1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,920 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg The 5 00:00:27,960 --> 00:00:31,800 Speaker 1: Interview of the Day on international economics and Trade and 6 00:00:31,840 --> 00:00:35,520 Speaker 1: with China, John Farroll Without Question, Katherine Man long Ago 7 00:00:35,800 --> 00:00:38,240 Speaker 1: of brand Ice and other points, and O. E. C. 8 00:00:38,440 --> 00:00:41,680 Speaker 1: D and now Darkening the Door at Fortress Corbett two 9 00:00:41,720 --> 00:00:45,360 Speaker 1: thousand four, Peterson Institute, Breaking Up is Hard to Do, 10 00:00:45,479 --> 00:00:50,720 Speaker 1: Global codependency, collective action and the challenges of global adjustment 11 00:00:51,400 --> 00:00:54,680 Speaker 1: light years out in front of others. On the China 12 00:00:54,800 --> 00:00:58,080 Speaker 1: US matter, Katherine Man, John a world class economist that 13 00:00:58,080 --> 00:01:00,080 Speaker 1: really didn't need much for an introduction a sol at 14 00:01:00,000 --> 00:01:02,800 Speaker 1: a greet global chief economists. Good morning to Catherine, Thank 15 00:01:02,840 --> 00:01:05,600 Speaker 1: you great to see. Let's walk through that code dependency. 16 00:01:05,959 --> 00:01:09,520 Speaker 1: Have we given enough thought to the full out of 17 00:01:09,640 --> 00:01:12,800 Speaker 1: two of the launchest economies in the world, essentially going 18 00:01:12,840 --> 00:01:16,040 Speaker 1: on it with each other? I think the answer is no. UM. 19 00:01:16,080 --> 00:01:19,520 Speaker 1: I think the stock market has gyrated a little bit, 20 00:01:19,560 --> 00:01:24,399 Speaker 1: but but has not fully appreciated the potential for a divorce. Um, 21 00:01:24,520 --> 00:01:28,679 Speaker 1: and that certainly is something that the administration would like 22 00:01:28,760 --> 00:01:31,399 Speaker 1: to see. Is it is a divorce, I mean we 23 00:01:31,440 --> 00:01:34,520 Speaker 1: could get closer together. I mean the the objectives of 24 00:01:34,640 --> 00:01:38,600 Speaker 1: market access, which was the original UH design of the 25 00:01:38,640 --> 00:01:42,080 Speaker 1: Section three or one case, you know, protecting intellectual property, 26 00:01:42,240 --> 00:01:45,160 Speaker 1: creating a level playing field for foreign firms in China 27 00:01:45,160 --> 00:01:47,280 Speaker 1: in order to be able to access the market and 28 00:01:47,600 --> 00:01:50,840 Speaker 1: serve the citizens and the firms there um. That would 29 00:01:51,120 --> 00:01:54,840 Speaker 1: that would tighten the relationship. But that's not the direction 30 00:01:54,880 --> 00:01:58,639 Speaker 1: that we currently appear to be going in. Divorce seems 31 00:01:58,680 --> 00:02:01,040 Speaker 1: to be the direction that we're going in. That might 32 00:02:01,040 --> 00:02:03,800 Speaker 1: be the direction we're going again in your view, is 33 00:02:03,800 --> 00:02:07,040 Speaker 1: that the objective though, Catherine, because that's a different that's 34 00:02:07,040 --> 00:02:09,600 Speaker 1: a different scenario. Entighly, the objective, as you points out, 35 00:02:09,680 --> 00:02:12,119 Speaker 1: was to get market access. To rebelief that the objective 36 00:02:12,120 --> 00:02:15,080 Speaker 1: now is to have a divorce. Well, I think that 37 00:02:15,280 --> 00:02:19,840 Speaker 1: we've we've seen a number of different communications that suggest 38 00:02:19,919 --> 00:02:23,519 Speaker 1: that if firms want to avoid having to pay the tariffs, 39 00:02:23,520 --> 00:02:27,000 Speaker 1: that they should um move their production back to the 40 00:02:27,040 --> 00:02:29,760 Speaker 1: United States. That that is a nice thing to say, 41 00:02:29,760 --> 00:02:33,680 Speaker 1: it's probably unrealistic um and instead, uh, there will be 42 00:02:33,720 --> 00:02:37,440 Speaker 1: some supply change that go to other countries, not not 43 00:02:37,520 --> 00:02:39,680 Speaker 1: necessarily to the United States and probably not to the 44 00:02:39,720 --> 00:02:43,520 Speaker 1: United States. So it's it's kind of, uh, you divorce 45 00:02:43,960 --> 00:02:46,680 Speaker 1: China and you take up with I don't know, Vietnam 46 00:02:46,800 --> 00:02:49,800 Speaker 1: or something like that. Um and and that's the strategy 47 00:02:49,960 --> 00:02:55,239 Speaker 1: two pages decades ago, Catherine Man is a trade deficit sustainable? 48 00:02:55,360 --> 00:02:59,800 Speaker 1: Maybe some of it's dated. Chapter three is must read, 49 00:03:00,200 --> 00:03:05,000 Speaker 1: including at the White House, has us comparative advantage changed? 50 00:03:05,280 --> 00:03:09,640 Speaker 1: And on page thirty where does comparative advantage come from? 51 00:03:10,080 --> 00:03:14,040 Speaker 1: Lecture the president right now? A wise one. So comparative 52 00:03:14,080 --> 00:03:19,200 Speaker 1: advantage comes from productivity growth, it comes from educated workers, 53 00:03:19,280 --> 00:03:22,720 Speaker 1: it comes from how you use your resources, and and 54 00:03:22,760 --> 00:03:26,760 Speaker 1: that is uh not none of that is enhanced with 55 00:03:26,840 --> 00:03:30,800 Speaker 1: trade wars. It is an intellectual leap, going back to 56 00:03:31,440 --> 00:03:35,640 Speaker 1: Ricardo Smith of tearing down the certitude of Thomas Munn 57 00:03:35,920 --> 00:03:39,320 Speaker 1: and others hundreds of years ago. I mean John Farrell's 58 00:03:39,400 --> 00:03:45,280 Speaker 1: ancestors lived Thomas Munn England. Are we going back to that? No, 59 00:03:45,400 --> 00:03:47,200 Speaker 1: I don't think we're going to go back to um. 60 00:03:47,200 --> 00:03:49,520 Speaker 1: A tar key, that's our tarkey is the word that 61 00:03:49,720 --> 00:03:53,200 Speaker 1: the trade economists use when you produce and consume everything 62 00:03:53,240 --> 00:03:56,200 Speaker 1: at home, which is the what the tweets said this morning, 63 00:03:56,680 --> 00:04:00,080 Speaker 1: John continue, um So, I mean you don't you don't know. 64 00:04:00,120 --> 00:04:02,400 Speaker 1: I mean, if you're a producer, you want market access 65 00:04:02,440 --> 00:04:05,080 Speaker 1: to more markets to to sell your stuff. If you're 66 00:04:05,080 --> 00:04:08,040 Speaker 1: a consumer, you want the variety that comes from you know, 67 00:04:08,680 --> 00:04:11,520 Speaker 1: what you can buy that doesn't come from your own country. 68 00:04:11,960 --> 00:04:15,320 Speaker 1: Um so. And of course producing you know, producing things abroad, 69 00:04:15,360 --> 00:04:18,360 Speaker 1: it's cheaper, so that's good as well from a pocketbook standpoint. 70 00:04:18,600 --> 00:04:20,320 Speaker 1: So there are a lot of reasons why you know, 71 00:04:20,360 --> 00:04:23,719 Speaker 1: we think trade is good and uh it should be enhanced. 72 00:04:24,080 --> 00:04:27,120 Speaker 1: Um We know, of course that there are adjustment issues 73 00:04:27,200 --> 00:04:29,760 Speaker 1: as well, and that's been kind of the centerpiece of 74 00:04:29,760 --> 00:04:33,440 Speaker 1: a lot of concerns. But closing the door to to trade, 75 00:04:33,839 --> 00:04:38,000 Speaker 1: closing the door to um uh created markets abroader to 76 00:04:38,000 --> 00:04:41,960 Speaker 1: to buy things from abroad. That doesn't enhance your capacity 77 00:04:41,960 --> 00:04:45,000 Speaker 1: of your economy to deliver on on what your citizen's 78 00:04:45,000 --> 00:04:47,760 Speaker 1: talk about. Comparative advantage though, because it's not that clear cut. 79 00:04:47,920 --> 00:04:51,320 Speaker 1: Let's take the chip industry for instance, the Chinese import 80 00:04:51,440 --> 00:04:55,080 Speaker 1: a load of semis from US companies. The Chinese would 81 00:04:55,120 --> 00:04:56,920 Speaker 1: essentially like to end that. And the way they're looking 82 00:04:56,960 --> 00:04:59,000 Speaker 1: to end that is the beef up these industries by 83 00:04:59,040 --> 00:05:02,360 Speaker 1: subsidizing the This administration has a problem with that. That's 84 00:05:02,360 --> 00:05:06,320 Speaker 1: not about comparative advantage. That's about skewing the results to 85 00:05:06,400 --> 00:05:09,400 Speaker 1: your own advantage. It is not about a level playing field. 86 00:05:09,800 --> 00:05:12,400 Speaker 1: The Chinese are ultimately doing the same thing on the 87 00:05:12,520 --> 00:05:17,039 Speaker 1: Catherine Well. So, uh, comparative advantage is not immutable. It 88 00:05:17,040 --> 00:05:19,320 Speaker 1: doesn't just come from the weather or from you know, 89 00:05:19,400 --> 00:05:21,599 Speaker 1: the whether you have you know, minerals in the ground. 90 00:05:21,880 --> 00:05:25,320 Speaker 1: Comparative advantage is something that can be built um as 91 00:05:25,320 --> 00:05:28,240 Speaker 1: I say, educated workers, that's something that you build. Um 92 00:05:28,480 --> 00:05:32,119 Speaker 1: A you know, superior technologies, those are something that you build. 93 00:05:32,160 --> 00:05:36,200 Speaker 1: So so you know, subsidization is something that has is 94 00:05:36,240 --> 00:05:38,719 Speaker 1: the you know, the Chinese are pretty obvious about that 95 00:05:39,120 --> 00:05:42,080 Speaker 1: right now, but it's not like it's the only country 96 00:05:42,120 --> 00:05:44,680 Speaker 1: that does that. Um going back to the to the 97 00:05:44,760 --> 00:05:47,640 Speaker 1: day with was it you know what's what's may are 98 00:05:47,680 --> 00:05:50,719 Speaker 1: important computer chips or potato chips. That goes back to 99 00:05:50,760 --> 00:05:55,239 Speaker 1: the nineties um and and the US allowed um US 100 00:05:55,560 --> 00:05:58,480 Speaker 1: chip producers back in the day to create a cartel 101 00:05:58,960 --> 00:06:01,720 Speaker 1: uh sem attack. If you're remember back then, um, and 102 00:06:01,760 --> 00:06:05,280 Speaker 1: that was in order to promote U S semiconductor industry. 103 00:06:05,400 --> 00:06:07,840 Speaker 1: So I mean we did it too. Uh, they're doing 104 00:06:07,880 --> 00:06:10,680 Speaker 1: it and so it's it's not new under the sun. 105 00:06:11,000 --> 00:06:15,599 Speaker 1: Chapter six is the trade deficit sustainable? Is the external 106 00:06:15,720 --> 00:06:19,240 Speaker 1: deficit caused by unfair trade practices? What did you do 107 00:06:19,320 --> 00:06:23,479 Speaker 1: write this chapter for young Trump? So, I mean, you know, 108 00:06:23,560 --> 00:06:26,400 Speaker 1: it's uh, people ask that question back then. I mean 109 00:06:26,480 --> 00:06:29,760 Speaker 1: I think that we should remember that that the issues 110 00:06:29,880 --> 00:06:32,920 Speaker 1: that are being displayed in the in the current environment 111 00:06:32,960 --> 00:06:35,960 Speaker 1: with with the U. S And China, these are not 112 00:06:36,120 --> 00:06:39,120 Speaker 1: new issues. These are absolutely not new issues. What is 113 00:06:39,160 --> 00:06:42,120 Speaker 1: new is that the size of the two countries involved, 114 00:06:42,560 --> 00:06:45,479 Speaker 1: and that it is it is taking place after a 115 00:06:45,520 --> 00:06:48,400 Speaker 1: period of time when there's been so much integration between 116 00:06:48,440 --> 00:06:52,680 Speaker 1: the two countries. There's so much interesting simply chain relationships, 117 00:06:52,760 --> 00:06:56,839 Speaker 1: and that that means taking Barrett taking that apart is 118 00:06:56,920 --> 00:07:01,640 Speaker 1: much more costly than than in Mrs Farroll from Coventry 119 00:07:01,680 --> 00:07:03,320 Speaker 1: emails in and she says, what's it going to do 120 00:07:03,360 --> 00:07:05,840 Speaker 1: for the dollar? She doesn't care about all this mumbo jumbo. 121 00:07:06,120 --> 00:07:07,479 Speaker 1: She just wants to know what's it going to do 122 00:07:07,520 --> 00:07:10,120 Speaker 1: for the dollar? Well, in the short run, all this 123 00:07:10,280 --> 00:07:14,720 Speaker 1: uncertainty associated with policy changes, trade wars and so forth, 124 00:07:14,960 --> 00:07:19,280 Speaker 1: people tend to um go to the dollar. Uh, it's 125 00:07:19,520 --> 00:07:22,600 Speaker 1: the place that you go for safe haven. UM. But 126 00:07:22,680 --> 00:07:24,680 Speaker 1: there are other kind of currencies that have started to 127 00:07:24,680 --> 00:07:26,480 Speaker 1: be a little bit more attractive as well, which is 128 00:07:26,560 --> 00:07:29,280 Speaker 1: which is the end? So by and large we're looking 129 00:07:29,360 --> 00:07:33,920 Speaker 1: at short term improvements or a dollar appreciation. But then 130 00:07:34,280 --> 00:07:37,400 Speaker 1: you know, then you the buyer's remorse sets in and 131 00:07:37,480 --> 00:07:41,679 Speaker 1: the cost of disentangling your value chains looks bad. Um, 132 00:07:41,800 --> 00:07:45,000 Speaker 1: and uh, there's and that, and there's a big trade deficit, 133 00:07:45,240 --> 00:07:48,680 Speaker 1: trade deficity. There's a big um fiscal budget deficit that 134 00:07:48,720 --> 00:07:52,440 Speaker 1: the US currently has, larger than uh most countries would 135 00:07:52,480 --> 00:07:55,080 Speaker 1: have at this point in their business cycle. And you 136 00:07:55,120 --> 00:07:58,080 Speaker 1: will have to be issuing treasury securities and I think 137 00:07:58,080 --> 00:08:00,160 Speaker 1: there's some question marks about that. So cancery on a 138 00:08:00,240 --> 00:08:02,480 Speaker 1: question for you, how you model to pass through from 139 00:08:02,600 --> 00:08:04,560 Speaker 1: tariffs that could be on everything and they could be 140 00:08:04,640 --> 00:08:08,400 Speaker 1: hired too, through to final prices and plug in those 141 00:08:08,440 --> 00:08:11,040 Speaker 1: effects assumptions for me as well, because I think that's important. 142 00:08:11,080 --> 00:08:13,400 Speaker 1: Just do that for US briefly. Well. So a lot 143 00:08:13,440 --> 00:08:16,920 Speaker 1: of people do focus on for the foreign currency translations, 144 00:08:16,960 --> 00:08:19,360 Speaker 1: so a product, you know, in theory of product is 145 00:08:19,400 --> 00:08:23,040 Speaker 1: priced in yen or in yuan R and B, and 146 00:08:23,080 --> 00:08:26,360 Speaker 1: then you adjust the price to translate it into dollars. 147 00:08:26,720 --> 00:08:30,080 Speaker 1: And so they say, oh, well, if the yuan depreciates 148 00:08:30,120 --> 00:08:34,480 Speaker 1: by ten percent, it offsets ten That's actually way too simplistic, 149 00:08:34,760 --> 00:08:37,640 Speaker 1: because in fact, all that is invoiced in dollars to 150 00:08:37,720 --> 00:08:42,360 Speaker 1: start with, so there's much less of a dollar translation 151 00:08:42,440 --> 00:08:46,800 Speaker 1: effect than most people think. Catherine Man really really interesting, 152 00:08:46,840 --> 00:08:49,320 Speaker 1: thoughtful stuff. Great to catch hell you this morning, Catherine Man, 153 00:08:49,360 --> 00:08:52,880 Speaker 1: City Group Global Chief Economist Tom really thoughtful stuff and 154 00:08:52,920 --> 00:08:54,720 Speaker 1: some great analysis of the last couple of days on 155 00:08:54,720 --> 00:09:12,360 Speaker 1: this story. The big issue. The President certainly optimistic about 156 00:09:12,360 --> 00:09:14,520 Speaker 1: the chances of a deal, saying it would become apparent 157 00:09:14,559 --> 00:09:16,800 Speaker 1: in about three or four weeks whether trade talks with 158 00:09:16,920 --> 00:09:19,760 Speaker 1: China we're going to be successful. Planning to meet with 159 00:09:19,840 --> 00:09:22,320 Speaker 1: this Chinese counterpart, the President said he has a feeling 160 00:09:22,600 --> 00:09:25,600 Speaker 1: it's going to be very successful here in New York 161 00:09:25,640 --> 00:09:28,360 Speaker 1: to discuss some please to say is YenS nord Exante 162 00:09:28,520 --> 00:09:32,360 Speaker 1: data founder and CEO. Good morning to yents. Good morning. 163 00:09:32,520 --> 00:09:37,480 Speaker 1: The concept of the Trump put market sensitive policy preferences, 164 00:09:37,840 --> 00:09:40,000 Speaker 1: and we've seen that being activated just a little bit 165 00:09:40,000 --> 00:09:42,320 Speaker 1: in the last twenty four hours. Yeah. I think we 166 00:09:42,480 --> 00:09:47,040 Speaker 1: saw obviously a very big market reaction starting last week 167 00:09:47,080 --> 00:09:52,360 Speaker 1: and accelerating very much on Monday, and then the rhetoric 168 00:09:52,520 --> 00:09:55,439 Speaker 1: from from Trump changed a little bit. I thought the 169 00:09:55,520 --> 00:09:59,240 Speaker 1: Keys sentence really yesterday was this thing about the tariffs 170 00:09:59,360 --> 00:10:02,600 Speaker 1: on the remain inning three hundred billion was not set 171 00:10:02,640 --> 00:10:04,480 Speaker 1: in stone, like that was something that was still to 172 00:10:04,520 --> 00:10:07,000 Speaker 1: be decided. So I thought that was the opening. That 173 00:10:07,120 --> 00:10:10,280 Speaker 1: was the most reason, the most important reason why we're 174 00:10:10,280 --> 00:10:12,360 Speaker 1: starting to rally back a little bit in these risk 175 00:10:12,400 --> 00:10:14,280 Speaker 1: asses that have been hammered. There's a belief that we 176 00:10:14,280 --> 00:10:17,280 Speaker 1: have the series of automatic stabilizers that will kick in. 177 00:10:17,600 --> 00:10:20,240 Speaker 1: These policy preferences will kick in the likes of China, 178 00:10:20,280 --> 00:10:22,440 Speaker 1: the sheep put that have growth and the risks around 179 00:10:22,440 --> 00:10:25,080 Speaker 1: growth increased too much. They'll deliver stimulus that if the 180 00:10:25,120 --> 00:10:27,560 Speaker 1: market backs off too much, the President will back away 181 00:10:28,000 --> 00:10:32,520 Speaker 1: from market negative policy preferences, for instance, the FED put 182 00:10:32,520 --> 00:10:34,559 Speaker 1: the power put. We've talked about that so much, all 183 00:10:34,600 --> 00:10:37,440 Speaker 1: of these three things. Yes, do you believe that those 184 00:10:37,480 --> 00:10:39,920 Speaker 1: three things