June 26, 2021 • 29 mins
This week, Mercury Group CEO Adam Posner came on to talk about bottlenecks in the global supply chain and why there have been astronomical jumps in shipping rates. Audacity Capital founder and general partner Erikan Obotetukudo discussed forming the first VC firm focused solely on crypto startups and the opportunity she sees in the space. Win Thin, head of global currency strategy at Brown Brothers Harriman, joined to explain why he thinks global liquidity has reached an inflection point and markets are not taking it into account. Then UBS Economist Alan Detmeister gave his outlook for rent inflation.
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Episode Transcript
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Speaker 1 (00:08):
Welcome to What You Missed This Week? I'm Joe Wisenthal.
This podcast has some of our favorite interviews from the
Daily Market Clothes show that I co anchor along with
Romaine Bosti and Caroline Hyde. What do you miss It's
the perfect way to kick off your weekend. We've spent
a lot of time talking about the various bottlenecks in
the economy. Some areas, like lumber seem to have pooled
(00:28):
down a little bit, but this week we looked at
one area that has shown no signs of getting better,
and that's global shipping. A common industry measure of container
rates between Hong Kong Los Angeles has surged to its
highest level in years, maybe ever. So we got some
perspective from someone in the business and spoke with Anton Posner,
CEO of the Mercury Group, and we asked Anton what
(00:48):
his firm does and what the big challenges facing his
clients are right now. Thanks for having me on, Joe.
We we focus on the supply chain and logistics. Global
logistics for industrial commodity so steel, metals, ores, agricultural commodities
moving them around the world, for trading companies, producers, banks
(01:11):
that are involved in commodity trade. So supply chain management
focus right, supply chain management focus, and they must be
putting their hair out their clients at the moment. There's
a great story on the terminal out of control shipping
costs far up one one toy manufacturer in the UK
called the Entertainers And in forty years of toy retailing,
(01:31):
I've never known such challenging conditions from the point of
view of pricing that he's having to like stop stocking
a certain kind of teddy bear because it would double
in price. And on how much you've seen these prices
go through the roof, right, Yeah, Caroline, We're seeing astronomical
jumps and daily just daily fluctuations on what's what's happening
(01:52):
in the markets. If you look look at our focus
on the types of commodities that we're moving, which are
on the metals and raw material side, industrial commodities, we're seeing,
let's say, the ships that are carrying those those types
of commodities, handy size bulk vessels have tripled in cost
for a daily higher rate. So a few months ago,
(02:14):
several months ago, the ship that would carry steel from
the Far East to the United States, for example, was
running at about ten thousand dollars a day for a
higher or leasing the ship essentially even Layman's terms. Now
we're seeing over thirty dollars plus per day for those
for those ships to take a ship on time charter
long term lease. So of course that's filtering down to
(02:36):
the per ton cost of freight that's going into the aluminum,
the copper, right the the steel that is going into
the consumer goods that people are buying. So we're seeing
it on the shelves essentially. Right. So I mentioned in
the intro that there are areas of supply chains commodities
bottlenecks that have shown some signs of maybe easing a
(02:58):
little bit, and it's not dramatic, but maybe over the
worst of it doesn't look like that is there are
Is there any light at the end of the tunnel?
Are there? Or what's it gonna take to start to
see that number is a little bit. Yeah, it's a
it's a good question, Joe, you know the big big question.
This week we saw China intervene on on the copper
side by releasing copper national stock piles to try to
ease pressure on commodity markets. It's going to until there
(03:23):
is a downward pressure on the commodity commodity pricing and
the market overall, We're not going to see much happening
on at least on the industrial certainly on the industrial
commodity UH supply supply chain side, right, Retail focuses on
container container ships. Of course, energy commodities focused on the
tanker markets. But but everything is is heating, is still
(03:46):
hot right now. So a little downward pressure this week
with China jumping in with some of the downward pressure
on agricultural commodities. UH FEDS comments today on interest rates
UH certainly helped. But when is the when is this
going to end? Good question? I'd like to know the
answer today, And I thought you were going to tell us. Yeah,
(04:07):
If I knew the answer to that, I'd be I'd
be buying some some future some interesting future contracts, futures, contracts,
derivatives right now? Do that end? Like? How are you
trying to hedge this out to some extent? Anton? What
are you having to put in place to try and
anneviate some of the questions you're experiencing? Sure, Carline, the
big thing is communication with our clients, making sure that
(04:29):
they're not stuck out there, UH, not letting them execute
trades and purchases without having the proper freight support at
this point. So getting that point across to our clients
is key to to work in lockstep right now to
make sure that if they're gonna pull the trigger on
a trade, if they're gonna buy aluminium, they're gonna make
buy steel, they're gonna pull the trigger on a sale
(04:51):
of iron ore coal, thermal coal or metallurgical, that we
have that freight support to back up that trade before
they me that particular before they make that particular trade.
So communication, hammering home what's going on in these markets
to our client base is just critical right now. So
getting that communication out and making sure that they all
(05:13):
know what's happening. UH. Infrastructure Joe and I talked about
on the podcast last week, UH is another big part
of it. We're seeing strains all over the place right
So understanding what's happening in the ports, Understanding the constraints
that we're seeing because of the infrastructure infrastructure situation, not
just in North America but throughout the globe. Key also
(05:35):
write what ports to avoid, where, what parts of the
inland river system in the United States to avoid all
key You know, one thing that we've seen in some
areas is this sort of like amplification effect where people
are saying, if companies are saying worried about their ability
to source semiconductors, then maybe they'll make even larger orders
for down the road so that they feel like they
(05:56):
can get Something's like some uncertainty about supply. Does that
is that we had an issue with booking freight down
the road. It's like, you know what, I don't know
what I'm gonna need in September, October, October, but I'm
going to try and buy some space now because I'm
you know, I just want to get it. I want
to make sure I can get on the ship. Creating
further logistical problems, I think not as much of an issue,
(06:18):
Joe not seeing at least, I'm not seeing that. We're
not seeing that as a as a major issue. The
focus right now is securing space for immediate immediate needs
and short short term, short term needs. There are we're
all working on some forward longer term contract business. For example,
steel coming out of Southeast Asia running into two so
(06:40):
we're trying to secure that in UH In long term
contracts with some flexibility. Uh there, but no, we're not
necessarily seeing situations where people are are you making say,
let's use the term ghost bookings right that they know
or that they think is a good chance that they
will not need. It's not really going to accomplish much
in at least in the in the world of industrial
(07:02):
commodities that we're dealing with. That's not one other thing.
It seems like, you know, how much are these sort
of seemingly isolated incidents like the blockage in the Suez,
some of the outbreaks that we've seen of COVID in
some of the Chinese ports. How much do these sort
of little idiosyncratic things at a time when the chain
is already so stressed, really compound and reverberate for several
(07:26):
weeks after Yeah, yeah, good question. The sue s situation
was done in about a week when they when they
cleared the ship. It certainly caused some some uproar. You
had ships diverting to go around around the cape around
the south southern tip of Africa to avoid the avoid
the canal. Turned out that was probably not the not
(07:47):
the best move for those ships, and in terms of cost,
considering how fast the canal was open. But what we're
seeing in China right now with port of the Nten
just outside of Hong Kong and several of the ports
with the COVID situation being uh, you know, having massive
delays and now seeing container carriers avoid those ports, that's
(08:08):
having some major disruptions. You you have a situation, there's
already a backlog, as Tracy knows right what we what
we dealt with on the on the Teddy Bear example,
when you already had a situation where containers were getting
left behind. Now you have ships just avoiding these ports altogether,
so just really compounding the situation greatly. There's a few
(08:32):
good pieces out out in the media about how many
ships are sitting off an anchor at some of these ports.
You could just see them on brain traffic and so forth.
So Audacity Capital could be the first venture capital fund
focused on crypto startups and helm by a black woman.
The Los Angeles based firm is going to invest in
cryptocurrency related startups led by entrepreneurs of Black and African descent,
(08:55):
with a focus on decentralized finance and its ray. It's
an undisclosed some from investors, including IDEO colab Ventures and
Electric Capital. The fun plans to invest up to one
thousand dollars each and as many as three startups a quarters.
So we caught up with a woman behind Audacity Capital,
it's founder and CEO, Ericon about Tokudo. We started by
(09:15):
asking what opportunity she sees for her fund Yes, so,
first of all, thank you so much for having me. Fundamentally,
we recognize that the next generation of the Internet is
being created today and there are so many entrepreneurs from
all over the world that have the great greatest advantage
point to create the Internet that needs to exist today.
So we want to back them. And we recognize that
(09:37):
there's a whole continent in Africa and so many different
parts of the world that have overlooked and underestimated founders
that can literally become the next geniuses to create the
better Internet, to create create the better financial system, and
create better cultures for lives of people all over the world.
So we want to invest in them. Kind of you're
a woman who knows Africa used to be connecting them
(09:59):
with the future of Africa. You connected investors with entrepreneurs.
But we're a woman who's I mean, you've troubled. You've
been a jazz musician, not I UNDERSTANDI at one point
really fund focused on helping fund a cure for aids
in Brazil, South Africa. What drew you to crypto? What
got you investing in ethereum? Yeah, well, fundamentally, I have
been someone who's been overlooked by financial institutions my entire
(10:22):
life as an immigrant in the United States. My family
has sent hundreds of thousands of dollars back to Africa
every single year. And frankly, I can't walk into a
traditional bank and be serviced for my needs to move
money across continents and oceans. And so my understanding of
blockchain and my understanding of crypto was that I could
send money without intermediaries including banks, to my family members
(10:44):
in Nigeria, without dealing dealing with the incredible costs and
the incredible challenges and and frankly inability to track my
money effectively. And when I was living in Nigeria and
literally was at the beginning of recession which many countries
around the world are experiencing today, I was not able
to move my money in the local currency because it
was deflating incredibly, and I couldn't even move it to
(11:05):
the US dollar because the local the national government had
said there's a freeze on the dollar in the nation,
and the dollar had become gold in Nigeria. And when
I realized that and one of the largest black nations
in the world, the biggest producer of oil in Africa,
and one of the biggest exports of intellectual capital had
a currency that they couldn't rely on, I knew that
we needed an alternative system. So I dabbled in a
(11:25):
theoryum and eventually found that blockchain has created away for
us to literally move trillions of dollars around the world
without the middlemen that we have to work around today.
When you think about like the types of apps or
the types of companies that can allow normal people to
sort of interact with crypto, because it is extremely hard
to wrap ones head around often and the apps are confusing,
(11:47):
and especially a lot of the DeFi apps still have
a long way to go in terms of usability. That's
sort of like the general public, would it be able
to understand what are the types of solutions or sorry,
the types of like problems that you're looking to see
solved in the companies you're trying to find. Yeah, so
fundamentally things are challenging. You're so right about that, and
(12:08):
guess what, it is the perfect time to now create
the layer that is accessible, that is available and readily
understandable by the general mass public. So we're looking to
invest in companies that recognize that the infrastructure can be
as complicated as it is, but at the end of
the day, we need to communicate and get as close
to the eight billion people on this planet. So not
(12:29):
only people have the opportunity to build wealth, but they
can do so in a way that they understand. So
we're excited to invest in companies that are considered depths
to centralize apps, which are essentially layers on top of
all of this funny sounding infrastructure that you all are
hearing about today that essentially make you not even aware
of what all of this technicality is and simply allow
you to on wrap nicely and smoothly into this new
(12:51):
Internet with seamless efforts to build wealth and participate in
new financial systems. So we're excited about those seamless um
apps and solutions that make this infrastructure more accessible, and
of course focused on those that are being built by
people of color in particular Aricain and I think, what's
what's so interesting when we are lucky enough on this
show to interview, for example, basketball stars, some celebrities, So
(13:12):
are people of color who've got into Crypto, got into
n f t S for example, and a really powerfully
passionate about getting people of color within it. They see
an area that you don't need to be an accredited investor,
that there are less blocks to actually getting in at
an early stage to back these sorts of companies. How
many people have color a building at the moment, How
many companies are there opportunities to put these a hundred
(13:35):
thousand dollar checks to work? Yeah, well, fundamentally, since you
are did such a great job and breaking the story,
we've had incredible inbound and right now there's a wonderful
community called Crypto for Black Economic Empowerment, which includes one
fifty Crypto All Stars from across twenty countries. And right
there alone, there's about seventy companies that are worth making
(13:58):
a solid investment today at our seeking some of the
largest amounts of capital um in the space right now.
So right now we recognize that there's easily a hundred
companies that we can look to invest in. We want
to make one to three a quarter, and frankly, with
the visibility and representation matters so much with so many
more people now being able to see, wow, I can
do that. I can raise ten million dollars and build
(14:19):
something that has a fifteen billion dollar market cap in
four years. I want to go and do that as well.
So we also recognize that this fund is really going
to signal to so many black and brown people from
all over the world that they can be the leaders
in the new Internet, and that we can be a
check that is the first one to go into them
and say we believe in you when we validate your genius. Okay,
I'm so pleased to al Gore. Our colleague broke the story,
(14:42):
brought you to our attention, and we want to thank
you so much for coming on on your birthday now.
This week, fed Sherman J. Powell was back on Capitol
Hill testifying before the House elect can on the coronavirus crisis,
and he sounded in quite devilish after striking more hawkersh
(15:04):
shone than many expected at his recent news conference following
the FMC rate decision. The dollar fell on his comments
and we got reaction from Wind Thin, the global head
of Currency strategy at Brown Brothers Herman. We started by
asking when how much the current trajectory of FED policy
is consistent with the framework laid out at Jackson Hall
last year. But to me, it's entirely consistent. I know
(15:25):
there's been some confusion amongst the media and the market,
but you know, to me, it's prudent. If you're going
barreling down um an unknown highway at full speed and
come up on a curve, I think most drivers who
putin would probably take the foot off the gas a
little bit. And it's a simple analogy, but that's my view. Uh,
this tapering talk, we're emerging pandemic. You know, we think
(15:48):
that there's no wage pressures and what have you. But
as Mr Palace had, the inflation has been much higher
than expecting, it could be more persistent. So to me,
I think it's prudent for the FED officials at these say, look,
we're talking about talk about tapering, and you know, as
Mr Bullard confirmed earlier this week, Mr Powell has opened
those discussions. UM People focusing on the August Jackson all
(16:10):
means September afform see but you know, make no mistake
that we are at an inflection point. Um. We can
look around the world, go down the checklist, but global
equity is has reached an inflection point. I think that's
something that markets are not quite um kicking in a
count yet. Okay. Wea then goes the great US dollar.
Does it push higher and the fact that we're expecting
(16:32):
some sort of great hikes sooner than expected, even if
it's a couple of years off, or does it go
lower because our gil's you know, we start to see
it will win priced in and we worry more about
a deficit. So obviously it kind of such to myself.
Try and look at you know, historical examples one force
right now, we only have a sample sized one, and
that's from the Great Financial Crisis. Um. The FED was
(16:54):
the first to aggressively go to zero rates KWEI and
the dollars typically suffer. Um, it's in that early part.
We saw that during the pandemic this past year. But
it's sort of first and first out. The FED was
also set the groundwork for a really a rip roaring
recovery for the US economy back in two thousand nine ten. UM,
(17:14):
we started talking about tapering, that the US economy performed
and the dollars started getting some tractions. So again, you know,
it's not much of a sample to go on, but
it's the best we've got and I still see this
roadmap being played out. The FED has a similar sort
of roadmap for tapering and eventually hiking rates. Obviously timing
is open to question, but you know, you know, the
sort of the playbook and the roadmap are out there. Um.
(17:36):
The tip pandemic obviously something we've never ever had to
deal with in terms of policy and what have you.
But Mr paul has done a to me, a terrific job, um,
you know, navigating these things. But again I think prudence
says that, you know, we shouldn't go full speed ahead
when when we're going into a very sort of unknown
um territory. So the one sort of risk and the
(17:57):
one thing that Paulo and his press conference last week
it expressed some possible anxiety over not not too much
is couldn't this period of elevated inflation now? Could it
last longer? Could it? Could transitory inflation turn into more
elevated sustained inflation, Maybe inflation expectations become unananchored. Do you
see anything out there, either in the data itself or
(18:19):
surveys or anything else that causes you to be concerned
that there will be something other than sort of inflation
related to the reopening. Yes, that's a great question. Um.
You know, to me, I have more questions and answers
these days. I mean, I really, but I have to
ask the right questions. That's me the question. I think
that's the million dollar questions. What's going on in labor market?
You know, we've had this sort of antdo elevidence that
(18:40):
all people staying home because enhanced benefits, but the sances
defended to study um last month that suggests about one
and are are sort of doing this? So a very
small amount that that that you know that are sort
of in this sort of thematicum or we're staying home
because being pages at home. It's it's you know, we're
him all sorts of shorts of the aber. People who
(19:01):
are not going into low wage industry is leaving moving up.
So to me, there's there is some potential wage pressure. Again,
I'm not an inflation easta by any stretch, but there's
so much unknown to me. The labor market is the key.
You know, comms all recognized that, um, really the lynchpind
the higher inflation is higher wage inflation, um, you know.
And so that's that's to me that the biggest question.
(19:22):
We won't know. We won't know this for several months,
and that that is really to me. I think, what
is you know, I think it's so risky form markets
that we we sort of have bought into this narrative fads,
it's temporary, it's bottlenecks. But as you point out, Joe,
it's it's you know, what's transitorys three months, six months,
nine months. You can you can make a case for
again as Mr Powell did, that this could go on
for for longer than expected. And I would say the
(19:45):
bondom marks been incredibly patient, you know, with ten ure
one fifty, when we've got four pc up three point
four percent possibly on Friday. UM, so so many moving parts.
But if I had to say anything that you know,
the risks to me are more inflationary than deflationary. Does
that go worldwide? Given this is so much about people
being able to come out pent up demand. I understand,
(20:06):
of course the rollout the vaccine isn't similar everywhere We
don't see certain countries getting back online as quickly as
perhaps would anticipated, but it does feel like inflation is
something the Bank of England, for example, is having to
tackle to. Where else do we see these narratives playing out?
So you know, it's really really articular, and I look
at the central banks around the world. I really see
the versions the countries that went into this pandemic. Strong
(20:29):
are the central banks that are actually talking about or
thinking about or have already rooved UM combination. That would
be the Bank of Camp getting them very tapered RBS
probably next, the FED is talking about it. Nor just
banks has flagged the hike ray hikes, so is the
rbn Z all the times we're doing well before the
pandemic and the sort of first you know, sort of
recover Bank of Japan, e c B, SNB, Swiss National Bank,
(20:52):
the Swedish Risks Bank, they were all battling deflation going
into pandemic and as a result they sort of entered
this UM period a very weakened state. So those central
banks are nowhere nearer moving accommodation. So this diversience, I
think is gonna become clearer and clearer. Um, you know
as as we sort of moved through this year, in
the second half this year. Um, but you know it's
all being joined by underlying economic fundamentals. Um, those that
(21:15):
have good, strong growth. I think those currencies outperformed bank
like you mentioned Bank of England. Um. You know, they
were the first to sort of get this vaccine to
a lot of really going and the numbers out of
the NU Care a blockbuster. Um. So really and again
it's sort of you know, sort of have and have
not got to keep an eye on on how these
things go. And we're getting a bit of a buyer
(21:38):
strike in the housing market, data showing that sales of
new homes dropped unexpectedly in May, with high prices continuing
to weigh on affordability and builders rushing to replenish inventory.
