WEBVTT - U.S Factory Index Rises, Tesla Worries 0:00:02.920 --> 0:00:08.600 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.960 --> 0:00:13.840 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:13.920 --> 0:00:16.599 weekdays at ten am Eastern on Affle Car Playing and 0:00:16.760 --> 0:00:19.640 Broud Auto with the Bloomberg Business app. Listen on demand 0:00:19.680 --> 0:00:24.000 wherever you get your podcasts, or watch us live on YouTube. 0:00:25.079 --> 0:00:29.120 Interesting on those isms expansionary territory here ism manufacturing coming 0:00:29.160 --> 0:00:30.800 in at over fifty. So let's get to the man 0:00:30.800 --> 0:00:33.159 behind the data. Tim Fioria's chair for the Institute of 0:00:33.200 --> 0:00:37.360 Supply Management's Manufacturing Business Survey Committee. Tim we knew we 0:00:37.360 --> 0:00:39.880 were in the trough. Is this legit expansion here? 0:00:40.560 --> 0:00:40.720 Yeah? 0:00:40.720 --> 0:00:43.640 Absolutely, Alex, Good morning, Paul, Good morning Alex. So this 0:00:43.720 --> 0:00:47.760 is the third month for covering demand and there's not 0:00:47.840 --> 0:00:49.800 a lot to complain about in this report. I mean, 0:00:49.840 --> 0:00:53.440 we've got good demand to beat the seasonals expanded for 0:00:54.560 --> 0:00:58.400 it's on average the last three months, it's an expansionary period. 0:00:58.600 --> 0:01:02.160 We had production go up, which is output pretty significantly. 0:01:02.240 --> 0:01:04.880 We were continuing to have layoffs, which I think is good, 0:01:04.920 --> 0:01:07.800 but that should probably end soon. Suppliers are starting to 0:01:07.800 --> 0:01:10.440 stiffen up. So overall, this is a very good report. 0:01:10.520 --> 0:01:14.480 Remember last time we spoke August September, we declared that 0:01:14.520 --> 0:01:17.600 we thought we were in the manufacturing trough. In January 0:01:17.600 --> 0:01:19.560 we indicated that we thought we're starting to climb out. 0:01:19.600 --> 0:01:21.720 We climbed out in January, a little bit of February, 0:01:21.760 --> 0:01:23.959 even more now in March. So we're well on our 0:01:24.000 --> 0:01:26.240 path here to a good manufacturing recovery. 0:01:26.800 --> 0:01:29.480 And Tim you always tell us to kind of focus 0:01:30.160 --> 0:01:33.280 on the new orders, and new orders showed some expansion 0:01:33.280 --> 0:01:33.640 as well. 0:01:34.200 --> 0:01:37.000 Yeah, they sure did. They pop back above fifty. We 0:01:37.040 --> 0:01:39.480 also had pretty significant new expert orders. There were a 0:01:39.480 --> 0:01:42.479 flat expansion to the prior month, but they're expanding. Nonetheless, 0:01:43.120 --> 0:01:45.800 backlog was stable, which is okay, it's in the mid forties. 0:01:45.800 --> 0:01:48.160 That's all right. That'll come back probably in the early summer. 0:01:48.800 --> 0:01:51.920 And cuss Er inventories went way too low again, which 0:01:51.960 --> 0:01:55.160 is very good. So we've got demand increasing, we've got 0:01:55.160 --> 0:01:58.240 production increasing, we've got staffing being finalized. 0:01:58.280 --> 0:01:58.560 Here. 0:01:58.960 --> 0:02:01.240 We still had a one to one hired a fire ratio, 0:02:01.320 --> 0:02:03.440 which means that we still have a lot of companies 0:02:03.520 --> 0:02:07.880 letting people go. Seventy percent of our layoffs attrition freeze 0:02:07.920 --> 0:02:11.120 activities were actually layoffs, so you know, people have been 0:02:11.120 --> 0:02:13.639 getting a little bit more urgent on the tool to use, 0:02:14.400 --> 0:02:16.360 and like I said, on the input side, we had 0:02:16.360 --> 0:02:20.800 inventory still contracting by getting very close to fifty. Across 0:02:20.840 --> 0:02:22.440 all the industry sectors. 0:02:22.480 --> 0:02:23.520 They all did well. 0:02:23.919 --> 0:02:26.160 None of them did exceptionally well, but most of them 0:02:26.200 --> 0:02:29.520 came in above fifty of the top six. If they 0:02:29.560 --> 0:02:31.680 didn't come in above fifty, they were like forty nine. So, 0:02:32.320 --> 0:02:34.920 you know, March is a big manufacturing month. We have 0:02:35.000 --> 0:02:38.320 seasonal factors that hit us. We overcame the seasonal factors. 0:02:39.200 --> 0:02:42.200 We only had thirty percent of manufacturing GDP declining in 0:02:42.200 --> 0:02:45.320 the month, down from forty percent to prior month. And 0:02:45.360 --> 0:02:49.200 even more importantly, only one percent of manufacturing GDP contracted 0:02:49.240 --> 0:02:50.040 below forty five. 0:02:50.360 --> 0:02:53.440 Yes, alex So Tim, so you were mentioning the layoffs, 0:02:53.480 --> 0:02:57.320 like legit layoffs. Do we expect that to end if 0:02:57.360 --> 0:03:00.320 we wind up seeing manufacturing truly recover? So, like you 0:03:00.360 --> 0:03:02.920 mentioned recovery, and I'm wondering what that looks like, and 0:03:02.919 --> 0:03:04.919 then what the reflection is on the job market. 0:03:05.760 --> 0:03:07.720 So you know, a couple of reasons I think companies 0:03:07.760 --> 0:03:09.760 are cleaning up their staffing. You know, we did a 0:03:09.800 --> 0:03:11.920 lot of urgent things over the last couple of years 0:03:11.919 --> 0:03:14.519 to get headcount, probably hired some people that we don't 0:03:14.520 --> 0:03:16.840 really want to keep, so some of that cleansing is 0:03:16.880 --> 0:03:19.240 going on. But we are going to cross that conversion 0:03:19.280 --> 0:03:22.640 line where you need the labor regardless of whether it's 0:03:22.680 --> 0:03:25.239 one hundred percent productive or ninety five percent production. So 0:03:25.240 --> 0:03:27.320 I think we're going to see that layout activity start 0:03:27.320 --> 0:03:29.800 to diminish. In fact, I'm going to start to reverse 0:03:29.840 --> 0:03:32.639 symmetric and start to look for hiring activities. So I 0:03:32.680 --> 0:03:35.320 would guess that probably by June we'll see that slow down, 0:03:35.480 --> 0:03:36.960 especially for the second half of the year. 0:03:37.640 --> 0:03:39.480 Tim thanks so much for joining us. As always, always 0:03:39.520 --> 0:03:42.520 appreciate getting your insights here for this data. Tim Fury, 0:03:42.920 --> 0:03:46.400 chairman of the Manufacturing Business Survey at the Institute for 0:03:46.560 --> 0:03:49.839 Supply Management. Again, the ISM manufacturing headline number came into 0:03:49.920 --> 0:03:54.560 fifty point three, signaling expansion above fifty. The consensus was 0:03:54.560 --> 0:03:57.240 for forty eight point three, so a well above consensus 0:03:57.480 --> 0:03:59.960 and last period a last month was forty seven point eight. 0:04:00.120 --> 0:04:02.800 So it's TIMO saying a good momentum there for the 0:04:02.880 --> 0:04:04.160 manufacturing site. 0:04:05.440 --> 0:04:09.320 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:04:09.400 --> 0:04:12.920 weekdays at ten am Eastern on applecar Play and Android 0:04:12.960 --> 0:04:16.120 Auto with the Bloomberg Business. You can also listen live 0:04:16.200 --> 0:04:19.359 on Amazon Alexa from our flagship New York station Just 0:04:19.440 --> 0:04:22.080 Say Alexa playing Bloomberg eleven thirty. 0:04:23.400 --> 0:04:26.760 The avenue is It's interesting. Is UPS as well as FedEx? 