Bloomberg Daybreak Holiday: Earnings, Retail, Markets

Welcome to a special holiday edition of Bloomberg day Break. 0:00:05.400 --> 0:00:09.039 US markets are closed for President's Day. I'm Nathan Hager, 0:00:09.160 --> 0:00:12.160 and coming up on today's program, what's ahead for earnings 0:00:12.160 --> 0:00:15.640 from the world's number one big box retailer, Plus how 0:00:15.640 --> 0:00:19.040 to prepare for a second Trump presidency, why the obvious 0:00:19.079 --> 0:00:21.759 market bets might not be the right ones, And we 0:00:21.840 --> 0:00:25.000 speak to a big name in architecture and design here 0:00:25.079 --> 0:00:28.320 his take on getting workers back to the office. That's 0:00:28.360 --> 0:00:31.520 all straight ahead on this show. First, let's begin with 0:00:31.560 --> 0:00:35.639 a conversation on earnings from Walmart. The companies do out 0:00:35.680 --> 0:00:39.159 with fourth quarter results on Tuesday. Here for a preview 0:00:39.240 --> 0:00:43.120 is Bloomberg Intelligence Senior analyst Jennifer Bartashis, who keeps an 0:00:43.159 --> 0:00:46.320 eye on all things retail for us. Jen great to 0:00:46.360 --> 0:00:48.559 have you with us on the holiday. So this is 0:00:48.680 --> 0:00:52.040 a holiday quarter for Walmart. Shall we say it's going 0:00:52.120 --> 0:00:53.200 to be happy returns? 0:00:54.200 --> 0:00:56.400 In general? I think it was a very strong holiday 0:00:56.440 --> 0:01:01.360 season for Walmart. When consumers are in that placed directly 0:01:01.360 --> 0:01:04.840 into Walmart's strength. And when we look at what we 0:01:04.920 --> 0:01:08.479 observed in the stores, you know, we saw a lot 0:01:08.480 --> 0:01:11.480 of you know, customer engagement with with Walmart during the 0:01:11.640 --> 0:01:14.720 entire quarter from Black Friday all the way through, and 0:01:14.800 --> 0:01:17.319 so there's every reason to think that they should they 0:01:17.319 --> 0:01:18.520 should have a pretty good quarter. 0:01:19.000 --> 0:01:22.200 Are we going to see the kind of markdowns around 0:01:22.280 --> 0:01:24.840 the holidays that could eat into margins? 0:01:25.319 --> 0:01:28.319 Well, actually, I think that, you know, Walmart has done 0:01:28.319 --> 0:01:30.920 a very good job of changing the way they plan 0:01:31.040 --> 0:01:34.800 for holiday and being much more measured with regards to inventory. 0:01:35.440 --> 0:01:38.039 When we really run into problems with markdowns, it's when 0:01:38.280 --> 0:01:41.039 there's just too much inventory and they're not able to 0:01:41.040 --> 0:01:43.800 sell through it. In our channel checks when we've been 0:01:43.840 --> 0:01:47.400 in stores, we actually didn't see a very high level 0:01:47.440 --> 0:01:50.760 of markdowns, which is very very promising, and that means 0:01:50.800 --> 0:01:53.680 that they really probably sold through the majority of their 0:01:53.680 --> 0:01:57.240 holiday inventory according to plans, so that should have very 0:01:57.280 --> 0:02:00.440 little impact on gross margin at least for the quarter. 0:02:00.680 --> 0:02:02.280 So what are we thinking that we're going to see 0:02:02.320 --> 0:02:04.560 in terms of the sales mix. When you think about 0:02:04.600 --> 0:02:07.120 a holiday quarter, you're thinking about a lot of big 0:02:07.160 --> 0:02:11.480 ticket gift items. Possibly at the same time, Walmart has 0:02:11.760 --> 0:02:15.359 a lot of those staples that it sells throughout the year. 0:02:15.360 --> 0:02:19.200 I'm thinking about groceries and other lower cost items. So 0:02:19.320 --> 0:02:21.240 what are we thinking in terms of a sales mix 0:02:21.360 --> 0:02:22.520 around a holiday quarter. 0:02:22.800 --> 0:02:25.040 Well, even for the holiday quarter, I think their sales 0:02:25.040 --> 0:02:28.680 mix still skews to the consumables. If you think about 0:02:28.680 --> 0:02:32.080 Thanksgiving fell in the quarter, that's a huge food holiday. 0:02:32.400 --> 0:02:35.080 We saw traffic spike at Walmart as people were going 0:02:35.120 --> 0:02:39.520 in to buy ingredients for those celebrations, and they just 0:02:39.600 --> 0:02:43.200 sell so much food. But the good news is that 0:02:43.680 --> 0:02:46.680 because inflation has been moditoring moderating a little bit, and 0:02:46.720 --> 0:02:50.680 because Walmart was really quite outspoken and with regards to 0:02:50.760 --> 0:02:54.880 holding prices study from last year, especially on holiday like 0:02:54.919 --> 0:02:58.080 holiday related foods, there may been a little extra money 0:02:58.080 --> 0:03:01.240 in people's pockets to actually buy into the higher margin 0:03:01.280 --> 0:03:04.800 part of the store, which is general merchandise. And while 0:03:04.840 --> 0:03:07.960 we didn't expect to see a lot of big tickets sales, 0:03:08.240 --> 0:03:10.640 we do expect that they'll have done a little bit 0:03:10.639 --> 0:03:14.400 better on things like apparel, beauty items, things that are 0:03:14.600 --> 0:03:18.359 smaller level indulgences but make good gifting items. 0:03:18.720 --> 0:03:20.640 It would be interesting to see if we do get 0:03:20.639 --> 0:03:24.000 that kind of mix, because even though inflation is coming down, 0:03:24.040 --> 0:03:26.720 it is still at pretty elevated level. So I wonder 0:03:26.760 --> 0:03:29.400 what you're thinking in terms of what we could see 0:03:29.720 --> 0:03:33.680 when it comes to consumers possibly trying to buy items 0:03:33.680 --> 0:03:36.000 that sort of protect them from inflation at a place 0:03:36.040 --> 0:03:36.640 like Walmart. 0:03:36.880 --> 0:03:39.880 Well, you know, with regards to inflation, you know, we 0:03:39.960 --> 0:03:43.320 are seeing some disinflation in food, but it's not across 0:03:43.400 --> 0:03:48.279 every category. And so what we're continuing to see customers 0:03:48.320 --> 0:03:53.640 and consumers gravitate to value and so, you know, where 0:03:53.680 --> 0:03:57.200 they feel that they're getting a good value. Walmart has 0:03:57.240 --> 0:04:00.600 been pretty aggressive in rollbacks where they've seen inflation come down, 0:04:01.440 --> 0:04:05.800 and that generally attracts consumer attention. And so the inflation, 0:04:05.880 --> 0:04:07.760 this inflation we're seeing is more on the food side 0:04:07.760 --> 0:04:11.040 of the business at this point, and so we you know, 0:04:11.080 --> 0:04:13.200 we just we we do see that as a positive, 0:04:13.920 --> 0:04:15.840 but it's still going to be a little bit of 0:04:15.840 --> 0:04:17.560 time before things really smooth out. 0:04:17.760 --> 0:04:19.960 And of course Walmart has a fair amount of competition 0:04:20.279 --> 0:04:24.720 in the food space, not just from its more traditional competitors, 0:04:24.720 --> 0:04:27.560 but even now from Amazon, which is of course a 0:04:27.760 --> 0:04:31.800 huge competitor for Walmart. Just across the board, Where do 0:04:31.839 --> 0:04:35.160 you see Walmart in terms of market share against some 0:04:35.200 --> 0:04:38.800 of those other really big competitors in the retail space. 0:04:38.800 --> 0:04:41.559 Well, Walmart does have the lion's share of market share, 0:04:42.040 --> 0:04:46.000 especially in grocery. But you know, there's there are never 0:04:46.120 --> 0:04:50.839 ending threats with regards to competition in this space. Because 0:04:50.839 --> 0:04:53.040 it's a very low margin business and because it is 0:04:53.200 --> 0:04:57.359 an area where everybody needs to buy food and basic essentials, 0:04:57.880 --> 0:05:02.080 there's just a lot of competition. Amazon has definitely been 0:05:02.160 --> 0:05:04.760 sending indications that it wants to step up its game 0:05:05.440 --> 0:05:08.240 and that it wants to become even more kind of 0:05:08.279 --> 0:05:12.479 double down in grocery. There are some big pieces of 0:05:12.520 --> 0:05:14.680 that strategy that we need to understand a little bit 0:05:14.680 --> 0:05:18.960 better and how quickly that will materialize. Because Walmart's really 0:05:19.000 --> 0:05:21.800 big strength is that they have all their stores right, 0:05:22.040 --> 0:05:24.159 It's easy for people to stop in, it's easy to 0:05:24.200 --> 0:05:26.520 do click and collect and place orders online and pick 0:05:26.560 --> 0:05:28.760 it up at the store, and then they also have 0:05:28.839 --> 0:05:33.760 their marketplace. And so for Amazon to compete effectively, they 0:05:33.800 --> 0:05:36.000 also they really need to solve that problem of how 0:05:36.040 --> 0:05:40.000 you compete with that many physical stores, and that'll take 0:05:40.040 --> 0:05:42.960 some time for Amazon to to to figure that out. 0:05:43.720 --> 0:05:45.920 On the general merchandise side, though, one of the other 0:05:46.040 --> 0:05:48.320 things that we're watching carefully is the rise of like 0:05:48.400 --> 0:05:54.280 Tamu and Sian, and because these are direct competitors, more 0:05:54.320 --> 0:05:57.440 on the marketplace side and more on the general merchandise side, 0:05:57.960 --> 0:06:01.520 so we are seeing a lot of competitive dyce across 0:06:01.520 --> 0:06:02.440 the board for Walmart. 0:06:02.520 --> 0:06:06.760 Bloomberg Intelligence Senior analyst Jennifer bartashis Thanks for this, Jen, 0:06:06.880 --> 0:06:08.760 really good having you on with us, and we'll be 0:06:08.760 --> 0:06:10.960 looking out for those earnings from Walmart. They are due 0:06:11.000 --> 0:06:14.960 out tomorrow around seven am Wall Street time, but before that, 0:06:15.240 --> 0:06:18.919 roughly an hour earlier, we expect results from Home Depot 0:06:19.000 --> 0:06:21.200 and those details could give us a check on the 0:06:21.240 --> 0:06:24.720 housing and home improvement markets. So here to discuss those 0:06:24.839 --> 0:06:28.160 numbers before they come out, is your reading covers Housing 0:06:28.200 --> 0:06:31.400 for Bloomberg Intelligence. Thanks for being here, Drew. Of course, 0:06:31.440 --> 0:06:34.160 we know just how challenged the housing market's been with 0:06:34.360 --> 0:06:37.800 high mortgage rates and high listing prices. How could that 0:06:37.839 --> 0:06:40.480 play into the results we get from Home Depot on Tuesday. 0:06:40.720 --> 0:06:43.800 Sure, So heading into the results, the bar is pretty 0:06:43.839 --> 0:06:46.680 low for home Depot. If you recalled, during their last 0:06:46.720 --> 0:06:49.800 earnings release, they guided to same store sales being down 0:06:49.800 --> 0:06:52.560 about three to four percent for the full year, So 0:06:52.600 --> 0:06:54.359 that's kind of what we're expecting to see in the 0:06:54.400 --> 0:06:56.560 fourth quarter as well. If you look at some of 0:06:56.640 --> 0:07:00.320 the data on retail sales. You'll see that when you 0:07:00.320 --> 0:07:03.080 look at home centers, the market's still declining in the 0:07:03.160 --> 0:07:07.279 low to mid single digits. So it's still a challenging environment, 0:07:07.320 --> 0:07:09.400 but I think the attention has really started to shift 0:07:09.880 --> 0:07:12.560 to twenty twenty four. And on that note, we would 0:07:12.600 --> 0:07:17.160 expect that they're going to suggest probably a remodeling market 0:07:17.200 --> 0:07:19.840 that's relatively flat next year, and that would be similar 0:07:19.920 --> 0:07:22.200 to some of the commentary that we heard from some 0:07:22.280 --> 0:07:25.200 of their suppliers. So better trends in the second half, 0:07:25.360 --> 0:07:27.720 first half, but still a little bit of a challenging 0:07:27.800 --> 0:07:28.440 market out there. 0:07:28.680 --> 0:07:32.600 You wonder, well whether that outlook for the second half 0:07:32.880 --> 0:07:37.720 could stay as resilient if we continue to see interest 0:07:37.800 --> 0:07:40.160 rates at the levels that we're at right now. In 0:07:40.200 --> 0:07:43.640 this expectation in the market that maybe the Fed's not 0:07:43.680 --> 0:07:45.840 going to be able to move as quickly as we 0:07:45.920 --> 0:07:48.560 might like. I mean, that could play into the outlook 0:07:48.560 --> 0:07:49.880 for home depot as well, couldn't it. 0:07:50.120 --> 0:07:52.080 Yeah, that's a great point because part of the reason 0:07:52.080 --> 0:07:54.120 that we think the second half will get better is 0:07:54.120 --> 0:07:57.360 because we're assuming in our base case that mortgage rates 0:07:57.400 --> 0:08:00.200 fall down to somewhere six and quarter six and a 0:08:00.240 --> 0:08:02.360 half percent as we get through the year, and the 0:08:02.400 --> 0:08:05.400 idea is that would boost existing home sales. And as 0:08:05.440 --> 0:08:08.000 we know, people that move tend to spend significantly more 0:08:08.040 --> 0:08:10.920 than people that don't move. So to the extent that 0:08:11.160 --> 0:08:13.560 interest rates remain high, you know, we have seen a 0:08:13.600 --> 0:08:16.400 lot of volatility, and with that hot CPI print we 0:08:16.520 --> 0:08:20.400 had recently, we actually see mortgage rates back above seven percent. 0:08:20.480 --> 0:08:22.800 So to the extent that rates remain high and volatile, 0:08:23.080 --> 0:08:26.520 that could certainly impact existing home sales and ultimately demand 0:08:26.560 --> 0:08:28.000 for remodeling spending. 0:08:28.320 --> 0:08:32.079 And to the point about home remodel spending, you got 0:08:32.120 --> 0:08:34.480 to wonder what the appetite is for a big home 0:08:34.600 --> 0:08:38.800 projects right now that home depot caters to with inflation 0:08:39.000 --> 0:08:41.520 where it is, I mean, how can you game that out? 0:08:41.760 --> 0:08:44.240 Yees. So, we have seen a pullback in big ticket 0:08:44.360 --> 0:08:47.920 discretionary purchases. That's really been one of the drivers over 0:08:47.960 --> 0:08:50.520 the last couple of years that's really helped boost sames 0:08:50.520 --> 0:08:52.760 source sales, and that's where we're seeing a pretty big pullback, 0:08:53.400 --> 0:08:56.240 declines in the mid single digit range. We don't think 0:08:56.320 --> 0:08:59.520 these projects are necessarily being destroyed, but they're being delayed. 0:08:59.520 --> 0:09:02.160 So we do think that as existing home sales start 0:09:02.200 --> 0:09:04.560 to pick up and we get to the tail end 0:09:04.559 --> 0:09:06.920 of twenty twenty four and into twenty twenty five, we 0:09:06.960 --> 0:09:09.120 do expect to see a rebound, and one of the 0:09:09.160 --> 0:09:12.160 reasons is because what we're seeing with home equity. Home 0:09:12.200 --> 0:09:14.480 prices are up more than forty percent over the last 0:09:14.559 --> 0:09:18.079 couple of years, and homeowners are sitting on record home equity. 0:09:18.320 --> 0:09:21.319 On average, average home owner has about three hundred thousand 0:09:21.360 --> 0:09:24.120 dollars in equity. So we do think that that big 0:09:24.160 --> 0:09:27.560 ticket market will start to unfreeze towards a tail end 0:09:27.559 --> 0:09:29.040 of next year and into twenty twenty five. 0:09:29.200 --> 0:09:31.400 Yeah, that'll be an interesting point to see whether that 0:09:31.480 --> 0:09:36.079 home equity continues to keep the consumer going like we've seen, 0:09:36.160 --> 0:09:40.720 there's been so much resilience in consumer spending despite inflation. 0:09:41.160 --> 0:09:43.800 When it comes to this quarter, though, Drew, how much 0:09:43.920 --> 0:09:47.359 of a factor does seasonality play in? How do companies 0:09:47.600 --> 0:09:50.600 like home Depot typically do in a holiday quarter? 0:09:51.040 --> 0:09:52.960 Yeah, so when you think of home Depot, traditionally their 0:09:53.080 --> 0:09:56.040 strong season is in the spring. That's you know, where 0:09:56.040 --> 0:09:58.160 they make a lot of money. But that being said, 0:09:58.320 --> 0:10:00.680 home Depot and those, you know, the broader home improvement 0:10:00.679 --> 0:10:04.040 industry has really started to lean more into the holiday 0:10:04.040 --> 0:10:07.080 because they've seen a lot of demand from consumers. You know, 0:10:07.120 --> 0:10:11.040 that includes Halloween where they've had great success, you know, 0:10:11.160 --> 0:10:14.360 great great deals on Black Friday, and they've continued that 0:10:14.480 --> 0:10:19.400 into the Christmas holiday. You've see them expand their assortments 0:10:19.400 --> 0:10:22.719 and can consumers have really reacted positive, positively. So it's 0:10:22.760 --> 0:10:25.280 not an area where you would traditionally think of a 0:10:25.280 --> 0:10:28.480 home improvement retailer like home Depot really leaning into, but 0:10:28.559 --> 0:10:31.280 it is. It is something that they've got more involved 0:10:31.320 --> 0:10:32.600 in over the last couple of years. 0:10:32.720 --> 0:10:35.719 And you can't help but notice the inflatables that time 0:10:35.800 --> 0:10:38.040 of year that put out on the lawn. Now, I 0:10:38.040 --> 0:10:40.800 know you've done some research over at BI on the 0:10:40.840 --> 0:10:43.720 growth opportunity that home Depot could get out of the 0:10:43.720 --> 0:10:49.320 professional contractor segment as opposed to DIY customers. Is that 0:10:49.520 --> 0:10:53.080 something that home Depots moving into more aggressively and can 0:10:53.120 --> 0:10:55.320 we see that reflected in the results as well? 0:10:55.520 --> 0:10:58.400 Yeah? Great question. So in the near term, the professional 0:10:58.440 --> 0:11:03.200 contractor is still out out performing the DIY customer. But 0:11:03.200 --> 0:11:06.240 if we step back and we look big picture, home 0:11:06.280 --> 0:11:08.800 Depot generates about fifty percent of their sales from the 0:11:08.840 --> 0:11:12.040 professional contractor on the other hand, Lows generates about twenty 0:11:12.040 --> 0:11:14.520 five percent, so that's been one of the key drivers 0:11:14.960 --> 0:11:18.200 of relative performance for Home Depot. But what's interesting is 0:11:18.200 --> 0:11:19.719 we kind of look down the road a little bit. 0:11:19.720 --> 0:11:23.680 They're tackling a new market for what they call complex pros. 0:11:23.880 --> 0:11:27.200 So these are bigger projects, think of large scale remodels 0:11:27.200 --> 0:11:30.120 and renovations, and what they're trying to do is really 0:11:30.160 --> 0:11:33.880 consolidate the number of suppliers a contractor needs to work with. 0:11:34.040 --> 0:11:37.400 So you think of a traditional contractor, maybe they're getting 0:11:37.440 --> 0:11:40.040 windows and doors from one supplier, they're getting flooring and 0:11:40.120 --> 0:11:43.000 cabinets from somewhere else. So what Home Depot is looking 0:11:43.040 --> 0:11:44.960 to do, and they've rolled this out in a couple markets, 0:11:45.120 --> 0:11:49.760 is consolidate that relationship. They want to bring everything in house, 0:11:50.160 --> 0:11:52.160 and they're looking to be able to do this type 0:11:52.200 --> 0:11:55.160 of project in bulk. So it's something that represents a 0:11:55.240 --> 0:11:58.000 huge untapped market for them. It's probably something that's going 0:11:58.040 --> 0:12:00.680 to develop over the next several years, but as you mentioned, 0:12:00.840 --> 0:12:02.400 a big growth growth opportunity. 0:12:02.480 --> 0:12:04.280 Nonetheless, do you think that's the kind of thing that 0:12:04.360 --> 0:12:06.400 could play into the outlook for this year that we 0:12:06.600 --> 0:12:08.480 get from Home Depot this week so. 0:12:08.440 --> 0:12:10.520 I don't know that necessarily that it's going to move 0:12:10.559 --> 0:12:13.760 the needle in twenty twenty four. You know, we do 0:12:13.800 --> 0:12:15.880 think that the pro will probably come back with greater 0:12:15.920 --> 0:12:18.200 strength towards the end of the year. But in terms 0:12:18.200 --> 0:12:21.320 of this kind of new initiative on those large complex projects, 0:12:21.360 --> 0:12:23.480 you think that's probably more of a twenty twenty five 0:12:24.080 --> 0:12:25.520 into twenty twenty six story. 0:12:26.120 --> 0:12:27.920 Interesting. Well, we're going to be looking out for those 0:12:27.960 --> 0:12:31.680 results from home depot just around the corner here. So 0:12:31.800 --> 0:12:33.840 thanks for this, Drew, really good having you on with us. 0:12:34.080 --> 0:12:34.440 Thank you. 0:12:34.760 --> 0:12:38.400 That's Bloomberg Intelligence Senior analyst Drew Redding. Up next on 0:12:38.440 --> 0:12:41.920 the program, how to Prepare for a second Trump presidency. 0:12:42.400 --> 0:12:45.600 John Authurs joins us with his opinion, including why the 0:12:45.679 --> 0:12:48.719 obvious market bets might not be the right ones. That's 0:12:48.760 --> 0:12:52.280 straight ahead on this special holiday edition of Bloomberg day Break. 0:12:52.400 --> 0:12:59.440 I'm Nathan Hager, and this is Bloomberg. You're listening to 0:12:59.480 --> 0:13:02.920 a special holiday edition of Bloomberg Daybreak. US markets are 0:13:02.960 --> 0:13:05.880 closed for President's Day. I'm Nathan Hager. That as we 0:13:05.880 --> 0:13:09.400 get closer to the next presidential election, the question that 0:13:09.520 --> 0:13:13.000 many investors are asking themselves more and more is this 0:13:13.640 --> 0:13:17.560 how should I position for a second Trump presidency? To 0:13:17.600 --> 0:13:19.920 try to answer that question, we bring in Bloomberg opinion 0:13:19.960 --> 0:13:23.600 columnist John Authurs, who writes on markets and investment. Great 0:13:23.640 --> 0:13:25.400 to have you on with us, John, And while none 0:13:25.440 --> 0:13:28.200 of this is a foregone conclusion, we did see how 0:13:28.280 --> 0:13:31.800 caught off guard markets were after Trump one in twenty sixteen. 0:13:31.880 --> 0:13:34.000 Are we in a better position this time around? I mean, 0:13:34.000 --> 0:13:35.480 we kind of know what we're going to get from 0:13:35.480 --> 0:13:37.880 a Trump presidency in some respects. 0:13:37.920 --> 0:13:40.120 In some respects, I mean, I think that the big 0:13:40.120 --> 0:13:44.160 difference is that absolutely everybody knows that it could happen, 0:13:44.720 --> 0:13:48.880 whereas eight years ago most people didn't think that. The 0:13:48.960 --> 0:13:51.920 other interesting thing about last time around, though, was that 0:13:52.000 --> 0:13:57.280 the actual impact of how Trump would affect markets was 0:13:58.760 --> 0:14:02.080 very difficult to gauge. So you had the last few 0:14:02.080 --> 0:14:06.280 months before the election. Every time something looked good for Trump, 0:14:06.320 --> 0:14:09.480 the markets would sell off, and then when he actually 0:14:09.520 --> 0:14:16.120 surprisingly won, the markets had a great boom. So that 0:14:16.200 --> 0:14:19.640 in itself makes it very hard to track what he's 0:14:19.680 --> 0:14:23.320 going to do. I think what is intriguing at the moment, 0:14:25.560 --> 0:14:27.640 and I'll try to stay in my lane as a 0:14:27.720 --> 0:14:31.720 financial rather than the political pundit, but the belief is 0:14:32.080 --> 0:14:38.400 very strong, even among relatively more conservative outlets, that Trump 0:14:38.440 --> 0:14:40.600 two point zero is going to be different, that he's 0:14:40.840 --> 0:14:43.520 really going to do populism properly this time, that he's 0:14:43.520 --> 0:14:46.800 going to be genuinely authoritarian, that he's going to do 0:14:46.840 --> 0:14:49.040 protectionism properly this time, and that he's really going to 0:14:49.080 --> 0:14:54.000 leave NATO, et cetera, et cetera. That is interesting how 0:14:54.240 --> 0:14:59.480 strong that point of view has become and how quickly 0:14:59.520 --> 0:15:02.840 it to shape At about the point that Rond de 0:15:02.920 --> 0:15:06.080 Santis has plainly blown it, towards the end of last year, 0:15:06.200 --> 0:15:09.000 it really became very clear that it was going to 0:15:09.040 --> 0:15:11.440 be a Trump candidacy. 0:15:11.480 --> 0:15:11.800 Again. 0:15:13.600 --> 0:15:19.000 It's interesting how that suddenly became something approaching a media panic, 0:15:19.720 --> 0:15:21.880 and it's hard to imagine that that would also have 0:15:21.920 --> 0:15:24.800 had an effect on the market. So we're dealing with 0:15:24.840 --> 0:15:28.200 what is with something that people can understand and can 0:15:28.280 --> 0:15:32.840 accept as a possible outcome, which is different from eight 0:15:32.960 --> 0:15:35.280 years ago. But I'm not sure that the level of 0:15:35.400 --> 0:15:42.160 certainty about exactly what he would mean is there. I mean, 0:15:42.200 --> 0:15:46.280 in terms of his economics eight years ago, Trump's first 0:15:46.360 --> 0:15:53.680 term was basically straightforward chamber of commerce, traditional conservative republican economics, 0:15:53.720 --> 0:15:59.800 tax cuts, lower regulation, nothing that would particularly scare the market. 0:16:00.400 --> 0:16:03.200 Some of the stuff that's being talked about this time. 0:16:03.240 --> 0:16:08.000 If he really does try for something more genuinely economically populist, 0:16:09.040 --> 0:16:11.680 wouldn't necessarily be so popular with the markets. 0:16:11.800 --> 0:16:14.040 Yeah, and some of the things that have been talked 0:16:14.040 --> 0:16:17.359 about to your point have already started to raise some eyebrows, 0:16:17.360 --> 0:16:21.560 This idea of a sixty six zero percent tariff on 0:16:21.960 --> 0:16:27.920 Chinese imports and elevated tariffs across the board for other markets. 0:16:28.040 --> 0:16:30.720 I mean, how do you prepare for something like that? 0:16:30.960 --> 0:16:34.280 Is that something that investors really do need to keep 0:16:34.280 --> 0:16:37.080 in mind in the event that the election does go 0:16:37.240 --> 0:16:37.880 Trump's way. 0:16:38.800 --> 0:16:41.440 I think you can tell that investors do have that 0:16:41.520 --> 0:16:44.120 in mind because of what's been happening to Chinese stocks, 0:16:45.200 --> 0:16:50.240 which there are many good reasons to be relatively negative 0:16:50.240 --> 0:16:55.400 about China these days. The fact that, depending on which 0:16:55.440 --> 0:16:58.360 index you're using, they are Chinese stocks and net worth 0:16:58.480 --> 0:17:01.640 no more than they were twenty years ago. When you 0:17:01.680 --> 0:17:04.520 think of the growth that's happened in China's economy in 0:17:04.920 --> 0:17:09.600 that period, Plainly that would make no sense at all 0:17:09.880 --> 0:17:14.880 unless people were trying to factor in some fairly considerable 0:17:15.119 --> 0:17:19.560 risk of major protectionism. Ultimately, I think the way that 0:17:19.920 --> 0:17:22.639 benefits if there is somebody to go long on, and 0:17:22.720 --> 0:17:25.280 obviously you want to be short on things directly affected 0:17:25.600 --> 0:17:29.360 with China. At the moment, there is very unobtrusively there 0:17:29.440 --> 0:17:33.840 is a big boom in Mexico, which is extremely counterintuitive 0:17:33.880 --> 0:17:39.040 given that Trump's first policy pronouncement when he first immediately 0:17:39.040 --> 0:17:41.639 after coming down that escalator in twenty fifteen, was to 0:17:41.680 --> 0:17:46.159 attack Mexico. Mexico is probably the single biggest beneficiary of 0:17:46.200 --> 0:17:50.200 a really big tarif on China because it has much 0:17:50.240 --> 0:17:54.040 more of a chance to get to get jobs back 0:17:54.040 --> 0:17:56.760 at on its side of the border. And it would 0:17:56.840 --> 0:18:01.800 behoove the US to make it easier to builds jobs 0:18:01.800 --> 0:18:03.919 and factories at the border, because that way people are 0:18:03.960 --> 0:18:07.680 more likely to immigrate from Central Americans stay there rather 0:18:07.680 --> 0:18:08.960 than try to cross the border. 0:18:09.040 --> 0:18:13.600 What could it mean for the dollar the bond market 0:18:13.960 --> 0:18:17.480 if the president, if the former president does become president, 0:18:18.040 --> 0:18:22.040 succeeds in doing populism, as you say, right this. 0:18:22.000 --> 0:18:31.080 Time, I think if he does populism right and again, politically, 0:18:31.119 --> 0:18:34.679 there are there are lots of things wrong with the 0:18:34.680 --> 0:18:37.800 way the American and Western European economies have gone over 0:18:37.840 --> 0:18:42.440 the last few decades, so it's a perfectly defensible policy 0:18:42.920 --> 0:18:47.920 choice to make. I think it's pretty straightforward that markets 0:18:47.960 --> 0:18:53.480 wouldn't like it. However, on the issue of tariffs, if 0:18:53.480 --> 0:18:57.320 he's really going to go with big protectionism, that's bad 0:18:57.320 --> 0:19:01.800 for the dollar because the foreign exchange market will generally 0:19:01.920 --> 0:19:08.800 try to counteract tariffs. So if that if if you're 0:19:08.840 --> 0:19:16.640 making imports that much less competitive through adding on tariffs, 0:19:16.680 --> 0:19:20.080 that the the currency market will generally make them more 0:19:20.119 --> 0:19:24.520 competitive again by by changing the by changing the exchange rates. 0:19:25.560 --> 0:19:32.880 I think the very interesting subject that may come up, 0:19:33.320 --> 0:19:36.920 and which is a much more valid subject than any other, 0:19:37.119 --> 0:19:44.600 is fiscal policy. If Trump is at the moment, there's 0:19:45.000 --> 0:19:48.960 in terms of neither Biden nor Trump has any real 0:19:49.040 --> 0:19:51.680 right to moral right to complain about the scale of 0:19:51.680 --> 0:19:54.239 the deficit at the moment, because they both started their 0:19:54.320 --> 0:19:59.439 terms with by taking actions that quite obviously increase the deficit. 0:19:59.760 --> 0:20:05.000 Huge unfunded tax cutman, you know, the the the spending 0:20:05.040 --> 0:20:09.600 that Biden did at the beginning of his turn. There 0:20:09.680 --> 0:20:13.720 does come a point, and when rates are higher, that 0:20:13.800 --> 0:20:18.240 point is closer. When you really can't finance too much 0:20:18.320 --> 0:20:21.639 more borrowing or you can, but it just has to 0:20:21.640 --> 0:20:28.000 be at higher rates. That is one that I think 0:20:28.080 --> 0:20:30.760 there is. There's certainly a chance if if you get 0:20:31.080 --> 0:20:34.960 a Trump two point zero and he starts with a 0:20:35.000 --> 0:20:38.800 with a tax cut in a tariff and spend some 0:20:38.840 --> 0:20:44.800 money on something boosts defense spending, something like that, it's 0:20:44.840 --> 0:20:47.719 possible that you really do get a bond market strike 0:20:48.359 --> 0:20:51.720 that the you know, the bonds, bond yields shoot up. 0:20:51.960 --> 0:20:54.800 And to your point, John, the one of the big 0:20:55.240 --> 0:20:58.560 legislative victories that Trump one point I had was a 0:20:58.600 --> 0:21:02.200 massive tax cut, as you glued to. It raises the 0:21:02.280 --> 0:21:06.040 question about whether the FED steps in to sort of 0:21:06.080 --> 0:21:09.359 counterbalance whatever might happen on the fiscal side. And even 0:21:09.440 --> 0:21:12.959 during the first go round for former President Trump, we 0:21:13.000 --> 0:21:17.160 saw him really hit the FED hard, at least rhetorically 0:21:17.200 --> 0:21:21.880 on social media. Yes, what's the potential impact on FED 0:21:21.880 --> 0:21:24.520 independence of a second Trump presidency. 0:21:24.840 --> 0:21:29.200 That's a very interesting one. I certainly get the impression, 0:21:29.560 --> 0:21:32.200 but again we need to see how you know the 0:21:32.560 --> 0:21:40.480 difference between bark and bite. He did appoint j Powell, who, 0:21:41.320 --> 0:21:44.600 at the point that he hired him had been a 0:21:44.600 --> 0:21:46.880 FED government for I think as long as ten years. 0:21:46.920 --> 0:21:48.959 It's certainly been around for a long time. He had 0:21:49.200 --> 0:21:52.760 never dissented from any of the monetary policy decisions they 0:21:52.760 --> 0:21:56.800 had made in the years before he could have. You know, 0:21:57.000 --> 0:22:00.480 there were a couple of plausible candidates Kevin Walsh Taylor 0:22:00.480 --> 0:22:06.800 that there were some candidates who would have very clearly 0:22:07.200 --> 0:22:11.959 really shaken the FED up, and instead he really moved. 0:22:12.800 --> 0:22:15.760 It's difficult to see anything that Jay Powell has done 0:22:15.760 --> 0:22:18.720 that you can confidently say Janet Yellen wouldn't have done. 0:22:19.200 --> 0:22:22.600 So let's get that, get that that clear at first. 0:22:22.640 --> 0:22:26.720 It's one of the things that happened in Trump one point, oh, 0:22:26.840 --> 0:22:30.600 was that he blinked on the possibility of really shaking 0:22:30.680 --> 0:22:34.000 up the FED. And in terms of the institutions, the 0:22:34.040 --> 0:22:37.560 Senate bulked at one or two of the obviously unqualified 0:22:38.000 --> 0:22:41.800 people he wanted to put on the board. Now, if 0:22:41.800 --> 0:22:44.240 you have and I think if he does win, the 0:22:44.359 --> 0:22:48.600 chances that he has the Senate very high. If he 0:22:48.640 --> 0:22:53.360 has a majority in the in the Senate and that 0:22:53.400 --> 0:22:58.280 majority has moved more in you know, the marga direction 0:22:58.440 --> 0:23:02.120 and further away from the you know, Chamber of Commerce 0:23:02.400 --> 0:23:09.320 institutional Republican wing, Yeah, it's possible he could really do 0:23:09.480 --> 0:23:15.320 some things to the FEDS in he could effectively change 0:23:15.359 --> 0:23:19.680 the Fed's independence by bringing on some much more radically 0:23:19.720 --> 0:23:26.160 minded people. That that is a possibility. Again, I'm not 0:23:26.240 --> 0:23:29.199 going to tell you that the FED has done a 0:23:29.240 --> 0:23:34.919 perfect job in every respect and could not is above criticism, 0:23:34.920 --> 0:23:38.640 because that's obviously not true. I again, from the point 0:23:38.640 --> 0:23:40.600 of view of how markets would deal with it, they 0:23:40.680 --> 0:23:43.760 like the devil they know, and that would scare them. 0:23:44.000 --> 0:23:47.240 They are much happier with monetary policy being at least 0:23:47.600 --> 0:23:53.200 to some extent, free from democracy, free from the traviles 0:23:53.240 --> 0:23:58.439 of being being buffeted by democracy. So that is a 0:23:59.520 --> 0:24:04.080 the the FED could become a very interesting question. I 0:24:04.080 --> 0:24:10.679 mean for his first year. I don't know of a way. 0:24:10.840 --> 0:24:13.640 I mean, there's you know, we now have an impeachment 0:24:13.720 --> 0:24:16.760 of Secretary mayorcus I mean, unless they want to impeach 0:24:16.880 --> 0:24:21.000 J Powell or something. I can't imagine we get two 0:24:21.040 --> 0:24:24.880 thirds in the Senate, I don't I'm not, as far 0:24:24.960 --> 0:24:28.680 as I'm aware, he can't fire Powell until his term 0:24:28.760 --> 0:24:36.960 ends a year into the next presidential ten uh. Generally speaking, 0:24:38.000 --> 0:24:42.720 if the if the FED thinks fiscal policy is too 0:24:42.760 --> 0:24:48.199 stimulative and may tend to make inflation worse. It's just 0:24:48.320 --> 0:24:55.280 straightforwardly in their mandate. Okay, they'd better tighten monetary policy accordingly. Yeah. 0:24:55.280 --> 0:24:58.040 That that's that they're not allowed to sort of get 0:24:58.080 --> 0:25:02.000 into a you know, political flame fight about whether it 0:25:02.080 --> 0:25:04.920 was sensible to be spending more money. But they are 0:25:04.960 --> 0:25:08.359 allowed to say, we see this as increasing the risks 0:25:08.359 --> 0:25:12.920 of overheating and inflation, so we're raising rates. That's you know, 0:25:13.040 --> 0:25:16.160 that's that's very central to the traditional punch bowl rule. 0:25:16.600 --> 0:25:18.640 It's a lot to think about as we get closer 0:25:18.680 --> 0:25:22.760 to finding out what version of the next presidency we're 0:25:22.760 --> 0:25:26.080 going to get check. That's Bloomberg Opinion columnist John Authurs. 0:25:26.280 --> 0:25:28.959 And up next on the program, we talked return to Office. 0:25:29.080 --> 0:25:31.120 Stay with us for a conversation with a big name 0:25:31.160 --> 0:25:34.680 in architecture and design for his take on getting workers 0:25:35.440 --> 0:25:37.959 in the bill. That's straight Ahead. On the special holiday 0:25:38.080 --> 0:25:41.680 edition of Bloomberg Daybreak. I'm Nathan Hager, and this is. 0:25:41.680 --> 0:25:41.919 Going to. 0:25:45.119 --> 0:25:48.640 Welcome back to the special holiday edition of Bloomberg Daybreak. 0:25:48.760 --> 0:25:52.159 US markets are closed for President's Day. I'm Nathan Hager. 0:25:52.280 --> 0:25:54.479 Now let's bring you a conversation with a man who 0:25:54.560 --> 0:25:57.960 wants to change the face of our cities. Thomas Heatherwick 0:25:58.200 --> 0:26:01.159 is the designer behind New York's Little Island and Vessel 0:26:01.240 --> 0:26:04.280 in Manhattan's Hudson Yard district, as well as Google's new 0:26:04.320 --> 0:26:07.520 London headquarters. He says our buildings need to be more 0:26:07.600 --> 0:26:11.840 human and less boring. Heatherwick has said Vessel will reopen 0:26:11.880 --> 0:26:14.520 to the public this year after being closed in twenty 0:26:14.560 --> 0:26:18.000 twenty one for safety reasons. He's been speaking with Bloomberg 0:26:18.080 --> 0:26:21.280 Daybreak Europe banker Steven Carrol Stephen Nathan. 0:26:21.480 --> 0:26:24.080 Thomas Heatherwick is one of the best known names in 0:26:24.200 --> 0:26:27.320 modern building design. His studio has won more than one 0:26:27.400 --> 0:26:31.040 hundred awards. Cities from New York to London to Tokyo 0:26:31.119 --> 0:26:34.080 boast examples of his work, and he even designed the 0:26:34.200 --> 0:26:37.520 cauldron for the Olympic flame in the twenty twelve London Games. 0:26:38.240 --> 0:26:41.240 Now he wants to end what he's called a blandemic 0:26:41.400 --> 0:26:44.120 in buildings. He's written a book on the subject called 0:26:44.320 --> 0:26:47.440 Human Eyes. I've been discussing this with him and how 0:26:47.480 --> 0:26:50.520 he's applying this philosophy to his latest projects. 0:26:51.000 --> 0:26:53.840 We talk about how nature is good and there is 0:26:53.880 --> 0:26:58.720 evidence showing that people take less time to heal in 0:26:59.480 --> 0:27:02.800 spaces where they can look out at nature, and what 0:27:02.960 --> 0:27:07.760 nature has is a necessary visual complexity. And we've had 0:27:07.800 --> 0:27:12.640 buildings for the last eighty years which are flatter and smoother, 0:27:13.119 --> 0:27:18.280 and shinier and plainer and more serious than ever in history. 0:27:18.520 --> 0:27:22.520 And what the science is starting to show is that 0:27:22.560 --> 0:27:25.720 they aren't just maybe not nice. Some people might call 0:27:25.720 --> 0:27:29.119 them ugly, but they actually your body starts to go 0:27:29.160 --> 0:27:32.879 into stress when you don't have necessary visual complexity. But 0:27:32.920 --> 0:27:35.000 I'm not calling to go back to the past and 0:27:35.040 --> 0:27:38.800 copyhold buildings. Even some of the new buildings, they've really 0:27:38.880 --> 0:27:44.160 made an effort to put visual enrichment and detail into them, 0:27:44.359 --> 0:27:47.240 which makes it interesting to walk around. But it's not 0:27:47.440 --> 0:27:51.760 just a cosmetic thing. What we've discovered is our humanness 0:27:52.240 --> 0:27:54.840 needs places to have that interestingness. 0:27:55.119 --> 0:27:58.240 That's a difficult conversation though, when you're thinking about where 0:27:58.280 --> 0:28:00.440 the money goes in a project. What violence should we 0:28:00.520 --> 0:28:03.400 be placing on design when it comes to a building 0:28:03.520 --> 0:28:05.800 like that versus the cast values? 0:28:05.840 --> 0:28:08.320 The word that value really is the right word. The 0:28:08.359 --> 0:28:12.120 problem we had was that that style that came in 0:28:12.200 --> 0:28:18.960 that said flatter, smoother, shinier, more serious, plainer was fashionably good, 0:28:19.640 --> 0:28:22.080 was not good for us, but it was also a 0:28:22.119 --> 0:28:26.320 bit cheaper, and so with the Humanized campaign, we're really 0:28:26.400 --> 0:28:30.639 arguing that we need to make a step change a 0:28:30.680 --> 0:28:33.439 bit like we've had in the world of architecture. We 0:28:33.520 --> 0:28:36.920 talk about the green premium, which is that a building 0:28:37.119 --> 0:28:39.320 you do need to pay a little bit more for 0:28:39.360 --> 0:28:44.440 it to be highly environmentally good, performing well, but unless 0:28:44.480 --> 0:28:48.880 people care about it. We've had this dirty secret in construction, 0:28:49.360 --> 0:28:53.880 which is buildings get demolished, and so the worst value 0:28:54.200 --> 0:28:57.880 is to build buildings that society doesn't care about because 0:28:58.080 --> 0:29:02.640 they get demolished. So, for example, with commercial buildings, the 0:29:02.680 --> 0:29:05.320 average age in the UK of a commercial building is 0:29:05.400 --> 0:29:08.440 forty years, so if I was a commercial building, I 0:29:08.480 --> 0:29:11.720 would have been killed thirteen years ago. And the carbon 0:29:12.240 --> 0:29:18.080 in construction is five times that of the whole aviation industry. 0:29:18.520 --> 0:29:23.520 So they're bad environmentally, they're bad socially because they don't 0:29:23.520 --> 0:29:27.480 bring us together. Yeah, and after COVID, when the digital 0:29:27.520 --> 0:29:30.080 revolution is really kicked in, you can stay at home, 0:29:30.200 --> 0:29:35.080 get a PhD, work by everything. Cities are dangerous places 0:29:35.120 --> 0:29:38.040 when you don't have people in them, So we need 0:29:38.120 --> 0:29:43.800 cities that bring us together and nurture the togetherness and 0:29:43.840 --> 0:29:45.720 not being scared of each other. 0:29:45.640 --> 0:29:47.479 And does that need to go into planning rules then, 0:29:47.560 --> 0:29:49.520 is it's the question that we need to change the 0:29:49.600 --> 0:29:51.960 regulations around buildings in the same way that we do 0:29:52.000 --> 0:29:54.680 around sustainability to incorporate rules like that. 0:29:55.600 --> 0:29:58.520 Planning's being quite basic and it's a very difficult thing 0:29:58.560 --> 0:30:01.840 to get right. But in the book we talk about 0:30:01.840 --> 0:30:05.240 the three distances you can experience buildings. If you imagine 0:30:05.280 --> 0:30:07.520 being one hundred and fifty meters away from a building, 0:30:07.560 --> 0:30:10.040 seeing it from a distance, how it fits in with 0:30:10.080 --> 0:30:12.920 the city. You then look at the street distance, which 0:30:12.960 --> 0:30:15.520 is when you're starting to be maybe only twenty or 0:30:15.520 --> 0:30:19.200 thirty meters away. But the most impactful and the one 0:30:19.240 --> 0:30:24.320 that we've found the least regulatory support for design teams 0:30:24.520 --> 0:30:29.600 for society is door distance, because actually your emotion isn't 0:30:29.680 --> 0:30:33.240 at the top, it's at the bottom, because that's where 0:30:33.240 --> 0:30:36.560 we all are, where us as pass us by walk past, 0:30:36.640 --> 0:30:40.120 And we spend too much time talking about insides of buildings. 0:30:40.280 --> 0:30:44.040 A thousand times more people will walk past the outside 0:30:44.360 --> 0:30:48.320 than ever go inside. So designing for buildings to be 0:30:48.360 --> 0:30:51.320 givers rather than take us I mean selfishly, as a 0:30:51.360 --> 0:30:55.600 designer of buildings, I want your great grandchildren to say 0:30:55.720 --> 0:30:57.760 about one of the buildings I've done, No, don't knock 0:30:57.800 --> 0:31:01.680 it down, let's repair it, let's adjust it, instead of 0:31:01.720 --> 0:31:05.480 saying meh, knock it down, because the carbon in buildings 0:31:05.640 --> 0:31:07.240 is it's ridiculous. 0:31:07.320 --> 0:31:09.440 On the projects that you've worked on, look for example 0:31:09.520 --> 0:31:11.760 the Google campus, the King's Cross which people might be 0:31:11.840 --> 0:31:14.680 very familiar with in London as well. There's a fantastic 0:31:14.760 --> 0:31:17.040 roof garden going onto the top of that, which is 0:31:17.480 --> 0:31:19.560 a really interesting design feature. But again that's when you 0:31:19.560 --> 0:31:22.600 talk about perspective that's not at the street level, whereas 0:31:22.600 --> 0:31:25.480 when you walk by its street level from the images 0:31:25.480 --> 0:31:27.880 that we've seen, does it look that different from what 0:31:27.920 --> 0:31:30.400 else that you see in the area. How would you 0:31:30.480 --> 0:31:32.200 contribute to resolving that issue. 0:31:32.240 --> 0:31:34.360 Well, I'm actually really pleased you've brought it up because 0:31:34.760 --> 0:31:36.440 you don't know what we're doing at the ground level. 0:31:37.080 --> 0:31:39.400 It is an enormous building. It's three hundred and thirty 0:31:39.400 --> 0:31:42.720 meters long. It's the same size as a cruise liner 0:31:42.800 --> 0:31:46.360 coming into King's Cross, so as you will see and 0:31:46.440 --> 0:31:49.080 what isn't apparent at the moment behind the hoardings and 0:31:49.120 --> 0:31:51.960 the amazing thing about the building is it's lifted up 0:31:52.000 --> 0:31:56.200 two stories and so underneath we can build a village. 0:31:56.520 --> 0:31:59.680 So that village will start to be being constructed this 0:31:59.760 --> 0:32:04.360 year and that will be a higgeldy pigglety collection of 0:32:04.720 --> 0:32:09.280 wooden sub buildings of differing heights. They tip forward at 0:32:09.280 --> 0:32:12.880 different angles, they're not in alignment, they're different colors, they 0:32:12.920 --> 0:32:17.320 have different people and community organizations as part of them. 0:32:17.640 --> 0:32:19.880 So in a sense we're going to be doing a 0:32:20.000 --> 0:32:24.600 radical chance to reinvent High Street. But to my point, 0:32:25.200 --> 0:32:28.800 we judge buildings all the time by the top, just 0:32:28.840 --> 0:32:32.719 as you have the ground is actually where your feeling is. 0:32:33.000 --> 0:32:35.480 As you say, no one's in a helicopter looking down 0:32:35.480 --> 0:32:37.080 on the amazing garden we put on the. 0:32:37.000 --> 0:32:39.200 Top AND's tonally they're lucky people who work there that 0:32:39.280 --> 0:32:40.040 get to use those. 0:32:40.080 --> 0:32:42.360 Yeah, and it's wonderful. I mean we're in an incredible 0:32:42.360 --> 0:32:45.160 building at this moment. You're one of the privileged people 0:32:45.200 --> 0:32:47.200 in London who will get to be in this building, 0:32:47.520 --> 0:32:50.480 as will the people in our Google building. But your 0:32:50.560 --> 0:32:54.200 real duty, I believe as a building designer you're to 0:32:54.240 --> 0:32:58.160 some extent a public servant, and so what are you 0:32:58.520 --> 0:33:01.320 making a building give? But I don't think this is 0:33:01.400 --> 0:33:05.440 sort of just altruistic. It means that for a Google 0:33:05.760 --> 0:33:09.240 an organization like that, what does your employee think as 0:33:09.240 --> 0:33:12.720 they walk into that building, as they tell their grandmother 0:33:12.800 --> 0:33:15.800 they work there. How do the social values of that 0:33:15.880 --> 0:33:19.400 building manifest? And for a very long time, we've had 0:33:19.480 --> 0:33:22.840 buildings that have been takers, not givers. You know how 0:33:22.880 --> 0:33:25.040 many times have you walked down a street past a 0:33:25.080 --> 0:33:29.480 big glass lobby dead to the passer by and you 0:33:29.520 --> 0:33:32.880 can see the some luxury private world beyond and you 0:33:32.920 --> 0:33:37.480 can see the leather sofa and the marble reception desk, 0:33:37.720 --> 0:33:41.280 but it's got nothing for you. It's almost rubbing in 0:33:41.320 --> 0:33:44.960 its exclusiveness. So the Google building in King's Cross will 0:33:45.000 --> 0:33:45.800 be the opposite of that. 0:33:46.040 --> 0:33:48.880 Okay. I want to ask you about your journey on 0:33:49.000 --> 0:33:51.320 coming to these conclusions in this latest book as well, 0:33:51.400 --> 0:33:53.840 because you know you've had these huge tryants. We've talked 0:33:53.840 --> 0:33:57.720 about some of them already. One project which has attracted 0:33:57.720 --> 0:34:00.680 criticism was Vassal in New York. It had to be 0:34:00.760 --> 0:34:03.120 closed to the public since twenty twenty one and over 0:34:03.160 --> 0:34:05.640 a number of suicides that happened there. I wonder how 0:34:05.760 --> 0:34:08.440 you feel about that project now and how you reflect 0:34:08.480 --> 0:34:10.239 on what you learned from that process. 0:34:10.840 --> 0:34:17.280 Vessel was a project commissioned to help create the atmosphere 0:34:17.320 --> 0:34:20.880 and identity of a new district in New York that 0:34:20.920 --> 0:34:24.279 hadn't existed before. It was a very very brave piece 0:34:24.320 --> 0:34:30.400 of commissioning and an incredible investment in helping to wholeheartedly 0:34:30.440 --> 0:34:35.759 make distinctiveness in a place. But it timed very unfortunately. 0:34:35.880 --> 0:34:40.880 It timed its opening just before this terrible pandemic, something 0:34:40.920 --> 0:34:46.120 that affected the mental health of millions of people all 0:34:46.120 --> 0:34:49.000 over the world, and some of that mental health impact 0:34:49.040 --> 0:34:54.480 was particularly felt amongst young people. That project was astonishingly 0:34:55.000 --> 0:34:58.800 compelling in how it engaged people. It was a number 0:34:58.840 --> 0:35:03.640 one backdrop on Grinder and in Tinder and all these things. 0:35:03.840 --> 0:35:08.200 And the project was built above code. The barriers all 0:35:08.719 --> 0:35:11.279 around it were built above the code that would have 0:35:11.320 --> 0:35:16.440 been needed for any normal structure. But its compellingness had 0:35:16.480 --> 0:35:20.480 a dark side, and so there were no accidents on it. 0:35:20.480 --> 0:35:25.480 It was very sadly chosen by a tiny handful of 0:35:25.480 --> 0:35:32.080 people to to this terrible, awful thing. So this year 0:35:33.280 --> 0:35:36.759 is the year that it's going to be refitted with 0:35:36.960 --> 0:35:40.960 a protected, protective barrier. But it was this sort of 0:35:41.360 --> 0:35:46.160 dark side of its success, was this use that people had. 0:35:46.200 --> 0:35:49.040 I mean there are nearby there are levels that are 0:35:49.680 --> 0:35:52.760 just as high as many bits of the vessel which 0:35:52.840 --> 0:35:56.640 have balustrades that no one was choosing to jump from. 0:35:56.680 --> 0:36:01.680 So it's it was very sad and telling thing of 0:36:01.719 --> 0:36:05.680 our time. It will be later this year that these 0:36:06.440 --> 0:36:11.080 the safety measures are going to be implemented by the 0:36:11.160 --> 0:36:13.680 commissioners of the project. So I'm pleased to be able 0:36:13.719 --> 0:36:14.200 to say. 0:36:14.000 --> 0:36:16.279 That, do they diminish your design in any way? Do 0:36:16.320 --> 0:36:18.759 you think to have protective screens like that erected on 0:36:18.840 --> 0:36:19.160 to the. 0:36:19.320 --> 0:36:22.200 No, because we've worked with them and they've been really 0:36:22.239 --> 0:36:27.440 sensitive to getting the design to have the similar quality 0:36:27.719 --> 0:36:31.359 as the original vessel structure. So it's not a kind 0:36:31.440 --> 0:36:33.920 of thing thrown on at the last minute. It's had 0:36:33.960 --> 0:36:37.520 an enormous amount of development and reflection to get it right. 0:36:37.600 --> 0:36:40.839 So my hope is that it will and there at 0:36:40.880 --> 0:36:44.200 the moment there is a sample section of it on 0:36:44.280 --> 0:36:50.480 the vessel and it looks really good, so it's it 0:36:50.520 --> 0:36:52.360 doesn't need to be at the cost of the project. 0:36:52.719 --> 0:36:55.640 The whole point of the project is it's public. My passion, 0:36:56.000 --> 0:36:59.120 all my studios projects are public, and look at Little Island. 0:36:59.480 --> 0:37:02.200 If you get you know just down from there that 0:37:02.360 --> 0:37:06.480 opened three years ago and is just packed with people 0:37:07.280 --> 0:37:10.920 and loved and has these free performances on it and 0:37:11.040 --> 0:37:15.080 is a main place for New Yorker's fitness and visitors, 0:37:15.600 --> 0:37:18.480 and is all about the river and nature. So I 0:37:18.520 --> 0:37:23.080 think we are hungry for public spaces that are wholehearted 0:37:23.719 --> 0:37:26.680 and which sort of validate all of us. 0:37:26.760 --> 0:37:26.960 You know. 0:37:27.040 --> 0:37:30.600 The thing that sort of inspires me really is that 0:37:31.000 --> 0:37:34.560 there are seven point whatever billion people on the planet, 0:37:34.880 --> 0:37:38.240 and every one of us thinks we're special. It's human nature. 0:37:38.760 --> 0:37:41.280 And I think for too long we have not designed 0:37:42.080 --> 0:37:45.240 the places the public life. You know how they say 0:37:45.640 --> 0:37:48.520 you can't change what you can't measure. We haven't been 0:37:48.560 --> 0:37:52.840 measuring the biggest experiences of buildings, who are on the 0:37:52.880 --> 0:37:55.279 street outside, who will never come in. 0:37:55.400 --> 0:37:59.440 That's Thomas Heatherwick, the founder and design director of Heathwic Studios. 0:38:00.000 --> 0:38:02.399 He's not daunted by the prospect of higher interest rates 0:38:02.480 --> 0:38:06.000 or remote working threatening the future of offices. He says 0:38:06.040 --> 0:38:09.840 he's hopeful and excited by the challenge of adapting existing 0:38:09.920 --> 0:38:12.960 buildings to new uses. And that's a question, he says, 0:38:13.000 --> 0:38:15.320 of being ingenious with what you've got. 0:38:15.760 --> 0:38:19.240 Nathan, Thanks Steven. That's Bloomberg Stephen Carroll from our European 0:38:19.280 --> 0:38:22.360 headquarters in London. And that does it for this special 0:38:22.400 --> 0:38:26.600 holiday edition of Bloomberg Daybreak. Join us again Tuesday morning 0:38:26.640 --> 0:38:28.960 at five am Wall Street Time for the latest on 0:38:29.120 --> 0:38:31.960 markets overseas and all the news you need to start 0:38:32.000 --> 0:38:35.000 your day. I'm Nathan Hager. Stay with us. The top 0:38:35.080 --> 0:38:39.200 stories and global business headlines are coming up right now