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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, sound Cloud,

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Speaker 1: Bloomberg dot com, and of course on the Bloomberg Dropping

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Speaker 1: by the New York Studio. I'm pleased to say, is

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Speaker 1: Abraham rock Barry here City's global head of Content and

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Speaker 1: gtent FX Strategy. Good morning to Abraham the main event

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Speaker 1: chairman pound later. What are you looking for? Yes, I

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Speaker 1: think there will be a lot of focus on the

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Speaker 1: chairman's comments today. I think that he will reinforce this

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Speaker 1: message of the last few weeks, mainly, which is confidence

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Speaker 1: in the outlook for the US. But then in there

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Speaker 1: I think he will say that they will be watching

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Speaker 1: financial conditions closely simply not to look too complacent. Does

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Speaker 1: the data back up his optimism and confidence. I think

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Speaker 1: overall it still does. In the US, I think we're

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Speaker 1: still at a point where many people saw a few

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Speaker 1: signs of weakness over the last couple of weeks, but

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Speaker 1: they didn't really they didn't really show up in in

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Speaker 1: the data. We still have that big discrepancy between positive

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Speaker 1: momentum in the US and signs of slowdown in the

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Speaker 1: rest of the world. Actually really an interesting day given

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Speaker 1: the data we've had. We've had a little bit of

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Speaker 1: weakness through China, bit of weakness through Germany, and looking

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Speaker 1: ahead to the CPI print here in the United States,

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Speaker 1: CPI year on year set to come in at two

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Speaker 1: point two percent. That's backing out food and energy. So

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Speaker 1: the core read we're on the money, aren't we. For

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Speaker 1: the Fed? Yes, I think we're pretty close to what

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Speaker 1: the Fed wants to see. In the medium term. I

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Speaker 1: think there will be a lot of a lot of

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Speaker 1: focus on some of the details on the shelter side,

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Speaker 1: in particular, where we've seen perhaps some concerns that the

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Speaker 1: numbers could be getting softer, but we had a strong

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Speaker 1: print last time around. But the bigger picture is I

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Speaker 1: think inflation looks pretty much on target for the fit.

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Speaker 1: How does this oil collapse of the last month factor

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Speaker 1: into the federal reserves? Thinking both for Chairman Powell and

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Speaker 1: for the headline rage that we get from inflation in

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Speaker 1: the United States, I think for now it's still very

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Speaker 1: early days. That's the way that they will look at it.

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Speaker 1: It remains to be seen how persistent the price store

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Speaker 1: will be, and it is still true that in the

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Speaker 1: US at this stage the effect on underlying inflation is

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Speaker 1: still pretty pretty limited for these old price bos. What

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Speaker 1: is best for the President of the United States? If

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Speaker 1: we start with the idea that it's zero sum attitude,

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Speaker 1: as we've seen, we've got a massive trade discussion between

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Speaker 1: Mr Caudlow and Dr Navarro. I think we all understand that.

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Speaker 1: But what's the best outcome for the president? Giving your

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Speaker 1: US team's g d P car I think for the

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Speaker 1: for for for the president, and for the economy here

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Speaker 1: as a whole, I think the best outcome is that

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Speaker 1: we get into a more constructive trade trade relationship with

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Speaker 1: with China, and that involves some changes to trade policies,

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Speaker 1: but it probably involves a limit to how much more

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Speaker 1: confrontational the relationship will become. Is there evidence that we're

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Speaker 1: going to see that? Or do we have to wait?

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Speaker 1: What are the meetings to twenties when end of the

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Speaker 1: month and when we're getting there, it's like ten days

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Speaker 1: away something like that, What do we want out of

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Speaker 1: those meetings? Yes, so I I'm skeptical that we will

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Speaker 1: see a durable truth emerge, but there's room for it

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Speaker 1: for a temporary one. And what that temporary truce would

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Speaker 1: involve would be some combination of higher US higher imports

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Speaker 1: from the U S by the Chinese, some offers of

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Speaker 1: market access in areas that the Chinese and not to

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Speaker 1: worried about financial services, electric vehicles perhaps, and that that

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Speaker 1: may push back the data at which the US will

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Speaker 1: raise its tariffs further. That was scheduled for the first

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Speaker 1: of January otherwise, But that's about the best we can hopeful.

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Speaker 1: What you'll rate on the strength of the Chinese economy.

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Speaker 1: We had a huge amount of data from China overnight

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Speaker 1: retail sales relative to expectations, a big downside surprise, the

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Speaker 1: slight pick up in industrial production and investment. What's your

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Speaker 1: read on what is happening? Because it looks like a

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Speaker 1: clear deceleration to me, and I agree with you there.

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Speaker 1: I think the overall picture is that the economy is

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Speaker 1: still decelerating in in China. And within there, within that picture,

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Speaker 1: they're two major across currents. One is the private sector

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Speaker 1: is really the focus of that down downside momentum, and

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Speaker 1: we see that particularly in the retail sales print overnight.

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Speaker 1: But on the other hand, we are seeing signs of

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Speaker 1: policies income through and that's what's shown up in the

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Speaker 1: slight pickup in investment and inference. That's what I think

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Speaker 1: is so important for markets anyone, cross asset global. Looking

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Speaker 1: at the situation at the moment, you see a slowdown

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Speaker 1: in Germany in contraction territory, you wonder whether it's temporary.

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Speaker 1: You look at the situation in China, you see a deceleration.

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Speaker 1: You wonder when the stimulus starts to bite. Just the

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Speaker 1: slightest of turns could change this divergent story that really

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Speaker 1: gathered some pace through the turn of the year. Do

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Speaker 1: you that turn that improvement in Europe, that improvement in

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Speaker 1: China coming anytime soon? Not yet. No, I think we

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Speaker 1: will see further divergence on the expectation that I think

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Speaker 1: again in China will be some time until we see

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Speaker 1: stability in Europe. I think the contraction in Germany clearly

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Speaker 1: is temporary. It's driven by what's been happening in the

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Speaker 1: in the car sector. But the overall story is still

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Speaker 1: of divergence and of the slowdown in Europe. So I

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Speaker 1: only expect that turning point to come earlier next with

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Speaker 1: hycuse plus cyplus cheap an x. What part of Europe

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Speaker 1: x autos is slowing down? Is it a dearth of consumption?

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Speaker 1: Is it investment? Didn't you show up? What factor is

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Speaker 1: leading us to you know, I'll letitoralize here and say

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Speaker 1: hero sclerosis. It's it's for now investment and exports. So

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Speaker 1: it is driven by a slowdown in the global capex

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Speaker 1: cycle and in an investment, both of which were buoy

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Speaker 1: and last year. So some of that is really just

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Speaker 1: a return to the normal. And the big question is

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Speaker 1: whether the remaining pillar, if you like that, domestic and

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Speaker 1: particular consumptions ending, whether that at least will hold up,

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Speaker 1: because that's going to be a necessary condition to get

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Speaker 1: at least the modicum of growth. But that's the export,

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Speaker 1: the dem But what about the domestic economies of your

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Speaker 1: Is it is exports just so dominant it overwhelms on

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Speaker 1: So it's still it's investment has also slowed domestic investment,

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Speaker 1: but that is in part because the external environment also

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Speaker 1: looks looks more damaging, particularly if you look like Germany.

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Speaker 1: The the consumption picture still looks pretty benign, but historically

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Speaker 1: it's followed investment rather than the other way around. So

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Speaker 1: they're clearly warning signs there too. So you talk about

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Speaker 1: the confidence of Federal Reserve Chairman Jeron Powell, it's any

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Speaker 1: confidence for President marryot drag going into his final year

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Speaker 1: at the top of the e c B. Whate depends it.

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Speaker 1: I think that confidences is diminishing, to say the least.

