1 00:00:00,120 --> 00:00:03,960 Speaker 1: The following edition of Bloomberg's Wall Street Week was recorded 2 00:00:04,000 --> 00:00:08,560 Speaker 1: ahead of the Thanksgiving holiday. This is Bloomberg Wall Street Week. 3 00:00:08,720 --> 00:00:12,080 Speaker 1: Market shruggle, higher consumer prizes, The economy is in the 4 00:00:12,119 --> 00:00:14,520 Speaker 1: process of rebounding. Will the Federal Reserve have its own 5 00:00:14,520 --> 00:00:17,880 Speaker 1: digital currency? The financial stories that cheap hard work. Many 6 00:00:17,920 --> 00:00:20,000 Speaker 1: people think the eels are just going to keep marching up. 7 00:00:20,079 --> 00:00:22,400 Speaker 1: We have more spending coming out of Congress. One of 8 00:00:22,400 --> 00:00:25,160 Speaker 1: the big questions I think on investor's minds inflations through 9 00:00:25,200 --> 00:00:28,360 Speaker 1: the eyes of the most influential voices. Larry Summer is 10 00:00:28,400 --> 00:00:31,200 Speaker 1: the former Treasury Secretary Bryan Wynhand, the Back of America 11 00:00:31,880 --> 00:00:35,920 Speaker 1: CEO Charlie Sharp. Bloomberg Wall Street Week with David Weston 12 00:00:36,240 --> 00:00:40,160 Speaker 1: from Bloomberg Radio, not so new leadership for the Fed, 13 00:00:40,400 --> 00:00:45,000 Speaker 1: oil from strategic reserves, and the holiday shopping season gets underway. 14 00:00:45,080 --> 00:00:48,519 Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. It 15 00:00:48,600 --> 00:00:51,400 Speaker 1: was a shortened holiday trading week in the United States, 16 00:00:51,440 --> 00:00:54,600 Speaker 1: but that didn't mean we wanted for news. As President 17 00:00:54,600 --> 00:00:57,760 Speaker 1: Blind finally told us who he wants to be running 18 00:00:57,840 --> 00:01:02,120 Speaker 1: the FED. I'm nominating Jerome for second terms chair the 19 00:01:02,160 --> 00:01:05,839 Speaker 1: Federal Reserve, and I'm not. I'm not. I'm nominating Leo 20 00:01:05,920 --> 00:01:09,559 Speaker 1: Brainer to take the positions vice chair of the Federal Reserve. 21 00:01:09,800 --> 00:01:12,000 Speaker 1: And then the President said he wants to help us 22 00:01:12,000 --> 00:01:15,680 Speaker 1: all out of the gas pump by releasing some petroleum reserves, 23 00:01:15,720 --> 00:01:19,000 Speaker 1: although initial reaction was probably not exactly what he wanted. 24 00:01:19,520 --> 00:01:22,399 Speaker 1: And then with the threat of a further Russian invasion 25 00:01:22,400 --> 00:01:25,720 Speaker 1: of Ukraine described by Richard has of the Council on 26 00:01:25,880 --> 00:01:29,080 Speaker 1: Foreign Relations, whether this is simply a show of force 27 00:01:29,200 --> 00:01:32,280 Speaker 1: in order to muscle Ukraine to persuade the government there, 28 00:01:32,600 --> 00:01:36,160 Speaker 1: say not to move closer to the west, or whether 29 00:01:36,200 --> 00:01:38,520 Speaker 1: this is the prelude to an intervention in which they 30 00:01:38,520 --> 00:01:42,880 Speaker 1: would take over enormous parts of the country, conceivably even 31 00:01:42,880 --> 00:01:45,640 Speaker 1: the capital. I don't rule anything out at at this point. 32 00:01:45,959 --> 00:01:50,160 Speaker 1: And then just before that Thanksgiving holiday, a massive dump 33 00:01:50,200 --> 00:01:53,800 Speaker 1: of economic data in the United States showing a strong spending, 34 00:01:54,160 --> 00:01:59,240 Speaker 1: continued inflation, and overall economic growth. As summarized by Tiffany 35 00:01:59,280 --> 00:02:03,400 Speaker 1: Wilding PIMCO. We saw a pretty decent re acceleration and 36 00:02:03,440 --> 00:02:06,280 Speaker 1: economic activity in October. So I think that was confirmed, 37 00:02:06,320 --> 00:02:08,480 Speaker 1: as you mentioned, by the consumption data, you know, So 38 00:02:08,520 --> 00:02:11,919 Speaker 1: I think overall the data was was quite good. Raised 39 00:02:11,919 --> 00:02:14,160 Speaker 1: our own forecast for growth for the fourth quarter, and 40 00:02:14,200 --> 00:02:17,240 Speaker 1: certainly good news you know, for for growth moving forward, 41 00:02:17,480 --> 00:02:19,679 Speaker 1: all of which left the markets with a good deal 42 00:02:19,720 --> 00:02:22,400 Speaker 1: to chew on this week, and the text sector really 43 00:02:22,440 --> 00:02:24,560 Speaker 1: didn't like it very much with because we had this 44 00:02:24,720 --> 00:02:27,799 Speaker 1: prospect of higher rates coming along. So we thought we'd 45 00:02:27,800 --> 00:02:30,640 Speaker 1: take this shortened week, this holiday week to reflect a 46 00:02:30,639 --> 00:02:33,880 Speaker 1: little more broadly for investors on what the phenomena are 47 00:02:33,960 --> 00:02:36,240 Speaker 1: that we're facing. And there's no one better to do 48 00:02:36,280 --> 00:02:39,240 Speaker 1: that than Jillian Tech. She is the editor at y'al 49 00:02:39,320 --> 00:02:41,120 Speaker 1: large for the US, as well as head of the 50 00:02:41,240 --> 00:02:44,880 Speaker 1: editory board at the Financial Time. She's also author of 51 00:02:44,919 --> 00:02:47,880 Speaker 1: a very important book called Anthrow Vision. Julian, it's great 52 00:02:47,919 --> 00:02:49,840 Speaker 1: to have you back with us. Thank you for joining us. 53 00:02:50,080 --> 00:02:52,320 Speaker 1: Let's apply so your anthropology if you could, as well 54 00:02:52,360 --> 00:02:55,040 Speaker 1: as your financial acumen to what we saw this week 55 00:02:55,080 --> 00:02:58,120 Speaker 1: with the appointment uh reappointment of j pile On, the 56 00:02:58,160 --> 00:03:00,720 Speaker 1: appointment of Leo Brainer and advice Ja. And one of 57 00:03:00,720 --> 00:03:02,640 Speaker 1: the things I'm curious about is one of the biggest 58 00:03:02,639 --> 00:03:04,880 Speaker 1: issues we have in this country right now is inflation. 59 00:03:04,919 --> 00:03:08,160 Speaker 1: And yet in the appointment, we didn't hear the president 60 00:03:08,240 --> 00:03:10,760 Speaker 1: pardon say much about that at all? Is the friend 61 00:03:11,160 --> 00:03:13,720 Speaker 1: really should it be that independent from what's going on 62 00:03:13,840 --> 00:03:16,400 Speaker 1: in the country. Well, the reason you didn't hear President 63 00:03:16,480 --> 00:03:18,800 Speaker 1: Biden say but much about inflation is because the Federal 64 00:03:18,880 --> 00:03:24,200 Speaker 1: Reserve right now is it an absolutely nightmarily difficult position. Um. Now, 65 00:03:24,280 --> 00:03:27,480 Speaker 1: the immediate reason for that is that it has these 66 00:03:27,480 --> 00:03:31,600 Speaker 1: twin goals of low employment and keeping inflation under control 67 00:03:31,639 --> 00:03:34,000 Speaker 1: as well. But it's very likely that in the coming 68 00:03:34,040 --> 00:03:36,280 Speaker 1: months we're going to see inflation spiral out of control 69 00:03:36,560 --> 00:03:39,320 Speaker 1: while employment still isn't anywhere near what the Fed wants. 