Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: YouTube search Bloomberg clovel News. Well. Over the next thirty minutes,
Speaker 1: we're digging deep into the world of space exploration and evs,
Speaker 1: all with an Elon Musk connective threat. So right now
Speaker 1: we want to talk about what's going on with that
Speaker 1: SpaceX Falcon nine rocket caring for private astronauts that lifted
Speaker 1: off at eleven seventeen am Eastern Time from the Kennedy
Speaker 1: Space Center in Florida. Tim It was the first private
Speaker 1: mission to the International Space Station sanctioned by NASA fifty
Speaker 1: five million dollars per seat. But think about it, it's
Speaker 1: a big deal. That's a lot of money. It is
Speaker 1: a lot of money. It's not something that's the big deal, though,
Speaker 1: it's a huge about what's going on. Let's talk about
Speaker 1: it with Ed lud the West Coast correspondent for Bloomberg News.
Speaker 1: He finds himself now though in Flora Cape Canaveral, Florida,
Speaker 1: where he joins us to talk about SpaceX launching its
Speaker 1: first private astronaut mission to the space station. And that
Speaker 1: happened just a few hours ago. Where are these astronauts
Speaker 1: right now. Yes, so they're in their orbit right there now,
Speaker 1: slowing things right down inside the capsule, and they're about
Speaker 1: two and a half hours into a twenty hour journey
Speaker 1: to the International Space Station. And I can tell you
Speaker 1: Carol and Tim that they've taken off their space suits.
Speaker 1: They're shiny white SpaceX space suits, and they've had their
Speaker 1: first space meal as they get some R and R
Speaker 1: ahead of that long journey. Uh, it's unbelievable. I mean,
Speaker 1: I feel like there's just so many ways to look
Speaker 1: at it in terms of space exploration generally right, private
Speaker 1: public sector working together. And then of course there's a
Speaker 1: political aspect. So what's what's the historic moment. I think
Speaker 1: I heard you talking about the launch pad that was
Speaker 1: being used today. Well, yeah, so this launched Complex thirty
Speaker 1: nine A. It's the same pad that first took man
Speaker 1: to the moon, right, and and it's you know, without
Speaker 1: getting too carried away with ourselves. I spoke to NASA
Speaker 1: Administrator Bill Nelson, and he called today an inflection point
Speaker 1: because what he as under his leadership, what NASA has
Speaker 1: tried to do is pass the baturn from public sector
Speaker 1: to private sector. Where NASA doesn't have an infinite budget.
Speaker 1: The I S S costs four billion dollars a year
Speaker 1: in terms of the US contribution to maintain it. So
Speaker 1: what they want is the private sectors to step up.
Speaker 1: Not just in the context of SpaceX carrying humans to
Speaker 1: the I S S. Today was the first all private crew,
Speaker 1: no public sector or government astronauts, but they actually want
Speaker 1: the private sector to take over for the space station itself.
Speaker 1: And as you guys know, the I S S goes
Speaker 1: gets decommissioned in one and their hope is that Axiom,
Speaker 1: this Texas based startup, by that point will have built
Speaker 1: its own commercial, private sector space station that will maintain
Speaker 1: and stay up in orbit. So what are these folks
Speaker 1: doing once they get to the space station. How long
Speaker 1: are they going to be there? And who are they
Speaker 1: gonna be with? So everyone's been at pains to point
Speaker 1: out that they're not there for a vacation, although you know,
Speaker 1: they kind of are. They've paid fifty five million dollars
Speaker 1: a seat for the opportunity. But they're going to be
Speaker 1: conducting scientific experiments. They're going to be conducting assembly AI
Speaker 1: related in experiments looking at the human anatomy and physiology
Speaker 1: on in a zero gravity environment. And they did almost
Speaker 1: a thousand hours each of training for this mission, the
Speaker 1: four private astronauts, So they have prepared for this, and
Speaker 1: NASA is kind of excited, right because they get access
Speaker 1: to the data generated up there. And I guess the
Speaker 1: other part of your question, Tim, My understanding is they
Speaker 1: could have dinner with the three Russian astronauts that are
Speaker 1: currently on board the s S. Yeah, that's going to
Speaker 1: go well, or is it? Like? So, how does the
Speaker 1: backdrop of our geopolitical tensions um and tension, it's war,
Speaker 1: let's just call it what it is. How might that
Speaker 1: that conversation or that meeting or you know, will it
Speaker 1: even happen? So it's at the discretion of the three
Speaker 1: cosmonauts to invite either the private Axiom crew, the four
Speaker 1: members or the exist Remember there's three US astronauts currently
Speaker 1: on I S S and the German you know, so
Speaker 1: it's completely at their discretion. Bill Nelson, national Administrator, told
Speaker 1: me he thought it would happen. CAFEE leaders who run
Speaker 1: space operation here as associate administrators, told me it would happen.
Speaker 1: The fighting talk is really coming from the Russian side.
Speaker 1: Dmitri Ruggazin, who's the head of ross Cosmos, their space agency,
Speaker 1: said that the economic and trade sanctions in place on Russia,
Speaker 1: if they're not removed, then Russia could pull out of
Speaker 1: the I S S agreement, which is quite a threat.
Speaker 1: That's a really big deal because Russia is responsible for
Speaker 1: a large portion of the I S S yearly budget,
Speaker 1: just after the United States contribution. And then there's also
Speaker 1: the element for years, the US relied on soy use
Speaker 1: rockets to actually get astronauts from from the United States.
Speaker 1: They would go to you know, go to parts of
Speaker 1: Russia or after parts of outside, just outside of Russia
Speaker 1: to actually get to the International Space Station. Explain what's
Speaker 1: going on here, Yeah, it's multifaceted. But yes, historically NASA
Speaker 1: has in part relied on Russia and the Sawyers system
Speaker 1: to get astronauts from Earth to the International Space Station.
Speaker 1: I'm talking about U s citizens, right, hitching a ride
Speaker 1: with Russia essentially, and of course they've relied on them
Speaker 1: to bring them back. SpaceX has changed that somewhat, of course,
Speaker 1: because SpaceX is sending and bringing back astronauts are quite
Speaker 1: a regular cadence from here in Florida. The other side
Speaker 1: of it is you have names like Northfrook Grumman, You
Speaker 1: have names like United Launch Alliance that use Russian built
Speaker 1: engines for their own launch systems. Now with the sanctions situation,
Speaker 1: they don't have access to those, and SpaceX isn't going
Speaker 1: to start selling their engines to those US players. Blue Origin,
Speaker 1: the jeffs Or startup is trying to. But this whole
Speaker 1: conflict or war in Ukraine has completely changed the dynamico
Speaker 1: spaces cut Russia off from its customers, and it's cut
Speaker 1: Nasser off. But I would say that Bill Nelson did
Speaker 1: leave the door open to US astronauts traveling on Sawyers,
Speaker 1: whether it's this year next year, because as he puts it.
Speaker 1: There are level terms, there are professional terms when it
Speaker 1: comes to space, and we have peace in space irrespective
Speaker 1: of what's happening on Earth. That's actually comforting words and
Speaker 1: interesting considering our backdrop. Ed Ludlow, Um, you're reporting is
Speaker 1: just fantastic and so glad that we had some time
Speaker 1: with your Ed Ludlow. He's a West Coast correspondent at
Speaker 1: Bloomberg News from Cape Canaveral, Florida. And I just want
Speaker 1: to point out that, as we said, we're gonna do
Speaker 1: a bit more on Tesla and Elon Muskers coming up next,
Speaker 1: we're gonna get into what happened at last night's Tesla
Speaker 1: cyber rodeo in Austin, Texas. Yeah, it's been a big
Speaker 1: week from Twitter to Texas to Florida for space X.
Speaker 1: We got it all covered here on Bloomberg Radio. You
Speaker 1: talk about innovation to disruption like him, are not. He
Speaker 1: definitely moves the needle on a lot of things. I
Speaker 1: sell some statistic about E VS. The ramp up and
Speaker 1: the number that's out there. It's just showing that it's
Speaker 1: great gaining traction overall. All Right, you're listening to Bloomberg
Speaker 1: Business Week on Bloomberg Radio. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. So we did promise you more from the
Speaker 1: world of Elon Muss Last night, Elon and Tesla hosting
Speaker 1: a cyber rodeo at the company's new factory in Austin, Texas.
Speaker 1: And uh did a lot of things, including giving some
Speaker 1: updates for delayed products and more. We weren't there, but
Speaker 1: we know who was. Sean o'caine is EV reporter for
Speaker 1: Bloomberg News. He joins us via zoom from Austin, Texas. Sean,
Speaker 1: really good to have you with us on Bloomberg Business
Speaker 1: Week Radio. What was it like last night? Overwhelming? There's
Speaker 1: a lot going on, um, and not just in sort
Speaker 1: of the events and the concert aspect and all of that.
Speaker 1: And of course Elon must talking that, you know, just
Speaker 1: being inside this new factory and seeing a lot of
Speaker 1: the stuff they've already set up and have pretty much
Speaker 1: ready to go. Well, and let's talk about this because
Speaker 1: this you know, you know Tesla well, and we talked
Speaker 1: about a lot for such a long time. You know,
Speaker 1: he'd put out, you know, estimates forecast they wouldn't happen,
Speaker 1: and so on and so forth. Um, we are waiting
Speaker 1: for the cybertruck, the roadster, the tell us what we
Speaker 1: we found out and can we believe it? Well, I mean,
Speaker 1: how much time do you have? Uh? It was surprisingly
Speaker 1: a news light event for the most part. Um. You know,
Speaker 1: Elon Musk got up there and spoke for about a
Speaker 1: half an hour and really just sort of ran everybody
Speaker 1: through sort of the history of Tesla and abridged version
Speaker 1: um and uh, and a little bit about the future
Speaker 1: and the plans that he has for expansion. But it
Speaker 1: wasn't really anything too new, um compared to what we've
Speaker 1: heard him talk about before on earnings calls or at
Speaker 1: other events. Maybe the only really sort of new thing
Speaker 1: that we heard was that he said Tesla's working on
Speaker 1: building a dedicated robotaxi um, so a whole new vehicle
Speaker 1: that would be just sort of purpose built for fully
Speaker 1: autonomous vehicle travel. But you know, we still haven't seen
Speaker 1: the company come up with that technology in the cars
Speaker 1: that has today, even though it's working towards it. So
Speaker 1: it's one of the many things you can add to
Speaker 1: the list, Like you know, the Tesla van, which was
Speaker 1: something you talked about a long time ago. We were hey, Sean,
Speaker 1: we were showing video for our YouTube users, and so
Speaker 1: the silver truck or whatever that he was getting cyber truck,
Speaker 1: is that the cyber truck. That's it, right? Yeah, And
Speaker 1: that was the first time that we've ever seen, at
Speaker 1: least that we know of the two prototypes that they
Speaker 1: have working of the cyber truck in the same place. Uh.
Speaker 1: And so yeah, that was something that a lot of
Speaker 1: people they were really excited to see. Okay, how big
Speaker 1: of a grain of salt should we take these dates? Uh, Sean,
Speaker 1: Because well, I hear Tesla robo taxi, right, and I
Speaker 1: think back to when you know, Elon must promise we'd
Speaker 1: be seeing he's on the roads back. So well, here
Speaker 1: we are three years later, no robo taxis, and then
Speaker 1: at the same time, the cyber truck in the semi
Speaker 1: or you know this, we're supposed to be in production already. Um.
Speaker 1: I mean, I think you're right in thinking that there
Speaker 1: should be grains of salt taken with some of this stuff. Uh.
Speaker 1: You know, as a writer myself, I know I have
Speaker 1: trouble with deadlines, so I can't but you still got
Speaker 1: this piece in last night. And yes, uh though with
Speaker 1: help for sure. And uh and Ellen is definitely someone
Speaker 1: who likes to go it alone, at least at the
Speaker 1: top level of the company a lot of times. So yeah,
Speaker 1: I mean, I think we should view any date that
Speaker 1: he sets, whether it's Tessla or any of the other
Speaker 1: companies that he runs with, with huge skepticism. Um it
Speaker 1: doesn't mean that they aren't working on these things, they
Speaker 1: are just sort of, uh, you know, test this problem.
Speaker 1: And Elon's problem really has always been never willing. He's
Speaker 1: never really willing to fully accept or understand the challenges
Speaker 1: that he's sort of put in front of him because
Speaker 1: he's been able to accomplish him pretty wild things. But
Speaker 1: I think he thinks at the outset of some of
Speaker 1: these projects that he's going to be able to make
Speaker 1: those sort of breakthrough moves along the way that he
Speaker 1: typically stumbles his way into or designs his way into,
Speaker 1: and sometimes those are a little bit harder to come
Speaker 1: by than I think he expects. You know, I think
Speaker 1: it was back I was just checking. I was doing
Speaker 1: quick Google search. I think it was back in we
Speaker 1: used to keep track of um Lan's forecast deadline schedules
Speaker 1: because it was constantly Sean so fluid um and that's
Speaker 1: just kind of who he is. But it's interesting how
Speaker 1: investors have kind of gotten used to it, because you know,
Speaker 1: if we look at what he's done, he ultimately does
Speaker 1: seem to deliver um. Can you just tell us about
Speaker 1: the drones flying in the night sky? Did you get
Speaker 1: to see that? Yeah? That was pretty cool. I mean
Speaker 1: they we've seen this a lot of tech companies and
Speaker 1: stuff and started doing this and sporting events and everything.
Speaker 1: But it was nice to see them sort of go
Speaker 1: through sort of the design work and put in the
Speaker 1: thought to come up with really kind of clever or
Speaker 1: funny things to show in this drone show. We saw
Speaker 1: like a portrait of Nicola Tesla. We saw the she
Speaker 1: you know that is sort of thematica coach coin. We
Speaker 1: even saw a little um uh, the meme that kind
Speaker 1: of shows up at the end of the ordering process
Speaker 1: when you buy a Tesla, this little hedgehog that is
Speaker 1: throwing up the little okay symbol. So it was you know,
Speaker 1: it's a very considerate as far as uh, you know,
Speaker 1: things within the realm of Tesla uh and people who
Speaker 1: follow the world closely U that surrounds this business. It
Speaker 1: was a very considerate thing for all those people to
Speaker 1: see it was it was something else, the humanoid robot
Speaker 1: that didn't make it just quickly it was there. But
Speaker 1: it's still very much a just department store mannequin uh
Speaker 1: prop up on a stage. It is. It is not
Speaker 1: something that is working. So we'll see that one might
Speaker 1: need a little bit more salt than some of the others.
Speaker 1: Looking forward to that timeline coming true. Sean Okaine, thank
Speaker 1: you so much. Really fun Evie reporter or Bloomberg News.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well the
Speaker 1: new Wayshaw Bloomberg business Week. It is out. It's online
Speaker 1: at business Week dot com, Bloomberg dot com, also on
Speaker 1: the Bloomberg terminal, and it's on newstand. Joel Weber is
Speaker 1: editor at Bloomberg business Week. He joins the via the
Speaker 1: Access line from Brooklyn. You can follow him on Twitter
Speaker 1: at Joel Weber's Show. Joel, I got in my hands
Speaker 1: the current issue of Bloomberg Business Week magazine. I want
Speaker 1: to start with the cover and then we're gonna get
Speaker 1: to the cover story, but one of my favorite parts
Speaker 1: about Business Week each week is talking to you about
Speaker 1: how the cover is made, or even just finding out
Speaker 1: how the cover is made, flipping it open to the
Speaker 1: table of contents and reading that take us through how
Speaker 1: this one came together. So this cover story is by
Speaker 1: Joshua Green, and it's about David McCormick, who, until earlier
Speaker 1: this year is actually CEO of Bridgewater, the world's largest
Speaker 1: hedge fund UH. He is now a candidate for the
Speaker 1: gop UH Senate position, a seat in Pennsylvania, and that
Speaker 1: primary is unfolding now. The election primary election is next
Speaker 1: month and he's in a heated race with Dr Rosz.
Speaker 1: So the story really focuses on McCormick um and and
Speaker 1: sort of his transformation from being U hedge fund finance
Speaker 1: type into a Trump loving maga UH politician. And to
Speaker 1: do that, we really wanted to, you know, show show
Speaker 1: what he was like the environments that he's now at
Speaker 1: with these rallies. And we just had this amazing photo
Speaker 1: that we got of him sort of cackling, and it
Speaker 1: was just the perfect image to go with a line
Speaker 1: um The dominant part of which is you know, full maga.
Speaker 1: I said to Tim, this is a guy who is
Speaker 1: on a mission. If it looks like, you know, we'll
Speaker 1: kind of do whatever he needs to do or be
Speaker 1: whoever he needs to be to get to his ultimate goal. Yeah,
Speaker 1: and I think, you know, um John, it's not like
Speaker 1: the Republican um side of his politics as a surprise.
Speaker 1: I mean, he's long been um known to be Republican
Speaker 1: and has prob you know, Josh, as Josh writes in
Speaker 1: the story, like potentially grand ambitions than just this the
Speaker 1: Senate seat. But it has taken his Bridgewater colleagues a
Speaker 1: little bit by surprise just how um full maga he's gone.
Speaker 1: And it also speaks, as Josh writes in the story,
Speaker 1: to what it takes to actually really uh be a
Speaker 1: successful Republican at this stage. And for a while post Trump,
Speaker 1: there was maybe a theory that you would be able
Speaker 1: to to see more centrist candidates, and it turns out
Speaker 1: that even somebody like McCormick, who who probably in a
Speaker 1: non Trump world would have been a centest, has to attack.
Speaker 1: And now you know, there he and Dr Oz are
Speaker 1: effectively trying to out trump one another, and all all
Speaker 1: to basically get Trump's blessing, and if either of them
Speaker 1: happens to get the blessing, it might be enough to
Speaker 1: put him over the top. Well, I do want to
Speaker 1: give a shout out to not just Josh who who
Speaker 1: wrote the story, but also to our editor's roundtable discussion
Speaker 1: that's part of our Bloomberg Business Week weekend show, which
Speaker 1: drops tomorrow, because we do talk a lot about the
Speaker 1: story Joel, but one area that we didn't get to
Speaker 1: hit with Josh was China connections for David McCormick. And
Speaker 1: I thought this was a really interesting part of the
Speaker 1: piece because if we think about what the Trump administration,
Speaker 1: the Trump Adminstration's tone towards China and where we are
Speaker 1: when it comes to Republicans in China, Uh, what he
Speaker 1: did at Bridgewater, many would argue, uh, does not really
Speaker 1: jell with that. Yeah. And and there's a very memorable
Speaker 1: scene with with Josh and Dr oz In in the
Speaker 1: in the bathroom actually where Josh got to interview Dr
Speaker 1: oz And and basically Dr oz at that moment said
Speaker 1: as much um to Josh and that he was surprised
Speaker 1: that more people haven't been frustrated with McCormick on that
Speaker 1: on on the China score, because you're right, Bridgewater um
Speaker 1: famously has been very sympathetic to China, has court of
Speaker 1: Chinese dollars, has made a ton of money there and
Speaker 1: you know a lot of that happened on McCormick's watch
Speaker 1: as CEO. Uh so you know what what he can
Speaker 1: Also he's also pushed back on that and said, you know,
Speaker 1: it's only a fraction of the business and um, you know,
Speaker 1: was in direct something that that he oversaw. But you know,
Speaker 1: the fact of the matter is if in the political
Speaker 1: world in which we look in now, everything looks like
Speaker 1: it could be weaponized and that looks like something that
Speaker 1: may continue to be used against them, um, either in
Speaker 1: this race and racist com All right, so that's the
Speaker 1: domestic cover story. We also, um had a chance to
Speaker 1: catch up this week with you and Sarifire on the
Speaker 1: international cover story, which has to do with the French elections. Yeah,
Speaker 1: so we uh we You know that that McCormick story
Speaker 1: is interesting because that I forgot to mention that it's
Speaker 1: the most expensive primary and Senate history, but it's all
Speaker 1: and it also just shows how this idea that that
Speaker 1: I think transfixed the US the last election cycle, the
Speaker 1: last election cycles of you know, how misinformation can be
Speaker 1: weaponized and how rife it is on social media, and
Speaker 1: you know, we've spent a lot of time talking about
Speaker 1: the social media companies and the platforms and what they're
Speaker 1: doing to fight misinformation. And it turns out that a
Speaker 1: lot of these problems are still um are still festering.
Speaker 1: And France, which has an election on Sunday, happens to
Speaker 1: be a surprising case study in just how how wrong
Speaker 1: it all still looks. The far right candidates there, Marine
Speaker 1: Lepine ericson Moore have managed to basically get UM uh
Speaker 1: Emmanuel McCrone to to have to have to veer more
Speaker 1: towards their lane. UH. The race which I think a
Speaker 1: lot of people would probably thought McCrone would probably be
Speaker 1: able to to walk away with looks really tight and even,
Speaker 1: and it will basically lead to a runoff. And even
Speaker 1: in that runoff, it looks like UM currently like some
Speaker 1: of the numbers suggest that Lapin could have the edge.
Speaker 1: And it all comes down to basically what what Sarah
Speaker 1: Fryar and company right in the story UM is that
Speaker 1: there's more tactics really brought racial grievances to the forefront
Speaker 1: country that's already obsessed with nash fialism has become just
Speaker 1: it's become a weapon there and a lot of the
Speaker 1: same echo chamber of misinformation. They there's a more campaign
Speaker 1: is used to great advantage. Well, let's go to another
Speaker 1: story featured in Bloomberg Business Week this week, this one
Speaker 1: by Mark German, and it's about Apple workers are pushing
Speaker 1: back on their return to office almost two years after
Speaker 1: they were first sent home. So Monday marks the day
Speaker 1: that Apple employees are set to return to the office. Um,
Speaker 1: are they just willingly going to come back to the office. Oh? Man,
Speaker 1: it's a it's a story that I'm really interested in
Speaker 1: because even um, you know, the world's moth valuable company
Speaker 1: on Apple UH is struggling to get its employees to
Speaker 1: come back to the office. And the German story opens
Speaker 1: with uh this reference to a promotional video titled Escape
Speaker 1: from the Office that Apple published recently, and it's basically
Speaker 1: about how a group of of heroes in this US
Speaker 1: ad working for this fictitious company basically get Apple devices
Speaker 1: and can start their own company. And boy, the irony
Speaker 1: there is just that if I can use a bunch
Speaker 1: of Apple devices to start my own company, Like why
Speaker 1: why do I have to work from an office for Apple? Uh?
Speaker 1: And that is exactly what Apple is wrestling with. It's
Speaker 1: not alone, a lot of corporate America is wrestling with
Speaker 1: this same thing. Uh. And you know they're having to
Speaker 1: come up with some accommodative policies because maybe exacts need
Speaker 1: to be in the office, but others, um, not not
Speaker 1: so much. So all of that UH leads to sort
Speaker 1: of like you know, even even the most fabulous, wealthy
Speaker 1: companies in the world are are wrestling with uh. You
Speaker 1: know how how ranks want to deal with rto talk
Speaker 1: about tensions man, um, great issue and so fun to
Speaker 1: check in with you. Uh. The editor of Bloomberg Business Week,
Speaker 1: Jill Weber, on the phone from Brooklyn, And of course
Speaker 1: check out our weekend show. You can hear it on
Speaker 1: radio Bloomberg Radio at eight am Saturday. You can also
Speaker 1: catch it on our podcast Speed and check out also
Speaker 1: that editor's roundtable that we do with Joel and we
Speaker 1: talk about cover stories. You are listening to Bloomberg, I'm roam, yeah,
Speaker 1: but you let me drive? No, no, no no, honey, please,
Speaker 1: I'll do the ravels. I want to drive it's good question. Drive,
Speaker 1: which is the Drive to the Clothes down on bloom
Speaker 1: Bird Radio. All right, we've got about ten minutes left
Speaker 1: in today's trading session, getting ready to wrap up the week.
Speaker 1: Let's not forget earnings start in a big way next week,
Speaker 1: those little things with the big banks, uh, Tippian Morgan, Morgan,
Speaker 1: Stanley Goldman Sachs. That will be a focus next week.
Speaker 1: Right now that we're focusing on stocks, we're seeing some
Speaker 1: selling into the clothes, not quite at our loads of
Speaker 1: the day, as we just heard from Charlie, but nonetheless
Speaker 1: moving down. Let's get to it, and let's get to
Speaker 1: the Drive to the clothes. Lisa eric Son is co
Speaker 1: ahead of the Public Markets group at US Bank Wealth Management.
Speaker 1: Lisa joins us on the phone from Minneapolis, Minnesota. Lisa,
Speaker 1: how are you? How are things in Minneapolis? We're having
Speaker 1: a great day, thanks so much to him. Great is
Speaker 1: it you always? Whenever everyone says that and the markets down,
Speaker 1: Carol says, do you really mean really having a good day?
Speaker 1: Tell me what great means? Uh No, But in this environment,
Speaker 1: it's a rough one. You know, we held our Bloomberg
Speaker 1: lives as rough as it was a month ago, that's true.
Speaker 1: We hear a Bloomberg Live Wealth event, uh and talking
Speaker 1: with a lot of investment professionals like yourself, and I
Speaker 1: caught up at the president of the Nicey Group and
Speaker 1: Catherine Keating over at b and Y Melon. She's ahead
Speaker 1: of b and Y Melon Wealth, and there was a
Speaker 1: lot of optimism, but everybody's keeping a very close watch
Speaker 1: on how aggressive the FETE is going forward. What is
Speaker 1: it that kind of keeps you up up at night
Speaker 1: when it comes to the outlook. Well, to your point, Carol,
Speaker 1: we really do think the FET is one of the
Speaker 1: key items we need to keep our eye on. And
Speaker 1: really the reason why is as they move from this
Speaker 1: approach of accommodation to normalization, they really have a tight
Speaker 1: rope to walk. And that's because coming into this year
Speaker 1: we really knew already that the comparisons would be hard.
Speaker 1: We had such strong reopening in one that it was
Speaker 1: just going to be hard for growth to be anyway.
Speaker 1: And now on top of that, inflation has been elevated
Speaker 1: for longer than I think most expected, And on top
Speaker 1: of that we have the very unfortunate human situation and
Speaker 1: tragedy in the Ukraine and Russia. Which again may keep
Speaker 1: prices elevated and supply constraints uh going forward. So really
Speaker 1: they've got a tough hole in terms of really trying
Speaker 1: to moderate those price pressures while not hopefully denigrating growth
Speaker 1: toe to great a degree. Yeah, sometimes I have to
Speaker 1: say it certainly feels crossed talking about equity markets and
Speaker 1: environment like this because there is so much suffering happening
Speaker 1: around the world. Um, but we we should note that
Speaker 1: a lot of what we're seeing playout in market today
Speaker 1: is a dire result of geopolitics right now, especially when
Speaker 1: it comes to inflation on when it comes to energy. Lisa,
Speaker 1: I'm wondering, can you give us some numbers behind how
Speaker 1: you're thinking inflation will moderate or if it will stay
Speaker 1: elevated this year, because we do get CPO next week
Speaker 1: and it's and it's looking like it's going to be
Speaker 1: pretty hot. Absolutely well, we do see that there are
Speaker 1: some pressures on the side to help that moderate. On
Speaker 1: the positive side, we have seen the labor force continue
Speaker 1: to heal and particularly those participation numbers pick up, and
Speaker 1: that's really nice because there's more workers come back into
Speaker 1: the workforce. That's going to help offset some of those
Speaker 1: supply chain pressures. Uh, And we have seen just organically
Speaker 1: some improvements overall in logistical chains and things like that,
Speaker 1: so there are some countervailing forces. Again, the really the
Speaker 1: wild card, I think is going to be to your point,
Speaker 1: some of these geopolitical events, it's really hard to handicap
Speaker 1: and to assess really what the outcome is going to be.
Speaker 1: But obviously the longer those constraints continue, the it's going
Speaker 1: to be a force to keep that inflationary pressure up.
Speaker 1: All right, So what do you have to do then
Speaker 1: for investors portfolios at this point or how do you
Speaker 1: think about it in terms of you know, there's capital preservation,
Speaker 1: which sometimes in a crazy market environment, that's what it's about,
Speaker 1: just not losing too much in an environment, rather than
Speaker 1: thinking about gains or out performance. Absolutely well, we're really
Speaker 1: at a balanced position right now on our outlook across
Speaker 1: asset classes. And what that means for us is really, uh,
Speaker 1: for the investor, all other things being equals staying at
Speaker 1: their typical strategic allocation to equities. And the reason for
Speaker 1: that is despite you know, some of these risks that
Speaker 1: we're talking about, and really the difficult situation if you
Speaker 1: look at the underlying fundamentals. We're actually in an okay place.
Speaker 1: When we track our global health check of indicators across
Speaker 1: the US, what we see is really actually a solid picture,
Speaker 1: and while there's some slowly in some of the indicators,
Speaker 1: it's really from a very high level, and corporations have
Speaker 1: continued to do well in terms of their earnings. So
Speaker 1: we're starting from that solid operational base and really just
Speaker 1: watching to see how some of these risks play out
Speaker 1: as the year continues to unfold. Okay, so you talked
Speaker 1: about what an investor should be doing right now when
Speaker 1: it comes to their own allocation and staying the course.
Speaker 1: If you were to deploy new money right now, where
Speaker 1: would you put it? Would you put it in ships
Speaker 1: because they're selling off. Yeah, Well, we really are advocating
Speaker 1: rebalancing again to what those strategic positions would be in equities.
Speaker 1: And then on the fixed income side, we're really a
Speaker 1: little bit more cautious again on the back of UH
Speaker 1: the fact that the Fed is got this road to
Speaker 1: UH move towards in terms of continuing to normalize policy.
Speaker 1: And so with that more cautious stance with fixed income,
Speaker 1: we actually think an interesting place to invest this global infrastructure.
Speaker 1: We see that as an opportunity to benefit both from
Speaker 1: some internal to the US ongoing reopening activity at all,
Speaker 1: so provide some inflationary offset as well as provides some
Speaker 1: really nice diversified cash flows on an ongoing basis. Okay,
Speaker 1: what about you know, market indicators. We follow different things,
Speaker 1: whether it's the VIX, whether it's the doubt transports. The
Speaker 1: transports down another one percent in today's session, if I
Speaker 1: look for the week overall down almost seven percent, you know,
Speaker 1: in times past, I'm thinking of different market cycles, we
Speaker 1: would say that that's a negative sign about what's to
Speaker 1: come in the economy. Do you buy it well, certainly,
Speaker 1: and I don't mean do you well. Do you buy
Speaker 1: it in terms of is it an opportunity investment opportunity
Speaker 1: or do you buy the signal that things are getting darker? Well,
Speaker 1: certainly it is an important indicator to watch. But we
Speaker 1: really take a whole mosaic approach though, again as we
Speaker 1: look at not only the transports and the VIX, but
Speaker 1: a number of other indicators. That's really leading us to
Speaker 1: this more balanced conclusion that at least as far as
Speaker 1: the risk on stance, really just staying more at the
Speaker 1: neutral position with typically wherever you would be and continue
Speaker 1: to watching how that data unfolds. Well, again, there's some
Speaker 1: risk on the horizon. We do see this appetite for reopening,
Speaker 1: and consumers and corporate coffers really continue to remain healthy,
Speaker 1: although there's been a little bit of draw down on
Speaker 1: the consumer side. That again is a support for the
Speaker 1: equity market. Really interesting stuff. Um, we only have about
Speaker 1: twenty seconds left with you. Um, does the US hit
Speaker 1: a recession the next twelve months? Well, our bass case
Speaker 1: really is we're going to see some slowing, but we
Speaker 1: aren't seeing recession yet in the cards. Again, the path
Speaker 1: forward is pretty uncertain, so we're going to just have
Speaker 1: to continue to monitor, monitor, and buckle up. Sounding like
Speaker 1: the FED, we're gonna be data dependent, which makes sense.
Speaker 1: I really think that's a fair assessment in terms of
Speaker 1: where we are. Lisa, listen, have a great weekend. Nice
Speaker 1: to check in with you again. Lisa Erickson, she's senior
Speaker 1: vice president co head of the Public Markets Group over
Speaker 1: at US Bank Wealth Management. On the phone from Minneapolis.
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