Stocks Climb as Trump Soothes Wall Street Nerves

22:42Carol Massar:So we think there's going to be somewhere in the mid where there's going to possibly be privatization, but still some type of an insurance where you're going to get that government back to guarantee. So in the near term, we don't think that will happen just because that would cause rates to go up, which is not what the administration wants. Terrific stuff. Katie, thank you so much. Katie Hubbard, Executive Vice President of Capital Markets at Walton Global, joining us.

23:09You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App.

23:20Carol Massar:Or watch us live on YouTube. With us is Dana Telsey, Founder, CEO, and Chief Research Officer of Telsey Advisory Group, here to join us here in our Bloomberg Interactive Broker Studio. Hello, hello. How are you? Good. How are you? Thank you so very much for having me. It's so great to have you here. You know, I was looking at retail stocks. They've come down about 8 % since the beginning of September. So we've seen them under pressure. I know we've talked a lot about concerns about consumers. Tell us about how the consumer and retailers are doing. You're just off a big conference that you guys just hosted.

23:51Carol Massar:We just saw everyone. We saw Macy, Saks, Ulta, Urban, Fibolo, Kroger, Lowe's, you name it, G3, Stitch Fix, all of them were there. I would say that when you think about September to your mention, the beginning of September was rough. We had warmer weather last for longer. That's true. The cooler weather finally picked up. And what's hot now? Brown suede, tall shaft boots are what it's all about. So the cooler it gets, the better it gets. But you're seeing more of a bifurcation between the lower income consumer and the higher income consumer. We just had LVMH report their sales yesterday, spoke to them this morning, and basically things are improving a bit.

24:28They're seeing stabilization in the Chinese cluster. and even the fashion and leather goods segment, which accounts for nearly 50 % of the business, sequential improvement from the second quarter. What's driving all this? Just like at our conference, the word resilience and newness and innovation. The more product that's new, you look at Levi's, wide leg jeans, look at Birkenstock, closed toe clogs. That's what's driving consumer demand. At the same time, you have a cautious consumer. The full effect of tariffs and price increases are not yet there. They're expected to increase as we go through the balance of the year.

25:04Carol Massar:We just talked with the CFO of Levi, Harmit Singh, and talked about what they are seeing in their business. I want to go back to luxuries, though, Dana, because Barenberg came out today and says luxury super cycle is over and it downgraded LVMH. They say the three-decade boom in the luxury sector, it is over. They say luxury is at an inflection point. Do you think they've got it wrong? I think basically the inflection point is that we're beginning to see stabilization. You have a change in creative designers at many of the top brands. Look what you had in September, the unfortunate passing of Giorgio Armani.

25:38So you have a new cycle that we're beginning to enter into. And at the same time, you need social media. You need a digital presence in order to activate. What's more than what you're seeing the merger of food experience and what you're doing with luxury? Look in Beverly Hills where Dior just opened their new store and it has a restaurant. Go to Madison Avenue and 72nd Street. Ralph Lauren's Coffee Shop is busy.

26:02Carol Massar:Does that really, though, move the retail needle or the retail side of their business? It helps. And you know why? It helps activate the brand. It makes you relevant. Pictures also drives conversion. Well, we're talking about the higher-end consumers. So what are you seeing in that middle third of consumers, whether that's U.S. or around the world? I think overall, the middle third, look where Walmart's seeing the most growth. They're seeing the most growth from some of the higher income consumers trading down. And that trade down could be beneficial to some retailers. It's beneficial to Walmart, but it's also beneficial to the off-pricers, TJX, Ross Stores, and Burlington.

26:37And at the same time, you look where there's value and convenience. That matters. And that value and convenience, you're beginning to see an uptick. Look at Gap, for example. Gap all of a sudden has become more relevant because of creative designs. But who's losing? I think overall you're seeing some brands that haven't reinvented themselves. You've seen some brands, department stores need to reinvigorate themselves. You look at the reimagined campaign at Macy's where they're seeing their stores outperform in terms of those that have been reimagined. If your brand isn't investing, if your brand is showing weakness, we've seen that they need to work to improve.

27:15look at Nike, which has been in a transformation and just showed for the first time an up 20 % increase in running. It takes share from others.

27:24Carol Massar:Dana, one of the things I got to ask you, and it's certainly something that we have been talking about a lot this week is Walmart and ChatGPT. We saw this stock just take off their alliance that's going to allow Walmart shoppers to browse and purchase products directly on ChatGPT to just have to click a buy button. Mizuho, their Alice came on and said the track, the company's on track to become a trillion valuation company as a result. How do you see it? Big gets bigger. When you think of Walmart, they have a competitive moat and they're scaling. And you look at the valuation, not a cheap stock, but also not the same valuation as a tech stock.

27:59Yet they're integrating tech capabilities into their platform to drive a bigger competitive moat that they can scale more. So a PE at 42, you're cool with? I basically, you get on the train and you get on the train because the train's continuing to run. You look at other companies where there's work to do. Let's see what Target does in order to reinvent themselves.

28:20Carol Massar:Well, does everybody then pop on and does another Inksa deal with ChatGPT? No. No. No. Why? It basically is more specific. Companies have to have the ability to adopt these technological capabilities. Walmart's been more at the forefront. and Doug has done a great job at repositioning the business for tomorrow, not just for today. Which is amazing considering their digital strategy lagged for a long time, but it sounds like that they're on track. Yep. Well, would you expect Walmart then to partner with Anthropix XAI across the board, or how does that shake out? We'll have to see what they do, but certainly the first step with OpenAI was a huge leap.

28:57Well, because I immediately think, okay, well, if Walmart's going to serve me up what I want on using ChatGPT, do I then use ChatGPT more? Maybe I'm not a fan of Walmart, or is it bringing in more consumers? I think people are beginning to use ChatGPT in more different aspects of their lives, whether it's for shopping, whether it's for business. It becomes something that their goal to get consumers to rely more on it, so it becomes part of your daily life. Well, because I remember when Reddit went public, they were partnered with Google. So Google was immediately feeding Reddit and then they stopped doing that as much and we saw a drop off in Reddit user data.

29:33Is that the downside case? If, I don't know, ChatGPT decides we don't want Walmart anymore, we want Target or we want to start feeding people to Costco? The biggest retailer in the world with Walmart, it doesn't seem like you wouldn't want them. It's how can you enhance the capabilities.

29:47Carol Massar:They're trying to figure out, I mean, they're bringing in money, but they need to be profitable. People want to see the return there. I am curious, this conference you had this week and all the you had everybody and anybody in retail, what were they saying about AI? AI, still early innings for some of the smaller companies, more advanced for the bigger, being able to curate inventory levels to drive more full price profitability. Yes, to manage costs, but not to manage costs where you're getting rid of human capital that provides insight into how to bring business forward. So I think the relationships of sales experience and sales associates matters.

30:26operational enhancements, all systems go, but it has to be go in order to be able to execute precisely because you can't give up the old without incorporating the new.

30:35Carol Massar:We're talking with Dana Telsey, founder, CEO, and chief research officer of Telsey Advisory Group. If you've been following markets, you know Dana is the person to speak to when it comes to retail. What was top of mind for everybody that was there? Was it stuff out of the White House? Was it inflation? Was it tariffs? Like, I'm just curious. Consumer demand. Are we still seeing the consumer remain strong given the strength that you've had all year long in retail sales? Are they still spending? And the answer most of them had, they're resilient because of newness and product innovation and price increases because tariffs definitely top of mind still to come.

31:12So you, for someone who's been covering this, you feel more optimistic? I feel like we're in a more We're in a more stable place. Keep in mind, though, first half of 26, you're going to have tariff impacts that you didn't have first half of 25. So the expectations that you could have more modest guidance for the first half of 26, yes, let's be realistic in what it could look like. Well, that's what I wanted to ask about. Talking to a few months ago, a head of a supply chain company, and he was saying, basically, we all pulled in as much as we could in April. And we all pretty much are saying, we're good for 25.

31:46January, February, March of 26, we'll see real issues pop up. What does that look like? Looks like margin pressure. Could we be seeing margin pressure? And you always have the puts and takes, lower rates, tax refunds. Is that going to help consumers have the ability to spend? But you're seeing companies manage their margins carefully because it's always about a third diversification of supply chain, a third sharing the cost with your manufacturing partners. And unfortunately, a third goes to the end consumer. Well, when President Trump proposes another 100 % tariff on China, you're with the CEOs of these companies, leaders of these companies.

32:23Are they penciling in how they can address this? Are they kind of hoping that he balks and we have a new conversation? You always have to have different scenarios all available to you so you can react. But, of course, they're hoping. But hope is not an antidote. Real numbers tell the story.

32:40Carol Massar:All right. I am curious, too, that we do have—we don't get retail numbers for a little while, earnings. closer to the holiday shopping season. What are you expecting? Again, I know you can't lump them all together and I hate to do that, but when you think about the average over the past six years, it's been around three to 4 % some better years. I think we'll be more likely be in the average realm. Don't forget you have inflationary prices that's added to this. So will the real number please stand up? Well, when you look at companies within your coverage or that you're meeting with, who's best position or worst position to pass along tariffs and some of these price hikes?

33:14Brands. Brands of strength have the ability to price it along. You talked about Levi's. They have newness. They can pass it along. You look at a coach, for example. They've been able to pass it along because of new products that they're introducing. And you're also seeing footwear companies pass it along because they get so much of their goods from some of the most highly impacted tariff countries. Favorite retail? I know. I have a lot of different ones. I mean, I think when you think about consistency, it's the off-price wagon of TJX. When you think about product newness and innovation, I think about Birkenstock there that's doing exciting things.

33:54When you think it's about transformation, who's transforming, let's see what Victoria's Secret does. There's certainly some reaction to the fashion show that it generated interest. And I think you have others where there's transformation happening, like in luxury. And let's see what we see there.

34:11Carol Massar:Great stuff. It always amazes me that somebody hasn't kind of copied the TJX model because they just seem to own it. Buyers' relationships with brands are not built in a day. Unbelievable. Great stuff. Thank you. Hallelujah. Thank you. On to Thanksgiving and the holiday shopping season. She is always ready. Dana Telsey, founder, CEO, and chief research officer at Telsey Advisory Group, joining us. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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37:25You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg

37:36Carol Massar:Business app or watch us live on YouTube. All right, folks, we're going to stay in the nation's capital, dig a little bit deeper into the story with a voice that so understands President Putin. She's, in fact, written a book, Putin's World, Russia Against the West. And with the rest, she is Angela Stentz, senior fellow at the American Enterprise Institute, former national intelligence officer for Russia and Eurasia at the National Intelligence Council. And she served in the Office of Policy Planning at the U.S. Department of State, a friend of the show. She joins us on this Friday. Angela, your takeaway on what we just saw in the Cabinet Room in the White House?

38:11Well, I still think that President Trump is kind of on a high from the Israel-Gaza peace deal. He really does want to get the Nobel Peace Prize. And so he and his relationship with Zelensky, as we just heard from your correspondent, has definitely improved greatly since February. Zelensky understands exactly what he has to do to deal with President Trump. And I think the fact that Zelensky yesterday met with business folks here to talk about joint production of drones, other military material, other potential business deals, also speaks to his focus on telling President Trump, you know, the U.S.

38:51can make money from this too. On the other hand, you know, we know that we thought at least that the president was fairly serious about supplying Ukraine with these long range Tomahawk missiles with which Ukraine could strike quite deeply into Russia. And President Putin intervened. He requested a phone call. He got it yesterday. So I wouldn't say we're back to square one, but we're back to a situation where President Trump, I think, still believes that he can get Putin to agree to a ceasefire and a peace deal. Angela, with that in mind, who has the most power between the three leaders and who's facing the most pressure right now?

39:31Well, I think that Putin is feeling some pressure, but I think Putin still feels that he holds quite a lot of cards. he's in no hurry to end this war he still believes russia can win i think president trump is really more in more of a hurry to end the war and clearly president zelensky wants to see it and because of the terrible loss of life there i think unlike in let's say the israel gaza situation president trump has much less leverage over president putin that he had say over prime minister netanyahu and others and even to some extent over president zelensky because Russia still holds a lot of cards and it can always threaten, as it does periodically, that if, say, the Tomahawk missiles were given to Ukraine, that Russia would escalate and who knows what it would do with its nuclear weapons.

40:23So Putin, I think, still feels that he holds many cards here.

40:27Carol Massar:Well, and, you know, I think about all the conversations, Angela, we've had since this war started. Hard to believe we're, what, three and a half months, three and a half years in. It's really kind of shocking. Why would President Putin want to end this war? I mean, you we've talked about this with you. I mean, this isn't just about Ukraine. These are where what he believes Russia should be going back to kind of its former glory. So is there really any reason that he would want to end the war? Is there possibly economic pressures? I mean, help me out here. I mean, the economic pressure is there.

41:03The sanctions have had an impact. They'd have more impact if President Trump gave the go-ahead to the Senate bill, which I think 89 senators have agreed to support, bipartisan, to impose more sanctions on Russia. And I think, in fact, supplying Ukraine with these tomahawk missiles, with maybe other weapons, if Putin really believes that he cannot win on the battlefield, then he might have to think about actually sitting down and negotiating. By the way, I don't think he's ready to sit down with President Zelensky. He said the President Zelensky is an illegitimate leader, but he'll certainly sit down with President Trump.

41:40He believes he's at war with the West. So I think the incentives here are just his concern, because Trump periodically says they're going to be much harsher measures taken. And he wants to fend those off. He wants to make sure that those are not imposed on Russia.

41:56Carol Massar:Angela, can a real ceasefire into this war happen if we don't see all three or really the two primary people, and I'm talking about President Zelensky and President Putin, in the same room? I mean, if you look at what happened, again, it's not a perfect analogy with the Israelis and then Gaza and the other Arab countries. There weren't that many direct negotiations. I mean, you can have intermediaries. You could theoretically have the U.S. negotiating with Russia, with Ukraine, maybe some other intermediaries, and they could agree to a ceasefire. I think that the meeting between Putin and Zelensky would be more relevant if they're actually going to have a peace deal.

