caroline: i'm caroline hyde. romaine: i am romaine bostick. taylor: i'm taylor riggs. caroline: the bloomberg new economy forum has brought together world and financial leaders and we are talking about some of the topics, inflation, increasing prices, pressures on executives and investors at human beings and some who have never had to build their portfolio in such an environment. we look at retail, earning

numbers rolling in, at least on the corporate side of things companies are thriving amid high prices. they are still spending. also from the ceo on how he is handling things. let's listen in. we heard from them on the new economy forum. >> i think inflation is getting to be a lot more structured t oward -- once inflation expectations get anchored, then you get into the spiral. i don't think it is such prairie, non-. >> -- temporary phenomenon. >> i am concerned about inflation. supply chains are repositioning in part because of geopolitics, partly because of resilience considerations by governments, oil prices are going to remain high for quite a while. >> when i think about my 40 year

career, there have been periods of time when greed has outpaced fear. we are in one of those periods. inflation is going above trend, that will take some of the exuberance out of certain markets. romaine: we are way on the other side of transitory, inflation on everyone's lips and that makes it this week's cover of bloomberg businessweek. it is our cover story and you can see it here. you know who wrote that story? katie who is joining us on set to talk about this cover story. at the end of the day, we are all concerned about this for one reason and that is because it erodes our purchasing power, our investment gains, everything we talked about on this show every day. >> if you are a money manager it can erode your returns in a big way. so this piece is looking into the psychology of running a portfolio and what exactly is at

stake in that question, transitory or not. this is the question, you have to look at the portfolio over the next year and there's a lot of estate to the downside but there is an optimistic bent. if you get this call right, this could make your career. if you think back to 2007, 2009, there are some real heroes. michael with subprime merger -- mortgages, others, you could stand out here. taylor: someone who did get the call right was professor jeremy siegel. >> it is not over. we have seen it go above 6% year-over-year and i predicted that until this is all over, we are going to get about 20 or 25% cumulative inflation. over two or three years we will see the price level rise by 20 to 25%. this is not temporary.

and by the way, it could get worse. if the fed gets a handle on money supply growth. taylor: the implications of that back into the world of investing, everyone says stocks outperform in an inflationary environment but a lot of calls are saying that multiples contract during the time because there is so much pressure on the bottom line. what is the consensus about getting that call about that portfolio? >> it does not feel like there is a consensus. we are still in the period of inflationary pressure where inflation is a good thing. the round of retail earnings we just looked through this week shows that. a lot of companies so far have been able to pass on their costs to consumers, margins are still strong. we know consumers are miserable. consumer sentiments. but consumers are willing to accept those costs. it is the bond market where you

are starting to see >>. -- some cracks. if you compare that to the vix, that is at a low. really different messages coming out across asset classes. caroline: this is where it hits the bond market for some foremost, but where it can outperform is the real assets, real estate, old is what everyone looks to, commodities. is that where people are starting to put their money? >> i've heard some calls that real assets are in the equity market and where you want to be. maybe you want to be in companies -- that is a good place. it's hard to say when it comes to the commodities because it feels like this rolling ball of insanity. think back to lumber, steel, some -- copper, too hot to handle and then collapsing.

every physical commodity at some point in the past year has come under that moment. romaine: underneath this is the idea that a big part of inflation is leaf effectively. the fed has admitted this, we have heard from other policymakers. inflation is what people believe it to be. there seems to be a disconnect. market participants are saying it's not that bad and even if it is not transitory, it is not far off from the inflation target. meanwhile i get emails and texts every day from failing numbers complaining about how much they pay for gas like i have a solution, they figure that i should be able to talk them through it. i tell them -- taylor: do you tell them is transitory? romaine: but that's the point. there are a lot of people seeing this in real life, in real-time who don't necessarily have the capacity to hedge or even peel back some of their expenses because they are not being hit by discretionary items. they are being hit by

necessities. >> and those are costs that people have to deal with. that is what is landing at the fed's door. how do you do with that? have headline cpi, the highest levels of the 1990. it is a hard question to answer particularly because we don't know who is going to be the fed chair next year, but you know they're probably not going to approach this like paul volcker and hike interest rates when he percent and kill demand. but this is the question portfolio managers have to answer and that the fed has answer. caroline: at least we are meant to get an answer on the fed lead thanksgiving. katie, a great cover story, congratulations. romaine: right here on bloomberg. caroline: what of the fed chair end of inflation? katie wright felt -- katie with the cover story.

coming up, opening their wallets -- not yet. in terms of macy's numbers, ross numbers, the guidance, why are people able to go out and spend and are they willing to do so? atomic he is with us, the ceo of icsc. this is bloomberg. ♪

romaine: today we are focused on price pressures. they are being felt across industries. co warner -- ceo warner spoke with us at the new economy forum in singapore about the impact on his business. >> we have seen that there is

quite a bit of cost pressure that has come to us driven by the fact that supply chains have not been as stable as they used to be before the crisis. we have seen significant increases. everybody is talking about transatlantic transportation, airfreight's which is even more expensive, and then life-saving products that need to come to patients and customers, that is what we do. there are also prizes that are of limited impact for us but we feel it in our production. in the last, some materials are increasing and the labor cost increases that we will see starting 2022. >> do you think they will continue to rise in 2022? >> i do think we will certainly see that. when we come to discussions with the unions, merit increases and the like, people feel the pinch

of inflation and cost increases when they go to the store, when they go shopping and this has risen in terms of what the annual increase will be. it's always a negotiation but we will not get away with the relatively low increase we have seen over the last years. >> what kind of increased you think you're going to be faced with? >> we are seeing low single-digit increases over the last few years. i think it will be higher. but to -- potentially below 5%. caroline: while businesses grapple with these costs, americans are feeling comfortable spending at department stores. taylor: which is crazy because we have been talking about meeting the consumer where they are. macy's is, kohl's is, and we don't have it on the board, after hours ross stores as well. these are all companies that may be returning to the promisor. romania brought up a good point,

if you are buying things online given the supply chain issues, you don't know that you are going to get it in time for the holidays. how much of this is going back into the department store, rummaging around and these companies have said inventory levels are good. they are protected -- preparing to keep those stores stocks. romaine: e-commerce was almost a certainty, you could buy something and it will be on your doorstep in a few days, the next day here. now you click on that bucket -- button and you don't know when it will show up. caroline: what about the williams and sonoma stuff? romaine: you guys have to get going. let's bring in tom again, the president and ceo of icsc and released a survey saying consumers are spending $1.8 billion black friday. we pay a lot of attention to the black friday, the whole thanksgiving week and the week that follows.

this is equitable time for retailers. it seems there has been a lot of spending already by people on holiday shopping because they were concerned about whether they would be able to get what they want. >> i think that is right. the holiday season is longer this year and started earlier than it has in the past. there has been a lot of spending. but i think the spending is going to continue over the thanksgiving holiday weekend leading into the holidays themselves. our forecast has been 8.9% growth over the holiday season. we are quite confident we will reach that growth. 86% of consumers expect to shop over the holiday weekend. while there is some strain on consumer sentiment, it has not translated into consumer behavior. consumers are going out and shopping. there is a lot of personal savings, a lot of fiscal stimulus, all that is contributing to a robust consumer demand. i am optimistic about the

holiday season. caroline: are they bringing some of their purchasing -- we are worried about e-commerce, the supply chain, goods arriving late. have they been in the previous quarter going out and buying holiday gifts already, and is there a worry building up to the actual holiday? tom: it is a legitimate worry but i do think people have shopped earlier and pulled some of their purchases forward. but honestly i believe, although that has happened, the people will continue to lean in and shop over this holiday season. over the course of the next few months, leading into 2022, i don't really reason retail sales should not continue to be robust. retailers themselves, they suggested that they are seeing demand and expect to see that demand. so yes, certainly demand has

been pulled forward, but i continue to think it is going to be strong for the next several months. taylor: what about the structural shift that pre-covid was underway? we did not want goods, millennials wanted services, trips, we were living in urban areas and we did not want stuff. is that structural shift broken and we are going back away from experiences into goods and items? tom: there are a lot of structural changes that happened over one of the big things, and a lot of people have moved back to the suburbs and the suburbs have become a growth area again. and what if that has to do with demographic changes. the pandemic accelerated this. millennials moving out, buying homes, moving out of cities. that clearly has increased demand for products. time will tell how much of that is a sticky in regards to

products versus experience from a permanency perspective. my personal belief is as you have millennials age and enter into their prime consumption years and buy homes, have kids, historically that has been exceptionally good for retail. when you buy a home and you have children, you tend to buy a lot of stuff. you need products. that is just the nature of life. i do think looking out over the course of the next couple of years, respecting that there are places -- the retail environment will be strong. romaine: what about the composition of the retail industry? prior to the pandemic and appeared to be consolidating where you saw more spending weighted toward a smaller group of large retailers. i'm not sure what the trend has been since the pandemic. what are you anticipating longer-term? tom: those retailers that went

into the pandemic in a strong position exited or are exiting the pandemic in a stronger position. that being said, if you look at trends and store openings in 2021, there is three times as many store openings this year than there are closings. it is the first time in the last number of years that has happened. most of those store openings are on general new types of retailers that are opening. those that started as e-commerce players and now are looking to open up physical stores, new concepts that are happening in local markets. one of the things that i don't think people appreciate during the pandemic was the importance of physical retail. it was accentuating. that demand of going and being able to pick something up in the proximity to customers, whether it is stores, curbside pickup, or things like food and beverage. doordash, postmates, having that

food delivered. but that restaurant needs to be close to you for that to happen. so the importance of physical retail has been accentuated by the events of the last two years. caroline: going back to what we were discussing earlier, some of the headwinds have been the ability to pass it on. we were talking about how some managed inventory. how have companies been doing that? some of them focused on bath and body works today who came out with their numbers, there were talking about how they sourced locally in the united states and that has helped them out. did companies make up a pivot, or was that luck? tom: i think a lot of retailers were purposeful and it depended upon the retailer. obviously their product mix as well. some did what you referenced, went to more local suppliers and changed the mix. others that had the scale were

able to diversify their logistics next -- network and engage in their own shipping patterns and aircrafts to get those goods in an advance of the holiday season. it really depended upon the individual retailers. clearly scale matters. larger retailers are going to have more options than the smaller retailers and smaller local shops, and that is a challenge. for local and small businesses. romaine: always great to catch up with you. wonderful insights from tom mcgee, president of icsc. we will talk about luxury goods, we heard from aco earlier who said his company is raising prices but not because of the supply chain bottlenecks. stick around to hear why he is saying that. coming up on bloomberg. ♪

taylor: we are focused on inflation and how rising prices are affecting businesses and consumers. a ceo spoke with francine lacqua at our forum where he spoke about why it are creeping up. >> we had a drop in 2020. we were uncertain about what would happen, and since the middle of last year we saw people coming back,, e-commerce activities were picking up, people were coming back and this year has been very good. it looks like they are going to finish this year of 2019. >> if you look at the u.s. and china, these are your biggest markets. and china is the premium brand.

has any consumption changed and do you see it changing in the next few years? >> what we have seen has been an upgrading of the consumer in terms of his choices. we have seen people coming back in consumption, moving up from that level to this level and all of us have benefited. between china and the u.s. it is different. the u.s. is a lot about cognac and hennessey, the more entry-level hennessey and champagne, a lot of champagne in the u.s. and our new tequila and whiskey, and the china is a lot about xo, the high-end hennessey, and then it is about whiskey but not so much about japan. >> have you had to raise supply chain -- prices because of supply chain issues?

>> we raised our prices because we are selling limited products. caroline: the moet hennessey ceo. how expensive are these presents? romaine: you see it on champagne, necessities, milk prices, gas prices. you see it on big ticket items, houses, cars, it is everywhere. taylor: and all the way into coals, macy's, lower-priced items as well. maybe people are trading down. caroline: walmart and target are trying to preserve their market and therefore swallowing some about margin -- that margin pressure. romaine: should there be a policy response?

because a lot of people say this will sort itself out naturally. caroline: jeremy siegel was saying there needs to be a. taylor: next is caroline.

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>> from the heart of or innovation, money, and power collide. this is "bloomberg technology." with emily chang. caroline: this is bloomberg technology. coming up, apple is putting the pedal to the metal. the new car chief is pushing for a debut as early