1 00:00:01,040 --> 00:00:04,960 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tim keene Jailey. 2 00:00:05,160 --> 00:00:08,720 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:09,200 --> 00:00:14,720 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, Sam Cloud, 4 00:00:14,800 --> 00:00:18,919 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. So 5 00:00:18,960 --> 00:00:21,040 Speaker 1: it's the market comes, It's time for us to take 6 00:00:21,040 --> 00:00:23,680 Speaker 1: a step back and think about some really important issues, 7 00:00:23,720 --> 00:00:25,480 Speaker 1: and we do that. I'm very pleased to say with 8 00:00:25,560 --> 00:00:28,160 Speaker 1: truly one of the world's leading economists. He took over 9 00:00:28,200 --> 00:00:30,120 Speaker 1: at the Bank of England as one of the Monetary 10 00:00:30,160 --> 00:00:34,519 Speaker 1: Policy Committee members at the depths of the financial crisis fallout. 11 00:00:34,720 --> 00:00:37,559 Speaker 1: He is an advocate of monetary policy activism when a 12 00:00:37,560 --> 00:00:39,760 Speaker 1: lot of people were still thinking about the response that 13 00:00:39,800 --> 00:00:42,519 Speaker 1: needed to take place. His name is Adam Poston is 14 00:00:42,560 --> 00:00:46,560 Speaker 1: the now the Peterson Institute for International Economics. President Adam, 15 00:00:46,600 --> 00:00:49,120 Speaker 1: it's always great to catch up with you. Thank you 16 00:00:49,200 --> 00:00:51,400 Speaker 1: for that. I'm just delighted to be back on surveillance 17 00:00:51,440 --> 00:00:53,920 Speaker 1: and a really important article in the LATECE issue with 18 00:00:53,920 --> 00:00:55,600 Speaker 1: Foreign Affairs, and I want to read some of it 19 00:00:55,680 --> 00:00:58,080 Speaker 1: to our to our listeners. The title is the Post 20 00:00:58,080 --> 00:01:01,440 Speaker 1: American World Economy Bedside Root. It was last night. It 21 00:01:01,520 --> 00:01:04,120 Speaker 1: was the last night for Thursday night. But the final 22 00:01:04,280 --> 00:01:07,360 Speaker 1: lines of this are so powerful. A world in which 23 00:01:07,440 --> 00:01:10,560 Speaker 1: the United States ceases to lead, or worse still attacks 24 00:01:10,840 --> 00:01:13,760 Speaker 1: the system it built will be poorer, nasty, or less 25 00:01:13,800 --> 00:01:18,039 Speaker 1: fair and more dangerous for everyone. So let's start there, Adam, 26 00:01:18,200 --> 00:01:25,240 Speaker 1: Why uh? Straightforwardly? I think the issue is twofold. When 27 00:01:25,280 --> 00:01:27,880 Speaker 1: the U S set up this system, and that means 28 00:01:27,920 --> 00:01:30,039 Speaker 1: all to free trade, all the rules, the institutions like 29 00:01:30,080 --> 00:01:32,920 Speaker 1: the IMF and World Bank, the norms of behavior. I 30 00:01:32,920 --> 00:01:35,280 Speaker 1: make the analogy it's like a club where the US 31 00:01:35,440 --> 00:01:38,600 Speaker 1: was the chair. UM. When it set up this system, 32 00:01:38,680 --> 00:01:41,720 Speaker 1: it was actually as much about peace as prosperity. So 33 00:01:41,760 --> 00:01:43,960 Speaker 1: you go back to Cordell Hall and Franklin Roosevelt and 34 00:01:44,000 --> 00:01:46,080 Speaker 1: all that came out of World War Two, and there 35 00:01:46,160 --> 00:01:49,480 Speaker 1: was a big divide made between national scary stuff in 36 00:01:49,480 --> 00:01:53,600 Speaker 1: economic issues. And it's never been perfect obviously, UM. But 37 00:01:53,840 --> 00:01:57,680 Speaker 1: it meant that people and countries around the world could 38 00:01:57,760 --> 00:02:01,240 Speaker 1: try to become prosperous without having to fear being threatened 39 00:02:01,240 --> 00:02:05,760 Speaker 1: and bullied. UM. And what the Trump administrations stated national 40 00:02:05,800 --> 00:02:09,880 Speaker 1: security strategy as well as their bilateral approach. It stated 41 00:02:09,919 --> 00:02:13,320 Speaker 1: bilateral approach to trade deals and their hostility to some 42 00:02:13,360 --> 00:02:16,200 Speaker 1: of the international organizations. Again, which the US set up 43 00:02:17,400 --> 00:02:20,600 Speaker 1: is doing is it's raising it's breaking down that barrier. 44 00:02:20,760 --> 00:02:23,320 Speaker 1: It's linking national security and economics and ways that I 45 00:02:23,360 --> 00:02:26,680 Speaker 1: think are counterproductive, and it's making it so that there's 46 00:02:26,720 --> 00:02:29,160 Speaker 1: more room for autocrats, not just the US, to be 47 00:02:29,200 --> 00:02:33,000 Speaker 1: bullying to other countries and to individual businesses. So that's 48 00:02:33,000 --> 00:02:35,840 Speaker 1: the big picture. The second thing that's going on is 49 00:02:35,880 --> 00:02:40,280 Speaker 1: directly economically, it's eroding some things that make the world 50 00:02:40,280 --> 00:02:44,280 Speaker 1: economy better. There is this tendency from President Trump, particulat 51 00:02:44,320 --> 00:02:46,440 Speaker 1: during a campaign but since from some of his cabinet 52 00:02:46,480 --> 00:02:49,680 Speaker 1: officials to suggest that the US got some kind of 53 00:02:49,760 --> 00:02:53,119 Speaker 1: raw deal in all these trade deals in every organization, 54 00:02:53,120 --> 00:02:55,480 Speaker 1: whether it's the UN or the I M F that 55 00:02:55,680 --> 00:02:58,400 Speaker 1: somehow the American voter has been suckered and made a 56 00:02:58,440 --> 00:03:02,360 Speaker 1: fool of, And it's actually the opposite. It's been that 57 00:03:02,400 --> 00:03:04,000 Speaker 1: the rest of the world had to catch up with 58 00:03:04,040 --> 00:03:07,720 Speaker 1: the US. After World War Two, the US was dominant 59 00:03:07,760 --> 00:03:11,360 Speaker 1: by historical accident in military victory. And what has happened 60 00:03:11,400 --> 00:03:14,080 Speaker 1: is the U s has made it worthwhile for everybody 61 00:03:14,120 --> 00:03:17,639 Speaker 1: to keep the US in the chair position, and in fact, 62 00:03:17,680 --> 00:03:20,239 Speaker 1: the US basically gets the cheat and free ride. To 63 00:03:20,360 --> 00:03:23,120 Speaker 1: the degree these things are a little annoying to individual people, 64 00:03:23,440 --> 00:03:26,240 Speaker 1: the U s gets the better deal than anybody else. So, Adam, 65 00:03:26,320 --> 00:03:28,800 Speaker 1: the argument against this and the endorsement of the latest 66 00:03:28,800 --> 00:03:31,440 Speaker 1: approach by this administration is there has been a leach 67 00:03:31,480 --> 00:03:34,240 Speaker 1: on this system over the last two decades that refuses 68 00:03:34,280 --> 00:03:37,440 Speaker 1: to play by the rules, and that's the Chinese economy. 69 00:03:37,680 --> 00:03:40,080 Speaker 1: Is there an argument that's be night out of that's 70 00:03:40,200 --> 00:03:42,760 Speaker 1: you're absolutely right. That is the question is how much 71 00:03:42,800 --> 00:03:45,280 Speaker 1: does the existence If you're gonna make a legitimate case 72 00:03:45,320 --> 00:03:47,560 Speaker 1: to change the system, it's how much does the existence 73 00:03:47,600 --> 00:03:50,560 Speaker 1: of China change it? You're absolutely right. And where I 74 00:03:50,680 --> 00:03:54,080 Speaker 1: share the administration's concerns, and I think everybody rightly does, 75 00:03:54,840 --> 00:04:00,680 Speaker 1: it's particularly about forced technology transfer, forced intellectual property transfer, 76 00:04:00,760 --> 00:04:04,960 Speaker 1: forced intellectual property theft. These are issues where China is 77 00:04:04,960 --> 00:04:06,920 Speaker 1: not playing by the rules, and not just sort of 78 00:04:07,320 --> 00:04:10,880 Speaker 1: minorly importantly. But as we just heard rumors in the 79 00:04:10,880 --> 00:04:12,560 Speaker 1: press the other day, it looks like, and I've been 80 00:04:12,560 --> 00:04:15,120 Speaker 1: talking with officials in various countries about this, there may 81 00:04:15,120 --> 00:04:19,040 Speaker 1: be a joint US EU Japan case at the w 82 00:04:19,240 --> 00:04:23,279 Speaker 1: T O really threatening China in a legal way, in 83 00:04:23,320 --> 00:04:25,960 Speaker 1: an effective legal way to stop doing some of this. 84 00:04:26,160 --> 00:04:29,360 Speaker 1: And I mean you mentioned a solo of M I T. 85 00:04:30,640 --> 00:04:33,120 Speaker 1: Seven was a few papers then that changed the world. 86 00:04:33,800 --> 00:04:38,000 Speaker 1: His technology is different than our technology or John Farrow 87 00:04:38,080 --> 00:04:41,080 Speaker 1: and I see in interviews. Is everyone searching for a 88 00:04:41,120 --> 00:04:47,680 Speaker 1: new definition of the technological effect or impact upon society? 89 00:04:47,720 --> 00:04:50,359 Speaker 1: What is the new technology right now? How does it 90 00:04:50,400 --> 00:04:54,520 Speaker 1: affect our listeners? There's we don't know, we don't know, 91 00:04:54,800 --> 00:04:57,760 Speaker 1: and I'm pausing because I can't just make up something. No, 92 00:04:57,880 --> 00:04:59,640 Speaker 1: we don't know, we don't know. But but I would 93 00:04:59,640 --> 00:05:03,000 Speaker 1: say are two commonalities time with the past. The first 94 00:05:03,160 --> 00:05:07,159 Speaker 1: is there are always business secrets and leading edge businesses 95 00:05:07,360 --> 00:05:11,279 Speaker 1: which do get their intellectual property stolen. I mean the 96 00:05:11,320 --> 00:05:14,280 Speaker 1: Industrial Revolution in the US was abetted by the fact 97 00:05:14,520 --> 00:05:17,040 Speaker 1: that the Americans got around what we're called the Navigation 98 00:05:17,080 --> 00:05:19,720 Speaker 1: Acts in the late eighteenth early nineteenth century in Britain 99 00:05:20,000 --> 00:05:22,880 Speaker 1: and stole some of the technology that was used for 100 00:05:22,920 --> 00:05:28,360 Speaker 1: power looming and producing cover the same because and I'm 101 00:05:28,360 --> 00:05:30,200 Speaker 1: not saying that means it's lovely and just. It just 102 00:05:30,240 --> 00:05:32,599 Speaker 1: means we're not in an entirely new world. The other 103 00:05:32,600 --> 00:05:34,599 Speaker 1: piece that goes on is there is a policy aspect 104 00:05:34,640 --> 00:05:36,320 Speaker 1: of this, which I know you all have talked about 105 00:05:36,320 --> 00:05:39,039 Speaker 1: before with other experts, which is where you draw the 106 00:05:39,120 --> 00:05:42,880 Speaker 1: line on patent rights and protections for the developer versus 107 00:05:42,880 --> 00:05:46,280 Speaker 1: where you let in competition, and that I know I've 108 00:05:46,320 --> 00:05:48,120 Speaker 1: listened to you guys talk about this. I mean, this 109 00:05:48,240 --> 00:05:50,840 Speaker 1: is a real issue right now because on the one 110 00:05:50,880 --> 00:05:53,919 Speaker 1: ending of these enormously innovative large firms, but we're not 111 00:05:53,960 --> 00:05:56,160 Speaker 1: seeing new business creation. And that's in part because their 112 00:05:56,160 --> 00:05:58,320 Speaker 1: patent rights are being very protected, even if they're not 113 00:05:58,360 --> 00:06:01,040 Speaker 1: protected by China something as you've touched on, Adam, and 114 00:06:01,040 --> 00:06:02,359 Speaker 1: I want to get to it with you, because I 115 00:06:02,360 --> 00:06:04,800 Speaker 1: think it's important my self. Fither will admit to this. 116 00:06:05,080 --> 00:06:07,640 Speaker 1: Many market participants do the same. The I m F 117 00:06:07,720 --> 00:06:10,159 Speaker 1: come out with the report, they come out with forecasts 118 00:06:10,200 --> 00:06:12,400 Speaker 1: and we laugh at them. And I'm one of those 119 00:06:12,440 --> 00:06:14,120 Speaker 1: that laughed at them because I sit here and think, 120 00:06:14,279 --> 00:06:16,600 Speaker 1: why do I care what the I m F thinks 121 00:06:16,640 --> 00:06:21,080 Speaker 1: about the world. The forecasts are always wrong. You've touched 122 00:06:21,120 --> 00:06:23,400 Speaker 1: on this in your latest article and you call it 123 00:06:23,440 --> 00:06:27,040 Speaker 1: the post reality economy, And actually, for many of us, 124 00:06:27,080 --> 00:06:28,800 Speaker 1: what we're doing is not a dangerous thing. We're just 125 00:06:28,839 --> 00:06:31,360 Speaker 1: sitting here thinking this isn't useful to my world. It's 126 00:06:31,400 --> 00:06:33,760 Speaker 1: not useful for what I do as an investor, as 127 00:06:33,760 --> 00:06:36,800 Speaker 1: a market participant. But you actually point out that it's 128 00:06:36,800 --> 00:06:40,000 Speaker 1: really really important that we do still continue to enshrine 129 00:06:40,000 --> 00:06:42,520 Speaker 1: the work of the International Monitor Fund and others. Can 130 00:06:42,560 --> 00:06:44,919 Speaker 1: you walk me through why? Yeah. I think a major 131 00:06:45,000 --> 00:06:47,760 Speaker 1: part of the regime, the world system that the US 132 00:06:47,839 --> 00:06:50,360 Speaker 1: did set up was particularly IMF, but also the o 133 00:06:50,480 --> 00:06:54,680 Speaker 1: e c D, the World Bank, other organizations that provide 134 00:06:54,760 --> 00:06:58,719 Speaker 1: a consistent standard of data, both in terms of definitions 135 00:06:58,720 --> 00:07:01,840 Speaker 1: and regularly public publishing it and explaining it and making 136 00:07:01,839 --> 00:07:04,440 Speaker 1: it accessible around the world. I mean, something we shouldn't 137 00:07:04,440 --> 00:07:06,440 Speaker 1: even take for granted, domestic stuff like the Bureau of 138 00:07:06,480 --> 00:07:09,480 Speaker 1: Labor Statistics here, which we know gets threatened. But the 139 00:07:09,480 --> 00:07:13,640 Speaker 1: critical point is this is like the free press for economics. 140 00:07:13,440 --> 00:07:17,160 Speaker 1: It is an independent, objective voice, and frankly it is objective. 141 00:07:17,200 --> 00:07:19,600 Speaker 1: It sometimes gets things wrong, but they have no astragrind 142 00:07:20,400 --> 00:07:22,520 Speaker 1: trying to go out there and tell you what are 143 00:07:22,600 --> 00:07:25,840 Speaker 1: the potential effects of changes in economic policies, how well 144 00:07:26,000 --> 00:07:28,920 Speaker 1: is a government doing? And if you take that away, 145 00:07:29,400 --> 00:07:31,520 Speaker 1: and if governments not only get to push back, but 146 00:07:31,880 --> 00:07:34,480 Speaker 1: like the Trump administration or the main administration in the 147 00:07:34,560 --> 00:07:38,480 Speaker 1: UK gets to bully again that word to bully the 148 00:07:38,560 --> 00:07:42,800 Speaker 1: authorities on this. Markets have less voters have less ability 149 00:07:42,840 --> 00:07:45,880 Speaker 1: to hold the whole policymakers accountable. It's going to make 150 00:07:45,880 --> 00:07:49,360 Speaker 1: more uncertainty markets and it gives carp lunch to autocrats. 151 00:07:49,400 --> 00:07:52,520 Speaker 1: This question, Johnny, Your question, John is brilliant, And the 152 00:07:52,840 --> 00:07:55,400 Speaker 1: point about it that comes up within all the research 153 00:07:56,080 --> 00:07:58,800 Speaker 1: is to understand going in that you know whatever the 154 00:07:58,840 --> 00:08:01,160 Speaker 1: analysis you should look that is going to be wrong. 155 00:08:01,480 --> 00:08:04,080 Speaker 1: You have to start with the first order condition that 156 00:08:04,160 --> 00:08:06,600 Speaker 1: they never get it right. There's some really good research 157 00:08:06,600 --> 00:08:09,440 Speaker 1: on this, folks out of Vanderbilt University and also the 158 00:08:09,520 --> 00:08:13,760 Speaker 1: University of Massachusetts at Amorous. With that said, what's your prediction. 159 00:08:14,080 --> 00:08:16,600 Speaker 1: We know you're gonna be wrong, adam posing, but but 160 00:08:17,240 --> 00:08:21,280 Speaker 1: what is your prediction for American economic growth giving your 161 00:08:21,320 --> 00:08:25,040 Speaker 1: post American world economy. Well, unfortunately, Tom, it's not a 162 00:08:25,120 --> 00:08:28,440 Speaker 1: quick morality place. Several of us pointed out during the crisis. 163 00:08:28,480 --> 00:08:31,560 Speaker 1: You can do something that's temporarily good and not and 164 00:08:31,640 --> 00:08:34,679 Speaker 1: horrible but horrible long term and not suffer for it yet. 165 00:08:34,960 --> 00:08:36,320 Speaker 1: And I think that's where we are. I think the 166 00:08:36,400 --> 00:08:38,280 Speaker 1: US is going in for a couple of years of 167 00:08:38,480 --> 00:08:40,920 Speaker 1: very very strong growth. It may even average over the 168 00:08:41,000 --> 00:08:45,080 Speaker 1: three percent that President Trump has spoken about. It's not sustainable, 169 00:08:45,600 --> 00:08:48,640 Speaker 1: but the enormous fiscal stimulus we have is going to 170 00:08:48,720 --> 00:08:52,480 Speaker 1: have a huge part of it, and the huge global recovery. Frankly, frankly, 171 00:08:52,559 --> 00:08:54,800 Speaker 1: the US is benefiting from the rest of the world's growth. 172 00:08:55,040 --> 00:08:58,120 Speaker 1: What happens over time if these kinds of things I 173 00:08:58,160 --> 00:09:00,439 Speaker 1: talk about in my article actually come to pass and 174 00:09:00,480 --> 00:09:02,959 Speaker 1: which are happening, is you get less opportunities for the 175 00:09:03,040 --> 00:09:05,360 Speaker 1: US and less stable growth. The book of the moment 176 00:09:05,400 --> 00:09:08,400 Speaker 1: that everybody's got on their reading list is Ben Steel, 177 00:09:09,000 --> 00:09:11,959 Speaker 1: The Martial Plan, Dawn of the Cold War. Everybody's talking 178 00:09:12,000 --> 00:09:15,720 Speaker 1: about this work by Ben There was the Martial Plan, 179 00:09:15,920 --> 00:09:18,840 Speaker 1: we all studied it, we all knew it. You lived 180 00:09:19,040 --> 00:09:24,600 Speaker 1: reunification in Germany, and now we live a Germany that 181 00:09:25,120 --> 00:09:29,439 Speaker 1: has an alright minority party, We've got a government that 182 00:09:29,559 --> 00:09:34,120 Speaker 1: can't come together, and we have an aging Angelo miracle. 183 00:09:34,480 --> 00:09:37,760 Speaker 1: What are your thoughts on how Germany looks in two 184 00:09:37,800 --> 00:09:40,280 Speaker 1: thousand twenty. I think there are three big messages to 185 00:09:40,320 --> 00:09:44,240 Speaker 1: take away from Germany. Tom. Besides, as Ben Steel rightly 186 00:09:44,280 --> 00:09:47,080 Speaker 1: points out, Germany having been the result in some ways 187 00:09:47,080 --> 00:09:49,960 Speaker 1: of the Martial Plan. First is that you can have 188 00:09:50,080 --> 00:09:52,440 Speaker 1: the alt right and all these terrible things happening in 189 00:09:52,520 --> 00:09:56,040 Speaker 1: politics even when you've had enormous economic success. So right, 190 00:09:56,120 --> 00:09:57,920 Speaker 1: so you know people keep saying in the US, the 191 00:09:58,000 --> 00:09:59,840 Speaker 1: vote for this, that or the other right wing things 192 00:10:00,000 --> 00:10:02,160 Speaker 1: to the economic banks. Well, they've had a fifteen year 193 00:10:02,240 --> 00:10:04,640 Speaker 1: run of great economics in Germany and you still got 194 00:10:04,640 --> 00:10:07,800 Speaker 1: that anchor. The second thing that's interesting is they've had 195 00:10:07,840 --> 00:10:12,040 Speaker 1: all these years now of really huge exports, manufacturing, exports, 196 00:10:12,040 --> 00:10:15,240 Speaker 1: everything that Trump administration wants, and we still didn't get 197 00:10:15,280 --> 00:10:18,200 Speaker 1: wage growth until literally just last week. Right, we have 198 00:10:18,240 --> 00:10:20,480 Speaker 1: a deal set with the Gay Mental, the Big Union 199 00:10:20,880 --> 00:10:23,840 Speaker 1: finally get some wage growth. And so that to me 200 00:10:23,920 --> 00:10:25,520 Speaker 1: is a warning because we've seen the same thing in 201 00:10:25,600 --> 00:10:28,120 Speaker 1: Japan that even if you run big surpluses in trade, 202 00:10:28,320 --> 00:10:30,080 Speaker 1: even if you grow fast, even if you have a 203 00:10:30,080 --> 00:10:32,720 Speaker 1: shrinking labor force because of the demographics you mentioned, Tom, 204 00:10:33,040 --> 00:10:35,079 Speaker 1: you don't see the wage increases, and the Fed's got 205 00:10:35,080 --> 00:10:37,520 Speaker 1: to worry about that. And then the third big thing 206 00:10:37,559 --> 00:10:39,959 Speaker 1: to think about Germany, which is more about going forward 207 00:10:40,600 --> 00:10:43,200 Speaker 1: is it's not just the alternative in for Deutsche Lion, 208 00:10:43,360 --> 00:10:47,680 Speaker 1: the right wing, hateful party, it's that the moderate left party, 209 00:10:47,720 --> 00:10:50,760 Speaker 1: the Social Democrats, are historic loads of support. And this 210 00:10:50,840 --> 00:10:53,400 Speaker 1: has been a long term trend. And this is kind 211 00:10:53,400 --> 00:10:55,920 Speaker 1: of the scary thing across Western Europe and arguably in 212 00:10:55,960 --> 00:10:59,640 Speaker 1: the US. For all the talk years ago about third 213 00:10:59,679 --> 00:11:03,680 Speaker 1: Way from Clinton and Blair to Brown and Obama, you've 214 00:11:03,760 --> 00:11:07,520 Speaker 1: now the madyrate left has been dying in every every country. 215 00:11:07,559 --> 00:11:10,560 Speaker 1: So like even in the UK right Corbyn's labor is 216 00:11:10,600 --> 00:11:14,200 Speaker 1: not Blair's labor, It's certainly not, so, you know. And 217 00:11:14,240 --> 00:11:16,640 Speaker 1: this is again very odd in Germany that that's where 218 00:11:16,640 --> 00:11:19,480 Speaker 1: they're ending up when they've had very good benefits from 219 00:11:19,480 --> 00:11:22,680 Speaker 1: this system. They have had fantastic benefits. Most people would 220 00:11:22,720 --> 00:11:25,000 Speaker 1: say it's off the back of some really tough reforms 221 00:11:25,000 --> 00:11:28,400 Speaker 1: that went before Chancellor Merkell. And I ask a difficult 222 00:11:28,480 --> 00:11:31,400 Speaker 1: question right now because I wonder how we view Merkele's 223 00:11:31,520 --> 00:11:34,080 Speaker 1: term through the economic lens in about ten years time, 224 00:11:34,320 --> 00:11:36,719 Speaker 1: and I wonder how much for squandered opportunity this will 225 00:11:36,760 --> 00:11:39,760 Speaker 1: turn out to be with rates near all time loads, 226 00:11:40,240 --> 00:11:42,800 Speaker 1: with the budget as firm as it has been, and 227 00:11:42,920 --> 00:11:47,040 Speaker 1: yet the investment at home just hasn't been there. Adam. 228 00:11:47,160 --> 00:11:49,080 Speaker 1: We look at this economic period in Germany at the 229 00:11:49,120 --> 00:11:51,800 Speaker 1: moment with these rose tinted glasses that it's all great. 230 00:11:51,840 --> 00:11:53,600 Speaker 1: But I wonder in five to ten years time when 231 00:11:53,600 --> 00:11:56,000 Speaker 1: we look back and actually think that Chancellor Merkels squandered 232 00:11:56,200 --> 00:11:59,120 Speaker 1: a significant opportunity to address some issues that could have 233 00:11:59,160 --> 00:12:01,360 Speaker 1: been addressed. I think you've put your finger on something 234 00:12:01,400 --> 00:12:04,600 Speaker 1: extremely important, Jonathan. I think that's right to be fair 235 00:12:04,640 --> 00:12:08,040 Speaker 1: to Chancellor Merkel though. I mean, this run of growth 236 00:12:08,559 --> 00:12:11,880 Speaker 1: has been historically good, and she didn't mess it up 237 00:12:11,880 --> 00:12:14,040 Speaker 1: in any way, even if she partly was benefiting from 238 00:12:14,040 --> 00:12:16,920 Speaker 1: her predecessor Schroeder's labor market reforms, she didn't mess it 239 00:12:17,000 --> 00:12:19,880 Speaker 1: up in any way, which a lot of people do. Nonetheless, 240 00:12:20,200 --> 00:12:24,680 Speaker 1: the missed opportunity you speak about on investment public and private, 241 00:12:24,880 --> 00:12:27,800 Speaker 1: and how much public could have crowded in private investment, 242 00:12:27,880 --> 00:12:30,240 Speaker 1: which of course is the infrastructure key. Going back to 243 00:12:30,280 --> 00:12:33,000 Speaker 1: the Marshall Plan, you have good public investments sometimes forced 244 00:12:33,000 --> 00:12:37,040 Speaker 1: this in attracts private investment that is a huge loss. 245 00:12:37,120 --> 00:12:40,960 Speaker 1: And additionally that had huge spillovers on the rest of Europe. 246 00:12:41,000 --> 00:12:43,920 Speaker 1: Because Germany kept under investing. As part of the reason 247 00:12:44,000 --> 00:12:46,240 Speaker 1: we had the euro crisis, and part of the reason 248 00:12:46,240 --> 00:12:48,840 Speaker 1: the recovery from the euro crisis was too slow was 249 00:12:48,920 --> 00:12:53,559 Speaker 1: because Germany was unwilling to expand domestic investment. Forget consumption, 250 00:12:53,640 --> 00:12:57,160 Speaker 1: domestic investment. Again, that's not all at Chancellor Merkel's feet, 251 00:12:57,480 --> 00:13:00,720 Speaker 1: but the bottom line is if she gets credit for 252 00:13:01,320 --> 00:13:03,199 Speaker 1: the good things she did in the error she avoided, 253 00:13:03,240 --> 00:13:06,360 Speaker 1: your absolutely right. Both for Germany's long long term and 254 00:13:06,400 --> 00:13:09,960 Speaker 1: for European stability. The missed opportunity to invest the last 255 00:13:10,000 --> 00:13:11,960 Speaker 1: twenty years is a big deal. And I'm just finally, 256 00:13:12,000 --> 00:13:14,520 Speaker 1: for an investor from outside of Europe looking within, I 257 00:13:14,520 --> 00:13:16,760 Speaker 1: think they have one basic question right now, and I'd 258 00:13:16,760 --> 00:13:19,520 Speaker 1: like to ask it. The future of austerity in Europe 259 00:13:19,600 --> 00:13:23,280 Speaker 1: with the shift in Germany. What is it? It's unclear 260 00:13:23,559 --> 00:13:25,560 Speaker 1: because we still don't know, as Tom and the kid, 261 00:13:25,600 --> 00:13:27,040 Speaker 1: we still don't know what the coalition is going to 262 00:13:27,080 --> 00:13:29,760 Speaker 1: be in Germany. And even if you get the coalition, 263 00:13:29,800 --> 00:13:32,480 Speaker 1: even if the Social Democrats do go in the grow code, 264 00:13:32,480 --> 00:13:35,559 Speaker 1: the grocer coalition with with the Social with the Christian Democrats, 265 00:13:35,960 --> 00:13:38,040 Speaker 1: and yet the Finance Ministry, it's not like they're going 266 00:13:38,080 --> 00:13:40,800 Speaker 1: to go in a huge spending spree. What has happened 267 00:13:41,040 --> 00:13:44,880 Speaker 1: is people in Europe are reasonably backing off of some 268 00:13:45,000 --> 00:13:49,280 Speaker 1: of the austerity because things are better. Thank you so much, 269 00:13:49,679 --> 00:13:52,400 Speaker 1: Thank you Tom. Great pleasure to love to see in 270 00:13:52,440 --> 00:13:54,520 Speaker 1: Washington when we get down there, and imposing is with 271 00:13:54,600 --> 00:13:59,880 Speaker 1: the Peterson Institute. It is joy. Jennifer will always go 272 00:14:00,000 --> 00:14:04,839 Speaker 1: of Jane Folly at Rubble Bank on the dollar and 273 00:14:04,840 --> 00:14:07,400 Speaker 1: on what you were write about this weekend. Jane, it 274 00:14:07,440 --> 00:14:10,920 Speaker 1: has been just a wild week. Is it a brutal 275 00:14:11,040 --> 00:14:14,120 Speaker 1: move in the dollar or is it something less than that? 276 00:14:15,559 --> 00:14:18,000 Speaker 1: You know, I think there are a number of different 277 00:14:18,080 --> 00:14:21,680 Speaker 1: offsetting factors hitting the dollar right now, and certainly the 278 00:14:22,040 --> 00:14:25,680 Speaker 1: theme of dollar weakness this week is we've really taken 279 00:14:25,720 --> 00:14:28,600 Speaker 1: its toll now. This I think refers back to concerns 280 00:14:28,600 --> 00:14:31,360 Speaker 1: about the fiscal deficit in the US or some of 281 00:14:31,440 --> 00:14:33,760 Speaker 1: the the spending plans that we've seen over the last 282 00:14:33,760 --> 00:14:36,000 Speaker 1: couple of months. But of course we've got to see 283 00:14:36,000 --> 00:14:38,760 Speaker 1: this through the perspective of what's going on in Europe. 284 00:14:39,080 --> 00:14:41,840 Speaker 1: The fundamentals in Europe really are very good, and we've 285 00:14:41,840 --> 00:14:45,360 Speaker 1: seen more favorable growth growth data, and that's a budget 286 00:14:45,400 --> 00:14:49,400 Speaker 1: deficit data from a number of European countries recently. And 287 00:14:49,400 --> 00:14:52,600 Speaker 1: and this is the backtop I think which intensifies the 288 00:14:52,680 --> 00:14:57,320 Speaker 1: concerns about the fiscal discipline in the US right now. Jane, 289 00:14:57,360 --> 00:14:59,720 Speaker 1: big question, and you've talked about the euro side of 290 00:14:59,760 --> 00:15:01,960 Speaker 1: the t AID, but this is dollar weakness against everything 291 00:15:02,440 --> 00:15:05,040 Speaker 1: in G ten with the exception of maybe today it's 292 00:15:05,040 --> 00:15:07,240 Speaker 1: a bit of a novelty. Jane talked to me about 293 00:15:07,240 --> 00:15:09,800 Speaker 1: the dynamics that's behind a substantially weaker dollar. What is 294 00:15:09,880 --> 00:15:14,160 Speaker 1: driving that right now? Well, if again, if we go 295 00:15:14,240 --> 00:15:15,840 Speaker 1: back to the end of last year and we had 296 00:15:15,880 --> 00:15:18,400 Speaker 1: the realization that we were finally going to get that 297 00:15:18,480 --> 00:15:20,760 Speaker 1: that tax plan through, the market began to worry then 298 00:15:20,800 --> 00:15:23,280 Speaker 1: about the fiscal discipline in the U. S Now, we 299 00:15:23,320 --> 00:15:26,120 Speaker 1: know last year we had the Congressional Budget Office already 300 00:15:26,120 --> 00:15:28,000 Speaker 1: warning over the next ten years we were going to 301 00:15:28,040 --> 00:15:31,360 Speaker 1: get a larger US budget deficit because really the demographics 302 00:15:31,360 --> 00:15:33,800 Speaker 1: are low. And then we've got the changes in the law, 303 00:15:33,840 --> 00:15:36,680 Speaker 1: and we got the many economist or surveys of economists 304 00:15:36,680 --> 00:15:39,760 Speaker 1: suggesting that goes in US probably wouldn't reach three percent. 305 00:15:39,840 --> 00:15:44,080 Speaker 1: So the market began to worry about unfunded at spending plans. 306 00:15:44,080 --> 00:15:46,080 Speaker 1: And I think over the last week could say this, 307 00:15:46,080 --> 00:15:48,680 Speaker 1: this is this is worse than with the two year 308 00:15:49,040 --> 00:15:53,680 Speaker 1: budget program. It's also concerns about the the the infrastructure program, 309 00:15:53,880 --> 00:15:57,960 Speaker 1: and this has taken its toll on the dollar now. Interestingly, 310 00:15:58,080 --> 00:15:59,880 Speaker 1: I don't think this is the only dynamic in the 311 00:16:00,000 --> 00:16:02,120 Speaker 1: market for the dollar right now. If you go back 312 00:16:02,120 --> 00:16:04,520 Speaker 1: to last week when we had the stock markets selling off, 313 00:16:04,520 --> 00:16:07,080 Speaker 1: we had the dollar strengthony and this I think was 314 00:16:07,480 --> 00:16:10,440 Speaker 1: in relation to fears about dollar liquidity. There's a lot 315 00:16:10,440 --> 00:16:13,520 Speaker 1: of dollar denominated debt, particularly in Asia, and again if 316 00:16:13,520 --> 00:16:16,120 Speaker 1: we did get another batter market concern, we could get 317 00:16:16,120 --> 00:16:19,560 Speaker 1: the dollar put higher again. So so within that, I 318 00:16:19,600 --> 00:16:23,960 Speaker 1: guess the cocktail question over the weekend Jane is does 319 00:16:24,040 --> 00:16:29,360 Speaker 1: the new fiscal angst or the expectation of fiscal angst 320 00:16:29,960 --> 00:16:32,960 Speaker 1: he's that folded into your world yet or is that 321 00:16:33,120 --> 00:16:36,920 Speaker 1: something to come. I think that's exactly what's been folded 322 00:16:36,920 --> 00:16:38,440 Speaker 1: in right now, and I think that the dollars. Do 323 00:16:38,480 --> 00:16:40,560 Speaker 1: you think it's had an impact? You think that the 324 00:16:41,960 --> 00:16:44,520 Speaker 1: interesting But as I say, I think one of the 325 00:16:44,520 --> 00:16:47,000 Speaker 1: reasons that it's had such an impact on the dollar 326 00:16:47,120 --> 00:16:49,600 Speaker 1: right now is because the markets, looking through the prison 327 00:16:49,720 --> 00:16:52,800 Speaker 1: of the improved fundamentals of the Euro. So there there's 328 00:16:52,840 --> 00:16:57,000 Speaker 1: a direct, very very obvious contrast here between the Euro 329 00:16:57,160 --> 00:17:00,680 Speaker 1: with his improving fundamentals and then concerned about siscal discipline 330 00:17:00,680 --> 00:17:02,520 Speaker 1: on the other side of the Atlantic. But Jane, how 331 00:17:02,600 --> 00:17:05,920 Speaker 1: we worked through something. Typically we associate lucivefiscal with time 332 00:17:05,920 --> 00:17:08,879 Speaker 1: of monitory and a stronger currency. That theory doesn't apply 333 00:17:08,880 --> 00:17:10,600 Speaker 1: in the United States of America right now, and I'm 334 00:17:10,600 --> 00:17:12,960 Speaker 1: hearing this bearesh view on the dollar off the back 335 00:17:13,000 --> 00:17:16,119 Speaker 1: of a deficit that's getting wider, a fiscal deficit that 336 00:17:16,119 --> 00:17:17,919 Speaker 1: gets wider in the United States. Can you walk me 337 00:17:17,960 --> 00:17:21,119 Speaker 1: through the mechanics of that. Well again, I mean you 338 00:17:21,160 --> 00:17:22,720 Speaker 1: don't have to go well, maybe you go back to 339 00:17:22,840 --> 00:17:26,560 Speaker 1: nineteen ninety four. You look at a budget crisis in Sweden, 340 00:17:27,440 --> 00:17:30,240 Speaker 1: it pressures the currency. If you look at Canada during 341 00:17:30,240 --> 00:17:33,439 Speaker 1: the nineteen nineties, concerns about the fiscal discipline there, it 342 00:17:33,480 --> 00:17:36,960 Speaker 1: pressures the currency. When you have a new finance minister, 343 00:17:37,040 --> 00:17:40,240 Speaker 1: when you get the market very confident that this can 344 00:17:40,280 --> 00:17:44,320 Speaker 1: be turned around, that there is fiscal discipline, the currency 345 00:17:44,359 --> 00:17:46,840 Speaker 1: goes up. As a very simple dynamic. Remember that the 346 00:17:46,840 --> 00:17:50,159 Speaker 1: Eurozone debt crisis, it pressures the euro Now, I'm not 347 00:17:50,280 --> 00:17:52,400 Speaker 1: saying that what we've seen in the US is anything 348 00:17:52,440 --> 00:17:55,080 Speaker 1: like any of the problems that we had in those 349 00:17:55,119 --> 00:17:58,000 Speaker 1: three reagions that I've just mentioned, but that's a good example. 350 00:17:58,920 --> 00:18:01,760 Speaker 1: Budget or lack of budget discipline is considered to be 351 00:18:02,760 --> 00:18:05,439 Speaker 1: a negative for currency, and this is what the markets 352 00:18:05,480 --> 00:18:09,840 Speaker 1: working through now. Speaking of pressure, Tom King, former presidential 353 00:18:10,400 --> 00:18:13,159 Speaker 1: candidate Mitt Romney says he's running for the U. S. 354 00:18:13,160 --> 00:18:16,680 Speaker 1: Senate seat in Utah. Um. I imagine if he gets 355 00:18:16,720 --> 00:18:18,680 Speaker 1: that seat, that means a little bit more pressure for 356 00:18:18,720 --> 00:18:21,520 Speaker 1: the President of the United States. Anything done, There's no question, 357 00:18:21,560 --> 00:18:24,200 Speaker 1: And that shows the subtleties of the GOP response here 358 00:18:24,200 --> 00:18:27,800 Speaker 1: and that we always look at the adversarial Democrat versus Trump, 359 00:18:27,840 --> 00:18:31,720 Speaker 1: Democrat versus Republican, But so many of the nuances moving 360 00:18:31,720 --> 00:18:35,040 Speaker 1: to two thousand and eighteen and particularly on two thousand 361 00:18:35,040 --> 00:18:38,480 Speaker 1: and twenty has to be the idea of of of 362 00:18:38,520 --> 00:18:42,360 Speaker 1: within the Republican Party. He has a number of titles. 363 00:18:42,359 --> 00:18:46,280 Speaker 1: Governor Romney of the Commonwealth of Massachusetts, seventy years old, 364 00:18:46,440 --> 00:18:50,560 Speaker 1: and that catches me by surprise. Johnny. Of course, he's 365 00:18:50,560 --> 00:18:55,040 Speaker 1: always been buoyant and had a real uh git whether 366 00:18:55,080 --> 00:18:57,320 Speaker 1: he was doing the Olympics in Utah. That's one of 367 00:18:57,320 --> 00:18:59,720 Speaker 1: the reasons he'd go back to Utah. So well, yeah, 368 00:19:00,080 --> 00:19:02,399 Speaker 1: he was considered the hero of the Utah Olympics. I 369 00:19:02,400 --> 00:19:06,320 Speaker 1: don't think that's editorializing, but it goes back again John 370 00:19:06,359 --> 00:19:09,560 Speaker 1: Farrow and for our global audience to my ute of 371 00:19:09,920 --> 00:19:13,720 Speaker 1: Michigan politics and his father, who was George Romney long 372 00:19:13,760 --> 00:19:18,240 Speaker 1: before Mitt Romney. So it's a Republican family and as 373 00:19:18,280 --> 00:19:22,639 Speaker 1: you nicely put perhaps removed from the politics of the 374 00:19:22,680 --> 00:19:25,480 Speaker 1: president of the United States. We thank Jane Foley for 375 00:19:25,560 --> 00:19:29,080 Speaker 1: her perspective today with robal Bank. And that's a headline 376 00:19:29,080 --> 00:19:31,840 Speaker 1: again Mitt Romney saying you will run again for this 377 00:19:32,200 --> 00:19:39,960 Speaker 1: run rather for US Senate seat in Utah. What we're 378 00:19:39,960 --> 00:19:42,639 Speaker 1: trying to do today, folks, after all the market hysteria, 379 00:19:42,680 --> 00:19:45,639 Speaker 1: and to be clear, there's less hysteria and a major 380 00:19:45,680 --> 00:19:48,280 Speaker 1: surveillance shout out to Karen Moscow who really kept us 381 00:19:48,359 --> 00:19:54,119 Speaker 1: together with sophisticated data checks through all of this volatility. 382 00:19:54,160 --> 00:19:56,360 Speaker 1: But within that is to take a broader look. Let's 383 00:19:56,400 --> 00:19:59,240 Speaker 1: do that with inflation right now. Amir Sharif is a 384 00:19:59,359 --> 00:20:01,760 Speaker 1: society's in a row and he is known to write 385 00:20:01,840 --> 00:20:06,159 Speaker 1: detailed essays with far too many charts, and one of 386 00:20:06,200 --> 00:20:11,720 Speaker 1: them on there is Janet Yellen sometimes once twice three 387 00:20:11,760 --> 00:20:16,800 Speaker 1: times at a press conference talking about wireless phone deflation. 388 00:20:17,840 --> 00:20:22,960 Speaker 1: Is you pull out a chart of hospital services inflation 389 00:20:23,600 --> 00:20:25,720 Speaker 1: in One of the great fictions of the media is 390 00:20:25,720 --> 00:20:29,359 Speaker 1: there's one or two or three inflation statistics. There's like 391 00:20:30,200 --> 00:20:34,240 Speaker 1: things underlying it, isn't there? Yeah, it's if you look 392 00:20:34,240 --> 00:20:37,480 Speaker 1: at inflation data, there's a lot happening each and every month. 393 00:20:37,560 --> 00:20:40,720 Speaker 1: You mentioned wireless, there's hospitals, what's happening to car prices. 394 00:20:40,720 --> 00:20:44,560 Speaker 1: There's a lot of sort of underlying volatility in the numbers. 395 00:20:44,680 --> 00:20:46,240 Speaker 1: You know. What I try to do is kind of 396 00:20:46,560 --> 00:20:48,399 Speaker 1: dig into the details of some of this to to 397 00:20:49,160 --> 00:20:51,720 Speaker 1: you know, get a sense of, yes, the broader pictures here, 398 00:20:52,000 --> 00:20:54,200 Speaker 1: but perhaps the narrative is wrong if we look at 399 00:20:54,200 --> 00:20:56,400 Speaker 1: some of these details. So, you know, we we think 400 00:20:56,400 --> 00:20:58,040 Speaker 1: that's a good way to look at it, this bottom 401 00:20:58,080 --> 00:21:01,520 Speaker 1: approach to inflation um And there's a lot coming in 402 00:21:01,520 --> 00:21:04,440 Speaker 1: the next few months. You mentioned wireless, for example, that's 403 00:21:04,480 --> 00:21:07,399 Speaker 1: going to help lift the inflation rate. As soon as 404 00:21:07,400 --> 00:21:09,199 Speaker 1: we get to the March data, which will come out 405 00:21:09,200 --> 00:21:11,920 Speaker 1: in mid April, that's gonna get us probably about twenty 406 00:21:11,960 --> 00:21:16,560 Speaker 1: basis points. Why why will cell phone inflation go up? Well, 407 00:21:17,119 --> 00:21:23,840 Speaker 1: inflation went down dramatically last March. It was down very, 408 00:21:23,960 --> 00:21:27,040 Speaker 1: very sharply in March of two thousand seventeen. The way 409 00:21:27,080 --> 00:21:29,280 Speaker 1: the pace that we're running out right now, each month 410 00:21:29,320 --> 00:21:32,280 Speaker 1: it's you know, roughly flatish. So when you compare that 411 00:21:32,359 --> 00:21:35,160 Speaker 1: sort of zero percent change that we expect in March 412 00:21:35,560 --> 00:21:37,879 Speaker 1: to a minus ten, you're going to get a huge 413 00:21:38,000 --> 00:21:40,760 Speaker 1: lift on the year yr rate. So the fat knew 414 00:21:40,760 --> 00:21:42,439 Speaker 1: this was going to happen all along. This is why 415 00:21:42,520 --> 00:21:45,320 Speaker 1: Janet yell And last summer, in a June press conference, 416 00:21:45,320 --> 00:21:47,919 Speaker 1: had this. It was simply simple line saying, we know 417 00:21:48,000 --> 00:21:50,879 Speaker 1: this is transitory and idiosyncratic, so we know this is 418 00:21:50,880 --> 00:21:53,080 Speaker 1: going to change come the spring, and that's why we 419 00:21:53,119 --> 00:21:56,000 Speaker 1: expect inflation to move higher the core probably to around 420 00:21:56,000 --> 00:21:58,240 Speaker 1: two percent by mid year, and then we think it 421 00:21:58,280 --> 00:21:59,760 Speaker 1: will cool off in the second half of the year. 422 00:22:00,480 --> 00:22:02,120 Speaker 1: I mean, you look at this and you know cell 423 00:22:02,119 --> 00:22:05,480 Speaker 1: phones obviously we all got a good morning outside of Toledo, 424 00:22:05,560 --> 00:22:10,080 Speaker 1: d fertelly, tomatoes, tomatoes moonshot, they go the other way. Now, 425 00:22:10,080 --> 00:22:13,720 Speaker 1: granted tomatoes are not wireless cell phone, but how does 426 00:22:13,760 --> 00:22:16,080 Speaker 1: a company, how does a guy like you and a 427 00:22:16,119 --> 00:22:19,240 Speaker 1: bank like suck chin? How do you fold in the 428 00:22:19,320 --> 00:22:22,480 Speaker 1: deflation on the one side and the inflation and tomatoes 429 00:22:22,520 --> 00:22:24,520 Speaker 1: on the other side. Do you just sum it up 430 00:22:24,760 --> 00:22:28,840 Speaker 1: or do you do some other calculus with incense? You know, 431 00:22:28,920 --> 00:22:31,879 Speaker 1: we you know, the BLS tells us exactly what the 432 00:22:31,920 --> 00:22:34,360 Speaker 1: weight of all of these components is. So how much 433 00:22:34,760 --> 00:22:36,520 Speaker 1: is you know, how much do you spend out of 434 00:22:36,560 --> 00:22:39,760 Speaker 1: all of your spending on cellphones or on tomatoes, or 435 00:22:39,760 --> 00:22:42,080 Speaker 1: on cars and things of that nature. So if you 436 00:22:42,160 --> 00:22:43,679 Speaker 1: get a sense of what the price change might be 437 00:22:43,720 --> 00:22:45,520 Speaker 1: every month, and you know what the weight is, you 438 00:22:45,560 --> 00:22:47,960 Speaker 1: can sort of aggregate it from there and get a 439 00:22:47,960 --> 00:22:50,320 Speaker 1: sense of inflation. Okay, so there's the math. But here's 440 00:22:50,320 --> 00:22:53,040 Speaker 1: the reality, folks, And I get, I get. I can 441 00:22:53,080 --> 00:22:55,320 Speaker 1: honestly say it's not the most mail, but it's right 442 00:22:55,400 --> 00:22:59,320 Speaker 1: up there. Tom The inflation in my mailbox is a 443 00:22:59,359 --> 00:23:04,600 Speaker 1: lot worse than what Omar Shariff is saying on Bloomberg Surveillance. 444 00:23:04,840 --> 00:23:09,960 Speaker 1: Service sector inflation is tangible, Cleveland. Cp I adjusted core 445 00:23:10,200 --> 00:23:14,119 Speaker 1: is tangible, and yet you're telling me goods inflation is not. 446 00:23:14,240 --> 00:23:17,280 Speaker 1: So what do you say to our listeners who say 447 00:23:17,320 --> 00:23:22,360 Speaker 1: they've got service sector inflation killing them in their mailbox. Yeah, 448 00:23:22,400 --> 00:23:25,000 Speaker 1: I think, well to be fair, service sector inflation, even 449 00:23:25,040 --> 00:23:28,280 Speaker 1: in the official data is you know, around two and 450 00:23:28,280 --> 00:23:31,400 Speaker 1: a half three percent per year UM. You know, it's 451 00:23:31,440 --> 00:23:33,720 Speaker 1: tough to talk to individuals about this because we talk 452 00:23:33,800 --> 00:23:37,600 Speaker 1: about the average consumer across the United States. Everyone is 453 00:23:37,600 --> 00:23:39,880 Speaker 1: going to have their own experience. And that's especially true 454 00:23:39,920 --> 00:23:45,000 Speaker 1: if you live, you know, in Toledo versus Philadelphia or Boston. Um, 455 00:23:45,040 --> 00:23:46,919 Speaker 1: It's it's different all over the place, and we we 456 00:23:47,200 --> 00:23:49,159 Speaker 1: try to focus on the average that you know, the 457 00:23:49,200 --> 00:23:52,720 Speaker 1: consumer as a whole, um. And Look, the other thing 458 00:23:52,800 --> 00:23:56,119 Speaker 1: I would say is, oftentimes, when you're paying for stuff 459 00:23:56,160 --> 00:23:59,320 Speaker 1: out of pockets, you know, directly coming out of your wallet, 460 00:23:59,359 --> 00:24:02,680 Speaker 1: you're not worried about quality adjustment or hedonics or any 461 00:24:02,720 --> 00:24:06,000 Speaker 1: of these things that the BLS does, UM. And so 462 00:24:06,320 --> 00:24:09,320 Speaker 1: it is sometimes very difficult to explain exactly what the 463 00:24:09,359 --> 00:24:12,359 Speaker 1: inflation data are doing to people. We're hedonic free on 464 00:24:13,160 --> 00:24:16,040 Speaker 1: Friday's here at Bloom Surveillance. Oh my sure. If if 465 00:24:16,080 --> 00:24:20,280 Speaker 1: that's the case, then are we undershooting inflation as our audience? Right, 466 00:24:20,320 --> 00:24:24,719 Speaker 1: it's higher than we actually measure. Look, you know, I 467 00:24:24,760 --> 00:24:28,240 Speaker 1: think you take the broadest indicator we've got of inflation, 468 00:24:28,280 --> 00:24:31,960 Speaker 1: which is the PC deflator, and right now it's still 469 00:24:32,040 --> 00:24:36,080 Speaker 1: running the chorus, still running around one five. UM. I 470 00:24:36,080 --> 00:24:39,800 Speaker 1: think you know, overall, we are probably be doing a 471 00:24:39,840 --> 00:24:43,440 Speaker 1: decent job, you know, given the limitations of capturing sort 472 00:24:43,440 --> 00:24:45,680 Speaker 1: of these price changes. And uh, as far as the 473 00:24:45,720 --> 00:24:49,239 Speaker 1: Fed's concerned, we're still undershooting on on core inflation and 474 00:24:49,240 --> 00:24:51,200 Speaker 1: we'll we'll see if we can manage to get there 475 00:24:51,920 --> 00:24:54,000 Speaker 1: by the end of this year. Within the mix that 476 00:24:54,080 --> 00:24:57,399 Speaker 1: we're talking about this morning, across economics, across markets, and 477 00:24:57,400 --> 00:25:00,399 Speaker 1: of course some of these subtle academics again think Adam 478 00:25:00,440 --> 00:25:04,600 Speaker 1: posing for his attendance today, Almish Shariff. It just comes 479 00:25:04,640 --> 00:25:07,920 Speaker 1: down to, as I've mentioned earlier today, folks, the real 480 00:25:08,000 --> 00:25:11,879 Speaker 1: financial repression that's out there, low rates and then low 481 00:25:12,119 --> 00:25:16,840 Speaker 1: inflation adjusted rates. In the mix that you see, Almis Shariff, 482 00:25:17,359 --> 00:25:22,560 Speaker 1: do you see rising inflation adjusted interest rates so retirees 483 00:25:22,640 --> 00:25:28,800 Speaker 1: can get less repressed over the next twenty four months. Yeah. Look, 484 00:25:28,840 --> 00:25:32,760 Speaker 1: I actually think inflation um itself is probably going to 485 00:25:32,840 --> 00:25:36,160 Speaker 1: stay pretty stable. UM. So you know, if there's any 486 00:25:36,240 --> 00:25:39,399 Speaker 1: kind of a move in real rates, it's going to 487 00:25:39,480 --> 00:25:41,479 Speaker 1: come from, you know, especially higher it's going to come 488 00:25:41,480 --> 00:25:44,240 Speaker 1: from those nominal screaming. But I think that part of 489 00:25:44,280 --> 00:25:46,119 Speaker 1: you know, part of what we're looking for is for 490 00:25:46,240 --> 00:25:49,480 Speaker 1: rates to come back down later on this year. Um 491 00:25:49,480 --> 00:25:52,640 Speaker 1: partly because in our view, the inflation story is still 492 00:25:52,800 --> 00:25:55,720 Speaker 1: very contained despite all of the sort of panic and 493 00:25:56,000 --> 00:25:59,000 Speaker 1: fear about runaway inflation the last couple of weeks. You know, 494 00:25:59,040 --> 00:26:00,720 Speaker 1: we think that's the first half story, and in the 495 00:26:00,760 --> 00:26:03,320 Speaker 1: second half it should quiet down, which should help those 496 00:26:03,400 --> 00:26:06,119 Speaker 1: nominal rates move a little bit lower. I'm thank you 497 00:26:06,160 --> 00:26:08,400 Speaker 1: so much. I'm a sure reef is a suck general. 498 00:26:08,600 --> 00:26:12,119 Speaker 1: Terrific briefing. That was phenomenal. They're the briefing then some 499 00:26:12,160 --> 00:26:17,320 Speaker 1: of the dynamics of UH inflation. You know who also 500 00:26:17,359 --> 00:26:19,080 Speaker 1: has a miracle to be here in the studio with us, 501 00:26:19,640 --> 00:26:23,080 Speaker 1: Go ahead, Michael Holland. Michael Holland with us. Yes, he's 502 00:26:23,160 --> 00:26:25,320 Speaker 1: the only reason you're here, are you interviewing of the 503 00:26:25,440 --> 00:26:28,000 Speaker 1: Rangers to run the team when they clean house. They 504 00:26:28,000 --> 00:26:30,920 Speaker 1: call me a miracle on ice too, and they're gonna 505 00:26:30,960 --> 00:26:33,639 Speaker 1: be one as well. Michael Holland with us. And it 506 00:26:33,720 --> 00:26:36,560 Speaker 1: is a wonderful way to gain perspective as we did 507 00:26:36,600 --> 00:26:39,480 Speaker 1: with Howard Ward of Cabelly a few days ago. Michael, 508 00:26:39,520 --> 00:26:41,880 Speaker 1: what did you do on Monday and Tuesday? Like? Did 509 00:26:41,880 --> 00:26:45,600 Speaker 1: you just go ice skates somewhere? Or or what do 510 00:26:45,680 --> 00:26:50,080 Speaker 1: you do when it's that frenzy? Um, don't just do something? 511 00:26:50,400 --> 00:26:53,840 Speaker 1: Stand There was something I learned in one of the 512 00:26:53,880 --> 00:26:58,399 Speaker 1: previous frenzied periods and it's stood me to good stead forever. 513 00:26:58,840 --> 00:27:01,439 Speaker 1: And when things are crazy, if you liked what you 514 00:27:01,480 --> 00:27:04,200 Speaker 1: had going in, you may like it even a little 515 00:27:04,240 --> 00:27:06,359 Speaker 1: bit more after the frenzy is over. And if you 516 00:27:06,400 --> 00:27:09,720 Speaker 1: have some reserves, you probably did you acquire shares on 517 00:27:09,840 --> 00:27:12,000 Speaker 1: Monday and Tuesday? I don't know, because I was there. 518 00:27:12,000 --> 00:27:15,520 Speaker 1: I have the you know, I was thinking Tom crash 519 00:27:15,520 --> 00:27:18,320 Speaker 1: of eighty seven, Um, that would have been six to 520 00:27:18,480 --> 00:27:23,160 Speaker 1: seven thousand dow points and the sixty seven thousand dow 521 00:27:23,280 --> 00:27:25,159 Speaker 1: points as opposed to the one thousand, which was the 522 00:27:25,680 --> 00:27:28,920 Speaker 1: big couple of days we had several days ago. Those 523 00:27:29,320 --> 00:27:32,120 Speaker 1: these these things are bumps as you look back years later. 524 00:27:32,200 --> 00:27:34,920 Speaker 1: So if you like your Walmart or your J and 525 00:27:35,040 --> 00:27:38,560 Speaker 1: J or your three m um going into it, it's 526 00:27:38,600 --> 00:27:41,240 Speaker 1: it's it's you don't have to do anything, Michael. In 527 00:27:41,280 --> 00:27:45,480 Speaker 1: that context, though I understand that the conversation turns to 528 00:27:45,680 --> 00:27:48,639 Speaker 1: what do I sell when markets fall? That can be 529 00:27:48,680 --> 00:27:53,160 Speaker 1: a common conversation. Correct and and expert will say, don't 530 00:27:53,200 --> 00:27:55,439 Speaker 1: do that, right, that is the worst time to do that. 531 00:27:55,800 --> 00:27:59,800 Speaker 1: So what is the best time to sell when? As Warren? 532 00:27:59,800 --> 00:28:02,520 Speaker 1: But if I said when everyone is enthusiastic and loving 533 00:28:02,640 --> 00:28:07,959 Speaker 1: everything that's going on a little bit, I think there 534 00:28:07,960 --> 00:28:10,520 Speaker 1: are lots of scared people out there, Pim. I listened 535 00:28:10,560 --> 00:28:13,320 Speaker 1: to you a couple of days ago asking some questions 536 00:28:13,320 --> 00:28:17,400 Speaker 1: that related to this exact subject, which was, when you 537 00:28:18,680 --> 00:28:21,760 Speaker 1: have a situation where you sell some and it keeps 538 00:28:21,800 --> 00:28:25,080 Speaker 1: going up, haven't you made some money? And what The 539 00:28:25,160 --> 00:28:26,960 Speaker 1: question you asked then, and the one you're kind of 540 00:28:27,000 --> 00:28:30,640 Speaker 1: asking now is one it's an investor like us as 541 00:28:30,680 --> 00:28:35,000 Speaker 1: an individual investor or institutions. The person you were interviewing 542 00:28:35,040 --> 00:28:38,840 Speaker 1: was an institutional investor, and unfortunately that kind of pressure, 543 00:28:39,040 --> 00:28:41,720 Speaker 1: the moment to moment, quarter to quarter pressure that these 544 00:28:41,760 --> 00:28:44,520 Speaker 1: people have, forces them to do things that are dumb. 545 00:28:45,080 --> 00:28:47,040 Speaker 1: By the way, I've been in that business, so I've 546 00:28:47,080 --> 00:28:49,880 Speaker 1: done done things, okay. So that leads me to another question, 547 00:28:49,920 --> 00:28:53,160 Speaker 1: which is when you have that debate inside of an institution. 548 00:28:54,240 --> 00:28:56,120 Speaker 1: First of all, who are you having a debate with 549 00:28:56,840 --> 00:29:00,120 Speaker 1: and how does that ultimately get resolved? Because they're a 550 00:29:00,120 --> 00:29:03,000 Speaker 1: couple of different competing interests, right, I mean there's job 551 00:29:03,040 --> 00:29:06,520 Speaker 1: preservation has the standing of the firm, but that ultimately 552 00:29:06,560 --> 00:29:10,240 Speaker 1: it's about the client or is that not necessarily all? 553 00:29:10,320 --> 00:29:13,160 Speaker 1: I think you got the order just right. That was 554 00:29:13,280 --> 00:29:15,920 Speaker 1: number three. That was number three. I have to tell 555 00:29:15,920 --> 00:29:20,320 Speaker 1: you there was a wonderful uh market uh uh ascribe 556 00:29:20,520 --> 00:29:23,240 Speaker 1: named Barton Biggs who who wrote something once that said, 557 00:29:23,640 --> 00:29:28,680 Speaker 1: when you um are fully invested in a bull market, 558 00:29:28,720 --> 00:29:31,240 Speaker 1: that turns into a bear market, and your stocks in 559 00:29:31,240 --> 00:29:34,760 Speaker 1: your client stocks, but not your client complains. When the 560 00:29:34,840 --> 00:29:36,760 Speaker 1: market goes up and you have a lot of cash, 561 00:29:36,760 --> 00:29:40,160 Speaker 1: your client fires you. So that's what the people who 562 00:29:40,200 --> 00:29:42,600 Speaker 1: run these businesses are aware of. When the market is 563 00:29:42,640 --> 00:29:45,600 Speaker 1: doing the fluctuations, then what do you see in terms 564 00:29:45,640 --> 00:29:49,000 Speaker 1: of effort fences? Anthony emails in here from a zip 565 00:29:49,040 --> 00:29:52,360 Speaker 1: code in Connecticut. I can't afford. And Anthony has a 566 00:29:52,520 --> 00:29:57,200 Speaker 1: really Michael Holland type question about fund flows, which is okay, 567 00:29:57,240 --> 00:30:02,600 Speaker 1: great media blah blah blah blah. What are people actually 568 00:30:02,920 --> 00:30:07,080 Speaker 1: doing with their money? What are they doing? Right? Now, Michael, well, 569 00:30:08,080 --> 00:30:11,640 Speaker 1: right now, the biggest number that's that's happened in report 570 00:30:11,680 --> 00:30:15,360 Speaker 1: on Bloomberg this morning is a huge outflow from the 571 00:30:15,440 --> 00:30:20,760 Speaker 1: junk bond funds. Um there were, uh, there were flows 572 00:30:20,800 --> 00:30:23,960 Speaker 1: out of the equity funds last week. The short term 573 00:30:23,960 --> 00:30:27,640 Speaker 1: flows are really at best a contraindicator, but actually they're 574 00:30:27,720 --> 00:30:30,600 Speaker 1: very confusing. Six billion, that's the number, right, the investors 575 00:30:30,640 --> 00:30:34,040 Speaker 1: pulling six billion. So I was telling the truth. But 576 00:30:34,120 --> 00:30:36,080 Speaker 1: this goes back to think, look, this goes back to 577 00:30:36,120 --> 00:30:38,920 Speaker 1: the Archie show, Cash and somebody in the heat of 578 00:30:39,000 --> 00:30:41,600 Speaker 1: Monday or Tuesday, Michael Holland brought up that great moment 579 00:30:41,960 --> 00:30:45,040 Speaker 1: you and I lived with Mr Rukaiser where he calmed 580 00:30:45,160 --> 00:30:49,680 Speaker 1: literally condemnation. On that Friday evening after the crash, A 581 00:30:49,760 --> 00:30:53,680 Speaker 1: lot of people in eighties seven went to cash and 582 00:30:53,760 --> 00:31:00,120 Speaker 1: didn't enjoy the December into January recovery. About two two 583 00:31:00,120 --> 00:31:04,000 Speaker 1: thousand seven, two two thousand nine, we repeating that again, 584 00:31:04,080 --> 00:31:06,600 Speaker 1: And my answer is there's a real possibility we could 585 00:31:06,680 --> 00:31:09,520 Speaker 1: be Oh yeah, And I think there's been a number 586 00:31:09,520 --> 00:31:11,360 Speaker 1: of articles in the past several days time. I'm talking 587 00:31:11,360 --> 00:31:16,080 Speaker 1: about how little the stock market gyrations have on the 588 00:31:16,560 --> 00:31:20,680 Speaker 1: American public because so few people identify their wealth has 589 00:31:20,720 --> 00:31:23,720 Speaker 1: have it where their their their fortunes having anything to 590 00:31:23,760 --> 00:31:25,920 Speaker 1: do with the stock market, which is so when we 591 00:31:26,000 --> 00:31:29,000 Speaker 1: get the consumer sentiment surveys from Michigan and other places, 592 00:31:29,240 --> 00:31:31,400 Speaker 1: as we do today, we end up with the situation 593 00:31:31,480 --> 00:31:34,440 Speaker 1: where the market goes down. The market. With all due 594 00:31:34,480 --> 00:31:37,480 Speaker 1: respect to President Trump who has been trumpeting good pun 595 00:31:38,040 --> 00:31:42,400 Speaker 1: the market doing well as part of his report card, 596 00:31:42,600 --> 00:31:44,920 Speaker 1: I think at the end of the day, um, you 597 00:31:45,000 --> 00:31:47,880 Speaker 1: simply end up with with people kind of selling high 598 00:31:47,880 --> 00:31:52,520 Speaker 1: and buying low. Not really now they do the opposite. 599 00:31:52,840 --> 00:31:55,800 Speaker 1: Thank you so much, greatly appreciate we don't we don't 600 00:31:55,800 --> 00:31:58,240 Speaker 1: see enough of them him. We have a justice with 601 00:31:58,280 --> 00:32:02,840 Speaker 1: our team. We can have his actualidated. Yes, take care 602 00:32:02,840 --> 00:32:05,000 Speaker 1: of his market. But well he's gonna be, you know, 603 00:32:05,080 --> 00:32:09,080 Speaker 1: training for the Rangers. Here in August rebuilt Michael Holland 604 00:32:09,080 --> 00:32:14,120 Speaker 1: of Holland Management. This is really one of the high 605 00:32:14,120 --> 00:32:17,680 Speaker 1: points of the year for Pim Fox and myself sort 606 00:32:17,720 --> 00:32:20,560 Speaker 1: of wrapped around New York Fashion Week and she will 607 00:32:20,640 --> 00:32:23,040 Speaker 1: migrate to Milan here in a bit to continue the 608 00:32:23,120 --> 00:32:26,640 Speaker 1: fashion storm. Is Vanessa Freedman of The New York Times. 609 00:32:26,680 --> 00:32:30,880 Speaker 1: His articles are definitive worldwide and the pulse of fashion 610 00:32:31,000 --> 00:32:34,600 Speaker 1: and luxury, and we are honored. The joining Ms Friedman 611 00:32:34,680 --> 00:32:38,680 Speaker 1: this morning is Robert Burke. Uh Robert Burke associates he 612 00:32:38,760 --> 00:32:42,200 Speaker 1: hasn't forced to contend with within luxury in the state 613 00:32:42,280 --> 00:32:45,840 Speaker 1: of retail. Of course, his stewardship of Bergdorf Goodman for 614 00:32:45,920 --> 00:32:49,160 Speaker 1: years is noted. Wonderful to have both of you with 615 00:32:49,280 --> 00:32:53,120 Speaker 1: us as we celebrate fashion Vanessa. Is New York City 616 00:32:53,160 --> 00:32:55,920 Speaker 1: the fashion capital of the world or is it a 617 00:32:55,960 --> 00:33:00,600 Speaker 1: different geography? Well, I think we can general it is 618 00:33:00,640 --> 00:33:03,280 Speaker 1: really fashioned month, and it's composed of four different cities 619 00:33:03,280 --> 00:33:06,160 Speaker 1: in New York, London, Milan and Paris. New York kick 620 00:33:06,280 --> 00:33:09,360 Speaker 1: things off, but I would say the buzz and the 621 00:33:09,440 --> 00:33:13,880 Speaker 1: momentum is actually emigrating towards Paris. New York has lost 622 00:33:14,400 --> 00:33:17,800 Speaker 1: four or five of its most um famous names in 623 00:33:17,880 --> 00:33:21,600 Speaker 1: recent seasons, and it felt a little quiet this time. 624 00:33:22,240 --> 00:33:25,719 Speaker 1: Robert Burke, do you agree that Madison Avenue in New 625 00:33:25,800 --> 00:33:28,160 Speaker 1: York is a little quiet? And if so, what is 626 00:33:28,200 --> 00:33:33,560 Speaker 1: the Robert Burke prescription? Well? I do agree, and we 627 00:33:33,800 --> 00:33:37,840 Speaker 1: see um a number of designers leaving the shows, and 628 00:33:37,960 --> 00:33:42,320 Speaker 1: we see an emphasis on Paris. But I still think 629 00:33:42,360 --> 00:33:46,560 Speaker 1: that from just a retail standpoint, people really do rely 630 00:33:46,680 --> 00:33:51,080 Speaker 1: on on Manhattan Vall Madison Avenue. Maybe a little slow 631 00:33:51,160 --> 00:33:55,400 Speaker 1: in places, there's still great growth and uh in retail 632 00:33:55,400 --> 00:33:59,960 Speaker 1: in Manhattan versus say Paris or UM. Well, Milan's great, 633 00:34:00,360 --> 00:34:04,680 Speaker 1: but but it is still the center that people look at. Now, 634 00:34:04,720 --> 00:34:09,920 Speaker 1: there's other competitive UM cities UM like Dubai and London 635 00:34:10,040 --> 00:34:13,400 Speaker 1: is certainly very very strong UM but New York is 636 00:34:13,440 --> 00:34:16,520 Speaker 1: important from a retail perspective, but it's been very slow 637 00:34:16,600 --> 00:34:19,760 Speaker 1: on the on the fashion front UM with the shows 638 00:34:19,800 --> 00:34:22,319 Speaker 1: and the designers. Well, I put this question the both 639 00:34:22,360 --> 00:34:24,800 Speaker 1: of you and maybe Vanessa you want to try it first. 640 00:34:24,840 --> 00:34:27,279 Speaker 1: But I mean, is there really a seasonality to fashion now? 641 00:34:27,280 --> 00:34:29,480 Speaker 1: When you can wear blue jeans, T shirts and hoodies 642 00:34:29,520 --> 00:34:32,160 Speaker 1: just about anywhere any time of the year, What is 643 00:34:32,239 --> 00:34:34,759 Speaker 1: this whole idea about a particular season. Isn't that kind 644 00:34:34,760 --> 00:34:38,680 Speaker 1: of old fashioned? It's ridiculous, Frankla, I mean, our language 645 00:34:38,760 --> 00:34:41,200 Speaker 1: is simply not caught up with our reality. You know, 646 00:34:41,280 --> 00:34:44,880 Speaker 1: we are still adhering to this idea of spring, summer 647 00:34:44,960 --> 00:34:47,759 Speaker 1: and automn mentor. And the truth is we wear the 648 00:34:47,800 --> 00:34:50,200 Speaker 1: same clothes year round because, as we all know today, 649 00:34:50,200 --> 00:34:53,200 Speaker 1: in New York it is and no one is wearing 650 00:34:53,200 --> 00:34:57,240 Speaker 1: their fur. Robert, what do you think? I? I I agree. 651 00:34:57,280 --> 00:35:01,680 Speaker 1: I think that that the customers of so quickly, and 652 00:35:01,840 --> 00:35:05,160 Speaker 1: really the department stores and the and the designers have 653 00:35:05,200 --> 00:35:08,080 Speaker 1: not evolved as quickly as the customer has. And I 654 00:35:08,120 --> 00:35:11,480 Speaker 1: think it's very past to look at it in a seasonality, 655 00:35:11,640 --> 00:35:15,480 Speaker 1: a sort of stance. Guys, you know, within a week 656 00:35:15,520 --> 00:35:18,479 Speaker 1: ago for hours here with Vanessa Freeman and Robert Burke. 657 00:35:18,560 --> 00:35:21,759 Speaker 1: But Vanessa Gucci gets all the buzz now and all that. 658 00:35:22,280 --> 00:35:25,920 Speaker 1: Let's do the challenge up Madison Avenue to someone beloved 659 00:35:26,360 --> 00:35:28,040 Speaker 1: in New York, and that would of course be the 660 00:35:28,120 --> 00:35:32,160 Speaker 1: late Oscar dealer Renta. What a Laura kim In Fernando 661 00:35:32,280 --> 00:35:36,240 Speaker 1: Garcia need to need to do with that venerable brand 662 00:35:36,880 --> 00:35:41,400 Speaker 1: in a time of Lulu Lemon or Gucci do an athlete? 663 00:35:41,360 --> 00:35:45,680 Speaker 1: You're stretchy, squishy clothes. What are these two creative designers 664 00:35:45,719 --> 00:35:49,000 Speaker 1: need to do? Well? Laura and Hernando are walking a 665 00:35:49,120 --> 00:35:51,319 Speaker 1: very very fine tight room, and I would actually say 666 00:35:51,320 --> 00:35:53,440 Speaker 1: they're doing a very good job because they are managing 667 00:35:53,480 --> 00:35:57,640 Speaker 1: to satisfy the traditional Oscar customer, you know, who really 668 00:35:57,680 --> 00:35:59,800 Speaker 1: wants a beautiful suit to wear to lunch, a beautiful 669 00:36:00,080 --> 00:36:03,360 Speaker 1: he dressed, and also to start to reach out to 670 00:36:03,400 --> 00:36:07,480 Speaker 1: a new generation. And for me, the absolute encapsulation of 671 00:36:07,520 --> 00:36:09,640 Speaker 1: that was something that put on the runway last week, 672 00:36:09,680 --> 00:36:12,120 Speaker 1: which looked if you, if you look at the pictures 673 00:36:12,239 --> 00:36:14,520 Speaker 1: like sort of shirt tails coming out of a suit, 674 00:36:14,560 --> 00:36:16,680 Speaker 1: look like someone which is said, untouched their white shirt 675 00:36:16,680 --> 00:36:19,920 Speaker 1: and they're walking down the runway. But in fact it 676 00:36:20,080 --> 00:36:23,319 Speaker 1: was a sort of removable I don't even know what 677 00:36:23,360 --> 00:36:26,240 Speaker 1: you call it, a shirt sticky, like a waist sticky. 678 00:36:26,360 --> 00:36:29,560 Speaker 1: So instead of a false front top, it was a 679 00:36:29,600 --> 00:36:32,560 Speaker 1: false front bottom. You effectively put it on like apron. 680 00:36:33,239 --> 00:36:35,880 Speaker 1: It's stuck out from the bottom of your your suit jacket. 681 00:36:36,280 --> 00:36:38,359 Speaker 1: But it was not constricting. You didn't have to wear 682 00:36:38,400 --> 00:36:41,240 Speaker 1: the whole thing. And that is the kind of high 683 00:36:41,280 --> 00:36:44,719 Speaker 1: fashion nod to athlete. Sure, see Robert Burke, this is 684 00:36:44,719 --> 00:36:47,880 Speaker 1: how Vanessa Friedman can bring an afternoon barbecue to a 685 00:36:47,880 --> 00:36:51,160 Speaker 1: complete stop. She can, she can, she can do that. 686 00:36:52,080 --> 00:36:57,680 Speaker 1: Discussions like Robert, I was lost, Pim and I are 687 00:36:57,719 --> 00:37:00,759 Speaker 1: going wait, how do we wear that? Robert Burke on 688 00:37:00,840 --> 00:37:04,880 Speaker 1: a more on a less enthusiastic or more interesting attact, 689 00:37:05,160 --> 00:37:07,560 Speaker 1: what are the Nordstroms do. The north Stroms are building 690 00:37:07,920 --> 00:37:10,239 Speaker 1: a big store I think at the bottom of Central Park. 691 00:37:10,280 --> 00:37:13,640 Speaker 1: They were featured this week with the challenges of that 692 00:37:13,880 --> 00:37:17,400 Speaker 1: middle America field. You are iconic at Bergdorf. If you 693 00:37:17,480 --> 00:37:21,520 Speaker 1: bring luxury worldwide, you consult to all the fancy people 694 00:37:21,800 --> 00:37:27,200 Speaker 1: consult right now to Nordstrom's, well, I think Nordstrom really 695 00:37:27,440 --> 00:37:32,759 Speaker 1: appeals to the customer that's um relying on there every day. 696 00:37:32,840 --> 00:37:35,680 Speaker 1: They still want fashion, they still want some brands. North 697 00:37:35,719 --> 00:37:39,160 Speaker 1: From's footwear is fantastic, But what really stands out for 698 00:37:39,200 --> 00:37:42,080 Speaker 1: north Rooms their customer service. So I think for that 699 00:37:42,200 --> 00:37:44,520 Speaker 1: middle I mean Burgers is Burgers. I think for that 700 00:37:44,719 --> 00:37:47,840 Speaker 1: middle UM, that that customer that has a family that 701 00:37:47,920 --> 00:37:51,720 Speaker 1: knows about fashion men or women, UM and and they 702 00:37:51,719 --> 00:37:54,680 Speaker 1: want something north Strom knows how to fulfill that and 703 00:37:54,800 --> 00:38:00,640 Speaker 1: be a non intimidating, friendly environment in Manhattan. UM that's 704 00:38:00,719 --> 00:38:04,240 Speaker 1: needed right now. Vanessa is a brand like Gypsy Sport, 705 00:38:04,320 --> 00:38:08,919 Speaker 1: really the future of fashion and Gypsy Sport and it's 706 00:38:08,960 --> 00:38:18,000 Speaker 1: a ten year old YouTube viral Fashion explained to people 707 00:38:18,200 --> 00:38:20,719 Speaker 1: about this ten year old model and about how this 708 00:38:21,080 --> 00:38:24,399 Speaker 1: may be one of the directions that fashion is going. Well, 709 00:38:24,400 --> 00:38:26,040 Speaker 1: you know, one of the things that is that is 710 00:38:26,080 --> 00:38:28,239 Speaker 1: really interesting, but this happened on the runways that is 711 00:38:28,280 --> 00:38:31,120 Speaker 1: absolutely notable and is a really positive development has been 712 00:38:31,160 --> 00:38:34,719 Speaker 1: the expansion of the definition of what constitutes beauty and 713 00:38:34,760 --> 00:38:38,280 Speaker 1: a runway model, you know, and increasingly these younger brands 714 00:38:38,320 --> 00:38:42,920 Speaker 1: like Gypsy Sport, like the Kara are casting friends, people 715 00:38:42,920 --> 00:38:46,520 Speaker 1: they admire, people they find on the street in their shows. 716 00:38:46,600 --> 00:38:50,080 Speaker 1: You know, they're bringing personality and diversity and a broad 717 00:38:50,239 --> 00:38:53,839 Speaker 1: range of physicality and physical types to the runway. And 718 00:38:53,840 --> 00:38:56,520 Speaker 1: that Gypsy Sports just really went to the extreme, you know, 719 00:38:56,600 --> 00:38:58,480 Speaker 1: both because you got to see a lot of the 720 00:38:58,560 --> 00:39:00,840 Speaker 1: bodies because there weren't a lot of clotes and uh, 721 00:39:01,360 --> 00:39:04,960 Speaker 1: you know, they even put a ten year old transgender 722 00:39:05,040 --> 00:39:07,239 Speaker 1: kid on the on the runway, you know, but they 723 00:39:07,239 --> 00:39:11,160 Speaker 1: didn't they didn't kind of hericature him up, which I 724 00:39:11,160 --> 00:39:13,560 Speaker 1: think is important. You know, they really just let me 725 00:39:13,760 --> 00:39:16,960 Speaker 1: see him and wear a nice suit and and it 726 00:39:17,040 --> 00:39:20,120 Speaker 1: was a very human moment. To to end the discussion 727 00:39:20,160 --> 00:39:23,319 Speaker 1: in in your generous time, Robert Burke, let me go 728 00:39:23,360 --> 00:39:27,200 Speaker 1: to you. We had a wonderful conversation with the Curing people. 729 00:39:27,400 --> 00:39:31,040 Speaker 1: Are Caroline Conan in Paris last week and there was 730 00:39:31,120 --> 00:39:34,879 Speaker 1: quietly one sentence in the discussion on Gucci, where Mr 731 00:39:34,920 --> 00:39:38,720 Speaker 1: Proneul said, and we're selling it at full price. That's 732 00:39:38,760 --> 00:39:41,520 Speaker 1: really the grail. Are we going to get back to 733 00:39:41,600 --> 00:39:47,120 Speaker 1: buying full price? Are we forever going to be on sale? Well, 734 00:39:47,160 --> 00:39:50,319 Speaker 1: what Gucci has done has been UM fantastic that day, 735 00:39:50,440 --> 00:39:53,480 Speaker 1: and I applaud them that they are a hot brand 736 00:39:53,520 --> 00:39:56,239 Speaker 1: and they realize they don't have to chase after this 737 00:39:56,400 --> 00:40:01,440 Speaker 1: markdown um game. And so they did put their their 738 00:40:01,440 --> 00:40:04,720 Speaker 1: handbags and their and their shoes and their clothes on sale, 739 00:40:05,120 --> 00:40:09,120 Speaker 1: and and and and I think if more brands that 740 00:40:09,160 --> 00:40:12,360 Speaker 1: are in high demands start to do that, they'll realize 741 00:40:12,400 --> 00:40:15,400 Speaker 1: that the customer realized that they can't wait and that 742 00:40:15,480 --> 00:40:18,120 Speaker 1: they need to buy it full price. So it's really 743 00:40:18,160 --> 00:40:20,840 Speaker 1: all about training the customer. Again, to the two of you, 744 00:40:20,920 --> 00:40:23,760 Speaker 1: thank you so much for joining Bloomberg Surveillance, hugely valued 745 00:40:23,800 --> 00:40:26,759 Speaker 1: for our worldwide audience. Ms. Friedman of course at the 746 00:40:26,760 --> 00:40:29,600 Speaker 1: New York Times and Mr Burke with his own company 747 00:40:30,200 --> 00:40:34,160 Speaker 1: advising retail and up him the Luxury Mind. It's you 748 00:40:34,160 --> 00:40:37,360 Speaker 1: are you are a cutting edge. I just was dazzled 749 00:40:37,360 --> 00:40:41,480 Speaker 1: by that. You like that? Huh? You just just well, 750 00:40:41,520 --> 00:40:44,719 Speaker 1: I mean if you have young children, you're watching YouTube, 751 00:40:44,840 --> 00:40:48,880 Speaker 1: watching YouTube, because that's all they're watching. They're making everything 752 00:40:48,920 --> 00:40:52,239 Speaker 1: from slime to their own handbags, and it is a 753 00:40:52,320 --> 00:40:55,279 Speaker 1: do it yourself world and it's probably like the most 754 00:40:55,360 --> 00:40:59,080 Speaker 1: expensive lemonade stand in the history. I love that. We'll 755 00:40:59,160 --> 00:41:02,160 Speaker 1: put one of the older offspring said the other day, 756 00:41:02,200 --> 00:41:05,239 Speaker 1: you know what you need for Father's Day? Dad? You 757 00:41:05,320 --> 00:41:10,520 Speaker 1: need a T shirt that says is that appropriate? Having 758 00:41:10,600 --> 00:41:14,480 Speaker 1: a check is that appropriate? You know you too? That 759 00:41:14,520 --> 00:41:16,960 Speaker 1: says We love doing that. And we thank you for 760 00:41:17,040 --> 00:41:20,399 Speaker 1: your feedback out. We got a huge feedback from Ms 761 00:41:20,400 --> 00:41:24,000 Speaker 1: Conan's interview in Paris with Mr Prune of Kurrigan. I 762 00:41:24,080 --> 00:41:26,160 Speaker 1: go to Joe. Just stunning to see the feedback. And 763 00:41:26,160 --> 00:41:29,200 Speaker 1: we'll do more of this because either you own it, 764 00:41:29,960 --> 00:41:33,800 Speaker 1: or someone you know wants to buy luxury, or maybe 765 00:41:33,800 --> 00:41:36,960 Speaker 1: you aspire to it. We think again, Vanessa Freedman and 766 00:41:37,080 --> 00:41:41,239 Speaker 1: Robert Burt. Thanks for listening to the Bloomberg Surveillance podcast. 767 00:41:41,600 --> 00:41:46,520 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 768 00:41:46,680 --> 00:41:51,360 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keane. 769 00:41:51,920 --> 00:41:55,600 Speaker 1: Before the podcast, you can always catch us worldwide. I'm 770 00:41:55,600 --> 00:42:00,239 Speaker 1: Bloomberg Radio two,