1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,000 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why learn more and find your 4 00:00:10,760 --> 00:00:26,360 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,760 --> 00:00:30,480 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,520 --> 00:00:35,560 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:47,880 Speaker 1: of course on the Bloomberg Yeah, I'm Francine Lack. What 9 00:00:48,080 --> 00:00:51,840 Speaker 1: in for David or Tom Keene? We're not sure. I'm 10 00:00:51,840 --> 00:00:54,520 Speaker 1: with Michael McKee. Mike, we got to choose who we 11 00:00:54,560 --> 00:00:57,880 Speaker 1: are today. Are you worried about I'm not, but in 12 00:00:57,920 --> 00:01:00,960 Speaker 1: my mind I am everywhere I go to Keane is 13 00:01:01,080 --> 00:01:03,640 Speaker 1: in my mind. Let's have a look at the markets. 14 00:01:04,319 --> 00:01:06,040 Speaker 1: That's what it is, a little bit scary, It's a 15 00:01:06,120 --> 00:01:08,319 Speaker 1: little bit freaky. This is what Tom would do. So 16 00:01:08,400 --> 00:01:10,880 Speaker 1: he'd open it up and look at the dollar pairing 17 00:01:11,240 --> 00:01:13,039 Speaker 1: some of the weekly advance that was spurred by the 18 00:01:13,080 --> 00:01:16,200 Speaker 1: prospect of hire u S interest rates, gold also rebounding 19 00:01:16,240 --> 00:01:20,480 Speaker 1: from a nine month Mike, I know you're watching, of course, 20 00:01:20,520 --> 00:01:24,119 Speaker 1: Black Friday, and the shift for me is really incredibly 21 00:01:24,160 --> 00:01:27,240 Speaker 1: Onto Mobile and the online retailers doing a lot better 22 00:01:27,240 --> 00:01:29,959 Speaker 1: than they did in previous years. Right. Yeah, We've been 23 00:01:29,959 --> 00:01:32,959 Speaker 1: watching live pictures of various retailers coming in because it's 24 00:01:33,000 --> 00:01:35,200 Speaker 1: Black Friday, and you send your cameras out to do that, 25 00:01:35,280 --> 00:01:39,640 Speaker 1: and stories don't look all that crowded. But um, why 26 00:01:39,760 --> 00:01:41,800 Speaker 1: would you This one I don't understand is why you 27 00:01:41,840 --> 00:01:44,840 Speaker 1: would go to a store when you can do the 28 00:01:44,880 --> 00:01:47,040 Speaker 1: same thing and get the same bargains by sitting at 29 00:01:47,080 --> 00:01:50,000 Speaker 1: home and not getting whacked in the head by somebody 30 00:01:50,040 --> 00:01:53,440 Speaker 1: grabbing a TV set and swinging it around. Um, I 31 00:01:53,440 --> 00:01:56,760 Speaker 1: don't get that. I did not realize that it could 32 00:01:56,800 --> 00:02:00,280 Speaker 1: be that violent. Actually remember seeing in the past a 33 00:02:00,320 --> 00:02:02,240 Speaker 1: lot of you know, when the stores open, people actually 34 00:02:02,240 --> 00:02:04,560 Speaker 1: fighting for stuff. I'm a little bit more old school, Mike. 35 00:02:04,720 --> 00:02:06,800 Speaker 1: I like going in shops because I get a feel 36 00:02:06,840 --> 00:02:08,480 Speaker 1: for the things I want to buy, and then I 37 00:02:08,520 --> 00:02:11,360 Speaker 1: can't deal with the hassle of returning them. Let's get 38 00:02:11,360 --> 00:02:14,240 Speaker 1: to someone who knows a thing or two about retail. 39 00:02:14,280 --> 00:02:18,080 Speaker 1: He is Howard Davidovits from Davidovitz Associates. He is chairman there. 40 00:02:18,120 --> 00:02:21,160 Speaker 1: Howard Great to speak to you on this Black Friday. 41 00:02:21,400 --> 00:02:24,440 Speaker 1: Black Friday a success, but are people really moving to 42 00:02:24,520 --> 00:02:31,120 Speaker 1: online massively? Massively? There's a massive moved online. And the 43 00:02:31,160 --> 00:02:36,519 Speaker 1: total picture is, uh, we're so overstowed. We have three 44 00:02:36,840 --> 00:02:41,800 Speaker 1: times the amount of sales of square feet three times 45 00:02:42,360 --> 00:02:46,280 Speaker 1: per person in the United States than any other country England, Japan, 46 00:02:46,520 --> 00:02:51,080 Speaker 1: you mentioned in Canada. We're overstewed and the hottest area 47 00:02:51,240 --> 00:02:54,840 Speaker 1: is online. Now you put those two things together and 48 00:02:54,919 --> 00:02:59,000 Speaker 1: you're going to be in for a massive readjustment in 49 00:02:59,120 --> 00:03:02,880 Speaker 1: retail space and shopping center space. And that's what's going 50 00:03:02,919 --> 00:03:07,520 Speaker 1: on with major retailers across the board closing stores and 51 00:03:07,600 --> 00:03:10,639 Speaker 1: downsizing stores, and that's what's going on. Yeah, but it 52 00:03:10,800 --> 00:03:14,160 Speaker 1: is is anybody gonna can you still make money? Put 53 00:03:14,200 --> 00:03:16,720 Speaker 1: it that way, if you're a retailer, are you gonna 54 00:03:16,760 --> 00:03:18,960 Speaker 1: make money? Or are we gonna see people even if 55 00:03:19,000 --> 00:03:20,799 Speaker 1: they're trying to move people online? A We're gonna see 56 00:03:20,800 --> 00:03:25,200 Speaker 1: people going out of business. We're going to massively see 57 00:03:25,240 --> 00:03:28,600 Speaker 1: people going out of business, as we've seen and as 58 00:03:28,680 --> 00:03:32,840 Speaker 1: we will continue to see malls closing, stores closing, and 59 00:03:33,000 --> 00:03:38,800 Speaker 1: folks going out of business. Departments, well, the largest department 60 00:03:38,840 --> 00:03:43,200 Speaker 1: store in the United States. See here's they're in liquidation. 61 00:03:43,280 --> 00:03:45,640 Speaker 1: What do you want them to do? Came out with 62 00:03:45,760 --> 00:03:49,520 Speaker 1: the largest discounted They were ten times bigger than Walmart. 63 00:03:50,760 --> 00:03:53,560 Speaker 1: They're liquid dating. I mean, if you go and you 64 00:03:53,840 --> 00:03:57,200 Speaker 1: and the list goes on and on and on. If 65 00:03:57,200 --> 00:04:00,400 Speaker 1: you're in the office supply business, you know, off the 66 00:04:00,400 --> 00:04:04,200 Speaker 1: there's just so many people in trouble out there, and 67 00:04:04,240 --> 00:04:08,520 Speaker 1: it's because we're overstowed and the growth areas online. That 68 00:04:08,720 --> 00:04:12,600 Speaker 1: is a deadly combination. All right, But Howard, is this 69 00:04:12,800 --> 00:04:15,560 Speaker 1: because of cheap money out there so we've kept, you know, 70 00:04:15,680 --> 00:04:20,479 Speaker 1: zombie retailers alive. Or do we actually think that because 71 00:04:20,520 --> 00:04:23,839 Speaker 1: Donald Trump is coming on January twenties and he wants 72 00:04:23,920 --> 00:04:27,200 Speaker 1: to remove the US a little bit from globalization, that 73 00:04:27,240 --> 00:04:29,520 Speaker 1: actually it's going to be so much more difficult for 74 00:04:29,600 --> 00:04:32,600 Speaker 1: you guys to import cheap prices cheap clothing from the 75 00:04:32,640 --> 00:04:35,400 Speaker 1: rest of the world, so they'll automatically have to go under. 76 00:04:36,080 --> 00:04:38,080 Speaker 1: First of all, it says nothing to do with Donald 77 00:04:38,120 --> 00:04:40,320 Speaker 1: Trump or anything else. This has been going on for 78 00:04:40,400 --> 00:04:45,400 Speaker 1: some time. What happened is retail is over expanded, and 79 00:04:45,520 --> 00:04:49,159 Speaker 1: one reason they did is with the craziness of Wall Street, 80 00:04:49,200 --> 00:04:52,680 Speaker 1: where you have to show growth. What they don't like you, 81 00:04:52,680 --> 00:04:56,279 Speaker 1: you got to show growth. So they all over expand 82 00:04:56,320 --> 00:04:58,680 Speaker 1: that cheap money was a major part of it. When 83 00:04:58,760 --> 00:05:03,279 Speaker 1: it comes to real estate and shopping centers, the time 84 00:05:03,360 --> 00:05:07,240 Speaker 1: is coming. We're gonna have fifty billion dollars up for 85 00:05:07,320 --> 00:05:11,520 Speaker 1: refinancing in the next eighteen months, and then forty billion 86 00:05:11,560 --> 00:05:15,640 Speaker 1: more f that. At those c MBS loans. There is 87 00:05:15,720 --> 00:05:18,000 Speaker 1: going to be trouble because the banks are going to 88 00:05:18,080 --> 00:05:21,719 Speaker 1: be very tough and the lenders are on renewals and 89 00:05:21,839 --> 00:05:26,560 Speaker 1: new and new structures. So and you're gonna have shopping 90 00:05:26,560 --> 00:05:29,679 Speaker 1: center developers just hand the shopping center back to the banks. 91 00:05:29,920 --> 00:05:32,400 Speaker 1: The loan is secured with the property, they're gonna say 92 00:05:32,440 --> 00:05:35,680 Speaker 1: goodbye and good luck. You're gonna see this everywhere because 93 00:05:35,720 --> 00:05:38,400 Speaker 1: this is what's going on. Well, it is the same 94 00:05:38,440 --> 00:05:44,040 Speaker 1: thing happening with small businesses, the local retailers as you're 95 00:05:44,080 --> 00:05:47,279 Speaker 1: talking about with the big guys with the Yeah, the 96 00:05:47,400 --> 00:05:50,320 Speaker 1: local retailers, many of them are getting crushed. You know, 97 00:05:50,360 --> 00:05:52,719 Speaker 1: when I started in this business, I traveled a gross 98 00:05:52,760 --> 00:05:57,440 Speaker 1: America and I dealt with independent department stores in almost 99 00:05:57,480 --> 00:06:01,080 Speaker 1: every state affirmed in either way. You know how many 100 00:06:01,080 --> 00:06:04,800 Speaker 1: of them are left none. There are literally you can 101 00:06:04,920 --> 00:06:08,719 Speaker 1: count them on one hand. You don't have any more 102 00:06:08,760 --> 00:06:12,160 Speaker 1: independent department stores in America. Wherever I used to go, 103 00:06:12,880 --> 00:06:16,440 Speaker 1: Think about New York, we had all we had Altmans, 104 00:06:16,520 --> 00:06:20,080 Speaker 1: we had Gimbals, which we had six quarterbacks. We had 105 00:06:20,160 --> 00:06:25,160 Speaker 1: six independent department stores. They're all gone Best and Cup 106 00:06:25,200 --> 00:06:30,680 Speaker 1: they're all out. That's true in every single state. This 107 00:06:30,760 --> 00:06:34,839 Speaker 1: is what's gone on already, and we're just beginning. The 108 00:06:35,000 --> 00:06:38,880 Speaker 1: problem is going to get worse. We're overstored. This is 109 00:06:38,920 --> 00:06:43,640 Speaker 1: the number one retail problem in the United States. Overstored, 110 00:06:44,000 --> 00:06:48,800 Speaker 1: and the fastest growing area is online. How can you 111 00:06:49,000 --> 00:06:53,960 Speaker 1: possibly put those things together? You got a mess, all right? 