1 00:00:00,120 --> 00:00:04,360 Speaker 1: Bloomberg is now on your dashboard with Apple CarPlay and 2 00:00:04,360 --> 00:00:08,160 Speaker 1: Android Auto. It gives you access to every Bloomberg podcast, 3 00:00:08,280 --> 00:00:11,560 Speaker 1: live audio feeds from Bloomberg Radio, print stories from Bloomberg 4 00:00:11,640 --> 00:00:14,920 Speaker 1: News in audio form, and the latest headlines of the 5 00:00:14,920 --> 00:00:18,600 Speaker 1: click of a button with Bloomberg News. Now it's free 6 00:00:18,680 --> 00:00:21,439 Speaker 1: with the latest version of the Bloomberg Business App. That's 7 00:00:21,680 --> 00:00:24,400 Speaker 1: the Bloomberg Business App. Get it on your phone in 8 00:00:24,440 --> 00:00:27,760 Speaker 1: the Apple App Store or on Google Play. Just download 9 00:00:27,800 --> 00:00:30,560 Speaker 1: the app, connect your phone to your car and get started. 10 00:00:30,960 --> 00:00:34,400 Speaker 1: And it's all presented by our sponsor, Interactive Brokers. 11 00:00:35,400 --> 00:00:38,600 Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 12 00:00:38,640 --> 00:00:39,800 Speaker 2: my co host Matt Miller. 13 00:00:40,200 --> 00:00:44,159 Speaker 1: Every business day we bring you interviews from CEOs, market pros, 14 00:00:44,320 --> 00:00:48,160 Speaker 1: and Bloomberg experts, along with essential market moven News. 15 00:00:48,720 --> 00:00:51,839 Speaker 2: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 16 00:00:51,960 --> 00:00:55,080 Speaker 2: you listen to podcasts, and at Bloomberg dot com slash podcast. 17 00:00:55,600 --> 00:01:00,320 Speaker 2: We can break down this story here on Nike with 18 00:01:00,400 --> 00:01:03,959 Speaker 2: Putum Goil. She is the retail analyst for Bloomberg Intelligence. 19 00:01:04,040 --> 00:01:06,600 Speaker 2: She follows this stuff. She's done it for decades. She 20 00:01:06,640 --> 00:01:09,840 Speaker 2: knows what's happening, so put them. Thanks so much for 21 00:01:09,920 --> 00:01:14,040 Speaker 2: joining us here. Is this a Nike issue? Is just 22 00:01:14,040 --> 00:01:16,840 Speaker 2: this reflection of the consumer. What's going on? 23 00:01:17,959 --> 00:01:20,640 Speaker 3: It's definitely not a Nike issue. It's more a reflection 24 00:01:20,720 --> 00:01:23,479 Speaker 3: of the consumer and just the macro environment that we operated. 25 00:01:23,880 --> 00:01:25,559 Speaker 3: You know, when you look at the results that Nike 26 00:01:25,720 --> 00:01:28,520 Speaker 3: post did and you just look at the different geographies 27 00:01:28,520 --> 00:01:31,960 Speaker 3: that they operated, the myss was really in two geographies. 28 00:01:32,160 --> 00:01:35,160 Speaker 3: One was China and two Baza Mia. Now the China 29 00:01:35,240 --> 00:01:38,040 Speaker 3: miss consensus is looking for a twelve point five percent 30 00:01:38,120 --> 00:01:41,520 Speaker 3: increase on sales in constant currency. They posted an eight 31 00:01:41,520 --> 00:01:44,720 Speaker 3: percent increase. That's not so bad. I mean, it's definitely, 32 00:01:44,840 --> 00:01:47,680 Speaker 3: you know, behind consensus, but eight percent growth is still 33 00:01:47,720 --> 00:01:50,880 Speaker 3: pretty respectable. Now when you look at Emia the negative 34 00:01:50,920 --> 00:01:53,240 Speaker 3: three percent that we saw there versus an Estama for 35 00:01:53,280 --> 00:01:55,800 Speaker 3: a little single digit gain there, I think, you know, 36 00:01:56,040 --> 00:01:59,280 Speaker 3: whether it was really the culprit not apparel sales which 37 00:01:59,360 --> 00:02:01,960 Speaker 3: hurt them. And that's something that we wouldn't be too 38 00:02:02,000 --> 00:02:04,240 Speaker 3: concerned with when we think about Nike for the longer 39 00:02:04,320 --> 00:02:06,880 Speaker 3: term because those kind of situations have been slow. 40 00:02:07,840 --> 00:02:09,960 Speaker 2: All right, So here we go, hold on, let's go 41 00:02:09,960 --> 00:02:11,959 Speaker 2: to the I'm gonna go back to an earlier We 42 00:02:12,040 --> 00:02:16,080 Speaker 2: were discussing simone tennis shoes versus sneakers, and Eric Mala, 43 00:02:16,160 --> 00:02:20,120 Speaker 2: our producer, popped something in the chat. Here a map 44 00:02:20,840 --> 00:02:24,079 Speaker 2: showing the United States and where people call it tennis 45 00:02:24,080 --> 00:02:27,160 Speaker 2: shoes and where they call it sneakers. So like the northeast, 46 00:02:27,320 --> 00:02:30,640 Speaker 2: kind of like from Pennsylvania up to the northeast sneakers, 47 00:02:31,040 --> 00:02:37,240 Speaker 2: Southern Florida sneakers, the rest of the country, including Alaska 48 00:02:37,560 --> 00:02:38,120 Speaker 2: tennis shoes. 49 00:02:38,200 --> 00:02:38,920 Speaker 4: I don't buy it. 50 00:02:39,000 --> 00:02:41,120 Speaker 2: You don't buy that, But pun what do. 51 00:02:41,080 --> 00:02:42,200 Speaker 4: You call them? 52 00:02:42,560 --> 00:02:45,640 Speaker 2: I call them sneakers, see expert. 53 00:02:46,919 --> 00:02:47,440 Speaker 5: Experts. 54 00:02:48,760 --> 00:02:51,640 Speaker 4: That must be an interesting conversation to have at industry of. 55 00:02:52,360 --> 00:02:55,919 Speaker 2: Well, in Chicago and Cincinnati. You might lace up your quote. 56 00:02:55,639 --> 00:02:57,799 Speaker 4: Gym shoes that I've heard. 57 00:02:57,840 --> 00:03:01,640 Speaker 2: Actually, I'm sneaks, you know, sneakers. Sneaks, that's the. 58 00:03:01,639 --> 00:03:02,000 Speaker 6: Way you go. 59 00:03:03,760 --> 00:03:05,840 Speaker 4: I want to get your sense. How much is this 60 00:03:06,080 --> 00:03:10,240 Speaker 4: a story of sneakers. How much is this a story 61 00:03:10,320 --> 00:03:14,000 Speaker 4: of apparel? And how much is this, you know, athletic war, 62 00:03:14,240 --> 00:03:17,440 Speaker 4: and how much is this a story of overall apparel? 63 00:03:18,440 --> 00:03:20,679 Speaker 3: Sure? So, I think the bigger story here, which has 64 00:03:20,720 --> 00:03:24,079 Speaker 3: been in the story for some time, is broader apparel weakness. 65 00:03:24,400 --> 00:03:27,240 Speaker 3: Now we have seen this across the board because inventories 66 00:03:27,280 --> 00:03:30,040 Speaker 3: were too high and that's what caused apparel to be 67 00:03:30,120 --> 00:03:33,359 Speaker 3: marked down. Now, the other thing was apparel is versus footwear. 68 00:03:33,360 --> 00:03:36,800 Speaker 3: It's for Nike. Nike is dominant in footwear, but when 69 00:03:36,840 --> 00:03:39,600 Speaker 3: it comes to apparel, they don't have that lead that 70 00:03:39,640 --> 00:03:42,680 Speaker 3: they have in footwear with rivals. So it's anyone's game 71 00:03:42,720 --> 00:03:45,520 Speaker 3: when it comes to apparel, and Nike has to fight 72 00:03:45,680 --> 00:03:49,720 Speaker 3: for its share. So it's definitely a tougher marketplace. Though 73 00:03:49,720 --> 00:03:51,560 Speaker 3: when it comes to the footwear, I think they do 74 00:03:51,640 --> 00:03:54,200 Speaker 3: have a lead. I think it comes back to innovation, 75 00:03:54,280 --> 00:03:57,240 Speaker 3: which they're pressing the pedal harder on and that will 76 00:03:57,240 --> 00:04:00,640 Speaker 3: continue to really help them maintain that lead. So footwear, 77 00:04:00,680 --> 00:04:03,680 Speaker 3: I do think they're very strong in and you could 78 00:04:03,800 --> 00:04:07,280 Speaker 3: argue that, you know, there's been competition from companies like 79 00:04:07,400 --> 00:04:11,080 Speaker 3: Foca and on, especially on the running side, but those 80 00:04:11,120 --> 00:04:14,200 Speaker 3: brands are very small. When you look at Nike's footwear 81 00:04:14,280 --> 00:04:18,320 Speaker 3: market and its size there, it's multiple fold of those 82 00:04:18,400 --> 00:04:21,839 Speaker 3: smaller brands and we don't see them losing that lead, 83 00:04:22,320 --> 00:04:25,640 Speaker 3: especially with Jordan. Right Jordan's position to be the second 84 00:04:25,839 --> 00:04:29,799 Speaker 3: largest global footwear brand or at leisure brand in the world, 85 00:04:29,880 --> 00:04:32,599 Speaker 3: and that says something for the Nike flagship. 86 00:04:33,120 --> 00:04:36,480 Speaker 4: But we also heard Nike introducing about two billion dollars 87 00:04:36,480 --> 00:04:40,440 Speaker 4: worth of cost cuts over the next three years. Will 88 00:04:40,480 --> 00:04:41,840 Speaker 4: that impact innovation? 89 00:04:43,120 --> 00:04:45,440 Speaker 3: I don't think so, because the cost cuts are now 90 00:04:45,480 --> 00:04:49,240 Speaker 3: going to be to limit innovation or to really reduce 91 00:04:49,320 --> 00:04:52,920 Speaker 3: spending on innovation. They're really happening on the operation side 92 00:04:53,040 --> 00:04:55,480 Speaker 3: where they may have had redundancy and they're kind of 93 00:04:55,520 --> 00:04:59,600 Speaker 3: backstaff where they're just reorganizing to make matters more efficient, 94 00:05:00,120 --> 00:05:03,960 Speaker 3: more about driving efficiencies. So you could argue that, you know, 95 00:05:04,000 --> 00:05:06,920 Speaker 3: maybe they were two layered to start with and now 96 00:05:06,920 --> 00:05:10,080 Speaker 3: they're just peeling off those layers. I don't think this 97 00:05:10,160 --> 00:05:13,680 Speaker 3: will impact their roadmap for innovation to drive newness into 98 00:05:13,680 --> 00:05:15,320 Speaker 3: the business, especially in footware. 99 00:05:16,440 --> 00:05:19,200 Speaker 2: So simone, you know, Punham's one of the top retail 100 00:05:19,240 --> 00:05:22,159 Speaker 2: anamalsts on Wall Street. Her job, a big part of 101 00:05:22,160 --> 00:05:25,839 Speaker 2: her job is literally going to shopping malls and just 102 00:05:25,920 --> 00:05:29,839 Speaker 2: watching people. What are they buying, what's hot, where's the 103 00:05:29,880 --> 00:05:33,560 Speaker 2: traffic going, how are the promotions out there? And we 104 00:05:33,600 --> 00:05:37,840 Speaker 2: actually pay her to do this stuff. Punum, what are 105 00:05:37,880 --> 00:05:40,800 Speaker 2: you seeing here on this holiday? Shopping. What's your outlook 106 00:05:40,839 --> 00:05:43,600 Speaker 2: here for holiday shopping overall? 107 00:05:44,640 --> 00:05:46,880 Speaker 3: I think we're gonna have a really good homebase even fall, 108 00:05:47,560 --> 00:05:50,400 Speaker 3: irrespective of what we have heard about the US consumer 109 00:05:50,520 --> 00:05:53,440 Speaker 3: and how they're shopping, where they're shopping. The stores are crowded, 110 00:05:53,480 --> 00:05:57,839 Speaker 3: people are buying stuff online. Trucks are being seen all 111 00:05:57,839 --> 00:06:01,080 Speaker 3: over the US delivering multiple blocks, so the lobbies are full, 112 00:06:01,920 --> 00:06:04,640 Speaker 3: so it will be a good holiday. The question is 113 00:06:04,720 --> 00:06:07,719 Speaker 3: what happens after holiday? Do we go into a lull? 114 00:06:08,160 --> 00:06:10,400 Speaker 3: Do you have you bought everything that you wanted and 115 00:06:10,440 --> 00:06:13,159 Speaker 3: now you're just going to take a break. And that's 116 00:06:13,160 --> 00:06:15,720 Speaker 3: really what we'll see into twenty twenty four. But for now, 117 00:06:15,800 --> 00:06:19,440 Speaker 3: people are spending. They're using more buy now, pay later mediums, 118 00:06:19,480 --> 00:06:23,039 Speaker 3: alternative stayment mediums to facilitate the spend, which is also 119 00:06:23,080 --> 00:06:26,640 Speaker 3: something we'll be watching for. But holiday spend online in 120 00:06:26,760 --> 00:06:31,560 Speaker 3: stores looks robust, especially at the key that have done 121 00:06:31,560 --> 00:06:34,360 Speaker 3: a good job in just you know, harping their value 122 00:06:34,400 --> 00:06:37,040 Speaker 3: message and also driving the nique product into their stores. 123 00:06:37,040 --> 00:06:41,479 Speaker 4: Of online businesses, Are there any sectors of the broader 124 00:06:41,520 --> 00:06:45,000 Speaker 4: retail space that may benefit going into next year? What's 125 00:06:45,040 --> 00:06:45,640 Speaker 4: your take on that. 126 00:06:46,720 --> 00:06:49,440 Speaker 3: I think the online retailers are well positioned going into 127 00:06:49,440 --> 00:06:53,000 Speaker 3: twenty twenty four because now things have normalized where you know, 128 00:06:53,000 --> 00:06:55,839 Speaker 3: we've were passed the pandemic and people went to stores 129 00:06:55,880 --> 00:06:58,080 Speaker 3: that wanted to go to stores. They have that experience there. 130 00:06:58,480 --> 00:07:01,960 Speaker 3: But now convenience comes back into play. You want to 131 00:07:02,000 --> 00:07:04,000 Speaker 3: be able to shop from your home, shop from wherever 132 00:07:04,040 --> 00:07:07,040 Speaker 3: you want, and just have things delivered to you, especially 133 00:07:07,040 --> 00:07:10,120 Speaker 3: as things are coming faster now with two day shipping, 134 00:07:10,160 --> 00:07:12,800 Speaker 3: Monday shipping with bio Fine that's being rolled out to 135 00:07:14,040 --> 00:07:16,320 Speaker 3: companies that don't typically sell on Anthon but to be 136 00:07:16,320 --> 00:07:19,120 Speaker 3: able to use that service. So we do think that 137 00:07:19,280 --> 00:07:22,680 Speaker 3: consumers will lean back a little more on digital in 138 00:07:22,720 --> 00:07:24,800 Speaker 3: twenty twenty four than on stories. 139 00:07:25,280 --> 00:07:26,880 Speaker 2: All right, put them Goil, Thank you so much. We 140 00:07:26,960 --> 00:07:29,560 Speaker 2: appreciate that. Put them Goil. She's a senior retail analyst 141 00:07:29,600 --> 00:07:32,760 Speaker 2: for Bloomberg Intelligence, one of the best on Wall Street, 142 00:07:33,160 --> 00:07:35,679 Speaker 2: giving again extent so kind of where the trends are 143 00:07:35,720 --> 00:07:39,480 Speaker 2: for consumers and what retailers are best position to meet those. 144 00:07:39,520 --> 00:07:44,840 Speaker 2: So check out Bloomberg's put them's research on Bloomberg Intelligence. 145 00:07:44,880 --> 00:07:47,280 Speaker 2: You go to Big on the terminal and get all 146 00:07:47,320 --> 00:07:50,600 Speaker 2: of the research from Bloomberg Intelligence. Including put them stuff 147 00:07:50,600 --> 00:07:54,240 Speaker 2: here so it's good stuff, and calling for a decent holiday. 148 00:07:54,280 --> 00:07:54,640 Speaker 2: Are you doing you? 149 00:07:55,160 --> 00:07:58,680 Speaker 4: Which is interesting because you know traffic in store was 150 00:07:58,720 --> 00:08:03,760 Speaker 4: so lackluster it seemed like one Black Friday. No, I 151 00:08:03,800 --> 00:08:04,960 Speaker 4: have not done on my holiday. 152 00:08:04,960 --> 00:08:07,720 Speaker 2: Shn you need to get going there. I need to 153 00:08:07,720 --> 00:08:10,600 Speaker 2: click click a few buttons myself. I'm actually waiting for 154 00:08:10,640 --> 00:08:13,000 Speaker 2: a couple of things that have not been delivered, one 155 00:08:13,040 --> 00:08:16,120 Speaker 2: by Amazon and one by another retailler, So maybe supply 156 00:08:16,240 --> 00:08:17,240 Speaker 2: chain issues out there. 157 00:08:18,600 --> 00:08:22,440 Speaker 6: You're listening to the Team Can't Live program Bloomberg Markets 158 00:08:22,520 --> 00:08:25,600 Speaker 6: weekdays at ten am Eastern on Bloomberg dot Com, the 159 00:08:25,680 --> 00:08:28,800 Speaker 6: iHeartRadio app, and the Bloomberg Business App, or listen on 160 00:08:28,880 --> 00:08:30,840 Speaker 6: demand wherever you get your podcasts. 161 00:08:33,120 --> 00:08:36,599 Speaker 7: We welcome now our Bloomberg television and radio audience. Is 162 00:08:36,640 --> 00:08:39,360 Speaker 7: the top story of course today. Cooling inflation in the 163 00:08:39,480 --> 00:08:43,520 Speaker 7: United States call PCEE barely rising in November. You want 164 00:08:43,520 --> 00:08:45,480 Speaker 7: a cool figure, take a look at the six month 165 00:08:45,520 --> 00:08:48,920 Speaker 7: annualized number, the core metric. They're up one point nine percent, 166 00:08:49,160 --> 00:08:53,320 Speaker 7: ie below two percent. Let's get some reaction from Washington. 167 00:08:53,440 --> 00:08:55,920 Speaker 7: Leil Break, our director of the National Economic Council at 168 00:08:55,920 --> 00:08:58,000 Speaker 7: the White House, and of course, former Vice Chair of 169 00:08:58,080 --> 00:09:00,920 Speaker 7: the Federal Reserve joins us now along with our own 170 00:09:01,400 --> 00:09:04,640 Speaker 7: Kaylee Lines low Brain. Not great to see you. We've 171 00:09:04,679 --> 00:09:07,400 Speaker 7: all been anticipating this number and looking forward to seeing 172 00:09:07,400 --> 00:09:09,199 Speaker 7: exactly what it was going to deliver and what the 173 00:09:09,280 --> 00:09:12,520 Speaker 7: data are going to deliver. It's a really solid number. 174 00:09:12,600 --> 00:09:14,560 Speaker 7: I'm wondering whether we are now at the points where 175 00:09:14,559 --> 00:09:16,920 Speaker 7: we can declare victory, whether it is time for a 176 00:09:17,040 --> 00:09:20,920 Speaker 7: victory lap, whether the inflation dragon has now been slain. 177 00:09:22,880 --> 00:09:26,640 Speaker 8: Well, look, it is really good to see that we're 178 00:09:26,640 --> 00:09:29,440 Speaker 8: closing out the year with inflation on a six month 179 00:09:29,520 --> 00:09:33,600 Speaker 8: basis at two percent. That's the pre pandemic benchmark, and 180 00:09:33,640 --> 00:09:37,240 Speaker 8: it's a very significant milestone. And if you look back 181 00:09:37,280 --> 00:09:40,320 Speaker 8: over the course of the year, it is really stunning 182 00:09:40,400 --> 00:09:45,160 Speaker 8: how much progress the economy has made. Inflations come down 183 00:09:45,240 --> 00:09:49,360 Speaker 8: faster than even the more optimistic forecasts, and growth has 184 00:09:49,400 --> 00:09:53,480 Speaker 8: remained very resilient, along with a strong employment. If you 185 00:09:53,559 --> 00:09:56,600 Speaker 8: recall a year ago, the consensus projection was that getting 186 00:09:56,600 --> 00:10:01,520 Speaker 8: inflation down will require a spike in unemployment recession, but 187 00:10:01,600 --> 00:10:04,480 Speaker 8: in fact, the unemployment rate has remained below four percent 188 00:10:04,559 --> 00:10:06,920 Speaker 8: for twenty two months in a row, and of course, 189 00:10:06,960 --> 00:10:11,200 Speaker 8: we're still seeing more data suggesting growth is resilient. But no, 190 00:10:12,320 --> 00:10:15,600 Speaker 8: it is not time to rest. It is time to 191 00:10:15,640 --> 00:10:19,120 Speaker 8: continue working. And that's what the President is determined to do, 192 00:10:20,040 --> 00:10:26,400 Speaker 8: keep working to keep bringing down prices and improving the 193 00:10:26,440 --> 00:10:29,000 Speaker 8: economy from the middle out and the bottom up. 194 00:10:30,360 --> 00:10:33,520 Speaker 9: Well, and Director brainerd it's Kaylee in Washington. Obviously, he 195 00:10:33,559 --> 00:10:36,360 Speaker 9: has tried to do that domestically, but geopolitics are a 196 00:10:36,400 --> 00:10:38,840 Speaker 9: factor here as well. If it's not time yet to 197 00:10:38,920 --> 00:10:42,800 Speaker 9: declare victory on inflation, if there may still be upside 198 00:10:42,880 --> 00:10:45,760 Speaker 9: risks to inflation out there, How worried are you about 199 00:10:45,800 --> 00:10:47,560 Speaker 9: what's happening in the Red Sea and what it could 200 00:10:47,600 --> 00:10:49,920 Speaker 9: mean for energy prices and supply chains. 201 00:10:51,400 --> 00:10:55,280 Speaker 8: Well, the Red Sea situation is one that we are 202 00:10:55,320 --> 00:11:00,840 Speaker 8: monitoring very closely. Our National security team is in constant 203 00:11:00,880 --> 00:11:06,000 Speaker 8: contact with partners in the region, with shippers, and we 204 00:11:06,160 --> 00:11:10,000 Speaker 8: are doing everything we can to make sure that those 205 00:11:10,600 --> 00:11:15,400 Speaker 8: shipping routes disruptions do not lead to broader disruption supply 206 00:11:15,480 --> 00:11:18,199 Speaker 8: chain disruptions in the US economy. And of course we're 207 00:11:18,280 --> 00:11:22,160 Speaker 8: much better equipped today than we were just two or 208 00:11:22,160 --> 00:11:26,040 Speaker 8: three years ago, because we have under the presence leadership, 209 00:11:26,040 --> 00:11:28,880 Speaker 8: done so much to work in partnership with the private 210 00:11:28,920 --> 00:11:32,000 Speaker 8: sector on supply chain resilience. 211 00:11:33,679 --> 00:11:37,080 Speaker 7: Doctor Brenand, are you confident that the current outlook when 212 00:11:37,080 --> 00:11:40,480 Speaker 7: it comes to wages, it's consistent with let's call it 213 00:11:40,520 --> 00:11:43,120 Speaker 7: two percent, so the target that we're all shooting for here. 214 00:11:43,760 --> 00:11:45,679 Speaker 7: Are you confident that some of the deals that have 215 00:11:45,720 --> 00:11:47,360 Speaker 7: be done this year that are going to take effect 216 00:11:47,400 --> 00:11:50,600 Speaker 7: next year are going to really take us in that direction. 217 00:11:52,280 --> 00:11:56,400 Speaker 8: Well, as you said yourself, that core number, which is 218 00:11:56,440 --> 00:12:02,760 Speaker 8: the really important number on inflation, is actually slightly below 219 00:12:02,960 --> 00:12:06,439 Speaker 8: two percent on a six month basis, and that should 220 00:12:06,480 --> 00:12:11,559 Speaker 8: give everyone a lot of confidence that inflation is sustainably 221 00:12:12,559 --> 00:12:17,520 Speaker 8: down and we can continue to see good growth in 222 00:12:18,320 --> 00:12:24,400 Speaker 8: real disposable incomes, in real wages, and in fact, if 223 00:12:24,440 --> 00:12:29,080 Speaker 8: you look at the real disposable income growth over the 224 00:12:29,120 --> 00:12:32,559 Speaker 8: past year that we saw today three point seven percent, 225 00:12:32,800 --> 00:12:36,920 Speaker 8: very strong, and it is coming in the context of 226 00:12:37,120 --> 00:12:41,320 Speaker 8: rising productivity. You can see that in the last year, 227 00:12:41,679 --> 00:12:44,720 Speaker 8: productivity has been nearly two and a half percent. So 228 00:12:44,800 --> 00:12:49,280 Speaker 8: that gives room for American workers to continue to enjoy 229 00:12:49,880 --> 00:12:53,640 Speaker 8: that take home pay that allows them to purchase thirty 230 00:12:53,679 --> 00:12:57,360 Speaker 8: five hundred dollars more today than they could pre pandemic. 231 00:12:59,200 --> 00:13:02,640 Speaker 9: Okay, so let's talk about American workers, or perhaps more specifically, 232 00:13:02,720 --> 00:13:05,600 Speaker 9: Director Brainerd American voter. So you've mentioned a few times 233 00:13:05,600 --> 00:13:08,679 Speaker 9: here the work the president has done on addressing supply chains, 234 00:13:08,720 --> 00:13:12,040 Speaker 9: on trying to bring inflation down, and clearly the economic 235 00:13:12,120 --> 00:13:14,760 Speaker 9: data supports this idea that the economy is held in 236 00:13:14,800 --> 00:13:17,720 Speaker 9: there even as price pressures have eased. Whatever it is 237 00:13:17,760 --> 00:13:21,040 Speaker 9: not reflected, though, is in the President's approval in consistent 238 00:13:21,080 --> 00:13:23,079 Speaker 9: pulling we are seeing. It's not really a question of 239 00:13:23,120 --> 00:13:25,840 Speaker 9: whether there is a disconnect, because clearly there is one. 240 00:13:25,880 --> 00:13:28,920 Speaker 9: But how do you advise the president as an economic advisor, 241 00:13:29,240 --> 00:13:31,080 Speaker 9: how to address it? What does he need to do? 242 00:13:32,400 --> 00:13:35,160 Speaker 8: Yeah, so when I talked to the President, he has 243 00:13:35,280 --> 00:13:38,800 Speaker 8: focused on one thing. He always wants to know what 244 00:13:38,840 --> 00:13:43,000 Speaker 8: does the strong data, the strong economy mean for American workers, 245 00:13:43,360 --> 00:13:45,640 Speaker 8: What does it mean for their wages, their wallets. We've 246 00:13:45,720 --> 00:13:50,559 Speaker 8: already noted that American consumers are now seeing declines in 247 00:13:50,679 --> 00:13:53,960 Speaker 8: prices over the year on things that really matter to 248 00:13:54,000 --> 00:13:57,000 Speaker 8: them a gallon of gas, a gallon of milk, toys 249 00:13:57,000 --> 00:14:01,120 Speaker 8: for the holiday season, appliances and you know for the holidays, 250 00:14:01,160 --> 00:14:04,000 Speaker 8: car rentals and airfaress are all down over the year. 251 00:14:04,120 --> 00:14:08,400 Speaker 8: Wealth is up thirty seven percent since before the pandemic. 252 00:14:08,559 --> 00:14:13,080 Speaker 8: Home ownership is up, Housing wealth is up, retirement accounts, 253 00:14:13,080 --> 00:14:16,000 Speaker 8: as you know, is up. And today we saw a 254 00:14:16,080 --> 00:14:22,000 Speaker 8: consumer sentiment jumping and that's the biggest jump we have 255 00:14:22,080 --> 00:14:27,360 Speaker 8: seen in years, which suggests that Americans may finally beginning 256 00:14:27,440 --> 00:14:29,880 Speaker 8: to feel a little bit more confident, a little bit 257 00:14:29,920 --> 00:14:33,440 Speaker 8: more secure. But the President is going to continue to 258 00:14:33,480 --> 00:14:38,040 Speaker 8: push us to work to lower costs for American families 259 00:14:38,040 --> 00:14:42,560 Speaker 8: and to keep these gains over the course of the 260 00:14:42,640 --> 00:14:44,480 Speaker 8: next year and years. 261 00:14:46,120 --> 00:14:48,400 Speaker 7: Do you think these gains and inflation should be taken 262 00:14:48,440 --> 00:14:51,640 Speaker 7: for granted? Dr Brain not. The financial markets are pricing 263 00:14:51,680 --> 00:14:55,400 Speaker 7: in six rate cuts for next year. Do you think 264 00:14:55,400 --> 00:14:57,880 Speaker 7: this is an economy that needs that level of easing. 265 00:15:00,160 --> 00:15:02,800 Speaker 8: Look, this is a president who respects the independence of 266 00:15:02,880 --> 00:15:06,240 Speaker 8: the Federal Reserve, so I won't comment on Federal reserve 267 00:15:06,680 --> 00:15:11,360 Speaker 8: policy making. What I can say is that the conditions 268 00:15:11,920 --> 00:15:15,880 Speaker 8: are very favorable in the sense that inflation has come 269 00:15:15,920 --> 00:15:19,120 Speaker 8: down to two percent on a six month basis, much 270 00:15:19,200 --> 00:15:23,120 Speaker 8: earlier than people predicted at a time where the labor 271 00:15:23,200 --> 00:15:27,080 Speaker 8: market is in much better balance. And why it's because 272 00:15:27,120 --> 00:15:31,520 Speaker 8: supply chains have healed, and workers are coming back into 273 00:15:31,560 --> 00:15:35,040 Speaker 8: the labor force at much larger numbers three point three 274 00:15:35,080 --> 00:15:38,920 Speaker 8: million over the last year alone. So that work on 275 00:15:39,000 --> 00:15:42,160 Speaker 8: supply chains that the President has really pushed forward since 276 00:15:42,200 --> 00:15:44,840 Speaker 8: the first month of his presidency is showing up in 277 00:15:44,920 --> 00:15:49,040 Speaker 8: those lower inflation prints, and the market does seem to 278 00:15:49,080 --> 00:15:55,360 Speaker 8: be taking that to a more benign set of interest rates. 279 00:15:55,400 --> 00:15:58,360 Speaker 8: I mean, you look at mortgage rates one and a 280 00:15:58,400 --> 00:16:01,440 Speaker 8: half percentage point DCRE and mortgage rates just over the 281 00:16:01,520 --> 00:16:02,280 Speaker 8: last few months. 282 00:16:02,360 --> 00:16:03,200 Speaker 3: It's very welcome. 283 00:16:04,840 --> 00:16:07,760 Speaker 9: So I understand the restraint around what you can say 284 00:16:07,800 --> 00:16:10,080 Speaker 9: on the monetary policy side, but I wonder what all 285 00:16:10,080 --> 00:16:12,080 Speaker 9: of this means on the fiscal policy side of the 286 00:16:12,120 --> 00:16:15,720 Speaker 9: equation as well, Knowing when Congress returns in January, there 287 00:16:15,760 --> 00:16:17,920 Speaker 9: is going to be a massive spending fight that has 288 00:16:18,000 --> 00:16:19,960 Speaker 9: to take place in terms of the budget. Are we 289 00:16:20,080 --> 00:16:22,560 Speaker 9: looking at a US economy right now that is able 290 00:16:22,600 --> 00:16:25,160 Speaker 9: to withstand greater fiscal restraint. 291 00:16:26,880 --> 00:16:31,840 Speaker 8: Well, this economy has proven to be remarkably resilient, defying 292 00:16:32,040 --> 00:16:35,840 Speaker 8: all the predictions, and looks to close out this year 293 00:16:35,880 --> 00:16:39,760 Speaker 8: certainly on a much stronger level of growth than had 294 00:16:39,760 --> 00:16:45,720 Speaker 8: been anticipated in terms of the fiscal trajectory. President Biden 295 00:16:45,880 --> 00:16:50,040 Speaker 8: really wants to see the agreement that he put in 296 00:16:50,120 --> 00:16:55,160 Speaker 8: place that would cut an additional one trillion in spending, 297 00:16:55,360 --> 00:17:00,400 Speaker 8: a bipartisan budget deal the Fiscal Responsibility Act to and 298 00:17:00,720 --> 00:17:04,919 Speaker 8: put into place. Congress needs to move forward and do 299 00:17:05,080 --> 00:17:08,040 Speaker 8: its job, And of course he's already seen a one 300 00:17:08,080 --> 00:17:11,800 Speaker 8: trillion reduction in depths, it's just in the time since 301 00:17:11,840 --> 00:17:14,520 Speaker 8: he's been in office. So we'll continue to work with 302 00:17:14,600 --> 00:17:17,640 Speaker 8: Congress on a bipartisan basis. The President is really very 303 00:17:17,680 --> 00:17:21,439 Speaker 8: focused on being fiscally sustainable. 304 00:17:23,840 --> 00:17:27,520 Speaker 7: Does big physically sustainable mean as well that we need 305 00:17:27,600 --> 00:17:31,960 Speaker 7: lower interest rates. There's a growing discussion about the interest 306 00:17:31,960 --> 00:17:35,040 Speaker 7: bill that the American economy now carries. That the federal 307 00:17:35,119 --> 00:17:39,120 Speaker 7: government now carries. Significantly lower interest rates obviously would make 308 00:17:39,160 --> 00:17:43,120 Speaker 7: that challenge much much easier to handle. Do you think 309 00:17:43,119 --> 00:17:47,199 Speaker 7: there is a case of fiscal dominance beginning to emerge 310 00:17:47,240 --> 00:17:50,880 Speaker 7: in the United States that the economy is not capable 311 00:17:50,880 --> 00:17:54,440 Speaker 7: of sustaining itself unless it has lower interest rates given 312 00:17:54,440 --> 00:17:56,640 Speaker 7: the interest bill that has now been built up. 313 00:17:58,400 --> 00:18:01,000 Speaker 8: Well, I would come at it from the reverse direction 314 00:18:01,359 --> 00:18:05,000 Speaker 8: and simply say that the benign data that we are 315 00:18:05,040 --> 00:18:10,359 Speaker 8: seeing that suggests that inflation really is sustainably coming down 316 00:18:10,960 --> 00:18:14,720 Speaker 8: on the back of these great improvements and supply chains. 317 00:18:15,200 --> 00:18:19,600 Speaker 8: With the inflation on a six month basis now at 318 00:18:19,600 --> 00:18:24,080 Speaker 8: the two percent pre pandemic benchmark, that's a benign outlook 319 00:18:24,400 --> 00:18:30,400 Speaker 8: that will be much better for our fiscal outlook all 320 00:18:30,440 --> 00:18:36,760 Speaker 8: around in terms of growth, revenues and the longer run 321 00:18:36,920 --> 00:18:41,400 Speaker 8: physcal sustainability. So this is a benign outlook, and yes, 322 00:18:41,440 --> 00:18:44,960 Speaker 8: it's very positive I think for the fiscal trajectory, but 323 00:18:45,040 --> 00:18:46,240 Speaker 8: there's more work to do there. 324 00:18:48,680 --> 00:18:52,240 Speaker 9: I'd like to switch topics if we can, to something 325 00:18:52,240 --> 00:18:54,320 Speaker 9: else that you've addressed this week, which is the proposed 326 00:18:54,320 --> 00:18:58,240 Speaker 9: takeover of a Japanese steel company, Nipon Steel and US Steel. 327 00:18:58,400 --> 00:19:01,040 Speaker 9: You have written in response to this at the purchase 328 00:19:01,080 --> 00:19:03,760 Speaker 9: of an iconic American owned company by a foreign entity, 329 00:19:03,800 --> 00:19:08,359 Speaker 9: even one from a closed ally, deserves serious scrutiny. Why 330 00:19:08,400 --> 00:19:13,240 Speaker 9: does a US ally as close as Japan deserve the scrutiny. 331 00:19:14,280 --> 00:19:19,760 Speaker 8: Well, I think it is longstanding position of the US 332 00:19:19,840 --> 00:19:24,879 Speaker 8: government and longley held, long held view of President Biden 333 00:19:25,800 --> 00:19:30,760 Speaker 8: that steel is a very vital sector for US national 334 00:19:30,840 --> 00:19:36,440 Speaker 8: security and for critical supply chain resilience. And we've seen 335 00:19:36,480 --> 00:19:40,600 Speaker 8: that in past policies that have been undertaken by this president. 336 00:19:41,359 --> 00:19:48,840 Speaker 8: So it is important to review or to make sure 337 00:19:48,840 --> 00:19:54,040 Speaker 8: that there is serious scrutiny of these kinds of transactions 338 00:19:54,480 --> 00:19:59,280 Speaker 8: from the perspective of national security and supply chain resilience. 339 00:19:59,720 --> 00:20:05,400 Speaker 8: While we continue, of course to welcome investment from abroad 340 00:20:05,680 --> 00:20:11,840 Speaker 8: and have seen record foreign direct investment in the US economy. 341 00:20:11,119 --> 00:20:13,960 Speaker 7: Doctor Brandon, have you spoken to has the administration spoken 342 00:20:14,000 --> 00:20:18,439 Speaker 7: to the United steel Workers on this issue? Have you 343 00:20:18,440 --> 00:20:21,080 Speaker 7: got any feedback from them? And is that feedback influencing 344 00:20:21,119 --> 00:20:22,440 Speaker 7: in any way you're thinking. 345 00:20:23,359 --> 00:20:27,880 Speaker 8: Well, I will say that the steel workers are a 346 00:20:28,000 --> 00:20:35,200 Speaker 8: vital part of our steel strength here in the US. 347 00:20:35,920 --> 00:20:41,080 Speaker 8: They are partners with industry, and they are at the 348 00:20:41,119 --> 00:20:45,920 Speaker 8: center of President Biden's vision for growing the economy from 349 00:20:46,480 --> 00:20:50,240 Speaker 8: the middle out and the bottom up. So it is 350 00:20:50,440 --> 00:20:57,000 Speaker 8: important to continue to see strong, good union jobs continuing 351 00:20:57,040 --> 00:21:02,240 Speaker 8: to sustain our steel industry, which is US manufacturing, vital 352 00:21:02,280 --> 00:21:05,040 Speaker 8: to our supply chains, vital to our national security. 353 00:21:06,920 --> 00:21:09,520 Speaker 7: We really appreciate your time today, have a very happy holiday. 354 00:21:10,119 --> 00:21:11,840 Speaker 7: We end on a good note with that data. 355 00:21:12,040 --> 00:21:12,280 Speaker 6: LEL. 356 00:21:12,320 --> 00:21:16,200 Speaker 7: Brighter, Director of the National Economic Council, and of course 357 00:21:16,240 --> 00:21:18,320 Speaker 7: I thanks to bloombergs Kdie Lines. 358 00:21:18,600 --> 00:21:21,680 Speaker 6: You're listening to the tape. Can's our live program Bloomberg 359 00:21:21,800 --> 00:21:25,399 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 360 00:21:25,440 --> 00:21:28,680 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 361 00:21:28,720 --> 00:21:31,520 Speaker 6: You can also listen live on Amazon Alexa from our 362 00:21:31,560 --> 00:21:35,960 Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 363 00:21:37,760 --> 00:21:41,720 Speaker 2: Lots of economic data today, personal income PC, deflator on 364 00:21:41,760 --> 00:21:47,119 Speaker 2: the inflation front, durable goods, you know you mish coming 365 00:21:47,119 --> 00:21:48,919 Speaker 2: in a little bit better than expected. They don't just 366 00:21:48,960 --> 00:21:50,800 Speaker 2: have a good football team, they have good economists over 367 00:21:50,840 --> 00:21:53,399 Speaker 2: there at the University of Michigan. So some pretty solid 368 00:21:53,520 --> 00:21:56,080 Speaker 2: data coming across. Let's check in with Stuart Paul, another 369 00:21:56,080 --> 00:21:59,439 Speaker 2: good economists, another good economist, Bloomberg Economics. Now he usually 370 00:21:59,520 --> 00:22:02,600 Speaker 2: joins us in studio, but he's joining us via zoom 371 00:22:02,640 --> 00:22:04,280 Speaker 2: here today. So I'm going to go out on a 372 00:22:04,320 --> 00:22:08,000 Speaker 2: limb and say he might be at Windham Mountain. Now, 373 00:22:08,000 --> 00:22:10,920 Speaker 2: he's got this kind of cheesy background on a zoom, 374 00:22:10,920 --> 00:22:13,160 Speaker 2: which I'm not buying whatsoever, because I think we really 375 00:22:13,200 --> 00:22:16,000 Speaker 2: had the real background. It would be like the slopes 376 00:22:16,000 --> 00:22:19,320 Speaker 2: of Windom Mountain, Stuart, I gotta ask you, where are you, dude. 377 00:22:20,560 --> 00:22:23,760 Speaker 10: I'm in Wyndom. Yeah, he got a light dusting of snow, 378 00:22:24,080 --> 00:22:25,840 Speaker 10: and as soon as I hang up with you guys, 379 00:22:25,840 --> 00:22:28,240 Speaker 10: I'm going out for a hike. All the data is out. 380 00:22:28,560 --> 00:22:30,400 Speaker 5: The data was a gift to Jay Powell. 381 00:22:30,680 --> 00:22:33,320 Speaker 10: I'm taking it personally as a gift for the holidays, 382 00:22:33,400 --> 00:22:35,080 Speaker 10: and after this I'm done. 383 00:22:34,880 --> 00:22:37,240 Speaker 2: And just full disclosure on behalf of Stuart. He is 384 00:22:37,280 --> 00:22:40,440 Speaker 2: an all mountain ski patroller at Windham Mountain Resort. He's 385 00:22:40,440 --> 00:22:43,040 Speaker 2: been doing that for many years. So that's good stuff there. 386 00:22:43,160 --> 00:22:45,280 Speaker 2: So Stuart, what did you take away from again, a 387 00:22:45,320 --> 00:22:48,959 Speaker 2: lot of this data this morning? It seems, I guess, 388 00:22:49,560 --> 00:22:51,280 Speaker 2: give a little bit more leeway for the FED to 389 00:22:51,320 --> 00:22:54,159 Speaker 2: be a little dovershare. Maybe it does. 390 00:22:54,480 --> 00:22:56,560 Speaker 10: It does, But the real question that we need to 391 00:22:56,600 --> 00:22:59,080 Speaker 10: be thinking about the background is just why does the 392 00:22:59,160 --> 00:23:01,640 Speaker 10: data look as good as it does. So we saw 393 00:23:01,880 --> 00:23:07,000 Speaker 10: headline PC inflation actually deflation during the month of November 394 00:23:07,000 --> 00:23:09,760 Speaker 10: because energy price is globally declined, so we got ten 395 00:23:09,800 --> 00:23:14,440 Speaker 10: basis points of deflation for the headline. Core PC inflation 396 00:23:14,680 --> 00:23:17,960 Speaker 10: slowed to just ten bases points, allowing the six month 397 00:23:18,080 --> 00:23:22,200 Speaker 10: annualized pace of core inflation to decline to one point 398 00:23:22,280 --> 00:23:24,800 Speaker 10: nine percent. So if the FED is thinking about what 399 00:23:24,920 --> 00:23:29,440 Speaker 10: trend core inflation looks like, they're thinking, oh, wow, it's 400 00:23:29,480 --> 00:23:34,119 Speaker 10: actually at our target. But in the background, we have 401 00:23:34,600 --> 00:23:38,920 Speaker 10: a lot of core goods deflation during the month. And 402 00:23:39,520 --> 00:23:43,919 Speaker 10: if you think, as we do, that destocking of inventories 403 00:23:44,240 --> 00:23:49,480 Speaker 10: will allow firms, particularly goods producers and retailers, to avoid 404 00:23:49,600 --> 00:23:52,480 Speaker 10: price cuts in the future, then that drag that we're 405 00:23:52,480 --> 00:23:55,560 Speaker 10: getting from core goods would be set to reverse, at 406 00:23:55,600 --> 00:23:59,480 Speaker 10: which point we would have about three percent annualized core inflation. 407 00:24:00,119 --> 00:24:04,679 Speaker 10: So if that inventory d stocking takes place, it's not 408 00:24:04,920 --> 00:24:08,159 Speaker 10: really the case that the FED can declare mission accomplished 409 00:24:08,160 --> 00:24:09,280 Speaker 10: on inflation quite yet. 410 00:24:10,160 --> 00:24:13,679 Speaker 4: So then if they if we see that, does that 411 00:24:15,080 --> 00:24:19,879 Speaker 4: threaten the three cuts next year that we outlook that 412 00:24:19,920 --> 00:24:22,560 Speaker 4: we heard from the Fed? Or does it simply threaten 413 00:24:22,600 --> 00:24:23,800 Speaker 4: the potential timeline? 414 00:24:25,560 --> 00:24:27,679 Speaker 10: As far as I'm concerned, it does not threaten the 415 00:24:27,680 --> 00:24:32,040 Speaker 10: Fed's forecast of three of three cuts. What it does 416 00:24:32,119 --> 00:24:35,240 Speaker 10: threaten is the market pricing that's showing, you know, nearly 417 00:24:35,320 --> 00:24:40,879 Speaker 10: double that. So that's what's going on in the inflation front. 418 00:24:41,240 --> 00:24:44,919 Speaker 10: If the fundamentals that that we think are going on 419 00:24:44,920 --> 00:24:47,520 Speaker 10: in the background in addition to inflation. If we think 420 00:24:47,560 --> 00:24:50,840 Speaker 10: that the labor market, for example, starts loosening more materially, 421 00:24:51,119 --> 00:24:54,639 Speaker 10: which we expect, but let's face it, others out there don't. 422 00:24:55,080 --> 00:24:58,240 Speaker 10: If that starts taking place, then we expect the Fed's 423 00:24:58,240 --> 00:25:01,600 Speaker 10: going to revise its inflation forecast show actually more cuts 424 00:25:01,760 --> 00:25:04,480 Speaker 10: than it currently is showing, even if it means that 425 00:25:04,560 --> 00:25:07,320 Speaker 10: inflation has yet to fully reach the target. It's just 426 00:25:07,440 --> 00:25:10,840 Speaker 10: the case that the last mile of disinflation is difficult. 427 00:25:11,920 --> 00:25:16,880 Speaker 2: So my personal Paul Swiney daily inflation gauge is gasoline 428 00:25:17,040 --> 00:25:19,600 Speaker 2: three dollars and twelve cents a gallon. That's down just 429 00:25:19,720 --> 00:25:22,240 Speaker 2: big time, just over the past a few months here, 430 00:25:22,280 --> 00:25:24,320 Speaker 2: So talk to us about it. You mentioned before the 431 00:25:24,359 --> 00:25:27,280 Speaker 2: impact on energy, and you got to adjust for that, 432 00:25:27,320 --> 00:25:30,120 Speaker 2: don't you, And I guess when you do, maybe you're 433 00:25:30,119 --> 00:25:33,440 Speaker 2: a little bit less sanguine about the inflation abating. 434 00:25:35,040 --> 00:25:40,840 Speaker 10: Yeah, So declining energy prices does allow for declining headline inflation. 435 00:25:41,280 --> 00:25:44,560 Speaker 10: More importantly, probably for the FED, is that declining energy 436 00:25:44,600 --> 00:25:48,159 Speaker 10: prices matters a lot for consumers and their inflation expectations, 437 00:25:48,320 --> 00:25:52,439 Speaker 10: and inflation expectations matter a lot for consumer behavior. So, 438 00:25:53,040 --> 00:25:55,359 Speaker 10: for example, if folks think that prices are going to 439 00:25:55,400 --> 00:25:57,080 Speaker 10: be much higher in the future, they go out and 440 00:25:57,160 --> 00:25:59,920 Speaker 10: rush and buy goods and services today, and that act 441 00:26:00,359 --> 00:26:04,879 Speaker 10: begets inflation in the future. Seeing declining gasoline prices helps 442 00:26:04,960 --> 00:26:09,000 Speaker 10: consumers to slow their role a little bit, and it 443 00:26:09,040 --> 00:26:13,640 Speaker 10: does allow for softening consumer inflation expectations, which we saw 444 00:26:13,680 --> 00:26:17,960 Speaker 10: in umish today, particularly in year ahead inflation expectations, and 445 00:26:18,040 --> 00:26:20,120 Speaker 10: it does allow them to sort of slow the pace 446 00:26:20,160 --> 00:26:22,840 Speaker 10: of their spending, which we've seen there has been a 447 00:26:22,840 --> 00:26:26,040 Speaker 10: little bit of a shift from consumer spending on goods 448 00:26:26,080 --> 00:26:29,400 Speaker 10: for which they have any elastic demand to nerd out 449 00:26:29,440 --> 00:26:32,800 Speaker 10: a little bit. But it allowed them to get a 450 00:26:32,800 --> 00:26:37,040 Speaker 10: little bit of savings on gasoline that was directed actually 451 00:26:37,080 --> 00:26:39,240 Speaker 10: a little bit more to holiday shopping we saw in 452 00:26:39,280 --> 00:26:43,400 Speaker 10: the PCE report, But we don't think that that really 453 00:26:43,480 --> 00:26:46,000 Speaker 10: has legs. If you look at credit card data through 454 00:26:46,080 --> 00:26:50,320 Speaker 10: December rather than just the November piece report is sales 455 00:26:50,320 --> 00:26:52,600 Speaker 10: are a little bit more tepid. Consumers are taking that 456 00:26:52,680 --> 00:26:55,520 Speaker 10: gasoline savings and just kind of sitting on it a 457 00:26:55,520 --> 00:26:58,359 Speaker 10: little bit in December, So we're not fully out of 458 00:26:58,359 --> 00:27:00,919 Speaker 10: the woods in terms of an economic slowdown quite yet. 459 00:27:01,600 --> 00:27:05,320 Speaker 4: This has been a political I guess issue that's come up. 460 00:27:05,400 --> 00:27:10,760 Speaker 4: You know, Biden very unhappy according to reports that people 461 00:27:10,840 --> 00:27:15,520 Speaker 4: aren't feeling the impact of his economic policies, people seemingly 462 00:27:15,560 --> 00:27:20,040 Speaker 4: trusting the Republicans more on the economy than the current 463 00:27:20,080 --> 00:27:22,159 Speaker 4: Democratic administration. Now, I'm not going to ask you to 464 00:27:22,200 --> 00:27:25,040 Speaker 4: weigh on politics, but what kind of indicators do you 465 00:27:25,080 --> 00:27:29,520 Speaker 4: need to see to think, Hey, well, consumers actually think 466 00:27:29,800 --> 00:27:32,600 Speaker 4: that the economy is good. Now, how far are we 467 00:27:32,640 --> 00:27:34,920 Speaker 4: from that point? 468 00:27:35,359 --> 00:27:38,400 Speaker 10: So, at least in terms of election outcomes. And I'm 469 00:27:38,400 --> 00:27:42,280 Speaker 10: not speaking as a political analyst, but strictly as a statistician, 470 00:27:42,400 --> 00:27:45,480 Speaker 10: as an economist, it really matters where the economy is 471 00:27:45,520 --> 00:27:48,720 Speaker 10: three to six months before the election. There's still a 472 00:27:48,760 --> 00:27:50,920 Speaker 10: lot of the game to be played before then. There's 473 00:27:50,920 --> 00:27:52,760 Speaker 10: still a lot of data that we're going to see 474 00:27:52,760 --> 00:27:56,480 Speaker 10: before then. And if we start getting rate cuts in 475 00:27:56,560 --> 00:28:02,280 Speaker 10: Q one, that could help to avoid the worst case 476 00:28:02,400 --> 00:28:06,320 Speaker 10: economic scenarios, and that could be helpful for the administration 477 00:28:06,760 --> 00:28:10,320 Speaker 10: in the twenty twenty four election cycle. But again, it 478 00:28:10,359 --> 00:28:13,520 Speaker 10: depends why we're getting those rate cuts. Potentially in Q one, 479 00:28:13,840 --> 00:28:16,199 Speaker 10: if we're getting those rate cuts, because we see the 480 00:28:16,280 --> 00:28:21,000 Speaker 10: unemployment rate inching up, not just inching up, but gapping up, 481 00:28:21,440 --> 00:28:24,920 Speaker 10: which tends to be the case once Salm's rule is triggered. 482 00:28:25,160 --> 00:28:27,360 Speaker 10: If we see the unemployment rate gapping up, and that's 483 00:28:27,359 --> 00:28:30,159 Speaker 10: why we get those rate cuts, it probably would not 484 00:28:30,240 --> 00:28:37,520 Speaker 10: be enough to offset any sort of alleviation of of 485 00:28:37,760 --> 00:28:42,040 Speaker 10: interest rate pressures in financing costs that consumers might find helpful. 486 00:28:42,440 --> 00:28:45,600 Speaker 10: That softening the labor market would be more influential in 487 00:28:45,680 --> 00:28:49,120 Speaker 10: determining election outcomes than say, the change in interest rates. 488 00:28:49,400 --> 00:28:53,360 Speaker 2: So Stewart bottom line, Bloomberg Economics, what is your GDP 489 00:28:53,560 --> 00:28:55,480 Speaker 2: call for twenty twenty four? 490 00:28:56,720 --> 00:28:59,960 Speaker 10: Well, so for Q four specifically, we have an estimated 491 00:29:00,240 --> 00:29:05,160 Speaker 10: one point one percent qver q annualized. Again, you know, 492 00:29:05,240 --> 00:29:07,760 Speaker 10: that's better than we would have been anticipating. As we 493 00:29:07,840 --> 00:29:09,520 Speaker 10: do more of the bottoms up work and as we 494 00:29:09,560 --> 00:29:12,760 Speaker 10: get more of the data, things are looking a bit 495 00:29:13,000 --> 00:29:17,160 Speaker 10: better than we would have expected, especially a year ago. 496 00:29:17,320 --> 00:29:19,840 Speaker 10: But we're not quite out of the woods yet. We 497 00:29:19,880 --> 00:29:24,880 Speaker 10: are still expecting a bit of a slowdown, and you know, 498 00:29:25,760 --> 00:29:27,880 Speaker 10: we think that that's the reason why the Fed is 499 00:29:27,880 --> 00:29:30,160 Speaker 10: going to have to start cutting rates in twenty twenty four. 500 00:29:30,560 --> 00:29:33,200 Speaker 4: What's the black swan for you? Looking ahead? To next year. 501 00:29:36,640 --> 00:29:40,760 Speaker 10: Look, I think that there's still a lot of risk 502 00:29:40,880 --> 00:29:43,600 Speaker 10: around commercial real estate. I don't know if that's totally 503 00:29:43,600 --> 00:29:46,360 Speaker 10: a black swan, because you know, it is what a 504 00:29:46,360 --> 00:29:48,880 Speaker 10: lot of folks are keeping their eye on. But in 505 00:29:49,000 --> 00:29:51,000 Speaker 10: terms of what could be a major shock to the system, 506 00:29:51,040 --> 00:29:54,080 Speaker 10: I think that that's probably it. The ability of banks 507 00:29:54,120 --> 00:29:57,080 Speaker 10: to work with their bar works so that they don't 508 00:29:57,080 --> 00:29:59,760 Speaker 10: have to take back keys, The ability for banks to 509 00:29:59,800 --> 00:30:03,360 Speaker 10: work with their regulators perhaps to allow those banks to 510 00:30:03,480 --> 00:30:07,680 Speaker 10: lend to borrowers at below market rates, that those borrowers 511 00:30:07,760 --> 00:30:10,360 Speaker 10: could then cash flow any sort of dead obligations that 512 00:30:10,400 --> 00:30:15,920 Speaker 10: they have, which regulators frankly don't love. They don't love 513 00:30:16,000 --> 00:30:18,880 Speaker 10: when banks are lending it below market rates. Those are 514 00:30:18,880 --> 00:30:22,240 Speaker 10: the sort of those are the sort of financial conditions 515 00:30:22,400 --> 00:30:27,480 Speaker 10: issues that are a bit orthogonal to most of the 516 00:30:27,480 --> 00:30:30,360 Speaker 10: economic data that we think about day to day, and 517 00:30:30,600 --> 00:30:33,840 Speaker 10: so it could catch some folks by surprise, just because 518 00:30:33,840 --> 00:30:36,680 Speaker 10: it's sort of retreated to the back of everybody's minds. 519 00:30:37,160 --> 00:30:39,280 Speaker 2: All right, Stuart, thanks so much for joining us. Really 520 00:30:39,320 --> 00:30:39,720 Speaker 2: appreciate it. 521 00:30:39,720 --> 00:30:39,800 Speaker 3: Now. 522 00:30:39,800 --> 00:30:41,080 Speaker 2: It's been a busy morning for you with all the 523 00:30:41,120 --> 00:30:43,400 Speaker 2: economic data hitting the tape. Here Stuart Paul. He's a 524 00:30:43,480 --> 00:30:47,080 Speaker 2: US economist for Bloomberg Economics. Go hit the mountain and 525 00:30:47,240 --> 00:30:48,000 Speaker 2: enjoy the day. 526 00:30:48,920 --> 00:30:52,040 Speaker 6: You're listening to the tape catcher are live program Bloomberg 527 00:30:52,080 --> 00:30:55,680 Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the 528 00:30:55,760 --> 00:30:58,960 Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business app. 529 00:30:59,000 --> 00:31:01,680 Speaker 6: You can also listen Hello, I've on Amazon Alexa from 530 00:31:01,680 --> 00:31:05,480 Speaker 6: our flagship New York station. Just say Alexa, play Bloomberg 531 00:31:05,520 --> 00:31:06,200 Speaker 6: eleven thirty. 532 00:31:08,040 --> 00:31:10,840 Speaker 2: Everything seems to be going to the cloud, all types 533 00:31:10,880 --> 00:31:15,240 Speaker 2: of applications. Why not space. Our next guest is he's 534 00:31:15,280 --> 00:31:20,040 Speaker 2: there already. Peter Platzer, CEO and founder Spire Global, which 535 00:31:20,360 --> 00:31:23,000 Speaker 2: is a New York Stock Exchange list of company spir 536 00:31:23,080 --> 00:31:28,440 Speaker 2: Go based in Boulder, Colorado. As a parent of a 537 00:31:28,520 --> 00:31:30,520 Speaker 2: you see graduate, I spent a lot of time in Boulder. 538 00:31:30,560 --> 00:31:33,400 Speaker 2: Great town there, Peter, Thanks so much for joining us. 539 00:31:33,640 --> 00:31:36,760 Speaker 2: Tell us what Spire Global does. What's your biz? 540 00:31:38,000 --> 00:31:41,440 Speaker 11: One of bull excited to be here. Spire collects hearts 541 00:31:41,520 --> 00:31:45,400 Speaker 11: to acquire data from space through satellites that helps humanity 542 00:31:45,440 --> 00:31:48,960 Speaker 11: tackle some of our greatest challenges, often related to climate 543 00:31:49,080 --> 00:31:51,720 Speaker 11: change and global security. And we do this with the 544 00:31:51,720 --> 00:31:55,960 Speaker 11: world's largest multipurpose satellite fleete over one hundred space draft 545 00:31:56,000 --> 00:31:59,480 Speaker 11: that covered the Earth every fifteen minutes, every spot on Earth. 546 00:32:00,520 --> 00:32:04,680 Speaker 4: What is driving various different companies to want to have 547 00:32:04,960 --> 00:32:07,600 Speaker 4: a satellite, like, what are the key trends behind this 548 00:32:07,800 --> 00:32:10,200 Speaker 4: market at the moment, and who are you trying to 549 00:32:10,320 --> 00:32:14,640 Speaker 4: sell your space as a service as it were modeled to. 550 00:32:15,880 --> 00:32:16,720 Speaker 5: One hundred percent. 551 00:32:16,840 --> 00:32:20,760 Speaker 11: So companies that want to help humanity, for example, tackle 552 00:32:20,880 --> 00:32:25,719 Speaker 11: wildfires or measure greenhouse gases, those are companies that leverage 553 00:32:25,720 --> 00:32:28,600 Speaker 11: our space as a service model, which you can think 554 00:32:28,640 --> 00:32:31,480 Speaker 11: of is like Amazon Ews. 555 00:32:30,840 --> 00:32:31,760 Speaker 5: But for space. 556 00:32:32,200 --> 00:32:34,880 Speaker 11: So if you got a cool application, but you don't 557 00:32:34,880 --> 00:32:38,320 Speaker 11: want to learn about quaternions and licensees and rockets and 558 00:32:38,360 --> 00:32:42,040 Speaker 11: everything else that makes space complicated and very very hard 559 00:32:42,200 --> 00:32:46,040 Speaker 11: to tackle, then you come to us and in a 560 00:32:46,120 --> 00:32:49,000 Speaker 11: few weeks, a few months, maybe a year, you have 561 00:32:49,160 --> 00:32:52,800 Speaker 11: your application running. So those are then companies that really 562 00:32:53,160 --> 00:32:57,000 Speaker 11: have their own application or payload netfor example, can detect 563 00:32:57,000 --> 00:33:01,080 Speaker 11: a tiny wildfire, or can see where greenhouse gases are omitted, 564 00:33:01,480 --> 00:33:04,600 Speaker 11: or if you are someone who has long pipelines and 565 00:33:04,640 --> 00:33:07,400 Speaker 11: you have like little senses that measure where something might 566 00:33:07,440 --> 00:33:09,320 Speaker 11: go wrong, you know they do that you know, that's 567 00:33:09,360 --> 00:33:10,840 Speaker 11: an Internet of Thing application. 568 00:33:11,240 --> 00:33:13,320 Speaker 5: So all of those come to. 569 00:33:13,320 --> 00:33:16,840 Speaker 11: Us because it's fast, it's easy, it's cost effective, and 570 00:33:16,880 --> 00:33:19,800 Speaker 11: they're listening to, you know, maybe the report that McKinsey 571 00:33:19,880 --> 00:33:23,080 Speaker 11: send out recently saying that if you don't have a 572 00:33:23,120 --> 00:33:25,720 Speaker 11: space strategy today, you better get one. 573 00:33:26,000 --> 00:33:29,120 Speaker 2: Interesting. So, Peter, does your company do you own the 574 00:33:29,120 --> 00:33:33,400 Speaker 2: satellites or do you lease capacity on other satellites. 575 00:33:34,320 --> 00:33:35,280 Speaker 5: No, they are all our. 576 00:33:35,200 --> 00:33:38,520 Speaker 11: Own spacecraft, our own technology. So everything we do is 577 00:33:38,560 --> 00:33:41,440 Speaker 11: invented by Spire. This is why it works so well 578 00:33:41,480 --> 00:33:44,400 Speaker 11: and so reliably, and we can make those offers at 579 00:33:44,400 --> 00:33:48,520 Speaker 11: a very very competitive economic price point for our customers 580 00:33:48,880 --> 00:33:52,520 Speaker 11: and we get to scale very very efficiently because it 581 00:33:52,600 --> 00:33:56,040 Speaker 11: is in house. So those are our own spacecraft, our 582 00:33:56,120 --> 00:34:00,120 Speaker 11: own technology. It's also our own ground station network. It 583 00:34:00,160 --> 00:34:03,720 Speaker 11: is our own operations system that manages this very very 584 00:34:03,760 --> 00:34:05,000 Speaker 11: complex infrastructure. 585 00:34:05,560 --> 00:34:09,200 Speaker 4: And it's not like a single satellite for a single company. 586 00:34:09,360 --> 00:34:12,839 Speaker 4: Necessarily you've got a lot of satellites. You can run 587 00:34:12,880 --> 00:34:16,560 Speaker 4: a lot of different operations and use that network to 588 00:34:17,719 --> 00:34:20,040 Speaker 4: back companies. Am I right in thinking that. 589 00:34:21,120 --> 00:34:23,760 Speaker 11: You are one hundred percent spot on? Quite the opposite, 590 00:34:23,840 --> 00:34:27,480 Speaker 11: So our space off on multi purpose so they serve 591 00:34:28,000 --> 00:34:32,000 Speaker 11: not just a particular customer, but they serve many, many 592 00:34:32,040 --> 00:34:35,680 Speaker 11: customers across many many industries because one of the power 593 00:34:35,680 --> 00:34:38,439 Speaker 11: of that infrastructure is is that you collect the data 594 00:34:38,480 --> 00:34:41,600 Speaker 11: sitt once and then you sell it an almost unlimited 595 00:34:41,640 --> 00:34:45,040 Speaker 11: amount of time, serving a large number of use cases. 596 00:34:45,080 --> 00:34:49,080 Speaker 11: We had a very very well known partner assess how 597 00:34:49,120 --> 00:34:52,200 Speaker 11: many major use cases they could find, and after one 598 00:34:52,280 --> 00:34:54,360 Speaker 11: hundred and seventy five they said, Peter, we're going to 599 00:34:54,400 --> 00:34:55,400 Speaker 11: stop counting here. 600 00:34:55,600 --> 00:34:58,640 Speaker 5: There is a massive amount of use cases. But for 601 00:34:58,719 --> 00:35:00,239 Speaker 5: us to serve. In addition, on the. 602 00:35:00,320 --> 00:35:02,960 Speaker 11: Use case, it's not a new spacecraft, it's not a 603 00:35:03,000 --> 00:35:06,160 Speaker 11: new satellite. It's not more spacecraft, more satellites. It is 604 00:35:06,239 --> 00:35:09,880 Speaker 11: the same data that is already collected, just packaged in 605 00:35:09,880 --> 00:35:12,759 Speaker 11: a different way to serve another use case for a 606 00:35:12,760 --> 00:35:13,760 Speaker 11: different type of customer. 607 00:35:14,480 --> 00:35:19,320 Speaker 2: So, Peter, who's the typical customer of spire, Like getting 608 00:35:19,320 --> 00:35:21,319 Speaker 2: a sense of kind of the use cases here? 609 00:35:22,480 --> 00:35:26,120 Speaker 11: Yeah, So about fifty percent of our business is commercial 610 00:35:26,160 --> 00:35:28,320 Speaker 11: and about fifty percent of our businesses government. 611 00:35:28,760 --> 00:35:31,759 Speaker 5: So if you are a company that. 612 00:35:31,760 --> 00:35:34,560 Speaker 11: For example, is in charge of logistics, well, one of 613 00:35:34,560 --> 00:35:36,080 Speaker 11: the big things you need to know is, like where 614 00:35:36,160 --> 00:35:38,080 Speaker 11: is all this stuff, which means you needn't know where 615 00:35:38,120 --> 00:35:40,560 Speaker 11: are all the ships and where are all the planes? Well, 616 00:35:40,600 --> 00:35:42,839 Speaker 11: you know, Aspires a company that can help you with that. 617 00:35:43,360 --> 00:35:46,000 Speaker 11: If you are in the energy business, you know it's 618 00:35:46,000 --> 00:35:49,640 Speaker 11: a particularly renewable energy, but also you know electricity, you 619 00:35:49,680 --> 00:35:51,879 Speaker 11: need to understand what is the weather going to be 620 00:35:52,120 --> 00:35:56,160 Speaker 11: On one hand, to understand demand for electricity, but on 621 00:35:56,200 --> 00:35:58,600 Speaker 11: the other hand, you also want to understand, okay, what's 622 00:35:58,680 --> 00:36:01,360 Speaker 11: kind of like the risk of something going wrong because 623 00:36:01,400 --> 00:36:05,080 Speaker 11: of high winds or because a fire breaking out from lightning. 624 00:36:05,320 --> 00:36:07,000 Speaker 5: Well, then you come to Spire. 625 00:36:07,360 --> 00:36:11,200 Speaker 11: If you are a maritime insurance company that wants to know, well, 626 00:36:11,200 --> 00:36:13,480 Speaker 11: where are all the assets that you ensure. 627 00:36:13,400 --> 00:36:14,920 Speaker 5: Well, you come to Inspire. 628 00:36:15,080 --> 00:36:17,520 Speaker 11: If you're a commodity trader that really tries to get 629 00:36:17,560 --> 00:36:21,360 Speaker 11: a handle of supply and demand for many commodities, in 630 00:36:21,400 --> 00:36:24,399 Speaker 11: particular oil and gas, but also others, then you come 631 00:36:24,440 --> 00:36:25,040 Speaker 11: to Spire. 632 00:36:25,440 --> 00:36:26,080 Speaker 5: If you're an. 633 00:36:26,000 --> 00:36:28,759 Speaker 11: Airline that needs to run better and smoother operations, or 634 00:36:28,800 --> 00:36:31,560 Speaker 11: an airport that wants to improve his throughput and have 635 00:36:31,600 --> 00:36:35,080 Speaker 11: a really really smooth and efficient ground operation, then you 636 00:36:35,160 --> 00:36:35,920 Speaker 11: come to Spire. 637 00:36:36,440 --> 00:36:37,120 Speaker 5: I could keep on. 638 00:36:37,120 --> 00:36:40,080 Speaker 11: Going probably for a couple of hours some use cases, 639 00:36:40,280 --> 00:36:41,840 Speaker 11: but maybe you get a sense now. 640 00:36:42,200 --> 00:36:47,520 Speaker 4: I do, Peter, I think anything any business that sends 641 00:36:48,320 --> 00:36:52,640 Speaker 4: ships or rockets or airplanes into the air is extremely 642 00:36:52,719 --> 00:36:55,719 Speaker 4: capital intensive. I know you guys have been on a 643 00:36:55,760 --> 00:36:59,040 Speaker 4: mission to get cash flow positive by year end. That's 644 00:36:59,040 --> 00:37:03,720 Speaker 4: according to a final last month. A is that still 645 00:37:03,719 --> 00:37:06,759 Speaker 4: in the cards? And B I guess how do you 646 00:37:07,280 --> 00:37:11,640 Speaker 4: how do you deal with the extraordinary capital intensity of 647 00:37:12,239 --> 00:37:13,200 Speaker 4: running a business like this? 648 00:37:14,560 --> 00:37:17,080 Speaker 11: So the first thing is that you stop making a 649 00:37:17,080 --> 00:37:21,440 Speaker 11: capital expensive and you make a capital efficient. So for Aspire, 650 00:37:22,080 --> 00:37:25,600 Speaker 11: as we have published to build all of our infrastructure 651 00:37:25,600 --> 00:37:28,040 Speaker 11: and maintain it and run it in the space and 652 00:37:28,160 --> 00:37:31,279 Speaker 11: underground is just a fixed amound there somewhere between seven 653 00:37:31,280 --> 00:37:33,839 Speaker 11: and nine million dollars a year. So it's a very 654 00:37:34,000 --> 00:37:38,160 Speaker 11: manageable small amount that supports it CAUs an unlimited amount 655 00:37:38,160 --> 00:37:40,920 Speaker 11: of revenue because we keep on collecting this data and 656 00:37:40,960 --> 00:37:43,840 Speaker 11: then sell it aquosity unlimited amount of time. And the 657 00:37:43,960 --> 00:37:46,920 Speaker 11: reason why Spire is able to do this because we 658 00:37:47,080 --> 00:37:50,000 Speaker 11: are a fully vertically integrated company. 659 00:37:50,360 --> 00:37:52,440 Speaker 5: It is our ip our technology. 660 00:37:52,520 --> 00:37:57,200 Speaker 11: We build it ourselves in our facilities and that has 661 00:37:57,320 --> 00:38:01,239 Speaker 11: allowed us to take the capital intense out of an 662 00:38:01,280 --> 00:38:04,799 Speaker 11: operation like space and make it very very capital lines, 663 00:38:04,960 --> 00:38:07,880 Speaker 11: very very capital efficient, just the same way as you 664 00:38:07,880 --> 00:38:10,759 Speaker 11: would look at how the subscription businesses that collect a 665 00:38:10,960 --> 00:38:14,720 Speaker 11: very very valuable data source and then monetize it. For us, 666 00:38:14,840 --> 00:38:17,440 Speaker 11: it's a small amount of money on an annual basis 667 00:38:17,680 --> 00:38:19,799 Speaker 11: that is fixed, supporting. 668 00:38:19,280 --> 00:38:20,440 Speaker 5: A very large revenue. 669 00:38:20,480 --> 00:38:22,800 Speaker 2: Peter, thanks so much for joining us. Peter Platzer, CEO 670 00:38:22,840 --> 00:38:27,240 Speaker 2: and founder of Spire Global. Spir is the ticker. 671 00:38:27,960 --> 00:38:31,040 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 672 00:38:31,080 --> 00:38:34,840 Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever 673 00:38:34,960 --> 00:38:38,680 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 674 00:38:38,880 --> 00:38:42,080 Speaker 1: at Matt Miller nineteen seventy three and on Paul Sweeney. 675 00:38:42,120 --> 00:38:44,759 Speaker 2: I'm on Twitter at pt Sweeney. Before the podcast, you 676 00:38:44,800 --> 00:38:48,160 Speaker 2: can always catch us worldwide at Bloomberg Radio