WEBVTT - The Fed, Retail Sales, and The Great Resignation 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.840 at Bloomberg dot com slash podcast. Today is Fed Minutes Day, 0:00:22.840 --> 0:00:24.920 and here a Bloomberg and Radio. We think that's a 0:00:25.040 --> 0:00:26.920 kind of a fun day, so we get excited about 0:00:26.920 --> 0:00:29.840 Fed minutes. So does our next guest, Danielle di Martino, 0:00:29.880 --> 0:00:34.120 Booth CEO and chief strategist for Quill Intelligence, former advisor 0:00:34.520 --> 0:00:38.280 at the Federal Reserve Bank of Dallas. Danielle, what are 0:00:38.320 --> 0:00:41.159 you really looking for this afternoon when we get a 0:00:41.200 --> 0:00:45.760 look at those FED minutes? Well, I'm going to be 0:00:45.840 --> 0:00:49.640 looking for the tassett and I use that word carefully. 0:00:49.680 --> 0:00:56.120 The tasset concession made to the bears made to Christopher Waller, 0:00:56.280 --> 0:00:59.000 the former research director of Jim Bullard at the St. 0:00:59.080 --> 0:01:01.440 Louis Fed, who's now our gut Ner, uh and Master 0:01:01.680 --> 0:01:04.240 and George and others who have been insistent that the 0:01:04.240 --> 0:01:07.040 Fed Reserve does not belong in the business of of 0:01:07.080 --> 0:01:09.920 housing of the word we would use internally when I 0:01:09.959 --> 0:01:13.080 was at the fit with credit allocation. Um. So it's 0:01:13.080 --> 0:01:15.399 an inappropriate place where it had to be, and it 0:01:15.440 --> 0:01:17.800 has been for about a year. And the only nod 0:01:17.840 --> 0:01:20.320 that we saw to them in the minutes was that 0:01:20.360 --> 0:01:23.399 they you know, they said specifically, we're going to get 0:01:23.400 --> 0:01:24.960 out of a housing business. We're gonna get out of 0:01:24.959 --> 0:01:28.080 the business of mortgage backed securities and focus more on treasuries. 0:01:28.400 --> 0:01:30.800 So I'm interested in that conversation and how that went 0:01:30.840 --> 0:01:33.720 down because I think it's what prevented a dissent. Yeah. 0:01:33.720 --> 0:01:37.840 A lot of people, though, are getting downright angry that 0:01:37.920 --> 0:01:40.679 they're waiting this long to make those statements and that 0:01:40.760 --> 0:01:44.040 they're waiting until the March meeting to make any moves. 0:01:44.440 --> 0:01:47.559 Inflation is at a level where you know, I'm getting 0:01:48.440 --> 0:01:51.680 I'm getting text messages from from viewers who finally figured 0:01:51.720 --> 0:01:53.840 out my cell phone number, and there are a lot 0:01:53.840 --> 0:01:57.440 of expletives in them. Um, what do you think about 0:01:57.440 --> 0:02:01.040 the possibility of an emergency meeting or a fifty basis 0:02:01.040 --> 0:02:04.760 point hike in March? You know, when when I saw 0:02:05.880 --> 0:02:08.360 and I was I was actually I was gratified that 0:02:08.400 --> 0:02:11.960 Jim Bullard stood by his position on Monday morning, and 0:02:12.440 --> 0:02:14.720 because it at least seems to me that there are 0:02:14.720 --> 0:02:16.520 at least a few people inside the FED who are 0:02:16.560 --> 0:02:20.120 not insensitive. And that's the word that I'll use. So 0:02:20.200 --> 0:02:21.880 it's all good and well to come out with an 0:02:21.880 --> 0:02:26.240 emergency rate cut in March of uh, you know, when 0:02:26.280 --> 0:02:30.600 investors are being you know, in the crosshairs. But it's 0:02:30.639 --> 0:02:33.000 not okay to come out with an emergency rate hike 0:02:33.600 --> 0:02:38.040 to answer the plight of everyday US workers. And that's 0:02:38.080 --> 0:02:40.959 to me, it boils down to being white and black. 0:02:41.000 --> 0:02:42.880 It's as simple as that we will come to the 0:02:42.880 --> 0:02:45.079 rescue of investors, we will not come to the rescue 0:02:45.080 --> 0:02:47.800 of you as households. And the FED is mandated to 0:02:47.840 --> 0:02:50.840 make policy in the public interests and to suggest that 0:02:50.919 --> 0:02:53.960 when when when we're when when we've got the gallows 0:02:54.000 --> 0:02:56.520 humor going on about skateboarding and relearning how to do 0:02:56.560 --> 0:02:59.600 that and gas prices are you know, hitting four dollars 0:02:59.600 --> 0:03:02.480 a gallon, and it's it's just again, the word that 0:03:02.480 --> 0:03:05.360 comes to mind is insensitive. Five dollars a gallon. We 0:03:05.360 --> 0:03:09.400 were talking about five dollars. Yeah, So that Daniel I mean, 0:03:09.520 --> 0:03:11.720 when we think about inflation in the FED, I'm not 0:03:11.760 --> 0:03:14.679 even sure the FEDS in that business. This an inflation 0:03:14.760 --> 0:03:19.639 this time around primarily supply chain driven. So was this 0:03:20.480 --> 0:03:22.200 don't a good point? Maybe it's something that the FED 0:03:22.240 --> 0:03:25.920 can't address. How do you think about that? You know, 0:03:26.040 --> 0:03:28.440 I don't think it's supply chain driven. We we saw 0:03:28.520 --> 0:03:32.400 production this morning increased by point two p once you 0:03:32.480 --> 0:03:35.480 got rid of the cost for heating oil and gas. 0:03:35.480 --> 0:03:37.960 So I don't buy that. I think that the supply 0:03:38.080 --> 0:03:43.200 chain disruptions are coming undone. We're seeing inventories be replenished. Uh, 0:03:43.200 --> 0:03:44.840 and that the you know, on the other hand, forty 0:03:44.880 --> 0:03:48.720 two million Americans got a bump up in their allocation 0:03:48.800 --> 0:03:51.520 for food spending on October the one. And that's why, 0:03:51.840 --> 0:03:55.800 despite world food inflation being off the rails, it's even 0:03:56.080 --> 0:03:59.480 more off the rails for your average American family because 0:03:59.720 --> 0:04:02.800 the US government has put pump so much fiscal spending 0:04:03.080 --> 0:04:06.280 out into the economy. So we we have to look 0:04:06.400 --> 0:04:09.040 in the eye the fact that the fiscal spending, and 0:04:09.080 --> 0:04:11.520 there's been countless empirical studies done on this. When you 0:04:11.560 --> 0:04:14.960 give people money directly deposit cash into the hands of 0:04:15.000 --> 0:04:17.400 those with the highest propensity to spend it. They're going 0:04:17.440 --> 0:04:21.200 to spend it, and they did. And the inflation is lagging, 0:04:21.279 --> 0:04:25.120 so it's dragging down growth even as the fiscal stimulus 0:04:25.240 --> 0:04:29.560 has largely gone away. Can I just ask you quickly 0:04:29.800 --> 0:04:34.720 about Sarah bloom Raskin, what's your take on um, the 0:04:34.839 --> 0:04:39.800 kind of job she'll do if she's ever confirmed? Well? 0:04:39.960 --> 0:04:41.960 And I think it's I really do think it's a 0:04:41.960 --> 0:04:45.359 big if. People don't quite understand the importance of Pat 0:04:45.400 --> 0:04:48.160 to me sticking to his guns and saying I'm i'm 0:04:48.200 --> 0:04:51.000 self imposing term limits, and so time and again he's 0:04:51.040 --> 0:04:53.960 been able to actually do his job, and and and 0:04:53.960 --> 0:04:57.080 and put, you know, give the scrutiny that's needed to 0:04:57.320 --> 0:05:00.920 certain positions, whether it was defends municipal bond facility that 0:05:00.960 --> 0:05:03.520 he insisted be shut down along with those credit facilities 0:05:03.800 --> 0:05:08.200 in the December two thousand m two at twenty excuse me, 0:05:08.240 --> 0:05:11.359 two thousand twenty stimulus. I think that there has been 0:05:11.400 --> 0:05:16.000 an inappropriate amount of um of disclosure, and I think 0:05:16.040 --> 0:05:20.400 demanding questions as opposed to being placated with saying I'll 0:05:20.440 --> 0:05:23.080 sign a pledged it's never exists and dreamed up by 0:05:23.080 --> 0:05:27.080 Elizbeth Warren, No, I think an appropriate of scrutiny is 0:05:27.440 --> 0:05:31.720 called for, and I find some of the testimonies plural 0:05:31.800 --> 0:05:34.080 that have been that have been given to be disingenuous 0:05:34.160 --> 0:05:36.360 because of the work that they've been in the past 0:05:36.400 --> 0:05:39.680 on climate change. Danielle, thank you so much for joining us. 0:05:39.760 --> 0:05:43.520 As always, we appreciate your thoughts and insight. Danielle di Martino, Booth, 0:05:43.920 --> 0:05:52.480 CEO and chief strategists at Quill Intelligence. Speaking of inflation, 0:05:52.520 --> 0:05:54.359 for you, no matter where the where you look, you 0:05:54.440 --> 0:05:58.280 see it c p I, p p I retail sales. Uh, 0:05:58.320 --> 0:06:00.920 certainly many signs of inflat sation out there, whether it's 0:06:00.920 --> 0:06:04.040 at the gas pump or the supermarket. The question is, um, 0:06:04.279 --> 0:06:07.240 have we peaked? Has it peaked? When will we see 0:06:07.279 --> 0:06:10.440 inflation a subside? And there's a federal reserve in other 0:06:10.480 --> 0:06:12.400 center banks have any roll here? Let's check in with 0:06:12.480 --> 0:06:17.120 Jennifer Lee, senior economist and managing director Demo Capital Markets. So, Jennifer, 0:06:17.160 --> 0:06:20.240 I'd love to get your call here on kind of 0:06:20.520 --> 0:06:24.159 us inflation. Have we peaked? Are we near a peak? 0:06:24.200 --> 0:06:27.400 How do you think about it? Good morning. I'm going 0:06:27.440 --> 0:06:30.680 to continue saying that we have not piked just yet. 0:06:30.760 --> 0:06:33.960 We are actually expecting uh, the inflation data to sort 0:06:33.960 --> 0:06:37.320 of you know peak the rollover I'm going to say, 0:06:37.400 --> 0:06:40.400 like late spring ish. Um, I don't think it's going 0:06:40.440 --> 0:06:44.080 to head sells very quickly. Unfortunately, it probably stays somewhat 0:06:44.080 --> 0:06:48.000 elevated before heading a before cooling somewhat in the second 0:06:48.040 --> 0:06:50.680 half of the year. But so NOA in a in 0:06:50.920 --> 0:06:52.600 my long winded way of saying, I don't think we've 0:06:52.800 --> 0:06:56.000 peaked just yet, but we're calling almost there. But you 0:06:56.040 --> 0:06:58.880 do think that we're going to come back down? Um? 0:06:58.960 --> 0:07:01.200 Is that because you think the FED is going to 0:07:01.320 --> 0:07:03.599 hike rates and that's going to cool down the economy 0:07:03.680 --> 0:07:07.680 and inflation. That would be the hope. I mean that's 0:07:07.920 --> 0:07:09.479 you know, I think of being central banks around the 0:07:09.480 --> 0:07:12.880 world of your just pointing out, are facing the same 0:07:12.920 --> 0:07:17.280 issues right now. And given such high inflation rates globally, 0:07:17.320 --> 0:07:19.840 you know, all the central banks, including the FED, are 0:07:20.320 --> 0:07:23.120 you know, starting to rate in all that accommodation that 0:07:23.160 --> 0:07:26.280 they've poured out during during the pandemic. Um, And this 0:07:26.360 --> 0:07:28.960 is the time and with inflation before inflation gets too 0:07:29.040 --> 0:07:32.200 much out of control. So, Jennifer, I'm looking at the 0:07:32.400 --> 0:07:36.400 w I rp go function on the Bloomberg Turmulin shows 0:07:36.440 --> 0:07:41.520 me potential for seven rate hikes encounter. Is that something 0:07:41.560 --> 0:07:46.440 you ascribed to? Oh, that's pretty rising. I feel every 0:07:46.480 --> 0:07:49.640 every single week we are actually we are looking for 0:07:49.840 --> 0:07:54.080 five rate hikes this year, twenty five basis points each 0:07:54.200 --> 0:07:57.920 and kicking off in March. I think that's more, you know, 0:07:58.080 --> 0:08:01.080 I've been saying a more reasonable pace. UM, I think 0:08:01.120 --> 0:08:03.960 fifty basis points for example in March that summer calling 0:08:04.000 --> 0:08:07.560 for is h I think it would be quite aggressive UM. 0:08:07.600 --> 0:08:09.760 And I think it was only like one UM, one 0:08:10.000 --> 0:08:12.440 FED member in particular, that it has been pushing for that. 0:08:12.480 --> 0:08:15.960 But I think the other policymakers have been taken more 0:08:16.000 --> 0:08:19.760 of a balanced approach and looking for probably basis points instead. 0:08:20.400 --> 0:08:22.760 One of the concerns, I mean, we all know what 0:08:23.720 --> 0:08:27.280 rate hike cycles look like, or even the kids can 0:08:27.320 --> 0:08:29.800 go back and and look at the history. But one 0:08:30.120 --> 0:08:34.440 sort of unknown is how quantitative tightening will affect markets. 0:08:34.840 --> 0:08:36.880 How do you see that panning out? Will they just 0:08:37.160 --> 0:08:39.240 um let it run off the balance sheet? Will they 0:08:39.240 --> 0:08:42.160 actively sell assets? Is it going to be a problem 0:08:42.240 --> 0:08:46.160 for rates markets? So we are looking for the QT 0:08:46.440 --> 0:08:50.160 process to start probably in July um and and and 0:08:50.720 --> 0:08:54.080 sort of taper off at a steady pace. But the 0:08:54.120 --> 0:08:56.920 Fed has always said that they are going to focus 0:08:57.440 --> 0:09:01.320 more on the FED funds target specific because that is 0:09:01.360 --> 0:09:04.120 what the public knows and and how you know, whether 0:09:04.200 --> 0:09:06.800 or not balance sheets runoff is is going to impact 0:09:06.840 --> 0:09:10.240 anyone's mindset is a big question. But I think they're 0:09:10.280 --> 0:09:13.560 going to just basically use the set funds and talk 0:09:13.720 --> 0:09:15.960 and keep talking about raising rates and sort of in 0:09:15.960 --> 0:09:19.040 the background, let let the balance sheets sort of start 0:09:19.360 --> 0:09:21.920 coming off. Um. And I think that will also have 0:09:22.200 --> 0:09:24.280 the impact of, you know, of a of a tighter, 0:09:24.679 --> 0:09:29.319 tighter financial conditions. Besides, Jeffrey hikes Jennifer. At two pm 0:09:29.320 --> 0:09:30.920 Wall Street time, we're going to get the f O 0:09:31.040 --> 0:09:35.319 m C meeting minutes. Um. It's always big news here Bloomberg. 0:09:35.920 --> 0:09:38.680 What are you looking for when when you Peruzo's minutes. 0:09:39.840 --> 0:09:42.440 There's always a lot to go through, but it's always 0:09:42.480 --> 0:09:44.800 interesting to get like a little little little tibbits, like 0:09:44.920 --> 0:09:47.800 you know, how how much each policy maker was pushing 0:09:47.840 --> 0:09:50.160 for what you know, how many um where there are 0:09:50.200 --> 0:09:53.120 several a few, you know a majority of people that 0:09:53.160 --> 0:09:56.240 were pushing for you know, a more aggressive tact at 0:09:56.240 --> 0:09:58.400 the beginning of a of a great high cycle or 0:09:58.400 --> 0:10:01.319 are they trying to go more severely. Those are little nuances, 0:10:01.360 --> 0:10:03.800 I think, just to see, you know, where how they're 0:10:03.840 --> 0:10:06.560 going to start off, even though they were saying that 0:10:06.559 --> 0:10:09.199 they're going to start raising rates right now, and even though, 0:10:09.200 --> 0:10:11.439 as you're pointing out, we've got seven rate hyps potentially 0:10:11.920 --> 0:10:15.480 coming in, which again I think is a bit extreme. Um. 0:10:15.520 --> 0:10:18.080 You know, things can change, and once inflation starts to 0:10:18.080 --> 0:10:20.280 taper off, they could start reading in a little bit 0:10:20.360 --> 0:10:23.080 some of their um their hawkish talk. Um, you know, 0:10:23.080 --> 0:10:24.920 I don't think it's going to be I don't think 0:10:24.920 --> 0:10:27.480 they're on autopilot as things what I'm trying to say, 0:10:27.480 --> 0:10:29.040 and I take most central banks are probably in that 0:10:29.080 --> 0:10:32.960 mode right now. Um not all right. We see some 0:10:34.000 --> 0:10:37.480 interesting exceptions in the Bank of Japan springs to mind. 0:10:37.520 --> 0:10:40.240 We had an interesting opinion piece this morning on Bloomberg saying, 0:10:41.160 --> 0:10:44.559 you know, the economy, the growth or the recovery in 0:10:44.640 --> 0:10:47.800 Japan doesn't look great. But as we all the rest 0:10:47.800 --> 0:10:50.679 of us deal with this huge inflation, um, the rest 0:10:50.720 --> 0:10:53.000 of the world might look to Japan and think one 0:10:53.040 --> 0:10:55.720 percent doesn't look so bad. Right now? What's your take 0:10:55.760 --> 0:11:01.520 on the contrasts of the Japan with with the rest 0:11:01.520 --> 0:11:04.480 of the central bank regime Japan has been. It's such 0:11:04.520 --> 0:11:06.720 an interesting story there, and I mean they've been facing 0:11:06.760 --> 0:11:08.640 you know, deflational on your more or less for the 0:11:08.720 --> 0:11:12.679 last at least two decades or so. UM and that 0:11:12.880 --> 0:11:15.480 is one UMU central Bank, as you just pointed out, 0:11:15.520 --> 0:11:18.800 that is remaining stubbornly on on the signlines, and Governor 0:11:18.880 --> 0:11:22.840 Karuda continues to stress that point. Um. You know, they 0:11:22.880 --> 0:11:25.439 had bond yields, for example, rising, their ten year yields 0:11:25.480 --> 0:11:28.680 were rising in conjunction with everybody else's uh last week 0:11:28.679 --> 0:11:30.680 and earlier this week, and they had to pour some 0:11:30.720 --> 0:11:33.360 money into to bring it back down to what their 0:11:33.400 --> 0:11:36.600 target was, but they remained so devilish and even one 0:11:36.800 --> 0:11:39.720 one or two of the the policy makers within the 0:11:39.760 --> 0:11:43.479 bank um continue actually to push for even more accommodations. 0:11:43.440 --> 0:11:46.320 So that's a huge extreme from what we're seeing elsewhere, 0:11:46.320 --> 0:11:48.560 you know, with with the G seven, even the ECB 0:11:48.760 --> 0:11:52.120 right now, you know, they're starting to become less emboldened 0:11:52.240 --> 0:11:55.720 to their transitory story and we're probably going to see 0:11:56.080 --> 0:11:58.040 you know, it's still a matter of debate right now. 0:11:58.080 --> 0:11:59.760 But you know, I wouldn't be surprised to see right 0:11:59.800 --> 0:12:03.240 high before the end of the year. All Right, thanks 0:12:03.280 --> 0:12:07.200 so much for joining us. Real pleasure talking. Um. We 0:12:07.320 --> 0:12:11.600 obviously are following this story very closely. Um, and and 0:12:11.640 --> 0:12:15.160 we'll continue to Jennifer Lee. They're joining us from BEMO 0:12:15.320 --> 0:12:19.000 Capital Markets, where she is senior economist and managing director. 0:12:21.960 --> 0:12:24.920 I'm gonna talk electric vehicles. Yes, I want to talk 0:12:24.920 --> 0:12:28.040 internal combustion vehicles, but it's the same discussion, the same discussion. 0:12:28.040 --> 0:12:31.120 Connercend a columnist for Bloomberg Opinion, joins this. Connor, You've 0:12:31.160 --> 0:12:35.920 got a piece out here saying, the automakers have an 0:12:35.920 --> 0:12:40.720 incentive obviously for keeping new car prices high, use car 0:12:40.760 --> 0:12:44.040 prices high, because they need the profits to fund this 0:12:44.120 --> 0:12:48.040 whole pivot towards electric What what's going on there? You're 0:12:48.040 --> 0:12:52.119 basically saying their purposely holding back production to pad margins. 0:12:53.720 --> 0:12:55.280 They say that they're kind of in a spot that 0:12:55.360 --> 0:12:58.000 they don't mind where you know, again, they have to 0:12:58.040 --> 0:13:00.079 inve us billions of dollars in the CP transition, and 0:13:00.280 --> 0:13:02.880 they also have to show investors near term profitability. They're 0:13:02.880 --> 0:13:04.920 trying to do both, and so they see the prices 0:13:04.920 --> 0:13:07.640 are really high. Inventories are really low. They're saying that 0:13:07.720 --> 0:13:11.120 their production won't meaningfully impact prices, and make expect prices 0:13:11.160 --> 0:13:13.360 to remain high because that's going to fund the profits 0:13:13.400 --> 0:13:16.200 that keep keeps this thing going. So in a way, 0:13:16.320 --> 0:13:20.880 your column actually made me feel better about being um 0:13:20.920 --> 0:13:26.360 an old you know, dodgy e v holdout Because I 0:13:26.360 --> 0:13:29.439 am waiting for General Motors to release a new Sierra, 0:13:29.559 --> 0:13:32.120 the A T four X. I need the six point 0:13:32.160 --> 0:13:36.160 to leader who naturally aspirated V eight And I felt 0:13:36.160 --> 0:13:39.320 guilty about that until I read your column column Connor, 0:13:39.360 --> 0:13:43.319 because um, what I realized is I'm paying a high 0:13:43.360 --> 0:13:46.880 price for that big inch internal combustion engine, and I 0:13:46.920 --> 0:13:53.719 am effectually subsidizing their electric vehicle investment with that. That's 0:13:53.720 --> 0:13:55.440 a really good way. I've never thought of it that way. 0:13:55.520 --> 0:13:57.400 That's a good point. So now anyone who really wants 0:13:57.400 --> 0:13:59.839 their gas guggler can say, hey, look I'm paying jury. 0:14:00.360 --> 0:14:02.640 So it's you know, there's no way that we'd be 0:14:02.640 --> 0:14:04.439 building these things unless people like me were going out 0:14:04.440 --> 0:14:07.960 and doing our patriarchy duty keeping the old stuff going. Connor. 0:14:08.000 --> 0:14:10.720 But if if the automakers had the chips, wouldn't they 0:14:10.720 --> 0:14:14.080 crank up production? Back up to sixteen seventeen million star. Yeah, 0:14:14.120 --> 0:14:17.560 this is my main question was is selling fewer vehicles 0:14:17.679 --> 0:14:22.680 at higher prices more profitable than selling um more vehicles 0:14:22.880 --> 0:14:25.880 at lower prices? Right, and I get to the whole 0:14:25.880 --> 0:14:29.040 discussion about you know, what does demand for gasoling power 0:14:29.120 --> 0:14:32.160 vehicles look like in four We know that right now 0:14:32.240 --> 0:14:33.880 we've got a huge shortage, and if you just pump 0:14:33.920 --> 0:14:36.160 out vehicles for six months, they're all going to sell 0:14:36.160 --> 0:14:38.360 at high prices. But you know, it's an industry with 0:14:38.400 --> 0:14:39.840 a lot of it's capital in sensive, it's a long 0:14:39.920 --> 0:14:42.360 lead time, and if ebs ramp up, you know it's 0:14:42.360 --> 0:14:44.000 coming out of somewhere. And so it's kind of a 0:14:44.000 --> 0:14:46.720 tricky situation, kind of like oil oil product producers where 0:14:47.040 --> 0:14:49.160 they kind of need to keep supply low because they're 0:14:49.160 --> 0:14:51.480 really worried about a glut on the market as demand 0:14:51.480 --> 0:14:54.400 falls off over time. A buddy of mine runs a 0:14:54.400 --> 0:14:56.480 bunch of dealerships, and he used to say, you'd have, 0:14:56.560 --> 0:14:59.880 you know, a couple hundred vehicles in inventory, but he's 0:15:00.000 --> 0:15:01.680 as those days are over, that's on how they're going 0:15:01.760 --> 0:15:05.120 to run the dealerships going forward. Is this kind of 0:15:05.120 --> 0:15:08.960 a new normal where they're gonna have lower inventories, maybe 0:15:09.000 --> 0:15:12.320 lower production. I'm not sure how that works. Yeah, it's 0:15:12.360 --> 0:15:14.120 interesting because we're seeing the same thing in the housing 0:15:14.160 --> 0:15:17.640 market where homebuilders are very happy with kind of the lowmentory, 0:15:17.760 --> 0:15:20.800 high profit margin situation. That's sort of like, well, we 0:15:20.840 --> 0:15:22.960 got caught on two of thementory, but we're making it 0:15:23.040 --> 0:15:25.280 up on price and margins. So they're they're kind of 0:15:25.320 --> 0:15:27.680 rolling with it for now, and investors are sort of 0:15:27.720 --> 0:15:30.560 not sure, Like, you know, valuations are lower because they're 0:15:30.560 --> 0:15:33.040 not sure if Martin's are gonna Mian revert. But that's 0:15:33.240 --> 0:15:34.600 you know, what they're selling in terms of a good 0:15:34.600 --> 0:15:37.080 thing for investors. Right now, my wife is looking for 0:15:37.840 --> 0:15:42.280 BMW X five X drive forty five E, which is 0:15:42.320 --> 0:15:47.160 their new hybrid STUV. I messaged my inside guy at 0:15:47.160 --> 0:15:49.720 BMW and said, do you have an inside guy a BMW? 0:15:49.880 --> 0:15:51.520 I said, can you source one of the one of 0:15:51.520 --> 0:15:53.320 these for me at a dealership in the States, And 0:15:53.320 --> 0:15:56.600 he said, we have one in California, there's one in 0:15:56.640 --> 0:16:00.200 Sans for it actually called out a deal or is 0:16:00.240 --> 0:16:02.520 that we're selling at inflated prices above m s r 0:16:02.600 --> 0:16:04.240 P and they so that those dealers an't going to 0:16:04.280 --> 0:16:06.880 get them until I're going forward. So I hope they're 0:16:06.920 --> 0:16:09.320 I hope they're true to their word because if you 0:16:09.440 --> 0:16:12.200 look for UM, for example, a four D F one 0:16:12.200 --> 0:16:15.800 fifty raptor uh there you know, Baja racing truck, or 0:16:15.840 --> 0:16:19.160 if you look for the Mustang Shelby Mustang g T 0:16:19.360 --> 0:16:22.120 five hundred, which is the supercharge five point two seven 0:16:22.200 --> 0:16:27.080 hundred sixty horsepower monster, you can't find them without ten thousand, 0:16:27.120 --> 0:16:30.640 fifteen thousand, twenty thousand dollar additions to the price tag. 0:16:30.680 --> 0:16:35.640 They call it like UM added dealer something, UM profit margin. Yeah, 0:16:35.840 --> 0:16:39.200 it's it's unbelievable. I always wonder like, if they're doing that, 0:16:39.320 --> 0:16:44.520 why can't UM these producers have their own dealerships, right, 0:16:44.520 --> 0:16:46.840 And that's probably the whole point with the online sales 0:16:46.880 --> 0:16:49.160 and the big fight about that. So it's that's probably 0:16:49.160 --> 0:16:51.400 gonna be a contentious flight going forward as dealers want. 0:16:51.480 --> 0:16:53.680 You know, if Tesla and Ribbyan can sell online, then 0:16:53.680 --> 0:16:55.560 why can't Board and GM. You make a great point 0:16:55.600 --> 0:16:58.720 about Tesla in your column as well. Um Elon Musk 0:16:58.760 --> 0:17:01.680 basically said, yeah, we're not working on the cheap car 0:17:01.760 --> 0:17:03.960 for every man right now because we're making too much 0:17:04.000 --> 0:17:08.280 money with the expensive cars for rich people. Um, what, 0:17:08.280 --> 0:17:10.720 what's you know? There's got to be some outcry there 0:17:10.720 --> 0:17:12.800 at least I'm not that not that the Model three 0:17:12.880 --> 0:17:15.800 is that expensive, but they are making huge margins on 0:17:15.840 --> 0:17:19.200 all their products, right And I think right now, because 0:17:19.240 --> 0:17:21.680 some conductors are in short supply, they can credibly say, 0:17:21.840 --> 0:17:24.160 you know, sorry, this is really just a situation we're 0:17:24.200 --> 0:17:26.760 put upon, we're put in. But if some semi conductor 0:17:26.960 --> 0:17:29.159 towards normalized, then maybe there won't be those excuses and 0:17:29.160 --> 0:17:32.760 they'll be more legitimate outcry and crack down on, you know, 0:17:32.880 --> 0:17:35.400 when wind fall profits or whatever you wanna call it. So, 0:17:35.440 --> 0:17:40.080 what is the new normal level of vehicle sales in 0:17:40.119 --> 0:17:42.000 the U S? If it's not a production, if it's 0:17:42.040 --> 0:17:45.720 not sixteen seventeen million, I mean, what's that? You're always 0:17:45.760 --> 0:17:47.439 asking me what the stars for this? Yeah? And I 0:17:47.480 --> 0:17:50.240 think the I that's where demand is, right, I mean, 0:17:51.160 --> 0:17:54.640 if I'm a factory, I think I think over time 0:17:54.640 --> 0:17:56.600 that's where we're gonna be. But it's sort of evs 0:17:56.640 --> 0:17:59.159 are supplied constrained for the time being, and automakers are 0:17:59.240 --> 0:18:01.760 very cautious about letting the market with ice vehicles because 0:18:01.760 --> 0:18:04.320 they don't know what the man looks like down the road. Connor, 0:18:04.400 --> 0:18:08.359 just personally, have you spent any uh time seat time 0:18:08.359 --> 0:18:11.240 in an electric vehicle? What do you think about them? 0:18:11.520 --> 0:18:13.119 I have to which it's sort of embarrassing that I 0:18:13.119 --> 0:18:14.600 write about him, but I have not been behind the 0:18:14.600 --> 0:18:16.399 wheel of one. I'm on the list, dribbian, but I 0:18:16.440 --> 0:18:18.439 have not driven one yet. I have to say so 0:18:18.480 --> 0:18:22.840 many I find um interesting. I was super psyched about 0:18:22.920 --> 0:18:26.480 these uh um F one fifty lightning trucks coming up 0:18:26.600 --> 0:18:30.400 the waitlist put me off. Now I've tested out the 0:18:30.480 --> 0:18:34.440 Mustang Maki, which is fast and sporty, but it doesn't vibrate. 0:18:34.520 --> 0:18:37.600 It doesn't there's no feeling in it. That's I don't 0:18:37.720 --> 0:18:40.440 enjoy driving it. I keep asking you car people, isn't 0:18:40.440 --> 0:18:43.280 that gonna be a big turn off for these things 0:18:43.880 --> 0:18:45.760 for evs? I just I just think the folks that 0:18:46.000 --> 0:18:48.119 like the internal combustion engine, particularly if you go to 0:18:48.119 --> 0:18:50.720 the high end, you know, performance cars, I think that's 0:18:50.760 --> 0:18:52.520 gonna be a problem. But what do I know? So 0:18:52.560 --> 0:18:54.879 but everybody's tell me where you can't shift your own gears? 0:18:55.119 --> 0:18:57.520 I know, don't even go no more manual, Connor. I mean, 0:18:57.680 --> 0:18:59.359 let's not go there. I kind of send calmness for 0:18:59.400 --> 0:19:02.960 Boomberg and joining us. He's a founder of Peachtree Creek Investments. 0:19:02.960 --> 0:19:06.560 He's a Bloomberke opinion columnist. Uh, we're all going electric, folks, 0:19:06.840 --> 0:19:09.400 get used to it. I guess I'm keeping my two 0:19:09.400 --> 0:19:14.120 thousand four team BMW five series six speed manual transmission 0:19:14.119 --> 0:19:17.560 for as long as I possibly ken because it's a 0:19:17.560 --> 0:19:24.720 lot of fun. One of the many things that I 0:19:24.720 --> 0:19:29.280 don't understand about this pandemic, any economic disruption resulting from it, 0:19:29.400 --> 0:19:32.080 is this whole thing about the great resignation, these three 0:19:32.200 --> 0:19:35.480 four five million workers. Who are they? Where did they go? 0:19:36.000 --> 0:19:38.240 How do they do it? And I really don't how 0:19:38.240 --> 0:19:40.439 did they get how did they get so lucky? I'm 0:19:40.480 --> 0:19:45.119 thinking about Dave Wilson, Bloomberg's former Stocks editor. Um, I 0:19:45.200 --> 0:19:47.359 blame him. I put him in that bunch. But he 0:19:47.440 --> 0:19:50.000 worked here for thirty years. If you work someplace for 0:19:50.080 --> 0:19:54.760 thirty years plus, you're incredibly smart. Uh, you save well, 0:19:55.000 --> 0:19:59.080 you invest well, you should retire. Okay, alright, alright, I 0:19:59.160 --> 0:20:01.760 just said, Dave, are you going? Buddy? Michael Hanson, he's 0:20:01.760 --> 0:20:05.840 a CEO of Send Gauge Group. Michael, who are these people. 0:20:06.240 --> 0:20:10.760 Where did they go? Are they coming back to the workforce? Yeah, 0:20:10.800 --> 0:20:14.160 thanks for having me. And actually the example that you said, 0:20:14.160 --> 0:20:18.520 the retiring um the people are the minority of these people, 0:20:18.680 --> 0:20:23.240 the last majority of those people that are resigning actually 0:20:23.320 --> 0:20:26.600 reassessing their career. They're saying, what don't I like about 0:20:26.600 --> 0:20:29.000 my current job and what where do I want to 0:20:29.040 --> 0:20:33.000 go next? And about of them feel that their current 0:20:33.080 --> 0:20:35.679 job is not really supporting their career and is not 0:20:35.760 --> 0:20:38.679 supporting them. Yeah, that's why I say, you know, he 0:20:38.760 --> 0:20:41.440 should be retiring. If you if you have a thirty 0:20:41.480 --> 0:20:44.679 year career and you do very well and retire, that's no, 0:20:45.040 --> 0:20:48.520 that's no surprise. The great resignation is weird in that 0:20:48.680 --> 0:20:51.359 people who you wonder how do they have enough money 0:20:51.359 --> 0:20:53.719 to to quit their jobs are doing it. And one 0:20:53.720 --> 0:20:55.960 of the points that you make, Michael, is that they're 0:20:55.960 --> 0:21:00.199 actually making financial sacrifices. They're not retiring to Indian hills 0:21:00.240 --> 0:21:03.080 in playing eighteen holes a day. They're they're doing other 0:21:03.160 --> 0:21:07.480 stuff exactly. And this is why this is actually good 0:21:07.520 --> 0:21:11.560 news in a way. These people are courageous, They take risks, 0:21:11.600 --> 0:21:13.800 and what they say is I want to learn another 0:21:13.920 --> 0:21:16.119 skill and I want to get a better job that 0:21:16.200 --> 0:21:19.240