Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes. Tim Stinovan from Bloomberg Radio. Hi. I'm Carol
Speaker 1: Masser and I'm Tim Stanovac of Bloomberg Quick Take. Welcome
Speaker 1: to the weekend edition of Bloomberg Business Week. Week working
Speaker 1: from home still for so many We were at Bloomberg
Speaker 1: headquarters throughout the week, and it was a week of
Speaker 1: wild market moves thanks to the Reddit revolution. As retail
Speaker 1: investors and day traders man they went head to head
Speaker 1: with the big guys over game stop, Tim and a
Speaker 1: lot of others. We talked about this a lot this week.
Speaker 1: This was the story of the week, Carol, and I
Speaker 1: think it's going to continue. Look up. We were surprised
Speaker 1: to hear that FED chair J. Powell was asked about
Speaker 1: this this week. Two of the three people who asked
Speaker 1: their questions first, two of them were focused on game stuff.
Speaker 1: We'll hear from the chairman and founder of Interactive Brokers
Speaker 1: on why they moved to restrict trading of these high flyers. Plus,
Speaker 1: I don't know when the next pandemic will come, but
Speaker 1: there will be another pandemic. Why we need to get
Speaker 1: ready for the next big virus from the CEO of
Speaker 1: Feinstein Institutes for Medical Research. It makes me so down.
Speaker 1: I know we're already thinking about the next one. I
Speaker 1: really need to And also coming up getting back to
Speaker 1: the high Seas, we're gonna need a bunch of patients
Speaker 1: for that as well. We're going to hear though from
Speaker 1: the CEO of Carnival, all that to come. We begin
Speaker 1: with our cover story history lesson and what that may
Speaker 1: portend for today. We know that the nineteen twenties roared
Speaker 1: after a pandemic, so can we expect the same after
Speaker 1: the horrendous year of Bloomberg Economics editor Peter Coy writing
Speaker 1: about that for Bloomberg business Week and joining us along
Speaker 1: with Bloomberg business Week editor Joel Weber. We put it
Speaker 1: to Peter and did a little bit of a historical
Speaker 1: analysis to kind of paint a picture of like, you know,
Speaker 1: could we have a repeat, you know, be like those twenties,
Speaker 1: and Peter w what did your what did you find?
Speaker 1: What was your conclusion? Probably not? I mean it would
Speaker 1: be nice right there are. Let me give you the
Speaker 1: optimistic take. First of all, there have been periods where
Speaker 1: productivity lagged and then sudden they jumped, and what the
Speaker 1: reason is that you have some general purpose technologies. In
Speaker 1: the case of the nineties, it was the automobile, the
Speaker 1: internal combusting engine, which was used in cars and trucks,
Speaker 1: and electricity which electrification of factories and homes. Both those
Speaker 1: things paid dividends literally for years, even though it took
Speaker 1: a while before the big payoff came. So who knows,
Speaker 1: maybe the ninth twenties will be the decade that uh,
Speaker 1: you know, biotechnology and digitization, computers, artificial intelligence and so
Speaker 1: on will finally start paying off big dividends. And you
Speaker 1: see some intriguing evidence the very fact that so many
Speaker 1: of us are working from home now successfully, the reflection
Speaker 1: of the ability of video conferencing, callud computing and so on.
Speaker 1: It's just incredibly uh productive use of new technologies. And
Speaker 1: then again in medicine, we have the very fact that
Speaker 1: these vaccines were concocted and just began to be distributed
Speaker 1: within a year. It's just incredible. And that's based on
Speaker 1: some new technologies that will be used in other medicines
Speaker 1: and vaccines in the future. So that's the optimistic take.
Speaker 1: So I just want to stick on that for a
Speaker 1: minute before we turned to the pessimism, and we'll get
Speaker 1: to the pessimism. I also want to just bring us,
Speaker 1: like rewind to nineteen twenty one and the inauguration. Can
Speaker 1: you tell us about what that was like, because that
Speaker 1: the similarities are sometimes cold and windy day. The predecessor
Speaker 1: in that case, Woodrow Wilson, was not on stage, although
Speaker 1: it was not because he had gone to Florida, was
Speaker 1: because he had a serious stroke and really wasn't very well. Um.
Speaker 1: The President, Warren G. Harding, spoke of unity. It was
Speaker 1: a time of high unemployment and the US had just
Speaker 1: gotten through a global pandemic, so a lot of parallels.
Speaker 1: It was a bit of a somber occasion and yet inauspicious.
Speaker 1: And yet it's set the stage for, as we know,
Speaker 1: a take off the start of that summer when we
Speaker 1: emerge from a recession, and the rest is history. Electrification,
Speaker 1: as I said, the automobile, radio movies, on and on,
Speaker 1: indoor plumbing, labor saving. Yeah, those are all huge. Okay,
Speaker 1: So you gave us the optimistic case, Peter, give us
Speaker 1: the pessimistic one. Well, the pessimist one is that we
Speaker 1: are have been stuck for a while in so called
Speaker 1: secular stagnation, which is a term that comes to the
Speaker 1: nineteen thirties, have been repurposed for the more recent period
Speaker 1: where we have kind of low productivity growth. We have
Speaker 1: UM low interest rates. It seems as though there's an
Speaker 1: excess of savings over desired investment UM and that's reflected
Speaker 1: in extremely low We have negative real interest rates real
Speaker 1: mean inflation adjusted out ten years, which tells you that
Speaker 1: there's just people are pessimistic. The rich scott richer, and
Speaker 1: the poor got poorer. In that case, the poor farmers
Speaker 1: did very badly in the nineteen twenties, and that was
Speaker 1: a time when the agricultural workforce was a much bigger
Speaker 1: share of the population than it is now, so it
Speaker 1: really affected a lot of people. UM factory workers did
Speaker 1: well because manufacturing was on the rise. UM In contrast,
Speaker 1: it was a tough period rural American general, A lot
Speaker 1: of immigrants had a tough time. It was very It
Speaker 1: was women had just gotten the vote. Remember that was
Speaker 1: the amendment that brought women suffrage in nine um Blacks
Speaker 1: in some ways African Americans, Uh, we had the explosion
Speaker 1: of creativity and culture with the Harlem Renaissance and so on.
Speaker 1: But there's also a lot of discrimination against African Americans. Um,
Speaker 1: and there were race riots, there were lynchings, there was
Speaker 1: a Ku Klux Klan rally in Washington, d c. Um.
Speaker 1: There were some dark sides, and there were also a
Speaker 1: lot of anti immigration sentiment. The nine Immigration Act was
Speaker 1: actually a role model for none of them. Adolf Hitler
Speaker 1: is horrible as that is to say, so, yeah, not
Speaker 1: all sweetness and light of the nineteen twenties. Look, Carol,
Speaker 1: whenever I hear anyone talking about the Roaring twenties and
Speaker 1: looking back on how great they were, we have to
Speaker 1: remember there was a lot of history there that doesn't
Speaker 1: get focused on, and remember how it ended right, not
Speaker 1: so well. So you've got to remember that, all right.
Speaker 1: That was Bloomberg Business Week Economics editor Peter Coy writing
Speaker 1: about that for the magazine, and it's, of course the
Speaker 1: cover story this week. Joining us along with Bloomberg Business
Speaker 1: Week editor Joe Weber coming up the story of the
Speaker 1: week game Stop. We'll check in with the chairman and
Speaker 1: founder of Interactive Brokers, who moved to restrict trading on
Speaker 1: that stock and others. You're listening to Bloomberg Business Week.
Speaker 1: This is Bloomberg. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick takes Tim Steinovik from Bloomberg Radio.
Speaker 1: One big story of the week and feels like it
Speaker 1: will already be a story of the year when we
Speaker 1: look back in December. Yeah, the volatility and big moves
Speaker 1: that resulted also led to Interact a broker's group and
Speaker 1: other firms restricting trading of stocks that have run up
Speaker 1: rapidly over the last week. We talked about that with
Speaker 1: Interactor Broker's chairman and founder Thomas petterfe Interacted by the way,
Speaker 1: a sponsor of Bloomberg Radio, we are extremely concerned about
Speaker 1: the continuing viability of intermedia. Is the clearinghouses and the brokers? Now?
Speaker 1: Why is that? Because every option contract there is a
Speaker 1: buyer and a seller. So the number for each number,
Speaker 1: each each option contract that exists in the world, there
Speaker 1: is a loser and a winner. The broker stands between
Speaker 1: the broker and the clearinghouse stands between the winners and
Speaker 1: the loose. Us. The broker has to collect from the losers,
Speaker 1: give it to the clearing cause. The clearing cause gives
Speaker 1: it to the winners broker and gives it to broke
Speaker 1: winners broker gives it to the winning The problem arises
Speaker 1: when the loser loses more money than is in his
Speaker 1: or accounts. Right now, there are currently um three million
Speaker 1: options contracts are standing on game. The average option contract I,
Speaker 1: since the stuff has moved around so much, I estimate
Speaker 1: the average option contract is verse about ten thousand dollars.
Speaker 1: So unert three million contracts, half of them are verse less,
Speaker 1: half of the verse on the average of ten thousand dollars.
Speaker 1: That's uh, that's fifteen billion dollars of the winners and losers, right.
Speaker 1: So now the brokers have to collect from the losers
Speaker 1: and pay to the winners if they can. They have
Speaker 1: to put up their own money, right right. So uh,
Speaker 1: Luckily enough, we have a very large capital base of
Speaker 1: nine billion dollars and the automated liquidation systems, but many
Speaker 1: of other brokers do not have them. But but can I,
Speaker 1: if I, Thomas, if I can break in, and we
Speaker 1: should put out that Interactor Brokers is a sponsor Bloomberg
Speaker 1: Radio and Bloomberg TV. So it's not the case that
Speaker 1: traders were doing anything wrong or illegal. It's just a
Speaker 1: case of logistically there were going to be problems right
Speaker 1: in terms of clearing houses. So that's more an operational
Speaker 1: problem versus a market problem or traders doing something wrong. Correct, No, no, no,
Speaker 1: not correct. So so short squeezes are illegal? Nah? When
Speaker 1: when you buy a stop for three hundred dollars that
Speaker 1: months ago was the failing company right there? You know,
Speaker 1: basically a second tend store for for video games. Right.
Speaker 1: Uh so it wasn't really worse and it's not reading
Speaker 1: that two hundred and thirty dollars, right, So your only
Speaker 1: motivation to buy that stock, which you know full well
Speaker 1: eventually we'll go down to seventeen dollars, could be to
Speaker 1: join the short streets because why would this stuck go up?
Speaker 1: Why is it first two hundred and thirty dollars? It's
Speaker 1: first in hundred dollars right right? Are you? Are you
Speaker 1: guys closing out accounts? Are you closing closing out positions?
Speaker 1: We learned just minutes ago that robin hood has told
Speaker 1: users that it may close some at risk positions. We
Speaker 1: have we have closed thousands of positions. We have we
Speaker 1: have twenty seven thousand customers who were involved in in
Speaker 1: GM stock, either via the stock or vias them of
Speaker 1: course many many of them, especially since we have tend
Speaker 1: to have professional customers, they tend to be at the
Speaker 1: short side. So yes, we close out many of those positions.
Speaker 1: And was a lot of the the positions that you
Speaker 1: closed out of me? I'm curious about in terms of
Speaker 1: your business, how much is retail investors individual investors versus
Speaker 1: bigger institutional clients. So well, it's hard to spell our
Speaker 1: Our average client account is uh just under three hundred
Speaker 1: thousand dollars, so they are not your regular Moments clients.
Speaker 1: But of course many of them are smolder, are many
Speaker 1: of them are much bigger, But three hundred thousand it's
Speaker 1: just the average. We have one point one eight million customers.
Speaker 1: So yeah, hey, you know, Thomas, you know it's hard,
Speaker 1: and I think we're trying to get our head about.
Speaker 1: I have lots of conversations with you know, big name
Speaker 1: shops too, and and investors who say, you know, we're
Speaker 1: increasingly trying to open up alternative investments to individual investors,
Speaker 1: give them access to the types of investments that the
Speaker 1: bigger institutional clients typically have. And yet I feel like
Speaker 1: when a smaller retail investor to some extent, acts like
Speaker 1: one of the big guys, all of a sudden their
Speaker 1: hands gets slapped. I saw. I don't think that's true.
Speaker 1: So short squeezes are not legal not Maybe many of
Speaker 1: the long seers do not know that they are participating
Speaker 1: in a short screet, but uh that that that's the
Speaker 1: only issue I see that they inadvertently doing something that
Speaker 1: they shouldn't be doing. But it's it's really stupid to
Speaker 1: look at the stock and buy the three hundred dollars
Speaker 1: and you know that it's a it's a little business, right,
Speaker 1: it's a it's a corner store, Thomas. We only have
Speaker 1: fifteen seconds for this. But are you worried that there's
Speaker 1: going to be a pr impact from this and retailer
Speaker 1: traders will go to other trading platforms. I don't think so,
Speaker 1: because our professional customer understands that we have to protect
Speaker 1: the marketplace where day's sake and the money we have
Speaker 1: to protect. Do you think regulators just quickly twenty seconds
Speaker 1: have to get involved from Congress and others. I think
Speaker 1: unless regulators come out and say that trading should be
Speaker 1: in these stuffs for liquidation only, this is going to
Speaker 1: continue indefinitely and that's not good. Interactive Brokers chairman and
Speaker 1: founder Thomas petterfe. We should note again that Interactive Brokers
Speaker 1: is a sponsor of Bloomberg Radio so well the investment
Speaker 1: community tries to understand the impact of the Reddit community. Tim,
Speaker 1: Let's not forget that so much of this year's environment
Speaker 1: really depends on getting the virus COVID nineteen under control. Right.
Speaker 1: We talked so often about how the recovery is so
Speaker 1: bound to the recovery of the virus. While doing so, though,
Speaker 1: we also need to be preparing for the next pandemic.
Speaker 1: We will be better prepared if we learn from what
Speaker 1: we're going through. Now, this is Bloomberg, This is Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes. Tim
Speaker 1: Stellovan from Bloomberg Radio. So. In an annual letter, billionaire
Speaker 1: philanthropist Bill Gates outlined an ambitious plan to stop the
Speaker 1: next pandemic. Yes, folks, there will be another one. He's
Speaker 1: calling for a global alert system, massive testing, a contra
Speaker 1: of three thousand first responders ready to spring into action,
Speaker 1: and tens of billions of dollars of annual spending. I
Speaker 1: know we're not even through this one, Tim, but we've
Speaker 1: got to start thinking about the next one. We're not
Speaker 1: and look, I think we should listen to Bill Gates.
Speaker 1: This is a guy who was sounding the alarm about
Speaker 1: the pandemic for years before. I mean, he knew this
Speaker 1: was coming, and he knew we weren't prepared. And look,
Speaker 1: one of our guests gets that and reminded us of
Speaker 1: the need to continue research into clinical trials and vaccines.
Speaker 1: He's Dr Kevin Tracy, and he's professor at the Institute
Speaker 1: of Molecular Medicine fine Stein Institutes for Medical Research, also
Speaker 1: Professor of Molecular Medicine at the School of Medicine at
Speaker 1: Hofstra north Well Health and north Well. We know is
Speaker 1: a massive hospital system and they've seen the strains and
Speaker 1: stresses of COVID nineteen really from day one. And he
Speaker 1: talked to us though about what he's seeing in terms
Speaker 1: of the virus, especially when it comes to those less fortunate.
Speaker 1: The virus has has been a brutal to those in
Speaker 1: lower income neighborhoods, multiple housing units, and to the elderly.
Speaker 1: And there's an enormous opportunity to double down in in
Speaker 1: what has to be done to vaccinating those populations as
Speaker 1: well as looking at new therapies that we're going to
Speaker 1: continue to nave even after the vaccines have been have
Speaker 1: been given out. Dr Tracy. We we're seeing some conflicting
Speaker 1: news right We're seeing lockdowns and restrictions being I shouldn't
Speaker 1: say lockdowns, but restrictions being lifted in certain parts of
Speaker 1: the country right now, California, New York. Well, at the
Speaker 1: same time, new strains are being discovered in multiple places.
Speaker 1: What's the right approach here for for local states to
Speaker 1: take the right The right approach is to follow the
Speaker 1: masking of all individuals, maintaining social distancing and handwashing, and
Speaker 1: to focus on a coordinated deployment of the vaccine as
Speaker 1: soon as the supplies are available. That's the science based approach. Well,
Speaker 1: and it's interesting too, you know, I think we're getting
Speaker 1: back to that core. And certainly Dr Fauci has been
Speaker 1: impressing that the importance of tim we saw it. Certainly.
Speaker 1: I feel like over the weekend or since the new
Speaker 1: administration has come in, you can almost see some relief
Speaker 1: among Dr Faucci is just being able to focus on
Speaker 1: the medicine. He definitely does. He definitely does um and
Speaker 1: listen the science kind of reveals all in terms of
Speaker 1: what we need to do. Dr Tracy, We we sort
Speaker 1: of tease that you wanted we're going to talk about
Speaker 1: the next pandemic. And it's surprising to me that we're
Speaker 1: already thinking about the next pandemic. We haven't even gotten
Speaker 1: through this one yet. Um, are we going to be
Speaker 1: better prepared, hopefully for the next pandemic? And why are
Speaker 1: you convinced their? Well, when do you think the next
Speaker 1: one would be? I don't I don't know when the
Speaker 1: ex pandemic will come, but there will be another pandemic,
Speaker 1: and in fact, we will be better prepared if we
Speaker 1: learn from what we're going through now. So UM, there's
Speaker 1: there's a couple of ways to think about this. UM.
Speaker 1: One way is to think of it as a spun
Speaker 1: Nick moment. When Russia launched its first satellite, it terrorized
Speaker 1: UM military leaders in the US and it terrorized civilians
Speaker 1: because it was unexpected and we were unprepared for for
Speaker 1: a space race. But we we as a country doubled
Speaker 1: down and led via an invest major investments in science
Speaker 1: and research. We put a man on the moon before
Speaker 1: the decade was out. As as JFK S the country
Speaker 1: to do we we it's because the country reacted in
Speaker 1: a cohesive and organized way to US perceived threat. We
Speaker 1: need to do the exact same thing now for the
Speaker 1: COVID response, by investing more in in federal dollars invested
Speaker 1: into research. Because this was not a surprise, Okay, this
Speaker 1: this was an expected event. Well, and forgive me for
Speaker 1: jumping in because like someone tweeting at me and saying, listen,
Speaker 1: we've had the swine flew in oh nine, we had
Speaker 1: the Russian flu of the seventies, Hong Kong flew the
Speaker 1: late sixties. Um, you know, we've had flus along the way,
Speaker 1: and we've had viruses that have been really difficult. I
Speaker 1: guess I mentioned it because I agree with you that
Speaker 1: the country has to focus on it, but the world
Speaker 1: really has to focus on it. Right, If we're going
Speaker 1: to really get these under control, especially with the amount
Speaker 1: of flow and movement between countries, um, and our economies
Speaker 1: depend on that, it really has to be a global effort.
Speaker 1: I agree, Carol, global effort and a global focus would
Speaker 1: be ideal, But we we may not be able to
Speaker 1: control the global focus, but we certainly have to double
Speaker 1: down on the US focus. In two in two thousand
Speaker 1: and three, after the first Stars outbreak, I actually was
Speaker 1: invited down to Washington and a very small panel and
Speaker 1: we modeled what would happen if exactly of IRUs like
Speaker 1: COVID coming out of UH China or Asia began to
Speaker 1: infect Americans. And the models we used were more lethal
Speaker 1: than the current virus, which is not very lethal. The
Speaker 1: models we used projected of the United States would have
Speaker 1: been would have been dead by now if if so so,
Speaker 1: this was not a surprise, and I was one of
Speaker 1: dozens of participants in reports recommending preparation for pandemics. Does
Speaker 1: Dr Kevin Tracy, Professor at the Institute of Molecular Medicine
Speaker 1: at the fine Stein Institutes for Medical Research, Professor of
Speaker 1: Molecular Medicine at the School of Medicine of Hofstra Northwell
Speaker 1: Health listen to him. It's all about listen, We've got
Speaker 1: to get through this one, but we've also got to
Speaker 1: think about the next viruses to come. And look, I'm
Speaker 1: optimistic that because we are living through this one, because
Speaker 1: we are getting through this one, we will see the
Speaker 1: other side. We're going to be able to handle the
Speaker 1: next one much better. We're learning a lot. I certainly hope.
Speaker 1: So you're listening to Bloomberg Business Week up next. It's
Speaker 1: been a tough time. That's a that's a very difficult
Speaker 1: time for travel and leisure. Health concerns continue to plague
Speaker 1: progress towards getting cruise ships back to see. We'll hear
Speaker 1: from the CEO of Carnival. That's coming up next. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes.
Speaker 1: Tim Stinovic from Bloomberg Radio. I know to be able
Speaker 1: to travel, Carol, I am, I cannot wait. I mean
Speaker 1: I haven't traveled in a year. Um, raise your hand
Speaker 1: if you need a vacation. Okay, we're both raising our hands.
Speaker 1: Let the record show the whole audience has raised their
Speaker 1: hands as well. One of the hardest stand industries, Tim,
Speaker 1: we know by the pandemic is anything and everything to
Speaker 1: do with travel, and definitely the cruise industry. So to
Speaker 1: find out what kind of year we can't expect in
Speaker 1: the cruise industry, there's probably no one better to speak
Speaker 1: to than Arnold Donald. He's President and CEO of Carnival Corporation.
Speaker 1: You caught up with him at Bloomberg's the year ahead
Speaker 1: of virtual Summit, and in this excerpt you talked with
Speaker 1: Donald about what it feels like to be a bell
Speaker 1: Weather and the outlook. Of course, it's been a tough time.
Speaker 1: It's a it's a very difficult time for travel and
Speaker 1: leisure UM, and obviously difficult time for cruise. You know,
Speaker 1: we voluntarily paused way back in March of and here
Speaker 1: we are in January of twenty one and we're still
Speaker 1: not sailing. We've had a few sailings over in Europe,
Speaker 1: but you know, very limited basis. So you know, they
Speaker 1: have a business with no revenue for such an extended
Speaker 1: period of time and a significant burn rate because obviously
Speaker 1: we have to keep our ships operational. You can't set
Speaker 1: these ships up to not airplanes. You can't just put
Speaker 1: them in a hangar. You have to continue to operate them.
Speaker 1: And so it's been very challenging. On the other hand, UM,
Speaker 1: the company has proven its resilience. Are people have been fantastic.
Speaker 1: We have raised over nineteen billion dollars of capital in
Speaker 1: the past few months, all virtually nobody in an office,
Speaker 1: not our people, not the investors, not the bankers, not
Speaker 1: the lawyers, UM. And so some extraordinary things have happened.
Speaker 1: Plus we got ninety thousand crew Ris Carroll back home
Speaker 1: at a time where no flights there were, you know,
Speaker 1: borders were closed, et cetera. So that was a major
Speaker 1: ideal not to mention in the early days, two fifty
Speaker 1: thousand guests plus as well. Hey, what I wanted to
Speaker 1: ask you, because I feel like, go back a year ago,
Speaker 1: you folks, Carnival, the cruise industry was seeing I think
Speaker 1: the depth of the magnitude, the seriousness of what this
Speaker 1: virus was about right you were seeing it. Certainly, you
Speaker 1: had passengers on the ship, you had employees you had
Speaker 1: to deal with. I just feel like you guys got
Speaker 1: an earlier window into how serious this could be. Do
Speaker 1: you feel like that there's any early windows that you're
Speaker 1: seeing right now that maybe the rest of the world
Speaker 1: is not. Yeah, I don't know if we really had
Speaker 1: an earlier window, but clearly we were impacted because when
Speaker 1: countries closed their borders, we had ships at sea because
Speaker 1: this was evolving, nobody understood it. People were shutting down
Speaker 1: and we had to get people home. So that was
Speaker 1: a major episode for us. Our excuse and maybe that's
Speaker 1: what I mean, and maybe that's what I mean is
Speaker 1: that you guys really felt the impact pretty quickly, pretty
Speaker 1: swiftly before a lot of other folks didn't. A lot
Speaker 1: of other industries did. I think our return, unfortunately, is
Speaker 1: probably going to be slower than others. UM. And it's
Speaker 1: because we have so many If you take a cruise,
Speaker 1: you go somewhere. So everyone talks about c d C,
Speaker 1: which of course is critically important in terms of having
Speaker 1: you know, the confidence of CDC for us to sail.
Speaker 1: But we have to go to destinations. Those destinations have
Speaker 1: to feel comfortable. Uh. And we're not gonna be able
Speaker 1: to start all that once. We're gonna have to stagger
Speaker 1: our start. We'll start with a few ships at a time,
Speaker 1: et cetera. And so we'll be slower coming back, but
Speaker 1: we will come back, and depending when, Um, it's in
Speaker 1: the best of public health, you know, to sail here
Speaker 1: in the US and elsewhere in the world. UM, we're
Speaker 1: cautiously optimistic hopeful that we could have nearly all the
Speaker 1: fleet back sailing by the end of the year. UM.
Speaker 1: But obviously whole tells and schools and other places where
Speaker 1: there is UM congregation of people are going already happening,
Speaker 1: and so you know, they're kind of in front of
Speaker 1: us in terms of being able to see when things
Speaker 1: are coming back to normal. You guys announced some extending
Speaker 1: some of your pauses on your departures in the United States.
Speaker 1: So do me a favor, Arnold, take me to you know,
Speaker 1: your first US depart your post COVID. What does it
Speaker 1: look like? And when do you know, fingers crossed? When
Speaker 1: do you think it might be? Yeah, well, those are
Speaker 1: great answers. I would love o great questions. I love
Speaker 1: that answers too. But the reality is, you know what
Speaker 1: it's gonna look like is um you know, obviously there's
Speaker 1: going to be enhanced protocols on board health protocols because
Speaker 1: in this time frame, even with the advent of vaccines,
Speaker 1: even with the acceleration of low cost, rapid, more accurate testing,
Speaker 1: even with the advancement of treatments. UM, you know, COVID
Speaker 1: is still still out there and about and still impacting people.
Speaker 1: And so we're gonna have to have elevated protocols for
Speaker 1: a period of time. Physical distance, what does that look Yeah?
Speaker 1: What does that look like? Yeah? And and think and
Speaker 1: good news as we've done it now and in Italy
Speaker 1: and Germany, for example, And so the guests, for the guests,
Speaker 1: they have a great experience, but they are wearing masks.
Speaker 1: You know, there is an attention of physical distancing. It
Speaker 1: looks like when you go to the grocery store wherever
Speaker 1: you go now and there's a little spot on the
Speaker 1: Floria says, you know, stand six ft behind the person
Speaker 1: in front of you or something, or in the airport
Speaker 1: or whatever. So so that's what you know. It's going
Speaker 1: to have those kinds of feels to it, but it'll
Speaker 1: still be a cruise. People will still be experiencing new
Speaker 1: places and new people in new destinations. Um, you know,
Speaker 1: we had our very high net promoter scores, you know,
Speaker 1: guest satisfacshition scores on the cruises that we had in
Speaker 1: Italy and Germany. I have to say, and you know,
Speaker 1: you know I spent some time with you guys went
Speaker 1: on a cruise, just kind of went out on an overnight.
Speaker 1: But you know, part of the fun is there's a
Speaker 1: lot of people on those ships. I mean they're massive.
Speaker 1: So I do wonder does the new protocol mean that
Speaker 1: you have to limit the amount of passengers you have
Speaker 1: on a ship at least for some time. Well, we'll
Speaker 1: have to see. I think initially that will probably happen
Speaker 1: to a degree as we practice the protocols with the
Speaker 1: crew and get them used to handling everything. We certainly
Speaker 1: did that with our early sailings in Europe. Um. But
Speaker 1: the ships are vast, as you know, you've been on
Speaker 1: them and so you know, and so the most important
Speaker 1: thing is not how many people, but in those situations
Speaker 1: where you can have a congregation of people, um, you know,
Speaker 1: is there adequate room for distancing? Can we distribute which
Speaker 1: we can for dining and other things to have the
Speaker 1: physical space like you having restaurants square and in places
Speaker 1: where you're allowed to eat inside the US today. And
Speaker 1: so there will probably be some limitation based on those
Speaker 1: types of things, but maybe not as much as people think.
Speaker 1: You know, our ships initially will start slow, but chances
Speaker 1: are we'll be back to relatively for I can see
Speaker 1: just with different practices. Are you going to require passengers
Speaker 1: who get on the ship. Are you going to require
Speaker 1: employees to get COVID tests? Are you going to require vaccinations?
Speaker 1: I'm just curious how that comes into playing universal testing
Speaker 1: right now. It was required for the cruises, absolutely the
Speaker 1: ones we are operating. Vaccines are new, and so we
Speaker 1: have to see where that evolves. And we're gonna listen
Speaker 1: to the medical experts around the world, just as we
Speaker 1: have on everything else, UM, you know, the science and
Speaker 1: medical experts around the world, and then determine what makes
Speaker 1: the most sense. UM. You know, everything is still evolving,
Speaker 1: as you well know, UM that you know, there's still
Speaker 1: a lot of questions and unknowns. UM. But yeah, we'll
Speaker 1: we'll do whatever is in the best interest of public
Speaker 1: health and UM. And you know, we don't want to
Speaker 1: do anything. We never have historically in the industry and
Speaker 1: our company certainly not UM to do anything to compromise
Speaker 1: public health, and we certainly aren't in this situation. Is
Speaker 1: there a little part of you, Arnold that is at
Speaker 1: all worried that looks a lot more like twenty then
Speaker 1: maybe we're all setting up for well, here's the differences
Speaker 1: I see that caused me not to feel that way
Speaker 1: I feel early on in twenty one. You know, obviously
Speaker 1: we're having a hangover of that kind of a and
Speaker 1: uh question about that, UM, But we have vaccines and
Speaker 1: we didn't UM. You know, we have some in hance
Speaker 1: treatment protocols that most of we didn't have. We have
Speaker 1: much more testing availability and rapid testing and a more
Speaker 1: accurate testing which in most of we didn't. We have
Speaker 1: a much better understanding. Although we're not fully knowledgeable about
Speaker 1: the virus, we have a much better understanding of the
Speaker 1: virus where we didn't. And so when I look at
Speaker 1: all those things, yeah, I see twenty one, you know,
Speaker 1: with with some optimism, but at the same time realizing
Speaker 1: we have to continue to you know, let things evolve
Speaker 1: and study and pay attention to the science first and
Speaker 1: then secondly, you know, to our societal ability to you know, um,
Speaker 1: both function as a society and have people feel comfortable
Speaker 1: in that function. You mentioned at the top that you
Speaker 1: guys raised nineteen billion dollars, there was debt, there was
Speaker 1: equity raises. Um. That puts you guys in a great position.
Speaker 1: It's really pretty impressive. And and do you feel like
Speaker 1: Wall Street has acknowledged your ability to do that? And
Speaker 1: I do wonder do you anticipate that you could do that?
Speaker 1: You have to do any other kind of capital raises here? Well,
Speaker 1: you know what we've said, you know, public day Alvius
Speaker 1: at this point is we have raised over nineteen billion
Speaker 1: dollars and that gives us a runway. It gives us
Speaker 1: liquidity to make it through all of twenty one with
Speaker 1: zero revenues. So we have no revenues for the full year. Um,
Speaker 1: you know, with a pretty healthy burn rate given the
Speaker 1: number of ships we have in everything, and we can
Speaker 1: get through the years. So so that gives us time.
Speaker 1: And in terms of UM, and we've already published that
Speaker 1: we have additional capacity for debt um obviously. UM. As
Speaker 1: we move forward, we'll pay attention to the balance sheet
Speaker 1: and if we determine it makes sense, well, you know,
Speaker 1: we can do additional equity rays if if we need to. So,
Speaker 1: so we have some flexibility, which gives us confidence we
Speaker 1: can sort of weather the storm. And um, you know,
Speaker 1: it's not without sacrifice. It's not without some pain. Um.
Speaker 1: You know that was raised that you know, pretty aggressive
Speaker 1: rates and so on and so forth, given the time
Speaker 1: and what the markets were like at the time. The
Speaker 1: market today seems to be you know, somewhat better and
Speaker 1: so on. But but the bottom line is, you know,
Speaker 1: it's not what our pain, is, not what our sacrifice. Yeah,
Speaker 1: listen to him, It's all about getting it under control.
Speaker 1: Everybody is looking forward, but again there's lots of questions
Speaker 1: about how long until we get there. I'm ready to
Speaker 1: get there too. All right. That was Carnival President and
Speaker 1: CEO Arnold Donald Cash. That entire conversation. It's in our
Speaker 1: extra podcast feed. You can find that at Bloomberg dot com,
Speaker 1: on Apple or wherever you get your podcasts. That wraps
Speaker 1: up the first hour of the week. Get edition of
Speaker 1: Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and
Speaker 1: I'm Tim Stanovic. More ahead in our next hour, including
Speaker 1: fifty companies to watch for in plus how the my
Speaker 1: Pillow CEO will not stop trying to prove that Donald
Speaker 1: Trump got cheated. You're gonna love that story. Also the
Speaker 1: US CEO of Colliers International, I'm working from home and
Speaker 1: whether it's here to stay. We're going to talk about
Speaker 1: real estate and an iconic guitar company on surviving nearly
Speaker 1: two centuries. This is a fun one, Caroled, This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes. Tim Stenovy from Bloomberg Radio. Hi, I'm Carol
Speaker 1: Masser and I'm Tim Stanovic from Bloomberg Quick Take plentyhead
Speaker 1: in our second hour of the weekend edition of Bloomberg
Speaker 1: Business Week, including commercial real estate. It was hit big
Speaker 1: time from the pandemic. We'll talk about what stays, what
Speaker 1: goes with the US CEO of Colliers International plus Carrol
Speaker 1: this story headline really stuck out. Why pillow King Michae
Speaker 1: Lindell is never going to rest or shut up. You're
Speaker 1: gonna love that story. And the CEO of the Martin
Speaker 1: Guitar Company on the Earth guitar it's a thing. First up, though,
Speaker 1: let's take a look at some of the Business Week
Speaker 1: fifty Companies to watch. The list it is compiled by
Speaker 1: our Bloomberg Intelligence team, who talk about two thousand companies
Speaker 1: and fields including finance, retail, energy and technology. RBI team
Speaker 1: consider such factors including companies size and growth opportunities, management changes,
Speaker 1: scheduled release of noteworthy products and services, and of course,
Speaker 1: the impact of the COVID nineteen pandemic and other seeping
Speaker 1: economic forces. Bloomberg Business we get it, or Joe Weber,
Speaker 1: he's back with more. There's way too many companies for
Speaker 1: us to figure out on our own, and they basically
Speaker 1: take the you know universe of the two thousand companies
Speaker 1: that they track and basically put it through their spreadsheets
Speaker 1: until we come out with fifty that we think are
Speaker 1: really interesting to watch. And watch means not just UM
Speaker 1: buy or sell, where we have to be a little
Speaker 1: bit more ambivalent than that because they can calls. But
Speaker 1: investors and readers have definitely noticed. I've had a portfolio
Speaker 1: manager paying me before and say, I'm not sure if
Speaker 1: you knew this or not, But like forty of the
Speaker 1: companies that are on this this year's list, this was
Speaker 1: a year back. Um, we're out performing their benchmarks. UM.
Speaker 1: So it's you know, if you knew what you were doing,
Speaker 1: you could go along on a few and short some
Speaker 1: others and and probably look pretty smart. Past performance is
Speaker 1: no indication. It's true. It's true, especially not right now. Yeah. So, Joel,
Speaker 1: what what is sort of the common thread that that
Speaker 1: runs through these fifty companies? I mean, because you have
Speaker 1: consumer staples on here, you've got materials, you've got healthcare,
Speaker 1: you've got Boeing on here. UM what ties them together.
Speaker 1: There's a couple of themes that I've noticed, UM, that
Speaker 1: I thought we were interesting to comment on. One is
Speaker 1: UM travel UM, and I think you can see this
Speaker 1: with you mentioned bowing there UM now that they're on
Speaker 1: the other side of of the max Um debacle. Uh.
Speaker 1: We we once we see travel start to perk up,
Speaker 1: we expect that um, that that plane will be back
Speaker 1: in business, which will be UM, you know, a huge
Speaker 1: deal for for Boeing as well as for airlines. There's
Speaker 1: also a couple of airlines on this list that I
Speaker 1: think are really interesting becauld Pay Pacific being one, but
Speaker 1: also Whiz Air. UM. There's another article in UM this
Speaker 1: issue about European airlines where where Whizz operates UM and
Speaker 1: Whizz was sort of a breakout before and sort of
Speaker 1: all eyes on them to see if they can come
Speaker 1: back to it. UM. So So I thought that travel
Speaker 1: one was interesting because you know, I think we all
Speaker 1: sort of uh innately expect that to be a sector that,
Speaker 1: you know, the moment that you're vaccinated and able to travel,
Speaker 1: I think a lot of people will uh yeah, sign
Speaker 1: me up, sign me up. Hey. You know what's really
Speaker 1: cool too, It's it's some household names, and then it's
Speaker 1: some companies that we don't really talk a lot about. Uh,
Speaker 1: And that's what kind of makes it come you've never
Speaker 1: heard of some of these companies, right, like and that's
Speaker 1: I've never whizz air. Yeah, I mean if we if
Speaker 1: we only told you about g E S, it's like, yeah, right,
Speaker 1: start providing some service. So so we really try to
Speaker 1: dig when we put this list together, so that it's
Speaker 1: you know, you get a combination of ones that you've
Speaker 1: heard of A B and BEV for example, but we
Speaker 1: pair that with uh, you know, not only an international
Speaker 1: um quotient, but but just sort of the sense of discovery,
Speaker 1: so that you know, everybody has heard of Tesla, but
Speaker 1: you know, perhaps you haven't heard of, you know, somebody
Speaker 1: like Ablemarle, which is in the lithum business. And if
Speaker 1: you're looking for e V exposure like something like that
Speaker 1: makes a lot of sense. So it's just and I'm
Speaker 1: just gonna tell there you go, and now you can
Speaker 1: talk about it, you know, over the weekend whenever you're
Speaker 1: you know, having remote dinners with friends or whatever. Um.
Speaker 1: You know. But back to the other themes that I
Speaker 1: thought were really interesting. Another one, I don't know if
Speaker 1: you guys noticed this, how much China plays are rolling
Speaker 1: here um and and their domestic companies. Uh, there are
Speaker 1: companies that have exposed more international exposure. But when you
Speaker 1: go through the list, it's really impressive just how much
Speaker 1: China factors into everything. Yeah, are there other regional variations here?
Speaker 1: I mean did you did you sort of put parameters
Speaker 1: on when you talk to the team at at at
Speaker 1: Bloomberg Intelligence, or do you say, hey, these are two
Speaker 1: thousand companies. UM, we want to know which fifty you
Speaker 1: think should be on the list. So we we do
Speaker 1: have UM. We basically just want to make sure that
Speaker 1: we have regional exposure. So if we if we talked
Speaker 1: about fifty and didn't account for for Europe or Asia
Speaker 1: especially UM off this year, we you know, it wouldn't
Speaker 1: be an interesting list. So so we definitely we don't
Speaker 1: set any hard rules. Uh, we kind of let the
Speaker 1: data speak, but we definitely just make sure that we
Speaker 1: we have that regional exposure in addition to everything else. UM.
Speaker 1: I do think like that. I think we're a little
Speaker 1: overweight on on Asia. UM. And that is for a
Speaker 1: good reason because, UM, you know another company that you
Speaker 1: know totally was an obvious one when you kind of
Speaker 1: sit back and think about it, was like Nintendo, right,
Speaker 1: Nintendo is um got a new switch coming? We're all
Speaker 1: still locked at home and looking for you know, new
Speaker 1: consoles that we had. You know this, any Microsoft war
Speaker 1: tends to kind of lead first, but then Nintendo comes
Speaker 1: from behind and everybody ends up playing Switch, it seems.
Speaker 1: So we'll see if that one proves true. Um. So,
Speaker 1: so that's just another The PayPal one is interesting because
Speaker 1: we've seen, you know, there's so many players there, but
Speaker 1: then it's a it's a it's a space where it
Speaker 1: feels like entrenched players. It's like like a PayPal may
Speaker 1: have sort of an unfair advantage. Um. So, the fact
Speaker 1: that they've navigated so many security stuff for so long
Speaker 1: that everyone's paying remote already. Uh, they seem like a
Speaker 1: really interesting one to keep an eye on. Um And
Speaker 1: the numbers there are just really interesting to see, you know,
Speaker 1: sales growth, you know, go up. It just told the
Speaker 1: circumstances placed straight to them. Well and speak of sales growth.
Speaker 1: Twilio Jeff Lawson, co founder CEO, get a new book
Speaker 1: out UM and we talked about some of that growth.
Speaker 1: I mean, they had an unbelievable and he's pretty upbeat,
Speaker 1: you know, once again, but it's a name that we've
Speaker 1: talked about a lot here. Joel. Yeah, they're interesting. It's
Speaker 1: a it's a that omni channel play a super convenient
Speaker 1: business software. That was Bloomberg Business Week editor Joe Weber.
Speaker 1: Check out the full list and the metrics by checking
Speaker 1: out the yearhead issue online at Bloomberg dot com and
Speaker 1: of course, on the Bloomberg and Tim a few real
Speaker 1: estate related companies. They are on that list of fifty
Speaker 1: companies to watch. And speaking of real estate, we're going
Speaker 1: to check in with the U s CEO of Colliers
Speaker 1: International get some ideas on how this year is shape
Speaker 1: en up. This is Bloomberg. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes. Tim Stenovan from
Speaker 1: Bloomberg Radio. Carol COVID has shuttered thousands of US restaurants,
Speaker 1: gyms and stores. It's kept office workers at home, It's
Speaker 1: left hotel rooms sitting empty. All of that, of course,
Speaker 1: leaving commercial real estate trying to rebuild a solid foundation. Yeah. Tim,
Speaker 1: there's definitely been winners and losers when it comes to
Speaker 1: real estate and the impa the pandemic has had on
Speaker 1: overall real estate. And to help us understand exactly where
Speaker 1: we are, I caught up with the U s president
Speaker 1: and CEO of Colliers International. We're talking about Gil Barack,
Speaker 1: and like so many guests, we had to kick things
Speaker 1: off talking about what does the world has been like
Speaker 1: and where we are one year into the pandemic. Look,
Speaker 1: I think we're doing fine. It's been a long year
Speaker 1: for all of us, or along eleven months, um, and
Speaker 1: I think that, you know, sort of where we are.
Speaker 1: We're closer to the end than the beginning. That's the
Speaker 1: good news, right. The vaccines are rolling slowly, but they're rolling,
Speaker 1: and I think that most people are quite encouraged by
Speaker 1: that and encouraged about the fact that we should be
Speaker 1: returned to some sense of normalcy by the middle of
Speaker 1: the year and into the back half of the year.
Speaker 1: And so things are looking up. And they didn't end
Speaker 1: as badly as some might have predicted, sort of when
Speaker 1: the crisis hit us in March and April last year,
Speaker 1: there was activity, uh and there was some sense of optimism,
Speaker 1: you know, again towards the end of last year. Clearly
Speaker 1: we didn't perform last year like we did in two
Speaker 1: thousand nineteen, but things did gradually start to get better
Speaker 1: and that trend seems to be continuing. Is that true?
Speaker 1: Around the world. I mean, I knew you focus on
Speaker 1: US properties, but you guys are international. Is it kind
Speaker 1: of the same story everywhere? It depends on the market.
Speaker 1: I mean, I know real estate is location, location, location,
Speaker 1: and it's a very local story. But I'm just curious. Yeah,
Speaker 1: I know everything I've heard and read from my colleagues,
Speaker 1: you know, across the ponds, um is that they're feeling
Speaker 1: sort of generally the same way. There is enthusiasm, activity
Speaker 1: is picking up, um and UM. You know, their their pockets. Obviously,
Speaker 1: there are things within the industry, things like industrial, which
Speaker 1: I think is fairly common now than anybody that follows
Speaker 1: the space. Industrial real estate is having. You know, COVID
Speaker 1: has been a silver ligning for them, right It's it's
Speaker 1: been because of e commerce, and you see this globally,
Speaker 1: the demand for that type of real estate has really
Speaker 1: been the opposite of most other types because of the
Speaker 1: the e commist growth. Are you seeing any bankruptcies with
Speaker 1: any of your properties, Because I'm trying to get my
Speaker 1: head around that, because I think that was the story
Speaker 1: we thought was coming was coming was coming in uh
Speaker 1: and and expectations as restaurants shut down, as retail shut down. Uh,
Speaker 1: And I'm just curious, are you guys facing some bankruptcies
Speaker 1: with any of your properties or are you seeing any
Speaker 1: of that? We really it's really diminimous. Um. There was
Speaker 1: a lot of talk and this is not dissimilar to
Speaker 1: two thousand and two thousand nine, that the stress debt
Speaker 1: is coming, the the special servicing needs are coming, and
Speaker 1: it's going to be a wave, and that wave didn't happen. Yes,
Speaker 1: they're clearly there are properties that are distressed. There are
Speaker 1: there are problematic situations. They are higher than what are
Speaker 1: they normally are in normal times, But it hasn't been
Speaker 1: at least from what we've seen, it hasn't been a
Speaker 1: huge wave yet. Um. I don't know what the next
Speaker 1: few months hold as stimulus checks are coming out again,
Speaker 1: but whether you know, if if we don't see some
Speaker 1: improvement in terms of of stimulus and in terms of
Speaker 1: the crisis receding through vaccination, right, then the longer it
Speaker 1: goes on, the harder it is going to be for
Speaker 1: people to keep going. But so far it's been manageable.
Speaker 1: Easy for me to say, right if not, if I
Speaker 1: haven't been a directly impacted, well, I mean, does that
Speaker 1: change does that any of that. I mean, you say
Speaker 1: that you see that we're closer to the end than
Speaker 1: we are at the beginning. But I do wonder do
Speaker 1: you think that there will still be some fallout of
Speaker 1: properties just because the world is changing when it comes
Speaker 1: to real estate. I think they will be. And I
Speaker 1: think it would be you know, remiss of me to
Speaker 1: say that, or putting my head in the sand if
Speaker 1: I didn't say. Look, I think the way that for example, office,
Speaker 1: that's the big elephant in the room, right, how is
Speaker 1: office going to come back and in what fashion? And
Speaker 1: how is demand going to be? Well, it's it's it's
Speaker 1: a mixed bag. You see some new developments that are
Speaker 1: fifty and sixty and sevent already pre leased, and I
Speaker 1: think it depends on where they are and what type
Speaker 1: of um you know, office space you have. So new
Speaker 1: is generally good and popular. Old is probably going to
Speaker 1: struggle more, um you know, because we will work a
Speaker 1: bit differently, and I think we will see people working
Speaker 1: more remotely than they have historically, and that the trend
Speaker 1: will be a downward trend in demand, uh, you know,
Speaker 1: offset by when the economy recovers and stoughts to go again,
Speaker 1: and there's more demands for space, So there are going
Speaker 1: to be some lasting impacts, particularly I think in the
Speaker 1: office arena. So gil, let me ask you, um, offices,
Speaker 1: wide open spaces, right. That has just been the thing
Speaker 1: at Bloomberg. It's been in our culture from day one,
Speaker 1: this whole idea of open spaces and no real offices. Um.
Speaker 1: And then we start really take off with all the
Speaker 1: tech companies. Right, it was the cool thing, the right
Speaker 1: thing to do, and everybody got away from offices. Will
Speaker 1: we stay with it? Do you think that changes significantly? Yea.
Speaker 1: In the short term, conventional wisdom would suggest that that's
Speaker 1: probably not a good idea to be death sharing, right
Speaker 1: and to be so us to each other without some
Speaker 1: kind of plexiglass separation. I think it remains to be
Speaker 1: seen because if you reconfigure officers, there is a capital
Speaker 1: cost to doing that, and I think that in the
Speaker 1: short term, anyway, my own senses, we can manage it
Speaker 1: a different way. So, for example, have half the employees
Speaker 1: come in on Monday and Wednesday and the other half
Speaker 1: on Tuesday and Thursday. A lot of people want to
Speaker 1: work remotely a little bit anyway, after the pandemic and
Speaker 1: that's sort of you know, and a lot of people
Speaker 1: can work remotely quite effectively. So I think we're going
Speaker 1: to come back in stages, and it sort of does
Speaker 1: remain to be seen what the long term holds. I
Speaker 1: think we'll get back to it. I think there is
Speaker 1: a camaraderie and a productivity to having open officers. I
Speaker 1: think people like it and have gotten used to it.
Speaker 1: And if we weren't for the pandemic, uh, you know,
Speaker 1: nobody would think twice about it. So there'll be some
Speaker 1: I think, some short term, short to medium term restraint
Speaker 1: on that type of setup, but I think over time
Speaker 1: we you know, we can evolve back to it. Particularly
Speaker 1: the vaccines are effective. All right, So what about retail.
Speaker 1: We just did a story about a mall out in Vegas,
Speaker 1: um and it's not a new story deal, right, Like
Speaker 1: we've been talking about it for a year, Were overstored,
Speaker 1: were overmalled, uh. And I do feel like mall developers
Speaker 1: are getting a little bit more strategic in terms of
Speaker 1: where they put them all. So what's what what do
Speaker 1: we continue to see on that front? Yeah? So I
Speaker 1: think you know, retail is um. It has obviously suffered
Speaker 1: and that and and it has for us, as you say,
Speaker 1: and the pandemic obviously accelerated and deepened debt suffering, if
Speaker 1: you will. But I think that malls that offer an experience,
Speaker 1: and it used to be that you think of that. Okay,
Speaker 1: that has to be an outdoor mall. Not necessarily so,
Speaker 1: because you have some of these new malls that have
Speaker 1: been developed unfortunately maybe not quite gotten off the ground
Speaker 1: because of the pandemic. But they have attractions, whether that's
Speaker 1: roller coasters or attractions to kids or whatever it is. Uh,
Speaker 1: those draw crowds and of course then they shop right
Speaker 1: And so I think if it's a new mall, if
Speaker 1: it's an exciting mall, if it's in a good location,
Speaker 1: maybe good restaurants. When we get back to normal, those
Speaker 1: I think are ultimately going to be fine. The malls
Speaker 1: of the type you're talking about in somewhat of a
Speaker 1: remote location. It's not entirely remote because a lot of
Speaker 1: cards is a lot of card classic and outlets. People
Speaker 1: would stop on the way to Vegas. It makes sense.
Speaker 1: But they're not surviving very well in the pandemic. That
Speaker 1: was gil Borrock, the U S President and CEO of
Speaker 1: Colliers International, still to come on Bloomberg Business Week. What's
Speaker 1: going on with the pillow King? He is CEO Mike Lindell.
Speaker 1: So many questions about the pillow King. This is Bloomberg.
Speaker 1: This is Bloomberg Business Week with Carol Messier and Bloomberg
Speaker 1: Quick Takes Tim Stinovin from Bloomberg Radio. Pillow King Mike Lindell, Well,
Speaker 1: you know him from those late night commercials. I kinda
Speaker 1: say he's never going to rest or shut up, at
Speaker 1: least according to the story in the magazine Look, as
Speaker 1: reporter Josh Dean notes, you can laugh at him, shun
Speaker 1: his business, sue him. The my Pillows CEO won't stop
Speaker 1: trying to prove Donald Trump got cheated. Just joining us
Speaker 1: on the phone in New York along with Bloomberg Business
Speaker 1: Week editor Joe Weber on the access line in Brooklyn.
Speaker 1: Backstory here. Four years ago, Josh Dean wrote basically the
Speaker 1: definitive story on Mike Lindell and just the preposterous business
Speaker 1: success story. Um that that is my pillow and this
Speaker 1: is a guy who went from basically being a crack
Speaker 1: addict um to an unlikely entrepreneur with actually like a
Speaker 1: pretty successful business UM. And Josh actually did that story
Speaker 1: four years ago for the magazine, and it happened to
Speaker 1: coincide basically with the first couple of visits that Lindell
Speaker 1: had with Trump. And obviously, if you know anything about
Speaker 1: Mike Lindell, the past four years, UM had become much
Speaker 1: Trumpier UM, let's say, and so when the administration was
Speaker 1: in its last days, we've kind of reached out to
Speaker 1: Josh and said, what do you what do you think
Speaker 1: about getting back in touch with Mike Glendel And so
Speaker 1: that led to a pretty memorable conversation that Josh had
Speaker 1: with him in this feature. Um, Josh, what was the
Speaker 1: what was the opening question? How did the conversation start
Speaker 1: with with Mr Lindell? I don't even know if I
Speaker 1: needed to ask a question. I think I think I did,
Speaker 1: said hello, off and running started just going. I mean
Speaker 1: that man is um I think I said in the
Speaker 1: original story. You know he's been off cocaine and crack
Speaker 1: now for a long time, but it's like his body
Speaker 1: is permanently stuck in up in a cocaine mania. Like
Speaker 1: I don't think he's used Duggs in a long time,
Speaker 1: but he talks like someone who who maybe just did
Speaker 1: it for so long that he can't he can't control
Speaker 1: himself anymore. Well, so listen, though he's definitely an ally
Speaker 1: of Donald Trump, we know that, and you lay it
Speaker 1: out really well, why has he continued to be so
Speaker 1: adamant despite the court cases that have shown that there
Speaker 1: was no fraud in the election. Why has he and
Speaker 1: I know this is when he was off and running
Speaker 1: and talking with you, Why has he, though, continue to
Speaker 1: say there was fraud? I mean, he's he's just one
Speaker 1: of those people who are so convinced of something that
Speaker 1: no amount of information evidence would ever change his mind.
Speaker 1: I mean, he would tell you, you you know, for hours
Speaker 1: on end that he's convinced and that he has this
Speaker 1: you know, quote unquote forensic evidence of machine hacking and
Speaker 1: all this stuff. And unless he's completely doing this for show,
Speaker 1: and I don't think that he is. He truly believes that,
Speaker 1: you know, he's here to save Donald Trump's presidency and
Speaker 1: to save democracy. Well, Josh, I was so surprised to
Speaker 1: read that he's not concerned at all by this, uh
Speaker 1: what you call a big danger, the dominion voting systems
Speaker 1: having threatened him with a defamation suit. Uh you write
Speaker 1: that a decision in Dominion's favor could destroy my Pillow
Speaker 1: as a company. H Why is he not concerned about this?
Speaker 1: This is a big deal. Yeah, I mean, here's probably
Speaker 1: the the most convincing evidence that he truly believes what
Speaker 1: he's saying, that it's not some kind of act, because yeah,
Speaker 1: I mean, this is a potentially an existential threat to
Speaker 1: my pillow, like a decisive judgment. And we're talking like,
Speaker 1: you know, I think Dominions going after these these defense
Speaker 1: for hundreds of millions of dollars. If they choose to
Speaker 1: sue him, um, and he loses, then he could lose
Speaker 1: the company. But he thinks that he's right, so he
Speaker 1: believes as he as he tells it, I'm going to
Speaker 1: go to court and I'll present my evidence and I
Speaker 1: will prevail. I mean it's from the outside objectively, it
Speaker 1: seems crazy and self destructive, but he doesn't see it. Lay, Uh,
Speaker 1: what do you have to say about how his business
Speaker 1: has been doing? Because there was this photograph taking taking
Speaker 1: of him, uh leaving the White House with what appeared
Speaker 1: to be um some papers that referenced martial law. Uh,
Speaker 1: and and I'm curious, like, hey, what do you say
Speaker 1: about that? And then be how is how his business
Speaker 1: been doing well? The martial law thing, he said that
Speaker 1: was we're not his notes. So basically he was going
Speaker 1: to see Trump to present his you know, quote unquote
Speaker 1: evidence of of like election fraud, and then a lawyer
Speaker 1: front of his if he wouldn't name, gave him a
Speaker 1: second set of notes that included um that martial law reference.
Speaker 1: So he's like, I don't even know what martial is.
Speaker 1: That wasn't me. Um. As for the business, he's you
Speaker 1: know again, he thinks that this is good for his business,
Speaker 1: and it may be. I mean in the short term.
Speaker 1: He says, sales are up, he's hiring more people. He's
Speaker 1: actually added floor space because you know, I think there's
Speaker 1: probably everything is political today, right, so people maybe buying
Speaker 1: pillows as a reaction to what they see as like
Speaker 1: left wing blowback. Yeah, it's interesting. Is he really a
Speaker 1: buddy of Donald Trump's? No, I mean I asked talk
Speaker 1: he talked to the President? He said no, It's like
Speaker 1: I don't have his pon number. We've only met a
Speaker 1: handful of times. But I mean he loves he think
Speaker 1: Trump is amazing. That was Josh Deane reporting for Bloomberg
Speaker 1: Business Week. See if you can spoil this one. Al Right, everybody,
Speaker 1: grab a snack, a cup of coffee. Good to know,
Speaker 1: because coming up, we're going to check in with the
Speaker 1: head of an iconic brand of the music industry that
Speaker 1: survived check us out, Tim nearly two centuries. Yeah, this
Speaker 1: is the one I know you were very excited for, Carol.
Speaker 1: This company makes guitarist used by some of the biggest
Speaker 1: names in the history of music. I'm talking Eric Clapton,
Speaker 1: a Bob Dylan, Johnny Cash, Elvis Presley and more. You're
Speaker 1: listening to Bloomberg Business Week, that's next. This is Bloomberg,
Speaker 1: do you This is Bloomberg Business Week with Carol Masser
Speaker 1: and Bloomberg Quick takes Tim Stinovik from Bloomberg Radio measure.
Speaker 1: So that's the weight by the band, the lyrics I
Speaker 1: pulled into Nazareth. Well, that hasn't do with Martin guitar
Speaker 1: and where it's based. Robbie Robertson of the band noted
Speaker 1: that once Tim, while searching for inspiration for a song,
Speaker 1: he actually looked inside his Martin guitar. I loved this story.
Speaker 1: He saw the words made of Nazareth, which happens to
Speaker 1: be with the Martin Guitar Company is baby, Carol. I
Speaker 1: had no idea until I heard that, you Google amazing.
Speaker 1: Chris Martin is CEO of the company. He took over
Speaker 1: from his grandfather, keeping the company all in the family.
Speaker 1: I am the sixth generation. I'm C F. Martin. The
Speaker 1: four two of my ancestors were named Frank for some reason. Okay,
Speaker 1: because I was doing some research and I was trying
Speaker 1: to make sure I had the count right. How are
Speaker 1: you And what's the past year been like for you guys? Well,
Speaker 1: you know, um Pennsylvania, the governor basically shut the state
Speaker 1: down in about a week. So every day which like, Okay,
Speaker 1: tomorrow we'll do this, and then tomorrow was like, oh no,
Speaker 1: we're going to do this and this, And by the
Speaker 1: end of the week we were closed. And I thought,
Speaker 1: I said to my colleagues, says, I've been through guitar
Speaker 1: booms and busts for a variety of reasons, often economic,
Speaker 1: sometimes cultural. And I said, all right, let's just go
Speaker 1: for a break. Even if we can, you know, we'll
Speaker 1: bring the business down will unfortunately, you know, we have
Speaker 1: to lay off a bunch of people that will get
Speaker 1: unemployment and we'll go to break even. And then all
Speaker 1: of a sudden the phone started to ring. And it
Speaker 1: turns out that when people were stuck at home, they
Speaker 1: really wanted to buy a guitar. Did that that was
Speaker 1: that April May? Like how quickly did that start? So
Speaker 1: February March. By April we kept petitioning the governors, like,
Speaker 1: the governor, people want our product? Can we can we
Speaker 1: go into the warehouse? Can we just get a half
Speaker 1: a dozen people into the warehouse to ship the product
Speaker 1: that's on the shelf. And they said, okay, only half
Speaker 1: a dozen with protocol were a masked, take their temperature,
Speaker 1: social distancing. And then we put together a protocol. You know,
Speaker 1: we have a forty pag age book about this is
Speaker 1: the way we're going to reopen the business. And we
Speaker 1: showed that to the State of Pennsylvania and they said, huh,
Speaker 1: all right, you seem to be serious about wanting to
Speaker 1: get back into business. And I think that will help
Speaker 1: allow the State of Pennsylvania to say, hey, some of
Speaker 1: these firms that are really trying to be diligent about
Speaker 1: the virus should go back to work. So I've been
Speaker 1: working from home, but my dedicated colleagues who actually make
Speaker 1: the guitars are in the factory making guitars because we're
Speaker 1: back ordered. Okay, so let's talk about the kind of
Speaker 1: demand that you've seen. You're back ordered. Tell me what
Speaker 1: normal order is in a non pandemic world. Have bit
Speaker 1: we're like for you guys, and then what it's been
Speaker 1: like post pandemic and everybody's like, I'm home, I want
Speaker 1: to play guitar. So you know, from you go from
Speaker 1: Obama to trumpaconry has been pretty good and so you know,
Speaker 1: we benefit, you know, and people have some discretionary money.
Speaker 1: But this demand, and it's not just Martin. Everyone who
Speaker 1: makes some kind of musical instrument that you can play
Speaker 1: at home right now, they're back ordered. We're all we're
Speaker 1: all scrambling, We're all like, okay, we're trying to catch up.
Speaker 1: And and the real challenge is to allocate the scarce
Speaker 1: product that we have uniformly across our customer base around
Speaker 1: the world. Well, that's interesting, right, because you have global demand. Um,
Speaker 1: how many give me an idea where you know, Bloomberg
Speaker 1: weret into you know, how how many guitars and I
Speaker 1: know you guys have a bunch of different guitars, But
Speaker 1: how many can you produce in a week? And it's
Speaker 1: it all handwork, or it's a mixture of hand and
Speaker 1: it's a combination. My family's business has always respected technology,
Speaker 1: and one of my competitors I al ways say this honestly,
Speaker 1: Bob Taylor got to jump on us in terms of
Speaker 1: using computer numerically controlled routing machines which really make the
Speaker 1: early part of the manufacturing process very efficient. And we
Speaker 1: got religion. So I often joke when I give a
Speaker 1: factory tour that my ancestors if they could come back
Speaker 1: and see the factory that lay left me, their head
Speaker 1: would spin. Maybe, but they are ultimately they are put
Speaker 1: together by hand, right was no one. I don't care
Speaker 1: where you make guitars. No one has invented the guitar
Speaker 1: put it together machine. I love to get an idea
Speaker 1: of a business like yours. And you say you respect technology,
Speaker 1: and so it's a combination of technology and people putting
Speaker 1: the guitars together. I think you said you get about
Speaker 1: a hundred and eighty five out in a week. Talk
Speaker 1: to me a little bit more about that. Well, we
Speaker 1: have two factories. We have the main mothership I call
Speaker 1: it in nas. You know, my great great great grandfather
Speaker 1: started his business in Lower Manhattan at eighty nine, moved
Speaker 1: to Pennsylvania and then early in my career Crutton Street,
Speaker 1: if I recall, if I read it right, we opened
Speaker 1: up a sister facility in Mexico and Kia doora and
Speaker 1: so at that facility we make all of our Martin
Speaker 1: guitar strings, and we make what I'll call a medium
Speaker 1: Martin guitar, and so we actually do more volume because
Speaker 1: the price is lower. So we're doing about fo units
Speaker 1: out of that factory a day. Wow, that's I don't
Speaker 1: know where they're all going, but they're going somewhere. Well,
Speaker 1: it's interesting. So what do you expect? Do you you know, anticipate?
Speaker 1: I mean, you've got to feel good about the demand
Speaker 1: that we're seeing. You wish it was not against a
Speaker 1: health pandemic. But I think one of the things that
Speaker 1: we ask about a lot of businesses is do you
Speaker 1: anticipate that this continues? Because once the world opens up
Speaker 1: right all of a sudden, we have a lot of
Speaker 1: challenges for our time. Again. So yes, a good friend
Speaker 1: of mine, Brian Majesty. He and his brother have a
Speaker 1: trade publication music trades and Brian was involved last week
Speaker 1: in an event at our virtual trade show, and Brian
Speaker 1: made the prognostation whatever that word is. You know, he
Speaker 1: likes to analyze data and then from the analysis kind
Speaker 1: of tell you what he thinks might happen. And he said,
Speaker 1: I think that people, not everyone, but enough people are
Speaker 1: going to continue to work from home, maybe not every day,
Speaker 1: but often enough that they will still want to buy
Speaker 1: guitars because they have some free time. You know, in
Speaker 1: between work you're doing you're doing zoom calls all day.
Speaker 1: You've got twenty minutes break before your next call. And
Speaker 1: how many times have we seen we're seeing you know,
Speaker 1: someone on TV and doing a zoom call and in
Speaker 1: the backgrounds of guitar a lot of times. Yeah, so
Speaker 1: they pick it up. They got twenty minutes to just
Speaker 1: do something else and then go back to work. Well,
Speaker 1: I have to say my husband loves to play guitars, guitart.
Speaker 1: He has a few of them, Um, and he's got
Speaker 1: you can never have enough. I know that. That's what
Speaker 1: he tells me. I say that about shoes and that's
Speaker 1: why we have a happy marriage. Um. But he has
Speaker 1: a Martin and the acoustic sound is just pretty incredible.
Speaker 1: I think it's yeah, and it's just a beautiful sound. Um.
Speaker 1: You know, it's interesting too that I wonder and talk
Speaker 1: to me because you guys to a lot of things
Speaker 1: that we've talked about over the past two years, companies innovating,
Speaker 1: being disrupted, and I do wonder whether it's digital online
Speaker 1: if you're seeing you know, you grow your business that
Speaker 1: way even more because of what's happened the pandemic, And
Speaker 1: talk to me too about you guys are creating an
Speaker 1: earth guitar or an environmentally friendly guitar, which I think
Speaker 1: is another bigger trend that's coming out of the pandemic
Speaker 1: that we're all thinking a lot more about, especially as
Speaker 1: the world shot shut down right and all of a
Speaker 1: sudden there was clean air. We're just so the fires
Speaker 1: in California like they were just thinking a lot more
Speaker 1: about our environment. So the first question what we've seen
Speaker 1: at the retail level is the retailers that already had
Speaker 1: a robust online presence have done better than the brick
Speaker 1: and mortar retailers. Some do both. Some came from a
Speaker 1: digital world and then did brick and mortar. Most came
Speaker 1: from brick and mortar and did did the digital world,
Speaker 1: but the ones that can do both because people are
Speaker 1: going to want to go back into a music store.
Speaker 1: There's something about hanging out in the music store, playing
Speaker 1: the guitar, talking to other guitar players, maybe buying something.
Speaker 1: But in the meantime you can't do that. The other
Speaker 1: thing what I've seen in just in my career is that,
Speaker 1: you know, we use these are called rare exotic woods
Speaker 1: for a reason, and we need to find alternatives and
Speaker 1: we need to take better care of the rare exotic woods.
Speaker 1: And so we've partnered with the Forest Stewardship Council and
Speaker 1: they audit us. They come in annually and they want
Speaker 1: to make sure that when we say we've bought this
Speaker 1: would legally, they come in and they say prove it.
Speaker 1: We want to see the paperwork, we want to see
Speaker 1: the And so that's what the Earth Guitar is. It's
Speaker 1: a way of us saying you can buy these rare
Speaker 1: exotic woods, and you can buy them legally and correctly.
Speaker 1: And and that's that's what it's really all about. Is
Speaker 1: there's still illegal logging going on. There's still you know,
Speaker 1: would that gets sold nefariously. I want no part of that.
Speaker 1: And I don't think any guitar should have I don't
Speaker 1: think anything made out of wood should have any illegal
Speaker 1: wood in it. And so there's still a big concern,
Speaker 1: you know, and you look over you know, you look
Speaker 1: at some parts of the world and a hundred dollar
Speaker 1: bill will buy a lot of illegal wood. Yeah, I
Speaker 1: can imagine that. And listen the way of consumers, you know,
Speaker 1: they care about this stuff, and they're increasingly asking the
Speaker 1: questions for me too as well. So what is this
Speaker 1: believe in music week, So it was our we had
Speaker 1: to pivot. Normally would be our traditional big international trade
Speaker 1: show as part of our trade association in Anaheim. Can't
Speaker 1: do it right, not going to happen. And Joe, the
Speaker 1: CEO of NAM said, Chris, I don't want to sit
Speaker 1: this one out, I said, Joe, we can't. He said,
Speaker 1: if we sit it out, we're going to lose people.
Speaker 1: We're going to lose the connection that our association brings
Speaker 1: to all of the tribe. And so this was our
Speaker 1: digital show and what it's turned out to be. As
Speaker 1: Joe said the other day, he said, you know, it's
Speaker 1: not the same as a physical trade show. But boy
Speaker 1: in terms of connecting all of us. I haven't seen
Speaker 1: each other in a year. Yeah, it's done a really
Speaker 1: good job. That's Chris Martin, the fourth CEO of the
Speaker 1: Martin Guitar Company. Check out the full conversation on our
Speaker 1: podcast feed. And that wraps up the weekend edition to
Speaker 1: Bloomberg Business Week from Bloomberg Radio. Thanks so much for
Speaker 1: joining us. I'm Carol Masser and I'm Tim stanno Ck.
Speaker 1: Be sure to tune into our Bloomberg Business Week Daily
Speaker 1: show Monday through Friday, starting at two pm Wall Street
Speaker 1: Time on Bloomberg Radio. You can also watch our daily
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Speaker 1: at Bloomberg dot com, Apple or wherever you get your
Speaker 1: podcast and that's where you'll also find our extra podcast
Speaker 1: this week. It's with Arnold Donald, Presidency of Carnival Corporation.
Speaker 1: I caught up with him at Bloomberg's The Year Ahead Summit,
Speaker 1: a gathering of leaders really to talk about what's going
Speaker 1: on this year. Or find that conversation at Bloomberg dot com, Apple,
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Speaker 1: Me on Bloomberg Quick Take, available on Bloomberg dot com,
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Speaker 1: This is Bloomberg. Mhm.