1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,280 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. The 5 00:00:33,360 --> 00:00:37,120 Speaker 1: news over the last few hours a two hundred billion 6 00:00:37,280 --> 00:00:41,320 Speaker 1: dollar reduction of a trade surplus. Some China disputing reports 7 00:00:41,520 --> 00:00:44,240 Speaker 1: this morning that it had offered to reduce its annual 8 00:00:44,280 --> 00:00:47,240 Speaker 1: trade surplus with the United States by that number, with 9 00:00:47,400 --> 00:00:51,080 Speaker 1: a Foreign Ministry officials saying he was unaware of any 10 00:00:51,159 --> 00:00:54,240 Speaker 1: such concession. Where does the two billion come from? While 11 00:00:54,240 --> 00:00:56,920 Speaker 1: the reduction in the U. S trade get with China 12 00:00:57,000 --> 00:01:00,560 Speaker 1: by was on a list of demands that the president's 13 00:01:00,560 --> 00:01:04,480 Speaker 1: administration made earlier this month, as Treasury Secretary Steve Manuchin 14 00:01:04,520 --> 00:01:07,200 Speaker 1: led a delegation to Beijing. So just where are we? What? 15 00:01:07,280 --> 00:01:09,240 Speaker 1: I'm really pleased to say that Barry I. Can Green 16 00:01:09,480 --> 00:01:12,760 Speaker 1: University of California Berkeley professor joins us now the author 17 00:01:12,800 --> 00:01:16,400 Speaker 1: of his new Berkeley Populist Temptation, Economic Grievance and Political 18 00:01:16,480 --> 00:01:18,880 Speaker 1: Reaction in the Modern Era, and joining us on his 19 00:01:19,000 --> 00:01:22,200 Speaker 1: most recent project syndicate column as well, China and the 20 00:01:22,280 --> 00:01:26,240 Speaker 1: future of democracy, Barry, where better to begin than with China. 21 00:01:26,319 --> 00:01:27,920 Speaker 1: Let's just begin with the news if we can, and 22 00:01:27,920 --> 00:01:29,640 Speaker 1: we'll work our way through some of the work you've 23 00:01:29,640 --> 00:01:32,720 Speaker 1: been doing recently. How realistic is it to get this 24 00:01:32,760 --> 00:01:38,639 Speaker 1: trade surplus down two billion dollars? It's unrealistic period um. 25 00:01:38,680 --> 00:01:42,800 Speaker 1: I think a number like that may be attainable over 26 00:01:42,840 --> 00:01:47,600 Speaker 1: a decade um as a consequence of big changes in 27 00:01:47,640 --> 00:01:50,480 Speaker 1: the structure of the Chinese economy, and maybe some changes 28 00:01:50,520 --> 00:01:53,400 Speaker 1: in the structure of the U s economy as well, 29 00:01:53,680 --> 00:01:57,320 Speaker 1: but not as a matter of government fiat. If China 30 00:01:57,400 --> 00:02:01,800 Speaker 1: were to take major steps to curtail its exports to 31 00:02:01,840 --> 00:02:04,440 Speaker 1: the US, it would export more to other markets, say 32 00:02:04,480 --> 00:02:08,040 Speaker 1: to Europe, and other countries in Asia would redirect their 33 00:02:08,040 --> 00:02:11,520 Speaker 1: exports towards the United States. Even if you deal with 34 00:02:11,560 --> 00:02:16,120 Speaker 1: the bilateral trade balance, you don't end up solving the 35 00:02:16,240 --> 00:02:18,960 Speaker 1: problem if you regard it as a problem of the 36 00:02:19,040 --> 00:02:22,560 Speaker 1: overall US trade deficit. The other big issues as well. Barry. 37 00:02:22,639 --> 00:02:24,480 Speaker 1: On the list of demands that the United States has 38 00:02:24,840 --> 00:02:27,919 Speaker 1: reportedly given to China, this might be the easier one 39 00:02:27,960 --> 00:02:30,440 Speaker 1: to get the Chinese to agree to. Bring this surplus 40 00:02:30,480 --> 00:02:33,720 Speaker 1: down over an agreed period of time. The more difficult one, 41 00:02:33,760 --> 00:02:36,880 Speaker 1: perhaps is to get the Chinese to stop subsidizing the 42 00:02:36,919 --> 00:02:41,520 Speaker 1: industries around the made in China five effort. How difficult 43 00:02:41,560 --> 00:02:45,120 Speaker 1: will that be? Barry? I agree that to focus on 44 00:02:45,160 --> 00:02:48,760 Speaker 1: the trade deficit is to take our eyes off the 45 00:02:48,800 --> 00:02:53,880 Speaker 1: more important issues. I don't think that China thing is 46 00:02:54,240 --> 00:02:58,880 Speaker 1: a big or objectionable issue. Every country has an industrial 47 00:02:58,919 --> 00:03:01,520 Speaker 1: policy and does things us to try to develop its 48 00:03:01,600 --> 00:03:07,280 Speaker 1: high tech sectors. Where China violates international norms is in 49 00:03:07,400 --> 00:03:10,800 Speaker 1: terms of intellectual property protections. And my worry is that 50 00:03:10,840 --> 00:03:14,040 Speaker 1: if we focus on the headline trade deficit number and 51 00:03:14,040 --> 00:03:18,360 Speaker 1: and congratulate ourselves on our ability to export more motor 52 00:03:18,480 --> 00:03:22,560 Speaker 1: vehicles to China, we lose sight of what really matters, 53 00:03:22,680 --> 00:03:27,200 Speaker 1: which is intellectual property rights. Bury the hallmark of your work, 54 00:03:27,400 --> 00:03:32,080 Speaker 1: your books from Golden Fetters to Globalizing Capital, in the 55 00:03:32,240 --> 00:03:34,400 Speaker 1: many many books that all of us have read, and 56 00:03:34,440 --> 00:03:37,400 Speaker 1: of course this book Folcus is an immediate view of 57 00:03:37,480 --> 00:03:40,120 Speaker 1: book of the year. This is on populism from Professor 58 00:03:40,160 --> 00:03:43,680 Speaker 1: Eiken Green is the old phrase O B E. Then 59 00:03:43,680 --> 00:03:45,720 Speaker 1: we get to a point where all our good thinking, 60 00:03:46,280 --> 00:03:49,840 Speaker 1: where we're overcome by events. When you look at dollars strength, 61 00:03:50,000 --> 00:03:54,520 Speaker 1: how close are we to being overcome by events? I 62 00:03:54,560 --> 00:04:00,320 Speaker 1: think there is obviously a tendency to react excess of lee. 63 00:04:00,400 --> 00:04:05,640 Speaker 1: That's what financial markets do. They react excessively to news. 64 00:04:05,720 --> 00:04:08,680 Speaker 1: So people are extrapolating the recent rise of the dollar 65 00:04:08,760 --> 00:04:14,280 Speaker 1: into the future and imagining that it could proceed much further. 66 00:04:14,400 --> 00:04:17,120 Speaker 1: And that's part of the reason I think why emerging 67 00:04:17,200 --> 00:04:19,480 Speaker 1: markets are having such a tough time at the moment. 68 00:04:19,480 --> 00:04:22,719 Speaker 1: It could be that the dollar pauses, and that gives 69 00:04:23,400 --> 00:04:27,600 Speaker 1: Argentina time, for example, to conclude its negotiations with the IMF. 70 00:04:27,720 --> 00:04:30,479 Speaker 1: It gives Argentina time, but then you get knock on effects. 71 00:04:30,520 --> 00:04:33,440 Speaker 1: For example, John I did log in honor of professor 72 00:04:33,480 --> 00:04:36,080 Speaker 1: Ike Green. I did a semilog chart of Brazilian real 73 00:04:36,880 --> 00:04:39,920 Speaker 1: which is curve a linear log, which means some acceleration 74 00:04:40,000 --> 00:04:43,839 Speaker 1: back up to new Brazilian weakness. Is it a domino effect? 75 00:04:43,920 --> 00:04:47,040 Speaker 1: Does it? Does it go from Argentina or Turkey onto 76 00:04:47,080 --> 00:04:49,640 Speaker 1: other things? Is is that what we learned in Ecuador, 77 00:04:49,800 --> 00:04:53,640 Speaker 1: Mexico or Thailand, what we learned from from that earlier 78 00:04:53,680 --> 00:04:58,040 Speaker 1: experiences that investors can um go to sleep for extended 79 00:04:58,080 --> 00:05:01,320 Speaker 1: periods and then something called s along to send them 80 00:05:01,320 --> 00:05:03,279 Speaker 1: a wake up call. So I don't think there is 81 00:05:04,080 --> 00:05:09,120 Speaker 1: economic spillover from Argentina Brazil, but there is a greater 82 00:05:09,160 --> 00:05:12,280 Speaker 1: awareness all of a sudden that there's an election coming 83 00:05:12,279 --> 00:05:16,760 Speaker 1: in Brazil later this year, and that could deliver the unexpected, 84 00:05:16,839 --> 00:05:22,520 Speaker 1: as it did in Italy. I look, Barry at the 85 00:05:22,640 --> 00:05:25,839 Speaker 1: political Maelstruman as we spoke on television this morning. I 86 00:05:25,880 --> 00:05:29,279 Speaker 1: think our audience worldwide on radio wants to know what 87 00:05:29,360 --> 00:05:33,159 Speaker 1: the backside of populism is. I mean, William Jennings Bryan 88 00:05:33,520 --> 00:05:37,480 Speaker 1: was William Jennings Bryan and then things changed. How do 89 00:05:37,600 --> 00:05:42,280 Speaker 1: things change? Is it just economic growth solves populous fears 90 00:05:42,279 --> 00:05:47,080 Speaker 1: of elites. Economic growth certainly helps. So the economy in 91 00:05:47,120 --> 00:05:51,840 Speaker 1: the United States had turned around in a year before 92 00:05:51,960 --> 00:05:57,360 Speaker 1: that historic McKinley Brian election. Prices had begun to rise 93 00:05:57,480 --> 00:05:59,839 Speaker 1: rather than falling, So all that help. That helped the 94 00:06:00,080 --> 00:06:03,960 Speaker 1: armors and UH and the workers. But the other thing 95 00:06:04,000 --> 00:06:08,360 Speaker 1: that happened was an effort to address distributional concerns and 96 00:06:08,480 --> 00:06:14,960 Speaker 1: to strengthen competition anticrust policy, to deal with the railway monopolies. 97 00:06:15,320 --> 00:06:18,920 Speaker 1: And UH. It's not only only growth, but it's also 98 00:06:19,800 --> 00:06:23,080 Speaker 1: economic and social policy. More broadly, then you have to 99 00:06:23,080 --> 00:06:25,760 Speaker 1: ask the question why are some countries better able to 100 00:06:25,800 --> 00:06:30,800 Speaker 1: respond in that constructive manner, whereas in contrast, you saw 101 00:06:31,120 --> 00:06:34,760 Speaker 1: in Italy and Germany in the ninet twenties no no 102 00:06:34,920 --> 00:06:39,120 Speaker 1: response and UH an even more extreme swing to the right. 103 00:06:39,320 --> 00:06:42,359 Speaker 1: Have we had the populist shock yet, Barry? Have we 104 00:06:42,400 --> 00:06:46,360 Speaker 1: actually seen that and where have we seen it? Well? 105 00:06:46,400 --> 00:06:48,760 Speaker 1: I think we have seen it in a sense that 106 00:06:48,800 --> 00:06:54,960 Speaker 1: there's been a profound disaffection towards mainstream political parties, UH, 107 00:06:57,560 --> 00:07:03,520 Speaker 1: criticism of the elites, UH, targeting immigrants, minorities and others, 108 00:07:04,240 --> 00:07:07,359 Speaker 1: and and authoritarian tendencies. So if you asked me to 109 00:07:07,400 --> 00:07:12,560 Speaker 1: define populism, I would say anti elite, anti authoritarian, and 110 00:07:12,800 --> 00:07:16,960 Speaker 1: anti other where other can mean the wealthy bankers or 111 00:07:17,080 --> 00:07:20,120 Speaker 1: or foreigners, depending on whether you have right wing or 112 00:07:20,240 --> 00:07:23,440 Speaker 1: left wing populism. So, yes, we've seen it, we just 113 00:07:23,600 --> 00:07:27,320 Speaker 1: don't know how it will end. Very congratulations on this effort, folks. 114 00:07:27,320 --> 00:07:30,720 Speaker 1: I'll be direct. I've already downloaded it to the old kindle. 115 00:07:30,720 --> 00:07:32,360 Speaker 1: I've got a big trip coming up and it will 116 00:07:32,400 --> 00:07:35,880 Speaker 1: be major airplane reading. Already a shortlist for Book of 117 00:07:35,880 --> 00:07:40,480 Speaker 1: the Year, The populist populist temptation by Barry Coon Green 118 00:07:40,560 --> 00:07:44,160 Speaker 1: at the University of California at Berkeley. We greatly appreciate 119 00:07:44,200 --> 00:08:01,000 Speaker 1: his attendance. Julia Carnado with us right now, with micro policies, 120 00:08:01,080 --> 00:08:03,360 Speaker 1: we look at any number of things. I think, just 121 00:08:03,400 --> 00:08:05,520 Speaker 1: because of time, Julie, I really want to focus in 122 00:08:05,920 --> 00:08:10,520 Speaker 1: on the inflation dynamic. Is the Fed's measurement of inflation 123 00:08:10,640 --> 00:08:14,760 Speaker 1: right now anywhere near accurate in the measurement of the 124 00:08:14,760 --> 00:08:19,280 Speaker 1: inflation our viewers feel? Yes, I mean, I think that 125 00:08:19,560 --> 00:08:22,160 Speaker 1: what they tend to look at is while they focus 126 00:08:22,200 --> 00:08:25,200 Speaker 1: on core inflation as the underlying trend, they look at 127 00:08:25,200 --> 00:08:28,320 Speaker 1: headline inflation. So right now we're seeing headline inflation perk 128 00:08:28,400 --> 00:08:31,640 Speaker 1: up a bit on higher gas. Goods is coming up 129 00:08:31,640 --> 00:08:35,560 Speaker 1: as well as it was. Actually, you know, broader goods, 130 00:08:35,600 --> 00:08:38,720 Speaker 1: core goods prices really aren't showing the strength that they've 131 00:08:38,760 --> 00:08:41,320 Speaker 1: been wanting to see. So we see things like auto 132 00:08:41,360 --> 00:08:45,120 Speaker 1: prices coming down because auto the auto cycle is peaked 133 00:08:45,120 --> 00:08:48,040 Speaker 1: and we're seeing auto demand come off. Auto prices are 134 00:08:48,440 --> 00:08:50,640 Speaker 1: you know, people have to offer discounts to get people 135 00:08:50,640 --> 00:08:54,360 Speaker 1: to buy cars now. So broadly speaking, the inflation picture 136 00:08:54,440 --> 00:08:58,520 Speaker 1: looks pretty benign again abstracting from what consumers are going 137 00:08:58,559 --> 00:09:00,480 Speaker 1: to feel as a big hit front gas prices in 138 00:09:00,520 --> 00:09:02,560 Speaker 1: the near term overnight. John Fair, I bring this up 139 00:09:02,559 --> 00:09:05,280 Speaker 1: because of Japan, where I mean, I'm sorry it was 140 00:09:05,360 --> 00:09:08,760 Speaker 1: it was Mouldi nominal g d P John, and Mouldy 141 00:09:08,840 --> 00:09:12,080 Speaker 1: inflation as well in Japan. Julia West thinky credit picture 142 00:09:12,160 --> 00:09:14,120 Speaker 1: in the United States. Now, the New York Fed coming 143 00:09:14,120 --> 00:09:17,240 Speaker 1: out with their high frequency data, the release of the 144 00:09:17,840 --> 00:09:21,599 Speaker 1: credit loans and and looking at the number of consumers 145 00:09:21,600 --> 00:09:25,720 Speaker 1: inquiring about taking a more credit within six months, and 146 00:09:25,760 --> 00:09:29,880 Speaker 1: it's fallen into five point six five it's very very low. Yeah, 147 00:09:29,920 --> 00:09:32,440 Speaker 1: So that reflects again the peaking of the auto cycle, 148 00:09:32,520 --> 00:09:36,360 Speaker 1: less demand for auto's, less need for loans ferrautos. In general, 149 00:09:36,440 --> 00:09:40,400 Speaker 1: consumers have not shown a taste for releveraging one. Credit 150 00:09:40,440 --> 00:09:45,120 Speaker 1: standards are still pretty tight, but in general we really 151 00:09:45,160 --> 00:09:50,040 Speaker 1: haven't seen that sort of rush to add on new obligations, 152 00:09:50,280 --> 00:09:52,800 Speaker 1: even as the economy is better, in the labor market 153 00:09:52,840 --> 00:09:54,920 Speaker 1: heats up a bit, so people will be sort of 154 00:09:54,920 --> 00:09:57,360 Speaker 1: wandering about that drop of five point six five percent. 155 00:09:57,400 --> 00:10:00,160 Speaker 1: I'm wondering whether that's related to tax savings, so that 156 00:10:00,200 --> 00:10:01,920 Speaker 1: I need to take on more credits. So is there 157 00:10:01,960 --> 00:10:04,920 Speaker 1: an optimistic story there or is this one of pessimism. 158 00:10:05,040 --> 00:10:07,360 Speaker 1: I mean, that's a that's a pretty high frequency read. 159 00:10:07,440 --> 00:10:10,160 Speaker 1: I mean I think, um, most consumers did see a 160 00:10:10,240 --> 00:10:14,199 Speaker 1: small bump in their paychecks, but a lot of consumers 161 00:10:14,200 --> 00:10:17,839 Speaker 1: are facing uncertainty because of higher state and local liabilities. 162 00:10:17,920 --> 00:10:20,360 Speaker 1: So I think, net net, a lot of consumers are 163 00:10:20,360 --> 00:10:22,600 Speaker 1: going to be really uncertain until they file their taxes 164 00:10:22,640 --> 00:10:24,839 Speaker 1: next year about what the net effect of the tax 165 00:10:24,840 --> 00:10:28,160 Speaker 1: cut is for them. So I wouldn't call this attack story. 166 00:10:28,240 --> 00:10:30,520 Speaker 1: I just think in general, if you look at debt 167 00:10:30,559 --> 00:10:34,320 Speaker 1: to income, consumers have been cautious the entire cycle, and 168 00:10:34,360 --> 00:10:37,400 Speaker 1: there's no sign that that's about to fade. Are we 169 00:10:37,480 --> 00:10:40,240 Speaker 1: make America great again? I mean, you've been more cautious 170 00:10:40,280 --> 00:10:43,080 Speaker 1: in you you know, you made your reputation on being 171 00:10:43,160 --> 00:10:47,439 Speaker 1: right about a more subtle and diminished GDP versus consensus 172 00:10:47,480 --> 00:10:50,439 Speaker 1: at the time. If we're not at this represent run rate, 173 00:10:50,440 --> 00:10:52,640 Speaker 1: where are we? Well? Look, I think a lot of 174 00:10:52,679 --> 00:10:55,760 Speaker 1: my view is based in the demographics of our country 175 00:10:55,800 --> 00:10:58,520 Speaker 1: and of the global economy, and so you've got a 176 00:10:58,559 --> 00:11:01,840 Speaker 1: lot an older generation sation that is more focused on 177 00:11:02,000 --> 00:11:05,440 Speaker 1: saving their gains. If if equity prices go up, that's great. 178 00:11:05,440 --> 00:11:07,400 Speaker 1: We'll spend a little, but we'll save more than we 179 00:11:07,440 --> 00:11:10,559 Speaker 1: did in the past, and and and focus on retirement. 180 00:11:11,000 --> 00:11:13,560 Speaker 1: So I think that that's just a reality that we face. 181 00:11:13,679 --> 00:11:16,920 Speaker 1: So I still think potential GDP growth is below two. 182 00:11:17,000 --> 00:11:20,840 Speaker 1: We're running pretty strong right now. Um, that's creating good, 183 00:11:20,880 --> 00:11:24,319 Speaker 1: good labor market momentum. I think we can see that continue. 184 00:11:24,679 --> 00:11:29,200 Speaker 1: But the underlying trend is is pretty pretty modest. Where 185 00:11:29,240 --> 00:11:33,720 Speaker 1: are you in good question? Most people agree on we'll 186 00:11:33,720 --> 00:11:35,640 Speaker 1: get close to a three handle. That's what the government 187 00:11:35,679 --> 00:11:40,000 Speaker 1: is looking for. The economists surveys by Bloomberg on the Street, 188 00:11:40,080 --> 00:11:41,920 Speaker 1: the median estimate this year, I believe it's two point 189 00:11:42,000 --> 00:11:43,880 Speaker 1: eight pc. It's going to be the high. Two seems 190 00:11:43,920 --> 00:11:46,479 Speaker 1: to be the consensus view. That's the consensus. The consensus 191 00:11:46,480 --> 00:11:49,600 Speaker 1: breaks down significantly next year and the year after that. 192 00:11:49,720 --> 00:11:52,960 Speaker 1: What's your view? So so, not surprisingly I'm on the 193 00:11:53,000 --> 00:11:56,480 Speaker 1: more cautious side, partly because, um, I think when we 194 00:11:56,559 --> 00:12:01,240 Speaker 1: do tax when we do fiscal stimulus, defice financed fiscal 195 00:12:01,240 --> 00:12:04,200 Speaker 1: stimulus at full employment, we are going to see margins 196 00:12:04,200 --> 00:12:07,079 Speaker 1: of crowding out. Um, We're going to see higher interest rates, 197 00:12:07,080 --> 00:12:11,760 Speaker 1: tighter financial conditions, perhaps wider trade deficit. All of these 198 00:12:11,800 --> 00:12:16,560 Speaker 1: things mean that the pass through to the domestic economy 199 00:12:16,600 --> 00:12:19,719 Speaker 1: is not going to be as strong. Jiropolicy Advisors, thank 200 00:12:19,760 --> 00:12:22,160 Speaker 1: you so much. Thank you for wearing like an evening 201 00:12:22,480 --> 00:12:27,439 Speaker 1: gown type you would graduate. I'm all amped up for 202 00:12:27,640 --> 00:12:31,080 Speaker 1: team coverage. I mean, I wore a tuxedo today for radio. 203 00:12:31,360 --> 00:12:35,360 Speaker 1: It works on radio. You look, you look fabulous. Pharaoh. 204 00:12:35,400 --> 00:12:37,600 Speaker 1: On the other hand, what do you have on an 205 00:12:37,600 --> 00:12:40,959 Speaker 1: A C. Mullin Jersey over there? I know, well, a weddy. 206 00:12:40,960 --> 00:12:42,360 Speaker 1: You don't wear black to a wedding in the not 207 00:12:42,480 --> 00:12:47,400 Speaker 1: at Kingdom's home. It's a few really really please protocol 208 00:12:47,440 --> 00:12:50,000 Speaker 1: breath tell us about that. No one of the European 209 00:12:50,040 --> 00:12:52,520 Speaker 1: aristocracy would wear black to a wedding. Really, what do 210 00:12:52,559 --> 00:12:55,160 Speaker 1: they wear? You would? You would wear a different color, 211 00:12:55,480 --> 00:12:59,760 Speaker 1: black and gray and perhaps gray. You'll strung man, you'll, 212 00:13:00,000 --> 00:13:01,880 Speaker 1: I'll go to find many men in the city of 213 00:13:01,920 --> 00:13:06,800 Speaker 1: London as well wearing black suits. One of the miracles, 214 00:13:07,200 --> 00:13:10,720 Speaker 1: the miracles buried on the internet is the photo of 215 00:13:10,760 --> 00:13:14,199 Speaker 1: me at my junior problem. That wasn't a black tuxedo. 216 00:13:28,040 --> 00:13:29,760 Speaker 1: Let's get right to it. And there's been a huge 217 00:13:29,840 --> 00:13:33,640 Speaker 1: demand for foreign exchange analysis, whether it's Berry ken Green 218 00:13:33,760 --> 00:13:37,200 Speaker 1: in international economics or in the trenches of gazing at 219 00:13:37,240 --> 00:13:42,079 Speaker 1: the Bloomberg one M McCormick. Mark McCormick with t D Securities, 220 00:13:42,679 --> 00:13:47,040 Speaker 1: UM is very good at folding Bloomberg functionality into his reports. Mark, 221 00:13:47,080 --> 00:13:49,319 Speaker 1: when you walk in in the morning, what's the first 222 00:13:49,360 --> 00:13:53,760 Speaker 1: thing in the FX world you look at on your Bloomberg? Yeah, 223 00:13:53,800 --> 00:13:56,240 Speaker 1: the first thing is always the w c RS function. 224 00:13:56,520 --> 00:13:59,880 Speaker 1: So I look at w c R, S, w E, I, 225 00:14:00,160 --> 00:14:02,839 Speaker 1: w B and just the commodity function to kind of 226 00:14:02,840 --> 00:14:05,600 Speaker 1: see what's going on across different asset classes. I look 227 00:14:05,640 --> 00:14:07,800 Speaker 1: at w c RS and folks, this is a function 228 00:14:07,840 --> 00:14:11,120 Speaker 1: I know John Farrell doors as well, and you can 229 00:14:11,200 --> 00:14:15,720 Speaker 1: parse it into the different buckets of dollar dynamics against 230 00:14:15,760 --> 00:14:18,880 Speaker 1: G seven, against d x Y, against the emerging market 231 00:14:18,880 --> 00:14:21,720 Speaker 1: a d x y blah blah blah. Which bucket is 232 00:14:21,760 --> 00:14:25,680 Speaker 1: of most interest to t D Securities right now? Um? 233 00:14:25,720 --> 00:14:28,280 Speaker 1: It's actually, so I do I do two different buckets, 234 00:14:28,280 --> 00:14:30,280 Speaker 1: one to customize where it's all G ten, and then 235 00:14:30,280 --> 00:14:32,120 Speaker 1: I do one that I frame out that's kind of 236 00:14:32,120 --> 00:14:35,280 Speaker 1: global macro. So I throw in the major emerging markets 237 00:14:35,280 --> 00:14:37,040 Speaker 1: to T d cover. So we'll you know, we look 238 00:14:37,080 --> 00:14:40,160 Speaker 1: at Turkey, a little bit of South Africa, Brazil, uh, 239 00:14:40,200 --> 00:14:42,080 Speaker 1: some of the Latin and some of the major Asians. 240 00:14:42,160 --> 00:14:44,200 Speaker 1: So come in and kind of look at what's going 241 00:14:44,200 --> 00:14:45,920 Speaker 1: on the G ten, kind of give this sense of 242 00:14:45,960 --> 00:14:48,120 Speaker 1: what's going on with the d x Y and then 243 00:14:48,200 --> 00:14:50,360 Speaker 1: kind of pull it back out to what's going on 244 00:14:50,400 --> 00:14:52,280 Speaker 1: and some of the major emerging markets. After I looked 245 00:14:52,280 --> 00:14:53,680 Speaker 1: at my rad screen, you know, I've got it on 246 00:14:53,720 --> 00:14:55,400 Speaker 1: the screen right now, Mark, and I've got the daughter 247 00:14:55,440 --> 00:14:58,800 Speaker 1: was device currency in my basket. Just plane emerging markets 248 00:14:58,800 --> 00:15:00,840 Speaker 1: have set the time period to one month, and it 249 00:15:00,960 --> 00:15:04,240 Speaker 1: is ugly. The Turkish Lyra down ten percent, the Argentine 250 00:15:04,240 --> 00:15:07,320 Speaker 1: pace so dance sevent the Mexican pay so down almost 251 00:15:07,360 --> 00:15:10,920 Speaker 1: nine percent. The Polish slotty has been hammered as well. 252 00:15:11,320 --> 00:15:15,680 Speaker 1: Muhammad Alarium Bloomberg view columnist, Bloomberg opinion columnist and of 253 00:15:15,720 --> 00:15:18,880 Speaker 1: course economic advisor to Alliance as well, talking about this 254 00:15:19,000 --> 00:15:24,480 Speaker 1: trifecta of higher roll prices, stronger dollar, high US rates 255 00:15:25,240 --> 00:15:29,160 Speaker 1: injecting some poison into emerging markets. Just how brutal is 256 00:15:29,200 --> 00:15:32,000 Speaker 1: it right now for a m Mark? Yeah, this is 257 00:15:32,040 --> 00:15:33,920 Speaker 1: a this is a tricky time pre um because like 258 00:15:34,040 --> 00:15:38,200 Speaker 1: what you have is you've got tighter global financial conditions. 259 00:15:38,200 --> 00:15:40,600 Speaker 1: So obviously you've got the US rate story, which is 260 00:15:40,680 --> 00:15:43,480 Speaker 1: very clear. We've seen the break of on the tenure, 261 00:15:43,840 --> 00:15:46,520 Speaker 1: which is causing some kind of global financing stress. You've 262 00:15:46,520 --> 00:15:49,520 Speaker 1: got the moving library, So librar o I S has 263 00:15:49,560 --> 00:15:52,080 Speaker 1: been moving probably maybe on what people would look as 264 00:15:52,080 --> 00:15:56,000 Speaker 1: like technical reasons. We maybe it's some refinancing of the 265 00:15:56,320 --> 00:15:59,600 Speaker 1: budgets and those kind of things, along with some repatriation 266 00:15:59,640 --> 00:16:03,040 Speaker 1: that's come through from the Cisco package. But the other 267 00:16:03,080 --> 00:16:04,880 Speaker 1: side of it is you've got US real rates are 268 00:16:04,880 --> 00:16:06,600 Speaker 1: starting to move up. I think that's one thing that 269 00:16:06,640 --> 00:16:09,280 Speaker 1: a lot of people kind of misses that the US 270 00:16:09,320 --> 00:16:12,120 Speaker 1: real rate is the global plumbing of the financial markets, 271 00:16:12,160 --> 00:16:15,800 Speaker 1: and so the US tenure real rates back is pretty 272 00:16:15,840 --> 00:16:18,920 Speaker 1: close to one. So to me, what we're kind of 273 00:16:18,920 --> 00:16:20,960 Speaker 1: really focused on is whether or not the US deal 274 00:16:21,040 --> 00:16:24,320 Speaker 1: ker is going to continue to whether US real rates 275 00:16:24,360 --> 00:16:26,720 Speaker 1: are going to break one percent. And also the story 276 00:16:26,720 --> 00:16:29,000 Speaker 1: behind the scenes is the ECB and the b o 277 00:16:29,120 --> 00:16:32,080 Speaker 1: J are are gradually normalizing policy when you look at 278 00:16:32,120 --> 00:16:34,200 Speaker 1: the deils of their balance sheets. So you've got this 279 00:16:34,320 --> 00:16:37,040 Speaker 1: really kind of toxic mix for emerging market which you 280 00:16:37,080 --> 00:16:40,320 Speaker 1: have volatility and you've got the end of easy money 281 00:16:40,320 --> 00:16:42,920 Speaker 1: coming at the exact same time period. Mark, let's go 282 00:16:43,000 --> 00:16:45,480 Speaker 1: on Canadian onion. In the time we've got left, you're 283 00:16:45,520 --> 00:16:49,440 Speaker 1: with Toronto Dominion Bank TV Securities. And is there a 284 00:16:49,520 --> 00:16:52,120 Speaker 1: play in Looney right now or is there a a 285 00:16:52,200 --> 00:16:56,120 Speaker 1: play and a different Canadian pair where John can you know, 286 00:16:56,240 --> 00:17:00,680 Speaker 1: recover financially from his wedding gift to Megan and and Henry, 287 00:17:00,760 --> 00:17:04,399 Speaker 1: I mean, where where's the place to make it? Henry? 288 00:17:04,440 --> 00:17:10,359 Speaker 1: It's Henry, Not excuse me, folks, it's Henry, not Harry. Okay, Mark, Mark, 289 00:17:10,400 --> 00:17:13,399 Speaker 1: where can I make money in Canada? Yeah, it's a 290 00:17:13,520 --> 00:17:16,399 Speaker 1: very interesting time because I think what people are usually 291 00:17:16,440 --> 00:17:18,800 Speaker 1: focused on in Canada they always look at oil prices, 292 00:17:19,160 --> 00:17:21,280 Speaker 1: and they always look at the kind of interest rate 293 00:17:21,320 --> 00:17:24,160 Speaker 1: differential or terminal rate spread to get between the US 294 00:17:24,240 --> 00:17:26,879 Speaker 1: and UH in Canada. What I think people are missing 295 00:17:26,920 --> 00:17:29,320 Speaker 1: again in this story is that Canada is now becoming 296 00:17:29,440 --> 00:17:33,760 Speaker 1: what we're calling a credit currency. And so you've got essentially, um, 297 00:17:33,960 --> 00:17:35,359 Speaker 1: we're where in the world, as we just kind of 298 00:17:35,359 --> 00:17:38,479 Speaker 1: mentioned here, in emerging markets, where you've got its global 299 00:17:38,520 --> 00:17:41,120 Speaker 1: tighter financial conditions you've got what we'd call a regime 300 00:17:41,200 --> 00:17:44,440 Speaker 1: change in financial system. Central banks are ending the easy 301 00:17:44,480 --> 00:17:47,320 Speaker 1: money game. And Canada here is a country that sits 302 00:17:47,640 --> 00:17:49,879 Speaker 1: with a very large current account deficit two and a 303 00:17:49,880 --> 00:17:52,760 Speaker 1: half percent of GDP. It has not improved since the 304 00:17:52,800 --> 00:17:55,919 Speaker 1: paper tantrum, Which was one positive evaluation signally got from 305 00:17:55,960 --> 00:17:59,639 Speaker 1: emerging markets is they started to reduce those external and 306 00:17:59,720 --> 00:18:02,960 Speaker 1: bounce is once the taper tantrum started in two thousand twelve, 307 00:18:03,000 --> 00:18:06,159 Speaker 1: two thirteen. But the concern for Canadas, you have a 308 00:18:06,160 --> 00:18:08,639 Speaker 1: country that hasn't really started to deliver yet, you have 309 00:18:08,640 --> 00:18:12,400 Speaker 1: a wholesale funded banking system. You've got tighter financial conditions 310 00:18:12,440 --> 00:18:14,280 Speaker 1: coming from the US and that's being passed on the 311 00:18:14,280 --> 00:18:17,359 Speaker 1: Canadian consumer. And the big story here is that the 312 00:18:17,640 --> 00:18:21,000 Speaker 1: Bank of Canada is already engineered and overshoot um. Whether 313 00:18:21,119 --> 00:18:23,800 Speaker 1: or not they call it temporary or whether tactically they 314 00:18:23,800 --> 00:18:27,159 Speaker 1: are going to overshoot their inflation target. You're going to 315 00:18:27,240 --> 00:18:29,200 Speaker 1: have lower real rates in Canada. You're gonna have a 316 00:18:29,280 --> 00:18:33,480 Speaker 1: very large current account deficits. Did you see Did you see? JOHNA. 317 00:18:33,520 --> 00:18:37,280 Speaker 1: McCormick didn't answer the question give me an economic dissertation. 318 00:18:37,520 --> 00:18:39,239 Speaker 1: I just want to know John where you can make 319 00:18:39,280 --> 00:18:42,320 Speaker 1: money to bake up for your wedding present. Yeah, to Henry, 320 00:18:42,560 --> 00:18:45,440 Speaker 1: I guess he was town. What do I do? Run mind? Yeah, 321 00:18:45,440 --> 00:18:51,840 Speaker 1: I mean do a do do a dou. So it's 322 00:18:51,840 --> 00:18:55,879 Speaker 1: straight up to buy dollar cat dips trade on fifty, 323 00:18:56,000 --> 00:19:00,320 Speaker 1: but it's also a cross trade on on evaluation but basket. 324 00:19:00,400 --> 00:19:03,560 Speaker 1: So we're looking at short cat against Yeah, we're looking 325 00:19:03,560 --> 00:19:07,879 Speaker 1: at short cat against cable, shortcat against euro. So essentially 326 00:19:07,920 --> 00:19:09,200 Speaker 1: what we're trying to do is we want to be 327 00:19:09,240 --> 00:19:12,000 Speaker 1: along all those turn accounts surplus countries that we still 328 00:19:12,000 --> 00:19:15,600 Speaker 1: see those currencies as being undervalued over the next six 329 00:19:15,680 --> 00:19:18,200 Speaker 1: or twelve months, and we're short the Canadian dollar against them. 330 00:19:18,240 --> 00:19:20,320 Speaker 1: So that's kind of the want to. You don't want 331 00:19:20,359 --> 00:19:25,480 Speaker 1: to be traveling to Europe. McCormick was long the Winnipeg 332 00:19:25,560 --> 00:19:30,200 Speaker 1: Jets leave alone. Just quickly. You mentioned Canada has not delivered. 333 00:19:30,320 --> 00:19:33,360 Speaker 1: We've all heard stories about the property marketing Canada. We've 334 00:19:33,359 --> 00:19:36,240 Speaker 1: all heard very ugly stories. Where is it and where's 335 00:19:36,280 --> 00:19:39,280 Speaker 1: it going? In your mind? Where do you see things going? Well? 336 00:19:39,320 --> 00:19:42,399 Speaker 1: I think things are still relatively positive, So there's you know, 337 00:19:42,440 --> 00:19:45,119 Speaker 1: you kind of have your sentiment base, you know, where 338 00:19:45,160 --> 00:19:47,520 Speaker 1: should you know, where how do people feel about it, 339 00:19:47,560 --> 00:19:50,600 Speaker 1: and how people feel what's the common knowledge about the 340 00:19:50,600 --> 00:19:52,119 Speaker 1: real estate market and whether or not they want to 341 00:19:52,160 --> 00:19:54,280 Speaker 1: continue to kind of you know, buy into it. And 342 00:19:54,320 --> 00:19:57,280 Speaker 1: there's also the supply demand. The supply demand for kind 343 00:19:57,280 --> 00:19:59,240 Speaker 1: of the real estate market is really driven by what's 344 00:19:59,280 --> 00:20:01,080 Speaker 1: happening in toront know, which is becoming a much more 345 00:20:01,080 --> 00:20:03,959 Speaker 1: globalized city and you're seeing a lot more immigration, You're 346 00:20:03,960 --> 00:20:06,280 Speaker 1: seeing a lot more you know, pressure on the supply 347 00:20:06,320 --> 00:20:08,400 Speaker 1: and demand story. It's kind of like you know, where 348 00:20:08,440 --> 00:20:10,720 Speaker 1: New York City was ten fifteen years ago in terms 349 00:20:10,760 --> 00:20:12,439 Speaker 1: of you have all these people coming in, you have 350 00:20:12,520 --> 00:20:15,280 Speaker 1: these different industries changing, and the city is just not 351 00:20:15,359 --> 00:20:17,960 Speaker 1: ready for it. So there is a natural pressure that 352 00:20:18,200 --> 00:20:20,520 Speaker 1: prices do we just have to to kind of continue 353 00:20:20,520 --> 00:20:23,600 Speaker 1: to rise. But the story is is how much really 354 00:20:23,760 --> 00:20:27,119 Speaker 1: is this impacted by the mobility of global capital and 355 00:20:27,119 --> 00:20:28,920 Speaker 1: how much money is kind of coming in from other 356 00:20:29,000 --> 00:20:33,119 Speaker 1: countries and how much is that dislocating the potential for 357 00:20:33,160 --> 00:20:35,439 Speaker 1: people that can afford real estate versus kind of like 358 00:20:35,480 --> 00:20:37,960 Speaker 1: how much is this an asset play? So I think 359 00:20:38,000 --> 00:20:41,920 Speaker 1: the baseline here is that the market's cooling off, but 360 00:20:42,359 --> 00:20:44,320 Speaker 1: it's pulling off at the exact same time that the 361 00:20:44,320 --> 00:20:47,680 Speaker 1: consumers have just are basically just starting stage one of 362 00:20:47,760 --> 00:20:51,280 Speaker 1: the leveraging. So the domestic demand story is really kind 363 00:20:51,320 --> 00:20:53,679 Speaker 1: of I think what is the major concern is that 364 00:20:54,119 --> 00:20:56,320 Speaker 1: if housing market and the consumer come off from the 365 00:20:56,359 --> 00:20:59,280 Speaker 1: exact same time, there hasn't been anything else to kind 366 00:20:59,280 --> 00:21:03,240 Speaker 1: of kind of hand over the economy to continue to move. Mark, 367 00:21:03,320 --> 00:21:08,640 Speaker 1: nobody cares Jets or Vegas, which one I guess I'll 368 00:21:08,680 --> 00:21:11,680 Speaker 1: just go Vegas. No, you're we You work for TV Securities. 369 00:21:11,720 --> 00:21:14,920 Speaker 1: You're supposed to say Jets. I stopped watching sports after 370 00:21:15,040 --> 00:21:18,880 Speaker 1: the Raptors. Uh after they got swept by the by 371 00:21:18,920 --> 00:21:24,479 Speaker 1: they did. I know, it's it's therapy as well. Okay, 372 00:21:24,600 --> 00:21:27,440 Speaker 1: Mark McCormick, thank you so much, greatly appreciate what TV Securities. 373 00:21:27,480 --> 00:21:44,720 Speaker 1: That was brilliant, nice summary there of Canada. Pim Fox 374 00:21:44,760 --> 00:21:46,880 Speaker 1: and I on a Friday with John Tucker and we're 375 00:21:46,880 --> 00:21:50,399 Speaker 1: sitting around anxiously deciding what champagne to buy for the 376 00:21:50,480 --> 00:21:54,720 Speaker 1: Royal wedding, and Campbell's falls apart, so we're able to 377 00:21:54,760 --> 00:21:59,119 Speaker 1: go out and get Scott muschikin. He's with Wolf for years, 378 00:21:59,119 --> 00:22:01,720 Speaker 1: with d l J and Kidder Peabody's when every award 379 00:22:01,760 --> 00:22:04,159 Speaker 1: out there, he was so good. The Wall Street Journal 380 00:22:04,160 --> 00:22:06,480 Speaker 1: in their beauty contest a couple of years ago, actually 381 00:22:06,560 --> 00:22:10,400 Speaker 1: retired him. He's not retired. He's with Wolf where he's 382 00:22:10,520 --> 00:22:14,280 Speaker 1: He's seen the Durance family struggle for years. Scott Um 383 00:22:14,560 --> 00:22:17,120 Speaker 1: nineteen or rather two thousand and eight, ten years ago, 384 00:22:17,880 --> 00:22:22,360 Speaker 1: Campbell's soup with a moldy five point one percent total 385 00:22:22,560 --> 00:22:26,320 Speaker 1: return and the two minute drill is they're not getting 386 00:22:26,320 --> 00:22:28,880 Speaker 1: it done. From their annual report of ten years ago. 387 00:22:29,520 --> 00:22:33,199 Speaker 1: At Campbell, we believe the key to sustainable success more 388 00:22:33,240 --> 00:22:38,480 Speaker 1: than ever is on course strains, major trends and outstanding 389 00:22:38,520 --> 00:22:42,720 Speaker 1: opportunities worldwide. Isn't this about nobody wants to buy a 390 00:22:42,800 --> 00:22:46,879 Speaker 1: can of Campbell's tomato soup. Yeah. Hey, first of all 391 00:22:47,000 --> 00:22:49,119 Speaker 1: to him and Tom, thanks thanks for having me. But 392 00:22:49,760 --> 00:22:52,640 Speaker 1: you know it's interesting, Uh, the ship category actually grew 393 00:22:52,680 --> 00:22:55,440 Speaker 1: this year, UM, Believe it or not. It was a 394 00:22:55,520 --> 00:22:58,399 Speaker 1: cold winter, so soup grew. So you know, one of 395 00:22:58,400 --> 00:23:01,440 Speaker 1: the things going on here is just lot out mismanagement 396 00:23:01,480 --> 00:23:06,440 Speaker 1: of Campbell's UM. Now there's unprecedented change afflicting the food 397 00:23:06,480 --> 00:23:10,679 Speaker 1: at home space UM, and there's certainly that headwind and 398 00:23:11,040 --> 00:23:13,840 Speaker 1: very disturbing coming off that conference call with them talking 399 00:23:13,880 --> 00:23:17,080 Speaker 1: about not being able to get pricing through and what 400 00:23:17,200 --> 00:23:20,600 Speaker 1: is that is that that's Bentonville, that's Walmart. Walmart saying 401 00:23:20,720 --> 00:23:23,600 Speaker 1: no way, guys. You know, we're we got a plan 402 00:23:23,680 --> 00:23:27,560 Speaker 1: and we're keeping prices low and so aluminiums up, steals up. 403 00:23:27,800 --> 00:23:30,720 Speaker 1: You're not getting pricing, But go ahead, Scott, I had 404 00:23:30,760 --> 00:23:34,240 Speaker 1: a slide rule when people were talking about this good family, 405 00:23:34,800 --> 00:23:39,119 Speaker 1: the steward of Campbell's soup should sell the company. Is 406 00:23:39,160 --> 00:23:43,160 Speaker 1: that same conversation going on today? I mean, I think 407 00:23:43,160 --> 00:23:45,040 Speaker 1: you gotta look at Campbell's and they talked about a 408 00:23:45,080 --> 00:23:48,600 Speaker 1: strategic review and you know, from our perspective, ten billion 409 00:23:48,640 --> 00:23:53,160 Speaker 1: dollars in revenue going against you know, guys like Kroger 410 00:23:53,160 --> 00:23:56,320 Speaker 1: and Walmart. You know, the scale is just not there. 411 00:23:56,680 --> 00:24:00,239 Speaker 1: Uh and clearly the operating acumens not there. And so 412 00:24:00,280 --> 00:24:02,560 Speaker 1: I think, you know, the family should think about it. 413 00:24:03,000 --> 00:24:05,400 Speaker 1: I think Kraft Hyns makes a lot of sense, honestly, 414 00:24:05,400 --> 00:24:07,879 Speaker 1: and we've talked about that and even in writing like 415 00:24:08,960 --> 00:24:10,440 Speaker 1: I don't think they have the scale to do it. 416 00:24:10,520 --> 00:24:14,639 Speaker 1: I think there's unprecedented change coming at this industry. Food 417 00:24:14,640 --> 00:24:17,800 Speaker 1: at home industry and people need to bulk up, and 418 00:24:17,840 --> 00:24:21,600 Speaker 1: not only retailers. But I think these manufacturers have to 419 00:24:21,640 --> 00:24:24,840 Speaker 1: think about coming together, all right, So Scott Mushkin, let's 420 00:24:24,880 --> 00:24:29,399 Speaker 1: say that they're thinking about coming together. You mentioned Craft Hynes. 421 00:24:29,520 --> 00:24:32,440 Speaker 1: Is that the only one? I mean, I think that 422 00:24:32,960 --> 00:24:36,080 Speaker 1: in our opinion, it seems it seems somewhat logical. Um, 423 00:24:36,320 --> 00:24:39,960 Speaker 1: there's obviously long term investors in in Kraft times uh 424 00:24:40,119 --> 00:24:44,160 Speaker 1: three g in in Berkshire, Hathaway. So if the dor 425 00:24:44,200 --> 00:24:46,320 Speaker 1: and Sandy wants to do it, they you know that 426 00:24:46,320 --> 00:24:49,480 Speaker 1: it makes sense there. But I mean, as they said, 427 00:24:49,480 --> 00:24:51,919 Speaker 1: everything is on the table and it's always tough to speculate, 428 00:24:52,000 --> 00:24:55,159 Speaker 1: but it makes a lot of sense. They fit nicely together. 429 00:24:55,440 --> 00:25:00,640 Speaker 1: How long can they keep doing this? Campbell's Yeah, I mean, 430 00:25:00,920 --> 00:25:03,159 Speaker 1: you know, I think the markets telling us that you know, 431 00:25:03,240 --> 00:25:06,399 Speaker 1: they're they're they're tired of of what Campbell's has been 432 00:25:06,440 --> 00:25:09,920 Speaker 1: doing over the last ten years. Um and the challenges. 433 00:25:10,000 --> 00:25:14,840 Speaker 1: And we saw you know, Kroger partnering with Accado yesterday. Um, 434 00:25:14,880 --> 00:25:18,679 Speaker 1: the industry is it's tell Tom about that. To hang 435 00:25:18,760 --> 00:25:21,240 Speaker 1: on a second, Tell people, tell tell people about and 436 00:25:21,320 --> 00:25:24,720 Speaker 1: Tom about this this deal, because this is interesting. What 437 00:25:24,840 --> 00:25:28,639 Speaker 1: Kroger did with Ocado. It's licensing some technology that is 438 00:25:28,680 --> 00:25:34,720 Speaker 1: already being tested and used in France and also in Canada. Yeah, 439 00:25:34,760 --> 00:25:36,960 Speaker 1: and then of course over in the UK. So I 440 00:25:37,000 --> 00:25:40,440 Speaker 1: mean the you know, Accado basically is an automated system 441 00:25:40,480 --> 00:25:45,160 Speaker 1: to bring online groceries to your home. Um, and Kroger 442 00:25:45,280 --> 00:25:47,920 Speaker 1: his license decked technology. It's been pretty successful over in 443 00:25:47,920 --> 00:25:50,479 Speaker 1: the UK, and as you mentioned, there now spreading their 444 00:25:50,520 --> 00:25:53,960 Speaker 1: wings into other markets. Um. But the net of it is, 445 00:25:54,240 --> 00:25:57,480 Speaker 1: and this is the challenge, is Kroger's agreed to build 446 00:25:57,760 --> 00:26:04,320 Speaker 1: twenty STU where houses distribution centers. That's all extra capacity. Um. 447 00:26:04,440 --> 00:26:06,920 Speaker 1: Funny enough, the birthrate came out yesterday I think from 448 00:26:06,920 --> 00:26:10,919 Speaker 1: the CDC, and it was the lowest it's been. So 449 00:26:11,000 --> 00:26:13,520 Speaker 1: the challenge with the industry is it's not growing all 450 00:26:13,560 --> 00:26:17,080 Speaker 1: that fast. Populations of fifty BIPs. You know, food at 451 00:26:17,080 --> 00:26:19,359 Speaker 1: home may not even be growing fifty BIPs. And so 452 00:26:19,400 --> 00:26:24,760 Speaker 1: when Kroeger announces they're gonna build twenty fulfillment centers, you 453 00:26:24,840 --> 00:26:27,600 Speaker 1: know almost gives me heart palplications and like more capacity 454 00:26:27,600 --> 00:26:30,920 Speaker 1: into an overcapacity industry. Uh, not to mention what Amazon 455 00:26:31,000 --> 00:26:33,800 Speaker 1: is doing with Whole food, So you know, they got 456 00:26:33,960 --> 00:26:37,159 Speaker 1: to play. The industry is changing, but man as is 457 00:26:37,320 --> 00:26:40,040 Speaker 1: tough out there. It's tough out there, and with your experience, 458 00:26:40,080 --> 00:26:42,920 Speaker 1: Scott Michigan, is just simple. It all gets worked out. 459 00:26:42,960 --> 00:26:45,320 Speaker 1: You know, the five year plan becomes the three year plan. 460 00:26:45,880 --> 00:26:48,320 Speaker 1: I think everybody can basically stay. Campbell's has been a 461 00:26:48,359 --> 00:26:50,880 Speaker 1: modest train wreck for a number of years for whatever reasons, 462 00:26:51,240 --> 00:26:54,840 Speaker 1: and all that every other industry is rolling up essentially, 463 00:26:54,840 --> 00:26:57,399 Speaker 1: look at media just as one example. When does the 464 00:26:57,400 --> 00:27:01,679 Speaker 1: food frenzy start and they all merge? I mean, you 465 00:27:01,720 --> 00:27:03,880 Speaker 1: know it should in our opinion, it should, and it's 466 00:27:04,000 --> 00:27:06,440 Speaker 1: it's started to a degree. I mean obviously Campbell's bought, 467 00:27:06,800 --> 00:27:10,919 Speaker 1: but but Lance, but um, it needs to happen at 468 00:27:10,920 --> 00:27:13,480 Speaker 1: a much more rapid pace. I mean, we would have thought, 469 00:27:14,160 --> 00:27:16,480 Speaker 1: and we've wrongly thought over the last six months it 470 00:27:16,480 --> 00:27:20,040 Speaker 1: would have sped up. Um. But you know, even on 471 00:27:20,080 --> 00:27:23,600 Speaker 1: the retail side, there's this kind of like almost overconfidence, 472 00:27:23,880 --> 00:27:26,640 Speaker 1: um that things will be okay, it's all gonna work 473 00:27:26,680 --> 00:27:30,320 Speaker 1: itself out. We've seen you know, bad trends before. But 474 00:27:31,000 --> 00:27:33,720 Speaker 1: you know, in our opinion, that's that's the wrong thought 475 00:27:33,760 --> 00:27:37,199 Speaker 1: to have. That you really need to partner and partner quickly. 476 00:27:37,480 --> 00:27:41,560 Speaker 1: Pen very quickly. Kraft Heine's employment thirty nine thousand, Campbell 477 00:27:41,640 --> 00:27:45,720 Speaker 1: soup half as much eighteen thousand. That gives you the skills. Yeah, well, Scott, 478 00:27:45,760 --> 00:27:48,080 Speaker 1: I just wanted to know if that is, Uh, if 479 00:27:48,119 --> 00:27:52,359 Speaker 1: that sort of underscores the I guess the scorecard that 480 00:27:52,400 --> 00:27:55,880 Speaker 1: you've got. You covered twenty three companies officially, you've got 481 00:27:55,920 --> 00:28:00,359 Speaker 1: thirteen holes and ten buys. That's not a big bull 482 00:28:00,440 --> 00:28:03,720 Speaker 1: endorsement for the sector, is it. Yeah? And then you know, 483 00:28:03,960 --> 00:28:06,120 Speaker 1: you know, we've we've known each other for years, and 484 00:28:06,200 --> 00:28:07,840 Speaker 1: you know one of the things that you know, I 485 00:28:07,880 --> 00:28:10,160 Speaker 1: think I got wrong honestly over the last six months. 486 00:28:10,160 --> 00:28:12,960 Speaker 1: So we were very barished on the food at home 487 00:28:13,000 --> 00:28:16,479 Speaker 1: sector with a lot of cells. With tax reform, we 488 00:28:16,520 --> 00:28:19,280 Speaker 1: believe nominal growth in the U S would accelerate, which 489 00:28:19,320 --> 00:28:22,960 Speaker 1: is actually happening. We thought the inflation rate would rise, 490 00:28:23,160 --> 00:28:27,240 Speaker 1: that's happening. Generally. That becomes a much more productive environment 491 00:28:27,280 --> 00:28:31,480 Speaker 1: for the food at home sector. Uh. Realizing there's unprecedented change. 492 00:28:31,520 --> 00:28:35,199 Speaker 1: But right now we're seeing is that this idea of 493 00:28:35,359 --> 00:28:40,000 Speaker 1: nominal growth helping the sector, it's just not not coming through. Um. 494 00:28:40,040 --> 00:28:44,040 Speaker 1: The unprecedented pressures are winning the day. Well, let's be 495 00:28:44,080 --> 00:28:45,760 Speaker 1: constructed here are you've been kind to come out and 496 00:28:45,840 --> 00:28:52,240 Speaker 1: short notice Scott Muskin. What is natural Grocers? Oh? Natural Grocers. Oh, 497 00:28:52,320 --> 00:28:55,920 Speaker 1: it's a it's a small regional chain selling natural organic 498 00:28:55,960 --> 00:28:59,400 Speaker 1: food out of it's located at the Denver's that stores 499 00:28:59,480 --> 00:29:01,800 Speaker 1: kind of in the mid all ther performance and that 500 00:29:01,920 --> 00:29:04,360 Speaker 1: you're killing it on natural Grocers, it means it's been 501 00:29:04,640 --> 00:29:07,400 Speaker 1: why is that a moon shot versus everybody else troubled? 502 00:29:08,800 --> 00:29:10,640 Speaker 1: So so I think you know, one of the things 503 00:29:10,720 --> 00:29:12,920 Speaker 1: we see in the food at home industry is well, 504 00:29:12,920 --> 00:29:16,400 Speaker 1: first of all, geography matters, right, So they're located in Denver, 505 00:29:16,520 --> 00:29:19,760 Speaker 1: they have a lot of stores in the oil market, 506 00:29:19,760 --> 00:29:23,160 Speaker 1: which is rallying, uh huge, and so they're they're getting 507 00:29:23,280 --> 00:29:26,040 Speaker 1: a big economic benefit. But we see is this so 508 00:29:26,200 --> 00:29:28,440 Speaker 1: as you get up into the national organic channel, it 509 00:29:28,480 --> 00:29:32,600 Speaker 1: does respond to a better economy and more robust economy, 510 00:29:32,760 --> 00:29:35,440 Speaker 1: and so natural grocers. So I think that's factor number one. 511 00:29:35,440 --> 00:29:37,760 Speaker 1: Factor number two is you know, there's just not a 512 00:29:37,760 --> 00:29:40,160 Speaker 1: lot of liquidity in that stock, and so I think 513 00:29:40,200 --> 00:29:43,360 Speaker 1: that you know, when it can, it can overshoot and 514 00:29:43,480 --> 00:29:46,840 Speaker 1: undershoot just because of the liquidity factors. But you know, 515 00:29:46,920 --> 00:29:49,840 Speaker 1: definitely their business has improved markedly because of what's going 516 00:29:49,880 --> 00:29:54,280 Speaker 1: on in the macro industry, macro economy. Scott really appreciate 517 00:29:54,320 --> 00:29:56,680 Speaker 1: this on short notice with wild free search. Scott musing 518 00:29:56,800 --> 00:30:06,680 Speaker 1: on Campbell's soup as well. Thanks for listening to the 519 00:30:06,680 --> 00:30:13,160 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 520 00:30:13,560 --> 00:30:17,760 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 521 00:30:17,800 --> 00:30:22,080 Speaker 1: Tom Keene before the podcast. You can always catch us worldwide. 522 00:30:22,520 --> 00:30:23,600 Speaker 1: I'm Bloomberg Radio