70 00:03:39,600 --> 00:03:42,040 Speaker 1: So there's a big cognitive distance there about what an 71 00:03:42,040 --> 00:03:44,560 Speaker 1: earth of Federal Reserve's going to do about that. Plus 72 00:03:44,560 --> 00:03:47,200 Speaker 1: the course the fact that you've got asset price inflation 73 00:03:47,480 --> 00:03:49,240 Speaker 1: that's been going up and up and up and up, 74 00:03:49,520 --> 00:03:52,760 Speaker 1: and yet somehow the Fed only looks at consumer price inflation, 75 00:03:52,800 --> 00:03:54,760 Speaker 1: which just doesn't make much sense in terms of how 76 00:03:54,840 --> 00:03:58,040 Speaker 1: people are their lives. But the other big issue is 77 00:03:58,080 --> 00:04:00,760 Speaker 1: that the Federal Reserve has sort of convinced us in 78 00:04:00,800 --> 00:04:03,360 Speaker 1: recent years, and it's almost like this sort of high 79 00:04:03,480 --> 00:04:07,720 Speaker 1: priest of the American economy where it has these seemingly 80 00:04:07,800 --> 00:04:10,800 Speaker 1: magical powers and this continuity to keep the show on 81 00:04:10,800 --> 00:04:14,080 Speaker 1: the road no matter what happens in politics, and you know, 82 00:04:14,120 --> 00:04:16,839 Speaker 1: the FED leaders are there for a lot longer than 83 00:04:17,080 --> 00:04:21,600 Speaker 1: many other politicians. Um, and it's created as aura of omniptiance. 84 00:04:22,240 --> 00:04:24,120 Speaker 1: And yet the reality is that if you look at 85 00:04:24,160 --> 00:04:26,880 Speaker 1: what's happening right now, there's not a lot that they 86 00:04:26,920 --> 00:04:29,520 Speaker 1: can actually do about inflation because it's been driven to 87 00:04:29,600 --> 00:04:33,320 Speaker 1: a large degree by supply chain problems, by the fact 88 00:04:33,400 --> 00:04:36,159 Speaker 1: you just had this massive phiscal boost. So the FED 89 00:04:36,200 --> 00:04:38,320 Speaker 1: to someone tandency trying to convince us that it has 90 00:04:38,320 --> 00:04:42,080 Speaker 1: control over inflation, but the reality is it probably doesn't. 91 00:04:42,720 --> 00:04:44,440 Speaker 1: And on top of that, you have the fact that 92 00:04:44,520 --> 00:04:47,960 Speaker 1: you know, FED pretends that it's comehow changing the economy 93 00:04:47,960 --> 00:04:50,839 Speaker 1: and the financial system by moving the price of money 94 00:04:50,839 --> 00:04:55,120 Speaker 1: by minute degrees or changing how it buys bonds m 95 00:04:55,279 --> 00:04:58,640 Speaker 1: But in reality, what's really driving sentiment is what it says. 96 00:04:58,960 --> 00:05:02,560 Speaker 1: It's verbal intevent. You might even call it voodoo. So 97 00:05:02,680 --> 00:05:04,760 Speaker 1: there's a lot of cognitive dissonance in the way that 98 00:05:04,800 --> 00:05:07,320 Speaker 1: we see the FED at the moment, and I think 99 00:05:07,320 --> 00:05:09,200 Speaker 1: for that reason, it's going to have a tough time 100 00:05:09,320 --> 00:05:11,680 Speaker 1: in the months ahead. Well, I wonder, Jillian, how much 101 00:05:11,720 --> 00:05:15,400 Speaker 1: of the Fed's power is really derived from its credibility 102 00:05:15,440 --> 00:05:17,200 Speaker 1: and the fact that we believe in it, we trust 103 00:05:17,240 --> 00:05:20,000 Speaker 1: it for one reason or another. Do we really trust 104 00:05:20,120 --> 00:05:23,000 Speaker 1: an institution have that much power if they don't listen 105 00:05:23,000 --> 00:05:26,200 Speaker 1: to us at some general level and specifically, isn't the 106 00:05:26,240 --> 00:05:29,160 Speaker 1: appointment process that we just saw this week with first 107 00:05:29,160 --> 00:05:31,680 Speaker 1: of money, isn't it that one limited way to have 108 00:05:31,880 --> 00:05:34,960 Speaker 1: some influence over the Fed? Absolutely, And the most been 109 00:05:34,960 --> 00:05:37,400 Speaker 1: fascinaing this week is you're seeing Congress pushing for much 110 00:05:37,440 --> 00:05:40,200 Speaker 1: greater say on the part of the progressives in terms 111 00:05:40,240 --> 00:05:43,560 Speaker 1: of who gets appointed. But the reality is that there's 112 00:05:43,600 --> 00:05:47,400 Speaker 1: a lot of sort of almost mystical magic around the FED. 113 00:05:47,720 --> 00:05:49,600 Speaker 1: And it's a bit like the priests and medieval Catholic 114 00:05:49,720 --> 00:05:53,320 Speaker 1: Church who spoke Latin and the congregation didn't, but the 115 00:05:53,320 --> 00:05:56,160 Speaker 1: congregation relied on the priests to provide the blessings. And 116 00:05:56,320 --> 00:05:58,320 Speaker 1: mostly we don't actually understand what the FED is doing 117 00:05:58,320 --> 00:06:01,040 Speaker 1: and what it says most of the time. Um, and 118 00:06:01,080 --> 00:06:03,240 Speaker 1: of course it's not elected. Again, that's another point of 119 00:06:03,240 --> 00:06:06,520 Speaker 1: college to this dissonance because so much of the American 120 00:06:06,560 --> 00:06:09,599 Speaker 1: style perception is driven by this concept of democracy and 121 00:06:09,640 --> 00:06:13,960 Speaker 1: being accountable and the Fed's independent. Um so, I think, 122 00:06:14,040 --> 00:06:16,039 Speaker 1: you know, there are a lot of questions about the 123 00:06:16,080 --> 00:06:18,960 Speaker 1: way that the FED maintains its credibility going forward. The 124 00:06:19,000 --> 00:06:22,520 Speaker 1: fact that central banks have marble pillars or granite pillars 125 00:06:23,200 --> 00:06:27,880 Speaker 1: or hefty buildings is no accident. It symbolizes their sense 126 00:06:27,920 --> 00:06:31,680 Speaker 1: of permanence. But the reality is that, you know, anthropologists 127 00:06:31,720 --> 00:06:33,839 Speaker 1: know that every society, as seems the way that they 128 00:06:34,240 --> 00:06:37,360 Speaker 1: live at the moment is normal and inevitable and permanent, 129 00:06:37,760 --> 00:06:40,320 Speaker 1: and that's just not the case. Okay, Jillian's always great 130 00:06:40,320 --> 00:06:41,880 Speaker 1: to have you on wall Stree Week. Thank you so much. 131 00:06:41,880 --> 00:06:45,680 Speaker 1: That's Jillian Ted of the Financial Times. Thank you. Coming up, 132 00:06:45,839 --> 00:06:49,520 Speaker 1: it's the holiday season, which means of course shopping. We 133 00:06:49,720 --> 00:06:54,000 Speaker 1: talk retail sales with a true expert, Jerry Storge, longtime 134 00:06:54,080 --> 00:06:56,880 Speaker 1: head of Toys r US, about what to expect this 135 00:06:56,960 --> 00:07:01,040 Speaker 1: year in retail. That's next down Wall Stree were on Bloomberg. 136 00:07:06,400 --> 00:07:10,360 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 137 00:07:10,480 --> 00:07:13,760 Speaker 1: Bloomberg Radio. It is holiday time and that means for 138 00:07:13,840 --> 00:07:15,560 Speaker 1: all of us at time to go out and get 139 00:07:15,600 --> 00:07:18,360 Speaker 1: those gifts for everyone, and we thought would a good 140 00:07:18,360 --> 00:07:21,240 Speaker 1: time to review where we are on the retail sector 141 00:07:21,360 --> 00:07:23,840 Speaker 1: right now, particularly with Black Friday in the United States 142 00:07:23,880 --> 00:07:26,720 Speaker 1: happening right after Thanksgiving, which is the official start for 143 00:07:26,720 --> 00:07:28,800 Speaker 1: the season. And when it comes to retail, there's no 144 00:07:28,880 --> 00:07:30,920 Speaker 1: one better to talk to than Jerry Storge. He of 145 00:07:30,920 --> 00:07:33,760 Speaker 1: course is a long time chairman and CEO Toys r US. 146 00:07:34,000 --> 00:07:37,320 Speaker 1: He is now the CEO of Storch Advisers. So Jerry, 147 00:07:37,320 --> 00:07:39,320 Speaker 1: thank you so much for being with us. Let's start 148 00:07:39,320 --> 00:07:41,760 Speaker 1: with the most basic question. We hope we're kind of 149 00:07:41,760 --> 00:07:44,800 Speaker 1: coming out of the pandemic. Where's retail in recovery from 150 00:07:44,840 --> 00:07:48,200 Speaker 1: what the pandemic did to it? Look overall, we're more 151 00:07:48,280 --> 00:07:51,960 Speaker 1: than back, We're beyond any expectations. Sales are actually an 152 00:07:52,000 --> 00:07:56,600 Speaker 1: unprecedented levels. This really began last spring and sales have 153 00:07:56,680 --> 00:07:59,520 Speaker 1: been accelerating ever since. We've heard all kinds of stories 154 00:07:59,560 --> 00:08:02,160 Speaker 1: about is slowing down over the summer because at Delta 155 00:08:02,280 --> 00:08:04,840 Speaker 1: or this, or that the supply chain was scaring people, 156 00:08:04,880 --> 00:08:07,840 Speaker 1: inflation all the rest. When you look at a two 157 00:08:07,920 --> 00:08:11,080 Speaker 1: year stack in sales that has compare sales today two 158 00:08:11,080 --> 00:08:14,400 Speaker 1: sales two years ago before the pandemic, they've been running 159 00:08:14,480 --> 00:08:19,320 Speaker 1: up more than it was eighteen percent in June. In 160 00:08:19,400 --> 00:08:24,520 Speaker 1: July etcetera, etcetera, etcetera, up versus two years ago. In 161 00:08:24,560 --> 00:08:29,200 Speaker 1: the most recent sales report, which covered October in two 162 00:08:29,440 --> 00:08:32,800 Speaker 1: years and even the normal best of times, that number 163 00:08:32,840 --> 00:08:36,160 Speaker 1: should be half of that. So sales are actually booming, 164 00:08:36,440 --> 00:08:39,319 Speaker 1: and I would expect holiday sales to be up double 165 00:08:39,400 --> 00:08:42,880 Speaker 1: digits versus last year. How even is the recovery are 166 00:08:42,920 --> 00:08:47,120 Speaker 1: there's some parts of the retail sector doing better than others. Well. 167 00:08:47,120 --> 00:08:49,520 Speaker 1: There are certainly winners and losers, as there always are. 168 00:08:49,960 --> 00:08:52,160 Speaker 1: The winners are those that were well positioned before the 169 00:08:52,200 --> 00:08:54,800 Speaker 1: pandemic and a few companies that are having kind of 170 00:08:54,840 --> 00:08:57,400 Speaker 1: a dead cat bounce based on pent up demand. So 171 00:08:57,440 --> 00:09:05,479 Speaker 1: the biggest winners are Walmart, Target Home depot Loads, Amazon, Costco. 172 00:09:06,120 --> 00:09:10,280 Speaker 1: Giant retailers with broad assortments, the ability to navigate this 173 00:09:10,480 --> 00:09:13,960 Speaker 1: environment to get those goods on the floor, and consumers 174 00:09:13,960 --> 00:09:16,840 Speaker 1: have been flocking both to the physical stores for these 175 00:09:16,880 --> 00:09:20,200 Speaker 1: companies and to their websites, so they continue to grow 176 00:09:20,559 --> 00:09:23,200 Speaker 1: at tremendous rates. A few of the companies have done 177 00:09:23,200 --> 00:09:27,000 Speaker 1: well during the fall that you might not normally expect 178 00:09:27,000 --> 00:09:30,080 Speaker 1: strategically to be that will position people like a Macy's 179 00:09:30,160 --> 00:09:33,319 Speaker 1: or a Dillard's or a Coal's, you know, companies with 180 00:09:33,480 --> 00:09:37,000 Speaker 1: strong apparel businesses or apartment stores. But I warn you, 181 00:09:38,000 --> 00:09:41,360 Speaker 1: the pandemic does not fix a broken strategy. And so 182 00:09:41,480 --> 00:09:43,360 Speaker 1: some of what you're seeing here is that people were 183 00:09:43,400 --> 00:09:46,640 Speaker 1: not buying clothing during the pandemic. Now they're coming out 184 00:09:46,679 --> 00:09:49,360 Speaker 1: and they're buying those goods. Those are not long term 185 00:09:49,520 --> 00:09:53,080 Speaker 1: good bets. They have to revolutionize their business model to succeed. 186 00:09:53,840 --> 00:09:57,000 Speaker 1: That's quite different from the first companies I mentioned, who 187 00:09:57,040 --> 00:09:59,839 Speaker 1: already have a winning business model and are just putting 188 00:09:59,840 --> 00:10:03,480 Speaker 1: their foot on the acceleter and growing even faster. No 189 00:10:03,679 --> 00:10:07,280 Speaker 1: discussion of retail will be complete without mentioning Amazon. I'm sorry, 190 00:10:07,360 --> 00:10:10,360 Speaker 1: just have to go there, right And Amazon stock hasn't 191 00:10:10,400 --> 00:10:12,600 Speaker 1: done very much this year, and in some ways, I 192 00:10:12,600 --> 00:10:15,680 Speaker 1: think that's a huge opportunity because they continue to be 193 00:10:15,760 --> 00:10:20,280 Speaker 1: the class act of the dominant growth segment in retail, 194 00:10:20,559 --> 00:10:23,120 Speaker 1: which is e commerce. So, you know, whatever you may 195 00:10:23,160 --> 00:10:25,560 Speaker 1: think about Amazon one way or the other, back to 196 00:10:25,640 --> 00:10:28,760 Speaker 1: the politicians, everyone else trying to muck around their business. 197 00:10:29,000 --> 00:10:31,880 Speaker 1: They are the only one who can deliver consistently no 198 00:10:31,920 --> 00:10:34,679 Speaker 1: matter what happens everyone else's supply check. I want to 199 00:10:34,679 --> 00:10:36,480 Speaker 1: come back to Amazon before that just let me pick 200 00:10:36,520 --> 00:10:38,839 Speaker 1: up on something you said before, uh too or three 201 00:10:38,920 --> 00:10:41,920 Speaker 1: years ago, I had the impression that department stores, the 202 00:10:41,960 --> 00:10:46,160 Speaker 1: general departners were definitely in decline. Has this changed that 203 00:10:46,280 --> 00:10:48,959 Speaker 1: at all or will they remain in decline apart from 204 00:10:48,960 --> 00:10:50,800 Speaker 1: what you call the dead cat bounds. Well, I think 205 00:10:50,800 --> 00:10:53,400 Speaker 1: over the long term they're still in decline. In the 206 00:10:53,440 --> 00:10:56,080 Speaker 1: short term they've picked up quite nicely, but keep in 207 00:10:56,120 --> 00:10:59,280 Speaker 1: mind they've lost such massive amounts of market share that 208 00:10:59,360 --> 00:11:02,120 Speaker 1: when you look at the overall retail sells PIE, they're 209 00:11:02,160 --> 00:11:05,079 Speaker 1: actually kind of irrelevant already. The game is almost over. 210 00:11:05,600 --> 00:11:09,160 Speaker 1: You know, Sears has gone, Pennies went bankrupt. There's just 211 00:11:09,200 --> 00:11:10,920 Speaker 1: a shadow of what they used to be. You know, 212 00:11:10,960 --> 00:11:13,400 Speaker 1: you've got a few to learn and tailor and banker. 213 00:11:13,440 --> 00:11:15,440 Speaker 1: We just got a few of them left, and those 214 00:11:15,480 --> 00:11:17,600 Speaker 1: have not been growing significult. I mentioned that two years 215 00:11:17,600 --> 00:11:20,760 Speaker 1: stacked in growth that's up more than for retail sales 216 00:11:20,800 --> 00:11:23,199 Speaker 1: as a whole. The department stores are struggling that same 217 00:11:23,200 --> 00:11:25,800 Speaker 1: two years to get over ten percent growth, despite the 218 00:11:25,800 --> 00:11:27,720 Speaker 1: fact that no one was even buying anything from these stores. 219 00:11:27,760 --> 00:11:30,640 Speaker 1: They were deeply negative last year. So I don't see 220 00:11:30,679 --> 00:11:33,520 Speaker 1: this as a long term win. Uh. They will tell you, oh, look, 221 00:11:33,520 --> 00:11:37,600 Speaker 1: it proves our strategies are working. You know. Macy's will say, look, look, 222 00:11:37,640 --> 00:11:39,800 Speaker 1: it's just like what we did in Palario's, Ohio. You 223 00:11:39,800 --> 00:11:42,800 Speaker 1: know our model store. It's working everywhere. Now. Well, I 224 00:11:42,840 --> 00:11:46,120 Speaker 1: think they're fooling you know, almost no one but themselves 225 00:11:46,120 --> 00:11:49,160 Speaker 1: when they say that, because that isn't going to fix anything. 226 00:11:49,360 --> 00:11:51,520 Speaker 1: To fix a business like that, you have to change 227 00:11:51,520 --> 00:11:53,679 Speaker 1: who you are to the consumer. And let's be honest, 228 00:11:53,720 --> 00:11:57,079 Speaker 1: today's millennials do not want to shop where their grandparents shop. 229 00:11:57,200 --> 00:11:59,320 Speaker 1: They don't want to go to an apartment store. There 230 00:11:59,320 --> 00:12:01,839 Speaker 1: has to be more fundamental change. Jerry. Let's go back 231 00:12:01,840 --> 00:12:03,480 Speaker 1: to Amazon. As you say, you can't have a talk 232 00:12:03,480 --> 00:12:06,400 Speaker 1: about retail sales. The stags about talking about Amazon, and 233 00:12:06,480 --> 00:12:09,760 Speaker 1: I'd like a sense of to market shares. One is 234 00:12:10,200 --> 00:12:13,120 Speaker 1: e commerce versus bricks and water. What's going on there 235 00:12:13,160 --> 00:12:15,720 Speaker 1: is that continuous e commerce continue to grow as a 236 00:12:15,760 --> 00:12:19,520 Speaker 1: part of the pie overall, and secondly Amazon within the 237 00:12:19,600 --> 00:12:23,040 Speaker 1: e commerce section. Yeah, you have to look at it 238 00:12:23,080 --> 00:12:25,160 Speaker 1: again over that two year basis, because what we saw 239 00:12:25,240 --> 00:12:27,440 Speaker 1: with e commerce sales, let me start there, is that 240 00:12:27,720 --> 00:12:31,760 Speaker 1: they mushroom last year during the pandemic, uh, including key 241 00:12:31,800 --> 00:12:34,400 Speaker 1: times like the holiday period when when there was there 242 00:12:34,440 --> 00:12:36,280 Speaker 1: was still a lot of lockdowns. You remember that that 243 00:12:36,400 --> 00:12:39,400 Speaker 1: second wave that came last last holiday, so we were 244 00:12:39,400 --> 00:12:42,440 Speaker 1: forced online and you saw essentially a couple of years 245 00:12:42,480 --> 00:12:45,679 Speaker 1: of growth in in in that one year, and then 246 00:12:45,760 --> 00:12:47,880 Speaker 1: then people say, oh, look it's slowing down now. It's 247 00:12:47,920 --> 00:12:50,400 Speaker 1: not so much much up. You're here, but it's still 248 00:12:50,480 --> 00:12:53,480 Speaker 1: up versus that enormous multi year growth that occurred, so 249 00:12:53,760 --> 00:12:57,960 Speaker 1: that for all off retail, it's for eat commerce, so 250 00:12:57,960 --> 00:13:01,240 Speaker 1: it's growing forty and two years. There's still growth over 251 00:13:01,360 --> 00:13:04,840 Speaker 1: last year in that number. So it's still growing quite nicely, 252 00:13:04,920 --> 00:13:07,160 Speaker 1: thank you very much. Just the people have a choice 253 00:13:07,160 --> 00:13:09,480 Speaker 1: now to go to bricks and mortar retailing, and in 254 00:13:09,520 --> 00:13:11,720 Speaker 1: fact they're doing that, and so you see traffic counts 255 00:13:11,760 --> 00:13:14,520 Speaker 1: up in bricks and mortar stores versus last year as well. 256 00:13:14,559 --> 00:13:17,160 Speaker 1: Of course, during this period, bricks and mortar is gaining 257 00:13:17,200 --> 00:13:20,320 Speaker 1: back some of that sort of uh, you know, unsustainable 258 00:13:20,400 --> 00:13:24,000 Speaker 1: accelerated growth in e commerce share that took back took 259 00:13:24,000 --> 00:13:26,800 Speaker 1: place during the pandemic period, but over any kind of 260 00:13:26,840 --> 00:13:29,480 Speaker 1: reasonable time frame like that two year time frame, bricks 261 00:13:29,480 --> 00:13:32,640 Speaker 1: and mortar is still losing share overall to e commerce, 262 00:13:32,840 --> 00:13:35,000 Speaker 1: and the same thing is true of Amazon, while well, 263 00:13:35,160 --> 00:13:37,560 Speaker 1: certainly some of its competitors have gained. If you look 264 00:13:37,559 --> 00:13:39,400 Speaker 1: at what some of the competiers are doing there, they're 265 00:13:39,440 --> 00:13:41,719 Speaker 1: utilizing their omni channel or what I call the all 266 00:13:41,800 --> 00:13:44,439 Speaker 1: channel model to drive customers to the stores and do 267 00:13:44,559 --> 00:13:46,400 Speaker 1: in store pick up. You know, I do that a 268 00:13:46,440 --> 00:13:48,960 Speaker 1: lot with groceries at Walmart, which is the main growth 269 00:13:48,960 --> 00:13:51,240 Speaker 1: by the way, in Walmart's e commerce has been grocery 270 00:13:51,240 --> 00:13:53,760 Speaker 1: pickup in the store. So this hybrid model has been 271 00:13:53,760 --> 00:13:56,200 Speaker 1: where they're growing, which is smart and right and what 272 00:13:56,240 --> 00:13:59,040 Speaker 1: they need to do because it's leveraging their stores for 273 00:13:59,120 --> 00:14:03,400 Speaker 1: a competitive van age versus versus versus Amazon, which does 274 00:14:03,440 --> 00:14:06,840 Speaker 1: work and something there's perishable like like groceries. But overall, 275 00:14:06,880 --> 00:14:08,320 Speaker 1: if you're gonna take a look at the big guys 276 00:14:08,400 --> 00:14:12,480 Speaker 1: versus Amazon, they're all a fraction of Amazon size. You know, 277 00:14:13,080 --> 00:14:15,960 Speaker 1: Walmart is over between ten and fifteen percent of Amazon 278 00:14:16,080 --> 00:14:20,200 Speaker 1: size online, so it's really Amazon versus Amazon online. Everyone 279 00:14:20,240 --> 00:14:23,640 Speaker 1: else is picking up some pieces and building a complex 280 00:14:23,840 --> 00:14:26,520 Speaker 1: all channel model, great model, you know, the right model 281 00:14:26,600 --> 00:14:28,120 Speaker 1: for them, and some of them in the winners in 282 00:14:28,200 --> 00:14:30,680 Speaker 1: Metro and you just find, you know, get Walmart, Target, 283 00:14:31,040 --> 00:14:35,360 Speaker 1: you know that home Depot, Low's costco. These companies will 284 00:14:35,400 --> 00:14:38,040 Speaker 1: do great, you know with that, with that hybrid model. 285 00:14:38,200 --> 00:14:40,320 Speaker 1: But it doesn't mean Amazon is quaking in its boots 286 00:14:40,520 --> 00:14:42,680 Speaker 1: that they're gonna lose out an e commerce to these folks. 287 00:14:42,840 --> 00:14:44,520 Speaker 1: As I say, when it comes to retail, is nobody 288 00:14:44,520 --> 00:14:46,640 Speaker 1: we want to talk to more than Jerry Storge. Thank 289 00:14:46,640 --> 00:14:50,600 Speaker 1: you so much. Jerry. He is the CEO of Storch Advisors. 290 00:14:50,600 --> 00:14:53,760 Speaker 1: Coming up, we talked with special contributor Larry Summers about 291 00:14:53,760 --> 00:14:56,400 Speaker 1: the future of the Fed now that we know who 292 00:14:56,400 --> 00:14:59,200 Speaker 1: will be leading it. That's next on Wall Street Week 293 00:14:59,440 --> 00:15:07,720 Speaker 1: on bloom The following edition of Bloomberg's Wall Street Week 294 00:15:07,880 --> 00:15:12,760 Speaker 1: was recorded ahead of the Thanksgiving holiday. This is Bloomberg 295 00:15:12,840 --> 00:15:16,960 Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. I'm 296 00:15:17,000 --> 00:15:21,000 Speaker 1: nominating Jerome Paul for second term as Chair the Federal Reserve, 297 00:15:21,720 --> 00:15:24,920 Speaker 1: and I'm not I'm not. I'm nominating Leo Brainer to 298 00:15:25,000 --> 00:15:28,080 Speaker 1: take the positions vice Chair of the Federal Reserve. At 299 00:15:28,120 --> 00:15:32,840 Speaker 1: this moment, both of both enormous potential and enormous uncertainty 300 00:15:32,840 --> 00:15:36,360 Speaker 1: for our economy, we need stability and independence at the 301 00:15:36,400 --> 00:15:41,080 Speaker 1: Federal Reserve. Jay has proven the independence that I value 302 00:15:41,080 --> 00:15:43,800 Speaker 1: in the Federal chair, in the FED chair. One of 303 00:15:43,800 --> 00:15:47,240 Speaker 1: those who expressed its support for President Biden's decision was 304 00:15:47,320 --> 00:15:49,720 Speaker 1: Larry Summers, our very own special contributor here on Wall 305 00:15:49,760 --> 00:15:52,640 Speaker 1: Street Week, former treasure Secretary of course, now with Harvard. 306 00:15:52,760 --> 00:15:54,920 Speaker 1: So Larry, thanks so much for being back with us. 307 00:15:55,200 --> 00:15:57,920 Speaker 1: Give us what you took away from this announcement and 308 00:15:57,960 --> 00:16:01,000 Speaker 1: what was said around the announcement perhaps even as important 309 00:16:01,080 --> 00:16:03,440 Speaker 1: as the announcement itself. So I think the President made 310 00:16:03,440 --> 00:16:06,400 Speaker 1: a good choice. J. Powell, in the fullness of it all, 311 00:16:06,400 --> 00:16:10,320 Speaker 1: has done an excellent job at the FED. Lloyd Layo 312 00:16:10,440 --> 00:16:16,600 Speaker 1: Brainerd is an experienced and capable monetary policy operator. I 313 00:16:16,600 --> 00:16:18,600 Speaker 1: think it's a good team. It's a team that will 314 00:16:18,600 --> 00:16:23,000 Speaker 1: have some creative tension in areas like regulation, in areas 315 00:16:23,080 --> 00:16:25,440 Speaker 1: like the environment. But I think it's a very good 316 00:16:25,480 --> 00:16:27,920 Speaker 1: team at the helm of the FED. And I was 317 00:16:28,000 --> 00:16:33,120 Speaker 1: glad to see the President's choice. I was equally glad 318 00:16:33,200 --> 00:16:37,280 Speaker 1: to see what the President said in announcing them, what 319 00:16:37,760 --> 00:16:43,360 Speaker 1: UH Chairman Powell said, what nominated vice chair Brainers said, 320 00:16:43,880 --> 00:16:47,400 Speaker 1: because they all recognized what has been true for some 321 00:16:47,520 --> 00:16:52,400 Speaker 1: time that overheating and inflation are right now the central 322 00:16:52,440 --> 00:16:57,200 Speaker 1: macroeconomic problems facing the American economy, and there was no 323 00:16:57,280 --> 00:17:01,880 Speaker 1: good outcome for the American population, for the American middle 324 00:17:01,960 --> 00:17:05,920 Speaker 1: class that is so dear to President Biden without taking 325 00:17:06,000 --> 00:17:11,640 Speaker 1: steps to get inflation under control. And I think that 326 00:17:11,720 --> 00:17:15,320 Speaker 1: the rhetoric you saw from Chairman Powell and Vice chair 327 00:17:15,359 --> 00:17:20,080 Speaker 1: Brainer portends a new era here for the FED. I 328 00:17:20,080 --> 00:17:23,400 Speaker 1: think the question the Fed is now managing is not 329 00:17:23,960 --> 00:17:27,960 Speaker 1: do we have an overheating problem? Can we uh bet 330 00:17:28,000 --> 00:17:31,679 Speaker 1: with team Transitory? They know we do have an overheating 331 00:17:31,720 --> 00:17:36,199 Speaker 1: problem and that they can't place their bet with Team Transitory. 