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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Let's

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Speaker 1: get over to Kit Jukes right now from SoC gen

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Speaker 1: chief effect strategist and Kit let me put a question

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Speaker 1: to you that Marie and I have been discussing today.

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Speaker 1: I talked with Daniel Locai about as I mentioned, um,

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Speaker 1: how confident are you that the EU is going to

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Speaker 1: be able to efficiently and quickly hand out the stimulus

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Speaker 1: money from its rescue package as needed? Um, I'm confident

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Speaker 1: that they'll get it done. I'm absolutely confident they'll be

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Speaker 1: glitches along the way, because that's how your works. But

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Speaker 1: but I'm still confident that we've passed a turn in

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Speaker 1: the road, if you like, where fiscal policy, after being

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Speaker 1: really hardly active for the last decade, is finally coming

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Speaker 1: to the party in a meaningful fashion. And I think

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Speaker 1: that for me that's the important thing. You know, we've

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Speaker 1: with They're not that we're not going to do as

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Speaker 1: quickly as someone want it won't be you know, they'll

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Speaker 1: be glitches along the way, but it's happening. And for

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Speaker 1: the last ten years, the ECB has been the only

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Speaker 1: game in town. And this money is is going to

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Speaker 1: get spent is really important. So kid, I guess when

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Speaker 1: do we I don't know. I keep thinking of the

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Speaker 1: financial crisis and that long protracted recovery right which actually

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Speaker 1: was ultimately really good for many different asset classes. But

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Speaker 1: how do you see is it? Once again, we heard

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Speaker 1: FED Chief J. Powell kind of talk about the possibility

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Speaker 1: for kind of a long sustainable recovery coming out of

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Speaker 1: this era as well, how do you see it? Do

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Speaker 1: you feel like you've got that visibile it yet? Well?

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Speaker 1: I think, I mean my instinct is undone on a

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Speaker 1: horse stress and think that everything about the recovery from

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Speaker 1: the financial crisis, and although they got panned for some

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Speaker 1: of that, but for some bits of it, I thought

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Speaker 1: that you know, this time is different. Was was a

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Speaker 1: was a brilliant look, you know at the time in

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Speaker 1: terms of how a financial crisis was going to leave

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Speaker 1: us with really serious scarring, with a financial system that

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Speaker 1: didn't help the recovery properly in some places, and it

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Speaker 1: was particularly true in Europe. I think the recovery from this,

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Speaker 1: it seems to me, is that this has this has

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Speaker 1: been a horrible year, but it's still only a you know,

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Speaker 1: a ten months a ten month crisis um and in

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Speaker 1: all likelihood, I think once we get enough people vaccinated,

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Speaker 1: we will get what people will say afterwards is a

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Speaker 1: very v shaped economy recovery. I don't think there's a

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Speaker 1: lot of long term scarring that gets left behind as

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Speaker 1: a result of this pandemic. So you can, you can

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Speaker 1: put some things in place that the better you can

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Speaker 1: do well. But I think I think this is going

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Speaker 1: to be a you know, it's going to be a

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Speaker 1: quicker return to where we were before the crisis, this

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Speaker 1: time off to two thousand and nine for sure. Well,

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Speaker 1: then kid is Larry Summer's former U. S. Treasury secretary,

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Speaker 1: who got a lot of heat on social media over

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Speaker 1: the weekend saying that maybe we don't need these two

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Speaker 1: thousand dollars stimulus checks, and he was really thinking about

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Speaker 1: it's got to be really targeted relief going to the

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Speaker 1: people who ultimately really needed. His concern is we're pumping

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Speaker 1: a lot of stimulus into the economy at this point,

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Speaker 1: some argue, listen, let's overdo it. Let's make sure everybody's

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Speaker 1: getting what they need. His point is there are people

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Speaker 1: who don't need it who are getting it, and that

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Speaker 1: could lead to an overheated economy. Do you worry at

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Speaker 1: all about that? Um, I don't worry in the first instance.

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Speaker 1: I think in the first instance, it's true, you've got

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Speaker 1: a lot of people who need help now in terms

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Speaker 1: of replacing salaries, who don't have any money, and we

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Speaker 1: don't have time, I think at a logistical level to

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Speaker 1: go and find out exactly who those people are and

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Speaker 1: do it right. So so that's the decision that's been

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Speaker 1: taken in a bunch of countries. It is true. I mean,

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Speaker 1: it's true on the other side that an enormous amount

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Speaker 1: of the money that's been handed out in this crisis

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Speaker 1: has gone to people who just can't spend it because

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Speaker 1: we're all locked down in places where we can't do this.

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Speaker 1: You know, I cannot go on a holiday to celebrate

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Speaker 1: having having a hand app of some kind. So there's

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Speaker 1: a lot of pent up demand that when we get

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Speaker 1: these vaccines in is going to kick in automatically, and

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Speaker 1: you know, so in three months time, you'll find that

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Speaker 1: if the money handed out this time in the US,

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Speaker 1: quite a lot of that's going to have been saved

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Speaker 1: because people can't do that much else with it. Now

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Speaker 1: that again, that does mean, that does mean that when

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Speaker 1: we come out of the other side of this, so

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Speaker 1: when we have vaccines to a to a significant number

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Speaker 1: of the population and we can all go to restaurants,

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Speaker 1: bars and holidays, we're going to go really for it.

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Speaker 1: And that's why I think we get such a such

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Speaker 1: a V shaped recovery coming out. Now, you know, how

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Speaker 1: will how we will Will we feel at the end

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Speaker 1: of that about j Pal's commitment to keep rates so

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Speaker 1: low as such a long time? How will we feel

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Speaker 1: about um tax adjustments that need to be made to

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Speaker 1: to kind of balancing down the road? Yeah, we we

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Speaker 1: You know those if you like, those are good problems

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Speaker 1: for policy makers to have on the road, um and

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Speaker 1: potentially going to be helped by the fact that we've

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Speaker 1: got a lot of disinflation and repressions here holding at

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Speaker 1: least inflation under control. He I mean, when you talk

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Speaker 1: about overheating economy, I had this mental image of Mario

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Speaker 1: Draggy chuckling, you know, or I think of Ben bernanke

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Speaker 1: on sixty minutes back in the day when he said,

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Speaker 1: inflations of problem we can deal with. Don't worry about that.

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Speaker 1: It's disinflation that's the issue. Um, what do you think?

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Speaker 1: You know? Investors on the other hand, kit do seem

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Speaker 1: to be gearing up for the possibility of inflation. I mean,

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Speaker 1: gold isn't running away, it's at nine um. But Bitcoin

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Speaker 1: at twenty eight thousand is partly kind of the Reddit

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Speaker 1: cult following and the inflow from these big famous money managers.

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Speaker 1: But a lot of it is because people think printing

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Speaker 1: presses are gonna start running out of control, and this

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Speaker 1: is a good hedge against inflation on currencies. What do

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Speaker 1: you think, um? Part of it is, Look, I don't

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Speaker 1: know if it's a if it's a hedge against inflation

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Speaker 1: as much as a hedge against asset prices being generally

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Speaker 1: out of control as a result of such easy policy.

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Speaker 1: That you know, if we come out that, if we

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Speaker 1: come out of this crisis, if you like, with asset

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Speaker 1: prices and you're talking about P levels, but P levels

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Speaker 1: too high and bond deals too low, then the one

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Speaker 1: thing you can bet in the next cycle is it's

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Speaker 1: really hard for the said to have a rate cycle

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Speaker 1: that doesn't have a lower peak level of rates than

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Speaker 1: the current one, and that we will continue that pattern

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Speaker 1: under than the same process of that. Companies then are

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Speaker 1: still being encouraged to borrow too much money um and

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Speaker 1: raise themselves and fund themselves with debt rather than with

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Speaker 1: equity at the FEDS front and of the equity market

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Speaker 1: going down, so it's let it drop. And so that's

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Speaker 1: where you get this loss of confidence in in feat

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Speaker 1: money if you like, and people looking for other assets,

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Speaker 1: and gold is one of those big point has been

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Speaker 1: a trendy one of those for one of the description

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Speaker 1: wherever it goes in the long run. I think that

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Speaker 1: those and I do think that there is a question

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Speaker 1: that we need to ask ourselves, or at least the

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Speaker 1: policy needed to maka thin classesselves and say if what

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Speaker 1: if the problem is not consumer price inflation until we

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Speaker 1: get through all the things that have held insulation down

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Speaker 1: for the last thirty years. What if the problem is

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Speaker 1: we're just taking the debt cycle further by having real

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Speaker 1: interest rates that are too low, And how do you

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Speaker 1: get out of that if we're so sensitive whenever they

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Speaker 1: go up even a tiny bit. Well, these are things

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Speaker 1: a certainly we all going to be talking about for

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Speaker 1: some time. Kit. Always good to check in with you.

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Speaker 1: Kitchukes from sen joining us on the phone on this Monday.

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Speaker 1: Kathy Joan and she is Charles Schwab, but she fixed

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Speaker 1: incomes Strategy's gotta take a look at the fixed income

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Speaker 1: market because of course we're watching as more stimulus stimulus

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Speaker 1: is pumped into the economy. What is the ultimate impact

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Speaker 1: when it comes to fixed income Cathy, great to have

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Speaker 1: you here with Matt and myself. How do you see

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Speaker 1: at the stimulus package and what it does ultimately for

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Speaker 1: the economy overall, what it does for Americans, and what

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Speaker 1: it does for the fixed income trade. Well, it helps

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Speaker 1: fill a gap that continues to be open. You know,

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Speaker 1: when we hit this crisis, a huge gap, the output

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Speaker 1: gap opened up. We've come about two thirds of the

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Speaker 1: way back. I'm still got a third of the way

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Speaker 1: to go. And that affects um by and large, the

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Speaker 1: lowest income folks, So the people who have the least cushion, uh,

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Speaker 1: and now they've just seen some of that cushion kind

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Speaker 1: of taken away temporarily. But it also affects small business.

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Speaker 1: It affects state and local governments, so we still have

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Speaker 1: a ways to go. Uh. And I think that the

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Speaker 1: fiscal aid is is a good thing. It certainly is

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Speaker 1: booing markets. It raises optimism about the economy further route

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Speaker 1: in one and we're optimistic and in terms of the

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Speaker 1: second half of the year as well. And I think

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Speaker 1: ultimately it pushes up bond yields. And we've been hovering

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Speaker 1: right below one percent here in ten year treasury yields.

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Speaker 1: If we continue to see inflation expectations move up and

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Speaker 1: signs of increased recovery, by the end of one we

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Speaker 1: could be close to the one and a half percent area.

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Speaker 1: So we were talking earlier about the fact that bond

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Speaker 1: yields are incredibly low, Cathy, you know, near zero there

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Speaker 1: but negative everywhere else. UM and price earnings ratios are

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Speaker 1: incredibly high, certainly in the US. I just looked at

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Speaker 1: the S and P and we're at almost thirty times

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Speaker 1: estimated earnings UM. How can investors expect to make any

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Speaker 1: money even if we get further stimulus. Yeah, it's gonna

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Speaker 1: be a challenging year. And I think um Schwab along

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Speaker 1: with a lot of other places, are indicating that expected

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Speaker 1: returns are going to be lower. You know, the higher

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Speaker 1: the price you pay, the lower they expected return over time.

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Speaker 1: So I think you do have to have realistic expectations

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Speaker 1: about where we're going. But it's not an environment where

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Speaker 1: I just say, you know, move to cash, because cash

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Speaker 1: is going to pay nothing for at least a year

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Speaker 1: or two, possibly longer. So um, the key is to

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Speaker 1: be fairly selective. In the fixed income market, what we're

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Speaker 1: saying is keep the duration short so you're not exposed

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Speaker 1: to a lot of increase in long term rates and

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Speaker 1: move up in credit quality, whether it's investment grade, corporate bonds,

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Speaker 1: municipal bonds, etcetera. There's still some yield to be had

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Speaker 1: and the opportunity to compound those yields. All right, So

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Speaker 1: I'm looking at the piano behind. I know you've already

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Speaker 1: played for surveillance, so I'm not going to ask you

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Speaker 1: to play for Matt and me. But I do wonder

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Speaker 1: if you were composing something and you have to describe,

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Speaker 1: you know, you know something for one, is it going

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Speaker 1: to be more optimistic, but you've got to be patient

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Speaker 1: to get to that optimism. Where is it going to

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Speaker 1: be a bit somber this year. You know, I think

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Speaker 1: it's going to start out on a more somber note

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Speaker 1: markets aside. I think economically speaking, it's going to start

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Speaker 1: out on a more somber note, but it's probably going

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Speaker 1: to be more like a Beethoven symphony where you have

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Speaker 1: highs and lows, you know, christiandos and and and declines.

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Speaker 1: Because um, we're all looking right now at this optimistic

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Speaker 1: scenario for the second half of the year, and we

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Speaker 1: all know that things don't just glide in the direction

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Speaker 1: that we want them too. So I'm expecting a fairly

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Speaker 1: tumultuous here coming. All right. We've certainly seen a lot

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Speaker 1: of volatility, So just get ready, everybody for a little

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Speaker 1: bit more. Kathy, thank you so much. Happy New Year.

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Speaker 1: Kathy Jones of Charles Schwab joining us here on surveillance.

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Speaker 1: Lindsay Pieza Staple, Chief Economists, joins us now to talk

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Speaker 1: a little bit more about this. Lindsay Larry wrote a

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Speaker 1: UM Secretary Summers, I suppose wrote a an op ed

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Speaker 1: for Bloomberg explaining a little bit more. He said, of

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Speaker 1: course he thinks stimulus is necessary, more stimulus, but he

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Speaker 1: used the old um Anti minimum wage argument when it

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Speaker 1: comes to stimulus check saying, hey, if we're gonna say

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Speaker 1: two thousand is better than six D, why not do

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Speaker 1: five thousand or ten thousand? What do you think? Well,

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Speaker 1: I think right now this represents a lot of frustration

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Speaker 1: that we're seeing surrounding the stimulus bill. For many, the

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Speaker 1: frustration stems from the fact that it's taken months to

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Speaker 1: negotiate to get to this point, and it's seen as

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Speaker 1: smaller in scope than many would like. There's others that

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Speaker 1: argue their pet projects or pet components in the in

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Speaker 1: the legislation that really doesn't address asked the issues of

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Speaker 1: the pandemic itself. There's others that say, it really doesn't

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Speaker 1: matter how much have we send out in terms of

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Speaker 1: direct stimulus or relief to Americans. It's really about finding

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Speaker 1: a long term health solution. Remember, this wasn't a market crisis.

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Speaker 1: This was a health crisis. So in order to have

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Speaker 1: a long term, sustainable pathway to recovery, we have to

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Speaker 1: have a meaningful way to separate the healthy from the six.

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Speaker 1: So there really isn't much that the government can do

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Speaker 1: long term other than support finding a way to get

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Speaker 1: that that vaccine out to the American public and have

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Speaker 1: widespread inoculation. So okay, so let me push a little

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Speaker 1: bit further here, lindsay, because you know, Matt was mentioning

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Speaker 1: Larry Summers, did you can check it out on the

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Speaker 1: Bloomberg terminal, you know, did do an op ed piece,

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Speaker 1: you know, referring to that two thousand dollar stimulus check

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Speaker 1: in the comments he made, and he said total employee

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Speaker 1: compensation is now running only about thirty billion dollars per

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Speaker 1: month behind the pre COVID baseline. He talks about the

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Speaker 1: congressional stimulus from this bill will add about a hundred

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Speaker 1: fifty billion dollars a month to household income in order

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Speaker 1: to replace all of this loss. So is he right?

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Speaker 1: Is he right in that we're putting too much into

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Speaker 1: the economy when you're saying it's a health problem that

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Speaker 1: unless we really do money that's targeted towards getting that

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Speaker 1: you know, dealt with and and stopped. Is he kind

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Speaker 1: of righting what he's saying? Well, there certainly is literited

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Speaker 1: to his arguments. When we look at replacing one's wages

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Speaker 1: at a hundred percent or in some cases with these

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Speaker 1: enhanced benefits above on, you actually create a disincentive for

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Speaker 1: many of these workers to return to the marketplace. And

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Speaker 1: we've heard a number of stories, particularly in the service sector,

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Speaker 1: in the restaurant industry actually, to be more specific, that

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Speaker 1: they're having difficulty reconnecting with workers as they try to

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Speaker 1: reopen in some capacity at fift or doing delivery only,

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Speaker 1: and they're having trouble finding workers to come back and

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Speaker 1: actually fill those positions. And this isn't a political statement

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Speaker 1: or a judgment in any means, but if you're paid

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Speaker 1: X to work or X plus to not work, most

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Speaker 1: rational agents would choose the latter. So it certainly is

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Speaker 1: creating some disconnect in the labor market. And at the

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Speaker 1: same time, I'm gonna play devil's advocate here. There are

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Speaker 1: millions of Americans Matt and I've been talking about it,

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Speaker 1: that are are facing eviction, are facing that they can't

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Speaker 1: put food on their table. So it's I don't know

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Speaker 1: how we kind of make sure that we're doing the

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Speaker 1: right thing, And I'm wondering how you kind of factor

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Speaker 1: all of that into it. Absolutely, we're talking about ten

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Speaker 1: million renting based families that could be uh impacted by

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Speaker 1: that eviction if it is not extended beyond what that

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Speaker 1: fifth round stimulus package has at the end of January.

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Speaker 1: So it's a very delicate balance. On the one hand,

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Speaker 1: we want to make sure that we encourage people to

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Speaker 1: participate in the labor market. On the other hand, we

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Speaker 1: want to make sure that we support businesses and workers

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Speaker 1: that have lost income revenue opportunities through no fault of

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Speaker 1: their own, but by the government's own design. So it's

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Speaker 1: a very delicate balance. But again, it doesn't come down

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Speaker 1: to long term sustainability via government funding or government support.

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Speaker 1: It has to come from health solutions, and so right now,

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Speaker 1: that's where the majority of our focus, that's where the

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Speaker 1: majority of the funding should be. Uh, it should be

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Speaker 1: driven at least in my opinion, lindsay, what do you

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Speaker 1: expect from a Biden administration. It's not going to be

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Speaker 1: too many weeks now until um President Biden gets into office.

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Speaker 1: There's the possibility can depending on what happens in Georgia,

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Speaker 1: that he even has um control of the Congress and

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Speaker 1: the Senate as well. So what are you expecting from

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Speaker 1: the Democrats. Well, we're going to assume a balance of

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Speaker 1: power in Congress. We will assume that Republicans maintain control

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Speaker 1: the Senate. Of course, the House is led by the Democrats,

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Speaker 1: and right there that's going to remove a number of

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Speaker 1: fringe agendas, from violent tax increases to Medicare for all,

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Speaker 1: to the Green New Deal, aggressive changes in immigration or

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Speaker 1: regulatory reform. Those are all off the table at least

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Speaker 1: for now. But of course the President will still have

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Speaker 1: the power to tip the needle in one direction, and

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Speaker 1: we do expect him to focus on a sixth round

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Speaker 1: relief package to come in imediately. We also expect him

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Speaker 1: to lessen some pressure on China, loosen the us UH

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Speaker 1: stance on immigration at least to a certain degree. So

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Speaker 1: there are some moderate changes that we would expect on

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Speaker 1: some of these big ticket issues that he would otherwise

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Speaker 1: prefer to have sweeping reform, which again will be controlled

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Speaker 1: by the fact that we have that balance of power,

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Speaker 1: that presumed balance of power in Congress. So gridlock is

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Speaker 1: good at least for markets. What do you think happens

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Speaker 1: in terms of risk assets? I mean, we're living in

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Speaker 1: an economy where um, you lend your money to the

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Speaker 1: government for no return and you invest in UH you

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Speaker 1: invest in equities at a thirty price earnings ratio. Well,

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Speaker 1: the equity market seems to be elited by the fact

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Speaker 1: that we did finally reach a deal a fifth round

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Speaker 1: stimulus package. The equity market also seems to be getting

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Speaker 1: a positive boost from Brexit negotiations, which appear also to

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Speaker 1: have taken a positive step in the right direction. So

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Speaker 1: right now, the equity market seems to be focused on

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Speaker 1: everything but the fact that fundamentals in the economy appear

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Speaker 1: to be losing momentum, and the fact that the US

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Speaker 1: economy spirits right absolutely right now. Depending on the depth

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Speaker 1: and duration of this second round resurgence and the subsequent

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Speaker 1: policy measures that we put in place, we could see

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Speaker 1: the first quarter dip back into negative territory. Yet you

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Speaker 1: see very little if any concern priced in via the

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Speaker 1: equity market, right Gridlock good uh and before a good

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Speaker 1: for the markets, but not necessarily for humans. There's a

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Speaker 1: great story in the Bloomberg just about that. Just quickly, lindsay,

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Speaker 1: I do think about the first FED meeting of January.

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Speaker 1: We'll have a new administration in the White House. What

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Speaker 1: do you think will be kind of the thing that

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Speaker 1: j Pal has to do at that first meeting of

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Speaker 1: the new year. I think he's going to continue to

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Speaker 1: walk this very delicate line of highlighting the improvement that

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Speaker 1: we've seen in the economy, but continue to put pressure

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Speaker 1: on the federal government, as we've seen him do many

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Speaker 1: times that really the Federal Reserve has passed that proverbial

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Speaker 1: baton to the federal government to step up with any

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Speaker 1: further relief or stimulus measures that are needed. So I

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Speaker 1: do expect Paul to continue to again walk that delicate line,

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Speaker 1: but to keep the pressure on the new administration to

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Speaker 1: continue to provide support. Yeah, it's gonna be an interesting

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Speaker 1: new year, no doubt about it. Lindsay, thank you so much.

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Speaker 1: Lindsay Piegs of stephile joining us there. I do want

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Speaker 1: to talk a little bit about speaking of distress. We've

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Speaker 1: certainly seen that play out when it comes to the

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Speaker 1: retail sector. So someone who knows retails so well as

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Speaker 1: Steve Sado, he's former sax CEO MasterCard senior advisor, he

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Speaker 1: joins us on this Monday. Steve, so great to have

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Speaker 1: you here with us. UM this holiday season actually turning

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Speaker 1: out to be okay. Absolutely, I think it's been a

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Speaker 1: healthy consumer environment. If you look at the MasterCard spending

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Speaker 1: pulse numbers, which measures all of retail, not just the

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Speaker 1: master Card numbers. It shows that from October eleven to

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Speaker 1: decembery which is what we're looking at, is the full season,

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Speaker 1: the consumer grew three versus year ago. And if you

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Speaker 1: had asked me back in March whether or not there

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Speaker 1: was a shot that you were going to see positive

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Speaker 1: growth like that, I would have said, you're kidding. Those

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Speaker 1: numbers are almost essentially in line with what we saw

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Speaker 1: in two thousand nineteen in terms of growth. So it's

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Speaker 1: a healthy consumer. It's very different than we saw before,

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Speaker 1: much more different. Let's talk about that because it's interesting. You.

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Speaker 1: Matt and I were talking in the break and we

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Speaker 1: were talking about everybody's kind of all in on your

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Speaker 1: home right now. Yep, absolutely home. Uh you know you're nesting.

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Speaker 1: You're not at work, you're fixing up your house. So

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Speaker 1: anything related to home furnishings, electronics, uh, stay at home,

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Speaker 1: types of activities of grocery doing extremely well, apparel not

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Speaker 1: doing well. Department stores within an apparel which declined nineteen

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Speaker 1: percent during the holiday season, you see still strengthen. UH.

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Speaker 1: Ath leisure in some of the casual dressing. Nobody's buying,

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Speaker 1: nobody's going out to events, so they're not buying dresses

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Speaker 1: and items like that that will come back in time.

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Speaker 1: But you're you're having this gravitating towards the home, but

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Speaker 1: you also have this digital environment. People aren't comfortable being

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Speaker 1: in the stores. The malls are having a very difficult

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Speaker 1: time apparel stores. What you're seeing is the big box retailers,

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Speaker 1: which have been winning throughout this environment. The home depot loads,

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Speaker 1: UH targets, walmarts, etcetera, doing extremely well, and that continued

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Speaker 1: during the holiday season. But there's one other thing. I

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Speaker 1: think it's fascinating. You see strengthen the suburbs versus the

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Speaker 1: city's people aren't going into uh the offices that the

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Speaker 1: savings rate you talked about earlier going up. It's also

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Speaker 1: people aren't spending on commuting, they're not eating in restaurants.

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Speaker 1: That's leading you towards the dollars going towards items like

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Speaker 1: the home and home improvement. So, you know, Steve, how

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Speaker 1: does this you know in terms of kind of some

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Speaker 1: of the patterns were seeing right now, UH and the

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Speaker 1: increase in online how much of that stays with us

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Speaker 1: post pandemic in your view, because we've constantly been talking

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Speaker 1: about online kind of overtaking brick and mortar. We still

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Speaker 1: have a long way to go when it comes to that,

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Speaker 1: but I do think that there are people who never ordered,

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Speaker 1: whether it was food or some other things online, all

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Speaker 1: of a sudden did it for the first time, and

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Speaker 1: they're like, this is pretty easy. So what changes dramatically

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Speaker 1: potentially when it comes to retail post pandemic? You know,

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Speaker 1: I think we've probably seen eight years of change in

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Speaker 1: eight months. You now have digital being about of the

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Speaker 1: total purchases. That means that is still being done in

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Speaker 1: a physical store. So we shouldn't be writing off stores

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Speaker 1: because stores are still critically important. I think that a

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Speaker 1: lot of the changes that we're seeing are here to stay.

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Speaker 1: It's that the digitization of society, you're gonna have working differently.

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Speaker 1: People are going to have a mix of in their

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Speaker 1: offices and at home. That means they're going to have

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Speaker 1: to be have fixing up their home on a continue basis.

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Speaker 1: Restaurants are going to come back, Apparel will come back.

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Speaker 1: But I think that more importantly some of the societal

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Speaker 1: changes that we've seen, people the consumer, and it used

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Speaker 1: to be more the gen Z customer. Now it's everybody

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Speaker 1: concerned about brands and brand values, social justice issues, environmentally conscious,

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Speaker 1: where the what the brands stand for, how the products

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Speaker 1: are made. Those kinds of changes I think are going

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Speaker 1: to stick with us. I also think that the trend

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Speaker 1: towards moving out of the city's uh right now, suburban

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Speaker 1: sales are much stronger than you're seeing in some of

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Speaker 1: the urban areas. You may. I think cities aren't going

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Speaker 1: to die, that's for sure. You have enormous amount of

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Speaker 1: the cultural aspects of the cities that are to be vibrant.

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Speaker 1: But I do think that some of these changes are

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Speaker 1: going to be sticking with us. So what kind of

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Speaker 1: retailer do you not want to be, Steve right now

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Speaker 1: when you look at what's going to come maybe in

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Speaker 1: the next tutay four years, let's say, Well, the ones

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Speaker 1: you didn't want to be where the distress financially distressed

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Speaker 1: apparel retailers like the Neeman marcus Is, the J. C. Pennies,

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00:24:04,680 --> 00:24:08,600
Speaker 1: the Brooks Brothers, the J. Cruz that already have gone

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Speaker 1: bankrupt during the pandemic. I think that the in line

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00:24:12,359 --> 00:24:16,840
Speaker 1: apparel retailers in malls are still stressed because the malls

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Speaker 1: aren't the place the consumers are shopping their shopping and

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Speaker 1: outdoor strip malls, but indoor shopping malls are slower to recover.

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Speaker 1: So I think that's going to be different a difficult

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Speaker 1: environment for some time to come. I think that broadly,

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Speaker 1: restaurants are still having a very difficult time. I was

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Speaker 1: pleased to see that the bill, the Support Pandemic Support Bill,

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Speaker 1: got signed last night, But restaurants are in terrible condition.

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Speaker 1: Now you're gonna see a resurgence in restaurants when once

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Speaker 1: we're into the post pandemic period. But you're also going

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Speaker 1: to see a reset of rents. You're gonna see real

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Speaker 1: estate being very different. You look at vacancy rates of

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Speaker 1: let's say in New York of Manhattan, Soho and Madison

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Speaker 1: Avenue vacancy right. Real estate prices will go down, and

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Speaker 1: you're going to see a reset and all these categories

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Speaker 1: we're already seeing that reset. Just drive down the avenues

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Speaker 1: here in New York City and you see a lot

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Speaker 1: of those retail stores that have been shut down already. Steve,

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Speaker 1: thank you so much. Have a great new year, Steve

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Speaker 1: said of his former SAX CEO and MasterCard senior advisor

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Speaker 1: joining us on this Monday Thanks for listening to the

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Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

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00:25:29,040 --> 00:25:33,240
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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Speaker 1: Tom Keene before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio