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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App.
Investors trying to claw their way out of recent worries about overvalued tech companies sigflation. Apollo Global Management president Jim Zelter joins us. Now, Jim, wonderful to see you. Thank you so much for being here.
Always nice to be here.
So let's start with the.
Look ahead for next year, which is everything is awesome and what we're hearing from every single person who comes on the show, is it next year is going to be double digit gains in the S and P five hundred at the same time that you continue to get get grind out better returns from the debt space.
Is there a contradiction here.
Well, I would just say that the confidence sitting here in December about next year that anybody puts forth has to be taken with a little bit of skepticism because of the year we've just had. If you were here on this journey, this year obviously has been a turnis on volatility, and we've ended up in a place that
many probably wouldn't have predicted. But as we sit here right now thinking about the year ahead, you're going to end this year with an extremely strong M and a calendar an M and a backlog in terms of what's actually been executed this year, but also in the pipeline
of new deals. The expectations on the Bloomberg Economics page is a thirty percent chance of a recession next year, a little bit higher inflation, a little bit lower growth, And as we talked about a moment ago, one of the markets has to be wrong in this intersection right now, where many are saying we need to lower rates because of an economic slowdown and the other side saying earnings upside because of accelerating earnings from the mag seven and
the four ninety three. Those both can't be correct or it's very, very unlikely that they'll both be correct.
We're in the.
Camp at Apollo, as Torson's been up here in many others that between the k shape economy and other demographic issues, we're going to probably see a deceleration of lower rates and a stronger economy in terms of m and a capex cycle, positive regulatory backdrop, and things of that nature.
So if bonds and stocks can't both be right, and they seem to be in conflict right now, are you saying that stocks right and bonds have it wrong.
I'm saying what's been surprising to all of it. If we take a big step back the last four or five years, the idea that the FED would raise rates so much that they did be starting in twenty two, we all predicted massive slow down in the US economy, tightening financial conditions, and we were all wrong. This US economy has been amazingly resilient. Now it's been resilient for organic reasons as well as a lot.
Of fiscal spending.
Obviously now the capex cycle, but the US economy has been in the most resilient for a variety of reasons, and our suspicion is that that will tend to continue in the year ahead. So I think if you look if you look at the gap in the last month or two of the MAG seven earnings growth and the four ninety three a year ago, it was like thirty thirty five percent. The growth rates of the MAG seven and the four ninety three in the last quarter was
eleven percent, twenty two versus eleven. I believe so the rest of the US economy is doing somewhat better in light of the breadth of the AI cycle.
How much is this really all predicated on the ongoing funding of the AI cycle. I mean, this is sort of the fear that you're seeing baked into markets right now is that there's a lot of debt coming into the space. Everything is leveraged to AI being the solution to absolutely every problem that we have.
Well, I think you need to separate that a little bit on the equity side of the AI activity and re mentioned it at the start. Certainly, you've got the incumbents that have amazing business models, whether that's Alphabet, Meta and the other Microsoft and Amazon, and then you've got the upstart Open AI. They're all coming from a different situation.
Once the four or five have incredibly strong balance sheets and incredibly strong capbex and shut me free cash flow, which they're going to allocate to the AAI equity story because for them it's an existential issue.
So for that, that's the equity side of the equation.
What you're really touching on is this question of the five to seven trillion that's expected to be needed to fund the data center and infrastructure capbecks of the.
Next five to seven years.
That's been the zip code of the numbers being being bantered around and today if you look at that number and aggregate and take us step back again, is the industry of that five trillion? About a trillion five will get funded from free cash flow of the of the hyperscalers. The next trillion five will get funded between project finance, private capital, and a variety of their debt markets. About a trillion and trillion a quarter will get done by
the high grade investment grade market. So it leaves about a trillion trillion five. Where's that going to get financed? That's a question mark. What's the clearing price of that of that paper and so you know, we spent a lot of time thinking about that. That's those are the big picture moves that will really have an impact on pricing of the IG market, pricing of the high yield market, pricing of investment grade private credit.
That's the big.
Question that we're all grappling with if you're in these markets today.
Last time you were on you talked about how financing these data centers is fundamentally different than in the past financing other technology projects.
Why why are they so different?
Well, the last thirty years in the US high yield and leverage finance market, for the most part, you've been financing companies that were disruptors, but they were not investment grade disruptors. Think of the cable companies, Think of healthcare companies, think of gaming, even companies like MCI in the regional airlines. This time with the hyperscalers. Again, if you look at the balance sheets of Microsoft and Google and Amazon, these
are some of the greatest companies we've ever seen. Three four hundred billion in revenues, one hundred and fifty billion a year per company in.
Free cash flow.
So there is a counterparty to those businesses you're willing to take on much longer duration risk. If they are the tenant counterparty, then you might have been at an upstart MCI or an upstart airline. It's just a very different economic equation. It's great investment grade risk. It's challenging non investment grade risk.
Now the pack of that.
If you look at the investment grade market today, which is about eleven trillion, it's up from about three trillion ten years ago. That's really dominated by the financial services companies. The biggest issuers are JP Morgan, BAA, Wells, Morgan Stanley, the top seven or all banks. If the predictions about the AI data center boom are correct and the capital needs of the five trillion that I just mentioned will come through, you're going to look at the IG marketplace
in the next five years. The top ten will be very different. It will have Meta, it will have Amazon, it will have Microsoft. If they do pursue that path of funding, which is one of the largest deepest markets eleven trillion, they're going to have.
To access that.
So when we step back and think about the next three to five years, we think about how the investment grade public mark market is going to change in context and risk. It's one thing financing some of the great financial services and banks in the world POSTGFC, our banks and our financial services companies are the strongest, healthiest in the world.
You don't mind being a debt lender to those.
These other companies are taking business models that have been amazing, business models that have been asset light, business models that have generated tremendous amounts of cash flow, and they're just changing the risk of being a lender to those companies. It's not bad risk, it's just different risk.
It sounds like this year was the year of credit.
We were talking about how the twenty twenty five banner year was credit.
It sounds like next year isn't going to be.
It sounds like next year the investment is in something that is more revenue stream based, that is maybe more equity driven, that isn't as leverage to the story that you're talking about, which is an increasing glut of issuance, potential, sticky inflation, and that's not that accommodative.
I actually take the other side of that. I think it's actually a tremendous time to be in credit.
I long there, I go.
I think this is all about dispersion. It's picking the right names from the wrong names. It's about like people in credit are focused on credit, whether it's IG public, high yield private and it's the dispersion that we've been waiting.
If you're if you're a forty year.
Veteran of this business and it built a massive credit platform.
We like dispersion.
We like being in the middle of trying to pick the winners and losers because at the end of the day, that's just good credit picking. And I do think you're getting rewarded with base rates between three and four percent, and the clearing price for a lot of this capbex for these data centers going to be more challenging. That's when you can actually earn your keep by being a smart investor.
Do you think we're heading into a distress cycle.
I don't see it.
We are one of the largest historical players in the distressed arena. You look at the numbers in the last twelve months in the loan market, in the high yield market, they've actually come down in terms of the default rates, they were a little bit north of three four percent. They've actually declined. So on a three trillion plus high yield and loan market, defaults of two and a half three percent, that's sixty to ninety billion. I don't see
an overwhelming amount. Now what I do see is I think you're going to get more secular distressed than cyclical distressed, and that's very important. When we think about secular distressed, I think that the development of AI will change broad business models. If we've talked a lot about healthcare technology, we've talked a lot about the outsourcing businesses, We've talked about software, enterprise software. The AI impact can have dramatic impact on those business models.
And typically, when you go.
