Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg He
Speaker 1: is Home on arranged John Sylvia with us from Wells Fargo,
Speaker 1: and we're thrilled not to bring them in right now. John.
Speaker 1: It's not that there's a complacency right now, but we're
Speaker 1: all enjoying three and a half four whatever the percent
Speaker 1: g d P is nominal GDP of six make America
Speaker 1: great again? Seven percent nominal GDP. What's the Wells Fargo
Speaker 1: forecast for the next six or eight quarters? What's the
Speaker 1: glide path of economic growth? The live plats for us
Speaker 1: are slower. I agree with you very much on the
Speaker 1: complacency of you know, the foreign four percent plus that
Speaker 1: we're going to see on Friday, the three percent we've
Speaker 1: probably seen in a third quarter. But to sustain that
Speaker 1: over time, you still need the gains and productivity which
Speaker 1: are yet to appear, and you still need significant improvement
Speaker 1: in labor force participation rates. What we are seeing some
Speaker 1: improvement there, but again to sustain that three percent growth. Um,
Speaker 1: I think the market is a little bit well, I
Speaker 1: think the market a general is a little bit too
Speaker 1: complacent given what I see as conflicts. And you've already
Speaker 1: talked about this this morning, Tom Oil with respect Iran,
Speaker 1: the trade tensions that go on, and then the coming
Speaker 1: shrinking of the Fed's balanche and raising short term interest rates,
Speaker 1: John Sylvia. On Friday, while other people may have been
Speaker 1: looking in one direction, we were looking at a report
Speaker 1: from the Congressional Budget Office, this is the nonpartisan CBO.
Speaker 1: They said that new legislation enacted since the release of
Speaker 1: the February budget would add more than a hundred billion
Speaker 1: dollars to the deficit. Now this would push it over
Speaker 1: a trillion dollars. Can you connect economic performance as measured
Speaker 1: by g d P and how that connects to estimates
Speaker 1: about what will happen to the deficit if we don't
Speaker 1: reach that four Well, I mean that that is Indeed,
Speaker 1: what the CBO was saying is that the deficit rises.
Speaker 1: Now that surprises people in the sense that, well, wait
Speaker 1: a minute, we're seeing a better economy. Shouldn't we have
Speaker 1: better tax revenue as well in part that that certainly
Speaker 1: is true. Um, but when you're looking at that differsit
Speaker 1: it does suggest two things. Interest rates are rising, so
Speaker 1: the interest expense that goes along with all that federal
Speaker 1: debt um is going to continue to increase. In second,
Speaker 1: for CBO, their long run economic objections, uh talk about
Speaker 1: economic growth more like two two and a half and
Speaker 1: certainly not three. So those two problems, the interest expense
Speaker 1: and the slower growth over time are again combined with
Speaker 1: the Fed shrinking its balary sheet going to create problems.
Speaker 1: What do real rates do within this dynamic? I mean,
Speaker 1: if we've got nominal GDP squeezing down and you're looking
Speaker 1: for a slow down in inflation adjusted economic growth is well,
Speaker 1: what do real rates do? And then within that, John
Speaker 1: your expertise at real wages, Well, again, a real rates rise. Again,
Speaker 1: the cost of capital starts to rise. It sets a
Speaker 1: higher barrier for business investment going forward. And it's not
Speaker 1: you just not you know, going to be the end
Speaker 1: of the world, but it does mean the real rates rise,
Speaker 1: it's going to put a higher bar for anybody trying
Speaker 1: to invest in terms of expected rate of return. And
Speaker 1: once again Tom, when you're talking about a slower nominal
Speaker 1: GDP number. You're talking about the lower returns to what
Speaker 1: to labor and capital going forward, John, I want to
Speaker 1: connect a couple of pieces. One is the g d P,
Speaker 1: One is tax revenue in the deficit, and then the
Speaker 1: way the government actually puts its budget together. There's the
Speaker 1: mandatory spending and then there's the discretionary spending. Just as
Speaker 1: an example, some portion of the Veterans Affairs budget is
Speaker 1: going to be moved to discretionary, but they've said, the
Speaker 1: Republicans have said that they're going to have to find
Speaker 1: cuts somewhere else in order to balance payments to veterans
Speaker 1: who want to take private insurance. Do you see that
Speaker 1: happening in more categories because of the deficits. Well, I
Speaker 1: appreciate the government trying to do that, but you know,
Speaker 1: mandatory is mandatory as far as I understand, And so
Speaker 1: the challenges when you look at the US budget and
Speaker 1: again looking at the CBO reports, increasingly most federal and
Speaker 1: spending now is entitlements plus net interest expense, meaning that
Speaker 1: that discretionary portion is shrinking and is going to continue
Speaker 1: to shrink over time. It's gonna be extremely difficult, you know,
Speaker 1: to to really cut anything with respecting mandatory spending because
Speaker 1: those come under the entitlements, federal pensions, disability payments, UM, Medicaid,
Speaker 1: all those other issues. So again, uh, you know, I
Speaker 1: would say that you've got a challenge ahead of us again, complacency.
Speaker 1: Going back to Tom's first point. Uh, yeah, you can
Speaker 1: enjoy what's going on today, but you cannot be complacent
Speaker 1: on the outlook for the next two to five years.
Speaker 1: What have we learned from the Tax Act? I mean,
Speaker 1: it's getting to be almost on the edge of ancient history.
Speaker 1: Although I'm struck John by how many people are running
Speaker 1: in your don't trust their worthholding right now. They're really
Speaker 1: not sure what happens next spring. But what have we
Speaker 1: learned about the tax active months ago? Well, go back
Speaker 1: to your own statement, Tom, if you're not sure about
Speaker 1: your withholding six months or a year from now, or
Speaker 1: two years from now, if some of these provisions are
Speaker 1: more temporary than permanent, you're not going to change your
Speaker 1: permanent behavior. Yes, you'll enjoy fund right now. It will
Speaker 1: be a good time and the economy is moving ahead,
Speaker 1: and that's what the Tax Act was supposed to do.
Speaker 1: But can that tax program alter the productivity and labor
Speaker 1: force participation rate over the long run to make a
Speaker 1: significant difference. So our estimates is probably zero point two
Speaker 1: to zero point three percent change in potential GDP going forward.
Speaker 1: UM still doesn't still doesn't get us percent. We're a
Speaker 1: little bit short at three percent time, John Sylvia, thank
Speaker 1: you so much. John. I'm gonna say this folks for
Speaker 1: the first time today, but I'll repeat it throughout the
Speaker 1: day tonight, PBS American Masters, Ted Williams. I believe Pim Fox,
Speaker 1: John Sylvia, we'll be tuning into that. I think somehow
Speaker 1: know that to be in case. John Sylvia, fall River
Speaker 1: and Wells Fargo with us today. Goldner Montevali joined us
Speaker 1: reporting for Bloomberg from Tehran. Goldner, let me start with
Speaker 1: you as well. Who has Mr Rohani's back? Who has
Speaker 1: his political support? Is it domestic or is it so
Speaker 1: important that it's Beijing? Um, that's as It's a good question.
Speaker 1: I think it's unclear right now what China's position is
Speaker 1: going to be. I think Uranians have been very interested,
Speaker 1: UM to see what Beijing will do in the in
Speaker 1: the coming months, particularly with the deadlines for the sanctions
Speaker 1: coming up, because they're very aware here. I think both
Speaker 1: officials and ordinary Iranians, those who at least keep tabs
Speaker 1: on the news, are aware of this, this trade war
Speaker 1: that that Trump and Trump has engaged Beijing, and they're
Speaker 1: aware of that, and I think they're waiting to see
Speaker 1: what China will do. I know that China has already
Speaker 1: come out and said that you know it, it wants
Speaker 1: to support the nuclear deal UM and I think it's
Speaker 1: even gone further than that to say that Trump can't
Speaker 1: force it from not buying Iranian um oil. But I
Speaker 1: think in terms of Rahani's domestic constituents and his support here,
Speaker 1: he's right now under a huge amount of pressure domestically.
Speaker 1: People are frustrated with the government here. But I think
Speaker 1: that their sense that the US and Trump specifically is
Speaker 1: waging an economic war on the country which will affect
Speaker 1: their livelihoods, will trump any kind of um you know,
Speaker 1: any kind of frustration that they do have with the government,
Speaker 1: which which is pretty high at the momentum gonor. Of course,
Speaker 1: the tweeter President Trump came hours after President Rohani warned
Speaker 1: the US against threatening the nation's oil exports. He also
Speaker 1: called it the time actually for improved relations with its neighbor,
Speaker 1: including its arch rival Saudi Arabia. Does this get escalated
Speaker 1: and if it does, we find out this week or
Speaker 1: could it escalate in the next couple of months. I
Speaker 1: don't know, I think again, because of those sanctions deadlines,
Speaker 1: there are quite a lot of unanswered questions. And one
Speaker 1: of the big things that we don't know yet is
Speaker 1: what the Europeans have managed to do and the kind
Speaker 1: of rescue package and those mechanisms that they've been trying
Speaker 1: to secure and to find in order to salvage and
Speaker 1: save the nuclear deal. That remains the big question mark here.
Speaker 1: We have to see what happens with that, whether Iran
Speaker 1: is going to accept it, whether it's going to be enough,
Speaker 1: and then I think the escalation will posted we start
Speaker 1: from there. I have the feeling because Rawhani's comments yesterday
Speaker 1: were very we were quite strong, and they've been terts
Speaker 1: recently anywhere because of trumpsactions, but they were stronger than
Speaker 1: than usual perhaps, and so my prediction is is that
Speaker 1: Iran is going to take what it will see as
Speaker 1: the moral high ground in its next response to this tweet, well,
Speaker 1: thank you so much for your importing from Tehran in
Speaker 1: Banking PM. There's Keith Briette in Woods, which is out
Speaker 1: there far more than just sell side and analysis. They
Speaker 1: were acclaimed for decades ago. Uh, it is about transactions,
Speaker 1: about mergers, about acquisitions, combinations as well. And that's a
Speaker 1: good introduction for the gentleman from Middlebury. Yes, indeed, well,
Speaker 1: let's bring in Tom Michel. He is, of course with
Speaker 1: the KBW, a Stephal company. He is well, as you mentioned,
Speaker 1: really a veteran of the industry, and he is the
Speaker 1: president and chief executive officer and he directs all business
Speaker 1: lines there. Tom, thanks very much for being with us.
Speaker 1: Just a couple of questions having to do with that
Speaker 1: idea of acquisitions and mergers. Last week we got State
Speaker 1: Street and Charles River Systems, People's United acquiring vend Lease,
Speaker 1: and then you've got a world in which Venmo and
Speaker 1: Square participate. What's the future for big bank like Bank
Speaker 1: of America when you see these other kind of tucking acquisitions,
Speaker 1: there doesn't seem to be a lot of big acquisition,
Speaker 1: big takeovers. What's the future for bank like b of
Speaker 1: A in this context. Well, first of all, good morning
Speaker 1: Tim and Tom, and it's great to be with you
Speaker 1: and thank you for having me join you. Uh well,
Speaker 1: Bank America, being one of the big four, has a
Speaker 1: deposit market share that is right around ten percent, and
Speaker 1: as you may recall, Congress past to law that said
Speaker 1: that no bank can go above ten percent during normal times.
Speaker 1: I mean, my sense is in a crisis that could
Speaker 1: be changed, but in normal times, no big bank can
Speaker 1: go over ten percent via acquisition. So really the way
Speaker 1: they need to grow now is organically. And what we're
Speaker 1: seeing happen at Bank America in particular and the other
Speaker 1: big banks is their profitability is ramping. And it's ramping
Speaker 1: because a tax reform. It's ramping because they've really put
Speaker 1: um the crisis behind them. Uh. The environment is a
Speaker 1: good environment. Uh. The in other words, the economy is
Speaker 1: doing well, and we're seeing them investing a lot into
Speaker 1: tuck in acquisitions as well of non bank type not
Speaker 1: not non depositories, as well as making acquisitions and investments
Speaker 1: in fintech and digital banking. I think digital banking is
Speaker 1: really going to be one of the themes that's going
Speaker 1: to be talked about much more over the course of
Speaker 1: the next couple of years in banking. Do you expect
Speaker 1: Bank of America to make an acquisition similar to a
Speaker 1: square of Venmo. You know, I'm not aware of their
Speaker 1: specific acquisition plans, but my sense is that they have
Speaker 1: the wherewithal to certainly do something like that. UM. You
Speaker 1: mentioned Square and you mentioned Venmo. Those are both terrific companies.
Speaker 1: UM Bank America, I believe, is one of the seven
Speaker 1: investors in Zel, which is a competitor to Venmo, Which
Speaker 1: leads me to believe that that's probably not a likely
Speaker 1: candidate for them. Doesn't mean it's impossible, but I think
Speaker 1: probably unlikely. UM. So they're headed down that path, but
Speaker 1: just with a different provider. It's their own company. Scale
Speaker 1: is the word of the day. It's it's you know,
Speaker 1: if you go to an NBA act, your scale scale, scale, scale, scale,
Speaker 1: scale scale. Are the regional's going to scale up to
Speaker 1: join the two big defails? I mean, are we going
Speaker 1: to have more too big defails size banks? I I
Speaker 1: don't think we're going to have more too big to
Speaker 1: fail banks because those banks are so enormous as they
Speaker 1: approach a trillion dollars or more in assets. Uh, it
Speaker 1: would be a lot of consolidation to get there. I
Speaker 1: think the way the rest of the industry is going
Speaker 1: to think about it is how do they get enough
Speaker 1: scale to compete and what business are there regional competitors
Speaker 1: going to look to be in. Uh, the retail business
Speaker 1: is going to be one of a business of high
Speaker 1: benefits of scale, especially as digital banking is being more
Speaker 1: and more received by consumers. So you're gonna see over time,
Speaker 1: I think the retail banking move somewhat away from the
Speaker 1: branch and more towards the phone and mobile applications. UH.
Speaker 1: With commercial banking, I think that's a little bit different.
Speaker 1: That hasn't moved as much and probably would move a
Speaker 1: little bit more slowly. But I think these regional banks
Speaker 1: need to stand up and get more efficiencies to compete
Speaker 1: with the biggest banks. And now there's going to be
Speaker 1: an opportunity to do that because of the legislative reform
Speaker 1: of a few weeks ago, where that fifty billion dollar
Speaker 1: barrier for heightened regulation has been moved upwards to a
Speaker 1: hundred or two hundred and fifty billion, depending upon your company.
Speaker 1: So investing companies like Capital One pm C, I think
Speaker 1: you know those are fine banks. Um, I'm not. You know,
Speaker 1: they have I think plenty of they have plenty of scale.
Speaker 1: I don't think they necessarily have to need to have
Speaker 1: to do something. But um, But nonetheless, I'm sure they're
Speaker 1: always eager to find areas for more efficiency. But I
Speaker 1: think the super regional banks generally have the wherewithal to
Speaker 1: compete with the bigger banks. Um. I think it's the
Speaker 1: smaller banks below them that are going to feel more
Speaker 1: pressure to get more efficiency. Well, okay, that's come on,
Speaker 1: that's Keith Fett. We'll talk for mergers. When the merg
Speaker 1: do you see always said that more efficiency is more
Speaker 1: synery synergies? You use that synergies? When does the merger
Speaker 1: frenzy start timing me? Rates are coming up? When does
Speaker 1: it click in? Well, unfortunately, you may be seeing it
Speaker 1: because uh, it's happening slower this cycle than in the past.
Speaker 1: We went back and checked and I think the most
Speaker 1: prolific company we found in our analysis was Norwest did
Speaker 1: more than fifteen acquisitions in one year. If you went
Speaker 1: back to the boom years, I don't know exactly what
Speaker 1: year that was in. But today, if you want the
Speaker 1: most prolific bank in America, you may do two or
Speaker 1: possibly three mergers in a year. It is just down
Speaker 1: because of the regulatory um apparatus that's more stringent than
Speaker 1: it has been in the past. So so and then
Speaker 1: also there are just fewer banks, So you could come
Speaker 1: in on a Monday and see a merger Monday in
Speaker 1: the past and there'd be a series of bank acquisitions.
Speaker 1: There are a quarter fewer banks in there were during
Speaker 1: the crisis. So so it's gonna happen, but at a
Speaker 1: more deliberate pace in my opinion. Uh. And I think
Speaker 1: the big big bank mergers are going to probably happen
Speaker 1: very slowly. I don't think there's going to be a
Speaker 1: sudden boom um. I think you're going to see it
Speaker 1: more in the regional banking space where probably the need
Speaker 1: for efficiency is is greater and scale is greater. You
Speaker 1: said need for efficiency. That leads me to Deutsche Bank.
Speaker 1: What do you believe is going to happen at dB? Well,
Speaker 1: you're really getting him in trouble this morning. Well help
Speaker 1: us of Deutsche Bank and particularly Deutsche Bank New York,
Speaker 1: Mr Michell. I think if you look at the valuation
Speaker 1: of the stock, you'd see a trades um at a
Speaker 1: at a big discount to books um and and it
Speaker 1: is below its peers, um and I and I think
Speaker 1: that that tells you that greater changes ahead. UM. I
Speaker 1: don't have any particular insights as to what I think
Speaker 1: is could happen, other than the fact that the bank
Speaker 1: needs to do something. The current status isn't working. Uh.
Speaker 1: And I think it's very hard to be a national
Speaker 1: and a global champion if if your stock is trading
Speaker 1: like that, So there's going to be a need to
Speaker 1: take strategic actions. Um. I Also one thing I will
Speaker 1: comment on just generally, not not just for Deutsche Bank,
Speaker 1: but the the American banking regulators responded to the oh
Speaker 1: seven o nine crisis by selling troubled big banks to
Speaker 1: even bigger banks. I don't think that's going to happen
Speaker 1: next time. Uh. I think that, and that's partly how
Speaker 1: the big global cities in the US got to be
Speaker 1: so big. Washington Mutual, bear Stearns ended up in JP
Speaker 1: Morgan's hands, wakovi A Wells Fargo's hands. So I think,
Speaker 1: what's gonna happen and those banks. It might have been
Speaker 1: the right thing to do at that time, But I
Speaker 1: think as as I've heard the policy discussion, I think
Speaker 1: that someone like Deutsche Bank, if there is a combination.
Speaker 1: I don't think the idea is going to be, let's
Speaker 1: find a single buyer for the whole thing. I just
Speaker 1: don't think that's gonna happen. To Michel, thank you so much,
Speaker 1: greatly appreciated. Chief Executive Officer, K B. W. Keith Branton.
Speaker 1: Wood's a stiff a company we're celebrating. I love capitalism.
Speaker 1: An American story. Ken Lan Going, co founder of home
Speaker 1: g built on the cover PIM A nostalgic photograph, a
Speaker 1: well Ian, a wreck Wellian photograph. I would say, kenn
Speaker 1: is that is that you with a shovel that kids
Speaker 1: better looking than I was? Okay, and I think they
Speaker 1: has a little eyes to have dark here well not
Speaker 1: now now I have no here. But that was my physique.
Speaker 1: That was pretty much it. The only thing about that
Speaker 1: picture and I lost the argument was we didn't use
Speaker 1: long handles shovels, shovels and construction. We use short handles
Speaker 1: for the handle, yes, yes, yes, exactly, but they for
Speaker 1: the for the layout, for having the kids standing and
Speaker 1: putting his foot on a shovel and having the babelhold
Speaker 1: a long handle, That's why they did it. But but
Speaker 1: other than that, it's it's exactly what I was. I
Speaker 1: have to go to work with a pair of jeans
Speaker 1: and work shoes and a T shirt. Yeah about now,
Speaker 1: I want to I want I want you to talk
Speaker 1: a little bit if you can, about walking away from
Speaker 1: deals and walking away from people that you do not
Speaker 1: feel you can do business with, because sometimes it seems
Speaker 1: those are the best decisions, and yet they go unsung.
Speaker 1: Tell us about walking away from deals. I have an expression,
Speaker 1: the best deals I ever did were the ones I
Speaker 1: didn't do. Okay, my bet on deals is essentially a people.
Speaker 1: When when I my nose tells me that I'm getting
Speaker 1: in with a group of people that I might wish
Speaker 1: I hadn't, I walk away. I walk away because when
Speaker 1: I look back at at the opportunities I've had, whether
Speaker 1: it was Bernie and Author and Pat Barrett Home Depot
Speaker 1: or Ross Perow and Mitch Hart, Tom Marcus, Tom Walter,
Speaker 1: all those guys at the d S, Derek Smith and
Speaker 1: Doug Curland at choice point, when I look at all
Speaker 1: of these deals that became usually successful of Pat Lexico, ration, Garriyer,
Speaker 1: Olbraham's brother Stephen, his brother Michael, these are people that
Speaker 1: that every time I've gotten near them. We've certainly had
Speaker 1: business problems at every case, but the culture and the
Speaker 1: character and the integrity the people allowed us to be
Speaker 1: objective in addressing challenges and problems we had. So I,
Speaker 1: you know, every time I looked back at a deal
Speaker 1: where it didn't work out very well, it was always
Speaker 1: me overriding my judgment about the people in the business.
Speaker 1: For example, we have a textile company called Unify, and
Speaker 1: the guy that ran at allan Mevin. I made my
Speaker 1: mind it before I met him. I wasn't going to
Speaker 1: do the deal, and then when I met him, I
Speaker 1: changed my mind because I knew this guy would move
Speaker 1: heaven and earth, and that's exactly what he's done. He
Speaker 1: built a fabulous company and it's still in business today.
Speaker 1: Every all of its its competitives, for the most part gone,
Speaker 1: Cone Mills, Brownington Industries, you name it, they're all gone.
Speaker 1: And and here's all Unifi. I just chuck it alof
Speaker 1: And so I can't stress enough the importance of the
Speaker 1: values and character and integrity of people you're in business with.
Speaker 1: There's one example in the book. I'm just wondering if
Speaker 1: you would expand on the name that a lot of
Speaker 1: people may have forgotten Sandy Sigloff. Yeah, no, Sandy Sigaloff
Speaker 1: was a man. He's now dead. May a soul rest
Speaker 1: in peace. I'm not sure I really mean that, but anyway,
Speaker 1: may a soul rest in peace. Sandy sigalaw few people.
Speaker 1: I'll give you a simple philosophy. Yet, if he determined
Speaker 1: that he wanted to let you go, whether he fired
Speaker 1: you or he just said, look, we don't need you anymore,
Speaker 1: he would tell people that it wasn't just enough to
Speaker 1: fire them, you had to destroy them, because if you
Speaker 1: didn't destroy them, they might come back one day and
Speaker 1: hurt you. And uh and you know that that told
Speaker 1: me a lot. That told me a lot about his
Speaker 1: emotional attachment to people. I I have been blessed my success.
Speaker 1: It's largely because of the talent and abilities of people
Speaker 1: I was in business with. I had something to do
Speaker 1: with it. But I'm saying to you, and I meant
Speaker 1: what I said in the book, I'm not a self
Speaker 1: made man. I am not a self made man. I
Speaker 1: say that not with any degree humility, but I say
Speaker 1: it in candor and honestly. Ken, what does retail do
Speaker 1: about Jeff Bezos and Amazon. I mean the time we've
Speaker 1: got left with you and I love Amazon is game changing?
Speaker 1: What what? What does? How does retail respond in a
Speaker 1: constructive way within capitalism? To Mr Bezos, Well, first of all,
Speaker 1: remember this, and there are two things that Jeff has
Speaker 1: got that to me make him a player. Number one,
Speaker 1: he's brilliant and number two he's humble. And boy, that's
Speaker 1: a winning combination. Of my book. Amazon is making Home
Speaker 1: Depot a better company, Believe it or not. Why because
Speaker 1: maybe we might have offered our custom is the alternative
Speaker 1: sitting on their butts and the houses and shopping, But
Speaker 1: I don't think we would have the intensity that we
Speaker 1: have now in making the online experience an opportunity for
Speaker 1: those people who want to shop from their home or
Speaker 1: who want flexibility and how they shop. And what are
Speaker 1: we doing? For example, we've announced we're gonna be spending
Speaker 1: eleven billion dollars over the next three years. We're bringing talent,
Speaker 1: and we're bringing in a thousand software engineers into home people.
Speaker 1: This is a retail company. So so Jeff, to me,
Speaker 1: is God going to make you dramatically improve your game
Speaker 1: or you're gonna be gone? What's it gonna do? About rents.
Speaker 1: I mean, you've got your whole medical practice here in
Speaker 1: New York and your philanthropy that you've done for the
Speaker 1: medical business, except most of those blocks around your landing
Speaker 1: combine have empty storefronts. Does real estate adjust in New York?
Speaker 1: And frankly, Kenton Langon nationwide? Does real estate a just
Speaker 1: I'm not sure that. I'm not I'm not sophisticated enough
Speaker 1: regarding real estate. I will tell you this that if
Speaker 1: you provide a service to customers, and if you do
Speaker 1: it in a competitive and in a constructive way, you'll
Speaker 1: do business. You'll do business now, whether it's a delicatessen,
Speaker 1: or whether it's a small boutique clothing shop, or whether
Speaker 1: it's a I'm investing right now with some ladies who
Speaker 1: have a line of shoes called Margot and and I
Speaker 1: know one thing right now, they're offering a quality product
Speaker 1: at a very competitive price in a very unusual way.
Speaker 1: Jeff Bezos to me or Amazon or for that matter,
Speaker 1: Costco or b JAS or Sam's Club, all of us
Speaker 1: are going to have to raise the quality of our game.
Speaker 1: And all I can say is the the the consumer
Speaker 1: will benefit by it. I think, Jeff, the intensity of
Speaker 1: our effort in online selling at home depot is nowhere
Speaker 1: is where would have been had Amazon not existed. Amazon
Speaker 1: has forced us to say, hey, wait a minute, we
Speaker 1: gotta be on our game here as well as in
Speaker 1: the stores. So I think a great competitive will make
Speaker 1: you better. If if you're a competitive you know a
Speaker 1: lot of people roll over and die, well, and roll
Speaker 1: over and die. What why he I'll give you. For instance,
Speaker 1: the originator of a discount concept was a man by
Speaker 1: the name of Harry Cunningham who was running a chain
Speaker 1: at five and dime stores called ss Kresky, and he
Speaker 1: opened up Talmart. And when he opened up his first Talmart,
Speaker 1: it was a man by the name of Sam Walton
Speaker 1: who was running four or five Ben Franklin five and
Speaker 1: dime stores in northwest Arkansas. Kmart's gone. Walmart is the biggest.
Speaker 1: What I'm telling you is it's the people. Yeah, but
Speaker 1: it's as Sears savable. I mean if kmart did it
Speaker 1: with a blue Light special in price and Sears no, no, no,
Speaker 1: no no no no no no no. They didn't evolve.
Speaker 1: They brought it when they when they had the Blue
Speaker 1: Light Special and the Hey Shoppers and all these and
Speaker 1: that was fine, but you better obsolete yourself or somebody
Speaker 1: else will obsolete you. And that's what happened. Look look
Speaker 1: at Walmart. Walmart today is a generali Look at the
Speaker 1: fight they're gaining. Now. Look Amazon has done following them.
Speaker 1: Remember the movie Torritora Tora, and and and and the
Speaker 1: Japanese adal steaming towards someplace before they hit Pearl Harbor,
Speaker 1: and he said, I I'm afraid we've awakened the sleeping giant.
Speaker 1: This is what's going on in America. You're either gonna
Speaker 1: rise to the challenges of Walmart or you're gonna be
Speaker 1: out of business. Lan going Thank you so much. I
Speaker 1: love Capitalism an American Story, Mr Landing. It is a
Speaker 1: spirited book. It is very conversational and it's a good
Speaker 1: quick read for those that want to get the braining
Speaker 1: gear really pim and within the history there that Mr
Speaker 1: Lang talked about. Thanks for listening to the Bloomberg Surveillance podcast.
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Speaker 1: I'm Bloomberg Radio