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Speaker 1: We have to keep in mind that the ECB has

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Speaker 1: to some degree deliberately over stimulated. So when it comes

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Speaker 1: to the narrow question of is this the right time

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Speaker 1: to any Jewey program, if it's eventually the right time

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Speaker 1: to raise interest rates, I think the bar is relatively

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Speaker 1: low eventually, but they're facing a lot of challenge. I've

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Speaker 1: got to say that, you know, I wouldn't say this

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Speaker 1: in the radio. I said it earlier that your work

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Speaker 1: with Villenbauda was path breaking on periphet Europe, and what

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Speaker 1: we all waited for before you went to your f

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Speaker 1: X duties was for you to really write the definitive

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Speaker 1: Rabbari essay on how Juventus can't get along with A. C. Milan.

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Speaker 1: And I still don't get it, John, I look at

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Speaker 1: ac Milan in this uproar of this game with is

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Speaker 1: it Juventus? Is how you say it? For you American listeners,

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Speaker 1: it sounds like days of our lives. I can't keep

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Speaker 1: track of who's going to which team and who's more

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Speaker 1: upset with who. I will say that it's a traditional

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Speaker 1: derby of Italy. It's not Milan Juventus. It's Juventus inter Um,

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Speaker 1: which is the other side of me Land, and it's

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Speaker 1: not my side of me Land. No, it's intimate Land

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Speaker 1: versus Juventus is considered the derby of TI League. So

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Speaker 1: what we had over the weekend was a big game,

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Speaker 1: but traditionally not the biggest game. If they fight in soccer,

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Speaker 1: or what happens, they get a red card, they get

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Speaker 1: a red card. They There was an amazing thing that

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Speaker 1: happened in the nineteen nineties and the mid nineties. A

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Speaker 1: French footballer called Eric Cantona, who played for Manchester United,

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Speaker 1: was abused by a fan and he jumped into the

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Speaker 1: crowd and karate kicked the fan, I think in the

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Speaker 1: chest and he got suspended for a long long time.

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Speaker 1: Proper fights in football aren't really seen like they're seen

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Speaker 1: in ice hockey. I mean you just don't get them

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Speaker 1: in the same way. Someone just said in my ear,

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Speaker 1: they only fake injuries. But I gotta say, and everyone

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Speaker 1: knows how upset I am about that, I'm not seeing

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Speaker 1: that in Premier League. I mean, when when you're forcing

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Speaker 1: me to watch these games on Saturday, can we just

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Speaker 1: be clear, I don't force you anymore. You actually put

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Speaker 1: it on yourself and then you tell me to come

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Speaker 1: upstairs and watch the game with you. I'm just trying

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Speaker 1: to keep you happy. But I don't see him doing

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Speaker 1: that is well though. I mean, my loyalty is to

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Speaker 1: buy Munich. And I had a couple of years where

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Speaker 1: I played for my local team in in Dusseldorf for

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Speaker 1: Tuna Disseldorf. Okay, you got a professional. I got in

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Speaker 1: the room, Michael Barr and I are the only two

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Speaker 1: in the room and have no clue what we're talking about,

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Speaker 1: right Michael at the time, and I'm talking these guys,

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Speaker 1: these guys Dusseldorf in the youth to beat. My answer

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Speaker 1: is just in Germany have all the best goalies. It

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Speaker 1: just they just own the goalie thing, don't they. We's

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Speaker 1: don'tally that pretty well, but our best one he's showing

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Speaker 1: some signs of that. Okay, Bari, Thank you so much

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Speaker 1: for Juventus an report. Today, we talked about Texas A

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Speaker 1: and M and Rice University economics. Chris emails in from

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Speaker 1: the West and Chris says, I'm a Villa fan. Great discussion.

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Speaker 1: You see people like this stuff. I just can we

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Speaker 1: just get back to auld material stuff? What's adult material? Hockey?

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Speaker 1: No Green Bay Packers, that's adult material. That's adult material.

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Speaker 1: Continue the Jets losing? Is that adult material? No? Green

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Speaker 1: Bay Packers. Bringing David here, I'm gonna bring in David Harrow.

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Speaker 1: He joins US now he joins us from Oakmark. Can

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Speaker 1: I just go through some of David Harrow's performances the

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Speaker 1: oak Mark International Fund. Have you seen the performance of

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Speaker 1: this tom The average return ten point four at the

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Speaker 1: end of amid the volatility that he lives in every day.

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Speaker 1: One year, great, next year not so just you know,

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Speaker 1: it's amazing. It's a different ten percent that if he

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Speaker 1: was running a domestic portfolio with an our squared to

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Speaker 1: point nine four. See how I did that. That's off

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Speaker 1: of Vila and argentinean. We did our score that you

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Speaker 1: thank you. David's thinking what the hell is going on?

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Speaker 1: David had a good morning. She said, how you doing,

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Speaker 1: good morning, and thank you for stopping my investment performance.

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Speaker 1: At the end of and by the way, there are

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Speaker 1: what six people in this whole viewer audience that knows

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Speaker 1: who Aston Villa are. Come on, David, come on, is

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Speaker 1: at least including Levin King? Can I can I secue

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Speaker 1: here properly? Okay, David, you're doing international investment with the

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Speaker 1: shotgunaut has been a boy in American economy. The benchmark

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Speaker 1: of this is a claims number in an unemployment labor economy,

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Speaker 1: unemployment rate that goes back to the day Max McGee

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Speaker 1: caught that pass in the back of the end zone

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Speaker 1: nineteen sixty nine. Vince Lombardi take us back there to

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Speaker 1: the Green Bay packers then, And this isn't Vince Lombardi's economy,

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Speaker 1: isn't it. It's a lot more service sector. It's not

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Speaker 1: what we used to know or what the president thinks

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Speaker 1: we used to know. Now it's a very strong US

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Speaker 1: economy and it was finally unleash. And I would assert,

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Speaker 1: after eight years of kind of fearfulness and interpredation post

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Speaker 1: the global financial crisis, you've got this better. What Kins

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Speaker 1: called were animal spirits, consumers felt better, And it's all

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Speaker 1: in the consumer confidence numbers and small business confidence. When

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Speaker 1: you see those numbers become as elevated as they are,

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Speaker 1: that is a feel good factor and people act on

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Speaker 1: this feel good factor. And so I think this is

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Speaker 1: why weather, whatever reason you want to give. But in

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Speaker 1: the last couple of years, consumer and business confidence have soared,

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Speaker 1: and as a result, you have more spending, you have

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Speaker 1: more hiring, you have more investing. It's okay, great, but

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Speaker 1: you like b MP Perry bad. They're in a small

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Speaker 1: bear market negative from the end of last year. The

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Speaker 1: President going after Mr McCraw. You're an international investor, is

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Speaker 1: there a euro malaise or can they find that constructive

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Speaker 1: animal spirit? You know there tends to be a constant

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Speaker 1: euro malay. That doesn't mean you don't invest in Europe

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Speaker 1: because as an investor, you look at the price, your

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Speaker 1: pain for what you're getting. And I think as a

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Speaker 1: result of all these macro factors, European stocks are especially

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Speaker 1: undervalued today and this gives you an opportunity to buy

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Speaker 1: something that's low priced. Because of this malay. They're still growing,

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Speaker 1: they're still healthy, these businesses despite the fact of this

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Speaker 1: malay and this is the opportunity. All these geopolitical events,

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Speaker 1: all is bickering with Italy, all this bregsit talk, all

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Speaker 1: a Macron versus Trump, all this trade, all these trade

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Speaker 1: issues all brings malay. But basically the businesses themselves are

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Speaker 1: still doing pretty well. Don't forget. A lot out of

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Speaker 1: them export to the United States, and we have an

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Speaker 1: extremely weak euro today which helps those exporters. So David,

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Speaker 1: to take a really simple approach to this, if you

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Speaker 1: had the very same company listed in the United States,

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Speaker 1: it would probably get a much better evaluation. Is the

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Speaker 1: very same company if it was just listed in Europe.

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Speaker 1: There is quite clearly evaluation gap there between very similar companies,

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Speaker 1: and Devid, I want to understand the kind of business

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Speaker 1: you want to own. If you can get a better

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Speaker 1: evaluation on a European index, fine, but you want a

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Speaker 1: business that has exposure to the European continent or do

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Speaker 1: you want a business that has exposure to the international story?

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Speaker 1: You really should not be concerned per se on where

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Speaker 1: that company's sales exposure is. Okay, what you should be

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Speaker 1: looking at is are they able to grow their cash

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Speaker 1: floor streams, which means to some degree growing sales. Yes,

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Speaker 1: but other things are involved, and what you do want,

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Speaker 1: if possible, is a diversified sales space. But then you

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Speaker 1: have to compare that business performance to the price your

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Speaker 1: pain for the business. So say you're multinational that's based

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Speaker 1: in Germany, a company like Daimler or BMW. Yes, you're

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Speaker 1: exposed to Germany, but you're also exposed to the United States,

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Speaker 1: You're exposed to the rest of the world. You're heavily

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Speaker 1: exposed to China. And yet because of the Year of Malay,

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Speaker 1: or maybe because of some trade fears, your multiple is

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Speaker 1: selling at a ridiculously low level. The financial service companies

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Speaker 1: in Europe in particular are trading at big discounts to

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Speaker 1: their US brethren. To some degree, some discount is warranted

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Speaker 1: because the return structure of these companies is a little

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Speaker 1: less than the US, So all else equal, you'd be

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Speaker 1: able to pay a higher price for a higher sustainable

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Speaker 1: return on equity of a financial But still I would

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Speaker 1: argue that the gap between the two is just too high.

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Speaker 1: When you could get a BNP Perry bat and Alloyd's

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Speaker 1: Bank and and Tessa in a credit suite selling generally

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Speaker 1: well below book value, and they should have normal roes

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Speaker 1: and the low double digits MR market has given you

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Speaker 1: an opportunity to buy quality at a very low price. Devin,

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Speaker 1: I don't use too many cliches and offend you, but

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Speaker 1: we'll use a couple. There are some people that look

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Speaker 1: at the valuation gap and wonder whether it's evaluation tramp,

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Speaker 1: and it has looked like that through what's the catalyst

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Speaker 1: for that valuation gap to actually close. There's the best

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Speaker 1: catalyst for evaluation gap closing is earnings performance through time,

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Speaker 1: and if these companies could demonstrate their ability to earn

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Speaker 1: money through time, that valuation gap will close. But the big,

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Speaker 1: the easy ones are, of course, some of these macro

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Speaker 1: issues that have been weghing on the valuations. If some

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Speaker 1: of those get resolved, like Italian budget situation, like Brexit,

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Speaker 1: David will talk Asia in our next block with you.

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Speaker 1: But David hero Um mckilley delaver gooes with us today

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Speaker 1: from Goldman's extually looks at big oil and like you,

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Speaker 1: he was huge on the dividend in Europe at the

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Speaker 1: dividend growth modest but nevertheless tangible and even share buy back.

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Speaker 1: I mean, what is the culture now in Europe or

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Speaker 1: the marginal change in the culture about use of cash,

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Speaker 1: even greater dividends. The marginal change is certainly better, but

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Speaker 1: it's not optimal. And if you looked at a spectrum

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Speaker 1: and looked at capital allocation proficiency, you'd probably say US

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Speaker 1: managements and boards are the best, and Japanese or Korean

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Speaker 1: are the worst. Europe was somewhere in the middle, but

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Speaker 1: has gotten better. I mean, just take a company like

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Speaker 1: x Or, which is the well it was the Agnell,

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Speaker 1: a family kind of holding company, but it's listed. I mean,

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Speaker 1: look at uh f C, a Fiat Chrysler and now

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Speaker 1: Mr MARCHIONI ran that company UM for the shareholders. They

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Speaker 1: allocated capital in a way which lied to shareholder value ation.

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Speaker 1: And if you compare that capital allocation proficiency UM in

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Speaker 1: Europe versus company, it's just not there. But in some

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Speaker 1: instances it's gotten better. Let's come back. David associates from Chicago,

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Speaker 1: Tom Keane in New York and then Washington, but not

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Speaker 1: in FM studios one Pim Fox, Oh, Pim, where are you?

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Speaker 1: I am attending the Bloomberg Government next to twent eighteen

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Speaker 1: summit meeting. Now this is taking place at the Intercontinental

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Speaker 1: Hotel on the wharf Now, if you're not familiar with

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Speaker 1: the wharf, then you haven't been to Washington in the

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Speaker 1: last year. Because the wharf is part of a multi year,

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Speaker 1: multi I don't know, hundred thousand square foot development all

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Speaker 1: in the southwest of Washington, d C. Say it's where

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Speaker 1: the brokers keep their yachts, but it's really where the

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Speaker 1: lobbyists keep their yachts, right, you know what. I'm not

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Speaker 1: gonna look at the names on the yachts because it

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Speaker 1: would get it all away. But this was the big

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Speaker 1: commercial waterfront like all the way back in the eighteen thirties,

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Speaker 1: fell into disuse and disrepairnce on. But now we have

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Speaker 1: just first the anniversary just opened a year ago two

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Speaker 1: and a hand billion dollars worth new office space condo's

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Speaker 1: apartments retailed a new yacht club for you, tom uh

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Speaker 1: And that is appropriate because our next guest knows a

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Speaker 1: thing or two about real estate. Toby Moskovitz is the

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Speaker 1: president and the founder of the real estate investment firm

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Speaker 1: Heritage Equity Partners, and he joins us. Now, Toby, thanks

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Speaker 1: for being being with us. It's you know, it's it's

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Speaker 1: a it's when you come to a new development like

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Speaker 1: this and you see what it does to the not

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Speaker 1: just to the specific area that's being redeveloped, but to

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Speaker 1: the entire community. I'm wondering if you could describe a

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Speaker 1: little bit about your work in Brooklyn, because you designed

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Speaker 1: a hotel in Bushwick, and I confessed, when I heard

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Speaker 1: the prices of apartments in Bushwick, as someone that grew

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Speaker 1: up in Bedford Stuyveson in Brooklyn, I was floored. I

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Speaker 1: couldn't believe this was the same Brooklyn. Tell us about

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Speaker 1: the hotel and about what you're doing. So I'm a

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Speaker 1: Brooklyn girl born and bread um first generation American. My

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Speaker 1: dad actually had a business on the Williamsburg waterfront in

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Speaker 1: the seventies and eighties. UM. And in two thousand nine

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Speaker 1: and everybody started running for the hills. UM, I found

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Speaker 1: myself back in a neighborhood where I grew up, and

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Speaker 1: really the world had stopped. There was very little financing. UM.

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Speaker 1: I was new to real estate, but recognized a great neighborhood,

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Speaker 1: a great opportunity and was one of the first developers

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Speaker 1: after the crash to start buying stalled residential projects and

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Speaker 1: building up a residential portfolio. And then ultimately when others

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Speaker 1: came into the market and pricing started to go up

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Speaker 1: in residential development deals. I shifted gears and began to

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Speaker 1: focus on what today we call the White Avenue waterfront,

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Speaker 1: which is Kent and White between North Tenth and Green Point.

