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Markets, US Economy, And The Supply Chain (Podcast) · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. All right, let's go
• 0:21
  Speaker 1: to a professional here. Let's switch gears. This is it's
• 0:24
  Speaker 1: just ugly afterre Matt Stucky, senior portfolio manager for Northwestern Mutual,
• 0:27
  Speaker 1: joins us. Matt. The concern this morning to talk this morning.
• 0:31
  Speaker 1: The Wall Street chatter this morning is recession. What say you?
• 0:35
  Speaker 1: Is that in your model? Well, it certainly in the
• 0:38
  Speaker 1: distribution and at that section the distribution has been rising
• 0:41
  Speaker 1: over the last few months. Um, growth is rapidly slowing,
• 0:45
  Speaker 1: and the potential for a mild recession I think is
• 0:48
  Speaker 1: pretty elevated here. Um, you know a couple of data
• 0:51
  Speaker 1: points that you know, we would point to that are
• 0:54
  Speaker 1: really starting to kind of shine out to us as
• 0:57
  Speaker 1: you saw it the last quarter with orange reports from
• 1:01
  Speaker 1: you know, the likes of Target and Walmart. We kind
• 1:03
  Speaker 1: of wonder what else is going to be spilling over.
• 1:05
  Speaker 1: And you know, first and foremost we think it's probably
• 1:07
  Speaker 1: housing here just as a reflection of how quickly interest
• 1:10
  Speaker 1: rates are rising and what that does to affordability. Um.
• 1:13
  Speaker 1: But you what you've seen so far this quarter, which
• 1:17
  Speaker 1: I think is really interesting, is just the percentage of
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  Speaker 1: increase of inventory that's out there in the existing home market,
• 1:23
  Speaker 1: and that's being met with with a buyer that's starting
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  Speaker 1: to uh, really refine out what their what their budgets
• 1:30
  Speaker 1: are with the higher interest rate environment, and um, you know,
• 1:33
  Speaker 1: somewhat of a bias right going smar right now? So
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  Speaker 1: housing about a house without even thinking about my budget
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  Speaker 1: and about how terrified every day but hopefully locked in
• 1:41
  Speaker 1: that interest rate exactly. I was like three, I'll pay
• 1:45
  Speaker 1: whatever you want. Um. So we've had these um inventory
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  Speaker 1: build ups at Walmart, at Target, and I hear you
• 1:54
  Speaker 1: now saying that we're seeing that in housing as well.
• 1:57
  Speaker 1: Does that mean you think inflation is going to roll over?
• 2:02
  Speaker 1: I do think that's going to roll over pretty quickly.
• 2:04
  Speaker 1: And you know a couple of things, you know, certainly
• 2:06
  Speaker 1: the durable goods, the story has been well discussed, and
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  Speaker 1: inventories they are potting up quickly, which you know inevitably
• 2:13
  Speaker 1: leads to discounting that eventually find its way into uh
• 2:16
  Speaker 1: inflation obviously. But um, you know, the housing story I
• 2:20
  Speaker 1: think hasn't been really discussed much in terms of what
• 2:23
  Speaker 1: it means in terms of overall inflation. UM. You know,
• 2:26
  Speaker 1: this is it's a stickier part of the inflation story,
• 2:28
  Speaker 1: and it moves with a lag and in terms of
• 2:31
  Speaker 1: the way excuse me, it finds its way into inflation. UM.
• 2:35
  Speaker 1: So you know for the third War, certainly, you know,
• 2:37
  Speaker 1: I think it's got upward pressure for for PC as
• 2:40
  Speaker 1: well cp I. But you know, as you move into
• 2:42
  Speaker 1: the fourth quarter beyond, UM, you know, we don't really
• 2:45
  Speaker 1: expect as much up pressure from the happening part of
• 2:48
  Speaker 1: the equation as it relates to inflation. UM. So you know,
• 2:51
  Speaker 1: between the backup of inventories as well as consumer spending
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  Speaker 1: shifting away from durable goods and you know pressure coming
• 2:58
  Speaker 1: off for um, for housing as we moved throughout this year,
• 3:03
  Speaker 1: you do think that there is the potential for inflation
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  Speaker 1: to to move lower throughout the rest of this year
• 3:08
  Speaker 1: and into and it's it's a it's starting to show
• 3:10
  Speaker 1: up in terms of what the bond markets expecting the
• 3:13
  Speaker 1: Federal Reserve to do you did you didn't notice that, um,
• 3:17
  Speaker 1: first quarter traders are certain to price in Fed Reserve cuts,
• 3:20
  Speaker 1: which is just you know, obviously a pivot by the
• 3:22
  Speaker 1: feder Reserve from a ratching up of interest rates and so, UM,
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  Speaker 1: it's starting to fall on a line where you know,
• 3:27
  Speaker 1: the peak of inflationary pressures in the rear view mirror. Here.
• 3:31
  Speaker 1: All right, man, we got the earnings coming up starting
• 3:33
  Speaker 1: in about a week or so, the big banks will
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  Speaker 1: kick it off in earnest here. What are you looking
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  Speaker 1: for this earning season? You know, UM, it's it's great
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  Speaker 1: that we get to have banks start things up because
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  Speaker 1: they touched so many fastest of the economy, from the
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  Speaker 1: consumer and credit conditions there to what business spending is
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  Speaker 1: looking like. UM, as well as you know M and
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  Speaker 1: A activity. A couple of things that really we watch
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  Speaker 1: out for obviously is is consumer press sure and in
• 4:00
  Speaker 1: the form of delinquencies. You would expect those to normalise
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  Speaker 1: as inflationary pressures have started to strain consumer pujects. UM.
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  Speaker 1: You know, credit credit performance throughout the last couple of
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  Speaker 1: years such as been absolutely fantastic. UM. You would expect
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  Speaker 1: that to normalize would still be pretty healthy here because
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  Speaker 1: consumers and aggregates still have two trillion worth of access
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  Speaker 1: liquidity that they didn't have before the pandemic. UM that
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  Speaker 1: really helps credit performance for for banks UM. You know,
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  Speaker 1: on the on the expense side, UM, we are wondering
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  Speaker 1: whether or not you know, banks you could be able
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  Speaker 1: to start to defend margins UM you know as as
• 4:37
  Speaker 1: UM and transition from UH back to more of an
• 4:41
  Speaker 1: operating leverage scenario that you know we saw pre pandemic.
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  Speaker 1: You know, UH, operating leverages been going in the wrong
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  Speaker 1: direction for the last couple of years and and you know,
• 4:50
  Speaker 1: maybe this quarter with rising UH that interesting income as
• 4:53
  Speaker 1: well as you know, continued healthy credit performance, operating leverage
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  Speaker 1: can continue, can continue to be a good out of
• 5:00
  Speaker 1: the story. In said of Nago that we've seen the
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  Speaker 1: last couple of you. By the way, I'm wondering, do
• 5:03
  Speaker 1: you have products at Northwestern that you sell the people
• 5:06
  Speaker 1: who are just worried about inflation. All they want to
• 5:08
  Speaker 1: do is be inflation like a tips thing or or
• 5:11
  Speaker 1: an insurance product. Well not, I don't really think we
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  Speaker 1: have one on the insurance side, but certainly side portfolios
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  Speaker 1: that we manage UM of you know, public securities. You know,
• 5:22
  Speaker 1: we do from time, from time to time build up
• 5:25
  Speaker 1: UM inflation protection in their portfolios in the form of tips.
• 5:28
  Speaker 1: We took a pretty big step into a TIPS position
• 5:31
  Speaker 1: UH in April. We actually exited out earlier out earlier
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  Speaker 1: in two is we thought we were past the point
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  Speaker 1: of peak inflation. UM. You know, we we tipped at
• 5:42
  Speaker 1: maybe a couple of a few weeks to early because
• 5:44
  Speaker 1: in the Russia, Russia Ukraine flare up did occur, unfortunately.
• 5:48
  Speaker 1: But you know, even since even since um, you know,
• 5:52
  Speaker 1: Russian dated Ukraine, you've seen one year UH inflation break
• 5:56
  Speaker 1: evens moved from UM over six percent back down to
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  Speaker 1: four and app all right, man, we're gonna to have
• 6:02
  Speaker 1: to leave it there because of time. But but we'll
• 6:03
  Speaker 1: get you back and we'll check in on that. Matt Stucky,
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  Speaker 1: senior portfolio manager in Northwestern Neutral. Now let me bring
• 6:12
  Speaker 1: in my friend Gary Schilling, who's had a long and
• 6:16
  Speaker 1: storied career, starting in Fremont, Ohio, then going on to Amherst,
• 6:23
  Speaker 1: which is almost as good as Williams and Wesleyan before
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  Speaker 1: landing at Stanford UM, the Federal Reserve and Mary Lynch etcetera,
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  Speaker 1: and so forth. Gary, great to have you on the program. Um.
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  Speaker 1: I was hoping, first of all, we could talk about
• 6:40
  Speaker 1: a comparison between the kind of inflation that we're having
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  Speaker 1: now and the kind of inflation that we had in
• 6:46
  Speaker 1: the seventies. A buddy of mine, Neil Grossman and and
• 6:49
  Speaker 1: Bill Dudley also have said that the way they're measured
• 6:54
  Speaker 1: is different. But if we measured inflation now like we did,
• 6:57
  Speaker 1: then it could seem just as bad. What do you think, Well,
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  Speaker 1: it is a different type of inflation. It's more it's
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  Speaker 1: more supply. It's more weakness and supply and over abundance
• 7:10
  Speaker 1: of demand. But it's a little of both. And the
• 7:13
  Speaker 1: way they come together as pushed as push up prices.
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  Speaker 1: But it makes it a lot coverer for the Fed
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  Speaker 1: to deal with because the Fed. You know, look what
• 7:22
  Speaker 1: what can the Fed do? They can raise the lower
• 7:23
  Speaker 1: interest rates, they can buy and sell securities and that's it,
• 7:27
  Speaker 1: and that's very good for controlling demand. Um. You know,
• 7:31
  Speaker 1: they pull on the string constrict demand. They push on
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  Speaker 1: the string, not much happens, but they can't do very
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  Speaker 1: much on the supply side. So the FED is dealing
• 7:41
  Speaker 1: with instruments. They're not really appropriate to the current situation,
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  Speaker 1: but they were so far behind the inflation curve that
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  Speaker 1: I think they felt just just to preserve their credibility,
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  Speaker 1: they had to do something. So they are hot and
• 7:56
  Speaker 1: heavy at raising rates. And when they go on these
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  Speaker 1: rate raising campaigns, more times than not, you end up
• 8:02
  Speaker 1: with a recession their virgin soft landings in the entire
• 8:05
  Speaker 1: post or a period that brings up something that that
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  Speaker 1: you and I were talking about this weekend, and I
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  Speaker 1: was really taken to task this morning, um by claiming
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  Speaker 1: that we're in a recession already. The Atlanta Fed GDP
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  Speaker 1: now tracker says the second quarter contraction was two point
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  Speaker 1: one percent, and of course we had a one point
• 8:24
  Speaker 1: six percent contraction in Q one. John Riding said, Miller,
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  Speaker 1: you don't know you're talking about And you basically told
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  Speaker 1: me the same thing, Um, how will how will we
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  Speaker 1: know when we're in a recession? We'll know when they
• 8:38
  Speaker 1: Nastural Bureau of Economic Research, a private research organization that
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  Speaker 1: really first uh first mapped out business cycles and started
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  Speaker 1: them back in the ninet thirties. When they say so,
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  Speaker 1: no administration, Republican or Democrat, would ever want to declare
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  Speaker 1: a recession. Oh no, no, they leave that to somebody
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  Speaker 1: else and v R. And the thing is that they
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  Speaker 1: wait until they get all the visions and all the
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  Speaker 1: late data in and and there are times when they
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  Speaker 1: don't declare that they passed the peak of business and
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  Speaker 1: intercession until the whole thing is over. And so it's
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  Speaker 1: it's it's very difficult. I mean, you can't to say
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  Speaker 1: you're in recession. Yeah, I think we're probably either in
• 9:16
  Speaker 1: or close to it. That's what I started talking about
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  Speaker 1: earlier this year. But again, it's all over, including the
• 9:24
  Speaker 1: shop for the time it becomes official. So, Gary, if
• 9:28
  Speaker 1: we are already in a recession or close to one,
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  Speaker 1: do you have any sense, based upon your experience, how
• 9:34
  Speaker 1: deep it maybe, how long it may be. Do you
• 9:37
  Speaker 1: have any feelings at that point? I think it could
• 9:41
  Speaker 1: be deep now, not like the oh seven oh nine
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  Speaker 1: when you have the collaps and sub prime mortgages, and
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  Speaker 1: and not like the two thousand, which was the COVID
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  Speaker 1: in terms of depth. But you've got a lot of
• 9:56
  Speaker 1: speculation out there, and that's that's what happens, you know,
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  Speaker 1: what really happens. What's the guts of recessions? It's the
• 10:03
  Speaker 1: correction of accesses, accesses and inventories, accesses and speculation heavy
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  Speaker 1: financial positions. And we've had so much very reserved for
• 10:14
  Speaker 1: largest really since two thousand eight reaction to the financial crisis,
• 10:20
  Speaker 1: that there's there's, there's no doubt, an awful lot of speculation.
• 10:24
  Speaker 1: That's we see it coming out of the woodwork every day.
• 10:27
  Speaker 1: You see the sp A c is collapsing, you see
• 10:29
  Speaker 1: crypto collapsing. These things that people fall were perfectly safe,
• 10:33
  Speaker 1: but you find out there's a lot of speculation. And
• 10:36
  Speaker 1: one of the things that we always see is that
• 10:39
  Speaker 1: everybody ends up on the same side of the same
• 10:42
  Speaker 1: trade at the same time. So when one goes bad,
• 10:45
  Speaker 1: traders have to cut back their positions and other things
• 10:48
  Speaker 1: they are totally unrelated, oftentimes in order to survive. So
• 10:52
  Speaker 1: I think it could be, it could be deep blank,
• 10:56
  Speaker 1: it'll it'll run into next year. I wouldn't I wouldn't
• 10:59
  Speaker 1: try to put an exact pinpoint the timing, but it
• 11:01
  Speaker 1: could very well last three or four quarters, which isn't
• 11:04
  Speaker 1: all let unusual. Could the sell off in stocks and
• 11:08
  Speaker 1: indeed bonds gary which have you know, collapsed relative to
• 11:13
  Speaker 1: history in the first half, could it be a paradigm shift,
• 11:17
  Speaker 1: because you famously called the shift back in the day
• 11:22
  Speaker 1: when you know, before people owned tangible assets and eventually
• 11:27
  Speaker 1: started investing in things like stocks and bonds. Could we
• 11:30
  Speaker 1: see that turnaround? Uh? Yeah, we probably probably could. I
• 11:37
  Speaker 1: think you've had a lot of speculation in commodities. Um,
• 11:41
  Speaker 1: I don't. I don't. There isn't anything that's really going
• 11:44
  Speaker 1: to drive global global growth. There's no big forces on
• 11:48
  Speaker 1: the horizon. And I think we're going to be in
• 11:51
  Speaker 1: a low inflationary environment. And the key driver of that
• 11:54
  Speaker 1: is we're in the next I supply world. You've got Asia,
• 11:58
  Speaker 1: huge producers, very weak consumers, and unless we had all
• 12:02
  Speaker 1: out protection as you've got a surplus of of supply
• 12:07
  Speaker 1: or demand that the savings but they talk about, and
• 12:10
  Speaker 1: I think that's going to keep downward pressure on on inflation.
• 12:14
  Speaker 1: So uh yeah, I think you've probably got slow growth
• 12:17
  Speaker 1: of low inflation, if not even deflation as we look ahead. Garry,
• 12:24
  Speaker 1: give us your sense of the consumer here. I was
• 12:26
  Speaker 1: down at the Jersey Shore this weekend. People were out
• 12:28
  Speaker 1: and about spending money, having a good time. Are you
• 12:31
  Speaker 1: confident that the consumer can kind of power through here? Uh? Well,
• 12:35
  Speaker 1: if you look at if you look at what's going on,
• 12:37
  Speaker 1: people are pining back or article to wellstry journal the
• 12:40
  Speaker 1: day you probably saw to that effect that people are
• 12:43
  Speaker 1: taking fewer trips, even the libraries. So consumers, consumers are
• 12:49
  Speaker 1: you know they're there are two thirds of of GDP
• 12:52
  Speaker 1: consumers spending and people have been affected. I mean it's
• 12:55
  Speaker 1: you know, they call it demand destruction if it cast
• 12:58
  Speaker 1: you cast of I bucks of down and to fill
• 13:01
  Speaker 1: the tank unless you've got a big shirt plus of
• 13:05
  Speaker 1: of saving and a lot of people have been saving more,
• 13:08
  Speaker 1: they're really scared. So I just don't think that there's
• 13:12
  Speaker 1: gonna be a lot of spending. You know, it's it's
• 13:14
  Speaker 1: a it's if it's it's cut back in one area
• 13:17
  Speaker 1: that they've got up accommodate others. So do you still
• 13:21
  Speaker 1: have that Volvo? Gary? You had? You had like a
• 13:24
  Speaker 1: a brown two forty station wagon from the eighties. Now,
• 13:29
  Speaker 1: wait a minute, two thousand one board explorer. I drive
• 13:34
  Speaker 1: him till they dropped? Man? Okay, has some one Ford explore?
• 13:39
  Speaker 1: All right? Gary? Great stuff as always. Gary Shilling, President
• 13:43
  Speaker 1: of a. Gary Shilling and Company, UH PhD in economics
• 13:49
  Speaker 1: from Stanford BS in physics from Amherst College back in
• 13:53
  Speaker 1: the day. He's seen a thing or two. He's seen
• 13:56
  Speaker 1: a cycle or two on Wall Street over his career.
• 13:59
  Speaker 1: We appreciate getting a few minutes. The discussion today is
• 14:06
  Speaker 1: all about recession, so we need to check on the read.
• 14:08
  Speaker 1: Pickard U s economy reporter for Bloomberg News, plus Ryan Guest,
• 14:12
  Speaker 1: CEO at Arrow Clean, discusses how her company is trying
• 14:17
  Speaker 1: to disrupt the cleaning and disinfectant market in a sustainable way.
• 14:21
  Speaker 1: That should be interesting, but coming up, let's check in
• 14:23
  Speaker 1: with Greg Jared first get a Bloomberg Business Flash. Greg
• 14:26
  Speaker 1: stocks have tumbled as recession fears gripped the market's outweighing
• 14:30
  Speaker 1: optimism over the possibility that US China talks will have
• 14:35
  Speaker 1: tariff reductions. As a result, the S and P five
• 14:39
  Speaker 1: is now down two percent, down seventy five dollars down
• 14:41
  Speaker 1: two point two percent, down seventy five, and the nasdacs
• 14:45
  Speaker 1: down just over one down a hundred eleven thirty four.
• 14:48
  Speaker 1: The tenure is up twenty one thirty seconds, with the
• 14:51
  Speaker 1: yield at two point eight percent. West Texas intermediate crude
• 14:55
  Speaker 1: is down below a hundred dollars for the first time
• 14:58
  Speaker 1: in a long time. Uh, down eight point three at
• 15:02
  Speaker 1: forty one a barrel. Comics gold is down at one
• 15:05
  Speaker 1: point nine at seventeen sixty six dollar the euro a
• 15:12
  Speaker 1: dollar to forty three in the British founded dollar nineteen twelve.
• 15:15
  Speaker 1: How many people hold up your hands, honky your horns,
• 15:18
  Speaker 1: flash your lights or whatever. How many think that gasoline
• 15:20
  Speaker 1: is going to go back down to where it was
• 15:23
  Speaker 1: when oil was last at? No way? Why not? Because
• 15:29
  Speaker 1: they've already raised prices. They don't cut them now. You
• 15:32
  Speaker 1: know how hard it is to get that long pole
• 15:33
  Speaker 1: out there and move those numbers around. Paul, Okay, that
• 15:36
  Speaker 1: explains it. Actually, I just I saw a great meme
• 15:40
  Speaker 1: over the weekend with people President Biden blames for gas prices, right,
• 15:46
  Speaker 1: and it's putin crossed out oil producers, crossed out, gas
• 15:50
  Speaker 1: station owners, crossed out the guy who puts the numbers
• 15:54
  Speaker 1: on the side that's next. I think it's just a commodity.
• 15:58
  Speaker 1: That's kind of how I play it, all right, Greig Jared,
• 16:00
  Speaker 1: thanks so much for that. We appreciate it. All right.
• 16:02
  Speaker 1: Let's check in with read a pick or u s
• 16:05
  Speaker 1: economy reporter and editor for Bloomberg News, and read It's
• 16:07
  Speaker 1: a great time to touch base with you, because, boy,
• 16:10
  Speaker 1: the narrative in the market today after the July four
• 16:13
  Speaker 1: long weekend is recession. That seems to be spooking the market.
• 16:17
  Speaker 1: What do you what is your reporting showing? Absolutely so
• 16:20
  Speaker 1: thank you for having me. So we had a story
• 16:23
  Speaker 1: out today based on Bloomberg Economics model and they now
• 16:27
  Speaker 1: see a chance of recession within the next twelve months
• 16:31
  Speaker 1: at thirty eight percent. So that's a big increase from
• 16:34
  Speaker 1: what they were expecting just a couple of months ago,
• 16:36
  Speaker 1: where this same model was showing zero percent UM. And
• 16:40
  Speaker 1: then of course if we look further on that time
• 16:42
  Speaker 1: horizon UM by the start of they, like a lot
• 16:48
  Speaker 1: of other economists on Wall Street UM, expect a recession. UM.
• 16:51
  Speaker 1: There's about a three and four chance of a recession
• 16:54
  Speaker 1: by the start of so you know, in terms of
• 16:58
  Speaker 1: the markets, yeah, they're looking at the picture where recession
• 17:01
  Speaker 1: odds are growing. It's looking increasingly likely that we could
• 17:05
  Speaker 1: have a second straight quarter where GDP declines UM and
• 17:11
  Speaker 1: the Fed, you know, is messaging that they are determined
• 17:14
  Speaker 1: to crush inflation. So you know how much they would
• 17:18
  Speaker 1: come to the rescue if things go down to downhill?
• 17:21
  Speaker 1: Is is not super clear. No, well, they can't do
• 17:23
  Speaker 1: it right now. Um. The worst thing that could happen
• 17:27
  Speaker 1: for the Fed's credibility is that they don't raise as
• 17:30
  Speaker 1: much as we expect and then inflation rises even higher. Right. So,
• 17:35
  Speaker 1: but you mentioned something interesting the the fact that we
• 17:39
  Speaker 1: have two quarters of you know, back to back contraction.
• 17:44
  Speaker 1: I know a recession does not uh make but for
• 17:49
  Speaker 1: simplistic people like me, that's a general rule of thumb, right,
• 17:52
  Speaker 1: And the Atlanta Fed UM GDP now forecast shows a
• 17:56
  Speaker 1: contraction in Q two of two point one percent, right,
• 17:59
  Speaker 1: and it is a general rule of them. So here
• 18:02
  Speaker 1: in the US is different than other countries, and that
• 18:04
  Speaker 1: we all look to a group of academics at the
• 18:08
  Speaker 1: National Bureau of Economic Research who makes the official call
• 18:11
  Speaker 1: on these types of things. Um. But what's tricky about
• 18:14
  Speaker 1: right now when we're looking at these two quarters is
• 18:17
  Speaker 1: you know, in the first quarter, a big part of
• 18:20
  Speaker 1: that decline UM. What weighed on that number in the
• 18:24
  Speaker 1: GDP accounting was that you had imports surge. So you
• 18:29
  Speaker 1: actually saw an underlying measure of demand that economist tend
• 18:34
  Speaker 1: to look at. UM. You actually saw that quite strong
• 18:36
  Speaker 1: consumer spending UM wasn't as strong as we were all
• 18:39
  Speaker 1: thought it would be UM after some recent revisions, but
• 18:42
  Speaker 1: it's still held up UM. But the second quarter is
• 18:45
  Speaker 1: looking UM kind of increasingly scary from the fact that
• 18:48
  Speaker 1: we finally just saw real spending or inflation ingested spending
• 18:53
  Speaker 1: fall for the first time this year in May. So
• 18:56
  Speaker 1: it's not quite clear what's going to happen in June
• 18:58
  Speaker 1: and whether that was more of a blip in the
• 19:01
  Speaker 1: month or whether this is the start of a sustained
• 19:04
  Speaker 1: downward trend and inflation adjusted spending. So read does that
• 19:07
  Speaker 1: Bloomberg Economics Research note that they have an opinion at
• 19:11
  Speaker 1: as to maybe how deep this recession, maybe if in
• 19:15
  Speaker 1: fact we do vol into recession, is it's something that
• 19:17
  Speaker 1: could be multi quarters? What are they saying? So I
• 19:20
  Speaker 1: haven't talked to Bloomberg Economics specifically about this, but in
• 19:24
  Speaker 1: terms of other economists that I've spoken with, the general
• 19:27
  Speaker 1: kind of description word that I hear is mild or modest,
• 19:32
  Speaker 1: But in terms of the length people differ. So I've
• 19:35
  Speaker 1: had some economists say that they see this being a
• 19:39
  Speaker 1: kind of two quarter thing, very short UM, and then
• 19:42
  Speaker 1: others who kind of note the fact that the FED
• 19:46
  Speaker 1: is in a situation where they really need to hit
• 19:49
  Speaker 1: inflation and hit inflation hard, so they might not offer
• 19:53
  Speaker 1: the kind of support monetary policy support that we're used
• 19:56
  Speaker 1: to seeing in downturns. And as a result, while it
• 19:59
  Speaker 1: might be a old recession, it could very well be
• 20:01
  Speaker 1: a long recession. Um. But I think it is important
• 20:05
  Speaker 1: to keep in mind, whether you know, even if this
• 20:07
  Speaker 1: is a quote unquote mild recession, recessions are painful, and
• 20:12
  Speaker 1: even a mild recession would still likely mean you know,
• 20:16
  Speaker 1: possibly hundreds of thousands of people losing their jobs. All right, interesting, Matt,
• 20:20
  Speaker 1: Do you know what the Cavalier Cavalier Daily is? Is
• 20:24
  Speaker 1: that a Cleveland, Ohio newspaper? Student newspaper? No, it is
• 20:29
  Speaker 1: the student newspaper at the University of Virginia. Read Pickard
• 20:34
  Speaker 1: was a reporter there. It is a very high quality
• 20:37
  Speaker 1: student publication. How long were you a reporter at the
• 20:39
  Speaker 1: Cavalier Daily. I was years ago now, but I was
• 20:43
  Speaker 1: a reporter for four years. It's a it's a heck
• 20:45
  Speaker 1: of a student paper. Are they the Cavaliers? I thought
• 20:48
  Speaker 1: they were like the who's who it's read? You can
• 20:51
  Speaker 1: explain it. Yeah, It's it's kind of like Auburn is
• 20:53
  Speaker 1: the same way where people people yell wah who waf
• 20:57
  Speaker 1: But um, the actual mascot is A is a cavalier.
• 21:00
  Speaker 1: So at football games and satch there um is A
• 21:04
  Speaker 1: is a mascot of a guy with a sword and
• 21:06
  Speaker 1: a hat with a feather in it. And I can't
• 21:08
  Speaker 1: not know that because we have like half of the
• 21:11
  Speaker 1: people at Bloomberg came from uv A. Right, Well, it's
• 21:14
  Speaker 1: even worse than that thing from the University of Carolina
• 21:17
  Speaker 1: Danny Berger. Um Kaylee lines and the list goes on
• 21:22
  Speaker 1: and on and on. I know there's more, you know,
• 21:25
  Speaker 1: uv A people, a ton of North Carolina people, and
• 21:28
  Speaker 1: painfully few dude people here, so we're vastly outnumbered. Well,
• 21:32
  Speaker 1: I'm the only one from Antioch College and anti colleges
• 21:35
  Speaker 1: in Ohio. Right it is Antioch College, Yellow Springs, Ohio
• 21:38
  Speaker 1: when they're the fighting. Uh, we have had no football
• 21:41
  Speaker 1: team since. The only intercollegiate sport we've had that I
• 21:46
  Speaker 1: know of is women's rugby. Nice. I'm sure you exceled
• 21:50
  Speaker 1: there a right. Read Thanks so much for joining us.
• 21:52
  Speaker 1: Read Pickard us economy reporter and editor for Bloomberg News,
• 21:55
  Speaker 1: former reporter at the Daily Cavalier The Cavalier Daily. I
• 22:02
  Speaker 1: guess during the pandemic we all became I guess experts
• 22:05
  Speaker 1: at cleaning stuff and disinfecting stuff. Our next guest has
• 22:10
  Speaker 1: an angle on that. Rain guest CEO of a company
• 22:13
  Speaker 1: called arrow Clean. Rain, thanks so much for joining us here.
• 22:17
  Speaker 1: I love for you just to give us, you know,
• 22:18
  Speaker 1: kind of a thirty overview of what you guys do
• 22:21
  Speaker 1: at Aero Clean. Well, nice to chat with you guys
• 22:25
  Speaker 1: this morning. Things for having me, uh So at Aero Clean,
• 22:29
  Speaker 1: we actually have a patented device that gives people the
• 22:33
  Speaker 1: power to produce their own cleaning and disinfecting products on site.
• 22:37
  Speaker 1: So it actually just circumvents the whole supply chain completely.
• 22:42
  Speaker 1: So I mean I would think that during the pandemic,
• 22:46
  Speaker 1: as people were searching for again, cleaning solutions, disinfecting solutions,
• 22:52
  Speaker 1: your business got impact. A little bit of talk to
• 22:54
  Speaker 1: us about how that played out over the less several years. Yeah,
• 22:57
  Speaker 1: so it was really interesting. Historically at we've been regulated
• 23:01
  Speaker 1: as a device um by the e p A. So
• 23:04
  Speaker 1: when the pandemic hit, even though we had all the
• 23:06
  Speaker 1: testing that showed we were, you know, thirty times more
• 23:09
  Speaker 1: effective at killing uh COVID. We were actually exempt from
• 23:14
  Speaker 1: the list end, which is the holy grail of products
• 23:17
  Speaker 1: that you know, everybody recommended during the pandemic. So you know,
• 23:21
  Speaker 1: at a time when everybody was looking for ways to
• 23:25
  Speaker 1: you know, they nobody had access to disinfectants and cleaners.
• 23:29
  Speaker 1: We actually had a facility hole of here in the
• 23:31
  Speaker 1: Dallas area of devices that made hundreds of gallons of
• 23:35
  Speaker 1: it a day, but because we were exempt from that list,
• 23:38
  Speaker 1: people didn't trust it. So since then, thankfully, the e
• 23:42
  Speaker 1: p A has put us on that list. And you
• 23:44
  Speaker 1: know now that supply change shortages are happening again and
• 23:47
  Speaker 1: people are looking for ways to save money, um, and
• 23:50
  Speaker 1: they're understanding the importance of killing germs effectively. You know,
• 23:54
  Speaker 1: people are understanding that these germs infect us and that's
• 23:58
  Speaker 1: why everybody's getting sick, you know now, uh, you know,
• 24:02
  Speaker 1: whether it's here domestically or for an uh overseas, people
• 24:06
  Speaker 1: are are wanting to find more effective, safer disinfectants. So
• 24:10
  Speaker 1: only there were such a device for baby formula, right. Well,
• 24:16
  Speaker 1: you know what's interesting about the baby formula situation is
• 24:20
  Speaker 1: you know, the CDC actually determined that the bacteria that
• 24:24
  Speaker 1: they found at the Abbot facility didn't match the genetic
• 24:27
  Speaker 1: strains that infected the babies. So if you look at
• 24:30
  Speaker 1: the CDC's website, it actually says that the most likely
• 24:33
  Speaker 1: cause of infections is then someplace like someone's kitchen counter.
• 24:37
  Speaker 1: You know, you put a formula scoop on a kitchen
• 24:39
  Speaker 1: counter and then it contaminates the baby formula and that's
• 24:43
  Speaker 1: where infections come from. Um. Because you know, I'm really
• 24:46
  Speaker 1: hoping that the CDC will put out a public warning
• 24:49
  Speaker 1: soon to parents, you know, reiterating how important it is
• 24:52
  Speaker 1: for us to disinfect surfaces in our homes, so that
• 24:55
  Speaker 1: week with your website on it, right, Okay, Well, you
• 24:59
  Speaker 1: know you want to use the products that works the fastest,
• 25:01
  Speaker 1: and you want to you know, use the product that
• 25:04
  Speaker 1: is safe. So yeah, what do you expect in terms
• 25:07
  Speaker 1: of I mean, clearly, right now, we're all still freaked out.
• 25:11
  Speaker 1: Even if the pandemic were to end tomorrow. Um. I
• 25:17
  Speaker 1: know a lot of people in this office are going
• 25:19
  Speaker 1: to be disinfecting things until the rest of their lives.
• 25:21
  Speaker 1: But do you see demand falling off at all? No,
• 25:26
  Speaker 1: not at all, but I am hoping happened. So, UM,
• 25:29
  Speaker 1: demands not going to fall up because there's numerous pathogens, right,
• 25:33
  Speaker 1: there's covid, different strings of covid. Hospitals historically have had
• 25:37
  Speaker 1: crazy death rates. You know, hundreds of thousands of people
• 25:40
  Speaker 1: diet you're in hospitals from infections. Millions of people get
• 25:43
  Speaker 1: infected in hospitals from infections. So COPE is not the
• 25:46
  Speaker 1: only bug in the game. You've got Merca's death. You know,
• 25:50
  Speaker 1: we've got monkey pops now and always. Well, yeah, but
• 25:55
  Speaker 1: you know it's spread on surfaces, so might so MC
• 25:57
  Speaker 1: for surfaces, and so you know, we really need to
• 26:01
  Speaker 1: take take a step back and say, Okay, everybody needs
• 26:04
  Speaker 1: to disinfect. But the question we need to be asking
• 26:06
  Speaker 1: ourselves is have we been doing it properly? Well? I
• 26:09
  Speaker 1: also wonder if we've been doing it too much though.
• 26:12
  Speaker 1: I mean, when I was a kid, uh growing up
• 26:16
  Speaker 1: here in New York City, my mom had no problem
• 26:19
  Speaker 1: with us like licking the handrails in the subway because
• 26:22
  Speaker 1: the idea back then was, um, it builds immunity, right,
• 26:27
  Speaker 1: Was that wrong? No? You know what I used to
• 26:30
  Speaker 1: see my younger brother, mud Pies. I was raised up
• 26:33
  Speaker 1: in Ida Hook. It was like, there doesn't get out
• 26:35
  Speaker 1: their play right, go climb a tree near stuff on
• 26:38
  Speaker 1: your face. Um, but you know there's good germs, when
• 26:41
  Speaker 1: there's sad germs, and when you know, imagine you know,
• 26:46
  Speaker 1: we're all a bunch of animals in a small, confined
• 26:50
  Speaker 1: space in essence, right, So I don't think that you
• 26:54
  Speaker 1: can ever disinfect too much. We're almost going to touch
• 26:57
  Speaker 1: surfaces and then touch our eyes, notes or my health,
• 27:00
  Speaker 1: and we're always going to get infections. But we do
• 27:02
  Speaker 1: want to mitigate some of the risk. Now. The one
• 27:05
  Speaker 1: thing that I don't think most people realize is, yes,
• 27:08
  Speaker 1: we were using a lot of disinfectants, but those disinfectants
• 27:12
  Speaker 1: that we were using, most of them have warnings on
• 27:16
  Speaker 1: them like they cause respiratory issues, their respiratory irritants. And
• 27:19
  Speaker 1: when you use products like that incorrectly without proper protective gear,
• 27:24
  Speaker 1: you actually leave yourself more susceptible to infectious diseases like COVID.
• 27:28
  Speaker 1: And then compound that problem, if you don't let that
• 27:31
  Speaker 1: product sit on the surface for the contact time the
• 27:36
  Speaker 1: proper contact times, you don't actually kill the bugs. So
• 27:40
  Speaker 1: most disinfectants cause respiratory irritants, and most disinfectants have to
• 27:45
  Speaker 1: sit wet on the surface for ten minutes to kill germs. Now, gentlemen,
• 27:49
  Speaker 1: have you ever let a product sit on the surface
• 27:51
  Speaker 1: for ten minutes? No? I mean, I mean, I was
• 27:53
  Speaker 1: just thinking. You know, we used to disinfect the grocery
• 27:56
  Speaker 1: who brought them home from the grocery store. Don't do
• 27:58
  Speaker 1: that anymore. I've also, I mean when I I can't
• 28:02
  Speaker 1: even conditioner when it says leave it in for two minutes,
• 28:05
  Speaker 1: I don't think I can last that long. No, No,
• 28:07
  Speaker 1: once you have no hair, So that's well. Now now
• 28:10
  Speaker 1: I used to have gorgeous locks. But it's a good point, Rain,
• 28:13
  Speaker 1: I know nobody does that. Yeah, exactly, all right, all right, Rain,
• 28:17
  Speaker 1: thank you so much for joining us. I really appreciate
• 28:19
  Speaker 1: getting your thoughts there. Rain Guests, CEO of Arrow Clean,
• 28:24
  Speaker 1: thanks for listening to the Bloomberg Markets podcast. You can
• 28:27
  Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
• 28:31
  Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 28:35
  Speaker 1: at Matt Miller three. Put on false swheey. I'm on
• 28:39
  Speaker 1: Twitter at pt Sweeney Before the podcast. You can always
• 28:42
  Speaker 1: catch us worldwide at Bloomberg Radio.