Latest / Bloomberg Intelligence / Kocherlakota Sees Labor Market Slack, Calls for Hike Caution

Transcript

Kocherlakota Sees Labor Market Slack, Calls for Hike Caution · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:14
  Speaker 1: you and your money, whether at the grocery store or
• 0:16
  Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
• 0:20
  Speaker 1: SoundCloud and at Bloomberg dot com. We are broadcasting live
• 0:29
  Speaker 1: from the Women for Climate Conference at Columbia University Low
• 0:33
  Speaker 1: Library and the City of New York, and we are
• 0:37
  Speaker 1: also expecting a press conference scheduled by Federal Reserve Chair
• 0:41
  Speaker 1: Janet Yellen following the conclusion of a two day f
• 0:43
  Speaker 1: O m C meeting at which it is widely expected
• 0:47
  Speaker 1: the Federal Reserve will raise interest rates twenty five basis points.
• 0:51
  Speaker 1: Here to tell us more. Nriana Coacha Lakota, Bloomberg View
• 0:54
  Speaker 1: Columnists also happens to just be the former president of
• 0:59
  Speaker 1: the Minneapolis Federal Reserve. Nrianna Cutchlacarta, thank you very much
• 1:04
  Speaker 1: for being with us. I want you to just begin,
• 1:07
  Speaker 1: maybe by describing what is it like to sit at
• 1:10
  Speaker 1: the table at these meetings, and maybe you can tell
• 1:16
  Speaker 1: us if you've ever been to any of them. On
• 1:17
  Speaker 1: a virtual basis, like by a video because that's the
• 1:20
  Speaker 1: sort of essence of one of your columns that I
• 1:22
  Speaker 1: want to bring up. Yeah, no, thanks for having me
• 1:25
  Speaker 1: on tim. UM. No. The regular meetings are held in Washington. UM.
• 1:30
  Speaker 1: We all sit around a large one of the biggest
• 1:34
  Speaker 1: tables you've ever seen in your life, and try to
• 1:36
  Speaker 1: hash through the policy and economic issues at the time
• 1:39
  Speaker 1: to to get to to get to a good decision. UM.
• 1:44
  Speaker 1: People are usually really prepared remarks that they've put together
• 1:47
  Speaker 1: with the help of their staffs. UM and UH. But
• 1:50
  Speaker 1: I think that is there a specific order. It's that
• 1:55
  Speaker 1: the order is usually the chair goes last in the
• 1:59
  Speaker 1: two different go hounds that we have. So there's an
• 2:02
  Speaker 1: discussion the economy where the chair will go last, and
• 2:04
  Speaker 1: then the chair typically goes last the discussion of what's
• 2:07
  Speaker 1: going to be done with policy. But other than that,
• 2:09
  Speaker 1: it's pretty flexible. People will go in different orders depending
• 2:12
  Speaker 1: on where they want to be, and it's the secretary
• 2:15
  Speaker 1: of the committee will will hash it out. It's nothing
• 2:17
  Speaker 1: really predetermined there. On the video conferences, UM, those are
• 2:22
  Speaker 1: hald on a more ad hoc basis. UM. Sometimes on
• 2:26
  Speaker 1: for emergencies that come up during the course of the
• 2:28
  Speaker 1: between the in the regular scheduled meetings, but sometimes just
• 2:31
  Speaker 1: because the committee wants to do a deeper dive into
• 2:35
  Speaker 1: two two questions before coming together. And I always found
• 2:39
  Speaker 1: those very useful when I was on the committee. UM.
• 2:42
  Speaker 1: The thing is, you can't get everyone in Washington on
• 2:44
  Speaker 1: a on an ad hoc basis, but so then you'll
• 2:46
  Speaker 1: you'll end up doing things by by video conference. You know, Marianna,
• 2:51
  Speaker 1: I was noticing that you wrote to us ahead of
• 2:55
  Speaker 1: this that you will be against the FED raising rates
• 2:57
  Speaker 1: by a quarter of a percentage point. UH today Why yeah,
• 3:03
  Speaker 1: So I have a thanks for the question, that's UH.
• 3:05
  Speaker 1: I think I have a couple of reasons where I
• 3:07
  Speaker 1: would be pretty cautious about raising rates at this time time.
• 3:11
  Speaker 1: So one is that I continue to think there's more
• 3:14
  Speaker 1: slack and labor markets than UH than I think most
• 3:18
  Speaker 1: members of the FOMC do UM. And the reason I
• 3:21
  Speaker 1: say that is we've continue to see very strong employment
• 3:24
  Speaker 1: growth UM. Most economists think that over the longer run,
• 3:28
  Speaker 1: employment growth has to settle down something in the low
• 3:31
  Speaker 1: hundreds per months hundred thousand per months as opposed to UM.