112 00:06:54,000 --> 00:06:55,719 Speaker 1: But how I mean? This is true in the UK, 113 00:06:55,920 --> 00:06:58,320 Speaker 1: This is true in a lot of our Western societies. 114 00:06:58,360 --> 00:07:00,599 Speaker 1: That the big guys come over, they take office space, 115 00:07:00,640 --> 00:07:03,960 Speaker 1: they can pay so much more than the independent retailer. 116 00:07:04,040 --> 00:07:09,680 Speaker 1: Do you ever see independent retailers coming back? Independent retailers 117 00:07:09,720 --> 00:07:12,880 Speaker 1: will always find the way to come back because there 118 00:07:13,000 --> 00:07:17,920 Speaker 1: is genius and independent entrepreneurs, and I see it everywhere 119 00:07:17,960 --> 00:07:20,600 Speaker 1: I can look. Take New York City. We used to 120 00:07:20,640 --> 00:07:24,520 Speaker 1: have independent uh drug stores on every block with the 121 00:07:24,600 --> 00:07:27,080 Speaker 1: name of the owner. Now or and none, because of 122 00:07:27,120 --> 00:07:31,200 Speaker 1: course all either Walgreens or CBS are right. Eight owns 123 00:07:31,240 --> 00:07:35,480 Speaker 1: everything right to know. Now what what I see now 124 00:07:35,760 --> 00:07:41,160 Speaker 1: are guys opening up little stores without a pharmacist, selling 125 00:07:41,200 --> 00:07:44,240 Speaker 1: health and beauty aids all over the place. And they 126 00:07:44,280 --> 00:07:47,960 Speaker 1: look like they're very profitable. They're narrow spaces, very cheap. 127 00:07:48,320 --> 00:07:50,800 Speaker 1: The owner is there with two employees and they look 128 00:07:50,840 --> 00:07:53,640 Speaker 1: to me like they're really doing well and they're selling 129 00:07:53,760 --> 00:07:57,720 Speaker 1: lots of cosmetics. They know exactly what they do. They're 130 00:07:57,760 --> 00:08:03,400 Speaker 1: selling it for less entreprene door is always find a way, 131 00:08:03,400 --> 00:08:06,280 Speaker 1: but it's harder and harder. Let's talk a little bit 132 00:08:06,320 --> 00:08:11,280 Speaker 1: about a Black Friday itself. This used to be huge. 133 00:08:10,840 --> 00:08:15,160 Speaker 1: A certain presidential candiate would say, uh, and now everybody 134 00:08:15,280 --> 00:08:18,480 Speaker 1: serif why do I want to do that? Well, there 135 00:08:18,520 --> 00:08:23,360 Speaker 1: are several reasons. Number one, Black Friday starts way earlier 136 00:08:24,160 --> 00:08:27,400 Speaker 1: that and that is out of desperation on the part 137 00:08:27,400 --> 00:08:29,960 Speaker 1: of retail is in a fight for market share and 138 00:08:30,080 --> 00:08:34,760 Speaker 1: the mighty Amazon. They all started weeks ago with all 139 00:08:34,760 --> 00:08:37,400 Speaker 1: of the sales for Black Friday, and I mean it's 140 00:08:37,520 --> 00:08:42,480 Speaker 1: it's amazing Amazon Prime. So it started a long time ago. 141 00:08:43,080 --> 00:08:46,320 Speaker 1: Now we have Cyber Monday, which takes up a lot 142 00:08:46,360 --> 00:08:50,080 Speaker 1: of space, which is a huge day. We have Thanksgiving open. 143 00:08:50,200 --> 00:08:52,400 Speaker 1: We got all of his stuff going on, and all 144 00:08:52,440 --> 00:08:56,320 Speaker 1: of that takes away from Black Friday? So is Black 145 00:08:56,360 --> 00:08:59,960 Speaker 1: Friday still are very important? That yes, doesn't have any 146 00:09:00,080 --> 00:09:03,160 Speaker 1: we near the impact it used to have. No, and 147 00:09:03,280 --> 00:09:07,199 Speaker 1: you said something like very important before that, I didn't 148 00:09:07,240 --> 00:09:10,920 Speaker 1: miss you said there were there was a report from 149 00:09:11,040 --> 00:09:15,160 Speaker 1: Target at Walmart on TVs. You know what that means? 150 00:09:15,240 --> 00:09:18,440 Speaker 1: The best Buy is going to do great. That is 151 00:09:18,480 --> 00:09:22,080 Speaker 1: the interpretation of what I heard from you. And best 152 00:09:22,120 --> 00:09:25,640 Speaker 1: Buy has been rolling anyway, look for a very good 153 00:09:25,720 --> 00:09:30,080 Speaker 1: performance from best Buy. Why do people buy TVs? Now? 154 00:09:31,280 --> 00:09:33,360 Speaker 1: This can be the cheapest of the year. If if 155 00:09:33,400 --> 00:09:35,520 Speaker 1: everybody knows you're gonna go buy a TV, I jack 156 00:09:35,640 --> 00:09:38,959 Speaker 1: up the price. Nobody can jack up the price. It 157 00:09:39,040 --> 00:09:43,240 Speaker 1: here's the reason this too much product in too many places. 158 00:09:43,400 --> 00:09:47,680 Speaker 1: You that's what you can do. Nobody has pricing power 159 00:09:47,920 --> 00:09:52,839 Speaker 1: unless your product is unique, no one. So if everybody 160 00:09:52,920 --> 00:09:57,319 Speaker 1: is selling the same TV, that means the only difference 161 00:09:57,559 --> 00:10:02,480 Speaker 1: is price. That drives the a price down. But Howard, 162 00:10:03,640 --> 00:10:07,880 Speaker 1: this is a crazy business model. This won't work long term, right? 163 00:10:08,679 --> 00:10:12,120 Speaker 1: Why I am saying there is gonna be Carne. Do 164 00:10:12,120 --> 00:10:14,240 Speaker 1: you know how many electronics chains we used to have 165 00:10:14,280 --> 00:10:19,840 Speaker 1: in America? You remember CompUSA? Remember Radio Shack? Remember Ultimate 166 00:10:19,880 --> 00:10:23,320 Speaker 1: Electronics circuits? Do you remember all of them? By the way, 167 00:10:23,360 --> 00:10:28,800 Speaker 1: they're all gone. They're all gone. Best Buy is almost 168 00:10:28,880 --> 00:10:33,839 Speaker 1: the only one left standing out of the seventeen we had. 169 00:10:34,080 --> 00:10:37,680 Speaker 1: Welcome to the Club. We are talking Black Friday and 170 00:10:37,920 --> 00:10:42,319 Speaker 1: retail with Howard Davidovitz and Howard Dividov's is coming to us, 171 00:10:42,400 --> 00:10:48,360 Speaker 1: as I understand it, live from Trump Tower, Howard, Absolutely, 172 00:10:49,040 --> 00:10:53,199 Speaker 1: you live in the home of the President elect. Correct. 173 00:10:54,080 --> 00:10:57,560 Speaker 1: What's it like to live in a tower that is 174 00:10:57,760 --> 00:11:02,680 Speaker 1: basically a military outpost? Now it seems, well, I'm my 175 00:11:02,840 --> 00:11:05,960 Speaker 1: reaction is there's no military I mean, I go in 176 00:11:06,040 --> 00:11:07,960 Speaker 1: and that and I put my stuff through the machine. 177 00:11:08,000 --> 00:11:12,600 Speaker 1: It takes one second and that's it. So I I 178 00:11:12,640 --> 00:11:14,959 Speaker 1: don't see a lot I'm in any outpost. However, there 179 00:11:15,000 --> 00:11:16,840 Speaker 1: are a lot of people in the building who do 180 00:11:16,960 --> 00:11:22,160 Speaker 1: feel exactly as you just said, a military outpost. I 181 00:11:22,200 --> 00:11:26,079 Speaker 1: think the NYPD has been absolutely sensational, and so is 182 00:11:26,120 --> 00:11:30,560 Speaker 1: the Secret Service. Their total gentleman and general ladies and 183 00:11:31,200 --> 00:11:34,280 Speaker 1: have been doing the job magnificently and really don't bother 184 00:11:34,440 --> 00:11:38,360 Speaker 1: us very much at all. That's my personal reaction. However, 185 00:11:38,880 --> 00:11:43,360 Speaker 1: if I was one of the stores like Gucci, Tiffany's, Nike, 186 00:11:43,559 --> 00:11:47,760 Speaker 1: or one of those stores that that if you're a customer, 187 00:11:48,760 --> 00:11:51,480 Speaker 1: a lot of customers are going to be turned off ongoing. 188 00:11:51,559 --> 00:11:55,680 Speaker 1: And that's pretty heavy duty because ten percent of Tiffany's 189 00:11:55,720 --> 00:11:59,680 Speaker 1: businesses in their flagship store on Fifth Avenue, so that 190 00:11:59,760 --> 00:12:03,080 Speaker 1: could be a problem for some stores. And that's where 191 00:12:03,120 --> 00:12:05,480 Speaker 1: I see the problem as far as the residents go, 192 00:12:06,360 --> 00:12:09,640 Speaker 1: at least from my perception. In my reality, we just 193 00:12:09,720 --> 00:12:11,640 Speaker 1: go in and out. If you want to make a 194 00:12:11,640 --> 00:12:14,040 Speaker 1: big deal out of it, good luck. But to me, 195 00:12:14,120 --> 00:12:18,120 Speaker 1: it's no big deal. Yeah, I am fascinated, Howard. And actually, 196 00:12:18,400 --> 00:12:21,000 Speaker 1: when Tom Keene was starting to talk about Tiffany's and 197 00:12:21,040 --> 00:12:23,280 Speaker 1: Gucci and how their head, I was laughing it off 198 00:12:23,320 --> 00:12:26,080 Speaker 1: at the start, right, But you really believe that tiffany 199 00:12:26,280 --> 00:12:29,720 Speaker 1: could get hurt because they're really next door to Donald Trump. 200 00:12:30,280 --> 00:12:33,040 Speaker 1: It's not because the Donald Trump and nothing that I 201 00:12:33,120 --> 00:12:38,400 Speaker 1: mean what they they have a store in a location 202 00:12:39,200 --> 00:12:45,400 Speaker 1: where is kind of security that's gonna turn off I 203 00:12:45,440 --> 00:12:48,920 Speaker 1: think certain customers from going in because it's a pain 204 00:12:49,000 --> 00:12:54,360 Speaker 1: in the neck. So I think they're gonna lose potential business, 205 00:12:55,200 --> 00:12:57,600 Speaker 1: and I think that will be hurtful. So I think 206 00:12:57,640 --> 00:13:03,480 Speaker 1: that would be part of this total picture. Go ahead. No, 207 00:13:04,000 --> 00:13:06,320 Speaker 1: I was curious hard when we know we've never seen 208 00:13:06,320 --> 00:13:08,760 Speaker 1: a president like this, so we're expecting the cummings and 209 00:13:08,800 --> 00:13:15,679 Speaker 1: goings to last until January. We understand that. Actually, no, no, 210 00:13:15,840 --> 00:13:19,480 Speaker 1: it's gonna go. He's gonna come home weekends. First of all, 211 00:13:20,559 --> 00:13:22,920 Speaker 1: he loves the building. Look, George Bush was going to 212 00:13:23,040 --> 00:13:26,880 Speaker 1: Texas for months, if you recall, for months and operating 213 00:13:26,880 --> 00:13:30,200 Speaker 1: out of his Texas home because that's what he liked. No, no, no, 214 00:13:30,440 --> 00:13:33,880 Speaker 1: I mean I think this is gonna go on for 215 00:13:33,920 --> 00:13:36,440 Speaker 1: four or eight years, and I think everybody is going 216 00:13:36,520 --> 00:13:39,000 Speaker 1: to get used to it, and all the hysteria will end, 217 00:13:39,840 --> 00:13:43,960 Speaker 1: and everybody will adjust. As Americans, we adjust to things 218 00:13:44,559 --> 00:13:46,839 Speaker 1: and and that, and that's what will happen. I just 219 00:13:46,960 --> 00:13:51,400 Speaker 1: don't think it's that big of a deal for me, 220 00:13:51,679 --> 00:13:56,720 Speaker 1: and yet Howard uh. This is for those who don't know. 221 00:13:57,120 --> 00:14:00,280 Speaker 1: Trump Tower is between fifty six and fifty seven on 222 00:14:00,440 --> 00:14:04,960 Speaker 1: Fifth Avenue, which basically the shopping section part of Fifth 223 00:14:05,000 --> 00:14:08,240 Speaker 1: Avenue starts at fifty and goes down, So you've got 224 00:14:08,240 --> 00:14:12,440 Speaker 1: this security courting that cut cuts Fifth Avenue down to 225 00:14:12,600 --> 00:14:15,760 Speaker 1: one or two lanes when he's there. Does that change 226 00:14:15,840 --> 00:14:20,160 Speaker 1: the whole dynamic of Fifth Avenue itself? I do well. 227 00:14:20,200 --> 00:14:22,280 Speaker 1: There are two dimensions to it. One, it's the most 228 00:14:22,320 --> 00:14:26,160 Speaker 1: expensive space on a planet Earth, five thousand dollars of 229 00:14:26,200 --> 00:14:30,240 Speaker 1: square foot from fort nine to fifty seventh on Fifth. 230 00:14:30,840 --> 00:14:34,240 Speaker 1: So the retail stores are paying the highest rent on 231 00:14:34,320 --> 00:14:39,680 Speaker 1: the planet Earth, highest rent on the planet Earth. Now, 232 00:14:39,720 --> 00:14:42,240 Speaker 1: when you pay the highest rent on the planet Earth, 233 00:14:42,480 --> 00:14:46,360 Speaker 1: you expect to be able to do business. There is 234 00:14:46,520 --> 00:14:50,880 Speaker 1: an obstruction to do we business and I think this 235 00:14:50,960 --> 00:14:56,280 Speaker 1: is going to hurt certain stores and it's unfortunate and 236 00:14:56,680 --> 00:15:01,040 Speaker 1: it's part of what's going on, and that's it. So 237 00:15:01,160 --> 00:15:03,080 Speaker 1: that has to live with it. They'll have to make 238 00:15:03,120 --> 00:15:05,680 Speaker 1: an adjustment in their rent, they'll have to do something 239 00:15:05,720 --> 00:15:11,440 Speaker 1: to litigate, they'll do something. They're going to lose business, okay, 240 00:15:11,440 --> 00:15:13,960 Speaker 1: but can they not make up for that business elsewhere? 241 00:15:14,040 --> 00:15:15,720 Speaker 1: I don't know if they have other stores that are 242 00:15:15,760 --> 00:15:20,400 Speaker 1: not These is a worldwide I said that that stores 243 00:15:20,480 --> 00:15:23,320 Speaker 1: ten percent of their business, which is huge because they've 244 00:15:23,360 --> 00:15:26,760 Speaker 1: got stores everywhere all over. There was a worldwide company 245 00:15:26,960 --> 00:15:31,600 Speaker 1: they've got stores all across America. Of course, that's you know, 246 00:15:31,800 --> 00:15:35,640 Speaker 1: one of the store Nike is a giant organization, Gucci 247 00:15:35,880 --> 00:15:42,080 Speaker 1: that LVMH. I mean, these are giant organizations that will 248 00:15:42,200 --> 00:15:48,840 Speaker 1: suffer just in that location. How divids from Divinos An Associates. 249 00:15:48,880 --> 00:15:52,000 Speaker 1: Thank you very much for joining us today from Chuck Tower. 250 00:16:03,760 --> 00:16:06,320 Speaker 1: Now we're hearing it's black of course we know that 251 00:16:06,360 --> 00:16:09,160 Speaker 1: it's Black Friday, but holiday prices, well, that war is 252 00:16:09,200 --> 00:16:13,640 Speaker 1: intensifying as companies such as Walmart and Target are pursuing Amazon. 253 00:16:13,760 --> 00:16:16,360 Speaker 1: So Mike, let's continue the retail conversation. Let's bring in 254 00:16:16,400 --> 00:16:20,560 Speaker 1: a Jerry Storage. He is Hudson Bay CEO on Black Friday. Jerry, 255 00:16:20,600 --> 00:16:23,040 Speaker 1: great to have you here in the program. To her website. 256 00:16:23,360 --> 00:16:26,040 Speaker 1: I'm looking at the sales you're on offer, They're great. 257 00:16:26,120 --> 00:16:28,520 Speaker 1: Is it not too much? How much of an inconvenience 258 00:16:28,640 --> 00:16:31,080 Speaker 1: is it? If you're a retail a person, then what 259 00:16:31,200 --> 00:16:33,560 Speaker 1: will fly off the shelves or what you will sell 260 00:16:33,560 --> 00:16:37,400 Speaker 1: online is actually the blockbusters. Well, look, this is Black Friday, 261 00:16:37,600 --> 00:16:41,360 Speaker 1: and Black Friday is an American institution, and Black Friday 262 00:16:41,440 --> 00:16:45,320 Speaker 1: is totally about the deals. Everyone knows that. That's that's 263 00:16:45,360 --> 00:16:47,520 Speaker 1: why it exists. It's the super Bowl of retail and 264 00:16:47,560 --> 00:16:49,640 Speaker 1: you have to bring your top game. People don't go 265 00:16:49,680 --> 00:16:52,480 Speaker 1: to stores on Black Friday to buy things at regular price. 266 00:16:52,560 --> 00:16:55,480 Speaker 1: That's a very different time. If you're reconsumer, they come 267 00:16:55,520 --> 00:16:58,160 Speaker 1: to get the bargains and they're having fun doing it. 268 00:16:58,520 --> 00:17:00,360 Speaker 1: You know, it's a treasure hunt, So you have to 269 00:17:00,360 --> 00:17:02,240 Speaker 1: have great bargets. So like a Lord and Taylor with 270 00:17:02,320 --> 00:17:05,919 Speaker 1: Kashma swear for th it is just flying. I mean, 271 00:17:05,920 --> 00:17:09,040 Speaker 1: people are so excited to snag a Kashma whatever tht 272 00:17:09,440 --> 00:17:12,360 Speaker 1: get that online. You can also get online. Every merchandise 273 00:17:12,400 --> 00:17:15,159 Speaker 1: offer we have for Black Friday is also you've been 274 00:17:15,240 --> 00:17:19,080 Speaker 1: visiting stores, your stores, you have, uh, Lord and Taylor, 275 00:17:19,080 --> 00:17:22,480 Speaker 1: You've got Sacks, You've got a whole bunch of department 276 00:17:22,520 --> 00:17:26,760 Speaker 1: stores around the country. Have you noticed fewer people I'm 277 00:17:26,760 --> 00:17:30,800 Speaker 1: not saying lower sales, I'm saying fewer actual bodies in 278 00:17:30,840 --> 00:17:33,720 Speaker 1: the stores? Are more people shopping online? And is Black 279 00:17:33,760 --> 00:17:37,320 Speaker 1: Friday the experience of going out sort of fading? Uh? 280 00:17:37,840 --> 00:17:41,959 Speaker 1: The answer is that both are happening. So uh, the 281 00:17:41,960 --> 00:17:44,480 Speaker 1: the physical shopper and the and the in stores in 282 00:17:44,520 --> 00:17:47,720 Speaker 1: the online shopper are both happening. So Black Friday is 283 00:17:47,720 --> 00:17:51,160 Speaker 1: definitely a physical experience. People love to go out, and 284 00:17:51,320 --> 00:17:56,040 Speaker 1: still you have to remember of sales in almost any 285 00:17:56,080 --> 00:17:58,960 Speaker 1: category take place in a bricks and mortar store. But 286 00:17:59,119 --> 00:18:00,919 Speaker 1: we are seeing general only in the retail industries as 287 00:18:00,960 --> 00:18:03,240 Speaker 1: a whole, is that more of the growth is taking 288 00:18:03,240 --> 00:18:05,919 Speaker 1: place online, and of course the economy is growing, so 289 00:18:05,960 --> 00:18:10,920 Speaker 1: more the growth is coming online, and certainly Thanksgiving Day 290 00:18:11,040 --> 00:18:14,639 Speaker 1: and Black Friday arrivaling Cyber Monday in terms of online sales, 291 00:18:14,640 --> 00:18:17,040 Speaker 1: so growing very rapidly. For a company like us, whether 292 00:18:17,040 --> 00:18:20,000 Speaker 1: it's Sackforth, Avenue, Lord and Taylor or one of our 293 00:18:20,040 --> 00:18:22,439 Speaker 1: many other banners, what we're focused on is providing the 294 00:18:22,440 --> 00:18:24,880 Speaker 1: best all channel experience. So so we have the same 295 00:18:24,920 --> 00:18:26,560 Speaker 1: offers online and in store, and it's up to the 296 00:18:26,600 --> 00:18:29,480 Speaker 1: customer to choose how she wants to do it. Some 297 00:18:29,560 --> 00:18:31,240 Speaker 1: of is their doorbusters and get people to wait in 298 00:18:31,320 --> 00:18:33,159 Speaker 1: line and come into the stores like there was you know, 299 00:18:33,200 --> 00:18:35,359 Speaker 1: there's a great doorbuster at Lord and Taylor where the 300 00:18:35,400 --> 00:18:37,840 Speaker 1: first five hundred people each day this week get a 301 00:18:37,880 --> 00:18:41,160 Speaker 1: twenty other gift card for being in line and going 302 00:18:41,160 --> 00:18:44,320 Speaker 1: into the store. But but most of the merchandise offers 303 00:18:44,560 --> 00:18:47,040 Speaker 1: are the same in the store and online, and you 304 00:18:47,080 --> 00:18:49,000 Speaker 1: buy it however you choose. It's not our job to 305 00:18:49,119 --> 00:18:52,600 Speaker 1: try to train you or teach you or change your behavior. 306 00:18:52,760 --> 00:18:54,280 Speaker 1: If you want to buy inline, great, you want to 307 00:18:54,280 --> 00:18:57,119 Speaker 1: come to the store, that's great too. I like the 308 00:18:57,119 --> 00:19:00,400 Speaker 1: way that you said she, Jerry, is it the she's 309 00:19:00,480 --> 00:19:03,040 Speaker 1: at The female shoppers actually spend more on Black Friday. 310 00:19:03,160 --> 00:19:05,240 Speaker 1: Let me tell you, after thirty years in retailer, it 311 00:19:05,520 --> 00:19:08,440 Speaker 1: always has been she and always will be she. The 312 00:19:08,800 --> 00:19:12,080 Speaker 1: woman is the CFO of the household and certainly, uh 313 00:19:12,119 --> 00:19:15,520 Speaker 1: you know, buys far more at retail than than men do. 314 00:19:15,600 --> 00:19:18,239 Speaker 1: But but another interesting phenomenon, as long as we're on this, 315 00:19:18,640 --> 00:19:21,000 Speaker 1: is that the men's areas in our stores haven't grown 316 00:19:21,040 --> 00:19:22,840 Speaker 1: more rapidly than the women's. And it's not just us, 317 00:19:22,880 --> 00:19:25,359 Speaker 1: it's industry wide, and we say that men are the 318 00:19:25,359 --> 00:19:28,600 Speaker 1: new women as they're starting to grow their their their purchases. 319 00:19:29,280 --> 00:19:32,320 Speaker 1: Take that. It's a good thing, Mike. Shopping is always 320 00:19:32,320 --> 00:19:33,960 Speaker 1: a good thing. But you know, part of it is 321 00:19:33,960 --> 00:19:37,080 Speaker 1: because with the more casual workplaces, I mean, you know, 322 00:19:37,280 --> 00:19:40,679 Speaker 1: they're less sort of formal suits and ties, men have 323 00:19:40,720 --> 00:19:42,840 Speaker 1: to learn all over again have a dress when they 324 00:19:42,880 --> 00:19:44,879 Speaker 1: go to work, and they need to buy sweaters and 325 00:19:45,080 --> 00:19:47,439 Speaker 1: and different shoes and and really pay attention to it, 326 00:19:47,440 --> 00:19:50,000 Speaker 1: because you know, you can't just wear the same navy 327 00:19:50,000 --> 00:19:51,840 Speaker 1: blue suit aid to work and no one notices. You've 328 00:19:51,840 --> 00:19:53,840 Speaker 1: got to be different each day. And that's part of 329 00:19:53,840 --> 00:19:57,600 Speaker 1: what's driving that. It's still though, uh true that fastly 330 00:19:57,640 --> 00:20:00,320 Speaker 1: more of the spetting is buy women and more of 331 00:20:00,320 --> 00:20:03,399 Speaker 1: it is for women and Jerry overall, do I spend 332 00:20:03,440 --> 00:20:05,320 Speaker 1: more if I go online and I want to buy 333 00:20:05,440 --> 00:20:07,760 Speaker 1: a I don't know, perfumer or one of your great 334 00:20:07,760 --> 00:20:10,000 Speaker 1: sale items that you have on do I end up 335 00:20:10,000 --> 00:20:12,960 Speaker 1: spaying more than if I were in one of your 336 00:20:12,960 --> 00:20:15,400 Speaker 1: shops or the other way around? Actually, and quite interesting, 337 00:20:15,480 --> 00:20:18,880 Speaker 1: you spend more if you're all channel shopper. So we 338 00:20:18,960 --> 00:20:21,040 Speaker 1: love as customers who love the brand and shop with 339 00:20:21,080 --> 00:20:23,360 Speaker 1: us whichever way it works the best for that occasion, 340 00:20:23,440 --> 00:20:25,960 Speaker 1: both online or in store. And we find is those 341 00:20:26,000 --> 00:20:28,159 Speaker 1: are the customers who spend the most with us. It's 342 00:20:28,200 --> 00:20:30,199 Speaker 1: the ones who love us online and love us in 343 00:20:30,240 --> 00:20:32,119 Speaker 1: the store and sometimes use the combination. So we have 344 00:20:32,160 --> 00:20:37,280 Speaker 1: some fantastic integration of online and the internet. So for example, 345 00:20:37,440 --> 00:20:39,240 Speaker 1: if you go to Saxforth Avenue, you're likely to have 346 00:20:39,320 --> 00:20:42,320 Speaker 1: a personal salesperson that you work with. That person knows 347 00:20:42,320 --> 00:20:44,680 Speaker 1: you what you bought the last time. They will send 348 00:20:44,680 --> 00:20:47,760 Speaker 1: you a curated selection from the website in an email 349 00:20:47,800 --> 00:20:49,520 Speaker 1: to you that you can then open up and shop 350 00:20:49,560 --> 00:20:51,880 Speaker 1: the website. But it's not the entire website. It's what 351 00:20:52,119 --> 00:20:54,600 Speaker 1: your salesperson picked us appropriate for you. And of course 352 00:20:54,600 --> 00:20:56,159 Speaker 1: you can get from there to the entire website if 353 00:20:56,160 --> 00:20:58,040 Speaker 1: you if you want to get something else, But it's 354 00:20:58,040 --> 00:20:59,800 Speaker 1: a way of using the Internet is a tool that 355 00:20:59,800 --> 00:21:02,119 Speaker 1: helps shoe shop even better. And if you don't have 356 00:21:02,160 --> 00:21:04,160 Speaker 1: a salesperson, Let's say you go to sax dot com 357 00:21:04,320 --> 00:21:06,480 Speaker 1: a which it pops up and it says, would you 358 00:21:06,520 --> 00:21:09,120 Speaker 1: like to speak to a stylist? And if you say yes, 359 00:21:09,680 --> 00:21:11,639 Speaker 1: we connect you to someone in the store near you 360 00:21:11,920 --> 00:21:14,040 Speaker 1: who's not like someone in a call center in some 361 00:21:14,080 --> 00:21:16,439 Speaker 1: foreign country. It's someone in the store you're you, who 362 00:21:16,520 --> 00:21:18,439 Speaker 1: knows something about style. He says, what would you like 363 00:21:18,480 --> 00:21:20,479 Speaker 1: to get, and we'll do everything to satisfy. I did 364 00:21:20,480 --> 00:21:22,480 Speaker 1: it once in front of a group of investors, and 365 00:21:22,520 --> 00:21:24,639 Speaker 1: I said I wanted a bow tie and and he 366 00:21:24,720 --> 00:21:26,239 Speaker 1: said what type? And you want a fan too? And 367 00:21:26,280 --> 00:21:28,040 Speaker 1: I said, what is the black one? Find next. You know, 368 00:21:28,480 --> 00:21:31,040 Speaker 1: this nice fellow wanted to deliver it to me. Literally 369 00:21:31,080 --> 00:21:32,640 Speaker 1: know that I was in Toronto when I was talking 370 00:21:32,640 --> 00:21:34,639 Speaker 1: to him in the York story in that case. But 371 00:21:34,640 --> 00:21:37,520 Speaker 1: but you know, it's a fantastic integration experience, and that's 372 00:21:37,520 --> 00:21:40,600 Speaker 1: what the customers want. They don't. They don't think, especially 373 00:21:41,200 --> 00:21:44,359 Speaker 1: millennials and young they're not thinking online versus in store. 374 00:21:44,600 --> 00:21:46,280 Speaker 1: They're thinking, this is what I want. This is a 375 00:21:46,320 --> 00:21:48,720 Speaker 1: brand I like, This is a company I like. You know, 376 00:21:48,920 --> 00:21:51,800 Speaker 1: it's sack fordam Lord and Taylor Guilt. How do I 377 00:21:51,840 --> 00:21:54,040 Speaker 1: deal with them? And I deal with him online? When 378 00:21:54,040 --> 00:21:55,520 Speaker 1: I choose to Some say I just look and see 379 00:21:55,520 --> 00:21:56,600 Speaker 1: what I want to buy and they go to the 380 00:21:56,600 --> 00:21:58,640 Speaker 1: store and find it. You know, I do whatever I want. 381 00:21:58,720 --> 00:22:01,240 Speaker 1: I don't that that line is a false dichotomy. Do 382 00:22:01,680 --> 00:22:04,880 Speaker 1: you have a demographic breakdown as to who shops online 383 00:22:05,000 --> 00:22:07,080 Speaker 1: versus who shops in the brick and mortar stores is 384 00:22:07,119 --> 00:22:10,000 Speaker 1: and the millennials who are more likely to shop online, Well, 385 00:22:10,000 --> 00:22:12,560 Speaker 1: there's no doubt that the younger you are, the more 386 00:22:12,640 --> 00:22:15,240 Speaker 1: likely you're you are to use a smartphone or some 387 00:22:15,320 --> 00:22:18,199 Speaker 1: Internet enable tool. But make no mistake about it. You know, 388 00:22:18,400 --> 00:22:21,439 Speaker 1: even our most senior customers use the internet now and 389 00:22:21,520 --> 00:22:25,080 Speaker 1: have a smartphone, and so everybody's online, everybody's in the store, 390 00:22:25,400 --> 00:22:27,720 Speaker 1: and that's the that's the world of the future, and 391 00:22:27,760 --> 00:22:30,840 Speaker 1: the online owner retailers better get physical pretty darn fast, 392 00:22:31,320 --> 00:22:33,320 Speaker 1: or are we physical retailers is gonna kill them. And 393 00:22:33,359 --> 00:22:35,040 Speaker 1: that's why you see some of the internet guys starting 394 00:22:35,080 --> 00:22:36,879 Speaker 1: to open up stores now where it's Warwy Parker with 395 00:22:36,960 --> 00:22:40,160 Speaker 1: glasses or Amazonism stores because they realize that that bricks 396 00:22:40,160 --> 00:22:42,080 Speaker 1: and more thing is kind of an advantage that we're 397 00:22:42,080 --> 00:22:45,600 Speaker 1: getting a report from the front lines of Black Friday shopping. 398 00:22:45,680 --> 00:22:49,560 Speaker 1: Jerry Starch is the chief executive officer of Hudson's Bay Company. 399 00:22:49,560 --> 00:22:53,800 Speaker 1: They own a whole bunch of department stores, and um, 400 00:22:53,800 --> 00:22:57,040 Speaker 1: I want to ask you about that because we've been 401 00:22:57,080 --> 00:23:01,800 Speaker 1: told that by of retail analysts the department stores are 402 00:23:01,880 --> 00:23:04,080 Speaker 1: kind of the worst place you want to be these 403 00:23:04,160 --> 00:23:07,280 Speaker 1: days in retail because everybody's going to specialty stores or 404 00:23:07,280 --> 00:23:11,280 Speaker 1: they're going online and uh, and department stores getting killed. 405 00:23:11,560 --> 00:23:15,040 Speaker 1: Um So why tell me why it's a good business 406 00:23:15,080 --> 00:23:19,000 Speaker 1: to buy in Dudson's Bay. Department stores are incredibly flexible format, 407 00:23:19,160 --> 00:23:21,560 Speaker 1: so we can adapt with the time. So if one 408 00:23:21,600 --> 00:23:24,720 Speaker 1: category is not selling, we can go into a different category. Meanwhile, 409 00:23:24,720 --> 00:23:28,080 Speaker 1: because offering so broad is the perfect foundation for an 410 00:23:28,080 --> 00:23:30,719 Speaker 1: all channel business to unite the Internet and the stores. 411 00:23:30,920 --> 00:23:33,639 Speaker 1: Because we certain we sell products for young and old, 412 00:23:33,880 --> 00:23:36,719 Speaker 1: for for men, for women, for kids, we saw, we 413 00:23:36,760 --> 00:23:40,359 Speaker 1: sell home products, and uh and apparel products. We sell everything. 414 00:23:40,440 --> 00:23:44,359 Speaker 1: So it's a great foundation for for the future we're 415 00:23:44,560 --> 00:23:48,240 Speaker 1: retelling is going. But meanwhile, what we've learned in country 416 00:23:48,240 --> 00:23:51,880 Speaker 1: after country is that it's not that people like department stores. 417 00:23:51,880 --> 00:23:55,199 Speaker 1: That don't like department stores. People love good department stores 418 00:23:55,280 --> 00:23:57,280 Speaker 1: and they don't like bad ones. And so it's so 419 00:23:57,320 --> 00:23:59,840 Speaker 1: important that we continue to invest in our in our 420 00:24:00,000 --> 00:24:03,800 Speaker 1: in our buildings, invest in our in our technology in 421 00:24:03,840 --> 00:24:06,920 Speaker 1: the stores, invest in the experience in the stores. So 422 00:24:07,000 --> 00:24:09,719 Speaker 1: that's something special to go to the department store that 423 00:24:09,760 --> 00:24:11,600 Speaker 1: gets you out of your chair at home in your 424 00:24:11,600 --> 00:24:14,920 Speaker 1: pajamas into the store to experience something you can't possibly 425 00:24:14,920 --> 00:24:17,400 Speaker 1: see any way, but in a physical sense. But Jerry, 426 00:24:17,440 --> 00:24:19,600 Speaker 1: how often, I mean how much in advance you actually 427 00:24:19,600 --> 00:24:21,520 Speaker 1: have to howard your stuff And you say your flexible, 428 00:24:21,600 --> 00:24:25,760 Speaker 1: which is true, but you still have to what book 429 00:24:26,160 --> 00:24:29,639 Speaker 1: or buy things and trends and ideas six months in 430 00:24:29,640 --> 00:24:32,439 Speaker 1: advance or even a year. Well, you know, it varies. 431 00:24:32,640 --> 00:24:35,679 Speaker 1: So we're experimenting a lot with fast fashion inside the 432 00:24:35,680 --> 00:24:38,119 Speaker 1: department store. So the equivalent to what someone like an 433 00:24:38,200 --> 00:24:40,280 Speaker 1: H and M R as R might do where we 434 00:24:40,359 --> 00:24:43,360 Speaker 1: have much shorter lead times on on certain categories or products. 435 00:24:43,520 --> 00:24:46,720 Speaker 1: There are other products where let's take Kashmir swinters where 436 00:24:46,880 --> 00:24:49,439 Speaker 1: it doesn't where where it doesn't make any sense to 437 00:24:49,440 --> 00:24:51,120 Speaker 1: wait till less second to order them because you get 438 00:24:51,119 --> 00:24:53,119 Speaker 1: a much better deal for you yourself and for the 439 00:24:53,160 --> 00:24:58,840 Speaker 1: customer to offer that thirty kashmeer switter at well. But 440 00:24:58,880 --> 00:25:01,480 Speaker 1: it's true. You know, if you want to sell a 441 00:25:01,520 --> 00:25:03,720 Speaker 1: sweater at thirty nine dollars nine cents, you need to 442 00:25:03,800 --> 00:25:05,840 Speaker 1: order a lot of them and order them well in advance. 443 00:25:06,000 --> 00:25:08,080 Speaker 1: So so we make that decision on a case by 444 00:25:08,119 --> 00:25:10,880 Speaker 1: case basis. So we need just as flexible as anyone 445 00:25:10,920 --> 00:25:14,200 Speaker 1: can be. We were talking with Howard David if it's 446 00:25:14,240 --> 00:25:18,159 Speaker 1: the retail analyst earlier on the program, who's this country 447 00:25:18,320 --> 00:25:21,360 Speaker 1: in particular still has a problem of way too many 448 00:25:21,400 --> 00:25:24,639 Speaker 1: stores and that the story for retailers going forward is 449 00:25:24,720 --> 00:25:28,000 Speaker 1: just you're going to have to close stores, which not 450 00:25:28,040 --> 00:25:29,760 Speaker 1: only throws people out of work, but then you end 451 00:25:29,800 --> 00:25:33,639 Speaker 1: up with real estate problems as well. Uh, is that 452 00:25:33,720 --> 00:25:36,359 Speaker 1: something you're experiencing now? Is this down the road? Let 453 00:25:36,359 --> 00:25:37,879 Speaker 1: me give you a couple of thoughts on that. I 454 00:25:37,920 --> 00:25:41,639 Speaker 1: believe it is true that the United States, almost unique 455 00:25:41,800 --> 00:25:45,080 Speaker 1: or especially among countries, has too much retail score footage. 456 00:25:45,200 --> 00:25:47,600 Speaker 1: You know, it's way to proportion, you know, it's it's 457 00:25:47,600 --> 00:25:51,080 Speaker 1: it's uh, you know, a third more than Canada, for example, 458 00:25:51,119 --> 00:25:53,760 Speaker 1: which it would be the closest pier. It's it's quite 459 00:25:53,760 --> 00:25:56,720 Speaker 1: a bit more far beyond that. Then what we see 460 00:25:56,760 --> 00:25:58,960 Speaker 1: when we operate the large parter store in Germany, for example, 461 00:25:59,040 --> 00:26:02,880 Speaker 1: far less retail score for capital capital in Europe. First, 462 00:26:03,160 --> 00:26:05,600 Speaker 1: i'd say so clearly too much. So that parts right. 463 00:26:05,960 --> 00:26:08,320 Speaker 1: But what's going to happen next is it is different 464 00:26:08,359 --> 00:26:09,880 Speaker 1: I think a little bit from what you just said. 465 00:26:10,160 --> 00:26:12,840 Speaker 1: So it doesn't mean that all the retailer should get 466 00:26:12,840 --> 00:26:15,520 Speaker 1: together somehow. Even if you could even envision this and 467 00:26:15,520 --> 00:26:17,239 Speaker 1: I'll agree, oh we'll I'll close a third of our 468 00:26:17,280 --> 00:26:19,280 Speaker 1: stores or something like that. You know, that's not how 469 00:26:19,320 --> 00:26:22,680 Speaker 1: it works. Uh. What really needs to happen, what will happen, 470 00:26:22,720 --> 00:26:24,879 Speaker 1: is that individual retailers will simply go out of business, 471 00:26:24,880 --> 00:26:27,440 Speaker 1: and we've seen that already, like sports Authority for example, 472 00:26:27,760 --> 00:26:31,679 Speaker 1: are fairly fairly recently and you know many others. Is 473 00:26:31,720 --> 00:26:34,000 Speaker 1: that entire change will go to business and that will 474 00:26:34,000 --> 00:26:37,000 Speaker 1: put things put the market more in equaliver if you, 475 00:26:37,080 --> 00:26:40,080 Speaker 1: as an individual retailer, starts closing to profitable stores, and 476 00:26:40,160 --> 00:26:42,960 Speaker 1: most stores that you operate are profitable, if you start 477 00:26:43,000 --> 00:26:46,040 Speaker 1: closing them, it's it's ridiculous to think that customer is 478 00:26:46,080 --> 00:26:48,000 Speaker 1: gonna go, oh, you close the store near my house, 479 00:26:48,560 --> 00:26:51,760 Speaker 1: then I won't shop at you know, your competitor across 480 00:26:51,800 --> 00:26:54,280 Speaker 1: the street. Now that who's still open, I'm going to 481 00:26:54,359 --> 00:26:56,960 Speaker 1: go to your website instead and shop. That's that's not logical, 482 00:26:57,040 --> 00:26:59,720 Speaker 1: because the customer chooses how she wants to shop. And 483 00:27:00,359 --> 00:27:02,520 Speaker 1: uh strongly, I believe that if she decides she wants 484 00:27:02,520 --> 00:27:04,119 Speaker 1: to shop in a physical store, she's gon shop in 485 00:27:04,119 --> 00:27:06,600 Speaker 1: physical store. You closure, she's going to your competitor. So 486 00:27:07,160 --> 00:27:10,639 Speaker 1: simply closing stores doesn't accomplish anything for you individually as 487 00:27:10,640 --> 00:27:12,600 Speaker 1: a retailer, unless you have some that are losing money, 488 00:27:12,800 --> 00:27:16,400 Speaker 1: but most successful retailers don't. It's really hard to lose 489 00:27:16,440 --> 00:27:19,440 Speaker 1: money in individual store in retailing, so most don't. So 490 00:27:19,680 --> 00:27:21,960 Speaker 1: what's what will happen is they'll be a rationalization of 491 00:27:22,000 --> 00:27:24,359 Speaker 1: the retail community. That's probably why we do grow a 492 00:27:24,400 --> 00:27:27,280 Speaker 1: lot through acquisition. That's part of that rationalization. I think. 493 00:27:27,320 --> 00:27:29,160 Speaker 1: The other other point is what happens to the malls 494 00:27:29,160 --> 00:27:32,240 Speaker 1: because you asked that question right, so, uh, the malls 495 00:27:32,240 --> 00:27:34,720 Speaker 1: are are you know, are not homogeneous. So there are 496 00:27:34,760 --> 00:27:37,720 Speaker 1: a malls that are really fantastic places really that you 497 00:27:37,960 --> 00:27:40,800 Speaker 1: been well well maintained. They have beautiful stores, they have 498 00:27:40,800 --> 00:27:43,600 Speaker 1: beautiful experience them. Those are gonna thrive, they can they'll 499 00:27:43,640 --> 00:27:46,119 Speaker 1: continue to do well in any environment. It's the B 500 00:27:46,359 --> 00:27:48,960 Speaker 1: malls and the C malls that are going to become 501 00:27:49,040 --> 00:27:51,399 Speaker 1: like places to get a cat scans and insurance offices, 502 00:27:51,480 --> 00:27:53,879 Speaker 1: things like that. Only got a minute left, so I 503 00:27:53,920 --> 00:27:56,360 Speaker 1: gotta I can talk about that part all day long. 504 00:27:56,400 --> 00:27:58,800 Speaker 1: But let me ask you this, um, can you raise prices? 505 00:27:58,840 --> 00:28:02,119 Speaker 1: These days everybody's talking about the return of inflation, but 506 00:28:02,600 --> 00:28:05,760 Speaker 1: can you uh, you know, we're really focused on providing 507 00:28:05,800 --> 00:28:09,040 Speaker 1: great deals every day and particularly in Black Friday. Your 508 00:28:09,119 --> 00:28:12,200 Speaker 1: question feels like like, you know, totally beside the point 509 00:28:12,240 --> 00:28:14,920 Speaker 1: because what we're trying to do now is to offer 510 00:28:14,960 --> 00:28:17,480 Speaker 1: the best possible deals in every one of our stores 511 00:28:17,520 --> 00:28:19,560 Speaker 1: where it's sacked with having a lord and Taylor sacks 512 00:28:19,560 --> 00:28:23,080 Speaker 1: off five or guilt or anywhere. All right, Jerry Storch, 513 00:28:23,160 --> 00:28:26,000 Speaker 1: thanks for joining us, the CEO of Hudson's Bay Company. 514 00:28:26,119 --> 00:28:30,320 Speaker 1: Good luck on Black Friday shopping. And uh, friend, you 515 00:28:30,320 --> 00:28:32,240 Speaker 1: you want to order a sweater? Right? I was gonna 516 00:28:32,240 --> 00:28:34,159 Speaker 1: say so. Nice of Tunking to be off today to 517 00:28:34,160 --> 00:28:36,840 Speaker 1: bias Cashmere sweaters. Thank you, Tom, I know you're listening. 518 00:28:37,040 --> 00:28:47,520 Speaker 1: We'll get a blue and a red one. Who you 519 00:28:47,600 --> 00:28:51,080 Speaker 1: put your trust in matters. Investors have put their trust 520 00:28:51,120 --> 00:28:54,920 Speaker 1: in independent registered investment advisors to the tune of four 521 00:28:54,960 --> 00:28:58,920 Speaker 1: trillion dollars. Why they see their roles to serve, not sell. 522 00:28:59,440 --> 00:29:02,720 Speaker 1: That's right. Al Schwab is committed to the success over 523 00:29:02,880 --> 00:29:09,120 Speaker 1: seven thousand independent financial advisors who passionately dedicate themselves to 524 00:29:09,240 --> 00:29:14,040 Speaker 1: helping people achieve their financial goals. Learn more and find 525 00:29:14,240 --> 00:29:24,200 Speaker 1: your independent advisor dot com. Don riss Miller is with us. 526 00:29:24,280 --> 00:29:27,960 Speaker 1: He is the chief economist at Strategist Partners, and we've 527 00:29:28,000 --> 00:29:29,920 Speaker 1: been talking to him for the last hour on Bluebirg 528 00:29:29,960 --> 00:29:34,440 Speaker 1: Surveillance on television about all of this and how the 529 00:29:34,600 --> 00:29:38,680 Speaker 1: election may be influencing what people think that. It certainly 530 00:29:38,720 --> 00:29:41,840 Speaker 1: has in the markets as we've seen um, but how 531 00:29:41,960 --> 00:29:46,000 Speaker 1: is it going to affect the economy itself. Can we 532 00:29:46,160 --> 00:29:51,080 Speaker 1: say that the enthusiasm we're seeing in equity markets for 533 00:29:51,320 --> 00:29:55,960 Speaker 1: Donald Trump is justified? Well, it's nice to be here, 534 00:29:56,160 --> 00:29:58,720 Speaker 1: and I certainly think at least some of it's justified. 535 00:29:58,880 --> 00:30:03,000 Speaker 1: So part of the issue is we have some optimism 536 00:30:03,160 --> 00:30:07,080 Speaker 1: on the regulatory side. There's reason for optimism on the 537 00:30:07,120 --> 00:30:10,840 Speaker 1: fiscal side, and so we have monetary policy which could 538 00:30:10,880 --> 00:30:14,760 Speaker 1: continue to normalize at a gradual pace. And even if 539 00:30:14,800 --> 00:30:19,320 Speaker 1: we don't get big changes on immigration or some of 540 00:30:19,360 --> 00:30:22,120 Speaker 1: the other policies, that's enough when we look at the 541 00:30:22,120 --> 00:30:25,400 Speaker 1: economy itself to say, yeah, some of this is justified. 542 00:30:25,720 --> 00:30:29,000 Speaker 1: We could do a little better going forward versus where 543 00:30:29,040 --> 00:30:32,720 Speaker 1: we've been. So versus a forecast of muddle through going 544 00:30:32,760 --> 00:30:36,520 Speaker 1: into the election, at least there's some upside risk that 545 00:30:36,520 --> 00:30:39,520 Speaker 1: could transpire over the next year. And don what is 546 00:30:39,560 --> 00:30:41,800 Speaker 1: the one thing that that Donald Trump and his team 547 00:30:41,840 --> 00:30:44,520 Speaker 1: need to get absolutely right? Is it the spending so 548 00:30:44,560 --> 00:30:46,840 Speaker 1: they've promised to trillion? Is it enough if they and 549 00:30:46,920 --> 00:30:49,240 Speaker 1: they get ten of that, or is it actually the 550 00:30:49,280 --> 00:30:52,440 Speaker 1: repatriation of a lot of foreign cash under a new 551 00:30:52,480 --> 00:30:55,719 Speaker 1: tax regime. So I think all those would help. If 552 00:30:55,760 --> 00:30:58,040 Speaker 1: I said, the one thing they have to get right, 553 00:30:58,440 --> 00:31:00,680 Speaker 1: I would go over and look at the trade side, 554 00:31:00,680 --> 00:31:03,320 Speaker 1: because I think that's where the biggest uncertainty is at 555 00:31:03,320 --> 00:31:07,040 Speaker 1: the moment, and that's not that hard to get right. 556 00:31:07,160 --> 00:31:09,560 Speaker 1: What they have to do is basically not get it wrong. 557 00:31:10,480 --> 00:31:12,560 Speaker 1: So you could get some of the spending, you could 558 00:31:12,560 --> 00:31:15,840 Speaker 1: get half of the spending, you could get the spending. Still, 559 00:31:15,880 --> 00:31:19,360 Speaker 1: all that could be good in this environment where we've 560 00:31:19,360 --> 00:31:22,640 Speaker 1: had lackluster growth for quite some time. I would say 561 00:31:22,640 --> 00:31:25,400 Speaker 1: the removal of a negative in this case, some of 562 00:31:25,400 --> 00:31:27,440 Speaker 1: the rhetoric on trade, and there's been some move in 563 00:31:27,480 --> 00:31:29,920 Speaker 1: that direction over the last two weeks. We need to 564 00:31:29,920 --> 00:31:33,200 Speaker 1: see more. But if we see more of that, I 565 00:31:33,240 --> 00:31:35,800 Speaker 1: really think that would help reassure people, and not just 566 00:31:36,000 --> 00:31:38,920 Speaker 1: in the US but in other places as well, that 567 00:31:39,000 --> 00:31:42,080 Speaker 1: there really is some upside potential here. Well. Obviously, it's 568 00:31:42,080 --> 00:31:43,880 Speaker 1: going to take a while to get anything like a 569 00:31:43,960 --> 00:31:47,240 Speaker 1: tax cut through Congress, so the effects are going to 570 00:31:47,280 --> 00:31:51,760 Speaker 1: be down the road a bit. The president has a 571 00:31:51,840 --> 00:31:55,760 Speaker 1: lot of power on his own to affect trade, So 572 00:31:55,800 --> 00:31:59,239 Speaker 1: how much does rhetoric matter. How far can Trump go 573 00:31:59,480 --> 00:32:02,640 Speaker 1: on trade aid before it affects the economy. So there 574 00:32:02,600 --> 00:32:04,120 Speaker 1: are a couple of things he's talked about, and this 575 00:32:04,160 --> 00:32:07,560 Speaker 1: is in the first hunder day plan. There's the NAFTA issue. 576 00:32:07,600 --> 00:32:10,000 Speaker 1: There's the t p P issue, and there's some concerns 577 00:32:10,040 --> 00:32:13,520 Speaker 1: about China. So TPP looks like it's dead, and that 578 00:32:13,560 --> 00:32:16,520 Speaker 1: could be a very early issue that could be done 579 00:32:16,560 --> 00:32:20,400 Speaker 1: pretty much right away. NAFTA is something where you need 580 00:32:20,440 --> 00:32:23,440 Speaker 1: a renegotiation, and there may be some appetite for that 581 00:32:23,680 --> 00:32:27,120 Speaker 1: on all sides, so I'm not as worried about that one. 582 00:32:27,200 --> 00:32:30,000 Speaker 1: There there's some negotiating room. This could be a give 583 00:32:30,040 --> 00:32:34,160 Speaker 1: and take in North America. China is the one where 584 00:32:34,240 --> 00:32:37,080 Speaker 1: I think I'd like some reassurance just to say that 585 00:32:37,120 --> 00:32:39,960 Speaker 1: we're not going to really get into a trade war, 586 00:32:40,120 --> 00:32:43,240 Speaker 1: that we're not going to see the worst case scenario transpire. 587 00:32:43,520 --> 00:32:46,800 Speaker 1: There's been some talk of labeling China currency manipulator. What 588 00:32:46,880 --> 00:32:50,760 Speaker 1: that would do is start a discussion, So we'll see 589 00:32:50,800 --> 00:32:54,680 Speaker 1: if that happens, how the Treasury departments. The Treasury Department 590 00:32:54,760 --> 00:32:59,440 Speaker 1: is going to react, but that's where I'd like some clarity, 591 00:32:59,480 --> 00:33:01,840 Speaker 1: in particular around China as we look at what trade 592 00:33:01,880 --> 00:33:04,840 Speaker 1: is going to be. Don are you concerned? It's my 593 00:33:04,920 --> 00:33:07,680 Speaker 1: understanding actually that first of all, he'll focus on domestic 594 00:33:07,720 --> 00:33:09,920 Speaker 1: policy and then he deals with trade, and then he 595 00:33:09,960 --> 00:33:12,880 Speaker 1: deals with China. Right he has lost tweet twenty one 596 00:33:12,880 --> 00:33:15,720 Speaker 1: hours ago saying I'm working hard even on Thanksgiving trying 597 00:33:15,720 --> 00:33:18,760 Speaker 1: to get Carrier, a c company to stay in the US. 598 00:33:19,080 --> 00:33:22,560 Speaker 1: If he does focus a lot on domestic policy, then 599 00:33:22,680 --> 00:33:25,240 Speaker 1: it doesn't increase the chances of him getting foreign policy, 600 00:33:25,240 --> 00:33:29,880 Speaker 1: your trade policy wrong. Well, this depends also who's advising him, 601 00:33:29,880 --> 00:33:31,320 Speaker 1: And this is where I think there's a lot of 602 00:33:31,360 --> 00:33:34,440 Speaker 1: attention being paid to who's coming in in the cabinet, 603 00:33:34,760 --> 00:33:37,640 Speaker 1: how those individuals are going to view the world, what 604 00:33:38,040 --> 00:33:41,040 Speaker 1: we're going to see in terms of policy advice that's 605 00:33:41,080 --> 00:33:44,760 Speaker 1: provided to the president. So yeah, I think it's okay 606 00:33:44,800 --> 00:33:48,520 Speaker 1: to focus on domestic policy in the way we're talking 607 00:33:48,520 --> 00:33:51,480 Speaker 1: about here, as long as there's a team assembled that 608 00:33:51,560 --> 00:33:54,360 Speaker 1: can deal with some of the international items, and as 609 00:33:54,400 --> 00:33:56,760 Speaker 1: long as there's not a push from the top to 610 00:33:56,800 --> 00:34:00,280 Speaker 1: get into tariffs or a trade war those type of things. 611 00:34:01,120 --> 00:34:06,400 Speaker 1: What what's the impact of a trade war? I mean, 612 00:34:06,920 --> 00:34:10,160 Speaker 1: we we say trade war, but suppose he labels China 613 00:34:10,280 --> 00:34:14,839 Speaker 1: currency manipulator? Does that's like the old Monte Python joke 614 00:34:14,920 --> 00:34:17,800 Speaker 1: of you know, if you don't surrender, I'll insult you again. 615 00:34:18,080 --> 00:34:22,280 Speaker 1: Does it actually mean anything? Not directly, it would start 616 00:34:22,280 --> 00:34:26,080 Speaker 1: a conversation. And I think the biggest risk is if 617 00:34:26,120 --> 00:34:29,360 Speaker 1: we go down that road and there's some action on 618 00:34:29,400 --> 00:34:32,799 Speaker 1: the other side that that comes about that we don't 619 00:34:32,800 --> 00:34:35,240 Speaker 1: know at the moment. In other words, if we label 620 00:34:35,280 --> 00:34:39,640 Speaker 1: you currency manipulator, what do you do? And that's where 621 00:34:39,640 --> 00:34:43,000 Speaker 1: frictions are always going to be treated poorly in economic models. 622 00:34:43,600 --> 00:34:46,440 Speaker 1: So if we increase the friction in global trade, if 623 00:34:46,440 --> 00:34:49,120 Speaker 1: we increase the friction in the economy, it's tough to 624 00:34:49,160 --> 00:34:52,560 Speaker 1: grow in that type of environment. And I think that's 625 00:34:53,040 --> 00:34:57,880 Speaker 1: where the analysis of the trade implications is going to 626 00:34:57,920 --> 00:35:01,120 Speaker 1: focus over the next few months. Well, what if I could, 627 00:35:01,160 --> 00:35:04,560 Speaker 1: for let me just ask, uh done, have you heard 628 00:35:04,560 --> 00:35:07,399 Speaker 1: any names of people on the economic side, because we've 629 00:35:07,400 --> 00:35:11,680 Speaker 1: gotten all these foreign policy people are appointed, um, who 630 00:35:11,719 --> 00:35:17,680 Speaker 1: would be advising the president? Elearned, Well, so there's clearly 631 00:35:17,719 --> 00:35:20,200 Speaker 1: a hawkish move on the foreing policy side. I think 632 00:35:20,200 --> 00:35:24,000 Speaker 1: we can safely say that at the moment, and I'm 633 00:35:24,000 --> 00:35:27,400 Speaker 1: not sure I know who's going to get the President's 634 00:35:27,440 --> 00:35:32,200 Speaker 1: here more or less over the next four years in 635 00:35:32,320 --> 00:35:35,560 Speaker 1: terms of whether the economy should go. But what I 636 00:35:35,600 --> 00:35:39,799 Speaker 1: do think is we're looking at an environment where if 637 00:35:39,800 --> 00:35:43,560 Speaker 1: we take a step back and we say, this is 638 00:35:43,600 --> 00:35:45,880 Speaker 1: a global economy, whether we like it or not. We 639 00:35:45,920 --> 00:35:47,840 Speaker 1: can do domestic policy, but let's do it in a 640 00:35:47,840 --> 00:35:50,680 Speaker 1: global context. The more of that we get, I think, 641 00:35:50,680 --> 00:35:52,680 Speaker 1: the better we're going to be. Don are you talking 642 00:35:52,719 --> 00:35:56,040 Speaker 1: about retaliation from China? So there there are two questions right. 643 00:35:56,120 --> 00:35:59,440 Speaker 1: First of all, whether as Trump becomes president, then China 644 00:35:59,520 --> 00:36:02,400 Speaker 1: moves to fill in this global leadership vacuum which the 645 00:36:02,480 --> 00:36:05,520 Speaker 1: U s would leave if you retrench from foreign policy 646 00:36:05,560 --> 00:36:08,480 Speaker 1: and global trade. But the other one is if Donald 647 00:36:08,560 --> 00:36:12,120 Speaker 1: Trump or someone on his team say their currency manipulator, 648 00:36:12,160 --> 00:36:16,400 Speaker 1: do they actually stop access of you know, US companies 649 00:36:16,400 --> 00:36:19,600 Speaker 1: to certain you know, to the Chinese market essentially? Well, 650 00:36:19,640 --> 00:36:22,920 Speaker 1: so there's the end of access. There's also just more 651 00:36:22,920 --> 00:36:27,439 Speaker 1: expensive access. If we talked about how tariffs could be implemented. 652 00:36:27,800 --> 00:36:29,600 Speaker 1: So I think that there's a couple different issues here. 653 00:36:29,640 --> 00:36:32,960 Speaker 1: There's the political issue of the region. In other words, 654 00:36:33,000 --> 00:36:35,319 Speaker 1: part of the move on the t p P was 655 00:36:35,400 --> 00:36:37,800 Speaker 1: for the United States to have some influence in Asia, 656 00:36:37,920 --> 00:36:41,319 Speaker 1: pivot to Asia. That looks like that could be over 657 00:36:42,120 --> 00:36:44,839 Speaker 1: and so that leaves a bit of a vacuum. It's 658 00:36:45,000 --> 00:36:49,279 Speaker 1: natural for China to step into that position. I'm not 659 00:36:49,320 --> 00:36:52,880 Speaker 1: sure that's bad. We'll see how that how that goes. 660 00:36:52,960 --> 00:36:54,800 Speaker 1: So the biggest thing that would worry me is some 661 00:36:54,880 --> 00:36:58,840 Speaker 1: sort of retaliation, some sort of competition that's created on 662 00:36:58,920 --> 00:37:01,520 Speaker 1: the price of goods on a tariff side. That's where 663 00:37:01,520 --> 00:37:03,960 Speaker 1: I think you create the friction that would slow down growth. 664 00:37:04,080 --> 00:37:06,400 Speaker 1: This is Bloomberg Surveillance and Michael McKey sitting in for 665 00:37:06,480 --> 00:37:09,440 Speaker 1: Tom Keene and Francine Lackwi is with me today sitting 666 00:37:09,440 --> 00:37:11,160 Speaker 1: in for David Gurr Or is it the other way around. 667 00:37:11,280 --> 00:37:13,440 Speaker 1: You're sitting in for Tom and I'm sitting in for day. 668 00:37:15,880 --> 00:37:17,600 Speaker 1: How do we know, Well, when the music stops, you 669 00:37:17,680 --> 00:37:20,160 Speaker 1: just grab a chair. Sitting in a chair next to 670 00:37:20,200 --> 00:37:24,200 Speaker 1: me is Don rist Miller. He's the chief economist at Strategous. 671 00:37:24,280 --> 00:37:26,000 Speaker 1: We were talking during the Brake brand about something that 672 00:37:26,000 --> 00:37:29,359 Speaker 1: to go right up your alley, Um, the impact not 673 00:37:29,480 --> 00:37:32,279 Speaker 1: just on the United States but on the world of 674 00:37:32,360 --> 00:37:35,200 Speaker 1: what's going on in Europe. That has been the story 675 00:37:35,400 --> 00:37:41,160 Speaker 1: every year since basically the financial crisis ended, and we 676 00:37:41,200 --> 00:37:43,279 Speaker 1: still can't get away from it because in another week 677 00:37:43,320 --> 00:37:46,520 Speaker 1: we have a referendum vote in Italy and you were 678 00:37:46,520 --> 00:37:50,239 Speaker 1: talking about how that is also affecting the markets. Yeah, 679 00:37:50,239 --> 00:37:52,359 Speaker 1: it looks to me like the political uncertainty could be 680 00:37:52,400 --> 00:37:54,839 Speaker 1: shifting to Europe. So we had this big build up 681 00:37:54,880 --> 00:37:57,080 Speaker 1: to the US election, and then we had two weeks 682 00:37:57,120 --> 00:37:59,719 Speaker 1: where we kind of processed a surprise, and now we 683 00:37:59,800 --> 00:38:02,520 Speaker 1: have to start thinking about how the referendum in Italy 684 00:38:02,640 --> 00:38:06,319 Speaker 1: will go. And Rensey said he would resign with a 685 00:38:06,400 --> 00:38:10,040 Speaker 1: vote that went against him. We have an Austrian election, 686 00:38:10,080 --> 00:38:11,880 Speaker 1: we have the French election next year, There's a German 687 00:38:11,920 --> 00:38:14,200 Speaker 1: election coming up. So this isn't gonna end. This is 688 00:38:14,200 --> 00:38:17,480 Speaker 1: gonna continue for quite some time. Yeah. Although Don and 689 00:38:17,600 --> 00:38:20,320 Speaker 1: I understand that there's a lot of political turmoil coming 690 00:38:20,400 --> 00:38:23,360 Speaker 1: up potentially in Europe, but remember we had the Great Crisis, 691 00:38:23,360 --> 00:38:26,240 Speaker 1: So Mike, it's not like it's anything new here in Europe. 692 00:38:26,280 --> 00:38:28,839 Speaker 1: We are used to it. Do we worry too much 693 00:38:28,840 --> 00:38:31,719 Speaker 1: about politics in Europe? I know it's difficult to predict, Don, 694 00:38:31,760 --> 00:38:34,759 Speaker 1: but there is a sense of actually Brexit happened. The 695 00:38:34,800 --> 00:38:38,200 Speaker 1: polls weren't really predicting Trump happened. We weren't really predicting it, 696 00:38:38,280 --> 00:38:41,200 Speaker 1: and so now everything is priced in that no referendum 697 00:38:41,239 --> 00:38:44,279 Speaker 1: voter is priced in and also possible marrying lepen when 698 00:38:44,320 --> 00:38:47,239 Speaker 1: his price in France, it seems to be Rensey's big 699 00:38:47,239 --> 00:38:49,359 Speaker 1: hope would be the polls are wrong. So we've seen 700 00:38:49,360 --> 00:38:52,560 Speaker 1: the polls be incorrect and the Brexit vote the polls 701 00:38:52,680 --> 00:38:55,840 Speaker 1: were somewhat off here in the United States that we 702 00:38:55,840 --> 00:38:58,120 Speaker 1: could argue about whether it's the polls themselves or the 703 00:38:58,120 --> 00:39:01,759 Speaker 1: interpretation of the polls, but certainly that the hope would 704 00:39:01,760 --> 00:39:05,520 Speaker 1: be if you were Rerenzy that maybe the polls wrong again, 705 00:39:05,600 --> 00:39:08,200 Speaker 1: maybe it could it could change. So I think the 706 00:39:08,239 --> 00:39:10,879 Speaker 1: issue with political uncertainty as I see it is does 707 00:39:10,920 --> 00:39:14,719 Speaker 1: the euro survive? Does the EU survive in a way 708 00:39:14,760 --> 00:39:16,759 Speaker 1: that that makes sense? And so if we had a 709 00:39:16,840 --> 00:39:21,920 Speaker 1: euro member start to challenge EU membership, that seems tougher 710 00:39:22,600 --> 00:39:25,720 Speaker 1: to swallow than the briggs And vote. Is that really 711 00:39:27,560 --> 00:39:29,839 Speaker 1: at the forefront of anybody's mind or is it just 712 00:39:29,880 --> 00:39:33,200 Speaker 1: sort of you know, do people look at Italy and 713 00:39:33,840 --> 00:39:37,359 Speaker 1: think that is something that could actually happen. Well, maybe not, 714 00:39:37,480 --> 00:39:40,359 Speaker 1: But that's why it's useful, I think for market participants 715 00:39:40,400 --> 00:39:42,799 Speaker 1: to to watch, in other words, what's priced in in 716 00:39:42,880 --> 00:39:45,839 Speaker 1: terms of where we're going with let's say the FED 717 00:39:45,880 --> 00:39:48,919 Speaker 1: in December, it looks like we've had that priced into 718 00:39:48,920 --> 00:39:50,759 Speaker 1: the market if we look at at market odd So 719 00:39:50,800 --> 00:39:53,640 Speaker 1: if we're trying to say where could the surprise be, Well, 720 00:39:53,680 --> 00:39:55,560 Speaker 1: the surprise, certainly in the last few weeks, has been 721 00:39:55,600 --> 00:39:59,480 Speaker 1: the US election. The surprise going forward maybe somewhere else, 722 00:39:59,560 --> 00:40:01,719 Speaker 1: and Italy's up there is something that could start a 723 00:40:01,800 --> 00:40:04,799 Speaker 1: chain reaction. So by itself it's not that big a deal. 724 00:40:04,800 --> 00:40:06,799 Speaker 1: But if this starts a chain reaction where we start 725 00:40:06,800 --> 00:40:11,000 Speaker 1: getting EU referendums in Italy or in other places, I 726 00:40:11,000 --> 00:40:13,600 Speaker 1: think that's that's something to consider. Right, So how should 727 00:40:13,640 --> 00:40:16,160 Speaker 1: the markets deal with it? Right? What you're implicating is 728 00:40:16,200 --> 00:40:19,400 Speaker 1: that we kind of, you know, start jumping at shadows 729 00:40:19,760 --> 00:40:23,120 Speaker 1: and looking at every world changing implication, even if it's 730 00:40:23,239 --> 00:40:26,160 Speaker 1: as harmless in certain cases as a referendum, should the 731 00:40:26,200 --> 00:40:29,320 Speaker 1: markets deal with that? So I expect the worst and 732 00:40:29,360 --> 00:40:31,759 Speaker 1: hope for the best. Well that or well, let's let's 733 00:40:31,760 --> 00:40:35,200 Speaker 1: put this way. Let's take the strengthen the dollar over 734 00:40:35,360 --> 00:40:38,880 Speaker 1: the past few weeks. That makes some sense if we 735 00:40:38,960 --> 00:40:41,440 Speaker 1: have fiscal stimulus coming in the US, if we've had 736 00:40:41,440 --> 00:40:45,279 Speaker 1: a regime change in terms of regulatory items. But it 737 00:40:45,360 --> 00:40:48,520 Speaker 1: also makes sense in a context where whatever is happening 738 00:40:48,920 --> 00:40:52,400 Speaker 1: with single party control now in the US, there's some certainty. 739 00:40:52,480 --> 00:40:56,080 Speaker 1: The uncertainty is abroad, and so I certainly think for 740 00:40:56,080 --> 00:41:02,960 Speaker 1: foreign currency traders as matters, let me ask you this. Uh, 741 00:41:03,040 --> 00:41:07,359 Speaker 1: the markets are trading as if there is a new 742 00:41:07,440 --> 00:41:10,920 Speaker 1: new normal or else we've gone back to the old normal. 743 00:41:10,960 --> 00:41:14,000 Speaker 1: Do you think that is the case? Uh? There there 744 00:41:14,000 --> 00:41:15,719 Speaker 1: seems to be this general view that the U s 745 00:41:15,800 --> 00:41:19,960 Speaker 1: economy is going to suddenly reignite. Yeah, I'm not sure 746 00:41:20,000 --> 00:41:22,360 Speaker 1: we're all the way back to the old normal. Maybe 747 00:41:22,400 --> 00:41:25,480 Speaker 1: we're a part of the way back to the old normal. 748 00:41:25,520 --> 00:41:29,359 Speaker 1: In other words, we had this fear of deflation that 749 00:41:29,480 --> 00:41:32,239 Speaker 1: was being driven by a lot of debt and aging, demographic, 750 00:41:32,600 --> 00:41:35,240 Speaker 1: some of these structural items. So none of that's really changed, 751 00:41:35,719 --> 00:41:38,240 Speaker 1: and and that was part of this new normal idea 752 00:41:38,320 --> 00:41:40,879 Speaker 1: that trend growth would be slower because we have these 753 00:41:40,960 --> 00:41:44,400 Speaker 1: large structural factors that are out there, So that's still 754 00:41:44,480 --> 00:41:46,640 Speaker 1: in place. It would seem to me what we're saying 755 00:41:46,719 --> 00:41:49,640 Speaker 1: is for the next year maybe there's a reprieve for 756 00:41:49,719 --> 00:41:52,719 Speaker 1: the next year, maybe there's a boost in sentiment, maybe 757 00:41:52,719 --> 00:41:54,920 Speaker 1: there's a change in the regulatory side, things that could 758 00:41:54,960 --> 00:41:57,200 Speaker 1: be done quickly, and then for the year after that, 759 00:41:57,280 --> 00:42:00,640 Speaker 1: maybe there's the knock on effects of fiscal policy. So 760 00:42:00,680 --> 00:42:04,719 Speaker 1: there's the indirect effects of stimulus right now in terms 761 00:42:04,760 --> 00:42:07,239 Speaker 1: of sentiment. There's the direct effects of stimulus, say a 762 00:42:07,320 --> 00:42:10,400 Speaker 1: year from now, in terms of actual fiscal spending. And 763 00:42:10,440 --> 00:42:13,120 Speaker 1: it looks like with single party controls something will get done. 764 00:42:13,640 --> 00:42:17,400 Speaker 1: So it's all good for equity markets. Well, uh, until 765 00:42:17,440 --> 00:42:19,719 Speaker 1: we get, say, bond deals up high enough where we 766 00:42:19,760 --> 00:42:21,759 Speaker 1: have to start worrying about housing, or we have to 767 00:42:21,760 --> 00:42:24,200 Speaker 1: start worrying about some of those secondary effects. I say, 768 00:42:24,239 --> 00:42:27,520 Speaker 1: the near term risk and trade certainly makes sense. DoD 769 00:42:27,600 --> 00:42:31,480 Speaker 1: Ris Miller with some optimistic views here on Black Friday. 770 00:42:31,520 --> 00:42:33,920 Speaker 1: Maybe you want to go shopping because at least in 771 00:42:33,960 --> 00:42:36,160 Speaker 1: the short run things will be good. He's just chief 772 00:42:36,160 --> 00:42:46,440 Speaker 1: you got of this tat Strategious. Thanks for listening to 773 00:42:46,480 --> 00:42:52,560 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 774 00:42:52,960 --> 00:42:57,200 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 775 00:42:57,280 --> 00:43:01,080 Speaker 1: at Tom Keene David Gura is at David Gurra. Before 776 00:43:01,120 --> 00:43:05,480 Speaker 1: the podcast, you can always catch us worldwide on Bloomberg Radio. 777 00:43:17,920 --> 00:43:20,560 Speaker 1: Who you put your trust in matters. Investors have put 778 00:43:20,600 --> 00:43:24,919 Speaker 1: their trust and independent registered investment advisors to the two 779 00:43:24,960 --> 00:43:28,600 Speaker 1: and four trillion dollars. Why Learn more and find your 780 00:43:28,680 --> 00:43:31,440 Speaker 1: independent advisor dot com