WEBVTT - It's Very Implausible That Powell Will Pause To Please Markets 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:27.520 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 0:00:27.520 --> 0:00:30.200 There are some out there who are waiting for j. 0:00:30.320 --> 0:00:34.120 Powell to take the podium on Wednesday at the Economic 0:00:34.159 --> 0:00:37.800 Forum in New York and say, you know what, guys, 0:00:38.159 --> 0:00:39.960 We're going to take a little pause. We've seen the 0:00:40.000 --> 0:00:43.680 stock sell off and weren't going to make sure that 0:00:43.800 --> 0:00:46.440 we don't go too quickly. Our next guest says, not 0:00:46.560 --> 0:00:49.360 so fast on author, as a senior editor for Bloomberg Markets, 0:00:49.360 --> 0:00:51.239 we are so lucky that he joins us here in 0:00:51.320 --> 0:00:55.279 our interactive brokers studios in New York. John, you think 0:00:55.320 --> 0:00:58.320 that this is an implausible scenario? Is that right? The 0:00:59.120 --> 0:01:02.800 fit would would to call off change its course just 0:01:03.000 --> 0:01:06.600 because of a sell off in the stock markets just 0:01:06.840 --> 0:01:09.760 the extent we've had so far, or frankly, if it 0:01:09.840 --> 0:01:15.880 fell another from here, Yes, I find very implausible. They've 0:01:16.280 --> 0:01:19.840 learned the lesson from the last two cycles. The FED 0:01:20.000 --> 0:01:24.440 got it wrong by being too easy and allowing very 0:01:24.480 --> 0:01:29.119 big bubbles to inflate. That hurt when they burst tech 0:01:29.160 --> 0:01:32.720 stocks the first time and then credit the second. They 0:01:32.760 --> 0:01:37.360 will at least make a different mistake this time. You know, 0:01:37.400 --> 0:01:39.840 at least themistic love it. They're not going to make 0:01:39.840 --> 0:01:44.080 the same mistake at least. What is your reaction to 0:01:44.319 --> 0:01:51.080 investment professionals who blame the Federal Reserve either because they 0:01:51.160 --> 0:01:57.480 don't raise interest rates enough or because they have raised 0:01:57.480 --> 0:02:01.960 them too much already. When they use the Federal Reserve 0:02:02.440 --> 0:02:06.360 as a whipping post for why the market behaves in 0:02:06.360 --> 0:02:12.040 a certain way, I find it a little rich personally. 0:02:12.200 --> 0:02:16.440 I mean, certainly we all of us way of yes, exactly, 0:02:17.200 --> 0:02:20.000 try to be nice. But those of us around this table, 0:02:20.040 --> 0:02:23.519 we all make a living commenting on markets, which means 0:02:23.560 --> 0:02:25.359 that we spend a lot of time commenting on the FED. 0:02:25.360 --> 0:02:28.000 Because the FED is an incredibly important player. All of 0:02:28.040 --> 0:02:32.840 that is evident generally speaking, However, the FED is not 0:02:33.320 --> 0:02:37.840 just an actor, but it's also a passive recipient of conditions. 0:02:37.840 --> 0:02:42.280 It does have to respond, and while it's I think 0:02:42.280 --> 0:02:45.639 it's fair to say the single most powerful actor in markets. 0:02:45.680 --> 0:02:50.799 It's not omnipotent by any leap of the imagination at 0:02:50.840 --> 0:02:54.919 the moment. It If you really think that the FED 0:02:55.040 --> 0:03:01.240 is already overtightening, that is I think ridiculous given the 0:03:01.320 --> 0:03:05.239 historically how low interest rates still are. And one I 0:03:05.280 --> 0:03:08.240 don't want to comment on any particular politicians you might 0:03:08.280 --> 0:03:11.520 be taking any particular positions to say that the FED 0:03:11.880 --> 0:03:14.919 should be hiking less than it is when we can 0:03:14.919 --> 0:03:17.960 all agree that it's still being very accommodative, means that 0:03:18.040 --> 0:03:21.600 you're saying the economy is a lot weaker than certain 0:03:21.639 --> 0:03:23.799 politicians might be claiming. There is there is no way 0:03:23.840 --> 0:03:26.720 out of that. Either the Fed is doing the right 0:03:26.760 --> 0:03:28.720 thing or if it's going too far, that's because the 0:03:28.720 --> 0:03:33.399 economy is in real trouble if it can't stand interest rates. 0:03:33.440 --> 0:03:37.200 So I do have serious problems with people who say 0:03:37.240 --> 0:03:39.760 that that the Fed is already going too far, and 0:03:39.880 --> 0:03:44.480 that the significant problem we have all right, well, just 0:03:44.760 --> 0:03:48.160 looking to one aspect of the tightening, the balance sheet 0:03:48.200 --> 0:03:51.200 reduction that gets less attention than the raid high exprests 0:03:51.240 --> 0:03:53.920 perhaps shouldn't. And there's still a big question, which is 0:03:54.000 --> 0:03:56.400 at what point will the FEDS say all right enough, 0:03:56.680 --> 0:03:58.720 We've done enough rolling off here, and we're going to 0:03:58.800 --> 0:04:00.960 keep our balance sheet at what two trillion, three trillion? 0:04:00.920 --> 0:04:02.680 I mean, we don't really have a number, right we 0:04:02.720 --> 0:04:05.160 We're gonna get guidance on that this week. Yes, but 0:04:06.120 --> 0:04:09.400 I would I suspect this could be where we get 0:04:09.520 --> 0:04:13.520 quite an ugly surprise. If you look through the volumes 0:04:13.800 --> 0:04:16.280 of FED speak that are out there, and FED governors, 0:04:16.279 --> 0:04:20.039 as they should, are fairly transparent at least in thinking 0:04:20.080 --> 0:04:24.239 out loud, there is almost no thinking out loud about 0:04:24.279 --> 0:04:32.040 the balance sheet. Just none. The implicit, implicit uh conclusion 0:04:32.120 --> 0:04:36.600 you can draw from their public pronouncements is that on 0:04:37.000 --> 0:04:40.839 the balance sheet reduction they are on autopilot. It is 0:04:41.120 --> 0:04:43.640 the ideas of the balance sheet is going to very 0:04:43.720 --> 0:04:48.680 steadily reduced month over month. You don't hear. You hear 0:04:49.120 --> 0:04:54.480 plenty of risks, potential risks on the horizon being listed 0:04:54.839 --> 0:04:59.560 by Powell and the other governors, resource as resource reserve 0:05:00.040 --> 0:05:03.000 reserve scarcity is not among them. You hear plenty of 0:05:03.040 --> 0:05:07.120 people complaining about already about a shortage of dollars in 0:05:07.160 --> 0:05:10.240 the market. You do not hear that reflected by fit speak. 0:05:10.360 --> 0:05:12.240 And just real quick here to give a sense of 0:05:12.440 --> 0:05:15.479 the balance sheet. The balance sheet has been reduced from 0:05:15.480 --> 0:05:18.080 four and a half trillion at its peak in January 0:05:18.960 --> 0:05:21.880 down to four point one trillion dollars, so we have 0:05:21.960 --> 0:05:23.760 seen a bit of a roll off, but there's still 0:05:23.800 --> 0:05:25.919 a lot more to go. If they want to write, 0:05:25.960 --> 0:05:28.400 I mean, this has been you know, yes, a decline, 0:05:28.640 --> 0:05:32.880 but it's completely realistic to think that they will keep 0:05:32.920 --> 0:05:37.080 doing this for more than another year, and the balance 0:05:37.120 --> 0:05:40.880 sheet would still be utterly enormous in historic terms. But 0:05:41.400 --> 0:05:45.159 the change at the margin, which is all important, I suspect, 0:05:45.360 --> 0:05:47.640 is much more what people should be worrying about than 0:05:47.720 --> 0:05:50.320 exactly how many more changes we get in the target 0:05:50.320 --> 0:05:54.479 fit funds rate. This may sound bizarre, but is there 0:05:54.560 --> 0:05:58.039 any value in noting the difference between two thousand and 0:05:58.040 --> 0:06:02.440 eight and twenty eighteen when it comes to the accessibility 0:06:02.720 --> 0:06:06.640 of social media apps and the ability to report crises. 0:06:07.320 --> 0:06:11.719 When the two thousand eight crisis was broadcast mainly via 0:06:11.800 --> 0:06:15.640 television and traditional media, do you think that it means 0:06:15.720 --> 0:06:20.600 something different? Now? Very much so. I mean my farewell piece, 0:06:20.640 --> 0:06:22.919 but when I'm still at the Financial Times, my farewell 0:06:22.960 --> 0:06:28.120 piece was about how I remember it. Yeah, I it's 0:06:28.160 --> 0:06:31.440 blazoned into my mind that that that I went to 0:06:31.480 --> 0:06:35.080 I went to my city branch on possibly the worst 0:06:35.160 --> 0:06:37.599 day of the crisis, and found there were dozens of 0:06:37.720 --> 0:06:42.359 very well dressed Wall Streeters evidently shifting money around to 0:06:42.360 --> 0:06:46.280 make sure they still had to UH insured accounts. And 0:06:46.480 --> 0:06:50.279 we wrote a very, very very negative story that day. 0:06:50.320 --> 0:06:53.800 But I didn't actually do what I might conceivably do 0:06:53.920 --> 0:06:55.599 now and which somebody definitely would do, which is just 0:06:55.920 --> 0:06:58.719 take a photo of a bunch of panicking Wall Streeters 0:06:58.720 --> 0:07:00.240 in their suits trying to get their money out of 0:07:00.240 --> 0:07:05.480 a bank. Such a photo now on on that social 0:07:05.480 --> 0:07:09.000 media could have could have been the spark that lit 0:07:09.440 --> 0:07:12.480 an even worse flame. So yes, I think that's a 0:07:12.600 --> 0:07:15.640 very worrying scenario. I don't think it has a particularly 0:07:15.640 --> 0:07:19.800 big effect, bar you know, the president's focal diplomacy over 0:07:20.480 --> 0:07:23.080 over Twitter, which which the FED seems to be ignoring 0:07:23.080 --> 0:07:25.240 so far. But so far, I don't think it makes 0:07:25.320 --> 0:07:28.120 a great difference. But if things get as nerve wracking 0:07:28.120 --> 0:07:30.080 as they did in two thousand and eight, it could 0:07:30.120 --> 0:07:33.240 be critical. Just real quick, here is your sense that 0:07:33.320 --> 0:07:36.120 if the fired were to indicate that they are ready 0:07:36.120 --> 0:07:38.280 to slow down a little bit, or that they're showing 0:07:38.280 --> 0:07:41.200 more concern. Do you think that that will correspond with 0:07:41.280 --> 0:07:47.920 a substantial pop in US stocks? Quite? No, I I 0:07:48.080 --> 0:07:51.160 suspect not. I mean in the in the very short term, 0:07:51.440 --> 0:07:54.760 if you have your operative word is substantial. No. If 0:07:54.800 --> 0:07:57.760 if we get if we get unusually dovish FED speak 0:07:58.200 --> 0:08:00.560 at some point in the next week, then yes you'll 0:08:00.560 --> 0:08:03.680 get a pop on that day. But ultimately I've got 0:08:03.760 --> 0:08:05.840 enough trust in the FIT that the only reason I believe, 0:08:05.840 --> 0:08:07.480 the only reason they'd be doing that is because the 0:08:07.560 --> 0:08:12.360 underlying data, particularly from China, will be worrying, and therefore 0:08:12.360 --> 0:08:15.000 that would cancel out the effects of the the extra 0:08:15.040 --> 0:08:17.520 devisist from the faith. Thank you very much for spending 0:08:17.560 --> 0:08:20.240 time with us. As always, John Authors is a senior 0:08:20.360 --> 0:08:25.240 editor for Bloomberg Markets, talking about the Federal Reserve potential 0:08:25.480 --> 0:08:31.800 rate increases and what they might do to the US economy. 0:08:33.920 --> 0:08:37.040 Facebook the shares of Facebook. They are higher right now 0:08:37.080 --> 0:08:39.120 by about three and a half dollars a hundred and 0:08:39.120 --> 0:08:42.320 thirty five dollars a share for Facebook joining us as 0:08:42.400 --> 0:08:46.120 David Garretty, chief market strategist for laid Law and Company, 0:08:46.600 --> 0:08:50.920 and you can follow David on Twitter at g v 0:08:51.080 --> 0:08:56.040 A Research David Garritty speak to the issues that surround 0:08:56.160 --> 0:08:59.960 corporate governance at Facebook. This is coming at a time 0:09:00.000 --> 0:09:04.240 time when the report is that Britain's Parliament has actually 0:09:04.320 --> 0:09:09.880 seized some confidential Facebook documents from the developer of what 0:09:10.040 --> 0:09:15.600 is described as a now defunct bikini photos searching app. 0:09:16.360 --> 0:09:20.960 And this has to do with data protection policies. What 0:09:21.080 --> 0:09:25.320 does this have to do with Facebook's corporate governance? In 0:09:25.400 --> 0:09:27.520 terms of looking at Facebook's corporate governance, I mean, it's 0:09:27.520 --> 0:09:30.280 pretty much, very clearly set forth in the prospectives when 0:09:30.280 --> 0:09:33.600 the company went public back in two thousand twelve that 0:09:33.720 --> 0:09:38.120 Mark Zuckerberg would have because of many class dual classes 0:09:38.160 --> 0:09:40.800 of stock, that he would have supervoting rights. And then 0:09:40.800 --> 0:09:43.920 the company since then had introduced another class of stock 0:09:44.000 --> 0:09:47.920 that had no votes at all. So effectively, Zuckerberg, for 0:09:48.120 --> 0:09:51.360 owning about a five percent economic interest in the company, 0:09:51.720 --> 0:09:55.400 has you know, majority voting control. He also has the 0:09:55.520 --> 0:09:58.680 right to be the sole person to select who his 0:09:58.800 --> 0:10:03.800 successor as CEO will be. So from that standpoint, Zuckerberg's 0:10:03.920 --> 0:10:08.680 hold on corporate governance at Facebook is effectively a hammer lock. 0:10:08.880 --> 0:10:11.439 It's impregnable. There's no way that you're going to get 0:10:11.520 --> 0:10:15.160 rid of Mark Zuckerberg anytime soon, unless he chooses to 0:10:15.160 --> 0:10:18.640 step down for some reason. Um. Obviously there's a question 0:10:18.679 --> 0:10:21.600 here does this pierce the corporate veil when it comes 0:10:21.640 --> 0:10:24.559 to looking at some of the liabilities that Facebook may face. 0:10:24.760 --> 0:10:27.839 But going specifically to the case that you mentioned that 0:10:27.920 --> 0:10:31.480 was being examined by Parliament and the invasion of privacy rights, 0:10:31.559 --> 0:10:35.679 it ties into the committee in Parliament that is investigating 0:10:36.160 --> 0:10:39.640 what Facebook had done in terms of providing user information 0:10:40.000 --> 0:10:45.840 to Cambridge Analytica for the purposes of interference or campaigning 0:10:45.880 --> 0:10:51.479 around or targeting advertising around not only the Brexit campaign 0:10:52.040 --> 0:10:55.280 but also the two thousand sixteen elections. And so from 0:10:55.320 --> 0:10:58.640 that standpoint, if we look in the context of Europe 0:10:58.720 --> 0:11:03.000 that's been introduced introduced new privacy regulations, this is separate 0:11:03.000 --> 0:11:06.240 and distinct and is very much focused on bad actors 0:11:06.280 --> 0:11:08.880 such as Cambridge Analytica. Okay, but when you talk about 0:11:08.920 --> 0:11:12.800 regulators kind of stepping in our lawmakers investigating Facebook and 0:11:12.880 --> 0:11:16.720 its role in some recent elections, I just have to 0:11:16.760 --> 0:11:19.760 wonder what could come out of that. How much does 0:11:19.800 --> 0:11:23.640 this sort of threaten Facebook's existence in its current form, 0:11:23.720 --> 0:11:25.680 and how much is this already praised in with Facebook 0:11:25.679 --> 0:11:29.120 shares down more than this year. True. No, I mean 0:11:29.160 --> 0:11:31.640 you certainly have seen the stock come off. You know what, 0:11:31.800 --> 0:11:35.400 it was about two dollars a share back and um 0:11:35.640 --> 0:11:38.360 July and then has since sort of come in to 0:11:38.480 --> 0:11:41.160 a level about one forty, so it's lost about a third. 0:11:41.400 --> 0:11:43.640 UM And yeah, Baron's over the weekend and come up 0:11:43.640 --> 0:11:45.439 with a favorable article saying, here's a company on the 0:11:45.480 --> 0:11:49.240 double sales, but it's cheaper than Walmart. Um. The issue 0:11:49.280 --> 0:11:52.240 here is is that you know, Walmart's business model isn't 0:11:52.320 --> 0:11:57.400 under regulatory scrutiny. Um. You have a situation with Facebook 0:11:57.480 --> 0:12:01.560 where you know the company arguably given how important it's 0:12:01.600 --> 0:12:07.280 become for people getting news. You know, if something barks 0:12:07.320 --> 0:12:09.160 like a dog or walks like a duck, you know 0:12:09.200 --> 0:12:11.480 it's a duck or it's a dog. In Facebook's case, 0:12:11.480 --> 0:12:14.760 we could say it's actually a media company. They distribute news, 0:12:15.120 --> 0:12:18.080 and from this standpoint, they're a media company that's trying 0:12:18.080 --> 0:12:20.440 to say that they're not. And in the event that 0:12:20.440 --> 0:12:23.360 the government would decide to say, look, you're a media company, 0:12:23.400 --> 0:12:26.960 despite whatever your protestations otherwise might be, we're gonna start 0:12:27.000 --> 0:12:30.719 regulating you like a media company. This changes the dynamic 0:12:30.880 --> 0:12:34.160 for Facebook in terms of their internal costs and in 0:12:34.280 --> 0:12:36.720 terms of what they may and may not be allowed 0:12:36.800 --> 0:12:41.480 to do. Because this also that would mean libel laws 0:12:41.800 --> 0:12:45.800 would apply to Facebook precisely and possibly you know, there 0:12:45.840 --> 0:12:48.720 may be scrutiny here given the governance structure. You know, 0:12:49.080 --> 0:12:52.520 what is management's responsibility here? You know, does it does 0:12:52.559 --> 0:12:56.640 the corporate veil actually apply? So just expanding out, I mean, 0:12:56.640 --> 0:12:59.400 we did get the news today that Supreme Court justice 0:12:59.440 --> 0:13:02.080 is a pure ways to allow an antitrust lawsuit to 0:13:02.120 --> 0:13:05.120 go through. It accuses Apple of using its market dominance 0:13:05.120 --> 0:13:08.960 to artificially inflate prices at its app store. Apple shares 0:13:08.960 --> 0:13:12.000 have been falling steadily for the past few weeks, And 0:13:12.040 --> 0:13:14.240 I'm just wondering, I mean, do you view this sort 0:13:14.280 --> 0:13:17.439 of existential threat to the business model to be similar 0:13:17.840 --> 0:13:20.920 at other big tech companies just by virtue of their 0:13:21.000 --> 0:13:23.720 size and the fact that regulators are kind of getting 0:13:23.720 --> 0:13:26.679 more concerned about that. I don't know if I necessarily 0:13:26.679 --> 0:13:29.040 want to go out. I mean, looking at Facebook's problem, 0:13:29.040 --> 0:13:31.440 facebooks problem is a problem with social media and and 0:13:31.480 --> 0:13:34.079 the abuse of social media, and how our regulator is 0:13:34.120 --> 0:13:37.400 going to exercise appropriate and proper oversight in terms of 0:13:37.440 --> 0:13:41.360 social media companies. As we look to other technology companies, 0:13:41.360 --> 0:13:43.600 whether it's an Apple, whether it's a Google, whether it's 0:13:43.600 --> 0:13:47.040 a micro Microsoft, whether it's a Netflix or an Amazon, um. 0:13:47.120 --> 0:13:48.760 You know, certainly we have to look at companies that 0:13:48.800 --> 0:13:53.040 have grown to a fairly substantial size, wield, substantial economic 0:13:53.120 --> 0:13:56.960 influence um and as a result, you know, are they 0:13:57.160 --> 0:14:01.559 introducing anti competitive behaviors. There has been the case being 0:14:01.559 --> 0:14:05.760 made quietly but steadily over the past six to twelve 0:14:05.800 --> 0:14:09.480 months that the next administration ought to be coming back 0:14:09.520 --> 0:14:12.240 in and looking at trust busting. We ought to be 0:14:12.320 --> 0:14:16.080 going back and looking at what happened in earlier economic cycles, 0:14:16.120 --> 0:14:19.320 back in nearly twentieth century. You know, Teddy Roosevelt came 0:14:19.360 --> 0:14:23.240 in basically as a trustbuster. Have these companies gotten to 0:14:23.240 --> 0:14:25.520 be too large? And it's interesting here with this news 0:14:25.720 --> 0:14:27.840 with respect to Apple, is that this is something that's 0:14:27.840 --> 0:14:32.320 actually rising to review by the Supreme Court. David Garty. 0:14:32.440 --> 0:14:36.120 The one name we have yet to mention is Cheryl Sandberg. 0:14:37.040 --> 0:14:44.080 Cheryl Sandberg is responsible, I believe, for the direct scrutiny 0:14:44.120 --> 0:14:50.880 of advertising as well as legal and policy issues at Facebook. 0:14:51.320 --> 0:14:54.920 Who gets thrown under the bus if anyone because of 0:14:54.960 --> 0:15:00.360 the perilous situation that the company faces right now, well 0:15:00.360 --> 0:15:03.040 one certainly has to argue that Sandberg is going to 0:15:03.080 --> 0:15:05.680 be sort of squarely in the crosshairs. And but I 0:15:05.720 --> 0:15:08.160 will give Sandberg credit is that when it has come 0:15:08.200 --> 0:15:12.600 time for this company's management to appear before various government bodies, 0:15:12.680 --> 0:15:17.480 regulatory bodies to testify, it has generally been Sandberg who 0:15:17.480 --> 0:15:20.440 has been the stand up person out of management to 0:15:20.520 --> 0:15:25.280 be held accountable. Zuckerberg has tried to stay in the shadows, 0:15:25.560 --> 0:15:29.720 has tried to dutch dodge duck Bob Weave, but it's 0:15:29.760 --> 0:15:32.400 been Sandberg who really has been the stand up person here. 0:15:32.600 --> 0:15:35.160 And unfortunately, given the way things are set up in 0:15:35.280 --> 0:15:37.960 terms of the governance we discussed earlier, it's most likely 0:15:37.960 --> 0:15:41.560 going to be Sandberg who takes the first fall. David Garritty, 0:15:41.560 --> 0:15:43.200 it's always a pleasure to have you. Thank you so 0:15:43.280 --> 0:15:46.200 much for coming in. David Garritty as chief market strategist 0:15:46.520 --> 0:15:49.480 at laid Law and Company in New York, joining us 0:15:49.480 --> 0:15:56.240 here in our eleven at three oh studios. General Motors 0:15:56.360 --> 0:15:58.760 Shares are searching after they announced it will cut more 0:15:58.760 --> 0:16:03.040 than ten thousands salerate staff and factory workers, closing five 0:16:03.120 --> 0:16:07.520 factories and this comes after surprisingly good results. David Walts 0:16:07.600 --> 0:16:10.160 joining US now Detroit Bureau chief for Bloomberg. He is 0:16:10.200 --> 0:16:14.240 at GM headquarters. David, why are they doing this and 0:16:14.760 --> 0:16:18.880 why is it being so well received by shareholders? There 0:16:18.880 --> 0:16:21.400 are a couple of reasons. One, they see the market 0:16:21.520 --> 0:16:25.560 moving toward electric vehicles autonomous vehicles, and they're still hiring 0:16:25.560 --> 0:16:28.640 people in those areas. But as they cut passenger car 0:16:28.680 --> 0:16:32.040 models that aren't selling, and as they try to develop 0:16:32.040 --> 0:16:34.680 the cars of tomorrow, they just don't need as many 0:16:34.720 --> 0:16:39.120 assemblers and traditional mechanical engineers. Um. You know, electric cars 0:16:39.160 --> 0:16:42.320 have fewer parts, they're easier to engineer, they're easier to build. Uh. 0:16:42.360 --> 0:16:45.320 They see a future there. People are buying more SUVs 0:16:45.560 --> 0:16:48.440 and fewer passenger cars, so they're getting rid of some 0:16:48.520 --> 0:16:51.280 of those nameplates like the Chevy Cruise Compact. They're getting 0:16:51.480 --> 0:16:54.600 the Impalace sedan. You don't need passenger car engineers to 0:16:54.640 --> 0:16:57.840 do that. Um. And you know, I think they're not 0:16:57.880 --> 0:17:01.080 really admitting this part, but I think they the the 0:17:01.120 --> 0:17:04.720 global auto market softening. China is in a downturn this year, 0:17:05.040 --> 0:17:08.440 the US is definitely coming off. It's two thousand sixteen peak. 0:17:09.359 --> 0:17:11.879 It's not going a creator, but when things are getting 0:17:11.880 --> 0:17:14.000 soft during you don't need as many people to engineer 0:17:14.080 --> 0:17:16.720 this myriad of nameplates that they've had for a long time. 0:17:17.200 --> 0:17:18.800 You can make a lot of cuts. The other thing 0:17:18.840 --> 0:17:20.919 that's Mary bars under a lot of pressure because the 0:17:20.920 --> 0:17:23.400 stock prices hasn't been doing great. Add it all together 0:17:23.480 --> 0:17:26.840 and she's got to show some money. David Watch, could 0:17:26.840 --> 0:17:31.119 you just continue on the theme of electric and hybrid 0:17:31.480 --> 0:17:34.520 vehicles and the number of workers that it takes to 0:17:34.800 --> 0:17:38.680 build them compared to what it takes to build a 0:17:38.720 --> 0:17:42.720 fossil fuel power automobile or vehicle. Okay, I don't have 0:17:42.720 --> 0:17:45.920 any numbers for you on that, but imagine this. One 0:17:45.920 --> 0:17:48.320 of the reasons electric cars are so expensive, it's just 0:17:48.359 --> 0:17:51.480 because that one big hunk of battery costs so much. 0:17:51.960 --> 0:17:55.000 But that's coming down so so the cost is getting 0:17:55.000 --> 0:17:58.520 more competitive. What that will replace. And I've seen testa's 0:17:58.560 --> 0:18:01.399 torn down, I've seen a ship both torn down. You 0:18:01.480 --> 0:18:03.840 have this giant battery, and you have one electric motor 0:18:03.960 --> 0:18:07.720 that replaces an internal combustion engine, a transmission on, a 0:18:07.760 --> 0:18:11.119 whole exhaust system, a whole fuel intake and management system, 0:18:11.160 --> 0:18:14.440 a bunch of pumps um. You take all of those 0:18:14.480 --> 0:18:17.120 parts and you toss them, and you've got these two 0:18:17.160 --> 0:18:19.639 big pieces that you know that that battery is basically 0:18:19.640 --> 0:18:21.480 the floor of a car. You kind of bolted in 0:18:21.920 --> 0:18:24.200 and connect everything, and it's like, it's not that simple, 0:18:24.240 --> 0:18:26.920 tim You and I couldn't do it. But it's a 0:18:26.920 --> 0:18:31.560 lot less complex than that whole suite of internal combustion 0:18:31.600 --> 0:18:34.399 parts I just rattled up. So, David, though, I have 0:18:34.480 --> 0:18:37.840 to wonder whether that is going to be an excuse 0:18:38.320 --> 0:18:40.880 for the other point that you mentioned, which is that 0:18:41.000 --> 0:18:45.760 GM probably sees the global auto market slowing substantially and 0:18:45.800 --> 0:18:47.760 they want to make sure that they're the correct size 0:18:47.840 --> 0:18:52.200 to meet waning demand, because honestly, we haven't seen electric 0:18:52.240 --> 0:18:56.359 car sales pick up that much, and frankly, cars and trucks, 0:18:56.400 --> 0:18:59.040 gas guzzling trucks have continued to be the most popular, right, 0:18:59.080 --> 0:19:02.040 So I mean that basically a red herring for the 0:19:02.040 --> 0:19:06.520 real issue, which is the slowdown. It's not a red 0:19:06.560 --> 0:19:09.320 hearing in the sense that they are hiring software related 0:19:09.400 --> 0:19:13.199 people to do autonomous cars and the power, electronics and 0:19:13.240 --> 0:19:17.240 battery engineering you need for e vs, but they're absolutely 0:19:17.359 --> 0:19:21.480 using the cover of that in order to really just 0:19:21.680 --> 0:19:24.960 get leaner. Number one, uh and and number two prepare 0:19:25.000 --> 0:19:27.040 for what is I think it's going to be a 0:19:27.080 --> 0:19:30.600 slowdown in the US, and some other forecasters uh that 0:19:31.080 --> 0:19:33.440 are making that point that they could be we could 0:19:33.440 --> 0:19:36.760 go from selling seventeen million vehicles in the US this 0:19:36.880 --> 0:19:39.159 year to you know, maybe fifteen and a half or 0:19:39.160 --> 0:19:42.000 sixteen in the next couple of years. Um. You know 0:19:42.040 --> 0:19:44.320 that there's a forecast out there like that, and it's 0:19:44.359 --> 0:19:47.040 from someone who's not crazy. So yeah, I think they 0:19:47.040 --> 0:19:51.000 see things softening up a bit, and they're they're allocating 0:19:51.040 --> 0:19:53.520 more in China as well. You know what. The part 0:19:53.600 --> 0:19:55.680 that they're not talking about here is a lot of 0:19:55.680 --> 0:19:57.399 the vehicles they're killing in the US are still going 0:19:57.440 --> 0:19:59.399 to be stold in China. They're probably gonna engineer them 0:19:59.400 --> 0:20:02.400 over there in future slip of hiring engineers there as well. 0:20:02.960 --> 0:20:06.240 So it's kind of all of these factors, and you 0:20:06.280 --> 0:20:09.560 know that they put probably the best and most futuristic 0:20:09.760 --> 0:20:12.480 spin on it. But yeah, they want to get leander 0:20:12.560 --> 0:20:16.840 and they see the markets often David Well should just 0:20:16.880 --> 0:20:19.200 give you a couple of seconds here. Do you think 0:20:19.240 --> 0:20:24.120 that the same issues face the large German automobile makers, 0:20:24.320 --> 0:20:29.000 and they have big labor unions to deal with. Yeah, 0:20:29.359 --> 0:20:32.359 it's going to affect everyone. And to be honest with you, 0:20:32.520 --> 0:20:36.159 I think the US market it's probably a healthier market 0:20:36.480 --> 0:20:39.560 than Europe is. Even though they sell luxury cars over there, 0:20:40.359 --> 0:20:42.520 that's always been a tougher market than the US because 0:20:42.560 --> 0:20:44.600 here you got pick up trucks and big subs that 0:20:44.800 --> 0:20:46.399 had a lot of problems and make a lot of 0:20:46.400 --> 0:20:48.880 money to help you deal with your other problems. Uh, 0:20:48.920 --> 0:20:51.560 they've got luxury cars over there, but that's just a 0:20:51.560 --> 0:20:54.360 tougher place to do business than the US. So absolutely, 0:20:54.640 --> 0:20:57.320 thanks very much for being with us. David Welchard, Detroit 0:20:57.359 --> 0:21:01.840 bureau chief for Bloomberg, talking about GM and its announcement 0:21:01.880 --> 0:21:04.520 that it will cut about fifteen percent of its workforce 0:21:04.840 --> 0:21:12.800 and shutter five manufacturing plants in twenty nineteen. Fernando Camera 0:21:13.040 --> 0:21:16.480 is the co founder and the chief executive of sky hour, 0:21:16.880 --> 0:21:19.800 and he's here to tell us how you can actually 0:21:20.080 --> 0:21:27.679 book and give flights and travel to someone else using hint, hint, right, 0:21:28.040 --> 0:21:33.240 using the website that he is co created called sky 0:21:33.440 --> 0:21:36.760 our dot com. Thanks very much for being here. How 0:21:36.800 --> 0:21:40.399 does sky our work? Thank you? For having me guys, 0:21:40.480 --> 0:21:43.200 So it's SKay our. What we do is we sell 0:21:43.280 --> 0:21:46.080 flight hours for sixty dollars an hour and you can 0:21:46.160 --> 0:21:48.680 use those hours book any flights on the biggest fall 0:21:48.760 --> 0:21:51.240 hunding the airlines in the world. So it all started 0:21:51.240 --> 0:21:53.320 when I was trying to give the flights to one 0:21:53.359 --> 0:21:55.679 of my best friends and and I couldn't find a 0:21:55.680 --> 0:21:58.080 way to do that. So first I was trying to 0:21:58.080 --> 0:21:59.920 book a flight, I had to know the person, details, 0:22:00.000 --> 0:22:03.560 destination dates. I was killing the surprise airlines in telome 0:22:03.560 --> 0:22:05.800 me to book a flight for a because of security reasons. 0:22:06.160 --> 0:22:08.120 Then I try their line Miles. But if I give 0:22:08.119 --> 0:22:10.119 you miles of chet Blue, you cannot travel on Delta. 0:22:10.400 --> 0:22:13.040 There's a lot of like outdates and restrictions and so 0:22:13.080 --> 0:22:15.880 it's almost impossible to use them. And it's exactly exactly 0:22:15.880 --> 0:22:17.879 the same thing with airline gifts cards gives car off 0:22:17.920 --> 0:22:20.679 jet Blue doesn't work on Debta. It's almost impossible to 0:22:20.840 --> 0:22:23.200 use to use them. So there wasn't like a easy, 0:22:23.240 --> 0:22:25.640 smart and inspiring great to give someone a flight as 0:22:25.640 --> 0:22:28.000 a gift. And so at sky Hour you can buy 0:22:28.000 --> 0:22:30.000 as many hours as you want for sixty dollars and 0:22:30.000 --> 0:22:31.800 you can use those hours book any flights on the 0:22:31.800 --> 0:22:33.720 biggest one hundred their lines in less than a minute. 0:22:34.000 --> 0:22:36.600 To be it seems like a cheap price sixty an hour, 0:22:36.720 --> 0:22:40.560 especially when you think about peak travel times to say Florida, 0:22:40.720 --> 0:22:43.840 places that are popular destinations in the United States during 0:22:43.880 --> 0:22:46.240 those times, is it? I mean, how did you get 0:22:46.240 --> 0:22:49.199 the airlines on board here? So you know, people don't know, 0:22:49.320 --> 0:22:51.919 but more than all the flights in the world, they 0:22:51.960 --> 0:22:54.760 cost less than six hours an hour. And so there's 0:22:54.800 --> 0:22:57.600 only around five percent, which is the super last minute 0:22:57.640 --> 0:23:01.000 flights on busy routes. And we a very fair model 0:23:01.000 --> 0:23:02.960 because when you book a fight on SKA our, we 0:23:03.000 --> 0:23:05.359 always give you a rewards back, so we always give 0:23:05.400 --> 0:23:07.480 you hours back they can use to book your next flight. 0:23:08.000 --> 0:23:10.080 And so if you do them at and and you 0:23:10.119 --> 0:23:12.000