WEBVTT - Bloomberg Daybreak Holiday: Earnings, Retail, Markets

0:00:01.840 --> 0:00:05.280
<v Speaker 1>Welcome to a special holiday edition of Bloomberg day Break.

0:00:05.400 --> 0:00:09.039
<v Speaker 1>US markets are closed for President's Day. I'm Nathan Hager,

0:00:09.160 --> 0:00:12.160
<v Speaker 1>and coming up on today's program, what's ahead for earnings

0:00:12.160 --> 0:00:15.640
<v Speaker 1>from the world's number one big box retailer, Plus how

0:00:15.640 --> 0:00:19.040
<v Speaker 1>to prepare for a second Trump presidency, why the obvious

0:00:19.079 --> 0:00:21.759
<v Speaker 1>market bets might not be the right ones, And we

0:00:21.840 --> 0:00:25.000
<v Speaker 1>speak to a big name in architecture and design here

0:00:25.079 --> 0:00:28.320
<v Speaker 1>his take on getting workers back to the office. That's

0:00:28.360 --> 0:00:31.520
<v Speaker 1>all straight ahead on this show. First, let's begin with

0:00:31.560 --> 0:00:35.639
<v Speaker 1>a conversation on earnings from Walmart. The companies do out

0:00:35.680 --> 0:00:39.159
<v Speaker 1>with fourth quarter results on Tuesday. Here for a preview

0:00:39.240 --> 0:00:43.120
<v Speaker 1>is Bloomberg Intelligence Senior analyst Jennifer Bartashis, who keeps an

0:00:43.159 --> 0:00:46.320
<v Speaker 1>eye on all things retail for us. Jen great to

0:00:46.360 --> 0:00:48.559
<v Speaker 1>have you with us on the holiday. So this is

0:00:48.680 --> 0:00:52.040
<v Speaker 1>a holiday quarter for Walmart. Shall we say it's going

0:00:52.120 --> 0:00:53.200
<v Speaker 1>to be happy returns?

0:00:54.200 --> 0:00:56.400
<v Speaker 2>In general? I think it was a very strong holiday

0:00:56.440 --> 0:01:01.360
<v Speaker 2>season for Walmart. When consumers are in that placed directly

0:01:01.360 --> 0:01:04.840
<v Speaker 2>into Walmart's strength. And when we look at what we

0:01:04.920 --> 0:01:08.479
<v Speaker 2>observed in the stores, you know, we saw a lot

0:01:08.480 --> 0:01:11.480
<v Speaker 2>of you know, customer engagement with with Walmart during the

0:01:11.640 --> 0:01:14.720
<v Speaker 2>entire quarter from Black Friday all the way through, and

0:01:14.800 --> 0:01:17.319
<v Speaker 2>so there's every reason to think that they should they

0:01:17.319 --> 0:01:18.520
<v Speaker 2>should have a pretty good quarter.

0:01:19.000 --> 0:01:22.200
<v Speaker 1>Are we going to see the kind of markdowns around

0:01:22.280 --> 0:01:24.840
<v Speaker 1>the holidays that could eat into margins?

0:01:25.319 --> 0:01:28.319
<v Speaker 2>Well, actually, I think that, you know, Walmart has done

0:01:28.319 --> 0:01:30.920
<v Speaker 2>a very good job of changing the way they plan

0:01:31.040 --> 0:01:34.800
<v Speaker 2>for holiday and being much more measured with regards to inventory.

0:01:35.440 --> 0:01:38.039
<v Speaker 2>When we really run into problems with markdowns, it's when

0:01:38.280 --> 0:01:41.039
<v Speaker 2>there's just too much inventory and they're not able to

0:01:41.040 --> 0:01:43.800
<v Speaker 2>sell through it. In our channel checks when we've been

0:01:43.840 --> 0:01:47.400
<v Speaker 2>in stores, we actually didn't see a very high level

0:01:47.440 --> 0:01:50.760
<v Speaker 2>of markdowns, which is very very promising, and that means

0:01:50.800 --> 0:01:53.680
<v Speaker 2>that they really probably sold through the majority of their

0:01:53.680 --> 0:01:57.240
<v Speaker 2>holiday inventory according to plans, so that should have very

0:01:57.280 --> 0:02:00.440
<v Speaker 2>little impact on gross margin at least for the quarter.

0:02:00.680 --> 0:02:02.280
<v Speaker 1>So what are we thinking that we're going to see

0:02:02.320 --> 0:02:04.560
<v Speaker 1>in terms of the sales mix. When you think about

0:02:04.600 --> 0:02:07.120
<v Speaker 1>a holiday quarter, you're thinking about a lot of big

0:02:07.160 --> 0:02:11.480
<v Speaker 1>ticket gift items. Possibly at the same time, Walmart has

0:02:11.760 --> 0:02:15.359
<v Speaker 1>a lot of those staples that it sells throughout the year.

0:02:15.360 --> 0:02:19.200
<v Speaker 1>I'm thinking about groceries and other lower cost items. So

0:02:19.320 --> 0:02:21.240
<v Speaker 1>what are we thinking in terms of a sales mix

0:02:21.360 --> 0:02:22.520
<v Speaker 1>around a holiday quarter.

0:02:22.800 --> 0:02:25.040
<v Speaker 2>Well, even for the holiday quarter, I think their sales

0:02:25.040 --> 0:02:28.680
<v Speaker 2>mix still skews to the consumables. If you think about

0:02:28.680 --> 0:02:32.080
<v Speaker 2>Thanksgiving fell in the quarter, that's a huge food holiday.

0:02:32.400 --> 0:02:35.080
<v Speaker 2>We saw traffic spike at Walmart as people were going

0:02:35.120 --> 0:02:39.520
<v Speaker 2>in to buy ingredients for those celebrations, and they just

0:02:39.600 --> 0:02:43.200
<v Speaker 2>sell so much food. But the good news is that

0:02:43.680 --> 0:02:46.680
<v Speaker 2>because inflation has been moditoring moderating a little bit, and

0:02:46.720 --> 0:02:50.680
<v Speaker 2>because Walmart was really quite outspoken and with regards to

0:02:50.760 --> 0:02:54.880
<v Speaker 2>holding prices study from last year, especially on holiday like

0:02:54.919 --> 0:02:58.080
<v Speaker 2>holiday related foods, there may been a little extra money

0:02:58.080 --> 0:03:01.240
<v Speaker 2>in people's pockets to actually buy into the higher margin

0:03:01.280 --> 0:03:04.800
<v Speaker 2>part of the store, which is general merchandise. And while

0:03:04.840 --> 0:03:07.960
<v Speaker 2>we didn't expect to see a lot of big tickets sales,

0:03:08.240 --> 0:03:10.640
<v Speaker 2>we do expect that they'll have done a little bit

0:03:10.639 --> 0:03:14.400
<v Speaker 2>better on things like apparel, beauty items, things that are

0:03:14.600 --> 0:03:18.359
<v Speaker 2>smaller level indulgences but make good gifting items.

0:03:18.720 --> 0:03:20.640
<v Speaker 1>It would be interesting to see if we do get

0:03:20.639 --> 0:03:24.000
<v Speaker 1>that kind of mix, because even though inflation is coming down,

0:03:24.040 --> 0:03:26.720
<v Speaker 1>it is still at pretty elevated level. So I wonder

0:03:26.760 --> 0:03:29.400
<v Speaker 1>what you're thinking in terms of what we could see

0:03:29.720 --> 0:03:33.680
<v Speaker 1>when it comes to consumers possibly trying to buy items

0:03:33.680 --> 0:03:36.000
<v Speaker 1>that sort of protect them from inflation at a place

0:03:36.040 --> 0:03:36.640
<v Speaker 1>like Walmart.

0:03:36.880 --> 0:03:39.880
<v Speaker 2>Well, you know, with regards to inflation, you know, we

0:03:39.960 --> 0:03:43.320
<v Speaker 2>are seeing some disinflation in food, but it's not across

0:03:43.400 --> 0:03:48.279
<v Speaker 2>every category. And so what we're continuing to see customers

0:03:48.320 --> 0:03:53.640
<v Speaker 2>and consumers gravitate to value and so, you know, where

0:03:53.680 --> 0:03:57.200
<v Speaker 2>they feel that they're getting a good value. Walmart has

0:03:57.240 --> 0:04:00.600
<v Speaker 2>been pretty aggressive in rollbacks where they've seen inflation come down,

0:04:01.440 --> 0:04:05.800
<v Speaker 2>and that generally attracts consumer attention. And so the inflation,

0:04:05.880 --> 0:04:07.760
<v Speaker 2>this inflation we're seeing is more on the food side

0:04:07.760 --> 0:04:11.040
<v Speaker 2>of the business at this point, and so we you know,

0:04:11.080 --> 0:04:13.200
<v Speaker 2>we just we we do see that as a positive,

0:04:13.920 --> 0:04:15.840
<v Speaker 2>but it's still going to be a little bit of

0:04:15.840 --> 0:04:17.560
<v Speaker 2>time before things really smooth out.

0:04:17.760 --> 0:04:19.960
<v Speaker 1>And of course Walmart has a fair amount of competition

0:04:20.279 --> 0:04:24.720
<v Speaker 1>in the food space, not just from its more traditional competitors,

0:04:24.720 --> 0:04:27.560
<v Speaker 1>but even now from Amazon, which is of course a

0:04:27.760 --> 0:04:31.800
<v Speaker 1>huge competitor for Walmart. Just across the board, Where do

0:04:31.839 --> 0:04:35.160
<v Speaker 1>you see Walmart in terms of market share against some

0:04:35.200 --> 0:04:38.800
<v Speaker 1>of those other really big competitors in the retail space.

0:04:38.800 --> 0:04:41.559
<v Speaker 2>Well, Walmart does have the lion's share of market share,

0:04:42.040 --> 0:04:46.000
<v Speaker 2>especially in grocery. But you know, there's there are never

0:04:46.120 --> 0:04:50.839
<v Speaker 2>ending threats with regards to competition in this space. Because

0:04:50.839 --> 0:04:53.040
<v Speaker 2>it's a very low margin business and because it is

0:04:53.200 --> 0:04:57.359
<v Speaker 2>an area where everybody needs to buy food and basic essentials,

0:04:57.880 --> 0:05:02.080
<v Speaker 2>there's just a lot of competition. Amazon has definitely been

0:05:02.160 --> 0:05:04.760
<v Speaker 2>sending indications that it wants to step up its game

0:05:05.440 --> 0:05:08.240
<v Speaker 2>and that it wants to become even more kind of

0:05:08.279 --> 0:05:12.479
<v Speaker 2>double down in grocery. There are some big pieces of

0:05:12.520 --> 0:05:14.680
<v Speaker 2>that strategy that we need to understand a little bit

0:05:14.680 --> 0:05:18.960
<v Speaker 2>better and how quickly that will materialize. Because Walmart's really

0:05:19.000 --> 0:05:21.800
<v Speaker 2>big strength is that they have all their stores right,

0:05:22.040 --> 0:05:24.159
<v Speaker 2>It's easy for people to stop in, it's easy to

0:05:24.200 --> 0:05:26.520
<v Speaker 2>do click and collect and place orders online and pick

0:05:26.560 --> 0:05:28.760
<v Speaker 2>it up at the store, and then they also have

0:05:28.839 --> 0:05:33.760
<v Speaker 2>their marketplace. And so for Amazon to compete effectively, they

0:05:33.800 --> 0:05:36.000
<v Speaker 2>also they really need to solve that problem of how

0:05:36.040 --> 0:05:40.000
<v Speaker 2>you compete with that many physical stores, and that'll take

0:05:40.040 --> 0:05:42.960
<v Speaker 2>some time for Amazon to to to figure that out.

0:05:43.720 --> 0:05:45.920
<v Speaker 2>On the general merchandise side, though, one of the other

0:05:46.040 --> 0:05:48.320
<v Speaker 2>things that we're watching carefully is the rise of like

0:05:48.400 --> 0:05:54.280
<v Speaker 2>Tamu and Sian, and because these are direct competitors, more

0:05:54.320 --> 0:05:57.440
<v Speaker 2>on the marketplace side and more on the general merchandise side,

0:05:57.960 --> 0:06:01.520
<v Speaker 2>so we are seeing a lot of competitive dyce across

0:06:01.520 --> 0:06:02.440
<v Speaker 2>the board for Walmart.

0:06:02.520 --> 0:06:06.760
<v Speaker 1>Bloomberg Intelligence Senior analyst Jennifer bartashis Thanks for this, Jen,

0:06:06.880 --> 0:06:08.760
<v Speaker 1>really good having you on with us, and we'll be

0:06:08.760 --> 0:06:10.960
<v Speaker 1>looking out for those earnings from Walmart. They are due

0:06:11.000 --> 0:06:14.960
<v Speaker 1>out tomorrow around seven am Wall Street time, but before that,

0:06:15.240 --> 0:06:18.919
<v Speaker 1>roughly an hour earlier, we expect results from Home Depot

0:06:19.000 --> 0:06:21.200
<v Speaker 1>and those details could give us a check on the

0:06:21.240 --> 0:06:24.720
<v Speaker 1>housing and home improvement markets. So here to discuss those

0:06:24.839 --> 0:06:28.160
<v Speaker 1>numbers before they come out, is your reading covers Housing

0:06:28.200 --> 0:06:31.400
<v Speaker 1>for Bloomberg Intelligence. Thanks for being here, Drew. Of course,

0:06:31.440 --> 0:06:34.160
<v Speaker 1>we know just how challenged the housing market's been with

0:06:34.360 --> 0:06:37.800
<v Speaker 1>high mortgage rates and high listing prices. How could that

0:06:37.839 --> 0:06:40.480
<v Speaker 1>play into the results we get from Home Depot on Tuesday.

0:06:40.720 --> 0:06:43.800
<v Speaker 3>Sure, So heading into the results, the bar is pretty

0:06:43.839 --> 0:06:46.680
<v Speaker 3>low for home Depot. If you recalled, during their last

0:06:46.720 --> 0:06:49.800
<v Speaker 3>earnings release, they guided to same store sales being down

0:06:49.800 --> 0:06:52.560
<v Speaker 3>about three to four percent for the full year, So

0:06:52.600 --> 0:06:54.359
<v Speaker 3>that's kind of what we're expecting to see in the

0:06:54.400 --> 0:06:56.560
<v Speaker 3>fourth quarter as well. If you look at some of

0:06:56.640 --> 0:07:00.320
<v Speaker 3>the data on retail sales. You'll see that when you

0:07:00.320 --> 0:07:03.080
<v Speaker 3>look at home centers, the market's still declining in the

0:07:03.160 --> 0:07:07.279
<v Speaker 3>low to mid single digits. So it's still a challenging environment,

0:07:07.320 --> 0:07:09.400
<v Speaker 3>but I think the attention has really started to shift

0:07:09.880 --> 0:07:12.560
<v Speaker 3>to twenty twenty four. And on that note, we would

0:07:12.600 --> 0:07:17.160
<v Speaker 3>expect that they're going to suggest probably a remodeling market

0:07:17.200 --> 0:07:19.840
<v Speaker 3>that's relatively flat next year, and that would be similar

0:07:19.920 --> 0:07:22.200
<v Speaker 3>to some of the commentary that we heard from some

0:07:22.280 --> 0:07:25.200
<v Speaker 3>of their suppliers. So better trends in the second half,

0:07:25.360 --> 0:07:27.720
<v Speaker 3>first half, but still a little bit of a challenging

0:07:27.800 --> 0:07:28.440
<v Speaker 3>market out there.

0:07:28.680 --> 0:07:32.600
<v Speaker 1>You wonder, well whether that outlook for the second half

0:07:32.880 --> 0:07:37.720
<v Speaker 1>could stay as resilient if we continue to see interest

0:07:37.800 --> 0:07:40.160
<v Speaker 1>rates at the levels that we're at right now. In

0:07:40.200 --> 0:07:43.640
<v Speaker 1>this expectation in the market that maybe the Fed's not

0:07:43.680 --> 0:07:45.840
<v Speaker 1>going to be able to move as quickly as we

0:07:45.920 --> 0:07:48.560
<v Speaker 1>might like. I mean, that could play into the outlook

0:07:48.560 --> 0:07:49.880
<v Speaker 1>for home depot as well, couldn't it.

0:07:50.120 --> 0:07:52.080
<v Speaker 3>Yeah, that's a great point because part of the reason

0:07:52.080 --> 0:07:54.120
<v Speaker 3>that we think the second half will get better is

0:07:54.120 --> 0:07:57.360
<v Speaker 3>because we're assuming in our base case that mortgage rates

0:07:57.400 --> 0:08:00.200
<v Speaker 3>fall down to somewhere six and quarter six and a

0:08:00.240 --> 0:08:02.360
<v Speaker 3>half percent as we get through the year, and the

0:08:02.400 --> 0:08:05.400
<v Speaker 3>idea is that would boost existing home sales. And as

0:08:05.440 --> 0:08:08.000
<v Speaker 3>we know, people that move tend to spend significantly more

0:08:08.040 --> 0:08:10.920
<v Speaker 3>than people that don't move. So to the extent that

0:08:11.160 --> 0:08:13.560
<v Speaker 3>interest rates remain high, you know, we have seen a

0:08:13.600 --> 0:08:16.400
<v Speaker 3>lot of volatility, and with that hot CPI print we

0:08:16.520 --> 0:08:20.400
<v Speaker 3>had recently, we actually see mortgage rates back above seven percent.

0:08:20.480 --> 0:08:22.800
<v Speaker 3>So to the extent that rates remain high and volatile,

0:08:23.080 --> 0:08:26.520
<v Speaker 3>that could certainly impact existing home sales and ultimately demand

0:08:26.560 --> 0:08:28.000
<v Speaker 3>for remodeling spending.

0:08:28.320 --> 0:08:32.079
<v Speaker 1>And to the point about home remodel spending, you got

0:08:32.120 --> 0:08:34.480
<v Speaker 1>to wonder what the appetite is for a big home

0:08:34.600 --> 0:08:38.800
<v Speaker 1>projects right now that home depot caters to with inflation

0:08:39.000 --> 0:08:41.520
<v Speaker 1>where it is, I mean, how can you game that out?

0:08:41.760 --> 0:08:44.240
<v Speaker 3>Yees. So, we have seen a pullback in big ticket

0:08:44.360 --> 0:08:47.920
<v Speaker 3>discretionary purchases. That's really been one of the drivers over

0:08:47.960 --> 0:08:50.520
<v Speaker 3>the last couple of years that's really helped boost sames

0:08:50.520 --> 0:08:52.760
<v Speaker 3>source sales, and that's where we're seeing a pretty big pullback,

0:08:53.400 --> 0:08:56.240
<v Speaker 3>declines in the mid single digit range. We don't think

0:08:56.320 --> 0:08:59.520
<v Speaker 3>these projects are necessarily being destroyed, but they're being delayed.

0:08:59.520 --> 0:09:02.160
<v Speaker 3>So we do think that as existing home sales start

0:09:02.200 --> 0:09:04.560
<v Speaker 3>to pick up and we get to the tail end

0:09:04.559 --> 0:09:06.920
<v Speaker 3>of twenty twenty four and into twenty twenty five, we

0:09:06.960 --> 0:09:09.120
<v Speaker 3>do expect to see a rebound, and one of the

0:09:09.160 --> 0:09:12.160
<v Speaker 3>reasons is because what we're seeing with home equity. Home

0:09:12.200 --> 0:09:14.480
<v Speaker 3>prices are up more than forty percent over the last

0:09:14.559 --> 0:09:18.079
<v Speaker 3>couple of years, and homeowners are sitting on record home equity.

0:09:18.320 --> 0:09:21.319
<v Speaker 3>On average, average home owner has about three hundred thousand

0:09:21.360 --> 0:09:24.120
<v Speaker 3>dollars in equity. So we do think that that big

0:09:24.160 --> 0:09:27.560
<v Speaker 3>ticket market will start to unfreeze towards a tail end

0:09:27.559 --> 0:09:29.040
<v Speaker 3>of next year and into twenty twenty five.

0:09:29.200 --> 0:09:31.400
<v Speaker 1>Yeah, that'll be an interesting point to see whether that

0:09:31.480 --> 0:09:36.079
<v Speaker 1>home equity continues to keep the consumer going like we've seen,

0:09:36.160 --> 0:09:40.720
<v Speaker 1>there's been so much resilience in consumer spending despite inflation.

0:09:41.160 --> 0:09:43.800
<v Speaker 1>When it comes to this quarter, though, Drew, how much

0:09:43.920 --> 0:09:47.359
<v Speaker 1>of a factor does seasonality play in? How do companies

0:09:47.600 --> 0:09:50.600
<v Speaker 1>like home Depot typically do in a holiday quarter?

0:09:51.040 --> 0:09:52.960
<v Speaker 3>Yeah, so when you think of home Depot, traditionally their

0:09:53.080 --> 0:09:56.040
<v Speaker 3>strong season is in the spring. That's you know, where

0:09:56.040 --> 0:09:58.160
<v Speaker 3>they make a lot of money. But that being said,

0:09:58.320 --> 0:10:00.680
<v Speaker 3>home Depot and those, you know, the broader home improvement

0:10:00.679 --> 0:10:04.040
<v Speaker 3>industry has really started to lean more into the holiday

0:10:04.040 --> 0:10:07.080
<v Speaker 3>because they've seen a lot of demand from consumers. You know,

0:10:07.120 --> 0:10:11.040
<v Speaker 3>that includes Halloween where they've had great success, you know,

0:10:11.160 --> 0:10:14.360
<v Speaker 3>great great deals on Black Friday, and they've continued that

0:10:14.480 --> 0:10:19.400
<v Speaker 3>into the Christmas holiday. You've see them expand their assortments

0:10:19.400 --> 0:10:22.719
<v Speaker 3>and can consumers have really reacted positive, positively. So it's

0:10:22.760 --> 0:10:25.280
<v Speaker 3>not an area where you would traditionally think of a

0:10:25.280 --> 0:10:28.480
<v Speaker 3>home improvement retailer like home Depot really leaning into, but

0:10:28.559 --> 0:10:31.280
<v Speaker 3>it is. It is something that they've got more involved

0:10:31.320 --> 0:10:32.600
<v Speaker 3>in over the last couple of years.

0:10:32.720 --> 0:10:35.719
<v Speaker 1>And you can't help but notice the inflatables that time

0:10:35.800 --> 0:10:38.040
<v Speaker 1>of year that put out on the lawn. Now, I

0:10:38.040 --> 0:10:40.800
<v Speaker 1>know you've done some research over at BI on the

0:10:40.840 --> 0:10:43.720
<v Speaker 1>growth opportunity that home Depot could get out of the

0:10:43.720 --> 0:10:49.320
<v Speaker 1>professional contractor segment as opposed to DIY customers. Is that

0:10:49.520 --> 0:10:53.080
<v Speaker 1>something that home Depots moving into more aggressively and can

0:10:53.120 --> 0:10:55.320
<v Speaker 1>we see that reflected in the results as well?

0:10:55.520 --> 0:10:58.400
<v Speaker 3>Yeah? Great question. So in the near term, the professional

0:10:58.440 --> 0:11:03.200
<v Speaker 3>contractor is still out out performing the DIY customer. But

0:11:03.200 --> 0:11:06.240
<v Speaker 3>if we step back and we look big picture, home

0:11:06.280 --> 0:11:08.800
<v Speaker 3>Depot generates about fifty percent of their sales from the

0:11:08.840 --> 0:11:12.040
<v Speaker 3>professional contractor on the other hand, Lows generates about twenty

0:11:12.040 --> 0:11:14.520
<v Speaker 3>five percent, so that's been one of the key drivers

0:11:14.960 --> 0:11:18.200
<v Speaker 3>of relative performance for Home Depot. But what's interesting is

0:11:18.200 --> 0:11:19.719
<v Speaker 3>we kind of look down the road a little bit.

0:11:19.720 --> 0:11:23.680
<v Speaker 3>They're tackling a new market for what they call complex pros.

0:11:23.880 --> 0:11:27.200
<v Speaker 3>So these are bigger projects, think of large scale remodels

0:11:27.200 --> 0:11:30.120
<v Speaker 3>and renovations, and what they're trying to do is really

0:11:30.160 --> 0:11:33.880
<v Speaker 3>consolidate the number of suppliers a contractor needs to work with.

0:11:34.040 --> 0:11:37.400
<v Speaker 3>So you think of a traditional contractor, maybe they're getting

0:11:37.440 --> 0:11:40.040
<v Speaker 3>windows and doors from one supplier, they're getting flooring and

0:11:40.120 --> 0:11:43.000
<v Speaker 3>cabinets from somewhere else. So what Home Depot is looking

0:11:43.040 --> 0:11:44.960
<v Speaker 3>to do, and they've rolled this out in a couple markets,

0:11:45.120 --> 0:11:49.760
<v Speaker 3>is consolidate that relationship. They want to bring everything in house,

0:11:50.160 --> 0:11:52.160
<v Speaker 3>and they're looking to be able to do this type

0:11:52.200 --> 0:11:55.160
<v Speaker 3>of project in bulk. So it's something that represents a

0:11:55.240 --> 0:11:58.000
<v Speaker 3>huge untapped market for them. It's probably something that's going

0:11:58.040 --> 0:12:00.680
<v Speaker 3>to develop over the next several years, but as you mentioned,

0:12:00.840 --> 0:12:02.400
<v Speaker 3>a big growth growth opportunity.

0:12:02.480 --> 0:12:04.280
<v Speaker 1>Nonetheless, do you think that's the kind of thing that

0:12:04.360 --> 0:12:06.400
<v Speaker 1>could play into the outlook for this year that we

0:12:06.600 --> 0:12:08.480
<v Speaker 1>get from Home Depot this week so.

0:12:08.440 --> 0:12:10.520
<v Speaker 3>I don't know that necessarily that it's going to move

0:12:10.559 --> 0:12:13.760
<v Speaker 3>the needle in twenty twenty four. You know, we do

0:12:13.800 --> 0:12:15.880
<v Speaker 3>think that the pro will probably come back with greater

0:12:15.920 --> 0:12:18.200
<v Speaker 3>strength towards the end of the year. But in terms

0:12:18.200 --> 0:12:21.320
<v Speaker 3>of this kind of new initiative on those large complex projects,

0:12:21.360 --> 0:12:23.480
<v Speaker 3>you think that's probably more of a twenty twenty five

0:12:24.080 --> 0:12:25.520
<v Speaker 3>into twenty twenty six story.

0:12:26.120 --> 0:12:27.920
<v Speaker 1>Interesting. Well, we're going to be looking out for those

0:12:27.960 --> 0:12:31.680
<v Speaker 1>results from home depot just around the corner here. So

0:12:31.800 --> 0:12:33.840
<v Speaker 1>thanks for this, Drew, really good having you on with us.

0:12:34.080 --> 0:12:34.440
<v Speaker 3>Thank you.

0:12:34.760 --> 0:12:38.400
<v Speaker 1>That's Bloomberg Intelligence Senior analyst Drew Redding. Up next on

0:12:38.440 --> 0:12:41.920
<v Speaker 1>the program, how to Prepare for a second Trump presidency.

0:12:42.400 --> 0:12:45.600
<v Speaker 1>John Authurs joins us with his opinion, including why the

0:12:45.679 --> 0:12:48.719
<v Speaker 1>obvious market bets might not be the right ones. That's

0:12:48.760 --> 0:12:52.280
<v Speaker 1>straight ahead on this special holiday edition of Bloomberg day Break.

0:12:52.400 --> 0:12:59.440
<v Speaker 1>I'm Nathan Hager, and this is Bloomberg. You're listening to

0:12:59.480 --> 0:13:02.920
<v Speaker 1>a special holiday edition of Bloomberg Daybreak. US markets are

0:13:02.960 --> 0:13:05.880
<v Speaker 1>closed for President's Day. I'm Nathan Hager. That as we

0:13:05.880 --> 0:13:09.400
<v Speaker 1>get closer to the next presidential election, the question that

0:13:09.520 --> 0:13:13.000
<v Speaker 1>many investors are asking themselves more and more is this

0:13:13.640 --> 0:13:17.560
<v Speaker 1>how should I position for a second Trump presidency? To

0:13:17.600 --> 0:13:19.920
<v Speaker 1>try to answer that question, we bring in Bloomberg opinion

0:13:19.960 --> 0:13:23.600
<v Speaker 1>columnist John Authurs, who writes on markets and investment. Great

0:13:23.640 --> 0:13:25.400
<v Speaker 1>to have you on with us, John, And while none

0:13:25.440 --> 0:13:28.200
<v Speaker 1>of this is a foregone conclusion, we did see how

0:13:28.280 --> 0:13:31.800
<v Speaker 1>caught off guard markets were after Trump one in twenty sixteen.

0:13:31.880 --> 0:13:34.000
<v Speaker 1>Are we in a better position this time around? I mean,

0:13:34.000 --> 0:13:35.480
<v Speaker 1>we kind of know what we're going to get from

0:13:35.480 --> 0:13:37.880
<v Speaker 1>a Trump presidency in some respects.

0:13:37.920 --> 0:13:40.120
<v Speaker 4>In some respects, I mean, I think that the big

0:13:40.120 --> 0:13:44.160
<v Speaker 4>difference is that absolutely everybody knows that it could happen,

0:13:44.720 --> 0:13:48.880
<v Speaker 4>whereas eight years ago most people didn't think that. The

0:13:48.960 --> 0:13:51.920
<v Speaker 4>other interesting thing about last time around, though, was that

0:13:52.000 --> 0:13:57.280
<v Speaker 4>the actual impact of how Trump would affect markets was

0:13:58.760 --> 0:14:02.080
<v Speaker 4>very difficult to gauge. So you had the last few

0:14:02.080 --> 0:14:06.280
<v Speaker 4>months before the election. Every time something looked good for Trump,

0:14:06.320 --> 0:14:09.480
<v Speaker 4>the markets would sell off, and then when he actually

0:14:09.520 --> 0:14:16.120
<v Speaker 4>surprisingly won, the markets had a great boom. So that

0:14:16.200 --> 0:14:19.640
<v Speaker 4>in itself makes it very hard to track what he's

0:14:19.680 --> 0:14:23.320
<v Speaker 4>going to do. I think what is intriguing at the moment,

0:14:25.560 --> 0:14:27.640
<v Speaker 4>and I'll try to stay in my lane as a

0:14:27.720 --> 0:14:31.720
<v Speaker 4>financial rather than the political pundit, but the belief is

0:14:32.080 --> 0:14:38.400
<v Speaker 4>very strong, even among relatively more conservative outlets, that Trump

0:14:38.440 --> 0:14:40.600
<v Speaker 4>two point zero is going to be different, that he's

0:14:40.840 --> 0:14:43.520
<v Speaker 4>really going to do populism properly this time, that he's

0:14:43.520 --> 0:14:46.800
<v Speaker 4>going to be genuinely authoritarian, that he's going to do

0:14:46.840 --> 0:14:49.040
<v Speaker 4>protectionism properly this time, and that he's really going to

0:14:49.080 --> 0:14:54.000
<v Speaker 4>leave NATO, et cetera, et cetera. That is interesting how

0:14:54.240 --> 0:14:59.480
<v Speaker 4>strong that point of view has become and how quickly

0:14:59.520 --> 0:15:02.840
<v Speaker 4>it to shape At about the point that Rond de

0:15:02.920 --> 0:15:06.080
<v Speaker 4>Santis has plainly blown it, towards the end of last year,

0:15:06.200 --> 0:15:09.000
<v Speaker 4>it really became very clear that it was going to

0:15:09.040 --> 0:15:11.440
<v Speaker 4>be a Trump candidacy.

0:15:11.480 --> 0:15:11.800
<v Speaker 2>Again.

0:15:13.600 --> 0:15:19.000
<v Speaker 4>It's interesting how that suddenly became something approaching a media panic,

0:15:19.720 --> 0:15:21.880
<v Speaker 4>and it's hard to imagine that that would also have

0:15:21.920 --> 0:15:24.800
<v Speaker 4>had an effect on the market. So we're dealing with

0:15:24.840 --> 0:15:28.200
<v Speaker 4>what is with something that people can understand and can

0:15:28.280 --> 0:15:32.840
<v Speaker 4>accept as a possible outcome, which is different from eight

0:15:32.960 --> 0:15:35.280
<v Speaker 4>years ago. But I'm not sure that the level of

0:15:35.400 --> 0:15:42.160
<v Speaker 4>certainty about exactly what he would mean is there. I mean,

0:15:42.200 --> 0:15:46.280
<v Speaker 4>in terms of his economics eight years ago, Trump's first

0:15:46.360 --> 0:15:53.680
<v Speaker 4>term was basically straightforward chamber of commerce, traditional conservative republican economics,

0:15:53.720 --> 0:15:59.800
<v Speaker 4>tax cuts, lower regulation, nothing that would particularly scare the market.

0:16:00.400 --> 0:16:03.200
<v Speaker 4>Some of the stuff that's being talked about this time.

0:16:03.240 --> 0:16:08.000
<v Speaker 4>If he really does try for something more genuinely economically populist,

0:16:09.040 --> 0:16:11.680
<v Speaker 4>wouldn't necessarily be so popular with the markets.

0:16:11.800 --> 0:16:14.040
<v Speaker 1>Yeah, and some of the things that have been talked

0:16:14.040 --> 0:16:17.359
<v Speaker 1>about to your point have already started to raise some eyebrows,

0:16:17.360 --> 0:16:21.560
<v Speaker 1>This idea of a sixty six zero percent tariff on

0:16:21.960 --> 0:16:27.920
<v Speaker 1>Chinese imports and elevated tariffs across the board for other markets.

0:16:28.040 --> 0:16:30.720
<v Speaker 1>I mean, how do you prepare for something like that?

0:16:30.960 --> 0:16:34.280
<v Speaker 1>Is that something that investors really do need to keep

0:16:34.280 --> 0:16:37.080
<v Speaker 1>in mind in the event that the election does go

0:16:37.240 --> 0:16:37.880
<v Speaker 1>Trump's way.

0:16:38.800 --> 0:16:41.440
<v Speaker 4>I think you can tell that investors do have that

0:16:41.520 --> 0:16:44.120
<v Speaker 4>in mind because of what's been happening to Chinese stocks,

0:16:45.200 --> 0:16:50.240
<v Speaker 4>which there are many good reasons to be relatively negative

0:16:50.240 --> 0:16:55.400
<v Speaker 4>about China these days. The fact that, depending on which

0:16:55.440 --> 0:16:58.360
<v Speaker 4>index you're using, they are Chinese stocks and net worth

0:16:58.480 --> 0:17:01.640
<v Speaker 4>no more than they were twenty years ago. When you

0:17:01.680 --> 0:17:04.520
<v Speaker 4>think of the growth that's happened in China's economy in

0:17:04.920 --> 0:17:09.600
<v Speaker 4>that period, Plainly that would make no sense at all

0:17:09.880 --> 0:17:14.880
<v Speaker 4>unless people were trying to factor in some fairly considerable

0:17:15.119 --> 0:17:19.560
<v Speaker 4>risk of major protectionism. Ultimately, I think the way that

0:17:19.920 --> 0:17:22.639
<v Speaker 4>benefits if there is somebody to go long on, and

0:17:22.720 --> 0:17:25.280
<v Speaker 4>obviously you want to be short on things directly affected

0:17:25.600 --> 0:17:29.360
<v Speaker 4>with China. At the moment, there is very unobtrusively there

0:17:29.440 --> 0:17:33.840
<v Speaker 4>is a big boom in Mexico, which is extremely counterintuitive

0:17:33.880 --> 0:17:39.040
<v Speaker 4>given that Trump's first policy pronouncement when he first immediately

0:17:39.040 --> 0:17:41.639
<v Speaker 4>after coming down that escalator in twenty fifteen, was to

0:17:41.680 --> 0:17:46.159
<v Speaker 4>attack Mexico. Mexico is probably the single biggest beneficiary of

0:17:46.200 --> 0:17:50.200
<v Speaker 4>a really big tarif on China because it has much

0:17:50.240 --> 0:17:54.040
<v Speaker 4>more of a chance to get to get jobs back

0:17:54.040 --> 0:17:56.760
<v Speaker 4>at on its side of the border. And it would

0:17:56.840 --> 0:18:01.800
<v Speaker 4>behoove the US to make it easier to builds jobs

0:18:01.800 --> 0:18:03.919
<v Speaker 4>and factories at the border, because that way people are

0:18:03.960 --> 0:18:07.680
<v Speaker 4>more likely to immigrate from Central Americans stay there rather

0:18:07.680 --> 0:18:08.960
<v Speaker 4>than try to cross the border.

0:18:09.040 --> 0:18:13.600
<v Speaker 1>What could it mean for the dollar the bond market

0:18:13.960 --> 0:18:17.480
<v Speaker 1>if the president, if the former president does become president,

0:18:18.040 --> 0:18:22.040
<v Speaker 1>succeeds in doing populism, as you say, right this.

0:18:22.000 --> 0:18:31.080
<v Speaker 4>Time, I think if he does populism right and again, politically,

0:18:31.119 --> 0:18:34.679
<v Speaker 4>there are there are lots of things wrong with the

0:18:34.680 --> 0:18:37.800
<v Speaker 4>way the American and Western European economies have gone over

0:18:37.840 --> 0:18:42.440
<v Speaker 4>the last few decades, so it's a perfectly defensible policy

0:18:42.920 --> 0:18:47.920
<v Speaker 4>choice to make. I think it's pretty straightforward that markets

0:18:47.960 --> 0:18:53.480
<v Speaker 4>wouldn't like it. However, on the issue of tariffs, if

0:18:53.480 --> 0:18:57.320
<v Speaker 4>he's really going to go with big protectionism, that's bad

0:18:57.320 --> 0:19:01.800
<v Speaker 4>for the dollar because the foreign exchange market will generally

0:19:01.920 --> 0:19:08.800
<v Speaker 4>try to counteract tariffs. So if that if if you're

0:19:08.840 --> 0:19:16.640
<v Speaker 4>making imports that much less competitive through adding on tariffs,

0:19:16.680 --> 0:19:20.080
<v Speaker 4>that the the currency market will generally make them more

0:19:20.119 --> 0:19:24.520
<v Speaker 4>competitive again by by changing the by changing the exchange rates.

0:19:25.560 --> 0:19:32.880
<v Speaker 4>I think the very interesting subject that may come up,

0:19:33.320 --> 0:19:36.920
<v Speaker 4>and which is a much more valid subject than any other,

0:19:37.119 --> 0:19:44.600
<v Speaker 4>is fiscal policy. If Trump is at the moment, there's

0:19:45.000 --> 0:19:48.960
<v Speaker 4>in terms of neither Biden nor Trump has any real

0:19:49.040 --> 0:19:51.680
<v Speaker 4>right to moral right to complain about the scale of

0:19:51.680 --> 0:19:54.239
<v Speaker 4>the deficit at the moment, because they both started their

0:19:54.320 --> 0:19:59.439
<v Speaker 4>terms with by taking actions that quite obviously increase the deficit.

0:19:59.760 --> 0:20:05.000
<v Speaker 4>Huge unfunded tax cutman, you know, the the the spending

0:20:05.040 --> 0:20:09.600
<v Speaker 4>that Biden did at the beginning of his turn. There

0:20:09.680 --> 0:20:13.720
<v Speaker 4>does come a point, and when rates are higher, that

0:20:13.800 --> 0:20:18.240
<v Speaker 4>point is closer. When you really can't finance too much

0:20:18.320 --> 0:20:21.639
<v Speaker 4>more borrowing or you can, but it just has to

0:20:21.640 --> 0:20:28.000
<v Speaker 4>be at higher rates. That is one that I think

0:20:28.080 --> 0:20:30.760
<v Speaker 4>there is. There's certainly a chance if if you get

0:20:31.080 --> 0:20:34.960
<v Speaker 4>a Trump two point zero and he starts with a

0:20:35.000 --> 0:20:38.800
<v Speaker 4>with a tax cut in a tariff and spend some

0:20:38.840 --> 0:20:44.800
<v Speaker 4>money on something boosts defense spending, something like that, it's

0:20:44.840 --> 0:20:47.719
<v Speaker 4>possible that you really do get a bond market strike

0:20:48.359 --> 0:20:51.720
<v Speaker 4>that the you know, the bonds, bond yields shoot up.

0:20:51.960 --> 0:20:54.800
<v Speaker 1>And to your point, John, the one of the big

0:20:55.240 --> 0:20:58.560
<v Speaker 1>legislative victories that Trump one point I had was a

0:20:58.600 --> 0:21:02.200
<v Speaker 1>massive tax cut, as you glued to. It raises the

0:21:02.280 --> 0:21:06.040
<v Speaker 1>question about whether the FED steps in to sort of

0:21:06.080 --> 0:21:09.359
<v Speaker 1>counterbalance whatever might happen on the fiscal side. And even

0:21:09.440 --> 0:21:12.959
<v Speaker 1>during the first go round for former President Trump, we

0:21:13.000 --> 0:21:17.160
<v Speaker 1>saw him really hit the FED hard, at least rhetorically

0:21:17.200 --> 0:21:21.880
<v Speaker 1>on social media. Yes, what's the potential impact on FED

0:21:21.880 --> 0:21:24.520
<v Speaker 1>independence of a second Trump presidency.

0:21:24.840 --> 0:21:29.200
<v Speaker 4>That's a very interesting one. I certainly get the impression,

0:21:29.560 --> 0:21:32.200
<v Speaker 4>but again we need to see how you know the

0:21:32.560 --> 0:21:40.480
<v Speaker 4>difference between bark and bite. He did appoint j Powell, who,

0:21:41.320 --> 0:21:44.600
<v Speaker 4>at the point that he hired him had been a

0:21:44.600 --> 0:21:46.880
<v Speaker 4>FED government for I think as long as ten years.

0:21:46.920 --> 0:21:48.959
<v Speaker 4>It's certainly been around for a long time. He had

0:21:49.200 --> 0:21:52.760
<v Speaker 4>never dissented from any of the monetary policy decisions they

0:21:52.760 --> 0:21:56.800
<v Speaker 4>had made in the years before he could have. You know,

0:21:57.000 --> 0:22:00.480
<v Speaker 4>there were a couple of plausible candidates Kevin Walsh Taylor

0:22:00.480 --> 0:22:06.800
<v Speaker 4>that there were some candidates who would have very clearly

0:22:07.200 --> 0:22:11.959
<v Speaker 4>really shaken the FED up, and instead he really moved.

0:22:12.800 --> 0:22:15.760
<v Speaker 4>It's difficult to see anything that Jay Powell has done

0:22:15.760 --> 0:22:18.720
<v Speaker 4>that you can confidently say Janet Yellen wouldn't have done.

0:22:19.200 --> 0:22:22.600
<v Speaker 4>So let's get that, get that that clear at first.

0:22:22.640 --> 0:22:26.720
<v Speaker 4>It's one of the things that happened in Trump one point, oh,

0:22:26.840 --> 0:22:30.600
<v Speaker 4>was that he blinked on the possibility of really shaking

0:22:30.680 --> 0:22:34.000
<v Speaker 4>up the FED. And in terms of the institutions, the

0:22:34.040 --> 0:22:37.560
<v Speaker 4>Senate bulked at one or two of the obviously unqualified

0:22:38.000 --> 0:22:41.800
<v Speaker 4>people he wanted to put on the board. Now, if

0:22:41.800 --> 0:22:44.240
<v Speaker 4>you have and I think if he does win, the

0:22:44.359 --> 0:22:48.600
<v Speaker 4>chances that he has the Senate very high. If he

0:22:48.640 --> 0:22:53.360
<v Speaker 4>has a majority in the in the Senate and that

0:22:53.400 --> 0:22:58.280
<v Speaker 4>majority has moved more in you know, the marga direction

0:22:58.440 --> 0:23:02.120
<v Speaker 4>and further away from the you know, Chamber of Commerce

0:23:02.400 --> 0:23:09.320
<v Speaker 4>institutional Republican wing, Yeah, it's possible he could really do

0:23:09.480 --> 0:23:15.320
<v Speaker 4>some things to the FEDS in he could effectively change

0:23:15.359 --> 0:23:19.680
<v Speaker 4>the Fed's independence by bringing on some much more radically

0:23:19.720 --> 0:23:26.160
<v Speaker 4>minded people. That that is a possibility. Again, I'm not

0:23:26.240 --> 0:23:29.199
<v Speaker 4>going to tell you that the FED has done a

0:23:29.240 --> 0:23:34.919
<v Speaker 4>perfect job in every respect and could not is above criticism,

0:23:34.920 --> 0:23:38.640
<v Speaker 4>because that's obviously not true. I again, from the point

0:23:38.640 --> 0:23:40.600
<v Speaker 4>of view of how markets would deal with it, they

0:23:40.680 --> 0:23:43.760
<v Speaker 4>like the devil they know, and that would scare them.

0:23:44.000 --> 0:23:47.240
<v Speaker 4>They are much happier with monetary policy being at least

0:23:47.600 --> 0:23:53.200
<v Speaker 4>to some extent, free from democracy, free from the traviles

0:23:53.240 --> 0:23:58.439
<v Speaker 4>of being being buffeted by democracy. So that is a

0:23:59.520 --> 0:24:04.080
<v Speaker 4>the the FED could become a very interesting question. I

0:24:04.080 --> 0:24:10.679
<v Speaker 4>mean for his first year. I don't know of a way.

0:24:10.840 --> 0:24:13.640
<v Speaker 4>I mean, there's you know, we now have an impeachment

0:24:13.720 --> 0:24:16.760
<v Speaker 4>of Secretary mayorcus I mean, unless they want to impeach

0:24:16.880 --> 0:24:21.000
<v Speaker 4>J Powell or something. I can't imagine we get two

0:24:21.040 --> 0:24:24.880
<v Speaker 4>thirds in the Senate, I don't I'm not, as far

0:24:24.960 --> 0:24:28.680
<v Speaker 4>as I'm aware, he can't fire Powell until his term

0:24:28.760 --> 0:24:36.960
<v Speaker 4>ends a year into the next presidential ten uh. Generally speaking,

0:24:38.000 --> 0:24:42.720
<v Speaker 4>if the if the FED thinks fiscal policy is too

0:24:42.760 --> 0:24:48.199
<v Speaker 4>stimulative and may tend to make inflation worse. It's just

0:24:48.320 --> 0:24:55.280
<v Speaker 4>straightforwardly in their mandate. Okay, they'd better tighten monetary policy accordingly. Yeah.

0:24:55.280 --> 0:24:58.040
<v Speaker 4>That that's that they're not allowed to sort of get

0:24:58.080 --> 0:25:02.000
<v Speaker 4>into a you know, political flame fight about whether it

0:25:02.080 --> 0:25:04.920
<v Speaker 4>was sensible to be spending more money. But they are

0:25:04.960 --> 0:25:08.359
<v Speaker 4>allowed to say, we see this as increasing the risks

0:25:08.359 --> 0:25:12.920
<v Speaker 4>of overheating and inflation, so we're raising rates. That's you know,

0:25:13.040 --> 0:25:16.160
<v Speaker 4>that's that's very central to the traditional punch bowl rule.

0:25:16.600 --> 0:25:18.640
<v Speaker 1>It's a lot to think about as we get closer

0:25:18.680 --> 0:25:22.760
<v Speaker 1>to finding out what version of the next presidency we're

0:25:22.760 --> 0:25:26.080
<v Speaker 1>going to get check. That's Bloomberg Opinion columnist John Authurs.

0:25:26.280 --> 0:25:28.959
<v Speaker 1>And up next on the program, we talked return to Office.

0:25:29.080 --> 0:25:31.120
<v Speaker 1>Stay with us for a conversation with a big name

0:25:31.160 --> 0:25:34.680
<v Speaker 1>in architecture and design for his take on getting workers

0:25:35.440 --> 0:25:37.959
<v Speaker 1>in the bill. That's straight Ahead. On the special holiday

0:25:38.080 --> 0:25:41.680
<v Speaker 1>edition of Bloomberg Daybreak. I'm Nathan Hager, and this is.

0:25:41.680 --> 0:25:41.919
<v Speaker 2>Going to.

0:25:45.119 --> 0:25:48.640
<v Speaker 1>Welcome back to the special holiday edition of Bloomberg Daybreak.

0:25:48.760 --> 0:25:52.159
<v Speaker 1>US markets are closed for President's Day. I'm Nathan Hager.

0:25:52.280 --> 0:25:54.479
<v Speaker 1>Now let's bring you a conversation with a man who

0:25:54.560 --> 0:25:57.960
<v Speaker 1>wants to change the face of our cities. Thomas Heatherwick

0:25:58.200 --> 0:26:01.159
<v Speaker 1>is the designer behind New York's Little Island and Vessel

0:26:01.240 --> 0:26:04.280
<v Speaker 1>in Manhattan's Hudson Yard district, as well as Google's new

0:26:04.320 --> 0:26:07.520
<v Speaker 1>London headquarters. He says our buildings need to be more

0:26:07.600 --> 0:26:11.840
<v Speaker 1>human and less boring. Heatherwick has said Vessel will reopen

0:26:11.880 --> 0:26:14.520
<v Speaker 1>to the public this year after being closed in twenty

0:26:14.560 --> 0:26:18.000
<v Speaker 1>twenty one for safety reasons. He's been speaking with Bloomberg

0:26:18.080 --> 0:26:21.280
<v Speaker 1>Daybreak Europe banker Steven Carrol Stephen Nathan.

0:26:21.480 --> 0:26:24.080
<v Speaker 5>Thomas Heatherwick is one of the best known names in

0:26:24.200 --> 0:26:27.320
<v Speaker 5>modern building design. His studio has won more than one

0:26:27.400 --> 0:26:31.040
<v Speaker 5>hundred awards. Cities from New York to London to Tokyo

0:26:31.119 --> 0:26:34.080
<v Speaker 5>boast examples of his work, and he even designed the

0:26:34.200 --> 0:26:37.520
<v Speaker 5>cauldron for the Olympic flame in the twenty twelve London Games.

0:26:38.240 --> 0:26:41.240
<v Speaker 5>Now he wants to end what he's called a blandemic

0:26:41.400 --> 0:26:44.120
<v Speaker 5>in buildings. He's written a book on the subject called

0:26:44.320 --> 0:26:47.440
<v Speaker 5>Human Eyes. I've been discussing this with him and how

0:26:47.480 --> 0:26:50.520
<v Speaker 5>he's applying this philosophy to his latest projects.

0:26:51.000 --> 0:26:53.840
<v Speaker 6>We talk about how nature is good and there is

0:26:53.880 --> 0:26:58.720
<v Speaker 6>evidence showing that people take less time to heal in

0:26:59.480 --> 0:27:02.800
<v Speaker 6>spaces where they can look out at nature, and what

0:27:02.960 --> 0:27:07.760
<v Speaker 6>nature has is a necessary visual complexity. And we've had

0:27:07.800 --> 0:27:12.640
<v Speaker 6>buildings for the last eighty years which are flatter and smoother,

0:27:13.119 --> 0:27:18.280
<v Speaker 6>and shinier and plainer and more serious than ever in history.

0:27:18.520 --> 0:27:22.520
<v Speaker 6>And what the science is starting to show is that

0:27:22.560 --> 0:27:25.720
<v Speaker 6>they aren't just maybe not nice. Some people might call

0:27:25.720 --> 0:27:29.119
<v Speaker 6>them ugly, but they actually your body starts to go

0:27:29.160 --> 0:27:32.879
<v Speaker 6>into stress when you don't have necessary visual complexity. But

0:27:32.920 --> 0:27:35.000
<v Speaker 6>I'm not calling to go back to the past and

0:27:35.040 --> 0:27:38.800
<v Speaker 6>copyhold buildings. Even some of the new buildings, they've really

0:27:38.880 --> 0:27:44.160
<v Speaker 6>made an effort to put visual enrichment and detail into them,

0:27:44.359 --> 0:27:47.240
<v Speaker 6>which makes it interesting to walk around. But it's not

0:27:47.440 --> 0:27:51.760
<v Speaker 6>just a cosmetic thing. What we've discovered is our humanness

0:27:52.240 --> 0:27:54.840
<v Speaker 6>needs places to have that interestingness.

0:27:55.119 --> 0:27:58.240
<v Speaker 5>That's a difficult conversation though, when you're thinking about where

0:27:58.280 --> 0:28:00.440
<v Speaker 5>the money goes in a project. What violence should we

0:28:00.520 --> 0:28:03.400
<v Speaker 5>be placing on design when it comes to a building

0:28:03.520 --> 0:28:05.800
<v Speaker 5>like that versus the cast values?

0:28:05.840 --> 0:28:08.320
<v Speaker 6>The word that value really is the right word. The

0:28:08.359 --> 0:28:12.120
<v Speaker 6>problem we had was that that style that came in

0:28:12.200 --> 0:28:18.960
<v Speaker 6>that said flatter, smoother, shinier, more serious, plainer was fashionably good,

0:28:19.640 --> 0:28:22.080
<v Speaker 6>was not good for us, but it was also a

0:28:22.119 --> 0:28:26.320
<v Speaker 6>bit cheaper, and so with the Humanized campaign, we're really

0:28:26.400 --> 0:28:30.639
<v Speaker 6>arguing that we need to make a step change a

0:28:30.680 --> 0:28:33.439
<v Speaker 6>bit like we've had in the world of architecture. We

0:28:33.520 --> 0:28:36.920
<v Speaker 6>talk about the green premium, which is that a building

0:28:37.119 --> 0:28:39.320
<v Speaker 6>you do need to pay a little bit more for

0:28:39.360 --> 0:28:44.440
<v Speaker 6>it to be highly environmentally good, performing well, but unless

0:28:44.480 --> 0:28:48.880
<v Speaker 6>people care about it. We've had this dirty secret in construction,

0:28:49.360 --> 0:28:53.880
<v Speaker 6>which is buildings get demolished, and so the worst value

0:28:54.200 --> 0:28:57.880
<v Speaker 6>is to build buildings that society doesn't care about because

0:28:58.080 --> 0:29:02.640
<v Speaker 6>they get demolished. So, for example, with commercial buildings, the

0:29:02.680 --> 0:29:05.320
<v Speaker 6>average age in the UK of a commercial building is

0:29:05.400 --> 0:29:08.440
<v Speaker 6>forty years, so if I was a commercial building, I

0:29:08.480 --> 0:29:11.720
<v Speaker 6>would have been killed thirteen years ago. And the carbon

0:29:12.240 --> 0:29:18.080
<v Speaker 6>in construction is five times that of the whole aviation industry.

0:29:18.520 --> 0:29:23.520
<v Speaker 6>So they're bad environmentally, they're bad socially because they don't

0:29:23.520 --> 0:29:27.480
<v Speaker 6>bring us together. Yeah, and after COVID, when the digital

0:29:27.520 --> 0:29:30.080
<v Speaker 6>revolution is really kicked in, you can stay at home,

0:29:30.200 --> 0:29:35.080
<v Speaker 6>get a PhD, work by everything. Cities are dangerous places

0:29:35.120 --> 0:29:38.040
<v Speaker 6>when you don't have people in them, So we need

0:29:38.120 --> 0:29:43.800
<v Speaker 6>cities that bring us together and nurture the togetherness and

0:29:43.840 --> 0:29:45.720
<v Speaker 6>not being scared of each other.

0:29:45.640 --> 0:29:47.479
<v Speaker 5>And does that need to go into planning rules then,

0:29:47.560 --> 0:29:49.520
<v Speaker 5>is it's the question that we need to change the

0:29:49.600 --> 0:29:51.960
<v Speaker 5>regulations around buildings in the same way that we do

0:29:52.000 --> 0:29:54.680
<v Speaker 5>around sustainability to incorporate rules like that.

0:29:55.600 --> 0:29:58.520
<v Speaker 6>Planning's being quite basic and it's a very difficult thing

0:29:58.560 --> 0:30:01.840
<v Speaker 6>to get right. But in the book we talk about

0:30:01.840 --> 0:30:05.240
<v Speaker 6>the three distances you can experience buildings. If you imagine

0:30:05.280 --> 0:30:07.520
<v Speaker 6>being one hundred and fifty meters away from a building,

0:30:07.560 --> 0:30:10.040
<v Speaker 6>seeing it from a distance, how it fits in with

0:30:10.080 --> 0:30:12.920
<v Speaker 6>the city. You then look at the street distance, which

0:30:12.960 --> 0:30:15.520
<v Speaker 6>is when you're starting to be maybe only twenty or

0:30:15.520 --> 0:30:19.200
<v Speaker 6>thirty meters away. But the most impactful and the one

0:30:19.240 --> 0:30:24.320
<v Speaker 6>that we've found the least regulatory support for design teams

0:30:24.520 --> 0:30:29.600
<v Speaker 6>for society is door distance, because actually your emotion isn't

0:30:29.680 --> 0:30:33.240
<v Speaker 6>at the top, it's at the bottom, because that's where

0:30:33.240 --> 0:30:36.560
<v Speaker 6>we all are, where us as pass us by walk past,

0:30:36.640 --> 0:30:40.120
<v Speaker 6>And we spend too much time talking about insides of buildings.

0:30:40.280 --> 0:30:44.040
<v Speaker 6>A thousand times more people will walk past the outside

0:30:44.360 --> 0:30:48.320
<v Speaker 6>than ever go inside. So designing for buildings to be

0:30:48.360 --> 0:30:51.320
<v Speaker 6>givers rather than take us I mean selfishly, as a

0:30:51.360 --> 0:30:55.600
<v Speaker 6>designer of buildings, I want your great grandchildren to say

0:30:55.720 --> 0:30:57.760
<v Speaker 6>about one of the buildings I've done, No, don't knock

0:30:57.800 --> 0:31:01.680
<v Speaker 6>it down, let's repair it, let's adjust it, instead of

0:31:01.720 --> 0:31:05.480
<v Speaker 6>saying meh, knock it down, because the carbon in buildings

0:31:05.640 --> 0:31:07.240
<v Speaker 6>is it's ridiculous.

0:31:07.320 --> 0:31:09.440
<v Speaker 5>On the projects that you've worked on, look for example

0:31:09.520 --> 0:31:11.760
<v Speaker 5>the Google campus, the King's Cross which people might be

0:31:11.840 --> 0:31:14.680
<v Speaker 5>very familiar with in London as well. There's a fantastic

0:31:14.760 --> 0:31:17.040
<v Speaker 5>roof garden going onto the top of that, which is

0:31:17.480 --> 0:31:19.560
<v Speaker 5>a really interesting design feature. But again that's when you

0:31:19.560 --> 0:31:22.600
<v Speaker 5>talk about perspective that's not at the street level, whereas

0:31:22.600 --> 0:31:25.480
<v Speaker 5>when you walk by its street level from the images

0:31:25.480 --> 0:31:27.880
<v Speaker 5>that we've seen, does it look that different from what

0:31:27.920 --> 0:31:30.400
<v Speaker 5>else that you see in the area. How would you

0:31:30.480 --> 0:31:32.200
<v Speaker 5>contribute to resolving that issue.

0:31:32.240 --> 0:31:34.360
<v Speaker 6>Well, I'm actually really pleased you've brought it up because

0:31:34.760 --> 0:31:36.440
<v Speaker 6>you don't know what we're doing at the ground level.

0:31:37.080 --> 0:31:39.400
<v Speaker 6>It is an enormous building. It's three hundred and thirty

0:31:39.400 --> 0:31:42.720
<v Speaker 6>meters long. It's the same size as a cruise liner

0:31:42.800 --> 0:31:46.360
<v Speaker 6>coming into King's Cross, so as you will see and

0:31:46.440 --> 0:31:49.080
<v Speaker 6>what isn't apparent at the moment behind the hoardings and

0:31:49.120 --> 0:31:51.960
<v Speaker 6>the amazing thing about the building is it's lifted up

0:31:52.000 --> 0:31:56.200
<v Speaker 6>two stories and so underneath we can build a village.

0:31:56.520 --> 0:31:59.680
<v Speaker 6>So that village will start to be being constructed this

0:31:59.760 --> 0:32:04.360
<v Speaker 6>year and that will be a higgeldy pigglety collection of

0:32:04.720 --> 0:32:09.280
<v Speaker 6>wooden sub buildings of differing heights. They tip forward at

0:32:09.280 --> 0:32:12.880
<v Speaker 6>different angles, they're not in alignment, they're different colors, they

0:32:12.920 --> 0:32:17.320
<v Speaker 6>have different people and community organizations as part of them.

0:32:17.640 --> 0:32:19.880
<v Speaker 6>So in a sense we're going to be doing a

0:32:20.000 --> 0:32:24.600
<v Speaker 6>radical chance to reinvent High Street. But to my point,

0:32:25.200 --> 0:32:28.800
<v Speaker 6>we judge buildings all the time by the top, just

0:32:28.840 --> 0:32:32.719
<v Speaker 6>as you have the ground is actually where your feeling is.

0:32:33.000 --> 0:32:35.480
<v Speaker 6>As you say, no one's in a helicopter looking down

0:32:35.480 --> 0:32:37.080
<v Speaker 6>on the amazing garden we put on the.

0:32:37.000 --> 0:32:39.200
<v Speaker 5>Top AND's tonally they're lucky people who work there that

0:32:39.280 --> 0:32:40.040
<v Speaker 5>get to use those.

0:32:40.080 --> 0:32:42.360
<v Speaker 6>Yeah, and it's wonderful. I mean we're in an incredible

0:32:42.360 --> 0:32:45.160
<v Speaker 6>building at this moment. You're one of the privileged people

0:32:45.200 --> 0:32:47.200
<v Speaker 6>in London who will get to be in this building,

0:32:47.520 --> 0:32:50.480
<v Speaker 6>as will the people in our Google building. But your

0:32:50.560 --> 0:32:54.200
<v Speaker 6>real duty, I believe as a building designer you're to

0:32:54.240 --> 0:32:58.160
<v Speaker 6>some extent a public servant, and so what are you

0:32:58.520 --> 0:33:01.320
<v Speaker 6>making a building give? But I don't think this is

0:33:01.400 --> 0:33:05.440
<v Speaker 6>sort of just altruistic. It means that for a Google

0:33:05.760 --> 0:33:09.240
<v Speaker 6>an organization like that, what does your employee think as

0:33:09.240 --> 0:33:12.720
<v Speaker 6>they walk into that building, as they tell their grandmother

0:33:12.800 --> 0:33:15.800
<v Speaker 6>they work there. How do the social values of that

0:33:15.880 --> 0:33:19.400
<v Speaker 6>building manifest? And for a very long time, we've had

0:33:19.480 --> 0:33:22.840
<v Speaker 6>buildings that have been takers, not givers. You know how

0:33:22.880 --> 0:33:25.040
<v Speaker 6>many times have you walked down a street past a

0:33:25.080 --> 0:33:29.480
<v Speaker 6>big glass lobby dead to the passer by and you

0:33:29.520 --> 0:33:32.880
<v Speaker 6>can see the some luxury private world beyond and you

0:33:32.920 --> 0:33:37.480
<v Speaker 6>can see the leather sofa and the marble reception desk,

0:33:37.720 --> 0:33:41.280
<v Speaker 6>but it's got nothing for you. It's almost rubbing in

0:33:41.320 --> 0:33:44.960
<v Speaker 6>its exclusiveness. So the Google building in King's Cross will

0:33:45.000 --> 0:33:45.800
<v Speaker 6>be the opposite of that.

0:33:46.040 --> 0:33:48.880
<v Speaker 5>Okay. I want to ask you about your journey on

0:33:49.000 --> 0:33:51.320
<v Speaker 5>coming to these conclusions in this latest book as well,

0:33:51.400 --> 0:33:53.840
<v Speaker 5>because you know you've had these huge tryants. We've talked

0:33:53.840 --> 0:33:57.720
<v Speaker 5>about some of them already. One project which has attracted

0:33:57.720 --> 0:34:00.680
<v Speaker 5>criticism was Vassal in New York. It had to be

0:34:00.760 --> 0:34:03.120
<v Speaker 5>closed to the public since twenty twenty one and over

0:34:03.160 --> 0:34:05.640
<v Speaker 5>a number of suicides that happened there. I wonder how

0:34:05.760 --> 0:34:08.440
<v Speaker 5>you feel about that project now and how you reflect

0:34:08.480 --> 0:34:10.239
<v Speaker 5>on what you learned from that process.

0:34:10.840 --> 0:34:17.280
<v Speaker 6>Vessel was a project commissioned to help create the atmosphere

0:34:17.320 --> 0:34:20.880
<v Speaker 6>and identity of a new district in New York that

0:34:20.920 --> 0:34:24.279
<v Speaker 6>hadn't existed before. It was a very very brave piece

0:34:24.320 --> 0:34:30.400
<v Speaker 6>of commissioning and an incredible investment in helping to wholeheartedly

0:34:30.440 --> 0:34:35.759
<v Speaker 6>make distinctiveness in a place. But it timed very unfortunately.

0:34:35.880 --> 0:34:40.880
<v Speaker 6>It timed its opening just before this terrible pandemic, something

0:34:40.920 --> 0:34:46.120
<v Speaker 6>that affected the mental health of millions of people all

0:34:46.120 --> 0:34:49.000
<v Speaker 6>over the world, and some of that mental health impact

0:34:49.040 --> 0:34:54.480
<v Speaker 6>was particularly felt amongst young people. That project was astonishingly

0:34:55.000 --> 0:34:58.800
<v Speaker 6>compelling in how it engaged people. It was a number

0:34:58.840 --> 0:35:03.640
<v Speaker 6>one backdrop on Grinder and in Tinder and all these things.

0:35:03.840 --> 0:35:08.200
<v Speaker 6>And the project was built above code. The barriers all

0:35:08.719 --> 0:35:11.279
<v Speaker 6>around it were built above the code that would have

0:35:11.320 --> 0:35:16.440
<v Speaker 6>been needed for any normal structure. But its compellingness had

0:35:16.480 --> 0:35:20.480
<v Speaker 6>a dark side, and so there were no accidents on it.

0:35:20.480 --> 0:35:25.480
<v Speaker 6>It was very sadly chosen by a tiny handful of

0:35:25.480 --> 0:35:32.080
<v Speaker 6>people to to this terrible, awful thing. So this year

0:35:33.280 --> 0:35:36.759
<v Speaker 6>is the year that it's going to be refitted with

0:35:36.960 --> 0:35:40.960
<v Speaker 6>a protected, protective barrier. But it was this sort of

0:35:41.360 --> 0:35:46.160
<v Speaker 6>dark side of its success, was this use that people had.

0:35:46.200 --> 0:35:49.040
<v Speaker 6>I mean there are nearby there are levels that are

0:35:49.680 --> 0:35:52.760
<v Speaker 6>just as high as many bits of the vessel which

0:35:52.840 --> 0:35:56.640
<v Speaker 6>have balustrades that no one was choosing to jump from.

0:35:56.680 --> 0:36:01.680
<v Speaker 6>So it's it was very sad and telling thing of

0:36:01.719 --> 0:36:05.680
<v Speaker 6>our time. It will be later this year that these

0:36:06.440 --> 0:36:11.080
<v Speaker 6>the safety measures are going to be implemented by the

0:36:11.160 --> 0:36:13.680
<v Speaker 6>commissioners of the project. So I'm pleased to be able

0:36:13.719 --> 0:36:14.200
<v Speaker 6>to say.

0:36:14.000 --> 0:36:16.279
<v Speaker 5>That, do they diminish your design in any way? Do

0:36:16.320 --> 0:36:18.759
<v Speaker 5>you think to have protective screens like that erected on

0:36:18.840 --> 0:36:19.160
<v Speaker 5>to the.

0:36:19.320 --> 0:36:22.200
<v Speaker 6>No, because we've worked with them and they've been really

0:36:22.239 --> 0:36:27.440
<v Speaker 6>sensitive to getting the design to have the similar quality

0:36:27.719 --> 0:36:31.359
<v Speaker 6>as the original vessel structure. So it's not a kind

0:36:31.440 --> 0:36:33.920
<v Speaker 6>of thing thrown on at the last minute. It's had

0:36:33.960 --> 0:36:37.520
<v Speaker 6>an enormous amount of development and reflection to get it right.

0:36:37.600 --> 0:36:40.839
<v Speaker 6>So my hope is that it will and there at

0:36:40.880 --> 0:36:44.200
<v Speaker 6>the moment there is a sample section of it on

0:36:44.280 --> 0:36:50.480
<v Speaker 6>the vessel and it looks really good, so it's it

0:36:50.520 --> 0:36:52.360
<v Speaker 6>doesn't need to be at the cost of the project.

0:36:52.719 --> 0:36:55.640
<v Speaker 6>The whole point of the project is it's public. My passion,

0:36:56.000 --> 0:36:59.120
<v Speaker 6>all my studios projects are public, and look at Little Island.

0:36:59.480 --> 0:37:02.200
<v Speaker 6>If you get you know just down from there that

0:37:02.360 --> 0:37:06.480
<v Speaker 6>opened three years ago and is just packed with people

0:37:07.280 --> 0:37:10.920
<v Speaker 6>and loved and has these free performances on it and

0:37:11.040 --> 0:37:15.080
<v Speaker 6>is a main place for New Yorker's fitness and visitors,

0:37:15.600 --> 0:37:18.480
<v Speaker 6>and is all about the river and nature. So I

0:37:18.520 --> 0:37:23.080
<v Speaker 6>think we are hungry for public spaces that are wholehearted

0:37:23.719 --> 0:37:26.680
<v Speaker 6>and which sort of validate all of us.

0:37:26.760 --> 0:37:26.960
<v Speaker 2>You know.

0:37:27.040 --> 0:37:30.600
<v Speaker 6>The thing that sort of inspires me really is that

0:37:31.000 --> 0:37:34.560
<v Speaker 6>there are seven point whatever billion people on the planet,

0:37:34.880 --> 0:37:38.240
<v Speaker 6>and every one of us thinks we're special. It's human nature.

0:37:38.760 --> 0:37:41.280
<v Speaker 6>And I think for too long we have not designed

0:37:42.080 --> 0:37:45.240
<v Speaker 6>the places the public life. You know how they say

0:37:45.640 --> 0:37:48.520
<v Speaker 6>you can't change what you can't measure. We haven't been

0:37:48.560 --> 0:37:52.840
<v Speaker 6>measuring the biggest experiences of buildings, who are on the

0:37:52.880 --> 0:37:55.279
<v Speaker 6>street outside, who will never come in.

0:37:55.400 --> 0:37:59.440
<v Speaker 5>That's Thomas Heatherwick, the founder and design director of Heathwic Studios.

0:38:00.000 --> 0:38:02.399
<v Speaker 5>He's not daunted by the prospect of higher interest rates

0:38:02.480 --> 0:38:06.000
<v Speaker 5>or remote working threatening the future of offices. He says

0:38:06.040 --> 0:38:09.840
<v Speaker 5>he's hopeful and excited by the challenge of adapting existing

0:38:09.920 --> 0:38:12.960
<v Speaker 5>buildings to new uses. And that's a question, he says,

0:38:13.000 --> 0:38:15.320
<v Speaker 5>of being ingenious with what you've got.

0:38:15.760 --> 0:38:19.240
<v Speaker 1>Nathan, Thanks Steven. That's Bloomberg Stephen Carroll from our European

0:38:19.280 --> 0:38:22.360
<v Speaker 1>headquarters in London. And that does it for this special

0:38:22.400 --> 0:38:26.600
<v Speaker 1>holiday edition of Bloomberg Daybreak. Join us again Tuesday morning

0:38:26.640 --> 0:38:28.960
<v Speaker 1>at five am Wall Street Time for the latest on

0:38:29.120 --> 0:38:31.960
<v Speaker 1>markets overseas and all the news you need to start

0:38:32.000 --> 0:38:35.000
<v Speaker 1>your day. I'm Nathan Hager. Stay with us. The top

0:38:35.080 --> 0:38:39.200
<v Speaker 1>stories and global business headlines are coming up right now