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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Charles

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Speaker 1: cancer Jones is now new Berger Berman Group Managing Director

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Speaker 1: and Portfolio management director. So, Charles, what is it? Is

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Speaker 1: it the Republicans take that it's happening or the Democrats

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Speaker 1: take that this is the PR machine in overdrive? Look,

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Speaker 1: I think I focused on the corporate side and and

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Speaker 1: corporations have been waiting all yeah to make decisions. Tax

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Speaker 1: is an important part of any calculation on return on capita.

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Speaker 1: All taxes for for US companies just went down in

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Speaker 1: rate UM and now we're starting to see decisions and

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Speaker 1: and it's it's and the key one. I feel bad

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Speaker 1: for all the finance directors out there. They're going to

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Speaker 1: have a very very busy Christmas in New Year. But

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Speaker 1: the key decision, and it'll get played out over time,

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Speaker 1: is how much of the should I say win for

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Speaker 1: do do the companies keep versus pass along to employees, UM,

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Speaker 1: shareholders and customers, and they're in this incredibly competitive global

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Speaker 1: economy a lot getting passed along at The easy decision

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Speaker 1: to make is the mechanical decision. You look at what

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Speaker 1: your forecast for next year, you're baking a lower rate,

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Speaker 1: and you raise your guidance. That's really mechanical. What's going

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Speaker 1: to play out through next year, as you point out,

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Speaker 1: is the CAPEX story. What are they going to do?

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Speaker 1: Do they shift from capital returns to capital spending? From

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Speaker 1: an investors standpoint, what do you want to see them

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Speaker 1: do with that cash? There's no one answered to their question,

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Speaker 1: which what's going to make next year so exciting for

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Speaker 1: people that focus on individual securities, which is what my

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Speaker 1: day job is um and it's it's it's so bifurcated

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Speaker 1: by company and by sector, by competitive landscape. Businesses that

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Speaker 1: have large monopoly modes and don't feel they face a

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Speaker 1: big competitive threat and are high tax pain, they're going to,

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Speaker 1: you know, keep a lot of that. And and businesses

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Speaker 1: that operating super competitive markets, which is by the way

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Speaker 1: most of the world are going to be, are going

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Speaker 1: to be making sure that they react faster than their

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Speaker 1: competitors in how they think about how much of the

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Speaker 1: cash they keep versus versus reinvest to to maintain and

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Speaker 1: grow market share profitably. I would take a little question around.

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Speaker 1: You know, there's tax things easy. It's not easy. Taxes

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Speaker 1: are by definition hugely complicated, and there's so much nuanced

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Speaker 1: um in the language, and there's nuance in how to

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Speaker 1: apply that um, and in that nuance there will be

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Speaker 1: a lot of Shaholder value created as well. Welcome Tom King, Tom,

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Speaker 1: tom Me, you were signaling that going to the conversation

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Speaker 1: you you waved your hand. I'm sorry hand today I've

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Speaker 1: checked out for the holidays. How everybody, Good morning, Bloomberg.

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Speaker 1: Surveillance brought you by as always Investo. Learn how investo

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Speaker 1: is pure focus on investing, diversity of thought and passion

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Speaker 1: to exceee can help you get more out of life.

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Speaker 1: Visit investco dot com slash more out of life, John,

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Speaker 1: Can I start with the surveillance correction? You can start.

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Speaker 1: I mentioned earlier that with all the text Bill, maybe

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Speaker 1: the sports people in Washington set up like an LLC,

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Speaker 1: like a pass through thing, and Boris tweets in and says, Tom,

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Speaker 1: you're nuts. They can't. I don't know, but that's an

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Speaker 1: interesting idea. If they can't set up their own sidecar

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Speaker 1: deal and they're on the red skol. This is not

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Speaker 1: really a proper corranction, is it. It's sort of a direction.

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Speaker 1: I just were scrupulous about We we love when we

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Speaker 1: hear from our guests that we've made mistakes. That keeps

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Speaker 1: us at the King's house. It is cramped up because

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Speaker 1: you seem distracted. Time the ten year old has it's

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Speaker 1: like the deficit clock above her bed to shake countdown.

