WEBVTT - Advance and Retreat 0:00:03.840 --> 0:00:07.160 Welcome to Bloomberg Opinion. I'm Vonnie Quinn. This week, what 0:00:07.240 --> 0:00:12.160 we thought was asymmetric relationship having become even more asymmetric. 0:00:12.160 --> 0:00:14.880 Clara Fererra Marquez on the Sea putin meeting than just 0:00:14.960 --> 0:00:17.520 how detrimental sanctions are proving to the state of the 0:00:17.600 --> 0:00:21.040 Russian economy. Later, justin focus on what the slow decline 0:00:21.079 --> 0:00:23.040 of one industry is telling us about a change in 0:00:23.160 --> 0:00:27.200 US labor force. First though, two markets digesting but not 0:00:27.320 --> 0:00:30.800 very easily more ominous inflation data. Jerry J. Powell at 0:00:30.800 --> 0:00:33.800 the Cato Institute Inside of next week's f o MC meeting, 0:00:33.960 --> 0:00:37.240 we need to act forthrightly, strongly as we have been doing, 0:00:37.280 --> 0:00:39.040 and we need to keep at it until the job 0:00:39.159 --> 0:00:41.479 is done. We think we can avoid the kind of 0:00:41.600 --> 0:00:44.479 very high social costs that that Paul Volker and the 0:00:44.520 --> 0:00:47.360 FED had to bring into into ploy in order to 0:00:47.360 --> 0:00:49.720 get inflation back down and set us up then for 0:00:49.720 --> 0:00:52.720 for a long period of price stability. Bloomberg Opinions. John 0:00:52.720 --> 0:00:55.520 Authors joins so John, the week started out well. Market 0:00:55.560 --> 0:00:57.920 seemed to be treating the Russia retreat the Ukraine advance. 0:00:58.040 --> 0:01:00.600 Perhaps it was something soothing in their that there might 0:01:00.600 --> 0:01:03.640 be some geopolitical stability, but then came the inflation data, 0:01:03.720 --> 0:01:07.600 and equities literally embarrassed to put a blunt this was 0:01:07.920 --> 0:01:11.760 This has been one of the most striking bona fide 0:01:11.760 --> 0:01:15.760 macro surprises in many years. I would say the I 0:01:15.800 --> 0:01:20.000 was personally surprised by how poor the inflation numbers were, 0:01:20.640 --> 0:01:24.440 But it's also very strange to me how markets really 0:01:24.480 --> 0:01:29.200 had convinced themselves that the peak was definitely in and 0:01:29.280 --> 0:01:31.319 that more or less any inflation number was going to 0:01:31.360 --> 0:01:35.800 be consistent with the steady, steady decline from here, which 0:01:36.560 --> 0:01:39.600 thankfully I did point out before it happened that this 0:01:39.680 --> 0:01:42.640 seemed over confidence. One decline does not make a trend. Yes, 0:01:42.680 --> 0:01:44.920 and then they had basically set themselves up to step 0:01:44.920 --> 0:01:48.000 on a rake like in the cartoons, and whacked themselves 0:01:48.040 --> 0:01:50.880 in the face of the rake handle. And that's basically 0:01:51.720 --> 0:01:56.600 what happened. That said, I was also my self surprised 0:01:56.600 --> 0:02:01.240 by quite how thoroughly awful the flation numbers were once 0:02:01.320 --> 0:02:03.640 you dug into them. Yeah, I mean, and you point 0:02:03.720 --> 0:02:05.920 us out, how you know, the various head banks and 0:02:05.920 --> 0:02:08.080 other outward to put out different measures for core inflation, 0:02:08.160 --> 0:02:10.079 and it had made it seem like core inflation was 0:02:10.160 --> 0:02:12.720 under control. But actually all of those measures now sticky 0:02:12.720 --> 0:02:18.000 price inflation, trimmed, media or rising. Yes, and that's really 0:02:18.400 --> 0:02:21.920 not what very many people at all had been expecting. 0:02:22.120 --> 0:02:24.480 So these are all the numbers that a year ago, 0:02:24.480 --> 0:02:26.160 when we were still having a debate about whether this 0:02:26.200 --> 0:02:30.000 was transitory, people were pointing out, look, these core versions 0:02:30.000 --> 0:02:33.760 of inflation still aren't that high. This is transitory, and 0:02:34.240 --> 0:02:37.959 that was a valid argument then, and unfortunately what's now 0:02:38.000 --> 0:02:40.320 happened to those numbers shows this is really going to 0:02:40.360 --> 0:02:43.040 be difficult to bring down. The other critical thing, I 0:02:43.040 --> 0:02:47.640 suppose is services inflation, and goods inflation is indeed coming 0:02:47.680 --> 0:02:51.040 back down. Services is coming up by more than enough 0:02:51.080 --> 0:02:54.080 to counteract it. Services is a much more important part 0:02:54.120 --> 0:02:56.079 of the economy than it used to be. That is 0:02:56.120 --> 0:02:59.080 again very disappointing for many people who are hoping to 0:02:59.080 --> 0:03:02.320 see something different. Now markets are pricing in the potential 0:03:02.400 --> 0:03:04.720 for a one hundred basis point in this next week. 0:03:05.000 --> 0:03:07.080 Is that a little too far fetched? I mean, it 0:03:07.200 --> 0:03:09.040 was the CPI that made the Fed move last time. 0:03:09.280 --> 0:03:12.600 It was there is nothing more important than the CPI 0:03:12.720 --> 0:03:15.600 for the Fed at this point. Obviously, unemployment is still 0:03:15.639 --> 0:03:18.680 at such an encouraging level. The labor market is so 0:03:18.680 --> 0:03:22.120 strong that that provides no reason for them not to hike. 0:03:22.280 --> 0:03:27.160 It's all about inflation at this point. I personally think 0:03:27.440 --> 0:03:32.000 that hiking by the full hundred basis points would carry 0:03:32.200 --> 0:03:35.200 some risk of looking as though they're running scared, desperate 0:03:35.760 --> 0:03:41.080 and could therefore undermine itself. So I would bet if 0:03:41.120 --> 0:03:44.800 I had to even odds on a seventy bits rather 0:03:44.800 --> 0:03:47.920 than a hundred, we will probably if they want to 0:03:47.960 --> 0:03:50.440 make it a hundred, they will find ways to leak 0:03:50.480 --> 0:03:55.119 it to our colleagues or competitors between now and the announcement. 0:03:55.240 --> 0:03:57.360 So I'm not sure it's worth spending too much time 0:03:57.400 --> 0:04:00.640 agonizing over that because it's probably going to become clear. 0:04:01.080 --> 0:04:03.760 The key that bothers me, which I don't think has 0:04:03.760 --> 0:04:08.760 been looked at carefully enough, is how quickly can the 0:04:08.880 --> 0:04:13.800 FED turn around and start cutting. There has been a belief, 0:04:14.360 --> 0:04:17.279 which isn't an unreasonable one from from what we've lived 0:04:17.320 --> 0:04:20.919 through in the last decade, that there would be problems 0:04:20.920 --> 0:04:25.360 with either employment or with a sell off in stocks 0:04:26.160 --> 0:04:30.200 would prompt the FED to retreat pretty quickly. That argument 0:04:30.200 --> 0:04:34.000 seems flimsy these days. I am almost inclined to say 0:04:34.000 --> 0:04:37.360 it's gone. I mean, immediately after the last fo MC meeting, 0:04:37.839 --> 0:04:41.200 FED funds futures were priced so that the rate in 0:04:41.760 --> 0:04:46.440 January of four would be lower than the rate it's 0:04:46.440 --> 0:04:49.240 going to be by the end of this month, which 0:04:49.279 --> 0:04:53.680 is a remarkable suggestion that this is a transitory tightening, effectively, 0:04:53.720 --> 0:04:56.440 that we're going to be that far into reverse by then. 0:04:57.120 --> 0:05:00.760 At this point, I think it's the suggestion is that 0:05:00.800 --> 0:05:03.960 will still be a good percentage point higher that this 0:05:04.040 --> 0:05:08.479 is a so that probably is more important for the 0:05:08.560 --> 0:05:12.080 long term than whether the Fed decides it really needs 0:05:12.120 --> 0:05:14.040 to hurry up even more and go with a hundred. 0:05:14.080 --> 0:05:16.800 It's it's how long they have to stay at how 0:05:16.880 --> 0:05:19.479 higher level and how long are they giving these rate 0:05:19.560 --> 0:05:22.400 hikes to work, because we all know that it takes time, 0:05:22.560 --> 0:05:24.359 and it works in different parts of the economy at 0:05:24.360 --> 0:05:26.479 different rates and so on, And what are they looking 0:05:26.520 --> 0:05:28.760 at to see is it working in the broader economy? 0:05:28.960 --> 0:05:31.520 I mean, what does the seventy five basis point hike 0:05:32.040 --> 0:05:34.280 entail when it comes to filtering down through the banks 0:05:34.320 --> 0:05:36.120 and through the system and through loans and so on. Well, 0:05:36.240 --> 0:05:40.120 I guess the critical point for that is on shelter 0:05:40.200 --> 0:05:44.520 inflation the housing market. So yes, oil is more or 0:05:44.560 --> 0:05:47.560 less beyond the fits per view, particularly with the geopolitical 0:05:47.720 --> 0:05:52.360 uncertain at the moment. Shelter whether you're renting or buying, 0:05:52.800 --> 0:05:55.760 is so dependent on the rate at which you can 0:05:55.800 --> 0:06:00.240 take out of mortgage. That is a rate that shelter 0:06:00.279 --> 0:06:04.000 inflation is increasing. Worryingly, we all know that there are 0:06:04.080 --> 0:06:07.600 various markets that look quite bubbly for buying, which are 0:06:07.640 --> 0:06:11.520 already seemed to be turning. The FED needs to be 0:06:11.600 --> 0:06:15.239 sure that it's got the housing market back down again 0:06:16.279 --> 0:06:19.839 before it can desist. I think, and I suppose it 0:06:19.839 --> 0:06:21.800 has the double advantage Festival. It's a third of the 0:06:21.800 --> 0:06:25.120 index in round numbers, and secondly, it's the one where 0:06:25.160 --> 0:06:29.920 monetary policy really unambiguously has a direct effect. I think 0:06:30.000 --> 0:06:34.080 you need to see that trend reverse. People talk about 0:06:34.080 --> 0:06:36.279 real estate a lot when they know anything about it. 0:06:36.760 --> 0:06:40.200 Otherwise they talk about a lot. How much higher rates 0:06:40.320 --> 0:06:44.760 deter people from buying, cause people to stop putting houses 0:06:44.760 --> 0:06:47.520 on the market, all the rest of it is probably 0:06:47.600 --> 0:06:51.800 the single greatest issue for us CPI at this moment. John, 0:06:51.880 --> 0:06:54.279 do you see a scenario at all were inflation continues 0:06:54.320 --> 0:06:56.760 to rise even as the Foe continues to hike. I mean, 0:06:56.839 --> 0:06:58.680 that's basically what we got this month. Could we get 0:06:58.680 --> 0:07:00.760 it again next month ahead? I need to come down 0:07:00.839 --> 0:07:04.560 very slightly. Yeah, I can imagine that. I think it's unlikely. 0:07:05.360 --> 0:07:10.280 I would still, barring something horrible in Ukraine, I still 0:07:10.320 --> 0:07:13.960 think the peak for headline inflation is probably in because 0:07:13.960 --> 0:07:16.760 of oil. It's difficult for it not to be. If 0:07:17.240 --> 0:07:21.600 inflation stays like this for another couple of months and 0:07:21.880 --> 0:07:26.280 you get another round of wage negotiations coming at the 0:07:26.280 --> 0:07:31.800 turn of the year, I can imagine headline inflation getting 0:07:31.840 --> 0:07:35.239 above its peak. From earlier this year, we are starting 0:07:35.240 --> 0:07:38.000 to see that wage price spiral a tiny bit, and 0:07:38.080 --> 0:07:40.080 we were seeing Amazon pony up now a little at 0:07:40.120 --> 0:07:42.800 least for seasonal delivery. Drivers were seeing more and more 0:07:42.800 --> 0:07:45.480 strikes across the country. That I mean, that's one of 0:07:45.520 --> 0:07:50.440 the fascinating, imponderable questions is obviously the balance is going 0:07:50.480 --> 0:07:54.040 to move from capital to labor to some extent, but 0:07:54.480 --> 0:07:58.600 the balance has moved a quite remarkable way towards capital, 0:07:59.360 --> 0:08:04.440 and unions are weaker, less able to assert themselves than 0:08:04.440 --> 0:08:07.640 they've been in a century or so. That means that 0:08:07.680 --> 0:08:11.120 you can perhaps overstate how much that effect is going 0:08:11.200 --> 0:08:14.720 to happen, and membership is still tiny relative to the 0:08:14.840 --> 0:08:19.480 labor force. I think wage pressure is on balance likely. 0:08:19.760 --> 0:08:21.800 But again, this is one of the imponderables we'll find 0:08:21.840 --> 0:08:25.160 out about this country exactly how intense that is and 0:08:25.200 --> 0:08:27.680 how far it takes inflation. So, John, what is the 0:08:27.720 --> 0:08:33.200 question that for J. J. Powell is pondering tonight. I 0:08:33.240 --> 0:08:35.640 do feel somewhat sorry for him, and I'm very glad 0:08:35.640 --> 0:08:39.200 I'm not a central bank here. He has been so 0:08:39.240 --> 0:08:41.280 good as to admit that the FED made a mistake 0:08:41.440 --> 0:08:45.480 last year. That colleague Mike mackenzie was commenting earlier today 0:08:45.520 --> 0:08:48.200 that saying that inflation was transitory last year is going 0:08:48.240 --> 0:08:51.520 to go down with the subprime market is contained from 0:08:51.559 --> 0:08:54.920 two thousand and seven. They all got one, you get one, 0:08:55.080 --> 0:09:00.120 yes exactly. He probably will be giving some thoughts to 0:09:02.120 --> 0:09:05.160 I don't think that's his greatest one. It's about how 0:09:05.200 --> 0:09:08.840 they signal for the future. I think the dot plot 0:09:09.440 --> 0:09:13.520 where the FED governors can use it as a signal 0:09:13.600 --> 0:09:17.040 for their intentions. We get a new dot plot next week. 0:09:17.400 --> 0:09:21.400 I suspect that the Fed will take the chance to 0:09:21.520 --> 0:09:24.200 tell the market listen, you are wrong. We do not 0:09:24.640 --> 0:09:27.400 think we are cutting next year at all. And if 0:09:27.440 --> 0:09:29.920 you see a dot plot where their expectations for the 0:09:29.920 --> 0:09:32.720 Fed funds rates for the next few years rises significantly, 0:09:33.280 --> 0:09:37.640 that could be another really tough moment, tiny bit of 0:09:37.720 --> 0:09:41.040 chatter about England. If you wouldn't mind, you're just back. Yes, 0:09:41.240 --> 0:09:45.160 and you obviously saw a transition. He saw the transition 0:09:45.160 --> 0:09:47.440 from Boris Johnson to Liz trust I was I saw that. 0:09:47.520 --> 0:09:50.800 I saw that transition, and I came home just before 0:09:50.840 --> 0:09:55.440 another transition from another Liz. Yes. Yes, there are over 0:09:55.480 --> 0:09:58.000 sixty million of us to choose from, and apparently Liz 0:09:58.120 --> 0:10:01.520 trusses right best we can manage for being Prime Minister. 0:10:01.600 --> 0:10:03.560 So and now it's her chance to see what she 0:10:03.600 --> 0:10:07.040 can do. Obviously, the Queen's passing is a big moment. 0:10:07.120 --> 0:10:09.880 It can only be plenty of opinions about it, but 0:10:09.920 --> 0:10:15.640 it's a big deal. It was quite big of her 0:10:15.640 --> 0:10:20.480 to shake hands with me Guinness thinking through. But if 0:10:20.520 --> 0:10:22.800 we could go on to further this, let's let's not 0:10:22.840 --> 0:10:26.400 talk about the rather vexed awful history of Britain and treatment. 0:10:27.160 --> 0:10:30.480 Will she be able to carry out the policies that 0:10:30.520 --> 0:10:34.680 she's promised. My best guess is that she won't that 0:10:35.160 --> 0:10:39.040 promising tax cuts was I hope she's going to surprise 0:10:39.080 --> 0:10:42.440 me positively. I took a dim view of the way 0:10:42.520 --> 0:10:46.000 she handled that campaign because she was basically promising something 0:10:46.080 --> 0:10:48.360 she was plenty clever enough to know that she wasn't 0:10:48.360 --> 0:10:50.480 going to be able to deliver. Yes, she must have known, 0:10:50.679 --> 0:10:56.319 and you know that's distasteful. Quasi quatteng another bright guy. 0:10:57.040 --> 0:10:59.800 He was a really guy before, Yes, and you know, 0:11:00.080 --> 0:11:05.160 very talented guy who knows what he's doing. I imagine 0:11:05.280 --> 0:11:09.319 we have a very difficult situation, a very febrile situation 0:11:10.040 --> 0:11:13.840 that does give him a certain amount of room for maneuver, 0:11:13.880 --> 0:11:18.200 a certain ability to do something completely different from what 0:11:18.280 --> 0:11:21.920 was expected if the circumstances demand it. I mean, how 0:11:22.400 --> 0:11:24.360 garsenals what in place is going to be next year 0:11:24.400 --> 0:11:27.000 in the UK, But I mean we could. I mean, 0:11:27.000 --> 0:11:32.360 the UK has very particular, serious reasons to be worried 0:11:32.360 --> 0:11:38.560 about inflation, some of them self inflicted, but let's not 0:11:38.640 --> 0:11:42.400 reopen the Brexit wounds too too widely, and some of 0:11:42.440 --> 0:11:45.640 them a matter of bad luck. The currency is under 0:11:45.760 --> 0:11:51.040 pressure and the energy. The Bank of England I think, 0:11:51.160 --> 0:11:54.440 was very commendably honest predicting that there's going to be 0:11:54.480 --> 0:11:57.440 a recession, that the economy will be smaller at the 0:11:57.520 --> 0:11:59.839 end of next year than it is now. I think 0:12:00.000 --> 0:12:03.520 it's probably right to get everybody into a defensive crouch. 0:12:04.440 --> 0:12:07.439 And I think both quasi Quatting and this drust of 0:12:07.600 --> 0:12:12.240 probably smart enough to know that if they take some 0:12:12.360 --> 0:12:14.800 pain now, the key thing is whether they can get 0:12:14.800 --> 0:12:18.360 the economy recovering enough to get people thinking the direction 0:12:18.480 --> 0:12:21.280 is correct by the next election, which doesn't have to 0:12:21.280 --> 0:12:24.319 be for over two years still, and that that is possible, 0:12:24.360 --> 0:12:27.120 and that's that's their aim. But it's whether they have 0:12:27.360 --> 0:12:30.720 enough communication ability, which I think it's fair to say 0:12:30.920 --> 0:12:34.360 this trust is greatest weakness. She is not like Tony 0:12:34.400 --> 0:12:38.880 Blair or Boris Johnson when it comes to communicating. Whether 0:12:39.000 --> 0:12:41.920 she has the communication and political skills to get the 0:12:41.960 --> 0:12:44.360 government through the next year or so when the economy 0:12:44.440 --> 0:12:46.240 is going to be really bad. I mean, the question 0:12:46.280 --> 0:12:48.160 really is does she last longer than Boris Johnson, who 0:12:48.160 --> 0:12:51.600 didn't even last long If she can't win another election, 0:12:51.720 --> 0:12:55.760 she won't at the moment. Not that Keir Starmer is 0:12:55.760 --> 0:12:59.559 exciting anybody, but Labor looks more electable than it has 0:12:59.600 --> 0:13:05.600 done since Blair. And if the economy doesn't go considerably 0:13:05.640 --> 0:13:07.840 better than seems likely at the moment. The betting has 0:13:07.880 --> 0:13:11.040 to be on labor to win bound that would be 0:13:12.040 --> 0:13:16.040 it's it's quite something. But Liz Trust this very interesting 0:13:16.040 --> 0:13:20.240 piece to As Raphael wrote, Margaret Thatcher as a minister 0:13:20.760 --> 0:13:24.480 was really very unimpressive. She was education minister. She was 0:13:24.520 --> 0:13:29.520 best known for canceling free school milk. Well, I wasn't there. 0:13:29.640 --> 0:13:32.679 I actually was Maggie Thatcher, the milk snatcher she used 0:13:32.720 --> 0:13:37.280 to be, and reasonably when I when I was five, 0:13:37.559 --> 0:13:39.160 we used to get given a bottle of milk in 0:13:39.160 --> 0:13:40.960 the middle of the morning, and when I was six 0:13:41.000 --> 0:13:45.240 that stopped. People weren't happy about children, so so she 0:13:45.360 --> 0:13:48.280 generally didn't seem to be that good a politician on 0:13:48.320 --> 0:13:50.800 the basis of how she did as a minister in 0:13:50.840 --> 0:13:54.760 the early seventies. Justice Liz Trust really doesn't strike me 0:13:54.800 --> 0:13:57.640 as being a particularly special good politician on the base 0:13:57.720 --> 0:14:01.800 of a record to date, and that helped people underestimate 0:14:01.840 --> 0:14:04.920 to people really didn't know quite what they were dealing 0:14:04.920 --> 0:14:08.080 with until and she was aware of that too. Yes, 0:14:08.679 --> 0:14:12.839 and I think Liz Trust is a very different person 0:14:12.880 --> 0:14:16.200 in many ways. But I think she is also somebody 0:14:16.200 --> 0:14:22.400 who benefits from being easy to underestimate. Bloomberg opinions, John Authors, 0:14:22.560 --> 0:14:26.240 pandemic labor force trends have been fascinating, but Bloomberg opinions. 0:14:26.280 --> 0:14:29.800 Justin Fox discovered one trend that predates the pandemic that 0:14:29.840 --> 0:14:31.880 tells us a lot about the US labor force. He 0:14:31.960 --> 0:14:36.120 joins me, Now, dry leaners closing down were literally almost 0:14:36.200 --> 0:14:38.560 at half the amount of dry leaners that we were 0:14:38.600 --> 0:14:40.600 at back in two thousands, so there were more than 0:14:40.640 --> 0:14:43.760 twenty eight thousand, then now there's sixteen and a half thousand. 0:14:44.080 --> 0:14:46.840 It points to several trends, though not just our assumptions. 0:14:46.840 --> 0:14:48.840 So let's go through some of them. Why are dry 0:14:48.880 --> 0:14:51.920 cleaners closing well? So I initially looked at it because 0:14:51.920 --> 0:14:54.760 obviously the pandemic has been really it was tough on 0:14:55.280 --> 0:14:59.480 lots of businesses when things completely shut down, and now 0:14:59.520 --> 0:15:02.720 even as restaurants are full, fewer people are going to 0:15:02.760 --> 0:15:05.920 the office, and sort of the long running trend towards 0:15:06.440 --> 0:15:08.760 dressing more casually when you do go to the office 0:15:08.800 --> 0:15:12.040 seems to, at least in my experience here at Bloomberg, 0:15:12.160 --> 0:15:15.880 accelerated over the course of the pandemic. So I was 0:15:15.920 --> 0:15:18.680 expecting that there would be this plummet at the pandemic. 0:15:18.880 --> 0:15:20.560 And then I looked at the data, and this is 0:15:20.640 --> 0:15:23.760 from the Bureau of Labor Statistics. Does this thing called 0:15:23.760 --> 0:15:27.680 the quarterly Census of Employment of Wages that keeps track 0:15:27.720 --> 0:15:31.280 of how many establishments of different kinds of businesses there are. 0:15:31.360 --> 0:15:34.880 And it definitely accelerated with the pandemic, but it's basically 0:15:34.920 --> 0:15:38.000 been dropping at about two percent a year at least 0:15:38.000 --> 0:15:40.080 for the past two decades. So you see it all 0:15:40.080 --> 0:15:42.360 around New York City. Your local laundrect closes, your local 0:15:42.400 --> 0:15:44.840 directing it closes, and it's very sad. I had always 0:15:44.920 --> 0:15:47.640 chalked it up, at least in recent years, to venture 0:15:47.680 --> 0:15:50.160 capital phones and hedgephons buying up real estate and not 0:15:50.240 --> 0:15:52.680 caring if the real estate was empty or full. But 0:15:52.760 --> 0:15:54.880 it turns out that that's not actually the main way. Yeah, 0:15:54.880 --> 0:15:57.080 I know, I mean New York. It was rising in 0:15:57.240 --> 0:16:00.880 the number of and this is Manhattan. Actually in Manhattan, 0:16:01.320 --> 0:16:05.360 the number of dry cleaning laundry establishments was rising through 0:16:05.440 --> 0:16:08.960 two thousand eighteen, sort of the opposite of the national trend, 0:16:09.600 --> 0:16:12.400 and then it dropped in two thousand eighteen and two 0:16:12.400 --> 0:16:14.960 thousand nineteen and then even more during the pandemic. I 0:16:14.960 --> 0:16:17.760 think the dropping in the two eighteen two thousand nineteen 0:16:17.840 --> 0:16:21.160 is all the e p A this new standard. Well 0:16:21.200 --> 0:16:23.280 it's not that new. It was I think put in 0:16:23.280 --> 0:16:26.120 the Federal Register back in two thousand six or two 0:16:26.160 --> 0:16:30.200 thousand seven, basically banning the use of the chemical and 0:16:30.240 --> 0:16:34.080 I'm going to say it wrong per klora whatever in 0:16:34.280 --> 0:16:37.480 apartment buildings, and lots of dry cleaners in Manhattan are 0:16:37.560 --> 0:16:40.240 in the basements of apartment buildings. You can do dry 0:16:40.280 --> 0:16:42.800 cleaning without it, and they're more and more of these 0:16:42.800 --> 0:16:45.520 sort of organic dry cleaning places that avoid it. But 0:16:45.560 --> 0:16:48.440 I think for a lot of older dry cleaning establishments 0:16:48.480 --> 0:16:50.720 that was sort of the last straw. They had to 0:16:50.720 --> 0:16:54.240 stop using it by two thousand. You also figured out 0:16:54.280 --> 0:16:56.880 that obviously some of this was a trend that we're 0:16:56.880 --> 0:16:59.960 seeing in immigration. Yeah, I mean, this is basically more 0:17:00.440 --> 0:17:03.520 hypothesis than something you can really get date on, but 0:17:03.760 --> 0:17:08.320 it is known that Korean Americans in particular are wildly 0:17:08.440 --> 0:17:13.000 overrepresented in the dry cleaning business. Um and and you know, 0:17:13.080 --> 0:17:16.160 it's just one of those classic an immigrant group comes over, 0:17:16.880 --> 0:17:21.879 develops an expertise, other family members, friends come over, I mean, 0:17:21.880 --> 0:17:24.280 the problem with the Korean American community is the big 0:17:24.400 --> 0:17:27.960 Korean immigration wave ended a long time ago because South 0:17:28.040 --> 0:17:31.080 Korea is now quite affluent and it's also not growing, 0:17:31.119 --> 0:17:35.240 really has very low birth rates, and so that immigration 0:17:35.280 --> 0:17:38.719 wave ended a long time ago. The kids of Korean 0:17:38.720 --> 0:17:42.160 American dry cleaning owners, I would guess most of them 0:17:42.160 --> 0:17:45.280 are have gone off to college and have fancy careers, 0:17:45.480 --> 0:17:49.840 and so we clearly there's this whole bunch of aging 0:17:49.920 --> 0:17:53.920 dry cleaning laundry owners who don't really have an obvious 0:17:53.960 --> 0:17:57.359 person to hand off to. How much is cost an issue, 0:17:57.440 --> 0:17:59.520 if at all? I mean, obviously we've seen a huge 0:17:59.520 --> 0:18:01.119 amount of a lation, and some of that has been 0:18:01.160 --> 0:18:03.399 services inflation. But it turns out we don't really spend 0:18:03.400 --> 0:18:05.600 that much on dry cleaning in the end. I mean, 0:18:05.640 --> 0:18:09.840 we we spend a very small amount of overall consumer 0:18:09.920 --> 0:18:13.520 spending on it. Although you know that I cite numbers 0:18:13.520 --> 0:18:16.560 in my piece, and that's just all spending on laundry 0:18:16.560 --> 0:18:20.680 and dry cleaning outside the house. Back in nineteen fifty nine, 0:18:20.680 --> 0:18:23.040 which is when the data starts, it was half of 0:18:23.080 --> 0:18:26.440 a percent of all consumer spending. Now it's point zero 0:18:26.520 --> 0:18:29.320 seven percent. Part of that is just because everybody's got 0:18:29.400 --> 0:18:31.840 well not everybody in New York, but everybody in most 0:18:31.840 --> 0:18:34.760 places has washing machines at home now. So it's less 0:18:34.760 --> 0:18:37.560 that people are doing less of whatever. It's just that 0:18:37.640 --> 0:18:41.280 it's been shifted from something that people paid someone to 0:18:41.280 --> 0:18:43.280 do outside the house to do it inside the house. 0:18:43.520 --> 0:18:47.520 Because I mean, one interesting thing is that inflation in 0:18:47.880 --> 0:18:52.280 um dry cleaning and laundry has been higher than overall inflation, 0:18:52.320 --> 0:18:55.080 and overall inflation is pretty high, and and that's been 0:18:55.080 --> 0:18:57.080 true for years, and it's definitely true over the last 0:18:57.160 --> 0:18:59.520 two years. You also found out, and this wouldn't be 0:18:59.560 --> 0:19:01.840 any surprise to anybody, that the highest concentration in the 0:19:01.960 --> 0:19:03.960 US is in New York City with twenty nine one 0:19:04.320 --> 0:19:07.080 thousand residents. The lowest, obviously, is only one point six 0:19:07.119 --> 0:19:10.200 per hundred thousand residents, and that's in Pema County, Arizona. 0:19:10.600 --> 0:19:12.719 I guess it's self evidence of why there are so 0:19:12.720 --> 0:19:14.960 many in New York. But are we seeing more of 0:19:15.000 --> 0:19:17.920 a decline in New York than we are elsewhere? I mean, 0:19:17.960 --> 0:19:21.040 it's just a totally different chart. In New York. It's 0:19:21.119 --> 0:19:25.040 it's was rising, doing really well, and then this plummet. 0:19:25.240 --> 0:19:28.760 Pema County is Tucson, So it's partly the weather and 0:19:28.800 --> 0:19:31.560 the kind of jobs there. It's not a big, really 0:19:31.600 --> 0:19:35.359 white collar jobs place, and it's tons of retirees, and 0:19:35.440 --> 0:19:38.040 you know, other places with lots of retirees are relatively 0:19:38.080 --> 0:19:42.199 low on it. One interesting place with really high number, 0:19:43.040 --> 0:19:48.120 especially of workers in laundries and dry cleaners, is Clark County, Nevada, 0:19:48.160 --> 0:19:50.840 which is Las Vegas. And I guess that. I mean 0:19:50.880 --> 0:19:55.240 that's more people washing sheets and other linens for hotels 0:19:55.240 --> 0:19:59.240 and stuff. Newberg Opinions justin Fox. Don't forget. We're also 0:19:59.280 --> 0:20:02.800 available as a podcast on Apple, Spotify, or your favorite platform. 0:20:03.040 --> 0:20:05.800 Chinese President She's in Paying made his first trip outside 0:20:05.880 --> 0:20:08.800 China and Hong Kong in three years this week. Originally, 0:20:08.960 --> 0:20:11.840 his first international trip was supposed to be Indonesia in 0:20:11.840 --> 0:20:14.240 November for the G twenty, which is extended invites to 0:20:14.240 --> 0:20:17.439 President Biden and President Putin as well. This wizard to 0:20:17.520 --> 0:20:21.160 Uzbekistan for the s CEO Summit or Shanghai Cooperation Organization 0:20:21.600 --> 0:20:23.720 gave you the opportunity to meet face to face with 0:20:23.800 --> 0:20:26.639 Russia's president and give the world an opportunity to assess 0:20:26.760 --> 0:20:31.959 China's position on the war Bloomberg's Clara Ferrera Marquez joins, Clara, 0:20:32.080 --> 0:20:34.800 what did we learn from this visit. It's a really 0:20:34.840 --> 0:20:38.240 interesting opportunity for us to take the temperature of this 0:20:38.400 --> 0:20:41.280 no limit partnership. So they had met in February, if 0:20:41.320 --> 0:20:45.479 you remember, just before the start debajing Olympics um and 0:20:45.560 --> 0:20:47.280 this is the first time that they had met since 0:20:47.280 --> 0:20:50.560 then and since particularly the invasion of Ukraine. And what 0:20:50.600 --> 0:20:55.520 we saw was an asymmetric relationship having become even more asymmetric. 0:20:55.640 --> 0:20:57.960 So we saw Putain really bending over to say that 0:20:58.040 --> 0:21:02.199 he understood what he said the Hinda's concerns, recognizing China's 0:21:02.240 --> 0:21:06.200 balanced position, mentioning all sorts of trade figures but getting 0:21:06.280 --> 0:21:10.280 really very little, if anything in return. Now, that's what 0:21:10.480 --> 0:21:13.200 we saw. But we don't know what happened behind closed doors, 0:21:13.240 --> 0:21:15.600 and likely never will. So it's quite clear that President 0:21:15.640 --> 0:21:19.960 Seas and Things wants to give signals to the international community. 0:21:20.000 --> 0:21:22.359 Is there a chance that he said something different or 0:21:22.440 --> 0:21:25.160 took a different tone with Putin behind closed doors. Well, 0:21:25.160 --> 0:21:27.280 as you say, it's that's sort of unknowable, isn't it. 0:21:27.320 --> 0:21:29.520 But it was interesting to me that there were a 0:21:29.520 --> 0:21:32.680 few really low hanging fruit that she could have given 0:21:32.760 --> 0:21:36.119 Puttin at this meeting. For example, they could have advanced 0:21:36.160 --> 0:21:39.840 some sort of agreements, even a memorandum of understanding around parrots. 0:21:39.920 --> 0:21:43.400 Siberia too, which is a gas pipeline, a really important 0:21:43.440 --> 0:21:46.520 part of Russia's shift to the east, and they didn't 0:21:46.560 --> 0:21:49.399 do that. So even though Russian officials had talked it 0:21:49.480 --> 0:21:52.879 up as being close, it didn't actually materialize. There was 0:21:53.000 --> 0:21:56.040 nothing concrete, no numbers, and I think Putin could have 0:21:56.080 --> 0:21:59.480 really done with that. However, the theater is important to 0:22:00.119 --> 0:22:02.479 allowing the two men to be seen together, you know, 0:22:02.520 --> 0:22:04.880 around a very large circular table, but all the same 0:22:04.920 --> 0:22:07.719 together without masks. I mean, all of that is very 0:22:07.760 --> 0:22:10.320 important too, and allows Puttin to play this at home. 0:22:10.960 --> 0:22:14.600 It was interesting to see Putin take the position of subordinates, 0:22:14.640 --> 0:22:17.200 because that's really what happened in the way he said 0:22:17.240 --> 0:22:20.040 that he understood Beijing's questions and concerns about his invasion 0:22:20.040 --> 0:22:22.639 of Ukraine, and he also made mention of the US 0:22:22.720 --> 0:22:25.320 and its allies movements in the Taiwan strage, which has 0:22:25.359 --> 0:22:29.840 annoyed Taiwan obviously, but that presumably was and olive branch 0:22:29.840 --> 0:22:33.880 to Beijing. In other words, is he subordinate now? Association thing. Well, 0:22:33.920 --> 0:22:36.480 I think it's certainly clear that Putain has never been 0:22:36.560 --> 0:22:39.320 in a weaker negotiating position, and I would I would 0:22:39.359 --> 0:22:41.080