1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,240 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,400 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,400 --> 00:00:13,600 Speaker 1: along with essential market moving news. Kind the Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:21,240 Speaker 1: and on Bloomberg dot com. Good is time for Bloomberg Opinion. 7 00:00:21,280 --> 00:00:23,720 Speaker 1: Today we are joined by Bill Dudley. He's a senior 8 00:00:23,880 --> 00:00:27,560 Speaker 1: research scholar at Princeton University Center for Economic Policy Studies 9 00:00:27,800 --> 00:00:31,520 Speaker 1: and obviously also former president of the Federal Reserve Bank 10 00:00:31,640 --> 00:00:34,279 Speaker 1: of New York based in Princeton, New Jersey. Bill, thanks 11 00:00:34,320 --> 00:00:36,839 Speaker 1: so much for joining us here. Love to chat with 12 00:00:36,920 --> 00:00:40,919 Speaker 1: you kind of about your column about inflation. I think 13 00:00:40,920 --> 00:00:43,360 Speaker 1: the Federal Reserve would like to see some inflation come 14 00:00:43,400 --> 00:00:46,880 Speaker 1: back into this marketplace, but the signs really aren't there. 15 00:00:46,680 --> 00:00:49,479 Speaker 1: What are your thoughts on that. Well, the first thing 16 00:00:49,520 --> 00:00:51,600 Speaker 1: is that people are of the view that it's not 17 00:00:51,640 --> 00:00:53,040 Speaker 1: going to come back. And so if you look at 18 00:00:53,040 --> 00:00:58,080 Speaker 1: the spread between normal treasuries and inflation protected treasuries, spread 19 00:00:58,080 --> 00:01:01,640 Speaker 1: it on a tenure basis is one point nine. That's 20 00:01:01,640 --> 00:01:05,080 Speaker 1: on a CPI basis, So that translates to UH you know, 21 00:01:05,200 --> 00:01:08,880 Speaker 1: core PC deflator of about one point six So basically, 22 00:01:08,959 --> 00:01:11,480 Speaker 1: market participants are saying the Fed's not going to succeed 23 00:01:12,120 --> 00:01:14,760 Speaker 1: in their goal of pushing inflation not just back to 24 00:01:14,800 --> 00:01:18,360 Speaker 1: two percent, but above two. I've set the missages that 25 00:01:18,400 --> 00:01:21,720 Speaker 1: we've had in recent years, so market participants are very, 26 00:01:21,959 --> 00:01:25,039 Speaker 1: very confident that inflations will stay low in definitely, and 27 00:01:25,080 --> 00:01:29,280 Speaker 1: I think that just a little bit too optimistic and assessment. 28 00:01:30,120 --> 00:01:32,880 Speaker 1: There are some indicators though maybe I do that. What 29 00:01:32,920 --> 00:01:34,959 Speaker 1: about the five year five year forward which has been 30 00:01:34,959 --> 00:01:37,280 Speaker 1: creeping up and is at what two point nearly three 31 00:01:37,800 --> 00:01:40,360 Speaker 1: percent at this point. Yeah, we've had some movement in 32 00:01:40,360 --> 00:01:42,440 Speaker 1: the last week, so people are finally, I think, is 33 00:01:42,480 --> 00:01:44,520 Speaker 1: taking this on board. But there are a number of 34 00:01:44,560 --> 00:01:46,640 Speaker 1: reasons why I think inflation is a greater risk and 35 00:01:46,720 --> 00:01:50,040 Speaker 1: what's pricing from markets. The first is base effects. So 36 00:01:50,160 --> 00:01:53,280 Speaker 1: last April, March and April we saw a big decline 37 00:01:53,280 --> 00:01:56,960 Speaker 1: in the COREPC deflator because the onset of the pandemic. 38 00:01:57,280 --> 00:01:59,800 Speaker 1: When we get to May and those numbers drop out 39 00:01:59,840 --> 00:02:03,040 Speaker 1: of the UH year over year statistics, all sudden inflation 40 00:02:03,080 --> 00:02:05,760 Speaker 1: will look a little bit firmer. Second, I think that 41 00:02:06,000 --> 00:02:08,040 Speaker 1: as we as we get an economic recovery in the 42 00:02:08,080 --> 00:02:10,560 Speaker 1: second half of the year, which I fully anticipate, I 43 00:02:10,560 --> 00:02:12,720 Speaker 1: think you're going to see more pricing power in those 44 00:02:12,720 --> 00:02:15,640 Speaker 1: areas that were hurt most by the pandemic, things like 45 00:02:15,720 --> 00:02:19,360 Speaker 1: hospitality and leisure, especially given the fact that that we 46 00:02:19,400 --> 00:02:21,480 Speaker 1: probably actually are gonna have a shortage of capacity in 47 00:02:21,520 --> 00:02:24,800 Speaker 1: some of those areas, given business failures that have occurred 48 00:02:24,880 --> 00:02:28,400 Speaker 1: over the intermediate period. Third, you know, the other issue, 49 00:02:28,400 --> 00:02:30,200 Speaker 1: of course, is we know the fens will be very patient. 50 00:02:30,560 --> 00:02:32,399 Speaker 1: The fat is basically said they're not going to raise 51 00:02:32,600 --> 00:02:36,480 Speaker 1: short term interest rate until they until maximum employment gets 52 00:02:36,639 --> 00:02:38,799 Speaker 1: until we get the maximum employment, until we get to 53 00:02:38,880 --> 00:02:42,040 Speaker 1: two percent inflation, and the fattest confident inflation is going 54 00:02:42,080 --> 00:02:44,640 Speaker 1: to go above a two percent for some period of time, 55 00:02:44,840 --> 00:02:46,639 Speaker 1: So the FED is gonna be slow rather than fast. 56 00:02:47,320 --> 00:02:49,720 Speaker 1: And then uh, I think the final thing that makes 57 00:02:49,720 --> 00:02:53,480 Speaker 1: me more more worried about inflation is fiscal policy. There's 58 00:02:53,480 --> 00:02:56,519 Speaker 1: a pretty strong consensus developing that that if economies we 59 00:02:56,800 --> 00:02:59,520 Speaker 1: use fiscal policy, there's not a lot of worry anymore 60 00:02:59,520 --> 00:03:03,280 Speaker 1: about uh, that sustainability over the medium to longer term. 61 00:03:03,280 --> 00:03:05,320 Speaker 1: So fiscal policy is a lever that can be used 62 00:03:05,320 --> 00:03:08,760 Speaker 1: more aggressively than before. If you remember back during the 63 00:03:08,840 --> 00:03:12,519 Speaker 1: last economic cycle, fiscal policy restraint was one reason why 64 00:03:12,520 --> 00:03:14,840 Speaker 1: we had a subpar recovery in two thousand and twelve 65 00:03:14,919 --> 00:03:19,200 Speaker 1: without fourtune well bill, just like on that last point, 66 00:03:19,240 --> 00:03:22,440 Speaker 1: and maybe this is just political positioning, um, but we're 67 00:03:22,440 --> 00:03:25,760 Speaker 1: actually starting to hear some Republicans say, whoa, whoa, whoa, 68 00:03:25,919 --> 00:03:28,080 Speaker 1: let's put the brakes on some of the fiscal stimulus 69 00:03:28,120 --> 00:03:31,359 Speaker 1: that we're talking about. Three trillion UH is way too 70 00:03:31,360 --> 00:03:33,600 Speaker 1: big the number. We're thinking something less than a trillion 71 00:03:33,720 --> 00:03:36,560 Speaker 1: for example, just on the discussion this latest fiscal stimulus, 72 00:03:36,720 --> 00:03:40,520 Speaker 1: do you believe that after years of supporting higher and 73 00:03:40,600 --> 00:03:44,680 Speaker 1: higher spending, that the Republicans have any stomach for kind 74 00:03:44,680 --> 00:03:48,680 Speaker 1: of reining it in. Well, historically the Republicans have been 75 00:03:48,920 --> 00:03:52,960 Speaker 1: uh for fiscal consolidation when Democrats are in the White 76 00:03:52,960 --> 00:03:56,240 Speaker 1: House and not so much when Republicans. Certain way, I 77 00:03:56,240 --> 00:03:59,400 Speaker 1: think they'll I think they'll continue that that pattern. The 78 00:03:59,640 --> 00:04:01,400 Speaker 1: important thing on the fiscal size, it looks like we're 79 00:04:01,440 --> 00:04:03,560 Speaker 1: going to get another round of physical stimuls. If there's 80 00:04:03,600 --> 00:04:07,240 Speaker 1: nine billion dollar proposal goes forward, it seems more likely 81 00:04:07,280 --> 00:04:09,920 Speaker 1: than not at this point that I think is sufficient 82 00:04:09,920 --> 00:04:11,920 Speaker 1: to provide a bridge to the recovery that we're going 83 00:04:12,000 --> 00:04:17,120 Speaker 1: to see late spring uh an early summer bill. So 84 00:04:17,400 --> 00:04:21,240 Speaker 1: we definitely will see price increases in perhaps places like services, 85 00:04:21,240 --> 00:04:24,240 Speaker 1: which make up about there all c p I and 86 00:04:25,320 --> 00:04:27,080 Speaker 1: the core measures. So I could see where you would 87 00:04:27,120 --> 00:04:30,680 Speaker 1: get inflation. But if we have slack in the labor force, 88 00:04:30,720 --> 00:04:33,160 Speaker 1: which were likely to have for some time, won't that 89 00:04:33,320 --> 00:04:38,280 Speaker 1: offset that kind of inflation at least for the federal reserve? Well, 90 00:04:38,320 --> 00:04:40,080 Speaker 1: I think it. I think the question is how long 91 00:04:40,200 --> 00:04:43,320 Speaker 1: is that slack in the liver market actually going to persist? 92 00:04:43,760 --> 00:04:45,920 Speaker 1: And the other issue I think is, you know, people 93 00:04:46,000 --> 00:04:48,520 Speaker 1: talk about the scarring of the economic caused by the pandemic, 94 00:04:48,920 --> 00:04:52,920 Speaker 1: but the scarring isn't just about you know, workers being unemployed. 95 00:04:52,920 --> 00:04:55,719 Speaker 1: It's also about businesses. They are just going under so 96 00:04:55,839 --> 00:04:59,880 Speaker 1: capacity is also suffering. I mean, in my hometown Cranford, 97 00:04:59,880 --> 00:05:02,360 Speaker 1: New Jersey, to two of the major restaurants have gone 98 00:05:02,360 --> 00:05:05,200 Speaker 1: out of business. So when demand comes back, there's gonna 99 00:05:05,200 --> 00:05:07,159 Speaker 1: be a lot more pricing power for those that have 100 00:05:07,279 --> 00:05:11,440 Speaker 1: survived this, this this pandemic bill, how do you view 101 00:05:11,680 --> 00:05:13,720 Speaker 1: the labor market here? We get you know, a week 102 00:05:13,760 --> 00:05:17,520 Speaker 1: after week we get this really really sobering jobless claims, 103 00:05:17,520 --> 00:05:19,960 Speaker 1: and of course we had some of the jobs data 104 00:05:20,000 --> 00:05:23,000 Speaker 1: on Friday. Here, how do you view the labor market 105 00:05:23,040 --> 00:05:25,760 Speaker 1: and the resiliency of the labor market as we come 106 00:05:25,760 --> 00:05:28,719 Speaker 1: onto the back side of this pandemic arguably beginning maybe 107 00:05:28,720 --> 00:05:31,640 Speaker 1: you know sometime next year. Well, it's not as good 108 00:05:31,720 --> 00:05:35,039 Speaker 1: as the employment statistics suggests. For example, looking at the 109 00:05:35,080 --> 00:05:37,480 Speaker 1: unemployer rate of six point seven percent. The our reason 110 00:05:37,480 --> 00:05:39,480 Speaker 1: that as low as six point seven percent is a 111 00:05:39,480 --> 00:05:41,599 Speaker 1: whole bunch of people have dropped out of the labor force. 112 00:05:41,920 --> 00:05:43,880 Speaker 1: You're only counted as unemployed in the United States if 113 00:05:43,920 --> 00:05:47,560 Speaker 1: you're actively looking for work. The labor force participation rates 114 00:05:47,600 --> 00:05:50,880 Speaker 1: dropped by nearly two percentage points since February. So there's 115 00:05:51,000 --> 00:05:53,920 Speaker 1: a lot more people unemployed than suggested by the current 116 00:05:53,960 --> 00:05:57,040 Speaker 1: labor market, and that's certainly going to hold inflation back 117 00:05:57,080 --> 00:05:59,039 Speaker 1: for a while. But I do think the recovery in 118 00:05:59,040 --> 00:06:01,800 Speaker 1: the second half the years quite powerful. Once you get 119 00:06:01,839 --> 00:06:05,560 Speaker 1: people vaccinated and the risk of pandemic goes down from 120 00:06:05,600 --> 00:06:08,960 Speaker 1: a health perspective, social distancing land, you'll have an opening up. 121 00:06:08,960 --> 00:06:11,040 Speaker 1: And so I think there's a lot of pen of demand. 122 00:06:11,080 --> 00:06:13,200 Speaker 1: I mean, you look at the savings rate, the stavings 123 00:06:13,279 --> 00:06:16,720 Speaker 1: rate right now, it's really high, even though we've gone 124 00:06:16,720 --> 00:06:19,479 Speaker 1: through a very bumpy economy. So it seems to me 125 00:06:19,560 --> 00:06:23,359 Speaker 1: like there are resources, especially among higher income people to 126 00:06:23,400 --> 00:06:26,479 Speaker 1: go out and spend. So, Bill, if you don't mind 127 00:06:26,520 --> 00:06:30,120 Speaker 1: taking us through it very slowly for some of us 128 00:06:30,120 --> 00:06:32,880 Speaker 1: who may may maybe you know, less quick of thought 129 00:06:32,960 --> 00:06:36,040 Speaker 1: than you. Take that restaurant example that you just gave 130 00:06:36,080 --> 00:06:38,760 Speaker 1: us in your hometown to have closed. The others will 131 00:06:38,760 --> 00:06:41,280 Speaker 1: have pricing power when people come back and start eating 132 00:06:41,279 --> 00:06:45,320 Speaker 1: out properly. But how long will it take before those 133 00:06:45,400 --> 00:06:49,240 Speaker 1: businesses or new businesses open to take that pricing power away, 134 00:06:49,279 --> 00:06:51,560 Speaker 1: to employ some of the people that haven't been employed, 135 00:06:52,000 --> 00:06:54,640 Speaker 1: that were in the services sector, and that then you know, 136 00:06:54,920 --> 00:06:58,440 Speaker 1: contribute to the labor market becoming sort of full again 137 00:06:58,480 --> 00:07:01,240 Speaker 1: full employment. Well, I wish I knew the answer to 138 00:07:01,240 --> 00:07:03,320 Speaker 1: that question. I mean, we've never gone through anything quite 139 00:07:03,360 --> 00:07:06,440 Speaker 1: like this before, and the burden of course has fallen, 140 00:07:06,600 --> 00:07:10,400 Speaker 1: you know, disproportionately on leisure and hospitality and especially on 141 00:07:10,440 --> 00:07:12,800 Speaker 1: a lot of small businesses. You know, if you look 142 00:07:12,840 --> 00:07:16,520 Speaker 1: at the share of you know, demand, it's it's gone 143 00:07:16,680 --> 00:07:21,400 Speaker 1: disproportionately towards the larger, large, larger stores, larger businesses. You know, 144 00:07:21,440 --> 00:07:25,160 Speaker 1: Walmart's is able to stay open because they sell super 145 00:07:24,760 --> 00:07:30,080 Speaker 1: sell sell groceries, or while follower smaller stores that specialize 146 00:07:30,080 --> 00:07:33,400 Speaker 1: in things that Walmart sells, maybe you know, don't don't 147 00:07:33,520 --> 00:07:35,840 Speaker 1: have as much much business. So I think, you know, 148 00:07:35,880 --> 00:07:37,760 Speaker 1: I think you're right that you know, there will be 149 00:07:38,200 --> 00:07:40,480 Speaker 1: you know, a small business creation. But then that's about 150 00:07:40,520 --> 00:07:43,200 Speaker 1: you know, mobilizing capital and being credit worthy, and so 151 00:07:43,240 --> 00:07:46,320 Speaker 1: I think that's going to take some time. Hey, Bill, 152 00:07:46,360 --> 00:07:49,720 Speaker 1: thanks so much for joining us. We appreciate that. Bill Dudley, 153 00:07:50,000 --> 00:07:53,240 Speaker 1: former year FED president and senior researcher at Prince University, 154 00:07:53,440 --> 00:07:55,720 Speaker 1: and Vonnie, that's a big, big issue I think for 155 00:07:55,760 --> 00:07:58,800 Speaker 1: some of these small businesses, the you know, the how 156 00:07:58,880 --> 00:08:01,720 Speaker 1: quickly they can come back, or maybe a new entrepreneur 157 00:08:01,800 --> 00:08:04,200 Speaker 1: comes in and starts a new restaurant in that old 158 00:08:04,800 --> 00:08:07,400 Speaker 1: old space. Well that's just it. And you know, to me, 159 00:08:07,440 --> 00:08:10,200 Speaker 1: in some senses, that might be the critical question how 160 00:08:10,200 --> 00:08:12,160 Speaker 1: long does that take? Because that's when we're going to 161 00:08:12,160 --> 00:08:15,800 Speaker 1: see those indicators move around, the inflation indicator, the employment indicator, 162 00:08:15,840 --> 00:08:19,480 Speaker 1: and it's how they all sort of interact that you know, 163 00:08:19,720 --> 00:08:23,360 Speaker 1: decides whether we suffer from too much inflation, or whether 164 00:08:23,400 --> 00:08:25,360 Speaker 1: the FED needs to do something about the FED folds 165 00:08:25,400 --> 00:08:28,960 Speaker 1: back and so on, so many questions to resolve that 166 00:08:29,040 --> 00:08:36,360 Speaker 1: was built only former Fed Reserve. New York billion dollar 167 00:08:36,440 --> 00:08:39,440 Speaker 1: and logistics company d h L has just released its 168 00:08:39,440 --> 00:08:43,160 Speaker 1: annual Global Connectedness Index, which it does in conjunction with 169 00:08:43,280 --> 00:08:45,720 Speaker 1: n y U Stern School of Business, and the report 170 00:08:45,760 --> 00:08:50,160 Speaker 1: highlights key developments in international flows of capital, trade, information, 171 00:08:50,280 --> 00:08:53,520 Speaker 1: and people. Joining us now with the conclusion from the 172 00:08:53,559 --> 00:08:56,720 Speaker 1: report that globalization is far from dead is the CEO 173 00:08:56,800 --> 00:09:00,080 Speaker 1: of the America's of dhl Express America's Mike Power and 174 00:09:00,160 --> 00:09:03,280 Speaker 1: thanks for joining Mike. So my globalization may not be 175 00:09:03,360 --> 00:09:05,679 Speaker 1: dead according to the report, but what are the flows 176 00:09:05,720 --> 00:09:08,640 Speaker 1: showing us. Are we dealing with other countries as much 177 00:09:08,800 --> 00:09:13,440 Speaker 1: as we did a peak globalization? Well, good morning, Bonnie 178 00:09:13,440 --> 00:09:15,559 Speaker 1: and Paul, and thanks for having us. Yeah, I mean 179 00:09:15,760 --> 00:09:20,479 Speaker 1: the report in itself, uh, there there weren't big surprises. 180 00:09:20,520 --> 00:09:23,920 Speaker 1: So obviously people flows, if you've seen the report, people 181 00:09:23,960 --> 00:09:28,640 Speaker 1: flows suffered an unpreceded decline in We expected that based 182 00:09:28,679 --> 00:09:32,640 Speaker 1: on what was happening during the pandemic um capital flows 183 00:09:32,679 --> 00:09:35,560 Speaker 1: were hit a bit harder, but they are rebounding UM. 184 00:09:35,600 --> 00:09:39,360 Speaker 1: And that is positive, as you know, with governments and 185 00:09:39,480 --> 00:09:44,080 Speaker 1: central banks having stabilized the markets and helping to do that. 186 00:09:45,200 --> 00:09:47,720 Speaker 1: But the one that came out that we're actually excited 187 00:09:47,760 --> 00:09:52,680 Speaker 1: about his international trade. It's rebounded uh strongly. And people 188 00:09:52,760 --> 00:09:56,280 Speaker 1: ask us all the time, is this a U shape 189 00:09:56,280 --> 00:10:00,800 Speaker 1: and L shape? Uh? It's a rather narrow V shape 190 00:10:00,840 --> 00:10:05,120 Speaker 1: recovery that we have seen. UM. Our lowest point at 191 00:10:05,200 --> 00:10:08,520 Speaker 1: DHL this year was in April. Uh. If you think 192 00:10:08,520 --> 00:10:11,920 Speaker 1: about when we found out about the pandemic UH in 193 00:10:12,080 --> 00:10:16,600 Speaker 1: Wuhan and where it started, we started flowing from the 194 00:10:16,720 --> 00:10:20,920 Speaker 1: US to China ppe equipment UH. And then it turned 195 00:10:20,920 --> 00:10:24,200 Speaker 1: around in March April and you started the c PP 196 00:10:24,480 --> 00:10:28,840 Speaker 1: equipment that started to flow from China to the world 197 00:10:29,440 --> 00:10:34,240 Speaker 1: into the United States. UH. So really what we've seen 198 00:10:34,440 --> 00:10:41,000 Speaker 1: is the world remains connected. UH. International trade UH is key, 199 00:10:41,080 --> 00:10:46,200 Speaker 1: and globalization has been more resilient uh than expected. So 200 00:10:46,880 --> 00:10:50,400 Speaker 1: it's far away from coming to a standstill. Yeah, Mike, 201 00:10:50,400 --> 00:10:54,360 Speaker 1: that's interesting to hear your perspective because folks at DHL, 202 00:10:54,440 --> 00:10:56,880 Speaker 1: obviously it just has a bird's eye view of kind 203 00:10:56,920 --> 00:11:00,160 Speaker 1: of global trade. Here one of the concerns that some 204 00:11:00,320 --> 00:11:03,480 Speaker 1: folks have is, uh the trade war between the US 205 00:11:03,559 --> 00:11:08,800 Speaker 1: and China, and not so much the tariffs and maybe 206 00:11:08,800 --> 00:11:11,440 Speaker 1: the method in which the Trump administration carried out some 207 00:11:11,520 --> 00:11:14,280 Speaker 1: of its trade policies with China, tariffs and so on, 208 00:11:14,360 --> 00:11:17,800 Speaker 1: but just the general belief that the world needs to 209 00:11:17,880 --> 00:11:23,120 Speaker 1: get tougher with China. Does that uh throw some roadblocks 210 00:11:23,200 --> 00:11:27,319 Speaker 1: into the globalization story at all? I would say at 211 00:11:27,320 --> 00:11:30,840 Speaker 1: the beginning, Paul, I think there was a lot of speculation, 212 00:11:31,880 --> 00:11:35,160 Speaker 1: a lot of anecdotes that went out there. There is 213 00:11:35,280 --> 00:11:39,720 Speaker 1: always gonna be a change in the world, especially for 214 00:11:39,800 --> 00:11:41,920 Speaker 1: US when we're dealing in two d and twenty countries 215 00:11:41,920 --> 00:11:46,199 Speaker 1: and territories globally. What we have seen is China continues 216 00:11:46,320 --> 00:11:49,480 Speaker 1: to be one of our biggest trade lanes for US 217 00:11:49,520 --> 00:11:53,439 Speaker 1: at DHL China, US and a p US. I think 218 00:11:53,480 --> 00:11:56,280 Speaker 1: when you take a look at it, Uh, they're firing 219 00:11:56,320 --> 00:11:59,440 Speaker 1: in all cylinders right now, China and Asia Pacific to 220 00:11:59,480 --> 00:12:04,320 Speaker 1: Europe in the United States. So what I would say is, uh, 221 00:12:04,360 --> 00:12:06,800 Speaker 1: you know, the things that took place this past year, 222 00:12:06,840 --> 00:12:09,439 Speaker 1: whether it be the U S m c A deal 223 00:12:09,480 --> 00:12:12,280 Speaker 1: and the revision of NaSTA, which by the way, was needed, 224 00:12:12,400 --> 00:12:15,640 Speaker 1: some form of revision was needed, but there are biggest 225 00:12:15,640 --> 00:12:19,080 Speaker 1: trading partners now as well, UH and China. There needed 226 00:12:19,160 --> 00:12:22,280 Speaker 1: to be a reset from that perspective as well. But 227 00:12:22,320 --> 00:12:25,920 Speaker 1: there's been no slowing down at all. Mike. What have 228 00:12:26,080 --> 00:12:29,840 Speaker 1: you done in terms of changing routes, re prioritizing routes, 229 00:12:30,000 --> 00:12:32,400 Speaker 1: putting stuff on certain routes and so on in order 230 00:12:32,400 --> 00:12:35,440 Speaker 1: to deal with the changes the last year or two. Yeah, 231 00:12:35,520 --> 00:12:38,240 Speaker 1: it's thank you for that, UM, because we've been in 232 00:12:38,280 --> 00:12:42,720 Speaker 1: peak season, as I said, since early June, and as 233 00:12:42,720 --> 00:12:45,600 Speaker 1: a result of that, we've been adding jobs. So we 234 00:12:45,679 --> 00:12:47,680 Speaker 1: took a decision in the month of March that we 235 00:12:47,720 --> 00:12:51,480 Speaker 1: would not furlough one single employee UH. And all we've 236 00:12:51,520 --> 00:12:54,679 Speaker 1: been doing is adding jobs. So we're over three thousand 237 00:12:54,720 --> 00:12:58,160 Speaker 1: new added jobs and growing in the United States as 238 00:12:58,160 --> 00:13:02,480 Speaker 1: an example, over six thousand when you take into account Canada. UH. 239 00:13:02,480 --> 00:13:05,800 Speaker 1: In Mexico, we've added additional capacity as a reduction as 240 00:13:05,800 --> 00:13:10,240 Speaker 1: a result of reduction in airline capacity UH, and that 241 00:13:10,400 --> 00:13:12,840 Speaker 1: is coming back slow. As you can imagine some of 242 00:13:12,840 --> 00:13:17,720 Speaker 1: the recent announcement of further restriction, further lockdown. From a 243 00:13:17,720 --> 00:13:21,880 Speaker 1: commercial airline perspective, we had to supplement that with additional 244 00:13:21,920 --> 00:13:25,640 Speaker 1: capacity in the air. So we've added additional flights that 245 00:13:25,760 --> 00:13:29,240 Speaker 1: of Asia, China into Europe and into the United States, 246 00:13:29,320 --> 00:13:34,600 Speaker 1: intra United States, into Canada, into Mexico, uh, down south 247 00:13:34,800 --> 00:13:39,079 Speaker 1: into Central South America. UH. And that has been ongoing 248 00:13:39,240 --> 00:13:43,240 Speaker 1: for us really since the month of June. Uh And again, 249 00:13:43,520 --> 00:13:48,280 Speaker 1: don't see that slowing down anytime soon. Uh. And really 250 00:13:48,320 --> 00:13:52,400 Speaker 1: we've seen growth in eat commerce. UH so more and 251 00:13:52,440 --> 00:13:54,880 Speaker 1: more people, maybe like yourselves. I don't know about yourself, 252 00:13:54,960 --> 00:13:59,440 Speaker 1: but my wife's shops everything online, have gone to shopping online. 253 00:13:59,480 --> 00:14:02,600 Speaker 1: You you all the results of Black Friday and Cyber Monday, 254 00:14:03,080 --> 00:14:07,160 Speaker 1: some of the biggest ever online shopping numbers, uh in 255 00:14:07,200 --> 00:14:09,959 Speaker 1: the history of the United States. We saw greater than 256 00:14:10,000 --> 00:14:14,360 Speaker 1: a fift uh in a very short period of time. 257 00:14:14,400 --> 00:14:16,560 Speaker 1: And I get asked. I got asked the other day, Mike, 258 00:14:16,679 --> 00:14:20,480 Speaker 1: is this gonna slow down? I don't see it slowing down. 259 00:14:20,720 --> 00:14:25,160 Speaker 1: And we basically saw ten years of e commerce in 260 00:14:25,160 --> 00:14:28,240 Speaker 1: in a in a six month period of time. Wow. Yeah, 261 00:14:28,320 --> 00:14:32,080 Speaker 1: just extraordinary how consumer behaviors change. E commerce has just 262 00:14:32,120 --> 00:14:35,320 Speaker 1: been accelerated. I'm sure you see that clearer than just 263 00:14:35,360 --> 00:14:37,560 Speaker 1: about anyone. Mike Parrott, Thanks so much for joining us. 264 00:14:37,560 --> 00:14:40,600 Speaker 1: We really appreciated Mike Parrott, chief Executive Officer for the 265 00:14:40,600 --> 00:14:43,600 Speaker 1: Americas for d h L Express America's joining us on 266 00:14:43,640 --> 00:14:47,440 Speaker 1: the phone from Plantation, Florida. Just extraordinary. They're seeing the 267 00:14:47,520 --> 00:14:53,360 Speaker 1: recovery uh, you know in Asia, in China more specifically, uh, 268 00:14:53,400 --> 00:14:56,560 Speaker 1: and then a broad recovery in terms of traffic just 269 00:14:56,640 --> 00:15:01,520 Speaker 1: across the board. Amazing. We just got word that the 270 00:15:01,720 --> 00:15:04,480 Speaker 1: call between Prime Minister Boris Johnson and the US vander 271 00:15:04,560 --> 00:15:08,200 Speaker 1: Lyon has finished. Desperate to know what actually happened, because 272 00:15:08,240 --> 00:15:10,840 Speaker 1: this was the call during which talks could collapse or 273 00:15:10,880 --> 00:15:13,360 Speaker 1: they could actually find a solution. So let's bring in 274 00:15:13,400 --> 00:15:16,120 Speaker 1: to as Raphael to let us know what she knows. 275 00:15:16,320 --> 00:15:19,160 Speaker 1: Torez a Booberg opinion editor and is based in London. 276 00:15:19,440 --> 00:15:22,400 Speaker 1: Tores what do we know anything more about the call 277 00:15:22,440 --> 00:15:25,280 Speaker 1: except that is over? Yeah, I'm sorry to say we 278 00:15:25,320 --> 00:15:27,960 Speaker 1: don't know. Um, we don't have any detailed readout at 279 00:15:28,000 --> 00:15:30,800 Speaker 1: that call. It was a crucial one, as you said, 280 00:15:30,880 --> 00:15:34,560 Speaker 1: because uh, the talks are at an impast. This week 281 00:15:34,640 --> 00:15:38,000 Speaker 1: is considered, you know, if not the last week, then 282 00:15:38,040 --> 00:15:42,120 Speaker 1: pretty close to it. Given the European Council meet on Thursday. Um, 283 00:15:42,280 --> 00:15:45,440 Speaker 1: and Uh, the UK is due to leave its transition 284 00:15:45,480 --> 00:15:47,040 Speaker 1: period at the end of the month, and there's a 285 00:15:47,040 --> 00:15:49,200 Speaker 1: lot that needs to happen before that in terms of 286 00:15:49,560 --> 00:15:54,360 Speaker 1: legally scrubbing and translating and getting approval for any deal. Um. 287 00:15:54,400 --> 00:15:57,240 Speaker 1: There needs to be a political solution at this point. 288 00:15:57,280 --> 00:15:59,200 Speaker 1: I think that much is clear, and that's why we 289 00:15:59,280 --> 00:16:03,360 Speaker 1: have Boris Johnson and Slavander Lai and the European Commission 290 00:16:03,400 --> 00:16:07,320 Speaker 1: President speaking directly now whether they can unlock things, I 291 00:16:07,320 --> 00:16:10,800 Speaker 1: think we're unlikely to hear um the announcement of a deal, 292 00:16:10,840 --> 00:16:13,320 Speaker 1: for example, tonight. But what we I think, what what 293 00:16:13,480 --> 00:16:15,840 Speaker 1: everyone is waiting to hear is whether they're going to 294 00:16:15,920 --> 00:16:20,320 Speaker 1: keep talking at least another couple of days. Sores talk 295 00:16:20,360 --> 00:16:23,480 Speaker 1: to us about fishing. Why is fishing such a big thing? 296 00:16:23,600 --> 00:16:26,520 Speaker 1: I just don't get it when I read headlines of 297 00:16:26,560 --> 00:16:29,880 Speaker 1: thousands of jobs, finance jobs leaving London, billions of dollars 298 00:16:29,880 --> 00:16:34,240 Speaker 1: of capital leaving. Okay, I get that's an issue, But fishing, Yeah, 299 00:16:34,280 --> 00:16:38,000 Speaker 1: it's It's actually much simpler than it sounds. Uh. The 300 00:16:38,040 --> 00:16:42,720 Speaker 1: whole you know, Brexit was was thought on the one 301 00:16:42,960 --> 00:16:45,640 Speaker 1: very basic central idea, and that is that Britain would 302 00:16:45,680 --> 00:16:49,320 Speaker 1: take control of its borders, its laws, its money. And 303 00:16:49,320 --> 00:16:51,280 Speaker 1: when you look at the map of Britain, right, it's 304 00:16:51,280 --> 00:16:54,080 Speaker 1: an island and there's water and and their fish in 305 00:16:54,080 --> 00:16:57,360 Speaker 1: that water. And to you know, to to to the 306 00:16:57,520 --> 00:17:00,400 Speaker 1: common person's mind, well, if we control our borders, we 307 00:17:00,400 --> 00:17:03,000 Speaker 1: also control our water. And why should the EU have 308 00:17:03,120 --> 00:17:06,720 Speaker 1: the automatic right to fish? Uh to to claim you know, 309 00:17:06,840 --> 00:17:09,119 Speaker 1: very large share of the fish in British water. So 310 00:17:09,160 --> 00:17:12,000 Speaker 1: that's that's the simple assertion that the UK makes. It's 311 00:17:12,080 --> 00:17:16,399 Speaker 1: not so simple in reality, because um, EU fishermen have 312 00:17:16,480 --> 00:17:20,000 Speaker 1: been fishing those waters for you know, generations and more. Uh. 313 00:17:20,080 --> 00:17:22,320 Speaker 1: The fish are spawned in EU water, some of them 314 00:17:22,400 --> 00:17:25,320 Speaker 1: and then mature and are caught in British waters. It's 315 00:17:25,480 --> 00:17:29,680 Speaker 1: very complicated. Most of what Britain catches it sells into 316 00:17:29,760 --> 00:17:32,760 Speaker 1: the EU. So it's a very it's one of these 317 00:17:32,760 --> 00:17:35,360 Speaker 1: small issues that has the potential to blow things up. 318 00:17:35,640 --> 00:17:38,320 Speaker 1: That said that, the word out over the weekend was 319 00:17:38,320 --> 00:17:40,560 Speaker 1: that they were pretty close to agreeing a deal on 320 00:17:40,640 --> 00:17:43,600 Speaker 1: fish and that things were really hung up over these 321 00:17:43,800 --> 00:17:46,880 Speaker 1: what are called level playing field issues, you know, UH, 322 00:17:46,960 --> 00:17:51,080 Speaker 1: state aid subsidies for industry, labor, and environmental standards and 323 00:17:51,080 --> 00:17:53,919 Speaker 1: that sort of things, and those are pretty um, you know, 324 00:17:54,080 --> 00:17:57,440 Speaker 1: pretty important too to Boris Johnson and his party because 325 00:17:57,480 --> 00:18:00,600 Speaker 1: they signify how much the UK can divert from the 326 00:18:00,600 --> 00:18:05,160 Speaker 1: rest of Europe, which is again another you know, fundamental 327 00:18:05,240 --> 00:18:09,000 Speaker 1: reason why they're leaving the EU. But this fisheries issue 328 00:18:09,080 --> 00:18:11,520 Speaker 1: TOAs it's important on its own, but it's also sort 329 00:18:11,520 --> 00:18:14,879 Speaker 1: of symbolic of the whole thing, right because it will 330 00:18:14,960 --> 00:18:20,040 Speaker 1: decide what stands either parties take on things like creep 331 00:18:20,160 --> 00:18:23,640 Speaker 1: mission creeping and what gets decided for the past versus 332 00:18:23,720 --> 00:18:25,920 Speaker 1: what gets decided for the future in terms of what 333 00:18:25,960 --> 00:18:30,040 Speaker 1: companies can do. The Europeans don't want the British to 334 00:18:30,040 --> 00:18:33,919 Speaker 1: have the right to sort of change mandates over time, right, Yes, 335 00:18:34,000 --> 00:18:36,639 Speaker 1: So that's that's the level playing field a side of this, 336 00:18:36,760 --> 00:18:40,080 Speaker 1: and it's really stuck because the EU, from the used perspective, 337 00:18:40,480 --> 00:18:43,240 Speaker 1: what they don't want is a is a you know, 338 00:18:43,440 --> 00:18:47,080 Speaker 1: medium to large size economy right on their doorstep, having 339 00:18:47,080 --> 00:18:50,840 Speaker 1: the ability to undercut European companies in all sorts of 340 00:18:50,880 --> 00:18:54,080 Speaker 1: ways and yet having access to EU market. So they're 341 00:18:54,160 --> 00:18:57,800 Speaker 1: negotiating position is quite clear. Uh, if you want access 342 00:18:57,840 --> 00:19:01,640 Speaker 1: to the single markets, which is a euro terrfzuro quota deal. 343 00:19:01,680 --> 00:19:05,639 Speaker 1: Then you need to agree not to undercut European UM 344 00:19:05,920 --> 00:19:11,919 Speaker 1: countries with through regulations and different standards on labor markets 345 00:19:11,920 --> 00:19:15,000 Speaker 1: for example, UM and the UK's position as well, we've 346 00:19:15,119 --> 00:19:18,200 Speaker 1: left the single market, we've left the EU, why should 347 00:19:18,240 --> 00:19:21,159 Speaker 1: we follow your rules still, UM, we've left for the 348 00:19:21,280 --> 00:19:24,480 Speaker 1: very purpose of diverging. So that has created, you know, 349 00:19:24,520 --> 00:19:28,200 Speaker 1: the impass And as with all of these things, there 350 00:19:28,320 --> 00:19:32,359 Speaker 1: is a solution, but it would require concessions and political will, 351 00:19:32,400 --> 00:19:34,119 Speaker 1: and that's what we haven't seen up to now. We 352 00:19:34,160 --> 00:19:37,879 Speaker 1: haven't seen either side being willing to give enough to 353 00:19:37,960 --> 00:19:42,200 Speaker 1: get to a deal. So tres It's so it's fair 354 00:19:42,280 --> 00:19:46,720 Speaker 1: to assume by some that no deal will be reached 355 00:19:47,040 --> 00:19:49,119 Speaker 1: if there's a kind of a no deal here at 356 00:19:49,119 --> 00:19:52,000 Speaker 1: this last minute. What is crashing out of the EU 357 00:19:52,480 --> 00:19:56,080 Speaker 1: at your end really mean? Well, the first thing it 358 00:19:56,160 --> 00:20:00,000 Speaker 1: means is that there are a whole load of terror 359 00:20:00,160 --> 00:20:03,320 Speaker 1: that come into play. So right now there's free movement 360 00:20:03,359 --> 00:20:06,440 Speaker 1: of good services, capital, labor, that's what the single market means. 361 00:20:06,760 --> 00:20:10,520 Speaker 1: Suddenly you have teriffs. So for example, UM, sheep meet 362 00:20:10,680 --> 00:20:14,320 Speaker 1: the EU. UH that thirty percent of the UK sheep 363 00:20:14,320 --> 00:20:18,640 Speaker 1: meat goes into EU markets and terrorists would um add 364 00:20:18,680 --> 00:20:22,639 Speaker 1: about I think it's something like six ad belorum you know, 365 00:20:22,720 --> 00:20:25,080 Speaker 1: per year on that and there's a whole host of terrorits. 366 00:20:25,119 --> 00:20:28,560 Speaker 1: It would make British farming, um it would. It would 367 00:20:28,640 --> 00:20:31,119 Speaker 1: price it out of the European market. It would have 368 00:20:31,160 --> 00:20:34,280 Speaker 1: a huge impact on the automotive sector because of all 369 00:20:34,320 --> 00:20:37,879 Speaker 1: of the input, the intermediate goods, the supply chain that 370 00:20:38,000 --> 00:20:41,439 Speaker 1: involves EU part It also means a whole lot of 371 00:20:41,480 --> 00:20:44,480 Speaker 1: non tariff barriers. And by the way, this happens even 372 00:20:44,520 --> 00:20:46,800 Speaker 1: if there's a deal, So we we tend to think 373 00:20:46,840 --> 00:20:51,040 Speaker 1: of a deal as kind of you know, releasing all 374 00:20:51,119 --> 00:20:53,440 Speaker 1: of the pressure that's built up. But even with the deal, 375 00:20:53,560 --> 00:20:55,600 Speaker 1: we see a lot of non tariff barriers and those 376 00:20:55,640 --> 00:20:59,560 Speaker 1: are things like customs checks, rules of origin, where did 377 00:20:59,560 --> 00:21:02,800 Speaker 1: this product have to originate from? How do you certify that? Uh, 378 00:21:02,960 --> 00:21:07,280 Speaker 1: food safety standards and those kinds of certification. For a 379 00:21:07,320 --> 00:21:10,440 Speaker 1: British citizen who wants to take their dog to provounce 380 00:21:10,480 --> 00:21:13,280 Speaker 1: in the summer, you will need a special pet passport, 381 00:21:13,320 --> 00:21:15,960 Speaker 1: You'll need to get a vet to certify it. All 382 00:21:16,000 --> 00:21:18,639 Speaker 1: of these things become more complicated if you have a 383 00:21:18,640 --> 00:21:21,760 Speaker 1: second home in the South of France or Spain. You 384 00:21:21,760 --> 00:21:24,080 Speaker 1: will only be able to use it for I think 385 00:21:24,119 --> 00:21:27,320 Speaker 1: it's ninety days and a eighty day period um, whereas 386 00:21:27,359 --> 00:21:29,480 Speaker 1: now you can spend as much time as you want there. 387 00:21:29,640 --> 00:21:32,200 Speaker 1: So this is all sorts of implications. Some of them 388 00:21:32,200 --> 00:21:35,879 Speaker 1: are you know, seem quite you know, sort of small hassles, 389 00:21:35,880 --> 00:21:39,800 Speaker 1: and others are quite significant. But we're talking about, you know, 390 00:21:39,880 --> 00:21:44,359 Speaker 1: potentially a six percent loss of GDP compared to staying 391 00:21:44,400 --> 00:21:47,359 Speaker 1: in the EU. Uh GDP growth compared to what it 392 00:21:47,359 --> 00:21:49,399 Speaker 1: would be staying in the EU, according to the Office 393 00:21:49,440 --> 00:21:53,240 Speaker 1: of Budget Responsibility. So it's it's it's significant whether brigons 394 00:21:53,240 --> 00:21:56,320 Speaker 1: will feel it from day one, um, that remains to 395 00:21:56,440 --> 00:21:58,720 Speaker 1: be seen, but I think it's it's a sea change 396 00:21:58,720 --> 00:22:01,159 Speaker 1: on a lot of levels, and no deal most of 397 00:22:01,200 --> 00:22:05,120 Speaker 1: all means that the relationship between Britain and it's its 398 00:22:05,240 --> 00:22:09,560 Speaker 1: closest trading partner, it's geographical neighbor um are put on 399 00:22:09,560 --> 00:22:15,000 Speaker 1: on very sort of um, you know, not not a 400 00:22:15,000 --> 00:22:20,000 Speaker 1: good place. Yeah, terrible place, boyd dress. I remember when 401 00:22:20,040 --> 00:22:21,479 Speaker 1: we used to speak to you you on a daily basis 402 00:22:21,480 --> 00:22:24,280 Speaker 1: pre pandemic. But the it looks like we're finally getting 403 00:22:24,320 --> 00:22:27,439 Speaker 1: to the short strokes here. For Brexit uh winner or 404 00:22:27,600 --> 00:22:31,280 Speaker 1: lose thres Raphael Bloomberg, opinion editor covering the politics and 405 00:22:31,320 --> 00:22:37,119 Speaker 1: economics of Europe, joining us on a Brexit update. Just 406 00:22:37,160 --> 00:22:40,560 Speaker 1: looking at the d X Y Spot Dollar index trading 407 00:22:40,640 --> 00:22:43,200 Speaker 1: right now at about nineties spots seven five. That's done 408 00:22:43,200 --> 00:22:47,639 Speaker 1: about ten percent from just March. Here. As we think 409 00:22:47,680 --> 00:22:50,840 Speaker 1: about the Federal Reserve and uh FED Chairman Pale talking 410 00:22:50,840 --> 00:22:53,800 Speaker 1: about lower rates for longer, let's get a sense of 411 00:22:53,840 --> 00:22:56,960 Speaker 1: what's going on in the currency markets relative to the dollar. 412 00:22:57,040 --> 00:23:02,320 Speaker 1: We welcome Wolfgang Coaster, senior strategy officer for Kiriba uh Wolfgang, 413 00:23:02,359 --> 00:23:04,160 Speaker 1: thanks what for joining us here. So we have had 414 00:23:04,200 --> 00:23:07,560 Speaker 1: this pullback in the dollar and again summer calling for 415 00:23:07,960 --> 00:23:11,919 Speaker 1: maybe some continued weakness. What are your thoughts? My thoughts 416 00:23:11,960 --> 00:23:15,400 Speaker 1: Good morning everybody. Um My thoughts are that while we've 417 00:23:15,440 --> 00:23:19,399 Speaker 1: had some weakening here and certainly significant, the bigger issue 418 00:23:19,400 --> 00:23:22,840 Speaker 1: for corporations is really the volatility. Sometimes it's uptront as 419 00:23:22,840 --> 00:23:25,160 Speaker 1: it's down. We all know that we've had some we've 420 00:23:25,160 --> 00:23:28,919 Speaker 1: seen those continuous strength, we see some repriets. They're clear 421 00:23:28,960 --> 00:23:31,000 Speaker 1: with all the global economic things that are going on 422 00:23:31,040 --> 00:23:32,840 Speaker 1: that we're going to continue to see. One thing, which 423 00:23:32,880 --> 00:23:36,280 Speaker 1: is volatility. And the problem with the volatility is that 424 00:23:36,280 --> 00:23:38,520 Speaker 1: it doesn't just happen on day one and day nine 425 00:23:38,600 --> 00:23:41,239 Speaker 1: d of the quarter. It happens every single day. And 426 00:23:41,320 --> 00:23:43,800 Speaker 1: there are lots of corporations who if they are negative 427 00:23:43,800 --> 00:23:46,280 Speaker 1: to the impact of that forn exchange, its impacts their 428 00:23:46,400 --> 00:23:49,399 Speaker 1: cash and it's all about liquidity right now, as we 429 00:23:49,480 --> 00:23:52,280 Speaker 1: all know. So what we're helping companies was just trying 430 00:23:52,359 --> 00:23:56,399 Speaker 1: to make that as agnostic as possible and not worry 431 00:23:56,400 --> 00:23:59,120 Speaker 1: about whether dolls going up or down, but reality run 432 00:23:59,160 --> 00:24:02,080 Speaker 1: their business as I was a constant dollar business. Yeah, 433 00:24:02,119 --> 00:24:04,200 Speaker 1: just for context, let's let everybody know that the dollar 434 00:24:04,280 --> 00:24:08,000 Speaker 1: index today is at ninety point seven five nine zero 435 00:24:08,119 --> 00:24:11,359 Speaker 1: point seven five is you know, thanks to you know, 436 00:24:12,480 --> 00:24:14,879 Speaker 1: factor is beyond the dollars control as well, of course, 437 00:24:14,960 --> 00:24:17,720 Speaker 1: like euro strength and I mean not the British pounds 438 00:24:17,760 --> 00:24:20,520 Speaker 1: hurt nay, because that's been weakening too. So well, King, 439 00:24:20,760 --> 00:24:24,080 Speaker 1: I know you're particularly concerned about airbnbs currency problem. What 440 00:24:24,119 --> 00:24:26,440 Speaker 1: does the likes of AIRBND that's dealing with all sorts 441 00:24:26,480 --> 00:24:31,439 Speaker 1: of currencies all the time do, So what companies like 442 00:24:31,480 --> 00:24:33,880 Speaker 1: that should do is really understand where all their exposers 443 00:24:33,960 --> 00:24:37,000 Speaker 1: come from. And then manage it to a point that 444 00:24:37,040 --> 00:24:40,040 Speaker 1: it becomes immaterial. Lots of companies around the world do 445 00:24:40,160 --> 00:24:44,440 Speaker 1: that today. It looks like in the statements from Airbnb 446 00:24:44,640 --> 00:24:48,280 Speaker 1: that they recognize they have an issue. They actually mentioned 447 00:24:48,400 --> 00:24:53,280 Speaker 1: in their opening documents their currency sixty nine times. They're 448 00:24:53,280 --> 00:24:56,879 Speaker 1: in forty countries. Um they mentioned euro and Sterling is 449 00:24:56,920 --> 00:24:59,840 Speaker 1: the two largest exposures, which is a little bit of 450 00:25:00,000 --> 00:25:04,080 Speaker 1: setting right now. But overall, what what what investors will 451 00:25:04,119 --> 00:25:06,080 Speaker 1: be looking at is how they actually manage this and 452 00:25:06,119 --> 00:25:09,480 Speaker 1: what they're showing in their two thousand twenty results so 453 00:25:09,600 --> 00:25:12,240 Speaker 1: far as a sixty three million dollar hit due to 454 00:25:12,280 --> 00:25:15,200 Speaker 1: four exchange. That's sixty three million dollars worth of cash 455 00:25:15,280 --> 00:25:17,960 Speaker 1: that they do not have, and that is over ten 456 00:25:18,600 --> 00:25:21,400 Speaker 1: of their overall net losses. So they would have ten 457 00:25:22,200 --> 00:25:25,600 Speaker 1: less losses if they've managed that to a level where 458 00:25:25,640 --> 00:25:28,080 Speaker 1: it becomes immaterial. And lots of companies, as I said, 459 00:25:28,119 --> 00:25:29,960 Speaker 1: like the Googles of the world and others who have 460 00:25:30,000 --> 00:25:32,800 Speaker 1: the same problem, manage this. Just to follow, if you 461 00:25:32,840 --> 00:25:36,720 Speaker 1: don't mind, are they not hedging? It looks like they're 462 00:25:36,760 --> 00:25:39,040 Speaker 1: doing some hedging, but it doesn't seem to be as 463 00:25:39,080 --> 00:25:41,440 Speaker 1: effective as it could be, So they look like they're 464 00:25:41,440 --> 00:25:43,720 Speaker 1: doing from what they're saying, they are using their product 465 00:25:43,880 --> 00:25:47,159 Speaker 1: to partially manage this. How exactly they're doing it don't know, 466 00:25:47,600 --> 00:25:50,280 Speaker 1: But what I do know is that they have that 467 00:25:50,359 --> 00:25:53,440 Speaker 1: they have very material losses that they shouldn't be having. 468 00:25:54,320 --> 00:25:57,520 Speaker 1: So what's gotting up to last let's call it years? 469 00:25:57,560 --> 00:26:01,200 Speaker 1: As the global commony global economy has become much more 470 00:26:01,680 --> 00:26:06,600 Speaker 1: global uh and internationalism has uh, you know, increased. From 471 00:26:06,640 --> 00:26:11,560 Speaker 1: your perspective, how are companies today managing their currency exposure risk? 472 00:26:11,600 --> 00:26:13,520 Speaker 1: It still seems like when I listen to earnings calls, 473 00:26:13,920 --> 00:26:17,720 Speaker 1: I hear big, big numbers of currency swings, hits and 474 00:26:17,920 --> 00:26:22,640 Speaker 1: or gains to the earnings. Yeah, so that's absolutely correct. Unfortunately, 475 00:26:22,680 --> 00:26:24,639 Speaker 1: because we try to help companies make sure that that 476 00:26:24,680 --> 00:26:28,200 Speaker 1: doesn't happen. We we do actually a quarterly report where 477 00:26:28,240 --> 00:26:32,119 Speaker 1: we do were last quarter we had losses of in 478 00:26:32,440 --> 00:26:37,520 Speaker 1: eight hundred North American companies by exceeding seventeen billion dollars, 479 00:26:37,520 --> 00:26:39,879 Speaker 1: which is a lot of money. So you have to 480 00:26:39,960 --> 00:26:42,040 Speaker 1: answer your question. You have two camps. You have the 481 00:26:42,080 --> 00:26:45,720 Speaker 1: camps of companies will really understand it, understand their exposure 482 00:26:45,760 --> 00:26:49,920 Speaker 1: and actually fully automate that management. Today it is automated 483 00:26:49,920 --> 00:26:52,240 Speaker 1: all it is, and it is not expensive to do, 484 00:26:52,800 --> 00:26:55,960 Speaker 1: and especially relative to the losses that that we're seeing 485 00:26:56,000 --> 00:26:58,440 Speaker 1: companies have. And then you see the ones who kind 486 00:26:58,440 --> 00:27:01,760 Speaker 1: of think that this is a zero sum game and 487 00:27:01,960 --> 00:27:04,520 Speaker 1: practice it is not a zero sum game. You may 488 00:27:04,560 --> 00:27:06,480 Speaker 1: have ops, you may have downs, but they hit you 489 00:27:06,520 --> 00:27:08,600 Speaker 1: every single day during your business, and you may well 490 00:27:08,640 --> 00:27:11,280 Speaker 1: be losing lots of money in times when you need 491 00:27:11,320 --> 00:27:13,879 Speaker 1: it and so during for example, this these tough times. 492 00:27:14,359 --> 00:27:16,880 Speaker 1: U does is it really good for Airbnb to lose 493 00:27:16,880 --> 00:27:19,439 Speaker 1: another sixty million dollars due to this? I think not 494 00:27:20,000 --> 00:27:23,359 Speaker 1: and it's not necessary to there. Now, what's impressive about 495 00:27:23,359 --> 00:27:26,119 Speaker 1: Airbnb is still they're doing a great job through these 496 00:27:26,280 --> 00:27:29,760 Speaker 1: through this economy quite frankly, still having some nice revenues 497 00:27:29,800 --> 00:27:32,119 Speaker 1: of two and a half a billion dollars. So fundamentally 498 00:27:32,200 --> 00:27:34,280 Speaker 1: they have a lot of things going for for them. 499 00:27:34,359 --> 00:27:36,879 Speaker 1: But the financial risk management, it looks like it's in 500 00:27:36,920 --> 00:27:39,600 Speaker 1: that they unfortunately are a little bit more in the 501 00:27:39,640 --> 00:27:43,760 Speaker 1: camp of could improve. All right, then, well that's that's 502 00:27:43,800 --> 00:27:46,320 Speaker 1: telling them. Volcang. Let us know if they if they 503 00:27:46,400 --> 00:27:48,800 Speaker 1: get back to you and put a strategy in place, 504 00:27:48,800 --> 00:27:50,440 Speaker 1: we'd love to hear about it. All Going a Coaster 505 00:27:50,520 --> 00:27:55,320 Speaker 1: is senior strategy officer at Kiriba, based there in downtown 506 00:27:55,320 --> 00:27:59,920 Speaker 1: New York, New York Plaza. Thanks for listening to Bloomberg 507 00:28:00,000 --> 00:28:03,399 Speaker 1: Markets podcast. You can subscribe and listen to interviews at 508 00:28:03,400 --> 00:28:07,000 Speaker 1: Apple Podcasts or whatever a podcast platform you prefer. I'm 509 00:28:07,080 --> 00:28:10,040 Speaker 1: Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and I'm 510 00:28:10,040 --> 00:28:13,160 Speaker 1: Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, 511 00:28:13,160 --> 00:28:15,680 Speaker 1: you can always catch us worldwide at Bloomberg Radio