WEBVTT - S&P 500 Notches Its Best Week Since November 2023 0:00:02.520 --> 0:00:10.560 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.560 --> 0:00:14.720 Weekdaily reporting from the magazine that helps global leaders stay 0:00:14.760 --> 0:00:18.800 ahead with insight on the people, companies, and trends shaping 0:00:18.840 --> 0:00:23.760 today's complex economy, plus global business, finance and tech news 0:00:23.800 --> 0:00:27.800 as it happens. The Bloomberg Business Week Daily Podcast with 0:00:27.960 --> 0:00:33.800 Carol Masser and Tim Steneveek on Bloomberg Radio, Who cares. 0:00:33.560 --> 0:00:34.760 About the first quarter? 0:00:35.280 --> 0:00:37.440 What we all want to know was how things are 0:00:37.479 --> 0:00:40.760 looking in the current quarter, what the outlook is for more? 0:00:40.800 --> 0:00:43.559 We bring in Bloomberg News Chief Wall Street correspondent Trenata 0:00:43.600 --> 0:00:46.560 Rajen he joins us here in the Bloomberg Business Week 0:00:46.640 --> 0:00:53.320 Studio Shree. A couple words came up, uncertainty, unknowns, turbulence, 0:00:53.760 --> 0:00:55.080 what's the outlook. 0:00:54.760 --> 0:00:55.880 If anything is look. 0:00:56.000 --> 0:00:58.319 That's something that Jamie Diamond dens to use a lot, 0:00:58.400 --> 0:01:02.400 but yes, it's across ap Morgan, Morgan, Stanley Wells Fargo. 0:01:02.680 --> 0:01:05.240 That word certainly God repeated a lot more than we're 0:01:05.400 --> 0:01:08.960 used to seeing, and it's very understandable because of everything 0:01:09.000 --> 0:01:11.840 that's happened in the last week. It would have been 0:01:11.880 --> 0:01:14.840 an impossible situation to get to to expect these bank 0:01:15.160 --> 0:01:17.200 bosses to get in there and tell you that they 0:01:17.240 --> 0:01:19.920 have a very clear grasp of what lies ahead, because 0:01:19.920 --> 0:01:22.560 the path ahead clearly had there are many folks in 0:01:22.560 --> 0:01:25.360 the road. We don't know where this will go for now. 0:01:25.440 --> 0:01:28.399 When you look at the numbers that they've printed, extremely good, 0:01:28.440 --> 0:01:31.520 extremely healthy, they should be happy with where they are. 0:01:32.120 --> 0:01:34.560 But when you look at what their stock is actually 0:01:34.600 --> 0:01:36.959 doing for the year, down more than ten percent across 0:01:36.959 --> 0:01:39.680 the board rather than JP Morgan, and even JP Morgan 0:01:39.760 --> 0:01:42.000 is read for the year, it tells you that there 0:01:42.040 --> 0:01:45.440 is some nervousness in the system out there, not so 0:01:45.560 --> 0:01:49.240 much about how banks will handle it, but because banks 0:01:49.280 --> 0:01:52.640 are considered a good proxy for the broader economy, any 0:01:52.680 --> 0:01:56.760 concerns about the pace of growth, whether that's recession or 0:01:56.800 --> 0:01:58.920 even slower growth, which is what Ted Pick said, the 0:01:58.960 --> 0:02:03.080 consensus seems to be explore growth, not no growth. That's 0:02:03.120 --> 0:02:04.800 still not going to be a good outcome for the 0:02:04.840 --> 0:02:06.520 banks at the end of the day. And that's why 0:02:06.640 --> 0:02:09.160 some chrepedition in their comments today. 0:02:09.240 --> 0:02:11.080 Yeah, and we saw definitely some swings in the share 0:02:11.120 --> 0:02:14.520 price today as well in all of them. Hey, Allison, 0:02:14.560 --> 0:02:17.560 come on in here. What's kind of the key takeaway here. 0:02:18.280 --> 0:02:24.240 So I think JP morgan volatility helps their trading, and 0:02:24.280 --> 0:02:27.640 they've used that to sort of set aside some money 0:02:27.639 --> 0:02:30.640 for the growing risk. I think, you know what's important 0:02:30.760 --> 0:02:33.680 is if you look at the underlying quarter for JP Morgan, 0:02:33.760 --> 0:02:37.960 obviously I thought it was very robust, and they had 0:02:38.000 --> 0:02:40.920 sort of five hundred million in upside to trading. They 0:02:40.960 --> 0:02:43.799 also had a gain related to First Republic of about 0:02:43.840 --> 0:02:46.839 six hundred million, and so they used that to set 0:02:46.880 --> 0:02:50.800 aside a billion in loss reserves. And that compared that 0:02:50.840 --> 0:02:53.720 to Wells Fargo where they had a slight release. But 0:02:54.400 --> 0:02:57.800 then if you look at the underlying numbers, JP Morgan 0:02:57.919 --> 0:03:01.520 now weighted average view five eight percent unemployment rate and 0:03:01.560 --> 0:03:04.760 that's about simihere to Wells Fargo is so in a way, 0:03:05.280 --> 0:03:08.519 Wells Fargo had sort of stayed a little bit more conservative. 0:03:08.639 --> 0:03:11.320 They have a different loan mix. JP Morgan has more card. 0:03:11.360 --> 0:03:14.000 I think that's, you know, for sure, an area that 0:03:14.040 --> 0:03:15.720 I'm a little bit more worried about, just giving the 0:03:15.760 --> 0:03:19.200 growth we've had, it has higher loss rates. So and 0:03:19.240 --> 0:03:21.959 by the way, like forty percent of JP Morgan's reserve 0:03:22.120 --> 0:03:25.560 was for card. So JP Morgan, I would say, you know, 0:03:25.639 --> 0:03:30.240 the model benefiting from volatility helps them to provide for 0:03:30.800 --> 0:03:33.320 some of the risks from that uncertainty. And Wells Fargo 0:03:33.480 --> 0:03:35.640 just a little bit softer, right, So, as I said, 0:03:35.640 --> 0:03:38.600 they're not much happening with the reserve, but not interesting. 0:03:38.600 --> 0:03:39.280 Income was a. 0:03:39.200 --> 0:03:41.240 Little weak, demand a little weak, and I think that's 0:03:41.280 --> 0:03:42.560 why the shares are a little weaker. 0:03:42.760 --> 0:03:45.760 So, Allison, given what we heard from these three banks, 0:03:45.800 --> 0:03:48.120 and we still have some to hear from next week, 0:03:48.680 --> 0:03:51.720 how would you characterize their view on the economy as 0:03:51.760 --> 0:03:55.440 it is right now trade tariffs and potentially any red flags. 0:03:55.840 --> 0:03:59.120 I think you know, the view on the economy is 0:03:59.320 --> 0:04:01.520 I think similar to the rest of us. We have 0:04:01.600 --> 0:04:04.440 to see what happens with tariffs and a lot of 0:04:04.480 --> 0:04:07.200 the uncertainty, and there's a lot of unknowns and hopefully 0:04:07.280 --> 0:04:10.120 we'll know more by the time next time earnings rolls around. 0:04:10.320 --> 0:04:13.400 Clear as mud, right, exactly clear is mud. 0:04:13.720 --> 0:04:19.160 But factoring in, like what JP Morgan said, is like, look, 0:04:19.240 --> 0:04:22.599 we our space case is still very benign, but we're 0:04:22.600 --> 0:04:25.440 going to factor in more of a risk of a 0:04:25.480 --> 0:04:26.440 downside scenario. 0:04:26.520 --> 0:04:28.560 All right, So listen, I got to just say we 0:04:28.560 --> 0:04:30.080 were all kind of looking forward to the start of 0:04:30.120 --> 0:04:31.880 earning season, so that we could talk about something else 0:04:31.880 --> 0:04:35.000 than tariffs, and obviously tires play into, you know, the 0:04:35.040 --> 0:04:37.599 outlook and what these guys have to say. But you know, Shre, 0:04:38.080 --> 0:04:40.760 we just talked with you and kind of how you know, 0:04:40.800 --> 0:04:43.120 we were looking forward to what we got from these guys. 0:04:43.560 --> 0:04:46.400 So is there something as we look in this environment 0:04:46.640 --> 0:04:50.000 where uncertainty is the watchword that we got from them 0:04:50.200 --> 0:04:53.240 in terms of Yeah, folks, you should be worried because 0:04:53.560 --> 0:04:54.680 these are the guys that matter. 0:04:54.800 --> 0:04:57.240 They see the financial system. Look, it's an. 0:04:57.200 --> 0:05:00.160 Interesting question because for the longest time we've seen we 0:05:00.160 --> 0:05:03.039 we've looked at these bank earnings results not necessarily to 0:05:03.120 --> 0:05:05.560 see how good their bonuses will be at the end 0:05:05.600 --> 0:05:07.960 of the year. Right, that's what matters to them, But 0:05:08.000 --> 0:05:11.320 for us, it's a bell weather for what comes ahead 0:05:11.400 --> 0:05:13.520 in the broader economy. And maybe this is something Alison 0:05:13.520 --> 0:05:16.359 could address because one thing I've been thinking about, not 0:05:16.400 --> 0:05:18.320 an original thought, has come up a few times, but 0:05:18.800 --> 0:05:22.320 I do feel it plays a bigger role increasingly. Are 0:05:22.480 --> 0:05:26.039 these big banks necessarily a true bell weather when you 0:05:26.120 --> 0:05:28.880 consider that they have stopped playing a role sort of 0:05:28.920 --> 0:05:32.360 in the riskiest spots of the lending market whether it's 0:05:32.360 --> 0:05:36.240 a mortgage market or the consumer debt market. Can you 0:05:36.360 --> 0:05:39.200 really look at their results and see if we're seeing 0:05:39.240 --> 0:05:41.000 a turn in the economy or do we need to 0:05:41.040 --> 0:05:42.000 look elsewhere? 0:05:42.200 --> 0:05:42.640 What do you think? 0:05:42.680 --> 0:05:46.239 I think it depends on the business that you're looking at. 0:05:46.279 --> 0:05:50.359 So I do think that from a card perspective, right, So, 0:05:50.480 --> 0:05:57.000 JP Morgan, biggest card lender, obviously focuses on the higher 0:05:57.040 --> 0:06:01.000 segment than some other card lenders back of America. When 0:06:01.000 --> 0:06:03.360 we hear from them next week, we really do look 0:06:03.400 --> 0:06:07.200 at their consumer trends as an underlying bell weather. The 0:06:07.279 --> 0:06:11.159 thing is right is that nothing has happened yet. If anything, 0:06:11.320 --> 0:06:13.400 What we saw in JP Morgan alluded to this is 0:06:13.440 --> 0:06:16.440 that we've seen a little bit more frontloading of the spending, 0:06:16.520 --> 0:06:18.880 right so people that maybe want to make a sizeable 0:06:18.920 --> 0:06:21.280 purchase or you know, some things they wanted to sort 0:06:21.320 --> 0:06:23.719 of get in front of any uncertainty. We've also heard 0:06:23.720 --> 0:06:25.880 this from our retail analysts. We saw some of the 0:06:25.920 --> 0:06:30.000 five serve data right spending holding up with people were surprised, right, 0:06:30.000 --> 0:06:33.520 but those numbers are through March. They're through March thirty first, 0:06:33.720 --> 0:06:36.600 and so a lot of the uncertainty is happening now. 0:06:37.240 --> 0:06:39.480 And if you you know, if you look at all 0:06:39.520 --> 0:06:42.560 the deals that are stalled as you know, you know, 0:06:42.600 --> 0:06:45.200 we're we've had a lot of IPOs reported to be 0:06:45.440 --> 0:06:49.360 on hold, and you know, looking more towards that side 0:06:49.360 --> 0:06:53.040 of the business, I think the most telling numbers are Goldmen, Sachs, 0:06:53.520 --> 0:06:57.599 Morgan Stanley cutting investment bankers. Now you know they do 0:06:57.760 --> 0:06:59.880 normally do that process at the end of the year, 0:07:00.120 --> 0:07:02.120 they're doing it early. We saw the similar thing a 0:07:02.160 --> 0:07:05.040 couple of years ago Morgan Steam. We did also allude 0:07:05.080 --> 0:07:07.840 to things like AI and technology, but you know, they 0:07:07.880 --> 0:07:11.000 also were performance based. So I think you look at 0:07:11.000 --> 0:07:14.440 those numbers and you look at some of those those cuts, 0:07:14.960 --> 0:07:16.640 it's sort of telling on what they think is going 0:07:16.720 --> 0:07:18.520 to be happening with the banking for your pipeline. 0:07:18.560 --> 0:07:20.960 I feel like we're not crazily worried, just real quickly. 0:07:21.080 --> 0:07:23.400 Well, then to Allison's point, I think the divergence is 0:07:23.440 --> 0:07:26.280 there right If any pain in the consumer economy, it'll 0:07:26.280 --> 0:07:28.640 probably still take a few quarters to play out. But 0:07:28.720 --> 0:07:30.880 where you're seeing an immediate effect is because of the 0:07:30.960 --> 0:07:33.480 lack of confidence and because of the uncertainty, it is 0:07:33.520 --> 0:07:36.760 going to impact portions of the market. The banks that 0:07:36.800 --> 0:07:39.119 are tethered to the investment bank and the investment banking 0:07:39.160 --> 0:07:41.120 business are going to see that effect. Which is why 0:07:41.120 --> 0:07:43.880 I'm very curious how Goldman reacts, not only through earnings, 0:07:43.880 --> 0:07:46.000 but also a few weeks beyond, because even in the 0:07:46.040 --> 0:07:47.880 last ten days you've seen a little bit of weakness 0:07:47.960 --> 0:07:50.680 in that stock relative to its bigger peers. I want 0:07:50.680 --> 0:07:52.480 to see if that loss or not or of earnings 0:07:52.480 --> 0:07:53.800 completely change the narrative on that. 0:07:54.200 --> 0:07:56.960 And maybe just one thing throughout quickly. You know, one 0:07:57.000 --> 0:08:00.000 billion and lost reserves at JP Morgan. They built fifteen 0:08:00.080 --> 0:08:02.840 billing in the pandemic in a couple of quarters, So okay, 0:08:02.920 --> 0:08:05.920 there is uncertainty, but just keep in mind, and you know, 0:08:06.000 --> 0:08:08.200 people look at the market and different measures, but I 0:08:08.200 --> 0:08:09.520 would just point to that for the bank. 0:08:09.520 --> 0:08:11.560 That's why we talk to you, guys. It's the perspective 0:08:11.560 --> 0:08:12.000 we needed. 0:08:12.360 --> 0:08:15.080 Thank you both so much, Bloomberg News Chief Wall Street 0:08:15.080 --> 0:08:18.160 correspondent Street nottaraje On and Bloomberg Intelligence Senior analysts for 0:08:18.200 --> 0:08:21.320 global investment banks and asset managers, Allison Williams. 0:08:21.720 --> 0:08:25.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:08:25.520 --> 0:08:28.040 Live weekday afternoons from two to five ease during the 0:08:28.200 --> 0:08:32.120 listen on Applecarplay and Android Atto with the Bloomberg Business app, 0:08:32.280 --> 0:08:35.280 or watch us Live on YouTube. 0:08:36.480 --> 0:08:38.839 Well, farmers are worried that Trump's trade war with China 0:08:38.880 --> 0:08:42.880 could cause disastrous consequences for their ability to sell soybeans. 0:08:43.160 --> 0:08:45.840 Even before the current administration took the reins, farmer income 0:08:45.880 --> 0:08:47.880 had been under pressure for a couple of years as 0:08:47.920 --> 0:08:51.520 the cost of seeds, fertilizer, and equipment went up and 0:08:51.559 --> 0:08:54.440 crop prices decline. That's what's going on here in the 0:08:54.559 --> 0:08:57.000 US with this trade war exactly. We want to go 0:08:57.040 --> 0:08:59.840 outside of the US and talk to somebody who spent 0:08:59.880 --> 0:09:02.720 his career thinking about where products, where commodities come from, 0:09:02.920 --> 0:09:06.160 who brings them to us, how they're compensated, and the 0:09:06.200 --> 0:09:10.120 working conditions of those individuals. Paul Rice is the founder 0:09:10.160 --> 0:09:13.360 of fair Trade USA. It's the nonprofit fair trade certifier 0:09:13.640 --> 0:09:17.080 he started nearly thirty years ago. The organization says that 0:09:17.120 --> 0:09:20.040 a product is a fair Trade certified and that means 0:09:20.040 --> 0:09:22.840 that it was quote made according to rigorous standards that 0:09:22.880 --> 0:09:27.120 protect the livelihoods of farmers, fishers, and other producer communities 0:09:27.440 --> 0:09:29.240 and the environment. He's got a new book out. It's 0:09:29.240 --> 0:09:32.760 called Every Purchase Matters How fair trade farmers, companies, and 0:09:32.840 --> 0:09:37.120 consumers are changing the world. He joins us from Berkeley, California. Paul, 0:09:37.360 --> 0:09:39.600 great to have you. Congratulations on the new book. It's 0:09:39.600 --> 0:09:43.200 perfect to have somebody who understands trade and tariffs. You 0:09:43.240 --> 0:09:45.960 certainly understand these things. What is your view on tariff 0:09:46.000 --> 0:09:48.920 specifically with regard to the world where you've spent the 0:09:49.000 --> 0:09:49.800 last thirty years. 0:09:51.040 --> 0:09:54.480 Well, tariffs are bad. There's no other way. There's no 0:09:54.559 --> 0:09:57.520 other way to put it. Tariffs are dumb, and they're 0:09:57.520 --> 0:09:59.000 going to hurt a lot of people. They're going to 0:09:59.080 --> 0:10:02.120 hurt American consumer US as we all know, because the 0:10:02.480 --> 0:10:04.520 cost of things that we buy are going to go up. 0:10:05.240 --> 0:10:11.040 And it's going to hurt American business because there's retaliatory tariffs. 0:10:11.480 --> 0:10:15.600 I recently spoke with a US company that sells about 0:10:15.600 --> 0:10:19.560 forty percent of their roasted coffee into Canada. Retaliatory tariffs 0:10:19.600 --> 0:10:21.160 are going to make it harder for him to do that. 0:10:21.679 --> 0:10:26.200 And finally, the tariffs are bad for sustainability. 0:10:26.880 --> 0:10:27.040 Oh. 0:10:27.120 --> 0:10:31.240 Interesting. The onus is going to be pushed back onto 0:10:31.280 --> 0:10:35.160 a lot of developing world farmers and factory owners to 0:10:35.280 --> 0:10:38.439 absorb some of that extra cost, and it's going to 0:10:38.600 --> 0:10:41.240 pressure a lot of people to cut back on sustainability 0:10:41.280 --> 0:10:45.559 measures that you know, things like installing solar panels or 0:10:46.520 --> 0:10:49.680 you know, providing better housing for workers. So all the 0:10:49.679 --> 0:10:51.280 way around, tariffs are bad. 0:10:51.720 --> 0:10:53.480 One of the reasons we wanted to speak to you 0:10:54.000 --> 0:10:58.720 is because the products that we see the fair trade 0:10:59.080 --> 0:11:03.320 certification are often products that you can only get outside 0:11:03.320 --> 0:11:04.840 of the United States. And I think it's fair to 0:11:04.880 --> 0:11:07.560 say the reason the President wants to impose these tariffs 0:11:08.080 --> 0:11:10.160 are because he has, in his view, the US has 0:11:10.160 --> 0:11:12.160 been treated unfairly when it comes to trade. He wants 0:11:12.200 --> 0:11:17.480 to see manufacturing specifically and production specifically move back to 0:11:17.600 --> 0:11:22.000 this country. Is there a disconnect in your view given 0:11:22.080 --> 0:11:25.520 that some of the stuff that could see tariffs on 0:11:25.559 --> 0:11:29.200 it you can't actually produce here in the US. Like, 0:11:29.400 --> 0:11:30.320 help me make sense of that? 0:11:31.040 --> 0:11:35.240 Yeah, a huge disconnect. I mean, seventy percent of Americans 0:11:35.320 --> 0:11:39.560 drink coffee. The US can't grow coffee, right, Coffee comes 0:11:39.600 --> 0:11:44.640 from Latin America and Asia and Africa. And you know, similarly, 0:11:45.240 --> 0:11:48.160 eighty percent of Americans eat bananas. Guess what, We don't 0:11:48.160 --> 0:11:52.640 grow bananas in the US. We import them. So tariffs 0:11:52.679 --> 0:11:55.000 are going to hurt Americans because all of those things 0:11:55.000 --> 0:11:57.920 that we love to drink and eat, like coffee and bananas, 0:11:58.160 --> 0:12:00.959 the price of those are going to go up. But furthermore, 0:12:01.280 --> 0:12:03.600 you know, tariff's are really going to hurt those farmers 0:12:03.640 --> 0:12:06.720 around the world. And so you know, what is quite 0:12:06.760 --> 0:12:10.280 possible is that a lot of those businesses are going 0:12:10.360 --> 0:12:14.800 to fail because they cannot absorb the tariff, which means 0:12:14.920 --> 0:12:18.200 more workers out of work. I mean, imagine what happens 0:12:18.360 --> 0:12:21.960 if unemployment goes up in Mexico, what kind of pressure 0:12:22.040 --> 0:12:25.000 that puts on the southern border. There's nothing good about 0:12:25.040 --> 0:12:26.200 this whole tariff policy. 0:12:26.400 --> 0:12:31.040 Now when I think about Paul Supermarket, certainly here in 0:12:31.080 --> 0:12:34.880 the United States, they live on such slim margins, so 0:12:35.200 --> 0:12:38.040 they have no choice but to pass any additional costs 0:12:38.040 --> 0:12:38.960 off to consumers. 0:12:39.440 --> 0:12:42.199 Correct either they'll. 0:12:42.000 --> 0:12:44.640 Pass it on to the consumer or they'll push it 0:12:44.720 --> 0:12:47.400 back onto the producer. And that's what I mean by 0:12:47.720 --> 0:12:50.640 you know, companies in Mexico, for example, going belly up 0:12:51.080 --> 0:12:54.040 or having to lay off workers. If you know, if 0:12:54.360 --> 0:12:56.960 Whole Foods or Costco or Walmart decides to push some 0:12:57.080 --> 0:13:01.560 of that extra cost back on to the producer, then 0:13:02.600 --> 0:13:06.960 we're going to see some severe business uh disruption south 0:13:07.040 --> 0:13:09.760 of the border, which is not going to help our 0:13:10.240 --> 0:13:13.560 our national situation at all. And on the you know, similarly, 0:13:13.640 --> 0:13:16.720 even if it all gets passed on to consumers with 0:13:16.880 --> 0:13:22.199 prices already high, will consumers pay more for imported strawberries 0:13:22.280 --> 0:13:24.880 or tomatoes, or coffee or bananas? I don't know, you know, 0:13:25.120 --> 0:13:28.120 I think it's quite possible the demand goes down, which 0:13:28.200 --> 0:13:32.520 means a ripple effect around the world that you know 0:13:32.559 --> 0:13:35.360 it's going to it's going to be a tremendous hardship 0:13:35.400 --> 0:13:36.240 for a lot of people. 0:13:36.559 --> 0:13:38.400 Well, that brings us to your book. 0:13:38.440 --> 0:13:41.000 And as we said, it's entitled Every Purchase Matters How 0:13:41.040 --> 0:13:43.920 fair trade farmers, companies, and consumers are changing the world. 0:13:44.240 --> 0:13:45.880 Fair trade, I think it's thrown around. 0:13:45.960 --> 0:13:47.880 I think we'd like to buy fair trade goods, but 0:13:48.160 --> 0:13:50.960 explain to the world, just remind them what fair trade 0:13:51.000 --> 0:13:51.120 is all. 0:13:51.320 --> 0:13:53.080 And you're talking when you ask the question, Carol, you're 0:13:53.080 --> 0:13:56.200 asking about fair trade like capital F capital T fair trade, 0:13:56.200 --> 0:13:57.200 not the concept of. 0:13:57.440 --> 0:14:01.000 Fair trade, no exactly, which is something that president might use, 0:14:01.080 --> 0:14:02.800 but no, what fair trade? 0:14:02.920 --> 0:14:04.160 Fair trade certified? 0:14:04.360 --> 0:14:04.520 There? 0:14:04.520 --> 0:14:04.960 It is. 0:14:06.480 --> 0:14:09.000 What gets that certification. What has to happen in order 0:14:09.040 --> 0:14:09.440 to get it? 0:14:10.160 --> 0:14:13.920 Yeah, So fair trade is a rigorous two hundred point 0:14:14.120 --> 0:14:19.640 checklist of social, labor and environmental criteria that farms and 0:14:19.760 --> 0:14:24.640 factories meet and get audited against every year in order 0:14:24.720 --> 0:14:27.720 to wear the fair trade certified label. And on this 0:14:27.800 --> 0:14:31.080 side of the market, our you know, two thousand plus 0:14:31.120 --> 0:14:35.600 market partners from Whole Foods to Target to Walmart all 0:14:35.640 --> 0:14:38.640 agree to pay a small premium back to those farmers 0:14:38.680 --> 0:14:41.720 and workers, which they then can invest in healthcare and 0:14:41.920 --> 0:14:46.120 education and better housing. So fair trade, you know, through 0:14:46.120 --> 0:14:49.440 the lens of global development, it's a market based approach 0:14:49.640 --> 0:14:53.080 to global poverty and to protecting the planet for us 0:14:53.120 --> 0:14:56.280 the consumer. Increasingly, consumers want to know that there's no 0:14:56.400 --> 0:14:59.320 child labor in our chocolate bar and that the environment 0:14:59.480 --> 0:15:02.320 wasn't just in the production of our coffee. So fair 0:15:02.360 --> 0:15:05.400 trade is a way that we as consumers can feel 0:15:05.440 --> 0:15:09.360 reassured that the products we're consuming are produced in a 0:15:09.400 --> 0:15:11.160 responsible and sustainable way. 0:15:11.360 --> 0:15:13.000 What are the checks that are in place to make 0:15:13.040 --> 0:15:16.800 sure these sustainable practices are followed when the folks from 0:15:16.840 --> 0:15:19.560 your organization are not watching, when they're not there visiting 0:15:20.000 --> 0:15:20.640 these plants. 0:15:21.600 --> 0:15:26.960 So our one million plus farms and factories are audited 0:15:27.040 --> 0:15:31.400 every year. The auditors talk with the workers, they may 0:15:31.840 --> 0:15:37.400 visit the production sites, they do a rigorous inspection, and 0:15:37.640 --> 0:15:41.200 that happens every year. And in addition, of course, all 0:15:41.200 --> 0:15:43.400 of the brand partners or many of the brand partners 0:15:43.440 --> 0:15:46.040 are visiting those farms and factories every year. So it's 0:15:46.160 --> 0:15:51.240 an incredibly rigorous oversight. And the producers, for their own 0:15:51.280 --> 0:15:55.000 part tend to be producers that are really bought into 0:15:55.000 --> 0:15:58.040 the notion of greater responsibility, and they're getting this premium, 0:15:58.200 --> 0:16:00.840 So producers don't want to run the risk of losing 0:16:00.920 --> 0:16:04.040 the annual premium they get. So there's a real alignment 0:16:04.120 --> 0:16:09.160 of incentives where the producer, the farmer, or the factory 0:16:09.200 --> 0:16:13.479 owners get more money, the brands get a more secure 0:16:13.520 --> 0:16:17.400 and reliable supply chain, and the consumer gets a product 0:16:17.400 --> 0:16:21.120 that makes us feel good because it's helping lift workers 0:16:21.120 --> 0:16:23.840 out of poverty, it's ensuring fair wages, and it's helping 0:16:23.840 --> 0:16:24.880 to protect the environment. 0:16:25.080 --> 0:16:28.960 I didn't know Driscolls had kind of gone through a 0:16:29.000 --> 0:16:31.360 little bit of a path. Dristcals. I think about strawberries 0:16:31.440 --> 0:16:34.360 right like, I mean, every berry, every berry is just close. 0:16:34.640 --> 0:16:39.280 It's the organic, it's the non organic. We are Bloomberg, 0:16:39.520 --> 0:16:42.520 and you know, we think, Tim and I think a 0:16:42.520 --> 0:16:46.880 lot about profitability. Obviously right here we are in earning season, 0:16:47.160 --> 0:16:50.160 but at the same time, the ability to be a 0:16:50.160 --> 0:16:54.880 good company, be a good corporate citizen, do well. What 0:16:55.120 --> 0:16:59.320 is kind of the financial story of sustainability or fair 0:16:59.360 --> 0:17:00.360 trade practice is? 0:17:01.320 --> 0:17:04.160 Yeah, I love I love this question, you know, because 0:17:04.200 --> 0:17:08.480 I spent eleven years working with coffee farmers in the 0:17:08.520 --> 0:17:11.840 mountains of Nicaragua in my twenties and then moved back 0:17:11.880 --> 0:17:15.720 here to start fair trade and I've always felt that 0:17:15.800 --> 0:17:18.480 fair trade would never work for the farmers if it 0:17:18.480 --> 0:17:21.119 didn't also work for business. So I've spent you know, 0:17:21.160 --> 0:17:24.440 the better part of the last thirty years working directly 0:17:24.480 --> 0:17:30.000 with companies to develop a strong business case for sourcing 0:17:30.040 --> 0:17:32.359 in a more sustainable way, not just because it's the 0:17:32.400 --> 0:17:36.080 right thing to do, but because it creates value for 0:17:36.119 --> 0:17:39.800 the firm, right what Michael Porter at Harvard calls shared value. Right. 0:17:39.840 --> 0:17:42.280 So there's there's value for the farmer, for the worker, 0:17:42.320 --> 0:17:45.879 for the planet, but also there's supply chain resilience for 0:17:45.960 --> 0:17:49.639 the company. There's brand differentiation for the company, and there's 0:17:50.119 --> 0:17:53.080 you know that emotional gratification as a consumer that we 0:17:53.119 --> 0:17:56.360 feel when we buy something knowing that it did no harm. 0:17:56.680 --> 0:18:00.000 I'll give you a recent example. Walmart piloted fair trade 0:18:00.160 --> 0:18:04.720 tomatoes and saw their sales go up by three percent 0:18:04.880 --> 0:18:07.280 when the label went on the package. Now, who would 0:18:07.320 --> 0:18:11.000 have thought that a Walmart consumer would care about tomato 0:18:11.119 --> 0:18:14.480 farm workers in the developing world, And in fact they do. 0:18:14.720 --> 0:18:18.760 And so it's just an indication of the business case 0:18:18.800 --> 0:18:21.600 for fair trade right that consumers are moving in this direction. 0:18:22.200 --> 0:18:25.080 They're voting with their dollars, if you will, for the 0:18:25.160 --> 0:18:27.359 kind of world they want to see. They're looking for 0:18:27.400 --> 0:18:31.600 more socially and environmentally responsible products. And quite frankly, this 0:18:31.720 --> 0:18:35.359 macro trend is politics proof. I just wrote a piece 0:18:35.840 --> 0:18:39.360 for a Wall Street Journal and our ed piece entitled 0:18:39.480 --> 0:18:43.879 will sustainability survive Trump's second term? And the reality is 0:18:43.920 --> 0:18:46.960 the business community is moving in this direction not just 0:18:46.960 --> 0:18:49.200 because it's the right thing to do, but because it's 0:18:49.280 --> 0:18:51.240 better business, and it is better for business. 0:18:51.520 --> 0:18:55.520 Paul, is there anything that cannot be produced in your view, 0:18:55.560 --> 0:18:57.040 in a fair trade way? Right now? 0:18:57.160 --> 0:19:00.240 Can an iPhone? I don't even think we. 0:19:00.200 --> 0:19:02.880 Would love to work with Apple on fair trade iPhones 0:19:02.920 --> 0:19:06.000 we're not there yet, but over the last twenty six years, 0:19:06.119 --> 0:19:09.080 you know, we started with coffee, and then year after 0:19:09.200 --> 0:19:13.960 year we engaged with lighthouse brands, pioneering brands who wanted 0:19:13.960 --> 0:19:16.400 to take us into their industry. So now we work 0:19:16.400 --> 0:19:20.240 in apparel, we work in cosmetics, we work in you know, 0:19:20.280 --> 0:19:24.600 in furniture with Williams Sonoma Inc. And we're certifying seafood, 0:19:24.680 --> 0:19:27.400 we're certifying dairy. We sort of buy farms and factories 0:19:27.400 --> 0:19:30.639 in the US now, not just abroad. And so you know, 0:19:30.880 --> 0:19:33.119 our vision is fair trade for all, and it's the 0:19:33.160 --> 0:19:37.760 notion that any and all supply chains, domestic or international, 0:19:37.920 --> 0:19:43.000 can be can embrace responsible sourcing practices. And so yeah, 0:19:43.080 --> 0:19:45.680 stay tuned. Maybe next year you'll bring me on when 0:19:45.680 --> 0:19:47.000 we have fair trade iPhones. 0:19:48.119 --> 0:19:49.880 All right, we will do that. 0:19:50.040 --> 0:19:50.639 We will do that. 0:19:50.680 --> 0:19:52.680 We will hold you to it. Paul, Thank you so much, 0:19:52.760 --> 0:19:53.320 Paul Rice. 0:19:53.560 --> 0:19:56.240 Glad we could finally get to you, founder of Fairtrade USA, 0:19:56.359 --> 0:20:00.160 his book Every Purchase Matters, How fairtrade farmers. 0:19:59.800 --> 0:20:02.360 Come, copanies and consumers are changing the world. 0:20:04.480 --> 0:20:08.120 This is the Bloomberg Business Week podcast. Listen live each 0:20:08.160 --> 0:20:11.560 weekday starting at two pm Eastern on Applecarplay and Android 0:20:11.600 --> 0:20:14.639 Auto with the Bloomberg Business App. You can also listen 0:20:14.720 --> 0:20:17.960 live on Amazon Alexa from our flagship New York station. 0:20:18.520 --> 0:20:21.200 Just say Alexa, Play Bloomberg eleven thirty. 0:20:22.840 --> 0:20:26.520 Chinese exports of rare earth minerals are all but on 0:20:26.560 --> 0:20:30.360 hold as producers grapple with tighter permit requirements following last 0:20:30.400 --> 0:20:33.879 week's new restrictions on the critical materials in an escalating 0:20:34.160 --> 0:20:37.200 trade war with the US. We want to go deep 0:20:37.359 --> 0:20:40.159 on rare earth to understand how they fit into the 0:20:40.160 --> 0:20:43.119 trade war, if there are alternatives, how much leverage it 0:20:43.160 --> 0:20:45.680 gives China, and more. And we've got a great roundtable. 0:20:45.720 --> 0:20:47.920 So we're going to just tell you sit down, pull 0:20:47.960 --> 0:20:50.280 your car over, maybe grab a drink, well, not if 0:20:50.320 --> 0:20:50.600 you're in the. 0:20:50.600 --> 0:20:52.879 G get your shovel and dig in well, because this 0:20:52.960 --> 0:20:54.520