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Speaker 1: UM and there was one of the first developers to

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Speaker 1: build a hotel, the Williamsburg Hotel and UH as well

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Speaker 1: a project that we call Kent Avenue, which is the

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Speaker 1: first speculative office development to be built in Brooklyn since

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Speaker 1: the nineties. UM and it's going to be home new

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Speaker 1: construction to tech office companies in Williamsburg. Well, this is

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Speaker 1: an appropriate time then, because of Amazon's announcement that they

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Speaker 1: have selected two areas. I can almost see one of

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Speaker 1: the areas here, the Crystal City location Arlington, Virginia, and

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Speaker 1: then of course Long Island City in Queens, New York.

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Speaker 1: Can you give us some idea of comparative rents on

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Speaker 1: a commercial basis so that listeners understand sort of what

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Speaker 1: the dynamic are between different areas. Sure, so the tenants

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Speaker 1: that would come to our building, and then I'll comment

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Speaker 1: on Amazon as well. Many of them are working in

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Speaker 1: and around Google's headquarters. UM and that part of what

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Speaker 1: we call Midtown South, where they might be paying ninety

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Speaker 1: to a hundred dollars of square foot rent UH. An

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Speaker 1: equivalent building in the outer boroughs new construction would be

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Speaker 1: um in the seventies to eighties. UH. The decision of

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Speaker 1: Amazon to move into Long Island City, I think is

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Speaker 1: significant for the City of New York and specifically for Brooklyn,

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Speaker 1: because what it does is it creates a connection point

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Speaker 1: between the east side of Manhattan UM into green Point

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Speaker 1: and Williamsburg. Long Island City is technically in Queens, but

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Speaker 1: it is really that that space and that place that

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Speaker 1: runs outside of the Midtown Tunnel into green Point UM.

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Speaker 1: And I think it's going to be a huge boon,

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Speaker 1: certainly for the continued growth of residential and it is

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Speaker 1: also for commercial Okay, but I want to talk about

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Speaker 1: the real world here. I mean, you're you're doing lofty

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Speaker 1: commercial stuff of that I'm looking just for example, I

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Speaker 1: don't live in Long Island City. People are gonna parachute in.

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Speaker 1: They're gonna make a hundred and fifty thousand large or

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Speaker 1: a lot more than that, and they're gonna be in

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Speaker 1: que Gardens, which is it's just south of Forest Hills

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Speaker 1: where they used to play the US Open, and I'm

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Speaker 1: gonna get in my car and go up with six

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Speaker 1: seventy eight. Then I'm gonna take four to seventy eight

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Speaker 1: and finally get the Long Island City after what a

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Speaker 1: forty five minute commute. This is gonna work to add

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Speaker 1: all those new people. So what I believe is that

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Speaker 1: the way to solve the housing crisis in this city

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Speaker 1: is to bring commercial jobs into neighood. Mr Bezos doing that.

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Speaker 1: So he may not be, but a lot of people

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Speaker 1: like myself, developers and other larger developers, most of the

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Speaker 1: organians related. They've built thousands and thousands of apartments in

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Speaker 1: Long Island City, and I think the idea is to

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Speaker 1: continue to bring the live work balance effect that by

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Speaker 1: having people work closer to where they live. That's the

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Speaker 1: vision behind only five kent trying to alleviate some of

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Speaker 1: the pressure on the L train. Um, you know, I've

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Speaker 1: heard it said that we have a reverse commute that

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Speaker 1: is a full, fully active train system. Could you imagine

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Speaker 1: that all those people traveling you breathe, Brooklyn, I mean

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Speaker 1: you want it. It's great to have Arthur, but I

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Speaker 1: still Brooklyn, whatever you look, come on, you're the real deal.

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Speaker 1: What I what do I know? I'm a tourist. Okay,

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Speaker 1: is Jeff Bezos going to bring to you wall to

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Speaker 1: wall plaid shirts and pork pie hats? That's what this

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Speaker 1: comes down to. How hipster is Queens in Brooklyn Brooklyn already?

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Speaker 1: But how hipster is all this going to become? So

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Speaker 1: I run a great program in Williamsburg had something called

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Speaker 1: the High School for Architecture and Design, and it's a

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Speaker 1: high school where the kids learned cat computer aided design.

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Speaker 1: And I could think modestly myself and the other architects

428
00:24:50,720 --> 00:24:53,280
Speaker 1: that we've had participated in this program as really we've

429
00:24:53,440 --> 00:24:55,359
Speaker 1: we've changed the lives of kids growing up in the

430
00:24:55,440 --> 00:24:59,120
Speaker 1: projects by exposing them to new industries real estate development,

431
00:24:59,440 --> 00:25:04,320
Speaker 1: product design. I believe that Amazon will help really accelerate

432
00:25:04,400 --> 00:25:08,080
Speaker 1: the pace of tech ecosystems that are being built in Manhattan,

433
00:25:08,160 --> 00:25:11,359
Speaker 1: in Brooklyn and Queens that are really have an opportunity

434
00:25:11,440 --> 00:25:15,200
Speaker 1: if we give the tangential that really need help. Well,

435
00:25:15,640 --> 00:25:18,720
Speaker 1: no housing is affordable without a job, so giving kids

436
00:25:18,800 --> 00:25:23,080
Speaker 1: access to pathways to prosperity. So I think I call

437
00:25:23,160 --> 00:25:26,120
Speaker 1: on Jeff Bezos to make sure that in the neighborhoods

438
00:25:26,200 --> 00:25:29,960
Speaker 1: that he touches in Queens Queen's Bridge. There's ac usion

439
00:25:30,040 --> 00:25:31,920
Speaker 1: number of projects that he figures out how to get

440
00:25:31,960 --> 00:25:34,040
Speaker 1: these kids jobs. Am I call on you to get

441
00:25:34,119 --> 00:25:37,000
Speaker 1: me from Bushwick to Forest Hill? Not a problem, I will.

442
00:25:37,040 --> 00:25:39,280
Speaker 1: I will take you there. Maybe we might even leave

443
00:25:39,320 --> 00:25:42,679
Speaker 1: you somewhere on Queens Boulevard just hailing a taxi. But Toby,

444
00:25:44,200 --> 00:25:46,080
Speaker 1: one of the things I want to just offer you

445
00:25:46,200 --> 00:25:48,600
Speaker 1: the chance to do is and Tom raises a very

446
00:25:48,960 --> 00:25:52,080
Speaker 1: uh salient point, which is this idea of what developments

447
00:25:52,640 --> 00:25:57,560
Speaker 1: due to existing neighborhoods, But is it also worth expressing

448
00:25:58,280 --> 00:26:03,159
Speaker 1: there doesn't There doesn't see to be a viable alternative.

449
00:26:03,600 --> 00:26:08,120
Speaker 1: So you've got to make what is existing work either

450
00:26:08,400 --> 00:26:12,040
Speaker 1: better more efficient. And it's one thing to have a

451
00:26:12,240 --> 00:26:14,320
Speaker 1: you know, uh pie in the sky kind of oh,

452
00:26:14,359 --> 00:26:16,720
Speaker 1: we're gonna do this for housing this, but the reality

453
00:26:16,880 --> 00:26:19,680
Speaker 1: is it's the businesses. Without a big, coherent government plan,

454
00:26:19,960 --> 00:26:22,639
Speaker 1: it's the businesses that really make this work in partnership

455
00:26:22,720 --> 00:26:25,480
Speaker 1: with the community. I think you're right. A perfect example

456
00:26:25,560 --> 00:26:27,320
Speaker 1: is that if you haven't been to Willings with recently,

457
00:26:27,359 --> 00:26:29,680
Speaker 1: you should go check out Domino Park, which is a

458
00:26:29,760 --> 00:26:32,560
Speaker 1: privately funded park on the waterfront and then go look

459
00:26:32,600 --> 00:26:35,320
Speaker 1: at the city owned parks and look at the difference.

460
00:26:35,720 --> 00:26:38,040
Speaker 1: I think that and I'm available tomorrow morning. By the way,

461
00:26:38,040 --> 00:26:40,080
Speaker 1: if you can somehow manage to get Bezos to come back,

462
00:26:40,160 --> 00:26:42,080
Speaker 1: I'll tell them a little bit about what Brooklyn needs,

463
00:26:42,320 --> 00:26:44,560
Speaker 1: a little bit about what Queens needs. And I think

464
00:26:44,600 --> 00:26:47,960
Speaker 1: that it's incumbent upon businesses like Amazon coming into New

465
00:26:48,040 --> 00:26:51,080
Speaker 1: York to figure out how to really open their doors

466
00:26:51,200 --> 00:26:54,240
Speaker 1: and create local employment, and that leads to other opportunity.

467
00:26:55,359 --> 00:26:58,560
Speaker 1: I got what should be the approach of the Mayor

468
00:26:58,680 --> 00:27:03,920
Speaker 1: of New York City to seismic investment in tax incentive

469
00:27:04,400 --> 00:27:08,520
Speaker 1: with Amazon. I think there needs to be a requirement

470
00:27:08,600 --> 00:27:11,200
Speaker 1: for local hiring. There needs to be a requirement for

471
00:27:11,320 --> 00:27:14,520
Speaker 1: local job training. Um their kids that are living literally

472
00:27:14,520 --> 00:27:17,399
Speaker 1: across the street from where there should be part of

473
00:27:17,480 --> 00:27:22,000
Speaker 1: this news. There should be a requirement that of Amazon's

474
00:27:22,040 --> 00:27:26,360
Speaker 1: new employees take on our service mentors, and that will

475
00:27:26,520 --> 00:27:29,320
Speaker 1: open up doors of opportunity to kids that today don't

476
00:27:29,359 --> 00:27:31,320
Speaker 1: have access to these kinds of jobs. Toby, thank you

477
00:27:31,400 --> 00:27:34,840
Speaker 1: so much. With us here at Bloomberg in an important

478
00:27:34,840 --> 00:27:51,280
Speaker 1: seminar heritage of Bompartners. Today we begin really our retail

479
00:27:51,520 --> 00:27:54,480
Speaker 1: and a holiday coverage with no one better than Dana

480
00:27:54,600 --> 00:27:59,159
Speaker 1: Telsey of Telsey Advisory Group Retail. And all of this

481
00:27:59,320 --> 00:28:02,840
Speaker 1: consumption that we do isn't absolutely the fabric of her family,

482
00:28:02,920 --> 00:28:05,800
Speaker 1: and she has staked out a wonderful career and looking

483
00:28:05,880 --> 00:28:09,080
Speaker 1: at its ups and downs. Linda, I was in or

484
00:28:09,200 --> 00:28:13,160
Speaker 1: rather I should say Dana, I was in your Bergdorf

485
00:28:13,280 --> 00:28:16,320
Speaker 1: Goodman yesterday and I accidentally got off on the wrong

486
00:28:16,520 --> 00:28:22,600
Speaker 1: floor and there was Linda's at Bergdorf, Linda Fargo's personally

487
00:28:22,760 --> 00:28:27,240
Speaker 1: curated shop. And like Tiffany, it seems like everybody's trying

488
00:28:27,320 --> 00:28:30,800
Speaker 1: to change to create excitement. Is that the theme this year?

489
00:28:31,760 --> 00:28:35,520
Speaker 1: That is the theme? Anything where you can feel it's personalized,

490
00:28:35,840 --> 00:28:39,800
Speaker 1: halized excitement, something new and different that's curated for you

491
00:28:40,680 --> 00:28:42,920
Speaker 1: is what the holiday season is going to be about.

492
00:28:43,200 --> 00:28:46,320
Speaker 1: It's not just the experience of buying, it's the activity

493
00:28:46,360 --> 00:28:50,200
Speaker 1: of doing too. So buying married with doing is what

494
00:28:50,360 --> 00:28:54,440
Speaker 1: makes the experience. Is it making money? I mean, I

495
00:28:54,560 --> 00:28:56,760
Speaker 1: get that it's a vogue, but so is AI or

496
00:28:56,880 --> 00:29:00,520
Speaker 1: nanotechnology ten years ago. Is all this stuff gonna make

497
00:29:00,720 --> 00:29:05,600
Speaker 1: revenue and margin happen or not? I think it will

498
00:29:06,080 --> 00:29:08,480
Speaker 1: do a little bit of both. Over time, but there's

499
00:29:08,520 --> 00:29:11,400
Speaker 1: a service component of learning how to get there. What

500
00:29:11,560 --> 00:29:15,120
Speaker 1: we're seeing though, is inventory levels are lean, the consumers

501
00:29:15,200 --> 00:29:19,800
Speaker 1: in good shape. We should have a solid critics, right, Pim.

502
00:29:19,960 --> 00:29:22,760
Speaker 1: Let me editorialize here that there's a there's a winter

503
00:29:22,920 --> 00:29:26,720
Speaker 1: coat company from Europe starts with an M. Yeah, Montclair.

504
00:29:26,880 --> 00:29:30,280
Speaker 1: They have no coats in North America, just so is

505
00:29:30,400 --> 00:29:33,920
Speaker 1: Dana said inventors lean. It's not lean, Pim. There no

506
00:29:34,080 --> 00:29:37,280
Speaker 1: winter coats. The women of the Keen family are freezing

507
00:29:37,400 --> 00:29:39,280
Speaker 1: as we speak. Well, I thought the reason they were

508
00:29:39,360 --> 00:29:41,239
Speaker 1: lean is because no one has any money left over

509
00:29:41,320 --> 00:29:44,120
Speaker 1: after buying their Montclair coat. They can't afford anything else,

510
00:29:44,480 --> 00:29:47,640
Speaker 1: Dana Telsey, is Tom Keane gonna be seen in an

511
00:29:47,800 --> 00:29:52,640
Speaker 1: under armour, Adidas or Audidas or Nike outfit this holiday season?

512
00:29:52,680 --> 00:29:58,360
Speaker 1: I understand that athletic apparel and active where that's gonna

513
00:29:58,440 --> 00:30:01,440
Speaker 1: be where we're gonna see some big means. We've been

514
00:30:01,480 --> 00:30:04,560
Speaker 1: seeing big games in athletic and active where apparel, and

515
00:30:04,640 --> 00:30:06,720
Speaker 1: I think we're going to continue to see those games.

516
00:30:07,120 --> 00:30:09,800
Speaker 1: One of the newest things that's happening is we're having

517
00:30:09,840 --> 00:30:14,160
Speaker 1: an apparel revival for women beyond just active in athletics.

518
00:30:14,600 --> 00:30:18,520
Speaker 1: All the sudden denim jeans are resonating. We're seeing newness

519
00:30:18,600 --> 00:30:22,240
Speaker 1: and the handbag category from newness in the footwear category.

520
00:30:22,640 --> 00:30:24,640
Speaker 1: And it doesn't hurt that we're getting a little bit

521
00:30:24,680 --> 00:30:27,720
Speaker 1: of cold weather now so we sell not just Montclair.

522
00:30:27,840 --> 00:30:30,240
Speaker 1: But take a look at those Canada Goose numbers today.

523
00:30:30,640 --> 00:30:35,040
Speaker 1: Those are pretty special. Also see the Canada Goose numbers.

524
00:30:35,120 --> 00:30:38,200
Speaker 1: Tom all right, help Mr Keen a little bit um

525
00:30:38,480 --> 00:30:42,200
Speaker 1: tell us about the beauty sector, because boy, if there

526
00:30:42,480 --> 00:30:46,320
Speaker 1: is not something that the Internet has helped to push

527
00:30:46,600 --> 00:30:50,520
Speaker 1: even further into the household, it is the beauty Let

528
00:30:50,560 --> 00:30:52,680
Speaker 1: me translate that, Dana, have you been in the new

529
00:30:52,720 --> 00:30:56,840
Speaker 1: Glossier story yet downtown? I have, and I've seen the lines.

530
00:30:56,960 --> 00:30:59,360
Speaker 1: I've been there in New York and in Los Angeles.

531
00:31:00,000 --> 00:31:03,240
Speaker 1: A people about this, Dana, I think what the way

532
00:31:03,280 --> 00:31:07,200
Speaker 1: I think of Glass Day is more affordable cosmetic line

533
00:31:07,560 --> 00:31:11,120
Speaker 1: that basically is very interactive. That the packaging is cool,

534
00:31:11,560 --> 00:31:17,080
Speaker 1: That is that it has influencer recognition, and it's attracting frankly,

535
00:31:17,240 --> 00:31:20,440
Speaker 1: women of all ages. But they certainly had that millennial

536
00:31:20,480 --> 00:31:24,400
Speaker 1: bent data. My daughter afterthought, it's like the whole bedroom

537
00:31:24,520 --> 00:31:26,960
Speaker 1: is glossy. I just want to point out him that

538
00:31:27,040 --> 00:31:31,480
Speaker 1: the oversized laminated Jersey jogging pand by Gucci is one

539
00:31:31,600 --> 00:31:35,480
Speaker 1: thousand three eight dollars. Yeah, it's sort of like a

540
00:31:35,560 --> 00:31:38,040
Speaker 1: Celtic screen, but not with the price tag. It's like

541
00:31:38,200 --> 00:31:41,320
Speaker 1: rich data. I mean within all this is consumption, and

542
00:31:41,400 --> 00:31:43,920
Speaker 1: I get the idea of a struggling America in dollar

543
00:31:44,000 --> 00:31:46,760
Speaker 1: stores and Walmart and all that and the luxury stuff

544
00:31:46,800 --> 00:31:49,280
Speaker 1: we like to talk about. Is there a middle in

545
00:31:49,360 --> 00:31:52,600
Speaker 1: the Dana Telsea world anymore? There is a middle in

546
00:31:52,640 --> 00:31:55,520
Speaker 1: the Dana Telsea World. Take a look at Macy's numbers today.

547
00:31:55,960 --> 00:31:58,720
Speaker 1: Those are good numbers. A three point one percent comp

548
00:31:58,800 --> 00:32:02,600
Speaker 1: store sales, increase, their average unit retail price up just

549
00:32:02,760 --> 00:32:07,479
Speaker 1: around three They improved trends in traffic that they've been

550
00:32:07,480 --> 00:32:10,360
Speaker 1: seeing in brick and mortar, and the fact that October

551
00:32:10,520 --> 00:32:12,920
Speaker 1: was the strongest month of the quarter. There you go,

552
00:32:13,280 --> 00:32:16,840
Speaker 1: there's the middle. And let's not forget off price Burlington,

553
00:32:17,000 --> 00:32:20,840
Speaker 1: Ross and t J. It's a destination. You see traffic games,

554
00:32:21,160 --> 00:32:24,120
Speaker 1: it's outside of the mall we've been seeing, whether it's

555
00:32:24,200 --> 00:32:27,120
Speaker 1: the off priceres Look what you just saw with Macy's

556
00:32:27,120 --> 00:32:29,760
Speaker 1: that should kick off good numbers for the department store season.

557
00:32:30,200 --> 00:32:32,880
Speaker 1: Look what you saw at Alta. They just reported their

558
00:32:32,920 --> 00:32:36,360
Speaker 1: same store sales last week for the quarter. That was encouraging.

559
00:32:36,920 --> 00:32:40,080
Speaker 1: So we are seeing some better results, but only because

560
00:32:40,400 --> 00:32:43,800
Speaker 1: there's product and innovation and consumers the power to buy

561
00:32:44,680 --> 00:32:49,000
Speaker 1: just quickly data. They're gonna be more electronics in the

562
00:32:49,160 --> 00:32:52,959
Speaker 1: keen household in there will be I don't know if

563
00:32:52,960 --> 00:32:56,600
Speaker 1: you've visited the Amazon four star store downtown, but guess what,

564
00:32:56,960 --> 00:33:00,160
Speaker 1: drones are one of the biggest selling items. So will

565
00:33:00,200 --> 00:33:02,520
Speaker 1: have to get your drones with the holiday. He can

566
00:33:02,600 --> 00:33:04,840
Speaker 1: launch it from the window, right, he can just launch

567
00:33:04,880 --> 00:33:08,520
Speaker 1: it out over I can launch it out over Central Park. Yeah,

568
00:33:08,520 --> 00:33:11,960
Speaker 1: and they'll they'll take it down by the glossy East

569
00:33:11,960 --> 00:33:15,400
Speaker 1: store and you can supervise the dog. Yeah, Dana. What's

570
00:33:15,440 --> 00:33:17,800
Speaker 1: your single best buy a Telsey Advisor group? What is

571
00:33:17,840 --> 00:33:20,560
Speaker 1: the want equity? Where we can make alpha to pay

572
00:33:20,640 --> 00:33:24,520
Speaker 1: for my Gucci jogging pants one thousand, three eighty dollars?

573
00:33:24,560 --> 00:33:28,720
Speaker 1: Where am I going to make money? pH Calvin Klein,

574
00:33:28,880 --> 00:33:36,080
Speaker 1: Tommy Hilfiger, clean valuation, global distribution, all channels, clean inventory, Dana.

575
00:33:36,160 --> 00:33:37,920
Speaker 1: Every time I'm in the first floor of Bird or

576
00:33:38,000 --> 00:33:41,200
Speaker 1: for those lovely new windows they've blown out showing the

577
00:33:41,280 --> 00:33:45,040
Speaker 1: best of Fifth Avenue in the Plaza. Love what you do,

578
00:33:45,160 --> 00:33:47,280
Speaker 1: Dana Telsey, thank you so much for being with us

579
00:33:47,320 --> 00:34:02,440
Speaker 1: a Telsey Advisor group. The great clarity from Alan Greenspan,

580
00:34:03,200 --> 00:34:07,040
Speaker 1: it's not the obligatory one volume after being chairman of

581
00:34:07,080 --> 00:34:09,200
Speaker 1: the Fellow Reserve, that is an easy thing to do,

582
00:34:10,000 --> 00:34:15,520
Speaker 1: but genuinely establishing a writing career after his chairmanship, including

583
00:34:15,560 --> 00:34:18,280
Speaker 1: a wonderful new book out. It's a new book on caution.

584
00:34:18,719 --> 00:34:23,040
Speaker 1: Here is Chairman Greenspan on inflation. I think I'm beginning

585
00:34:23,080 --> 00:34:25,759
Speaker 1: to see the first signs of it. We're seeing it

586
00:34:25,960 --> 00:34:29,759
Speaker 1: basically in the tightening of the labor markets first, which

587
00:34:29,760 --> 00:34:33,880
Speaker 1: did you know, getting very tight. Now we're beginning finally

588
00:34:33,960 --> 00:34:42,640
Speaker 1: to see average wages rise, and clearly there's no productivity

589
00:34:42,719 --> 00:34:47,319
Speaker 1: behind it. Chairman Greenspan with David Rubinstein, and of course

590
00:34:47,360 --> 00:34:50,640
Speaker 1: we bring in David Rubinstein. Now is wonderful set of

591
00:34:50,719 --> 00:34:54,080
Speaker 1: interviews he's had. David. What I find so important about

592
00:34:54,120 --> 00:34:57,520
Speaker 1: this book is and someone of his vintage years old

593
00:34:57,719 --> 00:35:00,600
Speaker 1: celebrating nine years old in March. We'll go out and

594
00:35:00,680 --> 00:35:02,799
Speaker 1: I'll get a co writer and I then he went

595
00:35:02,840 --> 00:35:06,480
Speaker 1: out and got the rock star Adrian Wildridge of The

596
00:35:06,600 --> 00:35:10,719
Speaker 1: Economist magazine, writing Schumpeter and Lexington and all that for

597
00:35:10,800 --> 00:35:13,480
Speaker 1: the economists. I mean, what a great co write to

598
00:35:13,640 --> 00:35:20,040
Speaker 1: Capitalism in America, Alan Greenspan in Adrian Wildridge, Yes, I

599
00:35:20,200 --> 00:35:23,400
Speaker 1: highly recommend the book. Um, it's a pretty good history

600
00:35:23,520 --> 00:35:27,360
Speaker 1: of capitalism in America. And the main point really is

601
00:35:27,480 --> 00:35:31,920
Speaker 1: that America capitalism is is what he caused, the creative destruction,

602
00:35:31,960 --> 00:35:36,680
Speaker 1: which is to say, repeatedly reinventing itself. And um, he's

603
00:35:36,719 --> 00:35:40,160
Speaker 1: concerned that now the reinvention is not occurring quite as

604
00:35:40,239 --> 00:35:43,719
Speaker 1: much as maybe before, perhaps because of the enormous debt,

605
00:35:43,880 --> 00:35:47,279
Speaker 1: is crowding out entrepreneurial capitalism, perhaps because there's too much

606
00:35:47,320 --> 00:35:50,040
Speaker 1: consolidation in the in the tech sector. But for whatever

607
00:35:50,160 --> 00:35:53,720
Speaker 1: reason he's worried about the current US economy. He uses

608
00:35:53,800 --> 00:35:57,319
Speaker 1: in chapter twelve a word that I associate with David Rubinstein,

609
00:35:57,440 --> 00:36:00,439
Speaker 1: and frankly it comes from the Laurid to Colombia Ned

610
00:36:00,520 --> 00:36:07,719
Speaker 1: Phelps dynamism. How does David Rubinstein define dynamism? And particularly

611
00:36:07,800 --> 00:36:12,319
Speaker 1: through the career of Alan Greenspan well, Alan has had

612
00:36:12,360 --> 00:36:14,600
Speaker 1: a number of careers. As he mentioned, he started out

613
00:36:14,680 --> 00:36:16,759
Speaker 1: thinking he would be a professional musician, but he was

614
00:36:16,800 --> 00:36:20,200
Speaker 1: playing against a fifteen year old stan Getz and realized

615
00:36:20,200 --> 00:36:23,000
Speaker 1: that stan Getz was probably really great and Alan was

616
00:36:23,040 --> 00:36:25,080
Speaker 1: not going to be as great. So he went into

617
00:36:25,280 --> 00:36:29,120
Speaker 1: economics UM and uh became a public servant. He hadn't

618
00:36:29,120 --> 00:36:30,800
Speaker 1: really expected to become the head of the Council of

619
00:36:30,800 --> 00:36:33,440
Speaker 1: Economic Advice on the President Ford, but he did. And

620
00:36:33,560 --> 00:36:35,920
Speaker 1: then later for almost nineteen years I guess, he was

621
00:36:36,560 --> 00:36:40,040
Speaker 1: the Chairman of the Federal Reserve. Distinguished Career UM. And

622
00:36:40,160 --> 00:36:42,640
Speaker 1: now at ninety two and a half he's writing books.

623
00:36:42,800 --> 00:36:44,560
Speaker 1: This is I think his third book since he's left

624
00:36:44,600 --> 00:36:47,680
Speaker 1: the FED chairmanship. His mind as as sharp as ever,

625
00:36:47,880 --> 00:36:50,160
Speaker 1: and he is very concerned about the amount of debt

626
00:36:50,239 --> 00:36:53,520
Speaker 1: we have and entitlements we have in our US federal system.

627
00:36:54,520 --> 00:36:57,000
Speaker 1: David Rubinstein, I'm wondering if you could just expand on that,

628
00:36:57,160 --> 00:37:01,680
Speaker 1: having to do with rising deficits and increases to debt,

629
00:37:02,480 --> 00:37:06,400
Speaker 1: and whether the most recent tax cuts are a focus

630
00:37:06,480 --> 00:37:10,560
Speaker 1: of his attention. Yes, the most recent tax cut. He

631
00:37:10,600 --> 00:37:14,120
Speaker 1: wouldn't say the tax cuts are bad. He supported tax cuts.

632
00:37:14,160 --> 00:37:17,640
Speaker 1: He supported George W. Bush's tax cut when that was

633
00:37:18,000 --> 00:37:20,600
Speaker 1: actually probably even larger in some respects. But he thinks

634
00:37:20,640 --> 00:37:24,040
Speaker 1: the tax cuts have to be balanced with spending cuts,

635
00:37:24,520 --> 00:37:26,719
Speaker 1: and if you don't get spending cuts, you have to

636
00:37:26,800 --> 00:37:28,440
Speaker 1: make sure that the tax cut is really going to

637
00:37:28,560 --> 00:37:31,840
Speaker 1: produce much more revenue. He's not yet convinced that this

638
00:37:32,000 --> 00:37:35,400
Speaker 1: tax cut will produce the necessary revenue to offset the

639
00:37:36,040 --> 00:37:38,200
Speaker 1: loss in revenue from the tax cut, and he doesn't

640
00:37:38,239 --> 00:37:42,480
Speaker 1: see gains now in productivity, doesn't see cuts and spending,

641
00:37:42,560 --> 00:37:44,840
Speaker 1: So he's quite worried. As we all probably remember, in

642
00:37:44,840 --> 00:37:48,960
Speaker 1: the early eighties, chaired a commission to help rein in

643
00:37:50,040 --> 00:37:52,520
Speaker 1: the problems that SO Security had, and now we have

644
00:37:52,640 --> 00:37:55,760
Speaker 1: that problem against SO Security and the other entitlement programs

645
00:37:55,840 --> 00:37:59,239
Speaker 1: we have are really ballooning the federal budget. Well as

646
00:37:59,440 --> 00:38:03,160
Speaker 1: as someone who has been incredibly successful in business and

647
00:38:03,320 --> 00:38:06,800
Speaker 1: building businesses throughout the world, David Rubinstein, and getting to

648
00:38:06,920 --> 00:38:10,600
Speaker 1: speak with all of these luminaries, if everyone agrees that

649
00:38:10,680 --> 00:38:13,960
Speaker 1: there is no political will to cut spending, do you

650
00:38:14,080 --> 00:38:16,400
Speaker 1: see that it is kind of a false promise to

651
00:38:16,600 --> 00:38:19,359
Speaker 1: offer tax cuts as a way to increase revenue when

652
00:38:19,640 --> 00:38:23,360
Speaker 1: basically all the work shows that maybe thirty of the

653
00:38:23,480 --> 00:38:29,680
Speaker 1: tax cut is made up by increased revenue but nothing else. Well,

654
00:38:29,760 --> 00:38:32,600
Speaker 1: there's no doubt that those people who like tax cuts

655
00:38:32,680 --> 00:38:35,880
Speaker 1: that believe that they will openly produce greater revenue by

656
00:38:35,920 --> 00:38:38,200
Speaker 1: increasing the GDP. And there's no doubt as well that

657
00:38:38,280 --> 00:38:41,360
Speaker 1: the GDP seems to be going up, perhaps because of

658
00:38:41,560 --> 00:38:44,359
Speaker 1: the most recent tax that perhaps other reasons. Whatever the case,

659
00:38:44,880 --> 00:38:48,160
Speaker 1: we now have have, as Alan Greenspan pointed out, a

660
00:38:48,360 --> 00:38:51,120
Speaker 1: deficit that's going to be for f y nineteen about

661
00:38:51,120 --> 00:38:54,960
Speaker 1: one point three trillion dollars. The f y eighteen budget

662
00:38:55,000 --> 00:38:58,120
Speaker 1: deficit was about eight billion. We now have twenty one

663
00:38:58,480 --> 00:39:00,960
Speaker 1: trillion dollars of federal debt. When I was in the

664
00:39:00,960 --> 00:39:02,279
Speaker 1: White House and we left at the end of the

665
00:39:02,320 --> 00:39:05,239
Speaker 1: Carter administration, we end up had seven hundred billion of

666
00:39:05,360 --> 00:39:09,520
Speaker 1: total condebtedness. So we're now, uh, you know, measuring a

667
00:39:09,640 --> 00:39:12,719
Speaker 1: debt by trillion dollar increases every year, and at some

668
00:39:12,880 --> 00:39:15,000
Speaker 1: point somebody's gonna have to pay for this. It's right.

669
00:39:15,000 --> 00:39:17,799
Speaker 1: I wanted to go David, your public service with Jimmy Carter,

670
00:39:17,920 --> 00:39:20,439
Speaker 1: and then on we go to the conquered Coalition, Paul

671
00:39:20,560 --> 00:39:25,239
Speaker 1: Songas and Pete Peterson dearly missed. And here, Chairman Greenspan,

672
00:39:25,960 --> 00:39:28,040
Speaker 1: are these guys ever gonna win the day? Are the

673
00:39:28,160 --> 00:39:31,719
Speaker 1: deficit hawks are the deficit warriors? Are they ever going

674
00:39:31,760 --> 00:39:36,440
Speaker 1: to get traction? Well, I suspect they will when there's

675
00:39:36,520 --> 00:39:39,520
Speaker 1: a collapse in the financial markets. And at some point,

676
00:39:39,640 --> 00:39:41,960
Speaker 1: I don't know when, but I suspect at some point

677
00:39:42,040 --> 00:39:43,840
Speaker 1: the financial markets will say that debt is out of

678
00:39:43,880 --> 00:39:46,440
Speaker 1: control and we have to do something about it right now.

679
00:39:46,760 --> 00:39:48,719
Speaker 1: And really for the last ten years or so, that

680
00:39:48,840 --> 00:39:52,040
Speaker 1: hasn't been a concern of most investors. At some point,

681
00:39:52,120 --> 00:39:55,120
Speaker 1: I suspect that the concern will come home to Ruce,

682
00:39:55,200 --> 00:39:57,640
Speaker 1: But I don't know exactly when the north is Alan Greenspan,

683
00:39:58,800 --> 00:40:02,320
Speaker 1: David Grubinstein. Does that speak to what the chairman Greenspan

684
00:40:02,680 --> 00:40:06,080
Speaker 1: talks about when he speaks about government regulation and does

685
00:40:06,160 --> 00:40:09,239
Speaker 1: that get connected to moral hazard that if we reach

686
00:40:09,360 --> 00:40:11,680
Speaker 1: that point, things are just too big to fail, so

687
00:40:11,840 --> 00:40:15,759
Speaker 1: the government has to bail out everybody anyway, Well, we

688
00:40:15,840 --> 00:40:18,560
Speaker 1: didn't quite address that, but but he has. His concern

689
00:40:18,760 --> 00:40:21,400
Speaker 1: is that it doesn't seem to be an interest right

690
00:40:21,440 --> 00:40:24,880
Speaker 1: now and reigning in spending and and and in dealing

691
00:40:24,960 --> 00:40:27,080
Speaker 1: with some of the concerns that he sees in the economy.

692
00:40:27,360 --> 00:40:30,320
Speaker 1: As we probably all know, he's a big fan of

693
00:40:30,480 --> 00:40:34,920
Speaker 1: seeing productivity increases and without productivity increases. In the end,

694
00:40:35,440 --> 00:40:37,680
Speaker 1: you really can't get your economy moving forward in a

695
00:40:37,719 --> 00:40:40,560
Speaker 1: productive way, and right now he doesn't see any productivity

696
00:40:40,600 --> 00:40:44,879
Speaker 1: increases in the U. S. Economy. David Rubinstein, I'm broadcasting

697
00:40:45,400 --> 00:40:48,600
Speaker 1: from the wharf at the Intercontinental in Washington, d C.

698
00:40:48,920 --> 00:40:51,840
Speaker 1: Of course, you know it well, this major redevelopment of

699
00:40:51,920 --> 00:40:54,920
Speaker 1: the of the waterfront, But this was something that was

700
00:40:55,000 --> 00:40:58,759
Speaker 1: really a partnership between a lot of private money and

701
00:40:58,840 --> 00:41:01,320
Speaker 1: a lot of effort on the part of the local

702
00:41:01,920 --> 00:41:04,719
Speaker 1: and community. Can you speak to how that might be

703
00:41:04,840 --> 00:41:07,960
Speaker 1: a model for solving some of these issues since there

704
00:41:08,000 --> 00:41:11,600
Speaker 1: seems to be such good luck at the federal level. Well,

705
00:41:11,960 --> 00:41:16,200
Speaker 1: one example would be infrastructure. UM. Infrastructure something like like

706
00:41:16,360 --> 00:41:18,200
Speaker 1: the weather that everybody likes to talk about, but not

707
00:41:18,320 --> 00:41:21,120
Speaker 1: a lot is getting done. I do think that infrastructure

708
00:41:21,360 --> 00:41:25,040
Speaker 1: is necessary to be improved in the United States, and

709
00:41:25,280 --> 00:41:26,840
Speaker 1: I do think that you're going to see more of

710
00:41:26,920 --> 00:41:29,279
Speaker 1: that get done, but it's really going to require the

711
00:41:29,440 --> 00:41:33,279
Speaker 1: private sector working with the public sector. Congress probably is

712
00:41:33,320 --> 00:41:36,400
Speaker 1: not going to pass a major infrastructure bill UM this

713
00:41:36,560 --> 00:41:38,799
Speaker 1: year or next, so I hope it will, but it's

714
00:41:38,840 --> 00:41:41,600
Speaker 1: moved very slowly on that. President Obama couldn't get Infrastructure

715
00:41:41,600 --> 00:41:44,640
Speaker 1: Bill of Consequence through, and President Trump has not yet either.

716
00:41:44,960 --> 00:41:47,240
Speaker 1: Hopefully that will change, but in the meantime, the private

717
00:41:47,320 --> 00:41:50,560
Speaker 1: sector is moving forward to work with various parts of

718
00:41:50,640 --> 00:41:52,960
Speaker 1: the of the government, not necessarily the federal government, to

719
00:41:53,040 --> 00:41:57,319
Speaker 1: bring infrastructure reform and infrastructure improvements UH To the fore,

720
00:41:57,960 --> 00:42:00,360
Speaker 1: David has always thank you the David Reuben Science Appeer

721
00:42:00,400 --> 00:42:03,960
Speaker 1: to peer conversations. Looking forward to that conversation with a

722
00:42:04,040 --> 00:42:07,560
Speaker 1: former chairman of the Fellow Reserve System, Alan Greenspan out

723
00:42:07,600 --> 00:42:12,719
Speaker 1: with the new book Capitalism in America. I'm Bloomberg TV Wednesday,

724
00:42:13,239 --> 00:42:17,359
Speaker 1: nine pm and moving across the radio Thursday at five

725
00:42:17,480 --> 00:42:26,000
Speaker 1: pm as well, Looking forward to the Thanks for listening

726
00:42:26,120 --> 00:42:30,640
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews

727
00:42:30,680 --> 00:42:35,880
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

728
00:42:36,480 --> 00:42:39,759
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

729
00:42:39,840 --> 00:42:43,240
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio