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Speaker 3: We're going to stay on the Middle East and to
Speaker 3: why the US could be possibly drawn more deeply into
Speaker 3: the attacks on Rand's nuclear facilities, and that's where we
Speaker 3: want to go next.
Speaker 4: For more, we head to our Washington DC News bureau
Speaker 4: into Bloomberg Newspending on in national security reporter Tony Capasio.
Speaker 4: First up, Tony, is the US preparing for war right now?
Speaker 5: I think they're positioning what they call assets in the
Speaker 5: region for the eventuality of strikes. I'm not sure you
Speaker 5: can call it war, but the tanker thing, the twenty
Speaker 5: tankers in the region, I think that's a message to
Speaker 5: Iran that the US may be preparing for round the
Speaker 5: clock bombing campaigns and parts of Iran aided by air
Speaker 5: refueling aircraft.
Speaker 3: When is war war and when is it just hostilities
Speaker 3: or conflict. Help me out here. I have a hard
Speaker 3: time understanding the differences.
Speaker 5: Called declarations of war. Remember Iraq, we were going into
Speaker 5: a weapons of mass destruction and then there was regime
Speaker 5: change and all the cataclysm that happened from that for
Speaker 5: over a decade. A lot of echoes here, regime change,
Speaker 5: undeclared war, preemptive strikes, a lot of two thousand and
Speaker 5: three echoing through this conflict.
Speaker 3: Why does the US maybe have to make its presence
Speaker 3: known in Iran? And I got to say all credit
Speaker 3: to Tim who, like on our morning call, was saying,
Speaker 3: we got to talk about the bunker Buster, give us
Speaker 3: some background on that and what we know and why
Speaker 3: that might also pull the US possibly to the conflict
Speaker 3: with her.
Speaker 5: On Okay, the bunker Buster is a massive ordinance penetrator.
Speaker 5: It's a thirty thousand pound bomb that can only be
Speaker 5: dropped from the B two stealth bomber. They are now
Speaker 5: based in Whiteman Air Force Base. They were in Diego,
Speaker 5: Garcia recently, but they've come back.
Speaker 3: So they would have to do long.
Speaker 5: Refueling missions maybe fifteen hours sixteen hours in flight one
Speaker 5: way do their bombing precision bombing of the Farido en
Speaker 5: Richmond facility and then probably land to Diego, Garcia. That
Speaker 5: is an active war. It's not a preanmptive strike. It's
Speaker 5: an active war on an enemy that we don't have
Speaker 5: any that hasn't threatened the United States recently, So the
Speaker 5: public has to be aware of that. But that would
Speaker 5: be the biggest, biggest contribution we can make to destroying
Speaker 5: that facility. It's the only bomber that can do that,
Speaker 5: and those are the only weapons that really can penetrate
Speaker 5: deeply enough and they can fire. They can drop sequentially
Speaker 5: behind the other and pound the living daylights out of it.
Speaker 4: Unfortunately, why is it that the US is the only
Speaker 4: country that has this bomb and the ability to deliver
Speaker 4: this bomb? Why has the US not shared this technology
Speaker 4: with other parts of the world, with its allies.
Speaker 5: Well, A, it was secret until the number of years ago.
Speaker 5: The Pentagon is still very reticent to talk about it.
Speaker 5: But b it was designed around the B two bomber,
Speaker 5: the stealth bomber. You know, you can say what you
Speaker 5: want about it, but it's had successful mission since its introduction.
Speaker 5: Is first attack in Serbia in the nineteenth nineteen ninety six,
Speaker 5: I think it was. But it's our technology. It's a
Speaker 5: developed it's a classified weapons program on a classified bomb,
Speaker 5: a bomber.
Speaker 3: Excuse me, no.
Speaker 5: Other nation in the world really has that capability, that
Speaker 5: platform to carry it. Now if we have sold other
Speaker 5: bunker busters to Israel and the two two thousand pounds variety,
Speaker 5: but thus those can be dropped from F fifteen ease
Speaker 5: and some of their other aircraft, but they can't be
Speaker 5: dropped from F thirty five's Those bombs are too big
Speaker 5: for the F thirty five.
Speaker 3: Your experience on this world covering the Pentagon, understanding national security?
Speaker 3: When the president calls his advisors into the situation room,
Speaker 3: what's the optics on that? Are there any conclusions we
Speaker 3: can make? Or is it just where they go to
Speaker 3: have a safe conversation about national security issues.
Speaker 5: I think the optics are that the Joint Chase of Staff,
Speaker 5: their job is to present the president with not only
Speaker 5: options for military power, but the potential collateral or down
Speaker 5: the road impacts that the politicians. The politicians might not
Speaker 5: have thought of. I think any talk with Trump would
Speaker 5: also discuss the implications going back to Irock, remember the
Speaker 5: weapons of mass destruction. All of a sudden, the society
Speaker 5: collapsed there over two years and we were sucked into
Speaker 5: a ten year conflict. I think that would resonate with
Speaker 5: the White House. This President say what you want about it,
Speaker 5: but he has not voiced support for long term preemptive
Speaker 5: strikes and getting US sucked into Middle East wars.
Speaker 4: I want to go back to the B two spirit
Speaker 4: you said, it's that Whiteman Air Force Base right now.
Speaker 4: Is where they're being, where they're stationed, where they're based.
Speaker 4: Is it possible that these could move to a different
Speaker 4: position ahead of some sort of US military action and
Speaker 4: that would indicate a certain red line that the US
Speaker 4: has crossed.
Speaker 2: It definitely could.
Speaker 5: They could do a high profile flyaway. Basically, they're not
Speaker 5: going to fly from white Men without being seen by
Speaker 5: local plane watchers and then split plane tracking software which
Speaker 5: may or may not be able to pick up every
Speaker 5: part of a stealth bomber's flight. But people in the region,
Speaker 5: in the area there, they'd be watching for these things
Speaker 5: and be flying off and there would be a lot
Speaker 5: of chatter about it. But yeah, if we still flow
Speaker 5: flew these two uh back to Diego Garcia, that'd be
Speaker 5: a very strong signal. If we flew these to Lake
Speaker 5: and Heath Air Force Base in England. That would be
Speaker 5: a signal too. Those are the I mean, Diego Garcia's
Speaker 5: got the ideal location and the hangars, the hangars to
Speaker 5: store these valuable airplanes. But I think the US could
Speaker 5: send a real message by parading the elephants through the
Speaker 5: air these b two elephants and letting the world know.
Speaker 3: You're not expecting boots on the ground by the US though.
Speaker 5: Well, we've got forty We've got about forty thousand airmen,
Speaker 5: air women, airmen, naval and Army Navy marines in the region.
Speaker 5: It's like like four thousand or so in Iraq and
Speaker 5: another two thousand or so in Syria, all for the
Speaker 5: counter ISIS campaign. But I'm not expecting more boots on
Speaker 5: the ground, if that's what you mean.
Speaker 3: Okay, you said four or forty.
Speaker 5: Forty thousand in the region, Okay, to twenty five hundred
Speaker 5: in i Rock, Okay, and about two thousand in Syria.
Speaker 5: So the forty thousand would include airman in various bases
Speaker 5: around the region. We had many bases, and then the
Speaker 5: naval forces, so that'd be the cumulative all right.
Speaker 3: Thank you so much. Can't even tell you how much
Speaker 3: we appreciate it. Tony as always Tony Capacio. He's Washington,
Speaker 3: DC's man on the ground when it comes to the
Speaker 3: Pentagon and national security issues, joining us from our bureau.
Speaker 3: They are so appreciated.
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Speaker 3: In the meantime, we got some headlines this morning, and
Speaker 3: it had to do with the retail sector here in
Speaker 3: the United States. US retail sales falling for a second
Speaker 3: straight month in May, suggesting some anxiety over tariffs and
Speaker 3: also finances, prompting maybe consumers to pull back a bit
Speaker 3: after an early year spending rush. US retail sales. Here's
Speaker 3: the data, zero point nine percent to the downside month
Speaker 3: of May. That's the largest decline since the start of
Speaker 3: the year, with seven of thirteen categories tim posting declines.
Speaker 4: We've got a trusted a voice on retail, somebody who's
Speaker 4: analyzed this area through multiple cycles and gets into the
Speaker 4: details like no one else. The founder, CEO and Chief
Speaker 4: Research Officer of Telsey Advisory Group, Dana Telsea here in
Speaker 4: our Bloomberg BusinessWeek studio. I want to start with the
Speaker 4: big picture data data. The data that we got earlier today,
Speaker 4: the largest decline since the start of the year. Obviously,
Speaker 4: people not buying cars has a lot to do with this,
Speaker 4: But is it proof that tariffs do affect the way
Speaker 4: that customers think about buying things?
Speaker 6: So a couple things you have, Yes, it was one
Speaker 6: of the weakest months. You look at cars, which were
Speaker 6: the real weak link. It's twenty percent of retail sales.
Speaker 6: You've seen some of the other data points where the
Speaker 6: sporting goods department stores frankly did a touch better. I
Speaker 6: think overall the pull forward of sales, I think we're
Speaker 6: seeing some of that. We put out a tracker every
Speaker 6: Tuesday of eighty items and how the prices have changed.
Speaker 6: We've done this for nine weeks now, We're going to
Speaker 6: continue to do it. We haven't seen much change in
Speaker 6: prices yet. Expectations are second half of July into back
Speaker 6: to school is when you'll see the price upticks and
Speaker 6: when you speak to companies it'll more be on some
Speaker 6: of the goods that are newer and have more product
Speaker 6: or make or embellishment in them. Essentials are going to
Speaker 6: be watched very carefully. The phrasing is surgical and select
Speaker 6: items where there are price increases. That's where it will happen.
Speaker 6: It won't be across everything, but the mood and the sentiment.
Speaker 6: Look at the numbers you got Friday from the Sentiment Index.
Speaker 6: Those are better than expected. A little surprising given the
Speaker 6: headwinds that you're seeing in some of the services. The
Speaker 6: restaurant numbers certainly continue to show a downturn.
Speaker 3: So yeah, so add it up for us, like you've
Speaker 3: seen cycles, you've seen stress points that we have gone through,
Speaker 3: whether you know Great Financial Crisis, COVID, like, there's a
Speaker 3: lot of things. How would you describe the retail environment?
Speaker 3: And I know it's hard to throw everything in one
Speaker 3: bucket because there's so many different verticals.
Speaker 6: I think right now it's more uncertain the change that's
Speaker 6: different this retail environment than others. Even luxury has come down,
Speaker 6: even your luck, so your high income spender isn't spending
Speaker 6: in the same magnitude, and you don't have the flood
Speaker 6: of tourists that have come to the United States like
Speaker 6: you had in the past to buy those discretionary items.
Speaker 6: You're still seeing essentials grocery. That's where the consumer is spending.
Speaker 6: They'll spend selectively on some services, but take a look.
Speaker 6: We've seen airfares, Loo, Corojet Blue today talk about reduced demand.
Speaker 6: So how I added up is it feels a little
Speaker 6: bit more uncertain because of the volatility, and it's not
Speaker 6: complete down trends across the board. It's very selective and
Speaker 6: I think could it come yes, I think it's more
Speaker 6: let's go into the summer, through the second half of
Speaker 6: the summer and see what these price increases are. But
Speaker 6: there's more concern over slowing than growing.
Speaker 4: It's interesting that you brought in tourism here, especially when
Speaker 4: it comes to retail. I'm wondering on the other side
Speaker 4: of things, we've heard from executives and companies, including Coca
Speaker 4: Cola that the crackdown on immigration is actually affecting their sales.
Speaker 4: I'm wondering from a retail environment, is the ice on
Speaker 4: undocumented immigrants weighing on sales for any retailers out there
Speaker 4: at this point. People being afraid to shop, people afraid
Speaker 4: to go out.
Speaker 6: That sort of and you think about it for restaurants
Speaker 6: in terms of the workers working in restaurants, you've certainly
Speaker 6: seen it some of the low end points and the retailers.
Speaker 6: It's interesting that the dollar stores performed okay, so that's
Speaker 6: where you would think you would, yeah, right, show up,
Speaker 6: but it hasn't shown up there as much. And also
Speaker 6: you look at Walmart. Walmart's sales were better than expected, so.
Speaker 3: We are seeing I hate to say trading down. I
Speaker 3: feel so like not nice, but I just feel like
Speaker 3: maybe just people are being smart right, I'm looking for
Speaker 3: the best.
Speaker 6: Bar they are trading down. Look where Walmart has talked
Speaker 6: about the biggest growth coming from is their highest income consumer.
Speaker 6: You've seen it from others. Look at TJ Max on
Speaker 6: the off price side, You've seen what they have and
Speaker 6: they're an umbrella for pricing, so they'll always be lower
Speaker 6: than everyone else. And I think they're going to be
Speaker 6: a beneficiary as we go through the back half of
Speaker 6: the year.
Speaker 4: When you and I spoke earlier this spring, you mentioned
Speaker 4: that we could be seeing some empty shelves later this year.
Speaker 4: Has that materialized in anything that you cover and is
Speaker 4: that still a possibility.
Speaker 6: It's a possibility. It hasn't materialized yet because the goods
Speaker 6: that are on the shelves right now, there's still some
Speaker 6: of the lower cost goods. Ordering for holiday is happening
Speaker 6: right now, and it would show up frankly first when
Speaker 6: you get to the holiday season. But you know what,
Speaker 6: you have TJX buyers overseas in China right now looking
Speaker 6: to take over and take control of and acquire those
Speaker 6: canceled items. So go to the off pricers.
Speaker 3: Yeah, kind of fascinating. Well, you know, and I just wonder,
Speaker 3: you know, ultimately in terms of supply chains, right, we
Speaker 3: talked about so much of that because of the tariffs, Dana.
Speaker 3: When you think about you know, clothes and things like that,
Speaker 3: I mean, it's already been moving away from China, correct, Like,
Speaker 3: give me some perspective on where all of the stuff
Speaker 3: that we are wearing, where it really is manufacting and where.
Speaker 6: Things are coming from. Yes, they've all looked to reduce
Speaker 6: their exposure to China. Vietnam has been very popular. Mexico, Cambodia,
Speaker 6: Brazil hard to come back into North America and the
Speaker 6: US given the high labor costs, but it's been Mexico,
Speaker 6: it's been Vietnam it's been Brazil and Cambodia that we
Speaker 6: hear goods are going towards. How much is still made
Speaker 6: in China depends on which type or retail retailer. Everyone
Speaker 6: is trying to get to single digits. No one wants
Speaker 6: to stick there at double digits.
Speaker 3: Was that happening ahead of It's been.
Speaker 6: Happening since the last time we had tariffs. Everyone had
Speaker 6: accelerated it. But keep in mind one of the beneficies
Speaker 6: of China labor costs are compelling, and the make that
Speaker 6: they put into the product and the expertise is faster
Speaker 6: and better than others. As a long time sourcing executive
Speaker 6: always tells me, there's no China like China.
Speaker 3: Wow, Okay, but.
Speaker 4: It seems like Dana, at least for President Trump. It
Speaker 4: doesn't matter if it's made in China or it's made
Speaker 4: in Vietnam. It's not made in the US. It's going
Speaker 4: to be hit with a tariff. Yes, So how are
Speaker 4: retailers dealing with that?
Speaker 6: They'll raise prices on some selective goods, and it's a
Speaker 6: third to third, a third, a third, they'll verify their sourcing,
Speaker 6: a third, they'll share the cost of the manufacture and
Speaker 6: a third, they'll raise prices on select goods to the
Speaker 6: end consumer.
Speaker 4: When you say select goods, do you mean obviously it's
Speaker 4: we can't put them all in the same bucket.
Speaker 3: Higher price goods, higher price.
Speaker 4: Goods because the consumer has a higher willingness to pay
Speaker 4: because it's.
Speaker 6: New and different. It's something that isn't a basic okay, which.
Speaker 3: Makes me wonder like which companies are going to see
Speaker 3: it hurt in terms of their balance sheets on that
Speaker 3: you know, first quarter retail sales. Right, we've seen all
Speaker 3: these numbers, So which names do you think stand out
Speaker 3: really is the biggest winners? Which are the biggest loser.
Speaker 3: You look at.
Speaker 6: Birkenstock with their closed toad shoes, very popular, still doing
Speaker 6: really well. I think that there's definitely some moment in there.
Speaker 6: You look at Tapestry with the Coach brand. They've been excelling.
Speaker 6: They've been able to get better prices on some of
Speaker 6: their goods. You look at Ralph Lauren who's been expanding
Speaker 6: their purview in terms of the demographics that they appeal
Speaker 6: to and it's been working for them. And then you
Speaker 6: still see the value players, like the discounters and like
Speaker 6: the off pricers continue to win.
Speaker 3: Okay, who doesn't too well.
Speaker 6: We've seen some of the women's apparel retailers be slow,
Speaker 6: haven't been able to execute as well. It's definitely been
Speaker 6: more challenging. You just had the announcement yesterday of at
Speaker 6: Home filing for bankruptcy again. But these empty boxes are
Speaker 6: being taken by a lot of the dollar stores and
Speaker 6: the off price retailers. The off prices are each opening
Speaker 6: one hundred stores a year.
Speaker 4: Data before we let you go, our companies, our retailers
Speaker 4: are afraid to communicate two customers that prices are going up
Speaker 4: as a result of tariffs, given what we saw from
Speaker 4: the White House pushing back on Amazon and on Wiemart.
Speaker 6: Yes, I think you do have that, and I think
Speaker 6: that's why the phrasing and the wording select surgical price increases,
Speaker 6: and it's not across the board. Look at our price
Speaker 6: tracker every Tuesday and you'll see what changes.
Speaker 3: All right, So second half should be interesting.
Speaker 6: Very interesting. Want to see that back to school time period.
Speaker 6: Back to school typically is a pathway to the upcoming
Speaker 6: holiday season. Look what it was just announced today that
Speaker 6: Amazon's Prime day is going to be ninety six hours,
Speaker 6: four days longer length. Let's see consumer response, all.
Speaker 3: Right, fascinating stuff. Always always appreciate the deep dove. Thank
Speaker 3: you very much. Dana Telsey of course, she's the founder, CEO,
Speaker 3: and Research officer of Telsey Advisory Group. Joining us right
Speaker 3: here in studio.
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Speaker 2: two giant.
Speaker 3: Ocean going tankers collided and caught fire off the coast
Speaker 3: of the United Arab Emirates near the Strait of Harmu's
Speaker 3: energy choke points. Separately to vessels were approached by Iranian
Speaker 3: boats near the strait in the last thirty six hours,
Speaker 3: which is noteworthy, of course, during all of the tensions
Speaker 3: we are seeing in the region now, the incident did
Speaker 3: rattle global oil and shipping markets with forward freight agreements,
Speaker 3: rallying and oil tank are they served more than fifty
Speaker 3: percent due tim to the increased tensions.
Speaker 4: Yeah, the Israeli wrong conflict on the radar of the
Speaker 4: global shipping industry, and that's exactly where we want to
Speaker 4: go right now. Stas Stemmatist Santanas as chairman and CEO
Speaker 4: of the publicly held global shipping company Senergy Maritime. The
Speaker 4: ticker is SAHIP. Also United Maritime USAA is the ticker
Speaker 4: United was spun off from Synergy back in twenty twenty two.
Speaker 4: Stamata is good to have you back in the Bloomberg
Speaker 4: BusinessWeek studio here in New York. Last time you joined
Speaker 4: us was a few months ago. The conflict between Iran
Speaker 4: and Israel was I think not on anybody's radar at
Speaker 4: this at that point. What is the backdrop right now
Speaker 4: given the regional conflict?
Speaker 7: Well, thank you for having me once again. It's great
Speaker 7: to be here. Well, I mean, I don't know what
Speaker 7: to say. I mean, every other month you have a
Speaker 7: different situation coming up. We started with the Reussian invasion
Speaker 7: to the Ukraine, and then we had the Red Sea
Speaker 7: who it is? And now we have this so you know,
Speaker 7: every little certain that comes up, it's great for you.
Speaker 3: A little uncertainty or is it something more significant?
Speaker 7: It's I want to be confident. I want to stay
Speaker 7: like very very optimistic that nothing you know, not a
Speaker 7: wider war is going to go around, but it's certainly,
Speaker 7: you know, one of the situations where we have to
Speaker 7: be really cautious about.
Speaker 4: Have you had to change the routes of any of
Speaker 4: your ships as a result of this contract.
Speaker 8: Absolutely.
Speaker 7: I mean we were going through the Red Sea all
Speaker 7: the time, connecting let's say Australia to Europe and all that.
Speaker 7: Now we have to go around the Cape of Good Hope.
Speaker 7: So that has added a lot to the tone mile effect,
Speaker 7: and of course the pollution. Because you do more miles,
Speaker 7: you emit more co twos, it's more expensive for the
Speaker 7: consumers you go longer distance. So the answer is yes,
Speaker 7: I mean, every little thing that happens or bigger thing,
Speaker 7: it's good for rates.
Speaker 8: But but for the Earth, I guess.
Speaker 4: Do you see it getting worse in the Strait of
Speaker 4: Horn Moves anytime in the near future. I know you
Speaker 4: said you're optimistic, and you're optimistic by nature, but that's
Speaker 4: a real energy choke point. As Carol mentioned, I.
Speaker 7: Want to believe that this nothing serious is going to happen,
Speaker 7: and the collision you had today is not.
Speaker 8: Actually a product of wars.
Speaker 7: It's the shadow fleet, you know, the shadow fleet has
Speaker 7: been going around since the Russian invasion, and you have
Speaker 7: all these undocumented and shadow ships going around, and it's
Speaker 7: like a danger and it's only a miracle that we
Speaker 7: haven't seen more of these things happening because of the
Speaker 7: shadow fleet.
Speaker 3: It's forgiving.
Speaker 7: Yeah, that's a product of the previous war, not like
Speaker 7: this war.
Speaker 3: Now, how are you, as someone right who's got to
Speaker 3: watch these things so closely determine like or think about, Okay,
Speaker 3: this is not such a big issue, this could be
Speaker 3: something more substantial.
Speaker 8: Well, we try to.
Speaker 7: Be prepared, I mean, except for the insurance and stuff.
Speaker 7: Whenever we see like any conflict arising, we don't want
Speaker 7: to put the risk health risk of our crews, of
Speaker 7: our people, so we just stay out of that. And
Speaker 7: we're lucky to have partnered with some of the world's
Speaker 7: biggest chatters. And whenever we tell them that we want
Speaker 7: to avoid what areas, they listen to us. So they're
Speaker 7: not going to push us to go through the war areas.
Speaker 4: What tools do you have ships to prevent from pirate
Speaker 4: attacks or defend from pirate attacks.
Speaker 7: We I mean, if anyone says that they have sophisticated
Speaker 7: tools avoiding that they're lying because you know, we just
Speaker 7: avoid these areas and whenever we have to cross pirate,
Speaker 7: that is, we always have armed guards on board of ships.
Speaker 8: Otherwise there's no other way to do it, no other
Speaker 8: way to do it.
Speaker 7: I mean, whoever says that these are commercial ships, slow
Speaker 7: going commercial ships, targets and targets.
Speaker 8: Yeah, so you just avoid it all together. It's very big,
Speaker 8: but yeah, super big. Okay.
Speaker 3: One thing I want to ask you what's great is
Speaker 3: tim and I love to watch money flows, right, money
Speaker 3: tells you so much, but I also love to watch
Speaker 3: when it comes to transportation. Transportation flows tells us a
Speaker 3: lot about what's going on in the world. The US
Speaker 3: more protectionist policies. How has that impacted global drive? Ball
Speaker 3: to mad What are you seeing in that regard?
Speaker 7: Well, I'm sureful it is what the right that is
Speaker 7: on eventually, but so far it has created a lot
Speaker 7: of uncertainty. A lot of people are just don't know
Speaker 7: what to do. I mean, imports in the United States
Speaker 7: have really dropped significantly in the last few months because
Speaker 7: of the potential tariffs that I don't even know if
Speaker 7: they have kicked in or not kicked in already, So
Speaker 7: We need certainty and we need to make sure that
Speaker 7: people will be able to trade always for the benefit
Speaker 7: of the US consumer and always for the benefit of everybody.
Speaker 7: But it really has to be like a dependable and
Speaker 7: you know, to know what you expect.
Speaker 8: That's the thing.
Speaker 3: Certain things already changing in terms of you like flows
Speaker 3: back to the United States. We have seen changes right already.
Speaker 7: Indeed, yes, I mean what we do, which is aron
Speaker 7: oor coal and box site doesn't really change. It's still
Speaker 7: super strong the demand for these raw materials because you
Speaker 7: need it for infrastructure. As you know, a lot of
Speaker 7: investors in including a lot of people here in the government,
Speaker 7: have invested significantly in infrastructure in the Middle East. We
Speaker 7: have one point six three million dollars of investments happening there,
Speaker 7: new nice buildings and all that. So this is going
Speaker 7: to happen. They are all fully funded and it's good
Speaker 7: for our business.
Speaker 4: I guess the protectionist policies. I'm wondering what you're seeing
Speaker 4: in terms of goods flowing to and from China, and
Speaker 4: specifically of China is looking elsewhere for commodities that are
Speaker 4: typically sourced from the US. I mean, we could talk grains,
Speaker 4: we could talk corns, so I being wheat and the like,
Speaker 4: or we could talk other commodities too.
Speaker 8: What are you seeing?
Speaker 7: Well, suddenly the last few weeks we saw a surge
Speaker 7: in exports from the US golf, the American golf. So
Speaker 7: we see a surge in, we see a surge of America.
Speaker 8: Yes, exactly, exactly.
Speaker 7: Well, I just wanted to hear what you So we
Speaker 7: say surge in you know, corn products, maze, you know,
Speaker 7: grains and all that. So that has been good. Actually
Speaker 7: we're not expecting that. And we came into coming from
Speaker 7: the US. Yes, and we do a lot of coal,
Speaker 7: lot of going where to India and in China as well.
Speaker 8: We see that they're picking up slowly, slowly.
Speaker 3: That's but it was. It did slow down, It did.
Speaker 7: Slow down a load. Yeah, but now it's picking up again.
Speaker 7: I don't know if it's going to be there to stay,
Speaker 7: but for the time being, it's going quite well the.
Speaker 8: Last few weeks. Let's hope it's going to remain.
Speaker 7: And we do a lot of coal trades out of
Speaker 7: India to sorry, Baltimore to India. So we've done a
Speaker 7: couple of trades recently which we hadn't done for a while.
Speaker 3: So in terms of any of the flows that have shifted,
Speaker 3: is it just in your view, kind of defensive maneuvers
Speaker 3: and just a result of maybe short term blips and
Speaker 3: you think things are going to go back to the
Speaker 3: way it is, or do you see some new long
Speaker 3: term trade flows based on the shipping demand.
Speaker 7: Well, China's reliance to the US grains has dropped a lot.
Speaker 7: I mean, they learned their lesson in the previous administration,
Speaker 7: not the immediate previous, but the previous before that. Yeah,
Speaker 7: and they have now dependent They're more dependent now in
Speaker 7: South American corpse, you know.
Speaker 8: So that's the corpse, you know. So that's the thing.
Speaker 7: If it ever gets back to, you know, importing more
Speaker 7: and more grain products from the US, I hope it does,
Speaker 7: but it doesn't really seem like that in the near future.
Speaker 4: Before we let you go just thirty seconds, I think
Speaker 4: right now there's a focus on where ships are built
Speaker 4: that has ben yes in focus really ever in my career,
Speaker 4: specifically Chinese built ships. Are there any Chinese built ships
Speaker 4: in your fleet in.
Speaker 7: Our Fluidat of the twenty nine we only have one,
Speaker 7: which is basically a Japanese yard based in China. So
Speaker 7: I don't know if that qualifies for Chinese altogether, but
Speaker 7: the vast, vast majority is made in China, Yes, made
Speaker 7: in China, but not really by a Chinese yard. So
Speaker 7: the Chinese interesting. So I'm not concerned about us. The
Speaker 7: only good thing I need to say is we've been
Speaker 7: in discussions with the US administration about that issue, and
Speaker 7: they're listening. They're positive, and they're listening. They want to
Speaker 7: find a solution, So they're not like totally black or white.
Speaker 7: I mean, they want to find a solution.
Speaker 4: Stematis love it when you join us yet Antanas, chairman
Speaker 4: and CEO of the public held global shipping company Synergy.
Speaker 2: You are listening to the Bloomberg Business Weekdaily podcast. Catch
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Speaker 4: When the word uncertainty is used over and over, we
Speaker 4: lean on other factors and metrics to help define a
Speaker 4: time period that includes something like global real estate carol,
Speaker 4: which of course is sensitive to macro factors like geopolitics,
Speaker 4: and yes, the interest rate environment, which we just discussed
Speaker 4: with Mike McKee.
Speaker 3: Yeah, one company with a view on all of this
Speaker 3: is JLL former Jones Lang LaSalle, the publicly held global
Speaker 3: professional services firm specializing in real estate investment management. Travis
Speaker 3: McCready is the head of Industries Leasing Advisory in the
Speaker 3: Americas for JLL. It's also chair of the JLL Global
Speaker 3: Life Sciences Advisory Board. He oversees brokerage and advisory for
Speaker 3: the company's key global industry vertical. So we're talking about
Speaker 3: life sciences, healthcare, data centers, energy, security and defense, technology,
Speaker 3: and higher education. There's a lot going on, So let's
Speaker 3: get to it. He joins us from Boston. You've got
Speaker 3: to be a busy individual, or maybe you're not. This
Speaker 3: is what I want to ask you. You're not busy?
Speaker 8: Of course he's busy.
Speaker 4: He's got screens on screens in there.
Speaker 1: It's very busy, screens on screens. I'm busy.
Speaker 3: Well, listen as we As Tim mentioned in the in
Speaker 3: the lead up to you that when there's uncertainty and
Speaker 3: folks are saying uncertainty, a lot heads of companies are
Speaker 3: saying are One of our conversations on global shipping, uncertainty
Speaker 3: came up a lot. You know, where are you the
Speaker 3: busiest region of the world area of the United States
Speaker 3: category of real estate. Give us a picture, and where
Speaker 3: are you not busy?
Speaker 9: Wow, I'd say uncategorically, without doubt.
Speaker 1: We're busiest in data centers, which.
Speaker 9: Is an area that affects pretty much every aspect of
Speaker 9: the economy, every vertical and technology vertical that we cover
Speaker 9: in real estate. Our ability to bring online additional data
Speaker 9: centers across the United States is a rate limiting factor
Speaker 9: to the growth of pretty much all our verticals.
Speaker 8: In that regard.
Speaker 9: Data centers are popping up anywhere that there's a correlation
Speaker 9: between access to power, access to the right amounts of land,
Speaker 9: and cooling infrastructure, which would include of course water and wastewater.
Speaker 9: So that's my area of biggest activity levels. Second being
Speaker 9: advanced manufacturing, and that's manufacturing, whether it's for semiconductors or
Speaker 9: for biologicals.
Speaker 1: We're seeing a nice steady clip of activity around advanced
Speaker 1: manufacturing across the United States.
Speaker 4: I'm wondering how you look at the protectionist policies that
Speaker 4: the Trump administration, I won't even say toying with the
Speaker 4: protectionist policies that the Trump administration has established or has
Speaker 4: actually put into action at this point, we're talking tariffs,
Speaker 4: we're talking about other ways to keep jobs here in
Speaker 4: the United States and keep manufacturing here in the United States.
Speaker 4: Has that affected your business.
Speaker 1: Yeah, I think there's.
Speaker 8: Uh.
Speaker 9: These policies are still a lot of them are still
Speaker 9: in theory. So it's the uncertainty around these policies and
Speaker 9: how they'll play themselves out in practice, which is really
Speaker 9: driving a lot of decision making or in many cases,
Speaker 9: lack of decision making by a lot of our businesses.
Speaker 9: From a real estate standpoint, we definitely have felt post COVID,
Speaker 9: in particular, the desire for businesses to control their supply chain,
Speaker 9: and this is and this desire is really what's driving
Speaker 9: the advanced manufacturing sector. We've definitely felt a desire for
Speaker 9: increased employment around advanced manufacturing, particularly as it relates to
Speaker 9: semiconductors and energy and the like. So these policies are
Speaker 9: haven't really had the type of effect that we think
Speaker 9: that we've we've wanted them to have, partially just because
Speaker 9: they haven't been implemented in many cases as of yet.
Speaker 9: The one policy that's really gotten a lot of our
Speaker 9: folks in the life sciences in particular spoot is the
Speaker 9: most favored Nation's clause in this notion around MFN pricing
Speaker 9: really shifts the algebra around pharmaceutical prices and then in terms,
Speaker 9: shifts the discussion about profitability and plowing some of those.
Speaker 1: Profits back into the R and D enterprise.
Speaker 9: That's really having a deep structural effect on how our
Speaker 9: pharma companies are thinking about manufacturing here in the United States.
Speaker 3: So play it out so meaning that they're going to
Speaker 3: You mentioned the number two busiest area is advanced biological
Speaker 3: So the thinking is, okay, especially pharmaceuticals doing more manufacturing
Speaker 3: more in the United States. And what about Puerto Rico.
Speaker 3: I thought at one point we were doing a ton
Speaker 3: of manufacturing there is there.
Speaker 1: Oh, we continue to do a ton of manufacturing and
Speaker 1: import Rico.
Speaker 9: In fact, next time you go to the drug store
Speaker 9: to buy tail and all, thank the Puerto Rican manufacturing
Speaker 9: ecosystem because that's where eighty to eighty five percent of
Speaker 9: all of the tile known in the United States comes from.
Speaker 1: The advanced manufacturing. However, we're talking about proteins.
Speaker 9: Biologics, selling gene therapy, manufacturing. A lot of that's happening
Speaker 9: in a smaller scale, and it happening domestically while within
Speaker 9: the continues forty eight that's you know, the type of
Speaker 9: manufacturing we've seen the announced post tariff conversation, we had
Speaker 9: about twenty seven billion dollars worth of those announcements.
Speaker 1: The degree to which those announcements come to fruition, however,
Speaker 1: is what we're waiting to see.
Speaker 9: There's still a lot of uncertainty around the both the
Speaker 9: tariff conversation and MFN conversation, and that will drive the
Speaker 9: degree to which, or the rate at which those manufacturing
Speaker 9: facilities are actually executed.
Speaker 4: You know, I wanted to talk geographically a little bit
Speaker 4: with you because you've got such a great view on
Speaker 4: what happens around the country and around the world. For
Speaker 4: the last actually ever since I've been doing this job,
Speaker 4: the Sun Belt, we've been talking about it growing and growing, growing,
Speaker 4: and I'm starting finally to see a shift when it
Speaker 4: comes to the Sun Belt. Some weakness happening there right now.
Speaker 4: And I know you don't specialize in residential. That's where
Speaker 4: we're starting to see some weakness, but certainly commercial is
Speaker 4: tied to residential. Tell me what you're seeing in the
Speaker 4: sun Belt.
Speaker 9: Yeah, the sun belts in it both an exciting and
Speaker 9: slightly risky part of the United States right now from
Speaker 9: a real estate standpoint.
Speaker 1: On the one hand, you're absolutely right.
Speaker 9: We're seeing demographic shifts into the Sunbelt into the southern
Speaker 9: United States, and with that flow comes commercial activity. On
Speaker 9: the other hand, we're also seeing and we're also seeing
Speaker 9: UH structural weaknesses in the in.
Speaker 1: The grid in particular. In particular, and.
Speaker 10: The energy needs that these advanced technologies, whether it's UH
Speaker 10: semiconductors or even our healthcare clients, the energy needs that
Speaker 10: they're that they're demanding, we're increasingly having difficulty finding those sites,
Speaker 10: finding that power infrastructure in order to be to satisfy
Speaker 10: the commercial demand.
Speaker 1: So you're absolutely right.
Speaker 9: The point of signal strength obviously that we'll see first
Speaker 9: is around residential, but the safety, security strength and growth
Speaker 9: of the grid will dictate whether or not we can
Speaker 9: continue this this growth pattern going forward.
Speaker 3: You know, we've actually had some really deep reporting on
Speaker 3: this here at Bloomberg. This idea of you know, folks
Speaker 3: that play into kind of the electrification play, the power demand,
Speaker 3: whether it's through data centers, that we just don't have
Speaker 3: the skilled workers to do it. And it's not just
Speaker 3: a US thing. It's actually a global thing. And I'm
Speaker 3: just curious from your perspective, which is the real estate
Speaker 3: play are you seeing You said data centers, that's your
Speaker 3: busiest area, But are you seeing somewhat any kind of
Speaker 3: pulling back or slowing down because there isn't either the
Speaker 3: labor to supply it and what's needed to be done,
Speaker 3: or there's not the power there to supply it.
Speaker 9: We have this this section of our of our business
Speaker 9: we call location analytics or location advisory, which basically is
Speaker 9: a fancy, fancy way of saying that people's decision making
Speaker 9: is very complicated and there are a lot of variables
Speaker 9: that go into where to site a business or where
Speaker 9: which state to locate a business. It's not always about
Speaker 9: tax incentives or other sort of cash incentives.
Speaker 1: It's really about access to two or three core variables.
Speaker 1: It's all.
Speaker 9: They're always at the top of a One is power,
Speaker 9: and the second is people human capital. And it's our
Speaker 9: ability to be able to train the workforce of tomorrow
Speaker 9: that we'll be working in these advanced facilities.
Speaker 1: Again, that's the.
Speaker 9: Second great limiting factor of our growth. And here is
Speaker 9: where we need the technical schools, We need the community colleges,
Speaker 9: and we need higher education to be able to support
Speaker 9: that thirst that we have for trained human capital for
Speaker 9: these roles.
Speaker 1: So we have a very.
Speaker 9: Yes, we're real estate and we focus on infrastructure, but
Speaker 9: increasingly we have to focus on our ability to be
Speaker 9: able to deliver skilled workforce to be able to work
Speaker 9: in our facilities.
Speaker 3: So relevant to our times right and for all the
Speaker 3: investors who are listening right when we see these go
Speaker 3: go sectors, whether it's data centers AI, there's a huge
Speaker 3: technical equipment, but human capital in for structure that's needed
Speaker 3: to power it going forward. And it's something we need
Speaker 3: to think about about the momentum, how strong it can
Speaker 3: ultimately be. Travis Great checking in with you. Travis McCready,
Speaker 3: who's head of Industries Leasing Advisory and chair of the
Speaker 3: JLL Global Life Sciences Advisory Board, joining us from Boston
Speaker 3: on this Tuesday.
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