Latest / Bloomberg Intelligence / Jay Powell, Polestar, Markets, and Veterans

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Jay Powell, Polestar, Markets, and Veterans · Bloomberg Intelligence

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  Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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  Speaker 3: All right, let's get over to Washington, DC right now.
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  Speaker 1: A lot going on there as the government, as the
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  Speaker 1: as Congress you know, runs closer and closer to a shutdown.
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  Speaker 3: We have a serious upset.
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  Speaker 1: I would say for Democrats in West Virginia. Nathan Dean
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  Speaker 1: joins us. He covers all things politics out of the
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  Speaker 1: Washington d C Bureau. So mister Manchin is not running
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  Speaker 1: for reelection. What does this mean for the Senate, Nathan.
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  Speaker 4: Well, it means pretty much the Democrats have a really steep,
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  Speaker 4: uphill battle to keep the Senate in the twenty twenty
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  Speaker 4: four elections. Look, it was going to be a challenge
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  Speaker 4: to begin with, but with Senator Mansion announcing his retirement,
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  Speaker 4: that essentially flips the state to the Republicans. And so
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  Speaker 4: you know, this election is very bad for those members
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  Speaker 4: in the Senate. There aren't many Republicans out there running
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  Speaker 4: for reelection that the Democrats potentially have a chance, and
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  Speaker 4: that actually could play into what the Democrats do for
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  Speaker 4: the rest of the year before the election. We may
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  Speaker 4: see them focus more on confirming judges and confirming appointments
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  Speaker 4: and trying to get a lot of the cleanup work
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  Speaker 4: that they can do when you control the Senate. Before
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  Speaker 4: you know, they anticipate to lose it in the twenty
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  Speaker 4: twenty four election.
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  Speaker 5: I was actually I wanted to ask you about that, Nathan,
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  Speaker 5: because I think you know a lot of us. Know,
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  Speaker 5: Joe mansioned to be I guess a moderate Democrat is
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  Speaker 5: how he would describe himself, and on a lot of issues,
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  Speaker 5: probably leans a little bit more right than left. And
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  Speaker 5: what a thought, maybe, you know, if the Democrats could
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  Speaker 5: hold on to that seat, this would maybe be viewed
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  Speaker 5: more opportunistically, perhaps if you could get somebody who's like
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  Speaker 5: a little bit more in line with the agenda that
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  Speaker 5: you're trying to push.
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  Speaker 4: Yeah, but I mean you also have to answer the
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  Speaker 4: question of what would he do if he were to
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  Speaker 4: actually win reelection. I mean, then you know the makeup
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  Speaker 4: of the Senate could be if the Republicans were to
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  Speaker 4: take the Senate without Senator or with Senator Mansion there,
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  Speaker 4: you know, he would lose a lot of that power
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  Speaker 4: as being that one kingmaker individual that can sort of
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  Speaker 4: go back and forth between the parties and try and appeal.
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  Speaker 4: So I think this is sort of also maybe and
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  Speaker 4: this is just my own view, that maybe this is
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  Speaker 4: Senator Mansion trying to prepare for the future. You know,
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  Speaker 4: he made that statement yesterday online how he wants to
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  Speaker 4: travel the country and see if there's a way to
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  Speaker 4: mobilize a centrist third party run. I don't think that's
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  Speaker 4: going to happen. Again, that's just my own personal view.
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  Speaker 4: So I just think that he saw the future and
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  Speaker 4: was like, you know what, maybe the future is better
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  Speaker 4: for me working outside of Congress than being inside, because
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  Speaker 4: if the Republicans do take the Senate, you know, he
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  Speaker 4: may actually not may not have all that much stuff
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  Speaker 4: to do.
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  Speaker 1: All right, let's talk about the Congress here. Mike Johnson
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  Speaker 1: has let's see, seven days left before a government shutdown.
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  Speaker 3: Does he have any plan to stop that?
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  Speaker 4: So, you know what we've just heard is, you know,
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  Speaker 4: there's really two options on the table. One is a
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  Speaker 4: clean continuing resolution. This other idea, and this is the
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  Speaker 4: one that I think he's going to go with initially,
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  Speaker 4: is this idea of a laddered continuing resolution, so that
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  Speaker 4: he would extend funding for certain agencies to say January fifteenth,
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  Speaker 4: and then funding for other agencies to February fifteenth. So
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  Speaker 4: then you would have a rolling set of potential government
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  Speaker 4: shutdowns depending on which agency you're impacted by. You know,
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  Speaker 4: we are actually telling our clients that we still think
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  Speaker 4: it's around a forty percent ants of a shutdown next week.
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  Speaker 4: I know that doesn't sound like in line with the
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  Speaker 4: news headlines that are coming out there. But you know,
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  Speaker 4: there are just too many political cakes that are being
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  Speaker 4: baked around, you know, Ukraine, Israel, House GOP ideas, border security,
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  Speaker 4: and none of these ideas are actually close to fruition,
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  Speaker 4: and they need more time for negotiation. And so ultimately
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  Speaker 4: I think what will happen is is that next week
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  Speaker 4: Speaker Johnson will pursue this letter at CR. It won't
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  Speaker 4: go anywhere with the Senate, and then they'll entertain this
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  Speaker 4: idea of maybe kicking the can down the road another
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  Speaker 4: four weeks or eight weeks to give those ideas more
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  Speaker 4: time to fight or to go to be closer to finalization,
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  Speaker 4: and then kick the can on the bigger fight because
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  Speaker 4: there's really no strategy yet of why you would shut
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  Speaker 4: the government down. Most government shutdowns, a party goes in
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  Speaker 4: there and says, we will want we want to close
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  Speaker 4: the government and get this in return, and that just
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  Speaker 4: doesn't exist. So I think the Republicans need a little
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  Speaker 4: bit more time to figure out what that is, and
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  Speaker 4: so I think ultimately they'll just kick the can down
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  Speaker 4: the road.
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  Speaker 5: Kick the can down the road, isn't that the famous
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  Speaker 5: phrase of this whole exercise that we've been going through.
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  Speaker 5: For man, when was the first one now or the
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  Speaker 5: potential one?
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  Speaker 1: Was it end of I mean in this in this Congress.
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  Speaker 5: In this or the beginning of October? Right, that's when
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  Speaker 5: that was potentially getting going y.
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  Speaker 3: Yes, and we the debt ceiling.
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  Speaker 5: Debate, right, Okay, so we've kicked the can to now. Okay,
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  Speaker 5: all right, just had to catch up on the timeline
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  Speaker 5: there a little bit, Nathan. It's been a lot to
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  Speaker 5: keep track of. When Mike Johnson emerged as the Speaker
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  Speaker 5: of the House, were any of these proposals on the
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  Speaker 5: table at the time. Did people potentially like catapult him
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  Speaker 5: into this position because they had confidence that he could
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  Speaker 5: avert a shutdown?
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  Speaker 4: No, I think it's just more Look the way it
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  Speaker 4: works in Washington is in this my view is is
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  Speaker 4: that it's almost like water taking the path of least resistance,
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  Speaker 4: you know, until they get back into political walls. Politicians
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  Speaker 4: on both sides of the aisle will try and figure
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  Speaker 4: out flexible ways of moving around. And I think that's
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  Speaker 4: what Speaker Johnson is trying to do here, is just
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  Speaker 4: trying to figure out a way to keep the momentum
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  Speaker 4: going without being backed into a political wall. And so
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  Speaker 4: you know, obviously he's got members of his caucus that
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  Speaker 4: want him to, you know, try and get all these
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  Speaker 4: policy goals. It will never happen if you have the
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  Speaker 4: Senate or you know, the Democratic control, and obviously President
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  Speaker 4: Biden would have to sign off on it. So the
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  Speaker 4: odds of all that happening are almost nil. So how
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  Speaker 4: do you get out of that, Well, you kick the
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  Speaker 4: can down the road and you say you, rather than
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  Speaker 4: making the tough decision today, we're going to make the
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  Speaker 4: tough decision the next time. Now, I think Spiker Johnson
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  Speaker 4: has a mulligan here because this is the first time
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  Speaker 4: he's done this and it was such a quick time
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  Speaker 4: between the election of his speakership to today. I think
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  Speaker 4: after he pursues this latter a cr he can go
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  Speaker 4: to his caucus and say, look, we tried. There's still
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  Speaker 4: a lot of ideas out there that we you know,
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  Speaker 4: we have some issues on border security that we're negotiating
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  Speaker 4: with the White House on. Let's just move this fight
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  Speaker 4: in either next year or later in December, and then
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  Speaker 4: we'll have our fight then. You know. The other thing
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  Speaker 4: to just point out is that you know, the election
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  Speaker 4: that happened in Virginia and in Kentucky and so forth.
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  Speaker 4: This wasn't exactly a good night for you know, in Ohio.
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  Speaker 4: You know, wasn't a good night for the Republicans. Why
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  Speaker 4: would you, if you're the party of the scene is
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  Speaker 4: shutting the government down, want to have two bad whammies
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  Speaker 4: over a series of two weeks. I think it's more
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  Speaker 4: sense to just kick the can again down the road.
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  Speaker 3: Yeah exactly.
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  Speaker 1: I mean, maybe Johnson gets the mulligan, but the Republicans
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  Speaker 1: don't because they already kicked the can once and then
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  Speaker 1: fired McCarthy for it. He is the one who took
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  Speaker 1: us through the debt sealing deal in which was way
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  Speaker 1: back in May. So they've been you know, kind of
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  Speaker 1: stuttering and starting all year long without getting a lot done.
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  Speaker 1: By the way, speaking of getting little done, it seems
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  Speaker 1: in a recent poll that American voters are more concerned
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  Speaker 1: about border security than they are about you know, Israel,
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  Speaker 1: Hamas and Ukraine Russia. What's the Biden administration going to
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  Speaker 1: do about it? I mean, they've arguably had years to
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  Speaker 1: deal with it and haven't.
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  Speaker 4: Yeah, you know, so obviously the Ukraine Israel issue is
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  Speaker 4: something that's a little bit more by partisan at least
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  Speaker 4: in the Senate, and so I think they're going to
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  Speaker 4: be trying to work that out. You know, there are
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  Speaker 4: negotiations going on in the Senate Overboard of Security. President
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  Speaker 4: by Neven just said a couple of days ago that
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  Speaker 4: they're open to it. You know, the reason why I
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  Speaker 4: think he's saying they're open to it is this is
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  Speaker 4: one of those issues, like you pointed out that you know,
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  Speaker 4: voters may not be too thrilled with his position going
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  Speaker 4: into an election year, so why wouldn't they do something?
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  Speaker 4: So you know, but ultimately, what we're telling our clients
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  Speaker 4: is if you look at what has to happen between
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  Speaker 4: now and the twenty twenty four elections, once we get
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  Speaker 4: through this funding fight, there's really not a left a
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  Speaker 4: lot left on the table. The debt ceiling isn't all
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  Speaker 4: that much, you know, isn't there until after the election.
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  Speaker 4: So there's nothing really scary for markets outside of the
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  Speaker 4: geopolitical issues. So you know, markets could have some clarity
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  Speaker 4: once this funding in Ukraine and Israel issues goes through,
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  Speaker 4: because twenty twenty four, a lot more focus is just
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  Speaker 4: going to be running for reelection.
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  Speaker 3: Nathan, thanks so much for joining us.
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  Speaker 1: Pleasure having you as always Nathan Dean from Bloomberg Intelligence,
• 8:57
  Speaker 1: where he is senior policy analysts for US government.
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  Speaker 6: You're listening to the teenth Kenser Live program Bloomberg Markets
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• 9:17
  Speaker 1: Maybe mulroy knows. He's the co founder of the Lobo Institute.
• 9:20
  Speaker 1: We love to get his insight on what's going on
• 9:24
  Speaker 1: in geopolitics, especially in the Middle East because his senior
• 9:27
  Speaker 1: fellow at the Middle East Institute. But he is a marine.
• 9:33
  Speaker 1: What you don't say former marine, do you, Mick? Isn't
• 9:36
  Speaker 1: it one a marine, always a marine?
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  Speaker 7: That's right. The Commandade actually passed a rule that once
• 9:41
  Speaker 7: a marine is always a marine. So we're just marines,
• 9:43
  Speaker 7: all right.
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  Speaker 1: Well, we thank you for your service and congratulate you
• 9:48
  Speaker 1: and your your brothers and sisters on this the two
• 9:51
  Speaker 1: hundred and forty eighth birthday of the United States Marines. Absolutely,
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  Speaker 1: I want to ask you about, first off, the situation
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  Speaker 1: in the Middle East and how it's developing now, because
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  Speaker 1: you know on October seventh.
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  Speaker 3: I think.
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  Speaker 1: Nearly everyone was shocked and horrified by the attacks of
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  Speaker 1: Hamas on the Israeli people, and it seems that many
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  Speaker 1: people since then, or or or or the voices that
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  Speaker 1: support the Palestinian cause and even support Hamas have grown
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  Speaker 1: louder and louder. What do you think the national feeling
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  Speaker 1: is now about this Israeli Palestinian war?
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  Speaker 7: So I just simply don't understand that people who support
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  Speaker 7: Hamas that would be the equivalent, at least the way
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  Speaker 7: I see it as supporting isis essentially deprave terrorist organization
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  Speaker 7: now being concerned about the Palestinian people. I think is
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  Speaker 7: is not only understandable, I think it should be the case.
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  Speaker 7: So I think there is the balance because war is ugly,
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  Speaker 7: but it has to be fought within certain bounds, and
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  Speaker 7: we've set that internationally. And I do think, you know,
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  Speaker 7: everybody's jumping to the conclusion that the Israelis perhaps went
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  Speaker 7: too far. I think that's to be determined, But certainly
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  Speaker 7: the level of civilian casualties is unacceptable, As Secretary of
• 11:19
  Speaker 7: Blincoln said, I would share that. But now we're seeing
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  Speaker 7: a lot of things done to move civilians to the
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  Speaker 7: south to get out of the area of the most
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  Speaker 7: significant fighting, which is important. I think they should be
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  Speaker 7: set up a safe zone where people can receive food
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  Speaker 7: and water, and it's monitored so that the AMAS fighters
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  Speaker 7: can't hide amongst those folks. But we're going to see
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  Speaker 7: an increasingly violent fight in Gaza City. It's already started,
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  Speaker 7: but it's far from over. And that objective of the
• 11:50
  Speaker 7: Israeli defense forces is to destroy the moss and that
• 11:53
  Speaker 7: can only be done close and personal.
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  Speaker 5: I do want to come back to Secretary blink In in
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  Speaker 5: a moment, but first, Mick would love it if you
• 12:00
  Speaker 5: could tell us a bit more the perspective that you
• 12:02
  Speaker 5: were coming at this from. I see that you were.
• 12:05
  Speaker 5: You were to the Department of Defense. So you were
• 12:08
  Speaker 5: the Deputy Assistant Secretary for Defense in the Middle East
• 12:12
  Speaker 5: at the in the federal government, and now you're a
• 12:14
  Speaker 5: senior fellow at the Middle East Institute. Can you just
• 12:16
  Speaker 5: tell us what that means and like what your role
• 12:18
  Speaker 5: is right now?
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  Speaker 7: So I started for the most part as a practitioner
• 12:24
  Speaker 7: of uh you know, irregular warfare warfare in general, as
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  Speaker 7: a marine, and then as a well it's called a
• 12:30
  Speaker 7: part military officer in the CIA, which is our version
• 12:33
  Speaker 7: of the Special Operations in the Agency. So I spent
• 12:37
  Speaker 7: most of my time in conflict zones, as did most
• 12:39
  Speaker 7: of my colleagues, and I fought many times in urban
• 12:42
  Speaker 7: environments and it is the by far the worst. It's
• 12:45
  Speaker 7: very disoriented, it's very violent, and it's you just never
• 12:48
  Speaker 7: know what's coming at you. So that's that's what I
• 12:51
  Speaker 7: brought into being a policy person for Secretary Madis and
• 12:54
  Speaker 7: then Secretary Esper. Was mostly a practitioner's point of view,
• 12:58
  Speaker 7: but then I got obviously school up pretty quick on policy,
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  Speaker 7: so I view it from both lenses when I look
• 13:04
  Speaker 7: and analyze these type of conflicts.
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  Speaker 5: Thanks for that, Yeah, I think I was definitely want
• 13:11
  Speaker 5: to know a bit more about your background here. Very impressive.
• 13:13
  Speaker 5: So you're also a former coach at USA Boxing in
• 13:16
  Speaker 5: the Marines for a few years, so very impressive pedigree.
• 13:20
  Speaker 5: And wanted to echo Madden thanking you for your service
• 13:22
  Speaker 5: as well.
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  Speaker 1: A few years Marines from nineteen eighty eight twenty fourteen.
• 13:27
  Speaker 5: Yeah, that's taller than a few Yeah, so you certainly
• 13:30
  Speaker 5: have a lot more to bring to the table than
• 13:32
  Speaker 5: we do in this perspective, So I did want to
• 13:35
  Speaker 5: come back yeah to Secretary Blinken's visit then and what
• 13:38
  Speaker 5: you made of his time in the Middle East, and
• 13:42
  Speaker 5: how his reaction was and where basically the US's role
• 13:46
  Speaker 5: is in this conflict right now.
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  Speaker 7: So I think one of the roles that the US
• 13:51
  Speaker 7: is attempting to play is to talk about the day
• 13:54
  Speaker 7: after this is going to happen. I believe Hamas will
• 13:57
  Speaker 7: be destroyed, as they should be. What's going to come next?
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  Speaker 7: A long term occupation of the IDF of Gaza would
• 14:04
  Speaker 7: be unacceptable to many, and I don't think it would
• 14:07
  Speaker 7: be in their interest. So what's going to fill the gap?
• 14:10
  Speaker 7: I think Secretary of Blinket's been talking to all our
• 14:12
  Speaker 7: partners in the region saying, you know, rhetorically, you know,
• 14:16
  Speaker 7: having opinions on this is fine, but what are we
• 14:19
  Speaker 7: actually going to do? So is there going to be
• 14:21
  Speaker 7: an international peacekeeping force? What's going to be the political
• 14:24
  Speaker 7: way ahead for the people in Gaza, the Palestinians? What
• 14:28
  Speaker 7: are we going to do to make sure that this
• 14:30
  Speaker 7: never happens again, both for the sake of Israel, of course,
• 14:33
  Speaker 7: and for the sake of the Palestinian people. And I
• 14:35
  Speaker 7: think everything that I've seen Secretary blink and saying is
• 14:39
  Speaker 7: indicating that that is really where he wants to focus
• 14:41
  Speaker 7: this how to reduce this human tragedy that's happening in
• 14:45
  Speaker 7: Gaza and eliminate Hamas and also look at what's going
• 14:49
  Speaker 7: to come next to make sure this is it doesn't
• 14:51
  Speaker 7: happen again.
• 14:52
  Speaker 1: Now, I make a lot of people would say Israel
• 14:54
  Speaker 1: has occupied Gaza for quite a long time and continue
• 14:58
  Speaker 1: to do to do so through October seventh. They certainly
• 15:02
  Speaker 1: have occupied the West Bank in a large part and
• 15:07
  Speaker 1: haven't honored any of the attempts at a two state solution,
• 15:11
  Speaker 1: not under net in Yahoo, right, So is there any
• 15:13
  Speaker 1: hope that they're going to do that now? Because everyone
• 15:16
  Speaker 1: else in the world backs a two state solution, even
• 15:18
  Speaker 1: the countries like the US that back Israel and send
• 15:21
  Speaker 1: Israel billions of dollars every year, and yet the Israelis
• 15:26
  Speaker 1: refused to allow the Palestinians to have their own state.
• 15:32
  Speaker 7: And the only way I could see this ever working
• 15:34
  Speaker 7: where you don't have this happen again and again is
• 15:36
  Speaker 7: a two state solution. They have essentially to your point,
• 15:41
  Speaker 7: they have direct access into the West Bank and therefore
• 15:44
  Speaker 7: occupy it. They control in and out access in Gaza.
• 15:48
  Speaker 7: They would say they didn't occupy it, which is one
• 15:50
  Speaker 7: of the reasons why they didn't know what was going.
• 15:52
  Speaker 3: On on settlements. They have checkpoints, they absolutely do.
• 15:55
  Speaker 7: Yes, I'm not disagreeing with you, but they would say
• 15:59
  Speaker 7: that they want to have troops on the ground now
• 16:02
  Speaker 7: because they don't want hamas to get reconstituted. I think
• 16:05
  Speaker 7: that would be a bad idea. That's why I think
• 16:08
  Speaker 7: Secretary of blancoln State Department of the White House is
• 16:10
  Speaker 7: rightfully talking about, well, what's the alternative is AI is
• 16:15
  Speaker 7: a caretaker type group, an international peacekeeping force that could
• 16:19
  Speaker 7: stay there until the Palestinian people select a government that
• 16:23
  Speaker 7: sets up its security, it sets up its basic life support,
• 16:27
  Speaker 7: and then of course there should be large investments from
• 16:31
  Speaker 7: a lot of the wealthy countries in the region and
• 16:33
  Speaker 7: out of the region that help rebuild Goza and turn
• 16:36
  Speaker 7: it into a place that has a future, including an
• 16:39
  Speaker 7: economic one. And I think that's what the US is
• 16:42
  Speaker 7: pushing now, and I think they should be because this
• 16:44
  Speaker 7: situation I don't see changing unless there is a two
• 16:47
  Speaker 7: state solution in which the international community is heavily involved
• 16:52
  Speaker 7: in setting up.
• 16:53
  Speaker 1: Are we losing sight of what's going on in Ukraine
• 16:56
  Speaker 1: through all this, because if the Russians win, they're push
• 17:00
  Speaker 1: up into NATO borders.
• 17:02
  Speaker 7: They absolutely are. And the fights still raging on in Ukraine,
• 17:05
  Speaker 7: even though it's not the first thing on the news,
• 17:08
  Speaker 7: it's still happening, and they are making incremental gains. And
• 17:11
  Speaker 7: it's really clear now that a lot of the weapons
• 17:13
  Speaker 7: systems that we provided them recently, especially the attackers the
• 17:17
  Speaker 7: long range artillery system, is having a major effect on
• 17:21
  Speaker 7: the Russian's ability to resupply both its front line troops
• 17:25
  Speaker 7: and they can reach anywhere in Ukraine now with those systems,
• 17:27
  Speaker 7: so there's no place off limits, including the Crimean peninsula,
• 17:31
  Speaker 7: so that is super important. It's also really important that
• 17:34
  Speaker 7: we get more funding to them to purchase and buy
• 17:38
  Speaker 7: ammunition because as this gets into the winter, it's going
• 17:41
  Speaker 7: to be somewhat of a war of attrition, particularly on
• 17:44
  Speaker 7: the logistical side, and the US needs to help them
• 17:47
  Speaker 7: keep up with a much larger, much broader enemy in Russia.
• 17:54
  Speaker 3: All right, Nick, thanks so much for joining us.
• 17:56
  Speaker 1: I always love talking to you and I really appreciate you,
• 18:00
  Speaker 1: know your service. I think, especially at times like this,
• 18:02
  Speaker 1: we should all be thankful that marines like yourself and
• 18:06
  Speaker 1: soldiers that defend the freedom of America are doing what
• 18:09
  Speaker 1: they do so that we can sleep safely. Mick Malroy
• 18:11
  Speaker 1: there is co founder of the Lobo Institute and a
• 18:14
  Speaker 1: senior Fellow at the Middle East Institute.
• 18:17
  Speaker 6: You're listening to the tape Catcher live program Bloomberg Markets
• 18:20
  Speaker 6: weekdays at ten am Eastern on Bloomberg Radio, the tune
• 18:24
  Speaker 6: in app, Bloomberg dot Com, and the Bloomberg Business App.
• 18:27
  Speaker 6: You can also listen live on Amazon Alexa from our
• 18:30
  Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 18:36
  Speaker 1: Matt Miller here with Molly Smith and the Bloomberg Interactive
• 18:38
  Speaker 1: Brokers Studio.
• 18:39
  Speaker 3: I want to bring in Margie Patel.
• 18:41
  Speaker 1: She is a senior portfolio manager at all Spring Global
• 18:44
  Speaker 1: Investments and we love to talk to her because she
• 18:48
  Speaker 1: has a great view of the stock market and also of.
• 18:51
  Speaker 3: The bond market.
• 18:52
  Speaker 1: Right. She was twice nominated Morning Stars Fixed Income Manager
• 18:55
  Speaker 1: of the Year.
• 18:56
  Speaker 5: Yeah, that's right, and Margy is nice to talk to
• 18:58
  Speaker 5: you again to talk when I covered the credit markets,
• 19:02
  Speaker 5: I think you were back at Wells Fargo at the time,
• 19:04
  Speaker 5: so good to see you.
• 19:07
  Speaker 1: Well, let's ask let's get your take on what happened yesterday, Margie,
• 19:11
  Speaker 1: and what we've seen in yields and how it's affecting stocks.
• 19:15
  Speaker 1: I mean after the auction, I mean it didn't go wrong,
• 19:19
  Speaker 1: but it didn't go great. Right yesterday of the thirty years,
• 19:24
  Speaker 1: we saw the yields spike up and then the stock
• 19:28
  Speaker 1: market sell off. I think Powell kind of confirmed what
• 19:32
  Speaker 1: the market was thinking that maybe they're not quite done yet.
• 19:35
  Speaker 3: How do you see it?
• 19:37
  Speaker 8: Well, I think the Fed is saying a lot of
• 19:40
  Speaker 8: different things because in their whole tightening program of the
• 19:44
  Speaker 8: last year and a half, nothing is real had played
• 19:46
  Speaker 8: out the way they thought according to their playbook. As
• 19:49
  Speaker 8: far as raising rates, we haven't seen economy slow down.
• 19:52
  Speaker 8: We actually had a very nice score just reported probably
• 19:56
  Speaker 8: thinking was we would have a recession, lower stock prices.
• 20:00
  Speaker 8: It really hasn't worked out. So I think the Fed
• 20:02
  Speaker 8: is a little bit lummox because what they thought would
• 20:06
  Speaker 8: happen just hasn't happened. And I think it shows you
• 20:08
  Speaker 8: that the economy really isn't that sensitive to what the
• 20:12
  Speaker 8: fedist with interest rates.
• 20:13
  Speaker 5: Well, I think that was also a big point of
• 20:15
  Speaker 5: what Powell was saying yesterday. That he had mentioned. You know,
• 20:17
  Speaker 5: there's so many people right now in the US that
• 20:20
  Speaker 5: are just so more or less interest rate agnostic, especially
• 20:24
  Speaker 5: if you're a homeowner who's already locked in a mortgage
• 20:26
  Speaker 5: rate under four percent or so. So that was definitely
• 20:29
  Speaker 5: part of what he mentioned. And I think otherwise, I mean,
• 20:32
  Speaker 5: my take on what he said yesterday, I'd love to
• 20:34
  Speaker 5: hear your perspective on this. It seemed like he just
• 20:37
  Speaker 5: kind of like flip the script a little bit on
• 20:39
  Speaker 5: what he had said at last week's meeting. But last
• 20:41
  Speaker 5: week's meeting was more we're probably done, but we could
• 20:45
  Speaker 5: hike again, and yesterday was more, we could hike again,
• 20:49
  Speaker 5: but we're probably done.
• 20:52
  Speaker 8: Well, I think he's just trying to cover a broad
• 20:56
  Speaker 8: spoke of what they might do and really the market
• 20:59
  Speaker 8: is and giving them the guidance that they wanted. So
• 21:02
  Speaker 8: I think that's why they sort of sound as if
• 21:04
  Speaker 8: they're all over the map about well, maybe we'll be more,
• 21:07
  Speaker 8: maybe we're done, maybe we're not. And that really reflects
• 21:10
  Speaker 8: the fact that their playbook hasn't worked out. The economy
• 21:13
  Speaker 8: is too strong, and inflation has come down maybe more.
• 21:17
  Speaker 9: Than they expected.
• 21:19
  Speaker 8: The economies very stronger than they expected, and so we
• 21:23
  Speaker 8: haven't really seen much happen, and we haven't had interest
• 21:26
  Speaker 8: rates to really break out yesterday where it's we're up
• 21:28
  Speaker 8: today they're down, and you can see the market is
• 21:31
  Speaker 8: just not taking you might say all that talk seriously.
• 21:35
  Speaker 8: So we still have a very good stock market and
• 21:37
  Speaker 8: I think that's what we're going to see for the
• 21:38
  Speaker 8: rest of the year.
• 21:40
  Speaker 1: So what about the FED and it's fight against inflation?
• 21:44
  Speaker 1: You know, I've heard an interesting thesis in the last
• 21:48
  Speaker 1: couple of days that we were dealing with inflation that
• 21:52
  Speaker 1: had a two percent ceiling and now we're looking at
• 21:55
  Speaker 1: an inflation environment with a two percent floor. Of course,
• 21:59
  Speaker 1: we're not near that floor yet. If you take if
• 22:03
  Speaker 1: you're looking any of the data that the FED looks at,
• 22:06
  Speaker 1: how do you view the fight against inflation?
• 22:10
  Speaker 8: Well, honestly, looking at the inflation data you're seeing which
• 22:13
  Speaker 8: basically we had some short term things from COVID supply glitches,
• 22:18
  Speaker 8: but really I can't see much connection between what the
• 22:21
  Speaker 8: FED has done and what's happened to inflation. Inflation went
• 22:24
  Speaker 8: up as they began to tighten, it's come down. And
• 22:27
  Speaker 8: if you look at the factors that have caused inflation
• 22:29
  Speaker 8: to come down. I can't see very much of a
• 22:31
  Speaker 8: connection with the fed's activities.
• 22:34
  Speaker 9: So I think that the economy is going on.
• 22:37
  Speaker 8: The FED is doing their thing of raising rates, and
• 22:39
  Speaker 8: it's almost as if it's a random effect on the economy.
• 22:43
  Speaker 9: May be slight negative because there's a little.
• 22:45
  Speaker 1: Uncertain Well, but that sounds like that sounds like bad
• 22:48
  Speaker 1: news ready to happen, because the FED has raised rades
• 22:51
  Speaker 1: five hundred and fifty basis points. And I guess you know,
• 22:56
  Speaker 1: those long and variable lags are starting to hit home
• 23:00
  Speaker 1: right as inflation is coming down. I guess, fortunately, But
• 23:03
  Speaker 1: aren't we going to see a slow down in the economy.
• 23:08
  Speaker 9: Well, we really haven't.
• 23:09
  Speaker 8: Seen it yet, and we've had an economy it looks okay,
• 23:13
  Speaker 8: and it looks like the fourth quarter is going to
• 23:14
  Speaker 8: be modestly positive again. And so I think if you
• 23:18
  Speaker 8: had asked the FED, where do you think the economy
• 23:20
  Speaker 8: would be?
• 23:21
  Speaker 9: I think they were looking for unemployment to.
• 23:23
  Speaker 8: Have jumped up by several million people, not to be
• 23:27
  Speaker 8: where it is, you know, the under four percent, So
• 23:30
  Speaker 8: that was their whole key in bringing down inflation. So
• 23:33
  Speaker 8: we've had very low unemployment rates, we've had inflation come down.
• 23:38
  Speaker 8: So I just conclude other factors in the world have
• 23:40
  Speaker 8: pulled inflation down. The basic strength of the US economy
• 23:44
  Speaker 8: isn't that sense of interest rates, because business and consumers
• 23:47
  Speaker 8: have taken out long term fixed rate loans and so
• 23:51
  Speaker 8: they aren't sensitive, and so the FED is really just
• 23:54
  Speaker 8: almost a bystander to what's happening in.
• 23:57
  Speaker 9: The real economy.
• 23:59
  Speaker 5: Couldn't you say that, I.
• 24:00
  Speaker 8: In the inflation, I don't see what they've done to fight,
• 24:02
  Speaker 8: and I think they just sort of hope if they're
• 24:05
  Speaker 8: very short rates, inflation would come down.
• 24:07
  Speaker 9: It's come down up because the.
• 24:08
  Speaker 8: Short rates, but all these other factors that have come
• 24:10
  Speaker 8: into the marketplace.
• 24:12
  Speaker 5: Well, couldn't you say, then, Marget, it sounds like some
• 24:14
  Speaker 5: of the things that you've just mentioned right here between,
• 24:16
  Speaker 5: like the consumers still staying pretty strong, Like inflation is
• 24:19
  Speaker 5: coming down, granted not as fast as we might hope,
• 24:22
  Speaker 5: economy is still doing okay. Couldn't you say that that's
• 24:25
  Speaker 5: maybe the making of a soft landing. Is that how
• 24:28
  Speaker 5: you're positioning this right now?
• 24:30
  Speaker 8: Well, I think it looks like the economy. I don't
• 24:33
  Speaker 8: see anything way out of Kilder that would precipitate a recession.
• 24:38
  Speaker 8: People have been looking for recession for a long time.
• 24:40
  Speaker 8: It hasn't come. I do think though, that we've had
• 24:43
  Speaker 8: a huge lift of the economy that's come from federal spending.
• 24:47
  Speaker 8: We had the COVID money, which is still out there
• 24:50
  Speaker 8: being dispersed.
• 24:51
  Speaker 9: Being dispensed right now.
• 24:53
  Speaker 8: We've had a big increase in state and local government spending,
• 24:56
  Speaker 8: and so I think that's added a little floor to
• 24:59
  Speaker 8: what mayo seniors come down. So as we get into
• 25:03
  Speaker 8: twenty four, we may see the economy dislerat a little
• 25:07
  Speaker 8: bit because some of these money flows, particularly leftover COVID
• 25:10
  Speaker 8: Moody that spent really a big boost for consumers, may
• 25:14
  Speaker 8: stop and that may cause e Connor you slow down
• 25:17
  Speaker 8: a little. But I just don't see your recession in
• 25:19
  Speaker 8: the cars eaven for twenty four.
• 25:22
  Speaker 3: Margie.
• 25:22
  Speaker 1: Great to get your take. Thanks so much for joining us.
• 25:24
  Speaker 1: Margie Bettel there. She is a senior portfolio manager at
• 25:27
  Speaker 1: all Spring Global Investments, and she does not see a
• 25:31
  Speaker 1: recession on the horizon, even if the economy will slow
• 25:35
  Speaker 1: down in twenty twenty four.
• 25:38
  Speaker 6: You're listening to the tape. Can's our live program Bloomberg
• 25:41
  Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 25:44
  Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 25:48
  Speaker 6: You can also listen live on Amazon Alexa from our
• 25:51
  Speaker 6: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
• 25:57
  Speaker 10: Were welcome now on TV on radio listens, TV audience
• 26:01
  Speaker 10: and radio listeners. We need to talk about what's happening
• 26:04
  Speaker 10: in the EV space. EV maker Polestar, fresh off its
• 26:08
  Speaker 10: investor day, a day that showcased its business strategy and
• 26:12
  Speaker 10: future EV prototypes. We now welcome Thomas Ingola, Postar CEO
• 26:17
  Speaker 10: and Bloomberg's resident. It says gearhead, but electric cars don't
• 26:22
  Speaker 10: have gears, so we'll maybe part that name for now.
• 26:25
  Speaker 10: But Matt Miller joins us. Thomas, great to see you,
• 26:28
  Speaker 10: Thanks for joining us. What's the message that you are
• 26:31
  Speaker 10: sending to investors? What do you want to convey about
• 26:34
  Speaker 10: where this business goes next?
• 26:37
  Speaker 11: Yeah, good morning guy.
• 26:38
  Speaker 6: Hi Matt.
• 26:40
  Speaker 11: Well, our message here from our poster day are we
• 26:44
  Speaker 11: call it he in La. It's I think a very positive,
• 26:48
  Speaker 11: good one.
• 26:49
  Speaker 6: We have.
• 26:51
  Speaker 11: Two major parts here, one of course, the great news
• 26:55
  Speaker 11: about the product rollout, and the other part about what
• 26:58
  Speaker 11: work we have done over the last summer about the
• 27:02
  Speaker 11: business plan, obviously making that a strong resilient business plan,
• 27:08
  Speaker 11: which means clear view on the break even cashlow break
• 27:14
  Speaker 11: even twenty twenty five, So what I would call, in
• 27:18
  Speaker 11: a very short distance very much insight twenty twenty five
• 27:24
  Speaker 11: cash flow break even and the funding need that is
• 27:28
  Speaker 11: needed from today to this break even, a very clear
• 27:33
  Speaker 11: defined amount of one point three billion, which you know
• 27:36
  Speaker 11: we want to cover with a mix of debt inequity,
• 27:39
  Speaker 11: so what I would call a very manageable funding need.
• 27:43
  Speaker 11: These two are the key cornerstones of this business plan,
• 27:48
  Speaker 11: which I think everybody would acknowledge is not based on
• 27:52
  Speaker 11: dreamy fancy production numbership but really a very realistic and
• 28:00
  Speaker 11: achievabile volume.
• 28:01
  Speaker 1: Thomas, let me jump in and ask you about those
• 28:03
  Speaker 1: production numbers, because you've scaled back your twenty twenty three
• 28:07
  Speaker 1: production forecast a couple of times already. Now you expect
• 28:10
  Speaker 1: to make sixty thousand vehicles in total this year, but
• 28:12
  Speaker 1: you need to get up to I think one hundred
• 28:15
  Speaker 1: and fifty five thousand by twenty twenty five.
• 28:18
  Speaker 3: How are you going to make it?
• 28:19
  Speaker 1: Make that leap from sixty to one to fifty five
• 28:22
  Speaker 1: in the next couple of years.
• 28:26
  Speaker 11: Well, yesterday people were queuing to get it right along
• 28:31
  Speaker 11: in our Post three suv and and the suv coupee
• 28:37
  Speaker 11: the Post A four. Both cars are ready to go
• 28:40
  Speaker 11: out to Post A four actually has production start next week.
• 28:44
  Speaker 11: The Post for three will start production early twenty twenty four.
• 28:47
  Speaker 11: So twenty twenty four we will get these two cars
• 28:51
  Speaker 11: in our hands. Twenty five will be a year where
• 28:53
  Speaker 11: they will be fully for in the in customer delivery,
• 28:58
  Speaker 11: plus the Post of five joining so three grade coasts
• 29:03
  Speaker 11: in exclusive secment. So these two, this product lineup. Of course,
• 29:09
  Speaker 11: there's a big, big reason for our increase of volume
• 29:13
  Speaker 11: in this period.
• 29:16
  Speaker 10: Thomas, you just called your your products exclusive. What we've
• 29:20
  Speaker 10: seen today is Richemont, the owner of Cartier, warning that
• 29:25
  Speaker 10: they are seeing a significant consumer slow down at the
• 29:28
  Speaker 10: upper end. You've got the Agio warning that its premium
• 29:32
  Speaker 10: products are starting to hit price resistance. We're seeing it
• 29:36
  Speaker 10: all across the luxury sector at the moment that the
• 29:39
  Speaker 10: consumer is saying I can't afford that anymore, even the
• 29:43
  Speaker 10: upper end consumer.
• 29:44
  Speaker 3: Are you seeing any.
• 29:45
  Speaker 10: Evidence of that? Our exclusive ev product's going to face
• 29:49
  Speaker 10: the same headwinds that the rest of the luxury sector
• 29:53
  Speaker 10: might be seeing at the moment.
• 29:57
  Speaker 11: I think it's very important to that in perspective. I
• 30:01
  Speaker 11: think there's no doubt that the long term success of
• 30:05
  Speaker 11: electrification is given the only way of C two emission
• 30:11
  Speaker 11: reduction is via EV's transition from combustion engine to evs
• 30:16
  Speaker 11: IS is a clear pass forward short term economic fluctuations.
• 30:25
  Speaker 11: The industry has seen that over decades. I think the
• 30:27
  Speaker 11: real question is how resilient are you as a business
• 30:31
  Speaker 11: to go through those And I think us having presented
• 30:35
  Speaker 11: this business plan is a clear testimony of poster being
• 30:38
  Speaker 11: on the side of the winners to go through those
• 30:41
  Speaker 11: downsides and to simply be resilient enough to get out
• 30:46
  Speaker 11: as a winner in that. So for that reason, I
• 30:49
  Speaker 11: don't think there's any any question about the EV success
• 30:54
  Speaker 11: in the long term.
• 30:56
  Speaker 3: Thomas, You've just.
• 30:58
  Speaker 1: Talked to us about your new business plan that you
• 31:00
  Speaker 1: presented and said you need one point three billion dollars.
• 31:03
  Speaker 1: You're very specific about what you need to be cash
• 31:06
  Speaker 1: flow break even in twenty twenty five. You need that
• 31:10
  Speaker 1: externally that funding. Are you in talks with any external investors?
• 31:15
  Speaker 1: What kind of outside investors do you wanna Do you
• 31:18
  Speaker 1: want to hook up with and has anyone expressed interest.
• 31:24
  Speaker 11: Well, look, we were always very clear about the openness
• 31:29
  Speaker 11: to attract outside investors. Our two main share holders, who
• 31:35
  Speaker 11: have been and will be very supportive in in our business,
• 31:39
  Speaker 11: of course, will stay with us, but they're very willingful
• 31:43
  Speaker 11: to have others participating in the ownership of Posstoff, and
• 31:48
  Speaker 11: that's how we how we plan at.
• 31:50
  Speaker 3: So Volvo and Jilie.
• 31:51
  Speaker 1: Do you think the other investors could they come from China?
• 31:54
  Speaker 1: Are you even talks with Chinese? Other Chinese investors?
• 31:59
  Speaker 11: No real world blide pitching for this, so there's certainly
• 32:02
  Speaker 11: no preference in any regional destination where these people should
• 32:09
  Speaker 11: come from. Now we are here obviously today in the
• 32:15
  Speaker 11: US we have yours production with supposs restarting. I think
• 32:20
  Speaker 11: that is as well a very clear sign that we
• 32:22
  Speaker 11: are an international business open to international investment.
• 32:27
  Speaker 10: Thomas, you flank the fact that you have US production.
• 32:30
  Speaker 10: President Biden has within the last couple of days signaled
• 32:34
  Speaker 10: his support for the UAW to start targeting businesses like Tesla.
• 32:40
  Speaker 10: He thinks that maybe that's the next place that they
• 32:42
  Speaker 10: should be looking. What do you think about your labor
• 32:45
  Speaker 10: Do you think you could be facing strikes. Do you
• 32:47
  Speaker 10: think you could be facing a union push. Do you
• 32:50
  Speaker 10: think this is going to be something that pulls in
• 32:52
  Speaker 10: the whole of the automotive sector in the United States.
• 32:57
  Speaker 11: Well, not really that much a question to us, because
• 33:03
  Speaker 11: we have a very simple way of having basically no
• 33:10
  Speaker 11: manufacturing footprint on our own. We have contact manufacturing with
• 33:14
  Speaker 11: our big partners in that obviously the Volvo factory in
• 33:20
  Speaker 11: Ritual we have production together with Chili and this is where,
• 33:25
  Speaker 11: of course this question you have now should be targeted.
• 33:28
  Speaker 11: We are very well familiar with with factories with unions.
• 33:34
  Speaker 11: We have obviously in Sweden a very strong base as
• 33:38
  Speaker 11: well with manufacturing in Volvo. So I think that's really
• 33:43
  Speaker 11: no question mark from our site onto that.
• 33:45
  Speaker 1: What is the pull star, you know, the unique selling
• 33:48
  Speaker 1: point because you know some brands Porsche is about you know,
• 33:52
  Speaker 1: speed in sports cars, Mercedes is about kind of luxury
• 33:56
  Speaker 1: and status. Volvo is about you know, safety and family.
• 34:00
  Speaker 1: At least for me, what is pole Star about.
• 34:06
  Speaker 11: Post Our main differentiator clearly is our design focus. It's
• 34:10
  Speaker 11: a brand with strongest design design as advanced as its technology.
• 34:18
  Speaker 11: That's our slogan and I think yesterday at our Post
• 34:22
  Speaker 11: day when you see the lineup of the beautiful cast
• 34:24
  Speaker 11: and how innovation is brought to the customer through our
• 34:29
  Speaker 11: design made it really desirable. I mean that is how
• 34:32
  Speaker 11: we think electrification will succeed cars that really makes people
• 34:36
  Speaker 11: are passionate about And what is the greatest driver for
• 34:39
  Speaker 11: passion is clearly the design aspect of it. So if
• 34:44
  Speaker 11: you ask us to narrow it down to that one aspect,
• 34:46
  Speaker 11: it's designed.
• 34:49
  Speaker 10: Tom's great to catch up. Really appreciate you joining us
• 34:51
  Speaker 10: from Los Angeles to think of that of Polstar and
• 34:54
  Speaker 10: of course our thanks to Bloomberg's Matt Miller.
• 34:58
  Speaker 5: All right, well, if you just us here, you are
• 35:01
  Speaker 5: just listening to Matt Miller and Guy Johnson, they were
• 35:04
  Speaker 5: interviewing the CEO of pole Star and bad. I believe
• 35:08
  Speaker 5: that you've driven a Polestar recently show us two.
• 35:13
  Speaker 3: Yeah, So, I mean I drove the Polestar.
• 35:15
  Speaker 1: One was I think, really amazing from a design perspective.
• 35:19
  Speaker 1: It checked every box and it was cool in that
• 35:23
  Speaker 1: it was a hybrid and it had manually adjustable Olan's suspension.
• 35:28
  Speaker 3: That's something you don't see in cars these days. Two.
• 35:32
  Speaker 1: I don't really it's not terribly luxurious, It's not over engineered,
• 35:36
  Speaker 1: and it's fifty thousand dollars in white, so it's a concern.
• 35:39
  Speaker 5: Does it have that car play feature that you were
• 35:42
  Speaker 5: asking our good John Tucker about it.
• 35:44
  Speaker 1: You can use car play, but you have to plug
• 35:46
  Speaker 1: it in, so it doesn't have wireless car play. And
• 35:48
  Speaker 1: it's made in China, so I think they're going to
• 35:50
  Speaker 1: have difficulty selling that vehicle in this country. You know,
• 35:54
  Speaker 1: Chinese cars that come in here are subject to a
• 35:57
  Speaker 1: twenty seven and a half percent tariff, so they can't
• 36:00
  Speaker 1: beat anybody on pricing. But it'll be interesting to see
• 36:04
  Speaker 1: the three that'll be built here in the US and
• 36:07
  Speaker 1: South Carolina. As he's saying, the Pollstar four is going
• 36:10
  Speaker 1: to be built in Korea, and then they're going to
• 36:13
  Speaker 1: have another car, so it'll be interesting to see how
• 36:17
  Speaker 1: they do with the Swedish slash Chinese ownership.
• 36:23
  Speaker 5: Yeah all right, well that's something fun to consider going forward.
• 36:26
  Speaker 5: So thanks you and guy for talking and for bringing
• 36:29
  Speaker 5: us that interview.
• 36:33
  Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
• 36:36
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• 36:40
  Speaker 1: podcast platform you prefer.
• 36:41
  Speaker 3: I'm Matt Miller.
• 36:43
  Speaker 1: I'm on Twitter at Matt Miller nineteen seventy three and
• 36:46
  Speaker 1: I Fall Sweeney.
• 36:47
  Speaker 2: I'm on Twitter at pt Sweeney before the podcast. You
• 36:49
  Speaker 2: can always catch us worldwide at Bloomberg Radio