WEBVTT - IMF, Western Alliance, ETFs, and Kurodanomics 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.560 --> 0:00:18.400 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.599 at Bloomberg dot com slash podcast. I was thunderstruck in 0:00:22.680 --> 0:00:26.560 your speech and what your world economic outlook says about 0:00:26.600 --> 0:00:30.319 a five year vision of the International Monetary Fund of 0:00:30.440 --> 0:00:34.040 growth from three point eight percent down to three percent, 0:00:34.120 --> 0:00:37.880 a twenty one percent decline in the five year vision, 0:00:38.200 --> 0:00:41.640 are you modeling global recession? And dare I say global 0:00:41.680 --> 0:00:45.920 recession for five years? What permodelink is a period of 0:00:45.960 --> 0:00:50.000 slow growth that is being held back by a number 0:00:50.000 --> 0:00:55.920 of factors. One is not so dramatic. Some of the 0:00:55.960 --> 0:01:00.640 fuzz growing economies like China or South Korea are growing 0:01:00.680 --> 0:01:05.039 fast no more. But you would expect that there would 0:01:05.080 --> 0:01:09.080 be others to pick up the torch of strong growth 0:01:09.640 --> 0:01:14.720 and this is not happening. What is holding growth back 0:01:15.040 --> 0:01:20.880 are three groups of factors. First, low productivity. We have 0:01:21.000 --> 0:01:27.399 been struggling with this phenomenon before the pandemic and we 0:01:27.480 --> 0:01:35.000 continue to struggle with it. Second, it is fragmentation, the 0:01:35.040 --> 0:01:39.640 fact that the world economy does not enjoy the same 0:01:39.840 --> 0:01:44.480 impetus that comes from more to understand, we're going to 0:01:44.480 --> 0:01:47.200 spend this entire interview on trade for imitation. Give you 0:01:47.319 --> 0:01:50.480 the third point right now. And the third point is 0:01:50.560 --> 0:01:55.960 that countries that we would expect to add to growth 0:01:57.880 --> 0:02:03.320 from TM markets, low income country are in particularly difficult 0:02:03.480 --> 0:02:11.680 place because they have been innocent bystanders, repetitive shocks that COVID, 0:02:12.480 --> 0:02:17.359 Russia's invasion. The fact that the world ecolling me as 0:02:17.360 --> 0:02:23.359 a whole, is now less able to support the weakest members. 0:02:23.600 --> 0:02:27.799 Why the piece divident is gone well, and we're through COVID, 0:02:27.840 --> 0:02:30.280 and it is a celebration of these meetings as we 0:02:30.360 --> 0:02:33.720 come beyond COVID, the assistance of you and other institutions 0:02:33.800 --> 0:02:36.960 in getting us beyond this pandemic. But you end your 0:02:37.000 --> 0:02:40.800 speech talking about the ropes that tie us together. The 0:02:40.960 --> 0:02:44.680 ropes between Washington and Beijing are afraid as you and 0:02:44.720 --> 0:02:48.239 I haven't seen from our youth. How does the IMF 0:02:48.400 --> 0:02:53.560 tie the ropes between Beijing and Washington back together? Where 0:02:53.680 --> 0:02:59.160 we see an opportunity to do better is to identify 0:02:59.440 --> 0:03:04.919 very proud practically areas where cooperation is a must. Climate 0:03:05.000 --> 0:03:11.000 change cannot be fought by individual countries. The criticality of 0:03:11.280 --> 0:03:19.120 adjusting to more supply security at the lowest possible cost, 0:03:20.480 --> 0:03:25.760 engaging on securing areas of the world that have become 0:03:26.400 --> 0:03:30.240 more fragile. It is in everybody's interest that we do 0:03:30.320 --> 0:03:34.480 not have more civil wars more comright, But in everybody's 0:03:34.639 --> 0:03:38.120 interest in the tone here and particularly in the Economist 0:03:38.360 --> 0:03:41.760 article of two or three days ago, is China doesn't 0:03:41.800 --> 0:03:45.000 want to participate. Now you've spoken your comments in your 0:03:45.040 --> 0:03:49.120 speech of the new practicality of the Premier of China, 0:03:49.240 --> 0:03:52.160 can you report that there's a new practicality out of 0:03:52.200 --> 0:03:56.200 Beijing to help us with those ropes. Tie together what 0:03:56.760 --> 0:04:01.200 I hurt in our bilateral meeting, can also publicly from 0:04:01.840 --> 0:04:08.480 Premier Li Chang. Are three important messages. First, Chinese commitment 0:04:08.640 --> 0:04:16.479 to continue to open its economy for private investors from 0:04:16.480 --> 0:04:23.039 all over the world. Second, China's commitment to play a 0:04:23.120 --> 0:04:29.880 constructive role in multi lateral institutions, including the IMAN, and third, 0:04:30.120 --> 0:04:35.599 Chinese commitment to support developing countries that are struggling with 0:04:35.800 --> 0:04:39.320 high that levels for making them China, the major A 0:04:39.480 --> 0:04:42.440 major sore so important here and this goes to our 0:04:42.520 --> 0:04:45.200 en Rehardens conversation with the Speaker of the House last 0:04:45.320 --> 0:04:47.680 night in Los Angeles. But to take it away from 0:04:47.720 --> 0:04:50.880 the politics and go back to IMF one on one, 0:04:51.200 --> 0:04:54.919 the Chinese don't want to participate in the normal and 0:04:55.120 --> 0:05:00.440 historic IMF restructuring process. They don't want to exgeneration, they 0:05:00.480 --> 0:05:02.200 don't want to take a hair cut and bring down 0:05:02.200 --> 0:05:04.440 the interest rate. They don't even want to write down 0:05:04.520 --> 0:05:07.400 some of the debts that they were directly or indirectly 0:05:07.520 --> 0:05:10.640 involved in. I spoke to our Matthew Hill and Mozambique 0:05:10.640 --> 0:05:15.040 and Zambia today. Can Chinese help you with the challenges 0:05:15.160 --> 0:05:20.360 of Zambia. What I am very mindful of is that 0:05:21.279 --> 0:05:28.240 China has been very slow to recognize that multilateral debt 0:05:28.279 --> 0:05:34.320 restructuring requires China to play by the rules that are 0:05:34.360 --> 0:05:39.200 already established. It is now the time for China to 0:05:39.279 --> 0:05:46.719 demonstrate that they are capable of playing by these rules. Yes, 0:05:47.440 --> 0:05:52.200 we have had very slow process on that restructuring on Chat, 0:05:52.880 --> 0:05:57.440 but we have completed it. We have now initiated a 0:05:57.520 --> 0:06:02.120 debt restructuring for Zambia, and I got the assurances from 0:06:02.160 --> 0:06:07.119 the Chinese premier that China would play its role. They're 0:06:07.120 --> 0:06:11.479 the largest creditor to Zambia for Zambia to move to 0:06:11.680 --> 0:06:17.520 a more reliable path. The same applies to Sri Lanka, 0:06:17.520 --> 0:06:20.919 where China has taken a commitment to play by the 0:06:21.000 --> 0:06:25.680 international rules. The same applies to Ghana, Tree Ekiopia. We 0:06:25.760 --> 0:06:30.120 have created, together with the World Bank and India as 0:06:30.200 --> 0:06:35.160 G twenty Presidency, a new global sovereign that round table. 0:06:35.920 --> 0:06:41.280 China is participating, They're they're part of it. They're participating 0:06:41.680 --> 0:06:47.400 fully and they're participating constructively. Where we need to continue 0:06:47.480 --> 0:06:52.200 to engage with China is on how we can achieve 0:06:52.279 --> 0:06:56.359 the same result for countries in terms of shrinking that 0:06:56.360 --> 0:07:02.520 that level that China can implement meant domestically given their 0:07:02.680 --> 0:07:10.160 own internal domestic constraints. Direct haircut is the most straightforward way, 0:07:10.720 --> 0:07:15.119 but we can achieve the same shrinking of death through 0:07:15.360 --> 0:07:20.320 that reprofiling, in other words, extending by many more years 0:07:20.640 --> 0:07:24.960 the time of services trying to agree to that traditional methodology. 0:07:25.280 --> 0:07:28.000 They are not well. They have agreed in the case 0:07:28.040 --> 0:07:31.560 of chat We are now working on having them agreeing 0:07:31.640 --> 0:07:34.600 in the case of Zambia. But look proof of the 0:07:34.640 --> 0:07:38.600 pudding is where it is in the meeting, so I 0:07:38.640 --> 0:07:43.040 can say we got reassurances from the Chinese leadership that 0:07:43.120 --> 0:07:46.160 they would play constructively. From now we need to eat 0:07:46.200 --> 0:07:48.720 the cake. Now we need to see China delivering on 0:07:48.920 --> 0:07:52.240 How urgent is it, as you said in your speech, 0:07:52.280 --> 0:07:56.400 as you start these spring meetings, this difficult climb. How 0:07:56.600 --> 0:08:00.920 urgent is it for President Biden to meet President to 0:08:01.000 --> 0:08:05.800 begin the path of practicality and the path towards the 0:08:06.080 --> 0:08:09.560 huge tensions that we have now to improve those tensions. Well, 0:08:09.800 --> 0:08:12.040 this is for the leadership of the of these two 0:08:12.160 --> 0:08:16.800 countries to decide. What I can say is that when 0:08:17.400 --> 0:08:22.360 there is so much tension between the two largest economies, 0:08:23.440 --> 0:08:30.600 then the innocent bystanders are being hurt. We calculated the 0:08:30.640 --> 0:08:38.480 economic impact of the taris US impulsed on China for 0:08:38.679 --> 0:08:43.199 last year. This shrunk global growth by zero point four 0:08:43.320 --> 0:08:45.160 or you want to player, come on, it's a working 0:08:45.200 --> 0:08:48.400 paper the IMF and basically we're shrinking in Japan and 0:08:48.559 --> 0:08:51.839 Germany out of the global system. Right Well, now, this 0:08:52.080 --> 0:08:55.040 is this is a separate issue. I'm talking specifically about 0:08:55.080 --> 0:09:01.240 the tariffs. Okay, the taris that have been impulse they 0:09:01.320 --> 0:09:08.679 reduce global GDP because the impact of trade restrictions. We 0:09:08.760 --> 0:09:11.360 know it from I'm running out of time. Are gonna 0:09:11.360 --> 0:09:14.120 make some news. Are you suggesting that President Biden should 0:09:14.160 --> 0:09:19.560 eliminate or diminished the Trump tariffs? We think that getting 0:09:19.960 --> 0:09:25.720 on a path of less fragmentation in the world economy 0:09:25.960 --> 0:09:29.880 is good for everybody, including for middle class in the 0:09:29.960 --> 0:09:37.080 United States, because when we impose more costs, they trickled 0:09:37.200 --> 0:09:42.200 down and somebody pays. Who pays it is in the 0:09:42.360 --> 0:09:48.480 end consumers here, consumers everywhere. So less fragmentation in the 0:09:48.480 --> 0:09:54.040 world economy means the highest standard of living for people everywhere. 0:09:55.480 --> 0:09:59.320 You're listening to the Team Cancer ALIGNE program, Bloomberg Markets 0:09:59.360 --> 0:10:02.480 We Jason ten A m Eastern Bloomberg dot Com, the 0:10:02.600 --> 0:10:05.280 r Heard radio app, and the Bloomberg Business app. We're 0:10:05.280 --> 0:10:10.400 listening on demand wherever you get your podcast. I want 0:10:10.400 --> 0:10:12.360 to talk about it. Now. We have an economist who 0:10:12.440 --> 0:10:17.199 has a PhD. Wow, that's big. I'm not that's University 0:10:17.200 --> 0:10:19.440 of Maryland. When you make the commitment for PhD, that 0:10:19.600 --> 0:10:22.079 is a huge commitment. I mean the masters I got 0:10:22.080 --> 0:10:23.839 my NBA is two years. I spent half of it 0:10:24.000 --> 0:10:26.080 on the golf course. But when you go to get 0:10:26.080 --> 0:10:30.360 a PhD. You know, that is a commitment. Uh some 0:10:30.640 --> 0:10:32.960 more rigorous than an MBA. It's a little bit more rigorous. 0:10:33.000 --> 0:10:36.079 Yeah some. I have chief economists at Core Lodgist Joints 0:10:36.080 --> 0:10:38.000 this year. We want to talk about the housing market here, 0:10:38.280 --> 0:10:40.280 so Selma, give us a sense here. We've had these 0:10:40.360 --> 0:10:43.880 rates move up dramatically. That didn't stop me from diving 0:10:43.880 --> 0:10:45.679 into the real estate market. Well, and then, as Critti 0:10:45.760 --> 0:10:49.360 pointed out, we've had rates then moved down dramatically. I 0:10:49.360 --> 0:10:52.200 mean the ten year was over four percent like what 0:10:52.400 --> 0:10:58.080 three weeks ago, and now we're at three twenty eight. Selma, 0:10:58.280 --> 0:11:04.319 is that like a concern? Um? Yes, Well, first of all, 0:11:04.360 --> 0:11:07.520 thank you very much for having me on the show. Um. Yeah, 0:11:07.559 --> 0:11:10.520 I mean we've we've been muddling through this transition in 0:11:10.600 --> 0:11:14.120 the housing market brought on by by Surgeon mortgage rates 0:11:14.240 --> 0:11:17.120 and and you know, we had a really miserable winter. 0:11:17.679 --> 0:11:21.200 Homesales ended up with the thirty to forty percent lower 0:11:21.240 --> 0:11:24.160 activity at the end of the year than than at 0:11:24.160 --> 0:11:26.840 the end of twenty twenty one. But now mortgages have 0:11:27.000 --> 0:11:30.079 come down from the November peak. You know, after picking 0:11:30.240 --> 0:11:33.200 seven at seven percent, mortgage rates have been. You know, 0:11:33.600 --> 0:11:35.760 they even came down to six percent, went up to 0:11:35.840 --> 0:11:38.880 six and a half, coming back down towards six percent. 0:11:39.320 --> 0:11:42.280 So um. You know, lower mortgage rates have definitely helped 0:11:42.280 --> 0:11:45.440 the home sales activity which has which was really really 0:11:45.480 --> 0:11:48.080 strong in the first couple of months of this year. 0:11:48.240 --> 0:11:51.000 And we are seeing is that the buyers are very 0:11:51.120 --> 0:11:54.520 very responsive to these low lower mortgage rates. Um and 0:11:54.559 --> 0:11:58.320 then as soon as mortgages start coming down, buyers jumped in. 0:11:58.480 --> 0:12:01.599 It's the only problem really at this point is inventory 0:12:01.920 --> 0:12:05.360 that continues to be extremely scarce. And you know, the 0:12:05.440 --> 0:12:09.480 usually spring increase that we see for spring homebuying season, 0:12:09.559 --> 0:12:11.720 it's just not there this time. Run well, and also 0:12:11.720 --> 0:12:14.480 the question, you know, why our rates coming down so quickly. 0:12:14.559 --> 0:12:17.439 I mean, it's great to have lower mortgages, obviously more 0:12:17.480 --> 0:12:20.360 people can afford to buy a house, but if we're 0:12:20.360 --> 0:12:23.959 heading into a recession, that's got to concern you a little. Right. 0:12:24.400 --> 0:12:26.520 If you look at the World to interest rate probability 0:12:27.679 --> 0:12:31.440 page on the Bloomberg Terminal, which is how we calculate 0:12:31.559 --> 0:12:34.400 what markets are forecasting for the FED, there was a 0:12:34.480 --> 0:12:36.920 seventy percent chance of a rate hike at the beginning 0:12:36.920 --> 0:12:39.720 of this week. Now it's only a forty four percent chance. 0:12:40.240 --> 0:12:44.360 So that means the market is really worried that the 0:12:44.440 --> 0:12:49.719 Fed is going to freak out a pause right right, absolutely, 0:12:49.800 --> 0:12:52.880 And and that's actually reflected in the mortgage ry spread, 0:12:53.040 --> 0:12:56.320 you know it has. It's we've had one of the 0:12:56.360 --> 0:12:59.520 most volatil years in terms of mortgage ry spread, and 0:13:00.200 --> 0:13:03.199 we ended the year at three hundred basis points. It's 0:13:03.280 --> 0:13:07.040 over the ten year treasury from thirty year fixed. You know, 0:13:07.120 --> 0:13:09.640 this is almost double that that, you know, the long 0:13:09.760 --> 0:13:12.320 term average of a five hundred and seventy based points. 0:13:12.360 --> 0:13:15.079 It has come down and now again over the last 0:13:15.720 --> 0:13:18.640 month or so, it has jumped back to closer to 0:13:18.800 --> 0:13:21.719 three hundred basis points. So he has mortgage right, volatility 0:13:21.840 --> 0:13:24.120 is huge, and I mean, imagine how difficult it is 0:13:24.160 --> 0:13:27.719 for potential homebuyers to plan in this environment because you 0:13:27.760 --> 0:13:29.600 don't know if you're going to be space six percent, 0:13:29.720 --> 0:13:31.760 if you're gonna bay seven percent. And for some folks 0:13:31.760 --> 0:13:33.800 that matters a lot in terms of how much they 0:13:33.800 --> 0:13:36.960 can afford. Well, I'm going to refinance my mortgage I 0:13:37.000 --> 0:13:38.840 just got into I'm gonna say twelve to eighteen months, 0:13:38.840 --> 0:13:40.680 and it's gonna have a four handle on the front. 0:13:40.679 --> 0:13:43.240 That's my prediction. So you got a floating rate, Well, 0:13:43.320 --> 0:13:44.840 we'll see about that. Yeah, we got some we got 0:13:44.880 --> 0:13:47.480 some work going on there in the mortgage market. So 0:13:47.480 --> 0:13:49.560 I'm gona talk to us about the regionality of what's 0:13:49.559 --> 0:13:51.600 going on out there in the housing market. Is it 0:13:51.920 --> 0:13:54.559 as simple as everybody's moving down to the sun belt 0:13:54.600 --> 0:13:58.520 and that's good, and everybody's moving out of the coastal cities. 0:13:58.640 --> 0:14:02.040 Is that kind of the story? Um, well, I don't 0:14:02.080 --> 0:14:04.000 know that it's as simple as that, but I mean 0:14:04.040 --> 0:14:06.679 that's actually what the data is reflecting at this point. 0:14:07.160 --> 0:14:11.160 You know, it's it's very the home price changes are 0:14:11.280 --> 0:14:16.440 varying so so much across the US. On the West coast, 0:14:16.480 --> 0:14:20.320 Mountain West, we've seen significant declines from last year's peaks, 0:14:20.640 --> 0:14:24.800 as much as ten to fourteen percent, so double digit declines. 0:14:25.680 --> 0:14:31.000 On the East coast, Southeast Texas, New England not as much. 0:14:31.120 --> 0:14:34.480 Home prices are down in very low single digits, up 0:14:34.520 --> 0:14:38.440 to down three percent, So there is huge variation. But 0:14:38.520 --> 0:14:42.480 I think it's really it's it's about affordability. You know, 0:14:42.520 --> 0:14:45.840 Mortgage rates really took a huge chunk of the purchase 0:14:45.920 --> 0:14:49.480 budget for buyers, so it's about affordability, it's about lack 0:14:49.520 --> 0:14:52.880 of inventory. The areas that are doing much better are 0:14:52.920 --> 0:14:57.240 areas that do have new construction activity where builders have 0:14:57.360 --> 0:15:01.120 been able to compensate buyers for that and mortgage rates. 0:15:01.200 --> 0:15:05.960 So it's it's about more than just um sunshine. Right, Yeah, 0:15:05.960 --> 0:15:08.960 it's taxes, It's all that kind of good stuff. Real 0:15:09.040 --> 0:15:13.240 quickly m thirty seconds. Some what's your expectation for where 0:15:13.400 --> 0:15:17.120 mortgage rates are going to go? Well, I think we're 0:15:17.120 --> 0:15:20.000 going to continue to see volatility in mortgage rates, but 0:15:20.120 --> 0:15:24.000 I think generally speaking, we're going to be uh driving 0:15:24.040 --> 0:15:27.280 a mortgagees are going to be coming lower. Um. You 0:15:27.320 --> 0:15:30.240 know when you look at the consensus forecast, it's all 0:15:30.240 --> 0:15:33.520 over the place. I mean, it's it's so uncertain and 0:15:33.560 --> 0:15:37.760 wide ranging. Um. I think generally speaking, uh, we expect 0:15:37.760 --> 0:15:40.200 mortgage rates to come below six percent by the end 0:15:40.240 --> 0:15:44.040 of the year. Um. Some expect still in that six 0:15:44.480 --> 0:15:46.640 percent handle, but but I think we're going to be 0:15:47.800 --> 0:15:50.920 drifting lower to five and a half. All right, SMA, 0:15:50.920 --> 0:15:52.960 thank you so much. I'm again I'm holding out for 0:15:53.000 --> 0:15:54.720 something with a four handle on it, So see what 0:15:54.760 --> 0:15:57.240 you can do for me. Some have she's a chief 0:15:57.280 --> 0:16:01.720 economist at a core logic coming up and just moments. Yeah, 0:16:01.760 --> 0:16:06.160 so I'm confused. Did you buy I actually asked, are 0:16:06.200 --> 0:16:09.200 you no? I haven't fixed or I have a fixed mortgage, 0:16:09.200 --> 0:16:11.440 but I'm gonna be financi that bad boy. Um oh, 0:16:11.480 --> 0:16:14.120 I see okay, yeah, okay. For a second, I suspected 0:16:14.160 --> 0:16:17.720 you just bought in cash and then you're waiting to no, 0:16:17.840 --> 0:16:19.640 I need that. I like the tax deduction. I didn't 0:16:19.680 --> 0:16:21.600 have that for a while. So you're listening to the 0:16:21.680 --> 0:16:25.480 tape Cancer Live program Bloomberg Markets weekdays at ten am 0:16:25.520 --> 0:16:29.440 Eastern on Bloomberg Radio tuning half, Bloomberg dot Com and 0:16:29.480 --> 0:16:32.280 the Bloomberg Business Half. You can also listen live on 0:16:32.360 --> 0:16:35.640 Amazon Alexa from our flagship New York station, Just say 0:16:35.680 --> 0:16:40.960 Alexa play Bloomberg eleven thirty. You know, cars for the 0:16:41.040 --> 0:16:45.360 American market designed and built more quickly. Now, absolutely, this 0:16:45.560 --> 0:16:47.920 is a journey, Matt, So it would not be from 0:16:47.960 --> 0:16:50.280 one day to the next. It's not gonna happen tomorrow. 0:16:50.640 --> 0:16:54.920 But I think by bringing digitalization engineering combined with the design, 0:16:55.320 --> 0:16:59.440 it will increase the amount of vehicles that we'll bring 0:16:59.520 --> 0:17:01.760 to the market, and it would decrease the amount of time. 0:17:02.640 --> 0:17:04.760 This would not be possible if we would not have 0:17:04.840 --> 0:17:07.280 the support from Bozai and in Germany. Yeah, I know 0:17:07.320 --> 0:17:10.560 that Oliver Bloom fully supports. They studied along with the board. Yeah, 0:17:10.600 --> 0:17:13.320 we have our non leads and we are also the 0:17:13.640 --> 0:17:17.080 bd W brand CEO, Tomas Schaeffer. So everybody's supporting the 0:17:17.200 --> 0:17:20.760 strategy that we need to get more responsibility for the 0:17:20.840 --> 0:17:23.520 design on the developer of the vehicles. She in the US. 0:17:23.600 --> 0:17:26.040 I was just down in Mexico and I saw down 0:17:26.080 --> 0:17:29.560 there some of the original bugs, right, and my heart 0:17:29.600 --> 0:17:32.840 flutters a little bit. It's such an iconic design. I 0:17:32.880 --> 0:17:36.520 grew up partially in Germany, so for me, the golf 0:17:36.760 --> 0:17:40.640 is almost synonymous with car. Right. My mother has pined 0:17:40.720 --> 0:17:43.520 for a Volkswagen bus for the better part of my life, 0:17:43.520 --> 0:17:47.840 and I'm old. Are these iconic nameplates gonna come back? 0:17:48.280 --> 0:17:50.040 I was worried when I heard the golf this may 0:17:50.080 --> 0:17:52.840 be the last generation of the Golf. Yeah, So going 0:17:52.920 --> 0:17:54.400 to your point, they will come back. I mean, we're 0:17:54.400 --> 0:17:58.080 going to maintain the DNA of the brand, the iconic products. 0:17:58.119 --> 0:18:02.040 For example, we are launching the ID bus in a 0:18:02.119 --> 0:18:04.399 couple of months here in the US. It will be 0:18:04.480 --> 0:18:07.879 a global launch. It will be in the beginning of June, 0:18:08.720 --> 0:18:11.800 and the launch of the product will be available in 0:18:11.920 --> 0:18:15.359 twenty twenty four. So this type of vehicles, iconic vehicles, 0:18:15.440 --> 0:18:19.000 we will preserve the DNA of the brand. Going forward, 0:18:19.040 --> 0:18:21.080 there will be a next gen golf. We're gonna still 0:18:21.200 --> 0:18:24.480 see a golf in twenty thirty. We're gonna maintain the 0:18:24.600 --> 0:18:27.960 DNA of the brand, probably a golf. I cannot guarantee you, 0:18:28.040 --> 0:18:30.120 but I guarantee you that the DNA of the brand 0:18:30.160 --> 0:18:33.000 of these iconic products will remain in Let means you, yes, 0:18:33.080 --> 0:18:38.159 have to buy your mother one as sure. Okay, so 0:18:38.200 --> 0:18:41.320 she's just getting on. So speaking of demand, what is 0:18:41.359 --> 0:18:43.560 your view on where the US is right now in 0:18:43.800 --> 0:18:47.280 terms of recessionary fears, et cetera. Yeah, So, first of all, 0:18:47.400 --> 0:18:49.480 let me tell you that on the first quarter of 0:18:49.560 --> 0:18:54.119 this year, the marker is growing nine percent, So despite 0:18:54.680 --> 0:18:59.040 the recession fears, despite inflation, and despite the interest rate 0:18:59.119 --> 0:19:02.680 the market, we mains strong and we have gained market 0:19:02.720 --> 0:19:06.280 share as VAW over the last three three months, so 0:19:06.760 --> 0:19:11.040 that's very positive. How strong nine percent market growth is 0:19:11.320 --> 0:19:14.159 very strong, I mean, and we grew almost ten percent, 0:19:14.560 --> 0:19:19.040 so I think that, Yeah, there's inflation pressure. There's interest 0:19:19.119 --> 0:19:21.560 rates obviously, particularly on the least. When the consumers go 0:19:22.160 --> 0:19:24.280 to the dealer and they see that the least has 0:19:24.440 --> 0:19:27.399 you know, almost double, he has an impact. But he 0:19:27.520 --> 0:19:30.200 has not slowed down the industry. Now. I think the 0:19:30.359 --> 0:19:34.000 FED has made really good decisions on increasing the indust 0:19:34.080 --> 0:19:36.640 rate to keep the interest rate under control. I think 0:19:36.680 --> 0:19:40.879 this strategy will pay off by the year end twenty 0:19:40.920 --> 0:19:43.720 twenty three, and I would expect that the interestry would 0:19:43.720 --> 0:19:46.760 start coming down slowly early next year. We've seen in 0:19:46.840 --> 0:19:49.480 the last couple of days a number of carmakers put 0:19:49.520 --> 0:19:52.720 out news about their own finance arms. Right, it's really 0:19:52.760 --> 0:19:55.240 important to have your own finance arm, especially in this 0:19:55.320 --> 0:19:58.399 kind of situation, a high prices, rising rates, How do 0:19:58.480 --> 0:20:00.920 you plan to finance your growth? So we do have 0:20:01.080 --> 0:20:03.600 estric customers, so we do have a bank here in 0:20:03.720 --> 0:20:08.200 the US, a very solid bank. But again it goes 0:20:08.240 --> 0:20:09.720 back to the products. So let me give you an 0:20:09.760 --> 0:20:12.879 example of the eighty four, which when we started manufacturer 0:20:12.960 --> 0:20:15.840 in Chatauga in the state of Tennessee last year, it's 0:20:15.880 --> 0:20:20.200 our first electric vehicle manufacturing in the US. Today, for 0:20:20.320 --> 0:20:23.000 the first three months, we're number four in the rankings 0:20:23.320 --> 0:20:26.280 in the electric vehicles. And then on top of that, 0:20:26.520 --> 0:20:30.080 we have a company called Electrify America which are charging stations, 0:20:30.400 --> 0:20:33.840 you know, three hundred charging stations, three thousand, five hundred superchargers. 0:20:34.240 --> 0:20:37.880 We're gonna duble that in two years. And the most 0:20:37.880 --> 0:20:40.480 important thing is that one percent of that comes from 0:20:40.560 --> 0:20:44.240 renewable energy. Yeah, and then we give the buyer of 0:20:44.400 --> 0:20:47.200 the i D four up to three years thirty minute 0:20:47.280 --> 0:20:50.399 charge for free, included in the package of a vehicle 0:20:50.440 --> 0:20:53.000 which starts around thirty nine thousand dollars. So when you're 0:20:53.040 --> 0:20:55.440 a consumer and you look at the total picture, you're 0:20:55.440 --> 0:21:01.640 an affordable I D four with three energy renewal energy 0:21:01.720 --> 0:21:05.120 for the next three years on, you have some financing options. 0:21:05.280 --> 0:21:07.600 On top of that, you had the IRD credit. That's 0:21:07.600 --> 0:21:10.440 a company package. All right, Pablo, thank you so much. 0:21:10.440 --> 0:21:13.240 I really appreciate it. Matt also appreciate having a set 0:21:13.320 --> 0:21:16.760 with me. Thank you for allowing me to come Pablo 0:21:16.960 --> 0:21:21.320 to see Volkswagen of America CEO and Bloomberg's Matt Miller. 0:21:21.560 --> 0:21:26.520 This is Bloomberg. You're listening to the Team Cancer Line 0:21:26.600 --> 0:21:30.480 program Bloomberg Markets weekdays at ten am Eastering on Bloomberg 0:21:30.560 --> 0:21:33.120 dot com. The I Heart Radio app and the Bloomberg 0:21:33.200 --> 0:21:36.440 Business app. We're listening on demand wherever you get your podcast. 0:21:39.119 --> 0:21:41.240 All right, let's bring in Herman Chan. He covers the 0:21:41.280 --> 0:21:44.600 regional banks for Bloomberg Intelligence. He's been a busy, busy 0:21:44.960 --> 0:21:49.119 analyst over the last several weeks here, So Herman, I 0:21:49.240 --> 0:21:51.399 guess I'm just looking at Western Alliance. That's kind of 0:21:51.400 --> 0:21:53.080 the one of the banks I have on my screen 0:21:53.160 --> 0:21:56.480 to keep an eye on. Is maybe a potential at 0:21:56.600 --> 0:21:59.120 risk type of institution out there on the West coast. 0:21:59.160 --> 0:22:01.040 It's up five percent today. I don't know what to 0:22:01.119 --> 0:22:04.200 make of it. What are we hearing from some of 0:22:04.320 --> 0:22:06.600 these banks or are we just waiting for earnings to 0:22:06.760 --> 0:22:09.600 really get a sense of how their balanceies are, how 0:22:09.640 --> 0:22:11.960 their deposit levels are. Is that kind of where we are? Yeah? 0:22:12.119 --> 0:22:14.880 I heard the segment earlier in terms of Western Alliance 0:22:15.040 --> 0:22:17.240 and how they positioned themselves over the last couple of 0:22:17.320 --> 0:22:19.960 days in terms of their update and lack of the 0:22:20.040 --> 0:22:25.480 deposit disclosure. The disclosure that they subsequently came out with 0:22:25.680 --> 0:22:30.760 yesterday afternoon was actually pretty positive in the grand scheme 0:22:30.800 --> 0:22:36.360 of things. Deposits down and they finally gave that number. 0:22:36.400 --> 0:22:38.960 They didn't give that initial number in the in the 0:22:39.080 --> 0:22:43.120 Tuesday update, so that was a big consternation for them. 0:22:44.440 --> 0:22:48.560 Eleven percent pretty decent. I think some of the analysts 0:22:48.600 --> 0:22:50.840 were expecting something that was worse than that, So I 0:22:50.920 --> 0:22:52.919 think that's why you're seeing a bit of a relief 0:22:53.080 --> 0:22:55.760 rally from Western. Liane. If I'm a banker and I've 0:22:55.800 --> 0:23:00.320 got like Western in my name, I'm gonna I've probably 0:23:00.359 --> 0:23:02.840 lost deposits, or i got some kind of Silicon Valley 0:23:03.240 --> 0:23:08.480 name in my name, I'm losing deposits. Well, right, what 0:23:08.600 --> 0:23:10.439 do I do if I'm a banker? Do I literally 0:23:10.760 --> 0:23:12.840 get on the phone and call these people up and say, 0:23:12.920 --> 0:23:16.160 take your money back from JP Morgan Chase, from Bank 0:23:16.200 --> 0:23:18.479 of America wherever you put it, and bring it back. 0:23:18.640 --> 0:23:20.560 Is we're okay? Is that what I'm doing? Yeah, that's 0:23:20.600 --> 0:23:25.920 what you're doing. Uh, you're going, dude that listen, I 0:23:26.880 --> 0:23:29.520 give you a toaster. Although I'm perfectly happy with my bank, 0:23:30.160 --> 0:23:35.560 um full disclosure to bank, they have obviously no branches here, 0:23:35.720 --> 0:23:39.960 so it makes banking for me particularly difficult. Nonetheless, I 0:23:40.080 --> 0:23:42.560 have not changed my bank since I moved here from 0:23:42.640 --> 0:23:46.800 Ohio like thirty years ago. Right, I'm more likely to 0:23:46.960 --> 0:23:51.240 change my wife than my bank, right, I mean, it's 0:23:51.320 --> 0:23:54.680 just something people don't do, right. She doesn't listen to radio, 0:23:55.080 --> 0:23:59.119 so um, I just can't imagine that people would change 0:23:59.440 --> 0:24:03.679 their bank and then change back, right, unless I mean, 0:24:03.720 --> 0:24:07.280 I'm also maybe extraordinarily lazy and disorganized. But you're a 0:24:07.359 --> 0:24:10.680 super loyal customer that I'm sure Huntington is glad to 0:24:10.760 --> 0:24:15.400 have you. But some of these other institutions, specifically technology 0:24:15.560 --> 0:24:19.479 and startup companies, have had this heard mentality where they 0:24:19.480 --> 0:24:22.920 don't want to operate within a regional bank structure because 0:24:22.960 --> 0:24:26.120 they view them as less safe. So you've seen them 0:24:26.800 --> 0:24:29.639 jettison their deposits over to a larger, too big to 0:24:29.680 --> 0:24:33.640 fail banks. It's unfortunate, but the hope is that when 0:24:33.760 --> 0:24:35.840 things start to stabilize, and you've seen that a bit 0:24:35.960 --> 0:24:41.600 with SBB being acquired by for Citizens and the signature 0:24:41.760 --> 0:24:44.639 deal with New Your Community, it has quelled some of 0:24:44.720 --> 0:24:48.760 the concerns and specifically within regional banks that they are 0:24:48.920 --> 0:24:52.600 operating as as expected. So the hope is that the 0:24:54.000 --> 0:24:57.000 concern sort of goes away and then things can move 0:24:57.040 --> 0:24:59.840 back to normal and deposits can come back to the regionals. Yeah, 0:25:00.000 --> 0:25:03.960 because I think the greater or wider economic concern is, Hey, 0:25:04.080 --> 0:25:07.359 if regional bank A has lost deposits, that bank is 0:25:07.440 --> 0:25:10.680 less likely to lend to my new little store I 0:25:10.760 --> 0:25:12.720 want to open up on main Street and that could 0:25:12.760 --> 0:25:16.879