Latest / Bloomberg Intelligence / Hurricane Irma Threatens $1.2 Billion of Florida Crops, Bjerga Says

Transcript

Hurricane Irma Threatens $1.2 Billion of Florida Crops, Bjerga Says · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
• 0:11
  Speaker 1: we bring you the most important, noteworthy, and useful interviews
• 0:15
  Speaker 1: for you and your money, whether you're at the grocery
• 0:17
  Speaker 1: store or the trading floor. Find the Bloomberg P M
• 0:20
  Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well.
• 0:32
  Speaker 1: As I mentioned a little bit bit ago, hurricane watch
• 0:35
  Speaker 1: in effect now for Florida, South Florida, the Florida Keys,
• 0:40
  Speaker 1: that whole area, and the best track still has it
• 0:43
  Speaker 1: going up the east coast of the state and then
• 0:47
  Speaker 1: into the Georgia Carolina border area. That obviously has big
• 0:52
  Speaker 1: impacts on the people who lived there, but it also
• 0:54
  Speaker 1: has a major impact on the agriculture done in these states.
• 0:59
  Speaker 1: Hurricane Urma threatening uh one point two billion dollars worth
• 1:03
  Speaker 1: of production in Florida tomatoes, oranges, green beans, cucumbers, squash,
• 1:07
  Speaker 1: and sugarcane, and just a few moments ago, North Carolina's
• 1:10
  Speaker 1: agriculture commissioner put out a statement saying that hurricane could
• 1:13
  Speaker 1: cause severe economic loss of livestock, poultry, and crops in
• 1:18
  Speaker 1: our state. Ala Virga covers agriculture for Bloomberg, he joins
• 1:22
  Speaker 1: US now and Alan people tend to forget when we
• 1:26
  Speaker 1: look at the hurricane damage. We tend to focus on
• 1:28
  Speaker 1: the cities. But this could have an impact on a
• 1:32
  Speaker 1: lot of crops that could have an impact on what
• 1:35
  Speaker 1: people pay for food. This does have potentially a great
• 1:38
  Speaker 1: impact on crop prices and certain very key commodities that
• 1:41
  Speaker 1: come out of Florida. You know, Mike, Florida is a
• 1:44
  Speaker 1: very unique agricultural state because it's even further south than California,
• 1:48
  Speaker 1: and as the number two producer of fresh produce, there
• 1:51
  Speaker 1: are certain times of year where Florida is the only
• 1:54
  Speaker 1: place in the US that is growing strawberries or peppers
• 1:57
  Speaker 1: for example. Of course, it's the major you US orange
• 2:00
  Speaker 1: producer um and all of these are very much in
• 2:03
  Speaker 1: the direct path of the hurricane. You know, you can't
• 2:05
  Speaker 1: move your orange trees, you can't evacuate them to someplace else,
• 2:08
  Speaker 1: and people will lose their homes, people lose their livelihoods,
• 2:11
  Speaker 1: and and there's a high likelihood of tragedy this weekend.
• 2:14
  Speaker 1: From an agricultural standpoint, what you're looking at our folks
• 2:17
  Speaker 1: who are preparing their fields for the winter, crops um
• 2:20
  Speaker 1: and possibly not being able to even get a crop
• 2:22
  Speaker 1: in this year simply because of the damage they may
• 2:24
  Speaker 1: be facing in the next week. Now, orange juice is
• 2:26
  Speaker 1: the big one that that was the one that the
• 2:28
  Speaker 1: headlines immediately came about about orange juice futures jumping um.
• 2:33
  Speaker 1: There's a real danger that much of the depending on
• 2:38
  Speaker 1: where it hits, I guess uh, much of the crop
• 2:41
  Speaker 1: could be lost. Much of the crop could be lost.
• 2:43
  Speaker 1: And most of the oranges are grown in the southern
• 2:45
  Speaker 1: two thirds of the state once again in the path
• 2:48
  Speaker 1: of the hurricane. Um The eastern part of the state
• 2:51
  Speaker 1: has a special concentration of oranges. That is where this
• 2:54
  Speaker 1: is being tracked potentially for the storm's greatest interact directly.
• 2:59
  Speaker 1: One thing where Florida maybe in for a little bit
• 3:02
  Speaker 1: of a break is the timing of this hurricane in
• 3:04
  Speaker 1: the hurricane season. If this were a little bit later,
• 3:07
  Speaker 1: you would see some of these crops the winter crops. Again,
• 3:10
  Speaker 1: because Florida has a different growing season, a lot of
• 3:12
  Speaker 1: crops aren't in the ground yet, you know, not many
• 3:14
  Speaker 1: tomatoes have been planted outside of the Tampa area. Strawberries
• 3:18
  Speaker 1: largely have not gone to the ground, and the oranges
• 3:20
  Speaker 1: have not grown very much on the tree. Now, of course,
• 3:24
  Speaker 1: trees can be taken down by this hurricane, but some
• 3:26
  Speaker 1: of these larger groves, especially the trees that are further in,
• 3:29
  Speaker 1: may be able to survive this. And and the fruit
• 3:31
  Speaker 1: that if it were a little bit later in the
• 3:32
  Speaker 1: season would be more likely to blow away, might actually
• 3:35
  Speaker 1: stay on the trees this time. So you know, I
• 3:37
  Speaker 1: was talking to the head of the Florida Tomato Exchange
• 3:40
  Speaker 1: down in a locally Florida, down by the Everglades, and
• 3:42
  Speaker 1: he was saying, look, there's never a good time for
• 3:45
  Speaker 1: a hurricane. Um, but it is a little bit easier
• 3:48
  Speaker 1: when it's this part of the season rather than a
• 3:50
  Speaker 1: little bit further on. Now, the North Carolina thing that
• 3:54
  Speaker 1: came out just a few minutes ago, they gave an
• 3:58
  Speaker 1: executive order allowing people you don't have to weigh your vehicle.
