1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,960 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Earlier today, 7 00:00:33,200 --> 00:00:36,199 Speaker 1: we spoke with Houston Police Chief are to us A 8 00:00:36,280 --> 00:00:38,960 Speaker 1: Vado to discuss the current situation in Houston on the 9 00:00:39,000 --> 00:00:43,440 Speaker 1: ground as Hurricane Harvey continues to rain down destruction on 10 00:00:43,560 --> 00:00:47,199 Speaker 1: Southeast Texas. We started by asking what the most pressing 11 00:00:47,240 --> 00:00:50,320 Speaker 1: problems were for the Houston Police Department as they continue 12 00:00:50,320 --> 00:00:53,720 Speaker 1: to rescue thousands of people. The issue for us is 13 00:00:53,760 --> 00:00:57,120 Speaker 1: obviously a capacity. You know, we've we've had so many 14 00:00:57,120 --> 00:00:59,960 Speaker 1: resources trying to get here throughout the state and country, 15 00:01:00,240 --> 00:01:03,360 Speaker 1: but flash flooding and flooding has impacted not just the 16 00:01:03,400 --> 00:01:05,760 Speaker 1: city of Houston, but the entire region, a big part 17 00:01:05,800 --> 00:01:08,559 Speaker 1: of our state, and so you know, we're running on fumes, 18 00:01:08,600 --> 00:01:11,319 Speaker 1: but we're still getting it done. In our department alone 19 00:01:11,319 --> 00:01:16,440 Speaker 1: already has about thirty rescues, So right now you're saying 20 00:01:16,440 --> 00:01:19,920 Speaker 1: that there are backup efforts trying to get to you 21 00:01:19,959 --> 00:01:22,920 Speaker 1: but cannot Does that include supplies as well that are 22 00:01:22,920 --> 00:01:25,760 Speaker 1: trying to get to you. We're having a difficult time 23 00:01:25,760 --> 00:01:30,760 Speaker 1: getting supplies through to to the city and to the region. Unfortunately, 24 00:01:30,760 --> 00:01:34,800 Speaker 1: this storm has sat here for a daze now, but 25 00:01:34,880 --> 00:01:39,600 Speaker 1: it's also impacted other roadways and so we leave convoys 26 00:01:39,640 --> 00:01:42,920 Speaker 1: over the last few days of people and equipment and 27 00:01:42,959 --> 00:01:45,880 Speaker 1: supplies have had a real challenge getting here. I'm I mean, 28 00:01:45,880 --> 00:01:48,240 Speaker 1: it's still pouring down rain here in downtown Houston. I'm 29 00:01:48,240 --> 00:01:50,880 Speaker 1: on my way to the heck So Emerge Communication Center 30 00:01:51,120 --> 00:01:54,080 Speaker 1: and that's becoming a problem. And we've got a bunch 31 00:01:54,080 --> 00:01:55,920 Speaker 1: of our stations now if I think we have four 32 00:01:56,000 --> 00:01:58,880 Speaker 1: or five that we've had to evacuate. So it's just 33 00:01:58,960 --> 00:02:01,600 Speaker 1: one one challenge after the other. But you know, we're 34 00:02:01,680 --> 00:02:04,200 Speaker 1: rising to the task and we'll get to it with 35 00:02:04,320 --> 00:02:07,160 Speaker 1: the help of our fellow Texans and the fellow Americans 36 00:02:07,200 --> 00:02:10,320 Speaker 1: that are coming here to help. Chief as Surveato speak 37 00:02:10,360 --> 00:02:12,320 Speaker 1: a little bit, if you can in detail about what's 38 00:02:12,360 --> 00:02:16,120 Speaker 1: going on at the George Brown Convention Center, and also 39 00:02:16,160 --> 00:02:17,800 Speaker 1: if you can just give us an update on things 40 00:02:17,840 --> 00:02:23,000 Speaker 1: like electric and communications networks, airports and so on. Yeah, 41 00:02:23,080 --> 00:02:24,960 Speaker 1: well the airports are still shut down. They're only going 42 00:02:25,040 --> 00:02:28,600 Speaker 1: to be open for uh humanitarian and searching and obviously 43 00:02:28,960 --> 00:02:33,240 Speaker 1: response uh flights, which means that people are coming here 44 00:02:33,280 --> 00:02:35,960 Speaker 1: to help us. Uh. The George are brown the centers 45 00:02:36,160 --> 00:02:39,240 Speaker 1: at capacity. We have I think on nine thousand folks there, 46 00:02:39,240 --> 00:02:42,560 Speaker 1: but we're starting to open other shelters and uh we'll 47 00:02:42,560 --> 00:02:47,080 Speaker 1: start transporting up exactly weis to those places. Our water 48 00:02:47,160 --> 00:02:49,400 Speaker 1: supply is still intact, but you know how that goes. 49 00:02:49,480 --> 00:02:51,560 Speaker 1: You just never know what will happen. You know that 50 00:02:51,680 --> 00:02:55,200 Speaker 1: historically at some point in these storms anyone in the country, 51 00:02:55,280 --> 00:02:57,320 Speaker 1: you end up having a disruption of water supply. So 52 00:02:57,720 --> 00:03:01,720 Speaker 1: people should they if they, uh they can make you know, 53 00:03:01,760 --> 00:03:03,960 Speaker 1: try to store us own your own in your back 54 00:03:03,960 --> 00:03:07,400 Speaker 1: stupor containers, whatever you can in your home. Uh. Some 55 00:03:07,440 --> 00:03:10,680 Speaker 1: of the cell piwers are starting to fail. Uh And 56 00:03:10,720 --> 00:03:12,680 Speaker 1: so you know, it's it's it's what you would expect, 57 00:03:12,680 --> 00:03:15,200 Speaker 1: an aread of one challenge after the other. But I'm 58 00:03:15,280 --> 00:03:17,720 Speaker 1: very proud of the fact that our cities are region 59 00:03:17,800 --> 00:03:19,720 Speaker 1: and our men and women in the Houston Department, our 60 00:03:19,720 --> 00:03:23,200 Speaker 1: first responding community, are are still working they've been working 61 00:03:23,200 --> 00:03:28,200 Speaker 1: NonStop since Friday. What about the main public hospitals. Uh, well, 62 00:03:28,520 --> 00:03:30,800 Speaker 1: we've had to evacuate. Uh I know of at least 63 00:03:30,800 --> 00:03:34,280 Speaker 1: one major hospitals evacuated. But you know, we've one of 64 00:03:34,280 --> 00:03:36,440 Speaker 1: the things that the blessing that we have here in 65 00:03:36,480 --> 00:03:39,640 Speaker 1: the city of Houston is it are our medicine here 66 00:03:39,680 --> 00:03:41,440 Speaker 1: is a world right now. We've got some of the 67 00:03:41,440 --> 00:03:44,800 Speaker 1: best doctors and nurses, uh, you know, from around the world, 68 00:03:44,880 --> 00:03:47,760 Speaker 1: and uh, there's a reason that foreign leaders come here 69 00:03:48,320 --> 00:03:51,000 Speaker 1: for treatment. And so we have a lot of capacity 70 00:03:51,600 --> 00:03:56,040 Speaker 1: and we've been able to successfully transfer patients safely from 71 00:03:56,080 --> 00:03:59,360 Speaker 1: facilities that have set down. What kind of aid have 72 00:03:59,520 --> 00:04:02,240 Speaker 1: you already received from the federal government and what are 73 00:04:02,240 --> 00:04:05,320 Speaker 1: you expecting? Well, the relief is that's coming, and we've 74 00:04:05,320 --> 00:04:08,440 Speaker 1: got people here on the ground, so I'm still trying 75 00:04:08,440 --> 00:04:12,360 Speaker 1: to get here. We know we have supplies coming. Uh. 76 00:04:12,520 --> 00:04:16,839 Speaker 1: We we have rescue vehicles here. We've got uh National 77 00:04:16,839 --> 00:04:20,120 Speaker 1: Guard high high high water vehicles here. But the currents 78 00:04:20,160 --> 00:04:23,520 Speaker 1: have been strong for votes are trying to rescue folks. 79 00:04:23,520 --> 00:04:27,440 Speaker 1: So it's just although we have the help, obviously, we 80 00:04:27,480 --> 00:04:30,200 Speaker 1: don't have enough help. Chief, what's the best way that 81 00:04:30,240 --> 00:04:32,840 Speaker 1: people who are listening to you can help. Well. One 82 00:04:32,839 --> 00:04:35,159 Speaker 1: of the things we don't need more people self self 83 00:04:35,480 --> 00:04:38,640 Speaker 1: dispatching themselves to the region of we want trying to 84 00:04:38,680 --> 00:04:42,960 Speaker 1: get here is uh is precarious at best. Yeah, what 85 00:04:43,000 --> 00:04:45,039 Speaker 1: we need is people to you know, donate to the 86 00:04:45,080 --> 00:04:47,880 Speaker 1: Red Cross, go to the City of Houston website and 87 00:04:48,040 --> 00:04:53,400 Speaker 1: uh donate food and obviously the recovery for our the 88 00:04:53,440 --> 00:04:58,840 Speaker 1: poor citizens that and residents of this state have lost everything. Uh, 89 00:04:58,960 --> 00:05:01,599 Speaker 1: they're going to need financial assistance, and so anything you 90 00:05:01,600 --> 00:05:04,680 Speaker 1: can give, you know, it's uh, we'll we'll, we'll pay 91 00:05:04,680 --> 00:05:08,080 Speaker 1: it forward. And just lastly, how are you fixed for 92 00:05:08,120 --> 00:05:11,080 Speaker 1: a fuel, for food, for medicine for you and for 93 00:05:11,160 --> 00:05:14,160 Speaker 1: all of your colleagues. You know what. It's a challenge, 94 00:05:14,240 --> 00:05:17,040 Speaker 1: but we're balancing it. It's really interesting. You know, some 95 00:05:17,200 --> 00:05:20,400 Speaker 1: a pizza place brought pizza to our folks yesterday and 96 00:05:21,040 --> 00:05:23,200 Speaker 1: some guys said, well some citizens, Well the rest of 97 00:05:23,200 --> 00:05:25,359 Speaker 1: the city starving there you guys eating pizza. What he 98 00:05:25,400 --> 00:05:27,680 Speaker 1: doesn't know is that our folks have been going not 99 00:05:27,760 --> 00:05:31,279 Speaker 1: going home since Friday. Their families are but that their 100 00:05:31,320 --> 00:05:35,159 Speaker 1: families have been evacuated. If we can't feed our first responders, 101 00:05:35,320 --> 00:05:37,479 Speaker 1: then nobody's going to respond to a lot of people 102 00:05:37,520 --> 00:05:40,280 Speaker 1: are still unparil so it's a challenge to get all 103 00:05:40,279 --> 00:05:44,120 Speaker 1: these things done. Our officers are being they're out of uniforms. 104 00:05:44,480 --> 00:05:48,040 Speaker 1: We need help trying to get these uniforms washed because 105 00:05:48,320 --> 00:05:53,520 Speaker 1: they've been contaminated. They've been in chest high water rescuing people. 106 00:05:53,560 --> 00:05:56,039 Speaker 1: And so we're not making excuses and we're not going 107 00:05:56,080 --> 00:05:57,960 Speaker 1: to stop and we're not going to arrest until this 108 00:05:58,040 --> 00:06:01,400 Speaker 1: job gets done. That is as saved oh he is 109 00:06:01,480 --> 00:06:04,160 Speaker 1: the chief of Police for the City of Houston. As 110 00:06:04,200 --> 00:06:08,120 Speaker 1: those rescue and relief efforts continue. And Lisa, just to note, 111 00:06:08,160 --> 00:06:10,200 Speaker 1: you know the seaports in Houston as well as in 112 00:06:10,240 --> 00:06:13,839 Speaker 1: Corpus Christie, they've been closed to most ships before Harvey 113 00:06:13,880 --> 00:06:17,560 Speaker 1: made landfall last Friday. This means a lot of rerouting 114 00:06:17,600 --> 00:06:21,479 Speaker 1: for those ships for the freighters. Also, rail traffic has 115 00:06:21,520 --> 00:06:26,679 Speaker 1: been suspended. UPS has suspended freight service in Houston and Beaumont, Texas. 116 00:06:26,920 --> 00:06:29,800 Speaker 1: So there's going to be not only a humanitarian issue 117 00:06:29,839 --> 00:06:31,880 Speaker 1: that needs to be dealt with, but there's also going 118 00:06:31,960 --> 00:06:35,680 Speaker 1: to be an untangling of transport uh transport lines and 119 00:06:35,720 --> 00:06:39,640 Speaker 1: transport networks. Indeed, and the police department in Houston sure 120 00:06:39,720 --> 00:06:42,960 Speaker 1: has a lot going on. They've rescued more than three 121 00:06:42,960 --> 00:06:47,359 Speaker 1: thousand people, and there are reports coming out today that 122 00:06:47,440 --> 00:06:50,640 Speaker 1: there have been looters that have been violent that they're 123 00:06:50,640 --> 00:06:53,320 Speaker 1: also trying to deal with. So quite a quite a 124 00:06:53,320 --> 00:06:56,680 Speaker 1: situation that's unfolding. Also, there is a question of what 125 00:06:56,760 --> 00:07:00,960 Speaker 1: the death toll is. So far, it has remained fairly limited, 126 00:07:01,000 --> 00:07:05,120 Speaker 1: but many are expecting the numbers to rise. So definitely 127 00:07:05,520 --> 00:07:09,440 Speaker 1: a tragic situation right now unfolding. Yeah, and some forecasters 128 00:07:09,440 --> 00:07:13,520 Speaker 1: are saying that Houston will see another two feet of 129 00:07:13,680 --> 00:07:16,520 Speaker 1: rain as it continues to pummel the area. Amazing, and 130 00:07:16,640 --> 00:07:19,720 Speaker 1: this will obviously also raise questions about how this will 131 00:07:19,760 --> 00:07:23,520 Speaker 1: get paid for and flood insurance which is currently provided 132 00:07:23,520 --> 00:07:28,480 Speaker 1: by the US government in an underfunded and actually unsound program, 133 00:07:28,760 --> 00:07:43,120 Speaker 1: the n f I P Let's turn our attention now 134 00:07:43,200 --> 00:07:46,280 Speaker 1: to the energy markets. Right now, nimex gasoline is higher 135 00:07:46,320 --> 00:07:49,840 Speaker 1: by more than two percent. The crude oil is falling 136 00:07:49,840 --> 00:07:51,920 Speaker 1: one and a half percent. Here to have explain all 137 00:07:51,960 --> 00:07:54,360 Speaker 1: this is Stephen Shorky is the president of the Short 138 00:07:54,400 --> 00:07:57,200 Speaker 1: Group and he joins us now. Steven, thanks very much 139 00:07:57,200 --> 00:07:59,920 Speaker 1: for being with us, So just briefly explain the diverge 140 00:08:00,240 --> 00:08:02,520 Speaker 1: because on the surface it doesn't seem to make a 141 00:08:02,520 --> 00:08:05,680 Speaker 1: lot of sense, but I know it does well. Absolutely. 142 00:08:06,120 --> 00:08:10,680 Speaker 1: Hurricanes historically tend to be very barish for the stuff 143 00:08:10,680 --> 00:08:13,520 Speaker 1: you put into the refinery crude oil, and very bullish 144 00:08:13,520 --> 00:08:15,800 Speaker 1: for the stuff you take out of the refinery that 145 00:08:15,960 --> 00:08:19,120 Speaker 1: is the product. And this is because, of course refineries 146 00:08:19,160 --> 00:08:21,960 Speaker 1: now in the Gulf Coast epy center, a good majority 147 00:08:22,000 --> 00:08:23,680 Speaker 1: of them now or a good share of them I 148 00:08:23,680 --> 00:08:26,840 Speaker 1: should say, are shut in. So when the refinery shuts in, 149 00:08:26,920 --> 00:08:29,280 Speaker 1: a refinery is the only person in the world that 150 00:08:29,360 --> 00:08:32,600 Speaker 1: actually buys crudal physical crudal. So when you have that 151 00:08:32,720 --> 00:08:35,880 Speaker 1: much capacity right now shut in, and right now the 152 00:08:35,920 --> 00:08:38,400 Speaker 1: capacity that is linked to the New York Mercantile Exchange, 153 00:08:38,600 --> 00:08:41,480 Speaker 1: one out of every four barrels of refining capacity is 154 00:08:41,559 --> 00:08:44,120 Speaker 1: now shut in. So that's a lot of crudal that's 155 00:08:44,120 --> 00:08:47,480 Speaker 1: floating around here. But the real big difference between this 156 00:08:47,720 --> 00:08:50,240 Speaker 1: hurricane and the last hurricane that we saw in this 157 00:08:50,280 --> 00:08:53,439 Speaker 1: region two thousand and eight with Hurricane Pike and Hurricane 158 00:08:54,000 --> 00:08:57,960 Speaker 1: Goose stuff was the reversal of a major pipeline. Back 159 00:08:58,000 --> 00:09:00,400 Speaker 1: in two thousand and eight, we used to take Rudel 160 00:09:00,440 --> 00:09:02,640 Speaker 1: into the Houston market area and ship it up to 161 00:09:02,920 --> 00:09:05,360 Speaker 1: the middle part of the country and into the Chicago 162 00:09:05,400 --> 00:09:09,160 Speaker 1: market area. We reverse that pipeline in two thousand and twelve, 163 00:09:09,440 --> 00:09:11,920 Speaker 1: So now there's a lot of oil that comes from 164 00:09:11,960 --> 00:09:14,800 Speaker 1: Canada and from the Upper Midwest down into the Euston 165 00:09:14,840 --> 00:09:17,320 Speaker 1: market to go to those refineries and then go to 166 00:09:17,360 --> 00:09:20,240 Speaker 1: the export market. So now with the situation of the 167 00:09:20,240 --> 00:09:23,439 Speaker 1: refineries being shut in so you can't boil that oil, 168 00:09:23,720 --> 00:09:27,120 Speaker 1: and with the ports closed you can't export that crude oil, 169 00:09:27,400 --> 00:09:29,640 Speaker 1: we are now in the process of building a very 170 00:09:29,760 --> 00:09:33,040 Speaker 1: large glut and crude oil prices, hence why we're seeing 171 00:09:33,480 --> 00:09:38,760 Speaker 1: them barrish reaction in the crude all market. Conversely, as 172 00:09:38,760 --> 00:09:41,320 Speaker 1: we said, if you can't boil crude oil, well you 173 00:09:41,400 --> 00:09:45,520 Speaker 1: can't make gasoline or diesel fuel. Hence why those markets 174 00:09:45,559 --> 00:09:49,400 Speaker 1: are rallying over the past few days. Right, Stephen, that's fascinating. 175 00:09:49,440 --> 00:09:52,200 Speaker 1: I'm looking right now at crude UH at a little 176 00:09:52,200 --> 00:09:54,840 Speaker 1: bit less than forty six dollars a barrel. Are you 177 00:09:55,640 --> 00:10:00,480 Speaker 1: thinking that perhaps this price will go substantially lower should 178 00:10:00,679 --> 00:10:04,760 Speaker 1: the closures of these refineries get prolonged for for several 179 00:10:04,760 --> 00:10:08,720 Speaker 1: weeks or more. Yes, I do because we also have 180 00:10:08,840 --> 00:10:11,120 Speaker 1: to appreciate what time of the year we are at. 181 00:10:11,480 --> 00:10:13,959 Speaker 1: We are now approaching the Labor Day holiday, which now 182 00:10:14,040 --> 00:10:17,920 Speaker 1: means this summer holiday driving season is over. So guest 183 00:10:18,040 --> 00:10:21,719 Speaker 1: Lene demand was about the fall regardless, that means we're 184 00:10:21,760 --> 00:10:25,559 Speaker 1: also heading into September October, which is the fall maintenance 185 00:10:25,559 --> 00:10:29,600 Speaker 1: season for the refineries. So the refiners were already starting 186 00:10:29,640 --> 00:10:31,960 Speaker 1: to pair back purchases because they were going to go 187 00:10:32,000 --> 00:10:35,240 Speaker 1: into maintenance. And so of course when a refiners in maintenance, 188 00:10:35,320 --> 00:10:38,800 Speaker 1: it's not boiling oil, it's not buying oil. So therefore, 189 00:10:39,120 --> 00:10:42,800 Speaker 1: with what this hurricane and if we see prolonged stoppages 190 00:10:43,040 --> 00:10:45,960 Speaker 1: in and this, we're just these stoppages are just going 191 00:10:46,040 --> 00:10:48,480 Speaker 1: to roll over into the maintenance season. So we could 192 00:10:48,480 --> 00:10:51,520 Speaker 1: see a prolonged maintenance season and a tremendous amount of 193 00:10:51,559 --> 00:10:55,360 Speaker 1: demand destruction already on top of what we're experiencing. So 194 00:10:55,559 --> 00:10:59,280 Speaker 1: how low do you expect crude values to go in 195 00:10:59,400 --> 00:11:03,040 Speaker 1: that scenario? Area? Uh? In that scenario, if we take 196 00:11:03,040 --> 00:11:06,480 Speaker 1: out now normally between now in Halloween, we could expect 197 00:11:06,559 --> 00:11:09,400 Speaker 1: crudal demand by us of finders here in um the 198 00:11:09,520 --> 00:11:13,880 Speaker 1: fall anywhere between eight hundred thousand barrels a day upwards 199 00:11:13,880 --> 00:11:16,440 Speaker 1: of over one point two million barrels a day. So 200 00:11:16,480 --> 00:11:20,400 Speaker 1: if you take that normal uh seasonal demand instruction, and 201 00:11:20,400 --> 00:11:25,200 Speaker 1: then you uh you compound it by extended closures because 202 00:11:25,240 --> 00:11:29,600 Speaker 1: of hurricane related damage, then certainly we're now at the 203 00:11:29,640 --> 00:11:32,280 Speaker 1: bottom of the range. We're in that mid forty dollar range. 204 00:11:32,320 --> 00:11:34,959 Speaker 1: This is exactly where crudal has more or less found 205 00:11:34,960 --> 00:11:37,120 Speaker 1: support over the past two and a half years. We 206 00:11:37,240 --> 00:11:40,080 Speaker 1: have had some outliers, some dips below forty, even a 207 00:11:40,120 --> 00:11:44,000 Speaker 1: dip below thirty. I'm certainly not expecting a dip below thirty, 208 00:11:44,040 --> 00:11:48,360 Speaker 1: but any sort of prolonged outage both related to refinery 209 00:11:48,440 --> 00:11:52,120 Speaker 1: capacity and also the export market with the port closures 210 00:11:52,120 --> 00:11:55,280 Speaker 1: and pipeline issues, we could certainly see that forty dollar 211 00:11:55,360 --> 00:11:59,200 Speaker 1: barrier tested in a perfect scenario. Well, Stephen, maybe just 212 00:11:59,240 --> 00:12:02,800 Speaker 1: the expand on that, because some weather forecasters say that 213 00:12:02,840 --> 00:12:06,880 Speaker 1: the Houston and the that area in Texas could see 214 00:12:06,920 --> 00:12:10,520 Speaker 1: another two feet of rain. How long does it take 215 00:12:10,520 --> 00:12:13,040 Speaker 1: to restart one of these refineries and what kind of 216 00:12:13,080 --> 00:12:15,800 Speaker 1: safety checks do they need to go through in order 217 00:12:15,840 --> 00:12:19,600 Speaker 1: to even start that process? Right now, the good news 218 00:12:19,640 --> 00:12:22,400 Speaker 1: here is, unlike two thousand and five with Hurricane Katrina, 219 00:12:22,559 --> 00:12:25,720 Speaker 1: on that Friday, if we recall for everyone was expecting. 220 00:12:25,760 --> 00:12:29,160 Speaker 1: Every meteorologist thought that storm was going into the Florida Panhandle. 221 00:12:29,440 --> 00:12:32,480 Speaker 1: It took a nasty turn over the weekend, and by Sunday, 222 00:12:32,559 --> 00:12:35,480 Speaker 1: of course, it devastated New Orleans and the oil and 223 00:12:35,520 --> 00:12:38,960 Speaker 1: gas infrastructure in that area. The good news here is 224 00:12:39,320 --> 00:12:43,880 Speaker 1: this storm was well followed, so the industry initiated it's 225 00:12:43,880 --> 00:12:47,120 Speaker 1: emergency protocols and a timely fashion. They shut down in 226 00:12:47,160 --> 00:12:51,360 Speaker 1: a timely fashion. Even better, unlike Katrina, this storm did 227 00:12:51,400 --> 00:12:55,200 Speaker 1: not develop into a monster cats fork storm until it 228 00:12:55,240 --> 00:12:57,480 Speaker 1: was close to the shore, so you're not going to 229 00:12:57,520 --> 00:12:59,240 Speaker 1: get it didn't have enough time to build up that 230 00:12:59,280 --> 00:13:02,920 Speaker 1: wall of seaward that to flood the areas. Yeah, I 231 00:13:02,920 --> 00:13:04,200 Speaker 1: mean it could have been. What I'm saying is it 232 00:13:04,240 --> 00:13:07,000 Speaker 1: could have been a lot worse. So that said, the 233 00:13:07,080 --> 00:13:10,600 Speaker 1: ongoing rain PIM is a problem because right now the 234 00:13:10,720 --> 00:13:14,040 Speaker 1: closures with the refineries are in the Corpus Christie, which 235 00:13:14,120 --> 00:13:16,920 Speaker 1: is west of Houston up to Houston. Now, with the 236 00:13:16,960 --> 00:13:19,320 Speaker 1: track of all of this rain, we're moving towards the 237 00:13:19,440 --> 00:13:23,200 Speaker 1: Texas Louisiana border, so that's going to threaten the Port. 238 00:13:23,320 --> 00:13:26,960 Speaker 1: Arthur Beaumont Texas Refinery Epicenter. That's another one point five 239 00:13:27,040 --> 00:13:30,120 Speaker 1: million barrels of refinery capacity. And then we can go 240 00:13:30,160 --> 00:13:33,559 Speaker 1: into the Louisiana to the Mississippi Coast Refinery Center. That's 241 00:13:33,600 --> 00:13:36,120 Speaker 1: another three point seven million barrels a day of demand. 242 00:13:36,320 --> 00:13:40,040 Speaker 1: So that's a considerable amount of capacity that is in 243 00:13:40,080 --> 00:13:42,960 Speaker 1: the wake of the storm that is susceptible to flooding. 244 00:13:43,040 --> 00:13:45,959 Speaker 1: So we're by no means out of the woods, so 245 00:13:46,040 --> 00:13:48,880 Speaker 1: that that this is still a bullishry event for gasoline prices. 246 00:13:48,880 --> 00:13:50,920 Speaker 1: Stephen Shark, thank you so much for joining us. Stephen 247 00:13:50,920 --> 00:13:53,520 Speaker 1: Shork as president of the Shark Group, also the author 248 00:13:53,600 --> 00:14:08,920 Speaker 1: of the short report. Well, overnight, North Korea did do 249 00:14:09,040 --> 00:14:12,640 Speaker 1: another missile test, in this time it went over Japan. 250 00:14:12,840 --> 00:14:16,760 Speaker 1: Japan called this unprecedented. And here to give us a 251 00:14:16,840 --> 00:14:20,960 Speaker 1: little more perspective on how this changes the backdrop for 252 00:14:21,080 --> 00:14:25,640 Speaker 1: the US negotiations and dealings with North Korea is Brad Taylor. 253 00:14:25,680 --> 00:14:30,320 Speaker 1: He's retired Special Forces lieutenant colonel, also author of Ghosts 254 00:14:30,400 --> 00:14:34,160 Speaker 1: of War, which is available in paperback now. And Brad, 255 00:14:34,200 --> 00:14:36,280 Speaker 1: thank you so much for joining us. I know that 256 00:14:36,360 --> 00:14:40,360 Speaker 1: you were part of the Combined Unconventional Warfare Task Force 257 00:14:40,440 --> 00:14:44,320 Speaker 1: review of how the US is dealing with North Korea, 258 00:14:44,360 --> 00:14:46,960 Speaker 1: and I would love to get your sense of how 259 00:14:47,080 --> 00:14:51,120 Speaker 1: much this latest provocation from North Korea ups the anti 260 00:14:51,240 --> 00:14:54,360 Speaker 1: ups the tension and changes the backdrop for the US 261 00:14:54,560 --> 00:14:58,440 Speaker 1: dealings with that region. Well, it uh at tensions quite 262 00:14:58,480 --> 00:15:00,200 Speaker 1: a bit just because of the tensions where were at 263 00:15:00,280 --> 00:15:02,760 Speaker 1: right now. It just amplifies it. But it's not you know, 264 00:15:02,880 --> 00:15:05,120 Speaker 1: Japan screaming about it being unprecedent. It's actually the third 265 00:15:05,120 --> 00:15:08,600 Speaker 1: time the missile's gone over Japan, so it's not entirely unprecedented. 