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Speaker 1: P and L Podcast. I'm Pim Fox. Along with my
Speaker 1: co host Lisa Abramowitz. Each day we bring you the
Speaker 1: most important, noteworthy, and useful interviews for you and your money,
Speaker 1: whether you at the grocery store or the trading floor.
Speaker 1: Find the Bloomberg P and L Podcast on iTunes, SoundCloud
Speaker 1: and at Bloomberg dot com. Tesla reported earnings yesterday after
Speaker 1: the bell and what they delivered up was very pleasing
Speaker 1: to traders, at least initially in after hours, but they've
Speaker 1: kind of backed away from some of those bets now.
Speaker 1: I want to bring in somebody who knows much more
Speaker 1: about this than I do, Liam Denning. He is a
Speaker 1: Bloomberg gad Fly columnist, and you wrote a column that
Speaker 1: highlighted one number in particular, nine hundred and seventy million dollars.
Speaker 1: That's the amount of cash the Tesla burned through in
Speaker 1: the last three months of two thousand sixteen. So what
Speaker 1: was your biggest takeware? Was this your biggest takeaway from
Speaker 1: from the Tesla earnings? I mean, yeah, that's really the
Speaker 1: only number that that counts with Tesla any any time.
Speaker 1: I mean the earnings themselves. They were distorted this quarter
Speaker 1: by the acquisition of Solar City UM. And in any case,
Speaker 1: whether Tesla beats earnings MSS earnings, there is zero correlation
Speaker 1: between that and what happens to the stock price the
Speaker 1: next day. I've gone back and checked it. There's none.
Speaker 1: Why because the key issue here is UM is Tesla's
Speaker 1: cash flow and its ability to realize this ever expanding
Speaker 1: vision that Elon Musk lays out. If you look at
Speaker 1: any valuation model for Tesla, most of the value resides
Speaker 1: in what people expect it to be doing. You know,
Speaker 1: five of our ten years from now, you know, whether
Speaker 1: it's producing millions of vehicles or you know, installing solar
Speaker 1: roofs or building its fifth giga factory. The the constant
Speaker 1: need for cash necessitates a strong message of growth and transformation.
Speaker 1: And that's kind of what I meant when I said,
Speaker 1: you know, investors take Elon Musk seriously. They don't take
Speaker 1: him literally, that's a good that's a good distinction to make. Liam.
Speaker 1: I was looking at the f A page because I
Speaker 1: love it of Tesla, and I note the free cash
Speaker 1: flow has a wonderful minus sign next to it. As
Speaker 1: you just mentioned, at least for the year one point
Speaker 1: four billion. As a matter of fact, how much is
Speaker 1: there any estimate how much they're going to need? Um? Well,
Speaker 1: it's you know, it's looking like they're gonna need a
Speaker 1: lot well not a lot of god, but I mean
Speaker 1: are we talking? I mean because obviously you know, Well,
Speaker 1: the reason that the reason it's interesting also is because
Speaker 1: Elon Musk of course owns what about of the company,
Speaker 1: So what is what is the most what he wants
Speaker 1: is probably most likely to happen. Well, the way to
Speaker 1: think about it is this, so, um, you know, revenue
Speaker 1: cash flow, Yeah, but cash flow from operations in the
Speaker 1: last quarter was about minus you know, four hundred someone
Speaker 1: between four hundred and five hundred million UM. Their guidance
Speaker 1: for CAPEX just for the first half of this year
Speaker 1: is somewhere between two and two and a half billion,
Speaker 1: So that means net net they're probably going to burn
Speaker 1: through I would say somewhere between two and a half
Speaker 1: and three and a half billion in the first half
Speaker 1: of the year. And that kind of makes sense because
Speaker 1: they're about to launch the Model three, which is there
Speaker 1: they're kind of mass market ev that's where they try
Speaker 1: and get from producing you know, eight thousand cars a
Speaker 1: year up to more like five or six thousand. Well,
Speaker 1: let me just offer this note. This comes from our
Speaker 1: colleague Corey Johnson, who you know, coming up on a
Speaker 1: Bloomberg Markets PM, he said. A year ago. Chief executive
Speaker 1: Elon Musk stated on their Q four earnings call that
Speaker 1: quotes something I'm personally quite excited about is that we
Speaker 1: expect to be positive cash flows starting next month and
Speaker 1: then continuing into Q two and beyond. Well, analysts don't agree.
Speaker 1: I'm looking at the expectation for fiscal year two thousand,
Speaker 1: seventeen h that was a year ago, all right, Well,
Speaker 1: that didn't didn't come looking at a sort of an
Speaker 1: expectation among analysts of negative basically a hundred and seventy
Speaker 1: billion dollars, right, Um, But I would go back to
Speaker 1: the original message, which is that none of it matters,
Speaker 1: which is right, you know, he can say whatever. He
Speaker 1: was missed. Sales forecast its original sales guidance for the
Speaker 1: last three years running, and it's got a market cap
Speaker 1: which is almost the same as as awards. That will
Speaker 1: give them the wherewithal to go out and sell more equity,
Speaker 1: to raise more money. And as long as they keep
Speaker 1: pushing out a message of growth and transformation, and as
Speaker 1: long as enough investors believe in it, then they can
Speaker 1: keep raising money to keep pushing towards it. Okay, So
Speaker 1: what could happen to disrupt this virtuous chain of events? Okay,
Speaker 1: so it's hard to say specifically, but I think what
Speaker 1: would have to happen is some sort of real disruption
Speaker 1: to something like the Model three. Now it's looking like
Speaker 1: the guidance for the Model three's production, I mean that
Speaker 1: looks pretty shaky to me. The numbers that they were
Speaker 1: putting out last night. We haven't even seen a fully
Speaker 1: functioning pre production model yet. Doesn't look like we're gonna
Speaker 1: see one before production is supposed to start in July.
Speaker 1: So if some if there was some real setback to that,
Speaker 1: then I think that might shake people's confidence. I think
Speaker 1: the other thing is as time rolls on, we're seeing
Speaker 1: more competitors like GM for BMW launched their own electric vehicles.
Speaker 1: I mean, GM has pretty much beaten Tesla to the
Speaker 1: punch with the Bolt, which is going to be the
Speaker 1: main competitor to the Model three. And I think over time,
Speaker 1: although right now Tesla is seen as the force for
Speaker 1: change in the auto's market, at some point there is
Speaker 1: going to be the reality of having lots of other
Speaker 1: competitors who are also able to offset their risk with
Speaker 1: other cars producing their own electric vehicles. Thank you very much,
Speaker 1: Liam Denning, Bloomberg Gadfly columns. Shares of Tesla data about
Speaker 1: five and a half percent. I want to turn to
Speaker 1: Krishna Mamani, chief investment officer at Oppenheimer Funds UH, to
Speaker 1: talk a little bit about what are you seeing in
Speaker 1: the bar market specifically. I want to start Krishna with
Speaker 1: comments that we heard today from US Treasury Secretary Steve
Speaker 1: Minution basically expressing great interest frankly and issuing longer dated
Speaker 1: US treasuries. This would be the fifty year or possibly
Speaker 1: even a hundred year UH treasuries. What's what's your feeling
Speaker 1: on this? Do you think this is realistic? I think
Speaker 1: from a demand perspective, so in any policy change, you
Speaker 1: have to kind of focus on whether there will be
Speaker 1: some buyer for the security. But you're a buyer, right,
Speaker 1: I'm a buyer, and I think there are lots of
Speaker 1: people who are buyers of really long bonds special fuer quality.