• 4:03
  Speaker 1: I don't understand all this stuff, but basically what they're
• 4:05
  Speaker 1: saying is farmers can harvest as much of their crops
• 4:08
  Speaker 1: as possible before the storm hits. It's that time, I guess,
• 4:11
  Speaker 1: And how much can they get in? Yeah, And you're
• 4:14
  Speaker 1: hitting on a key point about again, how the tracking
• 4:17
  Speaker 1: of the storm is really going to affect the agricultural
• 4:19
  Speaker 1: damage because the further north you get from Florida, the
• 4:22
  Speaker 1: more your crop mixed changes, and the more you get
• 4:24
  Speaker 1: into some different industries. You know, the Carolinas are huge
• 4:27
  Speaker 1: and poultry UM. Georgia is very large in in peanuts
• 4:31
  Speaker 1: for example, UM a lot of these crops. The further
• 4:34
  Speaker 1: north you get, the more you get into traditional growing seasons,
• 4:37
  Speaker 1: and that means fall harvests are being actually jeopardized in
• 4:40
  Speaker 1: some ways. You could see greater damage to those crops
• 4:42
  Speaker 1: further north than you would see in Florida. Now in
• 4:45
  Speaker 1: terms of you know, interstate vehicles, you know, there's a
• 4:48
  Speaker 1: lot of inspection of vehicles that go on between states
• 4:50
  Speaker 1: because states have different food safety rules, and a lot
• 4:52
  Speaker 1: of those rules have now been suspended basically so that
• 4:55
  Speaker 1: if you do have livestock, if you do have a
• 4:58
  Speaker 1: way of actually moving your animals, unlike a plant that's
• 5:00
  Speaker 1: coming out of the ground, you can move those, you
• 5:03
  Speaker 1: have more of an ability to do that. UM harvesting
• 5:06
  Speaker 1: is going on. You know, Georgia is a major cotton state,
• 5:08
  Speaker 1: and so maybe you're going to be harvesting some things
• 5:10
  Speaker 1: a little earlier than you would you know that has
• 5:13
  Speaker 1: a financial cost as well, because that affects your yield.
• 5:15
  Speaker 1: You're better off having some sort of a crop than
• 5:17
  Speaker 1: no crop at all. But it's not the way that
• 5:19
  Speaker 1: you would have done it otherwise, So there is an
• 5:22
  Speaker 1: opportunity cost that's lost there. Uh. Obviously, if the storm
• 5:26
  Speaker 1: skirts Florida as bad as it would be going into
• 5:29
  Speaker 1: the Carolina Is, it's fewer people affected and fewer big cities,
• 5:33
  Speaker 1: is there. I hate to put it this way, but
• 5:36
  Speaker 1: a better case not a best case, but a better
• 5:38
  Speaker 1: case scenario for the track of the storm In terms
• 5:41
  Speaker 1: of agriculture, that is a difficult question to answer because
• 5:45
  Speaker 1: anybody who gets hit is going to be suffering. Um.
• 5:47
  Speaker 1: If from the standpoint of the American grocery shelves, probably
• 5:51
  Speaker 1: more damage in Georgia and the Carolina Is it's going
• 5:54
  Speaker 1: it's going to be felt more broadly on your grocery
• 5:56
  Speaker 1: aisle than Florida, which is very much about fresh produce.
• 5:59
  Speaker 1: You get further or south, you get a larger variety
• 6:01
  Speaker 1: of both livestock as well as crops. You get a
• 6:04
  Speaker 1: more traditional harvest that this hurricane is interfering with that calendar. Um,
• 6:09
  Speaker 1: and you would definitely see a more broad based damage
• 6:12
  Speaker 1: if this storm tracks further north, rather than staying very
• 6:15
  Speaker 1: much focused on Florida, where you would see some real
• 6:17
  Speaker 1: devastating changes with some crops, but it is limited toward
• 6:21
  Speaker 1: fresh produce for certain periods of the year. Let me
• 6:24
  Speaker 1: ask you this very quickly, in about thirty seconds, how
• 6:27
  Speaker 1: soon does what happens to the crops in the ground
• 6:30
  Speaker 1: affect what we pay in the grocery store with gasoline?
• 6:33
  Speaker 1: It's almost immediate sure, well and again, and it's going
• 6:36
  Speaker 1: to come down to consumer expectations. I mean, you've already
• 6:38
  Speaker 1: seen the futures jump. Um. If companies decide to take
• 6:41
  Speaker 1: advantage of this by raising some prices, maybe preemptively to
• 6:44
  Speaker 1: get some profit in before they have to deal with shortages, um,
• 6:47
  Speaker 1: it could be pretty quick. Um. Again, in Florida, you're
• 6:50
  Speaker 1: probably going to see a little bit tougher effect, maybe
• 6:52
  Speaker 1: a few months from now in the winter. Um. If
• 6:54
  Speaker 1: it's more North Carolina, if it's something like chicken and broilers,
• 6:57
  Speaker 1: you can see a very immediate impact. Well. Um. Deargo
• 7:00
  Speaker 1: covers Agriculture for Bloomberg, Thank you very much. As we mentioned,
• 7:03
  Speaker 1: IRMA Category five and the National Hurricane Center says it's
• 7:07
  Speaker 1: gonna stay that way. Not exactly sure where it hits,
• 7:10
  Speaker 1: but all of Florida now the Carolinas being warned be ready.
• 7:28
  Speaker 1: We haven't seen the hurricane hit land yet, but there
• 7:30
  Speaker 1: are a lot of pictures of damage on the internet, um,
• 7:35
  Speaker 1: from Hurricane Irma in Florida and the Carolinas. And I'm
• 7:39
  Speaker 1: talking about retail stores. I mean the shelves have been
• 7:42
  Speaker 1: stripped bare. Uh and at grocery stores, at do it
• 7:47
  Speaker 1: yourself stores. Um, it is that time when everybody goes
• 7:51
  Speaker 1: and stocks up. Uh. We're joined now by Craig Johnson,
• 7:54
  Speaker 1: the president of Customer Growth Partners, on the impact of
• 7:58
  Speaker 1: retail from Harvey and Irma. There's kind of, I guess
• 8:01
  Speaker 1: a two part thing to a storm like this. Everybody
• 8:05
  Speaker 1: goes and buys everything off the shelves and then the
• 8:08
  Speaker 1: stories get wrecked by the hurricane. So on one hand,
• 8:12
  Speaker 1: the retailers win, on the other hand, they lose. Yeah,
• 8:14
  Speaker 1: well it's it's first of all, we have to say
• 8:17
  Speaker 1: how difficult it is, and our thoughts go to the
• 8:19
  Speaker 1: many victims of this, either people whose lives were lost
• 8:22
  Speaker 1: or you know, or their homes ruined. And so when
• 8:25
  Speaker 1: we see, we've been studying this since Hurricane Andrew, which
• 8:28
  Speaker 1: is two the last Big Five to hit Florida, and
• 8:32
  Speaker 1: typically there's uh in most um disaster events, there's a
• 8:37
  Speaker 1: prior area, the prior section, and then an ex post
• 8:40
  Speaker 1: facto now unpredicted events such as earthquakes that like the
• 8:44
  Speaker 1: Northquadge earthquake in in the mid nineties in l A
• 8:47
  Speaker 1: and like nine eleven, you know, there's no no warning.
• 8:50
  Speaker 1: But when there's a widely predicted thing, there's a ton
• 8:52
  Speaker 1: of stuff sold. So the generator sets. Chatting with the
• 8:56
  Speaker 1: head of Home Depot, Craig Maneriro this morning, that's they're
• 9:00
  Speaker 1: they're virtually all gone generator sets for when the power
• 9:03
  Speaker 1: goes out. Water was out throughout South Florida yesterday, Gasoline
• 9:08
  Speaker 1: states were out, Tap City. Now they're trying to bring
• 9:11
  Speaker 1: in some new supplies, but it's very difficult, and especially
• 9:14
  Speaker 1: when places like Home Depot and lows are trying to
• 9:17
  Speaker 1: preposition supplies but they don't know exactly where the storm goes,
• 9:22
  Speaker 1: so they have to kind of spread it out a
• 9:24
  Speaker 1: little bit. It's very difficult situation. Yeah, that is one
• 9:27
  Speaker 1: thing that I imagine has changed since Andrew, which was
• 9:30
  Speaker 1: so many years ago that the retailers have gotten better
• 9:33
  Speaker 1: at anticipating a what people are going to want to
• 9:36
  Speaker 1: buy and be as you mentioned, pre positioning it. Yeah,
• 9:40
  Speaker 1: the the the analytics in the industry in terms of
• 9:43
  Speaker 1: what's needed when it's needed at such and this is
• 9:45
  Speaker 1: everything batteries to flashlight to plywood. You know, plywood is
• 9:49
  Speaker 1: literally by definition a before item, right and but uh,
• 9:55
  Speaker 1: things like uh batteries and generators you can wait till
• 9:59
  Speaker 1: act for the storm to get them, but they may
• 10:01
  Speaker 1: well be sold out. But the big retail is, particularly
• 10:05
  Speaker 1: places like Costco, Walmart, UH Target. The two home improvement
• 10:11
  Speaker 1: players you know, Depo and Lows are much better at this.
• 10:14
  Speaker 1: But again, even they they have pretty supple supply change,
• 10:18
  Speaker 1: pretty flexible, but they can't. You can't always outrun a
• 10:21
  Speaker 1: storm because you don't know where it's going to be.
• 10:23
  Speaker 1: How do you get something like uh, plywood or batteries,
• 10:28
  Speaker 1: I mean to a place I guess it's just the
• 10:31
  Speaker 1: better weather forecasting gives them enough time to what do
• 10:34
  Speaker 1: they do? Fly it in from somewhere? Well, no, there's
• 10:37
  Speaker 1: let's take just these two. Because you can buy batteries
• 10:39
  Speaker 1: a lot of you can buy it at the public
• 10:41
  Speaker 1: level of batteries is what I'm talking. Well, now, they're
• 10:44
  Speaker 1: typically in distribution centers d c's that are spread out
• 10:49
  Speaker 1: in multiple places, you know, across the country or more so,
• 10:53
  Speaker 1: I'm depending on the retailer. And so they'll be a
• 10:57
  Speaker 1: warehouse in Florida. Maybe it's just to be maybe even
• 11:00
  Speaker 1: more than one. It will be other than Georgia. There
• 11:02
  Speaker 1: might be Alabama. So the one that's now, let's say
• 11:05
  Speaker 1: it's sitting in Orlando, Uh, it will run out of batteries, say,
• 11:10
  Speaker 1: and run out of plywood and other stuff. So they
• 11:13
  Speaker 1: have to bring it in from the next adjacent one.
• 11:15
  Speaker 1: And what you want to make sure you do well,
• 11:16
  Speaker 1: you not want you don't want to bring it down
• 11:18
  Speaker 1: from you know, from from Savannah, because Savannah might be
• 11:22
  Speaker 1: next in line to get hit. So you want to
• 11:24
  Speaker 1: you know, take it from elsewhere, maybe uh west, you know,
• 11:28
  Speaker 1: you know, West Florida, Alabama, and then bring it down there.
• 11:31
  Speaker 1: So this is a thing you you basically have logistical
• 11:33
  Speaker 1: officers working for you, if you're a big retailer who
• 11:37
  Speaker 1: figure these things out. Yes, that's that's exactly right. You
• 11:41
  Speaker 1: have all these companies because this is you know, this
• 11:44
  Speaker 1: is not the first rodeo on this. So they've gone
• 11:48
  Speaker 1: through what Houston in its own crazy way, which is
• 11:51
  Speaker 1: like you know that hit maybe a couple of a
• 11:53
  Speaker 1: couple weeks ago ago. There was lessons been learned in
• 11:56
  Speaker 1: Houston that they are in a real time basis applying
• 12:01
  Speaker 1: to whether it's Florida, George or you know, Carolinas, whatever,
• 12:04
  Speaker 1: they're applying those lessons of getting stuff, they're getting early.
• 12:07
  Speaker 1: And like water. You know, there were fights at Costco
• 12:10
  Speaker 1: yesterday morning. Over over the last you know a few
• 12:13
  Speaker 1: things about fist fights breaking out in some of the stories.
• 12:15
  Speaker 1: It was crazy and now it's all gone. Um, water
• 12:18
  Speaker 1: is tricky because it's heavier. You know, you can't fly
• 12:21
  Speaker 1: it in that easily. Again about thirty seconds left. But
• 12:24
  Speaker 1: what about things that aren't critical, you know, like clothing. Um,
• 12:28
  Speaker 1: those retailers affected as well, well, they will be affected.
• 12:30
  Speaker 1: But typically if someone needs to buyse to a new
• 12:33
  Speaker 1: you know, warm weather stuff you know for the fall
• 12:35
  Speaker 1: or or or or white sweat, you don't have to
• 12:38
  Speaker 1: get it this week. Uh, you can get it, you
• 12:40
  Speaker 1: know a week or two after things. You said that,
• 12:42
  Speaker 1: and of course you can always order it online. So
• 12:44
  Speaker 1: purchases deferred. But not yet. It's not foregone because we
• 12:48
  Speaker 1: say disasters don't destroy demand, they displace it forward in time,
• 12:54
  Speaker 1: backward or online. So in general the retailers won't necessarily
• 13:00
  Speaker 1: who's other than damage wise, they'll they'll be a net neutral.
• 13:03
  Speaker 1: In fact, that maybe slightly up because people in the
• 13:06
  Speaker 1: entire cone will buy generators, even though they may not
• 13:09
  Speaker 1: end up needing it. Everybody as a generator in their
• 13:12
  Speaker 1: back yard. Greig Johnson, thanks very much for being with
• 13:15
  Speaker 1: President of Customer Growth Partners. Interesting story the other day,
• 13:30
  Speaker 1: I walked into a whole food store, now that of
• 13:32
  Speaker 1: course they were just bought by Amazon, and there was
• 13:35
  Speaker 1: a whole cable full of Amazon echoes and dots. There's
• 13:40
  Speaker 1: a big sign on the table that said farm Fresh.
• 13:43
  Speaker 1: It's not like the frozen or you know, boxed Amazon
• 13:48
  Speaker 1: echoes that you get from ordinary retailers. These are farm
• 13:52
  Speaker 1: fresh ones. But it's all part of Amazon's massive expansion,
• 13:56
  Speaker 1: so big that Amazon is now shopping. According to Jeff Bezos,
• 14:01
  Speaker 1: they're looking for a new second North American Headquarters dubbed
• 14:06
  Speaker 1: h Q two, somewhere in the country in which they
• 14:09
  Speaker 1: would house fifty thousand people O day is a Bloomberg
• 14:15
  Speaker 1: Gadfly columnist. I've never heard of this. I mean, I
• 14:19
  Speaker 1: know people have campuses for various reasons one place or
• 14:23
  Speaker 1: another around the world, But to have something that you
• 14:26
  Speaker 1: would dub a second headquarters and have it be so large,
• 14:29
  Speaker 1: this is unusual. Yeah. I mean, I guess Boeing sort
• 14:33
  Speaker 1: of has to headquarters a bit in Seattle. They had
• 14:36
  Speaker 1: a weird deal because because that's where their manufacturing is
• 14:39
  Speaker 1: in Seattle, and everybody would have been really I'll use it.
• 14:43
  Speaker 1: I'll just nicely say they would be angry if they
• 14:46
  Speaker 1: had moved that away, but they wanted to get their
• 14:48
  Speaker 1: executives out of there. But they don't have fifty people
• 14:50
  Speaker 1: in Chicago. No, I think that's right, And I mean
• 14:53
  Speaker 1: I think we're at the point where Amazon has basically
• 14:56
  Speaker 1: outgrown its hometown that as you said, they have, and
• 15:00
  Speaker 1: people in Seattle. There's a good deal of anxiety in
• 15:03
  Speaker 1: the city of Seattle about Amazon kind of gobbling up
• 15:06
  Speaker 1: all the prime real estate. Um that the number of
• 15:10
  Speaker 1: employees there has made traffic worse, raised housing prices, right,
• 15:14
  Speaker 1: So I can't even imagine doubling the size of Amazon
• 15:18
  Speaker 1: in a city like Seattle. So I guess they're looking
• 15:21
  Speaker 1: for someplace else to put another Amazon sized company. Where
• 15:25
  Speaker 1: would that place be? I think we can safely say
• 15:29
  Speaker 1: that the guns the gun fired this morning, and you're
• 15:34
  Speaker 1: gonna have every city, any big city and municipality hoping
• 15:39
  Speaker 1: that Amazon comes into their backyard and sort of dangling
• 15:42
  Speaker 1: tax um tax breaks and other goodies to Jeff Bezos.
• 15:46
  Speaker 1: While we were sitting here, the mayor Memphis tweeted that
• 15:49
  Speaker 1: they're going to bid for this new Amazon headquarters. So again,
• 15:52
  Speaker 1: that's just the first of many, it doesn't I mean,
• 15:54
  Speaker 1: they it would seem to me they would need some
• 15:58
  Speaker 1: specialization in the city that they would end up. You
• 16:01
  Speaker 1: got to have a place where there are tech people, right, yeah,
• 16:05
  Speaker 1: I would think so. And you know, Amazon had this
• 16:07
  Speaker 1: kind of h eight page brief that kind of lays
• 16:09
  Speaker 1: out their criterion. It's basically, they want highly educated workforce.
• 16:14
  Speaker 1: They want a relatively large city or that has kind
• 16:17
  Speaker 1: of a suburban urban core. They wanted to have a
• 16:20
  Speaker 1: quote unquote business friendly climate. So you know, they do
• 16:24
  Speaker 1: have some criteria in mind for what they're looking for,
• 16:28
  Speaker 1: including having enough, um, kind of talented people. Would you
• 16:32
  Speaker 1: think that they would want to move away from the
• 16:36
  Speaker 1: West Coast in other words have a second headquarters somewhere
• 16:39
  Speaker 1: on the east side of the country. I mean, I'm
• 16:41
  Speaker 1: guessing a little bit, but I would think, yeah, they
• 16:44
  Speaker 1: would want some geographic diversity and whether that means. I've
• 16:49
  Speaker 1: heard people this morning talking about Utah, for example, which
• 16:52
  Speaker 1: people have dubbed Silicon Slopes, right, the sort of Silicon Valley,
• 16:57
  Speaker 1: slightly further east. Um, that obviously gets you a little
• 17:01
  Speaker 1: bit out of the Bay Area and Seattle tech hubs,
• 17:06
  Speaker 1: but not quite so far away. But again, I imagine
• 17:09
  Speaker 1: many cities all over the country. You are going to
• 17:12
  Speaker 1: be vying for Amazon this new HQ. Well, what do
• 17:16
  Speaker 1: we think Jeff Bezos wants out of this? I mean,
• 17:19
  Speaker 1: he you bring fifty jobs somewhere, that's going to transform
• 17:23
  Speaker 1: where every even if you put it in New York
• 17:25
  Speaker 1: eight million people, that's going to be transformative. Does he
• 17:28
  Speaker 1: want to transform someplace? Does he want to make it
• 17:32
  Speaker 1: the next Seattle? And raise some of those questions, Uh,
• 17:35
  Speaker 1: do we know what he wants to accomplish here? So
• 17:38
  Speaker 1: one thing that's been very interesting to watch is Amazon's
• 17:42
  Speaker 1: reaction to I think there's just kind of growing anxiety
• 17:46
  Speaker 1: about the impact to the labor economy and the economy
• 17:51
  Speaker 1: at large from the transformation of retail from physical in
• 17:58
  Speaker 1: some cases mom and pop stores to e commerce controlled
• 18:02
  Speaker 1: by a handful of very large companies, primarily Amazon. And
• 18:07
  Speaker 1: you know that if you see them reacting here and
• 18:09
  Speaker 1: there to sort of economic reports about you know, these
• 18:13
  Speaker 1: automated package warehouses crushing jobs and Amazon putting retailers out
• 18:19
  Speaker 1: of business. And I can imagine that making generating attention
• 18:24
  Speaker 1: for a company for adding fifty jobs, for potentially transforming
• 18:29
  Speaker 1: the economy of a medium sized or large city by
• 18:32
  Speaker 1: adding fifty high paying jobs. That is the kind of
• 18:36
  Speaker 1: attention that Amazon wants, not attention for them, you know,
• 18:40
  Speaker 1: shutting mom and pop retailers on Main Street very quickly.
• 18:43
  Speaker 1: Just thirty seconds left, When do we find out? Uh,
• 18:47
  Speaker 1: they're looking to have a city selected soon and they
• 18:50
  Speaker 1: want to start building the new headquarters. By this is like,
• 18:54
  Speaker 1: you know, bidding for the Olympics. I guess I wonder
• 18:56
  Speaker 1: who gets the TV rights to all of who's to
• 19:00
  Speaker 1: carry the torch exactly year overday from Bloomberg Gadfly. I
• 19:15
  Speaker 1: heard our next guest to draw a breath when we
• 19:18
  Speaker 1: heard Greg read the ten year note yield two point
• 19:21
  Speaker 1: oh four. Uh Mar mar Lowe is senior global market
• 19:26
  Speaker 1: strategist to be in y Melon. Um, what is going
• 19:30
  Speaker 1: on now? I mean we were talking about this earlier
• 19:33
  Speaker 1: on the show. The FED is in theory going to
• 19:37
  Speaker 1: announce that next month it's going to start tapering its
• 19:40
  Speaker 1: bond purchases. UH, and that should, all things being equal,
• 19:45
  Speaker 1: push rates higher. UH. Mario drag said today, We're not
• 19:49
  Speaker 1: ready to do anything. We're gonna keep buying sixty billion
• 19:51
  Speaker 1: euros a month worth of UH securities in Europe, and
• 19:55
  Speaker 1: we keep our interest rate at negative forty basis points.
• 19:58
  Speaker 1: And everybody wants into the Euro and everybody wants to
• 20:01
  Speaker 1: do American bonds. Um, what's going on out there? Well,
• 20:05
  Speaker 1: you know, I still think that the central banks are
• 20:08
  Speaker 1: the most important, UM thing that investors have to consider.
• 20:11
  Speaker 1: And you've got these waxing and waning UM on the
• 20:14
  Speaker 1: next stage of monetary policy. And UM, there are certain
• 20:17
  Speaker 1: aspects that are going on in Europe in terms of
• 20:20
  Speaker 1: the fact that they haven't started to reverse their accommodation,
• 20:24
  Speaker 1: whereas the Fed and you know, to a certain degreet
• 20:26
  Speaker 1: what we saw from the Bank of Canada UH yesterday,
• 20:28
  Speaker 1: has started to move in that direction. So UM, the
• 20:32
  Speaker 1: next move in terms of how the market looks at
• 20:35
  Speaker 1: it is that the ECB has to do something at
• 20:37
  Speaker 1: this point, and I think you're starting to see that
• 20:39
  Speaker 1: play out in its currency. The FED, however, is a
• 20:42
  Speaker 1: few steps ahead, and they've got some challenges to continue
• 20:46
  Speaker 1: along the path that day'veum that they've kind of told
• 20:48
  Speaker 1: the market over the course of the last few quarters.
• 20:51
  Speaker 1: So basically it's the old Chuck Prince thing. You gotta
• 20:55
  Speaker 1: keep dancing as long as the music is playing. You know.
• 20:57
  Speaker 1: It's that that's such a such a uh analogy that
• 21:01
  Speaker 1: has a lot of uh difficult connotations associated with it.
• 21:05
  Speaker 1: But you know, we saw again a vixed spike kind
• 21:08
  Speaker 1: of around some of the North Korea tensions that developed,
• 21:11
  Speaker 1: and you know, once again a collapse around it. There
• 21:14
  Speaker 1: still is a lot of liquidity in the market. One
• 21:17
  Speaker 1: certainly has to be prepared um to kind of see
• 21:20
  Speaker 1: these spikes. But you know, so long as that liquidity
• 21:22
  Speaker 1: is out there, I think that kind of the reach
• 21:24
  Speaker 1: for yield and kind of this buoyant type of risk
• 21:27
  Speaker 1: environment is something that we have to consider, um, tie
• 21:31
  Speaker 1: the money, but could the tide go up very quickly
• 21:33
  Speaker 1: and leave people as in Warren Buffett's famous analogy not
• 21:39
  Speaker 1: wearing their swimming trust. There's there there are a lot
• 21:42
  Speaker 1: of UM into relationships in this market that we haven't
• 21:45
  Speaker 1: seen since the crisis. You know, whether it's whether it
• 21:47
  Speaker 1: comes from UM. These packaged products are out there, the
• 21:50
  Speaker 1: e t f s the ability to UM make investments
• 21:54
  Speaker 1: in sectors that once were tied to more longer term
• 21:57
  Speaker 1: type UH type thought processes. UM from the central bank perspective,
• 22:02
  Speaker 1: they're going to continue to convey that they're going to
• 22:05
  Speaker 1: take money out of the system in a very slow manner,
• 22:08
  Speaker 1: and for the moment, the market is certainly buying it.
• 22:11
  Speaker 1: I think was the market prepared for that? I mean,
• 22:13
  Speaker 1: or did people start thinking that they were going to
• 22:15
  Speaker 1: be UM more hawkish than they have been? Yeah, I
• 22:20
  Speaker 1: think I think when we were in the middle of
• 22:22
  Speaker 1: the summer, and you know, we can kind of think
• 22:24
  Speaker 1: back UM to some of the volatility that Dragging introduced
• 22:27
  Speaker 1: when he had his speech and in Portugal, that's certainly
• 22:31
  Speaker 1: raised the specter that there was going to be a
• 22:33
  Speaker 1: coordinated move around monetary policy, and we kind of saw
• 22:35
  Speaker 1: some volatility around that. But lo and behold UM currencies
• 22:39
  Speaker 1: and UH inflation and UM the impact that currency has
• 22:43
  Speaker 1: on your economy, growth, etcetera, etcetera comes into play, and
• 22:47
  Speaker 1: it's showing how difficult it is for them to to
• 22:50
  Speaker 1: step away. How does that? How did it when when
• 22:53
  Speaker 1: you talk to people about what they should be buying, then, um,
• 22:56
  Speaker 1: how do you incorporate this uh, this x a nation
• 23:00
  Speaker 1: for what's going on into your buying suggestions? You know,
• 23:03
  Speaker 1: I think I think, um, we have to start looking
• 23:06
  Speaker 1: a little bit more deeply in terms of what sectors,
• 23:09
  Speaker 1: what parts of the world would benefit from um, the
• 23:13
  Speaker 1: fact that it's hard to withdraw a lot of this
• 23:15
  Speaker 1: monetary policy stimulus. Emerging markets have had an incredible run. Um. Uh,
• 23:20
  Speaker 1: they've been the top performer and a lot of different
• 23:22
  Speaker 1: asset classes depending on how you um, how you slice it,
• 23:25
  Speaker 1: that's still a story that we should look at. UM.
• 23:27
  Speaker 1: I think it's a story where we have to dissect
• 23:29
  Speaker 1: it a little bit more. You know, the easy trade
• 23:31
  Speaker 1: is over, you know, do we start looking at industries
• 23:33
  Speaker 1: within that? Do we start looking at various rating sectors
• 23:36
  Speaker 1: within that sleeve? Um to decide where there might be
• 23:40
  Speaker 1: you know, there's no more low hanging fruit. But let's
• 23:42
  Speaker 1: say you know, a fruit that we could still reach
• 23:44
  Speaker 1: without without a ladder. Were you surprised yet, and I'm
• 23:48
  Speaker 1: thinking of countries where you you know you could go.
• 23:50
  Speaker 1: Were you surprised by Candida yesterday? You know, to a
• 23:52
  Speaker 1: certain degree, Um, the fact that they moved, I think
• 23:55
  Speaker 1: the surprise was that they moved yesterday rather the next month.
• 23:58
  Speaker 1: So to a certain degree, that is a little bit
• 24:00
  Speaker 1: of surprise in it. But uh, you know, it was
• 24:02
  Speaker 1: widely expected, including by myself, that they were going to
• 24:05
  Speaker 1: go sometime this year. October seemed like it made more sense,
• 24:09
  Speaker 1: um in terms of seeing how the other central banks did.
• 24:12
  Speaker 1: But you know it it created a little bit of volatility.
• 24:15
  Speaker 1: But overall, um, the move is not a surprise from
• 24:18
  Speaker 1: the perspective of are they going to move within uh
• 24:21
  Speaker 1: you know, are they going to move this year? Again,
• 24:23
  Speaker 1: the answer would have been yes for most people. What
• 24:25
  Speaker 1: about now are they done? They sounded very devish in
• 24:29
  Speaker 1: their statement, Yeah, you know they And again it's it's
• 24:32
  Speaker 1: the currency thing. This is the challenge with a lot
• 24:35
  Speaker 1: of what the central banks are trying to do. It's
• 24:37
  Speaker 1: it's a it's a very fine line. Um. It does
• 24:40
  Speaker 1: come down to the data. They were forced, um to
• 24:43
  Speaker 1: a certain degree, because they've had some very very strong
• 24:46
  Speaker 1: data prints. They also have, um, you know, housing concerns
• 24:49
  Speaker 1: and real estate price concerns that maybe some of the
• 24:52
  Speaker 1: other central banks aren't UM as worried about. Uh they
• 24:55
  Speaker 1: those are still issues. UM. But it will be on
• 24:58
  Speaker 1: it will it will be reliant on the data and
• 25:01
  Speaker 1: it seems firm. So UM, you know, I wouldn't be
• 25:03
  Speaker 1: surprised if we see another move from them this year.
• 25:06
  Speaker 1: What about other markets that might surprise us? So I
• 25:10
  Speaker 1: presume you're not expecting much from the Japanese, but any
• 25:14
  Speaker 1: any place else around the world that you're watching, you know,
• 25:17
  Speaker 1: the Japan, Japan and the yen are always interesting because
• 25:20
  Speaker 1: of the flight to quality type of aspect that that
• 25:22
  Speaker 1: the END has. So we're looking at it from that perspective,
• 25:25
  Speaker 1: and it makes it incredibly challenging because you know, whether
• 25:28
  Speaker 1: it's a you know, it's a tape bomb that comes
• 25:29
  Speaker 1: out of the administration and or you know, real saber
• 25:32
  Speaker 1: rattling that comes out of the peninsula, the END is
• 25:35
  Speaker 1: at the center of that. In terms of what their
• 25:37
  Speaker 1: monetary policy can do. They're they're somewhat hamstrong. They they
• 25:41
  Speaker 1: own a very large part of the market already. They
• 25:44
  Speaker 1: are UM you know, buying pretty much as much as
• 25:48
  Speaker 1: they can. Uh. I think that this year, with their
• 25:52
  Speaker 1: tenual targeting, they've kind of reduced their purchases. So there's
• 25:54
  Speaker 1: a little bit of tapering that's been going on there already.
• 25:57
  Speaker 1: But their yields are are you know, they don't move
• 26:00
  Speaker 1: a whole lot kind of given how large of a
• 26:02
  Speaker 1: buyer the b o J is already at this point.
• 26:04
  Speaker 1: You mentioned tape bombs. Uh do you wear a hard
• 26:07
  Speaker 1: hat to work these days? I mean the way that
• 26:09
  Speaker 1: the news flow has been Yeah, I mean, I guess
• 26:11
  Speaker 1: I'm in the same camp as all of us. Through
• 26:13
  Speaker 1: a certain degree, we get immune from it. And again
• 26:16
  Speaker 1: the fact that we could, you know, spike the vix
• 26:18
  Speaker 1: by somewhere in the range on Monday and kind of
• 26:21
  Speaker 1: see a collapse back down to this eleven eleven and
• 26:23
  Speaker 1: a half era area makes it so that, um, we
• 26:29
  Speaker 1: are almost expecting that that's not necessarily um a good
• 26:32
  Speaker 1: attitude to have, but it seems that we're always kind
• 26:35
  Speaker 1: of looking for it. You do get a little bit
• 26:36
  Speaker 1: immune to it. Uh. Interesting question. Stocks keep going up
• 26:41
  Speaker 1: and I've only got about fifteen seconds here. Bonds stay
• 26:44
  Speaker 1: range bound. The only movement is in currencies. Does that
• 26:47
  Speaker 1: change anytime soon? Um? You know what, I think, I
• 26:52
  Speaker 1: think that that's a pattern that's gonna it's gonna take
• 26:54
  Speaker 1: something to break it. Um And and so far we're
• 26:57
  Speaker 1: still within that. A lot of this this debt ceiling
• 26:59
  Speaker 1: to discussion whether or not the administration can be effective,
• 27:03
  Speaker 1: might be a catalyst around that, but so far the
• 27:05
  Speaker 1: market has been able to overlook it. All right, Thank
• 27:08
  Speaker 1: you very much, bar and Lowe Senior Global Market Strategies
• 27:10
  Speaker 1: to be and Lion Melon, the man with a hard
• 27:12
  Speaker 1: hat on as you gotta work. Tape bombs every day,
• 27:16
  Speaker 1: it seems. And we're keeping an eye on obviously IRMA
• 27:20
  Speaker 1: for something that could happen, and keeping an eye on
• 27:22
  Speaker 1: the White House for anything that could come out these days.
• 27:26
  Speaker 1: I Michael McKy, this is Bloomberg. Thanks for listening to
• 27:32
  Speaker 1: the Bloomberg P and L podcast. You can subscribe and
• 27:35
  Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast
• 27:39
  Speaker 1: platform you prefer. I'm Pim Fox. I'm on Twitter at
• 27:43
  Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one
• 27:47
  Speaker 1: before the podcast. You can always catch us worldwide on
• 27:49
  Speaker 1: Bloomberg Radio.