WEBVTT - Ken Burns Says We've Grown Numb to Violence 0:00:09.720 --> 0:00:12.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 0:00:13.600 --> 0:00:16.520 David Gura. Daily we bring you insight from the best 0:00:16.560 --> 0:00:22.239 of economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:22.320 --> 0:00:27.000 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 0:00:27.320 --> 0:00:35.200 on the Bloomberg David Gurn Tom Keen on a difficult 0:00:35.280 --> 0:00:39.280 Monday morning, of course America. Of course, last night about 0:00:39.360 --> 0:00:42.720 ten pm, Las Vegas time, one am. I believe that 0:00:42.840 --> 0:00:47.240 is David wall Street time. Horrific shooting in Las Vegas 0:00:47.320 --> 0:00:50.800 with us now, uh for a generous uh in good 0:00:50.840 --> 0:00:54.560 half hours, Robert for fuseck of Jones Day and uh, Bob. 0:00:54.760 --> 0:00:57.160 The normal discussion with you would be M and A 0:00:57.320 --> 0:00:59.200 and finance, and I guess we can do that here 0:00:59.200 --> 0:01:02.320 in a bit or in our next section. Jones Day 0:01:02.400 --> 0:01:06.240 is well in excess of two thousand lawyers worldwide, truly 0:01:06.280 --> 0:01:10.560 worldwide and one of your jewels. As Peter Canfield of Atlanta. 0:01:10.600 --> 0:01:14.360 I should point out that Mr Canfield has represented Bloomberg 0:01:14.360 --> 0:01:18.240 guilp on various matters and he is a leader in 0:01:18.480 --> 0:01:22.920 thinking about guns safety. Um, it's not something Bob, I'm 0:01:22.959 --> 0:01:26.240 assuming you're up to speed. On the minutia of us. 0:01:26.280 --> 0:01:30.880 But where does the legal business fit into this only 0:01:30.959 --> 0:01:34.640 in America debate that we have about guns just framed 0:01:34.680 --> 0:01:38.959 for us. Where lawyers fit in to the debate that 0:01:39.040 --> 0:01:42.279 we're going to once again have over the next number 0:01:42.319 --> 0:01:46.200 of days. Well, I think they basically line up just 0:01:46.319 --> 0:01:49.760 where their politics line up. Um. I don't understand personally 0:01:49.840 --> 0:01:52.600 why this is a political issue, but it's been been 0:01:52.640 --> 0:01:57.360 that for gosh for decades, and you're gonna be expected 0:01:57.360 --> 0:02:04.080 to continue. There was a a an effort to uh 0:02:04.480 --> 0:02:07.960 get the gun control through litigation a few years ago. 0:02:08.040 --> 0:02:12.080 It actually kind of on the tobacco model of taking 0:02:12.120 --> 0:02:14.919 on the gun manufacturers in the ground they were producing 0:02:14.960 --> 0:02:18.639 an inherently dangerous product that didn't really go anywhere in 0:02:18.680 --> 0:02:21.880 the courts. Um. So it's not something that's gonna be 0:02:22.520 --> 0:02:24.680 gonna be dealt with in litigation. It will be the 0:02:24.720 --> 0:02:28.520 political issue. I hate to be negative about it, but 0:02:28.560 --> 0:02:32.240 obviously the the lobbying has has kept things from happening 0:02:32.360 --> 0:02:34.520 very much is particularly on a federal level. I mean, 0:02:34.720 --> 0:02:38.320 the cynic of it all is twenty six dead in Connecticut, 0:02:38.360 --> 0:02:41.560 which clearly has a local tinge to our New York audience. 0:02:41.600 --> 0:02:45.720 And maybe you know, we shouldn't focus on that versus Danville, California. 0:02:46.360 --> 0:02:50.720 But now this horrific event in Las Vegas. From where 0:02:50.800 --> 0:02:55.600 you sit, what is the power of those that want 0:02:55.600 --> 0:02:59.639 to protect firearms? Is the romance they talk about that 0:02:59.720 --> 0:03:03.600 those weren't firearms in that video this morning, that we 0:03:03.639 --> 0:03:07.440 saw people dying in Las Vegas, that was warfare. Well, 0:03:07.520 --> 0:03:11.160 sometimes you know, incidents like that can change people's perspectives. 0:03:11.200 --> 0:03:14.320 And when you listened to that continue the automatic weapon 0:03:14.440 --> 0:03:18.200 could continuing to discharge, you thought, is this a gun 0:03:18.400 --> 0:03:21.000 or is this a weapon? And maybe if there are 0:03:21.160 --> 0:03:25.960 people started drawing that distinction. Uh, there's a possibility of 0:03:25.960 --> 0:03:29.400 of taking a different perspective. I suspect this may be 0:03:29.560 --> 0:03:32.400 something more likely to be dealt with state by state 0:03:32.440 --> 0:03:35.240 than on a federal level. There's just too much paralysis 0:03:35.240 --> 0:03:39.400 in Washington over the most basic of issues. And you know, 0:03:39.440 --> 0:03:42.960 the pro the anti gun lobby didn't have much, didn't 0:03:42.960 --> 0:03:46.280 have much lobby, and r A and other people can lobby. 0:03:46.360 --> 0:03:48.680 And I would say, David, and I don't say this 0:03:48.720 --> 0:03:52.200 with any expertise or authority. The video and audio attached 0:03:52.200 --> 0:03:55.400 to it that we ran on Bloomberg Television, this morning. 0:03:55.480 --> 0:03:58.680 I was stunned because I had not seen it until 0:03:58.680 --> 0:04:01.800 we went to air, and I was just thunderstruck by 0:04:01.840 --> 0:04:05.200 the immediacy of the video that America wakes up to 0:04:05.320 --> 0:04:08.040 this morning. Yeah, I think Bomb's right. I think people 0:04:08.080 --> 0:04:10.480 are gonna be reckoning with that today and throughout the 0:04:10.480 --> 0:04:13.400 week and beyond. And certainly something that has changed is 0:04:13.400 --> 0:04:16.960 the availability of audio and video of incidents like these. 0:04:16.960 --> 0:04:19.760 It certainly changes. I think how one process is begins 0:04:19.800 --> 0:04:23.239 to process what happened here, probably pivot if I could, 0:04:23.279 --> 0:04:25.840 and and and go to something more mundane as as 0:04:25.920 --> 0:04:27.960 that Tom said at the top, that is, uh, what 0:04:28.040 --> 0:04:29.760 we we focus on here day in and day out 0:04:29.760 --> 0:04:33.200 in light of what we've been falling overnight. Just get 0:04:33.240 --> 0:04:34.560 us up to speed on sort of what the this 0:04:34.680 --> 0:04:36.719 environment looks like for deal making. There's a lot of 0:04:36.720 --> 0:04:38.599 conversation here about what the fete is going to look like, 0:04:38.600 --> 0:04:40.520 what's going to happen to interest rates? So we continue 0:04:40.520 --> 0:04:43.960 to follow that on Bloomberg surveillance, of course, how is that? 0:04:44.120 --> 0:04:46.760 How is the conversation about interest rates shaping a company's 0:04:46.760 --> 0:04:49.760 appetites for for deal making? Here in two thousand seventeen, well, 0:04:49.880 --> 0:04:53.200 equity capital is getting very expensive, but that debt capital 0:04:53.240 --> 0:04:59.000 is basically free. I mean for high high end credit, 0:04:59.360 --> 0:05:02.599 it's it's effectively free. When you think of the amount 0:05:02.600 --> 0:05:06.640 of debt that will be taken down for the Time 0:05:06.680 --> 0:05:10.320 Warner deal, for example, it's it's almost like going to 0:05:10.520 --> 0:05:12.039 the A T M for a T N T to 0:05:12.080 --> 0:05:15.719 do that deal. So it's pretty extraordinary. And that there 0:05:15.839 --> 0:05:18.000 is going to be some pressure when there is a 0:05:18.040 --> 0:05:21.640 perspective that those rates will actually change normalize. I'm not 0:05:21.680 --> 0:05:24.080 sure I know what normal means for the debt markets anymore, 0:05:24.440 --> 0:05:26.760 but get get higher up, that's gonna put some pressure. 0:05:26.960 --> 0:05:30.880 The biggest issue though, is we talked about it earlier 0:05:30.880 --> 0:05:33.640 on the on TV, is is getting rid of the 0:05:33.760 --> 0:05:38.200 uncertainty about taxation. It isn't that that there'll be repatriation, 0:05:38.240 --> 0:05:40.560 although that would be stimulative, or that there will be 0:05:40.640 --> 0:05:42.840 lower rates that would be stimulative as well. Is that 0:05:43.160 --> 0:05:45.640 some of the other stuff is off the table. That's 0:05:45.680 --> 0:05:49.560 important because you're trying to value something and you don't know. 0:05:49.839 --> 0:05:51.760 It's hard to do it with that text. I don't 0:05:51.760 --> 0:05:54.640 mean to interrupt, but I am it's Monday interruption day here, David. 