266 00:15:08,880 --> 00:15:10,480 Speaker 1: In the past, they always said they were launching the 267 00:15:10,480 --> 00:15:13,080 Speaker 1: satellite uh no, satellite made into space, and so at 268 00:15:13,120 --> 00:15:15,000 Speaker 1: least they were willing to camouflage the fact that they're 269 00:15:15,000 --> 00:15:16,880 Speaker 1: testing the missile. This time, they just launched a missile, 270 00:15:16,880 --> 00:15:19,160 Speaker 1: didn't say anything about the satellite. So it's definitely a 271 00:15:19,160 --> 00:15:21,840 Speaker 1: poke in the eye. Uh Some of the unique things 272 00:15:21,840 --> 00:15:24,440 Speaker 1: of it they launched this thing from Pyongyang right outside 273 00:15:24,480 --> 00:15:27,040 Speaker 1: during the National Airport, which in the past they've alays 274 00:15:27,120 --> 00:15:30,280 Speaker 1: launched them out in the hinter lands in the military basis. Basically, 275 00:15:30,280 --> 00:15:31,320 Speaker 1: they're saying, you know, if you want to do a 276 00:15:31,320 --> 00:15:33,160 Speaker 1: first strike or not, you have to take out Pyongang, 277 00:15:33,240 --> 00:15:37,480 Speaker 1: which definitely amps up our capabilities for first strike. If 278 00:15:37,520 --> 00:15:39,640 Speaker 1: you are going to write this as a novel with 279 00:15:39,800 --> 00:15:42,440 Speaker 1: a happy ending, what would it be like? And then 280 00:15:42,440 --> 00:15:45,800 Speaker 1: you can give us the alternative. I don't think there 281 00:15:45,880 --> 00:15:48,520 Speaker 1: is a happy ending for this one. They're not going 282 00:15:48,560 --> 00:15:50,560 Speaker 1: to give up the nuclear missiles. They've seen what happens 283 00:15:50,560 --> 00:15:54,680 Speaker 1: when other regimes give up the nuclear missiles market off. 284 00:15:54,680 --> 00:15:56,640 Speaker 1: He gave up his missiles, and you know, ten years 285 00:15:56,720 --> 00:15:59,480 Speaker 1: later we came, we saw he died. So I'm a 286 00:15:59,560 --> 00:16:01,360 Speaker 1: saying gave his up. We took kids regime down. So 287 00:16:01,400 --> 00:16:04,600 Speaker 1: he wants the missiles. For him, the missiles are intertwined 288 00:16:04,600 --> 00:16:07,680 Speaker 1: with his regime's stability. So when we say either get 289 00:16:07,760 --> 00:16:09,680 Speaker 1: rid of the missiles or lose your resime, that's the 290 00:16:09,720 --> 00:16:11,440 Speaker 1: same thing. To him. Getting rid of his missiles, it 291 00:16:11,480 --> 00:16:13,640 Speaker 1: means the loss of his regime. So he's it's really 292 00:16:13,680 --> 00:16:16,160 Speaker 1: off the table. Now. He'll certainly do talks, and we'll 293 00:16:16,200 --> 00:16:18,160 Speaker 1: do bilettle talks and six party talks and all that 294 00:16:18,240 --> 00:16:20,320 Speaker 1: kind of stuff, but he's going to keep marshing forward. 295 00:16:20,880 --> 00:16:25,680 Speaker 1: So what is a better case scenario than a catastrophic 296 00:16:25,680 --> 00:16:29,320 Speaker 1: altercation that leaves thousands and thousands of people dead in 297 00:16:29,400 --> 00:16:33,400 Speaker 1: the region at this point. Well, the best case would 298 00:16:33,400 --> 00:16:35,400 Speaker 1: be of China. You know, China has all the leverage 299 00:16:35,400 --> 00:16:38,000 Speaker 1: in North Korea. And if China started leveraging the sanctions 300 00:16:38,080 --> 00:16:40,440 Speaker 1: and we you know, this is our seventh set of 301 00:16:40,480 --> 00:16:43,640 Speaker 1: sanctions and they were all voted um unanimously, so that's 302 00:16:43,640 --> 00:16:46,520 Speaker 1: not unprecedented either. What happens though, is Russia and China 303 00:16:46,920 --> 00:16:50,000 Speaker 1: failed to enforce their part of the sanctions. The problem 304 00:16:50,000 --> 00:16:52,360 Speaker 1: with that is it's not in China's interest to enforce 305 00:16:52,400 --> 00:16:55,120 Speaker 1: the sanctions. They do not want. I mean, sanctions work 306 00:16:55,160 --> 00:16:57,760 Speaker 1: because you struggle, you hammer the people so much the 307 00:16:58,080 --> 00:17:00,800 Speaker 1: leadership decides to change. Well, in this case, the leadership 308 00:17:00,880 --> 00:17:02,720 Speaker 1: doesn't care about the people. So the only way the 309 00:17:02,760 --> 00:17:05,440 Speaker 1: leadership would change is if the people overturned the leadership. 310 00:17:05,720 --> 00:17:08,679 Speaker 1: And China definitely does not want that. What China does 311 00:17:08,720 --> 00:17:11,080 Speaker 1: not want it's against their interest to have a unified 312 00:17:11,119 --> 00:17:13,960 Speaker 1: Korean peninsula underneath this way of South Korea. Right. Well, 313 00:17:14,000 --> 00:17:17,359 Speaker 1: I mean we were talking with j Leftwitz a couple 314 00:17:17,400 --> 00:17:20,879 Speaker 1: of weeks ago, who was the former Human rights envoid 315 00:17:20,920 --> 00:17:24,200 Speaker 1: to North Korea for the US, and he was saying, look, 316 00:17:24,240 --> 00:17:28,080 Speaker 1: the US has to drop this UH unified Korean Peninsula 317 00:17:28,200 --> 00:17:31,239 Speaker 1: concept entirely to get China on board. Do you have 318 00:17:31,280 --> 00:17:34,960 Speaker 1: any sense that the US is taking that approach and 319 00:17:35,119 --> 00:17:37,320 Speaker 1: is moving closer to some kind of agreement with China 320 00:17:37,560 --> 00:17:40,320 Speaker 1: that would actually tighten the screws on this situation in 321 00:17:40,359 --> 00:17:43,719 Speaker 1: a non catastrophic way. I think they're doing it right now. 322 00:17:43,840 --> 00:17:46,480 Speaker 1: China historically when they sign a new sanction, they go 323 00:17:46,520 --> 00:17:48,600 Speaker 1: ahead and do it, and then something will go along 324 00:17:48,680 --> 00:17:49,879 Speaker 1: later on a couple of years down the road and 325 00:17:49,880 --> 00:17:52,120 Speaker 1: they'll start slipping up on it. So on the surface, yes, 326 00:17:52,440 --> 00:17:54,479 Speaker 1: they're all going to be on board. The one thing 327 00:17:54,480 --> 00:17:57,639 Speaker 1: that wasn't reported, Russians actually flew a fleet of nuclear 328 00:17:57,680 --> 00:17:59,760 Speaker 1: capable bombers out of the Sea of Japan. They got 329 00:17:59,760 --> 00:18:03,040 Speaker 1: interest upted by South Korean UH fighter jets during the 330 00:18:03,080 --> 00:18:05,560 Speaker 1: exercises we're doing last week, so they're they're playing the 331 00:18:05,560 --> 00:18:08,880 Speaker 1: game too. Do you have any idea what exactly does 332 00:18:08,880 --> 00:18:11,080 Speaker 1: the leader of North Korea want from all of this? 333 00:18:12,600 --> 00:18:14,880 Speaker 1: What I think he wants is just to survive. That's 334 00:18:14,960 --> 00:18:17,720 Speaker 1: what he's looking at. His his sole function in life, 335 00:18:17,760 --> 00:18:20,200 Speaker 1: his regime survivability. His father was the same way. His 336 00:18:20,280 --> 00:18:23,040 Speaker 1: grandfather who started the country was the same way. That's 337 00:18:23,040 --> 00:18:26,160 Speaker 1: what they want. So is it possible that there's some 338 00:18:26,240 --> 00:18:30,280 Speaker 1: way that either the United States, China, South Korea could 339 00:18:30,359 --> 00:18:34,720 Speaker 1: ensure his survivability and say, all right, survive, keep your weapons, 340 00:18:35,359 --> 00:18:38,720 Speaker 1: just don't launch them. Well, yeah, that's one school of 341 00:18:38,760 --> 00:18:40,439 Speaker 1: thought is exactly that we might as well live with it. 342 00:18:40,480 --> 00:18:41,879 Speaker 1: We live with it with Russia, we lived with it 343 00:18:41,920 --> 00:18:45,080 Speaker 1: with Pakistan, all these other nuclear capable countries. But the 344 00:18:45,119 --> 00:18:47,680 Speaker 1: problem is, you know, his thing is if he thinks 345 00:18:47,720 --> 00:18:50,360 Speaker 1: his regime's going down, he's gonna launch everything he's got. 346 00:18:50,400 --> 00:18:53,120 Speaker 1: He's going out with the blaze of glory, which makes 347 00:18:53,160 --> 00:18:55,320 Speaker 1: it very hard to do any kind of provocative actions 348 00:18:55,320 --> 00:18:58,119 Speaker 1: against him. So he launches a missile over Japan. We 349 00:18:58,160 --> 00:19:00,600 Speaker 1: know it's not gonna hit anything that's a provocative if 350 00:19:00,640 --> 00:19:02,200 Speaker 1: we try to do the same thing to him, he's 351 00:19:02,280 --> 00:19:05,280 Speaker 1: loved to trigger and say they're attacking me. How much 352 00:19:05,320 --> 00:19:08,560 Speaker 1: closer are we to a nuclear altercation at this point? 353 00:19:09,400 --> 00:19:11,960 Speaker 1: I don't think we're close to a nuclear altercation. But 354 00:19:12,320 --> 00:19:15,440 Speaker 1: what people fail to remember is that, uh, he's got 355 00:19:15,480 --> 00:19:18,800 Speaker 1: five thousand tons of chemical and biological weapons. He's got 356 00:19:18,880 --> 00:19:20,600 Speaker 1: enough devastation there he doesn't even need to use a 357 00:19:20,680 --> 00:19:23,159 Speaker 1: nuke UH and if it if he launched all that 358 00:19:23,200 --> 00:19:26,119 Speaker 1: into South Korea. Most of South Korea, the population is 359 00:19:26,119 --> 00:19:28,359 Speaker 1: within the artillery fan of North Korea, and you can't 360 00:19:28,640 --> 00:19:30,280 Speaker 1: It doesn't matter if you have a sad missile system 361 00:19:30,320 --> 00:19:32,760 Speaker 1: of patriot battery or whatever. You're not taking out artillery. 362 00:19:32,960 --> 00:19:37,359 Speaker 1: It's going to be devastation on a biblical scale. Well, Brad, 363 00:19:37,720 --> 00:19:39,600 Speaker 1: let's let's say you get the call from the White 364 00:19:39,600 --> 00:19:43,639 Speaker 1: House and they underscore that they don't they're not playing 365 00:19:43,720 --> 00:19:46,480 Speaker 1: politics here. They just want an assessment of what you 366 00:19:46,520 --> 00:19:50,960 Speaker 1: would recommend be done. And there's no issue about whether 367 00:19:51,160 --> 00:19:54,000 Speaker 1: someone comes out looking good bad, or you know, whether 368 00:19:54,040 --> 00:19:57,080 Speaker 1: they made the right decision in the past. I think 369 00:19:57,119 --> 00:19:58,320 Speaker 1: the first thing that needs to be done is that 370 00:19:58,359 --> 00:19:59,960 Speaker 1: the administration needs to get on the same set. To me, 371 00:20:00,040 --> 00:20:02,600 Speaker 1: is it it about what signals are sending? When Rex Tillerson 372 00:20:02,640 --> 00:20:05,000 Speaker 1: says we have no reason, I have no desire for 373 00:20:05,040 --> 00:20:07,640 Speaker 1: regime change. We want you to talk, come on, let's talk, 374 00:20:07,960 --> 00:20:10,240 Speaker 1: and then President Trump says I'm gonna rain fire and 375 00:20:10,240 --> 00:20:13,639 Speaker 1: fury on you. That the posting party's seeing both those signals. 376 00:20:13,640 --> 00:20:15,360 Speaker 1: Now he's trying to read, what does what does that mean? 377 00:20:15,600 --> 00:20:17,200 Speaker 1: Am I getting fire and fury or do they want 378 00:20:17,200 --> 00:20:20,560 Speaker 1: to talk? Well? Was it sort of encouraging to you 379 00:20:20,600 --> 00:20:23,560 Speaker 1: that we did not get an immediate response from President 380 00:20:23,600 --> 00:20:28,439 Speaker 1: Trump via Twitter, but after a market and noted silence, 381 00:20:28,640 --> 00:20:32,680 Speaker 1: there was a very thought out statement that came from 382 00:20:32,720 --> 00:20:36,280 Speaker 1: the White House instead. Yeah, I was, and I actually 383 00:20:36,440 --> 00:20:39,000 Speaker 1: thought about now, He's called the hermit Kingdom for a reason, 384 00:20:39,080 --> 00:20:42,399 Speaker 1: so he's definitely ensconsin his own little world there, but 385 00:20:42,440 --> 00:20:44,280 Speaker 1: he does get news. And I wondered to myself, was 386 00:20:44,359 --> 00:20:47,119 Speaker 1: he seen the devastations from Hurricane Harvey and thought this 387 00:20:47,160 --> 00:20:48,359 Speaker 1: would be the time I can do this with a 388 00:20:48,359 --> 00:20:50,520 Speaker 1: little blowback because they got their hands full. I don't 389 00:20:50,520 --> 00:20:51,879 Speaker 1: know if he's as smart or not, but it did 390 00:20:51,920 --> 00:20:55,240 Speaker 1: cross my mind. Is there anything that the South Koreans 391 00:20:55,240 --> 00:20:59,840 Speaker 1: should be doing that would make the situation less perilous there? 392 00:21:00,000 --> 00:21:01,600 Speaker 1: And they're they're doing pretty much what we want to 393 00:21:01,680 --> 00:21:03,159 Speaker 1: have a new president in there right now. Although he 394 00:21:03,200 --> 00:21:05,880 Speaker 1: did do a pretty provocative act when the missile went off, 395 00:21:05,920 --> 00:21:08,520 Speaker 1: he launched a bunch of the exercise going on an 396 00:21:08,560 --> 00:21:11,840 Speaker 1: ulti Freedom Guardian, which is really a tabletop map exercise. 397 00:21:11,840 --> 00:21:13,720 Speaker 1: It happens by annually. It's not that big a deal. 398 00:21:14,280 --> 00:21:17,280 Speaker 1: But when he launched the missiles um, the President ordered 399 00:21:18,000 --> 00:21:21,119 Speaker 1: F fifteen strike to simulate destruction of the regime. So 400 00:21:21,119 --> 00:21:23,080 Speaker 1: I'm not sure that was a smart thing to do. 401 00:21:23,960 --> 00:21:26,040 Speaker 1: It sounds as if you're you're saying that there's no 402 00:21:26,400 --> 00:21:29,119 Speaker 1: one person in charge who can really make these kinds 403 00:21:29,119 --> 00:21:32,680 Speaker 1: of thoughtful decisions. Where am I wrong? No, it's because 404 00:21:32,720 --> 00:21:34,520 Speaker 1: it's super complicated. We'd like the world to be black 405 00:21:34,520 --> 00:21:37,359 Speaker 1: and white, but it's a complicated situation and everybody there 406 00:21:37,400 --> 00:21:39,400 Speaker 1: has a vested interest that is not in the same 407 00:21:39,480 --> 00:21:42,000 Speaker 1: vested interests of another party. So China has a lot 408 00:21:42,040 --> 00:21:44,040 Speaker 1: of sway there. But China's goals are not our goals. 409 00:21:44,280 --> 00:21:47,080 Speaker 1: We have sway. Our goals are not Russia's goals. So 410 00:21:47,200 --> 00:21:49,280 Speaker 1: there's just a lot of you know, it's just a 411 00:21:49,320 --> 00:21:51,800 Speaker 1: gray area's it's really hard to solve. I want to 412 00:21:51,840 --> 00:21:54,719 Speaker 1: thank you for joining us. Brad Taylor is an author 413 00:21:54,760 --> 00:21:57,639 Speaker 1: and consultant. He served more than twenty years as a 414 00:21:57,720 --> 00:22:01,959 Speaker 1: US Army officer and also participated in the Combined Unconventional 415 00:22:02,040 --> 00:22:05,800 Speaker 1: Warfare Task Force of a Unified Plan for Defense of 416 00:22:05,840 --> 00:22:20,320 Speaker 1: the Korean Peninsula. All right, let's turn our attention to 417 00:22:20,359 --> 00:22:23,440 Speaker 1: the world of luxury and to help us do so, 418 00:22:23,480 --> 00:22:25,639 Speaker 1: we have Bob Shulman. He is the founder of the 419 00:22:25,680 --> 00:22:29,320 Speaker 1: Shulman Research Center. They're based in Riverside, Connecticut, and the 420 00:22:29,400 --> 00:22:34,040 Speaker 1: latest report is Insides Brief Insights into Luxury, Affluence, Wealth 421 00:22:34,440 --> 00:22:36,760 Speaker 1: and More. And to tell us more, Bob is joining 422 00:22:36,840 --> 00:22:38,640 Speaker 1: us here in our studio. Bob, thanks for being here. 423 00:22:38,720 --> 00:22:40,880 Speaker 1: Delighted to be here. Before we get into any other 424 00:22:40,880 --> 00:22:42,639 Speaker 1: results of the study, I'm wondering if you could just 425 00:22:42,720 --> 00:22:46,600 Speaker 1: parse out who are the people that were surveyed and 426 00:22:46,760 --> 00:22:50,600 Speaker 1: did they really count as the wealthy shoppers the wealthy 427 00:22:50,680 --> 00:22:58,600 Speaker 1: consumers in the United States. We surveyed approximately consumers, and 428 00:22:58,840 --> 00:23:01,440 Speaker 1: we structured it in such a way that we were 429 00:23:01,520 --> 00:23:05,119 Speaker 1: able to focus not only on people with what I 430 00:23:05,119 --> 00:23:09,159 Speaker 1: would call high incomes and wealth, but also what I 431 00:23:09,240 --> 00:23:13,040 Speaker 1: call mass market Americans, people with we call more average 432 00:23:13,119 --> 00:23:19,520 Speaker 1: incomes who also treat themselves to entry level luxuries, which 433 00:23:19,600 --> 00:23:22,920 Speaker 1: are very important to the big luxury brands. I mean 434 00:23:23,000 --> 00:23:25,640 Speaker 1: a lot of people don't focus it on it, but 435 00:23:26,080 --> 00:23:28,439 Speaker 1: if you speak to the people at some of the 436 00:23:28,560 --> 00:23:34,920 Speaker 1: major luxury companies like lvm Ajor Caring, Uh, they do 437 00:23:35,080 --> 00:23:39,000 Speaker 1: care about mass market Americans. There's like a d eighty 438 00:23:39,040 --> 00:23:42,480 Speaker 1: million of them versus the people with high incomes and wealth. 439 00:23:43,240 --> 00:23:45,520 Speaker 1: And they buy a lot of champagne, they buy a 440 00:23:45,560 --> 00:23:48,720 Speaker 1: lot of kerchiefs, they buy a lot of i'll call 441 00:23:48,960 --> 00:23:52,720 Speaker 1: entry level high end watches. The matter yeah, well, and 442 00:23:52,760 --> 00:23:56,480 Speaker 1: but you know, the survey is certainly matters and is 443 00:23:56,520 --> 00:23:59,160 Speaker 1: interesting I'm sure too wealthy individuals themselves, but much more 444 00:23:59,240 --> 00:24:02,040 Speaker 1: so too these brands that you're talking about, right, this 445 00:24:02,119 --> 00:24:04,720 Speaker 1: is really the audience that is curious of how the 446 00:24:04,800 --> 00:24:09,159 Speaker 1: appetites are changing for these luxury purchases. And uh, you know, 447 00:24:09,200 --> 00:24:11,840 Speaker 1: in your latest survey, what were some of the most 448 00:24:11,960 --> 00:24:16,200 Speaker 1: notable aspects that were different than well, more and more, 449 00:24:16,640 --> 00:24:21,200 Speaker 1: I mean shopping. And that's really what the brands care about. 450 00:24:21,240 --> 00:24:25,919 Speaker 1: How American consumers shop for their products and services. The 451 00:24:26,200 --> 00:24:30,920 Speaker 1: shopping behaviors continue to go more and more. There's two aspects, 452 00:24:30,920 --> 00:24:34,680 Speaker 1: the search and the actual buy. And searching is almost 453 00:24:34,760 --> 00:24:39,720 Speaker 1: universally done online today and from my observations over the years, 454 00:24:40,160 --> 00:24:43,440 Speaker 1: the digital brand. The luxury brands have been slower than 455 00:24:43,480 --> 00:24:49,760 Speaker 1: many other brands to embrace digital because most of luxuries 456 00:24:49,800 --> 00:24:55,160 Speaker 1: heritage is based upon quote unquote exclusivity, and they've had 457 00:24:55,160 --> 00:24:58,879 Speaker 1: a difficult time coming to grips with the fact that 458 00:24:59,040 --> 00:25:02,879 Speaker 1: even some of the older wealthier customers who buy the 459 00:25:02,960 --> 00:25:07,240 Speaker 1: high end brands where they have great margins, are now 460 00:25:07,520 --> 00:25:12,639 Speaker 1: doing their initial shopping online and they care about how 461 00:25:12,760 --> 00:25:17,360 Speaker 1: things look online and their ability to basically buy online. 