Speaker 1: So you would buy a fifty year US treasure absolutely,
Speaker 1: because if you if you have really long term liabilities
Speaker 1: that you're looking to extinguish and extinguished with really high
Speaker 1: quality assets, there really isn't a better instrument available. So
Speaker 1: do you have a sense of what premium you would
Speaker 1: need for a fifty year treasury over a thirty year
Speaker 1: treasury or a ten year treasury in order to make
Speaker 1: it worthwhile? So I guess would be that that premium
Speaker 1: is probably smaller than most of us anticipate. And the
Speaker 1: reason for that is because the the convexity characteristics which
Speaker 1: is a technical term to say the the the price
Speaker 1: appreciation and appreciation qualities of really long bonds is very
Speaker 1: good and from a from a liability extinguishment standpoint, the
Speaker 1: demand is quite solid. So I think that premium would
Speaker 1: be much less than what we think uh it would be,
Speaker 1: and much less than what the differences between ten years
Speaker 1: and thirty years today. As much as I would like
Speaker 1: to say that I'm going to be around in fifty years,
Speaker 1: I got to say that there are chances that I
Speaker 1: might not. So why would you buy something that is
Speaker 1: going to be subject to the vagaries of inflation, global instability? Uh,
Speaker 1: in order to satisfy a current And I don't mean
Speaker 1: you personally, but I mean to satisfy a current and
Speaker 1: hole in the portfolio because number one, you can't think
Speaker 1: of anything better to buy. Second, you need to keep
Speaker 1: your job, and no one's gonna fire you for buying
Speaker 1: us treasuries. You're gonna say, here, I bought them. It
Speaker 1: matches our liability. But you know, I'm not gonna be
Speaker 1: around when this thing blows up. So that's that's funny
Speaker 1: that you say that. But you you you have to recognize,
Speaker 1: uh that while you and I may not be around
Speaker 1: in fifty years, there are pension plans. No, no, no,
Speaker 1: I got I. I understand all that. But I mean,
Speaker 1: if you're to tell me that you were to buy
Speaker 1: a thirty year let's say it's thirty years right now
Speaker 1: at three percent, you mean to tell me that in
Speaker 1: thirty years you're not going to take a hit in
Speaker 1: terms of what it is. Maybe your new customer base
Speaker 1: wants in terms of a return, because if you're an
Speaker 1: insurance company, you're matching future liabilities future new customers. Sure, so,
Speaker 1: but I today I have some liabilities that I need
Speaker 1: to fund and demonstrate to the accountants that my liability
Speaker 1: is fully funded. So you're limited in what you can exactly. Okay, alright, Well,
Speaker 1: moving moving on to something else that Minution said. He
Speaker 1: said that he thinks it's completely feasible that the U
Speaker 1: S should see three percent or even higher growth. That's
Speaker 1: up from two rate or less. Frankly, now, first of all,
Speaker 1: do you agree with this assessment? And second of all,
Speaker 1: if this is true, what bond is going to get
Speaker 1: hit hardest? So I I think that's that's really more
Speaker 1: hope than reality in my view. Alright, And so you
Speaker 1: don't think that's true in the current environment, The likelihood
Speaker 1: that we get to higher than three percent growth rate
Speaker 1: anytime soon, I'm not holding my breath, you know. It's
Speaker 1: it's not it's not to say that it couldn't happen,
Speaker 1: but for it to happen, a whole lot of policy
Speaker 1: initiatives have to come into play. And policy initiatives like
Speaker 1: significantly higher level of fiscal deficit, which I don't think
Speaker 1: the Republican administration, at least the Republican Congress is really
Speaker 1: very much in the mood mood to do without that.
Speaker 1: The likelihood that we get three percent, in my mind,
Speaker 1: is virtually zero. And yet you do still think that
Speaker 1: benchmark borrowing costs in the US will rise enough to
Speaker 1: legitimize or justify uh favoring leverage loans or other floating
Speaker 1: rate debt correct well, so the floating rate debt market
Speaker 1: is really not just about your view on where rates
Speaker 1: are going. That certainly helps, but I think what you
Speaker 1: have to factor in is the fact that floating rate
Speaker 1: yields are comparable to high yield yields, and therefore the
Speaker 1: the end they are senior. So the downside in loans
Speaker 1: is significantly less than what it is in high yield bonds,
Speaker 1: and as a result, I think in the current market environment,
Speaker 1: loans is the best asset class in all of all
Speaker 1: of credit. Having said that, you know the interest rate
Speaker 1: component of loans is a side benefit rather than the
Speaker 1: primary driver of the value and loans, thank you very much,
Speaker 1: very interesting. Christian Memony is the chief investment officer at
Speaker 1: Oppenheimer funds uh. He is based here in New York
Speaker 1: and joining us in our eleven three OHD studios. Thank
Speaker 1: you very much for being here. P and L is
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Speaker 1: When you think of appliances, Lisa Bramwitz, do you think
Speaker 1: of J. C. Penny? Yes, I do you do? I
Speaker 1: do well. I'm glad you do because this was a
Speaker 1: category that they well, they exited at one point and
Speaker 1: now um they are back in the world of appliances,
Speaker 1: so you must have a very good memory. Here to
Speaker 1: tell us more. Craig Johnson, President Customer Growth Partners. They're
Speaker 1: based in New Canaan, Connecticut. Craig, always a pleasure. Thanks
Speaker 1: for coming into the studio, tell us about j C.
Speaker 1: Penny and whether there is any way they can offset
Speaker 1: that weak store traffic and also the negative soft apparel
Speaker 1: trends that a lot of retailers are facing. Well, him
Speaker 1: and Lisa, great to be with you all today. Um, yeah,
Speaker 1: j C. Penney has been doing a lot better under
Speaker 1: the still fairly new CEO, Robert Allison. Uh, he came
Speaker 1: out of out of home Depology, you might recall, and
Speaker 1: so he knows a lot about major appliances now. Um,
Speaker 1: they extualed the major pints is like thirty plus years ago,
Speaker 1: but they've always been in small pints is kitchen, the
Speaker 1: pints as and so forth. Um, and so they're looking
Speaker 1: that is one of the things they're looking at to
Speaker 1: increase the productivity of the store floor. The floor is
Speaker 1: still jc pnny stores are still way under productive where
Speaker 1: they used to be some years back. And they're working
Speaker 1: on the Internet. That helps. They're doing much better on
Speaker 1: that than they used to be. I used to do.
Speaker 1: And um, major plinants is is not gonna be a
Speaker 1: panacea because for major appliances, I would argue a little
Speaker 1: bit there at least it's not it's not top of
Speaker 1: mind for most customers. Most major plants sales are what
Speaker 1: are known as duress sales when the old unit conks out.
Speaker 1: When the old unit conks out, you're probably gonna go
Speaker 1: to Loads, which is number one in market share. Maybe
Speaker 1: Sears Home Depot or best Buy. J. J. Penney just
Speaker 1: doesn't pop up, then Greg just zooming out a little bit.
Speaker 1: This is peak earnings week for the retailers, and it
Speaker 1: comes at a time when a lot of people are
Speaker 1: writing off retailers as uh soon to be victims of
Speaker 1: the Amazon boom and the online move to shopping. And
Speaker 1: yet we're seeing Beats Coals this morning beat expectations. We
Speaker 1: saw Macy's beat expectations earlier this week. Does this point
Speaker 1: to signs of recovery in your opinion? Well, the fact
Speaker 1: that they beat pretty dour expectations doesn't always bode well.
Speaker 1: In other words, it's it's maybe a moral victory at
Speaker 1: most best to have only negative two point comps as
Speaker 1: calls we boarded they can get right right exactly. But
Speaker 1: I distinguished between the department store sector and the apparel sector,
Speaker 1: which have been the most troubled, and department stores are
Speaker 1: mostly apparel and accessory stores mostly for women that you
Speaker 1: will have a home section and so forth. But it's
Speaker 1: mostly apparel, and that whole sector is declining. It's so
Speaker 1: much slower share of market that used to be department
Speaker 1: sto as a generation ago. Um Uh used to have
Speaker 1: ten percent of the retail market. Now it's sounded one
Speaker 1: point six. So you do the math. That is not
Speaker 1: that is not a good thing. But other parts of
Speaker 1: retail off price apparel, such as t j X, which
Speaker 1: had fairly decent numbers, Ross and Burlington, which is reported
Speaker 1: in the next you know week ten days, they'll do
Speaker 1: very very well. Um and and there's been a major
Speaker 1: rotation to home um, whether it's home improvement or the
Speaker 1: homeport instance. Players w Wayfair just reported this morning, did
Speaker 1: you know very strong numbers not make any money by
Speaker 1: the report of the strong top line tell us about
Speaker 1: I gotta go to l brands. I know that the
Speaker 1: results are already out, so I was just watching to
Speaker 1: talk about Victoria's secret. Well, I just don't know. I mean,
Speaker 1: here's the stock. It's down at sixth the body works,
Speaker 1: I see good, thank you down six Uh. They don't know.
Speaker 1: They they've got their own stores. Obviously a brand but
Speaker 1: I mean, is this the story that is this like
Speaker 1: a business that's going to be around in five years
Speaker 1: in the same format somehow, I think the market for
Speaker 1: intimatewear or innerwears calling it these days, I suspect that's
Speaker 1: gonna be around for a while. The difference is is
Speaker 1: that Victoria's Secret uh, as apart from Bath and Bodyworks,
Speaker 1: which is you know, different little bit of different animals.
Speaker 1: But for the for Vicky, um, we believe that it's overexpanded.
Speaker 1: It kind of breathed, was breathing its own exhaustumes too much.
Speaker 1: And any good retail you have, even if you have
Speaker 1: a great concept, you don't want to make it so
Speaker 1: it's totally ubiquitous. So there's one on every corner because
Speaker 1: you'll you'll overserve the market. And right now the market
Speaker 1: for for for intimate underwear is uh, it's you know,
Speaker 1: it's modestly growing, but it's not rampant. Well and also
Speaker 1: didn't Victoria's Secret come under some fire for not having
Speaker 1: big enough sizes for some clients and there was some
Speaker 1: discussion about should they have should they cater to a
Speaker 1: larger population. Does that matter to you at all or
Speaker 1: is that sort of just a relevant kind of side show. Well,
Speaker 1: the the size of the average woman has over the
Speaker 1: last generation has increased, and uh, the full figured woman
Speaker 1: does have a market, and right now that's a little
Speaker 1: bit underserved, we believe. And so Victoria's secret, you know,
Speaker 1: it's the image of Victoria's sacred is maybe you know,
Speaker 1: a little thinner, younger, et cetera. But there's a ton
Speaker 1: of women that may need, you know, a little bit
Speaker 1: larger sizing, and there we believe they're a little bit undeserved. Craig,
Speaker 1: you said that you just returned from a trip to Chicago.
Speaker 1: I know you spent a lot of time on the
Speaker 1: road actually checking out the retail operations. What can you
Speaker 1: tell about what's going on in the middle of the
Speaker 1: country in Chicago, Well, he was, you know, we have
Speaker 1: a team of eighteen people. We've been doing this for
Speaker 1: years across the country. They go about to about ninety
Speaker 1: major venues um and I like to travel myself and
Speaker 1: native Chicago's I remember Marshall Fields in its better days,
Speaker 1: and so you remember the chocolate, the mints, I guess
Speaker 1: the Franco mits where which macis. I believe they just
Speaker 1: sold that the great thing and so um. Retail in
Speaker 1: the rest of the country is doing, you know, kind
Speaker 1: of much better than the pundits think because the headlines
Speaker 1: are all around the department store as the well known
Speaker 1: names and departments are a sector is tanking, it's it's
Speaker 1: a it's a near free fall. Now there's a role
Speaker 1: for department stores, but they have to rethink and reconceptualize
Speaker 1: really what they are. But what you see in Chicago,
Speaker 1: can you tell us, I mean any are there any
Speaker 1: retail concepts that are new that we need to pay
Speaker 1: attention to? One of them, just as expanding rapidly is
Speaker 1: a warby Parker, the the the eyeglass maker, and they
Speaker 1: have I was in their stores on North Rush Street
Speaker 1: and it's great. Locations like Catty Corner from an urban outfitters,
Speaker 1: you know, sort of serve a little bit of the
Speaker 1: same customers and so forth. And so they now have
Speaker 1: a couple of locations physical location. Because this is a
Speaker 1: retailer that started online. Classes. Yeah, but they started online
Speaker 1: and now they're now they're rapidly going to building out
Speaker 1: a store fleet. Craig Johnson, thank you so much for
Speaker 1: joining us. Craig, uh, it sounds like they're eighteen people
Speaker 1: go around secretly shopping for for for their business. I
Speaker 1: love it. Craig Johnson, president of Customer Growth Partners in
Speaker 1: New Canaan at Connecticut Well pim Fox. We heard quite
Speaker 1: a bit this morning from US Treasury Secretary UH Steve Minution.
Speaker 1: Now that he has been confirmed, he is making the
Speaker 1: rounds and giving some sense of what his priorities will
Speaker 1: be over the next couple of years. I want to
Speaker 1: bring in Salaha Moson, she is a Bloomberg News reporter,
Speaker 1: to talk a little bit about what we've learned about
Speaker 1: manutions policies. So, Sala, let's first start with the longer
Speaker 1: dated US Treasury since this is moving markets and causing
Speaker 1: a quarter into some traders. This is what's causing the
Speaker 1: yield curve to steep in somewhat today. Um, what exactly
Speaker 1: did he say about the U s issuing fifty one
Speaker 1: hundred year treasuries? So the Secretary Minution said that the
Speaker 1: Treasury will explore issuing longer term debt maturities. As you said, Um,
Speaker 1: he said that with rates seen historically low for some
Speaker 1: time to come, it is time to seriously explore whether
Speaker 1: Treasury should be issuing these bonds. Well, what is the
Speaker 1: likelihood that this will happen? Who does he have in support?
Speaker 1: You know, there are a few members in Congress who
Speaker 1: have asked about this in the last year, uh and
Speaker 1: including some Democrats, But so far in the Senate there
Speaker 1: hasn't been a lot of movement on this. It's not
Speaker 1: clear that he would actually even need congress um full
Speaker 1: support to do this, But I think for now it's
Speaker 1: more just the sake, a question of asking market participants
Speaker 1: and investors what they think and then going from there.
Speaker 1: You know, one thing that I found interesting both today
Speaker 1: as well as yesterday, there was an article about Treasury
Speaker 1: Manution in the Wall Street Journal where he talked about
Speaker 1: the dollar policy and that the strong the strong dollar
Speaker 1: is a good reflection on the US over the long term.
Speaker 1: That seemed to go in contradiction to what President Trump
Speaker 1: had said about the dollar being too strong. He also
Speaker 1: said today that there is no urgency to brand China
Speaker 1: a currency manipulator. How much is Treasury Secretary Manution in
Speaker 1: sync with President Trump? You know, it's hard to know, um,
Speaker 1: when something might come out on a tweet and where
Speaker 1: the signaling there might when it might shift, um. But
Speaker 1: you know, we have seen some clear signals from Trump
Speaker 1: himself where he is softening on his views of China. UM.
Speaker 1: That started after the elections and it's continued as he
Speaker 1: has become president. UM and Manution is pretty much echoing that.
Speaker 1: But this is new that you know, no announcement will
Speaker 1: come before April, and that means that they are looking
Speaker 1: to the traditional mechanisms to investigate whether they should be
Speaker 1: labeling them now or or how they can start raising
Speaker 1: any alarms before they would actually formally designate them. It
Speaker 1: just shows that we're not going to do this haphazardly.
Speaker 1: We're gonna look to what existing established mechanisms. We have
Speaker 1: to do this now, Sala. Earlier, President Trump spoke about
Speaker 1: the United states is economic relationship with Mexico, and did
Speaker 1: he reference that Secretary of State Rex Tillerson is in
Speaker 1: Mexico today beginning that relationship. What if you could speak
Speaker 1: a little bit about what you know about repealing or
Speaker 1: changing or reforming NAFTA. You know, right now it looks
Speaker 1: like a very strong initiative to start, like a ninety
Speaker 1: day review of the law has not started. Um, it
Speaker 1: looks like they're still in the talking mode. Let's connect
Speaker 1: with all of our counterparts and see what we hear
Speaker 1: back as the rest of the world kind of starts
Speaker 1: to re adjust to the US's new trade stance. You know.
Speaker 1: One other aspect of Minutions comments earlier today was his
Speaker 1: expectations for the growth rate in the US. He said
Speaker 1: that it was completely reasonable to expect a three percent
Speaker 1: or higher growth rate. Did he give any idea of
Speaker 1: what he thought would push growth to that rate, which
Speaker 1: we have not seen for years. Yeah, So he stuck
Speaker 1: to the party line that it is tax cuts and
Speaker 1: cutting regulations that will unlock this economic growth of at
Speaker 1: least three percent. Mission did say today on TV and
Speaker 1: a scene LEAs the interview that he doesn't expect that
Speaker 1: to really feed into the economy until the end of
Speaker 1: next year. But that's why they want to get started
Speaker 1: on this sooner rather than later, just so that that
Speaker 1: can start showing up in the economy. Now. Recently, I believe,
Speaker 1: you know, there was a G twenty meeting, and this
Speaker 1: was at a time when I believe the Secretary of
Speaker 1: the Treasury had just been installed, and I'm wondering if
Speaker 1: you could just give us the reaction to some of
Speaker 1: those UH from the Foreign UH Finance chiefs about Stephen
Speaker 1: Manuchition and about the US policy. So the next twenty
Speaker 1: meeting is in Germany in mid March UM, and what
Speaker 1: we had was a leadership gap at Treasury that was
Speaker 1: longer than before between administrations, So the Treasure secretary counterparts
Speaker 1: around the world had no one really to pick up
Speaker 1: and call as they heard Trump and his advisors, including Manuchian,
Speaker 1: making comments about bilateral trade issues and currencies that were
Speaker 1: moving markets. Um. So as soon as Minuition was installed,
Speaker 1: we saw that within half a day we had his
Speaker 1: German counterpart UH talking about saying, you know, be careful
Speaker 1: how you talk about cutting regulations because they don't want
Speaker 1: a race to the bottom of the very regulations that
Speaker 1: were put in place two Uh sort of keep another
Speaker 1: financial crisis from happening. And then shortly after that we
Speaker 1: heard from Japan's pair also about how Minution should be
Speaker 1: cautious and careful in remarks about the yen. And that
Speaker 1: kind of comes from Trump's comments that China and Japan
Speaker 1: are playing in currency markets. Although you know, aside from
Speaker 1: just the big Dodd Frank rollback which some people are expecting,
Speaker 1: Treasury Secretary Minution could have a much more direct effect
Speaker 1: on rolling back some of these regulations. Correct, I mean
Speaker 1: he could potentially direct the Federal Reserve of the o
Speaker 1: c C or work with f STOCK, uh this Financial
Speaker 1: Stability Committee to potentially ease certain sort of de facto
Speaker 1: policies that are that are just basically governed by guidance. Right.
Speaker 1: That's right. He is as treasure Secretary's ahead of f STOCK,
Speaker 1: and so it's up to him if he decides to
Speaker 1: put some different issues on the backboard burner and re
Speaker 1: prioritize that is one way to sort of start loosening regulations.
Speaker 1: Like what types of things you're talking about, I mean,
Speaker 1: it's hard to say. Right now. He seems very focused
Speaker 1: on doing anything he can to help small and medium
Speaker 1: businesses grow investment. They said for a long time that
Speaker 1: small community banks aren't able to make loans that really
Speaker 1: are a part of a large part of the economy
Speaker 1: and are holding back part of growth according to their
Speaker 1: base case, because they are kind of weighed down by regulation.
Speaker 1: And if they can loosen that up and make it
Speaker 1: easier for these smaller banks to operate, then you know
Speaker 1: that's they're going to aim for. First. I wonder if
Speaker 1: you just give US about twenty seconds on the euro.
Speaker 1: On the Euro, you know, we did hear from Peter Navarro,
Speaker 1: who is the Trade Council Director at the White House,
Speaker 1: that Germany does have a large trade imbalance with the
Speaker 1: US and that was kind of, you could say, a
Speaker 1: soft attack to the on the Euro. Now, we haven't
Speaker 1: heard a lot on Europe. UM. I know that UM
Speaker 1: in Germany. Merkel is often seen or heard talking about
Speaker 1: an interview that Trump did many years ago where he
Speaker 1: says that maybe Mercedes should be pariffed, and you kind
Speaker 1: of wonder if she is now kind of darting to
Speaker 1: gird herself to maybe be a weary of a trade war.
Speaker 1: Well that and uh in a coming election. I want
Speaker 1: to thank you very much, Salleja most Economy Treasury reporter
Speaker 1: for Bloomberg News giving us details about the new Treasury
Speaker 1: Secretary Stephen. This is Bloomberg. Thanks for listening to the
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