Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey. We bring you insight from the best in economics, finance, investment, and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, on the Bloomberg Record Weakness Dolla, Lira, Wow, that's and that's happening. Can I interrupt the very Haley Haley from Beverly Hills emails and loved what we did in the Celtics. Wonderful, she says.
More basketballball is what she says. So let's do a review of the Los Angeles Lakers thirty five and forty seven this year. And there is your further basketball What is she doing? A I don't know. Hay from Rodeo driving Beverly Hills. Thank you, Hay, Well, thank you very much. Hailey. I'm told we have to praise Guy Johnson. Now do we have to do that on Bloomberg Radio? You know why? You know why? It was a solid interview. It was a solid one question. It was like, have you got anymore? No,
it's it was okay, it was good. I think let's bring in Bloomberg's Guy Johnson Sauby, who we sat down with the President of Turkey, Guy Johnson, welcome to the program, Good morning for us. Help me out then, what was your sense from the Turkish president on the direction of monetary policy and what he'd like to see. He came here to London, he knew what he was doing. He delivered a message. The message is clear. I am in charge. I'm not only in charge of the government. I'm in
charge of all aspects of the government. Everybody answers to me. Guy. I thought it was fabulous how singular the interview was in our Benjamin Harvey, with years of experience in instable felt the same way. We interviewed Mama sam Sek, the financial guy for Mr Raawan in I MF meetings. Has he even been part of the picture or is he tangential to what Turkey is going to do with lear AD four point four or five. He's currently sitting next
to President Urdawan. He sat next to him at the lunch that I hosted with President Urdawan and he was president during the interview off camera obviously, but he was there. So he is currently part of the team. After the elections. Who knows? And that's another fact that the financial markets are watching. He is one of the few last roop. In fact, I think he's the only last remaining part of the economic team that the markets have any faith in.
The guy. For our listeners worldwide have been following this story. It's a really odd situation in Turkey where they have double digit inflation and the traditional response to that is higher interest rates. But we have a president in Turkey who wants to see lower interest rates. Guy, did you get a sense from the president of whether he was worried about what was happening in the FX market, worried
about what was happening in the bond market. He was, He didn't show it, John, He honestly, he came here. This is I He came to Bloomberg, he came to London, this is like, these are two kind of bastions of the financial landscape. And and he walked in and he delivered a message. He knew what he was doing. This wasn't something that was delivered by accidents. This was this was a message that was sent loud and clear to
the financial community, to investors. I'm in charge. This is how we're gonna run monetary policy, and I am going to be the one that ultimately decides which direction that is going in. He's already indicated, he did so last weekend, that he thinks Ray should be going down, not up. You have to assume that that is now the direction of travel. He has a very different view of how economics works. So, Guy, aside from the fact that he has this really different view as to how economics work,
typically markets like independent, credible central banks. And the next month there's an important election in Turkey. Talk to us about what happens in the next month in terms of electoral politics and how it may reshape the central bank. Well, he's becoming he is, he is becoming um effectively, he's going to be in sole control. At the moment we have a parliamentary system, we are going to go to an executive presidential system. That is how it's going to work.
All power will be centered in him. He is going to change the constitution to allow himself control of almost all, in fact, all of the levers of power in Turkey. He everything will center on him. And as a result of which, why should monetary policy be any different? Guy, fantastic interview, Just a brilliant interview, and Guy Johnson Tom Kane even said it was solid, and I think that hurt him a little bit. Taking the box that did that hurt a little bit to admit that it was solid. No,
it was great. It was you know. And I will say this as well, it's very hard, much harder, I should say, to do an interview where they're answering in their own language. That really can with a translator, and it really changes the dynamic from you know, like a craft point, from a method standpoint, and it took the story forward. I'll say, yeah, and I don't care. The bottom light is the market doesn't give a damn what Guy Johnson thinks. Is guy going now so shreds? Okay?
The bottom light is the market john Pharaoh. The market is saying to Guy Johnson, you don't know what you're talking about. I think the market is saying that to the President of Turkey, let's bring in Phoenix. Kalin Shaw, Society General director of Emerging Market Strategy. Phenis great to have you with us on the program. Your thoughts on that Bloomberg exclusive, the interview with the Turkish president and
how it shapes your views on the Turkish currency. Now, yeah, I think it's just shocking the message that he actually delivered to an international audience of all people, um, which really undermined any credibility that investors still had in the Central Bank of Turkey and in what actions they're able
to take to to stem the current currency routes. So I think you know, there's, um, there's there's a lack of credibility on the part of policymakers to to try to take the appropriate actions, and so we're likely to head towards that currency crisis. Phoenix, if your morass setting Ki the governor of the Central Bank of Turkey, what
on earth do you do now? Well, I guess it's it's difficult to understand the place that he's in, considering the kind of political dress that he's under, and we don't have, you know, a clear sense of what that is. But if he, if he were able to to take the full powers of his role, then it would be to necessarily calm down the markets via coming out and asserting, um, the independence of the central bank and try to do an emergency rate hike, which is what the market is
demanding in order to address the currency routes. Yeah, I look, Phoenix at Turkey, is it discreet to you, I mean you follow at full time for Sarjen. Is it a screed event or does this have not kind of affects other countries? Well, I think right now Turkey is kind of an isolated situation because we do see some stress on other emerging markets right now, but nowhere neither the
extent that Turkey is experiencing. And that's coming from the combination of vulnerabilities that the Turkey has in terms of you know, exposure to UM, high oil imports with rising oil prices right now, and high external financing needs UM. So it's it's a confluence of all of those factories. Okay, I'm glad you mentioned oil Brent crude seventy nine oh seven. Does Brent crude at seventy nine oh seven does that fold right in to reduce GDP and Turkey are they
going into recession as we speak? Well, I think it functions more into the trade channels of really impacting the trade balance and then the current account deficits and and exacerbating those external vulnerabilities and from there influencing the financing channels and then onwards to GDP growth. So it's it's a few steps, but yes, that does ultimately curb down consumption. Um, as we move into this this latter cycle, which I suppose is what President Era to want is trying to
prevent by trying to over stimulate growth. Phoenix, Just before we lose you, one final question. You did mention in this conversation and risk of a currency crisis in Turkey? What is the currency crisis in Turkey? And how how close are we too? Want? There's no pressure on Phoenix. We just want to know where the tipping point is it? Is it a five handle? Dora? I don't know, Phoenix, what is it? Well? I just hope it's not a six handle? Um, Phoenix, there's no pressure. You're the General
Council of SOEN is not listening. Okay, what's the tip point here? What's the tip point here in the crisis? I think I think this is it. This is you know that US witnessing that the central bank has no ability to step in and and do UM and take the appropriate actions, and with the political authorities coming down on them, this is sort of the US sending into the crisis. Phois. Thank you so much. Fizz Kalin with US General, let's get an economic night to Shally he's
been down. Two dice, hello, Jonathan. Retail sales and Manufacturing, the Commerce Department reporting retail sales rose point three percent in April, less than the prior month, which has actually revised a bit higher, but inline with forecasts. Excluding autos, we see a point three percent increase. The retail sales control group, which you know, Tom Keen monitors closely up point four percent, a bit lower than the prior month.
Manufacturing Federal Reserve, Bank of New York, Empire Manufacturing Index, Regional Index topping forecasts up to twenty point one. In the headline, retail sales up point three percent in April. I'm let's go back to New York. Little Saggyny, thank you so much, greatly appreciate that little saga report. En moves weaker. Yen off that these are little little tweaks. I don't want to overplay that dollar stronger, uh En moves weaker, but there's a lot of other noise out there.
Ten yere yield importantly just now goes through three point zero three to four digits three point zero three three six on the tenure yield equity features to tier A negative nine down futures negative one oh two. Um, it is good to get an update from Francis Donald. She is with Manual Life on the American economy on Canada as well. We said good morning to all of you across Canada. Uh, francis the character of the retail report Beneath it, there's a lot of data. When you dive
into the data today to write your manual life. Note, what kind of data do you look at? The granular UH pages and pages? Well, number one is that control group number that comes through, because that's what the Bureau of Economic Analysis is going to use to calculate the GDP number. So we can breathe. A five release that came in on expectations today and does suggest that Q two is going to be the comeback kid that we
were hopeful it will be. Under the surface, we're looking at things like gas sales important because those gas prices rising are eating into consumer pocketbooks. We're going to take a look at autos to make sure we're not seeing too much of a deceleration there. And then my personal favorite, I always have an eye on those non store retailers.
Not because there's a day to day trade there or even quartered a quarter trade, but they've become so significant that they are starting to move the economic picture in abroad. So let's rephrase that to be clear. Amazon is in this data this morning. They are so total retail sales have been running about four or five percent year a year. Non store retailers overhead or double that, closer to ten
percent year every year. Online retail sales of grown from about three percent of total retail sales in the up to eleven percent today, and they've captured about six of all retail sales growth that the past two years. And that's why we have to watch non store retailers because they become part of the inflation data. That's the link between the two. Do you, as a non sell side retail internet E type as an economist, do you just
extrapolate Amazon's market share growth? Well, we pay attention to it, and the most important extrapolation is really what it means for pricing power. What does this mean for companies and their ability to lift the price of their goods and services over time? And is this part of the disinflationary story. When I look at retail sales data, and every time I see that non store retailers never come through, I just think this is disinflation. I just want to get
to the price section. Francis, what's happening in the market, A new year today high, a new one year high, new multi year high on the US tenure year at three point zero four percent. Don't a strength, renewed dollar strength against everything in G ten and the bulk of emerging markets as well. Francis, what do you make of what we're seeing in the rates market as rates and
the US dollar seemingly a recaupling over the last month. Yeah, this is confirmation that the US just had a soggy first quarter, that there's strength behind the US consumer moving forward. The US consumer has been the pillar of growth in the United States, and we're hoping that we can withstand that pillar and then add to it with some additional capex down the road. Now, higher oil prices has been
a double edged sword here. In one sense, will worry that that's going to put some breaks on the U. S. Consumer. This type of retail sales data here fairly strong suggest that no, the U. S. Consumer can withstand higher gas prices, and then if we wait a little bit longer, we should see those higher gas and oil prices filter through to Capex as well. So this data here is a really good confirmation and probably very supportive of the strong
US narratives. Francis, I'm just trying to understand that what higher rates and a stronger US dollar means for the U s A toonomy if this continues. Well, it's part of financial conditions weakening. It's part of why has the ability to be a three percent year. But that's a little bit harder. All of a sudden, we have difficult year over year comparisons, we have higher rates, and all things considered, higher rates are going to put down side
pressure and then ended to do so. And we have financial conditions that are tightened, but we're still way below historical norms. And with a consumer like this, I think they have the ability to withstand it, Francis. One final question, When the Montreal Canadians are as bad as they were in hockey this year, do you end up in Montreal just rooting for the Winnipeg Jets. Well, there are last hope, especially now that the Raptors are out of the NBA for this season. So yes, we've got to hang on
to even you that I'm not doing. I can't get there. I'm sorry. The Supreme Court opening the door to legal sports betting around the country. It invalidated federal prohibitions against the wagering on a professional as well as I believe amateur sports. Ryan A. Prit joins us now. Ryan, of course is our expert for all things Bloomberg Tax, State and Local Tax reporter. Ryan, thanks very much for being with us um tell us about this ruling and what
it's going to mean for state and local governments. Absolutely well. First of all, thank you guys so much for having me on. This is a great program. Love listening to as much as I can. So yes, So, yesterday the Supreme Court ruled in Murphy versus the n C double A in favor of Murphy and really in favor of New Jersey. So what this ruling does is it doesn't It doesn't legalize sports betting across the board. It just repeals the Professional and Amateur Sports Protection Act of N two,
also known as Task. It repeals that in if we give states the option to legalize sports betting if they choose to so, New Jersey had already passed a law that was contingent on this ruling to set them up to enact sports betting. So how to other states Mississippi, New York, Pennsylvania, and West Virginia. So what this means for those states is that they're going to try and
get the ball rolling as soon as they can. Talked with a lawyer who's very familiar with this topic, and he said that New Jerseys could be offering legal sports bets by this weekend, definitely by the NBA finals. Um, so there's a huge untapped revenue revenue field here. You have. The American Gaming Association CEO on a call yesterday said that he believes that there's a hundred fifty billion dollars in this legal market that that they could try and
suck up. What does this mean to multiple decades of young Pen Fox and young Tim Keen growing up knowing that if you bet on sports, you were maybe not as bad as Pete Rose, but you were able an evil person and probably go to hell. What what that that cultural, that behavioral thing that we all grew up. You don't bet on sports because it's bad. What happened
yesterday to that? Oh man, Tom Boy, I'll tell you yesterday that that basically went down the garbage suppose because you even have professional sports leagues trying to get some of this revenue. You have the NBA and the MLB coming out outwardly supporting this. I mean, really is crazy. The actual MLB coming out and saying, we support legal sports betting and we want to take in one percent of that. I mean, Wow, that was fear. They lost the fear of Raliota in Shoelace, Joe Jackson or whatever
it was. They've lost the fear of the Chicago Black This is before your time, I remember, just slightly. But yeah, say it is so yeah, I mean, and Ryan, what the n the n c A A uh, they still against sports betting because I mean, this does raise a lot of issues about the integrity of the game. It does. It does, and you know that is one reason why the MLB and the NBA are trying to take one
per cent there. One of their one of the reasonings to that is we're gonna be able to protect the integrity of the game if we are taking in a piece of the revenue. Um, I'm not sure if that really makes sense, but but you do have a couple of states supporting that. You have West Virginia and New York supporting it. You also have Missouri supporting it. And while while none of those states have actually enacted an integrity feet into their law, they are outwardly supporting it.
You have you also have the NHL come out yesterday and say that we want our players, we want our individual players to benefit from this. If this is if this is gonna be a thing, Well when you bet like this, pim quickly here you do a Red Sox hedge, which is you bet that the Red Sox will lose. But you do that if you're a Red Sox fan about April one, and then you do a spread calendar bet against it going out to July four. Will you read bet on July four that they're going to lose
somehow I imagine this is going to be the word. Well, Ryan, so what's next? As you said, maybe we get we get sports betting in New Jersey by this weekend. Yeah, that's ping by this weekend, bye bye. Definitely by the NBA finals, Definitely by the Stanley Cup finals. Um so yeah, you'll you'll you'll be seeing betting in New Jersey in the next week, next two weeks. Next up from that will be Mississippi because they already have casinos. They already
have a believe of sports book built down there. UM. So I'm hearing that Mississippi will be the next couple of months. The other states that have have been actually Pennsylvania, New York, West Virginia. UM. The people that I've talked to you said you'll be able to bet in those states by by the super Bowl, and um, and and next legislative session. Um, you could expect up to twenty states, maybe even more trying to propose legislation to legalize this.
Ryan pretty thank you so much, greatly appreciate it. With an update there well, well do more on this coming up here. Last night of Sotheby's, a big banner was put up by Brooke Lampley over the assembled looking at wonderful fine art, which said make art great again. She succeeded in doing this at Sothebys, where she is vice chairman. She uh became smarter than most on art history at a small school in New Haven and has moved on to a truly distinguished career in art history and as
vice chairman again of Sotheby's. Brook Lampley, wonderful to have you with this, I guess at Sothebys you celebrate what do you do after an auction last night including the Madigliani at a hundred and fifty plus a million? Do do you people break out, you know, the cold duck or do you go expensive and try to have a decent bottle of champagne? What do you do after an auction? We pause for a bit of celebration before going back
to the auctions again. Today we saw the day sales and then tomorrow night we will be continuing the Impressionists and Modern series with the collection of Morton and Barbara Mandel, which is opening the contemporary auction on Wednesday night. So there's only a moment I was gonna let Pim jump in, but that's right where I was going to go. How do Morton and Barbara Mandel? How do we become like them? How do you put together truly the world class art
that they have that they collected over their lifetime. That's such an excellent question because that's really what we're here to help people do. Um and there are many art advisors working in this space to really help guide clients to assembling great collections that span various categories but has their own internal logical, aesthetic and dialogue. What was amazing about what the Mandela's did was that they were looking
at art across um, you know, an entire century. They had a fabulous large quad Miro painting hanging next to a Donald Judd stack UM, and these works created a fabulous synergy in their incredibly modern home. So UM, the collector brings a lot of context um and vision to the art that they acquire and then how they present it UM. That becomes part of the narrative of the object um and part of the history that other people then go on to acquire when they acquire that work.
Brook Lampley, if I could just break in, I just want to focus for a second on the actual painting. This Madigliani that went for a hundred and thirty nine million, that was the hammer price. With the premium and so on, that goes to a hundred and fifties seven million. Who bought it? I can't, unfortunately cannot disclose any details of
the buyer um. They are anonymous, UM, but suffice to say that they are someone who UM, we're very excited uh to acquire an outstanding Madigliani nude from this series and felt very confident in the price, so much that they committed to guarantee the work in advance of the sale. So what does that mean when you say guarantee in in UH in advance of the sale that they already agreed to pay a certain amount of money if the
this work was guaranteed to sell going into the sale. Um, we had UH committed price that was going to be achieved for the consigner UM on the evening of the event. And UM it was already a fantastic result that the container was very excited about. And it's just a tremendous testament to the growth in this particular market. I mean to see that um sixfold appreciation since two thousand three. And who was the seller? Can you tell us that? No,
we can't disclose any details of the seller either. Have you seen just the fun of information yet? He was gonna say, because Lisa smiling on my side of this, because the last the record auction for Modigliani, right was that was set in and that was for a painting that I believe sold for about a hundred and seventy million, and that was purchased by the Chinese collector Lou Quan. Yes, and I was there at that time as well, And
UM that was a fantastic result. And it's to me very interesting to think given that they that is a private collector who is acquiring for their public institution, the Long Museum, UM, it would be an interesting exercise to try and imagine what this work might have sold for U if that buyer were still in the market and hadn't already acquired a great example of a Medicaliani nude for their museum. Brook you have advanced art like nobody. I mean, you get a lot of credit for you know,
you had Johnny Depp's collection. Blah blah blah. What do you need to play? Of our listeners like like to go into you and your good competitors, including Bottoms one block over from US Park Avenue. What do you need to play the game to assemble modest or better than modest collection over twenty or thirty years. I can't say that I believe there's truly any barrier to entry. You need passion and love and excitement about what you're looking at.
And so many of the best collections that we regard now today, in hindsight, were formed by people just acquiring things that moved them, then they loved, and I think people learn over time, and it shapes the collection that they form. Money helps, though, doesn't it? Money helps, doesn't it? But we sell works from every praise. I understand that. But I mean, I mean we're talking about you know, Medigliani that goes for a hundred and you know, fifty
million dollars. Picasso, right, I mean you're talking a hundred and eighty million. Uh is there any limit? Do you believe? I mean we've seen that, uh, Leonardo right, the uh? I think it went for four hundred and fifty million dollars. Leonardo da Vinci, Salvatore Mundi that went for four hundred and fifty million dollars, Brooke, Brooke within this is the different auctions that Sothoby does. And maybe this is away from your core competience, but I kind of think you
can speak to it. How's photography doing? I mean there's always been the critics, well you should pain or pot Photography will have its moment. It's it's vogue. You have in London, you have on May seventeenth, just two days from now, a photograph auction. Is there a spirit there as well, like you saw last night in New York? Absolutely?
And I think the important point is that um as more people enter the market, as there's greater and greater knowledge and confidence in the art market, people are increasingly apt to appreciate works for their quality and not um segregate them in terms of medium or region. Um it's you know it works on paper or on the rise.
Photographs are definitely on the rise. You'll see an increasing number of photographs that are being offered in the contemporary art sale as opposed to a photograph sale, because we're finding that those um, those small, those regional categories, for example American paintings or Latin American painting specifically, which we integrated into their Impressionists and modern sales this season for
the first time, they're increasingly outmoded. People are just looking for great works, and you mention in the tape modern jump starting the Madigliani nudes and all that, or what the v n A did with medieval tapestry a year and a half ago, or what they just did the Child's the first exhibition in London. To museum exhibitions drive your world of collecting. There's a balance, but yes, I
would say generally they do. They can increase momentum or accelerate interest in a space where interest already exists a great example of that, in addition to the Madigliani retrospective would be the exhibition of Picasso's works from thirty two that is presently at the Tate Modern and previously was in Paris. People were already seduced by Picasso paintings and re test and as great depictions of Dora have become increasingly scarce um people are turning to other lovers as
Marquis subjects. But certainly this exhibition helps to focus interest on that period and accelerate the prices. I mean, I mean, Brooke very quickly here, and I know your husband was bidding on this. Sothobes in Europe had the Bulgari diamond ring like four thousand carrots or something that when three times, how's jewelry doing that? I mean, John Tucker, is that your is that? We'll have to leave it there. Brook, you're doing jewelry book. I see, that's good to see
you're doing. And Bailey, very good. Brook Lampley, thank you so much. Congratulations to all of Stobs on a spectacular auction last night. I led by the mediculing on musician and well. Brook Lampley is Vice chairman of Stobs. We could go on with her forever, but believe it here with a really interesting market. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple podcast S, SoundCloud, or whichever podcast platform you prefer. I'm
on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio