Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I am
Speaker 1: Jason Kelly and I'm Carol Masser. Welcome to the Bloomberg
Speaker 1: Business Week Weekend Podcast. Can I just tell you I love,
Speaker 1: love love this Double Issue. I mean, we love the
Speaker 1: magazine every week, but I have to say so many
Speaker 1: great deep dives into stories and so many things. You're
Speaker 1: gonna be You're gonna read it and you're gonna walk away,
Speaker 1: are gonna listen to it? You're gonna walk away, And
Speaker 1: like I didn't know that. We have some clear highlights
Speaker 1: from the issue in this week's show. Also next week
Speaker 1: show we're gonna have even more. But some of the
Speaker 1: stories that really jump out to me at the Barclays
Speaker 1: story is so compelling. Yeah. Absolutely, And we also have
Speaker 1: some highlights from our daily show because we caught up.
Speaker 1: We talked a little bit about the elections women in
Speaker 1: the upcoming elections, how the pipeline is definitely building, so
Speaker 1: we'll talk about that. Also, apparently recession, don't worry about it.
Speaker 1: It's all good here in the United happen three months ago,
Speaker 1: don't worry. That's according to our economics editor as well
Speaker 1: as the CEO of visa. Plus, we've got a conversation
Speaker 1: with the c of Tiffany after the news this week
Speaker 1: that Luxury Brand LVMH has entered talks to buy the
Speaker 1: jewelry maker. Apparently they up their bid and so now
Speaker 1: the two companies are talking. Talk about fortuitous because the
Speaker 1: year ahead Luxury this is an event that we do
Speaker 1: at Bloomberg every year. They had already scheduled for the
Speaker 1: CEO of Tiffany to come in and he was gracious
Speaker 1: enough to stick around and really answer a bunch of questions.
Speaker 1: Much more of that ahead, but we begin with our
Speaker 1: top stories. A busy week in d C with impeachment hearings,
Speaker 1: trade talks, hitting a series of road bumps. Let's break
Speaker 1: it down with Ryan te beckwith in d C. So Ryan,
Speaker 1: help us understand everything that happened there in the nation's capital.
Speaker 1: This was a long week and the sal The testimony
Speaker 1: on Wednesday established pretty definitively that there was at least
Speaker 1: one quid pro quo um holding out the White House
Speaker 1: meeting and exchange for investigations into the bidens um. San
Speaker 1: Land testified that he was not definitively sure that there
Speaker 1: was a second quid pro quo on the aid. But
Speaker 1: that establishes this sort of pattern. And as the questioners,
Speaker 1: the Democratic questioners sort of made clear, a White House
Speaker 1: visit is an official act, which would be the statutory
Speaker 1: term for something that could be considered uh, a thing
Speaker 1: of value in a in a bribery case, So they
Speaker 1: could have is an article of impeachment itself, just on
Speaker 1: holding out the promise of a White House visit in
Speaker 1: exchange for a personal favor to of investigating the bidens.
Speaker 1: All right, Ryan, as you said, a very long weeks,
Speaker 1: so we had the impeachment hearing is going on. We
Speaker 1: also had trade talks again. And I feel like I've
Speaker 1: said this so much over the last few years in
Speaker 1: terms of US trying to trade negotiations. Two steps forward,
Speaker 1: one step back. Where are we? I mean, it's it
Speaker 1: exists in a nebulous zone right now. Trump has been
Speaker 1: using Twitter to argue that Democrats should be somehow advancing
Speaker 1: UH trade deal that he hasn't sent to them. Um.
Speaker 1: I actually think that the impeachment means that both on
Speaker 1: the domestic side, that both Trump and Democrats will want
Speaker 1: to do it. For Democrats, it's a way of saying, look,
Speaker 1: we're not just out to get Trump. Um, we'll work
Speaker 1: with him on something we can agree on. And this
Speaker 1: is one of the few things that they both agree
Speaker 1: on and have made some progress on. Like they agree
Speaker 1: on infrastructure, but they've made no progress on that. All right,
Speaker 1: Ryan tick beckwith We're gonna leave it there. Thank you
Speaker 1: so much for wrapping up a very busy week in Washington.
Speaker 1: Well from DC to London. Story the magazine on how
Speaker 1: breaks its chaos. It's opening cracks in the U K's
Speaker 1: three hundred year plus union. Yeah, this is also going
Speaker 1: on this week, A televised debate and election campaigns also
Speaker 1: picking up momentum. Let's head to Lund and check in
Speaker 1: with Tim Ross. So much going on, busy here in
Speaker 1: the States, busy over in the UK. Let's talk about
Speaker 1: the election trail on News from Eric. There was a
Speaker 1: lot of momentum, Tim, what's the momentum that we need
Speaker 1: to know about as investors. One of the moments the
Speaker 1: concept of party is still ahead comfortably in the opinion
Speaker 1: polls of Jeremy Corbyn's Labor Party. But in the first
Speaker 1: of the televised debates between Boris Johnson, the Prime Minister
Speaker 1: and tour leader, and Jeremy Corbyn, who is challenging him
Speaker 1: from a really quite a hard left wing socialist angle.
Speaker 1: They ended in a bit of a drawer. It was
Speaker 1: a kind of stalemate. Everyone was really expecting Johnson, or
Speaker 1: most people were expecting Johnson to do well. He's a
Speaker 1: famous campaigner. He won the Brexit campaign for those pro
Speaker 1: leave voters in twenties sixteen. He's won two terms as
Speaker 1: London mayor, and he was picked really by the Tories
Speaker 1: as someone who could defeat Corbyn. But in that first
Speaker 1: debate on Tuesday night it was declared a draw. Really
Speaker 1: in the first opinion poll that was taken afterwards, that
Speaker 1: hasn't really moved the dial in terms of where the
Speaker 1: party stand. But Corbyn isn't doing terribly and Johnson isn't
Speaker 1: doing brilliantly at the moment, and so as we look ahead,
Speaker 1: it feels like we're working under the assumption there is
Speaker 1: going to be some sort of Brexit, and as we
Speaker 1: think about the implications of that, they are real implications
Speaker 1: if you look especially north of where you are to Scotland,
Speaker 1: and that figures into a much larger and maybe in
Speaker 1: some ways more limited future for the United Kingdom. Tell
Speaker 1: us what you've learned. Well, as in the magazine this week,
Speaker 1: we have a story in there about the future of
Speaker 1: the UK potentially being at stake in this election. If,
Speaker 1: for example, the Conservative Party doesn't get that majority, and
Speaker 1: if the Labor Party managed to squeeze into power with
Speaker 1: the support of potentially the Scottish Nationalists who are saying
Speaker 1: they would they would help get Jeremy Corbyn into ten
Speaker 1: Downing Street. That would give the pro independence campaigns in
Speaker 1: Scotland a really big boost, the kind of boost they
Speaker 1: haven't really had since Scotland voted in its own referendum
Speaker 1: in twenty fourteen on the question of whether to break
Speaker 1: away from the UK. Nicolas Sturgeon is this sort of
Speaker 1: tough firebrand leader of the Scottish National Party and she
Speaker 1: is very sure that Brexit means Poland must now get
Speaker 1: a vote on its own future and whether to break
Speaker 1: away from the rest of the UK. And if she
Speaker 1: helps Jeremy Corbyn get into power, he might just give
Speaker 1: her that vote. That's tim ross. And like we kidded
Speaker 1: with Ryan T. Beckwith about how busy it was over
Speaker 1: in Washington and just the US at large, but it
Speaker 1: was really very busy over the UK as well well,
Speaker 1: and the next couple of weeks are really going to
Speaker 1: determine the fate of the United Kingdom in many ways.
Speaker 1: And if you look out two years, certainly ten years,
Speaker 1: it could be a radically different kingdom as it were
Speaker 1: than we saw. This has been effectively in place for
Speaker 1: three years, right, a reminder it's not just about Brexit,
Speaker 1: but it's about really the fate of the UK going forward.
Speaker 1: So we talk often about the importance of building pipelines
Speaker 1: as a necessary way to create more diversity, more women
Speaker 1: in both the public and private sectors. Here with what
Speaker 1: we've learned since the mid terms and how she's working
Speaker 1: to get more women in the pipeline aeron Loostro. She's
Speaker 1: back with us, founder and CEO of she should Run,
Speaker 1: and she's of course typically based in Washington, d C.
Speaker 1: She's back here in the Bloomberg headquarters, specifically in our
Speaker 1: Bloomberg Interactive Broker studios. So nice to have you back.
Speaker 1: Thank you, Carol. Um tell us about where we are
Speaker 1: when it comes to the prospect of more women making
Speaker 1: their way into elected office. Sure, so, uh, you know,
Speaker 1: I'll start by saying that a lot of folks are
Speaker 1: particularly interested in was een a moment in time? Was
Speaker 1: it a surge that would pass? And what we're seeing
Speaker 1: in the numbers so far is we're sustaining the momentum,
Speaker 1: continuing to grow the pipeline UM. And I think there's
Speaker 1: some really interesting stories to tell that look quite different
Speaker 1: than twenty and even and so, Aaron, as you look
Speaker 1: across the success stories, what do you take away that
Speaker 1: that might be a through line? Obviously every race is
Speaker 1: a little bit different, but where have you seen things
Speaker 1: where you said, Okay, we should do that again? You know.
Speaker 1: I think what's most interesting is that a lot of
Speaker 1: the research around with been running UM points to the
Speaker 1: need to recruit women, to encourage women to run for office.
Speaker 1: This is all still true. It's a mostly a man's
Speaker 1: game with his you know, record our majority men in office,
Speaker 1: it's not surprising to see men are more likely to
Speaker 1: be recruited. But what we're seeing that's different is that
Speaker 1: women are now increasingly saying, Okay, I'm gonna run. I'm
Speaker 1: gonna run just like I am, and UM and the
Speaker 1: voters are hungry. I think UM for that variety. And
Speaker 1: and while we're not there yet, I wouldn't say we're
Speaker 1: totally normalized and seeing women in positions of political power.
Speaker 1: It's becoming more and more normal to see women to
Speaker 1: tell their stories. And I think as we continue to
Speaker 1: see that, we will continue to see more women's up
Speaker 1: war work. Because you said earlier, different stories to tell
Speaker 1: than is that what's different? Yeah, you know, what's what?
Speaker 1: Two things that I want to plant. One is um,
Speaker 1: you know, we we absolutely see a record number of
Speaker 1: women on the ballot already. UM. What's super interesting to
Speaker 1: me is it's a Republican story. So UM, last year
Speaker 1: at this time there was a story of a record
Speaker 1: number women on the ballot, but it was primarily Democratic women.
Speaker 1: This year, we actually have registered to run UM for
Speaker 1: federal office, double the number of Republican female candidates than
Speaker 1: we did last year at the same time. So, you
Speaker 1: know that we saw this in the In the outcome
Speaker 1: of the election in eighteen, there was little to no
Speaker 1: gain In some places, Republican women actually went backwards in
Speaker 1: their percentage of UM of political power, and so that's
Speaker 1: absolutely needed to change. You know. Look, I think there's
Speaker 1: there's a really high number of incumbent Republican men who
Speaker 1: have announced they're not running for re election, which opens
Speaker 1: up I mean tremendous opportunity. It's really difficult to beat
Speaker 1: an incumbent on the Democratic side. What we're seeing is
Speaker 1: a record number of UM challengers to incumbents UM, which
Speaker 1: some could point to examples like Alexandra Casio Quartets and
Speaker 1: say not surprising, right, Well, because that was one where
Speaker 1: it seemed like the longest of long shots and then
Speaker 1: it happened. I mean, this is one of the most
Speaker 1: senior members of the House, Joe Crowley, that she of
Speaker 1: course defeated. How does it being a presidential year change things?
Speaker 1: Obviously you get bigger voter turnout typically. Uh does that
Speaker 1: change your calculus at all who you go after, who
Speaker 1: you recruit? Yeah, I mean it does, and that I mean, look, women,
Speaker 1: since I think sixty four have been the majority of
Speaker 1: voters in elections, and that will I'm sure remain true this. Uh,
Speaker 1: in elections, do women tend to vote for other women?
Speaker 1: You have any research on that yet? No, I don't.
Speaker 1: You know, I can't point to it because we talked
Speaker 1: about in the business community, even like female venture capitalists
Speaker 1: don't always aren't very supportive of other women entrepreneurs. So
Speaker 1: I just wondered if there's anything no and it plays
Speaker 1: out politically, absolutely, And I'd love to say that, you know,
Speaker 1: I'm not privy to research that you look at and
Speaker 1: say women are really tough on other women, you know.
Speaker 1: I mean, there's this issue that we face around women
Speaker 1: running probably number one issues around likability. Women have to
Speaker 1: be likable. Men don't have to be likable. So what
Speaker 1: does that mean for women who are running um Women
Speaker 1: hold them to that high of a standard too around
Speaker 1: likability and qualifications, so we're a long way to go there. Well,
Speaker 1: and I do wonder about likability what does it mean
Speaker 1: for a woman because I think I'm going to say
Speaker 1: I think it's more complicated because I think some people
Speaker 1: like women who are very successful and driven and career
Speaker 1: driven and strong, and some want them to be like
Speaker 1: the person you know, your next door neighbor who's watching kids.
Speaker 1: All of it valuable. I'm not making any judgment call,
Speaker 1: but I do wonder what's likable in the environment like
Speaker 1: today or does it come down to policies and what
Speaker 1: they stand for. It really does feel like something you
Speaker 1: can't win, you know, if you if you're if you're
Speaker 1: too assertive, then that's that's no good. If you're you know,
Speaker 1: too soft, Um, that's no good. And I think until
Speaker 1: we get to a place where we have critical mass
Speaker 1: of women serving in elected office and those examples to
Speaker 1: point to, we're going to continue to struggle with this.
Speaker 1: So you mentioned uh, Alexandro Castio Cortez, who obviously has
Speaker 1: become our pbably one of the most prominent politicians in America.
Speaker 1: There is this whole notion We've talked about it a
Speaker 1: lot on this show, the whole notion of you know,
Speaker 1: if you can see it, you can be it. That
Speaker 1: that idea Nancy Pelosi sort of coming back to being
Speaker 1: one of the most senior politicians in the US. Has
Speaker 1: that changed the calculus at all? And this crop of
Speaker 1: new women legislate tours, what is the ultimate impact there? Yeah, Look,
Speaker 1: it's the it's the most diverse Congress that we've ever seen,
Speaker 1: and it absolutely changes who who's thinking about running, who
Speaker 1: who looks forward and says, um, you know, maybe maybe
Speaker 1: I can see myself in that role we and she
Speaker 1: should run. Focus primarily on women who are running at
Speaker 1: the local level, and that's where we see a huge
Speaker 1: effect because you know, when you when you sort of
Speaker 1: only see one type of person serving in elected office.
Speaker 1: You look at that and you say, no way, that's
Speaker 1: not me, No chance, I'm not qualified. You go through
Speaker 1: all of the issues. But as we continue to diversify
Speaker 1: that that representation, I think, you know, it's anybody, it's
Speaker 1: anybody's game. Then well, and I do wonder about you know,
Speaker 1: but there's a stat in some of the research that
Speaker 1: you sent over that the World Economic Form recently rejected
Speaker 1: that we are a staggering at two eight years away
Speaker 1: from gender equality in the US. UM. That just hurts
Speaker 1: me so so much. UM. In terms of what you're
Speaker 1: seeing politically, do you feel like though, and the momentum,
Speaker 1: as you said, it feels like it's really really strong. Um.
Speaker 1: Could we see parody a lot closer in terms of Congress? Yes,
Speaker 1: My hope is that there's a snowball effect here. Absolutely,
Speaker 1: we continue at the rate that we're at, it's going
Speaker 1: to take a really long time. This will not happen
Speaker 1: in our lifetime. But you know that we we actually
Speaker 1: just launched a program called Role Call that gets right
Speaker 1: at this, which is, UM. What we saw of individuals
Speaker 1: coming to us is, you know, across the board, people
Speaker 1: who are catalysts within their business, within UM, you know,
Speaker 1: within their education setting, within their communities that said, we
Speaker 1: want to do something to be helpful. But um, but
Speaker 1: but I'm not the candidates, So what can I do? Right?
Speaker 1: And so what we've done is build the platform to say, look,
Speaker 1: we're if we want to solve this in less than
Speaker 1: you know what the World Economic Forum is telling us,
Speaker 1: then we all have to step up and do something
Speaker 1: and those little some things will add up to something
Speaker 1: really big. That's Aaron Lows Catrero, she's the CEO of
Speaker 1: She should run. And you know the work that they've
Speaker 1: been doing. It's all about getting more women to step
Speaker 1: up to the plate to consider running for office. And
Speaker 1: that's what it is. Building the pipeline, and we sought
Speaker 1: payoff in the mid terms. We've see it playing out
Speaker 1: and they're working harder than ever for the upcoming election.
Speaker 1: Curly Holdings beating revenue estimates, reporting its second consecutive quarter profitability.
Speaker 1: It's indicating that the large U S pot companies man
Speaker 1: they are outperforming their Canadian counterparts. Let's talk about the business,
Speaker 1: the quarter, the outlook. Borce Jordan is with us. He
Speaker 1: is UM executive chairman at CUA Leth're based in Wakefield, Massachusetts.
Speaker 1: Nice to have you here with us. Good quarter. Yeah,
Speaker 1: it worked out for us, Hey to continue. Yeah, I
Speaker 1: think you know, we're seeing substantial growth in the US.
Speaker 1: Most of the companies are growing around twenty five to
Speaker 1: thirty five quarter on quarter. I don't see that abating
Speaker 1: any time soon, to be honest, because we're still very
Speaker 1: early days. And more importantly, I think you're starting to
Speaker 1: see inflection points in a lot of the big companies,
Speaker 1: at least a purely if we saw it in the
Speaker 1: last quarter, and we're starting to see increases in profitability
Speaker 1: quarter on quarter, what's it? What's what's making that possible that?
Speaker 1: You know, it's just the it's really about scale, size
Speaker 1: and investment. So you know, we spent the last five
Speaker 1: years investing heavily building it all out, taking a lot
Speaker 1: of losses on those investments, obviously in the early days.
Speaker 1: But now that those investments are at scale, we're starting
Speaker 1: to see the benefits of that investment period, and every
Speaker 1: quarter more and more goes to the bottom line. Uh,
Speaker 1: there's a lot of deal making, it feels like going
Speaker 1: on at your shop and elsewhere where. Are we in
Speaker 1: that process? Of acquisitions, expansion, etcetera. I think you're going
Speaker 1: to see a slowdown and major transactions because I think
Speaker 1: there's an issue with appital right now. As you know,
Speaker 1: this sector has been down and beating up pretty hard
Speaker 1: over the last six months, largely due to Canadian performance
Speaker 1: and due to the fact that the Canadian market historically
Speaker 1: has been the bell weather market for for cannabis stocks.
Speaker 1: We've sort of followed suit with them, even though our
Speaker 1: companies here have been performing much better. We hope that
Speaker 1: that trend will break in the U S companies will
Speaker 1: start to outperform, but for the time being we've been
Speaker 1: basically tied at the hip with the Canadian companies. It
Speaker 1: was interesting. It was a reminder to all of us
Speaker 1: at the year ahead. Joe Is already sat down with
Speaker 1: me of our cure LEAEF of course, and talked to
Speaker 1: us and saying reminded us that in every state, because
Speaker 1: of the way the law is right now, you've got
Speaker 1: to set up your integration from A to Z. Right
Speaker 1: you can't kind of do it across states because it's
Speaker 1: illegal to do that. And I do wonder that if
Speaker 1: we can figure out some kind of federal legislation. What
Speaker 1: would that do to the growth of your business? Well,
Speaker 1: I think first of all, we actually got a ruling
Speaker 1: from the Judiciary Committee in Congress, first time Congress has
Speaker 1: ever ruled on legalization of Cannada. So we have had
Speaker 1: a vote and it was able to get something. So
Speaker 1: so there's definitely something going on. I think that if
Speaker 1: they can take their mind off impeachment for five minutes,
Speaker 1: maybe we'd actually get some legislation in the country. But
Speaker 1: I listen, I think that the market would the industry
Speaker 1: would change for sure, So I think growth would go exponential.
Speaker 1: But I think that what mean does that mean? Because
Speaker 1: because today it's only thirty three don't forget it's only
Speaker 1: thirty three states in the country that are are are
Speaker 1: either medical or recreational. There's only eight and are recreational,
Speaker 1: and so that would mean the whole country it would
Speaker 1: be free to be able to trade by cell cannabis.
Speaker 1: So obviously that would be tremendous growth to the sector.
Speaker 1: But because everybody is siloed at the moment um, I
Speaker 1: think that it would depend on how the legislation comes through,
Speaker 1: whether the states continue to hold power over licensing, or
Speaker 1: whether that would go federal and I think that that
Speaker 1: that's the big unknown, and which is why I think
Speaker 1: if you ask anyone in the sector, they would prefer
Speaker 1: slow legalization, so in other words, not in one day,
Speaker 1: but over a period of time, so that the industry
Speaker 1: could adjust to what the new rules. A perfect examples
Speaker 1: would happen with hemp. Right, congres came out legalized hemp,
Speaker 1: and now you have a total catastrophe in the market
Speaker 1: that hemp rotting in fields in Kentucky because there's no
Speaker 1: rules for CBD. I mean, hemp in and of itself
Speaker 1: isn't a particularly interesting product unless you can use derive
Speaker 1: CBD from it. But they don't have any regulations on CBD,
Speaker 1: so it's all the CBD sales are down and you've
Speaker 1: got hemp brought in. Because if FDA hasn't come out
Speaker 1: with rules, and the FDA is giving it an indication,
Speaker 1: it could take two years to come out with rules.
Speaker 1: So that's what we're hoping doesn't happen in cannabis. You know,
Speaker 1: you worked on Wall Street back in the day where
Speaker 1: you worked in emerging markets, you worked for kid or
Speaker 1: you worked for Credit Swis. It feels like we've been
Speaker 1: in this couple of years with investors trying to figure
Speaker 1: this market out. Do they get it at this point
Speaker 1: and how or if they don't, what's it gonna take
Speaker 1: for people to fully understand the opportunity and maybe some
Speaker 1: of the complexity. So the difference I I like to
Speaker 1: use the example of emerging markets, and I was a
Speaker 1: very early investor in a lot of the emerging markets.
Speaker 1: And the difference between emerging markets and this cannabis market
Speaker 1: is that there you basically knew that as the country progressed,
Speaker 1: as the country wrote more legislation, as the regulators became
Speaker 1: more sophisticated, the next wave of capital would come. The
Speaker 1: issue here is that the industry is actually quite sophisticated.
Speaker 1: The regulators are there, but it's federally legal, so a
Speaker 1: lot of money can't invest. And that's why you're seeing
Speaker 1: US tied to the Canadian stocks because there's a lot
Speaker 1: more eyes on Canada, even though the industry is damaged
Speaker 1: and it's a lot smaller than the US companies. But
Speaker 1: everyone can invest in Canadian stocks, whereas not everyone can
Speaker 1: buy the U S stocks. So what's the reality in
Speaker 1: terms of a timetable that we do get a federal regulation,
Speaker 1: you know, on cannabis. We are pretty comfortable that the
Speaker 1: votes are everywhere for Safe Fact, which is the Banking Act.
Speaker 1: So if that happens, that will be the first step.
Speaker 1: The second step will be States Act, and if we
Speaker 1: get States Act, then the next step after that will
Speaker 1: be full legalization. Uh. And I think that we have
Speaker 1: a chance of getting Safe Fact December January. Really we
Speaker 1: have the votes. It's a question with do they have
Speaker 1: time with impeachment to actually focus on legislation. And that's
Speaker 1: Boris Jordan's he is the executive chairman of cure Leaf.
Speaker 1: Talking with him obviously about the numbers they reported earnings
Speaker 1: this week, but the broader opportunity in cannabis US versus Canada,
Speaker 1: even getting in a little bit to the vaping controversy
Speaker 1: that has really consumed the public health debate of Right
Speaker 1: and his expectations in terms of the regulatory environment which
Speaker 1: could really open up the industry. The UK Supreme Court
Speaker 1: weillll the hearing next week involving Barkley's Bank and the
Speaker 1: issue of responsibility involving a group of Barkley's employees. It's
Speaker 1: a very specific case, a disturbing one, and it's a
Speaker 1: case with an outcome that could have implications for the
Speaker 1: gig economy Jason. It also raises questions too about Wall
Speaker 1: Street responsibility and getting away with something. Once again, Max
Speaker 1: Abelson is here with us in New York. This is
Speaker 1: a story he's been working on for some time. Max,
Speaker 1: great to see you. Thanks for having all right, So
Speaker 1: tell us how this story came about. I mean, honestly,
Speaker 1: it was a long time ago. A couple of months
Speaker 1: have on buy since I was sitting on my Bloomberg
Speaker 1: terminal and I saw a story by Kay Wiggins, who's
Speaker 1: a was a great legal correspondent here. She since left
Speaker 1: Bloomberg News. UM. She writes in England about the lawn.
Speaker 1: She wrote maybe a four paragraph story that said that
Speaker 1: a group of claimants, which are what plaintiffs in England
Speaker 1: are called UM, said that when they were teenagers and
Speaker 1: they were applying for jobs at Barclay's sort of low
Speaker 1: level branch jobs in Newcastle, which is northeast city in
Speaker 1: in England in that area, they said that Barclays said, Okay,
Speaker 1: you have the job, but you have to go see
Speaker 1: a doctor. And you have to go see this doctor's
Speaker 1: name is Gordon Bates and you have to go to
Speaker 1: his house. And these people said that Dr Bates um
Speaker 1: sexually assaulted them, um about a hundred and twenty of them,
Speaker 1: and they wanted to hold Barclays responsible because Barclay's had
Speaker 1: sent them to him. And they won, and then Barclay's
Speaker 1: appealed and they won again, and bar Please appealed again
Speaker 1: to the Supreme Court, and this news item said the
Speaker 1: Supreme Court is going to be hearing this really interesting case.
Speaker 1: So I called k Up and I asked her, do
Speaker 1: you think that this might make for an interesting feature story?
Speaker 1: And she said I think it would, and we started
Speaker 1: working on it. And one of the first things we
Speaker 1: did is we got in touch with the court system
Speaker 1: in England and asked them for court documents because it's
Speaker 1: such a fascinating story, but it hasn't gotten a lot
Speaker 1: of coverage, and sometimes court cases don't in England, UM,
Speaker 1: where the coverage of sort of current legal questions are
Speaker 1: often quieter than than in America. We got permission from
Speaker 1: from the court, and in fact we got through the
Speaker 1: court really really fascinating documents that shine a light on
Speaker 1: how this happened. Fascinating, disturbing, fascinating and disturbing. I mean,
Speaker 1: this wasn't This was an upsetting story to work on this,
Speaker 1: there's no doubt about it. And I'm sure it's an
Speaker 1: upsetting story to h to read, and I might even
Speaker 1: be upsetting for viewers and listeners to to watch now
Speaker 1: and listen now. But UM, what was really special is
Speaker 1: that we got, um, a couple of people who had
Speaker 1: worked for Barclay's and were sent to Dr Bates to
Speaker 1: talk to us and to share their stories and what
Speaker 1: the story is about. On the one hand, it's about
Speaker 1: these visits, debates and what ended up happening to These
Speaker 1: are two main characters who we call James and Anne,
Speaker 1: not their real names. Aren't their real names. The court
Speaker 1: ordered us not to use their real names. Um. It's
Speaker 1: partially about that, which is upsetting, but it's also, um,
Speaker 1: I think, a complicated and rich story about UM, it's
Speaker 1: really fascinating question of when a company has a responsibility
Speaker 1: to their workers and in this case, Barclays says Dr
Speaker 1: Bates wells and our employee. He was just a you know,
Speaker 1: essentially a contractor. So we're sorry if anything bad happened,
Speaker 1: but not our fault. But they sent Barkley's sent possible
Speaker 1: employees to him, or once they were employe ways to
Speaker 1: him for many many years like this went on for
Speaker 1: a long time, Carol went on for a long time.
Speaker 1: So it started in the late sixties and it ended
Speaker 1: in the mid eighties, and a few years later Barclay's
Speaker 1: says they stopped sending people to the doctor. You know,
Speaker 1: why they would send them to the doctor in the
Speaker 1: first places. A question you might have. They say it was, uh,
Speaker 1: make sure they were fit to work and have fit
Speaker 1: for you know, insurance. Um. You know. Barclay's um says that, um,
Speaker 1: you know, we only found out about this in around
Speaker 1: two thousand thirteen when people started complaining. UM. But without
Speaker 1: giving way too much because I hope folks read the story.
Speaker 1: We have a court document that includes allegations, UM that
Speaker 1: you know, half a dozen more than half a dozen
Speaker 1: people and their parents called Barclay's um, called managers, called
Speaker 1: human relations people to say something really bad happened here,
Speaker 1: and it happened start as early as the late seventies
Speaker 1: and into the eighties, but Barclay's kept using bits and
Speaker 1: Bates has since passed away. You spoke with his family
Speaker 1: for this story. You reached out to his family. They
Speaker 1: ultimately didn't comment. Cordon Bates is dead. He died in
Speaker 1: two thousand nine. His son is Nigel Bates, who worked
Speaker 1: for Barclay's for thirty two years. According to something I
Speaker 1: just found in court documents. Actually, um, you know, I
Speaker 1: emailed with him a bunch. I you know, when you're
Speaker 1: telling a story like this, you know, of course deeply
Speaker 1: interested in the accounts of the people who saw Bates.
Speaker 1: But you know, I have to say, just as interested
Speaker 1: in the perspective of Barclay's. Um didn't who didn't comment?
Speaker 1: Essentially they said that they wouldn't answer questions while the
Speaker 1: case was ongoing. But I also would have loved to
Speaker 1: speak to the family, and if Gordon Bates were alive,
Speaker 1: it certainly would have wanted to speak with him. Well,
Speaker 1: and I do. Let's get into like this whole idea
Speaker 1: of you know, whether or not the firm takes for
Speaker 1: responsibility for folks who were their employees, meaning the people
Speaker 1: who worked for them, right, and what happened to them
Speaker 1: by by someone who was not technically a Barclays employee,
Speaker 1: And it gets to the heart of responsibility. That's actually right,
Speaker 1: I mean, in a way You know what we do
Speaker 1: here by chronicling capitalism is we follow the ways things
Speaker 1: change and the ways the relationship between companies and their
Speaker 1: customers but also companies and their employees changes. Right. And
Speaker 1: you know, when Bates was alive, he would not have
Speaker 1: recognized this whole new kind of economy. You know that
Speaker 1: you have uber Um, you have delivery in England. Um,
Speaker 1: it's a it's this gig economy where these giants, these
Speaker 1: multibillion dollar companies have saved a lot of money. They've
Speaker 1: saved both the cost of having to pay people on
Speaker 1: the one hand, and they and they save legal liability
Speaker 1: on the other by saying these people are not our employees.
Speaker 1: They are freelancers who are applied patform for freelancers. We're
Speaker 1: not We're not employers. And in this case, Um, the
Speaker 1: fight is similar. The fight is to hold Barclay's responsible
Speaker 1: or the legal word here is vicariously liable. And vicariously
Speaker 1: vicarious liability is sort of a boring sounding phrase, but
Speaker 1: it's so interesting because it's a way of saying that
Speaker 1: you are vicariously liable for something he did. You know,
Speaker 1: Barclays in a way is in some sense an innocent
Speaker 1: party here as as a judge might describe them, because
Speaker 1: Barclay's as an institution wasn't in that room. But the
Speaker 1: question is are they responsible for what happened in that
Speaker 1: house in Newcastle? And what precedent might that set for
Speaker 1: the economy that we now live in. So as I
Speaker 1: read this, and Carol and I have talked a lot
Speaker 1: about this story because I think we both were just
Speaker 1: knocked over by it. It's a powerful piece of journalism,
Speaker 1: to say the least, and and the fact that you
Speaker 1: Max worked on it really called to mind, I think
Speaker 1: for me, and I think for Carrol as well, sort
Speaker 1: of the whole body of your work, which in part
Speaker 1: is about Wall Streets culpability across so many things. You know,
Speaker 1: here we are eleven years on from the onset of
Speaker 1: the financial crisis, and at a time when politicians, candidates
Speaker 1: for high office are talking about these issues of will
Speaker 1: hold on a second? Who's ultimately responsible? And I think
Speaker 1: it's fair to say there's a pattern of behavior across
Speaker 1: Wall Street and financial firms where they kind of get
Speaker 1: off on a technicality. And as I read this, I
Speaker 1: saw through line through a lot of things that that
Speaker 1: you've written about this and I wonder how you feel
Speaker 1: about because people were hurt here, people were hurt, and
Speaker 1: so where do they get their justice? Well, you know,
Speaker 1: that's just about one of the most interesting questions about
Speaker 1: my work that I've ever been asked. I find it
Speaker 1: very moving that you connect this st other stories that
Speaker 1: I've worked on, and you know, it's something that I
Speaker 1: have to as a reporter, working with my editors like
Speaker 1: Robert friedman Um and with my colleagues like Kanski. She
Speaker 1: and I wrote this story about Cantrafraser and the woman
Speaker 1: who had a Bernie Sanders mug in an office in
Speaker 1: New Jersey, and she opened up the cupboard one day
Speaker 1: and she found feces in it. She says, in that case,
Speaker 1: Canter frich Gerald, when sued by this woman, basically said,
Speaker 1: you can't sue us. You signed an arbitration agreement, right,
Speaker 1: And in that case, the question of um the arbitration system,
Speaker 1: the question of vicarious liability kind of merge in my
Speaker 1: mind in exactly the way you're talking about you know how,
Speaker 1: If if one question readers and viewers and listeners might
Speaker 1: have is you know how and why I have these
Speaker 1: powerful institutions gotten away with whatever bad behavior has happened,
Speaker 1: certainly want to answer that. Um. You know, the kind
Speaker 1: of thing we talked about in the newsroom is it's
Speaker 1: almost as if each story, or each loss SUITUM, or
Speaker 1: each interview shines sort of a new beam of light
Speaker 1: on you know, something that sometimes we we've begun to
Speaker 1: talk about is like this, like this machine, you know,
Speaker 1: like a machine of silence, UM, that keeps things quiet.
Speaker 1: And you know, we have to be fair to these
Speaker 1: companies because of course, you know, in the canterfis Gerald case,
Speaker 1: they just simply deny it. They say it's not so
Speaker 1: much a matter of a machine of silence. They would say,
Speaker 1: it's just that nothing bad happened. And a lot of
Speaker 1: powerful people on Wall Street field that way. That's Max
Speaker 1: Abelson and this story, Man, it's a disturbing one. It's
Speaker 1: a case with an outcome that could have implications for
Speaker 1: the gig economy. But you know, Jason, you and I
Speaker 1: got into it with Max. It really digs into also
Speaker 1: Wall Street accountability. I have to say, this story and
Speaker 1: that conversation with Max has really stuck with me since
Speaker 1: we sat down with him in the studio. I know
Speaker 1: Max pretty well. I've worked with him on stories and
Speaker 1: his journalism. I feel like it is some of the
Speaker 1: most important and powerful that we do at Bloomberg. It
Speaker 1: goes to the core of who our audiences in many ways,
Speaker 1: and goes to the core of the story of Wall
Speaker 1: Street over the past two decades, and constantly uncovering difficult situations,
Speaker 1: particularly within the financial community, and really getting out there
Speaker 1: some things that people don't want to address. But he's
Speaker 1: really uncovering a lot of important information, some big news
Speaker 1: this week. In fact, we've been following this deal or
Speaker 1: potential deal for the last few weeks. LVMH and Tiffany
Speaker 1: they officially have entered talks after the French luxury brand
Speaker 1: up to its offer for the US jeweler and you,
Speaker 1: Carol Masser caught up with the CEO of Tiffany, that
Speaker 1: is Alessandro Boliolo here at the Year Ahead Luxury conference
Speaker 1: at Bloomberg headquarters. All right, so let's do the elephant
Speaker 1: in the living room. So everybody's been reporting about LVMH.
Speaker 1: It sounds like you guys are finally officially talking. Is
Speaker 1: that fair? We have six keys pies, and the first
Speaker 1: one is to amplify your brand message now by amplifying
Speaker 1: our what brand message. I was not meaning to the
Speaker 1: about M and A in a conference, so maybe I
Speaker 1: can expend on other point. I will, and I'm not
Speaker 1: going to push too much because I know there's a
Speaker 1: lot of stuff going on. But I do wonder about
Speaker 1: when we look at the luxury space, is there something
Speaker 1: to be had by being part of a bigger conglomerate
Speaker 1: like LVMH And I'm curious, you've been at the company
Speaker 1: now for two years, right, and you've been rebooting stories,
Speaker 1: reworking a strategy, introducing lots of lines. Is M and
Speaker 1: A is a deal kind of part of the plan. Well,
Speaker 1: I have to say that there are many luxury brands,
Speaker 1: but when you talk you take really top luxury brands,
Speaker 1: the big let me say mega brands. We talked about
Speaker 1: a handful of brands and among those who have actually
Speaker 1: some of them extremely successful that are part of big groups.
Speaker 1: Consider we don't considered Cartier. But you have other brands
Speaker 1: that are super brands, super powerful that are not part
Speaker 1: of groups. Consider Channel consider her mess. So honestly, I mean, seriously,
Speaker 1: I don't think that for this is a kind of
Speaker 1: level of brands. There is a magic formula. It could be,
Speaker 1: it's proven, it can be one way, can be the other.
Speaker 1: What is crucial is that when you lead a brand
Speaker 1: like ours that has one of the day two years
Speaker 1: of history, you at the end of the day have
Speaker 1: to concentrate on the legacy that you receive and the
Speaker 1: beautiful product and promises that you made to your customers.
Speaker 1: This is really the key of success. Then the financial arrangements,
Speaker 1: as I said, I mean, can be successful one or
Speaker 1: the other. What is important customers. They don't care about
Speaker 1: your shareholders. Customers care about your products, about your brand,
Speaker 1: about sustainability, about the beauty of your products. This is
Speaker 1: what really makes success. It's interesting that you say that
Speaker 1: to Alessandro. I think we're in a year where we
Speaker 1: are so much debating public private markets, right, and I
Speaker 1: think companies are evaluating the benefits and pro or the
Speaker 1: pros and cons of staying private versus not. And I
Speaker 1: do wonder, can I just indulge me for a second.
Speaker 1: A Bloomberg opinion piece today, and it said um one
Speaker 1: of our writers said a deal would benefit both sides.
Speaker 1: For the owner of Louis Vuitton, it would mean dominating
Speaker 1: the jewelry market. I mean it would automatically give them
Speaker 1: a huge presence, while Tiffany could avoid the tricky task
Speaker 1: of executing a turnaround in a US recession on its own.
Speaker 1: So I do wonder about being able to step away.
Speaker 1: We're part of the problem. We focus quarter to quarter
Speaker 1: to quarters. So when you're doing renovations on stores, when
Speaker 1: you're thinking about the future, you know, you get a
Speaker 1: report card every three months, and I think sometimes it
Speaker 1: makes it difficult for a publicly health company. Would there
Speaker 1: be some benefits from stepping away from that public spotlight?
Speaker 1: For sure? For any public company to be necessarily to
Speaker 1: be a reporting every quarter, there is of course. It's
Speaker 1: it's a check that you have to go through every quarter,
Speaker 1: and we take it very, very seriously because it's our
Speaker 1: shareholders and it's our obligation to not only report, but
Speaker 1: also deliver results to the benefit of our shareholders. Having
Speaker 1: said so, I think, as a leader of a brand
Speaker 1: with such a history which means value, to maximize that
Speaker 1: value I have and my team, we have to look
Speaker 1: at the quarter, but we have to look even more
Speaker 1: at the next three years, at the next five years.
Speaker 1: So this is if you want the real challenge in
Speaker 1: managing a brand with a legacy like like Tiffany, because
Speaker 1: you have, of course to maximize the profit for your shareholders.
Speaker 1: But this doesn't mean that is just the sum of
Speaker 1: ten good quarters. You have to think about the next
Speaker 1: ten years to our questions that I'm gonna move off
Speaker 1: off of Whenever it was on everybody's mind, Are you
Speaker 1: open to a deal? We could have a deal if
Speaker 1: all the Advent calendars went didn't already sell they are
Speaker 1: also doubt otherwise I would Advent calendar idea. I would
Speaker 1: offer you as a deal, beautiful Advent calendar to avoid
Speaker 1: this question. Unfortunately that also died. But if I opened December,
Speaker 1: would it say a deal? You know, they didn't share
Speaker 1: with me what there is in Sember twenty for but
Speaker 1: I will tell you on December twenty five. That's a
Speaker 1: Los angel Boleolo, the CEO of Tiffany and Company. And
Speaker 1: it was a good sport to talk about the potential
Speaker 1: for a deal. But we really dug deeper too into
Speaker 1: what's going on with the luxury space. They're making changes
Speaker 1: at their wars, not just in the US their flagship
Speaker 1: in New York, but also around the globe. They've been
Speaker 1: hit by some of the tensions because of the U. S.
Speaker 1: China trade war, so a lot to talk about. Well,
Speaker 1: and I feel like in a week where we got
Speaker 1: so many earnings from retailers and conflicting reports, really an
Speaker 1: interesting deep dive into the world of luxury. So I'm
Speaker 1: stealing the words of our economics that Peter Koy, because
Speaker 1: he reminds us and writes this week about three months
Speaker 1: ago the US economic gallic, Well it didn't look so
Speaker 1: good today. Definitely a different feel, and investors definitely reacting accordingly.
Speaker 1: They've sent to US equity averages to record highs. Yeah,
Speaker 1: so what do we make of all this? Peter Coy
Speaker 1: is with us himself here in our New York City studio.
Speaker 1: As you looked at this, you saw a very different
Speaker 1: picture we all did in August. It's really amazing what
Speaker 1: the heck happened? You know? This equity markets, I think
Speaker 1: tend to overshoot very often, so both on the downside
Speaker 1: and the upside. So it could be that things were
Speaker 1: not as bad as we thought in August, and it
Speaker 1: could be there not as good as we think now.
Speaker 1: So do they take take stocks with the grain of salt?
Speaker 1: That said, there are some changes since August. You know,
Speaker 1: I picked out one day in August when the the
Speaker 1: Dow Jones Industrials and SMP five hundred both felt like
Speaker 1: three in one session, and the thirty year Treasury bond
Speaker 1: hit a record low. It was like recession talk was
Speaker 1: in the air on our TV, you know, everywhere. Uh So,
Speaker 1: what's happened since then? Well, one thing is that the
Speaker 1: FED had already changed its stamps even at that time
Speaker 1: in August, they had they had already put through one
Speaker 1: great cut. They've done two since then, and that's huge.
Speaker 1: The most powerful central bank in the world, the European
Speaker 1: Central Bank, resumed buying securities to drive down the long
Speaker 1: end of their yield curve. We see the bank which
Speaker 1: hand maybe not as aggressive, but you know, keeping their
Speaker 1: policy rate in negative territory. So I would say monetary
Speaker 1: policy is the single biggest change since then. And then
Speaker 1: you can feel in a lot of things around that.
Speaker 1: But if it hadn't been for that, we'd probably still
Speaker 1: be in a world of hurt. Well, I think that's
Speaker 1: really key. Right, go back almost a year last December,
Speaker 1: right we were talking about the FED raising exactly several times.
Speaker 1: That was the December was the last injuries, but but
Speaker 1: Paul was still talking about how yeah, we have more
Speaker 1: and more more to come. In twenty nineteen and December
Speaker 1: Christmas Eve was a massacre in the stock really bad.
Speaker 1: If you go back and look at the history of
Speaker 1: the stock market, then it's like a deep v And
Speaker 1: then everybody took off for Christmas and came back with
Speaker 1: bright smiles and their faces. And the day after stocks
Speaker 1: shot up because I think something happening around then where
Speaker 1: the Fed kind of changed its mind a little bit,
Speaker 1: and and that got That was the beginning of the
Speaker 1: route we're in now. But we do we have you know,
Speaker 1: you talk about recession. We focused a lot on that
Speaker 1: two year and ten years spread in the treasury market,
Speaker 1: where we did see an inversion of the yel curve,
Speaker 1: and we've seen that in the past. So the inversion,
Speaker 1: of course means that the ten year yield falls below
Speaker 1: the two year yield, which historically as an indicator recession
Speaker 1: is coming because you know, usually long term racer. So um,
Speaker 1: it didn't last very long though, it was gone within
Speaker 1: two weeks, and we had a re steepening of the
Speaker 1: yield curve, which is a positive sign uh in ordinary
Speaker 1: circumstances for the economy. Um, it means that conditions are
Speaker 1: normal basically, and tell us about how geopolitics plays into this,
Speaker 1: because it's something we obviously all watch very closely. Uh.
Speaker 1: It's not a super optimistic world to your earlier point,
Speaker 1: and yet on a relative basis, the world feels a
Speaker 1: little bit better or better enough, better enough. That's high praise. Right.
Speaker 1: The trade war has not devolved into as bad as
Speaker 1: it could have been. Trump's pulled back or delayed on
Speaker 1: some of the tariffs on China, and we still don't
Speaker 1: know how that's going to turn out as we sit here,
Speaker 1: but it just is again, it's not as bad as
Speaker 1: it could have been. Meanwhile, Brexit, Um, I'm not saying
Speaker 1: Brexit is a major influence on the world stock markets,
Speaker 1: but it's one of those things that you worry about,
Speaker 1: and it appears as though they're pulling back from the brink.
Speaker 1: Is less likely to be a hard, messy, uncontrolled Brexit. Well,
Speaker 1: one of the things you point out, which I think
Speaker 1: is really important we talked about all the time on
Speaker 1: our daily show, of which you are a frequent guest,
Speaker 1: is this notion of business spending and and that is
Speaker 1: something that has been tailing off for the last year
Speaker 1: in eighteen months, and you quote somebody in your story
Speaker 1: essentially saying that maybe the big question and the answer
Speaker 1: to that question may determine whether we are able to
Speaker 1: sort of continue on this ride for longer. Right. That's
Speaker 1: that's the flying the ointment. The consumer is really strong
Speaker 1: in the U S. U S. Consumer had to pick
Speaker 1: one force in the entire global economy, it's the U
Speaker 1: S consumer out there still spending and but support in
Speaker 1: a in a sustainable way because real wages that is
Speaker 1: adjusted for inflations, have been rising and unemployment is super low,
Speaker 1: so people have spending power. They're not caring a lot
Speaker 1: of debt. The question is can this keep going for
Speaker 1: a long time if businesses are cutting back because businesses
Speaker 1: cut back on spending, maybe they've gotta cut back on hiring.
Speaker 1: Maybe some of that UH, the income of the consumer
Speaker 1: will eventually trail off. Now, h Eddie ar Danny Danny Research,
Speaker 1: one of the really smart guys on Wall Street, was
Speaker 1: telling me that he thinks that the downturn and capital
Speaker 1: spending is UH is misleading because it's a lot of
Speaker 1: us to do with the oil patch, you know, is weak.
Speaker 1: So if you take that out, things kind of look better,
Speaker 1: and tech healthcare are doing relatively finance to which are
Speaker 1: key areas. So um, but that it remains to be seen.
Speaker 1: That's still an open question because I do feel like
Speaker 1: we we did hear some caution on earnings calls from
Speaker 1: CEO is essentially saying, you know what, I'm pulling back
Speaker 1: a little bit, or I'm not spending on that new factory,
Speaker 1: or I'm not expanding maybe as aggressively as I could
Speaker 1: right And historically capital spending is much more volatile than
Speaker 1: the consumer spending. Spending is like, yeah, it tends to
Speaker 1: kind of rise gradually. Spend is all over the place,
Speaker 1: So that's what you want to pay attention to, even
Speaker 1: as though it's not as big resumer spending, it can
Speaker 1: kind of be the thing that wags the tail that
Speaker 1: wags at dolls. And I think the magazine has covered that.
Speaker 1: When the longer you get into an expansion like here
Speaker 1: we are the longest US economic expansion on record, longer
Speaker 1: that you're in it, that to keep it going, that's
Speaker 1: where capital expenditures usually typically coming towards the end and
Speaker 1: give it that last kind of umph. And I wonder
Speaker 1: if that's the case here. Well, this has been such
Speaker 1: a long cycle. It's in its eleventh year now, the
Speaker 1: capital spending has had its own mini cycles within that,
Speaker 1: We've had our ups and downs, and if we get
Speaker 1: another up here, it could really be good news for
Speaker 1: keeping this thing going well into its eleven twelveth year
Speaker 1: and be a great thing far as economic growth. That's
Speaker 1: our Economics editor Peter Coy talking about recession fears and
Speaker 1: what's fascinating. He's absolutely right. Go back to late August,
Speaker 1: just three months ago, and everybody was talking about recession.
Speaker 1: There were concerns about, you know, more rate increases, Where
Speaker 1: was the economy going, what's going on with the consumer?
Speaker 1: Here we are today, everybody's not so worried, Jason, right.
Speaker 1: It's a really interesting look into how far we've come
Speaker 1: in a very short amount of time and how much
Speaker 1: was weighing on us a few weeks ago. Are those
Speaker 1: fears completely evaporated? I guess the rest of the year
Speaker 1: will tell us. So. This week in Business Week talks
Speaker 1: Al Kelly, he's chairman and CEO of the world's largest
Speaker 1: payments network. We're talking about Visa three point three billion
Speaker 1: visa cards and use full disclosure. I've got one or two,
Speaker 1: um more than two countries. Al thank you for joining us.
Speaker 1: Delighted to be here, Carol, thank you. I have to say,
Speaker 1: what's great about talking to someone like you that's got
Speaker 1: such a global perspective is you do have an incredible
Speaker 1: vantage point about what's going on in the world, what's
Speaker 1: going on with consumers. So tell us what you're seeing. Actually,
Speaker 1: you know, despite all of this thought that there was
Speaker 1: a recession coming, we don't see it. You know. In fact,
Speaker 1: our fourth quarter numbers, which for US were September thirty numbers,
Speaker 1: were better than the third quarter. In the US it
Speaker 1: was up eight percent, the internationals up twelve percent excluding China, uh,
Speaker 1: Europe upcent when you exclude the UK, which has done
Speaker 1: a little bit of self inflicted wounds. To what's wrong
Speaker 1: with everyone that we're talking so much about recession. I
Speaker 1: think it must just be the cycle. You know, It's
Speaker 1: been a long time that we've had this up swing,
Speaker 1: and I think that people just look at the street
Speaker 1: and say it's it's got to go down at some point.
Speaker 1: But you know, the consumer has stayed extremely strong around
Speaker 1: the world. The only place we see any weaknesses in
Speaker 1: the UK, and as I said, that's kind of related
Speaker 1: to the whole Brexit situation. But other than that, the
Speaker 1: world looks pretty darn good. And so let's talk about
Speaker 1: consumers and go a level down because you have more
Speaker 1: insights probably than almost anyone into where they're spending, how
Speaker 1: they're spending, what they're buying, what are they buying, where,
Speaker 1: where is where's their money going? Is it experiential? Like
Speaker 1: everybody keeps saying, well, and in our world, there's a
Speaker 1: couple of things that are really driving the increases in
Speaker 1: the number of transactions we're seeing. One is obviously e commerce.
Speaker 1: You know, people are jumping on their phones and jumping
Speaker 1: on their iPads and jumping on their computers and and
Speaker 1: buying in big ways. We're seeing every month those numbers.
Speaker 1: The growth in eCOM is anywhere between two and three
Speaker 1: times the growth in the face to face world every
Speaker 1: every single month. Uh. We're also seeing people continuing to travel. Uh.
Speaker 1: There was a real downturn and travel in December and January.
Speaker 1: If you remember, that's during the height of the U S.
Speaker 1: China trade talks. It was during the height of the
Speaker 1: Brexit conversations. And then we had the forty day US
Speaker 1: government shutdown, and almost immediately consumers started to just stay
Speaker 1: at home and not travel. But we've seen that pick up,
Speaker 1: especially in the last six months, and that's always a
Speaker 1: good sign that when people are willing to leave their
Speaker 1: home country and go to another country, that's a that's
Speaker 1: a very very good thing. The other thing that we're
Speaker 1: seeing is an increased amount of smaller ticket items being
Speaker 1: used using digital payments, and a lot of that I
Speaker 1: think is driven by mass transit. We are really excited
Speaker 1: about mass transit. Just in the last uh ninety days,
Speaker 1: we've seen open systems in Edinboro and Salpollo. Uh. We
Speaker 1: started in July, I guess June here in the m
Speaker 1: t A in New York where we're only at eighteen
Speaker 1: stations from Grand Central Station to Atlantic Avenue in Brooklyn,
Speaker 1: but by the end of October of the mt A
Speaker 1: hopes to be in all four D and twenty four
Speaker 1: subway stops. Are people using it to and go? Absolutely,
Speaker 1: it's tap and go, It's so convenient, it's better experience
Speaker 1: for the merchant, it's better experience for the consumer. We
Speaker 1: we had a million transactions in the first seven weeks
Speaker 1: and we had no and that's at eighteen stations. Uh,
Speaker 1: It's truly amazing, absolutely continuing to grow. Tap to pay
Speaker 1: has grown hugely around the world, with the exception of
Speaker 1: the United States. Interesting enough, Well, I was going to
Speaker 1: ask you about that because we've done a lot of
Speaker 1: work in the magazine about the adoption of those sorts
Speaker 1: of systems, especially in Asia, especially mobile payments, all of
Speaker 1: these things. What is it about the United States, which
Speaker 1: is usually pretty innovative in many ways and early adopting
Speaker 1: in terms of technologies. Why is the US lagging? The
Speaker 1: US is lagging because it first it goes back. You
Speaker 1: have to go back about six or seven years at least,
Speaker 1: where the US was much slower to adapt chip in
Speaker 1: the car, and they it took so long to adopt
Speaker 1: chip at that point in time, people around the rest
Speaker 1: of the world, we're moving past actually just dipping the
Speaker 1: car to actually tapping. And the reality is that the
Speaker 1: other countries have moved hugely ahead of us. You have
Speaker 1: countries like Poland and Hungry that are over tap to
Speaker 1: pay in the face to face world. In the US,
Speaker 1: we have a very interesting situation. The vast majority of
Speaker 1: the businesses are set and plumbed to be able to
Speaker 1: facilitate tap to pay. It's replacing the hundreds and hundreds
Speaker 1: of millions of cards, and the banks rightly so want
Speaker 1: to do it on their normal cycle. So by the
Speaker 1: end of this year, we'll have over a hundred million
Speaker 1: cards in the United States that will be tapped to
Speaker 1: pay uh Enable and by the end of next year
Speaker 1: will be over three d million. So this will take
Speaker 1: a little time. Right now, tap to pay in the
Speaker 1: United States is about two percent penetration. I think we'll
Speaker 1: get to five or six next year, and then based
Speaker 1: on our experience around the world, it will really take off.
Speaker 1: That's Al Kelley, no relation, the CEO of Visa, guy
Speaker 1: who's been around this business for quite some time. So
Speaker 1: getting his PERSPECTI TV on the consumer. You think about
Speaker 1: the data that they have access to, the spending pattern
Speaker 1: where people are shopping, what they're buying, pretty remarkable, right.
Speaker 1: Their payments network is vast, So when you think about
Speaker 1: vantage points on what's going on in the global economy,
Speaker 1: what's going on with consumers, this is the guy you
Speaker 1: want to talk to. Every new watch is like a
Speaker 1: new piece of lot. The Italian wines as a whole
Speaker 1: really speak to that quintessential need is the most powerful
Speaker 1: car made in the US period. You get the beautiful interior,
Speaker 1: the iconic designs, very chic and posh. So let's check
Speaker 1: out this week's pursuits section. There's a lot of fun stuff.
Speaker 1: It all has to do with travel. The editor pursuits
Speaker 1: with us Chris rouser I love the opener. Let's talk
Speaker 1: about this piece. Brand Impressor again doing a story. He
Speaker 1: worked at L a X. How does he do this?
Speaker 1: How does he do this? Last time we've talked about him,
Speaker 1: he was working at Nobu, right yea So Brand Impressor's
Speaker 1: specialty for us as he gropes behind the scenes of
Speaker 1: works undercover at all these fabulous, fancy places. So he's
Speaker 1: done it at Nobu. He was a butler at the Plaza.
Speaker 1: He was a ski instructor at Aspen, And every time
Speaker 1: we're always surprised that people agree to let him do it.
Speaker 1: So l a X and like even security or like yeah,
Speaker 1: come on in, Yes, l a X was very excited
Speaker 1: about this. They offered him access to T s A,
Speaker 1: to the private suite the the v I P terminal.
Speaker 1: They offered him access to the mail center to the
Speaker 1: food service, to the private lounges like the business class lounges. Everything.
Speaker 1: He went behind the scenes for a week and learned
Speaker 1: about how it all works. All right, So let's start
Speaker 1: with T. S A. I want to end with the
Speaker 1: luxury if we can, but let's start with T. S A.
Speaker 1: Because I definitely learned some things, some slightly horrifying things
Speaker 1: about what people do. I mean, there's just scenes in
Speaker 1: here that are hard to get out of your head.
Speaker 1: What did he learn? So basically, people are constantly sort
Speaker 1: of accidentally trying to bring things through T. S A
Speaker 1: that they don't know our contrabands, So you know, people
Speaker 1: bring up for studo or something or a plant. It's
Speaker 1: very common. But all day, every day there's stuff that's
Speaker 1: really wild, um, including one time that one of the
Speaker 1: people that he worked with actually encountered a dead body
Speaker 1: trying to get through security. A family, as you know,
Speaker 1: a father and a family had died and they were
Speaker 1: trying to get him back to Mexico to his family
Speaker 1: for a burial, and instead of shipping a coffin, which
Speaker 1: is actually expensive, they bought a one way ticket. And
Speaker 1: you cannot take a dead body of basically full weekend
Speaker 1: at Bernie's and they you know, they got stopped, you know,
Speaker 1: Dad's sleeping, like exactly, that's what happened. And actually it's
Speaker 1: not it's not uncommon. I was going to go to
Speaker 1: the guy who like had all the birds on us. Yes, well,
Speaker 1: if you read the New York Post, this is really
Speaker 1: a thing. Actually, there are songbird competitions in New York,
Speaker 1: in the New York area actually, and so people have
Speaker 1: to smuggle in songbirds. So this guy had dozens of
Speaker 1: songbirds in toilet paper rolls, little rubber bands around their beaks,
Speaker 1: strapped to his body, flying with them. Yeah, and underneath
Speaker 1: like you just wore underneath, going through and thinking, hey,
Speaker 1: no problem. Yep. And one time they found us cobra
Speaker 1: in a Pringles cam. Can you imagine opening up now? Uh,
Speaker 1: let's talk about lost and found, because I have lost
Speaker 1: things at airports, uh and found them in many cases.
Speaker 1: That famously left one of my jackets at heath Row
Speaker 1: and they tracked it down. But what the size and
Speaker 1: scope of the l a X operation cost? At any
Speaker 1: given time, they have about six thousand laptops and you know,
Speaker 1: if you've ever left an laptop at T S A
Speaker 1: they're actually pretty good about tracking you down and getting
Speaker 1: it back to you because it happens all the time.
Speaker 1: But they have stuff where you're like, how did you
Speaker 1: even lose that? Like a surfboard or a set of
Speaker 1: bongo drums or a chainsaw, which you wouldn't have been
Speaker 1: able to get on a plane, but like, oh, you
Speaker 1: just left your chainsaw somewhere in the airport. It is nuts.
Speaker 1: I mean they talk about they estimate that seventy people
Speaker 1: a day lose a computer. That's nuts. It's like an
Speaker 1: Apple store in there. So one of the things he
Speaker 1: also addresses is, and this is a very bloomberg thing
Speaker 1: to do, essentially, why things cost so much at the airport,
Speaker 1: And it's because the infrastructure is really expensive. This is
Speaker 1: an expensive proposition to run where whether you're talking about
Speaker 1: security or retail, everything in just getting everybody in everything
Speaker 1: in Yeah, l a X. You you might have noticed
Speaker 1: that the food is expensive at L a X. There's
Speaker 1: no McDonald's. It's all these kind of like upscale places,
Speaker 1: and it's because there's no storage really there, so they
Speaker 1: have to bring in everything every day. They can't stalk. Also,
Speaker 1: staff has to be really highly paid because it takes
Speaker 1: an hour for staff to get in and out just
Speaker 1: to even get in and out of the airport. Um,
Speaker 1: so they're paying a lot. So there's a huge premium
Speaker 1: on prices there over like what you would pay on
Speaker 1: the street, whereas like the Portland Airport there's a zero
Speaker 1: percent markup. Actually, but they do talk about the outposts
Speaker 1: that are there in terms of restaurants and sow and stuff,
Speaker 1: where they do really well. Sometimes they're the most most
Speaker 1: profit making enterprises that these companies have. I have to admit,
Speaker 1: I go to an airport and I do I get
Speaker 1: kind of excited if there are a good restaurants that
Speaker 1: I know I'm going to be stuck there for a
Speaker 1: while because you kind of have to get there earlier.
Speaker 1: They're off in delays. Right, we've been in, you know,
Speaker 1: kind of get excited about the bad restaurants. It's the
Speaker 1: only time it's okay to eat it too, yea a
Speaker 1: sinnabon all of a sudden it can be dinner, all right.
Speaker 1: So speaking of paying up, of course it's l a
Speaker 1: So of course, uh, there is a premium, a super
Speaker 1: premium experience. The v I P s can sort of
Speaker 1: do it in a totally different way. Tell us about them.
Speaker 1: So l a X has a private terminal, which is
Speaker 1: that there's a year fee to join it. And really
Speaker 1: what you're getting there is they basically take you from
Speaker 1: your car to the plane and so you miss standard security.
Speaker 1: It's just like people are breezing through. But and to
Speaker 1: be clear, this isn't to fly private, this is to
Speaker 1: fly on a commercial. You're just basically going in a
Speaker 1: different door, having a totally different experience on the way in.
Speaker 1: And as you say, of eating all of the Sterman
Speaker 1: drang of just l Ax is famous for photographers. And
Speaker 1: you know, if you actually go and hang out there,
Speaker 1: you can have it with every visit up to two
Speaker 1: thousand dollars in minibar amenities for free. You can get
Speaker 1: free massages, a free hair appointment, all the stuff. And
Speaker 1: nobody does it because they're just going right through. They
Speaker 1: just want to get on the plane, not there for
Speaker 1: very long ultimately, right, they talked about Megan Markle's right
Speaker 1: en route to the wedding, right she she went there. Yeah,
Speaker 1: I mean imagine how people were trying to get a
Speaker 1: picture of her on that day. And that's just that
Speaker 1: this is the best way. But it's not just celebrities,
Speaker 1: it's also business folks, right that are using these Yeah,
Speaker 1: they're paying for the efficiency. Yeah, it's CEO s it's
Speaker 1: it's business leader all right. Talked to us to about
Speaker 1: the social tears in the lounges the airline, because I
Speaker 1: have to say I've been there, because I don't go
Speaker 1: to loungees a ton a lot of times. I'm just raising, seriously,
Speaker 1: I'm racing and like you do you do that, like
Speaker 1: you spin around you like restaurant anyway, So there are
Speaker 1: So when he worked on a lounge, she noticed that
Speaker 1: he was. The people who worked there told him they
Speaker 1: were like you can always tell the first time or
Speaker 1: when they walk into the lounge and they do the
Speaker 1: whole lap of the lounge to look at where to sit,
Speaker 1: where the food is, which I absolutely dent do every
Speaker 1: time I go into the love. Yeah. And they actually
Speaker 1: they stock food differently depending on where planes where flights
Speaker 1: are coming from. So if there's flights from Asia, they
Speaker 1: actually stock it with more instant ramen. Jason Kelly's in town.
Speaker 1: It's kobaby and they've got you know, they have celebrities
Speaker 1: that are used to dealing with of course, so you know,
Speaker 1: one Charlie's Angels Starr, they have to have red Bull
Speaker 1: available for her to just grab from the bar when
Speaker 1: she's there. See, I don't know, I gotta ask Brandon, um,
Speaker 1: you know. And and then's actually one celebrity actually gives
Speaker 1: Christmas presents to all of the staff that work in
Speaker 1: the lounge, which is he's a hero. Lovely. There are
Speaker 1: some good tips in here about sort of how to
Speaker 1: act like you've been there before. I love love love this. Um,
Speaker 1: I want to work it. Wouldn't you like to just
Speaker 1: do that? Would glass? Alright? So one of the places
Speaker 1: that I think people might be going apparently more and
Speaker 1: more is Gonacra amazing. I mean, the the layout of
Speaker 1: the city and the airport is nothing I knew about before.
Speaker 1: Tell us about it. So the reason we're writing about
Speaker 1: Akera now is because last year there was a renovation.
Speaker 1: There was a new terminal built there, which actually has
Speaker 1: cleaned up a lot of the issues that used to
Speaker 1: be a problem with flying in and out of Acara.
Speaker 1: There were a huge delays. You kind of had to
Speaker 1: sometimes pride people, um, and now that's much more efficient.
Speaker 1: And this is one of those stories where you know,
Speaker 1: we always write about fabulous places to go, but everyone
Speaker 1: on our team was like, we really want to go here.
Speaker 1: This sounds so fun. Uh. It's you know, they say
Speaker 1: it's the most friendly city in Africa, that people are
Speaker 1: super welcoming. Um. It's the capital of Ghana. And you
Speaker 1: know the area around the airport is actually the most
Speaker 1: fabulous place to live because the traffic is so bad
Speaker 1: when you're there, so people love to be where you
Speaker 1: can get in and out and that's kind of the
Speaker 1: cool scene. So unusual, right because anywhere else, like in
Speaker 1: our country, you don't want to be living near the airport.
Speaker 1: So it's interesting that it is that it makes sense there. Yeah,
Speaker 1: and you know there's a big artistic cultural culture there
Speaker 1: so uh, you know, our writer went and she visit
Speaker 1: did it all these different artists. She visited this guy
Speaker 1: who makes these fantastic coffins. His funerals are big parties
Speaker 1: in Okera and they you know, you can make a
Speaker 1: coffin that's a giant Nike sneaker, one that's a tree. Um.
Speaker 1: And she actually got caught up in a funeral party
Speaker 1: and she said, literally everything in Okera as a party.
Speaker 1: Hey listen. Also this week UM Pursuits hosted the Year
Speaker 1: Ahead in Luxury, Yes, and thank you for your help
Speaker 1: with that. UM. You know, we started doing the Year
Speaker 1: Ahead in Luxury last year, which is a spinoff of
Speaker 1: our year Head franchise UM. And it's a half a
Speaker 1: day conference and we just get leaders from all different
Speaker 1: aspects of stuff we cover, so from food and wine
Speaker 1: to travel to fashion, two cars. So we had Alessandro Bugliolo,
Speaker 1: the CEO of Tiffany, come in. We had Brunello Cucinelli,
Speaker 1: the designer come in and talk about this community that
Speaker 1: he's built around the village where they make all the clothes. UM.
Speaker 1: We had Klaud Selmer from Porsche com and talk about
Speaker 1: electrification UM. And then Steven Star the Restaurant Tour came
Speaker 1: which is very cool talking about you know, what we
Speaker 1: can expect in food next year. So it was really
Speaker 1: fun day UM and we're very excited to be able
Speaker 1: to do this every year. That's the editor of Pursuits,
Speaker 1: Chris Rouser, and I love talking with Chris about the
Speaker 1: section this week because it was all about flying UH.
Speaker 1: Some of the highlights and in particular I love getting
Speaker 1: the details from Chris on Brandon pressor's story, Brandon goes undercover,
Speaker 1: not really undercover. I mean, we all know the companies
Speaker 1: that he goes to knows he's doing it. He does
Speaker 1: it at restaurants, but he did at L a X.
Speaker 1: He worked there, and so he really got the inside
Speaker 1: perspective of what goes on at one of the world's
Speaker 1: busiest airports, well, from what you might find in the
Speaker 1: security line to what your bottle of water costs and
Speaker 1: why some really really great stuff. It's a fantastic issue
Speaker 1: of the magazine, a double issue. As you said at
Speaker 1: the top of the show, we're gonna have more coming
Speaker 1: up next week. We're going to talk about warby Parker.
Speaker 1: We're going to talk a little bit about Amtrak as well,
Speaker 1: and Google generals. Google getting together with really the U. S.
Speaker 1: Defense Department because they want some of those contracts. And
Speaker 1: that wraps up this week's edition of the Bloomberg Business
Speaker 1: Week Weekend Podcast. Thanks so much for joining us. I'm
Speaker 1: Jason Kelly and I'm Carol Masser. Be sure to tune
Speaker 1: into Bloomberg Business Week Radio Live Monday through Friday starting
Speaker 1: at two pm Wall Street Time, and if you can't
Speaker 1: catch us live, get us via podcast. Download that at
Speaker 1: bloomberg dot com or wherever you get your podcasts. And
Speaker 1: of course you can get this week's edition of the magazine.
Speaker 1: It's a double issue and it's on newsstands now. We'll
Speaker 1: be right back here next week at the same time.
Speaker 1: This is Bloomberg