June 12, 2025 • 24 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alix Steel
-Siddharth Philip, Bloomberg Deputy Team Leader for Global Aviation, discusses the crash of a Boeing 787 Dreamliner operated by Air India that was bound for London. More than 200 bodies have been recovered at the crash site, according to police officials. The flight was carrying 242 passengers and crew, most of whom were Indian and British nationals.
-Jeffrey Cleveland, Chief Economist at Payden & Rygel, discusses his outlook for the U.S economy. The US producer price index rose 0.1% in May, indicating muted inflation across the board and no sign of price shocks from tariffs.
-Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, discusses the latest tariffs news. President Donald Trump plans to send letters to trading partners in the next one to two weeks setting unilateral tariff rates ahead of a July 9 deadline.
-Laura Modi, CEO and Co-Founder of Bobbie, discusses the infant formula Made in America Act, inclusion in finance, and leadership.
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Episode Transcript
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Speaker 1 (00:02):
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Speaker 2 (00:23):
So the Boeing seven eighty seven Dreamliner that was operated
by Air India crash shortly after taking off in India,
killing all. But it's killing all two hundred and forty
two people on board joining us now is said Phillip Bloomberg,
Deputy team leader for Global Aviation. I said he was
in London, but he's not. He's in Paris. I should
have known from the Eiffel Tower that's behind him. For
those of you on radio, this is all right before
(00:44):
the Paris air show, right, what are you hearing on
the ground.
Speaker 3 (00:48):
Thanks Alix. So at the moment, we don't really have
details on what rety went wrong with the aircraft and
what caused the crash. I mean it reached an altitude
of six hundred and twenty five feet and then it
sort of just plummeted the ground in a massive fireball.
And we know that over two hundred over two hundred
people have been pulled out dead. There has been some
(01:10):
mention of survivors, we don't really know how many. The
police said that survivors have been taken to hospital. We're
not quite sure whether those survivors are from the aircraft
or whether they're from the residential building. So the plane
crashed into a residential building. It was a medical college
hostel and that's where students and doctors were eating lunch
(01:30):
when the plane crashed. So it was a massive tragedy
the bot for air India, for India, and obviously it's
raised lots of questions on Boeing and we're still waiting
to see what those answers actually are to those questions
as to what caused it and where do we go
from here.
Speaker 4 (01:48):
So typically who leads these investigation series at the host
country is that the airline? Is it? How does that work?
Speaker 3 (01:57):
Yes, so the investigation will be led by investigators from India.
So typically when a plane crashes, the country where the
plane crash leads the investigation into what went wrong. The
other countries that sort of we have FA input, we
have NTSP input, we have input from the manufacturer. In
this case Boeing in also from GE because they made
(02:18):
the engine, So there will be input from others. And
we've also seen the UK Air Investigation Investigation Accident Investigation
Board talking that they would be sending some investigators to
India tomorrow, so there will be it will be a
multinational effort in terms of trying to find out what
went wrong and then they will sort of determine where
(02:40):
the problem came up from and what really caused this crash.
Speaker 2 (02:44):
We are seeing Boeing shares down obviously looking at GE
because they were using GE engines. Are those market reactions investors'
reactions legitimate considering how much unknown there are, how hard
it is to fly planes and the variables like birds.
Speaker 3 (03:02):
It's difficult to actually put a sort of input this
onto Boeing or GE because I mean, this aircraft has
been in service for over eleven years, almost twelve years,
so it's not a brand new aircraft that's just come
off fresh off the line from Boeing. So I mean
it is sort of far fetched to sort of pin
the blame on Boeing without sort of ascertaining the causes
of what happened and what went wrong. I mean, obviously
(03:24):
the investigation will determine what went wrong and who is
it fauld and if there was pilot error, if there
was any technical issue, if there was something wrong with
the plane or with the engines. But it's all still
too early to determine the cause of it, and so
it does seem to be an initial reaction, and we
will get more clarity on what really went wrong in
(03:45):
the days and months ahead as we sort of as
investigators sort of port through the flight data recorders, the
cockpit voice recorders and sort of pieced together, minute by minute,
second by second, what really went wrong.
Speaker 4 (03:57):
All right, so thank you so much for joining us.
Really appreciate your reporting, said our Philip, deputy team leader
for Global Aviation Bloomberg News. He is based in London,
but who's reporting from our Paris bureau today.
Speaker 1 (04:11):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
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Speaker 4 (04:25):
All right, let's talk inflation. Yesterday, Remember we had the
CPI data came out and it came in a little
less than expected, so we called that benign inflation, I
think was the term we used. As John's just mentioned,
we got the PPI out today, John characterized it as muted.
I'll go with that PPI final demand month the month
zero point one percent, consensus was zero point two percent.
(04:46):
And then if you annualize all this stuff and say
PPI X food, energy and trade year over year came
in a two point seven percent. Consensus was three percent.
So that's a pretty big beat, I would say. Jeffrey
Cleveland joins economists at Peyton and Regal out there in
l A. Jeffrey, what did you make of yesterday's CPI,
(05:07):
today's PPI what you call on inflation these days?
Speaker 5 (05:10):
Well, Paul, not only was it benign for May, that's
four months in a row, So four months in a row,
after you know, a January hot start to the year,
CPI has been soft. I know the inflationistas listening are
going to say that, you know, just wait, just wait
another month and the tariff toll will will hit, and
that is possible. But I would point out that in
(05:31):
the day that we saw yesterday, it wasn't just that
goods prices were soft. Also services prices were soft, So
you know, housing free which are we all clear, but
also non housing services. I wouldn't say the all clear, Alex,
but I mean it's uh, we're getting there. We're getting
close to say it all clear. I think another another
couple of months, I'll declare the the all clear. I
(05:52):
think also with this morning's PPI, you throw that in
the mix. You can imagine a soft reading for core
PCEE when it comes out at the end of this month,
which is what the FED is more focused on, and
I think very good news for the central Bank and
for the bond market. So soft inflation.