could be activated? What do you think the 185 00:10:40,040 --> 00:10:44,240 Speaker 1: risks are, the constraints around the deployment of those initiatives. Yes, 186 00:10:44,400 --> 00:10:49,360 Speaker 1: so I think the problem with that narrative is that 187 00:10:49,520 --> 00:10:51,719 Speaker 1: a lot of them have already been deployed, and then 188 00:10:51,760 --> 00:10:54,960 Speaker 1: there's places like the eurosoone where they don't really have 189 00:10:55,080 --> 00:10:57,920 Speaker 1: much left. So I was in the Chinese have have 190 00:10:58,000 --> 00:11:02,679 Speaker 1: stimulated already, The FED has already done their pivot. Doesn't 191 00:11:02,679 --> 00:11:05,280 Speaker 1: mean they couldn't quite aggressively in surprise, but they've done 192 00:11:05,640 --> 00:11:08,920 Speaker 1: a fair bid. So I think really the most important 193 00:11:08,920 --> 00:11:11,880 Speaker 1: part of what you're describing is some kind of softening 194 00:11:11,880 --> 00:11:15,240 Speaker 1: of the stands in the trade negotiation itself. That's something 195 00:11:15,280 --> 00:11:17,120 Speaker 1: that can be sort of pulled out of the hat 196 00:11:17,200 --> 00:11:19,440 Speaker 1: if needed, if if the market started to tank, and 197 00:11:19,480 --> 00:11:22,600 Speaker 1: that will be important to market certainly in the short term. 198 00:11:22,679 --> 00:11:25,320 Speaker 1: So those are things I'm watching. Until then, We've got 199 00:11:25,320 --> 00:11:27,680 Speaker 1: to think about how the efex market adjust as well. 200 00:11:27,920 --> 00:11:30,520 Speaker 1: I hear a lot of analysis around the tariff impact, 201 00:11:30,800 --> 00:11:34,880 Speaker 1: which doesn't account for the FX market adjusting. Just how 202 00:11:34,960 --> 00:11:38,560 Speaker 1: much will the redmen be adjusted and to what degree 203 00:11:38,559 --> 00:11:41,000 Speaker 1: and how much tolerance do the Chinese have to allow 204 00:11:41,320 --> 00:11:46,760 Speaker 1: a weaker Chinese currency. Yeah, so the Chinese authorities really 205 00:11:46,800 --> 00:11:49,559 Speaker 1: have a challenge on your hands here, right, because if 206 00:11:49,600 --> 00:11:52,000 Speaker 1: they wanted to fully adjust to the tariff that is 207 00:11:52,040 --> 00:11:56,920 Speaker 1: now spiking up on a large proportion of their goods, 208 00:11:56,920 --> 00:11:58,360 Speaker 1: we would need to see a big move of like 209 00:11:58,400 --> 00:12:01,240 Speaker 1: maybe more than ten percent. On the other hand, they've 210 00:12:01,280 --> 00:12:04,640 Speaker 1: signaled from a psychological perspective that they don't really want 211 00:12:04,679 --> 00:12:06,800 Speaker 1: to have it above seven. That was the signal they 212 00:12:06,840 --> 00:12:09,280 Speaker 1: sent in the second half of last year, and I 213 00:12:09,280 --> 00:12:12,480 Speaker 1: think that's a signal they're sending again. We are their fixings. 214 00:12:12,520 --> 00:12:14,720 Speaker 1: Every day they come in the morning, they set essentially 215 00:12:14,720 --> 00:12:16,760 Speaker 1: at a starting level, and that has been set low 216 00:12:16,840 --> 00:12:18,679 Speaker 1: signal that they don't want it to be weaker than 217 00:12:18,720 --> 00:12:22,800 Speaker 1: it already is. So they're sort of stuck between, Okay, 218 00:12:22,800 --> 00:12:25,560 Speaker 1: what will be good for their exporters and what do 219 00:12:25,600 --> 00:12:29,800 Speaker 1: they need to keep the situation calm, both in relation 220 00:12:29,880 --> 00:12:32,920 Speaker 1: to keeping the trade negotiation going, not to do as 221 00:12:33,000 --> 00:12:36,400 Speaker 1: anything that looks offensive to Minuchin and Trump and so forth, 222 00:12:36,840 --> 00:12:39,640 Speaker 1: but also to avoid capital flight. Um, and that's a 223 00:12:39,679 --> 00:12:43,000 Speaker 1: really big, big balancing act. Yeah, and some money question 224 00:12:43,080 --> 00:12:45,120 Speaker 1: here is not only ram n B to seven in 225 00:12:45,160 --> 00:12:48,160 Speaker 1: the vector that we see well out over two standard deviations, 226 00:12:48,760 --> 00:12:51,600 Speaker 1: but dollar dynamics as well. If we assume now blended 227 00:12:51,600 --> 00:12:55,280 Speaker 1: dollar is range bound. Should we look at a blended 228 00:12:55,320 --> 00:12:58,720 Speaker 1: dollar Bloomberg Dollar Index or d x Y index or 229 00:12:58,760 --> 00:13:02,400 Speaker 1: do we have to disaggreg gate Asia d x Y 230 00:13:02,520 --> 00:13:05,880 Speaker 1: that bundled Pacific rim index or do we aggregate to 231 00:13:05,920 --> 00:13:08,320 Speaker 1: the major pairs? What do we do in terms of 232 00:13:08,440 --> 00:13:12,960 Speaker 1: judging scaling stronger dollar? Yeah? No, I always always look 233 00:13:13,000 --> 00:13:15,360 Speaker 1: at it in a number of buckets. Right, So you 234 00:13:15,400 --> 00:13:18,320 Speaker 1: want to look at this sort of low yield bucket, 235 00:13:18,360 --> 00:13:20,880 Speaker 1: which is the yen and the euro and the Swiss 236 00:13:20,920 --> 00:13:23,480 Speaker 1: franc What is that bucket? Hero hasn't moved at all? No, 237 00:13:23,720 --> 00:13:26,319 Speaker 1: And obviously end is strong and the Swiss francs has 238 00:13:26,360 --> 00:13:28,959 Speaker 1: been getting strong as well. And then you have like 239 00:13:30,280 --> 00:13:32,719 Speaker 1: a bucket that is the commodity bucket, which is very 240 00:13:32,720 --> 00:13:37,240 Speaker 1: important with Australia and Canada and so forth. And then 241 00:13:37,280 --> 00:13:41,720 Speaker 1: you have the surrounding countries adjacent bucket to China, which 242 00:13:41,720 --> 00:13:46,480 Speaker 1: witch buckets should Secretary Manu should look at. So I 243 00:13:46,520 --> 00:13:50,200 Speaker 1: think from his perspective, clearly he wants to look at 244 00:13:50,240 --> 00:13:53,840 Speaker 1: the Bilattal crosses for the people who is negotiating with, 245 00:13:54,640 --> 00:13:57,560 Speaker 1: but he also needs to think about, Okay, what are 246 00:13:57,559 --> 00:14:00,439 Speaker 1: the crosses that's going to really impact the I'm sure 247 00:14:00,440 --> 00:14:04,040 Speaker 1: he's looking what do you think, what do you what crosses? 