1 00:00:04,760 --> 00:00:08,080 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,119 --> 00:00:11,200 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,280 --> 00:00:14,480 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:14,520 --> 00:00:16,880 Speaker 1: you and your money, whether at the grocery store or 5 00:00:16,920 --> 00:00:20,680 Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes, 6 00:00:20,840 --> 00:00:29,280 Speaker 1: SoundCloud and at Bloomberg dot com. Well earlier, we spoke 7 00:00:29,280 --> 00:00:32,680 Speaker 1: with Lex churs Macker, senior vice president of the America's 8 00:00:32,720 --> 00:00:36,320 Speaker 1: Region and president and chief executive officer of Volver Cars 9 00:00:36,400 --> 00:00:39,440 Speaker 1: of North America, to talk about the new x C sixty, 10 00:00:39,680 --> 00:00:42,520 Speaker 1: their new plant in Charleston, and electric vehicles. We kicked 11 00:00:42,520 --> 00:00:45,479 Speaker 1: things off by asking Lex how Volvo has managed to 12 00:00:45,520 --> 00:00:48,160 Speaker 1: increase both the price point of cars as well as 13 00:00:48,280 --> 00:00:50,720 Speaker 1: the volume. Take a listen. I think it's it's fair 14 00:00:50,800 --> 00:00:52,519 Speaker 1: to say that we are on a turnaround in the 15 00:00:52,600 --> 00:00:55,200 Speaker 1: United States. We have been out of sight, out of mind. 16 00:00:55,880 --> 00:00:59,560 Speaker 1: Now with entering the market with absolute fabulous products, we 17 00:00:59,600 --> 00:01:02,279 Speaker 1: are a to and grow because we have the right 18 00:01:02,320 --> 00:01:08,360 Speaker 1: products and also increase our price steps because the products 19 00:01:08,360 --> 00:01:12,440 Speaker 1: are very competitive compared to compared to the rest of 20 00:01:12,480 --> 00:01:15,520 Speaker 1: the market. So it's a little bit of a rare situation, 21 00:01:16,360 --> 00:01:20,280 Speaker 1: low volume, start great products, and by that we can 22 00:01:20,319 --> 00:01:23,080 Speaker 1: combine those factors. I wonder if you could just help 23 00:01:23,120 --> 00:01:25,679 Speaker 1: people a little bit about Volvo, because your parent company 24 00:01:25,720 --> 00:01:29,280 Speaker 1: obviously based in China. Geely Automotive, the largest, one of 25 00:01:29,280 --> 00:01:32,080 Speaker 1: the largest manufacturers of automobiles in the world, described the 26 00:01:32,120 --> 00:01:34,840 Speaker 1: split between the United States and China as far as 27 00:01:34,840 --> 00:01:37,880 Speaker 1: your markets go, volume and so on. I think what 28 00:01:38,000 --> 00:01:40,320 Speaker 1: you see in the in the in in China happening 29 00:01:40,319 --> 00:01:43,840 Speaker 1: now is that their their their volume prediction for two 30 00:01:43,880 --> 00:01:48,120 Speaker 1: thousand seven, the total market is twenty seven million cars, 31 00:01:48,200 --> 00:01:51,320 Speaker 1: whereas in the United States, as you know, we're operating 32 00:01:51,400 --> 00:01:55,400 Speaker 1: between sixteen and seventeen. It's it's only two years ago, 33 00:01:55,720 --> 00:01:58,040 Speaker 1: probably one and a half year ago, if I remember well, 34 00:01:58,280 --> 00:02:02,320 Speaker 1: that they passed the US the sixteen million borderline. So 35 00:02:02,440 --> 00:02:05,760 Speaker 1: what we see in in China is extremely rapid growth. 36 00:02:06,960 --> 00:02:10,840 Speaker 1: How concerned are you about the rebound in commodity prices 37 00:02:10,960 --> 00:02:15,799 Speaker 1: steel in particular, as China does stabilize their growth and 38 00:02:15,919 --> 00:02:20,760 Speaker 1: how expensive it is becoming too manufacturer cars Now at 39 00:02:20,760 --> 00:02:23,000 Speaker 1: the moment, I am not so worried at all. I 40 00:02:23,040 --> 00:02:26,840 Speaker 1: think it's that at the end we are we're working 41 00:02:26,919 --> 00:02:29,240 Speaker 1: in a in a in a free world with free economy, 42 00:02:29,280 --> 00:02:31,880 Speaker 1: and at the end we will we will resolve it. 43 00:02:32,120 --> 00:02:36,120 Speaker 1: But of course, I mean steel production is a generic issue, 44 00:02:36,200 --> 00:02:39,160 Speaker 1: but it's it's not our biggest concern for the moment. 45 00:02:39,639 --> 00:02:43,040 Speaker 1: So what's your biggest concern? My biggest concerns here in 46 00:02:43,040 --> 00:02:46,720 Speaker 1: the United States is to secure sustainable growth. I mean, 47 00:02:46,760 --> 00:02:48,960 Speaker 1: we want to go as soon as possible to a 48 00:02:49,040 --> 00:02:51,760 Speaker 1: one percent market share. That's exactly where we were in 49 00:02:51,800 --> 00:02:56,680 Speaker 1: two thousand four. That's what our retailers are are aiming for. 50 00:02:56,800 --> 00:03:00,359 Speaker 1: They have invested accordingly, and we have all more as 51 00:03:00,360 --> 00:03:03,480 Speaker 1: such is on a on a on a great path. 52 00:03:03,800 --> 00:03:07,520 Speaker 1: So my major concern is to get sufficient cars to 53 00:03:07,600 --> 00:03:11,160 Speaker 1: the United States to enable that growth. Can you tell 54 00:03:11,240 --> 00:03:13,560 Speaker 1: us what volumes you're doing in the United States currently 55 00:03:13,600 --> 00:03:16,760 Speaker 1: and what your goals are um At the moment, we 56 00:03:16,800 --> 00:03:22,160 Speaker 1: are operating around thousand units, and that's why I would 57 00:03:22,240 --> 00:03:24,840 Speaker 1: like to end up somewhere between in the United States 58 00:03:25,240 --> 00:03:28,400 Speaker 1: between ninety and nine five thousand units. And that's that's 59 00:03:28,480 --> 00:03:32,280 Speaker 1: based on supply. It's not necessarily based on demand because 60 00:03:32,320 --> 00:03:36,640 Speaker 1: demand is higher, especially on the ex ninety So just 61 00:03:36,680 --> 00:03:41,000 Speaker 1: tell us about the new plant in Charleston, South Carolina. UM. 62 00:03:41,040 --> 00:03:43,560 Speaker 1: We decided about two years two and a half years 63 00:03:43,600 --> 00:03:46,360 Speaker 1: ago to build a plant in South Carolina. We wanted 64 00:03:46,400 --> 00:03:48,760 Speaker 1: to be in the United States. This is this is 65 00:03:49,160 --> 00:03:51,840 Speaker 1: we have been in the US for more than sixty years. 66 00:03:51,920 --> 00:03:55,080 Speaker 1: This is more or less our second home market, UM, 67 00:03:55,120 --> 00:03:57,920 Speaker 1: and we we took a deliberate choice to be in 68 00:03:57,960 --> 00:04:00,960 Speaker 1: the United States already two years as ago and for 69 00:04:01,080 --> 00:04:03,600 Speaker 1: exactly the reasons I said, this is our whole market, 70 00:04:03,720 --> 00:04:06,400 Speaker 1: this is where our customers are since long and we 71 00:04:06,480 --> 00:04:09,360 Speaker 1: have faced very loyal retailers. So we wanted to give 72 00:04:09,360 --> 00:04:13,320 Speaker 1: a very clear signal United States. It is how concerned 73 00:04:13,360 --> 00:04:16,000 Speaker 1: are you about pushing into the US at a time 74 00:04:16,080 --> 00:04:19,320 Speaker 1: when auto sales numbers are coming down and there is 75 00:04:19,360 --> 00:04:24,080 Speaker 1: concern about deteriorating resale values of cars. That is an issue. 76 00:04:24,080 --> 00:04:26,919 Speaker 1: And I think what we what we face generally is 77 00:04:26,960 --> 00:04:29,440 Speaker 1: that we all want to get to the sixteen and 78 00:04:29,440 --> 00:04:32,200 Speaker 1: a half seventeen million units in the US and that 79 00:04:32,200 --> 00:04:36,000 Speaker 1: that drives and sentenced and that's not necessarily sustainable. In 80 00:04:36,080 --> 00:04:39,080 Speaker 1: respect of the factory in South Carolina, it will be 81 00:04:39,120 --> 00:04:42,320 Speaker 1: a global factory. We will produce as sixty on the 82 00:04:42,360 --> 00:04:44,599 Speaker 1: new based on the new platform, same as the x 83 00:04:44,600 --> 00:04:48,640 Speaker 1: C sixty and we will also export as sixties to 84 00:04:48,680 --> 00:04:51,239 Speaker 1: the rest of the world, so we're not only dependent 85 00:04:51,279 --> 00:04:54,680 Speaker 1: on the US market. Although it isn't labor more expensive here. 86 00:04:55,800 --> 00:04:58,280 Speaker 1: It is, but at the end, you know, it's it's 87 00:04:58,400 --> 00:05:01,120 Speaker 1: it's it's about you produce where you sell, and we 88 00:05:01,200 --> 00:05:05,040 Speaker 1: have a global manufacturing footprint. That's why it's so important 89 00:05:05,080 --> 00:05:07,880 Speaker 1: to stress that it's not only about the US. We 90 00:05:07,920 --> 00:05:10,640 Speaker 1: are a global company. We produce cars in Europe, we 91 00:05:10,680 --> 00:05:13,760 Speaker 1: produce cars in China, and depending on the demand and 92 00:05:13,800 --> 00:05:16,359 Speaker 1: the model, we distribute them all over the world. And 93 00:05:16,400 --> 00:05:19,159 Speaker 1: that's one of the reasons why I'm very concerned about 94 00:05:19,200 --> 00:05:22,320 Speaker 1: the adjustable text discussions here at the United States, because 95 00:05:22,480 --> 00:05:25,520 Speaker 1: that is that's not aligned with free trade, that's not 96 00:05:25,640 --> 00:05:28,600 Speaker 1: in line with what we face in the automotive industry, 97 00:05:28,920 --> 00:05:33,680 Speaker 1: a very global footprint. The Swedish government has made it 98 00:05:33,720 --> 00:05:36,680 Speaker 1: a policy in order to eliminate the use of fossil fuels, 99 00:05:36,680 --> 00:05:40,760 Speaker 1: particularly in automobiles. What kind of hybrid or electric cardio 100 00:05:40,839 --> 00:05:44,320 Speaker 1: bills can we expect to see from Volvo. We took 101 00:05:44,360 --> 00:05:48,000 Speaker 1: in two thousand eight the deliberate choice to abandon five 102 00:05:48,040 --> 00:05:51,880 Speaker 1: cylinders and six cylinders and to focus on very fuel 103 00:05:51,880 --> 00:05:56,800 Speaker 1: efficient force force cylinder turbo engines combined with electrification. So 104 00:05:57,680 --> 00:06:02,080 Speaker 1: we are totally on track with ever demand any government 105 00:06:02,279 --> 00:06:06,680 Speaker 1: where ever in the world is putting on on environment. 106 00:06:07,000 --> 00:06:10,480 Speaker 1: We strongly believe in electrification. We will launch our first 107 00:06:10,520 --> 00:06:14,440 Speaker 1: full electrical car in two thousand nineteen. And those markets 108 00:06:14,839 --> 00:06:19,440 Speaker 1: where electrification does not bite yet, we have extremely fuel 109 00:06:19,440 --> 00:06:22,520 Speaker 1: efficient engines in all our car ranges, so I feel 110 00:06:22,640 --> 00:06:27,320 Speaker 1: very comfortable with actually any demand. What about self driving cars? 111 00:06:27,320 --> 00:06:29,760 Speaker 1: And Evolvo had been making a big push, pulled back 112 00:06:29,839 --> 00:06:34,279 Speaker 1: after some high profile accidents. Where is this now? Um 113 00:06:34,800 --> 00:06:38,320 Speaker 1: Autonomous drive is an integrated part of our vision. We 114 00:06:38,440 --> 00:06:42,039 Speaker 1: have a vision that by twenty nobody should be killed 115 00:06:42,160 --> 00:06:46,360 Speaker 1: or heavily injured in Evolvo, and that's quite a statement. 116 00:06:46,520 --> 00:06:50,080 Speaker 1: And with passive safety and active safety alone, we do 117 00:06:50,200 --> 00:06:53,440 Speaker 1: not manage to reach that statement because we know that 118 00:06:54,520 --> 00:06:57,119 Speaker 1: of the accident is caused by distraction of the driver. 119 00:06:57,279 --> 00:07:00,359 Speaker 1: There's only one tool which can resolve that, and that 120 00:07:00,480 --> 00:07:04,479 Speaker 1: is a tautomers drive. So we continue to to roll 121 00:07:04,560 --> 00:07:09,000 Speaker 1: out very aggressively our development plan and and and Uber 122 00:07:09,400 --> 00:07:13,400 Speaker 1: you mentioned it is one partner. We see one accident 123 00:07:14,120 --> 00:07:17,800 Speaker 1: that doesn't that doesn't hold us back. It's it's a revolution, 124 00:07:17,840 --> 00:07:20,080 Speaker 1: so it will be a snak umpy roads and there 125 00:07:20,120 --> 00:07:24,280 Speaker 1: are you know, there are sometimes some obstacles. That was 126 00:07:24,360 --> 00:07:27,480 Speaker 1: Lex Cursor Macker, senior vice president of the America's Region 127 00:07:27,760 --> 00:07:31,120 Speaker 1: and president and chief executive officer of Volvo Cars of 128 00:07:31,400 --> 00:07:34,200 Speaker 1: North America. He was talking about the new X sixty, 129 00:07:34,360 --> 00:07:38,360 Speaker 1: their new plant in Charleston electric vehicles, as well as 130 00:07:38,520 --> 00:07:41,640 Speaker 1: breaking into a US market or expanding a presence in 131 00:07:41,640 --> 00:07:45,200 Speaker 1: a US market that currently has a couple of road 132 00:07:45,560 --> 00:07:49,680 Speaker 1: speed bombs just based on the long deterioration as well 133 00:07:49,720 --> 00:08:06,760 Speaker 1: as lower resale values of cars. Many of the automobile 134 00:08:06,800 --> 00:08:10,040 Speaker 1: companies here say that they are leading the charge when 135 00:08:10,040 --> 00:08:13,440 Speaker 1: it comes to automated driving systems and the latest technology 136 00:08:13,480 --> 00:08:17,480 Speaker 1: inside the cabin. Maybe not. Sam Abel Zamid is a 137 00:08:17,560 --> 00:08:22,200 Speaker 1: senior analyst for mobility for Navigant Research. He's based in Detroit, 138 00:08:22,280 --> 00:08:24,760 Speaker 1: but luckily he's here with us today. Sam, thanks very 139 00:08:24,800 --> 00:08:27,560 Speaker 1: much for being with us. And you okay, you give 140 00:08:27,560 --> 00:08:30,320 Speaker 1: away the the answer here. I keep thinking, you know, 141 00:08:30,360 --> 00:08:34,000 Speaker 1: maybe it's Ford or GM or maybe Mercedes. Somebody's got 142 00:08:34,000 --> 00:08:37,600 Speaker 1: this great you know in cabin technology. You're saying, uh, 143 00:08:37,720 --> 00:08:40,840 Speaker 1: that's not the group you need to be paying attention to. Well, 144 00:08:41,320 --> 00:08:43,680 Speaker 1: what we did was we took a look at a 145 00:08:43,760 --> 00:08:46,880 Speaker 1: lot all of the major companies that are developing automated 146 00:08:46,960 --> 00:08:50,280 Speaker 1: driving systems and took a holistic look at who is 147 00:08:50,320 --> 00:08:53,480 Speaker 1: best positioned to actually succeed in commercializing the technology, not 148 00:08:53,600 --> 00:08:56,680 Speaker 1: just the core technologies of a self driving car, but 149 00:08:56,880 --> 00:08:59,440 Speaker 1: who can actually make a business out of it. And 150 00:08:59,559 --> 00:09:03,160 Speaker 1: when we did that and scored scored these companies on 151 00:09:03,280 --> 00:09:07,000 Speaker 1: ten different criteria for strategy and execution, we came out 152 00:09:07,120 --> 00:09:10,920 Speaker 1: with several of the major automakers as the leaders in 153 00:09:10,920 --> 00:09:15,679 Speaker 1: the space. Overall, uh SO, um Ford and GM came 154 00:09:15,720 --> 00:09:18,400 Speaker 1: out on top for just slightly ahead of General Motors, 155 00:09:18,400 --> 00:09:23,320 Speaker 1: followed by Reno Nissan Alliance, and then Diemler and um Weymo, 156 00:09:23,559 --> 00:09:28,160 Speaker 1: the Google self driving car spinoff uh came in seventh overall. 157 00:09:29,080 --> 00:09:32,840 Speaker 1: Uh we scored them highest for vision and for technology. 158 00:09:32,880 --> 00:09:36,040 Speaker 1: But they have no manufacturing capability, and you know they're 159 00:09:36,160 --> 00:09:38,600 Speaker 1: they're talking to O E. M s about partnering to 160 00:09:38,679 --> 00:09:41,840 Speaker 1: produce cars for them they can install their their platform 161 00:09:41,920 --> 00:09:44,480 Speaker 1: on and and developing the services. But right now they 162 00:09:44,480 --> 00:09:47,720 Speaker 1: don't have that piece. And some of the other companies 163 00:09:47,720 --> 00:09:50,600 Speaker 1: that have obviously gotten a lot of media attention. Like 164 00:09:50,640 --> 00:09:54,000 Speaker 1: Tesla and uber Uh, they actually came quite a bit 165 00:09:54,000 --> 00:09:57,880 Speaker 1: further down in the rankings UM based on factors in 166 00:09:57,920 --> 00:10:01,320 Speaker 1: Tesla's case um poor qualit and reliability of the cars 167 00:10:01,320 --> 00:10:05,560 Speaker 1: they built today, and um uber um their technology just 168 00:10:05,679 --> 00:10:08,160 Speaker 1: doesn't actually seem to work all that well and their 169 00:10:08,240 --> 00:10:11,320 Speaker 1: company as a business doesn't seem all that sustainable. Well, Sam, 170 00:10:11,440 --> 00:10:13,120 Speaker 1: you know, I have to bring this back to recent 171 00:10:13,320 --> 00:10:16,800 Speaker 1: market action where all of a sudden, Tesla's market cap 172 00:10:17,400 --> 00:10:21,480 Speaker 1: surpassed g MS, which was a surprising landmark to a 173 00:10:21,559 --> 00:10:24,760 Speaker 1: lot of people. If Tesla is in seventh place or 174 00:10:24,840 --> 00:10:29,000 Speaker 1: way down there, right, I think twelve place, sorry, twelve 175 00:10:29,040 --> 00:10:33,439 Speaker 1: place when it comes to their ability to commercialize self 176 00:10:33,520 --> 00:10:38,480 Speaker 1: driving technology, what does that mean about current valuations? Well, 177 00:10:38,520 --> 00:10:41,559 Speaker 1: I'm not a stock market analyst or financial analysts. I'm 178 00:10:41,559 --> 00:10:44,920 Speaker 1: a technology analyst and look at the business side of it. 179 00:10:44,960 --> 00:10:49,200 Speaker 1: But um, frankly, you know, it's it's a mystery to 180 00:10:49,240 --> 00:10:51,600 Speaker 1: me how how they have such a valuation. I mean, 181 00:10:51,600 --> 00:10:55,719 Speaker 1: I hear you know, uh people investors talking about their 182 00:10:55,760 --> 00:10:58,679 Speaker 1: talking about their the company's future potential. But frankly, they 183 00:10:58,720 --> 00:11:02,480 Speaker 1: haven't really demonstrated they necessarily have a long term future 184 00:11:02,720 --> 00:11:06,840 Speaker 1: as a large scale automaker. UH. Building cars at small scale, 185 00:11:06,880 --> 00:11:09,200 Speaker 1: they haven't done a particularly good job at product quality 186 00:11:09,200 --> 00:11:13,640 Speaker 1: and reliability. UM, they certainly haven't been profitable, and UH 187 00:11:13,720 --> 00:11:16,480 Speaker 1: as as they scale up to larger, you know, higher 188 00:11:16,520 --> 00:11:22,080 Speaker 1: volume vehicles at lower price points, UH somewhat UH. Counterintuitively, 189 00:11:22,360 --> 00:11:25,280 Speaker 1: customers that buy mainstream cars in the thirty thirty five 190 00:11:25,320 --> 00:11:28,439 Speaker 1: thou dollar price point are actually much have much higher 191 00:11:28,440 --> 00:11:32,720 Speaker 1: expectations of quality and reliability than customers buying premium cars. 192 00:11:32,760 --> 00:11:35,160 Speaker 1: Those affluent customers that buy a hundred thousand dollars in 193 00:11:35,240 --> 00:11:38,680 Speaker 1: up cars often have more than one vehicle, and they're 194 00:11:38,720 --> 00:11:41,280 Speaker 1: not necessarily reliant on a specific vehicle to be running 195 00:11:41,280 --> 00:11:45,079 Speaker 1: every day. People that you know, company customers that buy 196 00:11:45,120 --> 00:11:47,640 Speaker 1: toy To cameras and Honda accords, don't buy them because 197 00:11:47,679 --> 00:11:50,080 Speaker 1: they're exciting or sexy. They buy them because they know 198 00:11:50,120 --> 00:11:52,800 Speaker 1: they're gonna get in that car every morning, turn the key, 199 00:11:52,840 --> 00:11:55,640 Speaker 1: press the start button. It's gonna beat, it's gonna fire up, 200 00:11:55,679 --> 00:11:57,600 Speaker 1: and take them to work, to school, wherever they need 201 00:11:57,640 --> 00:12:00,079 Speaker 1: to go, and if they need service, it's gonna be 202 00:12:00,160 --> 00:12:03,360 Speaker 1: handled promptly, something Tesla has not demonstrated a capability to 203 00:12:03,400 --> 00:12:07,200 Speaker 1: do so far, and if they can't execute properly on 204 00:12:07,720 --> 00:12:10,840 Speaker 1: launching the Model three, they could be in serious trouble. 205 00:12:11,600 --> 00:12:13,199 Speaker 1: I gotta say, you know, when you said press the 206 00:12:13,320 --> 00:12:16,120 Speaker 1: start button, that just took me all the way back 207 00:12:16,160 --> 00:12:19,160 Speaker 1: to the nineteen sixties. You know, the turn the key, 208 00:12:19,280 --> 00:12:21,960 Speaker 1: press the ignition and you know, maybe play a little 209 00:12:22,000 --> 00:12:24,080 Speaker 1: bit with the throttle. Now you've been working almost twenty 210 00:12:24,320 --> 00:12:29,199 Speaker 1: you worked twenty years working on electronic control systems. Uh 211 00:12:29,240 --> 00:12:32,200 Speaker 1: in in the automobile. I've always wanted to know the 212 00:12:32,320 --> 00:12:36,640 Speaker 1: start stop capability relatively new. Right you stopped at a 213 00:12:36,679 --> 00:12:40,480 Speaker 1: red light, the engine cuts off then instantly turns on. 214 00:12:40,960 --> 00:12:42,720 Speaker 1: But we're going to see more innovation like that. And 215 00:12:42,760 --> 00:12:46,679 Speaker 1: who was responsible? Do you know who came up with that? Uh? 216 00:12:46,800 --> 00:12:49,440 Speaker 1: You know, I I'm not sure who did the first 217 00:12:49,440 --> 00:12:52,000 Speaker 1: auto start stop systems. Most of them were implemented in 218 00:12:52,000 --> 00:12:56,160 Speaker 1: in Europe by a number of European manufacturers, UM, Folkswagen, 219 00:12:56,280 --> 00:13:00,440 Speaker 1: BMW some of the first ones. Um. And we're going 220 00:13:00,480 --> 00:13:03,040 Speaker 1: to see more stuff like that, yeah, absolutely, Um. You 221 00:13:03,080 --> 00:13:06,840 Speaker 1: know they're they're very cost effective solutions that give you, 222 00:13:06,840 --> 00:13:09,760 Speaker 1: you know, two three four percent more fuel economy, especially 223 00:13:09,760 --> 00:13:13,640 Speaker 1: in city driving. Uh, and so that it doesn't cost 224 00:13:13,720 --> 00:13:17,080 Speaker 1: much in manufacturers will use that to improve their fuel 225 00:13:17,080 --> 00:13:19,560 Speaker 1: economy in a way that isn't going to add a 226 00:13:19,600 --> 00:13:22,480 Speaker 1: lot to the sticker price of the car. Sam, when 227 00:13:22,640 --> 00:13:28,680 Speaker 1: you were analyzing which companies were most adept at making 228 00:13:29,200 --> 00:13:32,839 Speaker 1: a market out of autonomous driving vehicles, did you get 229 00:13:32,840 --> 00:13:35,640 Speaker 1: a sense of what the true self driving car would 230 00:13:35,640 --> 00:13:37,520 Speaker 1: look like, the one that actually would be sold that 231 00:13:37,520 --> 00:13:41,920 Speaker 1: we'd end up seeing possibly in the next couple of years. Um, 232 00:13:41,960 --> 00:13:44,600 Speaker 1: I think a good hint of the direction we're going 233 00:13:44,640 --> 00:13:47,839 Speaker 1: to see as cars like the Chevrolet Bolt ev UM. 234 00:13:47,880 --> 00:13:51,640 Speaker 1: You know, when GM was designing that car, they specifically 235 00:13:51,720 --> 00:13:55,360 Speaker 1: factored in mobility services ride hailing services as one of 236 00:13:55,400 --> 00:13:58,440 Speaker 1: the potential use cases for that car, which is why 237 00:13:58,520 --> 00:14:00,800 Speaker 1: it has the form factor it does. It's a relatively 238 00:14:00,840 --> 00:14:03,760 Speaker 1: short wheelbase, it's a little bit taller, it's very easy 239 00:14:03,800 --> 00:14:05,520 Speaker 1: to get in and out of. It's actually got a 240 00:14:05,520 --> 00:14:08,480 Speaker 1: lot of room for for four or five adults, uh, 241 00:14:08,520 --> 00:14:11,480 Speaker 1: even in the back seat. Uh. So they designed it 242 00:14:11,520 --> 00:14:14,400 Speaker 1: for that kind of application, and now it's their primary 243 00:14:14,400 --> 00:14:17,200 Speaker 1: platform that they're using to develop self driving technology and 244 00:14:17,240 --> 00:14:19,680 Speaker 1: what they're going to planning to deploy with lift in 245 00:14:19,720 --> 00:14:22,680 Speaker 1: the next few years. Well, fascinating stuff. Thank you so 246 00:14:22,760 --> 00:14:26,000 Speaker 1: much for training us. How is sam Abu Wilsa Sammon 247 00:14:26,200 --> 00:14:30,720 Speaker 1: Abu Wilsamond? Yeah, you pronounced it place buil Salmon. Thank you. Uh. 248 00:14:30,880 --> 00:14:35,000 Speaker 1: Senior analyst of Mobility at Navigant Research joins us here 249 00:14:35,120 --> 00:14:39,280 Speaker 1: at the New York Auto Show at the Javitt Center, Uh, 250 00:14:39,520 --> 00:14:42,320 Speaker 1: talking about autonomous cars and how Ford and GM he 251 00:14:42,480 --> 00:14:44,760 Speaker 1: a leg up on the Tesla's and the Google's of 252 00:14:44,800 --> 00:15:00,040 Speaker 1: the world despite all the hype. This is Bloomberg. I 253 00:15:00,120 --> 00:15:02,560 Speaker 1: want to learn more about Puerto Rico, in particular a 254 00:15:02,600 --> 00:15:07,480 Speaker 1: new study that shows that bondholder losses maybe substantially bigger 255 00:15:07,520 --> 00:15:12,240 Speaker 1: than the current ratings suggest. Michelle Caski is back with us. Michelle. 256 00:15:12,280 --> 00:15:14,200 Speaker 1: We are so happy to have you back. She's a 257 00:15:14,240 --> 00:15:17,880 Speaker 1: Puerto Rico reporter UH for Bloomberg News and she joins 258 00:15:17,960 --> 00:15:21,560 Speaker 1: us from our Bloomberg eleven three oh studios. Michelle, can 259 00:15:21,600 --> 00:15:24,280 Speaker 1: you talk a little bit about why bondholders might be 260 00:15:24,320 --> 00:15:28,000 Speaker 1: in for bigger losses than Puerto Rico ratings currently suggest. Well, 261 00:15:28,040 --> 00:15:30,480 Speaker 1: they might be in for bigger losses just because there's 262 00:15:30,520 --> 00:15:35,360 Speaker 1: so much uncertainty surrounding this. According to municipal market Advisors 263 00:15:35,480 --> 00:15:38,640 Speaker 1: UM and Analytics, and they, you know, their their whole 264 00:15:38,680 --> 00:15:41,200 Speaker 1: theory is, look, you know, everything is still so up 265 00:15:41,200 --> 00:15:43,640 Speaker 1: in the air, and how do we really even know 266 00:15:44,160 --> 00:15:48,200 Speaker 1: um that you can get what Moody's is estimating UM 267 00:15:48,240 --> 00:15:50,240 Speaker 1: that you could get, which would be the on the 268 00:15:50,280 --> 00:15:52,920 Speaker 1: lower end of thirty five to sixty five cents on 269 00:15:52,960 --> 00:15:57,240 Speaker 1: the dollar, right, UM. This uh, this report that's challenging 270 00:15:57,240 --> 00:16:01,560 Speaker 1: the ratings is coming from Matt Right, Matt Fabian, a 271 00:16:01,640 --> 00:16:05,680 Speaker 1: partner at Concord, Massachusetts based Municipal Market Analytics. He was 272 00:16:05,720 --> 00:16:08,920 Speaker 1: talking in a note that was distributed on Tuesday. I 273 00:16:09,000 --> 00:16:13,320 Speaker 1: find it interesting that, frankly, there are even ratings at 274 00:16:13,320 --> 00:16:16,360 Speaker 1: a time when there's so much ambiguity. I mean, is 275 00:16:16,360 --> 00:16:18,920 Speaker 1: there anything that you can kind of anchor your estimates 276 00:16:18,920 --> 00:16:23,240 Speaker 1: on at this point? Well, Fabian doesn't even anchor his 277 00:16:23,360 --> 00:16:25,280 Speaker 1: estimates on anything. He comes out and he says, look, 278 00:16:25,320 --> 00:16:28,320 Speaker 1: you know, we're not even going to um speculate on 279 00:16:29,600 --> 00:16:34,000 Speaker 1: arrange because it's just there's what what could happen in 280 00:16:34,000 --> 00:16:37,040 Speaker 1: the future is just so unknown. And he also talks 281 00:16:37,040 --> 00:16:41,800 Speaker 1: about how it's ultimately what will need to happen is 282 00:16:42,080 --> 00:16:45,440 Speaker 1: something that we haven't seen yet, which would be um, 283 00:16:45,560 --> 00:16:48,240 Speaker 1: whether the federal government gets involved in some sort of 284 00:16:48,240 --> 00:16:50,480 Speaker 1: way more than they have already, not not in the 285 00:16:50,520 --> 00:16:53,360 Speaker 1: sense of writing out a check, but um, creating some 286 00:16:53,400 --> 00:16:55,440 Speaker 1: sort of super bond, or where the I R s 287 00:16:55,480 --> 00:16:59,640 Speaker 1: would you maybe collect Puerto Rico's um taxes or creating 288 00:16:59,680 --> 00:17:03,840 Speaker 1: something like the New York UM New York Municipal water 289 00:17:03,960 --> 00:17:07,800 Speaker 1: what what they did in terms of a really complex 290 00:17:08,240 --> 00:17:12,280 Speaker 1: security structure. So again, and these are all speculations, but 291 00:17:12,600 --> 00:17:16,560 Speaker 1: because of that, UM, that's why many people are just 292 00:17:16,680 --> 00:17:19,359 Speaker 1: reluctant to really kind of put a gauge on this 293 00:17:20,240 --> 00:17:22,720 Speaker 1: and so zooming out. I mean, there's seventy billion dollars 294 00:17:22,720 --> 00:17:25,119 Speaker 1: of Puerto Rico debt outstanding. A lot of it is 295 00:17:25,560 --> 00:17:28,159 Speaker 1: held by hedge funds who came in late to the 296 00:17:28,200 --> 00:17:31,359 Speaker 1: game as speculators, buying the bonds at a discount, but 297 00:17:31,400 --> 00:17:34,000 Speaker 1: a lot of it is still held by mutual funds. 298 00:17:34,040 --> 00:17:36,040 Speaker 1: I mean, how big could the losses be at this 299 00:17:36,119 --> 00:17:40,040 Speaker 1: point for retail investors who have money and some of 300 00:17:40,080 --> 00:17:43,879 Speaker 1: these funds well there, I mean, they are gonna have 301 00:17:44,000 --> 00:17:45,800 Speaker 1: to say there's going to be some sort of a loss. 302 00:17:45,920 --> 00:17:49,119 Speaker 1: Right now, The most actively traded Puerto Rico g O 303 00:17:49,560 --> 00:17:54,960 Speaker 1: trades at today is training trading at sixties six six 304 00:17:55,440 --> 00:18:00,640 Speaker 1: sixty five cents on the dollar. And that's down from well, 305 00:18:00,800 --> 00:18:03,120 Speaker 1: how much is sent down when it first sold? It's 306 00:18:03,200 --> 00:18:07,480 Speaker 1: sold at. Um, let's see here, it's sold it was 307 00:18:07,520 --> 00:18:11,800 Speaker 1: in thees in cents on the dollar. So it's sold 308 00:18:11,800 --> 00:18:15,160 Speaker 1: at it's sold at a discount, right, but that was right, 309 00:18:15,240 --> 00:18:17,639 Speaker 1: it's sold at a discount. Indition, you're talking about a 310 00:18:17,640 --> 00:18:20,960 Speaker 1: body that is traded down pretty dramatically after being sold 311 00:18:20,960 --> 00:18:23,760 Speaker 1: in two fourteen, So we're talking, you know about three 312 00:18:23,840 --> 00:18:26,840 Speaker 1: years later, it's lost about a third of its value. 313 00:18:26,920 --> 00:18:29,560 Speaker 1: And those those uh, those losses are going to be 314 00:18:29,560 --> 00:18:32,080 Speaker 1: felt across the board. So what are the deadlines coming up? 315 00:18:32,119 --> 00:18:34,560 Speaker 1: To give people a better sense of what to expect 316 00:18:34,640 --> 00:18:36,560 Speaker 1: respect to losses? I mean, I know that the governor 317 00:18:36,600 --> 00:18:39,960 Speaker 1: has managed to solidify, uh some kind of deal with 318 00:18:40,200 --> 00:18:44,760 Speaker 1: some bondholders. What negotiations lie ahead? Well, right, actually this 319 00:18:44,880 --> 00:18:47,800 Speaker 1: day as we speak, um, there are GEO and and 320 00:18:47,960 --> 00:18:53,359 Speaker 1: Cofina sales tax bond holders and others um talking today. Um, 321 00:18:53,359 --> 00:18:56,560 Speaker 1: how how far that will progress? Where they'll get We'll 322 00:18:56,600 --> 00:18:59,040 Speaker 1: we'll see, UM. Some people are doubtful that they'll really 323 00:18:59,040 --> 00:19:02,280 Speaker 1: be able to hammer out in an actual and agreement 324 00:19:02,840 --> 00:19:07,120 Speaker 1: before May one, which is when a legal stay that 325 00:19:07,200 --> 00:19:11,040 Speaker 1: sort of shields and protects Puerto Rico from from litigation, 326 00:19:11,240 --> 00:19:15,080 Speaker 1: that that will end and uh, and then the any 327 00:19:15,160 --> 00:19:18,720 Speaker 1: lawsuits that are currently in the works will um be 328 00:19:18,800 --> 00:19:22,200 Speaker 1: able to move forward and um and and we'll see 329 00:19:22,240 --> 00:19:25,760 Speaker 1: what happens after May one. Who are the main firms 330 00:19:25,800 --> 00:19:29,000 Speaker 1: that are leading the charge on behalf of the creditors 331 00:19:29,080 --> 00:19:32,320 Speaker 1: to negotiate with Puerto Rico right now? You mean the 332 00:19:32,359 --> 00:19:36,800 Speaker 1: main the main investors, I mean Franklin, Yeah, Franklin, Templeton 333 00:19:36,840 --> 00:19:41,240 Speaker 1: and Oppenheimer are two of the biggest mutual funds out 334 00:19:41,280 --> 00:19:43,879 Speaker 1: there holding Puerto Rico debt. And then there's just a 335 00:19:43,880 --> 00:19:48,280 Speaker 1: whole slate of hedge funds out there as well, UM 336 00:19:48,320 --> 00:19:51,560 Speaker 1: that that hold the debts. So but pretty much, I mean, 337 00:19:51,600 --> 00:19:54,520 Speaker 1: Franklin and and Oppenheimer are the ones that that bought 338 00:19:54,560 --> 00:19:59,600 Speaker 1: in UM at full price. So they're they're they're they're 339 00:19:59,640 --> 00:20:00,840 Speaker 1: they're on the hug for a lot of the laws, 340 00:20:00,880 --> 00:20:02,640 Speaker 1: and they hold a lot of different types of Puerto 341 00:20:02,720 --> 00:20:06,359 Speaker 1: Rico debt. So well, it's a messy situation. I'm sure 342 00:20:06,400 --> 00:20:08,679 Speaker 1: we'll have you back to talk more about what's going on. 343 00:20:08,760 --> 00:20:11,159 Speaker 1: Michelle Casky, thank you so much for joining us. Michelle 344 00:20:11,200 --> 00:20:14,639 Speaker 1: Casky is Puerto Rico reporter for Bloomberg News. Talking about 345 00:20:14,760 --> 00:20:17,520 Speaker 1: the situation. We're talking seventy billion dollars of debts spread 346 00:20:17,520 --> 00:20:21,199 Speaker 1: across mutual funds, hedge funds. A new governor came into place, 347 00:20:21,640 --> 00:20:24,919 Speaker 1: Congress did allow a Fiscal Control Board to get in 348 00:20:25,359 --> 00:20:28,680 Speaker 1: UH to oversee the finances of Puerto Rico, and yet 349 00:20:28,800 --> 00:20:31,800 Speaker 1: they signed off on a bill recently on a budget 350 00:20:32,080 --> 00:20:35,960 Speaker 1: that would materially reduce the potential recoveries for bondholders. There's 351 00:20:35,960 --> 00:20:38,200 Speaker 1: a lot at stake, a lot of people are watching, Michelle. 352 00:20:38,200 --> 00:20:53,760 Speaker 1: We really appreciate you joining us. Yesterday, President Trump was interviewer. 353 00:20:53,920 --> 00:20:56,240 Speaker 1: I should say The Wall St Journal published an article 354 00:20:56,320 --> 00:20:59,640 Speaker 1: in which President Trump was interviewed saying that I think 355 00:20:59,760 --> 00:21:02,520 Speaker 1: our dollar is getting too strong, and partially that's my 356 00:21:02,680 --> 00:21:06,200 Speaker 1: fault because people have confidenced me. While the dollar plunged 357 00:21:06,640 --> 00:21:09,960 Speaker 1: major move UH and people were wondering what this means 358 00:21:09,960 --> 00:21:11,720 Speaker 1: for the path ahead to break this down. I want 359 00:21:11,720 --> 00:21:14,400 Speaker 1: to bring in Bob SnCH, Global strategistic AMers to pure 360 00:21:14,400 --> 00:21:19,480 Speaker 1: pont Securities. Bob was the fall of the dollar yesterday 361 00:21:19,560 --> 00:21:23,520 Speaker 1: in response to President Trump's comments, or has the decline 362 00:21:23,680 --> 00:21:28,000 Speaker 1: in the green back come from something else? You know, 363 00:21:28,040 --> 00:21:31,000 Speaker 1: at least I think it's, Uh, it's pretty fundamentally driven. Look, 364 00:21:31,000 --> 00:21:33,520 Speaker 1: we've had a pretty good rally in the bond market 365 00:21:33,920 --> 00:21:37,000 Speaker 1: over the last week or so, and uh, as we 366 00:21:37,040 --> 00:21:41,280 Speaker 1: look at at the movement in the dollar index, particularly 367 00:21:41,280 --> 00:21:45,399 Speaker 1: against major currencies, is really very consistent with the interest 368 00:21:45,480 --> 00:21:49,120 Speaker 1: rate differential between the US and those same countries. So 369 00:21:49,600 --> 00:21:51,240 Speaker 1: you know, I think that you know, if you look 370 00:21:51,280 --> 00:21:55,960 Speaker 1: at the dollar move I'd say more has been related 371 00:21:56,040 --> 00:21:59,520 Speaker 1: to changing interest rates and interest rate differentials, and a 372 00:21:59,680 --> 00:22:02,480 Speaker 1: very small part of it was was really in response 373 00:22:02,520 --> 00:22:05,480 Speaker 1: to the president's comments. I mean, the dollar took about 374 00:22:05,480 --> 00:22:08,879 Speaker 1: a three quarters quarters of a percent hit um on 375 00:22:08,960 --> 00:22:10,760 Speaker 1: the initial which is a big deal for the dollar. 376 00:22:11,359 --> 00:22:13,560 Speaker 1: But that's it's a big deal for the dollar. Well, 377 00:22:13,760 --> 00:22:15,800 Speaker 1: I mean, yes, I guess in a in a short 378 00:22:15,840 --> 00:22:18,479 Speaker 1: period of time. But it's regained two thirds of that 379 00:22:19,200 --> 00:22:23,040 Speaker 1: um this morning. So basically the dollars down dollar indext 380 00:22:23,080 --> 00:22:25,600 Speaker 1: is down about a quarter of a percent from where 381 00:22:25,600 --> 00:22:30,399 Speaker 1: it was before those comments were published. Bob, if you 382 00:22:30,440 --> 00:22:32,399 Speaker 1: could just speak a little bit more about currencies. But 383 00:22:32,600 --> 00:22:35,880 Speaker 1: in this case the Japanese yen and the euro, as 384 00:22:35,920 --> 00:22:39,840 Speaker 1: well as falling tenure US treasury yields, doesn't that send 385 00:22:39,840 --> 00:22:43,800 Speaker 1: a non inflationary kind of risk off signal? You know, 386 00:22:43,880 --> 00:22:46,720 Speaker 1: it definitely sends a risk off signal. We've seen that 387 00:22:46,920 --> 00:22:51,000 Speaker 1: in uh in movement into the end, which which you 388 00:22:51,040 --> 00:22:53,600 Speaker 1: know that that risk off movement in the end persists 389 00:22:53,640 --> 00:22:56,840 Speaker 1: despite the fact that Japan has you know, huge, huge 390 00:22:56,880 --> 00:23:00,359 Speaker 1: deficits and uh uh and their own long term pro blums. 391 00:23:00,400 --> 00:23:03,920 Speaker 1: But but certainly, I think we had an interesting test 392 00:23:04,040 --> 00:23:07,280 Speaker 1: this morning. Uh if you look at a two d 393 00:23:07,480 --> 00:23:10,440 Speaker 1: day moving averages, is one of those that the technical 394 00:23:10,480 --> 00:23:13,600 Speaker 1: guys will look at for sort of trend movements. One 395 00:23:14,080 --> 00:23:17,639 Speaker 1: S five is dollar yen's two hundred day moving average. 396 00:23:17,640 --> 00:23:20,440 Speaker 1: We went down and tested that having closed or gotten 397 00:23:20,440 --> 00:23:23,040 Speaker 1: below it. So I think that's an important one to 398 00:23:23,080 --> 00:23:25,800 Speaker 1: watch in terms of risk aversion in this movement in 399 00:23:25,800 --> 00:23:29,600 Speaker 1: in dollar yen. But I think in general, um again, 400 00:23:29,640 --> 00:23:31,879 Speaker 1: I think it's it's been this retreat in interest rates, 401 00:23:32,119 --> 00:23:35,199 Speaker 1: uh you know, ten year yields, you know, down a 402 00:23:35,200 --> 00:23:38,240 Speaker 1: good fifteen basis points in the last week, and I 403 00:23:38,240 --> 00:23:41,520 Speaker 1: think that's been the key driver of the of the 404 00:23:41,560 --> 00:23:44,200 Speaker 1: week er dollar in particularly dollar yen, which is which 405 00:23:44,240 --> 00:23:48,840 Speaker 1: is sensitive to ten year interest rate differential. So um. Again, 406 00:23:48,880 --> 00:23:50,280 Speaker 1: I think a lot of it's going to depend on 407 00:23:50,359 --> 00:23:54,919 Speaker 1: what happens to to rates from here and uh, you know, 408 00:23:54,920 --> 00:23:57,639 Speaker 1: and I think the dollar will respond accordingly. Do you 409 00:23:57,640 --> 00:23:59,840 Speaker 1: think that ten your treasury you will continue to fall? 410 00:24:00,800 --> 00:24:02,520 Speaker 1: Doesn't seem to be but it is not supposed to 411 00:24:02,560 --> 00:24:04,800 Speaker 1: be doing that at at the moment, right And bank 412 00:24:04,920 --> 00:24:08,240 Speaker 1: lending also in the United States that period to befalling. Yeah, 413 00:24:08,520 --> 00:24:10,480 Speaker 1: on the bank lending side, I think a lot of 414 00:24:10,480 --> 00:24:13,840 Speaker 1: that is companies that are just very liquid um. And 415 00:24:13,920 --> 00:24:18,000 Speaker 1: obviously capital spending has not been a has not been robust, 416 00:24:18,240 --> 00:24:21,720 Speaker 1: and so the demand and need for capital frankly um 417 00:24:21,840 --> 00:24:25,040 Speaker 1: isn't all that great in terms of yield. Certainly, the 418 00:24:25,040 --> 00:24:28,240 Speaker 1: market got caught off sides after the March of f 419 00:24:28,320 --> 00:24:30,040 Speaker 1: o MC meeting. I think a lot of people were 420 00:24:30,080 --> 00:24:32,760 Speaker 1: short bonds. But I think the one thing that is 421 00:24:32,800 --> 00:24:37,000 Speaker 1: sort of creeping into market sensitivity is that this little 422 00:24:37,200 --> 00:24:40,800 Speaker 1: bubble of inflation that everyone was focused on, I think 423 00:24:40,920 --> 00:24:43,960 Speaker 1: is fading pretty quickly. Obviously, when you look at year 424 00:24:44,000 --> 00:24:48,520 Speaker 1: over year inflation numbers, it looks like February UM for 425 00:24:48,560 --> 00:24:51,160 Speaker 1: many countries will have been the peak, and that's when 426 00:24:51,160 --> 00:24:54,359 Speaker 1: oil prices and and gasoline prices were up the most 427 00:24:54,400 --> 00:24:57,800 Speaker 1: on a year on year basis. But you look at China, 428 00:24:57,840 --> 00:25:00,879 Speaker 1: inflation has suddenly retreated to below one percent. Europe a 429 00:25:00,960 --> 00:25:04,720 Speaker 1: year from over to the Eurozone, the headline cp I 430 00:25:04,840 --> 00:25:07,960 Speaker 1: touched two for a month and is now retreating their 431 00:25:07,960 --> 00:25:11,399 Speaker 1: core numbers only zero point seven. So I think after 432 00:25:11,720 --> 00:25:14,320 Speaker 1: a focus early in the year, that maybe inflation is 433 00:25:14,359 --> 00:25:17,120 Speaker 1: picking up around the world, and and maybe yield levels 434 00:25:17,119 --> 00:25:19,840 Speaker 1: will be picking up. I think we are seeing this 435 00:25:20,040 --> 00:25:24,280 Speaker 1: turn globally UM that inflation pressures are cooling a little bit, 436 00:25:24,440 --> 00:25:27,639 Speaker 1: and with the market that was heavily short US treasuries, 437 00:25:28,040 --> 00:25:30,919 Speaker 1: there's been a pretty painful shortcovering rally. I think in 438 00:25:30,920 --> 00:25:34,840 Speaker 1: that market. You know, Bob just going back to the dollar, 439 00:25:34,880 --> 00:25:38,439 Speaker 1: because I really was struck by President Trump's comments, especially 440 00:25:38,480 --> 00:25:41,600 Speaker 1: ahead of a Treasury report that we're expecting that should 441 00:25:41,600 --> 00:25:45,040 Speaker 1: address UH some of the same issues. I mean, can 442 00:25:45,080 --> 00:25:47,359 Speaker 1: you just put in a perspective how unusual it is 443 00:25:47,400 --> 00:25:50,920 Speaker 1: for a standing president to comment about the strength of 444 00:25:51,320 --> 00:25:55,320 Speaker 1: the dollar, especially in a year where it has declined. UH, 445 00:25:55,359 --> 00:25:58,679 Speaker 1: And at a time when in recent, very recent history, 446 00:25:58,920 --> 00:26:01,359 Speaker 1: a strong dollar was you as a positive and a 447 00:26:01,440 --> 00:26:04,680 Speaker 1: sign of strength of the economy, or so at least 448 00:26:04,720 --> 00:26:09,120 Speaker 1: an official said, yeah, you got me. Um, Like, I'm 449 00:26:09,119 --> 00:26:13,080 Speaker 1: just I'm just I'm struggling to understand the strategy here. Yeah, well, 450 00:26:13,119 --> 00:26:15,000 Speaker 1: I think that's the problem as if you're referring to 451 00:26:15,040 --> 00:26:18,119 Speaker 1: it as a strategy. Look, I think the president is 452 00:26:18,440 --> 00:26:22,840 Speaker 1: um uh you know, speaks his mind. Um, you know, 453 00:26:23,040 --> 00:26:25,439 Speaker 1: is not afraid to make off the cuff comments. I 454 00:26:25,440 --> 00:26:29,359 Speaker 1: think this was in the same category as um. You know, 455 00:26:29,440 --> 00:26:31,720 Speaker 1: I'd like the dollar to be a little weaker. I'd 456 00:26:31,720 --> 00:26:34,520 Speaker 1: like I like low interest rates, I like meat loaf. 457 00:26:34,640 --> 00:26:38,439 Speaker 1: I mean, I just think this was a dialogue and 458 00:26:38,440 --> 00:26:40,880 Speaker 1: and these things were on his mind. Obviously the whole 459 00:26:40,880 --> 00:26:45,280 Speaker 1: issue of of China. You know, China does not qualify 460 00:26:45,480 --> 00:26:49,000 Speaker 1: UM as a currency manipulator under the Treasury's guideline, so 461 00:26:49,040 --> 00:26:52,160 Speaker 1: it's gonna be extremely difficult to name them a currency manipulator. 462 00:26:52,560 --> 00:26:55,160 Speaker 1: So now I think, you know, the tradeoff is, well, 463 00:26:55,160 --> 00:26:57,200 Speaker 1: we weren't going to name them a manipulator. In this way, 464 00:26:57,200 --> 00:26:59,520 Speaker 1: maybe they'll help us with North Korea. It's a it's 465 00:26:59,520 --> 00:27:03,280 Speaker 1: a good versl it sells reasonably well. But I think 466 00:27:03,320 --> 00:27:06,040 Speaker 1: these topics, you know, talking to the to the Wall 467 00:27:06,040 --> 00:27:08,639 Speaker 1: Street Journal, these topics were front and the center, and 468 00:27:08,680 --> 00:27:11,080 Speaker 1: I think he made some comments that you know, he 469 00:27:11,160 --> 00:27:13,720 Speaker 1: likes a weaker dollar, you know, But I don't. I 470 00:27:13,720 --> 00:27:15,760 Speaker 1: don't think there's a strategy here. I think it was 471 00:27:15,840 --> 00:27:18,600 Speaker 1: just a dialogue, a conversation, and one of those things 472 00:27:18,640 --> 00:27:23,399 Speaker 1: that happened to come up, well, is there anything tangible 473 00:27:23,440 --> 00:27:27,440 Speaker 1: that President Trump or his administration would do or could 474 00:27:27,480 --> 00:27:31,359 Speaker 1: do to lower the value of the dollar that seems 475 00:27:31,400 --> 00:27:36,040 Speaker 1: feasible in the near term. Well, you know, I think 476 00:27:36,119 --> 00:27:39,439 Speaker 1: that one of the factors that's been driving the dollar 477 00:27:39,640 --> 00:27:43,240 Speaker 1: has been an expectation of a change in the policy mix. 478 00:27:43,960 --> 00:27:46,280 Speaker 1: And what I mean by that is less reliance on 479 00:27:46,359 --> 00:27:50,760 Speaker 1: monetary policy, more reliance on fiscal policy in terms of 480 00:27:50,800 --> 00:27:56,199 Speaker 1: stimulus for the economy. And certainly history and and and 481 00:27:56,359 --> 00:28:00,359 Speaker 1: theory would suggest that the combination of a stimulative fiscal 482 00:28:00,400 --> 00:28:03,720 Speaker 1: policy and a tighter monetary policy UH is one that's 483 00:28:03,800 --> 00:28:06,679 Speaker 1: very supportive of a currency. So I think to the 484 00:28:06,720 --> 00:28:10,080 Speaker 1: extent that we don't see the follow through on tax 485 00:28:10,119 --> 00:28:13,680 Speaker 1: reform and things like that, a result of that could 486 00:28:13,760 --> 00:28:16,919 Speaker 1: be a weaker dollar, but I don't think there's a 487 00:28:16,960 --> 00:28:20,520 Speaker 1: real objective in terms of occurrency. You know, you know, 488 00:28:20,920 --> 00:28:25,320 Speaker 1: administrations policymakers talk a lot about currencies, but you don't 489 00:28:25,320 --> 00:28:29,080 Speaker 1: really see a lot of action on a consistent basis 490 00:28:29,320 --> 00:28:33,159 Speaker 1: where the currency is really the objective of policy. I 491 00:28:33,200 --> 00:28:35,520 Speaker 1: mean you you you may see that in in Hong 492 00:28:35,640 --> 00:28:38,360 Speaker 1: Kong and Saudi Arabia where they're linked to the dollar, 493 00:28:39,040 --> 00:28:42,200 Speaker 1: but most most countries are trying to generate domestic growth, 494 00:28:42,240 --> 00:28:46,240 Speaker 1: domestic jobs, tame inflation, keep inflation from being too low. 495 00:28:46,920 --> 00:28:51,280 Speaker 1: The dollar or or their currency is a way of 496 00:28:51,320 --> 00:28:55,640 Speaker 1: getting to those objectives, but not the objectives themselves. Thanks 497 00:28:55,760 --> 00:29:00,600 Speaker 1: very much, Bob stinch is global strategist Amherst Pure Punt Curities. 498 00:29:06,320 --> 00:29:09,240 Speaker 1: Thanks for listening to the Bloomberg pien L podcast. You 499 00:29:09,280 --> 00:29:13,200 Speaker 1: can subscribe and listen to interviews at iTunes, SoundCloud, or 500 00:29:13,440 --> 00:29:17,479 Speaker 1: whatever podcast platform you prefer. I'm pim Fox. I'm out 501 00:29:17,520 --> 00:29:20,400 Speaker 1: there on Twitter at pim Fox. I'm out there on 502 00:29:20,440 --> 00:29:23,680 Speaker 1: Twitter at Lisa Abramo. It's one before the podcast. You 503 00:29:23,680 --> 00:29:26,360 Speaker 1: can always catch us worldwide on Bloomberg Radio.