Back in the underwriting memo and you think about your base case and your downside being down five, ten, fifteen percent, when you have secular dislocation, you've missed the downside by multiples, and that's what you're probably going to have. But again, I think that what I think is a great question because I think a lot of the topics that are being discussed right now about the role of banks and private credit, or the transparency of private credit, they're legitimate questions.
But the bigger questions are, it's been a long time since we've had a credit cycle.
We're going to have a credit cycle.
That's normal, it's natural, it's a cleansing process of capitalism. And again, I think that when you have a business like we've been in where you have many companies that are more upstarts. We've been doing this. I've been doing it for forty years. We've been doing it Apollo for thirty five years. I feel comfortable about our ability. But you've got some tourus in this space, no doubt about it.
And Jim, that question of affordability very much in the focus point, not just for the veneral Reserve but also the federal government.
From the FED perspective.
How much is seeming like the logical step to cut rates in response to affordability concerns at the lower end of the consumer base.
You know, I know you've had Torsten on recently to talk about this. I do think the K shape economy and the demographics of that, it's really having an impact on the transmission mechanism of FED policy. I do think the last three to five years you've seen, whether it was this emergence of the K shape economy and our demographic shift of income and wealth, along with the evolution of our banking system, the evolution of dispersion, securitization, private capital,
I think that's blunted the impact on monetary policy. And so you know, I well, I understand the impact of the view that rates are a bit higher than the nominal rate right now or the neutral rate issues me. I just don't see a huge other than confidence in the equity market. I don't see a reason to cut rates dramatically. But I do think there's no doubt this affordability issue. We saw it in New York, we saw it in the national we saw it in the various
elections around the country, Virginia in other places. It's going to be a topic for this administration to.
Deal with absolutely, and we've seen them actually backtrack on some issues because of it. Torsten'thlock actually published this morning talking about significant fiscal boost coming in twenty twenty six. When it comes to the One Being Beautiful Bill twenty twenty five, it was a lot of uncertainty. At least that's how people were viewing Washington. What do you view Washington for twenty twenty six. What's most important for you?
Well, I think that certainly it would be interesting to see what happens with the Supreme Court and the tariffs. I still think that there's a lot of domestic initiatives in terms of large industrial capex, But from our perspective, this administration. You know, when you look back at it, you really have nine to twelve months to really get most of your activity done, and then the activity will
be on the midterms next year. So I think that their ability to move in large swath domestic activities is going to be much more limited than.
It was this year.
So it's more of a wait and see and see how I think Sony digest it.
Do you think they'll take more equity stakes.
I don't have a view on that. In particular, they've had a handful. Certainly, they need to deal with some of the domestic issues with regard to chip manufacturing in the US. A lot of the activities that were approved in the Chips Act with the prior administration have not been put to work, So that's an ongoing need for national security and other reasons for them to deal with.
So that would that would be on the agenda in terms of manufacturing, But I'm not sure I see a lot of equity stakes as part.
Of the plan.
I know you can't and on potential live deals. There is this paramount offer Forearner Brothers. It would be financed by Apollo according to reporting. Do you see this environment the regulatory environment ripe for deals in a lot of these spaces.
You know, I think there's a reason why the M and A market will have a near record performance this year in terms of volume, north of five trillion. Certainly you have an administration that's much more comfortable with large industrial mergers, and certainly those larger transactions are able to
garner very large financing packages. People want to invest in high quality companies, and certainly, whether it's industrial consolidation or media consolidation, those types of activities garner a lot of attention and confidence.
Is there a lot of to get done between now and the end of the year, or is everyone pretty much packing it up, putting their crystal balls on.
Look, we're going to the beach.
No.
I think these are very robust markets. There's a lot of activity going on right now. The market will probably shut down in two and a half weeks or so for a little bit of a global respite, and the predictions and the crystal balls will come out, But there's still a fair amount of activity going on, and I think the pipelines are fairly well built into the first quarter, so I would suspect a busy first quarter as well.
The crystal balls already around, Jim, come on, they already come out because people are looking for something to talk about.
Twenty twenty six is already done in dusted.
People are talking about twenty twenty seven at this point.
Can you imagine we have to have people watch TV and sell newspapers.
So it's important to all of.
Us stay with us. Multiple impex saviidance coming up off to this.
Sticking with the Fed ahead of next week's meeting. Lindsay p exem stiphail clearly in the inflation camp of worries, writing, while inflation held steady in September, the lack of down improvement from a still elevated level raises concerns that any further policy easing could risk an acceleration of price pressures.
Lindsay joins us.
Now, Lindsay, thank you so much for being with us.
I want to start there.
Why are you still concerned about inflation worries being the pre eminent concern at a time when it seems like the FED has moved more to the employment side of the equation.
Well, it does seem at least some FED officials have shifted their focus away from price stability to full employment, But there are still a number of FED officials that have come out to highlight the need to remain focused on reinstating price stability after years of allowing price pressures
to remain above that two percent target. Now we have made considerable progress in terms of reining in that growth in the aftermath of the pandemic, but we've never been able to get back to that point of price stability, And now with this lack of downward momentum, it does suggest that the FED might have reached a neutral position in policy appropriate now to take a position a sidelined position without further rate cuts, without further risk of inciting inflation.
Particularly now, there are a number of upside risks as we look out to the end of the year and turn the calendar page into twenty twenty six. So now is not the time to entirely divert focus away from achieving price stability.
Wenzi, do you.
Think that the FED has enough information and data given what happened with the government.
Shutdown to make a decision next week.
I think the FED has a good read on what's happening in terms of the underlying momentum in terms of
cost pressures. Again, we haven't seen necessarily all of the data moved to the upside, but we haven't seen any indications of a material downward momentum in inflation, and as such, I do think, coupled with the fact that consumer still remains on far from robust but solid footing, the economy is on track for a plus three percent growth pace, and we continue to see again not robust, but positive solid job creation, I think the Fed should air on
the side of caution, moving to the sideline, allowing for a further understanding of the evolution of both the price and the labor data before making any additional policy adjustments.
Lisa brought this up earlier if potentially it's a hawkish cut, but what you're describing is maybe maybe we have a dubvish pause next week.
Is that correct? Not necessarily a dubbish pause. I think we're looking for more of a neutral pause. I think the FED at this point is pretty well divided between those that have that lingering fear of price pressures and those that are facing this emerging concern of weakness on the labor market front. So I do think the FED could very clearly articulate a neutral pause push policy to the sideline, say we're not going to make any unnecessary movements until we have a better read on prices and
the labor market. Given there are risks to both sides of the fed s dual mandate.
Lindsay, when you say inflation pressures are still in the system, there is a real question of what those inflation pressures look like percent. A lot of people say we can handle four percent, not so much. How much are you seeing an actual unmooring of inflation expectations in a way that feels unsustainable and unduly punitive rather than two and a half.
Percent, say, or two point eight percent.
Well, I think at the current read right around two and a half ish percent, I think the Fed would be willing to tolerate that longer term. But my concern is these upside pressures that are still coming down the pipeline.
Should we see a stronger than expected growth profile at year end, or a stronger more spendy consumer as we now enter this key holiday shopping season, or turning the corner into twenty twenty six, should businesses now begin to pass through more of those cost increases to the end consumer that were previously absorbed into the bottom line now that inventories have been drawn down significantly, any one or combination of those factors could add significant upward pressure to
inflation going forward. So it's not necessarily where we sit right now, but the risk to prices pressures as we look out to the remote aiming months of the re maining weeks excuse me, of the year, and into twenty twenty six.
Lisie, just real quick here going forward, I'm curious how effective you think monetary policy really is in tackling some of the issues that are pre eminem, particularly when it comes to the key shaped economy, in questions around just how much wages are not keeping pace at the lower end.
