WEBVTT - Trade Talks Should Be Ongoing, Zentner Says 0:00:00.080 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 0:00:13.480 --> 0:00:17.560 jay Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.200 Bloomberg dot Com, and of course on the Bloomberg Ellen 0:00:34.280 --> 0:00:37.200 Center joins me now in studio. Ellen, always a pleasure, 0:00:37.200 --> 0:00:42.120 Thanks for being here. Um, trade wars and the US economy. 0:00:42.200 --> 0:00:44.599 Have you produced some kind of model that looks at 0:00:44.640 --> 0:00:46.680 what the U. S economy would do if this trade 0:00:46.680 --> 0:00:50.480 war really sticks and gets worse? So? I think, first, UM, 0:00:50.520 --> 0:00:55.080 we do expect these trade tensions. Let's say, I think 0:00:55.160 --> 0:00:58.880 war is a little inflammatory, but but it's certainly catches 0:00:58.920 --> 0:01:00.880 the attention more when you is the word war. But 0:01:01.560 --> 0:01:06.080 we are in an escalatory phase. Okay, there's no denying that. Um. 0:01:06.120 --> 0:01:08.320 And we've now seen the first round of thirty six 0:01:08.319 --> 0:01:11.920 billion dollars in teariffs go into place. Um. The questions 0:01:11.920 --> 0:01:13.959 that I get are I thought this was supposed to 0:01:14.000 --> 0:01:16.880 hurt the economy. We've got four g d P in 0:01:16.920 --> 0:01:21.000 the second quarter that economists are tracking, Uh, what gives? 0:01:21.040 --> 0:01:23.360 It must not matter for the economy, And that's absolutely 0:01:23.400 --> 0:01:25.640 the wrong way to look at this. These first thirty 0:01:25.680 --> 0:01:29.240 six billion dollars that have gone into place are hitting 0:01:29.319 --> 0:01:34.520 intermediate goods, capital goods. Guess what matters for the US 0:01:34.520 --> 0:01:38.120 consumer goods? And it's the next round, the ten on 0:01:38.160 --> 0:01:41.319 two billion in Chinese goods that are really going to 0:01:41.400 --> 0:01:43.640 hit consumer goods. And do you think that when we 0:01:43.720 --> 0:01:47.600 raise prices on consumer goods in the US because of tariffs, 0:01:47.880 --> 0:01:49.600 the consumers are just going to spend as much as 0:01:49.600 --> 0:01:51.640 they did before that we really don't care that prices 0:01:51.680 --> 0:01:54.520 are going up. That's just not the case. So when 0:01:54.600 --> 0:01:57.680 we look at it, tear us, uh, you know, in 0:01:58.160 --> 0:02:00.440 you know, just one at a time. Right now, if 0:02:00.480 --> 0:02:02.720 I just look at the economic impact of the tariffs 0:02:02.720 --> 0:02:06.160 that have gone that went into place on Friday, um, 0:02:06.200 --> 0:02:09.000 it doesn't look like that much that you shave off 0:02:09.240 --> 0:02:11.720 the US economy. But you start to build in the 0:02:11.760 --> 0:02:15.919 second round, impacts to supply chains, the unknown impacts to 0:02:16.080 --> 0:02:19.280 financial conditions, and you start to pile on the next 0:02:19.400 --> 0:02:21.720 round and the next round and the next round. At 0:02:21.720 --> 0:02:24.320 some point investors are going to say this is too much, 0:02:24.800 --> 0:02:27.760 this is changing the global growth story. And then the 0:02:27.800 --> 0:02:31.959 financial conditions piece of this escalates. At the time when 0:02:31.960 --> 0:02:35.600 you have unemployment at the levels I guess, okay, it 0:02:35.800 --> 0:02:39.280 increased to four, but that was because so many people 0:02:39.720 --> 0:02:43.839 came back into the into the workforce. Where's the positive? 0:02:44.000 --> 0:02:49.000 Where's the benefit from these trade uh? Okay confrontations? I 0:02:49.000 --> 0:02:51.680 won't say war. Where where does the benefit come in? 0:02:51.800 --> 0:02:54.440 Because if the if the economy is already working and 0:02:54.480 --> 0:02:58.239 you're looking at that four GDP number that you mentioned, 0:02:58.760 --> 0:03:02.160 where's the benefit to this trade confrontation? Well, I think 0:03:02.160 --> 0:03:07.120 that that UM. Trade talks in general should be something 0:03:07.160 --> 0:03:11.560 that are constantly ongoing between countries. The condensed timeline that 0:03:11.600 --> 0:03:14.960 we're on, and it has been very disruptive UM in 0:03:14.960 --> 0:03:17.120 the way it's almost like someone just turned the light 0:03:17.160 --> 0:03:20.720 on and said, oh, these this trade situation in the 0:03:20.720 --> 0:03:24.280 global economy is is unfair. Let's change it tomorrow. And 0:03:24.280 --> 0:03:29.560 it's self right, but it's it's I won't argue with 0:03:29.720 --> 0:03:33.639 the need for looking closely at trade agreements and trade 0:03:33.639 --> 0:03:36.880 among countries, and that should be an open ended conversation 0:03:36.920 --> 0:03:40.080 that we're having. UM. What's what can be very disruptive 0:03:40.120 --> 0:03:43.120 is trying to change it overnight, when, as you point out, 0:03:43.160 --> 0:03:45.680 we've already got a tight labor market, We've already got 0:03:45.760 --> 0:03:48.360 a very low unemployment rate. We don't have a large 0:03:48.960 --> 0:03:52.240 manufacturing sector. We don't have a lot of workers to 0:03:52.280 --> 0:03:55.760 attract back to manufacturing or to retrain for manufacturing. It 0:03:55.800 --> 0:03:59.480 takes time to open idle factories, it takes time to 0:03:59.560 --> 0:04:03.080 build new factories. You don't just turn on the manufacturing 0:04:03.120 --> 0:04:05.160 engine overnight in the U S. And so what does 0:04:05.160 --> 0:04:09.360 that mean? That means that that these trade negotiations UH 0:04:09.600 --> 0:04:13.440 on such a condensed timeline can create even more inflationary pressures. 0:04:13.840 --> 0:04:16.200 Then we've already got from tight labor markets in late 0:04:16.240 --> 0:04:20.200 cycle dynamics. And what happens then then you run into 0:04:20.200 --> 0:04:22.880 the risk that it begs a more aggressive monetary policy 0:04:22.960 --> 0:04:26.599 response from the FED as they're seeing price pressures in 0:04:26.640 --> 0:04:30.320 the US from tariffs UH, and that's very difficult to 0:04:30.360 --> 0:04:34.039 deal with right policy or rates that are higher in 0:04:34.080 --> 0:04:36.760 the US than they otherwise would have been. That is 0:04:36.800 --> 0:04:39.000 to me the biggest risk. And it's not as if 0:04:39.040 --> 0:04:41.719 the world is standing still. Why this is while this 0:04:41.800 --> 0:04:45.520 is happening, correct? I mean Shinzo Abe, Prime Minister of Japan. 0:04:45.640 --> 0:04:48.200 He is going to be in Brussels on Wednesday to 0:04:48.240 --> 0:04:51.560 sign a trade accord with the European Union. You have 0:04:52.160 --> 0:04:55.640 I believe a meeting between German Chancellor Angela Merkel and 0:04:55.680 --> 0:04:59.800 the Chinese premier Prime Minister UH. That will be to 0:05:00.080 --> 0:05:03.719 day actually UH in Berlin. And the topic there is 0:05:03.839 --> 0:05:09.080 trade investment. UH. Nothing is standing still just because the 0:05:09.160 --> 0:05:14.480 United States wants to impose tariffs on imported goods from China, 0:05:14.720 --> 0:05:18.640 plus wants to at least seemingly renegotiate NAFTA, and that 0:05:18.680 --> 0:05:21.599 hasn't gone anywhere. What's the worst case scenario for the 0:05:21.680 --> 0:05:25.040 US economy if all of these things come to pass. Well, 0:05:25.080 --> 0:05:27.919 I think the long term worst case scenario for the 0:05:28.000 --> 0:05:29.920 U S economy would be that the rest of the 0:05:30.320 --> 0:05:33.840 world and other global leaders move on without us, and 0:05:33.880 --> 0:05:36.000 so we become the odd man out instead of the 0:05:36.120 --> 0:05:41.080 leader among all of these groups, trade groups, global groups. UH, 0:05:41.240 --> 0:05:44.279 just where we sit on the global stage. Of course, 0:05:44.360 --> 0:05:48.360 that is the longer term risk because trade negotiations can 0:05:48.360 --> 0:05:50.840 be very sensitive. It's one reason why they typically take 0:05:50.920 --> 0:05:53.720 some time to play out. UH. And so that that 0:05:53.800 --> 0:05:55.320 I do. And with the change of guard I'm just 0:05:55.320 --> 0:05:58.080 thinking of Mexico, with the change of government in Mexico, 0:05:58.160 --> 0:06:00.679 which may be more adversarial when it comes to dealing 0:06:00.680 --> 0:06:02.520 with the United States, right there are there are a 0:06:02.520 --> 0:06:05.360 lot of you know, I think that I can't remember 0:06:05.360 --> 0:06:09.800 a time uh and uh, I'm forty seven years old. 0:06:09.920 --> 0:06:13.880 I've been practicing economics for over twenty years. Uh and 0:06:14.000 --> 0:06:17.480 I cannot remember a time that politics mattered so much 0:06:17.520 --> 0:06:21.920 in the global economy. That and and politics, it's not 0:06:22.000 --> 0:06:25.159 just for the US. Everywhere politics are a wild card 0:06:26.240 --> 0:06:30.279 for just about every economy. And politics are playing out globally. 