Surveillance: Trade Wars Are Scaring People, Stringham Says

now to give us a little bit of perspective. When we see that the SMP five hundred is down twelve percent for the year, the nasdack down ten percent, the Dow Jones industrial leverage posting a decline of eleven and a half percent, we went looking under the tree for someone who is optimistic, and luckily we didn't have to go very far. Edward Stringham joins us now here in our studios. He's the president of the American Institute for

econom Research. Edward Stringham, Merry post Christmas and Happy Boxing Day to you. I'm so glad that you're here because you are optimistic about the global economy in twenty nineteen. Give us some reasons why we should put the humbug aside. So I would say, uh, potentially, potentially we got it with a little hope. There's the there's a joke in the Soviet Union of the optimists and the pessimists. That the pessimist says, oh, things are so bad, they can't

get any worse. The optimist says, no, don't be so pessimistic. Things can get a lot worse. So I hope that's in the past. So I I would say that there's a lot of things that could go wrong in two thousand nineteen, but there's just so much that could go well. So we're at right now record low unemployment rates, the

lowest we've seen in the past fifty years. We've seen a lot of increase in UH certain sectors of the economy, like the financial sector due to I would say de regulation of the economy or the past couple of years, we've seen a lot of strength in our business due to lowering taxes and increasing corporate opportunity. On the other hand, there's a lot that is actually interfering, getting people upset. I would say things like the trade wars are scaring people.

They're hammering markets in China. If you look at the stock indexes for for the Chinese stock markets, I feel very bad for them. So you know, there's a lot more than the Hank Sang is down more than this year it's just unbelievable. So that's what we would predict. However, when we see that people can gain from trade and then we see that that could be taken away from this, that's exactly what we would predict, is decreases in our

major trading partners stock markets. All Right, I'm going to play the optimist for you here because I'm wondering whether the sort of imagination of investors has run away with them when they think about the repercussions from the trade confrontation between the United States and China, between the United States and the European Union, because it seems to be at least let's go down the list, be a little specific.

The issue of intellectual property is one that no one, at least in the United States, Republican or Democrats, seems to have an issue with. Everybody sees the perspective that China has been stealing or at least misappropriating intellectual property not only from the United States but from other countries. It's I think a very interesting issue that has come up in light of these discussions about tariffs, and a lot of people say, oh, it's really not about restrictions

on trade, it's these other things. But when the president came out a few weeks ago, I say, I am a tariff man. I think that that really shows deep down that he might be actually a tariff man, and that to me does worry me. So there's a lot of these I would say, I don't think it's just a political stand. I wanted to get Chinese to change the way they do business. I I don't know. A lot of my friends actually argue that that's what he's doing. It's part of his art of the deal, and he's

really just bargaining. And if that ends up being the case and we end up with lower tariffs all around, then I will be thrilled and say yes two thousand nineteen, I think if they were to actually take their foot off of the throat of international trade, the government or take its foot off the throat of international trade, we would have a huge increase in markets, and that also could be potentially part of his strategy to actually open

up unleash markets at a later date. What do you make of the argument that the reason we've seen this steady sell off in stocks is directly related to the US Federal Reserve, the increase in interest rates, and the wind down the ongoing wind down of the Federal Reserve's balance sheet. That's another very interesting and complicated issue. We've got a system where the Federal Reserve controls so much of the important parts of our economy, specifically the interest rate.

We had a series of very loose monetary policy for over ten years, and people saying we've got to move away from that. We've had what I would say are very artificially low UH interest rates for so long, and the Federal Reserve said, basically, we can't continue this, and they've been easing off of this what I would call this overly loose monetary policy. So I think it had to happen at one point. We're going into this direction. And then the question is is this going to be

distabling or destabilizing of the economy or not. You believe it will be destabilizing. I mean, it's really is this level of interest rates. I mean, you take a look at you know, three percent for the thirty year and all right, to take a look at the two year at two point five, that doesn't seem like an outsized increase in interest at all. I totally agree with you that we're we're talking about, you know, a quarter percent increase last week, and it's like, oh, the sky is falling.

I just don't think that that is that the excuse for why people sell, but they don't have any other President said just the other day he said he said the only bad thing going on in the economy is a federal reserve. And I think that's trying to put point the finger too much at the federals. I'm not saying the federal reserve is great, but to say that they're responsible for all woes and the economy, I just

don't buy it. Well, they can't rack up a trillion dollar deficit all by themselves, right, I mean, they need help from side, from the government. Do you believe that the increase in the debt and the deficits that the government is the U S Government is running, you think that this is going to really hurt the economy? In so, this is I would call a long term problem. We've got unsustainable deficits, unsustainably growing debt, and I think the longer this last, the more we're gonna have to be

paying on interest servicing debt. But I do think that this is going to come in gradually and it's going to be more and more problematic. But I don't I can't predict that this is what everybody who is listening has already retired, and the children and grandnill do. Right. So I don't think tonight there's going to be this massive crisis. But but over time, certainly, as we go more and more into the realm of higher and higher debt,

that isn't going to be increasingly a problem. Okay, so you've talked about the labor picture, which means more people working. You see help wanted signs, it's difficult to hire workers for certain jobs. Do you believe that that will help the economy in because if you're working, you're paying taxes, and that money also goes into the economy because you've got to spend it. Sure. Yeah, there's a very good labor market right now. There's increases in wages, and by

all accounts, that's actually very positive. The more people we have hired, the more, as you said, the people are working, the more they're producing, the more everybody has. So so to what do you really ascribe the gloom that seems to have settled on financial markets, whether it's the debt market, treasuries, leverage, loans, equities, yeah, I I don't. I don't consider things like leverage loans to be the problem. I consider the problem to be policy.

Uncertainty of bad government policy can really throw a wrench into things. It can interfere with businesses plans if all of a sudden the inputs of their products are more expensive. American corporations are now put at a competitive disadvantage worldwide. Consumers themselves are going to be buying fewer goods when they have to pay higher tariffs. So I certainly hope that this trade ward doesn't balloon and explode, But it's something that can cause a lot of alarm to to anybody.

All right, So I'm just gonna before we let you go, I just got to assume that you came here either in some vehicle or you've taken a plane. In the last couple of days. We've got oil right now at forty three dollars of barrel trading on the nimax. It's up two percent today, but that's the minimus because it's six cents higher. If oil stays at forty three, is that going to be good for consumers and good for the economy, and good for the airlines and so on?

That's a really difficult question. We've got so many prices in the world, and stock markets prices are determined by all factors, including current input crisis. So I think that, um uh, the oil. Oil is an important factor in the economy, but I think there's so many other, bigger, more important things that are in our control. The oil markets is kind of outside of our control in the short run at least. But what isn't our control is policy.

Economic policy matters. All right, Well done, thanks very much. Edward Stringham is the president of the American Institute for Economic for Research. I'vean fine set. Tigers Financial Chief investment officer and director of Research joins us. Now, Ivan, it looks like a good open today, but what about a close for the year. Do you think that we're going to be able to rebound from these pretty steep sell

offs and all the indexes? Well, I think now it is the time to take advantage of the after Christmas sale on Wall Street. I mean, there are some incredible values here. There's been, unfortunately, there's been a huge disconnect between how well the economy is doing and now how badly the stock market is doing. And there's been some near term issues I mean, the concern over the trade

situation with China. Now the um uh government shutdown, and um, some concerning tweets from President Trump about the lack of confidence in the FED and uh, you know, and wanting to potentially remove Jerome Powell as the head of the FED. Yes, and his statement of the fact that the FED doesn't understand financial markets is is a little odd. That's like saying the doctor who's about to operate on you doesn't understand medicine. So, um, some of these near term things

have been disappointing. And uh, two of the things that President Trump had going for him was the strength of the economy. Everybody liked the Trump economy and the Trump stock market, and unfortunately the Trump rally has faded. However, I still believe that the underlying economic strength in the US is still strong, and you know, just look at the strong holiday season that we had. And uh, for the most part, stocks are cheaper than they were a

year ago at this time. Surely, But but I gotta pressed you, ivan, I mean, did you see this sell off coming? No, not not to this extreme point. Okay, So if you didn't see this, okay, So my point is, if you didn't see it coming. Many people didn't see

it come. You've got a lot of company. Is it possible that the stock market and investors, like you know, the bookmakers, are telling the public something that they didn't know before, that they really are concerned about something in the future, and that it is a future looking machine that sometimes gets it right. Well, there is a lot of concern amongst investors about the decline in stocks, but they are more upset that the market is down, and not more upset that that not upset that they believe

the economy is slowing. You know, everybody says the economy still looks good from various people's advantage point of you know, the companies they run, or the jobs they have, or the situations that they're in. They still say the economy is good. But this sell off in the stock market

has been somewhat technical. I think we've seen a lot of margins selling recently, and a lot of UH forced selling by over leveraged hedge funds, and a lot of funds are in net redemption now, which has caused a lot of forced selling, and there's a lot of panic

out there. Explain in a second, I've explained how that forced redemptions work because if you invest in an alternative such as a hedge fund, it's like you can just call them up on the phone or send them an email whatever it is, and say I want to get out, send me my check. It takes a while, doesn't it. Well. Usually some have, you know, minimum of thirty day notice to redeem. Others have a periodic redemptions that you have

to get in line for. But I think with the poor performance and hedge funds that we've seen, um, they in theory underperform on the way up because their heads, but they're supposed to protect you on the way down, and many haven't and they are getting a lot of redemptions uh for the end of the year and have been forced to sell. Also, a lot of hedge funds use leverage and they have been in a significant deleveraging process.

What do you make of the argument that the reason that stock prices have fallen is directly correlated to the Federal Reserve with drawing liquidity and buying power in the marketplace. They've raised rates and they have been contracting their balance sheet.

But I don't really believe it has been a huge reduction in liquidity I think the point that Treasury Secretary Minution was making on Sunday night with his calls to the heads of all the big banks was that there is plenty of liquidity out there, so we really there's not really a liquidity issue. I think we've seen a buyer strike. People have just pulled back from buying, and when you have a lot of shares being dumped on

the market, prices moved downward quickly. But I don't think that there's a lack of liquidity in any of the financial markets. So where do you believe this on the skyline? Okay? So where do you believe the new money will come from in order to boost stock prices because the only reason they go up is someone else is willing to pay more for the same share. Well, that's a good question.

The first flow of money will begin on the middle of January when people start to get paid again and uh start to contribute into their four o one case because um, you know, during the course of a year you may reach the limit, and that for some people can be anywhere from the middle of the year toward you know, later on in the year. So we still maxing out your four oh one contribution you think that

has an effect. That's number one, yes, yes, So you will see UM money flow back into four one case, which goes back into the stock market on a periodic basis one of the best ways to invest. The second catalyst for the upside I believe will be Q four earnings, which we start to get in towards the end of January, and the and the and two thousand nineteen outlooks, and we have not seen a huge reduction in corporate outlooks, and in fact, most CEOs are still very optimistic for

two thousand nineteen. They haven't cut their outlook back. So you're looking at earnings being a boost when we receive those fourth quarter results. I think there's you know, two a catalysts. The flow of money that always begins in January into pensions in four O one case is always positive for the market. Second is uh, I think that earnings will be a positive catalyst. The third is I think we will get some type of UM trade deal

with China. I've said for a long time President Trump had the upper hand for a while, as the Chinese stock market has declined significantly since the trade battle began in February, and now the decline in our market, which is partially caused by the uncertainty over trade with China. I think President Trump maybe a little bit more flexible in his negotiations. Uh, and he's probably as stubborn as

President sigen Ping is too. So you have two sub negotiators that you know are being forced to the table because of current economic and market situations in their own countries. Speaking with Ivan fine Set, he is Tigris Financial's chief investment officer and director of Research, Ivan, are you surprised that there are not more bullish calls for equity, particularly when you see the price of fossil fuel of crude

oil at forty two dollars a barrel. The one thing I have been right on and recently has been I've said oil was going to drop, and I believe the oil will go closer to forty dollars than many people calling for sixty dollars and lower oil prices is another positive thing for consumer discretionary spending, so that also is

helpful the economy. Why do you think oil prices are gonna hit forty because they will not be able to support prices meaning OPEC with the recently announced UM production cuts and Uh, the US is now a wash and oil, and we are the world's biggest producer of oil now and the shale oil that keeps coming online is also helping keep prices lower. Russia, while they are not an OPEC member, they meet with OLPEC and try to have a consensus on production because obviously we have an interest

in the price of oil. But they will pump what they want and when they want, and we just have a lot of supply. Also, company countries like Venezuela is in desperty to cash though they want to pump as much as they can. So um, the world is a wash and oil. It's supply and demand and right now we have an oversupply which should take prices for you know lower. Well, it just to give you thirty seconds, and I'd like you to spend some more time with us, and because I want to get your sort of specific

views on the market which sectors. But is it possible that the decline in oil prices is linked to slowing demand and that's weaker economic output outside the United States? Well, there has been some concern that the decline in oil would be an indication of economic weakness. My guest is Ivan Fined set He is the chief investment officer and director of Research for Tigress Financial Show Ivan. It has

been a brutal fourth quarter for stock investors. We know that we are approaching a decline in the S and P five currently at one. We'll wait to see what the open brings us. You have mentioned that you are bullish and you believe that there is a buying opportunity. So if you are an investor who has money to invest, where would you specifically be looking to put it to work? The first sector would be the tech sector. It's still the engine of growth for our economy and pretty much

most global economies. And the sell off there has been the most dramatic companies like Amazon and Apple and UM, Intel and Microsoft and Nvidiah and along with many of the other chip stocks like Skyworks, Corbo and Quilcom. I think there are huge bargains there. And then retail Costco UH, Best Buy, UM, Target, UH, Nordstrooms and Macy's. And then

in the industrials Caterpillar, Boeing, ALCOA, UM. There's just a tremendous number of companies that have good growth, pay good dividends, and have a huge amount of opportunity ahead of them. All right, let's take each one of these if we can just a little bit more detail. You mentioned technology. You spoke about Amazon dot Com, of course retail plus technology. Also you mentioned chip stocks and Apple. I didn't hear Facebook in there. Oh yes, I forgot face Facebook. You'd

be buying Facebook at these levels. Absolutely. You don't believe that there's any concern about government regulation. Um not. I'm not overly concerned about it. I think that they are doing a lot to The two key issues are fake accounts and um pretty much false news, and they have hired about twenty people to oversee compliance and are heavily using artificial intelligence to ferret out a lot of the issues.

But the most important driver is they have two point six billion monthly active users, and advertisers want to go to where the customers are, and the digital advertising continues to grow because you can use technology and target and measure your return on advertising invested dollar. And Facebook offers the best value and opportunity to the advertisers and that is the key. Al Right, So at a hundred and

do a share, you're a buyer of Facebook. Absolutely. In Facebook is now at the cheapest level since the history of it being a public company. All right, so you're positive on Facebook. Make the case for Apple. When we heard from many analysts that the transition from hardware sales of iPhones to service revenue and software is going to be a challenge, Well, I don't know if it's going to be a challenge. It continues to happen. iPhone sales are slowing slightly, but they sold million phones in the

last quarter. They have a active iPhone user base of seven and fifty million that they can sell additional services to. They could go to a subscription model for the sale of the phones, where uh, most people do buy their phones on a monthly basis as part of the contract with their service. They can go to a Amazon Pride type of membership for streaming media for iTunes um. They can also include the Apple Care warranty on a for a monthly fee as part of the purchase of the phone.

There's a lot they can do to monetize this huge Apple customer base, and they continue to sell product. They continue to go through the ongoing upgrade cycle of the phones. They still sell max, they still sell iPads um. The demand for their products is strong, alright, So bullish on Facebook, bullish on Apple. Turn your attention to industrial as you mentioned them. Just give us one industrial stock to give you about the thirty seconds. What industrial company would you

most like to own? They just raised their dividend. Is that part of the story. Yes, they just increased their dividend. They just increased their buy back by two billion dollars from eighteen billion billion. Plane that they have a backlog of plane demand for the next twenty years. Few companies have that kind of visibility. Uh. They just got a huge A fifty plane order from a subsidiary of Saudi Arabia Airlines worth almost six billion dollars. Uh. The UH

seven thirty seven Max remains their best selling phone. Excuse me, past selling plane. They've had no loss of letters since the unfortunate Lion Air issue, which is now coming out. It was all right, he's got a trifecta. We've got to leave it there. Ivan find set the Chief investment Officer, Director of Research Tigers Financial, Bullish on Boeing, Apple and Facebook.