Well, wages still are relatively positive. We see about this four percent ish, but you're right, a lot of that growth has been isolated to the upper end of the income spectrum, fueling a lot of the activity on the retail side in the upper echelon, and so we don't
see necessarily this broad based expenditure. When we talk about the consumer being solid, we do have to be somewhat careful painting with a broad brush because a lot of that momentum has come from this underlying increase in asset valuations fueling trillions tens of trillions of dollars in wealth.
But again that's very much much isolated to the middle or the upper end of the income spectrum, as we're talking about property ownership participation in the equity market, which those at the lower end, statistically speaking, are less likely to own property or have a stake in the equity market. So we do see again not necessarily the fed'sibility to completely afiliorate this K shaped recovery. But there is a
role of monetary policy, but a delicate one. We have to make sure that we're attentive to both that labor market and the price data components of that recovery.
Stay with us. Multile Impex Savannah's coming up after this.
Stocks edging higher following a week start to the trading month. Katie Kaminski of Alpha Simplex Group writing ratecut optimism has boosted small cap and mid cuff.
Stocks more than AI big tech.
Overall investor sentiment has stabilized, but fears still remain for overvaluation.
Katie joins us.
Now, Katie, I wanted to start with your understanding of what actually has been happening in markets over the past couple of trading sessions. It seems like there is an increasing breakdown in risk led by bitcoin, maybe a bit of a stabilization.
But from a technical standpoint, what do you see.
This is a good point because what we have seen, you've definitely seen a breakdown in some of the recent trends. There has been a shift in sentiment overall, and you're starting to see some deterioration in some of the key themes, of course gold being something that has been selling off today, and it is also surprising that you're also seeing yields higher when rate cut optimism should be a positive for them.
So I think that just highlights the amount of uncertainty and the potential for risk off sentiment when people are concerned about high valuations.
One thing that really I was looking forward to speaking with you, Katie, because when you're following trends, sometimes you can find the pivot points and understand there something different here.
We're not going to see.
Maybe the melt up rally that we typically do in December heading into year end. Are you sensing that there is some sort of pivot going on under the hood in markets?
Well, this is a very good point because technically December is generally one of the better months for equity markets.
There tends to be a lot of positive.
Sentiment, but I think in the backdrop of some tepid economic information, some weaker labor data, people are getting a little more nervous. So there is some indication at least with some of the price reversals that we've seen. I think some of these other asset classes like bitcoin, even now gold selling off some suggests that there is chance for some deterioration in equity markets.
Katie, isn't japan Ism the waiting on AIPA, or is the market just basically looking for an excuse to hold pat at the moment, especially when there's a number of questions still going into year end, most notably the Fed next week.
This is a good point because there's not a lot of data to hang on to. It is definitely mixed data, and I think with concerns of over evaluation and just how exposed many investors are to these themes, there is some clear uncertainty there. But what's interesting to me is you see like small cap has been doing a lot better, for example, than big tech, and that's just a little bit.
Of a reversal from what we've seen typically this.
Year, So you're just seeing a little bit of pivoting, a little bit of changing direction, which suggests that we might be in for a change and trend moves at some point.
Lisa pointed out that the PCEE data we're going to get on Friday is very stale.
This is from September.
So when you look at the data coming out, what do you want to hang your hat on.
Ah, that's a good question.
I mean, obviously we'll start to get more data next week. I'd say that there's not a lot for investors to hang on to at this point, and it really is sort of the end of the year, which tends to be a very positive environment. So I think they're focused much more on sort of following the narrative for rate.
Cuts for next week.
That seems to be the only major thing to follow and see what's going on. But you're correct, there's not a lot of very pivotal data that's going to help us figure out what's really going on.
Well, this goes back to something you were saying earlier. If you're following rate cuts, why are yields rising.
Exactly?
I mean, I would guess that that's probably a reaction to what is going on in Japan. Clearly we saw the potential for hikes there, causing treasure yields to move upwards. Besides that, I mean, it is slightly counterintuitive for yields to be rising going into a potential for rate cut.
But this just may have to do with some of the uncertainty.
I know that there's been a lot of discussion about disagreement within the Fed, so that may be causing.
A little bit of jitters in the bond markets.
Yesterday we did see ten year and two year Japanese bond yields and reach the highest levels that we've seen going back to two thousand and eight. The expectation was that you were going to see a rate hike at the next Bank of Japan meeting. That said earlier in the morning, it wasn't when we saw the yields creep higher.
It was after the ism manufacturing data, and then as Cameron Dawson was pointing out, it was after this story about Costco potentially actually laying the groundwork to reclaim some of the revenue some of the tariffs that they paid over the course of this year in the case of a Supreme Court ruling which of these narratives makes the most sense to you, or.
Do you think that there's something else entirely.
Well, this is I mean, really it's very tricky, right because you have market moves that seem counterintuitive to general macroeconomic themes, such as the FED rate cuts.
Then you have you know, Japan, which is moving in a different.
Direction, and as you just pointed out, you're also seeing some weakness in labor data and manufacturing, which paints a more concerning picture about the general US economy. And especially if you're thinking about long term bonds, you know, there may be some questions of whether or not rates can stay low for long if the you know, if we sort of don't know what's going on next.
So you're right, it's very tricky right now.
When you start thinking about the FED meeting next week, the market is making this idea of another interest rate cut, but you're talking about maybe some disagreement at the Federal Reserve. Do you think there's a potential that they stay patent on pause.
Right now? The market is not thinking that.
But given the level of disagreement, the level of uncertainty, and the wide range of potential outcomes, I think we haven't had this level of disagreement in the FED for almost thirteen years or longer. So just given that sort of range of outcomes, there's always a probability you're going to have more disagreement or more disappointment than if you have a lot of consensus on the FED.
If the FED does pause and does not cut interest rates, will there be a Santa Rally at least A started the program off this morning.
That's that's a good question.
I mean, that could definitely put a pause on a Santarelli because you look at how small cap US stocks have really reacted. There's clearly that would be a headwind for many equity investors, and I do think that could be, you know, a potential negative for equity markets should they not deliver as people expect.
Stay with us multiple IMPEG surveillance coming up.
After this, the National Retail Federation forecasting twenty twenty five holiday sales to exceed one trillion dollars for the first time. Joining US now, I'm so pleased to say is Matt sha CEO and President of the National Retail Federation.
Matt, thank you so much for being with us.
First, I just want to get a sense of how much that one trillion dollar figure and how much some of the increases that we've seen in sales during this holiday shopping season have really stemmed from just higher prices, not next necessarily a greater degree of volume.
Well, good morning, Happy to be with you today to talk about the big holiday weekend on Cyber Tuesday now, but we had a great weekend. We had tens of millions of Americans out shopping. We're going to be releasing the results of the weekend on our holiday call at eleven o'clock this morning, eleven Eastern. So I think what
we saw was retailers delivering real value to consumers. And while there have been some price increases throughout the system through this whole year, retailers have worked very, very hard to keep delivering value for customers and to avoid passing on any price increases. So we're looking at maybe one percent price increases on food, and really for the last couple of years, we've been seeing on the good side, flat to down on inflation.
So there's real growth there.
With a four percent forecast, our forecast three point seven to four point two percent, we'll see real.
Growth this year.
And I think you saw some great deals over the weekend and some retailers that we're really winning with customers.
So let's talk about this period of discounting. It was a Black Friday, then it was Cyber Monday, where actually there are potentially steeper discounts averaging thirty one percent compared with twenty eight percent of Black Friday. Now we're onto, you know, let's go teetotaling Tuesday or something. I mean, it seems like it's just continuing in terms of the sales and the promotions. Does that indicate that retailers are looking to clear their shelves?
So does that indicate that there.
Just is a need to generate eyeballs or is it just that they feel like they want to give a sense of value to their customers.
Well, I think there are a couple of things happening here. First of all, I think we begin with inventory levels, and inventory levels are in a very good place on a historic basis.