0:06:30.720 --> 0:06:33.840 Um and create another lay of uncertainty of exactly where 0:06:33.839 --> 0:06:36.279 does the U s end up? UM in this in 0:06:36.320 --> 0:06:38.800 these tips for tats. Now, I'm sure you've read the 0:06:38.880 --> 0:06:43.360 reports about increasing logistics costs in the United States. I'm 0:06:43.400 --> 0:06:47.480 sure you've read the reports of input costs going up 0:06:47.520 --> 0:06:52.160 for many manufacturers. Uh. You've also read, I'm sure about 0:06:52.200 --> 0:06:56.600 what happens to our agricultural exports that may be displaced 0:06:56.640 --> 0:07:01.599 by exports from places such as for Zil and Argentina. 0:07:01.920 --> 0:07:05.920 What do you see if this continues? What do you 0:07:05.960 --> 0:07:09.160 see happening in the US economy? Well, I think we'll 0:07:09.200 --> 0:07:12.720 see some rebalancing, right, we already know and you've you've 0:07:12.720 --> 0:07:16.120 touched on a lot of it. Businesses are have already 0:07:16.200 --> 0:07:21.720 been exploring alternative sourcing. UM. And it's not just the US. 0:07:21.840 --> 0:07:26.400 The the rest of the global economy will be doing that, right. 0:07:26.440 --> 0:07:29.160 They might buy things from somewhere else. So there's a 0:07:29.200 --> 0:07:32.320 rebalancing that will go on. And I'm not saying that 0:07:32.360 --> 0:07:35.800 when the dust settles, we won't come out ahead, um, 0:07:35.840 --> 0:07:39.720 but there's near term pain that will have to be digested. UM. 0:07:39.760 --> 0:07:45.040 Just sourcing UH. New supply chains cost businesses money and 0:07:45.120 --> 0:07:48.200 they have to either eat that on the margin or 0:07:48.320 --> 0:07:51.920 pass that on to the end user either way to 0:07:52.080 --> 0:07:55.360 lose lose situation in the near term. UM. That doesn't 0:07:55.360 --> 0:07:57.720 mean it won't be a long term gain once all 0:07:57.760 --> 0:08:01.560 this rebalancing occurs, but it's something that's a reality of 0:08:01.600 --> 0:08:04.200 this late cycle economy that we're in, that we are, 0:08:03.920 --> 0:08:06.760 that we are now having to deal with in thirty seconds. 0:08:06.800 --> 0:08:10.680 Are you advising people, based on your analysis, to change 0:08:10.720 --> 0:08:14.360 the way they view investing right now until it dost settles. Well, 0:08:14.400 --> 0:08:17.600 I think that on our wealth management side of the business, 0:08:18.040 --> 0:08:21.120 which sits on a two trillion dollar purse, you know 0:08:21.160 --> 0:08:26.320 they've been advising their clients to aggressively manage cash. And 0:08:26.320 --> 0:08:29.440 that's not just that that almost has nothing to do 0:08:29.480 --> 0:08:31.800 with the trade. Tension has to do with where we 0:08:31.880 --> 0:08:35.600 are in the cycle um and volatile markets that occur 0:08:35.679 --> 0:08:39.080 in the cycle. Um, Mike Wilson, our chief US equity 0:08:39.120 --> 0:08:43.280 strategist on the institutional security side, where I sit UM 0:08:43.400 --> 0:08:46.640 is looking at you know, no more upside driven by 0:08:47.000 --> 0:08:49.440 earnings after the third quarter, So it just makes for 0:08:49.520 --> 0:08:52.040 a difficult time as we view as we start to 0:08:52.120 --> 0:08:55.320 view the second half of the year. Many thanks Ellen Center, 0:08:55.520 --> 0:08:59.360 Morgan Stanley, chief US Economists giving us her views on 0:08:59.400 --> 0:09:04.800 the US economy based on trade confrontations of war not 0:09:05.000 --> 0:09:23.000 yet with us now in our London studios, Brian Class 0:09:23.000 --> 0:09:26.640 of the London School of Economics, Fellow in Comparative Politics 0:09:27.200 --> 0:09:30.000 in their Department of Government. And some of you will 0:09:30.000 --> 0:09:34.319 know Professor Class for his outstanding work out on Twitter 0:09:34.880 --> 0:09:39.160 and just pointing out research topics as we look at 0:09:39.160 --> 0:09:42.800 a time of authoritarianism, and that gets to his wonderful 0:09:42.840 --> 0:09:47.200 book The Despots Accomplices is well. Um, there was a 0:09:47.280 --> 0:09:51.080 lot Class in this weekend in the literature, I thought 0:09:51.120 --> 0:09:53.480 of you this weekend. A lot of people have come 0:09:53.520 --> 0:10:00.000 around to your study of democracy in liberalism versus authority 0:10:00.160 --> 0:10:03.760 terrian Ism. Is it overdone. Is it overdone done about 0:10:03.760 --> 0:10:07.360 the president in his relationship with Mr Putin? No, I 0:10:07.360 --> 0:10:09.319 don't think it is. I think we've got this global moment. 0:10:09.360 --> 0:10:12.520 There's been twelve consecutive years where the world has become 0:10:12.600 --> 0:10:15.280 less democratic. That is now creeping into the West. You 0:10:15.320 --> 0:10:18.880 have poland hungry, some Italian populism flirting with the full 0:10:18.960 --> 0:10:21.719 train is um and then also across the Atlantic in 0:10:21.760 --> 0:10:24.720 the United States, where where Trump not only mimics the 0:10:24.760 --> 0:10:29.720 behaviors of authoritarian leaders but also admires them and and 0:10:29.800 --> 0:10:33.320 has praised virtually every Authorityraian leader under the sun, from 0:10:33.400 --> 0:10:38.640 President g to do Terte in the Philippines, Putin in Moscow, um, 0:10:38.679 --> 0:10:40.679 and then you know, sort of has taken a much 0:10:40.720 --> 0:10:43.720 harsh attack on America's historic democratic allies, whether it be 0:10:43.760 --> 0:10:45.920 EU or NATO members. And that's going to be on 0:10:45.960 --> 0:10:48.800 display this week as Trump arrives in in the UK, 0:10:49.280 --> 0:10:52.199 moves on to Brussels, and then meets with Putin in Helsinki. 0:10:52.960 --> 0:10:55.360 I mean, he's gonna go to Helsinki, and this is 0:10:55.600 --> 0:10:59.120 you know, your your area. That the basic theme and 0:10:59.200 --> 0:11:02.600 Kevin's early push back on this today is people say 0:11:02.679 --> 0:11:06.280 Mr Putin will be hugely prepared and Mr Trump will 0:11:06.280 --> 0:11:09.680 be less prepared to be kind. Um, how does that 0:11:09.840 --> 0:11:12.959 play in terms of your study? Well, I think it's 0:11:12.960 --> 0:11:14.800 a major risk. And that's why I think this one 0:11:14.800 --> 0:11:18.800 on one meeting is dangerous. It's highly unorthodox past foreign 0:11:18.800 --> 0:11:23.040 policy advisors to pass. Presidents would not allow it. Yeah, 0:11:23.240 --> 0:11:25.880 and and on top of this, you have this major risk. 0:11:25.960 --> 0:11:28.400 I mean, we had a dress rehearsal for this in Singapore. 0:11:28.440 --> 0:11:31.840 With the Trump Kim meeting that is falling apart very quickly, 0:11:31.840 --> 0:11:34.679 where Trump prematurely declared a win and now his secretary 0:11:34.720 --> 0:11:37.280 of State is trying to do the cleanup. And you know, 0:11:37.400 --> 0:11:40.200 Kim was very prepared for that meeting because that's what 0:11:40.320 --> 0:11:42.720 their foreign policy revolves around. Putin is going to be 0:11:42.760 --> 0:11:44.760 the same. Um. And so I think there's a real 0:11:44.880 --> 0:11:47.880 risk that Trump makes serious concessions to Putin in a 0:11:47.920 --> 0:11:51.640 sort of good natured summit and it ends up getting played. Um. 0:11:51.679 --> 0:11:53.600 But we have you know, I think the bigger picture 0:11:53.640 --> 0:11:56.640 here is that there is a momentous shift in geopolitics 0:11:56.720 --> 0:11:58.800 underfoot and has been for the last year or two. 0:11:59.559 --> 0:12:02.199 People tell talk about black Swan risk, the sort of unpredictable, 0:12:02.280 --> 0:12:05.200 unforeseen risk This one is a highly predictable risk. You 0:12:05.200 --> 0:12:09.320 have the president