1 00:00:01,400 --> 00:00:03,360 Speaker 1: Thank you so much for joining us on this good 2 00:00:03,400 --> 00:00:07,360 Speaker 1: Friday edition of Bloomberg Daybreak. I'm Nathan Hagar coming up 3 00:00:07,400 --> 00:00:10,360 Speaker 1: this hour with so much division on Capitol Hill, is 4 00:00:10,400 --> 00:00:13,280 Speaker 1: the US in real jeopardy of defaulting on its debt? 5 00:00:13,440 --> 00:00:15,760 Speaker 1: We'll look at the debate awaiting lawmakers when they get 6 00:00:15,800 --> 00:00:19,000 Speaker 1: back from the holiday with Bloomberg Government's Emily Wilkins. Plus, 7 00:00:19,040 --> 00:00:20,560 Speaker 1: we'll take you to part of the country that has 8 00:00:20,600 --> 00:00:23,480 Speaker 1: traditionally been a pretty good indicator of the economy. We'll 9 00:00:23,480 --> 00:00:26,560 Speaker 1: tell you why it's now flashing signs of a recession. Plus, 10 00:00:26,760 --> 00:00:28,680 Speaker 1: we'll take it to Geneva, where one of the year's 11 00:00:28,720 --> 00:00:33,200 Speaker 1: biggest events in the luxury watch industry just wrapped up. First, though, 12 00:00:33,200 --> 00:00:35,800 Speaker 1: it was a shock to commodity markets to begin the 13 00:00:35,800 --> 00:00:40,120 Speaker 1: week at surprise production cut from OPEC Plus for more 14 00:00:40,159 --> 00:00:42,920 Speaker 1: on the short and long term implications of this move 15 00:00:43,000 --> 00:00:45,600 Speaker 1: in the oil space, We're pleased to welcome Stephen Schork, 16 00:00:45,880 --> 00:00:48,559 Speaker 1: who of course covers energy markets as president of the 17 00:00:48,600 --> 00:00:51,280 Speaker 1: Short Group. Stephen, thanks for being with us. How big 18 00:00:51,280 --> 00:00:53,960 Speaker 1: a surprise was this for you to hear OPEC plus 19 00:00:53,960 --> 00:00:55,280 Speaker 1: come out and say we're going to take more than 20 00:00:55,320 --> 00:00:58,400 Speaker 1: a million barrels off the market every day. It was 21 00:00:58,480 --> 00:01:02,440 Speaker 1: a surprise, but but not shocking surprise. Actually, I thought 22 00:01:02,480 --> 00:01:06,640 Speaker 1: we would have more hawkish rhetoric out of OPEC in 23 00:01:06,680 --> 00:01:10,960 Speaker 1: their prior meeting, so this did come out of the blows. 24 00:01:11,040 --> 00:01:15,160 Speaker 1: So I was surprised that we didn't get a hawkish 25 00:01:15,280 --> 00:01:18,280 Speaker 1: rhetoric the last time and the last go around, and 26 00:01:18,440 --> 00:01:22,080 Speaker 1: I'm surprised that it happened now, but not shocked. So 27 00:01:22,880 --> 00:01:25,920 Speaker 1: the real shocking thing is not the cut itself, but 28 00:01:26,000 --> 00:01:30,080 Speaker 1: what the cut tells us. And first and foremost, it 29 00:01:30,200 --> 00:01:33,679 Speaker 1: isn't a political move. Yeah, there's the old Saint on 30 00:01:33,720 --> 00:01:36,759 Speaker 1: Wall Street that bulls and bears make money, hogs get slaughtered. 31 00:01:37,160 --> 00:01:40,759 Speaker 1: And OPEC is very aware there's a limit to how 32 00:01:40,840 --> 00:01:43,880 Speaker 1: high they want prices to go. And what they're telling 33 00:01:43,959 --> 00:01:47,480 Speaker 1: us now by this production cut is they're very skeptical 34 00:01:47,720 --> 00:01:52,520 Speaker 1: about the economy, the global economy, and therefore they want 35 00:01:52,560 --> 00:01:56,440 Speaker 1: to get ahead of any sort of demand destruction. So 36 00:01:56,480 --> 00:01:59,520 Speaker 1: they've decided to pull that supply off of the market. 37 00:01:59,800 --> 00:02:01,920 Speaker 1: So it's more of a kind of a canary in 38 00:02:01,960 --> 00:02:04,720 Speaker 1: a coal mine, and for all of us, that canary 39 00:02:05,480 --> 00:02:08,560 Speaker 1: is sucking wind right now, telling us that there are 40 00:02:08,600 --> 00:02:11,560 Speaker 1: some economic headwinds in the nearby future. Is that a 41 00:02:11,560 --> 00:02:14,760 Speaker 1: concern that you share with the oil ministers at OPEC, 42 00:02:14,840 --> 00:02:19,680 Speaker 1: Plus that we could see demand concerns for energy in 43 00:02:19,720 --> 00:02:23,799 Speaker 1: the months to come here, Well, it really seems that 44 00:02:25,440 --> 00:02:28,160 Speaker 1: the OPEC and kind of the all the language we 45 00:02:28,160 --> 00:02:31,079 Speaker 1: were getting out of China is China was full steam 46 00:02:31,120 --> 00:02:36,840 Speaker 1: ahead with regard to summer demand. And so I didn't 47 00:02:36,880 --> 00:02:39,200 Speaker 1: quite buy into that. I don't buy into anything that 48 00:02:39,240 --> 00:02:43,480 Speaker 1: comes out of official reports coming out of China. They 49 00:02:43,520 --> 00:02:46,160 Speaker 1: did raise their quotas they did, they did signal some 50 00:02:46,360 --> 00:02:50,440 Speaker 1: some demand uptick and they have been buying for an 51 00:02:50,440 --> 00:02:54,519 Speaker 1: oil they have in buying US crude oil. But that said, 52 00:02:55,080 --> 00:02:59,280 Speaker 1: I cannot argue with this when we look at sort 53 00:02:59,320 --> 00:03:02,160 Speaker 1: of the the headlines that are coming out, the I 54 00:03:02,400 --> 00:03:06,440 Speaker 1: S numbers, n numbers, the industrial production numbers, record credit 55 00:03:06,480 --> 00:03:09,720 Speaker 1: card debt, uh, you know, so forth, there are a 56 00:03:09,760 --> 00:03:13,120 Speaker 1: lot of indications out there that the economy has a 57 00:03:13,200 --> 00:03:17,799 Speaker 1: big up uphill battle and the thing really shaving kind 58 00:03:17,840 --> 00:03:20,080 Speaker 1: of the the you know, the bulls, you know, the 59 00:03:20,240 --> 00:03:24,239 Speaker 1: on the economic front was strong, you know, strong job numbers, 60 00:03:24,240 --> 00:03:26,560 Speaker 1: which are battle you know, to me, they are baffling. 61 00:03:27,440 --> 00:03:31,200 Speaker 1: But look, we just got the job, job opening, and 62 00:03:31,280 --> 00:03:34,000 Speaker 1: labor turnover surveyed. The Jolts report out of the BLS 63 00:03:34,040 --> 00:03:36,560 Speaker 1: the other day and it disappointed. It was a downer 64 00:03:37,120 --> 00:03:40,160 Speaker 1: um and then the ADPEP report came out today with 65 00:03:40,280 --> 00:03:45,000 Speaker 1: jobs again another downer. So if that if we get 66 00:03:45,080 --> 00:03:48,360 Speaker 1: confirmation you know a month, oh you know, this month, 67 00:03:48,440 --> 00:03:51,480 Speaker 1: next month, so forth in the in the BLS employment numbers, 68 00:03:51,720 --> 00:03:54,200 Speaker 1: then yeah, we we Yeah, I'm certainly buying into the 69 00:03:54,200 --> 00:03:57,880 Speaker 1: theory that we got trouble ahead. Okay, so we have 70 00:03:58,000 --> 00:04:02,360 Speaker 1: a lot of these economic potential head wins moving forward. Here. 71 00:04:02,520 --> 00:04:05,960 Speaker 1: What's the potential that if we do start to see 72 00:04:06,280 --> 00:04:10,880 Speaker 1: commodity prices spike with this level of production coming off 73 00:04:10,920 --> 00:04:16,839 Speaker 1: the market, adding even further to those macroeconomic pressure Stephen, Oh, 74 00:04:16,880 --> 00:04:18,640 Speaker 1: if we see the spike, and you know, keep in 75 00:04:18,720 --> 00:04:23,040 Speaker 1: mind we had a significant sell off over the prior 76 00:04:23,120 --> 00:04:27,040 Speaker 1: two weeks related to first with Signature Banking then SVB. 77 00:04:28,000 --> 00:04:31,080 Speaker 1: So there are those issues and the banking system, as 78 00:04:31,120 --> 00:04:34,039 Speaker 1: Jamie Diamonds just said, there are troubles there now. A 79 00:04:34,120 --> 00:04:36,960 Speaker 1: banking crisis has been an antecede into two of the 80 00:04:37,000 --> 00:04:40,120 Speaker 1: prior three recessions. Of course, what we all can remember 81 00:04:40,120 --> 00:04:43,880 Speaker 1: what happened during the mortgage backed securities in Great Recession, 82 00:04:43,920 --> 00:04:45,960 Speaker 1: but we also had the recession that was brought on 83 00:04:46,040 --> 00:04:50,520 Speaker 1: by the SNL crisis. So right now we have one 84 00:04:50,720 --> 00:04:53,720 Speaker 1: of the fuses lit for an implosion in the economy. 85 00:04:54,320 --> 00:04:57,360 Speaker 1: What also, going back to two thousand and eight, what 86 00:04:57,400 --> 00:05:01,320 Speaker 1: we saw was oil prices one hundred and fifty dollars, 87 00:05:01,520 --> 00:05:05,840 Speaker 1: massive increases and energy costs, which of course hampered US 88 00:05:05,920 --> 00:05:08,520 Speaker 1: spending this time around. Yes, we did get to one 89 00:05:08,560 --> 00:05:11,520 Speaker 1: hundred and fifty dollars last year. We didn't stay there, 90 00:05:11,880 --> 00:05:15,680 Speaker 1: but we've stayed high on the energy front and also 91 00:05:16,080 --> 00:05:20,479 Speaker 1: on the entire inflation front. So consumers, I think it's 92 00:05:20,560 --> 00:05:25,000 Speaker 1: thirty three straight months that they're purchasing power has decreased. 93 00:05:25,200 --> 00:05:28,520 Speaker 1: So for thirty three straight months, we're getting poorer each month. 94 00:05:29,480 --> 00:05:33,440 Speaker 1: I just intuitively, logically, I have to think that is 95 00:05:33,480 --> 00:05:36,000 Speaker 1: going to have a carry on. Now, if this spike 96 00:05:36,520 --> 00:05:41,120 Speaker 1: goes any higher than what we've already seen, than yeah, 97 00:05:41,360 --> 00:05:45,599 Speaker 1: the odds are for a significant downturn. But what I 98 00:05:45,640 --> 00:05:48,960 Speaker 1: want to point out now is Sunday night, the first 99 00:05:49,000 --> 00:05:53,400 Speaker 1: opportunity to trade the OPEC number, the market surged higher. Okay, 100 00:05:53,760 --> 00:05:56,600 Speaker 1: hasn't gone any higher since then. So all we are 101 00:05:56,720 --> 00:05:59,640 Speaker 1: right now is right back to where we wore prior 102 00:05:59,680 --> 00:06:04,599 Speaker 1: to the of the S ANDDB a catastrophe. So kind 103 00:06:04,640 --> 00:06:06,359 Speaker 1: of like the market is kind of like pumping the 104 00:06:06,400 --> 00:06:10,880 Speaker 1: brakes here. The bulls are not getting any carry over momentum. 105 00:06:11,160 --> 00:06:14,120 Speaker 1: Now if you're bullish, if you bought Sunday night, you're 106 00:06:14,160 --> 00:06:16,240 Speaker 1: out of the money right now. And you know, with 107 00:06:16,600 --> 00:06:19,760 Speaker 1: us allegedly bullish, this headline was you're not getting any 108 00:06:19,760 --> 00:06:23,559 Speaker 1: followed through and that is a very clear telltale that 109 00:06:24,160 --> 00:06:26,480 Speaker 1: the market is skeptical. I don't think skeptical of the 110 00:06:26,480 --> 00:06:28,919 Speaker 1: OPEC decision that they'll carry through. I think they are 111 00:06:29,000 --> 00:06:32,080 Speaker 1: skeptical of what the OPEC decision is telling them about 112 00:06:32,080 --> 00:06:35,400 Speaker 1: the economy. Speaking with Stephen Short, oil analyst and president 113 00:06:35,440 --> 00:06:38,080 Speaker 1: of the Short Group here on Bloomberg Day Break, So 114 00:06:38,120 --> 00:06:41,840 Speaker 1: we talked about the short term implications here. Stephen, what's 115 00:06:41,880 --> 00:06:45,080 Speaker 1: your longer term view on what this could mean for 116 00:06:45,320 --> 00:06:49,800 Speaker 1: oil prices? Are you changing your target for where barrel 117 00:06:49,800 --> 00:06:53,560 Speaker 1: accrude could go from here? Well, I run probabilistic models 118 00:06:53,560 --> 00:06:55,120 Speaker 1: and ate Nathan that that kind of gives you a 119 00:06:55,240 --> 00:07:01,400 Speaker 1: range and likelihood based on uncertain giving odds of prices happening, 120 00:07:01,880 --> 00:07:05,160 Speaker 1: and we've been in the upper range since the beginning 121 00:07:05,200 --> 00:07:07,440 Speaker 1: of the year. What I've shared with with with with 122 00:07:07,520 --> 00:07:11,160 Speaker 1: clients and analysis for clients, and that was oil bottoming 123 00:07:11,200 --> 00:07:14,560 Speaker 1: in the seventy dollars area, that is the Brent crudal 124 00:07:14,680 --> 00:07:17,440 Speaker 1: market more of a global market, which means that w 125 00:07:17,640 --> 00:07:20,720 Speaker 1: TI would would would bottom some near somewhere around there, 126 00:07:20,840 --> 00:07:25,000 Speaker 1: you know, high sixties. And that's exactly where where we've bottomed. UH. 127 00:07:25,040 --> 00:07:27,720 Speaker 1: And the catalyst was that for was for that major headline, 128 00:07:27,760 --> 00:07:32,280 Speaker 1: the SVB. But we we've ricocheted back. We're back around 129 00:07:32,400 --> 00:07:34,720 Speaker 1: hovering eighty dollars a barrel. So we're right in the 130 00:07:34,760 --> 00:07:38,400 Speaker 1: middle of where I expected to meet and we'll call 131 00:07:38,440 --> 00:07:41,400 Speaker 1: it the sixty eight percent. That that one standard deviation 132 00:07:41,400 --> 00:07:43,960 Speaker 1: of where my outcomes were coming out. They were coming 133 00:07:43,960 --> 00:07:47,720 Speaker 1: out between seventy ninety dollars. Now, when we move further 134 00:07:47,800 --> 00:07:50,800 Speaker 1: out on the tail and we factor in a potential 135 00:07:51,320 --> 00:07:56,600 Speaker 1: UH demand destruction going forth for at least this month, 136 00:07:57,200 --> 00:07:59,680 Speaker 1: UH in the what we can get down into the 137 00:07:59,720 --> 00:08:03,880 Speaker 1: low sixties and in the first quarter oil below fifty 138 00:08:03,920 --> 00:08:07,000 Speaker 1: dollars in a severe recession ALLAH akin to what we 139 00:08:07,080 --> 00:08:09,560 Speaker 1: saw in O eight oh nine that we're talking about 140 00:08:09,560 --> 00:08:12,160 Speaker 1: oil back down below fifty dollars barrel. Do you see 141 00:08:12,160 --> 00:08:15,560 Speaker 1: a move like this having an impact on diversification of 142 00:08:15,600 --> 00:08:18,400 Speaker 1: the energy mix. Do renewables get a lift if we 143 00:08:18,480 --> 00:08:21,920 Speaker 1: start to see more pressure on fossil fuel prices? No, 144 00:08:22,040 --> 00:08:24,840 Speaker 1: because renewables have been one of the catalysts for the 145 00:08:25,040 --> 00:08:28,440 Speaker 1: rise in fossil fuel. I mean nothing, nothing brought coal 146 00:08:28,560 --> 00:08:33,040 Speaker 1: back or wood burning back in Europe this winter than 147 00:08:33,240 --> 00:08:36,360 Speaker 1: what we've seen, the manipulation that we saw with carbon 148 00:08:36,400 --> 00:08:39,760 Speaker 1: credits and renewable prices. So, for crying out loud, Germany 149 00:08:39,800 --> 00:08:43,839 Speaker 1: was cutting down ancient forests for fuel this So no, 150 00:08:43,920 --> 00:08:47,520 Speaker 1: I don't I think what's going to happen is not diversification. 151 00:08:47,800 --> 00:08:50,800 Speaker 1: We need national security. And the problem with renewables, which 152 00:08:50,800 --> 00:08:52,520 Speaker 1: I'm a big fan of, Nathan, you and I were 153 00:08:52,559 --> 00:08:56,520 Speaker 1: just having an off phone talk here. We both have 154 00:08:56,880 --> 00:08:59,920 Speaker 1: versions of you. You have all electric, I have hybrid electric. 155 00:09:00,160 --> 00:09:02,240 Speaker 1: I'm a big fan of it. But it can't do 156 00:09:02,280 --> 00:09:06,000 Speaker 1: it alone, nowhere near alone. So the renewables are part 157 00:09:06,000 --> 00:09:09,560 Speaker 1: of the answer. Fossil fuels hydrocarbons are more of the 158 00:09:09,600 --> 00:09:11,840 Speaker 1: complete answer. And I'm not even go to nukes because 159 00:09:11,840 --> 00:09:14,679 Speaker 1: that's the hundred percent answer. We're not there yet at 160 00:09:14,679 --> 00:09:17,520 Speaker 1: this point. So no, given I think renewables are a 161 00:09:17,559 --> 00:09:20,360 Speaker 1: big driver with the lack of money so forth going 162 00:09:20,360 --> 00:09:24,439 Speaker 1: into hydrocarbon infrastructure longer term out, they're the catalyst, that's 163 00:09:24,480 --> 00:09:28,439 Speaker 1: the catalyst for high prices. So as long as we continue, 164 00:09:28,480 --> 00:09:31,600 Speaker 1: we in the West, continue to pursue a zero sum 165 00:09:31,720 --> 00:09:34,960 Speaker 1: game where we don't want any investments in hydrocarbons and 166 00:09:35,000 --> 00:09:38,760 Speaker 1: we want it in a source that is not reliable. 167 00:09:39,320 --> 00:09:43,319 Speaker 1: Wind solar not reliable, and they're terrible. They're just as 168 00:09:43,320 --> 00:09:47,680 Speaker 1: bad for the environment, Believe it or not, when we 169 00:09:47,760 --> 00:09:51,360 Speaker 1: talk about non recyclable plastics in windmills, we talked about batteries, 170 00:09:51,400 --> 00:09:54,680 Speaker 1: we're talking about landfill fill ups, We're talking about degradation 171 00:09:54,960 --> 00:09:57,280 Speaker 1: of the environment. We're digging up these rare earths, and 172 00:09:57,320 --> 00:09:59,640 Speaker 1: we're digging up rare earths in countries that are not 173 00:09:59,679 --> 00:10:02,640 Speaker 1: exact be friendly to the United States. But yet we 174 00:10:02,679 --> 00:10:05,640 Speaker 1: want all of our investment to go into this one commodity, 175 00:10:05,679 --> 00:10:08,960 Speaker 1: and it's it's it's a terrible risk we are taking. 176 00:10:09,080 --> 00:10:14,520 Speaker 1: So to reiterate my answer, no, you'll see the political moves. 177 00:10:14,800 --> 00:10:18,080 Speaker 1: But with the crash of SVB and the lack of 178 00:10:18,240 --> 00:10:21,000 Speaker 1: return on HT that we are seeing both from an 179 00:10:21,000 --> 00:10:24,800 Speaker 1: economic and a social cost. I would think this would 180 00:10:24,840 --> 00:10:28,559 Speaker 1: be the catalyst to diversify more towards and bring hydrocarbons 181 00:10:28,800 --> 00:10:31,880 Speaker 1: that conversation back into the mix. Now we're going to 182 00:10:31,960 --> 00:10:34,200 Speaker 1: be keeping an eye on the crude market very closely 183 00:10:34,200 --> 00:10:37,079 Speaker 1: as we had even closer to summer driving season. Thanks 184 00:10:37,120 --> 00:10:40,040 Speaker 1: as always, Stephen, good having you with us. Thank you, Nathan. 185 00:10:40,240 --> 00:10:43,000 Speaker 1: That's Stephen Short, the president of the Short Group. And 186 00:10:43,080 --> 00:10:45,480 Speaker 1: up next, time is on our side. One of the 187 00:10:45,520 --> 00:10:48,640 Speaker 1: world's biggest events in the luxury watch its has wrapped up. 188 00:10:48,640 --> 00:10:52,160 Speaker 1: We'll get the highlights from Geneva. Next. I'm Nathan Tiger 189 00:10:52,480 --> 00:11:09,640 Speaker 1: and this is welcome back to the special edition of 190 00:11:09,640 --> 00:11:13,280 Speaker 1: Bloomberg Daybreak. I'm Nathan Hagar. US markets are closed on 191 00:11:13,320 --> 00:11:16,640 Speaker 1: this good Friday, and speaking of time and the future, 192 00:11:16,960 --> 00:11:19,320 Speaker 1: let's talk about time and how we keep track of 193 00:11:19,320 --> 00:11:21,920 Speaker 1: it on our wrists if you can afford it. We 194 00:11:22,000 --> 00:11:23,920 Speaker 1: just wrapped up one of the biggest events of the 195 00:11:24,000 --> 00:11:28,280 Speaker 1: year for the luxury watch business. It happened in Geneva, 196 00:11:28,400 --> 00:11:32,120 Speaker 1: and Bloomberg's Andy Hoffman was there at this event and 197 00:11:32,400 --> 00:11:34,920 Speaker 1: joins us for some of the TikTok I had to 198 00:11:34,960 --> 00:11:37,680 Speaker 1: say it, Andy, thanks for being here. What better place 199 00:11:37,760 --> 00:11:40,000 Speaker 1: to join us from then, the home of luxury Swiss 200 00:11:40,040 --> 00:11:42,920 Speaker 1: time pieces. Tell us more about this event. For those 201 00:11:42,960 --> 00:11:45,960 Speaker 1: who are not in the know, it's called Watches and Wonders, right, 202 00:11:46,320 --> 00:11:48,839 Speaker 1: indeed it is. It's called Watches and Wonders. It is, 203 00:11:49,280 --> 00:11:52,640 Speaker 1: without a doubt, the biggest industry event for the watch 204 00:11:52,679 --> 00:11:56,840 Speaker 1: industry each year. It's where most of the top brands, 205 00:11:56,920 --> 00:12:01,520 Speaker 1: including Rolex protect for the old Richmon's own brands come 206 00:12:01,559 --> 00:12:06,280 Speaker 1: together and they present their new watches, their new wares, 207 00:12:06,720 --> 00:12:11,560 Speaker 1: to retailers, to their best collectors, and of course to 208 00:12:11,679 --> 00:12:16,120 Speaker 1: the growing watch press who come. And it was five 209 00:12:16,200 --> 00:12:19,640 Speaker 1: days this week for that private event, and then it 210 00:12:19,720 --> 00:12:23,360 Speaker 1: was two days open to the public for the first time. Overall, 211 00:12:23,400 --> 00:12:26,400 Speaker 1: I think there was something like forty thousand people who 212 00:12:26,480 --> 00:12:29,800 Speaker 1: attended this event, which was twice as many as last year. Wow. 213 00:12:29,920 --> 00:12:32,360 Speaker 1: So that gives you something of an idea of just 214 00:12:32,520 --> 00:12:37,000 Speaker 1: how high demand continues to be in the luxury space 215 00:12:37,080 --> 00:12:39,800 Speaker 1: even with all the macro head ones we continue to 216 00:12:39,800 --> 00:12:42,720 Speaker 1: talk about here on Bloomberg. What are some of the 217 00:12:42,760 --> 00:12:45,040 Speaker 1: highlights for you? What really stood out let's start with 218 00:12:45,120 --> 00:12:47,640 Speaker 1: I mean Rolex. I mean, that's one of the biggest 219 00:12:47,640 --> 00:12:51,720 Speaker 1: brands in Switzerland. What's new from them? Rolex is always 220 00:12:51,720 --> 00:12:54,040 Speaker 1: sort of the focus in the center of attention. They 221 00:12:54,040 --> 00:12:57,080 Speaker 1: are the biggest brand. Their sales or something like nine 222 00:12:57,120 --> 00:12:59,559 Speaker 1: point three billion Swiss francs a year. They have about 223 00:12:59,600 --> 00:13:03,320 Speaker 1: twenty nine percent market share. And so what role X 224 00:13:03,360 --> 00:13:06,920 Speaker 1: does at watches and Wonders is it shows everybody it's 225 00:13:07,000 --> 00:13:12,960 Speaker 1: new models each year, and they also would reveal which 226 00:13:13,040 --> 00:13:16,760 Speaker 1: models they will be discontinuing, and this has a great 227 00:13:16,800 --> 00:13:21,760 Speaker 1: impact obviously on demand and supply for certain models. And 228 00:13:21,800 --> 00:13:24,679 Speaker 1: then what we often see is that, you know, models 229 00:13:24,679 --> 00:13:29,560 Speaker 1: that are discontinued, their value on the secondary market will 230 00:13:29,679 --> 00:13:33,559 Speaker 1: generally increase because we know there will be less supply 231 00:13:33,720 --> 00:13:37,120 Speaker 1: going forward. So what are some of the most notable 232 00:13:37,360 --> 00:13:41,360 Speaker 1: new designs that you saw from Rolex? It was quite interesting. 233 00:13:41,360 --> 00:13:45,240 Speaker 1: I mean, it is an anniversary for the Rolex Daytona, 234 00:13:45,400 --> 00:13:49,319 Speaker 1: their chronograph, and they did a new model which has 235 00:13:49,360 --> 00:13:52,520 Speaker 1: an open case back so you can actually see the 236 00:13:52,679 --> 00:13:55,160 Speaker 1: movement and this is a first for Rolex, They've never 237 00:13:55,200 --> 00:13:59,880 Speaker 1: done this before. They also did a really wild surprise 238 00:14:00,320 --> 00:14:03,720 Speaker 1: version of their day date watch that had a sort 239 00:14:03,720 --> 00:14:07,120 Speaker 1: of a puzzle um pattern on the dial, and then 240 00:14:07,200 --> 00:14:11,800 Speaker 1: instead of days or um there there are sort of 241 00:14:12,360 --> 00:14:15,679 Speaker 1: words like love and emotions and things like that, and 242 00:14:15,720 --> 00:14:20,400 Speaker 1: there's emojis in the in where the date wheel normally 243 00:14:20,520 --> 00:14:25,000 Speaker 1: is so fly one different emojiss. Those quite bold and 244 00:14:25,200 --> 00:14:27,920 Speaker 1: strange for Rolex to do, which is generally a very 245 00:14:28,000 --> 00:14:32,760 Speaker 1: safe and conservative brand. Yeah, I mean that really sort 246 00:14:32,760 --> 00:14:34,480 Speaker 1: of flies in the face of what you think about 247 00:14:34,560 --> 00:14:36,960 Speaker 1: when you think of a Rolex. Did you get a 248 00:14:37,040 --> 00:14:40,800 Speaker 1: chance to talk to any of the officials from Rolex 249 00:14:40,840 --> 00:14:42,840 Speaker 1: about what their strategy might be with some of these 250 00:14:42,960 --> 00:14:45,720 Speaker 1: left field ideas. It's a good question. I mean, we 251 00:14:45,800 --> 00:14:47,840 Speaker 1: get we do get to speak to some of the 252 00:14:47,880 --> 00:14:51,720 Speaker 1: people from Rolex, but their CEO is known for not 253 00:14:51,880 --> 00:14:56,920 Speaker 1: giving interviews about rolex Um. But yeah, I mean, you 254 00:14:56,960 --> 00:15:00,360 Speaker 1: know they're they're very careful and garden with what they say, 255 00:15:00,360 --> 00:15:03,520 Speaker 1: but they you know, for those who get the invite, 256 00:15:03,600 --> 00:15:06,280 Speaker 1: you do get the chance to come and see the 257 00:15:06,320 --> 00:15:08,960 Speaker 1: new models in the flash, So you get to hold 258 00:15:09,000 --> 00:15:11,120 Speaker 1: these things in your hand and put them on your 259 00:15:11,120 --> 00:15:14,480 Speaker 1: wrist and you know it's you and you can feel 260 00:15:14,520 --> 00:15:18,800 Speaker 1: the weight as it were. So indeed, quite interesting. Yeah, 261 00:15:18,840 --> 00:15:21,920 Speaker 1: anything to dream. We're speaking with Andy Hoffman of Bloomberg 262 00:15:21,960 --> 00:15:25,360 Speaker 1: News talking about the Watches and Wonders event in Geneva, 263 00:15:25,440 --> 00:15:28,840 Speaker 1: Switzerland for luxury time piece collectors. Now, I know you 264 00:15:28,920 --> 00:15:31,320 Speaker 1: did get a chance to talk with the CEO of 265 00:15:31,440 --> 00:15:34,800 Speaker 1: another well known Swiss brandon that would be Potech Philippe. 266 00:15:34,960 --> 00:15:37,080 Speaker 1: What did he have to tell you? We were very fortunate. 267 00:15:37,360 --> 00:15:40,800 Speaker 1: My colleague Chris Rosar and I sat down with Terry Stern, 268 00:15:40,920 --> 00:15:44,320 Speaker 1: who is the chairman of Protect Philip. But it was 269 00:15:44,440 --> 00:15:47,560 Speaker 1: really quite interesting. Mister Stern was very talkative and he 270 00:15:47,640 --> 00:15:50,600 Speaker 1: was in a very good mood, and he revealed to 271 00:15:50,680 --> 00:15:54,040 Speaker 1: us that, you know, they have a prototype ready and 272 00:15:54,240 --> 00:15:56,040 Speaker 1: they you know, they want to get all the final 273 00:15:56,120 --> 00:15:58,560 Speaker 1: designs in place before they start producing. But they are 274 00:15:58,600 --> 00:16:02,200 Speaker 1: going to introduce their first model line for the first 275 00:16:02,200 --> 00:16:06,200 Speaker 1: time since nineteen ninety nine, so it's almost a quarter century. 276 00:16:06,480 --> 00:16:09,160 Speaker 1: So this is a major deal for them. And what 277 00:16:09,320 --> 00:16:12,360 Speaker 1: Potech is trying to do, and we don't know what 278 00:16:12,400 --> 00:16:14,320 Speaker 1: the watch is or what the design is, but what 279 00:16:14,360 --> 00:16:18,000 Speaker 1: they're trying to do is, you know, give their customers 280 00:16:18,840 --> 00:16:22,040 Speaker 1: and the collectors who buy their time pieces, you know, 281 00:16:22,240 --> 00:16:26,880 Speaker 1: something to look beyond the Nautilus and you know those 282 00:16:27,000 --> 00:16:30,480 Speaker 1: great complicated watch that's watches that they're known for. They 283 00:16:30,480 --> 00:16:33,520 Speaker 1: want to be more diversified, you know, like a portfolio 284 00:16:33,680 --> 00:16:35,400 Speaker 1: or something, and they don't want to be just a 285 00:16:35,440 --> 00:16:37,760 Speaker 1: one trick pony. We'll see if they're a new design 286 00:16:37,840 --> 00:16:40,800 Speaker 1: includes any emojis as well, that'd be something. I know, 287 00:16:40,880 --> 00:16:44,320 Speaker 1: you broke some news as well, Andy with another legendary 288 00:16:44,360 --> 00:16:49,560 Speaker 1: Swiss brand, ottomarp Gay and an effort to fight watch theft. 289 00:16:49,760 --> 00:16:52,840 Speaker 1: This is becoming something that's become quite a big concern 290 00:16:52,920 --> 00:16:55,600 Speaker 1: for watchmakers. Yeah, I mean, you know, we've been writing 291 00:16:55,640 --> 00:16:58,080 Speaker 1: stories over the past year. I mean, you know what's 292 00:16:58,080 --> 00:17:01,040 Speaker 1: going on with watches the is you know that more 293 00:17:01,120 --> 00:17:05,359 Speaker 1: of the world is paying attention to watches. People are, 294 00:17:05,840 --> 00:17:09,639 Speaker 1: you know, showing off their watches on Instagram and social media. 295 00:17:09,760 --> 00:17:13,479 Speaker 1: And at the same time, the problem of watch theft, 296 00:17:13,640 --> 00:17:18,800 Speaker 1: people getting mugged for their watches has become a huge issue. 297 00:17:18,880 --> 00:17:22,080 Speaker 1: You know, this in fact, could present a sort of 298 00:17:22,160 --> 00:17:26,480 Speaker 1: existential crisis for the major luxury brands, most of which 299 00:17:26,480 --> 00:17:31,600 Speaker 1: are here in Switzerland. If customers are afraid to wear 300 00:17:31,720 --> 00:17:35,200 Speaker 1: their time pieces, you know, they just might stop buying them. 301 00:17:35,280 --> 00:17:38,120 Speaker 1: And you know, nobody wants. Everybody buys a watch because 302 00:17:38,160 --> 00:17:40,680 Speaker 1: they want to wear it. It's just an unprecedented thing 303 00:17:40,720 --> 00:17:42,679 Speaker 1: that they're doing. They've got a new program where if 304 00:17:42,760 --> 00:17:46,280 Speaker 1: you bought an Odemarpgay watch such as the Royal Oak, 305 00:17:46,359 --> 00:17:49,200 Speaker 1: which is the watch that they're known for in twenty 306 00:17:49,240 --> 00:17:52,640 Speaker 1: twenty two, which was the fiftieth anniversary of that watch, 307 00:17:52,880 --> 00:17:55,480 Speaker 1: or in twenty twenty three this year, you can register 308 00:17:55,600 --> 00:17:59,760 Speaker 1: that watch with Odomarp Gay and become part of an 309 00:17:59,760 --> 00:18:04,240 Speaker 1: extended service program. And if that watch is stolen or 310 00:18:04,440 --> 00:18:08,639 Speaker 1: lost or damaged. You know, the language they use is 311 00:18:08,720 --> 00:18:13,919 Speaker 1: suddenly and unexpectedly i e. And a robbery, they will replace, 312 00:18:15,200 --> 00:18:19,800 Speaker 1: refund or repair that watch. No one has ever done 313 00:18:19,800 --> 00:18:24,840 Speaker 1: this before in the luxury watch industry. It's quite unprecedented. 314 00:18:25,119 --> 00:18:28,480 Speaker 1: We don't know how it's going to play out. It's 315 00:18:28,520 --> 00:18:32,240 Speaker 1: indeed quite a bold move. Yeah, interesting that there hasn't 316 00:18:32,280 --> 00:18:34,600 Speaker 1: been something like that before, But lots to think about 317 00:18:34,640 --> 00:18:37,800 Speaker 1: coming out of the Watches and Wonders event in Geneva. 318 00:18:37,960 --> 00:18:40,200 Speaker 1: Thanks for this, Andy, great having you with us. That's 319 00:18:40,240 --> 00:18:44,639 Speaker 1: Bloomberg's Andy Hoffman from Geneva, Switzerland and still ahead on 320 00:18:44,680 --> 00:18:48,240 Speaker 1: Bloomberg day Break is a US debt default really a risk. 321 00:18:48,440 --> 00:18:51,880 Speaker 1: We speak with Bloomberg government reporter Emily Wilkins. Next, I'm 322 00:18:51,960 --> 00:18:58,159 Speaker 1: Nathan Hagar, and this is Bloomberg. Welcome back to the 323 00:18:58,200 --> 00:19:01,680 Speaker 1: special Good Friday edition of burg Daybreak. I'm Nathan Hagar. 324 00:19:01,960 --> 00:19:04,240 Speaker 1: It is a holiday not just on Wall Street, but 325 00:19:04,320 --> 00:19:06,800 Speaker 1: on Capitol Hill. Lawmakers in factor in the middle of 326 00:19:06,840 --> 00:19:10,080 Speaker 1: a two week spring recess, getting a break from a 327 00:19:10,080 --> 00:19:12,080 Speaker 1: debate that is going to get even more pressing for 328 00:19:12,119 --> 00:19:14,600 Speaker 1: the markets as we get closer to summer. It's over 329 00:19:14,680 --> 00:19:18,639 Speaker 1: the debt ceiling, the risk of an unprecedented default on 330 00:19:18,680 --> 00:19:22,280 Speaker 1: the nation's obligations. House Speaker Kevin McCarthy says he has 331 00:19:22,280 --> 00:19:25,080 Speaker 1: a message for the White House. Mister President, I'm ready 332 00:19:25,119 --> 00:19:28,400 Speaker 1: at any time, at any moment, I'll come tonight. It 333 00:19:28,440 --> 00:19:31,840 Speaker 1: doesn't make it difficult to sit down and negotiate and 334 00:19:31,920 --> 00:19:35,159 Speaker 1: find common ground to make America a little stronger and 335 00:19:35,240 --> 00:19:37,760 Speaker 1: make sure we stop overspending. But the message from White 336 00:19:37,800 --> 00:19:41,320 Speaker 1: House Press Secretary Karine Jean Pierre is President Biden's shown 337 00:19:41,320 --> 00:19:45,360 Speaker 1: Republicans his budget. Now they should show him theirs what 338 00:19:45,359 --> 00:19:48,160 Speaker 1: we have seen, our is and heard our excuses after 339 00:19:48,200 --> 00:19:51,639 Speaker 1: excuses after excuses. But they should be transparent to the 340 00:19:51,680 --> 00:19:54,119 Speaker 1: American people. They should lay out what is it that 341 00:19:54,160 --> 00:19:57,120 Speaker 1: they want to cut Karne, Jean Pierre and Kevin McCarthy 342 00:19:57,200 --> 00:19:59,720 Speaker 1: drawing their lines in this debate over the debt. Let's 343 00:19:59,720 --> 00:20:02,320 Speaker 1: bring it. Bloomberg government reporter Emily Wilkins, who's going to 344 00:20:02,359 --> 00:20:05,720 Speaker 1: be keeping a very close eye on these negotiations once 345 00:20:05,800 --> 00:20:09,800 Speaker 1: lawmakers return to Washington from their home districts. Emily, I 346 00:20:09,800 --> 00:20:12,320 Speaker 1: know you're paying attention to this, but how much attention 347 00:20:12,359 --> 00:20:15,080 Speaker 1: should market participants be paying at this point? I think 348 00:20:15,080 --> 00:20:18,920 Speaker 1: you do have to pay some attention because the agreements 349 00:20:18,960 --> 00:20:22,440 Speaker 1: that they're being worked out right now. We all knew 350 00:20:22,480 --> 00:20:25,399 Speaker 1: that this was going to take time, but at the 351 00:20:25,480 --> 00:20:28,760 Speaker 1: same point, and we're getting kind of early indicators now 352 00:20:28,800 --> 00:20:31,840 Speaker 1: about how easy or difficult this will be, and it's 353 00:20:31,880 --> 00:20:35,359 Speaker 1: going to be quite difficult, as we're seeing now. You know, 354 00:20:35,440 --> 00:20:39,080 Speaker 1: initially saw the meeting between Biden and McCarthy. They sat down, 355 00:20:39,200 --> 00:20:42,160 Speaker 1: it was pretty pleasant, and then Biden kind of said, hey, 356 00:20:42,160 --> 00:20:44,800 Speaker 1: I'm going to release my budget and he expected Republicans 357 00:20:44,800 --> 00:20:46,680 Speaker 1: to do the same. For a minute, it did look 358 00:20:46,720 --> 00:20:49,880 Speaker 1: like Republicans we're going to release a budget either this 359 00:20:49,920 --> 00:20:52,920 Speaker 1: month in April or potentially even next month in May, 360 00:20:53,280 --> 00:20:57,000 Speaker 1: that now seems a little bit less likely. Kevin McCarthy 361 00:20:57,280 --> 00:21:00,320 Speaker 1: sent a letter to Biden with basically four bullets points 362 00:21:00,320 --> 00:21:02,800 Speaker 1: of what Republicans want to see in a Deadlomit agreement, 363 00:21:03,040 --> 00:21:05,520 Speaker 1: and they're basically now saying that they're not going to 364 00:21:05,720 --> 00:21:08,720 Speaker 1: move forward anymore until Biden sits down with them again. 365 00:21:08,800 --> 00:21:11,400 Speaker 1: So it feels like both the sides are a deadlock 366 00:21:11,600 --> 00:21:14,360 Speaker 1: right now. Of course, there is some time to work 367 00:21:14,400 --> 00:21:16,760 Speaker 1: it out, but remember Congress is not a body that 368 00:21:16,800 --> 00:21:20,000 Speaker 1: moves particularly quickly. With any sort of agreement. You're going 369 00:21:20,040 --> 00:21:22,119 Speaker 1: to have to have at least a couple different weeks 370 00:21:22,119 --> 00:21:24,240 Speaker 1: for it to go through the Senate, go through the House, 371 00:21:24,280 --> 00:21:27,320 Speaker 1: have the debate, go through the process. And so I 372 00:21:27,359 --> 00:21:29,760 Speaker 1: don't think we're in a spot yet where we need 373 00:21:29,800 --> 00:21:34,080 Speaker 1: to panic, but things aren't looking super great at the 374 00:21:34,200 --> 00:21:37,840 Speaker 1: moment for getting this agreement done well. I wonder if 375 00:21:37,840 --> 00:21:41,200 Speaker 1: they're feeling any more pressure to move forward on this 376 00:21:41,240 --> 00:21:44,639 Speaker 1: when they get back. Given the turmoil we saw in 377 00:21:44,680 --> 00:21:47,800 Speaker 1: the banking sector with the collapse of Silicon Valley Bank 378 00:21:48,119 --> 00:21:51,840 Speaker 1: and Signature Bank, it's raised all these questions that you 379 00:21:51,920 --> 00:21:54,480 Speaker 1: know when you have a financial system that is so 380 00:21:54,600 --> 00:21:58,840 Speaker 1: reliant on treasuries. If there is a concern about those 381 00:21:58,880 --> 00:22:02,600 Speaker 1: treasuries default, we could be in some trouble. Emily, Oh, 382 00:22:02,640 --> 00:22:04,600 Speaker 1: we definitely could be in some trouble. And I feel 383 00:22:04,600 --> 00:22:07,879 Speaker 1: like every lawmaker understands the states for not raising the 384 00:22:07,960 --> 00:22:11,920 Speaker 1: debt limit. I don't think they're really particularly among leadership. 385 00:22:12,080 --> 00:22:14,159 Speaker 1: A lot of Republicans who don't want to see the 386 00:22:14,680 --> 00:22:17,240 Speaker 1: limit raised in some capacity. They just want to be 387 00:22:17,280 --> 00:22:20,040 Speaker 1: able to say that they've also gotten cuts to do so. 388 00:22:20,640 --> 00:22:23,800 Speaker 1: And so when we think a little bit about you know, 389 00:22:23,960 --> 00:22:27,000 Speaker 1: what is coming next and how the banking crisis relates, 390 00:22:27,200 --> 00:22:29,520 Speaker 1: I think it's also just important to point out Congress 391 00:22:29,560 --> 00:22:33,200 Speaker 1: is certainly taking the banking crisis seriously. You have Financial 392 00:22:33,200 --> 00:22:36,080 Speaker 1: Services Chairman Patrick McHenry, who I think is interested in 393 00:22:36,119 --> 00:22:39,399 Speaker 1: holding more hearings, kind of looking into banking from a 394 00:22:39,440 --> 00:22:42,600 Speaker 1: holistic perspective and seeing what needs to be done there. 395 00:22:42,920 --> 00:22:45,440 Speaker 1: At the same point, a Congress is kind of done 396 00:22:45,440 --> 00:22:48,399 Speaker 1: with like the crisis mode on the banks. They're feeling 397 00:22:48,400 --> 00:22:50,760 Speaker 1: free to kind of look at other issues, look at 398 00:22:50,760 --> 00:22:53,919 Speaker 1: other concerns. There's a sense now that because we haven't 399 00:22:53,920 --> 00:22:56,800 Speaker 1: seen more bank shutter that the bleeding has at least 400 00:22:56,800 --> 00:22:59,800 Speaker 1: been stopped, even if the wound hasn't been fully healed. 401 00:23:00,080 --> 00:23:03,440 Speaker 1: And so I do question you know exactly how much 402 00:23:03,480 --> 00:23:05,919 Speaker 1: pressure the banking is going to be putting on the 403 00:23:06,000 --> 00:23:09,000 Speaker 1: debt limit, if only because I don't think Congress can 404 00:23:09,080 --> 00:23:12,280 Speaker 1: use that as an emergency situation anymore, even though they 405 00:23:12,280 --> 00:23:15,040 Speaker 1: still see it as an important situation that they'll continue 406 00:23:15,080 --> 00:23:16,760 Speaker 1: to focus on. So what are you going to be 407 00:23:16,800 --> 00:23:20,120 Speaker 1: looking for once lawmakers do get back. You mentioned that 408 00:23:20,400 --> 00:23:24,639 Speaker 1: list of bullet points that Republicans put out before the break. 409 00:23:24,840 --> 00:23:27,119 Speaker 1: Are you expecting that we're going to see any further 410 00:23:27,280 --> 00:23:30,639 Speaker 1: details of what Republicans are looking for when it comes 411 00:23:30,640 --> 00:23:33,960 Speaker 1: to cuts before they get into these negotiations with the 412 00:23:34,000 --> 00:23:37,199 Speaker 1: White House. So I think two things that I'm looking for. 413 00:23:37,400 --> 00:23:40,639 Speaker 1: Number one is that if the White House and House Republicans, 414 00:23:40,680 --> 00:23:43,480 Speaker 1: if Kevin McCarthy does sit down with Joe Biden again 415 00:23:43,800 --> 00:23:46,120 Speaker 1: at this point, that seems unlikely because the White House 416 00:23:46,200 --> 00:23:48,320 Speaker 1: is saying that Republicans need to put out a budget 417 00:23:48,359 --> 00:23:51,199 Speaker 1: before they sit down and talk. That just does not 418 00:23:51,400 --> 00:23:54,000 Speaker 1: seem likely. So it'll be interesting to see kind of 419 00:23:54,040 --> 00:23:56,640 Speaker 1: the balls in both courts. I'd say the White House 420 00:23:56,680 --> 00:23:58,720 Speaker 1: could make a move that could change things, so could 421 00:23:58,760 --> 00:24:02,360 Speaker 1: House Republicans. But look, Republicans acknowledge that if they are 422 00:24:02,400 --> 00:24:05,000 Speaker 1: going to pass some debt limit deal through, they want 423 00:24:05,040 --> 00:24:07,199 Speaker 1: to do it through what they call regular order, and 424 00:24:07,240 --> 00:24:09,919 Speaker 1: that basically just means a longer process. It means they 425 00:24:09,920 --> 00:24:13,120 Speaker 1: actually want to bring legislation to committees. The committees, they 426 00:24:13,119 --> 00:24:15,479 Speaker 1: hold a hearing, they mark it up, they bring it 427 00:24:15,520 --> 00:24:17,840 Speaker 1: to the Rules Committee, they prep it for the House floor, 428 00:24:17,880 --> 00:24:20,520 Speaker 1: they bring it. This is all things that take time, 429 00:24:20,960 --> 00:24:23,960 Speaker 1: and at this point, it doesn't really look like Republicans 430 00:24:24,000 --> 00:24:26,840 Speaker 1: have a lot of this legislation written yet. And of course, 431 00:24:27,119 --> 00:24:30,240 Speaker 1: the more details that Republicans begin to put down on paper, 432 00:24:30,600 --> 00:24:34,440 Speaker 1: the more they risk isolating various factions of their conference 433 00:24:34,520 --> 00:24:37,439 Speaker 1: into saying, hey, we're simply not going to support this, 434 00:24:37,760 --> 00:24:39,800 Speaker 1: and that's where things are going to get really tricky 435 00:24:39,880 --> 00:24:42,159 Speaker 1: and really messy. And we just haven't even gotten to 436 00:24:42,200 --> 00:24:45,159 Speaker 1: that part yet. Because the four bullet points that Republicans 437 00:24:45,160 --> 00:24:48,720 Speaker 1: have put out, I mean, they're pretty vague all things considered. 438 00:24:48,800 --> 00:24:51,720 Speaker 1: I mean, it's things like clineback COVID nineteen funding, having 439 00:24:51,760 --> 00:24:55,120 Speaker 1: stricter work requirements, passing bills that's basically all of them 440 00:24:55,119 --> 00:24:58,080 Speaker 1: agree to but some of these things aren't going to 441 00:24:58,119 --> 00:25:00,280 Speaker 1: be no goes with the White House. And to get 442 00:25:00,280 --> 00:25:03,080 Speaker 1: more into details on that, you know, it's they only 443 00:25:03,119 --> 00:25:05,919 Speaker 1: have a four vote majority, so it really does not 444 00:25:06,000 --> 00:25:08,040 Speaker 1: take a lot of members to decide, hey, we don't 445 00:25:08,080 --> 00:25:11,400 Speaker 1: want this to completely stall the process. Speaking with Bloomberg 446 00:25:11,400 --> 00:25:14,240 Speaker 1: government reporter Emily Wilkins, who keeps say, a very close 447 00:25:14,280 --> 00:25:17,960 Speaker 1: eye on what's happening with the debt ceiling negotiations that 448 00:25:18,000 --> 00:25:21,240 Speaker 1: are going to be ramping up really heading into the summer. Here, 449 00:25:21,400 --> 00:25:25,520 Speaker 1: I want to ask you, specifically, Emily, about that four 450 00:25:25,760 --> 00:25:29,320 Speaker 1: seat majority in the Republican Party and the factions and 451 00:25:29,359 --> 00:25:34,320 Speaker 1: the difficulty that how Speaker McCarthy has keeping his caucus 452 00:25:34,359 --> 00:25:36,920 Speaker 1: in line. Are there certain lawmakers that you're looking at 453 00:25:36,960 --> 00:25:40,320 Speaker 1: in particular who could potentially go one way or the 454 00:25:40,320 --> 00:25:43,480 Speaker 1: other to try to come to some kind of majority 455 00:25:43,520 --> 00:25:46,240 Speaker 1: that can get around the idea of doing something either 456 00:25:46,280 --> 00:25:48,960 Speaker 1: about spending cuts or raising the dead ceiling. So I 457 00:25:49,000 --> 00:25:51,119 Speaker 1: think in the case like this, you always kind of 458 00:25:51,160 --> 00:25:54,639 Speaker 1: have to look at what the extremes are on either side. 459 00:25:54,960 --> 00:25:58,760 Speaker 1: I mean, certainly on one end you have hardliners, conservative hardliners. 460 00:25:58,800 --> 00:26:01,440 Speaker 1: It looks like Lauren Bob and Matt Gates, who have 461 00:26:01,520 --> 00:26:04,520 Speaker 1: shown before that they are willing to buck Kevin McCarthy 462 00:26:04,640 --> 00:26:07,399 Speaker 1: until he gives them what they want. And you know, 463 00:26:07,440 --> 00:26:09,960 Speaker 1: it's the question of sort of exactly what do they want? 464 00:26:09,960 --> 00:26:12,080 Speaker 1: What are they going to be willing to accept. We've 465 00:26:12,119 --> 00:26:15,119 Speaker 1: seen the Conservative Freedom Caucus put out a couple of 466 00:26:15,119 --> 00:26:19,919 Speaker 1: proposals at the same point. Ki McCarthy's majority rests on 467 00:26:19,960 --> 00:26:24,080 Speaker 1: a number of lawmakers, Republican lawmakers who won in twenty 468 00:26:24,160 --> 00:26:27,320 Speaker 1: twenty two in districts that Biden carried in twenty to 469 00:26:27,359 --> 00:26:31,720 Speaker 1: twenty and so these are Republican lawmakers representing moderate districts. 470 00:26:31,720 --> 00:26:33,680 Speaker 1: They need to make sure that they're continuing to get 471 00:26:33,720 --> 00:26:37,080 Speaker 1: support from independence and Democrats there. And so there's really 472 00:26:37,119 --> 00:26:39,920 Speaker 1: only so far that they can go with various cuts. 473 00:26:40,160 --> 00:26:42,200 Speaker 1: And so those are kind of two groups that I'm 474 00:26:42,280 --> 00:26:44,639 Speaker 1: keeping a very close eye on. But the fact is 475 00:26:44,720 --> 00:26:47,680 Speaker 1: sort of anyone could potentially move or be a mover 476 00:26:47,840 --> 00:26:51,520 Speaker 1: or shaker here for various reasons. Tony Gonzalez, a congressman 477 00:26:51,520 --> 00:26:54,320 Speaker 1: from Texas who's been pretty vocal on bills dealing with 478 00:26:54,400 --> 00:26:57,760 Speaker 1: border security and immigration. He tweeted out something the other 479 00:26:57,840 --> 00:27:00,600 Speaker 1: week basically saying, look if if any bills come to 480 00:27:00,640 --> 00:27:03,639 Speaker 1: the floor that he deems his anti immigrant, he's not 481 00:27:03,680 --> 00:27:06,000 Speaker 1: going to support the debt limit. And usually if you 482 00:27:06,080 --> 00:27:07,800 Speaker 1: had a bigger majority, it would be a kind of 483 00:27:07,800 --> 00:27:10,120 Speaker 1: a thing where it's like, you don't have any leverage here. 484 00:27:10,160 --> 00:27:12,639 Speaker 1: But all he needs is three more Republicans with a 485 00:27:12,680 --> 00:27:15,800 Speaker 1: similar mindset to join him, and that again is going 486 00:27:15,840 --> 00:27:19,560 Speaker 1: to pose another hurdle for McCarthy to have to navigate 487 00:27:19,600 --> 00:27:22,000 Speaker 1: around as he tries to figure out what the denlop 488 00:27:22,040 --> 00:27:23,639 Speaker 1: it's going to be. So this is definitely a thing 489 00:27:23,680 --> 00:27:25,360 Speaker 1: where if you've got you know, if you're a lawmaker 490 00:27:25,600 --> 00:27:28,119 Speaker 1: and you've got three other lawmakers and you all desperately 491 00:27:28,160 --> 00:27:30,560 Speaker 1: care about an issue, when you want to have leverage 492 00:27:30,560 --> 00:27:32,560 Speaker 1: on it, and this is a point where you can 493 00:27:32,640 --> 00:27:35,639 Speaker 1: really use that leverage. Of course, it comes at the 494 00:27:35,720 --> 00:27:39,000 Speaker 1: risk of potentially defaulting on our national debt. So when 495 00:27:39,040 --> 00:27:41,600 Speaker 1: do you expect this to really start to heat up, Emily, 496 00:27:41,640 --> 00:27:43,920 Speaker 1: do we have a really clear idea of what that 497 00:27:44,240 --> 00:27:47,719 Speaker 1: X state is and when we could potentially face that 498 00:27:47,840 --> 00:27:50,320 Speaker 1: risk of debt default. So initially we had all talked 499 00:27:50,320 --> 00:27:53,359 Speaker 1: about the X state as being June sets, and I 500 00:27:53,400 --> 00:27:56,560 Speaker 1: think that date is still in many lawmakers minds, but 501 00:27:56,640 --> 00:27:59,199 Speaker 1: it is not the It is kind of considered on 502 00:27:59,240 --> 00:28:02,199 Speaker 1: the early side of things. It's now looking like the 503 00:28:02,440 --> 00:28:05,200 Speaker 1: X date could occur a little bit into the summer, 504 00:28:05,359 --> 00:28:08,520 Speaker 1: potentially even into the fall. At this point, I still 505 00:28:08,520 --> 00:28:11,320 Speaker 1: think we don't quite know. Me Jenny Yellen is updating 506 00:28:11,359 --> 00:28:14,119 Speaker 1: Congress as much as she can on it. But I 507 00:28:14,119 --> 00:28:16,320 Speaker 1: think there's a sense that, you know, as far as 508 00:28:16,400 --> 00:28:18,800 Speaker 1: things getting really intense, it's when you're going to hit 509 00:28:18,880 --> 00:28:22,720 Speaker 1: June and you kind of hit that first projected deadline. 510 00:28:23,160 --> 00:28:25,679 Speaker 1: Is that going to be the deadline? Maybe not, but 511 00:28:25,800 --> 00:28:28,679 Speaker 1: it's going to sort of be when when people realize that, Okay, 512 00:28:28,800 --> 00:28:30,640 Speaker 1: now is the time that we need to move. Yeah, 513 00:28:30,760 --> 00:28:33,280 Speaker 1: so we have several more weeks, if not months, to 514 00:28:34,119 --> 00:28:38,000 Speaker 1: keep talking about this. Thank you as always, Bloomberg Government's 515 00:28:38,160 --> 00:28:41,440 Speaker 1: Emily Wilkins. And up next on this Good Friday edition 516 00:28:41,440 --> 00:28:44,720 Speaker 1: of Bloomberg Daybreak, recession signs from one of the key 517 00:28:44,840 --> 00:28:48,840 Speaker 1: areas of the US economy. I'm Nathan Hagar, and this 518 00:28:49,440 --> 00:28:56,680 Speaker 1: is welcome back to this special edition of Bloomberg Daybreak. 519 00:28:56,720 --> 00:28:59,680 Speaker 1: I'm Nathan Hagar. US markets are closed for this Good 520 00:28:59,720 --> 00:29:02,200 Speaker 1: Friday holiday. We now want to turn to the economy 521 00:29:02,240 --> 00:29:05,520 Speaker 1: and a key area of the country that has traditionally 522 00:29:05,560 --> 00:29:08,160 Speaker 1: been a pretty good indicator of the nation's economic health, 523 00:29:08,200 --> 00:29:12,200 Speaker 1: and right now it is flashing warning signs for recession. 524 00:29:12,280 --> 00:29:15,920 Speaker 1: Bloomberg's Augusta Suriva's been covering this and is here with 525 00:29:16,040 --> 00:29:20,040 Speaker 1: us now for more on this story. Thanks for being here, Augusta. So, 526 00:29:20,120 --> 00:29:24,320 Speaker 1: where is this geographical economic indicator in the US? Thank 527 00:29:24,320 --> 00:29:26,920 Speaker 1: you for having me. So, this is an area called 528 00:29:26,960 --> 00:29:30,760 Speaker 1: the Inland Empire, and it's located next to La and 529 00:29:30,960 --> 00:29:34,080 Speaker 1: it's called an empire because it's so big. Gets started 530 00:29:34,160 --> 00:29:38,840 Speaker 1: as a farming location and then because of its because 531 00:29:38,880 --> 00:29:43,520 Speaker 1: of its location so close to the largest port complex 532 00:29:43,520 --> 00:29:46,840 Speaker 1: in the country, which is located in LA, it gave prominence. 533 00:29:47,160 --> 00:29:51,240 Speaker 1: They started building warehouse after warehouse until we became North 534 00:29:51,240 --> 00:29:55,800 Speaker 1: America's warehousing mecca in a way. So it started as 535 00:29:55,800 --> 00:29:59,360 Speaker 1: a farming mecca, now a warehousing mecca. Obviously, we've come 536 00:29:59,400 --> 00:30:02,640 Speaker 1: out of penn Emmic where we've had supply chain issues 537 00:30:02,840 --> 00:30:05,440 Speaker 1: and is that what we're seeing here in the Inland 538 00:30:05,480 --> 00:30:08,720 Speaker 1: Empire that it's starting to come into focus where goods 539 00:30:08,760 --> 00:30:12,200 Speaker 1: get stored in this country exactly in the way this 540 00:30:12,360 --> 00:30:15,200 Speaker 1: region was storried of a post her child of the pandemic, 541 00:30:15,440 --> 00:30:17,680 Speaker 1: Most of the goods we were buying in places like 542 00:30:17,880 --> 00:30:22,440 Speaker 1: Amazon and Target passed by this region before they were 543 00:30:22,480 --> 00:30:24,560 Speaker 1: shipped out to the rest of the country. So there 544 00:30:24,560 --> 00:30:28,160 Speaker 1: are more than four thousand warehouses in the region, so 545 00:30:28,240 --> 00:30:31,640 Speaker 1: pretty much everything we buy online is stored there at 546 00:30:31,640 --> 00:30:35,120 Speaker 1: some point nowadays. And you mentioned it's close to Los Angeles, 547 00:30:35,160 --> 00:30:37,880 Speaker 1: which is of course the Port of Los Angeles and 548 00:30:37,960 --> 00:30:40,080 Speaker 1: the Port of Long Beach. What are the changes that 549 00:30:40,160 --> 00:30:43,720 Speaker 1: we're seeing between the end of the pandemic, when we 550 00:30:43,920 --> 00:30:47,160 Speaker 1: sort of had this glut of supply chain issues to now. 551 00:30:47,760 --> 00:30:50,400 Speaker 1: So one of the things that we're seeing now economically 552 00:30:50,680 --> 00:30:53,360 Speaker 1: is the slowdown when it comes to good spanning rain. 553 00:30:53,680 --> 00:30:56,120 Speaker 1: It could be both because people are starting to tight 554 00:30:56,240 --> 00:30:59,200 Speaker 1: under belts, but also because people are going back to 555 00:30:59,280 --> 00:31:02,840 Speaker 1: spanning on services. We were always a service economy, and 556 00:31:02,880 --> 00:31:07,479 Speaker 1: now people are spending more on experiences and less and 557 00:31:07,520 --> 00:31:10,280 Speaker 1: are spending lost time buying things online. Right, So for 558 00:31:10,360 --> 00:31:13,840 Speaker 1: a region where now one and three people now work 559 00:31:14,240 --> 00:31:18,280 Speaker 1: in the broad transportation sector, that's a warning sign, right, 560 00:31:18,400 --> 00:31:21,720 Speaker 1: what's going to happen to this place when people start 561 00:31:21,760 --> 00:31:26,360 Speaker 1: buying less? What does this mean, for the economic health 562 00:31:26,600 --> 00:31:29,320 Speaker 1: of that part of the country. How does it compare 563 00:31:29,760 --> 00:31:31,920 Speaker 1: to the rest of the country when it comes to 564 00:31:32,160 --> 00:31:36,120 Speaker 1: the quality of jobs and wages that people get in 565 00:31:36,240 --> 00:31:38,840 Speaker 1: that part of the country. So this is a region 566 00:31:38,960 --> 00:31:41,760 Speaker 1: that is used to boom and bus cycles. When we 567 00:31:41,800 --> 00:31:46,760 Speaker 1: had the Great Recession, it was hardly hit. The unemployment 568 00:31:46,880 --> 00:31:51,640 Speaker 1: rate spiked to above fourteen percent, it's a rampant foreclosures. 569 00:31:51,960 --> 00:31:54,280 Speaker 1: So it's a region that's used to that. But right 570 00:31:54,320 --> 00:31:57,720 Speaker 1: now it's a region that has become overreliant on a 571 00:31:57,840 --> 00:32:01,720 Speaker 1: single industry, and that's why people are concerned. And not 572 00:32:01,760 --> 00:32:04,880 Speaker 1: only that, but as you mentioned wages, it's a region 573 00:32:05,000 --> 00:32:10,120 Speaker 1: where the warehousing workers specifically make on average eight dollars 574 00:32:10,200 --> 00:32:13,880 Speaker 1: less than the national average for all occupations. So some 575 00:32:13,920 --> 00:32:18,960 Speaker 1: people say that these jobs, even though they're booming and 576 00:32:19,040 --> 00:32:23,560 Speaker 1: they do provide jobs for workers in the region, they're 577 00:32:23,640 --> 00:32:26,960 Speaker 1: not sustainable in the long run. So are there efforts 578 00:32:27,000 --> 00:32:30,000 Speaker 1: underway to try to diversify the economy and the inland 579 00:32:30,040 --> 00:32:33,480 Speaker 1: empire away from warehousing or is it even possible to 580 00:32:33,520 --> 00:32:36,520 Speaker 1: do that. I would say right now the region is 581 00:32:36,640 --> 00:32:39,600 Speaker 1: very reliant on a single industry, But of course you 582 00:32:39,640 --> 00:32:42,920 Speaker 1: have efforts to not only diversify to other industries, so 583 00:32:43,120 --> 00:32:47,320 Speaker 1: healthcare for example, as an industry that's a major employer 584 00:32:47,400 --> 00:32:51,160 Speaker 1: to They're trying to bring more more jobs in the 585 00:32:51,200 --> 00:32:54,880 Speaker 1: scientific sector for example, and not only that, but also 586 00:32:54,960 --> 00:32:58,760 Speaker 1: efforts to improve education levels in the region, which tend 587 00:32:58,800 --> 00:33:01,400 Speaker 1: to be lower than another parts of the country. But 588 00:33:01,600 --> 00:33:03,920 Speaker 1: right now it seems like the focus when it comes 589 00:33:03,960 --> 00:33:07,920 Speaker 1: to governments is to invest more in the warehousing sector 590 00:33:08,000 --> 00:33:10,920 Speaker 1: in an effort to make this a more sustainable industry, 591 00:33:11,000 --> 00:33:14,240 Speaker 1: not necessarily straight away from it. An interesting insight and 592 00:33:14,560 --> 00:33:16,240 Speaker 1: good to have you on with us to talk more 593 00:33:16,280 --> 00:33:18,600 Speaker 1: about it. Thanks for this, Augusta, really good at having 594 00:33:18,600 --> 00:33:21,240 Speaker 1: you with us. Thank you for having me Bloomberg's Augusta, 595 00:33:21,360 --> 00:33:24,760 Speaker 1: Sorry Eva joining us on the special edition of Bloomberg Daybreak, 596 00:33:24,800 --> 00:33:27,840 Speaker 1: and our thanks as well to Bloomberg Government reporter Emily Wilkins, 597 00:33:27,840 --> 00:33:31,680 Speaker 1: Bloomberg's Andy Hoffman with us from Geneva, Switzerland along with 598 00:33:31,760 --> 00:33:34,479 Speaker 1: oil industry analyst Stephen Shark. We want to thank you 599 00:33:34,520 --> 00:33:37,160 Speaker 1: for joining us as well on this good Friday. I'm 600 00:33:37,240 --> 00:33:40,680 Speaker 1: Nathan Hagert. Stay with us. Today's top stories and global 601 00:33:40,720 --> 00:33:44,120 Speaker 1: business news headlines are coming up right now.