1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:21,599 Speaker 1: at Bloomberg dot com. It has been one of the 8 00:00:21,640 --> 00:00:25,400 Speaker 1: best starts to the year on record for US high 9 00:00:25,440 --> 00:00:29,760 Speaker 1: old bonds returns exceeding five per cent. The extra yield 10 00:00:29,840 --> 00:00:33,080 Speaker 1: investors are earning to own the debt versus safer notes 11 00:00:33,320 --> 00:00:36,480 Speaker 1: has compressed to the lowest in months. Joining us here 12 00:00:37,000 --> 00:00:39,040 Speaker 1: is uh someone who can weigh in on whether it 13 00:00:39,200 --> 00:00:41,880 Speaker 1: is time to start pairing this risk of your debt 14 00:00:41,960 --> 00:00:44,200 Speaker 1: around the edges. That is Greg Han, President and Chief 15 00:00:44,240 --> 00:00:47,680 Speaker 1: investment Officer and Win throw Up Capital Management normally in Indianapolis, 16 00:00:47,760 --> 00:00:51,400 Speaker 1: but joining us here today in our Bloomberg Interactive Broker Studios. Greg, 17 00:00:51,760 --> 00:00:53,400 Speaker 1: what's your view on this? Is it time to sell 18 00:00:53,560 --> 00:00:56,960 Speaker 1: hi yield bonds? Oh? No, we actually um right now, 19 00:00:57,080 --> 00:00:59,560 Speaker 1: We're actually still buying high yield. We think there's value there. 20 00:00:59,640 --> 00:01:02,880 Speaker 1: The the spreads have come in since the fourth quarter, 21 00:01:03,000 --> 00:01:05,400 Speaker 1: but they're still room for it to move in volatilities down. 22 00:01:05,800 --> 00:01:07,560 Speaker 1: So with spread ball down, we think that you're going 23 00:01:07,600 --> 00:01:09,520 Speaker 1: to see more spread contraction. So what are some of 24 00:01:09,600 --> 00:01:11,520 Speaker 1: the sectors in a high yield space that you're looking 25 00:01:11,560 --> 00:01:15,520 Speaker 1: at right now? Uh, so, energy, telecom both, there's areas 26 00:01:15,560 --> 00:01:17,760 Speaker 1: there that we like. UM. We've been in the in 27 00:01:17,840 --> 00:01:21,200 Speaker 1: the financial side, higher quality, the double B space on financials. 28 00:01:21,360 --> 00:01:23,760 Speaker 1: Are there any sectors that you're just no matter where 29 00:01:23,840 --> 00:01:26,880 Speaker 1: the vat, you're just staying away from. UM. So we'll 30 00:01:26,880 --> 00:01:29,360 Speaker 1: look at anything. I mean, honestly, especially when you look 31 00:01:29,360 --> 00:01:31,640 Speaker 1: in the utility space, and with what's going on Pacific 32 00:01:31,680 --> 00:01:35,319 Speaker 1: Gas and Electric that that area weo we think, wait, wait, wait, 33 00:01:35,440 --> 00:01:38,440 Speaker 1: you're buying right now, not right now. So here's the thing, 34 00:01:38,480 --> 00:01:41,400 Speaker 1: but look at so, look at so calid and Mission Energy. 35 00:01:42,200 --> 00:01:44,960 Speaker 1: In other words, just because the other utilities that are 36 00:01:44,959 --> 00:01:49,000 Speaker 1: getting slammed because of issue there, in order to get 37 00:01:49,040 --> 00:01:51,240 Speaker 1: out of the bankruptcy, they've got to fix the legislation 38 00:01:51,480 --> 00:01:54,840 Speaker 1: because you can't you can't leave bankruptcy and and still 39 00:01:54,920 --> 00:01:58,120 Speaker 1: have that legislation in place where the utility is liable 40 00:01:58,560 --> 00:02:00,480 Speaker 1: for the next fire. Because you haven't need anything, so 41 00:02:00,520 --> 00:02:02,279 Speaker 1: they got to fix it. And I think that bodes 42 00:02:02,320 --> 00:02:05,560 Speaker 1: well for all the southern utilities. Basically, this is a bet. 43 00:02:05,840 --> 00:02:09,040 Speaker 1: Buying the bonds of those other California utilities is a 44 00:02:09,160 --> 00:02:13,239 Speaker 1: bet that California will be forced to change its legislation 45 00:02:13,520 --> 00:02:16,080 Speaker 1: so that these utilities are not held responsible for all 46 00:02:16,120 --> 00:02:19,799 Speaker 1: of the damages of wildfires. And that's fascinating. That is 47 00:02:19,919 --> 00:02:22,520 Speaker 1: that is a I would say, a gutsy call, because 48 00:02:22,600 --> 00:02:26,120 Speaker 1: you're basically waiting for Sacramento to come and kind of 49 00:02:26,200 --> 00:02:28,400 Speaker 1: make it all right for you. Well and think about it, though, 50 00:02:28,440 --> 00:02:31,600 Speaker 1: in the capitalist society, can you really have publicly traded 51 00:02:31,720 --> 00:02:34,560 Speaker 1: entity that is not played by the same rules as 52 00:02:34,600 --> 00:02:38,880 Speaker 1: every other state in our in our form of capitalism, 53 00:02:38,919 --> 00:02:40,480 Speaker 1: I don't think it makes sense. So I want to 54 00:02:40,520 --> 00:02:43,000 Speaker 1: shift gears a little bit. We've seen a rash of 55 00:02:43,280 --> 00:02:46,640 Speaker 1: deleveraging recently. We've seen a number of companies that are 56 00:02:46,800 --> 00:02:50,480 Speaker 1: triple B rated who have agreed to pay down debt. 57 00:02:50,520 --> 00:02:52,880 Speaker 1: I'm thinking of some of the big communications companies A 58 00:02:53,000 --> 00:02:56,320 Speaker 1: T and T Verizon. You're laughing. I will find out 59 00:02:56,360 --> 00:03:00,239 Speaker 1: why right now. Why are you laughing? So A T 60 00:03:00,360 --> 00:03:04,519 Speaker 1: and T um has the debt level of Portugal. So 61 00:03:04,760 --> 00:03:08,840 Speaker 1: and if you look at the total size of a 62 00:03:08,960 --> 00:03:10,840 Speaker 1: T and T S debt is the equivalent of one 63 00:03:10,880 --> 00:03:13,919 Speaker 1: of the top twenty five sovereign and debted nations billion 64 00:03:13,919 --> 00:03:15,600 Speaker 1: dollars or something like that, something like that. So in 65 00:03:15,680 --> 00:03:18,919 Speaker 1: other words, this deleveraging is yeah, they have to do 66 00:03:19,000 --> 00:03:21,200 Speaker 1: it in order to state in order to stay trip 67 00:03:21,240 --> 00:03:24,120 Speaker 1: will be rated. Now really this this is a cusp credit. 68 00:03:24,600 --> 00:03:26,400 Speaker 1: Um we're going to expect to write down on the 69 00:03:26,480 --> 00:03:28,760 Speaker 1: direct TV side, so they have to they have to 70 00:03:29,120 --> 00:03:32,799 Speaker 1: deliver this. Wow. Interesting interesting, How about like another name 71 00:03:32,800 --> 00:03:35,400 Speaker 1: it's similar to that Comcast that's that looks like a 72 00:03:35,480 --> 00:03:38,240 Speaker 1: better profile. Yeah, we like Comcast and this this whole space, 73 00:03:38,320 --> 00:03:40,720 Speaker 1: this is this is amazing. So in our generation to 74 00:03:40,840 --> 00:03:44,120 Speaker 1: see the shift in technology that's taking place by going 75 00:03:44,200 --> 00:03:47,080 Speaker 1: to streaming and what's what's happening with all the cord cutting, 76 00:03:47,160 --> 00:03:50,320 Speaker 1: this is um so to be fully integrated like Comcast Disney, 77 00:03:50,480 --> 00:03:52,480 Speaker 1: this is this is gonna be interesting. So you sound 78 00:03:52,600 --> 00:03:57,120 Speaker 1: pretty sanguine right now on us credit. So you well, okay, 79 00:03:57,320 --> 00:04:00,240 Speaker 1: we've had a heck of a rebound, so we're we're 80 00:04:00,280 --> 00:04:03,280 Speaker 1: benefiting from that. I'll be honest with you December was 81 00:04:03,360 --> 00:04:05,400 Speaker 1: tough because we gave up a lot in the in 82 00:04:05,560 --> 00:04:07,000 Speaker 1: the last two weeks of the year. Well, let me 83 00:04:07,040 --> 00:04:09,520 Speaker 1: tell you how tough it was. Um, I believe when 84 00:04:09,520 --> 00:04:12,480 Speaker 1: you were here in December, you said, quote the financial 85 00:04:12,520 --> 00:04:15,680 Speaker 1: position of the US is a disaster end quote. Have 86 00:04:15,840 --> 00:04:19,320 Speaker 1: we changed as you bringing up You're absolutely no, we 87 00:04:19,360 --> 00:04:21,680 Speaker 1: haven't changed. We still think it's a disaster. But and 88 00:04:21,920 --> 00:04:24,080 Speaker 1: there's no So it's gonna be interesting because we're gonna 89 00:04:24,080 --> 00:04:26,920 Speaker 1: come into the elections now, so two thousand twenty, we're 90 00:04:26,920 --> 00:04:28,880 Speaker 1: going to start to hear dialogue on it. The debt 91 00:04:29,000 --> 00:04:31,960 Speaker 1: levels is it's not part of the dialogue that's taking 92 00:04:31,960 --> 00:04:35,080 Speaker 1: place right now, but you can't ignore it. So here's 93 00:04:35,120 --> 00:04:38,080 Speaker 1: my question, especially at a time when JP Morgan and 94 00:04:38,480 --> 00:04:41,400 Speaker 1: now what we're seeing with Toronto Dominion Bank and Canadian 95 00:04:41,400 --> 00:04:43,839 Speaker 1: Imperial Bank of Canada both out today with their results, 96 00:04:44,240 --> 00:04:48,200 Speaker 1: all raising issues about deteriorating credit worthiness of some of 97 00:04:48,279 --> 00:04:51,800 Speaker 1: their borrowers. JP Morgan said that they're starting to tighten 98 00:04:51,839 --> 00:04:55,320 Speaker 1: their credit uh credit conditions a little bit just to 99 00:04:55,880 --> 00:04:57,360 Speaker 1: make sure that they don't deal with a lot of 100 00:04:57,440 --> 00:05:00,520 Speaker 1: loss in the next downturn. What do you think could 101 00:05:00,680 --> 00:05:04,080 Speaker 1: or will cause the next credit crisis and when Yes, 102 00:05:04,160 --> 00:05:06,160 Speaker 1: so we and we talked about this last time too, 103 00:05:06,240 --> 00:05:07,400 Speaker 1: is we're on the front end. We think we're on 104 00:05:07,480 --> 00:05:11,040 Speaker 1: the front end of a potential shift in the credit cycle. 105 00:05:11,279 --> 00:05:14,320 Speaker 1: We still believe in cycles. So it's gonna it's gonna 106 00:05:14,400 --> 00:05:17,080 Speaker 1: show differently this time because traditionally we'd go through the 107 00:05:17,120 --> 00:05:21,240 Speaker 1: banking sector, we'd see UM, an increase in loan reserves 108 00:05:21,480 --> 00:05:24,160 Speaker 1: and higher non performing loans. That actually hasn't happened. So 109 00:05:24,320 --> 00:05:25,760 Speaker 1: we were starting to see the front end of it, 110 00:05:26,120 --> 00:05:28,320 Speaker 1: but we think it's going to be expressed in the 111 00:05:28,400 --> 00:05:31,880 Speaker 1: public markets through leverage loans. So we're seeing you know, 112 00:05:31,920 --> 00:05:34,720 Speaker 1: one of the telltale signs is as structured security issuance 113 00:05:34,839 --> 00:05:38,119 Speaker 1: is up, clos are up, and um, we're seeing credit 114 00:05:38,240 --> 00:05:42,360 Speaker 1: light uh loans so I'm sorry, covenant light loans that 115 00:05:42,400 --> 00:05:44,920 Speaker 1: are coming to markets. So these are these are all 116 00:05:44,960 --> 00:05:47,920 Speaker 1: signs the volume increase and we'll look back. I think 117 00:05:48,000 --> 00:05:50,640 Speaker 1: on vintage two thousand seventeen, two thousand eighteen, and two 118 00:05:50,640 --> 00:05:54,679 Speaker 1: thousand nineteen vintage structured securities could be problematic. How about 119 00:05:54,760 --> 00:05:57,480 Speaker 1: you know, we have the FED on the sidelines. We 120 00:05:57,600 --> 00:06:00,240 Speaker 1: have you know, earnings were pretty much done earnings. Do 121 00:06:00,320 --> 00:06:02,680 Speaker 1: you think the market is fairly discounting some of the 122 00:06:02,760 --> 00:06:06,240 Speaker 1: geopolitical issues out there, whether it's spoints China today, North 123 00:06:06,320 --> 00:06:10,520 Speaker 1: Korea today, Brexit yesterday, what's the market? Absolutely not. And 124 00:06:10,600 --> 00:06:12,560 Speaker 1: this is the part I just I just don't understand. 125 00:06:12,600 --> 00:06:14,920 Speaker 1: I'll confess this, but growing up in the in the 126 00:06:14,960 --> 00:06:17,440 Speaker 1: business in the eighties and nineties, when you had geopolitical 127 00:06:17,520 --> 00:06:21,040 Speaker 1: events at moved markets. But to have Brexit, which is 128 00:06:21,120 --> 00:06:23,600 Speaker 1: probably one of the single biggest events in the capital 129 00:06:23,640 --> 00:06:27,040 Speaker 1: markets in the last thirty years, and there's I think 130 00:06:27,080 --> 00:06:29,400 Speaker 1: Barkley's last week had a reserve set aside for it, 131 00:06:29,480 --> 00:06:31,440 Speaker 1: but it's the only bank that we've seen that's put 132 00:06:31,480 --> 00:06:34,440 Speaker 1: reserving against it. Corporate you know, the corporations are not 133 00:06:34,520 --> 00:06:36,480 Speaker 1: set up for it. And I don't I don't think 134 00:06:36,520 --> 00:06:38,479 Speaker 1: the markets are really discounting it. I think the markets 135 00:06:38,520 --> 00:06:39,840 Speaker 1: are looking at it. You know this is going to 136 00:06:39,920 --> 00:06:43,640 Speaker 1: get fixed somehow, or the markets are profoundly bored by 137 00:06:43,720 --> 00:06:45,760 Speaker 1: all of the discussion that's been going on for two 138 00:06:45,880 --> 00:06:48,560 Speaker 1: years and then they're saying, show be something I can 139 00:06:48,600 --> 00:06:52,000 Speaker 1: hook my teeth into. Otherwise forget about it. Just real 140 00:06:52,120 --> 00:06:55,080 Speaker 1: quick here, emerging markets, are you bullish or bearish, So 141 00:06:55,240 --> 00:06:57,680 Speaker 1: we uh, this is Lisa, this is one area we 142 00:06:57,760 --> 00:07:00,760 Speaker 1: really want to go into. Its lagged the last three years, 143 00:07:01,200 --> 00:07:03,240 Speaker 1: and we still think it's early. And what we're looking 144 00:07:03,360 --> 00:07:06,040 Speaker 1: for is credit flow. We're looking for credit that's flowing 145 00:07:06,160 --> 00:07:09,360 Speaker 1: into the emerging economies and we're not seeing it, but 146 00:07:09,520 --> 00:07:10,920 Speaker 1: we think we're on the cusp of that. So I 147 00:07:11,000 --> 00:07:12,160 Speaker 1: think by the end of the year we're going to 148 00:07:12,200 --> 00:07:15,560 Speaker 1: have an increase to that. We're in particular, so we're 149 00:07:15,720 --> 00:07:17,800 Speaker 1: we look at the Big Four, so it's it's and 150 00:07:17,920 --> 00:07:19,960 Speaker 1: we're not in there, but the Big four of China, Russia, 151 00:07:20,000 --> 00:07:22,480 Speaker 1: India and Brazil, and it's I think China is gonna 152 00:07:22,520 --> 00:07:25,880 Speaker 1: dictate what's gonna happen here. So interesting, very very good. 153 00:07:25,920 --> 00:07:27,720 Speaker 1: We'll take well, well, have you back when you're starting 154 00:07:27,760 --> 00:07:30,680 Speaker 1: to get into your mergery markets and we'll certainly take 155 00:07:30,680 --> 00:07:33,840 Speaker 1: a look at that. Greg Han, President, Chief Investment Officer, 156 00:07:33,920 --> 00:07:37,120 Speaker 1: Winthrop Capital Management, based in Indianapolis, but we're fortunate to 157 00:07:37,160 --> 00:07:40,200 Speaker 1: have him here in our Bloomberg Interactive Brokers studio here 158 00:07:40,280 --> 00:07:57,040 Speaker 1: in New York. Thank you so much. Greg. Well, the 159 00:07:57,160 --> 00:08:00,400 Speaker 1: U S and China continue to discuss discussion. It's about 160 00:08:00,440 --> 00:08:03,920 Speaker 1: possibly having discussions about trade. It is so unclear to 161 00:08:04,040 --> 00:08:06,520 Speaker 1: me where we are in this process that I have 162 00:08:06,680 --> 00:08:09,640 Speaker 1: to call upon our own Dr Sam Natapa, who is 163 00:08:09,680 --> 00:08:13,520 Speaker 1: a frequent visitor here to our Bloomberg Interactive Broker studios. 164 00:08:13,600 --> 00:08:18,760 Speaker 1: Dr Sam Natapa is president of Empire Global Ventures. All right, Sam, 165 00:08:19,280 --> 00:08:21,880 Speaker 1: what what's going on? We have this deadline March one. 166 00:08:22,040 --> 00:08:25,800 Speaker 1: It's gonna get kicked, the cannel get kicked with tariffs. 167 00:08:26,240 --> 00:08:29,240 Speaker 1: What are you looking for for real progress here? Well, 168 00:08:29,320 --> 00:08:31,400 Speaker 1: it's very clear that President Trump needs to listen to 169 00:08:31,480 --> 00:08:34,079 Speaker 1: more Kenny Rogers because he doesn't know how to hold 170 00:08:34,160 --> 00:08:36,679 Speaker 1: him and he doesn't know how to fold him. We 171 00:08:36,800 --> 00:08:38,760 Speaker 1: have some sense of what the deal is going to 172 00:08:38,840 --> 00:08:42,200 Speaker 1: be when President Ji Jinping will come to Florida tomorrow 173 00:08:42,280 --> 00:08:45,439 Speaker 1: Lago to sign this agreement. One, they're probably going to 174 00:08:45,720 --> 00:08:49,240 Speaker 1: agree to hold the yuan stable and not devalue in 175 00:08:49,400 --> 00:08:51,199 Speaker 1: order to make Chinese goods cheaper to come into the 176 00:08:51,320 --> 00:08:54,760 Speaker 1: US market. To the Chinese will clearly commit to buying, 177 00:08:55,280 --> 00:08:58,120 Speaker 1: you know, hunting billions of dollars more of US goods. 178 00:08:58,160 --> 00:09:01,480 Speaker 1: They've already committed to buy I think ten million tons 179 00:09:01,559 --> 00:09:03,960 Speaker 1: more soya beans, which is about three point five billion 180 00:09:04,000 --> 00:09:06,880 Speaker 1: dollars already this year. But since the US China trade 181 00:09:06,920 --> 00:09:09,520 Speaker 1: deficits going to be four hundred billion dollars this year, 182 00:09:09,760 --> 00:09:13,360 Speaker 1: that's less than one percent of that deficit. So what's 183 00:09:13,400 --> 00:09:16,599 Speaker 1: that really going to mean? Yesterday, Bob Lightheiser announced that 184 00:09:16,640 --> 00:09:20,160 Speaker 1: there's now a mechanism by which they will handle this 185 00:09:20,840 --> 00:09:24,240 Speaker 1: back and forth internally and bilaterally instead of going through 186 00:09:24,280 --> 00:09:26,600 Speaker 1: the w t O. In other words, the US has 187 00:09:26,600 --> 00:09:29,360 Speaker 1: a chance to reimpose sanctions if the Chinese don't do 188 00:09:29,440 --> 00:09:32,160 Speaker 1: what they say they're going to do. So there's a 189 00:09:32,200 --> 00:09:35,800 Speaker 1: lot of talk, and the top line thing is Donald 190 00:09:35,840 --> 00:09:38,000 Speaker 1: Trump wants to lower the U s trade deficit, which 191 00:09:38,040 --> 00:09:40,679 Speaker 1: doesn't really mean anything. The things that really matter, the 192 00:09:40,720 --> 00:09:44,599 Speaker 1: intellectual property issues, the force technology transfer, the protection for 193 00:09:44,800 --> 00:09:47,280 Speaker 1: US companies going to do to stuff in China. None 194 00:09:47,320 --> 00:09:49,679 Speaker 1: of that is being discussed and no progress will be 195 00:09:49,760 --> 00:09:53,800 Speaker 1: made on that. Why are those big items not being addressed? 196 00:09:53,880 --> 00:09:55,480 Speaker 1: Those are the ones that move the needle, Those are 197 00:09:55,520 --> 00:09:58,839 Speaker 1: the ones that Corporate America is most concerned about. How 198 00:09:58,960 --> 00:10:01,960 Speaker 1: are they not on the agenda? To be clear, US 199 00:10:02,000 --> 00:10:05,160 Speaker 1: Trade Representative Robert Lightheiser has dedicated thirty years of his 200 00:10:05,280 --> 00:10:07,559 Speaker 1: career to focus on this issue. He did this on 201 00:10:07,679 --> 00:10:10,840 Speaker 1: Japan first, He's doing it on China now. He's deeply 202 00:10:10,920 --> 00:10:13,920 Speaker 1: focused on that issue. He is being overruled by the 203 00:10:13,960 --> 00:10:16,079 Speaker 1: President of the United States who's so desperate for a 204 00:10:16,160 --> 00:10:18,839 Speaker 1: headline that he will undermine the structural integrity of the 205 00:10:18,920 --> 00:10:22,120 Speaker 1: US economy going forward. All right, let's listen to something 206 00:10:22,400 --> 00:10:26,880 Speaker 1: that Bob Lightheiser said. US Trade Representative Robert Lightheiser speaking 207 00:10:27,160 --> 00:10:30,960 Speaker 1: in speaking yesterday in front of the Ways and Means 208 00:10:31,000 --> 00:10:33,280 Speaker 1: Committee of the U s House of Representatives. Take a 209 00:10:33,320 --> 00:10:36,040 Speaker 1: listen to what he had to say. I'm not PAULI Anna. 210 00:10:36,160 --> 00:10:38,439 Speaker 1: I don't believe that this is going to solve all 211 00:10:38,480 --> 00:10:41,040 Speaker 1: the problems between the United States and China. We have 212 00:10:41,200 --> 00:10:44,640 Speaker 1: very different systems there in a process of reform or 213 00:10:44,720 --> 00:10:47,760 Speaker 1: they're not. Depends on what you talked to. If they're 214 00:10:47,800 --> 00:10:51,080 Speaker 1: in the process as reform, will we'll make headway. If 215 00:10:51,120 --> 00:10:53,600 Speaker 1: they're not, we're going to go right back to having problems. 216 00:10:54,040 --> 00:10:57,880 Speaker 1: That was US Trade Representative Robert lighthouser Heiser speaking in 217 00:10:58,000 --> 00:10:59,880 Speaker 1: front of the House Ways and Means Committee. I have 218 00:11:00,040 --> 00:11:04,800 Speaker 1: to wonder say just how many allies Bob Ladheiser has 219 00:11:04,960 --> 00:11:08,040 Speaker 1: among other people who could kind of force President Trump 220 00:11:08,160 --> 00:11:10,559 Speaker 1: to to sort of consider his point of view a 221 00:11:10,640 --> 00:11:13,120 Speaker 1: little bit more. The US Chamber of Commerce is on 222 00:11:13,240 --> 00:11:16,120 Speaker 1: his side, The American Association of Manufacturers is on his side. 223 00:11:16,280 --> 00:11:17,880 Speaker 1: The problem is none of those people work in the 224 00:11:17,920 --> 00:11:20,120 Speaker 1: White House, and even if they did, Donald Trump wouldn't 225 00:11:20,120 --> 00:11:21,960 Speaker 1: listen to them. Well, will it be considered a victory 226 00:11:22,120 --> 00:11:24,520 Speaker 1: if President Trump gets some sort of agreement that has 227 00:11:24,520 --> 00:11:27,720 Speaker 1: to do with Soyabeans In other words, Well, markets rally, 228 00:11:27,920 --> 00:11:30,280 Speaker 1: I mean, because that's essentially how President Trump is valuating it, 229 00:11:30,480 --> 00:11:33,560 Speaker 1: right it is. But markets are smart, and markets are 230 00:11:33,600 --> 00:11:36,920 Speaker 1: going to understand that this is lipstick on a pig, 231 00:11:37,320 --> 00:11:39,520 Speaker 1: and pig is, of course the number one consumed meat 232 00:11:39,600 --> 00:11:43,000 Speaker 1: in all of China. So nothing's going to change, all right? 233 00:11:43,440 --> 00:11:45,400 Speaker 1: Who when when you take a look at the two 234 00:11:45,440 --> 00:11:47,000 Speaker 1: sides and you take a look at some of the 235 00:11:47,040 --> 00:11:48,599 Speaker 1: bigger issues are out there, But we don't have to 236 00:11:48,679 --> 00:11:50,880 Speaker 1: do them all at once, but piecemeal. Maybe over the 237 00:11:50,960 --> 00:11:55,040 Speaker 1: next couple of years. This China becoming increasingly incentive to 238 00:11:55,240 --> 00:11:58,880 Speaker 1: make some changes that their economy slowing, maybe even slower 239 00:11:58,920 --> 00:12:02,000 Speaker 1: than people believe. Isn't there growing incentive on China to 240 00:12:02,040 --> 00:12:04,679 Speaker 1: actually come to the table on some of these issues. Yes, 241 00:12:04,920 --> 00:12:07,920 Speaker 1: there is tremendous incentive for China to change. That doesn't 242 00:12:07,960 --> 00:12:10,720 Speaker 1: mean there's incentive for them to compromise with the United States. 243 00:12:11,040 --> 00:12:14,199 Speaker 1: In eighteen, the Chinese economy slow to six point six 244 00:12:14,280 --> 00:12:17,520 Speaker 1: percent GDP growth, which is the lowest recorded since uh 245 00:12:17,720 --> 00:12:21,720 Speaker 1: the nineteen nineties. Over the last three months, factory activity 246 00:12:21,760 --> 00:12:24,880 Speaker 1: in China is the lowest it's been in since the 247 00:12:24,960 --> 00:12:28,439 Speaker 1: nineteen nineties. There's a there tremendous indicators showing that the 248 00:12:28,520 --> 00:12:31,480 Speaker 1: Chinese economy is slowing and that Ji Jinping has to 249 00:12:31,559 --> 00:12:34,960 Speaker 1: do something. But forgive me, the one thing is he's 250 00:12:35,000 --> 00:12:39,000 Speaker 1: under tremendous domestic pressure himself. Politically. He opened the path 251 00:12:39,120 --> 00:12:40,760 Speaker 1: for him to be able to run for a third 252 00:12:40,800 --> 00:12:43,200 Speaker 1: and fourth term as president, but if he doesn't deliver, 253 00:12:43,520 --> 00:12:45,680 Speaker 1: that's not going to come true. So just to push 254 00:12:45,720 --> 00:12:47,880 Speaker 1: back a little bit on this idea that President Trump 255 00:12:48,000 --> 00:12:51,600 Speaker 1: is going to make an economic mistake on pretty big 256 00:12:51,640 --> 00:12:54,479 Speaker 1: proportions if he just leaves the trade agreement at soybeans 257 00:12:54,480 --> 00:12:58,679 Speaker 1: and other agricultural and other imports and exports. Isn't this 258 00:12:58,800 --> 00:13:01,760 Speaker 1: just the opening salve those of ongoing discussions. Isn't the 259 00:13:01,840 --> 00:13:04,640 Speaker 1: idea that the US and China can have some sort 260 00:13:04,679 --> 00:13:08,360 Speaker 1: of agreement laying the groundwork for for future negotiations over 261 00:13:08,400 --> 00:13:12,200 Speaker 1: the more substantial issues. It could be if President Trump 262 00:13:12,320 --> 00:13:15,400 Speaker 1: were consistent enough to hold the line, because the lesson 263 00:13:15,480 --> 00:13:18,000 Speaker 1: the Chinese just learned is we're going to go through 264 00:13:18,040 --> 00:13:21,160 Speaker 1: two years of economic turmoil globally and in the end 265 00:13:21,360 --> 00:13:23,160 Speaker 1: will get a deal that we would have signed two 266 00:13:23,280 --> 00:13:28,200 Speaker 1: years ago. Sorry, so Sam, They're going to Palm Beach, 267 00:13:28,200 --> 00:13:31,079 Speaker 1: Florida and lucky them, Um, they sign a deal. Good 268 00:13:31,160 --> 00:13:34,360 Speaker 1: for them. Um. What are next steps in the China 269 00:13:34,920 --> 00:13:40,760 Speaker 1: U S trade negotiations? Uh, Robert Leitheiser will again intend 270 00:13:40,880 --> 00:13:42,640 Speaker 1: and try to put pressure on the Chinese to make 271 00:13:42,679 --> 00:13:46,439 Speaker 1: structural changes, particularly on the intellectual property side, to technology 272 00:13:46,480 --> 00:13:49,920 Speaker 1: transfer side, and the treatment of foreign companies inside China. 273 00:13:50,200 --> 00:13:53,559 Speaker 1: Master card and visa cannot function in China, and that 274 00:13:53,720 --> 00:13:55,160 Speaker 1: was one of the things that people were looking at 275 00:13:55,240 --> 00:13:57,560 Speaker 1: in this negotiation to see if the Chinese would open 276 00:13:57,640 --> 00:14:00,880 Speaker 1: up their domestic market. They're not going to. The question 277 00:14:01,000 --> 00:14:04,280 Speaker 1: is Robert Leitheiser is in a difficult position because he 278 00:14:04,440 --> 00:14:06,280 Speaker 1: just got his legs cut out of from under him 279 00:14:06,320 --> 00:14:08,520 Speaker 1: by his boss and the Chinese assuming they'll do that again. Well, 280 00:14:08,600 --> 00:14:10,160 Speaker 1: that That's what I was gonna say, is sort of 281 00:14:10,240 --> 00:14:12,440 Speaker 1: you know that seems like some of these issues are 282 00:14:12,480 --> 00:14:14,280 Speaker 1: gonna have a hard time getting yourself. Can you give 283 00:14:14,360 --> 00:14:18,040 Speaker 1: us a sense of why Visa MasterCard can operate in China? Uh? 284 00:14:18,520 --> 00:14:22,440 Speaker 1: This is a specific regulatory issue that both the Chinese 285 00:14:22,480 --> 00:14:26,400 Speaker 1: Ministry of Finance and other Chinese regulators have uh not 286 00:14:26,880 --> 00:14:31,120 Speaker 1: granted them a license to operate inside China. So that 287 00:14:31,280 --> 00:14:34,880 Speaker 1: is a Chinese governmental decision. Uh. And it's we'll call 288 00:14:34,960 --> 00:14:38,400 Speaker 1: it a non tariff barrier, if you will, Dr Sam Natapa, 289 00:14:38,520 --> 00:14:40,440 Speaker 1: thank you so much for being here as always. Dr 290 00:14:40,480 --> 00:14:44,080 Speaker 1: Sam Natapa is president of Empire Global Ventures, talking about 291 00:14:44,120 --> 00:14:47,720 Speaker 1: the latest between the US and China trade negotiations, the 292 00:14:47,800 --> 00:15:08,320 Speaker 1: dollar gaining a little against the U N today. Right now, 293 00:15:08,400 --> 00:15:11,280 Speaker 1: let's shift our focus to the retail sector. We've gotten 294 00:15:11,280 --> 00:15:14,280 Speaker 1: a host of earnings from t j X to Macy's 295 00:15:14,320 --> 00:15:17,480 Speaker 1: two j C penny and really the question becomes, are 296 00:15:17,560 --> 00:15:19,920 Speaker 1: we seeing a turn in the tide? There were a 297 00:15:19,960 --> 00:15:23,520 Speaker 1: lot of short sellers targeting these companies. Are they being 298 00:15:23,640 --> 00:15:26,840 Speaker 1: blown out of the water and forced to offend with 299 00:15:27,040 --> 00:15:29,880 Speaker 1: actually a relatively healthy retail sector. Joining us now is 300 00:15:29,920 --> 00:15:33,360 Speaker 1: Evan Clark deputy Managing editor for Women's Where Daily, joining 301 00:15:33,440 --> 00:15:35,920 Speaker 1: us here in our Bloomberg Interactive Broker's studios. So, Evan, 302 00:15:36,520 --> 00:15:38,760 Speaker 1: is there a big takeaway so far from all of 303 00:15:38,800 --> 00:15:41,320 Speaker 1: the retail earnings we've gotten so far? Right? So, I 304 00:15:41,400 --> 00:15:45,359 Speaker 1: think going into the holiday season, there was big expectations 305 00:15:45,440 --> 00:15:48,640 Speaker 1: around sales, and I think that hasn't really panned out. 306 00:15:48,760 --> 00:15:50,760 Speaker 1: I think sales were not quite as bad as the 307 00:15:50,840 --> 00:15:54,080 Speaker 1: overall number that came out from the government, but it's 308 00:15:54,600 --> 00:15:56,560 Speaker 1: they really didn't turn out the way that the industry 309 00:15:56,680 --> 00:15:58,840 Speaker 1: was hoping. So I think the overall story that we 310 00:15:59,160 --> 00:16:03,200 Speaker 1: are seeing right now is that retailers are being cautious. 311 00:16:03,240 --> 00:16:05,160 Speaker 1: They've spent a few years really kind of spending to 312 00:16:05,280 --> 00:16:08,440 Speaker 1: ramp up their online businesses, but now they're starting to 313 00:16:09,200 --> 00:16:12,320 Speaker 1: hit that kind of hit the expense line a little bit. 314 00:16:12,360 --> 00:16:15,480 Speaker 1: They're cutting back there, being more cautious going forward on 315 00:16:15,600 --> 00:16:18,200 Speaker 1: how they spend their money. For instance, macy has just 316 00:16:18,240 --> 00:16:20,680 Speaker 1: cut a hundred million dollars out of their expense structure, 317 00:16:21,080 --> 00:16:24,320 Speaker 1: kind of reducing their top management and sort of simplifying 318 00:16:24,400 --> 00:16:27,760 Speaker 1: things there. So that will help them be more flexible 319 00:16:28,000 --> 00:16:31,320 Speaker 1: should the economy turn. You know, you can win and 320 00:16:31,440 --> 00:16:34,640 Speaker 1: if that that happens so Evan really over the last 321 00:16:34,680 --> 00:16:37,040 Speaker 1: several years as I listened to earning his conference calls 322 00:16:37,080 --> 00:16:40,480 Speaker 1: from these retailers, it's a combination of cutting costs, as 323 00:16:40,560 --> 00:16:44,600 Speaker 1: you mentioned with Macy's reducing um, you know, footprint, closing stores. 324 00:16:44,640 --> 00:16:47,080 Speaker 1: We heard that from J. C. Penny closing eighteen stores. 325 00:16:47,720 --> 00:16:50,320 Speaker 1: What is your sense for how much more the industry 326 00:16:50,440 --> 00:16:54,160 Speaker 1: has to go in terms of reducing its footprint of 327 00:16:54,280 --> 00:16:57,320 Speaker 1: physical stores to deal with what is now a e 328 00:16:57,480 --> 00:17:00,720 Speaker 1: commerce growing e commerce economy. Yeah, you know, I don't 329 00:17:00,960 --> 00:17:03,880 Speaker 1: the numbers I don't have off the top of my head, 330 00:17:03,960 --> 00:17:06,560 Speaker 1: but the U S economy historically has had something like 331 00:17:06,680 --> 00:17:10,720 Speaker 1: six times more retails space per pet capita than the 332 00:17:10,960 --> 00:17:13,560 Speaker 1: next closest market, which is the UK. I think that 333 00:17:13,680 --> 00:17:16,440 Speaker 1: number has come down some lately, but I think there's 334 00:17:16,480 --> 00:17:19,600 Speaker 1: still a long way to go just where the right 335 00:17:19,680 --> 00:17:22,280 Speaker 1: balance is. I don't think anyone really knows. But the 336 00:17:22,320 --> 00:17:25,600 Speaker 1: buzzword we get in retail right now is experience. So 337 00:17:25,800 --> 00:17:29,920 Speaker 1: everyone's trying to figure out how you know, the stores 338 00:17:30,160 --> 00:17:32,320 Speaker 1: and the website are very clearly you know that you've 339 00:17:32,359 --> 00:17:34,520 Speaker 1: got the same brand, the same products, but they're very 340 00:17:34,600 --> 00:17:39,960 Speaker 1: clearly different experiences. So when stores do get people, when 341 00:17:40,000 --> 00:17:42,720 Speaker 1: retailers do get people in their stores, what do they 342 00:17:42,760 --> 00:17:44,880 Speaker 1: give them, How are they keeping them there, what kind 343 00:17:44,920 --> 00:17:46,879 Speaker 1: of you know, what are they doing to engage them. 344 00:17:46,920 --> 00:17:48,600 Speaker 1: That's why we've seen a whole lot of food come 345 00:17:48,640 --> 00:17:51,800 Speaker 1: into retail. We're just seeing more sort of like testing 346 00:17:52,080 --> 00:17:55,919 Speaker 1: with the Canada. Goose has cold rooms where it drops 347 00:17:56,000 --> 00:17:57,879 Speaker 1: to minus twenty or something and you put in their 348 00:17:57,960 --> 00:18:00,480 Speaker 1: jacket and see how cozy you feel. So I think 349 00:18:00,520 --> 00:18:03,480 Speaker 1: that that I don't know the answer is. I think more. 350 00:18:04,000 --> 00:18:07,080 Speaker 1: I think we'll see that the foot print kind of 351 00:18:07,240 --> 00:18:09,680 Speaker 1: go down some more. I don't know when it ends. 352 00:18:09,680 --> 00:18:11,840 Speaker 1: And that's sort of the ten million dollar question. I 353 00:18:11,920 --> 00:18:14,960 Speaker 1: think this has also been an earning this period where 354 00:18:15,400 --> 00:18:18,240 Speaker 1: there's been a huge divergences between the winners and the losers. 355 00:18:18,280 --> 00:18:20,400 Speaker 1: I mean, I'm looking at Macy, as you mentioned them, 356 00:18:20,800 --> 00:18:23,720 Speaker 1: shares down seventeen percent so far year to date, whereas 357 00:18:23,760 --> 00:18:25,840 Speaker 1: t j X, which is banked on the whole experience 358 00:18:25,920 --> 00:18:30,040 Speaker 1: of treasure hunting and finding bargains, up nearly fifteen percent. Right, 359 00:18:30,160 --> 00:18:33,879 Speaker 1: And so it definitely has been uh a sort of 360 00:18:34,119 --> 00:18:36,520 Speaker 1: shaking out of the of the sort of weaker players 361 00:18:37,000 --> 00:18:39,000 Speaker 1: and sort of putting them aside and saying, you know, 362 00:18:39,119 --> 00:18:41,359 Speaker 1: you still need to figure out what your experience is, 363 00:18:41,840 --> 00:18:45,359 Speaker 1: what you're sort of claim to fame is versus the 364 00:18:45,400 --> 00:18:49,000 Speaker 1: winners that are consolidating that power, right right, absolutely, So 365 00:18:49,240 --> 00:18:51,960 Speaker 1: I think you mentioned the treasure hunt at t j X. 366 00:18:52,000 --> 00:18:53,840 Speaker 1: I mean t j X has just been a phenomenon. 367 00:18:54,040 --> 00:18:57,920 Speaker 1: It's been growing tremendously, so it's kind of really transcended 368 00:18:58,040 --> 00:19:01,760 Speaker 1: that it's initial kind of you know, business model of 369 00:19:01,880 --> 00:19:04,720 Speaker 1: taking leftover goods in the market and selling it. And 370 00:19:04,800 --> 00:19:09,159 Speaker 1: they've really at this national brands at a discount price 371 00:19:09,280 --> 00:19:12,760 Speaker 1: and it's like new, it's new, and it's the frequency 372 00:19:12,880 --> 00:19:14,280 Speaker 1: is very fast. So if you go to t J 373 00:19:15,000 --> 00:19:18,080 Speaker 1: Marshals today, it's different, it's going to be different next week. 374 00:19:18,680 --> 00:19:22,159 Speaker 1: So I think that that model continues to resonate. So 375 00:19:22,240 --> 00:19:24,560 Speaker 1: people want brands at a good price and like, uh, 376 00:19:25,000 --> 00:19:28,159 Speaker 1: you know, an environment that is fun or engaging in 377 00:19:28,280 --> 00:19:31,120 Speaker 1: some way. And I think you know, Macy's is very 378 00:19:31,240 --> 00:19:35,119 Speaker 1: much uh trying to kind of figure out how they 379 00:19:35,280 --> 00:19:37,479 Speaker 1: do what they do and how that works for the future. 380 00:19:37,520 --> 00:19:39,679 Speaker 1: I mean, they're they're working very hard. They've got their 381 00:19:39,720 --> 00:19:43,080 Speaker 1: program where they're really trying to sharpen the sharpened fifty 382 00:19:43,280 --> 00:19:45,919 Speaker 1: of their stores to kind of give give a different 383 00:19:45,960 --> 00:19:48,040 Speaker 1: look to shoppers, and they just expanded that to a 384 00:19:48,119 --> 00:19:52,120 Speaker 1: hundred and fifty. So so there you know the changes there. 385 00:19:52,160 --> 00:19:55,000 Speaker 1: They're trying to be um, They're trying to figure out 386 00:19:55,080 --> 00:19:57,359 Speaker 1: exactly where they need to go. And that's the big 387 00:19:57,440 --> 00:20:00,159 Speaker 1: question in retail is exactly where do you go? What 388 00:20:00,440 --> 00:20:02,919 Speaker 1: is the model of the future that kind of really works. 389 00:20:03,359 --> 00:20:05,000 Speaker 1: So I think that we see a lot of testing 390 00:20:05,080 --> 00:20:08,040 Speaker 1: across the industry and kind of incrementally moving forward, I 391 00:20:08,080 --> 00:20:10,720 Speaker 1: mean across the board for retail. The question is can 392 00:20:10,800 --> 00:20:14,159 Speaker 1: people change fast enough? How about just the consumer as 393 00:20:14,200 --> 00:20:16,159 Speaker 1: we go through here these fourth quarter numbers, what what 394 00:20:16,280 --> 00:20:18,119 Speaker 1: are these results tell me about how the consumer is 395 00:20:18,200 --> 00:20:20,960 Speaker 1: right now, real quickly twenty seconds right the consumer is 396 00:20:21,480 --> 00:20:23,639 Speaker 1: is still strong. They still have money. They just have 397 00:20:23,720 --> 00:20:25,520 Speaker 1: a lot more stuff to spend it on. They've got 398 00:20:25,800 --> 00:20:29,720 Speaker 1: you know, the new iPhones are thousand dollars. There's Netflix 399 00:20:29,840 --> 00:20:33,359 Speaker 1: costs every month, so there's more places to put the money. Interesting. 400 00:20:33,440 --> 00:20:36,919 Speaker 1: Thank you very much. Evan Clark, Deputy Managing editor, Woman's 401 00:20:36,960 --> 00:20:39,840 Speaker 1: Where Daily, joining us here in the bluebrig interact their 402 00:20:39,840 --> 00:20:56,240 Speaker 1: brokera studio in New York. Thank you so much. Well, 403 00:20:56,320 --> 00:20:59,359 Speaker 1: the automobile wants both a badge of success and the 404 00:20:59,440 --> 00:21:01,800 Speaker 1: most convene. A conveyance between points A and B is 405 00:21:01,880 --> 00:21:04,359 Speaker 1: falling out of favor in cities around the world as 406 00:21:04,480 --> 00:21:08,480 Speaker 1: ride hailing and other new transportation options proliferate, and concerns 407 00:21:08,520 --> 00:21:12,399 Speaker 1: over gridlock and pollution spark a revaluation of privately owned cars. 408 00:21:12,800 --> 00:21:15,119 Speaker 1: To telp us dig into this issue is David Welch. 409 00:21:15,200 --> 00:21:18,800 Speaker 1: David is our Detroit bureau chief from Bloomberg News, coming 410 00:21:18,840 --> 00:21:20,960 Speaker 1: to us from Detroit, and this is I have to 411 00:21:21,240 --> 00:21:24,720 Speaker 1: notice the cover story of the March fourth Bloomberg Business 412 00:21:24,760 --> 00:21:26,879 Speaker 1: Week coming out. So David, thanks so much for joining us. 413 00:21:27,320 --> 00:21:30,800 Speaker 1: Are we at peak car? We're getting pretty close and 414 00:21:31,240 --> 00:21:33,359 Speaker 1: uh so, here's here's what's going on. You see, in 415 00:21:33,400 --> 00:21:36,280 Speaker 1: the U s we we hit record car sales two 416 00:21:36,359 --> 00:21:39,280 Speaker 1: years ago. Uh well, going on three, two thou sixteen, 417 00:21:39,680 --> 00:21:42,000 Speaker 1: still healthy levels, but it's been kind of slowly coming 418 00:21:42,040 --> 00:21:44,680 Speaker 1: down ever since. In most companies kind of see that 419 00:21:44,760 --> 00:21:47,760 Speaker 1: happening for a while. Last year in China we saw 420 00:21:47,800 --> 00:21:50,239 Speaker 1: I'd go backwards for geez, the first time since I've 421 00:21:50,280 --> 00:21:52,199 Speaker 1: been covering the industry, and that's more than I care 422 00:21:52,280 --> 00:21:56,280 Speaker 1: to admit. China will continue to grow kind of long term, 423 00:21:56,480 --> 00:21:58,920 Speaker 1: but the year's a double digit growth, it's kind of 424 00:21:58,960 --> 00:22:02,000 Speaker 1: behind us. So those are your two biggest markets. You're 425 00:22:02,240 --> 00:22:04,440 Speaker 1: you're not going to get growth there. In Japan, no way. 426 00:22:04,920 --> 00:22:08,800 Speaker 1: There will be growth according to General Motors in places 427 00:22:08,880 --> 00:22:13,119 Speaker 1: like Russia, India, South America, but all those are problematic. 428 00:22:13,240 --> 00:22:16,040 Speaker 1: India has huge infrastructure problems when it comes to cars, 429 00:22:16,600 --> 00:22:20,720 Speaker 1: Russia has political instability problems, and South America has currency 430 00:22:20,800 --> 00:22:24,480 Speaker 1: instability problems. So you boil all that together and even 431 00:22:24,520 --> 00:22:26,280 Speaker 1: if there is some growth, it's going to be slow. 432 00:22:26,800 --> 00:22:29,360 Speaker 1: And really the bottom line is car companies to gain 433 00:22:29,400 --> 00:22:31,840 Speaker 1: any kind of sales, they're gonna beating each other over 434 00:22:31,880 --> 00:22:33,640 Speaker 1: the head to gain market share. There's not a lot 435 00:22:33,720 --> 00:22:36,639 Speaker 1: of organic growth out there going forward, so they've got 436 00:22:36,720 --> 00:22:39,280 Speaker 1: to find other ways to show investors that they're growing 437 00:22:39,320 --> 00:22:42,879 Speaker 1: the business. So I guess, David, there's a broader question 438 00:22:43,040 --> 00:22:45,520 Speaker 1: here aside from some of the trouble spots as far 439 00:22:45,600 --> 00:22:48,159 Speaker 1: as the growth generators, which is how much of a 440 00:22:48,240 --> 00:22:52,760 Speaker 1: threat our ridesharing services. How much have people ditched their 441 00:22:52,840 --> 00:22:56,320 Speaker 1: cars altogether and just shifted to the Ubers and lifts 442 00:22:56,359 --> 00:22:59,440 Speaker 1: of the world. It hasn't happened in mass yet, but 443 00:22:59,520 --> 00:23:01,600 Speaker 1: it is happening. You're seeing some families that maybe have 444 00:23:01,720 --> 00:23:03,840 Speaker 1: three cars go to two or two down to one. 445 00:23:04,480 --> 00:23:07,520 Speaker 1: And it's not a lot, but it will happen, and 446 00:23:08,359 --> 00:23:11,520 Speaker 1: especially as people continue to move to cities. Already the 447 00:23:11,680 --> 00:23:14,640 Speaker 1: US more than people live in urban areas and that's 448 00:23:14,640 --> 00:23:17,760 Speaker 1: supposed to get up to about and that's accelerating in 449 00:23:17,920 --> 00:23:20,080 Speaker 1: China as well. And you know, if you live in 450 00:23:20,119 --> 00:23:23,000 Speaker 1: a big city, having a car is just owners insurance 451 00:23:23,080 --> 00:23:26,240 Speaker 1: tends to be really expensive, Parking is expensive and just 452 00:23:26,400 --> 00:23:29,640 Speaker 1: kind of tough to find. So that that's why urban 453 00:23:29,720 --> 00:23:31,880 Speaker 1: dwellers of often not head cars. And it's more people 454 00:23:31,960 --> 00:23:35,239 Speaker 1: move that way. Uh, they're just going to give them 455 00:23:35,320 --> 00:23:39,560 Speaker 1: up and not have them. So honestly, David, David, your 456 00:23:39,680 --> 00:23:42,199 Speaker 1: understatement about how difficult it is to have a car 457 00:23:42,280 --> 00:23:45,040 Speaker 1: in the city, I mean, really, it's aside from alternate 458 00:23:45,080 --> 00:23:49,320 Speaker 1: side of the street, parking insurance, people bashing into your fenders. 459 00:23:49,440 --> 00:23:53,119 Speaker 1: Oh my gosh, sign all episodes about George trying to 460 00:23:53,200 --> 00:23:57,320 Speaker 1: find a parking spot. I've I've lost years of my life, 461 00:23:58,040 --> 00:24:01,359 Speaker 1: Paul Safety exactly, so so of it. How about mass transit? 462 00:24:01,440 --> 00:24:05,000 Speaker 1: Is that contributing to, um, you know, the decline of 463 00:24:05,040 --> 00:24:08,199 Speaker 1: the car We saw this week in California where they 464 00:24:08,320 --> 00:24:11,959 Speaker 1: ran into some trouble getting their railroad system approved as 465 00:24:12,000 --> 00:24:15,080 Speaker 1: mass transit, making any inroads on the traditional auto ownership. 466 00:24:15,720 --> 00:24:17,680 Speaker 1: Actually mass mass transit it's sort of one of the 467 00:24:17,760 --> 00:24:20,240 Speaker 1: victims in all of this because it's more people go 468 00:24:20,320 --> 00:24:23,360 Speaker 1: to Uber and Lift and other services. People who make 469 00:24:23,440 --> 00:24:27,240 Speaker 1: pretty good money have been opting for those services instead 470 00:24:27,359 --> 00:24:28,960 Speaker 1: because you know, hey, look, if you take an Uber 471 00:24:28,960 --> 00:24:30,960 Speaker 1: our lift, you don't have to sit on a platform 472 00:24:31,000 --> 00:24:33,480 Speaker 1: when it's ten degrees out or hundred and ten degrees 473 00:24:33,560 --> 00:24:36,120 Speaker 1: out and wait for a train to come by. Someone 474 00:24:36,240 --> 00:24:38,879 Speaker 1: picks you up on your schedule. So people have actually 475 00:24:39,080 --> 00:24:43,200 Speaker 1: left those services the same way they've they've left owning 476 00:24:43,240 --> 00:24:45,800 Speaker 1: their own car in some cases. So you see in 477 00:24:45,920 --> 00:24:48,880 Speaker 1: some cities that they're actually putting in taxes on rides 478 00:24:48,880 --> 00:24:51,399 Speaker 1: sharing companies like Uber and Lift and then funneling the 479 00:24:51,480 --> 00:24:54,240 Speaker 1: money to public transit because it's it's become an issue 480 00:24:54,280 --> 00:24:57,440 Speaker 1: that way. UM, you know you're going to see that 481 00:24:57,560 --> 00:25:01,400 Speaker 1: battle play out. Public transit authorities do not want to see. 482 00:25:01,720 --> 00:25:03,600 Speaker 1: They don't want to go into a lost position because 483 00:25:03,600 --> 00:25:05,679 Speaker 1: everyone's going to Uber and Lift, and then the cities 484 00:25:05,760 --> 00:25:09,360 Speaker 1: themselves don't want to see terrible congestion because people are 485 00:25:09,760 --> 00:25:11,399 Speaker 1: getting those cars. And look, this is one of the 486 00:25:11,480 --> 00:25:15,199 Speaker 1: many mitigating factors for peak car. If people give up 487 00:25:15,440 --> 00:25:17,439 Speaker 1: owning a car to take Uber, and if you're going 488 00:25:17,480 --> 00:25:19,399 Speaker 1: to need more Uber and Lift and way Mow and 489 00:25:19,720 --> 00:25:22,840 Speaker 1: maybe GM cruise cars and you know services we don't 490 00:25:22,840 --> 00:25:25,280 Speaker 1: even know exists yet, it's more of those coming to play. 491 00:25:25,320 --> 00:25:28,439 Speaker 1: You're going they're still gonna be building those cars. They 492 00:25:28,560 --> 00:25:31,040 Speaker 1: just might get Fox coned into building the hardware and 493 00:25:31,359 --> 00:25:34,280 Speaker 1: you know, instead of selling the services. Fox kind of course, 494 00:25:34,320 --> 00:25:36,200 Speaker 1: it's a company that makes your iPhone and Apple makes 495 00:25:36,200 --> 00:25:39,000 Speaker 1: all the money off the content. So David, just real 496 00:25:39,080 --> 00:25:41,600 Speaker 1: quick here, I'm wondering. So we may not be heading 497 00:25:41,720 --> 00:25:45,520 Speaker 1: for peak auto, but kind are. Okay, so we are, 498 00:25:45,600 --> 00:25:47,520 Speaker 1: but we're not heading for like a nose dive where 499 00:25:47,520 --> 00:25:50,560 Speaker 1: autos go out of fashion and nobody drives anymore necessarily, 500 00:25:50,600 --> 00:25:52,760 Speaker 1: at least not in the next couple of years. Are 501 00:25:52,840 --> 00:25:55,800 Speaker 1: we hitting their peak truck in thirty seconds? The idea 502 00:25:56,000 --> 00:25:58,360 Speaker 1: of you know, perhaps are just too pricey and they're 503 00:25:58,400 --> 00:26:01,719 Speaker 1: just too many of them out there. Oh well, that's 504 00:26:01,760 --> 00:26:04,920 Speaker 1: a tough one. I not yet, but we're going to 505 00:26:05,040 --> 00:26:08,119 Speaker 1: get there before too long. Because the average praise of 506 00:26:08,280 --> 00:26:10,880 Speaker 1: vehicle is over thirty six thousand in the US. That's 507 00:26:10,880 --> 00:26:12,760 Speaker 1: a lot of money for a lot of people. Yeah, 508 00:26:13,040 --> 00:26:14,639 Speaker 1: all right, David Weals, thank you so much for being 509 00:26:14,680 --> 00:26:17,080 Speaker 1: with us. David Welch is our Detroit bureau chief for 510 00:26:17,280 --> 00:26:20,960 Speaker 1: Bloomberg News. Thanks for listening to the Bloomberg pen L podcast. 511 00:26:21,160 --> 00:26:23,760 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 512 00:26:23,840 --> 00:26:26,800 Speaker 1: or whatever podcast platform you prefer. I'm Paul Sweeney. I'm 513 00:26:26,840 --> 00:26:29,560 Speaker 1: on Twitter at pt Sweeney. I'm Lisa bram Woits. I'm 514 00:26:29,560 --> 00:26:32,400 Speaker 1: on Twitter at Lisa bramw wits. One Before the podcast, 515 00:26:32,440 --> 00:26:35,040 Speaker 1: you can always catch us worldwide on Bloomberg Radio.