0:05:54.680 --> 0:05:57.440 I'm sorry to interrupt. Do you have a number of 0:05:57.640 --> 0:06:00.919 yields where the game changes you have in your head. 0:06:01.680 --> 0:06:04.440 I mean, you're not a numbers yield guy, You're a 0:06:04.520 --> 0:06:07.239 legal guy. So I'm gonna ask you the question because 0:06:07.360 --> 0:06:09.479 probably you're the only one that knows. Do you have 0:06:09.560 --> 0:06:12.919 a number where the rules change for M and A? 0:06:13.040 --> 0:06:15.800 Is it a three percent yield? Is it? Do you 0:06:15.839 --> 0:06:17.560 have a number in your head? I think when the 0:06:17.600 --> 0:06:20.479 ten years starts, when people start getting convinced a tenure 0:06:20.520 --> 0:06:23.400 will actually start approaching three, you're gonna see a stampede 0:06:23.480 --> 0:06:25.960 or transaction. We would never get that answer, David from 0:06:25.960 --> 0:06:29.920 a financial guy, their general counsel, a lawyer like Robert Profuse, 0:06:30.080 --> 0:06:32.680 don't say that on air or Profuse, I can said, 0:06:34.080 --> 0:06:36.440 given what we're saying with that, why why have we 0:06:36.480 --> 0:06:38.800 seen some sluctions or slowness to to the deals that 0:06:38.920 --> 0:06:41.040 marketplace at this point? Do you think it's gonna we're 0:06:41.040 --> 0:06:43.680 gonna see an uptick here soon? Well? I do think 0:06:43.720 --> 0:06:46.040 that that. Well, there's a lot of things, of course, 0:06:46.080 --> 0:06:48.240 I mean, and there's never one answer at anything, but 0:06:48.640 --> 0:06:52.560 to me, the overwriting issue has been the uncertainty of 0:06:52.720 --> 0:06:56.760 the of everything going on in Washington, including and that 0:06:56.960 --> 0:06:59.320 and some of that will continue just the you know, 0:06:59.400 --> 0:07:01.760 oh my god, can you believe this reaction that we 0:07:01.800 --> 0:07:04.440 seem to have on whether it's the NFL or Puerto 0:07:04.560 --> 0:07:06.480 Rico or you name it. I mean that that has 0:07:06.520 --> 0:07:11.120 an effect. But the fundamentals, tax policy is an important issue. 0:07:12.040 --> 0:07:14.800 Um and you know, earlier in the year, and this 0:07:14.920 --> 0:07:18.360 was less Trump than and more Kevin Brady. Uh, they 0:07:19.120 --> 0:07:21.800 had a Houseways and Means Committee. It was like, We're 0:07:21.800 --> 0:07:24.000 going to do these grand things. We're gonna go to 0:07:24.040 --> 0:07:28.440 a territorial system, We're gonna do all of that sort 0:07:28.440 --> 0:07:30.920 of stuff. People are saying, well, how do I value something? 0:07:30.920 --> 0:07:33.800 How do you value even a retailer, which there's got 0:07:33.800 --> 0:07:35.200 to be a lot of M and A in that space, 0:07:35.240 --> 0:07:37.640 There's no question about it. But if you import both 0:07:37.640 --> 0:07:39.120 of your stuff and there'll be the B A T, 0:07:39.600 --> 0:07:41.760 what's it worth? I don't know. I mean, so it 0:07:42.040 --> 0:07:45.920 it inhibited things getting rid of that uncertainty, and it's 0:07:45.920 --> 0:07:49.080 self gonna open the floodgate, but it will be an 0:07:49.160 --> 0:07:52.520 important point of a very important part of it. I've 0:07:52.560 --> 0:07:55.040 talked with Stephano Pissina of Well Grade Boots Allions just 0:07:55.200 --> 0:07:57.400 a few weeks ago after his steal for right aid 0:07:57.480 --> 0:07:59.320 went through and I asked him what he thought about 0:07:59.320 --> 0:08:01.360 the environment and Shington, and he said, there is a 0:08:01.360 --> 0:08:04.640 lot of uncertainty and surprised by how long his particular 0:08:04.680 --> 0:08:07.480 process took. Our things taking longer. Imagine there's a lot 0:08:07.520 --> 0:08:09.960 of observation of how these regulators are working, some of 0:08:10.000 --> 0:08:12.760 which have fewer commissioners than than a full panoply of them. 0:08:12.760 --> 0:08:14.760 Of course, but is it taking longer than it did 0:08:14.760 --> 0:08:18.160 in the past. Well, it's it's kind of break into 0:08:18.200 --> 0:08:22.280 two pieces. Deals is started in the old administration. Those 0:08:22.320 --> 0:08:25.160 are taking even longer because of there's been a lot 0:08:25.200 --> 0:08:29.400 