So we're about one point one point.
Three, which means we've got a little more than a month's supply for a month's worth of sale. So they're not holding too much inventory. They've got the right inventory in place. I think it's a very competitive retail environment. Consumers are under some pressure at the lower end, but they're still out there spending and we're on track to have a very good year overall, probably in the four percent range for the year. And what we're seeing is
consumers are being very deliberate, very thoughtful, very purposeful. They've got lots of information at their fingertips. They're really looking for the best deals. They can find the best value based on the things they need and want. So I
think what we see is a competitive landscape. Inventory levels in a good place, Margins are holding up very well for retailers across the board, and the promotions we've seen have been planned promotion, so there's you know, this is all part of a planned rollout for the holiday season, and I think thus Fart's going really well. We're off to a great start for the five day holiday weekend here for Thanksgiving.
Matt to Lisa's point, though, maybe we call it tarty transaction Tuesday. I am getting non sit up emails this morning about how cyber Monday has been quote extended, and to be honest, I actually took advantage of them very early this morning. Something I forgot I wanted to purchase are you saying that is all planned and this basically just becomes a discount week or does it actually show that these retailers are really desperate to try to get eyeballs and individuals back on their site.
Well, I think, Amory. I think one thing we've seen is the holiday season has been extended over the last several years, and certainly since the pandemic, We've seen consumers beginning their shopping much much earlier than was traditionally the case, and we see retailers delivering those deals all the way back into the summer and throughout the fall. So what we're seeing now, I think is a continuation of that.
They're going to continue to be day by day, week by week, different kinds of promotions, different kinds of rollouts that are going to be designed to attract consumer engagement throughout the holiday season. And I think that this has all been This is a thoughtful series of deliberate sort of promotions that are out there. They're planned, they're responding to what consumers are looking for. And I think back
to the competitive landscape that we're operating in. We're not in the period where every retailer is a winner and every business is going to win the way we saw in twenty one, twenty two, twenty three. Even this is an environment which it's much more competitive, and so retailers are trying to distinguish themselves in the marketplace deliver that real value. And value is I think more complicated. It's
not just price. For some consumer's value is price, but it can be quality, it can be selection, it can be convenience when it comes to fulfillment delivery. So when consumers say they're looking for value, they're looking for something that makes them feel they got what they paid for, and that might be a great quality item, that might be an item that gets delivered more quickly than they
could get it from another competitor. So I think there's a whole series of things that we use when we say value, we're talking about a series of different kinds of experiences based on the consumer. And again, you know, we'll talk more about this at eleven this morning, but we saw retailers really delivering value through this weekend. The numbers were good, traffic was good online in store, So I think we're off to a very healthy holiday season.
Stepping away from the holiday season for a moment, can you give us a sense of how retailers are dealing with tariffs and this potential of AEPA being struck down. Are they talking about potentially benefiting for the reimbursements that might be needed to be paid back to them if the Supreme Court deems that AEPA was illegal.
Well, I think what we've seen this year, and again going back to the pandemic we've seen for the last five years, this great period of disruption, this period of uncertainty, unpredictability, even volatility across the market, things that are outside the control of a retail business or any business for that matter. And so I think as we look forward, retailers again are focused on the things they can can control and what they can control. Their relationship with their partners, their suppliers.
They can be creative and thoughtful about the way they're handling their sourcing, their inventory, they're importing, the way they're communicating with customers. Those are all things they can control. What the court does or doesn't do when it finally issues a decision on the tariffs, I think that's something that we can't control, our members can't control, and we'll handle that when we get to it. So I don't think anyone's counting on a result one way or the other.
It's what we're.
Looking for is certainty, predictability, something that will smooth out the relationships in the supply chain, and the court will make a decision and we'll certainly go from there based on what the court decides.
This is the bloomberg S Events podcast, bringing you the best in markets, economics, angiopolitics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on the Blue Bug Terminal and the Bloomberg Based this out
Mm hmm