1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,119 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:47,599 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Jeffrey Rosenberg 11 00:00:47,680 --> 00:00:50,120 Speaker 2: joins us now with Blackrock, and it's not in a 12 00:00:50,159 --> 00:00:53,240 Speaker 2: FED day. We're all lathering about the FED, so Jeff, 13 00:00:53,280 --> 00:00:56,240 Speaker 2: we're not going there right now. Jeff, what are you 14 00:00:56,320 --> 00:01:02,680 Speaker 2: doing in a system system systematic bond portfolio, a mixed 15 00:01:02,760 --> 00:01:07,040 Speaker 2: multisector bond portfolio when spreads are priced to perfection? What 16 00:01:07,160 --> 00:01:10,560 Speaker 2: does your action plan is? Do you adjust into the 17 00:01:10,600 --> 00:01:11,240 Speaker 2: second half? 18 00:01:12,280 --> 00:01:14,920 Speaker 3: Yeah, it's a great question, Tom, because you know, spreads 19 00:01:14,959 --> 00:01:18,959 Speaker 3: are not particularly attractive. You know, we're at or through 20 00:01:19,160 --> 00:01:22,200 Speaker 3: mid cycle tights, so there's not a lot of kind 21 00:01:22,240 --> 00:01:27,240 Speaker 3: of anticipation of price performance from spread compression here and 22 00:01:27,319 --> 00:01:31,360 Speaker 3: so generally it's a more defensive positioning because you've got 23 00:01:31,360 --> 00:01:35,000 Speaker 3: more downside than upside. But your upside is basically the carry, 24 00:01:35,600 --> 00:01:38,639 Speaker 3: and the carry is attractive mostly for the total yield, 25 00:01:39,160 --> 00:01:43,040 Speaker 3: less for the spread. You know, So we've been allocating 26 00:01:43,200 --> 00:01:47,320 Speaker 3: you know, less than we would otherwise be to the 27 00:01:47,360 --> 00:01:50,760 Speaker 3: lower end of high yield. There's a bit of a 28 00:01:50,760 --> 00:01:55,760 Speaker 3: different story there, and a bifurcation, really big bifurcation kind 29 00:01:55,800 --> 00:01:59,040 Speaker 3: of mirrors the bifurcation that we see between say, you know, 30 00:01:59,120 --> 00:02:02,920 Speaker 3: small caps large caps in the equity world, and that 31 00:02:03,000 --> 00:02:06,000 Speaker 3: bifurcation is kind of double be's to triple c's. That's 32 00:02:06,040 --> 00:02:08,800 Speaker 3: where you really see a very different part. 33 00:02:08,600 --> 00:02:09,200 Speaker 2: Of the market. 34 00:02:09,320 --> 00:02:11,840 Speaker 3: So you got to play a lot more defense in 35 00:02:11,919 --> 00:02:15,280 Speaker 3: that part of the market. It is pricing appropriately for 36 00:02:15,440 --> 00:02:19,799 Speaker 3: the default risk aggregate. The default risks are very low, 37 00:02:19,840 --> 00:02:22,160 Speaker 3: so we feel pretty good about the spread exposure that 38 00:02:22,200 --> 00:02:25,720 Speaker 3: we're taking. We think you can take that spread exposure. 39 00:02:25,760 --> 00:02:28,320 Speaker 3: But again you got to think about that as as 40 00:02:28,440 --> 00:02:30,000 Speaker 3: carry and not price appreciation. 41 00:02:30,120 --> 00:02:34,440 Speaker 2: Paul Sween the here it is the Bloomberg Total Return Fund, 42 00:02:34,480 --> 00:02:37,720 Speaker 2: the old Lehman Index, Bloomberg has it now. It's definitive 43 00:02:38,040 --> 00:02:40,960 Speaker 2: a breakout price up, yield down. I got a little 44 00:02:40,960 --> 00:02:44,880 Speaker 2: better price performance and the total return index exactly. 45 00:02:46,320 --> 00:02:50,080 Speaker 4: Tom Jeffery got his master's in computational financier. 46 00:02:49,880 --> 00:02:51,320 Speaker 2: Curdie Curdie Melon. 47 00:02:51,400 --> 00:02:52,359 Speaker 4: I mean, that's meth right. 48 00:02:52,480 --> 00:02:54,359 Speaker 2: He sat there one day and he looked at Tepper 49 00:02:54,360 --> 00:02:56,960 Speaker 2: and he said, should I go robots or Temper? And 50 00:02:57,000 --> 00:02:58,520 Speaker 2: he went Temper. He went Tepperate. 51 00:02:58,639 --> 00:03:01,800 Speaker 4: I mean, who doesn't computation finance MC Carnegie mellon way 52 00:03:01,800 --> 00:03:04,720 Speaker 4: too much? Meth so, Jeffrey, Tom was calling out earlier 53 00:03:04,720 --> 00:03:07,400 Speaker 4: today he noticed that the Home Depot comes to the 54 00:03:07,400 --> 00:03:10,320 Speaker 4: market with a ten billion dollar debt offering. They had 55 00:03:10,360 --> 00:03:13,640 Speaker 4: forty seven billion dollars in demand. Talk to us about 56 00:03:13,639 --> 00:03:16,480 Speaker 4: the investment grade market. People are just dying to get 57 00:03:16,520 --> 00:03:18,680 Speaker 4: paper and get yield. Is that kind of where you 58 00:03:18,720 --> 00:03:20,680 Speaker 4: take away from a deal like Home Depot. 59 00:03:21,480 --> 00:03:21,799 Speaker 2: Yeah. 60 00:03:21,880 --> 00:03:24,240 Speaker 3: I mean if you look in the credit markets, and 61 00:03:24,280 --> 00:03:26,800 Speaker 3: I talked about, you know, probably the weakest part of 62 00:03:26,800 --> 00:03:29,239 Speaker 3: the public credit markets, which is kind of triple C 63 00:03:29,639 --> 00:03:32,000 Speaker 3: part of high yield, But if you talk about investment grade, 64 00:03:32,400 --> 00:03:36,040 Speaker 3: it's a very different story. And really again this mirrors 65 00:03:36,080 --> 00:03:39,000 Speaker 3: this kind of small cap large cap story in terms 66 00:03:39,040 --> 00:03:43,520 Speaker 3: of what company's interest rates sensitivity is. Right, A lot 67 00:03:43,560 --> 00:03:47,320 Speaker 3: of questions about, you know, where is the bite of 68 00:03:47,440 --> 00:03:50,400 Speaker 3: higher interest rates being felt, and it is really this 69 00:03:50,520 --> 00:03:53,760 Speaker 3: kind of bifurcation that we're seeing, and the investment grade 70 00:03:53,880 --> 00:03:58,280 Speaker 3: side is really well prepared and well positioned. Partly that 71 00:03:58,360 --> 00:04:00,400 Speaker 3: was because we had such a long peer period of 72 00:04:01,120 --> 00:04:06,080 Speaker 3: zero and low interest rates that allowed companies to really 73 00:04:06,120 --> 00:04:10,320 Speaker 3: fortify their balance sheets extend debt maturities. Most of the 74 00:04:10,360 --> 00:04:14,280 Speaker 3: investment grade cap stack is in fixed rate debt with 75 00:04:14,720 --> 00:04:20,520 Speaker 3: long maturities, and so you're seeing very strong interest coverage 76 00:04:20,960 --> 00:04:24,440 Speaker 3: performance even in an environment where you'd expect some degradation 77 00:04:24,600 --> 00:04:26,839 Speaker 3: given the increase in interest rates, and there's just not 78 00:04:26,960 --> 00:04:31,200 Speaker 3: that much rollover that's happening. So the fundamental side of 79 00:04:31,279 --> 00:04:36,120 Speaker 3: investment grade credit risk is very supportive. You have a 80 00:04:36,160 --> 00:04:41,400 Speaker 3: tremendous amount of demand and you haven't had an incentive 81 00:04:41,800 --> 00:04:44,479 Speaker 3: and this is the first case in a very long time, 82 00:04:44,520 --> 00:04:47,360 Speaker 3: you haven't had an incentive for issuers to kind of 83 00:04:47,480 --> 00:04:51,080 Speaker 3: front run or front load I should say front load. 84 00:04:51,560 --> 00:04:54,440 Speaker 3: They're refinancing. What they're doing is they're pushing it out 85 00:04:54,520 --> 00:04:57,839 Speaker 3: obviously because the coupons that they have on their balance 86 00:04:57,880 --> 00:05:00,200 Speaker 3: sheets are the lowest ones that they're going to have have, 87 00:05:00,839 --> 00:05:04,679 Speaker 3: So it's reducing the amount of kind of rollover issuance 88 00:05:04,720 --> 00:05:06,760 Speaker 3: that you would otherwise have. And so when you see 89 00:05:06,760 --> 00:05:09,000 Speaker 3: these new issues come to market, there's just there's just 90 00:05:09,040 --> 00:05:12,280 Speaker 3: a lot more demand for them. As you're highlighting in 91 00:05:12,320 --> 00:05:13,400 Speaker 3: the some debot case. 92 00:05:13,240 --> 00:05:16,880 Speaker 2: John Templeton years ago, there will be a shortage of bonds. 93 00:05:17,000 --> 00:05:20,680 Speaker 2: You say, demands insane. Paul correctly brings up home depot 94 00:05:20,680 --> 00:05:23,400 Speaker 2: where we had one hundred I can't remember now, we 95 00:05:23,440 --> 00:05:25,479 Speaker 2: had like a one hundred and thirty seven b pick 96 00:05:25,560 --> 00:05:28,520 Speaker 2: up in the forty year yield from what was expected, 97 00:05:28,560 --> 00:05:32,640 Speaker 2: a lower yield, a more attractive return because of demand. 98 00:05:33,040 --> 00:05:36,279 Speaker 2: Jeff Rosenberg, is there a shortage of bills, notes and bonds? 99 00:05:37,720 --> 00:05:40,040 Speaker 3: Well, Tom, we got to be a little careful about 100 00:05:40,080 --> 00:05:43,880 Speaker 3: about that, because you know, we're going to switch the 101 00:05:43,960 --> 00:05:49,080 Speaker 3: lens from corporate issuance, where balance sheets have been you know, strengthened, 102 00:05:49,320 --> 00:05:54,080 Speaker 3: they've extended debt maturities, they've been relatively conservative, specially on 103 00:05:54,120 --> 00:05:57,359 Speaker 3: the investment grade side, and then flip the lens to 104 00:05:57,480 --> 00:06:02,039 Speaker 3: the government side, US treasure issuance. We have a very 105 00:06:02,040 --> 00:06:06,960 Speaker 3: different picture, and obviously that's the fiscal debate, the unsustainability 106 00:06:06,960 --> 00:06:11,080 Speaker 3: of fiscal policy, the increasing amount that the private sector 107 00:06:11,120 --> 00:06:15,360 Speaker 3: will have to fund that issuance, and the eventual raising 108 00:06:15,839 --> 00:06:20,080 Speaker 3: of treasury coupon sizes you know, been hanging out kind 109 00:06:20,120 --> 00:06:22,400 Speaker 3: of in bills here, But we're going to have some 110 00:06:22,560 --> 00:06:25,279 Speaker 3: pressure eventually. We think that pressure will show up in 111 00:06:25,320 --> 00:06:27,400 Speaker 3: the back end, and it's not going to be a 112 00:06:27,440 --> 00:06:30,919 Speaker 3: case of too little supply. It's going to be a 113 00:06:30,960 --> 00:06:35,359 Speaker 3: case of the markets having to digest ever increasing amounts 114 00:06:35,360 --> 00:06:38,000 Speaker 3: of supply, and that we think, you know, is going 115 00:06:38,080 --> 00:06:41,360 Speaker 3: to end up being a pricing story for the back 116 00:06:41,440 --> 00:06:43,080 Speaker 3: end of the curve. So it's going to be a 117 00:06:43,160 --> 00:06:45,719 Speaker 3: different story than what you're talking about here for the 118 00:06:45,760 --> 00:06:46,719 Speaker 3: investment grade market. 119 00:06:46,720 --> 00:06:48,760 Speaker 2: And Jeff, the next time you're on, I want to 120 00:06:48,800 --> 00:06:51,839 Speaker 2: talk about medig Lean and Miller, who at your Carnegie 121 00:06:51,839 --> 00:06:56,560 Speaker 2: Mellon invented how we think about capital structure. But just 122 00:06:56,680 --> 00:06:59,479 Speaker 2: simply to say, are we going to see new corporate 123 00:06:59,520 --> 00:07:03,400 Speaker 2: bondation wins like what home Depot did yesterday? Yes, this 124 00:07:03,440 --> 00:07:06,360 Speaker 2: week looks like a thirty billion dollar week. Is one 125 00:07:06,360 --> 00:07:07,600 Speaker 2: of the reports from Bloomberg. 126 00:07:09,920 --> 00:07:15,280 Speaker 3: Yeah, I mean in terms of optimal debt structure. I think, 127 00:07:15,320 --> 00:07:18,080 Speaker 3: you know, particularly again on the investment grade side, a 128 00:07:18,080 --> 00:07:20,840 Speaker 3: lot of companies you know, got to the right point 129 00:07:21,240 --> 00:07:26,080 Speaker 3: given the prior interest rate tax regime. Another thing that 130 00:07:26,120 --> 00:07:28,280 Speaker 3: we're going to talk about here, you know, as we 131 00:07:28,440 --> 00:07:31,840 Speaker 3: moved through the election and the fiscal policy debate is 132 00:07:32,360 --> 00:07:35,320 Speaker 3: corporate taxes. And you know, it's the proper tax rate 133 00:07:35,400 --> 00:07:38,680 Speaker 3: and the deductibility of interest, you know, and and and 134 00:07:38,800 --> 00:07:41,120 Speaker 3: there were some changes in the tax code that limited 135 00:07:41,160 --> 00:07:45,960 Speaker 3: the deductibility for highly leveraged firms. That changes the optimal 136 00:07:46,120 --> 00:07:48,720 Speaker 3: default point. But for investment grade companies, as you see 137 00:07:48,720 --> 00:07:51,240 Speaker 3: that tax rate goes up, you know, you may see 138 00:07:51,480 --> 00:07:55,000 Speaker 3: you know, some more attractiveness in terms of issue ins 139 00:07:55,040 --> 00:07:57,600 Speaker 3: and that can shift how much issuance we're getting. 140 00:07:57,600 --> 00:08:01,840 Speaker 2: Are that tax we're out of Jeff Rosenberg never enough 141 00:08:01,840 --> 00:08:13,920 Speaker 2: time with Blackrock, thank you. We have in the studios 142 00:08:14,480 --> 00:08:17,560 Speaker 2: the number one voice and retail and we're gonna go 143 00:08:17,640 --> 00:08:20,880 Speaker 2: to luxury because that's what's out there. 144 00:08:21,440 --> 00:08:22,640 Speaker 4: And Tom another CJ. 145 00:08:22,760 --> 00:08:25,880 Speaker 2: Lawrence, Yeah, I know, she's gifted. I mean, she's gifted. 146 00:08:25,920 --> 00:08:26,120 Speaker 1: C J. 147 00:08:26,280 --> 00:08:28,440 Speaker 2: Lawrence and all that. Dan, I'm gonna cut to the chase. 148 00:08:28,880 --> 00:08:32,679 Speaker 2: The Lewis Viewton store at fifty seventh Street in Fifth 149 00:08:32,720 --> 00:08:36,720 Speaker 2: Avenue is a gorgeous modern white glass store of windows 150 00:08:36,720 --> 00:08:40,480 Speaker 2: that I can't afford our No wants to bulldoze it 151 00:08:40,640 --> 00:08:45,800 Speaker 2: and build a new building. Five people have said why why? 152 00:08:46,400 --> 00:08:51,280 Speaker 1: The reason why companies, especially luxury companies, reinvest because the 153 00:08:51,360 --> 00:08:53,920 Speaker 1: ante keeps going up and you have to be able 154 00:08:53,960 --> 00:08:57,800 Speaker 1: to give new experiences to that luxury consumers that they'll 155 00:08:57,840 --> 00:09:01,000 Speaker 1: pay those dollars for those luxury items. Look what he's 156 00:09:01,000 --> 00:09:03,880 Speaker 1: got across the street. He spent a fortune on Tiffany. 157 00:09:04,240 --> 00:09:07,400 Speaker 1: The Louis Vuitton store hasn't been touched in years. Right, 158 00:09:07,600 --> 00:09:10,600 Speaker 1: if he needs to be have another brand that is 159 00:09:10,679 --> 00:09:13,079 Speaker 1: on the same part you have to invest. 160 00:09:12,960 --> 00:09:15,960 Speaker 2: Is luxury the AI we don't talk about. I'm looking 161 00:09:16,000 --> 00:09:21,000 Speaker 2: at Aermez's estimated forward pe. It comes down Paul to 162 00:09:21,080 --> 00:09:24,120 Speaker 2: forty seven times earnings. I mean, help me here with 163 00:09:24,200 --> 00:09:26,440 Speaker 2: the effervescence of the luxury business. 