• 3:37
  Speaker 1: The the the numbers we've been seeing which are really
• 3:42
  Speaker 1: closer to two hundreds. And so given that we've seen
• 3:46
  Speaker 1: that kind of fast employment growth without seeing high inflationary
• 3:50
  Speaker 1: pressures or wage pressures, that's really a strong signal that
• 3:54
  Speaker 1: we have still a lot of slack left and labor markets,
• 3:56
  Speaker 1: and the the committee should be really uh doing what
• 3:59
  Speaker 1: it and to facilitate the that that taking up of
• 4:03
  Speaker 1: that flat by the economy. Well, but Marianna, aren't you
• 4:06
  Speaker 1: a little bit concerned about these incredible enthusiasm that we've
• 4:10
  Speaker 1: seen in stock markets and in junk bond markets and
• 4:13
  Speaker 1: other areas that you know, frankly have stemmed from this
• 4:17
  Speaker 1: low rate environment. I mean, isn't it the FEDS responsibility
• 4:19
  Speaker 1: to try to uh inject some discipline into markets that
• 4:22
  Speaker 1: may not otherwise be there. I don't see that. I
• 4:26
  Speaker 1: never thought that as a FED. Fed's job. It's not
• 4:29
  Speaker 1: the job that's Mandy to buy Congress. The job is
• 4:32
  Speaker 1: to promote max employment and promote price stability. Uh. Their
• 4:35
  Speaker 1: concerns on the financial side, UM, the Dodd Frankine introduced
• 4:40
  Speaker 1: a number of changes in the regulatory system. The FED
• 4:43
  Speaker 1: has responsibility those through the Board of Governors. Uh if
• 4:46
  Speaker 1: if IF a FETE is worried about financial institutions taking
• 4:50
  Speaker 1: on too much risk. They have a number of tools
• 4:52
  Speaker 1: that are disposal through through their regulatory function where they
• 4:56
  Speaker 1: can can start to start to bring pure pressure to
• 4:58
  Speaker 1: bear on those institutions. It's not monetary policy is just
• 5:02
  Speaker 1: way too blunt and frankly, just too an effective a
• 5:06
  Speaker 1: tool to be used in that kind of kind of
• 5:08
  Speaker 1: kind of disciplining device. Can you tell us a little
• 5:11
  Speaker 1: bit about the process of selecting new presidents of the
• 5:15
  Speaker 1: Board of Governors as well as those that sit on
• 5:18
  Speaker 1: the committee, because I believe we're going to get a
• 5:21
  Speaker 1: new president in the Atlanta FED, but then the president
• 5:25
  Speaker 1: also has some appointments that could reshape the Federal Reserve. Right.
• 5:30
  Speaker 1: We just got announced this week that UM there was
• 5:33
  Speaker 1: a new president for the Federals of Bank of Atlanta,
• 5:35
  Speaker 1: replacing retiring Dennis Lockhart. Raphbaiel Bostic is going to be
• 5:40
  Speaker 1: replaced Dennis um And that appointment process is that the
• 5:43
  Speaker 1: Board of Directors and the UH subset of the Board
• 5:45
  Speaker 1: of Directors, those who are not bankers UH in Atlanta
• 5:49
  Speaker 1: UM name appoint Mr Bostic subject to the approval of
• 5:55
  Speaker 1: the Board of Governors in Washington and UH I think
• 5:59
  Speaker 1: I think it's notable that you know Mr bostick Is,
• 6:03
  Speaker 1: I think brings a great range of experiences both in
• 6:05
  Speaker 1: the public sector and an academ um, and he is
• 6:09
  Speaker 1: the first African American to be a president of a
• 6:13
  Speaker 1: reserve bank in the history of the Federal Reserve. So
• 6:15
  Speaker 1: I think a lot of good things coming from this disappointment. Nanna,
• 6:21
  Speaker 1: I wanted to I was just gonna quickly say about
• 6:24
  Speaker 1: the government. The governor appointments I think of as being
• 6:26
