WEBVTT - Surveillance: Still More Work To Do, GM's Barra Says 0:00:05.720 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.120 Bloomberg dot Com, and of course on the Bloomberg. Yeah. 0:00:34.760 --> 0:00:36.880 John Riding dropping by the studio here in New York 0:00:36.960 --> 0:00:41.200 RDQ in Economics, chief economist and founding partner. So, John, 0:00:41.200 --> 0:00:43.920 that hasn't happened yet. It's the assumption of many, many 0:00:43.920 --> 0:00:47.160 individuals that follow the politics much closer than you and I. 0:00:47.159 --> 0:00:49.959 I'm just trying to understand what would happen if that 0:00:50.000 --> 0:00:53.880 headline crossed the Bloomberg. How would the market respond to 0:00:53.960 --> 0:00:58.400 that scenario. I don't think there's necessarily much that's gonna 0:00:58.960 --> 0:01:00.680 it's going to have to respond on too at this point, 0:01:00.680 --> 0:01:03.160 because that doesn't immediately start building the wall, doesn't do 0:01:03.280 --> 0:01:06.399 anything other than this will eventually get kicked to the 0:01:06.440 --> 0:01:09.800 Supreme Court, and I think there will be you know, 0:01:09.840 --> 0:01:12.360 however long that takes to play out, this may become 0:01:12.720 --> 0:01:16.000 a mechanism by which both sides get a win. Because 0:01:16.000 --> 0:01:18.520 if he is declared, if the President declares the national 0:01:18.560 --> 0:01:20.920 state of emergency. He can do it, then there's no 0:01:21.000 --> 0:01:26.200 need to keep the government closed. So presumably, uh, that 0:01:26.240 --> 0:01:29.840 would then pave the way to passing some kind of 0:01:29.880 --> 0:01:33.559 budget agreements getting the departments reopened. But by the same token, 0:01:33.600 --> 0:01:36.680 the wall's not going to be begun to be built 0:01:36.720 --> 0:01:39.600 because there has there will have to be a test. Well, 0:01:39.640 --> 0:01:42.480 it's the Congress's job to determine the budget, so the 0:01:42.560 --> 0:01:46.160 president's diverting funds. Can he legally do it? He says 0:01:46.200 --> 0:01:48.920 he can, Congress says he can't. The Supreme Court has 0:01:48.960 --> 0:01:52.000 to decide. Were used to volatility in Washington, d C. 0:01:52.160 --> 0:01:55.080 We're used to gridlock in the nation's capital. Is this 0:01:55.160 --> 0:01:57.880 different at all to what we've experienced in previous administrations 0:01:57.920 --> 0:02:00.680 for market participants where they look at this any differently 0:02:00.920 --> 0:02:03.800 to these situations we've seen in years gone by, No, 0:02:04.160 --> 0:02:07.920 and government shutdowns have never been a really big thing 0:02:08.040 --> 0:02:11.040 for the market. The question is what is the policy 0:02:11.440 --> 0:02:14.320 that needs to be resolved that drove the government to 0:02:14.480 --> 0:02:16.200 a shut down. In the past, it might have been 0:02:16.480 --> 0:02:21.240 a fiscal cliff relating to tax increases. Um this is 0:02:22.040 --> 0:02:26.880 in a sense a much smaller economic issue, So you know, 0:02:27.080 --> 0:02:31.040 you know, I I think that Uh, after a while, 0:02:31.400 --> 0:02:34.080 maybe there's acumic damage. People maybe talk about a tenth 0:02:34.160 --> 0:02:38.640 to prevent sent off GDP. We're not talking huge numbers. 0:02:38.680 --> 0:02:43.760 It's much more about executive privilege and politics, I think, 0:02:43.800 --> 0:02:47.720 than it is about economics. We have had economic growth. 0:02:48.320 --> 0:02:51.840 You predicted this, You've always been an optimist in the 0:02:51.840 --> 0:02:56.360 American experiment. Are we having these tensions because all the 0:02:56.440 --> 0:03:02.320 growth went to too few people? Well, look, just we 0:03:02.480 --> 0:03:07.640 cannot deny that distributional considerations are now very important politically. 0:03:08.320 --> 0:03:12.400 Um and that has been a theme in economics and 0:03:12.520 --> 0:03:15.320 a theme in politics. But I think but the question 0:03:15.919 --> 0:03:20.280 in the debts of the financial crisis and the Great Recession, 0:03:20.280 --> 0:03:23.960 if someone said, well, the economy is going to enjoy 0:03:24.120 --> 0:03:27.920 the longest expansion in US economic history coming out of this, 0:03:28.440 --> 0:03:33.000 we would have taken growth over where we were. So, 0:03:33.600 --> 0:03:37.600 you know, the economy has delivered the lowest unemployment rate 0:03:37.680 --> 0:03:41.280 now in fifty years. More people are coming back to 0:03:41.320 --> 0:03:44.640 the labor for US. Inflation is relatively low. You know, 0:03:44.720 --> 0:03:49.520 those compare the situation to Europe, and the US is 0:03:49.560 --> 0:03:53.800 in a far, far stronger place despite all of the 0:03:53.880 --> 0:03:57.560 dysfunctionality inside of the Beltway. And John I would totally 0:03:57.600 --> 0:03:59.560 agree with that as well. Looking at the economic data 0:03:59.560 --> 0:04:01.160 at the moment, there's been a big worry about what 0:04:01.200 --> 0:04:03.080 would happen with the global slow down and how it 0:04:03.080 --> 0:04:06.320 would spill over into the U S economy. Initial jobless claims, 0:04:06.320 --> 0:04:09.720 that's a real time indicator of this economy still really 0:04:09.840 --> 0:04:13.400 really low, multi decade lows at the moment. John, any 0:04:13.440 --> 0:04:16.800 sign of weakness anywhere that you're concerned about at the moment, well, 0:04:16.960 --> 0:04:21.159 there is weakness in areas like housing, for example, and 0:04:21.240 --> 0:04:23.720 that's one area where the government shut down may exacerbate 0:04:23.760 --> 0:04:26.960 the weakness because of the role of the government in 0:04:27.880 --> 0:04:32.000 guaranteeing mortgages and so there maybe you know mortgage applications 0:04:32.040 --> 0:04:35.479 that get delayed and some disruption there. But the point 0:04:35.560 --> 0:04:38.159 is an economy at full employment can't keep crying on 0:04:38.200 --> 0:04:44.000 all fronts. It's mathematically impossible. So interest rates are the 0:04:44.160 --> 0:04:48.560 mechanism that reallocates resources within the economy. So the Fed 0:04:49.080 --> 0:04:54.120 until recently has been on a path of steadily raising 0:04:54.160 --> 0:04:56.840 interest rates. When you raise interest rich, you're supposed to 0:04:56.920 --> 0:05:00.240 tighten financial conditions. When you type financial conditions, some hearts 0:05:00.279 --> 0:05:02.719 the economy are supposed to slow. There should be no 0:05:02.920 --> 0:05:05.479 surprises here, but John, for the first few years at 0:05:05.480 --> 0:05:09.920 the tightening cycle, financial conditions actually loosened exactly. Gold prices 0:05:09.920 --> 0:05:12.880 are hired. And when the Fed first started raising interest rates, 0:05:12.920 --> 0:05:16.080 the dollar really hasn't done very much. The equity markets 0:05:16.120 --> 0:05:20.039 a lot higher. And again, people between where we were 0:05:20.440 --> 0:05:22.880 early October and where we got to wunt Christmas Eve, 0:05:22.960 --> 0:05:25.960 the drop in the equity market to a level that 0:05:26.040 --> 0:05:28.640 none of us would have imagined going back ten years ago, 0:05:28.760 --> 0:05:32.359 that the economy could have gotten to in this timeframe. 0:05:32.440 --> 0:05:34.040 So here's the good news. The committee at the Federal 0:05:34.040 --> 0:05:37.120 Reserve seemed to be on the same page. Patients wait 0:05:37.120 --> 0:05:39.360 and see, and I think the inflation data gives them 0:05:39.360 --> 0:05:42.560 the capacity to do that. Inflation expectations have come in CPR. 0:05:42.640 --> 0:05:44.960 We get a little bit later, there is an urgency 0:05:45.000 --> 0:05:47.480 to raise interest rates. There is some space to be patient. 0:05:47.760 --> 0:05:51.800 The confusion is around the chairman, and the chairman continues 0:05:51.839 --> 0:05:54.560 to confuse and bewilder everyone in this market. I'm speaking 0:05:54.560 --> 0:05:56.480 for a lot of people I know. I'll speak for myself. 0:05:56.520 --> 0:05:59.160 It's confusing me. In October said rates are a long 0:05:59.200 --> 0:06:02.480 way from neutral. In November, he said he emphasized the 0:06:02.640 --> 0:06:05.320 estimate the range of estimates for the neutral rate. He 0:06:05.360 --> 0:06:07.920 walked it back December, he talked about the balance sheet 0:06:07.960 --> 0:06:10.440 runoff on autopilot, followed it up a couple of weeks 0:06:10.520 --> 0:06:13.840 later by pledging flexibility and patients, and then he speaks 0:06:13.920 --> 0:06:16.159 yesterday and says the balance sheet is going to be 0:06:16.200 --> 0:06:20.160 substantially smaller. John, Why is the chairman seemingly all over 0:06:20.200 --> 0:06:24.400 the place? Um? So, you know, you got on a 0:06:24.440 --> 0:06:27.520 bicycle for the first time, takes a little time before 0:06:27.560 --> 0:06:30.320 you can take the training wheels off. Um. I think 0:06:30.320 --> 0:06:35.200 that if you look through what he has said, and 0:06:35.400 --> 0:06:40.719 you take out the early October fireside chat with Judy 0:06:40.760 --> 0:06:44.640 Woodruff and that that long way from neutral. I think 0:06:44.720 --> 0:06:47.680 he was trying to correct the impression for when the 0:06:47.720 --> 0:06:50.880 FED took away some language in the FED in in 0:06:50.920 --> 0:06:53.799 the statement that said, well is the FED no longer accommodative? 0:06:54.120 --> 0:06:56.160 Do they see themselves at neutral? And no, No, we're 0:06:56.160 --> 0:06:59.640 a long way from neutral. I think the message that 0:06:59.680 --> 0:07:01.520 he's on it conveys the following. I think he did 0:07:01.560 --> 0:07:04.320 a reasonably good job in his last two appearances doing it. 0:07:05.000 --> 0:07:07.000 We had a view the economy is going to grow 0:07:07.000 --> 0:07:10.360 fairly stronger this year. Markets have created a range of 0:07:10.400 --> 0:07:14.760 uncertainty around that view. You said it right, inflations reasonably low. 0:07:15.000 --> 0:07:17.800 So now the Fed can afford to be patient. So 0:07:17.880 --> 0:07:20.720 they they're gonna say, we've race rates quite a bit. 0:07:20.840 --> 0:07:24.440 We're gonna sit aside and see which scenario when folds. 0:07:24.760 --> 0:07:27.480 Do you know that I've become a girl magnet here 0:07:27.520 --> 0:07:30.200 at Bloomberg because I have a Preston North End, Jersey 0:07:30.560 --> 0:07:33.960 over my chair women combined, they just stare at it 0:07:34.040 --> 0:07:38.600 in awe, Preston North. Then what happened with is it? Doncaster? 0:07:38.680 --> 0:07:42.240 How do you pronounce it? Doncaster? Doncaster? What? How do 0:07:42.320 --> 0:07:45.000 you lose to a team like that? I mean yet 0:07:45.120 --> 0:07:50.640 the post I get that, But how did this happen? Injuries? Injuries? 0:07:53.200 --> 0:07:55.240 I did not. I just want to point this out 0:07:55.320 --> 0:07:57.160 to the listeners out there who were tired of hearing 0:07:57.200 --> 0:08:02.080 about my hometown love of Preston North Then no, um, 0:08:02.560 --> 0:08:06.720 but explain, can you explain to our listeners what you're 0:08:06.720 --> 0:08:11.520 talking about? Talking about? Cup? The f A cup is 0:08:11.560 --> 0:08:13.760 different than Premier Lely against where the little guy can 0:08:13.760 --> 0:08:15.880 beat the big guy. Right, yeah, So what happens does 0:08:15.880 --> 0:08:18.960 it take the story for what happens this weekend in 0:08:19.000 --> 0:08:21.240 the f A Cup. I'm not sure who plays? Isn't 0:08:21.240 --> 0:08:23.280 it the league? The league games are back this weekend? Right, 0:08:23.560 --> 0:08:25.440 so the f A Cup round are done, tomp So 0:08:25.480 --> 0:08:29.960 the league games restart this weekend as far as I know. Okay, 0:08:30.280 --> 0:08:33.120 so like they're back to like the normal TV football. Yes, 0:08:33.160 --> 0:08:36.920 so tomorrow, Preston, I think play Swansea. Is that right? 0:08:37.559 --> 0:08:41.839 We played back in the league tomorrow. Of course, Doncaster 0:08:41.920 --> 0:08:47.280 Rovers was the little team of the knocked out the 0:08:47.280 --> 0:08:51.880 bigger t can I just explain some of our listeners 0:08:51.640 --> 0:08:53.800 here and this is like, this is like good. UK. 0:08:54.000 --> 0:08:56.760 F A Cup is a is a football cup that 0:08:56.760 --> 0:08:59.959 goes back to the eighteen hundreds which pretty much any 0:09:00.040 --> 0:09:03.240 football team in the UK can participate in. It's cool, 0:09:03.400 --> 0:09:05.920 It's very cool. So like minor league baseball could play 0:09:05.960 --> 0:09:08.760 the major leagues and basically if the minor league team 0:09:08.800 --> 0:09:11.920 got far enough, they could the Yankees and got to here. 0:09:12.160 --> 0:09:14.360 There we go. See I pulled it back to America. 0:09:14.480 --> 0:09:19.720 Rich congratulations, John Ridy, Thank you, John Ridy, thank you 0:09:19.800 --> 0:09:22.200 so much, but thank you for the Preston Northern Jersey. 0:09:22.240 --> 0:09:25.360 I just it just sits there on in Montreal Canadians 0:09:25.400 --> 0:09:42.600 Jersey and closes this is a joy. We have Peter 0:09:42.679 --> 0:09:46.120 Hooper on a Friday with Deutsche Bank. He's gonna publish 0:09:46.160 --> 0:09:48.240 this weekend. He's got a team of people towards En 0:09:48.320 --> 0:09:52.560 Slock and the others, Matthew Lozetti killing it with smart research, 0:09:52.960 --> 0:09:56.000 young losing. What's it like, Peter Hooper to bring someone 0:09:56.080 --> 0:10:02.440 like Matthew Lozetti on. I mean it keeps you young, right? Uh? True, joy, 0:10:02.559 --> 0:10:05.160 I mean I would have retired years ago if it 0:10:05.240 --> 0:10:08.160 wasn't for people like uh, Matt and Torson to be 0:10:08.200 --> 0:10:13.160 working with wonderful guys, really right, fantastic research. They do, 0:10:13.240 --> 0:10:15.680 detailed research. And again to the x y Z chart, 0:10:15.720 --> 0:10:18.400 you've gotten your new research note, which is way advanced stuff. 0:10:18.400 --> 0:10:21.240 And we don't do x y z charts Peter Hooper 0:10:21.280 --> 0:10:23.760 on radio, it doesn't work. Wait, charts don't work on 0:10:23.800 --> 0:10:27.640 a radio period. But but Peter Hooper, again, it comes 0:10:27.679 --> 0:10:32.240 down to model building and our confidence in what we're doing. 0:10:32.360 --> 0:10:35.439 Let's start with the Phillips curve theory. Uh in in 0:10:35.480 --> 0:10:39.000 all out of out of your Princeton, your Michigan as well. 0:10:39.040 --> 0:10:43.679 Are we still using the Phillips curve within our analysis? Absolutely, 0:10:44.360 --> 0:10:48.200 it's it's it's Central still. Um. You know people are 0:10:48.200 --> 0:10:53.120 claiming it's dead. Uh. The fact that inflation has failed 0:10:53.160 --> 0:10:57.560 to respond to an unemployment rate which is approaching a 0:10:57.640 --> 0:11:01.240 percentage point, has been approaching a percentage point low neighru 0:11:01.000 --> 0:11:04.880 but below full employment, very tight labor market in the past, 0:11:05.440 --> 0:11:09.240 more distant past, this generated a lot of inflation. We've 0:11:09.280 --> 0:11:11.520 been there for a number of months now, um, and 0:11:11.600 --> 0:11:15.960 it hasn't not really a budge yet. So things are changing. 0:11:16.000 --> 0:11:18.200 The reasons for the reasons why I think we're changing, 0:11:18.480 --> 0:11:21.040 but there are also reasons why they haven't changed permanently. 0:11:21.200 --> 0:11:24.320 And this will spring back to life eventually. Okay. I 0:11:24.320 --> 0:11:25.959 want to take this on two things. I knew what 0:11:26.280 --> 0:11:28.440 Dr Hooper's answer would be, folks, and it sets us 0:11:28.480 --> 0:11:30.880 up for an inflation discussion. And then I want to 0:11:30.880 --> 0:11:33.920 go to the broader American landscape, Peter. If I look 0:11:33.960 --> 0:11:39.360 at service sector inflation and goods inflation, the answer is 0:11:39.360 --> 0:11:43.600 service sector has been remarkably flat positive a normal number 0:11:43.600 --> 0:11:46.680 that all our listeners know. We've had goods deflation, but 0:11:46.720 --> 0:11:50.800 then a goods inflation pick up out of deflation. Can 0:11:50.880 --> 0:11:55.440 we sustain stability and goods prices or in an age 0:11:55.440 --> 0:12:00.840 of oversupply to goods prices roll over again. Well, you know, 0:12:01.400 --> 0:12:03.800 one of the factors that I think was sort of 0:12:04.000 --> 0:12:10.720 compressing inflation over several decades was was globalization, Um, increasing 0:12:10.720 --> 0:12:14.600 supply change, a lot of competition from abroad, huge increase 0:12:14.640 --> 0:12:18.760 in labor into the world, production in China, etcetera. That's 0:12:18.840 --> 0:12:22.080 that's changing now. I mean, I think I think you are. 0:12:22.320 --> 0:12:28.760 You are seeing effects of trade restriction, etcetera, potential tariffy impacts. Uh. 0:12:29.240 --> 0:12:34.160 The the international compression on inflation beginning to shift and 0:12:34.240 --> 0:12:36.920 in a direction that means that prices eventually will be 0:12:37.000 --> 0:12:41.040 rising more in the good sector. Um. The dollar has 0:12:41.440 --> 0:12:43.839 strengthened on average over the last year, and that that's 0:12:44.000 --> 0:12:48.079 compressed import prices. But that won't go on and definitely 0:12:48.760 --> 0:12:51.360 the dollar will fall again at some point. Uh, And 0:12:51.440 --> 0:12:54.840 you will see eventually good inflation is going to come 0:12:54.840 --> 0:12:59.640 back more sustainably in the positive territory. And I beg 0:12:59.679 --> 0:13:01.480 the differ a little bit. I think the underlying train 0:13:01.559 --> 0:13:06.160 and services inflation is word healthcare, etcetera. Even rental inflation. 0:13:06.240 --> 0:13:10.920 We've got some positives there today. Um so so I 0:13:10.400 --> 0:13:13.240 I do think that we are going to be moving 0:13:13.640 --> 0:13:17.440 at least modestly above the fed's goal of two not 0:13:17.600 --> 0:13:21.120 enough to cause major problems, but there are risks on 0:13:21.160 --> 0:13:25.240 that side. Peter Hoover, can you or Vice Chairman Claire Hiss, 0:13:25.240 --> 0:13:28.680 a front rate macro economist D. S. G and all that, 0:13:29.559 --> 0:13:34.559 can you advise Chairman Powell in a gilded age if 0:13:34.600 --> 0:13:37.240 we have the inequality we have an income and wealth, 0:13:37.800 --> 0:13:42.960 if we have the apparent beneficial effects of technology so 0:13:43.040 --> 0:13:47.880 different for rich and poor. Can we use your knowledge 0:13:48.120 --> 0:13:50.440 in a gilded age? Or do we make it up 0:13:50.480 --> 0:13:54.560 as we go? Well, you're you're you're talking about an 0:13:54.600 --> 0:13:57.400 area that the FED unfortunately really does not have much 0:13:57.520 --> 0:14:00.760 control over it. If you can deal with the macro economy, 0:14:00.840 --> 0:14:05.200 it cannot deal so much with the distribution effects. That's 0:14:05.200 --> 0:14:08.320 more in the realm of physical policy. That's uh, you know, 0:14:08.679 --> 0:14:13.160 tax and in transfer and and certainly a lot more 0:14:13.240 --> 0:14:17.200 is needed in terms of compensating those who lose jobs 0:14:17.280 --> 0:14:20.560 because of trade or technology, and there's a lot of 0:14:20.600 --> 0:14:23.520 that going on. We need more retraining, we need no more, 0:14:23.960 --> 0:14:27.400 you know, uh. To increase the flexibility of the US 0:14:27.520 --> 0:14:32.520 labor force to deal with these challenges is a major 0:14:33.080 --> 0:14:36.400 should be a high priority. We need we need a 0:14:36.400 --> 0:14:39.080 better functioning government in Washington to get some of this 0:14:39.240 --> 0:14:42.720 done as well. What is the state of the American consumer? 0:14:42.760 --> 0:14:45.760 I guess I'm going over to touristen Slux area here 0:14:46.200 --> 0:14:48.080 give us an update on the Deutsche Bank feel on 0:14:48.120 --> 0:14:53.520 the American consumer, consumers consumers of the engine of growth here. Uh, 0:14:53.560 --> 0:14:56.400 I mean in in in the presence of all this 0:14:56.480 --> 0:14:59.800 doom and gloom about slow down globally. And there's impressively 0:14:59.800 --> 0:15:05.000 we numbers on manufacturings are manufacturing around the world of 0:15:05.480 --> 0:15:09.240 late Uh, the U S consumer is really still the 0:15:09.280 --> 0:15:13.240 engine of growth. The strong labor market, strong income growth, 0:15:14.480 --> 0:15:17.200 even with the recent correction in the stock market. Household 0:15:17.240 --> 0:15:19.160 balance sheets are very strong. There's been a lot of 0:15:19.200 --> 0:15:26.720 deleveraging there. Uh and and uh we we we. Assuming 0:15:26.760 --> 0:15:29.840 we get the numbers before too long, I think you'll 0:15:29.880 --> 0:15:32.880 see the consumers are continuing to do reasonably well. One 0:15:32.960 --> 0:15:36.720 final question, Dr Hooper, what should the Fed do January? 0:15:37.240 --> 0:15:39.800 I know we were data dependent. We've got a lot 0:15:39.800 --> 0:15:43.040 of data to go to get to January. It's easy 0:15:43.080 --> 0:15:48.520 to pause. Or should they shake things up with some drama. Well, 0:15:48.880 --> 0:15:51.080 what they should do and what they will do has 0:15:51.160 --> 0:15:53.880 been very clear in the speeches we got yesterday from 0:15:53.920 --> 0:15:56.680 the chair and vice chair. They're they're they're in wait 0:15:56.720 --> 0:16:00.160 and see mode. A lot of uncertainty going on around here, 0:16:00.440 --> 0:16:03.280 a lot of risks that need to be resolved one 0:16:03.320 --> 0:16:06.000 way or another. I don't see them doing anything for 0:16:06.080 --> 0:16:08.400 quite a while. Peter Hooper, thank you so much with 0:16:08.440 --> 0:16:10.840 Deutsche Bank. Wonderful to have you for such an extended 0:16:10.880 --> 0:16:13.880 time this morning. Can't say enough about the Deutsche Bank 0:16:13.960 --> 0:16:17.600 research through the year from Matthew Lozettie, Torsten Slack, Brendan 0:16:17.640 --> 0:16:19.280 Maran and the rest of their Brenton Ryan and the 0:16:19.280 --> 0:16:37.120 rest of their team as well. If the New York 0:16:37.160 --> 0:16:40.560 stock has changed. Mary Barra, and she is with our 0:16:40.680 --> 0:16:45.800 David Weston on Bloomberg Television and Radio. We now welcome 0:16:45.880 --> 0:16:48.600 Mary Barra. She is the chairman, the CEO and president 0:16:48.720 --> 0:16:52.840 of General Motors. Welcome to Bloomberg, Mary, So we've just 0:16:52.880 --> 0:16:57.760 heard the news about General Motors, both respected and I 0:16:57.800 --> 0:17:00.600 think surprising the upside. What happened, well, I think this 0:17:00.680 --> 0:17:02.480 is a result of what we've been working on since 0:17:02.520 --> 0:17:06.200 the time frame, you know, really working to transform the business, 0:17:06.280 --> 0:17:08.720 both the core business and also the investments were making 0:17:08.880 --> 0:17:11.720 in the e V a V and connectivity and we 0:17:11.800 --> 0:17:15.000 see all that coming tom coming to fruition. We still 0:17:15.040 --> 0:17:16.680 have more work to do. That's why we made the 0:17:16.680 --> 0:17:20.480 difficult announcement we did last at the end of last year. 0:17:20.720 --> 0:17:23.359 But we are focused on this transformation, make sure General 0:17:23.359 --> 0:17:26.480 Motors is strong and really demonstrating that even in a 0:17:26.520 --> 0:17:30.120 cyclical business, we can continue continue to deliver results. It's 0:17:30.119 --> 0:17:32.399 cyclical and all sorts requiring a lot of investment. Right now, 0:17:32.440 --> 0:17:34.840 as you go through the transformation to electric vehicles to 0:17:34.960 --> 0:17:37.919 also autonomous vehicles, will you be able to maintain the 0:17:37.960 --> 0:17:39.840 situation where you can get the money you need to 0:17:39.880 --> 0:17:42.680 invest by saving money elsewhere because you're earnings for share 0:17:42.720 --> 0:17:45.639 are up actually despite all the investment. Well absolutely, and 0:17:45.680 --> 0:17:48.000 we are investing. And one of the things that we 0:17:48.080 --> 0:17:51.040 did in this transformation is we're remixing our our global 0:17:51.040 --> 0:17:54.320 product development. We've indicated that over the next few years 0:17:54.359 --> 0:17:56.720 we will double the amount of that is spenting EVY 0:17:56.720 --> 0:17:59.440 and a by but that's not added to that's transitioning 0:17:59.480 --> 0:18:02.399 to and we've actually found a lot of synergies and 0:18:02.480 --> 0:18:05.440 not only how we engineer, but also from a capital perspective, 0:18:05.600 --> 0:18:08.280 you know, we've made a lot of investments in crossovers, 0:18:08.320 --> 0:18:10.959 full size trucks, our global family of vehicles, and so 0:18:11.240 --> 0:18:13.159 that's going to pay off, and that's investment that we 0:18:13.200 --> 0:18:15.280 can continue to leverage as we go forward. So that's 0:18:15.320 --> 0:18:17.919 what's allowing us over the near term to take the 0:18:18.880 --> 0:18:21.160 billion and a half out of our capital spot. So, 0:18:21.160 --> 0:18:23.080 so talk about electric vehials for a while. And as 0:18:23.080 --> 0:18:25.439 I understand, you're gonna have I think it's twenty twenties 0:18:25.480 --> 0:18:31.360 three miles by twenties twenty Is that got it right? Uh? Cadillac, 0:18:31.400 --> 0:18:33.640 now we know it's gonna be your lead Why well, 0:18:33.960 --> 0:18:36.439 Cadillac is our technology brand. And when we look at 0:18:36.440 --> 0:18:38.679 the technology in addition to ev that we're going to 0:18:38.680 --> 0:18:41.640 put on this vehicle, it's appropriate that Cadillac is our 0:18:41.880 --> 0:18:43.840 is our lead brand. And then you know, we'll we'll 0:18:43.880 --> 0:18:46.600 fill out the portfolio that makes sense and be customer driven. 0:18:46.840 --> 0:18:49.919 But it also is a very important part of rebuilding 0:18:49.960 --> 0:18:53.919 Catillac and demonstrating that Catillac is a true luxury brand 0:18:54.480 --> 0:18:57.600 again delighting customers with the technology and the and the 0:18:57.640 --> 0:19:00.400 electric experience. How does this fit with what you're doing 0:19:00.400 --> 0:19:02.280 a cruise Because when we've talked to Dan Ammon, he 0:19:02.320 --> 0:19:05.240 said that by twenty and nineteen. This year, you will 0:19:05.280 --> 0:19:08.080 have some commercialized versions of autonomy. Le how does that 0:19:08.119 --> 0:19:11.000 fit with, for example, a Cadillac electric vehicle. Well, first 0:19:11.000 --> 0:19:14.560 of all, um, we believe that all avies, all autonomous 0:19:14.640 --> 0:19:17.920 vehicles should be electric vehicles, and so that's a leveraging 0:19:17.960 --> 0:19:20.800 of the technology and the platform as well. We are 0:19:20.840 --> 0:19:23.960 working on the rate of iteration that we're demonstrating and 0:19:24.480 --> 0:19:26.959 we just posted a really cool video yesterday, so if 0:19:26.960 --> 0:19:29.399 you haven't seen it, for Cruise and demonstrating how we 0:19:29.440 --> 0:19:32.639 continue to learn UH new operations in the very dense 0:19:32.680 --> 0:19:35.639 and urban environment of San Francisco. So we will be 0:19:35.680 --> 0:19:37.879 gated by safety and I think we've demonstrated in the 0:19:37.920 --> 0:19:40.040 past that we will make decisions to make sure our 0:19:40.119 --> 0:19:43.320 vehicles are safe, as we demonstrated with super Cruise. But 0:19:43.480 --> 0:19:45.960 based on that rate of iteration, we're going as fast 0:19:46.000 --> 0:19:48.480 as we can and we believe that we can take 0:19:48.480 --> 0:19:53.680 the driver out and right or a constrained environment and 0:19:53.880 --> 0:19:57.880 UH and and demonstrate our electric vehicle capability and anytime. 0:19:57.880 --> 0:19:59.920 Besides announcing that Cadillac is going to be your lead 0:20:00.000 --> 0:20:02.800 in electraveals, you also have announced a new architecture which 0:20:02.800 --> 0:20:05.679 would be for China and Brazil and Mexico's I understand it, 0:20:05.760 --> 0:20:07.400 not the United States tell us about that. Why you're 0:20:07.400 --> 0:20:11.000 doing it? Well, if you look at really being customer driven, 0:20:11.040 --> 0:20:14.840 the customers in those markets, they want the latest technology 0:20:15.000 --> 0:20:18.359 and they want UH performance from safety, from connectivity, and 0:20:18.400 --> 0:20:21.119 so we step back and often those markets are served 0:20:21.119 --> 0:20:23.600 by older architectures. So we looked and said, with the 0:20:23.920 --> 0:20:27.119 scale and the significant share we have in China, the 0:20:27.160 --> 0:20:29.400 strength that we have in South America and other markets 0:20:29.440 --> 0:20:33.800 like Mexico, let's do a dedicated UH new architecture where 0:20:33.840 --> 0:20:36.800 we can really deliver something special to the customer. And 0:20:36.840 --> 0:20:39.639 so are the feedback we've gotten again will be sharing 0:20:39.680 --> 0:20:41.800 some of those vehicles today or an early glimpse of 0:20:41.800 --> 0:20:43.879 those vehicles. I think it's can be very significant, and 0:20:43.920 --> 0:20:47.679 we start that rollout UH later this year in China 0:20:47.720 --> 0:20:49.720 and then it will flow to South America, Mexico into 0:20:49.720 --> 0:20:53.199 over forty countries. As I said, this announcement is a 0:20:53.200 --> 0:20:55.360 bit of a surprise because it comes against a back 0:20:55.440 --> 0:21:00.000 job of some softness, at least perceived in the automobile marketplay. 0:21:00.359 --> 0:21:02.880 We've had some announcements for some competitors about cutting back. 0:21:03.400 --> 0:21:07.359 We've had some announcements about some soft sales. How much 0:21:07.400 --> 0:21:10.399 of your projection in which is robust, how much of 0:21:10.440 --> 0:21:12.320 that is the overall size of the market and where 0:21:12.320 --> 0:21:14.119 the market is, and how much it is you taking 0:21:14.160 --> 0:21:17.280 market share and doing better well. I think again in 0:21:17.320 --> 0:21:19.840 the key markets, whether you look at China, the United States, 0:21:19.840 --> 0:21:22.080 South America, we think we're very well positioned. In the 0:21:22.160 --> 0:21:23.960 United States, we're going to have we we think the 0:21:24.480 --> 0:21:26.560 market will be in the low sevent teams. We have 0:21:26.840 --> 0:21:29.159 the full year of our new light duty trucks. We 0:21:29.240 --> 0:21:32.520 have the Catillac XT four, we have the Chevrolet Blazer. 0:21:32.880 --> 0:21:34.280 Second half of the year, we're going to have our 0:21:34.320 --> 0:21:37.240 heavy duties. So we have an exceptionally strong product cames 0:21:37.240 --> 0:21:39.399 building on our crossovers in our full size trucks in 0:21:39.400 --> 0:21:42.760 North America. In China, we have twenty new or or 0:21:43.000 --> 0:21:45.520 brand new or refreshed models that will be rolling out 0:21:45.600 --> 0:21:47.520 this year, and we think the market will be about 0:21:47.520 --> 0:21:50.280 the same. There's I think, you know, positive news coming 0:21:50.280 --> 0:21:53.359 out of the trade talks. There's talk in China about 0:21:53.680 --> 0:21:56.640 stimulus from a durable durbal goods perspective, so we see 0:21:56.640 --> 0:21:59.600 an opportunity there. And then South America we're starting to 0:21:59.640 --> 0:22:02.480 see recovery and in South America's where we have a 0:22:02.600 --> 0:22:05.239 very strong Chevallee franchise. So when you look at our 0:22:05.320 --> 0:22:09.120 key markets, we think we're well positioned not only with 0:22:09.160 --> 0:22:10.639 where we think the market is going to be, but 0:22:10.680 --> 0:22:13.280 also the strength of our product portfolio. You mentioned trade 0:22:13.680 --> 0:22:16.119 way back in Q two second quarter, you had to 0:22:16.119 --> 0:22:19.320 take down some projections based on concerns about tariffs. As 0:22:19.359 --> 0:22:23.000 I recall, as you look into are your projections based 0:22:23.040 --> 0:22:26.200 on status quo, on things getting better, on things getting worse? 0:22:26.240 --> 0:22:27.719 What are your projecting In order to come up with 0:22:27.880 --> 0:22:29.880 what your forecast is, we really looked at what we think, 0:22:29.920 --> 0:22:32.640 you know, the current macro environment um and what we're 0:22:32.640 --> 0:22:35.480 seeing and what you know, what outside analysts are are 0:22:35.520 --> 0:22:37.959 looking at from a from a macro perspective, and then 0:22:38.000 --> 0:22:40.879 looking and laying on where General Motors is position and 0:22:40.920 --> 0:22:43.280 that is all built into the guidance that we provided. 0:22:44.080 --> 0:22:45.720 So you've had quite a year. This is your investor 0:22:45.800 --> 0:22:47.240 day if you go all the way back three and 0:22:47.320 --> 0:22:49.280 six five days ago, there's been a lot that's happened. 0:22:49.320 --> 0:22:51.760 I mean certainly with Cruise, with investments from soft Bank 0:22:51.960 --> 0:22:54.560 as well as from Honda, You've made some management changes 0:22:54.560 --> 0:22:56.680 where you took Dan Ammond from President GM, moved him 0:22:56.680 --> 0:23:00.480 over to Cruise, brought up Mark Royce. All so announced, 0:23:00.480 --> 0:23:02.720