of departures. Um the thing, you know, the leadership changes, 0:08:29.480 --> 0:08:32.559 but the staff positions don't change. So their attitudes about 0:08:32.640 --> 0:08:36.720 very aggressive uh. Any trust enforcement If FCC you name 0:08:36.760 --> 0:08:42.560 a regulatory enforcement, that's that's uh. That's continuing and in 0:08:42.600 --> 0:08:44.719 fact even dragging things out. We have a deal that 0:08:44.840 --> 0:08:47.480 was announced fourth quarter last year that we thought would 0:08:47.480 --> 0:08:50.520 be long be closed. It looks like a team deal. 0:08:51.400 --> 0:08:54.120 Same people who would have reviewed this transaction under President 0:08:54.160 --> 0:08:57.800 Obama they've got it, so they have those attitudes. H 0:08:57.880 --> 0:09:00.200 Any trust will get easier. On the other hand, there's 0:09:00.240 --> 0:09:03.680 some aspects of the new administration where deals are tougher. 0:09:03.720 --> 0:09:06.720 I mean, the amount of Chinese M and A in 0:09:06.720 --> 0:09:10.040 in the United States is going to be not virtually nothing. 0:09:10.120 --> 0:09:14.160 I think Uma Chinese companies have switched almost like vcs 0:09:14.320 --> 0:09:17.280 venture capital investment rather than M and A. Boberfus is 0:09:17.320 --> 0:09:19.280 with us here in Bloombic even three studios. He's the 0:09:19.280 --> 0:09:20.880 global chair of M and A at jones Day Law 0:09:20.920 --> 0:09:22.920 from jones Day and before break, Bubb we were talking 0:09:22.960 --> 0:09:26.560 about the role of China in the deal's space, and uh, 0:09:26.840 --> 0:09:29.040 you know, I've I've noted the degree to which Chinese 0:09:29.160 --> 0:09:32.680 regulators Chinese that government officials are cracking down on capital outflows. 0:09:32.679 --> 0:09:35.240 When when you look at the diminished role of China 0:09:35.720 --> 0:09:37.960 in the deal space, is it is it because of 0:09:38.040 --> 0:09:41.600 a declining US appetite that you see Cyphius perhaps expressing 0:09:41.640 --> 0:09:44.120 some reluctance to approve these deals, or is it more 0:09:44.160 --> 0:09:46.720 attributable to what the Chinese government is doing that is 0:09:46.960 --> 0:09:49.880 letting less Chinese money out of the global marketplace. Well, 0:09:50.000 --> 0:09:54.079 it's really both. Um was an incredible here for Chinese 0:09:54.120 --> 0:09:56.920 investment in North America. Had forgotten the exact number. I 0:09:56.960 --> 0:10:00.400 think it was in the order of j billion dollars. 0:10:00.679 --> 0:10:04.240 That's a lot from way more than there have ever 0:10:04.280 --> 0:10:08.040 been before. Yes, the it's coming from both ends. The 0:10:08.120 --> 0:10:11.280 Chinese government is cracking down. But when you talk to 0:10:11.400 --> 0:10:15.560 Chinese clients we have we have over a hundred lawyers 0:10:15.559 --> 0:10:18.959 in China and UM we talked to these clients what 0:10:19.000 --> 0:10:22.160 they're really they're They're concerned less about currency issues and 0:10:22.200 --> 0:10:26.720 their regulatory UM regulatory matters, but the attitude of the 0:10:26.840 --> 0:10:31.079 current administration, which has perceived to be very antagonistic towards 0:10:31.200 --> 0:10:36.240 Chinese investment. UM. There was an important cifist decision to 0:10:36.760 --> 0:10:39.800 block a semiconductor deal on the basis of that impacted 0:10:39.880 --> 0:10:44.320 national security. I don't know, there's a lot of semiconductor companies, 0:10:44.360 --> 0:10:46.560 no offense to anybody in the industry, but it just 0:10:46.720 --> 0:10:49.240 you know, to the m and A community, people went 0:10:49.400 --> 0:10:53.959 g that that's pretty significant. There was a cifious decision 0:10:54.800 --> 0:10:58.040 earlier having to do with what was essentially a real 0:10:58.160 --> 0:11:01.360 estate transaction, but it was close to an army base 0:11:01.480 --> 0:11:05.360 up in the Pacific Northwest. So there's a sense that 0:11:05.559 --> 0:11:08.040 some of this America first, and America is going to 0:11:08.120 --> 0:11:10.200 be great again, all that stuff, it's going to really 0:11:10.280 --> 0:11:14.200 impact foreign investment. Maybe not for an investment generally, but 0:11:14.320 --> 0:11:19.320 certainly China within these wonderful observations is our collective memory, 0:11:19.480 --> 0:11:22.080 whether it's Pebble Beach Golf Club, remember the upward when 0:11:22.120 --> 0:11:25.600 we were kids over that. But I guess my right. 0:11:25.679 --> 0:11:30.320 UNICELL was sort of the seismic legal transaction review that 0:11:30.400 --> 0:11:35.319 police MR purchasing. Well, there's a the sort of a 0:11:35.440 --> 0:11:39.160 very large Chinese company named c which is that at 0:11:39.200 --> 0:11:42.480 that time of state owned enterprise tried to acquire Unical 0:11:42.720 --> 0:11:46.439 and it has that name Unical, and so the perception 0:11:46.559 --> 0:11:48.600 was it was an American company and it was blocked 0:11:48.600 --> 0:11:52.280 on Ciphius grounds, like Stiffius is a inter agency's committee 0:11:52.280 --> 0:11:55.920 in Washington that looks at things that impact national security. 0:11:56.640 --> 0:12:01.559 And it was a pretty extraordinary transaction. This is because, 0:12:01.600 --> 0:12:04.760 in all honesty, it was an oil company. Um. Well, 0:12:04.800 --> 0:12:09.040 of course oil in general impacts everything, at least at 0:12:09.120 --> 0:12:12.920 least today and back then. Um. But the irony was, 0:12:13.040 --> 0:12:15.360 even though it was named Unchale, about eight percent of 0:12:15.360 --> 0:12:19.160 assesss were in Asia. UM. So it really wasn't an 0:12:19.200 --> 0:12:23.320 American transaction except name only in a real sense. But 0:12:23.480 --> 0:12:26.120 that's sort of the point, is that politics can get 0:12:26.120 --> 0:12:30.760 in the way. UM. Most times the other regulatory agencies 0:12:30.880 --> 0:12:34.640 don't really look at that. UM. But you know, there 0:12:34.720 --> 0:12:37.920 was a lot of talk about you know, America, this, 0:12:38.040 --> 0:12:41.760 America that, and the and the election last last term, 0:12:41.800 --> 0:12:43.400 and we're probably going to see it, and there was 0:12:43.440 --> 0:12:47.000 some you know, biggest bad uh stuff. We haven't seen 0:12:47.040 --> 0:12:50.040 the answer yet. UM. I frankly think it'll go forward. 0:12:50.080 --> 0:12:52.560 But the Time Warner deal still pending, and of course, 0:12:52.559 --> 0:12:56.840 as a candidate, President Trump basically said he'd block it. 0:12:57.360 --> 0:12:59.959 So we'll see what if we learned about the leg 0:13:00.000 --> 0:13:01.520 to see if breakit. We talk with the legacy of 0:13:01.559 --> 0:13:03.880 Brexit before it's officially happened here, but the legacy of 0:13:03.920 --> 0:13:06.959 that vote at least, and our notions of of what's 0:13:07.000 --> 0:13:10.120 accessible when it comes to to competition and companies in Europe. 0:13:10.120 --> 0:13:11.960 I sat down with the Margaret ofst Or a few 0:13:12.120 --> 0:13:14.560 weeks back. She was in Washington, d C. And obviously 0:13:14.600 --> 0:13:17.559 she's focusing on a large part on on US tech companies. 0:13:18.160 --> 0:13:21.439 Is there a lessoned appetite for for deals in Europe 0:13:21.520 --> 0:13:22.959 or in the UK at this point as a result 0:13:23.000 --> 0:13:28.000 of Brexit? Well, actually, um, the deal of in the 0:13:28.080 --> 0:13:31.600 third quarter Europe was down more than any any other 0:13:32.080 --> 0:13:34.040 market if you look, if you think it's Asia and 0:13:34.200 --> 0:13:37.520 America's and Europe. It was down almost fifteent year on 0:13:37.720 --> 0:13:41.240 urine on a dollar basis. Um. Again, the number of 0:13:41.240 --> 0:13:45.680 transactions wasn't down quite so much. That stays pretty constant, 0:13:45.720 --> 0:13:48.320 and that the value is driven by these big deal 0:13:48.400 --> 0:13:51.120 of things over five billion and that sort of thing. 