This is coming as rents continue to rise as well.
We got some perspective from Allen Debt, moister economist at UBS.
We started by asking Ellen if we should be expecting
a surge and rent inflation later this year some extent, Yes,
(22:03):
we've been seeing some very strong increases in rents for
new listings. So private sector data from Apartment list Zillo,
Yardie Matrix Chortologic Single family rent Index. Those have moved
up very strongly in recent months. They were a little
week early in the in the pandemic, but they have
moved up very strongly in the last few months. And
(22:26):
those take some time to get into the CPI basket,
usually on average, you know, uh, six to twelve months
before those get into the CPI baket, because the CPI
is not looking at new rent rent for new releases.
They're looking at the average stock of rent being paid,
and they take a six month moving average. Okay, And
(22:46):
I have to say anecdotally, I feel it. I've just
been looking for a new apartment and I was thinking
I would catch some sort of deal, and I had
significantly missed it by several months. I understand the whole
world suddenly wants to come back to New York City
and prices are driven higher. Is this the case though
for everywhere at the moment. We certainly feel it in
certain hubbs as people bring back to work in the
(23:09):
office space. But is this is appeally New York kind
of dynamical. Where is it happening in the rest of
the US. The monthly increases have been the strongest in
in New York and some of these areas where we've
seen the early weakness New York, Boston, San Francisco and
in the inner city is not in the further out areas.
The further out areas did see some big strong increases
(23:31):
and earlier in the pandemic, but the most recent monthly
ones have been more in the inner city areas. Over
the last twelve months, though you see it more kind
of in some of the areas that weren't affected earlier
in the pandemics. Say Phoenix has had some large increases
over the last twelve months, but not as much in
the last couple So then what does this mean then
(23:51):
for headline inflation? It's like we can look at four
point seven or five percent and say, you know what,
this is just about a few distinct categories, some supply
chain it ups and so forth, and we can expect
them to resolve. But again, oh, we are really big component.
What are what are you seeing in terms of the
pressure that that's going to put on the headline measures? Yeah,
(24:12):
so those will put a big upward pressure on CPI,
particularly a core CPI where owners equivalent rent tenants, rents
or of the index A lot less on the feds
preferred PC inflation nature where they get about half the way,
actually a little less than half the way. So there's
not gonna be as much upward pressure on the FEDS masure,
(24:33):
but there will be on the what you know, financial
markets and tips are based off of the CPI, so
that's gonna lead to a little disconnect next year. We
actually expect the spread between those two majors to open
up to about a hundred and twenty basis points by
early next year, where the average is something like thirty
basis points. So we expect to see actually some pretty
(24:55):
weak numbers on the Fed's preferred more PC inflation gauge
because you've got weakness in in some of the core
goods prices likely to be seeing when we get into
the fourth quarter into next year. And to that point,
Alan therefore, is it right for the FED to look
through what is perhaps now a sudden flight back to
inner cities and maybe that will be transitory? And I'm
(25:16):
interested in what happens to all the suburbs that suddenly
saw rumpopping rents as everyone wanted to get out of
the cities. Do they then come back down as offset
things over time? And does all of this prove transitory
or is the only way up well the rents major,
particularly in the in the core, the way the BLS
and b A, the official price and disease major, that
(25:39):
tends to be very slow moving. So it's probably not
going to get too strong until we're into the fourth
quarter of this year or into next year. But since
it's so slow moving, it's going to be really hard
to tell. Is this just a transitory pickup in going
back to you know, everybody coming back into the inner cities,
or is it really some being more persistent and so
(26:01):
that we're gonna have to follow some of these other
gauges like you showed them the ZELLO and the apartment
list masure and see if those price increases start coming
back down. We haven't seen it yet the last few months,
as you showed, we're just booming in those indexes. Do
you have a four a specific forecast for where it's
gonna go. We're just looking at the chart and so
so so far below and even pre crisis, I mean
(26:22):
there's well above. You know, we're in the mid threes
for rent increases an now or at two point one percent.
Do you see it getting back to those levels. Do
you see it shooting over shooting sort of pre crisis paces,
the pre crisis pace of your over your change, Like,
how far do you think it could go based on
some of the other indicators you're looking at. Yeah, so
for right now, we're expecting to that twelve month masure
(26:44):
to peek out well above where it was at the
pre crisis, up to about four and if we're in
a quarter percent. But I think with the numbers that
we've seen on those, um those other private sector indexes
are to the upside, and sooner we've got you know,
the official index is peaking out middle too late next year,
and it could occurred much quicker and much higher than
(27:05):
we're expected if we still can see those see those
rents for new leases moving out as strongly as they
have the last couple of months. Can you dispel the
own myth I've created in my own head or not,
as the case may be. But what shows up when
when all these real estate brokers were offering basically just
three months but actually didn't change the level of rent,
(27:26):
how does that feed into the data? Does that get
picked up? Does it look as though the rents have
never changed in theory they should be picked up. What
they try to do is if they they're giving you
a month free rent, they will the BLS will take
it that you're paying five six rent on the place
for the first six months. But some of those things
in their free months get pretty complicated where you can
(27:49):
pick different months and in the year, or take half
rent for a couple of months at some point. So
it's not clear that the CPI really gets all of
that free month those concessions off, but they attempt to
try and get them. Let's just talk real briefly elsewhere
within the basket. So again, we know the contours of
current inflation, we know the FED stands, we know the
(28:12):
stands of the market, and the markets sort of not
particularly showing any signs of whether you look at break
events and so forth, of being too concerned. The transitory
story well accepted. Do you see any evidence to doubt
that overall? No, As as you mentioned, it's been a
fairly narrow increase that we've been seeing um in recent months,
(28:32):
particularly used cars, new cars, some strength in household furnishings
and supplies UM Burns furniture in particular, and and things
like airfares which are still well below their pre pandemic level,
like twelve and a half percent, and those are probably
still expected to see some strength over the next few months,
but that's just getting back to where they were. And
(28:54):
for those other things, you'll see a movement away from
the goods based consumption that we've really seen since the
pandemic started down back to services based consumption, and that
will probably decrease demand and costs for a lot of
those goods. But over the next few months, I still
expect to see some strong inflation numbers, probably higher than
(29:17):
than uh what consensus is when the beds expecting, and
this could lead them to be even more pockished by
the time we had the September meeting. And that's it
for what you missed this week. If you like the show,
and make sure to subscribe and rate us an Apple
podcast or wherever you listen to podcasts, you can catch
(29:37):
our show every weekday from three thirty to five pm
on Bloomberg TV and from four to five pm on Twitter.
Thanks for listening and have a great week.
Welcome to What You Missed This Week? I'm Joe Wisenthal.
This podcast has some of our favorite interviews from the
Daily Market Clothes show that I co anchor along with
Romaine Bosti and Caroline Hyde. What do you miss It's
the perfect way to kick off your weekend. We've spent
a lot of time talking about the various bottlenecks in
the economy. Some areas, like lumber seem to have pooled
(00:28):
down a little bit, but this week we looked at
one area that has shown no signs of getting better,
and that's global shipping. A common industry measure of container
rates between Hong Kong Los Angeles has surged to its
highest level in years, maybe ever. So we got some
perspective from someone in the business and spoke with Anton Posner,
CEO of the Mercury Group, and we asked Anton what
(00:48):
his firm does and what the big challenges facing his
clients are right now. Thanks for having me on, Joe.
We we focus on the supply chain and logistics. Global
logistics for industrial commodity so steel, metals, ores, agricultural commodities
moving them around the world, for trading companies, producers, banks
(01:11):
that are involved in commodity trade. So supply chain management
focus right, supply chain management focus, and they must be
putting their hair out their clients at the moment. There's
a great story on the terminal out of control shipping
costs far up one one toy manufacturer in the UK
called the Entertainers And in forty years of toy retailing,
(01:31):
I've never known such challenging conditions from the point of
view of pricing that he's having to like stop stocking
a certain kind of teddy bear because it would double
in price. And on how much you've seen these prices
go through the roof, right, Yeah, Caroline, We're seeing astronomical
jumps and daily just daily fluctuations on what's what's happening
(01:52):
in the markets. If you look look at our focus
on the types of commodities that we're moving, which are
on the metals and raw material side, industrial commodities, we're seeing,
let's say, the ships that are carrying those those types
of commodities, handy size bulk vessels have tripled in cost
for a daily higher rate. So a few months ago,
(02:14):
several months ago, the ship that would carry steel from
the Far East to the United States, for example, was
running at about ten thousand dollars a day for a
higher or leasing the ship essentially even Layman's terms. Now
we're seeing over thirty dollars plus per day for those
for those ships to take a ship on time charter
long term lease. So of course that's filtering down to
(02:36):
the per ton cost of freight that's going into the aluminum,
the copper, right the the steel that is going into
the consumer goods that people are buying. So we're seeing
it on the shelves essentially. Right. So I mentioned in
the intro that there are areas of supply chains commodities
bottlenecks that have shown some signs of maybe easing a
(02:58):
little bit, and it's not dramatic, but maybe over the
worst of it doesn't look like that is there are
Is there any light at the end of the tunnel?
Are there? Or what's it gonna take to start to
see that number is a little bit. Yeah, it's a
it's a good question, Joe, you know the big big question.
This week we saw China intervene on on the copper
side by releasing copper national stock piles to try to
ease pressure on commodity markets. It's going to until there
(03:23):
is a downward pressure on the commodity commodity pricing and
the market overall, We're not going to see much happening
on at least on the industrial certainly on the industrial
commodity UH supply supply chain side, right, Retail focuses on
container container ships. Of course, energy commodities focused on the
tanker markets. But but everything is is heating, is still
(03:46):
hot right now. So a little downward pressure this week
with China jumping in with some of the downward pressure
on agricultural commodities. UH FEDS comments today on interest rates
UH certainly helped. But when is the when is this
going to end? Good question? I'd like to know the
answer today, And I thought you were going to tell us. Yeah,
(04:07):
If I knew the answer to that, I'd be I'd
be buying some some future some interesting future contracts, futures, contracts,
derivatives right now? Do that end? Like? How are you
trying to hedge this out to some extent? Anton? What
are you having to put in place to try and
anneviate some of the questions you're experiencing? Sure, Carline, the
big thing is communication with our clients, making sure that
(04:29):
they're not stuck out there, UH, not letting them execute
trades and purchases without having the proper freight support at
this point. So getting that point across to our clients
is key to to work in lockstep right now to
make sure that if they're gonna pull the trigger on
a trade, if they're gonna buy aluminium, they're gonna make
buy steel, they're gonna pull the trigger on a sale
(04:51):
of iron ore coal, thermal coal or metallurgical, that we
have that freight support to back up that trade before
they me that particular before they make that particular trade.
So communication, hammering home what's going on in these markets
to our client base is just critical right now. So
getting that communication out and making sure that they all
(05:13):
know what's happening. UH. Infrastructure Joe and I talked about
on the podcast last week, UH is another big part
of it. We're seeing strains all over the place right
So understanding what's happening in the ports, Understanding the constraints
that we're seeing because of the infrastructure infrastructure situation, not
just in North America but throughout the globe. Key also
(05:35):
write what ports to avoid, where, what parts of the
inland river system in the United States to avoid all
key You know, one thing that we've seen in some
areas is this sort of like amplification effect where people
are saying, if companies are saying worried about their ability
to source semiconductors, then maybe they'll make even larger orders
for down the road so that they feel like they
(05:56):
can get Something's like some uncertainty about supply. Does that
is that we had an issue with booking freight down
the road. It's like, you know what, I don't know
what I'm gonna need in September, October, October, but I'm
going to try and buy some space now because I'm
you know, I just want to get it. I want
to make sure I can get on the ship. Creating
further logistical problems, I think not as much of an issue,
(06:18):
Joe not seeing at least, I'm not seeing that. We're
not seeing that as a as a major issue. The
focus right now is securing space for immediate immediate needs
and short short term, short term needs. There are we're
all working on some forward longer term contract business. For example,
steel coming out of Southeast Asia running into two so
(06:40):
we're trying to secure that in UH In long term
contracts with some flexibility. Uh there, but no, we're not
necessarily seeing situations where people are are you making say,
let's use the term ghost bookings right that they know
or that they think is a good chance that they
will not need. It's not really going to accomplish much
in at least in the in the world of industrial
(07:02):
commodities that we're dealing with. That's not one other thing.
It seems like, you know, how much are these sort
of seemingly isolated incidents like the blockage in the Suez,
some of the outbreaks that we've seen of COVID in
some of the Chinese ports. How much do these sort
of little idiosyncratic things at a time when the chain
is already so stressed, really compound and reverberate for several
(07:26):
weeks after Yeah, yeah, good question. The sue s situation
was done in about a week when they when they
cleared the ship. It certainly caused some some uproar. You
had ships diverting to go around around the cape around
the south southern tip of Africa to avoid the avoid
the canal. Turned out that was probably not the not
(07:47):
the best move for those ships, and in terms of cost,
considering how fast the canal was open. But what we're
seeing in China right now with port of the Nten
just outside of Hong Kong and several of the ports
with the COVID situation being uh, you know, having massive
delays and now seeing container carriers avoid those ports, that's
(08:08):
having some major disruptions. You you have a situation, there's
already a backlog, as Tracy knows right what we what
we dealt with on the on the Teddy Bear example,
when you already had a situation where containers were getting
left behind. Now you have ships just avoiding these ports altogether,
so just really compounding the situation greatly. There's a few
(08:32):
good pieces out out in the media about how many
ships are sitting off an anchor at some of these ports.
You could just see them on brain traffic and so forth.
So Audacity Capital could be the first venture capital fund
focused on crypto startups and helm by a black woman.
The Los Angeles based firm is going to invest in
cryptocurrency related startups led by entrepreneurs of Black and African descent,
(08:55):
with a focus on decentralized finance and its ray. It's
an undisclosed some from investors, including IDEO colab Ventures and
Electric Capital. The fun plans to invest up to one
thousand dollars each and as many as three startups a quarters.
So we caught up with a woman behind Audacity Capital,
it's founder and CEO, Ericon about Tokudo. We started by
(09:15):
asking what opportunity she sees for her fund Yes, so,
first of all, thank you so much for having me. Fundamentally,
we recognize that the next generation of the Internet is
being created today and there are so many entrepreneurs from
all over the world that have the great greatest advantage
point to create the Internet that needs to exist today.
So we want to back them. And we recognize that
(09:37):
there's a whole continent in Africa and so many different
parts of the world that have overlooked and underestimated founders
that can literally become the next geniuses to create the
better Internet, to create create the better financial system, and
create better cultures for lives of people all over the world.
So we want to invest in them. Kind of you're
a woman who knows Africa used to be connecting them
(09:59):
with the future of Africa. You connected investors with entrepreneurs.
But we're a woman who's I mean, you've troubled. You've
been a jazz musician, not I UNDERSTANDI at one point
really fund focused on helping fund a cure for aids
in Brazil, South Africa. What drew you to crypto? What
got you investing in ethereum? Yeah, well, fundamentally, I have
been someone who's been overlooked by financial institutions my entire
(10:22):
life as an immigrant in the United States. My family
has sent hundreds of thousands of dollars back to Africa
every single year. And frankly, I can't walk into a
traditional bank and be serviced for my needs to move
money across continents and oceans. And so my understanding of
blockchain and my understanding of crypto was that I could
send money without intermediaries including banks, to my family members
(10:44):
in Nigeria, without dealing dealing with the incredible costs and
the incredible challenges and and frankly inability to track my
money effectively. And when I was living in Nigeria and
literally was at the beginning of recession which many countries
around the world are experiencing today, I was not able
to move my money in the local currency because it
was deflating incredibly, and I couldn't even move it to
(11:05):
the US dollar because the local the national government had
said there's a freeze on the dollar in the nation,
and the dollar had become gold in Nigeria. And when
I realized that and one of the largest black nations
in the world, the biggest producer of oil in Africa,
and one of the biggest exports of intellectual capital had
a currency that they couldn't rely on, I knew that
we needed an alternative system. So I dabbled in a
(11:25):
theoryum and eventually found that blockchain has created away for
us to literally move trillions of dollars around the world
without the middlemen that we have to work around today.
When you think about like the types of apps or
the types of companies that can allow normal people to
sort of interact with crypto, because it is extremely hard
to wrap ones head around often and the apps are confusing,
(11:47):
and especially a lot of the DeFi apps still have
a long way to go in terms of usability. That's
sort of like the general public, would it be able
to understand what are the types of solutions or sorry,
the types of like problems that you're looking to see
solved in the companies you're trying to find. Yeah, so
fundamentally things are challenging. You're so right about that, and
(12:08):
guess what, it is the perfect time to now create
the layer that is accessible, that is available and readily
understandable by the general mass public. So we're looking to
invest in companies that recognize that the infrastructure can be
as complicated as it is, but at the end of
the day, we need to communicate and get as close
to the eight billion people on this planet. So not
(12:29):
only people have the opportunity to build wealth, but they
can do so in a way that they understand. So
we're excited to invest in companies that are considered depths
to centralize apps, which are essentially layers on top of
all of this funny sounding infrastructure that you all are
hearing about today that essentially make you not even aware
of what all of this technicality is and simply allow
you to on wrap nicely and smoothly into this new
(12:51):
Internet with seamless efforts to build wealth and participate in
new financial systems. So we're excited about those seamless um
apps and solutions that make this infrastructure more accessible, and
of course focused on those that are being built by
people of color in particular Aricain and I think, what's
what's so interesting when we are lucky enough on this
show to interview, for example, basketball stars, some celebrities, So
(13:12):
are people of color who've got into Crypto, got into
n f t S for example, and a really powerfully
passionate about getting people of color within it. They see
an area that you don't need to be an accredited investor,
that there are less blocks to actually getting in at
an early stage to back these sorts of companies. How
many people have color a building at the moment, How
many companies are there opportunities to put these a hundred
(13:35):
thousand dollar checks to work? Yeah, well, fundamentally, since you
are did such a great job and breaking the story,
we've had incredible inbound and right now there's a wonderful
community called Crypto for Black Economic Empowerment, which includes one
fifty Crypto All Stars from across twenty countries. And right
there alone, there's about seventy companies that are worth making
(13:58):
a solid investment today at our seeking some of the
largest amounts of capital um in the space right now.
So right now we recognize that there's easily a hundred
companies that we can look to invest in. We want
to make one to three a quarter, and frankly, with
the visibility and representation matters so much with so many
more people now being able to see, wow, I can
do that. I can raise ten million dollars and build
(14:19):
something that has a fifteen billion dollar market cap in
four years. I want to go and do that as well.
So we also recognize that this fund is really going
to signal to so many black and brown people from
all over the world that they can be the leaders
in the new Internet, and that we can be a
check that is the first one to go into them
and say we believe in you when we validate your genius. Okay,
I'm so pleased to al Gore. Our colleague broke the story,
(14:42):
brought you to our attention, and we want to thank
you so much for coming on on your birthday now.
This week, fed Sherman J. Powell was back on Capitol
Hill testifying before the House elect can on the coronavirus crisis,
and he sounded in quite devilish after striking more hawkersh
(15:04):
shone than many expected at his recent news conference following
the FMC rate decision. The dollar fell on his comments
and we got reaction from Wind Thin, the global head
of Currency strategy at Brown Brothers Herman. We started by
asking when how much the current trajectory of FED policy
is consistent with the framework laid out at Jackson Hall
last year. But to me, it's entirely consistent. I know
(15:25):
there's been some confusion amongst the media and the market,
but you know, to me, it's prudent. If you're going
barreling down um an unknown highway at full speed and
come up on a curve, I think most drivers who
putin would probably take the foot off the gas a
little bit. And it's a simple analogy, but that's my view. Uh,
this tapering talk, we're emerging pandemic. You know, we think
(15:48):
that there's no wage pressures and what have you. But
as Mr Palace had, the inflation has been much higher
than expecting, it could be more persistent. So to me,
I think it's prudent for the FED officials at these say, look,
we're talking about talk about tapering, and you know, as
Mr Bullard confirmed earlier this week, Mr Powell has opened
those discussions. UM People focusing on the August Jackson all
(16:10):
means September afform see but you know, make no mistake
that we are at an inflection point. Um. We can
look around the world, go down the checklist, but global
equity is has reached an inflection point. I think that's
something that markets are not quite um kicking in a
count yet. Okay. Wea then goes the great US dollar.
Does it push higher and the fact that we're expecting
(16:32):
some sort of great hikes sooner than expected, even if
it's a couple of years off, or does it go
lower because our gil's you know, we start to see
it will win priced in and we worry more about
a deficit. So obviously it kind of such to myself.
Try and look at you know, historical examples one force
right now, we only have a sample sized one, and
that's from the Great Financial Crisis. Um. The FED was
(16:54):
the first to aggressively go to zero rates KWEI and
the dollars typically suffer. Um, it's in that early part.
We saw that during the pandemic this past year. But
it's sort of first and first out. The FED was
also set the groundwork for a really a rip roaring
recovery for the US economy back in two thousand nine ten. UM,
(17:14):
we started talking about tapering, that the US economy performed
and the dollars started getting some tractions. So again, you know,
it's not much of a sample to go on, but
it's the best we've got and I still see this
roadmap being played out. The FED has a similar sort
of roadmap for tapering and eventually hiking rates. Obviously timing
is open to question, but you know, you know, the
sort of the playbook and the roadmap are out there. Um.
(17:36):
The tip pandemic obviously something we've never ever had to
deal with in terms of policy and what have you.
But Mr paul has done a to me, a terrific job, um,
you know, navigating these things. But again I think prudence
says that, you know, we shouldn't go full speed ahead
when when we're going into a very sort of unknown
um territory. So the one sort of risk and the
(17:57):
one thing that Paulo and his press conference last week
it expressed some possible anxiety over not not too much
is couldn't this period of elevated inflation now? Could it
last longer? Could it? Could transitory inflation turn into more
elevated sustained inflation, Maybe inflation expectations become unananchored. Do you
see anything out there, either in the data itself or
(18:19):
surveys or anything else that causes you to be concerned
that there will be something other than sort of inflation
related to the reopening. Yes, that's a great question. Um.
You know, to me, I have more questions and answers
these days. I mean, I really, but I have to
ask the right questions. That's me the question. I think
that's the million dollar questions. What's going on in labor market?
You know, we've had this sort of antdo elevidence that
(18:40):
all people staying home because enhanced benefits, but the sances
defended to study um last month that suggests about one
and are are sort of doing this? So a very
small amount that that that you know that are sort
of in this sort of thematicum or we're staying home
because being pages at home. It's it's you know, we're
him all sorts of shorts of the aber. People who
(19:01):
are not going into low wage industry is leaving moving up.
So to me, there's there is some potential wage pressure. Again,
I'm not an inflation easta by any stretch, but there's
so much unknown to me. The labor market is the key.
You know, comms all recognized that, um, really the lynchpind
the higher inflation is higher wage inflation, um, you know.
And so that's that's to me that the biggest question.
(19:22):
We won't know. We won't know this for several months,
and that that is really to me. I think, what
is you know, I think it's so risky form markets
that we we sort of have bought into this narrative fads,
it's temporary, it's bottlenecks. But as you point out, Joe,
it's it's you know, what's transitorys three months, six months,
nine months. You can you can make a case for
again as Mr Powell did, that this could go on
for for longer than expected. And I would say the
(19:45):
bondom marks been incredibly patient, you know, with ten ure
one fifty, when we've got four pc up three point
four percent possibly on Friday. UM, so so many moving parts.
But if I had to say anything that you know,
the risks to me are more inflationary than deflationary. Does
that go worldwide? Given this is so much about people
being able to come out pent up demand. I understand,
(20:06):
of course the rollout the vaccine isn't similar everywhere We
don't see certain countries getting back online as quickly as
perhaps would anticipated, but it does feel like inflation is
something the Bank of England, for example, is having to
tackle to. Where else do we see these narratives playing out?
So you know, it's really really articular, and I look
at the central banks around the world. I really see
the versions the countries that went into this pandemic. Strong
(20:29):
are the central banks that are actually talking about or
thinking about or have already rooved UM combination. That would
be the Bank of Camp getting them very tapered RBS
probably next, the FED is talking about it. Nor just
banks has flagged the hike ray hikes, so is the
rbn Z all the times we're doing well before the
pandemic and the sort of first you know, sort of
recover Bank of Japan, e c B, SNB, Swiss National Bank,
(20:52):
the Swedish Risks Bank, they were all battling deflation going
into pandemic and as a result they sort of entered
this UM period a very weakened state. So those central
banks are nowhere nearer moving accommodation. So this diversience, I
think is gonna become clearer and clearer. Um, you know
as as we sort of moved through this year, in
the second half this year. Um, but you know it's
all being joined by underlying economic fundamentals. Um, those that
(21:15):
have good, strong growth. I think those currencies outperformed bank
like you mentioned Bank of England. Um. You know, they
were the first to sort of get this vaccine to
a lot of really going and the numbers out of
the NU Care a blockbuster. Um. So really and again
it's sort of you know, sort of have and have
not got to keep an eye on on how these
things go. And we're getting a bit of a buyer
(21:38):
strike in the housing market, data showing that sales of
new homes dropped unexpectedly in May, with high prices continuing
to weigh on affordability and builders rushing to replenish inventory.
This is coming as rents continue to rise as well.
We got some perspective from Allen Debt, moister economist at UBS.
We started by asking Ellen if we should be expecting
a surge and rent inflation later this year some extent, Yes,
(22:03):
we've been seeing some very strong increases in rents for
new listings. So private sector data from Apartment list Zillo,
Yardie Matrix Chortologic Single family rent Index. Those have moved
up very strongly in recent months. They were a little
week early in the in the pandemic, but they have
moved up very strongly in the last few months. And
(22:26):
those take some time to get into the CPI basket,
usually on average, you know, uh, six to twelve months
before those get into the CPI baket, because the CPI
is not looking at new rent rent for new releases.
They're looking at the average stock of rent being paid,
and they take a six month moving average. Okay, And
(22:46):
I have to say anecdotally, I feel it. I've just
been looking for a new apartment and I was thinking
I would catch some sort of deal, and I had
significantly missed it by several months. I understand the whole
world suddenly wants to come back to New York City
and prices are driven higher. Is this the case though
for everywhere at the moment. We certainly feel it in
certain hubbs as people bring back to work in the
(23:09):
office space. But is this is appeally New York kind
of dynamical. Where is it happening in the rest of
the US. The monthly increases have been the strongest in
in New York and some of these areas where we've
seen the early weakness New York, Boston, San Francisco and
in the inner city is not in the further out areas.
The further out areas did see some big strong increases
(23:31):
and earlier in the pandemic, but the most recent monthly
ones have been more in the inner city areas. Over
the last twelve months, though you see it more kind
of in some of the areas that weren't affected earlier
in the pandemics. Say Phoenix has had some large increases
over the last twelve months, but not as much in
the last couple So then what does this mean then
(23:51):
for headline inflation? It's like we can look at four
point seven or five percent and say, you know what,
this is just about a few distinct categories, some supply
chain it ups and so forth, and we can expect
them to resolve. But again, oh, we are really big component.
What are what are you seeing in terms of the
pressure that that's going to put on the headline measures? Yeah,
(24:12):
so those will put a big upward pressure on CPI,
particularly a core CPI where owners equivalent rent tenants, rents
or of the index A lot less on the feds
preferred PC inflation nature where they get about half the way,
actually a little less than half the way. So there's
not gonna be as much upward pressure on the FEDS masure,
(24:33):
but there will be on the what you know, financial
markets and tips are based off of the CPI, so
that's gonna lead to a little disconnect next year. We
actually expect the spread between those two majors to open
up to about a hundred and twenty basis points by
early next year, where the average is something like thirty
basis points. So we expect to see actually some pretty
(24:55):
weak numbers on the Fed's preferred more PC inflation gauge
because you've got weakness in in some of the core
goods prices likely to be seeing when we get into
the fourth quarter into next year. And to that point,
Alan therefore, is it right for the FED to look
through what is perhaps now a sudden flight back to
inner cities and maybe that will be transitory? And I'm
(25:16):
interested in what happens to all the suburbs that suddenly
saw rumpopping rents as everyone wanted to get out of
the cities. Do they then come back down as offset
things over time? And does all of this prove transitory
or is the only way up well the rents major,
particularly in the in the core, the way the BLS
and b A, the official price and disease major, that
(25:39):
tends to be very slow moving. So it's probably not
going to get too strong until we're into the fourth
quarter of this year or into next year. But since
it's so slow moving, it's going to be really hard
to tell. Is this just a transitory pickup in going
back to you know, everybody coming back into the inner cities,
or is it really some being more persistent and so
(26:01):
that we're gonna have to follow some of these other
gauges like you showed them the ZELLO and the apartment
list masure and see if those price increases start coming
back down. We haven't seen it yet the last few months,
as you showed, we're just booming in those indexes. Do
you have a four a specific forecast for where it's
gonna go. We're just looking at the chart and so
so so far below and even pre crisis, I mean
(26:22):
there's well above. You know, we're in the mid threes
for rent increases an now or at two point one percent.
Do you see it getting back to those levels. Do
you see it shooting over shooting sort of pre crisis paces,
the pre crisis pace of your over your change, Like,
how far do you think it could go based on
some of the other indicators you're looking at. Yeah, so
for right now, we're expecting to that twelve month masure
(26:44):
to peek out well above where it was at the
pre crisis, up to about four and if we're in
a quarter percent. But I think with the numbers that
we've seen on those, um those other private sector indexes
are to the upside, and sooner we've got you know,
the official index is peaking out middle too late next year,
and it could occurred much quicker and much higher than
(27:05):
we're expected if we still can see those see those
rents for new leases moving out as strongly as they
have the last couple of months. Can you dispel the
own myth I've created in my own head or not,
as the case may be. But what shows up when
when all these real estate brokers were offering basically just
three months but actually didn't change the level of rent,
(27:26):
how does that feed into the data? Does that get
picked up? Does it look as though the rents have
never changed in theory they should be picked up. What
they try to do is if they they're giving you
a month free rent, they will the BLS will take
it that you're paying five six rent on the place
for the first six months. But some of those things
in their free months get pretty complicated where you can
(27:49):
pick different months and in the year, or take half
rent for a couple of months at some point. So
it's not clear that the CPI really gets all of
that free month those concessions off, but they attempt to
try and get them. Let's just talk real briefly elsewhere
within the basket. So again, we know the contours of
current inflation, we know the FED stands, we know the
(28:12):
stands of the market, and the markets sort of not
particularly showing any signs of whether you look at break
events and so forth, of being too concerned. The transitory
story well accepted. Do you see any evidence to doubt
that overall? No, As as you mentioned, it's been a
fairly narrow increase that we've been seeing um in recent months,
(28:32):
particularly used cars, new cars, some strength in household furnishings
and supplies UM Burns furniture in particular, and and things
like airfares which are still well below their pre pandemic level,
like twelve and a half percent, and those are probably
still expected to see some strength over the next few months,
but that's just getting back to where they were. And
(28:54):
for those other things, you'll see a movement away from
the goods based consumption that we've really seen since the
pandemic started down back to services based consumption, and that
will probably decrease demand and costs for a lot of
those goods. But over the next few months, I still
expect to see some strong inflation numbers, probably higher than
(29:17):
than uh what consensus is when the beds expecting, and
this could lead them to be even more pockished by
the time we had the September meeting. And that's it
for what you missed this week. If you like the show,
and make sure to subscribe and rate us an Apple
podcast or wherever you listen to podcasts, you can catch
(29:37):
our show every weekday from three thirty to five pm
on Bloomberg TV and from four to five pm on Twitter.
Thanks for listening and have a great week.
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