Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. This
Speaker 1: is a joy. I will tell you that on a
Speaker 1: Black Friday, it was the spirit that is New York
Speaker 1: City retailing. To have Pim Fox, who grew up in
Speaker 1: the heart of it, truly is the most new Yorker.
Speaker 1: I mean, we have nineteen people, and you're the most
Speaker 1: new Yorker person. I know your mother's acclaim checker. Yes,
Speaker 1: I do remember when there was nothing that the Trump
Speaker 1: Tower was not the Trump Tower exactly. You have apartment store,
Speaker 1: collective memory, bringing our guests more than you. That's why
Speaker 1: he That's why he's at in that location. How are
Speaker 1: divid if it's of course of David, if it's an associate,
Speaker 1: he's the founder and the chairman of a veteran of
Speaker 1: the retail industry, and how are always a pleasure? Happy
Speaker 1: Thanksgiving to you? And you know what I'm I'm speaking of, right,
Speaker 1: I mean, the Trump Tower was on the land that
Speaker 1: was originally I believe it was a best in company,
Speaker 1: and then you had bond with Teller and a variety.
Speaker 1: But having said all this, I want to ask you
Speaker 1: about something having to do with the company whose name
Speaker 1: we know, Lord and Taylor, owned by Hudson Bay right,
Speaker 1: the Canadian retail giant, And recently there were the big
Speaker 1: headlines that Walmart is really upping its game by having
Speaker 1: Lord and Taylor merchandise on their website. And this is
Speaker 1: supposed to be an upscale fashion forward event. I know
Speaker 1: I'm not the prime audience for whatever Lord and Taylor
Speaker 1: is gonna sell, But having said that, I just never
Speaker 1: thought of Lord and Taylor as the X siding fashion
Speaker 1: forward uh kind of retailer. And so I'm curious why
Speaker 1: would Walmart do this rather than even going close to home?
Speaker 1: Because when I think of fashion forward, I look at
Speaker 1: people like Mark Zuckerberg and I think, Gee, he's wearing
Speaker 1: that hoodie? Who made that hoodie? Or what happens to
Speaker 1: have been made in Middlesex, North Carolina by a company
Speaker 1: called American Giants. So there I've laid it out for you.
Speaker 1: What are your what are your thoughts? Well, I think
Speaker 1: every time there's an obituary. Lordon Taylor loses a customer.
Speaker 1: I mean, that's who they are. It's a failed business again,
Speaker 1: all part of the department store sector, which is a catastrophe,
Speaker 1: and Lord and Taylor is a piece of that. They
Speaker 1: are in the very weak part of that. Now, the
Speaker 1: guy that owns Lord and Taylor, Baker, is a brilliant
Speaker 1: real estate guy. I mean, he bought Sacks for two
Speaker 1: point two billion. It's unbelievable. One Sacks store on Fifth
Speaker 1: Avenues were three point five bit. Now, either the Sacks
Speaker 1: management were a bunch of total morons or Baker is
Speaker 1: a genius. But something went wrong selling the company for
Speaker 1: two point two billion. Of Baker the genius. What he
Speaker 1: did in Canada was unbelievable. Hudson's Bay. He sold that
Speaker 1: real estate to Target for a fortune of fortune and
Speaker 1: then the Target liquid they did in All the stores
Speaker 1: are empty and Baker has got the money. Now, this
Speaker 1: guy is what I call a real estate operator, a
Speaker 1: zipped Now as a retailer, not so good. And Walmont
Speaker 1: in fashion, if you're naked and you gotta stay naked,
Speaker 1: you go to Walmart because they cover up. That is
Speaker 1: the extent of Walmont fashion efforts. So I mean, that's it.
Speaker 1: That's what they do. That is the extent of their efforts.
Speaker 1: Any time they tried to step out of that, they've
Speaker 1: gotten destroyed. They've done it three or four times. They
Speaker 1: were a model the apparel sector knew, fixed is rugs,
Speaker 1: whatever it is. Why do it because you have to
Speaker 1: do something. I don't know why they did it. They've
Speaker 1: got a very aggressive guy in in charge of this
Speaker 1: whole thing. He's spending billions. That got Walmut Labs. They
Speaker 1: have acquired nineteen companies that one of they're going bananas.
Speaker 1: They're buying everybody. They've got to do something about Amazon,
Speaker 1: so they're doing everything. How is it all gonna come out?
Speaker 1: I have a lot of doubts that the Walmut culture
Speaker 1: can make this work. A lot of doubts. The decision
Speaker 1: on Lord Taylor is similar to buying Jet carn for
Speaker 1: three point three billion, a one year old company losing
Speaker 1: money three point rebillion. You wish you had two of
Speaker 1: those businesses to sell the Walman exactly. So I don't
Speaker 1: know about what they're doing, all right, But you mentioned
Speaker 1: the purchase of Sacks Fifth Avenue being a smart real
Speaker 1: estate movie. Okay, but if you can't do anything else
Speaker 1: with that real estate, if it's locked in to be
Speaker 1: a store, what's the difference, what the prices? It's not
Speaker 1: locked in to be a store, That's the point. It's not.
Speaker 1: It could be. It could be just what Lord and
Speaker 1: Taylor did with their store on Fifth Avenue, multi use.
Speaker 1: It could be a condo. It could be a combination
Speaker 1: of a condo in a hotel and an office and
Speaker 1: a smaller Sacks store, which would make a lot of sense.
Speaker 1: You do bowling in sacks. The stores way too big,
Speaker 1: just like the Lord and Taylor was like old Black Friday.
Speaker 1: And I'm so honored to have Pim Fox here with
Speaker 1: our divinoments right now to bring in a man I've
Speaker 1: really wanted to speak to. Grover Northquest A lot of
Speaker 1: people will say has one message. I found his over
Speaker 1: the year. He's an awfully nuanced about his thoughts on
Speaker 1: tax receipts, the money coming in. He joins US now
Speaker 1: and tax cuts. Grover. I I looked at the news
Speaker 1: flow in the analysis flow over the weekend. I could
Speaker 1: not find one single removed person who liked the Senate bill.
Speaker 1: Do you find any value to the Senate legislation. Well,
Speaker 1: the good news is that the Senate bill will likely
Speaker 1: pass um next year next week end of the week,
Speaker 1: uh and that it will go into conference with the
Speaker 1: House bill. The Senate bill is like the House bill
Speaker 1: on taking the corporate right, but it's the lays of
Speaker 1: the year. I tend to think that will go with
Speaker 1: the House without the delay. But at the end of
Speaker 1: the day, if you like to have twenty years going
Speaker 1: to permanently uh now or a year from now, pretty
Speaker 1: close to the same thing. Uh So there's not a
Speaker 1: lot of difference. Sometimes the Senate will pass one bill
Speaker 1: and the House of pass another bill, and they are
Speaker 1: on different planets. One is, but these are easily conferenceable. Okay,
Speaker 1: they're easily conferenceable. Are you gonna have to change the
Speaker 1: name of your shop Americans for tax reform? Are you
Speaker 1: gonna have to change it to Americans for tax cuts? Well,
Speaker 1: we've always been for lower taxes as part of tax reform.
Speaker 1: But even though they're doing a tremendous amount of things
Speaker 1: here in terms of lowering rates and dealing with pass
Speaker 1: through companies which the corporations, which we've not worked on
Speaker 1: in the past, we're taking the corporate rate down to
Speaker 1: make us modestly competitive with the rest of the world
Speaker 1: thirty five, Chinas at twenty five for crying out loud,
Speaker 1: England's at fifteen, Ireland's at twelve and a half. Repatriation
Speaker 1: allowing people to bring American companies to bring to bring
Speaker 1: their money back without being double tax getting rid of
Speaker 1: the tax deductive antility of state local taxes, which is
Speaker 1: a massive subsidy for incompetence mayors and governors who don't
Speaker 1: keep their tax rate. And well, I mean every article
Speaker 1: I read this weekend toward this legislation to shreds pim.
Speaker 1: Well what I what I understand you kind of you're
Speaker 1: you're offering kind of a pejorative about states that tax
Speaker 1: their citizens, but much of that tax money ends up
Speaker 1: going to the federal government that gets then gets redistributed
Speaker 1: to states that don't have either a high tax rate
Speaker 1: or don't have any income tax at all. So, uh,
Speaker 1: it's either a United States or it's a Disunited States
Speaker 1: when it comes to taxes. Why why do you make
Speaker 1: that distinction? What we have is, uh, there're two issues here.
Speaker 1: One is the federal taxes. And you're right, it's interesting
Speaker 1: that New York senators. In California, senators vote very high
Speaker 1: federal tax rates on businesses and high income earners, and
Speaker 1: much of that money gets shipped out to red red states.
Speaker 1: UM two states with a lot of of welfare recipients.
Speaker 1: Uh So that's very generous of them, but they've decided
Speaker 1: to do that. However, at the state level, you see
Speaker 1: California with income tax rates in the stating come tax
Speaker 1: rates over ten, New York with high stat income tax rates, Minnesota, Hawaii,
Speaker 1: New Jersey. Uh. There was a wonderful article in Politico
Speaker 1: where they went and quoted the head of the state
Speaker 1: Senate in New Jersey said, our number one goal was
Speaker 1: going to be a millionaire's tax. And now that they're
Speaker 1: going to get rid of the tax of doctability of
Speaker 1: state local but we're not gonna do that. It changes everything.
Speaker 1: So if you live in a in a blue state
Speaker 1: with high income taxes, the best thing that's going to
Speaker 1: happen to you for the next fifty years is the
Speaker 1: downward pressure on high income tachments. I mean, I over
Speaker 1: What I find stunning here is the number of people
Speaker 1: calculated to see their tax bill go up. Do you
Speaker 1: have an optimum number A percent of people that should
Speaker 1: have their tax bill go up to get corporate tax reform,
Speaker 1: UH optimum numbers zero and the corporate side pace for
Speaker 1: itself and the individuals. But come on, every article. I
Speaker 1: I must have read ten articles this weekend without kidding,
Speaker 1: and and it's it's it's of Americans are going to
Speaker 1: see increased taxes off of some proposals. Do you buy that? Um? No?
Speaker 1: And I'll tell you the tricks that they use to
Speaker 1: get those numbers. First of all, UH, a number of
Speaker 1: the tax cuts are technically temporary, so the only last
Speaker 1: ten years or eight years? Why did why did the
Speaker 1: Republicans in the House and Senate decide that certain taxes
Speaker 1: would be permanent? Is there paid for with other offsets
Speaker 1: and others? Are uh? End it eight years? Ten years?
Speaker 1: And that's why they'll say this at tax increase in
Speaker 1: what's that? That's the end of the tenure window. And
Speaker 1: a number of the tax deductions credits lower lower rates,
Speaker 1: and that year they picked the ones that will never end.
Speaker 1: Remember when the Republicans under Bush had a ten year
Speaker 1: tax cut and Obama made that permanent because he had
Speaker 1: to the faster depreciation going. So you're just expensing. You're
Speaker 1: just assuming that the temporary tax cuts of a decade
Speaker 1: ish will be made permanent more than assuming. I've talked
Speaker 1: to the republic leadership. They don't expect to wait until
Speaker 1: we get there to make those permanent. There will be
Speaker 1: a series of tax reforms tax cuts going out into
Speaker 1: the future, and those will be made permanent as we
Speaker 1: move forward, long before we get to year ten. So
Speaker 1: and you, our friends on the left, say that's not fair.
Speaker 1: This is a bigger tax cut than the Republicans are saying,
Speaker 1: because they know darn well that some of the ending
Speaker 1: of certain tax cuts, like they the House built has
Speaker 1: full business expensing, full and immediate business expensing rather than
Speaker 1: longing depreciation schedules for five years, and everyone knows that
Speaker 1: that's going to be permanent. So they're they're misstating when
Speaker 1: they say the tax cuts only one point five trillion,
Speaker 1: it's actually more like four some some larger number. And
Speaker 1: the answer is, yeah, you're right. We had to fit
Speaker 1: it into your box. It was your stupid box. We
Speaker 1: didn't want to have a box that side. You made
Speaker 1: up imaginary rules, were playing by your imaginary rules. And
Speaker 1: by the way, these will But I still don't understand
Speaker 1: exactly how if people if you're going to literally you're
Speaker 1: going to be taking money away from people that would
Speaker 1: obviously spend it, how does that square with the idea
Speaker 1: to put more money in the pockets of consumers. I mean,
Speaker 1: that's just a fact. That's just what's gonna happen. Well,
Speaker 1: i mean, forget ten years. No one knows what's going
Speaker 1: to happen. In ten years, happened over the next ten months,
Speaker 1: well in in the next, over the next, over the
Speaker 1: next ten years, every income group will see a significant
Speaker 1: reduction in their taxes and then their tax rates. So
Speaker 1: you that's what people are trying to do is cherry
Speaker 1: pick somebody with a very interesting collection of deductions and
Speaker 1: credits and how they that you know, But but over
Speaker 1: we do that every day with John Tucker. We cherry
Speaker 1: pick John Tucker is representative of someone who's going to
Speaker 1: see his taxes go up. We gotta come back Grover
Speaker 1: Norcas with us, and we were a huge amount of
Speaker 1: mail with Mr norc was on because you know, I'll
Speaker 1: be honest with him. A lot of people they respect
Speaker 1: his persistence on doing what everybody wants, which is lower taxes.
Speaker 1: But how do you get there, because I haven't seen
Speaker 1: it over the last ten years of you know, and
Speaker 1: I'm still waiting for the empirical evidence which ties corporate
Speaker 1: tax cuts to greater economic growth. Should we get him going,
Speaker 1: I'm gonna come back and talk to Grover Norcast about
Speaker 1: a Paul Krugman chart that'll get grows, that'll ruin his Thanksgiving,
Speaker 1: his post Thanksgiving grow norcrist with his folks, of course,
Speaker 1: from the Americans for tax reform, always controversial thrill he
Speaker 1: could be with us. Uh. And it is a glorious,
Speaker 1: beautiful perfect day here in New York City, less so
Speaker 1: in Egyp hears the right through from Danna Crutchy and
Speaker 1: Ahmed Khalil, I'll sayd out our Cairo bureau. At least
Speaker 1: a hundred and fifty five killed. This is an abombing
Speaker 1: and a mosque to the northeast of Cairo, up on
Speaker 1: the Mediterranean towards the Gaza Strip. A hundred and twenty
Speaker 1: others wounded. UH militants in four vehicles drove up to
Speaker 1: the mosque. They set off a explosive device and then
Speaker 1: the guns on the carnage began. This is a story
Speaker 1: that is moving at light speed by no means is
Speaker 1: that an accurate count? And we'll go from there. We
Speaker 1: are privileged to have with us UH Lennoid, our Cairo
Speaker 1: Bureau chief, she's out of Bristol and out of the
Speaker 1: American University at Beirut, has a terrific perspective on the
Speaker 1: Middle East. Lynn that it's not an everyday occurrence. But
Speaker 1: it is safe to say that Mr l c C
Speaker 1: does not have control of the security of Egypt. When
Speaker 1: you look month to month and quarter to quarterback, there
Speaker 1: seems to be an endless sequence of these tragic events. Um. Yes, Um,
Speaker 1: this is a particularly large attack. I mean in terms
Speaker 1: of the number of people killed, a hundred and fifty
Speaker 1: five in a single attack. I can't remember the last
Speaker 1: time that many people were killed, you know, in one incident. UM.
Speaker 1: So in terms of scale, this is an unusual and
Speaker 1: it's worrying. UM. In terms of the place where the
Speaker 1: attack has taken place, um, it's it's in northern SINAI. Yes,
Speaker 1: the government has been government forces have been um fighting
Speaker 1: an insurgency there for years. Attacks are common, um, small
Speaker 1: smaller scale attacks up and you know, very often mostly
Speaker 1: they target security forces. Um. Um. But we have seen
Speaker 1: like at Easter um and um at Christmas in December
Speaker 1: of year, big attacks on churches, which again were a
Speaker 1: major depart from the kinds of a taxi through before.
Speaker 1: So I think what's really changed is who are the targets,
Speaker 1: you know, no longer just security forces, ordinary people worshiping
Speaker 1: in churches and mosques. The mythology of Egypt that so
Speaker 1: many of our listeners in America have is Lawrence of Arabia.
Speaker 1: And there's a scene where Lawrence goes across the sina
Speaker 1: and hits the Suez Canal, and it makes for great
Speaker 1: movies in great drama. Tell us about the tourist industry
Speaker 1: that's been destroyed. Um yeah, so um yeah. SINAI, you know,
Speaker 1: used to be a huge tourist destination for Egypt. Um.
Speaker 1: It's got amazing red sea diving resorts and seaside resorts
Speaker 1: along the northern coast, beautiful Mediterranean coastline. Um um. Um.
Speaker 1: Mount Catherine, where there's a monastery at the top of
Speaker 1: the mountain, was a great place that people used to
Speaker 1: love to misit um and that's mostly been um, you know,
Speaker 1: decimated by the attack that brought down a Russian passenger
Speaker 1: plane in late two thousand and fifteen and two d
Speaker 1: and twenty four people were killed in that UM in
Speaker 1: that incident. UM. And since then, the government has been
Speaker 1: trying to attract tourists bat UM, trying to you know,
Speaker 1: show that it's got the security situation under control so
Speaker 1: that you know, people will come back, because tourism was
Speaker 1: very important for the Egyptian economy. However, I think an
Speaker 1: attack like this, UM, even though it's quite far from
Speaker 1: where the resorts are, UM, you know, you see a
Speaker 1: headline like this, and you know that's going to put
Speaker 1: people off coming coming to Egypt so so so so
Speaker 1: that will set them back. Then can I just ask
Speaker 1: you to be a little political force for a moment here,
Speaker 1: because earlier in the week, I believe it was on
Speaker 1: Tuesday that the Lebanese Prime Minister Ad Hariri he with
Speaker 1: the Egyptian President of Delft all CC in UH Cyprus.
Speaker 1: I believe, and I'm wondering, you know, what has been
Speaker 1: going on with Hariri and Hezbollah in Lebanon plus the
Speaker 1: Saudi visit. Is there a reason why you've believed this
Speaker 1: might have occurred at this particular time. UM. I don't
Speaker 1: think that, UM, But those issues are linked. Actually, Um,
Speaker 1: this attack, we believe UM was on a mosque that's
Speaker 1: frequented by Sufi Muslims, and they belonged to a kind
Speaker 1: of a mystical They have a mystical interpretation of Islam
Speaker 1: and Islamic State, and groups like Islamic State are are
Speaker 1: very opposed UM. You know to those kinds of they're
Speaker 1: they're very rigid in their interpretation of Islam, and they
Speaker 1: don't like people who view it differently and worship differently.
Speaker 1: UM and UM. So it looks at the moment like
Speaker 1: they that like the attack was focused or like that
Speaker 1: was the reason. That's that's why domestic there's a purely
Speaker 1: domestic issue to a certain extent. Yes, I don't think
Speaker 1: it was an attack or it doesn't so far look
Speaker 1: like UM, it's related to regional politics or to see
Speaker 1: these recent efforts to kind of play a mediating role
Speaker 1: in various conflicts around the Middle East. UM. And obviously
Speaker 1: the militants in North sign I have attacked to the
Speaker 1: Muslims before, UM, but they've attacked individuals, they've executed individuals,
Speaker 1: they've attacked shrines, but they haven't carried out an attack
Speaker 1: on the scale one more question, because I know you've
Speaker 1: got to get back to the leadership of covering this
Speaker 1: terrible story. Lynn. Is this linked in any way to
Speaker 1: the other challenges of Cairo and particularly the tensions of
Speaker 1: the Muslim Brotherhood or is it separate and discreet? Um,
Speaker 1: It's linked in some ways in in in the sense
Speaker 1: that the crackdown on the Muslim Brotherhood has been you know,
Speaker 1: very I mean, there are thousands of people in jail,
Speaker 1: lots of people have been sentenced to death. UM. You know,
Speaker 1: the group has been outlawed, many many people in exile now.
Speaker 1: And it's linked in the sense that, UM, some disaffected
Speaker 1: Muslim Brotherhood members may have kind of abandoned their their
Speaker 1: commitment to peaceful politics and kind of been encouraged to
Speaker 1: join these more militant groups. In that sense, you know
Speaker 1: that there there is a link, UM, But they're not
Speaker 1: the same group. They're not you know, they're not the
Speaker 1: same people. But yeah, but there are there is certainly
Speaker 1: a sense amongst some you know, particularly among younger people
Speaker 1: who would have been Muslim Brotherhood members, UM, that they
Speaker 1: have no option but to turn to violence, and you know,
Speaker 1: some of them may then be more easily recruited by
Speaker 1: the more militant groups. Linn, thank you so much. Lennoi,
Speaker 1: charge of our Cairo operation, joining us today our North
Speaker 1: Africa Bureau chief. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom
Speaker 1: Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio