WEBVTT - Bloomberg Businessweek Weekend - October 26th, 2019 0:00:02.520 --> 0:00:06.240 This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm 0:00:06.280 --> 0:00:09.280 Carol Master with Kaylee Lines. Welcome to the weekend edition 0:00:09.320 --> 0:00:11.880 of Bloomberg Business Week. Over the next couple of hours, 0:00:11.880 --> 0:00:13.640 what are you News of the week, insights from the 0:00:13.680 --> 0:00:17.200 magazine and more. And this magazine, this issue is all 0:00:17.280 --> 0:00:20.680 about twenty twenty. It is the year ahead issue, from 0:00:20.720 --> 0:00:23.360 politics and power and what's ahead for the global economy 0:00:23.360 --> 0:00:26.400 and markets, to technology and trends in the luxury space 0:00:26.480 --> 0:00:29.000 and a lot more so. For better or worse, US 0:00:29.040 --> 0:00:33.040 and global markets have become inextricably entwined with American politics. 0:00:33.040 --> 0:00:35.559 Here to explain Michael Reagan, he keeps a watch on 0:00:35.600 --> 0:00:38.479 the financial markets for US. So what do you we 0:00:38.560 --> 0:00:41.400 do know? Right? We watched the election so carefully in 0:00:41.479 --> 0:00:44.040 terms of what it might mean for investors. Right, Yeah, 0:00:44.080 --> 0:00:46.559 it's this kind of awkward position that a lot of 0:00:46.600 --> 0:00:49.680 investors and analysts have been thrust into. Is now they 0:00:49.680 --> 0:00:51.559 have to sort of have a sideline as a political 0:00:51.600 --> 0:00:53.840 scientist and kind of gauge where the tea leaves in 0:00:53.880 --> 0:00:56.560 the politics world are headed. It is it really is 0:00:56.560 --> 0:00:59.040 turning into old market of its own almost And you know, 0:00:59.080 --> 0:01:02.000 there's these prediction sites that you can tract sort of 0:01:02.000 --> 0:01:06.440 where the the betting community believes, uh, the horse race lies. 0:01:06.480 --> 0:01:09.000 In politics, We'll tell us about one strategist that you 0:01:09.000 --> 0:01:11.280 actually went to visit, right, because you start off your 0:01:11.319 --> 0:01:13.759 story with that, and I think it tells yeah, yeah, 0:01:13.760 --> 0:01:17.480 it's It's funny. Laurie Calvacina at RBC UH and she 0:01:17.560 --> 0:01:19.800 wrote in a note how she's she looks at these 0:01:20.040 --> 0:01:23.360 uh political polling charts almost like stock charts right now, 0:01:23.480 --> 0:01:26.920 and um, you know she's looking at Elizabeth Warren is 0:01:26.959 --> 0:01:29.679 like a momentum stock because she's really rising in the polls, 0:01:29.959 --> 0:01:33.200 and she's she's said she would advise shorting Joe Biden, 0:01:33.480 --> 0:01:36.919 uh in my comrade from the University of Delaware, unfortunately, 0:01:37.080 --> 0:01:39.679 but just because he's waning in momentum in the pulse. 0:01:39.959 --> 0:01:43.920 But you know what's really fascinating is that so much 0:01:44.000 --> 0:01:47.560 is at stake with politics right now because obviously, when 0:01:47.560 --> 0:01:50.880 President Trump was elected, you know, politics ruled everything in 0:01:50.920 --> 0:01:54.760 global markets for you know, ever since basically. But now 0:01:54.800 --> 0:01:59.040 some of these Democratic can candidates are really have platforms 0:01:59.080 --> 0:02:01.800 that are really threatened to sort of upend a lot 0:02:01.800 --> 0:02:04.280 of the main industries in the US well, they're talking 0:02:04.280 --> 0:02:07.120 about Medicare for all, right, that's going to have implications 0:02:07.200 --> 0:02:10.119 on all of those publicly held healthcare plan absolutely. Yeah, 0:02:10.120 --> 0:02:13.040 And that's why Elizabeth Lawren's ascent in the polls is 0:02:13.120 --> 0:02:16.240 really has well. She's kind of scrambling to try to 0:02:16.280 --> 0:02:18.840 decipher what it could possibly mean, because her plans are 0:02:18.960 --> 0:02:22.600 all over the place, so broad reaching. Um that a 0:02:22.760 --> 0:02:24.959 you have to kind of figure out, well, what will 0:02:25.040 --> 0:02:28.799 her priorities be, uh, and what will she sort of 0:02:28.840 --> 0:02:31.359 be able to get to accomplish. And a lot depends 0:02:31.400 --> 0:02:35.120 obviously on what the Congress looks like after the next election, 0:02:35.200 --> 0:02:40.680 But a hypothetical Elizabeth Warren presidency is has well. She's 0:02:40.680 --> 0:02:44.640 scrambling to try to figure out all the ripple effects. Obviously, 0:02:44.680 --> 0:02:48.240 as you said, Medicare for all would have major implications 0:02:48.280 --> 0:02:50.880 for the healthcare sector. Um. She also wants to raise 0:02:50.880 --> 0:02:53.680 the minimum wage, which would pressure a lot of margins 0:02:53.800 --> 0:02:55.959 at at some companies, but it would also provide a 0:02:56.040 --> 0:02:58.200 lot more spending in the economy, so there'd be winners 0:02:58.200 --> 0:03:02.240 and losers in that scenario. Um. Obviously, she's talked about 0:03:02.280 --> 0:03:05.400 getting tougher on the banks. Um. The thinking is that 0:03:05.480 --> 0:03:09.320 her sec would be very much a pitfall of an 0:03:09.360 --> 0:03:12.640 sec uh, and on and on and on. There's so 0:03:12.680 --> 0:03:16.399 many different ripple effects that um, it's it's a mad 0:03:16.480 --> 0:03:18.880 dash to try to sort it all out. What's really 0:03:18.880 --> 0:03:21.760 interesting is, as of yet, um, there doesn't seem to 0:03:21.800 --> 0:03:26.320 be much of her ascent priced in two markets so far, 0:03:26.360 --> 0:03:29.600 and analysts are saying, well, look for that to potentially 0:03:29.680 --> 0:03:33.040 change maybe early in the first quarter, around February or March, 0:03:33.080 --> 0:03:36.000 when we start to get those primary results in, and 0:03:36.000 --> 0:03:38.320 it really will then become more clear who the front 0:03:38.400 --> 0:03:40.600 runner is in the Democratic race, because right now it 0:03:40.640 --> 0:03:42.560 really is a worse race. Well, there's still a long 0:03:42.560 --> 0:03:44.720 way to go, right, and of course many people say 0:03:44.760 --> 0:03:47.200 that regardless of how far left she maybe now, if 0:03:47.240 --> 0:03:49.360 it does get to the general election where she is 0:03:49.400 --> 0:03:51.840 the Democratic candidate, she's going to have to move more 0:03:51.880 --> 0:03:53.960 to a middle. So I wonder if maybe you don't 0:03:54.000 --> 0:03:56.440 want to overprice everything she's saying now, because again, we 0:03:56.480 --> 0:03:58.520 have so far to go and stances could change. Yeah, 0:03:58.560 --> 0:04:01.400 that's that's absolutely right. You know, the assumption is you 0:04:01.560 --> 0:04:03.480 run very far left to win that primary, then you 0:04:03.560 --> 0:04:05.800 moved to the middle. Elizabeth Barren's a bit of a 0:04:05.800 --> 0:04:07.760 wild card. I don't know how far to the middle 0:04:07.840 --> 0:04:10.040 you can expect her to move. Again, I think it 0:04:10.160 --> 0:04:12.840 a lot goes back to how much she can get 0:04:12.840 --> 0:04:16.080 through Congress. So some analysts are looking at, well, what 0:04:16.160 --> 0:04:20.919 can she accomplish through executive orders or through existing channels 0:04:20.920 --> 0:04:24.440 in the executive branch rather than get through Congress um. 0:04:24.520 --> 0:04:27.280 So there's a lot of moving pieces, and this is 0:04:27.320 --> 0:04:29.080 an analysis I think that's going to keep going on 0:04:29.120 --> 0:04:31.080 and on. Might take a take a step back because 0:04:31.080 --> 0:04:33.000 I think it used to be that we thought if 0:04:33.000 --> 0:04:35.400 there was a Democrat in the White House ultimately that 0:04:35.440 --> 0:04:37.680 it wasn't good for business right, and that there was 0:04:37.720 --> 0:04:40.240 a Republican it was and that's the markets would play 0:04:40.240 --> 0:04:42.520 off of that. But in years, in recent years, we 0:04:42.560 --> 0:04:44.920 haven't seen that, Like, tell me what happens if it's 0:04:44.920 --> 0:04:47.839 a Democrat versus a Republican? Is it all good? And yeah? 0:04:47.880 --> 0:04:50.640 There's so many different variables and scenarios you can run, 0:04:50.680 --> 0:04:53.400 you know, is it a Democrat who's got who has 0:04:54.400 --> 0:04:56.839 a full Democratic Senate and House beyond them or a 0:04:56.920 --> 0:04:59.560 mixed sipolit chamber And there's so many different scenarios you 0:04:59.600 --> 0:05:01.840 can run. Historically, I don't put a lot of faith 0:05:01.880 --> 0:05:04.599 in any of them because every situation is so unique, 0:05:04.920 --> 0:05:08.640 and the candidates are, the economic environment going into the 0:05:08.640 --> 0:05:12.360 elections are unique. So I think we've kind of uh 0:05:12.960 --> 0:05:16.599 gotten into this unchartered territory with President Trump doing stuff 0:05:16.640 --> 0:05:20.719 that no president has done before, aggressively hitting UH China 0:05:21.200 --> 0:05:25.120 the tariffs, threatening them elsewhere. So he kind of broke 0:05:25.320 --> 0:05:28.360 what I think would be the paradigm of the past 0:05:28.400 --> 0:05:30.039 and you have to kind of just play the cards 0:05:30.040 --> 0:05:32.359 on the on the table now. Yeah. Absolutely, And to 0:05:32.440 --> 0:05:34.400 the point of President Trump, you also mentioned your peach 0:05:34.640 --> 0:05:37.680 that you can't extract politics from talk of a recession 0:05:37.760 --> 0:05:39.800 right now, and a lot of that is due to 0:05:39.960 --> 0:05:42.560 the president's policies, specifically in regard to the trade war, 0:05:42.600 --> 0:05:45.720 which as we know, is impacting his base pretty substantially. 0:05:45.760 --> 0:05:48.720 Those areas are feeling the most pain. But a lot 0:05:48.720 --> 0:05:51.159 of the strategists we've talked to on Bloomberg Television say 0:05:51.200 --> 0:05:53.440 that because of going into he's not going to run 0:05:53.440 --> 0:05:55.160 a recession. That could mean that he is going to 0:05:55.240 --> 0:05:57.280 kind of have to shift his strategy in a lot 0:05:57.279 --> 0:05:59.080 of ways over the course of the next year as 0:05:59.120 --> 0:06:00.680 we run up to the election. What could that look 0:06:00.680 --> 0:06:03.160 like for the moment. That's another huge wild card. I mean, 0:06:03.160 --> 0:06:06.800 obviously we've seen what appears to be progress on the 0:06:06.880 --> 0:06:11.000 China US trade tensions. Um, we've seen that movie before 0:06:11.040 --> 0:06:13.640 and it's sort of you know, has ended badly, but 0:06:13.760 --> 0:06:16.720 this time people are kind of putting in a lot 0:06:16.720 --> 0:06:19.920 of faith in exactly what you're talking about. That Uh, 0:06:20.000 --> 0:06:25.040 he can't ratchet up tensions much more without risking a 0:06:25.200 --> 0:06:30.120 global recession or US recession. Basically, I mean the manufacturing sector, uh, 0:06:30.160 --> 0:06:33.520 in many countries is already in recession. If you look 0:06:33.560 --> 0:06:37.200 at the models, I think the Bloomberg Economics model, it 0:06:37.240 --> 0:06:40.000 pulls in a lot of different inputs. It's about a 0:06:41.240 --> 0:06:43.080 chance of a recession in the next twelve and it 0:06:43.120 --> 0:06:46.280 was higher earlier. It was high. Yeah, the FEDS model 0:06:46.400 --> 0:06:48.120 is much simpler. It just looks at the deal curb 0:06:48.240 --> 0:06:51.320 about a thirty five chance. There. That's Mike Reagan, who 0:06:51.400 --> 0:06:53.200 keeps a watch on the financial markets for US, just 0:06:53.240 --> 0:06:56.200 reminding us how closely connected are the financial markets and 0:06:56.240 --> 0:06:59.440 of course those presidential elections. So it's a big week 0:06:59.440 --> 0:07:02.039 for Boeing. Of course, we've got earnings from the company, 0:07:02.240 --> 0:07:05.640 and more importantly, we got an update the company mapping 0:07:05.640 --> 0:07:07.960 out a big boost in seven thirty seven max output. 0:07:08.080 --> 0:07:11.000 Justin Bachman writes about what to expect from Boeing in 0:07:12.240 --> 0:07:14.480 nineteen Justin, has not been a great year for Bowing, 0:07:14.480 --> 0:07:16.960 to say the least. No, to say the least, their 0:07:16.960 --> 0:07:19.160 best slane product was grounded for most of the year 0:07:19.640 --> 0:07:25.360 following to fatal accidents that killed six people. Um, you know, 0:07:25.840 --> 0:07:28.200 airlines are not taking this that, you know, no no 0:07:28.320 --> 0:07:31.559 regulators letting it in their airspace. Uh So it's really 0:07:31.600 --> 0:07:34.160 been a tough tough year for Bowing in terms of 0:07:34.200 --> 0:07:36.920 the MAX And Justin, it's not just now the fact 0:07:37.000 --> 0:07:38.760 that they need to get the planes back in the year, 0:07:38.800 --> 0:07:41.120 it's that they need to get travelers willing to go 0:07:41.200 --> 0:07:44.280 back on the planes right right, Their airline customers really 0:07:44.360 --> 0:07:47.200 need to face up to how much of a public 0:07:47.880 --> 0:07:50.760 fear and concern is there about this airplane? And you know, 0:07:50.800 --> 0:07:53.280 the old saying is that the you know, the safest 0:07:53.280 --> 0:07:55.440 airplane is probably one that has the most attention to it. 0:07:55.800 --> 0:07:57.840 But at the same time, a lot of the public 0:07:57.960 --> 0:08:00.200 doesn't pay attention to what they're flying, but in this 0:08:00.280 --> 0:08:03.520 case they might. Uh, there's there's good evidence from surveys 0:08:03.560 --> 0:08:06.360 and such that people will be asking and will be 0:08:06.480 --> 0:08:08.680 very cognizant of what they're flying and want to know 0:08:08.800 --> 0:08:10.280 is it a MAX. If it's not a MAX, they 0:08:10.320 --> 0:08:12.440 probably don't care, but they do want to know if 0:08:12.440 --> 0:08:14.360 it's going to be that aircraft, and if it is, 0:08:14.440 --> 0:08:17.120 what new airlines have to do to get those people 0:08:17.320 --> 0:08:19.560 comfortable that it's safe to fly again. Well, let's talk 0:08:19.600 --> 0:08:21.520 about what the airlines are doing, because it's interesting. They're 0:08:21.520 --> 0:08:24.280 gonna lay it out right, if you make a reservation, 0:08:24.560 --> 0:08:26.200 they're gonna let you know if you're gonna be flying 0:08:26.200 --> 0:08:28.840 one of these jets, right. Yeah, the the three US 0:08:28.880 --> 0:08:32.200 airlines that have at Southwest, American and United UM, I'll 0:08:32.200 --> 0:08:34.320 say that they are going to be very transparent in 0:08:34.320 --> 0:08:37.280 this process and they want everybody to know up front 0:08:37.400 --> 0:08:39.439 when you're buying a ticket if that flight is going 0:08:39.480 --> 0:08:42.280 to be on a seven thirty seven Max UM and 0:08:42.280 --> 0:08:44.760 and the idea it's practical because they don't want people 0:08:44.800 --> 0:08:47.160 getting on the plane and then having sort of a 0:08:47.160 --> 0:08:50.560 freak out incident, um, you know, on the aircraft with 0:08:50.640 --> 0:08:54.280 the crew, social media, etcetera. It makes a lot more 0:08:54.320 --> 0:08:57.719 sense to separate those folks early in the process or 0:08:57.720 --> 0:09:00.400 as early as possible. Even if that's at the airport 0:09:00.440 --> 0:09:02.960 at check in, and somebody finds out, Uh, they're going 0:09:03.000 --> 0:09:06.320 to let you rebook without a fee or penalty to 0:09:06.360 --> 0:09:09.080 go on another aircraft if you're not comfortable flying on 0:09:09.120 --> 0:09:11.680 the Max. And we don't know how long that's gonna last. 0:09:12.120 --> 0:09:16.120 They've been a little bit hesitant to disclose how long 0:09:16.160 --> 0:09:18.920 that policy will last, but I think for several months 0:09:18.920 --> 0:09:21.040 at least. It's it's going to be the case where 0:09:21.040 --> 0:09:23.200 you're allowed to rebook if you don't want to fly it. 0:09:23.800 --> 0:09:26.000 And how much of a burden does do the airlines 0:09:26.080 --> 0:09:28.840 have to bear in restoring confidence in this gender? Is 0:09:28.880 --> 0:09:31.880 that mostly Boeing is prerogative at this point. It's definitely 0:09:31.920 --> 0:09:35.400 a shared responsibility. But I think what happens is once 0:09:35.760 --> 0:09:38.840 the government say, you know, in the US and Europe 0:09:38.840 --> 0:09:41.240 and China, etcetera, that this airplane can fly, and the 0:09:41.240 --> 0:09:43.600 airlines are very eager to get it back into service 0:09:44.080 --> 0:09:46.960 for financial reasons, then it becomes the airline issue because 0:09:46.960 --> 0:09:49.600 they're dealing with their own customers and their own customers 0:09:50.120 --> 0:09:54.319 fears and concerns and questions, and you know, Boeing is 0:09:54.360 --> 0:09:57.320 going to be involved in in doing what airlines asked 0:09:57.320 --> 0:09:59.880 them to do. But I really think that at that 0:10:00.080 --> 0:10:03.240 point it becomes an airline centered issue of dealing with 0:10:03.280 --> 0:10:05.319 their own customers. So that's probably where we're going to 0:10:05.360 --> 0:10:07.720 see the most outreach and the most communications. I think 0:10:07.720 --> 0:10:09.040 one of the folks that you talked to, I think 0:10:09.040 --> 0:10:11.480 it was a consultant, talking about how maybe the airlines 0:10:11.520 --> 0:10:15.400 need to have their own executives and maybe their executives families, 0:10:15.400 --> 0:10:20.160 and maybe Boeing executives and Boeing's executives families actually take 0:10:20.240 --> 0:10:22.960 some of the flights um to show that you know, 0:10:23.080 --> 0:10:26.439 they are supporting this jet and feel comfortable flying it, right. 0:10:26.520 --> 0:10:30.360 I think that's another thing we'll see. Definitely the CEOs 0:10:30.400 --> 0:10:33.120 of those three airlines and probably in Canada as well, 0:10:33.840 --> 0:10:36.240 will fly on the jet and make it very publicly 0:10:36.280 --> 0:10:38.960 known that they're they're comfortable flying on the jet, may 0:10:39.000 --> 0:10:41.800 have families, I think. I think you're going to see 0:10:41.840 --> 0:10:46.600 a very broad based media outreach in terms of, you know, 0:10:46.679 --> 0:10:49.760 telling everybody, this is what has been done, this is 0:10:49.800 --> 0:10:54.120 the the appropriate certification process, and this is why our 0:10:54.120 --> 0:10:56.920 pilots are comfortable. And you're going to see a message 0:10:56.920 --> 0:10:59.559 from everybody in the industry that the plane is not 0:10:59.679 --> 0:11:02.160 safe to fly. But at the end of the day, 0:11:02.160 --> 0:11:05.000 I think also they just need to fly it. It's 0:11:05.040 --> 0:11:06.840 got to go back into service and it has to 0:11:06.840 --> 0:11:10.480 to fly without incident and over time people will you know, 0:11:10.559 --> 0:11:13.160 gradually start to come back around to it. And at 0:11:13.200 --> 0:11:15.480 least that's the thinking justin how much of this is 0:11:15.480 --> 0:11:18.200 about the seven thirty seven Max, that particular plane, and 0:11:18.200 --> 0:11:20.000 then how much of this is that Boeing has to 0:11:20.040 --> 0:11:24.640 restore its reputation as a company. Right, Yeah, Boeing is 0:11:25.000 --> 0:11:28.000 facing a lot of issues, including you know, a grand 0:11:28.080 --> 0:11:32.680 jury inquiry in Washington. Their whole certification process is under 0:11:32.720 --> 0:11:35.839 review by the d OT. So there are some other 0:11:36.320 --> 0:11:39.840 issues that remain after the seven thirties seven Max is 0:11:39.840 --> 0:11:43.000 I'm grounded um and and that has you know, bearing 0:11:43.080 --> 0:11:45.319 on a new They're working on a new plane called 0:11:45.360 --> 0:11:48.360 the Triple seven X a wide body uh and that 0:11:48.400 --> 0:11:50.800 was supposed to fly in it's going to be probably 0:11:51.480 --> 0:11:53.719 one now. But that whole process is going to come 0:11:53.720 --> 0:11:57.320 in for another very vigorous round of scrutiny when they 0:11:57.400 --> 0:11:59.840 have a new plane that they're putting through. And so 0:12:00.000 --> 0:12:02.760 I think I think for Bowing there's a long long 0:12:02.800 --> 0:12:06.679 tail of of aftermath for this incident even after the 0:12:06.679 --> 0:12:08.720 plane is back in service, because I think that's a 0:12:08.760 --> 0:12:11.240 great question. I mean, I think, you know, whenever a 0:12:11.320 --> 0:12:13.520 company is going through crisis, you wonder about the culture 0:12:13.559 --> 0:12:17.320 within and whether or not the problem that allowed um 0:12:17.400 --> 0:12:20.360 this situation to occur has it been fixed? And I 0:12:20.400 --> 0:12:21.960 guess that's what we need to get to the bottom 0:12:22.040 --> 0:12:25.600 up with with Boeing, right, and I think there are 0:12:25.640 --> 0:12:29.200 a lot more questions coming in terms of last week, 0:12:29.200 --> 0:12:32.600 Boeing made a big change in management from placing their 0:12:32.880 --> 0:12:36.040 commercial airplanes chief. You know, it's an open question about 0:12:36.040 --> 0:12:39.560 whether other executives and other changes that Boeing are forthcoming 0:12:40.280 --> 0:12:42.800 after the Max is back in the air. You know, 0:12:42.880 --> 0:12:44.840 that doesn't mean that the end of the case for 0:12:44.880 --> 0:12:47.480 Bowing by any means. And of course, in addition to 0:12:47.480 --> 0:12:49.720 the management changes, we also got earnings from Bowing this 0:12:49.760 --> 0:12:51.560 week in A big part of their commentary was that 0:12:51.600 --> 0:12:52.920 they think this plane is going to be back in 0:12:52.960 --> 0:12:54.800 the air in the fourth quarter. They're actually ramping up 0:12:54.840 --> 0:12:58.280 their output and we know there's orders in the backlog. 0:12:58.559 --> 0:13:01.760 Do people still want the jet? Is that really that 0:13:01.920 --> 0:13:04.680 they are right to have that? Optimary Airlines right? Is 0:13:04.679 --> 0:13:06.520 it still in demand? Right, because it's been so important 0:13:06.520 --> 0:13:09.600 to Boeing. Yeah, it really is. We we hear all 0:13:09.640 --> 0:13:11.920 these headlines for this year, but but we also forget 0:13:11.960 --> 0:13:15.920 that this airplane was pretty revolutionary on the economics. Um 0:13:15.960 --> 0:13:18.480 you know, roughly less fuel burns. So if you're an 0:13:18.480 --> 0:13:21.880 airline operator, this this airplane is very much needed and 0:13:21.920 --> 0:13:25.040 you very much wanted to operate the way that it 0:13:25.080 --> 0:13:27.360 was you know, sold and purchased. You you bought this 0:13:27.440 --> 0:13:30.240 thing for a very clear economic reason, and you want 0:13:30.240 --> 0:13:33.160 to capitalize on that. Um. So the flight issues that's 0:13:33.160 --> 0:13:36.120 been a very big negative. But longer term, I mean 0:13:36.400 --> 0:13:39.199 airlines like Southwest, this is the core of that operation 0:13:39.360 --> 0:13:41.599 for many many years to come. So justin would you 0:13:41.640 --> 0:13:47.400 fly it tough question, I think. I think so it's 0:13:47.440 --> 0:13:49.280 it's it's one of those things that do you want 0:13:49.280 --> 0:13:51.880 to be the first one on it? And like we 0:13:51.880 --> 0:13:55.920 were saying before this, this airplane is so scrutinized, and 0:13:56.480 --> 0:13:58.760 you know that's the airplane that's probably the safest in 0:13:58.760 --> 0:14:01.120 the sky. So I don't think it's a question of 0:14:01.720 --> 0:14:04.880 does it fundamentally have problems? But I have talked with 0:14:04.960 --> 0:14:08.480 pilots who say there are certain places they won't fly it. Uh, 0:14:08.559 --> 0:14:11.080 they don't think pilot training standards are the same. So 0:14:11.160 --> 0:14:13.600 I think that's another issue that people will will have 0:14:13.640 --> 0:14:16.480 to grapple with. That's Justin Bakman, a reporter in Dallas 0:14:16.559 --> 0:14:19.400 with an update on Boeing this week and the latest 0:14:19.480 --> 0:14:22.760 on the seven thirty seven MAX. Safe to say is 0:14:22.800 --> 0:14:25.080 turning out to be the year of the streaming wars, 0:14:25.080 --> 0:14:27.560 no doubt about that. Let's get to Lucashaw knows all 0:14:27.600 --> 0:14:30.480 about this, he joins us from Los Angeles. Um, streaming 0:14:30.520 --> 0:14:32.800 wars is right. What we is in four new services 0:14:32.800 --> 0:14:36.160 coming online for new services coming online in a twelve 0:14:36.160 --> 0:14:38.520 month period. So we know that the three biggest right 0:14:38.520 --> 0:14:41.360 now our Netflix, Amazon and Hulu. Netflix far and away 0:14:41.360 --> 0:14:45.360 the largest, Amazon the second biggest and pure numbered terms, 0:14:45.360 --> 0:14:47.600 but in terms of users less clear because you get 0:14:47.640 --> 0:14:50.040 it for free with Prime and then and then Hulu third. 0:14:50.080 --> 0:14:52.720 In part that's only in the US. That's the new 0:14:52.760 --> 0:14:56.600 players are Apple TV Plus launching November one, Disney Plus 0:14:56.680 --> 0:15:01.040 launching November twelve, and then HBO Max and Casts Peacock 0:15:01.160 --> 0:15:04.360 will both debut sometime next year. The thinking on HBO 0:15:04.400 --> 0:15:07.120 Max is probably in the spring, with some testing before then, 0:15:07.160 --> 0:15:11.360 and Peacock just sometime before the Olympics in Tokyo next summer, 0:15:11.560 --> 0:15:12.760 and which one of these is going to be the 0:15:12.800 --> 0:15:15.640 most formidable opponent to Netflix, whether it's on pricing or 0:15:15.720 --> 0:15:19.640 on content. The perception among people in Hollywood at least, 0:15:19.640 --> 0:15:21.880 and I think on Wall Street, is that Disney Plus 0:15:21.960 --> 0:15:24.960 is the most formidable, uh in part because of its 0:15:25.000 --> 0:15:27.720 pricing six nine is quite affordable, and then just what 0:15:27.880 --> 0:15:30.760 it has. You know, Disney operates the most powerful movie 0:15:30.760 --> 0:15:34.640 studio in the world. It has these brands Pixar, Marvel, Lucasfilm, 0:15:34.960 --> 0:15:37.880 and Disney. That means a lot to customers, meet a 0:15:37.880 --> 0:15:39.800 lot to kids. And so the kind of the on 0:15:40.000 --> 0:15:42.360 ramp for Disney Plus seems quite easy. It's going to 0:15:42.440 --> 0:15:44.960 be very hard if you're a parent not to buy 0:15:45.000 --> 0:15:47.400 this just to save money a little bit, because you're 0:15:47.400 --> 0:15:50.680 probably having to rent or buy movies over and over 0:15:50.720 --> 0:15:53.960 again to show your kids. That being said, I am 0:15:54.160 --> 0:15:58.000 most interested, I think in HBO Max because Disney Plus 0:15:58.040 --> 0:16:00.520 could still be an additive to Netflix. It cheap, and 0:16:00.560 --> 0:16:03.200 it's targeted. It's not trying to be everything. You know, 0:16:03.280 --> 0:16:06.280 Netflix's enemy in a sense is cable. It wants to 0:16:06.360 --> 0:16:10.720 replace cable television with Internet television, and it have Netflix 0:16:10.760 --> 0:16:13.360 b the number one network Plus is a little bit 0:16:13.440 --> 0:16:15.800 more like a cable network in the traditional sense. You 0:16:15.840 --> 0:16:18.840 stick with that analogy and that metaphor because it's super 0:16:18.840 --> 0:16:21.880 serves a particular audience. HBO Max is the only one 0:16:21.920 --> 0:16:24.240 of these new services that is similarly trying to be 0:16:24.360 --> 0:16:26.320 all things to all people. And they also of a 0:16:26.360 --> 0:16:29.120 wide array of programming right from the get go. Yeah, 0:16:29.360 --> 0:16:32.080 HBO Max combines what you already get with HBO so 0:16:32.200 --> 0:16:34.720 Library of Sopranos, Game of Thrones, new shows like The 0:16:34.760 --> 0:16:37.520 Watchman and Catherine, the Great Show that's just come out. 0:16:37.920 --> 0:16:39.880 As well as that, you're going to fold in other 0:16:39.920 --> 0:16:43.040 programming from across what was once Time Warner now Warner 0:16:43.080 --> 0:16:45.280 Media and all part of the Phone Company, A T 0:16:45.400 --> 0:16:49.120 and T. That is that includes movies from Warner Brothers, 0:16:49.120 --> 0:16:52.600 so that's Aquaman, Harry Potter, all things like that. That 0:16:52.640 --> 0:16:57.120 includes Cartoon Network, That includes documentaries from CNN, that includes 0:16:57.200 --> 0:17:00.360 the Warner some projects from the Warner Brothers TV Library, 0:17:00.400 --> 0:17:02.720 which is the largest independent studio in Hollywood. So you're 0:17:02.760 --> 0:17:04.920 talking about friends, You're talking about the Big Bang Theory. 0:17:05.040 --> 0:17:07.600 I mean, there's just so much content out there. But 0:17:07.680 --> 0:17:09.760 the question is, are people willing to pay for four, 0:17:09.920 --> 0:17:12.640 maybe five streaming services to get to that content? I mean, 0:17:12.720 --> 0:17:14.800 is there room for everyone here? There's room for a 0:17:14.800 --> 0:17:17.040 lot of them. If it's everybody, I'm not sure, you know. 0:17:17.200 --> 0:17:19.879 Most research suggests, or when I when I talk to 0:17:19.960 --> 0:17:23.200 John Stinky, who's overseeing HBO Max for a p and T, 0:17:23.520 --> 0:17:25.760 their research suggests it at least that people are going 0:17:25.800 --> 0:17:28.560 to spend about a hundred dollars on TV. Some people 0:17:28.600 --> 0:17:30.840 are still paying for traditional cable. In fact, a lot 0:17:30.880 --> 0:17:32.960 of people are still paying for cable or satellite. The 0:17:33.000 --> 0:17:35.520 number is kind of in the eighty million rage maybe 0:17:35.520 --> 0:17:37.520 a little higher. That will continue to go down, but 0:17:37.560 --> 0:17:40.120 you still have a lot of people who want news, sports. 0:17:40.280 --> 0:17:43.440 But let's say people will pay for three or four services, 0:17:43.640 --> 0:17:45.879 maybe five if they have a lot of disposable income. 0:17:46.160 --> 0:17:49.720 That probably means Netflix, which is just built in Amazon 0:17:49.800 --> 0:17:52.000 which barely even counts in this, and then they'll probably 0:17:52.000 --> 0:17:54.159 add on a couple of others. So maybe that's Hulu 0:17:54.240 --> 0:17:56.399 with the Disney plus those two can be sold together. 0:17:56.800 --> 0:17:59.359 Maybe it's HBO Max. It's hard to see every single 0:17:59.400 --> 0:18:01.439 one of these serve. This is knocking it out of 0:18:01.440 --> 0:18:03.560 the park. Well, let's talk about two um that we 0:18:03.560 --> 0:18:06.200 haven't talked too much about, and that's Apple. Let's talk 0:18:06.200 --> 0:18:08.960 about them, and let's also talk about Comcast Peacocks. Start 0:18:09.000 --> 0:18:12.920 with Apple because they don't have a ton of programming 0:18:13.560 --> 0:18:17.400 um from the first day out, but they also do 0:18:17.600 --> 0:18:21.120 have a lot of subscribers are already and people using 0:18:21.160 --> 0:18:25.679 Apple devices. Yeah, Apple is the most unusual in that 0:18:26.080 --> 0:18:28.280 they are not if you are going to pay for 0:18:28.440 --> 0:18:31.120 TV Plus, which is the paid version of their service, 0:18:31.560 --> 0:18:34.119 you are only getting a handful of original series. I 0:18:34.119 --> 0:18:36.040 think that a lot of half a dozen on launch day. 0:18:36.560 --> 0:18:38.239 Uh you know, let's say they have a dozen by 0:18:38.280 --> 0:18:40.159 the end of the year. But most every every one 0:18:40.200 --> 0:18:42.840 of these other services is going to have originals as 0:18:42.840 --> 0:18:44.879 the thing to bring you in and then thousands of 0:18:44.920 --> 0:18:47.960 other titles that can satisfy you in between. Apple will 0:18:48.000 --> 0:18:50.239 not have that. But what Apple does happen as an 0:18:50.240 --> 0:18:54.520 advantage is the largest kind of the largest customer base 0:18:54.800 --> 0:18:57.480 almost from scratch, because you're gonna get Apple TV Plus 0:18:58.040 --> 0:19:00.840 for free for a year anytime you buy an Apple device. 0:19:00.960 --> 0:19:04.240 Apple sells two million devices in the year, so let's 0:19:04.240 --> 0:19:06.600 say a fifth a quarter to those people keep it 0:19:06.640 --> 0:19:09.400 after one year. Apple is automatically one of the biggest 0:19:09.440 --> 0:19:12.720 online TV networks in the world. Comcast Peacock is a 0:19:12.880 --> 0:19:16.280 is a different proposition. Comcast is the largest cable provider 0:19:16.320 --> 0:19:19.680 in the US and they're giving again customers Peacock for 0:19:19.720 --> 0:19:23.520 free if they are a PATV customer. Seems a little 0:19:23.520 --> 0:19:25.720 counterintuitives and from the full point of a lot of 0:19:25.760 --> 0:19:28.200 these stout services is for people who don't want cable. 0:19:28.560 --> 0:19:31.240 But I don't know. I think it's unclear what the 0:19:32.040 --> 0:19:35.000 full Comcast strategy is here. That's Lucas Shaw. He's our 0:19:35.000 --> 0:19:38.160 go to person when it comes to media and content. 0:19:38.440 --> 0:19:40.919 We caught up with him in Los Angeles. Get ready, everybody, 0:19:40.920 --> 0:19:43.359 because there's a lot of new streaming services could be 0:19:43.400 --> 0:19:47.080 great for the consumer. It's all coming in and for 0:19:47.119 --> 0:19:49.760 a look at the year ahead in politics and also 0:19:49.800 --> 0:19:53.359 Trump's scariest political opponent. Let's turn to Josh Green. He 0:19:53.480 --> 0:19:56.640 joins us now from our Washington bureau. So let's talk 0:19:56.680 --> 0:19:59.160 about it. What is it that President Trump really needs 0:19:59.200 --> 0:20:01.920 to be worried about when it comes to re election. Well, 0:20:01.920 --> 0:20:03.600 what he needs to worry about is the fact that 0:20:03.640 --> 0:20:07.280 the economy, by most forecast is trending in the wrong direction, 0:20:07.760 --> 0:20:11.320 and in particular, manufacturing is trending in the wrong direction 0:20:11.440 --> 0:20:14.679 in a recession. That is key in the group of 0:20:14.720 --> 0:20:17.119 swing states in the Upper Midwest that are probably going 0:20:17.160 --> 0:20:20.960 to decide the next election. Yeah, the demographics, the geographics 0:20:20.920 --> 0:20:23.879 are really important here. But when Trump considers that, is 0:20:23.920 --> 0:20:25.920 it too late for him to change the game, even 0:20:25.920 --> 0:20:28.400 if he were to InCor trade deal with China? Say, 0:20:28.520 --> 0:20:31.560 are we too far gone? Too much damage done? Well? 0:20:31.800 --> 0:20:33.639 I don't think so necessarily. I mean, the way I 0:20:33.640 --> 0:20:35.960 think about this, I break this into into two lanes. 0:20:36.000 --> 0:20:38.200 If you look at what Trump promised coming in during 0:20:38.200 --> 0:20:41.840 his first year as president, he promised four or five 0:20:42.080 --> 0:20:45.639 or even six percent growth across the economy. That's not 0:20:45.680 --> 0:20:49.120 going to happen. On the other hand, he he has 0:20:49.160 --> 0:20:51.800 had some positives. Unemployment is at a fifty year low. 0:20:52.240 --> 0:20:54.280 The stock market hasn't moved up a lot, but it's 0:20:54.480 --> 0:20:58.000 it's sort of trading water near all time highs. And 0:20:58.040 --> 0:21:02.280 he's managed to keep Republicans sentiment behind him even as 0:21:02.320 --> 0:21:06.199 he faces a slowing economy and impeachment. I think the 0:21:06.320 --> 0:21:08.800 big unknown in the people that I spoke to for 0:21:08.880 --> 0:21:11.679 this story was what are the effects of the trade 0:21:11.680 --> 0:21:14.760 war gonna be going forward. We're now seeing them bite 0:21:14.800 --> 0:21:18.879 into growth, bite into the economy, hurt state economies in 0:21:18.960 --> 0:21:22.200 states that Trump needs to win. However, there is still 0:21:22.240 --> 0:21:24.800 time to strike at least a modest trade deal with China, 0:21:25.119 --> 0:21:26.840 and I think if he were to do that, that 0:21:26.840 --> 0:21:29.240 could turn sentiment around in a way that would certainly 0:21:29.240 --> 0:21:31.760 benefit his re election choices. Yeah, Josh, what I love 0:21:31.800 --> 0:21:33.880 about it as you do break it down into kind 0:21:33.880 --> 0:21:36.800 of what happened right after he came into the White House, 0:21:36.880 --> 0:21:39.800 and you did see manufacturing jobs coming back. There was 0:21:39.840 --> 0:21:42.520 a lot of momentum. The tax cut certainly had an impact. 0:21:42.760 --> 0:21:45.000 But in the last year or so you've seen that 0:21:45.080 --> 0:21:47.920 kind of shift and as you say, those key states 0:21:47.920 --> 0:21:51.840 that he won last time around, um, it's gotten tougher 0:21:51.880 --> 0:21:53.919 in terms of some of the manufacturing jobs and some 0:21:53.960 --> 0:21:55.679 of those stories. That's right. If you if you go 0:21:55.720 --> 0:21:57.280 back and look at his turn from kind of a 0:21:57.280 --> 0:22:00.520 macro level, it's really interesting Trump delivered in his eighteen 0:22:00.560 --> 0:22:02.639 months two years, you had the stock market going up, 0:22:02.640 --> 0:22:05.879 you had manufacturing job growing is Jamie Diamond said in 0:22:06.359 --> 0:22:10.159 seen Trump had really succeeded in unleashing animal spirits partly 0:22:10.200 --> 0:22:13.240 because of his tax cut. The problem for Trump is 0:22:13.280 --> 0:22:16.160 that all that has stalled out, in large part due 0:22:16.240 --> 0:22:19.360 to the trade war that he started. So you have, uh, 0:22:19.440 --> 0:22:22.560 animal spirits have gone away. Companies aren't investing. We are 0:22:22.600 --> 0:22:25.960 now in a manufacturing recession, and that has hurt the 0:22:25.960 --> 0:22:32.040 economies and states like Wisconsin, Michigan, Pennsylvania where recent polls 0:22:32.040 --> 0:22:36.159 show all of the top Democrats Biden, Warren Sanders beating 0:22:36.200 --> 0:22:38.800 Trump and a head to head matchup. That is a 0:22:38.840 --> 0:22:42.359 flashing red warning signal for Trump as he looks ahead 0:22:42.400 --> 0:22:45.440 to the election. But again, there are bright spots. He's 0:22:45.440 --> 0:22:48.359 still got time to turn the ship around, uh and 0:22:48.520 --> 0:22:51.000 and pull another upset. But let's talk more about pulling 0:22:51.000 --> 0:22:53.879 and where exactly voters stand as to what kind of 0:22:53.960 --> 0:22:56.040 job they think the president has done. Are they still 0:22:56.040 --> 0:22:59.600 behind him? Do they still approve? Trump's approval has been 0:22:59.720 --> 0:23:04.200 room arkably consistent and about the forty percent approval, uh, 0:23:04.240 --> 0:23:08.560 you know, fifty two to fifty six disapproval. That's been 0:23:08.600 --> 0:23:12.520 true throughout everything, through the Muller investigation and now the 0:23:12.560 --> 0:23:16.000 impeachment drama. He has managed to keep. Most importantly, he's 0:23:16.040 --> 0:23:19.520 managed to keep Republican voters pretty much behind him. He's 0:23:19.520 --> 0:23:23.520 got a solid approval ratings, so as of now, his 0:23:23.600 --> 0:23:27.439 voters aren't abandoning him as we saw in ten. The 0:23:27.480 --> 0:23:31.600 electoral college I think favors of Republican candidate like Trump. Um, 0:23:32.240 --> 0:23:34.440 there are areas where he has to worry. He has 0:23:34.560 --> 0:23:38.320 lost enormous amounts of support among non college white women 0:23:38.359 --> 0:23:41.679 who are instrumental to his coalition in ten. Uh. He 0:23:41.800 --> 0:23:44.160 is driving away voters in the suburbs who I think 0:23:44.160 --> 0:23:47.120 are gonna be really important. But on the other hand, 0:23:47.160 --> 0:23:49.480 he's brought new people into the political process, so his 0:23:49.600 --> 0:23:53.920 campaign believes that they can excite voters who don't usually vote, 0:23:53.920 --> 0:23:56.080 who like Trump, who likes that he fights, likes what 0:23:56.119 --> 0:23:58.960 he stands for. It will be a test of whether 0:23:59.000 --> 0:24:02.240 he can turn out an enough Republican voters in two 0:24:02.320 --> 0:24:04.800 under to overcome what is undoubtedly going to be a 0:24:04.800 --> 0:24:07.480 blue wave of Democrats. But your story, Josh, a reminder 0:24:07.520 --> 0:24:10.239 with everything that's going on globally as well in the 0:24:10.320 --> 0:24:12.320 US and down in Washington, and we've seen this in 0:24:12.359 --> 0:24:15.840 past elections before, it is truly ultimately about the economy 0:24:15.880 --> 0:24:18.720 and how everybody feels come the next election. It really 0:24:18.760 --> 0:24:20.480 is if you look at the three presidents in the 0:24:20.480 --> 0:24:23.920 twentieth century who lost the re election races. All three 0:24:23.960 --> 0:24:27.160 of them were running in a recession and it costs 0:24:27.200 --> 0:24:31.320 them the election. Trump isn't there yet, but all forecasts 0:24:31.320 --> 0:24:33.520 show that things are trending in a bad direction. That's 0:24:33.600 --> 0:24:35.919 Josh Green. We caught up with him from Washington and 0:24:35.960 --> 0:24:37.760 just a reminder of that when it comes down to it, 0:24:37.800 --> 0:24:40.680 when everybody goes to the polls come next November, it's 0:24:40.720 --> 0:24:43.640 all about how good you feel about your job, your 0:24:43.680 --> 0:24:47.679 economic prospects. It's all about the economy. Concerns about companies 0:24:47.680 --> 0:24:49.760 becoming too big and too dominant might bring about the 0:24:49.800 --> 0:24:53.639 great antitrust reawakening. Jonah Sarah always gets us thinking, and 0:24:53.680 --> 0:24:56.040 he does that again with his article this week. I 0:24:56.080 --> 0:24:58.240 said to you before we got started, this is why 0:24:58.280 --> 0:25:00.399 I love reading your columns. You rem find us of 0:25:00.440 --> 0:25:02.960 what's happened in the past, bringing some history. So tell 0:25:03.040 --> 0:25:06.359 us about the great antitrust reawakening. What are we talking about, Well, 0:25:06.520 --> 0:25:10.159 we're talking about coming out of an antitrust slumber. Really 0:25:10.760 --> 0:25:14.480 um the last time, uh, the Department of Justice really 0:25:14.520 --> 0:25:16.040 went after a company tried to break it up with 0:25:16.119 --> 0:25:20.280 Microsoft twenty years ago, and since then and even before then, 0:25:20.720 --> 0:25:24.200 the anti trusts have been evolving into this thing where 0:25:24.920 --> 0:25:27.640 if if it didn't harm the consumer, if it didn't 0:25:27.680 --> 0:25:31.720 push up prices, the country said the legal profession and 0:25:31.760 --> 0:25:35.199 the court said it's okay. So now you've got Google, 0:25:35.240 --> 0:25:38.240 you've got Facebook, you've got Amazon, you've got other tech companies, 0:25:38.720 --> 0:25:41.959 and you have all this consolidation that's taken place. And 0:25:42.000 --> 0:25:45.800 people are saying, well, you can't use the consumer welfare 0:25:45.840 --> 0:25:48.840 standard for big tech because people are getting everything for free, right, 0:25:49.400 --> 0:25:52.320 And that's different, right, And that doesn't really get at 0:25:52.720 --> 0:25:55.639 get at its power and what it can do and 0:25:55.640 --> 0:25:57.639 what we should do about it. And so there's this 0:25:57.720 --> 0:26:02.560 whole movement um a lot of young economists but others 0:26:02.640 --> 0:26:05.280 as well, who are saying, we need to start thinking 0:26:05.280 --> 0:26:07.680 about anti trust in a different way. We need to 0:26:07.760 --> 0:26:09.360 kind of go back to the way we thought about 0:26:09.400 --> 0:26:11.760 it in the thirties and forties, where just bigness alone 0:26:11.800 --> 0:26:13.639 was a problem and we need to come up with 0:26:13.720 --> 0:26:16.480 a different set of solutions. Well, why is now the moment? 0:26:16.600 --> 0:26:19.880 Why why is this the year of the great reawakening 0:26:19.880 --> 0:26:23.080 on this? Well, I think there's two reasons. Um. One one, 0:26:23.119 --> 0:26:26.000 I think is the growing awareness of income inequality. And 0:26:26.040 --> 0:26:28.440 I know that may sound strange, but if you think 0:26:28.480 --> 0:26:32.720 about airlines, there used to be twenty airlines. Now there's four, 0:26:33.560 --> 0:26:36.680 and that gives them incredible pricing power, and it gives 0:26:36.680 --> 0:26:39.240 them incredible power over the labor force. So a lot 0:26:39.280 --> 0:26:41.680 of people are thinking, you know, maybe this had something 0:26:41.760 --> 0:26:44.320 to do with income into quality. The second reason has 0:26:44.359 --> 0:26:46.800 to do with all the problems Facebook in particular has 0:26:46.840 --> 0:26:50.880 had the privacy problems, the data problems, Cambridge Analytica the election. 0:26:51.640 --> 0:26:53.960 David Cecelini, who is the head of the House Anti 0:26:54.000 --> 0:26:57.560 Trust Up Committee, told me specifically he'd been thinking about 0:26:57.560 --> 0:27:00.639 these issues, but when Cambridge Analytica came on that the 0:27:00.760 --> 0:27:02.840 light bulb went on and said, you know, I'm in 0:27:02.880 --> 0:27:05.120 a position to do something. I gotta do something. Yeah, 0:27:05.119 --> 0:27:07.440 because it's interesting, like I love the history that you know, 0:27:07.520 --> 0:27:10.280 you remind us that government used to be suspicious a 0:27:10.359 --> 0:27:12.840 big companies, right, they were constantly on the watch, and 0:27:12.880 --> 0:27:15.520 then it kind of changed with that. Thinking about okay, 0:27:15.520 --> 0:27:20.280 our consumers harmed. GM used to say internally, we can't 0:27:20.280 --> 0:27:24.040 have market share over because if we have market share 0:27:24.040 --> 0:27:26.000 over forty, the government's going to come after us, and 0:27:26.000 --> 0:27:27.359 they'll try to break us up, and so we have 0:27:27.480 --> 0:27:31.000 to keep our market share contained. You know, Microsoft at 0:27:31.000 --> 0:27:33.240 his peak with Windows, they had a market share of 0:27:34.640 --> 0:27:37.240 percent exactly exactly. You know, we'll talk to us little 0:27:37.240 --> 0:27:40.200 bit about the Microsoft case and remind us because ultimately 0:27:40.280 --> 0:27:43.919 they lost initially and they were supposed to be broken up. 0:27:43.960 --> 0:27:47.960 That's right. The trial court judge who got very angry 0:27:47.960 --> 0:27:50.720 at Microsoft many times during that trial. Believe you me, 0:27:50.920 --> 0:27:54.600 I was there. He definitely concluded it should be broken up. 0:27:55.080 --> 0:27:58.280 The Windows part of the company should be one company, 0:27:58.359 --> 0:28:02.320 and the application his part were you know, Microsoft were 0:28:02.400 --> 0:28:05.040 and all that should be a different company. But um, 0:28:05.080 --> 0:28:07.040 he made a fatal mistake, which is that he was 0:28:07.080 --> 0:28:09.440 talking to the press behind the scenes the whole time, 0:28:10.280 --> 0:28:12.800 and when that came out, it gave the appeals court 0:28:13.119 --> 0:28:16.600 uh grounds to overturn his his verdict, and so the 0:28:16.640 --> 0:28:19.520 appeals court overturned it, and then the Bush administration came 0:28:19.520 --> 0:28:22.560 along and settled in a way that was, you know, 0:28:22.760 --> 0:28:25.160 slap on the wrist, but but nothing too heavy. But Joe, 0:28:25.160 --> 0:28:28.639 what's significant about this is that you say Microsoft became 0:28:28.760 --> 0:28:32.920 a different company as a result. Right, Microsoft was chastened 0:28:33.160 --> 0:28:37.520 by the trial, you know, watching Bill Gates on on 0:28:37.520 --> 0:28:39.800 on his deposition. I don't know if you remember where 0:28:39.800 --> 0:28:42.080 you know, you know, it depends on what I hate 0:28:42.160 --> 0:28:45.280 to find that and that, and then it was awful. 0:28:45.720 --> 0:28:48.360 They really became chasened. They wanted to be viewed as 0:28:48.400 --> 0:28:52.400 good corporate citizens again, and they realized that if they 0:28:52.520 --> 0:28:55.960 used the same techniques I Using Windows to squash a 0:28:56.040 --> 0:28:59.560 potential competitor, the government would go after them again. So 0:28:59.600 --> 0:29:04.200 they doing that. And let's remind everybody was about Netscape, right, No, no, 0:29:04.280 --> 0:29:06.680 what was that? What was wasn't it? It wasn't Escape. 0:29:06.720 --> 0:29:11.520 I was gonna say, Napster. No, it's not really around. No, 0:29:11.960 --> 0:29:15.960 Netscape has gone. But but Explorer, the Microsoft browser is 0:29:15.960 --> 0:29:20.560 not the dominant browser. There's Google Chrome, there's Safari, there's 0:29:20.600 --> 0:29:26.640 other other browsers. So the key thing is that because 0:29:26.800 --> 0:29:30.720 Microsoft was constrained, because it no longer could flex his 0:29:30.800 --> 0:29:33.680 muscles the way it used to, that really led to 0:29:34.000 --> 0:29:37.200 companies like Google and Facebook being able to rise because 0:29:37.240 --> 0:29:39.880 they didn't have to worry about this giant up in Redmond, 0:29:39.920 --> 0:29:43.360 Washington squashing them. Okay, well now they have to worry 0:29:43.400 --> 0:29:46.120 about not that on that side, But now the part 0:29:46.240 --> 0:29:48.520 the potential of them possibly getting broken up. And you 0:29:48.560 --> 0:29:50.160 kind of alluded to how this has become an issue 0:29:50.160 --> 0:29:52.800 in Democrats are focused on this, but is there kind 0:29:52.800 --> 0:29:55.800 of a bipartisan consensus that something needs to happen with 0:29:55.840 --> 0:29:58.080 these giants? Well, and I feel like Democrats and Republicans 0:29:58.080 --> 0:30:00.680 are both focused on it. Well, if you excuse me, 0:30:00.720 --> 0:30:04.560 the new senator from Missouri, Josh Holly, has been incredibly 0:30:04.560 --> 0:30:08.160 outspoken about the wrongs. What's what's wrong with the with 0:30:08.160 --> 0:30:10.520 with big tech. So that's one example. A lot of 0:30:10.520 --> 0:30:13.440 conservatives are concerned beating up on big tech because they 0:30:13.440 --> 0:30:16.600 think it's biased against conservatives. I don't really believe that, 0:30:16.800 --> 0:30:20.120 but it puts them of a mind to do something. 0:30:20.200 --> 0:30:21.800 I told you always give us things to think about, 0:30:21.880 --> 0:30:23.960 especially as we go in because this will be a 0:30:24.000 --> 0:30:25.800 major issue totally is going to be a big issue 0:30:25.880 --> 0:30:29.720 Washington campaign trail. So um, certainly something to think about, 0:30:29.840 --> 0:30:31.680 big time. Joe, Thank you so much. Thank you for 0:30:31.720 --> 0:30:33.880 having me. Kaylee Lines and I caught up with Matt 0:30:33.920 --> 0:30:36.840 Townsend about how the US economy is being supported by 0:30:36.920 --> 0:30:40.360 the U S consumer. Matt says it will be no different. 0:30:40.640 --> 0:30:43.120 You know, the US economy is always relied on consumer 0:30:43.160 --> 0:30:46.360 spending as a big chunk of the economy. Uh, you know, interesting, 0:30:46.440 --> 0:30:49.840 interesting status of the US economy is consumer spending in China. 0:30:50.720 --> 0:30:52.960 That just shows you how different it is. Um. But 0:30:53.080 --> 0:30:56.000 now the US economy is relying on consumers even more 0:30:56.080 --> 0:31:00.000 so because things like manufacturing are actually technically in contracts 0:31:00.160 --> 0:31:03.480 right now. They're cutting jobs, let's output. So it's the 0:31:03.560 --> 0:31:06.080 U S consumer and that's what's propping up the economy 0:31:06.160 --> 0:31:08.760 right now. Is the consumer feeling good still? To this 0:31:08.840 --> 0:31:11.120 point they are? And that's you know, one of these 0:31:11.160 --> 0:31:15.280 sort of counterintuitive aspects of the story is that broadly 0:31:15.320 --> 0:31:18.760 economists at the big banks you know, Goldman, Sachs, Morgan, Stanley, 0:31:19.000 --> 0:31:21.720 they do not see a recession coming next year. Um. 0:31:21.760 --> 0:31:24.000 The few bears on the case that sort of see 0:31:24.040 --> 0:31:27.720 one coming, they're basically pointing to consumers being hurt by 0:31:27.800 --> 0:31:30.440 some job losses and maybe slow down spending. But as 0:31:30.440 --> 0:31:34.560 of now, I mean, the sort of broadly speaking economists 0:31:34.560 --> 0:31:36.800 do not see recession coming, and largely because the US 0:31:36.840 --> 0:31:38.840 consumer is so strong. Well, that's what I love about 0:31:38.880 --> 0:31:40.560 your story, mat, is that you go through a bunch 0:31:40.560 --> 0:31:44.800 of the economic data points. I mean, consumers are optimistic. Right, Yeah, 0:31:44.960 --> 0:31:48.960 consumer confidence is you know, relatively, you know, at the 0:31:49.040 --> 0:31:52.280 highest levels in a decade, you know, since before the recession, 0:31:53.200 --> 0:31:56.920 which is remarkable considering how long this expansion has gone on, right, 0:31:57.000 --> 0:31:59.600 longest on record. We hit that over the summer, and 0:31:59.680 --> 0:32:02.920 yet the still optimistic. They're still optimistic. Um. You know, 0:32:02.960 --> 0:32:05.120 the data is showing more wage gains coming. You know, 0:32:05.160 --> 0:32:07.880 there's there's a stat called you know, if you look 0:32:07.880 --> 0:32:10.360 at a stat on job openings, you know, it's over 0:32:10.400 --> 0:32:13.040 seven million people. Over seven million jobs are open right now. 0:32:13.320 --> 0:32:14.560 So what does that mean. I mean, there's a big 0:32:14.600 --> 0:32:17.200 demand for labor all across the economy and people are 0:32:17.240 --> 0:32:20.200 able to either negotiate raises or leave for better jobs 0:32:20.240 --> 0:32:23.280 where they get raises. That's raising wages, um, sort of 0:32:23.280 --> 0:32:26.800 lifting up you know, the economic um fortunes of America. 0:32:27.320 --> 0:32:29.520 And you know, as long as that's happening, it's hard 0:32:29.560 --> 0:32:31.800 to see where this is going to change. How do 0:32:31.800 --> 0:32:33.360 you get to recession if you've got that going on 0:32:33.560 --> 0:32:35.400 right exactly? And you know, some of the cracks in 0:32:35.440 --> 0:32:39.080 the armor, so to speak, are housing, So housing prices 0:32:39.320 --> 0:32:42.720 have them going up has been a big boon to 0:32:42.800 --> 0:32:44.760 consumer spending because people are spending a lot more on 0:32:44.760 --> 0:32:46.920 their homes, and just think about all the things that 0:32:46.960 --> 0:32:50.920 means you're buying furniture, you're hiring contractors, and that is 0:32:50.920 --> 0:32:55.000 slowing down. Home sales gains are home prices are decelerating, 0:32:55.040 --> 0:32:58.040 and it's because of lack of demand, not lack of supply. 0:32:58.360 --> 0:33:01.000 It depends on the market, but they're there. In some markets, 0:33:01.080 --> 0:33:04.040 like you know, New York for example, the concern is 0:33:04.360 --> 0:33:07.720 too much supply is driving down the and you have 0:33:07.760 --> 0:33:10.040 more and more people renting rather than buying as well, 0:33:10.240 --> 0:33:13.360 right exactly. Um. And then you know things like healthcare 0:33:13.400 --> 0:33:16.320 costs if those keep going, if there's some sort of 0:33:16.520 --> 0:33:19.720 repeal of Obamacare, right, and all of some people have 0:33:19.800 --> 0:33:22.440 to pay more out of pocket for health insurance. Think 0:33:22.440 --> 0:33:24.560 about the people on Obamacare. Those are sort of the 0:33:24.560 --> 0:33:27.120 people in middle income, low income that could really stretch 0:33:27.160 --> 0:33:30.760 their wallets. Um. And then you know job growth. Job growth, 0:33:30.920 --> 0:33:35.200 while still positive, has slowed down. So you know, if 0:33:35.200 --> 0:33:37.280 you're a bear on the U S consumer, you see 0:33:37.280 --> 0:33:39.160 that continue to slow down, maybe the effects of the 0:33:39.160 --> 0:33:42.760 trade war, uncertainty about the economy, freezes of hiring decisions, 0:33:43.240 --> 0:33:46.120 and you see job growth slowing and slowing slowing, and 0:33:46.120 --> 0:33:48.280 that could you know, create a sort of cycle of 0:33:48.400 --> 0:33:50.560 people worried about the economy and maybe cutting back on 0:33:50.680 --> 0:33:53.240 investment spending well, and on those worries about the economy. 0:33:53.280 --> 0:33:55.040 I mean, we hear a lot here on Bloomberg from 0:33:55.080 --> 0:33:57.840 strategists talking about are we talking ourselves into a recession? 0:33:57.840 --> 0:34:00.120 Are we entering a slowdown? Is the consumers start to 0:34:00.120 --> 0:34:03.000 feel those jitters? The everyday person in America? Yeah, I 0:34:03.000 --> 0:34:06.600 mean it's interesting because consumer psychologies is obviously a big 0:34:06.640 --> 0:34:09.000 part of this. And if you think there's going to 0:34:09.000 --> 0:34:11.880 be a recession, do you take that big vacation, Do 0:34:11.920 --> 0:34:13.279 you put an addition on your house? Do you go 0:34:13.320 --> 0:34:15.799 out and buy a new car? No, especially if you're 0:34:15.840 --> 0:34:17.840 worried about your job, if you're if you're work for 0:34:17.880 --> 0:34:20.440 a company or in a sector that has made under pressure. 0:34:20.800 --> 0:34:23.400 There's been other companies laying off people. Maybe your companies 0:34:23.440 --> 0:34:26.880 had layoffs previously, that that could be what you know 0:34:27.000 --> 0:34:29.520 was quoted the story as a self fulfilling prophecy. I 0:34:29.520 --> 0:34:31.239 think there's going to be a recession. There for a 0:34:31.239 --> 0:34:34.120 recession comes because consumers pull back. It's so funny that 0:34:34.200 --> 0:34:36.000 you know, you look at the statistics about you know, 0:34:36.040 --> 0:34:38.160 consumer optimism, but I feel like I have so many 0:34:38.160 --> 0:34:41.640 conversations with people who are like, I don't have enough money. 0:34:42.160 --> 0:34:44.759 You know, it's really tight, I'm not getting wage increases, 0:34:44.840 --> 0:34:47.440 or I'm worried about my doublic You hear those conversations, 0:34:47.920 --> 0:34:49.640 and yet you see the statistics come out in the 0:34:49.719 --> 0:34:53.560 data and it shows optimism. Yeah there's something, Yeah, there's 0:34:53.560 --> 0:34:56.640 something going on there. Whether there's this dichotomy between what 0:34:56.719 --> 0:34:59.440 you hear from your friends and anecdotes and sort of 0:34:59.560 --> 0:35:02.920 this data shows No. Granted, consumer confidence isn't always necessarily 0:35:02.920 --> 0:35:06.280 the best measure to look at a lot of consumers 0:35:06.440 --> 0:35:08.960 maybe don't realize what's going on probably in the economy, 0:35:09.239 --> 0:35:12.319 or you know, certain pockets of the consumer world feel 0:35:12.320 --> 0:35:14.200 it differently. Well, and I thought it's interesting you watch 0:35:14.280 --> 0:35:16.720 the markets you talk about, you know, different stock sectors 0:35:16.719 --> 0:35:18.720 in their performance you talked about in terms of consumer 0:35:18.760 --> 0:35:22.640 discretionary to that, you see some of the discount retailers 0:35:22.680 --> 0:35:25.080 doing better when it comes to consumer shopping, and that 0:35:25.120 --> 0:35:28.000 can show that what consumers are a little worried made 0:35:28.120 --> 0:35:30.600 yeah exactly. I mean, you know what we saw on 0:35:30.880 --> 0:35:34.279 the Great Recession, right was people trading down so even 0:35:34.320 --> 0:35:36.880 trading down to dollar stores. So so you know Target 0:35:37.000 --> 0:35:38.680 wasn't doing as well because people were trading down to 0:35:39.000 --> 0:35:43.080 dollar stores to Walmart. And you know, the the opposite 0:35:43.080 --> 0:35:46.600 side of Walmart and Target doing well is they're doing well. 0:35:46.640 --> 0:35:49.440 But is it because more middle class, upper middle class 0:35:49.440 --> 0:35:53.759 shoppers are shopping them buying clothes necessities there instead of 0:35:53.760 --> 0:35:57.160 a department stores or higher in places. Right, We're seeing 0:35:57.160 --> 0:36:00.520 a lot of weakness in those aspects of retail, sort 0:36:00.520 --> 0:36:03.160 of the middle of the road. Think about Gap, think 0:36:03.200 --> 0:36:08.640 about Victoria's Secret, things like that, where they're pure discretionary spending, right, 0:36:09.120 --> 0:36:11.560 and those things are actually are not doing quite so 0:36:11.600 --> 0:36:14.040 well well in the pace of spending. This pace of 0:36:14.080 --> 0:36:16.440 spending growth rather, of course it is very important. Are 0:36:16.440 --> 0:36:19.200 there signs of it tapering down as we go into 0:36:19.320 --> 0:36:22.279 the holiday season and into Yeah, I mean the last 0:36:22.280 --> 0:36:24.200 month of the report wasn't positive and it was sort 0:36:24.239 --> 0:36:26.720 of a negative surprise. So but that's just one month, 0:36:26.760 --> 0:36:31.760 and you know there's potential variables there. That's Matt Townsend 0:36:31.760 --> 0:36:33.960 reminding us that the U. S. Consumer is so important 0:36:34.000 --> 0:36:36.480 to the current economy. It's going to be even more so. 0:36:38.080 --> 0:36:39.880 We're in a new era on many levels thanks to 0:36:39.920 --> 0:36:42.839 the pushback against globalization and the trade wars initiated by 0:36:42.880 --> 0:36:45.440 the US. One sector undergoing a great unwinding as a 0:36:45.520 --> 0:36:47.960 result is of course the chip sector. Right we see 0:36:48.000 --> 0:36:50.160 this big time Austin Cars here with more on the 0:36:50.200 --> 0:36:53.080 remapping of an industry. I mean, this is I really 0:36:53.120 --> 0:36:55.640 do wonder if we're gonna look back in time and say, Okay, 0:36:55.640 --> 0:36:57.680 this was a this was a moment in time in 0:36:57.760 --> 0:37:00.880 terms of the semiconductor industry. Absolute really. I mean the 0:37:00.880 --> 0:37:03.360 crazy thing about the semi conductor and chip market is 0:37:03.400 --> 0:37:06.000 you just don't realize how embedded it is to every 0:37:06.000 --> 0:37:08.879 single device we use. I mean, whether that's Windows, PCs, 0:37:08.880 --> 0:37:12.000 are iPhones, are Android tablets. All the little teeny parts 0:37:12.000 --> 0:37:15.319 that control memory and processing speed um all come from 0:37:15.360 --> 0:37:18.520 a global set of partners, mostly in Asia. Yet they 0:37:18.520 --> 0:37:20.239 power so many of the parts that we have here 0:37:20.239 --> 0:37:22.160 in the US. And so the big pivot, the big 0:37:22.200 --> 0:37:24.080 thing that we're focusing on in this Business Week story 0:37:24.320 --> 0:37:25.480 is whether or not there is going to be this 0:37:25.520 --> 0:37:28.200 great divide, great unwinding for a market that was heading 0:37:28.200 --> 0:37:31.320 toward more interconnectedness is now might be pulled apart and 0:37:31.360 --> 0:37:36.080 grate sort of a great firewall between China and the US. Yeah, well, okay, 0:37:36.120 --> 0:37:39.279 so they're in everything, but they aren't necessarily made everywhere. 0:37:39.360 --> 0:37:41.520 These things are heavily concentrated, So can you kind of 0:37:41.520 --> 0:37:43.439 map that out for us totally. One of the things 0:37:43.440 --> 0:37:45.279 that we highlight in the story is this big I 0:37:45.440 --> 0:37:49.440 P lawsuit that's coming up between Global Foundries, which is 0:37:49.480 --> 0:37:52.560 a semi conductor foundry, and these guys are always sing 0:37:52.760 --> 0:37:55.000 always Yeah, there's a back and forth. There's a lot 0:37:55.040 --> 0:37:57.560 of arguments about the legitimacy of these lawsuits. But what 0:37:57.600 --> 0:37:59.520 they wanted to highlight, what they're really playing up in 0:37:59.560 --> 0:38:02.839 this and finding reception on, is that not just that 0:38:02.920 --> 0:38:06.880 there's a growing corporate consolidation of these parts, but also regional. Uh. 0:38:07.120 --> 0:38:11.200 The company they're suing, t SMC, is based in Taiwan. Um. 0:38:11.640 --> 0:38:14.000 You know, according to Bloomberg Intelligence data, they owned about 0:38:15.320 --> 0:38:18.480 of outsourced chip production. That means basically, you know, a 0:38:18.480 --> 0:38:21.239 company that designs a chip but wants them to manufacture it, 0:38:21.560 --> 0:38:24.560 and that's massive that you know. Global Founders actually says 0:38:24.560 --> 0:38:27.240 for the more advanced chips, it's something like the bargain 0:38:27.320 --> 0:38:30.360 chair um. And so they're playing up the geopolitical concerns 0:38:30.360 --> 0:38:33.319 about this, just how concerns should we be that, you know, 0:38:33.360 --> 0:38:35.560 basically our iPhones couldn't run if we got cut off 0:38:35.560 --> 0:38:38.040 from that market, from that manufacturer, from that region. That's 0:38:38.040 --> 0:38:40.239 what they keep They kept referring to this company as 0:38:40.239 --> 0:38:42.800 being from Greater China, although they are from Taiwan. But 0:38:42.840 --> 0:38:45.719 they want to play into those geopolitical fears about the 0:38:45.800 --> 0:38:47.879 US China trade war right now. Well, and we've seen 0:38:47.880 --> 0:38:50.080 that play out right right. I mean, semi conductors have 0:38:50.120 --> 0:38:53.120 been a very volatile sector for basically the duration of 0:38:53.160 --> 0:38:55.360 this eighteen month long trade war because every trade headline, 0:38:55.480 --> 0:38:57.960 you know, semi conductors are so vulnerable to that, and 0:38:58.040 --> 0:38:59.680 a lot of the conversation has been, Okay, how do 0:38:59.680 --> 0:39:02.439 we then get the supply chains out of China? How 0:39:02.440 --> 0:39:04.040 do they really go about doing that? Where do they 0:39:04.080 --> 0:39:07.440 go and can they really do that that quickly? It's complicated. 0:39:07.440 --> 0:39:09.759 I mean Bloomberg Intelligence, one of the analysts that we 0:39:09.760 --> 0:39:12.359 had talked to just in terms of electronics manufacturing, said 0:39:12.520 --> 0:39:15.040 the immediate impact would be about nearly a third of 0:39:15.080 --> 0:39:18.279 electronics manufacturing would move out of China to places like 0:39:18.440 --> 0:39:23.480 get your head around that, Vietnam, uh India, U Taiwan elsewhere, 0:39:23.560 --> 0:39:26.640 which is a really compelling, uh you know, massive shift 0:39:27.160 --> 0:39:29.600 that the downside to that is that normally takes a 0:39:29.600 --> 0:39:32.480 couple of quarters, if not years to actually relocate some 0:39:32.520 --> 0:39:35.440 of those manufacturing centers, and also likely means that supply 0:39:35.520 --> 0:39:37.919 chain costs will go up. Component costs, depending on who 0:39:37.920 --> 0:39:40.560 you talked to, could go up quite materially, which have 0:39:41.120 --> 0:39:44.560 an uh impact on end customers. So this holiday season, 0:39:44.560 --> 0:39:46.640 you might not see prices raised, but you might see 0:39:46.680 --> 0:39:48.440 less discounts. That's one of the things I heard from 0:39:48.520 --> 0:39:51.200 from analysts, just because supply chain costs will go up. 0:39:51.600 --> 0:39:53.600 But the greater concern, I think is just that some 0:39:53.680 --> 0:39:55.719 of these companies are just having to find new suppliers 0:39:55.800 --> 0:39:58.560 or even create their own supply chains. Uh. Huawei being 0:39:58.600 --> 0:40:01.040 the major example in I know, because of these sort 0:40:01.080 --> 0:40:04.600 of corporate blacklist as well as teriffs that some people 0:40:04.760 --> 0:40:07.040 argue have been weaponized to a degree. Well, if you 0:40:07.080 --> 0:40:09.799 think about it, Huawei has been certainly a focal point 0:40:09.800 --> 0:40:12.840 for President Trump, right, and it's been really problematic for 0:40:12.880 --> 0:40:15.600 that company by having some of these bands put in place, 0:40:15.640 --> 0:40:18.719 and it really has created everyone kind of to rethink, Okay, now, 0:40:18.840 --> 0:40:21.960 maybe I need to be doing it in my backyard. Basically, Yeah, 0:40:22.000 --> 0:40:24.640 I mean, I think there is something something healthy about 0:40:24.680 --> 0:40:26.480 creating more competition. I think you want that in the 0:40:26.480 --> 0:40:28.560 market at the same time, sort of this you know, 0:40:28.640 --> 0:40:32.320 President Trump had tweeted recently in August just actually I 0:40:32.360 --> 0:40:34.280 think a couple of days before the the t SMC 0:40:34.400 --> 0:40:38.400 Global Foundaries lawsuit that he was hereby ordering US companies 0:40:38.440 --> 0:40:42.040 to find, you know, new new companies from manufacturers from China. 0:40:42.160 --> 0:40:43.880 It doesn't you know, work that way. Of course, you 0:40:43.920 --> 0:40:47.440 can't just order US tech companies to find uh new suppliers, 0:40:47.480 --> 0:40:49.759 in part because this stuff is incredibly different. This is 0:40:50.120 --> 0:40:53.520 precision manufacturing. You need a high skilled labor pool to 0:40:53.520 --> 0:40:55.360 actually do this stuff, and then you actually need the 0:40:55.600 --> 0:40:58.440 components that supply the silicon to to manufacturer. One of 0:40:58.440 --> 0:41:00.880 the things I've loved in your story is you, um, 0:41:00.880 --> 0:41:02.799 what would be kind of a really severe outcome and 0:41:02.800 --> 0:41:04.600 I'm just gonna take your words, a so called silicon 0:41:04.640 --> 0:41:07.719 curtain of country by country restrictions which could split up 0:41:07.760 --> 0:41:10.920 chip suppliers between Eastern and Western companies. We can can 0:41:11.000 --> 0:41:13.440 you know, constantly kind of talk about this of the 0:41:13.480 --> 0:41:16.000 world being split into right in terms of the US 0:41:16.040 --> 0:41:18.560 and its allies, and then maybe China and its allies, 0:41:18.600 --> 0:41:20.400 and that we could see in terms of chip production. 0:41:20.520 --> 0:41:22.759 You know what's interesting is, you know you often think 0:41:22.760 --> 0:41:26.480 about those in sort of militaristic terms. Certainly the technology 0:41:26.520 --> 0:41:29.560 that they might developing for their military is divided up 0:41:29.560 --> 0:41:31.719 between Eastern and Western companies. But now you're talking about 0:41:31.719 --> 0:41:33.840 consumer products. You know, we we have that the so 0:41:33.960 --> 0:41:36.759 called Great Firewall in China, where you traditionally thought of 0:41:36.760 --> 0:41:38.960 it as a software divide. You know, we use Facebook, 0:41:38.960 --> 0:41:42.080 they use we chad Um. You know, there's a very 0:41:42.160 --> 0:41:45.960 very strong divide between Allie pay and Venmo, let's say, 0:41:46.040 --> 0:41:48.640 But imagine bringing that to the hardware market, where suddenly 0:41:48.840 --> 0:41:51.120 you can actually get access to certain technology because it's 0:41:51.120 --> 0:41:53.960 only available in Asia, or you can't actually get access 0:41:53.960 --> 0:41:56.520 some U S phones because they're only available in Western countries. 0:41:56.760 --> 0:41:58.640 Think that's the big fear, and you wonder what happens 0:41:58.640 --> 0:42:00.759 to like global innovation as a result of it. That 0:42:00.880 --> 0:42:02.960 that's I think that you know, most of the analysts 0:42:02.960 --> 0:42:04.919 I talked to, we're not bullish about this. This wasn't 0:42:04.960 --> 0:42:06.880 like a healthy thing that they thought overall. They just 0:42:06.920 --> 0:42:09.600 thought it would slow the pace of innovation. One analysts 0:42:09.640 --> 0:42:11.880 actually told me that we could potentially paying more for 0:42:11.960 --> 0:42:14.680 devices that are actually worse than quality because we just 0:42:14.719 --> 0:42:17.080 don't have the best parts. And talk about the implications 0:42:17.080 --> 0:42:19.560 for five G two, because that's a big innovation. We've 0:42:19.560 --> 0:42:22.040 all been waiting for for it to come, but this 0:42:22.120 --> 0:42:24.320 can kind of set that back a bit absolutely. I 0:42:24.320 --> 0:42:26.799 mean it also complicates that This is actually as most 0:42:26.840 --> 0:42:28.680 analysts I talked to you told me, this was the 0:42:28.719 --> 0:42:32.080 one technology we finally agreed on. It was a universal standard. 0:42:32.120 --> 0:42:34.200 It's not like any other technology out there where we 0:42:34.239 --> 0:42:36.480 have different standards and different companies wanting to approach it. 0:42:36.600 --> 0:42:39.120 This was a universal thing and we were heading in 0:42:39.160 --> 0:42:41.680 that direction and suddenly we're unwinding it. So now there 0:42:41.760 --> 0:42:45.600 might be different network suppliers. There already are for Hua, Huawei, 0:42:45.640 --> 0:42:48.880 they're developing their own uh and other companies Unisak I 0:42:48.880 --> 0:42:51.200 think in China is also developing their own mobile chip 0:42:51.239 --> 0:42:53.719 set to compete in five G reportedly, and so that 0:42:53.800 --> 0:42:56.000 just you know whether or not it's a great unwinding 0:42:56.120 --> 0:42:58.960 or divide a silicon curtain. It is a great reshuffling 0:42:58.960 --> 0:43:00.920 I guess of the technology market. And is it too 0:43:01.000 --> 0:43:03.400 late if we get some kind of trade war resolution, 0:43:03.480 --> 0:43:06.239 this whole thing gets put to bed. Is this going 0:43:06.280 --> 0:43:10.000 to happen anyway? So far as I've been feels like yeah, 0:43:10.040 --> 0:43:13.479 I think. I think that there's a longer term impacts both. Um. 0:43:13.600 --> 0:43:14.840 You know, some of the analysts I talked to you 0:43:14.960 --> 0:43:17.279 just say you can't settle this the Yeah, the train 0:43:17.280 --> 0:43:19.680 has been put in motion. Um, but there's also other 0:43:19.719 --> 0:43:22.640 things that play, not just supply chain, but talent pool. 0:43:22.680 --> 0:43:26.040 And when you start relocating supply chains. Um, you know, 0:43:26.080 --> 0:43:27.960 these things don't happen overnight. So if you start building 0:43:27.960 --> 0:43:30.759 and semiconductor facilities cost fifty billion dollars to build, they 0:43:30.800 --> 0:43:32.600 take years and years and years to set up. So 0:43:32.640 --> 0:43:34.399 once you start putting this stuff in motion, I think 0:43:34.600 --> 0:43:37.560 there's complications that just can't be ended through one trade 0:43:37.640 --> 0:43:40.239 deal agreement. That's reporter Austin car We caught up with 0:43:40.280 --> 0:43:42.480 him in New York talking about the vulnerability is being 0:43:42.480 --> 0:43:44.719 exposed because of the U. S john A trade war 0:43:45.080 --> 0:43:47.840 and how it may be creating a remapping of the 0:43:47.920 --> 0:43:51.040 chip industry. It's been talked about and talked up for 0:43:51.080 --> 0:43:53.359 a long time. It's gone through a few iterations, cost 0:43:53.360 --> 0:43:56.040 a lot of money, and it is opening up this week, 0:43:56.080 --> 0:43:58.640 and Craig Giomona has followed the hopes and dreams, the 0:43:58.680 --> 0:44:02.040 trials and travails, and now the reality of the American dream. 0:44:02.120 --> 0:44:04.440 This story, I feel like it's its own little serious 0:44:05.000 --> 0:44:07.280 it is, and I think everybody from this area, especially 0:44:07.280 --> 0:44:09.239 from New Jersey, has seen this thing for close to 0:44:09.280 --> 0:44:11.680 twenty years. Right next to Giant Stadium, you know, the 0:44:11.680 --> 0:44:14.280 ski slope has been out there multi color on the highway. 0:44:14.320 --> 0:44:16.480 And it sounds like or seems like it's finally going 0:44:16.520 --> 0:44:17.920 to get open, which I think a lot of people 0:44:18.360 --> 0:44:20.760 never thought they'd see this day. I mean Governor Christie 0:44:20.840 --> 0:44:24.520 knocked it going back years and finial right, financial crisis 0:44:24.560 --> 0:44:26.880 really threw this off the rails the first time around, 0:44:26.880 --> 0:44:28.719 and now here we are finally about ready to get 0:44:28.760 --> 0:44:30.840 it open. Well, and tell us more about what exactly 0:44:30.960 --> 0:44:33.000 it is. You mentioned a ski sclope, but there's also 0:44:33.040 --> 0:44:35.799 a Nickelodeon theme part. What all does this project entail? 0:44:35.920 --> 0:44:38.880 You know they're calling it basically a retail entertainment complex. 0:44:38.920 --> 0:44:42.719 I think it's something like fifty percent entertainment retail. I 0:44:42.760 --> 0:44:44.719 mean it's a mall, right, but it's a lot more 0:44:44.800 --> 0:44:46.440 than a mall. In the traditional sense. I mean, you've 0:44:46.440 --> 0:44:48.200 got all your stores. There's gonna be luxury stores like 0:44:48.200 --> 0:44:51.080 our Maze and Sacks Fifth Avenue. Definitely high end though right, 0:44:51.120 --> 0:44:53.200 definitely high end. But you know, they also talk about 0:44:53.239 --> 0:44:55.560 Forever twenty one. So it's got sort of the standard 0:44:55.600 --> 0:44:57.560 go to mall stores you would expect. There's a lot 0:44:57.560 --> 0:45:01.160 of dining, a twenty restaurant, dining terrorists, and then there's 0:45:01.200 --> 0:45:03.959 all this other stuff. The water park, the hockey Rank, 0:45:04.360 --> 0:45:07.480 the ski slope. It's all opening kind of in phases. 0:45:07.520 --> 0:45:10.120 But you know, you hear a lot about experiential retail, 0:45:10.280 --> 0:45:12.640 right like the retail apocalyas. Nobody wants to shop at 0:45:12.640 --> 0:45:15.440 stores anymore. People want to shop online. It's much more convenient. 0:45:15.760 --> 0:45:18.439 The The argument has been that people will come out 0:45:18.480 --> 0:45:20.479 for something to do. They want to see the theme park, 0:45:20.600 --> 0:45:22.520 So are they going to shop at the gap? I 0:45:22.520 --> 0:45:24.680 mean maybe not, but they might walk by the gap 0:45:24.719 --> 0:45:27.160 on the way to the water park or a restaurant 0:45:27.239 --> 0:45:29.439 or whatever else it is, assuming they can get there 0:45:29.719 --> 0:45:31.560 and are willing to deal with the traffic. In northern 0:45:31.600 --> 0:45:34.160 New Jersey, it's a retail story, it's an entertainment story, 0:45:34.400 --> 0:45:37.080 it's an investment story. There's so many real estate story right, 0:45:37.080 --> 0:45:39.839 there's so many moving parts to this. Who's the who 0:45:39.920 --> 0:45:42.000 are the investors behind it? Let's get there right. So 0:45:42.040 --> 0:45:44.640 basically a company called Triple five Group, which is out 0:45:44.640 --> 0:45:46.879 of Canada, took this over in twentyven. They're the ones 0:45:46.920 --> 0:45:48.719 that really have gotten this over. The finish line. It's 0:45:48.719 --> 0:45:51.680 controlled by the Gramesean family, their billionaires. This is the 0:45:51.719 --> 0:45:54.040 family business. It's been around forever. But they weren't in 0:45:54.080 --> 0:45:55.800 there initially, were they They were not. They took this 0:45:55.920 --> 0:45:58.000 over in The big thing that they did was they 0:45:58.040 --> 0:46:00.400 got a one point seven billion dollar construction loan from 0:46:00.440 --> 0:46:02.880 JP Morgan and some other people. And you know, they 0:46:02.920 --> 0:46:05.759 have about that three billion, north of three billion into 0:46:05.800 --> 0:46:08.320 the project. The total is something like five but basically 0:46:08.360 --> 0:46:11.600 they have roughly three or so on the line here 0:46:11.640 --> 0:46:13.719 and basically betting on the future of malls. And one 0:46:13.760 --> 0:46:16.080 of the interesting interesting things that they also happen to 0:46:16.080 --> 0:46:19.040 own Mall of America and the West Edmonton Mall, which 0:46:19.040 --> 0:46:20.920 I think are the two largest malls in North America, 0:46:21.280 --> 0:46:24.120 and they have put up steak in each of those 0:46:24.160 --> 0:46:27.160 as collateral for the construction loan on this project. A 0:46:27.160 --> 0:46:29.319 lot on the line it is. And the reason why 0:46:29.360 --> 0:46:31.839 this came out is because officials up in Minnesota where 0:46:31.880 --> 0:46:34.279 Mall of America is. They found out basically because they're 0:46:34.320 --> 0:46:36.279 working on a water park with these guys next to 0:46:36.320 --> 0:46:39.040 Mall of America, and as part of the public disclosure process, 0:46:39.080 --> 0:46:41.839 these loan documents came out. But interesting bet that they've 0:46:41.840 --> 0:46:44.319 made putting up a big steak in their existing properties 0:46:44.360 --> 0:46:46.960 on this new mall project. Is it going to work? 0:46:47.120 --> 0:46:49.960 There's some skepticism for sure about the willingness of New 0:46:50.040 --> 0:46:52.520 Yorkers to get on a bus at Port Authority and 0:46:52.560 --> 0:46:55.480 go over to the Meadowlands on a Saturday. You know, 0:46:55.520 --> 0:46:58.520 our tourists gonna do this. I certainly think people will 0:46:58.560 --> 0:47:00.839 go to see it. The traffic over there is bad. 0:47:00.880 --> 0:47:02.680 Anybody that's gone to a jet or a Giant's game 0:47:02.760 --> 0:47:04.640 or a concert and MetLife Stadium knows it's not the 0:47:04.640 --> 0:47:07.279 easiest place to get to. It's like five miles from 0:47:07.320 --> 0:47:09.720 the Lincoln Tunnel. That five miles can take two hours 0:47:09.719 --> 0:47:11.560 if it's the wrong time of day. You know, if 0:47:11.560 --> 0:47:13.720 it's the middle of night, it's a fifteen minute drive. 0:47:14.200 --> 0:47:16.080 So how this all works on the transportation end of 0:47:16.120 --> 0:47:18.320 things will be interesting. They're really not doing anything besides 0:47:18.360 --> 0:47:21.319 special buses to get people there. So it's really a 0:47:21.360 --> 0:47:23.200 bet on the willingness of people to go over there 0:47:23.360 --> 0:47:26.120 and check out these crazy attractions that they've built. And 0:47:26.360 --> 0:47:30.280 they're betting four million people will go over there. Here, 0:47:30.080 --> 0:47:32.799 they're saying high number it does. They're saying forty million 0:47:32.800 --> 0:47:34.680 people annually. Look, I mean, New Jersey has a bunch 0:47:34.719 --> 0:47:36.600 of malls in Bergen County, and that part of the 0:47:36.640 --> 0:47:40.400 state some of the most traffic clouded roads in the nation. 0:47:40.960 --> 0:47:42.600 So I think it's it's wait and see. I think 0:47:42.600 --> 0:47:43.960 there's certainly a group of people that are going to 0:47:44.000 --> 0:47:45.919 go out there to take a look, right, because people 0:47:45.920 --> 0:47:49.640 are like that the novelty and just I can't sort 0:47:49.640 --> 0:47:51.759 of emphasize enough how much of a thing this has 0:47:51.800 --> 0:47:54.080 been in northern New Jersey for so long. I grew 0:47:54.120 --> 0:47:55.359 up in northern New Jersey, and I have to say 0:47:55.400 --> 0:47:57.080 it's funny. I was coming back from a trip this 0:47:57.120 --> 0:47:58.680 weekend and we were like, Okay, is there a giant game? 0:47:58.760 --> 0:48:01.560 Like we think about it New constantly because you don't 0:48:01.560 --> 0:48:03.040 want to be in that area because you can just 0:48:03.080 --> 0:48:05.520 sit for hours to kind of move around. So I 0:48:05.560 --> 0:48:07.800 do wonder about the transportation part of this. It's a 0:48:07.840 --> 0:48:09.080 big it's a big piece of it. Like I said, 0:48:09.120 --> 0:48:10.320 I think there's a lot of people that will go 0:48:10.360 --> 0:48:12.400 there if certainly wants to take a look. It's a 0:48:12.440 --> 0:48:14.880 new thing, it's the hot new story. Will they go 0:48:14.960 --> 0:48:16.640 back again and again? Are people going to make that 0:48:16.680 --> 0:48:18.719 their shopping destination? I mean that remains to be seen 0:48:18.760 --> 0:48:21.239 because look, there's fewer and fewer reasons to shop at 0:48:21.239 --> 0:48:23.400 a store every day. It gets better and better shopping online. 0:48:23.440 --> 0:48:26.319 What they're saying is theme park, all these attractions are 0:48:26.320 --> 0:48:27.600 the things that are going to bring people in. Well, 0:48:27.640 --> 0:48:29.680 I guess let's take an optimistic lens on it. Then 0:48:29.719 --> 0:48:32.040 if it does attract forty million visitors a year, is 0:48:32.080 --> 0:48:34.120 that a sign that this is now what it takes 0:48:34.160 --> 0:48:36.719 to drive foot traffic to traditional malls. That's certainly how 0:48:36.760 --> 0:48:38.239 people will look at it, because I mean, you hear 0:48:38.239 --> 0:48:40.319 a lot about the retail apocalypse, right and there are 0:48:40.360 --> 0:48:42.759 certainly dying malls out there, but they're older malls. You know, 0:48:42.840 --> 0:48:45.239 luxury high end malls have done pretty well. I mean 0:48:45.239 --> 0:48:47.799 I've been out in Guardens Date Plaza the last couple 0:48:47.800 --> 0:48:50.120 of Black Fridays. You know, reporting for the consumer team 0:48:50.120 --> 0:48:53.040 here at Bloomberg. It's crowded, right, I mean those people 0:48:53.080 --> 0:48:54.799 are they shopping at the Gap? Maybe not, but the 0:48:54.800 --> 0:48:58.040 Apple stores always packed, the Tesla stores packed, people are 0:48:58.080 --> 0:49:00.560 eating at the restaurant. So people still like to get 0:49:00.560 --> 0:49:02.279 out of the house, despite the fact that they might 0:49:02.320 --> 0:49:04.600 want to shop for their pants and their shirts online 0:49:04.640 --> 0:49:07.319 just because it's easier. But people do still want to 0:49:07.320 --> 0:49:08.920 do things. And in a large part of the country 0:49:08.920 --> 0:49:10.480 outside of New York City, people are still out in 0:49:10.520 --> 0:49:13.399 their cars on the weekends. So look, there's a chance 0:49:13.440 --> 0:49:15.400 for this to work. I think there's a lot of 0:49:15.440 --> 0:49:18.480 factors where people say, hi, I just wonder long term 0:49:18.520 --> 0:49:20.919 about the willingness of people to drive over there. That's 0:49:20.920 --> 0:49:23.799 Craig Giemona talking to us about the trials and tribulations, 0:49:23.840 --> 0:49:26.919 if you will, about the American Dream. It's been going 0:49:27.000 --> 0:49:29.480 on for decades. It's a retail story, that's a real 0:49:29.600 --> 0:49:32.359 estate story. There's so much to it, and folks, it's 0:49:32.400 --> 0:49:35.080 finally open. So in the Year Ahead issue, Hannah Elliot, 0:49:35.080 --> 0:49:37.920 who tracks all things high end transportation for us and 0:49:38.000 --> 0:49:40.160 is of course part of our Pursuits team, sat down 0:49:40.160 --> 0:49:43.399 with Diamond's chief design officer, and we always say she's 0:49:43.400 --> 0:49:45.799 got the best job because she really does. So tell 0:49:45.880 --> 0:49:47.920 us about who you talked with. So I spoke with 0:49:47.960 --> 0:49:51.960 Gordon Wagner, and he is a superstar in the car 0:49:52.000 --> 0:49:55.520 world for his designs. Of course, if you drive, if 0:49:55.520 --> 0:49:58.720 you drive basically any Mercedes these days, the C class, 0:49:58.719 --> 0:50:01.759 the E class, S class, all of the SUVs, UH, 0:50:01.880 --> 0:50:04.960 the A mg G Team Mercedes, which is their sports car, 0:50:05.160 --> 0:50:07.799 he's designed all of those. Um. So he's been very 0:50:07.840 --> 0:50:12.040 influential as for a long time there since a long 0:50:12.120 --> 0:50:15.120 time designer. But he's still pretty young. He's fifty one. UM. 0:50:15.160 --> 0:50:17.399 And he is also the one that's been doing these 0:50:17.400 --> 0:50:20.319 crazy conceptual cars that you may have seen like with 0:50:20.360 --> 0:50:23.640 my Box, Um he's done. If you follow him on Instagram, 0:50:23.640 --> 0:50:26.800 it's great because he'll put up photos of like taxi 0:50:26.960 --> 0:50:31.440 drones that are like flying devices that he's conceived. You 0:50:31.440 --> 0:50:34.200 know that possibly could happen. Um. But I spoke with 0:50:34.239 --> 0:50:35.719 him and he's great. We'll talk to us a bit 0:50:35.719 --> 0:50:37.680 about that because I thought that was interesting. I love 0:50:37.840 --> 0:50:40.200 concept cars because you do wonder about, okay, how much 0:50:40.200 --> 0:50:43.040 of this will ultimately be a reality. Yes, you kind 0:50:43.040 --> 0:50:44.680 of talked to him a little bit about that. Yeah, 0:50:44.760 --> 0:50:47.239 he's great to talk to because he looks like a 0:50:47.320 --> 0:50:50.240 very clean cut, you know, staunch type of German Man. 0:50:50.360 --> 0:50:53.759 But he's a really open, free thinker, and he basically says, look, 0:50:54.320 --> 0:50:57.799 I'm already living in the future here, and it's you know, 0:50:57.880 --> 0:50:59.839 it's not gonna happen next year, but within the next 0:51:00.040 --> 0:51:03.160 one of years, we can certainly expect to see flying 0:51:03.200 --> 0:51:06.360 taxi drones. And actually, if you think about it, planes 0:51:06.400 --> 0:51:10.000 are already using autopilot technologies to fly most of the time. 0:51:10.480 --> 0:51:15.160 So actually auto autopilot self driving vehicles are easier to 0:51:15.200 --> 0:51:17.279 do in the air than on the ground, right because 0:51:17.280 --> 0:51:19.680 we already used that. So that's kind of exciting. Is 0:51:19.680 --> 0:51:22.279 he's pretty convinced that kind of infrastructure and development is 0:51:22.280 --> 0:51:24.480 going to keep pace with all of these ideas we've had. 0:51:24.480 --> 0:51:27.359 I mean, a lot of the electron vehicles autopilot as 0:51:27.360 --> 0:51:29.560 we've seen, it's been kind of slow rolling. Doesn't expect 0:51:29.560 --> 0:51:32.960 that to accelerate, he he in the air, I mean, 0:51:32.960 --> 0:51:34.839 he's really kind of out there. He says, Look, it's 0:51:34.880 --> 0:51:37.240 easier to do in the air. The real thing, um 0:51:37.600 --> 0:51:41.719 is still consumer concerns about range anxiety, you know, that's 0:51:41.719 --> 0:51:46.399 still a real thing. Um. And then like legal issues, UM, 0:51:46.480 --> 0:51:49.319 infrastructure in general. We have all the technology, says, we 0:51:49.360 --> 0:51:52.400 have all the technology already. Basically, it's other things that 0:51:52.440 --> 0:51:55.239 are keeping us back, like consumer concerns, UM, you know, 0:51:55.440 --> 0:51:59.719 legality issues, insurance things, um, the price of building infrastructure 0:51:59.719 --> 0:52:01.440 that sort. Yeah. I thought that was important because I 0:52:01.440 --> 0:52:02.880 think I feel like we've been talking about you need 0:52:02.920 --> 0:52:05.480 the infrastructure there to make this really ramp up, and 0:52:05.520 --> 0:52:07.160 we've been talking about it for years. But he's right, 0:52:07.320 --> 0:52:09.600 it's still not there. No, it's not there. I mean, 0:52:09.640 --> 0:52:12.239 it's nice to think about these things, of course, but 0:52:12.320 --> 0:52:14.920 when it really comes to like this year, next year, 0:52:15.000 --> 0:52:17.880 the following year, we're not going to see flying cars 0:52:17.920 --> 0:52:19.839 in the next five or ten years. You know. It's 0:52:20.000 --> 0:52:22.799 it's it's happening and we can do it, um, but 0:52:23.080 --> 0:52:24.920 a lot of other things need to catch up first. 0:52:25.000 --> 0:52:26.959 I want to shift gears a little bit to sustainability 0:52:26.960 --> 0:52:30.799 because you asked him, point is sustainable luxury and oxymoron 0:52:31.239 --> 0:52:34.480 that was his answer. He immediately it was like, no, actually, 0:52:34.680 --> 0:52:38.240 the key of luxury is sustainability. He said, Look, luxury 0:52:38.360 --> 0:52:42.160 is is being admired by society for any number of 0:52:42.200 --> 0:52:46.920 things for your success, your intelligence, your wealth, whatever, um. 0:52:47.000 --> 0:52:51.200 And part of that admiration requires the responsibility to society, 0:52:51.320 --> 0:52:55.440 and sustainability is how you show the responsibility. If that 0:52:55.520 --> 0:52:58.040 makes sense. Yeah, he basically sayes, Look, if if luxury 0:52:58.080 --> 0:53:00.120 is going to continue, and it will, it has to 0:53:00.120 --> 0:53:02.759 go hand in hand with sustainability. Amazing, Yeah, I have it. 0:53:02.760 --> 0:53:04.440 Well you always think it is to fun places and 0:53:04.520 --> 0:53:07.640 to see fun cars. Um, Hannah, thank you. Thanks. In 0:53:07.680 --> 0:53:09.960 the year ahead, look at luxury, James Parmy checks out 0:53:09.960 --> 0:53:13.839 the galleries that are turning into museums. I'm like, wait, what, 0:53:13.840 --> 0:53:16.680 what's going on? Well, you know you're not the only 0:53:16.719 --> 0:53:21.400 person to have that reaction. Um. In in Chelsea, the 0:53:21.400 --> 0:53:23.480 New York neighborhood on the far west side of Manhattan, 0:53:23.800 --> 0:53:28.880 there are at least four different for profit art galleries 0:53:29.080 --> 0:53:33.160 that are at least the size of many midsized museums. 0:53:33.320 --> 0:53:38.040 And that's like thirty square feet, Like are huge, easily easily? Yeah. 0:53:38.200 --> 0:53:41.960 David's Werner is actually planning uh an exhibition space that 0:53:42.040 --> 0:53:45.480 has fifty square feet, which is the same amount of 0:53:45.520 --> 0:53:48.799 exhibition space. The Whitney has a few blocks down. So 0:53:48.880 --> 0:53:52.560 these are massive buildings. So why is this happening. Well, 0:53:52.600 --> 0:53:55.040 there are a lot of different reasons. Um, some people 0:53:55.080 --> 0:53:58.279 ascribe this sort of kind of constant competition with one 0:53:58.320 --> 0:54:01.000 another and I need to grow large and larger and larger, 0:54:01.200 --> 0:54:05.800 just in sort of needless expansion. But there are actually 0:54:05.880 --> 0:54:09.080 major economic forces at play here, and the primary one 0:54:09.280 --> 0:54:11.360 actually doesn't have to do with the viewing public. It 0:54:11.440 --> 0:54:15.120 has to do with galleries artists. So there are a 0:54:15.200 --> 0:54:19.640 finite number of blue chip artists out there and artists 0:54:19.760 --> 0:54:23.120 states out there, and galleries want those artists to states 0:54:23.160 --> 0:54:25.959 to stick with them, and there's usually nothing binding them 0:54:26.239 --> 0:54:28.799 these artists to go with one gallery another. So they're 0:54:28.840 --> 0:54:32.440 creating museum quality spaces for these artists to induce them 0:54:32.440 --> 0:54:34.480 to stay. And it's not just about size. I mean, 0:54:34.480 --> 0:54:37.520 they're doing a lot of other things emulating museums beyond 0:54:37.600 --> 0:54:40.480 just you know, having really big spaces. That's exactly gerience, 0:54:40.600 --> 0:54:44.200 right exactly. So you know, galleries have always put on 0:54:44.440 --> 0:54:47.759 shows that are in whatever way noncommercial. You know, they'll 0:54:47.760 --> 0:54:51.400 get loans from museums or private collections or foundations and 0:54:51.480 --> 0:54:54.719 they'll do these pretty academic shows. They hire curators, they 0:54:54.800 --> 0:54:58.160 hire real art historians, and they put them on but 0:54:58.280 --> 0:55:01.320 now that these galleries are growing larger and larger and larger, 0:55:01.640 --> 0:55:03.200 that means that they have more and more space to 0:55:03.239 --> 0:55:07.200 do these quite museum quality exhibitions. Well, and it's interesting, 0:55:07.239 --> 0:55:09.560 I think I was going through the list. They have cafes, 0:55:09.640 --> 0:55:16.759 exhibition spaces, events schedules, curators, book publishing, arms, bars importantly. Yeah, 0:55:17.120 --> 0:55:20.880 and you know, for instance, Pace Gallery, which just opened 0:55:20.880 --> 0:55:26.480 a seventy five thousand square foot gallery massive um in Chelsea, 0:55:27.000 --> 0:55:32.680 UM has hired museum curators to put together public performance 0:55:32.680 --> 0:55:37.560 schedules UM that are taking place in this absolutely beautiful natural, 0:55:37.800 --> 0:55:42.319 skylit space UM where anyone can go. And that is 0:55:42.400 --> 0:55:44.719 what a museum does. So help me out here because 0:55:44.719 --> 0:55:46.319 I was thinking about when I read this, I mean 0:55:46.480 --> 0:55:50.040 massive spaces. It's expensive real estate. I mean is it 0:55:50.160 --> 0:55:52.800 financially I mean they're in a business, right a gallery, 0:55:52.880 --> 0:55:55.680 are they? Is it financially paying off for them? It 0:55:55.840 --> 0:55:58.839 seems to UM usually wouldn't be doing it right, well, 0:55:58.880 --> 0:56:00.719 they wouldn't be doing it, but they might be doing 0:56:00.719 --> 0:56:02.400 it as a loss leader. You know, we don't actually 0:56:02.440 --> 0:56:04.960 have these are private enterprises, so we don't have a 0:56:04.960 --> 0:56:07.000 look at their books, so we can only speculate what 0:56:07.040 --> 0:56:10.319 do they tell you that. So they they say that 0:56:10.400 --> 0:56:14.439 it absolutely makes sense for their business because one, when 0:56:14.480 --> 0:56:17.120 they have hundreds of thousands of people coming through the door, 0:56:17.160 --> 0:56:20.120 it creates a buzz that you just can't buy otherwise. 0:56:20.320 --> 0:56:25.400 And collectors want to be part of whatever they perceive 0:56:25.480 --> 0:56:27.840 of a de zeitgeist. And if you have lines of 0:56:27.880 --> 0:56:30.759 people going down the block, but you're ushered in and 0:56:31.000 --> 0:56:33.400 invited to see this thing that everyone is desperate to see, 0:56:33.600 --> 0:56:37.960 obviously that has an impact on the perception that these 0:56:37.960 --> 0:56:41.279 works are valuable. Exactly. So are the galleries the big 0:56:41.280 --> 0:56:43.040 winners here or is it just art levers because you 0:56:43.040 --> 0:56:45.160 can get into these galleries for free, unlike a lot 0:56:45.200 --> 0:56:52.640 of museums. Well that's the excellent point, so museums. But 0:56:52.880 --> 0:56:56.719 it's true though museums cost twenty dollars a ticket, and 0:56:56.800 --> 0:57:00.239 that means a family of four, let's say a bull 0:57:00.320 --> 0:57:03.400 with two eighteen year old kids, that family is going 0:57:03.440 --> 0:57:06.120 to be paying a hundred dollars to see art at 0:57:06.160 --> 0:57:12.439 the Whitney, as opposed to anyone and whoever they want 0:57:12.480 --> 0:57:15.080 can just waltz in. It's a free art dealing experience. 0:57:15.080 --> 0:57:17.720 And that's why Chelsea and all of these galleries and 0:57:18.000 --> 0:57:21.920 London and Los Angeles anywhere. That's why they're also wonderful 0:57:21.920 --> 0:57:26.560 because you get to have these totally gratis art experiences. 0:57:26.600 --> 0:57:31.520 But now that these museums are actually rivaling midsize now 0:57:31.600 --> 0:57:35.840 that these galleries arrivaling midsize museums, now you're having a 0:57:35.880 --> 0:57:40.320 free museum experience. And so quite right, everyone benefits except 0:57:41.040 --> 0:57:44.920 possibly the competition, which is to a museums themselves. So 0:57:45.000 --> 0:57:46.960 what I mean, are you hearing any kind of rumblings 0:57:46.960 --> 0:57:49.680 from the museums, um, in terms of you know, they've 0:57:49.680 --> 0:57:52.640 got to be watching this, they are. You know, there's 0:57:52.640 --> 0:57:55.360 certainly a level of skepticism. And I say this only anecdotally. 0:57:55.440 --> 0:58:00.280 I you know, haven't had official comment from any museum representatives. UM. 0:58:00.320 --> 0:58:03.040 I will say that museums and galleries have an extremely 0:58:03.040 --> 0:58:08.960 symbiotic relationship. Museums oftentimes rely on galleries to partially fund 0:58:09.040 --> 0:58:13.400 the shows of contemporary artists. So UM, it's certainly not 0:58:14.000 --> 0:58:19.760 clear cut adversarial or clear cut purely beneficial relationship. I 0:58:19.840 --> 0:58:21.480 gotta say, one of my favorite things about New York 0:58:21.480 --> 0:58:24.040 has always been like wandering downtown and you just see, 0:58:24.280 --> 0:58:26.760 you never know where stumble into or something an event 0:58:26.800 --> 0:58:28.520 going on, and you can I mean sometimes you can 0:58:28.560 --> 0:58:31.120 wander and sometimes you have to be asked, but you know, well, 0:58:31.240 --> 0:58:35.040 you know, that's actually also hits on this very interesting question, 0:58:35.080 --> 0:58:38.840 which is to say how people feel when they're just 0:58:38.920 --> 0:58:41.240 coming in off the street. And for a very long time, 0:58:41.400 --> 0:58:45.000 art galleries felt pretty imposing. I would say to the 0:58:45.040 --> 0:58:50.520 average art lover, who or maybe an average art lover, 0:58:51.080 --> 0:58:53.040 maybe maybe even if you don't love it, maybe if 0:58:53.040 --> 0:58:56.440 you're just casually interested, there's it's not necessarily a warm, 0:58:56.480 --> 0:59:00.120 fuzzy place. And the other part of this growth of 0:59:00.200 --> 0:59:04.640 galleries is that they don't really want these massive buildings 0:59:04.680 --> 0:59:07.680 to be empty. They want people inside, and so to 0:59:07.840 --> 0:59:12.560 that end, they're becoming much more user friendly. Really um well, 0:59:12.560 --> 0:59:14.800 and I'm sure size for the person viewing the art. Also, 0:59:14.800 --> 0:59:16.840 because I've walked into galleries before, I'm the only person 0:59:16.880 --> 0:59:18.200 in there. I feel like I have to be quiet 0:59:18.240 --> 0:59:20.360 as a mouse. And to your point, it's a little 0:59:20.360 --> 0:59:22.360 bit of an uncomfortable experience. And when you're in more 0:59:22.400 --> 0:59:24.400 of a museum type space with a lot of other 0:59:24.400 --> 0:59:26.080 people around you, I could see how that makes a 0:59:26.120 --> 0:59:28.240 little bit more enticing, and that's what it should be. 0:59:28.280 --> 0:59:30.840 You know, art is approachable, or at least it should 0:59:30.880 --> 0:59:32.680 be approachable, and it should be something that you can 0:59:32.760 --> 0:59:34.520 engage with and have fun with and deal with. You know, 0:59:34.680 --> 0:59:39.400 a lot of this art is not meant to be imposing, 0:59:39.520 --> 0:59:43.040 and so in a sense this is potentially a very 0:59:43.080 --> 0:59:47.080 positive development for everyone, especially if you're putting a bar 0:59:47.160 --> 0:59:50.160 in a gallery. It sounds like a fun thing to do. Um, 0:59:50.360 --> 0:59:52.480 James Tarmy, You're always fun. Thank thank you so much 0:59:52.520 --> 0:59:54.640 for having me. 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