Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jaily. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminal. Right now, in
Speaker 1: Oil with a global view on what we've witnessed with
Speaker 1: cyber attacks in the United States, Amrita send joins US
Speaker 1: Energy Aspects Director of Research in chief Oil Analysts Emery Day.
Speaker 1: If as you look at the distribution of hydro carbons worldwide,
Speaker 1: how vulnerable are they to a cyber attack? Well, in
Speaker 1: great question, I would say pretty much everywhere. More and more,
Speaker 1: I think everybody is. I mean, the Colonial pipeline is
Speaker 1: a great example, but look at the Middleast, a lot
Speaker 1: of even up kick to that matter, there were elements
Speaker 1: um of kind of cyber attacks involved in that, but
Speaker 1: even more recently within the Middle East you do get
Speaker 1: a lot of infrastructure um, not necessarily disruptions, but targets
Speaker 1: um And I think this is just the new normal.
Speaker 1: There are more and more companies spending on this and
Speaker 1: it just needs to get higher from here, because you
Speaker 1: know it's not the warfedge generally is changing. The landscapes
Speaker 1: completely changed. I mean in Malaysia they're they're doing a
Speaker 1: twenty four mile thirty mile key pipeline having to do
Speaker 1: with the distribution. I believe it's up the west coast
Speaker 1: of Malaysia. How many spots do you perceive to be
Speaker 1: out there like the colonial pipeline worldwide? Is it ten
Speaker 1: other hot spots or is it hundreds? It's gonna be hundreds,
Speaker 1: because if you think about the distribution, I mean, if
Speaker 1: if you're really going down that route, you're talking about
Speaker 1: a huge distribution or pipeline net works within China, within India,
Speaker 1: even Europe. Europe has a huge network both for crew
Speaker 1: down for products. Looking more broadly then and racon when
Speaker 1: way to talk to any one of the commodity market.
Speaker 1: Right now, they're not concerned about this colonial pipeline shut down.
Speaker 1: There's just a belief that will adjust, it will come
Speaker 1: back online and will get back to normal. Any aspects
Speaker 1: of the infrastructure, the distribution in America, the transportation of
Speaker 1: energy that you would be concerned about, No, I mean
Speaker 1: not right now, and not the scale at which this
Speaker 1: attack has happened. I do agree with what you just said.
Speaker 1: I think the pipeline and just generally everything should be
Speaker 1: back up and running in about three to five days.
Speaker 1: But you don't never say never. This is it's definitely
Speaker 1: unprecedented in the scale at at which is happening, So
Speaker 1: it will require coordination from various government bodies and that
Speaker 1: can take some time. Um. I don't think there's going
Speaker 1: to be more and I think after this attack, I
Speaker 1: do think a lot of US networks natural gas as well.
Speaker 1: Let's not forget that they will probably tight and up
Speaker 1: what they can do to protect their networks going forward.
Speaker 1: I'm ready to coming forward from here build on the
Speaker 1: other issues surrounding the old market. Right now, we've talked
Speaker 1: a ton about supply, let's talk about it a little
Speaker 1: bit more out if Iran can we open things up
Speaker 1: a little bit more. What the negotiations look like. If
Speaker 1: you said twelve eighteen months ago that we'd have a
Speaker 1: president Joe Biden, a democratic sweep, we'd be talking potentially
Speaker 1: about loosening things up with Iran, and we still having
Speaker 1: that discussion. Yeah, we are, and you know we've always
Speaker 1: said that we're expecting some kind of a breakthrough over
Speaker 1: kind of April and May and then sanctions relieved by July.
Speaker 1: I will say, however, talks are progressing, but progressing probably
Speaker 1: a bit slower than we've been expecting. No, no major changes.
Speaker 1: But the thing I will warn is that everybody is
Speaker 1: expecting a deal in the coming weeks and then sanctions
Speaker 1: relief over Q three UM. But if there isn't a
Speaker 1: deal before they are in an elections, which are next month,
Speaker 1: that's the thing to watch out for because then it
Speaker 1: could get dragged on and then the deal becomes a
Speaker 1: twenty two story. I don't think that's in the price
Speaker 1: at all. What is the link em right up that
Speaker 1: you see between oil is a huge weighting of c
Speaker 1: RB or the Bloomberg Commodity Index with all the other commodities.
Speaker 1: They don't trade and lack step do they No, not
Speaker 1: at all. And I mean if you you guys were
Speaker 1: saying as well, just s and B it recordized. But
Speaker 1: if you look at metals, metals markets are soaring, and
Speaker 1: you know oil oil has been a very strong performance
Speaker 1: this year, but still hasn't been um as a strong
Speaker 1: as some of the other commodities and part of that
Speaker 1: is because you know, transportation was the worst hit during COVID.
Speaker 1: It is coming back, but it's not fully back yet.
Speaker 1: But there's also so much kind of talks around working
Speaker 1: from home, how much are we going to lose permanently
Speaker 1: for oil demand? But I mean, I will say, there's
Speaker 1: all the data we're getting right now. Personal incomes are
Speaker 1: back at pre COVID levels, and many many parts of
Speaker 1: the world. I think the summer is going to be huge.
Speaker 1: People are going to spend, and the bounce back in
Speaker 1: oil demand it's probably going to be significantly more than
Speaker 1: people have been expecting. That is the line that Jeff
Speaker 1: carry A government is pushing too. I'm Reachel, it sounds
Speaker 1: like you're on the same page. It's gonna hear from you.
Speaker 1: I'm ready to send their energy aspects. We're talking about
Speaker 1: this huge environmental transition on top of a demand boom.
Speaker 1: Two pins some of that as well. So the traditional
Speaker 1: sychnical rate that you might get from copper it's a
Speaker 1: little bit distorted this time around, given the political environment
Speaker 1: that we're in at the moment. The clear message of
Speaker 1: two thousand twenty one being different from two thousand two
Speaker 1: from Mr curry at Golden Saxon. That has always been
Speaker 1: a consistent theme with Ian Bremer of Eurasia Group, whose
Speaker 1: books are too many to mention. I can pick one
Speaker 1: of them, one of their titles and say it is
Speaker 1: also about this moment. We welcome Dr Bremer this morning
Speaker 1: as we speak of every nation for itself. Dr Bremmer,
Speaker 1: once again, food dynamics. Rice in Cambodia really matters rice
Speaker 1: in America less. So what does the food dynamic that
Speaker 1: you observe a this commodity lift. It just tells me
Speaker 1: that the gap between rich and four countries on the
Speaker 1: back of the pandemic and the rebound from the pandemic
Speaker 1: is being felt so so greatly differently. Um, you know
Speaker 1: this is UH that you already have UH before the pandemic.
Speaker 1: Yet about a quarter, for example, of everyone in Yemen
Speaker 1: being food stressed, not being able to have enough to eat,
Speaker 1: and Sudan numbers are similar. Those numbers are doubling on
Speaker 1: the back of the pandemic right now. One of the
Speaker 1: one of the most disheartening statistics that was indirect from
Speaker 1: the pandemic was the fact that we had an increase
Speaker 1: of fifty million of extreme four people around the world.
Speaker 1: The first time that number has gone up UM in
Speaker 1: well over uh in generations. It's like forty years since
Speaker 1: that numbers increased year on year. That's that's that's you know,
Speaker 1: that means food insecurity, that's first and foremost the most
Speaker 1: important things to be that kid. And you're gonna see
Speaker 1: that play out in so many of these contries with
Speaker 1: these prices have gone up and the people, the governments
Speaker 1: don't have any capacity to provide support. And I'm sure
Speaker 1: you saw Arama Chander Gua's magnificent essay and the ft
Speaker 1: I'm gonna say ten days ago about the collapse of
Speaker 1: his India. Do you eurise your group? Look at this
Speaker 1: pandemic and the horrific news from India is being politically
Speaker 1: and your Aisia group destabilizing for the region. Um, It's
Speaker 1: it's not destabilizing inside India. You know on India's Prime
Speaker 1: Minister Modi, despite having incredibly badly mishandled the last wave
Speaker 1: of this crisis, um is still um. You know, the
Speaker 1: popularity base that he had was higher coming in that
Speaker 1: of any other major leader. So he has a long
Speaker 1: way to go Before you talk about domestic instability domestic
Speaker 1: opposition would have a long way to strengthen before they
Speaker 1: could be cohesive and and really pose a chat olenge
Speaker 1: to him. But but there's no question that when you
Speaker 1: see the India variant spreading as much as it is
Speaker 1: across Southeast Asia. Now, when you see the fact that
Speaker 1: the Indians, who have been the largest producers of vaccines
Speaker 1: around the world, and now they have massive shortages inside
Speaker 1: their own country, they've had to suspend all export. Most
Speaker 1: of that export was going to other countries in the region.
Speaker 1: So this is now where the broader epicenter of coronavirus
Speaker 1: crisis is. It's India, but it's also South and Southeast Asia.
Speaker 1: It's also the region that's going to have some of
Speaker 1: the least capacity to actually fight it. And and by
Speaker 1: the way, um, the the India based and Chinese based
Speaker 1: vaccines aren't as effective as the m R and A vaccines.
Speaker 1: And I saw some extremely disturbing UH news. I don't
Speaker 1: know if you noticed this from the Seychells say Shells
Speaker 1: has had more vaccine rollout than any other country in
Speaker 1: the world for their small population. They now also have
Speaker 1: more human to humans spread per capita in cases new
Speaker 1: cases than India. That's astonishing, and that's because most of
Speaker 1: the vaccines are are coming from coming from China and
Speaker 1: they don't have the efficacy in stopping spread. That's again
Speaker 1: a serious problem for the developing world right now, largely
Speaker 1: isn't about Madearna Advisor, which is much more efficacy. So yeah,
Speaker 1: I'm actually quite worried about what this is gonna look
Speaker 1: like over the coming month. How the West can have
Speaker 1: that's the big question right now, and I've got to
Speaker 1: say the answer to that question is so in some
Speaker 1: real division between Europe and the United States at the moment,
Speaker 1: the US, as you know, in trying to suspend IP
Speaker 1: protection at least trying to push that issue through the
Speaker 1: w c O, and then you've got Europe turning around
Speaker 1: and saying, well, we don't think that's going to help.
Speaker 1: Germany is looking at the United States for holding vaccines
Speaker 1: and not exporting them. What did you make of the
Speaker 1: U S decision last week? And without bringing the allies
Speaker 1: on board, because this is playing out quite publicly, and
Speaker 1: it did so through the weekend. Yeah, this is playing
Speaker 1: out publicly. But you know the funny thing, first of all,
Speaker 1: I mean the German response, um that this is not
Speaker 1: the way to actually provide help in the near term.
Speaker 1: That's true. I mean it would take a very long time.
Speaker 1: We're talking about not just weeks or months with his
Speaker 1: urgent need right now, but but a year or more
Speaker 1: to get the kind of manufacturing capacity that would be
Speaker 1: aligned with just opening up the patent. So it's it's
Speaker 1: important symbolically um for a lot of progressives in the
Speaker 1: Democratic Party, and Biden will will benefit from that. But
Speaker 1: this isn't what's going to move the needle for the
Speaker 1: problem that we just talked about. The big issue is
Speaker 1: that here's a Biden administration trying to do the right
Speaker 1: thing and not coordinating with allies in advance. That's the mistake.
Speaker 1: It feels just like the announcement to leave Afghanistan. I mean,
Speaker 1: when your allies are absolutely critical, you shouldn't be in
Speaker 1: a position where the German government, where the EU is
Speaker 1: caught blindsided by you saying you're gonna suspend IP protection.
Speaker 1: The Americans in talking about helping the rest of the
Speaker 1: world in terms of this endemic, we need to be
Speaker 1: talking in advance of our announcements with all of the
Speaker 1: key allies. It's such an easy thing to do. The
Speaker 1: Biden team should be good at this. This is where
Speaker 1: they're following. Um. I think because they're used to do.
Speaker 1: These are experienced men and women that have been around
Speaker 1: foreign policy establishment for decades and for them, UM, you know,
Speaker 1: multilateralism means the United States does the right thing and
Speaker 1: other allies just go along with us. It doesn't mean
Speaker 1: that we actually might be wrong or might have to compromise.
Speaker 1: Because we've been a position of such strength and because
Speaker 1: the alliance itself has been so much more cohesive. That's
Speaker 1: not as true today. Part of that has been four
Speaker 1: years in the Trump administration, but part of that is
Speaker 1: just Europe itself is moving in a different direction. There.
Speaker 1: Their feeling of their social contract, their feeling of the
Speaker 1: effectiveness of their representative democracy, UM, just is different than
Speaker 1: that of the United States right now, and I think
Speaker 1: we're living that experience a firm or your top risks
Speaker 1: of two thousand twenty one, you have been out front
Speaker 1: and saying we have to pay attention to cyber. You
Speaker 1: talk about a cyber tipping point in January, and here
Speaker 1: we are talking about it for real with this pipeline
Speaker 1: across the nation. Give us an update on the tipping point,
Speaker 1: you see. Yeah, I mean the funny thing is, I
Speaker 1: don't think the tipping point is between the US and Russia,
Speaker 1: between the US and China, because there is a level
Speaker 1: of deterrence on cyber attacks between those countries. We do
Speaker 1: espionage against them, they do espionage against us. We use
Speaker 1: the data in ways that are useful for US, but
Speaker 1: we don't break things. We don't go in and and
Speaker 1: destroy critical infrastructure. We don't take the kind of actions
Speaker 1: that could precipitate a kinetic response a hot war where
Speaker 1: when you the problem is unlike news where you had
Speaker 1: that nuclear balance, but those were only the the only
Speaker 1: countries that had that capacity in the Cold War. Um
Speaker 1: in the case of cyber you know, we stop the
Speaker 1: audience from developing News were trying to get back into
Speaker 1: a deal to do that. We haven't stopped them from
Speaker 1: developing some of the world's most effective offensive cyber capabilities.
Speaker 1: Criminal networks in Russia and Eastern Europe, in the United States,
Speaker 1: around the world have incredibly sophisticated cyber capacity to destroy things.
Speaker 1: And we see that with the smash and grab both
Speaker 1: on the data of this critical pipeline over the weekend,
Speaker 1: but also in the in the the ransomware attack to
Speaker 1: shut them down. UM, and you know, we just don't
Speaker 1: have cyber defenses to deal with this. I was I've
Speaker 1: particularly worried that they were going to shut down hospitals
Speaker 1: UM in the middle of vaccine rollout. You know, in
Speaker 1: the early days, that was something they were clearly capable
Speaker 1: of doing, these these criminal networks, and thankfully for us,
Speaker 1: they didn't. But the vulnerabilities massive and it's gonna catch
Speaker 1: he writes, A great president and found a let's brink in.
Speaker 1: Jared woods Champ, we thank for America Securities, Head of
Speaker 1: Research Investment Committee. Can we just start with the supply
Speaker 1: side at the moment, Jared, whether it's the Colonial pipeline
Speaker 1: and the issues there, we can solve them with higher prices.
Speaker 1: If you want to import some gasoline from Europe, if
Speaker 1: it's the labor market shortage, you can hire, put up wages.
Speaker 1: What do you see in that dynamic on the supply side.
Speaker 1: Can it all be addressed with higher prices? Well, some
Speaker 1: of it can be addressed, not all of it. I
Speaker 1: mean semi conductors is the big one. I think that's
Speaker 1: that's an affected even the labor market possibly, uh in
Speaker 1: that latest report, and something is going to take a
Speaker 1: little while to sort out as far as we can tell. UM.
Speaker 1: But it's also not, you know, a sort of catastrophe.
Speaker 1: But most of the big headlines, whether it's in commodities
Speaker 1: or or in labor, we think can be addressed with
Speaker 1: higher prices, higher wages UM. And you know, it's it's
Speaker 1: uh kind of a two period market. I think everyone's
Speaker 1: ready and I think proper should be strapped in for
Speaker 1: what could be very wild summer. But if we look
Speaker 1: ahead six months, we looked at the end of the year, UM,
Speaker 1: we expect fairly normal conditions, even inflation back down to
Speaker 1: levels that were more consistent with what we saw before
Speaker 1: the pandemic. Sign on bonuses transitory, JAREDS. You've made this
Speaker 1: point that the conversation Tom and I were having early
Speaker 1: this morning ten minutes ago on the labor market, Steve
Speaker 1: Fault offering an appreciation bonus UBS for certain bankers getting
Speaker 1: a bonus if they get a promotion. That is all
Speaker 1: discretion were spending, Jared, in terms of just the extra bonus.
Speaker 1: It's not base salary. And Jared, I just wonder from
Speaker 1: your perspective whether that plays into the fed's hands a
Speaker 1: little bit on the labor market that on either end
Speaker 1: of the waste spectrum, we're talking about bonuses and we're
Speaker 1: not talking about higher base. Yeah, that's this is exactly
Speaker 1: what the third wants. I think if if you're if
Speaker 1: you're worried about long term wage price spiral, I think
Speaker 1: I think you you can relax a little bit here
Speaker 1: because assigning bonus is not a raise. You know, whether
Speaker 1: it's fifty dollars to show up for McDonald's you know,
Speaker 1: job and review or yeah then I mean or at
Speaker 1: the high end, these higher bonuses at the high end,
Speaker 1: these are not permanent salary increases. If they were, that's
Speaker 1: a different conversation. But so far there's no evidence of
Speaker 1: anything persistent because employers and workers both understand that. Again,
Speaker 1: six and nine months from now, things are probably gonna
Speaker 1: be a lot more uh normal than we expect. Yeah, John,
Speaker 1: it was great. All from New Jersey sent me a
Speaker 1: fifty dollar check and said, sure there's change liftover. How
Speaker 1: did you count on McDonald's. I don't know. It was great.
Speaker 1: There were two value meal and you know what coffee?
Speaker 1: I went large. I got the extra large fries just
Speaker 1: to get me through today, Jared, you have a single
Speaker 1: sentence in your note that's just so so important and
Speaker 1: really wise. You gotta have the courage to buy inflation
Speaker 1: surge when there's no inflation. But then, what do you
Speaker 1: do when inflation expectations finally go? What do you do
Speaker 1: when the expectations of inflation are finally there to sell? Well, look,
Speaker 1: let's let's look a little bit of history. Okay, our
Speaker 1: economists expect I think three point six percent cp I
Speaker 1: this quarter. Um, you know, I think that's exactly right.
Speaker 1: And if you look at what's happened in the past,
Speaker 1: we've seen inflation surgeries above three and a half percent
Speaker 1: just the past thirty years. There's been quite a few
Speaker 1: of those occasions. We looked at the market, you know,
Speaker 1: impact market data around those prints, and if you bought
Speaker 1: all the inflation trades and commodities, you know you're versus us,
Speaker 1: etcetera on those occasions past thirty years, on average, one
Speaker 1: year later your inflation trades loss money. Now, So that
Speaker 1: so to me, that says that if you believe the
Speaker 1: inflation trade, now you know it is something you have
Speaker 1: to buy when it's already priced into the market at
Speaker 1: those trades, some of those trades have already done really well,
Speaker 1: then you've got to be convinced that this is the
Speaker 1: big one, and we just don't see any evidence of that. Instead,
Speaker 1: we we think investors still have to keep a kind
Speaker 1: of a balanced approach within the inflation trades. Within the
Speaker 1: inflation trades, we still like financials very much, but I
Speaker 1: think that the you know, the commodities and materials and energy,
Speaker 1: there's just not enough evidence on that on the on
Speaker 1: that side, and if you do see more more dips
Speaker 1: um corrections, even in attack and the growth kind of trades,
Speaker 1: for a long term investor, those have to be viable opportunities. Jared,
Speaker 1: what do you think of the fans David Costons at
Speaker 1: the dust Star, Gold and Sex making a big splash
Speaker 1: this weekend on valuation of the things. Do you agree
Speaker 1: that the fangs actually offer value given their growth characteristics
Speaker 1: versus the ten uere yield. I think the trading vehicles,
Speaker 1: you know, perhaps at this point some of these big
Speaker 1: megacap growth trades um and so you can use they're
Speaker 1: they're they're almost kind of like a macro expression of
Speaker 1: what's happen with growth inflation. But but they're not. I
Speaker 1: don't think people are looking at them as devalue. But
Speaker 1: by any means, if you if you like the sort
Speaker 1: of the tech and and and and growth type stocks,
Speaker 1: I think small and midcaps are more attractive here. Jed
Speaker 1: caught up with a Greater to a black Rock a
Speaker 1: couple of days ago on Friday, and he was talking
Speaker 1: about running a higher cash position across some of the portfolio.
Speaker 1: Was something in the double digits mad teens. Maybe does
Speaker 1: that make sense going into some attempt that dry powder.
Speaker 1: I think it does make sense to have to have
Speaker 1: some cash ready to deploy if it's if it's a
Speaker 1: question of something tactical to to be ready. If there's
Speaker 1: some big dislocations you know and I or either end,
Speaker 1: we could see overheated reflation trades um that you know
Speaker 1: you want to sell to go rotate back into growth.
Speaker 1: You could see the reverse where we get another bad
Speaker 1: job sprint and people start to really get gloomy. Either case,
Speaker 1: you want to have cash ready. I don't think it's
Speaker 1: a it's a good moment to be sort of allocating
Speaker 1: higher permanent portfolio positions into into cash or anything else
Speaker 1: that's um that's gonna change your fundamental mix because right now,
Speaker 1: you know, there's so many cross currents. You can roll
Speaker 1: the dice and and and any you know, it's can
Speaker 1: tell you any number of ten different things. When there's
Speaker 1: that much confusion in the market, that much confusion the
Speaker 1: labor data, I don't think it's a good time to
Speaker 1: make permanent decisions just quickly without challenge. What would fund
Speaker 1: that position? Would you trind broadly or some hi specific Well,
Speaker 1: it would trade some of the mega cap stocks, whether
Speaker 1: it's tech or or otherwise. Um, my colleagues to be
Speaker 1: the superman, and is I think been fairly you know, uh,
Speaker 1: you know, neutral on on some of the mega cap
Speaker 1: stocks for a while and and uh and at the
Speaker 1: bank where we're much more favorable on small and mint caps.
Speaker 1: So I think that the trades that have already done
Speaker 1: very well, the really liquid names, are the obvious places
Speaker 1: to look for cash um and and that can even
Speaker 1: include an investment great credit for multist portfolios. We're kind
Speaker 1: of bearish on on that part of the credit market
Speaker 1: and see better opportunities elsewhere. Gonna see you gotta cash
Speaker 1: up on a range of asuas John would have been
Speaker 1: head of Research Investment Committee, this is the right person
Speaker 1: at the right time to talk about the retail cadence
Speaker 1: of America. Friday, we get retail from the lowest price
Speaker 1: point to the highest price point. And Steve Sadov is
Speaker 1: expert at this. Mr Sadoff is with master Card senior advisor.
Speaker 1: But that barely describes his contribution and retail herbal lessons
Speaker 1: and all that boom a million years ago in shampoo.
Speaker 1: It's Sadov's fault and he's the guy at SAX who
Speaker 1: exclusive is literally inventing that out of pixie. Does Steve say,
Speaker 1: let me talk about MasterCard and the knowledge that MasterCard
Speaker 1: has tick by tick and you say it even goes
Speaker 1: over to the department stores are enjoying this resurgence. Good
Speaker 1: to see you, Tom, And yeah, I think that the
Speaker 1: month of April, the master Card spending pulse numbers show
Speaker 1: that the consumer is really coming back with a vengeance.
Speaker 1: You saw overall sales and this is now not just
Speaker 1: the MasterCard sales, but it cuts across all forms of tender.
Speaker 1: Sales were up twenty three point three percent versus year
Speaker 1: versus year ago, but importantly they were up ten point
Speaker 1: eight percent versus nineteen and this is ex auto and gas.
Speaker 1: So you're seeing a consumer that's coming back, and it's
Speaker 1: across all sectors. You mentioned department stores, but it's in restaurants,
Speaker 1: it's in the categories like uh, jewelry and apparel, and
Speaker 1: you're starting to see the consumer saying, hey, I want
Speaker 1: to get back out of it. Let me ask yourself
Speaker 1: side question, then, are we pulling forward next autumn sales?
Speaker 1: Are we redoing the closet now where nothing ebbs as
Speaker 1: we go into the holiday season? What is that dynamic? Well,
Speaker 1: there's no question that that we're redoing our closets. We've
Speaker 1: been wearing sweatpants for the last year, and you're seeing
Speaker 1: a new fashion cycle starting. Uh. The guys in the
Speaker 1: gene business are all talking about bagg year higher ways.
Speaker 1: It's a new newness, excitement getting out again, and you're
Speaker 1: seeing it hit just the apparel fashion, but you're seeing
Speaker 1: it in the UH handbags, the shoes, the jewelry. So
Speaker 1: I don't know that it's necessarily pulling forward the volume
Speaker 1: from the fall because there's so much pent up demanded
Speaker 1: savings that's out there. And the interesting thing is it's
Speaker 1: not just online anymore. Online is now of all commerce
Speaker 1: and growing still at but people are back in the
Speaker 1: stores and brick and mortars started to see that ent
Speaker 1: up demand. Steve, I'm going to avoid the baggy, higher
Speaker 1: waste things somehow. I don't think the higher waste genes
Speaker 1: can work on me as well. Steve, you are a
Speaker 1: student of all this. And if I can move up
Speaker 1: the scale to luxury and such, will there be a
Speaker 1: consolidation we have? We have luxury which is three big
Speaker 1: French companies. You know it better than me. But how
Speaker 1: does how does how do we come out of this
Speaker 1: on an equity basis further consolidation or is it going
Speaker 1: to be entrepreneurial with I p O s and the rest.
Speaker 1: I think it's gonna be a combination of both. That
Speaker 1: you have, the strong ones are going to be picking
Speaker 1: off some of the big brands. You'll see the consolidation
Speaker 1: for the lvm ages and the reached months of the world.
Speaker 1: But you're seeing companies like the Tapestries performing uh much better.
Speaker 1: You're I think you're gonna continue to see these niche
Speaker 1: segmented brands that come out and do their I p
Speaker 1: O s. Uh. The consumer wants values, they want a story,
Speaker 1: they want to and I think that in the luxury
Speaker 1: space you're going to continue to see a lot of innovation.
Speaker 1: Steve said, how did you bring it back to master
Speaker 1: Card in your work for them now as a senior advisor?
Speaker 1: How is our relationship with our cards changing? There's a
Speaker 1: lot of dynamics in fintech and digital dynamics. How does
Speaker 1: master Card model that forward? Well, I think what you
Speaker 1: have as a consumer that is going much more cash less,
Speaker 1: so that they want touchless, they want ease of transaction.
Speaker 1: They still love their cards, and I think that it's
Speaker 1: it boats very well for the master Cards of the
Speaker 1: world in terms of the changing behaviors. And it's not
Speaker 1: just the transaction, it's what you do with some of
Speaker 1: the data and the analytics and the ability to understand
Speaker 1: consumers better. Right. I think that this is the value
Speaker 1: added proposition that all of these UH retailers need, and
Speaker 1: you're seeing a lot more of that coming out of
Speaker 1: the use of data and meeting the consumer needs. On
Speaker 1: a level of one, What is the permanent change of
Speaker 1: the consumer out of this natural disaster we've all lived.
Speaker 1: I think the consumer go back to the value and values.
Speaker 1: They're want to be safe, they want to be able
Speaker 1: to get what they want when they wanted. This omni
Speaker 1: channel shopping is here to stay. Uh. These are some
Speaker 1: fundamental changes that had started earlier before the pandemic that
Speaker 1: it probably accelerated six years over the last year in
Speaker 1: terms of the shift to come the channel and segmented
Speaker 1: and differentiated brands. You just described Amazon. They're doing an
Speaker 1: a trunch offering today of a gazillion dollars in bonds.
Speaker 1: How does Amazon adapt to the Steve Sadoff world. Oh,
Speaker 1: Amazon's a winner. I think the Amazon's the Walmart. The
Speaker 1: targets continue to do well. Doesn't mean they are the
Speaker 1: only ones that are going to do well. But marketplaces
Speaker 1: are important in this environment. They're not gonna be Amazon
Speaker 1: is not the only marketplace. You're gonna have the far
Speaker 1: fetches of the world that will do well. But the
Speaker 1: consumer loves convenience ease. Amazon sets the standards the way
Speaker 1: that they do, the pres dentation of the product, They
Speaker 1: understand the personalization. That's going to be the expectation. Amazon's
Speaker 1: a winner over time, but I think that there's gonna
Speaker 1: be a lot of others as well. And you also
Speaker 1: have the new evolving, whether it's the resale, the rental.
Speaker 1: All of this is this new age in terms of
Speaker 1: how retails evolving. S does Amazon take luxury from luxury?
Speaker 1: I mean, as Gucci gonna actually sell off Amazon. My
Speaker 1: guess is the answer is probably not. I think that
Speaker 1: the Gucci's and the lvmhs are going to play in
Speaker 1: other kinds of market places. Maybe they'll play in the
Speaker 1: far fetches, the Netta portes, the Sacks dot com which
Speaker 1: is separated from the full line stores. I don't know
Speaker 1: that those brands play in the Amazon world. But Amazon
Speaker 1: will play very They'll be the major player in uh
Speaker 1: in apparel. I'm just not so sure it's gonna be
Speaker 1: at the very high end luxury. It's been too long.
Speaker 1: Thank you so much, greatly appreciated inventing retail and exclusives
Speaker 1: at Sacks and of course a master card as a
Speaker 1: senior advisor. This is the Bloomberg Surveillance Podcast. Thanks for listening.
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Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg