Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,
Speaker 1: along with my co host Lisa Brahma wits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Well, the Mexican pay so today
Speaker 1: is close to its weakest since December, as trade tensions
Speaker 1: emerge from the US and there are questions, frankly about
Speaker 1: the health of the Mexican economy. Here joining us in
Speaker 1: studios at Al Hasseani. He is senior interest rate and
Speaker 1: currency analyst for Columbia thread Needle Investments uh from overseas
Speaker 1: four and fifty nine billion dollars from Minneapolis. Although you
Speaker 1: are here in our Bloomberg Atta Active Broker Studios, I
Speaker 1: want to talk about the Mexican pay so. How much
Speaker 1: of this has to do with the economy itself. We
Speaker 1: did get last night Moodies and Fitch downgrading the nation
Speaker 1: based on Pemax, it's stayed owned oil company, as well
Speaker 1: as other economic headwins and how much is due to
Speaker 1: potential ramifications from these US Mexico trade tensions. Yeah, it's
Speaker 1: a At the moment, I put more weight on the
Speaker 1: former in terms of the weakening economy, the contingental liabilities
Speaker 1: from from PEMM x um UM, and the fact that
Speaker 1: you know, both fiscal and monetary space in in Mexico
Speaker 1: is shrinking relatively quickly. Uh. You know that to me
Speaker 1: is kind of the key set of drivers for for
Speaker 1: a weaker pay. So in terms of trade tensions with
Speaker 1: the US, we actually haven't started pricing that into aggressively.
Speaker 1: We haven't seen that in US risk assets. We still
Speaker 1: haven't seen it fully priced into Mexican risk assets either.
Speaker 1: So I think from from the perspective of upside downside
Speaker 1: for the Mexico, for the Mexican pay so, I think
Speaker 1: there's still more downside to come through. So. UM. Earlier
Speaker 1: today we had the married drag from the e C
Speaker 1: b Uh, you know, give his commentary. What did you
Speaker 1: take away from it? Yeah? I thought, you know, this
Speaker 1: was for me, one of the more interesting and one
Speaker 1: of the more consequential meetings of the past two years. UM.
Speaker 1: A number of things came out. First, we cemented the
Speaker 1: fact that the path for policy rates really is flat
Speaker 1: to lower from here. Um. You know, this is an
Speaker 1: important change for them versus where they've been the course
Speaker 1: of the past, you know, EU plus Uh, there's been
Speaker 1: sort of an implicit upward bias to to the rate story,
Speaker 1: and I think that's now gone. The discussion about deeper
Speaker 1: negative rates and additional queis now firmly on the table, um,
Speaker 1: And I think that's that's a new part of the
Speaker 1: discussion as well. And um, you know, in terms of
Speaker 1: the growth and the outlook, the growth on the inflation
Speaker 1: mixing the outlook, you know, that continues to to weigh
Speaker 1: to the downsides. In terms of downside risks continue to intensify.
Speaker 1: So the e c B isn't it's in a tough spot.
Speaker 1: It doesn't have a lot of tools. But in terms
Speaker 1: of the tools that does have, I think the willingness
Speaker 1: to use those tools to ease policy has increased. The
Speaker 1: interesting thing to me, First of all, the ECB has
Speaker 1: pushed on a string at this point, right, I mean,
Speaker 1: if they cut rates further into negative territory, what's it
Speaker 1: going to do, Because it's not exactly fostering loan growth
Speaker 1: to a tremendous degree among consumers and risk your businesses.
Speaker 1: Uh So that's that's a big question, um. But it's
Speaker 1: also a question from your perspective, from the currency perspective today,
Speaker 1: the euro strengthening versus the dollar, what gives that's not
Speaker 1: what you would expect? Sure, so, um, two things. Let
Speaker 1: me let me push back a little bit on the
Speaker 1: on the credit growth story. The credit growth story has
Speaker 1: actually been one of the bright spots for for the
Speaker 1: Eurozone and the ECB, and it's been one of the
Speaker 1: success points in terms of the successive TOELTRA programs. The
Speaker 1: fact that the European banking system, which is relatively weak,
Speaker 1: relatively under capitalized, has actually seen very solid loan growth.
Speaker 1: And what the ECB doing right now is essentially risk management.
Speaker 1: They're seeing these risks intensified to the downside, which essentially
Speaker 1: means they can add best maintain their current policy stands um.
Speaker 1: But more likely they will increase the amount of easing
Speaker 1: just to keep the current level of credit growth alive. Um.
Speaker 1: And one one interesting I think takeaway I think from
Speaker 1: the last you know, take four or five you know
Speaker 1: ECB discussions on the negative rate, is that they've come
Speaker 1: to the conclusion that inaggregate, the impact of negative interest
Speaker 1: rates on loan growth is negligible. They're definitely certain banks
Speaker 1: where negative rates are eating into profitability, but the fact
Speaker 1: that they're providing these teltrual loans is actually cushions the
Speaker 1: banking system, and the banking overall continues to do quite well.
Speaker 1: So it given the rising trade tensions around the world
Speaker 1: relates China, Mexico, g maybe Indian so on, where do
Speaker 1: you see value in emerging market currencies? So I one
Speaker 1: of the more interesting I think turning points in the
Speaker 1: course of the past you know, month or so has
Speaker 1: been the break and the dollar. It's it's very early days,
Speaker 1: but it does look like the buffer we have for
Speaker 1: the dollar versus developed market currencies has shrunk significantly. We
Speaker 1: had essentially US growth that was more solid than European
Speaker 1: and Asian growth, and we had US interest rates that
Speaker 1: were significantly higher both in real and nominal terms. That
Speaker 1: buffer has shrunk very aggressively, with the Treasury rally and
Speaker 1: with growth expectations for the US being being downgraded, and
Speaker 1: we've seen that turn in the dollar versus the euro.
Speaker 1: And Lisa's question earlier, this is one of the reasons
Speaker 1: why the euro continues to rally today despite despite the
Speaker 1: fact that these e CBS announced, you know, additional easing
Speaker 1: measures UH U s real rates continue to come down. UM.
Speaker 1: That weakness in the dollar, I think we'll start to
Speaker 1: feed into e m f X. And the question is
Speaker 1: are there idiosocratic stories where you know, real yields are
Speaker 1: high enough UH to provide us with that buffer. A
Speaker 1: couple of currencies rise to the top of my list.
Speaker 1: I think, you know, Russia is a good spot UM,
Speaker 1: limited external vulnerabilities, very good fiscal picture UH. Indonesia is
Speaker 1: another one. Well, there's there's been an improvement in the
Speaker 1: growth story UH. And increasingly we're starting to take a
Speaker 1: look at South Africa in part because the currency is
Speaker 1: weakened quite significantly over the course of the past month.
Speaker 1: So from a value perspective, I think that that looks
Speaker 1: quite attractive. The Turkish lira, the Turkish lera is is
Speaker 1: interesting because look on on on most valuation metrics, it's
Speaker 1: creates exceptionally cheap UM. And the question is is the
Speaker 1: current account or it's some of the external vulnerabilities shrinking
Speaker 1: fast enough to warrant the carry Are you gonna ever
Speaker 1: get will you ever get paid that carry? Um? And
Speaker 1: you know increasingly it's not terrible. UM, I would say
Speaker 1: the picture there is becoming a little bit more positive.
Speaker 1: Real rates remain quite high. Obviously there's policy risk with
Speaker 1: respect um to to the central banks next set of actions.
Speaker 1: Given an inflation that's coming down, there will be under
Speaker 1: pressure to cut rates, which will be negative for the currency.
Speaker 1: Policy risk, by the way, is the understatement of the
Speaker 1: year when it comes to Ara to Wan's regime. But
Speaker 1: go on, but look, I mean, look, we're we're in
Speaker 1: in in in e M space. This this is what
Speaker 1: you live with, and this is what you're getting paid for. UM.
Speaker 1: Policy risk in Turkey and in Argentina taken another place
Speaker 1: where you have high high high carry this one UM,
Speaker 1: I would say, of course Turkey and Argentina are at
Speaker 1: an extreme place in in in the m f X
Speaker 1: spectrum high risk, exceptionally high carry uh. And it's not
Speaker 1: very clear that you'll you'll make money over the next
Speaker 1: twelve months in those places. So I'm gonna take the
Speaker 1: risk and not clear that I'm going to make money.
Speaker 1: So I think I know where to kind of avoid
Speaker 1: a little bit. That's Hey, there's no there's no big
Speaker 1: return without big risk big So there you go, right,
Speaker 1: I mean yep, ed Alf HUSSAINI thanks so much for
Speaker 1: joining us as a senior interest rate and currency analyst
Speaker 1: for Clumbia thread Needle based in Minneapolish thread Needle is
Speaker 1: but joining us here in our Bloomberg Interactor Broker studio.
Speaker 1: Thank you so much. Just looking at the currencies here, um,
Speaker 1: you know the your euro up slightly, the pound up today,
Speaker 1: but you mentioned the ruble. The rubles also up a
Speaker 1: little bit as well. Well. Back at the day when
Speaker 1: I wanted to, I guess go to a Broadway show,
Speaker 1: I'd stand in line in Times Square at the t
Speaker 1: K T S kind of thing and wondering why am
Speaker 1: I doing this? This is so inconvenient. But I'm guessing
Speaker 1: there's a technology out there that can fix that, and
Speaker 1: in fact there is. We welcome Brian Fenty. Brian is
Speaker 1: a co founder and CEO of Today Ticks, based in
Speaker 1: New York City, joining us here in a Bloomberg Interactive
Speaker 1: Broker studio. Brian, thanks so much for joining us today Ticks.
Speaker 1: Does that solve my problem? We try to solve your problem. Yes,
Speaker 1: we started about six years ago to take the t
Speaker 1: KTS booth and do all the heavy lifting of searching
Speaker 1: for discounts and putting it right in your in your
Speaker 1: hand through a mobile app. And of course now we're
Speaker 1: on a website and we're in seventeen cities and doing
Speaker 1: a lot more than just that. Um. But that's really
Speaker 1: what it is. It's best prices, best seats, last minute
Speaker 1: on demand. How did you create this? Well, my partner
Speaker 1: and I were not technologists, um, which is always a challenge. Actually,
Speaker 1: you know, everybody always talks about the technical founder. Um.
Speaker 1: We were Broadway producers, we were private equity guys UM
Speaker 1: and I worked for the New York Yankees for a
Speaker 1: couple of years, so we had very diverse experience, and
Speaker 1: we knew that Broadway was a broken business in terms
Speaker 1: of getting millennials to the table, um, and so we
Speaker 1: sort of penciled out what was Uber doing an open
Speaker 1: table and Airbnb and these great mobile millennial companies what
Speaker 1: were they doing? And the answer was just great, simple
Speaker 1: seamless technology, having everything at your fingertips and making sure
Speaker 1: that it was a complete solution. So talking about talking
Speaker 1: about the business and Broadway, is it is? It a
Speaker 1: growing business. Is a big business? Is this something that
Speaker 1: people need a technical solution for? It's an unbelievable business.
Speaker 1: It's it's often overlooked. So you know, the first piece
Speaker 1: of it is Broadway, meaning the the five block radius
Speaker 1: in New York, and that's, you know, a multibillion dollar industry.
Speaker 1: It's grown more this year than it did in any
Speaker 1: other year. It's it's honestly, it's a resilient potter to
Speaker 1: Hamilton's and Deer of Enhanson. It's a great it's the
Speaker 1: golden age of Broadway right now. It's just an amazing,
Speaker 1: amazing time. Um. So, it's a huge industry. But you
Speaker 1: know most people don't know is it's twice the size
Speaker 1: of the film business on a revenue basis in the US.
Speaker 1: Um So it's a big business. Um But it's hard
Speaker 1: to access. It feels inaccessible to people, it feels expensive,
Speaker 1: it feels hard to engage with. And so we're trying
Speaker 1: to break down those walls. And it's not just Broadway, right,
Speaker 1: I mean, it's it's sort of theater. More broadly, are
Speaker 1: you thinking of expanding into sports or into music or
Speaker 1: other types of live ventures. So we started with theater
Speaker 1: traditionally plays musicals. We've gone to performing arts now and
Speaker 1: we've sort of expanded our definition as we go to markets.
Speaker 1: So when we went to Chicago, comedy is everywhere. So
Speaker 1: if you don't have the second city, you're nobody. And
Speaker 1: so we went to Chicago. We got comedy, We have opera,
Speaker 1: we have dance, improv immersive sleep, no more, you know,
Speaker 1: all of these different types of experiences. So really, as
Speaker 1: I say to our team, we don't compete with ticketing companies.
Speaker 1: We compete with a picture of Margarita's and Netflix. That is,
Speaker 1: you know, ultimately what we're trying to do. That's stiff competition. So, Brian,
Speaker 1: I guess thinking about Broadway per se that you know
Speaker 1: the five square blocks. You know, as my understanding is
Speaker 1: the kind of the theaters are kind of controlled by
Speaker 1: a handful of companies or a few companies. Did they
Speaker 1: welcome you, did they embrace you today? Where they concerned
Speaker 1: about you? How do they how do you kind of
Speaker 1: work with a big theater company? They did not embrace
Speaker 1: this at the beginning. I'll tell you you know, this
Speaker 1: is a true story of disrupting. When we went and
Speaker 1: met with the three theater owners, you know. The first
Speaker 1: theater owners said, I owned the tickets, you don't have them, goodbye.
Speaker 1: Door shut. The second theater owner that we talked to said, millennials,
Speaker 1: who needs them? They'll become adults someday. Shut the door.
Speaker 1: The third theater owners said mobile, who needs that? No
Speaker 1: one's going to spend money on it. And so we said, okay, guys, fine,
Speaker 1: if we go try to build this, will you support us?
Speaker 1: And they said, you know what, go try to build, Go,
Speaker 1: try to build the technology. And so for the last
Speaker 1: six years that's what we've been doing. And now five
Speaker 1: and a half million users later, Um, I think we've
Speaker 1: proven that there really is a space for this. And
Speaker 1: you did just raise seventy three million dollars from Great
Speaker 1: Health Partners that which is a private equity company. What
Speaker 1: are you gonna do with the money? So I'd say
Speaker 1: three may vehicles. One is talent talent. Talent talent, make
Speaker 1: sure that we have the smartest people, the best subject
Speaker 1: matter experts terms of tech are in terms of tech,
Speaker 1: product growth, marketing. So it's amazing is we have theaters
Speaker 1: that work with us across the country and not a
Speaker 1: single salesperson on our team. And so that hopefully speaks
Speaker 1: to the brand that we've built among the venues, UM
Speaker 1: and our audiences. So talent is number one. UM. Number
Speaker 1: two is content, making sure that we have the best
Speaker 1: content out there. UM. Millennials do hold you to a
Speaker 1: very high standard in terms of the types of content, programming,
Speaker 1: exclusivity that you have. And then the third piece is
Speaker 1: just data. Data, data, So making sure that we use
Speaker 1: data to make the experience seamless for everyone, so that
Speaker 1: if you open the app, it's different from when I
Speaker 1: open the app, and we can see the shows that
Speaker 1: we want to see. So when I think of the
Speaker 1: ticketing experience, certainly in this country, really even globally, I
Speaker 1: think ticket master. So how do you guys compete against
Speaker 1: the ticket masters of the world. So what we learned
Speaker 1: is that primary ticketers, because they have to do so
Speaker 1: many different things, they're selling for sports, concerts, large venues,
Speaker 1: small venues, their technology isn't great. And and how do
Speaker 1: we validate that it takes seven to nine minutes to
Speaker 1: buy a ticket on a major primary ticketing platform on
Speaker 1: today takes it's thirty seconds or less. UM. So really
Speaker 1: what we do is we kill you with convenience UM
Speaker 1: and we try to bring you through that funnel in
Speaker 1: a big way, and I think that's why we have
Speaker 1: such high ratings. Are our net promoter scores about four
Speaker 1: times the next highest primary ticketer. How do you make money?
Speaker 1: Consumer fees? Um and And what I'll tell you is,
Speaker 1: though we make it slow and steady, so we have
Speaker 1: fixed fees for our consumers. We have the lowest fees
Speaker 1: in the industry. And our view is to build a
Speaker 1: community of as many theater goers, arts goers and quite frankly,
Speaker 1: anyone who wants to do something in a night, we're
Speaker 1: your customer, were your place to go, and uh we
Speaker 1: grow from there. I know the Tony's are Sunday night,
Speaker 1: I believe on CBS when Broadway comes together to celebrate
Speaker 1: all the great work of the year, does that drive business?
Speaker 1: If a play wins Best Musical or Best Picture? How
Speaker 1: important is that? There's a few awards. So obviously it's
Speaker 1: the moment of the year for for theater and it's
Speaker 1: an amazing evening and this year James Cordon's hosting, so
Speaker 1: it'll be a blast um. But what I'll say is
Speaker 1: there's one or two awards that really move the needle.
Speaker 1: And as you say it's best musical. Um, it's best
Speaker 1: revival of a musical, it's best play. Those are the
Speaker 1: three awards that can actually make what we call boffo,
Speaker 1: but you know, make the box office really hit. Thank
Speaker 1: you so much for being with us. I have to
Speaker 1: say Today Ticks is something that I've just recently come
Speaker 1: to learn about and I'm excited. Still there, no mobile,
Speaker 1: no website, Still waiting in line Brian Fenti, co founder
Speaker 1: and CEO of Today Ticks, joining us here in our
Speaker 1: Bloombergetter Active Brokers Studios disrupting the theater industry. Right now,
Speaker 1: we're looking at a market still searching for direction, taking
Speaker 1: a breather after a series of risk off moves and
Speaker 1: then fluctuating around coming up though, the focus really is
Speaker 1: going to be always on Washington, d C. Which is
Speaker 1: also the focus of markets right now at Bloomberg Politics, policy,
Speaker 1: power and law. Amy Morris, what do you have on?
Speaker 1: So she's gonna be talking about US and Mexico extending
Speaker 1: their talks, which, of course markets are expecting that there
Speaker 1: will be some kind of deal. Also, we got some
Speaker 1: numbers with respect to the trade deficits showing as stalling
Speaker 1: out of imports and exports. We're gonna be looking ahead
Speaker 1: to the jobs data as well. Meanwhile, we are looking
Speaker 1: at a day finishing up. I mean, honestly, today, I'm
Speaker 1: I find it fascinating to me that we're taking a
Speaker 1: breather and yet there still is complacency there. Iss. Deals
Speaker 1: are gonna get done. Deals are gonna get done. And
Speaker 1: Lisa brom WIT's along with Paul Sweeney, this is Bloomberg Markets.
Speaker 1: Tensions are rising between the US and Mexico. This certainly
Speaker 1: has hit particularly the automaker shares pretty hard, considering how
Speaker 1: much supply chain or sort of intra company activity goes
Speaker 1: cross border. Joining us to talk about what the effect
Speaker 1: is on small businesses is Hector Baretto. He's chairman of
Speaker 1: the Latino Coalition, former US Small Business Administrator under George W.
Speaker 1: Bush through two thousand and six, joining us from Irvine, California. Hector,
Speaker 1: I'm so glad that you're here with us. What are
Speaker 1: you hearing from the people who you represent small business
Speaker 1: owners about the potential impact of these additional tariffs on
Speaker 1: goods from Mexico. Well, they're very concerned, and as you know, uh,
Speaker 1: probably of all businesses in the United states that do
Speaker 1: international trade are small businesses. They've seen their businesses grow
Speaker 1: over the last six months or so and they don't
Speaker 1: want to see that stop. So they really feel we're
Speaker 1: kind of at a tipping point right now. So hector,
Speaker 1: how about on the other side of the border, what
Speaker 1: are you hearing from your contacts there about how the
Speaker 1: business community in Mexico views kind of these rising trade tensions. Well,
Speaker 1: I was just down there last week. We we opened
Speaker 1: up an office for our organization, and two months ago
Speaker 1: I met with the President of Mexico. They were cautiously optimistic.
Speaker 1: You know, they've kind of gotten used to some of
Speaker 1: the rhetoric, but they're much more paying attention to the actions.
Speaker 1: They know that, you know, they can't respond to every tweet,
Speaker 1: every press release, every news uh, you know, but they've
Speaker 1: re sien some positive signs and obviously a lot of
Speaker 1: those leaders, business leaders and government leaders are in Washington
Speaker 1: today to talk to their counterparts and see if we
Speaker 1: can get to some kind of a compromise or solution
Speaker 1: on this issue. So it's very interesting because we hear
Speaker 1: about positive signs from people, and certainly the market doesn't
Speaker 1: think that there's going to be some sort of increase
Speaker 1: in tariffs in Mexico that substantial at least, that's what
Speaker 1: a lot of analysts and fund managers seemed to be
Speaker 1: saying this morning. And yet President Trump seems to be
Speaker 1: the one driving the bus here, and it's sort of
Speaker 1: unclear he's not backed away from his dance on tariff's right. Well,
Speaker 1: you know, uh, ironically, uh, in the last quarter Mexico,
Speaker 1: with our largest trading partner, we overtook China. So you know,
Speaker 1: they're starting to see some positive signs and again they
Speaker 1: don't want to see that derailed. And at the end
Speaker 1: of the day, you're right, President is going to decide,
Speaker 1: but there's gonna be other voices are gonna be part
Speaker 1: of this equation. You're starting to see members of Congress,
Speaker 1: both sides of the ail, that are very concerned about this.
Speaker 1: They're tracking this issue very very closely. And the last
Speaker 1: thing we need to do is put a break on
Speaker 1: this economy. The economy has been pretty good over the
Speaker 1: last you know, year, better than we've seen it over
Speaker 1: the preceding six seven years, and so uh, you know,
Speaker 1: this is the wrong time to actually, you know, derail
Speaker 1: the economy. And we're both affected. You know, days when
Speaker 1: we could say, oh, they're gonna be hurt more than
Speaker 1: we are. I don't see it that way. I think
Speaker 1: we're very interdependent and if one side gets hurt, the
Speaker 1: other side is gonna get hurt. And at the end
Speaker 1: of the day, you know that those costs are gonna
Speaker 1: be passed on to consumers. So you know, there's some
Speaker 1: big stakes at hand right now. So the hector, the
Speaker 1: businesses that you represent, what are they how are they
Speaker 1: thinking about the Trump administration's you know, use of tariffs
Speaker 1: to kind of curb immigration. Well it can. Well, they
Speaker 1: don't like the fact that these two issues are being conjoined.
Speaker 1: I was in the White House yesterday. I'm actually in
Speaker 1: d C. And they're doing everything they could to say, look,
Speaker 1: there are two separate issues. We're going to continue on
Speaker 1: the trade track. We want U s m C A pass,
Speaker 1: but we've got to deal with this immigration crisis. And
Speaker 1: it is a crisis. You can understand why there's so
Speaker 1: much frustration in the administration. They have not been able
Speaker 1: to turn this thing around. For months. People were saying,
Speaker 1: is Oh, it's not a big deal, it's going to
Speaker 1: go away. It's just seasonal. We haven't seen that. We've
Speaker 1: seen spikes at the border that we've never seen before.
Speaker 1: So there is a mutual responsibility on both sides of
Speaker 1: the border. Mexico can do a better job of enforcing
Speaker 1: their southern border. We need to work with Mexico as
Speaker 1: our number one trading partner and work on things like
Speaker 1: you know, we used to have something called the Medida
Speaker 1: initiative where we would work with Mexico, and we've done
Speaker 1: that with other countries. We need to go back to
Speaker 1: those kinds of cooperative efforts. I guess that. You know,
Speaker 1: it's interesting because if you are in Washington, what is
Speaker 1: sort of the consensus among the people you're speaking with
Speaker 1: who are within the administration as to the path of
Speaker 1: these negotiations, Because it seems like this kind of came
Speaker 1: I don't want to say out of the blue, but
Speaker 1: kind of out of the blue. Well, the the administration
Speaker 1: would say, for the people to say it's coming out
Speaker 1: of the blue, they haven't been listening, because you know,
Speaker 1: it hasn't been that long ago. The president was very upset.
Speaker 1: He was talking about closing the border. There was a
Speaker 1: time when he said he was going to do away
Speaker 1: with NAPTA and not have anything to replace it with. UM.
Speaker 1: You know, he's talked about tariffs before. Obviously we're doing
Speaker 1: tariffs with China. So uh, you know that the business community,
Speaker 1: and I say this across the board. You know, I
Speaker 1: also sit on the US Chamber of Commerce. Border directors,
Speaker 1: big business, medium business, small business are all watching this
Speaker 1: very closely. And by the way, it's not just our
Speaker 1: businesses that are watching it. Businesses around the world are watching.
Speaker 1: China's watching this to see if they can actually come
Speaker 1: to some agreement with the administration. So trust is in
Speaker 1: low supply right now. But at least they're talking. They're
Speaker 1: at the table with each other, and that's much better
Speaker 1: than just screaming across the fence to each other. Hector
Speaker 1: burnetto chairman of the Latino Coalition and former US Small
Speaker 1: Business Administrator, thank you so much for joining us and
Speaker 1: helping us understand better. What is you know, a rising
Speaker 1: trade tensions between the the US and Mexico. They don't
Speaker 1: seem to be abating, but there is a As Hector
Speaker 1: mentioned Lisa, a group of Mexican business people on government
Speaker 1: officials in Washington today meeting with US representatives. Uh. The
Speaker 1: hope obviously is that some resolution, at least a temporary resolution,
Speaker 1: can forestall uh, the terroiffs that are threatened to be
Speaker 1: going in place. But clearly, as Hector mentioned this, Mexico
Speaker 1: is our largest trading partner because just recently became a
Speaker 1: uh you know, certainly right there with China, So it's
Speaker 1: not just China, it's also in Mexico, uh, and these
Speaker 1: issues are certainly weighing on the mark places. Let's turn
Speaker 1: our focus now to automobiles, in particular the murder that
Speaker 1: wasn't Fiat Chrysler saying that is no longer going to
Speaker 1: continue its bid for Renault. Renault shares tumbling more than
Speaker 1: seven percent. Both sides blame each other, joining us now
Speaker 1: Kevin Tynan, senior Auto's analyst for Bloomberg Intelligence. So who's
Speaker 1: to blame Kevin Well, Um, everybody? Nobody? Um, so I think.
Speaker 1: And there's also Nissan involved in here too. So as
Speaker 1: difficult as a deal would be between f c A
Speaker 1: and and Rena, you know, you you also have that
Speaker 1: Nissan angle in there as well, So I think, you know,
Speaker 1: doing a deal between two big companies like that is
Speaker 1: difficult enough. And then when you add in the Nissan angle,
Speaker 1: and I'm not sure it's completely dead yet. Um, you
Speaker 1: know it's not. It wouldn't have been unlike Sergio Marcioni,
Speaker 1: and you see that down through fc A management now
Speaker 1: and up to the chairman and John el Con to
Speaker 1: say it's as important to sit down as it is
Speaker 1: to walk away. So I think, uh, there may be
Speaker 1: a little bit of gamesmanship going on here, um, and
Speaker 1: then the deal might not be completely dead just yet. Well, Kevin,
Speaker 1: I think when we talked to you, you know, when
Speaker 1: this deal was announced. You know, one of the things
Speaker 1: that you mentioned to us was the Fiat Chrysler's need
Speaker 1: for scale. Um, presumably that need is still there. What
Speaker 1: do you think their options are for them? Yeah? And
Speaker 1: I think, look at that's a company that has spent
Speaker 1: a lot of time and effort to make itself very
Speaker 1: attractive to you know, this kind of situation M and
Speaker 1: A or alliances and partnerships. So you know it doesn't
Speaker 1: end here for sure. Um. I if this does fall apart, ultimately,
Speaker 1: I think it takes two players off the table. It
Speaker 1: probably takes Reno and most likely Pougeau off the table.
Speaker 1: But you know, this is a company that has spent
Speaker 1: years uh, and a lot of time to be this
Speaker 1: lean basically ram and Jeep business, you know, focused in
Speaker 1: North America on light truck market which is now of
Speaker 1: a volume here, uh, and huge profitability there to to
Speaker 1: look like it does to be attractive to other companies.
Speaker 1: So how bad is this forward? Know, if this deal
Speaker 1: is off the table, and frankly, if any other suitor
Speaker 1: uh sort of starts to think about other options, just
Speaker 1: because it is so complicated, right, yeah, And I think
Speaker 1: the the issue is the valuation, and we talked about
Speaker 1: this on the show over the weekend. Um, there is
Speaker 1: that valuation of Rena and while that's one of the
Speaker 1: aspects that makes it attractive to other automakers and that
Speaker 1: European presence, uh, it's also what puts them at a
Speaker 1: disadvantage in negotiations. So you know, it's it's not unlike
Speaker 1: buying buying a car, right, the seller wants as much
Speaker 1: as they can get and the buyer wants to get
Speaker 1: for as little as possible. And that's really the situation here.
Speaker 1: So Kevin, I think you mentioned poop Pougou and Pougeot
Speaker 1: and it's just interesting. The French government here seems to
Speaker 1: be a real sticking point for deal making in the
Speaker 1: auto industry. Um, how does that really play out? If
Speaker 1: you're a buyer, you absolutely have to win over the government, correct, Yeah,
Speaker 1: I mean, and I think that's why I say, you know,
Speaker 1: Pougeot might be off the table as well, because it
Speaker 1: looks like it's the same you know, angry father, different
Speaker 1: daughter kind of scenario there. Um. You know that if
Speaker 1: IF and and Peugeot also and talking about valuation, is
Speaker 1: a much more valuable company in that sense. Um. And
Speaker 1: I think the issue with f C as they really
Speaker 1: want to control whatever company emerges from this or or
Speaker 1: whatever the alliance looks like going forward. And I think
Speaker 1: that again is part of the issue with Nissan right there,
Speaker 1: they're saying the state stake in the enterprise gets smaller. Um,
Speaker 1: and f c A at least steps in and commands
Speaker 1: this this enterprise from the top down. Uh, And that's
Speaker 1: difficult and even for the government to accept that. Meanwhile,
Speaker 1: from Fiat Chrysler's standpoint, is there some pressure to buy
Speaker 1: something else or sort of a mass more scale right now?
Speaker 1: Do you think that that's something in the near term
Speaker 1: that we're going to see. Oh? Yeah, absolutely, And I
Speaker 1: think this was, you know, back in Sergio's days, this
Speaker 1: was what was you know, the goal. Um. I think
Speaker 1: through this process you're starting to see start to see
Speaker 1: it happen. And again, I don't think this is the
Speaker 1: end of it. Um. It just maybe with different partners.
Speaker 1: But you know, this company has worked itself into this
Speaker 1: shape for this very reason, and just because of one
Speaker 1: bad date here, I don't think they sort of get
Speaker 1: off the market. Kevin Tynan, Thank you so much. Kevin Tynan,
Speaker 1: senior auto analysts for Bloomberg Intelligence, calling us on the
Speaker 1: phone from ba's headquarters in Princeton, New Jersey. At least,
Speaker 1: I'm just looking at the trailing twelve months a stock
Speaker 1: price performance for Down General Motors down seven percent, Fiat
Speaker 1: Chrysler Down. I think there's really is a concern here
Speaker 1: among all the investors. I think obviously about long term
Speaker 1: demand for Yes, definitely that although we have to sort
Speaker 1: of put in the caveat here, which is uh that
Speaker 1: Mexico US trade would hit the automakers in the US
Speaker 1: much more substantially than arguably any other group of industries.
Speaker 1: So that's been an additional hit in the recent weeks
Speaker 1: that sort of come out of out of nowhere. Yeah,
Speaker 1: exactly right. So and we saw that just for some
Speaker 1: of the commentaries from some of the auto manufacturers. Thanks
Speaker 1: for listening to the Bloomberg p m L podcast. You
Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa
Speaker 1: Abramo wits one. Before the podcast, you can always catch
Speaker 1: us worldwide on Bloomberg Radio.