consistently attacking NATO allies, attacking NATO, attacking 0:12:09.320 --> 0:12:11.600 the European Union, and praising Vladimir Putin, and it would 0:12:11.640 --> 0:12:16.080 be a major, major geopolitical seismic shock if American foreign 0:12:16.160 --> 0:12:19.560 policy ended the trans Atlantic relationship. How do you respond 0:12:19.600 --> 0:12:24.080 to the morning's urgency Eli like in Bloomberg Opinion writing 0:12:24.120 --> 0:12:27.480 and stuff beautifully that the real fear is Mr Trump 0:12:27.520 --> 0:12:32.719 will bargain Syria and Crimea. It's almost like a game 0:12:32.760 --> 0:12:35.440 of risk when we were kids three and two Central America. 0:12:35.720 --> 0:12:37.880 They're a huge risk. So last year, you know, Putin 0:12:37.920 --> 0:12:40.160 basically crafted a deal last year that involved a d 0:12:40.320 --> 0:12:43.960 escalation zone in Syria. That d escalation zone is a 0:12:44.000 --> 0:12:46.280 misnomber because it's where a lot of the heaviest fighting 0:12:46.440 --> 0:12:49.240 with the Russian troops is happening right now. But Trump 0:12:49.280 --> 0:12:52.040 was able to claim a win and look optically like 0:12:52.120 --> 0:12:54.320 he was the deal maker. That might happen again with 0:12:54.360 --> 0:12:58.319 Crimea or with Syria. And the problem with bargaining away Crimea, 0:12:58.360 --> 0:13:00.400 it's not just about that piece of terror roy it's 0:13:00.440 --> 0:13:03.760 the principle, which is basically the lynchpin of international security 0:13:03.760 --> 0:13:06.160 at to World War Two that you cannot change borders 0:13:06.200 --> 0:13:09.480 by force, and if Trump acknowledges that putin Ken, it 0:13:09.640 --> 0:13:13.920 up ends everything we know about international security and all that. 0:13:14.040 --> 0:13:18.400 Can a future president, either Republican or Democrat, walk back 0:13:18.679 --> 0:13:22.840 from Trump if he makes a decision on CRIMEA he 0:13:22.880 --> 0:13:24.920 could or she could, but it's a it's a real 0:13:25.000 --> 0:13:28.040 problem because the word of the United States matters in diplomacy. 0:13:28.040 --> 0:13:29.199 This is one of the things that I think is 0:13:29.200 --> 0:13:31.559 is a consequential shift in the Trump administration too, is 0:13:31.600 --> 0:13:33.880 that it has torn up so many deals of his 0:13:34.000 --> 0:13:37.080 predecessor that you start to have this question about are 0:13:37.120 --> 0:13:39.840 they a good faith dealmaker in diplomacy? And the question 0:13:39.840 --> 0:13:43.439 going forward is will Trump continue to basically work to 0:13:43.480 --> 0:13:46.400 blow up the international order? Brian Class, thank you so much. 0:13:46.440 --> 0:13:50.440 With the London School of Economics, the despots Accomplices is 0:13:50.520 --> 0:14:06.199 accomplice rather is is a book. Our topic is Amazon, 0:14:06.320 --> 0:14:09.280 Amazon dot Com and if we can imagine a world 0:14:09.360 --> 0:14:13.240 without Amazon. The shares of Amazon dot Com are up 0:14:13.280 --> 0:14:17.440 more than forty five percent so far this year. The 0:14:17.520 --> 0:14:21.640 company has more than half a million employees. And our 0:14:21.680 --> 0:14:25.360 next guest Matt Winkler, Bloomberg Editor in chief Emeritus says, 0:14:25.880 --> 0:14:29.040 this is a value stock. Matt, always a pleasure, Thanks 0:14:29.040 --> 0:14:32.440 for coming into the studio. Why do you believe that 0:14:32.680 --> 0:14:37.240 Amazon should be viewed as a value stock. It's good 0:14:37.240 --> 0:14:41.720 to be with you, him. Um. Since its inception, Amazon 0:14:41.960 --> 0:14:48.560 has committed itself two greater customer efficiency in everything it does. 0:14:49.400 --> 0:14:52.560 And it started with books of course. Um. And within 0:14:52.600 --> 0:14:57.040 a year of going public, it's market capitalization exceeded the 0:14:57.120 --> 0:15:01.800 number one bookseller Barnes and Noble. By two thousand fifteen, Uh, 0:15:01.920 --> 0:15:05.960 it exceeded the market capitalization of Walmart, which is the 0:15:06.040 --> 0:15:09.960 largest retailer in the world, and then this year. Uh. 0:15:10.200 --> 0:15:14.960 If