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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: can also watch the show live on YouTube. Visit the

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Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 2: mornings from seven to ten am Eastern from our global

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Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen, and always I'm Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App.

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Speaker 3: Jonathan Pinkele all over the place here Jonathan Pinkele, chief

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Speaker 3: economists at UBS Securities. He joins us here PhD from

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Speaker 3: this school down in North Carolina. I can't remember the name,

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Speaker 3: but Jonathan, thanks so much for joining us here. What

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Speaker 3: did you hear from our Frederi Reserve chairman yesterday? Anything

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Speaker 3: to change your economic outlook?

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Speaker 4: Nothing that really fundamentally changed our outlook, But I have

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Speaker 4: to say the way the chair handled the press conference

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Speaker 4: was pretty different from what we thought. I also have

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Speaker 4: to set the record straight. At five to eleven, I

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Speaker 4: did not play basketball at But but you know, you know,

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Speaker 4: but but you know, I did think it was actually

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Speaker 4: a pretty unique might be might be a stretch, but

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Speaker 4: I thought it was Actually it was a press conference

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Speaker 4: where you know, the chair really threw it back to

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Speaker 4: the data and almost almost completely got out of the

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Speaker 4: business of trying to guide markets about what was going

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Speaker 4: to unfold with monetary policy.

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Speaker 5: Let's get some perspective from yesterday. Alrian of Cambridge.

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Speaker 6: Tom what I'm worried about because I truly believe that

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Speaker 6: this is not about lags, that there are structural aspects

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Speaker 6: that are running the equilibrium inflation rate higher than it

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Speaker 6: has been in the past. I worry that the FED

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Speaker 6: is going to be overtight this year. I worry that

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Speaker 6: the FED is not going to end up cutting because

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Speaker 6: they're going to be so data dependent, so reactive, that

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Speaker 6: they're not going to look at the weakness that's coming.

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Speaker 6: In fact, if you simply read the earnings reports of McDonald's, Starbucks, PepsiCo, Nestley,

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Speaker 6: the list goes on. There is no doubt that low

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Speaker 6: income consumers are struggling, that balance sheet effects have gone

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Speaker 6: from positive to negatives, the pandemic savings are run down,

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Speaker 6: that credit card balances are high, that rely entirely on

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Speaker 6: the labor market, entirely on wage income, and if something

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Speaker 6: goes wrong in that labor market, we are going to

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Speaker 6: see this economy slow much faster than anybody would like

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Speaker 6: it to slow.

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Speaker 2: Mommadal Aerian, University of Cambridge. There, he'll be with us

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Speaker 2: next week. And what's so important here, Jonathan pingle Is

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Speaker 2: I alluded to it? Yesterday's the societal impact here? Is

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Speaker 2: this a FED running policy for the financial markets and

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Speaker 2: the fancy people? Are they actually looking at the split

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Speaker 2: in America of a lot of people struggling with labor,

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Speaker 2: struggling with jobs, struggling with inflation.

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Speaker 4: So I wouldn't phrase it as they are looking, let's say,

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Speaker 4: at the aggregate. But Tom, I really do have to

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Speaker 4: agree with the question you're asking and Muhammad's general thrust.

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Speaker 4: When we look at what's unfolding in the economy twenty

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Speaker 4: twenty three, the FED had to fight a lot of

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Speaker 4: fiscal thrust and while that was happening, you're watching net

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Speaker 4: interest payments for households rise. But if you think about

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Speaker 4: net interest payments rising for households and the households paying

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Speaker 4: the higher interest rates. That's not the same household as

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Speaker 4: the one who are earning the net interest income. And

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Speaker 4: we actually changed our economic forecast last year. You know,

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Speaker 4: we had been predicting, you know, weakness, seeing this deterioration

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Speaker 4: amongst you know, amongst sort of indicators like delinquency rates

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Speaker 4: and fewer and you know, cardholders paying minimum balances. But

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Speaker 4: when we broke down how wealthy households were by income bucket,

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Speaker 4: the upper twenty percent of the income distribution is just

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Speaker 4: a wash in cash, liquid assets and high levels of wealth.

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Speaker 7: And I do a lot of the spending Paul.

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Speaker 5: Wants to get into red. Paul, I can't tell you how.

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Speaker 2: This is almost like British economics. And there's a whole

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Speaker 2: heritage of this is Chicago as well. The idea of

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Speaker 2: aggregating our economics now in America, I mean, Meltzer used

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Speaker 2: to yell at me. You said, Tom, you gotta aggregate.

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Speaker 2: How do you aggregate in this economy with half the nation?

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Speaker 5: Yeah, flat on their.

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Speaker 3: Back, exactly right. So Jonathan, are you are you have

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Speaker 3: the opinion that I mean there's a lot of folks

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Speaker 3: out there, both in academia and in practice that are

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Speaker 3: saying this fed is already behind. They should be cutting

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Speaker 3: rates now that if you look I don't know, if

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Speaker 3: you look at the real time data, inflation is in fact,

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Speaker 3: you know, I'm not gonna say whipped, but certainly under control.

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Speaker 3: How do you think about the FED and are they behind?

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Speaker 5: Well?

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Speaker 4: I I mean I think in a way they are.

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Speaker 4: I mean one of the things. One of the reasons

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Speaker 4: you can have that sentiment. Also, if you look at

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Speaker 4: a tailor rule and John Taylor was no dove, and

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Speaker 4: you think that you know their long term daughter policy,

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Speaker 4: the median is, you know, between half a percent and

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Speaker 4: one percent real the fund rats should be one hundred

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Speaker 4: basis points or more lower by most by most of

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Speaker 4: the by most of those by most of those rules.

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Speaker 4: So so you can really make that case. But I

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Speaker 4: think one of the things the Fed's doing is it's

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Speaker 4: almost like they've got a short run neutral rate and

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Speaker 4: they're updating that with every payroll report. So you know,

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Speaker 4: they've seems sort of the strong economic data, you know,

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Speaker 4: that sort of has bolstered their case that they can

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Speaker 4: wait and they can keep rates elevated, even relative to

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Speaker 4: the progress they've made on inflation.

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Speaker 3: All right, So as we sit back here, and Jonathan,

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Speaker 3: are you comfortable. Let's let's just start, you know, get

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Speaker 3: the UBS house call on GDP. How do you think

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Speaker 3: GDP is gonna be for the rest of the year

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Speaker 3: and then for next year?

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Speaker 4: Yeah, I mean we so we think GDP is slowing

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Speaker 4: to roughly one and a half percent this year and

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Speaker 4: then the next two years is going to run roughly

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Speaker 4: between one and a half to two.

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Speaker 2: Is that staggy? I mean, there's no stag There's no flation.

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Speaker 2: Does Pingles say there is stag there is flation?

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Speaker 4: Well, we think inflation is going to generally cool over

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Speaker 4: the next few years. Staggy, You know, No, I mean

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Speaker 4: we're not telling it. I mean we're not really telling

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Speaker 4: a stagflation story. I mean we're telling a story more

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Speaker 4: where the economy really is going to slow. A lot

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Speaker 4: of the fiscal impetus looks like it's coming out, and

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Speaker 4: I think that is going to help pressure Jem Pingle.

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Speaker 8: We got to go.

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Speaker 2: But you know, with your basketball heritage of Connecticut Sixers

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Speaker 2: or Knicks, what do you think here Sixers or Nicks,

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Speaker 2: it's getting excited.

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Speaker 4: I'm kind of a you know, I grew up in

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Speaker 4: New York, so I'm kind of a Knicks fan.

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Speaker 2: Okay, Jonathan Gongo for the Knicks there, thrilled to have

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Speaker 2: him on with all of his UH prowess its stores

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Speaker 2: as well.

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Speaker 5: He's with a UBS. It's a Swiss bank in America.

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Speaker 2: Right now, we're gonna do we do this once in

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Speaker 2: a while where we go from you know, like a

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Speaker 2: really basic conversation. We're gonna get fancy and pro we

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Speaker 2: can do that with Steven Englander. He is with the

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Speaker 2: Standard Charter Bank and with our question, is the number

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Speaker 2: one cross rate currency strategist in the world Steve Englander,

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Speaker 2: Really honored to have you on the show today. My

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Speaker 2: basic teaching year Rudy Doom Dormbush one oh one is

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Speaker 2: is unilateral intervention doesn't work. Japan has put in a

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Speaker 2: first amount of money a second amount of money. I

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Speaker 2: guess they have an unlimited piggy bank. But they're really

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Speaker 2: getting nowhere. When do they raise interest rates?

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Speaker 9: Well, I think that's their problem that you know, you

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Speaker 9: can think of intervention as sending a signal that you

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Speaker 9: are going to raise interest rates, you know, building a

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Speaker 9: bridge between a point in time when you're not yet ready,

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Speaker 9: but kind of saying, hey, down the road, right it's coming.

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Speaker 9: You know, so far they haven't sent those signals, and

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Speaker 9: you know, my guess would be they haven't confirmed the intervention.

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Speaker 9: But you know, my guess would be that they've actually

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Speaker 9: put a basketful of money into it. You know, we'll

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Speaker 9: have to see if it succeeds. You know, they tried

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Speaker 9: inter you know, if it was intervention, it was in

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Speaker 9: a very I liquid part of the day.

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Speaker 2: I got year again in one sixty five. It's not succeeding,

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Speaker 2: Steve Englander. What I find so important here is they

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Speaker 2: have an overt national policy to reflate. Has that been successful?

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Speaker 2: From where I said, it's it's ephemeral, it's almost a fiction.

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Speaker 2: Have they successfully escaped the disinflation and deflation of decades?

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Speaker 9: You know, I'd say somewhere between a four and a

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Speaker 9: six out of.

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Speaker 5: Ten imagine continues Steve, Yeah.

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Speaker 9: I think that the the issue is that you know,

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Speaker 9: you're reflating by making yourself poor, right because the stuff

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Speaker 9: you buy from abroad is more expensive. That's not what

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Speaker 9: they really wanted in terms of reflation. But you know,

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Speaker 9: you do see some sign that wages are picking up.

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Speaker 9: So say that charitably defailed is wrong.

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Speaker 5: Well, Sweeting.

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Speaker 2: The late Martin Feldstein would be screaming right now, this

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Speaker 2: is this is just bad theory.

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Speaker 3: Well that's that's kind of where I wanted to go, Steve.

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Speaker 3: I mean, just historically, speaking for those of those who

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Speaker 3: don't follow currency markets that closely, interventions usually work, or

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Speaker 3: ever work over the intermediate to long term.

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Speaker 9: Oh, I mean that that's such a controversial question, and

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Speaker 9: it's not even clear why they should work, because you know,

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Speaker 9: most of the time what you do in the foreign

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Speaker 9: exchange market you undoing your domestic market exactly. You know,

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Speaker 9: there's no there's no change. But like I said, sometimes

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Speaker 9: if the market sees it as a signal that you're

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Speaker 9: ready to change policy, there's something fundamental is going to shift.

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Speaker 9: Sometimes it makes something that would have happened in six

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Speaker 9: months happen now. But there has to be the thing

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Speaker 9: that's going to shift. And so far, they really haven't

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Speaker 9: sent a very strong signal that anything has changed.

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Speaker 2: Okay, So what should we watch for, Steve Angler, If

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Speaker 2: we announced they're over three down over two recently on

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Speaker 2: some form of unannounced intervention, what's the to do list

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Speaker 2: for the leadership of the nation. From where I sit,

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Speaker 2: they've got to capitulate and get to a normalize rate structure.

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Speaker 5: Am I wrong?

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Speaker 9: Well, yeah, you can't have everything right. So you know

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Speaker 9: you can target your exchange rate, but it means that

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Speaker 9: you have to change your monetary policy. You can shut down,

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Speaker 9: you know, your capital markets right, make it harder for

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Speaker 9: money to leave, like you know China and some other

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Speaker 9: countries do. But if you're saying we want open capital markets,

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Speaker 9: we want monetary policy to be dictated by domestic fundamentals.

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Speaker 9: You know, your exchange rate, it's gonna go where the

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Speaker 9: market wants to take.

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Speaker 5: Okay, let's go.

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Speaker 2: Let's go with standard Charter Bank and folks, standard Charter

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Speaker 2: Bank is definitive. Pacific Rim and more em analysis. Bill

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Speaker 2: Winter leading the charge there, Steve Englander from the Standard

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Speaker 2: Charter view, how all the Pacific RIM countries led by

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Speaker 2: a thirty percent appreciation of Chinese you want versus yen?

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Speaker 5: How does sing dollar? How does Taiwan? How does the

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Speaker 5: ring it, et cetera? How do they react from this

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Speaker 5: madness in Tokyo?

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Speaker 9: You know, if we were having this conversation one hundred

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Speaker 9: years ago, you know you'd be asking that question about

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Speaker 9: you know, Sterling, if we were having this conversation forty

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Speaker 9: years ago. Yeah, the end would really matter because they

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Speaker 9: were this export power and on the margin they were

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Speaker 9: this sort of competitive edge. Now they're kind of in

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Speaker 9: the pack, they're in the peloton. So, I mean, one

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Speaker 9: thing that's really clear. You would expect that with that

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Speaker 9: kind of depreciation, Japanese exports will go to the moon,

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Speaker 9: but they haven't. So I think the impact on the

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Speaker 9: rest of Asia is much less than you would have expected.

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Speaker 9: Nobody likes it, but the bad part that you would

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Speaker 9: have expected from the end being so weak and in

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Speaker 9: theory being so competitive, that's just not showing up.

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Speaker 3: Steve, when you talk to your institutional clients over the

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Speaker 3: last several days, are they buying the en?

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Speaker 7: No?

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Speaker 3: No, no, what I mean I think, if what do

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Speaker 3: they need to see the step in?

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Speaker 9: Do you think? Well, you know, as we were saying earlier,

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Speaker 9: I think they need to see some sign that rate

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Speaker 9: differentials are narrowing. If you know, as long as there's like,

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Speaker 9: you know, four hundred basis points between the US and Japan,

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Speaker 9: you'd better be convinced that there's a truckload of you know,

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Speaker 9: yen buying going to come from somebody to jump on it,

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Speaker 9: and I say that most of them would say if

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Speaker 9: it went down to one fifty or one fifty two,

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Speaker 9: we would be selling yet not buying it.

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Speaker 5: Okay, let's finish up with this.

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Speaker 2: The impossible trinity is goaltending and defense and offense on

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Speaker 2: the Montreal Canadiens. That's that's the original definition of impossible trinity.

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Speaker 2: I'm doing this for England or in Montreal to the

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Speaker 2: late great Tobias Lefkovich, Steve England are just simply here,

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Speaker 2: there's an impossible trinity. Krugman wrote the book on this.

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Speaker 2: What do they need to do now to stop.

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Speaker 5: This intervention juvenility? What does Japan need to do?

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Speaker 9: Look, you know it's a tough one. And I'd say

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Speaker 9: on the Canadians I take one out of three of

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Speaker 9: that trinity at this point. But the you know, I

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Speaker 9: think the the boj just has to you know, sort

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Speaker 9: of suck it. I mean, I I look the a

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Speaker 9: lot of countries in the world, they've raised interest rates.

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Speaker 9: We've seen it in the US. The damage hasn't been

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Speaker 9: as bad as expected. It's possible that the Japanese economy won't,

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Speaker 9: you know, fall in its face if they raise faster.

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Speaker 9: But they you know, they kind of have to decide.

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Speaker 9: You know, we touched one sixty. You know, it was

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Speaker 9: a big level. They clearly didn't like it. Perhaps, you know,

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Speaker 9: perhaps they'll say, look, it's it's you know, the damage

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Speaker 9: from a week in is enough that we're going to

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Speaker 9: change monetary policy. But you know, there's no magic bullet there.

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Speaker 2: Steve Englander, thank you so much. Can't say enough about it.

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Speaker 2: Steve Englander with a standard child now joining us Professor

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Speaker 2: Faroli of JP Morgan again. It could be a one

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Speaker 2: hour conversation, Michael Faroli. What I witnessed yesterday was the

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Speaker 2: biggest amount of hopium I've ever seen. I mean, I'm sorry, Michael,

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Speaker 2: I'm looking at and they're all doing the parlor game.

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Speaker 5: How many rate cuts and all that?

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Speaker 2: What is the underlying if you're in class with Richard

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Speaker 2: Portis at LBS, Michael Ferole, what's the underlying theory.

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Speaker 5: Of this FED?

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Speaker 8: I think the underlying theory is that rates are restrictive

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Speaker 8: and that over time that will have a moderating effect

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Speaker 8: on inflation. Now, I think, you know, there's a couple

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Speaker 8: of things there, but I think another thing I heard

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Speaker 8: that maybe I didn't see so much commented on is that,

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Speaker 8: you know, I didn't feel like he's thinks that inflation

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Speaker 8: at two seven or.

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Speaker 7: Two eight is like an emergency situation.

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Speaker 8: Which is interesting because if you go back, you know,

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Speaker 8: fifteen years is one before we h fifteen fifteen to

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Speaker 8: twenty years.

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Speaker 7: When we first started debating.

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Speaker 8: A formal inflation target, there were a lot of people saying,

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Speaker 8: you know, comfort zone of one to three percent, and.

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Speaker 7: Obviously we settled on two percent. We're not there.

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Speaker 8: But he didn't really seem to think that two seven

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Speaker 8: to eight is right, you know, something that is worthy

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Speaker 8: of really risking risking growth.

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Speaker 2: This is why this is the conversation of the day.

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Speaker 2: Michael Feroli ages ago set the potential GDP of the

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Speaker 2: nation under two percent, and there's this raging debate about

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Speaker 2: should we panic with inflation at this level right now?

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Speaker 2: Clarida at the former vice chairman Richard Clareda. Michael Faroli,

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Speaker 2: he suggested, we're going to bring up the two percent level.

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Speaker 2: What do you and Bruce Casman and your team say,

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Speaker 2: what is an appropriate blended banded target rate for the

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Speaker 2: new FED.

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Speaker 5: The next FED.

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Speaker 8: Yeah, so if we're talking about real g EP growth

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Speaker 8: and we're talking about potential real GDP growth.

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Speaker 7: You know, normally we think of that as something that's

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Speaker 7: going to you know, obtain.

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Speaker 8: Over on average the next five years or something like that, Right.

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Speaker 8: I think in this particular situation, it's hard to get

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Speaker 8: around the issue of immigration and how that's affecting trend growth.

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Speaker 8: So just to you know, level set here, over the

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Speaker 8: past twelve months, we've averaged payrolls around two hundred and

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Speaker 8: fifty thousand per month, job growth two hundred fifty thousand

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Speaker 8: per month, and in that period the unemployment rate has

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Speaker 8: trended up on sort of averaging out about three tenths

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Speaker 8: of a percentage point, which would tell you, althoughs equal,

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Speaker 8: that steady state job growth could be above two hundred thousand.

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Speaker 7: Right, And if that's the case, then I do think.

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Speaker 8: Potential GDP, if you want to prove it that way

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Speaker 8: over the past year, has probably been above two percent.

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Speaker 8: You know, certainly we've had growth above above two percent

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Speaker 8: over the past year. Again alongside no evidence of tightening

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Speaker 8: in labor markets, no evidence of that tightening and inflation.

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Speaker 7: Data or wage data.

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Speaker 8: So I do think currently it's just you know, the

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Speaker 8: full employment growth of the economy is above two percent.

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Speaker 7: Now, I started off by saying, normally, we think about.

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Speaker 8: You know, potential GDP growth as something that's contained over

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Speaker 8: long stretches of time, and I think in this situation

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Speaker 8: it's a little more tricky to say, because you know,

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Speaker 8: the prospects for immigration into next year I think are

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Speaker 8: going to depend on, you know, the policy choices that

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Speaker 8: are made regarding immigration policy, which could you know, dramatically

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Speaker 8: affect whether that two hundred and fifty K number I

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Speaker 8: mentioned earlier is going to be something that you know,

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Speaker 8: rolls on into twenty five and beyond.

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Speaker 3: Michael, how concerned are you about inflation? Because I think

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Speaker 3: there is a debate out there in the marketplace whether

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Speaker 3: what we've seen over the last three months is something

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Speaker 3: we need to worry about or not. How do you

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Speaker 3: think about it?

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Speaker 8: You know, I still think we're on a disinflationary path.

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Speaker 8: I mean one for one reason. I guess if we

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Speaker 8: can either come at it from a bottom up or

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Speaker 8: top down, I think from the bottom up, you know,

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Speaker 8: chair a powel a few times yesterday laid out the

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Speaker 8: case for why rental inflation is going to come off.

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Speaker 8: Uh and if rental inflation normalizes, and I think you

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Speaker 8: that gets you, you know, a good chunk of the

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Speaker 8: way back to UH to the more you know, acceptable

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Speaker 8: inflation rate. And I think you could see that in

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Speaker 8: things like you know, in Europe they use this HICP,

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Speaker 8: which is basically CPI and minus oe R. The BLS

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Speaker 8: here in the US produces one of those, and right

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Speaker 8: now that h I c P is a little over

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Speaker 8: two percent for h I cp is a little below keeper.

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Speaker 8: So you know, basically from the top, from the bottom up,

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Speaker 8: if that uh, you know, there's ramble measures come down

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Speaker 8: that gets you a long way there. And from the

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Speaker 8: top down, you know, I don't really see in a

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Speaker 8: big way inflation pressures picking up in the first quarter.

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Speaker 5: Now.

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Speaker 8: I know, earlier this week we got that disappointing ECI,

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Speaker 8: but at the same time some other wage measures have

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Speaker 8: been a little less worrisome, and I guess most importantly,

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Speaker 8: inflation expectations still look pretty well, right.

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Speaker 2: I mean for Earliers talking like he's a president of

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Speaker 2: the New York Fed, I mean he's on the Edgine

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Speaker 2: Rulsby exactly.

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Speaker 3: JP Morgan, Hey, Michael, there are folks out there in

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Speaker 3: the marketplace, both academics and practitioners that say, you know what,

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Speaker 3: this Fed's just way behind the eight ball here. They

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Speaker 3: should be cutting rates now, inflation is in fact under control.

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Speaker 3: If you look at some more real time data, do

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Speaker 3: you share that view?

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Speaker 8: Not necessarily, you know, I guess I do buy. Look,

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Speaker 8: there's as they are behind the ball, right. I think

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Speaker 8: if that risk pans out, if tomorrow morning we get

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Speaker 8: a real you know, uh got of a payroll report,

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Speaker 8: then we'll find out they were behind the ball. But

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Speaker 8: I think if we're behind the ball, they are they

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Speaker 8: can catch up pretty quickly, right They can you know,

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Speaker 8: they can cut, They can cut quickly.

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Speaker 7: They can cut in.

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Speaker 8: Larger increments than twenty five basis points. Uh So, I

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Speaker 8: think it's a risk, but it's a manageable risk, right Michael.

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Speaker 5: I want to bring it over to the labor economy.

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Speaker 2: You've got the jobs report tomorrow, and Anna Wong was

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Speaker 2: heated about this and that we have a fully employed America.

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Speaker 2: I get it, but what we're hearing from our listeners

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Speaker 2: and viewers is that's just flat out wrong. Are we

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Speaker 2: a fully employed America into the jobs report tomorrow?

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Speaker 8: I think we are, you know, but I do think

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Speaker 8: there are there's signs that the vigor we're seeing in

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Speaker 8: labor market activity is moderating. And you know, I guess

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Speaker 8: to your point about you know, Americans saying, well, that's

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Speaker 8: flat out wrong. You know, yesterday we had a consumer conference,

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Speaker 8: I'm sorry, the conference sports consumer confidence number, which and

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Speaker 8: again Charipyle mentioned this yesterday within that they ask people

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Speaker 8: our jobs plentiful? Are they hard to get? You know,

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Speaker 8: that's been pointing to some loosening up in the labor markets.

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Speaker 8: Still overall, if you look at that, consumers are saying,

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Speaker 8: it's jobs are still pretty plentiful.

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Speaker 7: So so I think we're fully employed.

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Speaker 8: We're probably moving in a direction where again the vigor

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Speaker 8: of hiring is certainly slowing. Gross hiring is slowing, the

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Speaker 8: appetite for new postings of vacancies is waning. So yeah,

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Speaker 8: you know, I think it's it's a big nuanced we're

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Speaker 8: fully employed about.

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Speaker 5: Thank you so much.

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Speaker 2: With JP Morgan, your daily front pages without Lisa Matteo,

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Speaker 2: John Tucker, the newspapers.

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Speaker 1: All right, I got to admit a disclosure upfront. Some

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Speaker 1: of them are on front pages. I had to go

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Speaker 1: to page six for a few days, just your warning. Yeah,

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Speaker 1: let's start with this one from Bloomberg elon Muss's latest

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Speaker 1: cost cutting victims, summer interns Tesla race nding offers just

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Speaker 1: weeks before the internships were set to start.

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Speaker 5: You gotta be kidding.

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Speaker 1: So this has prompted aspiring employees to take to LinkedIn.

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Speaker 1: They're appealing to other employers to try to take them in.

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Speaker 1: Here's a one I'll read right from it. At eight

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Speaker 1: forty six am, I opened a Tesla email for flight information.

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Speaker 1: By eleven twenty five am, my internship offer was gone,

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Speaker 1: wrote Miami University student Joshua Schreiber, who said his start

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Speaker 1: date was three weeks away and that he'd already spent

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Speaker 1: thousands on housing, like a lot of other would be

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Speaker 1: Tesla interns, getting uncomfortably close to the end of the school. Yeah,

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Speaker 1: they say. The surprise calls from Tesla informing students that

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Speaker 1: their offers no longer stand have left them without a

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Speaker 1: lot of time to find replacement gigs for the summer.

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Speaker 1: So one part of me is like these poor kids.

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Speaker 1: The other part of me is like, yeah, welcome to

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Speaker 1: the real world.

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Speaker 5: Yep.

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Speaker 3: Anyway, But I mean, Tesla, you just it's such a

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Speaker 3: mercurial way.

436
00:24:27,960 --> 00:24:31,879
Speaker 1: The word erratic, Yes, yes, all right, this you're just

437
00:24:31,920 --> 00:24:36,440
Speaker 1: talking about retail. This comes interesting article from Women's Wear Daily,

438
00:24:37,840 --> 00:24:41,520
Speaker 1: a great read from Evan Clark. When Jeff Jeanette came

439
00:24:41,560 --> 00:24:43,840
Speaker 1: to the phone in November for his quarterly report as

440
00:24:43,920 --> 00:24:47,000
Speaker 1: CEO of Macy's, he had a long list of accomplishments

441
00:24:47,040 --> 00:24:49,399
Speaker 1: from his nearly seven year tenure at the top. He

442
00:24:49,520 --> 00:24:55,000
Speaker 1: also had one acknowledgment, telling WWD that really consistent, profitable

443
00:24:55,080 --> 00:24:58,639
Speaker 1: growth had eluded him. There's a lot of change and

444
00:24:58,800 --> 00:25:03,240
Speaker 1: challenge all at once. May Nordstrom Dealers coals they collectively

445
00:25:03,400 --> 00:25:06,200
Speaker 1: drove nearly sixty three billion dollars in sales last year,

446
00:25:06,680 --> 00:25:10,280
Speaker 1: marking a decline of three point two billion. It used

447
00:25:10,280 --> 00:25:14,320
Speaker 1: to be that customers needed those department stores to do

448
00:25:14,480 --> 00:25:17,159
Speaker 1: all their one stop shopping. Now you can click your

449
00:25:17,200 --> 00:25:20,200
Speaker 1: way to anything. And more than that, the department stores,

450
00:25:20,520 --> 00:25:24,639
Speaker 1: according to this article, losing their connections with consumers and

451
00:25:25,040 --> 00:25:29,159
Speaker 1: with the fashion ecosystem that they actually once supported. So

452
00:25:29,760 --> 00:25:34,120
Speaker 1: the end result the analysts are saying, you gotta scale down, YEA.

453
00:25:34,200 --> 00:25:37,600
Speaker 2: Steve Sadov at Sachs inventing the word exclusive and now

454
00:25:37,640 --> 00:25:41,800
Speaker 2: at MasterCard, I believe they're chairman and Steve Sadov once

455
00:25:41,880 --> 00:25:45,120
Speaker 2: said to me, they finally have figured out inventory management,

456
00:25:45,680 --> 00:25:47,760
Speaker 2: and people don't go to the department stores. They got

457
00:25:47,840 --> 00:25:51,720
Speaker 2: to go to the actual store of the brand, and

458
00:25:51,800 --> 00:25:52,840
Speaker 2: they're afraid.

459
00:25:52,480 --> 00:25:54,680
Speaker 5: They're going to run out of whatever they want. Yeah,

460
00:25:54,920 --> 00:25:56,800
Speaker 5: that's the whole emotional thing.

461
00:25:57,880 --> 00:26:00,520
Speaker 2: Get that blouse now because it's going to be gone,

462
00:26:00,960 --> 00:26:03,439
Speaker 2: which is radically different than what it was a decade

463
00:26:03,480 --> 00:26:03,920
Speaker 2: ago or so.

464
00:26:04,359 --> 00:26:07,280
Speaker 1: This one comes from the Journal this morning. There've always

465
00:26:07,320 --> 00:26:10,080
Speaker 1: been people who relish driving the cars until the wheels

466
00:26:10,160 --> 00:26:15,240
Speaker 1: fall off. Not me, that would be me anyway. This

467
00:26:16,640 --> 00:26:19,720
Speaker 1: the cost of car ownership keeps skyrocketing, so more and

468
00:26:19,800 --> 00:26:22,719
Speaker 1: more people are doing this. The average transaction price at

469
00:26:22,760 --> 00:26:25,920
Speaker 1: a new vehicle forty six thousand, six hut of sixty

470
00:26:25,960 --> 00:26:29,280
Speaker 1: dollars in March. Compare that with around thirty nine thousands

471
00:26:29,280 --> 00:26:32,439
Speaker 1: in a few years earlier. This according to Edmunds, repair

472
00:26:32,640 --> 00:26:35,720
Speaker 1: and maintenance costs up eight point two percent year over year,

473
00:26:36,160 --> 00:26:40,320
Speaker 1: insurance costs up over twenty two percent. So the increase

474
00:26:40,359 --> 00:26:42,359
Speaker 1: in the car costs a lot of developments that have

475
00:26:42,440 --> 00:26:46,520
Speaker 1: led to inflation. To cope owners squeezing more life out

476
00:26:46,560 --> 00:26:50,280
Speaker 1: of their current ride. US vehicles average age hitting twelve

477
00:26:50,600 --> 00:26:53,680
Speaker 1: and a half years in twenty twenty three, twelve and

478
00:26:53,720 --> 00:26:56,040
Speaker 1: a half you said, yeah, how old's your ride, John Tucker,

479
00:26:57,160 --> 00:26:59,200
Speaker 1: I don't know. Twenty nineteen.

480
00:26:59,280 --> 00:27:01,760
Speaker 5: I think I bought it. Okay, that's bush the first

481
00:27:03,200 --> 00:27:03,600
Speaker 5: It's like.

482
00:27:03,880 --> 00:27:06,480
Speaker 1: I've already got over one hundred thousand miles on it.

483
00:27:06,680 --> 00:27:10,239
Speaker 2: So it's I mean, help me here, Paul, because you're

484
00:27:10,320 --> 00:27:13,440
Speaker 2: riding the fancy car. The fact is is all this

485
00:27:13,520 --> 00:27:16,080
Speaker 2: stuff is more expensive because the cars aren't.

486
00:27:15,840 --> 00:27:18,080
Speaker 5: Like we knew as kids. No, it's my father took

487
00:27:18,160 --> 00:27:18,960
Speaker 5: the knob off.

488
00:27:18,840 --> 00:27:21,960
Speaker 2: The radio and only used pliers to turn it so

489
00:27:22,040 --> 00:27:23,280
Speaker 2: we wouldn't score around.

490
00:27:23,080 --> 00:27:23,639
Speaker 5: With the radio.

491
00:27:24,240 --> 00:27:26,479
Speaker 1: It's also the story my old man bought the pickup

492
00:27:26,520 --> 00:27:29,479
Speaker 1: truck for the farm to save costs. He didn't put

493
00:27:29,520 --> 00:27:30,119
Speaker 1: a radio in it.

494
00:27:30,320 --> 00:27:34,640
Speaker 5: Yes, exactly, we did that. But now what do you got?

495
00:27:34,720 --> 00:27:36,040
Speaker 5: How can you land on the moon?

496
00:27:36,359 --> 00:27:39,040
Speaker 3: Absolutely? It is it is all again. I just bought

497
00:27:39,080 --> 00:27:40,520
Speaker 3: a new car the first time in ten years, and

498
00:27:40,520 --> 00:27:43,160
Speaker 3: I was shocked at the amount of technology that's in there.

499
00:27:43,720 --> 00:27:47,320
Speaker 3: And it's again, it's like having your iPhone is the

500
00:27:47,440 --> 00:27:48,199
Speaker 3: car and so.

501
00:27:48,240 --> 00:27:50,359
Speaker 5: There's up eight percent to fix it.

502
00:27:50,920 --> 00:27:52,960
Speaker 1: Why am I sing? Oh, no, well you have to

503
00:27:53,040 --> 00:27:55,840
Speaker 1: pick the right kind of car. I would say, you

504
00:27:55,960 --> 00:27:59,440
Speaker 1: have to factor in the cost for repairing it before

505
00:27:59,480 --> 00:28:03,200
Speaker 1: you I'm sorry exactly. Anyway, let's finish with this. This

506
00:28:03,359 --> 00:28:06,680
Speaker 1: is actually actually from Bloomberg opinion. They're doing a riff

507
00:28:06,720 --> 00:28:12,040
Speaker 1: on it. There's a cutthroat secondary market for reservations in

508
00:28:12,200 --> 00:28:15,560
Speaker 1: Manhattan's hottest restaurants, So you have to fork over serious

509
00:28:15,680 --> 00:28:18,600
Speaker 1: cash just to get into the front door to the

510
00:28:18,640 --> 00:28:22,280
Speaker 1: people who go online and make reservations under a false

511
00:28:22,440 --> 00:28:25,399
Speaker 1: name and then sell it on the secondary market. But

512
00:28:25,520 --> 00:28:29,199
Speaker 1: it could get worse. There's the reservation system follneled by

513
00:28:29,640 --> 00:28:34,560
Speaker 1: high end establishments in Japan. They don't allow first time customers.

514
00:28:34,640 --> 00:28:37,480
Speaker 1: They only let in regulars and their guests.

515
00:28:37,720 --> 00:28:41,320
Speaker 2: So there's a restaurant in Midtown that will be nameless,

516
00:28:42,080 --> 00:28:44,440
Speaker 2: which it's very solid American food.

517
00:28:45,040 --> 00:28:49,160
Speaker 5: And I quit going because it was so pretentious about.

518
00:28:48,920 --> 00:28:52,040
Speaker 2: The pecking order really of who got in the door,

519
00:28:52,440 --> 00:28:55,320
Speaker 2: and I happened to be on the pecking order lower.

520
00:28:56,000 --> 00:28:58,320
Speaker 2: But the way they treated you, I just it was

521
00:28:58,520 --> 00:28:59,800
Speaker 2: really like swarming.

522
00:29:00,280 --> 00:29:02,240
Speaker 5: No I don't. I just want a meal, you know.

523
00:29:02,760 --> 00:29:05,400
Speaker 1: Just sort of tangential to this. Tim and Carroll on

524
00:29:05,480 --> 00:29:08,920
Speaker 1: their show, they had the head of the Michelin Guide

525
00:29:09,200 --> 00:29:14,719
Speaker 1: in absolutely fascinating discussion. And also there's a restaurant at

526
00:29:14,840 --> 00:29:18,520
Speaker 1: Disney World in Florida really that is now got Michelin rating.

527
00:29:18,960 --> 00:29:22,040
Speaker 1: David Gerr went to it, use kids want to imagine that,

528
00:29:22,160 --> 00:29:23,480
Speaker 1: And I don't think they let kids in.

529
00:29:25,560 --> 00:29:27,200
Speaker 2: He got his kids in because he's David Gerr, and

530
00:29:27,280 --> 00:29:29,120
Speaker 2: he ordered and the kids didn't finish their food and

531
00:29:29,560 --> 00:29:30,520
Speaker 2: he almost left him there.

532
00:29:30,720 --> 00:29:33,480
Speaker 5: Yeah, it cost a fortune. John Tucker with the News,

533
00:29:33,680 --> 00:29:35,800
Speaker 5: John Tucker with the newspapers, Thank you so much.

534
00:29:36,440 --> 00:29:39,640
Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best

535
00:29:39,680 --> 00:29:44,440
Speaker 2: in economics, finance, investment, and international relations. You can also

536
00:29:44,520 --> 00:29:48,520
Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast

537
00:29:48,680 --> 00:29:52,720
Speaker 2: channel on YouTube to see the show weekday mornings from

538
00:29:52,760 --> 00:29:56,000
Speaker 2: seven to ten am Eastern from our global headquarters in

539
00:29:56,120 --> 00:29:59,760
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540
00:30:00,160 --> 00:30:03,680
Speaker 2: or anywhere else you listen. And always I'm Bloomberg Radio,

541
00:30:03,920 --> 00:30:07,040
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App.