WEBVTT - The Earnings Crunch Is Getting Real 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.320 --> 0:00:09.799 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:28.400 pm Eastern Time on Bloomberg Radio or watch us on YouTube. 0:00:28.400 --> 0:00:32.280 Searched Bloomberg clovel News. Well, Katie, I mentioned some of 0:00:32.320 --> 0:00:34.159 the virus headlines, but we do like to do an 0:00:34.200 --> 0:00:37.839 update about where things stand. With numbers cases passed in 0:00:38.159 --> 0:00:40.839 the globe, about two hundred twenty three million deaths have 0:00:41.040 --> 0:00:44.400 exceeded six four point six million. More than five point 0:00:44.520 --> 0:00:48.239 six three billion doses of the vaccine have been administered. 0:00:48.560 --> 0:00:50.640 Let's check in now, as we do each and every week, 0:00:50.680 --> 0:00:53.320 with Dr Ian lust Beder, clinical Professor of Medicine at 0:00:53.440 --> 0:00:55.520 n y U Langnes Medical Center. He joins us on 0:00:55.560 --> 0:00:58.240 the phone from New York City. Dr LUs Beder, How 0:00:58.280 --> 0:01:01.400 are you on this Friday afternoon? Great Tim and Katie, 0:01:01.400 --> 0:01:05.160 Happy Friday. Lots of COVID news every day, it seems, yeah, 0:01:05.200 --> 0:01:06.760 And look, I think it's fair to say we're going 0:01:06.800 --> 0:01:09.920 to continue to be doing this Friday check in with 0:01:09.959 --> 0:01:12.759 you and focusing on COVID for quite a while, because 0:01:12.760 --> 0:01:15.679 it does seem like we continue to get relentless news 0:01:15.720 --> 0:01:17.400 about the spread of the delta variant. And I do 0:01:17.440 --> 0:01:20.319 wonder to what extent you think that the President's vaccine 0:01:20.319 --> 0:01:23.400 mandate that he announced yesterday for companies with more than 0:01:23.440 --> 0:01:27.600 one employees have to get vaccinated or face weekly tests, 0:01:28.160 --> 0:01:29.600 to what extent do you think that will put an 0:01:29.680 --> 0:01:32.160 end to the spread of the virus? You know, I 0:01:32.200 --> 0:01:35.319 think there are are a few challenges with the with 0:01:35.400 --> 0:01:38.480 the vaccine mandate. On On the good side, or the 0:01:38.480 --> 0:01:41.399 good news is that at least sevent of Americans have 0:01:41.480 --> 0:01:46.840 had at least one vaccine, over fifty have had two vaccines. Um, 0:01:47.160 --> 0:01:49.880 we also know that vaccines really have been very helpful 0:01:49.960 --> 0:01:53.320 in reducing severe disease, and you know, masks are certainly 0:01:53.320 --> 0:01:56.720 helpful as well, So we definitely are making some progress. 0:01:57.320 --> 0:02:01.440 The challenge really is how to get um everyone on board, 0:02:01.440 --> 0:02:03.640 and I think that's going to be very difficult. I'm 0:02:03.680 --> 0:02:07.200 not sure the vaccine mandate UM is going to be 0:02:07.240 --> 0:02:10.760 that helpful for several reasons. One is, by the time 0:02:11.120 --> 0:02:14.079 this sort of set up in a regulatory fashion and 0:02:14.360 --> 0:02:17.120 you know, potentially enforced, it's going to be a number 0:02:17.160 --> 0:02:20.160 of months down the line, and probably this delta wave 0:02:20.240 --> 0:02:23.240 that we're seeing will likely be over sometime in the 0:02:23.240 --> 0:02:27.840 next few months. UM, So you're sort of risking political 0:02:27.960 --> 0:02:34.000 capital and and uh, maybe polarization for really an unclear benefit. 0:02:34.240 --> 0:02:37.280 And I think a number of people may feel that, 0:02:37.680 --> 0:02:43.440 you know, letting um, having businesses incentivized too for the 0:02:43.480 --> 0:02:46.359 health of their own employees, maybe the best thing local 0:02:46.400 --> 0:02:50.200 districts and businesses really decide. I think the idea of 0:02:50.320 --> 0:02:55.240 vaccination is very helpful. Uh. The challenges will you alienate people? 0:02:55.280 --> 0:02:58.640 There are some studies that suggest of the about you know, 0:02:58.840 --> 0:03:04.480 twenty five to repercent of unvaccinated population, at that thirty 0:03:05.480 --> 0:03:07.600 of them say the reason they're not doing it is 0:03:07.639 --> 0:03:10.120 they don't trust the government. The other percent is concerned 0:03:10.120 --> 0:03:13.640 about side effects. So I think we need credibility. I 0:03:13.680 --> 0:03:16.400 think we need to reassure people to some degree about 0:03:16.440 --> 0:03:20.640 side effects and reassure people that there are no ulterior 0:03:20.680 --> 0:03:24.320 motives to slowly kind of chip away at that population 0:03:24.400 --> 0:03:27.440 that's been somewhat resistant. I'm not sure mandates are going 0:03:27.520 --> 0:03:29.720 to be, how effective it's going to be, and how 0:03:29.760 --> 0:03:31.720 long it will take to really get that in place. 0:03:32.440 --> 0:03:35.520 And so that's an interesting point about the holdouts that 0:03:35.560 --> 0:03:39.040 are still unvaccinated that you know, in your view, reassurance 0:03:39.080 --> 0:03:42.720 would work better. But I'm curious, you know, let's talk 0:03:42.720 --> 0:03:46.720 about carrots and sticks, because this vaccine mandate clearly it's 0:03:46.720 --> 0:03:49.000 a stick. And Tim and I were just talking about 0:03:49.040 --> 0:03:54.880 airlines imposing fines on maskless passengers. I'm curious, how, in 0:03:54.920 --> 0:03:57.440 your view, are we going to see more things like this, 0:03:57.520 --> 0:04:00.640 like penalties and fines when it comes to getting people 0:04:00.680 --> 0:04:03.720 to mask up or get vas versus uh, you know, 0:04:03.760 --> 0:04:07.920 the administration or companies actually taking a more reassuring route. 0:04:09.120 --> 0:04:11.920 You know, I think scientific data is always helpful, and 0:04:11.960 --> 0:04:15.000 believe it or not, we don't have randomized control trials. 0:04:15.320 --> 0:04:17.640 You know, we've been battling this for two years or 0:04:17.720 --> 0:04:21.359 more um and we don't really have randomized control trials 0:04:21.400 --> 0:04:24.720 about masks. And so when we talk about kids or 0:04:25.440 --> 0:04:28.080 you know, the benefits of masks and schools and so forth. 0:04:28.680 --> 0:04:31.080 We over the past two years could have done really 0:04:31.120 --> 0:04:35.640 big studies and made some determinations. So I think we're 0:04:35.640 --> 0:04:38.479 relying on data from another number of other countries, and 0:04:38.560 --> 0:04:41.760 many of them don't even require masks. But I think 0:04:41.800 --> 0:04:46.440 individual businesses can do um set guidelines for what they want, 0:04:46.520 --> 0:04:49.120 and an airline if they publish this is, you know, 0:04:49.240 --> 0:04:52.159 our requirements, you have to show your vaccine card or 0:04:52.160 --> 0:04:54.719 wear a mask during the flight. I think it's really 0:04:54.760 --> 0:04:56.800 within their right to do it. I think it would 0:04:56.800 --> 0:04:59.520 be more helpful if we had these studies already up 0:04:59.560 --> 0:05:02.240 so we can show people how effective it is. But 0:05:02.279 --> 0:05:04.480 it's certainly within the right to do it, and I 0:05:04.520 --> 0:05:07.560 think for short flights for a couple of hours, it's 0:05:07.640 --> 0:05:10.119 very reasonable to do. You know, when you're talking about 0:05:10.120 --> 0:05:12.640 people on five or six hour flights to remain master 0:05:12.800 --> 0:05:14.960 or kids, that's going to be tough to enforce in 0:05:15.000 --> 0:05:17.719 the middle of a you know, six hour flight. What 0:05:17.760 --> 0:05:20.159 about when it comes to the role that school boards 0:05:20.240 --> 0:05:23.200 and in school districts take, because we learned yesterday at 0:05:23.240 --> 0:05:25.840 Los Angeles is saying that all students twelve and older 0:05:25.880 --> 0:05:30.320 must be fully vaccinated by January ten. Uh, students need 0:05:30.520 --> 0:05:33.240 a lot of vaccines already. There are vaccine requirements at 0:05:33.279 --> 0:05:36.440 different ages, for for different schooling. I'm wondering why you 0:05:36.480 --> 0:05:40.400 make of this one, Dr LUs Better completely right, you know, Tim, 0:05:40.800 --> 0:05:46.400 We even mandate, which I disagree with, hepatitis B vaccines 0:05:46.480 --> 0:05:50.679 before you know, kids really start school. That's to reduce 0:05:50.800 --> 0:05:54.359 the incidents of potentially sexually transmitted disease. And you know 0:05:54.440 --> 0:05:57.120 these it can be twelve years before a kid or 0:05:57.160 --> 0:06:03.120 more before kids are even exposed. So I do think, um, uh, 0:06:03.200 --> 0:06:05.960 it is reasonable to require vaccines or a number of 0:06:06.040 --> 0:06:09.479 vaccines required before school. But I think if we had 0:06:09.520 --> 0:06:13.479 safety data, more safety data, and more efficacy data, people 0:06:13.520 --> 0:06:15.760 would be a lot happier to be on board with that, 0:06:15.839 --> 0:06:18.320 And I think we need to accumulate that and really 0:06:18.360 --> 0:06:22.880 reassure people. It should, over time, really reduce COVID in 0:06:22.960 --> 0:06:25.359 the schools, but I think parents would want to be 0:06:25.400 --> 0:06:27.880 reassured about it. You know again, I think a lot 0:06:27.920 --> 0:06:29.880 of COVID is going to be over before all this 0:06:30.320 --> 0:06:33.920 gets enforced over the next few months. Dr Ian LUs Beda, 0:06:33.960 --> 0:06:35.840 we unfortunately have to leave it there. Thank you so 0:06:35.920 --> 0:06:37.679 much as you do each and every week for joining 0:06:37.720 --> 0:06:40.120 us on this Friday. Dr LUs Beta is clinical professor 0:06:40.160 --> 0:06:42.600 of medicine at n y U Langnes Medical Center. He 0:06:42.680 --> 0:06:46.360 joins us on the phone from New York City. You're 0:06:46.400 --> 0:06:50.359 listening to Bloomberg Business Week with Carol Messer and Bloomberg 0:06:50.480 --> 0:06:54.560 Quick Takes Tim Stinovic on Bloomberg Radio. Well, it is 0:06:54.600 --> 0:06:56.200 the big story of the day when it comes to 0:06:56.400 --> 0:06:58.760 tech companies and indeed Apple stock taking ahead as a 0:06:58.800 --> 0:07:01.440 result of court ordering that Apple can no longer force 0:07:01.520 --> 0:07:04.479 developers to use in app purchases. This the culmination of 0:07:04.480 --> 0:07:07.680 the Apple Epic games battle with us. Now for the 0:07:07.720 --> 0:07:10.720 latest is Mark German, technology reporter at Bloomberg News. He 0:07:10.800 --> 0:07:12.840 joins us on the phone from Los Angeles. Mark, how 0:07:12.880 --> 0:07:16.640 big of a deal is this for Apple? This is 0:07:16.720 --> 0:07:21.120 a multibillion dollar per year deals for Apple. This set 0:07:21.240 --> 0:07:24.240 up major changes to the app store will where Apple 0:07:24.280 --> 0:07:29.160 will have to allow all apps, including games, to steer 0:07:29.520 --> 0:07:32.720 or have the option to steer users to complete transactions 0:07:33.360 --> 0:07:39.880 outside of the inept purchase ecosystem, which would save developers 0:07:39.920 --> 0:07:45.640 and obviously take that out of Apple's pocket. Mark, what 0:07:45.640 --> 0:07:47.800 does that look like for a user? For somebody who 0:07:47.880 --> 0:07:49.880 has been making an app purchases. How how much of 0:07:49.880 --> 0:07:51.560 a burden is going to be put on the user 0:07:51.560 --> 0:07:53.800 to actually go somewhere else to make this payment. Is 0:07:53.800 --> 0:07:56.360 it just gonna be easier to pay Apple. So there's 0:07:56.400 --> 0:08:00.880 a big question that remains. Will Apple require developers to 0:08:01.000 --> 0:08:05.640 offer both in app purchase and allow them to also 0:08:05.760 --> 0:08:08.800 steer at the same time, So our developer is going 0:08:08.840 --> 0:08:11.360 to be allowed to steer users without offering I a P. 0:08:12.200 --> 0:08:15.760 In the past, Apple has made these concessions while silver 0:08:15.840 --> 0:08:18.920 quiring I P to give the user choice. I'd imagine 0:08:18.960 --> 0:08:21.240 that's going to be the case, and I'd imagine there's 0:08:21.240 --> 0:08:22.920 still going to be some users who are going to 0:08:23.000 --> 0:08:24.960 use I a P for the convenience. And there's also 0:08:25.000 --> 0:08:27.080 going to be some developers who are not going to 0:08:27.160 --> 0:08:29.760 build external payment systems that could cost them a few 0:08:29.760 --> 0:08:32.640 percentage points and a bunch of convenience as well. And 0:08:32.640 --> 0:08:35.280 so Mark, let's broaden this out here, because you said 0:08:35.320 --> 0:08:39.240 this is a multibillion dollar a year deal for Apple. 0:08:39.480 --> 0:08:41.240 That's a bunch of money. But what does it mean 0:08:41.280 --> 0:08:44.120 for the other tech giants out there? I mean, is 0:08:44.160 --> 0:08:47.720 this just the start of a wave of antitrust actions 0:08:47.720 --> 0:08:53.680 against some of these tech giants or what are you expecting? Yeah, 0:08:53.720 --> 0:08:56.480 I think what we want to say is here that 0:08:56.720 --> 0:08:59.760 this is probably going to impact Google's ruling. Right there 0:08:59.840 --> 0:09:02.959 is Google trotal epic going. You know, it's going to 0:09:03.000 --> 0:09:06.920 be happening across the next year into and it's going 0:09:06.960 --> 0:09:10.560 to be very important for UH, you know, the ruling 0:09:10.600 --> 0:09:13.280 and there to take something to account this Apple ruling. 0:09:13.360 --> 0:09:17.960 I'm not sure this impact Amazon or Facebook, but definitely 0:09:18.000 --> 0:09:20.000 look for the seven impact from the Facebook or the 0:09:20.040 --> 0:09:22.680 Google situation next year. One thing that is interesting to 0:09:22.679 --> 0:09:25.960 see is the way that companies that have made UH 0:09:26.520 --> 0:09:29.880 or pushed back against what Apple has been doing for years. Spotify, 0:09:29.920 --> 0:09:33.360 for example, higher by more than two percent. Netflix on 0:09:33.400 --> 0:09:37.040 a daylight today, where the broader market is lower, is 0:09:37.240 --> 0:09:39.640 higher today by more than a percentage point. What does 0:09:39.679 --> 0:09:41.800 it mean for those companies that have long complained about 0:09:41.840 --> 0:09:45.200 this what they call its hole on the app store highway? 0:09:46.160 --> 0:09:49.000 This has already been done already, right like Apple last 0:09:49.000 --> 0:09:51.920 week that it would allow Netflix and Spotify and other 0:09:52.040 --> 0:09:55.880 media apps to bypass this. So there's no news here 0:09:55.920 --> 0:09:58.160 for those developers. The stock still live in higher though 0:09:59.000 --> 0:10:01.360 I don't know why it clear really the traders aren't 0:10:01.360 --> 0:10:05.720 reading our articles. This already happened a week ago, So 0:10:05.800 --> 0:10:08.240 no difference, no difference for these companies. It's just the 0:10:08.280 --> 0:10:11.840 gaming companies that are affected because Apple exempted gaming. No, no, 0:10:11.920 --> 0:10:14.040 there's no difference. Apple already did this a week ago. 0:10:14.600 --> 0:10:19.000 There's no difference. No differences is that it's for games. Okay, 0:10:19.080 --> 0:10:23.319 that is very helpful context Hopefully up traders on the 0:10:23.400 --> 0:10:26.240 terminal click. But I do I am curious, Mark. We 0:10:26.280 --> 0:10:29.360 know that Apple is going to appeal this decision. Do 0:10:29.480 --> 0:10:31.840 they have any shot? And I mean, how far could 0:10:31.840 --> 0:10:35.040 this go? You know, I don't know. I just spoke 0:10:35.080 --> 0:10:39.000 to their general counsel who was noncommittal on appealing the decision. 0:10:39.080 --> 0:10:41.760 So it's unclear yet. They say this is a resounding victory, 0:10:41.840 --> 0:10:44.679 a giant victory, and they're very happy with the ruling. 0:10:44.920 --> 0:10:47.400 So it's unclear what they're gonna do. They probably knew 0:10:47.440 --> 0:10:48.760 they were going to have to do this anyways, that's 0:10:48.800 --> 0:10:50.439 why they did it last week. Just in the last 0:10:50.440 --> 0:10:51.920 forty five seconds we have with you, Mark, do you 0:10:52.520 --> 0:10:54.400 think it's I mean, what does your gut tell you 0:10:54.440 --> 0:10:57.520 about Apple saying this is a victory? I mean, I 0:10:57.520 --> 0:10:59.920 think they're right they were ruled to not being a novel. 0:11:00.320 --> 0:11:02.959 They were ruled to not having anti trust issues. They 0:11:03.000 --> 0:11:06.079 simply have to expand a decision they made a week 0:11:06.120 --> 0:11:09.240 ago to games. They already did it for spotifying Netflix, 0:11:09.480 --> 0:11:11.520 so there's not a lot happening here. They're also going 0:11:11.559 --> 0:11:13.320 to get about I don't know, four or five million 0:11:13.360 --> 0:11:17.000 dollars with an m from for lost revenue. It's like 0:11:17.000 --> 0:11:19.480 a tiny amount of money for the company Mark whom 0:11:19.520 --> 0:11:23.400 cooked by a new car, right, just a little bit 0:11:23.440 --> 0:11:25.600 of money. So yeah, overall it's a big one for Apple. 0:11:26.040 --> 0:11:29.240 Mark German, it's always great to chat everything Apple with you. 0:11:29.280 --> 0:11:32.000 We really appreciate you taking the time, Mark German, technology 0:11:32.000 --> 0:11:34.480 reporter for Bloomberg News. He joins us on the phone 0:11:34.760 --> 0:11:38.720 from Los Angeles. This is Bloomberg Business Week with Carol 0:11:38.800 --> 0:11:43.920 Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, 0:11:43.960 --> 0:11:47.000 Poulti Group, the paint maker Sherwin Williams, and also the 0:11:47.000 --> 0:11:50.800 paint maker PPG Industries all slashing their outlooks this week 0:11:50.840 --> 0:11:54.920 as a result of higher input costs and inflationary pressures. 0:11:55.440 --> 0:11:59.160 Brooke Sutherland is Bloomberg Opinion columnist and she writes about 0:11:59.200 --> 0:12:01.959 it for bloom Opinion. Also joining us is Bloomberg Business 0:12:01.960 --> 0:12:03.960 We Get in Control Webber. He's on the access line 0:12:04.000 --> 0:12:08.440 from Brooklyn, Joel. I thought that these issues were transitory. 0:12:08.640 --> 0:12:12.200 I keep hearing about these higher prices being transitory, and 0:12:12.240 --> 0:12:15.880 I'm wondering to what extent it's going to continue, Uh, 0:12:15.920 --> 0:12:20.480 to be a challenge to these industrial companies. Depends who 0:12:20.520 --> 0:12:23.079 you're listening to, I think, um, because I think the 0:12:23.400 --> 0:12:27.280 companies themselves, Um. And this goes just beyond industrials too. 0:12:27.559 --> 0:12:30.040 I've been saying that they don't always think it's gonna 0:12:30.040 --> 0:12:33.280 be transitory. Um. But what I thought was significant about 0:12:33.280 --> 0:12:36.800 this is just how quickly things are beginning to change. 0:12:36.920 --> 0:12:39.280 And and Brooke does a great job of outlining this 0:12:39.320 --> 0:12:42.240 in our story. Um that you know what we saw 0:12:42.280 --> 0:12:45.680 a couple of months ago. It's really quickly changed and 0:12:45.760 --> 0:12:48.680 we're seeing that. Um, we'll continue to see that and earning. 0:12:48.720 --> 0:12:51.800 So so Brooke walk us through what's changed and how 0:12:51.840 --> 0:12:54.880 it's manifesting itself in the data. I mean, I think 0:12:54.920 --> 0:12:57.160 you really summed it up well. But it's just been 0:12:57.320 --> 0:12:59.760 so quick. I mean, you have to remember it was 0:12:59.800 --> 0:13:02.080 just July that we heard from a lot of these 0:13:02.080 --> 0:13:05.920 companies giving their most recent earnings updates, and things are 0:13:05.960 --> 0:13:09.839 just moving so quickly, um, you know, particularly with with 0:13:09.880 --> 0:13:12.840 some of the raw material inflations, but then also with 0:13:12.880 --> 0:13:15.120 some of these shortages that are just really getting to 0:13:15.160 --> 0:13:18.080 the point where manufacturers cannot find a way around them. 0:13:18.080 --> 0:13:21.480 But I thought one striking data point was PPG, which 0:13:21.520 --> 0:13:24.640 is a paintmaker, said that raw material inflation was running 0:13:24.720 --> 0:13:27.959 seventy million dollars higher in the third corder than what 0:13:28.080 --> 0:13:30.280 it anticipated in July. And keep in mind it was 0:13:30.320 --> 0:13:34.280 already factoring in a pretty significant headwind from rising costs 0:13:34.280 --> 0:13:36.520 in July. And so you know that really just studs 0:13:36.559 --> 0:13:41.319 underscores that business moving faster than anticipated and not getting better. 0:13:42.360 --> 0:13:44.920 And so for transitory or not, I mean, how much 0:13:44.960 --> 0:13:49.200 pricing power do these industrial companies like PPG, like Sherwan 0:13:49.240 --> 0:13:52.920 Williams actually have. I mean, are they able to pass 0:13:52.960 --> 0:13:55.800 at least some of these costs to their customers? Are 0:13:55.800 --> 0:13:58.760 they just having to eat this themselves? Now, they do 0:13:58.840 --> 0:14:00.920 have a good amount of seeing power, and I would 0:14:00.960 --> 0:14:03.440 say even more so in this current period. You're not 0:14:03.480 --> 0:14:07.080 really hearing about any pushback to price increases yet with 0:14:07.200 --> 0:14:10.440 the keyword being yet, but they are being, you know, 0:14:10.559 --> 0:14:14.480 generally able to push through pretty significant price increases to 0:14:14.559 --> 0:14:16.200 try to keep up with the rising costs. And I 0:14:16.200 --> 0:14:18.960 think that's because customers understand what's happening. I mean, all 0:14:19.000 --> 0:14:20.400 you have to do is look at the headlines and 0:14:20.440 --> 0:14:23.640 see reports everywhere about you know, various different kinds of 0:14:23.640 --> 0:14:26.840 inflation and shortages, and so customers understand. But there is 0:14:26.840 --> 0:14:29.760 a breaking point to this. So what is it that's 0:14:29.800 --> 0:14:32.600 that What is it that's driving the cost increases? Brooke? 0:14:32.680 --> 0:14:34.360 Is it? Is it any one thing more than another. 0:14:34.360 --> 0:14:37.720 We've heard so much about container shipping prices going up. 0:14:37.960 --> 0:14:41.240 We've also heard about raw material prices going up. There is, 0:14:41.280 --> 0:14:44.960 of course the cost of getting employees off the sidelines 0:14:45.000 --> 0:14:47.720 and making sure they're coming into work. And we've talked 0:14:47.720 --> 0:14:49.960 to CEO after CEO who said that they've had to 0:14:50.040 --> 0:14:52.640 raise price, raise wages as a result of that. What 0:14:52.720 --> 0:14:54.840 is it that's driving these price increases and these these 0:14:54.920 --> 0:14:58.560 higher input costs. I think it's everything that you just mentioned, 0:14:58.560 --> 0:15:01.920 And I think you know that's what makes so difficult, 0:15:01.920 --> 0:15:04.560 and that it's not just one thing, it's not one 0:15:04.720 --> 0:15:07.400 product that you can't find right now that you're having 0:15:07.440 --> 0:15:10.560 to pay up for it. It's almost everything. Um. And 0:15:10.600 --> 0:15:14.320 then you know, with logistics costs rising, labor costs rising, 0:15:14.360 --> 0:15:17.160 raw material costs rising, you're you're really starting to feel 0:15:17.200 --> 0:15:19.360 the pinch. And one comment I thought was really interesting 0:15:19.440 --> 0:15:22.440 was we did a video interview with the Union Pacific 0:15:22.480 --> 0:15:24.840 CEO with a team of Bloomberg reporters and editors, and 0:15:24.840 --> 0:15:28.920 he was talking about inflation pressures from janitorial services between 0:15:28.960 --> 0:15:31.680 their office buildings and people who mow their laws and 0:15:31.720 --> 0:15:34.680 their employee healthcare costs. This is a railroad. Those are 0:15:34.760 --> 0:15:38.359 that's not its main business. But these are major companies 0:15:38.720 --> 0:15:41.280 that employ you know, hundreds, if not thousands of people, 0:15:41.280 --> 0:15:43.520 and they rely on a lot of these ancillary services. 0:15:43.560 --> 0:15:45.880 And so there are the big ones that we talked about, 0:15:46.000 --> 0:15:48.960 raw materials, labor, logistics, but there are also these other 0:15:49.000 --> 0:15:51.760 sort of backed or inflationary pressures that these companies have 0:15:51.840 --> 0:15:54.000 to deal with, even if it's not their primary industry 0:15:54.080 --> 0:15:57.480 or business. So do you just not mow the lawn? Brook? 0:15:57.560 --> 0:16:00.320 Is that the big takeaway there? Maybe? I mean, I 0:16:00.320 --> 0:16:02.240 guess save some water, right, I don't know, maybe you 0:16:02.280 --> 0:16:04.360 can say a few pennies there, But I mean I 0:16:04.400 --> 0:16:08.040 think you know, these companies have been incredibly creative about 0:16:08.440 --> 0:16:11.680 managing supply chain pressures UM and and coming up with 0:16:11.720 --> 0:16:13.960 ways to keep costs down. I mean, I'm talking about 0:16:14.280 --> 0:16:17.520 re routing ships, but also redesigning products. UM. You know, 0:16:17.520 --> 0:16:20.200 I talked as a Honeywall supply chain chief a few 0:16:20.200 --> 0:16:22.920 weeks ago, and and they've redesigned some of their sensors 0:16:22.960 --> 0:16:26.480 to get around the semiconductor shortage. But there is only 0:16:26.520 --> 0:16:28.720 so much of that that you can do, especially when 0:16:28.720 --> 0:16:30.760 things are moving as quickly as they are right now. 0:16:30.800 --> 0:16:32.840 And I think that's the period that we're getting into, 0:16:32.880 --> 0:16:35.680 and you might really start to see these supply chain 0:16:35.840 --> 0:16:39.320 challenges and inflation and raw materials and logistics really start 0:16:39.360 --> 0:16:41.280 to take a bite out of earnings in the third quarter. 0:16:42.160 --> 0:16:45.280 So when you when you're talking to the CEOs that 0:16:45.320 --> 0:16:48.840 you talked to and and sort of attempting to understand 0:16:48.880 --> 0:16:52.000 where where things are aheaded Brook, I'm really curious, is 0:16:52.040 --> 0:16:54.280 this are they viewing this is like, you know, the 0:16:54.320 --> 0:16:56.400 new normal, which you know is going to be September 0:16:56.480 --> 0:17:00.560 and now is maybe January and if that if right? 0:17:01.080 --> 0:17:03.840 Or are they just recognizing that we're entering a new 0:17:03.880 --> 0:17:06.560 dynamic and these are really permanent changes in that that 0:17:06.720 --> 0:17:10.200 the sooner that they come to more permanent solutions, the better. 0:17:11.520 --> 0:17:13.479 I do think it's a bit of a moving target. 0:17:13.560 --> 0:17:16.479 I mean, I think people were optimistic, um, you know, 0:17:16.720 --> 0:17:19.080 in sort of the earlier part of the summer, that 0:17:19.160 --> 0:17:21.320 some of these headwinds would clear or at least not 0:17:21.400 --> 0:17:23.280 be quite as strong as what we're seeing right now 0:17:23.280 --> 0:17:25.520 in the fall, and that is obviously not the case. 0:17:25.560 --> 0:17:28.960 I mean, g E put out a statement earlier this 0:17:29.040 --> 0:17:31.640 seek talking about pressures that it's tating it's health care 0:17:31.680 --> 0:17:35.520 business from uh limited availability of workers and parts, and 0:17:35.560 --> 0:17:38.000 they don't expect you know, the operating environment to get 0:17:38.240 --> 0:17:41.560 much easier until you know, the midpoint of two and 0:17:41.600 --> 0:17:44.120 so we are talking about a pretty significant timeline here. 0:17:44.440 --> 0:17:47.000 I will say, you know, a lot of the manufacturing 0:17:47.040 --> 0:17:49.359 CEOs who have been in this business for a while, 0:17:49.400 --> 0:17:52.480 they have seen raw material inflation go up and down 0:17:52.600 --> 0:17:55.000 significantly over the course of their careers, and most of 0:17:55.000 --> 0:17:57.800 them would tell you some of those price increases are 0:17:57.800 --> 0:17:59.679 probably not going to be permanent, that there will be 0:17:59.720 --> 0:18:03.360 some actility they're um tied to you know, weather events, 0:18:03.400 --> 0:18:05.960 tied to the reopening effects on the economy. But I 0:18:05.960 --> 0:18:09.840 think what's really sticky in manufacturing is wages. Once you 0:18:09.880 --> 0:18:12.960 increase wages, it is hard to take those back down. Um. 0:18:13.040 --> 0:18:14.800 And so you know, I think that that is where 0:18:15.040 --> 0:18:17.920 they're getting a little bit nervous. I guess in terms 0:18:17.920 --> 0:18:20.360 of how this plays out over the long term. Well, 0:18:20.359 --> 0:18:23.160 I want to build on that, because that's what's fascinating 0:18:23.200 --> 0:18:26.080 to me that if we did see uh, companies really 0:18:26.080 --> 0:18:28.919 have to raise their wages, that's how inflation kind of 0:18:28.960 --> 0:18:31.840 gets built in. So, I mean, how have these companies 0:18:31.960 --> 0:18:34.760 been approaching that? I mean, have they been offering sort 0:18:34.760 --> 0:18:37.520 of one time perks. Are you actually starting to see 0:18:37.520 --> 0:18:40.560 some of these companies uh, sort of capitulate and actually 0:18:40.680 --> 0:18:45.080 boost wages. You are seeing them wages wages. I mean, 0:18:45.119 --> 0:18:46.800 I guess they will say there's a little bit of 0:18:46.800 --> 0:18:50.359 a divide between, you know, the companies that complain about 0:18:50.400 --> 0:18:54.520 labor shortages and the companies that are willing to rage wages. 0:18:54.600 --> 0:18:57.320 Excuse me, um, you know where you're not quite some 0:18:57.400 --> 0:18:59.080 of the companies that really go out of their way 0:18:59.119 --> 0:19:01.800 to make their workers like they're part of the community. 0:19:01.920 --> 0:19:03.880 They try to treat them like human beings, They pay 0:19:03.920 --> 0:19:08.560 them good wages. They're not complaining as much about labor shortageance. 0:19:08.600 --> 0:19:11.119 They're still feeling the pain here. But you know, I 0:19:11.440 --> 0:19:14.000 do think there is a little bit of that in 0:19:14.119 --> 0:19:15.639 terms of, you know, what kind of culture do you 0:19:15.640 --> 0:19:17.439 want to create? Because we also did just come out 0:19:17.480 --> 0:19:19.159 of the other side of a pandemic heater. We have 0:19:19.240 --> 0:19:21.439 e s G is a big phenomenon, and you have 0:19:21.520 --> 0:19:25.200 investors getting, you know, increasingly attuned into what do workers 0:19:25.240 --> 0:19:27.320 want um and so I think that's definitely part of 0:19:27.320 --> 0:19:31.760 the narrative here. Brooks Outherland is Bloomberg Opinion columnists. She 0:19:31.800 --> 0:19:34.680 covers industrials and more. Also joining us Bloomberg Business Week 0:19:34.760 --> 0:19:37.920 editor Joel Weber. He's on the access line from Brooklyn, 0:19:37.920 --> 0:19:39.359 and big thank you to both of you for taking 0:19:39.359 --> 0:19:42.560 the time. Check out Brooks article available at Bloomberg dot 0:19:42.600 --> 0:19:45.440 com and of course on the Bloomberg terminal. It's called 0:19:45.440 --> 0:19:50.040 the earnings Crunch is Getting Real. This is Bloomberg Business 0:19:50.080 --> 0:19:53.840 Week with Carol Messer and Bloomberg Quick Takes Tim Stinovich 0:19:54.200 --> 0:19:57.720 from Bloomberg Radio. Well. One way that lawmakers proposed to 0:19:57.720 --> 0:20:00.800 pay for the one trillion dollar infrastructure buil the Senator 0:20:00.760 --> 0:20:03.720 approved last month is by imposing tax reporting requirements for 0:20:03.760 --> 0:20:07.520 cryptocurrency brokers. It's the way that stockbrokers report their customer 0:20:07.640 --> 0:20:09.960 sales to the I r S. It could open the 0:20:09.960 --> 0:20:12.639 way for tighter regulation of cryptocurrency, and that's something that 0:20:12.680 --> 0:20:15.480 the Biden administration is moving toward as it also pushes 0:20:15.640 --> 0:20:19.080 for tax compliance. Let's get into it with Dnnelle Dixon, 0:20:19.200 --> 0:20:24.040 CEO and executive director at Stellar Development Foundation, a nonprofit 0:20:24.160 --> 0:20:28.040 organization that uses blockchain to unlock the world's economic potential 0:20:28.320 --> 0:20:31.359 by making money more fluid, markets more open, and people 0:20:31.520 --> 0:20:34.960 more empowered. Denniel joins us on the phone from California. Adult, 0:20:34.960 --> 0:20:37.880 It's great to have you on the show. Uh, this 0:20:38.000 --> 0:20:42.280 was a very contentious part of the infrastructure bill, and 0:20:42.320 --> 0:20:46.760 I'm I'm wondering, I'm wondering what your thoughts are on it. Yeah, 0:20:46.840 --> 0:20:50.040 it certainly became so it was really fun for us 0:20:50.080 --> 0:20:52.480 to see the influence that we could have from the 0:20:52.480 --> 0:20:55.520 blockchain and crypto space. Uh, and for us just to 0:20:55.600 --> 0:20:58.600