WEBVTT - Overdependence On Fed Cuts Stems From Uncertainty: Slok 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.760 along with my co host Lisa Brahmas. Each day we 0:00:07.880 --> 0:00:10.440 bring you the most noteworthy and useful interviews for you 0:00:10.520 --> 0:00:12.640 and your money, whether at the grocery store or the 0:00:12.640 --> 0:00:15.960 trading floor. Find a Bloomberg Penl podcast on Apple podcast 0:00:16.120 --> 0:00:18.040 or wherever you listen to podcasts, as well as at 0:00:18.079 --> 0:00:23.360 Bloomberg dot com. Try to find a theme right now 0:00:23.440 --> 0:00:26.480 in today's market. Good luck, it probably will change tomorrow. 0:00:26.560 --> 0:00:29.760 Joining us now is an economist who puts out tremendous 0:00:29.840 --> 0:00:34.760 research every day that shows just what people are focused on. 0:00:35.200 --> 0:00:38.480 His latest note shows that macro investing is just getting 0:00:38.640 --> 0:00:42.839 that much more challenging amid the changing political backdrop that 0:00:42.880 --> 0:00:46.280 we end up seeing every day. Let's bring in Torsten Slock, 0:00:46.600 --> 0:00:49.559 chief economist for Deutsche Bank. Thank you so much for 0:00:49.600 --> 0:00:52.959 being with us. Let's just talk about how challenging it 0:00:53.040 --> 0:00:55.960 is right now for macro investors and identifying a theme 0:00:56.000 --> 0:00:59.560 that you can sink your teeth into and depend on. Yeah, no, highly, 0:00:59.640 --> 0:01:01.880 it's what art bank that I work. But it's true 0:01:01.920 --> 0:01:04.560 that the environment at the moment has become much more 0:01:04.600 --> 0:01:08.360 difficult because central banks are basically not moving interest rates. 0:01:08.440 --> 0:01:10.600 So the thing we're pointing out here is that when 0:01:10.640 --> 0:01:14.000 interest rates basically don't go down or don't go up, 0:01:14.440 --> 0:01:18.399 then you have an environment where there's just no longer 0:01:18.480 --> 0:01:21.080 lasting trends in markets, and that just makes things difficult 0:01:21.080 --> 0:01:25.560 both for rates investors and also for excellent effects investors. 0:01:25.600 --> 0:01:28.080 So towards one of the issues I think that investors 0:01:28.120 --> 0:01:29.640 are trying to get a sense of now is you know, 0:01:29.640 --> 0:01:32.880 as we think about all the geopolitical issues, trade tensions 0:01:32.920 --> 0:01:35.880 with China and Mexico, do you believe the market is 0:01:35.959 --> 0:01:40.040 properly discounting some of these global trade tensions right now? Yeah, 0:01:40.040 --> 0:01:42.640 this is a really important question pulled because what we're 0:01:42.680 --> 0:01:44.800 all trying to do in the investing community is to 0:01:44.880 --> 0:01:48.960 try to quantify these risks. The first question is what 0:01:49.040 --> 0:01:51.480 has happened up to this point? How do we quantify that? 0:01:51.520 --> 0:01:53.720 Because we already know what has happened up to this point, 0:01:53.960 --> 0:01:57.040 but even figuring out what that means has been quite difficult. 0:01:57.080 --> 0:02:00.120 If you look at confidence in the CEO serve is 0:02:00.200 --> 0:02:02.880 I look at confidence in the CFO surveys, then you 0:02:02.920 --> 0:02:06.520 do see that there is some deterioration once the trade 0:02:06.520 --> 0:02:09.160 wall began to escalate in two thousand and eighteen, but 0:02:09.200 --> 0:02:11.440 at the same time the employment numbers have remained ready 0:02:11.480 --> 0:02:14.000 to be strong, at least up until the latest months here. 0:02:14.080 --> 0:02:17.560 So it still is a really difficult struggle. We just 0:02:17.600 --> 0:02:20.320 don't have anything in the toolbox that really will can 0:02:20.400 --> 0:02:24.000 quantify this trade risk, which then leads investors to say, well, 0:02:24.120 --> 0:02:26.160 it's a risk I can't quantify, so I should just 0:02:26.240 --> 0:02:28.680 ignore it. Or is it a risk I can't quantify 0:02:28.800 --> 0:02:30.440 so I really have to take it seriously. And this 0:02:30.520 --> 0:02:33.080 is where the debate is with the many investors that 0:02:33.120 --> 0:02:35.240 we have at the moment, name me, is this something 0:02:35.280 --> 0:02:36.919 that we should just brush aside and say, oh, the 0:02:36.960 --> 0:02:39.359 economy is still fine, or is this something that actually 0:02:39.400 --> 0:02:41.320 could end up being much more serious and have much 0:02:41.360 --> 0:02:43.720 more downside risk to the economy than what we are 0:02:43.720 --> 0:02:47.000 expecting at the moment. So, tourist, and from your perspective, 0:02:47.520 --> 0:02:50.679 do you think that as a result, people have become 0:02:50.960 --> 0:02:53.800 overly focused on the Federal Reserve a sort of the 0:02:54.440 --> 0:02:58.000 key body that can give some direction here? Yeah, because 0:02:58.000 --> 0:03:00.720 that if when when tetra banks mean the G seven 0:03:00.720 --> 0:03:03.960 central pranks essentially not moving interest rates much and they're 0:03:04.000 --> 0:03:07.919 moving much less than they did just ten twenty years ago. 0:03:08.000 --> 0:03:11.280 Of course, then people start looking around and saying, Okay, 0:03:11.360 --> 0:03:14.880 changing policy is no longer a changing interest rates, but 0:03:14.919 --> 0:03:18.000 it's now a change in communication about what are we 0:03:18.080 --> 0:03:20.000 doing And this is not only for the US, but 0:03:20.040 --> 0:03:23.040 what are we doing globally on unconventional monetary policy, everything 0:03:23.080 --> 0:03:26.720 from forward guidance to a queue, which of course is 0:03:26.919 --> 0:03:29.920 less of an issue now, but now where they're talking 0:03:29.919 --> 0:03:33.360 about you control other ways of stimulating the economy next 0:03:33.400 --> 0:03:36.320 time we have a slowdown, and the interpretation of these 0:03:36.920 --> 0:03:40.480 non conventional monetary policy tools and most importantly all these 0:03:40.520 --> 0:03:43.160 things that are not interest rates just makes things much 0:03:43.160 --> 0:03:45.880 more difficult. So to your good question, Lisa, it really 0:03:45.960 --> 0:03:48.720 is much more into the nitty gridy of what exactly 0:03:48.800 --> 0:03:52.000 is intended with this fait communication and should we interpret 0:03:52.040 --> 0:03:54.200 that as more easy is coming, or should we interpreted 0:03:54.200 --> 0:03:56.200 as hey, we're just looking at this and we will 0:03:56.240 --> 0:03:58.960 be doing something. We don't quite know exactly what it is, 0:03:59.240 --> 0:04:01.200 but we will be doing something if there is a 0:04:01.200 --> 0:04:03.400 sharper slowdown, And for the FED, of course it's lowering 0:04:03.440 --> 0:04:06.400 interest rates initially, but if we do have a global slowdown, 0:04:06.800 --> 0:04:09.760 then we will all be debating again, should we then 0:04:09.880 --> 0:04:13.000 do que forward guidance, should we raise the inflation target? 0:04:13.040 --> 0:04:15.800 Should it be you control? That's why it it becomes 0:04:15.800 --> 0:04:19.560 a much more messy debate about what reactions are coming 0:04:19.560 --> 0:04:21.440 from the central bank, which makes it so difficult from 0:04:21.440 --> 0:04:24.919 a macro perspective to identify with what trends is that 0:04:25.000 --> 0:04:28.159 going to create, both in rates and also in effects. 0:04:28.200 --> 0:04:30.320 So towardsten I think what we're hearing more and more, 0:04:30.640 --> 0:04:33.880 um you know, is the potential or perhaps even likelihood 0:04:33.920 --> 0:04:37.919 by mid recession in the US. Is that something you 0:04:37.920 --> 0:04:41.760 think is you ascribed to? So we still think that's unlikely. 0:04:42.040 --> 0:04:45.600 A We think that the Fed will begin to think 0:04:45.600 --> 0:04:48.920 about cutting rates here in July and September and December, 0:04:48.960 --> 0:04:52.039 and once those cuts come through, we do think also 0:04:52.120 --> 0:04:56.159 that that ultimately will be a preemptive strikes, if you will, 0:04:56.400 --> 0:04:59.880 that will be enough to basically soften the slowdown that 0:05:00.040 --> 0:05:02.359 we're seeing. But at the end of the day, the 0:05:02.480 --> 0:05:05.479 sharpness of the slowdown that we are experiencing in the 0:05:05.560 --> 0:05:09.760 data is absolutely critical. And this again is very very 0:05:09.760 --> 0:05:12.200 closely related to what is your outboo for when the 0:05:12.200 --> 0:05:13.920 trade wall will end? If you think the trade will 0:05:13.920 --> 0:05:16.760 will escalate from here, well, then the economy might slow 0:05:16.960 --> 0:05:19.320 a bit more. If you think the trade was really 0:05:19.320 --> 0:05:22.920 going to have a full blow out trade wall where 0:05:22.960 --> 0:05:25.880 you will see significant increases in sterios and significant disruptions 0:05:25.880 --> 0:05:28.440 and supply chains, it could potentially be a lot worse. 0:05:28.720 --> 0:05:31.279 But it's really difficult where we stand today to come 0:05:31.279 --> 0:05:33.800 with the forecast because these things could go away as 0:05:33.880 --> 0:05:37.520 quickly as they came. In other words, this is something 0:05:37.560 --> 0:05:43.000 that is essentially a political situation that came relatively suddenly, 0:05:43.360 --> 0:05:46.880 and now if we do have a resolution deal, for example, 0:05:46.880 --> 0:05:49.400 at the D twenty meeting, then this risk could go 0:05:49.480 --> 0:05:52.960 away recively quickly. Again, so from a forecasting perspective, when 0:05:52.960 --> 0:05:55.320 you think about the outdoor for consumption capics and GDP, 0:05:55.839 --> 0:05:58.920 it just continues to be really difficult what your assumptions 0:05:58.960 --> 0:06:02.240 are about what will be the end game to the 0:06:02.279 --> 0:06:04.320 trade wall, and is there an endgame or is discming 0:06:04.400 --> 0:06:06.719 to continue for a very long period. I guess the 0:06:06.720 --> 0:06:08.760 Tourson there's a question of how much the U S 0:06:08.800 --> 0:06:11.960 economy would be slowing down anyway even if it weren't 0:06:12.000 --> 0:06:15.919 for the trade tensions. What are the recession risks putting 0:06:15.960 --> 0:06:19.600 aside trade tensions if you can just based on in 0:06:19.839 --> 0:06:23.320 organic slowdown given how late we are in the cycle. Yeah, 0:06:23.320 --> 0:06:25.520 this is really important. I mean, as you know also well, 0:06:25.560 --> 0:06:29.040 the two key components of GDP are consumption and capics 0:06:29.120 --> 0:06:31.600 or investment. And if you are a consumption one problem 0:06:31.640 --> 0:06:33.520 is that interest rates on credit cards have started to 0:06:33.560 --> 0:06:35.599 move higher, interest rates on auto loans have started to 0:06:35.640 --> 0:06:38.320 move higher. You've also seen the linquency rates on consumer 0:06:38.360 --> 0:06:40.919 loans have started to move slowly higher, and most important 0:06:40.920 --> 0:06:43.440 in this context, in the linquagy rates on auto loans 0:06:43.440 --> 0:06:46.080 have also started to move higher. So the first answer 0:06:46.160 --> 0:06:51.080 to your question is that there there's some something brewing erosion, 0:06:51.120 --> 0:06:54.360 if you will, and the liquidity rate for consumers that's 0:06:54.400 --> 0:06:56.720 beginning to slowly move higher. And when interest rates also 0:06:56.720 --> 0:06:59.120 move higher on credit cards, auto loans and other consumer loans, 0:06:59.240 --> 0:07:01.040 you do begin to a bit about what are the 0:07:01.080 --> 0:07:04.839 consequences organically outside the trade war to the consumer outlook 0:07:04.839 --> 0:07:08.040 and for topics. Last year, of course, we got the 0:07:08.160 --> 0:07:11.080 huge tax cut from the administration. This was very helpful 0:07:11.160 --> 0:07:14.680 in boosting topics, and now those tax cuts are beginning 0:07:14.680 --> 0:07:17.080 to slowly run out of steam. So the positive effects 0:07:17.080 --> 0:07:20.480 of that organically are also becoming smaller and smaller, so 0:07:20.520 --> 0:07:23.760 that's also resulted in some slowdown in the CAPIC data. 0:07:23.880 --> 0:07:26.679 So the long answer to your question is that even 0:07:26.680 --> 0:07:29.480 outside the trade war, we are indeed, as you're pointing 0:07:29.480 --> 0:07:32.480 out least that we're indeed seeing already some signs of 0:07:32.600 --> 0:07:36.280 risks in particular topics slowing down, but also the additional 0:07:36.360 --> 0:07:39.760 risk here to consumption because of the modest increase in 0:07:39.800 --> 0:07:41.960 the liquacy rates and the modest increase that we're seeing 0:07:42.120 --> 0:07:44.560 in course of borrowing. So we are watching where we 0:07:44.560 --> 0:07:46.240 are in the cycle and what the implications are for 0:07:46.280 --> 0:07:48.680 the organic outlook above and beyond what's going on with 0:07:48.760 --> 0:07:51.400 the trade war. Torsten Slock, thank you so much for 0:07:51.520 --> 0:07:54.480 joining us in your comments. Torstens the chief economist for 0:07:54.520 --> 0:07:56.800 Deutsche Bank, joining us on the phone. He is based 0:07:56.800 --> 0:08:13.680 in New York. Well. Trade tensions between the US and 0:08:13.720 --> 0:08:17.000 Mexico appear to have abated, at least for the time being, 0:08:17.520 --> 0:08:20.160 but President Trump told reporters that he reached a secret 0:08:20.160 --> 0:08:23.360 immigration pack with Mexico that will take effect when he 0:08:23.440 --> 0:08:26.200 wants it to, despite the country's insistence that there are 0:08:26.240 --> 0:08:29.280 no secret components of an immigration deal struck last week. 0:08:29.360 --> 0:08:31.480 So see if you can get some clarification here, we 0:08:31.480 --> 0:08:34.440 welcome Duncan. Would Duncan is a director of the Mexico 0:08:34.559 --> 0:08:37.360 Institute at the Wilson Center that is based in Washington. 0:08:37.440 --> 0:08:39.840 D C. Duncan, thanks so much for joining us. So 0:08:39.920 --> 0:08:42.520 can you give us any enlightenment on what this secret 0:08:42.559 --> 0:08:46.400 immigration deal might be? The best guest that we have 0:08:46.600 --> 0:08:50.920 is that Mexico has agreed that if after either forty 0:08:51.000 --> 0:08:54.600 five or ninety days, depending on which deadline they choose, 0:08:54.920 --> 0:08:56.640 I want to say they it's probably going to be 0:08:56.679 --> 0:09:00.439 the United States. UM if if enough, if enough progress 0:09:00.440 --> 0:09:03.720 hasn't been made on reducing the flow of Central Americans 0:09:03.720 --> 0:09:08.080 through Mexico to the US southwest border, that Mexico would 0:09:08.080 --> 0:09:12.000 consider becoming a safe third country. In other words, that 0:09:12.120 --> 0:09:16.760 Mexico would be a place in which refugees or asylum 0:09:16.840 --> 0:09:23.000 seekers rather could could or should seek asylum after leaving 0:09:23.040 --> 0:09:27.040 their home country. So, in other words, Guatemalan's, Honduran Salvadorians 0:09:27.040 --> 0:09:30.559 who are coming up through Mexico would have to seek 0:09:31.040 --> 0:09:35.920 refugee status asylum in Mexico rather than in the United States. 0:09:36.440 --> 0:09:39.520 And that's something that Mexico has resisted for a long 0:09:39.600 --> 0:09:44.240 long time. UM it greatly reduces the burden on the 0:09:44.360 --> 0:09:47.920 United States because if anybody does make it up to 0:09:47.960 --> 0:09:51.679 the United States border, then they would be immediately returned 0:09:51.720 --> 0:09:55.000 to Mexico and they would have to apply for asylum there. 0:09:55.360 --> 0:09:57.320 So that's really what I think that we're we're probably 0:09:57.320 --> 0:10:00.200 looking at um. It's gonna cause a huge to go 0:10:00.320 --> 0:10:03.040 stink in Mexico if that's what the deal is, because 0:10:03.040 --> 0:10:05.040 a lot of people are going to say, once again, 0:10:05.160 --> 0:10:10.080 Mexico is essentially rolling over for the United States. Already, 0:10:10.120 --> 0:10:12.400 there are so many op eds being written in Mexico 0:10:12.760 --> 0:10:16.920 and commentaries on on television that Mexico has essentially become 0:10:17.000 --> 0:10:19.920 the wall for the United States. Rather than following through 0:10:19.920 --> 0:10:22.400 on Donald Trump's promised to make Mexico pay for the wall, 0:10:22.679 --> 0:10:25.400 Mexico is the wall for the United States, and that 0:10:25.480 --> 0:10:28.760 it will essentially stop migrants from coming up through the country. 0:10:29.040 --> 0:10:31.839 So I think that this is a it's politically explosive 0:10:31.880 --> 0:10:35.080 for the President Lopezo Brodord, but it may be the 0:10:35.160 --> 0:10:37.880 only way that they see to avoid the application or 0:10:37.920 --> 0:10:39.720 in position of tariffs at this point in time. So 0:10:39.800 --> 0:10:43.640 does that mean that the implement implementation of tariffs is 0:10:43.720 --> 0:10:47.400 more likely than people are realizing at this point. My 0:10:47.520 --> 0:10:51.160 reading of what the President has said. President Trump has 0:10:51.160 --> 0:10:54.760 said is that they have been suspended. Yes, he said indefinitely, 0:10:55.080 --> 0:10:58.080 and people tend to interpret indefinitely is being long term. 0:10:58.320 --> 0:10:59.760 I don't see it that way at all. I see 0:10:59.760 --> 0:11:02.400 it at You know, if Mexico does not succeed in 0:11:02.440 --> 0:11:04.600 stopping the flow of Central Americans, then the five percent 0:11:04.640 --> 0:11:07.440 tariff can be pulled out of the toolbox again and 0:11:07.520 --> 0:11:11.679 slapped on Mexico, And of course that creates huge uncertainty 0:11:11.720 --> 0:11:14.880 for Mexico UM at a time when the Mexican economy 0:11:14.920 --> 0:11:17.560 is not doing well, at a time when President Lopez 0:11:17.559 --> 0:11:22.120 overdoors economic plans are not going well, and investor confidences 0:11:22.760 --> 0:11:27.000 is disappearing in Mexico. So this is absolutely um. You know, 0:11:27.080 --> 0:11:31.720 it's terrible timing for Mexico UM and therefore makes President 0:11:31.760 --> 0:11:35.040 Trump's threat that much more effective. So, duncan, do you 0:11:35.200 --> 0:11:40.319 think that Mexico has the capabilities to meaningfully stem illegal immigration? 0:11:41.760 --> 0:11:44.680 I don't. I have to say that. You know, Mexico 0:11:44.800 --> 0:11:47.880 has been working exceptionally hard over the last five years, 0:11:48.120 --> 0:11:51.680 essentially since two thousand and fourteen, to to detain and 0:11:51.800 --> 0:11:55.880 deport hundreds of thousands of Central Americans. In fact, if 0:11:55.880 --> 0:11:57.920 you look at the last five years as a whole, 0:11:58.440 --> 0:12:01.560 Central Mexico has parted more Central Americans than the United 0:12:01.600 --> 0:12:05.400 States has um And you know, Mexico has been doing 0:12:05.440 --> 0:12:07.800 an incredible job. The problem is that the crisis is 0:12:07.840 --> 0:12:12.240 so huge now that Mexican authorities are overwhelmed. US authorities 0:12:12.240 --> 0:12:16.160 and agencies are overwhelmed, and it would require a massive 0:12:16.200 --> 0:12:22.240 injection of resources financial, human, technical, and technological to actually 0:12:22.559 --> 0:12:25.800 begin to stem the flow. The gambit here is that 0:12:25.920 --> 0:12:30.640 if you had Mexico adopting safe third country status, then 0:12:30.760 --> 0:12:33.960 the migrants would choose not to come. And I think 0:12:34.000 --> 0:12:36.440 that's a pretty big gamble if you ask me, I 0:12:36.480 --> 0:12:39.160 don't think that. I think that people are leaving because 0:12:39.160 --> 0:12:41.720 conditions are terrible. They're desperate to get to the United States. 0:12:41.800 --> 0:12:45.120 Let's say they do land in in Mexico and you 0:12:45.160 --> 0:12:48.160 know they're they're forced to seek asylum there. That doesn't 0:12:48.160 --> 0:12:50.920 mean they'll stop moving. Once they have asylum in Mexico, 0:12:50.960 --> 0:12:52.640 they can still move up to the United States. We're 0:12:52.679 --> 0:12:56.080 still going to see massive levels of illegal migration across 0:12:56.080 --> 0:12:59.560 the Southwest border, so duncan One key question here is 0:12:59.640 --> 0:13:03.280 President and Trump is sort of using his executive power 0:13:03.840 --> 0:13:07.760 to threaten these tariffs and possibly impose them on Mexico. 0:13:08.440 --> 0:13:11.000 UH in an unusual way. It's the first time, at 0:13:11.080 --> 0:13:13.680 least in modern history, that a president has used them 0:13:13.760 --> 0:13:17.880 this way. And I'm wondering whether they'll be challenges to that. 0:13:17.920 --> 0:13:22.199 In other words, is this something that could face opposition 0:13:22.280 --> 0:13:27.480 internally or is it totally a go. Sorry, when you 0:13:27.520 --> 0:13:29.400 mean internally, do you mean internally in the United States? 0:13:29.520 --> 0:13:31.280 In the United States. No. I think that we've already 0:13:31.320 --> 0:13:36.240 seen opposition in the United States. We've seen business associations, UM, 0:13:36.280 --> 0:13:39.280 We've seen members of Congress stating that this is a 0:13:39.400 --> 0:13:42.280 dangerous path to go down. But what's what I think 0:13:42.440 --> 0:13:45.520 is is telling is that we haven't seen any really 0:13:45.679 --> 0:13:49.920 well coordinated opposition, nobody standing up in Congress and saying 0:13:49.960 --> 0:13:54.440 that they will seek legal means of restraining the president 0:13:54.559 --> 0:13:57.079 from from applying these kind of tariffs UM. And I 0:13:57.160 --> 0:14:00.040 think part of it is that you know, the the 0:13:59.720 --> 0:14:02.880 E p a UM, the powers under which he would 0:14:02.960 --> 0:14:04.880 he would apply these tariffs. I think it's it's quite 0:14:04.920 --> 0:14:08.199 I mean, it's it hasn't really been properly explored. UM. 0:14:08.280 --> 0:14:11.080 And so we'd we'd all be hanging on tenter hooks 0:14:11.120 --> 0:14:13.360 waiting to see what a court would rule on this. 0:14:14.080 --> 0:14:17.040 UM and I think that you know, most people have 0:14:17.040 --> 0:14:19.200 accepted that if it was just a five percent tariff, 0:14:19.600 --> 0:14:21.560 then we could probably live with that. There would be 0:14:21.600 --> 0:14:24.000 a depreciation of the Mexican paco to compensate for some 0:14:24.080 --> 0:14:27.760 of that five percent UM, and you know, the trade 0:14:27.760 --> 0:14:30.160 would continue. But once you get up beyond a ten 0:14:30.200 --> 0:14:32.600 percent escalating tariff, and let's say you did get to 0:14:33.880 --> 0:14:36.360 which was the original threat that by October it would 0:14:36.360 --> 0:14:39.920 be a twenty percent tariff, then that's disastrous. That's disastrous 0:14:39.920 --> 0:14:43.960 for integrated UM manufacturing platform in North America, it's disastrous 0:14:43.960 --> 0:14:46.880 for supply chains, and it would cause a real crisis 0:14:46.920 --> 0:14:49.840 in the Mexican economy. Don't get just real quickly twenty seconds. 0:14:49.880 --> 0:14:52.200 What do the Mexican people feel right now? Are they 0:14:52.440 --> 0:14:56.640 really coming up in arms against the tariff threat? So UM, 0:14:56.760 --> 0:14:59.680 we've seen maximum public opinion of the United States fall 0:14:59.720 --> 0:15:03.920 to historic lows. UM. We have seen overall support for 0:15:04.160 --> 0:15:07.160 President Lopez Obrador UM and the fact that his his 0:15:07.400 --> 0:15:10.400 overall attitude in negotiating with the United States essentially trying 0:15:10.400 --> 0:15:13.280 to be as calm and moderate as possible. Um and 0:15:13.560 --> 0:15:16.040 Mexicans do not believe that their country should become a 0:15:16.040 --> 0:15:17.840 war for the United States. But at the same time, 0:15:17.880 --> 0:15:21.080 their astues towards migrants is changing. They're becoming less welcoming, 0:15:21.160 --> 0:15:24.080 less friendly towards Central American migrants than they ever have before. 0:15:24.440 --> 0:15:26.600 So as we've seen in many countries around the world 0:15:26.800 --> 0:15:30.560 that are overwhelmed with migration crises, unfortunately Mexico is is 0:15:30.600 --> 0:15:32.480 going down the same path and that I think it 0:15:32.480 --> 0:15:35.960 will become a less friendly country for migrants. Duncan would 0:15:35.960 --> 0:15:38.200 thank you so much for being with us. Duncan Wood, 0:15:38.240 --> 0:15:41.560 director of the Mexico Institute at the Wilson Center, joining 0:15:41.640 --> 0:16:01.760 us from Washington, d C. A relatively quiet morning of 0:16:01.800 --> 0:16:05.160 trading in the US equity indusseries. Not a big move 0:16:05.200 --> 0:16:07.640 in either of the indusseries. First, let's go see where 0:16:07.680 --> 0:16:10.120 there's some movement, maybe in a small cap world with 0:16:10.120 --> 0:16:12.840 bloomer stocks. Editor Dave Wilson date, Well, you're definitely seeing 0:16:12.880 --> 0:16:15.680 smaller companies down more than larger ones, that's for sure. 0:16:15.720 --> 0:16:18.320 The Russell two thousand index down a half a percent, 0:16:18.720 --> 0:16:21.480 in the SMP five hundreds only lowered by two tenths 0:16:21.520 --> 0:16:25.640 of a percent. The russell steepest drop belongs to Sarah's Therapeutics, 0:16:25.640 --> 0:16:29.520 whose ticker is mc RB. The drug developers fall in 0:16:29.560 --> 0:16:32.920 twenty four percent after raising sixty million dollars in a 0:16:33.000 --> 0:16:38.280 share sale. Ashford Hospitality Trust ticker a HT has lost 0:16:38.360 --> 0:16:42.640 fifteen percent. The luxury hotel owner reduced its quarterly dividend 0:16:42.680 --> 0:16:45.880 by half to six cents to share. Ashford's cut was 0:16:45.960 --> 0:16:48.200 the first two thousand and eight when the payout was 0:16:48.400 --> 0:16:53.160 eliminated entirely. And Meat Group ticker m e ET has 0:16:53.200 --> 0:16:57.160 slipped almost nine percent. The social meeting app company was 0:16:57.240 --> 0:16:59.880 the subject of a critical report by a short selling 0:17:00.000 --> 0:17:03.680 firm called The Friendly Bear. Now the Russell's biggest game 0:17:03.760 --> 0:17:07.399 belongs to our Quel ticker a r q L. The 0:17:07.440 --> 0:17:11.080 developer of cancer treatments, is up thirty five and a 0:17:11.160 --> 0:17:15.240 half percent. Early stage studied data on a proposed blood 0:17:15.280 --> 0:17:18.840 cancer drug was favorable, and Blue Green Vacations ticker b 0:17:19.200 --> 0:17:22.800 x G has risen almost twenty nine percent the time 0:17:22.840 --> 0:17:26.160 share owners settled the dispute with retailer Bass Pro Shops. 0:17:26.400 --> 0:17:28.960 The deal will let Blue Green resume marketing at Bass 0:17:29.000 --> 0:17:33.439 stores and expand into the country. The company's sister chain, Cabella's. 0:17:33.560 --> 0:17:36.040 And we should know bb X capital ticker bb X 0:17:36.119 --> 0:17:38.800 has a steak in blue Green and that stock is 0:17:38.880 --> 0:17:43.440 up six and you see the headline, just Matt Chili. Yeah, 0:17:43.560 --> 0:17:47.640 opening at thirty six dollars after initial public offering at 0:17:47.640 --> 0:17:52.640 twenty two dollars a share. So this is one lucrative, uh, 0:17:52.760 --> 0:17:56.719 pet food operation, you're not kidding. And pet Smart is 0:17:56.840 --> 0:18:01.320 the seller of most of those shares that to We're 0:18:01.400 --> 0:18:04.680 we're distributed, you might say, to investors in the initial 0:18:04.680 --> 0:18:07.800 public offerings. So they're they're definitely a winner on this deal. Yeah, 0:18:07.960 --> 0:18:10.680 losers are the people who are the debt investors because 0:18:10.720 --> 0:18:13.000 they could have evidently raised more money to pay back 0:18:13.040 --> 0:18:15.760 said dead investors. We'll get into that another time. Dave Wilson, 0:18:15.760 --> 0:18:18.639 Bluebrick Sock seditor, thank you so much for that. It 0:18:18.760 --> 0:18:21.159 is getting to be close to lunchtime on Wall Street 0:18:21.200 --> 0:18:23.439 about I don't know, fifty five minutes if you have 0:18:23.520 --> 0:18:26.439 at twelve o'clock exact kind of clock. And what I 0:18:26.440 --> 0:18:31.480 feel like is a big, juicy plant based protein product 0:18:31.600 --> 0:18:33.639 in a bun joining us now to talk about that. 0:18:33.680 --> 0:18:37.200 Dina Shanker, she's a consumer reporter for Bloomberg News. Um, 0:18:37.440 --> 0:18:40.879 I'm talking about the Impossible Burger because evidently it's incredibly 0:18:40.920 --> 0:18:42.960 popular as it gets rolled out to what it says 0:18:43.040 --> 0:18:46.080 is nine thousand stores, perhaps a little too popular. Can 0:18:46.119 --> 0:18:49.359 you give us a sense of what's going on here? Yes, definitely, 0:18:49.560 --> 0:18:52.760 So Impossible is having a lot of trouble supplying its 0:18:52.800 --> 0:18:57.640 customers specifically, uh even White Castle and Red Robin, these 0:18:57.680 --> 0:19:00.280 are major fast food chains, are not able to get 0:19:00.280 --> 0:19:03.400 their hands on the product at the same time impossible 0:19:03.400 --> 0:19:05.880 as rolling out into more and more burger Kings. So 0:19:06.800 --> 0:19:09.879 whether there's a cause and effect there, that's that's a 0:19:09.880 --> 0:19:11.919 good question. So I mean, as you mentioned, I mean 0:19:11.960 --> 0:19:16.240 these are not just organic stores, organic outlets. They're bringing 0:19:16.680 --> 0:19:21.359 these synthetic burgers to Burger King, right, that's right. The 0:19:21.600 --> 0:19:26.479 plant based burger mania is widespread. It's gone way beyond 0:19:26.640 --> 0:19:31.000 the vegans and the vegetarians and is fully mainstream. So 0:19:31.160 --> 0:19:34.399 these companies, these big restaurant companies, are really trying to 0:19:34.400 --> 0:19:37.080 get their hands on these products, and they do bring 0:19:37.119 --> 0:19:41.280 new customers into the stores. So Impossible Foods is leaving 0:19:41.320 --> 0:19:44.040 some of these restaurants in a tough spot. Well, so 0:19:44.359 --> 0:19:46.080 I guess I'm wondering are we are we seeing a 0:19:46.119 --> 0:19:49.840 sort of a Tesla moment here with respect to Beyond Meat. 0:19:49.880 --> 0:19:51.720 I'm talking about Beyond Me because their I p O 0:19:51.840 --> 0:19:57.040 has been just absolutely unbelievable, astronomical types of gains and 0:19:57.080 --> 0:20:01.359 impossible foods also attracting a lot of attention. But is 0:20:01.400 --> 0:20:03.960 it an issue where they can't kind of fulfill in 0:20:03.960 --> 0:20:08.919 the promise of the supplies. So that's the big question 0:20:09.040 --> 0:20:11.919 right now for what it's worth. Beyond Meat said that 0:20:12.000 --> 0:20:15.840 they learned a lot from their shortages in eighteen and 0:20:15.840 --> 0:20:18.880 that they don't see that really happening again. But at 0:20:18.920 --> 0:20:22.560 the same time, Free Birds as a burrito chain in Texas, 0:20:22.640 --> 0:20:26.040 and they reported that they don't have their Beyond Meat products. 0:20:26.080 --> 0:20:29.000 So I think we're going to have to wait and 0:20:29.000 --> 0:20:32.160 see how long these shortages last and how widespread they are. 0:20:32.400 --> 0:20:35.439 But it does seem like keeping up with demand is 0:20:35.560 --> 0:20:37.720 one of the biggest, if not the biggest challenges that 0:20:37.760 --> 0:20:40.080 these companies have. So that raises the question for me 0:20:40.440 --> 0:20:45.480 barriers to entry um, Why can't any existing food company 0:20:45.520 --> 0:20:48.159 come out with their own synthetic kind of thing and 0:20:48.240 --> 0:20:49.680 just kind of take over the market and push some 0:20:49.720 --> 0:20:53.200 of these smaller companies out like Tyson Tyson. So actually 0:20:53.280 --> 0:20:55.800 there are a lot of companies in this space, and 0:20:55.840 --> 0:21:01.000 they are big and small. Tyson just unveiled its own Uh. 0:21:01.640 --> 0:21:03.520 Some would call it a competitor to the Beyond and 0:21:03.560 --> 0:21:06.480 the Impossible Burger, but it's actually a half beef half 0:21:06.880 --> 0:21:10.919 p protein blend. So whether or not you get the 0:21:10.960 --> 0:21:16.200 same customer is a question that will remain to be answered. Um. 0:21:16.280 --> 0:21:19.520 And then you have other smaller companies that you've probably 0:21:19.560 --> 0:21:22.440 never heard of, that are pushing out their own versions 0:21:22.560 --> 0:21:25.640 um quietly, carefully to make sure that they can meet 0:21:25.680 --> 0:21:27.560 the demand when it's there. Yeah, I didn't know that 0:21:27.600 --> 0:21:30.639 flexitarian was a thing, but evidently that's a thing, and 0:21:30.920 --> 0:21:34.880 Tyson's gonna cater to those flexitarians. But I'm wondering, Dina, 0:21:35.160 --> 0:21:38.959 have you had an Impossible Burger and Beyond meat products 0:21:39.000 --> 0:21:42.600 if you tried all these? So I've had both of them, 0:21:42.840 --> 0:21:45.680 but I have not had an Impossible Burger recently. That 0:21:45.840 --> 0:21:48.280 was actually how we figured out this shortage was happening 0:21:48.320 --> 0:21:50.600 was because I went to a white castle near my apartment. 0:21:51.040 --> 0:21:54.560 It said impossible sliders right outside on the sign, and 0:21:54.840 --> 0:21:56.880 turned out they were all out. So do you think 0:21:56.920 --> 0:22:00.520 that they are as good as the meat version. I 0:22:00.600 --> 0:22:05.520 don't need meet I'm not the target customer. Actually, you're 0:22:05.600 --> 0:22:09.639 exactly teustomer. But we actually did have a Dave Wilson 0:22:09.800 --> 0:22:12.280