Surveillance: Black Friday's Massive Move to Online

of course on the Bloomberg Yeah, I'm Francine Lack. What in for David or Tom Keene? We're not sure. I'm with Michael McKee. Mike, we got to choose who we are today. Are you worried about I'm not, but in my mind I am everywhere I go to Keane is in my mind. Let's have a look at the markets. That's what it is, a little bit scary, It's a

little bit freaky. This is what Tom would do. So he'd open it up and look at the dollar pairing some of the weekly advance that was spurred by the prospect of hire u S interest rates, gold also rebounding from a nine month Mike, I know you're watching, of course, Black Friday, and the shift for me is really incredibly Onto Mobile and the online retailers doing a lot better

than they did in previous years. Right. Yeah, We've been watching live pictures of various retailers coming in because it's Black Friday, and you send your cameras out to do that, and stories don't look all that crowded. But um, why would you This one I don't understand is why you would go to a store when you can do the same thing and get the same bargains by sitting at home and not getting whacked in the head by somebody grabbing a TV set and swinging it around. Um, I

don't get that. I did not realize that it could be that violent. Actually remember seeing in the past a lot of you know, when the stores open, people actually fighting for stuff. I'm a little bit more old school, Mike. I like going in shops because I get a feel for the things I want to buy, and then I can't deal with the hassle of returning them. Let's get to someone who knows a thing or two about retail. He is Howard Davidovits from Davidovitz Associates. He is chairman there.

Howard Great to speak to you on this Black Friday. Black Friday a success, but are people really moving to online massively? Massively? There's a massive moved online. And the total picture is, uh, we're so overstowed. We have three times the amount of sales of square feet three times per person in the United States than any other country England, Japan, you mentioned in Canada. We're overstewed and the hottest area

is online. Now you put those two things together and you're going to be in for a massive readjustment in retail space and shopping center space. And that's what's going on with major retailers across the board closing stores and downsizing stores, and that's what's going on. Yeah, but it is is anybody gonna can you still make money? Put it that way, if you're a retailer, are you gonna make money? Or are we gonna see people even if they're trying to move people online? A We're gonna see

people going out of business. We're going to massively see people going out of business, as we've seen and as we will continue to see malls closing, stores closing, and folks going out of business. Departments, well, the largest department store in the United States. See here's they're in liquidation. What do you want them to do? Came out with the largest discounted They were ten times bigger than Walmart. They're liquid dating. I mean, if you go and you

and the list goes on and on and on. If you're in the office supply business, you know, off the there's just so many people in trouble out there, and it's because we're overstowed and the growth areas online. That is a deadly combination. All right, But Howard, is this because of cheap money out there so we've kept, you know,

zombie retailers alive. Or do we actually think that because Donald Trump is coming on January twenties and he wants to remove the US a little bit from globalization, that actually it's going to be so much more difficult for you guys to import cheap prices cheap clothing from the rest of the world, so they'll automatically have to go under. First of all, it says nothing to do with Donald Trump or anything else. This has been going on for

some time. What happened is retail is over expanded, and one reason they did is with the craziness of Wall Street, where you have to show growth. What they don't like you, you got to show growth. So they all over expand that cheap money was a major part of it. When it comes to real estate and shopping centers, the time is coming. We're gonna have fifty billion dollars up for refinancing in the next eighteen months, and then forty billion

more f that. At those c MBS loans. There is going to be trouble because the banks are going to be very tough and the lenders are on renewals and new and new structures. So and you're gonna have shopping center developers just hand the shopping center back to the banks. The loan is secured with the property, they're gonna say goodbye and good luck. You're gonna see this everywhere because

this is what's going on. Well, it is the same thing happening with small businesses, the local retailers as you're talking about with the big guys with the Yeah, the local retailers, many of them are getting crushed. You know, when I started in this business, I traveled a gross America and I dealt with independent department stores in almost every state affirmed in either way. You know how many of them are left none. There are literally you can count them on one hand. You don't have any more

independent department stores in America. Wherever I used to go, Think about New York, we had all we had Altmans, we had Gimbals, which we had six quarterbacks. We had six independent department stores. They're all gone Best and Cup they're all out. That's true in every single state. This is what's gone on already, and we're just beginning. The problem is going to get worse. We're overstored. This is the number one retail problem in the United States. Overstored,

and the fastest growing area is online. How can you possibly put those things together? You got a mess, all right? But how I mean? This is true in the UK, This is true in a lot of our Western societies. That the big guys come over, they take office space, they can pay so much more than the independent retailer.

Do you ever see independent retailers coming back? Independent retailers will always find the way to come back because there is genius and independent entrepreneurs, and I see it everywhere I can look. Take New York City. We used to have independent uh drug stores on every block with the name of the owner. Now or and none, because of course all either Walgreens or CBS are right. Eight owns

everything right to know. Now what what I see now are guys opening up little stores without a pharmacist, selling health and beauty aids all over the place. And they look like they're very profitable. They're narrow spaces, very cheap. The owner is there with two employees and they look to me like they're really doing well and they're selling lots of cosmetics. They know exactly what they do. They're selling it for less entreprene door is always find a way,

but it's harder and harder. Let's talk a little bit about a Black Friday itself. This used to be huge. A certain presidential candiate would say, uh, and now everybody serif why do I want to do that? Well, there are several reasons. Number one, Black Friday starts way earlier that and that is out of desperation on the part of retail is in a fight for market share and the mighty Amazon. They all started weeks ago with all of the sales for Black Friday, and I mean it's

it's amazing Amazon Prime. So it started a long time ago. Now we have Cyber Monday, which takes up a lot of space, which is a huge day. We have Thanksgiving open. We got all of his stuff going on, and all of that takes away from Black Friday? So is Black Friday still are very important? That yes, doesn't have any we near the impact it used to have. No, and you said something like very important before that, I didn't miss you said there were there was a report from

Target at Walmart on TVs. You know what that means? The best Buy is going to do great. That is the interpretation of what I heard from you. And best Buy has been rolling anyway, look for a very good performance from best Buy. Why do people buy TVs? Now? This can be the cheapest of the year. If if everybody knows you're gonna go buy a TV, I jack up the price. Nobody can jack up the price. It here's the reason this too much product in too many places.

You that's what you can do. Nobody has pricing power unless your product is unique, no one. So if everybody is selling the same TV, that means the only difference is price. That drives the a price down. But Howard, this is a crazy business model. This won't work long term, right? Why I am saying there is gonna be Carne. Do you know how many electronics chains we used to have in America? You remember CompUSA? Remember Radio Shack? Remember Ultimate

Electronics circuits? Do you remember all of them? By the way, they're all gone. They're all gone. Best Buy is almost the only one left standing out of the seventeen we had. Welcome to the Club. We are talking Black Friday and retail with Howard Davidovitz and Howard Dividov's is coming to us, as I understand it, live from Trump Tower, Howard, Absolutely, you live in the home of the President elect. Correct. What's it like to live in a tower that is

basically a military outpost? Now it seems, well, I'm my reaction is there's no military I mean, I go in and that and I put my stuff through the machine. It takes one second and that's it. So I I don't see a lot I'm in any outpost. However, there are a lot of people in the building who do feel exactly as you just said, a military outpost. I think the NYPD has been absolutely sensational, and so is

the Secret Service. Their total gentleman and general ladies and have been doing the job magnificently and really don't bother us very much at all. That's my personal reaction. However, if I was one of the stores like Gucci, Tiffany's, Nike, or one of those stores that that if you're a customer, a lot of customers are going to be turned off ongoing. And that's pretty heavy duty because ten percent of Tiffany's businesses in their flagship store on Fifth Avenue, so that

could be a problem for some stores. And that's where I see the problem as far as the residents go, at least from my perception. In my reality, we just go in and out. If you want to make a big deal out of it, good luck. But to me,

it's no big deal. Yeah, I am fascinated, Howard. And actually, when Tom Keene was starting to talk about Tiffany's and Gucci and how their head, I was laughing it off at the start, right, But you really believe that tiffany could get hurt because they're really next door to Donald Trump. It's not because the Donald Trump and nothing that I mean what they they have a store in a location where is kind of security that's gonna turn off I think certain customers from going in because it's a pain

in the neck. So I think they're gonna lose potential business, and I think that will be hurtful. So I think that would be part of this total picture. Go ahead. No, I was curious hard when we know we've never seen a president like this, so we're expecting the cummings and goings to last until January. We understand that. Actually, no, no, it's gonna go. He's gonna come home weekends. First of all,

he loves the building. Look, George Bush was going to Texas for months, if you recall, for months and operating out of his Texas home because that's what he liked. No, no, no, I mean I think this is gonna go on for four or eight years, and I think everybody is going to get used to it, and all the hysteria will end, and everybody will adjust. As Americans, we adjust to things and and that, and that's what will happen. I just don't think it's that big of a deal for me,

and yet Howard uh. This is for those who don't know. Trump Tower is between fifty six and fifty seven on Fifth Avenue, which basically the shopping section part of Fifth Avenue starts at fifty and goes down, So you've got this security courting that cut cuts Fifth Avenue down to one or two lanes when he's there. Does that change the whole dynamic of Fifth Avenue itself? I do well.

There are two dimensions to it. One, it's the most expensive space on a planet Earth, five thousand dollars of square foot from fort nine to fifty seventh on Fifth. So the retail stores are paying the highest rent on the planet Earth, highest rent on the planet Earth. Now, when you pay the highest rent on the planet Earth, you expect to be able to do business. There is an obstruction to do we business and I think this is going to hurt certain stores and it's unfortunate and

it's part of what's going on, and that's it. So that has to live with it. They'll have to make an adjustment in their rent, they'll have to do something to litigate, they'll do something. They're going to lose business, okay, but can they not make up for that business elsewhere? I don't know if they have other stores that are not These is a worldwide I said that that stores ten percent of their business, which is huge because they've got stores everywhere all over. There was a worldwide company

they've got stores all across America. Of course, that's you know, one of the store Nike is a giant organization, Gucci that LVMH. I mean, these are giant organizations that will suffer just in that location. How divids from Divinos An Associates. Thank you very much for joining us today from Chuck Tower. Now we're hearing it's black of course we know that it's Black Friday, but holiday prices, well, that war is intensifying as companies such as Walmart and Target are pursuing Amazon.

So Mike, let's continue the retail conversation. Let's bring in a Jerry Storage. He is Hudson Bay CEO on Black Friday. Jerry, great to have you here in the program. To her website. I'm looking at the sales you're on offer, They're great. Is it not too much? How much of an inconvenience is it? If you're a retail a person, then what will fly off the shelves or what you will sell

online is actually the blockbusters. Well, look, this is Black Friday, and Black Friday is an American institution, and Black Friday is totally about the deals. Everyone knows that. That's that's why it exists. It's the super Bowl of retail and you have to bring your top game. People don't go to stores on Black Friday to buy things at regular price. That's a very different time. If you're reconsumer, they come to get the bargains and they're having fun doing it.

You know, it's a treasure hunt, So you have to have great bargets. So like a Lord and Taylor with Kashma swear for th it is just flying. I mean, people are so excited to snag a Kashma whatever tht get that online. You can also get online. Every merchandise offer we have for Black Friday is also you've been visiting stores, your stores, you have, uh, Lord and Taylor, You've got Sacks, You've got a whole bunch of department

stores around the country. Have you noticed fewer people I'm not saying lower sales, I'm saying fewer actual bodies in the stores? Are more people shopping online? And is Black Friday the experience of going out sort of fading? Uh? The answer is that both are happening. So uh, the the physical shopper and the and the in stores in the online shopper are both happening. So Black Friday is definitely a physical experience. People love to go out, and still you have to remember of sales in almost any

category take place in a bricks and mortar store. But we are seeing general only in the retail industries as a whole, is that more of the growth is taking place online, and of course the economy is growing, so more the growth is coming online, and certainly Thanksgiving Day and Black Friday arrivaling Cyber Monday in terms of online sales,

so growing very rapidly. For a company like us, whether it's Sackforth, Avenue, Lord and Taylor or one of our many other banners, what we're focused on is providing the best all channel experience. So so we have the same offers online and in store, and it's up to the

customer to choose how she wants to do it. Some of is their doorbusters and get people to wait in line and come into the stores like there was you know, there's a great doorbuster at Lord and Taylor where the first five hundred people each day this week get a twenty other gift card for being in line and going into the store. But but most of the merchandise offers are the same in the store and online, and you

buy it however you choose. It's not our job to try to train you or teach you or change your behavior. If you want to buy inline, great, you want to come to the store, that's great too. I like the way that you said she, Jerry, is it the she's at The female shoppers actually spend more on Black Friday. Let me tell you, after thirty years in retailer, it

always has been she and always will be she. The woman is the CFO of the household and certainly, uh you know, buys far more at retail than than men do. But but another interesting phenomenon, as long as we're on this, is that the men's areas in our stores haven't grown more rapidly than the women's. And it's not just us, it's industry wide, and we say that men are the new women as they're starting to grow their their their purchases. Take that. It's a good thing, Mike. Shopping is always

a good thing. But you know, part of it is because with the more casual workplaces, I mean, you know, they're less sort of formal suits and ties, men have to learn all over again have a dress when they go to work, and they need to buy sweaters and and different shoes and and really pay attention to it, because you know, you can't just wear the same navy blue suit aid to work and no one notices. You've got to be different each day. And that's part of

what's driving that. It's still though, uh true that fastly more of the spetting is buy women and more of it is for women and Jerry overall, do I spend more if I go online and I want to buy a I don't know, perfumer or one of your great sale items that you have on do I end up spaying more than if I were in one of your shops or the other way around? Actually, and quite interesting,

you spend more if you're all channel shopper. So we love as customers who love the brand and shop with us whichever way it works the best for that occasion, both online or in store. And we find is those are the customers who spend the most with us. It's the ones who love us online and love us in the store and sometimes use the combination. So we have some fantastic integration of online and the internet. So for example, if you go to Saxforth Avenue, you're likely to have

a personal salesperson that you work with. That person knows you what you bought the last time. They will send you a curated selection from the website in an email to you that you can then open up and shop the website. But it's not the entire website. It's what your salesperson picked us appropriate for you. And of course you can get from there to the entire website if you if you want to get something else, But it's a way of using the Internet is a tool that

helps shoe shop even better. And if you don't have a salesperson, Let's say you go to sax dot com a which it pops up and it says, would you like to speak to a stylist? And if you say yes, we connect you to someone in the store near you who's not like someone in a call center in some foreign country. It's someone in the store you're you, who knows something about style. He says, what would you like

to get, and we'll do everything to satisfy. I did it once in front of a group of investors, and I said I wanted a bow tie and and he said what type? And you want a fan too? And I said, what is the black one? Find next. You know, this nice fellow wanted to deliver it to me. Literally know that I was in Toronto when I was talking to him in the York story in that case. But but you know, it's a fantastic integration experience, and that's

what the customers want. They don't. They don't think, especially millennials and young they're not thinking online versus in store. They're thinking, this is what I want. This is a brand I like, This is a company I like. You know, it's sack fordam Lord and Taylor Guilt. How do I deal with them? And I deal with him online? When I choose to Some say I just look and see what I want to buy and they go to the store and find it. You know, I do whatever I want.

I don't that that line is a false dichotomy. Do you have a demographic breakdown as to who shops online versus who shops in the brick and mortar stores is and the millennials who are more likely to shop online, Well, there's no doubt that the younger you are, the more likely you're you are to use a smartphone or some

Internet enable tool. But make no mistake about it. You know, even our most senior customers use the internet now and have a smartphone, and so everybody's online, everybody's in the store, and that's the that's the world of the future, and the online owner retailers better get physical pretty darn fast,

or are we physical retailers is gonna kill them. And that's why you see some of the internet guys starting to open up stores now where it's Warwy Parker with glasses or Amazonism stores because they realize that that bricks and more thing is kind of an advantage that we're getting a report from the front lines of Black Friday shopping. Jerry Starch is the chief executive officer of Hudson's Bay Company.

They own a whole bunch of department stores, and um, I want to ask you about that because we've been told that by of retail analysts the department stores are kind of the worst place you want to be these days in retail because everybody's going to specialty stores or they're going online and uh, and department stores getting killed. Um So why tell me why it's a good business to buy in Dudson's Bay. Department stores are incredibly flexible format, so we can adapt with the time. So if one

category is not selling, we can go into a different category. Meanwhile, because offering so broad is the perfect foundation for an all channel business to unite the Internet and the stores. Because we certain we sell products for young and old, for for men, for women, for kids, we saw, we sell home products, and uh and apparel products. We sell everything. So it's a great foundation for for the future we're

retelling is going. But meanwhile, what we've learned in country after country is that it's not that people like department stores. That don't like department stores. People love good department stores and they don't like bad ones. And so it's so important that we continue to invest in our in our in our buildings, invest in our in our technology in

the stores, invest in the experience in the stores. So that's something special to go to the department store that gets you out of your chair at home in your pajamas into the store to experience something you can't possibly see any way, but in a physical sense. But Jerry, how often, I mean how much in advance you actually have to howard your stuff And you say your flexible, which is true, but you still have to what book or buy things and trends and ideas six months in

advance or even a year. Well, you know, it varies. So we're experimenting a lot with fast fashion inside the department store. So the equivalent to what someone like an H and M R as R might do where we have much shorter lead times on on certain categories or products. There are other products where let's take Kashmir swinters where it doesn't where where it doesn't make any sense to wait till less second to order them because you get a much better deal for you yourself and for the

customer to offer that thirty kashmeer switter at well. But it's true. You know, if you want to sell a sweater at thirty nine dollars nine cents, you need to order a lot of them and order them well in advance. So so we make that decision on a case by case basis. So we need just as flexible as anyone

can be. We were talking with Howard David if it's the retail analyst earlier on the program, who's this country in particular still has a problem of way too many stores and that the story for retailers going forward is just you're going to have to close stores, which not only throws people out of work, but then you end up with real estate problems as well. Uh, is that something you're experiencing now? Is this down the road? Let

me give you a couple of thoughts on that. I believe it is true that the United States, almost unique or especially among countries, has too much retail score footage. You know, it's way to proportion, you know, it's it's it's uh, you know, a third more than Canada, for example, which it would be the closest pier. It's it's quite a bit more far beyond that. Then what we see when we operate the large parter store in Germany, for example, far less retail score for capital capital in Europe. First,

i'd say so clearly too much. So that parts right. But what's going to happen next is it is different I think a little bit from what you just said. So it doesn't mean that all the retailer should get together somehow. Even if you could even envision this and I'll agree, oh we'll I'll close a third of our stores or something like that. You know, that's not how

it works. Uh. What really needs to happen, what will happen, is that individual retailers will simply go out of business, and we've seen that already, like sports Authority for example,

are fairly fairly recently and you know many others. Is that entire change will go to business and that will put things put the market more in equaliver if you, as an individual retailer, starts closing to profitable stores, and most stores that you operate are profitable, if you start closing them, it's it's ridiculous to think that customer is gonna go, oh, you close the store near my house, then I won't shop at you know, your competitor across

the street. Now that who's still open, I'm going to go to your website instead and shop. That's that's not logical, because the customer chooses how she wants to shop. And uh strongly, I believe that if she decides she wants to shop in a physical store, she's gon shop in physical store. You closure, she's going to your competitor. So simply closing stores doesn't accomplish anything for you individually as a retailer, unless you have some that are losing money,

but most successful retailers don't. It's really hard to lose money in individual store in retailing, so most don't. So what's what will happen is they'll be a rationalization of the retail community. That's probably why we do grow a lot through acquisition. That's part of that rationalization. I think. The other other point is what happens to the malls because you asked that question right, so, uh, the malls

are are you know, are not homogeneous. So there are a malls that are really fantastic places really that you been well well maintained. They have beautiful stores, they have beautiful experience them. Those are gonna thrive, they can they'll continue to do well in any environment. It's the B malls and the C malls that are going to become like places to get a cat scans and insurance offices, things like that. Only got a minute left, so I gotta I can talk about that part all day long.

But let me ask you this, um, can you raise prices? These days everybody's talking about the return of inflation, but can you uh, you know, we're really focused on providing great deals every day and particularly in Black Friday. Your question feels like like, you know, totally beside the point because what we're trying to do now is to offer the best possible deals in every one of our stores where it's sacked with having a lord and Taylor sacks

off five or guilt or anywhere. All right, Jerry Storch, thanks for joining us, the CEO of Hudson's Bay Company. Good luck on Black Friday shopping. And uh, friend, you you want to order a sweater? Right? I was gonna say so. Nice of Tunking to be off today to bias Cashmere sweaters. Thank you, Tom, I know you're listening. We'll get a blue and a red one. Who you put your trust in matters. Investors have put their trust in independent registered investment advisors to the tune of four

trillion dollars. Why they see their roles to serve, not sell. That's right. Al Schwab is committed to the success over seven thousand independent financial advisors who passionately dedicate themselves to helping people achieve their financial goals. Learn more and find your independent advisor dot com. Don riss Miller is with us. He is the chief economist at Strategist Partners, and we've been talking to him for the last hour on Bluebirg Surveillance on television about all of this and how the

election may be influencing what people think that. It certainly has in the markets as we've seen um, but how is it going to affect the economy itself. Can we say that the enthusiasm we're seeing in equity markets for Donald Trump is justified? Well, it's nice to be here, and I certainly think at least some of it's justified. So part of the issue is we have some optimism on the regulatory side. There's reason for optimism on the fiscal side, and so we have monetary policy which could

continue to normalize at a gradual pace. And even if we don't get big changes on immigration or some of the other policies, that's enough when we look at the economy itself to say, yeah, some of this is justified. We could do a little better going forward versus where we've been. So versus a forecast of muddle through going into the election, at least there's some upside risk that could transpire over the next year. And don what is the one thing that that Donald Trump and his team

need to get absolutely right? Is it the spending so they've promised to trillion? Is it enough if they and they get ten of that, or is it actually the repatriation of a lot of foreign cash under a new tax regime. So I think all those would help. If I said, the one thing they have to get right, I would go over and look at the trade side, because I think that's where the biggest uncertainty is at the moment, and that's not that hard to get right. What they have to do is basically not get it wrong.

So you could get some of the spending, you could get half of the spending, you could get the spending. Still, all that could be good in this environment where we've had lackluster growth for quite some time. I would say the removal of a negative in this case, some of the rhetoric on trade, and there's been some move in that direction over the last two weeks. We need to

see more. But if we see more of that, I really think that would help reassure people, and not just in the US but in other places as well, that there really is some upside potential here. Well. Obviously, it's going to take a while to get anything like a tax cut through Congress, so the effects are going to be down the road a bit. The president has a lot of power on his own to affect trade, So how much does rhetoric matter. How far can Trump go

on trade aid before it affects the economy. So there are a couple of things he's talked about, and this is in the first hunder day plan. There's the NAFTA issue. There's the t p P issue, and there's some concerns about China. So TPP looks like it's dead, and that could be a very early issue that could be done pretty much right away. NAFTA is something where you need a renegotiation, and there may be some appetite for that on all sides, so I'm not as worried about that one.

There there's some negotiating room. This could be a give and take in North America. China is the one where I think I'd like some reassurance just to say that we're not going to really get into a trade war, that we're not going to see the worst case scenario transpire. There's been some talk of labeling China currency manipulator. What that would do is start a discussion, So we'll see

if that happens, how the Treasury departments. The Treasury Department is going to react, but that's where I'd like some clarity, in particular around China as we look at what trade is going to be. Don are you concerned? It's my understanding actually that first of all, he'll focus on domestic policy and then he deals with trade, and then he

deals with China. Right he has lost tweet twenty one hours ago saying I'm working hard even on Thanksgiving trying to get Carrier, a c company to stay in the US. If he does focus a lot on domestic policy, then it doesn't increase the chances of him getting foreign policy,

your trade policy wrong. Well, this depends also who's advising him, And this is where I think there's a lot of attention being paid to who's coming in in the cabinet, how those individuals are going to view the world, what we're going to see in terms of policy advice that's

provided to the president. So yeah, I think it's okay to focus on domestic policy in the way we're talking about here, as long as there's a team assembled that can deal with some of the international items, and as long as there's not a push from the top to get into tariffs or a trade war those type of things. What what's the impact of a trade war? I mean, we we say trade war, but suppose he labels China

currency manipulator? Does that's like the old Monte Python joke of you know, if you don't surrender, I'll insult you again. Does it actually mean anything? Not directly, it would start a conversation. And I think the biggest risk is if we go down that road and there's some action on the other side that that comes about that we don't know at the moment. In other words, if we label

you currency manipulator, what do you do? And that's where frictions are always going to be treated poorly in economic models. So if we increase the friction in global trade, if we increase the friction in the economy, it's tough to grow in that type of environment. And I think that's where the analysis of the trade implications is going to

focus over the next few months. Well, what if I could, for let me just ask, uh done, have you heard any names of people on the economic side, because we've gotten all these foreign policy people are appointed, um, who would be advising the president? Elearned, Well, so there's clearly a hawkish move on the foreing policy side. I think we can safely say that at the moment, and I'm not sure I know who's going to get the President's here more or less over the next four years in

terms of whether the economy should go. But what I do think is we're looking at an environment where if we take a step back and we say, this is a global economy, whether we like it or not. We can do domestic policy, but let's do it in a global context. The more of that we get, I think, the better we're going to be. Don are you talking about retaliation from China? So there there are two questions right.

First of all, whether as Trump becomes president, then China moves to fill in this global leadership vacuum which the U s would leave if you retrench from foreign policy and global trade. But the other one is if Donald Trump or someone on his team say their currency manipulator, do they actually stop access of you know, US companies to certain you know, to the Chinese market essentially? Well, so there's the end of access. There's also just more

expensive access. If we talked about how tariffs could be implemented. So I think that there's a couple different issues here. There's the political issue of the region. In other words, part of the move on the t p P was for the United States to have some influence in Asia, pivot to Asia. That looks like that could be over and so that leaves a bit of a vacuum. It's natural for China to step into that position. I'm not sure that's bad. We'll see how that how that goes.

So the biggest thing that would worry me is some sort of retaliation, some sort of competition that's created on the price of goods on a tariff side. That's where I think you create the friction that would slow down growth. This is Bloomberg Surveillance and Michael McKey sitting in for Tom Keene and Francine Lackwi is with me today sitting in for David Gurr Or is it the other way around. You're sitting in for Tom and I'm sitting in for day. How do we know, Well, when the music stops, you

just grab a chair. Sitting in a chair next to me is Don rist Miller. He's the chief economist at Strategous. We were talking during the Brake brand about something that to go right up your alley, Um, the impact not just on the United States but on the world of what's going on in Europe. That has been the story every year since basically the financial crisis ended, and we still can't get away from it because in another week we have a referendum vote in Italy and you were

talking about how that is also affecting the markets. Yeah, it looks to me like the political uncertainty could be shifting to Europe. So we had this big build up to the US election, and then we had two weeks where we kind of processed a surprise, and now we have to start thinking about how the referendum in Italy will go. And Rensey said he would resign with a vote that went against him. We have an Austrian election, we have the French election next year, There's a German

election coming up. So this isn't gonna end. This is gonna continue for quite some time. Yeah. Although Don and I understand that there's a lot of political turmoil coming up potentially in Europe, but remember we had the Great Crisis, So Mike, it's not like it's anything new here in Europe. We are used to it. Do we worry too much about politics in Europe? I know it's difficult to predict, Don, but there is a sense of actually Brexit happened. The

polls weren't really predicting Trump happened. We weren't really predicting it, and so now everything is priced in that no referendum voter is priced in and also possible marrying lepen when his price in France, it seems to be Rensey's big

hope would be the polls are wrong. So we've seen the polls be incorrect and the Brexit vote the polls were somewhat off here in the United States that we could argue about whether it's the polls themselves or the interpretation of the polls, but certainly that the hope would be if you were Rerenzy that maybe the polls wrong again, maybe it could it could change. So I think the issue with political uncertainty as I see it is does the euro survive? Does the EU survive in a way

that that makes sense? And so if we had a euro member start to challenge EU membership, that seems tougher to swallow than the briggs And vote. Is that really at the forefront of anybody's mind or is it just sort of you know, do people look at Italy and

think that is something that could actually happen. Well, maybe not, But that's why it's useful, I think for market participants to to watch, in other words, what's priced in in terms of where we're going with let's say the FED in December, it looks like we've had that priced into the market if we look at at market odd So if we're trying to say where could the surprise be, Well, the surprise, certainly in the last few weeks, has been

the US election. The surprise going forward maybe somewhere else, and Italy's up there is something that could start a chain reaction. So by itself it's not that big a deal. But if this starts a chain reaction where we start getting EU referendums in Italy or in other places, I think that's that's something to consider. Right, So how should

the markets deal with it? Right? What you're implicating is that we kind of, you know, start jumping at shadows and looking at every world changing implication, even if it's as harmless in certain cases as a referendum, should the markets deal with that? So I expect the worst and hope for the best. Well that or well, let's let's put this way. Let's take the strengthen the dollar over the past few weeks. That makes some sense if we have fiscal stimulus coming in the US, if we've had

a regime change in terms of regulatory items. But it also makes sense in a context where whatever is happening with single party control now in the US, there's some certainty. The uncertainty is abroad, and so I certainly think for foreign currency traders as matters, let me ask you this. Uh, the markets are trading as if there is a new new normal or else we've gone back to the old normal. Do you think that is the case? Uh? There there seems to be this general view that the U s

economy is going to suddenly reignite. Yeah, I'm not sure we're all the way back to the old normal. Maybe we're a part of the way back to the old normal. In other words, we had this fear of deflation that was being driven by a lot of debt and aging, demographic, some of these structural items. So none of that's really changed, and and that was part of this new normal idea that trend growth would be slower because we have these large structural factors that are out there, So that's still

in place. It would seem to me what we're saying is for the next year maybe there's a reprieve for the next year, maybe there's a boost in sentiment, maybe there's a change in the regulatory side, things that could be done quickly, and then for the year after that, maybe there's the knock on effects of fiscal policy. So there's the indirect effects of stimulus right now in terms of sentiment. There's the direct effects of stimulus, say a

year from now, in terms of actual fiscal spending. And it looks like with single party controls something will get done. So it's all good for equity markets. Well, uh, until we get, say, bond deals up high enough where we have to start worrying about housing, or we have to start worrying about some of those secondary effects. I say, the near term risk and trade certainly makes sense. DoD Ris Miller with some optimistic views here on Black Friday. Maybe you want to go shopping because at least in

the short run things will be good. He's just chief you got of this tat Strategious. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm out on Twitter at Tom Keene David Gura is at David Gurra. Before the podcast, you can always catch us worldwide on Bloomberg Radio.

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