462 00:25:18,040 --> 00:25:21,800 Speaker 1: Is there a natural diversion between those that are seeking 463 00:25:21,960 --> 00:25:25,760 Speaker 1: experiences that already own all the luxury stuff they want 464 00:25:25,880 --> 00:25:30,560 Speaker 1: and perhaps younger shoppers or younger consumers. Clearly, I mean 465 00:25:30,680 --> 00:25:32,560 Speaker 1: when you get to some of the will call it 466 00:25:32,640 --> 00:25:36,399 Speaker 1: older wealthier people who have closets full of some of 467 00:25:36,440 --> 00:25:42,320 Speaker 1: the beautiful brands, draws full of the nice jewelry. Uh. Effectively, 468 00:25:42,400 --> 00:25:47,840 Speaker 1: those people have the opportunity to travel much more, and 469 00:25:47,880 --> 00:25:51,359 Speaker 1: they're also getting more into the article expressive parts of 470 00:25:51,400 --> 00:25:54,280 Speaker 1: their lives. When we look at you know, depending on 471 00:25:54,320 --> 00:25:56,920 Speaker 1: how you define wealth, but recently we looked at five 472 00:25:56,960 --> 00:26:00,880 Speaker 1: million plus, which is a high end group. There's only 473 00:26:00,920 --> 00:26:05,840 Speaker 1: about four million people in America adults who basically fall 474 00:26:06,000 --> 00:26:09,200 Speaker 1: into that. It's a very elite group, one of whom 475 00:26:09,280 --> 00:26:12,920 Speaker 1: is our ex President Bush. But they're into painting, They're 476 00:26:12,960 --> 00:26:17,639 Speaker 1: into doing things that they want to do, because when 477 00:26:17,680 --> 00:26:20,520 Speaker 1: you get to a certain level, you no longer have 478 00:26:20,640 --> 00:26:25,119 Speaker 1: any obstacles to buying the products or services you want, 479 00:26:26,000 --> 00:26:29,440 Speaker 1: and depending upon how you grew up in your education 480 00:26:29,600 --> 00:26:33,280 Speaker 1: level and experiences, you start looking at things that the 481 00:26:33,359 --> 00:26:37,840 Speaker 1: average American can't do because they don't have the wherewithal So, Bob, 482 00:26:37,840 --> 00:26:40,040 Speaker 1: I have to wonder, are there any luxury brands that 483 00:26:40,080 --> 00:26:44,200 Speaker 1: are trying to cater to uh that type of activity, 484 00:26:44,280 --> 00:26:48,880 Speaker 1: say painting or taking you know, cruises, luxury cruises, or 485 00:26:49,480 --> 00:26:52,720 Speaker 1: having experiences that people have always wanted to do and 486 00:26:52,760 --> 00:26:54,960 Speaker 1: they have the money to doing more and more. You're 487 00:26:55,000 --> 00:26:58,560 Speaker 1: seeing some of the major what I would call luxury 488 00:26:58,680 --> 00:27:01,919 Speaker 1: groups like LVMH and Caring do it. I mean to me, 489 00:27:02,200 --> 00:27:07,240 Speaker 1: one of the major i'll call it changes UH was 490 00:27:07,320 --> 00:27:12,440 Speaker 1: when LVMH launch sever which is their website that basically 491 00:27:12,480 --> 00:27:16,399 Speaker 1: puts all their brands in one spot so a consumer 492 00:27:16,840 --> 00:27:19,840 Speaker 1: doesn't have to hunt and peck for the brands they 493 00:27:19,840 --> 00:27:23,000 Speaker 1: are looking for. I don't think many people are aware, 494 00:27:23,119 --> 00:27:27,120 Speaker 1: but LVMH did something like that like fifteen years ago, 495 00:27:27,200 --> 00:27:30,000 Speaker 1: and they were ahead of their time. Now, depending on 496 00:27:30,040 --> 00:27:32,800 Speaker 1: how you look at it, there behind the times, but 497 00:27:33,119 --> 00:27:36,119 Speaker 1: you know, the people are getting with it. L v 498 00:27:36,280 --> 00:27:39,480 Speaker 1: m H hired somebody out of Apple. I mean these 499 00:27:39,520 --> 00:27:43,080 Speaker 1: brands and these groups can do it when they realize 500 00:27:43,560 --> 00:27:47,200 Speaker 1: the shoppers are changing. You know, the future for them 501 00:27:47,280 --> 00:27:52,359 Speaker 1: are the millennials and eventually gen Z and these younger 502 00:27:52,400 --> 00:27:57,439 Speaker 1: people don't necessarily have the time or the desire at 503 00:27:57,520 --> 00:27:59,960 Speaker 1: this time in their life to go to stores. They 504 00:28:00,080 --> 00:28:03,120 Speaker 1: need to get them to try their brands, whether it's 505 00:28:03,160 --> 00:28:08,159 Speaker 1: taking an entry level cruise or taking but going to 506 00:28:08,400 --> 00:28:11,520 Speaker 1: a pop up store that sells. Like way back when 507 00:28:11,560 --> 00:28:15,280 Speaker 1: Airms sold in Grand Central, they sold three items, two 508 00:28:15,680 --> 00:28:19,880 Speaker 1: fifty dollar kerchief, a men's tie, and one other thing 509 00:28:19,920 --> 00:28:22,159 Speaker 1: as I remember, but they were in the corner of 510 00:28:22,280 --> 00:28:25,159 Speaker 1: Grand Central and the place was mobbed with younger people 511 00:28:25,440 --> 00:28:27,800 Speaker 1: who never saw an air Mez store. They need to 512 00:28:27,800 --> 00:28:30,720 Speaker 1: get out there, and the way to get out there today, 513 00:28:31,480 --> 00:28:36,560 Speaker 1: whether they like or not, includes digital sports. I want 514 00:28:36,560 --> 00:28:41,120 Speaker 1: to tell us about a sporting events. Sporting activities very important. Again, 515 00:28:41,240 --> 00:28:44,320 Speaker 1: they get the opportunity to, depending on how you look 516 00:28:44,320 --> 00:28:47,920 Speaker 1: at it, re live their youths, depending upon the teams 517 00:28:47,960 --> 00:28:51,280 Speaker 1: they were into. When you look at the really wealthy people, 518 00:28:51,880 --> 00:28:56,440 Speaker 1: the vast majority worked very hard to accumulate the wealth. 519 00:28:57,520 --> 00:29:00,239 Speaker 1: When they get older, and if they're even young and 520 00:29:00,280 --> 00:29:03,560 Speaker 1: retire or step out will say they now have the 521 00:29:03,600 --> 00:29:08,680 Speaker 1: opportunity to enjoy what they did where. You know, most 522 00:29:08,720 --> 00:29:14,400 Speaker 1: Americans don't ever accumulate that. The smart ones take the 523 00:29:14,440 --> 00:29:19,440 Speaker 1: time and start basically experiencing and using their wealth for 524 00:29:19,480 --> 00:29:24,320 Speaker 1: their own enjoyment, their families enjoyment, and frankly, the fellow 525 00:29:24,320 --> 00:29:27,680 Speaker 1: owns this company gives it away because his attitude is 526 00:29:28,000 --> 00:29:30,960 Speaker 1: I can't take it with me. Bob Shulman, thank you 527 00:29:31,000 --> 00:29:33,400 Speaker 1: so much for taking the time. Bob Shulman is founder 528 00:29:33,480 --> 00:29:37,200 Speaker 1: of the Shulman Research Center in Riverside, Connecticut that looks 529 00:29:37,320 --> 00:29:42,800 Speaker 1: at the trends in luxury spending. Thanks for listening to 530 00:29:42,800 --> 00:29:45,720 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 531 00:29:45,760 --> 00:29:49,760 Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast 532 00:29:49,760 --> 00:29:53,240 Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at 533 00:29:53,400 --> 00:29:57,320 Speaker 1: pim Fox. I'm on Twitter at Lisa abramowits one before 534 00:29:57,360 --> 00:30:00,240 Speaker 1: the podcast. You can always catch us worldwide on Brog 535 00:30:00,320 --> 00:30:09,120 Speaker 1: Radio M