  Speaker 1: UM potentially much more consequential because the governor's in Washington
• 6:30
  Speaker 1: always vote on every EFFEMC decision and they have this
• 6:33
  Speaker 1: larger regulatory function I alluded to earlier. UM Governor Trulo
• 6:37
  Speaker 1: Dan trula Is announced he's gonna step away from the
• 6:40
  Speaker 1: border governors in early April. That means there's gonna be
• 6:43
  Speaker 1: three openings for for President Trump to to fill UM,
• 6:48
  Speaker 1: probably in short order, and so that could give him
• 6:51
  Speaker 1: a lot of It gives him the opportunity have a
• 6:53
  Speaker 1: lot of influence over over the border governors. So Nariana
• 6:57
  Speaker 1: just to push all that back a little bit about
• 7:00
  Speaker 1: idea that it would be a mistake for the Fed
• 7:01
  Speaker 1: to hy quarter percentage point and isn't the market sort
• 7:05
  Speaker 1: of acceptance of this pricing it in without a big disruption,
• 7:09
  Speaker 1: basically a tacit understood the acknowledgement that it's the right
• 7:13
  Speaker 1: thing to do. Oh you know, I markets are sometimes
• 7:19
  Speaker 1: overly enthusiastic about about economic events, and sometimes they're not
• 7:23
  Speaker 1: as enthusiastics as you would like. You don't make monetary
• 7:26
  Speaker 1: policy based on what the stock markets doing. I think
• 7:29
  Speaker 1: you make monetary policy based on how you see the
• 7:32
  Speaker 1: economy evolving. Um, you know, I continue to see that
• 7:37
  Speaker 1: there's the opportunity for strong growth in America without having
• 7:41
  Speaker 1: inflationary pressures, and and the ft should be doing what
• 7:44
  Speaker 1: it can. I think the facilitate that. Um, that's that's uh,
• 7:48
  Speaker 1: that's its job is to promote max employment as long
• 7:51
  Speaker 1: as that doesn't prove a danger to price stability. Thank
• 7:54
  Speaker 1: you so much for joining us. It was really a
• 7:55
  Speaker 1: pleasure to speak with you. Marianna Cultural a Quota Bloom
• 7:58
  Speaker 1: Review columnist, professor of economics at the University of Rochester,
• 8:01
  Speaker 1: and of course, former Minneapolis Fed president. We're broadcasting live
• 8:18
  Speaker 1: from the Women for Climate Conference at Columbia University in
• 8:22
  Speaker 1: New York City, and I am honored to bring in mural.
• 8:25
  Speaker 1: Muriel Bowser. She is the mayor of the District of
• 8:28
  Speaker 1: Columbia and she joins us now on the phone. Muriel,
• 8:32
  Speaker 1: I'm so happy to speak with you, in particular because Washington,
• 8:34
  Speaker 1: d C. Is the first US city to establish a
• 8:37
  Speaker 1: green bank and only the second in the world. What
• 8:41
  Speaker 1: is a green bank? Well, actually, we're working to get
• 8:45
  Speaker 1: it established. This is a piece of legislation that I
• 8:48
  Speaker 1: am going to introduce to my council UH in the
• 8:53
  Speaker 1: upcoming weeks and as you mentioned, will be the first
• 8:56
  Speaker 1: city UH US city to do it, and it will
• 8:59
  Speaker 1: be a tool, as we see it, to create green jobs.
• 9:02
  Speaker 1: We're going to expand solar power. It will help us
• 9:05
  Speaker 1: lower energy costs for the government UH and reduce greenhouse
• 9:09
  Speaker 1: gas emissions. It would also help us increase our investments
• 9:14
  Speaker 1: in clean energy for for the district. So this is
• 9:18
  Speaker 1: a financing tool UM that will allow us to more
• 9:21
  Speaker 1: quickly get money out into green infrastructure in our city.
• 9:27
  Speaker 1: Mayor Bowser, you're the seventh elected mayor of the district.
• 9:30
  Speaker 1: You took office in January of twenty and fifteen. What
• 9:34
  Speaker 1: if you could speak to the role of affordable housing
• 9:37
  Speaker 1: and its relationship to our conference Women for Climate and
• 9:42
  Speaker 1: the Effects of Climate Change. Well, we recognize and I
• 9:47
  Speaker 1: was with Mayor Hidalgo in Mexico City recently when C
• 9:51
  Speaker 1: forty met, and we so appreciate her global leadership and
• 9:57
  Speaker 1: what she has put a focus on is the disproportionate
• 10:01
  Speaker 1: impact on love climate change on women around the world
• 10:06
  Speaker 1: UH as as it relates to housing and drought and
• 10:11
  Speaker 1: all other types of issues. Women of color, women who
• 10:15
  Speaker 1: live in poverty are bearing the brunt of drastic changes
• 10:19
  Speaker 1: in our climate. In our city, we have focused and
• 10:24
  Speaker 1: we have been a leader in sustainability, and we recognize
• 10:28
  Speaker 1: that mayors play a critical role when many times, and
• 10:34
  Speaker 1: not just in our in our nation, but in others,
• 10:37
  Speaker 1: there can be uncertainty at the federal level, but mayors
• 10:40
  Speaker 1: have the obligation and the ability uh to make quick
• 10:44
  Speaker 1: infrastructure decisions and procurement decisions that collectively, if you put
• 10:49
  Speaker 1: all the big city mayorts together, in the small ones too,
• 10:52
  Speaker 1: will have the type of American policy that fights climate change. Well,
• 10:56
  Speaker 1: Mayor Bowser, you know, you raise a good question, which
• 10:59
  Speaker 1: is you know even and if maybe perhaps we hear
• 11:01
  Speaker 1: a lot about the federal government rolling back some of
• 11:04
  Speaker 1: the environmentally protective regulations that President former President Obama put
• 11:11
  Speaker 1: in place, and we hear a lot about how the
• 11:13
  Speaker 1: e p A is kind of, uh, perhaps going to
• 11:15
  Speaker 1: have a curtailed budget. You're implying that basically it won't
• 11:18
  Speaker 1: matter if the mayors of big cities are able to
• 11:21
  Speaker 1: implement their own, uh sort of climate change friendly or
• 11:25
  Speaker 1: sort of environmentally friendly programs. But is that true? I mean,
• 11:28
  Speaker 1: is there some kind of effect from the fact that
• 11:31
  Speaker 1: the federal government is cutting the money that they devote
• 11:34
  Speaker 1: to reducing greenhouse gases. Yeah, I wouldn't say. I wouldn't
• 11:39
  Speaker 1: say that it doesn't matter, um, because we do, for
• 11:44
  Speaker 1: for example, in our city, Uh, we we get money
• 11:47
  Speaker 1: from the e p A that funds a lots lots
• 11:49
  Speaker 1: of grants in our department. UM. But we do have
• 11:53
  Speaker 1: the ability to make up the difference. UM. So it's
• 11:56
  Speaker 1: not sustainable to think that cities won't ever needs some
• 12:00
  Speaker 1: federal support. But we are able to drive innovation invest
• 12:05
  Speaker 1: practices that inform um the commitments that the federal government
• 12:09
  Speaker 1: is able to make. We are preparing right now to
• 12:12
  Speaker 1: stand in the breach, uh, to to make sure that
• 12:15
  Speaker 1: cuts in in federal grants to our to Our department,
• 12:19
  Speaker 1: for example, are made up mayor bowser. Municipalities tend to
• 12:25
  Speaker 1: have their own culture and their own dynamic in a
• 12:28
  Speaker 1: variety of areas, whether that's culture or in politics. And
• 12:32
  Speaker 1: I'm wondering if you could describe the special situation that
• 12:36
  Speaker 1: you're in as the mayor of the district with the
• 12:40
  Speaker 1: federal government right there. I'm wondering if you could tell
• 12:42
  Speaker 1: us about that relationship and how you believe maybe you
• 12:46
  Speaker 1: do that uh it can be improved in change to
• 12:48
  Speaker 1: help the people of the district. Uh. Well, we are
• 12:52
  Speaker 1: proud of our status as the nation's capital and host
• 12:56
  Speaker 1: too many federal government agencies, the White House and the
• 12:59
  Speaker 1: Capital included. We're a little different in the federal structure
• 13:03
  Speaker 1: and that we operate as a city, accounty, and a
• 13:07
  Speaker 1: state all at once. Um. So there are many functions,
• 13:11
  Speaker 1: for example, that I have that other mayors don't have
• 13:13
  Speaker 1: because we we function as a state, uh in many regards. UH.
• 13:19
  Speaker 1: For example, had of meeting just the other day with
• 13:22
  Speaker 1: the President where we focused on the federal workforce in
• 13:25
  Speaker 1: their implement weather policy. So there's just some kind of
• 13:29
  Speaker 1: practical things like that, uh, that that define our relationship
• 13:33
  Speaker 1: with the federal government. Uh, special events, people coming to
• 13:37
  Speaker 1: the nation's capital to exercise their First Amendment rights or
• 13:41
  Speaker 1: other ways. Um that we that we work with the
• 13:44
  Speaker 1: federal government. I want to thank you very much for
• 13:47
  Speaker 1: joining us. Muriel Bowser, Mayor Bowser the District of Columbia,
• 13:51
  Speaker 1: and she can be thank you for covering this special event.
