WEBVTT - Fed Decision Looms Over Financial Community 0:00:01.320 --> 0:00:05.680 This is Bloomberg business Week inside from the reporters and 0:00:05.840 --> 0:00:09.400 editors who bring you America's most trusted business magazine, plus 0:00:09.480 --> 0:00:13.640 global business finance and tech news. The Bloomberg Business Week 0:00:13.680 --> 0:00:18.600 Podcast with Carol Messer and Tim stinebec from Bloomberg Radio. 0:00:19.960 --> 0:00:22.400 It's two day policy meeting, as you know, kicking off today. 0:00:22.440 --> 0:00:24.759 It's the first of the new year, and we will 0:00:24.800 --> 0:00:28.480 hear from J. Powell tomorrow in that press conference. Policymakers 0:00:28.480 --> 0:00:31.120 widely expected to raise rates by a quarter percentage point, 0:00:31.400 --> 0:00:34.520 slowing from December's fifty basis point increase after four straight 0:00:34.600 --> 0:00:38.160 seventy basis point moves. But the big question is what 0:00:38.200 --> 0:00:40.320 words do they take out of that statement and what 0:00:40.520 --> 0:00:44.680 comes after this move. Well, to help us see into 0:00:44.720 --> 0:00:47.200 the crystal ball, look into the future, very please step 0:00:47.200 --> 0:00:50.880 back with Dr Stephen Skanky, chief economic advisor at kiel Point. 0:00:51.159 --> 0:00:52.880 He's a member, a former member of the U. S. 0:00:52.920 --> 0:00:56.120 Treasury and White House National Security Council staff member. He's 0:00:56.160 --> 0:00:58.760 based in Washington, d C. Joining us today from there 0:00:58.920 --> 0:01:01.080 via zoom. Dr Skanky, good to have you with us, 0:01:01.080 --> 0:01:04.399 How are you great? Thanks and it's great to be 0:01:04.480 --> 0:01:07.959 with you. Tim and Carol. There's always a fun time, 0:01:09.280 --> 0:01:13.720 and especially coming into this meeting today and tomorrow, there's 0:01:13.480 --> 0:01:16.440 there's so much good news for the Fed to be 0:01:16.480 --> 0:01:20.360 taking in UH. Their their conversations are likely to be 0:01:20.400 --> 0:01:23.520 a whole lot different than they were six weeks or 0:01:23.600 --> 0:01:25.760 twelve weeks ago. There is so much good news, but 0:01:25.760 --> 0:01:28.720 there's also some concerning news that could lead to UH 0:01:28.880 --> 0:01:32.360 potentially rates staying higher for longer. And I point specifically 0:01:32.400 --> 0:01:35.000 to the jobs market and what we see with just 0:01:35.240 --> 0:01:38.360 an incredibly resilient jobs market. It's really good, make no 0:01:38.440 --> 0:01:42.160 mistake for for for Americans. UH. It's not so good 0:01:42.160 --> 0:01:44.120 for the Federal Reserve because they're concerned about a wage 0:01:44.120 --> 0:01:49.600 price spiral. Well that's certainly on their their list of concerns. 0:01:50.080 --> 0:01:52.880 We did get some good news just the sporting with 0:01:53.040 --> 0:01:58.600 the Employment cost Index coming down again one percent for 0:01:58.680 --> 0:02:02.560 the fourth quarter, annualizes at four percent. Obviously it's not 0:02:02.600 --> 0:02:05.320 where the Fed wants it to be, but it but 0:02:05.440 --> 0:02:08.280 it dropped from an annual rate annualized rate of four 0:02:08.360 --> 0:02:13.919 point eight to UH to four percent. We do expect 0:02:13.960 --> 0:02:18.320 that the employment gains number coming out on Friday will 0:02:18.360 --> 0:02:22.040 also be helpful, not negative, but but down for where 0:02:22.080 --> 0:02:26.640 it was even just in December. So I want to 0:02:26.639 --> 0:02:29.399 go right to what I think is there could be 0:02:29.560 --> 0:02:32.080 a really important issue and if you think about it, 0:02:32.600 --> 0:02:34.200 um and in one of our I think it was 0:02:34.240 --> 0:02:36.840 maybe our one of our newsletters that was out this morning, 0:02:36.840 --> 0:02:38.959 I can't remember which one, but it talked about made 0:02:38.960 --> 0:02:42.000 in China inflation. And this speaks to our Bloomberg big take, 0:02:42.040 --> 0:02:43.560 which we'll get to a little bit later on. But 0:02:43.600 --> 0:02:47.760 back in September, then fed here Johnny Ellen mold the 0:02:47.800 --> 0:02:50.800 feds first interest rate hike in almost a decade. China's 0:02:50.800 --> 0:02:53.280 economic and market wobbles were among the reasons she ended 0:02:53.320 --> 0:02:56.920 up staying her hand. How does China, Steve complicate the 0:02:56.960 --> 0:03:02.200 situation for j Well, China is really come on back, 0:03:02.560 --> 0:03:06.040 come back online, and far more quickly, I think than 0:03:06.080 --> 0:03:10.880 anyone expected. They they ended their their COVID restraints, They're 0:03:10.880 --> 0:03:14.680 putting monetary and fiscal stimulus into it. They're standing behind 0:03:14.720 --> 0:03:19.120 their real estate sector, and so production in shadow will 0:03:19.160 --> 0:03:24.160 be helpful. Uh not that has been a big negative 0:03:24.160 --> 0:03:27.160 for inflation, but it certainly will be helpful and it 0:03:27.240 --> 0:03:31.200 will be what helps, uh the global economy be less 0:03:31.200 --> 0:03:35.560 likely to fall into recession. Probably the problem or the 0:03:35.560 --> 0:03:39.560 biggest challenge for the FED from China's increased activity is 0:03:40.080 --> 0:03:43.120 that it's going to be increasing its demand for for 0:03:43.280 --> 0:03:48.360 energy and that will just put upward pressure on energy prices. Uh. 0:03:48.600 --> 0:03:51.840 And so we're well, that's been a positive for inflation 0:03:51.920 --> 0:03:57.640 coming down. Uh, that positive impact is going to go away. Yeah, 0:03:57.720 --> 0:03:59.960 I was just looking through our story because I think, 0:04:00.160 --> 0:04:03.360 you know, concerns about Chinese inflation essentially what it could 0:04:03.360 --> 0:04:06.360 do in terms of kicking up inflation and the drag 0:04:06.600 --> 0:04:09.440 on the global economy. I think it's something like a 0:04:09.440 --> 0:04:12.160 one percentage point difference. I mean, do we need to 0:04:12.200 --> 0:04:15.200 be worried that it is going to make Ultimately the 0:04:15.200 --> 0:04:18.320 FED say, you know what, we don't quite know how 0:04:18.320 --> 0:04:22.840 the China factor and it's reopening how much pick up 0:04:22.839 --> 0:04:24.960 and momentum we will see in how much draw down 0:04:25.240 --> 0:04:28.480 on global commodities and pressure on those prices that they 0:04:28.560 --> 0:04:32.480 might just stay higher for longer. Well, it certainly is 0:04:32.520 --> 0:04:34.240 going to be on their mind, and that certainly can 0:04:34.279 --> 0:04:37.719 be a factor in their decision to stay higher for longer. 0:04:38.279 --> 0:04:42.280 But in some respects time is really on their side. 0:04:43.040 --> 0:04:47.839 The core PC inflation to flator that came out last 0:04:47.880 --> 0:04:53.040 week very good news for the Fed. It's annuallyzed over 0:04:53.080 --> 0:04:56.560 the last three months at the two point nine percent. 0:04:57.320 --> 0:04:59.800 It's not a two percent, but it's it's come down 0:05:00.040 --> 0:05:04.080 significantly from where it was. The tightening and higher interest 0:05:04.160 --> 0:05:10.160 rates are slowing economic growth, the job vacancy gap, all 0:05:10.240 --> 0:05:15.360 all that a plush and so so that the Fed 0:05:15.480 --> 0:05:19.120 is uh I think likely to increase twenty five basis 0:05:19.120 --> 0:05:22.120 points tomorrow. Most believe that it will do another twenty 0:05:22.160 --> 0:05:25.640 five basis points in mid March. UH, and before it 0:05:25.680 --> 0:05:29.200 has to do anything after that, it will have a 0:05:29.200 --> 0:05:34.479 whole lot of information and many believe the consensus of 0:05:34.520 --> 0:05:38.840 economists is that will continue to see inflation fall really 0:05:38.920 --> 0:05:42.760 back to where the FED wants it to be, notwithstanding 0:05:42.920 --> 0:05:47.800 the negative influence that higher energy prices I mean as 0:05:47.839 --> 0:05:51.160 a result of China coming back online so strongly, could 0:05:51.200 --> 0:05:54.320 also have Okay, so that's a wild card at this point. 0:05:54.360 --> 0:05:56.160 That's something that we need to keep in mind. And remember, 0:05:56.320 --> 0:05:58.599 you know, oil supply is not something that the FED 0:05:58.640 --> 0:06:02.119 can control. Oil demand the FED can control, I guess 0:06:02.120 --> 0:06:04.960 to a certain extent when it comes to raising rates 0:06:05.000 --> 0:06:10.159 and tamping down demand. Uh dr Skanky, I want to 0:06:10.160 --> 0:06:13.320 go back to your point about higher for longer. When 0:06:13.360 --> 0:06:15.520 do you think, how how long do you think the 0:06:15.520 --> 0:06:18.960 Fed will keep rates this high? I think they'll keep 0:06:19.000 --> 0:06:23.360 them this high at least through the end of June. Uh. 0:06:23.400 --> 0:06:27.479 Their rhetoric tomorrow is is going to be very much 0:06:27.480 --> 0:06:30.760 on track with their their higher for longer. That's surprising 0:06:30.800 --> 0:06:34.440 to hear only to June, though, because in December the 0:06:34.480 --> 0:06:39.760 Fed said they had no plans to cut this year. Well, 0:06:39.880 --> 0:06:43.039 that's right, and this is part of their forward guidance. 0:06:43.760 --> 0:06:47.400 They're there, They're they're sound being very hawkish on purpose, 0:06:47.760 --> 0:06:51.159 notwithstanding what they're seeing internally with the slowing of the 0:06:51.200 --> 0:06:54.800 economy and some of the other achievements that that are 0:06:54.839 --> 0:06:58.720 coming forth. But rather than having to raise interest rates 0:06:58.760 --> 0:07:03.320 further and to push the economy either into a recession 0:07:03.400 --> 0:07:07.360 or deeper into a recession, they're they're trying to to 0:07:08.000 --> 0:07:13.760 strip out some of the euphoria, enthusiasm, exuberants. They look 0:07:13.800 --> 0:07:17.120 at the SNP up six percent for the year. How 0:07:17.280 --> 0:07:21.560 how how is that not a frustration to them, and 0:07:22.240 --> 0:07:25.200 they're trying to use their rhetoric, their forward guidance to 0:07:25.800 --> 0:07:29.280 tamp that out. But they're also looking at a very 0:07:29.400 --> 0:07:35.480 much a weekending economy, and many now believe many many 0:07:35.560 --> 0:07:38.240 who who thought that it it certainly could just bounce 0:07:38.280 --> 0:07:42.200 around flat and then maybe tip into a recession in 0:07:42.360 --> 0:07:46.200 second or third quarter, are now seen that perhaps even 0:07:46.200 --> 0:07:48.160 in the first quarter, we're going to end up with 0:07:48.240 --> 0:07:52.840 negative really economic growth. So, you know, it's an interesting time. 0:07:53.040 --> 0:07:56.000 And Steve, yesterday we were talking with our Steve Matthews 0:07:56.040 --> 0:07:59.040 and our team UM about a story about how Feed 0:07:59.200 --> 0:08:01.560 is going to clash with Wall Street once again, because 0:08:01.600 --> 0:08:04.160 you've got traders expecting a peak policy rate of around 0:08:04.200 --> 0:08:06.840 four nine percent by May in June, falling to below 0:08:06.840 --> 0:08:09.160 four and a half percent by the December meeting, further 0:08:09.200 --> 0:08:14.240 cuts indicated during However, the latest you know dot plot 0:08:14.520 --> 0:08:18.160 from uh the Central Bank forecast showed seventeen of nineteen 0:08:18.200 --> 0:08:21.600 officials projecting rates about five this year, two of them 0:08:21.640 --> 0:08:23.560 above five and a half percent. It's a bit of 0:08:23.560 --> 0:08:26.320 a gap, a bit of a disconnect. Um, let's play 0:08:26.360 --> 0:08:30.680 the arbitrage there. But it's just interesting to see that gap. 0:08:31.480 --> 0:08:33.240 I mean, obviously, the Fed's going to do what it's 0:08:33.240 --> 0:08:36.720 got to do, but who usually has it right? Is it? 0:08:36.880 --> 0:08:42.360 Are you know traders right about this that that's a 0:08:42.480 --> 0:08:46.679 very good question, and to be honest, it's absolutely fascinating 0:08:46.679 --> 0:08:48.960 when you look at the dot plot and you really 0:08:48.960 --> 0:08:52.920 have yourself do they believe what they're saying or is 0:08:53.000 --> 0:08:57.080 this part of the hawk ish message they want to 0:08:57.240 --> 0:09:02.600 send to to tamp out this enthusiasm. They're very frustrated 0:09:02.640 --> 0:09:06.719 with easy and financial markets. They're they're trying to ring 0:09:06.760 --> 0:09:11.720 out inflation and financial markets. Wall Street are are acting 0:09:11.760 --> 0:09:14.000 as though that job has already finished. In the second 0:09:14.000 --> 0:09:16.040 half of the year, interest rates are going to decline 0:09:16.679 --> 0:09:20.360 and we'll we'll be back to a the old game. 0:09:20.400 --> 0:09:23.160 It will be the Fed pivot. The Fed absolutely does 0:09:23.200 --> 0:09:26.520 not want the market to believe that that's right. Reservations 0:09:26.520 --> 0:09:32.760 are up at the pivot pivot. You know, bistro investors 0:09:32.760 --> 0:09:35.200 are buying into it. They are So what could what 0:09:35.280 --> 0:09:38.280 could j Powell say tomorrow? What what could the Fed 0:09:38.440 --> 0:09:42.160 communicate tomorrow to really hammer home that this is not 0:09:42.200 --> 0:09:46.439 what they want to see? Well, they are going to 0:09:46.679 --> 0:09:50.199 they are going to say they haven't seen anything that 0:09:50.280 --> 0:09:53.320 tells them they can stop raising interest rates. They're going 0:09:53.400 --> 0:09:59.800 to talk about higher ongoing increases, plural in rates U 0:10:00.000 --> 0:10:03.040 it will be required, and the rate rates will remain 0:10:03.120 --> 0:10:08.280 at higher levels for some time. Um and uh. He 0:10:08.320 --> 0:10:10.920 won't he won't let anyone press him to to say 0:10:10.920 --> 0:10:15.520 what that exactly means. But higher rates, higher levels for 0:10:15.679 --> 0:10:20.440 some time, and that they're oh uh and it's it 0:10:20.520 --> 0:10:23.440 really is amazing to watch it. Their hope is that 0:10:23.520 --> 0:10:27.120 at some point markets will will take a step back 0:10:27.800 --> 0:10:34.080 and uh stop this, uh, this this frenzy, and belief 0:10:34.720 --> 0:10:38.800 that the pivot has already happened, and that the FET 0:10:38.840 --> 0:10:42.200 is happy where inflation is. It's not happy where inflation is, 0:10:42.480 --> 0:10:44.959 and it will continue to operate until it gets it down. 0:10:45.480 --> 0:10:48.439 But it's almost as though it doesn't matter so much 0:10:48.480 --> 0:10:52.360 anymore how much the FET increases rates or or or 0:10:52.400 --> 0:10:56.800 how long they keep them at higher levels. Inflation seems 0:10:56.840 --> 0:11:00.400 to be in the process of being wrung out as 0:11:00.400 --> 0:11:06.120 the economy cools the the employment sector is working itself out, 0:11:07.000 --> 0:11:11.280 Eddie goal gets back to some form of equilibrium. Right. 0:11:13.040 --> 0:11:15.200 Doesn't want to get fooled about. They want to see 0:11:15.240 --> 0:11:19.560 it happen, So they're not a trust that it will 0:11:19.559 --> 0:11:21.800 happen on its own. All right, We've got to run, 0:11:21.840 --> 0:11:23.840 Steve good to check in with you. Be wells. Dr 0:11:23.880 --> 0:11:26.640 Steve Skanky, chief Economic advisor at Kiel Point, former U 0:11:26.679 --> 0:11:29.240 s Treasury and White House National Security Council staff member 0:11:29.520 --> 0:11:32.040 showing us to be a zoom from Washington, d C. 0:11:32.840 --> 0:11:36.360 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:36.400 --> 0:11:38.599 live week days from two to five v m s 0:11:38.679 --> 0:11:42.000 during Listen on Bloomberg dot com, the I Heart Radio app, 0:11:42.040 --> 0:11:46.480 and the Bloomberg Business App, or watch us live on YouTube. 0:11:47.600 --> 0:11:49.480 Remember how we were all on a buying spree during 0:11:49.480 --> 0:11:51.640 the pandemic, Well, are you still waiting for your couch? 0:11:53.200 --> 0:11:55.079 Just a few things? Well, the same goes for those 0:11:55.120 --> 0:11:57.560 of the shipping industry who are looking to invest. Record 0:11:57.559 --> 0:12:00.880 profits made during the pandemic contain annial lines man, They 0:12:00.880 --> 0:12:02.920 went on a buying bins. Well, now all those new 0:12:03.000 --> 0:12:05.640 vessels will start arriving, and they've got to be named, 0:12:05.800 --> 0:12:08.400 just as the global economy is slowing. This story in 0:12:08.400 --> 0:12:11.000 the upcoming new issue of Bloomberg Business Week, on news 0:12:11.000 --> 0:12:13.720 stands later this week, already online at Bloomberg dot com 0:12:13.760 --> 0:12:16.360 and on the Bloomberg terminal. With more We've got Bloomberg 0:12:16.400 --> 0:12:19.280 Business Week editor Joel Webber and Bloomberg News Trades are 0:12:19.320 --> 0:12:21.679 Brendan Murray, who joins us on the phone in London. 0:12:21.760 --> 0:12:24.960 Joel's here in our interactive broker's studio. So Joel, how 0:12:25.000 --> 0:12:27.959 do you name a ship? Well, you you go, you 0:12:28.240 --> 0:12:30.720 go to the Midwest and you sort of like throw 0:12:30.800 --> 0:12:34.160 it darted a map and sometimes it lands on a 0:12:34.440 --> 0:12:38.040 on a place called may View, Missouri. Um, so Brendan, 0:12:38.120 --> 0:12:42.319 why why is Maresk who makes a lot of big vessels, 0:12:42.880 --> 0:12:48.120 some of them uh bordering on fours even Uh, and 0:12:48.160 --> 0:12:51.319 these are the style of both cargo vessels that that 0:12:51.559 --> 0:12:54.360 him alluded to that are going to be hopefully coming 0:12:54.360 --> 0:12:58.720 to mark coming to oceans near you. And nothing alleviate uh, 0:12:58.760 --> 0:13:01.320 but not too many problems, too many? But but why 0:13:01.360 --> 0:13:05.040 did Mayor's you know, Copenhagen based company go to Mayview, 0:13:05.120 --> 0:13:07.679 Missouri to name one of its ships, which that name 0:13:07.720 --> 0:13:11.240 will be the may View marisk That's right. So, so 0:13:11.360 --> 0:13:14.040 marisk Is is a hundred and twenty year old company 0:13:14.160 --> 0:13:16.800 and they and they're very proud of their history. A 0:13:16.840 --> 0:13:22.200 guy named Arnold Peter Mueller married a woman whose family 0:13:22.320 --> 0:13:25.960 was from the tiny town of Mayview, Missouri. This was 0:13:26.080 --> 0:13:30.000 about fifty miles east of Kansas City. Uh. You, I 0:13:30.240 --> 0:13:33.240 tried to find a stoplight using Google Earth and I 0:13:33.240 --> 0:13:36.599 couldn't find one. Um, that's not to say it's the 0:13:36.800 --> 0:13:39.720 folks that aren't proud of it. And I'm told there's 0:13:39.760 --> 0:13:42.960 even a plaque commemorating the fact that they've gotten one 0:13:42.960 --> 0:13:46.840 of the world's biggest ships named after the town. Okay, 0:13:46.840 --> 0:13:50.080 so there you know names aside um, and maybe we 0:13:50.080 --> 0:13:51.480 can spend a little bit more time with that yet. 0:13:51.559 --> 0:13:54.360 But Marisk isn't even the biggest buyer, right, Like who 0:13:54.360 --> 0:13:57.480 are you know? NSC is one name that's come up 0:13:57.800 --> 0:14:02.000 uh in some Bloomberg business we we week stories lately. Uh. 0:14:02.040 --> 0:14:06.120 It also happens to be a big buyer of ships, 0:14:06.120 --> 0:14:08.520 that's right. So so that this industry is the container 0:14:08.559 --> 0:14:12.440 shipping industry made record profits over the past two years, 0:14:13.000 --> 0:14:15.520 basically because we all bought things for our backyards or 0:14:15.520 --> 0:14:18.280 our home offices. Now that is starting to cool off, 0:14:18.280 --> 0:14:21.200 but in the meantime, they've all uh these and there 0:14:21.320 --> 0:14:24.600 is dominated by about ten companies, of half in Europe, 0:14:24.600 --> 0:14:27.760 Path and Asia. Um MSc, as you mentioned, is the 0:14:27.760 --> 0:14:31.240 biggest one. It's a sort of uh fairly low key 0:14:31.320 --> 0:14:36.000 company based in Switzerland owned by an Italian billionaire. Uh 0:14:36.040 --> 0:14:38.520 that and they are going full They're they're putting all 0:14:38.520 --> 0:14:43.000 their cards in the ocean freight. Uh game Uh and 0:14:43.040 --> 0:14:45.160 they are. They have something like a hundred and thirty 0:14:45.240 --> 0:14:48.720 ships on order now at about hundred and fifty to 0:14:48.760 --> 0:14:51.920 two hundred million dollars per ship. Somebody do the master 0:14:52.040 --> 0:14:54.400 me on that. But it's you know, it's a couple 0:14:54.400 --> 0:14:57.680 of a couple of billion dollars worth of ships they 0:14:57.720 --> 0:15:01.520 have on order. Um. So yeah. But but Marisk, on 0:15:01.560 --> 0:15:03.760 the other hand, is wants to be more of a 0:15:03.840 --> 0:15:06.280 door to door kind of end to end logistics providers. 0:15:06.320 --> 0:15:08.680 So they only have, you know, a couple of dozen 0:15:08.720 --> 0:15:13.600 ships on order compared to probably ten times the amount 0:15:13.640 --> 0:15:17.400 that are that are ten times more that MSc has. 0:15:17.600 --> 0:15:19.720 I gotta say, I keep thinking of a conversation Tim 0:15:19.760 --> 0:15:23.000 and I had recently with Mario Cordero, executive director at 0:15:23.000 --> 0:15:26.359 the Court of Long Beach, who talked about shipping containers 0:15:26.400 --> 0:15:29.120 being canceled. You know, very different from what we saw 0:15:29.160 --> 0:15:32.600 in the pandemic. There's no backup, prices are coming down. 0:15:32.600 --> 0:15:35.520 It's a very different environment. Are these guys do they 0:15:35.520 --> 0:15:39.160 make some wrong bets? Well, they don't. They don't bet 0:15:40.160 --> 0:15:42.280 on you know, a couple of hundred million dollars on 0:15:42.320 --> 0:15:45.400 a container ship on what's happening over the next twelve 0:15:45.440 --> 0:15:48.080 to eighteen months. These are these are investments of you know, 0:15:49.520 --> 0:15:52.640 years sometimes, but this is a very cyclical business. It 0:15:52.840 --> 0:15:56.200 rises and falls with the with the economic tides. And 0:15:56.280 --> 0:15:59.560 we are you know, the the the economy, the global 0:15:59.600 --> 0:16:02.680 economy it softening, and all these ships are going to 0:16:02.760 --> 0:16:05.680 hit the market just exactly the time when they don't 0:16:05.680 --> 0:16:08.640 need them. Container ships are kind of like hotels, and 0:16:08.640 --> 0:16:11.360 if they're not filled, uh, they're not making money. And 0:16:11.360 --> 0:16:13.360 if they're not making money, then the price comes down, 0:16:13.440 --> 0:16:16.880 so that benefits consumers. You know, we're we're gonna we're 0:16:16.880 --> 0:16:21.800 gonna see UH and and companies like Walmart and akia 0:16:22.040 --> 0:16:25.240 that that use a lot of shipping services, you know, 0:16:25.240 --> 0:16:27.640 they're going to see their rates come down and probably 0:16:27.680 --> 0:16:32.520 stay down. As our Bloomberg Intelligence UH logistics analysts said, 0:16:32.720 --> 0:16:35.680 we're going to see low ocean freight rates. So well 0:16:35.720 --> 0:16:39.600 into it time to talk about the names again, because 0:16:40.080 --> 0:16:41.680 you can talk about the names again. Why not talk 0:16:41.720 --> 0:16:45.560 about the names again? Um, Britan, I'm curious, since um 0:16:45.560 --> 0:16:47.920 you did some dogged reporting here, what did you learn 0:16:47.960 --> 0:16:51.920 about names that was you know, as somebody who follows 0:16:51.920 --> 0:16:53.840 this stuff so closely, you know, what was the big 0:16:53.880 --> 0:16:55.760 reveal for you? And in the naming of how we 0:16:55.840 --> 0:17:00.680 get these uh, you know vessels that sometimes become iconic 0:17:00.720 --> 0:17:02.880 and pop culture in the case of like saying the 0:17:02.920 --> 0:17:06.360 ever given right, so the so well if you bring 0:17:06.440 --> 0:17:10.760 up the ever Given so Evergreen Marine is the Taiwanese company. 0:17:10.840 --> 0:17:13.960 And they like consistency. They like putting ever in front 0:17:14.000 --> 0:17:15.800 of the name of their ships. So they've got dozens 0:17:15.840 --> 0:17:19.320 and dozens of ships. That's the ever Early I think 0:17:19.320 --> 0:17:24.840 there was one the ever uh superb exactly just any 0:17:24.960 --> 0:17:28.760 any any noun, you know, fill in the blank and 0:17:28.800 --> 0:17:30.399 put ever in front of it, and that's how they 0:17:30.480 --> 0:17:33.720 named their ships. Um other companies that you know, it's 0:17:33.760 --> 0:17:37.480 it's it's some some uh source of corporate pride. I 0:17:37.520 --> 0:17:41.880 mean the MSc said that they named Mayor's after uh 0:17:41.960 --> 0:17:44.600 family members of employees. So maybe it's you know, kind 0:17:44.600 --> 0:17:46.680 of a motivational thing. You know, you have a good 0:17:46.720 --> 0:17:48.520 year and you know, you get a ship named after 0:17:48.560 --> 0:17:50.800 your kid or something friended. I mean, you've done so 0:17:50.880 --> 0:17:52.680 much reporting on this. Have any companies come to you 0:17:52.760 --> 0:17:54.320 and said, we want to name this one after the 0:17:54.320 --> 0:17:57.919 trades are at Bloomberg? Well, you know I did lobby 0:17:58.000 --> 0:18:00.320 for that with with marrisk and they and the and 0:18:00.400 --> 0:18:02.880 the and the public relations guy who I talked to said, 0:18:03.200 --> 0:18:05.840 you've got to get in mine behind me because I 0:18:05.840 --> 0:18:08.520 won't say his name, but he he's you know, kind 0:18:08.560 --> 0:18:13.160 of quietly wants one named after him. Ever, Brendon has 0:18:13.200 --> 0:18:16.159 a kind of nice thing to it. Don't get stuck. 0:18:17.920 --> 0:18:22.320 I agree, exactly. Well, there's nine hundred ships coming over 0:18:22.359 --> 0:18:24.560 the next three or four years, and so you know 0:18:24.560 --> 0:18:27.000 you've got to figure one of those, you know, uh 0:18:27.160 --> 0:18:29.199 could uh you know, could be named after one of us. 0:18:29.240 --> 0:18:31.760 Maybe we didn't come back to may View, Missouri. Why 0:18:31.960 --> 0:18:36.720 maybe so maybe you stuck out to me because I'm 0:18:36.840 --> 0:18:39.000 well number one, because I'm from St. Louis, and I 0:18:39.040 --> 0:18:43.080 wanted to know how did this tiny little town literally, 0:18:43.119 --> 0:18:45.680 like I said, no spent you know, there any stoplights? 0:18:45.320 --> 0:18:48.200 And fairly it's not even a suburb of Kansas City. 0:18:48.200 --> 0:18:51.720 It's kind of just just an old farming community that 0:18:51.800 --> 0:18:54.919 has basically had two or three hundred residents for for 0:18:54.960 --> 0:18:57.280 as long as I could see the census day to 0:18:57.359 --> 0:19:01.240 go back, uh and and it was it meant something 0:19:01.280 --> 0:19:03.040 to the history of the company. I spoke to the 0:19:03.119 --> 0:19:07.040 historian mcmay's cousin in house historian, and he said that 0:19:07.040 --> 0:19:11.159 the that the that there and there are uh family members, 0:19:11.200 --> 0:19:13.320 you know, descendants of the founder who still work for 0:19:13.320 --> 0:19:15.720 the company. And that's just been the tradition. If they 0:19:15.840 --> 0:19:19.480 try to, uh, you know, keep that, keep that tradition going. 0:19:19.640 --> 0:19:22.960 Arnold Peter Mueller was married in may View. Go ahead, 0:19:23.480 --> 0:19:28.840 go figure. Ever Murray works too, it does Ever Webber, 0:19:29.680 --> 0:19:32.800 why not. I'll take that all right. Joel and Brendan, 0:19:33.520 --> 0:19:37.800 thank you. You're listening to the Bloomberg Business Week Podcast. 0:19:38.080 --> 0:19:40.320 Catch us live week days from two to five p 0:19:40.520 --> 0:19:43.119 m s during Listen on Bloomberg dot com, the I 0:19:43.240 --> 0:19:46.160 Heart Radio app, and the Bloomberg Business app, or watch 0:19:46.240 --> 0:19:51.639 us live on YouTube. It is time for plugged in 0:19:51.680 --> 0:19:53.880 your weekly look at e VS. And I gotta say 0:19:53.920 --> 0:19:56.720 tim lot's happening in the world always when it comes 0:19:56.720 --> 0:20:00.440 to electric vehicles, GM investing six fifty million developing the 0:20:00.520 --> 0:20:03.440 largest U S lithium deposit. And that's really a move 0:20:03.480 --> 0:20:05.840 to ramp up its efforts to secure supplies of the 0:20:05.920 --> 0:20:08.800 key metal used in electric vehicle batters. I mean, it 0:20:08.880 --> 0:20:11.720 is all about getting those raw materials and components in 0:20:11.840 --> 0:20:14.280 order to be able to meet demand and speaking of 0:20:14.440 --> 0:20:18.240 demand and e vs GM CEO Mary Bara dismissing concerns 0:20:18.240 --> 0:20:20.720 about those price cuts after Tesla and Ford cut their 0:20:20.720 --> 0:20:23.760 EV sticker prices. Look at shares of GM today up 0:20:23.800 --> 0:20:26.200 significantly after reporting results. Let's break it all down with 0:20:26.200 --> 0:20:28.680 Bloomberg Technology co host ed Ludlow, who's in the Bloomberg 0:20:28.760 --> 0:20:31.840 nine sixties studio in San Francisco, And I want to 0:20:31.880 --> 0:20:35.040 start with um the six fifty million dollar investment that 0:20:35.200 --> 0:20:37.960 GM is going to make the largest U S lithium deposit. 0:20:38.600 --> 0:20:40.520 So it's a big headline. It is. It is a 0:20:40.520 --> 0:20:42.560 big headline, But take us into the details of the 0:20:42.840 --> 0:20:44.760 just a headline? Is that what you say? What's the 0:20:44.840 --> 0:20:47.879 story behind the story here? I mean the devil's in 0:20:47.920 --> 0:20:52.199 the detail. This is for lithium supply starting from so 0:20:52.240 --> 0:20:55.240 a few years away from now. But you know it's 0:20:55.240 --> 0:20:58.440 all part of the widest story about concern for all 0:20:58.480 --> 0:21:02.080 of these players. Test being the pure play market incumbent 0:21:02.480 --> 0:21:05.520 GM and four being the legacy US names transitioning to 0:21:05.600 --> 0:21:08.920 e V making sure that they have access in their 0:21:08.960 --> 0:21:12.000 supply chains to the raw materials for battery cells right 0:21:12.000 --> 0:21:14.800 as they ramp up the volume of evs they produce, 0:21:15.080 --> 0:21:18.560 they need more battery cells and therefore they need more 0:21:18.640 --> 0:21:20.800 access to the metals that go into them. And you know, 0:21:20.840 --> 0:21:23.920 in this case it's lithium. It's a partnership with Lithium 0:21:23.960 --> 0:21:28.399 America's Corps. It's about a mine in Nevada, specifically the 0:21:28.400 --> 0:21:32.400 factor past mine UM. And you know, I think that 0:21:32.600 --> 0:21:35.800 you know it meets GM's ambition, right because this is 0:21:35.840 --> 0:21:38.760 a company that you know is aiming to build a 0:21:38.760 --> 0:21:41.800 millionaivs a year eventually and they need to make sure 0:21:41.800 --> 0:21:45.919 they've got the raw materials to do that. Um, do 0:21:46.040 --> 0:21:48.040 we have enough lithium to do what we need to 0:21:48.040 --> 0:21:52.280 do to turn over everybody to trick question that is 0:21:52.320 --> 0:21:54.760 a trick question is what the conversation do you have 0:21:54.800 --> 0:21:57.760 around this? Well? Do you know why it's a trick question, 0:21:57.840 --> 0:22:01.639 And it's because it's not about necessarily how much lithium 0:22:01.640 --> 0:22:04.280 we have available to us, but also where it's coming from. 0:22:04.320 --> 0:22:07.600 Because remember the whole point of the Inflation Reduction Act, 0:22:07.920 --> 0:22:13.200 which provides for a federal credit, a consumer incentive. Being 0:22:13.240 --> 0:22:17.440 eligible for that incentive long term is dependent on where 0:22:17.480 --> 0:22:21.359 you source your raw materials on in lithium's case, in particular, 0:22:21.720 --> 0:22:24.560 China is such a massive player, and the whole point 0:22:24.560 --> 0:22:26.919 of the I r A is to make America's supply 0:22:27.080 --> 0:22:30.640 chain more competitive. So it's not just about how much 0:22:30.720 --> 0:22:33.080 lithium there is on the planet, it's about where it's 0:22:33.119 --> 0:22:36.040 coming from and making the US more competitive. And again, 0:22:36.119 --> 0:22:39.320 this announcement that GM made Tuesday is for a mine 0:22:39.359 --> 0:22:42.000 in Nevada, so that would very much mean that any 0:22:42.040 --> 0:22:45.080 battery packs with lithium from that mine were eligible going 0:22:45.160 --> 0:22:47.520 forward for the IRA credit. But also brings us back 0:22:47.520 --> 0:22:51.280 to the question about making different batteries or batteries that 0:22:51.280 --> 0:22:54.160 are that have different materials in them add and are 0:22:54.200 --> 0:22:56.480 you betting on a component that's guaranteed to be used 0:22:56.480 --> 0:22:59.160