WEBVTT - Oil, EVs, Arm IPO, and a Government Shutdown (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.200 --> 0:00:23.959 Let's head down to Washington, DC. Nathan Dean. It's his 0:00:24.200 --> 0:00:28.040 task to follow and analyze all the shenanigans coming from 0:00:28.080 --> 0:00:30.560 our good friends in the halls of Congress. He's a 0:00:30.640 --> 0:00:35.839 senior analysts for US government for Bloomberg Intelligence. So, Nathan, 0:00:36.000 --> 0:00:38.800 you're joining us by zoom We appreciate that. My question 0:00:38.960 --> 0:00:41.000 is is this government going to be able to fund 0:00:41.000 --> 0:00:42.519 itself or we're going to get a shutdown at the 0:00:42.560 --> 0:00:44.640 end of this month. Can you give us a timeline 0:00:44.640 --> 0:00:45.680 and kind of where we are here? 0:00:46.320 --> 0:00:48.760 Yeah, so you know, the government's only back for you know, 0:00:48.840 --> 0:00:51.040 eight to ten days, you know, working days until this 0:00:51.360 --> 0:00:54.120 deadline of September thirtieth. And like you said, you know, 0:00:54.160 --> 0:00:56.040 we it's highly likely that we're going to end up 0:00:56.080 --> 0:00:58.880 with a government shutdown. Now, whether this is a thirty 0:00:58.960 --> 0:01:02.720 day shutdown. Look, under President Trump's administration probably not be 0:01:02.920 --> 0:01:03.360 the case. 0:01:03.440 --> 0:01:03.600 You know. 0:01:03.600 --> 0:01:06.480 The Speaker McCarthy says that he wants to kick the 0:01:06.480 --> 0:01:09.440 can to early December to give more time over negotiations. 0:01:09.680 --> 0:01:10.960 But the note that we just put out on the 0:01:11.000 --> 0:01:13.360 terminal this morning essentially states that if you do have 0:01:13.400 --> 0:01:17.160 a shutdown, both markets and defense contractors shouldn't be all 0:01:17.200 --> 0:01:20.479 that concerned. You know, during that thirty days shutdown under 0:01:20.520 --> 0:01:23.360 President Trump, the markets didn't react all that well in 0:01:23.400 --> 0:01:25.880 the first couple of days. But then once realized, once 0:01:25.920 --> 0:01:29.760 people realize the economic you know, impact isn't all that great, 0:01:30.120 --> 0:01:33.680 markets pretty much just moved beyond. Same thing with defense contractors. 0:01:33.720 --> 0:01:36.120 If you're Boeing or you know, raytheon and so forth 0:01:36.160 --> 0:01:39.200 like that, you know your contracts are already funded in. 0:01:39.240 --> 0:01:41.440 They're funded in on a long term basis. So the 0:01:41.480 --> 0:01:44.320 real big impact for a government shutdown, if it lasts 0:01:44.720 --> 0:01:46.800 more than a week or two, is that folks like 0:01:46.840 --> 0:01:49.200 me in Washington, DC can't take their kids to the zoo. 0:01:49.560 --> 0:01:53.040 Well what about federal employees? Will they still get paychecks 0:01:53.080 --> 0:01:54.880 every two weeks or however that works. I mean, if 0:01:54.880 --> 0:01:56.800 you work at the euro of Labor, and statistics putting 0:01:56.840 --> 0:01:59.240 together the CPI, for example, are you still going to 0:01:59.280 --> 0:01:59.680 get paid? 0:02:00.360 --> 0:02:02.400 So what they do is they deem employees to be 0:02:02.520 --> 0:02:05.640 essential and non essential. If you're an essential play it's 0:02:05.640 --> 0:02:07.760 about fifteen percent of the US workforce. 0:02:07.800 --> 0:02:09.480 Obviously, that's right, people. 0:02:09.320 --> 0:02:12.240 Only fifteen percent of the people that we employ are essential. 0:02:12.560 --> 0:02:15.560 Everybody else we could do without exactly. 0:02:15.680 --> 0:02:15.760 So. 0:02:15.880 --> 0:02:18.520 But you know, what's what's happened in the past is 0:02:18.520 --> 0:02:22.440 when the shutdown is over, the Congress will actually pass 0:02:22.440 --> 0:02:26.080 a resolution or pass a bill that provides retroactive back pay. 0:02:26.240 --> 0:02:27.960 So if you're shut down for a couple of weeks, 0:02:28.200 --> 0:02:30.200 obviously that's not going to be good if you're living 0:02:30.200 --> 0:02:32.360 paycheck to paycheck, but you will get that pay back. 0:02:32.680 --> 0:02:34.920 That is not the case for smaller contractors. 0:02:35.160 --> 0:02:38.360 So if you work for a contracting agency and your agency, 0:02:39.240 --> 0:02:41.360 you know, decides to shut down all of a sudden, 0:02:41.880 --> 0:02:43.600 you're not going to get that pay back unless the 0:02:43.600 --> 0:02:45.079 contractor and self pays you back. 0:02:45.200 --> 0:02:47.120 You're not going to get any recourse from the government. 0:02:47.360 --> 0:02:47.520 You know. 0:02:47.600 --> 0:02:49.600 I should also note that, you know, even though I 0:02:49.600 --> 0:02:51.960 took light of the situation with the Zoo, certain things 0:02:52.000 --> 0:02:55.000 like economic releases BLS, you know, so forth like that 0:02:55.240 --> 0:02:58.360 those eventually could be delayed, which and then also could 0:02:58.360 --> 0:03:01.280 cause some you know, can fusion and disruption to the 0:03:01.280 --> 0:03:02.960 traders that are relying on that information. 0:03:03.520 --> 0:03:06.000 Well, what about these things you guys, don't Washington DC 0:03:06.240 --> 0:03:09.239 called continuing resolutions or cr can't we use one of 0:03:09.240 --> 0:03:10.240 those thing that jigs? 0:03:10.800 --> 0:03:11.040 Yeah? 0:03:11.080 --> 0:03:12.960 Absolutely, And that's what I think is gonna happen here. 0:03:13.040 --> 0:03:16.800 You know, the Approachriate appropriations process is a twelve bill process, 0:03:17.040 --> 0:03:19.000 and they've only got an agreement on one. They have 0:03:19.040 --> 0:03:21.520 to pass eleven essentially in the next month. So what 0:03:21.520 --> 0:03:23.800 they're gonna do is they're gonna hit this continuing resolution. 0:03:24.200 --> 0:03:27.160 The challenge is is that Speaker McCarthy has had several 0:03:27.200 --> 0:03:29.840 people in the House Freedom Caucus just say, look, I'm 0:03:29.880 --> 0:03:32.480 not gonna vote for any continuing resolution unless you do 0:03:32.560 --> 0:03:35.760 fund the FBI or you you know, implement any of 0:03:35.760 --> 0:03:39.720 these policies. That has no chance whatsoever with President Biden 0:03:39.960 --> 0:03:43.080 in the Senate under Democratic control. So what's gonna happen 0:03:43.120 --> 0:03:45.360 here is Speaker McCarthy's in a hard place. He's got 0:03:45.400 --> 0:03:48.360 to figure out a way to pass up continuing resolution 0:03:48.880 --> 0:03:52.520 probably to early December, maybe next year. But probably early 0:03:52.560 --> 0:03:56.320 December using Democratic support, and that's just something that he's 0:03:56.360 --> 0:03:59.080 not gonna be able to get to until the last moment. 0:03:59.320 --> 0:04:01.760 So you're looking at either a shutdown will occur, you know, 0:04:01.840 --> 0:04:05.400 I'm guessing less than five days, but you know, negotiations 0:04:05.440 --> 0:04:07.480 are gonna go way up to the high wire and 0:04:07.840 --> 0:04:10.480 you're gonna see constant headlines over the next two to 0:04:10.520 --> 0:04:14.360 three weeks of shutdown inncs, shutdown angst, and more shutdown ancs. 0:04:14.360 --> 0:04:16.000 It's just kooky to me how much the far right 0:04:16.040 --> 0:04:18.080 and the far left have in common. You know, the 0:04:18.760 --> 0:04:21.440 lefties wanted to defund the police and now the Freedom 0:04:21.480 --> 0:04:24.039 Caucus wants to defund the FBI exactly. I mean, do 0:04:24.080 --> 0:04:25.839 we not need law enforcement in this country? 0:04:25.880 --> 0:04:27.680 I thought the FBI were the good guys, all right? 0:04:27.720 --> 0:04:30.920 What else besides the shutdown is Congress focused on here 0:04:30.960 --> 0:04:33.520 we go. They're gonna actually work for a solid eight days. 0:04:33.720 --> 0:04:35.240 Good for them, But what else do they have to 0:04:35.240 --> 0:04:35.760 get done here? 0:04:36.600 --> 0:04:39.239 So you know, you're gonna see a lot of negotiations 0:04:39.320 --> 0:04:42.320 or at least you know, we've heard the House Financial 0:04:42.320 --> 0:04:44.960 Services Chairman Patrick man Henry say that he wants to 0:04:44.960 --> 0:04:48.280 try and schedule a vote on crypto legislation, I'm not sure, 0:04:48.360 --> 0:04:50.240 and many of that's gonna get there in September. I mean, 0:04:50.360 --> 0:04:54.120 you have to reauthorize the FAA. The Farm Bill expiration 0:04:54.240 --> 0:04:56.600 is also in September thirtieth, So for the rest of 0:04:56.640 --> 0:04:59.480 the month, you're gonna see a lot of people try. 0:04:59.240 --> 0:05:01.800 Things, but it's going to be focused on this government shutdown. 0:05:02.040 --> 0:05:02.240 Now. 0:05:02.440 --> 0:05:04.480 One thing that came out last week that was interesting 0:05:04.560 --> 0:05:07.320 is that Bloomberg News reported that the Department of Health 0:05:07.360 --> 0:05:11.159 and Human Services is going to recommend changing marijuana from 0:05:11.160 --> 0:05:12.720 Schedule one to Schedule three. 0:05:13.520 --> 0:05:14.600 We are good, you know. 0:05:14.800 --> 0:05:17.200 That is a big deal for the marijuana industry, and 0:05:17.279 --> 0:05:19.680 so we're gonna be looking to see what steps come 0:05:19.720 --> 0:05:21.800 from the DEEA. They are the ones that are gonna 0:05:21.839 --> 0:05:24.120 have to make this decision, and really we're looking to 0:05:24.120 --> 0:05:26.760 see if they get this done in twenty twenty four 0:05:26.960 --> 0:05:29.560 or is this going to be a multi year process. 0:05:29.600 --> 0:05:31.240 That's really key for the marijuana stocks. 0:05:31.440 --> 0:05:34.920 Schedule one drugs include like heroin and Fenton myl and 0:05:34.960 --> 0:05:37.000 that's where marijuana is, and that's that's where they have 0:05:37.200 --> 0:05:40.840 had weed for decades now, you know, because you know 0:05:41.040 --> 0:05:45.120 Item nine, all right, So that's something that's probably not 0:05:45.120 --> 0:05:48.760 gonna happen salt, any any movement on salt at all. Nathan, 0:05:48.800 --> 0:05:51.160 I got to always ask ask you the state and 0:05:51.240 --> 0:05:52.760 local tax deduction question. 0:05:53.600 --> 0:05:56.000 Yeah, you know, I hit my phone always before these 0:05:56.040 --> 0:05:57.880 hits to see what's gonna happen with the salt folks 0:05:57.920 --> 0:05:58.440 around town. 0:05:58.480 --> 0:06:00.440 But this is laying the work. 0:06:00.480 --> 0:06:03.360 Look, the salt deduction is going to expire when the 0:06:03.400 --> 0:06:06.279 Trump tax cuts expire. That's not going to be that's 0:06:06.279 --> 0:06:08.760 actually coming up fairly soon. But this is one of 0:06:08.760 --> 0:06:11.440 those situations where you have lawmakers from New New York 0:06:11.440 --> 0:06:13.800 and New Jersey going out there and saying, look, we're 0:06:13.800 --> 0:06:16.960 going to fight tooth and nail to try and get 0:06:17.000 --> 0:06:18.919 salt back. I mean they're even saying we would just 0:06:18.960 --> 0:06:22.640 love to take a pinch of salt. But ultimately what's 0:06:22.680 --> 0:06:25.480 gonna happen here is if you're going to you know, 0:06:26.040 --> 0:06:28.680 the salt deduction brought a lot of money back to 0:06:28.680 --> 0:06:30.920 the government, or getting rid of the salt deduction brought 0:06:30.960 --> 0:06:32.400 a lot of money back to the government. 0:06:32.640 --> 0:06:34.240 That is money that can be used elsewhere. 0:06:34.279 --> 0:06:36.200 And there are a lot of lawmakers like, ooh, we 0:06:36.320 --> 0:06:37.880 like this New York New Jersey money. 0:06:38.160 --> 0:06:39.599 We can use this for something else. 0:06:40.000 --> 0:06:42.200 So we're just I think the New York and New 0:06:42.279 --> 0:06:44.880 Jersey lawmakers, the Salt Caucus, if you will, are just 0:06:44.960 --> 0:06:48.400 planting the seeds so that when these negotiations come back 0:06:48.440 --> 0:06:51.000 closer to the expiration date, you know, they can fight 0:06:51.040 --> 0:06:53.280 tooth and nail at that point to get some relief 0:06:53.320 --> 0:06:55.800 back to the you know, the the homeowners of the 0:06:55.800 --> 0:06:56.560 New York City area. 0:06:56.720 --> 0:06:59.039 Is this is this yet another issue on which AOC 0:06:59.240 --> 0:07:01.600 and Marjorie Taylor Green or in agreement. 0:07:02.720 --> 0:07:04.080 You know, this is going to be one of those 0:07:04.080 --> 0:07:06.480 issues where it's essentially New York, New Jersey, California, and 0:07:06.520 --> 0:07:08.960 Illinois against the world against everybody. 0:07:09.000 --> 0:07:11.560 All right, all right, I understand we've got some generals 0:07:11.640 --> 0:07:14.840 and some admirals that need to be approved for senior 0:07:14.920 --> 0:07:18.000 leadership positions. I thought this stuff just gets done like 0:07:18.080 --> 0:07:19.240 rubber stamp. What's going on? 0:07:20.000 --> 0:07:22.800 So this is coming out of Alabama. This is Senator Tubberville, 0:07:22.800 --> 0:07:26.240 you know, coach, you know, of Auburn. He's actually holding 0:07:26.360 --> 0:07:32.320 up these promotions in response to a federal policy related 0:07:32.360 --> 0:07:35.280 to abortion. And this is a classic standoff between the 0:07:35.320 --> 0:07:38.600 White House and one senator. And so you know, we've 0:07:38.600 --> 0:07:41.200 seen statements from Bloomberg News, you know, their interviews with 0:07:41.280 --> 0:07:44.960 other Republican senators. They wish that Senator Tuberville wasn't doing this. 0:07:45.520 --> 0:07:47.600 But this is just a standoff that's going to continue. 0:07:47.680 --> 0:07:50.640 And you know, we've seen other statements from both the 0:07:50.640 --> 0:07:54.239 Department of Defense and so forth that you know, American 0:07:54.280 --> 0:07:55.440 security could be harmed. 0:07:55.480 --> 0:07:57.600 But I don't think we've seen any end in sight. 0:07:57.680 --> 0:07:59.440 Both sides are pretty ducked in and so this is 0:07:59.480 --> 0:08:02.280 just one of those is where I'm not exactly sure 0:08:02.280 --> 0:08:03.840 if there's a resolution anytime soon. 0:08:04.560 --> 0:08:07.720 I mean, poor Nathan Dean's got to analyze and focus 0:08:07.760 --> 0:08:09.640 on Congress like for a living. 0:08:10.080 --> 0:08:11.920 Yeah, that is, and a lot of other stuff, right, 0:08:11.960 --> 0:08:15.000 I mean, the Washington DC. The weed decision doesn't come 0:08:15.000 --> 0:08:18.080 from Congress. That's first gonna come from. Who's the weed 0:08:18.080 --> 0:08:20.160 decision come from? If they push it back to schedule 0:08:20.200 --> 0:08:20.960 three d DA? 0:08:21.080 --> 0:08:24.120 Right, the DA? Yeah, all right, he's got. 0:08:23.920 --> 0:08:26.040 To watch all those agencies. He's gotta be careful. 0:08:26.120 --> 0:08:29.880 You know, the FBI might be defunded, yep, exactly. 0:08:29.280 --> 0:08:31.680 Who knows? All right, Nathan, it's your you got to 0:08:31.720 --> 0:08:34.640 deal with this stuff. We appreciate it. You're demand Nathan Dean, 0:08:34.880 --> 0:08:38.000 senior policy analysts. He covers all the US government stuff 0:08:38.120 --> 0:08:40.680 for Bloomberg Intelligence. He is our go to person for 0:08:40.760 --> 0:08:43.160 all you know, kind of how the sausage is made 0:08:43.160 --> 0:08:43.680 down there. 0:08:43.559 --> 0:08:46.280 With you're listening to the team. 0:08:46.640 --> 0:08:50.040 Ken's are Live program Bloomberg Markets weekdays at ten am 0:08:50.080 --> 0:08:53.480 Eastern on Bloomberg dot com, the iHeartRadio app and the 0:08:53.480 --> 0:08:56.520 Bloomberg Business app, or listen on demand wherever you get 0:08:56.559 --> 0:08:57.480 your podcasts. 0:09:00.080 --> 0:09:02.880 Let's talk global economics year. We're gonna got it from China, 0:09:03.120 --> 0:09:04.800 might head over to Europe. Who knows where else? 0:09:04.840 --> 0:09:05.080 Will go? 0:09:05.160 --> 0:09:07.880 Eddie vnderwaldt you can go anywhere. He is a deputy 0:09:07.920 --> 0:09:13.040 Managing Deputy Managing editor of Market's Live team from Bloomberg News. 0:09:13.080 --> 0:09:14.480 I want to as him about bitcoin first. 0:09:14.920 --> 0:09:19.280 So Eddie is an expert on crypto as well. And Eddie, 0:09:19.320 --> 0:09:22.080 you know, I was off last week, but I still 0:09:22.160 --> 0:09:26.240 read the news and I thought it was so exciting 0:09:26.280 --> 0:09:32.080 for crypto when we found the Grayscale SEC decision overturned 0:09:32.080 --> 0:09:34.400 by an appeals court. So I thought, man, this is 0:09:34.720 --> 0:09:38.560 great news. Bitcoin spot, bitcoin ETFs are happening. I'm sure 0:09:38.559 --> 0:09:41.200 that the underlying ASCID is surgeon. I come back in 0:09:41.240 --> 0:09:43.360 this morning to see it under twenty six thousand. 0:09:43.520 --> 0:09:46.440 What gives Bigcore. 0:09:46.080 --> 0:09:49.720 Really is struggling, And it's really fascinating to see this happen, 0:09:49.800 --> 0:09:52.360 right because not only did you have that, you're also 0:09:52.400 --> 0:09:56.280 coming towards the harving of supply next year. Every four 0:09:56.360 --> 0:09:59.160 years or so, they have the amount of output in 0:09:59.240 --> 0:10:01.240 the amount of coin. And if you see that, you 0:10:01.360 --> 0:10:04.600 also see an ETF launch bringing in more retail investors, 0:10:04.600 --> 0:10:07.480 making it easier for people to invest. Bitcoin really should 0:10:07.559 --> 0:10:10.400 be garnering some momentum going into next year, but it 0:10:10.559 --> 0:10:12.760 just isn't. And I think part of the reason is 0:10:13.000 --> 0:10:16.880 that we are seeing higher real interest rates, right, We 0:10:16.960 --> 0:10:20.080 are seeing interest rates pushing higher, and therefore, you know, 0:10:20.160 --> 0:10:23.720 people probably don't have as much speculative money lying around 0:10:24.000 --> 0:10:27.280 yet are there speculative assets like you know, your your 0:10:27.280 --> 0:10:30.200 bids on Nvidia and so on are really doing well. 0:10:30.360 --> 0:10:33.120 So maybe it's a case of not so much that 0:10:33.640 --> 0:10:35.640 you know that that people don't have the money, but 0:10:35.640 --> 0:10:37.880 but perhaps a little bit more that they that the 0:10:37.920 --> 0:10:41.560 AI story has taken the shine off of cryptocurrencies. I 0:10:41.559 --> 0:10:44.480 think AI is the new shiny thing, and that's where 0:10:44.480 --> 0:10:45.840 investor money is going. 0:10:46.080 --> 0:10:48.640 That's interesting take and thought about that, but that probably 0:10:48.679 --> 0:10:50.800 makes a lot of sense. All right, Eddie, let's I 0:10:50.840 --> 0:10:54.000 want to just go to China here. How concerned are you? 0:10:54.120 --> 0:10:58.600 How concerned should the global economy be about just it 0:10:58.600 --> 0:11:01.520 seems like day after day, you know, kind of disappointing 0:11:02.120 --> 0:11:04.920 economic data coming out of China, weakening data coming out 0:11:04.920 --> 0:11:06.959 of China. How do you put that in prospective? 0:11:06.960 --> 0:11:07.080 Wait? 0:11:07.160 --> 0:11:09.200 I thought they were finally giving a stimulus, were now 0:11:10.280 --> 0:11:16.120 stick giving money to parents of kids and kids of parents? 0:11:16.440 --> 0:11:16.720 Yep? 0:11:17.679 --> 0:11:19.839 Yeah, And look it's it's been this machine gun of 0:11:19.880 --> 0:11:22.640 stimulus literally the way you know, day after day you're 0:11:22.640 --> 0:11:25.080 coming in and you're hearing more and more more stimulus 0:11:25.160 --> 0:11:28.480 coming towards the Chinese economy. And yet today when the 0:11:28.559 --> 0:11:31.240 moment we got in a little bit of bad data, 0:11:31.280 --> 0:11:34.320 we got that pm I numbers showing that the services 0:11:34.320 --> 0:11:36.600 sector is slowing down, which we would think would be 0:11:36.640 --> 0:11:40.079 something that would would lead to further stimulus in China. 0:11:40.200 --> 0:11:42.800 What do we see We see the market actually reacting, 0:11:42.920 --> 0:11:44.640 you know, to the downside and saying, well, this is 0:11:44.679 --> 0:11:46.680 bad news in China? Is everything that is bad? 0:11:46.960 --> 0:11:47.200 Now? 0:11:47.400 --> 0:11:49.000 You ask how, you know, how does it play for 0:11:49.040 --> 0:11:51.040 the world economy. It's bad for the world economy. It 0:11:51.120 --> 0:11:53.960 says something bad about the world economy. It says that 0:11:54.040 --> 0:11:57.000 we are not buying Chinese stuff and we're not exporting 0:11:57.040 --> 0:11:59.960 it elsewhere. But it is very bad for Europe, right 0:12:00.160 --> 0:12:02.120 because it's it's you know, and I think that's why 0:12:02.320 --> 0:12:05.840 we saw Mercedes Benz perhaps you know, reacting to the 0:12:05.840 --> 0:12:09.000 downside today, even though they've got this fairly positive story 0:12:09.080 --> 0:12:12.720 vis A Vitesla. And the reason is that a lot 0:12:12.760 --> 0:12:14.760 of their cars go to China. A lot of the 0:12:14.840 --> 0:12:18.760 high end equipment that's manufactured manufactured in Germany, and a 0:12:18.800 --> 0:12:22.000 lot of the French luxury goods go to China. So 0:12:22.120 --> 0:12:25.000 if they are not spending, if their services sectors lows down, 0:12:25.360 --> 0:12:26.880 that's real trouble for Europe. 0:12:26.920 --> 0:12:29.720 I will say Ola Hellenius is now a little bit more. 0:12:30.080 --> 0:12:32.280 He's not as bullish on China as he wants. They 0:12:32.320 --> 0:12:35.440 have a great story, the CEO of Mercedes Benz on 0:12:35.480 --> 0:12:39.040 the terminal, even though they have you know, a concept 0:12:39.080 --> 0:12:44.600 car that has long range. Any takeaways I mean you well, 0:12:44.920 --> 0:12:47.439 my takeaway is that GM already has that kind of range, 0:12:47.480 --> 0:12:51.000 you know, the Cadillac Escalade IQ or the Silverado ev 0:12:51.240 --> 0:12:51.839 they already have. 0:12:51.800 --> 0:12:53.040 Four h fifteen miles of range. 0:12:53.080 --> 0:12:54.920 It's great to see it in a smaller package. And 0:12:55.880 --> 0:12:58.280 I think it's cool that Mercedes is doing it, but 0:12:59.000 --> 0:13:01.280 they're not as bullish on as they once were. Also, 0:13:01.320 --> 0:13:03.840 the pm I data on China, this is backwards. If 0:13:03.840 --> 0:13:06.920 they come out on Sunday or Monday and say, hey, 0:13:06.920 --> 0:13:08.880 we're going to give money to everybody with kids under 0:13:08.880 --> 0:13:11.600 three and everybody with parents over three, you know, and 0:13:11.640 --> 0:13:15.800 we're going to cut the foreign reserve requirements at banks 0:13:15.800 --> 0:13:18.079 from six percent to four percent. So that's all spec 0:13:18.400 --> 0:13:20.720 this will stimulut of going forward. Why do we care 0:13:20.800 --> 0:13:23.280 so much about the backward looking data release? 0:13:24.280 --> 0:13:24.480 Yeah? 0:13:24.520 --> 0:13:29.760 Absolutely? And and you know, so the PMI number being 0:13:29.800 --> 0:13:32.360 focused on the services sector, which is more important for 0:13:32.400 --> 0:13:35.360 the Chinese economy than the manufacturing, is because they want 0:13:35.360 --> 0:13:37.760 to put it away a little bit towards the services sector, right, 0:13:38.040 --> 0:13:41.280 So I think as long as we that should be 0:13:41.440 --> 0:13:44.839 a net positive because it should mean that they are 0:13:44.960 --> 0:13:47.959 more likely to deliver even more stimulus if more. 0:13:47.840 --> 0:13:48.960 Is needed down the road. 0:13:49.080 --> 0:13:52.040 Right, it shows that this this hurts the part of 0:13:52.040 --> 0:13:54.480 the the part of the economy that they're most concerned 0:13:54.520 --> 0:13:57.640 about is under pressure, and as long as that's the case, 0:13:57.720 --> 0:13:59.080 you know, stimulus will keep coming. 0:13:59.440 --> 0:13:59.960 But I think that. 0:14:00.760 --> 0:14:02.760 Drap the machine gun, eddie and grab a bazooka. 0:14:03.280 --> 0:14:06.120 You know, right, absolutely, But but but this, And you 0:14:06.160 --> 0:14:08.240 know what, if they did bring the bazuka, if they 0:14:08.240 --> 0:14:11.640 did say, hey, here's this massive stimulus package, all of 0:14:11.679 --> 0:14:14.040 these things that we've talked about over the last few 0:14:14.080 --> 0:14:16.320 weeks and they delivered all of that in one day, 0:14:16.600 --> 0:14:19.240 the markets would have said wow, shock and awe, and 0:14:19.240 --> 0:14:21.680 would have responded accordingly. But because it's a kind of 0:14:21.760 --> 0:14:25.680 drip feed, it just doesn't have that momentous feel to it. 0:14:25.880 --> 0:14:28.480 But I do think that this is more of what 0:14:28.520 --> 0:14:31.800 we're seeing today is more about reading what the market 0:14:32.000 --> 0:14:34.920 sentiment on China is than about what the outlook is, 0:14:34.920 --> 0:14:36.840 because I don't think the outlook has changed today. What 0:14:36.840 --> 0:14:39.400 you're saying is true, right, The PMI data is slightly 0:14:39.400 --> 0:14:42.880 more backward looking than the than than the fresh stimulus. 0:14:43.040 --> 0:14:45.960 But we are we asked, we are seeing something about 0:14:46.000 --> 0:14:48.520 the market wants to be negative because the market doesn't 0:14:48.520 --> 0:14:49.720 buy the China story. 0:14:49.480 --> 0:14:49.960 At the moment. 0:14:50.160 --> 0:14:52.040 Well, I mean, one of the things that I think 0:14:52.040 --> 0:14:53.920 we're trying to get a grip of is how bad 0:14:54.000 --> 0:14:58.560 is the real estate issue and the financing and of 0:14:58.640 --> 0:15:01.440 the real estate economy and China? How bad is it? 0:15:01.480 --> 0:15:02.840 How bad could it get? 0:15:03.800 --> 0:15:04.040 Yeah? 0:15:04.040 --> 0:15:06.000 And it is really bad? Right, And I think most 0:15:06.000 --> 0:15:08.840 of the stimulus has been targeted at that sector. Now, 0:15:09.000 --> 0:15:10.920 we had a Country Garden, which is one of their 0:15:10.960 --> 0:15:14.720 big property developers, who was very much distressed and still 0:15:14.720 --> 0:15:17.960 owes something like one hundred and eighty seven billion dollars 0:15:18.160 --> 0:15:22.560 worth of outstanding bonds. Now they met payment on a 0:15:22.640 --> 0:15:26.560 part two of their outstanding bonds today, but still you know, 0:15:27.000 --> 0:15:30.040 several billion are coming due in the next few months, 0:15:30.400 --> 0:15:32.760 and it's unclear whether they'll be able to meet most 0:15:32.840 --> 0:15:34.960 or any of that. The market currently pricing their bonds 0:15:35.000 --> 0:15:37.200 at something like, you know, nine cents to the dollar 0:15:37.280 --> 0:15:40.480 or fourteen cents of the dollar, depending, But you know, 0:15:40.680 --> 0:15:46.600 so this is but the authorities have targeted a lot 0:15:46.600 --> 0:15:50.280 of stimulus at that sector. What is interesting that they've 0:15:50.320 --> 0:15:53.160 done of late is that they pivoted also to things 0:15:53.200 --> 0:15:56.320 like the stock market. Right, So clearly stimulating the stock 0:15:56.360 --> 0:15:59.080 market by removing some of the costs and some of 0:15:59.080 --> 0:16:01.520 the taxes a social with that, and if you see 0:16:01.640 --> 0:16:04.720 the authorities really targeting the stock market. It tells you 0:16:04.720 --> 0:16:07.280 something about what they want to do to sentiment. It 0:16:07.280 --> 0:16:09.440 tells you something that they you know, when they're targeting 0:16:09.440 --> 0:16:13.440 the building sector, that tells you something about what they 0:16:13.440 --> 0:16:15.520 want to do to the economy when they when they're 0:16:15.560 --> 0:16:19.120 targeting the stock market, it tells you that they really 0:16:19.160 --> 0:16:20.400 worried about sentiment too. 0:16:21.160 --> 0:16:23.880 Hey, Eddie, you know everybody, I know, it seems like 0:16:23.960 --> 0:16:27.280 with a notable excession of John Tucker vacationed in Europe 0:16:27.600 --> 0:16:31.520 this summer, what's the economy like in Europe these days? 0:16:32.920 --> 0:16:35.080 Yeah, it's mixed, right, I mean, Europe is slowing down, 0:16:35.160 --> 0:16:36.920 no doubt. Europe is struggling. 0:16:36.960 --> 0:16:37.360 At the moment. 0:16:37.480 --> 0:16:41.200 We're seeing our manufacturing you know, deep below below fifty 0:16:41.200 --> 0:16:43.760 and on the PMIS, and we're seeing now with the 0:16:43.800 --> 0:16:46.800 latest revisions that we got in today, numbers in Europe 0:16:46.840 --> 0:16:49.320 have all been below fifty. Europe has really been struggling 0:16:49.360 --> 0:16:51.800 and it just hasn't been able to get gain that traction. Now, 0:16:52.160 --> 0:16:53.880 the situation in Europe is a little bit a little 0:16:53.880 --> 0:16:56.240 bit different from the from the from the US. Whereas 0:16:56.240 --> 0:17:00.880 the FED has a dual mandate growth and and inflation, 0:17:01.000 --> 0:17:03.800 in Europe, the central banks are supposed to be. The 0:17:04.080 --> 0:17:08.560 ECB is supposed to be focused on inflation, and that 0:17:08.680 --> 0:17:11.399 means that that that that you know, they're probably putting 0:17:11.440 --> 0:17:14.960 more pressure on the economy than they would have otherwise. Now, 0:17:15.200 --> 0:17:18.159 whether they will keep that line if they, you know, 0:17:18.240 --> 0:17:22.360 coming to see real trouble, real structural trouble. 0:17:22.040 --> 0:17:22.960 In the Eurozone. 0:17:23.080 --> 0:17:25.720 None of that we're seeing yet. But if that's the case, 0:17:25.760 --> 0:17:28.080 I think, I think the ECB will will start to 0:17:28.080 --> 0:17:30.640 rethink their policy despite inflation. 0:17:30.600 --> 0:17:32.720 Right, I don't know. I mean all those us I 0:17:32.720 --> 0:17:34.439 mean vacation dollars being spent in. 0:17:34.480 --> 0:17:37.080 The y Well, hotel prices are very high. You know, 0:17:37.160 --> 0:17:39.720 restaurants have been able to get a high ticket price. 0:17:40.000 --> 0:17:42.240 All right, I stayed on the Jersey shore. Did just 0:17:42.240 --> 0:17:45.520 find Eddie vanderwallt wut Managing Editor of Markets Life Team 0:17:45.520 --> 0:17:46.720 at Bloomberg News. Next so much. 0:17:46.920 --> 0:17:50.520 You're listening to the tape cancer Live program Bloomberg Markets 0:17:50.600 --> 0:17:53.960 weekdays at ten am Eastern on Bloomberg Radio, the tune 0:17:54.000 --> 0:17:55.840 in app, Bloomberg dot Com. 0:17:55.560 --> 0:17:56.960 And the Bloomberg Business App. 0:17:57.000 --> 0:17:59.760 You can also listen live on Amazon Alexa from our 0:17:59.760 --> 0:18:04.200 flag Ship New York station just say Alexa playing Bloomberg eleven. 0:18:06.359 --> 0:18:08.119 In September's we head towards the end of the year. 0:18:08.200 --> 0:18:09.879