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The Diamond Market And Economy In 2022 · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
• 0:15
  Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com Slash podcast in the Bloomberg Interactive
• 0:24
  Speaker 1: Broker studio. As we speak, Jenna Drosos. She is all
• 0:27
  Speaker 1: tested up for the COVID passing with colors. I would
• 0:31
  Speaker 1: say she's the CEO of Signet Jewelers based in Accord, Ohio.
• 0:35
  Speaker 1: It's a publicly traded company. S i G is a
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  Speaker 1: ticker about a four billion dollar market. Cappin. Jenna, thanks
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  Speaker 1: so much for joining us here. Talk to us about
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  Speaker 1: the jewelry business in the world of a global pandemic.
• 0:47
  Speaker 1: Tell us what the last couple of years have been
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  Speaker 1: like for your business. The sixth sign it is I
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  Speaker 1: read that Signal is the world's largest retailer of diamond jewelry.
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  Speaker 1: Is that true? Yes, that's right. So we operate under
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  Speaker 1: a number of retail banners that many customers no k sales.
• 1:02
  Speaker 1: Jared Banter by piercing Pagoda. We have an online purely
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  Speaker 1: digital play retailer, James Allen dot com. Just recently in
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  Speaker 1: the last year purchased Diamonds Direct and Rocks Box, which
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  Speaker 1: is the number one jewelry rental and subscription business in
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  Speaker 1: the US. So we are number one in the US
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  Speaker 1: both in bricks and mortar and e commerce. We're also
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  Speaker 1: the number one jeweler in Canada with People's Jewelers and
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  Speaker 1: in the UK with Ernest Jones and H. Samuel. So
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  Speaker 1: I'm just looking at your fundamentals here on the Bloomberg.
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  Speaker 1: It's great with any stock you can take GF go
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  Speaker 1: and see your revenue. Uh and um, EPs, you guys
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  Speaker 1: aren't doing great business obviously, up fifty percent year over
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  Speaker 1: year in terms of revenue growth EPs at a near
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  Speaker 1: record high. UM. Why Why is that? This is really
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  Speaker 1: the culmination of several years of transformation that the company
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  Speaker 1: has been under and I'm very proud of our team
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  Speaker 1: for embracing those strategies and for the passion that they have.
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  Speaker 1: We we have been working to drive out all costs
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  Speaker 1: that customers don't see or care about, and we've invested,
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  Speaker 1: We've invested that in creating a much stronger digital presence.
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  Speaker 1: What we know about shoppers as they came through COVID
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  Speaker 1: is that they're much more interested in searching and browsing
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  Speaker 1: online before they go to a retail store. In fact,
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  Speaker 1: in our business, now nine of our highest value customers,
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  Speaker 1: so people who spend more than five dollars with us,
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  Speaker 1: interact with us both online and in stores. So this
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  Speaker 1: this is growth. I mean, if you look across different
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  Speaker 1: segments and I know you have a ton of new
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  Speaker 1: kind of high tech businesses springing up, is online sales
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  Speaker 1: your your biggest growth business. It's definitely the biggest new
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  Speaker 1: interaction point for our customers. Still about eighty percent of
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  Speaker 1: stores and jewels of sales in jewelry happen in store,
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  Speaker 1: so people aren't buying as much online, but they're definitely
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  Speaker 1: getting informed on line. We have features now like virtual
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  Speaker 1: try on online, virtual jewelry consulting, asynchronous chat where you
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  Speaker 1: can chat with someone one day and come back to
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  Speaker 1: the same chat a week later. So we've really invested
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  Speaker 1: in digital tools to make the shopping experience easy. So
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  Speaker 1: talk to us about the pandemic that two years did
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  Speaker 1: you shut down stores and how did you manage that.
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  Speaker 1: I'm guessing it's a regional situation in different parts of
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  Speaker 1: the country doing different types of policies. So we we
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  Speaker 1: took a very proactive stance on that to keep our
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  Speaker 1: team members safe. UM we closed our stores almost exactly
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  Speaker 1: two years ago on March twenty three. That was a
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  Speaker 1: scary thing to do for a retailer that was very
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  Speaker 1: brick and mortar focused, but we had already been transforming
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  Speaker 1: our digital operations the Christmas before. UM. Everyone of our
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  Speaker 1: sales associates had been working with iPads in the store,
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  Speaker 1: so within forty eight hours we turned those on in
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  Speaker 1: their living rooms and they were still able to serve
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  Speaker 1: of our customers. Our digital business really exploded during that
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  Speaker 1: time period and we were ready to lean into that pivot.
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  Speaker 1: And and I would say, if anything, it accelerated our transformation.
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  Speaker 1: That's you know that amazed me talking to different luxury
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  Speaker 1: retailers about how customers did make the pivot to digital. Like,
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  Speaker 1: if I'm gonna lay down a big chunk of money
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  Speaker 1: for something, whether it's a diamond or an automobile or
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  Speaker 1: a fur coat, I want to see it, touch it,
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  Speaker 1: feel it. But that wasn't necessarily the case. Do you
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  Speaker 1: buy a lot of fur coats? I do not. Well,
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  Speaker 1: you know you have to. You have to think about
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  Speaker 1: what matters most in each category, and in jewelry, the
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  Speaker 1: two key things that customers are looking for before they
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  Speaker 1: make an expensive purchase our consultation or advice and visualization.
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  Speaker 1: You want to see what it looks like. But think
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  Speaker 1: about trying to look at a diamond in a store
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  Speaker 1: using a loop. It's not very easy. I mean, you
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  Speaker 1: pull it back and forth in front of your eye.
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  Speaker 1: You can't see the diamond that Well, we came up
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  Speaker 1: with a technology where we take hundreds of photos of
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  Speaker 1: a diamond, blow it up forty times in HD You
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  Speaker 1: can actually see that the you know, a diamond much
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  Speaker 1: better now digitally than you can't even in the store. Yeah,
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  Speaker 1: I'm sure that's that's the case. What about the current
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  Speaker 1: war in Ukraine? How and the sanctions on Russia? How
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  Speaker 1: difficult is that as a diamond retailer When I'm I've
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  Speaker 1: read that Russia maybe the world's largest supplier of raw diamonds.
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  Speaker 1: So thankfully we don't have any operations on the ground
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  Speaker 1: in Russia or Ukraine, but we did act very quickly
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  Speaker 1: on this um. Signet has been a leader in responsible
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  Speaker 1: and ethical sourcing of jewelry now for more than a decade,
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  Speaker 1: where founders of the Responsible Jewelry Council, members of the
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  Speaker 1: World Diamond Council, and we actually go above and beyond
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  Speaker 1: that and have our own Signet Responsible Sourcing protocol. So
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  Speaker 1: customers for many years have been able to count on
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  Speaker 1: everything in a Signet store being pristinely sourced. And we're agile.
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  Speaker 1: We have a group of changing vendors. We've gone to them,
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  Speaker 1: We've said we don't want any diamonds sourced after this
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  Speaker 1: conflict that came from Russia in our jewelry. We've stopped
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  Speaker 1: our own direct interaction and so customers can feel very
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  Speaker 1: good about buying jewelry at Signet. All right, Jenna, thank
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  Speaker 1: you so much for coming, and we really appreciate you
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  Speaker 1: coming into our studios here today. Jennet Drosos, CEO of
• 6:19
  Speaker 1: Signet Jewelers again public and traded company s i G.
• 6:23
  Speaker 1: They're based in Akron, Ohio, but Jenna joins us here
• 6:26
  Speaker 1: in New York and we appreciate that. All Right, Supreme
• 6:32
  Speaker 1: Court nomination, got another one coming. That means we're gonna
• 6:36
  Speaker 1: have some holly contested I guess some hearings, if you will.
• 6:39
  Speaker 1: June Grasso, host of Bloomberg Law and Bloomberg Opinion, joins
• 6:42
  Speaker 1: us here in our Bloomberg Interactive Brooker Studio. All right,
• 6:44
  Speaker 1: So Katanji Brown Jackson, June, what can you tell us
• 6:48
  Speaker 1: about Katanji Brown Jackson? Well, she is currently uh appellate
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  Speaker 1: court on the d C Circuit Court of Appeals, which
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  Speaker 1: is sort of known as the second highest court in
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  Speaker 1: the and it's the feeder court for the Supreme Court.
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  Speaker 1: And um, she was a district court judge for ten years.
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  Speaker 1: She just had a hearing last year to get onto
• 7:07
  Speaker 1: the d C Circuit Court of a judge. She has
• 7:10
  Speaker 1: a background as a public defender, which is something that's
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  Speaker 1: so unusual on the court. The last person who defended
• 7:17
  Speaker 1: criminals who sat on the court was um was it
• 7:21
  Speaker 1: was decades ago. So what what? Um? What we're saying
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  Speaker 1: seeing is that she might be attacked because of her
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  Speaker 1: defense of you know people, and that's one of the
• 7:32
  Speaker 1: attacks that they lodged when she was at her I
• 7:37
  Speaker 1: just remember, I just remember the Cavanaugh hearing being so ugly,
• 7:41
  Speaker 1: so ugly, and so many images that are seriously, people's
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  Speaker 1: you know, literally television images. How do you think this
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  Speaker 1: one's gonna go? Well, if you remember the Amy Coney
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  Speaker 1: Barrett hearings, which were after the caval hearings were not
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  Speaker 1: that ugly. Probably you remember that because you remember Kavanaugh
• 7:55
  Speaker 1: because it stood out, and we remember Clarence Thomas. There
• 7:58
  Speaker 1: are some hearings that really and out, and a lot
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  Speaker 1: of times you don't remember what what the the nominee said.
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  Speaker 1: You worry you remember what the attack on the nominee was.
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  Speaker 1: It's all about the questions in these kinds of hearings.
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  Speaker 1: It's all about the senators getting their questions in it.
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  Speaker 1: So you'll find a lot of the Republican senators who
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  Speaker 1: have presidential ambitions, like Josh Holly Ted Cruz are going
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  Speaker 1: to be on the attack most likely in these hearings.
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  Speaker 1: Even though I mean her record is I would say,
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  Speaker 1: I mean it's it's difficult to assail her on certain points.
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  Speaker 1: For example, the hot button issues like abortion, religious rights.
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  Speaker 1: She hasn't written about that. She's been on the court
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  Speaker 1: for only a few months, so she hasn't written about that,
• 8:41
  Speaker 1: and her as a district court judge, you don't write
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  Speaker 1: about those things. So they're not gonna be able to
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  Speaker 1: get her on that. So they found other things too,
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  Speaker 1: assail her on whoa like what? Like what? That's a
• 8:52
  Speaker 1: good question. That's a good question. Let me with that
• 8:55
  Speaker 1: without we don't want to get political about it, obviously,
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  Speaker 1: Um but if you when you were at Harvard Law
• 9:03
  Speaker 1: or wherever you studied, I'm sure you had to take
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  Speaker 1: the other side occasionally, right, So put yourself in the
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  Speaker 1: shoes of a white male Republican. I wonder which one
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  Speaker 1: of the few that around the Judiciary Committee, all of
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  Speaker 1: them except for one, there's one. There's one female Republican.
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  Speaker 1: I will tell you, because we know what they're going
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  Speaker 1: to attack on. Basically, they're going, what would you do
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  Speaker 1: if you were advising the Republican Party? How do you
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  Speaker 1: get rid of kenjy kb J? Can't do it. They
• 9:32
  Speaker 1: can't get rid of her unless the Democrats, who have
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  Speaker 1: held together, by the way, all fifty Democrats on all
• 9:37
  Speaker 1: of Biden's nominees. Unless one of them suddenly says Joe
• 9:40
  Speaker 1: Manchin kristin cinema, Oh, I'm not going to support her.
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  Speaker 1: They really can't get her. And the thing is that
• 9:46
  Speaker 1: so the attacks are going to be. Mitch McConnell has
• 9:49
  Speaker 1: already signaled this. She's soft on crime. She was a
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  Speaker 1: public a federal public defender, so she's soft on crime.
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  Speaker 1: And also Josh Holly came out with something a week
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  Speaker 1: ago that has not been raised in the three times
• 10:01
  Speaker 1: she's been before the Judiciary Committee and including the one
• 10:05
  Speaker 1: time that she was there when he was questioning her,
• 10:07
  Speaker 1: and that's that she's soft on child pornographers. That her sentencing. Now,
• 10:13
  Speaker 1: this is a good area for Republicans because who doesn't
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  Speaker 1: hate child pornographers? You know, it's just certainly the Republicans
• 10:21
  Speaker 1: do right, and the Democrats do y'all do right. It's
• 10:25
  Speaker 1: and also it doesn't involve and it's about sentencing, and
• 10:28
  Speaker 1: it doesn't involve the sensitive area of racist, racist sentencing,
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  Speaker 1: you know where that's been alleged. So she in point
• 10:36
  Speaker 1: of fact, she's um, I think about nine defendants and
• 10:40
  Speaker 1: she has sentenced to to below two to the minimum
• 10:45
  Speaker 1: and I think seven to the a little below the minimum.
• 10:50
  Speaker 1: Why wouldn't you just throw away the key because it's
• 10:53
  Speaker 1: it's child pornography. For child pornography, this is your your
• 10:56
  Speaker 1: what you have stuff on your computer? Right? You could
• 10:58
  Speaker 1: go to prison for decade. The laws are really out
• 11:01
  Speaker 1: of date, and in those cases, some of them, the
• 11:04
  Speaker 1: federal prosecutors recommended below the minimum. The sentencing laws are
• 11:08
  Speaker 1: out of date. And this all the judges, about six
• 11:11
  Speaker 1: judges sentenced below the maximum on those kinds of crimes
• 11:16
  Speaker 1: because it's you know, you have to compare them to
• 11:20
  Speaker 1: you know, murder, two different arson. What's the timing on
• 11:23
  Speaker 1: this whole process. They expect that before the Senate goes
• 11:27
  Speaker 1: away on its Easter break that the process will be done,
• 11:31
  Speaker 1: and maybe they'll be a vote before then. They're hoping
• 11:33
  Speaker 1: that they will be a vote before them. And from
• 11:35
  Speaker 1: your perspective, what do you think the odds are of
• 11:37
  Speaker 1: her getting confirmed here? I think the odds are. I'm
• 11:40
  Speaker 1: gonna say, just to leave, just to leave a so
• 11:44
  Speaker 1: Matt will tell me later on. But that doesn't do
• 11:47
  Speaker 1: anything really for the direction now. And that's why that's
• 11:50
  Speaker 1: why this is not going to be you know, one
• 11:52
  Speaker 1: of those like Kavanaugh that meant something, Amy Coney, Barrett,
• 11:56
  Speaker 1: that meant something. But this is just replacing one liberal
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  Speaker 1: with another liberal in a court that has a sixth
• 12:03
  Speaker 1: person conservative majority. All right, all right, Juan, thank you
• 12:07
  Speaker 1: so much for joining us here in our studio June Grasso,
• 12:10
  Speaker 1: host of Bloomberg Law and Bloomberg Opinion, giving us the
• 12:13
  Speaker 1: latest on the Supreme Court process. Hopefully, Uh, get the
• 12:18
  Speaker 1: Katanji Brown Jackson. I guess if you're a member of Congress,
• 12:21
  Speaker 1: I'd like to get this done by easter. Well, we've
• 12:27
  Speaker 1: been spending a lot of time recently talking about the
• 12:30
  Speaker 1: rates market, the yield curve. We're at or near inversion
• 12:32
  Speaker 1: in various portions of the yield curve. What does that mean?
• 12:35
  Speaker 1: Let's bring in r J. Gallow, Senior portfolio manager for
• 12:38
  Speaker 1: Federated Hermes. R J. When you see certain parts of
• 12:41
  Speaker 1: the U S yield curve at or near inversion, does
• 12:44
  Speaker 1: that meaningfully raised the recession risk in your mind? Good morning?
• 12:50
  Speaker 1: I think it reflects the fact that we have a
• 12:54
  Speaker 1: shock going on, sort of a series of them, the
• 12:57
  Speaker 1: most notable being the Russian invasion of Ukraine in the
• 13:00
  Speaker 1: area economic impacts in terms of the West response to
• 13:03
  Speaker 1: that invasion. Uh. That's a clear aggregate supply shock, broad based, exogenous,
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  Speaker 1: if you will, coming from the geopolitical realm. UM, and
• 13:12
  Speaker 1: that historically increases the risk of recession. UM. Add to
• 13:17
  Speaker 1: that that the Feds in tightening mode. UH, and historically
• 13:21
  Speaker 1: that also suggests increased risk of recession. Oftentimes, when the
• 13:24
  Speaker 1: FED has to pivot aggressively to fight inflation, the result
• 13:28
  Speaker 1: is a recession eventually ensues. So we're facing both of
• 13:31
  Speaker 1: those factors, the geopolitical shock and in the sense one
• 13:35
  Speaker 1: pivot from transitory too inflation is a problem. It makes
• 13:38
  Speaker 1: sense that the Yolk curb is flattening given both of
• 13:41
  Speaker 1: those you put those two together, it's clear that the
• 13:43
  Speaker 1: recession risk is rising in the market's mind. However, I
• 13:46
  Speaker 1: don't think the Yolk curb inverting is causal. I don't
• 13:48
  Speaker 1: think that ever causes recessions. I understand that people you know,
• 13:53
  Speaker 1: borrow short, land long, and can slow down uh the
• 13:57
  Speaker 1: financial mechanism that you see in financial intermediation. But I
• 14:00
  Speaker 1: think that the flattening of the curve is more people's
• 14:02
  Speaker 1: expectations that recession risk has risen. It's not a causal
• 14:05
  Speaker 1: relationship in my mind. I mean, some people have been
• 14:08
  Speaker 1: saying lately the yield curve may have caused COVID nineteen.
• 14:11
  Speaker 1: We saw it invert right before the pandemic. That was
• 14:14
  Speaker 1: a joke to those who didn't get it. I'm looking
• 14:16
  Speaker 1: at Paul's face, thinking he didn't get that correlation. He
• 14:20
  Speaker 1: didn't get that. No, I mean obviously that that was
• 14:23
  Speaker 1: our most recent recession, right, And UH, if you believe
• 14:26
  Speaker 1: in the predictive qualities of an inverted yield curve, you've
• 14:29
  Speaker 1: got to give it a lot of credit for that. Um.
• 14:32
  Speaker 1: No one could could have seen that coming. Nonetheless, we
• 14:35
  Speaker 1: have very high inflation and there is concerns of a
• 14:40
  Speaker 1: growth slow down. UM. Even if we don't go into
• 14:43
  Speaker 1: a recession, it looks like we could almost grind to
• 14:47
  Speaker 1: a halt here. Are you worried about stagflation? UM? I
• 14:51
  Speaker 1: think about six to twelve months ago, the words stagflation
• 14:55
  Speaker 1: sort of made my skin crawls. You know, it seems
• 14:58
  Speaker 1: inappropriate for the context that the time. I now think
• 15:01
  Speaker 1: it's a word we should be using. Uh. It's very
• 15:04
  Speaker 1: clear that the exogenous shock arising from the conflict, UH
• 15:10
  Speaker 1: is the kind of thing that results in broad based inflation,
• 15:13
  Speaker 1: which was already bad before the Russian troops invaded Ukraine.
• 15:17
  Speaker 1: It's also the kind of thing that produces demand destruction
• 15:21
  Speaker 1: ultimately slows down economic activities. So I do think stagpulation
• 15:25
  Speaker 1: is an appropriate word probably more so for Europe. Maybe
• 15:28
  Speaker 1: I'm being extreme, but I think when you actually have
• 15:31
  Speaker 1: recession outcomes and inflation together, uh, stagflation is the right
• 15:35
  Speaker 1: word to use now here in the United States. I
• 15:37
  Speaker 1: think it's a stagflationary shock. Uh. We may be able
• 15:41
  Speaker 1: to skirt a recession. The risks clearly risen, as evidenced
• 15:44
  Speaker 1: by the yokurve um, but it's not baked in the cake.
• 15:48
  Speaker 1: I mean, we have a lot of strong economic momentum
• 15:50
  Speaker 1: here in both the labor market, balance sheets are strong,
• 15:53
  Speaker 1: both for households and businesses. Uh, there's a good chance
• 15:57
  Speaker 1: that the United States can sort of power through this um.
• 16:00
  Speaker 1: That said, global markets are global in nature, and the
• 16:02
  Speaker 1: response that you're seeing in terms of the Yoeld curve
• 16:05
  Speaker 1: I think reflects the rising risks that are there. R J.
• 16:08
  Speaker 1: We got the oil on the move higher again today
• 16:11
  Speaker 1: w T I coot up over five about dollars a barrel,
• 16:15
  Speaker 1: just kind of, you know, reiterating in people's minds the
• 16:18
  Speaker 1: inflationary pressures that are out there in this economy. How
• 16:21
  Speaker 1: do you think about inflation, whether it's you know, the
• 16:24
  Speaker 1: duration of this inflationary cycle we're in or the severity
• 16:28
  Speaker 1: I'm struck by the fact that the markets still have
• 16:33
  Speaker 1: pretty high confidence. If you look at the the slope
• 16:36
  Speaker 1: or the yield curve of of the U S TIPS
• 16:38
  Speaker 1: break evens, UH, it's very downward sloping. It has been
• 16:42
  Speaker 1: inverted for some time, meaning that near term expectations for
• 16:46
  Speaker 1: inflation are much higher than long term expectations. So, for example,
• 16:49
  Speaker 1: UM I LB on your Bloomberg, the break even of
• 16:54
  Speaker 1: two and three years is are each well north of
• 16:56
  Speaker 1: four percent. Four seventy eight for two year break evens,
• 17:00
  Speaker 1: you know, astronomically high by by recent standards in recent decades.
• 17:04
  Speaker 1: When you go out to the ten year, it's down
• 17:06
  Speaker 1: to two high in the history of tips, but that's
• 17:09
  Speaker 1: still a sharp disinflation between the shorter break even and
• 17:13
  Speaker 1: the longer break even. You go all the way out
• 17:15
  Speaker 1: to the third year, it's a two. So I think
• 17:17
  Speaker 1: that the Fed has given the market what it needs
• 17:21
  Speaker 1: in the sense that the market needs to believe that
• 17:23
  Speaker 1: the Federal Reserve believes inflation fighting is still a huge
• 17:26
  Speaker 1: part of their mandate, and in fact they are now
• 17:29
  Speaker 1: focusing primarily on that side of their dual mandate. If
• 17:32
  Speaker 1: the Fed we're not to have done that, I think
• 17:34
  Speaker 1: we'd be facing a much more difficult bond market right
• 17:37
  Speaker 1: now than we already have UM in the sense that
• 17:40
  Speaker 1: nominal yields will be rising more rapidly, that these inflation
• 17:44
  Speaker 1: break even is probably wouldn't be nearly as inverted, and
• 17:46
  Speaker 1: losses would be more stark than they already are. And
• 17:48
  Speaker 1: it's been a pretty rough year for bonds. When you
• 17:51
  Speaker 1: think about the UH. The the Treasury Aggregate Index, for example,
• 17:56
  Speaker 1: is on a year today basis, the Bloomberg Agreed Index,
• 17:58
  Speaker 1: I should say, UH is now down five two percent,
• 18:03
  Speaker 1: and the Treasury Index itself, that component is down four
• 18:06
  Speaker 1: six So the inflation process, I think people believe if
• 18:10
  Speaker 1: that's doing what it needs to do, and inflation should
• 18:13
  Speaker 1: diminish as we move forward. If it doesn't happen, If
• 18:15
  Speaker 1: that doesn't happen, the bond market sell off will will
• 18:17
  Speaker 1: actually become more difficult, it will become more protractive. All right,
• 18:21
  Speaker 1: r J, thanks so much for joining us. Once again.
• 18:23
  Speaker 1: I always appreciate getting your perspective there are Gallo, senior
• 18:27
  Speaker 1: portfolio manager for Federated Hermes UH. Looking about stagflation is
• 18:32
  Speaker 1: something that is a term that's coming into our j's
• 18:35
  Speaker 1: vocabulary recently, and he's a wolverine, and he's a Michigan wolverine.
• 18:40
  Speaker 1: Actually was looking. I think he might have gone to
• 18:43
  Speaker 1: the University of Michigan for a four year period in
• 18:46
  Speaker 1: which Michigan won every single game. Is that right against
• 18:51
  Speaker 1: the Ohio State University. This is the Big Take, the
• 18:57
  Speaker 1: best of Boomberg's in depth original reporting from around the globe.
• 19:01
  Speaker 1: This is a really fast moving story that caused a
• 19:04
  Speaker 1: lot of outrage among investors. This is so fascinating. Market
• 19:07
  Speaker 1: shutdown in a way it's never done before. That's gonna
• 19:10
  Speaker 1: have consequences for years to come. The Big Take on
• 19:14
  Speaker 1: Bloomberg Radio. All Right, Matt, I've told you before I
• 19:18
  Speaker 1: take New Jersey Transit. Are we doing a sounder? I
• 19:22
  Speaker 1: just talk right over there. Oh well, no worries, Okay,
• 19:25
  Speaker 1: I gotta get this story. Did the sounder dud? We? Okay?
• 19:27
  Speaker 1: All right? But you know, so I take New Jersey
• 19:29
  Speaker 1: Transit in every day during the week man, and I
• 19:31
  Speaker 1: would say the trains now are maybe fifty full, but
• 19:34
  Speaker 1: on the weekends, just backed everybody's coming in and see
• 19:37
  Speaker 1: games and go to bars and restaurants and stuff. But
• 19:39
  Speaker 1: people ain't coming back to work in size, and that's
• 19:42
  Speaker 1: a problem for New York City. I think Alicia Diaz,
• 19:44
  Speaker 1: she's a writer for Bloomberg's Hop Live team, She's got
• 19:46
  Speaker 1: the big take story of the day again, Alicia, thanks
• 19:50
  Speaker 1: so much for joining us on our Bloomberg and Arctic
• 19:51
  Speaker 1: Broker studio. What you find came to work today? She
• 19:54
  Speaker 1: came to work today absolutely, which is probably more than
• 19:56
  Speaker 1: you can say for a lot of her supervisors. Um,
• 20:01
  Speaker 1: So we kind of looked at this as two groups.
• 20:03
  Speaker 1: There's there's the tourist group. You know, we we're not
• 20:05
  Speaker 1: having as many international visitors. And then also we're not
• 20:08
  Speaker 1: having those, like you mentioned, the people who are commuting
• 20:10
  Speaker 1: into the office. And so it seems like as a result,
• 20:14
  Speaker 1: a lot of those restaurants, the coffee shops, the places
• 20:17
  Speaker 1: around Midtown and fied I are kind of just struggling
• 20:20
  Speaker 1: to keep their doors open. And that what the kids
• 20:23
  Speaker 1: call the financial district. That's right, my daughter trying to
• 20:26
  Speaker 1: explain that to me as like kids, I've been working
• 20:28
  Speaker 1: down on Wall Street for thirty five years, just just
• 20:31
  Speaker 1: tuned into that as well. The kids who sit around
• 20:34
  Speaker 1: all right, so what has to happen here is it
• 20:37
  Speaker 1: are the tourist coming back, because I was in Midtown
• 20:40
  Speaker 1: a couple of weeks ago and I thought I felt
• 20:41
  Speaker 1: a much more European international tourist. Play are we seeing
• 20:46
  Speaker 1: any of that. It seems like it's slowly coming back,
• 20:49
  Speaker 1: especially with um you know, Oh Macron being subdued, but
• 20:53
  Speaker 1: it looks like more international tourist at least the level
• 20:56
  Speaker 1: it was before the pandemics still aren't returning, and that
• 20:58
  Speaker 1: could be to travel restrictions. Are still nervous about getting
• 21:02
  Speaker 1: COVID or spreading covid um, and international tourists had to
• 21:06
  Speaker 1: spend the most money, and so that's why a lot
• 21:08
  Speaker 1: of the sectors relying on the most. So the problem,
• 21:11
  Speaker 1: I mean, I can imagine here where we're sitting in Midtown,
• 21:15
  Speaker 1: the problem must be that no one's coming back to
• 21:17
  Speaker 1: the office because all of the big box stores, for example,
• 21:20
  Speaker 1: that are downstairs in this building or across the street
• 21:22
  Speaker 1: are empty still. I mean they haven't been um filled
• 21:27
  Speaker 1: back up again. I don't understand what the problem is
• 21:30
  Speaker 1: in the Bronx because here in New York seven seven
• 21:34
  Speaker 1: point six percent unemployments, some of the worst of any
• 21:37
  Speaker 1: major sitting in the country, But the Bronx is eleven
• 21:39
  Speaker 1: percent And it's not exactly a Wall Street hub up there, right,
• 21:43
  Speaker 1: So what's the problem. That's a great question. And it
• 21:45
  Speaker 1: seems like, um, this is also um, disproportionately impacting um
• 21:51
  Speaker 1: a lot of black workers as well. UM. And that
• 21:53
  Speaker 1: could be because um, you know, they're more so in
• 21:57
  Speaker 1: the service industry and they're more doing face to face
• 22:01
  Speaker 1: jobs like being in healthcare or that kind of thing,
• 22:03
  Speaker 1: and so um, that rate is almost double for for
• 22:07
  Speaker 1: other workers. And so UM, there could be some ties
• 22:10
  Speaker 1: to that. I get so workers and the Bronx basically
• 22:13
  Speaker 1: would well, they'd live in the Bronx, they'd come down
• 22:15
  Speaker 1: and work and fini die. But since no one's going
• 22:18
  Speaker 1: to Wall Street, they can't get those jobs back, which
• 22:21
  Speaker 1: is why their unemployment is higher. That's a very real possibility.
• 22:24
  Speaker 1: So what are we hearing about how we're going to
• 22:27
  Speaker 1: repurpose some of these commercial real estate buildings in like
• 22:30
  Speaker 1: Midtown Manhattan for example. Ive hear some people saying, well,
• 22:32
  Speaker 1: maybe'll convert them into apartments. That might address maybe some
• 22:34
  Speaker 1: of the crazy craziness that we have here in the
• 22:37
  Speaker 1: in the residential rental market. What are you hearing? Yeah,
• 22:40
  Speaker 1: so we're hearing a mix of things. Definitely that residential
• 22:43
  Speaker 1: aspect where this could be more affordable housing. Some are
• 22:47
  Speaker 1: saying it's going to be more likely um, like luxury
• 22:49
  Speaker 1: apartment buildings and so, um, does that really address the
• 22:52
  Speaker 1: problem is another question. Um. I've also heard that this
• 22:56
  Speaker 1: kind of opens the door in terms of just recreating
• 23:00
  Speaker 1: town and maybe adding more cultural hobs or or more
• 23:03
  Speaker 1: biotech incubators and that type of thing, and really rethinking this, um,
• 23:07
  Speaker 1: like corporate centers doing that howny thing is gonna do that?
• 23:10
  Speaker 1: Is it the city administered the Mayor's office, is it
• 23:13
  Speaker 1: the I guess that may have been Office of Economic
• 23:15
  Speaker 1: Deployment or something in the city. Is it the city
• 23:17
  Speaker 1: that's really gonna do that or is it gonna be
• 23:18
  Speaker 1: maybe a public private partnership. Um. They've been talks at
• 23:22
  Speaker 1: least with the mayor's new plan of doing a public
• 23:23
  Speaker 1: private partnership and so I think that's a very real
• 23:26
  Speaker 1: possibility as well. Um. And they've just talked about like
• 23:29
  Speaker 1: inklings and ideas, but it doesn't seem like anything is
• 23:32
  Speaker 1: super concrete. Just yeah, UM, so interested to see what
• 23:35
  Speaker 1: kind of comes out of those plans and ideas. Is
• 23:38
  Speaker 1: there a connection with the crime level It seems kind
• 23:41
  Speaker 1: of silly to worry about crime if you're a kid
• 23:43
  Speaker 1: who grew up in their seventies, right, because there was
• 23:45
  Speaker 1: real crime back then relative to this. But this is
• 23:48
  Speaker 1: much worse than the kind of Giuliani Bloomberg Eras you know,
• 23:52
  Speaker 1: we see also a huge amount of homelessness, drug use, um, theft.
• 23:58
  Speaker 1: Is that is that a problem that's causing some of
• 24:02
  Speaker 1: this unemployment or is the unemployment problem that's causing that.
• 24:06
  Speaker 1: That's a great question, and I I think that there
• 24:08
  Speaker 1: is some aspect that we looked at in terms of
• 24:10
  Speaker 1: people leaving Manhattan. Um, it doesn't seem to be a
• 24:14
  Speaker 1: mass accidus by any means, but it seems like that
• 24:17
  Speaker 1: could be people starting to trickle out of the city,
• 24:19
  Speaker 1: whether it's due to high rent or or crime. And
• 24:23
  Speaker 1: um that being such a center of the economic hub
• 24:27
  Speaker 1: for the entire city, UM could have a big impact.
• 24:30
  Speaker 1: All Right, Alicia, thank you so much for joining us here.
• 24:32
  Speaker 1: Alicia didya. She's a reporter for a Bloomberg's Top Live team,
• 24:37
  Speaker 1: joining us here on a Bloomberg Interactive a broker studio.
• 24:41
  Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
• 24:44
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• 24:48
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• 24:52
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• 24:56
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• 24:59
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