0:13:52.240 --> 0:13:54.920 I think there's a sense that it's probably not going 0:13:55.000 --> 0:13:57.040 to make that big of a difference. Yeah, there will 0:13:57.080 --> 0:14:00.120 be a thousand bankers moved from London to frank It 0:14:00.200 --> 0:14:03.319 or someplace like this by that, by a financial institution 0:14:03.440 --> 0:14:06.280 or two. But in terms of the overall activity, there's 0:14:06.280 --> 0:14:09.280 a sense and maybe we're kidding ourselves that maybe it 0:14:09.400 --> 0:14:14.000 was more sound and fury than reality. Um. And frankly, 0:14:14.000 --> 0:14:17.040 the EU was doing it in general pretty well economically, 0:14:17.120 --> 0:14:19.040 and there's in terms of growth rate and all the 0:14:19.080 --> 0:14:21.200 rest of it. So that you're seeing a lot of 0:14:21.240 --> 0:14:25.560 activity again, thinking about activity, and it comes through the 0:14:26.120 --> 0:14:30.480 railed UH announcement about a rail deal that was last week. 0:14:30.760 --> 0:14:34.800 That's an evidence there's plenty to do there. So um, 0:14:34.840 --> 0:14:37.680 I think people are pretty optimistic. I think the concern 0:14:37.760 --> 0:14:40.360 is is Asia. I really do Bob, thank you so 0:14:40.440 --> 0:14:42.320 much for being with a great in Your time is 0:14:42.400 --> 0:14:46.440 very valuable. Bob Bills by a syllable issue Ago David, 0:14:46.520 --> 0:14:50.040 his time is extremely generous of you to be with 0:14:50.080 --> 0:14:52.840 a sense surveillance on television and in a radio, and 0:14:52.880 --> 0:14:57.840 particularly your perspective there of your colleague in Atlanta. You're 0:14:57.880 --> 0:15:00.280 gonna dash out the door. Good to see. Take care 0:15:13.440 --> 0:15:17.880 you try to move to things uh more holiday and 0:15:17.960 --> 0:15:23.240 more timely on the calendar, which is finally degree in 0:15:23.280 --> 0:15:27.320 New York ended a few days ago, joining us. Uh. 0:15:27.440 --> 0:15:30.680 Stephen bar with p WC Steve let me ask with 0:15:30.720 --> 0:15:34.240 an open question October one, October two, how does the 0:15:34.320 --> 0:15:39.280 holiday season shape up? Yeah, it's really looking like it's 0:15:39.280 --> 0:15:44.200 going to be a great holiday both for retailers and consumers. 0:15:44.640 --> 0:15:48.400 We're about to release our holiday outlook which tells us, 0:15:48.440 --> 0:15:53.160 which tells us that the majority of consumers about are 0:15:53.200 --> 0:15:56.760 going to spend more or the same as they did 0:15:56.880 --> 0:16:00.200 last year. And that's a six in works. But being 0:16:00.240 --> 0:16:03.160 them to spend about six percent more than they did 0:16:03.240 --> 0:16:08.520 last year on average overall about eighty nine dollars sounds great. 0:16:08.640 --> 0:16:10.320 It's all going to go to Amazon or to some 0:16:10.400 --> 0:16:13.880 of it actually migrate to the brick and mortars store 0:16:13.960 --> 0:16:16.440 with two down, empty and vacant. Right now, which way 0:16:16.480 --> 0:16:20.520 is that going to till? Yeah, we're we're actually looking 0:16:20.560 --> 0:16:23.800 for it to be both. UM a great holiday for 0:16:24.560 --> 0:16:27.280 in store and online. No, no question that we're going 0:16:27.320 --> 0:16:31.040 to see the majority of the growth online. But the 0:16:31.120 --> 0:16:34.720 retailers have really come back with propositions that say they 0:16:34.720 --> 0:16:38.520 can keep the store relevant, especially in those areas with 0:16:39.040 --> 0:16:43.080 key demographics. And so for the first time in a 0:16:43.120 --> 0:16:45.520 long time, we're looking for stores to have a very 0:16:45.560 --> 0:16:48.400 productive holiday season. How did they go about keeping those 0:16:48.600 --> 0:16:51.840 stories relevant? You write about I love this phrase holiday 0:16:51.880 --> 0:16:54.800 felicity at stories? How does it? How does a traditional 0:16:54.840 --> 0:16:57.440 retailer get people to walk in You went to my house, 0:16:57.480 --> 0:17:05.800 We've got felicity. Yeah, it's yeah, it's Look, the malls 0:17:05.920 --> 0:17:09.760 UM of the past is long dead. And while we've 0:17:09.760 --> 0:17:14.480 seen as a massive shift to more entertainment and dining 0:17:15.080 --> 0:17:18.639 and so so the stores UM or the malls of 0:17:18.640 --> 0:17:21.800 the past that we're really a destination primarily for apparel. 0:17:22.440 --> 0:17:25.800 UM now are a destination for community, with dining and 0:17:25.920 --> 0:17:30.359 entertainment options making up nearly a quarter a quarter of 0:17:30.560 --> 0:17:33.480 the overall property and We've also seen the great mall 0:17:33.520 --> 0:17:38.040 operators adapt and they're doing things to draw Gen Z 0:17:38.440 --> 0:17:42.920 and and young millennials with things like uber lounges and 0:17:43.119 --> 0:17:47.200 really just making it convenient for UM that that next 0:17:47.240 --> 0:17:50.480 set of shoppers in the younger generations to care about 0:17:50.520 --> 0:17:54.880 the mall. Again. Interestingly enough, UM, we did a survey 0:17:54.960 --> 0:17:57.119 of of young Gen zs and they told us their 0:17:57.200 --> 0:18:01.360 favorite place to shop is actually you store versus online. 0:18:02.520 --> 0:18:05.680 You wrote about the move here for people to spend 0:18:05.680 --> 0:18:07.280 more this holiday season, I think gout by a six. 0:18:07.680 --> 0:18:09.959 That's your your prediction. Is that going to be across 0:18:09.960 --> 0:18:11.679 the board? In other words, do you have all strata 0:18:11.720 --> 0:18:14.000 of consumers indicating that they're going to be paying more 0:18:14.040 --> 0:18:18.359 this holiday season? Yeah, Well, the good news is that 0:18:18.440 --> 0:18:21.960 consumers over sixty that earn over sixty tho dollars a 0:18:22.040 --> 0:18:24.760 year are are going to spend more this year. But 0:18:24.840 --> 0:18:29.440 those consumers UM that that earned less than sixty thou dollars, 0:18:29.520 --> 0:18:33.600 they're they're still struggling. And so the median income for 0:18:33.600 --> 0:18:37.399 for UM all households in the US is around fifty 0:18:37.480 --> 0:18:41.040 nine thou dollars, but it takes about sixty six thousand 0:18:41.080 --> 0:18:44.560 dollars for a family afford to cover their basic needs. 0:18:44.560 --> 0:18:46.879 So it's just, you know, we just haven't seen the 0:18:46.920 --> 0:18:51.199 wage growth. While it's better than it's been um, you 0:18:51.200 --> 0:18:54.480 know in recent past, it just isn't enough to push 0:18:54.480 --> 0:18:57.919 those folks over. So we really do expect that the 0:18:58.000 --> 0:19:03.600 higher end consumer, and we also expect and older crowd 0:19:04.000 --> 0:19:06.800 to be the crowd that's driving the overall. Okay, I'm 0:19:06.840 --> 0:19:10.040 glad it doesn't identify me. Um. You know, when when 0:19:10.040 --> 0:19:12.240 I look at this, Steve, I think beg EON's and 0:19:12.240 --> 0:19:15.080 it was a Sears robot catalog that drove the dialogue. 0:19:15.400 --> 0:19:17.920 And then maybe with nostalgia and their bankruptcy, it was 0:19:17.960 --> 0:19:21.000 Toys r Us. Everybody wandered into Toys r Us for 0:19:21.040 --> 0:19:24.240 a frenzy of one hour shopping or two hour shopping. 0:19:24.240 --> 0:19:27.920 In case of the growth family, What's what's the emotion 0:19:28.040 --> 0:19:31.959 now behind all your economics, What's what's the emotion of 0:19:32.000 --> 0:19:38.680 the holiday moment? Yeah? Well, I think that emotion is 0:19:38.800 --> 0:19:42.040 driven by different things. I think that when we see, 0:19:42.680 --> 0:19:46.159 for for the younger generations, their emotion is influenced by 0:19:46.200 --> 0:19:50.600 social media, and that that social media is generally visual. 0:19:51.040 --> 0:19:53.639 So we see we see an interesting split in the 0:19:53.680 --> 0:19:59.560 analysis where um, for the older crowd, their social media 0:19:59.640 --> 0:20:02.480 is drive and by things like Facebook, and then for 0:20:02.480 --> 0:20:06.639 for for the younger generations, it's driven by things like 0:20:07.080 --> 0:20:10.640 Instagram and YouTube because they're they're far more visual. So 0:20:10.840 --> 0:20:13.040 and so that's the emotion that was that we're seeing 0:20:14.440 --> 0:20:18.800 Steve bar Thank you, Steve Barr, Thank you. P WC 0:20:19.040 --> 0:20:24.400 on retail David YouTube will never replace this, Sears, Roebuck 0:20:24.640 --> 0:20:44.560 Christmas candalog page four, silvertone guitars. This is Bloomberg, David Garrett, 0:20:44.600 --> 0:20:46.600 and Tom Keane here in New York Bloomberg surveillance on 0:20:46.600 --> 0:20:49.760 Bloomberg Radio. As a reporter in Washington, I relied often 0:20:49.760 --> 0:20:52.920 on the work the Urban Brookings Tax Policy Center, Howard Gleckman, 0:20:53.000 --> 0:20:55.359 Len Berman, Donald Marrin as well, who joins us on 0:20:55.400 --> 0:20:57.560 our phone lines. The Tax Policy Center worked quick after 0:20:57.600 --> 0:20:59.919 that framework came out last week, delivered an analysis just 0:21:00.080 --> 0:21:03.359 couple of days later. The headline here the Text Policy 0:21:03.400 --> 0:21:06.280 Center estimating that the proposal would reduce federal revenues by 0:21:06.280 --> 0:21:08.840 two point four trillion dollars over the first ten years 0:21:08.840 --> 0:21:12.520 and three point two trillion dollars over the subsequent decade. 0:21:12.520 --> 0:21:14.280 Donald mayn Great to speak with you. And before we 0:21:14.320 --> 0:21:15.920 dig into that headline number, let me just ask you 0:21:15.960 --> 0:21:18.320 about the difficulty of doing this. We look at these 0:21:18.400 --> 0:21:21.440 nine pages and the unanswered questions there, and how how 0:21:21.480 --> 0:21:24.639 difficult is it to forecast the ramifications of something like 0:21:24.680 --> 0:21:28.280 this with that little information. Well, you know, it is difficult. 0:21:28.280 --> 0:21:30.399 And you'll you'll see that our our report is headlined 0:21:30.440 --> 0:21:33.919 a preliminary analysis. Uh they're clearly important features that it 0:21:33.960 --> 0:21:37.639 doesn't include because the administration and Congress have inspelled them 0:21:37.640 --> 0:21:40.560 out in any detail. But we've we've seen some of 0:21:40.600 --> 0:21:43.040 the ideas they've had in previous proposals, and they certainly 0:21:43.040 --> 0:21:45.880 provided a lot more detail last week. And so this 0:21:45.960 --> 0:21:47.840 is this is the team's best cut at what we 0:21:47.880 --> 0:21:50.160 know about the plan so far. Something we've heard over 0:21:50.200 --> 0:21:52.200 the week, and they provided detail in that that framework, 0:21:52.200 --> 0:21:54.120 of course, and we've heard from many of the principles 0:21:54.160 --> 0:21:55.800 over the course of the week, and Stephen anution, the 0:21:55.800 --> 0:21:59.480 Treasury Secretary reiterating this is actually going to reduce the 0:21:59.720 --> 0:22:02.480 deaf Is it square square that with what you found 0:22:02.680 --> 0:22:06.840 in your preliminary analysis thus far? Uh So, it's exceedingly 0:22:06.840 --> 0:22:10.960 difficult to square that. The pieces that we've seen articulated 0:22:11.000 --> 0:22:13.040 thus far as as he said in the lead in, 0:22:13.119 --> 0:22:15.840 would reduce revenues by more than two trillion dollars over 0:22:15.840 --> 0:22:20.439 the next decade. Uh. That doesn't include our estimate of 0:22:20.440 --> 0:22:22.760 what the macroeconomic effect will be. That's in the works. 0:22:22.800 --> 0:22:25.960 That just takes longer, so you'll see that soon. But 0:22:26.200 --> 0:22:29.000 you know, none of the models that the scoring shops 0:22:29.000 --> 0:22:32.719 here in Washington, US would show you anywhere near you know, 0:22:32.800 --> 0:22:35.760 two trillion plus. Coming back from that, we should point 0:22:35.800 --> 0:22:38.720 out that all of our CBO directors, of various flavors 0:22:38.720 --> 0:22:42.960 and persuasions, are steamed academics. Mr Mayren no different with 0:22:43.080 --> 0:22:46.639 his mathematics at a school in Cambridge called Harvard, and 0:22:46.640 --> 0:22:49.680 then he went he went down the river, up the river. 0:22:49.720 --> 0:22:53.440 I guess it's down the river, downstream into the economics 0:22:53.680 --> 0:22:56.080 m I T. And what that tells me done is 0:22:56.119 --> 0:22:58.280 you know, the glide path. If we start at one 0:22:58.359 --> 0:23:01.720 point five trillion, I've seen numbers as high as two 0:23:01.720 --> 0:23:05.040 point four trillion. First of all, what's the certitude that 0:23:05.119 --> 0:23:08.160 the number is bigger than one point five trillion? What's 0:23:08.200 --> 0:23:11.520