Speaker 4 (06:08):
Readings, So, Jeff, is it we're not necessarily seeing any
inflation in the numbers yet? Maybe we will in the future.
Is that a reflection of companies just kind of eating
the cost increases that they are experiencing, maybe taking in
the margin as opposed to passing them along to consumers.
Speaker 5 (06:24):
That's a possibility, Paul, It's possible. We just haven't seen
the pass through yet. People are shifting their behaviors, people
are making up for it in other ways and not
passing it through into prices. I think all of those
are in the mix. I think one thing we've been
telling clients is that. Keep in mind, imported goods in
terms of the PCE index are six seven eight percent
of the index, so you could see potential price increases
(06:49):
on those goods, but you have to keep in mind
most of what you spend your money on, PAUL are
things like services, and those we still see scope for
services to continue to cool off, and certainly we saw
that in May, so that could outweigh some of the
tariff price increase. That's a good news. So I think
by the end of the year, so if you can
look out six months or so, I think inflation will
(07:10):
continue to moderate. Okay, So if.
Speaker 2 (07:13):
We are in this disinflationary environment right now, well, actually,
would you categorize us as disinflation?
Speaker 4 (07:18):
Oh?
Speaker 5 (07:18):
Yeah, I mean we peaked in twenty twenty two at
a very high level on core inflation. It's been coming down.
It's been coming down slower than we would have hoped,
but it is disinflating. So I think we're definitely in
a disinflationary environment right now.
Speaker 2 (07:32):
Yes, So if it's disinflationary, is that enough for the
FED to cut in July September predemptively?
Speaker 5 (07:39):
I think you have to step back here. You put
yourselves in the shoes of the FED. You're at four
fifty on the funds rate. I would categorize that alex
as restrictive. So they have a restrictive policy setting. But
we know, we just talked about it. Inflation is cooling.
Disinflation and the other thing that you brought up earlier
on a segment which was wonderful, We are seeing a
slow down in the lake. So with that backdrop, I
(08:02):
think the next move from the Fed is a cut.
Question is what are they comfortable doing that. I don't
think it's likely next week, but I think the market
should start pricing in July, should start entertaining July. But
we think but by September guys will have some evidence
enough where they could possibly cut.
Speaker 4 (08:20):
If that's the scenario, and inflation, you know, is not
necessarily a concern here or a big concern, what does
that do to your GDP? Look for the remainder of
this year, we.
Speaker 5 (08:31):
Cut our GDP Paul after the tariff turmoil really broke
out starting February second. That Sunday afternoon, my team got
together and we cut our GDP. So we went down
to one percent for twenty twenty five Q four to
Q four we brought that actually up a little bit
in recent weeks, so we're around one point five percent
for the year. That's not a recession, Paul. I would
(08:53):
characterize that as subpar economic growth, so subtrend, but that
doesn't really change here with that with this disinflation story,
I think that that will be the case. We'll have
subpart growth, We'll avoid a recession, but we'll have disinflation.
That's good for bonds. I think you're especially the long
end of the treasury market is really been pushed up
(09:14):
by fears of the fiscal fears of inflation from tariffs,
and if all of that sort of fades, man bonds
look good. We have a good set up here for
the bond market over the second half of the year.
In my view, really deficits included in that. Yeah, I
mean the deficits, Alex. This is the most widely known
story on Earth, you know, talking to global clients for years,
(09:37):
they've been looking at the US budget deficit. It's huge.
I'm not denying that six or seven percent of GDP.
I don't think that's going to change next year with
the big beautiful budget bill, but I think that's priced in.
We see that in I think the slope of the
curve in turn premium that's been built into tens and
thirty year treasuries. So that's no, that's a known known.
(09:58):
I think as we move on beyond that, you know,
people are going to realize the real story here is, Okay,
what happens with growth and what happens with inflation that
will drive markets.
Speaker 4 (10:07):
Hey, Jeffrey, I know you're in LA. You're an LA guy.
Give us a sense of what's happening out there.
Speaker 5 (10:14):
Well, you know, I'm twenty five miles from downtown LA today,
as you can see here in the home office. Part
of that is because paid and regal offices are, you know,
in the heart of it, downtown Los Angeles, which enjoyed
such a great resurgence pre COVID. It was really a renaissance,
if you will. Yeah, people living and working down there.
So the events that we've seen in the last week
or so really unfortunate, causing a lot of uncertainty here
(10:36):
on the West Coast. I think as far as it
pertains to the economic data, I mean, the big thing
we're watching here, Paul, is the labor force. You saw
that actually in the May jobs report, labor force participation
went down. We like to look at the labor force flows,
so every month you can look at the number of
people that are going from being employed, for example, to
(10:58):
out of the labor force, and in May that number
was the biggest increase that we've seen outside of COVID
in the last twenty twenty five years. It could be retirements,
it could be people leaving the labor force for reasons other,
you know, than work related, maybe family related reasons. But
it could also be related to the immigration issues. So
I think we need to keep we need to keep
(11:18):
an eye on that because the labor force participation is
the key part of economic growth.
Speaker 4 (11:23):
Jeffrey, thank you so much for joining us. Really appreciate
getting your time. Jeffrey Cleveland, Chief economists Payden and Regal
joining us via zoom from Los Angeles, where he is
a based.
Speaker 1 (11:36):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
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Speaker 4 (11:50):
We are live here in the Bloomberg Interactive Broker Studio
in New York. We are streaming live on YouTube as well.
