WEBVTT - Housing, Retail Sales, Energy, And Hiring (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.960 at Bloomberg dot com slash podcast. Let's get to our 0:00:23.040 --> 0:00:25.440 next guest, always a highlight of the week, Vince Cgnerella, 0:00:25.640 --> 0:00:29.680 global macro strategist for Bloomberg News, the master of work 0:00:29.720 --> 0:00:33.040 from Home. So, Vince, we got some retail sales numbers today. 0:00:32.600 --> 0:00:35.919 I think they're pretty good. I got target reporting numbers. Yeah, 0:00:35.960 --> 0:00:38.000 they were really bad as they just kind of throwing 0:00:38.040 --> 0:00:40.479 the kitchen Zinc getting clearing out their inventory. But they 0:00:40.560 --> 0:00:42.440 say the consumers looking good for the back half of 0:00:42.440 --> 0:00:44.959 the year in terms of buying. What did you make 0:00:44.960 --> 0:00:47.760 of some of this retail stuff today and what like 0:00:47.840 --> 0:00:49.919 you said, it wasn't that at all, um. You know, 0:00:50.000 --> 0:00:53.520 any reductions in the retail sales numbers came from gas 0:00:53.520 --> 0:00:56.400 and energy. So as consumers cut back on some driving 0:00:56.440 --> 0:00:58.880 because of the high gas prices, you know that slow 0:00:58.920 --> 0:01:02.640 retail sales. But we're starting to see that shift lower 0:01:02.720 --> 0:01:05.880 once again, you know, from six dollars a gallant to 0:01:06.080 --> 0:01:08.840 you know, just on their fish. UM. So that might 0:01:08.920 --> 0:01:13.120 lift future retail sales. But to me, the the issue 0:01:13.600 --> 0:01:16.680 going forward with retail sales still is on the revolving 0:01:16.680 --> 0:01:20.039 credit side. We've seen revolving credit jump by a third, 0:01:20.280 --> 0:01:23.520 same numbers were reported this morning in the UK. People 0:01:23.560 --> 0:01:26.440 are actually, you know, showing signs of borrowing on their 0:01:26.480 --> 0:01:29.600 credit cards, which is a terrible sign. Uh, and also 0:01:29.680 --> 0:01:31.920 running balances on their credit cards. And of course that 0:01:32.400 --> 0:01:36.080 users interest rates. You wonder how long that could last. 0:01:36.160 --> 0:01:39.160 So the future is going to be very interesting if 0:01:39.200 --> 0:01:41.319 we don't start to see some wage games. I'm not 0:01:41.360 --> 0:01:43.880 sure the consumer can carry us in the fourth quarter 0:01:44.520 --> 0:01:47.680 simply because they're they're borrowing, is they're just going to 0:01:47.800 --> 0:01:51.000 run it hit a wall. And meanwhile, people who think 0:01:51.040 --> 0:01:54.000 the FED needs to keep raising rates are saying, you know, 0:01:54.120 --> 0:01:57.680 five percent average hourly earnings, it's way too steep and 0:01:57.720 --> 0:02:02.800 it indicates a price wage viral. Do you disagree? UM? 0:02:03.520 --> 0:02:05.800 You know, we saw something just came out of biding panel. 0:02:06.120 --> 0:02:10.280 UM did an evaluation and they recommended to what was it? 0:02:10.280 --> 0:02:12.600 I think the freight industry. Let's see the rail bid 0:02:12.680 --> 0:02:17.600 and rail panel recommends a wage hike through two thousand four, 0:02:18.040 --> 0:02:24.960 So clearly, yeah, exactly a lot of work. Um. I 0:02:25.000 --> 0:02:28.600 don't think we'll see the wage price spiral that people 0:02:28.639 --> 0:02:30.960 are talking about, simply because I don't think we're going 0:02:31.000 --> 0:02:34.160 to have earnings to support that. If we if we 0:02:34.240 --> 0:02:38.919 get any kind of increase like that in wages, we're 0:02:38.919 --> 0:02:41.480 gonna see a bigger increase in prices. Companies are not 0:02:41.480 --> 0:02:43.560 going to eat this, They're gonna pass it along. And 0:02:43.560 --> 0:02:46.440 when they pass off those prices, you know, I guess 0:02:46.480 --> 0:02:49.080 that's why people see the wage wage price final They 0:02:49.080 --> 0:02:50.680 think that this is going to be some sort of 0:02:51.480 --> 0:02:54.040 what workers ask for more, So companies have to raise more. 0:02:54.240 --> 0:02:56.720 Companies raise more, so workers have to ask for more. 0:02:56.960 --> 0:02:59.200 I just don't see the economy by being able to 0:02:59.280 --> 0:03:02.440 sustain that. So but if that in fact occurs or 0:03:02.600 --> 0:03:05.320 is occurring, does that not suggest that the Fed has 0:03:05.360 --> 0:03:08.200 to be more aggressive? And I know you have a 0:03:08.360 --> 0:03:09.760 you know a little bit of a problem with our 0:03:09.760 --> 0:03:13.399 Federal Reserve these days. I do because when you look 0:03:13.400 --> 0:03:15.799 at what the Federal Reserve is doing there there are 0:03:15.840 --> 0:03:23.120 basically two areas. The CPI shelter. So the FED can 0:03:23.320 --> 0:03:29.160 in theory manipulate that because by raising interest rates they 0:03:29.240 --> 0:03:33.200 make it more difficult to borrow and and it's its 0:03:33.200 --> 0:03:36.400 stalls housing meains. Yeah, the problem is then those people 0:03:36.440 --> 0:03:41.880 have to rent and that and exactly so you know, 0:03:42.000 --> 0:03:44.080 it's it's a double edged sword when the when the 0:03:44.120 --> 0:03:46.680 FED gets involved that way. And I my concern with 0:03:46.720 --> 0:03:51.160 that is, you know, there's a demand and supply chain story, 0:03:51.200 --> 0:03:54.280 you know, demand and supply or the equilibrium levels if 0:03:54.280 --> 0:04:00.160 it should the FED be trying to curb demand um 0:04:00.240 --> 0:04:03.000 when the real issue was supply and and maybe they're 0:04:03.000 --> 0:04:06.360 just missing missing the mark. And it's my feeling that 0:04:07.000 --> 0:04:09.480 what's causing inflation right now is not something that FED 0:04:09.520 --> 0:04:13.160 can defeat, and they're better off taking their handle off 0:04:13.160 --> 0:04:15.640 the wheel and trying to see if the economy can 0:04:15.680 --> 0:04:18.720 scored itself out. We've already seen, you know, moderation and 0:04:18.800 --> 0:04:21.839 home prices and moderation and inflation because of what the 0:04:21.839 --> 0:04:24.479 FED has done so far. You know, if the FED 0:04:24.560 --> 0:04:26.440 wants to go back to their textbooks, what they should 0:04:26.440 --> 0:04:28.760 be doing is waiting six months to see how this 0:04:28.800 --> 0:04:32.200 works before going again to just keep going. You don't 0:04:32.200 --> 0:04:34.400 really know the effect of that, right, I mean much 0:04:34.600 --> 0:04:37.520 and Vincent in the last hour, Tom Keane was, you know, 0:04:37.960 --> 0:04:40.960 house hunting in Jackson Hole, Wyoming, and he found a 0:04:40.960 --> 0:04:44.120 four bedroom cabin that was assessed for a couple hundred grand, 0:04:44.160 --> 0:04:48.880 that was listed for four point five million dollars um. 0:04:49.360 --> 0:04:52.679 To the extent that the housing market has seen its peak, 0:04:52.760 --> 0:04:56.040 how does that impact this economy and the FED and 0:04:56.080 --> 0:04:59.280 consumers and all that. Well, you know, if there are 0:04:59.360 --> 0:05:02.719 lots of lots of corrections in housing that you know 0:05:02.800 --> 0:05:05.840 go unnoticed that people don't realize because you don't sell 0:05:05.839 --> 0:05:08.400 a house every year and and things like that, so 0:05:08.440 --> 0:05:12.760 you don't really check where your home price is, you know, 0:05:12.800 --> 0:05:16.839 like you look at your your stock portfolio, um, because 0:05:16.839 --> 0:05:21.960 you just don't roll it over as um. But you know, 0:05:22.000 --> 0:05:24.880 as long as that correction is modest, it's it's not 0:05:25.040 --> 0:05:26.839 a huge effect on the economy. It's when you have 0:05:26.920 --> 0:05:30.680 something crippling like two eight that would become insignition. So Vince, 0:05:30.720 --> 0:05:34.560 I gotta ask as a macro strategist or as a trader, um, 0:05:34.600 --> 0:05:38.960 it's more important your forecast about what the FED is 0:05:39.000 --> 0:05:42.039 going to do then what you think the FED should do. Right, 0:05:42.120 --> 0:05:44.600 So if you think the pot the Fed should be 0:05:44.600 --> 0:05:47.120 pausing and waiting six months. They're clearly not going to 0:05:47.240 --> 0:05:49.680 do that. No, absolutely not. They are going to hike 0:05:49.720 --> 0:05:52.120 in September. I think the key question is is a 0:05:52.200 --> 0:05:55.440 fifty or seventy five? Personally, I'd like to see them 0:05:55.880 --> 0:05:58.760 do fifty and send a positive message to the markets 0:05:58.839 --> 0:06:01.800 that you know, they're they're not. They don't have blinders on. 0:06:01.880 --> 0:06:04.360 They see that the data is slowing down and that 0:06:04.480 --> 0:06:07.000 you know, they can maybe take the foot off the 0:06:07.000 --> 0:06:09.640 gas going forward. I would love to see them, you know, 0:06:09.880 --> 0:06:12.599 but they're gonna laise in September. They basically set a period. 0:06:13.240 --> 0:06:16.200 I would love to see them stop after that. I 0:06:17.000 --> 0:06:20.120 think they if the data continues soft and from the 0:06:20.160 --> 0:06:23.160 minute today to where we are today, the data is 0:06:23.240 --> 0:06:25.839 rolled over right now. If it rolls over again, I 0:06:25.880 --> 0:06:29.280 think maybe they stopped all right. Vincegnarella always good to 0:06:29.360 --> 0:06:31.719 chat with you. We try to get Vince on every week, 0:06:32.320 --> 0:06:36.120 get his perspective and spent decades on the street trading currencies, 0:06:36.160 --> 0:06:39.320 trading corporates. Uh, he kind of knows what's going on there. 0:06:39.320 --> 0:06:40.800 He still talks to the traders all the time, so 0:06:40.800 --> 0:06:43.080 it gives us a good view of that market. Vince Signerella, 0:06:43.080 --> 0:06:48.000 a global macro strategist for Bloomberg News, famously phoning it 0:06:48.040 --> 0:06:54.520 in and proudly phoning it in red headline across the 0:06:54.560 --> 0:06:59.440 Bloomberg terminal, Blmot Sacks cuts China GDP forecast to three 0:06:59.480 --> 0:07:03.200 pc from three point three percent. Remember the days when 0:07:03.279 --> 0:07:05.479 it was just a layup to do six or seven 0:07:05.880 --> 0:07:08.440 MDP growth. You can't keep shutting down your economy every 0:07:08.440 --> 0:07:11.400 fifteen minutes. I mean that was was that nominal or 0:07:11.920 --> 0:07:14.600 that that wasn't real GDP growth? Right? That was nominal 0:07:14.600 --> 0:07:16.480 when they were when they were posting those big numbers. 0:07:16.560 --> 0:07:21.040 But nonetheless, Um, this is important because they're supposed to 0:07:21.120 --> 0:07:24.360 do five right according to the Communist Party's forecast at least, 0:07:24.800 --> 0:07:27.680 so they're gonna miss that by a mile. And my 0:07:27.800 --> 0:07:30.120 question every time we have one of these negative stories 0:07:30.120 --> 0:07:31.920 out on China there was one, you know Monday was 0:07:31.920 --> 0:07:34.520 a really bad narrative as well, Um is how long 0:07:34.520 --> 0:07:36.640 does she jing ping last? Does he get his third term? 0:07:36.920 --> 0:07:39.040 That's exactly right, And everybody, you know, we need to 0:07:39.040 --> 0:07:41.560 get Leland Millard trying to beige book on because he 0:07:41.640 --> 0:07:45.040 is my man on the ground or unemployment for kids 0:07:45.120 --> 0:07:47.280 unemployment there, Yeah, how do you get reelected? I don't 0:07:47.320 --> 0:07:49.080 We'll see. All right, let's bring our next guest. We'll 0:07:49.120 --> 0:07:51.640 keep it on the economic call. Jennifer Lee, senior economist 0:07:51.680 --> 0:07:54.800 and managing director for PIMO Capital Markets. Jennifer, we had 0:07:54.800 --> 0:07:57.840 a bunch of retail sales data today. I'm gonna call 0:07:57.840 --> 0:08:00.120 it a little bit better and expected. We had some 0:08:00.160 --> 0:08:02.520 mixed numbers out of the retailers. It seems like they're 0:08:02.520 --> 0:08:06.200 cleaning up their inventory issues. As you look at the 0:08:06.240 --> 0:08:09.360 retail numbers across the board, what's it telling me about 0:08:09.360 --> 0:08:14.520 the consumer here? Well, good morning. I think the numbers 0:08:14.520 --> 0:08:17.200 are sort of telling us that we again we cannot 0:08:17.240 --> 0:08:21.640 completely uh discount the American consumer ever. Um, you know, 0:08:21.720 --> 0:08:24.040 the headline was a bit disappointing obviously, but all of 0:08:24.040 --> 0:08:25.880 it was gas and maybe in a good way because 0:08:25.920 --> 0:08:30.480 gasoline prices are still below the four dollar per gallon 0:08:30.680 --> 0:08:33.000 level for the second week in a row, I believe. So, 0:08:33.080 --> 0:08:35.000 you know, obviously consumers are feeling the pain, you know, 0:08:35.040 --> 0:08:37.439 the pain afford or high inflation that's really hitting home. 0:08:37.480 --> 0:08:40.960 But the positive influences there, like the gas prices, you know, 0:08:41.160 --> 0:08:42.920 is is definitely a good thing and it shows that 0:08:43.000 --> 0:08:45.840 consumers are still buying. There's still going out for lunch, 0:08:45.880 --> 0:08:47.560 there's still going out for a drink. You know, they're 0:08:47.559 --> 0:08:51.160 still buying more electronics and furniture, but just getting less 0:08:51.240 --> 0:08:55.080 bang for their book. We appreciate all of that, but 0:08:55.559 --> 0:08:58.920 are consumers starting to charge this stuff and and not 0:08:58.960 --> 0:09:01.640 pay off their balances? That's what Events was just telling us. 0:09:01.679 --> 0:09:04.280 And I noticed the savings rate is now down to 0:09:04.440 --> 0:09:08.760 five um, you know, well below historical averages, which for 0:09:08.840 --> 0:09:14.160 Americans are already low. Right, So okay, so yes, I 0:09:14.200 --> 0:09:17.360 am definitely getting worried on the on the on the 0:09:17.400 --> 0:09:19.800 part of but charging a lot of their purchases. But 0:09:20.240 --> 0:09:22.720 that's saving rate. We really have to take it with 0:09:22.760 --> 0:09:26.480 a grain of salt. You know. It's it's income versus spending, 0:09:26.640 --> 0:09:29.400 but it doesn't take ato account what your savings have been, 0:09:29.440 --> 0:09:31.600 like what you have stocked way and when you look 0:09:31.600 --> 0:09:35.160 at what Americans have um so far in their in 0:09:35.160 --> 0:09:37.360 their bank accounts, they're checkable deposits of currency. So they 0:09:37.440 --> 0:09:40.480 still have like over four um for four trillion dollars 0:09:40.480 --> 0:09:42.079 still stocked up in there, and a lot of this 0:09:42.320 --> 0:09:44.880 probably um you know, coming off that peak already because 0:09:44.920 --> 0:09:47.120 that's only for the first quarter, but that's still quit 0:09:47.240 --> 0:09:49.440 a bit that stalked away. And you know, if I 0:09:49.480 --> 0:09:53.440 make and I bring like a personal UM example of that. UM, 0:09:53.480 --> 0:09:56.920 I definitely have a negative savings rate so far this year, Yes, 0:09:56.960 --> 0:09:59.480 and negative savings rate. And that's because you know, I 0:09:59.520 --> 0:10:02.280 did man to save my pennies during the pandemic and 0:10:02.320 --> 0:10:04.760 I was working from home. And this year I have 0:10:05.000 --> 0:10:08.720 you know, I'm I'm spending all my kitchen rental, which 0:10:08.760 --> 0:10:11.959 is uh, you know, so I'm definitely spending a heck 0:10:11.960 --> 0:10:14.400 of a lot more than than then I'm you know, 0:10:14.440 --> 0:10:17.680 than than my I've always wondered the savings rate that 0:10:17.720 --> 0:10:21.920 we get from UM. It's the US personal savings rate 0:10:21.960 --> 0:10:26.720 as a percentage of disposable income. UM. I guess we 0:10:26.760 --> 0:10:28.520 get it from the b l S or some subero 0:10:28.559 --> 0:10:32.360 of Economic Analysis or yes, that's right, Burero of Economic Analysis. UM. 0:10:32.440 --> 0:10:35.360 That doesn't count. For example, Paul has a giant walk in, say, 0:10:35.400 --> 0:10:38.960 filled with municipal bonds. That's not counted in his savings rate, right, 0:10:39.280 --> 0:10:43.840 even though those are legit savings. Right, It's like, you know, 0:10:43.720 --> 0:10:46.240 your house could be worth you know, a trillion dollars, 0:10:46.280 --> 0:10:48.439 but you know, that's not gonna be counted in your 0:10:48.480 --> 0:10:50.640 saving rates. So it's it's you know, you have stuff, 0:10:50.679 --> 0:10:52.880 you have your ass It's it's like a balance sheet 0:10:53.440 --> 0:10:57.160 versus your income statement, right, so you know, it's it's 0:10:57.280 --> 0:10:59.320 very interesting obviously to look at the saving rate just 0:10:59.360 --> 0:11:01.320 to see what you know with the trenches, but it 0:11:01.360 --> 0:11:03.560 doesn't take him to account the full picture of the 0:11:03.600 --> 0:11:06.480 health of the U. S. Consumer. All right, Jennifer, we're 0:11:06.520 --> 0:11:09.720 sending Tom Keenan the Bloomberk surveillance team out to Jackson Hole. 0:11:09.800 --> 0:11:14.000 What's the key question they should ask? You know what 0:11:14.200 --> 0:11:17.080 I will be I don't think Jackson Hole is as 0:11:17.720 --> 0:11:19.920 um market moving. I think, but like way back in 0:11:19.960 --> 0:11:23.079 the day during you know, for example, we're sending three 0:11:23.120 --> 0:11:27.360 anchors out there, plus a whole television crew. Let me 0:11:27.360 --> 0:11:29.600 whisper that. Um, you know, I mean I think he 0:11:29.640 --> 0:11:32.079 has said, you know, Feda Powell has has been very clear. 0:11:32.120 --> 0:11:33.800 I mean, as I've said before on your show, I've 0:11:33.840 --> 0:11:36.160 given him, you know, an a in communications. You know 0:11:36.200 --> 0:11:39.320 what you're saying, they're moving expeditiously to bring inflation down there, 0:11:39.559 --> 0:11:42.439 it could be appropriate to slow the piece of increases, 0:11:42.559 --> 0:11:46.000 you know, Uh. Um, amester Can continues to say that 0:11:46.000 --> 0:11:48.240 she wants to see compelling evidence of a of a 0:11:48.280 --> 0:11:50.520 slow down instlation. You know, I don't know what more 0:11:50.559 --> 0:11:53.880 they could say, Um too, you know that's gonna be 0:11:53.880 --> 0:11:57.319 new to to to markets except you know, maybe how 0:11:57.320 --> 0:11:59.000 close they are, you know, But so that's what I 0:11:59.000 --> 0:12:01.280 want to see, like for example, the minutes today. You know, um, 0:12:01.280 --> 0:12:03.400 it'll be interesting to see. You know, what will it take? 0:12:03.840 --> 0:12:05.600 You know, he did say this, it might be appropriate 0:12:05.640 --> 0:12:07.400 to slow the piece of increases at some point when 0:12:07.440 --> 0:12:10.480 we look at how policy is affecting the economy and inflicition. 0:12:10.559 --> 0:12:11.839 But you know exactly what it's gonna take. It is 0:12:11.920 --> 0:12:13.880 gonna take that nine point six percent dive in housing 0:12:13.880 --> 0:12:15.600 starts that we saw in July. You know it's going 0:12:15.640 --> 0:12:16.959 to take a heck of a lot more than that. 0:12:17.400 --> 0:12:19.079 You know, we're you know, yes, last week was all 0:12:19.160 --> 0:12:22.200 you know, confliction chatter. You know, you know it's going 0:12:22.240 --> 0:12:24.360 to take a lot more than one last to get 0:12:24.360 --> 0:12:26.640 the FED to turn around. All right, good stuff, Jennifer Lee. 0:12:26.880 --> 0:12:29.920 Always appreciate getting your thoughts, your perspective. Jennifer Lee. She's 0:12:29.920 --> 0:12:34.240 a senior economist and managing director at BMO Capital markets. BIMO. 0:12:34.440 --> 0:12:37.240 That's the Bank of Montreal for those of us that 0:12:37.360 --> 0:12:39.440 remember that, that was always worth a trip up to 0:12:39.440 --> 0:12:44.640 Montreal to see Bimo. I want to bring in one 0:12:44.640 --> 0:12:49.240 of my b f f's right now, one of my 0:12:49.800 --> 0:12:52.199 dear dear friends, Maria today. I used to be on 0:12:52.240 --> 0:12:55.840 Bloomberg TV, and she's left us for well, it's a hiatus. 0:12:55.880 --> 0:12:59.280 I think she's gone to Bloomberg opinion, Um for a while. 0:12:59.320 --> 0:13:01.080 We do these road atians every once in a while 0:13:01.120 --> 0:13:04.600 to give people experience a different areas, which I think 0:13:04.679 --> 0:13:06.920 is fantastic. But I miss her, sure, don't we all? 0:13:07.000 --> 0:13:09.559 I'd really like her back. Um. She joins us right 0:13:09.559 --> 0:13:13.720 now to talk about, uh, the situation in Europe in general. 0:13:13.800 --> 0:13:15.400 I was gonna say a recent piece, but really she's 0:13:15.400 --> 0:13:20.000 been writing about this for weeks and weeks. Um. The 0:13:20.040 --> 0:13:26.040 situation in Germany is particularly problematic because um, of their 0:13:26.080 --> 0:13:29.800 reliance on Russian gas, and of course we all know 0:13:29.840 --> 0:13:34.160 what's happened there with Putin cutting down the UM pipeline 0:13:34.200 --> 0:13:39.120 flows to about I believe of what they once were. Maria, Uh, 0:13:39.160 --> 0:13:41.640 what's your focus right now? As we see not only 0:13:41.720 --> 0:13:45.000 the problem in Germany but in France. The rivers are 0:13:45.040 --> 0:13:48.800 so warm they can't um run their nuclear plants at 0:13:48.840 --> 0:13:51.920 full and in the UK we have double digit inflation. 0:13:52.000 --> 0:13:56.520 Everywhere across Europe. It seems there is a crisis. Yeah, 0:13:56.559 --> 0:13:59.200 and Matt, I have a date. I know when I'm 0:13:59.200 --> 0:14:01.160 back in TV. I'm not gonna tell you because I 0:14:01.160 --> 0:14:03.560 want to keep it. I want to keep the expectation. 0:14:03.640 --> 0:14:07.520 But I have. Yeah, it's set out and and the 0:14:07.600 --> 0:14:09.480 day you see me back in TV will be like, ah, 0:14:09.640 --> 0:14:13.040 now it makes sense, Um, But you know, to to 0:14:13.080 --> 0:14:15.680 answer your question, I think this week there has been 0:14:15.760 --> 0:14:18.360 some good news but a lot of bad news, and 0:14:18.600 --> 0:14:20.320 I guess our job is to try to figure out 0:14:20.360 --> 0:14:24.160 what's happening in between. The good news is that storage 0:14:24.360 --> 0:14:28.040 is better than expected. Remember the European Union said this 0:14:28.160 --> 0:14:30.480 year you have to take it seriously. You have to 0:14:30.520 --> 0:14:33.440 fill up storage because it can make all the difference 0:14:33.440 --> 0:14:36.400 between having to ration or not going into recession or not. 0:14:36.800 --> 0:14:41.240 Germany had good news on Monday. There's se full. That's 0:14:41.240 --> 0:14:44.760 for gas. They're running two weeks ahead of schedules, so 0:14:44.800 --> 0:14:48.160 that means they're doing it faster. But the reasons for it, Matt, 0:14:48.480 --> 0:14:52.560 they're not good. It means that demand has dropped for 0:14:52.680 --> 0:14:56.360 a lot of consumers because we're concerned about the price 0:14:56.600 --> 0:14:59.720 that coming the bills. Also for the industry, they worry 0:14:59.760 --> 0:15:02.000 about the implications and the costs of this. And then 0:15:02.000 --> 0:15:04.400 also you have the big industry, the big German industry 0:15:04.680 --> 0:15:08.320 that's trying very very fast to switch from gas to 0:15:08.440 --> 0:15:10.600 other fossil fruls, which you could argue is back through 0:15:10.640 --> 0:15:14.280 the planet too, but it's also expensive for them, So 0:15:14.360 --> 0:15:17.560 this is coming at a cost. So in reality, with 0:15:17.680 --> 0:15:20.960 your face now is still the potential of Russia cutting 0:15:20.960 --> 0:15:23.360 off to place, but also the fact that now it 0:15:23.520 --> 0:15:26.280 is becoming clear that the bill for this will be 0:15:26.400 --> 0:15:29.400 very expensive. The question is who's going to pay for it. 0:15:29.720 --> 0:15:32.480 The Germans this week already said we have to let 0:15:33.120 --> 0:15:35.960 that cost be paths through consumers. So that could lead 0:15:36.080 --> 0:15:39.960 to a very shaky social winter in Germany if people 0:15:40.000 --> 0:15:42.960 get furious about the fact that it's cold and they 0:15:42.960 --> 0:15:45.080 have to choose between don't want to fill out the 0:15:45.120 --> 0:15:47.120 car or buy more food. I mean, that's really a 0:15:47.120 --> 0:15:49.440 scenario that we're facing. Well, and you have a story 0:15:49.640 --> 0:15:51.960 on O P I N Go on the Bloomberg terminal 0:15:52.040 --> 0:15:56.840 or Bloomberg dot com, slash opinion, um showing that this uh, 0:15:56.920 --> 0:16:00.520 this problem and the need for a real pality check 0:16:00.600 --> 0:16:04.920 goes so far past Um the German borders into France 0:16:04.960 --> 0:16:07.280 all the way to Spain and in the sort of 0:16:07.400 --> 0:16:12.360 northwest corner of Galifiaia. Where's that? It's well, in the 0:16:12.400 --> 0:16:18.040 northwest corner of Spain. Okay, Um, it's right right below Ovieto. 0:16:18.480 --> 0:16:20.520 You know, have you ever been to Ovieto? No, it's 0:16:20.520 --> 0:16:24.280 amazing if you go down. The next major city is Vigo. 0:16:24.840 --> 0:16:27.040 Never been there? Madrid, dude, that's where the money is. 0:16:27.080 --> 0:16:29.160 We have a little summer place in Cando. I love it. 0:16:29.240 --> 0:16:32.600 But um, how are they dealing with this? And what 0:16:32.640 --> 0:16:36.640 are energy prices? And what's the crisis like in Spain? Yeah? 0:16:36.760 --> 0:16:38.680 And you know the reason why I wrote about this, 0:16:38.720 --> 0:16:40.560 and this is a great thing about opinion is I 0:16:40.600 --> 0:16:43.400 do get to lash out in a way that is 0:16:43.480 --> 0:16:46.120 justifiable because on TV there's a number of things that 0:16:46.160 --> 0:16:48.240 I wish I could say, but of course, you know, 0:16:48.240 --> 0:16:50.360 as a reporter, you always have to pretend to sides 0:16:50.360 --> 0:16:52.480 to the story. Here right on opinion, where I have 0:16:52.520 --> 0:16:54.240 a little bit more freedom, and this is a story 0:16:54.280 --> 0:16:56.080 that to me, when I saw it, I just could 0:16:56.080 --> 0:16:58.640 not believe it, and it made me furious. Um, we 0:16:58.720 --> 0:17:00.920 talked about this idea of a very tough winter for 0:17:01.040 --> 0:17:04.680 consumers for houses that really it could get very ugly 0:17:04.720 --> 0:17:06.760 for a lot of people. And of course, at times 0:17:06.760 --> 0:17:08.760 your privilege because you kind of go, oh, my bills 0:17:08.800 --> 0:17:10.480 are gonna go up, But for a lot of people 0:17:10.560 --> 0:17:13.280 this is a life change in situation. So then I 0:17:13.359 --> 0:17:15.600 go on the Spanish TV, which I have still a 0:17:15.600 --> 0:17:19.520 habit of watching, and I see this mayor who says, well, nonetheless, 0:17:19.560 --> 0:17:23.440 we're still going ahead whether Christmas extravaganza, which means we're 0:17:23.480 --> 0:17:26.760 gonna do like huge Christmas lights. We want to arrival 0:17:26.840 --> 0:17:29.240 New York, and we should do it because Christmas is 0:17:29.280 --> 0:17:33.320 important and the war should not crush the holiday in 0:17:33.359 --> 0:17:36.439 the Christmas spirit. And to me, the whiplash to the 0:17:36.520 --> 0:17:40.520 average person here is so big where you're telling them, yeah, 0:17:40.520 --> 0:17:42.360 this winter is going to be very tough, set money 0:17:42.400 --> 0:17:44.640 aside for your bills, and then you go, but hey, 0:17:44.720 --> 0:17:47.560 let me just plant a Christmas tree like nothing's changed 0:17:47.640 --> 0:17:50.600 this winter. You know, you have to really change your 0:17:50.640 --> 0:17:53.080 tone here and the way that you prep people who 0:17:53.119 --> 0:17:56.639 what could be very very rough winter, and the sooner 0:17:56.680 --> 0:17:57.800 you do it, the better it is going to be, 0:17:57.800 --> 0:18:01.480 because otherwise the whiplash in no Member December could be huge. 0:18:01.520 --> 0:18:03.000 But also you could get a lot of people down 0:18:03.000 --> 0:18:05.600 the street seeing, well, you know, I don't want to 0:18:05.600 --> 0:18:08.679 pay my bills, or why should I listen to anything. 0:18:08.680 --> 0:18:11.560 Politicians tell me they didn't really anticipate any of this. 0:18:11.600 --> 0:18:13.280 So I think it's time to get serious on this. 0:18:13.600 --> 0:18:17.159 I gotta I take issue with one, uh sentence in 0:18:17.160 --> 0:18:20.560 this story, Maria. You wrote that in Spain energy saving 0:18:20.560 --> 0:18:23.119 measures came into force last week, air conditioning will be 0:18:23.160 --> 0:18:26.400 said at twenty seven degrees celsius eighty and a half fahrenheit. Now, 0:18:26.440 --> 0:18:29.119 I have been to the Moto g P and head F. 0:18:29.359 --> 0:18:34.080 I've been to Alhambra twice. I met Zapatero in Madrid. 0:18:34.200 --> 0:18:36.240 I've gone to the Running of the Bulls in Pamplona. 0:18:36.320 --> 0:18:38.920 I'm going to next week. Woman from Spain, let's be 0:18:39.160 --> 0:18:42.000 there is no air traditioning in Spain. This is my point. 0:18:43.680 --> 0:18:46.040 It's not it's not entirely true. You go to any 0:18:46.080 --> 0:18:48.960 shopping center you have it, but I think that uh, 0:18:49.000 --> 0:18:51.439 you know again, this this was another point that to 0:18:51.520 --> 0:18:53.720 me I just kind of went, guys, what are we 0:18:53.840 --> 0:18:57.119 making a big deal about a minimal This is a 0:18:57.160 --> 0:19:00.240 minor change. Plus it's it's it's Spain. I mean every 0:19:00.240 --> 0:19:02.280 summer it's like this. You get to forty five degrees. 0:19:02.480 --> 0:19:06.320 Since you're age twelve fifteen, your mom teaches you how 0:19:06.359 --> 0:19:08.440 to deal with the heat. You know there's some much 0:19:08.480 --> 0:19:11.439 bigger story happening here. You know two degrees is not 0:19:11.520 --> 0:19:14.080 going to change your life. The fact that some of 0:19:14.119 --> 0:19:16.639 the windows stores are gonna go black from ten pm. 0:19:16.920 --> 0:19:19.880 In reality, I understand there may be concerns about this 0:19:19.960 --> 0:19:23.600 is not good for tourism, it's not good perhaps for safety. 0:19:23.880 --> 0:19:26.760 But on the other hand, we're being told this is exceptional. 0:19:26.800 --> 0:19:29.920 I mean, this is just a one winter. Get it done. 0:19:29.960 --> 0:19:31.280 Let's trying to do it in a way that we 0:19:31.320 --> 0:19:33.840 all get the best of a really bad situation, and that, 0:19:33.960 --> 0:19:37.280 of course next year turn up the Christmas lights, blast 0:19:37.359 --> 0:19:40.160 year conditioning. I don't agree with it for the most part. 0:19:40.200 --> 0:19:41.960 You know, it doesn't have to be a freezer. But 0:19:42.000 --> 0:19:43.760 if that's what you want to do, that's great. But 0:19:43.840 --> 0:19:46.040 it needs to be obvious to people that this winter 0:19:46.320 --> 0:19:50.040 is exceptional. The sooner this message gets across, I think, 0:19:50.160 --> 0:19:52.879 the better it will be. I love that the Spaniards 0:19:52.920 --> 0:19:55.920 are worried about turning off the lights in stores at 0:19:55.960 --> 0:19:58.840 ten pm? Is that a thing? Ten pm is dinner 0:19:58.840 --> 0:20:01.480 time in Spain. I know which I think it's it's 0:20:01.600 --> 0:20:03.840 life is still going on. That's that's the thing. And 0:20:03.880 --> 0:20:05.879 I do agree with people who say, well, you know, 0:20:05.920 --> 0:20:07.760 you go to a shopping center at tempt the amberish 0:20:07.800 --> 0:20:09.960 people out. You know those people are just paid, are leaving. 0:20:10.240 --> 0:20:12.639 So that is a third point. But I guess you know, 0:20:12.800 --> 0:20:15.280 something's got to give and they've decided. Well, the temp 0:20:15.280 --> 0:20:17.359 the end, that's what we're gonna do, all right, Maria, 0:20:18.080 --> 0:20:20.480 thank you so much for joining us. We get the 0:20:20.520 --> 0:20:23.960 reporting on the ground in Europe like nobody like Maria 0:20:24.040 --> 0:20:27.680 can provide. Maria Today, Europe reporter for Bloomberg Opinion. I mean, 0:20:27.760 --> 0:20:29.399 I'm in bed at nine or ten. I can't even 0:20:29.440 --> 0:20:31.040