Gaining strength again today, although really its also little changed at 1238, up only 4 100 of 1 . And crude is down another dollar 91. So crude wti back down to almost 80 a barrel at 80. 60. John. And thats certainly weighing on the canadian stock market with energy, with such a big subgroup component here. Financials is well under pressure in canada and were seeing that in the us indices. Matt mean, beyond just figuring out the story on rates and inflation from here, fitch raising some fresh concerns around the Banking Sector within the dow. Youve got jp morgan, for example, as one of the lead laggards. Its down about 2 right now. Watching tech is kind of interesting when you consider the fact that we started the day with some muscle calls, if you will, from the analysts on wall street. You had baird with bullish commentary on nvidia. You had Morgan Stanley saying despite the recent weakness, this is a winner. The stock is gaining on the news, but its up a modest 1. 5 . Then of course, were continuing to watch through some of those regulatory filings. D. R. Horton has been a standout stock on the day right now, up less than 3 . But Berkshire Hathaway adding a stake there. So Warren Buffett giving a homebuilder a thumbs up and obviously a lot of those homebuilders, at least theyre activity can help the home depot business. Right now, home depot is modestly higher, matt. But as weve assessed those results and well talk a little bit more about them later in the program, it just feels like consumers are not buying the biggest ticket items these days, still doing some spending, but less so. Well, you know, i was talking to an analyst about this earlier, drew redding from bloomberg intelligence, who said the problem is the comps are from a time when people were out there buying the big ticket items, they were getting, you know, the big weber grills or, you know, decking for their patios. And now that thats done, its not the kind of thing that you buy every month. You just do that every few years. And a lot of consumers have already done that with the excess savings they had. And the question is how much is left . Lets talk about that right now, because us retail sales rose in july by more than forecast. We saw increases in Sporting Goods stores, clothing outlets and restaurants and bars. But is this the very last of those savings . Tiffany wilding is managing director at north american and north american economist, i should say, at pimco. And tiffany, this has been a debate for the last few months, but were getting towards a point where consensus is that americans, at least have spent their excess savings. What do you think . Yeah, i mean, i definitely think that the statistics would suggest that were getting close to that. You know, we we have been americans. When i say we, im in newport beach, california, for, you know, americans have been spending more than theyve been making on a real basis throughout this year. And thats been resulting in, you know, that excess savings that they built up during the pandemic on average to come down. You know, so i think theres a couple of other things to keep in mind here as well about the retail sales report that came out today. You know, it was it was probably boosted by promotions led by amazon prime day. And what weve seen in the past is that you have other retailers that sort of follow on with those Promotion Sales and, you know, and that those discounting that price discounting really drove volumes. So consumers are you know, with that excess savings coming down, consumers are becoming more price conscious, you know, and that just means that overall demand is slowing. What do you think about the inflation picture overall, tiffany . Because the most recent data points we saw were pretty encouraging. On the other hand, the comps are going to start to get harder and were looking at some things like Airline Tickets and Health Care Costs that dont seem like theyre going to go much lower. Yeah, well, i mean, in the United States, you know, its kind of interesting from the canadian statistics that on inflation that we got out today. But you know, in the United States, inflation has been falling, you know, pretty pretty notably more recently. And we expect that that to continue through the second half of this year. And really the drivers of that is what would, you know, kind of from a high level call these pandemic related factors was theyre just fading, you know, so obviously we have the whole used car story in the United States, which was very idiosyncratic to the United States. Thats coming off. Youre seeing used car prices drop pretty dramatically now. Now, as youve gotten supply, you know, thats coming back to the market. But in addition to that, you know, you mentioned it travel services is, you know, airline fares are coming down, but hotels as well, you know, some of that is allowed, you know, has been allowed by the lower jet fuel costs, which are now going up again because of the acceleration in Global Energy prices. So so thatll probably, you know, those price declines will moderate. But, you know, but nevertheless, you know, we think over the next quarter or so, you will start you will see us inflation, core inflation on a three month annualized basis, you know, get down pretty close to the feds target. But but they have to be careful. You know, they dont want to, you know, prematurely declare victory because you could see some reacceleration back up, you know, in, you know, next year, early next year. Well, tiffany, you did bring up the inflation data in canada just as a comparison. And so maybe we should go into some more detail there just because you had a headline reading that showed reacceleration. But to your point about core readings, one could take away from that some improving trends there. I mean, i guess the central bank question at this point is which inflation gauges do we want to watch . If you know, even in canada today you had mortgage related costs that have skyrocketed, which is somewhat ironic considering higher Interest Rates have made that an inflationary factor. Yeah, exactly. You know, because of the way that the statistics are calculated, the hiking rates is actually contributing to inflation somewhat, which seems a little bit counterintuitive. Yeah, you know, it depends on what measure you look at. You know, overall, i thought todays cpi report in canada, you know, it was a mixed bag. You know, i do think that the headline surprise, higher surprise ultimately is not good news for the bank of canada. But when you dug down into the details, it was really the travel Services Categories that were really resulting in, you know, some of that upside surprise. Those categories are notoriously volatile. You know, its the summertime. You know, we have had, you know, very nice weather this year. You know, obviously heat waves in some parts of the world, but its been nice. And so i would expect inflation in those categories to come down, you know, as the summer passes, you know, and, you know, looking at the rest of the categories like the socalled super core measure of core services, shelter, you know, that actually looks quite good. Its getting close to the or much closer to the box target. You know, so overall, you know, i think the bok, when theyre thinking about their rate hiking decision in september, you know needs to take into account the broader range of data. You know, we suggest that the canadian economy is slowing. The gdp suggests to us that its slowing. Third quarter gdp looks like its going to be sub 1 . You know, and of course, the labor market, the Unemployment Rate has increased by 50 basis points over the last three months. You know, and historically, thats more consistent with a recession. So bok is going to have to be weighing these things. You know, its going to be a close call. You know, i think on net, they probably continue to pause, however. So let me tie it back to the the spending and the retail spending story, because matt started the conversation by asking, you mean how much do americans have left to spend . And i wonder for the Central Banks at this point, like what is the goldilocks level of spending when Central Bank Action is meant to cool down the economy at a time when, you know, every time we get a reading thats better than expected and people say, well, that shows a resilient economy, everybody starts getting worried about, well, that means Interest Rates are higher for longer. Yeah, well, i mean, ultimately, you need to see consumers that are more price conscious for sure. And that helps bring down inflation in. You know, now i think the question here is, is in order to fully restore inflation back to target, you know, where do you need to be in terms of the Unemployment Rate and how much additional capacity in the labor markets do you need . Because keep in mind, if the labor markets are tight, you probably will continue to see, you know, more bargaining on on wages, more, you know, and wage pressure thats increasing aggregate earnings, you know, which is contributing to more resilient consumption. So its all interrelated. You know, but really, it gets down to in our minds how tight is the labor market and how much does it need to weaken moving forward in order to bring inflation all the way back down to target . You know, in the United States . I think that, you know, and elsewhere in the world as well, youve seen wages. You know, in terms of their level terms, wages have not fully caught up with the price level adjustment that weve seen. And and thats, you know, resulting in people still wanting to catch up. So youre seeing youre seeing increases in strikes in the United States, you know, as well as canada in order for wages, you know, to try to get peoples real wage, you know, at least flat versus where they were prepandemic. And we think that continues. You know, of course, unless you see a recession and you kind of we think you need to see that weakening in the labor market, higher unemployment in order to to bring in Wage Inflation down. Tiffany, great having you on the program. Thanks so much for joining us. Pimcos Tiffany Wilding talking to us about the economy. She is their north american economist. Coming up, home depot earnings Beat Estimates despite a pullback in us homebuilder sentiment. John and i were talking about that at the top. Well explore it more in the next block. 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Look, its great that you use workday to transform your business, but it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im oswald. Hello, oswald. Pam, you are a rock star. I wasnt gonna say it. Whoa. Constant contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand. Tall. This is bloomberg. This is bloomberg markets. Im John Oliphant with matt miller. Time to get into our stock of the hour and were watching home depot today. Its been a mixed session for the stock. The retailer reported earnings that were better than expected. Now high mortgage rates, those have been a headwind. Were also seeing fewer big ticket item purchases. Matt was making the point earlier about theres only so many barbecues, you might buy in a given year. There were some smaller projects. Sales, though, people doing landscaping, home depot, there, matt, seems to be able to keep some of their shoppers spending right now. Yeah, absolutely. And they have made a big investment in employees as well. Lets go to Laura Champine. She is Loop Capital Markets managing director. She has a hold on home depot with a 315 price target. Great to have you in the studio. Thanks for visiting us. What do you think about the Earnings Report . First of all, what did you glean from those numbers . So the Earnings Report was better than expected, meaning sales declined, but only 2 . So transactions are trending in the right direction. Ticket, though, barely grew. It was at its lowest point since october 2010. So ticket. Thats a good news. Maybe because inflation is certainly cooling off, but its a little bit of a worrying sign that theyre going to have to get people through the door because they cant make it just on the price tag alone. Laura, what do you do then . I mean, do you do you offer more doorbusters or are you trying to grab the traditional say, contractors and stay locked in a battle there with lowes for some of those big consistent shoppers . Home depot seems fairly content to let the market come to them. Its easy to do with their size, so theyre sales just for this quarter were 43 billion today. So what theyre doing is offering the best prices. Once again. Theyve got the best scale. And to your point, pros really like them. Pros still were down though pro backlogs are down. Sales are down both at pro and diy, but home depot is in a good relative position with that pro in terms of the home depot lowes competition, given how much of it is about being a better store and how much of it is about being in a better place, because i go to home depot all the time, not because i like it better than lowes, but because its right there and there isnt a lowes near me. Right . So the footprint for home depot is more urban, more coastal, more big cities. Lowes, because of its heritage, its tends to be more rural, more in the south. Luckily for lowes, thats a part of the country thats growing. But people do typically shop wherever is closest to them. Some some stores. So lowes overindexes to appliance biz, they do a little bit better with diy home depot does better with the pro. Okay, laura, this is such a busy week for retailers reporting. Hopefully well walk away with some signs on who are the clear winners and the laggards out there. I mean, you got target tomorrow, likely going to be, i believe, the First Sales Decline in upwards of four years. How are you thinking about we were just talking about the health of the consumer right now. How are you thinking about this . So a big worry for me and i cover off price. So i cover tj maxx and ross and burlington. I think theyll do well in this environment. But right now im starting to study the the student loan payments record occurring in the back half of this year. I think that thats just another thing to worry about a little bit overall, though, inflation easing is really good news. Weve had wages come in ahead of inflation just a couple of data points, but well take what we can get. I cover costco as well and theyve said that inflation has been less sequentially every month this year. Thats the metric im really watching to see trend down and maybe even reverse to keep consumer shopping. Do you expect a recession . And the reason i ask is that a lot of times when we get a recession, analysts will say that consumers step down to a tjmaxx, you know, or from a target to a walmart is kind of the narrative were hearing this week. I think that its not off the table. The fed will decide whether we go into a recession or not. Are our positioning is that you need to be defensive in case dont see a recession today in consumer stocks or with retailers. But we like the off price names. We like costco, bjs wholesale club. We think you want to be defensive right now. Its too soon to call it either way. All right, laura, great perspective. Well watch for those numbers tomorrow. And good to get your take on home depot as well. Loup capitals Laura Champine joining us with her perspective. Were going to take a quick break. When we come back, taiwans Vice President and the leading president ial candidate discussing some of the challenges that lie ahead with business week. And well get a full report. This is bloomberg. Sometimes you dont realize whats not c