1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,920 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,880 Speaker 2: Terminal and the Bloomberg Business App. 10 00:00:36,600 --> 00:00:39,160 Speaker 3: Here's the lead ist, Donald Trump, taking aim at Vice 11 00:00:39,200 --> 00:00:42,400 Speaker 3: President Kamala Harris in a wide ranging conversation on X 12 00:00:42,600 --> 00:00:46,440 Speaker 3: with Elon Musk. The conversation coming after Musk endorsed Trump 13 00:00:46,520 --> 00:00:49,440 Speaker 3: last month, with Trump's campaign looking to curb a wave 14 00:00:49,479 --> 00:00:53,319 Speaker 3: of momentum for Harris, Henrietta Trees and Beta Partners joins us. Now, 15 00:00:53,479 --> 00:00:57,280 Speaker 3: Henrietta a lot of talk through about this particular discussion. 16 00:00:57,520 --> 00:00:59,520 Speaker 1: I just want to start with what was your main takeaway? 17 00:01:00,240 --> 00:01:02,760 Speaker 4: The main takeaway was that this was a great opportunity 18 00:01:02,840 --> 00:01:06,920 Speaker 4: for X to promote spaces. I mean, over a million 19 00:01:06,959 --> 00:01:09,399 Speaker 4: listeners at some point, but it was sort of two 20 00:01:09,480 --> 00:01:12,480 Speaker 4: two and a half hours of two guys. 21 00:01:12,200 --> 00:01:13,480 Speaker 5: In a room agreeing with one another. 22 00:01:13,480 --> 00:01:15,280 Speaker 4: I wouldn't call it an interview, but more of a 23 00:01:15,319 --> 00:01:18,760 Speaker 4: conversation that touched on all the hits that you hear. 24 00:01:18,600 --> 00:01:21,840 Speaker 5: From a Trump rally or other. 25 00:01:23,120 --> 00:01:26,360 Speaker 4: Press press briefings that the president and former president puts on. 26 00:01:26,760 --> 00:01:29,200 Speaker 5: There wasn't a whole lot of new information there. 27 00:01:29,959 --> 00:01:32,440 Speaker 4: The main takeaway for me was that Elon Musk is 28 00:01:32,480 --> 00:01:36,000 Speaker 4: interested in getting further involved in the federal government, being. 29 00:01:35,880 --> 00:01:38,080 Speaker 5: Part of a federal sort of. 30 00:01:38,040 --> 00:01:41,319 Speaker 4: Task force to take on government spending and efficiency, as 31 00:01:41,360 --> 00:01:41,880 Speaker 4: he calls it. 32 00:01:42,440 --> 00:01:44,920 Speaker 5: But that was really the newsiest part of the interview to. 33 00:01:44,880 --> 00:01:47,400 Speaker 6: Me, Henrietta, what I took away is that Musk was 34 00:01:47,480 --> 00:01:50,800 Speaker 6: advocating for two key things. One to stop this demonization 35 00:01:51,360 --> 00:01:53,760 Speaker 6: which I think someone of you is coming from the 36 00:01:53,840 --> 00:01:58,440 Speaker 6: far right when it comes to sustainability and evs, but 37 00:01:58,680 --> 00:02:01,960 Speaker 6: also deregulation, and he brought it up a number of times. 38 00:02:02,320 --> 00:02:06,360 Speaker 6: Do you think he was successful Musk in convincing Trump 39 00:02:06,360 --> 00:02:08,919 Speaker 6: potentially some Trump acolytes on that call. 40 00:02:09,720 --> 00:02:12,560 Speaker 4: I think that there has been a history of Musk 41 00:02:12,639 --> 00:02:17,440 Speaker 4: being able to move present former President Trump, specifically electric vehicles, 42 00:02:17,919 --> 00:02:21,720 Speaker 4: government subsidies of that industry, in particular when it comes 43 00:02:21,720 --> 00:02:24,160 Speaker 4: to deregulation. I think that's already a big part of 44 00:02:24,200 --> 00:02:27,160 Speaker 4: the platform. When I speak with Republican staff, that's always 45 00:02:27,200 --> 00:02:30,080 Speaker 4: a refrain. So I think there's a primed audience for 46 00:02:30,160 --> 00:02:33,320 Speaker 4: that conversation that could certainly be receptive to that. What's 47 00:02:33,360 --> 00:02:36,400 Speaker 4: obviously interesting about that is that you simultaneously don't have 48 00:02:36,400 --> 00:02:39,560 Speaker 4: the votes to repeal the federal subsidies for all. 49 00:02:39,480 --> 00:02:41,760 Speaker 5: Of those industries in the clean energy tech space. 50 00:02:41,800 --> 00:02:45,280 Speaker 4: The manufacturing tax credits eighteen House Republicans to send a 51 00:02:45,320 --> 00:02:48,000 Speaker 4: letter to Speaker Johnson saying, hey, we need those subsidies 52 00:02:48,040 --> 00:02:48,760 Speaker 4: to continue going. 53 00:02:48,760 --> 00:02:50,600 Speaker 5: They promote job growth in our districts. 54 00:02:50,800 --> 00:02:54,600 Speaker 4: They're promoting you know, research and development, they're countering China. 55 00:02:54,680 --> 00:02:57,200 Speaker 4: So I think they're going to have a lot of 56 00:02:57,200 --> 00:03:00,320 Speaker 4: trouble actually governing on that agenda next year if former 57 00:03:00,360 --> 00:03:01,560 Speaker 4: President Trump is reelected. 58 00:03:01,639 --> 00:03:05,079 Speaker 6: So last night was pretty light on substance, but potentially 59 00:03:05,080 --> 00:03:08,639 Speaker 6: from the Harris camp, we'll actually get some policies on Thursday. 60 00:03:08,680 --> 00:03:11,720 Speaker 6: We have not seen a policy proposal yet from the 61 00:03:11,800 --> 00:03:14,440 Speaker 6: Harris Walls campaign, and they're going to be coming out 62 00:03:14,440 --> 00:03:15,960 Speaker 6: with this economic plan. 63 00:03:16,000 --> 00:03:18,000 Speaker 1: What are you expecting, Yeah. 64 00:03:17,880 --> 00:03:22,360 Speaker 4: We're expecting the plans to be rolled out around Thursday. Obviously, 65 00:03:22,720 --> 00:03:25,680 Speaker 4: there are not a lot of heavy hitting interviews happening 66 00:03:25,800 --> 00:03:28,359 Speaker 4: right now, last night being an example, So I don't 67 00:03:28,400 --> 00:03:31,960 Speaker 4: know that the Harris Waltz team needs to get two 68 00:03:32,480 --> 00:03:34,840 Speaker 4: in the weeds. 69 00:03:33,600 --> 00:03:37,680 Speaker 5: My advice to clients is to focus on the bill that. 70 00:03:37,600 --> 00:03:40,800 Speaker 4: The Houseways and Means Committee put out in twenty twenty one, 71 00:03:41,080 --> 00:03:44,920 Speaker 4: which receives widespread support from the Democratic Conference. 72 00:03:44,960 --> 00:03:46,920 Speaker 5: It includes a top corporate tax rate. 73 00:03:46,920 --> 00:03:49,480 Speaker 4: Of twenty six and a half percent, it's graduated in 74 00:03:50,080 --> 00:03:53,360 Speaker 4: and I think, overarchingly, whatever Harris does put out on Thursday, 75 00:03:53,640 --> 00:03:55,960 Speaker 4: take that as the high watermark when you go into 76 00:03:55,960 --> 00:03:58,760 Speaker 4: Congress next year in the off chance it's not a 77 00:03:58,800 --> 00:04:01,360 Speaker 4: Republican controlled set, and you're going to have to thread 78 00:04:01,760 --> 00:04:04,080 Speaker 4: the needle very very closely to get two hundred eighteen 79 00:04:04,160 --> 00:04:06,920 Speaker 4: votes on anything in the House and fifty one or 80 00:04:07,000 --> 00:04:09,640 Speaker 4: sixty in the Senate. It's going to be much more 81 00:04:09,720 --> 00:04:13,200 Speaker 4: lenient than whatever a Democratic proposal comes out looking like 82 00:04:13,280 --> 00:04:14,000 Speaker 4: on Thursday. 83 00:04:14,160 --> 00:04:16,760 Speaker 7: In the meantime, Henrietta, we're about a month away from 84 00:04:16,800 --> 00:04:19,920 Speaker 7: early voting starting, and by all accounts, this is going 85 00:04:19,960 --> 00:04:22,919 Speaker 7: to be a lot of early voting compared with historical references. 86 00:04:23,480 --> 00:04:26,320 Speaker 7: Is Donald Trump more or less out of time in 87 00:04:26,360 --> 00:04:28,320 Speaker 7: trying to define Kamala Harris? 88 00:04:28,680 --> 00:04:30,719 Speaker 4: I have two things to say on that. Number One, 89 00:04:30,960 --> 00:04:32,880 Speaker 4: the most important thing that happened last night is that 90 00:04:32,920 --> 00:04:36,320 Speaker 4: Arizona put the abortion issue on the ballot. That is 91 00:04:36,360 --> 00:04:39,200 Speaker 4: something that got doubled the number of signatures that they need. 92 00:04:39,240 --> 00:04:41,599 Speaker 5: They didn't bring abortion up once. That's the whole state 93 00:04:41,640 --> 00:04:42,240 Speaker 5: of Arizona. 94 00:04:42,320 --> 00:04:45,400 Speaker 4: If Democrats hold on to Arizona and pick up Nevada 95 00:04:45,480 --> 00:04:48,760 Speaker 4: and keep it in the blue camp, that seriously undermines 96 00:04:48,800 --> 00:04:51,080 Speaker 4: Trump's electoral college strategy. 97 00:04:51,160 --> 00:04:52,560 Speaker 5: So they should be focusing on that. 98 00:04:52,760 --> 00:04:54,920 Speaker 4: And I think time has run out on Trump being 99 00:04:54,960 --> 00:04:57,400 Speaker 4: able to define himself in a way that's favorable to 100 00:04:57,400 --> 00:05:01,720 Speaker 4: the majority of Americans on abortion, certainly with gdbans position. Secondarily, 101 00:05:01,920 --> 00:05:05,800 Speaker 4: you mentioned early voting, seventy two percent of early mail 102 00:05:05,839 --> 00:05:08,719 Speaker 4: in ballot requests in Pennsylvania came from the Democratic Party. 103 00:05:09,160 --> 00:05:12,080 Speaker 4: What the Republican Conference led by Trump and sort of 104 00:05:12,120 --> 00:05:15,280 Speaker 4: the concerns over election fraud have really driven is a 105 00:05:15,279 --> 00:05:20,320 Speaker 4: material tactical disadvantage in denigrating mail in balloting, which allows 106 00:05:20,360 --> 00:05:23,080 Speaker 4: the campaign to bank voters, Get those people off your 107 00:05:23,160 --> 00:05:25,039 Speaker 4: roles once they've already voted, and focus. 108 00:05:24,760 --> 00:05:26,640 Speaker 5: On the people you need to turn out on election day. 109 00:05:26,880 --> 00:05:30,359 Speaker 4: It's a tactical disadvantage that I think the Republicans have 110 00:05:30,480 --> 00:05:32,839 Speaker 4: been screaming about for several years, but to no avail 111 00:05:32,839 --> 00:05:33,799 Speaker 4: at this point, Henry. 112 00:05:34,000 --> 00:05:37,320 Speaker 7: But it also brings this possibility that Republicans can continue 113 00:05:37,320 --> 00:05:39,400 Speaker 7: the line that they did at the last election, that 114 00:05:39,480 --> 00:05:41,359 Speaker 7: it was rigged, that there were issues if it was 115 00:05:41,440 --> 00:05:44,480 Speaker 7: all mail in ballots, that they weren't genuine. How concerned 116 00:05:44,480 --> 00:05:47,520 Speaker 7: are you about a peaceful handover, not a handover, a 117 00:05:47,560 --> 00:05:51,120 Speaker 7: peaceful continuation of power, I suppose if Kamala Harris is 118 00:05:51,160 --> 00:05:51,719 Speaker 7: the president. 119 00:05:52,720 --> 00:05:54,800 Speaker 4: You know what's really interesting, and I heard this from 120 00:05:54,800 --> 00:05:57,880 Speaker 4: Republican staff as long as a year ago. Keep in 121 00:05:57,920 --> 00:06:01,240 Speaker 4: mind why there was a delay twenty twenty and why 122 00:06:01,279 --> 00:06:03,800 Speaker 4: there was a delay in calling Nevada and upending the 123 00:06:03,839 --> 00:06:06,599 Speaker 4: Arizona turnout or decision making process. 124 00:06:06,720 --> 00:06:08,839 Speaker 5: It was because who was in office at the time. 125 00:06:09,080 --> 00:06:12,120 Speaker 4: When Biden is in office, which he will become this November, 126 00:06:12,200 --> 00:06:14,440 Speaker 4: it's going to be a much more orderly process that 127 00:06:14,520 --> 00:06:16,000 Speaker 4: adheres to what's actually. 128 00:06:15,800 --> 00:06:16,560 Speaker 5: Happening on the ground. 129 00:06:16,600 --> 00:06:18,640 Speaker 4: No one's going to be calling the governor of Georgia 130 00:06:18,960 --> 00:06:21,040 Speaker 4: saying find me the votes. So I think who is 131 00:06:21,080 --> 00:06:24,800 Speaker 4: actually in office right now materially impacts whether this will 132 00:06:24,800 --> 00:06:25,800 Speaker 4: be a smooth transition. 133 00:06:25,920 --> 00:06:26,960 Speaker 5: I expect that it will be. 134 00:06:27,240 --> 00:06:28,920 Speaker 4: You can claim that there was broad but it's going 135 00:06:28,960 --> 00:06:31,880 Speaker 4: to be certified, hopefully within the next day or two 136 00:06:32,040 --> 00:06:33,240 Speaker 4: after November fifth, and. 137 00:06:33,400 --> 00:06:35,040 Speaker 3: HATI, given the fact that we haven't gotten a lot 138 00:06:35,040 --> 00:06:37,880 Speaker 3: of policy proposals that people actually are taking seriously and 139 00:06:38,000 --> 00:06:41,559 Speaker 3: wondering how much you actually do, think that the Federal 140 00:06:41,600 --> 00:06:44,880 Speaker 3: Reserve is going to avoid cutting rates too much or 141 00:06:44,880 --> 00:06:46,480 Speaker 3: too soon in order not. 142 00:06:46,480 --> 00:06:48,039 Speaker 1: To seem like a political agent. 143 00:06:48,080 --> 00:06:51,080 Speaker 3: And I say this because in the absence of real policies, 144 00:06:51,360 --> 00:06:54,240 Speaker 3: we have heard a lot from the Republican camp, from 145 00:06:55,040 --> 00:06:57,919 Speaker 3: jad Vans as well as Donald Trump about having a 146 00:06:57,960 --> 00:07:01,200 Speaker 3: more political hand in the Fed, whereas the Harris camp 147 00:07:01,240 --> 00:07:01,880 Speaker 3: is talking. 148 00:07:01,600 --> 00:07:04,840 Speaker 1: About not so much. How does that color your view 149 00:07:04,920 --> 00:07:05,360 Speaker 1: of it. 150 00:07:06,320 --> 00:07:08,280 Speaker 4: Well, I think we have to focus on what's going 151 00:07:08,320 --> 00:07:11,360 Speaker 4: to be happening next year. Extending the twenty seventeen tax 152 00:07:11,400 --> 00:07:12,920 Speaker 4: cuts is going to cost four. 153 00:07:12,760 --> 00:07:14,120 Speaker 5: Point six trillion dollars. 154 00:07:14,320 --> 00:07:16,320 Speaker 4: I'm getting a lot of inbound questions from clients about 155 00:07:16,320 --> 00:07:18,280 Speaker 4: whether there will be deficit reduction next year. 156 00:07:18,360 --> 00:07:20,840 Speaker 5: There's no scenario where the deficit is renewed. Next year. 157 00:07:20,880 --> 00:07:23,640 Speaker 4: There will be substantial federal spending. It'll happen as soon 158 00:07:23,680 --> 00:07:25,280 Speaker 4: as September thirtieth of this year. 159 00:07:25,480 --> 00:07:26,000 Speaker 5: I expect we. 160 00:07:26,040 --> 00:07:28,640 Speaker 4: Will continue to get aid to Ukraine, albeit a smaller 161 00:07:28,640 --> 00:07:31,520 Speaker 4: and lower amounts, along with Israel. There will continue to 162 00:07:31,560 --> 00:07:35,240 Speaker 4: be spending on par with what we've had in the past, 163 00:07:35,240 --> 00:07:38,080 Speaker 4: which is about one point seven trillion dollars just to 164 00:07:38,160 --> 00:07:40,560 Speaker 4: keep functionality. And then next year we have to keep 165 00:07:40,600 --> 00:07:43,880 Speaker 4: the tax bill extended, and I suspect that almost none 166 00:07:43,920 --> 00:07:47,240 Speaker 4: of those tax cuts will expire, So the FED is 167 00:07:47,280 --> 00:07:49,640 Speaker 4: going to have to contend with some of the political stuff, 168 00:07:49,680 --> 00:07:52,280 Speaker 4: but more importantly with just the fisful outlays that are 169 00:07:52,280 --> 00:07:55,080 Speaker 4: going to be coming through, whether Democrats or Republicans win 170 00:07:55,160 --> 00:07:55,600 Speaker 4: next year. 171 00:07:56,120 --> 00:07:59,360 Speaker 5: So I think engaging with the FED and trying. 172 00:07:59,160 --> 00:08:02,120 Speaker 4: To meddle from a perspective as somebody who's there when 173 00:08:02,120 --> 00:08:04,440 Speaker 4: we did Tarp and the Auto Baila and that's not. 174 00:08:04,400 --> 00:08:05,000 Speaker 5: What I want to see. 175 00:08:05,040 --> 00:08:07,480 Speaker 4: You need the autonomy of the FED, and I think 176 00:08:07,480 --> 00:08:08,800 Speaker 4: that they'll fight you the Neil for that. 177 00:08:09,040 --> 00:08:11,640 Speaker 1: Henrita Trees and Veta Partners. Thank you so much. 178 00:08:20,840 --> 00:08:23,640 Speaker 3: Four season CEO Alejandra right now saying his company is 179 00:08:23,640 --> 00:08:27,200 Speaker 3: seen in strongest year ever, writing this short term uncertainty 180 00:08:27,240 --> 00:08:32,080 Speaker 3: given the current geopolitical macroeconomic pressures are impacting traveler sentiment, 181 00:08:32,320 --> 00:08:37,359 Speaker 3: but the luxury sent segment is more resilient, Alejandro joins us. Now, Alejandro, 182 00:08:37,480 --> 00:08:39,560 Speaker 3: thank you so much for being with us. Pleasure to 183 00:08:39,559 --> 00:08:42,040 Speaker 3: have you here in studio. I want to start there. 184 00:08:42,520 --> 00:08:45,160 Speaker 3: Is it true that you're not seeing any slowdown whatsoever 185 00:08:45,559 --> 00:08:47,000 Speaker 3: in the luxury element? 186 00:08:47,600 --> 00:08:49,880 Speaker 8: Good morning, Thanks for having me. It's a pleasure to 187 00:08:49,920 --> 00:08:52,000 Speaker 8: be here. And I love the fact that we're talking 188 00:08:52,040 --> 00:08:55,440 Speaker 8: about in luxury hospitality. Yes, I mean, we had a 189 00:08:55,480 --> 00:08:58,360 Speaker 8: really strong first half of the year compared to last year, 190 00:08:58,720 --> 00:09:01,680 Speaker 8: much better. When I look into the booking trends for 191 00:09:01,720 --> 00:09:04,320 Speaker 8: the second half of the year, even going on into 192 00:09:04,400 --> 00:09:07,800 Speaker 8: twenty twenty five, they look very strong as well. You know, 193 00:09:07,840 --> 00:09:11,000 Speaker 8: I think there's two things that are happening there. First, 194 00:09:11,240 --> 00:09:13,880 Speaker 8: and for most, is that the luxury guest or the 195 00:09:13,960 --> 00:09:18,640 Speaker 8: luxury consumer continues to be very resilient. They continue to spend. 196 00:09:18,720 --> 00:09:23,720 Speaker 8: You know, that desire for experiences to explore continues to 197 00:09:23,720 --> 00:09:26,000 Speaker 8: be there. But also I would say that from a 198 00:09:26,000 --> 00:09:28,400 Speaker 8: four seasons angle and from a four season's point of view, 199 00:09:28,559 --> 00:09:32,760 Speaker 8: we do offer a very clear value proposition to our guest. 200 00:09:32,800 --> 00:09:35,320 Speaker 8: I mean, we do have very proud to say that 201 00:09:35,320 --> 00:09:37,679 Speaker 8: we have the very best hotels in the best locations 202 00:09:38,080 --> 00:09:40,640 Speaker 8: and we provide the best service to our guest. And 203 00:09:40,720 --> 00:09:43,160 Speaker 8: when you have that as the brand proposition, and that's 204 00:09:43,160 --> 00:09:45,680 Speaker 8: what we do at four seasons, there's a demand for that. 205 00:09:46,559 --> 00:09:49,360 Speaker 8: And by the way, this is not new of this year. 206 00:09:49,440 --> 00:09:52,199 Speaker 8: We've been operating down for sixty years and has been 207 00:09:52,280 --> 00:09:54,319 Speaker 8: the constant all throughout the period. 208 00:09:54,400 --> 00:09:55,240 Speaker 1: So what has changed? 209 00:09:55,440 --> 00:09:57,839 Speaker 3: And I'm wondering not just from the consumer who's able 210 00:09:57,840 --> 00:10:01,000 Speaker 3: to spend, but also from the employer, Yes, and who 211 00:10:01,080 --> 00:10:03,160 Speaker 3: you're able to recruit. For a long time, there is 212 00:10:03,200 --> 00:10:06,080 Speaker 3: this earth of people willing to work in hospitality in 213 00:10:06,120 --> 00:10:10,800 Speaker 3: the direct aftermath of the pandemic. Do you see it 214 00:10:10,840 --> 00:10:14,240 Speaker 3: as being much easier now to hire people and sort 215 00:10:14,280 --> 00:10:17,960 Speaker 3: of easier to also retain them without massive price increases 216 00:10:17,960 --> 00:10:18,800 Speaker 3: wage increases. 217 00:10:19,000 --> 00:10:21,960 Speaker 8: Yes. I mean, obviously for us, a key component of 218 00:10:22,040 --> 00:10:24,560 Speaker 8: what we do is through our people, and we are 219 00:10:24,559 --> 00:10:28,280 Speaker 8: a service company and the most important asset is the 220 00:10:28,320 --> 00:10:31,560 Speaker 8: people that we have with us. So we place a 221 00:10:31,559 --> 00:10:33,640 Speaker 8: lot of emphasis in making sure that we are the 222 00:10:33,720 --> 00:10:36,800 Speaker 8: employer of choice in every single market that we operate. 223 00:10:37,480 --> 00:10:40,559 Speaker 8: We do spend a lot of time training people, developing 224 00:10:40,600 --> 00:10:45,360 Speaker 8: them for us. We do measure employee engagement twice per year. 225 00:10:45,960 --> 00:10:49,360 Speaker 8: We are at the two percent across all industries in 226 00:10:49,440 --> 00:10:52,400 Speaker 8: terms of employee engagement. So it's a topic that we 227 00:10:52,480 --> 00:10:54,520 Speaker 8: spend a lot of time because we do believe that 228 00:10:54,559 --> 00:10:57,439 Speaker 8: we need to have the best and most engage employees 229 00:10:57,440 --> 00:11:00,400 Speaker 8: with us. We haven't had. I mean, obviously after the 230 00:11:00,400 --> 00:11:02,520 Speaker 8: pandemic there was a little bit of pressure from the 231 00:11:02,679 --> 00:11:04,920 Speaker 8: labor point of view. We don't see that anymore, but 232 00:11:04,920 --> 00:11:07,440 Speaker 8: again it's because of the air force that we place 233 00:11:07,559 --> 00:11:10,160 Speaker 8: in making sure that we are the employer of choice 234 00:11:10,160 --> 00:11:11,520 Speaker 8: in the marketing where we operate. 235 00:11:11,920 --> 00:11:14,240 Speaker 7: I want to know about more about your customer, but 236 00:11:14,320 --> 00:11:17,440 Speaker 7: specifically like the ultra luxury and there. I know you 237 00:11:17,480 --> 00:11:20,360 Speaker 7: have a private jet service something like one hundred and 238 00:11:20,400 --> 00:11:22,880 Speaker 7: fifteen thousand dollars for charter a day. 239 00:11:23,600 --> 00:11:24,840 Speaker 9: How much demand is there for that? 240 00:11:25,120 --> 00:11:27,280 Speaker 8: Yes, you know, it's interesting And just to give you 241 00:11:27,280 --> 00:11:32,360 Speaker 8: the context of this is obviously Four Seasons started as 242 00:11:32,400 --> 00:11:34,640 Speaker 8: a hotel and a resource company, and we are now 243 00:11:34,679 --> 00:11:39,520 Speaker 8: the leading luxury hospitality company and that's where our guests 244 00:11:39,640 --> 00:11:42,840 Speaker 8: experience the brand. What we found over time is that 245 00:11:44,280 --> 00:11:47,839 Speaker 8: because our second business is the residential brand, the residential 246 00:11:48,320 --> 00:11:52,080 Speaker 8: so guests they stay with us, they experience the brand, 247 00:11:52,200 --> 00:11:55,160 Speaker 8: and then they are willing to buy a residence with us. 248 00:11:55,520 --> 00:11:58,760 Speaker 8: So that's sort of the journey that they start experiencing 249 00:11:58,800 --> 00:12:01,800 Speaker 8: with four seasons. And the third piece is what you 250 00:12:01,880 --> 00:12:06,240 Speaker 8: just said is the journey's experience based travel that we 251 00:12:06,280 --> 00:12:09,120 Speaker 8: promote as a third line of business. So if you 252 00:12:09,160 --> 00:12:12,440 Speaker 8: think about the whole analogy, guests they stay with us, 253 00:12:12,480 --> 00:12:15,120 Speaker 8: they live with us, and they travel with us. They 254 00:12:15,200 --> 00:12:18,360 Speaker 8: developed such a comfort with the brand and with the 255 00:12:18,400 --> 00:12:21,760 Speaker 8: brand promise and the brand proposition that they're willing to 256 00:12:21,800 --> 00:12:25,640 Speaker 8: spend that amount of money in traveling for twenty days 257 00:12:25,679 --> 00:12:30,160 Speaker 8: through ten four seasons in Africa, in Europe and so forth. 258 00:12:30,200 --> 00:12:33,800 Speaker 8: So for us, it's been more around creating this lucture 259 00:12:33,880 --> 00:12:38,880 Speaker 8: ecosystem for four seasons that our guests are eager to travel. 260 00:12:39,280 --> 00:12:41,599 Speaker 8: By the way, we have all the intineraries for this 261 00:12:41,720 --> 00:12:44,440 Speaker 8: year sold out for the rest of the year, so 262 00:12:44,440 --> 00:12:47,320 Speaker 8: it's a very successful product and it taps into that 263 00:12:47,440 --> 00:12:50,640 Speaker 8: desire to experience, to explore that we find in our guests. 264 00:12:50,679 --> 00:12:52,160 Speaker 7: You're saying we're too late for it, then. 265 00:12:52,240 --> 00:12:55,280 Speaker 8: Yeah, twenty twenty five, we're opening the. 266 00:12:55,040 --> 00:12:57,600 Speaker 7: Good To keep in mind, I mean just talking about 267 00:12:57,760 --> 00:12:59,320 Speaker 7: the different mix of your businesses. 268 00:13:00,120 --> 00:13:00,959 Speaker 1: Only one doing in this. 269 00:13:00,920 --> 00:13:03,360 Speaker 7: Space, and it obviously is an exclusive space of those 270 00:13:03,360 --> 00:13:05,800 Speaker 7: who can offer this, but you think of the online 271 00:13:05,800 --> 00:13:09,040 Speaker 7: resources also trying to give also experiences to What does 272 00:13:09,160 --> 00:13:11,160 Speaker 7: competition look like right now? 273 00:13:12,080 --> 00:13:15,120 Speaker 8: Well, competition because of the attractiveness of the luxury space, 274 00:13:15,160 --> 00:13:17,400 Speaker 8: there's a lot of competitors coming in. I think we 275 00:13:17,520 --> 00:13:20,400 Speaker 8: have as a Four Seasons the advantage of the brand. 276 00:13:20,440 --> 00:13:24,160 Speaker 8: I mean, we are the most We continuously measure brand preference, 277 00:13:24,200 --> 00:13:27,240 Speaker 8: brand awareness in terms of our brand, and we continue 278 00:13:27,240 --> 00:13:30,160 Speaker 8: to be the number one luxury hospitality brand, and I 279 00:13:30,160 --> 00:13:32,640 Speaker 8: think that carries a lot of weight. But it's because 280 00:13:32,640 --> 00:13:34,320 Speaker 8: at the end of the day, we're able to deliver 281 00:13:34,640 --> 00:13:37,960 Speaker 8: that value proposition to our guest. I mean when it's 282 00:13:38,000 --> 00:13:41,000 Speaker 8: interesting because I do interact with a lot of our 283 00:13:41,080 --> 00:13:44,000 Speaker 8: guests and when I ask them what do they like 284 00:13:44,040 --> 00:13:46,000 Speaker 8: about the Four Seasons, the first thing they tell me 285 00:13:46,040 --> 00:13:47,840 Speaker 8: is that I know what to expect and I've been 286 00:13:47,880 --> 00:13:51,880 Speaker 8: able as a guest to explore remote destinations. So for example, 287 00:13:52,240 --> 00:13:54,320 Speaker 8: I've been able to go to Garabora. But because there's 288 00:13:54,320 --> 00:13:56,520 Speaker 8: the Four Seasons, I feel comfortable because I know what 289 00:13:56,559 --> 00:14:00,559 Speaker 8: to expect and to have that level of conceit extensy 290 00:14:00,760 --> 00:14:04,120 Speaker 8: and that brand power is very, very unique. So I 291 00:14:04,120 --> 00:14:06,360 Speaker 8: think we're uniquely a very well positioned. 292 00:14:05,920 --> 00:14:08,160 Speaker 6: Where do you see the demand right now in terms 293 00:14:08,240 --> 00:14:11,240 Speaker 6: of the hot spots top five people are traveling too. 294 00:14:11,360 --> 00:14:16,520 Speaker 8: Yeah, you know, it's interesting because and I'm going to 295 00:14:16,559 --> 00:14:18,560 Speaker 8: say something which is a little bit of contrariant. When 296 00:14:18,559 --> 00:14:22,880 Speaker 8: I look into the history of Four Seasons over the 297 00:14:22,960 --> 00:14:27,040 Speaker 8: last years, travel patterns haven't changed much. For example, fifty 298 00:14:27,080 --> 00:14:30,040 Speaker 8: five percent of our revenues come from the Americas, the 299 00:14:30,040 --> 00:14:33,080 Speaker 8: majority of in the US. More than fifty percent of 300 00:14:33,160 --> 00:14:36,600 Speaker 8: our guests, they are from the US. And whether they 301 00:14:36,680 --> 00:14:39,440 Speaker 8: travel to the US right now during the summertime, they 302 00:14:39,520 --> 00:14:42,440 Speaker 8: travel to our South Florida collection, they go to Hawaii. 303 00:14:43,120 --> 00:14:46,119 Speaker 8: Beyond the US, they go to Mexico and then Europe. 304 00:14:46,680 --> 00:14:49,400 Speaker 8: The fact is that this has happened for many, many years. 305 00:14:49,720 --> 00:14:51,720 Speaker 8: Americans are going to go to Europe probably once a 306 00:14:51,800 --> 00:14:54,880 Speaker 8: year every summer. I mean, that's so, and we're seeing 307 00:14:54,880 --> 00:14:57,320 Speaker 8: that again this summer, but it happened last year, prior year, 308 00:14:57,360 --> 00:15:01,480 Speaker 8: prior year. But again America representing fifty five percent of 309 00:15:01,520 --> 00:15:04,800 Speaker 8: revenues for US in the Europe and the Middle East 310 00:15:04,840 --> 00:15:07,920 Speaker 8: represents twenty five percent of the revenues, and there the 311 00:15:08,000 --> 00:15:11,720 Speaker 8: dynamics are similar. Europeans they mostly stay within Europe. They 312 00:15:11,800 --> 00:15:15,120 Speaker 8: ventured into the Middle East or Africa. And then we 313 00:15:15,200 --> 00:15:19,640 Speaker 8: have APAC, which is twenty percent of our business. Three 314 00:15:19,680 --> 00:15:23,000 Speaker 8: percent is only China and that's mainly regional travel. 315 00:15:23,360 --> 00:15:26,200 Speaker 6: Do you still see the Chinese consumers spending as much 316 00:15:26,360 --> 00:15:28,760 Speaker 6: in luxury hotels the same way the US consumers. 317 00:15:28,960 --> 00:15:30,840 Speaker 8: No, they have not come back. I mean when I 318 00:15:30,880 --> 00:15:34,480 Speaker 8: look into what was spending prior to the pandemic is less. 319 00:15:34,840 --> 00:15:37,440 Speaker 8: It's interesting because they are spending less in China, so 320 00:15:37,480 --> 00:15:39,800 Speaker 8: we still don't have the same race that we used 321 00:15:39,800 --> 00:15:42,360 Speaker 8: to have prior to the pandemic in China. But they're 322 00:15:42,640 --> 00:15:47,240 Speaker 8: starting to spend more internationally, but internationally within the region 323 00:15:47,520 --> 00:15:51,120 Speaker 8: meaning Japan for the most part, because of visa issues 324 00:15:51,120 --> 00:15:53,000 Speaker 8: and many other things. They still have not come back 325 00:15:53,280 --> 00:15:55,880 Speaker 8: to Europe or the US, which is where we saw 326 00:15:55,920 --> 00:15:57,080 Speaker 8: them prior to the pandemic. 327 00:15:57,120 --> 00:15:59,760 Speaker 3: There's real question here about how much and towards is 328 00:15:59,760 --> 00:16:01,880 Speaker 3: slow of Apollo called us out for us this morning. 329 00:16:01,880 --> 00:16:04,480 Speaker 3: He said, all you people in media, and I'm paraphrasing, 330 00:16:04,800 --> 00:16:06,840 Speaker 3: just keep using everyone as an anecdote to try to 331 00:16:06,880 --> 00:16:09,480 Speaker 3: paint a macro picture. Your company has been around for 332 00:16:09,520 --> 00:16:12,760 Speaker 3: sixty years. How independent of the macrocycle is it? 333 00:16:12,840 --> 00:16:12,960 Speaker 9: Right? 334 00:16:12,960 --> 00:16:14,760 Speaker 1: I mean, we're talking about something that. 335 00:16:14,960 --> 00:16:18,720 Speaker 3: Is a complete microcosmon to itself of people who have 336 00:16:18,960 --> 00:16:21,040 Speaker 3: disposable wealth and are going to travel no matter what, 337 00:16:21,680 --> 00:16:26,120 Speaker 3: versus a company that does have some sort of sensitivity 338 00:16:26,400 --> 00:16:29,600 Speaker 3: to what's going on in the underlying consumer centimacy. 339 00:16:29,920 --> 00:16:31,720 Speaker 8: I mean, I would be lying if I would say 340 00:16:31,720 --> 00:16:37,160 Speaker 8: that we are immune to any microeconomic geopolitical impacts, because 341 00:16:37,200 --> 00:16:38,440 Speaker 8: we are. I mean, at the end of the day, 342 00:16:38,800 --> 00:16:42,040 Speaker 8: that uncertainty impacts travel or sentiment, and people don't travel 343 00:16:42,080 --> 00:16:45,640 Speaker 8: because of that. But obviously we've been operating for sixty years. 344 00:16:45,680 --> 00:16:48,160 Speaker 8: Have We've gone through these cycles and they go away, 345 00:16:48,320 --> 00:16:50,000 Speaker 8: and at the end of the day, what we see 346 00:16:50,040 --> 00:16:52,800 Speaker 8: in is year or year that the market continues to grow. 347 00:16:52,840 --> 00:16:55,200 Speaker 8: I mean, trouble and torurism has been growing for many 348 00:16:55,280 --> 00:16:59,440 Speaker 8: years now, that desire to experience, to explore, continues to 349 00:16:59,480 --> 00:17:01,840 Speaker 8: be there. I think it's really interesting when you look 350 00:17:01,840 --> 00:17:07,000 Speaker 8: into the luxury consumer that our composition of guests about 351 00:17:07,000 --> 00:17:10,840 Speaker 8: twenty percent are boomers, forty five percent are Gen X, 352 00:17:11,400 --> 00:17:14,679 Speaker 8: thirty five percent already are millennials, so that transfer of 353 00:17:14,760 --> 00:17:18,520 Speaker 8: wealth is starting to happen, but we're not losing the boomers, 354 00:17:18,520 --> 00:17:21,600 Speaker 8: so it means that the market is expanding. So always 355 00:17:21,800 --> 00:17:24,600 Speaker 8: year and year, there's going to be more demand, more growth, 356 00:17:25,480 --> 00:17:27,240 Speaker 8: and at the end of the day as well, we 357 00:17:27,560 --> 00:17:31,040 Speaker 8: as as a hotel and restore company, need to be 358 00:17:31,160 --> 00:17:34,439 Speaker 8: at the forefront in terms of creating amazing experiences so 359 00:17:34,480 --> 00:17:36,439 Speaker 8: we can satisfy the demand. So I don't think at 360 00:17:36,440 --> 00:17:37,880 Speaker 8: the end of the day that the demand just comes 361 00:17:37,880 --> 00:17:40,119 Speaker 8: by itself. We need to have, like we do, a 362 00:17:40,200 --> 00:17:44,040 Speaker 8: very special product, a very special service proposition to our guests, 363 00:17:44,040 --> 00:17:45,879 Speaker 8: so at the end of the day, they are eager 364 00:17:45,920 --> 00:17:47,520 Speaker 8: to come to a four seasons. 365 00:17:47,680 --> 00:17:49,040 Speaker 1: So you're doing great with the baby class. 366 00:17:49,040 --> 00:17:51,959 Speaker 3: I hear that you really crushing it, you know, particularly 367 00:17:52,280 --> 00:17:53,160 Speaker 3: south of the US. 368 00:17:53,400 --> 00:17:54,000 Speaker 1: Paid actor. 369 00:17:54,880 --> 00:17:58,040 Speaker 8: No, it was, you know, but that's one. It's a 370 00:17:58,040 --> 00:18:00,760 Speaker 8: tremendous learning experience because sometimes we so much more you're 371 00:18:00,880 --> 00:18:07,040 Speaker 8: marketing that doesn't provide any outcomes, But then these special 372 00:18:07,359 --> 00:18:11,520 Speaker 8: authentic moments are the ones that the consumers value the most. 373 00:18:11,560 --> 00:18:14,879 Speaker 8: This was a complete viral moment, but it was completely authentic. 374 00:18:14,960 --> 00:18:17,320 Speaker 8: We had nothing to do with it. In the end, 375 00:18:17,320 --> 00:18:21,160 Speaker 8: we have more than three hundred million views through various 376 00:18:21,640 --> 00:18:24,479 Speaker 8: digital platforms on the four Seasons Baby. Obably, we got 377 00:18:24,480 --> 00:18:29,439 Speaker 8: a spike on on searches on four Seasons Orlando, so 378 00:18:29,520 --> 00:18:32,160 Speaker 8: it was very good. But again it was very authentic, 379 00:18:32,240 --> 00:18:34,200 Speaker 8: which ultimately is what. 380 00:18:34,160 --> 00:18:35,480 Speaker 9: People like I love it. 381 00:18:35,480 --> 00:18:37,360 Speaker 3: I wonder how many board meetings for about the four 382 00:18:37,400 --> 00:18:40,439 Speaker 3: seasons Baby. All right, now four Seasons, CEO, thank you 383 00:18:40,480 --> 00:18:41,280 Speaker 3: so much for being. 384 00:18:50,560 --> 00:18:52,159 Speaker 1: Joining us. Now I'm so pleased to say it's now 385 00:18:52,200 --> 00:18:52,720 Speaker 1: Leazei of. 386 00:18:52,840 --> 00:18:54,960 Speaker 3: Deutsche Bank, and I want to start thank you so 387 00:18:55,080 --> 00:18:57,159 Speaker 3: much for being here. Matt, I want to start with 388 00:18:57,200 --> 00:19:01,520 Speaker 3: your impression of how predictive to Danny's this PPI print 389 00:19:01,600 --> 00:19:02,639 Speaker 3: is for tomorrow's CPI. 390 00:19:02,960 --> 00:19:06,000 Speaker 10: Yeah, I would agree with Mike that not very Usually 391 00:19:06,000 --> 00:19:08,240 Speaker 10: what we look at are the few components that go 392 00:19:08,320 --> 00:19:11,120 Speaker 10: into PC the form the inflation gage that the FED 393 00:19:11,160 --> 00:19:15,200 Speaker 10: focus is on, so their portfolio management, healthcare, a few 394 00:19:15,200 --> 00:19:18,119 Speaker 10: of the other airfares or used car prices are most important. 395 00:19:18,320 --> 00:19:21,159 Speaker 10: I would downplay, you know, what we're seeing in the 396 00:19:21,160 --> 00:19:24,000 Speaker 10: headline or the core just for that reason. I think, 397 00:19:24,320 --> 00:19:25,560 Speaker 10: you know, we have to go through some of the details. 398 00:19:25,560 --> 00:19:26,880 Speaker 10: There are some reasons to think that some of those 399 00:19:26,880 --> 00:19:30,520 Speaker 10: components could have been stronger, so portfolio management. Inflation one 400 00:19:30,960 --> 00:19:32,720 Speaker 10: tends to lag the market. So the strength we had 401 00:19:32,720 --> 00:19:35,560 Speaker 10: in markets and prior months should actually lift that inflation component. 402 00:19:35,920 --> 00:19:39,199 Speaker 10: But I think ultimately as little feed through into how 403 00:19:39,200 --> 00:19:41,920 Speaker 10: we think about the CPI beyond those components that matter 404 00:19:41,960 --> 00:19:44,159 Speaker 10: for the pc I wouldn't change too much of how 405 00:19:44,200 --> 00:19:46,880 Speaker 10: we're thinking about the CPI tomorrow. But the market is lean, 406 00:19:47,040 --> 00:19:49,680 Speaker 10: I think in a very doughest direction from a CPI perspective. 407 00:19:49,760 --> 00:19:51,960 Speaker 10: You know, the market pricing is around a zero point 408 00:19:52,000 --> 00:19:55,520 Speaker 10: one percent core CPI print, below what consensus is expecting. 409 00:19:55,840 --> 00:19:59,280 Speaker 10: So the market is kind of anticipating soft inflation numbers 410 00:19:59,280 --> 00:20:00,800 Speaker 10: which allow the Fed begin to cut rates. 411 00:20:00,800 --> 00:20:03,080 Speaker 3: And this really is basically feeding into that kind of 412 00:20:03,119 --> 00:20:05,600 Speaker 3: coiled spring that we've got coming into tomorrow. In terms 413 00:20:05,720 --> 00:20:08,480 Speaker 3: of that dubvish positioning, Is there anything that you're seeing 414 00:20:08,480 --> 00:20:10,720 Speaker 3: in the data that should push back against that because 415 00:20:10,720 --> 00:20:12,760 Speaker 3: at one point you are more dubbish than the market 416 00:20:12,800 --> 00:20:14,159 Speaker 3: in terms of rate cut calls. 417 00:20:14,440 --> 00:20:16,440 Speaker 1: Now you're actually more hawkish. 418 00:20:16,119 --> 00:20:18,240 Speaker 3: Than the market with three rate cuts for the remainder 419 00:20:18,280 --> 00:20:20,800 Speaker 3: of this year. So is there anything in this data 420 00:20:20,920 --> 00:20:23,560 Speaker 3: that would give you pause before throwing your hat in 421 00:20:23,560 --> 00:20:24,439 Speaker 3: the ring and saying you know. 422 00:20:24,440 --> 00:20:25,280 Speaker 1: What, market? You're right? 423 00:20:25,880 --> 00:20:28,560 Speaker 10: Yeah, thinks changed quickly, you know, as you mentioned about 424 00:20:28,560 --> 00:20:30,800 Speaker 10: a month ago, we shifted to three twenty five basis 425 00:20:30,840 --> 00:20:32,640 Speaker 10: point back to back to back cuts and was viewed 426 00:20:32,640 --> 00:20:34,879 Speaker 10: as aggressive at that point in time. You know, I 427 00:20:34,880 --> 00:20:36,720 Speaker 10: think from the Fed, what we've heard from them is 428 00:20:37,200 --> 00:20:38,840 Speaker 10: wanting to kind of take a step back, be able 429 00:20:38,880 --> 00:20:40,560 Speaker 10: to see the data. 430 00:20:40,640 --> 00:20:40,800 Speaker 9: You know. 431 00:20:40,840 --> 00:20:42,639 Speaker 10: I think my read on the data is you have 432 00:20:42,680 --> 00:20:44,880 Speaker 10: a clear slowing, including in the labor market, but it's 433 00:20:44,880 --> 00:20:47,359 Speaker 10: not recessionary at this point in time. You still do 434 00:20:47,400 --> 00:20:49,760 Speaker 10: have inflation that's above target, but I think inflation risks 435 00:20:49,760 --> 00:20:51,560 Speaker 10: have really dissipated, and so I think the Fed should 436 00:20:51,560 --> 00:20:54,520 Speaker 10: be very comfortable cutting rates should they go by fifty 437 00:20:54,560 --> 00:20:56,680 Speaker 10: basis points. You know, the market has been priced kind 438 00:20:56,680 --> 00:20:58,639 Speaker 10: of fifty to fifty for that at this point in time, 439 00:20:58,920 --> 00:21:00,560 Speaker 10: I think the data will determine it. So if we 440 00:21:00,600 --> 00:21:02,840 Speaker 10: get confirmation in the next job support that the latest 441 00:21:02,880 --> 00:21:05,720 Speaker 10: weakness was real, then I think it could be quite 442 00:21:05,800 --> 00:21:07,800 Speaker 10: likely that the FED cuts by fifty basis points. If 443 00:21:07,840 --> 00:21:09,480 Speaker 10: you see a reversal of some of that weakness, which 444 00:21:09,520 --> 00:21:12,119 Speaker 10: is my baseline expectation, if you have the continer to 445 00:21:12,440 --> 00:21:14,840 Speaker 10: consumer continue to come in resilient, then I think that 446 00:21:14,880 --> 00:21:16,560 Speaker 10: the Fed can have a path here of going by 447 00:21:16,600 --> 00:21:18,080 Speaker 10: twenty five basis points at each meeting. 448 00:21:18,560 --> 00:21:20,359 Speaker 7: Can you just break down with the difference of going 449 00:21:20,359 --> 00:21:23,720 Speaker 7: twenty five and fifty is on impact? Is it signaling 450 00:21:23,840 --> 00:21:26,400 Speaker 7: or is there actual economic legs up that they give 451 00:21:26,440 --> 00:21:28,720 Speaker 7: the economy by going by fifty instead of twenty five. 452 00:21:28,800 --> 00:21:30,159 Speaker 10: Yeah, so at the moment, a lot of this is 453 00:21:30,160 --> 00:21:32,480 Speaker 10: already priced into the market, right, So two year yields 454 00:21:32,480 --> 00:21:35,760 Speaker 10: are reflecting an aggressive rate cutting cycle, a little bit 455 00:21:35,760 --> 00:21:38,360 Speaker 10: more aggressive than we're anticipating. I think markets are reflecting 456 00:21:38,400 --> 00:21:40,280 Speaker 10: that at this point in time. So if the Fed 457 00:21:40,280 --> 00:21:42,600 Speaker 10: were to go by twenty five basis point increments rather 458 00:21:42,640 --> 00:21:46,840 Speaker 10: than that, yields would rise, maybe you see equities come. 459 00:21:46,680 --> 00:21:49,120 Speaker 9: Down a little bit. But I'm skeptical that the Fed 460 00:21:49,160 --> 00:21:49,480 Speaker 9: being a. 461 00:21:49,440 --> 00:21:52,600 Speaker 10: Little bit more hawkish is going to tighten financial conditions aggressively, 462 00:21:52,960 --> 00:21:54,560 Speaker 10: And the reason is the only way that they would 463 00:21:54,600 --> 00:21:56,639 Speaker 10: do that is if the economy is looking resilient, and 464 00:21:56,720 --> 00:21:59,400 Speaker 10: I think the market is highly leveraged to negative news 465 00:21:59,400 --> 00:22:01,280 Speaker 10: on the economy, as I saw with the jobs report. 466 00:22:01,920 --> 00:22:03,840 Speaker 9: Anything that looks like it's a downside risk. 467 00:22:04,119 --> 00:22:05,720 Speaker 10: So I think if we get resilient news on the 468 00:22:05,840 --> 00:22:09,080 Speaker 10: labor market and consumer financial conditions can remain easy even 469 00:22:09,119 --> 00:22:11,040 Speaker 10: if the FED only goes by twenty five basis point. 470 00:22:10,840 --> 00:22:14,320 Speaker 7: Clip, are you surprised or even maybe concerned the Fed 471 00:22:14,359 --> 00:22:18,600 Speaker 7: hasn't given themselves that optionality, announced that optionality of doing 472 00:22:18,640 --> 00:22:21,320 Speaker 7: fifty basis points that at the moment they're still discussing 473 00:22:21,400 --> 00:22:23,120 Speaker 7: whether or not to do even just twenty five. 474 00:22:23,560 --> 00:22:25,920 Speaker 10: Yeah, I think you know what we will often hear 475 00:22:25,960 --> 00:22:28,080 Speaker 10: they make decisions at a meeting, and it's only for 476 00:22:28,160 --> 00:22:30,879 Speaker 10: that meeting. I think what we've heard from FED officials 477 00:22:31,200 --> 00:22:33,479 Speaker 10: since the jobs report and since market volatility has been 478 00:22:33,560 --> 00:22:36,880 Speaker 10: entirely appropriate, which has been Yes, there was some weakness 479 00:22:37,040 --> 00:22:40,040 Speaker 10: in the labor market data, but they are not overly 480 00:22:40,040 --> 00:22:43,160 Speaker 10: worried about it. They're not worried that it was signaling recession. 481 00:22:43,400 --> 00:22:44,960 Speaker 10: I think what they were seeing in markets, they thought 482 00:22:45,000 --> 00:22:47,960 Speaker 10: was being driven by technicals and positioning in a nonwind 483 00:22:48,000 --> 00:22:50,160 Speaker 10: of positioning, and so I far I think that's played out, 484 00:22:50,240 --> 00:22:52,240 Speaker 10: and the market went from pricing over one hundred and 485 00:22:52,240 --> 00:22:54,679 Speaker 10: twenty five basis points this year down to less than 486 00:22:54,680 --> 00:22:56,360 Speaker 10: one hundred. And if you get good data, I think 487 00:22:56,359 --> 00:22:58,639 Speaker 10: it'll give them the optionality. So I think they're in 488 00:22:58,640 --> 00:23:00,920 Speaker 10: a fine place at this point time, and chair pal 489 00:23:00,920 --> 00:23:04,159 Speaker 10: at Jackson Hole can help guide guide us on how 490 00:23:04,160 --> 00:23:04,639 Speaker 10: they're thinking. 491 00:23:04,760 --> 00:23:06,320 Speaker 1: Matt, you say the consumer's resilient. 492 00:23:06,400 --> 00:23:08,320 Speaker 6: What do you make of what Home Depot said this morning, 493 00:23:08,320 --> 00:23:11,120 Speaker 6: which is that they're in this deferral mindset that they're 494 00:23:11,160 --> 00:23:13,040 Speaker 6: waiting to make big purchases. 495 00:23:13,400 --> 00:23:16,920 Speaker 10: Yeah, I think resilience is definitely different than kind of 496 00:23:17,000 --> 00:23:19,919 Speaker 10: robustness or strength, and so I think we're coming from 497 00:23:19,960 --> 00:23:22,520 Speaker 10: a consumer environment where you just had a very robust 498 00:23:22,520 --> 00:23:24,679 Speaker 10: consumer over the course of twenty twenty three, and it 499 00:23:24,720 --> 00:23:26,520 Speaker 10: was across the income distribution. It was kind of hard 500 00:23:26,520 --> 00:23:29,040 Speaker 10: to find pockets of weakness. You now do have some 501 00:23:29,080 --> 00:23:31,800 Speaker 10: pockets of weakness. You do have some pockets of softness. 502 00:23:32,119 --> 00:23:34,399 Speaker 10: I think it's more reflecting of a normal type of 503 00:23:34,400 --> 00:23:37,280 Speaker 10: an environment, you know that said the labor market data 504 00:23:37,320 --> 00:23:40,400 Speaker 10: does have some risks to it. Job gains did slow, 505 00:23:40,440 --> 00:23:42,560 Speaker 10: we think some of it was due to hurricane effects, 506 00:23:42,560 --> 00:23:45,320 Speaker 10: but they have the uneployment rate has risen up to 507 00:23:45,359 --> 00:23:48,439 Speaker 10: four point three percent, and job gains remain resilient only 508 00:23:48,480 --> 00:23:51,159 Speaker 10: because layoffs remain low. So if there are risks that 509 00:23:51,240 --> 00:23:53,320 Speaker 10: I am looking at, it is that that layoff picture 510 00:23:53,400 --> 00:23:55,919 Speaker 10: changes and that would clearly undermine the consumer in a 511 00:23:55,920 --> 00:23:58,119 Speaker 10: way that turns it into it kind of a more 512 00:23:58,160 --> 00:23:58,920 Speaker 10: negative dynamic. 513 00:23:59,000 --> 00:24:00,560 Speaker 6: If we are now at full three percent of the 514 00:24:00,640 --> 00:24:02,399 Speaker 6: uneployment rate is basically what the Fed wants to be 515 00:24:02,440 --> 00:24:04,440 Speaker 6: at the end of the year. Does that in itself 516 00:24:04,520 --> 00:24:06,520 Speaker 6: signal that they are behind the curve. 517 00:24:06,920 --> 00:24:08,440 Speaker 9: I don't think it's signals that they're behind the curve. 518 00:24:08,480 --> 00:24:11,000 Speaker 10: I think it's signals that their dot plot in June 519 00:24:11,400 --> 00:24:13,440 Speaker 10: is not appropriate at this point in time. So when 520 00:24:13,440 --> 00:24:16,159 Speaker 10: they set that forecast with that unemployment rate, they had 521 00:24:16,160 --> 00:24:18,120 Speaker 10: one rate cut this year. I think that no longer 522 00:24:18,800 --> 00:24:21,360 Speaker 10: is a reasonable view at this point. I think it's 523 00:24:21,359 --> 00:24:24,080 Speaker 10: more likely that the debate is between going twenty five 524 00:24:24,160 --> 00:24:25,960 Speaker 10: or fifty basis points, and I think that will be 525 00:24:26,000 --> 00:24:28,680 Speaker 10: a real debate. I think it'll be dictated by the 526 00:24:28,760 --> 00:24:32,200 Speaker 10: data I honestly think that there's compelling arguments on both sides. 527 00:24:32,240 --> 00:24:33,240 Speaker 9: They are restrictive. 528 00:24:33,720 --> 00:24:35,680 Speaker 10: The inflation data is telling them that there's not as 529 00:24:35,760 --> 00:24:39,040 Speaker 10: much upside inflation risks, and then it depends on whether 530 00:24:39,080 --> 00:24:40,960 Speaker 10: not the economy is actually as resilient as we think. 531 00:24:41,040 --> 00:24:42,200 Speaker 10: If it is, then I think that they should go 532 00:24:42,280 --> 00:24:44,200 Speaker 10: by twenty five basis points, and I think they probably will. 533 00:24:44,600 --> 00:24:46,800 Speaker 10: But if we get kind of confirming evidence on the 534 00:24:46,880 --> 00:24:48,800 Speaker 10: labor market front, that gives them scope to go more. 535 00:24:48,720 --> 00:24:51,480 Speaker 3: Aggressively, giving some credence to that fifty basis point a 536 00:24:51,640 --> 00:24:52,640 Speaker 3: rate cut thesis. 537 00:24:52,800 --> 00:24:54,520 Speaker 1: If you are just joining us, we did just. 538 00:24:54,480 --> 00:24:57,719 Speaker 3: Get that PPI number and did come in softer than 539 00:24:57,800 --> 00:25:02,080 Speaker 3: expected inflation, then not necessarily the concern and opening the 540 00:25:02,080 --> 00:25:04,560 Speaker 3: door really to the Fed to cut rates perhaps even 541 00:25:04,560 --> 00:25:08,040 Speaker 3: more aggressively. Zero point one percent was PPI final demand 542 00:25:08,160 --> 00:25:10,679 Speaker 3: versus the expectation of zero point two percent. 543 00:25:10,720 --> 00:25:12,639 Speaker 1: That leaves the year over year final. 544 00:25:12,400 --> 00:25:15,680 Speaker 3: Demand at two point two percent versus the expected two 545 00:25:15,680 --> 00:25:16,679 Speaker 3: point three percent. 546 00:25:16,760 --> 00:25:19,600 Speaker 1: Pretty much across the board, it seems softer. 547 00:25:19,800 --> 00:25:22,639 Speaker 3: What you see in markets is pretty much a collective cheer. 548 00:25:22,680 --> 00:25:26,119 Speaker 3: You see across the board, stocks rally much more aggressively 549 00:25:26,200 --> 00:25:28,639 Speaker 3: led by the Nasdaq one hundred. 550 00:25:28,680 --> 00:25:30,160 Speaker 1: You also have bonds. 551 00:25:29,880 --> 00:25:32,240 Speaker 3: Rallying, as you see two year yields fall below four 552 00:25:32,320 --> 00:25:35,120 Speaker 3: percent solidly. So although we're tracing some of the earlier 553 00:25:35,200 --> 00:25:37,800 Speaker 3: rally that we saw three ninety six sixty eight, it's 554 00:25:37,800 --> 00:25:40,160 Speaker 3: pretty much across the board. The biggest bid though into 555 00:25:40,160 --> 00:25:42,760 Speaker 3: the two year, and if you bleed that through foreign exchange, 556 00:25:42,760 --> 00:25:46,480 Speaker 3: you see the dollar softer as you expect some sort 557 00:25:46,560 --> 00:25:49,600 Speaker 3: of rate cutting cycle to commend, certainly in September. A 558 00:25:49,680 --> 00:25:52,600 Speaker 3: question now the depth of it, the yeurogaining versus the 559 00:25:52,640 --> 00:25:55,359 Speaker 3: dollar one oh nine forty five. Michael mckeis still with 560 00:25:55,480 --> 00:25:59,080 Speaker 3: us here. Our economics corresponded, what are you seeing in 561 00:25:59,080 --> 00:25:59,760 Speaker 3: the details of this? 562 00:26:00,560 --> 00:26:02,719 Speaker 11: Well, the big change, as I mentioned earlier, was that 563 00:26:02,800 --> 00:26:05,760 Speaker 11: services prices went down, while goods prices went up, largely 564 00:26:06,040 --> 00:26:09,600 Speaker 11: because of gasoline, but we also saw passenger car prices 565 00:26:09,640 --> 00:26:14,080 Speaker 11: fall two tents. Health Care prices were basically flat, insurance 566 00:26:14,119 --> 00:26:21,080 Speaker 11: prices basically flat. The big increase in the numbers came 567 00:26:21,119 --> 00:26:26,959 Speaker 11: from portfolio management. Matt Lizzetti's colleagues are causing inflation at 568 00:26:26,960 --> 00:26:30,959 Speaker 11: this point. Portfolio management prices rose two point three percent, 569 00:26:31,440 --> 00:26:34,160 Speaker 11: one of the biggest moves in the whole PPI. So 570 00:26:34,960 --> 00:26:37,320 Speaker 11: the fact that you get paid either. 571 00:26:37,160 --> 00:26:39,760 Speaker 9: Way works out well. 572 00:26:39,760 --> 00:26:41,720 Speaker 1: Melazetia is still with us and can responding. What do 573 00:26:41,720 --> 00:26:42,640 Speaker 1: you make of the details. 574 00:26:42,840 --> 00:26:45,720 Speaker 10: Yeah, so portfolio maagement rose as I kind of signaled. 575 00:26:45,760 --> 00:26:47,720 Speaker 10: I think actually, I think maybe the most important thing 576 00:26:47,800 --> 00:26:52,200 Speaker 10: was healthcare being flat. So healthcare in the PC is 577 00:26:52,240 --> 00:26:52,920 Speaker 10: twenty percent of. 578 00:26:52,840 --> 00:26:53,720 Speaker 9: The core PC index. 579 00:26:53,760 --> 00:26:56,400 Speaker 10: It's basically as important as rent and know we are. 580 00:26:56,840 --> 00:26:59,600 Speaker 10: We've been signaling some upside risks to that because it 581 00:26:59,680 --> 00:27:02,520 Speaker 10: tends to be leveraged on healthcare wage growth, and that's 582 00:27:02,520 --> 00:27:05,239 Speaker 10: been very strong. You got a soft print there, so 583 00:27:05,280 --> 00:27:07,199 Speaker 10: that is as a read through to core PC. It's 584 00:27:07,240 --> 00:27:09,000 Speaker 10: a very good indicator for the Fed. 585 00:27:09,520 --> 00:27:11,080 Speaker 7: Matt. Just while you've been talking, I've been looking at 586 00:27:11,080 --> 00:27:13,920 Speaker 7: the interest rate probability tick lower and lower. I mean 587 00:27:13,960 --> 00:27:15,960 Speaker 7: not a dramatic move, but you were saying it's about 588 00:27:15,960 --> 00:27:18,160 Speaker 7: fifty to fifty. It's now more than fifty percent chance 589 00:27:18,160 --> 00:27:19,640 Speaker 7: that they go fifty basis points. 590 00:27:19,440 --> 00:27:20,000 Speaker 9: The next meeting. 591 00:27:20,400 --> 00:27:22,840 Speaker 7: Are we putting too much weight on each individual data 592 00:27:22,880 --> 00:27:24,359 Speaker 7: point as this market rolls on? 593 00:27:25,080 --> 00:27:27,680 Speaker 10: Yeah, you know, the market is highly sensitive to each 594 00:27:27,760 --> 00:27:28,200 Speaker 10: data point. 595 00:27:28,200 --> 00:27:30,160 Speaker 9: I think just seeing some big moves. 596 00:27:30,200 --> 00:27:32,240 Speaker 10: It doesn't take much to move, you know, by ten 597 00:27:32,280 --> 00:27:34,680 Speaker 10: percent for a cut. It's only two BIPs on in 598 00:27:34,760 --> 00:27:35,640 Speaker 10: terms of the pricing. 599 00:27:36,560 --> 00:27:38,800 Speaker 9: But you know, it makes sense. We're in an uncertain. 600 00:27:38,520 --> 00:27:40,679 Speaker 10: Environment at this point in time, and the FED is 601 00:27:40,680 --> 00:27:44,160 Speaker 10: providing little for guidance. I think appropriately, if the FED 602 00:27:44,200 --> 00:27:46,320 Speaker 10: is providing little for guidance, then it means the FED 603 00:27:46,359 --> 00:27:48,680 Speaker 10: is data dependent and we should be sensitive to those moves. 604 00:27:49,359 --> 00:27:51,840 Speaker 10: I do think the healthcare component here is important. That 605 00:27:51,920 --> 00:27:55,280 Speaker 10: being flat rather than strong is a Dubbs signal for 606 00:27:55,280 --> 00:27:55,800 Speaker 10: the core PC. 607 00:27:56,000 --> 00:27:57,879 Speaker 9: We'll have to wait what we get from the CPI tomorrow. 608 00:27:57,920 --> 00:28:00,199 Speaker 3: Mat Is that a really really smart Thank you so much, 609 00:28:00,240 --> 00:28:01,960 Speaker 3: As always, Mount Assadi of George. 610 00:28:01,760 --> 00:28:06,159 Speaker 2: Bag This is the Bloomberg Surveillance Podcast, bringing you the 611 00:28:06,200 --> 00:28:09,560 Speaker 2: best in markets, economics, angio politics. You can watch the 612 00:28:09,560 --> 00:28:12,600 Speaker 2: show live on Bloomberg TV weekday mornings from six am 613 00:28:12,720 --> 00:28:15,879 Speaker 2: to nine am Eastern. 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