248 00:14:04,400 --> 00:14:06,960 Speaker 1: What cross is the president at Well, he needs to 249 00:14:06,960 --> 00:14:08,840 Speaker 1: look at dollar max, he needs to look at dollar 250 00:14:08,920 --> 00:14:13,240 Speaker 1: can and look at dollar career. So there's probably a 251 00:14:13,280 --> 00:14:16,120 Speaker 1: handful that are really important. Yes, we know the administration 252 00:14:16,280 --> 00:14:18,679 Speaker 1: has looked at the Euro before. It's been interesting over 253 00:14:18,720 --> 00:14:20,960 Speaker 1: the last week that the euro has been so resilient. 254 00:14:21,000 --> 00:14:22,800 Speaker 1: I remember a conversation you and I had a number 255 00:14:22,800 --> 00:14:25,160 Speaker 1: of months ago, and we were talking about the prospect 256 00:14:25,160 --> 00:14:27,920 Speaker 1: of going into another risk off scenario and how the 257 00:14:27,960 --> 00:14:31,720 Speaker 1: efex market would respond and we'd have this very counterintuitive 258 00:14:31,720 --> 00:14:34,280 Speaker 1: move whether euro just wouldn't sell off in that environment. 259 00:14:34,600 --> 00:14:37,080 Speaker 1: So walk me through what's been happening here and why 260 00:14:37,120 --> 00:14:39,680 Speaker 1: the euro is starting to take on the character to 261 00:14:39,800 --> 00:14:43,920 Speaker 1: some degree of the Japanese yen. Yeah. Yeah, the there's 262 00:14:43,960 --> 00:14:46,760 Speaker 1: definitely an element of that. So it makes sense in 263 00:14:46,800 --> 00:14:50,640 Speaker 1: the context of the rate environment that you have in 264 00:14:50,680 --> 00:14:54,000 Speaker 1: the euro Zone. It's not that the yield curve is 265 00:14:54,120 --> 00:14:56,920 Speaker 1: totally flat like you have in Japan, but there's very 266 00:14:56,960 --> 00:15:00,440 Speaker 1: limited move for European interest rates to move further. So 267 00:15:00,520 --> 00:15:03,960 Speaker 1: that means when global interest rates drop, actually the rate 268 00:15:03,960 --> 00:15:06,240 Speaker 1: differential moves in the Euro's favor. So that's sort of 269 00:15:06,280 --> 00:15:09,560 Speaker 1: the simple explanation from what's going on from a float perspective. 270 00:15:09,640 --> 00:15:13,040 Speaker 1: What's happening is that European investors are incredibly active in 271 00:15:13,360 --> 00:15:16,040 Speaker 1: emerging market trades around the world, and when you have 272 00:15:16,480 --> 00:15:19,720 Speaker 1: some severe risk aversion, you get unwinding of those. And 273 00:15:19,800 --> 00:15:23,080 Speaker 1: we saw it very clearly last week that the specific 274 00:15:23,160 --> 00:15:26,280 Speaker 1: day when Ian was trading the worst with Thursday with 275 00:15:26,480 --> 00:15:29,560 Speaker 1: some big moves and key emerging market currencies, and the 276 00:15:29,560 --> 00:15:33,040 Speaker 1: euro actually had a pretty strong rally just as that happened. 277 00:15:33,040 --> 00:15:34,920 Speaker 1: The Mexican pigs have been one of them. So we're 278 00:15:34,960 --> 00:15:37,560 Speaker 1: unwinding the carry traits to some degree ends and I'm 279 00:15:37,600 --> 00:15:39,520 Speaker 1: just wondering how long it takes to flush that out 280 00:15:39,560 --> 00:15:41,720 Speaker 1: and before the Euro takes on what we would expect, 281 00:15:41,840 --> 00:15:44,160 Speaker 1: which is a Euro to be weaker in this kind 282 00:15:44,160 --> 00:15:47,080 Speaker 1: of environment. Yes, so I think it depends on whether 283 00:15:47,120 --> 00:15:49,960 Speaker 1: you have like a short term hedging dynamics where there's 284 00:15:50,000 --> 00:15:52,320 Speaker 1: some big real money guys that put some effects hedge 285 00:15:52,320 --> 00:15:55,280 Speaker 1: in their portfolio, or whether it's really like a more 286 00:15:55,360 --> 00:15:58,760 Speaker 1: wholesale getting out of every everything on a more structural basis. 287 00:15:58,800 --> 00:16:01,120 Speaker 1: So I think we've seen the hedge elements take place, 288 00:16:01,600 --> 00:16:05,080 Speaker 1: and now these e M portfolio managed have to decide, okay, 289 00:16:05,080 --> 00:16:07,640 Speaker 1: do they sell the securities too. I don't think we're 290 00:16:07,720 --> 00:16:11,240 Speaker 1: quite there yet. We have enjoyed five even six tweets 291 00:16:11,280 --> 00:16:14,120 Speaker 1: from the President this morning. These are Elizabethan tweets back 292 00:16:14,160 --> 00:16:18,280 Speaker 1: to Mercantile England of another time in place in one 293 00:16:18,280 --> 00:16:21,480 Speaker 1: of the great thrust here. Yen's is the idea from 294 00:16:21,480 --> 00:16:24,280 Speaker 1: the President that quote, we can make a deal with 295 00:16:24,360 --> 00:16:29,160 Speaker 1: China tomorrow before their companies start leaving so as not 296 00:16:29,280 --> 00:16:34,440 Speaker 1: to lose US a business. Explain this trade war if 297 00:16:34,440 --> 00:16:38,040 Speaker 1: it's with a totalitarian regime led by a communist party. 298 00:16:38,520 --> 00:16:43,200 Speaker 1: I mean, it's not even Elizabethan dynamics, is it. It's 299 00:16:43,840 --> 00:16:48,160 Speaker 1: clearly a totally different situation than in a democracy where 300 00:16:48,160 --> 00:16:51,320 Speaker 1: there's sort of different voices that can have their own opinions. 301 00:16:52,520 --> 00:16:56,240 Speaker 1: One thing that I always thought was sort of tricky 302 00:16:56,280 --> 00:17:00,400 Speaker 1: about the US China dynamic versus the US versus Mexico 303 00:17:00,480 --> 00:17:04,280 Speaker 1: dynamic was that it there's in the US a reasonable 304 00:17:04,280 --> 00:17:07,560 Speaker 1: amount of political backing for a tough stance versus China. 305 00:17:08,080 --> 00:17:10,040 Speaker 1: So that means that the US kind of has a 306 00:17:10,080 --> 00:17:12,679 Speaker 1: fighting chance, but can they really measure up with a 307 00:17:13,119 --> 00:17:15,159 Speaker 1: you can call it to terror the Tera regime, but 308 00:17:15,240 --> 00:17:19,320 Speaker 1: a regime where it's it's certainly more government directed. That's 309 00:17:19,359 --> 00:17:22,679 Speaker 1: a big question. So the pains, I think on the 310 00:17:22,760 --> 00:17:27,600 Speaker 1: sort of political coherence versus the actual economic pain. This 311 00:17:27,640 --> 00:17:29,840 Speaker 1: is wonderful, Jory, thank you so much, and he will 312 00:17:29,840 --> 00:17:32,600 Speaker 1: continue with us here, uh this morning. This is a 313 00:17:32,680 --> 00:17:50,320 Speaker 1: really important conversation. Synthathizing off right now we're gonna jump 314 00:17:50,359 --> 00:17:54,080 Speaker 1: to the equity markets, but also with a touch to technology. 315 00:17:54,400 --> 00:17:59,000 Speaker 1: Mark Lehman that JMP Securities is encyclopedic on the heritage 316 00:17:59,000 --> 00:18:02,680 Speaker 1: and history of his Gun Valley and also equity Marcus Mark, 317 00:18:02,760 --> 00:18:05,080 Speaker 1: let me go to the general markets right now. With 318 00:18:05,200 --> 00:18:08,320 Speaker 1: futures up twenty two, Can you acquire shares this morning 319 00:18:08,440 --> 00:18:12,320 Speaker 1: or you on the sidelines? Well, I think you're going 320 00:18:12,359 --> 00:18:16,200 Speaker 1: to have a necessary bounce back from a week of 321 00:18:16,600 --> 00:18:19,240 Speaker 1: down drafts in a week of bad news. I think 322 00:18:19,280 --> 00:18:21,359 Speaker 1: this is just the beginning. Though. We're not going to 323 00:18:21,440 --> 00:18:24,000 Speaker 1: have a lot of news as relates to tariffs through 324 00:18:24,000 --> 00:18:26,840 Speaker 1: the next six weeks, and looking for a catalyst for 325 00:18:26,880 --> 00:18:29,439 Speaker 1: the market between now and then, now that earnings are 326 00:18:29,480 --> 00:18:31,960 Speaker 1: behind us, is going to be hard to find UM. 327 00:18:32,119 --> 00:18:33,639 Speaker 1: So this is going to be a kind of a 328 00:18:33,640 --> 00:18:36,679 Speaker 1: wishy washy period I think for some time, and I 329 00:18:36,720 --> 00:18:39,399 Speaker 1: expected about I'm not sure this is about to be 330 00:18:39,440 --> 00:18:41,920 Speaker 1: bought for the next light up for the market so far. 331 00:18:42,359 --> 00:18:44,600 Speaker 1: Went Bush out with a note saying that Apple iPhone 332 00:18:44,600 --> 00:18:47,919 Speaker 1: production costs could rise to to three mark. How are 333 00:18:47,960 --> 00:18:50,280 Speaker 1: you thinking about the prospect of higher costs, how it 334 00:18:50,320 --> 00:18:52,520 Speaker 1: gets absorbed, whether it's in the margin or just a 335 00:18:52,600 --> 00:18:56,840 Speaker 1: full path through to the consumer, Jonathan Johnathan, I think 336 00:18:56,840 --> 00:18:58,119 Speaker 1: it's gonna be a little bit of both. I think 337 00:18:58,160 --> 00:19:00,080 Speaker 1: you're going to see some companies able to absorb but 338 00:19:00,119 --> 00:19:02,480 Speaker 1: and you're going to see some people probably pass it 339 00:19:02,480 --> 00:19:03,879 Speaker 1: on the consumer. But I think this is going to 340 00:19:03,960 --> 00:19:06,080 Speaker 1: put a wet blanket on a lot of demand here 341 00:19:06,600 --> 00:19:10,000 Speaker 1: UM And I think we've seen um bits of this 342 00:19:10,400 --> 00:19:12,320 Speaker 1: over time and some markets where they've been able to 343 00:19:12,359 --> 00:19:14,440 Speaker 1: absorb it. I just think we're running out of legs 344 00:19:14,480 --> 00:19:16,920 Speaker 1: to do that. And I think that's the reason why 345 00:19:16,960 --> 00:19:18,880 Speaker 1: you have more pessimism in the tech stocks and more 346 00:19:18,880 --> 00:19:22,720 Speaker 1: pessimism in the international community. And I again expect this 347 00:19:22,800 --> 00:19:26,119 Speaker 1: to not go away quickly. We had some self inflicted 348 00:19:26,320 --> 00:19:28,920 Speaker 1: um damaged by the President that he's been quickly able 349 00:19:28,960 --> 00:19:30,480 Speaker 1: to reverse and this is not going to be one 350 00:19:30,480 --> 00:19:32,639 Speaker 1: of those. Unfortunately, Well, what went through the demand in 351 00:19:32,760 --> 00:19:36,400 Speaker 1: China because I didn't get convincing guidance from the big semis, 352 00:19:36,720 --> 00:19:39,000 Speaker 1: the big chip makers in the last couple of weeks 353 00:19:39,040 --> 00:19:42,879 Speaker 1: about China for the year ahead, even before this escalation marks. 354 00:19:42,880 --> 00:19:46,239 Speaker 1: So what's your base case for demand? I think you're 355 00:19:46,280 --> 00:19:50,119 Speaker 1: going to see just a damp dampening right now. I 356 00:19:50,160 --> 00:19:53,200 Speaker 1: think globally, I think there's just too much skittishness as 357 00:19:53,200 --> 00:19:56,520 Speaker 1: it relates to pricing, and there's too much skittishness as 358 00:19:56,520 --> 00:19:59,359 Speaker 1: it relates to what is going on politically. UM and 359 00:19:59,400 --> 00:20:02,080 Speaker 1: I think probably has the most to lose, but I 360 00:20:02,080 --> 00:20:06,640 Speaker 1: think politically they have the most um the ability probably 361 00:20:06,680 --> 00:20:08,680 Speaker 1: to stay there the longest. And I think the president 362 00:20:08,720 --> 00:20:11,800 Speaker 1: here UM has less to lose, but I think he 363 00:20:11,840 --> 00:20:13,880 Speaker 1: has more to lose politically. It's kind of an interesting 364 00:20:13,960 --> 00:20:17,439 Speaker 1: juxtaposition between the two. I just think, Um, that's a 365 00:20:17,440 --> 00:20:20,800 Speaker 1: bad situation for a resolution, and that will just dampen things. 