Bloomberg Businessweek Weekend - November 23rd, 2019

from the issue in this week's show. Also next week show we're gonna have even more. But some of the stories that really jump out to me at the Barclays story is so compelling. Yeah. Absolutely, And we also have some highlights from our daily show because we caught up. We talked a little bit about the elections women in the upcoming elections, how the pipeline is definitely building, so we'll talk about that. Also, apparently recession, don't worry about it.

It's all good here in the United happen three months ago, don't worry. That's according to our economics editor as well as the CEO of visa. Plus, we've got a conversation with the c of Tiffany after the news this week that Luxury Brand LVMH has entered talks to buy the jewelry maker. Apparently they up their bid and so now the two companies are talking. Talk about fortuitous because the year ahead Luxury this is an event that we do

at Bloomberg every year. They had already scheduled for the CEO of Tiffany to come in and he was gracious enough to stick around and really answer a bunch of questions. Much more of that ahead, but we begin with our top stories. A busy week in d C with impeachment hearings, trade talks, hitting a series of road bumps. Let's break it down with Ryan te beckwith in d C. So Ryan, help us understand everything that happened there in the nation's capital.

This was a long week and the sal The testimony on Wednesday established pretty definitively that there was at least one quid pro quo um holding out the White House meeting and exchange for investigations into the bidens um. San Land testified that he was not definitively sure that there was a second quid pro quo on the aid. But

that establishes this sort of pattern. And as the questioners, the Democratic questioners sort of made clear, a White House visit is an official act, which would be the statutory term for something that could be considered uh, a thing of value in a in a bribery case, So they could have is an article of impeachment itself, just on holding out the promise of a White House visit in exchange for a personal favor to of investigating the bidens. All right, Ryan, as you said, a very long weeks,

so we had the impeachment hearing is going on. We also had trade talks again. And I feel like I've said this so much over the last few years in terms of US trying to trade negotiations. Two steps forward, one step back. Where are we? I mean, it's it exists in a nebulous zone right now. Trump has been using Twitter to argue that Democrats should be somehow advancing

UH trade deal that he hasn't sent to them. Um. I actually think that the impeachment means that both on the domestic side, that both Trump and Democrats will want to do it. For Democrats, it's a way of saying, look, we're not just out to get Trump. Um, we'll work with him on something we can agree on. And this is one of the few things that they both agree on and have made some progress on. Like they agree on infrastructure, but they've made no progress on that. All right,

Ryan tick beckwith We're gonna leave it there. Thank you so much for wrapping up a very busy week in Washington. Well from DC to London. Story the magazine on how breaks its chaos. It's opening cracks in the U K's three hundred year plus union. Yeah, this is also going on this week, A televised debate and election campaigns also picking up momentum. Let's head to Lund and check in with Tim Ross. So much going on, busy here in the States, busy over in the UK. Let's talk about

the election trail on News from Eric. There was a lot of momentum, Tim, what's the momentum that we need to know about as investors. One of the moments the concept of party is still ahead comfortably in the opinion polls of Jeremy Corbyn's Labor Party. But in the first of the televised debates between Boris Johnson, the Prime Minister and tour leader, and Jeremy Corbyn, who is challenging him from a really quite a hard left wing socialist angle. They ended in a bit of a drawer. It was

a kind of stalemate. Everyone was really expecting Johnson, or most people were expecting Johnson to do well. He's a famous campaigner. He won the Brexit campaign for those pro leave voters in twenties sixteen. He's won two terms as London mayor, and he was picked really by the Tories as someone who could defeat Corbyn. But in that first

debate on Tuesday night it was declared a draw. Really in the first opinion poll that was taken afterwards, that hasn't really moved the dial in terms of where the

party stand. But Corbyn isn't doing terribly and Johnson isn't doing brilliantly at the moment, and so as we look ahead, it feels like we're working under the assumption there is going to be some sort of Brexit, and as we think about the implications of that, they are real implications if you look especially north of where you are to Scotland, and that figures into a much larger and maybe in some ways more limited future for the United Kingdom. Tell

us what you've learned. Well, as in the magazine this week, we have a story in there about the future of the UK potentially being at stake in this election. If, for example, the Conservative Party doesn't get that majority, and if the Labor Party managed to squeeze into power with the support of potentially the Scottish Nationalists who are saying they would they would help get Jeremy Corbyn into ten

Downing Street. That would give the pro independence campaigns in Scotland a really big boost, the kind of boost they haven't really had since Scotland voted in its own referendum in twenty fourteen on the question of whether to break away from the UK. Nicolas Sturgeon is this sort of tough firebrand leader of the Scottish National Party and she is very sure that Brexit means Poland must now get a vote on its own future and whether to break

away from the rest of the UK. And if she helps Jeremy Corbyn get into power, he might just give her that vote. That's tim ross. And like we kidded with Ryan T. Beckwith about how busy it was over in Washington and just the US at large, but it was really very busy over the UK as well well, and the next couple of weeks are really going to determine the fate of the United Kingdom in many ways. And if you look out two years, certainly ten years, it could be a radically different kingdom as it were

than we saw. This has been effectively in place for three years, right, a reminder it's not just about Brexit, but it's about really the fate of the UK going forward. So we talk often about the importance of building pipelines as a necessary way to create more diversity, more women in both the public and private sectors. Here with what we've learned since the mid terms and how she's working

to get more women in the pipeline aeron Loostro. She's back with us, founder and CEO of she should Run, and she's of course typically based in Washington, d C. She's back here in the Bloomberg headquarters, specifically in our Bloomberg Interactive Broker studios. So nice to have you back. Thank you, Carol. Um tell us about where we are when it comes to the prospect of more women making their way into elected office. Sure, so, uh, you know, I'll start by saying that a lot of folks are

particularly interested in was een a moment in time? Was it a surge that would pass? And what we're seeing in the numbers so far is we're sustaining the momentum, continuing to grow the pipeline UM. And I think there's some really interesting stories to tell that look quite different than twenty and even and so, Aaron, as you look across the success stories, what do you take away that that might be a through line? Obviously every race is a little bit different, but where have you seen things

where you said, Okay, we should do that again? You know. I think what's most interesting is that a lot of the research around with been running UM points to the need to recruit women, to encourage women to run for office. This is all still true. It's a mostly a man's game with his you know, record our majority men in office, it's not surprising to see men are more likely to be recruited. But what we're seeing that's different is that

women are now increasingly saying, Okay, I'm gonna run. I'm gonna run just like I am, and UM and the voters are hungry. I think UM for that variety. And and while we're not there yet, I wouldn't say we're totally normalized and seeing women in positions of political power. It's becoming more and more normal to see women to tell their stories. And I think as we continue to see that, we will continue to see more women's up war work. Because you said earlier, different stories to tell

than is that what's different? Yeah, you know, what's what? Two things that I want to plant. One is um, you know, we we absolutely see a record number of women on the ballot already. UM. What's super interesting to me is it's a Republican story. So UM, last year at this time there was a story of a record number women on the ballot, but it was primarily Democratic women. This year, we actually have registered to run UM for federal office, double the number of Republican female candidates than

we did last year at the same time. So, you know that we saw this in the In the outcome of the election in eighteen, there was little to no gain In some places, Republican women actually went backwards in their percentage of UM of political power, and so that's absolutely needed to change. You know. Look, I think there's there's a really high number of incumbent Republican men who have announced they're not running for re election, which opens

up I mean tremendous opportunity. It's really difficult to beat an incumbent on the Democratic side. What we're seeing is a record number of UM challengers to incumbents UM, which some could point to examples like Alexandra Casio Quartets and say not surprising, right, Well, because that was one where it seemed like the longest of long shots and then it happened. I mean, this is one of the most senior members of the House, Joe Crowley, that she of

course defeated. How does it being a presidential year change things? Obviously you get bigger voter turnout typically. Uh does that change your calculus at all who you go after, who you recruit? Yeah, I mean it does, and that I mean, look, women, since I think sixty four have been the majority of voters in elections, and that will I'm sure remain true this. Uh, in elections, do women tend to vote for other women? You have any research on that yet? No, I don't.

You know, I can't point to it because we talked about in the business community, even like female venture capitalists don't always aren't very supportive of other women entrepreneurs. So I just wondered if there's anything no and it plays out politically, absolutely, And I'd love to say that, you know, I'm not privy to research that you look at and say women are really tough on other women, you know. I mean, there's this issue that we face around women

running probably number one issues around likability. Women have to be likable. Men don't have to be likable. So what does that mean for women who are running um Women hold them to that high of a standard too around

likability and qualifications, so we're a long way to go there. Well, and I do wonder about likability what does it mean for a woman because I think I'm going to say I think it's more complicated because I think some people like women who are very successful and driven and career driven and strong, and some want them to be like the person you know, your next door neighbor who's watching kids.

All of it valuable. I'm not making any judgment call, but I do wonder what's likable in the environment like today or does it come down to policies and what they stand for. It really does feel like something you can't win, you know, if you if you're if you're too assertive, then that's that's no good. If you're you know,

too soft, Um, that's no good. And I think until we get to a place where we have critical mass of women serving in elected office and those examples to point to, we're going to continue to struggle with this. So you mentioned uh, Alexandro Castio Cortez, who obviously has become our pbably one of the most prominent politicians in America. There is this whole notion We've talked about it a lot on this show, the whole notion of you know,

if you can see it, you can be it. That that idea Nancy Pelosi sort of coming back to being one of the most senior politicians in the US. Has that changed the calculus at all? And this crop of new women legislate tours, what is the ultimate impact there? Yeah, Look, it's the it's the most diverse Congress that we've ever seen, and it absolutely changes who who's thinking about running, who who looks forward and says, um, you know, maybe maybe I can see myself in that role we and she

should run. Focus primarily on women who are running at the local level, and that's where we see a huge effect because you know, when you when you sort of only see one type of person serving in elected office. You look at that and you say, no way, that's not me, No chance, I'm not qualified. You go through all of the issues. But as we continue to diversify that that representation, I think, you know, it's anybody, it's

anybody's game. Then well, and I do wonder about you know, but there's a stat in some of the research that you sent over that the World Economic Form recently rejected that we are a staggering at two eight years away from gender equality in the US. UM. That just hurts me so so much. UM. In terms of what you're seeing politically, do you feel like though, and the momentum, as you said, it feels like it's really really strong. Um. Could we see parody a lot closer in terms of Congress? Yes,

My hope is that there's a snowball effect here. Absolutely, we continue at the rate that we're at, it's going to take a really long time. This will not happen in our lifetime. But you know that we we actually just launched a program called Role Call that gets right at this, which is, UM. What we saw of individuals coming to us is, you know, across the board, people who are catalysts within their business, within UM, you know, within their education setting, within their communities that said, we

want to do something to be helpful. But um, but but I'm not the candidates, So what can I do? Right? And so what we've done is build the platform to say, look, we're if we want to solve this in less than you know what the World Economic Forum is telling us, then we all have to step up and do something and those little some things will add up to something really big. That's Aaron Lows Catrero, she's the CEO of She should run. And you know the work that they've

been doing. It's all about getting more women to step up to the plate to consider running for office. And that's what it is. Building the pipeline, and we sought payoff in the mid terms. We've see it playing out and they're working harder than ever for the upcoming election. Curly Holdings beating revenue estimates, reporting its second consecutive quarter profitability. It's indicating that the large U S pot companies man

they are outperforming their Canadian counterparts. Let's talk about the business, the quarter, the outlook. Borce Jordan is with us. He is UM executive chairman at CUA Leth're based in Wakefield, Massachusetts. Nice to have you here with us. Good quarter. Yeah, it worked out for us, Hey to continue. Yeah, I think you know, we're seeing substantial growth in the US. Most of the companies are growing around twenty five to

thirty five quarter on quarter. I don't see that abating any time soon, to be honest, because we're still very early days. And more importantly, I think you're starting to see inflection points in a lot of the big companies, at least a purely if we saw it in the last quarter, and we're starting to see increases in profitability quarter on quarter, what's it? What's what's making that possible that? You know, it's just the it's really about scale, size

and investment. So you know, we spent the last five years investing heavily building it all out, taking a lot of losses on those investments, obviously in the early days. But now that those investments are at scale, we're starting to see the benefits of that investment period, and every quarter more and more goes to the bottom line. Uh, there's a lot of deal making, it feels like going on at your shop and elsewhere where. Are we in

that process? Of acquisitions, expansion, etcetera. I think you're going to see a slowdown and major transactions because I think there's an issue with appital right now. As you know, this sector has been down and beating up pretty hard over the last six months, largely due to Canadian performance and due to the fact that the Canadian market historically has been the bell weather market for for cannabis stocks. We've sort of followed suit with them, even though our

companies here have been performing much better. We hope that that trend will break in the U S companies will start to outperform, but for the time being we've been basically tied at the hip with the Canadian companies. It was interesting. It was a reminder to all of us

at the year ahead. Joe Is already sat down with me of our cure LEAEF of course, and talked to us and saying reminded us that in every state, because of the way the law is right now, you've got to set up your integration from A to Z. Right you can't kind of do it across states because it's illegal to do that. And I do wonder that if we can figure out some kind of federal legislation. What

would that do to the growth of your business? Well, I think first of all, we actually got a ruling from the Judiciary Committee in Congress, first time Congress has ever ruled on legalization of Cannada. So we have had a vote and it was able to get something. So so there's definitely something going on. I think that if they can take their mind off impeachment for five minutes,

maybe we'd actually get some legislation in the country. But I listen, I think that the market would the industry would change for sure, So I think growth would go exponential. But I think that what mean does that mean? Because because today it's only thirty three don't forget it's only thirty three states in the country that are are are

either medical or recreational. There's only eight and are recreational, and so that would mean the whole country it would be free to be able to trade by cell cannabis. So obviously that would be tremendous growth to the sector.

But because everybody is siloed at the moment um, I think that it would depend on how the legislation comes through, whether the states continue to hold power over licensing, or whether that would go federal and I think that that that's the big unknown, and which is why I think if you ask anyone in the sector, they would prefer slow legalization, so in other words, not in one day, but over a period of time, so that the industry could adjust to what the new rules. A perfect examples

would happen with hemp. Right, congres came out legalized hemp, and now you have a total catastrophe in the market that hemp rotting in fields in Kentucky because there's no rules for CBD. I mean, hemp in and of itself isn't a particularly interesting product unless you can use derive CBD from it. But they don't have any regulations on CBD, so it's all the CBD sales are down and you've

got hemp brought in. Because if FDA hasn't come out with rules, and the FDA is giving it an indication, it could take two years to come out with rules. So that's what we're hoping doesn't happen in cannabis. You know, you worked on Wall Street back in the day where you worked in emerging markets, you worked for kid or you worked for Credit Swis. It feels like we've been in this couple of years with investors trying to figure

this market out. Do they get it at this point and how or if they don't, what's it gonna take for people to fully understand the opportunity and maybe some of the complexity. So the difference I I like to use the example of emerging markets, and I was a very early investor in a lot of the emerging markets.

And the difference between emerging markets and this cannabis market is that there you basically knew that as the country progressed, as the country wrote more legislation, as the regulators became more sophisticated, the next wave of capital would come. The issue here is that the industry is actually quite sophisticated. The regulators are there, but it's federally legal, so a

lot of money can't invest. And that's why you're seeing US tied to the Canadian stocks because there's a lot more eyes on Canada, even though the industry is damaged and it's a lot smaller than the US companies. But everyone can invest in Canadian stocks, whereas not everyone can buy the U S stocks. So what's the reality in terms of a timetable that we do get a federal regulation,

you know, on cannabis. We are pretty comfortable that the votes are everywhere for Safe Fact, which is the Banking Act. So if that happens, that will be the first step. The second step will be States Act, and if we get States Act, then the next step after that will be full legalization. Uh. And I think that we have a chance of getting Safe Fact December January. Really we have the votes. It's a question with do they have

time with impeachment to actually focus on legislation. And that's Boris Jordan's he is the executive chairman of cure Leaf. Talking with him obviously about the numbers they reported earnings this week, but the broader opportunity in cannabis US versus Canada, even getting in a little bit to the vaping controversy that has really consumed the public health debate of Right and his expectations in terms of the regulatory environment which

could really open up the industry. The UK Supreme Court weillll the hearing next week involving Barkley's Bank and the issue of responsibility involving a group of Barkley's employees. It's a very specific case, a disturbing one, and it's a case with an outcome that could have implications for the gig economy Jason. It also raises questions too about Wall Street responsibility and getting away with something. Once again, Max Abelson is here with us in New York. This is

a story he's been working on for some time. Max, great to see you. Thanks for having all right, So tell us how this story came about. I mean, honestly, it was a long time ago. A couple of months have on buy since I was sitting on my Bloomberg terminal and I saw a story by Kay Wiggins, who's a was a great legal correspondent here. She since left Bloomberg News. UM. She writes in England about the lawn.

She wrote maybe a four paragraph story that said that a group of claimants, which are what plaintiffs in England are called UM, said that when they were teenagers and they were applying for jobs at Barclay's sort of low level branch jobs in Newcastle, which is northeast city in in England in that area, they said that Barclays said, Okay, you have the job, but you have to go see a doctor. And you have to go see this doctor's name is Gordon Bates and you have to go to

his house. And these people said that Dr Bates um sexually assaulted them, um about a hundred and twenty of them, and they wanted to hold Barclays responsible because Barclay's had sent them to him. And they won, and then Barclay's appealed and they won again, and bar Please appealed again to the Supreme Court, and this news item said the Supreme Court is going to be hearing this really interesting case.

So I called k Up and I asked her, do you think that this might make for an interesting feature story? And she said I think it would, and we started working on it. And one of the first things we did is we got in touch with the court system in England and asked them for court documents because it's such a fascinating story, but it hasn't gotten a lot of coverage, and sometimes court cases don't in England, UM, where the coverage of sort of current legal questions are

often quieter than than in America. We got permission from from the court, and in fact we got through the court really really fascinating documents that shine a light on how this happened. Fascinating, disturbing, fascinating and disturbing. I mean, this wasn't This was an upsetting story to work on this, there's no doubt about it. And I'm sure it's an upsetting story to h to read, and I might even be upsetting for viewers and listeners to to watch now

and listen now. But UM, what was really special is that we got, um, a couple of people who had worked for Barclay's and were sent to Dr Bates to talk to us and to share their stories and what the story is about. On the one hand, it's about these visits, debates and what ended up happening to These are two main characters who we call James and Anne, not their real names. Aren't their real names. The court

ordered us not to use their real names. Um. It's partially about that, which is upsetting, but it's also, um, I think, a complicated and rich story about UM, it's really fascinating question of when a company has a responsibility to their workers and in this case, Barclays says Dr Bates wells and our employee. He was just a you know, essentially a contractor. So we're sorry if anything bad happened,

but not our fault. But they sent Barkley's sent possible employees to him, or once they were employe ways to him for many many years like this went on for a long time, Carol went on for a long time. So it started in the late sixties and it ended in the mid eighties, and a few years later Barclay's says they stopped sending people to the doctor. You know, why they would send them to the doctor in the

first places. A question you might have. They say it was, uh, make sure they were fit to work and have fit for you know, insurance. Um. You know. Barclay's um says that, um, you know, we only found out about this in around two thousand thirteen when people started complaining. UM. But without giving way too much because I hope folks read the story.

We have a court document that includes allegations, UM that you know, half a dozen more than half a dozen people and their parents called Barclay's um, called managers, called human relations people to say something really bad happened here, and it happened start as early as the late seventies and into the eighties, but Barclay's kept using bits and Bates has since passed away. You spoke with his family for this story. You reached out to his family. They

ultimately didn't comment. Cordon Bates is dead. He died in two thousand nine. His son is Nigel Bates, who worked for Barclay's for thirty two years. According to something I just found in court documents. Actually, um, you know, I emailed with him a bunch. I you know, when you're telling a story like this, you know, of course deeply interested in the accounts of the people who saw Bates. But you know, I have to say, just as interested

in the perspective of Barclay's. Um didn't who didn't comment? Essentially they said that they wouldn't answer questions while the case was ongoing. But I also would have loved to speak to the family, and if Gordon Bates were alive, it certainly would have wanted to speak with him. Well,

and I do. Let's get into like this whole idea of you know, whether or not the firm takes for responsibility for folks who were their employees, meaning the people who worked for them, right, and what happened to them by by someone who was not technically a Barclays employee,

And it gets to the heart of responsibility. That's actually right, I mean, in a way You know what we do here by chronicling capitalism is we follow the ways things change and the ways the relationship between companies and their customers but also companies and their employees changes. Right. And you know, when Bates was alive, he would not have recognized this whole new kind of economy. You know that

you have uber Um, you have delivery in England. Um, it's a it's this gig economy where these giants, these multibillion dollar companies have saved a lot of money. They've saved both the cost of having to pay people on the one hand, and they and they save legal liability on the other by saying these people are not our employees. They are freelancers who are applied patform for freelancers. We're not We're not employers. And in this case, Um, the

fight is similar. The fight is to hold Barclay's responsible or the legal word here is vicariously liable. And vicariously vicarious liability is sort of a boring sounding phrase, but it's so interesting because it's a way of saying that you are vicariously liable for something he did. You know, Barclays in a way is in some sense an innocent party here as as a judge might describe them, because

Barclay's as an institution wasn't in that room. But the question is are they responsible for what happened in that house in Newcastle? And what precedent might that set for the economy that we now live in. So as I read this, and Carol and I have talked a lot about this story because I think we both were just

knocked over by it. It's a powerful piece of journalism, to say the least, and and the fact that you Max worked on it really called to mind, I think for me, and I think for Carrol as well, sort of the whole body of your work, which in part is about Wall Streets culpability across so many things. You know, here we are eleven years on from the onset of the financial crisis, and at a time when politicians, candidates for high office are talking about these issues of will

hold on a second? Who's ultimately responsible? And I think it's fair to say there's a pattern of behavior across Wall Street and financial firms where they kind of get off on a technicality. And as I read this, I saw through line through a lot of things that that you've written about this and I wonder how you feel about because people were hurt here, people were hurt, and so where do they get their justice? Well, you know, that's just about one of the most interesting questions about

my work that I've ever been asked. I find it very moving that you connect this st other stories that I've worked on, and you know, it's something that I have to as a reporter, working with my editors like Robert friedman Um and with my colleagues like Kanski. She and I wrote this story about Cantrafraser and the woman who had a Bernie Sanders mug in an office in New Jersey, and she opened up the cupboard one day

and she found feces in it. She says, in that case, Canter frich Gerald, when sued by this woman, basically said,

you can't sue us. You signed an arbitration agreement, right, And in that case, the question of um the arbitration system, the question of vicarious liability kind of merge in my mind in exactly the way you're talking about you know how, If if one question readers and viewers and listeners might have is you know how and why I have these powerful institutions gotten away with whatever bad behavior has happened,

certainly want to answer that. Um. You know, the kind of thing we talked about in the newsroom is it's almost as if each story, or each loss SUITUM, or each interview shines sort of a new beam of light on you know, something that sometimes we we've begun to talk about is like this, like this machine, you know, like a machine of silence, UM, that keeps things quiet. And you know, we have to be fair to these companies because of course, you know, in the canterfis Gerald case,

they just simply deny it. They say it's not so much a matter of a machine of silence. They would say, it's just that nothing bad happened. And a lot of powerful people on Wall Street field that way. That's Max Abelson and this story, Man, it's a disturbing one. It's a case with an outcome that could have implications for the gig economy. But you know, Jason, you and I got into it with Max. It really digs into also

Wall Street accountability. I have to say, this story and that conversation with Max has really stuck with me since we sat down with him in the studio. I know Max pretty well. I've worked with him on stories and his journalism. I feel like it is some of the

most important and powerful that we do at Bloomberg. It goes to the core of who our audiences in many ways, and goes to the core of the story of Wall Street over the past two decades, and constantly uncovering difficult situations, particularly within the financial community, and really getting out there some things that people don't want to address. But he's really uncovering a lot of important information, some big news this week. In fact, we've been following this deal or

potential deal for the last few weeks. LVMH and Tiffany they officially have entered talks after the French luxury brand up to its offer for the US jeweler and you, Carol Masser caught up with the CEO of Tiffany, that is Alessandro Boliolo here at the Year Ahead Luxury conference at Bloomberg headquarters. All right, so let's do the elephant in the living room. So everybody's been reporting about LVMH. It sounds like you guys are finally officially talking. Is

that fair? We have six keys pies, and the first one is to amplify your brand message now by amplifying our what brand message. I was not meaning to the about M and A in a conference, so maybe I can expend on other point. I will, and I'm not going to push too much because I know there's a

lot of stuff going on. But I do wonder about when we look at the luxury space, is there something to be had by being part of a bigger conglomerate like LVMH And I'm curious, you've been at the company now for two years, right, and you've been rebooting stories, reworking a strategy, introducing lots of lines. Is M and A is a deal kind of part of the plan. Well, I have to say that there are many luxury brands, but when you talk you take really top luxury brands,

the big let me say mega brands. We talked about a handful of brands and among those who have actually some of them extremely successful that are part of big groups. Consider we don't considered Cartier. But you have other brands that are super brands, super powerful that are not part of groups. Consider Channel consider her mess. So honestly, I mean, seriously, I don't think that for this is a kind of

level of brands. There is a magic formula. It could be, it's proven, it can be one way, can be the other. What is crucial is that when you lead a brand like ours that has one of the day two years of history, you at the end of the day have to concentrate on the legacy that you receive and the beautiful product and promises that you made to your customers. This is really the key of success. Then the financial arrangements, as I said, I mean, can be successful one or

the other. What is important customers. They don't care about your shareholders. Customers care about your products, about your brand, about sustainability, about the beauty of your products. This is what really makes success. It's interesting that you say that to Alessandro. I think we're in a year where we are so much debating public private markets, right, and I think companies are evaluating the benefits and pro or the

pros and cons of staying private versus not. And I do wonder, can I just indulge me for a second. A Bloomberg opinion piece today, and it said um one of our writers said a deal would benefit both sides. For the owner of Louis Vuitton, it would mean dominating the jewelry market. I mean it would automatically give them a huge presence, while Tiffany could avoid the tricky task of executing a turnaround in a US recession on its own. So I do wonder about being able to step away.

We're part of the problem. We focus quarter to quarter to quarters. So when you're doing renovations on stores, when you're thinking about the future, you know, you get a report card every three months, and I think sometimes it makes it difficult for a publicly health company. Would there be some benefits from stepping away from that public spotlight? For sure? For any public company to be necessarily to

be a reporting every quarter, there is of course. It's it's a check that you have to go through every quarter, and we take it very, very seriously because it's our shareholders and it's our obligation to not only report, but

also deliver results to the benefit of our shareholders. Having said so, I think, as a leader of a brand with such a history which means value, to maximize that value I have and my team, we have to look at the quarter, but we have to look even more at the next three years, at the next five years. So this is if you want the real challenge in managing a brand with a legacy like like Tiffany, because you have, of course to maximize the profit for your shareholders.

But this doesn't mean that is just the sum of ten good quarters. You have to think about the next ten years to our questions that I'm gonna move off off of Whenever it was on everybody's mind, Are you open to a deal? We could have a deal if all the Advent calendars went didn't already sell they are also doubt otherwise I would Advent calendar idea. I would offer you as a deal, beautiful Advent calendar to avoid this question. Unfortunately that also died. But if I opened December,

would it say a deal? You know, they didn't share with me what there is in Sember twenty for but I will tell you on December twenty five. That's a Los angel Boleolo, the CEO of Tiffany and Company. And it was a good sport to talk about the potential for a deal. But we really dug deeper too into what's going on with the luxury space. They're making changes at their wars, not just in the US their flagship

in New York, but also around the globe. They've been hit by some of the tensions because of the U. S. China trade war, so a lot to talk about. Well, and I feel like in a week where we got so many earnings from retailers and conflicting reports, really an interesting deep dive into the world of luxury. So I'm stealing the words of our economics that Peter Koy, because he reminds us and writes this week about three months ago the US economic gallic, Well it didn't look so

good today. Definitely a different feel, and investors definitely reacting accordingly. They've sent to US equity averages to record highs. Yeah, so what do we make of all this? Peter Coy is with us himself here in our New York City studio. As you looked at this, you saw a very different picture we all did in August. It's really amazing what the heck happened? You know? This equity markets, I think tend to overshoot very often, so both on the downside

and the upside. So it could be that things were not as bad as we thought in August, and it could be there not as good as we think now. So do they take take stocks with the grain of salt? That said, there are some changes since August. You know, I picked out one day in August when the the Dow Jones Industrials and SMP five hundred both felt like three in one session, and the thirty year Treasury bond hit a record low. It was like recession talk was

in the air on our TV, you know, everywhere. Uh So, what's happened since then? Well, one thing is that the FED had already changed its stamps even at that time in August, they had they had already put through one great cut. They've done two since then, and that's huge. The most powerful central bank in the world, the European Central Bank, resumed buying securities to drive down the long end of their yield curve. We see the bank which hand maybe not as aggressive, but you know, keeping their

policy rate in negative territory. So I would say monetary policy is the single biggest change since then. And then you can feel in a lot of things around that. But if it hadn't been for that, we'd probably still be in a world of hurt. Well, I think that's really key. Right, go back almost a year last December, right we were talking about the FED raising exactly several times. That was the December was the last injuries, but but Paul was still talking about how yeah, we have more

and more more to come. In twenty nineteen and December Christmas Eve was a massacre in the stock really bad. If you go back and look at the history of the stock market, then it's like a deep v And then everybody took off for Christmas and came back with bright smiles and their faces. And the day after stocks shot up because I think something happening around then where the Fed kind of changed its mind a little bit, and and that got That was the beginning of the

route we're in now. But we do we have you know, you talk about recession. We focused a lot on that two year and ten years spread in the treasury market, where we did see an inversion of the yel curve, and we've seen that in the past. So the inversion, of course means that the ten year yield falls below the two year yield, which historically as an indicator recession

is coming because you know, usually long term racer. So um, it didn't last very long though, it was gone within two weeks, and we had a re steepening of the yield curve, which is a positive sign uh in ordinary circumstances for the economy. Um, it means that conditions are normal basically, and tell us about how geopolitics plays into this,

because it's something we obviously all watch very closely. Uh. It's not a super optimistic world to your earlier point, and yet on a relative basis, the world feels a little bit better or better enough, better enough. That's high praise. Right. The trade war has not devolved into as bad as it could have been. Trump's pulled back or delayed on some of the tariffs on China, and we still don't know how that's going to turn out as we sit here, but it just is again, it's not as bad as

it could have been. Meanwhile, Brexit, Um, I'm not saying Brexit is a major influence on the world stock markets, but it's one of those things that you worry about, and it appears as though they're pulling back from the brink.

Is less likely to be a hard, messy, uncontrolled Brexit. Well, one of the things you point out, which I think is really important we talked about all the time on our daily show, of which you are a frequent guest, is this notion of business spending and and that is something that has been tailing off for the last year in eighteen months, and you quote somebody in your story essentially saying that maybe the big question and the answer to that question may determine whether we are able to

sort of continue on this ride for longer. Right. That's that's the flying the ointment. The consumer is really strong in the U S. U S. Consumer had to pick one force in the entire global economy, it's the U S consumer out there still spending and but support in a in a sustainable way because real wages that is adjusted for inflations, have been rising and unemployment is super low, so people have spending power. They're not caring a lot

of debt. The question is can this keep going for a long time if businesses are cutting back because businesses cut back on spending, maybe they've gotta cut back on hiring. Maybe some of that UH, the income of the consumer will eventually trail off. Now, h Eddie ar Danny Danny Research, one of the really smart guys on Wall Street, was telling me that he thinks that the downturn and capital spending is UH is misleading because it's a lot of us to do with the oil patch, you know, is weak.

So if you take that out, things kind of look better, and tech healthcare are doing relatively finance to which are key areas. So um, but that it remains to be seen.

That's still an open question because I do feel like we we did hear some caution on earnings calls from CEO is essentially saying, you know what, I'm pulling back a little bit, or I'm not spending on that new factory, or I'm not expanding maybe as aggressively as I could right And historically capital spending is much more volatile than the consumer spending. Spending is like, yeah, it tends to

kind of rise gradually. Spend is all over the place, So that's what you want to pay attention to, even as though it's not as big resumer spending, it can kind of be the thing that wags the tail that wags at dolls. And I think the magazine has covered that. When the longer you get into an expansion like here we are the longest US economic expansion on record, longer that you're in it, that to keep it going, that's where capital expenditures usually typically coming towards the end and

give it that last kind of umph. And I wonder if that's the case here. Well, this has been such a long cycle. It's in its eleventh year now, the capital spending has had its own mini cycles within that, We've had our ups and downs, and if we get another up here, it could really be good news for keeping this thing going well into its eleven twelveth year and be a great thing far as economic growth. That's our Economics editor Peter Coy talking about recession fears and

what's fascinating. He's absolutely right. Go back to late August, just three months ago, and everybody was talking about recession. There were concerns about, you know, more rate increases, Where was the economy going, what's going on with the consumer? Here we are today, everybody's not so worried, Jason, right. It's a really interesting look into how far we've come in a very short amount of time and how much was weighing on us a few weeks ago. Are those

fears completely evaporated? I guess the rest of the year will tell us. So. This week in Business Week talks Al Kelly, he's chairman and CEO of the world's largest payments network. We're talking about Visa three point three billion visa cards and use full disclosure. I've got one or two, um more than two countries. Al thank you for joining us.

Delighted to be here, Carol, thank you. I have to say, what's great about talking to someone like you that's got such a global perspective is you do have an incredible vantage point about what's going on in the world, what's going on with consumers. So tell us what you're seeing. Actually, you know, despite all of this thought that there was a recession coming, we don't see it. You know. In fact, our fourth quarter numbers, which for US were September thirty numbers,

were better than the third quarter. In the US it was up eight percent, the internationals up twelve percent excluding China, uh, Europe upcent when you exclude the UK, which has done a little bit of self inflicted wounds. To what's wrong with everyone that we're talking so much about recession. I think it must just be the cycle. You know, It's been a long time that we've had this up swing, and I think that people just look at the street and say it's it's got to go down at some point.

But you know, the consumer has stayed extremely strong around the world. The only place we see any weaknesses in the UK, and as I said, that's kind of related to the whole Brexit situation. But other than that, the world looks pretty darn good. And so let's talk about consumers and go a level down because you have more insights probably than almost anyone into where they're spending, how they're spending, what they're buying, what are they buying, where,

where is where's their money going? Is it experiential? Like everybody keeps saying, well, and in our world, there's a couple of things that are really driving the increases in the number of transactions we're seeing. One is obviously e commerce. You know, people are jumping on their phones and jumping on their iPads and jumping on their computers and and buying in big ways. We're seeing every month those numbers.

The growth in eCOM is anywhere between two and three times the growth in the face to face world every every single month. Uh. We're also seeing people continuing to travel. Uh. There was a real downturn and travel in December and January. If you remember, that's during the height of the U S. China trade talks. It was during the height of the Brexit conversations. And then we had the forty day US government shutdown, and almost immediately consumers started to just stay

at home and not travel. But we've seen that pick up, especially in the last six months, and that's always a good sign that when people are willing to leave their home country and go to another country, that's a that's a very very good thing. The other thing that we're seeing is an increased amount of smaller ticket items being used using digital payments, and a lot of that I think is driven by mass transit. We are really excited about mass transit. Just in the last uh ninety days,

we've seen open systems in Edinboro and Salpollo. Uh. We started in July, I guess June here in the m t A in New York where we're only at eighteen stations from Grand Central Station to Atlantic Avenue in Brooklyn, but by the end of October of the mt A hopes to be in all four D and twenty four subway stops. Are people using it to and go? Absolutely, it's tap and go, It's so convenient, it's better experience

for the merchant, it's better experience for the consumer. We we had a million transactions in the first seven weeks and we had no and that's at eighteen stations. Uh, It's truly amazing, absolutely continuing to grow. Tap to pay has grown hugely around the world, with the exception of

the United States. Interesting enough, Well, I was going to ask you about that because we've done a lot of work in the magazine about the adoption of those sorts of systems, especially in Asia, especially mobile payments, all of these things. What is it about the United States, which is usually pretty innovative in many ways and early adopting in terms of technologies. Why is the US lagging? The

US is lagging because it first it goes back. You have to go back about six or seven years at least, where the US was much slower to adapt chip in the car, and they it took so long to adopt chip at that point in time, people around the rest of the world, we're moving past actually just dipping the car to actually tapping. And the reality is that the other countries have moved hugely ahead of us. You have countries like Poland and Hungry that are over tap to

pay in the face to face world. In the US, we have a very interesting situation. The vast majority of the businesses are set and plumbed to be able to facilitate tap to pay. It's replacing the hundreds and hundreds of millions of cards, and the banks rightly so want to do it on their normal cycle. So by the end of this year, we'll have over a hundred million cards in the United States that will be tapped to pay uh Enable and by the end of next year will be over three d million. So this will take

a little time. Right now, tap to pay in the United States is about two percent penetration. I think we'll get to five or six next year, and then based on our experience around the world, it will really take off. That's Al Kelley, no relation, the CEO of Visa, guy who's been around this business for quite some time. So

getting his PERSPECTI TV on the consumer. You think about the data that they have access to, the spending pattern where people are shopping, what they're buying, pretty remarkable, right. Their payments network is vast, So when you think about vantage points on what's going on in the global economy, what's going on with consumers, this is the guy you want to talk to. Every new watch is like a

new piece of lot. The Italian wines as a whole really speak to that quintessential need is the most powerful car made in the US period. You get the beautiful interior, the iconic designs, very chic and posh. So let's check out this week's pursuits section. There's a lot of fun stuff. It all has to do with travel. The editor pursuits with us Chris rouser I love the opener. Let's talk about this piece. Brand Impressor again doing a story. He worked at L a X. How does he do this?

How does he do this? Last time we've talked about him, he was working at Nobu, right yea So Brand Impressor's specialty for us as he gropes behind the scenes of works undercover at all these fabulous, fancy places. So he's done it at Nobu. He was a butler at the Plaza. He was a ski instructor at Aspen, And every time we're always surprised that people agree to let him do it. So l a X and like even security or like yeah, come on in, Yes, l a X was very excited

about this. They offered him access to T s A, to the private suite the the v I P terminal. They offered him access to the mail center to the food service, to the private lounges like the business class lounges. Everything. He went behind the scenes for a week and learned about how it all works. All right, So let's start with T. S A. I want to end with the luxury if we can, but let's start with T. S A. Because I definitely learned some things, some slightly horrifying things

about what people do. I mean, there's just scenes in here that are hard to get out of your head. What did he learn? So basically, people are constantly sort of accidentally trying to bring things through T. S A that they don't know our contrabands, So you know, people bring up for studo or something or a plant. It's very common. But all day, every day there's stuff that's really wild, um, including one time that one of the people that he worked with actually encountered a dead body

trying to get through security. A family, as you know, a father and a family had died and they were trying to get him back to Mexico to his family for a burial, and instead of shipping a coffin, which is actually expensive, they bought a one way ticket. And you cannot take a dead body of basically full weekend at Bernie's and they you know, they got stopped, you know, Dad's sleeping, like exactly, that's what happened. And actually it's not it's not uncommon. I was going to go to

the guy who like had all the birds on us. Yes, well, if you read the New York Post, this is really a thing. Actually, there are songbird competitions in New York, in the New York area actually, and so people have to smuggle in songbirds. So this guy had dozens of songbirds in toilet paper rolls, little rubber bands around their beaks, strapped to his body, flying with them. Yeah, and underneath like you just wore underneath, going through and thinking, hey,

no problem. Yep. And one time they found us cobra in a Pringles cam. Can you imagine opening up now? Uh, let's talk about lost and found, because I have lost things at airports, uh and found them in many cases. That famously left one of my jackets at heath Row and they tracked it down. But what the size and

scope of the l a X operation cost? At any given time, they have about six thousand laptops and you know, if you've ever left an laptop at T S A they're actually pretty good about tracking you down and getting it back to you because it happens all the time. But they have stuff where you're like, how did you even lose that? Like a surfboard or a set of bongo drums or a chainsaw, which you wouldn't have been able to get on a plane, but like, oh, you

just left your chainsaw somewhere in the airport. It is nuts. I mean they talk about they estimate that seventy people a day lose a computer. That's nuts. It's like an Apple store in there. So one of the things he also addresses is, and this is a very bloomberg thing to do, essentially, why things cost so much at the airport,

And it's because the infrastructure is really expensive. This is an expensive proposition to run where whether you're talking about security or retail, everything in just getting everybody in everything in Yeah, l a X. You you might have noticed that the food is expensive at L a X. There's no McDonald's. It's all these kind of like upscale places, and it's because there's no storage really there, so they

have to bring in everything every day. They can't stalk. Also, staff has to be really highly paid because it takes an hour for staff to get in and out just to even get in and out of the airport. Um, so they're paying a lot. So there's a huge premium on prices there over like what you would pay on the street, whereas like the Portland Airport there's a zero percent markup. Actually, but they do talk about the outposts that are there in terms of restaurants and sow and stuff,

where they do really well. Sometimes they're the most most profit making enterprises that these companies have. I have to admit, I go to an airport and I do I get kind of excited if there are a good restaurants that I know I'm going to be stuck there for a while because you kind of have to get there earlier. They're off in delays. Right, we've been in, you know,

kind of get excited about the bad restaurants. It's the only time it's okay to eat it too, yea a sinnabon all of a sudden it can be dinner, all right. So speaking of paying up, of course it's l a So of course, uh, there is a premium, a super premium experience. The v I P s can sort of do it in a totally different way. Tell us about them. So l a X has a private terminal, which is

that there's a year fee to join it. And really what you're getting there is they basically take you from your car to the plane and so you miss standard security. It's just like people are breezing through. But and to be clear, this isn't to fly private, this is to fly on a commercial. You're just basically going in a different door, having a totally different experience on the way in. And as you say, of eating all of the Sterman

drang of just l Ax is famous for photographers. And you know, if you actually go and hang out there, you can have it with every visit up to two thousand dollars in minibar amenities for free. You can get free massages, a free hair appointment, all the stuff. And nobody does it because they're just going right through. They just want to get on the plane, not there for very long ultimately, right, they talked about Megan Markle's right

en route to the wedding, right she she went there. Yeah, I mean imagine how people were trying to get a picture of her on that day. And that's just that this is the best way. But it's not just celebrities, it's also business folks, right that are using these Yeah, they're paying for the efficiency. Yeah, it's CEO s it's it's business leader all right. Talked to us to about the social tears in the lounges the airline, because I have to say I've been there, because I don't go

to loungees a ton a lot of times. I'm just raising, seriously, I'm racing and like you do you do that, like you spin around you like restaurant anyway, So there are So when he worked on a lounge, she noticed that he was. The people who worked there told him they were like you can always tell the first time or when they walk into the lounge and they do the whole lap of the lounge to look at where to sit, where the food is, which I absolutely dent do every

time I go into the love. Yeah. And they actually they stock food differently depending on where planes where flights are coming from. So if there's flights from Asia, they actually stock it with more instant ramen. Jason Kelly's in town. It's kobaby and they've got you know, they have celebrities that are used to dealing with of course, so you know, one Charlie's Angels Starr, they have to have red Bull available for her to just grab from the bar when

she's there. See, I don't know, I gotta ask Brandon, um, you know. And and then's actually one celebrity actually gives Christmas presents to all of the staff that work in the lounge, which is he's a hero. Lovely. There are some good tips in here about sort of how to act like you've been there before. I love love love this. Um, I want to work it. Wouldn't you like to just do that? Would glass? Alright? So one of the places that I think people might be going apparently more and

more is Gonacra amazing. I mean, the the layout of the city and the airport is nothing I knew about before. Tell us about it. So the reason we're writing about Akera now is because last year there was a renovation. There was a new terminal built there, which actually has cleaned up a lot of the issues that used to be a problem with flying in and out of Acara. There were a huge delays. You kind of had to sometimes pride people, um, and now that's much more efficient.

And this is one of those stories where you know, we always write about fabulous places to go, but everyone on our team was like, we really want to go here. This sounds so fun. Uh. It's you know, they say it's the most friendly city in Africa, that people are

super welcoming. Um. It's the capital of Ghana. And you know the area around the airport is actually the most fabulous place to live because the traffic is so bad when you're there, so people love to be where you can get in and out and that's kind of the cool scene. So unusual, right because anywhere else, like in our country, you don't want to be living near the airport.

So it's interesting that it is that it makes sense there. Yeah, and you know there's a big artistic cultural culture there so uh, you know, our writer went and she visit did it all these different artists. She visited this guy who makes these fantastic coffins. His funerals are big parties in Okera and they you know, you can make a coffin that's a giant Nike sneaker, one that's a tree. Um. And she actually got caught up in a funeral party and she said, literally everything in Okera as a party.

Hey listen. Also this week UM Pursuits hosted the Year Ahead in Luxury, Yes, and thank you for your help with that. UM. You know, we started doing the Year Ahead in Luxury last year, which is a spinoff of our year Head franchise UM. And it's a half a day conference and we just get leaders from all different aspects of stuff we cover, so from food and wine to travel to fashion, two cars. So we had Alessandro Bugliolo,

the CEO of Tiffany, come in. We had Brunello Cucinelli, the designer come in and talk about this community that he's built around the village where they make all the clothes. UM. We had Klaud Selmer from Porsche com and talk about electrification UM. And then Steven Star the Restaurant Tour came which is very cool talking about you know, what we can expect in food next year. So it was really fun day UM and we're very excited to be able

to do this every year. That's the editor of Pursuits, Chris Rouser, and I love talking with Chris about the section this week because it was all about flying UH. Some of the highlights and in particular I love getting the details from Chris on Brandon pressor's story, Brandon goes undercover, not really undercover. I mean, we all know the companies

that he goes to knows he's doing it. He does it at restaurants, but he did at L a X. He worked there, and so he really got the inside perspective of what goes on at one of the world's busiest airports, well, from what you might find in the security line to what your bottle of water costs and why some really really great stuff. It's a fantastic issue of the magazine, a double issue. As you said at the top of the show, we're gonna have more coming

up next week. We're going to talk about warby Parker. We're going to talk a little bit about Amtrak as well, and Google generals. Google getting together with really the U. S. Defense Department because they want some of those contracts. And that wraps up this week's edition of the Bloomberg Business Week Weekend Podcast. Thanks so much for joining us. I'm

Jason Kelly and I'm Carol Masser. Be sure to tune into Bloomberg Business Week Radio Live Monday through Friday starting at two pm Wall Street Time, and if you can't catch us live, get us via podcast. Download that at bloomberg dot com or wherever you get your podcasts. And of course you can get this week's edition of the magazine. It's a double issue and it's on newsstands now. We'll be right back here next week at the same time. This is Bloomberg