1 00:00:00,240 --> 00:00:04,040 Speaker 1: Runch you by Bank of America Mary Lynch. With virtual reality, 2 00:00:04,320 --> 00:00:09,719 Speaker 1: virtually everything will change. Discover opportunities in a transforming world 3 00:00:10,160 --> 00:00:14,440 Speaker 1: VI of a mL dot Com slash VR, Mary Lynch, 4 00:00:14,520 --> 00:00:29,240 Speaker 1: Pierce Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:29,280 --> 00:00:32,760 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,840 --> 00:00:37,680 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:38,080 --> 00:00:43,640 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:43,640 --> 00:00:50,479 Speaker 1: and of course on the Bloomberg Let's get right to 9 00:00:50,520 --> 00:00:52,839 Speaker 1: it with Mickey Leavy at Barnberg Capital Markets, responsible as 10 00:00:52,840 --> 00:00:54,600 Speaker 1: I said, for the economic coverage of the US and 11 00:00:54,720 --> 00:00:57,080 Speaker 1: Asia twins US here on Bloomberg and leven three oh 12 00:00:57,160 --> 00:00:59,880 Speaker 1: B Studios. Great to see if once again let's let's 13 00:01:00,160 --> 00:01:02,160 Speaker 1: just by situating us here. We had this big conference 14 00:01:02,360 --> 00:01:05,960 Speaker 1: in Europe last week in Portugal, central bankers from all 15 00:01:06,000 --> 00:01:09,800 Speaker 1: over the region gravitating there from Canada, from Europe, from 16 00:01:10,160 --> 00:01:12,960 Speaker 1: not not the U S but uh uh certainly the 17 00:01:13,000 --> 00:01:16,120 Speaker 1: DCB president as well. In that conversation. What that conversation 18 00:01:16,120 --> 00:01:17,920 Speaker 1: tell you about the state of central banking today? What's 19 00:01:17,920 --> 00:01:21,240 Speaker 1: of concern to them? Well, what David, that's that's a 20 00:01:21,240 --> 00:01:24,800 Speaker 1: great way to start, because basically, you have pretty healthy 21 00:01:24,880 --> 00:01:30,080 Speaker 1: growth in most of these countries, uh, particularly in Europe 22 00:01:30,200 --> 00:01:35,319 Speaker 1: euro Area Eurozone economic growth has actually exceeded expectations a 23 00:01:35,360 --> 00:01:37,400 Speaker 1: little bit, and it looks like, you know, you're getting 24 00:01:37,400 --> 00:01:41,000 Speaker 1: further from the financial crisis. Meanwhile, you have moderate inflation. 25 00:01:41,319 --> 00:01:45,520 Speaker 1: So what Droggy is basically saying is, Gee, we have 26 00:01:46,200 --> 00:01:49,600 Speaker 1: growth that succeeded expectations and it looks like things are 27 00:01:49,600 --> 00:01:53,280 Speaker 1: going to be sustained and moderate low inflation. Eventually, we're 28 00:01:53,280 --> 00:01:58,560 Speaker 1: going to have to taper our massive quantitative easing program 29 00:01:58,680 --> 00:02:04,480 Speaker 1: and uh move um the its policy right from minus 30 00:02:04,520 --> 00:02:07,800 Speaker 1: forty basis points. And that is the monetary policies are 31 00:02:07,840 --> 00:02:12,600 Speaker 1: absolutely inconsistent with the economic inflation fundamentals and and so 32 00:02:13,160 --> 00:02:16,079 Speaker 1: that's the key issue. And then drag is basically saying 33 00:02:16,080 --> 00:02:20,280 Speaker 1: I'm gonna have to taper it, but the ECB, like 34 00:02:20,480 --> 00:02:24,400 Speaker 1: the FED in earlier years, didn't want to do so 35 00:02:24,560 --> 00:02:27,440 Speaker 1: in a way that jars financial markets and upsets the economy, 36 00:02:27,480 --> 00:02:29,840 Speaker 1: and that that sums sums it up. So if I 37 00:02:29,960 --> 00:02:34,720 Speaker 1: look around the world, um, you see monetary policies and 38 00:02:34,840 --> 00:02:38,720 Speaker 1: central banks conducting policies that are inconsistent with the economic 39 00:02:38,760 --> 00:02:42,200 Speaker 1: inflation fundamentals. What did you make the conversation they're about coordination, 40 00:02:42,280 --> 00:02:46,160 Speaker 1: this attempt to trying to coordinate more among the central bankers. Oh, 41 00:02:46,600 --> 00:02:50,919 Speaker 1: there was a shrug there for our I shrug because 42 00:02:51,560 --> 00:02:56,280 Speaker 1: central bankers, Um, they don't coordinate except if there is 43 00:02:56,280 --> 00:03:02,200 Speaker 1: an emergency to open up Uh, you know overnight loan facilities. Um. 44 00:03:02,800 --> 00:03:06,600 Speaker 1: By coordination, they're they're polite, and they alert each other 45 00:03:06,880 --> 00:03:09,880 Speaker 1: as to what they're going to do. But I think 46 00:03:10,080 --> 00:03:13,799 Speaker 1: it's like a marriage. I think the idea of coordinating 47 00:03:14,040 --> 00:03:17,760 Speaker 1: makes very little sense. Happy fourth of July in advance. 48 00:03:17,840 --> 00:03:19,760 Speaker 1: You are wearing the capriz has promised. Yes, I got 49 00:03:19,800 --> 00:03:21,840 Speaker 1: the capriz on the flip I got the flip flops. 50 00:03:22,160 --> 00:03:24,639 Speaker 1: They're from one of the schools. Okay, I wore the 51 00:03:24,720 --> 00:03:28,800 Speaker 1: Tabor Academy flip flops because Mr Mueller spoke there earlier 52 00:03:28,880 --> 00:03:31,040 Speaker 1: this year. But when you have kids, your kids wear 53 00:03:31,080 --> 00:03:34,560 Speaker 1: flip flops in February when it's like six inches of 54 00:03:34,600 --> 00:03:38,760 Speaker 1: snow in the ground, that's the cool thing. Good mornings 55 00:03:39,000 --> 00:03:42,960 Speaker 1: sections you have put a second put in them on. Anyways, Nicky, 56 00:03:43,080 --> 00:03:45,520 Speaker 1: let me ask you. I would ask you the shadow 57 00:03:45,560 --> 00:03:47,520 Speaker 1: open market me, what what is it? First of all 58 00:03:47,600 --> 00:03:50,680 Speaker 1: that we know your participation on the shadow open marketing? 59 00:03:50,880 --> 00:03:52,320 Speaker 1: What is it? What's its history? And sort of what 60 00:03:52,360 --> 00:03:54,400 Speaker 1: are you all thinking about these days? It is a 61 00:03:54,480 --> 00:03:59,760 Speaker 1: group of UM UM private sector almost I'm the only 62 00:04:00,040 --> 00:04:04,160 Speaker 1: on academic. All the others are working universities that analyze 63 00:04:04,200 --> 00:04:08,160 Speaker 1: and critique monetary policy. It was founded in nineteen seventy 64 00:04:08,280 --> 00:04:13,800 Speaker 1: three by UM two world renowned economists Carl Brunner from 65 00:04:13,920 --> 00:04:18,360 Speaker 1: University of Rochester and Allan Meltzer from Carnegie Mellon and 66 00:04:18,680 --> 00:04:23,520 Speaker 1: and and to bring importance of monetary policy to inflation. 67 00:04:23,839 --> 00:04:27,800 Speaker 1: When the committee was came to be in ninety three, 68 00:04:28,440 --> 00:04:32,080 Speaker 1: UM nobody including the Fed, thought monetary policy and money 69 00:04:32,200 --> 00:04:34,400 Speaker 1: had anything to do with inflation. You could read the 70 00:04:34,440 --> 00:04:38,960 Speaker 1: literature back then. And the Committee has evolved into a 71 00:04:39,080 --> 00:04:45,960 Speaker 1: group that believes in sound monetary policy, UM, in sound 72 00:04:46,160 --> 00:04:51,960 Speaker 1: and rational banking UH and financial regulation. And we meet 73 00:04:52,000 --> 00:04:54,760 Speaker 1: twice a month and it's it's it's just a great committee. 74 00:04:54,960 --> 00:04:58,120 Speaker 1: And there have been members who have become Federal Federal 75 00:04:58,200 --> 00:05:02,560 Speaker 1: Reserve members and UM it's just it's just a great 76 00:05:02,560 --> 00:05:05,880 Speaker 1: group with with within that is in carrying the Torch 77 00:05:06,000 --> 00:05:09,280 Speaker 1: for the very the laden very much missed Allen Meltzer 78 00:05:09,360 --> 00:05:12,240 Speaker 1: and Karl Brunner of the University of Rogerster from years ago. 79 00:05:12,800 --> 00:05:15,600 Speaker 1: Is Bennett McCullum, who worked at Carnegie Mellon in the 80 00:05:15,680 --> 00:05:21,039 Speaker 1: University of Virginia is well. Does Bennett McCollum, does Alan Meltzer? 81 00:05:21,200 --> 00:05:24,520 Speaker 1: Does Carl Brunner? Do they want rules or even do 82 00:05:24,640 --> 00:05:28,880 Speaker 1: they understand you need a little bit of discretion? Tom, 83 00:05:28,960 --> 00:05:32,080 Speaker 1: That's a great question the way you phrase can they 84 00:05:32,760 --> 00:05:36,680 Speaker 1: They generally believe in rules, and they rail against the 85 00:05:36,880 --> 00:05:40,400 Speaker 1: discretion that the FED uses playing cat and mouse with 86 00:05:40,520 --> 00:05:45,160 Speaker 1: the market. Forward guidance and they yeah, forward guidance and saying, oh, 87 00:05:45,240 --> 00:05:48,240 Speaker 1: we'll wait to the next piece of economic data. All 88 00:05:48,320 --> 00:05:51,800 Speaker 1: of these members believe that the FED should look at 89 00:05:52,080 --> 00:05:56,719 Speaker 1: intermediate term guidelines and set these guidelines. At the same 90 00:05:56,800 --> 00:06:02,640 Speaker 1: time they favor rules over discretion, they also are realistic 91 00:06:02,880 --> 00:06:09,240 Speaker 1: enough to realize that at certain points, um, you need discretions. So, 92 00:06:09,400 --> 00:06:14,479 Speaker 1: for example, there's legislation pending on in Congress, authored by 93 00:06:14,480 --> 00:06:18,240 Speaker 1: the House Financial Service Committee that would make the FED 94 00:06:18,360 --> 00:06:22,680 Speaker 1: more rules based, That is, to establish a rule to 95 00:06:22,880 --> 00:06:26,640 Speaker 1: guide them. But if they deviate from it and they 96 00:06:26,680 --> 00:06:29,040 Speaker 1: would be able to deviate from it, they'd have to 97 00:06:29,120 --> 00:06:32,880 Speaker 1: explain it. To excuse me for interrupting, David gurl, but 98 00:06:32,920 --> 00:06:37,160 Speaker 1: I think this is really important. Mr Henseling has a 99 00:06:37,279 --> 00:06:41,919 Speaker 1: definition of Texas A and M rules that's way different 100 00:06:42,320 --> 00:06:46,440 Speaker 1: from rules discretion of John B. Taylor of Stanford, Glenn 101 00:06:46,520 --> 00:06:50,680 Speaker 1: Hubbard of Columbia, Professor good friend of Carnegie mellon the 102 00:06:50,920 --> 00:06:54,880 Speaker 1: the House wants a rule like the designated Hitter rule 103 00:06:55,400 --> 00:06:59,800 Speaker 1: or the sacrifice Bunt rule. It's it's too, am I 104 00:07:00,240 --> 00:07:03,920 Speaker 1: that the House proposals not what you and those good 105 00:07:03,960 --> 00:07:06,520 Speaker 1: economists would want. No. I think if you look at 106 00:07:06,600 --> 00:07:10,560 Speaker 1: hansel Rings legislation called the Financial Choice Act that's depending 107 00:07:10,600 --> 00:07:14,800 Speaker 1: in Congress um it. If you read the detail, it 108 00:07:15,040 --> 00:07:18,920 Speaker 1: asks the FED to establish the rule that it wants, 109 00:07:19,440 --> 00:07:21,200 Speaker 1: and in fact it can change that rule if it 110 00:07:21,240 --> 00:07:24,120 Speaker 1: wants and and then it has to It doesn't have 111 00:07:24,240 --> 00:07:27,240 Speaker 1: to stick to that rule, but when it deviates from it, 112 00:07:27,320 --> 00:07:30,160 Speaker 1: it has to explain it to uh Congress. Now, keep 113 00:07:30,200 --> 00:07:32,840 Speaker 1: in mind it is the House Financial Services Committee on 114 00:07:32,880 --> 00:07:35,640 Speaker 1: the House side and the Senate Banking Committee on on 115 00:07:35,720 --> 00:07:39,000 Speaker 1: the Senate side that are charged with supervising the FED, 116 00:07:39,360 --> 00:07:42,200 Speaker 1: and so from their angle. It would be good if 117 00:07:42,240 --> 00:07:45,480 Speaker 1: the FED had a guideline that they could when they 118 00:07:46,120 --> 00:07:49,320 Speaker 1: when when the Chair of the FED comes up to testify, 119 00:07:49,760 --> 00:07:52,880 Speaker 1: they could ask the chair, oh, I see you're on 120 00:07:53,040 --> 00:07:55,600 Speaker 1: your rule or or you're deviating from it. But it's 121 00:07:55,720 --> 00:07:58,960 Speaker 1: up in their legislation. It's up to the FED to 122 00:07:59,160 --> 00:08:03,440 Speaker 1: establish whatever rule for the moment it feels is appropriate. 123 00:08:03,960 --> 00:08:08,280 Speaker 1: This is This is very different from the FED where 124 00:08:08,320 --> 00:08:13,080 Speaker 1: it bounces from one idea to the next, China the dollar, 125 00:08:14,240 --> 00:08:17,160 Speaker 1: wait for the next piece of data, and playing cat 126 00:08:17,240 --> 00:08:20,000 Speaker 1: and mouse with the market. What's it? We'll come back 127 00:08:20,000 --> 00:08:21,200 Speaker 1: with the hungers a sect. But let me ask you 128 00:08:21,240 --> 00:08:24,120 Speaker 1: about how the regulatory responsibility of the FED stands to change. 129 00:08:24,160 --> 00:08:25,480 Speaker 1: Do you think it's going to change your during this 130 00:08:25,760 --> 00:08:29,720 Speaker 1: this administration. I think it will change, and I think 131 00:08:30,160 --> 00:08:34,880 Speaker 1: the impetus for that change uh comes once again from 132 00:08:34,960 --> 00:08:38,599 Speaker 1: Congress that has legislation, and the general thrust of the 133 00:08:38,760 --> 00:08:44,960 Speaker 1: legislation is to force banks to maintain a very high 134 00:08:45,040 --> 00:08:48,520 Speaker 1: level of capital and too in that move away from 135 00:08:48,720 --> 00:08:53,040 Speaker 1: Bostil three risk waitings and include even the economic value 136 00:08:53,080 --> 00:08:55,800 Speaker 1: of off of what's on off balance sheets. And then 137 00:08:56,120 --> 00:08:59,240 Speaker 1: once they maintain that high level of capital to ease 138 00:08:59,360 --> 00:09:03,040 Speaker 1: off on a of the Dodd Frank microregulations. That's the 139 00:09:03,160 --> 00:09:06,880 Speaker 1: general thrust. And you know, we look at legislation pending 140 00:09:06,960 --> 00:09:10,240 Speaker 1: on the Hill now, and even if it doesn't pass 141 00:09:10,520 --> 00:09:13,920 Speaker 1: in its full form, I do think you have this 142 00:09:14,120 --> 00:09:18,800 Speaker 1: impetus toward easing off from some of the microregulations because 143 00:09:19,160 --> 00:09:23,520 Speaker 1: if you look at it, the costs of UM complying 144 00:09:23,640 --> 00:09:27,960 Speaker 1: with those are the highest for small and regional banks 145 00:09:28,600 --> 00:09:31,599 Speaker 1: that are making a big portion of the loans to 146 00:09:31,760 --> 00:09:34,360 Speaker 1: small and medium sized businesses to generate a lot of 147 00:09:34,400 --> 00:09:37,079 Speaker 1: the employment gains. And so I think there is this 148 00:09:37,320 --> 00:09:43,120 Speaker 1: general impetus, and it'll be the legislative UH, the legislation 149 00:09:43,640 --> 00:09:45,960 Speaker 1: that the FED will abide by. And and once again, 150 00:09:45,960 --> 00:09:48,679 Speaker 1: if you look at like Randy Corals, who's going to 151 00:09:48,760 --> 00:09:52,560 Speaker 1: be nominated UH to take over Dan Trullo's job at 152 00:09:52,559 --> 00:09:54,800 Speaker 1: the FED, well, let's come back. Let's come back, make 153 00:09:54,840 --> 00:09:58,199 Speaker 1: you leave you with us on. FED will continue this discussion. 154 00:09:58,559 --> 00:10:02,160 Speaker 1: We've been waxing for plosophical at sixty feet. Let's go 155 00:10:02,240 --> 00:10:06,560 Speaker 1: down to five thousand feet here. July. It's July, folks, 156 00:10:06,640 --> 00:10:08,760 Speaker 1: for those of you that have, like Gurad taken the 157 00:10:08,840 --> 00:10:12,840 Speaker 1: weekend of how far out Fire Island were you were 158 00:10:13,040 --> 00:10:16,760 Speaker 1: clotely forgot about business, just a little ways away from 159 00:10:19,640 --> 00:10:23,320 Speaker 1: beautiful July. Dr Levy, we get the first look at 160 00:10:23,360 --> 00:10:28,120 Speaker 1: second quarter g d P. It's okay, but it's really 161 00:10:28,240 --> 00:10:34,000 Speaker 1: not okay. What's lagging? Is it consumption lagging or his investment? 162 00:10:34,120 --> 00:10:37,880 Speaker 1: Just that big a hole in the discussion. Tom, I 163 00:10:38,000 --> 00:10:40,319 Speaker 1: think you're making a great point. Because we had a 164 00:10:40,400 --> 00:10:43,480 Speaker 1: disappointing Q one. People said, oh, it is due to 165 00:10:43,559 --> 00:10:46,200 Speaker 1: temporary factors. It's been revised up a bit. You would 166 00:10:46,200 --> 00:10:50,440 Speaker 1: expect a full bounce back in Q two. UM. Basically, 167 00:10:51,360 --> 00:10:56,480 Speaker 1: consumer spending is growing. It's okay. What's interesting on consumer 168 00:10:56,520 --> 00:10:59,720 Speaker 1: spending is even though wealth is very high and real 169 00:10:59,840 --> 00:11:02,880 Speaker 1: to spposable incomes arising rapidly, people you know, a little 170 00:11:02,920 --> 00:11:06,120 Speaker 1: more cautious than they were before the financial crisis. Housing 171 00:11:06,240 --> 00:11:10,160 Speaker 1: is doing very well. Capital spending has been the disappointment 172 00:11:10,559 --> 00:11:16,400 Speaker 1: throughout the economic Policy changed, yes, tax policy could change. 173 00:11:16,600 --> 00:11:19,520 Speaker 1: What are we waiting for? We're doing videos, We're going 174 00:11:19,640 --> 00:11:23,120 Speaker 1: after you know, Williams College graduates. We're waiting. We're waiting 175 00:11:23,280 --> 00:11:29,880 Speaker 1: because the White House, UM and Congress, in their sequencing 176 00:11:30,000 --> 00:11:34,840 Speaker 1: decided to put this extremely difficult issue of healthcare reform 177 00:11:34,960 --> 00:11:39,600 Speaker 1: before tax and once they opened up that can of worms. 178 00:11:40,120 --> 00:11:43,160 Speaker 1: Once you give something to people, that is the A 179 00:11:43,360 --> 00:11:49,760 Speaker 1: C A. However flawed the legislation is it's very hard 180 00:11:49,840 --> 00:11:51,520 Speaker 1: to take it away, so they're caught up in that. 181 00:11:53,080 --> 00:12:00,840 Speaker 1: The significant increase in confidence reflected in consumer and particularly 182 00:12:00,960 --> 00:12:04,920 Speaker 1: business survey suggests that if you were to get tax reform, 183 00:12:05,000 --> 00:12:08,840 Speaker 1: you would get very positive responses and it would really 184 00:12:09,000 --> 00:12:14,120 Speaker 1: clear the air. Um, David Garrow, what's you're reading over 185 00:12:14,160 --> 00:12:17,120 Speaker 1: the weekend? I read a minution cone treatment that these 186 00:12:17,160 --> 00:12:21,240 Speaker 1: guys are gung ho? So what? Yeah, you know, where's this? So? What? 187 00:12:21,520 --> 00:12:23,760 Speaker 1: The big challenge I think remains that legislative When you 188 00:12:23,800 --> 00:12:26,040 Speaker 1: talk about confidence in the economy, how big a component 189 00:12:26,120 --> 00:12:28,760 Speaker 1: part of that is confidence in Washington to get stuff done? 190 00:12:28,880 --> 00:12:31,320 Speaker 1: In other words, is the economy fine exclusive of Washington? 191 00:12:31,840 --> 00:12:35,760 Speaker 1: Or do things need to happen there? Things need to 192 00:12:35,840 --> 00:12:39,679 Speaker 1: happen if you really want to break out to the upside. 193 00:12:39,760 --> 00:12:43,520 Speaker 1: On sustained economic growth, we're growing okay, two percent, but 194 00:12:43,640 --> 00:12:46,920 Speaker 1: look over the since the financial crisis, look at how 195 00:12:47,120 --> 00:12:51,439 Speaker 1: US potential growth has has come down as as people 196 00:12:51,480 --> 00:12:57,600 Speaker 1: have had more dour expectations come down relative to Europe 197 00:12:57,640 --> 00:13:01,319 Speaker 1: and the UK. Um we're growing. US is growing okay, 198 00:13:01,520 --> 00:13:06,280 Speaker 1: Employments okay, but productivities week wages are very weak. How 199 00:13:06,360 --> 00:13:09,760 Speaker 1: do you break out of that, Well, you create an 200 00:13:09,960 --> 00:13:14,480 Speaker 1: environment that is where businesses are, where they're thinking about 201 00:13:14,960 --> 00:13:19,880 Speaker 1: a longer term investment project or expansion. They know the 202 00:13:20,040 --> 00:13:22,439 Speaker 1: environment is going to be good rather than more and 203 00:13:22,640 --> 00:13:27,640 Speaker 1: more regulations and the threats of higher taxes. So we're 204 00:13:27,679 --> 00:13:32,520 Speaker 1: doing okay. If if Washington continues to dither, the probability 205 00:13:32,600 --> 00:13:34,800 Speaker 1: of recession in the US is very low, but we'll 206 00:13:34,920 --> 00:13:37,600 Speaker 1: continue to grow, you know, to to and a quarter. 207 00:13:37,679 --> 00:13:41,480 Speaker 1: If you really want to get it stronger growth with 208 00:13:41,760 --> 00:13:47,280 Speaker 1: higher wages, you really need uh fiscal reforms. To ask 209 00:13:47,320 --> 00:13:49,880 Speaker 1: you about what we know about what this administration wants 210 00:13:49,920 --> 00:13:51,880 Speaker 1: to do. I'm struck by the report that the Treasury 211 00:13:51,920 --> 00:13:54,280 Speaker 1: secretaration a few weeks back on bank regulation. It was 212 00:13:54,640 --> 00:13:57,079 Speaker 1: thick and very detailed, and very different from other plans 213 00:13:57,120 --> 00:14:01,880 Speaker 1: we've gotten from the administration on tax reforms or trade policy. 214 00:14:02,360 --> 00:14:04,079 Speaker 1: Do we need more of that? Do you? Does the 215 00:14:04,160 --> 00:14:07,439 Speaker 1: market need more detailed explanation of what this this administration 216 00:14:07,480 --> 00:14:12,440 Speaker 1: intends to do? David, I think we need more action 217 00:14:14,240 --> 00:14:18,640 Speaker 1: rather than more you know, statements, and once again, um, 218 00:14:18,720 --> 00:14:22,760 Speaker 1: I think what is missing here is from the White 219 00:14:22,840 --> 00:14:29,440 Speaker 1: House a real uh list of priorities and a sequencing 220 00:14:29,600 --> 00:14:32,440 Speaker 1: of those priorities. If that were done from day one 221 00:14:32,520 --> 00:14:36,400 Speaker 1: of the Trump administration, you wouldn't be caught up in things. Now. 222 00:14:36,640 --> 00:14:39,680 Speaker 1: When I stand back and look at the Trump administration 223 00:14:40,200 --> 00:14:45,560 Speaker 1: and try to abstract from President Trump's very unpresidential behavior, 224 00:14:46,640 --> 00:14:51,240 Speaker 1: what I see is they have made progress on certain 225 00:14:51,920 --> 00:14:57,560 Speaker 1: on the regulatory fronts in labor, in UH, certain regulations. 226 00:14:58,400 --> 00:15:02,640 Speaker 1: On the regulatory front, you're actually seeing some positive changes. However, 227 00:15:03,640 --> 00:15:07,360 Speaker 1: when I look at the legislative front, they've struck. Okay, 228 00:15:07,720 --> 00:15:10,240 Speaker 1: let's make you leave you. Thank you so much. Look forward. 229 00:15:10,240 --> 00:15:13,480 Speaker 1: You're testifying in Washington and July. Thank you so much. 230 00:15:13,520 --> 00:15:30,120 Speaker 1: Good luck with that testimony worldwide. This is Bloomberg. It 231 00:15:30,360 --> 00:15:33,280 Speaker 1: is wonderful the relationship we've had over the years with 232 00:15:33,480 --> 00:15:37,720 Speaker 1: Robert Allen Feldman of Morgan Stanley m u f G 233 00:15:37,960 --> 00:15:43,200 Speaker 1: of Tokyo, without question, the most predominant English speaking analyst 234 00:15:43,840 --> 00:15:47,560 Speaker 1: of not only the economics of Japan but the society 235 00:15:47,680 --> 00:15:50,600 Speaker 1: of Japan, and David Gura. As you bring in, Dr 236 00:15:50,720 --> 00:15:55,360 Speaker 1: Feldman needless to say, once again a stunning shock in 237 00:15:55,480 --> 00:15:58,600 Speaker 1: Japan in the last twenty four in. Let's start there, 238 00:15:58,680 --> 00:16:01,240 Speaker 1: Robert Felden's senior advisor to Morgan Stanley joining us on 239 00:16:01,240 --> 00:16:02,760 Speaker 1: our phone lines. Let me begin if I could, with 240 00:16:02,840 --> 00:16:04,840 Speaker 1: what happened over the weekend. This was an election, as 241 00:16:04,840 --> 00:16:07,480 Speaker 1: I understand it, in Tokyo. Why is it is a 242 00:16:07,880 --> 00:16:10,000 Speaker 1: essentially a local election so important when you look at 243 00:16:10,600 --> 00:16:15,440 Speaker 1: the politics of Japan writ large Well, the Tokyo Prefecture 244 00:16:15,520 --> 00:16:17,960 Speaker 1: is obviously the largest pretecture in the country, and it 245 00:16:18,080 --> 00:16:19,760 Speaker 1: is a trend center for the rest of the country. 246 00:16:19,800 --> 00:16:21,840 Speaker 1: And there is a history over the last thirty years 247 00:16:22,200 --> 00:16:25,440 Speaker 1: that these Tokyo Assembly elections, this is for the prefectural assembly, 248 00:16:25,840 --> 00:16:28,760 Speaker 1: do a service harbingers for national trends. So that's why 249 00:16:28,840 --> 00:16:31,520 Speaker 1: this election was so important. Remind us here of what 250 00:16:31,600 --> 00:16:33,440 Speaker 1: happened over the weekends, get us up to speed on 251 00:16:33,880 --> 00:16:37,680 Speaker 1: the results, yes, but also the import of what we saw. Well, 252 00:16:37,760 --> 00:16:39,760 Speaker 1: first of all, the Tokyo Assembly has a hundred and 253 00:16:39,840 --> 00:16:43,360 Speaker 1: twenty seven seats. Prior to the election, uh Prime Minister 254 00:16:43,440 --> 00:16:45,720 Speaker 1: of as party the l DP had fifty six, now 255 00:16:45,800 --> 00:16:50,200 Speaker 1: it has twenty three. Prior to the election, Governor Coikas 256 00:16:50,280 --> 00:16:53,880 Speaker 1: party and her coalition partners had twenty seven. Now they 257 00:16:53,920 --> 00:16:57,160 Speaker 1: have seventy nine, so she has a very strong majority 258 00:16:57,560 --> 00:17:00,360 Speaker 1: uh now and it's a big defeat for the LDP 259 00:17:01,080 --> 00:17:03,600 Speaker 1: And one sense, however, this actually could be exactly what 260 00:17:03,680 --> 00:17:05,879 Speaker 1: Prime Minister I've been needed. His party has been in 261 00:17:05,960 --> 00:17:08,440 Speaker 1: complacency for a number of months now. He's been trying 262 00:17:08,480 --> 00:17:09,960 Speaker 1: to shake them out of it. They don't want to 263 00:17:10,080 --> 00:17:13,640 Speaker 1: be shaken because you know, the stock markets up, everybody's happy. 264 00:17:13,720 --> 00:17:15,879 Speaker 1: They didn't want to move. Now they have a crisis, 265 00:17:15,960 --> 00:17:19,840 Speaker 1: and he has an opportunity uh to work along the 266 00:17:19,920 --> 00:17:23,080 Speaker 1: lines of my little UH gizmo I used to analyze 267 00:17:23,119 --> 00:17:26,680 Speaker 1: these things called the currict cycle, crisis response improvement complacency. 268 00:17:27,280 --> 00:17:29,840 Speaker 1: So if the Prime Minister Obbic can rise to this 269 00:17:29,960 --> 00:17:32,439 Speaker 1: crisis and get his own party back in line, then 270 00:17:32,480 --> 00:17:35,119 Speaker 1: he has an opportunity to join with Governor Clika in 271 00:17:35,240 --> 00:17:37,040 Speaker 1: some of the common and there are many of them 272 00:17:37,359 --> 00:17:40,159 Speaker 1: issues that they want to address and I get the 273 00:17:40,280 --> 00:17:42,639 Speaker 1: LDP back on the reformist track. So that's why it's 274 00:17:42,640 --> 00:17:45,080 Speaker 1: an important collection. How does Governor Clika run? Here? Was 275 00:17:45,160 --> 00:17:47,760 Speaker 1: she was? She running as a sort of basically just 276 00:17:47,840 --> 00:17:49,560 Speaker 1: as as a foil to him saying that she was 277 00:17:49,960 --> 00:17:52,680 Speaker 1: different than he is, or how how different were the platforms? 278 00:17:52,680 --> 00:17:56,480 Speaker 1: I guess well, she was clearly not running against the 279 00:17:56,640 --> 00:17:59,320 Speaker 1: LDP national parts. She made it very very clear that 280 00:17:59,440 --> 00:18:02,080 Speaker 1: this is a low coellection about Tokyo. She and a 281 00:18:02,119 --> 00:18:05,479 Speaker 1: Prime minister are actually get along very well. But her 282 00:18:05,560 --> 00:18:10,840 Speaker 1: style of politics is a discuss and decide style rather 283 00:18:10,920 --> 00:18:13,200 Speaker 1: than an interest group based style. And so the old 284 00:18:13,200 --> 00:18:15,640 Speaker 1: guard in the LDP don't like that style of politics. 285 00:18:15,720 --> 00:18:18,480 Speaker 1: That's why they don't like her very much. But she 286 00:18:18,640 --> 00:18:22,080 Speaker 1: ran with a very long platform of individual issues. There's 287 00:18:22,119 --> 00:18:24,920 Speaker 1: still some priorities to be set, but she ran on issues, really, 288 00:18:25,200 --> 00:18:27,480 Speaker 1: what do we do about the fish market issue where 289 00:18:27,560 --> 00:18:32,200 Speaker 1: there was some contamination under some areas that had supposed 290 00:18:32,240 --> 00:18:35,400 Speaker 1: to be filled in with landfills but weren't, etcetera, etcetera. 291 00:18:35,720 --> 00:18:38,160 Speaker 1: So she ran on issues and she but she also 292 00:18:38,280 --> 00:18:42,200 Speaker 1: ran on openness, and she used some of the language 293 00:18:42,359 --> 00:18:45,760 Speaker 1: like the Japanese word meaduka which means visibility that even 294 00:18:45,800 --> 00:18:48,600 Speaker 1: Prime Minister him Alba himself has been using. So there's 295 00:18:48,640 --> 00:18:53,000 Speaker 1: a lot between them, and his underlying message was very attractive. 296 00:18:53,640 --> 00:18:56,480 Speaker 1: Although some of the things about the LDP and not itself. 297 00:18:56,960 --> 00:18:59,840 Speaker 1: Recent scandals were not Robert something. Where is the ld 298 00:19:00,040 --> 00:19:01,800 Speaker 1: he'd go from from here? When you when you look 299 00:19:01,840 --> 00:19:04,320 Speaker 1: at the prime minister's government, for instance, what's going to 300 00:19:04,440 --> 00:19:07,520 Speaker 1: change the result of what we saw? Well, we don't 301 00:19:07,560 --> 00:19:09,440 Speaker 1: know the answer to that question yet and they have 302 00:19:09,560 --> 00:19:12,359 Speaker 1: to make some decisions. But basically this is a question 303 00:19:12,760 --> 00:19:15,200 Speaker 1: of whether Prime Minister can do the same thing he 304 00:19:15,280 --> 00:19:19,080 Speaker 1: did early in his administration on the agricultural issue. Japan 305 00:19:19,160 --> 00:19:23,359 Speaker 1: had been um dawdling for months and months and months 306 00:19:23,480 --> 00:19:26,600 Speaker 1: and years about whether to go into the TPP negotiations. 307 00:19:27,400 --> 00:19:29,159 Speaker 1: When a became to office, he said, we're going to 308 00:19:29,200 --> 00:19:31,439 Speaker 1: go in because it's in the national interest and if 309 00:19:31,480 --> 00:19:33,800 Speaker 1: the agriculture guys don't like it, I'm sorry, but you know, 310 00:19:33,920 --> 00:19:35,880 Speaker 1: we have to do this for the national interest. When 311 00:19:35,920 --> 00:19:38,680 Speaker 1: he did that, his support rate went up, and so 312 00:19:38,840 --> 00:19:41,560 Speaker 1: that's why he has an opportunity to do the same 313 00:19:41,600 --> 00:19:44,159 Speaker 1: thing here. Dr Felman give us an update on what 314 00:19:44,400 --> 00:19:50,080 Speaker 1: passes for immigration debate in Japan. And there's generational shifts, 315 00:19:50,119 --> 00:19:53,560 Speaker 1: there's labor shifts. People talk about the low unemployment rate 316 00:19:53,640 --> 00:19:58,440 Speaker 1: in Japan. Is the immigration into Japan different than the 317 00:19:58,560 --> 00:20:03,520 Speaker 1: immigration into Japan of ten or forty years ago. Yes, 318 00:20:03,600 --> 00:20:05,520 Speaker 1: it is different. It's a different in a couple of ways. 319 00:20:05,680 --> 00:20:09,160 Speaker 1: One is where the people are coming from. There, mostly Asians, UM. 320 00:20:09,760 --> 00:20:12,200 Speaker 1: About third of the immigrants now from China, another third 321 00:20:12,240 --> 00:20:15,479 Speaker 1: plus or from other Asian countries. The other thing is numbers. 322 00:20:15,800 --> 00:20:19,440 Speaker 1: Japan today has about one point one million foreign workers 323 00:20:19,560 --> 00:20:23,080 Speaker 1: inside the country. UM. This is a huge increase. Last 324 00:20:23,200 --> 00:20:25,159 Speaker 1: year alone, there were a hundred and seventy six thousand 325 00:20:25,240 --> 00:20:28,280 Speaker 1: extra foreign workers who came in to the country. The 326 00:20:28,320 --> 00:20:31,000 Speaker 1: stock went up by hundred and seventy six thousand, sixty 327 00:20:31,080 --> 00:20:34,960 Speaker 1: two from Vietnam. Without the foreign workers in Japan today, 328 00:20:35,200 --> 00:20:37,440 Speaker 1: the unemployment rate would not be three it would be 329 00:20:37,480 --> 00:20:40,399 Speaker 1: one and a half. So this is a qualitatively different 330 00:20:40,520 --> 00:20:43,679 Speaker 1: labor market than it was before. We see that saw 331 00:20:43,720 --> 00:20:45,399 Speaker 1: the headlines over the weekend our president here in the 332 00:20:45,520 --> 00:20:48,320 Speaker 1: US reaching out to the president of Japan and China 333 00:20:49,119 --> 00:20:51,040 Speaker 1: to talk about the situation in North Korea, and I 334 00:20:51,080 --> 00:20:53,199 Speaker 1: wonder if you could just share how large that looms 335 00:20:53,640 --> 00:20:56,520 Speaker 1: over dated life in Tokyo, and uh sort of what 336 00:20:56,640 --> 00:21:00,800 Speaker 1: what what what steps that you see going forward here? Well, 337 00:21:01,080 --> 00:21:04,360 Speaker 1: certainly the nuclear threat from North Korea is taken very 338 00:21:04,480 --> 00:21:07,400 Speaker 1: very seriously by people it is not very far from 339 00:21:07,480 --> 00:21:10,040 Speaker 1: the North Korean launch sites to Tokyo. If they are 340 00:21:10,080 --> 00:21:14,639 Speaker 1: successful in putting a miniaturized nuclear weapon on top of 341 00:21:14,720 --> 00:21:18,120 Speaker 1: a medium term rocket, that would be an extremely serious 342 00:21:18,160 --> 00:21:21,040 Speaker 1: threat to Japan. So people are very worried about that. 343 00:21:21,640 --> 00:21:24,840 Speaker 1: UH and I think this is an issue where we 344 00:21:24,960 --> 00:21:29,399 Speaker 1: need to make more more progress rather quickly, because the 345 00:21:29,480 --> 00:21:32,720 Speaker 1: North Koreans are making their own progress quite quickly, and 346 00:21:32,880 --> 00:21:36,639 Speaker 1: so unless that happens, then we're going to be facing 347 00:21:36,840 --> 00:21:39,919 Speaker 1: a mutually assured destruction situation much like in the Cold War. 348 00:21:40,200 --> 00:21:42,960 Speaker 1: That is not comfortable for anybody. What role is is 349 00:21:43,040 --> 00:21:45,560 Speaker 1: Japan playing on this issue in the region? So so 350 00:21:45,640 --> 00:21:47,840 Speaker 1: much of the conversation here is about the role that 351 00:21:47,920 --> 00:21:49,600 Speaker 1: China is playing. Is an ally of North Korea, the 352 00:21:49,680 --> 00:21:53,160 Speaker 1: role they could play in enforcing or thickening sanctions against 353 00:21:53,240 --> 00:21:57,280 Speaker 1: North Korea. What role is Japan playing? Well, Japan is 354 00:21:57,720 --> 00:22:00,040 Speaker 1: an ally of the United States, a military ally the 355 00:22:00,160 --> 00:22:04,199 Speaker 1: United States. We have a mutual alliance UH and Japan 356 00:22:04,560 --> 00:22:08,360 Speaker 1: uh IS actually has an extremely strong and well equipped 357 00:22:08,640 --> 00:22:12,040 Speaker 1: UH Navy UH. They own a number of agis, UH 358 00:22:13,400 --> 00:22:17,400 Speaker 1: UH destroyers, etcetera. And so Japan is playing quite an 359 00:22:17,640 --> 00:22:20,600 Speaker 1: important role in supporting US activity in the region. As 360 00:22:20,640 --> 00:22:26,639 Speaker 1: you know, Japan's constitution prohibits any offensive capability. It actually, 361 00:22:26,800 --> 00:22:29,320 Speaker 1: at least by the letter, prohibits Japan even from having 362 00:22:30,600 --> 00:22:34,359 Speaker 1: a military, although that has been interpreted as being um 363 00:22:34,680 --> 00:22:39,040 Speaker 1: just uh incorrect uh in terms of the sovereign right 364 00:22:39,080 --> 00:22:42,880 Speaker 1: of a nation to defend itself. But basically Japan has 365 00:22:43,480 --> 00:22:46,200 Speaker 1: limiting itself to support for US forces in terms of 366 00:22:46,240 --> 00:22:52,680 Speaker 1: bases and seaborn support back um sort of logistical operations, 367 00:22:52,720 --> 00:22:55,119 Speaker 1: things like that. But Japan wants to play a more 368 00:22:55,160 --> 00:22:58,720 Speaker 1: active role because it wants to be a reliable ally 369 00:22:58,800 --> 00:23:01,600 Speaker 1: of the United States. And I think there's a growing consensus, 370 00:23:01,680 --> 00:23:05,360 Speaker 1: particularly with what's going on in North Korea now, then 371 00:23:05,440 --> 00:23:07,400 Speaker 1: the Japan does need to play a more active role. 372 00:23:07,800 --> 00:23:12,080 Speaker 1: The distance from North Korea's capital to Japan's capital is 373 00:23:12,119 --> 00:23:15,679 Speaker 1: about a Chicago to New York. But how really wide 374 00:23:15,840 --> 00:23:18,720 Speaker 1: is the sea of Japan? How how wide is the 375 00:23:18,840 --> 00:23:23,640 Speaker 1: sea of Japan between Korea Peninsula and Japan. How wide 376 00:23:23,760 --> 00:23:27,840 Speaker 1: is that perceived by the Japanese people, Robbie, I think 377 00:23:27,880 --> 00:23:32,320 Speaker 1: the Japanese people perceive it as rather a short distance. Yeah, Um, 378 00:23:32,520 --> 00:23:34,439 Speaker 1: it kind of depends on how fast the missiles are 379 00:23:34,480 --> 00:23:41,200 Speaker 1: flying like Cuba. Short Basically yes, UH. Any substantial placement 380 00:23:41,359 --> 00:23:44,600 Speaker 1: of nuclear armed missiles in North Korea would be at 381 00:23:44,680 --> 00:23:47,800 Speaker 1: least the equivalent of a of a Cuban missile crisis 382 00:23:49,000 --> 00:23:51,879 Speaker 1: and might do How much weight does this have on 383 00:23:51,920 --> 00:23:54,879 Speaker 1: the economy, this uncertainty about the geopolitics of the region. 384 00:23:56,520 --> 00:23:58,359 Speaker 1: It does have some weight on the economy. But I 385 00:23:58,400 --> 00:24:03,119 Speaker 1: think people mostly are optimistic that cooler heads will prevail, because, 386 00:24:03,200 --> 00:24:07,280 Speaker 1: after all, China certainly has a huge national interest in 387 00:24:07,359 --> 00:24:10,680 Speaker 1: remaining connected to the global economy. UM is just a 388 00:24:10,800 --> 00:24:13,000 Speaker 1: question of what are the rules by which that is 389 00:24:13,040 --> 00:24:15,879 Speaker 1: going to be done. UH. The missiles in North Korea 390 00:24:15,920 --> 00:24:18,479 Speaker 1: are a threat to China as well, although a lot 391 00:24:18,480 --> 00:24:20,639 Speaker 1: of people in China don't want to recognize that. It 392 00:24:20,760 --> 00:24:25,080 Speaker 1: is a fact um and so I think that cooler 393 00:24:25,200 --> 00:24:28,159 Speaker 1: heads are likely to prevail UH. And we see that 394 00:24:28,640 --> 00:24:31,760 Speaker 1: in terms of game theory as well. For example, if 395 00:24:31,800 --> 00:24:34,320 Speaker 1: you're in game theory, if you have an uncooperative partner, 396 00:24:34,359 --> 00:24:36,040 Speaker 1: you can do two things. You can give them a 397 00:24:36,119 --> 00:24:39,680 Speaker 1: better reward for cooperative Are you cooperating or you can 398 00:24:39,800 --> 00:24:43,639 Speaker 1: worsen the payoff. We're not cooperating. And the history of 399 00:24:43,720 --> 00:24:46,240 Speaker 1: the North Korea, relations with China, with the US, with 400 00:24:46,359 --> 00:24:50,439 Speaker 1: Japan is really a is this structure in a nutshell? 401 00:24:50,640 --> 00:24:52,760 Speaker 1: Pleasure to have Robert Felmon with us again, senior advisor 402 00:24:52,760 --> 00:24:55,280 Speaker 1: to Morgan Stanley talking about Japan, and we talked about 403 00:24:55,359 --> 00:24:57,600 Speaker 1: the the elections and take you over the weekend, talked 404 00:24:57,640 --> 00:25:00,359 Speaker 1: a bit about geopolics. Let's let's talk some about trade 405 00:25:00,400 --> 00:25:02,240 Speaker 1: if we could now, because I gather there's been a 406 00:25:02,280 --> 00:25:05,000 Speaker 1: lot of focus on a pact between Europe, the EU 407 00:25:05,520 --> 00:25:08,359 Speaker 1: and Japan. What's the status of of that agreement? And UH, 408 00:25:08,680 --> 00:25:11,200 Speaker 1: what's the status of the trading relationship between Japan and 409 00:25:11,200 --> 00:25:15,480 Speaker 1: the US. Well, I think the European Free Trade Agreement 410 00:25:15,520 --> 00:25:18,199 Speaker 1: with Japan is moving forward, but it's not really UH 411 00:25:18,400 --> 00:25:22,080 Speaker 1: the center of attention. UH. In Japan, we essentially view 412 00:25:22,320 --> 00:25:26,960 Speaker 1: the Pacific Asia trade as the most likely future for 413 00:25:27,320 --> 00:25:30,680 Speaker 1: the country. UH. The relationship with the US is obviously 414 00:25:31,040 --> 00:25:34,240 Speaker 1: UH in some trouble. UH. Japan put a great deal 415 00:25:34,800 --> 00:25:38,080 Speaker 1: of effort into the TPP, made a number of very 416 00:25:38,119 --> 00:25:41,480 Speaker 1: difficult political compromises to get to the final decision, and 417 00:25:41,560 --> 00:25:44,600 Speaker 1: then that was thrown out by the US or nagged 418 00:25:44,640 --> 00:25:47,680 Speaker 1: on by the US for reasons that the US has 419 00:25:48,080 --> 00:25:51,359 Speaker 1: tried to make clear, but Japan did feel like they 420 00:25:51,440 --> 00:25:55,040 Speaker 1: had been Um. They made political sacrifices only to have 421 00:25:55,160 --> 00:25:59,920 Speaker 1: those pushed aside. Now what happens is Japan is work 422 00:26:00,200 --> 00:26:03,280 Speaker 1: very hard to reconstitute the t p P as an 423 00:26:03,320 --> 00:26:05,720 Speaker 1: agreement among Asian countries only, but do so in a 424 00:26:05,800 --> 00:26:08,680 Speaker 1: way that leaves the door open to the US coming 425 00:26:08,760 --> 00:26:12,159 Speaker 1: back in. That is, put through rules, and the TPP 426 00:26:12,320 --> 00:26:15,520 Speaker 1: is a very rule oriented agreement that the US will 427 00:26:15,520 --> 00:26:18,760 Speaker 1: be happy with when things sort of settled down in 428 00:26:18,840 --> 00:26:21,520 Speaker 1: that regard in a certain census. Is a repetition of 429 00:26:21,640 --> 00:26:25,840 Speaker 1: history because the US, as you recall in the nineteen 430 00:26:25,880 --> 00:26:30,000 Speaker 1: thirty past, the smooth Holly tariffs was retaliated against immediately 431 00:26:30,560 --> 00:26:33,040 Speaker 1: by other countries around the world, and then moved back 432 00:26:33,119 --> 00:26:37,719 Speaker 1: toward free trade very quickly in the nineteen four Trade Act. UM. Now, 433 00:26:37,800 --> 00:26:39,560 Speaker 1: I hope things move a little faster this time than 434 00:26:39,600 --> 00:26:42,280 Speaker 1: they did in the nineteen thirties. But basically we've seen 435 00:26:42,359 --> 00:26:45,800 Speaker 1: this movie before, UH, and the Japanese are just trying 436 00:26:45,840 --> 00:26:48,560 Speaker 1: to do every thing they can UH to make it 437 00:26:48,880 --> 00:26:53,240 Speaker 1: fast forward, UH, including negotiating with the US in terms 438 00:26:53,280 --> 00:26:55,600 Speaker 1: of getting a US Japan free trade agreement online what 439 00:26:55,720 --> 00:26:58,600 Speaker 1: would be very much like the TPP but also working 440 00:26:58,640 --> 00:27:01,720 Speaker 1: with Asian partners to make it clear to the US 441 00:27:01,760 --> 00:27:04,399 Speaker 1: that there are alternatives. What is that t p P 442 00:27:04,520 --> 00:27:06,600 Speaker 1: eleven is it's being called the t p P X 443 00:27:06,880 --> 00:27:10,000 Speaker 1: the US look like? How much enthusiasm is there forward 444 00:27:10,040 --> 00:27:11,600 Speaker 1: in the region. How different is it from the deal 445 00:27:11,640 --> 00:27:14,680 Speaker 1: that would have included the US. Well, obviously it's a 446 00:27:14,760 --> 00:27:17,120 Speaker 1: much smaller deal because the US is such a large economy, 447 00:27:17,400 --> 00:27:19,280 Speaker 1: But I think the content of the deal is not 448 00:27:19,480 --> 00:27:22,320 Speaker 1: likely to be all that much different for the simple 449 00:27:22,359 --> 00:27:25,479 Speaker 1: reason that if you start opening issues that have already 450 00:27:25,520 --> 00:27:28,920 Speaker 1: been decided, then every issue gets opened and the negotiations 451 00:27:29,000 --> 00:27:32,600 Speaker 1: just break down again. So my expectations is that these 452 00:27:32,800 --> 00:27:36,120 Speaker 1: negotiations will go relatively quickly UH, and they will come 453 00:27:36,200 --> 00:27:38,560 Speaker 1: to fruition in a form with a quite a high 454 00:27:39,480 --> 00:27:42,480 Speaker 1: high grade agreement. But in the at the same time, 455 00:27:42,840 --> 00:27:45,919 Speaker 1: the Chinese Initiative, to which Japan is also a party UH, 456 00:27:46,119 --> 00:27:49,920 Speaker 1: will move forward with a lower grade agreement. UH. And 457 00:27:50,080 --> 00:27:52,040 Speaker 1: just we need as many of these things as we 458 00:27:52,119 --> 00:27:56,200 Speaker 1: can to keep the Trade Opening UM initiative going. Tell 459 00:27:56,280 --> 00:28:00,199 Speaker 1: us about the generational shift in Japan. We've all got 460 00:28:00,240 --> 00:28:04,800 Speaker 1: our biases and our miss and frankly Dr Felbon are ignorances. 461 00:28:05,680 --> 00:28:08,760 Speaker 1: What does that you want the people wanted thirty years old? 462 00:28:08,960 --> 00:28:11,720 Speaker 1: What do they want? I think what they want is 463 00:28:11,800 --> 00:28:15,120 Speaker 1: a stable future or something that they can look forward to. Um. 464 00:28:15,280 --> 00:28:19,960 Speaker 1: They're working very hard to keep themselves healthy because no 465 00:28:20,080 --> 00:28:22,280 Speaker 1: matter how good your health care system is in Japan 466 00:28:22,400 --> 00:28:24,760 Speaker 1: is a pretty good one. Uh, It's much better to 467 00:28:24,840 --> 00:28:26,920 Speaker 1: be healthy than it is to be sick. And so 468 00:28:27,040 --> 00:28:30,040 Speaker 1: they're trying to take care of themselves. They're educating themselves more. 469 00:28:30,400 --> 00:28:32,800 Speaker 1: You walk around Tokyo today and their levels of English 470 00:28:32,840 --> 00:28:35,879 Speaker 1: and breadth of English being used that you just never 471 00:28:36,000 --> 00:28:39,120 Speaker 1: have seen ten years ago. Interesting. Why is that? Is 472 00:28:39,160 --> 00:28:43,040 Speaker 1: it just just they that's a generational decision or said 473 00:28:43,120 --> 00:28:47,040 Speaker 1: something else? I think partly it's so many people have 474 00:28:47,960 --> 00:28:50,520 Speaker 1: been abroad, grown up abroad. But also I think it's 475 00:28:50,560 --> 00:28:52,520 Speaker 1: the tourist boom over the last two years that Prime 476 00:28:52,560 --> 00:28:56,120 Speaker 1: Minister Abbe himself triggered by changing the visa rules, etcetera, 477 00:28:56,440 --> 00:29:00,280 Speaker 1: and by setting tourism guards. It's good business to speaking now, 478 00:29:00,960 --> 00:29:04,840 Speaker 1: and so we're seeing even people much older begin to 479 00:29:04,960 --> 00:29:06,960 Speaker 1: learn a little bit more than they than they used to. 480 00:29:07,040 --> 00:29:09,920 Speaker 1: It's it's really quite wonderful. And now one final question 481 00:29:10,520 --> 00:29:16,080 Speaker 1: with Robert Allen felt. The worst airport trip Robbie is 482 00:29:16,200 --> 00:29:20,080 Speaker 1: Narita to Tokyo. If they fixed that or is it 483 00:29:20,240 --> 00:29:25,600 Speaker 1: still Japanese all world worst? Well, when I go from 484 00:29:26,000 --> 00:29:28,840 Speaker 1: Narita to Tokyo, I take the Narita Express. It's a 485 00:29:28,880 --> 00:29:33,680 Speaker 1: pretty good ride, very nice train. Um, it's a long ride. 486 00:29:34,400 --> 00:29:35,800 Speaker 1: But you know when I go I try to go 487 00:29:35,920 --> 00:29:39,200 Speaker 1: to JFK on the train, it's not such a nice ru. Yeah, 488 00:29:40,080 --> 00:29:42,480 Speaker 1: that would be true. What can what can our president 489 00:29:42,680 --> 00:29:46,520 Speaker 1: learn from the infrastructure development of the nice ride from 490 00:29:46,600 --> 00:29:50,200 Speaker 1: Narita to Tokyo. Well, I think a lot of Americans 491 00:29:50,240 --> 00:29:52,880 Speaker 1: already understand that our infrastructure needs a lot of work. 492 00:29:52,920 --> 00:29:54,720 Speaker 1: And I think New York deserves some credit because New 493 00:29:54,800 --> 00:29:57,120 Speaker 1: York has been upgrading its infrastructure. It's better than it 494 00:29:57,240 --> 00:29:59,480 Speaker 1: used to be, but there's so much that needs to 495 00:29:59,520 --> 00:30:03,040 Speaker 1: be done. Uh. Japan has also gotten much better air 496 00:30:03,120 --> 00:30:08,400 Speaker 1: traffic control UH protocols using GPS and stuff like that, 497 00:30:08,440 --> 00:30:10,640 Speaker 1: which the US doesn't have yet. We really need a 498 00:30:10,840 --> 00:30:14,440 Speaker 1: huge infrastructure initiative in the US. The both Republicans and 499 00:30:14,480 --> 00:30:17,360 Speaker 1: Democrats agree we need, so, you know, let's get on 500 00:30:17,480 --> 00:30:20,960 Speaker 1: with it and re build our infrastructure, the way so 501 00:30:21,040 --> 00:30:23,320 Speaker 1: many ancient countries have look forward to seeing you in 502 00:30:23,400 --> 00:30:28,320 Speaker 1: Tokyo Offen Narita Express, Robert ellen Feldman, Legendary Senior Adviser, 503 00:30:28,440 --> 00:30:31,520 Speaker 1: Morgan Stanley uf G as well say what a joy 504 00:30:31,600 --> 00:30:34,400 Speaker 1: to talk to you. Um he I have been with him, 505 00:30:35,240 --> 00:30:40,120 Speaker 1: David Um. He is treated completely different in Japan. He 506 00:30:40,320 --> 00:30:42,560 Speaker 1: is the different respect you offer him. Now you know 507 00:30:42,760 --> 00:30:47,560 Speaker 1: he's the definitive English speaking person in Japan. He's Yeah, 508 00:30:47,840 --> 00:30:51,160 Speaker 1: I hate to say, good morning, Ambassador Kennedy. He's bigger 509 00:30:51,240 --> 00:30:55,080 Speaker 1: than Mike Mansfield. He's bigger than Caroline Kennedy. He's hugely 510 00:30:55,240 --> 00:30:58,440 Speaker 1: respected within their media. Great to get his perspective of 511 00:30:58,840 --> 00:31:00,920 Speaker 1: all of those things. Shocking vote. We got a lot 512 00:31:01,000 --> 00:31:03,960 Speaker 1: to learn about you. This caught me completely unawares. I 513 00:31:04,280 --> 00:31:08,000 Speaker 1: did not see this coming. And again, this dichotomy between 514 00:31:08,160 --> 00:31:11,840 Speaker 1: urban and rural. The really the lynch pin to lb 515 00:31:12,120 --> 00:31:16,920 Speaker 1: LDP politics is Dr Phillimon said. It's changing for lining 516 00:31:17,000 --> 00:31:20,280 Speaker 1: up Dr Felmon here over there London working unlike our 517 00:31:20,400 --> 00:31:33,520 Speaker 1: us killing it over in London as well. Runch you 518 00:31:33,640 --> 00:31:37,680 Speaker 1: by Bank of America, Mary Lynch. With virtual reality, virtually 519 00:31:37,880 --> 00:31:43,120 Speaker 1: everything will change. Discover opportunities in a transforming world VI 520 00:31:43,240 --> 00:31:47,760 Speaker 1: of a mL dot Com, slash Vr, Mary Lynch, Pierced 521 00:31:47,800 --> 00:31:57,880 Speaker 1: Fenner and Smith Incorporated. Why don't you bring in Mr Kats? 522 00:31:57,960 --> 00:32:02,360 Speaker 1: This is really cool and it really works, and it 523 00:32:02,560 --> 00:32:07,360 Speaker 1: really sort of got immediate traction. Yeah. Don Katz joins 524 00:32:07,440 --> 00:32:10,680 Speaker 1: us now. He's the founder and CEO of Audible Audible company. 525 00:32:10,720 --> 00:32:13,520 Speaker 1: We associate with Amazon. Of course, Amazon acquired Audible just 526 00:32:13,560 --> 00:32:16,680 Speaker 1: a few years ago. Audibles been around since, Don Cats, 527 00:32:16,720 --> 00:32:18,880 Speaker 1: How did you get the idea to do this is 528 00:32:18,920 --> 00:32:21,440 Speaker 1: somebody who grew up listening to a book on tape 529 00:32:21,520 --> 00:32:23,920 Speaker 1: or two. How did you decide that there was an 530 00:32:23,960 --> 00:32:26,400 Speaker 1: opportunity here to move in this direction? You know, there 531 00:32:26,440 --> 00:32:29,400 Speaker 1: are so many genesis stories of kind of ideas that 532 00:32:29,600 --> 00:32:34,400 Speaker 1: become become reality. David, it's as audible. Um actually supposed 533 00:32:34,440 --> 00:32:36,760 Speaker 1: to write my fourth book. I was a writer and 534 00:32:36,880 --> 00:32:39,760 Speaker 1: journalist for twenty years, and uh in my fourth book, 535 00:32:39,800 --> 00:32:42,320 Speaker 1: and I changed my Esquare magazine article over to tech 536 00:32:42,440 --> 00:32:44,240 Speaker 1: and I got more and more interested in things like 537 00:32:44,880 --> 00:32:48,719 Speaker 1: what was coming in terms of analog to digital signal 538 00:32:48,800 --> 00:32:51,000 Speaker 1: processing and the like. And it sort of came to 539 00:32:51,120 --> 00:32:54,360 Speaker 1: me that these audiobooks I used to jug in Riverside 540 00:32:54,400 --> 00:32:57,800 Speaker 1: Park in the Manhattan in a belly pack, which were 541 00:32:57,880 --> 00:33:02,040 Speaker 1: extremely inadmisient in all ways of publishing value chain that 542 00:33:02,280 --> 00:33:04,960 Speaker 1: you could actually shoot them through the phone lines the 543 00:33:05,000 --> 00:33:09,120 Speaker 1: internet back then. Mr Katz always travels with an entourage, folks, 544 00:33:09,160 --> 00:33:12,480 Speaker 1: and one of his entourage whispered to me, don will 545 00:33:12,520 --> 00:33:17,320 Speaker 1: play down who he is. Let's regroup, folks. Mr Katz 546 00:33:17,440 --> 00:33:22,320 Speaker 1: studied with Ralph Ellison at New York University a few 547 00:33:22,440 --> 00:33:27,000 Speaker 1: years ago in Darkened the Door at Chicago and LS is, well, 548 00:33:27,160 --> 00:33:31,880 Speaker 1: what was it like forty years ago in the shadow 549 00:33:32,120 --> 00:33:35,320 Speaker 1: of Ralph Ellison at New York University. Well, I'm glad 550 00:33:35,320 --> 00:33:37,440 Speaker 1: you brought that up, and it's one of the most 551 00:33:37,520 --> 00:33:40,520 Speaker 1: important things ever happened to me. So yeah, Ralph Ellison, 552 00:33:40,600 --> 00:33:43,440 Speaker 1: the great American novelist, took me on not just as 553 00:33:43,480 --> 00:33:45,560 Speaker 1: a student, but then as a kind of a two 554 00:33:45,640 --> 00:33:49,280 Speaker 1: t and a mentor and audible kind of came naturally 555 00:33:49,320 --> 00:33:52,040 Speaker 1: out of the many things I learned from this brilliant man, 556 00:33:52,160 --> 00:33:55,480 Speaker 1: and one of them was that American literature really descended 557 00:33:55,560 --> 00:33:58,040 Speaker 1: directly from the way we talked and bragged and told 558 00:33:58,080 --> 00:34:02,080 Speaker 1: stories around campfires. So he was always about the integrity 559 00:34:02,160 --> 00:34:05,520 Speaker 1: the the oral culture, not just the in the vernacular culture, 560 00:34:05,560 --> 00:34:08,360 Speaker 1: not just the written culture. You know, even I was 561 00:34:08,400 --> 00:34:11,600 Speaker 1: kind of a literary writer and uh, and so you know, 562 00:34:11,760 --> 00:34:14,799 Speaker 1: just the unleashing the power of the spoken words at 563 00:34:14,920 --> 00:34:16,640 Speaker 1: its really done a pretty good job of that. And 564 00:34:16,760 --> 00:34:19,400 Speaker 1: now it's got a right as we're speaking, millions of 565 00:34:19,440 --> 00:34:22,359 Speaker 1: millions of people listening, uh for an average two hours 566 00:34:22,400 --> 00:34:26,080 Speaker 1: a day to people telling them stories. And sometimes it's 567 00:34:26,080 --> 00:34:30,000 Speaker 1: Scarlett Johnson or Calling Firth And it's become a kind 568 00:34:30,000 --> 00:34:31,560 Speaker 1: of a big thing. And you know, we inbedded the 569 00:34:31,800 --> 00:34:35,160 Speaker 1: first digital audio player that allows you to allow you 570 00:34:35,239 --> 00:34:38,160 Speaker 1: to do that, and there's going to be well twenty 571 00:34:38,200 --> 00:34:41,879 Speaker 1: years You mentioned integrity and Mr Ellison an invisible man 572 00:34:42,040 --> 00:34:44,840 Speaker 1: that goes to his integrity, which is what to do 573 00:34:44,960 --> 00:34:49,880 Speaker 1: about the h the poverty and income distinctions of this country. 574 00:34:50,000 --> 00:34:53,880 Speaker 1: You are acclaimed for work in Newark, New Jersey. Explain 575 00:34:54,000 --> 00:34:58,400 Speaker 1: what you're doing in Newark besides watching the reinvigorated New 576 00:34:58,520 --> 00:35:03,040 Speaker 1: Jersey Devils. So New York. Uh, this was just ten 577 00:35:03,120 --> 00:35:05,240 Speaker 1: years ago. We moved. What we did is just voted 578 00:35:05,280 --> 00:35:08,360 Speaker 1: with our feet. We moved the company to downtown Newark. 579 00:35:08,640 --> 00:35:12,080 Speaker 1: We're still on NASDAC quite surprising to various of our 580 00:35:12,320 --> 00:35:14,160 Speaker 1: holders that we want want to move to a city 581 00:35:14,280 --> 00:35:18,040 Speaker 1: was considered challenged, if not dangerous, And you know, we 582 00:35:18,160 --> 00:35:21,400 Speaker 1: did it to basically try to see if a company 583 00:35:21,480 --> 00:35:24,320 Speaker 1: can be more than that company which is growing and 584 00:35:24,440 --> 00:35:27,560 Speaker 1: becoming very successful. You measure yourself and your you know, 585 00:35:27,600 --> 00:35:31,160 Speaker 1: we can't even say your job output and you're taxable revenue. 586 00:35:31,239 --> 00:35:33,879 Speaker 1: But we decided to see what it meant to kind 587 00:35:33,920 --> 00:35:36,480 Speaker 1: of activate caring on the ground in a city that 588 00:35:36,640 --> 00:35:42,560 Speaker 1: was still struggling to come back from decades of well. 589 00:35:42,640 --> 00:35:46,400 Speaker 1: For one thing, we learned that the the educational winds 590 00:35:46,480 --> 00:35:48,200 Speaker 1: in a city like New York is really New York's 591 00:35:48,239 --> 00:35:51,520 Speaker 1: best thing. That k twelve innovations that have come to 592 00:35:52,000 --> 00:35:55,240 Speaker 1: teaching from the great public charters like kid and Uncommon 593 00:35:55,320 --> 00:35:58,120 Speaker 1: schools and then a public school of the kids are 594 00:35:58,160 --> 00:36:00,160 Speaker 1: and Beat the Art schools. And what we've learned was 595 00:36:00,200 --> 00:36:01,960 Speaker 1: that if we've just made a rule that all the 596 00:36:02,000 --> 00:36:05,440 Speaker 1: paid interns had to be kids from Newark, then these 597 00:36:05,480 --> 00:36:09,839 Speaker 1: amazingly high energy content of the character kids come into 598 00:36:09,920 --> 00:36:12,880 Speaker 1: the lives as we were becoming the largest employer of 599 00:36:12,920 --> 00:36:15,200 Speaker 1: actors in the New York area, and it just created 600 00:36:15,239 --> 00:36:19,680 Speaker 1: this incredibly rich culture of of different kinds of people 601 00:36:19,800 --> 00:36:22,760 Speaker 1: from super high tech ees to uh two English majors 602 00:36:22,800 --> 00:36:25,560 Speaker 1: turned into the business people and the like and the 603 00:36:25,640 --> 00:36:28,360 Speaker 1: company kind of sword for it. We also learned that 604 00:36:28,800 --> 00:36:33,239 Speaker 1: you really can um impact by design, which you guys 605 00:36:33,400 --> 00:36:35,719 Speaker 1: talk a lot about the micro and the macroeconomics of 606 00:36:35,760 --> 00:36:38,240 Speaker 1: the world. That to connect the city to the growth 607 00:36:38,320 --> 00:36:41,640 Speaker 1: economy meant that we needed a lot of audibles in 608 00:36:41,760 --> 00:36:45,000 Speaker 1: Newark as opposed to what often happens with economic development 609 00:36:45,040 --> 00:36:47,720 Speaker 1: and state like New Jersey, you look backwards to saving 610 00:36:47,800 --> 00:36:50,160 Speaker 1: me the old. So we've done a lot of things 611 00:36:50,280 --> 00:36:54,040 Speaker 1: that including starting a venture phone New York Venture Partners 612 00:36:54,560 --> 00:36:56,440 Speaker 1: that already is kind of well on its way to 613 00:36:56,520 --> 00:36:59,919 Speaker 1: planning dozens of little audibles in Newark as many others 614 00:37:00,000 --> 00:37:03,000 Speaker 1: and great things happen, which is the build departments are 615 00:37:03,040 --> 00:37:08,479 Speaker 1: coming up in Newark where we came with people people 616 00:37:08,520 --> 00:37:11,600 Speaker 1: around now and uh we're building. We're rehabing a church 617 00:37:11,719 --> 00:37:14,720 Speaker 1: down the street into a tech center for a second 618 00:37:15,160 --> 00:37:18,520 Speaker 1: building and restaurants like Barcade and moved across the street 619 00:37:18,560 --> 00:37:21,320 Speaker 1: and just saw Marcus Samuels on the other day. Incredible 620 00:37:21,560 --> 00:37:24,520 Speaker 1: person he is, uh putting a restaurant just down the 621 00:37:24,600 --> 00:37:27,759 Speaker 1: street in the new Haine Building, and we just consistently 622 00:37:27,800 --> 00:37:30,279 Speaker 1: tried to be a little inventive about things, and uh, 623 00:37:30,600 --> 00:37:33,560 Speaker 1: I think we've cut cut your guys eyes recently. Was 624 00:37:33,640 --> 00:37:35,520 Speaker 1: we just decided to say if you, if you want 625 00:37:35,520 --> 00:37:37,840 Speaker 1: to move into the Haine Building, will take twenty of 626 00:37:37,920 --> 00:37:41,160 Speaker 1: the loft apartments and we'll just pay your rent for 627 00:37:41,239 --> 00:37:43,680 Speaker 1: the first year if you're an audible employee. And it 628 00:37:43,800 --> 00:37:47,080 Speaker 1: was massively oversubscribe a lot of present of the work force. 629 00:37:47,080 --> 00:37:49,120 Speaker 1: There's a lottery exactly. And then we said, if you 630 00:37:49,200 --> 00:37:50,960 Speaker 1: moved to Newark at all, we'll just supplement to a 631 00:37:51,000 --> 00:37:54,160 Speaker 1: two or fifty dollars a month in and spending money, 632 00:37:54,880 --> 00:37:58,960 Speaker 1: and u lot of people who take the train from 633 00:37:59,360 --> 00:38:02,040 Speaker 1: Brooklyn and the more learned district to to Newark suddenly 634 00:38:02,040 --> 00:38:04,680 Speaker 1: wanted to live in there. Two d fifty one spending 635 00:38:04,680 --> 00:38:07,080 Speaker 1: money doesn't start it because they may say, David, you 636 00:38:07,160 --> 00:38:09,920 Speaker 1: have to use that at a Whole Foods to buy avocados. 637 00:38:12,200 --> 00:38:14,440 Speaker 1: Let me ask you about what you've learned about what 638 00:38:14,600 --> 00:38:17,839 Speaker 1: makes for a good audiobook. You mentioned Scarlett Johansson doing 639 00:38:18,040 --> 00:38:20,120 Speaker 1: as some of these a zacharyly Kinto doing doing others 640 00:38:20,440 --> 00:38:22,080 Speaker 1: just does it matter if the author reads it or 641 00:38:22,320 --> 00:38:26,040 Speaker 1: or a trained actor reads what makes for a good audiobook. 642 00:38:26,680 --> 00:38:29,040 Speaker 1: It's so interesting you say that you've got a dozen 643 00:38:29,440 --> 00:38:32,600 Speaker 1: data scientists with dozens of bitch days between them studying 644 00:38:32,680 --> 00:38:36,400 Speaker 1: the the exactness of the of the science behind it. 645 00:38:36,560 --> 00:38:40,120 Speaker 1: But what we find is that, Um, when we decided 646 00:38:40,160 --> 00:38:42,560 Speaker 1: to go out and hire the Colin Firths and Dustin 647 00:38:42,640 --> 00:38:45,000 Speaker 1: Hoffman's and Kate Winslow, it's really kind of saw what 648 00:38:45,400 --> 00:38:49,440 Speaker 1: great actors do when they interpret and when we position 649 00:38:49,520 --> 00:38:52,000 Speaker 1: a book is not as a as a script. You 650 00:38:52,080 --> 00:38:54,480 Speaker 1: see these great great actors, he's doing what they do 651 00:38:55,040 --> 00:38:58,279 Speaker 1: to create these nuanced performances. But the key thing is 652 00:38:58,400 --> 00:39:01,840 Speaker 1: the is the seductive of intimacy of being read to 653 00:39:02,040 --> 00:39:07,040 Speaker 1: personally audible experience is almost all driving or exercising or 654 00:39:07,080 --> 00:39:09,560 Speaker 1: doing things around the house, and it's a performance just 655 00:39:09,760 --> 00:39:12,959 Speaker 1: for you. And I think the intensity of it also 656 00:39:13,080 --> 00:39:15,839 Speaker 1: harks backed a happy child is being read to by 657 00:39:15,880 --> 00:39:19,680 Speaker 1: your by your parents. Um. But the performance values have 658 00:39:19,800 --> 00:39:21,600 Speaker 1: just gone up and up, and you know, we're pretty 659 00:39:21,600 --> 00:39:23,719 Speaker 1: proud to have been been part of that, just to 660 00:39:23,920 --> 00:39:28,480 Speaker 1: to really connect the sector to two great actors. You know, 661 00:39:28,680 --> 00:39:30,960 Speaker 1: it's the spoken word always should have been an American 662 00:39:31,080 --> 00:39:33,600 Speaker 1: media type that's up there with any any element of 663 00:39:33,800 --> 00:39:36,960 Speaker 1: video and music and books. It kind of got stuck. 664 00:39:37,280 --> 00:39:38,880 Speaker 1: It kind of got stuck as a kind of a 665 00:39:38,920 --> 00:39:42,000 Speaker 1: poor sister of books when it should have been, you know, 666 00:39:42,400 --> 00:39:44,799 Speaker 1: thrown out into the storytelling where open made the movie 667 00:39:44,840 --> 00:39:46,759 Speaker 1: industry was. And I think we've made a lot of 668 00:39:46,840 --> 00:39:49,799 Speaker 1: progress in creating an amazing media type. And I'm sure 669 00:39:49,880 --> 00:39:52,440 Speaker 1: my old mentor, Ralph Ellison was de proud because that's 670 00:39:52,440 --> 00:39:54,760 Speaker 1: all he cared about. Let's come back with Don Kats 671 00:39:54,800 --> 00:39:57,279 Speaker 1: of New York University and a company called Audible. I 672 00:39:57,360 --> 00:40:01,000 Speaker 1: believe it works. At Mr Bezos talking about Amazon and 673 00:40:01,080 --> 00:40:04,360 Speaker 1: the futures for the record number of Amazon boxes in 674 00:40:04,480 --> 00:40:09,120 Speaker 1: my hallway of a number of apartments. Uh, David girls fourteen, 675 00:40:09,280 --> 00:40:11,279 Speaker 1: You've divided the apartment's made some new rooms out of 676 00:40:11,320 --> 00:40:13,480 Speaker 1: those boxes. You know, this is like the floor that 677 00:40:13,800 --> 00:40:16,400 Speaker 1: I don't have a man's like you. You know, when 678 00:40:16,440 --> 00:40:18,680 Speaker 1: you live in Brooklyn, you can get up to four thousand, 679 00:40:18,960 --> 00:40:22,800 Speaker 1: yeah square feet nine years on from an acquisition by Amazon. 680 00:40:23,560 --> 00:40:26,520 Speaker 1: If you're sitting with a leadership Whole Foods today, Don Katz, 681 00:40:26,880 --> 00:40:29,640 Speaker 1: what would you say is the best practices of Mr Bezos. 682 00:40:30,880 --> 00:40:33,319 Speaker 1: Really good question. But I think the good news is that, uh, 683 00:40:33,760 --> 00:40:36,600 Speaker 1: you know, depending on what's going on inside the whole Foods, 684 00:40:36,719 --> 00:40:39,920 Speaker 1: is that Amazon is a kind of a dream acquirer 685 00:40:40,080 --> 00:40:44,080 Speaker 1: if you have a sophisticated culture and uh, and you know, 686 00:40:44,160 --> 00:40:46,440 Speaker 1: you already have a brand and a business model and 687 00:40:46,520 --> 00:40:49,799 Speaker 1: a culture that that is, you know, elevates the people 688 00:40:49,840 --> 00:40:52,200 Speaker 1: who work with you. Is that you get to you 689 00:40:52,239 --> 00:40:54,800 Speaker 1: get to keep that and you can you will just 690 00:40:55,040 --> 00:40:57,879 Speaker 1: have have some of the the positive synergies of being 691 00:40:58,040 --> 00:41:01,759 Speaker 1: connected to a profound engine culture and to say nothing 692 00:41:01,840 --> 00:41:05,320 Speaker 1: of accumulation of the best online customers in the history 693 00:41:05,320 --> 00:41:08,040 Speaker 1: of commerce. And uh, it's been it's been a pretty 694 00:41:08,080 --> 00:41:10,600 Speaker 1: exciting thing. And you know, I personally went way back 695 00:41:10,640 --> 00:41:13,759 Speaker 1: with Jeff Bezos because we were in the first in 696 00:41:13,840 --> 00:41:17,360 Speaker 1: the same Kleiner Perkins, uh, you know, series A class, 697 00:41:17,440 --> 00:41:20,719 Speaker 1: And so we got together back in to compare notes, 698 00:41:20,840 --> 00:41:22,480 Speaker 1: and he told me what he was going to do. 699 00:41:22,560 --> 00:41:24,439 Speaker 1: And I told him I had this idea that people 700 00:41:24,560 --> 00:41:27,360 Speaker 1: be walking around with a little solid state devices in 701 00:41:27,400 --> 00:41:29,279 Speaker 1: their pockets packed with culture, and I was going to 702 00:41:29,880 --> 00:41:31,959 Speaker 1: lead in inventing the first one. He said it would 703 00:41:31,960 --> 00:41:34,719 Speaker 1: take years for that attraction in the market he was 704 00:41:34,800 --> 00:41:37,839 Speaker 1: kind of right about, but probably when it took off, 705 00:41:37,920 --> 00:41:40,560 Speaker 1: it really took off. But it's been it's it's uh, 706 00:41:41,360 --> 00:41:45,560 Speaker 1: it's it's been fascinating to share our customers centrist And 707 00:41:45,640 --> 00:41:48,040 Speaker 1: you know, Amazon thrives on the idea that you don't 708 00:41:48,200 --> 00:41:50,759 Speaker 1: look sideways at the competition. You actually just focus on 709 00:41:50,880 --> 00:41:53,719 Speaker 1: what the customers life could be if it was, if 710 00:41:53,760 --> 00:41:55,960 Speaker 1: you serve them better, and they've thrived with that, and 711 00:41:56,000 --> 00:41:58,759 Speaker 1: then you you and before they ask and uh, it's 712 00:41:58,760 --> 00:42:00,799 Speaker 1: so funny my journalism day as I got to spend 713 00:42:00,880 --> 00:42:03,040 Speaker 1: time with a lot of incredible people who taught me 714 00:42:03,040 --> 00:42:06,400 Speaker 1: a lot. In one with w Edwards Deming the great men. 715 00:42:08,040 --> 00:42:10,280 Speaker 1: Let me ask you this question. This is Jeff Bezos 716 00:42:10,360 --> 00:42:12,879 Speaker 1: ever come up called you up and said, I want 717 00:42:12,960 --> 00:42:15,640 Speaker 1: Tom Waits to do audible on this book or that book. 718 00:42:16,640 --> 00:42:20,160 Speaker 1: He definitely, we do talk about, you know, the talent explosion. 719 00:42:20,160 --> 00:42:23,560 Speaker 1: Here's the dirt, Okay, it's gonna And also, you know 720 00:42:23,640 --> 00:42:25,919 Speaker 1: they were they're really supportive of the stuff we're doing 721 00:42:26,280 --> 00:42:30,000 Speaker 1: in Newark, this idea of embracing urban renaissances defining the 722 00:42:30,120 --> 00:42:32,920 Speaker 1: company and uh and and look, you know it's you know, 723 00:42:33,080 --> 00:42:35,840 Speaker 1: I was a nastac CEO at a time, as you 724 00:42:35,880 --> 00:42:38,920 Speaker 1: guys know, and you know the probably two thousand, two 725 00:42:38,960 --> 00:42:41,200 Speaker 1: thousand seven that was it was not that fun to 726 00:42:41,280 --> 00:42:43,640 Speaker 1: be a smaller cap, you know, a mid cap company 727 00:42:43,760 --> 00:42:46,520 Speaker 1: those days. And uh and this, uh, this was just 728 00:42:46,680 --> 00:42:49,480 Speaker 1: a you know, really kind of happy marriage and uh, 729 00:42:49,800 --> 00:42:51,480 Speaker 1: he kind of get the best of all world. So 730 00:42:51,760 --> 00:42:54,080 Speaker 1: entrepreneurs called me all the time to ask me how 731 00:42:55,160 --> 00:42:56,880 Speaker 1: how you get to them? Don't let me ask you 732 00:42:56,880 --> 00:43:00,000 Speaker 1: about original content. I saw a number of former colleagues 733 00:43:00,000 --> 00:43:02,120 Speaker 1: at my past employer march over to your office is 734 00:43:02,160 --> 00:43:06,040 Speaker 1: to start working on original content for audible Uh. And 735 00:43:06,239 --> 00:43:08,120 Speaker 1: I noticed in the Pew report on the state of 736 00:43:08,120 --> 00:43:10,400 Speaker 1: American journalism. Now I think something like four out of 737 00:43:10,480 --> 00:43:13,560 Speaker 1: ten Americans I have now listened to a podcast. There 738 00:43:13,600 --> 00:43:15,600 Speaker 1: are those, though, who say that podcasting is in a 739 00:43:15,680 --> 00:43:17,799 Speaker 1: bubble state. There are more of them than we need, 740 00:43:17,880 --> 00:43:19,719 Speaker 1: more of them that are being listened to. How do 741 00:43:19,800 --> 00:43:21,480 Speaker 1: you how do you look at the landscape? Are there 742 00:43:21,520 --> 00:43:24,359 Speaker 1: too many podcasts? And how do you separate yourself from 743 00:43:24,440 --> 00:43:27,320 Speaker 1: from all of them? Yeah, but we are really investing 744 00:43:27,360 --> 00:43:31,680 Speaker 1: heavily in all kinds of produced to the form audio. 745 00:43:31,760 --> 00:43:35,759 Speaker 1: I mean very successful positioning books as scripts. And beyond that, 746 00:43:36,239 --> 00:43:38,920 Speaker 1: we know so much about the the aesthetics of the 747 00:43:39,000 --> 00:43:41,800 Speaker 1: listening experience and what works and what doesn't that we 748 00:43:41,880 --> 00:43:43,680 Speaker 1: have people who are some of the best you know, 749 00:43:43,760 --> 00:43:46,080 Speaker 1: print editors in the city working with us as signing 750 00:43:46,239 --> 00:43:48,200 Speaker 1: writers to do write directly to the forum. We just 751 00:43:48,280 --> 00:43:52,040 Speaker 1: announced a five million dollar fund to support emerging playwrights 752 00:43:52,680 --> 00:43:55,560 Speaker 1: doing one and two choice plays. Uh And and as 753 00:43:55,640 --> 00:43:57,960 Speaker 1: you know, some of the better um folks from your 754 00:43:58,000 --> 00:44:00,920 Speaker 1: world and public radio have come over um of you know, 755 00:44:01,080 --> 00:44:04,000 Speaker 1: just the radio world to help us produce directly of 756 00:44:04,160 --> 00:44:06,760 Speaker 1: different kinds of content. So so we're you know, we're 757 00:44:06,880 --> 00:44:09,560 Speaker 1: pushing out tons of the different things there and you know, 758 00:44:09,680 --> 00:44:13,759 Speaker 1: the listening revolution has extended beyond our you know, get 759 00:44:13,760 --> 00:44:16,239 Speaker 1: what you pay for work. We've done pretty well saying that. 760 00:44:16,320 --> 00:44:18,400 Speaker 1: You know, if it's the kind of thing that consumer 761 00:44:18,480 --> 00:44:21,560 Speaker 1: pays for for their information and their entertainment of their 762 00:44:21,680 --> 00:44:28,480 Speaker 1: educational aspirations, then you probably the right. Podcasting is a 763 00:44:28,560 --> 00:44:32,440 Speaker 1: different thing. It's it is, in fact, an explosion of 764 00:44:32,719 --> 00:44:35,799 Speaker 1: user generated folks talking. You know, I got one more 765 00:44:35,880 --> 00:44:39,120 Speaker 1: question I get again. This is from josenh from Manila. 766 00:44:39,719 --> 00:44:42,800 Speaker 1: Jim Dale is the voice of the Harry Potter's on 767 00:44:42,960 --> 00:44:46,120 Speaker 1: audible books. I mean, for starters, folks. Jim Dale wrote 768 00:44:46,480 --> 00:44:49,600 Speaker 1: wrote the great song Georgie's Girl, Georgie Girl from a 769 00:44:49,719 --> 00:44:51,960 Speaker 1: million years ago. Did you pick Jim Dale out for 770 00:44:52,000 --> 00:44:54,440 Speaker 1: the Harry Potter books? We did not. In fact, one 771 00:44:54,440 --> 00:44:57,320 Speaker 1: of the great mysteries that was that we actually didn't 772 00:44:57,360 --> 00:45:00,560 Speaker 1: have this great relationship with J. K. Rowling and uh, 773 00:45:00,640 --> 00:45:02,839 Speaker 1: and we didn't even have the book until the last 774 00:45:02,880 --> 00:45:05,920 Speaker 1: couple of years. And Jim Dale's performance in the US 775 00:45:06,120 --> 00:45:10,319 Speaker 1: and Stephen Fry, the iconic British figure in the UK, 776 00:45:10,880 --> 00:45:15,279 Speaker 1: are two of the great nuanced performances ever of an audiobook. 777 00:45:15,320 --> 00:45:17,400 Speaker 1: And it's it's one of those things where you kind 778 00:45:17,440 --> 00:45:20,160 Speaker 1: of can't believe it. A hundre people come to life 779 00:45:20,280 --> 00:45:25,319 Speaker 1: just through these slightly nuanced introductions and characteristics. He's an 780 00:45:25,320 --> 00:45:27,640 Speaker 1: amazing actor and but but his in our studio is 781 00:45:27,640 --> 00:45:29,759 Speaker 1: a lot doing other things and uh and we just 782 00:45:29,880 --> 00:45:33,359 Speaker 1: actually ran some commercials on the oscars that it's featured him, 783 00:45:33,360 --> 00:45:36,080 Speaker 1: and one of them is great Actors and it's fascinating. 784 00:45:36,080 --> 00:45:39,440 Speaker 1: There's it's an entirely se separate world of acting. It's 785 00:45:39,480 --> 00:45:42,839 Speaker 1: like a long form um distance runner who can keep 786 00:45:43,160 --> 00:45:46,640 Speaker 1: the consistency and then keep the story. Are you alive 787 00:45:47,160 --> 00:45:49,359 Speaker 1: and you know, come humanized and brought the life through 788 00:45:49,440 --> 00:45:51,480 Speaker 1: the voice. And it's not for everybody. You know a 789 00:45:51,560 --> 00:45:53,560 Speaker 1: lot of movie actors were used to close us and 790 00:45:53,800 --> 00:45:58,000 Speaker 1: like don't. Don't necessarily taught this all over the world 791 00:45:58,080 --> 00:46:02,759 Speaker 1: in acting schools. Done. Thank you, doncast Audible. Great to 792 00:46:02,840 --> 00:46:15,120 Speaker 1: speak with you. This is Bloomberg. Thanks for listening to 793 00:46:15,160 --> 00:46:19,840 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 794 00:46:20,040 --> 00:46:25,600 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 795 00:46:25,680 --> 00:46:29,240 Speaker 1: on Twitter at Tom Keene. David Gura is at David Gura. 796 00:46:29,880 --> 00:46:33,799 Speaker 1: Before the podcast, you can always catch us worldwide. I'm 797 00:46:33,840 --> 00:46:47,959 Speaker 1: Bloomberg Radio. Runch you by Bank of America Mary Lynch. 798 00:46:48,239 --> 00:46:53,719 Speaker 1: With virtual reality, virtually everything will change. Discover opportunities in 799 00:46:53,800 --> 00:46:58,360 Speaker 1: a transforming world. Be of a mL dot Com, slash vr, 800 00:46:59,239 --> 00:47:02,200 Speaker 1: Mary Lynch, Fenner and Smith Incorporated,