WEBVTT - Streaming, Uber, And Taiwan (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.520 at Bloomberg dot com slash podcast. We're kind of getting 0:00:22.560 --> 0:00:26.599 through the meat of the tech earnings, um and you 0:00:26.640 --> 0:00:28.880 know the stocks. I used to follow the big social 0:00:28.880 --> 0:00:30.720 media companies and Google's and facebooks in the world, so 0:00:30.760 --> 0:00:33.920 I always continue to keep an interest in that Pinterest. 0:00:34.040 --> 0:00:35.760 What was the biggest deal By the way, what was 0:00:35.800 --> 0:00:38.720 the biggest deal you did as an investment banker? A 0:00:38.880 --> 0:00:41.680 well buying time warner? We represented a well Okay, so 0:00:41.720 --> 0:00:44.080 that's the same wheelhouse. And I always think about the 0:00:44.200 --> 0:00:47.000 radio I did all the radio. Those were fun. Those 0:00:47.040 --> 0:00:49.040 were fun. That's why I love being in the radio business. 0:00:49.040 --> 0:00:53.840 But I look at Pinterest. I'm not a user, um, 0:00:53.880 --> 0:00:56.440 but it's a thing. I get it. They put up 0:00:56.480 --> 0:00:59.520 some good numbers, stock up twelve percent, but I look 0:00:59.560 --> 0:01:02.520 it around the digital advertising space and I saw some 0:01:02.600 --> 0:01:04.520 serious hiccups here. So I want to get a sense 0:01:04.560 --> 0:01:06.760 of what's going on out there. So fortunately we have 0:01:06.840 --> 0:01:10.679 Mark Douglas live in our Bloomberg Interactive Broker studio, not 0:01:10.760 --> 0:01:13.640 phoning it in like a certain interest rate analyst time. 0:01:13.640 --> 0:01:17.000 I know, Marcus the CEO and Mountain um Mark. We've 0:01:17.040 --> 0:01:19.440 had Google, We've had Facebook. I'm not going to use 0:01:19.480 --> 0:01:24.640 the medicine. This is a meta free yes, so but 0:01:24.680 --> 0:01:28.080 you know, but I see snap, I see Pinterest. Is 0:01:28.160 --> 0:01:32.440 these is the I guess secular growth of digital advertising 0:01:32.440 --> 0:01:34.680 because that story kind of playing out or do we 0:01:34.720 --> 0:01:37.640 still have room to grow? Um, it's not playing out. 0:01:37.680 --> 0:01:39.679 I think the way to think about it. And this 0:01:39.720 --> 0:01:43.920 goes for your personal finances. This goes for investing. Is 0:01:44.080 --> 0:01:48.720 everything that's closest to the consumer. The consumer making a 0:01:48.800 --> 0:01:52.280 purchase is going to do very well in tough times, 0:01:52.400 --> 0:01:57.000 and everything furthest Away is going to struggle. So like 0:01:57.200 --> 0:02:01.920 in in digital advertising, Roku is furthest Away brand ads, 0:02:02.000 --> 0:02:04.520 you know, not really at the point of purchase. Google 0:02:04.640 --> 0:02:08.080 is close, Pinterest is actually very close to the radio 0:02:08.440 --> 0:02:11.280 radio is closed. And so it goes also for other 0:02:11.400 --> 0:02:15.720 categories streaming television. You know that that the first three 0:02:15.800 --> 0:02:19.160 streaming services you like, you're gonna keep paying. If you're 0:02:19.240 --> 0:02:22.120 number five on that list, as a consumer, you're gonna 0:02:22.160 --> 0:02:24.560 be like, I'm cutting something right, and so you're gonna 0:02:24.600 --> 0:02:27.000 cut that off. It goes for everything, and so digital 0:02:27.080 --> 0:02:30.160 advertising is fine. You just have to focus on the 0:02:30.200 --> 0:02:32.760 companies that are closest to the point of purchase and 0:02:33.120 --> 0:02:35.520 what are you seeing in terms of the clients that 0:02:35.600 --> 0:02:39.000 you work with, what are they doing to increase their 0:02:39.080 --> 0:02:42.160 reach to the consumer at closer Yes, so they're generally 0:02:42.480 --> 0:02:46.120 reevaluating where they're spending, and then the things that are 0:02:46.120 --> 0:02:49.519 doing well for them, they actually increasing spend. So those 0:02:49.520 --> 0:02:53.920 are those categories we all know, paid search, paid social, um, 0:02:54.120 --> 0:02:57.120 the and then those things again there furthest away they're 0:02:57.240 --> 0:03:00.400 they're taking spend away from that and be us they 0:03:00.440 --> 0:03:02.880 just literally can't afford it, or at least can't afford 0:03:02.919 --> 0:03:05.840 the risk if the economy struggles a bit more. Right, 0:03:05.840 --> 0:03:08.640 So that's a that's a cyclical issue. It sounds to 0:03:08.720 --> 0:03:14.960 me the secular story of just growth and digital advertising. 0:03:15.400 --> 0:03:17.840 Are those days kind of behind us here? Or do 0:03:17.919 --> 0:03:20.600 we Because I've got Google, I've got Facebook, and I 0:03:20.600 --> 0:03:23.919 guess I've got Amazon as my big three digital advertisers, 0:03:24.080 --> 0:03:26.959 can they combined continue to drive this market on Yeah, 0:03:26.960 --> 0:03:29.959 I mean, well Google and Meta uh we agree with 0:03:30.080 --> 0:03:32.840 a gun call of Facebook already fell off that chair. 0:03:32.960 --> 0:03:35.680 And we also don't say alphabet, so you know, alright, 0:03:35.720 --> 0:03:39.680 I'm on that train. Um no pun intended as in 0:03:39.680 --> 0:03:44.200 New York. But no, they they obviously just have incredible scales. 0:03:44.280 --> 0:03:47.040 So at that scale, at ten percent growth, those are 0:03:47.080 --> 0:03:50.880 still really really big growth numbers. Amazon is on fire 0:03:50.960 --> 0:03:53.800 in terms of their business, both the advertising business and 0:03:53.920 --> 0:03:58.840 AWS which essentially almost funding that a retail business at 0:03:58.920 --> 0:04:02.040 least from a profitability perspective, and so I think those 0:04:02.160 --> 0:04:04.920 are good. But the you know, the the area men 0:04:05.080 --> 0:04:09.360 streaming television continuing to grow obviously fake um Netflix, I 0:04:09.400 --> 0:04:12.960 should say obviously Netflix is you know, they have like 0:04:14.440 --> 0:04:16.680 consumer market share in the US and it's just kind 0:04:16.680 --> 0:04:18.840 of hard to grow from that. But I think the 0:04:18.920 --> 0:04:22.880 overall streaming market, this transition from old school linear television 0:04:23.040 --> 0:04:26.320 cable to streaming, that's not slowing down, that's continuing. How 0:04:26.320 --> 0:04:29.680 many how many of streamers do you think will be 0:04:31.080 --> 0:04:32.720 I don't know left standing at the end of this. 0:04:32.839 --> 0:04:34.960 I mean, is it is it three, is it five? 0:04:35.080 --> 0:04:38.880 Is it the fifty we had on cable TV or well, 0:04:38.920 --> 0:04:41.280 there's a consolidation going on right now. When you look 0:04:41.320 --> 0:04:44.520 at the television industry, the biggest companies are like half 0:04:44.600 --> 0:04:48.000 the market. So I'm talking like Disney, which people forget 0:04:48.040 --> 0:04:53.360 also owns ABC on ESPN on like, has all these properties. 0:04:53.600 --> 0:04:55.600 And then you look at Discovering Networks and they have 0:04:55.720 --> 0:04:59.320 merged with Time Warner I believe, right, And so the 0:04:59.320 --> 0:05:02.240 the your have a consolidation underway. It's just kind of 0:05:02.360 --> 0:05:06.680 happening under a bit below the surface because people are 0:05:06.680 --> 0:05:09.000 not paying attention to it. So I think you're gonna 0:05:09.040 --> 0:05:13.320 wind up with just a relatively small number very large players, 0:05:13.760 --> 0:05:16.240 you know, kind of focused on that market, but in 0:05:16.279 --> 0:05:19.880 a new way because consumers are watching TV. On the subway, 0:05:19.880 --> 0:05:22.240 they're watching it and back at taxis they obviously still 0:05:22.279 --> 0:05:24.760 watching it at home everywhere with the sound up. By 0:05:24.760 --> 0:05:28.080 the way, but by the way, um, okay, you can 0:05:28.120 --> 0:05:31.960 be honest with me. Here as we watch Nancy Pelosi 0:05:32.160 --> 0:05:34.400 get off of her plane, Greg Jarrett says, it looks 0:05:34.400 --> 0:05:38.159 like a seven two A I'm a pilot, by the way, 0:05:38.400 --> 0:05:42.320 Oh yeah, I'll try to call that way. I would 0:05:42.360 --> 0:05:45.280 agree with the seven seven from from the shot. I'm 0:05:45.320 --> 0:05:49.080 thing right now as we watch that, and I'm not 0:05:49.120 --> 0:05:52.800 really necessarily I don't have anything to say about this 0:05:52.839 --> 0:05:54.960 because we already saw her land. It looks like she's safe, 0:05:54.960 --> 0:05:57.640 everything's cool, and the markets have breathed a side of relief. 0:05:57.680 --> 0:06:02.080 But does news? Howse news doing? In terms of television? Obviously, 0:06:02.920 --> 0:06:05.440 streaming news is kind of a silly thing because you 0:06:05.480 --> 0:06:09.039 want it right away, live, right But I don't. For example, 0:06:09.279 --> 0:06:12.400 I don't even have cable TV at all at my 0:06:12.480 --> 0:06:16.600 house television. I mean, I watched Bloomberg on the Apple TV, 0:06:16.800 --> 0:06:18.640 but I don't watch other kinds of news. Are peeple, 0:06:18.640 --> 0:06:24.200 do people watch CNN, MSNBC, Fox, Bloomberg? Are they? Are 0:06:24.240 --> 0:06:26.599 they paying for that? Are we? Are we losing money 0:06:26.640 --> 0:06:29.920 as a loss leader for for Mike over there? Ye? Also, 0:06:30.000 --> 0:06:32.440 I think most people are watching the news via their 0:06:32.720 --> 0:06:37.000 um Instagram account and their TikTok accounts. Scary, that's really scary. 0:06:37.080 --> 0:06:39.960 So I think that's most people's number one news source. 0:06:40.440 --> 0:06:42.279 You know. Obviously I think you're trying to give me 0:06:42.320 --> 0:06:46.560 in trouble here. No, no, But you make a good point, 0:06:46.600 --> 0:06:49.400 you know. I remember I was talking to a barista 0:06:49.520 --> 0:06:52.240 a couple of months ago and she hadn't gotten her vaccine. 0:06:52.279 --> 0:06:55.760 I asked her why and she said, because she saw 0:06:55.880 --> 0:06:59.000 on the news that it can paralyze you get the vaccine. 0:06:59.040 --> 0:07:00.840 I said, what news were you watching? She said, oh, 0:07:00.839 --> 0:07:03.160 I saw it on TikTok. That was her news, the 0:07:03.240 --> 0:07:06.279 vaccine paralyzed. Yeah. By the way, that isn't true, right, 0:07:06.320 --> 0:07:10.480 but but but yeah, I mean obviously CNN has is 0:07:10.480 --> 0:07:14.160 struggling right now. I think Fox knows who their audience is, 0:07:14.840 --> 0:07:17.880 and they have a very engaged audience and and also 0:07:17.920 --> 0:07:20.520 an audience the weird news is part. Yeah. I I 0:07:21.040 --> 0:07:23.880 actually owned some land in Kentucky, so I know the 0:07:23.920 --> 0:07:26.720 middle of America, and all they want to know about 0:07:26.760 --> 0:07:30.520 is Hunter Biden and see like California man fights off 0:07:30.600 --> 0:07:35.160 store roberts Um twenty four hours of Fox coverage. Well, 0:07:35.160 --> 0:07:37.880 news is also entertainment these days, so let's leave it 0:07:38.440 --> 0:07:42.040 all right back to entertainment. Then. I have noticed lately 0:07:42.240 --> 0:07:46.160 Amazon Prime is knocking it out of the park. I mean, 0:07:46.280 --> 0:07:49.920 they had the terminal List, which is hard for me 0:07:50.000 --> 0:07:53.520 to try and watch Chris Pratt in a serious role. 0:07:53.600 --> 0:07:57.960 But anyway, they had Jack Reacher that was killer. They 0:07:58.040 --> 0:08:02.720 had outer range, which I love with I think Josh Brolin. Um, 0:08:02.760 --> 0:08:05.840 they're just they're just taking it over. Yeah, so they're 0:08:05.920 --> 0:08:09.760 they're obviously. You know the interesting thing, I actually talked 0:08:09.760 --> 0:08:14.360 to someone at Amazon, very senior executive. Their biggest issue 0:08:14.480 --> 0:08:16.520 with Prime is a lot of the people at Prime 0:08:16.560 --> 0:08:21.600 subscriptions don't realize and includes television, includes video and so 0:08:21.760 --> 0:08:24.760 they so first they have to they need their Handmad's Tail. 0:08:24.840 --> 0:08:28.680 They need that show that everyone wants to watch, and 0:08:28.720 --> 0:08:32.120 they're investing heavily in getting that. And then they have 0:08:32.200 --> 0:08:35.160 to remind everyone that, hey, by the way, you have 0:08:35.400 --> 0:08:39.000 access to this as part of getting your packages delivered 0:08:39.080 --> 0:08:43.199 same day. So they're they're really in it. Um. I 0:08:43.840 --> 0:08:46.400 my company used to be based in l A since 0:08:46.440 --> 0:08:49.480 the pandemic were fully remote right now, and when we're 0:08:49.520 --> 0:08:52.280 in l A. Amazon built a huge movie studio in 0:08:52.320 --> 0:08:56.200 Culver City, and I mean a million square feet of 0:08:56.280 --> 0:08:59.440 space to produce shows, to to manage all that. So 0:08:59.520 --> 0:09:02.160 they're they're heavily investing along with all the other big 0:09:02.320 --> 0:09:04.480 They don't have the Adam Project though, no they don't. 0:09:04.880 --> 0:09:09.160 Ryan Ryan Reynolds continues, did you get a cameo in that? Um? 0:09:09.480 --> 0:09:12.600 I have have no cameos in Ryan's movie I haven't 0:09:12.920 --> 0:09:15.199 I have a cameo in his actual life right now, 0:09:16.040 --> 0:09:20.080 just for the listeners, h Mark and Mountain. Ryan Reynolds 0:09:20.080 --> 0:09:22.880 is their chief creative officer. So is that the right title. Yeah, 0:09:23.320 --> 0:09:27.080 it's been an incredible partnership. Mark, you mentioned your folks 0:09:27.080 --> 0:09:30.760 are remote. Is that permanent? How's that working? I mean 0:09:31.000 --> 0:09:34.280 you look around here. Mike has like this phenomenal office 0:09:34.320 --> 0:09:37.800 for us. Nobody's here. Yeah. So we we at the 0:09:37.960 --> 0:09:42.480 relatively early in the pandemic. We decided when everyone scattered, 0:09:42.600 --> 0:09:45.000 including me, I went to I left l A and 0:09:45.400 --> 0:09:47.480 actually went all over the I went tot Loo, Mexico 0:09:47.520 --> 0:09:50.200 and spent nine months there. Had it very nice. I 0:09:50.200 --> 0:09:52.599 thought you gonna say back to the Bronx, but it 0:09:52.760 --> 0:09:56.160 pretty cool. France is good too, and so we just 0:09:56.280 --> 0:10:00.440 decided we're going fully remote. We decided in May of um, 0:10:00.559 --> 0:10:04.319 maybe June, we're going fully remote, and um we do 0:10:04.440 --> 0:10:06.600 four off sites a year to bring the team together. 0:10:06.640 --> 0:10:10.400 It's been fantastic. That's good stuff. Interesting. Every everybody's adapting. 0:10:10.440 --> 0:10:14.880 Everybody has adapted is adapting. Mark Douglas, President CEO of Mountain, 0:10:14.960 --> 0:10:17.680 joining us live in our Bloomberg Interactive Broker studio that 0:10:17.800 --> 0:10:20.280 is very cool. We appreciate them taking the effort to 0:10:20.280 --> 0:10:25.760 come in here. Right now, let's check in with James 0:10:25.840 --> 0:10:30.240 McCann's deputy chief economists Aberdeen Standard Investments. James, thanks so 0:10:30.320 --> 0:10:33.760 much for joining us here. Boy, tremendous amounts of news flow. 0:10:33.800 --> 0:10:36.680 We've got central bankers making statements all over the place 0:10:36.760 --> 0:10:40.600 raising interest rate, We've got earnings, we've got g DP prints, 0:10:40.880 --> 0:10:44.960 we've got geopolitical issues obviously in Europe. Uh and today 0:10:45.080 --> 0:10:48.200 there a lot of focus on Taiwan. When you step 0:10:48.240 --> 0:10:52.720 back and think about where the US economy is going, 0:10:53.320 --> 0:10:57.160 I wonder how you kind of put all those pieces together. 0:10:57.600 --> 0:11:00.240 How do you think about the US economy and maybe 0:11:00.240 --> 0:11:02.640 even you know, the global economy really over the next 0:11:02.640 --> 0:11:06.439 six or twelve months. Yeah, I mean, you're absolutely right. 0:11:06.520 --> 0:11:09.640 It's just a huge amount to unpack here. I think 0:11:10.080 --> 0:11:12.800 what's very clear from the U S data is that 0:11:12.840 --> 0:11:15.679 we're going into a very pronounced soft patch. I think 0:11:15.720 --> 0:11:18.720 the fact that we've had a huge energy price drive 0:11:18.760 --> 0:11:21.160 and commodity price drate and price shock has had a 0:11:21.240 --> 0:11:24.760 larger effect of many had expected on on consumer sentiments, 0:11:24.760 --> 0:11:28.000 on consumer spending, etcetera. So you know, definitely we see 0:11:28.000 --> 0:11:29.880 in strong signs in the data of a soft spot, 0:11:30.000 --> 0:11:32.840 of a soft patch. We're not convinced this as a recession. 0:11:32.880 --> 0:11:35.120 I know, last week after the two quarters of negative 0:11:35.160 --> 0:11:37.840 growth has been a lot of speculation and concern that 0:11:37.880 --> 0:11:41.439 we're already in recession. We're not convinced that we yet, 0:11:41.559 --> 0:11:45.400 but look, the risks are definitely increasing. And then when 0:11:45.400 --> 0:11:47.880 we look on a longer term horizon, we do think 0:11:47.920 --> 0:11:52.360 as the Fed titans policy, as financial conditions have already 0:11:52.400 --> 0:11:56.920 adjusted very very significantly, stressing markets has increased that we 0:11:56.960 --> 0:11:59.160 think the outlook as we go forward is for a 0:11:59.240 --> 0:12:01.679 further deterior ration in growth. And what we know, as 0:12:01.720 --> 0:12:03.760 I said, we don't think crim recession at the moment. 0:12:04.120 --> 0:12:06.600 We do think prospects over that sort of twelve month 0:12:06.679 --> 0:12:09.320 horizon are pretty dim. So we have a lot of 0:12:09.360 --> 0:12:11.640 concerns about where the U. S. Economy is going, and 0:12:12.000 --> 0:12:14.320 we know when where the U. S. Economy glows, that 0:12:14.400 --> 0:12:16.720 the global economy tends to follow. I mean, it's pretty 0:12:16.720 --> 0:12:21.320 hard to obviously um the technical definition normally are the 0:12:21.400 --> 0:12:24.839 rule of thumb is to quarters of contraction. But if 0:12:24.840 --> 0:12:26.680 you look at this economy with three and a half 0:12:26.720 --> 0:12:32.600 percent unemployment, and you know six or seven percent nominal growth, Um, 0:12:32.640 --> 0:12:35.240 it's difficult to see it, or more it's difficult to 0:12:35.240 --> 0:12:38.080 see it as a recession. Now. On the other hand, 0:12:38.080 --> 0:12:40.200 we had an interesting note by his old ten poser 0:12:40.520 --> 0:12:44.520 opposed are Overnight Um and our colleague are a Jersey 0:12:44.559 --> 0:12:48.120 from Bloomberg Intelligence also has said that this is a 0:12:48.120 --> 0:12:53.080 FED that wants to fight inflation and is sort of determined, 0:12:53.720 --> 0:12:57.200 um to turn this inflation around at the risk of 0:12:57.240 --> 0:12:59.920 pushing the economy into a recession or as posed our 0:13:00.240 --> 0:13:03.040 even the depression. Do you think we're gonna go to 0:13:03.120 --> 0:13:04.960 five percent? Do you think we're gonna go to six 0:13:05.000 --> 0:13:08.080 percent as the outliers are saying, or um, do you 0:13:08.120 --> 0:13:09.880 believe the market that the Fed is going to get 0:13:09.880 --> 0:13:11.320 to three and a half or four and then turn 0:13:11.360 --> 0:13:15.760 tail and run back down? By that team means sorry 0:13:15.800 --> 0:13:19.280 un employment rates, No, No, I mean the terminal rate 0:13:19.360 --> 0:13:23.760 the FED right now at the top range at two fifty, right, 0:13:23.840 --> 0:13:26.880 And even if they do seventy five again, that's only 0:13:26.880 --> 0:13:29.800 three and a quarter. And and if you look at futures, 0:13:30.080 --> 0:13:32.280 the market thinks they're gonna go to four maybe a 0:13:32.280 --> 0:13:35.240 little more, and then come back down already next year. 0:13:35.600 --> 0:13:39.160 But does that mean we're gonna already have met our 0:13:39.160 --> 0:13:41.800 two percent inflation goal by next year or are they 0:13:41.840 --> 0:13:45.200 going to go early? What do you think, um the 0:13:45.200 --> 0:13:48.160 time it's going to be? I told them, I think 0:13:48.200 --> 0:13:50.559 that the difficulty for the Fed at the moment is 0:13:50.640 --> 0:13:52.840 it's seeing signs of weakness in the growth, but it's 0:13:52.880 --> 0:13:55.920 just not comfortable and I don't think will be comfortable 0:13:55.960 --> 0:13:58.920 for a while in pivoting. And that's because it's just 0:13:58.920 --> 0:14:01.320 going to take a while to an inflation under control 0:14:01.840 --> 0:14:05.000 even if growth slow, as the economy looks just enormously 0:14:05.000 --> 0:14:07.480 in balanced stills. So I think today's jolt states were 0:14:07.520 --> 0:14:11.920 really interesting. They showed openings fell pretty significantly, but they're 0:14:12.000 --> 0:14:15.440 still from a historical style and just extraordinarily high. And 0:14:15.480 --> 0:14:18.120 it just tells me the seat has more work to 0:14:18.200 --> 0:14:20.560 do in taking some of the heat tells of this economy. 0:14:20.640 --> 0:14:22.760 So we certainly think the set has a ways to 0:14:22.800 --> 0:14:25.680 go in terms of its tightening. But we probably agree 0:14:25.720 --> 0:14:28.880 that the you know, the terminal rate looks most likely 0:14:28.920 --> 0:14:31.320 to be around we're not a half per cent, so 0:14:31.640 --> 0:14:34.280 there are still a fat dunk of tightening to come. 0:14:34.640 --> 0:14:36.720 It's not impossible that the FED has to go to 0:14:36.800 --> 0:14:40.000 go higher certainly if that inflation proves you know, more 0:14:40.080 --> 0:14:42.840 difficult to to to to do you think with that 0:14:42.920 --> 0:14:45.320 kind of terminal rate they could get down to two. 0:14:45.720 --> 0:14:47.920 We were at nine point one. I know they don't 0:14:47.920 --> 0:14:51.520 go by headline cp I, but uh, what's core PC 0:14:51.960 --> 0:14:56.280 right now? Like five? Um? Can they get back to 0:14:56.440 --> 0:15:02.560 two with a terminal rate of only four? Yeah? Sorry, 0:15:03.280 --> 0:15:05.000 the connection is a little bit poor here, but I 0:15:05.000 --> 0:15:07.600 think they can. I think they can definitely create and 0:15:07.600 --> 0:15:10.160 I think they can do so potentially quite quickly. I 0:15:10.200 --> 0:15:12.200 think that has to happen sort of late next year 0:15:12.240 --> 0:15:16.760 into twenty four potentially. But really what you need to 0:15:16.800 --> 0:15:19.200 see as an inflation for when it falls, it could 0:15:19.280 --> 0:15:22.360 for quite quite quickly. You know. Certainly the energy price 0:15:22.400 --> 0:15:24.920 dynamic I think is already going to be disinflation ry 0:15:24.960 --> 0:15:27.440 through the summer, and it growth sloans could provide further 0:15:27.840 --> 0:15:32.080 disinflation reimpetus. I think global goods prices could moderate quite 0:15:32.200 --> 0:15:36.600 quite rapidly given weakening demand and improving supply chain conditions. 0:15:37.120 --> 0:15:40.160 So it's not impossible that some aspects of their inflation 0:15:40.200 --> 0:15:43.480 picture improved quite quite rapidly. I think what they really 0:15:43.480 --> 0:15:46.360 need to see is that course services inflation moderate, and 0:15:46.440 --> 0:15:49.120 for that they need to see labor market sees and 0:15:49.200 --> 0:15:51.680 wages start to come down, and then I think they'll 0:15:51.720 --> 0:15:54.000 be more confident that the run rate, perhaps not the 0:15:54.080 --> 0:15:56.600 year on year rate, but the run rate of monthly 0:15:56.600 --> 0:15:59.440 inflation is coming in more in line with where their 0:15:59.440 --> 0:16:02.400 inflation target is. And actually, I don't think they're going 0:16:02.480 --> 0:16:04.520 to put the economy into a depression to achieve that, 0:16:04.560 --> 0:16:07.080 because I don't think inflation would be that stubborn, you know, 0:16:07.120 --> 0:16:10.560 but certainly we think that, you know, consecutively a period 0:16:10.560 --> 0:16:12.640 of very weak growth of recession will be enough to 0:16:12.680 --> 0:16:15.600 sort of shake that inflation geanie back into the bottle 0:16:15.680 --> 0:16:17.320 maybe as as a way of putting it, and that 0:16:17.360 --> 0:16:19.560 will allow them to cut as we sort of move 0:16:19.640 --> 0:16:22.480 into late twenty three and twenty twenty four. But that's 0:16:22.480 --> 0:16:24.440 a we have to get the tightening in first. I 0:16:24.440 --> 0:16:27.720 guess James about the consumer, the consumer is kind of 0:16:27.760 --> 0:16:31.480 hanging in there pretty well, and Matt mentioned the relatively strong, 0:16:31.680 --> 0:16:35.640 very strong employment position, but there are some concerns about 0:16:35.800 --> 0:16:39.320 savings rates coming down, credit card rate balance is going up. 0:16:39.440 --> 0:16:42.680 How do you view the consumer? Look, I think the 0:16:42.720 --> 0:16:46.400 consumer in aggregilities is in really good shape when we 0:16:46.440 --> 0:16:49.680 look at the balance. So if we think about debts 0:16:49.720 --> 0:16:51.760 the ratio of the to income, then that's a multi 0:16:51.840 --> 0:16:55.040 year lows. We know there's a lot of accruede saving. 0:16:55.160 --> 0:16:57.520 Even if the flow of saving, the monthly thing that 0:16:57.560 --> 0:17:00.160 they're doing sort of back to pre crisis normals, they've 0:17:00.160 --> 0:17:02.800 built up a big stock pile of saving. I guess 0:17:02.840 --> 0:17:05.120 the key question for the consumer is, you know, what 0:17:05.119 --> 0:17:07.040 do they do with that? Well? Are they happy to 0:17:07.119 --> 0:17:11.120 keep on spending it, especially as the economic outlook starts 0:17:11.200 --> 0:17:14.320 to starts to darken, especially as the labor market starts 0:17:14.320 --> 0:17:17.399 to weaken, do they switch to perhaps some more precautionary stance. 0:17:18.200 --> 0:17:21.200 I think that's what we're already seeing signs of of 0:17:21.359 --> 0:17:24.159 coming out, is that consumers, at first we're looking to 0:17:24.240 --> 0:17:26.800 spend through this inflation of the impulse. Now they seem 0:17:26.840 --> 0:17:29.160 a little bit less convinced. So, you know, I don't 0:17:29.160 --> 0:17:31.760 think the consumers in terrible shape, but I do think 0:17:31.760 --> 0:17:34.960 they'll become increasingly cautious about how they spend their money. 0:17:35.280 --> 0:17:37.880 I think that's going to be felt most acutely endurable 0:17:37.920 --> 0:17:40.879 good sector, just because they've spent so much in that 0:17:41.040 --> 0:17:43.399 in that part of the economy over the last two years. 0:17:43.840 --> 0:17:46.560 Maybe services still has a bit of insulations. People are 0:17:46.560 --> 0:17:49.000 getting back to normal to you're going back to their 0:17:49.000 --> 0:17:52.880 lives pre pre pandemic spending on holidays and and anything else, 0:17:52.920 --> 0:17:58.359 et cetera. But yeah, I do think they look to Edinburgh. Yeah, exactly, 0:17:58.960 --> 0:18:01.439 it's my next holiday, all right, James, what do they 0:18:01.480 --> 0:18:03.159 do that log throwing thing? When do they do that 0:18:03.280 --> 0:18:11.399 big Scottish Thailand Highland Games? That would that's later this 0:18:11.560 --> 0:18:16.679 year is so you should definitely get to tell. Tell well, 0:18:16.840 --> 0:18:19.160 hopefully it cools down. Tell Luke Hickmore. I'm on my way, 0:18:19.320 --> 0:18:22.440 all right, James mcinn, Deputy Chief Economist, Aberdeen Standard Investments, 0:18:22.480 --> 0:18:30.119 Thanks so much for joining. Alright, all eyes on Taiwan today, 0:18:30.359 --> 0:18:33.879 Uh speaker Ploss playing did land moments ago in Taiwan. 0:18:34.440 --> 0:18:36.840 Now there's a red headline across the Bloomberg terminal China 0:18:36.920 --> 0:18:41.320 to carry out military drills encircling Taiwan. So here we go. 0:18:42.000 --> 0:18:46.040 Let's get the latest on all things Taiwan and from 0:18:46.080 --> 0:18:50.040 the speaker. Emily Wilkins, Washington reporter with Bloomberg Government, joins 0:18:50.119 --> 0:18:53.440 us here. So Emily, here we go. The speakers in 0:18:53.600 --> 0:18:59.720 Taiwan what is the expectation in Washington, hopeful or not 0:19:00.080 --> 0:19:03.040 about how this will play out? I mean, I think 0:19:03.119 --> 0:19:06.640 the expectation in Washington. Number one, this is an absolutely 0:19:06.800 --> 0:19:10.119 historic day. It is a historic trip. This is um 0:19:10.240 --> 0:19:12.639 the first time in a quarter of a century that 0:19:12.960 --> 0:19:16.000 one of the top lawmakers in America that the third 0:19:16.080 --> 0:19:19.840 in line from the presidency is in Taiwan. We saw 0:19:19.960 --> 0:19:23.320 that Taiwan even projected um onto a building near the 0:19:23.440 --> 0:19:26.879 airfield a message welcoming Speaker Pelosi and and saying that 0:19:27.040 --> 0:19:31.119 the Taiwan and that that Taiwan loves the US. And 0:19:31.240 --> 0:19:34.639 so it is a huge trip for those reasons. But 0:19:34.760 --> 0:19:36.800 when you look at exactly what is going to be 0:19:36.840 --> 0:19:40.159 accomplished here, Pelosi already put out a statement saying that 0:19:40.400 --> 0:19:42.760 you know that this is not change how the US 0:19:42.840 --> 0:19:46.600 sees Taiwan. It does not change US and Taiwan relationships. 0:19:46.640 --> 0:19:49.080 The US is sticking with the status quo. But she 0:19:49.280 --> 0:19:52.679 also notes that at this point that the US Taiwan 0:19:52.720 --> 0:19:55.639 relationship is more important today than ever as the world 0:19:55.720 --> 0:20:00.280 faces a choice between autocracy and democracy. Those were words 0:20:00.320 --> 0:20:02.920 that the Speaker are released in a statement shortly after 0:20:03.040 --> 0:20:06.360 she landed. So she's seen a larger historical context here. 0:20:06.920 --> 0:20:09.520 I think after Russia invaded Ukraine, a lot of folks 0:20:09.520 --> 0:20:13.200 started asking could we see similar with China and Taiwan. 0:20:14.000 --> 0:20:16.200 And so even though this trip does not involved a 0:20:16.359 --> 0:20:19.480 policy shift, it is sort of a signal about where 0:20:19.520 --> 0:20:23.120 the US sees Taiwan and the allegiance that that both 0:20:23.200 --> 0:20:25.399 have with each other. Eamily, you spend a lot of 0:20:25.480 --> 0:20:29.280 time um in the halls of Congress. Is this something 0:20:29.880 --> 0:20:33.440 that you know, one of those rare issues that has 0:20:33.480 --> 0:20:36.520 support on both sides of the aisle? It does? It 0:20:36.640 --> 0:20:40.639 really does. I mean, we saw Senate Minority Leader Mitch McConnell, certainly, 0:20:40.720 --> 0:20:43.440 someone who's never been afraid to criticize Pelosi in the past, 0:20:43.800 --> 0:20:46.280 basically encouraging her to go on this trip, saying that 0:20:46.359 --> 0:20:48.560 if she didn't, she would be handing China a win. 0:20:48.960 --> 0:20:52.720 We heard very similar rhetoric from the House Republican Leader 0:20:52.840 --> 0:20:57.080 Kevin McCarthy. You've heard the same from em Pelosi's own party. Certainly, 0:20:57.119 --> 0:21:00.479 there have been security concerns that we I've heard from 0:21:00.480 --> 0:21:03.879 the Department of Defense, from the Pentagon. There's a recognition 0:21:03.960 --> 0:21:07.399 that this is a sensitive time within the relationship between 0:21:07.440 --> 0:21:11.199 Washington and Beijing. At the same point, I can't think 0:21:11.240 --> 0:21:13.200 of a single House member who has really come out 0:21:13.560 --> 0:21:16.720 and said we don't want Speaker Pelosi to be going 0:21:16.920 --> 0:21:20.600 on this trip at this time. Certainly there this is 0:21:20.640 --> 0:21:22.160 going to have to be a trip where the Speaker 0:21:22.240 --> 0:21:24.320 needs to be cautious. She needs to be careful in 0:21:24.440 --> 0:21:27.120 what words she uses in the actions that she has. 0:21:27.520 --> 0:21:30.680 At the same point, though this is not Pelosi's first rodeo. 0:21:30.920 --> 0:21:35.520 I mean, she went to Taneman Square and and protested 0:21:35.760 --> 0:21:38.840 um the killings there the previous two years, and so 0:21:39.119 --> 0:21:42.840 she understands the region, she understands the aspect, she understands 0:21:42.880 --> 0:21:45.680 the dynamics, and certainly she's been in a position of 0:21:45.760 --> 0:21:48.800 power long enough to to really understand what would and 0:21:48.920 --> 0:21:51.760 would not be considered uh in line with the current 0:21:51.800 --> 0:21:54.119 status quo. Emily, Matt and I are looking at the 0:21:54.320 --> 0:21:57.399 live go when we see a view here appears to 0:21:57.480 --> 0:22:00.240 be of a hotel in Taiwan. Looks like the press 0:22:00.280 --> 0:22:03.639