WEBVTT - Baltimore Bridge Collapse 0:00:02.920 --> 0:00:10.639 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.720 --> 0:00:13.960 Week Inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.360 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.680 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:26.200 and Tim Stenebeck from Bloomberg Radio. 0:00:27.440 --> 0:00:29.440 Let's get to what, as you know, is our top 0:00:29.560 --> 0:00:32.199 national story, the collapse of the Francis Scott Key Bridge 0:00:32.280 --> 0:00:35.600 in Baltimore after containership struck it, sending nearly the entire 0:00:36.040 --> 0:00:40.120 roadway structure crumbling into the water. President Biden, addressing the 0:00:40.159 --> 0:00:41.800 incident earlier from the White. 0:00:41.560 --> 0:00:44.960 House, I told him we're going to send all the 0:00:44.960 --> 0:00:46.760 federal resources they need as. 0:00:46.600 --> 0:00:50.000 We respond to this emergency. I mean all the federal resources, 0:00:50.320 --> 0:00:52.080 and we're going to rebuild that port together. 0:00:52.880 --> 0:00:56.080 Everything so far indicates that this was a terrible accident. 0:00:56.520 --> 0:00:59.320 At this time, we have no other indication, no other 0:00:59.360 --> 0:01:02.200 reason to believe there's any intentional active all. 0:01:02.160 --> 0:01:04.240 Right, That, of course, was President Biden earlier from the 0:01:04.280 --> 0:01:06.560 White House. For the latest. Let's head to Bloomberg co 0:01:06.640 --> 0:01:08.600 host a Balance of Power Keayley Line. She is on 0:01:08.680 --> 0:01:13.319 site in Baltimore. Kelly a lot going on, and new information, 0:01:13.400 --> 0:01:16.399 obviously about this situation continues to come out. So what's 0:01:16.440 --> 0:01:17.720 the latest. Get us up to speed? 0:01:18.720 --> 0:01:21.440 Got well, Carol. Right now, this is still an active 0:01:21.480 --> 0:01:24.160 search and rescue effort, and officials here say that is 0:01:24.160 --> 0:01:26.280 still the number one priority. What we know is that 0:01:26.319 --> 0:01:28.920 at the time this happened one thirty am Eastern time, 0:01:28.959 --> 0:01:31.319 when the Dolly collided with a structural support of the 0:01:31.319 --> 0:01:33.720 bridge and it all came crashing down, there was a 0:01:33.800 --> 0:01:37.760 construction crew on the bridge working on fixing potholes, and 0:01:37.800 --> 0:01:40.600 a number of individuals fell into the water. Two have 0:01:40.680 --> 0:01:42.840 been rescued, one of which is hospitalized, but there are 0:01:42.880 --> 0:01:46.200 still six individuals unaccounted for. So that is really what 0:01:46.240 --> 0:01:49.880 everyone is focused on most immediately, is that rescue operation. 0:01:50.000 --> 0:01:52.320 Then of course it will turn to other questions, including 0:01:52.360 --> 0:01:54.880 the clearing of the debris so that this port, a 0:01:55.040 --> 0:01:57.680 very busy port of Baltimore, may be able to get 0:01:57.760 --> 0:02:00.559 back open at some point in time, And of course 0:02:00.600 --> 0:02:03.400 then there's the other effort of reconstructing this bridge, but 0:02:03.480 --> 0:02:06.120 again there is no clear timeline. We heard as much 0:02:06.120 --> 0:02:08.360 from the Maryland Governor Wes Moore when he spoke to 0:02:08.400 --> 0:02:11.440 reporters earlier today. He really emphasized that the focus right 0:02:11.440 --> 0:02:13.680 now is on saving lives. He did not put a 0:02:13.720 --> 0:02:17.440 timeline on anything. And in the interim traffic, commuter traffic, 0:02:18.440 --> 0:02:21.400 you know, goods getting shipped over the roads and goods 0:02:21.440 --> 0:02:25.160 getting shipped in transit by the waterways here around Baltimore 0:02:25.200 --> 0:02:26.760 are going to be disrupted. 0:02:27.040 --> 0:02:27.320 Kaylie. 0:02:27.360 --> 0:02:29.639 We did hear from the President that everything so far 0:02:29.680 --> 0:02:32.400 indicates that this was a terrible accident. What do we 0:02:32.440 --> 0:02:34.720 know about the accident, what do we know about the ship, 0:02:34.720 --> 0:02:36.440 what do we know about the crew on the Dohli 0:02:36.720 --> 0:02:37.800 and just how this happened. 0:02:39.440 --> 0:02:41.480 Well, the Dolli, of course, is a ship that with 0:02:41.520 --> 0:02:44.640 Singapore flags, had been chartered by Marriskin was carrying cargo 0:02:44.760 --> 0:02:47.760 of Marri's customers. Now, what is the law here in 0:02:47.800 --> 0:02:50.840 Maryland is that the ship actually needed to be piloted 0:02:50.840 --> 0:02:54.400 in Maryland waters by authorities from the state, so that 0:02:54.560 --> 0:02:56.680 was who would have been in charge of the vessel 0:02:56.680 --> 0:02:59.320 at the time this happened. But our understanding at this point, 0:02:59.320 --> 0:03:03.640 based on the briefing reporters have received from authorities, is 0:03:03.720 --> 0:03:07.320 essentially that there was a power outage, they lost propulsion, 0:03:07.400 --> 0:03:10.560 the ability to control the vessel and they did notify 0:03:10.880 --> 0:03:13.720 poor authorities here in Maryland of that. So Wes Moore 0:03:13.800 --> 0:03:16.680 actually the Governor talked in the briefing about how authorities 0:03:16.720 --> 0:03:19.160 did have time to make sure that no more vehicles 0:03:19.200 --> 0:03:21.600 came on to the bridge. They were able to halt 0:03:21.880 --> 0:03:24.720 more traffic because they did get warning a may day 0:03:24.919 --> 0:03:27.320 from the ship that this was happening. But ultimately, this 0:03:27.440 --> 0:03:29.400 was a ship, according to the Governor, that was traveling 0:03:29.600 --> 0:03:32.800 at eight knot speed, relatively fast considering they were just 0:03:32.840 --> 0:03:35.120 coming down the river, and ultimately could not be stopped 0:03:35.160 --> 0:03:37.760 from colliding into the structural support. So again, as we 0:03:37.800 --> 0:03:40.160 heard from the President, as we've heard repeatedly from the 0:03:40.240 --> 0:03:43.680 other authorities, really just looks like a terrible, tragic accident 0:03:43.720 --> 0:03:47.240 that of course will have consequences human most immediately regionally 0:03:47.280 --> 0:03:48.680 and even nationally as well. 0:03:48.760 --> 0:03:50.400 Kaylee, you've been on the ground for a few hours. 0:03:50.440 --> 0:03:53.240 Just describe the scene and what you've been noticing over 0:03:53.280 --> 0:03:54.000 that timeframe. 0:03:55.640 --> 0:03:58.320 Well, there are hundreds of people here, Carol, obviously very 0:03:58.400 --> 0:04:01.800 large media presence from local media here in the DMV 0:04:01.920 --> 0:04:04.080 area to national media as well, as there have been 0:04:04.120 --> 0:04:07.480 other trucks, things carrying equipment, even some trailers up to 0:04:07.520 --> 0:04:09.440 the point of the road that we at least are 0:04:09.480 --> 0:04:12.240 able to see. Of course, the road ultimately just hits 0:04:12.280 --> 0:04:14.560 a dead end and there is nothing beyond it because 0:04:14.560 --> 0:04:16.919 of that part of the bridge had collapsed. But starting 0:04:16.920 --> 0:04:18.680 to see some equipment coming in, and of course I 0:04:18.720 --> 0:04:21.800 am watching really at this hour for any time now. 0:04:21.880 --> 0:04:25.760 This Transportation Secretary Pete buddhaj Edge is expected to be 0:04:25.880 --> 0:04:28.800 here on site at the invitation of Governor Moore to 0:04:28.839 --> 0:04:31.479 work with authorities here as this effort is underway. He 0:04:31.520 --> 0:04:34.000 will likely reiterate a lot of what we've already heard 0:04:34.000 --> 0:04:36.560 from President Biden in terms of the federal government providing 0:04:36.600 --> 0:04:38.719 support not just to the search and rescue effort, but 0:04:38.760 --> 0:04:41.520 the reconstruction effort as well, and any funding that that 0:04:41.600 --> 0:04:43.680 might require. And even more immediately, I would point out, 0:04:43.680 --> 0:04:46.040 at two thirty pm Eastern time, we are expecting right 0:04:46.080 --> 0:04:49.360 here behind me, the NTSB to be delivering a briefing 0:04:49.360 --> 0:04:51.600 to the press. Of course, will keep all updated on 0:04:51.640 --> 0:04:52.960 those developments as we get them. 0:04:53.160 --> 0:04:55.880 Yeah, and we will take those briefings live as we 0:04:55.960 --> 0:04:59.240 do get them. Hey, Kaylee, I know you mentioned it's 0:04:59.240 --> 0:05:01.960 a search and rescue operation, is what's happening right now? 0:05:02.040 --> 0:05:05.480 That is our focus and the other questions will will 0:05:05.520 --> 0:05:09.640 certainly come later. It does raise questions about what happens 0:05:09.640 --> 0:05:13.000 to shipping out of Baltimore and what happens on the 0:05:13.040 --> 0:05:15.440 global shipping front. What can you tell us about the 0:05:15.440 --> 0:05:17.599 importance of the port and where some of the port 0:05:17.600 --> 0:05:21.640 traffic will go and how this could snarl a really 0:05:21.640 --> 0:05:24.640 delicate balance when it comes to global trade. 0:05:25.440 --> 0:05:27.600 Yeah, of course, we're all still reeling from the supply 0:05:27.680 --> 0:05:30.080 chain impacts we saw during COVID nineteen, and in some 0:05:30.120 --> 0:05:33.120 ways that may make actually more cargo operators and those 0:05:33.160 --> 0:05:35.320 coordinating these shipments to be a little bit more prepared 0:05:35.360 --> 0:05:37.799 and being able to reroute things, but that will likely 0:05:38.040 --> 0:05:40.640 be necessary and frankly for an unknown period of time. 0:05:40.680 --> 0:05:42.840 As you allude to, Tim, this is a very important port. 0:05:42.960 --> 0:05:45.479 It is actually the busiest port in the country and 0:05:45.520 --> 0:05:47.840 has been for thirteen years in a row in terms 0:05:47.880 --> 0:05:51.320 of the import and export of automobihicles, the vehicles, cars, 0:05:51.400 --> 0:05:54.120 light trucks. Almost eight hundred and fifty thousand of them 0:05:54.160 --> 0:05:56.640 went through this port in twenty twenty three, and that 0:05:56.760 --> 0:05:59.760 is now going to be likely heavily disrupted. We already 0:05:59.800 --> 0:06:02.880 have or have heard from the Ford executive speaking on 0:06:02.880 --> 0:06:05.120 Bloomberg earlier talking about how they're going to need to 0:06:05.160 --> 0:06:08.200 reroute some things in terms of car parks, for example, 0:06:08.240 --> 0:06:10.719 GM has indicated they'll have to reroute as well. And 0:06:10.720 --> 0:06:13.040 it's not just the auto industry that could be affected here. 0:06:13.080 --> 0:06:15.520 There's also a number of key commodities that come in 0:06:15.560 --> 0:06:17.479 and out of this port, one being cold. We're talking 0:06:17.520 --> 0:06:20.120 tens of millions of tons per year that could be 0:06:20.480 --> 0:06:23.960 disrupted in terms of those exports for an unknown period 0:06:23.960 --> 0:06:27.000 of time. Really, there's just a lot of transit, seaborne 0:06:27.000 --> 0:06:30.240 transit in particular, that is going to have to go elsewhere, 0:06:30.279 --> 0:06:33.320 whether that's north to places like New Jersey and New 0:06:33.400 --> 0:06:35.600 York and those ports there are south to the likes 0:06:35.600 --> 0:06:38.120 of Norfolk in Virginia. But there's going to have to 0:06:38.160 --> 0:06:39.960 be moving around. And that's just in terms of what 0:06:40.080 --> 0:06:42.520 moves over water. Of course, there is a huge part 0:06:42.560 --> 0:06:44.840 of I six ninety five that is now collapsed and 0:06:44.960 --> 0:06:48.599 is also submerged, and ground traffic, commuter traffic, and just 0:06:48.680 --> 0:06:51.160 freight distribution is going to be disrupted as well. 0:06:51.160 --> 0:06:52.920 All Right, Gonna leave it there, Hey, Kaylee, thank you 0:06:53.000 --> 0:06:55.160 so much. Bloomberg co host have balance of power at 0:06:55.200 --> 0:06:57.600 Kaylee Lines, and we want to continue on the shipping 0:06:57.600 --> 0:07:00.680 impact and the significance of this port in Baltimore. It 0:07:00.800 --> 0:07:02.560 is one of the busiest ports, as we heard from 0:07:02.640 --> 0:07:04.800 Kelly on the US East Coast. With more on that 0:07:04.839 --> 0:07:06.839 side of the story. Let's bring in Bloomberg News. Trades 0:07:06.880 --> 0:07:10.720 are Brendan Murray joining us from London. Brendan, we know 0:07:10.800 --> 0:07:15.120 this is a major distribution hub, the biggest in Maryland specifically, 0:07:15.160 --> 0:07:16.960 share with us some more about size and scope and 0:07:16.960 --> 0:07:20.000 the significance of this port to the US supply chain. 0:07:21.520 --> 0:07:24.240 Yeah, it's it's not a giant port for containers, but 0:07:24.520 --> 0:07:27.080 as your previous guests mentioned, there are some there's a 0:07:27.120 --> 0:07:30.720 diverse array of products that and goods that move in 0:07:30.760 --> 0:07:36.720 and out of Baltimore. Cars, coal, gypsum, uh, and a 0:07:36.720 --> 0:07:41.320 lot of the construction equipment, so you know, and farming equipment. 0:07:41.760 --> 0:07:43.920 You know, it's it's we're getting close to planting season 0:07:43.960 --> 0:07:46.960 for farmers, We're getting close to sort of spring construction season. 0:07:47.080 --> 0:07:50.880 So so those kinds of things could cause some logistical 0:07:51.080 --> 0:07:53.600 uh snarls or hiccups here in the in the weeks 0:07:53.640 --> 0:07:57.040 and months ahead. UH. A lot of a lot of 0:07:57.040 --> 0:07:59.840 this cargo will will be diverted to to places near 0:08:00.080 --> 0:08:04.520 I like New York or or Norfolk, Virginia, although one 0:08:04.520 --> 0:08:07.400 of the major car terminals that would be an option 0:08:07.520 --> 0:08:10.400 for Baltimore is in Brunswick, Georgia, and so that's you know, 0:08:10.760 --> 0:08:13.280 hundreds of miles to the south. So you can imagine 0:08:13.920 --> 0:08:16.800 that the delays that are going to be involved in 0:08:17.000 --> 0:08:20.720 shipping something from uh you know, Georgia, uh, you know, 0:08:20.800 --> 0:08:23.720 up the East coast as opposed to bringing it into Baltimore. 0:08:23.760 --> 0:08:25.520 So it's those kinds of wrinkles that are going to 0:08:25.600 --> 0:08:29.040 have to be worked out over the over the coming weeks. 0:08:29.640 --> 0:08:32.520 But but you know, they're still sort of untangling the 0:08:32.559 --> 0:08:36.719 mess that the port itself. Some of those auto terminals 0:08:36.920 --> 0:08:39.960 are on the ocean side of the bridge, so they're 0:08:40.000 --> 0:08:42.160 not going to be affected some of it if some 0:08:42.240 --> 0:08:43.760 of it is on the other side of the bridge, 0:08:43.800 --> 0:08:46.520 which which is apparently going to be closed for for 0:08:46.600 --> 0:08:49.040 a long time. So there's still a lot of details 0:08:49.040 --> 0:08:52.280 to work out about the extent of the of the disruptions, 0:08:52.600 --> 0:08:56.520 but it's they're going to be some at least minor 0:08:56.600 --> 0:09:01.120 disruptions uh for for a while, and they may turn 0:09:01.160 --> 0:09:06.360 into they may sort of snowball. If they can't work 0:09:06.400 --> 0:09:08.680 these out, that's yer over the next couple of weeks. 0:09:08.760 --> 0:09:10.440 Yeah, that's what I wanted to talk about. Used terms 0:09:10.520 --> 0:09:13.760 like hiccups and snarl and wrinkles. At what point do 0:09:13.800 --> 0:09:17.240 they become bigger disruptions that can affect the greater US 0:09:17.280 --> 0:09:20.640 and perhaps even global economy. Is that possible with the 0:09:20.679 --> 0:09:21.400 tragedy like this. 0:09:22.280 --> 0:09:25.040 Well, you know, we saw you a pretty clear example 0:09:25.120 --> 0:09:28.160 during the pandemic that an extra ten or twenty percent 0:09:28.280 --> 0:09:31.480 of cargo coming into another port that's not really ready 0:09:31.480 --> 0:09:35.720 for it can cause major congestion. That's what happened in 0:09:35.800 --> 0:09:38.480 Los Angeles when a lot of consumer demand in the 0:09:38.559 --> 0:09:42.160 US picked up, and you kind of had this sort 0:09:42.200 --> 0:09:46.280 of accordion effect where the rail the rail lines couldn't 0:09:46.360 --> 0:09:49.400 keep couldn't move the goods out of the port, and 0:09:49.440 --> 0:09:51.800 then the truckers, you know, couldn't move the you know, 0:09:51.800 --> 0:09:54.680 so it just kind of has this domino effect. So 0:09:54.760 --> 0:09:56.880 we definitely saw that. So if this cargo has got 0:09:56.920 --> 0:10:00.440 a divert elsewhere the other ports, if there's not opacity 0:10:00.559 --> 0:10:05.480 to handle and absorb the absorb that extra cargo, then 0:10:05.520 --> 0:10:08.760 you could see ships backed up to the extent to 0:10:08.800 --> 0:10:11.040 which we don't know yet, but that that kind of 0:10:11.040 --> 0:10:14.360 thing can definitely happen as we've seen before, you. 0:10:14.280 --> 0:10:15.800 Know, Brendan too. And I think, and you note this 0:10:15.840 --> 0:10:19.720 in your story. Let's not forget that, you know, distribution warehouses, right, 0:10:19.720 --> 0:10:21.400 it's always we talk about it as a great real 0:10:21.520 --> 0:10:24.040 estate play, a lot of investors do. But nonetheless, there 0:10:24.040 --> 0:10:28.040 are some massive distribution warehouses from the likes of Amazon, FedEx, 0:10:28.120 --> 0:10:33.280 under Armor, Home Depot, car companies like around that area 0:10:33.400 --> 0:10:35.720 in particular. So I guess we're all kind of waiting 0:10:35.720 --> 0:10:38.840 to see what those companies maybe say specifically about that. 0:10:38.920 --> 0:10:40.520 But that's another aspect to this story. 0:10:41.600 --> 0:10:44.160 Oh absolutely. I mean, these distribution centers are you know, 0:10:44.200 --> 0:10:46.760 whereas there are money that many of them are automated, 0:10:46.920 --> 0:10:50.920 so you know, you start throwing curveballs at them like this, 0:10:51.200 --> 0:10:53.439 and you know there's a kind of the whole system 0:10:53.480 --> 0:10:57.679 can kind of lock up. So there are definitely going 0:10:57.760 --> 0:11:02.520 to be problems regionally with shipping around Baltimore and the 0:11:02.600 --> 0:11:07.320 sort of the Philadelphia Washington corridor. The truck traffic is 0:11:07.360 --> 0:11:11.160 going to be you know, all that all the hazardous 0:11:11.200 --> 0:11:14.640 materials have to go over that bridge. That bridge now 0:11:15.000 --> 0:11:16.920 no longer is passable, so it's going to have to 0:11:16.920 --> 0:11:19.720 go somewhere else. It can't go through the Baltimore Harbor Tunnel, 0:11:20.080 --> 0:11:22.640 so you know you're looking at you know, a lot 0:11:22.679 --> 0:11:25.560 of extra traffic's going to be pushed on different roadways, 0:11:25.960 --> 0:11:28.760 and you know that's the middle of the Eastern Corridor 0:11:29.400 --> 0:11:31.640 where lots of goods flow on north and south. 0:11:31.679 --> 0:11:33.800 But as you said, still a lot to work out, 0:11:33.800 --> 0:11:35.600 and we'll find out whether or not what could be 0:11:35.679 --> 0:11:39.680 minor disruptions become something much more major. Brendan, thank you 0:11:39.679 --> 0:11:42.240 so much, really appreciate Bloomberg News Trades are Brendan Murray 0:11:42.320 --> 0:11:43.920 joining us there from London. 0:11:45.640 --> 0:11:49.160 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:49.200 --> 0:11:52.439 live weekday afternoons from two to five pm Eastern Listen 0:11:52.480 --> 0:11:54.640 on Apple card Play and then Bright Auto with a 0:11:54.679 --> 0:11:57.719 Bloomberg Business at or wants us Live on YouTube. 0:12:00.800 --> 0:12:03.480 A check though on the trade on this Tuesday with 0:12:03.520 --> 0:12:05.280 an update on that back over to John Tucker. 0:12:05.440 --> 0:12:08.000 Right the major average is Carol still higher right now, 0:12:08.200 --> 0:12:10.439 the advance for the S and P five hundred and 0:12:10.480 --> 0:12:14.000 the NANSDA Composite Index approaching ten percent since the start 0:12:14.000 --> 0:12:16.920 of the year. After the two day pullback. Stocks again 0:12:16.960 --> 0:12:20.319 they were advancing today. And the best performing stock in 0:12:20.400 --> 0:12:22.679 the S and P five hundred right now, McCormick. It 0:12:22.800 --> 0:12:26.520 is up over nine percent right now, closing in on 0:12:26.640 --> 0:12:29.880 ten percent again. That's the best performing stock in the 0:12:29.960 --> 0:12:33.079 S and P five hundred after delivering an encouraging sales update. 0:12:33.400 --> 0:12:36.520 Worst performing stock right now that belongs to the United 0:12:36.559 --> 0:12:40.200 Parcel Service eight percent lower their revenue target beat estimates. 0:12:40.600 --> 0:12:44.200 But Will Street analysts kind of underwhelmed by the performance there. 0:12:44.400 --> 0:12:46.520 S and P five hundred eight points higher right now. 0:12:46.520 --> 0:12:48.880 That's up two tents of a percent, fifty two to 0:12:48.960 --> 0:12:51.400 twenty six on the index. The down Jones, dust Linemage 0:12:51.440 --> 0:12:53.800 up sixty seven points, a rise of two tenths of 0:12:53.800 --> 0:12:57.240 a percent. The NANDAC right now forty points higher, that 0:12:57.320 --> 0:12:59.600 is up a quarter of a percent. And we check 0:12:59.600 --> 0:13:01.640 the market for you all day long right here on 0:13:01.679 --> 0:13:04.920 Bloomberg Radio, I'm John Tucker, and then he's your Bloomberg 0:13:05.120 --> 0:13:07.400 Business Flash Carolyn tim all right. 0:13:07.400 --> 0:13:09.920 John Tucker, So appreciate it, Hey, John, of course, breaking 0:13:09.960 --> 0:13:12.480 down the trade. Don't forget we did get some economic 0:13:12.559 --> 0:13:16.840 points earlier today, some data points. It's a busy check 0:13:16.880 --> 0:13:19.440 full week, if you will, of economic data points. We 0:13:19.480 --> 0:13:22.400 had US consumer confidence holding steady and March Americans were 0:13:22.400 --> 0:13:25.360 seguine about their current situations tim but grew slightly more 0:13:25.360 --> 0:13:28.719 pessimistic about the outlook. And then new orders placed with 0:13:28.840 --> 0:13:31.000 US factories for durable goods that rose in the month 0:13:31.000 --> 0:13:32.960 of February for the first time in three months, so 0:13:33.440 --> 0:13:36.840 suggesting that firms are somewhat optimistic about the direction of 0:13:36.880 --> 0:13:37.800 the US economy. 0:13:37.960 --> 0:13:41.199 On that, gold earlier extended Monday's gain ahead of key 0:13:41.240 --> 0:13:44.440 US inflation data which we get on Friday that could 0:13:44.480 --> 0:13:46.760 provide creators with a firm review on when the Fed 0:13:46.840 --> 0:13:49.839 will start cutting interest rates. Gold did pair most of 0:13:49.840 --> 0:13:52.000 those gains, but still near an all time high of 0:13:52.240 --> 0:13:54.559 more than twenty two one hundred dollars per ounce. 0:13:54.600 --> 0:13:56.080 All right, So with a look at kind of the 0:13:56.120 --> 0:13:59.160 broader macro environment and also the precious metal space, we 0:13:59.160 --> 0:14:02.280 welcome the President World Markets at EverBank. He's Chris Gaffney. 0:14:02.520 --> 0:14:05.520 He's here in studio. EverBank, by the way, noting on 0:14:05.559 --> 0:14:07.960 its website thirty six point two billion in assets and 0:14:08.000 --> 0:14:10.360 twenty seven point nine billion in deposits as of the 0:14:10.480 --> 0:14:13.080 end of twenty three. Chris nice to have you in studio. 0:14:13.080 --> 0:14:15.760 How are you great? Thanks, it's great to be here. 0:14:15.800 --> 0:14:17.360 Well, it's great to have you here, and I have 0:14:17.440 --> 0:14:20.240 to start you guys think about the broad macro and 0:14:20.280 --> 0:14:22.640 things kind of coming at us, And I am curious 0:14:23.560 --> 0:14:25.400 if you have any thoughts about what's going on in 0:14:25.400 --> 0:14:28.400 Baltimore right now. We're looking once again very deeply and 0:14:28.440 --> 0:14:31.320 closely at US supply chains, and I'm just curious if 0:14:31.320 --> 0:14:33.400 you have any thoughts in terms of your world and 0:14:33.440 --> 0:14:36.560 how you think about it might impact potentially if we 0:14:36.600 --> 0:14:40.520 see some supply chain disruptions in terms of higher prices inflation. 0:14:40.600 --> 0:14:42.160 And we kind of we know the story. 0:14:41.840 --> 0:14:45.960 Here exactly, so you know, it will definitely lead to, 0:14:46.280 --> 0:14:50.800 if anything, higher inflation and higher inflation reading with supply 0:14:50.920 --> 0:14:56.120 chain disruptions, which could could. 0:14:55.880 --> 0:14:57.520 Lead the FED to. 0:14:59.040 --> 0:15:03.560 You know, STUF rate cuts are actually pause on their 0:15:03.600 --> 0:15:06.440 planned rate cuts right now. We believe that the FED 0:15:06.480 --> 0:15:08.680 pretty much has a predetermined. 0:15:08.360 --> 0:15:10.920 Rate cut path and it's really looking. 0:15:10.600 --> 0:15:13.320 For reasons to knock them off their path instead of 0:15:13.360 --> 0:15:17.120 reasons to cut. And you know, I think June is 0:15:17.360 --> 0:15:20.080 definitely on the table and they're they're going to. 0:15:20.120 --> 0:15:21.200 Look to cut in June. 0:15:21.360 --> 0:15:23.200 And how many do you think will the FED will 0:15:23.240 --> 0:15:23.400 do this? 0:15:23.400 --> 0:15:27.320 Well, they're still saying three and not every member of 0:15:27.320 --> 0:15:30.440 the Fed, right, And they they pulled back a little 0:15:30.440 --> 0:15:34.160 bit on their twenty twenty five. I think it's really 0:15:34.200 --> 0:15:37.960 dependent on you know, where they they believe inflation. Where 0:15:37.960 --> 0:15:40.920 this next PCE report comes in. They ignored the last two, 0:15:42.080 --> 0:15:46.120 and they seem to be tending to look to let 0:15:46.160 --> 0:15:48.760 inflation run hotter for longer because. 0:15:48.560 --> 0:15:52.000 They believe those longer term inflation expectations are anchored, right, 0:15:52.080 --> 0:15:52.880 They're sticking to that. 0:15:53.200 --> 0:15:56.920 And and you know, they are in kind of a 0:15:57.000 --> 0:16:01.480 situation where with the amount of debt that we have here, 0:16:02.440 --> 0:16:06.760 they need to lower interest rates, especially before it really 0:16:06.800 --> 0:16:09.400 has an impact on the on the global economy and 0:16:09.880 --> 0:16:12.760 the cost of service exactly, that cost of servicing debt 0:16:13.480 --> 0:16:15.480 is going to take more and more of the of 0:16:15.520 --> 0:16:19.080 the budget of the US budget. So by lowering interest rates, 0:16:19.120 --> 0:16:22.360 they'll have less debt service cost. It's not one of 0:16:22.400 --> 0:16:25.480 their mandates, you know, I know, it's it's mind you 0:16:25.760 --> 0:16:26.520 strong labor. 0:16:26.720 --> 0:16:29.480 And I didn't hear Powell say this at all during 0:16:29.520 --> 0:16:32.320 the press by extra mandate in the background. 0:16:32.440 --> 0:16:35.479 And I do believe that, and maybe people. 0:16:35.200 --> 0:16:38.280 Have come on and said, you know us debt. You know, 0:16:38.280 --> 0:16:40.280 all of a sudden you go back ten years, twenty years, 0:16:40.280 --> 0:16:43.200 it's like every conversation was about it. Right, it's gone 0:16:43.200 --> 0:16:45.800 to the wayside, but it is up this morning. 0:16:46.760 --> 0:16:50.040 And you know, by cutting rates, they'll they'll ease that 0:16:50.040 --> 0:16:54.920 debt service. And I really think that from what Paul 0:16:55.040 --> 0:16:58.320 was saying in his pressure, they're going to let inflation round. 0:16:58.160 --> 0:17:01.520 A little hotter. I think they'll adjust their inflation target. 0:17:01.840 --> 0:17:03.960 I don't think two percent is realistic, and I think 0:17:04.000 --> 0:17:07.000 they'll adjust their inflation target up. What that does to 0:17:07.040 --> 0:17:09.640 the markets? You know, is two and a half three 0:17:09.680 --> 0:17:12.000 percent inflation going to kill the markets? 0:17:12.040 --> 0:17:14.760 I don't think so. And I think they continue to 0:17:14.800 --> 0:17:15.280 lower rates. 0:17:15.400 --> 0:17:17.159 Why do they have to make that adjustment? Is it 0:17:17.160 --> 0:17:19.200 because the macro factors, say, we're in a very different 0:17:19.280 --> 0:17:20.400 environment post pandemic. 0:17:20.560 --> 0:17:23.680 I think this is sticky inflation, and I think the 0:17:23.680 --> 0:17:27.160 the interest rates are going to settle at a higher 0:17:27.240 --> 0:17:30.560 level than the markets expecting right now because because of 0:17:30.600 --> 0:17:33.280 the higher inflation, is stickier inflation and. 0:17:33.440 --> 0:17:36.359 Because of macro like, is it like, what is it 0:17:36.400 --> 0:17:38.920 that's changed in our inflationary environment? 0:17:39.359 --> 0:17:40.959 Yeah? 0:17:41.040 --> 0:17:42.200 I think that. 0:17:43.600 --> 0:17:48.560 You know, we have the supply chain interruptions, but I 0:17:48.600 --> 0:17:50.840 think in general, the economy is doing well. The labor 0:17:50.880 --> 0:17:54.440 market is is very resilient, consumers are resilient. We've got 0:17:54.640 --> 0:17:58.600 very strong US consumers. They don't seem to be adjusting 0:17:58.600 --> 0:18:01.879 their spending, you know, confident. While the longer term confidence 0:18:02.000 --> 0:18:06.680 is questionable. US consumers are still very strong, so they're 0:18:06.680 --> 0:18:10.919 going to continue spending. We see services continuing to you know, 0:18:11.000 --> 0:18:16.439 inflationary pressures on services. Any supply chain interruption, you know, 0:18:16.480 --> 0:18:18.680 that's going to add to inflationary pressures also. 0:18:18.960 --> 0:18:22.600 So let's get to gold and precious metals. Given the 0:18:22.720 --> 0:18:25.720 narrative that you just gave, why are we seeing gold 0:18:25.760 --> 0:18:26.680 near an all time high? 0:18:27.000 --> 0:18:31.040 Well, absolutely, it's a a it's kind of an inflation hedge. 0:18:31.680 --> 0:18:34.840 You know, traditionally it's shown as an inflation hedge. But 0:18:35.040 --> 0:18:38.119 what we see on Everbank's World Market desk is is 0:18:38.359 --> 0:18:43.479 individual investors concerned about the global economy. They're using it 0:18:43.600 --> 0:18:47.160 as a uncertainty hedge or a catastrophe hedge, and we're 0:18:47.160 --> 0:18:50.359 seeing people come in. Individual investors come in and want to 0:18:50.680 --> 0:18:54.000 own a hard asset. One of the things that propelled 0:18:54.040 --> 0:18:57.000 gold to the record levels was central bank buying, and 0:18:57.480 --> 0:19:00.199 central banks were switching their reserves out of you US 0:19:00.280 --> 0:19:03.919 dollars into precious metal, into gold, and I think some 0:19:04.000 --> 0:19:06.639 of the consumers are starting to just start to do 0:19:06.720 --> 0:19:10.119 that also and wanting that hard asset, wanting the diversification 0:19:11.359 --> 0:19:14.240 outside of just owning the traditional asset classes. 0:19:14.359 --> 0:19:16.320 Chris, because you do see so much on that platform, 0:19:16.640 --> 0:19:18.679 quantify it for us. Is it back to levels we 0:19:18.680 --> 0:19:21.280 saw pre pandemic? Is it give us an idea of 0:19:21.320 --> 0:19:23.680 if you're seeing buying, how much has it how much 0:19:23.680 --> 0:19:26.200 has it kind of picked up in terms of frequency buying? 0:19:26.520 --> 0:19:28.760 Isn't quite back to the levels we saw, you know, 0:19:29.040 --> 0:19:31.960 post pandemic. We went through a silver shortage and we 0:19:32.000 --> 0:19:36.080 saw spreads on the physical silver widened dramatically. They're not 0:19:36.240 --> 0:19:40.080 back there yet. The spreads are narrower. Demand is up though, 0:19:40.119 --> 0:19:43.920 and we're seeing more and more demand and talking to individuals, 0:19:44.200 --> 0:19:47.560 it's more about concern about where the global economy is. 0:19:48.160 --> 0:19:51.919 In the US economy, the valuations on the equity markets, 0:19:52.000 --> 0:19:56.280 you know, seeing maybe some overvaluation there and really pushing 0:19:56.320 --> 0:19:59.000 people to have they want to have something to hold. 0:19:59.040 --> 0:20:02.160 So we're seeing the physical goal precious metals. We haven't 0:20:02.160 --> 0:20:04.760