Transcripts For BLOOMBERG Bloomberg 20240703 : vimarsana.com

Finance minister. From new york, i am alix steel with guy johnson. What do you got . Guy the two year yield dropped and Inflation Expectations come down to 3. 1. The headline number drops to 67. 7. The summer frenzy is over will that have an effect . What does a Government Shutdown due to these numbers and what does the uaw strike due to these numbers . Alix you said post taylor swift because thats not nothing in oil now is around 90 a barrel and gasoline prices are inching up as well. How will that decrease Consumer Confidence within the u. S. . You mentioned the auto strike. Its starting off and its one of our big stories. The uaw workers striking to get against the big three automakers. Work has stopped at various plans. Joining us is david westin and mary barra, the ceo of General Motors. Dani for our audience, we welcome mary borrow. You where the woman of the hour whether you like it or not. What comes next . We know there are individual plants that they have struck at. How far away are we from layoffs as plants run out of parts . I want to say that im extremely disappointed and frustrated we are even at a strike. General motors has a strong offer on the table and its historic. Its the largest increase from a wages perspective and are up to 115 year history along with worldclass health clear benefits and many other provisions like job security and a cola adjustment. When you look at the agreement on the table, we really dont need to be here. They have one plant down now and it will impact three very important products. Our Chevrolet Colorado and eric gmc canyon are midsize pickups that are in Strong Demand as well as our chevrolet cargo van the does well in the market. This is having an impact and we will have to. See where they go next we are ready for this. As we deal with covid in the Semi Conductor shortage and other supply chain challenges which have continued to persist from covid, air t knows how to manage these situations and they are staying agile and we will do whats right for the company make sure everyone stays safe but this is a strike that did need to happen. David you made an offer already for a substantial increase in wages which is not what the uaw wants. You agree they need and deserve some increase in wages but is this about more than that . Is it existential for your move into evs. They think that will cut the workforce by 40 . This is a once in a century transformation. We are moving from internal combustion vehicles to electric vehicles. At gm, we are at a Pivotal Point because we have so many electric vehicles ready to launch and its important to secure our futures. We need to get these vehicles out. They are wonderful vehicles and we have orders already in place so its importantly meet the demand. From a General Motors perspective, for job security, we have jobs for all of our people as we make this transformation. More than two years ago, we planned for this and one reason General Motors invested in our own power units which is important on electric vehicles, we designed them internally and are now allocating that production to the plants that build internal combustion vehicle engines. We have worked carefully to have a job for everyone so we can make this transformation together. When you have a strike and we are not making vehicles come you put that at risk. Its henna start transformation and we need to make sure we can compete and we need the company to be profitable because the prophets get invested in new products. Its a circle of what we invest in new product and there is a demand for that product from consumers that provides the jobs because we are building those vehicles in our plants. We need to invest in our future and we have a plan to take our employees along. The concern that there is not a place for. Them a General Motors is not true david if you came close to what they demand, what would it mean for the future of General Motors . You just came at a bankruptcy set 15 years ago . Thats an important point because if we cant invest in new vehicles which we need and be profitable to do that, we are not going to have a strong future. This is a very competitive industry. There are new entries not represented by the uaw that had a low Wage Structure so we need to compete. I am proud of our Manufacturing Team in the way they managed covid and have been very agile as weve dealt with supply Chain Shortages and for the last two years, between our engineering and Manufacturing Teams, they have delivered worldclass quality is recognized by jd powers. We have a strike team and want to do everything to win the future, secure their future and lead to the next 115 years. We need to be able to do that. David are the negotiating terms meeting today . Are you participating directly in any way . I have been participating and have been involved before july 18 when the talks kicked off. Ive been on call more than once a day with meetings and calls and text and ive been at the main table over the last few days and i will be extremely involved. Our team is winning to negotiate some my request is the uaw leadership needs to get back to the table so we can get these problems