If you happen to go through the lobby of just about any casino, perhaps the Tropicana in Atlantic City, what will you find signs that direct you to place your bets for sports. And here to tell us all about the industry is none other than our own expert, Brian Egger. Here's our Bloomberg Intelligence senior gaming analysts, and you can follow him on Twitter as we all do at Eggerantonomics. Alright at Egernomics, give us the lowdown on where you

can legally bet on sports. Yeah, there's been this remarkable proliferation of where you could actually bet on sports. So in the last year, actually since May when the Supreme Court repealed the federal ban on sports betting. It now exists in Delaware, New Jersey, West Virginia, Mississippi, Rhode Island, Pennsylvania, and also one track in New Mexico. So it's seven

other states other than Nevada. All right, So those seven other states, does the amount of money that is bet in those seven other states come close to what is

bet in Vegas? So it's starting to and you really have to distinguish between the amount bet in Vegas uh as opposed to the amount that actually is retained as revenue, And that amount in Vegas actual annually is about two fifty million dollars as revenue, about five or center the amount wagered and so far in New Jersey, if you extrapolate the last few months for the brick and mortar sports books there, it's been a similar piece of revenue so far. All right, now, I'm looking at the sign

that exists at the Tropicana in Atlantic City. It's a William Hill sign there the sports book You've got basketball, soccer, tennis, golf, baseball. But the biggest, the one that's most out front is football. Tell us about betting on football? Football is really the major sport. If you look at Nevada, the most well developed and long standing market, football accounts for about thirty six percent of annual sports betting revenue, and then basketball

comes next at about a third of the total. So football is really, uh the big one, which is why these books wanted to get up and running if possible before the advent of the football season. Is there a dichotomy between the market for sports betting when it comes to physic all betting I mean going to a casino and placing the bet versus online betting using your smartphone? There is now The online betting markets vary in size

by state. A lot of these states are new. But if you look at New Jersey, UH, the month of November, the most recent data we've got. It's kind of interesting because there are seven brick and mortar, seven casino affiliated

sports books, and only two racetracks. Yet those two racetracks, Meadowlands and Monmouth Park, account fort of the total sports betting revenue so so far, um, the on the racetracks are winning this proportionally, and UH the online portion is also about so the big winners so far are the race tracks and the online betting sites, which are about

about the total. Now, as someone that has been following this industry for a long time, do you believe that the actual physical betting locations, the casinos, the companies that provide the infrastructure to do it, are they really going to benefit or is it possible that we just have an online explosion like we've had in the retail world. So it's it's a really interesting question because sports betting historically has only accounted for about two percent of the

total gaming revenue, UH coming out of Nevada. The rest comes from slot machines and table games. Likewise, in New Jersey, it's been kind of in the order of kind of three four percent, So as a revenue generator because the casino has only retained five percent of dollars wagered as when it's comparatively small compared to the slop machines and

the table games. But it's really important as an ancillary traffic driver during those big UH sports betting weekends, football weekends and t double A basketball semifinals, World Series, etcetera. There's a lot of traffic flowing through from the sports books into the casino. So it's I think it's actually more important as a traffic driver of casino activity. There's an actual revenue source per se. Now I know that you spend some time at the Tropicana in Atlantic City recently.

What did you see? Okay? And I should say I spend most of my time at my desk doing analysis. Of course you do, of course, But what I saw was we were there and that's why you have that the one armed bands exact screen exactly. UM. So what I saw there was, although it wasn't a very busy time, you saw a lot of sports books. It's interesting that William Hill, the UK bookmaker UM has so far three

sports books in New Jersey, three physical ones UH. The Ocean Resort in Tropicana, Atlantic City and in Mommouth Park the race tracks. So a lot of the way these sports books have kind of emerged is through these allignances between race tracks and casinos and commercial gaming markets and some of the big betting houses like William Hill and

of course the daily fantasy sports companies really involved. Also, I want to go back to something you said about the five percent take that the casinos have when it comes to the revenue, right that they get about five is that materially different than the table stakes as well as the slot machine business. So it's probably similar to

the whole rate if you will, on slaw machines. The table game hold rates are are a little higher, you know, but that kind of activity is determined by UH competition.

Nevada is a fairly competitive and developed sports market. But the reason, you know, we kind of point this out is if you were to look at the theoretical size of sports betting, UH, look at the amount of a legal betting that has taken place in this country, and assigned that five percent rate to it, you know, theoretically there's seven to eight billion dollars of revenue flowing to these legal sports books. But that's only if people give

up their legal bookies. And of all these states legalized sports betting, is there a potential for more states to offer this kind of legal sports betting? Yeah, there is. I think we're only in the early innings of the

legalization UH process to use a sports betting metaphor. So so far, we've had, recently within the last week, Washington, d c. Getting ready to roll it out next year, New York State likely to next year as his Massachusetts likely to consider it UH and Michigan had a kind of way development with an introduction of a sportsmaning bill

that might gain traction during the twenty nineteen legislative session. Brian, if I were to say to you ten years ago that there would be legal sports betting in the United States, not just in Vegas but throughout the country, and you twin that with the legal cannabis market in the United States, would you have said I was crazy? Uh. I wouldn't have said you're crazy. But you have, with that great foresight,

if you thought that was strong. Yes, far in mind that the you know, the various states have kind of taken upon themselves to legalize recreational cannabis, whereas this is actually a supreme Court case that a floodgates. You know, this is it may reflect changing social opinion and permissiveness, but this is something that New Jersey has been trying to get through since their early nineties to overturn the band that really restricted UM sports betting in a large

part to Nevada. So it's really the Supreme Court that kind of came to the rescue of the commercial gaming industry. All right. The reason I bring this up is because of the revenue from the taxes that both of these activities would bring to the state's treasuries. Is that having an effect? You know, it's it's it's potentially significant over time. And the tax rates vary by state, as they do for the casino industry. It's about a percent in New Jersey.

It's as high as thirty four percent of sports betting revenue in Pennsylvania. Uh And obviously from the perspective of the sports books, the lower the lower the tax rate, the better. But it is going to be an incremental source of gaming revenues. Bear mind again, for markets like Nevada, nine percent of that gaming revenue pie is coming from

slab machines, table games, all the traditional stuff. Okay, we are, of course getting to that point in the season when people are looking towards the super Bowl and the estimates to how much money is going to be better this year on the super Bowl. I don't have an estimate and the n C Double A. Actually it's interest in American Gaming Association comes out with an estimate every year about how much money will we bet on the n C Double A basketball men's regional semifinals. That the super

Bowl is certainly really big seasonal events. Sports betting is by its nature very seasonal, so I don't have an estimate. But what's unusual about this? First this next super Bowl and n C Double A tournament in twenty nineteen, it will be the first time these events have taken place amid the widespread proliferation of legalized sports betting. This means you're just going to be a lot busier this year. Finally, you mentioned William Hill, UK company that has a partnership

with the Tropicana and many other casinos. Are there US companies that are good at doing this, so U S companies UM are are involved. There There are entities out there like UM Scientific Games ST Interactive, UH. There are the sports betting UM Sports daily fantasy sports companies. There's sp Tech in conjunction with Scientific Games. There's a number out there that involved but William Hill kind of really important um as ore and I mentioned one other thing too,

you talk about US versus International patty power. Betfair now has a controlling steak uh In Fandel, So we're really seeing this convergence of the traditional UK European betting houses with the DELA fantasy sports companies working alongside the casinos. Thank you very much, Brian Edgar as always fascinating, interesting

and worthwhile Bloomberg Intelligence senior gaming analysts. Well, if you're an American consumer, chances are your email inboxes filling up with what it's called boxing day sales or post Christmas sales. Flyers here to tell us about the state of the retail industry, Dana Telsey tells the Advisory Group chief executive and chief research Officer, Dana the sales are already starting,

aren't they. They are. The sales are definitely beginning today as your As you mentioned, everyone's email boxes are filling up. But the early lead on holiday season sales from MasterCards from November thirty five one percent. Who's right in line with our forecast of five so it seems like we have a good season and now we want to see

inventory levels cleared and what the margins look like. Okay, but that five percent, I understand comes with a little bit of a footnote for department stores, because the department store take actually fell more than one percent. It was down one preecent to department stores. And keep in mind you had a lot of closures, whether it was the Bontans closures, some of the Macy's closure closures, or J. C. Penny.

I think that when you look at the Perl stores, they were up seven point nine percent, which is one of the best we've seen out there all of all, whether it was the slight decline and department stores, the increase in apparel stores, the consumer had more dollars to spend, the products were innovative, and we pulled out a good season. This doesn't mean that two thousand nineteen we're entering with an easy glide past. It's going to be more challenging

in two thousand nineteen than it was an eighteen. All Right, we're going to get the two thousand nineteen in just a second. But I want to find out from you, what do you believe was the hottest offering in retail where? What was the trend? I think the trend you definitely had some of the electronics items like the Alexas out there. Drones are also quite popular. Dad sneakers were very popular,

and also denim jeans continue to be strong. We're fortunate that we had a cooler season this year than in year's past. Out where, whether it was Canada, Goose, whether it was North Bace, we definitely saw strength and outwhere. And let's not forget thugs that goes along with that. Okay, so that seems to be something that is correlated a

little bit to the weather. How about the online world, that was an increase at least from the Master Cards survey, the Spending Pulse survey, that was an increase of more than n for online sales. Yes, and that was better, it will touch better than the Adobe forecast also of eighteen percent. So it was a solid online selling season two. And I think the thing to take away is online and bricks and mortar go together, and you're seeing brands overall and retailers. The combination of the two is what

was powerful. We saw buy online, pick up in store, drive more traffic and drive more sales. I think that's going to be one of the takeaways on the Holiday two eighteen season. If you are a new retailer or looking to establish a retail brand, what do you take away from the results of this season That you have a customer who's interested, if it's innovati the new, if you have a loyalty program and participate in social media to drive awareness, there's dollars out there for you to

capture if you can create interest. Okay, now let's talk about the potential for interest in retail in twenty nineteen. What are going to be the big themes? The themes of retail. I think there's three words to capture the themes of retail. Where's the margin? I think we have a little bit more headwinds to face than tail winds. The headwinds whether it's tariffs, the uncertainty of tariffs, the potential for category extensions in tariffs. You have expense pressures

from freight and labor, and you have camping. The camp comparisons are more challenging in Choose thousand, nineteen th eighteen. On the tail one side, I've got a full employment economy with a consumer as money to spend whereby withholding should be a benefit, particularly in the first half of two thousand nineteen. And I still have some moiler taxes, but there are more challenges and in two thousand nineteen you may not get the same rate of earnings growth

that you had in two thousand eighteen. All right, now, to go back to your point about where are the margins? Are there specific companies that you track that are doing a better job of keeping those margins or expanding them. When you think about margins and where they're growing, we're seeing companies like lul Lemon continue to show nice margin increases and that's the real benefit for them. I think what you're seeing, particularly in the top line and some

of the off prices, is certainly encouraging. What we're hearing about from some of the companies where there's catalysts, I mean the catalysts are potentially closing stores at gap and for example, leading to less losses, could help the margins over time. Dana Telsey is they're a case to be made for direct mail catalogs twinned with online offerings and in store pick up this three legged retail strategy. I

think catalogs are tough to go by. I think that the world of paper these days is consolidating into online and we're seeing whether it's from magazines, whether it's from catalogs. The first thing consumers look at in the morning is their phones. The last thing they look at night is their phones. Capture the consumer where they are on their

phones and in physical stores with experiences. I'd like to get your views on home furnishings companies such as Wayfair, and then perhaps at the other end, restoration Hardware or it used to be restoration Hardware now just our H. When you think about what r H is doing, they're really creating the experience the restaurants combined with the selling of furniture where they have at effects for designers to come in and have their offices there to bring clientele

is compelling and I think that they're really creating a destination Wayfair and it'll be interesting to see does Wayfair ever get combined with a physical retailer. That combination to be powerful and probably one of the most powerful home retailers lately over the past few years that's taken share is home goods. What t j X has done with home goods and home sense is exciting, it's profitable, and it's driving inventory turns and more brands are selling in

their stores. Do you see any big changes to the world of fast retail for apparel companies such as H and M and Zara. I do see changes there. I think it's become more competitive in that landscape. I think we're going to see H and M become a more fine tune machine given the fact that their inventory levels have been too high. I think that you have other companies competing on price and also quality stepped up a bit,

so there's more competition. The old navies of the world are doing quite a good job, and you're also seeing when companies have targeted sales, it's taken some share from some of the fast fashion retailers. I think they have an evolution ahead of them in order to become more competitive. Thank you very much for spending time with us. As always, Dana's Telsey Telsey Advisory Group Chief executive and chief Research officer speaking about the world of retail and shopping. Thanks

for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio