that's bulky, like a fifty pound bag of pet food or uh any anything else that's large in size or heavy and weight like a UH gall on a milk which weighs nine pounds and is expensive on Amazon.

Walmart saves people more money. And Walmart's investing in advertising, marketing, and consumer communication, whether it's Bloomberg, Radio, TV, the Super Bowl. Sam Walden and his son Rob thought marketing and advertising

was an expense. Amazon views advertising as an expense, Doug McMillan, the CEO of Walmart, looks at as an investment, and Jerry del Famina, the legendary advertising agency head I, said Walmart's advertising as some of the best anywhere in the world, and that's in taking consumers away from competitors when Walmart loss for competitors, but at what expense? Right, Like, so gross margin expansion is going to still be a lusive for them because they have to do all the stuff

that you just said. They have to keep prices low. They also have to deal with delivery and shipping and all that. So why is it okay now? First a couple of years ago and that wasn't okay. We we look at it, Alex on your key question is Walmart's investing in the future to profitably drive sales growth. So if you look at depreciation for Walmart versus depreciation for Amazon, Walmart's spending more than its level of depreciation to win online.

When with their store eleven in Avon, Colorado, with click and collect, with a FedEx station inside, with Western Union to wire money and of America will be able to get deliveries from Walmart dot Com including consumables within the next two years. That's all through the investment. Meanwhile, Jeff Bezos aid Amazon typically does not reinvest all his and Amazon's depreciation in winning for the future. So Walmart with

a better balance sheet. To your point, the margin margins are more modest, but that's investing in the Roman Empire of retail UH to win in cyberspace and when the wars and the stores well, because Amazon's just getting crushed in the new whole foods formats by Walmart and others. So Bert Flickinger, Managing director for Strategic Resource Group, joining us in studio. One of the numbers that jumped out at me Bert was that growth in e commerce UH

for Walmart. So they continue to compete extraordinarily well against Amazon. What is the secret sauce for them? Secret sauce is the investment that Alex referenced, plus the reverse recruiting, so UH, Walmart and Doug McMillan of recruited Mark Lorie, who was a genius who helped develop wag Diapers dot com a lot of Amazon dot com away from Amazon. Dave Criscione, my star student at Cornell Summer Executive Program, was running

Amazon Go. Walmart recruited Dave away, so they've taken a dream team out of Amazon and Bazos, in our view, is the most brilliant guy in all of the history of retail. But one general can't win the war, and Walmart's taking as best officers and bringing them into Walmart for Walmart to win where Walmart has been losing in cyberspace before they did a complete reset with great leadership as opposed to family management. So who do you think Walmart is taking market share from? Or is the pie

bigger than we thought? And we've talked about Amazon, but I'm more interested also in like the targets are the Macy's, Like who are they eat? Who's lunch a they're eating? They're doing a combination. They're taking the business from Target because Walmart on your investment point, Walmart has the biggest UH data base in terms of terror bytes, second only to the US Pentagon. So in terms of dedicated direct distribution h e commerce communications down to the nanosecond, they're great.

Target's been working with McKenzie and company and a lot of consulting firms that have done a lot of good work, but they've outsourced distribution. They've outsowed, they outsourced Target dot Com for a number of years, the outsourced part of credit cards. So Target doesn't have that institutional efficiencies that Walmart's gotten. The other thing that you and Paul reported very well is the Payless bankruptcy, the Jimboree bankruptcies, the

earlier retail bankruptcies. So two toys r US, which you and Paul spoke of earlier. So Walmart's aggregating the sales from the bankrupt retailers, plus taking retailers from food, drug discount department store category dominant, especially sporting goods and toys twenty spart. How's the consumer doing? Broadly defined? Consumers doing well in off price and the word working consumer, consumers

doing okay. Uh. Luxury consumers are really struggling worldwide. As my husband said, can you just please stop spending alex thanks just one week, don't buy Maybe I think a lot of people that In December Profit Burt Flicking, your managing director for Strategic Resource Group, joining us in study

on Walmart and all things retail. As we were talking about, you have the FED minutes coming out on Wednesday at two pm, and you know what I'm hearing, kill the dots, more revolution of more revolt against the dot plot because it doesn't help provide clarity, but more confusion for the markets. Joining us now is Craig Taurus with the latest. So Craig, realistically, are we really going to see the end of the dot plot? And why no? And you're so sad about that.

It took a long time to get agreement on this. I do think it really isn't expressing what they would like to express, and maybe that's the departure point of their conversation these days. So Craig, maybe you know, it's debatable whether the dot plot itself and that forecast and what it represents is the problem, or maybe just the messaging of what the FED officials are seeing what happened

in December that really riled the markets. I think so they, as everybody now knows, they stuck with this outlook of two rate hikes at a time when we later saw in the minutes there were as many as five downside risks that they cited, and so whatever they said in the press release and the FED statement in their forecasts didn't really reflect the conditionality or their conviction about those two hikes in penciled in for so, so again I

come back to, is more of a messaging issue. How can they fix that if there is in fact a systemic problem. It's complicated. As we say in our story today, During a number of ideas floating around, one is well, j Pal's having press conferences eight times a year now, right, so they could give more frequent updates on their forecasts eight times a year instead of four. Now, that would show more agility in response to current information. And I would expect, you know, that dot plot and the outlook

for growth, you might see some changes. UM would not express conditionality though, uh no, it would not. So here's what this reminds me of. And if you are a parent, maybe you'll get this analogy. It reminds me of my toddler wanting chocolate for breakfast and I said, you can't have chocolate for breakfast, like but I want to and hear all the reasons why, and I say, no, you can't have any anything except giving her chocolate for breakfast. Won't let her relax and calm down. It's kind of

the same thing. The markets basically want Powell to come out and say we're raising rates this date and if we don't, here's the number one reason why. But that Paul is like totally unrealistic. That's not how the system works. It is. And it's also a question of getting too much information. With Chairman Pal, you know, speaking eight times a year versus four times UM, is that too much information?

I don't think so. So I think the problem. You know, there's something about communication when you make a decision, you know, as a parent, as an individual, whoever, you want to come out and kind of sell the decision, right, this is why we did what we did. It's kind of hard then to shift and say this is why we

might not do what we did. But they have to do that because you know why fed funds markets, money markets are always of reflecting the conditionality and probability of that they're going to do or may not do that, So somehow they have to address that. So basically that means that instead of the market focusing on the dot plot, it come out and say, I'm making this up. Here's the criteria of six things that we look at boom boom, boom, and this is what makes us doat a dependent or

not correct. So some central banks run scenarios and they say this isn't gonna we don't this isn't our baseline. This could happen or it may not. But what would happen if after the fiscal stimulus, growth ratcheted down to two percent or below, and then you just ran an economic model and plotted out a funds rate that's called a fan chart. Those are just as confusing. Now that's not a fan chart. This is a scenario with a

funds rate and not a fan around it. Fan charts are meaningless in my view and in many people's view, because it tells you the number could be zero where it could before. That's really not specific guidance, or it doesn't say anything about I hate this word, but I'm going to use it your reaction function, how you'll respond. So, Craig, is there any chance that the FED would consider a

consensus forecast? That's a great question. So if the three of us were in a room and we had to walk out and say something to Bloomberg at large, right, I think we could agree on what we're going to say. For some reason, the f o MC has a very hard time coming up with us or getting to the point where they say, well, this is we're going to agree on this forecast. Part of it is our system were diversity of views is also important, But it doesn't

seem to me like a big goal to aim for. Um. I'm optimistic, I guess all right, Craig, tourists tired of the dot plot, but I resigned and trying to get optimistic joining us up from Bloomberg. Well, interest rates are falling, and a growing course is forecasting slower growth and tepid inflation. Consensus has shifted to a point where virtually all forecasters expect interest rates to follow inflation towards this seller. To get a sense of how this scenario may play out,

we welcome Jack Ablin. Jack is founding partner and chief investment officer at Crescent Wealth Advisors. Jack, thanks so much for joining us. So the inflation outlook is currently I think quite benign in the marketplace. What do you think could change that? Well, I think probably if anything is the labor market. You know clearly um our economy is is pivots off of households, and household income pivots off

of wages. And you know, we'll keep in mind that wages your over year have are up three point two percent, so certainly you know, well above our trend trend growth UH for real GDP, and based on our forecast, we think wages could rise another three percent over the coming four quarters. So does that wind up feeding into inflation expectations because a lot of investors now argue that inflation expectations will be now, really what the fees reacting to Yeah,

I think that's exactly at Uh. The fact is that, you know, um that we've we've we've printed four point three four point five trillion dollars of money to buy bonds. That hasn't led too much inflation. We've had now a ten year recovery. Uh, that so far has not led too much inflation. But I think consumer demand, which drives obviously most of economic activity, once we start running out of capacity, we will, uh, we will eventually start to

see some price rises. Not to mention, of course, uh some of these tariffs that um, that that companies are going to have to pass along. So Jack, I guess the consensus for the Fed for the remainder of the year is maybe one, maybe two hikes and then I guess a systematic, steady wind down of the balance sheet. Are you in that consensus? Yeah, I mean I think that In fact, I would say consensus what the Fed believes and what consensus believes maybe a little bit different here.

I think consensus is closer to you know, zero hikes this year and in fact rate cuts next year. I think that probably a little overly aggressive. I do think, um, you know, we are starting to run of certain capacity. UM. You know, I I did note that, for example, UM, a lot of the staples companies said that they're going to be passing along higher prices to their consumers. UM. And so you know that's obviously staples in elastic demand.

But eventually if that starts to move into other areas, UM, you know, that could that could put the price indecks higher. Here's a question. Can we just keep going up but the economy slows? You know, it's a it's a great question. UM, yeah, I guess it could if we have a higher productivity. Mean right now, you know, businesses can only pay wage increases out of really two things. One is higher inflation, right, if they can price their products higher and then share

some of those higher prices with labor. Uh. The other, of course, is productivity if they if their employees can earn, you know, can can pump out five more product for the same amount of effort that I argue you could argue that, UM, business owners can pass some of those productivity benefits along to their workforce. Without those two, UM, the business owners have to start cutting into profits to pay those wage increases. And that's pretty much what we're

starting to see over the last couple of quarters. So Jack, we had some pretty good numbers coming out of Walmart this morning. UM, kind of kind of I think, offsetting kind of the weak retail sales number we had for December last week. What is what is sense of where the consumer is right now? I think that, you know, it's funny, I'm actually very surprised with that weak retail

number in December. Um. You know, I don't know. UM you know obviously one month um, and we want to you know, one once we get um, you know, more data, we can get a better sense of it. But I tend to be believe Walmart, which I think last time I checked was ten percent of all retail UM. Over you know, some of the one one time government stat

I think the consumer is very strong. Um. You know again hearkening back to this notion, uh that uh that wages have outpaced economic activity, so real wages are on the rise, and of course pump prices UM are remarkably low. One of the things we look at is how far can you drive on an hour's worth of work? Um. So it looks at pump prices, it looks at wages, It also looks at fuel efficient and see and we find if you can get over three and twenty miles on an hour's worth of work. UM, that's a pretty

good economy for American workforce. And that's where we are right now. So does that mean you want to be taking on more risk right now or less? Well? UM, you know it's interesting. I'm looking at other metrics. UM. I think that equities in general are fairly priced. I will say, anyone who's forecasting recession, uh, must have a better um crystal ball than I do. I don't see one on the horizon. Uh. You know, notwithstanding the weakness abroad.

I I just don't see one here at home. UM. So I would say, you know, I'm I'm pretty much neutrally weighted to equities. I think they're fairly priced based on conditions. One of the things I do look at, though, for the next at least six months, is the relative return of financials. What we find is historically that equities do well when financials do well, and equities don't do as well when financials are underperforming. And you know, over

the last six months, financials have underperformed. Uh, the S and p F I've founded, and that spells some headwinds for equity investing over the next couple of quarters. All right, Jack, good to catch up with you. Thank you very much. Chack Ablin, founding partner and chief investment officer at Crescent Wealth Advisors. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Paul Sweeney.

I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds. I'm on Twitter at Lisa bramw wits one. Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio.