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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 3: Okay, to the economic data of the day, you're looking

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Speaker 3: at PPI. If you back out food and you back

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Speaker 3: out energy in a month, a month basis came in

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Speaker 3: up two tenths of one percent. But if you keep

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Speaker 3: it all in there, you take a look at PPI

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Speaker 3: final demand at four tenths of one percent, and you

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Speaker 3: have to wonder, kind of what's going on and we

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Speaker 3: how's the.

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Speaker 1: Right way to take this.

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Speaker 3: On a year on your basis, final demand was up

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Speaker 3: by about three percent. So Mike McKee, Bloomberg International Economics

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Speaker 3: and Policy correspondent joins.

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Speaker 1: Us literally no one better.

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Speaker 3: And I know that because he's my bff and emails

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Speaker 3: me things all the time like price of eggs alex

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Speaker 3: that really contributed to the PPI.

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Speaker 4: Eighty percent of the headline PPI was due to goods

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Speaker 4: prices going up, and the majority of that was egg

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Speaker 4: prices up fifty six percent. In the month.

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Speaker 1: It's AV and flu.

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Speaker 4: It has happened because.

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Speaker 1: Paul like, why can't we make more chickens? But you know,

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Speaker 1: well we do, but then we kill them all. Yes,

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Speaker 1: get AV and flu.

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Speaker 4: That was the major contributor, and that's the biggest reason

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Speaker 4: that the core is so much less.

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Speaker 1: The important thing for the FAD is.

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Speaker 4: That the categories that they take from PPI and put

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Speaker 4: into the calculations for PCE all were much lower, like airfares, insurance,

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Speaker 4: things like that. So the outlook is much better than

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Speaker 4: it looks on the headline basis.

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Speaker 5: So net December eighteenth, we're still expecting I guess a

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Speaker 5: twenty five basis point cut.

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Speaker 4: We haven't seen any reason why we wouldn't at this point.

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Speaker 4: A couple of FED officials have said they would be

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Speaker 4: ready to pause soon, but they have said when that

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Speaker 4: is so, Given that most of them have suggested they're

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Speaker 4: still on track to cut rates, that's the bet.

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Speaker 1: Here's my question.

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Speaker 3: I feel like this is a day two story of

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Speaker 3: the CPI that we got yesterday. Is that, I mean,

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Speaker 3: inflation isn't conquered, like it's not, so why the still

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Speaker 3: impetus to cut in a more aggressive way?

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Speaker 4: Well, I don't know that it's any more aggressive. It's

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Speaker 4: what they had laid out, and it's twenty five basis points,

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Speaker 4: so not going back at fifty, But.

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Speaker 3: Why even cut it all and we know that inflation

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Speaker 3: isn't well, that's.

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Speaker 4: What the pause folks are saying, is that we still

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Speaker 4: need to make sure that inflation's going down. And the

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Speaker 4: answer to that from the other side is that inflation

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Speaker 4: is going down and it would continue to go down

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Speaker 4: given even a lower interest rate.

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Speaker 1: And one of the.

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Speaker 4: Things they can point to from the CPI is that

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Speaker 4: owner's equivalent rant the crazy way the government and calculates

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Speaker 4: housing costs went down to just a two tenths rise,

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Speaker 4: which is the lowest since January of twenty twenty one.

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Speaker 1: So they have been waiting.

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Speaker 4: For housing prices to roll over, and it may be

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Speaker 4: that they're finally doing that. And if that's the case,

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Speaker 4: when you back out housing from the CPI, you're pretty

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Speaker 4: much at two percent. So the odds are they can

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Speaker 4: they're going to look at that and say, we can

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Speaker 4: cut some more. Not as much, maybe as we thought

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Speaker 4: we would, neutral maybe higher, but we can cut some more.

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Speaker 5: We also had jobs claims that came out today the

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Speaker 5: highest in a couple of months. But I don't know,

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Speaker 5: as long as I still see like a two twenty,

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Speaker 5: I don't know.

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Speaker 1: What did you take away? You're you're in range.

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Speaker 4: The thing to remember about jobless claims this week is

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Speaker 4: Thanksgiving was the prior week, and everybody took two days off,

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Speaker 4: so nobody went and filed jobless claims during the Thursday

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Speaker 4: and Friday, and so they all go last week when

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Speaker 4: the office is really open, and we get this bump.

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Speaker 1: This is aught of that. Did they teach you that

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Speaker 1: in like economic school?

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Speaker 4: Yeah, it's all classic holidays, holiday season.

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Speaker 1: It is an issue called experience actually.

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Speaker 4: Especially this time of year, because the holidays float, you know,

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Speaker 4: they're they're at different times every year. And this was

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Speaker 4: a very late Thanksgiving, which impacts retail sales.

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Speaker 1: Which holidays that Yep, we heard that.

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Speaker 3: Okay, so what are you looking at next? So we're

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Speaker 3: going to get the FED on Wednesday? But then what

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Speaker 3: I mean, like, what's going to be that market moving moment?

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Speaker 4: Well, we're going to want to see what happens with

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Speaker 4: retail sales next week, which is the same day as

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Speaker 4: the first day of the FED meeting. Retail sales are

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Speaker 4: expected to have risen. People still hanging in there, still

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Speaker 4: spending money. And if that's the case, then that puts

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Speaker 4: us in line for continued stronger than expected growth, which

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Speaker 4: should be in theory inflationary, but raises the question of

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Speaker 4: productivity is at rising and absorbing some of this, So

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Speaker 4: a lot to look forward to in.

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Speaker 1: The numbers ahead.

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Speaker 4: But after the FED, I think everybody looks forward to Christmas, yes,

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Speaker 4: and Hadika, and we will get PCE at the end

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Speaker 4: of the at the end of the month, but we

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Speaker 4: will be on that game. It's going to move markets.

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Speaker 1: That's basically like, we're not really going to do much

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Speaker 1: until the New.

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Speaker 5: York fair enough, it's working that week between Christmas and

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Speaker 5: New Years.

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Speaker 1: You are pot you are.

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Speaker 3: He does it because he takes every Friday off.

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Speaker 1: In the summer, So that'sure. Yes, there's an idea. Yeah,

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Speaker 1: it works at some point. All right, Thanks so much.

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Speaker 3: Mike McKee, Bloomberger International Economics and Policy correspondent. Joining us there.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple car Play and

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Speaker 2: Just say Alexa playing Bloomberg eleven thirty are good.

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Speaker 5: Friends Over in Europe cutting rates yet again, the third

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Speaker 5: straight meeting cutting rates, and it doesn't feel like they're

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Speaker 5: cutting rates from any kind of particular position of strength.

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Speaker 5: There's just some concern about economic struggles across much of

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Speaker 5: Europe requiring lower rate. Let's break it down with Hugh Worthington,

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Speaker 5: European rate strategists for Bloomberg Intelligence. He joins us from

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Speaker 5: London via zoom Q. Again the third straight time, the

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Speaker 5: ECB cutting rates here.

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Speaker 1: What's your take?

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Speaker 6: Yeah, well, the markets had quite an interesting reaction to it,

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Speaker 6: actually because I think initially it looked at the headlines

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Speaker 6: that came out of the ECB, as you said, we

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Speaker 6: fully expected twenty five basis point rate cut. But there's

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Speaker 6: a bit of change in language as well, basically saying

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Speaker 6: that rates didn't need to stay restrictive going forward, which

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Speaker 6: I think initially was taken to be sort of a

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Speaker 6: very dubbish indication. And actually markets actually now moved to

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Speaker 6: price a fifty basis point cut at their thirtieth of

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Speaker 6: January meeting, which is a little bit harder than they

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Speaker 6: had previously, basically being driven by worries about activity data.

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Speaker 6: But right at the end of the meeting, Christine Leaguard

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Speaker 6: did actually sort of put a little bit of spanning

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Speaker 6: works and say that that suddenly they weren't so confident

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Speaker 6: about the outlook for inflation, and maybe you know, the

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Speaker 6: markets were probably or people were expecting her to be

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Speaker 6: more saying that there are downside risks to inflation, and

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Speaker 6: that seems to put the cats amongst the pigeons and

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Speaker 6: basically set the front end bond deals or bondials generally

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Speaker 6: in Europe, you know, trading higher again. So they've actually

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Speaker 6: moved in a a ten basis point range around the

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Speaker 6: ECB meeting, So you know, there's a little bit of

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Speaker 6: a bit of mixed messaging going on.

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Speaker 3: So it was really that last sentence and let's go

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Speaker 3: through that one more time. So Christine Leaguard said that

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Speaker 3: she wasn't they weren't as confident in the decline for inflation,

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Speaker 3: that she was worried about upside risk. Is that what

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Speaker 3: I'm reading It just seems like in Italy a ten

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Speaker 3: basis point i'd jumped to the upside in the tenure

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Speaker 3: feels a little extreme on that.

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Speaker 6: Yeah, I think that also that move might have been

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Speaker 6: a little bit something to do as well, that that

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Speaker 6: people are concerned about this idea of pe P P

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Speaker 6: pandemic que redemption. It's not happening from really actually basically

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Speaker 6: she said next week onwards, and that pressuring on the spreads,

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Speaker 6: that may be an element there. But yes, she said

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Speaker 6: that she basically the I think the idea they that

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Speaker 6: with a lot of the economist community is they look

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Speaker 6: at the numbers for inflation going forward and they look

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Speaker 6: like they're as flutters a pancake in Europe. But then

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Speaker 6: she said that, and you know, I think everybody's assuming

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Speaker 6: that basically the risks look really biased towards the downside.

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Speaker 6: She basically refused to or didn't go along with that

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Speaker 6: track of thinking, if you like. And that came in

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Speaker 6: right at the end of the meeting, and that seems

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Speaker 6: to have just literally it. Certainly it made the currency jump,

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Speaker 6: and it made the yields jump. And what I think

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Speaker 6: we've seen is a little bit whilst we are expecting

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Speaker 6: a fifty basis point cut in January, what's markets maybe

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Speaker 6: starting to do is just possibly looking for a little

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Speaker 6: bit of a pause or less less aggressive cutting cycle

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Speaker 6: there after that fifty basis point cut, and that that

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Speaker 6: may be, you know what, the people that have taken away.

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Speaker 6: We'll see if they sort of trying to lean against

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Speaker 6: that as we get sort of reaction, which it tends

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Speaker 6: to happen with ECB meetings the way they look at

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Speaker 6: market reaction, they may not like it, they tend to

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Speaker 6: try and lean against it in subsequent comments. Let's just

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Speaker 6: keep an eye on that going forward.

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Speaker 5: So Christine Legard, President of the ECB, calling out, you know,

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Speaker 5: weaker than expected economic growth or just I guess maybe

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Speaker 5: persistently weaker than expected growth here, what's kind of economic

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Speaker 5: backdrop that's got the ECB concerned about growth?

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Speaker 6: Well, I think we had a we had a it's

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Speaker 6: actually people are expecting growth in eure to be pretty

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Speaker 6: poor for a lot quite a long time, and it's

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Speaker 6: actually held up pretty well. We've certainly had the Olympics

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Speaker 6: in France and the summer may may have helped things

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Speaker 6: a little bit. But more latterly, you know, I think

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Speaker 6: that the there's just the higher instrates and the situation

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Speaker 6: obviously into of the energy costs in Europe and the

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Speaker 6: Russian Ukraine war and everything else has just weighed on things.

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Speaker 6: And frankly, you know, the growth outlook has has It's

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Speaker 6: going to be okay in twenty twenty four, you know.

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Speaker 6: But it's basically that a lot of the PMI surveys

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Speaker 6: and the survey data generally is pointing to at best

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Speaker 6: sclerotic growth and in reality probably you know a little

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Speaker 6: bit he possibly risk risk of contraction. Again, I think

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Speaker 6: they looking at twenty twenty five GDP growth in the

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Speaker 6: latest forecast was one point one percent. That was one

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Speaker 6: point three percent from September time, and frankly, they'll probably

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Speaker 6: be very lucky to be hitting that one point one

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Speaker 6: percent set of target.

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Speaker 3: Yeah, which really bigs the question. Also when do they

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Speaker 3: actually start cutting because growth this week and they need

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Speaker 3: to support the economy versus inflation has come down. Therefore

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Speaker 3: they can remove that restriction. All right, Grace, thank you

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Speaker 3: for explaining that to me, because I was so confused

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Speaker 3: all throughout the presser and the statement and then looking

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Speaker 3: at what happened to Italy. So I appreciate you. Hethington

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Speaker 3: a Bloomberg Intelligence European rates, a strategist, but it is interesting.

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Speaker 3: You know, you can't argue with the global cutting cycle.

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Speaker 3: I think we're now just in how deep does that

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Speaker 3: global cutting cycle go and where and does that actually

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Speaker 3: should that inform where you put your money?

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Speaker 5: Right in six station today we have the US Federal

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Speaker 5: Reserve and the expectation is for a twenty five basis point.

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Speaker 3: But you would like the day mat I.

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Speaker 5: Got my right there, I got my calendar up there

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Speaker 5: and everything I'm on top of it. Fed got is

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Speaker 5: everything you need to know about the Federal Reserve.

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Speaker 2: Right you're listening to the Bloomberg Intelligence Podcast. Catch us

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Speaker 2: live weekdays at ten am Eastern on Apple Cardplay and

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Speaker 2: Android Auto with the Bloomberg Business App. Listen on demand

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 5: Alex Seal, Paul Sweeney, you live here in our Bloomberg

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Speaker 5: Inactive Broker studio, streaming live on YouTube. It's head over

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Speaker 5: there and Barry joins us in studio. She's a founder,

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Speaker 5: manager partner of thread Needle. She invests money for a living.

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Speaker 5: You know, I wrote in a chat, the surveillance chat

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Speaker 5: this morning, I just dropped a note in and I said, hey,

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Speaker 5: there is a palpable sense of optimism in this country

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Speaker 5: since the election, and I think we've seen it in

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Speaker 5: financial markets.

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Speaker 1: Did you guys change your outlook.

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Speaker 5: For investing opportunities risk post election? Here?

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Speaker 7: I actually didn't. And while I'm optimistic, I don't have

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Speaker 7: the same euphoria that I think we're seeing translate into

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Speaker 7: the into these market outlooks. And one of the reasons

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Speaker 7: actually is pertinent to today, which is I think we're

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Speaker 7: going to see interest rates that are higher for longer

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Speaker 7: than we expected, not just because of the inflation data

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Speaker 7: we saw today, but because the noise around the policies

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Speaker 7: that we think are coming in next year don't lend

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Speaker 7: themselves in my opinion too, having a rate cut, and

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Speaker 7: I think that changes the outlook for tech. I think

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Speaker 7: it changes the outlook for some of these AI stories

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Speaker 7: that have been getting the biggest pop over the last

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Speaker 7: eighteen months. So I don't have the same you know,

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Speaker 7: embrace of these massive all time highs that we're looking

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Speaker 7: at for next year.

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Speaker 3: So the other point though is, and we just heard

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Speaker 3: from President like Donald Trump, is that we're going to

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Speaker 3: get tax cuts.

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Speaker 7: Yea.

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Speaker 3: It feels like we're in a very animal spirit place

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Speaker 3: right now I appreciate stacks are down today, but like

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Speaker 3: I think there was a spac yesterday, like bitcoin in

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Speaker 3: one hundred thousand, Like this isn't like a twenty eighteen

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Speaker 3: feel in some respects does that offset? Like how does

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Speaker 3: that meld with what you're saying?

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Speaker 7: Yeah, well, when spacks are back and meme stocks are

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Speaker 7: roaring again, then to your pint Alex, you know you're

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Speaker 7: in this sort of place of I think we're in

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Speaker 7: a bubble in some respects. Look, I think the at

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Speaker 7: a minimum, I think we're going to see the tax

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Speaker 7: cut extensions, right, we know that that's a certainty. It's

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Speaker 7: I think there's a question as to whether we really

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Speaker 7: see corporate tax rates coming down to fifteen percent. We'll

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Speaker 7: see what the offsets are offsets are with tariffs. But

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Speaker 7: I do think where we still have uncertainty. Right we

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Speaker 7: don't know what's going to happen to big sectors like

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Speaker 7: pharmaceuticals right when there's a change in healthcare policy. We

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Speaker 7: don't really know yet what the impact of dog is

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Speaker 7: going to be. If we're going to see margins getting

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Speaker 7: squeezed in some big sectors like industrials of defense. So

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Speaker 7: there is this optimism, but I do think that we

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Speaker 7: have yet to understand what specific policies we're going to

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Speaker 7: see from incoming President Trump, and until we do, I

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Speaker 7: think it's difficult to make a real bed.

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Speaker 5: Where do you see opportunities in the markets in general?

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Speaker 5: Are there any sectors that are screening well for you

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Speaker 5: guys these days?

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Speaker 7: Yeah, there's some areas of consumer discretionary that I'm getting

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Speaker 7: more excited about. So there's been a period of real

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Speaker 7: noise around the state of the consumer. Over the last

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Speaker 7: six months, we're getting more data that says it's sort

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Speaker 7: of stabilizing to perhaps getting a little bit better as

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Speaker 7: inflationary pressure abates for the parts of the population that's

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Speaker 7: been hardest hit. Experiential is a place in alex I've

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Speaker 7: talked about this with you in the past that I've

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Speaker 7: always been excited about, and I think elements of travel.

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Speaker 7: The cruise industry is one that was really, really well,

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Speaker 7: really well. And this is what I actually bought, you know,

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Speaker 7: Carnival Cruise is one I bought in the depths of

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Speaker 7: twenty twenty. I bought airlines at the same time. Airlines

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Speaker 7: I hung on too. Carnival I sold out of too early.

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Speaker 7: And the reason was there was a period of time

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Speaker 7: the recovery was much slower than it was for other

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Speaker 7: parts of travel. People didn't want to be cooped up

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Speaker 7: on these ships that are still that overhang of COVID

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Speaker 7: and the leverage of these businesses, these ships. When you

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Speaker 7: go buy a ship, you take out massive amounts of

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Speaker 7: debt to finance them, and so I got spooked by

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Speaker 7: the leverage levels. I now have conviction that the free

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Speaker 7: cashlow profile, the margin profile, the ability to take price

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Speaker 7: of this business is back where it should be. The

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Speaker 7: deleveraging is happening. So that's why I've been going back

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Speaker 7: into these kinds of names.

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Speaker 3: Sorry you mentioned worried about tech than an AI. Yeah,

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Speaker 3: I mean, do you is that really a levered play

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Speaker 3: to rates? People talk about it as it's like a

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Speaker 3: structural change.

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Speaker 7: I think there are some cases where it is a

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Speaker 7: levered play for rates. I think you've got some AI

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Speaker 7: stories where the free cashlow profile where they part of the

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Speaker 7: product that are to profitability remains not obvious. I think

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Speaker 7: there are parts that are not leathered plays to rates.

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Speaker 7: For example, the big tech businesses that are already free

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Speaker 7: cashlow generative where they've gone through this twenty four month

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Speaker 7: cycle of cost cutting and they're regress aggressing, aggressively reinvesting

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Speaker 7: behind AI. That to me is not a levered play

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Speaker 7: on rais. What that is, though, is setting up twenty

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Speaker 7: twenty five for a real year of show me the

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Speaker 7: money right, show me the productivity is coming through in

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Speaker 7: your KPI is show me that your margin is truly

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Speaker 7: being enhanced, showing you're getting adoption and you're taking price

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Speaker 7: and this is not just becoming table stakes that I

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Speaker 7: think is going to be the big question work for

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Speaker 7: twenty twenty five is execution turning into dollars?

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Speaker 5: On the consumer? What's your view on the consumer? How

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Speaker 5: do you think the consumer's doing out there? Because if

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Speaker 5: you're going along a cruise, yeah, company, I would think

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Speaker 5: it's pretty constructive.

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Speaker 7: Well, I'll answer your question in two parts. When it

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Speaker 7: comes to cruises specifically, the value proposition for consumers is great.

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Speaker 7: You're getting a vacation at a twenty five to fifty

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Speaker 7: percent discount of the land based equivalent.

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Speaker 5: So I say that again on cruise ship, I'm getting

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Speaker 5: a vacation at a discount of the land based the

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Speaker 5: land based equivalent.

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Speaker 7: So if you were to go and fly.

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Speaker 6: You're looking at that.

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Speaker 7: Yeah, if you go to go fly to a hotel

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Speaker 7: and that's saying Florida or a Vegas and then all

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Speaker 7: you fly to a villa. Right, You've got the transportation

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Speaker 7: and post a lot of these places. For cruises, you

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Speaker 7: can drive to the ports of cool. It's all inclusive

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Speaker 7: and if you you've got to think about it. Travel

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Speaker 7: in the US has been really impacted by the cost

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Speaker 7: of labor, by the services inflation that we've seen. A

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Speaker 7: lot of these cruise lines are staffing with international labor.

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Speaker 7: They're going out to nations outside the US to hire

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Speaker 7: their staff, so that we haven't seen the same wage

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Speaker 7: inflation that you've seen for domestic travel. So that's why

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Speaker 7: when you're a consumer that's perhaps been pressured over the

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Speaker 7: last year or so, this is actually an interesting value

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Speaker 7: proposition for you if you want to take a vacation.

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Speaker 7: More broadly, though, to answer your question, you know, I've

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Speaker 7: been looking very closely at default rates on consumer credit cards,

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Speaker 7: on auto loans, are looking at BNPL take up what

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Speaker 7: that means for consumer spending. We saw these default rates

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Speaker 7: creep up over the last sort of three to six months.

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Speaker 7: It looks like they're now stabilizing if you look at

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Speaker 7: the last amounts of data, so it feels as though

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Speaker 7: there's a little bit of a reprieve coming.

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Speaker 3: Does that a consumer call extend in to say retail?

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Speaker 3: I mean talk about stocks on a terror. I can't

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Speaker 3: tell you the number of days that Walmart has been

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Speaker 3: in a fifty two week high.

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Speaker 7: Yes, I love Walmart. I loved Walmart for a long time.

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Speaker 7: I think Walmart's a little bit special and I think

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Speaker 7: retail we have to break it down into a couple

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Speaker 7: of considents parts Walmart. Let's look ahead to next year.

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Speaker 7: Something like two thirds of Walmart's portfolio, by the way,

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Speaker 7: is US sourced. So if we're now looking at retail

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Speaker 7: and looking ahead to the tariff impact, I think Walmart's

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Speaker 7: particularly well positioned in terms of its scale, it's ability

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Speaker 7: to buy at lower costs, but also it's geographic mix.

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Speaker 7: You look at retail like Macy's for example, and what

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Speaker 7: happened Jesse. Department stores are still really really struggling. You

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Speaker 7: look at certain specialty retail names. I never saw this coming. Abber,

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Speaker 7: Crombie and Fitch has been on this unbelievable tear so

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Speaker 7: you've had some brown turnarounds that have been very successful.

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Speaker 7: You've got other retailers. Let's take the dollar stores, dollar generals.

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Speaker 7: They're struggling right. Their share prices are absolutely in the toilet.

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Speaker 7: So I think again, it comes back to what is

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Speaker 7: the value proposition? How is a consumer being sliced and

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Speaker 7: dice and who's playing to their strengths most effectively.

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Speaker 5: One of my favorite deals back in the day doing

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Speaker 5: deals was Live Nation putting that thing together. You like

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Speaker 5: that one, don't you.

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Speaker 7: I liked that for a while.

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Speaker 5: The regulators approved that.

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Speaker 7: I have no idea, Yeah right, Live Nation.

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Speaker 1: Look, I went into that.

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Speaker 7: I lost money in a bit for a while.

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Speaker 8: I'm now up.

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Speaker 7: I'm off about forty percent. But I hung onto it

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Speaker 7: because I really had conviction. This googlements is tied into

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Speaker 7: the cruise discussion that as the world gets more digital,

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Speaker 7: as more of our lives go online, the flip side

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Speaker 7: of that coy is people are going to look for

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Speaker 7: more opportunities for differentiated in person experiences. And Live Nation,

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Speaker 7: and specifically the concert piece, has been a big part

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Speaker 7: of that thesis. I've invested in other privately, in other

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Speaker 7: events based businesses, music festivals, smaller localized venues and there's

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Speaker 7: this huge demand for them. I don't think it's stopping yet.

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Speaker 7: Antitrust is a question, the ticket masterpiece is a question,

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Speaker 7: but for now I'm very approved it.

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Speaker 3: Yeah, well they are approved Googles and things, and they're

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Speaker 3: under fire for stuff as well.

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Speaker 5: You put the largest concert promoter together with the largest

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Speaker 5: ticket agency, I.

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Speaker 3: Mean, what do you think what's going to happen? Yeah?

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Speaker 3: What about We talked about tech and AI, So where

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Speaker 3: do you want to be a positioned.

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Speaker 7: In that sect? Specifically, where I've been more enthusiastic has

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Speaker 7: been around some of these platformization plays. That's such a

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Speaker 7: lot of syllables, but some examples are two specific examples

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Speaker 7: auto networks. If we look in the cybersecurity space, So

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Speaker 7: if you take a look at the way in which

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Speaker 7: a lot of enterprises right now have put together at

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Speaker 7: their cybersecurity infrastructure, they tended to stitch together lots of

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Speaker 7: esoteric solutions. And if you're sitting in the IT department

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Speaker 7: or the risk department of these enterprises, getting all of

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Speaker 7: these systems to talk to each other, to integrate to

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Speaker 7: how the holistic solution is really difficult. The auto networks

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Speaker 7: in the world turning up and saying, now, come to

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Speaker 7: us as a one stop shop. We'll provide all the

440
00:20:41,160 --> 00:20:44,159
Speaker 7: solutions for you. That's platformization. It's the coming together of

441
00:20:44,200 --> 00:20:47,479
Speaker 7: all the constituent solutions. PA ANDW has been doing it

442
00:20:47,560 --> 00:20:51,440
Speaker 7: very well. They've been executing. They're willing to take pricing hits,

443
00:20:51,480 --> 00:20:53,200
Speaker 7: they are willing to sell at losses to get people

444
00:20:53,200 --> 00:20:53,920
Speaker 7: to switch.

445
00:20:53,600 --> 00:20:54,560
Speaker 1: Over to their platform.

446
00:20:54,760 --> 00:20:57,720
Speaker 7: It's panning out, it's working. Salesforce has been another one

447
00:20:57,760 --> 00:20:59,640
Speaker 7: of those. Again, there was a moment where it wasn't

448
00:20:59,640 --> 00:21:02,560
Speaker 7: looking so bright, but they've actually had been delivered delivering

449
00:21:02,600 --> 00:21:06,000
Speaker 7: on that platformization play. And the reason I like these

450
00:21:06,040 --> 00:21:08,679
Speaker 7: alex is twofold and on boards. I spend a lot

451
00:21:08,720 --> 00:21:10,600
Speaker 7: of time on companies that are doing the buying. I

452
00:21:10,640 --> 00:21:12,920
Speaker 7: know that they're actively looking for these kinds of solutions

453
00:21:12,920 --> 00:21:15,720
Speaker 7: as buyers Number one number two when it comes to AI,

454
00:21:15,840 --> 00:21:18,120
Speaker 7: I am a big believer that the big are going

455
00:21:18,160 --> 00:21:20,719
Speaker 7: to get bigger. That scale is going to be what

456
00:21:20,800 --> 00:21:23,960
Speaker 7: ultimately wins in the collection of data, in the scrubbing

457
00:21:24,000 --> 00:21:26,119
Speaker 7: of data, and the application of data, and so I

458
00:21:26,119 --> 00:21:27,920
Speaker 7: think these platforms are going to be the big data

459
00:21:27,960 --> 00:21:30,000
Speaker 7: gatherers and the big winners as we go forward.

460
00:21:30,240 --> 00:21:33,120
Speaker 5: Any part of tech that scares you at this point, Yeah,

461
00:21:33,359 --> 00:21:33,840
Speaker 5: there are.

462
00:21:33,720 --> 00:21:36,399
Speaker 7: Some parts of tech that I feel more. On the

463
00:21:36,440 --> 00:21:39,760
Speaker 7: hardware side, I feel a bit nervous about. And I've

464
00:21:39,760 --> 00:21:41,240
Speaker 7: done a little bit of a one at on this

465
00:21:41,359 --> 00:21:45,000
Speaker 7: because I do believe that there is going to be

466
00:21:45,040 --> 00:21:49,119
Speaker 7: a reinvestment cycle as a lot of hardware companies and

467
00:21:49,160 --> 00:21:51,280
Speaker 7: they're pitching at the Lenova's the world of talking about it.

468
00:21:51,280 --> 00:21:53,200
Speaker 7: The apples are the world are talking about it, where

469
00:21:53,240 --> 00:21:56,200
Speaker 7: AI is now being built into the actual underlying devices.

470
00:21:57,440 --> 00:21:58,880
Speaker 7: I did make a play to try and go into

471
00:21:58,880 --> 00:22:02,199
Speaker 7: an industrial hardware around this, an industrial tech, and I

472
00:22:02,200 --> 00:22:03,800
Speaker 7: think it's just moving a lot more slowly than I

473
00:22:03,840 --> 00:22:05,600
Speaker 7: would have hoped. So I'm watching that with a little

474
00:22:05,640 --> 00:22:06,560
Speaker 7: bit more nervousness than.

475
00:22:06,520 --> 00:22:07,200
Speaker 8: I was before.

476
00:22:07,600 --> 00:22:10,760
Speaker 3: All right, and great stuff. Really appreciate it. Ann Barry, founder,

477
00:22:10,880 --> 00:22:13,240
Speaker 3: managing partner over at Thread Needle.

478
00:22:14,840 --> 00:22:18,720
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

479
00:22:18,800 --> 00:22:22,320
Speaker 2: weekdays at ten am Eastern on applecard Play and Android

480
00:22:22,359 --> 00:22:25,119
Speaker 2: Otto with the Bloomberg Business app. You can also listen

481
00:22:25,240 --> 00:22:28,320
Speaker 2: live on Amazon Alexa from our flagship New York station

482
00:22:28,720 --> 00:22:31,360
Speaker 2: just Say Alexa, playing Bloomberg eleven.

483
00:22:31,200 --> 00:22:33,199
Speaker 5: Thirty, Alex Stel Paul Sweeney. We're live here in our

484
00:22:33,200 --> 00:22:36,600
Speaker 5: Bloomberg Interactive Broker studio. We're streaming live on YouTube as well,

485
00:22:36,680 --> 00:22:39,600
Speaker 5: so check us out there. I'd say, anytime I want

486
00:22:39,640 --> 00:22:42,880
Speaker 5: to get the latest poop on China, there is no

487
00:22:42,920 --> 00:22:45,080
Speaker 5: one I want to talk to more than Lena Miller.

488
00:22:45,119 --> 00:22:47,480
Speaker 5: He's the sea of the China Beige Book. They have

489
00:22:47,640 --> 00:22:52,200
Speaker 5: extraordinary data on China, the economy of China, that really

490
00:22:52,240 --> 00:22:53,959
Speaker 5: no one else has, and it really gives them a

491
00:22:54,040 --> 00:22:57,399
Speaker 5: unique insight to what's happening there in China. Leland joins

492
00:22:57,480 --> 00:23:01,359
Speaker 5: us from Washington, DC via zoom and I love to

493
00:23:01,400 --> 00:23:03,960
Speaker 5: just start really thirty thousand foot with you in China.

494
00:23:04,160 --> 00:23:06,320
Speaker 5: Give us a sense of how the economy is in

495
00:23:06,400 --> 00:23:09,320
Speaker 5: China today really from your data, and what can the

496
00:23:09,359 --> 00:23:11,680
Speaker 5: government do to the extend it once improve things there.

497
00:23:13,880 --> 00:23:15,919
Speaker 8: I think if you look back earlier this fall, we

498
00:23:16,040 --> 00:23:17,639
Speaker 8: saw some of the worst data we've seen it in

499
00:23:17,680 --> 00:23:19,119
Speaker 8: a long while, and I think that's one of the

500
00:23:19,119 --> 00:23:23,080
Speaker 8: reasons that you saw these big stimulus announcements in September.

501
00:23:23,720 --> 00:23:25,639
Speaker 1: And they did do something.

502
00:23:25,640 --> 00:23:27,679
Speaker 8: I mean, they did spur a little bit of a

503
00:23:27,760 --> 00:23:30,440
Speaker 8: increased activity and a little bit increased confidence. If you

504
00:23:30,480 --> 00:23:33,120
Speaker 8: look at what happened in October, our data were much better.

505
00:23:33,359 --> 00:23:36,639
Speaker 8: November the data were also much better than September. So

506
00:23:37,119 --> 00:23:39,520
Speaker 8: you've seen a pickup in the economy. Some of that

507
00:23:39,600 --> 00:23:45,080
Speaker 8: may be manufacturing exports being expedited a head of Trump tariffs,

508
00:23:45,200 --> 00:23:47,159
Speaker 8: but you're seeing an economy that's better than it was.

509
00:23:48,000 --> 00:23:50,399
Speaker 8: It's not great, it's not strong, but it's also not

510
00:23:50,480 --> 00:23:53,720
Speaker 8: catastrophically weak. So that's the position we're in going into

511
00:23:53,720 --> 00:23:56,240
Speaker 8: twenty twenty five. It's sort of ironic seeing all these

512
00:23:56,920 --> 00:24:00,080
Speaker 8: headlines about you know, giant stimulus happening, and you know

513
00:24:00,200 --> 00:24:01,200
Speaker 8: they flood the economy.

514
00:24:01,440 --> 00:24:03,160
Speaker 1: You know, the economy doesn't need it right now.

515
00:24:03,320 --> 00:24:05,080
Speaker 8: If it needs it in twenty twenty five, it's because

516
00:24:05,119 --> 00:24:07,800
Speaker 8: something's happening in the teriff in the tariff world.

517
00:24:08,160 --> 00:24:08,960
Speaker 7: Okay, so this.

518
00:24:08,920 --> 00:24:10,200
Speaker 3: Is such a great point because that's all I was

519
00:24:10,200 --> 00:24:12,680
Speaker 3: going to say. So that signaling for more government stimulus

520
00:24:12,720 --> 00:24:15,160
Speaker 3: and racus you think that is not at all true.

521
00:24:15,440 --> 00:24:17,399
Speaker 3: I'm going it has to come from a tariff issue

522
00:24:17,440 --> 00:24:18,920
Speaker 3: that that will then provide stress.

523
00:24:19,880 --> 00:24:23,359
Speaker 8: He Look, this is the important, the important point to

524
00:24:23,400 --> 00:24:25,680
Speaker 8: take away from the second half of twenty twenty four,

525
00:24:25,920 --> 00:24:28,000
Speaker 8: even in September, when the economy is much worse than

526
00:24:28,040 --> 00:24:28,800
Speaker 8: it is right now.

527
00:24:29,400 --> 00:24:31,119
Speaker 1: It's bad, it can be weak.

528
00:24:31,200 --> 00:24:33,639
Speaker 8: It doesn't mean it's catastrophically meet weak, and it doesn't

529
00:24:33,640 --> 00:24:36,919
Speaker 8: mean that it needs big stimulus in order, you know,

530
00:24:37,480 --> 00:24:40,159
Speaker 8: in order for things not to fall apart. So what

531
00:24:40,200 --> 00:24:42,919
Speaker 8: the government wants to do is just do just enough

532
00:24:43,000 --> 00:24:45,800
Speaker 8: to be able to keep the economy stable. It's not

533
00:24:45,840 --> 00:24:48,440
Speaker 8: reaching for higher ceiling, it's not trying to juice things.

534
00:24:48,840 --> 00:24:49,760
Speaker 1: What it wants to do is.

535
00:24:49,680 --> 00:24:52,440
Speaker 8: Get the economy stable, so they could worry about other priorities,

536
00:24:52,520 --> 00:24:56,400
Speaker 8: mostly national security priorities, building up a domestic chip ecosystem,

537
00:24:56,600 --> 00:25:02,119
Speaker 8: working on supply chain resiliency, you know, working on vulnerability

538
00:25:02,119 --> 00:25:05,520
Speaker 8: to US sanctions, these types of things. Certainly a lot

539
00:25:05,520 --> 00:25:07,680
Speaker 8: of things with advanced technology. What it doesn't want to

540
00:25:07,720 --> 00:25:09,680
Speaker 8: do is juice high levels of growth. So it's trying

541
00:25:09,680 --> 00:25:12,120
Speaker 8: to figure out what the minimum amount needed in order

542
00:25:12,240 --> 00:25:14,560
Speaker 8: to keep going, keep going, keep going, and to not

543
00:25:14,680 --> 00:25:17,160
Speaker 8: have to worry about the economy. It's not a priority,

544
00:25:17,200 --> 00:25:19,440
Speaker 8: but it's also doesn't want it to be it's downfall.

545
00:25:20,080 --> 00:25:23,199
Speaker 5: To what extent are they concerned? Are the Chinese government

546
00:25:23,200 --> 00:25:27,359
Speaker 5: and officials concerned about tariffs that president like Trump is

547
00:25:27,400 --> 00:25:27,919
Speaker 5: talking about.

548
00:25:29,320 --> 00:25:30,840
Speaker 1: I think they are concerned.

549
00:25:30,840 --> 00:25:32,840
Speaker 8: I think they should be concerned because you know, tariffs

550
00:25:32,840 --> 00:25:35,960
Speaker 8: are coming in twenty twenty five. You know, we'll see

551
00:25:36,000 --> 00:25:38,520
Speaker 8: as the administration fills itself out and as the policy

552
00:25:38,600 --> 00:25:41,840
Speaker 8: gets gets more sequenced out, you know what exactly we

553
00:25:41,880 --> 00:25:44,640
Speaker 8: see on what timing. But I think they understand that

554
00:25:44,640 --> 00:25:47,359
Speaker 8: that there is a very high level chance that they're

555
00:25:47,359 --> 00:25:50,280
Speaker 8: going to see increased pressure on their major growth drive

556
00:25:50,400 --> 00:25:53,640
Speaker 8: right now, which is exports. You know, in twenty twenty four.

557
00:25:53,680 --> 00:25:56,880
Speaker 8: It's the timing of this is remarkable because twenty twenty four,

558
00:25:57,680 --> 00:26:00,719
Speaker 8: China spent the entire year, including through she including at

559
00:26:00,720 --> 00:26:02,919
Speaker 8: the Plunum, saying we are going to double down on

560
00:26:02,960 --> 00:26:05,520
Speaker 8: our manufacturing and export model. We're going to talk about

561
00:26:05,520 --> 00:26:07,840
Speaker 8: new quality, productive forces. And even though we have the

562
00:26:07,880 --> 00:26:09,879
Speaker 8: highest trade surplus ever and we have a you know,

563
00:26:10,040 --> 00:26:13,720
Speaker 8: record manufacturing goods surplus, we are going to still double

564
00:26:13,760 --> 00:26:15,919
Speaker 8: down on exports in a holy government effort to just

565
00:26:16,000 --> 00:26:18,240
Speaker 8: keep pushing them out, pushing them out, pushing them out

566
00:26:18,240 --> 00:26:20,679
Speaker 8: to the world. This is causing friction everywhere. But with

567
00:26:20,760 --> 00:26:23,520
Speaker 8: Trump coming in too, who's particularly sensitive to these issues,

568
00:26:23,720 --> 00:26:25,280
Speaker 8: you know, you're going to see you're going to see

569
00:26:25,280 --> 00:26:26,879
Speaker 8: a problem. So I think that they should be very

570
00:26:26,920 --> 00:26:28,320
Speaker 8: worried about the terrifs are on the way.

571
00:26:28,920 --> 00:26:32,199
Speaker 3: What do you think where in China in terms of

572
00:26:32,200 --> 00:26:35,200
Speaker 3: sectors are still the weakest and what can really be

573
00:26:35,680 --> 00:26:36,479
Speaker 3: done for that?

574
00:26:38,280 --> 00:26:39,840
Speaker 8: Well, I mean, I think you need to put property

575
00:26:39,840 --> 00:26:41,920
Speaker 8: off to the side, because property is weak in large

576
00:26:41,920 --> 00:26:43,720
Speaker 8: part because they want it to be weak. You know,

577
00:26:43,760 --> 00:26:47,000
Speaker 8: they have spent the last four plus years, you know,

578
00:26:47,080 --> 00:26:50,399
Speaker 8: diminishing property as a growth driver, popping the property bubble,

579
00:26:50,480 --> 00:26:54,520
Speaker 8: trying to keep prices down, trying to trying to extend

580
00:26:54,760 --> 00:26:57,600
Speaker 8: as little credit as possible into the sector. So property

581
00:26:57,640 --> 00:26:59,640
Speaker 8: is weak, but it's sort of separate because that's part

582
00:26:59,640 --> 00:27:02,520
Speaker 8: of the game plan. What could continues to be weak

583
00:27:02,680 --> 00:27:06,240
Speaker 8: and two weak for China's future growth is consumption. So

584
00:27:06,320 --> 00:27:08,480
Speaker 8: if you look at retail, you look at services, you

585
00:27:08,480 --> 00:27:10,080
Speaker 8: look at these areas of the economy that should be

586
00:27:10,320 --> 00:27:14,400
Speaker 8: should be soaring if the leadership was really paying attention

587
00:27:14,440 --> 00:27:17,880
Speaker 8: to this consumption as a priority. You know, mantra. Those

588
00:27:17,960 --> 00:27:19,399
Speaker 8: that are not doing too well, they're they're doing a

589
00:27:19,400 --> 00:27:21,200
Speaker 8: little bit better than they were earlier in the fall,

590
00:27:21,240 --> 00:27:23,800
Speaker 8: but they're not doing well, so everyone keeps thinking that

591
00:27:23,840 --> 00:27:26,280
Speaker 8: there's going to be this giant fiscal blast and consumptions

592
00:27:26,400 --> 00:27:28,760
Speaker 8: is going to flip like this. In order for there

593
00:27:28,800 --> 00:27:31,119
Speaker 8: to be a major restructure of the Chinese economy, you

594
00:27:31,160 --> 00:27:33,800
Speaker 8: do have to incentivize greater consumption, and you can't do

595
00:27:33,840 --> 00:27:35,040
Speaker 8: that through one off vouchers.

596
00:27:35,840 --> 00:27:36,159
Speaker 1: Leland.

597
00:27:36,160 --> 00:27:38,240
Speaker 5: If I were to chat with some folks on the street,

598
00:27:38,240 --> 00:27:40,640
Speaker 5: whether it's in urban centers like Beijing or shang Higher

599
00:27:40,760 --> 00:27:43,280
Speaker 5: on the countryside, what would they tell me? Are they

600
00:27:43,320 --> 00:27:44,480
Speaker 5: concerned about this economy?

601
00:27:44,480 --> 00:27:47,800
Speaker 1: Are they happy with the economy? Where are we? I

602
00:27:47,840 --> 00:27:48,600
Speaker 1: think they're concerned.

603
00:27:48,680 --> 00:27:51,240
Speaker 8: I mean, if they're traders, then they're trying to listen

604
00:27:51,359 --> 00:27:55,040
Speaker 8: very closely to hear every time there's a stimulus announcement.

605
00:27:55,080 --> 00:27:57,280
Speaker 8: Then they're running their computers and buying. Because this is

606
00:27:57,320 --> 00:28:00,240
Speaker 8: about storturemasset market trading. You know, most of these things

607
00:28:00,240 --> 00:28:04,040
Speaker 8: are complete nonsense, and they're being you know, being basically

608
00:28:04,080 --> 00:28:07,359
Speaker 8: broadcast by the street by others because they're trading opportunities.

609
00:28:07,359 --> 00:28:11,200
Speaker 8: They're not macro changes to the landscape. So I think

610
00:28:11,240 --> 00:28:13,320
Speaker 8: most of the people who are on the ground trying

611
00:28:13,320 --> 00:28:16,359
Speaker 8: to live their lives are very disappointed in what they see. Yes,

612
00:28:16,359 --> 00:28:19,400
Speaker 8: there's more policy support that's come in twenty twenty four.

613
00:28:19,480 --> 00:28:20,880
Speaker 8: Yes there will be more on the way in twenty

614
00:28:20,920 --> 00:28:24,440
Speaker 8: twenty five. But is this going to fix what ails China?

615
00:28:24,560 --> 00:28:28,080
Speaker 8: China has extraordinarily low domestic demand and they're over reliant

616
00:28:28,119 --> 00:28:30,160
Speaker 8: on an export model that's about to be hit hard

617
00:28:30,160 --> 00:28:33,280
Speaker 8: with tariffs. So with that combination, I would be very

618
00:28:33,320 --> 00:28:35,679
Speaker 8: concerned if I were a Chinese you know, a Chinese

619
00:28:35,720 --> 00:28:37,320
Speaker 8: household just trying to figure out what's.

620
00:28:37,119 --> 00:28:37,560
Speaker 1: Next for me.

621
00:28:38,440 --> 00:28:40,440
Speaker 3: So based on that, what do you think is going

622
00:28:40,480 --> 00:28:43,120
Speaker 3: to happen with tariffs? Like we were all talking about

623
00:28:43,120 --> 00:28:45,720
Speaker 3: how President elect Trump, but by the president g to

624
00:28:45,760 --> 00:28:48,720
Speaker 3: his inauguration, Like, do you really think that tariffs are

625
00:28:48,760 --> 00:28:50,440
Speaker 3: going to be in the cards in a material way?

626
00:28:50,440 --> 00:28:52,400
Speaker 3: Are this still the bargaining chip playbook?

627
00:28:53,680 --> 00:28:55,480
Speaker 1: Yes? I think tariffs are going to be coming in

628
00:28:55,600 --> 00:28:56,440
Speaker 1: a material way.

629
00:28:56,880 --> 00:28:59,400
Speaker 8: It's funny because you know, the Street commentary and I

630
00:28:59,440 --> 00:29:01,920
Speaker 8: get these things flooding my inbox every day. They like

631
00:29:02,000 --> 00:29:04,600
Speaker 8: to pick up on some sort of personnel something or other,

632
00:29:04,920 --> 00:29:07,400
Speaker 8: some sort of anecdote, and then that is their reason

633
00:29:07,440 --> 00:29:09,320
Speaker 8: why they think all this is it's going to be

634
00:29:09,360 --> 00:29:11,720
Speaker 8: a total, you know, a total non issue you know,

635
00:29:12,080 --> 00:29:15,600
Speaker 8: Scott Bessen doesn't like tariffs, or you know, you know,

636
00:29:15,760 --> 00:29:18,520
Speaker 8: or or Bob Leithheiser is not the administration, or she

637
00:29:18,680 --> 00:29:21,280
Speaker 8: may come the inauguration, and therefore this whole tariff thing

638
00:29:21,360 --> 00:29:25,800
Speaker 8: was was was non existent and it's not real. I

639
00:29:25,800 --> 00:29:27,960
Speaker 8: would I would spend a lot of time second guessing

640
00:29:28,000 --> 00:29:30,640
Speaker 8: these things because it's very important to understand that in

641
00:29:30,720 --> 00:29:34,200
Speaker 8: a core recept of what the Trump administration is coming

642
00:29:34,240 --> 00:29:37,600
Speaker 8: to do is reorder the domestic economy and reorder international relations,

643
00:29:37,640 --> 00:29:40,320
Speaker 8: economic relationships, and part of that is going to be

644
00:29:40,440 --> 00:29:43,960
Speaker 8: with tariffs. You know, we we still to be still

645
00:29:44,000 --> 00:29:47,240
Speaker 8: to be seen who gets tariffs and and how hard

646
00:29:47,240 --> 00:29:49,440
Speaker 8: and what's sequencing. I think the administration is going to

647
00:29:49,480 --> 00:29:52,360
Speaker 8: work on that and transition in the administration as things

648
00:29:52,360 --> 00:29:52,840
Speaker 8: come along.

649
00:29:53,120 --> 00:29:54,240
Speaker 1: The idea that China is not.

650
00:29:54,160 --> 00:29:55,920
Speaker 8: Going to see tariffs in a big way in twenty

651
00:29:55,960 --> 00:29:58,480
Speaker 8: twenty five, I think is is a is a very

652
00:29:58,480 --> 00:29:59,840
Speaker 8: optimistic take by the Street.

653
00:30:00,120 --> 00:30:02,480
Speaker 3: Really great stuff. Super appreciate, Alylan, Thank you very much.

654
00:30:02,560 --> 00:30:04,960
Speaker 3: Lelan Miller at CEO of the Beige Book.

655
00:30:05,160 --> 00:30:09,680
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656
00:30:09,840 --> 00:30:13,040
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657
00:30:13,080 --> 00:30:16,440
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658
00:30:16,560 --> 00:30:19,960
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659
00:30:20,080 --> 00:30:23,080
Speaker 2: You can also watch us live every weekday on YouTube

660
00:30:23,320 --> 00:30:25,160
Speaker 2: and always on the Bloomberg terminal