WEBVTT - Surveillance: Yen Drop Shakes Up Currencies (Podcast) 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownowitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.840 --> 0:00:23.799 To find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.319 and of course on the Bloomberg terminal. What we're gonna 0:00:30.320 --> 0:00:32.760 do now is what Bloomberg Surveillance does best. We welcome 0:00:32.760 --> 0:00:34.920 all of you on radio and television to a clinic 0:00:34.960 --> 0:00:38.959 now with when Thin He's Global out of Currency Strategy 0:00:38.960 --> 0:00:43.680 and Brown Brothers hareman that barely describes as encyclopedic perspective 0:00:43.720 --> 0:00:48.239 on the history of foreign exchange and Pacific, specifically his 0:00:48.360 --> 0:00:53.120 Pacific rim that's a mouthful from Japan down to his Burma. 0:00:53.240 --> 0:00:55.760 Dr Finn, thank you so much for joining. I think 0:00:55.760 --> 0:00:59.640 we need to educate all, including myself, on the ancient 0:01:00.040 --> 0:01:04.800 Japanese trajectory of needing to weaken the yend. The Yen 0:01:04.920 --> 0:01:08.520 starts out in ninety nine after World War Two, set 0:01:08.520 --> 0:01:11.880 at three sixty. It goes on to plause our Chord 0:01:11.920 --> 0:01:15.639 two hundred stronger yet stronger Yen. The Louivi Chord oops 0:01:15.680 --> 0:01:18.720 two years later we screwed up one twenty and then 0:01:18.760 --> 0:01:22.520 the shock which you and I lived in of to 0:01:22.720 --> 0:01:26.560 use a phrase from Boston, wicked strong Yen of eighty. 0:01:26.880 --> 0:01:31.400 What where are we at now at one thirty within 0:01:31.440 --> 0:01:38.240 the ancient Japanese continuum to hate and dislike strong Yen? Well, 0:01:38.319 --> 0:01:39.800 first of all, thank you very much for having me, Tom, 0:01:39.840 --> 0:01:42.160 It's always a pleasure. Uh. You know, I think there's 0:01:42.200 --> 0:01:44.920 two things that we're really looking at right now. There's 0:01:44.920 --> 0:01:46.560 that old adage that you can never have too much 0:01:46.560 --> 0:01:49.680 of a good thing. The Japanese poassi makers have been 0:01:50.000 --> 0:01:53.840 uh looking for a weekend and higher inflation for years, 0:01:53.880 --> 0:01:57.160 if not decades, as you know, and they're finally getting it, 0:01:57.240 --> 0:01:59.960 but at at a pace that is quite uncomfortable. Now, 0:02:00.120 --> 0:02:01.880 I want to circle back to what you what I 0:02:01.880 --> 0:02:04.720 think Jonathan mentioned about how they coln sort of square 0:02:04.720 --> 0:02:07.760 the circle and they can't. Professor Mundel, who had had 0:02:07.800 --> 0:02:10.320 the pleasure of having it in class in grad school, 0:02:11.000 --> 0:02:13.880 uh way back in the sixties, talked about the impossible trinity. 0:02:13.919 --> 0:02:18.960 You cannot run h have free capital controls, run independent policy, 0:02:19.040 --> 0:02:21.760 and also influenced exchange rate. You cannot have all three, 0:02:22.160 --> 0:02:25.359 and so right now Japan has free capital flows and 0:02:25.400 --> 0:02:29.840 they are keeping uh materre post ultra loose. So there's 0:02:30.040 --> 0:02:33.040 it is as Mr Mundell, Professor Mundell would say, it 0:02:33.080 --> 0:02:36.200 is impossible to control the end. It's going to find 0:02:36.200 --> 0:02:39.960 its own level. Uh. The doubling down on your control, 0:02:40.040 --> 0:02:42.839 it stands out and starts contrasts. Earlier today the ricks 0:02:42.880 --> 0:02:46.000 Bank delivered a surprise hike. So when the ricks Bank 0:02:46.080 --> 0:02:48.959 is more hawkish than you, that that's saying something. When 0:02:48.960 --> 0:02:51.120 in a situation like this one, I think we will 0:02:51.160 --> 0:02:53.639 recognize that you've just illustrates it. Something has to give. 0:02:54.080 --> 0:02:56.200 I wouldn't use that what something has to break? But 0:02:56.320 --> 0:02:58.680 something has to give. How do you get a read 0:02:58.720 --> 0:03:01.239 on on what gives? Is it in the government bond 0:03:01.280 --> 0:03:05.160 market or is it in foreign exchange? I would say 0:03:05.200 --> 0:03:08.359 John has stupid determined. You know it's it's um It's 0:03:08.360 --> 0:03:11.280 not just a Japanese phenomenon. Also, obviously, this yeok of 0:03:11.680 --> 0:03:14.480 control could have been sustained if if globally bond hills 0:03:14.520 --> 0:03:18.160 had remained at low levels. And yet here we are, 0:03:18.800 --> 0:03:23.280 the US ten year is getting close to etcetera, etcetera. 0:03:23.720 --> 0:03:27.760 So it's making it much more challenging to me the 0:03:27.800 --> 0:03:30.640 Bank of Japan just delivered an ultra doubbish hole there. 0:03:30.880 --> 0:03:33.680 If you look at the forecast in the outlook report, 0:03:33.760 --> 0:03:37.920 they are saying no tightening through fiscally year twenty four. 0:03:38.680 --> 0:03:41.200 They I think they kept their core inflation forecast around 0:03:41.200 --> 0:03:45.200 one percent um for both fistically year twenty four. That's 0:03:45.240 --> 0:03:48.000 quite a statement. I think at some point they're going 0:03:48.040 --> 0:03:49.720 to have to turn around. And my I think my 0:03:49.840 --> 0:03:52.920 feeling right now is that Krodo will keep this policy 0:03:52.960 --> 0:03:55.000 going through the end of his term which ends next 0:03:55.040 --> 0:03:57.680 year early next year, and he's gonna allow his predecessor, 0:03:57.760 --> 0:04:00.120 I'm sorry, his successor to sort of wrestle with. So 0:04:00.160 --> 0:04:02.200 that's a year out. I know that sounds like an 0:04:02.200 --> 0:04:06.920 eternity um, but I think eventually we will have abandon 0:04:07.040 --> 0:04:08.640 our yield of control. I don't think it's gona happen 0:04:08.640 --> 0:04:12.720 anytime soon, but it's it's as unnatural, you know, having 0:04:12.720 --> 0:04:15.440 a tenure at zero percent is unnatural. So that is 0:04:15.440 --> 0:04:17.559 where I think it will go. But we are nowhere 0:04:17.600 --> 0:04:20.120 near close to that pain threshold yet. In the meantime, 0:04:20.120 --> 0:04:23.080 when how much does this disrupt the idea of the 0:04:23.160 --> 0:04:25.960 yen as a haven trade, how much does this redirect 0:04:25.960 --> 0:04:29.279 flows simply into the dollar as the only haven left. 0:04:30.320 --> 0:04:32.600 Well that's a good point, so that that's really what 0:04:32.640 --> 0:04:35.320 the puzzle is right now. Over this last week or 0:04:35.320 --> 0:04:37.960 two of risk off activity, the end continue to weaken. 0:04:38.040 --> 0:04:39.840 So I don't like to put too much on one 0:04:39.880 --> 0:04:41.960 on one data point in one episode, but certainly something 0:04:42.000 --> 0:04:44.960 will look out for. We did have some finding some 0:04:45.520 --> 0:04:50.520 uh some correction lower intelligen in response to risk off, 0:04:50.800 --> 0:04:52.720 but it's very ministruble, maybe one or two yen. I 0:04:52.720 --> 0:04:56.200 think this this week, and I think that, uh, this, 0:04:56.200 --> 0:04:59.760 this montery polagide diversion is really to me the driving force. Yes, 0:05:00.040 --> 0:05:01.839 we'll have a couple of bouts of risk off. Maybe 0:05:01.880 --> 0:05:03.799 the end strength is a couple, you know, a couple 0:05:03.839 --> 0:05:07.080 of one or two percent. But to me, the the 0:05:07.279 --> 0:05:11.960 underlying stories monetary policy diversions again is going to go higher. 0:05:12.080 --> 0:05:14.080 M Dollyan is going to go higher. People throwing out 0:05:14.080 --> 0:05:16.560 one thirty five, I've heard one fifty. But I say, 0:05:16.600 --> 0:05:18.240 let's take one separate of time. Let's get to that two. 0:05:18.279 --> 0:05:20.480 Thou too high at one thirty five, and then let's 0:05:20.480 --> 0:05:22.960 see where things stands. Christopher and a Strtigues was just 0:05:23.000 --> 0:05:24.760 on and he was saying the knock on effects to 0:05:24.880 --> 0:05:27.440 China and the UN that we're saying overnight it's going 0:05:27.480 --> 0:05:29.880 to be a big concern to the Chinese authorities. Are 0:05:29.920 --> 0:05:33.640 we expecting some sort of further intervention there in order 0:05:33.720 --> 0:05:36.320 to stave off some of the dramatic pace of moves, 0:05:36.360 --> 0:05:39.839 if not the direction. Well, China is obviously very interesting. 0:05:40.200 --> 0:05:43.160 Despite sort of sort of introducing more market maximums, they 0:05:43.200 --> 0:05:46.200 still have very heavy hand in markets like financial markets 0:05:46.200 --> 0:05:50.000 across across China. Now again I would point out to 0:05:50.080 --> 0:05:53.839 monetary policies story there as well. People's make of China 0:05:54.760 --> 0:05:56.400 is actually even more delish in the sense that they 0:05:56.440 --> 0:06:00.280 are actually loosening posts right now. Japan is maintaining loose policy. See, 0:06:00.600 --> 0:06:04.400 but we're seeing the People's Bank of China reserve requirements. 0:06:04.720 --> 0:06:06.520 They've tweaked their interest rates lower. I think that more 0:06:06.600 --> 0:06:09.680 is coming, So that argus for more you want weakness 0:06:10.240 --> 0:06:12.520 more than the knock on effect. Of course, it's sort 0:06:12.520 --> 0:06:14.279 of it's all kind of wrapped together. But to me, 0:06:14.320 --> 0:06:18.200 that monte pass divergence in pbo c s is even stronger. 0:06:18.720 --> 0:06:21.159 Um they can control the pace a bit a bit 0:06:21.200 --> 0:06:23.960 more than Japan can. Obviously they have again a very 0:06:24.000 --> 0:06:26.600 heavy hand. But make no mistake, dollar you is going 0:06:26.640 --> 0:06:28.240 higher as well. Doctor said, I don't want you to 0:06:28.279 --> 0:06:30.600 get in trouble with the general counsel of the August 0:06:30.600 --> 0:06:33.800 Bank Brown Brothers harem and I'm gonna phrase this very carefully. 0:06:33.920 --> 0:06:37.200 To what you said two or three questions ago. What 0:06:37.240 --> 0:06:41.239 we're going to hear is bad people like that George 0:06:41.279 --> 0:06:49.240 Sorrows on Black Wednesday, quote are manipulating yen, are manipulating dollar, 0:06:49.480 --> 0:06:54.120 are manipulating the currency market? Respond to that, does the 0:06:54.200 --> 0:07:00.200 market tell these powers and institutions what to do? No? 0:07:00.320 --> 0:07:03.000 I mean, that's just a terrible trope about these these 0:07:03.000 --> 0:07:07.560 conspiracy theories. The market is the market. We have hedge funds, 0:07:07.600 --> 0:07:10.640 we have real money. We are you know, speculators of course, 0:07:10.720 --> 0:07:13.040 you know, we have all corporations, we have all sorts 0:07:13.080 --> 0:07:15.640 of players in the phone exchange market. I would say, 0:07:15.640 --> 0:07:17.600 I would pause it right now that with the upwards 0:07:17.600 --> 0:07:20.040 of three point five trillion dollars a day of f 0:07:20.240 --> 0:07:22.840 X flows daily, that's it's getting much much harder to 0:07:22.880 --> 0:07:25.280 quote unquote manipulate the markets. It was easy back in 0:07:25.320 --> 0:07:27.640 the nineties when we had pegs. You know, we had 0:07:28.160 --> 0:07:31.080 um capitals, are not as as large we had. Pigs 0:07:31.160 --> 0:07:34.120 are easy to break, uh so I of course it's 0:07:34.120 --> 0:07:36.480 always easy. Um. We see this a lot in emerging markets, 0:07:36.520 --> 0:07:39.280 whereas we always blame the foreign speculators. But it's a 0:07:39.400 --> 0:07:42.440 terrible trope that you know, I wish would would would really, 0:07:42.480 --> 0:07:44.960 you know, go go the way of wild West. That's 0:07:45.000 --> 0:07:46.600 just not the way the FX market is right now, 0:07:46.720 --> 0:07:49.760 Winston greant to catch up as a wife of Brand brothers. 0:07:49.840 --> 0:07:59.280 Harriman joining us now is someone who likes emerging markets, 0:07:59.440 --> 0:08:02.520 who likes US stocks. It's widely the global chief investment 0:08:02.560 --> 0:08:05.840 strategist at the black Rock Investment Institute, Whitely, Let's start here, 0:08:05.880 --> 0:08:10.560 why do you still like the equity story? Um, if 0:08:10.600 --> 0:08:14.040 you think about the broader macro environment, indeed, we have 0:08:14.240 --> 0:08:19.080 more challenges now thinking about policy uncertainty, thinking about a 0:08:19.280 --> 0:08:23.520 rate pushing higher. But if you think about the you know, 0:08:23.600 --> 0:08:27.240 like putting aside the year today kind of development real rate, 0:08:27.760 --> 0:08:32.000 we're still talking about really low levels versus historical UM 0:08:32.280 --> 0:08:36.520 averages and also the broader growth backroup. In our view, UM, 0:08:36.679 --> 0:08:40.480 the deal over from the war in Ukraine will impact 0:08:40.600 --> 0:08:45.400 European economies a lot more than US economies. So our 0:08:45.640 --> 0:08:49.360 estimates of the this bill over growth impact for the 0:08:49.440 --> 0:08:52.080 US economy for this year is after zero point five 0:08:52.080 --> 0:08:55.400 percent GDP growth track, which is quite a lot smaller 0:08:55.440 --> 0:08:59.000 than what we're expecting for for European economies. So that 0:08:59.160 --> 0:09:04.000 being the case, we prefer US market over European markets. Yes, 0:09:04.080 --> 0:09:07.480 we do like emerging markets that but broadly we still 0:09:07.520 --> 0:09:10.240 prefer developed market over emerging market. It's just that within 0:09:10.320 --> 0:09:13.200 emerging market we prefer to play it through local e 0:09:13.320 --> 0:09:17.080 M d versus e M equities. Right, currency, where you 0:09:17.120 --> 0:09:18.600 go right to where I want to go, which is 0:09:18.720 --> 0:09:21.040 local paper. I want you to give me the spill 0:09:21.120 --> 0:09:24.200 over on this new strong dollar black rock has to 0:09:24.240 --> 0:09:29.000 be riveted to the FFEX dynamics of yield and price 0:09:29.160 --> 0:09:33.720 briefits on that, how do you adjust to strong dollar 0:09:34.040 --> 0:09:40.280 in this crisis? With the end crisis was the end? Well, indeed, 0:09:40.400 --> 0:09:43.920 what we have seen so far one thirty dollar end 0:09:44.160 --> 0:09:48.160 is the significant moves. We're talking about two standard deviations 0:09:48.200 --> 0:09:53.160 away from the Cabinet office break even estimate, right, so 0:09:53.200 --> 0:09:58.559 we're talking about really really incredible, incredible currency volatility and moves. 0:09:58.640 --> 0:10:03.880 But that's very much speaks to this world of policy divergence. 0:10:04.040 --> 0:10:06.880 So on the one hand you have central banks like 0:10:06.920 --> 0:10:10.160 the PBOC and b o J. On the other hand, 0:10:10.240 --> 0:10:12.679 you have central banks like the FED and easy to 0:10:12.720 --> 0:10:16.800 be looking to get closer to neutral as quickly as possible. 0:10:16.880 --> 0:10:20.200 But specifically in the case of in the case of Japan, 0:10:20.240 --> 0:10:22.920 not only we have kind of the monetary side of 0:10:22.960 --> 0:10:26.840 phase actually still remaining very very accommodated. Actually on the 0:10:26.880 --> 0:10:29.120 physical side of things, they are coming through as well, 0:10:29.200 --> 0:10:32.720 right like they recently just announced to for the eight 0:10:33.440 --> 0:10:38.199 billion dollars of the physical aid to ease the inflation pain. 0:10:38.360 --> 0:10:41.480 So so so very very different from the world that 0:10:41.559 --> 0:10:44.320 we're seeing in the US and Europe. In Japan, actually 0:10:44.320 --> 0:10:47.600 we're still seeing this um this this this support coming 0:10:47.640 --> 0:10:49.840 from both the monetary side of things as well as 0:10:49.840 --> 0:10:52.719 the physical side of things. The Japanese yen should be 0:10:52.880 --> 0:10:55.640 a bit of a support for Japanese acquist given a 0:10:55.760 --> 0:10:59.360 historically the negative correlation between the two, but that correlation 0:10:59.440 --> 0:11:03.160 has condemn a little bit in recent years because a 0:11:03.200 --> 0:11:06.920 lot of the Japanese corporates actually moved their factories overseas, 0:11:06.960 --> 0:11:09.640 so that direct benefits is a bit less. But we 0:11:09.679 --> 0:11:12.439 like Japanese ouquts on the currency had basis. At this point, 0:11:12.640 --> 0:11:15.440 we're just taking a step back and quickly here is 0:11:15.480 --> 0:11:21.600 the only haven currency left the dollar. Oh, that's a 0:11:21.720 --> 0:11:24.040 that's a that's a great question. So far, if you 0:11:24.120 --> 0:11:28.640 look at within currencies, the dollar has been the key, right, 0:11:28.720 --> 0:11:31.920 like that's where people hide when things things go wrong. 0:11:32.240 --> 0:11:35.800 But one has to also question at some point that 0:11:35.880 --> 0:11:41.160 the benefit of government bonds as a diversifier in portfolios. 0:11:41.200 --> 0:11:44.880 We have to kind of discussed at which point of 0:11:45.320 --> 0:11:49.880 use levels government bonds can be good again as diversifiers 0:11:49.880 --> 0:11:52.800 in portfolios. Right, so so far they have not been good. Um, 0:11:52.880 --> 0:11:55.679 they have found the opposite of what we expect them too. 0:11:55.840 --> 0:11:58.120 But there is a level at which point tension funds 0:11:58.120 --> 0:12:01.360 are going to find government bonds attract and and and 0:12:01.360 --> 0:12:04.120 and as we moved further away from zero down to 0:12:04.160 --> 0:12:08.480 actually their diversification benefits would also come back in place. 0:12:08.520 --> 0:12:10.680 So that's that's something else that we're playing very close. 0:12:11.200 --> 0:12:13.440 Just funny, just to jump in in the amount of 0:12:13.440 --> 0:12:15.520 time we have left. You said something really interesting. Then 0:12:15.559 --> 0:12:18.760 you like Japanese equity still on a currency hedge basis, 0:12:18.880 --> 0:12:21.760 just two questions, why would you hedge the currency? And 0:12:21.800 --> 0:12:24.520 to how expensive is it to do? That right now, 0:12:24.559 --> 0:12:28.440 given the moves with saying that's a great question. Well, 0:12:28.520 --> 0:12:32.400 we turned positive on Japanese aquities earlier in the year, 0:12:32.679 --> 0:12:35.240 and we wanted to kind of hedge out the currency 0:12:35.320 --> 0:12:41.160 side of things because the negative correlation between aquities and currency, 0:12:41.400 --> 0:12:45.560 and also because the expectation for currency to weaken given 0:12:45.600 --> 0:12:48.959 policy divergence that is talked about a hundred and thirty. 0:12:49.160 --> 0:12:53.800 If we're talking about fresh entry into Japanese markets through 0:12:53.800 --> 0:12:58.679 currencies or through uh aquity markets, we probably would not 0:12:58.880 --> 0:13:03.680 be too mum. It's being currency had because as I 0:13:03.679 --> 0:13:06.560 said earlier, this represents two standard division moved from the 0:13:06.559 --> 0:13:11.880 great even from the Cabinet office and hadging cost. Well, 0:13:12.200 --> 0:13:19.440 thank you if the blank Rock investment instituted right now. 0:13:19.520 --> 0:13:23.440 Joining us in Kiev is a most original mayor, not 0:13:23.559 --> 0:13:27.600 only the mayor of a beleaguered capital of this nation, Ukraine, 0:13:28.040 --> 0:13:33.120 but also acclaimed truly with his brother, the pair of 0:13:33.200 --> 0:13:37.160 boxing brothers in the world, with many many heavyweight champions. 0:13:37.360 --> 0:13:40.520 But totally this is not boxing, this is not sport. 0:13:41.200 --> 0:13:44.640 There's a meanness here that you fought against an athletics 0:13:44.720 --> 0:13:49.480 for years. You state that the meanness of Vladimir Putin 0:13:50.120 --> 0:13:54.880 will go after these iconic symbols of your Kiev. When 0:13:54.920 --> 0:13:58.800 do you expect Mr Putin to go after those acclaimed 0:13:58.840 --> 0:14:05.800 churches and other sanctuaries. Um regards from Kiev, thank you 0:14:05.880 --> 0:14:09.960 for your question. But you can compare the right now 0:14:10.120 --> 0:14:14.240 citation in in Ukraine with support in Sport. You have 0:14:14.400 --> 0:14:19.120 clear rules. If you break the rules, you will be desified, 0:14:19.640 --> 0:14:23.720 and especially right now in the war, we see the 0:14:23.800 --> 0:14:28.680 whole world sees no rules. The economy of our country 0:14:28.680 --> 0:14:32.640 is destroyed, is big drama for all population, not just 0:14:32.840 --> 0:14:37.040 in the whole country. Also a big drama in uh 0:14:37.520 --> 0:14:40.800 in the capital of Ukraine, is big drama for everyone. 0:14:40.880 --> 0:14:46.240 From forty million people who live in Ukraine, a lot 0:14:46.280 --> 0:14:51.680 of millions of refugees uh try to find their new homes. 0:14:52.960 --> 0:14:56.200 People doesn't have a job right now, economy doesn't work, 0:14:56.360 --> 0:15:02.160 and right now they every day die people, civilians. And 0:15:02.320 --> 0:15:07.760 I talked many times this war, this war since less 0:15:07.920 --> 0:15:13.920 war is genocide of Ukrainian population because our city is destroyed. 0:15:14.120 --> 0:15:19.360 I talking about Mario Hartkieve, Erney in other and other 0:15:19.480 --> 0:15:25.400 cities which actually destroyed. And it's it's a big drama. 0:15:25.920 --> 0:15:29.240 Metallic Clio, the Mayor of Kiev with us today. We 0:15:29.280 --> 0:15:32.120 are so glad to get a sense of what's going on, 0:15:32.280 --> 0:15:35.080 but also horrified by what you talk about. How much 0:15:35.160 --> 0:15:41.160 will it cost to rebuild the Kiev of old? Actually 0:15:41.280 --> 0:15:47.239 we have redtail is a huge impact for our economy, 0:15:47.440 --> 0:15:50.520 a lot of people job less, A big part of 0:15:50.560 --> 0:15:53.280 the people advocate to the safe part of the city. 0:15:53.840 --> 0:15:57.880 We have more than two hundred buildings. We were totally destroyed. 0:15:58.400 --> 0:16:02.720 They destroyed all in structure. To rebuild the buildings. I 0:16:02.760 --> 0:16:06.400 guess it's not so big money. It's around the hundred 0:16:06.520 --> 0:16:10.720 million US dollar, But we lose the money in a 0:16:10.960 --> 0:16:15.760 budget and our i CD we guesses around the one 0:16:15.840 --> 0:16:20.320 one have billion US dollar. What our budget doesn't get 0:16:20.640 --> 0:16:29.120 they don't begin and and uh also I told you 0:16:29.360 --> 0:16:33.080 about their numbers right now, but we don't know how 0:16:33.200 --> 0:16:37.720 long will be the war and how much this would 0:16:37.720 --> 0:16:40.920 be cost in the next couple of weeks, maybe months, 0:16:41.320 --> 0:16:44.920 maybe years, mayor this is a delicate question. We hear 0:16:45.000 --> 0:16:48.960 about forty of the businesses in Kieva have reopened. Some 0:16:49.000 --> 0:16:52.520 people are trying to come back to their homeland. How 0:16:52.520 --> 0:16:55.480 many people do you expect what proportion of people do 0:16:55.480 --> 0:16:58.560 you expect not to return because of the threat and 0:16:58.640 --> 0:17:03.640 because of the war, people is afraid and right now 0:17:03.680 --> 0:17:08.040 that people ask me as a general manager of hometown, 0:17:10.320 --> 0:17:13.199 we have to come and not we stay in in 0:17:13.560 --> 0:17:17.080 other places. I tell to everyone right now we can't 0:17:17.600 --> 0:17:21.800 guarantee the safety in in capital. Just a week ago 0:17:22.480 --> 0:17:28.240 the Russian record alleged in buildings in hometown and the 0:17:28.760 --> 0:17:33.960 five civilians is dead, a lot of injured. By the ways, 0:17:34.280 --> 0:17:41.280 um more hundred people, two hundred citizens of hometown is 0:17:41.560 --> 0:17:46.840 dead and four children. Right Mary Klitchko, one final question, 0:17:47.000 --> 0:17:49.880 if we could, what weapons do you need right now 0:17:50.040 --> 0:17:53.440 from the Allies and from the United States, if you're 0:17:53.600 --> 0:17:58.359 afraid of further missile attacks again on symbolic Ukraine. What 0:17:58.520 --> 0:18:03.440 is the material you need now? We have to cover 0:18:03.640 --> 0:18:10.600 this air above our heads, but we need have weapons. 0:18:10.800 --> 0:18:13.520 I want to say depends the weapon because because we 0:18:13.640 --> 0:18:18.520 defend our country. I'm not military, I'm not the officer 0:18:18.720 --> 0:18:22.720 of military forces. That's why I can't give you exactly 0:18:23.520 --> 0:18:27.800 names what we need, what we need, but we need 0:18:27.800 --> 0:18:32.000 the weapon definitely because we stay in strong against the 0:18:32.040 --> 0:18:36.240 strongest army the world, the Russian's army, and that's why 0:18:36.600 --> 0:18:41.320 it's uh will be not enoughly and we want to 0:18:41.359 --> 0:18:43.720 say sank so much to the the United States to support 0:18:43.720 --> 0:18:46.960 your brains were important. Mayor, thank you so much for 0:18:47.040 --> 0:18:51.440 joining Bloomberg this morning Metallic Disco. Here's the mayor of Keep. 0:18:58.000 --> 0:19:01.399 Can we continue that conversation and the Troit dearborn in 0:19:01.480 --> 0:19:05.360 autos with John Lawler, chief executive officer Ford Motor, who 0:19:05.400 --> 0:19:08.320 has tattooed to is Iowa brain that you need to 0:19:08.320 --> 0:19:11.200 be in a Ford pickup truck to go from Ames, 0:19:11.240 --> 0:19:13.919 Iowa down to des Moine, Iowa. That's the way you 0:19:14.000 --> 0:19:17.320 do it in the midwest of this country, John, can 0:19:17.359 --> 0:19:22.280 you sell a new ninety dollar fully loaded electric pickup 0:19:22.280 --> 0:19:27.400 truck on the East and the West coasts of this nation. Absolutely? 0:19:27.680 --> 0:19:32.199 In fact are early reservations and orders are highly skewed 0:19:32.240 --> 0:19:36.640 towards the California and the East coast. So absolutely. Now 0:19:36.760 --> 0:19:39.240 one other thing to point out. We do have high 0:19:39.320 --> 0:19:41.720 end pickup trucks um in the price rains that you 0:19:41.800 --> 0:19:45.000 talked about, but we also have the starting series at 0:19:45.040 --> 0:19:48.439 around forty dollars, so you know, we've made this vehicle 0:19:48.520 --> 0:19:53.320 affordable for um our commercial customers and as well as 0:19:53.359 --> 0:19:55.480 those that would want to enter into it at the 0:19:55.800 --> 0:19:59.040 entry level series. What is the torque issue it came out. Now, 0:19:59.080 --> 0:20:01.240 this is a little bit engineering and it's away from 0:20:01.240 --> 0:20:04.440 the financial side of Ford Motor. But what people are 0:20:04.480 --> 0:20:09.560 saying is this thing can't pull like the other electric vehicles. 0:20:09.640 --> 0:20:13.600 You're in those meetings with your Knox engineering degree, help 0:20:13.680 --> 0:20:17.879 us with that. Is a torque there? Yes, this truck 0:20:18.040 --> 0:20:21.840 is fully capable. It's build Ford Tough, right. It has 0:20:21.960 --> 0:20:24.680 all the capabilities we see you need in a pickup truck. 0:20:24.720 --> 0:20:27.159 It has the horse power, it has the payload, and 0:20:27.200 --> 0:20:30.360 it does have the towing. So UM we feel very 0:20:30.400 --> 0:20:33.480 confident this this truck will meet our customers and needs 0:20:33.680 --> 0:20:37.919 and it will represent Ford Tough as we UM have 0:20:38.240 --> 0:20:40.760 for many years with our F series John. That might 0:20:40.760 --> 0:20:43.679 be the look forward. The look now, though, is beset 0:20:43.720 --> 0:20:46.000 by a lot of supply chain issues which definitely were 0:20:46.480 --> 0:20:49.560 weighing on some of the supplies that you are getting 0:20:49.600 --> 0:20:52.320 in terms of some of your automobiles in the first quarter. 0:20:52.800 --> 0:20:56.240 Going forward, you maintained your guidance though, even though you 0:20:56.359 --> 0:20:59.640 have seen production fall short of where you were expecting. 0:20:59.720 --> 0:21:03.280 How can that be? Well, you know, if you look 0:21:03.320 --> 0:21:07.000 at the first quarter, we had incredible demand for our products, 0:21:07.040 --> 0:21:09.159 all of our new products in fact, the Broncho, the 0:21:09.160 --> 0:21:12.960 Broncos Sport, the new Maverick, and then our electric fields, Machi, 0:21:13.200 --> 0:21:16.720 the Transit now the incredible f one fifty Lightning. So 0:21:16.920 --> 0:21:20.199 we see very strong demand for our products. Now in 0:21:20.240 --> 0:21:23.760 the first quarter, we were disrupted by the modules um 0:21:24.000 --> 0:21:28.240 that we're constrained due to the chip crisis. We resolved 0:21:28.320 --> 0:21:31.520 many of those. We do see rate and flow of 0:21:31.640 --> 0:21:34.439 chips or the availability of chips improving as we go 0:21:34.560 --> 0:21:37.480 through the second half, and we're seeing great traction on 0:21:37.520 --> 0:21:41.520 our forward plus plans. So improving chips uh great traction 0:21:41.560 --> 0:21:44.359 our forward plus plan in an increasing demand, in very 0:21:44.440 --> 0:21:47.520 high demand, and we see our volumes up this year 0:21:47.640 --> 0:21:50.439 versus last year ten to fift and that gives us 0:21:50.440 --> 0:21:53.160 confidence in reaffirming our guidance of eleven and a half 0:21:53.160 --> 0:21:56.200 to twelve and a half adjusted EBIT for the year. John, 0:21:56.200 --> 0:21:58.360 how much do you expect to raise prices on your 0:21:58.600 --> 0:22:00.960 Ford automobiles this year even the fact that demand is 0:22:01.040 --> 0:22:05.280 to robust and supplies are still constrained. Well, we've we've 0:22:05.320 --> 0:22:08.800 taken pricing this year, and we are an inflationary environment. 0:22:08.840 --> 0:22:11.640 The pricing that we have taken has stuck and we'll 0:22:11.680 --> 0:22:15.080 continue to manage that. Um you know, you'll you'll probably 0:22:15.119 --> 0:22:19.240 see if inflationary pressures continue, commodity prices continue to increase, 0:22:19.640 --> 0:22:23.080 you'll see in additional price increases. But the other thing 0:22:23.119 --> 0:22:25.920 that we're doing is we're also focused on costs. Is 0:22:25.920 --> 0:22:28.560 in an inflationary environment, you have to manage both ends, 0:22:28.760 --> 0:22:32.600 and so we're laser focused on increasing productive productivity and 0:22:32.720 --> 0:22:36.440 driving efficiencies through every line item of our income statement. John, 0:22:36.440 --> 0:22:38.199 I want and I don't want to get you in 0:22:38.240 --> 0:22:40.840 trouble with your general counsel, but I got to ask 0:22:40.880 --> 0:22:43.280 you this question. Full disclosure, folks. I grew up in 0:22:43.320 --> 0:22:45.840 a Ford family and my you you either had a 0:22:45.920 --> 0:22:47.800 Ford or a GM, That's all there was to it. 0:22:48.080 --> 0:22:51.639 And my father had the original Bronco built Ford Tough 0:22:52.400 --> 0:22:55.440 was made in nineteen seventy nine. You guys are run 0:22:55.480 --> 0:22:57.399 with that forever. I've had the honor of talking to 0:22:57.440 --> 0:23:01.800 Bill Ford about it. The fact is Elon Musk thinks 0:23:01.880 --> 0:23:06.719 he has built Tesla Tough. How does Tesla deal with 0:23:06.880 --> 0:23:10.760 your Ford? Pick up? With Mary Silverado in the forty 0:23:10.840 --> 0:23:14.000 seven other e vs out there that have a history 0:23:14.160 --> 0:23:18.600 of Tough, We've got the iconic brand. We have f 0:23:18.720 --> 0:23:21.520 one fifty. It's the number one selling vehicle in the US. 0:23:22.040 --> 0:23:25.320 We know what customers need, We know what Ford tough means. 0:23:25.400 --> 0:23:27.960 What are the What are the customers telling you, Johnny, 0:23:27.920 --> 0:23:30.119 I don't mean to interrupt, this is too important. What 0:23:30.240 --> 0:23:34.440 are the customers telling you they want? Is a purchase 0:23:34.600 --> 0:23:39.800 differentiator right now over Tesla. When you look at our product, 0:23:40.240 --> 0:23:43.480 we continue to make sure that it has the capability, 0:23:43.680 --> 0:23:46.359 it's a tool, it has pro power on board, it 0:23:46.440 --> 0:23:49.360 has all of the capabilities I talked about earlier. They 0:23:49.359 --> 0:23:52.720 want that, plus they also want the amenities that you 0:23:52.760 --> 0:23:55.920 get with an electric vehicle that we provide the charging. 0:23:56.119 --> 0:23:58.800 That's a tool, that's an enhancement for them. So they're 0:23:58.840 --> 0:24:00.960 coming to us and saying they want the room, they 0:24:00.960 --> 0:24:04.880 want the capabilities, and they want the every the benefit 0:24:04.960 --> 0:24:08.639 you get from having an EV power train. So customers 0:24:08.720 --> 0:24:11.919 want that benefit of you know, a clean emissions and 0:24:12.000 --> 0:24:14.760 everything else you get with the EV, along with no 0:24:14.960 --> 0:24:17.879 compromises to what you would expect from a Ford f 0:24:17.960 --> 0:24:20.800 one fifty, and we're delivering that hight John, great to 0:24:20.800 --> 0:24:22.480 can't shop to hear from you said thanks for beam 0:24:22.520 --> 0:24:24.400 with this this morning, John, Lord of that they fold 0:24:24.480 --> 0:24:29.160