1 00:00:00,080 --> 00:00:13,800 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jaily. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,720 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg I'm 5 00:00:33,800 --> 00:00:38,680 Speaker 1: yielded simple thirty year bond midnight hit a low of 6 00:00:38,720 --> 00:00:42,240 Speaker 1: a one nineties six ish and we just went through that, Lisa, 7 00:00:42,320 --> 00:00:44,920 Speaker 1: moments that go to a new low thirty year bond yield, Yeah, 8 00:00:45,000 --> 00:00:48,760 Speaker 1: one point nine five nine per cent. The question is 9 00:00:48,800 --> 00:00:52,239 Speaker 1: will dip people to actually borrow more money or does 10 00:00:52,280 --> 00:00:55,400 Speaker 1: this indicate slowing growth that won't have any kind of 11 00:00:55,400 --> 00:00:57,360 Speaker 1: positive effect with me? Why don't you ask that first 12 00:00:57,440 --> 00:01:00,240 Speaker 1: question to ours in guests here, because you know that's 13 00:01:00,240 --> 00:01:03,800 Speaker 1: a perfect breast constr yes of black Rock. Thank you 14 00:01:03,840 --> 00:01:05,479 Speaker 1: so much for being here. I mean that is sort 15 00:01:05,480 --> 00:01:07,200 Speaker 1: of the key question, right, What can the Fed do 16 00:01:07,280 --> 00:01:09,600 Speaker 1: at this point? What can lower rates do? Will that 17 00:01:09,680 --> 00:01:12,840 Speaker 1: actually stimulate the economy? From here? I think it cushions 18 00:01:12,840 --> 00:01:15,679 Speaker 1: the economy? Can you stimulate it? Well, you've already had 19 00:01:15,760 --> 00:01:18,839 Speaker 1: rates low, the mortgage rate thirty yr mortgages below four percent, 20 00:01:19,360 --> 00:01:23,080 Speaker 1: it's helping to stabilize housing, but is that by itself 21 00:01:23,160 --> 00:01:25,640 Speaker 1: going to be enough to get the economy to re accelerate. 22 00:01:25,680 --> 00:01:28,200 Speaker 1: Probably not. I think at this point what you're really 23 00:01:28,240 --> 00:01:31,479 Speaker 1: trying to do is to stabilize things. So I'm looking 24 00:01:31,560 --> 00:01:36,200 Speaker 1: right now at the expectations and all time high of 25 00:01:36,440 --> 00:01:39,280 Speaker 1: four and a half rate cuts being priced in by 26 00:01:39,280 --> 00:01:41,560 Speaker 1: the end of next year by the Federals. Or do 27 00:01:41,600 --> 00:01:44,440 Speaker 1: you think that's appropriate? I think right now the big 28 00:01:44,520 --> 00:01:47,320 Speaker 1: question is or how much more damage you're going to 29 00:01:47,360 --> 00:01:49,240 Speaker 1: see from the rest of the world. So if I 30 00:01:49,280 --> 00:01:52,280 Speaker 1: look at the U s economy, it actually doesn't look 31 00:01:52,280 --> 00:01:55,040 Speaker 1: in bad shape. The manufacturing sectors week it probably gets 32 00:01:55,040 --> 00:01:57,800 Speaker 1: a bit weaker, but the household sector, which is of course, 33 00:01:58,760 --> 00:02:01,360 Speaker 1: is pretty solid. But to me, the risk is, does 34 00:02:01,440 --> 00:02:05,320 Speaker 1: this contagion from trade from China from Europe you start 35 00:02:05,400 --> 00:02:07,440 Speaker 1: to affect confidence in a way that the FED is 36 00:02:07,480 --> 00:02:10,040 Speaker 1: going to be much more aggressive than they've been so far. Okay, 37 00:02:10,040 --> 00:02:12,840 Speaker 1: Walmart just out with earnings. They don't do a Macy's. 38 00:02:12,880 --> 00:02:17,440 Speaker 1: What was Macy's down yesterday like sixteen percent? I mean, 39 00:02:17,520 --> 00:02:21,120 Speaker 1: Macy's with clearly a failed business plan. Walmart does better. 40 00:02:21,480 --> 00:02:24,639 Speaker 1: They've got organic or same store sales to three ish 41 00:02:24,720 --> 00:02:27,560 Speaker 1: a is well, they do a spin. They're down seven 42 00:02:27,600 --> 00:02:31,360 Speaker 1: percent from the highs of July. Is well in retail 43 00:02:31,440 --> 00:02:34,080 Speaker 1: sales at a thirty. Those are the indicators of what 44 00:02:34,120 --> 00:02:37,440 Speaker 1: the consumers doing right, completely agree macy Tells. Macy's tells 45 00:02:37,440 --> 00:02:40,040 Speaker 1: you nothing. Macy's, as you pointed out, that's in secular 46 00:02:40,160 --> 00:02:44,040 Speaker 1: decline their challenges to the department. But what's happening with 47 00:02:44,040 --> 00:02:47,359 Speaker 1: the shout at tequila? When we say, seriously, it's sort 48 00:02:47,400 --> 00:02:49,280 Speaker 1: of like, you know, the kids will play when the 49 00:02:49,520 --> 00:02:53,160 Speaker 1: parents are away, Jonathan Varah carry on. But honestly, this 50 00:02:53,240 --> 00:02:57,960 Speaker 1: is this is important. So Macy's is idiosyncratic. But I 51 00:02:58,000 --> 00:03:01,000 Speaker 1: will say, what about Cisco, because that is not And 52 00:03:01,160 --> 00:03:03,800 Speaker 1: Cisco came out and it just opened nine percent. Uh, 53 00:03:04,400 --> 00:03:08,760 Speaker 1: the futures are nine percent lower. Act reporting earnings. Well, 54 00:03:08,919 --> 00:03:11,440 Speaker 1: to me, this was a fascinating story because they actually 55 00:03:11,440 --> 00:03:14,520 Speaker 1: reported a slowdown in their expectations. They cut their forecast 56 00:03:14,880 --> 00:03:17,560 Speaker 1: because of the trade concerns and the fact that businesses 57 00:03:17,560 --> 00:03:20,080 Speaker 1: are not investing as much in computers. I think this 58 00:03:20,160 --> 00:03:24,760 Speaker 1: is key, you know, watching the infrastructure companies, looking in industrials, 59 00:03:25,280 --> 00:03:27,600 Speaker 1: what our businesses doing, And here there is a clear 60 00:03:27,720 --> 00:03:29,760 Speaker 1: risk because when you talk to companies, you talk to 61 00:03:29,800 --> 00:03:33,440 Speaker 1: CEOs and CFOs, they are much more concerned about capital 62 00:03:33,520 --> 00:03:36,360 Speaker 1: spending investment than they wor a year ago. And so 63 00:03:36,400 --> 00:03:39,520 Speaker 1: what we're seeing that in the forward guidance is somewhat concerning. 64 00:03:39,600 --> 00:03:42,680 Speaker 1: Do you think that points to an even bigger downturn 65 00:03:43,160 --> 00:03:45,680 Speaker 1: than some people are pricing in. Well, it certainly points 66 00:03:45,720 --> 00:03:47,120 Speaker 1: to the fact that a year ago there was this 67 00:03:47,200 --> 00:03:49,920 Speaker 1: view that were finally, after ten years of sluggish growth, 68 00:03:49,920 --> 00:03:53,119 Speaker 1: going to see this increase in capital spending, increase of investment. 69 00:03:53,560 --> 00:03:56,320 Speaker 1: That's not going to happen. Part of that is secular. Now, 70 00:03:56,560 --> 00:03:59,440 Speaker 1: that's good news because many companies have grown with what 71 00:03:59,480 --> 00:04:02,000 Speaker 1: we call a capital lite business model. They don't have 72 00:04:02,080 --> 00:04:05,560 Speaker 1: to spend as much thanks to the cloud other technology. 73 00:04:05,600 --> 00:04:09,560 Speaker 1: But we're also getting economy now that's increasingly depended on 74 00:04:09,600 --> 00:04:12,400 Speaker 1: the consumer. You're not getting business spending, you're not getting 75 00:04:12,400 --> 00:04:14,960 Speaker 1: investment to the same degree. It's coming down to the 76 00:04:15,040 --> 00:04:17,560 Speaker 1: U S. Consumer. Once again, thank you for joining us 77 00:04:17,600 --> 00:04:20,920 Speaker 1: this morning. Bloomberg surveynas Lisa abrama witzon Tom King more 78 00:04:21,040 --> 00:04:25,480 Speaker 1: data checks futures negative eleven worser twenty minutes ago. The 79 00:04:25,640 --> 00:04:29,400 Speaker 1: yield extraordinary. The screen is I have to check myself 80 00:04:29,680 --> 00:04:31,760 Speaker 1: that the ten year yeld looks like a normal three 81 00:04:31,800 --> 00:04:35,560 Speaker 1: month T bill one point five thirty year bond one 82 00:04:35,680 --> 00:04:39,400 Speaker 1: point zero three. We had a one handle Lisa a 83 00:04:39,440 --> 00:04:42,400 Speaker 1: little bit ago. So Russ, you're talking about the consumer, 84 00:04:42,440 --> 00:04:44,520 Speaker 1: and the consumer has to remain strong. I was looking 85 00:04:44,520 --> 00:04:46,640 Speaker 1: at the New York Fed survey that came out earlier 86 00:04:46,680 --> 00:04:49,760 Speaker 1: this week about household borrowing, and we can see that 87 00:04:49,800 --> 00:04:52,640 Speaker 1: the credit card outstanding as well as the auto loan 88 00:04:52,640 --> 00:04:56,920 Speaker 1: outstanding picking up delinquency, is also picking up defaults also 89 00:04:56,960 --> 00:04:59,400 Speaker 1: picking up, albeit from a very low rate. At what 90 00:04:59,480 --> 00:05:03,000 Speaker 1: point can the consumer not sustained this kind of growth 91 00:05:03,000 --> 00:05:05,480 Speaker 1: at a time when wages just aren't increasing that much. Well, 92 00:05:05,480 --> 00:05:08,120 Speaker 1: I think that's a good point, but again, you nailed it. 93 00:05:08,160 --> 00:05:09,800 Speaker 1: I think the key is it's coming from a very 94 00:05:09,839 --> 00:05:12,280 Speaker 1: low base, and there are pockets of consumer borrowing where 95 00:05:12,279 --> 00:05:15,359 Speaker 1: you're talking about student loans, revolving credit, where you do 96 00:05:15,440 --> 00:05:18,440 Speaker 1: want to take a harsher look. But in general, the 97 00:05:18,440 --> 00:05:20,600 Speaker 1: good news is not only is the unemployment rate low, 98 00:05:20,680 --> 00:05:23,680 Speaker 1: but you are seeing decent wage gains, and most importantly, 99 00:05:24,160 --> 00:05:28,200 Speaker 1: those gains are the strongest among lower income consumers. So 100 00:05:28,240 --> 00:05:30,479 Speaker 1: I think the fundamentals there look solid. If you look 101 00:05:30,520 --> 00:05:34,479 Speaker 1: at debt servicing costs their historical lows, the consumers should 102 00:05:34,480 --> 00:05:38,080 Speaker 1: be okay as long as hiring keeps up. What's the 103 00:05:38,160 --> 00:05:44,560 Speaker 1: correlation of economic growth to the markets. It's very well, 104 00:05:44,600 --> 00:05:47,640 Speaker 1: it's it's very low. Now, having said that, it's low 105 00:05:47,720 --> 00:05:51,280 Speaker 1: if you look at all periods. If you have a recession, 106 00:05:51,800 --> 00:05:54,080 Speaker 1: then I think the equity market is at risk because 107 00:05:54,080 --> 00:05:57,120 Speaker 1: it's not obvious with stocks down five percent, six percent 108 00:05:57,160 --> 00:05:59,960 Speaker 1: from you've priced that in yet. This is a critical question. 109 00:06:00,040 --> 00:06:02,880 Speaker 1: I got this yesterday from someone emailing in and m 110 00:06:02,960 --> 00:06:06,120 Speaker 1: B e R recession. Good morning, Professor Frankel up at 111 00:06:06,120 --> 00:06:09,719 Speaker 1: Harvard is two negative quarters in Jeffrey Frankel did some 112 00:06:09,800 --> 00:06:15,080 Speaker 1: great research. Maybe not. Laurence Summers is talking about secular stagnation, 113 00:06:15,200 --> 00:06:19,000 Speaker 1: and there's this phrase from another time and place growth recession. 114 00:06:19,720 --> 00:06:23,600 Speaker 1: Is that what we're having for is one ish growth. Well, look, 115 00:06:23,680 --> 00:06:27,159 Speaker 1: depending upon your definition, you could argue even in secular 116 00:06:27,200 --> 00:06:29,479 Speaker 1: stagnation for a long period of time, if only to 117 00:06:29,560 --> 00:06:32,760 Speaker 1: the extent growth in this recovery has been will below 118 00:06:32,800 --> 00:06:35,559 Speaker 1: any previous recovery. I'm going there, But Lisa, I'm looking 119 00:06:35,600 --> 00:06:40,040 Speaker 1: at the Bloomberg terminal, and it's telling me secular stagnation. Yeah, 120 00:06:40,040 --> 00:06:42,800 Speaker 1: that's certainly what a yield curve seems to be saying. 121 00:06:42,880 --> 00:06:44,440 Speaker 1: And I guess that the question is, if we are 122 00:06:44,480 --> 00:06:47,160 Speaker 1: in secular stagnation, what's the playbook at a time when 123 00:06:47,160 --> 00:06:50,120 Speaker 1: central banks are easing once again? And as you sit 124 00:06:50,160 --> 00:06:54,800 Speaker 1: there looking at your portfolios, you are the global allocation 125 00:06:54,880 --> 00:06:57,720 Speaker 1: fun portfolio manager. You're supposed to look it around and say, 126 00:06:57,839 --> 00:07:00,240 Speaker 1: what's gonna make me money? I think that's it, And 127 00:07:00,279 --> 00:07:02,080 Speaker 1: what it means is that you're probably gonna have to 128 00:07:02,120 --> 00:07:04,599 Speaker 1: look further afield than you're used to, whether you're talking 129 00:07:04,640 --> 00:07:08,479 Speaker 1: about European dividend payers, whether you're talking about bonds that 130 00:07:08,520 --> 00:07:12,120 Speaker 1: are not issued in the US. It's a broader global 131 00:07:12,120 --> 00:07:15,520 Speaker 1: portfolio because your traditional sources of our turning yield are 132 00:07:15,600 --> 00:07:17,840 Speaker 1: not working the way they used to. So what what 133 00:07:18,040 --> 00:07:19,480 Speaker 1: is the to do now? I mean, don't give me 134 00:07:19,560 --> 00:07:23,520 Speaker 1: this sixty forty or sixty ten blowney? What's the actual 135 00:07:23,560 --> 00:07:27,920 Speaker 1: allocation you're proposing? Is all US? Is it all large cap? 136 00:07:28,160 --> 00:07:30,280 Speaker 1: Is it get under the desk? What is it does 137 00:07:30,360 --> 00:07:32,760 Speaker 1: not get under the desk? It is not all the US. 138 00:07:32,840 --> 00:07:36,240 Speaker 1: It is a global portfolio. It's thinking more about equities 139 00:07:36,280 --> 00:07:38,640 Speaker 1: a source of yield now. Right now, investing in Europe 140 00:07:38,800 --> 00:07:42,880 Speaker 1: doesn't feel that good. But you've got strong multinational companies 141 00:07:42,960 --> 00:07:46,720 Speaker 1: in Europe yielding six seven percent. You hedge bet that 142 00:07:46,760 --> 00:07:49,320 Speaker 1: back into dollars, you're actually getting eight or nine percent. 143 00:07:49,600 --> 00:07:53,240 Speaker 1: There are opportunities out there, albeit with some volatility. You 144 00:07:53,280 --> 00:07:55,520 Speaker 1: know what I hear that there's actually yield in Argentina. 145 00:07:57,040 --> 00:08:01,080 Speaker 1: There there is yield in Argentina. You go in, uh no, no, 146 00:08:01,240 --> 00:08:03,680 Speaker 1: we are not looking to add to Argentina right now, 147 00:08:03,760 --> 00:08:08,400 Speaker 1: but there are things between Argentina and European consumer companies. 148 00:08:08,560 --> 00:08:11,280 Speaker 1: That's probably the sweet I learned this week. Buenos Aires 149 00:08:11,280 --> 00:08:14,280 Speaker 1: is three hundred miles farther from New York than Honolulu. 150 00:08:14,800 --> 00:08:17,880 Speaker 1: I had no idea. It's been all the way around 151 00:08:17,880 --> 00:08:20,760 Speaker 1: the equator. That's a long flight. It's that's just I 152 00:08:20,800 --> 00:08:23,560 Speaker 1: lived in Chile for a year and yeah, I did 153 00:08:24,640 --> 00:08:27,880 Speaker 1: show cue the music, and you were like a Patagonia 154 00:08:27,960 --> 00:08:30,600 Speaker 1: thing down with. No. I was in Santiago working in 155 00:08:30,640 --> 00:08:32,920 Speaker 1: a newspaper. But you know, I did go to southern Chile, 156 00:08:33,080 --> 00:08:35,880 Speaker 1: but I was not on an alpaca. But yeah, it's 157 00:08:35,960 --> 00:08:39,800 Speaker 1: it's it's far, it's skinny. Do we have any Chilean music? 158 00:08:39,880 --> 00:08:45,040 Speaker 1: We can go out? And I don't think you know, 159 00:08:45,080 --> 00:08:48,000 Speaker 1: Pharaoh is more interesting. All he wants is British bar music. 160 00:08:48,160 --> 00:08:51,080 Speaker 1: I mean he's more you know, That's all there is 161 00:08:51,120 --> 00:09:07,680 Speaker 1: to it. The yield market, Lisa, what's the most important 162 00:09:07,760 --> 00:09:11,680 Speaker 1: yield thing you see right now? Definitely the thirty years. Yeah, 163 00:09:11,679 --> 00:09:13,280 Speaker 1: I think that that's really the most important thing to 164 00:09:13,360 --> 00:09:16,440 Speaker 1: keep watching Global how to Commodities research Jeffrey Curry and 165 00:09:16,440 --> 00:09:19,160 Speaker 1: I've had like forty two emails Mr Curry on the 166 00:09:19,280 --> 00:09:23,240 Speaker 1: geniosity of gold. What did you do? Said the diner? 167 00:09:23,280 --> 00:09:25,880 Speaker 1: There's three guys at dinner whatever it's called, and say 168 00:09:25,920 --> 00:09:28,800 Speaker 1: we got to go long gold? Is that how this works? Review? 169 00:09:28,920 --> 00:09:34,240 Speaker 1: Review your long o. We we first got bullish gold 170 00:09:34,280 --> 00:09:37,160 Speaker 1: in this recent cycle back in two thousand and I 171 00:09:37,160 --> 00:09:40,440 Speaker 1: guess it was seventeen and was based upon our fear 172 00:09:40,440 --> 00:09:43,719 Speaker 1: and wealth model. Yeah, fear in the developed markets that 173 00:09:44,480 --> 00:09:46,240 Speaker 1: was not that great at the time, but we're all 174 00:09:46,240 --> 00:09:48,480 Speaker 1: focused on the wealth component in the emerging markets. Well 175 00:09:48,520 --> 00:09:51,360 Speaker 1: what happened The wealth component emerging markets faded and we 176 00:09:51,440 --> 00:09:53,600 Speaker 1: got the fear component and developed markets, and that's what 177 00:09:53,640 --> 00:09:56,400 Speaker 1: we're doing dealing with right now. But let's add on 178 00:09:56,520 --> 00:09:59,800 Speaker 1: what really is the foundation of our bullets. One the 179 00:10:00,000 --> 00:10:04,120 Speaker 1: the dollarization story. Central bank buying of gold um in 180 00:10:04,200 --> 00:10:07,520 Speaker 1: the emerging markets is very high. Russia alone last year 181 00:10:07,600 --> 00:10:10,840 Speaker 1: bought two hundred and fifty tons um, Polish banks buying 182 00:10:10,880 --> 00:10:14,200 Speaker 1: a hundred tons, the Chinese, the PBOC is buying ten 183 00:10:14,280 --> 00:10:17,080 Speaker 1: tons a month at this point. Why because of sanction risk, 184 00:10:17,160 --> 00:10:19,800 Speaker 1: geopolitical risk, trade war. The list goes on and on. 185 00:10:20,120 --> 00:10:22,640 Speaker 1: These banks are want to diversify away from dollars. This 186 00:10:22,679 --> 00:10:25,360 Speaker 1: is well, this is a really important point, But at 187 00:10:25,400 --> 00:10:28,440 Speaker 1: what point is that the main technical driver in the market. 188 00:10:28,440 --> 00:10:30,240 Speaker 1: Because this has been happening for a while. They've been 189 00:10:30,280 --> 00:10:32,120 Speaker 1: adding to their gold portfolios for a while. And there 190 00:10:32,160 --> 00:10:34,240 Speaker 1: are a lot of people who say this isn't de delarization, 191 00:10:34,320 --> 00:10:38,880 Speaker 1: this is just diversification and good business good good business models. Well, 192 00:10:39,000 --> 00:10:41,520 Speaker 1: just at the rate um is at record levels it 193 00:10:41,640 --> 00:10:44,120 Speaker 1: right now, so it is very unique in terms of 194 00:10:44,400 --> 00:10:47,400 Speaker 1: their level. But but I think in terms of more 195 00:10:47,520 --> 00:10:50,160 Speaker 1: recently in the last and you know this flight to 196 00:10:50,240 --> 00:10:52,800 Speaker 1: quality um. You look at why treasuries are where they 197 00:10:52,800 --> 00:10:54,800 Speaker 1: are right now, where the dollar is where it is 198 00:10:54,920 --> 00:10:57,480 Speaker 1: right now and gold. The gold has the one aspect 199 00:10:57,559 --> 00:11:01,920 Speaker 1: that distinguishes it. So from let's say, yeah, dollar and treasuries. 200 00:11:02,280 --> 00:11:04,760 Speaker 1: UM is that, Um, it doesn't have all of the 201 00:11:04,760 --> 00:11:09,040 Speaker 1: other baggage. What's your target? Okay, I want to I 202 00:11:09,040 --> 00:11:10,680 Speaker 1: want to move on just because of the time. The 203 00:11:10,679 --> 00:11:13,439 Speaker 1: Bloomberg Commodity Index, which I would suggest as pretty good 204 00:11:13,440 --> 00:11:17,000 Speaker 1: bath like the Golden Sex Commodity Index. The vectors on 205 00:11:17,080 --> 00:11:20,280 Speaker 1: these are ugly. Inflation adjusted their ugly as well. Are 206 00:11:20,280 --> 00:11:24,920 Speaker 1: we in a commodity depression away from gold? The answer 207 00:11:24,960 --> 00:11:27,560 Speaker 1: that is yeah. We We argued back in two thousand 208 00:11:27,640 --> 00:11:29,040 Speaker 1: and fifteen we were going to go into what we 209 00:11:29,120 --> 00:11:33,120 Speaker 1: call an exploitation phase UM in commodities that could last 210 00:11:33,120 --> 00:11:36,079 Speaker 1: fifteen years. We're in it right now. Um, we're about 211 00:11:36,080 --> 00:11:38,679 Speaker 1: four to five years into this period. UM. If you 212 00:11:38,720 --> 00:11:41,040 Speaker 1: look at that period from nineteen eighties six to two 213 00:11:41,040 --> 00:11:43,360 Speaker 1: thousand and three, the last time we're in there, UM 214 00:11:43,440 --> 00:11:45,800 Speaker 1: that that lasted seventeen years, So we're probably in this 215 00:11:45,920 --> 00:11:48,400 Speaker 1: for a long one. Does that do to nations that 216 00:11:48,440 --> 00:11:51,840 Speaker 1: are commodity based? Um? You look at the period during 217 00:11:51,880 --> 00:11:54,400 Speaker 1: the nineteen eighties and nineties, Saudi went up to a 218 00:11:54,440 --> 00:11:57,880 Speaker 1: hundred percent of debt relative to g D p UM. 219 00:11:58,360 --> 00:12:00,720 Speaker 1: We look at the I think the many of those 220 00:12:00,720 --> 00:12:03,520 Speaker 1: countries and the gcs they're structure. If I know, this 221 00:12:03,559 --> 00:12:07,960 Speaker 1: person was a teacher in Santiago, Chile a million years ago. 222 00:12:08,480 --> 00:12:14,520 Speaker 1: She did every night she have a bottle of Chilean wine. 223 00:12:15,440 --> 00:12:17,599 Speaker 1: Listen in Chile. What does it do to Chile to 224 00:12:17,679 --> 00:12:21,800 Speaker 1: have a commodity depression? It's like the other parts of 225 00:12:21,840 --> 00:12:24,760 Speaker 1: Latin America right now. Um, you know that they're struggling. 226 00:12:24,800 --> 00:12:27,079 Speaker 1: The one thing that makes Chili very different from all 227 00:12:27,120 --> 00:12:33,960 Speaker 1: the other commodity But copper is the one commodity that 228 00:12:34,000 --> 00:12:36,360 Speaker 1: does have a relatively positive out like it doesn't have 229 00:12:36,440 --> 00:12:40,160 Speaker 1: the excess supply like oil, luminum, nickel and the rest 230 00:12:40,160 --> 00:12:42,720 Speaker 1: of these markets. Yeah, dr copper, which is sort of 231 00:12:42,720 --> 00:12:45,240 Speaker 1: interesting because usually that's the doom and gloom predictor. But 232 00:12:45,400 --> 00:12:48,720 Speaker 1: I do have to wonder at what points supply and 233 00:12:48,760 --> 00:12:51,400 Speaker 1: demand will matter again for oil, because right now it 234 00:12:51,440 --> 00:12:54,040 Speaker 1: seems like oil is trading more on fears of a 235 00:12:54,120 --> 00:12:58,120 Speaker 1: future slowdown than anything concrete in the data. We've had 236 00:12:58,120 --> 00:13:01,840 Speaker 1: production cuts and growth, isn't that? So how is this 237 00:13:01,840 --> 00:13:05,439 Speaker 1: going to reconcile? Um? You need to have a fundamental 238 00:13:05,480 --> 00:13:08,959 Speaker 1: event where markets focus on fundamentals as opposed to technicals. 239 00:13:09,080 --> 00:13:10,920 Speaker 1: So does that mean that oil prices are headed higher 240 00:13:10,960 --> 00:13:12,959 Speaker 1: in your view? No, I mean they're gonna go higher. 241 00:13:12,960 --> 00:13:14,920 Speaker 1: We say sixty five, but we're gonna go back up 242 00:13:14,960 --> 00:13:17,360 Speaker 1: to you know, seventy five. Unlikely we can get up 243 00:13:17,360 --> 00:13:21,000 Speaker 1: to the high sixties potentially. Um really driven by sentiment. 244 00:13:21,040 --> 00:13:23,760 Speaker 1: The problem is is that we have no volatility and 245 00:13:23,800 --> 00:13:27,080 Speaker 1: fundamentals and a's there. As a result, fundamentals have ceased 246 00:13:27,080 --> 00:13:29,440 Speaker 1: to be driving markets like oil, and they've been much 247 00:13:29,480 --> 00:13:32,679 Speaker 1: more driven by sentiment. Jeffrey Curry with us with Golden Sex, 248 00:13:32,720 --> 00:13:35,600 Speaker 1: how do their commodity research futures up fifteen? We had 249 00:13:35,679 --> 00:13:38,760 Speaker 1: green Way red, sort of red, and then a nice 250 00:13:38,800 --> 00:13:42,800 Speaker 1: pop here Walmart helping out there with the market taking 251 00:13:43,400 --> 00:13:46,360 Speaker 1: their earnings. Well, Walmart was up five percent at one point. 252 00:13:46,760 --> 00:13:51,000 Speaker 1: Yields are in the tenure in three basis point one 253 00:13:51,040 --> 00:13:56,000 Speaker 1: point five. Dovetail your work with the work of Jannati. 254 00:13:56,720 --> 00:13:59,760 Speaker 1: Janna is making a lot of headlines as Golden Sex, 255 00:13:59,840 --> 00:14:03,240 Speaker 1: like everyone else, struggles with the Fed, the parlor game, 256 00:14:03,720 --> 00:14:08,319 Speaker 1: struggles with this crazy market we see on the Bloomberg screen. Dovetail, 257 00:14:08,400 --> 00:14:12,160 Speaker 1: what commodities at Golden Sex is doing off of the 258 00:14:12,240 --> 00:14:15,760 Speaker 1: economic view. Um, they're very much in line. You know, 259 00:14:15,880 --> 00:14:18,560 Speaker 1: you're part of the reason why John was so hesitant 260 00:14:18,600 --> 00:14:21,720 Speaker 1: in terms of embracing um this recent rate cut is 261 00:14:21,720 --> 00:14:23,760 Speaker 1: he looked at the fundamental picture and it just didn't 262 00:14:23,800 --> 00:14:26,320 Speaker 1: warrant it. We look at the fundaments. You just pointed 263 00:14:26,360 --> 00:14:28,960 Speaker 1: to point out that in terms of oil, it doesn't 264 00:14:29,000 --> 00:14:31,720 Speaker 1: suggest the world's falling off a cliff. Um, you look 265 00:14:31,760 --> 00:14:34,040 Speaker 1: at copper demand, you look at steel demand, you look 266 00:14:34,080 --> 00:14:36,880 Speaker 1: at most of the iron or even I actually iron 267 00:14:36,960 --> 00:14:38,800 Speaker 1: arts the canary in the coal mine. It's the bullish 268 00:14:38,800 --> 00:14:42,200 Speaker 1: one right now. Um, So what we see in commodities 269 00:14:42,320 --> 00:14:46,280 Speaker 1: is very consistent with what Yon season in the economic environment. Um, 270 00:14:46,320 --> 00:14:49,120 Speaker 1: the gloom and doom out there is more sentiment than 271 00:14:49,200 --> 00:14:52,200 Speaker 1: it is reality. So then at what point could it 272 00:14:52,240 --> 00:14:53,960 Speaker 1: be reversed? I mean, I know you're saying that it 273 00:14:54,000 --> 00:14:57,400 Speaker 1: probably won't be dramatically, but at what point you know, 274 00:14:57,480 --> 00:14:59,720 Speaker 1: what has to happen for people to feel better, for 275 00:14:59,720 --> 00:15:01,760 Speaker 1: the loom to lift a little bit and people looking 276 00:15:01,760 --> 00:15:05,000 Speaker 1: at the fundamentals a little bit more. We look at 277 00:15:05,040 --> 00:15:08,120 Speaker 1: the the this gloom and doom it's been in with 278 00:15:08,200 --> 00:15:10,480 Speaker 1: us since the crisis period of oh eight oh nine. 279 00:15:10,680 --> 00:15:13,680 Speaker 1: You look at investment in long cycle capex. People don't 280 00:15:13,720 --> 00:15:16,800 Speaker 1: do tenure investments because they're fearful of the future. This 281 00:15:16,880 --> 00:15:19,360 Speaker 1: is not something that just crept up overnight. It's been 282 00:15:19,400 --> 00:15:21,360 Speaker 1: with us for quite some time. You look at where 283 00:15:21,360 --> 00:15:24,440 Speaker 1: all the capex and investment occurs. Short cycle things that 284 00:15:24,480 --> 00:15:27,200 Speaker 1: get your return in twelve months, maybe twenty four months, 285 00:15:27,240 --> 00:15:29,200 Speaker 1: they'll go out. Um, so that this fear of the 286 00:15:29,200 --> 00:15:31,040 Speaker 1: future has been with us for some time, and I 287 00:15:31,040 --> 00:15:34,400 Speaker 1: don't see a debating Give us a China perspective. You 288 00:15:35,520 --> 00:15:38,320 Speaker 1: synthesize all of gold. I've been to your offices in 289 00:15:38,440 --> 00:15:41,560 Speaker 1: Hong Kong a number of years ago, looking out over 290 00:15:41,600 --> 00:15:44,680 Speaker 1: the fancy real estate Hong Kong. Great, give us the 291 00:15:44,760 --> 00:15:48,880 Speaker 1: Jeff Curry take on what we've witnessed and trying, including 292 00:15:48,920 --> 00:15:52,320 Speaker 1: the headlines this morning. Well, I like to look at 293 00:15:52,360 --> 00:15:54,640 Speaker 1: it is to you know, there's the exporters of the 294 00:15:54,640 --> 00:15:57,280 Speaker 1: world and there's the importers of the world. The exporters 295 00:15:57,280 --> 00:15:59,600 Speaker 1: of the world is where the recession is right now. Um. 296 00:15:59,640 --> 00:16:02,080 Speaker 1: Even here in the US, like Caterpillar, they're building up 297 00:16:02,080 --> 00:16:05,920 Speaker 1: big inventories because they export land Movings article today was 298 00:16:05,960 --> 00:16:10,160 Speaker 1: great on this and um so even inside the US, China, 299 00:16:10,280 --> 00:16:13,160 Speaker 1: Germany is a big exporter their auto sectors. So anything 300 00:16:13,200 --> 00:16:16,080 Speaker 1: that's being exported has a problem. Why because they're building 301 00:16:16,160 --> 00:16:19,200 Speaker 1: up inventories on docks. The importing side of it is 302 00:16:19,440 --> 00:16:22,640 Speaker 1: drawing down inventories there d stocking. So places like the 303 00:16:22,800 --> 00:16:25,400 Speaker 1: US that imports and so forth wide they're trying to 304 00:16:25,440 --> 00:16:28,320 Speaker 1: wait out this trade war. And as a result, um 305 00:16:28,360 --> 00:16:31,240 Speaker 1: the areas that are focused on exports, like China, and 306 00:16:31,280 --> 00:16:34,600 Speaker 1: you look at the numbers yesterday it was computer equipment electronics. 307 00:16:34,600 --> 00:16:37,080 Speaker 1: They got hit hard at Leasta. George Friedman was brilliant 308 00:16:37,080 --> 00:16:40,640 Speaker 1: on this yesterday, would do political futures about the US. 309 00:16:40,760 --> 00:16:44,520 Speaker 1: Is China's big as customer? I mean with that said, 310 00:16:45,000 --> 00:16:48,760 Speaker 1: can you blame this market turboil then on the president 311 00:16:48,800 --> 00:16:51,800 Speaker 1: because it's a mercantile trade war? Well, it's it's all 312 00:16:51,800 --> 00:16:54,360 Speaker 1: about information flow. The information is coming in and out 313 00:16:54,360 --> 00:16:56,280 Speaker 1: of the market. But the one thing I would say 314 00:16:56,280 --> 00:16:58,240 Speaker 1: this time of year, and somebody once made this point 315 00:16:58,240 --> 00:17:00,720 Speaker 1: to me, markets in August are like a bunch of 316 00:17:00,720 --> 00:17:02,720 Speaker 1: little kids at a soccer field. They just run the 317 00:17:02,720 --> 00:17:05,160 Speaker 1: ball from one end of the field, to the next. Um, 318 00:17:05,240 --> 00:17:07,199 Speaker 1: so you know, I'd be careful of reading too much 319 00:17:07,240 --> 00:17:10,080 Speaker 1: of what we see in the markets today what the 320 00:17:10,119 --> 00:17:13,439 Speaker 1: test did. So they figured it out this weekend. But 321 00:17:13,480 --> 00:17:17,680 Speaker 1: it's so much that's good. I got, I got a sense. 322 00:17:17,800 --> 00:17:21,679 Speaker 1: I do. I understood the implication. But going forward, I 323 00:17:21,720 --> 00:17:24,200 Speaker 1: do have to wonder how it tied commodity markets are 324 00:17:24,200 --> 00:17:25,960 Speaker 1: to the auto market and the fact that we have 325 00:17:26,000 --> 00:17:30,399 Speaker 1: seen this slow down in auto manufacturing, but um, you 326 00:17:30,440 --> 00:17:33,399 Speaker 1: know they're there. I think there's another dynamic that's going on, 327 00:17:33,520 --> 00:17:35,840 Speaker 1: which is, you know, upgrading and you have a bunch 328 00:17:35,880 --> 00:17:38,879 Speaker 1: of excess sales, probably too uber and things like that 329 00:17:39,000 --> 00:17:42,680 Speaker 1: dynamics that are impacting the sales market. But this export 330 00:17:42,720 --> 00:17:45,560 Speaker 1: import dynamic very apparent. What I found interesting was the 331 00:17:45,600 --> 00:17:49,439 Speaker 1: Germany numbers. It's not cars to US in China that 332 00:17:49,440 --> 00:17:51,800 Speaker 1: are down, its cars to the UK, Italy and Turkey, 333 00:17:51,880 --> 00:17:55,760 Speaker 1: and Turkey's the big hits. So it's geopolitical risk are 334 00:17:56,200 --> 00:17:58,760 Speaker 1: what I'd argue really driving that weakness and autos. Then 335 00:17:58,760 --> 00:18:00,920 Speaker 1: we can see a tweet from the press and President 336 00:18:00,920 --> 00:18:05,000 Speaker 1: at one personal meeting exclamation point, Jeffrey Curry, thank you 337 00:18:05,080 --> 00:18:07,080 Speaker 1: so much, greatly appreciate it. Thank you for having this 338 00:18:07,119 --> 00:18:23,040 Speaker 1: morning with Goldman Sex. We will digress right now, and 339 00:18:23,119 --> 00:18:26,639 Speaker 1: we can do that on retail sales. Easy to do 340 00:18:26,800 --> 00:18:31,639 Speaker 1: with Sarah Halsack in Washington taking you more omnibus view 341 00:18:32,240 --> 00:18:35,359 Speaker 1: of omni channel as the future of retail. Okay, Sarah. 342 00:18:35,359 --> 00:18:38,679 Speaker 1: Walmart sticking to their knitting out with a good report. 343 00:18:38,720 --> 00:18:44,040 Speaker 1: They pop Macy's yesterday an unmitigated train wreck. Compare and 344 00:18:44,080 --> 00:18:49,800 Speaker 1: contrast the Macy's disaster with Walmart doing better than good. Yeah, 345 00:18:49,800 --> 00:18:52,640 Speaker 1: it all comes down to execution. Look a Mazie's admitted 346 00:18:52,720 --> 00:18:55,920 Speaker 1: yesterday that it had some merchandise misses, that it's women's 347 00:18:55,920 --> 00:18:59,040 Speaker 1: clothing offering was not up to snuff, and it suffered 348 00:18:59,080 --> 00:19:01,359 Speaker 1: because of that. I think Macy's also struggles because a 349 00:19:01,400 --> 00:19:04,280 Speaker 1: lot of its store portfolio is canine confined to those 350 00:19:04,359 --> 00:19:07,119 Speaker 1: regional enclosed malls that are just a format that are 351 00:19:07,160 --> 00:19:10,760 Speaker 1: struggling to draw the Walmart, on the other hand, has 352 00:19:10,800 --> 00:19:13,080 Speaker 1: really been making a lot of changes to sort of 353 00:19:13,240 --> 00:19:15,639 Speaker 1: not just imitate Amazon, but sort of carve out it's 354 00:19:15,640 --> 00:19:18,600 Speaker 1: an own niche in this kind of omni channel world 355 00:19:19,000 --> 00:19:24,160 Speaker 1: where it is stores and also developing its I've seen 356 00:19:24,200 --> 00:19:27,879 Speaker 1: you bring a bar to absolute silence talking about omni channel. 357 00:19:28,359 --> 00:19:33,119 Speaker 1: Define define omni channel for mere mortals, It's it's a 358 00:19:33,160 --> 00:19:36,040 Speaker 1: nerdy word for sure. Basically, it just means that consumers 359 00:19:36,280 --> 00:19:38,760 Speaker 1: don't choose one or the other between brick and mortar 360 00:19:38,880 --> 00:19:42,679 Speaker 1: and online shopping about between the well, they bounced back 361 00:19:42,680 --> 00:19:44,560 Speaker 1: and forth between the two channels, right that. We even 362 00:19:44,600 --> 00:19:47,480 Speaker 1: see if you've made an online purchase, often that began 363 00:19:47,520 --> 00:19:50,280 Speaker 1: with research in a store or vice versa. Okay, let's 364 00:19:50,320 --> 00:19:52,800 Speaker 1: take it away to something a little more upscale. His 365 00:19:53,000 --> 00:19:58,840 Speaker 1: Nordstrom found success with quote unquote omni channel. So Nordstrom 366 00:19:58,920 --> 00:20:01,440 Speaker 1: has recently hit some umbling blocks, and I think we 367 00:20:01,760 --> 00:20:04,680 Speaker 1: particularly with onmi channel. We saw this in July. They 368 00:20:04,680 --> 00:20:06,720 Speaker 1: have their semi annual sale, which is a very big 369 00:20:06,720 --> 00:20:09,320 Speaker 1: event for them, a key driver of sales for the 370 00:20:09,359 --> 00:20:13,840 Speaker 1: full year, and there was crashed um and consumers were 371 00:20:13,880 --> 00:20:15,639 Speaker 1: really frustrated. They were taking a lot of heat on 372 00:20:15,680 --> 00:20:19,159 Speaker 1: social media that here's this thing they've been marketing to 373 00:20:19,200 --> 00:20:21,399 Speaker 1: the hill and people weren't even able to shop it. 374 00:20:21,480 --> 00:20:24,800 Speaker 1: And so I think over the long term, nord From 375 00:20:24,840 --> 00:20:28,520 Speaker 1: was early to invest in e commerce, but recently has 376 00:20:28,760 --> 00:20:31,200 Speaker 1: has showed a little bit of a soft underbelly there. 377 00:20:31,400 --> 00:20:34,280 Speaker 1: Take us away from the five zip codes that the 378 00:20:34,359 --> 00:20:37,040 Speaker 1: media lives in, where we see a lot of you know, 379 00:20:37,080 --> 00:20:40,280 Speaker 1: bricks and mortar, empty stores and all that take us 380 00:20:40,359 --> 00:20:45,480 Speaker 1: out across the Great American plane. What does retail actually 381 00:20:45,720 --> 00:20:49,720 Speaker 1: look like in some of these towns that don't have 382 00:20:50,040 --> 00:20:53,879 Speaker 1: streets like Second Avenue. Sure, it's it's really anchored in 383 00:20:53,920 --> 00:20:57,120 Speaker 1: a lot of those communities by dollar stores. Dollar General, 384 00:20:57,560 --> 00:21:00,800 Speaker 1: UH and Dollar Tree have been relative bulworks, you know, 385 00:21:00,840 --> 00:21:04,000 Speaker 1: amid all change in the retail industry, they have been 386 00:21:04,040 --> 00:21:07,440 Speaker 1: drawing consistent traffic and they have sort of figured out 387 00:21:07,480 --> 00:21:11,679 Speaker 1: this formula for having a really strong assortment in a 388 00:21:11,760 --> 00:21:15,520 Speaker 1: relatively small footprint that works for that consumer. And so 389 00:21:15,800 --> 00:21:18,800 Speaker 1: they've been really pulling sales away for them lots of 390 00:21:18,800 --> 00:21:21,320 Speaker 1: different kinds of retailers, and will continue to do so 391 00:21:21,400 --> 00:21:24,439 Speaker 1: as they expand into grocery. I think Cold is another 392 00:21:24,520 --> 00:21:26,960 Speaker 1: example of a retailer that's worth keeping an eye on 393 00:21:27,040 --> 00:21:30,280 Speaker 1: when you sort of think outside dense urban centers. Uh, 394 00:21:30,320 --> 00:21:32,159 Speaker 1: this is a department store that doesn't tend to be 395 00:21:32,160 --> 00:21:33,919 Speaker 1: in malls. It tends to be in strip centers that 396 00:21:33,960 --> 00:21:36,040 Speaker 1: are closer to people's homes. Can be more of a 397 00:21:36,040 --> 00:21:39,200 Speaker 1: convenience oriented type trip, uh, And they're trying to sort 398 00:21:39,240 --> 00:21:41,399 Speaker 1: of redefine themselves with this new partnership they have with 399 00:21:41,440 --> 00:21:44,679 Speaker 1: Amazon where they're accepting Amazon returning in their physical stores, 400 00:21:44,920 --> 00:21:47,040 Speaker 1: and that will be really interesting to watch how that 401 00:21:47,080 --> 00:21:50,800 Speaker 1: gets traction. August, I'm only twelve weeks behind. Am I 402 00:21:50,880 --> 00:21:54,880 Speaker 1: back to school shopping? Sorry for that afterthought, Sarah, how's 403 00:21:54,920 --> 00:21:59,000 Speaker 1: back to school going? I think so far indicators are 404 00:21:59,040 --> 00:22:00,920 Speaker 1: that it's going fine. And we just had that. Is 405 00:22:01,000 --> 00:22:05,080 Speaker 1: that because I'm spending three dollars and fourteen cents on 406 00:22:05,280 --> 00:22:09,040 Speaker 1: school supplies? Oh? My goodness? Uh? I think it's a 407 00:22:09,119 --> 00:22:11,639 Speaker 1: number of factors. I think that, you know, we just 408 00:22:11,680 --> 00:22:15,600 Speaker 1: had a strong July retail sales report that probably reflected 409 00:22:15,640 --> 00:22:19,680 Speaker 1: some of that Prime Day spending that we saw in 410 00:22:19,680 --> 00:22:22,040 Speaker 1: in that month. And I think what's happening is back 411 00:22:22,080 --> 00:22:25,800 Speaker 1: to school shopping is moving a little bit earlier into yes, 412 00:22:25,840 --> 00:22:28,200 Speaker 1: because of these of Prime Day and all the imitator 413 00:22:28,240 --> 00:22:30,280 Speaker 1: Prime Day sales. Prime Day sort of because of rising 414 00:22:30,320 --> 00:22:32,280 Speaker 1: tide that lifts all boats and it moves some of 415 00:22:32,280 --> 00:22:34,119 Speaker 1: that spending earlier. In a way that can be a 416 00:22:34,119 --> 00:22:36,680 Speaker 1: good thing for retailers because it just elongates the back 417 00:22:36,680 --> 00:22:40,119 Speaker 1: to school shopping season. Then when August rolls around and 418 00:22:40,160 --> 00:22:43,080 Speaker 1: you have those sales tax free days, you still maybe 419 00:22:43,280 --> 00:22:45,600 Speaker 1: we'll be out there spending. I'll let you explain that 420 00:22:45,720 --> 00:22:49,959 Speaker 1: afterthoughts school as doing a slide rule of course this 421 00:22:50,040 --> 00:22:51,439 Speaker 1: year or so, I have to go out and buy 422 00:22:51,440 --> 00:22:55,560 Speaker 1: a kouflinus or slide rule ever heard of? Do logs 423 00:22:55,600 --> 00:22:57,640 Speaker 1: on her so that it sounds old school. Yeah, it's 424 00:22:57,640 --> 00:23:01,520 Speaker 1: so for a part of back to school. Uh so, 425 00:23:01,640 --> 00:23:04,560 Speaker 1: I'm sure there will be some benefit, particularly when you 426 00:23:04,560 --> 00:23:08,720 Speaker 1: think about the college as opposed to back to middle school. Um. 427 00:23:08,720 --> 00:23:13,320 Speaker 1: But yes, certainly you know that to college spending is 428 00:23:13,840 --> 00:23:17,160 Speaker 1: an important source of revenue for retailers, and I think, uh, 429 00:23:17,359 --> 00:23:20,400 Speaker 1: you know, college women. Sephora has absolutely been a place 430 00:23:20,400 --> 00:23:22,600 Speaker 1: where they like to spend, and I'm sure they will 431 00:23:22,640 --> 00:23:24,919 Speaker 1: be doing that. You can if you could finesse like 432 00:23:25,040 --> 00:23:27,440 Speaker 1: nobody I've seen in the time we got left Sarah 433 00:23:27,440 --> 00:23:31,560 Speaker 1: Hall sec with his folks. Uh Bloomberg Opinion writing brilliantly, seriously, 434 00:23:31,640 --> 00:23:37,000 Speaker 1: brilliantly on retail Let's go to luxury. I did darken 435 00:23:37,040 --> 00:23:39,320 Speaker 1: the door of a number of streets on Fifth Avenue 436 00:23:39,359 --> 00:23:42,080 Speaker 1: here in the last number of days, and it's sort 437 00:23:42,080 --> 00:23:47,040 Speaker 1: of a summer bustle. What's the prognosis for luxury given 438 00:23:47,040 --> 00:23:49,680 Speaker 1: a thirty year bond of two year two point zero 439 00:23:50,160 --> 00:23:54,199 Speaker 1: one per cent. Yeah, so there are a little bit 440 00:23:54,200 --> 00:23:56,800 Speaker 1: of discouraging signals out there for luxury. I think one 441 00:23:56,920 --> 00:23:59,800 Speaker 1: we got yesterday from Macy's that it said it's Bloomingdale's 442 00:23:59,840 --> 00:24:02,480 Speaker 1: chain being struggled in the quarter. And part of that 443 00:24:02,560 --> 00:24:05,959 Speaker 1: was actually a decline in international tourism spending, particularly here 444 00:24:06,000 --> 00:24:09,400 Speaker 1: in the US. A lot of chains like Tiffany for example, 445 00:24:09,760 --> 00:24:13,640 Speaker 1: or Michael Cores depend on overseas shoppers coming here uh 446 00:24:13,680 --> 00:24:16,399 Speaker 1: and spending their money in our in flagship stores and 447 00:24:16,400 --> 00:24:18,679 Speaker 1: the likes of New York or San Francisco. Um. And 448 00:24:18,720 --> 00:24:22,720 Speaker 1: so those were discouraging signals for how those types of 449 00:24:22,800 --> 00:24:25,800 Speaker 1: chains will hold up amid the economy as it's it's 450 00:24:25,840 --> 00:24:28,560 Speaker 1: changing right now. Okay, well the economy change. Is Amazon 451 00:24:28,640 --> 00:24:31,639 Speaker 1: doing luxury? I can't figure it out. Have they succeeded 452 00:24:31,640 --> 00:24:36,359 Speaker 1: at luxury? Absolutely not. You know, I think the challenge 453 00:24:36,359 --> 00:24:39,359 Speaker 1: for Amazon with luxury is that if you're LVMH, you 454 00:24:39,400 --> 00:24:42,280 Speaker 1: don't want your Louis Bitton handbags in people's shopping cards 455 00:24:42,320 --> 00:24:44,840 Speaker 1: next to their cat food, right. Um, it just does 456 00:24:44,920 --> 00:24:48,760 Speaker 1: not feel like an upscale experience. And also, these luxury 457 00:24:48,800 --> 00:24:51,960 Speaker 1: retailers really want to have end to end control of 458 00:24:52,000 --> 00:24:55,240 Speaker 1: how their brands are presented for consumers. This is why 459 00:24:55,280 --> 00:24:57,280 Speaker 1: a lot of them are even pulling away a little 460 00:24:57,280 --> 00:25:00,159 Speaker 1: bit from department stores, trying to get off those promotions 461 00:25:00,400 --> 00:25:03,800 Speaker 1: um that sort of cheapen their brand, right, And so 462 00:25:03,960 --> 00:25:07,800 Speaker 1: when you think about how products are presented on Amazon, 463 00:25:08,040 --> 00:25:10,600 Speaker 1: they basically have no control over it. Right, your product 464 00:25:10,680 --> 00:25:13,800 Speaker 1: listing page, the way your brand is represented, there's very 465 00:25:13,800 --> 00:25:17,639 Speaker 1: little opportunity for them to forcefully shape that, and so 466 00:25:17,800 --> 00:25:19,880 Speaker 1: they don't want to be in a retail experience where 467 00:25:19,880 --> 00:25:22,399 Speaker 1: that's the case. Is Louis Vuitton still working it? I 468 00:25:22,400 --> 00:25:25,560 Speaker 1: mean they see it everywhere. Is that still a defined 469 00:25:25,720 --> 00:25:30,640 Speaker 1: luxury brand? It sure is. I think Gucci has probably 470 00:25:30,680 --> 00:25:34,440 Speaker 1: been a relatively stronger performer that's owned by carrying a 471 00:25:34,560 --> 00:25:37,919 Speaker 1: rival to lvmh UM. But look, the luxury market for 472 00:25:37,960 --> 00:25:40,520 Speaker 1: sure is fickle, and I think that's even more so 473 00:25:40,640 --> 00:25:44,720 Speaker 1: true in this digital era or social media is putting 474 00:25:44,920 --> 00:25:47,680 Speaker 1: fashion in front of consumers faster than ever before. They're 475 00:25:47,720 --> 00:25:50,520 Speaker 1: seeing it in their Instagram feeds more frequently than ever before. 476 00:25:51,520 --> 00:25:54,080 Speaker 1: Handbag that might have stayed the handbag for a year 477 00:25:54,160 --> 00:25:57,200 Speaker 1: or two ten years ago, now stays the handbag for like, 478 00:25:57,880 --> 00:26:01,000 Speaker 1: and then shopperds have moved on the any luggage b B, 479 00:26:01,200 --> 00:26:03,960 Speaker 1: which looks like it could carry a baseball three thousand, 480 00:26:04,320 --> 00:26:07,359 Speaker 1: one fifty dollars. Let's wrap up, Sarah with the big 481 00:26:07,400 --> 00:26:10,000 Speaker 1: success of the year. That is the Real Real. The 482 00:26:10,080 --> 00:26:13,280 Speaker 1: Real Real is a real deal, isn't it. You know, 483 00:26:13,359 --> 00:26:15,480 Speaker 1: I actually have some concerns about the Real Tell me 484 00:26:15,480 --> 00:26:17,760 Speaker 1: about him please, Yeah. I think it's a little bit 485 00:26:17,760 --> 00:26:20,200 Speaker 1: of a hard model to scale. Um, you know, we're 486 00:26:20,320 --> 00:26:24,240 Speaker 1: promising consumers. Is this vetting right of making sure this? 487 00:26:24,400 --> 00:26:27,919 Speaker 1: Are they? Yes? So they are evaluating each one of 488 00:26:27,960 --> 00:26:31,159 Speaker 1: these products that's sold on their site and promising that 489 00:26:31,320 --> 00:26:33,760 Speaker 1: it's authentic, that it's a real Chanel, that it's real Gucci, 490 00:26:33,800 --> 00:26:35,919 Speaker 1: whatever it may be. And they also have to price 491 00:26:36,040 --> 00:26:39,679 Speaker 1: each item individually because it's a unique skew, because the 492 00:26:39,720 --> 00:26:41,960 Speaker 1: wear and tear on each of these years is going 493 00:26:42,000 --> 00:26:44,639 Speaker 1: to be different. And so to me, the idea that 494 00:26:44,680 --> 00:26:49,800 Speaker 1: you know, they're they're hiring gemologists and orologists to yeah, 495 00:26:50,000 --> 00:26:54,000 Speaker 1: you you know, evaluate this merchandise, and to me, the 496 00:26:54,080 --> 00:26:58,240 Speaker 1: profitable scalability of that is really tricky, sir. We gotta go. 497 00:26:58,320 --> 00:27:00,679 Speaker 1: But come on, it's just a dump been ground for 498 00:27:00,720 --> 00:27:06,160 Speaker 1: divorces and leftover stuff from weddings. Right well, I think 499 00:27:06,160 --> 00:27:10,840 Speaker 1: it aspires to be more than that. Yeah, and I 500 00:27:10,880 --> 00:27:13,960 Speaker 1: think that, you know, it's trying to reach a broad 501 00:27:14,000 --> 00:27:17,000 Speaker 1: swath of customers and we'll see how it does it 502 00:27:17,000 --> 00:27:19,320 Speaker 1: that Sarah, I just see you with a mini luggage 503 00:27:19,400 --> 00:27:23,399 Speaker 1: BB Louis Vuitton bag. It's tiny, folks. I don't know 504 00:27:23,440 --> 00:27:27,359 Speaker 1: what you put in at three thousand, one hundred fifty dollars. Help, 505 00:27:28,200 --> 00:27:31,520 Speaker 1: Sarah Halsick. Thank you so much, Bloomberg Opinion Futures Advance 506 00:27:32,119 --> 00:27:44,080 Speaker 1: up nineteen. This is Bloomberg. Appreciate you be like on 507 00:27:44,320 --> 00:28:07,120 Speaker 1: the ground right now. John Herman and John I want 508 00:28:07,119 --> 00:28:08,800 Speaker 1: to get to your g d P call, but first 509 00:28:08,880 --> 00:28:12,480 Speaker 1: we've got to look it retails sales productivity, the unit 510 00:28:12,560 --> 00:28:17,640 Speaker 1: labor costs of just does that constrain Sherman Powell's options 511 00:28:17,880 --> 00:28:21,679 Speaker 1: moving forward? It's gonna definitely make a you know, as 512 00:28:21,720 --> 00:28:25,080 Speaker 1: you know, a lot harder. So here's the here's the issue. 513 00:28:25,160 --> 00:28:28,040 Speaker 1: So um, you know, there's obviously a lot of pressure 514 00:28:28,640 --> 00:28:32,760 Speaker 1: from uh Donald President Trump on Powell to do more 515 00:28:32,800 --> 00:28:36,720 Speaker 1: easy the markets were looking for at one point at 516 00:28:36,880 --> 00:28:39,360 Speaker 1: a you know, almost fifty basis points of cuts in 517 00:28:39,880 --> 00:28:43,360 Speaker 1: the September meeting alone, and then another follow on by 518 00:28:43,400 --> 00:28:45,880 Speaker 1: the end of the year. So uh, you know there's 519 00:28:45,920 --> 00:28:48,960 Speaker 1: pressure from the markets and all leaning that way, um 520 00:28:49,040 --> 00:28:52,560 Speaker 1: and into you know, global global environment. Global economies are 521 00:28:52,600 --> 00:28:54,800 Speaker 1: not doing anywhere near as well as as the US 522 00:28:54,920 --> 00:28:58,160 Speaker 1: is doing. So there's some concerns about those overseas risks 523 00:28:58,160 --> 00:29:01,800 Speaker 1: and and and those headwinds blowing over here over the 524 00:29:01,840 --> 00:29:04,320 Speaker 1: next twelve months. Do you see evidence of that? Yet? 525 00:29:05,240 --> 00:29:07,560 Speaker 1: You see it in Capex. That's what you really you 526 00:29:07,600 --> 00:29:10,760 Speaker 1: see it. Uh. In the US where we have the 527 00:29:11,240 --> 00:29:14,880 Speaker 1: strength is you know, in the consumer side on the 528 00:29:15,040 --> 00:29:18,880 Speaker 1: and the job market is still resilient, outstanding. It's not poor, 529 00:29:19,040 --> 00:29:22,280 Speaker 1: it's just and but you when you look at Capex, 530 00:29:22,520 --> 00:29:24,400 Speaker 1: when you look at the housing market, when you look 531 00:29:24,440 --> 00:29:28,040 Speaker 1: at actuports and you look at inventory bills, you that's 532 00:29:28,080 --> 00:29:29,920 Speaker 1: the soft podect. Okay, John, I want to go to 533 00:29:29,920 --> 00:29:33,040 Speaker 1: her all that stuff, folks, the ticket item sales to 534 00:29:33,120 --> 00:29:36,160 Speaker 1: the consumer. Okay. I gotta be medicated. When I read 535 00:29:36,240 --> 00:29:39,280 Speaker 1: John Hermann's notes, they're so granular and so specific at 536 00:29:39,360 --> 00:29:42,080 Speaker 1: M u f G. That that the other note the 537 00:29:42,080 --> 00:29:44,440 Speaker 1: other day, John just stood out and that you framed 538 00:29:44,960 --> 00:29:48,040 Speaker 1: four quarters of g d P or almost four years 539 00:29:48,080 --> 00:29:52,000 Speaker 1: of g d P, which is a vector south a 540 00:29:52,200 --> 00:29:55,680 Speaker 1: lesser g d P each and every year. I want 541 00:29:55,720 --> 00:29:59,800 Speaker 1: you to fold that into this idea that the manufact 542 00:30:00,000 --> 00:30:04,360 Speaker 1: here in global trade challenges, will they fold over into 543 00:30:04,400 --> 00:30:08,400 Speaker 1: a weaker consumer. Discuss those two themes, bring them together. 544 00:30:08,560 --> 00:30:10,600 Speaker 1: I mean, this is this is a really you know, 545 00:30:10,680 --> 00:30:13,440 Speaker 1: this is the challenge for for pinning down next year 546 00:30:13,480 --> 00:30:16,400 Speaker 1: and for pinning down you know, do interest rates back up, 547 00:30:16,880 --> 00:30:19,000 Speaker 1: say you know in the belly and the long end, 548 00:30:19,000 --> 00:30:21,800 Speaker 1: do they back up basis points from here? Do we 549 00:30:21,840 --> 00:30:24,480 Speaker 1: sort of hang around these levels or do we possibly 550 00:30:24,560 --> 00:30:27,840 Speaker 1: rally and you know another thirty basis points. So that's 551 00:30:27,880 --> 00:30:30,760 Speaker 1: like really the big, the big issue in the markets. 552 00:30:31,040 --> 00:30:34,600 Speaker 1: So what we think is happening is this. I we 553 00:30:34,600 --> 00:30:37,360 Speaker 1: were really concerned about a few items for next year. 554 00:30:37,400 --> 00:30:39,800 Speaker 1: We're worried about there was a fiscal cliff that you know, 555 00:30:39,880 --> 00:30:42,800 Speaker 1: the details weren't ironed out and so on up until 556 00:30:42,840 --> 00:30:45,080 Speaker 1: a couple of weeks ago. So we're worried about that 557 00:30:45,160 --> 00:30:49,240 Speaker 1: and that drag in conjunction with all the uncertainty surrounding trade. 558 00:30:49,560 --> 00:30:53,560 Speaker 1: This is definitely matterfacturing slowdown globally. Uh. You know that 559 00:30:53,680 --> 00:30:57,640 Speaker 1: just pointed to downward pressure on business sentiment and consumer 560 00:30:57,720 --> 00:31:00,960 Speaker 1: sentiment over the next say eighteen months. We didn't have 561 00:31:01,000 --> 00:31:03,360 Speaker 1: a recession built into our numbers, but we really were 562 00:31:03,360 --> 00:31:08,280 Speaker 1: worried about the year, folks. That's our issue, folks, this 563 00:31:08,400 --> 00:31:11,320 Speaker 1: is can't get rid of that worry. I wish we could. Okay, 564 00:31:11,320 --> 00:31:13,320 Speaker 1: you can't get rid of that word. This is so 565 00:31:13,320 --> 00:31:18,480 Speaker 1: so important. Is Mr Herman is not signaling recession. But 566 00:31:18,680 --> 00:31:22,760 Speaker 1: you've got one percent g d P numbers. They're they're 567 00:31:22,800 --> 00:31:26,520 Speaker 1: not acceptable, are they? John? No? So I And again 568 00:31:26,560 --> 00:31:29,240 Speaker 1: for the year for the So what we have is 569 00:31:29,440 --> 00:31:32,560 Speaker 1: we have us decelerating to trend. Next year. Again, it's 570 00:31:32,560 --> 00:31:34,479 Speaker 1: a year, it's a year of it's a it's an 571 00:31:34,560 --> 00:31:36,600 Speaker 1: election year, and it's gonna be a year of high 572 00:31:36,640 --> 00:31:40,760 Speaker 1: political uncertainty in America and abroad. Uh. In addition to 573 00:31:40,800 --> 00:31:43,600 Speaker 1: the glowing you know, the slow downs that we've been highlighting. 574 00:31:44,080 --> 00:31:46,400 Speaker 1: So you have those head wins for next year as well. 575 00:31:46,560 --> 00:31:49,040 Speaker 1: We don't have, you know, the fiscal cliff issue. We 576 00:31:49,160 --> 00:31:51,760 Speaker 1: just passed new budgets for the next two years and 577 00:31:51,760 --> 00:31:53,800 Speaker 1: on fun But at this point, you know, you have 578 00:31:53,880 --> 00:31:56,200 Speaker 1: to say if if we fault, if there's a faulter 579 00:31:56,320 --> 00:31:58,480 Speaker 1: or globally or something, and that starts to make this, 580 00:31:58,880 --> 00:32:01,360 Speaker 1: you know, before the elect And I just can't believe 581 00:32:01,400 --> 00:32:03,400 Speaker 1: that the Democrats would come in and say, Hey, Donald Trump, 582 00:32:03,520 --> 00:32:05,520 Speaker 1: let's help you out here. Let's you know, throw you 583 00:32:05,560 --> 00:32:08,120 Speaker 1: another fifty sixty billion to help you out. I just 584 00:32:08,160 --> 00:32:10,880 Speaker 1: can't see them doing that. But they may, but I 585 00:32:10,960 --> 00:32:12,600 Speaker 1: just don't. It's as hard to take it as hard 586 00:32:12,640 --> 00:32:15,520 Speaker 1: to imagine the Chinampa. One final question, what are you 587 00:32:15,560 --> 00:32:17,880 Speaker 1: doing with net exports? I mean on the back end 588 00:32:17,920 --> 00:32:21,240 Speaker 1: of the GDP equation, folks, are all the dynamics of 589 00:32:21,280 --> 00:32:24,800 Speaker 1: exports imports? Gregg yipsarticle on the Journal today was brilliant. 590 00:32:24,840 --> 00:32:27,520 Speaker 1: Jeff Curry brought it up at Golden Sacks. What is 591 00:32:27,600 --> 00:32:31,840 Speaker 1: John Irman's export in import dynamics? So there's there's another 592 00:32:32,280 --> 00:32:35,040 Speaker 1: the other issue. So again, the CAPEX looks soft. Housing 593 00:32:35,080 --> 00:32:37,320 Speaker 1: market looks soft. Don't have the you know, the millennials, 594 00:32:37,320 --> 00:32:39,480 Speaker 1: for all the hype millennials are not really in the market. 595 00:32:39,480 --> 00:32:43,200 Speaker 1: And the housing, uh, we worry about inventories just decelerating 596 00:32:43,200 --> 00:32:45,040 Speaker 1: over the next year to his businesses get a little. 597 00:32:45,520 --> 00:32:48,960 Speaker 1: The net exports for us, you know, growth overseas is 598 00:32:49,000 --> 00:32:52,400 Speaker 1: not really that good, so our exports relative to our imports, 599 00:32:52,440 --> 00:32:55,080 Speaker 1: we still spend in balance to go over a trillion 600 00:32:55,120 --> 00:32:58,479 Speaker 1: bucks over the next you know, twelve months ago, possibly 601 00:32:58,480 --> 00:33:00,840 Speaker 1: even sooner. So we have the we have the net 602 00:33:00,880 --> 00:33:04,080 Speaker 1: exports as a drag not just this year, not just 603 00:33:04,200 --> 00:33:06,120 Speaker 1: next year, the year after, the year after that, we 604 00:33:06,160 --> 00:33:08,480 Speaker 1: have the next four years that exports are going to 605 00:33:08,520 --> 00:33:10,360 Speaker 1: be a drag on. Just no way we can get 606 00:33:10,360 --> 00:33:12,760 Speaker 1: around it. Brilliant research note two or three days ago 607 00:33:12,800 --> 00:33:15,360 Speaker 1: on our g d P reframing Mr Hermann with m 608 00:33:15,440 --> 00:33:28,640 Speaker 1: U f G. We think it was. There is no 609 00:33:28,760 --> 00:33:32,120 Speaker 1: question that the Book of the Year on Europe is 610 00:33:32,160 --> 00:33:37,000 Speaker 1: a substantial volume by the giant of French history Julian Jackson, 611 00:33:37,520 --> 00:33:42,120 Speaker 1: and I am thrilled that he joins us now from London. Julian, 612 00:33:42,240 --> 00:33:45,440 Speaker 1: one of my youthful moments was the fight my parents 613 00:33:45,480 --> 00:33:49,000 Speaker 1: had over as a teenager whether I could go in 614 00:33:50,960 --> 00:33:54,440 Speaker 1: to Paris. I was able to see Charles de Gau 615 00:33:54,640 --> 00:33:58,040 Speaker 1: on Bastill Day, which I consider one of my definitive 616 00:33:58,160 --> 00:34:02,160 Speaker 1: moments in my life. Warming moments in my life you 617 00:34:02,320 --> 00:34:09,280 Speaker 1: opened brilliantly and paid seven thirteen. How he got so wrong? Nineteen? 618 00:34:10,600 --> 00:34:14,359 Speaker 1: Was he passed his prime? Then? Yeah, that's so well, 619 00:34:14,600 --> 00:34:16,879 Speaker 1: thank you for what the nice thing you said about 620 00:34:16,920 --> 00:34:20,480 Speaker 1: the book. Yes, I think remember that he'd been in power. 621 00:34:20,680 --> 00:34:22,440 Speaker 1: He was an old man, he was late. He was 622 00:34:22,440 --> 00:34:25,680 Speaker 1: seventy eight years old, he'd been in power for ten years, 623 00:34:26,280 --> 00:34:32,000 Speaker 1: and he was faced with this um seemingly inexplicable student revolution. 624 00:34:32,480 --> 00:34:35,240 Speaker 1: And yeah, I think the answer is that he didn't 625 00:34:35,800 --> 00:34:40,520 Speaker 1: fully understand the new social cultural demand of the younger generation. 626 00:34:40,600 --> 00:34:43,080 Speaker 1: It wasn't his greatest moment. I'll agree with that, but 627 00:34:43,080 --> 00:34:44,520 Speaker 1: I would have loved to have been there like you. 628 00:34:44,719 --> 00:34:47,280 Speaker 1: I think many of our listeners, and particularly those coast 629 00:34:47,320 --> 00:34:51,440 Speaker 1: to coast Good Morning across America understand somewhat the de 630 00:34:51,560 --> 00:34:55,680 Speaker 1: gal in London battling Eisenhower VICH France and all that 631 00:34:56,320 --> 00:34:59,600 Speaker 1: take us to his second career, which was out of 632 00:34:59,680 --> 00:35:04,920 Speaker 1: the Algerian War. How did he extricate France from that 633 00:35:05,000 --> 00:35:10,920 Speaker 1: war in nine? Well, that's the absolutely right. There are 634 00:35:10,960 --> 00:35:13,239 Speaker 1: two great moments in his career. The one is the 635 00:35:13,320 --> 00:35:16,440 Speaker 1: decision to go to London in nineteen forty and to 636 00:35:16,520 --> 00:35:19,120 Speaker 1: go on keeping France in the war and all the 637 00:35:19,200 --> 00:35:22,560 Speaker 1: quarrels that he had with Churchill, actually with Eisenhower he 638 00:35:22,600 --> 00:35:25,719 Speaker 1: got on pretty well. But yes, that's a great important part. 639 00:35:26,000 --> 00:35:28,680 Speaker 1: And then you're absolutely right. The second great moment is 640 00:35:28,800 --> 00:35:32,440 Speaker 1: ninety eight when he comes back to power Frances, finding 641 00:35:32,520 --> 00:35:37,239 Speaker 1: himself in this terrible conflict, and what he did basically 642 00:35:37,360 --> 00:35:40,319 Speaker 1: over four years from fifty eight to sixty two. And 643 00:35:40,360 --> 00:35:43,840 Speaker 1: he could do it, I think because he was a conservative, 644 00:35:44,520 --> 00:35:48,000 Speaker 1: and it was easier for a conservative to sell to 645 00:35:48,080 --> 00:35:50,640 Speaker 1: the French public the idea that they would have to 646 00:35:50,760 --> 00:35:58,480 Speaker 1: give up this last remnant to their empire sometimes and 647 00:35:59,000 --> 00:36:01,640 Speaker 1: not go ahead, sir, please no. I was just gonna say, 648 00:36:01,719 --> 00:36:04,719 Speaker 1: you know, I'm thinking of an American comparison. It was 649 00:36:04,760 --> 00:36:07,880 Speaker 1: easier for Richard Nixon to recognize China than it might 650 00:36:07,920 --> 00:36:10,160 Speaker 1: have been for a Democrat, and so it was easier 651 00:36:10,160 --> 00:36:12,080 Speaker 1: for a conservatives to say to the French, you've got 652 00:36:12,080 --> 00:36:13,759 Speaker 1: to give up your empire than it might have been 653 00:36:13,800 --> 00:36:15,360 Speaker 1: for a man of the left. The book is de 654 00:36:15,440 --> 00:36:18,399 Speaker 1: gal Julian Jackson. I can't say enough about it. It's 655 00:36:18,440 --> 00:36:21,480 Speaker 1: when every word out there, Max Hastings and the British 656 00:36:21,480 --> 00:36:25,560 Speaker 1: press absolutely rave about it. In all of this is 657 00:36:25,600 --> 00:36:30,480 Speaker 1: a requirement of those thoughtful to prepare for the new Europe. 658 00:36:31,120 --> 00:36:33,799 Speaker 1: Let's begin with this, what would Charles Degal? What would 659 00:36:33,840 --> 00:36:37,120 Speaker 1: General de Gal think of the president President of the 660 00:36:37,160 --> 00:36:43,840 Speaker 1: French Republic? The President President Macron certainly is trying to 661 00:36:44,000 --> 00:36:49,200 Speaker 1: act in a goalless way. Um. The constitution of France 662 00:36:49,320 --> 00:36:53,200 Speaker 1: is the constitution that was created by the Goal for 663 00:36:53,280 --> 00:36:57,520 Speaker 1: a strong president. And I think actually that the way 664 00:36:57,600 --> 00:37:01,160 Speaker 1: that Macroy is inhabiting the presidents in a very active 665 00:37:01,440 --> 00:37:05,239 Speaker 1: way would have fitted in with the Goal's idea of 666 00:37:05,280 --> 00:37:08,120 Speaker 1: what the president should be, as opposed to the predecessor, 667 00:37:08,360 --> 00:37:12,840 Speaker 1: francois Land, who didn't really ever seem at ease. Now 668 00:37:13,040 --> 00:37:15,359 Speaker 1: it hasn't all gone perfectly for Macron. There has been 669 00:37:15,360 --> 00:37:18,120 Speaker 1: the big problem with a yellow vest. But nonetheless I 670 00:37:18,160 --> 00:37:21,440 Speaker 1: think the style of government isn't so different from the 671 00:37:21,480 --> 00:37:26,040 Speaker 1: goal Iss style. Frayin Charles deal with this raging battle 672 00:37:26,120 --> 00:37:29,800 Speaker 1: and I guess it's between the modern Brussels and London, 673 00:37:29,840 --> 00:37:32,160 Speaker 1: but it could easily have been forty years ago to 674 00:37:32,280 --> 00:37:35,840 Speaker 1: Paris or to Bonnerable Inn or that. How do you 675 00:37:36,000 --> 00:37:43,200 Speaker 1: frame the Degal heritage within the Archbrexit EU debate? Well, 676 00:37:43,360 --> 00:37:46,120 Speaker 1: in France. There's an idea of the goal that people have, 677 00:37:46,320 --> 00:37:48,319 Speaker 1: which is that he was a nationalist, and he was 678 00:37:48,360 --> 00:37:51,320 Speaker 1: a nationalist, there's no doubt. But he was a nationalist 679 00:37:51,360 --> 00:37:55,040 Speaker 1: who realized that if France was going to be able 680 00:37:55,160 --> 00:37:58,080 Speaker 1: to stand up in the world, to stand up to 681 00:37:58,239 --> 00:38:00,040 Speaker 1: the Soviet Union as it then was, and to the 682 00:38:00,120 --> 00:38:03,440 Speaker 1: United States, she had to do it through Europe. So 683 00:38:03,640 --> 00:38:07,640 Speaker 1: he was a European, but not a federalist, but very 684 00:38:07,719 --> 00:38:11,160 Speaker 1: much a European of the idea of a European of states. 685 00:38:11,480 --> 00:38:16,080 Speaker 1: So he would there's no doubt about the commitment to Europe. 686 00:38:16,520 --> 00:38:20,760 Speaker 1: Of course, on Britain, he had as famously twice vetoed 687 00:38:20,840 --> 00:38:22,920 Speaker 1: British entry to the Common Market as it was then 688 00:38:23,000 --> 00:38:25,759 Speaker 1: called in fifty three and sixty seven. And I think 689 00:38:25,760 --> 00:38:28,879 Speaker 1: he'd say I told you so. Well, yeah, I think 690 00:38:28,920 --> 00:38:31,719 Speaker 1: that would be true, and a few British elites would 691 00:38:31,719 --> 00:38:35,120 Speaker 1: say General de gall was correct within that as the 692 00:38:35,200 --> 00:38:37,360 Speaker 1: modern trade and of course, folks, we see that the 693 00:38:37,440 --> 00:38:40,319 Speaker 1: DAO up fifty points right now, and we go back 694 00:38:40,320 --> 00:38:43,280 Speaker 1: and forth on US and China. Much of this Julian 695 00:38:43,360 --> 00:38:46,720 Speaker 1: Jackson is framed by a president of the United States 696 00:38:46,719 --> 00:38:51,000 Speaker 1: who harkens back almost to Elizabeth the first economics. I mean, 697 00:38:51,000 --> 00:38:54,880 Speaker 1: there's almost a mercantile society here. He had such a 698 00:38:54,960 --> 00:39:00,400 Speaker 1: heritage of the war was Charles de gall multilateral, Bila, geral, 699 00:39:00,880 --> 00:39:08,359 Speaker 1: French lateral. Was the mercantist in terms of international politics. 700 00:39:08,840 --> 00:39:14,239 Speaker 1: He was somebody who wanted to break out of the 701 00:39:14,280 --> 00:39:18,400 Speaker 1: Cold War paradigm, you know that the two power blocks. 702 00:39:18,440 --> 00:39:21,200 Speaker 1: And he said that this was bad for the world. 703 00:39:21,600 --> 00:39:23,960 Speaker 1: And then he wanted to as it were, moved to 704 00:39:24,360 --> 00:39:31,080 Speaker 1: a world, a multipolar world in which Europe would have 705 00:39:31,360 --> 00:39:33,920 Speaker 1: its voice. But he realized that France could only have 706 00:39:34,120 --> 00:39:38,440 Speaker 1: her voice through Europe. He was a nationalist, but he 707 00:39:38,520 --> 00:39:42,680 Speaker 1: was always a nationalist who believed in connectedness. He's the 708 00:39:42,719 --> 00:39:47,680 Speaker 1: man who in ninety left France rather because he said, 709 00:39:47,840 --> 00:39:52,280 Speaker 1: v France says, will be alone in Europe with Germany. 710 00:39:52,320 --> 00:39:55,120 Speaker 1: He said, no, no, you'll be a vassal of Germany. 711 00:39:55,160 --> 00:39:58,600 Speaker 1: If you want France rise again, she has to be 712 00:39:58,800 --> 00:40:02,160 Speaker 1: with her ally a Britain Julian Jackson, outside of your 713 00:40:02,160 --> 00:40:05,720 Speaker 1: wonderful book, De Goll, your thoughts on the future of Germany. 714 00:40:05,800 --> 00:40:09,279 Speaker 1: Right now we have a generational change with miracle, fragile 715 00:40:09,320 --> 00:40:11,479 Speaker 1: and an out the door at some point a new 716 00:40:11,520 --> 00:40:16,279 Speaker 1: government within a populist European economy. Your thoughts and the 717 00:40:16,320 --> 00:40:22,040 Speaker 1: future of Germany. I'm I admit I'm I'm worried and 718 00:40:22,080 --> 00:40:26,640 Speaker 1: pessimistic because for me, Merkel was in the last has 719 00:40:26,680 --> 00:40:29,120 Speaker 1: been over the last ten years, a voice of of 720 00:40:29,920 --> 00:40:35,800 Speaker 1: decency and liberalism and reason, and when one sees the 721 00:40:35,920 --> 00:40:39,560 Speaker 1: rise of the extreme right in Germany, I'm worried. I 722 00:40:39,640 --> 00:40:41,680 Speaker 1: have to say, I'm worried by the state of the world, 723 00:40:41,760 --> 00:40:45,160 Speaker 1: and I think that the Franco German axis when it worked, 724 00:40:45,560 --> 00:40:49,280 Speaker 1: was an important anchor of stability, not just for Europe 725 00:40:49,280 --> 00:40:52,400 Speaker 1: but for the world. So I can't pretend I'm not worried. 726 00:40:52,480 --> 00:40:56,480 Speaker 1: But I'm, unfortunately historian not a soothsayer, so I don't 727 00:40:56,480 --> 00:40:58,400 Speaker 1: know what's going to happen. Well, let's be a southsayer 728 00:40:58,520 --> 00:41:01,360 Speaker 1: right now. How's Madame Legarde can to do in Frankfurt, Germany. 729 00:41:01,400 --> 00:41:05,239 Speaker 1: What's your thoughts on a finance minister, a politician, a 730 00:41:05,320 --> 00:41:09,160 Speaker 1: lawyer at Baker Mackenzie in Chicago, how's Madame Legarde going 731 00:41:09,200 --> 00:41:12,880 Speaker 1: to do in Frankfort his ECB president. I think she 732 00:41:13,320 --> 00:41:17,880 Speaker 1: she's an extraordinarily competent in that way of a certain 733 00:41:18,000 --> 00:41:23,800 Speaker 1: kind of French trained economy, and she's had an extellar career. 734 00:41:24,280 --> 00:41:30,160 Speaker 1: UM and I think that she's tough, she's um, she's cosmopolitan, 735 00:41:30,400 --> 00:41:35,360 Speaker 1: she's intelligent, she knows the job, and I can't imagine. 736 00:41:35,440 --> 00:41:39,000 Speaker 1: I think she'll be absolutely superb in that job. Personally, well, 737 00:41:39,040 --> 00:41:42,120 Speaker 1: we're gonna in a difficult world. She seems to me 738 00:41:42,239 --> 00:41:46,200 Speaker 1: to be a positive sign. I'm myself and Julian Jackson WHETHERS, 739 00:41:46,200 --> 00:41:48,279 Speaker 1: and we are absolutely thrilled to could join us from 740 00:41:48,320 --> 00:41:55,279 Speaker 1: London today. Thanks for listening to the Bloomberg Surveillance podcast. 741 00:41:55,680 --> 00:42:00,200 Speaker 1: Subscribe and listen to interviews on Apple podcast, sound clot 742 00:42:00,520 --> 00:42:04,719 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 743 00:42:04,800 --> 00:42:09,040 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 744 00:42:09,480 --> 00:42:10,560 Speaker 1: I'm Bloomberg Radio.