you think about all the industries Amazon has entered, um, 0:15:15.000 --> 0:15:18.960 starting with books of course, continuing with retail, which is 0:15:19.880 --> 0:15:25.480 broad and vast Walmart. Uh, it's in the business that Ibmazon, 0:15:25.680 --> 0:15:27.720 it's in the business that Oracles, and it's in the 0:15:27.720 --> 0:15:30.600 business that Netflix is in, and it's in the business 0:15:30.640 --> 0:15:35.800 that Ups is in. As in logistics, and market capitalization 0:15:35.800 --> 0:15:40.240 of Amazon exceeds all of those companies combined as of 0:15:40.760 --> 0:15:43.920 just a month ago. So you put all that together. 0:15:44.200 --> 0:15:49.720 Amazon has been very consistent about relentlessly innovating from day one, 0:15:50.120 --> 0:15:54.640 and that relentless innovation is all about focusing on the customers, 0:15:54.680 --> 0:15:58.200 something that Jeff Bezos, the founder and CEO and Sherman 0:15:59.320 --> 0:16:01.880 has said, in act told us right after the company 0:16:01.920 --> 0:16:08.920 went public. What I care about is maximizing the customer experience. 0:16:09.080 --> 0:16:13.680 And so you put that together. Um, that's why most 0:16:13.720 --> 0:16:19.920 of the analysts, all but one um on Bloomberg, surveyed 0:16:19.920 --> 0:16:23.200 by Bloomberg, recommend either buying the stock or keeping it 0:16:23.640 --> 0:16:28.000 because what they see is a future of greater innovation, 0:16:28.480 --> 0:16:30.600 more so than any other company. And I forgot to 0:16:30.640 --> 0:16:33.520 mention that you know, of all the publicly traded companies 0:16:33.560 --> 0:16:38.400 in the world, Amazon commits more money equivalent money to 0:16:38.560 --> 0:16:42.000 what we call r indeed than any other company. Matt, 0:16:42.120 --> 0:16:44.960 this is a spectacular article. I just put it out 0:16:45.000 --> 0:16:48.200 on Twitter, folks. I'll be blunted. It's, without question the 0:16:48.280 --> 0:16:50.960 read of the day. Matt. You go back to the 0:16:50.960 --> 0:16:56.240 original prospectives May fourteenth, and then at the end of 0:16:56.280 --> 0:17:00.280 the article you have a stunning quote which as at 0:17:00.320 --> 0:17:04.800 all if their market was the Empire State Building there 0:17:04.840 --> 0:17:08.399 on the third floor. And what makes it so trenched, folks, 0:17:08.480 --> 0:17:11.040 is Matt Winkler was once on the first floor with 0:17:11.119 --> 0:17:13.800 a roll of decks on a wooden desk, trying to 0:17:13.840 --> 0:17:16.800 start a news company where you surprise Matt that you 0:17:16.920 --> 0:17:20.879 heard there on the third floor of their future. Um. 0:17:20.880 --> 0:17:23.160 I thought that was a particularly good anecdote, which came 0:17:23.200 --> 0:17:26.920 from one of our more distinguished colleagues who works in 0:17:26.960 --> 0:17:29.600 Bloomberg Intelligence and no s far more than I do 0:17:29.640 --> 0:17:36.520 about technology, and he framed it that way, UM, so 0:17:36.560 --> 0:17:40.720 that every every person can appreciate what we're talking about here, 0:17:40.760 --> 0:17:46.199 which is that Amazon has unlimited expectations about what it 0:17:46.280 --> 0:17:53.159 can do about itself, and increasingly its shareholders recognize that. 0:17:53.280 --> 0:17:57.520 And that's why I did say that in effect makes 0:17:57.520 --> 0:17:59.879 it a value stock. I mean, it sort of defies 0:18:00.000 --> 0:18:03.080 all the conventions of great God, it's not Graham and 0:18:03.119 --> 0:18:07.639 dot exactly well it is. I mean, if you think 0:18:07.680 --> 0:18:11.159 about it intellectually, it is in the sense that, uh, 0:18:11.200 --> 0:18:15.680 you know, he Graham and Dodd, both of them would say, 0:18:15.680 --> 0:18:18.800 by all the conventional measures they had, uh, this is 0:18:18.840 --> 0:18:20.720 what a value stock is. But if we put it 0:18:20.720 --> 0:18:23.600 on fast forward and take ourselves into the twenty first century, 0:18:23.600 --> 0:18:26.160 which is where we are now, of course, I think 0:18:26.320 --> 0:18:29.399 they would appreciate what Bezos has been doing, which is 0:18:29.480 --> 0:18:34.919 constantly thinking about what can I do to make the happier? Okay, 0:18:34.920 --> 0:18:37.120 you once sent me to a dinner. You don't know this, Matt. 0:18:37.240 --> 0:18:39.320 I mean Reddo did it on the m X, but 0:18:39.680 --> 0:18:41.280 you don't know this, Mat. But you sent me to 0:18:41.320 --> 0:18:43.760 a dinner once with a guy named Eisener of Disney, 0:18:44.240 --> 0:18:46.560 and Michael Eisler said something that I think I've heard 0:18:46.600 --> 0:18:49.680 from you. It's not only the innovation and the positive 0:18:49.720 --> 0:18:53.360 things you do, it's what you don't do. In your 0:18:53.400 --> 0:18:57.480 research on Jeff Bezos, what's the thing that Jeff Bezos 0:18:57.640 --> 0:19:01.959 is not doing every day? So I don't think he 0:19:02.040 --> 0:19:05.960 ever thinks about, uh, you know, what do I do 0:19:06.040 --> 0:19:09.399 with the dividend or how do I beat you know, 0:19:09.480 --> 0:19:11.920 the earnings per share? I don't think he ever thought 0:19:11.960 --> 0:19:14.680 about that in the first you know, decade or two 0:19:14.680 --> 0:19:18.560 of the company's existence. Um, not for once. I mean 0:19:18.560 --> 0:19:24.879 he managed to do it ultimately, but in the life 0:19:25.000 --> 0:19:29.320 of Amazon most of those years, most of those quarters, 0:19:29.400 --> 0:19:32.880 Jeff Bezos never once thought about the things that most 0:19:32.920 --> 0:19:36.240 CEOs are obsessed with, which is how do I beat 0:19:36.640 --> 0:19:40.199 the earnings estimates from quarter to quarter? Um? You know, 0:19:40.240 --> 0:19:42.520 And just to put it in perspective, let's compare him 0:19:43.040 --> 0:19:47.800 to another company that was considered, you know, wonderful in 0:19:47.840 --> 0:19:51.439 the nineties, and that was General Electric and every quarter 0:19:51.640 --> 0:19:56.400 it beat uh the analysts estimates. But look at where 0:19:56.440 --> 0:19:59.840 g E is today, Um, sort of nowhere to say 0:19:59.840 --> 0:20:05.719 that east, whereas Amazon wasn't thinking that way from day one, Matt, 0:20:06.160 --> 0:20:11.440 Amazon and its focus on customer service, Can they bring 0:20:11.520 --> 0:20:16.640 that same focus to other industries such as health insurance, healthcare, Well, 0:20:16.720 --> 0:20:19.440 it would seem so because you know, if you think 0:20:19.480 --> 0:20:22.840 of where they started with books, and they encountered a 0:20:22.880 --> 0:20:28.240 great deal of hostility from the traditional folks who bought 0:20:28.280 --> 0:20:33.160 books they were customers by the way, um. And eventually, 0:20:34.040 --> 0:20:38.600 you know, Amazon won over all the die hard antagonists 0:20:39.880 --> 0:20:42.040 who didn't like what Amazon was doing and that was 0:20:42.080 --> 0:20:46.639 just books. And then Amazon very quickly becomes a retailer 0:20:47.040 --> 0:20:51.840 um of everything, which is why it's called the Everything store. Um. 0:20:51.840 --> 0:20:58.119 That's defies sort of conventional wisdom that a company can 0:20:58.240 --> 0:21:02.479 sell anything in every thing and do it better than 0:21:02.560 --> 0:21:05.680 all the traditional retailers. And that's exactly what Amazon did, 0:21:06.760 --> 0:21:08.879 and it did it in the space where you have 0:21:09.000 --> 0:21:12.680 these giants, and that's why it's market capitalization took off 0:21:12.720 --> 0:21:14.399 So the answer to your question is, of course, I 0:21:14.480 --> 0:21:16.120 think they can do what they prove and they can 0:21:16.160 --> 0:21:18.720 do it. It's what they're about, um, you know, and 0:21:18.760 --> 0:21:21.840 they start with the right, seems to me focus, which 0:21:21.880 --> 0:21:25.440 is what can we do to improve the customers experience? 0:21:26.240 --> 0:21:30.600 And that's very consistent and just give you ten seconds. 0:21:30.680 --> 0:21:33.440 That seems ironic in a world where that's what you're 0:21:33.480 --> 0:21:38.239 supposed to do with every business. Yeah, I mean, you know, 0:21:39.119 --> 0:21:41.760 you could always say better lucky, that's smart that I 0:21:41.800 --> 0:21:46.080 would say Amazon is lucky and smart. Well done, Thanks 0:21:46.160 --> 0:21:49.879 very much, Matt Winkler, Bloomberg Editor in Chief emeritus, talking 0:21:49.920 --> 0:21:53.320 about Amazon dot Com how it is a value stock. 0:22:04.560 --> 0:22:08.240 President Donald Trump is scheduled to make his selection for 0:22:08.359 --> 0:22:12.639 the Supreme Court known at nine pm Eastern daylight time 0:22:12.920 --> 0:22:16.280 today and we will of course cover that live. Here 0:22:16.320 --> 0:22:19.600 to tell us more about this appointment is Greg Store, 0:22:19.760 --> 0:22:23.720 our Supreme Court reporter. Greg. Always a pleasure to speak 0:22:23.760 --> 0:22:26.359 with you and learn what's going on. I have a 0:22:26.440 --> 0:22:29.520 question having to do with whoever or whomever rather is 0:22:29.920 --> 0:22:34.960 selected and perhaps approved by the Senate to uh fill 0:22:35.080 --> 0:22:39.520 the seat vacated by Justice Anthony Kennedy. What is the 0:22:39.600 --> 0:22:46.439 likelihood that people change their minds once they become an 0:22:46.480 --> 0:22:49.359 associate on the Supreme Court. Well, Pim, if you would 0:22:49.359 --> 0:22:51.920 ask me that question thirty years ago, I would say 0:22:51.960 --> 0:22:54.520 there's a decent likelihood people do change. And you look 0:22:54.520 --> 0:22:57.119 at a justice like David Suitor Um, who has touted 0:22:57.119 --> 0:22:59.000 as a conservative when he joined the court and then 0:22:59.200 --> 0:23:03.399 shifted ratherly to the left. Nowadays, however, that both parties 0:23:03.400 --> 0:23:06.639 and especially the Republicans, have gotten very very good at 0:23:06.720 --> 0:23:09.159 picking the type of justice who will be a reliable 0:23:09.240 --> 0:23:11.520 vote for them down the road, we don't see as 0:23:11.600 --> 0:23:15.280 much shift these days. And in the case of Justice Gorset, 0:23:15.640 --> 0:23:19.440 Donald Trump's first appointee, he very quickly asserted himself as 0:23:19.480 --> 0:23:24.040 the kind of conservative justice that the President and his 0:23:24.080 --> 0:23:27.800 supporters envisioned him him to be. And um, you know, 0:23:28.000 --> 0:23:30.360 I expect we'll have the same thing with this nominee 0:23:30.400 --> 0:23:33.880 and they will probably be reliable votes going forward. So 0:23:34.240 --> 0:23:36.840 would you don't subscribe to the notion that the Supreme 0:23:36.920 --> 0:23:42.399 Court follows public opinion? There is a certain, uh sense 0:23:42.400 --> 0:23:45.680 in which that is true. Absolutely, the Court does, as 0:23:45.720 --> 0:23:48.399 a real general matter, have have a sense of the 0:23:48.440 --> 0:23:52.000 public sentiment and the polls. Uh, you know, And we 0:23:52.040 --> 0:23:53.800 are we are potentially going to have a very very 0:23:53.840 --> 0:23:57.119 conservative Supreme Court, and maybe that will test the notion 0:23:57.200 --> 0:24:01.320 that justices cannot change. But you know, this list of 0:24:01.359 --> 0:24:04.040 people that Donald Trump is choosing from is a list 0:24:04.080 --> 0:24:07.639 put together by the Federalist Society. It has been vetted 0:24:07.680 --> 0:24:10.480 to a much greater extent than to go back to 0:24:10.520 --> 0:24:16.080 Justice Suitor. That appointment was some some three decades ago. Uh, 0:24:16.119 --> 0:24:20.760 And so the chances that somebody will actually move significantly 0:24:20.800 --> 0:24:26.720 to the left are much less than they used to be. Greg, Well, 0:24:26.720 --> 0:24:28.840 thank you so much for taking time with us today 0:24:28.880 --> 0:24:32.600 before all this excitement. Noah Feldman, folks, and you'll see this. 0:24:32.720 --> 0:24:37.200 It's not out yet, but Noah Feldman, the great Harvard 0:24:37.520 --> 0:24:43.879 calumnist for Bloomberg, Greg can't uh mentions the four candidates 0:24:43.920 --> 0:24:48.679 onesie insider, onesie outsider, et cetera. And then there is 0:24:49.359 --> 0:24:54.160 Judge Barrett, who, to be blunt, Greg, he raves about 0:24:55.240 --> 0:24:59.199 can they forget that she's a conservative? I mean, is 0:24:59.240 --> 0:25:03.720 it do they actually look at their credentials versus their 0:25:03.800 --> 0:25:09.400