WEBVTT - Sharp Fall In The Yuan Is Big Risk To Global Growth (Podcast) 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg P M 0:00:20.680 --> 0:00:33.040 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 0:00:33.040 --> 0:00:36.400 So much focus recently has been the relationship between the 0:00:36.520 --> 0:00:40.080 US and China. Here to talk about that is Patrick Shavannick. 0:00:40.200 --> 0:00:43.040 He is managing director and chief strategist as Silver Crest 0:00:43.080 --> 0:00:48.120 Asset Management. Just back from a tour of Denmark and 0:00:48.360 --> 0:00:51.479 uh Norway. Thank you so much for joining me here 0:00:51.479 --> 0:00:53.880 in our eleven three oh studios. So, Patrick, let's focus 0:00:53.920 --> 0:00:57.960 on China here because we are getting more talks that 0:00:58.000 --> 0:01:02.040 are continuing to fail but maybe making progress. Today. The 0:01:02.080 --> 0:01:05.040 big move is in the Chinese un which is actually 0:01:05.400 --> 0:01:09.600 strengthening by the most verses of dollars. Since what's going 0:01:09.720 --> 0:01:12.679 on here? Are we getting some sort of progress or 0:01:12.800 --> 0:01:14.720 is this just sort of muddling to a new phase? 0:01:14.959 --> 0:01:17.960 So on the trade talks um, there wasn't a lot 0:01:18.000 --> 0:01:20.960 of optimism that the talks over the past couple of 0:01:21.040 --> 0:01:23.200 days would lead to anything, and in fact they took 0:01:23.200 --> 0:01:28.759 place amid um the the likelihood and now the reality 0:01:28.880 --> 0:01:31.280 of a new round of terrorists being imposed on by 0:01:31.360 --> 0:01:34.880 both sides. So, uh, you know, I think I think 0:01:34.880 --> 0:01:38.080 the Chinese are trying to figure out, um, what exactly 0:01:38.160 --> 0:01:41.759 might satisfy the Trump administration if there is a deal 0:01:41.800 --> 0:01:44.880 to be cut here, and I think there's some disagreement 0:01:44.880 --> 0:01:48.400 within the Trump administration about what what would be satisfactory. 0:01:48.480 --> 0:01:53.480 You know, some such Learric Cudlow h insists that the 0:01:54.680 --> 0:01:58.680 that that the trade sanctions are bargaining trip to open 0:01:58.760 --> 0:02:03.000 up trade China. Others don't think so, Others such as Navarro, 0:02:03.240 --> 0:02:06.760 you know, Uh, the impression that I have is that 0:02:06.840 --> 0:02:10.960 he thinks, uh, tariffs are the solution that that China 0:02:11.040 --> 0:02:13.280 won't move. It's kind of you know. And then and 0:02:13.320 --> 0:02:16.359 the actually tariffs are the way that the are the 0:02:16.400 --> 0:02:18.359 way forward, you know. And honestly, we're just speaking with 0:02:18.400 --> 0:02:21.720 Garrett Vank of Bloomberg Technology, and he was talking about 0:02:21.760 --> 0:02:25.320 the US Postal Service and President trying to push the 0:02:25.400 --> 0:02:30.880 agency to renegotiate it's treaty and how it charges small 0:02:30.919 --> 0:02:34.400 packages to China versus the other way around, and that 0:02:34.440 --> 0:02:39.160 doesn't feel like it do feel like things are easy. 0:02:39.200 --> 0:02:41.320 It doesn't feel like cart because it's very specific and 0:02:41.320 --> 0:02:44.600 it's highlighting an issue that's been simmering for a long time. Yeah. So, 0:02:44.600 --> 0:02:48.119 so I think there's this division within the administration and 0:02:48.240 --> 0:02:50.960 I don't know, you know, where Trump falls on this 0:02:51.760 --> 0:02:55.200 about whether the goal is free your trade or whether 0:02:55.240 --> 0:02:58.520 the goal is protectionism. And obviously, you know, if you're 0:02:58.520 --> 0:03:00.600 in the markets, you'd like to know the answer to 0:03:00.639 --> 0:03:05.239 that question. Um, But we'll only know in time. Um. 0:03:05.280 --> 0:03:07.079 But it doesn't seem like this is heading towards a 0:03:07.120 --> 0:03:09.560 resolution anytime soon. You know. I want to sort of 0:03:10.360 --> 0:03:13.440 throughout there a theory that a number of big bank 0:03:13.480 --> 0:03:16.880 strategists have talked about, which is that President Trump, as 0:03:16.880 --> 0:03:21.200 he faces more challenges at home, legally and otherwise, that 0:03:21.320 --> 0:03:25.600 he will aamp up the rhetoric against China and Mexico 0:03:25.800 --> 0:03:29.880 and other places to seem hard in his convictions and 0:03:29.919 --> 0:03:32.760 to appeal to his base. Does that hold water with you? 0:03:33.040 --> 0:03:35.920 So you know, how much can more can you ramp 0:03:36.000 --> 0:03:40.640 up the rhetoric without actually taking action that then subsequently 0:03:40.680 --> 0:03:44.440 has economic impact. And so, you know, I realized that 0:03:44.680 --> 0:03:47.880 the rhetoric and even the actions. You know, protectionism is 0:03:47.880 --> 0:03:50.200 popular with a certain part of his base, but it's 0:03:50.200 --> 0:03:53.640 also deeply unpopular with the business community and with markets. 0:03:54.320 --> 0:03:56.880 And the one thing he's really got going for him 0:03:56.960 --> 0:04:00.160 right now is a strong economy. And if I were him, 0:04:00.160 --> 0:04:02.400 I wouldn't want to do anything to mess that up. 0:04:02.960 --> 0:04:05.119 And if you look in the I s M surveys 0:04:05.560 --> 0:04:08.880 um both manufacturing and non manufacturing, what a lot of 0:04:08.920 --> 0:04:12.400 companies are saying, Hey, we have a strong economy, we 0:04:12.440 --> 0:04:14.880 see a lot of positive new and but boy, these 0:04:15.480 --> 0:04:19.360 uncertainty over tariffs, the impact on our our input costs, 0:04:19.880 --> 0:04:23.279 We're losing export sales. This is the one big negative 0:04:23.320 --> 0:04:27.120 that we see that's making us hesitate to invest more. 0:04:27.520 --> 0:04:30.760 And so if that's if that's a reality now going 0:04:30.839 --> 0:04:34.160 further down that path, um, you know, I don't want 0:04:34.160 --> 0:04:37.479 to sound apocalyptic, like, Okay, it's going to end the 0:04:37.520 --> 0:04:40.279 cycle tomorrow, but but it's it's one more thing in 0:04:40.320 --> 0:04:43.680 a in a cycle that's fairly mature. It's one more 0:04:43.760 --> 0:04:46.680 thing that brings you closer to the end of the cycle. Potentially. 0:04:46.880 --> 0:04:50.080 I have to wonder, you know, putting aside the trade tensions, 0:04:50.360 --> 0:04:52.640 how much China itself could be the end of the 0:04:52.680 --> 0:04:55.880 cycle if it mismanages soft landing, And I think that 0:04:56.080 --> 0:04:58.400 people have stopped talking about that to some degree. But 0:04:58.440 --> 0:05:02.040 here we had ten Cent report earnings that were highly disappointing. 0:05:02.360 --> 0:05:05.000 Ali Baba reported earnings that were better than expected, but 0:05:05.080 --> 0:05:08.200 people still weren't that enthusiastic by the start, you know, 0:05:08.520 --> 0:05:11.839 based on the stock performance because of concerns going forward 0:05:11.839 --> 0:05:15.200 about growth. Are are you learning anything? Are you reading 0:05:15.200 --> 0:05:17.320 anything into this that makes you feel like there is 0:05:17.360 --> 0:05:20.800 a more substantial slowdown than people are really giving credit to. 0:05:20.960 --> 0:05:24.040 So I've always been quite concerned about China's economy and 0:05:24.080 --> 0:05:27.000 where it was headed um and the debt issues that 0:05:27.080 --> 0:05:29.560 they have in the past. I always took the view 0:05:29.680 --> 0:05:33.239 that because China was never really a driver of global 0:05:33.240 --> 0:05:37.320 growth because of its because of its surpluses, that a 0:05:37.400 --> 0:05:41.360 slowdown in China's economy would would not derail the global 0:05:41.400 --> 0:05:43.440 economy the US anymore than the slow down in the 0:05:43.520 --> 0:05:48.520 Japanese economy derailed growth in the ninety nineties. Right um, 0:05:48.720 --> 0:05:52.799 because it really isn't a driver of global demands. Um. 0:05:52.839 --> 0:05:56.800 That said, how China responds to a slowdown could have 0:05:56.839 --> 0:06:02.160 a significant impact. So we've seen um, the yuan depreciate. 0:06:02.839 --> 0:06:07.400 There's the prospect that they could have a devaluation, either 0:06:07.480 --> 0:06:12.560 in response to trade friction or a deteriorating economy, that 0:06:12.600 --> 0:06:14.440 would have a global impact. That would be trying to 0:06:14.480 --> 0:06:18.760 trying to exports, domestic internal problems globally, and that would 0:06:19.000 --> 0:06:21.920 create significant headwinds to US growth. That's a far way off, though, 0:06:21.960 --> 0:06:24.960 I mean, clearly you don't think so. Well, we've seen 0:06:25.520 --> 0:06:27.720 you know, we've seen the depreciation in the REM and 0:06:27.760 --> 0:06:31.400 B and and I'm not saying so. I've never had 0:06:31.440 --> 0:06:34.200 the view that China will be forced to devalue, okay, 0:06:34.240 --> 0:06:36.400 because I don't think that it would either be good 0:06:36.400 --> 0:06:39.640 for them or necessary for them to devalue. But back 0:06:39.839 --> 0:06:41.320 you know, two years ago, there were a lot of 0:06:41.360 --> 0:06:43.760 people trying to persuade them that that was in fact 0:06:43.800 --> 0:06:46.560 the case. And whether it is the case or not, 0:06:47.040 --> 0:06:49.200 they could be persuaded that this is the path that 0:06:49.240 --> 0:06:52.000 they should go down, particularly if it's a response to 0:06:52.000 --> 0:06:54.440 trade tensions, if it's seen as a way of of 0:06:54.560 --> 0:06:58.680 defanging US tarraffs by evaluating the currency, you're allowing it 0:06:58.720 --> 0:07:01.560 to depreciate. Um, I don't think it's a good path 0:07:01.600 --> 0:07:03.400 for China to go down, but it's one that they 0:07:03.480 --> 0:07:06.400 could choose to go down that would have global implications. 0:07:06.560 --> 0:07:09.160 Just real quick. I mean, perhaps the China slowdown doesn't 0:07:09.200 --> 0:07:11.960 necessarily have as big of an impact on global growth 0:07:12.080 --> 0:07:15.800 rates to say the US, but certainly for Asia. Yes, 0:07:15.880 --> 0:07:17.800 it has a huge impact and it can trickle out 0:07:17.800 --> 0:07:21.000 from there. Now. So if you're if you are, if 0:07:21.040 --> 0:07:23.640 you have over the past you know, ten years, been 0:07:23.720 --> 0:07:28.040 feeding into China's investment boom, if you're Australia selling iron ore, 0:07:28.320 --> 0:07:32.360 or Chili selling copper, or any number of Germany selling 0:07:32.360 --> 0:07:35.160 machinery to China, yes, it could have the end of 0:07:35.240 --> 0:07:37.840 China's investment boom. Could have a very serious impact. Now. 0:07:38.960 --> 0:07:41.800 It could also have a positive impact in the sense 0:07:41.880 --> 0:07:44.800 that if it helped resolve some of the overcapacity that 0:07:44.880 --> 0:07:48.400 China has been creating over the years. So you know, 0:07:48.920 --> 0:07:50.880 one thing that China's investment boom is done is it 0:07:50.960 --> 0:07:53.160 bit up the price of inputs and it pushed down 0:07:53.240 --> 0:07:56.320 the price of outputs. A reversal of that, I think 0:07:56.320 --> 0:07:59.400 in the long rum positive for the global economy, but 0:08:00.080 --> 0:08:03.320 how you get there could be very disruptive. Patrick Shavannick, 0:08:03.360 --> 0:08:05.080 thank you so much for drinking being with me today. 0:08:05.560 --> 0:08:08.720 It's a pleasure getting your insights, and China is in 0:08:08.760 --> 0:08:11.840 the absolute forefront of a lot of investor's minds these days. 0:08:11.840 --> 0:08:15.000 Patrick Shavannick, Managing Director and chief strategist, It's silver Crust 0:08:15.160 --> 0:08:32.960 Asset Management. This has been a fascinating season for retail 0:08:33.040 --> 0:08:36.440 earnings that has definitely split the halves from the have nots, 0:08:36.520 --> 0:08:39.480 with the Walmarts and the targets of the world doing 0:08:39.520 --> 0:08:43.640 phenomenally while Gap and L brands fall further, with people 0:08:43.760 --> 0:08:46.559 questioning why are they doing badly at a time when 0:08:46.600 --> 0:08:50.160 retail sales are going so strong. Here to talk about that, 0:08:50.760 --> 0:08:52.600 as well as a slew of other issues facing the 0:08:52.600 --> 0:08:56.199 retail industry is Rick Healthenbine, President, chief executive Officer of 0:08:56.240 --> 0:09:00.240 the American Apparel and Footwear Association based in Washington, d See. 0:09:00.320 --> 0:09:02.680 Although you know you've got a foot in Washington and 0:09:02.679 --> 0:09:05.080 a foot in New York. Uh Rick, thank you so 0:09:05.160 --> 0:09:07.520 much for being here. Um, so what do you make 0:09:07.559 --> 0:09:09.760 so far off the retail earning season? The earnings have 0:09:09.880 --> 0:09:13.760 been fascinating. I mean, we're we're finally uh seeing some 0:09:13.840 --> 0:09:16.559 relief from many years of agony. You know, we we 0:09:16.840 --> 0:09:20.480 we look at two thousand and eight and we compare 0:09:20.520 --> 0:09:22.719 that to two thousand and seventeen. We actually have more 0:09:22.760 --> 0:09:25.320 bankruptcyas in seventeen than we did in no AID. So 0:09:25.920 --> 0:09:29.800 to see a really good earning season like we're having 0:09:29.840 --> 0:09:34.240 now is beyond encouraging. But it's really really interesting to 0:09:34.400 --> 0:09:38.240 dig into the earnings almost companied by company, and they 0:09:38.280 --> 0:09:41.640 I think the cardinal example of who's doing well. I 0:09:41.720 --> 0:09:45.199 look at Target, and I look at Nordstrom and nordstron 0:09:45.760 --> 0:09:47.880 is fascinating because a couple of years ago they were 0:09:47.920 --> 0:09:50.920 trying to figure out who he is Nordstrom, and they 0:09:50.960 --> 0:09:54.079 developed a very strong presence in Nordstrom rac, which has 0:09:54.120 --> 0:09:58.600 a tremendous millennial appeal. And then they picked up on 0:09:58.640 --> 0:10:01.800 their Internet sales, which remarkably good. And to give them 0:10:02.000 --> 0:10:04.520 further credit, their in store experience has been good. So 0:10:04.600 --> 0:10:08.640 they've been positive over four percent on store traffic. I think, 0:10:08.720 --> 0:10:13.000 so everything is going right for them. Before you move 0:10:13.040 --> 0:10:15.800 on to somebody else, is there a particular person who 0:10:15.880 --> 0:10:20.640 is behind this strategy that has panned out in every facet. Well, 0:10:20.640 --> 0:10:23.640 in every company there's usually a leader, but in these 0:10:23.640 --> 0:10:27.000 bigger companies, it's usually leadership by committees. So you have 0:10:27.040 --> 0:10:30.439 to give a bunch of people credit to understand. You 0:10:30.520 --> 0:10:33.640 know that the dynamics of retail have changed. The lennial 0:10:33.800 --> 0:10:36.560 customer today. You're really trying to tract would prefer to 0:10:36.600 --> 0:10:39.440 shop on their phone. How do you convert that? And 0:10:39.480 --> 0:10:42.760 they also love stores like TJ Max. TJ Max is 0:10:42.800 --> 0:10:47.040 a huge favorite among millennials. Treasure Hunt. Yeah. So it's 0:10:47.040 --> 0:10:50.640 a combination of what works and what doesn't. And and 0:10:50.679 --> 0:10:53.720 probably the biggest measure in brick and mortar retail is 0:10:53.720 --> 0:10:56.880 foot traffic. The foot traffic is up if you have 0:10:57.040 --> 0:11:00.400 a strong Internet component, and if you have a mid 0:11:00.480 --> 0:11:03.840 price line like as I said, norstern Rack, that's a win. 0:11:03.960 --> 0:11:06.360 But then again, you look at somebody like Walmart and 0:11:06.720 --> 0:11:08.120 you know there you have to be a little careful, 0:11:08.120 --> 0:11:10.480 you have to factor out the groceries, but look at 0:11:10.480 --> 0:11:15.040 their online sales phenomenal. Look at targets online sales like up. 0:11:16.640 --> 0:11:19.160 So when you take it all, you can see the 0:11:19.280 --> 0:11:23.719 picture of having those retailers um who have got it, 0:11:23.960 --> 0:11:27.360 really got it and it's starting to show, and it's 0:11:27.400 --> 0:11:29.840 great for somebody like me. This is this is like 0:11:30.040 --> 0:11:32.800 manna from heaven. I just am hopeful it's not all 0:11:32.800 --> 0:11:35.120 going to implode, and when we get we'll get to 0:11:35.400 --> 0:11:37.839 why it might implode in a second. I am so 0:11:38.240 --> 0:11:41.559 concerned when I look at places like L Brand's, Victoria's 0:11:41.559 --> 0:11:44.960 Secrets parent company, or GAP or j C. Penny and Sears, 0:11:44.960 --> 0:11:46.640 which have been having a hard time for a long 0:11:46.679 --> 0:11:49.160 time and are showing no signs of recovery. You have 0:11:49.200 --> 0:11:51.640 to wonder, if these companies are not doing well now, 0:11:51.960 --> 0:11:56.120 what will it take for them to revive well. Sears 0:11:56.240 --> 0:11:58.320 is sort of in a world of its own, and 0:11:58.360 --> 0:12:01.559 it's really hard to comment on how to figure out 0:12:01.559 --> 0:12:04.559 how to get them out of their funking, their conundrum. Uh. 0:12:04.760 --> 0:12:07.600 J C. Penny, on the other hand, there's hope for 0:12:07.679 --> 0:12:11.560 j C. Penny. The question is can they figure out 0:12:11.640 --> 0:12:15.480 what works and what doesn't work. You know, we had 0:12:16.360 --> 0:12:18.240 Toys r US Kids ar US go out of business 0:12:18.240 --> 0:12:20.440 where people are going to buy their kids clothes. That 0:12:20.600 --> 0:12:23.120 used to be a strong point of J C. Penny. 0:12:23.160 --> 0:12:26.200 So maybe you know they can advance on that. They 0:12:26.280 --> 0:12:28.960 have to figure it out. But you know, then you 0:12:29.040 --> 0:12:32.920 look at someone like app who reported today um Old 0:12:33.000 --> 0:12:35.760 Navy was very strong. Don't look at CAP look at 0:12:35.800 --> 0:12:38.400 Old Navy and see what works and then figure out 0:12:38.440 --> 0:12:41.680 how to change the dynamic. All these companies are fighting 0:12:41.720 --> 0:12:45.680 for market share, but people are buying. You know, It's funny. 0:12:45.760 --> 0:12:49.080 In retail, you look at three things. You look at 0:12:49.120 --> 0:12:52.200 the unemployment level, you look at the consumer confidence level, 0:12:52.720 --> 0:12:57.040 and they're all good, all right. So one thing that's 0:12:57.040 --> 0:12:59.760 not perhaps good for your industry are some of the 0:12:59.840 --> 0:13:02.240 terps that have been proposed, and you've been lobbying against 0:13:02.240 --> 0:13:04.800 some of them. Um, a lot of them will hit 0:13:04.920 --> 0:13:08.400 your industry directly. Where are we with that? Well? I 0:13:08.480 --> 0:13:13.200 was at the hearings on Monday, our team testified, and uh, frankly, 0:13:13.240 --> 0:13:16.120 I was sitting in there what I would call the 0:13:16.160 --> 0:13:19.560 peanut gallery, and it sounded a little bit like Clara 0:13:19.600 --> 0:13:23.760 belhunking at Buffalo Bob. It was so sad, all these 0:13:24.160 --> 0:13:29.000 really strong businesses and trade associations explaining to a panel 0:13:29.080 --> 0:13:35.120 of government representatives how raising tariffs would severely impact their business. 0:13:35.400 --> 0:13:38.840 I'm curious, were there any representatives from companies arguing for 0:13:39.040 --> 0:13:43.160 the tariffs? Yes, there were a few, and I um 0:13:43.320 --> 0:13:47.520 put few in capital letters, um and and a lot 0:13:47.520 --> 0:13:49.920 of that place to self interest for them. You know, 0:13:50.040 --> 0:13:55.760 some protectionism would help. Uh, Well, there's one gentleman tests 0:13:55.840 --> 0:14:00.360 testifying actually about right now as we speak, from a 0:14:00.440 --> 0:14:05.439 leather company, and uh, he's interest is to protect his business. 0:14:06.120 --> 0:14:10.720 Um NICTO the trade organization also testified and they, you know, 0:14:10.760 --> 0:14:13.719 they represent textile interests in America. So you know, I 0:14:13.840 --> 0:14:16.080 have to give these people credit to the extent they're 0:14:16.120 --> 0:14:18.240 fighting for what they believe in. But I have to 0:14:18.280 --> 0:14:22.160 say they're in the minority, but they believe what they believe. 0:14:22.640 --> 0:14:25.800 Most people who testified hit tears in their eyes. You're 0:14:25.880 --> 0:14:28.440 really gonna hurt me. This is gonna hurt my business. 0:14:28.440 --> 0:14:30.680 And in this third ranch, we call it of two 0:14:30.720 --> 0:14:33.440 hundred billion, they've got hand bags, they've got hats, they've 0:14:33.440 --> 0:14:36.960 got baseball gloves, they've got backpacks. You know, I tell 0:14:36.960 --> 0:14:39.720 everybody who listen that, you know, it's back to school season, 0:14:39.760 --> 0:14:42.520 you better buy two backpacks because you're twenty dollar backpacks 0:14:42.560 --> 0:14:45.040 gonna be thirty next time. Do you think that there 0:14:45.120 --> 0:14:47.360 will be bankruptcies as a result of some of the 0:14:47.400 --> 0:14:49.400 proposed tariffs or do you think it will just be 0:14:49.720 --> 0:14:53.800 uh a slower profit margins? Now, you know, the tariffs 0:14:53.880 --> 0:14:56.760 aren't gonna push people into bankruptcy. You know, be other 0:14:56.800 --> 0:14:59.720 economic factors that do it, that are already in play 0:15:00.320 --> 0:15:04.960 the bank. The tarifs will just exacerbate the situation because 0:15:05.160 --> 0:15:08.920 you know, remember this isn't percent tariff they're talking about. 0:15:08.960 --> 0:15:12.040 It's twenty on top of what you're already paying. So 0:15:12.120 --> 0:15:15.120 if you're paying and you had twenty five, now we 0:15:15.200 --> 0:15:18.040 got a forty five percent tariff, what's gonna happen. People 0:15:18.080 --> 0:15:22.120 are gonna stop buying, They stop buying, sales go down. Um, 0:15:23.240 --> 0:15:27.120 it's a bad cycle. Is there any positive consequence from 0:15:27.160 --> 0:15:30.040 some of the post tariffs on retail? Wow? What a 0:15:30.160 --> 0:15:35.240 what a great question? Um, two word answer. Absolutely, no 0:15:35.560 --> 0:15:39.480 positive consequence except maybe at the end of the day, 0:15:39.760 --> 0:15:42.600 perhaps tariffs will just go away and then people could 0:15:43.400 --> 0:15:46.360 spend what they really should be spending for product. You know, 0:15:46.800 --> 0:15:50.280 you look at the economy and there was an article 0:15:50.360 --> 0:15:54.960 this this week about the millennials responding to the next crash, 0:15:55.040 --> 0:15:57.480 and you know, how will they respond? It's been ten years. 0:15:57.480 --> 0:16:00.320 We'll keep in mind that low quost product in last 0:16:00.360 --> 0:16:03.880 recession really helped us out, helped us come back quickly, 0:16:03.920 --> 0:16:06.160 and you're not going to have that anymore. So if 0:16:06.200 --> 0:16:08.760 you're short on cash, it's going to be harder. Rick 0:16:08.800 --> 0:16:10.720 Calforn Byn, thank you so much for joining me today. 0:16:11.000 --> 0:16:13.400 Rick Calvin Byn is President and chief executive officer of 0:16:13.440 --> 0:16:17.840 the American Apparel and Footwear Association in Washington, d C. 0:16:34.320 --> 0:16:38.040 The business of car racing is massive and growing. Joining 0:16:38.120 --> 0:16:41.280 us now is Mark Miles, President, chief executive officer of 0:16:41.520 --> 0:16:44.520 Indy Car, also the President CEO of Holman and Company, 0:16:44.520 --> 0:16:48.240 which owns the Indianapolis Motor Speedway. Mark, thank you so 0:16:48.320 --> 0:16:51.200 much for being with us. I just want to start 0:16:51.280 --> 0:16:53.360 with an overview. Can you give us a sense of 0:16:53.400 --> 0:16:56.560 sort of the state of play of the car racing business, 0:16:56.640 --> 0:17:00.440 given the fact that we've seen declines in some list ownership, 0:17:00.640 --> 0:17:05.960 viewership at tendership of other other sports. Yeah, there's definitely 0:17:06.440 --> 0:17:09.600 headwinds in sport to some extent, in the motor sport 0:17:09.640 --> 0:17:13.359 to great extent. But frankly, we're delighted that over the 0:17:13.400 --> 0:17:18.040 last few years since probably Indie Car has been growing 0:17:18.080 --> 0:17:21.200 in with respect, almost all the sort of fan metrics are. 0:17:21.280 --> 0:17:27.639 Television ratings are up in four years, um our attendance 0:17:27.720 --> 0:17:31.040 is growing, our social following is up by a million 0:17:31.440 --> 0:17:34.919 followers in the last year, and so we feel like 0:17:34.960 --> 0:17:37.800 we're kind of bucking the headwinds and and very bullish 0:17:37.800 --> 0:17:39.920 about our future. Can you give a sense of why. 0:17:40.040 --> 0:17:43.119 I mean you noted also that IndyCar is the highest 0:17:43.119 --> 0:17:46.960 percentage of millennials of any of the major sports leagues. 0:17:47.200 --> 0:17:50.320 What is it about the sport that is attractive to 0:17:50.359 --> 0:17:53.960 younger people? Part of our growth is because I think 0:17:53.960 --> 0:17:56.359 we kind of squandered the recent years in our past, 0:17:56.480 --> 0:17:58.920 and so we're getting our act together and getting things 0:17:59.000 --> 0:18:03.479 together and forward. But inherently we think IndyCar Racing has 0:18:03.520 --> 0:18:06.320 a lot to offer. It is the fastest series out there. 0:18:06.680 --> 0:18:10.480 It's very technical, and by that I mean on the track, 0:18:10.520 --> 0:18:12.720 but also in the way we go to market. For example, 0:18:13.320 --> 0:18:16.160 in a two hour race, we collect fifty million data 0:18:16.200 --> 0:18:20.320 records and when we talked to UH companies, you're well 0:18:20.359 --> 0:18:23.639 aware of that, think about how they can help us 0:18:24.640 --> 0:18:28.000 UH convert that data into really interesting content for fans. 0:18:28.080 --> 0:18:29.840 We think there's a there's a lot to offer there 0:18:29.840 --> 0:18:32.200 and to continue to grow our younger audience in particular, 0:18:33.119 --> 0:18:36.560 So UM the sport is compelling. You can start at 0:18:36.560 --> 0:18:39.040 the back of the grid and and win a race 0:18:39.200 --> 0:18:42.040 with lots of different winners, and yet we've got some 0:18:42.280 --> 0:18:46.000 you know, some stalwart competitors like Team Penskey and and 0:18:46.320 --> 0:18:50.359 Ganassi and Andretti, and drivers that are veteran champions. So 0:18:50.400 --> 0:18:53.040 we've got challengers, and we got UH, and we've got 0:18:53.160 --> 0:18:56.160 established champions, and I just think there's lots and lots 0:18:56.160 --> 0:18:58.720 of narrative for fans to follow. So Mark, when I 0:18:58.720 --> 0:19:01.680 think about what I think about car racing in the 0:19:01.760 --> 0:19:04.720 United States, I think about UH, the zooming noise that 0:19:04.800 --> 0:19:07.120 I think about, how fast they go, and the sort 0:19:07.160 --> 0:19:09.840 of sponsorship labels all over the cars. I also think 0:19:10.000 --> 0:19:14.399 of the highly publicized crash that crashes that occasionally happen 0:19:14.760 --> 0:19:17.560 from time to time, and there was a terrible crash 0:19:17.640 --> 0:19:22.080 just on Sunday, Indy car driver Robert Wickens being hospitalized 0:19:22.280 --> 0:19:27.080 for some serious injuries after a crash at the Pocono Raceway. 0:19:27.200 --> 0:19:30.280 What does a crash like this do for the sport? 0:19:30.560 --> 0:19:32.560 Is it something that sets you back? How do you 0:19:32.600 --> 0:19:36.760 address it? I think the sport, first of all, everybody 0:19:36.800 --> 0:19:40.160 recognizes that it's it is extreme sport and it's dangerous. 0:19:41.000 --> 0:19:43.640 So our our obligation is to do everything we can 0:19:43.920 --> 0:19:48.680 to to manage the technology and to continually improve safety 0:19:48.760 --> 0:19:52.200 and to be a better able to minimize the effects 0:19:52.240 --> 0:19:56.920 of accidents. Um. You know, psychologically, we're all human beings 0:19:57.000 --> 0:19:59.639 and when a guy like Robbie Wickens has a serious injury, 0:20:01.280 --> 0:20:03.320 you know, it sort of takes your breath away. But 0:20:03.560 --> 0:20:06.920 he's getting great medical care. He gets great medical care 0:20:06.960 --> 0:20:09.760 at the track we have. We're the one sport that 0:20:09.840 --> 0:20:13.239 for some years has had the same safety crews on 0:20:13.280 --> 0:20:16.040 the tracks, the same doctors, the same nurses that travel 0:20:16.840 --> 0:20:19.359 um and so there's great continuity, a very high level 0:20:19.359 --> 0:20:22.520 of care. We work with our car manufacturer, that d 0:20:22.640 --> 0:20:27.359 Lara in italyite to improve the physical aspects of the 0:20:27.400 --> 0:20:30.160 car that make it safer all the time. So it's 0:20:30.160 --> 0:20:32.960 a never ending process. We hope next year we'll be 0:20:32.960 --> 0:20:36.320 introducing a cockpit for the first time in years and 0:20:36.480 --> 0:20:41.119 will help protect the drivers from debris and around the track. 0:20:41.760 --> 0:20:43.440 We just got to keep doing the best we can. 0:20:43.920 --> 0:20:47.919 Racers sign up for it and there they insist that 0:20:48.000 --> 0:20:51.000 we do all that we can. But they're very resilient 0:20:51.119 --> 0:20:53.840 group and it's kind of what they what they love 0:20:53.920 --> 0:20:56.480 to do. Yeah, indeed, I'm wondering. You know. One of 0:20:56.480 --> 0:20:59.080 the big headlines in the sports industry this year has 0:20:59.119 --> 0:21:02.879 been the lead ization of sports gambling and I'm wondering 0:21:03.240 --> 0:21:07.040 does that affect you at all? Well, it will, for sure, 0:21:07.119 --> 0:21:09.240 but to be frank at this point, it's a little 0:21:09.240 --> 0:21:12.640 hard to know, you know, sort of how high is up. 0:21:12.680 --> 0:21:15.040 I think that, first of all, like all sports, will 0:21:15.040 --> 0:21:18.639 do everything possible to amp up kind of the integrity 0:21:18.760 --> 0:21:21.840 aspects of the governance of the sport. But I do 0:21:21.920 --> 0:21:23.960 think there's a commercial side to it, and whether that's 0:21:24.760 --> 0:21:29.000 making our data available, uh basically licensing it for for 0:21:29.160 --> 0:21:33.480 scoring and timing um and other things that that we 0:21:33.520 --> 0:21:36.720 think we can be engaged in yet to be determined. 0:21:36.720 --> 0:21:39.200 It's obviously complicated because you're gonna have this patchwork of 0:21:39.280 --> 0:21:42.920 legislation by state and we race seventeen times a year 0:21:43.000 --> 0:21:46.320 in a number of different states. But it certainly, you know, 0:21:46.440 --> 0:21:50.399 drives fan attention to the sport, and at one level 0:21:50.440 --> 0:21:53.120 that that can only be a good thing. Yeah, thank 0:21:53.160 --> 0:21:56.080 you so much. Really interesting, especially really interesting what you 0:21:56.119 --> 0:21:59.639 say about UH fans data and how that sort of 0:21:59.680 --> 0:22:02.880 allowed you to be more targeted in your approach with 0:22:03.000 --> 0:22:06.600 both advertisers as well as attracting new fans. Mark Miles, President, 0:22:06.720 --> 0:22:10.399 chief executive Officer of IndyCar. We really appreciate you joining 0:22:10.440 --> 0:22:13.280 us He's also the president CEO of Home and Company, 0:22:13.320 --> 0:22:16.840 which owns the Indianapolis Motor Speedway, i MS Productions and 0:22:16.920 --> 0:22:20.960 the Indiana based baking goods brand Clapper Girl. We really 0:22:20.960 --> 0:22:24.080 appreciate you being with us. Really interesting. Also, the Indie 0:22:24.080 --> 0:22:26.879 car is the highest percentage of millennials of any of 0:22:26.920 --> 0:22:29.639 the major sports leagues. So even though you are seeing, 0:22:29.720 --> 0:22:35.040 for example, UH, the viewership of baseball, for example, decline, 0:22:35.520 --> 0:22:38.960 there does seem to be some growth among the younger 0:22:39.520 --> 0:22:58.760 generations in the United States. One interesting thing about the 0:22:58.800 --> 0:23:03.359 tip for TAT or if war tariff tension that is 0:23:03.560 --> 0:23:06.240 brewing between the US and China is just how much 0:23:06.240 --> 0:23:09.560 of the infrastructure of trade is actually getting unleashed uh 0:23:09.600 --> 0:23:12.720 and sort of exposed and highlighted every day. The latest 0:23:13.240 --> 0:23:17.800 is fascinating looking at the universal Postal service and postal 0:23:17.920 --> 0:23:20.760 rates and how they're set. Garrett Devenk joining us now 0:23:20.800 --> 0:23:24.000 currently technology of Bloomberg News here in our eleven three 0:23:24.000 --> 0:23:27.399 oh studios. Garrett, just walk us through what this is 0:23:27.480 --> 0:23:30.880 that President Trump is proposing to do in order to 0:23:30.920 --> 0:23:34.000 give a competitive edge to US companies. So I think 0:23:34.000 --> 0:23:36.440