WEBVTT - Risky US Rail Strike Looms 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:20.000 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:31.920 YouTube search Bloomberg Global News. So among the things on 0:00:31.960 --> 0:00:35.400 our radar, it's also on investors radar. It is among 0:00:35.400 --> 0:00:37.479 our most right on the Bloomberg Today about the looming 0:00:37.560 --> 0:00:40.440 US rail strike that threatens to push inflation even higher 0:00:40.479 --> 0:00:44.080 across the country. And Tim, this is coming, of course, 0:00:44.120 --> 0:00:46.520 excuse me after we saw this morning's pp I report 0:00:46.520 --> 0:00:49.240 where prices jump more than expected last month. Yeah. Look, 0:00:49.320 --> 0:00:52.440 railroads account for a significant portion of goods that are 0:00:52.440 --> 0:00:55.400 transported within the US, more than a quarter of the 0:00:55.400 --> 0:00:58.800 goods transported here, so that would cause a real snarl, 0:00:58.840 --> 0:01:01.120 to say the least. Let's get into it with Katya Dmitrieva. 0:01:01.200 --> 0:01:04.440 She's U S economy reporter for Bloomberg News. She joins 0:01:04.520 --> 0:01:07.560 us this afternoon from in the field just outside of 0:01:07.600 --> 0:01:11.039 Washington this afternoon, Katia, how are you. I'm doing well. 0:01:11.040 --> 0:01:13.560 How are you good? It's good to have you with us. Hey. Um, 0:01:13.600 --> 0:01:15.840 before we get to what the strike is about, I 0:01:15.880 --> 0:01:18.440 want to dig into the economic implications of this because 0:01:18.440 --> 0:01:21.200 it's something that that you wrote about earlier today. UM, 0:01:21.280 --> 0:01:24.080 give us some numbers here. What would happen if rail 0:01:24.120 --> 0:01:28.360 workers went on strike? Well, the stakes are definitely high. 0:01:28.440 --> 0:01:31.440 As you mentioned, Uh, just over quarter of all goods 0:01:31.480 --> 0:01:34.800 are transported by rail in the US, and that includes 0:01:34.800 --> 0:01:40.600 everything from consumer goods uh, to basic inputs that businesses used, 0:01:40.600 --> 0:01:44.639 really all businesses used, like oil, even like oil, like coole, 0:01:44.959 --> 0:01:48.360 like timber lumber. I mean, you name it, and it's 0:01:48.400 --> 0:01:52.800 probably on one of these trains that could be you know, 0:01:52.960 --> 0:01:55.120 stopping as as early as fatty if there isn't a 0:01:55.160 --> 0:01:58.960 deal reached. Um, the estimates in terms of the economic impact, 0:01:59.560 --> 0:02:03.360 we got it. Goldman Sacks note just recently actually a 0:02:03.400 --> 0:02:06.520 new note showing that it's one point eight billion dollars 0:02:06.720 --> 0:02:10.160 potentially at stake in one week for the Class one rails. 0:02:10.240 --> 0:02:12.200 That's just in the first week of if there's a 0:02:12.200 --> 0:02:16.760 stoppage alone. Broadly, we have an industry group saying that 0:02:16.800 --> 0:02:20.400 it's two billion dollars of cost per day UM and 0:02:20.440 --> 0:02:22.720 that's for the entire U S economy, and they factor 0:02:22.760 --> 0:02:26.880 in things like worker productivity and wages, UM. You know, 0:02:26.960 --> 0:02:30.639 all of the related organizations and companies that are involved. 0:02:30.680 --> 0:02:34.000 Because if you can't get goods on a train, you're 0:02:34.000 --> 0:02:35.680 not going to need people to take them off the 0:02:35.720 --> 0:02:38.960 train to get them onto trucks to get them then elsewhere. 