WEBVTT - Bloomberg Wall Street Week: September 2, 2022 0:00:00.520 --> 0:00:03.720 This is Bloomberg Wall Street Week. We turn our attention 0:00:03.880 --> 0:00:07.120 to the markets this week. U s CPI members reinforcing 0:00:07.160 --> 0:00:10.639 concerns about inflation. The financial stories that sheep are worth 0:00:10.720 --> 0:00:13.480 a really different reaction to Mark. It's more indications of 0:00:13.640 --> 0:00:16.239 just how hot the U. S economy really is through 0:00:16.239 --> 0:00:19.520 the eyes of the most influential voices Larry Summers, the 0:00:19.560 --> 0:00:22.480 former Treachery Secretary, Katherine Keening, CEO of v N y 0:00:22.600 --> 0:00:26.160 mon Sam's l Sharmon and founder of Equatic Group Investment 0:00:26.239 --> 0:00:30.240 in Bloomberg wool Street Week with David Weston from Bloomberg Radio. 0:00:31.040 --> 0:00:33.600 Something for everyone in the August jobs report, with the 0:00:33.640 --> 0:00:37.760 top line beating estimates, but the unemployment rate ticking higher 0:00:37.800 --> 0:00:41.640 and European inflation hits a record high. This is Wall 0:00:41.720 --> 0:00:45.560 Street Week. This week wool Street Week contribute to Larry 0:00:45.600 --> 0:00:48.800 Summers on the Job's report, people have a tendency to 0:00:48.880 --> 0:00:56.440 exaggerate how much favorable participation contributes to necessary disinflation and 0:00:56.560 --> 0:00:59.320 Jessica Coldwell of Edmund's on the future of the electric 0:00:59.360 --> 0:01:02.440 vehicle market. It finally feels like now we're kind of 0:01:02.480 --> 0:01:04.560 on the cost of something big, So I think the 0:01:04.800 --> 0:01:08.000 question here is our consumers ready to pony had to 0:01:08.040 --> 0:01:23.600 spend the money. Markets began the week jittery, following FED 0:01:23.680 --> 0:01:27.320 chair pals hawk ish tilled from Friday, with Minneapolis Fed 0:01:27.319 --> 0:01:30.920 President Neil cash Cary hammering the point home. I was 0:01:31.080 --> 0:01:33.959 actually happy to see how the chair Pal's Jackson Whole 0:01:34.000 --> 0:01:37.240 speech was received. You know, people now understand the seriousness 0:01:37.240 --> 0:01:39.360 of our commitment to getting inflation back down to two. 0:01:40.120 --> 0:01:43.280 Inflation in Europe rocketed to yet another all time high, 0:01:43.440 --> 0:01:46.520 reaching nine point one year over year, as the Block's 0:01:46.520 --> 0:01:48.680 Central Bank ways whether to go with a jump the 0:01:48.840 --> 0:01:52.320 rate hike of seventy five basis points. But economists are 0:01:52.320 --> 0:01:55.360 also being swayed because of all this hawkish commentary we've 0:01:55.360 --> 0:01:58.280 had out of the CB. We've had six members of 0:01:58.280 --> 0:02:01.360 the Governing Council now saying that a move bigger than 0:02:01.400 --> 0:02:04.279 a half point needs to be at least considered class. 0:02:04.320 --> 0:02:07.840 Natural gas prices in Europe continue to fall throughout the week, 0:02:07.920 --> 0:02:10.840 even as Russia's gas proms shut off the spigots to 0:02:10.960 --> 0:02:14.920 Germany's Norde Dream pipeline three days of maintenance. I could 0:02:15.000 --> 0:02:17.639 quote marks around that because some people would doubt the motives. 0:02:17.680 --> 0:02:22.800 Fine back, I'm Caroline Hyde alongside Matt Miller. Let us 0:02:22.800 --> 0:02:25.000 shape up the week for you. The week that was 0:02:25.080 --> 0:02:28.280 on Wall Street s ANDP five hundred five days were 0:02:28.280 --> 0:02:30.359 in the red to the tune of almost or three 0:02:30.360 --> 0:02:33.280 and a half percent. This is third straight week of losses. 0:02:33.400 --> 0:02:36.200 This is the worst week we've had since mid June 0:02:36.280 --> 0:02:38.799 two year yield almost in a round trip. Look, we're 0:02:38.800 --> 0:02:41.000 basically flat on the week, But what a movement intra 0:02:41.200 --> 0:02:44.080 weak volatility that we had. Yields rise. We think we 0:02:44.160 --> 0:02:46.359 have a hawk is fed on our hands. They pull 0:02:46.440 --> 0:02:49.800 back when we get a really rather gold Delocks scenario 0:02:49.880 --> 0:02:52.600 with the jobs data and Matt the vix, it creeps 0:02:52.720 --> 0:02:56.280 a little Hibbert. Look, twenty five is above the annual average. 0:02:56.360 --> 0:02:59.280 I think the VIX doesn't really do much. So I'm 0:02:59.320 --> 0:03:03.040 that conveys that were really headed down hard. Yet the 0:03:03.080 --> 0:03:06.120 market doesn't really believe that the Fed can go ahead 0:03:06.200 --> 0:03:08.919 with rate hike after rate hike after rate hike. They're 0:03:08.919 --> 0:03:11.720 a little more convinced after Jackson Hole. But this job 0:03:11.840 --> 0:03:14.720 number you were talking about this earlier today, Um, we 0:03:14.800 --> 0:03:17.920 saw what looked like maybe a little stabilization in terms 0:03:17.960 --> 0:03:21.760 of average hourly earnings, and we saw the participation rate climb, 0:03:21.919 --> 0:03:24.680 So you know that's putting in a couple more question 0:03:24.760 --> 0:03:28.440 marks over the Fed's commitment to raise rates soft landing. 0:03:28.520 --> 0:03:31.240 Can they do it? Let's ask our guests were pleased 0:03:31.240 --> 0:03:33.400 to welcome to the show, and they Director and fundamental 0:03:33.440 --> 0:03:37.600 portfolio manager for Causeway Capital Sonalta, said chief investment officer 0:03:37.640 --> 0:03:40.560 Franklin Templeton Fixed Income. It is wonderful to have you 0:03:40.640 --> 0:03:43.280 both here as we look towards a long weekend, a 0:03:43.280 --> 0:03:45.920 long weekend where it felt that money managers took risk 0:03:46.000 --> 0:03:48.920 off the table. And then start first and foremost with 0:03:49.000 --> 0:03:51.640 us your interpretation of the job's number and where that 0:03:51.720 --> 0:03:54.080 leaves the Federal reserve. You know, people are looking at 0:03:54.080 --> 0:03:56.920 the number very care way to see if what feds 0:03:56.920 --> 0:04:00.960 are doing is working, to see if this what actions 0:04:00.960 --> 0:04:05.760 have taken, are loosening the labor market. It doesn't. There's 0:04:05.760 --> 0:04:09.400 incremental signs, but nothing for sure. And I think there 0:04:09.560 --> 0:04:13.600 is also some confusion in the market thinking that you know, 0:04:14.200 --> 0:04:18.839 only from the unemployment numbers we will see uh slow down, 0:04:19.279 --> 0:04:22.599 be more market. But in a high inflationary era, it 0:04:22.760 --> 0:04:26.599 is common that labor market stays tight before the shoe 0:04:26.680 --> 0:04:29.600 really drops. So I know this is a number that 0:04:29.680 --> 0:04:32.440 the BED is concerned about. But we have way more 0:04:32.480 --> 0:04:36.680 to go before unemployment is threatening, where FED has to 0:04:36.720 --> 0:04:38.719 be a birth course. We had, you know, in the 0:04:38.800 --> 0:04:41.279 last trading day of the week, a big turnaround. As 0:04:41.320 --> 0:04:45.040 Caroline points out, of course, a lot of asset managers 0:04:45.080 --> 0:04:46.960 are going to take risk off the table as they 0:04:47.000 --> 0:04:48.720 go into a labor day weekend. You don't want to 0:04:48.720 --> 0:04:51.880 be sitting on the beach worried about your portfolio. Now 0:04:52.000 --> 0:04:54.919 decide you have a big portfolio to worry about. Is 0:04:54.920 --> 0:04:56.320 that what you guys have done at the end of 0:04:56.320 --> 0:04:59.280 the week. Do you see portfolio managers typically doing that 0:04:59.520 --> 0:05:02.640 at Actually take it back to what you started started 0:05:02.880 --> 0:05:08.039 discussing the FED lacks credibility. Markets don't believe that the 0:05:08.080 --> 0:05:09.920 FED is going to do what the FED keeps saying 0:05:09.920 --> 0:05:11.880 it's going to do. That's a problem for the FED 0:05:12.279 --> 0:05:15.160 and it's also a problem for markets. So we in 0:05:15.200 --> 0:05:19.560 our portfolios have actually we started taking risk of sometime 0:05:19.680 --> 0:05:22.520 before this long weekend. We don't think that a long 0:05:22.520 --> 0:05:25.280 weekend in and of itself makes a major difference. I 0:05:25.320 --> 0:05:28.600 couldn't agree more with Eden. This is one day to point. 0:05:28.640 --> 0:05:31.279 The bottom line is I'm going to be looking very 0:05:31.320 --> 0:05:34.719 carefully at the Fed's new SEPs to see if we 0:05:34.800 --> 0:05:39.440 get some more realistic SEPs after the March and June 0:05:39.520 --> 0:05:43.560 number June projections, which I didn't think were internally consistent 0:05:43.839 --> 0:05:46.400 at all. So I want to dig in that for 0:05:46.440 --> 0:05:48.960 a moments now, because you're saying they lack credibility. You 0:05:49.000 --> 0:05:51.440 are a bond money manager first and foremost fixing. It 0:05:52.440 --> 0:05:55.039 felt as though the bond market sort of had interpreted 0:05:55.320 --> 0:05:58.560 the Federal Reserve along the right tracks prior to Jackson Hall. 0:05:58.600 --> 0:06:00.440 They didn't expect to pivot and quite the same way 0:06:00.440 --> 0:06:03.279 that the equity market did. Why do you think, therefore 0:06:03.320 --> 0:06:05.479 credibility has been so hard to come about. I'm not 0:06:05.560 --> 0:06:07.920 sure I fully agree with you, because we were at 0:06:08.080 --> 0:06:10.960 three forty seven. The type of volatility we've seen in 0:06:10.960 --> 0:06:15.440 the bond market on every single data point, to me, 0:06:15.480 --> 0:06:20.640 indicates that the bond market also fully anticipates that the 0:06:20.640 --> 0:06:22.080 Fed is going to do what it's done for the 0:06:22.120 --> 0:06:24.440 better part of a couple of decades now, which is, 0:06:24.480 --> 0:06:27.280 as soon as the market gets wappy, the Fed blinks 0:06:27.800 --> 0:06:31.680 and it reverses course. It happened in twenty eighteen. People 0:06:31.800 --> 0:06:37.760 keep anticipating that for the Feds first, and almost view 0:06:37.880 --> 0:06:41.480 the first target. The only target is unemployment and growth. 0:06:41.640 --> 0:06:43.640 When we've got inflation at eight and a half percent 0:06:44.279 --> 0:06:50.440 and we have employment significantly lower than current NYROU, it 0:06:50.480 --> 0:06:53.000 seems remarkable. We're gonna have much more wish now to 0:06:53.080 --> 0:06:55.640 side and Ellen Lee. Ellen's going to give us some 0:06:55.839 --> 0:06:58.640 individual company names to talk about after we take a break. 0:06:58.680 --> 0:07:03.559 This is Wall three on Bloomberg. This is Bloomberg Wall 0:07:03.600 --> 0:07:13.520 Street Week with David Weston from Bloomberg Radio. But this 0:07:13.600 --> 0:07:18.240 week the conventional media began to catch up. After all, 0:07:18.320 --> 0:07:21.480 it was hard totally to ignore such additional developments as 0:07:22.000 --> 0:07:25.880 the slowest rate of manufacturing growth in thirteen months, the 0:07:25.960 --> 0:07:30.880 first outright decline in construction spending in seven months, falling 0:07:30.960 --> 0:07:34.440 prices for raw materials to the lowest levels in September, 0:07:35.280 --> 0:07:39.160 the biggest monthly tumble in factory orders in almost a decade, 0:07:39.800 --> 0:07:44.239 arising unemployment rate, and the first monthly decline in private 0:07:44.280 --> 0:07:49.000 sector jobs in more than four years. You think maybe 0:07:49.000 --> 0:07:52.920 the economy really is a hairless vibrant these days. This 0:07:53.080 --> 0:07:56.119 is Bloomberg Wall Free Week. I'm Matt Miller alongside Caroline Hide. 0:07:56.120 --> 0:07:59.880 That Cliff of Lewis Rookheiser from June two, two thousand, 0:08:00.040 --> 0:08:02.480 when Santana's Maria Maria was at the top of the 0:08:02.560 --> 0:08:05.920 charts and Mission Impossible Too was the number one movie 0:08:06.280 --> 0:08:09.440 of the land. There were similarities between the economy then 0:08:09.520 --> 0:08:11.840 and now. The unemployment rate ticked up, but back then 0:08:11.880 --> 0:08:14.280 it was all the way to four percent compared to 0:08:14.320 --> 0:08:17.440 this month's three point seven percent, and people were starting 0:08:17.440 --> 0:08:19.320 to really think about what was going on in the 0:08:19.360 --> 0:08:22.880 economy rather than at the individual company level. Ellen Lee 0:08:23.000 --> 0:08:25.440 joins us right now, and I'll decide they're back with 0:08:25.520 --> 0:08:27.840 us to continue this conversation. Ellen, I wanted to touch 0:08:27.880 --> 0:08:30.640 on this because it seems like the whole world's gone macro. 0:08:31.000 --> 0:08:33.800 Everybody wants to talk about the unemployment rate and the 0:08:33.880 --> 0:08:37.880 fed um inflation. How does that strike you as as 0:08:37.920 --> 0:08:43.120 a fundamental research annelist. I can't ignore what's happening in 0:08:43.160 --> 0:08:47.360 the world, obviously, because it's the backdrop for the environment 0:08:47.400 --> 0:08:50.760 in which companies operate. But at causeway, we're looking for 0:08:50.880 --> 0:08:54.280 bottom up, you know, investment ideas, and there a couple 0:08:54.360 --> 0:08:57.480 that I really like in this environment, you know, Phillips 0:08:57.520 --> 0:09:01.800 and also both are restructuring store raised trading at ten times. 0:09:02.160 --> 0:09:04.679 I think in the current environment, were interest rates are 0:09:04.760 --> 0:09:07.959 going up, I think that's a good tail with were 0:09:08.040 --> 0:09:11.240 value stocks. But more importantly, they have more half their 0:09:11.280 --> 0:09:14.920 faith in their control, where the management can lead them 0:09:14.920 --> 0:09:18.600 out of the situation they're in, and of course macro 0:09:18.880 --> 0:09:22.240 environment being challenging. We believe it is all reflected in 0:09:22.280 --> 0:09:28.439 their valueation. Philips Alston both being European companies and Phillips 0:09:28.480 --> 0:09:30.199 you know, for you might use them for your teethbrush 0:09:30.240 --> 0:09:33.680 for examples. Not you, You're a global perspective here. We 0:09:33.720 --> 0:09:36.600 looked towards next week, we looked towards the European Central Bank, 0:09:36.720 --> 0:09:39.000 it's said, is not the only central bank having to 0:09:39.040 --> 0:09:41.079 fight inflation here. It's certainly not. And really the p 0:09:41.160 --> 0:09:44.080 bocs here. Anyone who doesn't are your perspective of whether 0:09:44.120 --> 0:09:46.920 Europe isn't a place to be investing at the moment 0:09:47.120 --> 0:09:51.000 a very wild girl mind. Sorry, sorry one moment, and 0:09:51.000 --> 0:09:54.160 then I just just us allow for a second. I'm sorry, 0:09:55.040 --> 0:09:57.240 I didn't I didn't hear that. So I was just 0:09:57.280 --> 0:10:00.560 going to say that Europe in a very different position, yeah, 0:10:00.640 --> 0:10:05.080 the relative to the US. I would say that it's 0:10:05.120 --> 0:10:09.679 interesting that inflation is almost as you know, is very 0:10:09.720 --> 0:10:12.880 similarly high in EU Rope as it is in the US, 0:10:13.160 --> 0:10:17.240 when it comes from completely different fundamental characteristics. You had 0:10:17.320 --> 0:10:20.520 energy prices go up six that I think energy prices 0:10:20.520 --> 0:10:24.240 in Europe. Gas prices, for example, went up the six 0:10:24.320 --> 0:10:27.880 seven ten times more than they went up here in 0:10:27.880 --> 0:10:31.120 the US. So yes, you've got inflation, but it's very different. 0:10:31.160 --> 0:10:33.720 The drivers are different. The demand side for your is 0:10:33.720 --> 0:10:36.640 significantly different than the demand side we had here in 0:10:36.679 --> 0:10:38.719 the US. This is why I think, this is why 0:10:38.720 --> 0:10:41.280 I think Ellen's call for Phillips Nelson is so interesting. 0:10:41.320 --> 0:10:45.600 I mean, um, the Russians said late on Friday that 0:10:45.720 --> 0:10:48.840 they are not gonna reopen. This figures in terms of 0:10:49.000 --> 0:10:52.439 nord dream one. Caroline was anchoring the clothes on Bloomberg 0:10:52.520 --> 0:10:55.680 and all of a sudden the markets turned around bigly. Ellen, 0:10:56.840 --> 0:10:59.480 why would you want two industrials in Europe at the 0:10:59.480 --> 0:11:01.960 time when they can't even count on energy bills to 0:11:02.080 --> 0:11:04.199 stay as low as ten times as high as what 0:11:04.280 --> 0:11:06.760 we pay in the US. Because you have to look 0:11:06.800 --> 0:11:09.840 at the price on the screen. These stocks are downboard 0:11:09.880 --> 0:11:16.160 than and they're reflecting this challenging operating environment. But mind you, 0:11:16.160 --> 0:11:19.800 you know this gas crisis, right now this winter it's 0:11:19.800 --> 0:11:22.080 going to be difficult. Actually people are thinking about a 0:11:22.160 --> 0:11:25.880 more difficult winter the year after. But the reality is 0:11:25.920 --> 0:11:28.600 things are in motion where this is going to be resolved. 0:11:29.320 --> 0:11:32.560 And guess what in the long term, everybody's going off 0:11:32.640 --> 0:11:35.640 Russian gas. I mean it. So now this is your 0:11:36.320 --> 0:11:39.000 sweet spot. We all know, of course the Franklin Templeton's 0:11:39.000 --> 0:11:43.040 of this world for emerging market expertise, but also global expertise, 0:11:43.080 --> 0:11:45.960 and therefore, are there any emerging markets at this moment? 0:11:46.000 --> 0:11:48.280 They're looking any way attractive when you've got the US dollar, 0:11:48.320 --> 0:11:50.959 as it did this week, hitting a new record high. 0:11:51.000 --> 0:11:53.920 So I think that you've got to look at different elements, 0:11:54.000 --> 0:11:56.120 whether you're looking at local currency, where they're looking at 0:11:56.160 --> 0:12:00.440 hot currency. Certainly, of in our emerging market get opportunity 0:12:00.480 --> 0:12:04.079 is fund We continue to find opportunities in the hot 0:12:04.080 --> 0:12:08.560 currency space in particular. I would note though that as 0:12:08.640 --> 0:12:12.320 these valuations get more attractive, there is a tendency to 0:12:12.400 --> 0:12:15.360 throw everything out, and there are many emerging markets which 0:12:15.400 --> 0:12:19.760 continue to have very solid policies number one. Number two. 0:12:19.960 --> 0:12:22.880 When you have energy crises the way we currently have, 0:12:23.440 --> 0:12:26.880 unsurprisingly still have a large number of emerging markets not 0:12:27.200 --> 0:12:30.600 NOTTRA structure, many other emerging markets which actually stand to 0:12:30.640 --> 0:12:34.800 benefit from high energy prices valuation. Now, Allen makes an 0:12:34.800 --> 0:12:36.640 interesting point which I want to get your take on. 0:12:37.000 --> 0:12:40.280 This winner is gonna be hard, next winner could be worse. Right, 0:12:40.320 --> 0:12:43.560 We've seen forecasts for inflation in the UK, for example, 0:12:43.840 --> 0:12:48.600 of over two from reputable investment banks. I mean, how 0:12:48.720 --> 0:12:52.360 quickly do the central banks want to get a handle 0:12:52.440 --> 0:12:54.480 on inflation, Because if they want to do it quickly, 0:12:55.160 --> 0:12:59.080 they're gonna have to come down hard, like Paul Vulker, 0:12:59.200 --> 0:13:02.679 hard on labor markets, and that's going to cause widespread 0:13:02.800 --> 0:13:05.880 spread pain and maybe civil unrest, and it's gonna be 0:13:05.960 --> 0:13:09.720 politically maybe untenable. So it's going to be really hard. 0:13:09.800 --> 0:13:11.720 There's no easy way to put this. I don't think 0:13:11.800 --> 0:13:16.360 those massive double digit inflation rates are necessarily going to 0:13:16.400 --> 0:13:19.200 happen in all of Europe, and that's a different issue. 0:13:19.679 --> 0:13:23.120 The UK in many respects, always seems to have some 0:13:23.200 --> 0:13:26.880 more tail winds on inflation and the list than the 0:13:26.920 --> 0:13:30.360 rest of Europe does, though all of it is very high. 0:13:30.520 --> 0:13:34.240 The problem is that if you let that high inflation continue, 0:13:34.720 --> 0:13:40.280 inevitably it starts getting built into expectations wage expectations and 0:13:40.400 --> 0:13:43.000 it just gets harder the longer you wait. So it's 0:13:43.040 --> 0:13:45.199 not clear to me that central banks have much of 0:13:45.240 --> 0:13:48.600 an option, right. They don't have an easy way out. 0:13:48.720 --> 0:13:51.760 And yes, it's going to be extremely painful. And I 0:13:51.840 --> 0:13:55.720 think that Monterrey policy was way too easy for way 0:13:55.720 --> 0:13:58.839 too long, and its full that a little bit of 0:13:58.880 --> 0:14:01.120 the UK and he started to looking tough, perhaps the 0:14:01.120 --> 0:14:04.679 whole before the market had antificated. What about Christine Lagard 0:14:04.800 --> 0:14:07.400 nfol Ellen? What about next week? What about seventy five 0:14:07.440 --> 0:14:11.960 basis points? I mean, I think you know, overall inflation 0:14:12.120 --> 0:14:14.600 is high, so the central banks need to do what 0:14:14.640 --> 0:14:17.400 they need to do. But again I would agree with Soanal. 0:14:17.520 --> 0:14:21.200 The energy crisis is at the sort of center of inflation. 0:14:21.880 --> 0:14:25.560 And because of that we see governments in Germany, brants 0:14:25.560 --> 0:14:30.760 in UK discussing and thinking about how they can manage 0:14:30.800 --> 0:14:33.920 power prices because they can change the structure of the 0:14:34.000 --> 0:14:38.080 market to ensure that this can be more contained. And 0:14:38.120 --> 0:14:40.200 I think there's more news to come, and I think 0:14:40.240 --> 0:14:43.680 this is why when the pipeline shut down actually a 0:14:43.680 --> 0:14:47.880 gas prices spell. And me, so now will decide wonderful 0:14:47.920 --> 0:14:49.520 to have time with you. I want to thank you 0:14:49.560 --> 0:14:51.120 both for joining us on Wall Street Week, and of 0:14:51.120 --> 0:14:53.400 course coming up we're gonna have so much more of 0:14:53.440 --> 0:14:56.240 a global perspective for you. It is global Wall Street. 0:14:56.640 --> 0:15:03.800 That's next in Wall Street Week, I'll bring back this 0:15:04.200 --> 0:15:08.680 is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:15:15.080 --> 0:15:18.000 Welcome back to Wall Street Week on Bloomberg. I'm Matt Miller. 0:15:18.320 --> 0:15:21.800 California has taken a big step forward in the electric 0:15:21.880 --> 0:15:26.200 car revolution, banning the sale of internal combustion engine vehicles 0:15:26.480 --> 0:15:29.000 in the state by twenty thirty five. So what do 0:15:29.080 --> 0:15:32.040 investors need to know about how this will affect the 0:15:32.080 --> 0:15:34.600 industry from World Let's go to Jessica Caldwell. She is 0:15:34.640 --> 0:15:38.760 executive director for Insights with Edmonds. Jessica, thanks so much 0:15:38.920 --> 0:15:42.280 for joining us. Let's let's first talk about the state 0:15:42.520 --> 0:15:45.640 of the market. I mean, we have been seeing so 0:15:45.720 --> 0:15:48.000 many testas on the road, certainly where you are, for 0:15:48.160 --> 0:15:51.520 years and years, and everyone's talking about the new forward 0:15:51.640 --> 0:15:54.800 Lightning as well as a number of other startup electric 0:15:54.840 --> 0:15:58.600 car companies like Lucid, for example. But how much of 0:15:58.640 --> 0:16:01.880 the market really is a electric right now across the 0:16:01.920 --> 0:16:04.000 United States. It's not a big percentage if you look 0:16:04.040 --> 0:16:06.640 at battery e V cells this year, they're around five 0:16:07.560 --> 0:16:10.440 of pure e vs, so not a big percentage. And 0:16:10.480 --> 0:16:12.480 this is a technology we've been talking about for over 0:16:12.520 --> 0:16:15.480 a decade. We've seen these cars, but it finally feels 0:16:15.520 --> 0:16:18.120 like now we're kind of on the cost of something big. 0:16:18.520 --> 0:16:21.240 We don't know exactly what the effect of that is yet, 0:16:21.560 --> 0:16:24.560 but it definitely feels like the products are finally coming. 0:16:24.600 --> 0:16:27.320 So I think the question here is our consumer is 0:16:27.360 --> 0:16:29.240 ready to pony up to spend the money. You know, 0:16:29.280 --> 0:16:31.200 the past few years have been quite difficult in that 0:16:31.280 --> 0:16:34.200 regard and to kind of see if infrastructure will support 0:16:34.320 --> 0:16:36.240 increased sales. But if we look at the market as 0:16:36.240 --> 0:16:38.360 it is, it's still a very small percentage of total 0:16:38.400 --> 0:16:40.760 new vehicle sales. In terms of spending the money. We've 0:16:40.760 --> 0:16:44.680 started to see price increases right forward. Is raising prices 0:16:45.000 --> 0:16:48.800 for the Mackie. It's already raised prices for the Lightning 0:16:48.880 --> 0:16:54.320 and not unsubstantial amount. We're talking about three, four, seven, 0:16:54.440 --> 0:16:59.320 eight thousand dollar price increases these vehicles. I think at 0:16:59.360 --> 0:17:01.560 least the small are ones were affordable before, but the 0:17:01.600 --> 0:17:03.720 bigger ones like the trucks, can get up to a 0:17:03.800 --> 0:17:08.800 hundred thousand dollars. Are they making any margin on those? Yes, 0:17:08.920 --> 0:17:11.080 I mean I think that's what it's all about. Really. 0:17:11.119 --> 0:17:13.600 I mean, there's been so much demand for these vehicles 0:17:13.600 --> 0:17:15.199 this year. I mean, I don't even think you can 0:17:15.240 --> 0:17:17.719 get on a reservation list right now for lightning, So 0:17:17.800 --> 0:17:20.320 if you really want one, it's it's it's pretty hard 0:17:20.320 --> 0:17:23.399 out there. So I think they're probably responding to the 0:17:23.440 --> 0:17:25.159 demand that they see. I mean, we've seen a lot 0:17:25.200 --> 0:17:27.840 of price increases also for Tesla products of where the 0:17:27.880 --> 0:17:30.520 course of the past year, and just the market in general. 0:17:30.560 --> 0:17:33.440 I mean, if we look at new vehicle crisis, they 0:17:33.440 --> 0:17:35.960 really have skyrocket and I mean the average new vehicles 0:17:35.960 --> 0:17:39.640 about forty seven thousand dollars right now, which feels much 0:17:39.680 --> 0:17:42.160 higher than it ever has been historically, and new evs 0:17:42.200 --> 0:17:45.240 are over sixty dollars. So it is not a cheap 0:17:45.320 --> 0:17:49.600 game to to buy a new vehicle, particularly an EV. Fortunately, 0:17:49.680 --> 0:17:52.160 for now, you get seven thousand, five hundred dollars back 0:17:52.200 --> 0:17:56.440 from Uncle Sam, and a lot of uh local markets 0:17:56.480 --> 0:17:59.800 also give you some sort of tax rebate. How long 0:17:59.880 --> 0:18:02.560 is that gonna last? I mean I've heard that I'm 0:18:02.560 --> 0:18:05.560 starting next year, you're gonna have to buy cars that 0:18:05.600 --> 0:18:08.440 are made in America. In order to get that, and 0:18:08.640 --> 0:18:10.159 that you're going to have to buy cars that have 0:18:10.320 --> 0:18:14.720 battery components also made in America. Yes, next year is 0:18:14.760 --> 0:18:16.920 where it starts to get really tricky, because not only 0:18:17.000 --> 0:18:20.760 are there requirements for the vehicles themselves and their components 0:18:20.800 --> 0:18:24.040 like their battery um the battery elements, as well as 0:18:24.080 --> 0:18:29.200 where the vehicle is assembled, there's also requirements on income levels. 0:18:29.240 --> 0:18:31.919 So if you're someone that is you know, you're a 0:18:31.960 --> 0:18:34.480 married couple and you make over three hundred thousand dollars, 0:18:34.520 --> 0:18:36.719 which may seem like a lot of money, but if 0:18:36.760 --> 0:18:39.320 you think about these vehicles are a hundred thousand dollars, 0:18:39.320 --> 0:18:42.320 it's it really isn't you're not going to be eligible 0:18:42.560 --> 0:18:45.920 for those rebates, which is, you know, a bit difficult. 0:18:45.960 --> 0:18:48.680 And the same thing for the used vehicles. So that's 0:18:48.680 --> 0:18:52.040 what's interesting and new is that in UH we're going 0:18:52.080 --> 0:18:55.920 to start seeing used rebates for e vs about four 0:18:55.960 --> 0:18:59.600 thousand dollars. Again, income requirements, So all of a sudden, 0:18:59.640 --> 0:19:02.280 this this market which didn't really have too many rules 0:19:02.320 --> 0:19:04.560 in terms of the rebates, it's gonna get really strict 0:19:04.560 --> 0:19:06.840 and it's gonna be pretty hard to figure out if 0:19:06.840 --> 0:19:09.600 a vehicle qualifies. Um, there's gonna have to be vindor 0:19:09.640 --> 0:19:12.560 Cooder is to figure out if your vehicle has the battery, 0:19:12.680 --> 0:19:15.280 the battery components, and the vehicle's automakers have a few 0:19:15.320 --> 0:19:18.040 years to ramp up to get these things set in place. 0:19:18.040 --> 0:19:20.760 Obviously this cannot change overnight, but it's still going to 0:19:20.840 --> 0:19:23.359 be a tough challenge for them as well as consumers 0:19:23.600 --> 0:19:26.520 because as of right now, none of the electric vehicles 0:19:26.960 --> 0:19:30.800 comply with the new regulations. In terms of you know, 0:19:31.960 --> 0:19:35.119 the raw materials UM coming from the US or the 0:19:35.160 --> 0:19:38.159 batteries being built in the US. UM, they're gonna have 0:19:38.240 --> 0:19:41.120 to change that, are they? Do you think those companies 0:19:41.160 --> 0:19:44.560 building car car electric cars in the US, like GM, 0:19:44.680 --> 0:19:48.639 like four, like BMW, are they gonna have to revamp 0:19:48.720 --> 0:19:51.679 the way they source these materials? Yes, a lot of 0:19:51.720 --> 0:19:53.240 the company is there's a lot of crussure on them 0:19:53.240 --> 0:19:56.240 to revamp the where where they source these materials. I mean, 0:19:56.240 --> 0:19:58.480 we know that there's a lot of factories being built 0:19:58.480 --> 0:20:01.920 as we speak, our back factory of building factories very soon, 0:20:02.520 --> 0:20:05.600 so that's definitely something that's in play. But in terms 0:20:05.640 --> 0:20:09.399 of sourcing some of these minerals UM the mining that 0:20:09.440 --> 0:20:12.320 goes into it, that's a little bit different. That's something 0:20:12.359 --> 0:20:14.560 that takes, from what I understand, a very long period 0:20:14.560 --> 0:20:17.040 of time. You can't just change that overnight. I mean, 0:20:17.080 --> 0:20:18.800 none of these things you can really change overnight. But 0:20:18.880 --> 0:20:22.560 that is even more sensitive to time. So yes, in 0:20:22.640 --> 0:20:26.600 terms of where they get these natural resources, they're going 0:20:26.640 --> 0:20:28.399 to have to put a lot more effort into it, 0:20:28.440 --> 0:20:30.600 which is tough. I mean it's not they don't have 0:20:30.640 --> 0:20:32.679 to be a hundred percent next year. There is a 0:20:32.760 --> 0:20:36.800 time frame associated with it. It's like six hundred percent eventually, 0:20:36.880 --> 0:20:39.360 so they do have a bit of a time window. Jessica, 0:20:39.359 --> 0:20:42.040 thanks so much for joining us, Jessica Caldwell. They're from 0:20:42.160 --> 0:20:45.520 Edmonds talking to us about the race to win UM 0:20:45.560 --> 0:20:50.240 the electric car crown. Coming up, we wrap up the 0:20:50.240 --> 0:20:53.560 week with former US Treasury Secretary and Wall Street Week 0:20:53.560 --> 0:20:58.600 contributor Larry Summers. That's next on Wall Street Week. This 0:20:59.040 --> 0:21:09.200 is Bloomberg. Welcome back to Wall Street Week on Bloomberg. 0:21:09.280 --> 0:21:11.560 I'm Matt Miller, I'm Caroline Hyde, and we are thrilled 0:21:11.560 --> 0:21:13.919 as always as we do each week, to welcome our 0:21:13.920 --> 0:21:17.879 Wall Street Week special contributor, Hobbard's Larry summers. Of course, Larry, 0:21:18.200 --> 0:21:20.960 your reaction first and foremost with the job's number, with 0:21:21.080 --> 0:21:25.040 actually take higher in participation, a steadying perhaps in terms 0:21:25.040 --> 0:21:27.359 of wage inflation. What do you make of the numbers. 0:21:27.680 --> 0:21:31.600 I think these numbers were relatively close to what we expected. 0:21:31.640 --> 0:21:35.720 I doubt anyone's going to change their view UH radically 0:21:35.840 --> 0:21:40.560 on this. I think the increases in participation are good news, 0:21:40.960 --> 0:21:44.560 but I think there's a tendency to exaggerate how much 0:21:44.680 --> 0:21:48.879 higher participation will reduce inflation because people think of it 0:21:48.920 --> 0:21:51.840 as extra labor supply. But they forget that if the 0:21:51.920 --> 0:21:55.760 unemployment rate ROT stays the same and participation goes up, 0:21:55.880 --> 0:21:59.359 more people are working, earning and therefore spending, and that 0:21:59.440 --> 0:22:03.360 in turn races the demand for labor. So I think 0:22:03.400 --> 0:22:06.600 this is a positive development for the economy, more people working, 0:22:06.680 --> 0:22:11.240 more GDP. But people have a tendency to exaggerate how 0:22:11.320 --> 0:22:18.119 much favorable participation contributes to UH necessary disinflation. It doesn't 0:22:18.160 --> 0:22:21.520 the Fed, Larry have to push people out of jobs. 0:22:21.600 --> 0:22:25.480 I mean, right now everyone is earning money and able 0:22:25.520 --> 0:22:27.280 to pay up as much as they need to for 0:22:27.320 --> 0:22:31.480 goods and services. But um, in order to bring inflation down, 0:22:31.680 --> 0:22:34.400 they're gonna need unemployment at four and a half five 0:22:34.520 --> 0:22:36.560