1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:30,240 Speaker 1: Bloomberg dot Com and of course on the Bloomberg. This 5 00:00:30,320 --> 00:00:34,040 Speaker 1: is a joy anytime you see head of Global research, 6 00:00:34,800 --> 00:00:37,159 Speaker 1: that's uses someone who spends a lot of time on 7 00:00:37,240 --> 00:00:41,640 Speaker 1: airplanes just recruiting people and all that and talking to 8 00:00:41,680 --> 00:00:45,160 Speaker 1: their investor clients, you know, and they sometimes they sort 9 00:00:45,159 --> 00:00:48,320 Speaker 1: of know what they're talking about inequities, bonds, and then 10 00:00:48,400 --> 00:00:51,640 Speaker 1: sometimes they don't. JP Morgan takes a different tex their 11 00:00:51,760 --> 00:00:55,920 Speaker 1: Joyce Chang is head of Global Research, Chair Global at Research, 12 00:00:56,040 --> 00:01:00,520 Speaker 1: and she has prodigious abilities in the fixed in market 13 00:01:00,880 --> 00:01:04,959 Speaker 1: in including tenure at Columbia University. Joyce, wonderful to have 14 00:01:05,000 --> 00:01:07,160 Speaker 1: you in our London studios. Let me ask you an 15 00:01:07,160 --> 00:01:11,280 Speaker 1: open question. Get started. What is the Joyce Chang observation 16 00:01:11,840 --> 00:01:15,679 Speaker 1: on fixed income right now? Well, it's great to be here. Tom. Well, 17 00:01:15,720 --> 00:01:18,399 Speaker 1: first of all, we expect yields to go lower. We're 18 00:01:18,400 --> 00:01:21,520 Speaker 1: seeing synchronized central bank easing, so it's not just all 19 00:01:21,560 --> 00:01:24,240 Speaker 1: about the Fed in total for what we expect in 20 00:01:24,280 --> 00:01:26,640 Speaker 1: central bank easing. We think that the e c B, 21 00:01:27,200 --> 00:01:29,800 Speaker 1: the b o J is going to follow and thirteen 22 00:01:30,400 --> 00:01:34,399 Speaker 1: emerging market central bank, So yields are going lower here UM, 23 00:01:34,400 --> 00:01:36,320 Speaker 1: and so we've seen you know, the best returns and 24 00:01:36,400 --> 00:01:39,440 Speaker 1: fixed income markets in about the last five years. UM. 25 00:01:39,600 --> 00:01:41,120 Speaker 1: You know, there's a little bit further for this to 26 00:01:41,200 --> 00:01:46,040 Speaker 1: go as UM yields come down. So importantly, if prices 27 00:01:46,280 --> 00:01:50,720 Speaker 1: up institutional retail yield down, do I want to lock 28 00:01:50,840 --> 00:01:54,080 Speaker 1: in that appreciation or are you just comfortable now? You 29 00:01:54,120 --> 00:01:57,560 Speaker 1: know the Joyce does as she clips coupons down in 30 00:01:57,600 --> 00:02:00,440 Speaker 1: the new Park Avenue office. Jamie's got a asked down 31 00:02:00,480 --> 00:02:03,280 Speaker 1: in the basement for Joyce to clip coupons. Well, you've 32 00:02:03,320 --> 00:02:06,200 Speaker 1: got to hold onto these gains because what's ahead for 33 00:02:06,280 --> 00:02:08,760 Speaker 1: the rest of the year, weather it's in fixed incomeer equities, 34 00:02:08,960 --> 00:02:11,760 Speaker 1: is mostly about preserving the game that we are expecting 35 00:02:12,000 --> 00:02:14,680 Speaker 1: no more than like low single digit returns across any 36 00:02:14,720 --> 00:02:17,080 Speaker 1: asset class in the second half of the year. And 37 00:02:17,120 --> 00:02:19,560 Speaker 1: be careful in emerging markets because the f X side, 38 00:02:19,760 --> 00:02:22,079 Speaker 1: actually it could be more volatile. Here. We've got to 39 00:02:22,080 --> 00:02:24,680 Speaker 1: see what happens between the U S and China. So Joyce, 40 00:02:24,720 --> 00:02:28,360 Speaker 1: you mentioned kind of a global coordinated devishness by some 41 00:02:28,440 --> 00:02:30,680 Speaker 1: of these central banks around the world. Does that suggest 42 00:02:30,720 --> 00:02:32,799 Speaker 1: that we maybe take on a little bit more risk 43 00:02:32,840 --> 00:02:36,639 Speaker 1: we think about emerging market debt, maybe US high yield. Well, 44 00:02:36,680 --> 00:02:38,960 Speaker 1: if you want to achieve a five percent yield at 45 00:02:38,960 --> 00:02:40,960 Speaker 1: this point, you have to look at emerging markets fixed 46 00:02:41,000 --> 00:02:43,720 Speaker 1: income or at high yield bonds. Um We still think 47 00:02:43,720 --> 00:02:46,160 Speaker 1: that the dollar debt is a better place to be 48 00:02:46,440 --> 00:02:48,839 Speaker 1: right now. I think there is still f X risk 49 00:02:49,400 --> 00:02:52,000 Speaker 1: if you have more tensions developed between the U S 50 00:02:52,000 --> 00:02:54,320 Speaker 1: and China, and you have c n y depreciation that 51 00:02:54,320 --> 00:02:57,440 Speaker 1: could have an effect on other currencies. And the time, Joyce, 52 00:02:57,520 --> 00:02:59,400 Speaker 1: that we've got left with you, I want to talk 53 00:02:59,440 --> 00:03:03,240 Speaker 1: about your serious job. Have had a research for one 54 00:03:03,280 --> 00:03:06,600 Speaker 1: of the world's great great banks. Right now, there are 55 00:03:06,680 --> 00:03:10,680 Speaker 1: people all across the world getting ready for the December 56 00:03:10,720 --> 00:03:14,120 Speaker 1: exams of the c A program, and a lot of 57 00:03:14,160 --> 00:03:16,840 Speaker 1: those people level one, level two, level three, people that 58 00:03:16,880 --> 00:03:19,880 Speaker 1: want to get into the act are going Is there 59 00:03:19,880 --> 00:03:23,640 Speaker 1: going to be a research capability five or ten or 60 00:03:23,680 --> 00:03:29,320 Speaker 1: fifteen years from now? Restate the vailue of research to 61 00:03:29,480 --> 00:03:33,639 Speaker 1: a major bank moving forward? Well, the CFA exam is 62 00:03:33,639 --> 00:03:36,400 Speaker 1: always a big deal in research departments, in particular the 63 00:03:36,400 --> 00:03:39,800 Speaker 1: credit groups. The company analysts all as a group study 64 00:03:39,840 --> 00:03:41,480 Speaker 1: for this, and we're very proud of the c F 65 00:03:41,560 --> 00:03:44,040 Speaker 1: as we have at JP Morgan. But there's always going 66 00:03:44,040 --> 00:03:46,680 Speaker 1: to be a need for thought leadership. Now you're gonna 67 00:03:46,720 --> 00:03:50,560 Speaker 1: have to incorporate more AI, examine more alternative and high 68 00:03:50,640 --> 00:03:53,960 Speaker 1: frequency data. But the thought leadership is all about the judgment. 69 00:03:54,360 --> 00:03:56,680 Speaker 1: It's all about connecting the different parts of the story. 70 00:03:56,920 --> 00:03:59,680 Speaker 1: And now it's about putting the geopolitical overlay on this. 71 00:04:00,040 --> 00:04:03,840 Speaker 1: And it's yeah, and much higher frequency data points are 72 00:04:03,880 --> 00:04:06,400 Speaker 1: needed and much greater amounts of flash crash. I didn't 73 00:04:06,400 --> 00:04:08,760 Speaker 1: ask for me. I asked for afterthought. She's twelve years old, 74 00:04:08,800 --> 00:04:11,200 Speaker 1: and what you're telling telling me is she needs a 75 00:04:11,240 --> 00:04:16,720 Speaker 1: double major international relations and finance. Right. Well, the geopolitics 76 00:04:16,760 --> 00:04:18,279 Speaker 1: of me, a lot of my background had been in 77 00:04:18,320 --> 00:04:21,359 Speaker 1: policy and so for a long time the view on 78 00:04:21,440 --> 00:04:24,520 Speaker 1: geo politics is, well, it doesn't determine the trend, it's 79 00:04:24,600 --> 00:04:27,520 Speaker 1: just the volatility. Now we're getting some real questions about 80 00:04:27,600 --> 00:04:29,880 Speaker 1: that and we're really seeing that play through in the 81 00:04:29,880 --> 00:04:32,679 Speaker 1: way that we're looking at business confidence and that's playing 82 00:04:32,680 --> 00:04:35,520 Speaker 1: out in global cat BACS, George Chang, thank you so much, 83 00:04:35,560 --> 00:04:38,080 Speaker 1: Thank you so much, share of their global research. Really 84 00:04:38,120 --> 00:04:40,200 Speaker 1: can't say enough about it. She took this is a 85 00:04:40,320 --> 00:04:42,960 Speaker 1: huge I get goose bumps over it because the history 86 00:04:43,000 --> 00:04:47,520 Speaker 1: of Manhattan in Columbia College, Columbia University. She took the 87 00:04:47,600 --> 00:04:50,159 Speaker 1: John J. Award one year, which is like super duper 88 00:04:50,200 --> 00:05:08,920 Speaker 1: teacher award from the Bloomberg Interactive Worker Studios in New York. 89 00:05:09,240 --> 00:05:12,760 Speaker 1: This is our China discussion of the day. She's Catherine Man, 90 00:05:13,720 --> 00:05:17,560 Speaker 1: who has left a trail of debris in international economics 91 00:05:17,960 --> 00:05:21,400 Speaker 1: for twenty or thirty years. Is a sympathy project. City 92 00:05:21,400 --> 00:05:23,320 Speaker 1: Group picked her up a couple of years ago from 93 00:05:23,320 --> 00:05:25,839 Speaker 1: the O E. C D in Paris. How is it 94 00:05:25,920 --> 00:05:30,320 Speaker 1: working out at City What a change from from brandeis 95 00:05:30,320 --> 00:05:33,800 Speaker 1: and your your important academic work and then O E. 96 00:05:33,920 --> 00:05:37,000 Speaker 1: C D with Anna L. Guria and all of a 97 00:05:37,000 --> 00:05:40,000 Speaker 1: sudden you're working for the animals in New York. Well, 98 00:05:40,040 --> 00:05:42,599 Speaker 1: I think the you know, the issue that is most 99 00:05:42,640 --> 00:05:45,680 Speaker 1: important is uh the interaction of financial markets in the 100 00:05:45,720 --> 00:05:49,000 Speaker 1: real economy, and I think we're seeing that playing out 101 00:05:49,120 --> 00:05:51,800 Speaker 1: right now as financial markets are trying to bet on 102 00:05:52,279 --> 00:05:54,080 Speaker 1: what is going to happen at the G twenty and 103 00:05:54,120 --> 00:05:56,640 Speaker 1: it even could be relatively better for the real economy 104 00:05:56,720 --> 00:05:59,320 Speaker 1: or relatively worse for the Let's back up. Then, I 105 00:05:59,360 --> 00:06:02,400 Speaker 1: was at a meeting with you and Michael Rosenberg of 106 00:06:02,400 --> 00:06:06,720 Speaker 1: Bloomberg a million years ago. You were like eighteen or twenty, 107 00:06:06,800 --> 00:06:09,320 Speaker 1: just out of m I T where the two of 108 00:06:09,360 --> 00:06:15,480 Speaker 1: you codified this idea of family dysfunction between China and 109 00:06:15,520 --> 00:06:18,719 Speaker 1: the United States. Folks to be careful here. Doctor Man 110 00:06:18,800 --> 00:06:22,360 Speaker 1: is acclaimed for her research on the back and forth, 111 00:06:22,640 --> 00:06:25,560 Speaker 1: almost the game theory figuring, you know, Mary Tyler Moore, 112 00:06:25,720 --> 00:06:29,159 Speaker 1: ordinary people bringing over to China in the US. How's 113 00:06:29,200 --> 00:06:32,679 Speaker 1: that dysfunction going right now? Well, I think we're seeing 114 00:06:33,279 --> 00:06:38,320 Speaker 1: a very difficult period of time where, uh, we're trying 115 00:06:38,360 --> 00:06:42,360 Speaker 1: to decide whether we're going to more deeply engage with 116 00:06:42,440 --> 00:06:46,960 Speaker 1: the marriage with China that's been developing with supply chain 117 00:06:47,040 --> 00:06:50,520 Speaker 1: or whether we're going to divorce because um, you know 118 00:06:50,680 --> 00:06:53,800 Speaker 1: you can't break up these supply chains, uh, and and 119 00:06:53,920 --> 00:06:56,640 Speaker 1: expect to continue to trade with them in the same way. 120 00:06:56,920 --> 00:07:01,279 Speaker 1: But we have a new president with a more mercantile tact, 121 00:07:02,000 --> 00:07:06,240 Speaker 1: and yet to your research, we're addicted the price of 122 00:07:06,279 --> 00:07:08,960 Speaker 1: those goods aren't we. Well, so I think there are 123 00:07:08,960 --> 00:07:11,920 Speaker 1: a couple of things that we think about where I 124 00:07:11,920 --> 00:07:14,880 Speaker 1: mean addicted to the price of the goods um, but 125 00:07:15,040 --> 00:07:19,480 Speaker 1: they are. They are also addicted to our capital flows, 126 00:07:19,520 --> 00:07:22,440 Speaker 1: so it goes both ways. They've invested in in US 127 00:07:22,640 --> 00:07:26,600 Speaker 1: UH businesses and and US treasuries, and where we have 128 00:07:27,000 --> 00:07:29,880 Speaker 1: deeply engaged with them, both to sell products in their 129 00:07:29,960 --> 00:07:34,640 Speaker 1: location as well as to sell products in terms of exports. 130 00:07:34,680 --> 00:07:37,520 Speaker 1: So we're very deeply engaged with China. Our businesses are 131 00:07:37,600 --> 00:07:40,880 Speaker 1: very deeply engaged. I want to continue to be deeply engaged. 132 00:07:41,400 --> 00:07:44,160 Speaker 1: And yet that's not the direction that the current policy 133 00:07:44,520 --> 00:07:49,800 Speaker 1: is going. The current policy is designed to divorce, so um, 134 00:07:49,920 --> 00:07:52,720 Speaker 1: you kind of can't have both of those uh in 135 00:07:52,920 --> 00:07:56,160 Speaker 1: a marriage. So, doctor Man, given that we are mutually 136 00:07:56,160 --> 00:07:59,520 Speaker 1: dependent with with China, clearly we know that the President 137 00:07:59,600 --> 00:08:01,920 Speaker 1: later said is getting on Air Force one heading over 138 00:08:01,960 --> 00:08:05,760 Speaker 1: to Osaka. What do you think is a reasonable outcome 139 00:08:05,920 --> 00:08:09,840 Speaker 1: here from this weekend's talks. Well, our base case is 140 00:08:09,880 --> 00:08:14,880 Speaker 1: that they shake hands and agree to UH go back 141 00:08:14,920 --> 00:08:20,080 Speaker 1: to the negotiating table UH and avoid therefore putting the 142 00:08:21,320 --> 00:08:24,320 Speaker 1: on the last tranche of the three billion dollars worth 143 00:08:24,360 --> 00:08:28,480 Speaker 1: of trade from China, and so that's that's our base case, 144 00:08:28,720 --> 00:08:32,120 Speaker 1: and we think that that's a very important outcome. It's 145 00:08:32,120 --> 00:08:35,240 Speaker 1: it's kind of minimalist in that it doesn't take off 146 00:08:35,240 --> 00:08:38,720 Speaker 1: any of the tariffs, but uh, it is a better 147 00:08:38,760 --> 00:08:41,360 Speaker 1: outcome and that it doesn't add to the tariffs and 148 00:08:41,840 --> 00:08:45,960 Speaker 1: more deeply, uh caused discress and distress and financial markets 149 00:08:46,000 --> 00:08:48,600 Speaker 1: and in business investment in the real economy. So it's 150 00:08:48,720 --> 00:08:51,720 Speaker 1: it's it's a better outcome than the alternative, which is 151 00:08:52,120 --> 00:08:55,640 Speaker 1: which is no, which is storming away from the table. Um. 152 00:08:55,960 --> 00:08:58,680 Speaker 1: So uh. But on the other hand, you know, that's 153 00:08:58,760 --> 00:09:02,280 Speaker 1: that's pretty minimalist. Usn't reduced the uncertainty associated with maybe 154 00:09:02,280 --> 00:09:04,040 Speaker 1: there will be tariffs in the future. We're not quite 155 00:09:04,040 --> 00:09:08,679 Speaker 1: so sure. Um, And uh that type of uncertainty of 156 00:09:08,800 --> 00:09:11,880 Speaker 1: roads business confidence and uh, if they're going to have 157 00:09:12,040 --> 00:09:15,240 Speaker 1: a lower confidence in the rules of the game going forward, 158 00:09:15,320 --> 00:09:17,000 Speaker 1: and that's the challenge. You know, give me some rules. 159 00:09:17,000 --> 00:09:19,480 Speaker 1: I'll play by the game and then um, you know, 160 00:09:19,520 --> 00:09:23,079 Speaker 1: you end up with lower investment, you get lower trade, uh, 161 00:09:23,080 --> 00:09:26,720 Speaker 1: and you get employment consequences from that well going forward. 162 00:09:26,760 --> 00:09:29,480 Speaker 1: For the next step would be sitting down again and 163 00:09:29,520 --> 00:09:32,840 Speaker 1: trying to close this deal. Do you think that a 164 00:09:33,120 --> 00:09:37,920 Speaker 1: meaningful deal is is an option here? Can we get 165 00:09:37,960 --> 00:09:40,000 Speaker 1: a meaningful deal with trying to can trying to get 166 00:09:40,000 --> 00:09:43,720 Speaker 1: a meaningful deal with the United States? So, uh, some 167 00:09:43,800 --> 00:09:47,800 Speaker 1: of the issues that that started this round of of tariff, well, 168 00:09:47,840 --> 00:09:50,400 Speaker 1: this whole round of trade negotiations and so forth, are 169 00:09:50,520 --> 00:09:54,200 Speaker 1: very serious issues having to do with intellectual property, UM, force, 170 00:09:54,240 --> 00:09:58,200 Speaker 1: technology transfer, joint ownership, and cybersecurity. Those are the elements 171 00:09:58,280 --> 00:10:00,360 Speaker 1: that were put forward at the beginning of the of 172 00:10:00,440 --> 00:10:04,840 Speaker 1: the whole relationship breakdown with China. Right now, um, the 173 00:10:05,000 --> 00:10:09,160 Speaker 1: strategy is not focused so much on those issues. The 174 00:10:09,200 --> 00:10:11,880 Speaker 1: tools that have been used to kind of pry uh 175 00:10:11,880 --> 00:10:14,680 Speaker 1: those negotiations open have been tariffs that has led to 176 00:10:15,080 --> 00:10:18,520 Speaker 1: much reduced trade with China. So I think there is 177 00:10:18,559 --> 00:10:22,000 Speaker 1: this there is this sort of um disconnect between the 178 00:10:22,080 --> 00:10:26,360 Speaker 1: objectives is to you know, enhance thetellectual property, allow for 179 00:10:26,679 --> 00:10:31,679 Speaker 1: broader joint ownership, allow for protected technology transfer that would 180 00:10:31,679 --> 00:10:37,120 Speaker 1: more deeply engage the US with China. The tariffs are 181 00:10:37,240 --> 00:10:40,360 Speaker 1: to divorce our relationship with China, to break up those 182 00:10:40,360 --> 00:10:43,160 Speaker 1: supply chains, make them go to some other country. So 183 00:10:43,320 --> 00:10:48,160 Speaker 1: there's a real disconnect between these two different objectives. Uh, 184 00:10:48,160 --> 00:10:51,320 Speaker 1: in the current policy set we are fifteen years on 185 00:10:51,720 --> 00:10:55,760 Speaker 1: since your seminal work on codependency and in all of 186 00:10:55,800 --> 00:10:58,880 Speaker 1: these dysfunctions. We had on Pierre Navarro the other day, 187 00:10:59,440 --> 00:11:04,240 Speaker 1: who espoused his view of economics, which to me is 188 00:11:04,280 --> 00:11:09,560 Speaker 1: exceptionally static, almost in a true classical economic standpoint you 189 00:11:09,640 --> 00:11:12,040 Speaker 1: work out of Harvard and M I. T. And a 190 00:11:12,200 --> 00:11:18,000 Speaker 1: hugely dynamic regime. Is the dynamics now radically different from 191 00:11:18,000 --> 00:11:20,960 Speaker 1: what you looked at fifteen years ago. Have we moved 192 00:11:21,000 --> 00:11:26,800 Speaker 1: on to even more interdependencies and correlations where anybody's policy 193 00:11:26,840 --> 00:11:30,920 Speaker 1: is really going to have little effect. Well, actually, what's 194 00:11:31,080 --> 00:11:35,679 Speaker 1: most disturbing to me is is that this, uh, this 195 00:11:35,679 --> 00:11:38,040 Speaker 1: this trade situation that we have right now with with 196 00:11:38,120 --> 00:11:43,640 Speaker 1: China is emblematic of ten years of stagnation in terms 197 00:11:43,640 --> 00:11:47,080 Speaker 1: of global integration. Uh. We had you know, earlier in 198 00:11:47,120 --> 00:11:50,520 Speaker 1: my career, we talked about deeping deep, more deeply integrated 199 00:11:50,720 --> 00:11:55,000 Speaker 1: global supply chains, a greater variety of products crossing borders, 200 00:11:55,080 --> 00:11:59,160 Speaker 1: lower prices available to both businesses and consumers. And you know, 201 00:11:59,240 --> 00:12:02,280 Speaker 1: all that stop about ten years ago, and so and 202 00:12:02,320 --> 00:12:04,360 Speaker 1: so where we are is kind of like trying to 203 00:12:04,440 --> 00:12:08,160 Speaker 1: fight the last war because we're to go. I mean, 204 00:12:08,160 --> 00:12:10,439 Speaker 1: the way we got to get was a tragedy of 205 00:12:10,520 --> 00:12:13,719 Speaker 1: two world wars? Have we have we just lost our 206 00:12:13,720 --> 00:12:17,920 Speaker 1: collective memory of the Atlantic Charter in the early GET initiatives. 207 00:12:18,280 --> 00:12:20,920 Speaker 1: Well we can look at you know, there's slow down 208 00:12:21,040 --> 00:12:25,000 Speaker 1: and you know, no multilateral trade agreement has has succeeded, 209 00:12:25,240 --> 00:12:29,000 Speaker 1: and there aren't even any successful or very few successful 210 00:12:29,440 --> 00:12:32,000 Speaker 1: pluralateral agreements. This is part of the sort of the 211 00:12:32,280 --> 00:12:34,720 Speaker 1: need to revitalize the w t O. What should it 212 00:12:34,760 --> 00:12:37,280 Speaker 1: be doing in today's world, which is which is very 213 00:12:37,280 --> 00:12:42,000 Speaker 1: complex with lots of competing interests. But but the bottom 214 00:12:42,000 --> 00:12:45,240 Speaker 1: line is we have ten years of very sluggish growth, 215 00:12:45,320 --> 00:12:50,920 Speaker 1: little investment um, productivity growth being slow, rising inequality. And 216 00:12:50,960 --> 00:12:53,360 Speaker 1: that also is a period of time when global trade 217 00:12:53,360 --> 00:12:56,640 Speaker 1: has stagnated. So you know, most people think about there 218 00:12:56,800 --> 00:13:00,560 Speaker 1: was too much globalization. I think we've had two So 219 00:13:00,679 --> 00:13:02,800 Speaker 1: Dr Man, you've met mentioning before we went on the air. 220 00:13:02,800 --> 00:13:05,000 Speaker 1: Have you've been traveling around the world meeting with the 221 00:13:05,600 --> 00:13:10,280 Speaker 1: largest institutional investors. What's number one on their issues that 222 00:13:10,360 --> 00:13:15,280 Speaker 1: they want to talk to you about. Uh, They're really 223 00:13:15,800 --> 00:13:18,960 Speaker 1: concerned about where the FED is going to go. That's 224 00:13:19,040 --> 00:13:22,120 Speaker 1: that's their their key issue. Um, some of them have 225 00:13:22,160 --> 00:13:25,079 Speaker 1: a longer term agenda and so that you know that's uh, 226 00:13:25,120 --> 00:13:28,439 Speaker 1: they're looking a bad productivity. Uh, they're looking at inequality, 227 00:13:28,880 --> 00:13:32,920 Speaker 1: specifically intergenerational inequality and what the implication of that might 228 00:13:32,960 --> 00:13:37,960 Speaker 1: be for wealth management issues and and that sort of thing. 229 00:13:38,280 --> 00:13:40,319 Speaker 1: So some of them have a very long term perspective 230 00:13:40,320 --> 00:13:43,920 Speaker 1: and are concerned about those issues. Other ones have more 231 00:13:44,000 --> 00:13:47,960 Speaker 1: short term, immediate perspective. On the on the FED actions 232 00:13:48,160 --> 00:13:50,960 Speaker 1: cancer man, thank you so much with sitting group. Always 233 00:13:51,080 --> 00:13:53,640 Speaker 1: just really honored to have you here in a time 234 00:13:53,679 --> 00:14:12,280 Speaker 1: of extraordinary international politics and international economics that darkening the door. 235 00:14:12,360 --> 00:14:18,040 Speaker 1: Timothy O'Brien Bloomberg Opinion, truly expert on the finances and 236 00:14:18,120 --> 00:14:20,680 Speaker 1: much of the past of the President of the United States. 237 00:14:20,680 --> 00:14:23,240 Speaker 1: Tim O'Brien the debates tonight, New York Times had that 238 00:14:23,320 --> 00:14:26,960 Speaker 1: great spread of the buttons. My first buttons were Nixon, Cabot, 239 00:14:27,040 --> 00:14:31,360 Speaker 1: Lodge sixty and Kennedy for presidents sixty. What was the 240 00:14:31,400 --> 00:14:34,120 Speaker 1: first button you had as a kid? Wow, the first 241 00:14:34,120 --> 00:14:37,360 Speaker 1: button they had as a kid was Carter Reagan Carter right, God, 242 00:14:37,400 --> 00:14:39,840 Speaker 1: he's young. Yeah, that's where I was. That's you too, 243 00:14:40,960 --> 00:14:43,080 Speaker 1: I guess I came from a Nixon household. My father 244 00:14:43,160 --> 00:14:46,240 Speaker 1: just went down the line of the Republicans. Does anybody 245 00:14:46,280 --> 00:14:49,080 Speaker 1: do that anymore? Do people vote straight line anymore? That's 246 00:14:49,120 --> 00:14:51,440 Speaker 1: a great question. I would I would think yes, I 247 00:14:51,480 --> 00:14:53,640 Speaker 1: would think the majority of voters do. But that's just 248 00:14:53,800 --> 00:14:56,600 Speaker 1: based on instinct. Yeah, Chim O'Brian with Jim, I want 249 00:14:56,600 --> 00:14:59,040 Speaker 1: to go to the debatement going tangentially with a House 250 00:14:59,080 --> 00:15:05,320 Speaker 1: Democratic vote. Uh, Promelia jail Uh of Seattle seventh District. 251 00:15:05,720 --> 00:15:09,400 Speaker 1: They voted for President Obama. They boosted it up to 252 00:15:09,520 --> 00:15:13,360 Speaker 1: eight percent for Hillary Clinton. Are the liberals driving the 253 00:15:13,400 --> 00:15:17,000 Speaker 1: Democratic bus in the House? Well? I mean, I think 254 00:15:17,040 --> 00:15:19,680 Speaker 1: the liberals and particularly women, are the people that put 255 00:15:19,760 --> 00:15:22,240 Speaker 1: the House back into Democratic hands at the mid terms. 256 00:15:22,760 --> 00:15:25,280 Speaker 1: But I think that was a very specific election. I 257 00:15:25,320 --> 00:15:28,760 Speaker 1: think I think, Um, I think that what you're gonna 258 00:15:28,800 --> 00:15:30,920 Speaker 1: have to see now is whether or not the issues 259 00:15:31,520 --> 00:15:35,440 Speaker 1: in in at the mid terms translated into what we're 260 00:15:35,480 --> 00:15:37,520 Speaker 1: gonna see in the general where we see moderation in 261 00:15:37,560 --> 00:15:39,640 Speaker 1: this debate tonight, or is going to be a progressive 262 00:15:39,680 --> 00:15:42,440 Speaker 1: free for all? Um. I think you'll see a lot 263 00:15:42,480 --> 00:15:44,920 Speaker 1: of both. I mean, you know, Joe Biden is obviously 264 00:15:44,960 --> 00:15:49,640 Speaker 1: the moderate, traditional candidate tomorrow tonight, you're gonna have um 265 00:15:49,680 --> 00:15:51,640 Speaker 1: I think a lot of people who need to differentiate 266 00:15:51,680 --> 00:15:55,160 Speaker 1: themselves from one another, and they're gonna differentiate themselves from 267 00:15:55,200 --> 00:15:59,040 Speaker 1: issues that um uh are going to be flashpoints for 268 00:15:59,280 --> 00:16:02,640 Speaker 1: the progressive of portion I think of the Democratic voters. So, 269 00:16:02,760 --> 00:16:05,160 Speaker 1: just following up on Tom's comment, the question I have 270 00:16:05,240 --> 00:16:06,680 Speaker 1: is we kind of get into these debates and we 271 00:16:06,880 --> 00:16:11,520 Speaker 1: begin this long slog of Democratic debates Kenneth Centrist, what 272 00:16:11,640 --> 00:16:13,520 Speaker 1: do you think the Democrats will put a central stop 273 00:16:13,560 --> 00:16:16,200 Speaker 1: at the end of the day. I think there's a 274 00:16:16,200 --> 00:16:18,640 Speaker 1: big push for that to happen. I think people I 275 00:16:18,680 --> 00:16:21,480 Speaker 1: think that they're there are pragmatists within the party who 276 00:16:21,520 --> 00:16:24,440 Speaker 1: are saying that the party needs a ticket that can 277 00:16:24,480 --> 00:16:27,440 Speaker 1: beat Trump, and that the candidates that Trump is most 278 00:16:27,480 --> 00:16:31,200 Speaker 1: worried about our our white males currently. I think there's 279 00:16:31,280 --> 00:16:34,120 Speaker 1: also a good argument to be made that the Democrats 280 00:16:34,400 --> 00:16:37,200 Speaker 1: should show that a diverse ticket also can win in 281 00:16:37,200 --> 00:16:39,200 Speaker 1: the United States. And so I think that those are 282 00:16:39,200 --> 00:16:42,240 Speaker 1: the conflicting things here. But I don't think it's inevitable, 283 00:16:42,720 --> 00:16:46,280 Speaker 1: um that either a a more left leading candidate or 284 00:16:46,280 --> 00:16:48,600 Speaker 1: a moderate candidate is going to come on top come 285 00:16:48,640 --> 00:16:51,680 Speaker 1: out on top. Here, you've seen Elizabeth Warren, who's done 286 00:16:51,760 --> 00:16:55,160 Speaker 1: great homework and really nailed down positions in a variety 287 00:16:55,200 --> 00:16:59,000 Speaker 1: of issues, surge because of that. You see Biden surging 288 00:16:59,000 --> 00:17:01,320 Speaker 1: because I think he's reass during, you know, to post 289 00:17:01,360 --> 00:17:04,560 Speaker 1: industrial blue collar workers as someone they can relate to. 290 00:17:04,600 --> 00:17:06,399 Speaker 1: And I think both of those tensions are are in 291 00:17:06,440 --> 00:17:09,720 Speaker 1: competition with one another. You know, the other big issue, 292 00:17:09,720 --> 00:17:14,600 Speaker 1: which arguably President Trump raised back in twenty six is immigration. 293 00:17:15,160 --> 00:17:17,359 Speaker 1: And I'll tell you the images we're starting to see. 294 00:17:17,840 --> 00:17:22,040 Speaker 1: I'm just wondering how how front and center immigration will 295 00:17:22,040 --> 00:17:24,280 Speaker 1: be not only in these debates over the next couple 296 00:17:24,320 --> 00:17:26,960 Speaker 1: of nights, but just in the election. Well. I think, 297 00:17:27,480 --> 00:17:31,280 Speaker 1: like everything around public policy, this depends on on how 298 00:17:31,720 --> 00:17:35,879 Speaker 1: uh principled and well spoken Democrats and Republicans want to 299 00:17:35,880 --> 00:17:39,600 Speaker 1: be about something that's no longer about just immigration policy. 300 00:17:39,640 --> 00:17:42,600 Speaker 1: This is a humanitarian crisis. You have people dying at 301 00:17:42,600 --> 00:17:46,600 Speaker 1: the border, you have detention centers that are brimming with children, 302 00:17:46,680 --> 00:17:51,399 Speaker 1: taking care of children in squalid, inhumane conditions, and it 303 00:17:51,560 --> 00:17:55,080 Speaker 1: it screamed out for a policy solution that, in an 304 00:17:55,119 --> 00:17:58,159 Speaker 1: ideal world, would transcend politics. I want to go to 305 00:17:58,200 --> 00:18:00,680 Speaker 1: your real host. It's gonna be hard to leave this, Paul. 306 00:18:00,760 --> 00:18:02,960 Speaker 1: But I was had a beverage in my hand the 307 00:18:03,000 --> 00:18:07,480 Speaker 1: other day and I was quoting Tim O'Brien, shocked at 308 00:18:07,520 --> 00:18:11,480 Speaker 1: that would happen. You are expert on how the president 309 00:18:11,760 --> 00:18:17,080 Speaker 1: rationalizes until he doesn't. How do you interpret the change, 310 00:18:17,119 --> 00:18:20,800 Speaker 1: the shift in Iran, the change, the shift in Mexico, 311 00:18:21,240 --> 00:18:23,840 Speaker 1: and on and on and on. You've witnessed that, am 312 00:18:23,840 --> 00:18:26,560 Speaker 1: I right? You've witnessed that behavior for decades. I mean, 313 00:18:26,560 --> 00:18:29,399 Speaker 1: this has been pretty typical of Donald Trump. He I 314 00:18:29,440 --> 00:18:31,760 Speaker 1: think the important thing to think about the president is 315 00:18:31,760 --> 00:18:35,639 Speaker 1: that he does not think strategically. He thinks cinematically, and 316 00:18:35,680 --> 00:18:39,000 Speaker 1: he's usually thinking about narratives, and he's usually thinking about 317 00:18:39,080 --> 00:18:41,760 Speaker 1: his own role on the stage. So his first instinct 318 00:18:42,240 --> 00:18:45,400 Speaker 1: is always going to be how does this make me appear? 319 00:18:45,680 --> 00:18:48,280 Speaker 1: And what he wants to always appear as is a 320 00:18:48,280 --> 00:18:52,520 Speaker 1: man of action who finds decisive solutions in a fast 321 00:18:52,880 --> 00:18:56,399 Speaker 1: and sometimes blunt, forced way, even if that doesn't achieve 322 00:18:56,440 --> 00:18:58,959 Speaker 1: his goals. So you saw and and and it creates 323 00:18:58,960 --> 00:19:03,040 Speaker 1: the self contradiction he wants to be, you know, carry 324 00:19:03,040 --> 00:19:05,840 Speaker 1: a big stick and be very mucho on policy in 325 00:19:05,880 --> 00:19:07,960 Speaker 1: the Middle East, if anyone gets in our way, we 326 00:19:08,040 --> 00:19:11,080 Speaker 1: will obliterate them. But the reality is he doesn't want 327 00:19:11,480 --> 00:19:14,240 Speaker 1: to engage in a in a deep seated military way. 328 00:19:14,440 --> 00:19:18,680 Speaker 1: Would you suggest he's an archise elationist. Uh, he he can't. 329 00:19:18,880 --> 00:19:21,080 Speaker 1: He can't be an archive as somebody who's on Twitter 330 00:19:22,000 --> 00:19:25,480 Speaker 1: is not an isolationist. What he is is I think 331 00:19:25,520 --> 00:19:29,760 Speaker 1: he's an unsophisticated person who hasn't thought through the implications 332 00:19:29,760 --> 00:19:32,640 Speaker 1: of his own beliefs. And what's more important to him 333 00:19:32,760 --> 00:19:36,600 Speaker 1: is atmospherics and and I think it's and self promotion 334 00:19:36,720 --> 00:19:39,320 Speaker 1: than policy goals. Jim O'Brien, thank you so much writing 335 00:19:39,359 --> 00:19:42,800 Speaker 1: for Bloomberg Opinion. Very you know, whatever your politics, very 336 00:19:42,920 --> 00:19:46,840 Speaker 1: very important. On the finances of the private citizen Trump 337 00:19:58,280 --> 00:20:01,520 Speaker 1: right now, we monitor Stephen Stanley. He has been fabulous 338 00:20:02,000 --> 00:20:05,320 Speaker 1: engaging the gross domestic product of this to me, Uh, 339 00:20:05,880 --> 00:20:09,359 Speaker 1: of of this nation? Stephen Stanley Amerson pierpoint, how gross 340 00:20:09,400 --> 00:20:12,920 Speaker 1: is our gross domestic product right now? Are we above two? 341 00:20:13,520 --> 00:20:16,320 Speaker 1: Good morning, Tom, Yes, I think we are. I mean, 342 00:20:16,440 --> 00:20:18,800 Speaker 1: you know, obviously the first quarter number was very good, 343 00:20:18,840 --> 00:20:21,720 Speaker 1: although it was the mix wasn't great. I think what 344 00:20:21,840 --> 00:20:23,960 Speaker 1: you've seen in the first half of the year is 345 00:20:24,000 --> 00:20:25,840 Speaker 1: what we've seen in five of the last six years, 346 00:20:25,840 --> 00:20:29,280 Speaker 1: which is you get a week underlying first quarter consumption 347 00:20:29,320 --> 00:20:32,520 Speaker 1: as always, for whatever reason, soft in Q one, and 348 00:20:32,520 --> 00:20:34,440 Speaker 1: then it roars back in Q two, and it seems 349 00:20:34,480 --> 00:20:37,919 Speaker 1: like we're seeing that pattern all over again. So Stephen, 350 00:20:38,040 --> 00:20:41,520 Speaker 1: Tom and I are hearing more and more economist strategist 351 00:20:41,600 --> 00:20:46,240 Speaker 1: fund managers talking about the recession. Perhaps mid that something 352 00:20:46,280 --> 00:20:50,119 Speaker 1: you subscribe to. No, I think the economy has very 353 00:20:50,119 --> 00:20:54,760 Speaker 1: good underlying momentum um. Obviously, the trade situation has been 354 00:20:54,800 --> 00:20:56,640 Speaker 1: a bit of a drag in the short run, and 355 00:20:56,640 --> 00:21:00,560 Speaker 1: and certainly you could envision a scenario where, um, you know, 356 00:21:00,600 --> 00:21:02,679 Speaker 1: the trade talks totally break off, we get into a 357 00:21:02,680 --> 00:21:05,520 Speaker 1: massive tariff war, and and then that that kind of 358 00:21:05,600 --> 00:21:08,600 Speaker 1: changes things. But anything short of that, I think the 359 00:21:08,640 --> 00:21:11,720 Speaker 1: economy has a good staying power. Steven Sally and the 360 00:21:11,760 --> 00:21:15,840 Speaker 1: President putting out extraordinary headlines in free flow. Here we 361 00:21:16,000 --> 00:21:19,880 Speaker 1: miss barter Romo over at Fox Biz mentioning Japan, mentioning 362 00:21:19,920 --> 00:21:23,200 Speaker 1: World War three. Forget about that. Here's the headline Steve 363 00:21:23,280 --> 00:21:26,760 Speaker 1: Stanley that matters. Trump says the U. S should have 364 00:21:26,840 --> 00:21:32,280 Speaker 1: draggy instead of quote our fed person unquote. What would 365 00:21:32,280 --> 00:21:34,920 Speaker 1: it be like, if Mario Draggy was running the FED, 366 00:21:35,040 --> 00:21:40,240 Speaker 1: based on his history, his challenges, different challenges in Europe, 367 00:21:40,359 --> 00:21:44,160 Speaker 1: what would what would Sherman Droggy look like. I mean, 368 00:21:44,320 --> 00:21:47,080 Speaker 1: obviously Draggy is someone that's been very doublish over the 369 00:21:47,119 --> 00:21:51,119 Speaker 1: course of his tenure. Um, you know, arguably the justified 370 00:21:51,160 --> 00:21:54,440 Speaker 1: given the difficulties in Europe. It is kind of ironic 371 00:21:54,520 --> 00:21:58,159 Speaker 1: because certainly Trump does want seem to want someone that's 372 00:21:58,240 --> 00:22:00,960 Speaker 1: extremely doublish at the FED, and the act is he 373 00:22:01,080 --> 00:22:03,520 Speaker 1: had probably the most dubbish FED chairman in the history 374 00:22:03,520 --> 00:22:06,439 Speaker 1: of the institution and he, uh, he let her go, 375 00:22:06,880 --> 00:22:09,840 Speaker 1: So you know, I guess, uh, maybe you get what 376 00:22:09,880 --> 00:22:12,720 Speaker 1: you deserve. I suspect it sounds like a Carol Kings 377 00:22:14,640 --> 00:22:18,000 Speaker 1: from Ali here in New York years ago, the President 378 00:22:18,040 --> 00:22:21,720 Speaker 1: goes down Mr Stanley to say he has high rates 379 00:22:21,960 --> 00:22:28,040 Speaker 1: while President Obama had cheap money. I'm lost translate. I 380 00:22:28,080 --> 00:22:31,359 Speaker 1: think he's jealous that we had zero rates throughout his 381 00:22:31,480 --> 00:22:34,320 Speaker 1: predecessor's tenure. I don't know that that's a good thing, 382 00:22:34,400 --> 00:22:37,119 Speaker 1: because that's indicative of a weak economy. I think he 383 00:22:37,119 --> 00:22:40,560 Speaker 1: should just focus on GDP and and trying to make 384 00:22:40,600 --> 00:22:43,680 Speaker 1: political hay out of the fact that the economy has 385 00:22:43,800 --> 00:22:47,800 Speaker 1: grown faster over the last few years. So, Stephen, you 386 00:22:47,800 --> 00:22:50,800 Speaker 1: know we've heard and read, I think over the last 387 00:22:50,800 --> 00:22:54,000 Speaker 1: several months, and you know, a growing argument that maybe 388 00:22:54,040 --> 00:22:58,080 Speaker 1: global growth rates are going to be lower going forward 389 00:22:58,160 --> 00:23:00,400 Speaker 1: than maybe we've seen over the last couple of decades. 390 00:23:00,680 --> 00:23:04,840 Speaker 1: Is that something you think is a reasonable view? Well, yeah, 391 00:23:05,160 --> 00:23:07,280 Speaker 1: I think there's not much question about that if you 392 00:23:07,320 --> 00:23:09,639 Speaker 1: compare it back to say the nineties or even the 393 00:23:09,680 --> 00:23:12,480 Speaker 1: two thousand's UM and there are a couple of things 394 00:23:12,520 --> 00:23:16,480 Speaker 1: going on. One is simply demographics, is the population ages, 395 00:23:17,040 --> 00:23:20,639 Speaker 1: the growth in labor supply slows down. And the second 396 00:23:20,680 --> 00:23:24,760 Speaker 1: thing is we've had very low productivity growth for most 397 00:23:24,800 --> 00:23:27,720 Speaker 1: of this decade, something that Tom and I've talked about 398 00:23:27,720 --> 00:23:30,880 Speaker 1: a lot over the last several years. And the good 399 00:23:30,880 --> 00:23:34,399 Speaker 1: news there is there does seem to be some upward slope. Um. 400 00:23:34,440 --> 00:23:37,360 Speaker 1: You know, we had fat somewhat faster productivity growth last year. 401 00:23:37,440 --> 00:23:40,600 Speaker 1: The the Q one number for this year was very good, 402 00:23:40,640 --> 00:23:44,560 Speaker 1: So I think there's a chance that productivity growth is accelerating, 403 00:23:44,560 --> 00:23:46,520 Speaker 1: which would be very good news for the economy. It 404 00:23:46,560 --> 00:23:49,760 Speaker 1: would mean higher potential growth and probably higher actual growth 405 00:23:50,240 --> 00:23:52,680 Speaker 1: than what we've seen the last um, you know, for 406 00:23:52,840 --> 00:23:55,159 Speaker 1: through most of this expansion, but we're not going to 407 00:23:55,240 --> 00:23:58,919 Speaker 1: get back to the kind of three percent potential GDP 408 00:23:59,119 --> 00:24:02,760 Speaker 1: type scenario that we had in prior decades. Why is 409 00:24:02,840 --> 00:24:07,800 Speaker 1: productivity predicted to accelerate. Is it a capital ratio, a 410 00:24:07,920 --> 00:24:10,560 Speaker 1: labor ratio or is it the pixie dust on the 411 00:24:10,640 --> 00:24:14,200 Speaker 1: right hand side of the equation. Well, I would say 412 00:24:14,200 --> 00:24:17,520 Speaker 1: it's a combination of the last two things. It's the 413 00:24:18,200 --> 00:24:21,080 Speaker 1: number one is that we we've had stronger investment on 414 00:24:21,119 --> 00:24:25,560 Speaker 1: the back of tax reform. And there's some cloudiness there 415 00:24:25,640 --> 00:24:28,359 Speaker 1: in the short term right now because of uncertainties around trade. 416 00:24:28,400 --> 00:24:31,000 Speaker 1: But if if those are resolved, I think you should 417 00:24:31,000 --> 00:24:34,480 Speaker 1: continue to better investment and that investment will provide better 418 00:24:34,520 --> 00:24:37,359 Speaker 1: plant equipment for workers to be Let's do this Steve 419 00:24:37,400 --> 00:24:39,840 Speaker 1: Stanley with Amber's Pierre Pott, and this is the President 420 00:24:40,080 --> 00:24:43,520 Speaker 1: says he has a right to fire Powell. President Trump 421 00:24:43,560 --> 00:24:46,400 Speaker 1: says Paul should have never raised rates as high as 422 00:24:46,400 --> 00:25:02,600 Speaker 1: he did. Now the most dangerous interview of the day 423 00:25:02,600 --> 00:25:05,879 Speaker 1: of the week, the month, the year, and Paul. It 424 00:25:06,000 --> 00:25:10,480 Speaker 1: starts with the palladium plated two thousand and eleven collection 425 00:25:10,640 --> 00:25:15,359 Speaker 1: format Alligator or MEZ broken bag and what's that gonna 426 00:25:15,359 --> 00:25:18,800 Speaker 1: set you? Gonna set you back forty dollars. It's just 427 00:25:18,840 --> 00:25:25,320 Speaker 1: one of the small items available this paycheck on Real 428 00:25:25,560 --> 00:25:28,840 Speaker 1: Real and Online, the Real Real, the Real Real and 429 00:25:29,000 --> 00:25:32,479 Speaker 1: online marketplace. Who would I think it but an online 430 00:25:32,480 --> 00:25:36,440 Speaker 1: marketplace for used luxury goods. Uh. This company, Real Real 431 00:25:36,600 --> 00:25:38,399 Speaker 1: is going public. I believe they're pricing their I p 432 00:25:38,520 --> 00:25:41,920 Speaker 1: O tonight, So we'll see how the market feels about that. 433 00:25:42,280 --> 00:25:44,800 Speaker 1: So to talk about this company, we're fortunate to have 434 00:25:44,840 --> 00:25:47,760 Speaker 1: our good friend Sema Shaw. She's a analyst covering all 435 00:25:47,800 --> 00:25:50,080 Speaker 1: things retail for Bloomberg Intelligence. She joins us here in 436 00:25:50,080 --> 00:25:54,840 Speaker 1: our Bloomberg Interactive Brokers studio. So, seema an online market 437 00:25:54,880 --> 00:25:59,240 Speaker 1: place for used luxury goods? There's such a thing as that. 438 00:25:59,560 --> 00:26:01,880 Speaker 1: There is? There are actually many things like that. There's 439 00:26:01,920 --> 00:26:05,640 Speaker 1: a lot of competitors in this space. Um, they're trying 440 00:26:05,640 --> 00:26:08,880 Speaker 1: to make the market for selling these use goods more efficient. 441 00:26:08,920 --> 00:26:10,800 Speaker 1: But the problem with the spaces you're spending a lot 442 00:26:10,840 --> 00:26:12,800 Speaker 1: of money, as Tom pointed out, so you want to 443 00:26:12,800 --> 00:26:14,760 Speaker 1: make sure what you get is not counterfeit. And it's 444 00:26:14,800 --> 00:26:19,879 Speaker 1: that authentication process that makes this. Uh, how how did 445 00:26:19,920 --> 00:26:22,080 Speaker 1: they do that? How? Do they authenticate stuff. So if 446 00:26:22,080 --> 00:26:25,119 Speaker 1: I'm going to pay forty dollars for whatever Tom was describing, 447 00:26:25,400 --> 00:26:28,679 Speaker 1: I know what I'm getting. So they hire people to 448 00:26:28,760 --> 00:26:32,680 Speaker 1: specifically look at each item. So it's jewelry, there's a gemologist, 449 00:26:32,760 --> 00:26:36,600 Speaker 1: and so it's a very time consuming, unhard to scale process. 450 00:26:36,640 --> 00:26:38,760 Speaker 1: And should that item be returned, they will have to 451 00:26:38,760 --> 00:26:42,080 Speaker 1: re authenticate it, so the margins on that second sale 452 00:26:42,200 --> 00:26:45,560 Speaker 1: of the same item would be less. Is it profit 453 00:26:45,680 --> 00:26:48,080 Speaker 1: making or is this like uber and Lift where we're 454 00:26:48,080 --> 00:26:52,600 Speaker 1: in hope streams and the fumes of two thousand the ladder. 455 00:26:52,800 --> 00:26:54,800 Speaker 1: We're on the hopes and dreams right now. There is 456 00:26:54,840 --> 00:26:57,160 Speaker 1: no money to be made, and there's, as I said, 457 00:26:57,200 --> 00:27:00,479 Speaker 1: a lot of competition. So what they need to have 458 00:27:00,560 --> 00:27:02,080 Speaker 1: in a marketplace to go, you need to have a 459 00:27:02,080 --> 00:27:03,760 Speaker 1: lot of sellers, but you also need to have a 460 00:27:03,760 --> 00:27:05,840 Speaker 1: lot of buyers. But in order to get sellers, they 461 00:27:05,840 --> 00:27:08,560 Speaker 1: have to make sure that they make enough money on 462 00:27:08,600 --> 00:27:10,240 Speaker 1: each product that they sell. And there's a lot of 463 00:27:10,280 --> 00:27:13,159 Speaker 1: competition to even get the sellers from even people like 464 00:27:13,240 --> 00:27:18,520 Speaker 1: Posh Mark Fashion file through um eBay even and they 465 00:27:18,560 --> 00:27:21,720 Speaker 1: may pay the seller more than the real real I 466 00:27:22,280 --> 00:27:24,880 Speaker 1: This says Paul Sweeney if nothing ever does. Actually, says 467 00:27:24,960 --> 00:27:29,400 Speaker 1: John Farrell, who the Saint laur On Jimmy twenties slide 468 00:27:29,440 --> 00:27:36,360 Speaker 1: sandals estimated retail five marked down to four off now 469 00:27:36,480 --> 00:27:40,280 Speaker 1: three for a pair sliders to walk that bill with, 470 00:27:40,880 --> 00:27:44,160 Speaker 1: I mean that's what people are buying, right essentially. Yeah, 471 00:27:44,160 --> 00:27:46,520 Speaker 1: so it is a deal on luxury. But are you 472 00:27:47,320 --> 00:27:50,719 Speaker 1: getting what you paid for? That's what's costing me. This 473 00:27:50,800 --> 00:27:54,679 Speaker 1: is used stuff. I mean, this is from John Farrell. 474 00:27:54,760 --> 00:28:00,120 Speaker 1: He's already worn those Saint Laurel sliders. Yes, yes, yes, somebody. 475 00:28:00,400 --> 00:28:02,960 Speaker 1: So this isn't you know the thing about the you know, 476 00:28:03,040 --> 00:28:06,919 Speaker 1: just the Amazons or the Ebays, it's about scale. So 477 00:28:07,119 --> 00:28:11,040 Speaker 1: how do you scale this business? Like how many units 478 00:28:11,080 --> 00:28:14,040 Speaker 1: did they actually transacted? I mean just right, so they're 479 00:28:14,119 --> 00:28:21,560 Speaker 1: total gmbe and ten million, and that's significantly less than 480 00:28:21,960 --> 00:28:25,160 Speaker 1: obviously an Amazon or many other peers, like even far 481 00:28:25,240 --> 00:28:28,080 Speaker 1: Fetch who's selling new luxury goods, which is over a 482 00:28:28,119 --> 00:28:31,840 Speaker 1: billion or selling good So there it's they sold a 483 00:28:31,840 --> 00:28:33,880 Speaker 1: total in the life of the company nine point four 484 00:28:33,920 --> 00:28:37,480 Speaker 1: million items. But still you have to continue to get 485 00:28:37,800 --> 00:28:40,840 Speaker 1: those sellers, and you have to keep driving the buyers. 486 00:28:40,880 --> 00:28:43,120 Speaker 1: And I think in this case because of the sellers 487 00:28:43,120 --> 00:28:47,440 Speaker 1: can sort of jump from platform to platform. It's really 488 00:28:47,440 --> 00:28:49,440 Speaker 1: hard to keep them unless you pay them a lot, 489 00:28:49,480 --> 00:28:51,400 Speaker 1: so that affects your growth margin. How long has this 490 00:28:51,440 --> 00:28:55,400 Speaker 1: company been around? Um? Not too long, I want to 491 00:28:55,440 --> 00:29:00,440 Speaker 1: say it hours. I'm just wondering, like I was six years. 492 00:29:00,480 --> 00:29:02,080 Speaker 1: I don't have the exact because you have to build 493 00:29:02,160 --> 00:29:04,000 Speaker 1: up some trust, don't you with your do And I 494 00:29:04,000 --> 00:29:07,560 Speaker 1: think they have trust, but there are so many other competitors, 495 00:29:07,560 --> 00:29:10,280 Speaker 1: and someone Likenshion file has it, you know, has been 496 00:29:10,320 --> 00:29:12,600 Speaker 1: invested in by Name and Marcus name, and Marcus already 497 00:29:12,640 --> 00:29:14,720 Speaker 1: has the stores and has the relationships with the brand, 498 00:29:14,800 --> 00:29:17,240 Speaker 1: so that might give them an edge to So what 499 00:29:17,320 --> 00:29:24,480 Speaker 1: do they make on a Patech Calatrava Tiffany's watched. They're 500 00:29:24,520 --> 00:29:28,640 Speaker 1: moving it out the door for fifteen dollars. Typically on 501 00:29:28,680 --> 00:29:33,400 Speaker 1: an item they'll get about sevent gross margin on the 502 00:29:33,480 --> 00:29:36,120 Speaker 1: first sale they resell it that the gross margin goes 503 00:29:36,160 --> 00:29:40,400 Speaker 1: down to the high teens. So then, of course that 504 00:29:40,440 --> 00:29:42,600 Speaker 1: depends on the product, but that's typically what it goes 505 00:29:42,760 --> 00:29:48,600 Speaker 1: after they've paid the person who sold. And I'm selling 506 00:29:48,640 --> 00:29:52,000 Speaker 1: my protech there because I'm broke and and I'm going 507 00:29:52,040 --> 00:29:53,600 Speaker 1: to get a hunk of it, and they get a hunk, 508 00:29:53,600 --> 00:29:59,000 Speaker 1: how much do they get they get about versus someone 509 00:29:59,080 --> 00:30:01,920 Speaker 1: like an eBay posh that's taking So in the movie 510 00:30:01,960 --> 00:30:05,680 Speaker 1: that won the Academy Award this year, The Green Book 511 00:30:06,360 --> 00:30:08,400 Speaker 1: and the guy So Broke before he goes out on 512 00:30:08,480 --> 00:30:10,920 Speaker 1: tour with a guy, he takes his watch into the 513 00:30:10,960 --> 00:30:15,440 Speaker 1: pawn shop and Queens of Brooklyn in the sixties, has 514 00:30:15,520 --> 00:30:19,600 Speaker 1: anything changed? Um, I guess this would be authenticated and 515 00:30:19,640 --> 00:30:22,240 Speaker 1: you can sell to more people than in Queens and 516 00:30:22,320 --> 00:30:25,800 Speaker 1: you can transact without talking to anybody. Interesting, So it's 517 00:30:26,480 --> 00:30:28,520 Speaker 1: is this a growing market? Are they growing their business? 518 00:30:28,920 --> 00:30:32,280 Speaker 1: They are growing their business from a top line perspective, 519 00:30:32,280 --> 00:30:34,440 Speaker 1: as are many of their peers. But as a question 520 00:30:34,520 --> 00:30:36,640 Speaker 1: is at what point will they be able to be profitable? 521 00:30:36,720 --> 00:30:38,400 Speaker 1: And how do you get this to scale so that 522 00:30:38,440 --> 00:30:40,800 Speaker 1: you can authenticate these products and move them through your 523 00:30:40,800 --> 00:30:43,440 Speaker 1: system at a faster rate and a less costly rate. 524 00:30:43,600 --> 00:30:47,080 Speaker 1: And so how do they attract who's the typical seller? 525 00:30:47,320 --> 00:30:49,640 Speaker 1: Is it someone who doesn't want to walk down to 526 00:30:49,640 --> 00:30:52,440 Speaker 1: the pawn shop, or there are people who have these 527 00:30:52,520 --> 00:30:54,680 Speaker 1: luxury products that they may have only used once or 528 00:30:54,680 --> 00:30:56,840 Speaker 1: twice any in their closets. So they're targeting them like 529 00:30:57,440 --> 00:31:01,480 Speaker 1: you monetize, monetize what you already have luxury that's already 530 00:31:01,480 --> 00:31:04,080 Speaker 1: out there. So Pharaoh is huge. I mean John Pharrell's 531 00:31:04,120 --> 00:31:07,480 Speaker 1: just j enormous. He sees the Pateech World Time watch 532 00:31:07,920 --> 00:31:12,720 Speaker 1: list they're moving out the door thirty five. Does he 533 00:31:12,760 --> 00:31:17,240 Speaker 1: get to see it before he buys it? No? What 534 00:31:18,000 --> 00:31:20,800 Speaker 1: you have to trust that the Pharaoh wouldn't do that 535 00:31:21,000 --> 00:31:24,240 Speaker 1: authenticated the product, and so that is what they have 536 00:31:24,360 --> 00:31:26,360 Speaker 1: built up by you know, getting their name out. So 537 00:31:26,400 --> 00:31:28,800 Speaker 1: the real rule is trusted as a far but so 538 00:31:28,880 --> 00:31:31,520 Speaker 1: are many of their peers. Wow, what's it? Is it? Like? 539 00:31:31,720 --> 00:31:34,600 Speaker 1: Is an average item? Is it a thousand dollar item 540 00:31:34,680 --> 00:31:37,400 Speaker 1: or some of these fifty dollar items for luxury? I 541 00:31:37,400 --> 00:31:40,440 Speaker 1: think it goes depending on it's jewelry, clothing, bags. I 542 00:31:40,440 --> 00:31:43,520 Speaker 1: think there's a wide range. Right now, did they guarantee 543 00:31:43,520 --> 00:31:48,240 Speaker 1: it if I buy something? Did they guarantee it's the authenticity? Yes? Yes, okay, 544 00:31:48,280 --> 00:31:50,320 Speaker 1: all right, but that's a big risk for them. Well yeah, 545 00:31:50,320 --> 00:31:51,600 Speaker 1: and if you don't like it, you send it back, 546 00:31:51,600 --> 00:31:52,840 Speaker 1: they have to do it again, make sure you didn't 547 00:31:52,840 --> 00:31:56,200 Speaker 1: do anything to it, and that's the cost. All right, Tom, Yeah, 548 00:31:56,240 --> 00:31:58,040 Speaker 1: I think you've got a new app for your phone here. 549 00:31:59,040 --> 00:32:04,760 Speaker 1: I just I just hope Mrs Keen's not listening. Riley 550 00:32:04,760 --> 00:32:06,600 Speaker 1: from St. Louis she knew all about this, she was 551 00:32:06,640 --> 00:32:09,560 Speaker 1: all over it. Yeah. I mean, does it have a buzz? 552 00:32:09,680 --> 00:32:11,240 Speaker 1: I mean, you know, it does have a bus. It's 553 00:32:11,240 --> 00:32:13,520 Speaker 1: supposed to be a very hot from an ibo perspective, 554 00:32:13,800 --> 00:32:15,800 Speaker 1: does have a buzz. A lot of these Why are 555 00:32:15,840 --> 00:32:17,840 Speaker 1: they going I p O? If that's small? I mean, 556 00:32:17,880 --> 00:32:20,440 Speaker 1: what's what's their motivation to go I PO? And they 557 00:32:20,480 --> 00:32:23,920 Speaker 1: could even do a direct listing? They need the money. Um. 558 00:32:23,960 --> 00:32:26,440 Speaker 1: The founder of this company had been in a couple 559 00:32:26,480 --> 00:32:30,280 Speaker 1: of prior companies during the dot com world, and so 560 00:32:31,920 --> 00:32:34,240 Speaker 1: I think that's part of what's driving in. And also 561 00:32:34,320 --> 00:32:37,400 Speaker 1: it's just a hot market for this retail consumer tech 562 00:32:37,440 --> 00:32:39,560 Speaker 1: I p O s given what you saw with something 563 00:32:39,640 --> 00:32:43,320 Speaker 1: like stitch fix Chewy. So they're performing much better than 564 00:32:43,400 --> 00:32:46,080 Speaker 1: let's say the IPOs of Uber and Left. Their prices 565 00:32:46,080 --> 00:32:48,880 Speaker 1: and watches are stunning. I mean, are people lined up 566 00:32:48,880 --> 00:32:52,040 Speaker 1: ten deep to buy this stuff? I don't know about that, 567 00:32:52,080 --> 00:32:54,880 Speaker 1: but they do have buyers. But you know, you need 568 00:32:54,960 --> 00:32:59,000 Speaker 1: to have increased velocity to really make any money. All right, Well, 569 00:32:59,040 --> 00:33:00,640 Speaker 1: we're gonna look at this type time. We're gonna pay 570 00:33:00,640 --> 00:33:02,080 Speaker 1: attention to this thing, you know, I love. I'm gonna 571 00:33:02,080 --> 00:33:05,120 Speaker 1: record back on this tomorrow. How it trades, how it opens, 572 00:33:05,680 --> 00:33:09,480 Speaker 1: the Aquinot uh really rare roch Patech. It's got a 573 00:33:09,520 --> 00:33:14,120 Speaker 1: secondary dial on it. Estimated retail thirty four thousand. They're 574 00:33:14,120 --> 00:33:18,560 Speaker 1: selling it for four thousand more. That's interesting, we're real 575 00:33:18,640 --> 00:33:23,400 Speaker 1: selling it for that's how in demand that watches. Just 576 00:33:23,600 --> 00:33:28,360 Speaker 1: nothing I would ever ownly Aquinot travel Time black with 577 00:33:28,440 --> 00:33:31,120 Speaker 1: a cool second drive. But there are people out there 578 00:33:31,120 --> 00:33:33,720 Speaker 1: that there would be. Mike Mayo, if you're listening, I 579 00:33:33,760 --> 00:33:38,600 Speaker 1: gotta watch for you. C Michelle. Thank Bloomberg Intelligence covering 580 00:33:38,600 --> 00:33:42,560 Speaker 1: all things retail forced. Thanks for listening to the Bloomberg 581 00:33:42,560 --> 00:33:48,560 Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 582 00:33:48,920 --> 00:33:53,120 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 583 00:33:53,160 --> 00:33:57,440 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 584 00:33:57,880 --> 00:34:02,000 Speaker 1: I'm Bloomberg Radio a