WEBVTT - XPO's Jacobs Talks Logistics, Economics and Geopolitics 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.920 --> 0:00:09.480 editors who bring you America's most trusted business magazine, plus 0:00:09.560 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:23.400 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:23.600 --> 0:00:31.040 Father All right, everybody, it has been a wild ride 0:00:31.360 --> 0:00:35.599 for the economy, global bonds, thinking around where rates go 0:00:35.680 --> 0:00:38.920 from here. We talked about yesterday the thirty year surgeon 0:00:38.960 --> 0:00:40.720 to its highest level since two thousand and seven. We 0:00:40.800 --> 0:00:44.159 got some jobs dated today, a little bit of softness, 0:00:44.159 --> 0:00:47.320 so maybe everybody calming down, so we're gonna have a 0:00:47.360 --> 0:00:50.519 great little roundtable because with us right now is Bloomberg 0:00:50.560 --> 0:00:53.160 News Rates reporter Michael McKenzie on zoom in New York 0:00:53.200 --> 0:00:56.000 City and then with a corporate perspective and more because 0:00:56.000 --> 0:00:57.560 he's going to stick around for a couple of blocks. 0:00:57.560 --> 0:00:57.680 Hiss. 0:00:57.680 --> 0:01:01.400 Brad Jacobs. He's founder and executive chair at XPO, co 0:01:01.480 --> 0:01:04.800 founder of United Rentals formature of United Ways. He's been 0:01:04.800 --> 0:01:07.399 described as a serial entrepreneur. He's got a new book out, 0:01:07.400 --> 0:01:09.280 which we're going to get to a little bit later on. 0:01:09.480 --> 0:01:12.600 But Brad is here in our Bloomberg Interactive Broker's studio. Brad, 0:01:12.680 --> 0:01:15.759 thank you so much. We're going to have Michael kind 0:01:15.760 --> 0:01:18.440 of lay out the rate environment. But how much do 0:01:18.560 --> 0:01:21.000 you listen and follow in terms of what's going on 0:01:21.120 --> 0:01:24.840 generally when it comes to rates, because it certainly impacts 0:01:25.000 --> 0:01:26.320 corporations balance sheets. 0:01:26.319 --> 0:01:28.399 Potentially, we pay attention to a lot to them because 0:01:28.440 --> 0:01:30.840 that depends that determines what you want to do with 0:01:30.840 --> 0:01:31.720 your capital spending. 0:01:31.760 --> 0:01:32.840 Do you want to spend more, do you want to 0:01:32.840 --> 0:01:34.760 spend less? Do you want to invest? So pay a 0:01:34.760 --> 0:01:35.480 lot of attention to that. 0:01:35.680 --> 0:01:37.520 Well, Michael COMMANI in on it and then lay it 0:01:37.520 --> 0:01:39.279 out for us because it's been kind of a wild 0:01:39.360 --> 0:01:41.639 ride once again when it comes to global bonds. 0:01:41.640 --> 0:01:45.960 Here it hairs Carol, and I think the story remains. 0:01:46.200 --> 0:01:48.520 People are still trying to work out whereas the top 0:01:48.520 --> 0:01:51.320 and yields, particularly for ten year yields, which matter a 0:01:51.320 --> 0:01:54.000 great deal for the US economy. That's the yield that 0:01:54.080 --> 0:01:56.840 determines mortgages and also it helps determine a lot of 0:01:56.840 --> 0:02:01.840 the corporate borrowing costs. It made a run above four eighty, 0:02:03.120 --> 0:02:05.280 A lot of people talking maybe five percent, but it 0:02:05.320 --> 0:02:06.920 wasn't that long ago. In fact, just a couple of 0:02:06.920 --> 0:02:08.520 weeks ago when we were talking about four to fifty 0:02:08.639 --> 0:02:10.600 was going to be the ceiling. So really, when you 0:02:10.639 --> 0:02:13.119 talk to investors and bond managers, as I've been doing 0:02:13.120 --> 0:02:15.639 for last a few days, there's still a sense of 0:02:15.760 --> 0:02:16.720 shell shock out there. 0:02:17.280 --> 0:02:19.200 Yeah, tell us rad if you want to come in 0:02:19.240 --> 0:02:22.000 here on the logistics perspective, this has got to be 0:02:22.040 --> 0:02:24.200 such a tough environment to operate in right now with 0:02:24.320 --> 0:02:27.400 the idea that interest rates are high, I'm going to 0:02:27.400 --> 0:02:30.160 stay that way for a while. You've got goods demand 0:02:30.240 --> 0:02:32.919 in the economy seems to be waning. I mean, how 0:02:32.919 --> 0:02:35.000 are you managing this right now? And how would you 0:02:35.040 --> 0:02:38.959 describe how the business is doing well? 0:02:39.880 --> 0:02:42.400 Interest rates are higher than what they work They were 0:02:42.440 --> 0:02:42.959 low for a while. 0:02:43.000 --> 0:02:44.880 But I'm an old dog. I remember when interest rates 0:02:44.919 --> 0:02:46.320 were much higher than where they are now. 0:02:46.480 --> 0:02:48.760 But is that an important point because we keep saying perspective. 0:02:48.800 --> 0:02:50.919 I remember working with folks who said, I remember having 0:02:50.919 --> 0:02:52.919 a fifteen sixteen seventy percent mortgage rate. 0:02:53.840 --> 0:02:56.680 I remember when HYO bonds were in the mid teens 0:02:56.680 --> 0:02:58.119 and that was normal, and that was for a number 0:02:58.160 --> 0:03:01.120 of years. And I remember back at a United Rentals 0:03:01.160 --> 0:03:03.760 when Leon Black was on our board, and. 0:03:03.720 --> 0:03:05.480 He of a poll of fame, of course. 0:03:05.440 --> 0:03:07.800 One of the first inventors of the junk bond. 0:03:07.800 --> 0:03:10.639 Now that the high yield called high yield, and I 0:03:10.639 --> 0:03:13.520 remember when when it went down to about ten percent, 0:03:13.919 --> 0:03:16.480 he said, we got to get as much yielded as 0:03:16.720 --> 0:03:18.239 hi yield this issue as much as possible. 0:03:18.400 --> 0:03:19.520 It's never going to go below here. 0:03:19.520 --> 0:03:21.520 Of course it did and stayed there for a long time. 0:03:22.000 --> 0:03:24.799 So I historically we're not at very high levels. 0:03:25.000 --> 0:03:27.200 How do you look at the do we stay maybe here? 0:03:27.280 --> 0:03:29.440 Like how when you think about running businesses or we're 0:03:29.440 --> 0:03:31.600 going to get into you know, your kind of next chapter, 0:03:31.639 --> 0:03:33.799 if you will, But thinking about investing, do you think 0:03:33.840 --> 0:03:36.400 that we're this is kind of the environment we're going 0:03:36.480 --> 0:03:37.360 to be in for a while. 0:03:37.720 --> 0:03:40.520 It depends so that there's in my career, I've never 0:03:40.560 --> 0:03:43.800 seen two simultaneous things that are going on right now, ever, 0:03:43.840 --> 0:03:44.800 going on at the same time. 0:03:45.080 --> 0:03:45.760 So you've got the. 0:03:45.720 --> 0:03:52.080 FED tightening, raising rates, slowing things down in possibly inducing 0:03:52.080 --> 0:03:54.720 a recession. But on the other hand, you have huge 0:03:54.760 --> 0:03:56.640 amount of stimulus going into the economy. So I was 0:03:56.640 --> 0:04:00.640 at the Jeffreys Industrials Conference a few weeks ago sixteen 0:04:00.680 --> 0:04:03.680 or seventeen presentations, half of them had a slide or 0:04:03.680 --> 0:04:06.000 two about how much money they were going to get 0:04:06.000 --> 0:04:09.160 from the Cares Act, from the Infrastructure Act, from Inflation 0:04:09.240 --> 0:04:12.120 Reduction Act. So this all trily is a stimulus. I 0:04:12.120 --> 0:04:14.120 thought naively, I thought that was done. I thought that 0:04:14.120 --> 0:04:16.320 was a couple of years ago. For it's now starting. 0:04:16.000 --> 0:04:17.280 To come up in big amounts. 0:04:17.279 --> 0:04:19.680 So that's inflationary. And yet you have the RAS and 0:04:19.680 --> 0:04:21.480 the rates. So let's just tug of war going on. 0:04:21.640 --> 0:04:24.120 Michael, come on back in, because I think Brad brings 0:04:24.120 --> 0:04:25.720 in a good point right when we talk about the 0:04:25.720 --> 0:04:28.359 amount of money that continues to maybe come into the economy, 0:04:28.400 --> 0:04:31.480 fuel it and continue to put pressure on the inflationary 0:04:31.560 --> 0:04:34.159 side of things, what are the markets telling us about 0:04:34.200 --> 0:04:37.200 monetary policy and inflation at this point. 0:04:38.320 --> 0:04:40.040 Well, he raised a very good point, and I think 0:04:40.040 --> 0:04:42.640 this is what the market has missed, in particularly the 0:04:42.680 --> 0:04:45.680 Bow market beginning to share. They really thought there was 0:04:45.720 --> 0:04:48.599 going to be a recession by now, and that hasn't 0:04:48.600 --> 0:04:51.720 come to fruition. And in fact, the stimutu is coming 0:04:51.720 --> 0:04:56.240 through the Biden infrastructure and other plans is still kicking in. 0:04:56.520 --> 0:04:58.960 So the key here is that's probably going to keep 0:04:59.000 --> 0:05:02.760 employment pretty tight. And that's the one metric that everyone's 0:05:02.760 --> 0:05:06.560 now watching. And until you see employment severely weak and 0:05:07.400 --> 0:05:11.520 then suggest economies on a recessionary path, bond yields are 0:05:11.560 --> 0:05:14.440 going to stay high and they may go higher. And 0:05:15.160 --> 0:05:18.960 I think inflation is still fairly elevated. It's more than 0:05:19.000 --> 0:05:21.120 double the Fed's targets, so that still has going to 0:05:21.160 --> 0:05:24.919 take time to come down. But a sticky inflation environment, 0:05:25.400 --> 0:05:28.279 you know, a Brazilian economy led by the job sector, 0:05:28.800 --> 0:05:33.160 and this fiscal stimulus still coming through from Washington, rates 0:05:33.160 --> 0:05:33.919 are higher for longer. 0:05:34.360 --> 0:05:35.880 I want to I'm curious, Bride, do you have a 0:05:35.960 --> 0:05:38.799 question for a reads guy? 0:05:38.920 --> 0:05:39.240 I do. 0:05:41.320 --> 0:05:43.440 How confident are you in that? What's your level of 0:05:43.520 --> 0:05:46.760 conviction on that? Because most people have gotten this completely 0:05:46.760 --> 0:05:49.000 wrong last couple of years. I remember I was at 0:05:49.520 --> 0:05:53.640 a trade organization for mostly fortune two hundred CEOs about 0:05:53.720 --> 0:05:56.080 a year and a half ago, and we voted on 0:05:56.120 --> 0:05:58.680 the little slideo app of whether we're going to have 0:05:58.720 --> 0:06:02.200 a severe recession or remind recession or no recession, and 0:06:02.839 --> 0:06:03.640 over ninety. 0:06:03.360 --> 0:06:05.920 Percent a conference pol but go ahead yes. 0:06:06.040 --> 0:06:09.279 And and over ninety percent, well over ninety percent said 0:06:09.279 --> 0:06:11.160 it was either going to be a severe recession or 0:06:11.200 --> 0:06:14.400 a minor recession last year. So obviously that never happened. 0:06:14.400 --> 0:06:16.720 So it's how confident are you in your in your 0:06:16.720 --> 0:06:17.359 in your prediction. 0:06:18.400 --> 0:06:20.560 Well, it's it's you made that you made that point bright. 0:06:20.600 --> 0:06:22.480 So I was talking to investors this morning. He said 0:06:22.600 --> 0:06:24.919 he thinks now that rates are at levels where you 0:06:24.960 --> 0:06:30.120 will get a recession next year. However he's still you know, 0:06:30.240 --> 0:06:32.560 that's his gut feel, but he says, I still got 0:06:32.600 --> 0:06:35.560 to check that I'm not confident enough that you know, 0:06:35.560 --> 0:06:38.680 we will get a real slow down. And so therefore 0:06:39.400 --> 0:06:42.800 it really I think the markets it's been saying recession 0:06:42.800 --> 0:06:45.840 recession has been caught out every time. I think it's 0:06:45.839 --> 0:06:47.839 still going to take time for the stimulus to come 0:06:47.880 --> 0:06:50.680 through and wear off. And I think the other real 0:06:50.720 --> 0:06:52.400 factor that I think one of the big changes here 0:06:52.480 --> 0:06:53.800 is at the Bob mark has always been used to 0:06:53.839 --> 0:06:58.080 this idea that ohur frates go up, something breaks, nothing's broken, 0:06:58.279 --> 0:07:00.719 and I think a reason why they haven't really seen 0:07:00.720 --> 0:07:04.080 anything break, outside of course regional banks who've now been 0:07:04.160 --> 0:07:05.960 ring fenced by the FED. And that's a very important 0:07:06.000 --> 0:07:08.719 point because as long as they stay ring fenced, that's 0:07:08.760 --> 0:07:10.760 not going to bleed into the economy as much. But 0:07:10.800 --> 0:07:12.160 I think the key fact here is you've got a 0:07:12.200 --> 0:07:14.720 lot of people sitting on thirty or fixed mortgages below 0:07:14.760 --> 0:07:18.000 three percent who do not want to sell their homes 0:07:18.560 --> 0:07:20.440 and take out a new mortgage. And you've got a 0:07:20.480 --> 0:07:23.160 lot of companies that benefited from borrowing at very low 0:07:23.240 --> 0:07:26.880 rate back in twenty one and twenty twenty, and again 0:07:27.480 --> 0:07:30.880 you're not going to get that corporate bond hit that 0:07:30.960 --> 0:07:33.560 we would have got from higher rates. So look, I 0:07:34.400 --> 0:07:36.680 think it's a fool's eron trying to predict more than 0:07:36.720 --> 0:07:39.320 three six months away. There are some very smart people 0:07:39.320 --> 0:07:41.600 as well, like Jeffrey Gunlack, who I listened to yesterday 0:07:41.600 --> 0:07:43.280 when he was speaking at a conference here in New York, 0:07:43.720 --> 0:07:46.760 saying that he thinks employment will will really start to 0:07:46.800 --> 0:07:48.600 fall apart towards the end of this year because they 0:07:48.560 --> 0:07:50.920 also are coming and they're going to be big. I 0:07:51.080 --> 0:07:53.400 just don't really know, but I think at this point, 0:07:53.400 --> 0:07:56.960 if the perils hold up, the employment holds up, it's 0:07:57.000 --> 0:07:59.360 going to be tough for this bomb market to not 0:07:59.440 --> 0:08:00.360 be higher for longer. 0:08:00.640 --> 0:08:03.480 What chances do you give that will have a Jimmy 0:08:03.480 --> 0:08:07.000 Carter like stagflation the worst of both worlds. We will 0:08:07.000 --> 0:08:09.400 have inflation, it will also have no growth. 0:08:10.880 --> 0:08:12.880 I mean, I mean when I talk to some big 0:08:12.880 --> 0:08:15.520 investors like dan I have some particularly PIMCO, it's a 0:08:15.520 --> 0:08:19.400 tail risk for them. They do worry that wages could 0:08:19.480 --> 0:08:21.920 kick up later this year and you're going to get 0:08:22.000 --> 0:08:25.200 stickier inflation, and then once the economy slowly but surely 0:08:25.280 --> 0:08:29.240 starts to buckle under these high rates, that you will 0:08:29.280 --> 0:08:33.520 get a more stagflationary type environment. I think that remains. 0:08:33.960 --> 0:08:36.280 That's not the base case most people are thinking here 0:08:36.320 --> 0:08:39.000 when you talk to them on the street. Economy will slow. 0:08:39.080 --> 0:08:41.880 We'll probably have a couple of quarters of soft growth, 0:08:42.320 --> 0:08:46.360 maybe one percent or less. But no one's really calling 0:08:46.400 --> 0:08:49.200 for a hard landing recession at this point. Really, when 0:08:49.240 --> 0:08:50.920 you when you when you dig into it, it just seems 0:08:50.960 --> 0:08:54.199 to be where we're probably going to muddle through because 0:08:54.240 --> 0:08:56.760 the stimulus VISI will stimulus, I think is such a 0:08:56.840 --> 0:09:00.440 huge difference to what we've seen in the last decade. 0:09:00.440 --> 0:09:02.720 It just didn't really come through after the global financial 0:09:02.760 --> 0:09:06.520 crisis in two thousand and eight, and that's why we 0:09:06.640 --> 0:09:08.360 just had very low rates for a very long time. 0:09:08.400 --> 0:09:11.040 The FED was doing all the heavy lifting, we weren't 0:09:11.200 --> 0:09:15.360 really undertaking these big stimulus programs that we're now seeing. 0:09:15.840 --> 0:09:17.679 Right, So Michael just threw out a few scenarios for 0:09:17.760 --> 0:09:21.600 us here, Brad, we've got the potential for stagflation, recession. 0:09:22.120 --> 0:09:24.760 Just moneying through it all. What are you preparing for? 0:09:25.120 --> 0:09:25.640 All the above? 0:09:25.840 --> 0:09:26.400 All the above? 0:09:26.480 --> 0:09:30.480 So when you're running a business, you have to you 0:09:30.520 --> 0:09:33.240 first really have to decide is your vision high. 0:09:33.120 --> 0:09:34.160 Conviction or low conviction? 0:09:34.360 --> 0:09:36.360 Right now, it's if you think it's high conviction, then 0:09:36.360 --> 0:09:38.640 you're not right because there's a lot of different scenarios 0:09:38.640 --> 0:09:41.439 here that got it played out, including geopolitical scenarios. 0:09:41.760 --> 0:09:43.080 So you have to prepare for everything. 0:09:43.280 --> 0:09:48.160 You can't just be paranoid and stop investing and stop growing, 0:09:48.200 --> 0:09:49.920 and you have to keep investing in the business, but 0:09:50.280 --> 0:09:52.760 you have to also be prepared for perhaps even a 0:09:52.800 --> 0:09:53.760 sudden downfall. 0:09:53.840 --> 0:09:55.959 What are you most prepared for though? Is it that 0:09:56.120 --> 0:09:59.000 idea that we are all too rosy despite all the 0:09:59.040 --> 0:10:01.840 stimulus money still come from some of the spending programs, 0:10:02.280 --> 0:10:03.880 or is it you know, that's what I'm trying to 0:10:04.280 --> 0:10:05.840 Which way, So you just got about thirty and then 0:10:05.880 --> 0:10:07.960 you're going to come back and talk more so, I chaired. 0:10:07.840 --> 0:10:09.800 Three companies and the answer is a little bit different 0:10:09.800 --> 0:10:10.400 for each company. 0:10:10.400 --> 0:10:10.839 So in the. 0:10:10.800 --> 0:10:14.280 Warehouse business and in the brokerage business, volumes have slowed, 0:10:14.280 --> 0:10:15.920 there's no question about that, and that's not a new 0:10:16.200 --> 0:10:18.640 piece of news. That's been slowly for quite a few months. 0:10:18.640 --> 0:10:20.800 And they haven't bottom and turned back up yet. They've 0:10:20.840 --> 0:10:23.840 slowed and they've staying down the bottom. On the LTL side, 0:10:23.880 --> 0:10:27.560 which is XPO, that's separate from what's going on in 0:10:27.559 --> 0:10:30.559 the macro because it's had two major events that have 0:10:30.679 --> 0:10:35.080 benefited XPO, the bankruptcy of Yellow and then now recently 0:10:35.320 --> 0:10:37.440 one of the biggest private company, SD's has had a 0:10:37.440 --> 0:10:38.400 big cyber attack and. 0:10:38.960 --> 0:10:41.080 They're just down, so that benefits it. 0:10:41.360 --> 0:10:43.240 Yeah, sadly that's a bad thing for them, but it's 0:10:43.280 --> 0:10:43.760 good for expert. 0:10:43.800 --> 0:10:46.360 Bad news good news. I want to get back to 0:10:46.440 --> 0:10:48.520 our guest at this hour, delighted to still have with us, 0:10:48.559 --> 0:10:51.920 Brad Jacobs, founder and executive chair at XPO. I mentioned, 0:10:51.920 --> 0:10:54.680 co founder of United Rental's former chair of United Waste. 0:10:55.400 --> 0:10:57.520 I was doing some reading, I think we both were, 0:10:57.880 --> 0:11:01.280 and he's been described as a numbers guy, a serial entrepreneur, 0:11:01.480 --> 0:11:02.960 and he has a new book coming out, How to 0:11:02.960 --> 0:11:05.600 Make a few Billion dollars still with us in our 0:11:05.640 --> 0:11:09.360 interactive broker studio. Great discussion. Loved having you weigh in 0:11:09.480 --> 0:11:12.840 on kind of these micro data points or moves in 0:11:12.880 --> 0:11:15.840 the market and how you see it on a bigger perspective. 0:11:16.160 --> 0:11:19.600 If you had to describe the business environment right now 0:11:19.640 --> 0:11:21.959 in a word or handful of words, how would you 0:11:22.000 --> 0:11:25.160 do it? Br mixed it, uncertain, mixed it on class 0:11:25.160 --> 0:11:27.440 half full, class half empty or right at the medlaf 0:11:28.360 --> 0:11:32.920 class half Well, okay, so so walk us through, work 0:11:32.920 --> 0:11:35.960 it out. Labor market costs like. 0:11:35.880 --> 0:11:37.240 What is labor market type? 0:11:37.360 --> 0:11:40.559 Still absolutely well, it's not as tight as it was 0:11:40.640 --> 0:11:43.200 during COVID and no comparison. You can actually find workers, 0:11:43.559 --> 0:11:46.560 but wages are up and trending towards up. But you 0:11:46.600 --> 0:11:49.240 can find people. For instance, in the XPO business, we 0:11:49.280 --> 0:11:52.640 can find drivers. During COVID we couldn't find drivers, just 0:11:52.760 --> 0:11:54.680 our base core people, but a lot of people checked 0:11:54.679 --> 0:11:56.240 out and didn't come back. 0:11:56.679 --> 0:11:58.840 It's got to be concerning for I would think a 0:11:58.840 --> 0:12:01.600 lot of CEOs right now looking at all this heightened 0:12:01.600 --> 0:12:04.959 strike activity is there, how would you describe right now, 0:12:05.000 --> 0:12:07.520 like the labor unrest around the country right now, And 0:12:07.600 --> 0:12:08.880 is that something that worries you at. 0:12:08.760 --> 0:12:12.960 All, well as a company executive or as a citizen 0:12:13.000 --> 0:12:13.520 of the country. 0:12:14.280 --> 0:12:15.760 Well, so to give it to us both, but more 0:12:15.800 --> 0:12:16.800 the company executives. 0:12:17.160 --> 0:12:19.240 As a company executive, no, it doesn't bother me at all, 0:12:19.280 --> 0:12:22.520 because we were the target of a Teamsters national campaign 0:12:22.559 --> 0:12:25.760 for seven years and it didn't work, and they left 0:12:25.760 --> 0:12:27.520 and they went on too, Amazon, which is a much bunch, 0:12:27.559 --> 0:12:29.120 bigger fish than XPO. 0:12:29.240 --> 0:12:32.160 So I suppose they're not coming back to us. 0:12:32.160 --> 0:12:34.319 But even if they do, we work so hard at 0:12:34.600 --> 0:12:37.040 creating an environment in the workplace where people are happy 0:12:37.040 --> 0:12:39.160 to come to work and people feel valued and respected 0:12:39.200 --> 0:12:40.960 that that doesn't bother me. 0:12:41.200 --> 0:12:42.720 How do you give them that though? I mean, there's 0:12:42.720 --> 0:12:44.880 so much demand right now for I would think a 0:12:44.880 --> 0:12:47.320 lot of your workers probably need to be in person 0:12:47.440 --> 0:12:49.160 right for the work that they do, and like so 0:12:49.280 --> 0:12:51.880 much of what people want is remote, and like you know, 0:12:51.960 --> 0:12:55.199 is it more in giving them different hours and schedule flexibility? 0:12:55.240 --> 0:12:56.160 What can you give to them? 0:12:56.280 --> 0:12:58.400 Well, if you're a driver or you're a dock worker, 0:12:58.720 --> 0:13:00.800 you can't work the moment need to come in so 0:13:00.880 --> 0:13:04.000 and that's the majority of our workers there, So What 0:13:04.040 --> 0:13:06.400 you have to give them is respecting them, and you 0:13:06.440 --> 0:13:10.000 show respect by paying them properly, by listening to their needs, 0:13:10.440 --> 0:13:13.000 by communicating with them, letting them know what's going on 0:13:13.040 --> 0:13:15.320 in the whole company and how they fit in, showing 0:13:15.360 --> 0:13:18.000 them the letting them have pride in the work by 0:13:18.720 --> 0:13:21.440 Mario Harrick, who's replaced me as CEOs of an amazing job. 0:13:21.640 --> 0:13:26.320 He's done a really, really fantastic focus on making sure 0:13:26.360 --> 0:13:28.680 we don't damage freight, make sure we deliver freight on time, 0:13:28.720 --> 0:13:31.319 which are very important things in our business. And those 0:13:31.360 --> 0:13:34.160 statistics in our company, those metrics have gone off the 0:13:34.240 --> 0:13:35.200 charts in the right direction. 0:13:35.720 --> 0:13:35.920 You know. 0:13:36.440 --> 0:13:38.120 We have a great function on the Bloomberg and it's 0:13:38.160 --> 0:13:40.199 like the supply chain, and it talks about your customers 0:13:40.200 --> 0:13:42.679 and who are your clients basically and who you buy from. 0:13:42.920 --> 0:13:46.200 But your customers include everybody from Amazon, Apple, eight A, 0:13:46.360 --> 0:13:50.120 m Low's, Walmart, home depots, so many more companies. And 0:13:50.160 --> 0:13:53.720 you have a global perspective. Where is though the strongest 0:13:53.720 --> 0:13:57.680 parts of the global economy in your view, and how 0:13:57.679 --> 0:14:02.439 does geopolitics potentially continue to kind of impact that. 0:14:02.520 --> 0:14:04.079 Geopolitics is very important. 0:14:04.240 --> 0:14:06.920 I think the two biggest things are obviously of Vladimir 0:14:07.000 --> 0:14:10.920 Putin and Chi Jimpin, who could single handedly, literally single handedly, 0:14:11.000 --> 0:14:13.720 either of them throw a pretty big monkey ranch into 0:14:13.679 --> 0:14:17.760 the whole world economy. Those are not insignificant possibilities. Those 0:14:17.760 --> 0:14:20.120 are not one percent possibilities. So we have to pay 0:14:20.120 --> 0:14:22.360 attention to that. But we can't be obsessed by that. 0:14:22.400 --> 0:14:25.280 We can't just be held down and just just enamored 0:14:25.280 --> 0:14:27.320 but just that those features. 0:14:27.680 --> 0:14:28.880 So we just keep trucking along. 0:14:29.120 --> 0:14:32.960 But okay, cute, but bred in terms of the pushback 0:14:33.000 --> 0:14:39.880 against you know, the globalization of the economy, and we 0:14:39.920 --> 0:14:42.400 talk about that being pushed back, do you see that 0:14:42.440 --> 0:14:43.640 guy firsthand? 0:14:43.720 --> 0:14:46.800 Yeah, so every so you mentioned before and increasingly so, 0:14:47.080 --> 0:14:48.760 no question, but that she mentioned before some of the 0:14:48.760 --> 0:14:52.400 customers we have, So I'm privileged to have windows into 0:14:52.520 --> 0:14:55.280 g XO RXO XPO where we have a whole cross 0:14:55.320 --> 0:14:58.120 section of customers around the whole world, and so you 0:14:58.160 --> 0:14:59.440 get to see a lot a lot of information what's 0:14:59.480 --> 0:15:01.480 going on, and you also get to interact with a 0:15:01.520 --> 0:15:03.320 lot of customers, a lot of boards of customers, a 0:15:03.360 --> 0:15:06.280 lot of C suite. There's not a single board in 0:15:06.320 --> 0:15:11.240 America that's not who has and has had business in China. 0:15:11.280 --> 0:15:14.040 Who's not thinking I need to diversify away from China. 0:15:14.120 --> 0:15:15.360 It's just the risk is too high. 0:15:15.520 --> 0:15:17.240 So everyone universally is doing that. 0:15:17.400 --> 0:15:20.160 What about the risks in our own political system? Does 0:15:20.200 --> 0:15:22.640 that crop up? Does that bother you? Does that worry you? 0:15:22.640 --> 0:15:24.920 About what happened this week with the Speaker of the House. 0:15:25.000 --> 0:15:27.080 Well, that's the two party system, and that's been going 0:15:27.080 --> 0:15:27.960 on for a couple hundred years. 0:15:28.000 --> 0:15:29.000 Do you consider it functional? 0:15:30.000 --> 0:15:31.440 It's worked for two hundred years. 0:15:31.440 --> 0:15:34.800 I mean, so as a global traveler, I certainly would 0:15:34.800 --> 0:15:36.240 not want to be in any of the countries that 0:15:36.280 --> 0:15:37.320 have one party systems. 0:15:37.600 --> 0:15:38.280 That's the worst. 0:15:38.360 --> 0:15:41.920 I mean, there's a very repressive, horrible cultures. And this 0:15:42.000 --> 0:15:44.800 is a country where, despite everyone fighting with each other 0:15:44.840 --> 0:15:47.760 and calling each other's names and certain levels of dysfunction, 0:15:48.400 --> 0:15:51.280 we unlike China, don't have a million people in prison 0:15:51.280 --> 0:15:54.720 camps because of their religion. We, unlike in Russia, we 0:15:54.760 --> 0:15:57.320 don't have journalists like you. If you criticize the president, 0:15:57.360 --> 0:15:58.920 you go to jail for eight years. So, I mean 0:15:59.040 --> 0:16:01.120 it's still a great country, fantastic country. 0:16:01.240 --> 0:16:03.040 When we're looking at some of the trends in the 0:16:03.120 --> 0:16:05.400 US economy right now, I mean We've been talking about 0:16:05.560 --> 0:16:09.080 for so long, the shift of preferences from goods to services, 0:16:09.120 --> 0:16:12.320 and I would think from your perspective, that's probably the 0:16:12.400 --> 0:16:14.000 last thing you would want to hear. You want people 0:16:14.040 --> 0:16:15.280 to be buying stuff. 0:16:15.040 --> 0:16:16.840 Right, we are good. 0:16:17.240 --> 0:16:19.800 All of the three companies I mentioned move goods one 0:16:19.800 --> 0:16:22.960 way or another. So more goods is better than more services. 0:16:23.280 --> 0:16:26.080 But for the economy as a whole, that's a normal cycle. 0:16:26.160 --> 0:16:28.080 Sometimes it's more goods, sometimes it's more services. 0:16:28.240 --> 0:16:29.800 We're not in the best part of the cycle to 0:16:29.840 --> 0:16:32.800 be in transportation, but there are specific things that each 0:16:32.880 --> 0:16:35.280 one of those three companies are doing that are independent 0:16:35.280 --> 0:16:37.280 of the macro to improve the businesses. 0:16:37.400 --> 0:16:39.400 When it comes to transportation, what are the biggest like 0:16:39.440 --> 0:16:42.240 technology technology trends that you think are going to change it. 0:16:42.280 --> 0:16:44.440 We talk a lot about AI, We talk obviously about 0:16:44.600 --> 0:16:46.960 self driving, Like, what is it that you think is 0:16:47.000 --> 0:16:49.000 the most interesting trends that are going to shape it 0:16:49.040 --> 0:16:52.000 for the next I don't know, fifty years. 0:16:52.080 --> 0:16:55.600 Well, on the GXO side, the warehouse business, where we 0:16:55.680 --> 0:16:57.640 have two hundred and some odd million square feet of 0:16:57.640 --> 0:17:01.240 warehouse about a thousand warehouses. It's the automation of warehouses 0:17:01.640 --> 0:17:05.200 and you continuation of it. Right, Yeah, AI powered robots. 0:17:05.400 --> 0:17:08.200 It's very very sophisticated, futuristic. You can go into a 0:17:08.240 --> 0:17:11.120 warehouse that's huge and there's no people. That was maybe 0:17:11.160 --> 0:17:14.280 ten people, whereas ten years ago there would have been. 0:17:14.280 --> 0:17:15.200 Hundreds of people there. 0:17:15.280 --> 0:17:18.320 So that's a very very big trend on the RXO side, 0:17:18.320 --> 0:17:23.639 which is a tech ford brokerage platform there. When I 0:17:23.760 --> 0:17:26.760 first hired Mario Harrick, who stayed behind at XPO as CEO, 0:17:26.840 --> 0:17:30.440 but then Drew Wilkerson became the CEO of RXO. When 0:17:30.480 --> 0:17:33.000 I first hired Drew, we had a vision of automating 0:17:33.040 --> 0:17:35.520 that brokerage business because it was one hundred percent human 0:17:35.880 --> 0:17:39.000 right today is ninety six percent touched electronically. 0:17:40.200 --> 0:17:42.000 I wanted to ask you a little bit, Brad, about 0:17:42.520 --> 0:17:44.760 how the business is doing now in the wake of 0:17:44.800 --> 0:17:47.719 the Yellow bankruptcy and what you can tell us you 0:17:47.760 --> 0:17:49.600 have have you seen on your side? Are you picking 0:17:49.640 --> 0:17:52.960 up any of their volumes, any of their workers? How's 0:17:52.960 --> 0:17:53.680 it changed for you? 0:17:54.240 --> 0:17:56.760