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Speaker 1: Things count. It's like, you know, the FED meeting in

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Speaker 1: thirty one minutes twelve seconds, she's like five or six

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Speaker 1: days hours seconds were fired. We're fired up. The tree

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Speaker 1: got watered once this week. I think the tree is

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Speaker 1: gonna all the needles are gonna come off it here

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Speaker 1: in a bit, Charles Cantor when when we look at

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Speaker 1: the boom that's out there we saw thirty days ago

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Speaker 1: literally a jump condition in retail sales. How do you

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Speaker 1: react as an investment guy when the President says we're

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Speaker 1: gonna get three percent g d P or Mr khne

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Speaker 1: X goldban Sex says no, we're gonna get four percent

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Speaker 1: in g d P. Oh, I don't think we we

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Speaker 1: we react a whole lot to that. I mean, we

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Speaker 1: we're in an environment where where we were back to

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Speaker 1: to lobal synchronized economic growth, every G seven economy is

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Speaker 1: in expansion territory. Most of the brick economies are in

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Speaker 1: expansion territory. And that's a that's a wonderful environment to

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Speaker 1: sell more goods and services UM. And I think, and

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Speaker 1: and we have an environment in the US where we

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Speaker 1: have nice, nice, reasonably nice full employment away from alternative

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Speaker 1: investments and along short funds. Would you suggest another double

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Speaker 1: digit year? Not so much to make a single point estimate,

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Speaker 1: but that the gloom crew looking for a tendency back

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Speaker 1: to single digits is off the mark. It's hard to

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Speaker 1: predict returns UM in any one year. If I was

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Speaker 1: going to make a prediction UM, I would say equity

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Speaker 1: assets positive next year with more volatility UM. And what

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Speaker 1: was quite surprising to me late last week was was

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Speaker 1: was a study done by a major consulting firm which

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Speaker 1: which seemed to suggest that confidence and skepticism UM remains really,

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Speaker 1: really high. And and I got to tell you, that's

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Speaker 1: a great environment to deploy capital. I'd rather deploy into

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Speaker 1: skepticism than into euphoria. And what's been remarkable about the

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Speaker 1: bull market. I mean, I don't even know if people

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Speaker 1: call it a bull market, but there's been a bull

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Speaker 1: market out there since since early two thousand and nine.

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Speaker 1: Is people haven't believed any of those steps, and they

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Speaker 1: remain skeptical. And against skepticism, UM, you can make money

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Speaker 1: because if you the predominant usually starts with tremendous skepticism

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Speaker 1: UM and ends with euphoria, and we haven't got close

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Speaker 1: to euphoria yet. You made quite a significant call in

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Speaker 1: that last comment, and it was the prospect for higher

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Speaker 1: volt next year. What's the catalyst for higher evolve? The

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Speaker 1: VIX yesterday had an eight handle. I'm wondering what gets

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Speaker 1: it north of ten, never mind significantly high. We rolled

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Speaker 1: over listen. I think, UM, fiscal stuff is way more

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Speaker 1: complicated than monetary stuff, and on the margin, we're tilting

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Speaker 1: more and more to to monitor to to fiscal versus monetary.

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Speaker 1: The amount of global liquidity, while inaggregate is still growing,

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Speaker 1: the rate of change is slowing, and we'll go negative

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Speaker 1: in a in a couple of years. So so I

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Speaker 1: would anticipate as you think through taxes, as you think

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Speaker 1: through fiscal policy, as you think through new communication from

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Speaker 1: the FED. Not to suggest they'll communicate something different, but

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Speaker 1: there'll be a new leader there, and there'll be a

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Speaker 1: new communication style. UM. I can't predict to you when

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Speaker 1: it shows up, but my guess is it will show up,

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Speaker 1: mostly because we've lived in an environment of just unusually

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Speaker 1: unusually low volved because of this tremendous amount of global

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Speaker 1: equidity out there, Bloomber Radio sees. At first, we just

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Speaker 1: put it on Twitter, that three day interday church rowing

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Speaker 1: John Pharaoh's eight handle yesterday. Yeah, it's that significant to you, Charles,

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Speaker 1: when you think about it. So many people get worried

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Speaker 1: about low ball, then they get worried about high vallus

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Speaker 1: if it signals something. What is eight signal? I'm not

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Speaker 1: I don't know what it signals. But but low vall

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Speaker 1: has been has been hurtful to those that understand the

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Speaker 1: assets best, and has been helpful to those that believe

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Speaker 1: that can self drive acid allocation. And as all changes, UM,

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Speaker 1: folks will realize that knowing what your own will become

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Speaker 1: incredibly more important, especially in a world where you're gonna

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Speaker 1: have bifurcation around return on capital because of taxes. Quickly,

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Speaker 1: here is there an opportunity in midcaps. I mean we

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Speaker 1: always we have a bad tendency here all and talk

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Speaker 1: about invisible large caps. You must be scouring a landscape.

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Speaker 1: We love midcaps. We love finding businesses that can grow

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Speaker 1: and be large on the margin. The midcaps have less global,

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Speaker 1: have gone globally less, and they're going to benefit. We

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Speaker 1: got because of time, we gotta go. Can we come

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Speaker 1: back John and talk about this? Can we come back?

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Speaker 1: Of course we can. Honestly, my permission today, I think

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Speaker 1: it's a huge deal. I mean, I'm a huge believer

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Speaker 1: in this MidCap theory. We'll do that with Charles Cantor

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Speaker 1: of New Burger Berman and Stan Calendar. If you're having

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Speaker 1: a beverage of your choice this morning, a good cup

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Speaker 1: of black coffee, what would be the single talking point

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Speaker 1: about where the deficit is in two years? Oh, that

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Speaker 1: we're gonna be talking about trillion dollar annual deficits for

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Speaker 1: the next two decades, trillion and at least trillion. And

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Speaker 1: that assumes that nothing further, nothing bad, it is going

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Speaker 1: to happen that's not currently anticipated. And we know something bad,

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Speaker 1: something always bad, happened Washington one oh one is no

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Speaker 1: one cares when they go in the voting booth about

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Speaker 1: the deficit. Do you see that November six of next year,

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Speaker 1: or is this time different where people actually are going

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Speaker 1: to care about the T word. Well, the deficit is

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Speaker 1: always as an issue as a subterfuge for other things. Um.

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Speaker 1: It often is described to a corrupt government or something

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Speaker 1: like that. People won't care about it in November two

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Speaker 1: thousand and eighteen unless unless the the interest rates start

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Speaker 1: getting higher, the economy is not growing um or unless

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Speaker 1: it's used it as an excuse to cut Medicare and

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Speaker 1: social security hasn't mattered for for years, and it's been

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Speaker 1: climbing for years. The total debt pole has been climbing

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Speaker 1: for years. What does it matter now? No, No, I'm

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Speaker 1: saying it doesn't unless unless it has an impact on

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Speaker 1: things that have a direct effect on people's lives, like

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Speaker 1: interest rates. Are you expecting the deficits being seeply politicized

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Speaker 1: over the next year, Oh? Almost, Well, the Republicans have

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Speaker 1: actually already started to do that. In one of the

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Speaker 1: ultimate uh exercises in hypocrisy. They've increased the deficit by

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Speaker 1: one and a half trillion dollars, or by their numbers

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Speaker 1: over the next ten years UM and then now they're

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Speaker 1: saying that the deficit is the reason they have to

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Speaker 1: cut spending. So first they increase the deficits substantially with

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Speaker 1: tax cuts, and now it's the it's spending vault, so

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Speaker 1: it will be a reason to do something. It won't

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Speaker 1: be the thing that needs to be taken care of.

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Speaker 1: It's clear to me that in the United States, the

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Speaker 1: deficit hawks disappear, wants to get into power, then when

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Speaker 1: they're out of power, they become ultimately defice hawks. Once again.

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Speaker 1: Is anyone in power and anytime soon gonna want to

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Speaker 1: do anything about it? Well? Yeah, even Paul Ryan said

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Speaker 1: last week, and other members Ted Cruz and others have

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Speaker 1: said that the deficit is going to be too high

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Speaker 1: and we're gonna have to cut spending to deal with it.

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Speaker 1: I was on a program with someone from the Heritage

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Speaker 1: Foundation a month ago who said, yes, we're gonna cut

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Speaker 1: taxes and increase the deficit and in suspending problem. So

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Speaker 1: that will be the excuse they use, But it's not

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Speaker 1: that they want to increase reduce the deficit by itself.

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Speaker 1: And my experience as well stand Calendar is that corporate

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Speaker 1: officers really don't adjust to the sixty foot view of

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Speaker 1: fiscal policy, debts, deficits, and the rest of it. But

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Speaker 1: to your point, they do adjust to hire interest rates.

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Speaker 1: How much of an interest rate move do we need

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Speaker 1: before it changes celebration of corporations. Well, it's not so

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Speaker 1: much that interest rates will move in just because we

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Speaker 1: are expecting interest rates to rise anyway over the next year.

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Speaker 1: It's whether they'll rise more than anticipated. And if we

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Speaker 1: got a one point one point zero we uh eight

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Speaker 1: point increase uh it interest rates in two thousand eighteen.

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Speaker 1: I suspect you have a lot of handwringing and people

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Speaker 1: demanding deficit reduced. So is that your prediction for two

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Speaker 1: thousand eighteen within the corporate political nexus, that handwringing will

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Speaker 1: be You're gonna go long hand ringing. Yeah, a lot,

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Speaker 1: a lot of hand lotion is going to be needed,

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Speaker 1: you know, So, so buy some Lubra derm or something

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Speaker 1: like that because that that. But there'll be a lot

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Speaker 1: of push on spending, not so much on revenues. And

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Speaker 1: then of course, what what what happens after the two

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Speaker 1: thou eighteen election. No one can be sure, But um,

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Speaker 1: I want to urge you, and Jonathan, I want to

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Speaker 1: urge you to keep in mind that the projections of

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Speaker 1: a trillion or one point one trillion dollar annual deficite

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Speaker 1: that I'm making assume that nothing bad like a war

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Speaker 1: is going to happen, or that other natural disasters won't occur,

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Speaker 1: and one or more of those happen all the time,

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Speaker 1: So we could easily be talking about one point five trillion,

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Speaker 1: in which case the pressure on on spending would be enormous. Well,

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Speaker 1: perhaps something even more inevitable outside of a war. Stand

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Speaker 1: at some point we're gonna have a downturn. Um your

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Speaker 1: prediction for the deficit, At what point do you incorporate

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Speaker 1: the prospect of a drop in GDP given that this

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Speaker 1: expansion has gone on for years and years and years now, Well,

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Speaker 1: all right, I'm not one of those people who thinks

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Speaker 1: that the past is a is a good predictor of

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Speaker 1: of what's going to happen in the future. So the

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Speaker 1: fact that we haven't had a drop in the last

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Speaker 1: eight or nine years or so doesn't necessarily convince me

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Speaker 1: that one is imminent, But you've got to believe that

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Speaker 1: it's probably not. In two thousand and eighteen, but beyond that,

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Speaker 1: there's going to be some reduction in in in GDP.

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Speaker 1: I know you have a busy week ahead of you,

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Speaker 1: and I believe one of your appointments is with the

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Speaker 1: President at the White House and over you know, two

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Speaker 1: scoops of ice cream. The President of United States is

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Speaker 1: gonna ask stand Colendar what the plug in should be

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Speaker 1: for his debt and fiscal calculations. Is it three percent?

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Speaker 1: Can Stand Calendar plug a four percent statistic into your

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Speaker 1: budget analysis? UM? I can? And I and I in

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Speaker 1: terms of debt to GDP, I I I what about GDP?

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Speaker 1: Just GDP analysis? Can you can? You? Can you use

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Speaker 1: a run rate of even three point zero percent for

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Speaker 1: g d P? UM I can? For the next year?

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Speaker 1: Uh that that's when we've got it now, and the

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Speaker 1: additional stimulus we're rating is going to probably goose it

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Speaker 1: up a little bit. But beyond that, it's not it's

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Speaker 1: certainly not sustainable, especially with the interest rates that are

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Speaker 1: likely to rise. Now. The other thing you guys know

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Speaker 1: better than I do is that we've got to watch

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Speaker 1: world demand. I'm not sure what's going to be going

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Speaker 1: on their past next year. Stand Can I get your

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Speaker 1: thoughts on a corporate response. So far, we've had several

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Speaker 1: companies come out and do various things. You've got the

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Speaker 1: mechanical response you would expect on a tax cut, which

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Speaker 1: is just this was our GUIDs for next year. Now

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Speaker 1: we're plugging in a lower tax right, and this is

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Speaker 1: our guard It's now. It's very mechanical you expected to happen.

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Speaker 1: The other one is just a pure decision that's being made.

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Speaker 1: A T and T, Fifth Third Bankorp and Comcast of

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Speaker 1: all announced one thousand dollar bonuses for their US workers.

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Speaker 1: WUS Fargo has actually joined Fifth Third by raising its

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Speaker 1: minimum aurly wage to fifteen dollars. How would you characterize

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Speaker 1: the decisions that are being made. Is that made by

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Speaker 1: the corporate PR team or is that made by a CFO. No, No,

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Speaker 1: that's made by at the highest levels on the eight

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Speaker 1: Those are different situations. The I think the A T

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Speaker 1: and T thing was signal to the President that they

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Speaker 1: want this deal with Comcast to go through UM and

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Speaker 1: that they're willing to play along to get him some

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Speaker 1: of the publicity he wants. I'm not sure that that

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Speaker 1: wasn't planned, or wasn't or wasn't gonna They weren't gonna

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Speaker 1: think about that anyway. Um, the way the minimum wage increases,

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Speaker 1: that the others we're talking about. Um, that seems to

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Speaker 1: be new. But I want to urge you remember what

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Speaker 1: happened in Indiana with the carrier plant. Uh. You know,

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Speaker 1: let's see if they actually carry through one these announcements.

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Speaker 1: Stein Calender final question, if we should and this goes

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Speaker 1: to the back and forth, the almost generational back and

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Speaker 1: forth of Congress. What is your experience if another party

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Speaker 1: comes into power. Do they go back in like retroactive legislation,

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Speaker 1: do they change it, do they amend it? Or once

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Speaker 1: something becomes financial fiscal law, it's sort of brandsed into perpetuity.

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Speaker 1: Which is it? Yeah, Well, let's remember Ronald Reagan signed

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Speaker 1: a big tax cut and then said then, uh spent

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Speaker 1: the rest of his presidency signing tax increases because the

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Speaker 1: first one had to be undone because the deficit was

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Speaker 1: getting so high. Back then, UM, new Congress comes in,

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Speaker 1: depending upon the size of the majority. If it's a

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Speaker 1: Democratic majority in both houses and it's a substantial majority, Uh,

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Speaker 1: there will be some pushback, There will be some take

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Speaker 1: back on this. UM. I don't think there's any doubt

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Speaker 1: about it. This is absolutely critical. Are you predicting a

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Speaker 1: Reagan redux if we get to that trillion dollar statistic

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Speaker 1: on the deficit? No, not not at a trillion, but

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Speaker 1: if it gets a trillion and a half or something,

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Speaker 1: there's going to be a lot of people talking about it.

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Speaker 1: This has been wonderful Stack Condor greatly appreciate it and

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Speaker 1: value perspective here for decades on Capitol Helen with them

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Speaker 1: CORPUS MSL Group. Matthew Winkler, Editor in Chief Emeritus here Bloomberg.

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Speaker 1: For our listeners that don't know, Matt Winkler was responsible

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Speaker 1: for hiring Tom Kane. And since we're in the holiday season,

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Speaker 1: I want Matt to explain to our listeners the day

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Speaker 1: he brings Matt Tom Keane into the building and gives

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Speaker 1: him a job. Matt, can you do that for us?

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Speaker 1: It is the holiday, Yeah, it was I think sort

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Speaker 1: of the end of the year ish and maybe like

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Speaker 1: around there, I was sitting around what do I do?

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Speaker 1: And I gotta I got a call from somebody we

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Speaker 1: call application specialists who know everything there is to know

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Speaker 1: about how to use the Bloomberg. So I had a

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Speaker 1: lot of time for Doug when he called me, and

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Speaker 1: he said, there's this uh fellow I'd like you to

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Speaker 1: meet if you have a chance, Um, can I come

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Speaker 1: see you with him? And I said sure? And uh,

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Speaker 1: you know, soon enough. Standing in front of me was

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Speaker 1: this giant Uh to me at least, because when you

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Speaker 1: put Tom Keene next to me, he does look like

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Speaker 1: a bus cop. Yeah, he looked like a very lanky

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Speaker 1: we view bank to me at the time. Uh. And um,

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Speaker 1: you know, I said, so, what's going on in the markets?

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Speaker 1: And I got a five minute monologue that was about

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Speaker 1: as intelligent and coherent as anything I heard. So I

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Speaker 1: said to him, can you start on Monday. That's what happened.

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Speaker 1: I sat down. I came back the next day literally

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Speaker 1: and I sat down and, folks, this is the magic

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Speaker 1: of Bloomberg. There's a guy sitting next to me, and

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Speaker 1: I go, who the hell is this guy? So I'm like,

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Speaker 1: I'm Google f E l I x k E S

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Speaker 1: S l E R. And I didn't realize the entire

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Speaker 1: row of people I was sitting with were real journalists,

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Speaker 1: including the great Felix Kessler. I mean, And that was

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Speaker 1: Bloomberg was the magic of of real journalism. Matt Winkler

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Speaker 1: thank you uh so much for a Bloomberg view in

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Speaker 1: this smart article on a gentleman from Fidelity, John, and

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Speaker 1: thank you for hiring Tom Keane. I guess so you

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Speaker 1: can either thank Matt or blame Matt for our listeners

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Speaker 1: out there, depending on where you stand. Matt Wink has

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Speaker 1: been great to catch up Bloomberg blockchain everyone. I thought

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Speaker 1: i'd try that out. Bloomberg. Does that work? Bloomberg blockchain, blockchain,

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Speaker 1: bitcoin dot com, you know, green shoots. I've got a

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Speaker 1: l T e A go ahead? What does the Securities

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Speaker 1: Exchange Commission do? I mean, I'm looking at the chart

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Speaker 1: and it says two to eleven. Why thought you're looking

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Speaker 1: for the recipe for Long Island iced tea. No, I

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Speaker 1: L T e A is a symbol and it's two

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Speaker 1: to twelve. Yeah, it's like the nine twenties. Well that's

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Speaker 1: what happens where, I guess when you've got people scouring

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Speaker 1: the internet or scouring any kind of filing documentation that

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Speaker 1: would include the words bitch a bitcoin blockchain, I don't

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Speaker 1: know ethereum pto currency ripple. Good morning, Virginia, Virginia Morris,

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Speaker 1: Phil Thomas, Julian Davidson, having a sprightly day in Hicksville,

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Speaker 1: New York, Long Island Iced Tea Corporation. We said good

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Speaker 1: morning to Oliver Chen and I want to do a

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Speaker 1: shout here, a shout out here for the gentleman from

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Speaker 1: Cowen and that people come in and they're gloomy on retail,

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Speaker 1: and Oliver is sort of on an even keel basis

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Speaker 1: for thirty six months, said you know what, They're still

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Speaker 1: going to show up at the door. Get over it.

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Speaker 1: What did you how did you respond to the truly

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Speaker 1: jump condition in retail sales economically that we saw across

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Speaker 1: the nation last quarter. Yeah, what we've seen here is

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Speaker 1: a delay in terms of the inventory being under good

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Speaker 1: control as well as better weather. So those have been

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Speaker 1: very helpful factors with regards to what's been happening. And also,

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Speaker 1: as you know, Tom, there's been so much of a

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Speaker 1: transformation in retail we've had multiple years in terms of

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Speaker 1: the battle versus Amazon et cetera, olvera, Is it really

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Speaker 1: just Amazon that is causing the issue or is it

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Speaker 1: that perhaps the actual merchandise is not what people want,

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Speaker 1: particularly the apparel industry, because I think of success stories

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Speaker 1: like Canada Goose and then you look at what happens

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Speaker 1: to the main retailers such as Macy's. Where are their brands,

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Speaker 1: where is their creative coming from? There has been a

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Speaker 1: lot PAM in terms of a high degree of sameness,

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Speaker 1: so innovation is so important. Lululemon is a name that

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Speaker 1: we like as well as Canada Goose, and what you

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Speaker 1: find is really differentiated. Brands with a strong functional proposition

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Speaker 1: balancing femininity as well as function can win the game.

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Speaker 1: And brands are the battle of thinking hard about brands

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Speaker 1: and content and lifestyle that that really needs to happen

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Speaker 1: and newness. What happens is there's too much safety and

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Speaker 1: retailers and brands don't take enough risk and things start

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Speaker 1: to just look the same. But Tom, I'm wearing these

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Speaker 1: shoes for you today and you can see come on,

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Speaker 1: give me your foot. We gotta hold this up for

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Speaker 1: the radio audience. Are you kidding? Slippers? These are like

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Speaker 1: Gucci's shoes and they've got an animal attached to the back.

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Speaker 1: You were these just for me? I thought of you

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Speaker 1: because they're differentiated, special. Okay, well, let's rip up the

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Speaker 1: scripture that you know. I look at the Canada Goose,

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Speaker 1: you say it's a balanced approach. It unbalances the wallet.

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Speaker 1: We are still an aspirational society. That's the great proof here.

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Speaker 1: If anything, the president uh sandwich between Tiffany's and Gucci's

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Speaker 1: for America has brought back that aspiration. How does luxury

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Speaker 1: move forward in two thousand eighteen, even if all of

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Speaker 1: our attentions on Walmart, Home Depot and the rest, well,

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Speaker 1: we're seeing a good closer to the mic, we're seeing

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Speaker 1: a good market for luxury and the luxury goods opportunity.

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Speaker 1: How does luxury move forward? It's it's a lot about

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Speaker 1: Generation Z and the new younger, wealthier consumer. If you

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Speaker 1: think about Southebys, they're using social media. You can really

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Speaker 1: have breakfast at Tiffany now, and food, travel and internationalism

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Speaker 1: are key aspects of Generation Z. But your names are Walmart, Target, Cole's, Costco, Macy's,

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Speaker 1: Jay Okay, that's a French name, j s Pinay, nord Strom.

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Speaker 1: I don't see any luxury names on here. Why not? Well,

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Speaker 1: I am the luxury and the retail analysts, and what

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Speaker 1: we also like is Tiffany, Bhutan and Sotheby's. At the

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Speaker 1: other end. That's not Louis Howton. Well, it's anything for you,

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Speaker 1: Louis Vutton than the Tom just knows him by the initials.

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Speaker 1: Go ahead, Oliver, help us. The reality of what's unamazonrble

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Speaker 1: is thinking about high luxury stocks such as LVMH, Tiffany

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Speaker 1: and then also deep value Costco, Walmart, t J Ross.

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Speaker 1: And that's a strategy that we like for portfolio managers

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Speaker 1: and clients and thinking about that. That is a major

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Speaker 1: trend Tom in terms of the real real and up

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Speaker 1: cycling as well, because what we have with new consumers

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Speaker 1: is a different approach to brands as well. Is the cause?

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Speaker 1: Is the price point for luxury really just a kind

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Speaker 1: of a fiction? I mean, what is the price point

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Speaker 1: now when you talk about luxury? Well there? I mean

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Speaker 1: is it a five T shirt that you just think?

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Speaker 1: Who buys that? Or in some cases yes, because do

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Speaker 1: you think about Huton and Supreme and these street where

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Speaker 1: brands where street is quite cheek and some of these

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Speaker 1: average retails tell people about Supreme just that may not

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Speaker 1: know this because it's not a public trade of come.

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Speaker 1: It's extremely limited edition goods and the market resell values

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Speaker 1: are tremendous and it's T shirts for four dollars plus

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Speaker 1: bags with Bhuton for ten dollars plus. But it's a

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Speaker 1: phenomenon because there's so much rarity and specialness and uniqueness

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Speaker 1: and very limited production. But where does the marketing come

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Speaker 1: from to make it so special? The marketing comes from

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Speaker 1: being secretive and discreet and also from a culture that

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Speaker 1: really loves collecting. I think collecting and thinking about scarcity

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Speaker 1: is a global trend. We could talk to you for

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Speaker 1: eight hours with this. We make jokes about it, folks,

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Speaker 1: but Oliver Chen is totally wired in to all this

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Speaker 1: odd aspirational stuff, and we've got to get you back

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00:26:15,840 --> 00:26:19,439
Speaker 1: for a longer interview. I want you to parse Zara

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Speaker 1: h and M. Why does Aara have the pixie dust?

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00:26:24,240 --> 00:26:27,639
Speaker 1: And H and M has lost it. Sara has done

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Speaker 1: a great job with speed, reacting to runway and really

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Speaker 1: assorting and also very limited depth and uh what does

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Speaker 1: that mean? You gotta get it then and now otherwise

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Speaker 1: I'll run out of sizes. So they've trained the customer

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Speaker 1: in a very healthy way. And we're in the Instagram generation.

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Speaker 1: So there's micro trends happening all over the place. And

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Speaker 1: what's a micro trend right now? These Gucci flour slippers

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Speaker 1: and slides and brought them to the long haul. So

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Speaker 1: he's a little annoyed that it's just gonna be a

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Speaker 1: short term thing. Said, we'll see a slippers, we do

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Speaker 1: a photo and put it out on Twitter. I ask

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Speaker 1: how much for a line? Slipper is this is the

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Speaker 1: astrational version, but I think Zara and others have an

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Speaker 1: excessive line. We're gonna do this, folks. We're gonna put

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Speaker 1: a photo out on Twitter for your foot pleasure of

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Speaker 1: one foot Chen and one foot Keen, just to show

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Speaker 1: you Oliver Chen. We thank you. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

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Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

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Speaker 1: on Twitter at Tom Keane before the podcast. You can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio