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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 Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. We begin this out

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Speaker 2: with the equity market rarely losing some steam as President

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Speaker 2: atlect Donald Trump's tarif escalation fuel's dollar strength. Stuart Kaiser

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Speaker 2: city right in the following. The focus of markets has

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Speaker 2: been Trump policy and geopolitical events that have shifted risk

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Speaker 2: specific pricing, but not reached critical mass to drive broad

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Speaker 2: based de risking. Stuart joined us. Now for more, Stuart

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Speaker 2: and Mornick. You see evidence of that again this morning.

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Speaker 3: Well, I mean this is what we'll see how futures react,

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Speaker 3: you know, to the tariff announcements. The market's kind of

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Speaker 3: been on top of this. If you look a whare volatility.

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Speaker 3: Marks has been pricing risk premiums. It's been in precious metals,

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Speaker 3: it's been in you know, China exposed equities, and it's

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Speaker 3: been in the currencies. So I think the market has

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Speaker 3: kind of viewed those as key sort of pockets of risk,

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Speaker 3: and you know, they're going to be surprised, I think

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Speaker 3: by the magnitude of tyrists proposed on what for what

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Speaker 3: we're former NAFTA, you know, kind of trade members. So

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Speaker 3: without a doubt, you know what, We'll see how the

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Speaker 3: futures react, but you know, this is this is what

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Speaker 3: we're in for. I think for the next couple of months.

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Speaker 2: How credible do you think the threats is additional ten

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Speaker 2: percent on China, twenty five percent on Mexico and Canada.

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Speaker 2: How credible is that?

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Speaker 3: I mean you have to read it as credible. I mean,

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Speaker 3: this is the president of the United States. He increased

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Speaker 3: tariffs in his in his first h you know, his

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Speaker 3: first term, and this was you know, part of his campaign,

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Speaker 3: So I think you have to view them as credible.

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Speaker 3: You know, I think some of his some of his

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Speaker 3: inner circle has talked about these being negotiating tactics, and

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Speaker 3: I think that's that's potentially true, but I mean a

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Speaker 3: negotiating tactic is only effective if you're willing to use it,

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Speaker 3: So I think you have to have to view them

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Speaker 3: as as credible threats yet, which is the reason.

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Speaker 1: Why line risk is real and the reason why you're

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Speaker 1: seeing people trade on this, even if that trade gets

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Speaker 1: faded in a couple of hours because of another headline

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Speaker 1: that comes out. Is a good time or a bad

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Speaker 1: time to be a trader?

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Speaker 4: It's a hard time to be a trader.

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Speaker 3: I would say, Look, I think it's a good time

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Speaker 3: in the sense that you know, good traders like.

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Speaker 4: A little bit of market volatility.

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Speaker 3: I think the hard part about these type of things

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Speaker 3: is just the unpredictability of it. It's not you know,

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Speaker 3: payrolls are going to be released at a thirty am

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Speaker 3: on December sixth, and I can kind of position and.

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Speaker 4: Trade around that.

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Speaker 3: You know, this is a little more you know, kind

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Speaker 3: of random in terms of timing, and also you know,

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Speaker 3: coming to you from.

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Speaker 4: A lot of directions.

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Speaker 3: Right, you have traders that are trying to deal with

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Speaker 3: potential impact on healthcare policy, potential impact on food policy,

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Speaker 3: and put potential impact on tariffs, et cetera.

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Speaker 4: Et cetera. I mean, nobody can say this is totally surprising.

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Speaker 3: Again, these were all things that were discussed during the

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Speaker 3: election as priorities to deal with.

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Speaker 4: But no, it's a.

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Speaker 3: Difficult time, I think to be a trader unless you

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Speaker 3: get it right.

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Speaker 5: To build on that.

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Speaker 1: You're talking about how there are specific headlines that have

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Speaker 1: affected healthcare and appointments that have affected health care sector

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Speaker 1: in particular, and you had a great note talking about

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Speaker 1: how different sectors have traded differently from the overall headline

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Speaker 1: in tandem with people's belief. Do you think that one

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Speaker 1: of those moves is stickier than the other in terms of, say, healthcare,

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Speaker 1: given the fact that some of the potential nominees for

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Speaker 1: cabinet positions have talked about really disrupting healthcare in America.

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Speaker 3: Yeah, I think, you know, toscoing into the election, two

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Speaker 3: of the sectors that were a little bit like WILDCARDI

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Speaker 3: would have been healthcare and energy, just in the sense

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Speaker 3: that it's hard to decide what's going to go on

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Speaker 3: at like the gigs level one sectoral level you almost

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Speaker 3: have to go down a level, and even within healthcare

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Speaker 3: that's the case. You know, do you have pharma being

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Speaker 3: impacted in one direction, but then you have biotech potentially

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Speaker 3: benefiting from M and A, and then people are trying

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Speaker 3: to hide out and bed tech for instance. So it's

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Speaker 3: a very complicated sector in terms of the policies that

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Speaker 3: are being proposed impact different levels of it. As you

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Speaker 3: go around energy, I would say, same way, We're going

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Speaker 3: to drill a lot. That might be good for let's

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Speaker 3: say pipelines, but it might push the price of oil lower.

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Speaker 3: So I think those two sectors in particular are very

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Speaker 3: complex right now, going to be very, very difficult to trade.

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Speaker 3: In terms of persist I think the markets are telling

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Speaker 3: you they think banking is persistent. So I think, you

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Speaker 3: know that is the one that people were comfortable being

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Speaker 3: long even in a down week.

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Speaker 4: Those the banks are rallying.

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Speaker 3: But I think healthcare and energy of the two that

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Speaker 3: are going to be a little bit more more pulled

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Speaker 3: than in multiple directions at the same time.

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Speaker 6: When it comes to healthcare, though, changing policy in Washington,

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Speaker 6: d C. Is like moving a massive tank. It takes

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Speaker 6: a really long time. Would now potentially be a good

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Speaker 6: entry point given how they have fallen with some of

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Speaker 6: these announcements.

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Speaker 4: You know it's possible.

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Speaker 3: I think, you know, our view on healthcare has been

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Speaker 3: that it was going to be difficult trade goingty election.

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Speaker 3: We do think it's a beneficiary of M and A.

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Speaker 3: I think at the top one of the question is

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Speaker 3: in this in you know, the releatant for the credibility

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Speaker 3: question is you know, how much of this stuff is

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Speaker 3: is sort of more pie in the sky or maybe

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Speaker 3: RF kids, you and your personality, things you'd like to

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Speaker 3: get done, versus what are.

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Speaker 4: They actually going to kind of push through.

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Speaker 3: I think there is potentially the you know, the there's

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Speaker 3: going to be a time to fade this stuff. I

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Speaker 3: think right now, when things are just kind of so

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Speaker 3: kind of uncertain and more of I don't know, wish

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Speaker 3: lists that actual policy might not be the time. I think,

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Speaker 3: you know, argue on the election. It's three stages. It's

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Speaker 3: the initial risk on reaction to the election. Then you

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Speaker 3: have what we're in now, which is nominees and policy proposals.

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Speaker 3: Then you have phase three, which is probably next year,

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Speaker 3: which is actually policy implementation. I think as we get

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Speaker 3: closer to that is when you can think about kind

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Speaker 3: of fading some of these things.

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Speaker 6: Well in this phase to this transition, Why are US

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Speaker 6: markets taking it and shried, and European markets are down

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Speaker 6: across the board.

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Speaker 4: That's a great question.

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Speaker 3: US markets are, I think, are still benefiting from like

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Speaker 3: the risk on repositioning part. I think a lot of

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Speaker 3: the policies we've discussed, particularly on the tariff side, are

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Speaker 3: viewed as more you know, pro us and and kind

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Speaker 3: of hurt your you know, to some extent. And then

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Speaker 3: you have the geopolitical risk you know, coming out of

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Speaker 3: coming out of both the Middle East and Russia Ukraine.

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Speaker 3: So look, I mean, if there's one thing that Trump

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Speaker 3: administration is probably focused on is domestic growth, right America

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Speaker 3: first type situation. So if you believe he is going

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Speaker 3: to be successful at that, then almost by definition, US

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Speaker 3: markets should benefit a bit more.

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Speaker 4: You know.

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Speaker 3: Will that actually come out, you know, in the wash,

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Speaker 3: We'll have to see, but I think that's part of it.

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Speaker 4: Right now.

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Speaker 2: What you'll read on domestic growth to retat, it's just

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Speaker 2: reporting moments ago one is cast the other is best

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Speaker 2: by both triming their roundlok down ground in their round block.

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Speaker 2: What she'll read on things right now, I understand landmine

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Speaker 2: big inventry problem. I've got that. You can sit here

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Speaker 2: and say that's a target problem. What are you seeing

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Speaker 2: across the other resat it's what are we learning about

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Speaker 2: consumption and how good US growth actually is.

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Speaker 4: I mean, it looks fairly solid.

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Speaker 3: You know, our our retail folks, you know, did a

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Speaker 3: big survey pre holiday spending. It looks like holiday season

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Speaker 3: is going to look pretty solid. So that's that's a

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Speaker 3: good story. On that side, I think was Williams and

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Speaker 3: Oma actually put up put up pretty decent numbers on

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Speaker 3: their earnings. So it looks like, you know, I think

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Speaker 3: how it's been, which is the underlying growth momentum, seems

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Speaker 3: pretty positive. But you're sort of at that level where

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Speaker 3: you get some good news and bad news, and you know,

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Speaker 3: I think because of that that the bad news stuff

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Speaker 3: is getting punished pretty bad. So I think over the

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Speaker 3: summer we were trading decelerating growth. I think you still

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Speaker 3: have to be trading this as you are at a

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Speaker 3: solid growth level, but you're close enough to borderlines that

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Speaker 3: when you get bad news you get a ton of reaction.

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Speaker 3: But payrolls are going to be massive. On December sixth,

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Speaker 3: my read would be growth is solid, but you know,

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Speaker 3: not exemplary, and we just kind of have to trade

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Speaker 3: it that way, and in those environments you have a

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Speaker 3: lot of kind of risk reward and volatility because you're

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Speaker 3: close to you're close to trigger points in a lot

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Speaker 3: of spots.

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Speaker 1: You talk about how they're winners and losers, the winners

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Speaker 1: being the Walmarts of the world, the winners being some

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Speaker 1: of the big tech names. I want to read some

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Speaker 1: of the commentary from.

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Speaker 5: The Coal CEO.

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Speaker 2: I thought this was interesting.

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Speaker 1: We are approaching our financial outlook for the year more

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Speaker 1: conservatively given the third quarter underperformance and our expectation for

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Speaker 1: a highly competitive high holiday season.

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Speaker 2: Is this a new time.

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Speaker 1: Where the big are going to get bigger that anyone

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Speaker 1: who has that platform to basically dominate when it comes

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Speaker 1: to data, when it comes to some of the technological

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Speaker 1: advancements and deliveries are going to outperform at a time

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Speaker 1: where they can offer maybe better price, competitive competition than

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Speaker 1: some of the other companies that haven't had the scope

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Speaker 1: to really expand in that way.

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Speaker 3: Yeah, I mean, I think that's true, and I think

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Speaker 3: you know that also brings the tariff discussion into is

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Speaker 3: you know, which are these bigger companies more better set

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Speaker 3: up to deal with any potential tariffs than kind of

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Speaker 3: smaller competitors. So yeah, I think, you know, the big

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Speaker 3: winning you know, that's hard to say. You still have

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Speaker 3: to get it right. I mean, Target's a big company

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Speaker 3: and they clearly got something wrong, you know, just just

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Speaker 3: based on the stock price reaction. So yeah, I think

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Speaker 3: it gives maybe a wal Mart on Amazon a little

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Speaker 3: bit of an advantage, but there's still execution risk, right,

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Speaker 3: and you do need to do it and.

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Speaker 4: Do it well.

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Speaker 3: I mean, I don't I'm not under the impression that

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Speaker 3: this is a more competitive holiday season than last holiday season,

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Speaker 3: for instance. I mean, I feel like these things are

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Speaker 3: always pretty competitive.

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Speaker 4: But yeah, you know, there's inventors there.

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Speaker 1: I guess that the question, the bigger question is how

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Speaker 1: much of a macro tell are any of these stories

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Speaker 1: given the fact that there are winners, but there are

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Speaker 1: some pretty big losers who are appointing to competition, who

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Speaker 1: are appointing to a real unwillingness for consumers to buy

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Speaker 1: things if the prices are perceived as too higher of

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Speaker 1: the quality isn't received as enough.

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Speaker 3: Yeah, I think the macro reave has been really tricky.

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Speaker 3: I think because you had a period last quarter when

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Speaker 3: the dollar stores did really, really poorly, and that would

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Speaker 3: seem to have reflected.

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Speaker 4: Hey, you're having a lot of pressure on that lower

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Speaker 4: end consumer.

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Speaker 3: But that's saying in that same period Walmart did great,

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Speaker 3: and you know they were you know, there was some discussion, well,

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Speaker 3: that's just because people are trading down to Walmart, and

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Speaker 3: that's that is actually all bad news.

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Speaker 4: I have my lower and consumer under pressure.

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Speaker 3: I've met medium and high income consumer having to trade

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Speaker 3: down and didn't need to be worried about that. But

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Speaker 3: then you get your retail sales numbers and they're okay.

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Speaker 3: And I think this gets back to you know, you

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Speaker 3: know John's question, which is economic growth is fine, but

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Speaker 3: it is slowing down to a level where you're going

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Speaker 3: to get some good results, you're going to get some

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Speaker 3: bad results, and that's going to kind of create volatility

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Speaker 3: in the market and you just kind of need to

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Speaker 3: excuse me, you need to risk risk manage around that

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Speaker 3: a little bit.

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Speaker 6: Is there more though anecdotes that more and more consumers

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Speaker 6: are trading down and potentially that's the start of something bigger.

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Speaker 3: It does feel that way, but I mean I can

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Speaker 3: think back to last all the previous to August August

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Speaker 3: twenty twenty three, when you had some you know, weak

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Speaker 3: data out of some of the retailers on their on

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Speaker 3: their private label credit cards, and folks were saying, this

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Speaker 3: is the moment. You know, these private level credit cards

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Speaker 3: are under under pressure and credit balances are rising.

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Speaker 4: So I mean the.

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Speaker 3: Anecdotes, yes, they are stacking up, but I feel like

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Speaker 3: people have been trying to fade this for an extended

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Speaker 3: period of time, and it's always been a little bit

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Speaker 3: too early. So you know, I think, yes, yes, yes,

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Speaker 3: the anecdotes are stacking up, but I'm not sure that that's,

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Speaker 3: you know, out of the blue. I think this is

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Speaker 3: something people have been expecting. It has been kind of

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Speaker 3: an ongoing process, and we're just gonna have to, I

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Speaker 3: hate to say, just wait on the data.

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Speaker 4: At this point.

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Speaker 2: Jobless Claims has been a great example of the same thing.

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Speaker 2: So many headfakes of the last compless summits. We're coming

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Speaker 2: into September oc Tiber. Every single time we're waiting for

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Speaker 2: this thing to slow down, and then it just doesn't happen.

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Speaker 4: Too.

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Speaker 2: It's good to see you. Thank you, have a happy

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Speaker 2: thanksgiving you to catching up with this. Thank you, Stu.

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Speaker 2: A kinds of that of City tending to Tenessla California Conveny,

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Speaker 2: I can have a new some excluding Elon Musk Company

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Speaker 2: from a proposal that would oft for EV rebates to

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Speaker 2: buy us if a federal subsidy is repealed. Newsom's office

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Speaker 2: telling Bloomberg it's due to the plan's market share limitations

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Speaker 2: must call in the proposal insane. In a post on x,

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Speaker 2: Danas of wet Buss saying this, with the majority of

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Speaker 2: evs sold in California being Tesla's, this would be a

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Speaker 2: risky political move in our view. Dan joins us from

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Speaker 2: more thank in Morning Creazy to be here. Do you

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Speaker 2: agree it's insane?

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Speaker 7: Look, yeah, Jig, Paul and Tyson, now you got news

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Speaker 7: and Musk. I mean, this is going to be a battle,

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Speaker 7: right like, and.

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Speaker 5: Ultimately it's a political battle.

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Speaker 7: But the only evs that are made in California Tasselas.

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Speaker 7: So if you ALTERO, if they actually go down this path,

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Speaker 7: I believe this could be some threat to where more

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Speaker 7: and more jobs moved from Freemont to sex Coustin.

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Speaker 5: But at the end of the.

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Speaker 7: Day, federal attacks, as we've talked about, that's going to

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Speaker 7: get ripped away.

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Speaker 5: That's bullsh for Tesla. You're just going to see this

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Speaker 5: back and forth.

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Speaker 2: Before we get into that, let's just take into this

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Speaker 2: relationship what it's behind it. We know what was behind

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Speaker 2: it with Biden. What this basically came down to was

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Speaker 2: union workers not being a tenser in a way that

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Speaker 2: they were at GM and Ford. What's this one about?

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Speaker 7: Look, I think first of all, I mean Musk was

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Speaker 7: iced out of the Biden administration per year.

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Speaker 5: I was really focused on Detroit and from the GM four.

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Speaker 7: Another's if you look here is that there's regulars. There's

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Speaker 7: a beef qlearly between Musk Newsome. But essentially what this

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Speaker 7: is really about is that you're going to have these

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Speaker 7: tax pap from a federal perspective taken away. California clearly

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Speaker 7: trying to do something.

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Speaker 5: To stop there. But the reality is is that this ran.

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Speaker 7: The money ran out on this program in California.

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Speaker 2: So Dan, this is important. The support at a federal

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Speaker 2: level is clearly with Elon Musk. At a state level,

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Speaker 2: in places like California, it looks like because of this

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Speaker 2: tension he's losing it. How important is that relationship of

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Speaker 2: both the state and level when it comes to things

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Speaker 2: like autonomus driving state.

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Speaker 7: We view it as much less than from a federal

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Speaker 7: perspective because the golden goose here is autonomous. You know,

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Speaker 7: we believe the autonomous piece is worth a trillion dollars

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Speaker 7: alone to Tesla. Federal regulatory spiderweb essentially gets ripped away,

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Speaker 7: and I think that's significant. Now California, Newsom queerly will

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Speaker 7: try to fight some of the autonomous, some of the

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Speaker 7: unsupervised FSD, but this is going to be something that's

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Speaker 7: really going to continue. But I believe Tesla is going

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Speaker 7: to have significant sort of room to what I view

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Speaker 7: is elevate themselves within autonomous and that's.

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Speaker 5: Really what I believe is the key to this Tesla story.

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Speaker 7: It's about AI and autonomous what Newsom's doing here when

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Speaker 7: it comes to California, this is essentially almost a side

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Speaker 7: show to the broader story here with Tesla, which is

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Speaker 7: why it's really been a Cinderella story since Trump got

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Speaker 7: in because of the must bet.

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Speaker 6: But when it comes to autonomous driving and the federal regulations,

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Speaker 6: it's a light switch.

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Speaker 4: This has to go through Congress.

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Speaker 6: Elon Musk and his proximity to power cannot just basically

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Speaker 6: get this over the finish.

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Speaker 7: Line of course not in itself, but could move it

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Speaker 7: significantly toward the finish line. So okay, he gets into

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Speaker 7: the two yard line. Right now, it's at the forty

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Speaker 7: yard line. Okay, fifty midfield, so he gets to a

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Speaker 7: two yard line. But that's also why with the red

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Speaker 7: sweep and just relative to what we see with coming

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Speaker 7: out of the beltwayh you know, being there over the

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Speaker 7: last week, we feel like there's a ground swell for autonomous,

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Speaker 7: but no doubt when it comes to EVS, you.

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Speaker 6: Feel there's a ground swell in Congress as well.

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Speaker 7: I believe there's a groundswell. For the reason I think

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Speaker 7: there's a ground swell based on our of you and

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Speaker 7: what we hear is because of what's happened in China,

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Speaker 7: because China is now going so far ahead of the

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Speaker 7: US when it comes to autonomous because of the lack

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Speaker 7: of really.

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Speaker 5: Regulatory spider web.

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Speaker 7: That's why Trump, you have an ais are come in,

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Speaker 7: But who's going to be From an AI's our perspective,

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Speaker 7: Musk is going to have have a front row seat

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Speaker 7: to really everything here. And that's why it continues to

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Speaker 7: be the poker bet for the ages for Musk.

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Speaker 5: You betting on Trump.

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Speaker 1: So basically, and this sort of goes to the heart

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Speaker 1: in some ways of the beef between Newsom and Musk.

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Speaker 4: The idea that it's one thing to.

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Speaker 1: Be transactional in your policies if you're in the White

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Speaker 1: House in your Washington, DC. It's another for sitting at

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Speaker 1: the state and the White House will probably trump that.

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Speaker 1: There is just a question of how far that will go.

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Speaker 1: Do you actually believe that there will be policies crafted

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Speaker 1: specifically to benefit Tesla over some of the rivals in

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Speaker 1: the United States because of Musk's closeness to the White House.

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Speaker 7: I think, look clearly, well, Tesla is just a much

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Speaker 7: different situation relative to Autonomous. So they at first that

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Speaker 7: they have the scale and scope on EV so you

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Speaker 7: pull the tax credit, gives them a huge advantage is

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Speaker 7: relative to federal subsidies, but aren't autonomous.

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Speaker 5: It's their world. Everyone else pays rent along with Weymouth.

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Speaker 7: So when you look at this relative to other auto makers,

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Speaker 7: they're essential almost going to have to license from Tessa

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Speaker 7: when it comes to the state level. You look in Newsom,

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Speaker 7: look does this end up in a UFC fight?

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Speaker 4: I don't know.

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Speaker 7: I mean, this is going to continue to play.

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Speaker 5: Out between this beef Newsom and Musk.

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Speaker 1: This goes beyond just Tesla. There was a report out

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Speaker 1: of the Information saying that Google CEO called Donald Trump

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Speaker 1: and Elon Musk was on the phone with him and he.

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Speaker 5: Was surprised by that.

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Speaker 4: You talk about.

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Speaker 1: Space and some of the space exploration and what's going

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Speaker 1: to happen with the NASA budget, how much can you

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Speaker 1: extrapolate out that the Musk halo is really something that

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Speaker 1: you have to sort of get on the bandwagon as

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Speaker 1: as an investor, simply because there are going to be

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Speaker 1: certain policies that will just to facto benefit him because

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Speaker 1: of his closeness with the president.

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Speaker 7: I mean, I think you said as best as I

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Speaker 7: can say. I mean this Musk and Trump, this is

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Speaker 7: not going away. I actually see this something that's going

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Speaker 7: to continue to expand, and it's going to be from

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Speaker 7: China tariff discussions.

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Speaker 5: When you look musk.

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Speaker 7: Ability in terms of President g and his relationship there,

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Speaker 7: when it comes to AI, when it comes to autonomous EV's.

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Speaker 5: That's why it comes down to Detroit. Musk, he wasn't

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Speaker 5: at the cool kids table.

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Speaker 7: Now there's a knock at the door at Delon and

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Speaker 7: I think that's really the issue right now that's starting

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Speaker 7: to happen is that everyone's starting to realize that this

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Speaker 7: Musk Trump alliance is going to continue in a lot

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Speaker 7: of ways. Newsom's clearly trying to get into that, but

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Speaker 7: I continue to believe that's probably gonna be a battle

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Speaker 7: he'll ultimately lose because you continue going down that path. Okay,

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Speaker 7: more jobs go from Fremont to Austin. Oh and second thought,

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Speaker 7: maybe we won't exclude him.

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Speaker 2: So this is Tensa in California. You also come at GM.

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Speaker 2: What's your reaction to the terrace that's been threatened on

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Speaker 2: Mexico on Canada, given that we know that these automakers

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Speaker 2: have kind of presence sounds of the border.

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Speaker 7: I mean, if you're married right now, Mary Barr, I mean,

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Speaker 7: here it is. You have Musk that's going to be

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Speaker 7: front row on Trump. Now, you got these tariffs. I

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Speaker 7: mean you took about heartburn from a GM perspective, Well

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Speaker 7: for a company right now, that's actually I think it's

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Speaker 7: some of the best execution that I've seen.

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Speaker 2: You've still got an out perform on the stuff.

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Speaker 7: Because because to me, if you look at execution, I

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Speaker 7: still don't believe the stock is getting the right value relative.

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Speaker 2: To how exposed are they vote to this tarrast story.

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Speaker 2: And if it goes through with it, can you still

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Speaker 2: put an outperform on that stuff?

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Speaker 5: They're exposed. We got to see how as it all

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Speaker 5: plays out.

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Speaker 7: I continue to think that Bark will be a little

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Speaker 7: worse than the bite, you know, in terms of as.

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Speaker 5: It all plays out.

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Speaker 7: But for GM, for a company that's humming right now,

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Speaker 7: it's kind of been a little one two punch in

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Speaker 7: that three wine three area.

442
00:18:38,480 --> 00:18:40,720
Speaker 2: Coulde such a m the anymason I put up GM,

443
00:18:40,760 --> 00:18:42,679
Speaker 2: it's not about a taris. It's about F one expanding

444
00:18:42,720 --> 00:18:44,720
Speaker 2: the grid to an left of the team. You went

445
00:18:44,760 --> 00:18:47,040
Speaker 2: to Venkas over the weekend. What was your impression of thinks?

446
00:18:47,080 --> 00:18:50,919
Speaker 7: I mean, after my first F one so influence in

447
00:18:50,960 --> 00:18:53,919
Speaker 7: the book that was that was just an epic we

448
00:18:54,200 --> 00:18:57,360
Speaker 7: in terms of just being experienced F one being part

449
00:18:57,359 --> 00:19:01,399
Speaker 7: of the Ferrari team there, it was just an unbelievable experience.

450
00:19:01,400 --> 00:19:03,760
Speaker 7: I recommend everyone you know, I went from the Netflix.

451
00:19:03,800 --> 00:19:07,320
Speaker 7: I went from Pharaoh to the Netflix shows an influencer.

452
00:19:07,359 --> 00:19:10,280
Speaker 5: Now he's an isn't it. He's actually an F one influencer.

453
00:19:10,520 --> 00:19:13,800
Speaker 7: So I went from Pharaoh to the Netflix show to

454
00:19:13,920 --> 00:19:16,040
Speaker 7: go into a net forn race. Next thing, I know,

455
00:19:16,119 --> 00:19:18,240
Speaker 7: I could be a monarcha you never know where that's

456
00:19:18,240 --> 00:19:18,639
Speaker 7: gonna go.

457
00:19:18,800 --> 00:19:21,080
Speaker 2: You was signed up member of the FOCI. Now you're

458
00:19:21,080 --> 00:19:21,760
Speaker 2: a Ferrari fan.

459
00:19:21,880 --> 00:19:24,200
Speaker 5: I am signed up Ferrari fan.

460
00:19:24,320 --> 00:19:27,040
Speaker 7: Now it's and now it starts with Penn Steep.

461
00:19:27,080 --> 00:19:28,439
Speaker 5: But now Ferrari is part of that.

462
00:19:28,520 --> 00:19:30,880
Speaker 2: Okay, that's quite a contrast Penn state and it's.

463
00:19:31,240 --> 00:19:32,760
Speaker 5: But you're talking about both.

464
00:19:33,359 --> 00:19:37,560
Speaker 2: You bomb out, you barbel the strategy. Thank you, it's

465
00:19:37,600 --> 00:19:39,640
Speaker 2: going to see it was a web past. Thank you, sir.

466
00:19:49,560 --> 00:19:52,240
Speaker 2: Here's the lass this morning. Holiday shopping expected to break

467
00:19:52,320 --> 00:19:55,399
Speaker 2: records this year, signaling just how much higher prices are

468
00:19:55,480 --> 00:19:59,760
Speaker 2: impact and consumer spending. Neia Richardson of a DP Research institute, writing,

469
00:19:59,840 --> 00:20:03,240
Speaker 2: high prices could dim holiday chap for a long time.

470
00:20:03,280 --> 00:20:07,440
Speaker 2: Wage growth for hourly employees was outpaced by inflation. NATA

471
00:20:07,520 --> 00:20:09,439
Speaker 2: joins us now for more NATA always great to see you,

472
00:20:09,520 --> 00:20:12,479
Speaker 2: welcome back, thank you. What's the outlook suspending this holiday

473
00:20:12,480 --> 00:20:13,159
Speaker 2: shop in season?

474
00:20:13,320 --> 00:20:16,800
Speaker 8: Well, the outlook for spending is that record highs. The

475
00:20:16,880 --> 00:20:22,000
Speaker 8: National Retail Federation expects consumers to spend nine hundred dollars

476
00:20:22,400 --> 00:20:27,880
Speaker 8: per person per family this year. That's up like fifteen

477
00:20:27,960 --> 00:20:32,320
Speaker 8: dollars from last year. So strong spending this year is expected.

478
00:20:32,359 --> 00:20:35,360
Speaker 8: But the problem is we're on a knife edge when

479
00:20:35,400 --> 00:20:40,000
Speaker 8: it comes to wage growth versus inflation. In fact, we

480
00:20:40,080 --> 00:20:44,680
Speaker 8: only expect for hourly wages, hourly workers, which are the

481
00:20:45,200 --> 00:20:48,439
Speaker 8: well sixty percent of the labor market, we only expect

482
00:20:48,480 --> 00:20:52,560
Speaker 8: their wages to tread just above CPI inflation, So that's

483
00:20:52,640 --> 00:20:56,120
Speaker 8: like thirty basis points. So as prices are going higher,

484
00:20:56,480 --> 00:20:57,920
Speaker 8: wages aren't keeping up.

485
00:20:58,119 --> 00:21:00,199
Speaker 2: How big is the spread between how consumers say they

486
00:21:00,200 --> 00:21:02,960
Speaker 2: fail versus how much they do because how they fail

487
00:21:03,000 --> 00:21:05,080
Speaker 2: has been pretty awful for quite a while now. But

488
00:21:05,080 --> 00:21:07,000
Speaker 2: then I look at retoul sounds, and retail sounds are

489
00:21:07,000 --> 00:21:10,520
Speaker 2: still really robust. What do you think explains that labor markets?

490
00:21:10,800 --> 00:21:14,080
Speaker 8: Because even though wages are just keeping up with inflation

491
00:21:14,200 --> 00:21:17,480
Speaker 8: right now, people are employed. If you look at layoffs,

492
00:21:17,480 --> 00:21:21,200
Speaker 8: they're very, very low. There's not this threat and pending

493
00:21:21,240 --> 00:21:23,439
Speaker 8: threat of doom when it comes to what's going to

494
00:21:23,480 --> 00:21:26,920
Speaker 8: happen after the holidays, will they still have their jobs?

495
00:21:26,960 --> 00:21:30,000
Speaker 8: For many workers, they still feel confident about the labor market.

496
00:21:30,200 --> 00:21:34,040
Speaker 8: What they lack confidence is in prices. They keep going

497
00:21:34,119 --> 00:21:37,040
Speaker 8: up higher and they're already at high levels, and that's

498
00:21:37,080 --> 00:21:39,120
Speaker 8: what's changing the game in terms of sentiment.

499
00:21:39,240 --> 00:21:42,160
Speaker 1: Has there been a behavioral shift or people are being paid,

500
00:21:42,200 --> 00:21:44,800
Speaker 1: they are employed, and yet they're not levering up. The

501
00:21:44,880 --> 00:21:47,640
Speaker 1: people still have the specter, whether it's the financial crisis,

502
00:21:47,680 --> 00:21:50,040
Speaker 1: whether it's just simply this time of high inflation and

503
00:21:50,080 --> 00:21:53,480
Speaker 1: feelings like you need to get your personal finances under control.

504
00:21:53,680 --> 00:21:56,960
Speaker 1: You're not seeing credit card delinquencies pick up in a

505
00:21:56,960 --> 00:21:57,840
Speaker 1: miss material way.

506
00:21:57,920 --> 00:22:00,480
Speaker 8: Is or message from that I think they're as First

507
00:22:00,480 --> 00:22:04,040
Speaker 8: of all, consumers are being a little sharper about their finances.

508
00:22:04,080 --> 00:22:07,600
Speaker 8: But you know, we can't go too overboard and optimism

509
00:22:07,640 --> 00:22:10,000
Speaker 8: with the low delinquencies relative to the past.

510
00:22:10,240 --> 00:22:12,080
Speaker 5: We have to also look at savings.

511
00:22:11,800 --> 00:22:15,600
Speaker 8: Rates, which are also low. So we're in this purgatory,

512
00:22:15,640 --> 00:22:19,320
Speaker 8: if you will, in terms of consumer balance sheets. They're

513
00:22:19,359 --> 00:22:22,120
Speaker 8: getting by, but they're living paycheck to paycheck. They're not

514
00:22:22,160 --> 00:22:24,960
Speaker 8: putting away savings at the same rate that they used to.

515
00:22:25,320 --> 00:22:28,919
Speaker 8: Credit Card delinquencies aren't picking up yet. So yes, this

516
00:22:29,080 --> 00:22:31,760
Speaker 8: is a happy period for the consumer, but it is

517
00:22:31,960 --> 00:22:35,240
Speaker 8: again a sensitive period. You don't know what could sway

518
00:22:35,280 --> 00:22:38,199
Speaker 8: the consumer into more debt and into less savings than

519
00:22:38,240 --> 00:22:38,720
Speaker 8: they have been.

520
00:22:38,840 --> 00:22:40,919
Speaker 1: It's taken a long time for the average worker to

521
00:22:40,960 --> 00:22:43,240
Speaker 1: catch up, to catch up to inflation, and they feel

522
00:22:43,280 --> 00:22:45,320
Speaker 1: like they've been left behind, and we've seen that increasingly.

523
00:22:45,400 --> 00:22:47,160
Speaker 1: John was talking about the sentiment surveys.

524
00:22:47,600 --> 00:22:48,520
Speaker 5: Have people caught up?

525
00:22:48,720 --> 00:22:49,400
Speaker 4: What would it take?

526
00:22:49,520 --> 00:22:50,440
Speaker 2: So what would it take.

527
00:22:50,440 --> 00:22:52,399
Speaker 1: For them to catch up in a mature way with

528
00:22:52,440 --> 00:22:55,320
Speaker 1: wage gains that could put them at least on the

529
00:22:55,320 --> 00:22:59,040
Speaker 1: same track they were or relatively close as pre pandemic.

530
00:22:59,359 --> 00:23:01,520
Speaker 8: Look, we look at data all the time at ADP.

531
00:23:01,680 --> 00:23:05,119
Speaker 8: We're looking at hourlay workers. I was just reviewing fourteen

532
00:23:05,359 --> 00:23:09,480
Speaker 8: million hourly workers in their average pay. For the better

533
00:23:09,520 --> 00:23:13,240
Speaker 8: part of the last four years, the worker has been underwater,

534
00:23:13,640 --> 00:23:16,520
Speaker 8: meaning their wage growth is not keeping up with the

535
00:23:16,840 --> 00:23:20,680
Speaker 8: inflation that they're seeing in retail, in consumer price inflation,

536
00:23:21,119 --> 00:23:24,800
Speaker 8: So we haven't kept up in general as a workforce.

537
00:23:25,520 --> 00:23:29,000
Speaker 8: There is pockets of light. Now we're finally starting to

538
00:23:29,080 --> 00:23:31,919
Speaker 8: see a little bit of an increase in wage growth

539
00:23:31,960 --> 00:23:36,879
Speaker 8: above CPI inflation, but it's tenuous, it's vulnerable, and anything

540
00:23:36,960 --> 00:23:40,480
Speaker 8: could trigger a reversal in that wage growth versus CPI.

541
00:23:40,880 --> 00:23:45,479
Speaker 8: So no, the worker is not keeping pace. Consumption is

542
00:23:45,520 --> 00:23:49,920
Speaker 8: being led by wealthy, more affluent households, and the average

543
00:23:49,920 --> 00:23:52,360
Speaker 8: worker is still trying to keep up. That's why you're

544
00:23:52,400 --> 00:23:57,160
Speaker 8: seeing lower savings rates yet not spilling over into delinquencies.

545
00:23:57,160 --> 00:23:59,640
Speaker 8: And that's going to be the barometer to watch about

546
00:23:59,680 --> 00:24:00,760
Speaker 8: the health of the consumer.

547
00:24:00,880 --> 00:24:04,000
Speaker 6: Yet they're spending more this holiday season and December last

548
00:24:04,080 --> 00:24:06,840
Speaker 6: year inflation was north of three percent. The prior Christmas

549
00:24:06,840 --> 00:24:09,520
Speaker 6: it was north of six percent. Is there this idea

550
00:24:09,520 --> 00:24:11,520
Speaker 6: that the consumers also just getting more.

551
00:24:11,480 --> 00:24:12,120
Speaker 2: Used to inflation.

552
00:24:12,960 --> 00:24:15,720
Speaker 8: Well, they are certainly spending like it. I mean, they

553
00:24:15,760 --> 00:24:20,520
Speaker 8: don't like inflation. They may rally against inflation when it

554
00:24:20,520 --> 00:24:23,800
Speaker 8: comes to our sentiment severs, but it hasn't dented the

555
00:24:24,000 --> 00:24:28,440
Speaker 8: enthusiasm in spending. What consumers want now is cheaper prices

556
00:24:28,800 --> 00:24:33,040
Speaker 8: very quickly. Goods were used to real time consumption, and

557
00:24:33,080 --> 00:24:36,879
Speaker 8: they're getting that right now after the holidays. It'll be

558
00:24:36,960 --> 00:24:39,920
Speaker 8: a good benchmark for the real status of the consumer.

559
00:24:40,000 --> 00:24:42,560
Speaker 8: People tend to go over their skis a little bit

560
00:24:42,640 --> 00:24:45,560
Speaker 8: during the holidays. Will they pull back in January? Will

561
00:24:45,640 --> 00:24:48,520
Speaker 8: companies pull back in January? That's what we'll be looking for.

562
00:24:48,640 --> 00:24:50,720
Speaker 1: You said that some of the gains are really fragile

563
00:24:50,840 --> 00:24:52,040
Speaker 1: and that they could be derailed.

564
00:24:52,320 --> 00:24:56,360
Speaker 8: What would derail them well, higher prices, higher prices, and

565
00:24:57,000 --> 00:25:01,480
Speaker 8: if consumers or businesses who are betting on lower interest

566
00:25:01,520 --> 00:25:06,199
Speaker 8: rates going into the new year don't get that bet realized.

567
00:25:06,720 --> 00:25:10,760
Speaker 8: There's indications that inflation is sticky. It's not moving down

568
00:25:10,800 --> 00:25:13,280
Speaker 8: in the street line that was expected. If we see

569
00:25:13,280 --> 00:25:16,560
Speaker 8: a stalling in the interest rates, if consumer credit becomes

570
00:25:16,680 --> 00:25:19,880
Speaker 8: more expensive, if it costs more for consumers to borrow

571
00:25:20,080 --> 00:25:23,280
Speaker 8: to buy cars, which are also seeing some price growth

572
00:25:23,480 --> 00:25:26,360
Speaker 8: to fun purchases, then that could stall some of their

573
00:25:26,400 --> 00:25:27,240
Speaker 8: spending behavior.

574
00:25:27,359 --> 00:25:30,639
Speaker 2: Do you think the Fed hits pause? That's a no

575
00:25:30,760 --> 00:25:31,480
Speaker 2: food question.

576
00:25:31,680 --> 00:25:34,199
Speaker 8: I mean you're hearing a lot of FED speaks suggesting

577
00:25:34,520 --> 00:25:38,200
Speaker 8: just that there's been no FED speaker that I've heard

578
00:25:38,240 --> 00:25:42,520
Speaker 8: recently that has come out definitively and said inflation is

579
00:25:42,520 --> 00:25:44,919
Speaker 8: going in the right track and we're confident enough that

580
00:25:44,960 --> 00:25:48,359
Speaker 8: we will lower rates in December. There's still uncertainty around

581
00:25:48,359 --> 00:25:48,800
Speaker 8: that decision.

582
00:25:48,800 --> 00:25:50,120
Speaker 2: It's going to be an interest a few weeks, that's

583
00:25:50,119 --> 00:25:51,840
Speaker 2: for sure. Native. It's good to see you. Nati Rich

584
00:25:51,920 --> 00:25:56,280
Speaker 2: is in there of ADP. This is the Bloomberg Seventans podcast.

585
00:25:56,400 --> 00:26:00,320
Speaker 2: Bringing you the best in markets, economics, angio politics. You

586
00:26:00,359 --> 00:26:03,119
Speaker 2: can watch the show live on Bloomberg TV weekday mornings

587
00:26:03,119 --> 00:26:06,080
Speaker 2: from six am to nine am Eastern. Subscribe to the

588
00:26:06,119 --> 00:26:09,600
Speaker 2: podcast on Apple, Spotify, or anywhere else you listen, and

589
00:26:09,640 --> 00:26:12,520
Speaker 2: as always, on the Bloomberg Terminal and the Bloomberg Business

590
00:26:12,520 --> 00:26:12,760
Speaker 2: app