42:37But I think you have to understand that there could be a ceasefire and armistice without them actually working out a peace deal. I mean, as there was really after the Korean War. I mean, that's how it ended. So you could you could just have the guns are silent, but you can't really get this settled. What other countries could be stepping in to help support Donald Trump in the U.S. and kind of mediating this? And what would you expect from, I don't know, the European Union or other countries? So, I mean, Turkey has been quite active. President Erdogan in intervening. I mean, when they had the initial talks after the war broke out to try and come up with a peace agreement, Turkey was very active there because Erdogan has pretty good relations both with Russia and Ukraine.

43:20I mean, theoretically, there's China. And I think in the beginning, you know, people in the West hoped that China would do more. But China really isn't neutral in this conflict. I mean, it's been supplying Russia with a wherewithal to continue the war. I mean, theoretically, it could. I think the European Union, that's much more difficult because Putin sees the Europeans as enemies, except, of course, for Prime Minister Viktor Orban. But his problem would be as an intermediary that he's been very critical of Zelensky. I mean, theoretically, Hungary is neutral in this war, but it isn't really. So I think Turkey, maybe China, I don't know, Saudi Arabia was involved in the beginning in trying to get the two parties together.

44:01So there may be some other countries that could be involved in helping to negotiate this.

44:07Carol Massar:How do you think President Zelensky feels when he's in a room and President Trump does mention Mr. Orban and that he's playing a role and there's going to be a meeting in Hungary. Like, how do you think that comes off? Is that kind of like a reminder to Zelensky? Like, keep your jacket on? Right. I mean, President Trump is not going to say to him publicly, I hope, as he did in February, you don't have any cards. But I think, you know, President Zelensky and the Ukrainians realize that they have limited leverage in all of this, and they're doing everything they can to, you know, support the U.S., to give business opportunities for the U.S., to get the U.S.

44:48to understand it would be much better if this war came to an end. But obviously, there's a limit to what President Zelensky can do. And I'm sure he'll be viewing this meeting in Budapest with a very wary eye. And Angela, just given your experience and your focus on the topic, what happens next, in your view, and how long does this drag on? Well, I mean, assuming that there is this meeting in Budapest with President Putin, and we haven't even talked about how he's actually going to get there. This will be his first trip to Europe since the war broke out. Most of the airspace is closed to him. But assuming he does get there, I'm assuming that there will be, you know, more discussions about the possibility of various things.

45:30Putin, I'm sure, will push the settlement that he thought that Stephen Whitcoff had agreed to, but apparently hadn't, which is that Ukraine would have to cede to Russia all of the four provinces that Russia claims to have annexed, none of which Russia fully controls. In other words, Ukraine would have to give some territory to Russia in return. There would be a quote unquote land swap. There is some land that it might get back. So I think if it were to agree to that, or if President Trump were to say that he would pressure Zelensky to agree to that. That would be a possible way of getting to a ceasefire.

46:09But unless Putin moderates his conditions, and the other one is Ukraine saying that it will never join NATO, it's not so clear about the European Union, then I think it would be, those are still, I haven't heard anything from the Kremlin where they've moderated the maximum demands, where they always say, we have to get to the root causes. And the root causes are, they don't want a sovereign Ukraine that's integrated with the West.

46:34Carol Massar:What are they so worried about? Just the West then supporting Ukraine going forward? Is that what it's all about? Well, they're worried about that. And what about the example? What about if you actually had a successful, prosperous, much more democratic Ukraine next door to you? That also might, you know, give the population in Russia something to think about. President Trump, how crucial is he in all of this, in your view? Oh, I think he's very crucial. I mean, I think, you know, under the Biden administration, there were no negotiations because the Biden administration essentially only had very few contacts with Russia after the full scale invasion.

47:11So I think President Trump is a very important player here. And I think he's going to have to decide how much pressure he's going to bring to bear on both sides and what the U.S. would be willing to accept for both sides as a reasonable, at least precondition to a ceasefire.

47:30Carol Massar:Hey, one last question, 30 seconds. Does President Putin respect President Trump? I think he does. I think he recognizes that President Trump, even if he's sometimes unpredictable, the U.S. is still the most powerful country in the world. And it does have the ability to make life more difficult for the Russians. So I think he does. Yeah. So glad we got some time with you, as we always feel that way. Angela, be well. Have a great weekend. Angela Stent, senior fellow at the American Enterprise Institute, author of Putin's World, Russia Against the West, and with the rest, joining us there from Washington.

48:02This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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