366 00:20:20,880 --> 00:20:23,480 Speaker 1: And that's a bad situation I think for the market. Marxist, 367 00:20:23,520 --> 00:20:25,359 Speaker 1: are the time left that we've got with you? I 368 00:20:25,480 --> 00:20:30,280 Speaker 1: have to ask why was Uber and Life missed priced 369 00:20:30,280 --> 00:20:38,240 Speaker 1: by intelligence, well meaning bankers. It's a great it's dollar question. UM. 370 00:20:38,280 --> 00:20:41,640 Speaker 1: I think the fee was bigger than that, but continue, Yes, 371 00:20:41,960 --> 00:20:45,320 Speaker 1: the optimism obviously was high. UM. I think there was 372 00:20:45,560 --> 00:20:49,119 Speaker 1: enough demand both institutionally, which we will talk about and 373 00:20:49,160 --> 00:20:52,480 Speaker 1: we will see very shortly by what institutions participated what 374 00:20:52,560 --> 00:20:55,520 Speaker 1: did not. UM. I think the retail hype, if you will, 375 00:20:55,720 --> 00:20:59,320 Speaker 1: was great. UM. But the reality is and I think 376 00:20:59,359 --> 00:21:01,480 Speaker 1: the most important thing as some of the later investors, 377 00:21:01,520 --> 00:21:04,600 Speaker 1: both publicly as well as the last private rounds are 378 00:21:04,720 --> 00:21:09,399 Speaker 1: well underwater well underwater lift as approaching lower than the 379 00:21:09,440 --> 00:21:12,600 Speaker 1: first print. And it reminds people that individual investors are 380 00:21:12,640 --> 00:21:16,520 Speaker 1: sometimes least likely UM, who should be participating in some 381 00:21:16,560 --> 00:21:19,320 Speaker 1: of these deals. And that's unfortunate, really unfortunate. Mark Leman, 382 00:21:19,359 --> 00:21:21,160 Speaker 1: thank you. We look to speak to you against soon. 383 00:21:21,280 --> 00:21:24,399 Speaker 1: Mr Lehman is with j MP Securities with decades of 384 00:21:24,480 --> 00:21:43,720 Speaker 1: experience on Left Coast equity and technology markets. Dana tells 385 00:21:43,760 --> 00:21:48,000 Speaker 1: you where us Dana, to John's point, what portion of 386 00:21:48,160 --> 00:21:51,960 Speaker 1: stores is from China? I mean like Big Box or 387 00:21:52,560 --> 00:21:58,359 Speaker 1: Bergdorf Goodman, what portions from China? High? Thank you for 388 00:21:58,400 --> 00:22:01,439 Speaker 1: having me today. UM. We just did a big piece 389 00:22:01,520 --> 00:22:04,320 Speaker 1: in terms of whether it's retail, whether it's apparel, what 390 00:22:04,520 --> 00:22:07,679 Speaker 1: percentage of all goods comes from China, And frankly, it 391 00:22:07,720 --> 00:22:11,080 Speaker 1: could be at least twenty five of all goods may 392 00:22:11,119 --> 00:22:15,200 Speaker 1: come in some former way from China, So it's significant. 393 00:22:15,440 --> 00:22:18,240 Speaker 1: And what we're seeing is companies are taking three different 394 00:22:18,240 --> 00:22:21,800 Speaker 1: actions in order to alleviate some of the pressure. And 395 00:22:21,880 --> 00:22:25,160 Speaker 1: none of this happens overnight. It happens over time. So 396 00:22:25,240 --> 00:22:28,680 Speaker 1: planning is key, and whether it's diversifying where your goods 397 00:22:28,720 --> 00:22:33,240 Speaker 1: come from, whether it's negotiating with the manufacturers who you 398 00:22:33,320 --> 00:22:35,840 Speaker 1: do business with in order for them to eat some 399 00:22:35,920 --> 00:22:39,879 Speaker 1: of the costs, and last and mostly, what companies do 400 00:22:39,960 --> 00:22:43,240 Speaker 1: not want to do is raise prices to the end consumer. 401 00:22:43,680 --> 00:22:45,960 Speaker 1: So there is a lot of work going on behind 402 00:22:46,000 --> 00:22:49,399 Speaker 1: the scenes in order to manage the exposure to China. 403 00:22:49,800 --> 00:22:52,159 Speaker 1: And it's been going on for a while. But it 404 00:22:52,240 --> 00:22:55,280 Speaker 1: doesn't happen overnight. So Dinna, I'm really interested in the 405 00:22:55,320 --> 00:22:59,080 Speaker 1: success right they might be having with negotiating with manufacturers 406 00:22:59,080 --> 00:23:02,600 Speaker 1: in China. Do those manufacturers have any margin to absorb 407 00:23:03,040 --> 00:23:07,200 Speaker 1: those higher costs? I think sometimes yes they do. We've 408 00:23:07,200 --> 00:23:10,040 Speaker 1: been hearing again and again from a lot of the 409 00:23:10,119 --> 00:23:13,720 Speaker 1: branded vendors and from a lot of the retailers that 410 00:23:14,040 --> 00:23:16,800 Speaker 1: factories over in China do not want to lose the 411 00:23:16,840 --> 00:23:20,240 Speaker 1: business that they currently have, so they're willing to work 412 00:23:20,320 --> 00:23:23,719 Speaker 1: with the terrorists and eat some of the cost and 413 00:23:23,840 --> 00:23:26,639 Speaker 1: share some of those burdens with the vendors or with 414 00:23:26,720 --> 00:23:29,800 Speaker 1: the retailers. What it all means in the numbers is 415 00:23:29,840 --> 00:23:32,280 Speaker 1: first going to settle out, but this is certainly a 416 00:23:32,320 --> 00:23:35,440 Speaker 1: continuing work in progress of the highest magnetudes. Does it 417 00:23:35,520 --> 00:23:38,320 Speaker 1: affect retail shares now or do you sort of have 418 00:23:38,359 --> 00:23:41,119 Speaker 1: to wait to see the math, the Excel spreadsheets, what 419 00:23:41,240 --> 00:23:45,600 Speaker 1: the cell side believes in such look at yesterday the 420 00:23:45,640 --> 00:23:49,479 Speaker 1: screen was all read basically it's act now, think later, 421 00:23:49,560 --> 00:23:53,200 Speaker 1: and yes, it is affecting retail stock prices now. It's 422 00:23:53,200 --> 00:23:57,760 Speaker 1: affecting comer stock prices now. Because the endgame of when 423 00:23:57,840 --> 00:24:01,040 Speaker 1: is it going to impact sales in the future. Let's 424 00:24:01,040 --> 00:24:05,080 Speaker 1: just take Macy's as an iconic big brand in a 425 00:24:05,119 --> 00:24:08,359 Speaker 1: cupper coffee. Technically, folks, it's an ugly church. Danny Telsey, 426 00:24:08,480 --> 00:24:11,240 Speaker 1: what is your target on Macy's. I mean, I think 427 00:24:11,280 --> 00:24:14,159 Speaker 1: Macy's they're going to release their numbers tomorrow. Jeff Kinnett 