solved. Another important point is for every job that General Motors has, there are six more jobs in the economy that depend on us running. This is broader than just General Motors. This is important for the plant cities but also for the nation. David you talk about 150,000 its potentially more than that. I am mindful that your father was a tool and die maker at pontiac when my father was a tool and die maker 30 miles away. We had gone through the uaw strike. What would our fathers say to each other of what we are seeing now . My father as he looked at the Historic Deal we put on the table, he would say the Companies Committed and must recognize our employees for their hard work wants to make sure they have a secure future. I think he would look at this offer and it was on the table for him to vote, he would vote yes. David thank you for your time today. She is the General Motors chair and ceo. Alix thanks so much, david westin. As they work toward an agreement, did we learn anything. The global auto analyst is with us so what did you make of it and what does this set up for the signal of the conversation going . I think she really put it out really well. You look at the difference and where the uaw was in really Auto Industry was, there was a wide dispersion between the two. The uaw wanted to 40 increase and the automakers are coming out that 10 but they came up closer to 20 . When she talked about electrification, they are finding ways where labor can be used and reallocated to making ub components. When i was the european auto analyst, i noticed this had already happened area the oems are trying their best to find places for these workers to go. They have increased wages in their latest proposal up to 20 . We have to not forget that they went through three years of under production and they kept elevated pricing which has been really profitable for the oems. I think people need to remember, lower volumes and a work stoppage, theyve been through this and come out on top because theyve had a strong price mix which is led to profitability. If i were on the labor side, the oems can get through this because they have strong pricing. This would keep pricing elevated for longer. Guy ironically, what you are suggesting is the oems need to be more profitable as a result of a strike . The big bear thesis i hear from clients is pricing will fall and inventory levels will come back up and that will be a disaster for the oems because they had peak earnings. What happens if you had a work stoppage and are not producing cars them inventories are low and we could have high pricing for cars for longer. This has a less bad impact automakers than lower pricing does. In a weird way, this is not as bad as we hear the optics in the media. I think something folks need to Pay Attention to this. Alix what is the inventory like for the big three . Inventory levels are still below 2019 levels for sure but they have been coming up a lot of people think this means pricing will come down in 2024. All this work stoppage does is just length this time where price makes things elevated. Things are still below 2018 levels. Alix mary addressed how many jobs and supply chain are dependent on the oems. Is this an opportunity for the supply chain to catch up in an opportunity for them to become more robust . I think so. They been doing this. We had three straight years where the supply chain has had to readjust and look at the amount of automation at some of these plants versus 10 years ago. Its more and we saw the numbers put out in terms of the labor cost and the percentage of their total cost. Its lower now than it was before. These companies have done a lot to right size their cost structure. Its a lot less painful for them to deal with this than it has been in the past. Alix there is also a narrative that all of this will be a huge boost to the nonunion automakers like tesla or toyota. Is that a real argument . That certainly could be something to be said by that. At the end of the day, it would be the case if they had market share where the oems hit by the stryker not selling vehicles. There is some of that certainly. Thats more e on thev side for tesla. I dont know if thats as big of an issue. Guy can the europeans protect their car industry from chinese ev imports . Thats a totally different question. There is an obstacle there which is the germans are not really that excited. About going against the chinese certainly, the french probably do. It comes down to whether or not the eu can come to an agreement and putting tariffs. I think its harder for that for them. Politically, there dependent on a first to china i think that will be difficult to deal with. We will see, things in europe are tough to get to the goal line. Guy thank you very much indeed, great stuff. Another story we are focused on today is the European Finance minister meeting which is taking place in spain. This is a day after the ecb hydrates. Maria tadeo is there. Maria we are joined by the french finance minister. Thank you so much for joining us. What is your take on the European Central bank because they hiked again and rates are at 4 and some say enough is enough so what is your take echo the ecb is independent but they would like to follow what Christine Lagarde says. I think we are at the right level of Interest Rates in the eu to stop and asian and these are the goal of the Interest Rates, to reduce inflation we are on the right track and i think Christine Lagardes right to stick to that level of Interest Rates. Maria . What you say is that you feel this was 25 basis points and its over . Since we are on the verge of reducing inflation we are on the right track, i dont see Christine Lagarde say we need to go further. 4 as a high level of Interest Rates. It might have some impact on the level of activity. We are on the right track to reduce inflation which must be our common goal. Enough is enough. Maria . That was very clear. Lets move onto the other big topic. This was a Massive Decision we saw reflected in the market. There is no a probe that will start into chinese electric vehicles ahead of the European Commission who says they flooded the market with cheap subsidies. This was a political victory for your country who wanted this included. What will you get out of it . We did not push anything, we wanted to have a fair condition between china and the eu. China is a key partner for the eu but the partnership between her two continents must be based on the same rules and must be based on a certain level. If there is any doubt there is a competitive field between china and the you, its up to the commission to launch an investigation. This investigation is most welcome. It is nothing against china, nothing against their chinese partner, just for the sake of preserving the trade. Maria do you fear the chinese will not look at this in the same way . Will this lead to a a trade war . Thats exactly what we want to avoid. We are not here to have a trade war. We are here to ensure that fair rules are being implemented by all partners whether by china or by any other partner. The responsibility of the commission is to ensure that trade is based on fair rules and thats the meaning of this investigation. Maria even if you have your nice handbags that you have and the luxury goods that go to china, china says if you are being protectionist, we will do this anything to you. Do you factor that in . It has nothing to do with protectionism. Applying the rules, abiding by the rules is not protectionism, its fair trade. China is a member of the wto. All new Member States are members of the wto. We have to abide by the same rules rules, nothing to do with protectionism. Its important the rules. Of the same for everybody maria because there is this fear of what china may do, it has prevented action in areas were some would argue its fair to say china abuses its position your and wiped out the entire solar industry. Companies went into bankruptcy. Should we say in the European Union that there is no need to fear china . Its a tractor think we cant action because we fear china . I think its good news that europe, we realize that every rely on the success of its economic controls. China is defending its economic interests. The eu must do the same and this investigation is the best way of explaining. We have economic interest, we want to be based on fair rules so we want to make ensure that the rules of the same for everybody. We the Single Market and one of the most confident as a power it is vision the world. Maria is this a beginning of a bigger rethinking . Would you say its not just evs . Maybe there arrange of areas we should look at. On everything as well. Maybe there are panels or other areas were we have to ensure that trade is based on fair rules. Its maybe the beginning of the new billion year where the eu starts thinking of its own interest and looking at the rules being decided and applied and start thinking about defending its interests. Your goal is to overtake germany . Are goal is to clearly have growth in france. Germany is our first economic partner. This is not good news when you have germany facing recession. It has a direct impact on the level of activity in france. I really want to have more growth in europe. This is one of the things were try to trade for. I explained to my colleagues in spain that we cannot be satisfied with the level of growth we have today in europe has forecast for 2024 we have phases by the slowdown in europe. We must take decisive steps to give a new impetus and get a solid, sustainable and stronger growth into 2024. Maria will that slowdown affect your country . We will have more growth in 2024. I believe we should define a new economic industrial strategy for the eu. Based on innovation and investments and based on competitiveness. Maria you spoke to your german counterpart and there is a debate about the european fiscal policies. The jenna the German Government want to see this in a fair way. They say youre fixated in numbers that have not produced massive investment across the European Union. You will see countries in here that could get punished for not having those numbers. People say it makes no sense. I want to make things very clear. France wants to have some public finances even in the euro zone. We want rules but we want rules that will not kill growth. Rules are necessary to ensure some public finances but it must also provide the fiscal space to also have growth in europe. Maria do the germans get that . The balance is the key challenge we have to face when we are defining the new rules. The second point is to do our best effort to come to compromise by the end of 2023. We need to give the signator cities and all the Member States that we stand ready to have new, efficient rules for this economy. Maria the market is becoming very negative on europe. It has done now so for weeks. Do you believe the idea of stagflation is a real risk where there is too much negativity around the european story . I think there is too much negativity. I believe there is a necessity to give a new impetus to growth to get stronger and more sustainable growth. Ive been negotiating the Capital Market for more than six years. We need to move on, we need to decide, we do have this Capital Market to provide more funding to the innovation and Disruptive Technologies to growth. Thats the key point. Im not observer of the political life in europe, i am an actor. I want more jobs and more prosperity and there is a necessity to make decisions to go this way. Maria did you get any phone calls from any french ceo this week when the probe was announced and asking how it will affect them . Any sign from the french corporate sector saying are we sure we want to do this . I got some phone calls but my response was quite clear. What do you want . Do you want a week europe are a strong europe . I think we need a strong europe and a strong europe as a continent and one that can defend its interest. You said we want to do it for a stronger europe . We need to have a position between china and the you dish in the eu. If you want that, you need a strong europe. Maria you will not tell me was on the phone . No, thank you so much. Maria always a pleasure to see you. That was the french finance minister at the euro group in spain. Alix thanks so much. A great conversation and timely with the auto strike here in the u. S. I think there are big issues and i dont know how you resolve them quickly and easy but it seems as if the u. S. And europe is behind on manufacturing for evs and they will have to find ways to ramp it up and all options run the table but it is happening. Guy it is happening. You can see the drip fate different parts. What i hear loud and clear is there is a certain degree of protectionism of home turf and i think that will be the reality of the situation. Airbus is usually dependent what comes out of china. You look at the luxury industry and their pushing the idea that its not protectionism but they are clearly in the market for some sort of help for r companies likeenault. Where are the luxury names in this . Its a zerosum game in some ways. Alix then what happens when you wrap in solar where parts are made in china. There is the trade in the Energy Transition that you still need to work with china. Does it need to be more manufacturing subsidies . You need to do you risk the demandside in europe rather than focus on supply . Does that mean more subsidies . I feel there are different parts to this. Guy that deals with the idea that maybe the chinese are the ones the benefit from that. Maybe europe needs to figure out the ira side of things. Alix thats a fair point. Coming up, the survey came out this moving markets. Alix we are an hour into the u. S. Trading session. Abigail doolittle is tracking the moves. Abigail this is a five day chart of the s p we are well off the highest, we could see anything happen the nasdaq 100 is flat on the week. A bit of volatility on the part of investors and the sector competition is pretty bearish. Most sectors are higher but the best is security, this is defense. Its almost like a flight to safety. Take a look at the two down sectors, industrials intact, tacked down for the second week in a row. This tells me that the bears are a little stronger. When we put this together with the weekly tech numbers, we are still neatly in this rising rate. We could still go down towards the bottom of the range near 4000. The technical price shows us the possibility. As for other asset classes, here is spoiled. We continue to see oil go higher. The dollar is down on the we, but the ninth week in a row with yields up. Here is the vix of a 13 handle. We will see how well these puzzle pieces play out. Guy the energy story has turned everything into the air and we dont know how its going to settle. Lets see whats happening with the economic data. The umich numbers coming out. Joanne hsu umich director. Joanne the consumer have noticed that inflation has slowed down but at the same time, they expect to continue so Inflation Expectations have come down. Alix why . Joanne its attributable to consumer reduction with people with very high inflation expectation. About a year ago one third of consumers thought inflation would be 10, 15 20 . That is down to 15 of consumers now. Consumers feel as if inflation is coming under control. They could still turn around depending on Economic Development but they are starting to firm up there expectation and feeling better about that. Guy what about a gasoline price how will that change consumers . In what sense could these numbers change . Joanne it depends on how much this passes through gas prices. Consumers continue to be concerned about oil and gas prices. The number of consumers that mentioned it during the survey increased. Consumers are not expecting these increases to process but if they do, then consumers will adjust accordingly. Alix how to consumers feel about the job market right now . Joanne they are starting to show signs of vulnerability and labor market expectations. Unemployment sentiment has worsened. Their income dropped quite a bit. They do recognize that labor markets are historically strong but we are seeing some signs of vulnerabilities emerge in the data. Guy why are consumers still so gloomy . The answer seems to be laying covid that there is a shift lower, what do you say to that . Joanne the data shows that kovic continues to have an effect of the perception of a new normal. Consumers had their alltime low and sentiment last june despite the fact that we had high inflation but it was nowhere near what we saw in the late 70s and 80s. With covid and political colorations led to consumers feeling distant goal and dismal about the country and society in general. This new reality they came in with covid has shifted consumer views and attitudes but it remains to be seen whether or not this will be permanent. As possible we were collecting data during the spanish flu we wouldve seen the same thing. Alix it is fascinating to see that there is a structural shift without. Joanne, thank you so much. Lets get more into this market perspective. Katrina, whatd you make of the umich numbers . Where looking at some of the data from the consumer and were paying attention to the sentiment and the job side. We have low unemployment and we have a job opening number which is 50 higher than it is historically. I think as we look at a longterm basis we are bullish on the consumer and we are impressed in terms of the security they have. Guy two words bring to mind, soft landing . Katrina weve been in the soft landing camp for at least 12 months. When we were working at the original thesis the things we pointed out to you, this has been a job filled downturn which is very different. Thats the other side of the coin from covid. We spoke to the same industrial ceos and they are holding on to labor which shows there just is positive they are as we are. We still think that theyre in the same campus we are that the fed has done a stop and navigated a soft landing. The other part of this is this is not quite as we thought. The fed still has the ability to adjust rates to land the plane. Alix we were talking about that yesterday and terms of where the ecb is. There was conversation that the fat cats because the ecb will have because the ecb will have to stay higher longer. Katrina they are very energy price dependent and what we are seeing is the quickness at which europe has reacted. In this case, weve been very surprised. You see an increase in oil prices and inflation in europe while control does not have the same tailwinds we see here. We are in the camp that by the end of the year we think we will see had to handle on inflation. Guy where do bond yields go on that scenario . Theres a lot of talk that the bond yields dont come down. How does that feed into your thesis . Katrina in terms of bond yields we are in the camp that they stay where they are. The bond market is pricing in all the information available. As we go into next year we are watching data like hawks in the ecb and fed are doing that. If you see a sign of slowness we think the fed will make another pipit and that will be what adjustment do i need to make . And that will mean a 25 point adjustment rate. Alix it is always good to see you. You mentioned bonds and that goes to what we see in the fx market does this mean continued pressure to the euro and an upside to the dollar . And at some point we have to talk about china and japan. Guy we have Big Decisions coming up next week, we have the boj and whats happening with the fed. The stress of dollar is going to create if it continues to ratchet higher from here is significant. I was listening to people talk about parity coming back but there is so much pessimism priced around europe that they dont think its there. The stronger dollar is ripping through europe but maybe that means alix steel can come to europe for a holiday next year . Alix to your point i heard that about european stocks that all the bad news is priced in. Coming up, a 50 million etf cash cow is getting a new rival. Thats coming up next, this is bloomberg. Let Innovation Refunds help with your erc tax refund so you can improve your business however you see fit. Rosie used part of her refund to build an outdoor patio. Clink dr. Marshall used part of his refund to give his practice a facelift. Emily used part of her refund to buy. I run a wax museum. Let Innovation Refunds help you get started on your erc tax refund. Stop waiting. Go to innovationrefunds. Com you really got the brows. Somebody would ask her something and she would just walk right past them. She didnt know they were talking to her. I just could not hear. I was hesitant to get the hearing aids because of my short hair. But nobody even sees them. Our nearly invisible hearing aids are just one reason weve been the brand leader for over 75 years. When i finally could hear for the first time, i could hear everything. Try miracleear hearing aids with no commitment during our limited time sounds of autumn event. Call 1800miracle now. Alix you are looking live shots of the principal rim coming up on balance of power, former Vice President might hints will appear at 5 00 p. M. Eastern time. Vice president mike pence alix date etf marked under cows was put on the market. We will go through all the new mooooves. We are looking at cash cows etfs. They launched the ticker cows and they have strong cash flows and pay Monthly Dividends and the reason why they have this ticker cows because there is already an etf with ticker cowz that has a ton of inflows. Guy why should i be more bullish, get it . Around inflow than what came before. You have to continue with this plan. We should carry on. Emily i think investors may be want to add more to their etfs. We have seen them launch dividend paying etfs and those focused on Higher Quality products. If we do see an economic downturn next year, when you look at the returns are up around 11 . But investors wouldve been better off buying a different etf. Alix are there sector preferences at all . Emily this new one is more broad, it will focus on Monthly Dividend income. The new etf will waive the Expense Ratio for a year. This etf will be free for the first year that it trades. Guy i dont have anything funny to say to end it. Emily, great job. Clearly i am unprepared. Emily did you prepare for it . Alix she said we are really trying to milk this. Guy excellent. Emily, great stuff. If youre looking for a return to the hedge fund world. This is a big deal if it happens. Is he coming back . This is bloomberg. Et created an etf that inspired the world to invest differently. It still does. What can you do with spy . Alix time now for wall street be, you are looking at the potential return to bridgewater a year after retiring. Whats going on here . Sonia they are writing a book on bridgewater. He was reporting that ray dalia was prepared to return to bridgewater. Returns have been doing worse than they were the last year so far, this is what its all about. According to the new york times, there was a veiled threat that dalia had that he used to say to executives take me out and you will get what you deserve. This idea that coming back to bridgewater would help them out but when he brought this idea to the ceo, the ceo brought it to the board and they rejected the idea. It just shows you the tension that still exists between bridgewater and the founder. Guy there has to be a tom brady joke in here. Which is my weights to pivoting towards what is happening. Wrexham, everton is being bought by the americans and Goldman Sachs is buying a sports franchise. Which one do you want to do . Sonali goldman was involved in the chelsea deal and is now one of the Investment Bank starting a sports franchise. There is a lot of institutional interest in teams and everton is getting another equity firm involved. Now to get to wrexham, partly owned by ryan reynolds. I think about them as a value trade. Something cheaper than chelsea but you have resistance where you brought in tom brady. He brought a team that was a little cheaper than chelsea and more than a value trade and trying to capitalize on the environment around the Football Club they bought. Guy birmingham. It is a massive club. My father used to support one and my uncle supported burlington. Sonali he supported everton . Guy liverpool used to dominate but they will redevelop the part. There is a need for money which is why they need the investment. It is probably better place. To your point about the value trade, thats where it makes more sense. Sonali that was behind the chelsea deal why they first got in. If you like moneyball you will like soccernomics about how they should use more data before remaking this teams. Football has been very wasteful with his money. Alix sonali and guy on sports stuff. 15 years ago Lehman Brothers happen. I remember it, you remember it. It was a turning moment and global economies. Guy what was amazing about that whole period is to remember it as a compressed period but it was stretched out. It did not all happen fast. The lehman moment makes it sound like it happened fast. It was an incredibly slow burn with the moment of tension in it. All of those things that happened, over a long period of time. Lvmh is bouncing back nicely. The dollar sorry the euro has bounced out 1. 06 and bright brent crude at 86. When we come back hugh gimber. Is it possible to fall in love with your home. Before you even step inside . Discover the Magnolia Home james hardie collection. Available now in siding colors, styles and textures. Curated by joanna gaines. Nice footwork. Sman, youre lucky,. Watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. Guy european equities enjoying the roundtrip at the end of the week. We are coming back down to flat. Francis up, lvmh has another good day. The countdown to the close starts right now. The countdown is on in europe this is Bloomberg Markets european close with guy johnson and alix steel. Guy we had positive chinese