All right, I'm looking at some Bloomberg reporting here, and
Donald Trump says he's intended to send letters to trading
partners in the next one to two weeks setting unilateral
tariff rates ahead of a July ninth deadline to reimpose
(12:11):
higher duties on dozens of economies. So sending out letters.
I'm not sure what that means, but I guess do
I watch mine? Dear sir, maam exactly to whom it
may concern, we're raising your things. Nathan Dean, he knows
the stuff because we pay him to know this stuff.
Nathan Dean, Bloomberg Intelligence senior policy analysts. Nathan, just give
us your latest kind of over you of where we
(12:31):
are on these tariffs here in little I guess context.
Speaker 6 (12:37):
Yeah, what I would say is, there's really two phrases
we're saying at the moment. The first is uncertainty. And look,
if you're in the markets, this isn't a new word,
you know. The uncertainty is the year for is the
word for twenty twenty five. But I would also use
the phrase status quo because even though President Trump said
yesterday that he's going to send those letters out, and
for what it's worth, that's a much easier way than
going to the Rose Garden and holding up a little
(12:59):
card that.
Speaker 4 (12:59):
Says caclates, you know.
Speaker 6 (13:02):
I think what we're going to see is we saw
some reporting from Bloomberg News just last night that President
Trump was also talking about extending this. So I think
the current idea here is is that you're going to
have a situation where you have President Trump going out
there and making threats or making statements that raises headline risk.
But subsequently you're also going to have this idea that
we're just going to try and keep the status quo
(13:24):
because we don't want to rock the markets. And so
I think you are going to see some examples. I
think President Trump may pick on a couple of countries
or the European Union in particular, to try and raise
a renewed threat or a headline risk in order to
just spur negotiations. But I think for the next three
to six months, the markets are going to face this
on this status quo of a ten percent baseline plus
(13:46):
an extension or plus an exemption, or plus a certain
additional threshold like we saw with the China agreement and
that should probably stick through the third quarter.
Speaker 2 (13:56):
Are these agreements, Emily, we're just looking at China in
the UK, are they actually different or are they just
kind of circling back to where we were before all
of this trauma unfolded here.
Speaker 6 (14:06):
Well, so the China one is mostly status quote from
where we were before, But the UK agreement was different
because the United Kingdom didn't have a trade deficit with
the United States like other certain countries do. So the
base case scenario that you should be looking at is
a ten percent minimum tariff on every country.
Speaker 5 (14:23):
I mean, look, you know.
Speaker 6 (14:24):
We heard Treasury Secretary Scott Besson say if they don't
have any trade, you know, tariff's on us, we're not
going to have tariffs on them. But this idea of
a ten percent baseline is something that's usually sticking around at.
Speaker 5 (14:33):
The White House.
Speaker 6 (14:35):
But then you're also going to see exemptions for example, automobiles, technology.
Anybody that can get into the White House is going
to be pushing for President Trump to offer exemptions. And
we just go back to this idea that if you
are going to see sectors that impact consumer prices, so
think of things like Apple, MacBooks or Amazon or you know, Walmart,
Like Treasury Secretary Scott Bessont was just getting pushed about
(14:58):
in the Senate Finance Committee, and you are going to
see exemptions, but then there are going to be additional
you know, tariffs for other countries. But we should say
that a lot of this depends on negotiations. Bloomberg News
reported just twenty minutes ago that Prime Minister Mark Karney
said the US Canada's going well. They reported last night
that negotiations with India weren't going so well, so that
idea for examples to be made before July ninth could
(15:20):
come about.
Speaker 4 (15:22):
Okay, I guess we'll just we just keep in touch
with some skepticism. But it feels like we're going to
get to a spot kind of where we did last time,
which is, at the end of the day, it's a
lot about nothing, you know, and I think the markets,
certainly the equity markets might be pricing that in with
the rebound here all right, Nathan, for the adults in
(15:43):
the room here, what's the next thing from DC we
should be focusing on here?
Speaker 6 (15:47):
So the number one question we've been getting from our
clients just this morning is when is the Senate Finance
Committee going to release its legislation or its text President
Trump's One Big, Beautiful Bill. So if you are an
equity investor in your you know, exposed to the solar
industry or the winds industry, this is very important to
you because Senator Crape out just last night was saying
that things like certain text credits should be phased out earlier,
(16:11):
and we think he was hitting at solar and wind
and others would be extended, which was nuclear and geothermal.
Now obviously we're still waiting for that text. Now. I
think that text is going to come after market clothes
on Friday. I think it's going to come Saturday or Sunday.
But keep your eyes out because there is this potential
for some what I you know, I used to say
marijuana stocks have hot sauce. Now I say the solar
(16:32):
stocks they have hot sauce. So these things move around,
So definitely keep your eyes out for that. That's probably
the next major catalyst you're going to see coming from Washington, is.
Speaker 2 (16:39):
That like a hot sauce reference is a good thing
or a bad thing or just spicy, just stuff spicy.
Speaker 6 (16:45):
I stole it from our friends over in the ETF space.
Speaker 2 (16:48):
Okay, no, fair enough, because a solar sector is just
really in a mess based on when the tax credits
land when it comes out of the Senate.
Speaker 5 (16:58):
Do you think the timeline still works?
Speaker 1 (17:00):
I do.
Speaker 6 (17:01):
I think, you know, obviously the Senators want to have
all this legislation out in the public arena before Juneteenth.
Next week they're going away for a couple of days,
and I think the Senate can eventually get there. They
seem to be a little bit more i'd say on board.
There's still major questions about the deficit, getting the ram
Pauls on the dead ceiling, and you know the other
senators Ron Johnson's if you will, on board. But I
(17:22):
think they can get there by the fourth of July,
or maybe even after the fourth of July. We still
are thinking at eighty percent chance this gets done before
the August recess, all right.