0:02:39.080 --> 0:02:41.440 So the costs are really going to be adding up 0:02:41.480 --> 0:02:44.520 every hour of every day. No pressure, President Biden and 0:02:44.560 --> 0:02:47.240 your team. UM, let's talk about that. Because US Labor 0:02:47.320 --> 0:02:52.720 Secretary Marty Walsh has been holding conversations. You've been posted 0:02:53.240 --> 0:02:56.320 outside the US Labor Department today. What do we know 0:02:57.040 --> 0:03:01.079 about those conversations? That's for Yeah, I'm here right now. 0:03:01.360 --> 0:03:05.760 The conversation started just after nine am this morning. So 0:03:06.160 --> 0:03:09.400 it's the two sides, the railway companies and the representatives 0:03:09.440 --> 0:03:12.200 and the unions. UH. And then Marty Walsh and his 0:03:12.240 --> 0:03:15.360 team kind of acting as the the broker middleman and 0:03:15.360 --> 0:03:18.720 and as you just said, I mean, the stakes are 0:03:18.800 --> 0:03:20.920 high and there's a lot of pressure to get a 0:03:21.000 --> 0:03:23.440 deal across. So what we know is that they've been 0:03:23.440 --> 0:03:26.720 talking NonStop since this morning. Uh. You know, at one 0:03:26.760 --> 0:03:29.880 point we were supposed to get uh some commentary from 0:03:29.919 --> 0:03:33.480 the secretary. We still expect that at some point today. Um, 0:03:33.520 --> 0:03:36.000 but he hasn't been outside the building yet. Uh. And 0:03:36.040 --> 0:03:39.760 they actually kept negotiating all through lunch. So according to 0:03:39.840 --> 0:03:43.360 someone familiar, uh, they just ordered lunch in and and 0:03:43.560 --> 0:03:47.640 continued talk all throughout that. And you can tell from 0:03:47.640 --> 0:03:49.920 from that kind of a pace of talks that this 0:03:50.000 --> 0:03:52.280 is this is pretty serious. We're getting down to the wire. 0:03:52.560 --> 0:03:56.720 TikTok though when we look at the clock. Um, Under 0:03:56.760 --> 0:04:00.040 the Railway Labor Act, right, Congress can step into the 0:04:00.080 --> 0:04:03.560 imposer resolution based on a Presidential Emergency Board plan that 0:04:03.640 --> 0:04:06.560 was submitted in August or order the trains to operate 0:04:06.600 --> 0:04:09.040 as usual while the two sides continue to negotiate. So 0:04:10.040 --> 0:04:11.800 is that likely to happen even if they don't come 0:04:11.840 --> 0:04:15.560 to some agreement. Yeah, that's right. That is that continues 0:04:15.600 --> 0:04:17.440 to be an option, right. So that's what they did 0:04:17.480 --> 0:04:21.480 in in the ninety nineties to avert a real strike 0:04:21.960 --> 0:04:24.400 back then, which would have been equally as as catastrophic 0:04:24.480 --> 0:04:27.559 to the economy. UM. And politically that's still an option 0:04:27.600 --> 0:04:30.840 on the table, UM, but as my political colleagues and 0:04:30.880 --> 0:04:34.320 White House colleagues have reported, it's not necessarily something that 0:04:34.560 --> 0:04:38.159 they want to do. UM. The ideal situation here is 0:04:38.200 --> 0:04:42.520 that they come to an agreement the two sides and uh, 0:04:42.880 --> 0:04:45.800 you know, hopefully hammer something out. But as far as 0:04:45.880 --> 0:04:48.520 right now, as far as we know, UM, you know, 0:04:48.560 --> 0:04:51.680 the likelihood of that happening right this minute is not high. 0:04:51.720 --> 0:04:54.960 I mean, we had another union, a smaller union UM involved, 0:04:55.320 --> 0:04:58.159 find out a press statement earlier today saying that they 0:04:58.839 --> 0:05:02.400 don't agree to the current deal and UM are kind 0:05:02.400 --> 0:05:06.640 of holding out UM and could strike later. So uh, yeah, 0:05:06.880 --> 0:05:10.360 a big goal, Kata. How big is the delta between 0:05:10.720 --> 0:05:15.400 what the rail workers want and what the companies are 0:05:15.400 --> 0:05:17.919 willing to give? In thirties in the last thirty seconds 0:05:17.960 --> 0:05:20.719 we have, Yes, Well there's a lot of thirty seconds. 0:05:20.720 --> 0:05:23.800 I mean there's that, there's wages, there's the ongoing wages 0:05:23.839 --> 0:05:27.120 and benefits issues, but I think scheduling is the is 0:05:27.160 --> 0:05:29.600 the top thing. So you're hearing a lot from both 0:05:29.600 --> 0:05:32.360 sides with the companies saying, you know, we're giving a 0:05:32.360 --> 0:05:34.520 lot as we can on scheduling, and then you hear 0:05:34.680 --> 0:05:37.040 the unions and the workers saying, well, actually, we need 0:05:37.080 --> 0:05:39.479 more flexibility and we need more, um, we need you 0:05:39.520 --> 0:05:41.760 to give more, essentially, and that's that's really the main 0:05:42.200 --> 0:05:45.440 sticking point here and probably exactly what they're discussing right now. 0:05:45.440 --> 0:05:47.240 And we do want to mention we have a headline 0:05:47.279 --> 0:05:51.240 crossing Amtrack is canceling all long distance trains starting September 0:05:51.320 --> 0:05:55.600 fift so, UH talk about some additional pressure, certainly on 0:05:55.640 --> 0:05:59.040 our individuals in the United States as well as our economy. 0:05:59.080 --> 0:06:02.480 Katia dmitriev uh US Economy Report at Bloomberg News Outside 0:06:02.480 --> 0:06:06.320 the US Labor Department. You're listening to Bloomberg Business Week 0:06:06.520 --> 0:06:10.440 with Carol Messer and Bloomberg Quick Takes Tim Stinovic on 0:06:10.640 --> 0:06:13.560 Bloomberg Radio. This is one of those stories that we 0:06:13.600 --> 0:06:15.240 have come to love Business Week for It's one that 0:06:15.279 --> 0:06:17.280 taps into some of the big themes of our time 0:06:17.320 --> 0:06:19.840 but may not be on your radar but should. And Tim, 0:06:19.839 --> 0:06:23.039 it's about a prime spot between Mexico's industrial capital and 0:06:23.080 --> 0:06:26.240 the US board that's become a haven for Chinese manufacturer. 0:06:26.440 --> 0:06:29.400 It's in Monterey, Mexico. It's if you look at a map, 0:06:29.440 --> 0:06:32.880 it's just south of the border with Texas. Uh. It's 0:06:32.920 --> 0:06:35.240 an area of the country that has really changed a 0:06:35.240 --> 0:06:38.400 lot in just a few years. Writing about it in 0:06:38.600 --> 0:06:41.919 Bloomberg business Week Magazine, as this issue is actually this 0:06:42.000 --> 0:06:43.599 is story is gonna be featured in the upcoming issue 0:06:43.600 --> 0:06:45.240 of Business Week Magazine. Read it now though on the 0:06:45.240 --> 0:06:48.000 Bloomberg and at Bloomberg dot com slash business Week. The 0:06:48.120 --> 0:06:51.200 editor of this piece is Christina Lindblad. She's Global Economics editor. 0:06:51.480 --> 0:06:54.080 She's with us in the Bloomberg Interactive Broker Studio. Also 0:06:54.160 --> 0:06:56.960 here is Joel Webber, the editor of Bloomberg Business Week. 0:06:57.120 --> 0:06:59.640 You can follow him on Twitter at Joel Webber. Show 0:07:00.279 --> 0:07:04.320 this area of Mexico, northern Mexico, just south of the 0:07:04.360 --> 0:07:06.520 border with Texas. What did it look like a few 0:07:06.600 --> 0:07:09.320 years ago? Joel? Well, it was a little quieter than 0:07:09.360 --> 0:07:13.120 it is now, with fewer factories. And uh lo and behold. Uh, 0:07:13.840 --> 0:07:18.360 China became very interested in sort of a side door 0:07:18.480 --> 0:07:20.840 to the US there, and so we have seen an 0:07:20.840 --> 0:07:26.720 explosion of factories there and uh it is effectively a 0:07:26.760 --> 0:07:32.240 workaround of Trump's tariff policy, which the Biden administration is 0:07:32.280 --> 0:07:35.600 basically kept in place. Um. And so it's interesting about 0:07:35.600 --> 0:07:40.640 that is that you know, you basically have gained the system. Uh. 0:07:40.680 --> 0:07:44.120 And so things going forward may not be manufactured in 0:07:44.200 --> 0:07:47.880 China as before you find some cheap real estate uh 0:07:47.920 --> 0:07:50.600 in other countries. Mexico is not the only version of this, 0:07:50.720 --> 0:07:53.200 but certainly the closest to the U. S UM. So, 0:07:53.240 --> 0:07:56.040 how's this, how's this working out? As uh as a 0:07:56.040 --> 0:07:59.560 little bit of arbitrage Christina, Well, that's the globalization as 0:07:59.600 --> 0:08:04.160 always rash, right. So I think when we interviewed companies 0:08:04.160 --> 0:08:06.880 that are based in one particular industrial park that we 0:08:07.000 --> 0:08:09.880 focused on, they most of the Chinese firms preferred to 0:08:10.200 --> 0:08:13.720 emphasize the you know, proximity to the US market and 0:08:13.760 --> 0:08:17.200 this and this savings on shipping. But when pressed they 0:08:17.320 --> 0:08:20.920 admitted that, you know, for example, one furniture maker was 0:08:20.960 --> 0:08:24.280 facing taffs of twenty