428 00:24:14,200 --> 00:24:17,400 Speaker 1: has a host of solid initiatives in place in order 429 00:24:17,440 --> 00:24:22,400 Speaker 1: to reinvigorate sales and reinvent reinvent the business. I think 430 00:24:22,440 --> 00:24:24,840 Speaker 1: that the first quarter was a tough quarter and you 431 00:24:24,880 --> 00:24:27,640 Speaker 1: have a lot of solid assets. Can you drive top 432 00:24:27,720 --> 00:24:30,760 Speaker 1: line growth remains the question. I think that's what everyone 433 00:24:30,800 --> 00:24:32,879 Speaker 1: will be focused on. So danna looking at the retail 434 00:24:32,960 --> 00:24:35,159 Speaker 1: universe right now, you've gone through those three options for 435 00:24:35,200 --> 00:24:37,920 Speaker 1: retailers on how they deal with the higher tariffs. Let's 436 00:24:37,920 --> 00:24:40,520 Speaker 1: say there are some companies that won't have the success 437 00:24:40,560 --> 00:24:43,679 Speaker 1: you're talking about with the manufacturers on the ground in China. 438 00:24:44,119 --> 00:24:46,800 Speaker 1: Let's say the worst case happens. Let's just explore that 439 00:24:46,800 --> 00:24:48,439 Speaker 1: that you have to pass it all through to the 440 00:24:48,440 --> 00:24:52,640 Speaker 1: final consumer. Which part of retail has the highest consumer 441 00:24:52,640 --> 00:24:56,520 Speaker 1: price tolerance where they do have that kind of flexibility 442 00:24:56,560 --> 00:24:58,960 Speaker 1: to have some passed through without damaging demand too much. 443 00:24:59,600 --> 00:25:02,359 Speaker 1: It's high end. It's those consumers that are the wealthiest, 444 00:25:02,359 --> 00:25:04,680 Speaker 1: and that's the high end. Keep in mind that most 445 00:25:04,760 --> 00:25:07,439 Speaker 1: luxury goods are not made in China. You have the 446 00:25:07,480 --> 00:25:10,520 Speaker 1: mid tier who has who has exposure and they can't 447 00:25:10,520 --> 00:25:13,879 Speaker 1: afford it, and they will definitely be watching what they 448 00:25:13,960 --> 00:25:17,200 Speaker 1: spend those dollars on. But the high end has the 449 00:25:17,280 --> 00:25:21,480 Speaker 1: greatest level of resistance to price increases, Dana, every listener 450 00:25:22,200 --> 00:25:27,400 Speaker 1: coast to coast in worldwide is observing empty storefront space, 451 00:25:27,560 --> 00:25:29,679 Speaker 1: and everybody's got their story on this. I don't want 452 00:25:29,680 --> 00:25:32,919 Speaker 1: to board people with it. But how does it adjust? 453 00:25:33,160 --> 00:25:36,919 Speaker 1: Does the real estate prices come down for retail? Is 454 00:25:36,920 --> 00:25:41,000 Speaker 1: the stuff permanently empty? What does Dana Telsey? I think 455 00:25:41,040 --> 00:25:44,000 Speaker 1: the five year plan of the tenure plan is on 456 00:25:44,080 --> 00:25:46,400 Speaker 1: all the empty square footage John and I see when 457 00:25:46,400 --> 00:25:49,320 Speaker 1: we go home in the Bentley A couple of very 458 00:25:49,400 --> 00:25:52,000 Speaker 1: nice A couple of things. I think Number one is 459 00:25:52,040 --> 00:25:55,920 Speaker 1: the fact that when you have top quality locations, top 460 00:25:56,000 --> 00:26:00,000 Speaker 1: quality space, there's always a value to it. And basically 461 00:26:00,040 --> 00:26:04,359 Speaker 1: it's the value that is brought there by the complementary tenants. 462 00:26:04,400 --> 00:26:07,119 Speaker 1: What you and I both see, whether it's on in 463 00:26:07,240 --> 00:26:09,800 Speaker 1: urban areas like that we're seeing here on Fifth Avenue. 464 00:26:10,160 --> 00:26:14,040 Speaker 1: We're seeing new usages develop, We're seeing a focus on services. 465 00:26:14,400 --> 00:26:19,120 Speaker 1: We're seeing restaurants, we're seeing spas, We're seeing activities where 466 00:26:19,400 --> 00:26:23,480 Speaker 1: services are definitely warranted. And that's where you're seeing consumers 467 00:26:23,520 --> 00:26:26,840 Speaker 1: gather in this world today where everyone is looking down 468 00:26:26,880 --> 00:26:29,520 Speaker 1: at their phone, and the first thing you wake up 469 00:26:29,560 --> 00:26:31,439 Speaker 1: in the morning you see is your mobile phone, and 470 00:26:31,640 --> 00:26:33,720 Speaker 1: the last thing before you go to bed is your 471 00:26:33,720 --> 00:26:37,160 Speaker 1: mobile phone. How do you get people to network and communicate. 472 00:26:37,680 --> 00:26:42,080 Speaker 1: That's why you're seeing more retail brands, whether it's incorporate restaurants, 473 00:26:42,080 --> 00:26:46,359 Speaker 1: whether it's incorporate other categories. We're seeing a changing of 474 00:26:46,400 --> 00:26:50,120 Speaker 1: the guard. And I think that good space where there 475 00:26:50,359 --> 00:26:55,199 Speaker 1: is large density of population always his value. Investing in 476 00:26:55,240 --> 00:26:59,840 Speaker 1: that space is essential to taket new again. Dana Chelsea seconds. 477 00:27:00,040 --> 00:27:03,159 Speaker 1: I need to spring refresh. I'm told by Bergdorff, what 478 00:27:03,320 --> 00:27:06,640 Speaker 1: is the must thing I'm buying this summer for various 479 00:27:06,640 --> 00:27:10,520 Speaker 1: and sunder boots? Nice? I mean you can. You can 480 00:27:10,520 --> 00:27:13,240 Speaker 1: get some boots. You're gonna get some sandals, You're gonna 481 00:27:13,240 --> 00:27:16,879 Speaker 1: get some denim jeans, a host of things these days. 482 00:27:17,280 --> 00:27:26,439 Speaker 1: Dana Telsey, go away, Dan Telsey, Oh you can see me, Jimmy. Yeah. 483 00:27:26,800 --> 00:27:32,520 Speaker 1: Dana Telsey. Love love having Dana Telsey on. Thanks for 484 00:27:32,600 --> 00:27:37,000 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 485 00:27:37,160 --> 00:27:42,919 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 486 00:27:43,440 --> 00:27:46,800 Speaker 1: I'm on Twitter at Tom Keane. Before the podcast, you 487 00:27:46,840 --> 00:28:00,280 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.