Speaker 4 (17:31):
I mean those recesses are actually a good incentive to
get stuff like deadlines. Yes, so it's good, all right.
Nathan appreciate it as always, Nathan Dean, he is our
go to person in DC to explain all the craziness
down there in terms of the policies. Nathan Dean senior
policy analysts Bloomberg Intelligence. He's down on our DC bureau.
Speaker 1 (17:52):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarclay and Android Otto
with the Work Business app. Listen on demand wherever you
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Speaker 2 (18:06):
Happy Thursday, everybody. Alex still here alongside Paul Sweeney. This
is Bloomberg Intelligence Radio. We are broadcasting to live from
Interactive Broker Studio right here in Midtown Manhattan. So June
is Pride Month. So over the next couple weeks we're
going to highlight segments on topics related to equality. And
today we're speaking with Laura Maudy, a CEO and co
founder of Bobby Now. Bobby is the only mom founded
(18:27):
and lead pediatric nutrition company in the US and the
third largest fully integrated infant formula manufacturer in the country. Laura,
we remember speaking to you over the pandemic when there
were shortages of things like infant formula. What is first
and foremost on your radar right now, like the biggest
struggle that you have right now?
Speaker 7 (18:47):
Lovely to chat with you guys again.
Speaker 8 (18:49):
Hello, I am the biggest struggle I think right now
is you know, you'll remember the infant formula shortage in
twenty twenty two. There has been a very concentrated effort
to make sure that we diversify and break up the
concentrated market, and the only way to do that is
to invest in more domestic manufacturing. I think the last
(19:11):
time I spoke to you guys, I mentioned that we
have co created a bill that really allows and incentivizes
more domestic manufacturing for infant formula, and right now that
is the number one focus.
Speaker 4 (19:24):
The Infant Formula Made in America Act of twenty twenty five.
Talk to us about that.
Speaker 8 (19:30):
So again, like I said, this is on the back
of the shortage, and what we recognized was nothing will
change if nothing changes when it comes to the footprint
of infant formula manufacturing. So this bill incentivizes new players
to up level and to break ground and build infant
formula manufacturing here in the US.
Speaker 2 (19:53):
Is it How expensive is it?
Speaker 7 (19:55):
It's very expensive.
Speaker 8 (19:56):
It's very expensive, but maybe nothing like other other investments
that are being made right now in manufacturing. It takes
around three years and it could be anywhere from you know,
sixty to one hundred and fifty million dollars to get
a basic footprint in place, and sometimes even more, and
given how long it takes to be able to get
more manufacturing up and running, this is why we can't
(20:20):
wait for another crisis.
Speaker 7 (20:21):
The investments have to happen now. And what this.
Speaker 8 (20:24):
Bill is is and it's finally gotten bipartisan support. I
don't actually believe there's anything more bipartisan than investing in
how our next generation is fed and building the resiliency
of this market. I am just hoping that this bill
gets introduced as something that gets passed sooner rather than later.
Speaker 4 (20:45):
Just remind us, Lara, where do Americas Where do we
source most of our infant formula these days?
Speaker 8 (20:52):
Yeah, look, most of it, most of it is sourced domestically.
Speaker 7 (20:58):
But what we did do is that we allowed.
Speaker 8 (21:01):
Some international formulas, some foreign formulas come into the country.
Speaker 7 (21:05):
On the back of the shortage.
Speaker 8 (21:07):
We essentially have imported our way out of a crisis,
and that is still happening. So over the last few years,
we've gone from less than one percent of infant formula
being made and sourced in the US to now over
ten percent of American babies are relying on formula coming
in from overseas, And the big push that I'm trying
(21:27):
to have is high quality formula should be able to
be sourced and made here at America for American babies.
Speaker 2 (21:35):
Yes, but because it's expensive to say, build the plans here, etc.
Can we get that at a price point where like
you can stand business and make money, but also it
can be available to all different types of families.
Speaker 8 (21:48):
The push I would have on that is it takes
more than the private sector to be able to make
that happen. And we're talking about infant formula. This is
where we need something like this bill to be put
in place to help bring down the costs. Because what
they are is it's a production tax credit, which means
that for every can, for every production run we make,
(22:09):
there's tax credits given back so that we can bring
those costs down. And it's really important that we make
those investments today. Otherwise what we're doing is we're waiving
the white flag as a country and saying America is
unable to do it, so we're going to allow other
countries to feed our babies. Fast forward in seven ten years,
we could be in a much bigger crisis if we're
(22:31):
relying on other countries to feed our babies.
Speaker 4 (22:33):
Lar, just give us the latest updates for your company, Bobby.
Speaker 8 (22:38):
Well, we've been pushing a lot of innovation. I think
the one thing we can't lose sight of is that
the quality of infant formula deserves its utmost attention on
an ongoing basis. So we recently launched the first USDA
organic whole milk infant formula made at our facility in Ohio,
and we're going to keep watching the way science evolves,
(22:59):
and when the scientists say that there's new updates that
need to happen, we're going to be making those changes
to our product. And my entire focus as a mother
is to keep innovating and up leveling the nutritional requirements
of formula for American babies.
Speaker 2 (23:16):
Do you a want of competition right now?
Speaker 7 (23:21):
There is competition. There is competition, and it's healthy competition.
Speaker 8 (23:24):
Because we need we need choice, and this is probably
one of the only products in the market that doesn't
have enough options. It doesn't have enough choice, and I
believe I speak for many parents that when you walk
down the formula aisle of a retailer today's it can
often be an empty sad and lonely aisle.
Speaker 7 (23:46):
But you're feeding your babies and it shouldn't be so.
Speaker 8 (23:49):
I believe and I hope that with something like the
Domestic Manufacturing Bill, it actually introduces more competition. We need
to see more Bobbies on shelf, and that competition will
force all of us to up level standards we need.
Speaker 2 (24:01):
All Right, Laura, thanks lot, really appreciate it.
Speaker 5 (24:02):
Good luck.
Speaker 2 (24:03):
Laura Moudy, CEO and co founder of Bobby Infant, formula
maker here in the United States.
Speaker 1 (24:10):
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Speaker 2 (00:23):
So the Boeing seven eighty seven Dreamliner that was operated
by Air India crash shortly after taking off in India,
killing all. But it's killing all two hundred and forty
two people on board joining us now is said Phillip Bloomberg,
Deputy team leader for Global Aviation. I said he was
in London, but he's not. He's in Paris. I should
have known from the Eiffel Tower that's behind him. For
those of you on radio, this is all right before
(00:44):
the Paris air show, right, what are you hearing on
the ground.
Speaker 3 (00:48):
Thanks Alix. So at the moment, we don't really have
details on what rety went wrong with the aircraft and
what caused the crash. I mean it reached an altitude
of six hundred and twenty five feet and then it
sort of just plummeted the ground in a massive fireball.
And we know that over two hundred over two hundred
people have been pulled out dead. There has been some
(01:10):
mention of survivors, we don't really know how many. The
police said that survivors have been taken to hospital. We're
not quite sure whether those survivors are from the aircraft
or whether they're from the residential building. So the plane
crashed into a residential building. It was a medical college
hostel and that's where students and doctors were eating lunch
(01:30):
when the plane crashed. So it was a massive tragedy
the bot for air India, for India, and obviously it's
raised lots of questions on Boeing and we're still waiting
to see what those answers actually are to those questions
as to what caused it and where do we go
from here.
Speaker 4 (01:48):
So typically who leads these investigation series at the host
country is that the airline? Is it? How does that work?
Speaker 3 (01:57):
Yes, so the investigation will be led by investigators from India.
So typically when a plane crashes, the country where the
plane crash leads the investigation into what went wrong. The
other countries that sort of we have FA input, we
have NTSP input, we have input from the manufacturer. In
this case Boeing in also from GE because they made
(02:18):
the engine, So there will be input from others. And
we've also seen the UK Air Investigation Investigation Accident Investigation
Board talking that they would be sending some investigators to
India tomorrow, so there will be it will be a
multinational effort in terms of trying to find out what
went wrong and then they will sort of determine where
(02:40):
the problem came up from and what really caused this crash.
Speaker 2 (02:44):
We are seeing Boeing shares down obviously looking at GE
because they were using GE engines. Are those market reactions investors'
reactions legitimate considering how much unknown there are, how hard
it is to fly planes and the variables like birds.
Speaker 3 (03:02):
It's difficult to actually put a sort of input this
onto Boeing or GE because I mean, this aircraft has
been in service for over eleven years, almost twelve years,
so it's not a brand new aircraft that's just come
off fresh off the line from Boeing. So I mean
it is sort of far fetched to sort of pin
the blame on Boeing without sort of ascertaining the causes
of what happened and what went wrong. I mean, obviously
(03:24):
the investigation will determine what went wrong and who is
it fauld and if there was pilot error, if there
was any technical issue, if there was something wrong with
the plane or with the engines. But it's all still
too early to determine the cause of it, and so
it does seem to be an initial reaction, and we
will get more clarity on what really went wrong in
(03:45):
the days and months ahead as we sort of as
investigators sort of port through the flight data recorders, the
cockpit voice recorders and sort of pieced together, minute by minute,
second by second, what really went wrong.
Speaker 4 (03:57):
All right, so thank you so much for joining us.
Really appreciate your reporting, said our Philip, deputy team leader
for Global Aviation Bloomberg News. He is based in London,
but who's reporting from our Paris bureau today.
Speaker 1 (04:11):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 4 (04:25):
All right, let's talk inflation. Yesterday, Remember we had the
CPI data came out and it came in a little
less than expected, so we called that benign inflation, I
think was the term we used. As John's just mentioned,
we got the PPI out today, John characterized it as muted.
I'll go with that PPI final demand month the month
zero point one percent, consensus was zero point two percent.
(04:46):
And then if you annualize all this stuff and say
PPI X food, energy and trade year over year came
in a two point seven percent. Consensus was three percent.
So that's a pretty big beat, I would say. Jeffrey
Cleveland joins economists at Peyton and Regal out there in
l A. Jeffrey, what did you make of yesterday's CPI,
(05:07):
today's PPI what you call on inflation these days?
Speaker 5 (05:10):
Well, Paul, not only was it benign for May, that's
four months in a row, So four months in a row,
after you know, a January hot start to the year,
CPI has been soft. I know the inflationistas listening are
going to say that, you know, just wait, just wait
another month and the tariff toll will will hit, and
that is possible. But I would point out that in
(05:31):
the day that we saw yesterday, it wasn't just that
goods prices were soft. Also services prices were soft, So
you know, housing free which are we all clear, but
also non housing services. I wouldn't say the all clear, Alex,
but I mean it's uh, we're getting there. We're getting
close to say it all clear. I think another another
couple of months, I'll declare the the all clear. I
(05:52):
think also with this morning's PPI, you throw that in
the mix. You can imagine a soft reading for core
PCEE when it comes out at the end of this month,
which is what the FED is more focused on, and
I think very good news for the central Bank and
for the bond market. So soft inflation.
Speaker 4 (06:08):
Readings, So, Jeff, is it we're not necessarily seeing any
inflation in the numbers yet? Maybe we will in the future.
Is that a reflection of companies just kind of eating
the cost increases that they are experiencing, maybe taking in
the margin as opposed to passing them along to consumers.
Speaker 5 (06:24):
That's a possibility, Paul, It's possible. We just haven't seen
the pass through yet. People are shifting their behaviors, people
are making up for it in other ways and not
passing it through into prices. I think all of those
are in the mix. I think one thing we've been
telling clients is that. Keep in mind, imported goods in
terms of the PCE index are six seven eight percent
of the index, so you could see potential price increases
(06:49):
on those goods, but you have to keep in mind
most of what you spend your money on, PAUL are
things like services, and those we still see scope for
services to continue to cool off, and certainly we saw
that in May, so that could outweigh some of the
tariff price increase. That's a good news. So I think
by the end of the year, so if you can
look out six months or so, I think inflation will
(07:10):
continue to moderate. Okay, So if.
Speaker 2 (07:13):
We are in this disinflationary environment right now, well, actually,
would you categorize us as disinflation?
Speaker 4 (07:18):
Oh?
Speaker 5 (07:18):
Yeah, I mean we peaked in twenty twenty two at
a very high level on core inflation. It's been coming down.
It's been coming down slower than we would have hoped,
but it is disinflating. So I think we're definitely in
a disinflationary environment right now.
Speaker 2 (07:32):
Yes, So if it's disinflationary, is that enough for the
FED to cut in July September predemptively?
Speaker 5 (07:39):
I think you have to step back here. You put
yourselves in the shoes of the FED. You're at four
fifty on the funds rate. I would categorize that alex
as restrictive. So they have a restrictive policy setting. But
we know, we just talked about it. Inflation is cooling.
Disinflation and the other thing that you brought up earlier
on a segment which was wonderful, We are seeing a
slow down in the lake. So with that backdrop, I
(08:02):
think the next move from the Fed is a cut.
Question is what are they comfortable doing that. I don't
think it's likely next week, but I think the market
should start pricing in July, should start entertaining July. But
we think but by September guys will have some evidence
enough where they could possibly cut.
Speaker 4 (08:20):
If that's the scenario, and inflation, you know, is not
necessarily a concern here or a big concern, what does
that do to your GDP? Look for the remainder of
this year, we.
Speaker 5 (08:31):
Cut our GDP Paul after the tariff turmoil really broke
out starting February second. That Sunday afternoon, my team got
together and we cut our GDP. So we went down
to one percent for twenty twenty five Q four to
Q four we brought that actually up a little bit
in recent weeks, so we're around one point five percent
for the year. That's not a recession, Paul. I would
(08:53):
characterize that as subpar economic growth, so subtrend, but that
doesn't really change here with that with this disinflation story,
I think that that will be the case. We'll have
subpart growth, We'll avoid a recession, but we'll have disinflation.
That's good for bonds. I think you're especially the long
end of the treasury market is really been pushed up
(09:14):
by fears of the fiscal fears of inflation from tariffs,
and if all of that sort of fades, man bonds
look good. We have a good set up here for
the bond market over the second half of the year.
In my view, really deficits included in that. Yeah, I
mean the deficits, Alex. This is the most widely known
story on Earth, you know, talking to global clients for years,
(09:37):
they've been looking at the US budget deficit. It's huge.
I'm not denying that six or seven percent of GDP.
I don't think that's going to change next year with
the big beautiful budget bill, but I think that's priced in.
We see that in I think the slope of the
curve in turn premium that's been built into tens and
thirty year treasuries. So that's no, that's a known known.
(09:58):
I think as we move on beyond that, you know,
people are going to realize the real story here is, Okay,
what happens with growth and what happens with inflation that
will drive markets.
Speaker 4 (10:07):
Hey, Jeffrey, I know you're in LA. You're an LA guy.
Give us a sense of what's happening out there.
Speaker 5 (10:14):
Well, you know, I'm twenty five miles from downtown LA today,
as you can see here in the home office. Part
of that is because paid and regal offices are, you know,
in the heart of it, downtown Los Angeles, which enjoyed
such a great resurgence pre COVID. It was really a renaissance,
if you will. Yeah, people living and working down there.
So the events that we've seen in the last week
or so really unfortunate, causing a lot of uncertainty here
(10:36):
on the West Coast. I think as far as it
pertains to the economic data, I mean, the big thing
we're watching here, Paul, is the labor force. You saw
that actually in the May jobs report, labor force participation
went down. We like to look at the labor force flows,
so every month you can look at the number of
people that are going from being employed, for example, to
(10:58):
out of the labor force, and in May that number
was the biggest increase that we've seen outside of COVID
in the last twenty twenty five years. It could be retirements,
it could be people leaving the labor force for reasons other,
you know, than work related, maybe family related reasons. But
it could also be related to the immigration issues. So
I think we need to keep we need to keep
(11:18):
an eye on that because the labor force participation is
the key part of economic growth.
Speaker 4 (11:23):
Jeffrey, thank you so much for joining us. Really appreciate
getting your time. Jeffrey Cleveland, Chief economists Payden and Regal
joining us via zoom from Los Angeles, where he is
a based.
Speaker 1 (11:36):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 4 (11:50):
We are live here in the Bloomberg Interactive Broker Studio
in New York. We are streaming live on YouTube as well.
All right, I'm looking at some Bloomberg reporting here, and
Donald Trump says he's intended to send letters to trading
partners in the next one to two weeks setting unilateral
tariff rates ahead of a July ninth deadline to reimpose
(12:11):
higher duties on dozens of economies. So sending out letters.
I'm not sure what that means, but I guess do
I watch mine? Dear sir, maam exactly to whom it
may concern, we're raising your things. Nathan Dean, he knows
the stuff because we pay him to know this stuff.
Nathan Dean, Bloomberg Intelligence senior policy analysts. Nathan, just give
us your latest kind of over you of where we
(12:31):
are on these tariffs here in little I guess context.
Speaker 6 (12:37):
Yeah, what I would say is, there's really two phrases
we're saying at the moment. The first is uncertainty. And look,
if you're in the markets, this isn't a new word,
you know. The uncertainty is the year for is the
word for twenty twenty five. But I would also use
the phrase status quo because even though President Trump said
yesterday that he's going to send those letters out, and
for what it's worth, that's a much easier way than
going to the Rose Garden and holding up a little
(12:59):
card that.
Speaker 4 (12:59):
Says caclates, you know.
Speaker 6 (13:02):
I think what we're going to see is we saw
some reporting from Bloomberg News just last night that President
Trump was also talking about extending this. So I think
the current idea here is is that you're going to
have a situation where you have President Trump going out
there and making threats or making statements that raises headline risk.
But subsequently you're also going to have this idea that
we're just going to try and keep the status quo
(13:24):
because we don't want to rock the markets. And so
I think you are going to see some examples. I
think President Trump may pick on a couple of countries
or the European Union in particular, to try and raise
a renewed threat or a headline risk in order to
just spur negotiations. But I think for the next three
to six months, the markets are going to face this
on this status quo of a ten percent baseline plus
(13:46):
an extension or plus an exemption, or plus a certain
additional threshold like we saw with the China agreement and
that should probably stick through the third quarter.
Speaker 2 (13:56):
Are these agreements, Emily, we're just looking at China in
the UK, are they actually different or are they just
kind of circling back to where we were before all
of this trauma unfolded here.
Speaker 6 (14:06):
Well, so the China one is mostly status quote from
where we were before, But the UK agreement was different
because the United Kingdom didn't have a trade deficit with
the United States like other certain countries do. So the
base case scenario that you should be looking at is
a ten percent minimum tariff on every country.
Speaker 5 (14:23):
I mean, look, you know.
Speaker 6 (14:24):
We heard Treasury Secretary Scott Besson say if they don't
have any trade, you know, tariff's on us, we're not
going to have tariffs on them. But this idea of
a ten percent baseline is something that's usually sticking around at.
Speaker 5 (14:33):
The White House.
Speaker 6 (14:35):
But then you're also going to see exemptions for example, automobiles, technology.
Anybody that can get into the White House is going
to be pushing for President Trump to offer exemptions. And
we just go back to this idea that if you
are going to see sectors that impact consumer prices, so
think of things like Apple, MacBooks or Amazon or you know, Walmart,
Like Treasury Secretary Scott Bessont was just getting pushed about
(14:58):
in the Senate Finance Committee, and you are going to
see exemptions, but then there are going to be additional
you know, tariffs for other countries. But we should say
that a lot of this depends on negotiations. Bloomberg News
reported just twenty minutes ago that Prime Minister Mark Karney
said the US Canada's going well. They reported last night
that negotiations with India weren't going so well, so that
idea for examples to be made before July ninth could
(15:20):
come about.
Speaker 4 (15:22):
Okay, I guess we'll just we just keep in touch
with some skepticism. But it feels like we're going to
get to a spot kind of where we did last time,
which is, at the end of the day, it's a
lot about nothing, you know, and I think the markets,
certainly the equity markets might be pricing that in with
the rebound here all right, Nathan, for the adults in
(15:43):
the room here, what's the next thing from DC we
should be focusing on here?
Speaker 6 (15:47):
So the number one question we've been getting from our
clients just this morning is when is the Senate Finance
Committee going to release its legislation or its text President
Trump's One Big, Beautiful Bill. So if you are an
equity investor in your you know, exposed to the solar
industry or the winds industry, this is very important to
you because Senator Crape out just last night was saying
that things like certain text credits should be phased out earlier,
(16:11):
and we think he was hitting at solar and wind
and others would be extended, which was nuclear and geothermal.
Now obviously we're still waiting for that text. Now. I
think that text is going to come after market clothes
on Friday. I think it's going to come Saturday or Sunday.
But keep your eyes out because there is this potential
for some what I you know, I used to say
marijuana stocks have hot sauce. Now I say the solar
(16:32):
stocks they have hot sauce. So these things move around,
So definitely keep your eyes out for that. That's probably
the next major catalyst you're going to see coming from Washington, is.
Speaker 2 (16:39):
That like a hot sauce reference is a good thing
or a bad thing or just spicy, just stuff spicy.
Speaker 6 (16:45):
I stole it from our friends over in the ETF space.
Speaker 2 (16:48):
Okay, no, fair enough, because a solar sector is just
really in a mess based on when the tax credits
land when it comes out of the Senate.
Speaker 5 (16:58):
Do you think the timeline still works?
Speaker 1 (17:00):
I do.
Speaker 6 (17:01):
I think, you know, obviously the Senators want to have
all this legislation out in the public arena before Juneteenth.
Next week they're going away for a couple of days,
and I think the Senate can eventually get there. They
seem to be a little bit more i'd say on board.
There's still major questions about the deficit, getting the ram
Pauls on the dead ceiling, and you know the other
senators Ron Johnson's if you will, on board. But I
(17:22):
think they can get there by the fourth of July,
or maybe even after the fourth of July. We still
are thinking at eighty percent chance this gets done before
the August recess, all right.
Speaker 4 (17:31):
I mean those recesses are actually a good incentive to
get stuff like deadlines. Yes, so it's good, all right.
Nathan appreciate it as always, Nathan Dean, he is our
go to person in DC to explain all the craziness
down there in terms of the policies. Nathan Dean senior
policy analysts Bloomberg Intelligence. He's down on our DC bureau.
Speaker 1 (17:52):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarclay and Android Otto
with the Work Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (18:06):
Happy Thursday, everybody. Alex still here alongside Paul Sweeney. This
is Bloomberg Intelligence Radio. We are broadcasting to live from
Interactive Broker Studio right here in Midtown Manhattan. So June
is Pride Month. So over the next couple weeks we're
going to highlight segments on topics related to equality. And
today we're speaking with Laura Maudy, a CEO and co
founder of Bobby Now. Bobby is the only mom founded
(18:27):
and lead pediatric nutrition company in the US and the
third largest fully integrated infant formula manufacturer in the country. Laura,
we remember speaking to you over the pandemic when there
were shortages of things like infant formula. What is first
and foremost on your radar right now, like the biggest
struggle that you have right now?
Speaker 7 (18:47):
Lovely to chat with you guys again.
Speaker 8 (18:49):
Hello, I am the biggest struggle I think right now
is you know, you'll remember the infant formula shortage in
twenty twenty two. There has been a very concentrated effort
to make sure that we diversify and break up the
concentrated market, and the only way to do that is
to invest in more domestic manufacturing. I think the last
(19:11):
time I spoke to you guys, I mentioned that we
have co created a bill that really allows and incentivizes
more domestic manufacturing for infant formula, and right now that
is the number one focus.
Speaker 4 (19:24):
The Infant Formula Made in America Act of twenty twenty five.
Talk to us about that.
Speaker 8 (19:30):
So again, like I said, this is on the back
of the shortage, and what we recognized was nothing will
change if nothing changes when it comes to the footprint
of infant formula manufacturing. So this bill incentivizes new players
to up level and to break ground and build infant
formula manufacturing here in the US.
Speaker 2 (19:53):
Is it How expensive is it?
Speaker 7 (19:55):
It's very expensive.
Speaker 8 (19:56):
It's very expensive, but maybe nothing like other other investments
that are being made right now in manufacturing. It takes
around three years and it could be anywhere from you know,
sixty to one hundred and fifty million dollars to get
a basic footprint in place, and sometimes even more, and
given how long it takes to be able to get
more manufacturing up and running, this is why we can't
(20:20):
wait for another crisis.
Speaker 7 (20:21):
The investments have to happen now. And what this.
Speaker 8 (20:24):
Bill is is and it's finally gotten bipartisan support. I
don't actually believe there's anything more bipartisan than investing in
how our next generation is fed and building the resiliency
of this market. I am just hoping that this bill
gets introduced as something that gets passed sooner rather than later.
Speaker 4 (20:45):
Just remind us, Lara, where do Americas Where do we
source most of our infant formula these days?
Speaker 8 (20:52):
Yeah, look, most of it, most of it is sourced domestically.
Speaker 7 (20:58):
But what we did do is that we allowed.
Speaker 8 (21:01):
Some international formulas, some foreign formulas come into the country.
Speaker 7 (21:05):
On the back of the shortage.
Speaker 8 (21:07):
We essentially have imported our way out of a crisis,
and that is still happening. So over the last few years,
we've gone from less than one percent of infant formula
being made and sourced in the US to now over
ten percent of American babies are relying on formula coming
in from overseas, And the big push that I'm trying
(21:27):
to have is high quality formula should be able to
be sourced and made here at America for American babies.
Speaker 2 (21:35):
Yes, but because it's expensive to say, build the plans here, etc.
Can we get that at a price point where like
you can stand business and make money, but also it
can be available to all different types of families.
Speaker 8 (21:48):
The push I would have on that is it takes
more than the private sector to be able to make
that happen. And we're talking about infant formula. This is
where we need something like this bill to be put
in place to help bring down the costs. Because what
they are is it's a production tax credit, which means
that for every can, for every production run we make,
(22:09):
there's tax credits given back so that we can bring
those costs down. And it's really important that we make
those investments today. Otherwise what we're doing is we're waiving
the white flag as a country and saying America is
unable to do it, so we're going to allow other
countries to feed our babies. Fast forward in seven ten years,
we could be in a much bigger crisis if we're
(22:31):
relying on other countries to feed our babies.
Speaker 4 (22:33):
Lar, just give us the latest updates for your company, Bobby.
Speaker 8 (22:38):
Well, we've been pushing a lot of innovation. I think
the one thing we can't lose sight of is that
the quality of infant formula deserves its utmost attention on
an ongoing basis. So we recently launched the first USDA
organic whole milk infant formula made at our facility in Ohio,
and we're going to keep watching the way science evolves,
(22:59):
and when the scientists say that there's new updates that
need to happen, we're going to be making those changes
to our product. And my entire focus as a mother
is to keep innovating and up leveling the nutritional requirements
of formula for American babies.
Speaker 2 (23:16):
Do you a want of competition right now?
Speaker 7 (23:21):
There is competition. There is competition, and it's healthy competition.
Speaker 8 (23:24):
Because we need we need choice, and this is probably
one of the only products in the market that doesn't
have enough options. It doesn't have enough choice, and I
believe I speak for many parents that when you walk
down the formula aisle of a retailer today's it can
often be an empty sad and lonely aisle.
Speaker 7 (23:46):
But you're feeding your babies and it shouldn't be so.
Speaker 8 (23:49):
I believe and I hope that with something like the
Domestic Manufacturing Bill, it actually introduces more competition. We need
to see more Bobbies on shelf, and that competition will
force all of us to up level standards we need.
Speaker 2 (24:01):
All Right, Laura, thanks lot, really appreciate it.
Speaker 5 (24:02):
Good luck.
Speaker 2 (24:03):
Laura Moudy, CEO and co founder of Bobby Infant, formula
maker here in the United States.
Speaker 1 (24:10):
This is the Bloomberg Intelligence podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday ten am to noon Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
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