WEBVTT - We Still Need Brick & Mortar Says Former Hudson's Bay CEO 0:00:00.080 --> 0:00:12.960 Yeah, welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 0:00:13.480 --> 0:00:17.560 Daily we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.680 Bloomberg dot Com, and of course on the Bloomberg Francine. 0:00:34.720 --> 0:00:37.239 Let's bring in our guest Julia Cornado with us UH 0:00:37.360 --> 0:00:40.720 to make us smarter as well. We've been talking through 0:00:40.720 --> 0:00:43.400 the morning, Julia about the Fed. How important is the 0:00:43.479 --> 0:00:47.080 vice chairman job? Dr el Arion was vetted to be 0:00:47.280 --> 0:00:49.480 vice chairman. Is it like a big deal to people 0:00:49.560 --> 0:00:51.400 like you? It can be a big deal. Yeah, I 0:00:51.400 --> 0:00:54.000 think the who the vice chair is will very much 0:00:54.080 --> 0:00:57.160 set the tone for the committee. Um, we know. And 0:00:57.160 --> 0:00:59.960 and the other important position is of course the President 0:01:00.040 --> 0:01:01.960 of the New York Fed, which we know that President 0:01:02.040 --> 0:01:05.839 Dudley will be uh, you know, stepping down and handing 0:01:05.840 --> 0:01:08.479 over the reins to somebody in mid year next year. 0:01:08.520 --> 0:01:10.000 So there's going to be a lot of change in 0:01:10.040 --> 0:01:13.240 the key leadership positions. And yes, it does matter, matters 0:01:13.240 --> 0:01:15.720 a lot in terms of how they will work with 0:01:15.800 --> 0:01:18.800 Chairman Powell, uh and what their views will be on 0:01:18.840 --> 0:01:23.520 monetary policy. Do you worry, Julie about communication that because 0:01:23.520 --> 0:01:25.640 you have so many new kids on the blog. I'm 0:01:25.959 --> 0:01:30.080 sure talk, you know, not too much or not enough. Sure. Well, look, 0:01:30.160 --> 0:01:32.759 the FED is still committed to transparency and I don't 0:01:32.760 --> 0:01:34.959 expect that to change. But as you say, just the 0:01:35.000 --> 0:01:37.479 fact that the cast of characters is changing could make 0:01:37.520 --> 0:01:40.360 it more of a cacophony and harder to sort through 0:01:40.400 --> 0:01:42.080 the tea leaves. So I think it is going to 0:01:42.200 --> 0:01:44.039 be you know, there was sort of a sigh of 0:01:44.080 --> 0:01:47.160 relief when when Powell was announced as as the successor 0:01:47.200 --> 0:01:49.800 to chair yelling Um on the idea that we we 0:01:49.800 --> 0:01:53.640 would have continuity and policy and communication. I think that 0:01:53.840 --> 0:01:57.560 is true for Powell himself, but for who will the 0:01:57.680 --> 0:01:59.720 vice chair be? Who will be the New York Fed 0:01:59.720 --> 0:02:02.200 press it in That will also be very important to 0:02:02.240 --> 0:02:04.040 setting the tone, and we just don't know. We just 0:02:04.080 --> 0:02:07.840 don't know who those people will be and what issues 0:02:07.880 --> 0:02:11.920 they'll be confronting. As unfolds, Julie, does the yield curve 0:02:11.960 --> 0:02:15.080 just keeps on getting flatter and flatter? H Yeah, And 0:02:15.120 --> 0:02:17.480 I think you know that's the current issue on the table. 0:02:17.560 --> 0:02:20.639 We saw that in the minutes last week that uh, 0:02:20.919 --> 0:02:23.799 one of The potential drivers of this is persistently low 0:02:23.840 --> 0:02:27.399 inflation and what should the FED do about this? So far, 0:02:27.840 --> 0:02:30.960 the choices have been easy because it's about getting off zero. 0:02:31.000 --> 0:02:34.680 It's about getting away from you know, ultra accommodative polity 0:02:34.919 --> 0:02:37.640 policy to something that's more neutral. But once you get there, 0:02:37.960 --> 0:02:40.919 or once you get closer, how much attention should you pay? 0:02:40.960 --> 0:02:44.200 How much weight should you put on persistently low inflation? 0:02:44.200 --> 0:02:47.680 The FETE seems like they're starting to rethink this notion 0:02:47.800 --> 0:02:50.640 that oh, this is all good, just transitory and going 0:02:50.680 --> 0:02:53.080 to go away, and and and starting to prepare a 0:02:53.080 --> 0:02:56.760 potential policy response if it sticks around. You really brought 0:02:56.800 --> 0:02:59.639 up and Francine frankly brought up something that that was 0:02:59.680 --> 0:03:01.240 a big it last week and I just in the 0:03:01.280 --> 0:03:04.280 blur this morning, folks missed it, which is the flatter 0:03:04.480 --> 0:03:08.239 yield curve. Does anybody in the profession worry that we're 0:03:08.240 --> 0:03:10.880 getting near the recession signal? I mean, you've got a 0:03:10.960 --> 0:03:13.919 run rate g d P under two percent, right, I'm 0:03:13.919 --> 0:03:17.840 gonna call that wicked gloomy, good morning, wicked gloomy, but 0:03:17.840 --> 0:03:22.200 but realistic, realistic, not wicked gloomy. But we also are 0:03:22.280 --> 0:03:25.640 getting towards a wicked flat yield curve or are we not? Ye? Know, 0:03:25.720 --> 0:03:28.040 well we are? I mean and and uh, the ten 0:03:28.120 --> 0:03:30.960 years seems very stuck below two fifty And if in 0:03:31.040 --> 0:03:34.120 lesson until that changes, uh, then the FED is going 0:03:34.200 --> 0:03:37.400 to be flattening out the yield curve even further as 0:03:37.400 --> 0:03:41.040 they proceed with normalization. We've heard a few FOMC members 0:03:41.240 --> 0:03:44.880 express concern about that. Now, I don't necessary I don't 0:03:44.880 --> 0:03:48.800 necessarily subscribe to the yield curve being a signal of 0:03:48.840 --> 0:03:51.360 impending doom. That might surprise you, since you think I'm 0:03:51.360 --> 0:03:55.400 so gloomy, but I actually don't think it's necessarily sending 0:03:55.600 --> 0:03:59.240 a recessionary signal so much as a signal of structurally 0:03:59.480 --> 0:04:03.520 low inflation and lower growth globally, meaning that you know, 0:04:04.720 --> 0:04:08.040 the ten year at two fifty two or close to 0:04:08.360 --> 0:04:11.760 there is not that bad a deal, Julie, Are you 0:04:11.760 --> 0:04:14.320 gloomy about inflation expectations? What do they do from here? 0:04:14.760 --> 0:04:16.800 So that's I think the key challenge for the FED. 0:04:16.920 --> 0:04:19.080 I think if you look at all measures, there is 0:04:19.160 --> 0:04:23.640 evidence of a break lower somewhere around. We just got 0:04:23.760 --> 0:04:29.839 settled into lower expectations, whether it's survey market um or 0:04:30.000 --> 0:04:34.320 or forecasters everybody sort of shifted down to a new paradigm. 0:04:34.360 --> 0:04:38.160 It's been stable since then. These measures, UH, and the 0:04:38.160 --> 0:04:42.000 Fed's challenges to keep them where they are and keep 0:04:42.080 --> 0:04:45.200 core inflation where it is and not lose further ground, 0:04:45.360 --> 0:04:47.359 because that is I think the key for them and 0:04:47.400 --> 0:04:51.200 the challenge for the next downturn. Can you keep inflation 0:04:51.240 --> 0:04:55.120 and inflation expectations anchored if we get hit by another 0:04:55.480 --> 0:04:58.880 recessionary shock, Julie, if we get the tax cuts where 0:04:58.880 --> 0:05:02.600 the tax cut posal plan, does that help with inflation expectations? 0:05:02.920 --> 0:05:06.080 It probably does. I mean, it probably will give a 0:05:06.240 --> 0:05:09.040 near term push to growth at least for a while, 0:05:09.360 --> 0:05:12.200 and that will probably you know, since we are at 0:05:12.240 --> 0:05:15.320 full employment, that will only pressure the labor market further 0:05:15.839 --> 0:05:18.359 and potentially bring forward some more wage growth. So it 0:05:18.440 --> 0:05:22.240 is inflationary in that sense, and the Fed UH may 0:05:22.480 --> 0:05:24.680 want to accommodate it to some agree to to get 0:05:24.720 --> 0:05:28.680 that inflation higher. Uh. There of course weighing all of 0:05:28.720 --> 0:05:34.920 this against concerns about market bubbles and and financial instability concerns. 0:05:35.000 --> 0:05:38.280 But um, but yeah, I think at the margin that 0:05:38.480 --> 0:05:42.159 it helps probably inflation and inflation expectations more than it 0:05:42.240 --> 0:05:44.880 does growth itself. Yes, So how do you get that 0:05:44.960 --> 0:05:48.400 three percent growth that that we know the administration wants 0:05:49.240 --> 0:05:52.880 look sustained three percent growth would require, given you know 0:05:53.440 --> 0:05:57.360 the building blocks of growth, our population growth and productivity. 0:05:57.480 --> 0:06:00.640 I am relatively optimistic that will see some better productivity 0:06:00.720 --> 0:06:05.000 numbers after a very very lethargic period. But we're looking 0:06:05.000 --> 0:06:08.359 at population growth that's projected to be about half a 0:06:08.400 --> 0:06:12.160 percent a year, and that's assuming no reduction in immigration. 0:06:12.560 --> 0:06:14.440 If we get a reduction in immigration, it will be 0:06:14.480 --> 0:06:17.159 even lower. So what are you looking at? Three percent 0:06:17.240 --> 0:06:21.200 productivity growth? That just doesn't seem realistic under any kind 0:06:21.240 --> 0:06:25.159 of investment boom that we might imagine. Is this eurosclerosis 0:06:25.240 --> 0:06:29.200 by any other name? It is a global phenomenon. You know, 0:06:29.320 --> 0:06:34.039 this is a population growth is slowing, populations are aging. Um, 0:06:34.080 --> 0:06:37.120 there is some tie between that and productivity. There's been 0:06:37.160 --> 0:06:38.960 sort of a mystery as to why all of this 0:06:39.000 --> 0:06:43.080 technological change has shown up in productivity numbers. But if 0:06:43.120 --> 0:06:47.159 you actually one of the implications could be that real 0:06:47.200 --> 0:06:50.520 growth is higher, but inflation is actually even lower than 0:06:50.560 --> 0:06:53.800 we're currently measuring, and so that's an even bigger problem. 0:06:53.880 --> 0:06:56.680 The nominee speaks this week, what will you listen for 0:06:56.760 --> 0:07:01.200 from future Chairman Powell. I think that uh. I think 0:07:01.240 --> 0:07:04.080 the current Governor Powell will keep it very close to 0:07:04.120 --> 0:07:07.240 the vest I think he's uh, he's got one of 0:07:07.279 --> 0:07:09.360 the best poker faces on the f O m C 0:07:09.600 --> 0:07:12.200 for sure. Always worth so much money. I saw a 0:07:12.200 --> 0:07:16.240 beautiful chart. I can't remember who bother me, not at all. 0:07:16.880 --> 0:07:18.640 Do we need a fed chairman that you know? It 0:07:18.720 --> 0:07:21.160 was like Trump has got more money than God. Does 0:07:21.200 --> 0:07:23.320 it make a difference. No, I don't think it really 0:07:23.360 --> 0:07:26.200 makes a difference. Um, I think I think what I 0:07:26.240 --> 0:07:29.559 am happy about is that Governor Powell has a healthy 0:07:29.640 --> 0:07:34.520 respect for the institution, has a deep understanding of the process. Uh. 0:07:34.560 --> 0:07:37.480 And and and he's committed. I think he's committed to 0:07:37.560 --> 0:07:41.720 getting the job done right and not playing with matches. Julia, 0:07:41.840 --> 0:07:44.680 thank you so much, Julia Cortonada. She brought in leftover 0:07:44.720 --> 0:07:48.480 Turkey which is just killer as well. Macro policy personpectives 0:07:48.480 --> 0:08:15.800 as well. This is a joy with us now the 0:08:15.840 --> 0:08:21.800 president First Data Corporation, Guysarillo with us as well, First 0:08:21.880 --> 0:08:25.680 Data of course thousand large out of New York and 0:08:25.680 --> 0:08:27.560 and and Guy, I want to go back to your 0:08:27.680 --> 0:08:33.760 storied career, it Chase. You were chief information officer, and 0:08:33.800 --> 0:08:38.280 you are widely accredited with hurting the cats into a 0:08:38.440 --> 0:08:43.400 room and creating the retail visibility of Chase. What was 0:08:43.640 --> 0:08:47.320 the first meeting like where you took Chase from an 0:08:47.480 --> 0:08:51.160 also ran to the retail juggernaut. It was when you 0:08:51.280 --> 0:08:53.560 left for First Data. You know, it was a great 0:08:53.559 --> 0:08:55.960 team there and Jamie led a great company and we 0:08:56.040 --> 0:08:58.280 decided very early on in my time there that we 0:08:58.280 --> 0:09:00.840 were going to be a digital leader. And at that point, uh, 0:09:01.000 --> 0:09:03.640 we didn't really have the branches fully digital. We didn't 0:09:03.679 --> 0:09:06.640 have a t M S fully digital, and we didn't 0:09:06.640 --> 0:09:09.160 have you know, a website, didn't while we had a website, 0:09:09.160 --> 0:09:10.840 but it was it wasn't what you would want it 0:09:10.840 --> 0:09:12.680 to be. And I think from that day in two 0:09:12.720 --> 0:09:15.439 thousand and seven when I started to the time I 0:09:15.520 --> 0:09:18.000 left in two thousand and thirteen, the focus was really 0:09:18.040 --> 0:09:22.000 to be digital everything and to iterate, iterate, iterate. And 0:09:22.040 --> 0:09:24.080 I see that now at First Data you've got the 0:09:24.080 --> 0:09:27.200 Clover system in that to to iterate, what do you 0:09:27.320 --> 0:09:30.920 iterated into? Are you iterating into charge cards being dead? 0:09:31.440 --> 0:09:34.439 You know? I think charge cards people will use a 0:09:34.520 --> 0:09:38.400 variety of formats as a combination of generational activity as 0:09:38.400 --> 0:09:40.079 well as just ease of use. So I think you're 0:09:40.080 --> 0:09:42.520 gonna see people tapping terminals, You're going to see people 0:09:42.559 --> 0:09:46.000 who are swiping cards. They're gonna be you know, transacting 0:09:46.040 --> 0:09:48.199 on their phones. It's pretty it's pretty natural at this 0:09:48.320 --> 0:09:50.720 I got the new toy, got it like three days 0:09:50.720 --> 0:09:54.400 ago as well. Is Tim Cook's no wonder child, your 0:09:54.480 --> 0:09:57.240 friend or enemy? You know, you never know at the 0:09:57.320 --> 0:09:59.440 end of the day. But they are really a consumer 0:09:59.559 --> 0:10:02.080 company and they are focused on ease of use in 0:10:02.160 --> 0:10:05.439 every way possible. I think payments integrated with a phone 0:10:05.520 --> 0:10:08.040 is a very is a very positive aspect. It's also 0:10:08.440 --> 0:10:11.680 a safer transaction in many different ways. And uh, and 0:10:11.720 --> 0:10:13.720 it's hard to know in this payments business who is 0:10:13.720 --> 0:10:16.080 your friend or not, but we are the collaborator, guys. 0:10:16.080 --> 0:10:18.880 Sharrolla with this with first day at Francy Loquix and 0:10:18.960 --> 0:10:22.000 London Francy. Yeah, guy, it was interesting too. You know 0:10:22.080 --> 0:10:25.160 what comes afterwards when you look at the kind of 0:10:25.440 --> 0:10:28.360 you know, the big takeaways. Um, and if you look 0:10:28.400 --> 0:10:30.880 at Thanksgiving like Friday, so overall spending was up at 0:10:30.880 --> 0:10:34.320 eleven point nine percent. Is it just because there's cheap 0:10:34.360 --> 0:10:36.240 and it's too much stock or is it actually a 0:10:36.240 --> 0:10:39.320 healthy consumer? No, I think it's healthy consumer. We saw 0:10:39.360 --> 0:10:42.400 that ten days prior to Thanksgiving and Black Friday being 0:10:42.480 --> 0:10:45.240 very robust. We've seen different things in different years, but 0:10:45.600 --> 0:10:48.400 it took nothing away from the holiday weekend that that 0:10:48.960 --> 0:10:52.760 activity was robust across retailers, electronics and appliances in a 0:10:52.840 --> 0:10:56.000 very very healthy way and carried forward right into the 0:10:56.040 --> 0:10:59.160 holiday weekend where we saw uh, you know, nine percent 0:10:59.320 --> 0:11:02.920 increase in total spend in retail eighteen percent and electronics 0:11:03.440 --> 0:11:06.600 uh and you know, a very robust spending year over year, 0:11:06.679 --> 0:11:09.679 no matter what category you looked at. Do you assume guy, 0:11:09.720 --> 0:11:11.120 And I don't know if it's wrong, just human that 0:11:11.200 --> 0:11:14.480 just e commerce. I think making up some twenty of 0:11:14.520 --> 0:11:17.280 Thanksgiving Black Friday will just continue so every year, if 0:11:17.280 --> 0:11:19.160 I speak to in one or two years, it's going 0:11:19.200 --> 0:11:21.959 to be up thirty percent and then and then it 0:11:22.000 --> 0:11:24.360 will finally reach that fifty percent mark. You know, I 0:11:24.360 --> 0:11:26.480 don't know where it levels off, but it's definitely has 0:11:26.520 --> 0:11:28.360 a lot of room to grow, a phenomena we saw 0:11:28.400 --> 0:11:30.199 all over the last couple of years. I've studied this 0:11:30.320 --> 0:11:33.200 pretty deep in a detailed way. In two thousand and 0:11:33.200 --> 0:11:35.559 fifteen and two thousand and sixteen. We saw these bumps 0:11:35.559 --> 0:11:38.200 and e commerce traffic during the holiday season, but it 0:11:38.280 --> 0:11:40.840 normalized when you went back into the first quarter. We 0:11:40.840 --> 0:11:42.839 didn't see that in two thousand and seventeen. What we 0:11:42.880 --> 0:11:45.880 saw that happened during the holiday season continued right through 0:11:45.920 --> 0:11:48.360 two thousand and seventeen. So people are more comfortable now. 0:11:48.440 --> 0:11:51.920 Your website always has the touchy feely little shop somewhere 0:11:52.160 --> 0:11:55.079 where first day of saving the day within transaction costs, 0:11:55.120 --> 0:11:57.040 I get, I get the you know that's what you do. 0:11:58.960 --> 0:12:02.440 How are you greeting Amazon when first data shows up 0:12:02.440 --> 0:12:05.640 at Amazon? What do you in team Bezos talk about? 0:12:06.120 --> 0:12:07.480 You know, there's a lot of there are a lot 0:12:07.480 --> 0:12:09.840 of different opportunities. It's and it's not just Amazon. It 0:12:09.880 --> 0:12:12.640 could be Ali Pay, Apple Pay, Google Pay. It doesn't 0:12:12.640 --> 0:12:15.679 matter where we show up our ability to process transactions 0:12:15.679 --> 0:12:17.599 in a secure and safe way around the world. So 0:12:17.679 --> 0:12:19.560 what do you do for Bezos? Actually, what we do 0:12:19.600 --> 0:12:22.360 for Bezos is process a lot of the Amazon transactions 0:12:22.360 --> 0:12:24.480 that come through the website, for Amazon Prime and all that, 0:12:25.040 --> 0:12:27.199 for a range of Amazon. We're not the only we're 0:12:27.200 --> 0:12:30.480 not the exclusive to Amazon, but we are a provider 0:12:30.520 --> 0:12:32.960 of those services in a variety of different ways, and 0:12:33.160 --> 0:12:37.600 you know, very successfully I hope to continues. Does Amazon 0:12:37.679 --> 0:12:39.760 try to get market share at all costs? I I 0:12:39.760 --> 0:12:41.959 don't know whether they're actually making you know, losses and 0:12:42.040 --> 0:12:43.520 some of the products that they sell just to make 0:12:43.520 --> 0:12:45.760 sure that people get addicted to their service. You know 0:12:45.800 --> 0:12:48.160 that we don't see. I think that Amazon is a 0:12:48.160 --> 0:12:51.200 is a great provider of products and services to uh, 0:12:51.600 --> 0:12:53.440 you know, two people around the world. And I think 0:12:53.480 --> 0:12:55.520 we see that again with a variety of our other 0:12:56.000 --> 0:12:59.320 large scale retailers and providers. So you know, they're they're 0:12:59.360 --> 0:13:02.040 a fierce come editor too many and you know, from 0:13:02.040 --> 0:13:05.160 our perspective, we will work to continue to provide safe 0:13:05.160 --> 0:13:08.080 commerce and transactions for Amazon and all the other companies 0:13:08.120 --> 0:13:10.800 we do business with around the world. Who can survive Amazon. 0:13:10.880 --> 0:13:13.319 So Toma disclaimer, I'm definitely a better mother thanks to 0:13:13.360 --> 0:13:15.760 Amazon because I pre buy everything it's waiting for me. 0:13:16.040 --> 0:13:17.760 But there must be things that people are too shy 0:13:17.800 --> 0:13:20.320 to buy on Amazon. You know, It's hard to tell. 0:13:20.360 --> 0:13:22.960 I you know, I don't look inside the Amazon baskets, 0:13:23.000 --> 0:13:25.800 but I believe that people are just getting comfortable in general, 0:13:25.840 --> 0:13:27.880 they order their food in advance and pick it up 0:13:27.880 --> 0:13:30.800 in a line. They order their retail in advance and 0:13:30.920 --> 0:13:32.720 have it shipped. As you know, it's a way of life. 0:13:32.760 --> 0:13:34.559 I mean, you and I are old enough. Francy's way 0:13:34.600 --> 0:13:37.520 too young to remember this. Where you bought American Express 0:13:37.600 --> 0:13:41.120 traveler checks and Carl Malden said, don't leave home without them. 0:13:41.679 --> 0:13:43.679 And you were a kid and your parents sent you 0:13:43.800 --> 0:13:46.319 out with this little lot of paper. I mean that 0:13:46.480 --> 0:13:50.800 was a transaction that disappeared. Is your world gonna disappear? 0:13:50.840 --> 0:13:52.520 I mean, are you staying up night looking at the 0:13:53.120 --> 0:13:56.400 College of New Jersey, Penance, You've got right on the bedroom. 0:13:56.600 --> 0:13:59.679 Are you staring there, going, Oh, one day they're not 0:13:59.760 --> 0:14:01.880 going to use the visa card of the master. No. 0:14:02.040 --> 0:14:05.520 You know, we love commerce. It's whether it's Visa, Amex, MasterCard, Discover, 0:14:05.600 --> 0:14:07.400 whether it's gift or EBT. We have one of the 0:14:07.520 --> 0:14:10.040 largest gift businesses in the country, and digital gift cards 0:14:10.160 --> 0:14:14.720 are are very robust. Um in from a euro excuse me, Francine. 0:14:14.760 --> 0:14:20.960 Those are exclusively used to purchase slime and slime materials. Caught. 0:14:21.000 --> 0:14:23.840 You buy like kilos of slim kilos. You can buy Elmer's. 0:14:24.400 --> 0:14:27.200 I wish I had the Elmer's Glue franchise for we 0:14:27.320 --> 0:14:29.480 love commerce. I think we love commerce and all and 0:14:29.560 --> 0:14:33.120 all formats. You'll take slime sales, not slime sales, but 0:14:33.200 --> 0:14:35.360 we love commerce. I mean, we're within this is the 0:14:35.400 --> 0:14:38.320 pressure to perform financially. What are you gonna do to 0:14:38.880 --> 0:14:40.720 really jumps? I mean you've come out of the bottom 0:14:40.760 --> 0:14:43.240 and all that and done better. But given a d 0:14:43.360 --> 0:14:45.960 P and the challenges with Mr Ackerman and all that, 0:14:46.120 --> 0:14:49.840 is there a pressure to goose the financials? You know. Look, 0:14:49.880 --> 0:14:51.920 I think in every business you have this pressure. This 0:14:52.040 --> 0:14:55.200 company is a huge transformation if you think about where 0:14:55.240 --> 0:14:58.320 we came from with billion dollars of that significant losses 0:14:58.400 --> 0:15:00.800 in the private equity space for a long time, one 0:15:00.840 --> 0:15:03.200 of the largest I P O. Still since October two 0:15:03.280 --> 0:15:06.720 thousand and fifteen, have transformed the company financially, growing the 0:15:06.800 --> 0:15:10.000 top line, improving the bottom line, expanding margins. I mean, 0:15:10.000 --> 0:15:13.040 we're going to continue to do what we have been doing. Fritzy, 0:15:13.120 --> 0:15:14.280 we don't care, we just want Are you going to 0:15:14.360 --> 0:15:17.440 create jobs in Manhaman? We're going to create jobs around 0:15:17.480 --> 0:15:19.320 the country and around the world. Yeah, oh see how 0:15:19.360 --> 0:15:24.600 he missed that? Did that? Frenzy? Where where guys, there 0:15:24.760 --> 0:15:26.760 is it? You know? Is it back office? Is it? 0:15:27.240 --> 0:15:29.880 What kind of jobs will you create? Are the quality jobs? 0:15:30.400 --> 0:15:34.360 You know? I'm hoping that the cyber related profession is 0:15:34.440 --> 0:15:37.280 a definitely an opportunity to create jobs. We are actually 0:15:37.360 --> 0:15:40.800 helping all of our merchants do the same. I think operationally, 0:15:41.160 --> 0:15:43.160 there are ways to continue to do things more and 0:15:43.240 --> 0:15:45.200 more efficiently. So I think that you know, those are 0:15:45.240 --> 0:15:48.600 those are opportunities to eliminate roles, while on the other side, 0:15:48.640 --> 0:15:50.760 the front end of the house their opportunities to expand. 0:15:50.880 --> 0:15:53.320 I had been three bad uber charges on my Chase 0:15:53.360 --> 0:15:55.680 account this weekend. I was going to call Jamie Diamond 0:15:55.720 --> 0:15:57.360 and complaint. Could you get it fixed for him? I 0:15:57.440 --> 0:15:59.960 think you should call Jamie, He'll help you. Call Mr Diamon. 0:16:00.240 --> 0:16:04.360 Very good, Thank you so much. Guy Ciarello with us 0:16:04.400 --> 0:16:07.320 with first day of Corp their president, moving the ship 0:16:07.480 --> 0:16:11.080 forward and really interesting within all the bitcoin and cyber 0:16:11.160 --> 0:16:34.600 currency is well to a great part of the Keene family. 0:16:34.720 --> 0:16:38.680 Francine September nine, two thousand and six was one of 0:16:38.720 --> 0:16:42.200 the darkest days in the history of mankind. This is 0:16:42.240 --> 0:16:45.800 when Marshall Field and the name went away of a 0:16:45.920 --> 0:16:48.840 building that was the fabric for part of my family. 0:16:49.360 --> 0:16:51.520 We're on it to bring you on this cyber what 0:16:51.800 --> 0:16:57.400 was it Cyber Wednesday, Cyber Monday. It reaches Monday branding, 0:16:57.720 --> 0:17:01.080 Geared Storage, Gerald Storch, which was if you know its history, 0:17:01.120 --> 0:17:03.800 Toys or Roast, Target and Hudson Bay and the rest 0:17:03.840 --> 0:17:06.639 of it. Stop it. Did you ever walk around the 0:17:06.720 --> 0:17:10.400 Marshall Field store at night when the lights were out? 0:17:10.480 --> 0:17:14.040 What a wonderful storage. You described the experience of the 0:17:14.160 --> 0:17:18.800 third largest thing in the world. Amazing, amazing building on 0:17:18.920 --> 0:17:22.400 State Street in Chicago. There and we bought it when 0:17:22.440 --> 0:17:27.720 I was at Target, and we set about to renovated extensively, 0:17:28.680 --> 0:17:31.920 bring back the old heritage. We hung the largest American 0:17:31.960 --> 0:17:33.800 flag in the world in the atrium because that's what 0:17:33.920 --> 0:17:36.600 they used to do. Bring We brought back all the traditions. 0:17:36.680 --> 0:17:41.120 What a beautiful, beautiful old building and what an enormous place. 0:17:41.200 --> 0:17:44.080 And talk about experience in retail, that was an experience 0:17:44.200 --> 0:17:48.159 that that's a nostalgia GM and you know the the 0:17:48.760 --> 0:17:53.080 just the Midwest retail, the Christmas Story, the comedy about 0:17:53.119 --> 0:17:56.879 the department, that's a nostalgia. It's all gone. I'm on 0:17:57.000 --> 0:18:01.280 my iPhone X buying something right now, do we need 0:18:01.920 --> 0:18:06.399 your world of nostalgia anymore? Well, my world includes the 0:18:06.480 --> 0:18:10.400 Internet and the Internet. It's a technology just like electricity, 0:18:11.000 --> 0:18:13.600 and we all use electricity in our businesses. It isn't 0:18:13.640 --> 0:18:16.920 just the exclusive domain of the electric utility companies. And 0:18:17.000 --> 0:18:19.440 so we're just at the very beginning of e commerce 0:18:19.520 --> 0:18:22.080 and of the Internet. It's going to change dramatically. So 0:18:22.160 --> 0:18:24.960 what we see is the traditional venerable bricks and mortar 0:18:25.000 --> 0:18:26.720 companies are doing a pretty good job of starting to 0:18:26.720 --> 0:18:31.280 bring the Internet into their businesses. Commerce is still done 0:18:31.400 --> 0:18:33.159 in the physical location. So what's gonna happen in the 0:18:33.240 --> 0:18:37.240 future is every transaction will have an Internet component, Internet 0:18:37.359 --> 0:18:39.200 enabled to one or the other, or you'll buy in line, 0:18:39.240 --> 0:18:40.959 pick it up in the store. But it doesn't mean 0:18:41.040 --> 0:18:43.720 we don't need bricks and mortar locations. We just don't 0:18:43.760 --> 0:18:47.200 need as many of them as we have now. So Jerry, 0:18:47.480 --> 0:18:50.120 when you good morning first of all from London, more 0:18:50.280 --> 0:18:52.159 you say we we still need bricks and mortars. This 0:18:52.280 --> 0:18:53.760 is what kind of like a showcase, you know. So 0:18:53.840 --> 0:18:55.560 I went to a supermarket for like the first time 0:18:55.560 --> 0:18:58.119 in like three years yesterday, um, and it was a 0:18:58.200 --> 0:19:00.639 lovely experience because everything I do is online. But do 0:19:00.760 --> 0:19:03.160 I have time to go back? Probably not so, Jerry, 0:19:03.600 --> 0:19:05.960 Is this when when people want to just, you know, 0:19:06.480 --> 0:19:09.639 do something different with the family. Is it a kind 0:19:09.680 --> 0:19:11.639 of show and tell? Or do you think people at 0:19:11.720 --> 0:19:14.159 some point will be fed up of shopping online and 0:19:14.280 --> 0:19:16.560 go back to bricks and mortars. Oh, I don't think 0:19:16.600 --> 0:19:18.680 it's getting fed up. I believe the internet is is 0:19:18.760 --> 0:19:23.080 revolutionary and it's transformational, but it's not transcendent. It doesn't 0:19:23.119 --> 0:19:25.200 mean it has to replace everything. So it's not just 0:19:25.400 --> 0:19:27.639 going to have a good time. It's also going to 0:19:27.720 --> 0:19:29.840 try it on to make sure that it fits before 0:19:29.880 --> 0:19:31.080 you buy it, so you don't have to go through 0:19:31.119 --> 0:19:34.040 buying twelve different sizes and returning the ones that don't fit. 0:19:34.359 --> 0:19:36.480 It's going to learn new things that you might not 0:19:36.560 --> 0:19:38.480 think about unless you walked in there. It's going to 0:19:38.560 --> 0:19:42.000 get a media gratification to have the product instantly able 0:19:42.040 --> 0:19:44.560 to walk out with it, and don't forget it still 0:19:44.640 --> 0:19:47.639 has superior economics to the online channel. This is what 0:19:47.760 --> 0:19:50.560 people forget when you when you buy something online and 0:19:50.640 --> 0:19:53.639 ship it to the home for home delivery, it's enormously 0:19:53.760 --> 0:19:57.200 expensive and this is why most companies do not make 0:19:57.320 --> 0:20:01.000 money on the physical home delivery of goods that are 0:20:01.119 --> 0:20:02.640 ordered on the Internet. This is kind of the dirty 0:20:02.640 --> 0:20:05.359 little secret of the Internet right now. But Jerry fits luxury. 0:20:05.400 --> 0:20:06.800 I mean, if you need a shop on you know 0:20:07.280 --> 0:20:09.680 here Old Bond Street or New Bond Street or Oxford 0:20:09.720 --> 0:20:12.119 Street in the US on Park Avenue, it's going to 0:20:12.200 --> 0:20:14.800 be more expensive than certainly getting a warehouse in New 0:20:14.880 --> 0:20:16.520 Jersey where you can just keep the stuff and ship 0:20:16.600 --> 0:20:18.840 it out. Yeah, but those luxury products are not going 0:20:18.880 --> 0:20:20.879 to sell online in that fashion. They want you to 0:20:21.040 --> 0:20:23.320 have the whole surround, have the high service, and you're 0:20:23.320 --> 0:20:25.240 gonna want the service to If you're going to spend 0:20:25.280 --> 0:20:27.159 a lot of money for something that's high luxury, you 0:20:27.320 --> 0:20:29.200 certainly want to know the person you're buying it from, 0:20:29.240 --> 0:20:30.840 have that kind of service, have someone who knows you 0:20:31.240 --> 0:20:33.639 who can help you pick it out. But the Internet 0:20:33.720 --> 0:20:35.920 is amazing, it's fantastic, and it will grow, but it 0:20:35.920 --> 0:20:39.080 will be integrating everything. Okay, down the income statement and 0:20:39.280 --> 0:20:42.119 now we're talking to Jerry Storg financial guy, which is 0:20:42.160 --> 0:20:46.879 really what he's famous for. Mr Londgren down in the 0:20:46.920 --> 0:20:50.560 Herald Squares making eleven twelve cents in the dollar he's 0:20:50.640 --> 0:20:53.520 cleaning basis, his clock basis is lucky if he's making 0:20:53.640 --> 0:20:58.680 nine sense, but as well, nobody cares since when is 0:20:58.800 --> 0:21:02.720 your business based on this sales growth fiction of Amazon 0:21:03.280 --> 0:21:07.399 versus valuing companies based on cash flow or something that 0:21:07.440 --> 0:21:10.080 on the income. There's no doubt that that Jeff has 0:21:10.080 --> 0:21:13.879 done an amazing job at Amazon, and people are betting 0:21:13.920 --> 0:21:16.440 on the future and what he's done, and so at 0:21:16.520 --> 0:21:18.840 some point, though, everybody has to make money. Now he's 0:21:18.880 --> 0:21:21.440 making a ton of money on the cloud. In other ways, 0:21:21.520 --> 0:21:24.200 it's helping to sort of cross subsidize what's going on 0:21:24.280 --> 0:21:27.720 in retail. Eventually, though, the bricks and watar retails will 0:21:27.760 --> 0:21:30.200 be smart. He'll be smart. You know, he bought Whole Foods, 0:21:30.280 --> 0:21:33.080