332 00:17:36,240 --> 00:17:40,280 Speaker 1: They've got a new problem, and it's a very complicated one, 333 00:17:40,359 --> 00:17:43,880 Speaker 1: and I very much hope they'll be very thoughtful about 334 00:17:43,920 --> 00:17:46,880 Speaker 1: it because there are no easy answers. The new problem 335 00:17:46,920 --> 00:17:51,119 Speaker 1: is how do you land this economy? Uh softly? That 336 00:17:51,200 --> 00:17:54,960 Speaker 1: got corroborated by the numbers we saw. The PC deflator 337 00:17:55,080 --> 00:17:58,800 Speaker 1: was very strong. Even more important, the income and spending 338 00:17:58,880 --> 00:18:02,200 Speaker 1: numbers were wronger than we expected. The revision of the 339 00:18:02,280 --> 00:18:07,679 Speaker 1: national accounts revised upwards how much incomes consumers had. That 340 00:18:07,720 --> 00:18:11,200 Speaker 1: means it revised upwards how much pent up savings ready 341 00:18:11,200 --> 00:18:15,720 Speaker 1: to spend, uh they have, So all the numbers are 342 00:18:15,840 --> 00:18:20,360 Speaker 1: pointing towards a lot of strength. All the numbers are 343 00:18:20,400 --> 00:18:24,560 Speaker 1: pointing towards limited capacity. You know, we've been saying for 344 00:18:24,600 --> 00:18:29,360 Speaker 1: a long time now that vacancies are record highs, quits 345 00:18:29,600 --> 00:18:34,120 Speaker 1: are record highs. We got another number in that direction 346 00:18:34,320 --> 00:18:39,240 Speaker 1: unemployment insurance claims lowest since nineteen sixty nine. And of 347 00:18:39,280 --> 00:18:41,240 Speaker 1: course we've got a lot more people than we did 348 00:18:41,600 --> 00:18:45,920 Speaker 1: uh then, so that makes it an even stronger uh statement. 349 00:18:46,320 --> 00:18:55,240 Speaker 1: So we're looking at a challenge of slowing and overheating economy, 350 00:18:55,840 --> 00:18:59,280 Speaker 1: and we know, we know from the research of a 351 00:18:59,400 --> 00:19:04,600 Speaker 1: number of people that that's a very difficult uh thing 352 00:19:05,240 --> 00:19:11,720 Speaker 1: uh for a central bank to do. It's particularly difficult when, frankly, 353 00:19:11,800 --> 00:19:16,639 Speaker 1: it's late to the party to recognize the overheating, and 354 00:19:17,119 --> 00:19:22,560 Speaker 1: when they have only an instrument monetary policy that works 355 00:19:22,680 --> 00:19:27,960 Speaker 1: quite slowly through the economy with lags of nine months 356 00:19:28,320 --> 00:19:34,000 Speaker 1: uh to a year. The Fed very foolishly asserted that 357 00:19:34,200 --> 00:19:39,239 Speaker 1: it wouldn't uh ever start raising monetary policy until we 358 00:19:39,240 --> 00:19:43,600 Speaker 1: were at full employment, which given the lags, was much 359 00:19:43,640 --> 00:19:47,679 Speaker 1: too strong a statement. And they're gonna have to figure 360 00:19:47,720 --> 00:19:52,159 Speaker 1: out how to maneuver within their framework, which when it 361 00:19:52,240 --> 00:19:57,399 Speaker 1: was put forward, didn't contemplate anything like uh, this moment 362 00:19:58,480 --> 00:20:04,240 Speaker 1: to provide the necessary gradual restraint. If they overdo it 363 00:20:04,359 --> 00:20:09,520 Speaker 1: on restraint, UH, the economy could easily tip over, especially 364 00:20:09,520 --> 00:20:13,760 Speaker 1: given how much euphoria there is built into markets. So 365 00:20:13,800 --> 00:20:16,480 Speaker 1: it's not going to be an easy uh set of 366 00:20:16,520 --> 00:20:21,000 Speaker 1: maneuvers for the Fed. But they now I think recognize 367 00:20:21,040 --> 00:20:24,160 Speaker 1: what they're dealing with in a way that is recently, 368 00:20:24,160 --> 00:20:26,440 Speaker 1: as a couple of months ago in Jackson Hall, they 369 00:20:26,480 --> 00:20:28,400 Speaker 1: did not Okay, they We're gonna ask you to stay 370 00:20:28,400 --> 00:20:30,520 Speaker 1: with us if you would please, because as important as 371 00:20:30,560 --> 00:20:33,040 Speaker 1: that monetary policy is and the Federal Reserve, there are 372 00:20:33,040 --> 00:20:35,520 Speaker 1: also issues on the fiscal side, and there's a question 373 00:20:35,560 --> 00:20:38,040 Speaker 1: whether the Body desision needs to make something a mid 374 00:20:38,080 --> 00:20:41,119 Speaker 1: course correction on fiscal policy. We're gonna ask Larry Summers, 375 00:20:41,119 --> 00:20:43,800 Speaker 1: our special contributor on the walls are coming up. That's 376 00:20:43,800 --> 00:20:51,119 Speaker 1: coming up next on Wall Street Week on Bloomberg. This 377 00:20:51,400 --> 00:20:55,879 Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 378 00:20:56,359 --> 00:20:59,360 Speaker 1: We've talked about the Fed and montery policy. Let's turn 379 00:20:59,400 --> 00:21:02,040 Speaker 1: out a Phis school policy. The Bud administration now at 380 00:21:02,040 --> 00:21:04,000 Speaker 1: the end of its first year, must be thinking a 381 00:21:04,040 --> 00:21:06,320 Speaker 1: little bit about whether there are any mid course corrections 382 00:21:06,320 --> 00:21:08,720 Speaker 1: it might make, specifically on the question of inflation that 383 00:21:08,760 --> 00:21:11,280 Speaker 1: Larry Summers has talked so often about. Larry Summers, our 384 00:21:11,320 --> 00:21:14,679 Speaker 1: special contributor has remained with us. So Larry, what about 385 00:21:14,800 --> 00:21:17,159 Speaker 1: what the administration could do, put aside the FED, with 386 00:21:17,240 --> 00:21:20,760 Speaker 1: the administration could do on the front of inflation. So look, 387 00:21:20,840 --> 00:21:22,920 Speaker 1: I think we need to be honest and we need 388 00:21:22,960 --> 00:21:28,600 Speaker 1: to recognize that the main action, the overwhelming action, is 389 00:21:28,640 --> 00:21:32,520 Speaker 1: with monetary policy, and it's with the overall posture of 390 00:21:32,560 --> 00:21:36,640 Speaker 1: fiscal policy. The overall posture of fiscal policy has been 391 00:21:36,720 --> 00:21:44,159 Speaker 1: substantially set, unfortunately set by the mistakenly large fiscal stimulus 392 00:21:44,200 --> 00:21:50,720 Speaker 1: that was enacted at the beginning of the administration's moving 393 00:21:50,800 --> 00:21:55,960 Speaker 1: towards doing uh the right things. The SPRO release was 394 00:21:56,000 --> 00:22:00,800 Speaker 1: probably a constructive step. But as we saw, they released 395 00:22:00,920 --> 00:22:05,480 Speaker 1: the SPRO and immediately after the SPRO release the price 396 00:22:05,520 --> 00:22:08,760 Speaker 1: of oil actually went up. That's because the release was 397 00:22:08,800 --> 00:22:12,720 Speaker 1: a little smaller than many people expected. It's because, unlike 398 00:22:13,320 --> 00:22:18,560 Speaker 1: after Libya, the Europeans didn't join in the SPRO release. 399 00:22:19,000 --> 00:22:22,000 Speaker 1: It's because the whole thing had been widely telegraphed for 400 00:22:22,040 --> 00:22:26,040 Speaker 1: the last few weeks. So probably if this whole SPRO 401 00:22:26,240 --> 00:22:29,600 Speaker 1: thing had not happened, oil would be a few dollars higher. 402 00:22:29,960 --> 00:22:32,399 Speaker 1: But we've kind of done it, and we are where 403 00:22:32,440 --> 00:22:35,960 Speaker 1: we are where we are. I think the administration should 404 00:22:36,000 --> 00:22:40,560 Speaker 1: do what it can to encourage UH oil supply UH 405 00:22:40,600 --> 00:22:43,480 Speaker 1: in the United States. But I think it's mostly developments 406 00:22:43,480 --> 00:22:47,840 Speaker 1: in capital markets, UH, not public policies that are driving 407 00:22:48,320 --> 00:22:51,240 Speaker 1: where we are on oil. So I was just gonna say, 408 00:22:51,280 --> 00:22:53,879 Speaker 1: just to be clear, SPRO is the strategic patrolling reserve 409 00:22:54,080 --> 00:22:56,040 Speaker 1: some people who are in this conversion with this as 410 00:22:56,080 --> 00:22:58,480 Speaker 1: you are, but you low hanging food. I was gonna 411 00:22:58,480 --> 00:23:01,280 Speaker 1: ask about other possible railitary las, such as tariff relief, 412 00:23:01,320 --> 00:23:03,960 Speaker 1: for example. So I think the administration does need to 413 00:23:04,000 --> 00:23:09,040 Speaker 1: find its way to more rapid action on tariffs. I 414 00:23:09,080 --> 00:23:13,520 Speaker 1: think it's plausible that they could take UH up to 415 00:23:14,160 --> 00:23:17,639 Speaker 1: half a percent, maybe even one percent out of the 416 00:23:17,680 --> 00:23:22,560 Speaker 1: inflation rate over the next eighteen months with properly strategic 417 00:23:22,920 --> 00:23:28,399 Speaker 1: UH tariff reform, But that's gonna require UH them to 418 00:23:29,480 --> 00:23:34,640 Speaker 1: adopt a more forward looking attitude towards trade than they 419 00:23:34,680 --> 00:23:38,000 Speaker 1: have already. I think if they could emphasize by cheap 420 00:23:38,119 --> 00:23:43,000 Speaker 1: rather than buy America. That would be UH constructive as well. 421 00:23:43,480 --> 00:23:46,800 Speaker 1: I think as they look at their various regulatory agendas, 422 00:23:47,080 --> 00:23:50,480 Speaker 1: they need to think about which ones are imposing costs 423 00:23:50,520 --> 00:23:57,720 Speaker 1: on business and be careful. These are all steps that UM, 424 00:23:57,760 --> 00:24:03,720 Speaker 1: I think are sign effigant UM, but they're not ultimately 425 00:24:03,760 --> 00:24:08,320 Speaker 1: what is going to determine uh the outcome. And while 426 00:24:08,359 --> 00:24:11,480 Speaker 1: I've tried to speak to them, I think it's very 427 00:24:11,560 --> 00:24:17,520 Speaker 1: important not to divert attention from the central issue, which 428 00:24:17,720 --> 00:24:24,160 Speaker 1: is the management of demand and the recognition of overheating. 429 00:24:24,720 --> 00:24:30,200 Speaker 1: The truth is that we don't have slack in our 430 00:24:30,280 --> 00:24:35,680 Speaker 1: labor market today, and there isn't room for more demand 431 00:24:35,760 --> 00:24:42,320 Speaker 1: to employ more people without unsustainable inflation. And that's I 432 00:24:42,400 --> 00:24:46,320 Speaker 1: wish it was otherwise. The people who say that more 433 00:24:46,359 --> 00:24:51,520 Speaker 1: demand does enormously good things for disadvantaged people are absolutely correct. 434 00:24:52,160 --> 00:24:54,960 Speaker 1: But you have to do things that are sustainable if 435 00:24:54,960 --> 00:24:58,240 Speaker 1: you want them to be sustained. And we're in the 436 00:24:58,400 --> 00:25:02,400 Speaker 1: unsustainable place right now in terms of how hard we're 437 00:25:02,440 --> 00:25:05,800 Speaker 1: pushing and pressing the economy. Let me ask about one 438 00:25:05,800 --> 00:25:09,160 Speaker 1: other regulatory initiative potential we've heard present Biden more than 439 00:25:09,160 --> 00:25:10,920 Speaker 1: once that he wants the FTC to look into the 440 00:25:10,960 --> 00:25:13,959 Speaker 1: oil companies whether they're gouging right now, if I can 441 00:25:13,960 --> 00:25:16,080 Speaker 1: put it that way, because the price of oil going 442 00:25:16,119 --> 00:25:18,080 Speaker 1: down has not been reflected at the pump. There are 443 00:25:18,119 --> 00:25:20,879 Speaker 1: reports from Bloomberg and elsewhere that perhaps the administration is 444 00:25:20,880 --> 00:25:24,000 Speaker 1: thinking about a broader arranging use of antitrust and perhaps 445 00:25:24,000 --> 00:25:27,119 Speaker 1: other laws and regulations to really go after people that 446 00:25:27,160 --> 00:25:30,760 Speaker 1: they think are passing along price increases. Does that make sense? Look, 447 00:25:31,760 --> 00:25:35,359 Speaker 1: we need stricter antitrust enforcement in America. One of the 448 00:25:35,400 --> 00:25:38,320 Speaker 1: things I'm encouraged by about the Biden administration is that 449 00:25:38,359 --> 00:25:42,560 Speaker 1: they're going to bring us stricter enforcement of the antitrust 450 00:25:42,680 --> 00:25:47,080 Speaker 1: law in America. That is a very important thing. Where 451 00:25:47,080 --> 00:25:53,320 Speaker 1: there are abuses, they should be corrected. If anybody thinks 452 00:25:54,040 --> 00:25:58,880 Speaker 1: that gouging is an important cause of our current inflation, 453 00:25:59,680 --> 00:26:05,920 Speaker 1: they are dead wrong. And a policy approach to inflation 454 00:26:06,560 --> 00:26:11,760 Speaker 1: that put some theory of gouging or exploitation or bad 455 00:26:11,840 --> 00:26:18,960 Speaker 1: corporate behavior at uh the center of policy would be 456 00:26:19,000 --> 00:26:23,800 Speaker 1: economic iver mactin It would be a dangerous and false 457 00:26:24,400 --> 00:26:31,440 Speaker 1: diagnosis and prescription for a very real and serious problem. 458 00:26:31,480 --> 00:26:35,120 Speaker 1: I think the administration won't go that way. I certainly 459 00:26:35,200 --> 00:26:39,480 Speaker 1: hope it will UH not go that way, and if 460 00:26:39,520 --> 00:26:43,960 Speaker 1: it does, it will be a very dangerous sign that 461 00:26:44,440 --> 00:26:50,960 Speaker 1: they are overly responsive to the hard Democratic left, which 462 00:26:51,240 --> 00:26:53,280 Speaker 1: I have to say, I think has been the source 463 00:26:54,000 --> 00:26:59,159 Speaker 1: of many of their difficulties. Larry, when we turn back 464 00:26:59,240 --> 00:27:01,439 Speaker 1: next week to the Build Back Better Plan, we'll have 465 00:27:01,440 --> 00:27:03,640 Speaker 1: Congress back in session. They're gonna be negotiating its more 466 00:27:03,720 --> 00:27:05,880 Speaker 1: some more. You said, you don't think I'm balanced, it's 467 00:27:05,920 --> 00:27:07,800 Speaker 1: that bad on the inflation front. You think there are 468 00:27:07,800 --> 00:27:09,480 Speaker 1: a lot of good things in there, but what could 469 00:27:09,520 --> 00:27:11,200 Speaker 1: be done to improve it from your point of view. 470 00:27:11,320 --> 00:27:13,680 Speaker 1: Let me be very clear, if I had to vote 471 00:27:13,800 --> 00:27:18,080 Speaker 1: up or down on it, I would definitely vote up. 472 00:27:18,880 --> 00:27:22,560 Speaker 1: Let me be equally clear that I think over time 473 00:27:22,640 --> 00:27:28,200 Speaker 1: it will make substantial contributions to making American society UM 474 00:27:28,400 --> 00:27:34,920 Speaker 1: both richer and UH fairer and more sustainable in its 475 00:27:35,080 --> 00:27:40,399 Speaker 1: environmental impacts. That's said, I'd be more comfortable with with 476 00:27:40,520 --> 00:27:44,479 Speaker 1: the measure, David if there wasn't quite as much fiscal 477 00:27:44,560 --> 00:27:47,560 Speaker 1: stimulus in the first few years. And I think it's 478 00:27:47,600 --> 00:27:50,520 Speaker 1: an easy way to achieve that. The state and local 479 00:27:50,520 --> 00:27:54,399 Speaker 1: deduction UH the increases in the state and local deduction 480 00:27:54,960 --> 00:27:59,879 Speaker 1: that were not in the administration's proposal, but we're inserted 481 00:28:00,040 --> 00:28:05,240 Speaker 1: in the House of Representatives. Are I believe UH misguided. 