when they were shipping from China 0:08:24.440 --> 0:08:28.520 and now uh qualified for duty free shipments into the US. 0:08:29.280 --> 0:08:31.280 What blew me away is how quickly they were able 0:08:31.320 --> 0:08:33.040 to do that, right, Like I always feel like when 0:08:33.040 --> 0:08:35.079 we're talking to CEOs and like, well, the shift you know, 0:08:35.080 --> 0:08:36.760 if we have to shift our production elsewhere, it's going 0:08:36.800 --> 0:08:39.040 to take a long time. I mean, they moved pretty quickly, 0:08:39.040 --> 0:08:41.599 and it reminds us that they are still the manufacturer 0:08:41.640 --> 0:08:43.360 to the world. Yes, and I think some of these 0:08:43.400 --> 0:08:46.360 companies are pretty I mean, they're not all big. I 0:08:46.360 --> 0:08:49.360 mean one of the manufacturers is a really big manufactor 0:08:49.440 --> 0:08:51.839 in China, but like so they are nimble and they 0:08:52.000 --> 0:08:57.599 you know, um, as a policy, China has been basically 0:08:58.000 --> 0:09:01.520 willing to shed kind of low mar in manufacturing businesses 0:09:01.600 --> 0:09:04.679 as it you know, as it focuses on high end 0:09:04.720 --> 0:09:09.160 stuff like you know, new new fuel vehicles and biotechnology 0:09:09.240 --> 0:09:13.559 and semiconductors. So I think that the first wave went 0:09:13.600 --> 0:09:16.640 to places like Vietnam. But now you know, you can see, 0:09:17.040 --> 0:09:20.040 like you know, businesses are moving further away, you know, 0:09:20.120 --> 0:09:24.000 from those comfort kind of locales where they first landed. 0:09:24.040 --> 0:09:28.120 And um, yeah, I mean I think what I thought 0:09:28.160 --> 0:09:30.760 it was kind of funny was that do you remember 0:09:30.840 --> 0:09:37.360 when Trump tweeted basically ordering American companies home, and I said, 0:09:37.400 --> 0:09:42.160 what came floating across like the Pacific or Chinese Chinese 0:09:42.200 --> 0:09:44.360 plants didn't exactly work that way. I don't know, it 0:09:44.400 --> 0:09:46.080 seems like there could be like a way for the 0:09:46.200 --> 0:09:48.520 US to close this loophole. I mean, they know what 0:09:48.600 --> 0:09:52.600 these Chinese companies produce, and isn't there a way that 0:09:52.640 --> 0:09:55.079 they can say, Okay, well we know that it comes 0:09:55.080 --> 0:09:58.240 from a subsidiary of a Chinese company, and you're not 0:09:58.400 --> 0:10:01.000 sticking to the spirit of the role. Um, we're going 0:10:01.040 --> 0:10:03.080 to attack on that tariff. Do they want to? Oh? 0:10:03.200 --> 0:10:05.520 I don't know. I mean that might cause issues with 0:10:05.559 --> 0:10:07.839 the U s m c A right like the successor 0:10:07.920 --> 0:10:10.840 to NAFTA. I mean, I think Mexico would have legitimate 0:10:10.880 --> 0:10:13.240 reason to say, well, what are you doing? You know, 0:10:13.320 --> 0:10:16.079 as long as they meet the content requirements, which they 0:10:16.080 --> 0:10:18.720 are and to do that. I mean, we should be 0:10:18.760 --> 0:10:21.560 clear that this applies a certain amount of effort on 0:10:21.640 --> 0:10:23.840 the part of these Chinese companies because they're having to 0:10:24.000 --> 0:10:28.200 source products from Mexico, could be even North America. There. 0:10:28.280 --> 0:10:31.400 They can't just import assemble everything from Chinese parts and 0:10:31.440 --> 0:10:34.400 shipping across. Yeah. The other thing to keep in mind here, 0:10:34.480 --> 0:10:36.600 you know, Belt and Road is a very top down 0:10:36.640 --> 0:10:40.360 initiative in China. This is not that this is just grassroots, 0:10:40.640 --> 0:10:44.960 grassroots effort by Chinese exporters to be like, how do 0:10:45.000 --> 0:10:49.480 we it's kind of simple, but it makes so much sense. Also, 0:10:49.559 --> 0:10:51.720 I mean, we talked to some companies that off the 0:10:51.800 --> 0:10:54.800 record explicitly said, part of the reason we're doing this 0:10:54.920 --> 0:10:58.520 isn't just cost savings, is that there's political risk, I 0:10:58.520 --> 0:11:02.000 mean policy risk rather in China in recent years, we've 0:11:02.040 --> 0:11:05.400 seen like crackdowns in tech and other sectors. And so, 0:11:05.920 --> 0:11:09.199 you know, so we talk about the Mexico saidators to 0:11:09.480 --> 0:11:14.320 AMLO being obviously UM, the president of Mexico has been 0:11:14.600 --> 0:11:18.360 you know, very eager to try and get employment whatever 0:11:18.480 --> 0:11:20.880 there can be employment. How is this shaping out domestically 0:11:20.920 --> 0:11:24.480 for him? Well, the interesting thing is at the federal level, 0:11:24.559 --> 0:11:28.319 Mexico has never really actively courted Chinese investment because they 0:11:28.360 --> 0:11:33.360 see Chinese exporters as rivals in third markets, right. So, 0:11:33.559 --> 0:11:36.520 but the state, at the state level, they like states 0:11:36.520 --> 0:11:39.560 have so Nueo Leone, which is where you know this 0:11:39.720 --> 0:11:42.080 particular industrial park, uh, and these are a lot of 0:11:42.080 --> 0:11:45.440 these companies are setting up shop. UM has has done 0:11:45.440 --> 0:11:47.959 and they're building a special road for example, from like 0:11:48.000 --> 0:11:51.880 you know, the UH from the industrial park to the border. Uh. 0:11:51.920 --> 0:11:56.400 And so yeah, but I think that some people have 0:11:56.520 --> 0:11:59.440 said that Mexico might have actually seen even a bigger 0:12:00.040 --> 0:12:03.000 in the fall of this kind of investment if am 0:12:03.080 --> 0:12:07.600 Low was being less nationalistic on topics like energy and 0:12:07.679 --> 0:12:09.560 you know and things like that. But I mean, this 0:12:09.640 --> 0:12:12.959 is great for Mexico, right, Like the number that really 0:12:13.000 --> 0:12:16.360 jumped out at me here is UH near shoring. UH 0:12:16.440 --> 0:12:19.760 could boost Mexico's exports by thirty five billion year, a 0:12:19.800 --> 0:12:24.920 bit over seven percent. I mean that's like real asformative. Yeah. Also, 0:12:25.120 --> 0:12:28.200 I mean while the Chinese investment, like like the most 0:12:28.240 --> 0:12:31.840 recent figures five million dollars a year is not huge, 0:12:31.880 --> 0:12:34.360 there is there are a couple of deals that could 0:12:34.440 --> 0:12:38.240 happen this year that would be transformative that that we're 0:12:38.240 --> 0:12:41.760 talking about billion dollar factories. One of them is there 0:12:41.800 --> 0:12:44.760 an e V engine maker that's looking at two different 0:12:44.760 --> 0:12:48.679 sites in Mexico. And those kinds of investments pulls supply 0:12:48.840 --> 0:12:53.280 chains you know around them. You know, so that kind 0:12:53.280 --> 0:12:54.800 of that kind of thing I think would take it 0:12:54.800 --> 0:12:57.920 to the next level suppliers that play into it. Hey, um, 0:12:58.000 --> 0:13:00.559 you guys point out in the story, though Chinese companies 0:13:00.559 --> 0:13:03.520 aren't the first to seek shelter from US, Terra Japan did. 0:13:03.559 --> 0:13:06.720 It went back in the similar playbook when Reagan started 0:13:06.800 --> 0:13:10.400 layering all these different restrictions on Japanese cars, and then 0:13:10.440 --> 0:13:13.120 when NAFTA took effect, they saw, well this is a 0:13:13.120 --> 0:13:16.280 great export platform now. But I think it's interesting right 0:13:16.320 --> 0:13:18.840 in terms of the globalization conversations that we're having about 0:13:18.880 --> 0:13:21.400 what's going on. What I forgot about that? We haven't 0:13:21.440 --> 0:13:28.439 talked about that forever. An the way I think about it, Well, 0:13:28.640 --> 0:13:32.800 we didn't use the word friend shoring. Friend shory. Yes, 0:13:32.840 --> 0:13:35.040 that's when you go to friendly countries like you know, 0:13:35.679 --> 0:13:38.679 I haven't heard that refriend shoring where you can have 0:13:38.760 --> 0:13:43.240 a special edition on Won't Talk, Stay tune to come 0:13:43.280 --> 0:13:45.800 all right, we gotta go, guys. Jill Webber, editor of 0:13:45.800 --> 0:13:48.640 Bloomberg Business Week here in our Interactive worker studio, and 0:13:48.800 --> 0:13:52.400 Christina Limblad, she's Global Economics editor. This story, it is 0:13:52.400 --> 0:13:55.040 a Bloomberg Big Take, and it is in the upcoming 0:13:55.040 --> 0:13:58.360 new issue of Bloomberg Business Week magazine. It's un newstands tomorrow. 0:14:00.600 --> 0:14:04.640 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:14:04.720 --> 0:14:09.839 Quick Takes. Tim Stinovic on Bloomberg Radio, Well shares of Walmart. 0:14:09.920 --> 0:14:11.880 I think little change down the day at list. When 0:14:11.920 --> 0:14:14.240 I checked at last this is the world's largest retailer, 0:14:14.280 --> 0:14:17.360 gets ready to offer up checking accounts. Yeah, this is 0:14:17.360 --> 0:14:19.640 a really interesting story. Jenny Seraine is with us. She's 0:14:19.640 --> 0:14:21.480 finance reporter for Bloomberg in here. She's with us in 0:14:21.480 --> 0:14:23.600 the Bloomberg in her active brokers. I mean, it kind 0:14:23.600 --> 0:14:26.240 of makes sense. When you know a company like Walmart 0:14:26.240 --> 0:14:28.080 wants to continue to grow, it has to get into 0:14:28.160 --> 0:14:31.480 other parts of business. The question that I have is 0:14:31.560 --> 0:14:34.120 who are these checking accounts meant for? These bank accounts 0:14:34.160 --> 0:14:38.280 been for? Walmart has more than one million employees. Have 0:14:38.400 --> 0:14:40.680 they been kind of like trialing this with the employees? 0:14:40.680 --> 0:14:43.080 What's going on here? Yeah, so that's what we're actually 0:14:43.080 --> 0:14:46.360 expecting to see in the coming weeks. UM. So Walmart 0:14:46.640 --> 0:14:50.360 last year actually set up this outside fintech startup UM, 0:14:50.400 --> 0:14:53.640 and they've been super secretive up till now, and we're 0:14:53.680 --> 0:14:56.320 basically expecting them to roll out these new bank accounts 0:14:56.400 --> 0:14:59.200 UM in the coming weeks too. For now, a small 0:14:59.240 --> 0:15:01.480 set of Walmart's employees here in the US, and even 0:15:01.920 --> 0:15:04.120 UM a small percentage of their online shoppers. So it's 0:15:04.160 --> 0:15:05.920 kind of in test and learn mode right now, but 0:15:06.280 --> 0:15:08.640 pretty soon, UM, they are expecting to roll this out 0:15:08.640 --> 0:15:12.160 to one point six million Walmart u S employees and 0:15:12.400 --> 0:15:15.360 all Walmart shoppers as well. First of all, kudos to you. 0:15:15.440 --> 0:15:17.720 It's an exclusive. It's among the most read on the 0:15:17.720 --> 0:15:20.680 Bloomberg so really really well done. What's interesting to me, 0:15:20.720 --> 0:15:24.600 and it also speaks to me that it's they're going 0:15:24.640 --> 0:15:27.720 after what many would say are an underserved part of 0:15:27.720 --> 0:15:30.920 our population when it comes to the financial infrastructure here. 0:15:30.960 --> 0:15:33.920 It's it's kind of super smart. Yeah, I think that's 0:15:33.920 --> 0:15:37.560 exactly right. Walmart is very keenly aware of what all 0:15:37.600 --> 0:15:39.840 of its customers really need and kind of the gaps 0:15:39.880 --> 0:15:42.120 that can be filled, and so they've talked a lot 0:15:42.160 --> 0:15:44.239 about how they want this to be something that's affordable. 0:15:44.720 --> 0:15:46.760 UM So you can, you know, imagine that there probably 0:15:46.800 --> 0:15:49.560 won't be lots of fees attached to this new account. Um. 0:15:49.640 --> 0:15:51.760 So yeah, I think it's a very interesting move for them. 0:15:52.080 --> 0:15:54.040 I will say they've tried this in the past, so 0:15:54.080 --> 0:15:57.160 this is not Walmart's first foray into finance um and 0:15:57.200 --> 0:15:59.520 they haven't always been successful. So I think they're taking 0:15:59.560 --> 0:16:01.240 another back at it. They're trying to go a little 0:16:01.240 --> 0:16:03.880 bit more digital, a little bit more flashy. So we'll 0:16:03.920 --> 0:16:05.960 see if this time makes a difference. How long ago 0:16:06.000 --> 0:16:08.200 was their last attempt do you know it's it's been 0:16:08.240 --> 0:16:11.360 a while. So they currently have a bevy of financial 0:16:11.360 --> 0:16:14.280 services products, so you can get a relttable debit card, 0:16:14.360 --> 0:16:17.640 you can change money. The reason the reason I ask 0:16:17.760 --> 0:16:20.360 is because we're in a mobile first world right now, 0:16:20.520 --> 0:16:22.320 and that's a big part of the you know, quote 0:16:22.360 --> 0:16:24.680 unquote disruptors who are coming into fintech and Jenny, you've 0:16:24.680 --> 0:16:26.680 written a lot about these companies, like, you know, companies 0:16:26.720 --> 0:16:29.200 like Dave and Chime and other one word you know, 0:16:29.520 --> 0:16:32.880 so called neo banks. Right, So, even though you know 0:16:32.920 --> 0:16:34.920 it could be a smart move from Walmart, this is 0:16:34.920 --> 0:16:37.600 a really crowded field already because a lot of companies 0:16:37.600 --> 0:16:41.120 are going after that underbanked consumer. Yeah, no, that's exactly right. 0:16:41.160 --> 0:16:43.880 I do think the fact that they so one of 0:16:43.880 --> 0:16:45.960 the big problems facing those other companies right now is 0:16:46.000 --> 0:16:49.000 they have to spend so much money acquiring customers. And 0:16:49.320 --> 0:16:51.240 these guys have kind of the built an advantage. You know, 0:16:51.240 --> 0:16:54.120 they've got the world's largest retailer with five thousand plus 0:16:54.120 --> 0:16:57.000 stores ready to advertise this, put this in front of 0:16:57.040 --> 0:16:59.040 their shoppers, put this in front of their employees. So 0:16:59.480 --> 0:17:01.440 that helps a lot. It means their expenses will be 0:17:01.480 --> 0:17:03.680 a lot lower um and maybe they can spend that 0:17:03.720 --> 0:17:05.760 money on something else. All right, can I can I 0:17:05.760 --> 0:17:07.600 just share with the audience that before we got going, 0:17:07.680 --> 0:17:09.440 you and I were talking, we're talking about Shark Tank 0:17:09.480 --> 0:17:12.000 that while I was home, I kind of did a 0:17:12.040 --> 0:17:13.440 little bit of a deep dive and did a little 0:17:13.440 --> 0:17:17.600 bit of binge watching. I like Shark Tank, but Shark Well, 0:17:18.080 --> 0:17:20.240 it's fascinating because this is so much the backbone of 0:17:20.240 --> 0:17:22.840 our our our country and our economy. These all these 0:17:22.840 --> 0:17:25.560 small companies, but so much they talk about customer acquisition, 0:17:25.560 --> 0:17:27.840 and I think if I am an individual and I 0:17:27.880 --> 0:17:30.320 shop at Walmart, I know the brand, It's a company 0:17:30.320 --> 0:17:33.080 that's been around for a long time, and I would 0:17:33.160 --> 0:17:35.399 be first of all comfortable with it. And then I 0:17:35.400 --> 0:17:37.840 think about for Walmart, right, they're right there. It's not 0:17:37.880 --> 0:17:39.800 going to cost them a lot to get to these 0:17:40.200 --> 0:17:43.760 additional customers for financial services. Yeah, no, that's exactly right. 0:17:43.800 --> 0:17:46.120 I mean, I think the one of the most interesting 0:17:46.160 --> 0:17:49.159 stats was Walmart has more locations than most of the 0:17:49.200 --> 0:17:51.320 major all four of the major biggest banks in the 0:17:51.760 --> 0:17:54.160 closing them exactly. So you know, if you're really thinking 0:17:54.160 --> 0:17:57.399 about a subset of customers who will mobile first, do 0:17:57.560 --> 0:17:59.720 like that kind of in store experience, this kind of 0:17:59.800 --> 0:18:03.800 chuck saw the boxes for them. Okay, so well, I 0:18:03.840 --> 0:18:05.800 don't know it just dumbfounded that I like did a 0:18:05.840 --> 0:18:08.840 deep deve on shark Tech. Ye, JENNI are bonding on 0:18:08.920 --> 0:18:12.000 this anyway. Jenny like Shark Tank too. I know it's fast. 0:18:12.560 --> 0:18:15.719 Everyone like Shark Tank. So so what does this end 0:18:15.760 --> 0:18:18.080 up looking like for Walmart's bottom line? Here, because this 0:18:18.160 --> 0:18:21.080 is something that investors certainly want to know about it. 0:18:21.320 --> 0:18:24.040 In the past, large companies getting into financial services didn't 0:18:24.080 --> 0:18:27.560 always end well, I'm talking about you know ge. Yeah, no, 0:18:27.600 --> 0:18:29.679 that's actually a great point. I think the way they 0:18:29.720 --> 0:18:32.000 structured this is super interesting. So they set up this 0:18:32.040 --> 0:18:35.520 outside fintech. It's completely independent, um, but they are the 0:18:35.560 --> 0:18:39.040 majority owned shareholder or majority shareholder, and they're also a 0:18:39.080 --> 0:18:41.440 lot of their executives around the board of this outside fintech, 0:18:41.520 --> 0:18:43.520 so they have a vested interest. But it is a 0:18:43.560 --> 0:18:47.040 separate effort. So I think we'll see I can't imagine 0:18:47.040 --> 0:18:49.880 that like right now, the financials are what's most compelling. 0:18:49.920 --> 0:18:52.400 I think it's the idea that when you're a consumer, 0:18:52.720 --> 0:18:54.959 you can go to Walmart now and basically get anything 0:18:55.040 --> 0:18:57.240 not just you know, your groceries or your gas, but 0:18:57.280 --> 0:19:01.359 also your bank accounts. So it's Amazon model, right, Like, 0:19:01.400 --> 0:19:04.679 you've already got how many users embedded in your system? 0:19:04.920 --> 0:19:06.800 What else can I offer them? I actually think a 0:19:06.800 --> 0:19:08.600 bit more of like the Ali Baba model, because that 0:19:08.920 --> 0:19:11.160 those guys really started out in retail and then slowly 0:19:11.160 --> 0:19:13.760 branch their way into every other thing. And um, so 0:19:13.800 --> 0:19:15.560 you're starting to see those models kind of make their 0:19:15.560 --> 0:19:17.600 way here in the US. But it makes so much sense, right, 0:19:17.600 --> 0:19:19.520 You've already got this installed base, and like, how do 0:19:19.560 --> 0:19:21.920 you how do you monetize it even further? Um, As 0:19:21.920 --> 0:19:25.280 we said, it's an exclusive thanks to our Jenny Surrene, 0:19:25.320 --> 0:19:27.640 finance reporter at Bloomberg Music is among our most read 0:19:27.960 --> 0:19:29.399 on the Bloomberg. So if you want to read it 0:19:29.440 --> 0:19:30.879 and it's entire to be sure to check it out 0:19:30.880 --> 0:19:33.800 and check out Jenny also on Twitter, She's at Jenny Surrene. 0:19:34.320 --> 0:19:46.440 I'm bro journal. Yeah, but you let me drive, no novels. 0:19:47.520 --> 0:19:52.359 I want to drive. It's a good question. Good drive 0:19:56.160 --> 0:20:02.199 ride to the clothe bloom Bird radio all. I just 0:20:02.200 --> 0:20:04.600 got about ten minutes left in today's trading session. Yep, 0:20:04.680 --> 0:20:07.760 chopping and sloppy is how Charlie Pellett called today's trade. 0:20:07.760 --> 0:20:10.119 And it's really accurate. We're bouncing off our lows, but 0:20:10.160 --> 0:20:13.080 well off our highs. Call it little change tim overall 0:20:13.119 --> 0:20:15.680 for today's equity trade, you're gonna hear what Megan Horneman 0:20:15.760 --> 0:20:18.800 has to say, Chief investment officer at Verden's Capital Advisors. 0:20:18.800 --> 0:20:22.040 Megan this afternoon, joins us on the phone from Hunt Valley, Maryland. 0:20:22.440 --> 0:20:24.440 All Right, Megan, you've had twenty four hours to breathe 0:20:24.480 --> 0:20:27.480 that after yesterday's route, certainly a different story in today's 0:20:27.520 --> 0:20:30.919 equity markets. Um, I mean, how are you looking at this? 0:20:31.040 --> 0:20:34.720 Are you looking at today's trade? Well? I think today 0:20:34.760 --> 0:20:36.919 you're going to see and and even up to the 0:20:36.920 --> 0:20:38.760 FED meeting, you're going to see a lot of this chopping. 0:20:38.840 --> 0:20:41.760 Is it's just going to be an ugly market over 0:20:41.800 --> 0:20:44.720 the next week, the markets just waiting for that FED report, 0:20:45.040 --> 0:20:47.320 and then even between now and then, we have quite 0:20:47.320 --> 0:20:50.160 a bit of economic data to digest. So I think 0:20:50.160 --> 0:20:52.440 you're just going to see a very sideways choppy market 0:20:52.520 --> 0:20:54.640