1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,440 Speaker 1: Along with my co host Lisa A. Bramowitz. Each day 3 00:00:11,480 --> 00:00:15,000 Speaker 1: we bring you the most important, noteworthy, and useful interviews 4 00:00:15,040 --> 00:00:17,520 Speaker 1: for you and your money, whether you're at the grocery 5 00:00:17,560 --> 00:00:20,560 Speaker 1: store or the trading floor. Find the Bloomberg P M 6 00:00:20,680 --> 00:00:33,040 Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 7 00:00:33,040 --> 00:00:36,400 Speaker 1: So much focus recently has been the relationship between the 8 00:00:36,520 --> 00:00:40,080 Speaker 1: US and China. Here to talk about that is Patrick Shavannick. 9 00:00:40,200 --> 00:00:43,040 Speaker 1: He is managing director and chief strategist as Silver Crest 10 00:00:43,080 --> 00:00:48,120 Speaker 1: Asset Management. Just back from a tour of Denmark and 11 00:00:48,360 --> 00:00:51,479 Speaker 1: uh Norway. Thank you so much for joining me here 12 00:00:51,479 --> 00:00:53,880 Speaker 1: in our eleven three oh studios. So, Patrick, let's focus 13 00:00:53,920 --> 00:00:57,960 Speaker 1: on China here because we are getting more talks that 14 00:00:58,000 --> 00:01:02,040 Speaker 1: are continuing to fail but maybe making progress. Today. The 15 00:01:02,080 --> 00:01:05,040 Speaker 1: big move is in the Chinese un which is actually 16 00:01:05,400 --> 00:01:09,600 Speaker 1: strengthening by the most verses of dollars. Since what's going 17 00:01:09,720 --> 00:01:12,679 Speaker 1: on here? Are we getting some sort of progress or 18 00:01:12,800 --> 00:01:14,720 Speaker 1: is this just sort of muddling to a new phase? 19 00:01:14,959 --> 00:01:17,960 Speaker 1: So on the trade talks um, there wasn't a lot 20 00:01:18,000 --> 00:01:20,960 Speaker 1: of optimism that the talks over the past couple of 21 00:01:21,040 --> 00:01:23,200 Speaker 1: days would lead to anything, and in fact they took 22 00:01:23,200 --> 00:01:28,759 Speaker 1: place amid um the the likelihood and now the reality 23 00:01:28,880 --> 00:01:31,280 Speaker 1: of a new round of terrorists being imposed on by 24 00:01:31,360 --> 00:01:34,880 Speaker 1: both sides. So, uh, you know, I think I think 25 00:01:34,880 --> 00:01:38,080 Speaker 1: the Chinese are trying to figure out, um, what exactly 26 00:01:38,160 --> 00:01:41,759 Speaker 1: might satisfy the Trump administration if there is a deal 27 00:01:41,800 --> 00:01:44,880 Speaker 1: to be cut here, and I think there's some disagreement 28 00:01:44,880 --> 00:01:48,400 Speaker 1: within the Trump administration about what what would be satisfactory. 29 00:01:48,480 --> 00:01:53,480 Speaker 1: You know, some such Learric Cudlow h insists that the 30 00:01:54,680 --> 00:01:58,680 Speaker 1: that that the trade sanctions are bargaining trip to open 31 00:01:58,760 --> 00:02:03,000 Speaker 1: up trade China. Others don't think so, Others such as Navarro, 32 00:02:03,240 --> 00:02:06,760 Speaker 1: you know, Uh, the impression that I have is that 33 00:02:06,840 --> 00:02:10,960 Speaker 1: he thinks, uh, tariffs are the solution that that China 34 00:02:11,040 --> 00:02:13,280 Speaker 1: won't move. It's kind of you know. And then and 35 00:02:13,320 --> 00:02:16,359 Speaker 1: the actually tariffs are the way that the are the 36 00:02:16,400 --> 00:02:18,359 Speaker 1: way forward, you know. And honestly, we're just speaking with 37 00:02:18,400 --> 00:02:21,720 Speaker 1: Garrett Vank of Bloomberg Technology, and he was talking about 38 00:02:21,760 --> 00:02:25,320 Speaker 1: the US Postal Service and President trying to push the 39 00:02:25,400 --> 00:02:30,880 Speaker 1: agency to renegotiate it's treaty and how it charges small 40 00:02:30,919 --> 00:02:34,400 Speaker 1: packages to China versus the other way around, and that 41 00:02:34,440 --> 00:02:39,160 Speaker 1: doesn't feel like it do feel like things are easy. 42 00:02:39,200 --> 00:02:41,320 Speaker 1: It doesn't feel like cart because it's very specific and 43 00:02:41,320 --> 00:02:44,600 Speaker 1: it's highlighting an issue that's been simmering for a long time. Yeah. So, 44 00:02:44,600 --> 00:02:48,119 Speaker 1: so I think there's this division within the administration and 45 00:02:48,240 --> 00:02:50,960 Speaker 1: I don't know, you know, where Trump falls on this 46 00:02:51,760 --> 00:02:55,200 Speaker 1: about whether the goal is free your trade or whether 47 00:02:55,240 --> 00:02:58,520 Speaker 1: the goal is protectionism. And obviously, you know, if you're 48 00:02:58,520 --> 00:03:00,600 Speaker 1: in the markets, you'd like to know the answer to 49 00:03:00,639 --> 00:03:05,239 Speaker 1: that question. Um, But we'll only know in time. Um. 50 00:03:05,280 --> 00:03:07,079 Speaker 1: But it doesn't seem like this is heading towards a 51 00:03:07,120 --> 00:03:09,560 Speaker 1: resolution anytime soon. You know. I want to sort of 52 00:03:10,360 --> 00:03:13,440 Speaker 1: throughout there a theory that a number of big bank 53 00:03:13,480 --> 00:03:16,880 Speaker 1: strategists have talked about, which is that President Trump, as 54 00:03:16,880 --> 00:03:21,200 Speaker 1: he faces more challenges at home, legally and otherwise, that 55 00:03:21,320 --> 00:03:25,600 Speaker 1: he will aamp up the rhetoric against China and Mexico 56 00:03:25,800 --> 00:03:29,880 Speaker 1: and other places to seem hard in his convictions and 57 00:03:29,919 --> 00:03:32,760 Speaker 1: to appeal to his base. Does that hold water with you? 58 00:03:33,040 --> 00:03:35,920 Speaker 1: So you know, how much can more can you ramp 59 00:03:36,000 --> 00:03:40,640 Speaker 1: up the rhetoric without actually taking action that then subsequently 60 00:03:40,680 --> 00:03:44,440 Speaker 1: has economic impact. And so, you know, I realized that 61 00:03:44,680 --> 00:03:47,880 Speaker 1: the rhetoric and even the actions. You know, protectionism is 62 00:03:47,880 --> 00:03:50,200 Speaker 1: popular with a certain part of his base, but it's 63 00:03:50,200 --> 00:03:53,640 Speaker 1: also deeply unpopular with the business community and with markets. 64 00:03:54,320 --> 00:03:56,880 Speaker 1: And the one thing he's really got going for him 65 00:03:56,960 --> 00:04:00,160 Speaker 1: right now is a strong economy. And if I were him, 66 00:04:00,160 --> 00:04:02,400 Speaker 1: I wouldn't want to do anything to mess that up. 67 00:04:02,960 --> 00:04:05,119 Speaker 1: And if you look in the I s M surveys 68 00:04:05,560 --> 00:04:08,880 Speaker 1: um both manufacturing and non manufacturing, what a lot of 69 00:04:08,920 --> 00:04:12,400 Speaker 1: companies are saying, Hey, we have a strong economy, we 70 00:04:12,440 --> 00:04:14,880 Speaker 1: see a lot of positive new and but boy, these 71 00:04:15,480 --> 00:04:19,360 Speaker 1: uncertainty over tariffs, the impact on our our input costs, 72 00:04:19,880 --> 00:04:23,279 Speaker 1: We're losing export sales. This is the one big negative 73 00:04:23,320 --> 00:04:27,120 Speaker 1: that we see that's making us hesitate to invest more. 74 00:04:27,520 --> 00:04:30,760 Speaker 1: And so if that's if that's a reality now going 75 00:04:30,839 --> 00:04:34,160 Speaker 1: further down that path, um, you know, I don't want 76 00:04:34,160 --> 00:04:37,479 Speaker 1: to sound apocalyptic, like, Okay, it's going to end the 77 00:04:37,520 --> 00:04:40,279 Speaker 1: cycle tomorrow, but but it's it's one more thing in 78 00:04:40,320 --> 00:04:43,680 Speaker 1: a in a cycle that's fairly mature. It's one more 79 00:04:43,760 --> 00:04:46,680 Speaker 1: thing that brings you closer to the end of the cycle. Potentially. 80 00:04:46,880 --> 00:04:50,080 Speaker 1: I have to wonder, you know, putting aside the trade tensions, 81 00:04:50,360 --> 00:04:52,640 Speaker 1: how much China itself could be the end of the 82 00:04:52,680 --> 00:04:55,880 Speaker 1: cycle if it mismanages soft landing, And I think that 83 00:04:56,080 --> 00:04:58,400 Speaker 1: people have stopped talking about that to some degree. But 84 00:04:58,440 --> 00:05:02,040 Speaker 1: here we had ten Cent report earnings that were highly disappointing. 85 00:05:02,360 --> 00:05:05,000 Speaker 1: Ali Baba reported earnings that were better than expected, but 86 00:05:05,080 --> 00:05:08,200 Speaker 1: people still weren't that enthusiastic by the start, you know, 87 00:05:08,520 --> 00:05:11,839 Speaker 1: based on the stock performance because of concerns going forward 88 00:05:11,839 --> 00:05:15,200 Speaker 1: about growth. Are are you learning anything? Are you reading 89 00:05:15,200 --> 00:05:17,320 Speaker 1: anything into this that makes you feel like there is 90 00:05:17,360 --> 00:05:20,800 Speaker 1: a more substantial slowdown than people are really giving credit to. 91 00:05:20,960 --> 00:05:24,040 Speaker 1: So I've always been quite concerned about China's economy and 92 00:05:24,080 --> 00:05:27,000 Speaker 1: where it was headed um and the debt issues that 93 00:05:27,080 --> 00:05:29,560 Speaker 1: they have in the past. I always took the view 94 00:05:29,680 --> 00:05:33,239 Speaker 1: that because China was never really a driver of global 95 00:05:33,240 --> 00:05:37,320 Speaker 1: growth because of its because of its surpluses, that a 96 00:05:37,400 --> 00:05:41,360 Speaker 1: slowdown in China's economy would would not derail the global 97 00:05:41,400 --> 00:05:43,440 Speaker 1: economy the US anymore than the slow down in the 98 00:05:43,520 --> 00:05:48,520 Speaker 1: Japanese economy derailed growth in the ninety nineties. Right um, 99 00:05:48,720 --> 00:05:52,799 Speaker 1: because it really isn't a driver of global demands. Um. 100 00:05:52,839 --> 00:05:56,800 Speaker 1: That said, how China responds to a slowdown could have 101 00:05:56,839 --> 00:06:02,160 Speaker 1: a significant impact. So we've seen um, the yuan depreciate. 102 00:06:02,839 --> 00:06:07,400 Speaker 1: There's the prospect that they could have a devaluation, either 103 00:06:07,480 --> 00:06:12,560 Speaker 1: in response to trade friction or a deteriorating economy, that 104 00:06:12,600 --> 00:06:14,440 Speaker 1: would have a global impact. That would be trying to 105 00:06:14,480 --> 00:06:18,760 Speaker 1: trying to exports, domestic internal problems globally, and that would 106 00:06:19,000 --> 00:06:21,920 Speaker 1: create significant headwinds to US growth. That's a far way off, though, 107 00:06:21,960 --> 00:06:24,960 Speaker 1: I mean, clearly you don't think so. Well, we've seen 108 00:06:25,520 --> 00:06:27,720 Speaker 1: you know, we've seen the depreciation in the REM and 109 00:06:27,760 --> 00:06:31,400 Speaker 1: B and and I'm not saying so. I've never had 110 00:06:31,440 --> 00:06:34,200 Speaker 1: the view that China will be forced to devalue, okay, 111 00:06:34,240 --> 00:06:36,400 Speaker 1: because I don't think that it would either be good 112 00:06:36,400 --> 00:06:39,640 Speaker 1: for them or necessary for them to devalue. But back 113 00:06:39,839 --> 00:06:41,320 Speaker 1: you know, two years ago, there were a lot of 114 00:06:41,360 --> 00:06:43,760 Speaker 1: people trying to persuade them that that was in fact 115 00:06:43,800 --> 00:06:46,560 Speaker 1: the case. And whether it is the case or not, 116 00:06:47,040 --> 00:06:49,200 Speaker 1: they could be persuaded that this is the path that 117 00:06:49,240 --> 00:06:52,000 Speaker 1: they should go down, particularly if it's a response to 118 00:06:52,000 --> 00:06:54,440 Speaker 1: trade tensions, if it's seen as a way of of 119 00:06:54,560 --> 00:06:58,680 Speaker 1: defanging US tarraffs by evaluating the currency, you're allowing it 120 00:06:58,720 --> 00:07:01,560 Speaker 1: to depreciate. Um, I don't think it's a good path 121 00:07:01,600 --> 00:07:03,400 Speaker 1: for China to go down, but it's one that they 122 00:07:03,480 --> 00:07:06,400 Speaker 1: could choose to go down that would have global implications. 123 00:07:06,560 --> 00:07:09,160 Speaker 1: Just real quick. I mean, perhaps the China slowdown doesn't 124 00:07:09,200 --> 00:07:11,960 Speaker 1: necessarily have as big of an impact on global growth 125 00:07:12,080 --> 00:07:15,800 Speaker 1: rates to say the US, but certainly for Asia. Yes, 126 00:07:15,880 --> 00:07:17,800 Speaker 1: it has a huge impact and it can trickle out 127 00:07:17,800 --> 00:07:21,000 Speaker 1: from there. Now. So if you're if you are, if 128 00:07:21,040 --> 00:07:23,640 Speaker 1: you have over the past you know, ten years, been 129 00:07:23,720 --> 00:07:28,040 Speaker 1: feeding into China's investment boom, if you're Australia selling iron ore, 130 00:07:28,320 --> 00:07:32,360 Speaker 1: or Chili selling copper, or any number of Germany selling 131 00:07:32,360 --> 00:07:35,160 Speaker 1: machinery to China, yes, it could have the end of 132 00:07:35,240 --> 00:07:37,840 Speaker 1: China's investment boom. Could have a very serious impact. Now. 133 00:07:38,960 --> 00:07:41,800 Speaker 1: It could also have a positive impact in the sense 134 00:07:41,880 --> 00:07:44,800 Speaker 1: that if it helped resolve some of the overcapacity that 135 00:07:44,880 --> 00:07:48,400 Speaker 1: China has been creating over the years. So you know, 136 00:07:48,920 --> 00:07:50,880 Speaker 1: one thing that China's investment boom is done is it 137 00:07:50,960 --> 00:07:53,160 Speaker 1: bit up the price of inputs and it pushed down 138 00:07:53,240 --> 00:07:56,320 Speaker 1: the price of outputs. A reversal of that, I think 139 00:07:56,320 --> 00:07:59,400 Speaker 1: in the long rum positive for the global economy, but 140 00:08:00,080 --> 00:08:03,320 Speaker 1: how you get there could be very disruptive. Patrick Shavannick, 141 00:08:03,360 --> 00:08:05,080 Speaker 1: thank you so much for drinking being with me today. 142 00:08:05,560 --> 00:08:08,720 Speaker 1: It's a pleasure getting your insights, and China is in 143 00:08:08,760 --> 00:08:11,840 Speaker 1: the absolute forefront of a lot of investor's minds these days. 144 00:08:11,840 --> 00:08:15,000 Speaker 1: Patrick Shavannick, Managing Director and chief strategist, It's silver Crust 145 00:08:15,160 --> 00:08:32,960 Speaker 1: Asset Management. This has been a fascinating season for retail 146 00:08:33,040 --> 00:08:36,440 Speaker 1: earnings that has definitely split the halves from the have nots, 147 00:08:36,520 --> 00:08:39,480 Speaker 1: with the Walmarts and the targets of the world doing 148 00:08:39,520 --> 00:08:43,640 Speaker 1: phenomenally while Gap and L brands fall further, with people 149 00:08:43,760 --> 00:08:46,559 Speaker 1: questioning why are they doing badly at a time when 150 00:08:46,600 --> 00:08:50,160 Speaker 1: retail sales are going so strong. Here to talk about that, 151 00:08:50,760 --> 00:08:52,600 Speaker 1: as well as a slew of other issues facing the 152 00:08:52,600 --> 00:08:56,199 Speaker 1: retail industry is Rick Healthenbine, President, chief executive Officer of 153 00:08:56,240 --> 00:09:00,240 Speaker 1: the American Apparel and Footwear Association based in Washington, d See. 154 00:09:00,320 --> 00:09:02,680 Speaker 1: Although you know you've got a foot in Washington and 155 00:09:02,679 --> 00:09:05,080 Speaker 1: a foot in New York. Uh Rick, thank you so 156 00:09:05,160 --> 00:09:07,520 Speaker 1: much for being here. Um, so what do you make 157 00:09:07,559 --> 00:09:09,760 Speaker 1: so far off the retail earning season? The earnings have 158 00:09:09,880 --> 00:09:13,760 Speaker 1: been fascinating. I mean, we're we're finally uh seeing some 159 00:09:13,840 --> 00:09:16,559 Speaker 1: relief from many years of agony. You know, we we 160 00:09:16,840 --> 00:09:20,480 Speaker 1: we look at two thousand and eight and we compare 161 00:09:20,520 --> 00:09:22,719 Speaker 1: that to two thousand and seventeen. We actually have more 162 00:09:22,760 --> 00:09:25,320 Speaker 1: bankruptcyas in seventeen than we did in no AID. So 163 00:09:25,920 --> 00:09:29,800 Speaker 1: to see a really good earning season like we're having 164 00:09:29,840 --> 00:09:34,240 Speaker 1: now is beyond encouraging. But it's really really interesting to 165 00:09:34,400 --> 00:09:38,240 Speaker 1: dig into the earnings almost companied by company, and they 166 00:09:38,280 --> 00:09:41,640 Speaker 1: I think the cardinal example of who's doing well. I 167 00:09:41,720 --> 00:09:45,199 Speaker 1: look at Target, and I look at Nordstrom and nordstron 168 00:09:45,760 --> 00:09:47,880 Speaker 1: is fascinating because a couple of years ago they were 169 00:09:47,920 --> 00:09:50,920 Speaker 1: trying to figure out who he is Nordstrom, and they 170 00:09:50,960 --> 00:09:54,079 Speaker 1: developed a very strong presence in Nordstrom rac, which has 171 00:09:54,120 --> 00:09:58,600 Speaker 1: a tremendous millennial appeal. And then they picked up on 172 00:09:58,640 --> 00:10:01,800 Speaker 1: their Internet sales, which remarkably good. And to give them 173 00:10:02,000 --> 00:10:04,520 Speaker 1: further credit, their in store experience has been good. So 174 00:10:04,600 --> 00:10:08,640 Speaker 1: they've been positive over four percent on store traffic. I think, 175 00:10:08,720 --> 00:10:13,000 Speaker 1: so everything is going right for them. Before you move 176 00:10:13,040 --> 00:10:15,800 Speaker 1: on to somebody else, is there a particular person who 177 00:10:15,880 --> 00:10:20,640 Speaker 1: is behind this strategy that has panned out in every facet. Well, 178 00:10:20,640 --> 00:10:23,640 Speaker 1: in every company there's usually a leader, but in these 179 00:10:23,640 --> 00:10:27,000 Speaker 1: bigger companies, it's usually leadership by committees. So you have 180 00:10:27,040 --> 00:10:30,439 Speaker 1: to give a bunch of people credit to understand. You 181 00:10:30,520 --> 00:10:33,640 Speaker 1: know that the dynamics of retail have changed. The lennial 182 00:10:33,800 --> 00:10:36,560 Speaker 1: customer today. You're really trying to tract would prefer to 183 00:10:36,600 --> 00:10:39,440 Speaker 1: shop on their phone. How do you convert that? And 184 00:10:39,480 --> 00:10:42,760 Speaker 1: they also love stores like TJ Max. TJ Max is 185 00:10:42,800 --> 00:10:47,040 Speaker 1: a huge favorite among millennials. Treasure Hunt. Yeah. So it's 186 00:10:47,040 --> 00:10:50,640 Speaker 1: a combination of what works and what doesn't. And and 187 00:10:50,679 --> 00:10:53,720 Speaker 1: probably the biggest measure in brick and mortar retail is 188 00:10:53,720 --> 00:10:56,880 Speaker 1: foot traffic. The foot traffic is up if you have 189 00:10:57,040 --> 00:11:00,400 Speaker 1: a strong Internet component, and if you have a mid 190 00:11:00,480 --> 00:11:03,840 Speaker 1: price line like as I said, norstern Rack, that's a win. 191 00:11:03,960 --> 00:11:06,360 Speaker 1: But then again, you look at somebody like Walmart and 192 00:11:06,720 --> 00:11:08,120 Speaker 1: you know there you have to be a little careful, 193 00:11:08,120 --> 00:11:10,480 Speaker 1: you have to factor out the groceries, but look at 194 00:11:10,480 --> 00:11:15,040 Speaker 1: their online sales phenomenal. Look at targets online sales like up. 195 00:11:16,640 --> 00:11:19,160 Speaker 1: So when you take it all, you can see the 196 00:11:19,280 --> 00:11:23,719 Speaker 1: picture of having those retailers um who have got it, 197 00:11:23,960 --> 00:11:27,360 Speaker 1: really got it and it's starting to show, and it's 198 00:11:27,400 --> 00:11:29,840 Speaker 1: great for somebody like me. This is this is like 199 00:11:30,040 --> 00:11:32,800 Speaker 1: manna from heaven. I just am hopeful it's not all 200 00:11:32,800 --> 00:11:35,120 Speaker 1: going to implode, and when we get we'll get to 201 00:11:35,400 --> 00:11:37,839 Speaker 1: why it might implode in a second. I am so 202 00:11:38,240 --> 00:11:41,559 Speaker 1: concerned when I look at places like L Brand's, Victoria's 203 00:11:41,559 --> 00:11:44,960 Speaker 1: Secrets parent company, or GAP or j C. Penny and Sears, 204 00:11:44,960 --> 00:11:46,640 Speaker 1: which have been having a hard time for a long 205 00:11:46,679 --> 00:11:49,160 Speaker 1: time and are showing no signs of recovery. You have 206 00:11:49,200 --> 00:11:51,640 Speaker 1: to wonder, if these companies are not doing well now, 207 00:11:51,960 --> 00:11:56,120 Speaker 1: what will it take for them to revive well. Sears 208 00:11:56,240 --> 00:11:58,320 Speaker 1: is sort of in a world of its own, and 209 00:11:58,360 --> 00:12:01,559 Speaker 1: it's really hard to comment on how to figure out 210 00:12:01,559 --> 00:12:04,559 Speaker 1: how to get them out of their funking, their conundrum. Uh. 211 00:12:04,760 --> 00:12:07,600 Speaker 1: J C. Penny, on the other hand, there's hope for 212 00:12:07,679 --> 00:12:11,560 Speaker 1: j C. Penny. The question is can they figure out 213 00:12:11,640 --> 00:12:15,480 Speaker 1: what works and what doesn't work. You know, we had 214 00:12:16,360 --> 00:12:18,240 Speaker 1: Toys r US Kids ar US go out of business 215 00:12:18,240 --> 00:12:20,440 Speaker 1: where people are going to buy their kids clothes. That 216 00:12:20,600 --> 00:12:23,120 Speaker 1: used to be a strong point of J C. Penny. 217 00:12:23,160 --> 00:12:26,200 Speaker 1: So maybe you know they can advance on that. They 218 00:12:26,280 --> 00:12:28,960 Speaker 1: have to figure it out. But you know, then you 219 00:12:29,040 --> 00:12:32,920 Speaker 1: look at someone like app who reported today um Old 220 00:12:33,000 --> 00:12:35,760 Speaker 1: Navy was very strong. Don't look at CAP look at 221 00:12:35,800 --> 00:12:38,400 Speaker 1: Old Navy and see what works and then figure out 222 00:12:38,440 --> 00:12:41,680 Speaker 1: how to change the dynamic. All these companies are fighting 223 00:12:41,720 --> 00:12:45,680 Speaker 1: for market share, but people are buying. You know, It's funny. 224 00:12:45,760 --> 00:12:49,080 Speaker 1: In retail, you look at three things. You look at 225 00:12:49,120 --> 00:12:52,200 Speaker 1: the unemployment level, you look at the consumer confidence level, 226 00:12:52,720 --> 00:12:57,040 Speaker 1: and they're all good, all right. So one thing that's 227 00:12:57,040 --> 00:12:59,760 Speaker 1: not perhaps good for your industry are some of the 228 00:12:59,840 --> 00:13:02,240 Speaker 1: terps that have been proposed, and you've been lobbying against 229 00:13:02,240 --> 00:13:04,800 Speaker 1: some of them. Um, a lot of them will hit 230 00:13:04,920 --> 00:13:08,400 Speaker 1: your industry directly. Where are we with that? Well? I 231 00:13:08,480 --> 00:13:13,200 Speaker 1: was at the hearings on Monday, our team testified, and uh, frankly, 232 00:13:13,240 --> 00:13:16,120 Speaker 1: I was sitting in there what I would call the 233 00:13:16,160 --> 00:13:19,560 Speaker 1: peanut gallery, and it sounded a little bit like Clara 234 00:13:19,600 --> 00:13:23,760 Speaker 1: belhunking at Buffalo Bob. It was so sad, all these 235 00:13:24,160 --> 00:13:29,000 Speaker 1: really strong businesses and trade associations explaining to a panel 236 00:13:29,080 --> 00:13:35,120 Speaker 1: of government representatives how raising tariffs would severely impact their business. 237 00:13:35,400 --> 00:13:38,840 Speaker 1: I'm curious, were there any representatives from companies arguing for 238 00:13:39,040 --> 00:13:43,160 Speaker 1: the tariffs? Yes, there were a few, and I um 239 00:13:43,320 --> 00:13:47,520 Speaker 1: put few in capital letters, um and and a lot 240 00:13:47,520 --> 00:13:49,920 Speaker 1: of that place to self interest for them. You know, 241 00:13:50,040 --> 00:13:55,760 Speaker 1: some protectionism would help. Uh, Well, there's one gentleman tests 242 00:13:55,840 --> 00:14:00,360 Speaker 1: testifying actually about right now as we speak, from a 243 00:14:00,440 --> 00:14:05,439 Speaker 1: leather company, and uh, he's interest is to protect his business. 244 00:14:06,120 --> 00:14:10,720 Speaker 1: Um NICTO the trade organization also testified and they, you know, 245 00:14:10,760 --> 00:14:13,719 Speaker 1: they represent textile interests in America. So you know, I 246 00:14:13,840 --> 00:14:16,080 Speaker 1: have to give these people credit to the extent they're 247 00:14:16,120 --> 00:14:18,240 Speaker 1: fighting for what they believe in. But I have to 248 00:14:18,280 --> 00:14:22,160 Speaker 1: say they're in the minority, but they believe what they believe. 249 00:14:22,640 --> 00:14:25,800 Speaker 1: Most people who testified hit tears in their eyes. You're 250 00:14:25,880 --> 00:14:28,440 Speaker 1: really gonna hurt me. This is gonna hurt my business. 251 00:14:28,440 --> 00:14:30,680 Speaker 1: And in this third ranch, we call it of two 252 00:14:30,720 --> 00:14:33,440 Speaker 1: hundred billion, they've got hand bags, they've got hats, they've 253 00:14:33,440 --> 00:14:36,960 Speaker 1: got baseball gloves, they've got backpacks. You know, I tell 254 00:14:36,960 --> 00:14:39,720 Speaker 1: everybody who listen that, you know, it's back to school season, 255 00:14:39,760 --> 00:14:42,520 Speaker 1: you better buy two backpacks because you're twenty dollar backpacks 256 00:14:42,560 --> 00:14:45,040 Speaker 1: gonna be thirty next time. Do you think that there 257 00:14:45,120 --> 00:14:47,360 Speaker 1: will be bankruptcies as a result of some of the 258 00:14:47,400 --> 00:14:49,400 Speaker 1: proposed tariffs or do you think it will just be 259 00:14:49,720 --> 00:14:53,800 Speaker 1: uh a slower profit margins? Now, you know, the tariffs 260 00:14:53,880 --> 00:14:56,760 Speaker 1: aren't gonna push people into bankruptcy. You know, be other 261 00:14:56,800 --> 00:14:59,720 Speaker 1: economic factors that do it, that are already in play 262 00:15:00,320 --> 00:15:04,960 Speaker 1: the bank. The tarifs will just exacerbate the situation because 263 00:15:05,160 --> 00:15:08,920 Speaker 1: you know, remember this isn't percent tariff they're talking about. 264 00:15:08,960 --> 00:15:12,040 Speaker 1: It's twenty on top of what you're already paying. So 265 00:15:12,120 --> 00:15:15,120 Speaker 1: if you're paying and you had twenty five, now we 266 00:15:15,200 --> 00:15:18,040 Speaker 1: got a forty five percent tariff, what's gonna happen. People 267 00:15:18,080 --> 00:15:22,120 Speaker 1: are gonna stop buying, They stop buying, sales go down. Um, 268 00:15:23,240 --> 00:15:27,120 Speaker 1: it's a bad cycle. Is there any positive consequence from 269 00:15:27,160 --> 00:15:30,040 Speaker 1: some of the post tariffs on retail? Wow? What a 270 00:15:30,160 --> 00:15:35,240 Speaker 1: what a great question? Um, two word answer. Absolutely, no 271 00:15:35,560 --> 00:15:39,480 Speaker 1: positive consequence except maybe at the end of the day, 272 00:15:39,760 --> 00:15:42,600 Speaker 1: perhaps tariffs will just go away and then people could 273 00:15:43,400 --> 00:15:46,360 Speaker 1: spend what they really should be spending for product. You know, 274 00:15:46,800 --> 00:15:50,280 Speaker 1: you look at the economy and there was an article 275 00:15:50,360 --> 00:15:54,960 Speaker 1: this this week about the millennials responding to the next crash, 276 00:15:55,040 --> 00:15:57,480 Speaker 1: and you know, how will they respond? It's been ten years. 277 00:15:57,480 --> 00:16:00,320 Speaker 1: We'll keep in mind that low quost product in last 278 00:16:00,360 --> 00:16:03,880 Speaker 1: recession really helped us out, helped us come back quickly, 279 00:16:03,920 --> 00:16:06,160 Speaker 1: and you're not going to have that anymore. So if 280 00:16:06,200 --> 00:16:08,760 Speaker 1: you're short on cash, it's going to be harder. Rick 281 00:16:08,800 --> 00:16:10,720 Speaker 1: Calforn Byn, thank you so much for joining me today. 282 00:16:11,000 --> 00:16:13,400 Speaker 1: Rick Calvin Byn is President and chief executive officer of 283 00:16:13,440 --> 00:16:17,840 Speaker 1: the American Apparel and Footwear Association in Washington, d C. 284 00:16:34,320 --> 00:16:38,040 Speaker 1: The business of car racing is massive and growing. Joining 285 00:16:38,120 --> 00:16:41,280 Speaker 1: us now is Mark Miles, President, chief executive officer of 286 00:16:41,520 --> 00:16:44,520 Speaker 1: Indy Car, also the President CEO of Holman and Company, 287 00:16:44,520 --> 00:16:48,240 Speaker 1: which owns the Indianapolis Motor Speedway. Mark, thank you so 288 00:16:48,320 --> 00:16:51,200 Speaker 1: much for being with us. I just want to start 289 00:16:51,280 --> 00:16:53,360 Speaker 1: with an overview. Can you give us a sense of 290 00:16:53,400 --> 00:16:56,560 Speaker 1: sort of the state of play of the car racing business, 291 00:16:56,640 --> 00:17:00,440 Speaker 1: given the fact that we've seen declines in some list ownership, 292 00:17:00,640 --> 00:17:05,960 Speaker 1: viewership at tendership of other other sports. Yeah, there's definitely 293 00:17:06,440 --> 00:17:09,600 Speaker 1: headwinds in sport to some extent, in the motor sport 294 00:17:09,640 --> 00:17:13,359 Speaker 1: to great extent. But frankly, we're delighted that over the 295 00:17:13,400 --> 00:17:18,040 Speaker 1: last few years since probably Indie Car has been growing 296 00:17:18,080 --> 00:17:21,200 Speaker 1: in with respect, almost all the sort of fan metrics are. 297 00:17:21,280 --> 00:17:27,639 Speaker 1: Television ratings are up in four years, um our attendance 298 00:17:27,720 --> 00:17:31,040 Speaker 1: is growing, our social following is up by a million 299 00:17:31,440 --> 00:17:34,919 Speaker 1: followers in the last year, and so we feel like 300 00:17:34,960 --> 00:17:37,800 Speaker 1: we're kind of bucking the headwinds and and very bullish 301 00:17:37,800 --> 00:17:39,920 Speaker 1: about our future. Can you give a sense of why. 302 00:17:40,040 --> 00:17:43,119 Speaker 1: I mean you noted also that IndyCar is the highest 303 00:17:43,119 --> 00:17:46,960 Speaker 1: percentage of millennials of any of the major sports leagues. 304 00:17:47,200 --> 00:17:50,320 Speaker 1: What is it about the sport that is attractive to 305 00:17:50,359 --> 00:17:53,960 Speaker 1: younger people? Part of our growth is because I think 306 00:17:53,960 --> 00:17:56,359 Speaker 1: we kind of squandered the recent years in our past, 307 00:17:56,480 --> 00:17:58,920 Speaker 1: and so we're getting our act together and getting things 308 00:17:59,000 --> 00:18:03,479 Speaker 1: together and forward. But inherently we think IndyCar Racing has 309 00:18:03,520 --> 00:18:06,320 Speaker 1: a lot to offer. It is the fastest series out there. 310 00:18:06,680 --> 00:18:10,480 Speaker 1: It's very technical, and by that I mean on the track, 311 00:18:10,520 --> 00:18:12,720 Speaker 1: but also in the way we go to market. For example, 312 00:18:13,320 --> 00:18:16,160 Speaker 1: in a two hour race, we collect fifty million data 313 00:18:16,200 --> 00:18:20,320 Speaker 1: records and when we talked to UH companies, you're well 314 00:18:20,359 --> 00:18:23,639 Speaker 1: aware of that, think about how they can help us 315 00:18:24,640 --> 00:18:28,000 Speaker 1: UH convert that data into really interesting content for fans. 316 00:18:28,080 --> 00:18:29,840 Speaker 1: We think there's a there's a lot to offer there 317 00:18:29,840 --> 00:18:32,200 Speaker 1: and to continue to grow our younger audience in particular, 318 00:18:33,119 --> 00:18:36,560 Speaker 1: So UM the sport is compelling. You can start at 319 00:18:36,560 --> 00:18:39,040 Speaker 1: the back of the grid and and win a race 320 00:18:39,200 --> 00:18:42,040 Speaker 1: with lots of different winners, and yet we've got some 321 00:18:42,280 --> 00:18:46,000 Speaker 1: you know, some stalwart competitors like Team Penskey and and 322 00:18:46,320 --> 00:18:50,359 Speaker 1: Ganassi and Andretti, and drivers that are veteran champions. So 323 00:18:50,400 --> 00:18:53,040 Speaker 1: we've got challengers, and we got UH, and we've got 324 00:18:53,160 --> 00:18:56,160 Speaker 1: established champions, and I just think there's lots and lots 325 00:18:56,160 --> 00:18:58,720 Speaker 1: of narrative for fans to follow. So Mark, when I 326 00:18:58,720 --> 00:19:01,680 Speaker 1: think about what I think about car racing in the 327 00:19:01,760 --> 00:19:04,720 Speaker 1: United States, I think about UH, the zooming noise that 328 00:19:04,800 --> 00:19:07,120 Speaker 1: I think about, how fast they go, and the sort 329 00:19:07,160 --> 00:19:09,840 Speaker 1: of sponsorship labels all over the cars. I also think 330 00:19:10,000 --> 00:19:14,399 Speaker 1: of the highly publicized crash that crashes that occasionally happen 331 00:19:14,760 --> 00:19:17,560 Speaker 1: from time to time, and there was a terrible crash 332 00:19:17,640 --> 00:19:22,080 Speaker 1: just on Sunday, Indy car driver Robert Wickens being hospitalized 333 00:19:22,280 --> 00:19:27,080 Speaker 1: for some serious injuries after a crash at the Pocono Raceway. 334 00:19:27,200 --> 00:19:30,280 Speaker 1: What does a crash like this do for the sport? 335 00:19:30,560 --> 00:19:32,560 Speaker 1: Is it something that sets you back? How do you 336 00:19:32,600 --> 00:19:36,760 Speaker 1: address it? I think the sport, first of all, everybody 337 00:19:36,800 --> 00:19:40,160 Speaker 1: recognizes that it's it is extreme sport and it's dangerous. 338 00:19:41,000 --> 00:19:43,640 Speaker 1: So our our obligation is to do everything we can 339 00:19:43,920 --> 00:19:48,680 Speaker 1: to to manage the technology and to continually improve safety 340 00:19:48,760 --> 00:19:52,200 Speaker 1: and to be a better able to minimize the effects 341 00:19:52,240 --> 00:19:56,920 Speaker 1: of accidents. Um. You know, psychologically, we're all human beings 342 00:19:57,000 --> 00:19:59,639 Speaker 1: and when a guy like Robbie Wickens has a serious injury, 343 00:20:01,280 --> 00:20:03,320 Speaker 1: you know, it sort of takes your breath away. But 344 00:20:03,560 --> 00:20:06,920 Speaker 1: he's getting great medical care. He gets great medical care 345 00:20:06,960 --> 00:20:09,760 Speaker 1: at the track we have. We're the one sport that 346 00:20:09,840 --> 00:20:13,239 Speaker 1: for some years has had the same safety crews on 347 00:20:13,280 --> 00:20:16,040 Speaker 1: the tracks, the same doctors, the same nurses that travel 348 00:20:16,840 --> 00:20:19,359 Speaker 1: um and so there's great continuity, a very high level 349 00:20:19,359 --> 00:20:22,520 Speaker 1: of care. We work with our car manufacturer, that d 350 00:20:22,640 --> 00:20:27,359 Speaker 1: Lara in italyite to improve the physical aspects of the 351 00:20:27,400 --> 00:20:30,160 Speaker 1: car that make it safer all the time. So it's 352 00:20:30,160 --> 00:20:32,960 Speaker 1: a never ending process. We hope next year we'll be 353 00:20:32,960 --> 00:20:36,320 Speaker 1: introducing a cockpit for the first time in years and 354 00:20:36,480 --> 00:20:41,119 Speaker 1: will help protect the drivers from debris and around the track. 355 00:20:41,760 --> 00:20:43,440 Speaker 1: We just got to keep doing the best we can. 356 00:20:43,920 --> 00:20:47,919 Speaker 1: Racers sign up for it and there they insist that 357 00:20:48,000 --> 00:20:51,000 Speaker 1: we do all that we can. But they're very resilient 358 00:20:51,119 --> 00:20:53,840 Speaker 1: group and it's kind of what they what they love 359 00:20:53,920 --> 00:20:56,480 Speaker 1: to do. Yeah, indeed, I'm wondering. You know. One of 360 00:20:56,480 --> 00:20:59,080 Speaker 1: the big headlines in the sports industry this year has 361 00:20:59,119 --> 00:21:02,879 Speaker 1: been the lead ization of sports gambling and I'm wondering 362 00:21:03,240 --> 00:21:07,040 Speaker 1: does that affect you at all? Well, it will, for sure, 363 00:21:07,119 --> 00:21:09,240 Speaker 1: but to be frank at this point, it's a little 364 00:21:09,240 --> 00:21:12,640 Speaker 1: hard to know, you know, sort of how high is up. 365 00:21:12,680 --> 00:21:15,040 Speaker 1: I think that, first of all, like all sports, will 366 00:21:15,040 --> 00:21:18,639 Speaker 1: do everything possible to amp up kind of the integrity 367 00:21:18,760 --> 00:21:21,840 Speaker 1: aspects of the governance of the sport. But I do 368 00:21:21,920 --> 00:21:23,960 Speaker 1: think there's a commercial side to it, and whether that's 369 00:21:24,760 --> 00:21:29,000 Speaker 1: making our data available, uh basically licensing it for for 370 00:21:29,160 --> 00:21:33,480 Speaker 1: scoring and timing um and other things that that we 371 00:21:33,520 --> 00:21:36,720 Speaker 1: think we can be engaged in yet to be determined. 372 00:21:36,720 --> 00:21:39,200 Speaker 1: It's obviously complicated because you're gonna have this patchwork of 373 00:21:39,280 --> 00:21:42,920 Speaker 1: legislation by state and we race seventeen times a year 374 00:21:43,000 --> 00:21:46,320 Speaker 1: in a number of different states. But it certainly, you know, 375 00:21:46,440 --> 00:21:50,399 Speaker 1: drives fan attention to the sport, and at one level 376 00:21:50,440 --> 00:21:53,120 Speaker 1: that that can only be a good thing. Yeah, thank 377 00:21:53,160 --> 00:21:56,080 Speaker 1: you so much. Really interesting, especially really interesting what you 378 00:21:56,119 --> 00:21:59,639 Speaker 1: say about UH fans data and how that sort of 379 00:21:59,680 --> 00:22:02,880 Speaker 1: allowed you to be more targeted in your approach with 380 00:22:03,000 --> 00:22:06,600 Speaker 1: both advertisers as well as attracting new fans. Mark Miles, President, 381 00:22:06,720 --> 00:22:10,399 Speaker 1: chief executive Officer of IndyCar. We really appreciate you joining 382 00:22:10,440 --> 00:22:13,280 Speaker 1: us He's also the president CEO of Home and Company, 383 00:22:13,320 --> 00:22:16,840 Speaker 1: which owns the Indianapolis Motor Speedway, i MS Productions and 384 00:22:16,920 --> 00:22:20,960 Speaker 1: the Indiana based baking goods brand Clapper Girl. We really 385 00:22:20,960 --> 00:22:24,080 Speaker 1: appreciate you being with us. Really interesting. Also, the Indie 386 00:22:24,080 --> 00:22:26,879 Speaker 1: car is the highest percentage of millennials of any of 387 00:22:26,920 --> 00:22:29,639 Speaker 1: the major sports leagues. So even though you are seeing, 388 00:22:29,720 --> 00:22:35,040 Speaker 1: for example, UH, the viewership of baseball, for example, decline, 389 00:22:35,520 --> 00:22:38,960 Speaker 1: there does seem to be some growth among the younger 390 00:22:39,520 --> 00:22:58,760 Speaker 1: generations in the United States. One interesting thing about the 391 00:22:58,800 --> 00:23:03,359 Speaker 1: tip for TAT or if war tariff tension that is 392 00:23:03,560 --> 00:23:06,240 Speaker 1: brewing between the US and China is just how much 393 00:23:06,240 --> 00:23:09,560 Speaker 1: of the infrastructure of trade is actually getting unleashed uh 394 00:23:09,600 --> 00:23:12,720 Speaker 1: and sort of exposed and highlighted every day. The latest 395 00:23:13,240 --> 00:23:17,800 Speaker 1: is fascinating looking at the universal Postal service and postal 396 00:23:17,920 --> 00:23:20,760 Speaker 1: rates and how they're set. Garrett Devenk joining us now 397 00:23:20,800 --> 00:23:24,000 Speaker 1: currently technology of Bloomberg News here in our eleven three 398 00:23:24,000 --> 00:23:27,399 Speaker 1: oh studios. Garrett, just walk us through what this is 399 00:23:27,480 --> 00:23:30,880 Speaker 1: that President Trump is proposing to do in order to 400 00:23:30,920 --> 00:23:34,000 Speaker 1: give a competitive edge to US companies. So I think 401 00:23:34,000 --> 00:23:36,440 Speaker 1: from his perspective, it's not so much necessarily about giving 402 00:23:36,440 --> 00:23:39,240 Speaker 1: it a new competitive edge to US companies, but to 403 00:23:39,280 --> 00:23:41,640 Speaker 1: sort of getting rid of what he sees as an 404 00:23:41,720 --> 00:23:45,640 Speaker 1: uncompetitive edge for the U. S. Postal Service and US companies. 405 00:23:45,680 --> 00:23:48,840 Speaker 1: So there's um international treaties judge, you know, sort of 406 00:23:48,840 --> 00:23:51,520 Speaker 1: saying that, you know, one country's postal service has an 407 00:23:51,560 --> 00:23:54,160 Speaker 1: agreement with another one, they agree to help each other out. 408 00:23:54,359 --> 00:23:56,359 Speaker 1: These things go back, you know, for as long as 409 00:23:56,400 --> 00:23:59,240 Speaker 1: we've had postal services, decades and hundreds of years. And 410 00:23:59,320 --> 00:24:01,480 Speaker 1: so we are sort of in the situation right now 411 00:24:01,760 --> 00:24:04,840 Speaker 1: where it's actually cheaper to send small packages, big things, 412 00:24:04,840 --> 00:24:07,359 Speaker 1: not but small things, letters and things up to about 413 00:24:07,359 --> 00:24:09,840 Speaker 1: four pounds from China to a US city that has 414 00:24:09,880 --> 00:24:12,520 Speaker 1: to send it domestically. And that's because of the international 415 00:24:12,520 --> 00:24:15,440 Speaker 1: agreements between the Chinese Postal Service and the U. S. 416 00:24:15,480 --> 00:24:18,399 Speaker 1: Postal Service. And so what Trump has said is next 417 00:24:18,520 --> 00:24:22,320 Speaker 1: month at the meeting of the International Postal Union, he 418 00:24:22,400 --> 00:24:25,360 Speaker 1: wants the US representatives to go and sort of changes 419 00:24:25,480 --> 00:24:28,240 Speaker 1: or pull themselves out of that agreement somehow. How big 420 00:24:28,280 --> 00:24:30,719 Speaker 1: of a deal is this for the Amazons of the 421 00:24:30,720 --> 00:24:33,320 Speaker 1: world and the Ali baba Is of the world. So 422 00:24:33,680 --> 00:24:36,480 Speaker 1: the companies that could be hurt by this any change 423 00:24:36,480 --> 00:24:38,960 Speaker 1: are anyone who's shipping a lot of small things from 424 00:24:39,040 --> 00:24:42,520 Speaker 1: China to the US. So Ali Baba, although you know, 425 00:24:42,680 --> 00:24:45,520 Speaker 1: obviously the bulk of its business is in China, is 426 00:24:45,560 --> 00:24:48,479 Speaker 1: trying to grow that service in the US, so this 427 00:24:48,480 --> 00:24:50,800 Speaker 1: could put it definitely put a damper on their US growth. 428 00:24:50,880 --> 00:24:54,120 Speaker 1: Another company to look at is Shopify, which a lot 429 00:24:54,119 --> 00:24:57,160 Speaker 1: of people see us as sort of shopifies this kind 430 00:24:57,160 --> 00:24:59,040 Speaker 1: of back end provider. If you want to sell something online, 431 00:24:59,080 --> 00:25:01,960 Speaker 1: anyone can set up It's like YouTube for selling online. 432 00:25:02,320 --> 00:25:05,600 Speaker 1: And there's this perception that a lot of Shopify sellers 433 00:25:05,600 --> 00:25:08,240 Speaker 1: are just sort of packaging small cheap goods from China 434 00:25:08,280 --> 00:25:11,760 Speaker 1: and selling them and sending them internationally. Shopify kind of says, well, 435 00:25:11,800 --> 00:25:14,399 Speaker 1: you know, we're diversifies business, but that's a stock that 436 00:25:14,400 --> 00:25:16,320 Speaker 1: you should be watching as well. On this, how big 437 00:25:16,359 --> 00:25:18,119 Speaker 1: of a deal is this? I mean, are we talking 438 00:25:18,119 --> 00:25:20,760 Speaker 1: about a couple of cents here and there that add 439 00:25:20,840 --> 00:25:24,560 Speaker 1: up to uh some money but not a tremendous amount, 440 00:25:24,680 --> 00:25:26,480 Speaker 1: or are we talking make it a break? Well, the 441 00:25:26,560 --> 00:25:29,480 Speaker 1: USPS has lost billions of dollars of the last years, 442 00:25:29,520 --> 00:25:32,160 Speaker 1: I mean the last several years they run and operating, 443 00:25:32,320 --> 00:25:34,800 Speaker 1: you know, shortfall every year to do their difficult job 444 00:25:34,880 --> 00:25:37,639 Speaker 1: of you know, sending packages to every single address in 445 00:25:37,640 --> 00:25:41,080 Speaker 1: the United States. You know, they are sort of operating 446 00:25:41,200 --> 00:25:44,080 Speaker 1: at loss when it comes to this kind of international shipping. 447 00:25:44,080 --> 00:25:47,200 Speaker 1: But they also agree to step deeper into these agreements 448 00:25:47,200 --> 00:25:49,879 Speaker 1: with the Chinese Postal Service because they want a piece 449 00:25:50,000 --> 00:25:53,080 Speaker 1: of that e commerce international trade pie, much of it 450 00:25:53,119 --> 00:25:57,200 Speaker 1: flowing from Chinese manufacturers to countries in the West, such 451 00:25:57,200 --> 00:26:00,000 Speaker 1: as the United States and Canada, and so they actually, 452 00:26:00,160 --> 00:26:02,080 Speaker 1: you know, there's a few different things going on here, 453 00:26:02,440 --> 00:26:05,840 Speaker 1: but you know, from Trump's perspective, it's about you know, 454 00:26:05,920 --> 00:26:10,399 Speaker 1: trying to kind of control those costs. And um, you know, 455 00:26:10,440 --> 00:26:12,960 Speaker 1: we'll see, we'll see how those discussions go in September. 456 00:26:13,119 --> 00:26:16,280 Speaker 1: So is the logic here from the US societe as 457 00:26:16,280 --> 00:26:19,639 Speaker 1: to why they agreed to this arrangement where it's cheaper 458 00:26:19,640 --> 00:26:21,720 Speaker 1: to send small packages from China to the US and 459 00:26:21,800 --> 00:26:25,000 Speaker 1: vice versa. Is a logic here that China said to 460 00:26:25,040 --> 00:26:28,000 Speaker 1: the US Postal Service or you know, we just won't 461 00:26:28,000 --> 00:26:30,480 Speaker 1: do business with you otherwise if you don't accept these 462 00:26:30,520 --> 00:26:34,359 Speaker 1: fees were out, well someone is going to be shipping 463 00:26:34,400 --> 00:26:36,879 Speaker 1: those things, you know, either way. And the USPS, I 464 00:26:36,880 --> 00:26:38,800 Speaker 1: think that they wanted to sort of they didn't want 465 00:26:38,800 --> 00:26:40,480 Speaker 1: someone else. They don't want a private ship or to 466 00:26:40,560 --> 00:26:43,760 Speaker 1: be you know, getting the bulk of that e commerce revenue. 467 00:26:43,760 --> 00:26:46,199 Speaker 1: So they said, well, let's step into these agreements. You know, 468 00:26:46,240 --> 00:26:49,160 Speaker 1: we'll take a loss in the actual um shipping them, 469 00:26:49,520 --> 00:26:51,439 Speaker 1: you know, from once they arrived to the US to 470 00:26:51,480 --> 00:26:53,480 Speaker 1: their end destination. But then what we can do is 471 00:26:53,520 --> 00:26:55,280 Speaker 1: we can layer on other costs. We can layer on 472 00:26:55,320 --> 00:26:57,639 Speaker 1: tracking costs, we can layer on premium services, we can 473 00:26:57,720 --> 00:26:59,840 Speaker 1: lay on rush shipping. And so they said, if we 474 00:27:00,000 --> 00:27:02,080 Speaker 1: can grab some of this market share, all of these 475 00:27:02,119 --> 00:27:05,000 Speaker 1: packages coming from China, you know, we'll we'll we'll deliver 476 00:27:05,040 --> 00:27:06,960 Speaker 1: them at a loss to us. But then if we 477 00:27:07,000 --> 00:27:10,000 Speaker 1: can sort of try to add some premium services, that's 478 00:27:10,000 --> 00:27:12,240 Speaker 1: where we're going to make the money. And that's kind 479 00:27:12,240 --> 00:27:14,119 Speaker 1: of has not been working out for them yet. What 480 00:27:14,160 --> 00:27:15,720 Speaker 1: do people in the markets say, I mean, do people 481 00:27:15,720 --> 00:27:18,280 Speaker 1: think that that President Trump is right on this? I mean, 482 00:27:18,359 --> 00:27:20,760 Speaker 1: it's definitely one of those things that seems to be 483 00:27:20,800 --> 00:27:24,240 Speaker 1: sort of a holdover or a quirk from international treaties. 484 00:27:24,240 --> 00:27:25,760 Speaker 1: I mean, you know, very few of us spend a 485 00:27:25,760 --> 00:27:30,040 Speaker 1: lot of time thinking about international postal service treaties and 486 00:27:30,160 --> 00:27:32,520 Speaker 1: the agreements between countries when it comes to the mail, 487 00:27:32,960 --> 00:27:34,440 Speaker 1: and so it does seem to be one of those 488 00:27:34,440 --> 00:27:36,479 Speaker 1: issues that has sort of, you know, continue to go 489 00:27:36,560 --> 00:27:39,240 Speaker 1: on and sort of been kind of subtly controversial to 490 00:27:39,280 --> 00:27:42,320 Speaker 1: a very few group of people. But now that President 491 00:27:42,320 --> 00:27:45,080 Speaker 1: Trump obviously is very focused on trades, focused especially on 492 00:27:45,160 --> 00:27:48,040 Speaker 1: China and his perception that China is beating United States 493 00:27:48,080 --> 00:27:50,800 Speaker 1: at the international game, this has suddenly become you know, 494 00:27:50,840 --> 00:27:53,919 Speaker 1: at the forefront. Is this encouraging to technology companies that 495 00:27:54,000 --> 00:27:56,880 Speaker 1: this is the tack that President Trump is taking, which 496 00:27:56,920 --> 00:28:00,359 Speaker 1: is nuanced. It's actually very nuanced, and it's a perhaps 497 00:28:00,440 --> 00:28:04,080 Speaker 1: highlighting issues that have been long simmering. It's not necessarily 498 00:28:04,160 --> 00:28:05,920 Speaker 1: hit you over the head at least when it comes 499 00:28:05,960 --> 00:28:08,240 Speaker 1: to tech in the same way that it has been 500 00:28:08,280 --> 00:28:11,800 Speaker 1: with say other areas. Perhaps, I mean, it's it's it's 501 00:28:11,840 --> 00:28:15,160 Speaker 1: definitely you know, someone definitely sort of proposed this idea 502 00:28:15,200 --> 00:28:18,159 Speaker 1: to him and something that he's gotten interested in and 503 00:28:18,160 --> 00:28:19,920 Speaker 1: has sort of, you know, decided that it's something he 504 00:28:19,960 --> 00:28:22,680 Speaker 1: wants to talk about. Companies like Amazon they are happy 505 00:28:22,720 --> 00:28:27,560 Speaker 1: about this because you know, they would imagine anyone whose 506 00:28:27,600 --> 00:28:31,400 Speaker 1: business is not primarily sending things from China to other countries. 507 00:28:31,920 --> 00:28:34,080 Speaker 1: Is well, okay, this level as the playing field, you know, 508 00:28:34,119 --> 00:28:36,439 Speaker 1: and even Shopify, which is perceived as a company that 509 00:28:36,520 --> 00:28:38,960 Speaker 1: handles a lot of volume from China to the US, 510 00:28:39,240 --> 00:28:41,320 Speaker 1: said well, you know, this will lay level the playing 511 00:28:41,360 --> 00:28:44,520 Speaker 1: field for our users who are in the United States 512 00:28:44,520 --> 00:28:48,800 Speaker 1: and sending to other Americans. Really really interesting. I did 513 00:28:48,840 --> 00:28:52,720 Speaker 1: not know about these treaties, the international treaties that governed 514 00:28:52,840 --> 00:28:56,360 Speaker 1: the price at which you sent packages internationally. Garrett de Bank, 515 00:28:56,400 --> 00:28:58,960 Speaker 1: thank you so much for being here. Garrett de Bank 516 00:28:59,080 --> 00:29:02,280 Speaker 1: is technology reporter for Bloomberg News, joining me here in 517 00:29:02,520 --> 00:29:05,920 Speaker 1: the eleven three oh studios in New York. Just really 518 00:29:05,960 --> 00:29:09,680 Speaker 1: interesting that there is going to be this potential renegotiation 519 00:29:09,760 --> 00:29:13,440 Speaker 1: of rates. A lot of renegotiations going on right now. 520 00:29:15,160 --> 00:29:17,720 Speaker 1: Thanks for listening to the Bloomberg p m L podcast. 521 00:29:18,040 --> 00:29:21,920 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 522 00:29:22,040 --> 00:29:25,520 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 523 00:29:25,560 --> 00:29:29,080 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa 524 00:29:29,120 --> 00:29:32,040 Speaker 1: Abramo wits one. Before the podcast, you can always catch 525 00:29:32,160 --> 00:29:33,880 Speaker 1: us worldwide on Bloomberg Radio.