WEBVTT - U.S. Stocks Tumble on Debt-Ceiling Concerns 0:00:01.800 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.600 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:34.040 YouTube search Bloomberg Global News. Well, it feels like the 0:00:34.040 --> 0:00:36.440 market story the past week has been about the bond market. 0:00:36.520 --> 0:00:39.760 Noticeable news and momentum. Uh, definitely in the tenure of 0:00:39.840 --> 0:00:41.680 the past week or so. Shorter end of the note 0:00:42.040 --> 0:00:44.200 are shorter end, I should say of the yield curve today, 0:00:44.200 --> 0:00:47.240 as two year treasure yields rose to their highest since March, 0:00:47.280 --> 0:00:51.160 of traders increasingly pricing in the prospect of the Fed 0:00:51.240 --> 0:00:54.320 tapering its bond purchases soon. Investors, you all know this. 0:00:54.760 --> 0:00:57.440 They watched and listen closely. Today's both US Treasury Secretary 0:00:57.520 --> 0:00:59.800 Janet Yellen and FED Chair J pal both up on 0:01:00.000 --> 0:01:03.680 Apple Hill testifying before Senate panel. Powell using the opportunity 0:01:03.720 --> 0:01:07.480 to once again reiterate specific plans for tapering. We had 0:01:07.480 --> 0:01:10.720 set a test for beginning to taper those purchases of 0:01:10.920 --> 0:01:15.320 substantial further progress towards our set story goals. We haven't 0:01:15.360 --> 0:01:17.120 met that yet, but as I mentioned, I think we've 0:01:17.160 --> 0:01:19.679 all but met it. Met it. On the path that 0:01:19.680 --> 0:01:23.160 we're looking at, we would continue to add accommodation not 0:01:23.280 --> 0:01:26.880 subtracted for until well into the middle of next year. 0:01:27.240 --> 0:01:29.800 And we think that's appropriate given the Given the strength 0:01:29.800 --> 0:01:33.240 of the economy, um the test for raising interest rates 0:01:33.319 --> 0:01:36.800 is substantially higher and definitely what we heard last week 0:01:36.880 --> 0:01:39.000 right from FED Chair J. Powell. Right now, you've got 0:01:39.000 --> 0:01:40.840 the tenure with the yield of one fifty two to 0:01:40.920 --> 0:01:43.000 your note with the yield of point three zero. Let's 0:01:43.040 --> 0:01:44.640 get to it and take a look at what's going 0:01:44.640 --> 0:01:46.640 on in the rate markets. Shooting us right now? Is 0:01:46.640 --> 0:01:50.360 Ira Jersey, Bloomberg Intelligence Chief US interest rates strategist on 0:01:50.480 --> 0:01:54.960 the phone in New Jersey. There's lots of people weighing in, 0:01:55.000 --> 0:01:57.200 as you know, Ira, when it comes to what's going 0:01:57.240 --> 0:01:59.880 on in the treasury trade. How do you see it? 0:02:00.000 --> 0:02:03.520 Why have we seen this move up? Yeah? We it's 0:02:03.520 --> 0:02:07.720 basically the trend that started after UM last Thursday, when 0:02:07.760 --> 0:02:10.920 we started to get substantial Fed speak that you know, 0:02:11.040 --> 0:02:15.000 said basically unequivocably that hey, we're going to be tapering. 0:02:15.160 --> 0:02:18.440 And then the question becomes how soon after taper will 0:02:18.560 --> 0:02:21.640 the FED start to hike interest rates? Now, um, you know, 0:02:21.680 --> 0:02:24.280 there's a lot of debate around that, and obviously you 0:02:24.400 --> 0:02:27.840 just heard that snippet from Chair Powell reiterating what he 0:02:28.000 --> 0:02:31.440 started to say back in in August at Jackson Hole, 0:02:31.800 --> 0:02:34.720 and that's that they want to wait until they make 0:02:34.760 --> 0:02:38.960 even way more progress to before they start hiking interest rates. 0:02:38.960 --> 0:02:40.840 So so I think the trade that you've been seeing 0:02:40.880 --> 0:02:44.280 the last couple of days is really saying, Okay, the 0:02:44.280 --> 0:02:46.799 FED is going to taper and then they're gonna let 0:02:46.840 --> 0:02:50.359 inflation run a little hot for longer maybe than they 0:02:50.360 --> 0:02:54.040 have during past cycles because of their new monetary policy 0:02:54.160 --> 0:02:57.160 framework that they've also been touting. And that means that 0:02:57.200 --> 0:03:00.359 you should get a steeper yield curve. Now, how steeper guts? 0:03:00.480 --> 0:03:03.440 That's uh, that's something that we're we're analyzing very closely 0:03:03.520 --> 0:03:06.440 right now. Is it just that the Fed got more 0:03:06.520 --> 0:03:09.480 specific and we can kind of start marking the calendar 0:03:09.520 --> 0:03:12.640 a little bit, especially when it comes to tapering. That's why. Yeah, 0:03:12.720 --> 0:03:14.800 that's exactly right. I think that's part of it. The 0:03:14.840 --> 0:03:16.519 other the other is and this was kind of the 0:03:16.560 --> 0:03:19.280 big change that kind of was glossed over and not 0:03:19.360 --> 0:03:22.320 paid too much attention to. But just the time frame 0:03:22.440 --> 0:03:25.320 that Chair Powell mentioned, and that's basically that if they 0:03:25.360 --> 0:03:28.040 start in November, so they'll announce that November meeting, and 0:03:28.080 --> 0:03:30.240 we think the following week is when they'll actually start 0:03:30.240 --> 0:03:33.200 to cut purchases. If they do that at fifteen billion 0:03:33.280 --> 0:03:36.720 dollars a month for UM, that starting in November, they 0:03:36.720 --> 0:03:39.680 will be done in June. So that means that that 0:03:39.760 --> 0:03:42.600 maybe that's a little bit faster than some people had anticipated, 0:03:42.680 --> 0:03:44.560 including us. I mean, we we thought that the taper 0:03:44.560 --> 0:03:47.240 a little bit slower than that, UM, But but that 0:03:47.320 --> 0:03:50.240 means that, you know, basically they're taking out all of 0:03:50.240 --> 0:03:52.520 this bond buying and and there is a flow effect, 0:03:52.600 --> 0:03:54.800 right like you can imagine that with the Fed being 0:03:54.840 --> 0:03:57.280 in there buying a billion, two billion, three billion dollars 0:03:57.280 --> 0:04:00.760 of treasuries every day, that that has a that flow 0:04:00.920 --> 0:04:04.480 has an effect on the market. In particular, it means 0:04:04.520 --> 0:04:08.000 that that dealers, so you know, the go betweens between 0:04:08.160 --> 0:04:11.720 different investors, that kind of are the shock absorber of 0:04:11.760 --> 0:04:14.960 the market. These dealers don't have to hold any inventory 0:04:15.040 --> 0:04:17.480 right now because they can always just sell that inventory 0:04:17.520 --> 0:04:20.040 to the Federal Reserve. That won't be the case a 0:04:20.120 --> 0:04:22.760 year from now when the Fed's done buying, So that 0:04:22.880 --> 0:04:25.320 is going to have some price effect on the market. 0:04:26.120 --> 0:04:29.279 I'm wondering what when you look at rates right now, Ira, 0:04:29.839 --> 0:04:32.880 is there anything you can say about whether in general 0:04:33.160 --> 0:04:38.640 investors feel optimistic or pessimistic about the economy. Yeah, generally speaking, 0:04:38.680 --> 0:04:41.760 I think you can say that they're they're not pessimistic. UM, 0:04:41.960 --> 0:04:44.479 I wouldn't say that they're necessarily optimistic, but they're not 0:04:44.520 --> 0:04:47.520 as they're not very pessimistic right now as they were 0:04:47.560 --> 0:04:49.560 a couple of a couple of weeks ago when everyone 0:04:49.640 --> 0:04:52.680 was really worried about Delta. People were worried that there 0:04:52.720 --> 0:04:55.400 was going to be more significant slowdown than we seem 0:04:55.440 --> 0:04:56.960 to be getting. You know, it's it's kind of interesting 0:04:56.960 --> 0:04:59.240 because we're seeing data right now. You know that the 0:04:59.279 --> 0:05:02.200 Consumer Confident say that they came out that UM, that 0:05:02.200 --> 0:05:04.080 that might suggest that you're seeing a little bit of 0:05:04.080 --> 0:05:06.359 a slowing in the economy, but maybe it's not as 0:05:06.440 --> 0:05:09.240 dramatic as the market was fearing a month ago when 0:05:09.240 --> 0:05:11.960 we hit those kind of cycle loads of of about 0:05:11.960 --> 0:05:14.359 one point one percent on ten year treasury yield. So 0:05:14.400 --> 0:05:17.520 we're you know, we're almost we're forty two bases points 0:05:17.600 --> 0:05:19.640 higher than that now and and I think we're going 0:05:19.680 --> 0:05:22.720 even a little bit higher than that. Um, So I 0:05:22.760 --> 0:05:25.880 do think that the market isn't particularly optimistic, but it's 0:05:25.920 --> 0:05:29.520 also you know, willing to admit that, hey, maybe the 0:05:29.560 --> 0:05:32.200 economy is going to continue to chug along here, and 0:05:32.240 --> 0:05:34.839 there's not a lot of reason to buy um, to 0:05:34.920 --> 0:05:37.760 buy the risk free asset because, um, we're not going 0:05:37.839 --> 0:05:40.360 to see inflation go down to one and a half percent, 0:05:40.400 --> 0:05:42.800 We're not going to see a complete rollover in the 0:05:42.800 --> 0:05:45.240 employment situation, at least not right now. And I are 0:05:45.279 --> 0:05:47.280 there are high rates than there are high rates. I mean, 0:05:47.400 --> 0:05:52.000 everybody remembers when you know people were paying what mortgage rates, 0:05:52.040 --> 0:05:55.280 you know, several decades ago. So even with this move up, 0:05:55.360 --> 0:05:58.599 what what kind of move does this have potentially on 0:05:58.760 --> 0:06:01.400 economic growth or Yeah, And speaking to what Tim said, 0:06:01.440 --> 0:06:03.800 is that this is really about, Hey, folks, things are 0:06:03.839 --> 0:06:08.160 getting quote unquote more normal. Well so from economic activity, 0:06:08.279 --> 0:06:11.440 probably not a ton and primarily because the household balance 0:06:11.440 --> 0:06:13.880 sheet is way better today than it was the last 0:06:13.880 --> 0:06:17.680 time interest rates shot up higher. You know in last 0:06:17.720 --> 0:06:20.160 year when you wound up seeing interest rates go from 0:06:20.160 --> 0:06:21.800 about one and a half percent all the way up 0:06:21.800 --> 0:06:25.080 to three percent. So now we're we're in a situation 0:06:25.080 --> 0:06:28.400 where households UM have a lot of savings, they've paid 0:06:28.400 --> 0:06:31.120 down a lot of debt, so there's not this big 0:06:31.160 --> 0:06:35.000 impetus to refinance mortgages and to UM and and you 0:06:35.000 --> 0:06:36.960 know now it's like, hey, can we find a house 0:06:37.000 --> 0:06:40.000 to buy? So there's even not a lot of UM. 0:06:40.520 --> 0:06:43.680 You know, there's not a lot of of leveraged activity 0:06:43.720 --> 0:06:45.840 going on right now. That's going that means that you know, 0:06:45.880 --> 0:06:48.120 another forty basis points in ten ure yields is going 0:06:48.160 --> 0:06:51.240 to slow down, Uh, the economy substantially. A lot of 0:06:51.279 --> 0:06:55.080 businesses UM had hedge data. Actually a lot of people 0:06:55.080 --> 0:06:57.680 had bought what's called rate locks, So basically they were 0:06:58.000 --> 0:07:00.359 saying when we were near one percent, like hey, I 0:07:00.400 --> 0:07:02.760 want to lock in this tenure yield now because I 0:07:02.800 --> 0:07:06.920 want to refinance some debt in early two so that 0:07:07.040 --> 0:07:09.800 economic activity won't feed through. So so it only is 0:07:09.840 --> 0:07:12.680 over a very long period of time that you know, 0:07:12.840 --> 0:07:15.400 rates at this level will really have a big economic impact. 0:07:15.440 --> 0:07:18.120 I love talking with you, great perspective. Our Jersey chief 0:07:18.200 --> 0:07:21.040 US Interest Rate Strategies at Bloomberg Intelligence joining us on 0:07:21.080 --> 0:07:25.000 the phone from New Jersey. Perspective. I like it. I 0:07:25.080 --> 0:07:28.160 do too. This is Bloomberg Radio. White House COVID nineteen 0:07:28.200 --> 0:07:30.960 coordinator saying today the booster campaign is off to a 0:07:31.040 --> 0:07:33.960 quote strong start, with more than four d thousand Americans 0:07:33.960 --> 0:07:36.080 getting an additional dose at pharmacies last week, and then 0:07:36.120 --> 0:07:38.680 Tim Fiser and BioNTech coming a step closer to bringing 0:07:38.720 --> 0:07:41.440 their vaccine to school age kids in the United States. 0:07:41.680 --> 0:07:43.680 That can't come soon enough. Meanwhile, here in New York, 0:07:43.680 --> 0:07:46.240 New York Governor Kathy Hokel saying a COVID nineteen vaccine 0:07:46.280 --> 0:07:48.400 mandate for health workers that went into effect this week 0:07:48.640 --> 0:07:51.440 it actually is working to boost vaccination rates. In Japan 0:07:51.600 --> 0:07:53.280 is going to lift a state of emergency this week 0:07:53.440 --> 0:07:56.320 as infections recede. Dare I say a little bit of 0:07:56.320 --> 0:07:57.880 good news, Yeah, a little bit of good news, And 0:07:57.920 --> 0:07:59.680 I think that is also playing out. We heard that 0:07:59.720 --> 0:08:02.400 from think some of our market observers when it comes 0:08:02.440 --> 0:08:06.480 to thoughts about the economic outlook. Dr Iman Ubi Abuse 0:08:06.480 --> 0:08:09.600 aid excuse me, Dr Iman Abuse. She's CEO and co 0:08:09.680 --> 0:08:12.760 foundering Incredible Health. Uh, someone we've reached out to throughout 0:08:12.760 --> 0:08:16.280 the pandemic here with our daily check on COVID. Her company, 0:08:16.280 --> 0:08:18.960 by the way, connects hospitals with nurses and other healthcare workers. 0:08:19.000 --> 0:08:21.040 So great person to talk to with us once again 0:08:21.120 --> 0:08:24.360 on the phone in San Francisco. Dr Abuse, Good to 0:08:24.440 --> 0:08:27.640 have you back here on Bloomberg. How are you and 0:08:27.680 --> 0:08:30.119 how are your team's doing and are they all getting 0:08:30.200 --> 0:08:34.040 vaccinated that booster shot? Yeah, thank you so much for 0:08:34.080 --> 0:08:37.480 having me today. Uh and yeah, I mean vaccinations are 0:08:37.480 --> 0:08:40.560 definitely under way. I mean our team, specifically, our our 0:08:40.679 --> 0:08:44.080 tech team, UH that's running the Incredible Health marketplace is 0:08:44.160 --> 0:08:46.679 not getting boosters yet. We are not on the on 0:08:46.720 --> 0:08:48.560 the list, you know. I think it's for over sixty 0:08:48.600 --> 0:08:52.040 five first and high risk individuals UM. And you know, 0:08:52.679 --> 0:08:56.440 from what we're hearing, healthcare workers aren't um, you know, 0:08:56.600 --> 0:08:59.240 lining up yet to get the booster vaccines. And we 0:08:59.240 --> 0:09:02.080 can definitely out more about why that is. Well, let's 0:09:02.280 --> 0:09:04.480 let's talk a little bit about what you're seeing on 0:09:04.520 --> 0:09:07.480 the platform, because I know that you serve health systems 0:09:07.480 --> 0:09:10.440 and that make up fift of hospital beds in Texas 0:09:10.480 --> 0:09:13.440 and California to states with a very large number of 0:09:13.480 --> 0:09:16.120 hospitals and hospital beds. What are you hearing from the 0:09:16.160 --> 0:09:20.080 hospitals in terms of capacity and how it is stretched currently? Yeah, 0:09:20.120 --> 0:09:23.560 I mean it varies by state. We operate in twenty 0:09:23.600 --> 0:09:26.400 states right now, and for for our clients that are 0:09:26.400 --> 0:09:30.920 in Florida in Texas, like, yeah, it's it's a very 0:09:30.920 --> 0:09:33.160 tough situation right now where they are running out of 0:09:33.160 --> 0:09:37.040 beds and more importantly running out of staff right. So, uh, 0:09:37.080 --> 0:09:40.240 these are these are hospitals that are pretty chronically understaffed. 0:09:40.520 --> 0:09:43.800 They don't have enough nurses and uh this delt recent 0:09:43.840 --> 0:09:46.960 delta wave has made things more even more challenging. Um, 0:09:47.160 --> 0:09:51.800 and so they are scrambling to retain their nurses as 0:09:52.000 --> 0:09:54.000 as well as hire them. How many people are leaving 0:09:54.000 --> 0:09:58.080 the industry and just saying I'm done? Um, So what 0:09:58.120 --> 0:10:01.160 we're seeing isn't so the annual turno. So, so that's 0:10:01.360 --> 0:10:04.600 nurses leaving, you know, quitting their jobs or changing jobs. 0:10:04.640 --> 0:10:07.559 Before the pandemic was around eighteen percent, so that one 0:10:07.559 --> 0:10:10.360 one in five. That number has now gone up to 0:10:10.600 --> 0:10:12.920 about twenty one and a half percent during the pandemic, 0:10:13.520 --> 0:10:16.920 and a big, big portion of that increase from eight 0:10:17.080 --> 0:10:19.400 percent to twenty one and a half percent has come 0:10:19.440 --> 0:10:22.599 from nurses that have permanently left the industry. So that 0:10:22.640 --> 0:10:25.520 includes nurses that took advantage of early retirement or who 0:10:25.520 --> 0:10:28.079 have just been completely burnt out and fatigue and just 0:10:28.240 --> 0:10:30.240 you know, left the profession completely. But you know, at 0:10:30.240 --> 0:10:33.600 the same time, we do see statistics about healthcare and 0:10:33.679 --> 0:10:36.320 future healthcare professionals who have been inspired during this time. 0:10:36.360 --> 0:10:39.079 When will we start to see those folks who enrolled 0:10:39.120 --> 0:10:41.960 in school hit the workforce because they did see some 0:10:41.960 --> 0:10:45.160 pretty high numbers last year. Yeah, absolutely, there have been 0:10:45.200 --> 0:10:48.200 record numbers of applicants. You're absolutely correct. But there's a 0:10:48.240 --> 0:10:52.079 there's a critical bottleneck in that. Uh, nursing schools, for example, 0:10:52.200 --> 0:10:55.640 don't have the faculty or the capacity to train more. 0:10:55.760 --> 0:10:58.760 So there's a lot lots of applicants on waitlists and 0:10:58.760 --> 0:11:02.680 and and able waiting to get in. But but but 0:11:02.760 --> 0:11:06.080 the nursing schools themselves can't handle more capacity. Right now, Yeah, 0:11:06.160 --> 0:11:09.040 it just feels like we are being squeezed, the labor market, 0:11:09.160 --> 0:11:12.480 the supply chains, everything. UM. Good to check in with you. 0:11:12.520 --> 0:11:14.760 Stay safe, uh, and we look forward to talking with 0:11:14.800 --> 0:11:17.719 you again. Dr Iman abuse A, she's co founder and 0:11:17.800 --> 0:11:20.840 chief executive officer of Incredible Health, joining us once again 0:11:21.280 --> 0:11:23.760 on the phone from San Francisco. And so you know, 0:11:23.760 --> 0:11:26.240 they're all about connecting hospitals to nursing talents. So she 0:11:26.400 --> 0:11:28.760 has been on the front line since day one of 0:11:28.800 --> 0:11:31.240 the pandemic. And you are just looking at me like 0:11:31.280 --> 0:11:33.760 there are just constraints everywhere. As soon as she said 0:11:33.760 --> 0:11:37.319 that they're having trouble getting the actual you know, instructors, 0:11:37.400 --> 0:11:39.760 the nurse just to teach these students, I just thought 0:11:39.760 --> 0:11:41.600 to myself, weird, this is a story we were hearing 0:11:41.600 --> 0:11:44.160 in every part of the supply chain, in every industry. 0:11:44.200 --> 0:11:47.000 A colleague, give me mind just of ours really just 0:11:47.080 --> 0:11:49.600 came up and said to that he knows he's talking 0:11:49.640 --> 0:11:52.080 about a friend of his works in an industry. And 0:11:52.080 --> 0:11:54.439 again it's a consumer product, a brand you would know, 0:11:54.480 --> 0:11:56.480 and they're like they can't find the materials they need 0:11:56.559 --> 0:11:59.320 to make their products. So we are feeling squeezes and 0:11:59.320 --> 0:12:01.880 hearing about squee is everywhere. We're talking cars. We're talking 0:12:01.880 --> 0:12:04.640 cars behind the scenes, having some fun here. Cars. As 0:12:04.679 --> 0:12:07.160 we know, Tim, they were in big demand during the pandemic, 0:12:07.280 --> 0:12:10.199 new cars, used cars, any cars, Yeah, they certainly were. 0:12:10.240 --> 0:12:12.720 In fact, Kyle Stock found somebody who was able to 0:12:12.720 --> 0:12:15.400 get a used car and sell it back for more 0:12:15.720 --> 0:12:18.440 than the person actually bought it for, so making money 0:12:18.760 --> 0:12:21.400 off buying a car. Car flipping. All right, let's talk 0:12:21.400 --> 0:12:23.720 more about it. Bloomberg News senior writer Kyle Stock with 0:12:23.800 --> 0:12:26.520 us on the phone from Hopewell, New Jersey, and aside 0:12:26.600 --> 0:12:28.760 us business, we get it or Joe Webber Inner Interactive 0:12:28.760 --> 0:12:31.920 broker Studio. Jill was all that cars during the pandemic. 0:12:32.000 --> 0:12:34.840 Still is. It feels like still is. And I thought 0:12:34.960 --> 0:12:36.800 it was really interesting about the story was just sort 0:12:36.840 --> 0:12:41.680 of just to see how prevalent um online reselling of 0:12:41.720 --> 0:12:44.600 cars has become. I mean, obviously it's like you're doing 0:12:44.640 --> 0:12:47.200 everything on your phone, want to do even more. Also, 0:12:47.760 --> 0:12:49.880 I don't know if you've ever used Craigslist. Kind of 0:12:49.920 --> 0:12:53.680 a nightmare. Uh So, so Kyle walk us through how 0:12:53.760 --> 0:13:02.480 this uh marketplace fight has evolved during the pandemic. Up. Yeah, yeah, 0:13:02.960 --> 0:13:05.880 it's a crowd of startups, not unlike you know, what 0:13:05.920 --> 0:13:08.679 we saw with mattresses and razors and all this other 0:13:08.679 --> 0:13:13.360 stuff going online. UM. They've figured, let's disrupt cars UM 0:13:13.440 --> 0:13:15.000 and they've been at it a few years and they've 0:13:15.000 --> 0:13:20.640 been going strong and growing impressively. But the pandemic was 0:13:20.720 --> 0:13:23.839 really sort of a shift change in consumer psyche and 0:13:24.120 --> 0:13:29.640 behavior that UM really gave them a boost. What's interesting 0:13:29.720 --> 0:13:34.480 now is that in part they're thriving, and they're still thriving, 0:13:34.880 --> 0:13:37.800 but now it's about the chip shortage. You know, analog 0:13:37.960 --> 0:13:40.679 bricks and mortar car dealers are having trouble just getting 0:13:40.760 --> 0:13:44.360 vehicles to buy, even use vehicles. They're getting into bidding 0:13:44.360 --> 0:13:48.280 wars on these auction sites and this crowd of startups 0:13:48.440 --> 0:13:52.120 because they're so good at selling cars directly to consumers, 0:13:52.160 --> 0:13:54.800 they're also really good at buying cars directly to consumers, 0:13:54.800 --> 0:13:59.160 so they haven't had the inventory challenges that much of 0:13:59.160 --> 0:14:04.760 the industry have. Space this year does do al so 0:14:05.000 --> 0:14:08.439 Carbona I want to talk specifically about them because they 0:14:08.440 --> 0:14:12.640 have these amazing like pinball, machine gunball machine style things. 0:14:12.920 --> 0:14:15.520 Been with a coin, right, and and there's a big coin. 0:14:16.400 --> 0:14:19.920 Have you put the coin into the machine col Yeah, 0:14:20.000 --> 0:14:22.880 a big cartoon coin. I mean it's a gimmick and 0:14:22.920 --> 0:14:26.360 it's a billboard, and it's you know, basically a parking 0:14:26.360 --> 0:14:30.400 garage George facility. But you know they need all those things, 0:14:30.440 --> 0:14:32.840 so they put it all in one thing. And we're 0:14:32.840 --> 0:14:34.480 talking about it. It's like you wake up with the 0:14:34.480 --> 0:14:36.280 middle of night, you're hungry, you get some chips, and 0:14:36.280 --> 0:14:37.760 you're like, I feel like buying a car. Let me 0:14:37.760 --> 0:14:39.880 take my big coin and go down to the cravat 0:14:40.200 --> 0:14:44.760 carbona machine. Um. It is really upending though, how we 0:14:44.840 --> 0:14:47.280 think about car buying. And I gotta tell you, if 0:14:47.280 --> 0:14:49.040 we get rid of sorry dealers, if we can kind 0:14:49.040 --> 0:14:51.680 of squeeze the dealers out, and in some ways you 0:14:51.720 --> 0:14:56.600 are getting that. Yeah, it's really I mean, I don't 0:14:56.600 --> 0:14:59.680 think you're getting a better deal. You might be getting 0:14:59.680 --> 0:15:03.560 a word steal in some ways, but it's a you know, 0:15:03.760 --> 0:15:06.840 it's a simple transaction, and you know they've done all 0:15:06.840 --> 0:15:09.440 this other stuff. You know, you can get your financing, 0:15:09.520 --> 0:15:12.000 you can get your warranties. You know there's all this 0:15:12.080 --> 0:15:14.840 other blocking and tackling around the transaction. You know, it 0:15:14.880 --> 0:15:18.080 doesn't have to be that difficult. You don't have to 0:15:18.120 --> 0:15:21.360 be in a crappy waiting room for five hours if 0:15:21.400 --> 0:15:24.920 you know what you want and and kind of so 0:15:25.080 --> 0:15:28.120 when you when you think about where this market police 0:15:28.120 --> 0:15:29.600 could go and like, i mean part of this is 0:15:29.680 --> 0:15:33.200 driven by chips also, right, Like it's there's just such 0:15:33.200 --> 0:15:35.480 a shortage. I mean there's a shortage of everything and 0:15:35.880 --> 0:15:38.080 the shortage of chips. There are shortage of new cars. 0:15:38.520 --> 0:15:41.040 What what do you think this marketplace kind of fight 0:15:41.400 --> 0:15:46.600 ends up looking like you know, once normality returns, whenever 0:15:46.640 --> 0:15:50.400 that happens, I don't not say. Well, what's really interesting 0:15:50.440 --> 0:15:53.680 is you know the big dealership groups that have you know, 0:15:53.760 --> 0:15:57.120 car lots all over the country. You know, during the pandemic, 0:15:57.160 --> 0:15:58.840 they were like, we're going to go back to normal. 0:15:59.400 --> 0:16:02.200 We got we can do digital, but people still want 0:16:02.200 --> 0:16:05.680 to come to the car lot. Now they're saying, hey, 0:16:05.840 --> 0:16:09.720 we are digital platform is great. It's really growing. We're 0:16:09.720 --> 0:16:13.160 buying cars online from people. They're doing the same business 0:16:13.200 --> 0:16:15.760 model as carbon and they're saying we can do all 0:16:15.800 --> 0:16:19.280 that as well. Um, and are you abili some of 0:16:19.280 --> 0:16:21.040 them can do it better because they already have all 0:16:21.040 --> 0:16:24.200 these dealerships that are full of mechanics and people that 0:16:24.280 --> 0:16:27.920 can recondition these cars. Um. So it's not going away 0:16:27.960 --> 0:16:32.520 it's kind of snowballing. What's interesting is you know the 0:16:32.600 --> 0:16:35.880 Craigslift transaction which is like twenty million cars a year, 0:16:36.120 --> 0:16:40.040 or Facebook marketplace, you choose, you choose it. Um, that 0:16:40.240 --> 0:16:44.440 stuff is going to go away because it's not it's 0:16:44.480 --> 0:16:48.040 not a great experience anyways. And you know Uncle Jimmy's 0:16:48.080 --> 0:16:50.280 car lot, That's what I was going to ask about, 0:16:50.720 --> 0:16:53.960 because yeah, well but that's a that's a in a 0:16:53.960 --> 0:16:55.600 lot of parts of America. That's where people do by 0:16:55.600 --> 0:16:58.520 their use cars and traditional all my siblings like, that's 0:16:58.520 --> 0:17:01.240 where my dad would go to the the score a lot. 0:17:01.640 --> 0:17:04.440 Those days coming to a to an end, I think 0:17:04.440 --> 0:17:06.840 those guys are gonna have a tough time. Um. You know, 0:17:06.920 --> 0:17:10.120 there are services out there that will you know, sort 0:17:10.119 --> 0:17:14.040 of stand up and online marketplace for those guys, or 0:17:14.119 --> 0:17:17.080 you know, they can certainly sell cars online and Cargurus 0:17:17.200 --> 0:17:20.760 or some of these other sites that the democratizing the 0:17:20.760 --> 0:17:23.840 Internet a little bit. But if they don't have the 0:17:23.920 --> 0:17:28.360 chop um, if they don't have the I t um 0:17:28.640 --> 0:17:32.960 sort of intelligence to evolve, they're gonna get squeezed out 0:17:33.119 --> 0:17:36.280 or or acquired. That's what I was going to ask you, Kyle, 0:17:36.359 --> 0:17:38.199 is there gonna be consolidation. Sounds like there's a lot 0:17:38.240 --> 0:17:40.800 of players doing similar things and that there might be 0:17:41.680 --> 0:17:44.679 some power if a few of them line up together. 0:17:45.160 --> 0:17:50.200 Should we anticipate that? Yes? Absolutely. Um. You know, the 0:17:50.240 --> 0:17:54.719 retail auto industry in this country is incredibly fragmented, Like 0:17:55.280 --> 0:17:57.399 the biggest player has like two or three percent of 0:17:57.440 --> 0:18:00.840 the market. Um, that's CarMax, um if I if I 0:18:00.880 --> 0:18:05.320 recall correctly, So there's a ton of room for for 0:18:06.119 --> 0:18:09.160 M and A and people to tie up. And then again, 0:18:09.280 --> 0:18:11.359 you know the used car markets forty million cars a 0:18:11.440 --> 0:18:14.200 year and like I said, about half of those are 0:18:14.280 --> 0:18:18.719 just peer to peer. Um, so yeah it things are 0:18:18.720 --> 0:18:25.440 going to change very quickly. So, Kyle, the little confession 0:18:25.640 --> 0:18:28.120 since we last spoke, I think, was that I actually 0:18:28.200 --> 0:18:30.919 happened to use carbona to sell that old Super U 0:18:31.000 --> 0:18:34.480 remember that one? Yeah, Yeah, and I went and I 0:18:34.480 --> 0:18:36.760 went Tesla, I got I got him on the one 0:18:36.800 --> 0:18:39.560 you did, Okay, Yeah, so I think that, but you 0:18:39.640 --> 0:18:42.680 made money right it was It basically was a wash 0:18:42.960 --> 0:18:46.440 where I was able to like buy the super right 0:18:46.440 --> 0:18:49.320 before the pandemic you and then was like wait a second, 0:18:49.320 --> 0:18:52.000 I could upgrade and get as much as I paid 0:18:52.040 --> 0:18:55.040 for it and like why wouldn't you write and like that. 0:18:55.400 --> 0:18:58.280 And the beauty of these apps is like the carbona 0:18:58.320 --> 0:18:59.639 thing is like, you know, you just put it in 0:18:59.640 --> 0:19:02.000 and that tells you what your number is. And then 0:19:02.040 --> 0:19:03.760 if you don't like the number, like try again next 0:19:03.800 --> 0:19:06.919 week and maybe it goes up right because there's a 0:19:06.920 --> 0:19:12.320 short pitch. They basically it's like a game. They've gamified it. 0:19:12.440 --> 0:19:14.440 I think in this way that makes you if you know, 0:19:14.480 --> 0:19:17.160 if you're dreaming about maybe even not having a car, 0:19:17.200 --> 0:19:19.600 it's like, wow, somebody will show up and take this 0:19:19.600 --> 0:19:22.680 thing away and give me, give me money. That sounds great. 0:19:22.760 --> 0:19:24.240 I love it. I love it. I want to deal 0:19:24.240 --> 0:19:27.640 with the riff raff from Craigslift. Sign me up. Put 0:19:27.680 --> 0:19:30.520 the coin in. He put the coin in exactly. Hey, Kyle, 0:19:30.600 --> 0:19:33.560 great stuff. Always appreciate checking in with you, Kyle Stock. 0:19:33.600 --> 0:19:35.920 He's senior correspondent Bloomberg News. Check out his story the 0:19:36.000 --> 0:19:40.440 upcoming issue of Bloomberg Business Week. Joe Webber buying cars cars. 0:19:40.480 --> 0:19:45.320 Who he's doing this Southside? I'll give you a right 0:19:46.560 --> 0:19:49.439 that was a no editor of Bloomberg Business Week. You 0:19:49.440 --> 0:19:55.840 are listening to Bloomberg right now. This is the big 0:19:55.920 --> 0:19:59.840 take the best of Bloomberg's in depth original reporting from 0:19:59.840 --> 0:20:02.639 a run the globe. Well, we actually make sure we do, 0:20:02.920 --> 0:20:05.960 as the economy covers is what cut the data kind 0:20:05.960 --> 0:20:08.280 of broken down a bit. It's fun to becoming more 0:20:08.280 --> 0:20:10.840 and more expensive to be looking at the shipping billion 0:20:10.840 --> 0:20:14.040 dollars for the re entry levels, ways of immigration that 0:20:14.119 --> 0:20:16.520 have faced a lot of resistance, a lot of color 0:20:16.720 --> 0:20:19.440 behind the scenes in a great untold story. How did 0:20:19.440 --> 0:20:22.320 Bezos really come out on top? It's the cover, says 0:20:22.480 --> 0:20:25.480 Jeff Wins. He always seems to win the Big Take 0:20:25.840 --> 0:20:28.640 on Bloomberg Radio, and it's also among our most read 0:20:28.680 --> 0:20:31.120 stories on the Bloomberg Today. It is the Bloomberg Big Take. 0:20:31.200 --> 0:20:33.040 It's one story that you need to have on your 0:20:33.119 --> 0:20:35.919 radar today. It's about the one country on Earth that 0:20:35.960 --> 0:20:39.960 puts more breakfasts on kitchen tables tim than any other. 0:20:40.320 --> 0:20:43.560