482 00:28:05,960 --> 00:28:10,520 Speaker 1: They are retroactive, and one thing we know is that 483 00:28:10,560 --> 00:28:16,320 Speaker 1: retroactive tax increases don't have any positive incentive effects. They 484 00:28:16,400 --> 00:28:20,800 Speaker 1: give relief to people like you and me, who are 485 00:28:20,800 --> 00:28:24,120 Speaker 1: not the people who really need help in our economy. 486 00:28:24,400 --> 00:28:28,680 Speaker 1: I mean, there is something wrong. There is something deeply 487 00:28:28,800 --> 00:28:37,040 Speaker 1: wrong with a democratic revenue raising measure that cuts the 488 00:28:37,240 --> 00:28:41,080 Speaker 1: taxes of people like you and me, who are almost 489 00:28:41,120 --> 00:28:45,280 Speaker 1: certainly in the top tenth of one percent because we've 490 00:28:45,280 --> 00:28:50,160 Speaker 1: been very lucky and fortunate of the income distribution, and 491 00:28:50,200 --> 00:28:54,240 Speaker 1: we could make that better by scaling way back the 492 00:28:54,280 --> 00:28:58,760 Speaker 1: state and local deduction UH proposal. And in the process 493 00:28:59,240 --> 00:29:04,440 Speaker 1: of UH doing that, we would also reduce the inflationary 494 00:29:04,440 --> 00:29:07,040 Speaker 1: pressure that we come from the bill. So, Larry, it's 495 00:29:07,120 --> 00:29:09,200 Speaker 1: clear to me, I think to everyone at this point 496 00:29:09,280 --> 00:29:12,400 Speaker 1: that many people have moved in your direction. You were 497 00:29:12,560 --> 00:29:14,920 Speaker 1: very early on saying we're putting too much money in 498 00:29:14,960 --> 00:29:18,320 Speaker 1: the fiscal stimulus in the last package, you're gonna have inflation. 499 00:29:18,520 --> 00:29:21,200 Speaker 1: We now have inflation without a doubt. But I wonder 500 00:29:21,280 --> 00:29:23,840 Speaker 1: if you are that confident that everyone agrees with you 501 00:29:23,880 --> 00:29:26,080 Speaker 1: that there's going to be overheating. That really needs to 502 00:29:26,120 --> 00:29:28,360 Speaker 1: be addressed right now, because we do have some people. 503 00:29:28,360 --> 00:29:30,120 Speaker 1: We talked to Paul Grougwin. You and I talked about 504 00:29:30,160 --> 00:29:31,880 Speaker 1: him regularly here. You know him well, I know you 505 00:29:31,960 --> 00:29:34,160 Speaker 1: respect him. We talked to him this week and he said, yes, 506 00:29:34,200 --> 00:29:37,240 Speaker 1: absolutely's inflation. Yes there should be tapering. But we've got 507 00:29:37,240 --> 00:29:39,920 Speaker 1: two or three factors that make us less concerned about it. 508 00:29:40,000 --> 00:29:43,960 Speaker 1: Number one is fiscal stimulus is working its way out. Necessarily, 509 00:29:44,160 --> 00:29:46,720 Speaker 1: we're gonna be contracting on the fiscal simulus given where 510 00:29:46,720 --> 00:29:49,760 Speaker 1: we were. We've got a COVID out there that's undetermined, 511 00:29:49,880 --> 00:29:52,040 Speaker 1: and in fact, the supply chain thing is getting better. 512 00:29:52,160 --> 00:29:54,200 Speaker 1: So there are some people who think, yes, there's a problem, 513 00:29:54,440 --> 00:29:57,360 Speaker 1: but it may solve itself to some extent. Paul's been 514 00:29:57,480 --> 00:30:02,520 Speaker 1: wishful thinking on this for nine months, and I think 515 00:30:02,520 --> 00:30:07,520 Speaker 1: he still is. With respect to the fiscal policy, we've 516 00:30:07,520 --> 00:30:11,560 Speaker 1: still got very substantial levels of spending to come from 517 00:30:11,600 --> 00:30:15,320 Speaker 1: the fiscal policy we've already done, and we've got new 518 00:30:15,360 --> 00:30:18,480 Speaker 1: fiscal legislation that will increase the deficit by a hundred 519 00:30:18,520 --> 00:30:23,200 Speaker 1: and sixty uh billion dollars in the legislation if it's 520 00:30:23,240 --> 00:30:28,880 Speaker 1: not amended UH in UH the Senate. The forecasts which 521 00:30:28,960 --> 00:30:33,680 Speaker 1: call for continued reductions of a substantial magnitude and unemployment 522 00:30:34,120 --> 00:30:38,720 Speaker 1: even given the super high vacancy rates, so further tightening 523 00:30:39,080 --> 00:30:43,800 Speaker 1: already assume all that Paul is saying about UH the 524 00:30:43,840 --> 00:30:47,640 Speaker 1: fiscal policy. So I think he's pretty unlikely UH to 525 00:30:47,760 --> 00:30:51,960 Speaker 1: turn out to be UH right in his UH fiscal 526 00:30:52,040 --> 00:30:54,320 Speaker 1: policy argument. And excuse me, David, what was the other 527 00:30:54,400 --> 00:30:58,760 Speaker 1: argument that you cited. Oh, look, nobody knows. Nobody knows 528 00:30:58,840 --> 00:31:01,720 Speaker 1: what's going to happen about COVID. What's kind of remarkable 529 00:31:02,200 --> 00:31:06,320 Speaker 1: about people like Paul and some of the others who 530 00:31:06,600 --> 00:31:11,320 Speaker 1: have just I think been UH deniers and hopers on 531 00:31:11,480 --> 00:31:14,240 Speaker 1: this is that if COVID is bad, they think that's 532 00:31:14,240 --> 00:31:17,920 Speaker 1: a reason for more stimulus, because we need to support 533 00:31:18,000 --> 00:31:21,000 Speaker 1: the economy through COVID, And if COVID is good and 534 00:31:21,080 --> 00:31:23,680 Speaker 1: goes away, they think that's a reason for more stimulus 535 00:31:23,720 --> 00:31:26,640 Speaker 1: because we're gonna get more supply. And they try to 536 00:31:26,680 --> 00:31:28,640 Speaker 1: have it, and they try to have it every which way. 537 00:31:28,880 --> 00:31:30,680 Speaker 1: Thank you so much, Larry. I always a treat to 538 00:31:30,720 --> 00:31:33,480 Speaker 1: have you with us. That's Larry Summers of Harvard. That 539 00:31:33,600 --> 00:31:35,520 Speaker 1: does it. For this episode of Wall Street Week, I'm 540 00:31:35,560 --> 00:31:38,160 Speaker 1: David Weston. This is Bloomberg. See you next week.