1 00:00:05,720 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jai Leye. 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 --> 00:00:28,160 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Yeah. 5 00:00:33,720 --> 00:00:37,479 Speaker 1: It's a story defining important political outcomes, how we understand 6 00:00:37,560 --> 00:00:41,280 Speaker 1: what shape political preferences is shifting radically. It's no longer 7 00:00:41,320 --> 00:00:44,240 Speaker 1: just a case of left and and right. It's globalism 8 00:00:44,360 --> 00:00:47,800 Speaker 1: versus nationalism, the conflict between the citizen of the state. 9 00:00:47,880 --> 00:00:51,559 Speaker 1: It often comes down to us versus Them. That's the 10 00:00:51,600 --> 00:00:54,320 Speaker 1: title of in Bremer's new book, Us Versus Them, The 11 00:00:54,480 --> 00:00:57,760 Speaker 1: Failure of Globalism. And I'm pleased to say that the 12 00:00:57,800 --> 00:01:00,440 Speaker 1: Eurasia Group founder and President joins us now here in 13 00:01:00,440 --> 00:01:02,880 Speaker 1: New York and good morning and congratulations to you. Thank 14 00:01:02,880 --> 00:01:04,760 Speaker 1: you having it told me about the essence of this 15 00:01:04,800 --> 00:01:08,000 Speaker 1: book and why this is some important to you right now. Uh, 16 00:01:08,080 --> 00:01:11,240 Speaker 1: it's important because I've never experienced our country so divided. 17 00:01:11,680 --> 00:01:13,840 Speaker 1: And when you travel you go to Europe and increasing 18 00:01:13,840 --> 00:01:16,120 Speaker 1: the other countries too, you feel it there and and 19 00:01:16,120 --> 00:01:18,400 Speaker 1: that's happening when the global economy is doing better than 20 00:01:18,360 --> 00:01:21,399 Speaker 1: at any point in over a decade, which means that 21 00:01:21,440 --> 00:01:24,920 Speaker 1: we are getting something fundamentally wrong in liberal democracies with 22 00:01:25,040 --> 00:01:27,839 Speaker 1: our citizens. In fact, the only country among the advanced 23 00:01:27,840 --> 00:01:31,120 Speaker 1: industrial democracies that you're not experiencing this is Japan, where 24 00:01:31,120 --> 00:01:34,840 Speaker 1: they have no immigration and where the population is shrinking 25 00:01:34,880 --> 00:01:38,360 Speaker 1: incredibly rapidly, so per capita. They feel like they're doing great. 26 00:01:38,440 --> 00:01:41,319 Speaker 1: But it's not just economics, right, It's much deeper than that. 27 00:01:41,360 --> 00:01:46,040 Speaker 1: It's about security, um, It's about identity and culture and society, 28 00:01:46,160 --> 00:01:49,000 Speaker 1: and and it basically is saying that the values that 29 00:01:49,040 --> 00:01:51,640 Speaker 1: the United States has been promoting, both at home and 30 00:01:51,680 --> 00:01:55,720 Speaker 1: abroad since after World War Two just don't apply to 31 00:01:55,840 --> 00:01:58,800 Speaker 1: the average person anymore. And that's why we got Trump 32 00:01:58,840 --> 00:02:01,720 Speaker 1: and Sanders, and that's why you got Brexit. And it's 33 00:02:01,800 --> 00:02:04,320 Speaker 1: just picking up momentum, it's not getting fixed. And your 34 00:02:04,360 --> 00:02:06,880 Speaker 1: point in the book, really in the conclusion, is that 35 00:02:07,080 --> 00:02:09,960 Speaker 1: the president the United States, President Trump, didn't create US 36 00:02:10,040 --> 00:02:13,720 Speaker 1: versus them. Us versus them created President Donald Trump. It 37 00:02:14,080 --> 00:02:16,919 Speaker 1: created the the outcome of the Ukit the Brexit decision 38 00:02:17,280 --> 00:02:20,639 Speaker 1: as well, and these necessarily negative outcomes, as far as 39 00:02:20,639 --> 00:02:26,280 Speaker 1: you're concerned, and I think they are because Trump's solutions 40 00:02:27,080 --> 00:02:30,480 Speaker 1: are more divisive. No, no one is better at painting 41 00:02:30,560 --> 00:02:35,560 Speaker 1: us versus them than Donald Trump is America First is 42 00:02:35,720 --> 00:02:41,000 Speaker 1: in a sense and encapulation of that um and everything 43 00:02:41,040 --> 00:02:44,440 Speaker 1: he says about Mexicans. We need to build a wall, 44 00:02:45,080 --> 00:02:48,359 Speaker 1: it's a fake news, and how everyone is a winner 45 00:02:48,480 --> 00:02:53,480 Speaker 1: or a loser. He's doing that and facilitating a deepening 46 00:02:53,720 --> 00:02:58,040 Speaker 1: of divisions that have already made us no longer understand 47 00:02:58,080 --> 00:03:00,600 Speaker 1: what it is the United States fundamental he stands for. 48 00:03:00,919 --> 00:03:04,240 Speaker 1: And that's happening in a world where China has the 49 00:03:04,280 --> 00:03:06,840 Speaker 1: strongest leader they've had since Mao, and the Chinese know 50 00:03:06,960 --> 00:03:10,320 Speaker 1: exactly what they stand for and they're building it long term. 51 00:03:10,360 --> 00:03:13,080 Speaker 1: This is a it's a profound tipping point in the 52 00:03:13,160 --> 00:03:19,040 Speaker 1: geopolitical order, and it really is um forces I think 53 00:03:19,200 --> 00:03:21,240 Speaker 1: us all to look at what kind of society we 54 00:03:21,280 --> 00:03:24,320 Speaker 1: want to build here in the United States. Perhaps importantly 55 00:03:24,320 --> 00:03:27,639 Speaker 1: that in what has happened and why this message resonates 56 00:03:27,680 --> 00:03:30,600 Speaker 1: with so many different people across the planet right now 57 00:03:31,080 --> 00:03:35,560 Speaker 1: is because previous administrations have completely failed to insulate large 58 00:03:35,600 --> 00:03:38,800 Speaker 1: sweats of society, whether it's in the United States, the UK, 59 00:03:39,000 --> 00:03:42,800 Speaker 1: and across much of Europe as well insulate them from 60 00:03:42,920 --> 00:03:46,960 Speaker 1: the negative impact of globalization. Previous administrations are quite clearly 61 00:03:46,960 --> 00:03:49,840 Speaker 1: failed to do that. I mean even Obama, who was 62 00:03:49,960 --> 00:03:53,440 Speaker 1: voted for precisely not as a Democrat, but because he was. 63 00:03:53,480 --> 00:03:56,160 Speaker 1: He beat Hillary right, because he was a first term senator, 64 00:03:56,560 --> 00:04:00,400 Speaker 1: first black man. Everyone thought, here's a new guy that 65 00:04:00,440 --> 00:04:04,160 Speaker 1: we can all have hoped for. And yet the swamp 66 00:04:04,560 --> 00:04:07,560 Speaker 1: could not be drained his ability. I mean a little 67 00:04:07,600 --> 00:04:10,440 Speaker 1: things like saying I'm not going to pay for pix up, 68 00:04:10,520 --> 00:04:13,320 Speaker 1: pay for play for American ambassadors around the world, to 69 00:04:13,440 --> 00:04:17,400 Speaker 1: big things like building infrastructure, improving education, dealing with gun 70 00:04:17,440 --> 00:04:20,840 Speaker 1: control in the poorest areas of the country. Couldn't get 71 00:04:20,880 --> 00:04:23,719 Speaker 1: it done, and so a lot of people got disappointed. 72 00:04:23,720 --> 00:04:26,239 Speaker 1: A lot of those Obama voters went to vote for Trump, 73 00:04:26,320 --> 00:04:28,880 Speaker 1: some went to vote for Sanders. They're gonna be disillusioned 74 00:04:28,880 --> 00:04:31,520 Speaker 1: again because in four and eight years their situation isn't 75 00:04:31,520 --> 00:04:33,360 Speaker 1: going to be better. So we have more and more 76 00:04:33,400 --> 00:04:36,160 Speaker 1: people in America saying should I bother voting at all, 77 00:04:36,520 --> 00:04:39,440 Speaker 1: More and more young people saying the system is rigged 78 00:04:39,480 --> 00:04:42,880 Speaker 1: and I'd rather have a military dictatorship than have a 79 00:04:42,920 --> 00:04:45,839 Speaker 1: democracy because this system doesn't work for me. More and 80 00:04:45,920 --> 00:04:49,279 Speaker 1: more people willing to vote outside of the elites and 81 00:04:49,320 --> 00:04:53,640 Speaker 1: the establishment, thinking that the business community, the political community, 82 00:04:53,800 --> 00:04:56,839 Speaker 1: the media, the public intellectuals are all in it for 83 00:04:56,920 --> 00:04:59,919 Speaker 1: themselves and no one cares about them. And that's odd 84 00:05:00,040 --> 00:05:02,560 Speaker 1: viously happening across Europe to this is not just an 85 00:05:02,560 --> 00:05:06,680 Speaker 1: American phenomena. So what's the solution. Well, in the near term, 86 00:05:06,680 --> 00:05:10,520 Speaker 1: precisely because it's not a crisis and the elites aren't 87 00:05:10,560 --> 00:05:14,760 Speaker 1: experiencing any trouble themselves, especially because the economy is doing 88 00:05:14,800 --> 00:05:18,719 Speaker 1: so well. It's a combination of candy to keep people 89 00:05:18,720 --> 00:05:20,880 Speaker 1: happy right now. So let's give everyone a tax break. 90 00:05:20,960 --> 00:05:23,040 Speaker 1: Let's blow out the budgets, even if the bill is 91 00:05:23,080 --> 00:05:24,840 Speaker 1: going to come do in a very serious way on 92 00:05:24,880 --> 00:05:27,800 Speaker 1: the back of the working class in five or ten years. 93 00:05:28,000 --> 00:05:31,040 Speaker 1: Let's just throw some cash at them now, and it's 94 00:05:31,120 --> 00:05:35,440 Speaker 1: build walls, it's divide people more effectively. The long term 95 00:05:35,480 --> 00:05:39,479 Speaker 1: solution is you need to change the social contract. The 96 00:05:39,560 --> 00:05:44,040 Speaker 1: long term solution, especially with technology facilitating divisions and fake 97 00:05:44,080 --> 00:05:47,919 Speaker 1: news within our countries, are liberal democracies and a new 98 00:05:48,000 --> 00:05:51,839 Speaker 1: industrial revolution or post industrial revolution going to take displace 99 00:05:51,960 --> 00:05:55,080 Speaker 1: so many people in terms of automation, artificial intelligence. The 100 00:05:55,240 --> 00:05:59,000 Speaker 1: long term is a would would require something very new. 101 00:05:59,040 --> 00:06:02,280 Speaker 1: Deal like would require the kind I mean, there's no 102 00:06:02,400 --> 00:06:06,520 Speaker 1: magic in the fact that we need serious investments in 103 00:06:06,520 --> 00:06:10,240 Speaker 1: infrastructure and education the rest. But Trump Trump did Infrastructure week. 104 00:06:10,279 --> 00:06:12,920 Speaker 1: It was a failure, became the butt of jokes, while 105 00:06:12,960 --> 00:06:15,919 Speaker 1: Trump does US versus them every day. One thing the 106 00:06:15,920 --> 00:06:18,479 Speaker 1: president has done that most people would agree with is 107 00:06:18,480 --> 00:06:20,760 Speaker 1: is take on China and try and break the status 108 00:06:20,839 --> 00:06:23,520 Speaker 1: quo that has shaped the global economy. The Chinese do 109 00:06:23,560 --> 00:06:26,760 Speaker 1: not abide by the global rules. They don't go by 110 00:06:26,839 --> 00:06:29,280 Speaker 1: the mantra of free trade. They have their own rules. 111 00:06:29,320 --> 00:06:31,240 Speaker 1: They played by their own book. Correct. Do you think 112 00:06:31,240 --> 00:06:33,000 Speaker 1: the president is going down the right path there trying 113 00:06:33,040 --> 00:06:36,280 Speaker 1: to break up what has been a country that has 114 00:06:36,320 --> 00:06:38,640 Speaker 1: really been elitch on the global trading system for for 115 00:06:38,720 --> 00:06:42,080 Speaker 1: much of the last decade. I'm conflicted. I mean, first 116 00:06:42,120 --> 00:06:44,320 Speaker 1: of all, it is true that if we have a 117 00:06:44,320 --> 00:06:47,080 Speaker 1: trade war with the Chinese, we both lose, but we 118 00:06:47,200 --> 00:06:49,520 Speaker 1: win against the Chinese. In other words, they'll get a 119 00:06:49,640 --> 00:06:52,039 Speaker 1: lot more hurt than we will. They know that, so 120 00:06:52,160 --> 00:06:55,120 Speaker 1: our ability to push them and get them to actually 121 00:06:55,120 --> 00:06:58,080 Speaker 1: be flexible with us is significant, and Trump has already 122 00:06:58,080 --> 00:07:00,760 Speaker 1: had some success there. My problem, Blom is that if 123 00:07:00,760 --> 00:07:04,200 Speaker 1: you want to beat up on the Chinese for deserved 124 00:07:04,360 --> 00:07:08,120 Speaker 1: reasons in terms of intellectually property stealing, no reciprocity and 125 00:07:08,160 --> 00:07:12,080 Speaker 1: market openness of the rest, you really want allies. You 126 00:07:12,160 --> 00:07:15,000 Speaker 1: really want the Europeans with you, You want the Japanese 127 00:07:15,040 --> 00:07:19,000 Speaker 1: with you, and and Trump just doesn't trust multilateralism. He 128 00:07:19,040 --> 00:07:21,760 Speaker 1: wants to do this himself. This is critical and it 129 00:07:21,800 --> 00:07:24,400 Speaker 1: goes to work with your colleague Robert Caplan in his 130 00:07:24,440 --> 00:07:26,920 Speaker 1: book The Return of Marco Polo. You've got a great 131 00:07:26,960 --> 00:07:30,800 Speaker 1: section on, for example, Indonesia, or you could speak about 132 00:07:30,800 --> 00:07:34,240 Speaker 1: the New Vietnam as well. Are those allies we have 133 00:07:34,280 --> 00:07:36,600 Speaker 1: the ability to speak to as we look at the 134 00:07:36,640 --> 00:07:40,880 Speaker 1: South China see the major conduit for oil and goods 135 00:07:40,880 --> 00:07:45,600 Speaker 1: in the Pacific some call Caplin calls it China's Mediterranean. 136 00:07:46,000 --> 00:07:48,280 Speaker 1: Does a president even know where the South China see 137 00:07:48,280 --> 00:07:50,240 Speaker 1: is on the map? They used to be allies that 138 00:07:50,320 --> 00:07:53,600 Speaker 1: we could speak to more effectively withdrawing from the Trans 139 00:07:53,680 --> 00:07:57,000 Speaker 1: Pacific Partnership than dangling it for a second and then 140 00:07:57,040 --> 00:08:01,760 Speaker 1: saying nah doesn't help. Our military presence in the region, 141 00:08:01,800 --> 00:08:04,840 Speaker 1: of course, is still dominant and beats the Chinese um 142 00:08:04,840 --> 00:08:06,800 Speaker 1: except for you know, sort of really close to the 143 00:08:06,920 --> 00:08:10,840 Speaker 1: Chinese shores. That is changing. But you know the fact 144 00:08:10,920 --> 00:08:15,440 Speaker 1: is that every day that we withdraw, every day that 145 00:08:15,480 --> 00:08:18,800 Speaker 1: we say it's all about us, baby, we're not doing multilateral, 146 00:08:18,920 --> 00:08:21,280 Speaker 1: is another day where the Chinese economy is more and 147 00:08:21,320 --> 00:08:25,440 Speaker 1: more dominant over these countries due to Indonesia. What does 148 00:08:25,520 --> 00:08:29,400 Speaker 1: our non engagement do. I'm just picking on the eye 149 00:08:29,400 --> 00:08:33,520 Speaker 1: country to Indonesia. I mean it means that they recognize 150 00:08:33,559 --> 00:08:36,480 Speaker 1: that one belt, one road is their marshal alone. It's 151 00:08:36,480 --> 00:08:39,040 Speaker 1: their marshal plan. They're not alone. The Chinese are prepared 152 00:08:39,040 --> 00:08:41,080 Speaker 1: to throw an enormous amount of money and there's massive 153 00:08:41,120 --> 00:08:43,720 Speaker 1: numbers of Chinese expats in Indonesia and the Philippines and 154 00:08:43,720 --> 00:08:46,920 Speaker 1: Australia who are actually becoming the key business people in 155 00:08:46,960 --> 00:09:02,800 Speaker 1: those countries. Five things you need to know to start 156 00:09:02,800 --> 00:09:05,800 Speaker 1: your day. We do this with Brian Weezer Pivotal Squeezing. 157 00:09:05,920 --> 00:09:08,120 Speaker 1: You know, five things, four things, six things. It's with 158 00:09:08,200 --> 00:09:12,480 Speaker 1: Brian Weezer. That's a good thing. Brought you by Interactive Brokers, 159 00:09:12,640 --> 00:09:16,680 Speaker 1: rated number one best online broker two thousand eighteen and 160 00:09:16,760 --> 00:09:21,000 Speaker 1: a top online broker for the eight consecutive year by 161 00:09:21,080 --> 00:09:25,200 Speaker 1: Baron's visit ib k R dot com slash why I 162 00:09:25,360 --> 00:09:29,120 Speaker 1: be to learn more? Brian Weiser, let's jump into it 163 00:09:29,240 --> 00:09:33,280 Speaker 1: right now. Is a traditional ad business dead? Disney Access, 164 00:09:33,280 --> 00:09:37,600 Speaker 1: traditional TV? This that Martin Sorel the gossip of your 165 00:09:37,640 --> 00:09:43,120 Speaker 1: industry is mad been dead? The TV series? No, you know, 166 00:09:43,160 --> 00:09:47,160 Speaker 1: I think advertising is in a constant stative evolution. Um. 167 00:09:47,200 --> 00:09:49,440 Speaker 1: I think sometimes we you know, how often have we 168 00:09:49,480 --> 00:09:51,200 Speaker 1: heard the phrase the world's changed more in the last 169 00:09:51,200 --> 00:09:53,199 Speaker 1: five years in the last fifty to which I sat? 170 00:09:53,240 --> 00:09:56,400 Speaker 1: Anyone prove it quantified? John? This is Brian's first time 171 00:09:56,400 --> 00:10:00,240 Speaker 1: on radio. Would you move as Mike's by him? Are 172 00:10:00,280 --> 00:10:02,640 Speaker 1: you okay over there? I'm good, I'm gonna have radio. 173 00:10:02,679 --> 00:10:05,960 Speaker 1: Guy has been on the Times of Times, c I, 174 00:10:06,000 --> 00:10:08,920 Speaker 1: t R Vancouver. I used to be the president Society there. 175 00:10:09,000 --> 00:10:12,000 Speaker 1: Did you get that we got? Brian knows what he's doing. 176 00:10:13,200 --> 00:10:17,199 Speaker 1: Is the business? No, it is not. I think that 177 00:10:17,480 --> 00:10:19,400 Speaker 1: there are a number of challenges in a number of 178 00:10:19,440 --> 00:10:21,839 Speaker 1: different parts of the industry, and unfortunately a lot of 179 00:10:21,880 --> 00:10:25,040 Speaker 1: the numbers are often obscured. The agency space, for example, 180 00:10:25,160 --> 00:10:26,920 Speaker 1: is obscured by the fact that we can't see what 181 00:10:27,000 --> 00:10:29,400 Speaker 1: the media agency business is doing separate from the creative 182 00:10:29,440 --> 00:10:32,640 Speaker 1: agency business. Um, we can't see the degree to which 183 00:10:32,679 --> 00:10:36,719 Speaker 1: individual clients are experiencing like for like fee pressure or 184 00:10:36,880 --> 00:10:40,120 Speaker 1: putting like for like fee pressure on their agencies. Um. 185 00:10:40,160 --> 00:10:43,360 Speaker 1: When it comes to traditional media, there is weakness, but 186 00:10:43,520 --> 00:10:46,240 Speaker 1: is the melting ice cube when it comes to TV 187 00:10:46,320 --> 00:10:49,480 Speaker 1: advertising for example, Uh, it's you know, a negative two 188 00:10:49,480 --> 00:10:52,640 Speaker 1: percent number. It's not going away. It remains the least 189 00:10:52,679 --> 00:10:56,600 Speaker 1: batt alternative for the largest advertisers. But UM, you know, 190 00:10:56,640 --> 00:10:59,480 Speaker 1: all this stuff is moving just very gradually. Can we 191 00:10:59,520 --> 00:11:03,400 Speaker 1: get yourself on Facebook? One of only two cells on 192 00:11:03,400 --> 00:11:06,960 Speaker 1: Facebook forty two buys two holds and it's you and 193 00:11:07,040 --> 00:11:09,800 Speaker 1: Simon Baker over at Solk gen Um with two sounds 194 00:11:09,840 --> 00:11:12,840 Speaker 1: on Facebook? What do you see that the bulk of 195 00:11:12,920 --> 00:11:15,680 Speaker 1: the analyst community aren't getting as far as you are 196 00:11:15,720 --> 00:11:19,040 Speaker 1: concern the single biggest issue for Facebook that most people 197 00:11:19,080 --> 00:11:21,400 Speaker 1: do not appreciate. And let me clarify, I'm I'm no 198 00:11:21,559 --> 00:11:25,439 Speaker 1: perma bear on Facebook. I had one of the highest 199 00:11:25,440 --> 00:11:29,080 Speaker 1: price targets on Wall Street at the end of UM. 200 00:11:29,120 --> 00:11:32,360 Speaker 1: But certainly there's a mismanagement issues that have come to 201 00:11:32,440 --> 00:11:36,240 Speaker 1: light over that period of time. The data privacy issue 202 00:11:36,360 --> 00:11:39,400 Speaker 1: is merely a symptom. I think mismanagement of the company 203 00:11:39,640 --> 00:11:43,120 Speaker 1: is a risk, not something we're seeing in the numbers. Clearly, 204 00:11:43,720 --> 00:11:46,920 Speaker 1: the biggest single problem facing Facebook is the limits to 205 00:11:46,960 --> 00:11:48,640 Speaker 1: growth that are available to them. In other words, the 206 00:11:48,679 --> 00:11:54,840 Speaker 1: advertising industry has not expanded faster than it otherwise would have. Doo, 207 00:11:55,000 --> 00:11:57,400 Speaker 1: I don't know my face, I like you know, I 208 00:11:57,440 --> 00:11:59,600 Speaker 1: got a big fine blah blahlah I never I never 209 00:11:59,640 --> 00:12:01,760 Speaker 1: go to never. All due respect, though neither of you 210 00:12:01,840 --> 00:12:05,760 Speaker 1: nor me, none of us matter. The consumer is the advertiser. 211 00:12:05,920 --> 00:12:08,240 Speaker 1: It doesn't matter whether or not we're there. It matters 212 00:12:08,240 --> 00:12:10,240 Speaker 1: whether or not it's the least bat alternative to a 213 00:12:10,240 --> 00:12:13,000 Speaker 1: digital to an advertiser has a digital budget right the 214 00:12:13,040 --> 00:12:15,640 Speaker 1: fact that we're not, When did they change their behavior? 215 00:12:15,800 --> 00:12:18,560 Speaker 1: That's the money question. When a lot of people reduce 216 00:12:18,600 --> 00:12:21,840 Speaker 1: their time on the platform substantially, that would be a 217 00:12:21,880 --> 00:12:24,440 Speaker 1: catalyst for change. But I think the bigger, more pressing 218 00:12:24,480 --> 00:12:26,920 Speaker 1: issue is that there's only so much that they can 219 00:12:27,000 --> 00:12:29,640 Speaker 1: increase their spending, and not a kind. It's only so 220 00:12:29,720 --> 00:12:32,400 Speaker 1: much that you can increase your spending because the total 221 00:12:32,440 --> 00:12:35,800 Speaker 1: pie for advertising is relatively fixed. That is the sync 222 00:12:35,920 --> 00:12:38,480 Speaker 1: biggest thing that most Twitter take out, they finally get 223 00:12:38,520 --> 00:12:42,000 Speaker 1: taken out stocks, better, income statements better. Is this not 224 00:12:42,160 --> 00:12:44,120 Speaker 1: the time they go? I mean it can always be. 225 00:12:44,280 --> 00:12:47,720 Speaker 1: It's always a possibility. Um, certainly, I think risks are 226 00:12:47,720 --> 00:12:50,560 Speaker 1: still to the downside for the stock. I think there's 227 00:12:50,559 --> 00:12:53,400 Speaker 1: a lot of positive things to read through from yesterday's numbers, 228 00:12:53,840 --> 00:12:55,920 Speaker 1: but not right away. I just got an email from 229 00:12:55,920 --> 00:12:59,679 Speaker 1: a listener cave we love the Cavy is listening at 230 00:12:59,679 --> 00:13:01,400 Speaker 1: this morning. She said, well, you could have taken me 231 00:13:01,440 --> 00:13:03,319 Speaker 1: to work. I go, but you're not my daughter. So 232 00:13:03,920 --> 00:13:06,880 Speaker 1: the youngest one emails in and goes, you didn't let 233 00:13:06,880 --> 00:13:10,280 Speaker 1: me come to work because ran fell you is styling? 234 00:13:10,440 --> 00:13:14,240 Speaker 1: So major it is it? Bring your challenge to excuse 235 00:13:14,280 --> 00:13:16,480 Speaker 1: me if you bring your issue, if your royal like 236 00:13:16,520 --> 00:13:19,680 Speaker 1: a royal baby, isn't issue to work. We should have 237 00:13:19,720 --> 00:13:21,960 Speaker 1: brought the dog to work. Can I just say, get 238 00:13:22,000 --> 00:13:24,199 Speaker 1: that bill to come in later? Can we get vet 239 00:13:24,200 --> 00:13:27,880 Speaker 1: better the next hour? Can I just say, Ryan, you 240 00:13:28,120 --> 00:13:32,360 Speaker 1: fell you is styling today at work with her dad? 241 00:13:32,600 --> 00:13:46,839 Speaker 1: This is Bloomberg wonderful to have. I brought a gallo 242 00:13:46,920 --> 00:13:50,480 Speaker 1: with us with wonderful wisdom on fixed income dynamics and 243 00:13:50,520 --> 00:13:54,319 Speaker 1: the interdependencies of what we see not only in Europe 244 00:13:54,320 --> 00:13:58,200 Speaker 1: but in general UM as well. Alberto Gallo, I guess 245 00:13:58,280 --> 00:14:02,360 Speaker 1: we have caution, but we have an unchanged confidence. How 246 00:14:02,400 --> 00:14:06,160 Speaker 1: could we have it both ways? A good morning from London. 247 00:14:06,240 --> 00:14:10,280 Speaker 1: I think what Drug is essentially saying is that a 248 00:14:10,320 --> 00:14:12,760 Speaker 1: bit like us, they have no idea why the data 249 00:14:12,840 --> 00:14:17,920 Speaker 1: has been slowing in the first quarter. So it could 250 00:14:19,240 --> 00:14:21,080 Speaker 1: it could be the weather. It could be easter, could 251 00:14:21,120 --> 00:14:23,240 Speaker 1: be that a lot of people got sick because the 252 00:14:23,240 --> 00:14:26,960 Speaker 1: weather was too cold, or it could be lower demand. Now, 253 00:14:27,640 --> 00:14:30,920 Speaker 1: if if this was just a soft patch, we would 254 00:14:30,960 --> 00:14:34,640 Speaker 1: have had some signs of mean reversion, uh, and we're 255 00:14:34,640 --> 00:14:38,840 Speaker 1: not getting that. And I suspect that given the trade conflict, 256 00:14:39,800 --> 00:14:44,760 Speaker 1: the slower you know, the tougher negotiations with Asia and 257 00:14:45,440 --> 00:14:49,120 Speaker 1: some other economies in the world that are also slowing, 258 00:14:49,120 --> 00:14:51,440 Speaker 1: you know, this may be something a bit more structural 259 00:14:51,800 --> 00:14:55,360 Speaker 1: than just a soft patch. And the question is has 260 00:14:55,440 --> 00:14:59,000 Speaker 1: the ECB missed the train on raising rates? Do they 261 00:14:59,000 --> 00:15:02,120 Speaker 1: have enough time to realize rates in the next twenty 262 00:15:02,120 --> 00:15:05,720 Speaker 1: four months before Mr Druggi leaves. I think they won't 263 00:15:05,760 --> 00:15:07,680 Speaker 1: be able to do a lot. I think they will 264 00:15:07,760 --> 00:15:12,000 Speaker 1: barely manage to normalize the deposit rate to zero. I mean, 265 00:15:12,000 --> 00:15:16,360 Speaker 1: I look, Alberta at the dynamics here, the market speaks. 266 00:15:16,840 --> 00:15:20,320 Speaker 1: You are so good at the interdependencies of the European markets. 267 00:15:20,680 --> 00:15:22,560 Speaker 1: What is the market telling you when you take the 268 00:15:22,640 --> 00:15:26,600 Speaker 1: fixed income market, when you fold in CDs. Is the 269 00:15:26,800 --> 00:15:33,040 Speaker 1: confidence there in the markets on European growth? Europe is growing, 270 00:15:33,400 --> 00:15:36,920 Speaker 1: but um, the marketing fixed income it's looking for places 271 00:15:36,960 --> 00:15:40,400 Speaker 1: to hide. We know that data in the US is strong. 272 00:15:40,520 --> 00:15:43,880 Speaker 1: We saw the jobless claims are you know, one of 273 00:15:43,960 --> 00:15:46,880 Speaker 1: the lowest numbers of the past few years. It's the 274 00:15:46,880 --> 00:15:52,960 Speaker 1: lowest since nineteen I think just came up a bit earlier. Um, 275 00:15:53,000 --> 00:15:55,680 Speaker 1: so do you do? US economy is doing well, the 276 00:15:55,760 --> 00:15:57,840 Speaker 1: FED is going to continue to hike, and fixed income 277 00:15:57,880 --> 00:16:01,480 Speaker 1: investors are looking for um pavens or places too high, 278 00:16:01,560 --> 00:16:03,680 Speaker 1: and Europe is one of them. So what happens is 279 00:16:03,680 --> 00:16:06,280 Speaker 1: if growth in Europe is softening, you know, people are 280 00:16:06,280 --> 00:16:11,960 Speaker 1: buying bones, but also BTPs, Portuguese bombs, Spanish bonds, and 281 00:16:12,120 --> 00:16:15,520 Speaker 1: you know, I think until DCB remains quiet, and I 282 00:16:15,520 --> 00:16:17,880 Speaker 1: think they're going to remain quiet for a bit longer. Okay, 283 00:16:17,880 --> 00:16:19,920 Speaker 1: they're gonna remain quiet. I get all this, and then 284 00:16:19,960 --> 00:16:22,800 Speaker 1: whether you know, the banks are all the same, Alberto, 285 00:16:22,880 --> 00:16:27,800 Speaker 1: there there betwixt by inflation or non inflation, and they're 286 00:16:27,840 --> 00:16:30,440 Speaker 1: all struggling with their crystal ball and what they're gonna 287 00:16:30,440 --> 00:16:33,680 Speaker 1: do with it. The money question is what will be 288 00:16:33,720 --> 00:16:39,600 Speaker 1: the exaggerin in shock that changes this measured pace of 289 00:16:39,640 --> 00:16:42,840 Speaker 1: a measured belief. Is that what we're waiting for is 290 00:16:43,320 --> 00:16:48,200 Speaker 1: some exoggerin is shocked like oil. We could have a 291 00:16:48,240 --> 00:16:50,960 Speaker 1: positive shock to inflation. I agree, there could be you know, 292 00:16:51,080 --> 00:16:55,800 Speaker 1: rising oil and and you know supply constraints or the 293 00:16:55,920 --> 00:16:59,480 Speaker 1: U S economy accelerating. However, I'm starting to worry about 294 00:16:59,520 --> 00:17:02,840 Speaker 1: negative arks too, I know. Such you know, you say, 295 00:17:02,880 --> 00:17:05,679 Speaker 1: I'm more and more about the negative side. But you know, 296 00:17:05,800 --> 00:17:08,200 Speaker 1: geo political risk. If you have a two high spike 297 00:17:08,240 --> 00:17:11,479 Speaker 1: in oil, that can also constrain growth, fell a supply 298 00:17:11,520 --> 00:17:14,240 Speaker 1: shock with oil spike into a D plus, so geo 299 00:17:14,240 --> 00:17:19,359 Speaker 1: political tensions you run Turkey, Russia, UM, and also the 300 00:17:19,600 --> 00:17:22,040 Speaker 1: global imbalances. You know, we focus a lot on growth, 301 00:17:22,080 --> 00:17:25,040 Speaker 1: on the on the changes in growth, on on unemployment changes. 302 00:17:25,359 --> 00:17:28,399 Speaker 1: But if you look at the stock of debt in 303 00:17:28,440 --> 00:17:30,760 Speaker 1: the US, the stock of consumer debt in the UK, 304 00:17:30,880 --> 00:17:33,359 Speaker 1: of the stock of sovereign debt in Europe and Italy. 305 00:17:33,680 --> 00:17:37,159 Speaker 1: So the stock variables are still very bad. What we 306 00:17:37,240 --> 00:17:39,880 Speaker 1: have to think about if something goes wrong like in February, 307 00:17:40,359 --> 00:17:42,959 Speaker 1: you don't have a lot of room, a lot of leeway. 308 00:17:43,080 --> 00:17:46,080 Speaker 1: You know, recovers don't die of old age like um 309 00:17:46,400 --> 00:17:48,879 Speaker 1: miss Ellen used to say. But if you're ninety nine 310 00:17:48,960 --> 00:17:52,080 Speaker 1: years old and someone pushes you over you you know 311 00:17:51,840 --> 00:17:54,920 Speaker 1: you just have a little bit of of of room 312 00:17:55,240 --> 00:17:58,000 Speaker 1: dollar weakness and some euro strength up to two or 313 00:17:58,040 --> 00:18:03,000 Speaker 1: seven pim near the hotel. Yeah, well, I don't I 314 00:18:03,040 --> 00:18:05,800 Speaker 1: just want to know a great question. I just don't understand. 315 00:18:05,880 --> 00:18:08,199 Speaker 1: Why would you buy a tenure Spanish bond at one 316 00:18:08,840 --> 00:18:11,560 Speaker 1: when you can buy a US tenure just under three 317 00:18:11,600 --> 00:18:15,600 Speaker 1: percent and you have a euro? Come on, how did 318 00:18:15,600 --> 00:18:19,720 Speaker 1: that make any sense? If you if you convert euros 319 00:18:19,760 --> 00:18:23,639 Speaker 1: to dollar, you know that you know the dollar yields 320 00:18:23,840 --> 00:18:26,639 Speaker 1: roughly three percent, right, and you were yield zero. But 321 00:18:26,680 --> 00:18:30,600 Speaker 1: if you buy European sovereign bond you converted two dollars, 322 00:18:30,600 --> 00:18:32,480 Speaker 1: you get that three percent on the top of the 323 00:18:32,560 --> 00:18:34,800 Speaker 1: yield that the European bond gives you. So for example, 324 00:18:34,880 --> 00:18:37,639 Speaker 1: b dps ten year an hour at one point seventy four. 325 00:18:38,440 --> 00:18:40,920 Speaker 1: If you buy it and then hedge the euro in 326 00:18:40,960 --> 00:18:45,399 Speaker 1: two dollars, you're getting close to five. Okay, there's that's 327 00:18:45,440 --> 00:18:48,919 Speaker 1: that's attractive. There's a pro anthematics, a bird o piment 328 00:18:49,000 --> 00:18:52,440 Speaker 1: a really good observation, which I believe Mr Drogs Italian. 329 00:18:52,880 --> 00:18:56,600 Speaker 1: Does he have any kind of domestic constituency where he 330 00:18:56,640 --> 00:19:01,480 Speaker 1: would run for prime minister in Italy? So there's been 331 00:19:01,520 --> 00:19:06,080 Speaker 1: this discussion. I don't think he would like to go 332 00:19:06,200 --> 00:19:10,119 Speaker 1: back um at the moment, given the um, you know, 333 00:19:10,640 --> 00:19:13,800 Speaker 1: political confusion. I do think that he would be a 334 00:19:13,800 --> 00:19:17,200 Speaker 1: great candidate for European you know, for for European role, 335 00:19:17,600 --> 00:19:20,040 Speaker 1: uh you know. And I hope as a European cities 336 00:19:20,080 --> 00:19:24,520 Speaker 1: and that he continues um you know, European Institute, maybe 337 00:19:24,760 --> 00:19:27,639 Speaker 1: on the fiscal side, like you know, finance men or 338 00:19:27,720 --> 00:19:31,240 Speaker 1: or European Commission President. Alberta Golos thank you so much 339 00:19:31,280 --> 00:19:33,880 Speaker 1: today as we see the euro surge here coming off 340 00:19:33,880 --> 00:19:36,760 Speaker 1: of dragon comments Mr Glos with Algebras and we greatly 341 00:19:36,800 --> 00:19:53,560 Speaker 1: appreciate his interest. Tom, do you know why you're able 342 00:19:53,600 --> 00:19:55,800 Speaker 1: to buy products let's say they are made in China 343 00:19:55,920 --> 00:19:57,720 Speaker 1: and have them ship to the United states and why 344 00:19:57,720 --> 00:20:00,320 Speaker 1: they's so cost effective for those companies. How has to 345 00:20:00,359 --> 00:20:03,760 Speaker 1: do with postal rates? Has to do with the cost 346 00:20:03,840 --> 00:20:07,040 Speaker 1: of actually making that shipment happen. Here to tell us 347 00:20:07,040 --> 00:20:10,320 Speaker 1: about those kinds of details is Cheryl Bolm. He is 348 00:20:10,640 --> 00:20:14,760 Speaker 1: Cheryl is Bloomberg's own government White House reporter focusing on trade. 349 00:20:14,800 --> 00:20:17,160 Speaker 1: And Cheryl, thanks so much for being with us. Tell 350 00:20:17,240 --> 00:20:19,560 Speaker 1: Tom exactly what this all has to do with the 351 00:20:19,600 --> 00:20:24,840 Speaker 1: U S Postal Service and the cost of delivering shipments 352 00:20:24,960 --> 00:20:28,720 Speaker 1: both domestically and internationally. That's right, This is this is 353 00:20:28,800 --> 00:20:32,160 Speaker 1: not a new issue, but it's certainly one that has 354 00:20:32,280 --> 00:20:38,760 Speaker 1: come up very suddenly, and especially for US manufacturers. UM, 355 00:20:38,840 --> 00:20:43,080 Speaker 1: there's been increased focus on the US Postal Service. The 356 00:20:43,119 --> 00:20:48,440 Speaker 1: President has been tweeting about it in order to reform UM. 357 00:20:48,480 --> 00:20:53,920 Speaker 1: But really, what what manufacturers, the US manufacturers have discovered 358 00:20:54,560 --> 00:20:57,359 Speaker 1: is that, especially with the rise of e commerce and 359 00:20:57,359 --> 00:21:01,280 Speaker 1: the ability of consumers to just go on line order 360 00:21:01,520 --> 00:21:06,360 Speaker 1: whatever toy, whatever products they want, UM that uh, these 361 00:21:06,359 --> 00:21:09,320 Speaker 1: a lot of these products are being shipped from China 362 00:21:09,400 --> 00:21:14,040 Speaker 1: for free. And why is that? Explaining the detail what happens? 363 00:21:14,320 --> 00:21:17,879 Speaker 1: Tom King goes online, he wants another bow tie and 364 00:21:18,000 --> 00:21:21,880 Speaker 1: it turns out that it's going to be shipped from Shanghai. 365 00:21:22,080 --> 00:21:25,240 Speaker 1: Why is it less expensive to get it from Shanghai 366 00:21:25,280 --> 00:21:29,080 Speaker 1: than it is from let's say, Chapel Hill from across 367 00:21:29,119 --> 00:21:32,000 Speaker 1: the street. That's right, um. And so this goes back 368 00:21:32,680 --> 00:21:37,800 Speaker 1: to UM, a very very old organization called the Universal 369 00:21:38,440 --> 00:21:43,640 Speaker 1: Um Postal Union, which is headquartered in Switzerland and it's 370 00:21:43,720 --> 00:21:46,800 Speaker 1: part of the United Nations now it's a u N 371 00:21:46,840 --> 00:21:51,040 Speaker 1: group and they get together every four years and they 372 00:21:51,040 --> 00:21:54,600 Speaker 1: set postal rates for the delivery of of foreign mail. 373 00:21:55,080 --> 00:21:58,800 Speaker 1: And so uh what happens is is China or any 374 00:21:58,800 --> 00:22:03,800 Speaker 1: other country their product um to US border and then 375 00:22:04,200 --> 00:22:08,560 Speaker 1: the US Postal Service then takes that and delivers it 376 00:22:08,640 --> 00:22:12,359 Speaker 1: to the to the final destination. They are paid that 377 00:22:12,560 --> 00:22:17,119 Speaker 1: US Postal Services paid a See, it's called a terminal do. Uh. 378 00:22:17,160 --> 00:22:21,919 Speaker 1: The terminal do system is set by this Universal Postal 379 00:22:22,040 --> 00:22:27,959 Speaker 1: Union and basically different countries are put into different categories 380 00:22:28,680 --> 00:22:32,000 Speaker 1: really based on how developed they are, China being one 381 00:22:32,000 --> 00:22:36,080 Speaker 1: of the countries that is considered developing and they get 382 00:22:36,080 --> 00:22:38,600 Speaker 1: a very very low rate. So how much does it 383 00:22:38,640 --> 00:22:41,119 Speaker 1: cost to ship to ship the bow tie from China 384 00:22:41,240 --> 00:22:44,760 Speaker 1: versus shipping it from across the street. Well, there there 385 00:22:44,760 --> 00:22:47,879 Speaker 1: are a couple of factors in play here. There's concerned 386 00:22:47,880 --> 00:22:52,800 Speaker 1: by manufacturers that China itself, China Post is subsidizing the 387 00:22:53,400 --> 00:22:58,040 Speaker 1: the first leg getting it from China to the United States. Um. 388 00:22:58,119 --> 00:23:00,600 Speaker 1: But really one of one of the Manu factors I 389 00:23:00,680 --> 00:23:04,400 Speaker 1: talked to said that for him, he's based in New 390 00:23:04,480 --> 00:23:07,840 Speaker 1: Jersey and for him to ship a package to California 391 00:23:07,880 --> 00:23:13,160 Speaker 1: would cost about eighteen dollars, whereas his Chinese counterpart would 392 00:23:13,200 --> 00:23:16,640 Speaker 1: pay about three dollars and seventy cents for that same 393 00:23:16,680 --> 00:23:22,880 Speaker 1: package o bucks versus under four bucks. That's right. That's 394 00:23:22,920 --> 00:23:27,720 Speaker 1: that's has been his experience, and he pays to get 395 00:23:27,800 --> 00:23:32,040 Speaker 1: the package across the Pacific Ocean that would be the 396 00:23:32,359 --> 00:23:37,080 Speaker 1: foreign post. And so that in this case the China Post. Um, 397 00:23:37,119 --> 00:23:42,080 Speaker 1: there's concern that the Chinese are subsidizing. I mean, I 398 00:23:42,080 --> 00:23:44,320 Speaker 1: mean to explain this year on the time we've got left, 399 00:23:44,320 --> 00:23:47,920 Speaker 1: and this is critical. It's just a classic linear sequence problem. 400 00:23:48,080 --> 00:23:54,000 Speaker 1: The bottom line is possibly the Chinese postal system is 401 00:23:54,080 --> 00:23:58,679 Speaker 1: subsidized by the government. So the transfer from Shanghai to 402 00:23:58,800 --> 00:24:03,240 Speaker 1: Long Beach is dirt cheap, right, That's that's correct. And 403 00:24:03,280 --> 00:24:05,879 Speaker 1: then when we pick it up at Long Beach or 404 00:24:06,000 --> 00:24:12,520 Speaker 1: Irvine or wherever. It's essentially an unsubsidized postal event in 405 00:24:12,560 --> 00:24:15,280 Speaker 1: the United States of America. That's right, The U S 406 00:24:15,320 --> 00:24:18,639 Speaker 1: Postal Services is losing a lot of money. What do 407 00:24:18,680 --> 00:24:21,200 Speaker 1: we do about this, because we're not going to tell 408 00:24:21,240 --> 00:24:23,679 Speaker 1: the Chinese what to do. No, we can't. We we 409 00:24:23,720 --> 00:24:26,560 Speaker 1: have no control of the Chinese UM. But there is 410 00:24:26,680 --> 00:24:31,240 Speaker 1: legislation that has been introduced um in the House by 411 00:24:31,760 --> 00:24:34,840 Speaker 1: Representative Kenny Marshawn and in the Senate by Senator Bill 412 00:24:34,920 --> 00:24:40,359 Speaker 1: kat to have the State Department eliminate that subsidy and 413 00:24:40,440 --> 00:24:44,640 Speaker 1: bring up the rates UH for for the internal delivery 414 00:24:44,680 --> 00:24:47,320 Speaker 1: and within the United States at the same rates that 415 00:24:47,400 --> 00:24:53,240 Speaker 1: the US Postal Service charges domestic UM US users mailers. 416 00:24:53,280 --> 00:24:55,880 Speaker 1: So there might be some remedy to this. There might 417 00:24:55,920 --> 00:24:59,080 Speaker 1: be some remedy. It's going to take an international agreement though, 418 00:24:59,080 --> 00:25:03,399 Speaker 1: and it involves the Secretary of State that negotiates on 419 00:25:04,000 --> 00:25:06,120 Speaker 1: the happy United But you know, we don't have time 420 00:25:06,119 --> 00:25:10,840 Speaker 1: for the bottom line is the foreign the foreign postal 421 00:25:10,880 --> 00:25:15,399 Speaker 1: services are totally subsidence logistic subsidy. There's not this delusion 422 00:25:15,440 --> 00:25:18,760 Speaker 1: of profitability that you have in the United States. Cheryl, 423 00:25:18,840 --> 00:25:22,240 Speaker 1: that was fabulous. Thank you Cheryl Bowlin. Greatly appreciated with 424 00:25:22,280 --> 00:25:39,359 Speaker 1: Bloomberg government today. Really that's not James Albert Tyne. Thrilled 425 00:25:39,400 --> 00:25:41,520 Speaker 1: to have him with us with consumer Edge and this 426 00:25:41,560 --> 00:25:43,439 Speaker 1: is on the auto business. But we wanted to go 427 00:25:43,560 --> 00:25:47,160 Speaker 1: further as we're always striving to do at Bloomberg Surveillance. 428 00:25:47,240 --> 00:25:48,960 Speaker 1: Is you know, one of the great things in America 429 00:25:49,560 --> 00:25:53,120 Speaker 1: is take your daughter, take your sons, and even worse, 430 00:25:53,240 --> 00:25:56,919 Speaker 1: pim take your twins to work. Take your twin. We 431 00:25:56,960 --> 00:26:00,679 Speaker 1: have some twins. Mom is like, yeah, free because e 432 00:26:00,680 --> 00:26:03,600 Speaker 1: free day. Dad brought the twins and McDonald and Liam 433 00:26:03,680 --> 00:26:07,119 Speaker 1: comes with us right now. You're out of Rumson, New Jersey, 434 00:26:07,200 --> 00:26:10,960 Speaker 1: and your parents have an suv, right, big fancy car 435 00:26:11,320 --> 00:26:13,840 Speaker 1: with lots of coffee cup holders in them. What do 436 00:26:13,880 --> 00:26:16,679 Speaker 1: you put in the coffee cup holders in an suv? 437 00:26:16,840 --> 00:26:19,600 Speaker 1: What do you put in there? Liam? Chocolate? Hot chocolate 438 00:26:19,600 --> 00:26:21,200 Speaker 1: would be very good. What have you got any others 439 00:26:21,240 --> 00:26:25,119 Speaker 1: you put in? Water? Do you like the water? Is 440 00:26:25,119 --> 00:26:27,359 Speaker 1: it like Mom pours a cup of water or like 441 00:26:27,400 --> 00:26:33,200 Speaker 1: fits the bottle waters perfectly? Um? Probably? Okay? One question 442 00:26:33,200 --> 00:26:36,520 Speaker 1: before you go to Mr Alberti Penguins Capitals. Penguins look 443 00:26:36,560 --> 00:26:41,320 Speaker 1: good right, yeah they do. But the Capitals, you know, 444 00:26:41,359 --> 00:26:45,159 Speaker 1: they're pretty good my second team, So it's tough for you. 445 00:26:45,240 --> 00:26:48,200 Speaker 1: This series is gonna be tough. Okay, to the UN's brothers, 446 00:26:48,200 --> 00:26:50,280 Speaker 1: thank you so much for coming in and giving us 447 00:26:50,359 --> 00:26:53,600 Speaker 1: auto perspective here, and James, that goes to the lead 448 00:26:53,640 --> 00:26:55,640 Speaker 1: of your note, which is cars are dead. I don't 449 00:26:55,640 --> 00:26:57,760 Speaker 1: buy it. Why are Why are cars dead? Is it 450 00:26:57,840 --> 00:27:01,440 Speaker 1: because of hot chocolate in the coffee cup holders? Well, first, 451 00:27:01,440 --> 00:27:03,680 Speaker 1: thanks for having me, and thank you because the Capitals 452 00:27:03,680 --> 00:27:08,520 Speaker 1: are my favorite team killing this is fantastic. Let me 453 00:27:08,560 --> 00:27:11,639 Speaker 1: explain yourself for a global audience and for Abbie Joseph 454 00:27:11,720 --> 00:27:17,440 Speaker 1: Coney goldban Sex. The Penguins always win, continue understood, and 455 00:27:17,600 --> 00:27:19,480 Speaker 1: and I've got three children, and so what I find 456 00:27:19,480 --> 00:27:22,240 Speaker 1: in the cup holders of their cars, it's always pretty interesting. 457 00:27:22,280 --> 00:27:24,080 Speaker 1: But I think that you take cars are dead. Well, 458 00:27:24,280 --> 00:27:27,119 Speaker 1: you just asked our our friend there and he mentioned 459 00:27:27,160 --> 00:27:29,600 Speaker 1: in SUV. So you know, I think the headpoints to 460 00:27:29,760 --> 00:27:32,800 Speaker 1: exactly the UH the crux of the story here. Segments 461 00:27:33,040 --> 00:27:36,280 Speaker 1: UM are shifting. You can get the same fuel economy 462 00:27:36,280 --> 00:27:39,240 Speaker 1: and a crossover utility vehicle now that you can UH 463 00:27:39,240 --> 00:27:41,600 Speaker 1: in a mid size Sadan and I think consumers are 464 00:27:41,600 --> 00:27:43,639 Speaker 1: waking to that fact that for a similar price and 465 00:27:43,720 --> 00:27:46,560 Speaker 1: similar fuel economy, the tradeoffs are not the same UM 466 00:27:46,600 --> 00:27:49,359 Speaker 1: as they had been prior cycles. So I I think 467 00:27:49,400 --> 00:27:51,959 Speaker 1: that you know, forward pulling back into I believe they 468 00:27:52,000 --> 00:27:55,600 Speaker 1: said to car segments looking into the future, specialty cars 469 00:27:55,640 --> 00:27:58,639 Speaker 1: like the Mustang, and I think, very good selling market 470 00:27:58,640 --> 00:28:00,840 Speaker 1: share for them in the focus. UM. You know, that's 471 00:28:00,880 --> 00:28:02,800 Speaker 1: that's a smart thing to do. GM doing some of 472 00:28:02,840 --> 00:28:05,080 Speaker 1: the same. So I like that domestic O e M 473 00:28:05,160 --> 00:28:07,840 Speaker 1: s because their mix is generally more lever to c 474 00:28:08,040 --> 00:28:10,399 Speaker 1: u vs, SUVs and trucks. That's where the margin is. 475 00:28:10,400 --> 00:28:13,399 Speaker 1: That's where consumers are going, and that's where they already are. James, 476 00:28:13,480 --> 00:28:15,800 Speaker 1: is that where the consumer is now? How does anybody 477 00:28:15,800 --> 00:28:17,360 Speaker 1: know where the consumer is going to be in two 478 00:28:17,400 --> 00:28:21,680 Speaker 1: to three years? Uh, that's a very difficult question. I agree, 479 00:28:21,760 --> 00:28:24,000 Speaker 1: But I think look at the end of the day, 480 00:28:24,000 --> 00:28:27,760 Speaker 1: we're monthly payment driven, UH, at least in the United States. 481 00:28:27,840 --> 00:28:31,160 Speaker 1: And I think as long as credit availability remains um 482 00:28:31,560 --> 00:28:35,480 Speaker 1: through widely available across the spectrum and leasing and residuals 483 00:28:35,480 --> 00:28:37,680 Speaker 1: hold up, UM, I think you could you know, these 484 00:28:37,720 --> 00:28:39,280 Speaker 1: these O E M s are going to push more 485 00:28:39,360 --> 00:28:42,680 Speaker 1: utility vehicles and UH and consumers will justify them because 486 00:28:42,680 --> 00:28:44,760 Speaker 1: the payments won't get out of reach. So I think 487 00:28:44,760 --> 00:28:47,160 Speaker 1: those two things together kind of answer your question, where's 488 00:28:47,200 --> 00:28:50,880 Speaker 1: your research on safety? What I see time and time 489 00:28:50,920 --> 00:28:53,760 Speaker 1: again is the guys going the shop, and even if 490 00:28:53,800 --> 00:28:56,280 Speaker 1: they don't mention in the store, they'll say, I want 491 00:28:56,280 --> 00:28:58,480 Speaker 1: more weight to the car to protect the family. Isn't 492 00:28:58,520 --> 00:29:03,080 Speaker 1: that still number one for so many people? Oh? Absolutely, 493 00:29:03,160 --> 00:29:05,520 Speaker 1: I think safety ratings are critical, and I think you 494 00:29:05,600 --> 00:29:08,120 Speaker 1: if you want to juxtapose that with recalls, it's a 495 00:29:08,280 --> 00:29:11,120 Speaker 1: very interesting debate. Right now. We've seen you know, record 496 00:29:11,200 --> 00:29:13,760 Speaker 1: numbers of vehicle recalls out there. On the one hand, 497 00:29:13,840 --> 00:29:16,360 Speaker 1: you might say that that's o e ms that are 498 00:29:16,720 --> 00:29:19,920 Speaker 1: much more focused on continuing to test the structure of 499 00:29:19,920 --> 00:29:22,840 Speaker 1: their vehicles, the the safety of their vehicles even after 500 00:29:22,880 --> 00:29:24,760 Speaker 1: they've sold it. They're they're kind of buying into the 501 00:29:24,840 --> 00:29:27,080 Speaker 1: long term safety, you know. On the other hand, you 502 00:29:27,080 --> 00:29:29,560 Speaker 1: could point it maybe there's you know, bigger quality concerns. 503 00:29:29,560 --> 00:29:32,120 Speaker 1: Maybe they're pushing volume too quickly, you know. I think, 504 00:29:32,320 --> 00:29:34,320 Speaker 1: you know the reality is we're going to get a 505 00:29:34,320 --> 00:29:37,000 Speaker 1: lot more sensors, a lot more air bags, a lot 506 00:29:37,000 --> 00:29:39,800 Speaker 1: more equipment on vehicles in the next kind of five 507 00:29:39,840 --> 00:29:42,920 Speaker 1: to ten year period as we're transitioning into more of, 508 00:29:43,000 --> 00:29:45,640 Speaker 1: if you will, an autonomous world. Now, I don't necessarily 509 00:29:45,640 --> 00:29:48,440 Speaker 1: think we're going to go fully a v UM, but 510 00:29:48,480 --> 00:29:50,520 Speaker 1: you know, I do think, UM, that's where a lot 511 00:29:50,520 --> 00:29:52,600 Speaker 1: of the strategy is focused. It's this sort of semi 512 00:29:52,640 --> 00:29:56,200 Speaker 1: autonomous functions. So safety is first and foremost on the 513 00:29:56,240 --> 00:29:58,080 Speaker 1: minds of O E M S. And I think that's 514 00:29:58,120 --> 00:30:00,600 Speaker 1: exactly right. That's the great way to have market share 515 00:30:00,640 --> 00:30:03,600 Speaker 1: because consumers are obviously focused on that as well. James, 516 00:30:03,600 --> 00:30:06,360 Speaker 1: are there any estimates for how much a fully automated 517 00:30:06,480 --> 00:30:10,880 Speaker 1: vehicle is going to cost? Uh? Nothing. I would say 518 00:30:10,920 --> 00:30:12,960 Speaker 1: that's credible at this point in terms of cost to 519 00:30:13,000 --> 00:30:15,040 Speaker 1: the consumer. I mean, we would say that some of 520 00:30:15,080 --> 00:30:17,760 Speaker 1: these test vehicles are well into the hundreds of thousands 521 00:30:17,760 --> 00:30:20,160 Speaker 1: of dollars you know cost to the O E M S. 522 00:30:20,200 --> 00:30:22,480 Speaker 1: But it's all about scale, and I think to get 523 00:30:22,520 --> 00:30:24,920 Speaker 1: you to answer your question, we'd have to figure out, Okay, 524 00:30:25,240 --> 00:30:28,040 Speaker 1: you know, how is this technology going to ramp over 525 00:30:28,080 --> 00:30:30,480 Speaker 1: time and how is it going to UM start to 526 00:30:30,480 --> 00:30:33,520 Speaker 1: penetrate sort of the the the commercial market UM, And 527 00:30:33,560 --> 00:30:35,040 Speaker 1: so that you know we're going to hear more of 528 00:30:35,080 --> 00:30:37,640 Speaker 1: that in a few minutes here from GM in terms 529 00:30:37,640 --> 00:30:39,760 Speaker 1: of the rollout of the Cruise Automation A v S 530 00:30:39,800 --> 00:30:42,560 Speaker 1: and Lower Manhattan later this year and into next year. 531 00:30:42,600 --> 00:30:44,640 Speaker 1: And that's going to drive the answer to your question 532 00:30:44,680 --> 00:30:46,320 Speaker 1: more than anything else. We gotta eat your back, hunt. 533 00:30:46,360 --> 00:30:48,280 Speaker 1: I really want to talk about the Ford Motor Company, 534 00:30:48,360 --> 00:30:51,400 Speaker 1: the Ford Motors short after Molalley and some of the 535 00:30:51,480 --> 00:30:54,440 Speaker 1: chances there. Jamie Alberton, thank you so much, greatly appreciate it. 536 00:30:55,160 --> 00:30:59,040 Speaker 1: Consumer Edge Research, UM, this one really really appreciate it. 537 00:31:00,080 --> 00:31:07,200 Speaker 1: M Thanks for listening to the Bloomberg Surveillance podcast. Subscribe 538 00:31:07,320 --> 00:31:12,120 Speaker 1: and listen to interviews on Apple Podcasts, SoundCloud, or whichever 539 00:31:12,280 --> 00:31:16,320 Speaker 1: podcast platform you prefer. I'm on Twitter at Tom Keene 540 00:31:16,800 --> 00:31:20,480 Speaker 1: before the podcast. You can always catch us worldwide. I'm 541 00:31:20,480 --> 00:31:21,400 Speaker 1: Bloomberg Radio.