WEBVTT - UAW, ECB, Arm, and Casino Cyberattacks (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.080 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven News. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.120 --> 0:00:25.680 David Welch, Detroit bureau chief for Bloomberg News, and Jordan Fabian, 0:00:25.760 --> 0:00:27.400 white House reporter for Bloomberg News. 0:00:27.600 --> 0:00:29.280 They join us. We're going to round table this thing 0:00:29.320 --> 0:00:29.840 a little bit. 0:00:30.000 --> 0:00:32.560 So, David, I want to get the latest reporting out 0:00:32.600 --> 0:00:33.240 of Detroit. 0:00:33.720 --> 0:00:34.559 What's the expectation. 0:00:34.640 --> 0:00:36.839 Will there be a strike and if so, is there 0:00:36.840 --> 0:00:38.840 any expectation of how long it may last? 0:00:40.640 --> 0:00:44.040 I think there certainly will be. All of the the 0:00:44.159 --> 0:00:46.080 vibe coming out of the union right now is the 0:00:47.200 --> 0:00:50.319 president is itching destroyed. He says he's not, but he's 0:00:50.360 --> 0:00:53.559 making plans. The writer has still really strong against the 0:00:53.600 --> 0:00:56.520 car companies, against rich executives, all of that, so he's 0:00:56.520 --> 0:01:00.480 getting people riled up. He says they're far apart. Sound 0:01:00.560 --> 0:01:01.920 like they are if you look at the numbers. So 0:01:03.360 --> 0:01:06.760 I think they will and look, it could go on 0:01:06.880 --> 0:01:10.640 for a while. I don't think it'll be something like 0:01:10.680 --> 0:01:14.800 three months, but I could see strike going on for weeks, 0:01:14.880 --> 0:01:17.520 and it could vary by car company too. It doesn't 0:01:17.560 --> 0:01:20.720 necessarily two days at one and three weeks at another, right, 0:01:20.880 --> 0:01:22.680 I mean, if he gets the deal he wants from 0:01:22.720 --> 0:01:23.720 specific companies. 0:01:23.840 --> 0:01:25.479 So, David, how far apart are they? 0:01:25.560 --> 0:01:29.000 Because I've read now that the union has lowered its 0:01:29.000 --> 0:01:32.759 demand for pay increases slightly, and the last I saw 0:01:32.840 --> 0:01:35.360 from automakers was about double what I had seen a 0:01:35.400 --> 0:01:38.119 week ago. So how far apart are they right now? 0:01:38.880 --> 0:01:39.119 Yeah? 0:01:39.160 --> 0:01:41.320 So look, Forward is up to twenty percent and GM 0:01:41.400 --> 0:01:44.520 is at eighteen percent pay raises over four years, which 0:01:44.680 --> 0:01:48.320 is I think better than they've ever gotten, so, you know, 0:01:48.800 --> 0:01:51.760 I think, and it's not the thirty six percent they 0:01:51.760 --> 0:01:53.760 asked for, but I think that was sort of a 0:01:53.880 --> 0:01:55.800 high ball offer from the union to begin with. 0:01:56.360 --> 0:01:59.000 But they asked for that because the chief executives have 0:01:59.080 --> 0:02:01.760 gotten those kinds of pay increases over the past four 0:02:01.840 --> 0:02:02.800 years as well, haven't they. 0:02:03.680 --> 0:02:04.160 That's right? 0:02:04.200 --> 0:02:07.960 And look, you know, CEO's got to kind of be 0:02:08.000 --> 0:02:10.600 careful what they wish for it, right, because you know, 0:02:10.880 --> 0:02:12.800 suddenly they might have a union saying you got forty 0:02:12.800 --> 0:02:16.959 percent and why didn't I? And didn't get great raises 0:02:17.000 --> 0:02:20.040 over the last contract. And I'm sure some labor negotiators 0:02:20.040 --> 0:02:22.679 that the company's got bonuses for negotiating a pretty low 0:02:22.720 --> 0:02:25.080 cost contract last time. And they used to be careful 0:02:25.120 --> 0:02:26.919 what they wish for, because now they've got an extremely 0:02:26.960 --> 0:02:30.920 angry union. But they do, and they and with a 0:02:30.960 --> 0:02:33.400 president who wants to make a statement about labour's role 0:02:33.400 --> 0:02:35.880 in America. This isn't just about this contract with him, 0:02:36.240 --> 0:02:39.280 he wants to bring the labor movement back to prominence 0:02:39.680 --> 0:02:40.360 in America. 0:02:40.480 --> 0:02:41.919 All right, and all. 0:02:41.919 --> 0:02:42.959 Right, so that's where we are. 0:02:43.080 --> 0:02:45.040 Yep, Jordan Fabian, let's bring you in. You covered the 0:02:45.040 --> 0:02:48.160 White House for Bloomberg News in Washington, DC. The President Biden, 0:02:48.280 --> 0:02:51.600 he has said twice that there won't be a strike here. 0:02:51.960 --> 0:02:53.560 What are you hearing out of the White House. 0:02:56.280 --> 0:02:59.640 I think that's the President being his usual optimistic self. 0:03:00.000 --> 0:03:03.440 Other people I've talked to aren't so optimistic. And you know, 0:03:03.480 --> 0:03:06.080 they see what we're all seeing, which is a union 0:03:06.200 --> 0:03:07.799 and management still. 0:03:08.240 --> 0:03:09.639 A part on a contract. 0:03:09.720 --> 0:03:13.399 And you know, they have encouraged the side to stay 0:03:13.400 --> 0:03:15.240 at the table. But you know, some people I've talked 0:03:15.240 --> 0:03:17.080 to have said, look, we don't know how this is 0:03:17.120 --> 0:03:20.040 going to end. It's all we can do is kind 0:03:20.080 --> 0:03:23.040 of encourage them to keep talking. But there's really not 0:03:23.120 --> 0:03:26.079 much we can do to force them to get a contract. 0:03:26.120 --> 0:03:29.600 So they're crossing their fingers and hoping there's not a strike, 0:03:29.639 --> 0:03:31.359 and if there is, that's not a long one. 0:03:31.639 --> 0:03:35.880 You So, Jordan David points out that this president wants 0:03:35.920 --> 0:03:38.960 to bring unions back to prominence. At the same time 0:03:39.280 --> 0:03:42.839 he has backed up truckloads of subsidies and dumped them 0:03:42.920 --> 0:03:47.240 on the automaker's doorsteps to try and encourage them to 0:03:48.040 --> 0:03:50.880 build more electric vehicles for which, by the way, we 0:03:50.960 --> 0:03:54.760 don't even know how much demand there is that is 0:03:54.760 --> 0:03:58.880 going to require far fewer workers. So is he working 0:03:58.920 --> 0:03:59.960 at cross purposes? 0:04:01.840 --> 0:04:05.280 This is the central dilemma for Joe Biden is this 0:04:05.320 --> 0:04:08.800 clean energy transition is one of his biggest domestic priorities. 0:04:08.920 --> 0:04:11.680 But guess what, so it is empowering the US labor movement, 0:04:11.760 --> 0:04:15.560 and in this negotiation he's found himself caught in the 0:04:15.560 --> 0:04:17.919 middle of those two priorities and they're really. 0:04:17.760 --> 0:04:18.680 No easy answers. 0:04:19.200 --> 0:04:22.720 They've done the administration has done something recently, they've released 0:04:22.720 --> 0:04:26.279 this fifteen billion dollar tranch of money from the Energy 0:04:26.320 --> 0:04:30.800 Department to incentivize factory retooling, and they've, you know, they've 0:04:30.800 --> 0:04:34.800 put some strings attached there. They're encouraging car companies to 0:04:35.720 --> 0:04:38.839 use that money on unionized plants and make sure the 0:04:38.839 --> 0:04:41.400 benefits go to union workers, but they're not forced to. 0:04:41.680 --> 0:04:45.480 And this has been the bane for Sean Fain, which 0:04:45.520 --> 0:04:49.880 is he doesn't think the administration imposed enough conditions on 0:04:50.120 --> 0:04:52.440 all this money that's going to the car companies. And 0:04:52.520 --> 0:04:55.520 so in addition to the pay and benefits, this ev 0:04:55.839 --> 0:04:59.960 transition issue has been at the backdrop of this negotiation 0:05:00.120 --> 0:05:03.200 and it's really, you know, causing political problems for Joe 0:05:03.240 --> 0:05:05.600 Biden because he needs all the units support he get 0:05:05.600 --> 0:05:07.640 going too twenty twenty four, and here you have this 0:05:07.720 --> 0:05:09.880 major union on the side saying, not so. 0:05:09.839 --> 0:05:14.279 Fast, Hey, David, do we know how this union will strike? 0:05:14.320 --> 0:05:17.200 Will they strike one automaker all three? Do we know 0:05:17.360 --> 0:05:20.280 kind of their strategy? 0:05:20.440 --> 0:05:23.200 I think they'll they will strike all three. And what 0:05:23.240 --> 0:05:25.960 they're what they said they're going to do is they 0:05:26.000 --> 0:05:29.160 will strike individual plants. They're not going to walk out 0:05:29.200 --> 0:05:32.520 on the entire company. That's one way of minimizing the 0:05:32.520 --> 0:05:34.880 payouts from the strike fund, which pays workers some money 0:05:34.920 --> 0:05:37.920 while they're striking. And if they strike all three at 0:05:37.920 --> 0:05:40.279 every plant, they'd run out of money in about seven weeks. 0:05:40.360 --> 0:05:42.800 They don't want to do that, so they'll they'll strike 0:05:42.839 --> 0:05:45.040 individual plants. And what I think they'll do is they'll 0:05:45.080 --> 0:05:48.520 strike the plants that make the most profitable vehicles, which 0:05:48.560 --> 0:05:52.559 would be the large pickup truck and suv plants, because 0:05:52.600 --> 0:05:54.360 that you know, if you were to take down Ford 0:05:54.400 --> 0:05:58.080 and GM's large suv and pickup plants and it's something 0:05:58.120 --> 0:05:59.960 like seventy or eighty percent of their profits comes from 0:06:00.000 --> 0:06:02.760 those vehicles, you do a lot of damage and put 0:06:02.760 --> 0:06:05.080 a lot of pressure on the companies very quickly while 0:06:05.120 --> 0:06:07.440 paying minimally out to your strike fund. And then if 0:06:07.480 --> 0:06:09.000 they don't get a deal, they can kind of keep, 0:06:09.600 --> 0:06:12.000 you know, adding another plant here and there. They could 0:06:12.040 --> 0:06:15.720 strike parts plants that supply the dealers with replacement parts 0:06:16.040 --> 0:06:18.159 for customers. That could create a lot of chaos. There 0:06:18.200 --> 0:06:20.520 are a lot of ways they could with individual plant strikes. 0:06:20.520 --> 0:06:21.640 They could apply a lot of pressure. 0:06:22.080 --> 0:06:25.640 Hey, David, just person on the street in Detroit, which 0:06:25.640 --> 0:06:26.440 way are they leaning? 0:06:28.720 --> 0:06:30.520 I mean, like that kind of runs the gamut. But 0:06:30.680 --> 0:06:34.240 I think, you know, it's it's a union city, so 0:06:34.279 --> 0:06:35.880 there's going to be a lot of sympathy for them. 0:06:36.040 --> 0:06:38.839 It's also the Detroit city proper. There's a lot of 0:06:38.839 --> 0:06:44.440 poverty there, so you know, strikers trying to get what 0:06:44.480 --> 0:06:46.560 they think is their fair share would probably have a 0:06:46.560 --> 0:06:49.520 lot of sympathy. You move further out in the state 0:06:49.600 --> 0:06:51.960 and you start to see comments on social media like 0:06:52.720 --> 0:06:54.920 thirty to our work. You guys are on crack up bread, 0:06:55.000 --> 0:06:59.880 stuff like that. So Michigans, Michigans are a very biver 0:07:00.040 --> 0:07:00.839 hated place in that. 0:07:01.200 --> 0:07:03.800 I mean, forty seemed like a lot to me at first, 0:07:03.800 --> 0:07:06.359 also until I read that the chief executives were getting that. 0:07:06.800 --> 0:07:09.440 You know, and this is an industry that was bailed 0:07:09.480 --> 0:07:11.840 out by the US government. There you go during the 0:07:11.880 --> 0:07:17.160 Great Financial Crisis and a union that gave a lot 0:07:17.200 --> 0:07:21.400 of help frankly that that accepted a worse contract in 0:07:21.480 --> 0:07:25.040 order to help the automakers stay alive. Now, the automakers 0:07:25.040 --> 0:07:27.200 have made a ton of money over the past ten years, 0:07:27.200 --> 0:07:31.320 and Jordan, does you know from that perspective, doesn't the 0:07:31.320 --> 0:07:35.000 president from Scranton, Pennsylvania, who cares about the scrappy workers. 0:07:35.240 --> 0:07:37.400 Doesn't he go march with the with the union when 0:07:37.400 --> 0:07:37.880 they strike. 0:07:39.920 --> 0:07:42.119 That would be quite the image, wouldn't it, Joe Biden 0:07:42.120 --> 0:07:43.000 holding a picket sign. 0:07:43.080 --> 0:07:45.440 But that's what he wants us to think of him, right. 0:07:46.160 --> 0:07:47.680 No, he absolutely does. 0:07:47.760 --> 0:07:50.640 He's repeatedly called himself the most pro union president in 0:07:50.720 --> 0:07:53.120 US history. He did put out a statement about a 0:07:53.120 --> 0:07:57.160 month ago that did voice support generally for some of 0:07:57.160 --> 0:08:00.560 the union demands, like I better pay and betterfit's making 0:08:00.560 --> 0:08:03.320 sure if there's a factory tooling or closing down, that 0:08:03.560 --> 0:08:07.040 the members are taken care of and that they keep jobs. 0:08:07.000 --> 0:08:08.080 In union communities. 0:08:08.320 --> 0:08:12.360 But look, he also needs these corporations like he needs 0:08:12.400 --> 0:08:15.400 them for the clean energy transition, not to mention, he 0:08:15.520 --> 0:08:19.280 needs to Corporate America on side to give him campaign 0:08:19.280 --> 0:08:22.680 donations for his re election campaign. So that's why you're 0:08:22.720 --> 0:08:24.440 not going to see him wearing that red shirt that 0:08:24.480 --> 0:08:26.520 Sean Fame was wearing in that image. 0:08:26.680 --> 0:08:28.800 All right, fellows, thank you so much for joining both 0:08:28.800 --> 0:08:31.640 of you. Jordan Fabian he covers the White House for 0:08:31.680 --> 0:08:35.439 Bloomberg News, and David Welch, Detroit bureau chief, out there 0:08:35.480 --> 0:08:38.120 giving us kind of the feel for the two sides 0:08:38.160 --> 0:08:42.520 here again. Midnight tonight Eastern time is the deadline. 0:08:43.920 --> 0:08:47.760 You're listening to the Team Ken's Arline program Bloomberg Markets 0:08:47.800 --> 0:08:50.880 weekdays at ten am Eastern on Bloomberg dot Com, the 0:08:50.960 --> 0:08:54.120 iHeartRadio app, and the Bloomberg Business app, or listen on 0:08:54.160 --> 0:08:56.079 demand wherever you get your podcast. 0:08:58.120 --> 0:09:02.400 We had the European Central Bank hike interest rates for 0:09:02.480 --> 0:09:05.560 the tenth time to quash inflation at the posit rate 0:09:05.640 --> 0:09:09.080 now four percent, up from three point seven three point 0:09:09.160 --> 0:09:10.040 seventy five percent. 0:09:10.080 --> 0:09:11.600 Where do we go from here? They've done? 0:09:11.920 --> 0:09:14.680 Let's check in with doctor Richard Portis, professor at the 0:09:14.760 --> 0:09:18.800 London Business School. Professor, thanks so much for joining us here. A. 0:09:19.000 --> 0:09:21.960 What do you make of the ECB move? ECB's move 0:09:22.040 --> 0:09:24.400 today and then B are they done? 0:09:25.960 --> 0:09:28.680 I'm disappointed. I don't think they should have hiked today. 0:09:29.559 --> 0:09:34.160 The pressures on the European economy are very great now 0:09:35.240 --> 0:09:39.680 and growth forecasts are just falling and falling. The latest 0:09:39.679 --> 0:09:44.440 European Commission forecast, independently of the ECB, has cut back 0:09:44.559 --> 0:09:49.760 their forecasts considerably so that I think they're pushing us 0:09:49.800 --> 0:09:54.040 into a recession, pushing the Eurozone into a recession, and 0:09:54.480 --> 0:09:58.160 that seems to be unwise. What they should have done 0:09:58.240 --> 0:10:02.840 is wait. In my view, the data are mixed. Otherwise, 0:10:02.920 --> 0:10:06.520 the inflation data are mixed, and it would have been 0:10:06.520 --> 0:10:07.160 better to hold on. 0:10:08.720 --> 0:10:12.000 They only have one mandate, though the European Central Bank, 0:10:12.080 --> 0:10:16.520 unlike the FED, doesn't worry or isn't supposed to be 0:10:16.640 --> 0:10:22.439 focused on the labor market and I guess economic growth altogether. 0:10:22.480 --> 0:10:26.600 Their only job is to keep inflation at a steady level. 0:10:27.760 --> 0:10:31.760 Excuse me, they're talking about their big into climate and 0:10:31.800 --> 0:10:37.560 all that. They're criticizing the Italian government for their windfall 0:10:37.880 --> 0:10:43.720 profit tanks on banks. Their single mandate has a very 0:10:43.760 --> 0:10:48.000 broad scope and actually, if you look at it, they 0:10:48.120 --> 0:10:52.800 are required to take account of their actions on the 0:10:52.920 --> 0:10:56.880 overall level of economic activity in the Eurozone. 0:10:57.600 --> 0:11:00.920 All right, So you're worried that they essentially push the 0:11:00.920 --> 0:11:05.480 Eurozone into a recession. We're already seeing, you know, we're 0:11:05.480 --> 0:11:07.599 already seeing that in some of the biggest economies in 0:11:07.640 --> 0:11:11.480 Germany for example. But they have said this is their 0:11:11.559 --> 0:11:14.480 final rate hike. Does that, well, they haven't said it. Actually, 0:11:14.559 --> 0:11:18.240 let me let me. In fact, in fact, Christine leguards 0:11:18.280 --> 0:11:21.200 that she can't say that, which she can't obviously, but 0:11:21.280 --> 0:11:23.920 we kind of you can read between the lines and 0:11:23.960 --> 0:11:26.800 see that this is their final rate hike. So does 0:11:26.840 --> 0:11:31.440 that kind of blunt the does that kind of reduce 0:11:31.520 --> 0:11:32.599 the damage effectively? 0:11:33.800 --> 0:11:37.120 Well, if it's if it ready is final, yes, that's 0:11:37.600 --> 0:11:41.760 that reduces the prospects of damage. But still I think 0:11:41.760 --> 0:11:45.640 they've gone too far and we'll just we'll see what happens. 0:11:46.040 --> 0:11:47.719 The inflation data are not. 0:11:48.200 --> 0:11:53.440 Particularly good, that's for sure, but you know it's turning around. 0:11:53.480 --> 0:11:56.679 It has been turning around for a while, and I 0:11:56.720 --> 0:12:02.000 think the wisest churus is to wait. But there are people, 0:12:02.920 --> 0:12:09.800 several people with strong views in the Council Governing Council 0:12:09.880 --> 0:12:13.880 of the ECB who think, no, we must stamp on 0:12:13.920 --> 0:12:17.160 inflation dramatically, and that's what they're doing. 0:12:17.679 --> 0:12:18.160 Professor. 0:12:18.200 --> 0:12:21.960 Here in the US, the talk has been about a 0:12:22.000 --> 0:12:25.160 soft landing. That is not the case in Europe. Can 0:12:25.240 --> 0:12:27.600 you give us your view of kind of where the 0:12:27.679 --> 0:12:30.280 European economy is, how we should think about it. 0:12:30.440 --> 0:12:31.480 Maybe on this side of the pond. 0:12:32.280 --> 0:12:35.960 It's certainly not a soft landing here in Europe, and 0:12:36.480 --> 0:12:39.640 I include the UK and that of course as well. 0:12:40.520 --> 0:12:45.920 But I think that's where we've got to the labor 0:12:45.960 --> 0:12:49.680 market is holding up fairly well as in the US 0:12:50.040 --> 0:12:56.040 for that matter, but economic activity is slowing down very considerably. 0:12:56.600 --> 0:13:00.960 And how long you can how they can take that? Uh, 0:13:01.160 --> 0:13:06.320 the politicians are coming European elections are coming up, not 0:13:06.440 --> 0:13:10.240 in just in individual countries, but also the European Parliament 0:13:10.240 --> 0:13:12.960 elections are coming up, and there's gonna be a lot 0:13:13.000 --> 0:13:19.320 of criticism of the ECB if indeed we find the 0:13:19.360 --> 0:13:21.240 Arizona going into a full scale recession. 0:13:22.679 --> 0:13:23.400 I wonder. 0:13:25.280 --> 0:13:28.880 You know how hesitant you are to include the UK 0:13:29.000 --> 0:13:32.520 when you talk about Europe, because aren't there very big differences? 0:13:33.160 --> 0:13:35.839 And to some extent, the UK has you know, kind 0:13:35.840 --> 0:13:37.600 of repeatedly shot itself in the foot. 0:13:39.760 --> 0:13:43.400 Well, I mean depends which which gun you're talking about. 0:13:45.679 --> 0:13:47.319 Was that the left foot or the right foot or 0:13:47.360 --> 0:13:48.240 both the same time? 0:13:49.240 --> 0:13:54.560 Yes, I'm afraid we have done, and right now there 0:13:54.559 --> 0:14:00.600 seems no prospect of that reversing. But but here too, 0:14:01.600 --> 0:14:04.280 I believe we should not be raising rates any further. 0:14:05.120 --> 0:14:10.559 The data are turning around. They're turning around for inflation. 0:14:10.840 --> 0:14:13.640 They're turning around slower than one would like, for sure, 0:14:14.200 --> 0:14:20.960 But the cost of the restrictive policies is high. 0:14:21.360 --> 0:14:24.040 And that I think is unwise. 0:14:25.160 --> 0:14:30.560 The the otherwise, you know, the banking sector is in 0:14:30.560 --> 0:14:34.000 pretty good shape, both in the Eurozone and in the UK. 0:14:35.120 --> 0:14:38.200 How long that will last we don't know. But the 0:14:38.320 --> 0:14:41.320 rise and interest rates as of course widened that interest 0:14:41.360 --> 0:14:45.320 margins for a while. They will they will come down 0:14:45.400 --> 0:14:49.320 as as banks have to pass on some of the 0:14:49.360 --> 0:14:53.480 interest rate rises to the depositors. But the financial sector 0:14:53.520 --> 0:14:57.640 is in pretty good shape in general, and it's just 0:14:57.840 --> 0:15:03.080 the main suffering is in manufacturing and to some extented services, 0:15:03.840 --> 0:15:07.280 and that's that's serious. 0:15:07.520 --> 0:15:07.680 Yep. 0:15:07.840 --> 0:15:11.120 And Professor, when you talk about manufacturing, European manufacturing, I 0:15:11.120 --> 0:15:14.120 think most US investors think Germany. Can you tell us 0:15:14.120 --> 0:15:17.560 about how we should be thinking about the German economy here? 0:15:17.560 --> 0:15:19.880 And maybe the outlook it's not. 0:15:19.880 --> 0:15:20.600 A pretty picture. 0:15:21.400 --> 0:15:25.880 The problem is partly a slow down in external demand 0:15:25.880 --> 0:15:31.240 from China in particular, and that is very substantial and 0:15:31.360 --> 0:15:34.600 very severe and has a big impact across a wide 0:15:34.680 --> 0:15:37.200 range of German engineering firms. 0:15:38.360 --> 0:15:40.160 So that's a big deal. 0:15:41.280 --> 0:15:47.960 The unions have push wages up and German manufacturing is 0:15:49.280 --> 0:15:52.280 there's not a sector I can think of right now 0:15:53.080 --> 0:15:59.080 that is balancing this trend downwards and If you look 0:15:59.080 --> 0:16:06.440 at the data, they're pretty they're pretty depressing, so uh so, and. 0:16:06.400 --> 0:16:08.200 It's it's not it's not easy to see how that's 0:16:08.240 --> 0:16:09.080 going to turn around. 0:16:09.840 --> 0:16:18.880 Actually, the the finance minister is a very uh conservative 0:16:19.000 --> 0:16:23.960 shall we say, uh uh minister, and he certainly has 0:16:24.000 --> 0:16:27.040 no intention of any fiscal expansion. Indeed, just the other 0:16:27.080 --> 0:16:30.960 way around, the prospect for next year for Germany is 0:16:30.960 --> 0:16:35.280 fiscal contraction. Uh in the face of this uh, in 0:16:35.320 --> 0:16:36.960 the face of this gathering recession. 0:16:37.360 --> 0:16:39.200 That seems to me very foolish. 0:16:40.880 --> 0:16:44.000 What do you think the solution? The solution is to 0:16:44.320 --> 0:16:47.960 the problems that the European Union faces in terms of 0:16:48.120 --> 0:16:52.120 monetary policy. You have got this one uh you know, 0:16:52.320 --> 0:16:56.960 organization setting monetary policy for so many different and diverse economies. 0:16:57.200 --> 0:17:00.680 Does that you think work? Has it worked out so far? 0:17:00.760 --> 0:17:01.880 Does it need to change? 0:17:03.120 --> 0:17:05.359 It's always Look if you look at the United States, 0:17:05.359 --> 0:17:09.760 you have a single monetary authority setting policies for states 0:17:09.760 --> 0:17:15.800 as diverse as Mississippi and California, not to mention Illinois, 0:17:15.840 --> 0:17:20.640 where I grew up a long time ago. So it's 0:17:21.160 --> 0:17:24.119 this one size fits all problem is a problem you 0:17:24.200 --> 0:17:29.560 have in any large, single economy. And to the extent 0:17:29.600 --> 0:17:34.960 that the European Eurozone is a single economy, it is. 0:17:34.960 --> 0:17:37.439 Diverse, and you're going to have. 0:17:37.920 --> 0:17:42.280 Areas where even in the UK we've had this conflict 0:17:42.560 --> 0:17:46.920 in part with monetary policy having different impacts on London 0:17:47.280 --> 0:17:50.240 and say the Northeast, and there's nothing you can do 0:17:50.280 --> 0:17:53.080 about that. You have to have a single monetary policy. 0:17:53.119 --> 0:17:56.800 You can't have different interest rates for different zones. So 0:17:57.760 --> 0:18:00.320 the one size fits all problem is there. It's no 0:18:00.440 --> 0:18:04.399 more acute in my view, in the Eurozone than it 0:18:04.560 --> 0:18:11.240 is in any large, geographically diverse economy. But it's true 0:18:11.320 --> 0:18:15.359 that you have very different, for example, in the Eurozone, 0:18:15.440 --> 0:18:18.520 very different rates of inflation. In the Baltic countries it's 0:18:18.560 --> 0:18:20.080 been much higher. 0:18:21.760 --> 0:18:23.679 Than the rate in. 0:18:25.280 --> 0:18:30.160 France, say, or Spain and Spain where Spain has been 0:18:30.400 --> 0:18:31.720 very low. 0:18:32.160 --> 0:18:36.480 So you know, that's something they can't they can't do 0:18:36.600 --> 0:18:37.080 much about it. 0:18:37.200 --> 0:18:40.600 They can't do anything about But it's not it's not 0:18:40.720 --> 0:18:42.240 special to the Eurozone. 0:18:42.320 --> 0:18:44.840 Okay, doctor Richard Porters, thank you so much for your time. 0:18:44.880 --> 0:18:49.399 You really appreciate getting your thoughts and analysis, Doctor Richard Porters. 0:18:49.400 --> 0:18:52.080 He's a professor at the London Business School. 0:18:52.359 --> 0:18:55.440 You're listening to the tape Can's are live program Bloomberg 0:18:55.520 --> 0:18:59.040 Markets weekdays at ten am Eastern on Bloomberg Radio. To 0:18:59.160 --> 0:19:01.120 tune it Upoomberg dot Com and. 0:19:01.080 --> 0:19:02.400 The Bloomberg Business App. 0:19:02.440 --> 0:19:05.239 You can also listen live on Amazon Alexa from our 0:19:05.280 --> 0:19:10.359 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:19:11.040 --> 0:19:11.359 All right. 0:19:11.400 --> 0:19:14.200 When I first learned about this whole reek thing years 0:19:14.240 --> 0:19:18.720 and years ago, fun flows from operation. That's the profitability 0:19:18.720 --> 0:19:20.840 metric that these people focus on FFO. 0:19:21.000 --> 0:19:23.000 I thought this, you're talking about a real estate investment. 0:19:23.040 --> 0:19:23.320 Trust. 0:19:23.359 --> 0:19:25.000 I know, it's kind of the thing. I thought it 0:19:25.040 --> 0:19:27.320 at the time was a scam, but now I understand 0:19:27.320 --> 0:19:27.800 how it works. 0:19:27.880 --> 0:19:28.960 That's free cash flow. 0:19:29.200 --> 0:19:31.879 No, it's like their ebitda oh, I think, I don't know. 0:19:32.160 --> 0:19:35.080 Our next guest can help us out, Christine Mostandria. 0:19:35.200 --> 0:19:37.440 She is the COO of white. 0:19:37.280 --> 0:19:40.000 Stone Rate that trades on the New York Stock Exchange 0:19:40.040 --> 0:19:44.600 ws R. Christine Whitestone read tell us about your company. 0:19:44.640 --> 0:19:46.280 What kind of real estate do you guys own or 0:19:46.359 --> 0:19:47.199 do you guys focus on? 0:19:47.520 --> 0:19:50.720 So primarily we focus on neighborhood retail. So this would 0:19:50.720 --> 0:19:57.000 be your high visit great corners with traffic and pretty 0:19:57.080 --> 0:19:59.320 much based on convenience versus soft goods. 0:20:00.080 --> 0:20:04.000 So I think about the pandemic in my home, in 0:20:04.040 --> 0:20:06.760 my town in Jersey, lots of and we have a 0:20:06.920 --> 0:20:11.400 very vibrant downtown in New Jersey. Lots of businesses went 0:20:11.440 --> 0:20:13.480 out of UH one went out of business, so a 0:20:13.480 --> 0:20:15.879 lot of you know, for sale for rent signs. What 0:20:15.920 --> 0:20:19.919 is the short Hills Summit Summit and better town than 0:20:19.920 --> 0:20:23.960 Short Hills, Better train Station. So which is why I 0:20:24.000 --> 0:20:26.359 chose somewhat over Short Hills Better train Station. Some people 0:20:26.440 --> 0:20:27.440 choose the name. 0:20:27.560 --> 0:20:29.239 I just wanted to make it clear because I can 0:20:29.280 --> 0:20:32.919 imagine properties like that in Short Hills or Summit. I 0:20:32.920 --> 0:20:35.560 can imagine property in Scarsdale and Bronxville. 0:20:35.600 --> 0:20:36.520 You know this is where? 0:20:36.800 --> 0:20:38.920 So what happened to your properties then? And kind of 0:20:38.920 --> 0:20:39.560 where are you now? 0:20:40.359 --> 0:20:42.959 So we have the fortune of being into very strong markets. 0:20:42.960 --> 0:20:44.520 So we're in Texas and Arizona. 0:20:44.600 --> 0:20:45.119 Oh nice. 0:20:45.200 --> 0:20:48.399 So our rebound from COVID which was much much quicker, 0:20:48.440 --> 0:20:50.679 In fact it probably I think we're affected maybe for 0:20:50.760 --> 0:20:54.159 six months really, So yeah, we had very few tenants 0:20:54.200 --> 0:20:54.680 to fall. 0:20:54.720 --> 0:20:57.120 Because you guys didn't shut down do the mess. Things 0:20:57.280 --> 0:20:59.919 just partied right, well, I mean on the Ozar. 0:21:00.720 --> 0:21:02.320 Yeah, there was a little bit of that going on, 0:21:02.400 --> 0:21:05.440 I'd have to say, and our restaurants for a while, 0:21:05.440 --> 0:21:07.959 there was a little bit of spacing, but you know, 0:21:08.000 --> 0:21:11.480 they rebounded really quickly and then quickly after that same 0:21:11.520 --> 0:21:13.320 thing with Fitness and all of other operators. 0:21:13.359 --> 0:21:14.040 So what is this. 0:21:14.119 --> 0:21:17.240 You're not just the CEO of Whitestone, reed, you're also 0:21:17.320 --> 0:21:20.240 a professor of commercial real estate and strategic management at 0:21:20.320 --> 0:21:23.919 Rice Business School. What does this fun flow from operations? 0:21:24.800 --> 0:21:26.560 What's the significance of that for a rate? 0:21:26.960 --> 0:21:28.920 So it's a little bit different than even up right, 0:21:28.960 --> 0:21:30.919 I mean as far as profitability. So what you have 0:21:30.960 --> 0:21:33.080 to take into context is where an asset have you 0:21:33.520 --> 0:21:35.960 business and so that means you have to reinvest capital 0:21:36.000 --> 0:21:38.400 into the business, and so that takes that into account. 0:21:38.640 --> 0:21:40.800 So it's a little bit different as far as getting 0:21:40.840 --> 0:21:41.480