• 13:56
  Speaker 1: Thank you at Mayor Bowser. What we're gonna learn this
• 14:10
  Speaker 1: afternoon of course, Bloomberg Radio, Bloomberg Television. We'll be covering
• 14:13
  Speaker 1: it on Bloomberg dot com. Uh. The press conference following
• 14:19
  Speaker 1: the rate decision is reportedly to be one of the
• 14:23
  Speaker 1: most important signals of what the Federal Reserves timeline will
• 14:30
  Speaker 1: be for when they will raise rates yet again, if
• 14:33
  Speaker 1: I guess the world has not fall into well, let's
• 14:36
  Speaker 1: let's let's get a sense of what Mark Stefanski is thinking.
• 14:38
  Speaker 1: He's chairman and CEO of Third Federal Savings and Loan
• 14:41
  Speaker 1: Bank in Cleveland. Mark, what are you hoping the Federal
• 14:46
  Speaker 1: Reserve will do today? Well, there's Uh, it's a double
• 14:50
  Speaker 1: edged sword because if they do raise the race, that
• 14:53
  Speaker 1: that will help all the banks because the interest uh,
• 14:57
  Speaker 1: the spreads will be better. Um. So the consider um
• 15:00
  Speaker 1: it's not so great. But if you think about things,
• 15:03
  Speaker 1: uh in terms of what's happened in the past. You know,
• 15:06
  Speaker 1: I grew up in an era where interest rates at
• 15:09
  Speaker 1: seven eight nine percent for a mortgage were pretty good,
• 15:12
  Speaker 1: and so um, we just moved over We just over
• 15:16
  Speaker 1: four for more thirty year fixed rate mortgages exactly, which
• 15:21
  Speaker 1: still is pretty good if you compare that over the
• 15:23
  Speaker 1: history of the last fifty six years. Even so, it's
• 15:27
  Speaker 1: still a good deal for the consumer. But Mark, how concerned,
• 15:30
  Speaker 1: argued that the economy is not ready for it, and
• 15:33
  Speaker 1: that a not the rate hike I mean, basis points,
• 15:36
  Speaker 1: we're talking a quarter of percentage point that's probably priced
• 15:39
  Speaker 1: into the market pretty fully throughout the curve. But what
• 15:42
  Speaker 1: about you know, sort of what they might suggest afterwards,
• 15:45
  Speaker 1: what are you hoping they indicate as far as their
• 15:47
  Speaker 1: pace of rate hikes this year and what that could
• 15:49
  Speaker 1: do to risk assets. Well, I'm very concerned of a
• 15:55
  Speaker 1: fast moving rate hike. Um. I don't think the world
• 15:59
  Speaker 1: that kind etomy can handle something like that. I think
• 16:02
  Speaker 1: the world economy is very very fragile, and if it wasn't,
• 16:05
  Speaker 1: then we would have seen uh significant moves UH years ago.
• 16:11
  Speaker 1: But UM, I still think that we have a fragile economy.
• 16:14
  Speaker 1: I think there's a lot of momentum with the current
• 16:16
  Speaker 1: administration in Washington. I think the optimism is there. I
• 16:20
  Speaker 1: think the consumer confidence is UH in a good place.
• 16:23
  Speaker 1: But we have to show that we're making gains on
• 16:26
  Speaker 1: the job circuit and the economy really is growing. Mark,
• 16:30
  Speaker 1: I wonder if you could give people a little background
• 16:32
  Speaker 1: about Third Federal savings and loan in your career, and
• 16:36
  Speaker 1: also maybe just give us an example of one of
• 16:39
  Speaker 1: your customers, and perhaps that would illustrate how things have changed. Sure. UM, well,
• 16:44
  Speaker 1: my parents started Third Federal back in the midst of
• 16:47
  Speaker 1: the depression. I'm a second generation CEO, chairman of the board,
• 16:52
  Speaker 1: and I've been at this job for the last thirty
• 16:55
  Speaker 1: plus years. Um. We do business in twenty six states
• 17:01
  Speaker 1: right now, and we're the largest mortgage lender in Ohio
• 17:04
  Speaker 1: and we have stores in Ohio and in Florida. UM.
• 17:08
  Speaker 1: Where what a typical UH customers thinking right now? I
• 17:12
  Speaker 1: think two things are happening. One with the rate hikes
• 17:15
  Speaker 1: UH that have occurred. I think UH because the consumers
• 17:19
  Speaker 1: in general are concerned that rates are going to jump
• 17:21
  Speaker 1: and jump too high. And priced them out of the
• 17:23
  Speaker 1: market for a mortgage. So you see a lot of
• 17:25
  Speaker 1: people jumping in. But for the first time, and I
• 17:28
  Speaker 1: think about ten years, we're looking at UH seasonality. And
• 17:32
  Speaker 1: what I mean by that is traditionally this time of
• 17:35
  Speaker 1: the year, especially in Ohio, you see a lot of
• 17:38
  Speaker 1: people coming to the table buying homes and we haven't
• 17:42
  Speaker 1: seen that in the last ten years. It has not
• 17:44
  Speaker 1: been cyclical until this year. This is the first year
• 17:47
  Speaker 1: since two thousand uh seven eight something like that that
• 17:52
  Speaker 1: we've actually seen. What do you what does that mean? Well?
• 17:57
  Speaker 1: I think I think it's two things. That The first
• 18:00
  Speaker 1: thing is is that there the consumer confidence is UH
• 18:04
  Speaker 1: is back. UM. How long that will last? It's it's
• 18:09
  Speaker 1: you know, it's it's up in the air, depending on
• 18:11
  Speaker 1: the policies I think, and the administrative things that come
• 18:15
  Speaker 1: out of Washington, and regulatory relief is one of them. UM.
• 18:19
  Speaker 1: And I think UM people are very optimistic, so they're
• 18:23
  Speaker 1: willing to take that risk. Well, and Mark, I wonder
• 18:27
  Speaker 1: if I want to break in there, because there was
• 18:29
  Speaker 1: some data that was highlighted highlighted by David Schowell. Any
• 18:32
  Speaker 1: manager that growth in loans and leases at commercial banks
• 18:36
  Speaker 1: has pretty much come to a stop. It's kind of
• 18:38
  Speaker 1: flatlined in the past few months. And I thought this
• 18:42
  Speaker 1: was compelling. That flies in the face of the narrative
• 18:44
  Speaker 1: that we've heard about how animal spirits are returning. How
• 18:47
  Speaker 1: do you interpret this data? Well, I can't speak to
• 18:50
  Speaker 1: commercial real estate, but I can tell you that insid
• 18:52
  Speaker 1: commercial loans and leases, right commercial. I can't speak to
• 18:56
  Speaker 1: commercial loans and leases because we just specialize in home ending.
• 19:00
  Speaker 1: That's all we do. Uh, we make more home loans
• 19:03
  Speaker 1: and like I said, and anyone in Ohio, and that's
• 19:05
  Speaker 1: all we do. We don't do credit cards, and we
• 19:06
  Speaker 1: don't do commercial lending. But the consumer, the person on
• 19:10
  Speaker 1: the street who's buying a house, is more confident today
• 19:13
  Speaker 1: than they've been in the last ten years. And just
• 19:17
  Speaker 1: to show that, last last week, our applications were up
• 19:22
  Speaker 1: thirty percent over last year at this time and that's
• 19:26
  Speaker 1: the first time it's yeah, it's the first time we
• 19:29
  Speaker 1: ever had a jump. And then preapprovals, which is people
• 19:32
  Speaker 1: anticipating they're going to get into the housing market, anticipating
• 19:35
  Speaker 1: they're going to buy a house, they're up about from
• 19:39
  Speaker 1: last year. So again, the seasonality is back, which is normal,
• 19:43
  Speaker 1: and the consumer confidence seems to be there, at least
• 19:46
  Speaker 1: in the housing sector. Well, thanks very much, Marcus Stefanski,
• 19:51
  Speaker 1: great great insight there, Chief executive Generate Second Generation Bank,
• 19:56
  Speaker 1: our third Federal Savings and Loan in Ohio. Up Women
• 20:12
  Speaker 1: for Climate Conference. We are here at the Women for
• 20:15
  Speaker 1: Climate Conference at Columbia University in the city of New York,
• 20:18
  Speaker 1: and I'm very glad to be here. Lisa Bramwitz. When
• 20:21
  Speaker 1: when I think of Laureal, I confess I think cosmetics,
• 20:24
  Speaker 1: I think lipstick, I think uh okay, but I don't
• 20:30
  Speaker 1: necessarily think about sustainability and climate change. But here is
• 20:34
  Speaker 1: we're going to introduce someone who's going to disabuse me
• 20:37
  Speaker 1: of my ignorance. Alexandra Pault is the chief sustainability officer
• 20:41
  Speaker 1: of Laureal, and she has graciously come in and jetted
• 20:45
  Speaker 1: here from Paris via Poland via Toronto to finally arrive
• 20:49
  Speaker 1: this morning here with us. Thank you very much for
• 20:51
  Speaker 1: being here. Good morning. Thanks, that's a long that's a
• 20:54
  Speaker 1: long trip to make. And so what message do you bring,
• 21:00
  Speaker 1: uh that you've been doing this you said twenty years.
• 21:04
  Speaker 1: I can't believe that, but that's another story. But you've
• 21:07
  Speaker 1: been doing this company. They're probably good creams anyway, tell
• 21:13
  Speaker 1: us what message you bring about Loreal sustainability and what
• 21:18
  Speaker 1: people can take away that they may not know. Yes,
• 21:20
  Speaker 1: UM at Loreal women gender equality is one of our
• 21:25
  Speaker 1: core commitments, of course, and that for many years more
• 21:29
  Speaker 1: than sixty of our brands are led by women. Almost
• 21:33
  Speaker 1: half of our board the female So we are really
• 21:36
  Speaker 1: committed to gender equality and that for a very long time.
• 21:39
  Speaker 1: And we are also committed to fighting climate change. This
• 21:42
  Speaker 1: is a core orientation of our company and that has
• 21:46
  Speaker 1: resulted in already a sixty seven percent reduction of common
• 21:50
  Speaker 1: emissions UM around the world. We had an goal of
• 21:55
  Speaker 1: target of minors in two thousand twenty and we reached
• 21:58
  Speaker 1: minus sixty seven percent in two south sixteen. Well, what
• 22:00
  Speaker 1: were some of the sources the biggest sources of greenhouse
• 22:03
  Speaker 1: gas emissions at Loyale. Well, uh, that's at the consumer level. Actually,
• 22:08
  Speaker 1: when you look at the life cycle of a product,
• 22:10
  Speaker 1: it's when you use hot water during a shower to
• 22:14
  Speaker 1: wash your hair. That's the biggest source of carbon emission.
• 22:17
  Speaker 1: But in our value chain that we can directly UM control,
• 22:22
  Speaker 1: it's through the sourcing of raw materials, packaging, UM it
• 22:26
  Speaker 1: is suppliers, it's production and distribution, and so we have
• 22:31
  Speaker 1: worked on all our value change. So how much more
• 22:34
  Speaker 1: expensive is it to be sustainably sustainability minded and and
• 22:39
  Speaker 1: sort of to go to fair trade types of suppliers
• 22:43
  Speaker 1: and other types of measures that you've taken. Well, um, actually,
• 22:46
  Speaker 1: we think that it's not more expensive. And we have
• 22:50
  Speaker 1: demonstrated that decoupling carbon emissions from growth is completely possible
• 22:56
  Speaker 1: because we during the time where we have reduced by
• 22:58
  Speaker 1: sixty seven also put our production group by almost exactly.
• 23:05
  Speaker 1: So we showed that you can the couple growth from
• 23:09
  Speaker 1: your carbon emission, production increase from carbon emissions. And of
• 23:13
  Speaker 1: course when you work on your carbon emissions, the first
• 23:15
  Speaker 1: source of what you're doing is working on energy efficiency.
• 23:18
  Speaker 1: When you work on energy efficiency, you are saving money.
• 23:22
  Speaker 1: That's very clear. And so one third of our savings
• 23:26
  Speaker 1: and carbon emissions came from energy savings. So and then
• 23:28
  Speaker 1: there is another point. We think we really are convinced
• 23:32
  Speaker 1: that without these commitments to sustainability, we are not going
• 23:37
  Speaker 1: to be a performing company in company in the twenty
• 23:39
  Speaker 1: one century, and Loreal is around for more than one
• 23:42
  Speaker 1: years and we want to be around for another quite
• 23:44
  Speaker 1: a while of time, and so we have to adapt
• 23:47
  Speaker 1: to this changing world because otherwise we are not going
• 23:50
  Speaker 1: to be successful. The combination of brands that fall under loreal,
• 23:57
  Speaker 1: if we were to align them up, they go everywhere,
• 23:59
  Speaker 1: for professional brands to consumer brands, luxury George ARMANI you
• 24:05
  Speaker 1: name it. Maybe lean everything right now as far as
• 24:11
  Speaker 1: the packaging goes, that is such an integral part of
• 24:14
  Speaker 1: the relationship with the customer has with the product. Has
• 24:19
  Speaker 1: The popularity and the emergence of a climate aware customer
• 24:25
  Speaker 1: made it easier for you to rethink the packaging, to
• 24:30
  Speaker 1: lower the amount of waste, to get rid of things
• 24:32
  Speaker 1: that are not essential to the product. But maybe for
• 24:37
  Speaker 1: a previous time, we're okay, but the needs to change
• 24:40
  Speaker 1: needs to be updated. Well. This is a very complicated
• 24:42
  Speaker 1: question because what you ask is basically, is the consumer
• 24:45
  Speaker 1: willing um too to change with change with us and
• 24:52
  Speaker 1: um the question the answer is is as it's complete,
• 24:55
  Speaker 1: it's complex. Some consumers are it's not the new normal yet.
• 24:59
  Speaker 1: It's not the new normal yet. And basically what we
• 25:02
  Speaker 1: see in studies around the world is that consumers very
• 25:06
  Speaker 1: often say we are very interesting in sustainability. We want
• 25:08
  Speaker 1: a brand that is committed, but when they go to
• 25:12
  Speaker 1: the shops, they don't think about sustainability in the moment
• 25:15
  Speaker 1: that they have the pleasure of buying a beauty product.
• 25:18
  Speaker 1: So what we are trying to do is to make
• 25:20
  Speaker 1: more and more sustainable products that consumers still want to buy.
• 25:24
  Speaker 1: So we are not making compromise on performance and desirability,
• 25:30
  Speaker 1: and very often it's possible. So bigger is not always
• 25:33
  Speaker 1: more beautiful. That's already that, and now we have introduced,
• 25:37
  Speaker 1: for example, we're starting to introduce a lot of recycled
• 25:39
  Speaker 1: material in our packaging, which doesn't change the outside uh vision.
• 25:45
  Speaker 1: And then our consumers more and more coming up that
• 25:48
  Speaker 1: are completely into this new model of a sustainable lifestyle,
• 25:53
  Speaker 1: that the new good life is going to be a
• 25:55
  Speaker 1: sustainable life, and I think they will become more and
• 25:58
  Speaker 1: more and more, and Loreal is going to be prepared
• 26:01
  Speaker 1: to respond to that market. You know. I find it interesting,
• 26:03
  Speaker 1: especially given the new US administration stands and some of
• 26:06
  Speaker 1: the environmental rules that we've had in place and some
• 26:10
  Speaker 1: of the agreements, and I do think it's interesting that
• 26:14
  Speaker 1: in corporate America it seems like, I mean, you've been
• 26:16
  Speaker 1: working on this for for more than two decades. You know,
• 26:19
  Speaker 1: what's the next front for corporate sustainability from your point
• 26:23
  Speaker 1: of view, especially given what's going on and this sort
• 26:26
  Speaker 1: of backlash on a political level that we're starting to see. Well,
• 26:31
  Speaker 1: I see also a lot of encouragement around the world,
• 26:33
  Speaker 1: you know, because I think what is clear is UM,
• 26:38
  Speaker 1: we cannot go back on that path UM. It seems
• 26:41
  Speaker 1: quite too dangerous for the majority of people around the world.
• 26:45
  Speaker 1: And I think for a corporate and for everybody, what
• 26:48
  Speaker 1: is now at stake is scale, impact and scale. So
• 26:53
  Speaker 1: UM we have to make this the new normal altogether.
• 26:56
  Speaker 1: And so that means consumers, citizens, corporations, local governments and
• 27:02
  Speaker 1: also natural governments as possible. But this UM is really
• 27:07
  Speaker 1: something that you can slow down, but you will not
• 27:09
  Speaker 1: be able to stop it. Also because people think nowadays
• 27:12
  Speaker 1: when you look into UM consumer studies that are working
• 27:16
  Speaker 1: with people who show a little bit way that the
• 27:20
  Speaker 1: good life, what people understand by the good life, is
• 27:23
  Speaker 1: a more sustainable lifestyle. So people do not feel they
• 27:27
  Speaker 1: are not going to feel attracted by the frenetic um
• 27:32
  Speaker 1: use of natural resources without respect. They feel guilty about it,
• 27:37
  Speaker 1: they don't feel comfortable, and this is going to come
• 27:39
  Speaker 1: more and more and more so the sense of history.
• 27:42
  Speaker 1: Will will won't be able to stop it will just
• 27:44
  Speaker 1: there's just some people who might slow it down. It's
• 27:47
  Speaker 1: a fascinating topic. Thank you very much for being with Yeah,
• 27:51
  Speaker 1: we really appreciate Alexandra Palt she sustainability officer at Loreal
• 27:55
  Speaker 1: based in Paris, but tracked all the way here to
• 27:57
  Speaker 1: New York City. Thank you so much. We really appreciate
• 28:00
  Speaker 1: your time. Thanks for listening to the Bloomberg pien L podcast.
• 28:09
  Speaker 1: You can subscribe and listen to interviews at iTunes, SoundCloud,
• 28:13
  Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox. I'm
• 28:17
  Speaker 1: out there on Twitter at pim Fox. I'm out there
• 28:20
  Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.
• 28:23
  Speaker 1: You can always catch us worldwide on Bloomberg Radio.