0:04:27.040 --> 0:04:28.360 Two things to watch one. 0:04:28.800 --> 0:04:32.880 FedEx won a contract to be the cargo carrier for 0:04:32.920 --> 0:04:37.080 the USPS. FedEx, on the other hand, failed to come 0:04:37.160 --> 0:04:40.039 up with a deal at a container deal for the 0:04:40.040 --> 0:04:42.400 government as well, So a little bit of divergence between 0:04:42.440 --> 0:04:42.719 the two. 0:04:42.800 --> 0:04:43.640 So who do we go to? 0:04:43.839 --> 0:04:47.360 Lee Clasgow, Bloomberg Intelligence senior transport logistics and shipping analyst 0:04:47.360 --> 0:04:51.120 who was off last week during the biggest shipping logistic 0:04:51.320 --> 0:04:52.400 nightmare that we've. 0:04:52.240 --> 0:04:53.960 Seen quite a long time. 0:04:54.040 --> 0:04:56.440 That nicely, Yeah, Lee, did you get a vacation or 0:04:56.480 --> 0:04:57.119 not so much? 0:04:57.640 --> 0:04:59.760 Not so much. I got woken up pretty early with 0:04:59.760 --> 0:05:02.800 one US coast time, so it was a fun day 0:05:02.839 --> 0:05:03.080 for me. 0:05:03.760 --> 0:05:04.800 Yeah, I can imagine that. 0:05:04.920 --> 0:05:05.599 Hence the beard. 0:05:05.640 --> 0:05:06.559 Now, hence the beard. 0:05:06.640 --> 0:05:08.839 He just got a lot older over the last week 0:05:08.960 --> 0:05:10.560 or so. So there's a lot to kind. 0:05:10.400 --> 0:05:10.839 Of get through. 0:05:10.960 --> 0:05:13.960 Let's get to the positive UPS news about being that 0:05:14.040 --> 0:05:16.080 cargo carrier for USPS. 0:05:16.880 --> 0:05:19.599 Yeah, so you know, This is somewhat of a surprise. 0:05:19.680 --> 0:05:22.320 I think most people were expecting the FedEx would lose 0:05:22.360 --> 0:05:24.599 maybe about half of that business, but they ended up 0:05:24.680 --> 0:05:27.560 losing all of it. It's about one point seven to 0:05:27.640 --> 0:05:30.800 one point nine billion dollars in revenue, makes up roughly 0:05:30.839 --> 0:05:33.520 around four to five percent of their express business, maybe 0:05:33.520 --> 0:05:35.120 two percent of their total business. 0:05:35.800 --> 0:05:36.680 So it's a. 0:05:36.600 --> 0:05:40.560 Big loss for FedEx. And you know, while FedEx is losing, 0:05:40.880 --> 0:05:44.800 Ups is gaining. What's great about this is maybe not 0:05:44.880 --> 0:05:47.000 so much the revenue and. 0:05:46.960 --> 0:05:48.520 The yields that it provides. 0:05:48.560 --> 0:05:51.880 It's the stability of the freight that it's going to 0:05:51.880 --> 0:05:54.120 be getting into its network. And when you have any 0:05:54.120 --> 0:05:58.040 sort of freight network, you want equilibrium. You want you 0:05:58.080 --> 0:06:00.120 want to be able to predict what you're going to 0:06:00.120 --> 0:06:03.640 to need in terms of resources, and this provides a 0:06:03.680 --> 0:06:06.720 good level set of predictability for them, and they can 0:06:06.720 --> 0:06:11.400 build density onto these routes where the US Postal Service 0:06:11.440 --> 0:06:12.159 will be leveraging. 0:06:12.720 --> 0:06:16.640 Why is the Postal Service making the switch, that's a 0:06:16.640 --> 0:06:17.200 great question. 0:06:17.279 --> 0:06:19.680 They were negotiating with fed X. I guess the two 0:06:19.720 --> 0:06:23.760 parties couldn't come to a conclusion in terms of an agreement, 0:06:24.520 --> 0:06:29.400 so therefore they just decided to part ways. You know, 0:06:29.760 --> 0:06:32.279 one would guess that this isn't maybe not the most 0:06:33.520 --> 0:06:37.760 high margin business for whether it's UPS or fed X. 0:06:37.880 --> 0:06:40.120 But again, I think there is a benefit to having 0:06:40.160 --> 0:06:42.040 this because it does create a lot of density in 0:06:42.080 --> 0:06:42.560 their network. 0:06:42.680 --> 0:06:45.159 Let me ask a silly question. When I'm looking to 0:06:45.160 --> 0:06:48.040 mail package, the United States Postal Service does not even 0:06:48.120 --> 0:06:49.440 come into my mindset. 0:06:49.600 --> 0:06:52.280 Oh god, no, no, who still. 0:06:52.160 --> 0:06:56.200 Uses the US Postal Service versus FedEx? Or or you 0:06:56.200 --> 0:06:58.760 know a UPS store that's right next to the Starbucks 0:06:58.760 --> 0:07:00.880 in town. I can go, you know, get my cafe 0:07:01.080 --> 0:07:03.680 mocha there. I'm not going to the post office. Who 0:07:03.800 --> 0:07:05.160 uses a post office these days? 0:07:06.320 --> 0:07:07.000 I mean I do? 0:07:07.160 --> 0:07:11.840 I guess I'm you do, but I do sometimes. But 0:07:11.840 --> 0:07:14.200 but the reality is the Postal service. You know, obviously 0:07:14.320 --> 0:07:17.800 you were not sending letters to Grandma anymore. But you 0:07:17.840 --> 0:07:21.720 know what we are doing is we're ordering stuff online 0:07:22.000 --> 0:07:24.040 and the US Postal Service provides a lot of the 0:07:24.080 --> 0:07:25.360 final mile delivery. 0:07:25.440 --> 0:07:26.160 So you might be. 0:07:26.600 --> 0:07:29.840 Ordering from a department store or you know, a dot 0:07:29.880 --> 0:07:33.760 com etailer, and you know they might be using UPS 0:07:33.760 --> 0:07:37.880 and FedEx for the line haul, but they might be 0:07:38.200 --> 0:07:41.040 leveraging the postal service for that final mile deliver because 0:07:41.080 --> 0:07:43.200 the postal service at the end of the day has 0:07:43.280 --> 0:07:45.600 to go to everyone's address, and it's it's a cheap 0:07:45.600 --> 0:07:47.960 way to do it, you know. And as more and 0:07:47.960 --> 0:07:50.040 more people are willing to maybe you don't need something, 0:07:50.040 --> 0:07:51.920 maybe you don't need that T shirt overnight, you can 0:07:51.960 --> 0:07:54.520 wait a couple of days, you know, injecting that freight 0:07:54.560 --> 0:07:56.040 into the postal service. 0:07:55.720 --> 0:07:56.320 That makes sense. 0:07:56.360 --> 0:07:59.560 And Amazon's is a big user of that final mile 0:07:59.600 --> 0:08:00.480 delivery as well. 0:08:01.080 --> 0:08:02.880 My daughter does send letters to her grandmother. 0:08:03.440 --> 0:08:06.120 I'm just putting that out there on the flip side, 0:08:06.120 --> 0:08:08.000 and I should point out they mentioned the margin part 0:08:08.000 --> 0:08:10.640 of it. So we talked to the UPS CEO last 0:08:10.680 --> 0:08:13.360 week on television, and their whole pitch is that going 0:08:13.400 --> 0:08:18.120 forward they want to focus on margin and pricing over volume. 0:08:18.200 --> 0:08:22.640 Does this fit into that strategy. 0:08:21.480 --> 0:08:22.000 Yes and no. 0:08:22.240 --> 0:08:26.080 So yes, because so what they're going to be focusing 0:08:26.120 --> 0:08:29.920 on are verticals like small to mid sized shippers, and 0:08:29.960 --> 0:08:34.520 those shippers come with very high margins relative to you know, 0:08:34.720 --> 0:08:38.880 large enterprise companies that are out there, so they're going 0:08:38.960 --> 0:08:42.240 to be really focused on that type of that type 0:08:42.280 --> 0:08:42.920 of business. 0:08:43.679 --> 0:08:45.720 But you know, what the what the. 0:08:45.800 --> 0:08:49.160 Volumes from the postal service brings is a level of 0:08:49.200 --> 0:08:52.480 density that you can leverage because it's all about operational leverage, right. 0:08:52.520 --> 0:08:55.880 You know, no matter what you are in transportation, operational 0:08:55.960 --> 0:08:58.840 leverage is pretty high. Because you add like one more 0:08:59.080 --> 0:09:01.800 piece of freight, that piece of freight tends to have 0:09:01.920 --> 0:09:04.800 higher margins than the first twenty pieces of freight. And 0:09:04.880 --> 0:09:07.240 so what this will do is this will probably help 0:09:07.280 --> 0:09:10.640 them provide a base level of cost coverage and you 0:09:10.679 --> 0:09:13.360 know what a profitable cost coverage at that and then 0:09:13.520 --> 0:09:16.800 all these additional volumes that they're getting from higher margin 0:09:17.120 --> 0:09:20.280 might even carrier, might even carry higher. 0:09:20.000 --> 0:09:22.280 Incremental margins for UPS. 0:09:22.320 --> 0:09:25.320 So long term it could have a very positive impact 0:09:25.440 --> 0:09:29.000 on margins. Near term, it might have somewhat of a mix, 0:09:29.559 --> 0:09:32.880 a negative mixshift, if you will, but you know, we 0:09:32.920 --> 0:09:35.680 think that it does make sense for them to take 0:09:35.679 --> 0:09:39.200 this volume. And other verticals also that they talked about 0:09:39.280 --> 0:09:43.120 during their analyst day were the healthcare vertical, which tends 0:09:43.120 --> 0:09:45.840 to be highly profitable just because of the high touch 0:09:45.960 --> 0:09:48.840 nature and the high service level of that freight that 0:09:48.920 --> 0:09:49.800 goes through their network. 0:09:50.360 --> 0:09:53.720 So Lee looking at the air freight companies to the FedEx, 0:09:53.760 --> 0:09:57.800 the UPS, how is business? How are volumes these days 0:09:57.800 --> 0:09:59.920 that they kind of peeled off from the pandemic or 0:10:00.040 --> 0:10:00.720 how is volume? 0:10:01.480 --> 0:10:03.640 Yeah, so, you know, we're coming off those highs that 0:10:03.679 --> 0:10:06.080 we reached during the pandemic when everyone was sitting at 0:10:06.120 --> 0:10:09.040 home and ordering toilet paper online or at least trying 0:10:09.040 --> 0:10:10.680 to get some toilet paper online. 0:10:11.200 --> 0:10:14.720 You know, we're back to a more normalized level. You know. 0:10:14.760 --> 0:10:18.040 But the reality is what the pandemic has done, is 0:10:18.240 --> 0:10:22.320 it really increased that e commerce penetration. It kind of 0:10:22.800 --> 0:10:25.440 kind of brought brought the penetration forward by three to 0:10:25.520 --> 0:10:26.439 five years. 0:10:26.679 --> 0:10:28.040 Which is a net positive. 0:10:28.520 --> 0:10:30.040 But you know, we have to go back to this 0:10:30.160 --> 0:10:33.960 quote unquote normalization process, which feels like a negative, but 0:10:34.000 --> 0:10:37.640 it's really not because once we get this space, which 0:10:37.640 --> 0:10:39.800 I think we're building right now, you know, we should 0:10:39.800 --> 0:10:42.480 see positive growth from here on out. 0:10:42.840 --> 0:10:44.439 Well, now since you're back, I can also ask you 0:10:44.440 --> 0:10:47.959 about Baltimore. What is the news today? 0:10:48.080 --> 0:10:48.200 Like? 0:10:48.320 --> 0:10:51.680 Where are we I know that there's some salvage ships 0:10:51.679 --> 0:10:53.760 that are coming in to try and get the stuff. 0:10:53.720 --> 0:10:57.480 Off the bottom of the port. Where are we here? 0:10:57.640 --> 0:10:58.160 How's it going? 0:11:00.840 --> 0:11:03.280 I'm not there, and I'm not My hands won't get 0:11:03.280 --> 0:11:05.600 dirty because I just I don't have those kind of hands. 0:11:06.200 --> 0:11:08.839 But you know, it could take four to six weeks 0:11:08.880 --> 0:11:12.880 to clean up the channel area to get the port reopened. 0:11:13.840 --> 0:11:16.560 You know, obviously to rebuild the bridge, we're talking two 0:11:16.640 --> 0:11:20.400 to four years, probably closer to four than two, and. 0:11:20.360 --> 0:11:21.920 So that's going to take time. 0:11:22.600 --> 0:11:25.400 The freight that is going to be impacted can be 0:11:25.480 --> 0:11:29.600 moved to other ports, whether it's coal going to the 0:11:29.640 --> 0:11:32.360 Port of Norfolk versus you. 0:11:32.280 --> 0:11:33.559 Know, going out of Baltimore. 0:11:34.240 --> 0:11:37.000 A lot of roll on roll off equipment, whether it's 0:11:37.080 --> 0:11:40.880 ag or commercial equipment in addition to automotives could go 0:11:40.920 --> 0:11:45.600 to Philly or New York, New Jersey ports. So there's 0:11:45.640 --> 0:11:47.559 going to be you know, there's going to be other 0:11:47.600 --> 0:11:50.600 ports that can pull the slack what you're going to see. 0:11:50.640 --> 0:11:53.560 Because we track weekly rail volumes, you're probably can see 0:11:53.559 --> 0:11:57.360 some volatility and the rail volumes, especially for Norfolk, Southern 0:11:57.440 --> 0:12:00.800 and CSX, the two eastern railroads, and that might make 0:12:00.920 --> 0:12:03.920 earnings maybe a little lumpy or a little lighter than 0:12:03.920 --> 0:12:08.120 what expectations were. But this is not like a huge 0:12:08.160 --> 0:12:12.080 dislocation like we saw, whether it's during the pandemic, and 0:12:12.120 --> 0:12:14.680 it's probably even less of. 0:12:13.880 --> 0:12:15.240 Of a big deal if you will. 0:12:16.040 --> 0:12:18.800 Then what we saw in what we're seeing right now 0:12:18.840 --> 0:12:20.880 in the Red Sea in terms of the impact, I 0:12:20.920 --> 0:12:23.320 think we're gonna this is really like a from a 0:12:23.360 --> 0:12:27.360 supply chain standpoint, It is really a short term negative 0:12:27.400 --> 0:12:31.160 impact where we'll find the new normal. I guess you know, 0:12:31.200 --> 0:12:33.320 I do say that a lot in my job, what 0:12:33.440 --> 0:12:36.079 the new normal is. But we will find a new 0:12:36.120 --> 0:12:39.280 normal as freight finds other ports to go short term 0:12:39.360 --> 0:12:42.360 until the Port of Baltimore opens up, which hopefully will 0:12:42.400 --> 0:12:43.840 be in less than two months time. 0:12:44.360 --> 0:12:44.480 Hey. 0:12:44.559 --> 0:12:47.280 Lee, when you talk to your institutional investor clients and 0:12:47.320 --> 0:12:51.360 you're talking about the transportation space broadly defined, where are 0:12:51.360 --> 0:12:52.360 people most excited? 0:12:52.440 --> 0:12:53.160 Is it the rails? 0:12:53.240 --> 0:12:55.560 Is it the trucks? Is it the marine shippers? 0:12:56.559 --> 0:12:58.400 Yeah, so that's a great question. 0:12:58.640 --> 0:13:03.040 I don't really think it's it's it's on a mode 0:13:03.200 --> 0:13:04.000 basis right now. 0:13:04.040 --> 0:13:06.840 I think it's really by a company's story. 0:13:07.240 --> 0:13:09.480 You know, you have a Norfolk Southern where you have 0:13:09.520 --> 0:13:13.120 a lot of activist investor activists activity going on there, 0:13:13.600 --> 0:13:15.800 so there's a lot of excitement about, you know, how 0:13:15.840 --> 0:13:17.760 that company can improve its margins. 0:13:18.240 --> 0:13:18.560 Uh. 0:13:18.600 --> 0:13:20.880 In the West, you have a new Pacific on on 0:13:20.920 --> 0:13:23.160 the rail side, where you have a new CEO that 0:13:23.240 --> 0:13:26.359 comes in with a lot of precisions scheduling, railroading experience 0:13:26.400 --> 0:13:28.800 and uh, you know, expectations are he's going to be 0:13:28.800 --> 0:13:31.480 able to improve margins. And then on the growth side 0:13:31.480 --> 0:13:33.800 of things in the rail industry, you have a Canadian 0:13:33.840 --> 0:13:38.080 Pacific uh Kansas City, which is uh, you know, the 0:13:38.120 --> 0:13:41.559 byproduct of a merger that happened last year, and they 0:13:41.559 --> 0:13:44.560 had some great growth opportunities because you know, they're the 0:13:44.600 --> 0:13:46.839 only railroad that touches Canada. 0:13:46.520 --> 0:13:49.079 The US and Mexico. And as you know, near. 0:13:48.960 --> 0:13:53.280 Shoring is a long term, slow, but long term secular 0:13:53.360 --> 0:13:56.600 growth story that you know, we're looking at and they're 0:13:56.760 --> 0:13:59.839 they're they're expected to benefit the most from from there. 0:14:00.200 --> 0:14:03.199 And then broadly speaking, I think people are just waiting 0:14:03.240 --> 0:14:06.600 to see the truckload cycle rate cycle start to turn. 0:14:07.240 --> 0:14:08.080 We believe it's going to. 0:14:08.080 --> 0:14:11.959 Happen this quarter. We believe we're bouncing along the bottom. 0:14:12.120 --> 0:14:14.720 What happened in Baltimore could kind of give a boost 0:14:14.960 --> 0:14:19.120 to certain kind of equipment types like flatbed equipment near 0:14:19.200 --> 0:14:22.240 term here, which could be a great base to work 0:14:22.280 --> 0:14:25.080 on positive pricing, which the truckload industry. 0:14:24.760 --> 0:14:27.680 Does really needs before we let you go. 0:14:27.880 --> 0:14:30.760 I mean on that point, we had the ISM manufacturing 0:14:30.840 --> 0:14:34.360 data coming in really strong, and you have been expansionary 0:14:34.480 --> 0:14:37.720 territory for the first time since July of twenty twenty two. 0:14:38.160 --> 0:14:40.360 It has been bouncing along the bottom and troughing for 0:14:40.400 --> 0:14:43.160 like five or six months. You're saying something similar for 0:14:43.200 --> 0:14:46.400 the transportation sector in some ways, does it reaccelerate, Like 0:14:46.520 --> 0:14:48.040 what does the upturn look like? 0:14:49.000 --> 0:14:52.120 So the ISM index is probably a great precursor to 0:14:52.600 --> 0:14:58.000 less than truckload demand. So think companies like XPO, Old Dominion, 0:14:58.080 --> 0:15:02.080 even FedEx Freight is the largest LTL carrier out there. 0:15:02.640 --> 0:15:09.000 Tonnage has been in decline h broadly speaking, and what 0:15:09.080 --> 0:15:12.560 the ISM usually is, it kind of leads demand. 0:15:12.240 --> 0:15:13.720 By by three to six months. 0:15:13.720 --> 0:15:18.400 So the fact that it inflected into expansion territory is 0:15:18.440 --> 0:15:19.480 a positive. 0:15:19.040 --> 0:15:22.320 Sign for the LTL space. You know, That's how we 0:15:22.320 --> 0:15:24.880 look when we're looking at the is m all right? 0:15:24.960 --> 0:15:28.280 Lee great Stuff has always appreciated, uh bringing it as 0:15:28.280 --> 0:15:31.400 he always does. Leek Clasicow, senior Transportation Logistics and shipping 0:15:31.440 --> 0:15:35.200 analysts for Bloomberg Intelligence coming to us from our Princeton 0:15:35.240 --> 0:15:38.800 studio via that technology, the kids call zoom. So that 0:15:38.840 --> 0:15:42.720 worked out worst. Yeah, just looking at the logistics, it 0:15:42.720 --> 0:15:46.920 seems like we're back to normalized logistics, getting up, you know, 0:15:46.920 --> 0:15:48.960 our product from point A to point B. Kind of 0:15:49.000 --> 0:15:51.360 back to where we were. I guess, I guess. My 0:15:51.360 --> 0:15:53.960 My question is what happens to justin time inventory? Is 0:15:54.000 --> 0:15:56.320 that still thing? Or do people learn their lesson like 0:15:56.760 --> 0:15:59.440 that just in time that's a little too dice meat, right. 0:15:59.360 --> 0:16:01.440 But it's not like a huge build up of inventory, right. 0:16:01.480 --> 0:16:03.400 It's like you have enough but not too much and 0:16:03.480 --> 0:16:05.280 kind of finding that sweet spot as I feel like 0:16:05.320 --> 0:16:07.760 retailers have been trying to find for a bit can 0:16:07.800 --> 0:16:10.600 be quite tricky, you know, but it will be interesting. 0:16:10.680 --> 0:16:13.600 I know that we're writing off what happened in Baltimore 0:16:13.640 --> 0:16:14.560 in terms of logistics. 0:16:14.600 --> 0:16:16.040 I know, I know we're doing that. 0:16:16.120 --> 0:16:20.560 There's space, there's capacity at different ports, railroads have capacity, 0:16:20.600 --> 0:16:23.720 et cetera. We have to wonder, though, if it doesn't 0:16:23.760 --> 0:16:26.320 take any shorter than four to six weeks, do we 0:16:26.400 --> 0:16:29.120 have to rethink the disinflationary trend that we're seeing, Like 0:16:29.160 --> 0:16:31.360 not inflation, not something crazy, but just. 0:16:31.640 --> 0:16:35.760 You know, stops the stops the decline. 0:16:36.160 --> 0:16:40.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:40.120 --> 0:16:42.760 weekdays at ten am Eastern on Apple car Playing and 0:16:42.920 --> 0:16:45.840 broyd Outo with the Bloomberg Business app. Listen on demand 0:16:45.880 --> 0:16:49.560 wherever you get your podcasts, or watch us live on YouTube. 0:16:49.640 --> 0:16:52.280 But we're looking to sell off all across the bond 0:16:52.320 --> 0:16:55.000 market here, particularly in the long end, and it seems 0:16:55.080 --> 0:16:57.560 like the good data is going to be bad then 0:16:57.680 --> 0:16:58.440 for the market. 0:16:58.680 --> 0:17:01.200 Are we seeing actually a re ex of the economy. 0:17:01.240 --> 0:17:02.600 I think that's going to be my question of the. 0:17:02.640 --> 0:17:03.520 Day, Pall, I like that. 0:17:04.440 --> 0:17:04.960 Let's do it. 0:17:05.040 --> 0:17:08.080 Carol Pepper is founder and CEO at Pepper International and 0:17:08.160 --> 0:17:12.199 she joins us. Now, Carol, are we seeing a reacceleration. 0:17:12.760 --> 0:17:12.879 Now? 0:17:12.960 --> 0:17:17.800 I think we're seeing a steady, continuing good performance. Reacceleration 0:17:17.920 --> 0:17:19.920 would imply that it's going to get a lot hotter 0:17:20.359 --> 0:17:22.679 too quickly and it will not allow the FED to cut. 0:17:22.960 --> 0:17:25.040 I don't believe that's the case. I think we're just 0:17:25.119 --> 0:17:28.959 going to continue to see a good, strong, muscular market 0:17:29.040 --> 0:17:31.760 that's doing well. I don't see it as a reacceleration. 0:17:31.840 --> 0:17:34.159 I see it as fairly a steady state, almost a 0:17:34.200 --> 0:17:37.119 goldilocks market, not too hot, not too cold. 0:17:37.359 --> 0:17:39.879 So if that back. With that background, Carol, what do 0:17:39.880 --> 0:17:41.879 you think are Feeder Reserve is going to do in 0:17:41.880 --> 0:17:42.760 the upcoming meetings. 0:17:43.560 --> 0:17:45.320 I'm definitely in the camp that says they're going to 0:17:45.400 --> 0:17:48.080 cut in June because they have no reason to keep the. 0:17:48.080 --> 0:17:48.919 Rates so high. 0:17:49.200 --> 0:17:52.199 I mean, there's just there's not a lot of justification 0:17:52.359 --> 0:17:55.960 if we don't have rampant inflation and the rates being 0:17:56.000 --> 0:17:58.439 so high do threaten the real estate markets, which in 0:17:58.440 --> 0:18:01.000 turn threaten the banks. So you know, a lot of 0:18:01.040 --> 0:18:03.399 people have been holding on by their fingernails, and a 0:18:03.400 --> 0:18:05.159 lot of banks don't want to take back all that 0:18:05.240 --> 0:18:07.600 real estate, so they really need to start cutting. 0:18:09.000 --> 0:18:11.000 Okay, So if we just do so things are just 0:18:11.080 --> 0:18:13.760 humming along and doing all right. As you were just saying, 0:18:14.600 --> 0:18:16.760 is that enough for equities to keep going up? 0:18:18.720 --> 0:18:21.520 Well, remember, we're going to have the stimulus coming, a 0:18:21.560 --> 0:18:23.760 real stimulus, which is the cut of interest rates. 0:18:24.200 --> 0:18:25.520 That will help real estate. 0:18:25.359 --> 0:18:28.080 That will help banks, That will help consumers because the 0:18:28.160 --> 0:18:29.520 credit card rates will go down. 0:18:29.680 --> 0:18:31.600 But if we don't get that, Carol, if we don't 0:18:31.640 --> 0:18:33.480 get the cuts, or if that gets pushed off even 0:18:33.520 --> 0:18:35.720 by a month, et cetera, can stocks will go up? 0:18:36.800 --> 0:18:37.480 Yes? I think so. 0:18:37.640 --> 0:18:40.199 Because again we're at the beginning of another level of 0:18:40.240 --> 0:18:43.520 secular change. I was around trading the Internet when it 0:18:43.600 --> 0:18:46.560