164 00:09:26,920 --> 00:09:29,880 Speaker 1: Is it in Nvidia like it feels like it is 165 00:09:30,040 --> 00:09:33,840 Speaker 1: for one reason, the creative products that they have, but 166 00:09:33,960 --> 00:09:37,640 Speaker 1: the continued expanding customer base. Baby boomers, one of the 167 00:09:37,679 --> 00:09:41,320 Speaker 1: wealthiest generations, is passing down that wealth to millennials. You 168 00:09:41,360 --> 00:09:44,320 Speaker 1: look at the Chinese consumer and see what's. 169 00:09:44,040 --> 00:09:47,360 Speaker 2: China doing right now? It's a bloom bloom. I know 170 00:09:47,800 --> 00:09:49,880 Speaker 2: you're the only one I know optimistic on. 171 00:09:49,840 --> 00:09:52,560 Speaker 1: China now, not optimistic on it. You were still having 172 00:09:53,080 --> 00:09:56,480 Speaker 1: very cautious trends out of China where the Chinese are spending, 173 00:09:56,640 --> 00:10:00,240 Speaker 1: or within China or within other local Asia regions. Not 174 00:10:00,320 --> 00:10:02,839 Speaker 1: seeing a return really to Europe. You're not seeing a 175 00:10:02,880 --> 00:10:03,760 Speaker 1: return to the US. 176 00:10:04,040 --> 00:10:05,800 Speaker 4: Yeah, I see that when I walk walk to Penn 177 00:10:05,840 --> 00:10:07,680 Speaker 4: Station every day. I don't see them on Fifth anyone. 178 00:10:07,679 --> 00:10:09,559 Speaker 2: So if you're gonna walk to Penn Station today to 179 00:10:09,760 --> 00:10:13,560 Speaker 2: sit on this chair, you're are you taking this Korski home? Yeah? 180 00:10:13,760 --> 00:10:14,240 Speaker 2: I might have to. 181 00:10:14,280 --> 00:10:16,360 Speaker 4: I might be going to Hoboken today. Little problems with 182 00:10:16,400 --> 00:10:20,040 Speaker 4: Penn Station here today, Dana, talk to us about the 183 00:10:20,200 --> 00:10:22,760 Speaker 4: US consumer. Here, we got some retail sales numbers say 184 00:10:22,760 --> 00:10:25,679 Speaker 4: a little bit weaker than forecast. Talk to us about 185 00:10:26,040 --> 00:10:29,040 Speaker 4: I hear there's a bifurcation in the marketplace with the consumer. 186 00:10:29,280 --> 00:10:32,280 Speaker 1: So overall I call the US consumer and today's numbers 187 00:10:32,280 --> 00:10:35,800 Speaker 1: definitely highlight it squishy. We have a squishy US consumer, 188 00:10:36,160 --> 00:10:38,920 Speaker 1: and frankly, it's every income level where we've seen a 189 00:10:39,000 --> 00:10:42,480 Speaker 1: moderation and spend and we've seen that trade down. Look 190 00:10:42,520 --> 00:10:46,040 Speaker 1: where the big sales increases are coming. Same store sales 191 00:10:46,080 --> 00:10:50,000 Speaker 1: increases of better than three percent at the off pricers 192 00:10:50,240 --> 00:10:54,040 Speaker 1: like TJX Ross Stores Burlington, they're getting the benefit of 193 00:10:54,040 --> 00:10:55,760 Speaker 1: the trade down. And you take a look at the 194 00:10:55,800 --> 00:11:00,760 Speaker 1: discounters they're getting that too. But overall, luxury sales are moderating. 195 00:11:01,080 --> 00:11:03,520 Speaker 1: If you have newness and new trends, it's working. 196 00:11:03,800 --> 00:11:04,000 Speaker 2: Tom. 197 00:11:04,000 --> 00:11:07,319 Speaker 1: You're gonna like this wide leg denim jeans. The wider, 198 00:11:07,360 --> 00:11:09,440 Speaker 1: the better, and that's the trend out there. 199 00:11:09,800 --> 00:11:11,120 Speaker 4: Got better than skinny jeans. 200 00:11:11,240 --> 00:11:14,360 Speaker 2: We go to surveillance, Fashion Icon and Lisa Mattel. Lisa, 201 00:11:14,360 --> 00:11:16,319 Speaker 2: we're going to see you in wye jeans. 202 00:11:16,320 --> 00:11:18,840 Speaker 5: Correct. I was told by my daughter that I am 203 00:11:18,880 --> 00:11:21,960 Speaker 5: not cool because I wear skinny jeans. I have to 204 00:11:22,000 --> 00:11:23,600 Speaker 5: go with the wide leg jeans in today. 205 00:11:23,760 --> 00:11:26,840 Speaker 2: See what you learn on surveillance, rich make the single 206 00:11:26,880 --> 00:11:31,600 Speaker 2: best idea with data and and and Lisa today, Paul continue, 207 00:11:31,720 --> 00:11:33,040 Speaker 2: So if. 208 00:11:32,920 --> 00:11:35,920 Speaker 4: I look at a Walmart, for example, what am I 209 00:11:35,920 --> 00:11:38,400 Speaker 4: seeing at the Walmart basket? What's in a Walmart basket 210 00:11:38,440 --> 00:11:41,960 Speaker 4: these days? Is it more essentials? Let's don't discretion. 211 00:11:42,160 --> 00:11:44,439 Speaker 1: So think about what Walmart is. Nearly sixty percent of 212 00:11:44,480 --> 00:11:47,280 Speaker 1: their business is grocery. Wow, so you're getting grocery in 213 00:11:47,320 --> 00:11:51,199 Speaker 1: there plus the other merchandise, and it's a combination of both. 214 00:11:51,520 --> 00:11:54,760 Speaker 1: And you're seeing consumers today, even with essentials, they're trading 215 00:11:54,800 --> 00:11:57,840 Speaker 1: down to private label. I've heard about the pet stores recently. 216 00:11:58,120 --> 00:12:01,160 Speaker 1: We're consumers for their pets. They're trading down to private 217 00:12:01,240 --> 00:12:02,480 Speaker 1: label goods for their pets. 218 00:12:02,480 --> 00:12:04,760 Speaker 2: Even we'll talk about single best idea, but I want 219 00:12:04,800 --> 00:12:09,079 Speaker 2: to talk about the big money that everybody that follows 220 00:12:09,080 --> 00:12:11,679 Speaker 2: surveillance follows with luxury. I remember, I think it was 221 00:12:11,760 --> 00:12:14,760 Speaker 2: Laura Piano. It was like a billion dollar transaction. It 222 00:12:14,880 --> 00:12:18,280 Speaker 2: changed the industry. This is years and years ago. Todds 223 00:12:18,400 --> 00:12:21,400 Speaker 2: of Italy, which I would say is pretty conventional brand, 224 00:12:22,040 --> 00:12:25,000 Speaker 2: spend over four hundred million dollars on a shoe brand 225 00:12:25,040 --> 00:12:30,640 Speaker 2: nobody knows in America Roger Vivier. Explain why someone spent 226 00:12:31,040 --> 00:12:34,679 Speaker 2: four hundred million dollars on a shoe that basically no 227 00:12:34,720 --> 00:12:36,680 Speaker 2: one knows in America. 228 00:12:36,080 --> 00:12:39,920 Speaker 1: Because what they see is the opportunity and acquire Roger Vivier. 229 00:12:40,320 --> 00:12:43,280 Speaker 1: They feel that they have the creative talent to enhance 230 00:12:43,320 --> 00:12:47,120 Speaker 1: the brand, open physical stores and distribution and make it 231 00:12:47,160 --> 00:12:50,280 Speaker 1: a global brand. And they feel that their insights into 232 00:12:50,360 --> 00:12:53,640 Speaker 1: the global customer will help drive that brand. When you 233 00:12:53,679 --> 00:12:57,000 Speaker 1: think of brands that are smaller that where can you grow? 234 00:12:57,280 --> 00:13:00,880 Speaker 1: I mean, I think one of LVMH's most significant transactions 235 00:13:00,880 --> 00:13:03,600 Speaker 1: of the past few years has to be Tiffany. And 236 00:13:03,640 --> 00:13:04,840 Speaker 1: look how they're reinventing. 237 00:13:05,080 --> 00:13:06,160 Speaker 2: Is that working for them? 238 00:13:06,320 --> 00:13:10,040 Speaker 1: Yes, they're getting more profit out of Tiffany. It's catering 239 00:13:10,080 --> 00:13:13,440 Speaker 1: to a younger customer. Now they're modernizing and updating the 240 00:13:13,480 --> 00:13:16,480 Speaker 1: stores and capturing a wider customer base. 241 00:13:17,160 --> 00:13:18,439 Speaker 2: Tom Roger Vivier. 242 00:13:18,559 --> 00:13:19,800 Speaker 4: It's on East sixtieth Street. 243 00:13:20,600 --> 00:13:21,920 Speaker 5: Can go there and check it out today. 244 00:13:22,040 --> 00:13:25,640 Speaker 2: Yes, she was there yesterday. It's why I brought it. 245 00:13:25,679 --> 00:13:28,360 Speaker 2: Is it promotional right now? Now? I walked in the 246 00:13:28,400 --> 00:13:31,760 Speaker 2: door and said, I'm saving you money? And is luxury 247 00:13:31,840 --> 00:13:32,960 Speaker 2: promotional right now? 248 00:13:33,000 --> 00:13:33,080 Speaker 5: Now? 249 00:13:33,320 --> 00:13:36,920 Speaker 1: Inventory levels are lean for luxury. It's not promotional. The 250 00:13:37,080 --> 00:13:40,040 Speaker 1: changes you have one of them raising prices like Chanelle. 251 00:13:40,200 --> 00:13:43,800 Speaker 1: The others are holding and they're working on newness in 252 00:13:43,880 --> 00:13:44,800 Speaker 1: order to drive demand. 253 00:13:45,440 --> 00:13:46,920 Speaker 2: I don't have it in front of me. I'm sorry, 254 00:13:46,960 --> 00:13:49,760 Speaker 2: I'm not brief done it but Dana Telsey, did Chanelle 255 00:13:49,800 --> 00:13:51,520 Speaker 2: just throw somebody out on the street and they're going 256 00:13:51,600 --> 00:13:55,239 Speaker 2: to bring in somebody new for design and all that looks. 257 00:13:54,960 --> 00:13:58,439 Speaker 1: Like someone new is coming for over thirty years. No, 258 00:13:58,800 --> 00:13:59,400 Speaker 1: it is not me. 259 00:14:00,400 --> 00:14:02,800 Speaker 2: What does Chanelle need to do to recapture what they have? 260 00:14:03,440 --> 00:14:05,200 Speaker 1: I mean, they're doing pretty well in terms of the 261 00:14:05,240 --> 00:14:09,199 Speaker 1: gains they had, but I think overall the continued modernization 262 00:14:09,360 --> 00:14:13,000 Speaker 1: and cut out the big price increases. They're not our mes. Yes, 263 00:14:13,040 --> 00:14:15,920 Speaker 1: they're a luxury brand, but you can't go to the 264 00:14:15,960 --> 00:14:17,079 Speaker 1: ilk of something. 265 00:14:17,720 --> 00:14:20,520 Speaker 2: And Valentine and all the other outrageously expensive ones are 266 00:14:20,560 --> 00:14:21,800 Speaker 2: all going to pull back prices. 267 00:14:22,040 --> 00:14:24,840 Speaker 1: No, they're not pulling back prices. They're at the right level. 268 00:14:25,160 --> 00:14:28,280 Speaker 1: Chanelle one higher than everybody else trying to capture a 269 00:14:28,320 --> 00:14:30,680 Speaker 1: mez and our mez is in a different league than anybody. 270 00:14:31,120 --> 00:14:33,960 Speaker 4: I didn't know that single best idea anybody talking to 271 00:14:33,960 --> 00:14:35,200 Speaker 4: your clients about this the target. 272 00:14:36,560 --> 00:14:38,960 Speaker 1: There's a couple that we're talking about Bathroom body Works 273 00:14:39,000 --> 00:14:41,160 Speaker 1: and the inflection point to growth in the second half 274 00:14:41,200 --> 00:14:43,880 Speaker 1: of the year. We're talking about t j X and 275 00:14:43,920 --> 00:14:48,200 Speaker 1: the continued drum beat of increasing market share and increasing gains. 276 00:14:48,600 --> 00:14:52,200 Speaker 1: We're talking about Costco because of the market share at gains. 277 00:14:52,480 --> 00:14:54,040 Speaker 1: And we're also you know, we're talking about you talked 278 00:14:54,040 --> 00:14:55,800 Speaker 1: about Denim Jean's, We're talking about Levi's. 279 00:15:00,600 --> 00:15:02,920 Speaker 2: You're in San Francisco right now saying we got to 280 00:15:02,920 --> 00:15:04,480 Speaker 2: go why jeans for Lisa Matail? 281 00:15:04,640 --> 00:15:07,360 Speaker 1: Yeah, and it's working. Not only are they doing wide 282 00:15:07,400 --> 00:15:10,200 Speaker 1: legs for Lisa, but take a look at their wholesale 283 00:15:10,280 --> 00:15:14,200 Speaker 1: business where they've strengthened the distribution channels that they're going through. 284 00:15:14,400 --> 00:15:17,680 Speaker 1: They're doing outfitting top to bottom with lifestyle, buy a 285 00:15:17,760 --> 00:15:20,720 Speaker 1: shirt and buy the Janes, not just one, and they're 286 00:15:20,760 --> 00:15:22,640 Speaker 1: capturing more of the women's customer. 287 00:15:23,080 --> 00:15:27,720 Speaker 2: And finally, the miracle that is Abercranbrie and Fitch. Are 288 00:15:27,760 --> 00:15:31,800 Speaker 2: you kidding me? How did they? I mean it's like GameStop? 289 00:15:32,200 --> 00:15:34,920 Speaker 2: How did they do? And this is legit? How Dana 290 00:15:35,000 --> 00:15:38,440 Speaker 2: Telsey over on Fifth Avenue they had Hunky Boy out 291 00:15:38,520 --> 00:15:41,520 Speaker 2: in the street lined up. That all went away. Then 292 00:15:41,600 --> 00:15:42,600 Speaker 2: what's happened doubled? 293 00:15:42,640 --> 00:15:45,960 Speaker 1: Then what happened? Fran Horowitz came in as CEO she 294 00:15:46,160 --> 00:15:50,080 Speaker 1: was there since twenty fourteen. Promoted to CEO. COVID gave 295 00:15:50,080 --> 00:15:52,800 Speaker 1: her the time to assess data the store wasn't working. 296 00:15:53,160 --> 00:15:53,720 Speaker 2: What do we do? 297 00:15:54,120 --> 00:15:56,760 Speaker 1: She took a look at where she wanted her customer 298 00:15:56,800 --> 00:15:59,040 Speaker 1: to be twenty five to thirty five? What do you 299 00:15:59,080 --> 00:16:01,920 Speaker 1: need to give them? Outfits not items? Where do you 300 00:16:01,960 --> 00:16:05,760 Speaker 1: need to sell it in stores that are inviting? Took 301 00:16:05,760 --> 00:16:09,280 Speaker 1: away the fragrance, turned up the lights and now you 302 00:16:09,280 --> 00:16:12,040 Speaker 1: can buy outfits and you wouldn't know it's the Abercrombie 303 00:16:12,080 --> 00:16:12,440 Speaker 1: the past. 304 00:16:12,560 --> 00:16:16,760 Speaker 2: One final question, No, no, I'm just amazed by one 305 00:16:16,800 --> 00:16:19,760 Speaker 2: final question. I think it's supportant for our Boston audience, 306 00:16:19,800 --> 00:16:23,040 Speaker 2: good morning, But across this nation? What is the pixie 307 00:16:23,120 --> 00:16:27,640 Speaker 2: doest of TJX? How did they execute where so many 308 00:16:27,680 --> 00:16:28,400 Speaker 2: others failed? 309 00:16:28,760 --> 00:16:29,200 Speaker 3: You know what? 310 00:16:29,480 --> 00:16:32,760 Speaker 1: They're people. They have the tenure of talent that have 311 00:16:32,880 --> 00:16:37,000 Speaker 1: relationships with brands and merchants that they're able to assort 312 00:16:37,040 --> 00:16:41,880 Speaker 1: the store better than others, capturing a wide price price assortment, 313 00:16:42,240 --> 00:16:46,200 Speaker 1: capturing better brands and a value and opening compelling stores 314 00:16:46,240 --> 00:16:47,080 Speaker 1: in great locations. 315 00:16:47,160 --> 00:16:50,000 Speaker 2: What are the department stores that your heritage, your heart 316 00:16:50,040 --> 00:16:51,560 Speaker 2: and soul is Bergdorf? Goodman? 317 00:16:51,600 --> 00:16:52,320 Speaker 1: Is it? 318 00:16:52,360 --> 00:16:54,320 Speaker 2: Is it around in five years? 319 00:16:54,440 --> 00:16:56,320 Speaker 1: I think Bergdorf will be around in five years. I 320 00:16:56,360 --> 00:16:57,760 Speaker 1: don't know who's going to own it. But I think 321 00:16:57,800 --> 00:16:59,080 Speaker 1: it'll be around in five years. 322 00:16:59,480 --> 00:17:01,680 Speaker 2: Do we still want to shop at department stores or 323 00:17:01,760 --> 00:17:04,000 Speaker 2: we you know, is is Lisa going to be over 324 00:17:04,080 --> 00:17:06,000 Speaker 2: at whatever? It's vivier today? 325 00:17:06,560 --> 00:17:09,160 Speaker 1: You need new life to be breathed into the department 326 00:17:09,200 --> 00:17:10,919 Speaker 1: stores because otherwise, what would you do? 327 00:17:11,119 --> 00:17:13,639 Speaker 2: What would you do to your burg Lisa put the 328 00:17:13,680 --> 00:17:18,119 Speaker 2: windows back on Fifth Avenue? That was Daylight, our original. 329 00:17:19,119 --> 00:17:22,080 Speaker 1: On Fifth Avenue? Burgdorfs has What would you do to Burgdorf? 330 00:17:22,680 --> 00:17:25,040 Speaker 1: I mean to Burgdorfs, I'd almost take a look at 331 00:17:25,080 --> 00:17:29,280 Speaker 1: my customer base, invite them in capturing that younger customer base. 332 00:17:29,560 --> 00:17:32,639 Speaker 1: Have events in the store and see what exclusives and 333 00:17:32,720 --> 00:17:35,880 Speaker 1: limited collections designers can give so that you can only 334 00:17:35,880 --> 00:17:36,760 Speaker 1: get it at Burgdorfs. 335 00:17:36,800 --> 00:17:38,560 Speaker 2: Would I know by them. 336 00:17:38,440 --> 00:17:40,360 Speaker 1: That's what it feels like. Would be the one look 337 00:17:40,359 --> 00:17:42,760 Speaker 1: at lots of Mauritane in Paris. If you visit a 338 00:17:42,800 --> 00:17:46,000 Speaker 1: lost of Mauritane in Paris, We're going to it's beautiful. 339 00:17:46,119 --> 00:17:48,679 Speaker 2: Absolutely, We're taking the show to Paris in the fall. 340 00:17:48,720 --> 00:17:49,240 Speaker 1: I'll join you. 341 00:17:49,400 --> 00:17:52,280 Speaker 2: proNT right at the top of front on the old restaurant. 342 00:17:51,800 --> 00:17:52,400 Speaker 5: Which is unning. 343 00:17:53,160 --> 00:17:53,920 Speaker 1: Yes, it's done. 344 00:17:54,080 --> 00:17:57,040 Speaker 2: Kill that. Don't use clothes. I mean, all the kids, Lisa, 345 00:17:57,440 --> 00:17:59,200 Speaker 2: they want to go to you. They don't want to 346 00:17:59,240 --> 00:18:02,440 Speaker 2: go to or whatever. They want to go to hand 347 00:18:02,440 --> 00:18:03,360 Speaker 2: me down store. 348 00:18:03,240 --> 00:18:06,400 Speaker 5: The consignment shops because you can get the great deal, 349 00:18:06,440 --> 00:18:08,879 Speaker 5: the great brands for a lower price and old is 350 00:18:08,920 --> 00:18:09,920 Speaker 5: new again. There you go. 351 00:18:10,400 --> 00:18:12,240 Speaker 2: Okay, Dana Telsea, thank you so much. 352 00:18:12,359 --> 00:18:12,639 Speaker 4: Thank you. 353 00:18:12,680 --> 00:18:16,600 Speaker 2: It's great. And if Paul said, what what Telsey Advisory 354 00:18:16,640 --> 00:18:18,800 Speaker 2: Group did? I remember the first day she came out, 355 00:18:18,800 --> 00:18:20,000 Speaker 2: I was like, yeah, you know whatever. 356 00:18:20,160 --> 00:18:22,119 Speaker 4: Well, it's interesting, Thomas. You know, there was a period 357 00:18:22,119 --> 00:18:24,200 Speaker 4: of time, maybe fifteen years ago where a lot of 358 00:18:24,240 --> 00:18:27,960 Speaker 4: animals left his cell side because they changed the business rules. 359 00:18:28,000 --> 00:18:29,960 Speaker 4: Elliot Spitzer all that with the investment banking took a 360 00:18:29,960 --> 00:18:31,359 Speaker 4: lot of the economics out of the business. Whole lot 361 00:18:31,359 --> 00:18:33,199 Speaker 4: of animals went to the cells, went to set up 362 00:18:33,200 --> 00:18:36,879 Speaker 4: their own shops. I'm talking dozens of ir number one animals. 363 00:18:37,040 --> 00:18:37,920 Speaker 2: Yes, I can. 364 00:18:37,680 --> 00:18:41,320 Speaker 4: Count three or four on my hand that are survived 365 00:18:41,320 --> 00:18:44,560 Speaker 4: and thrived. Dana's one of them surviving, yeah, and and 366 00:18:44,760 --> 00:18:47,680 Speaker 4: and thriving. You know, it's just it's a tough business. 367 00:18:47,760 --> 00:18:50,000 Speaker 2: You should see her do a channel check like in 368 00:18:50,040 --> 00:18:52,959 Speaker 2: your mess. Oh my god. The whole place that the 369 00:18:53,040 --> 00:18:55,600 Speaker 2: staff freezes comes in the door. They just. 370 00:18:57,240 --> 00:18:59,639 Speaker 4: Job their jobs, go to the malls and go to 371 00:18:59,720 --> 00:19:01,680 Speaker 4: store and I don't know, and they do that on 372 00:19:01,800 --> 00:19:03,119 Speaker 4: like that Friday after Thanksgiving. 373 00:19:03,240 --> 00:19:06,119 Speaker 2: It's seventy percent of our economy. Are you bullish on 374 00:19:06,200 --> 00:19:07,000 Speaker 2: retail quickly? 375 00:19:07,359 --> 00:19:07,600 Speaker 3: Yeah? 376 00:19:07,640 --> 00:19:11,000 Speaker 1: I think there's opportunities in retail. You know why singles 377 00:19:11,400 --> 00:19:14,040 Speaker 1: come on see? I mean it definitely is TJX. It's 378 00:19:14,040 --> 00:19:15,199 Speaker 1: going to keep moving higher. 379 00:19:15,560 --> 00:19:17,360 Speaker 2: Dana, thank you so much. 380 00:19:17,359 --> 00:19:18,280 Speaker 4: Just had a nice run. 381 00:19:21,400 --> 00:19:24,040 Speaker 2: This is a joy. It's a three hour conversation with 382 00:19:24,160 --> 00:19:27,560 Speaker 2: Russier Sharma with a book talked about what went wrong 383 00:19:27,640 --> 00:19:31,719 Speaker 2: with capitalism. Can't say enough about it. Hugely readable, like 384 00:19:31,760 --> 00:19:34,680 Speaker 2: all let's work you redefine the commodity super psycle years 385 00:19:34,720 --> 00:19:38,000 Speaker 2: ago holds court at the Rockefeller Foundation. It's been way 386 00:19:38,040 --> 00:19:40,879 Speaker 2: too long. Come back again. We'll do a two segment 387 00:19:41,200 --> 00:19:45,080 Speaker 2: interview to talk about fourteen other things. Megan Decai at 388 00:19:45,320 --> 00:19:50,160 Speaker 2: LSE has a definitive book on the success and failure 389 00:19:50,240 --> 00:19:55,959 Speaker 2: of Marxism called Marxist Revenge. The exploitation is still in 390 00:19:56,000 --> 00:19:58,080 Speaker 2: the air, and there's a lot of people out there 391 00:19:58,119 --> 00:20:02,800 Speaker 2: that feel with capitalism. What went wrong with capitalism is 392 00:20:02,840 --> 00:20:07,200 Speaker 2: an exploitation of so many within society. Is that where 393 00:20:07,240 --> 00:20:10,480 Speaker 2: we are today, back with MAGNETSI and Marx. 394 00:20:10,760 --> 00:20:13,440 Speaker 6: No Tom, I make exactly the opposite point in the book, 395 00:20:13,640 --> 00:20:16,359 Speaker 6: which is the fact that capitalism is no longer being 396 00:20:16,400 --> 00:20:19,080 Speaker 6: allowed to work. What we have today is a very 397 00:20:19,200 --> 00:20:23,040 Speaker 6: distorted form of capitalism. Capitalism at its core is supposed 398 00:20:23,040 --> 00:20:28,240 Speaker 6: to be pro competition, pro churn, pro creative destruction. Instead, 399 00:20:28,280 --> 00:20:31,399 Speaker 6: what we have today is a capitalism that is viewed 400 00:20:31,720 --> 00:20:34,960 Speaker 6: as being pro big business, pro incumbent. And what I 401 00:20:35,040 --> 00:20:37,600 Speaker 6: do in the book is to trace how over the 402 00:20:37,640 --> 00:20:41,919 Speaker 6: last one hundred years capitalism has been distorted systematically, decade 403 00:20:41,960 --> 00:20:44,639 Speaker 6: after decade. So in terms of what we have today 404 00:20:45,040 --> 00:20:48,760 Speaker 6: is in a way of socialized risk for everyone, most 405 00:20:48,760 --> 00:20:51,640 Speaker 6: gallingly for the rich, which Bernie Sanders of course called 406 00:20:51,680 --> 00:20:54,560 Speaker 6: socialism for the rich. But I think that it's socialized 407 00:20:54,640 --> 00:20:57,679 Speaker 6: risk across the spectrum. And so therefore we have a 408 00:20:57,760 --> 00:20:59,960 Speaker 6: very distorted form of capitalism. That's the thrust. 409 00:21:00,000 --> 00:21:03,680 Speaker 2: So if we have Trump Biden, let's assume that Biden 410 00:21:03,760 --> 00:21:07,000 Speaker 2: is going to continue the theme you're talking about, Can 411 00:21:07,080 --> 00:21:11,040 Speaker 2: Trump bring a second term Trump? Can he bring an 412 00:21:11,080 --> 00:21:13,680 Speaker 2: adjustment to a more constructive capitalism? 413 00:21:14,000 --> 00:21:17,320 Speaker 6: Well, Unfortunately, the evidence doesn't say so based on the 414 00:21:17,320 --> 00:21:19,520 Speaker 6: first term, because what did he do in the first term? 415 00:21:19,560 --> 00:21:22,520 Speaker 6: Some of the stuff that I think sounded very good, 416 00:21:22,560 --> 00:21:25,000 Speaker 6: like let's do deregulation in terms of the fact that 417 00:21:25,440 --> 00:21:30,200 Speaker 6: for every two for every regulation that we put in place, 418 00:21:30,280 --> 00:21:33,040 Speaker 6: let's withdraw to instead. By the end of the term, 419 00:21:33,280 --> 00:21:36,760 Speaker 6: Trump had instituted as many regulations as past precedents. As 420 00:21:36,760 --> 00:21:38,800 Speaker 6: I say in the book that one of the most 421 00:21:38,880 --> 00:21:43,440 Speaker 6: telling statistics is that over the last twenty years, America 422 00:21:44,080 --> 00:21:47,840 Speaker 6: has instituted three thousand new regulations a year. That's really 423 00:21:47,840 --> 00:21:51,840 Speaker 6: a huge increase, and it's withdrawn in total only twenty 424 00:21:51,960 --> 00:21:55,720 Speaker 6: regulations over twenty years. So this is a spectacular sort 425 00:21:55,760 --> 00:21:58,800 Speaker 6: of increase in the regulatory environment. But it's the suite 426 00:21:58,840 --> 00:22:01,040 Speaker 6: of government habits that as speak about in the book, 427 00:22:01,320 --> 00:22:04,280 Speaker 6: including the spending as a share of the economy, which 428 00:22:04,320 --> 00:22:07,800 Speaker 6: we all know about, the bailout culture, you know that 429 00:22:07,840 --> 00:22:09,760 Speaker 6: we speak about. So I think that you know, it's 430 00:22:09,760 --> 00:22:13,640 Speaker 6: the suite of government habits, the micromanagement of the business cycle. 431 00:22:14,560 --> 00:22:16,320 Speaker 6: And I think that that is what we need to 432 00:22:16,400 --> 00:22:19,320 Speaker 6: understand that what we have today is a very distorted 433 00:22:19,400 --> 00:22:22,760 Speaker 6: version of capitalism, very different from anything the founders had 434 00:22:22,800 --> 00:22:24,919 Speaker 6: in mind, and very different from even the kind of 435 00:22:24,960 --> 00:22:28,320 Speaker 6: capitalism that America practiced three or four decades ago. 436 00:22:28,800 --> 00:22:31,600 Speaker 4: Talk to us about protectionism, because it seems like the 437 00:22:31,760 --> 00:22:36,080 Speaker 4: US or the West versus China, whether that's it's broader 438 00:22:36,119 --> 00:22:39,480 Speaker 4: than just a technological cold work, seems like it's much 439 00:22:39,520 --> 00:22:40,960 Speaker 4: broader than that. How do you think about how the 440 00:22:41,000 --> 00:22:44,280 Speaker 4: West should deal with China these days? 441 00:22:44,560 --> 00:22:46,439 Speaker 6: Well, in terms of the West is doing what it is, 442 00:22:46,480 --> 00:22:49,800 Speaker 6: which is in terms of raising protectionist barriers and stuff 443 00:22:49,800 --> 00:22:51,480 Speaker 6: like that. But I think that the bigger problem I 444 00:22:51,480 --> 00:22:54,679 Speaker 6: have with the Biden administration is that they're invoking some 445 00:22:54,760 --> 00:22:57,960 Speaker 6: of China's bad habits, including, you know, having an industrial 446 00:22:57,960 --> 00:23:01,240 Speaker 6: policy now, and I feel that this misunderstanding of what's 447 00:23:01,240 --> 00:23:04,159 Speaker 6: succeeded in China, and also the fact that we you know, 448 00:23:04,200 --> 00:23:07,480 Speaker 6: we are once again spending more government money on stuff 449 00:23:07,480 --> 00:23:08,919 Speaker 6: we don't know whether it's going to work or not. 450 00:23:09,080 --> 00:23:12,879 Speaker 6: So we've had this massive stimulus, massive industrial policy. So 451 00:23:12,920 --> 00:23:14,879 Speaker 6: I feel that we know that we still are in 452 00:23:15,000 --> 00:23:17,680 Speaker 6: awe of China at a time when the Chinese growth 453 00:23:17,720 --> 00:23:20,119 Speaker 6: model has faded anyway. So that's what I find is 454 00:23:20,119 --> 00:23:23,280 Speaker 6: the great contradiction of the plan, and instead we are 455 00:23:23,560 --> 00:23:29,600 Speaker 6: wasting billions, if not trillions of dollars on allocating capital. 456 00:23:29,640 --> 00:23:32,399 Speaker 6: Once again, the government's involvement is just increasing with an 457 00:23:32,480 --> 00:23:35,720 Speaker 6: industrial policy. So what we have to as I keep saying, 458 00:23:35,760 --> 00:23:39,600 Speaker 6: is that it's like, whether it's because of China or 459 00:23:39,720 --> 00:23:43,119 Speaker 6: using that like excuse, it's become another reason for the 460 00:23:43,119 --> 00:23:45,000 Speaker 6: government to get more involved in the economy. 461 00:23:45,480 --> 00:23:49,679 Speaker 4: So, you know, you mentioned kind of the deficits in 462 00:23:49,720 --> 00:23:53,080 Speaker 4: it that I've been I'm sixty years old. I've been 463 00:23:53,080 --> 00:23:54,679 Speaker 4: hearing about that my whole life. 464 00:23:54,840 --> 00:23:57,800 Speaker 2: Right, is it a problem now? Is that an issue now? No? 465 00:23:57,880 --> 00:23:59,600 Speaker 6: I think that's a very relevant point. So therefore in 466 00:23:59,640 --> 00:24:02,399 Speaker 6: the book, I don't I show that that's not the 467 00:24:02,400 --> 00:24:04,960 Speaker 6: central problem that I'm focused on, because I know that 468 00:24:05,160 --> 00:24:07,919 Speaker 6: it's a lot like crying wolf, because you know, for 469 00:24:07,960 --> 00:24:09,880 Speaker 6: the last thirty to forty years, there's been so much 470 00:24:09,920 --> 00:24:12,920 Speaker 6: talk about this under Reagan, you know, like we switched 471 00:24:13,240 --> 00:24:19,399 Speaker 6: to deficit financing and through even though he did nothing 472 00:24:19,680 --> 00:24:22,280 Speaker 6: really to cut on spending. So I agree with you 473 00:24:22,320 --> 00:24:25,919 Speaker 6: that this is this book is not just about deficits 474 00:24:25,920 --> 00:24:28,320 Speaker 6: and debt. It's about the suite of government habits. It's 475 00:24:28,320 --> 00:24:31,440 Speaker 6: about the regulatory culture it's about the bailout culture which 476 00:24:31,480 --> 00:24:34,000 Speaker 6: has you know done. It's the micromanagement of the business cycle. 477 00:24:34,280 --> 00:24:37,280 Speaker 6: So it's much more than that. But yes, what's happened 478 00:24:37,280 --> 00:24:39,160 Speaker 6: now with the debt and deficits is that because it's 479 00:24:39,160 --> 00:24:42,280 Speaker 6: thinking is crept in that it doesn't matter. We have 480 00:24:42,320 --> 00:24:44,840 Speaker 6: now taken this to a different level. So now we're 481 00:24:44,920 --> 00:24:48,439 Speaker 6: running deficits of six percent of GDP in the middle 482 00:24:48,480 --> 00:24:51,720 Speaker 6: of a full employment economic recovery. 483 00:24:51,800 --> 00:24:54,119 Speaker 2: I'm going to bring this full circle with your career 484 00:24:54,119 --> 00:24:58,719 Speaker 2: at Morgan Stanley and over to Rockefeller International. On their website, 485 00:24:58,800 --> 00:25:02,000 Speaker 2: they have a memo of nineteen forty seven where the 486 00:25:02,119 --> 00:25:06,119 Speaker 2: Rockefeller family stepped up for India which was basically in 487 00:25:06,160 --> 00:25:14,680 Speaker 2: complete chaos in nineteen forty seven. We've had Rajan on 488 00:25:14,800 --> 00:25:18,680 Speaker 2: from Booth School, Chicago the day after the election in India. Now, 489 00:25:19,119 --> 00:25:22,080 Speaker 2: is this a new India where it's not only Modi 490 00:25:22,600 --> 00:25:26,000 Speaker 2: but Gandhi and the Congress Party can actually make it 491 00:25:26,359 --> 00:25:28,960 Speaker 2: a two party government? Is that what we've learned in 492 00:25:29,000 --> 00:25:29,840 Speaker 2: the Indian election? 493 00:25:30,000 --> 00:25:31,800 Speaker 6: Now, I think in the Indian election, what we've learned, 494 00:25:31,800 --> 00:25:36,080 Speaker 6: Tom is that India is very much a federal nation, 495 00:25:36,160 --> 00:25:37,960 Speaker 6: which is that the states have a lot of power. 496 00:25:38,359 --> 00:25:40,440 Speaker 6: I know we here like to simplify it a bit 497 00:25:40,480 --> 00:25:42,679 Speaker 6: by thinking about it as the center and Modi, but 498 00:25:42,760 --> 00:25:45,080 Speaker 6: even when Modi was in power, I think in India 499 00:25:45,119 --> 00:25:46,840 Speaker 6: the states have a lot of power, just like in 500 00:25:46,880 --> 00:25:49,720 Speaker 6: the United States a lot, and we sort of overplay 501 00:25:49,800 --> 00:25:53,560 Speaker 6: what the influence of the central government is and underappreciate 502 00:25:53,640 --> 00:25:55,720 Speaker 6: what the state governments in India do. So I think 503 00:25:55,720 --> 00:25:58,640 Speaker 6: that in India the big success story which could be 504 00:25:59,040 --> 00:26:02,200 Speaker 6: is one of compares to federalism, but different states of 505 00:26:02,280 --> 00:26:06,520 Speaker 6: competing with each other to get more investment, attract more jobs, 506 00:26:06,640 --> 00:26:09,800 Speaker 6: create more infrastructure. I think that is the real India 507 00:26:09,840 --> 00:26:10,840 Speaker 6: long term story is. 508 00:26:10,840 --> 00:26:13,400 Speaker 2: A Rockefeller International. Are you based in New York? 509 00:26:13,560 --> 00:26:16,040 Speaker 6: Yes, if you can come by more often, I'm very 510 00:26:16,040 --> 00:26:18,159 Speaker 6: happy to come by and speak about it currently. As 511 00:26:18,200 --> 00:26:21,040 Speaker 6: I said, my focus is obviously, you know, like on 512 00:26:21,080 --> 00:26:22,640 Speaker 6: the book, but happy to chat about anything. 513 00:26:22,760 --> 00:26:25,280 Speaker 2: No, of course, for sure. Sharma, thank you so much. 514 00:26:36,480 --> 00:26:39,040 Speaker 2: You did a look at the front pages around the world, Lisa. 515 00:26:39,400 --> 00:26:41,440 Speaker 2: You send me the list, which I've already forgotten because 516 00:26:41,440 --> 00:26:43,680 Speaker 2: I'm in a heat wave. But it was brilliant. 517 00:26:45,240 --> 00:26:45,399 Speaker 4: You know. 518 00:26:45,440 --> 00:26:46,879 Speaker 5: What I like to is that we always have this 519 00:26:46,960 --> 00:26:51,159 Speaker 5: conversation about colleges and the system and how much it costs. 520 00:26:51,160 --> 00:26:53,080 Speaker 5: So this one really So you remember when the University 521 00:26:53,080 --> 00:26:55,719 Speaker 5: of Arts in Philadelphia closed down, left all these kids 522 00:26:56,160 --> 00:26:57,080 Speaker 5: in limbo, which. 523 00:26:57,280 --> 00:26:58,280 Speaker 4: It's been around forever. 524 00:26:58,600 --> 00:26:59,920 Speaker 5: Yeah, like one hundred and fifty years. 525 00:27:00,160 --> 00:27:01,720 Speaker 4: Yeah, okay, I know this one. 526 00:27:01,840 --> 00:27:05,320 Speaker 5: Yeah, So so it left these kids. The problem was 527 00:27:05,400 --> 00:27:07,160 Speaker 5: that a lot of the colleges had already cut off 528 00:27:07,200 --> 00:27:09,520 Speaker 5: admissions for the fall, so these kids were left in limbo. 529 00:27:09,800 --> 00:27:12,199 Speaker 5: But it's not just you Art's I mean, enrollment is 530 00:27:12,320 --> 00:27:14,919 Speaker 5: falling enrollment causing other schools to close their door. But 531 00:27:15,000 --> 00:27:16,600 Speaker 5: this is the point I wanted to point out. This 532 00:27:16,640 --> 00:27:19,880 Speaker 5: is from the State Higher Education Executive Offices Association. They 533 00:27:19,880 --> 00:27:23,240 Speaker 5: say nationally, as many as half of students whose campus 534 00:27:23,320 --> 00:27:26,160 Speaker 5: is closed, they don't go back to school, and that's 535 00:27:26,200 --> 00:27:29,080 Speaker 5: a big problem. The others who do go, they lose 536 00:27:29,080 --> 00:27:31,719 Speaker 5: credits and then they wind up paying more money somewhere 537 00:27:31,720 --> 00:27:33,160 Speaker 5: else because they lost those credits. 538 00:27:33,200 --> 00:27:35,159 Speaker 2: They have to Yeah, they love the credit thing and 539 00:27:35,160 --> 00:27:38,080 Speaker 2: the family can do that they basically had to do with. 540 00:27:38,240 --> 00:27:40,280 Speaker 5: And you pay more, well you're paying more. 541 00:27:40,359 --> 00:27:44,160 Speaker 2: But there's there's a lot of schools that say that's 542 00:27:44,200 --> 00:27:45,879 Speaker 2: not We're not going to take that course. We're not 543 00:27:45,920 --> 00:27:49,320 Speaker 2: going to take that. This is a really important idea 544 00:27:49,480 --> 00:27:52,280 Speaker 2: of Paul, because there's such a focus, particularly on the 545 00:27:52,280 --> 00:27:56,119 Speaker 2: East Coast. Good Morning, East Coast on twelve schools or 546 00:27:56,119 --> 00:27:59,840 Speaker 2: maybe one hundred schools, and there's a zillion other schools 547 00:27:59,840 --> 00:28:01,920 Speaker 2: out They're going, Okay, how are we going to pay 548 00:28:01,920 --> 00:28:05,240 Speaker 2: for the faculty? I know, do we really need athletics. 549 00:28:05,720 --> 00:28:06,800 Speaker 2: There's a lot of that going on. 550 00:28:06,840 --> 00:28:09,840 Speaker 4: And if they don't have an endowment or big enough endowment, 551 00:28:09,880 --> 00:28:13,359 Speaker 4: they're just so dependent upon the tuition that they have. 552 00:28:13,600 --> 00:28:16,639 Speaker 2: Well that's a stick in Europe. The European schools are 553 00:28:16,680 --> 00:28:21,600 Speaker 2: basically broke, and so they want Americans badly. I mean, 554 00:28:21,640 --> 00:28:22,760 Speaker 2: that's I'm speaking. 555 00:28:23,000 --> 00:28:25,600 Speaker 4: You know, you said, you know, kids around here in 556 00:28:25,600 --> 00:28:28,160 Speaker 4: the Tristate are going down to the SEC schools that 557 00:28:28,400 --> 00:28:31,880 Speaker 4: you know, the Alabama's the LSUS because they'll pay full 558 00:28:32,200 --> 00:28:35,879 Speaker 4: out of state tuition and the states love that. So 559 00:28:36,480 --> 00:28:37,440 Speaker 4: that didn't happen in my day. 560 00:28:37,440 --> 00:28:41,600 Speaker 5: But anyway, now, Okay, so companies trying to get workers 561 00:28:41,640 --> 00:28:43,560 Speaker 5: back to the office. We've always been talking about this. 562 00:28:43,960 --> 00:28:46,600 Speaker 5: They've been offering free mails, yoga classes, all these kind 563 00:28:46,640 --> 00:28:49,600 Speaker 5: of things. Parties. Okay, but The new tactic is to 564 00:28:49,640 --> 00:28:51,720 Speaker 5: get workers back to the office by getting rid of 565 00:28:51,840 --> 00:28:55,360 Speaker 5: hot desking. I didn't understand what this was until to 566 00:28:55,400 --> 00:28:58,920 Speaker 5: rend the artic. It's a thing. It's when people share desks, 567 00:28:59,200 --> 00:29:01,120 Speaker 5: so you don't have a perms. You come into work 568 00:29:01,160 --> 00:29:02,840 Speaker 5: with let's say your laptop, and you have to find 569 00:29:02,880 --> 00:29:04,840 Speaker 5: a desk, and it's like this scramble and search for 570 00:29:04,880 --> 00:29:08,640 Speaker 5: a desk. It's sparking some hygiene concerns. People are saying 571 00:29:08,680 --> 00:29:10,760 Speaker 5: they don't like it. They have to wipe everything down. 572 00:29:11,120 --> 00:29:13,120 Speaker 5: They don't have their fancy chair, you know, they have 573 00:29:13,160 --> 00:29:15,960 Speaker 5: to search for a chair. So a lot of companies 574 00:29:16,000 --> 00:29:18,280 Speaker 5: are changing this. They're trying to give workers back that 575 00:29:18,440 --> 00:29:20,880 Speaker 5: permanent desk, you know with the family pictures and all 576 00:29:20,920 --> 00:29:22,880 Speaker 5: that kind of thing, to make them feel like it's 577 00:29:22,880 --> 00:29:23,360 Speaker 5: home again. 578 00:29:23,400 --> 00:29:27,160 Speaker 4: So it's kind of like the anti we work, you know, correct, Yeah, exactly, Okay, 579 00:29:27,200 --> 00:29:29,640 Speaker 4: so that we work. It works for a lot of companies. 580 00:29:29,840 --> 00:29:31,440 Speaker 4: You know a lot of companies that works great for it, 581 00:29:31,520 --> 00:29:33,960 Speaker 4: but for some other companies you need your own space. 582 00:29:34,400 --> 00:29:37,520 Speaker 2: I may I suggest that everybody's overthinking this and it's 583 00:29:37,680 --> 00:29:41,080 Speaker 2: just with the pandemic, there was no commute right and 584 00:29:41,200 --> 00:29:44,440 Speaker 2: that's where they're commute. Yeah, on behalf of all of 585 00:29:44,440 --> 00:29:49,960 Speaker 2: Bloomberg's surveillance. We're commuting pro exactly. We want to commute. 586 00:29:50,240 --> 00:29:53,880 Speaker 2: Good morning, Apple car Play and Android play in the 587 00:29:53,880 --> 00:29:58,760 Speaker 2: Bloomberg Business app. It's free for your commute. We'll make 588 00:29:58,840 --> 00:30:02,680 Speaker 2: your commute safe. Thank and better. Thank you for that promotion, Lisa. 589 00:30:02,760 --> 00:30:07,240 Speaker 5: Next, check all right, football's Christmas games on Netflix. How 590 00:30:07,320 --> 00:30:10,120 Speaker 5: much are these ads going for? Okay? This is according 591 00:30:10,160 --> 00:30:13,560 Speaker 5: to Adweek, five ad packages for pro footballs Christmas games 592 00:30:13,560 --> 00:30:17,520 Speaker 5: on Netflix will each cost at least five million dollars. 593 00:30:17,840 --> 00:30:20,160 Speaker 5: They're categorized by when they air, but each package has 594 00:30:20,200 --> 00:30:23,280 Speaker 5: to include at least eight thirty second ads for each company. 595 00:30:23,440 --> 00:30:26,160 Speaker 5: We're talking about Gatorade, Bryzon, bes A, Microsoft. 596 00:30:26,200 --> 00:30:28,800 Speaker 4: These are super Bowl almost pressure, yeah, because if you. 597 00:30:28,720 --> 00:30:31,280 Speaker 5: Think about it, I mean the Super Bowl. What's seven 598 00:30:31,360 --> 00:30:34,520 Speaker 5: million for a thirty second spot during Super Bowl fifty eight? 599 00:30:35,400 --> 00:30:37,640 Speaker 5: So it's close to it. But they, you know, they 600 00:30:37,640 --> 00:30:39,520 Speaker 5: have a choice. They can go to the Chief Stealers 601 00:30:39,600 --> 00:30:42,080 Speaker 5: game that's set for one pm Eastern and then you 602 00:30:42,120 --> 00:30:45,400 Speaker 5: have the Ravens Texans at four thirty pm. But you're 603 00:30:45,440 --> 00:30:47,320 Speaker 5: just starting to hear about how much people are going 604 00:30:47,360 --> 00:30:49,480 Speaker 5: to pay. Companies are going to pay for these ad 605 00:30:49,520 --> 00:30:52,040 Speaker 5: packages just for Christmas Day. It's going to ruin my 606 00:30:52,160 --> 00:30:52,840 Speaker 5: Christmas Day. 607 00:30:52,960 --> 00:30:53,240 Speaker 2: Okay. 608 00:30:53,280 --> 00:30:54,760 Speaker 5: We used to say I want to watch movies. Now 609 00:30:54,760 --> 00:30:55,440 Speaker 5: I'm stuck watching. 610 00:30:56,840 --> 00:31:00,800 Speaker 2: Does the Detroit Lions play on Christmas Day? Is excuse? 611 00:31:01,120 --> 00:31:02,320 Speaker 4: Thanks Thanksgiving? 612 00:31:02,360 --> 00:31:03,720 Speaker 2: Right? Are they Thanksgiving? No? 613 00:31:03,720 --> 00:31:04,640 Speaker 5: No chief stealers? 614 00:31:04,800 --> 00:31:05,840 Speaker 3: Bringing on the lawn? 615 00:31:06,240 --> 00:31:08,040 Speaker 5: Sex? 616 00:31:08,360 --> 00:31:12,720 Speaker 2: Maybe two games? Okay, you got anything else or that? 617 00:31:12,840 --> 00:31:15,040 Speaker 5: Oh yes, okay, you know we had a guest yesterday. 618 00:31:15,040 --> 00:31:16,600 Speaker 5: He was talking about how our kids wanted to be 619 00:31:16,680 --> 00:31:20,520 Speaker 5: social media influencers. So I that stood out to me. 620 00:31:20,560 --> 00:31:23,120 Speaker 5: And I found an article today that actually says they're 621 00:31:23,120 --> 00:31:25,480 Speaker 5: not making much money, so she can go and show 622 00:31:25,480 --> 00:31:28,680 Speaker 5: her kids. This article from the Wall Street Journal. Platforms 623 00:31:28,680 --> 00:31:31,440 Speaker 5: are given out less money for these influencers. Brands are 624 00:31:31,480 --> 00:31:35,480 Speaker 5: being pickier, TikTok possibly shutting down in twenty twenty five, 625 00:31:35,560 --> 00:31:38,080 Speaker 5: all these things going against it. How much are they 626 00:31:38,160 --> 00:31:42,080 Speaker 5: really making? There's Neo Reach, it's an influencer marketing agency. 627 00:31:42,360 --> 00:31:45,280 Speaker 5: They said last year forty eight percent of these creators 628 00:31:45,320 --> 00:31:48,800 Speaker 5: earned about fifteen thousand or less. That was about it. Yeah, 629 00:31:49,000 --> 00:31:51,040 Speaker 5: and then you had maybe thirteen percent who did like 630 00:31:51,080 --> 00:31:51,920 Speaker 5: one hundred thousand. 631 00:31:52,040 --> 00:31:52,240 Speaker 3: You know. 632 00:31:52,560 --> 00:31:54,640 Speaker 2: So if dad says go get a real job. 633 00:31:54,720 --> 00:31:56,440 Speaker 5: Yes, tell them to go to the Wall Street Journal. 634 00:31:56,520 --> 00:31:58,440 Speaker 5: Read the article, send it to your kids. 635 00:31:59,080 --> 00:32:02,640 Speaker 2: Lisa Mateo, thank you so much. The newspaper report, Lisa Manteo, 636 00:32:02,880 --> 00:32:07,240 Speaker 2: thank you so much. This is the Bloomberg Surveillance Podcast, 637 00:32:07,440 --> 00:32:12,280 Speaker 2: bringing you the best in economics, finance, investment, and international relations. 638 00:32:12,520 --> 00:32:15,880 Speaker 2: You can also watch the show live on YouTube. Visit 639 00:32:15,920 --> 00:32:20,080 Speaker 2: the Bloomberg Podcast channel on YouTube to see the show 640 00:32:20,280 --> 00:32:23,360 Speaker 2: weekday mornings from seven to ten am Eastern from our 641 00:32:23,400 --> 00:32:27,120 Speaker 2: global headquarters in New York City. Subscribe to the podcast 642 00:32:27,200 --> 00:32:31,240 Speaker 2: on Apple, Spotify, or anywhere else you listen, and always 643 00:32:31,400 --> 00:32:35,760 Speaker 2: on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.