Bloomberg Businessweek Weekend - June 17th, 2022

edition of Bloomberg Business Week. J Powell's Federal Reserve making its boldest move yet in the fight to curb inflation, calling for the first seventy five bases point interest rate increase. Since it was a big one, it was a big one. Powell also signaling that another such increase could come in July. And yet the federal funds rate is far from America's biggest economic concern right now. Our cover story will explain

why in just a moment. Also ahead on our broadcast, the outgoing see of the world's largest cruise vacation company talking about the prospects for a global recession. Also the CEO of SunPower telling us why the time to shift to solar it's now, And we'll check in on the retail environment. We'll do that with fashion entrepreneur Ray Burn. Some great voices on this weekend edition of the program

All About to Come. We begin with this week's cover story, though it does come from the Remarks section of Bloomberg Business Week, courtesy of assistant managing editor at the magazine, Jim Ellis. High inflation rattling Americans in part because it makes them feel like things are spiraling out of control, and there are plenty of signs that they are. Jim and Business we getitor Joe Weber explain, it makes you

go to some dark places really quick. Uh. And that is because of the nature of the last year and the spike that we've seen in inflation. Um has been something that Americans who have not had a sense of of what infliction means is suddenly it is gripping the country and it is leading to all kinds of anxieties, and that's reverberating across markets and everything else. And so, uh, you know, I turned to Jim Ellis early in the cycle and said, you know, Jim, you're uh elder statesman

on the staff. You live through the seventies and eighties. At Business Week, You've written We've asked you to write about this stuff before. Can you kind of give us a toe hold in it and then you know, between the Fed and the markets and everything. This week, it really to me what Jim ended up writing was really this sense of uh what it all means? Right? And and uh so, Jim, I'm just curious, like I'll take Tim's question on children and kind of bring that back

to you. Why why is inflation such a like almost like a cancer for sanity? I guess that it's core it's because it's one of those things that people, hey don't truly understand, certainly don't understand it in the way that economists do and um, but don't really have a clear definition for what it is. But they sort of know when it's there, they sort and they're afraid of it. And I think they're most afraid of it because it's one of those things that can affect the quality of

their life. Um. At the same time they have very little control over and because of at people are terrified of it. And um, you know, obviously, um, you know, an economist might tell you, well, there can be some good things about inflation. Inflation starts moving, um, you know, if prices are if wages start moving up, then you know, particularly for people who are either outside the labor force or people at the bottom of labor force. Maybe that's

a good thing. But you won't find anyone, as Stiller in his research to Ride, you know, they didn't find a single soul of the hundreds of people the interviewed who actually thought that inflation was a good thing. Jim, I wanted to go back to something that Joel said, you know, he said that you were at you were writing about the stuff in the nineteen seventies. You were at Business Week, and you wrote about this in the fall, inflation in the fall, and you made some parallels to

what you experienced in the nineteen seventies. And I'm wondering now a few months later, as inflation has continued to creep up and move higher, if you are starting to fear more then you did back in the fall, that we are indeed entering some sort of thing that was similar to what you experienced in the seventies in a way. I mean, obviously there are some rather significant differences between

now and the seventies. I mean, back then we did have, um, you know, we had product shortages that were really important because we had energy shortages both in a seventy three and and seventy nine where we had you know, gas lines. I mean today you can get gas. If you can afford five dollars six dollars gallon, you can get it. And also, um, we had significantly higher unemployment rates um back then than we have now. And now we have

a labor shortage still from post pandemic. And so in a lot of ways, you know, we're in a better place than we were in the seventies, obviously, but one thing that really rings true here, uh, you know, in a similarity to the seventies, is that there is a feeling that there are other things afoot. There are other things beyond just um, the continual rising prices that are making people feel uneasy and out of control and uh,

with their existence. I mean, right now we have everything from um, you know, the pandemic, the pandemic that doesn't seem to want to end. Um, the idea that you know, we have government system that we don't know if we are in control of, if we can trust what the president who says that the you know, the very basis of democracy, you know, the idea of you know, transfer power, that the integrity of elections is all put to question.

We have um, a lot of things that are making people feel uneasy and so UM to sort of get a handle on this, I talked to a number of sort of researchers, including um Um, you know, economists to think about behavior and um. They're saying that when people are afraid, they tend to be afraid of everything, and that being afraid of one thing, if you have multiple sources of discomfort, it actually sort of makes you feel

even worse. And so right now it's very real to say we do have rising prices, so we do have um inflation. But at the same time, people feel uncomfortable about government, they feel uncomfortable about safety of you know, with guns and safety of schools, and all of a sudden, it means that you're pushed to the end where you sort of think everything's going to hell. I mean the FED is uh, you know, they're in the position of being at least if if the seventies is any guide,

I mean that is um Um. You know, the one body that can bring it into this. I mean, you can beat inflation. You know. The problem is that to beat inflation, you often have to beat down the economy to the point that the people who will love you

for it, well, eventually hate you for it. That was Bloomberg Business Week Assistant Managing editor Jim Ellis, along with the editor of the magazine, Joel Webber, coming up a warning from the CEO of sun Power on what could be a difficult summer for America's power grid and how his company stands to benefit. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol

Masser and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio. Well, we caught up with him back in March, and as someone who has worked at Amazon, he wants to make using solar power for the home as easy as buying the book. Peter Pharisee as chairman, president and CEO of sun Power. It's a renewable energy company. It's got a market cap of just about three billion dollars and that could go up if the cost of energy continues to rise as it has been for much of Well, you're right, Uh,

it's shocking to see the increases. You know, utility bills are rising ten and it's really hitting consumers. Are energy energy went up three x? Yeah, it's it's you hear. Yeah, you hear a lot of these stories across the country. But what I can say on of the man's side is it's very strong. We grew in the first quarter and despite rising sorry raising some of our prices due

to supply chain costs, demand in the second quarter. You know, we haven't finished the second quarter yet, but I expected to grow even faster than it did in Q one. So we've been very pleased so far. I think between high energy prices and worries about blackouts, you know, people are really getting the message solar and battery storage, you know,

is the way to go. You know, it's interesting that you say that my energy company reached me, reach out to me recently and wanted to put me in connection with the solar company to see if I wanted to, you know, kind of put some panels about my roof and stuff. So and that just happened in the last week. Was at the weekend? Or what's the what's their interest in doing that? Like, why would they want you to

do that? Is it to decrease the demand. I think they all are increasingly right and help us out here, Peter. I mean, all companies increasingly have to reduce their carbon footprints, so if they can somehow wright source out to more greener rays um, that's part of their business strategy. I think many of the forward thinking you told these exactly, they want to reduce the amount of carbon footprint, getting

a lot of political pressure. But also, you know, when the grid is at its most stressed point, they have to light up these peaker plants. And these peaker plants are typically either coal or gas. They're very destructive on the environment because they can't run them very efficiently. So their goal is really to get you know, the forward thinking utilities are thinking how can we get as much

residential solar out there? And I'm not sure if you guys have heard about these concepts of virtual power plants, but it's kind of a concept that utilities will pay for consumers to take their solar battery energy and send it back to the grid when the grid is most stressed, which is usually six to seven PM, and we all get home upon our you know, our TVs and air conditioning and everything else. So there's a lot of really good ideas out there that I think are win win.

I'm glad Carrol you live in a place where your utility is thinking that direction sunny New Jersey. Yeah, it's and my roof isn't very big. But I got tell you, if you know the price is right, I kind of love to do it. One thing I do want to ask you, and I love this about peaker plants speakers. I was just like googling. I had no idea that that's what they're that's what they're referred to. Hey, Peter, I gotta they'll take a step back. And we do

this with all the leaders. So much market volatility. You know, we're all like on pins and needles about what the Fed's going to do tomorrow. And I do wonder, how does I mean your stock has seen a lot of pressure? I think down from the early April high, your market capit shrunk, so has most of the equity universe. To be fair, so volatility, tricky outlook, higher rate environment. How does what kind of pressures is putting on you? Guys? How do you think about it? And do you have outlook?

Do you feel like we're going to hit a recession? Well, I'm not qualified the answer of the recession. Yes, you are. You run a business. You run a business, you have to make decisions. Yeah, here's what I would say, right now, we have the high class problem of trying to keep up with customer demand. So I am chasing labor to

get more and more installation capacity across the US. And as you guys know from all the people you talk to, you're never sleeping very well with the supply chain every night, so we're constantly seeking more production of more panels and more components. So are really my my exclusive focus right now is not on the market. It's really on there's so much demand out there. You know, we're at a point now where we're going to have our third straight

quarter of record backlog. Obviously that's a wonderful signal about how much people love our products and bottom but you know, listening to consumers want stuff done fast. Let's say there is a recession or there is this pullback and consumer demand. We're seeing it in terms of consumer sentiment. With the way that consumers are feeling. We know they're concerned about inflation. We know high energy prices are eating into their while it's and it's not just energy for you know, powering

the home, it's of course filling up the car as well. Peter, well, at what point do they start to pull back on purchasing solar or financing solar, Like, what is the calculation that you guys have done when it comes to this type of data. Yeah, So most of our customers are telling us today that they're saving you know, a hundred couple hundred dollars a month when they install solar. I think,

even after paying for solar. Yeah. So I think as long as they continue to save money, I don't expect that any kind of you know, recession issue will have an impact because at the end of the day, the equation for consumers is really easy. Am I going to save money on this if I take at least or alone? Okay, So let I ask the question right now, that's what

people are seeing. Let me ask a question different way because our Bloomberg Intelligence senior commodity strategist Mike mcgloon came on earlier with us and talked about this being peak oil right now, and that's his prediction that we'll start to see energy prices come down. What happens when we if and when we start to see energy prices come down and and my energy bill goes back to what it was two years ago rather than what it was last month, then just demand dry up for solar. I

don't think so. And here's why. So over the last decade, UH solar prices have come down roughly seventy so it's really a much more affordable product than it used to be. Hey, one thing we want to ask you, I'm going to be you know, props to our Brian Eckhouse, who was like, hey, you gotta you're talking to Peter, You got to ask him about this present Biden, you know, looking to kind

of diffuse. I guess it's safe to say a really very complicated trade dispute that has paralyzed the US solar industry. UM and you know, he's imposing this two year freeze and new tiers for solar imports, invoking the Defense Production Acts to support US made pals. I don't know that it affects you guys specifically, But how does it or how do you think about this? And do you think

your company's share prices maybe suffered because of it? Well, I'm excited about where they want to get to, especially in two years, where they really want to incent you know, on shore production of solar panels. I think that's fantastic, Carol. We announced at our analyst day a couple of months ago that we're in late stage discussions with a company called First Solar. Uh. They're very famous because they're based here in the US and they make their panels here

in the US. So I think there's just a great opportunity as we move forward to get more and more of this industry production on shore. Having said all that, you're right, the decision that he made to sort of postpone any action there had no impact on our business.

But what it basically did is it will continue to keep prices low because it will allow companies to source panels from all parts of the world, including China, and it will make sure that there's continues to be great value in buying solar, particularly again compared to traditional energy prices. Still ahead on Bloomberg Business Week and update from what our next guest calls the American Riviera, South Florida and

specifically Miami Beach. One of the region's most prolific real estate agents tells us how much rising mortgage rates, inflation, and recession fears are squeezing her clients. This is Bloomberg Broadcasting from the financial capital of the world, Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nine team, and around the globe, the Bloomberg Business app and Bloomberg

Radio dot Com. This is Bloomberg Business Week. We want to get to our next guest. She was named the number one national agent at Douglas Element some seven fifty million dollars in sales volume last year alone, deals in and around Miami Beach bar Harmer, fall Harbor, right, ball Harbor. I don't know. I'm shaking my head. She's gonna help me with this. Uh, and we're gonna get into a look at really real estate overall and in particular Florida.

Dina Golden Tears, the executive director of sales at Douglas Allman. She joins, this vast bar harbor. Yeah, Dina, how are you great? Thank you so much for having me. Yeah, it's good to have you with us. Will help us understand what the market's looking like, because we did just read that article by our own talking about how we are seeing a decline in sales of homes in West Palm Beach, Florida. So just give us an idea of

what you're seeing. Sure, So the market that I specialize in really is, uh, the Miami Beach marketplace, which is pretty much our American riviera. Um, what we have seen the last two years has been uncharacteristic because people couldn't travel, so rather than going to Europe or to ask her to the Hampton's, we had some of the wealthiest people in the world quarantining and hanging out in Miami Beach.

So we had this NonStop flow of activity, whereas usually things dudes slowed down for us in June, July, and August and then everyone starts trickling back down for fall. So I am hoping that the slowdown that I'm seeing here is the reflection of that time tested pattern and hopefully not much more. Well. Yeah, so that's what we're trying to figure out, Like what is the financial market so much? You know, we talk about a Dina all

the time. We just talked about how some of the elite private schools in Florida are getting crowded because so much of Wall Street has gone to Wall Street South down in Florida. UM, So trying to get an idea of is there a slowdown though because of the financial market impact and people like I don't know you, you've you've seen a lot of cycles. What's your expertise telling you? I mean, I'm naturally inclined to be an optimist, so I'm hoping that again, it's kind of out of sight,

out of mind. With some of the deals I was working on. The buyers jetted off to Europe early this year because they haven't been in two years. They went out west early this year, and when you're not in Miami, it's really hard to get someone excited about a ten million dollar house. UM. I do believe that when they return, let's say in October, that I can revive those deals. But I did see some things that I was working on not come together. When people's stock portfolios were making

a cry. I'm wondering what's going on when it comes to you know, we were talking about decline in prices and decline in interest around the country. The housing market is certainly seeing moderating demand. I'm wondering how much this has to do with with rising mortgages and how you're thinking about you know, at what level do we start to see mortgages really start to hit demand. I mean, I know it has already, but like, what's the number

you think about? Well, where in seeing the mortgage interest rates, the high effect price points so far has really just been in one sector of my marketplace, which is three to five millions, which in Miami Beach is not you know, it's not the top tier of the marketplace. It's like a mid place. And in that price point, we've seen inventory really dramatically increase and buyers have several listenings to

choose from, whereas in ninety days they did not. So that's just one sector, and I hate to use one sector to generalize the whole marketplace because my listening is above ten million, my listening is above twenty million. I'm showing more than my listing the law priced wines. So

you know, it's interesting. Tim and I had a conversation yesterday about rents in New York City particular, and I know Florida, in Southern Florida's is really your world, but it was about the kind of record rents and just crazy and we're like, what happened to you? Everybody leaving New York City? It's like, what has happened in this

real estate market. Well, I think if you if you're a believer that people are not going to be buying as much because they're concerned about interest rates, then you have to be a believer that they want to rent. So if they're gonna be renting, it's going to make the rental market even hotter. So people aren't buying. You're saying, right, No, I'm saying if you're if you're a believer that people that are, the market is going to slow down because people don't want to buy. The race are too high,

and then what are they gonna do? They're going to go rent? What do you hear from your colleagues in New York just in the last twenty seconds that we have with you about slowing Are we going to see a slowdown in New York when it comes to sales? I'm not sure nobody's complaining. I mean, everyone's still, you know, really crushing it. But we haven't really seen in the after effects. You know, the deals that are closing in

my market, there's sales millions of dollars above apps. So we're still riding high because those deals happen sixty years ago and they're just closing now, dena five seconds at US buyers are outside the U s real quickly. It's always the US, but the outside US buyers are back now and hopefully one of them will buy my hundred million dollars less than the Golden Beach. That was Dina Golden Tear. She's executive director of sales over Douglas Element.

You're listening to Bloomberg Business Week. As we just heard, Miami is home to a hot housing market and it's also home to the world's largest cruise ship company. Of next, our exclusive interview with Carnival President and CEO Arnold'donald. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg

Quick Takes Tim Stinovik from Bloomberg Radio. Back in late April, Carnival named a new CEO to take over August one on A. Donald has been in that top spot since July, steering the company through a series of tough times, and that, of course, tim includes the pandemic. Donald is poised to become the company's vice chairman in August. Until then, he remains in charge of the world's largest cruise vacation company.

He joined US for an exclusive interview this past week, and Carol, you began by asking him about the chances that we may be facing a global recession in the near term. We're prepared to try the weather that storm, and we have sufficient liquidity. We've done with twenty nine billion dollars of financial transactions UM since ROM the beginning of of COVID on this COVID period UH and so we are well positioned with liquidity UM. As we said in the last I can't of a full business update

now because we're between corners. But from the last business update we gave at that time we had three quarters of the fleet sailing UM. Occupancy on those ships that were sailing was starting an increase. Obviously, the pandemic has taken an earned for the better more recently, and you can see protocols beginning to be relaxed and restrictions lifted in many areas, which bodes well for traveling general in

our business UH. And so you know, we see an opportunity to generate cash, accelerate repayment of debt over time UM, ultimately obviously creating sharehold of value. So recessions if recession comes, if there's additional UM global tensions, which you know, there's always something where in the world every year, something going on,

natural disasters, all of that. Um, you know, we're uh an industry and where a business and a company you know, engineer to weather through storms and and eventually will be getting back to the kind of gas cash generation that we're known for. You know, when I wish I knew when I wish I had that crost the ball, Carol,

come on, yeah, but I don't know exactly when. But um, you know, as we say in the last business update, we're expecting to be you know, pretty much at full operations and three if out before and as we say in the last business update, we will be giving an update here on another week or so and and and we'll well, we'll see where we are. But but you know, it's um uh we see a lot of fundamentals that are positive despite these other macel dynamics which are obviously

less positive and currently reflected in the market. Are your pricing your pricing power? Is that one of the positives? Because I am curious about how you are dealing with the increasing bunker fuel costs. You know, are you able to raise prices to kind of offset offset some of the higher costs and again I talked about higher food costs, higher labor. Are you able to to raise ticket prices?

You know, again we're a global business, and so we can't just hit a switch and automatically raise prices because fuel prices have gone up. If they're sustained increase in fuel prices as opposed to spikes and troughts. If there's the sustained high level of fuel pricing, obviously that Waltz may get reflected and and the cost to to the traveler. But right now we have you know, pent up demand, somewhat limited capacity because we're not operating yet. Uh, and

those are good tail winds. Obviously, we do have the head winds of higher fuel prices, and still some restrictions in the number of the world in terms of my areas in the world, in terms of constraints on being able to sell at full occupancy, in terms of accessing complete pools of guests who would like to sail with us. So you know, we're managing through all that. The overall longer term picture, though, Carol is really you know, positive

for the industry and certainly positive for one thing. I like talking about you and I said to you, Arnold, you've dealt with a lot of crises, certainly at the company and specific and you've seen a lot of different economic uh cycles, certainly as you said, as you were chairman or on the board at Carnival and then of course is running the company. So how is it where

it's such an interesting time right now? Right dealing with higher inflation, is tight labor market, a FED that is increasingly going to be it seems more and more aggressive. It fields really uncomfortable and complicated. UM. How do you kind of make sense of it? And what can you say? Do you see any kind of easing in some of the supply chain pressures? Is there anything out there? You talk about consumer demand, do you have a lot of confidence that that keeps coming, you know, for a while,

or do you start to see some weakness there? Now? We UM again as I mentioned, when not recession proved historically we've been recession resilient and UM right now, we certainly see pent up demand. People want to travel, you know, they want to UM share experiences. UH, you know, they

really are looking for experiences. So those are the tail winds. UM. There's constraints around that UM today, But those constraints are becoming fewer and less in terms of UM just the ability to feel that they can travel with certainty, not be concerned if they leave the country that they can get back in, not being concerned when they get to the airport where they'll be able to board the plane or not whether the plane is actually going to go on.

And so as those concerns evaporate when you start having the fly go to different countries, not sure what the rule is gonna be when you land, what are gonna be when you come back, you know obviously that impedes demand. So as those uncertainties to evaporate, that pent up latent demand for people to have experienced, for want to travel

and experience UM. That's ultimately what drives our business and it's what we're really great at it, and we do it at a value that's UM much better than equivalent based vacation. Arnold. I'm wondering specifically when it comes to here because Caroline I last month we're at the Milican Institute Global Conference, and one thing that came up over and over again was concerned about Europe's economy. But you yourself said, you can't paint the entire region with a

single brush. Talk to us about regional differences that you're seeing when it comes to economies right now. And if you're seeing pockets of strength, there's his pockets of weakness in some areas well, just through the lembs we look at from cruising. You know obviously, um, you know we're not going to Russia right now. You know, Saint Petersburg Um was a destination on a lot of itineraries, especially in the summertime. There were very high you and itineraries.

It's a very popular destination, etcetera. You think what everyone do you think you'll ever go back? Ever is a long is a long time. So ever, I'm sure let me ask the question a different way. What would need to have to what would need to happen in order to get St. Petersburg back on your itinerary? Well, first of all, it used to be peace and um, you

know that's first and foremost. Uh, and then um, from there we would have to see what you know, the restrictions are, the sanctions are, etcetera, if there are any and so on. But we believe in going to places where people want to go and where the locals want people to come. So we do believe in doing that and UM within of course our ultimate responsibilities and our top priority compliance and environmental protection and the health, safety

and well being of everyone. So we're gonna be in compliance with local as well as international and and and our our home state and flag state, um, you know, regulations. So it'll it'll take that that's okay to go from a compliance a regulatory standpoint, UM, And it would take that it's safe for people to go and it serves the best interests of health for everyone involved. You CEEO for nine years on the board for much longer than that. What didn't you get to do that you wish you

had That's a great question. There are always things that you wish you had had a chance to do. UM. One of the biggest things is that we are celebrating fifty year anniversary, fifty year birthday of a Carnival brand and our corporation, and the brand has done a very

nice job of celebrating fifth years for the brand. But I really wanted to do uh kind of a blowout thank you celebration for fifty years for our corporation, and I didn't get to do that because it would have been an inappropriate and environment where we were in UM

with the pandemic. And also, you know, given the fact that you know, we had paused for such a long time and and weren't generating you know, positive earnings, and so but I would have loved to have done a grand you know, celebration honoring the great legacy that UM Mickey Arison, Aarrison family, UM, all the people that have worked in this corporation, all of the partners who have supported it, the travel aged and professionals, the poorst destinations,

the tour operators, all the people that depend on cruise to our livelihood. But but it have been you know, good partners for us. I would have loved have done that, and and unfortunately we kind of had to take a quieter approach on that. So I have to leave it for Josh for the seventy five celebration hopefuls to be

around participate. So we've only got a had a minute left here, and you said, you know you're gonna be around for a while and make sure everything goes and you know, I know you wouldn't give me a time, but is there something after this, I mean, um, in terms of the corporate world or or something politics anything politics. I don't think so in politics, that's for sure. You know.

I have a number of of partners, um, that I've worked with in the past, private equity and others, and and so I'll look at, you know, as a sitting CEO, I can only be on one corporate board other than my own, um and um, not as a sitting CEO. Maybe some additional board opportunities. But I'm also going to, um, you know, think about maybe becoming a news anchor, you know, but now kidding guys, wait, wait, there's there's the red

headline across openings here. Okay, you can come, sorry, Tim, but I don't look at come and co anchor with me anytime? All right, maybe just once. UM. We look forward to future conversations wherever you go. You've always been gracious with us and finding time for us. We wish you well and I know we'll be talking again. Arnold, thank you so much. Be well, Errol, thank you. Some of you guys do a great job. Thank you very much. That's Arnold Donald presidency of Carnival Corporation. He will become

vice chairman in August. And that wraps up our first hour of the weekend edition. Of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanivack. Ahead in our next hour, more on the Federal reserves fight to tamp down inflation and the potential consequences of its strategy. Plus we'll catch up with fashion entrepreneur Tory Birch on the state of her business and her philanthropic pursuits. This

is Bloomberg. This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. As it happened, Sloomberg Business Week with Carol Messier and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio, and we got plenty ahead this hour of the weekend edition of Bloomberg Business Week, including a conversation with renowned fashion designer, entrepreneur and philanthropist

Tory Burch. Plus how A, B and Bev's commitment to E s G extends all the way to your local bar. First up this hour, though more on the Fed's efforts to tame soaring prices. Were strongly committed to returning inflation to our two percent objective inflation has again surprised to the upside. Some indicators of inflation expectations have risen, and projections for inflation this year have been revised up notably. In response to these developments, the Committee decided that a

larger increase in the target range was warranted at today's meeting. Clearly, today's seventy five basis point increase is an unusually large one, and I do not expect moves of this size to be common. Those words from Federal Reserve Chairman J Powell's press conference Wednesday after the Central Bank's biggest single rate hike in nearly three decades. It was a big, big meeting.

We were all counting down to it. Now. In a story you'll find online at Bloomberg dot com, Slash Business Week also on the Bloomberg terminal, Bloomberg News, Senior Markets editor Ed Harrison explains why the Feds pushed to keep the US economy on stable ground could actually help usher in your recession. They haven't really tried historically to protect the main streiod, at least for the last forty years.

What happened is that in the seventies, when we had our last inflation shot, there was a dreaded wage price spiral that people believe Paul Wilker was able to stamp out. And since then, they've sort of, you know, preemptively hyped rates at the end of every cycle, and so people who are just getting onto the employment ladder at the end of cycles were stopped out, you know, they were left behind. And then we had the Great Financial Crisis, which was a trauma for everyone, and we had to

bailout for Wall Street. So there was a sense in which the FED actually wasn't working for or main Street. And they've changed that approach because to become more inclusive their staff and has become more inclusive. They've tried to lengthen business cycles on purpose in order to make it more inclusive. But unfortunately they ran into the buzz Stoll

called inflation. Right, So, I mean, I love how your story reads, to be quite honest with you, you know that in terms of what happened during the financial crisis, right, I mean, Wall Street was protected for the most part, minus Lehman and a few other firms, um, but main Street felt it felt it so severely. Uh, it does feel you know a little bit different this time around. How do we need to kind of think about maybe

the FED approach right now. And we just got a lot from J. Powell and company, you know, just a few hours ago. Yeah. I think his overriding message is that if we don't get inflation under control, it doesn't benefit anyone, especially those who are most disapin because not only is it hurting people in st up not being able to afford things, but it also means that the cycle can't be longer. You can't have a long business cycle that is more inclusive, that gets the participation rate up.

So if he's to achieve what he needs to do, he needs to act now so that in the future this won't be a problem. So to what extent does the FET actually have the tools to do that? These are famously blunt instruments, And as we heard from Doug Cioca over at Covar Capital Partners, given the supply constraints that are leading to high inflation, we're helping contribute to high inflation when it comes to the supply chain, when it comes to high energy prices. What power does the

the FED have to do this? Well, it was interesting to listen to J p talk about it. He was quite honest and sin that they don't have h all of the tools. You know. Obviously they can't work against the flash shop. They can't make more computer chips round clogged court, they can't pump more oil. Uh. The only thing they can do in this particular instance is get uh supply and demand and balanced by cramping demand. That's

essentially what they're doing. And he's soft pedaling that policy by saying, look, we have the Jolts data which says that there are so many um jobs out there that we can just reduce the number of jobs that the supply of jobs then as opposed to the supply of labor, then we can get a nice balance there. I thought that was a very good turn of raise on his part.

Is that something we can do though, because I mean, okay, from the perspective of of you know, interest rates and how I'm going to fill up my my tank right to what extent do higher interest rates lead me to not drive somewhere or lead me to not use energy in my home? Well, I think it's gonna be very difficult, because, you know, it sounds good at the aggregate level, when you break it down to where people actually need jobs and where companies need employees. Uh, you get you get

a breakdown there. And I think that we're already seeing on two fronts a breakdown in terms of employment and in terms of business investments. If you looked at the business investment numbers that came out, uh, the d DP now figure went down to zero point zero percent, showing that they're looking for a contraction in business investment in Q two. And then jobless claims are are up forty five thousands on average over the last two months. Yeah,

I think it's really significant. You know, I was thinking about that in terms of here's our supply chains, our problems right ed and you know, many ways the energy situation right refining, like we need to increase capacity, we need to make these investments, and yet companies aren't doing it. And this is where the FED can't necessarily help ease though supply chain constraints if companies aren't willing to kind

of either amp up production. And so to me once again into reminder, inflation is going to stick around for a lot longer. And that's a lot of pain on Main Street. Just got about twenty five seconds. Yeah, and I think that that is a big problem. And you know, when you think about the oil patch, their scarred side, the shale boss, and I think that the investors want the money, so really the bed between a Rathna and Hardcoot. That was Bloomberg News Senior Markets editor Ed Harrison. You're

listening to Bloomberg Business Week coming up. She built the fashion brand that bears her name. Tory Birch on the outlook for her empire and what she's doing to help other women achieve their own success. This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick

Takes Tim Stinovik from Bloomberg Radio. The Tory Birch Undation has provided more than one point two million dollars in grants to help women grow their businesses, and the Tory Birch Capital Program has distributed more than seventy five million dollars in loans to nearly forty women entrepreneurs. The Foundation hosted its third Embrace Ambition Summit this past week, and just ahead of the event, we had the chance to

catch up with Tory Birch. She's, of course, founder, designer, and executive chairman of the company and brand that bears her name, also the president of the Tory Birch Foundation Lori Fabiano, and before we talked about the great things her philanthropic organization is doing, Tory brought us up to speed on the health of her enterprise. We talked retail.

We had a record year last year, and then we see the first quarters it's a lot tougher and and but but that said, it's still very optimistic and we we don't see um. We obviously are very concerned about inflation and all that's coming to supply chain issues are extremely challenging, but we were taking one day at a time and and our business is still extremely strong. Tory,

how have you managed supply the supply chain? I mean what changes have you had to make as a result of difficulty getting components as a difficulty in terms of shipping. Very luckily many years ago, about eight years ago, I really wanted to diversify with where we produce things, so we weren't dependent on one area, and I think that has helped us a great deal. Um, So we really really manufacture all over the world, and when one country

is down, we're moving supply chain to the next. Well, and when you think about things like labor, are you getting all the workers you want, whether it's in stores and so on, UM or if you are, are you finding you have to pay up for it? Well, we are. We are not having trouble hiring people, are having the people we need right now. And you know, I think time will tell what the toll that inflation has in store for us. What do you mean by that you're not seeing go ahead? Well, we just don't. We We

are not. We are not seeing the full impact that I think that's going to becoming our way. So we are preparing the best we can with the unknown, which we I think, do know that will get will get much worse. Well, how do you prepare, as you know, executive chairman of the company, how do you prepare for

for what the unknown is? I mean the concept of less is more, less of everything and everything was more integrity, making sure that our teams are in great shape, really that they're they're doing doing well, but but focusing on on product and innovation. And I think that that's something that people are still are still shopping, They're still wanting to dream, and that's something UM that we hope will

not change. I love what you said about less is more, and I do wonder I have a nineteen year old and she's very strategic and what she buys, she checks where things are made. She wants to understand the company and doesn't shop a lot, but what she buys is as a mother who pays for it last. Right. So, like, I think the consumer has changed, and what's exciting for us is a purpose driven company is resonating and super

important for for the world. And and people that are buying products they want they want more to it than just a product. All right, can I ask you? And then we're going to move back to the summit. So, Tory, we've talked with you about going public. You've told us that you know that's never your fun isn't really completely off the table. I mean, I get the benefits of being a private company. I see it all the time, public versus private. But I'm just curious. Well, listen, I

can never say never to anything. I don't think you can. But I think being private is a luxury, is something that I truly love, and I think that we um have no plans whatsoever to think in a different way. And I've got to say I've enjoyed the conversation story that we've had over the years when it comes to the work that you guys are doing with your Foundation for Women Entrepreneurs. I have to say your summit, I'm

curious about the tone the conversations come off. The pandemic coming off of again questionable times when it comes to the economic outlook that tends to impact minorities and women much more severely. So tell us a little bit about what we can anticipate Tory next week. Yeah, I mean, listen, it's it's very good timing based on some of the things that we all have experienced the last two years.

It's been a heartbreaking pandemic obviously, but women have been hit extra hard and two million women have left the job force alone, so you can imagine the impact that takes on women in general, but the economy. Laurie, what specifically are you doing at the foundation in order to

help these women who have been affected? Um, well, we created one program particular, it's Grants for Women of Color Entrepreneurs, and we did that in partnership with the Fearless Fund and the Crew and also with some help from Goldman Sacks. And that is literally to provide grants very quickly to women of color business owners that are in danger of losing their businesses, and we want to see them sustain

and thrive. But during the pandemic, we also really pivoted and became one of the primary resources for women trying to get p PP loans and for women in general trying to just get the information they needed to stay in business. We created a web series and for a while it was running literally every single week with with news and information that women entrepreneurs really need it. And tens of thousands of women have been on these on

our web series. You know, Tory, one of the things I remembered from and it's years ago, and I think it's when you were starting your foundation and you're talking about you know, these grants for women and entrepreneurs, and you know you had this money to to allocate, and yet people weren't coming up, you know, coming up. Our are are applying for it. What has changed over the years when it comes to women annili there are sources out there and accessing um you know, financial help and assistance,

whether it's starting a business. And I think about your summit, right it's now it's third year. The conversations around double standards and stereotypes. How is all of this evolving and and figures crossed getting better. Yeah. I mean, first of all, the summit we do every two years um and so it's going to be I think we the first one was in two thousand eighteen, so this will be our third summit um. But but I think, um, this the

system and program wasn't right. Initially. We had to figure it out and we needed to sort of crack it and realized that women we needed to find the women at the right time in the cycle of their business and when they actually needed a loan. So once we did that, we saw the enormous need and just the program that Lorie just mentioned, I can't even tell you. I think there are thousands of applicants seventh salvand that

the need is enormous. That's Tory Burch, the founder, designer, and executive chairman of Tory Burch, along with Lori Fabiano, president of the Tory Burch Foundation. Still to come on Bloomberg Business Week. How to state your case and make yourself heard in any situation. Tim and I we're gonna debate, Well, no we're not, No, we're not, but we are going to get some tips from a world class debate champion.

On the other side. This is Bloomberg Broadcasting from the financial capital of the World, Bloomberg eleven Rio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does San Francisco, Bloomberg nine sixty to the country Sirius XM Chado one nineteen and around the globe of Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Business Week. This next guest man, does

the world need his advice? He's a two time world champion debate or and a former coach of the Australian national debating team and the Harvard College Debating Union. Bo So is a journalist and author from Australia by way of South Korea. He overcame a significant language barrier to become one of the best in his field, and now he reveals some of the tricks of the trade in his new book Good Arguments. How Debate teaches us to

listen and be heard. We're living at a time of really extraordinary polarization, and it's easy in times like that

to see disagreement as the source of our troubles. And what I'm trying to suggest with this book is disagreements can be a force for good, not only because they're useful in terms of finding out truths and ensuring people are heard and and and we can be honest and frank and forthright with each other, but more importantly because good arguments, uh what good democracies are, They're good work They're what good workplaces are, what good families are, that we,

despite our differences, resolved to live together and instead of ignoring our differences, to put them in conversation with one another with the hope that we might be able to get somewhere deeper, somewhere better, somewhere richer than we might be able to on our own. So my hope with this book is to restore people's confidence in what disagreements can do, and hopefully to give them a few skills that are going to allow them to handle them a

little bit better too. I think that one thing that keeps people back from expressing disagreement in the workplace is perhaps the way that we interpret how other people are going to take that disagreement, the idea of people taking conflict personally. So, but what's a good way to you know, how should people express themselves in a way where they get to that better place by disagreeing with one another.

I think that's a really important question. And debate is such a big part of the workplace now, isn't it, Because the nature of modern wide collar work is just we sit around in meetings and disagree all day um. And I think the book gives a few different pieces of advice for someone in that situation. I think the first is you want to be really clear what the

disagreement is about. As soon as there's that kind of imprecision about what the conversation is about, it tends to become unruly, and it tends to bring in personality, it tends to bring in all the things that has happened in the past. So the first thing I would say is every disagreement starts with an act of agreement, and

that's often about what the discussion is about. The next thing that I would add is you want to have the kind of rules that we started our conversation with, so in competitive debate, you know that everybody gets equal time in which to speak. They're not interrupted while they're speaking, and they're given turns, so that when I speak and I give you a chance to speak, there's no need for me to interrupt because I know I'm going to

get a turned back. It's a big part of this too, is that there doesn't have to be a winner or loser absolute um. And you know, one of the things that you learn as a competitive debate or is wins and losses are temporary. You know, just the way it is in the workplace. You might take a w in this particular conversation or a loss in this particular conversation, but your coworkers aren't going anywhere right, and so they're going to be back the next day or the next week,

the next month with a different issue. Where you're on going to be on different sides, sometimes allied, sometimes on

opposing sides. So I think the real lesson, in addition to taking seriously the needs sometimes to prevail in arguments and to stick up for yourself and to carry your message, is to recognize what we all need is a set of rules, a set of practices that allows us to keep the conversation going in the long term and for the betterment of our organizations and for the betterment of ourselves. I have to you know, I think about presidential debate

or political debates like do you do. You watch them and you say, well, this isn't a debate, this is just a show. No, seriously, right, Like people don't have a chance to kind of say things. There's constantly somebody jumping in, and that's not a debate, or is it? I think I think that's exactly right. I don't think

they are debates. And something isn't a debate just because it's called a debate or because two people are standing at an awkward distance from each other at different podiums, right, And I think often what happens in those debates is one or more of the participants turns what would otherwise

be a debate into a kind of a brawl. And it becomes really important in those moments to pause, as you said at the at the at the top of the program, to say, to identify what is happening, to name the kinds of tactics that are being used, whether it be name calling and something like that, and to say is it a debate that we're having or is it something else? Because without that kind of a check um, what begins as a debate can devolve into something worse.

And we see that not only on the presidential stage, but We see that around the kitchen table and with our families and our loved ones, and we see it at workplaces all the time. That's journalist and author both so on his new book Good Arguments, How Debate teaches us to listen and be heard. It's out now. You're listening to Bloomberg Business Week, and if you missed any of it, or you want to hear the whole conversation,

check out our podcast online coming up. A b in Bev's all in on E s G. And it's not just about tackling climate change. What the world's largest brewery is doing to keep you safe at the bar and on the road. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio and as her busch in Bev thinks a lot about E s G as it relies on natural resources in a big way. I mean, no water,

no beer. It's as simple as that, and that easily makes the business case for the company, and it has set out a series of sustainability goals for twenty five as a result. It's not just sustainability though, part of its s G mission is smart drinking. For more on what that entails and how the world's largest brewer is thinking about our climate, supply chains and the health of its consumers, we turned to John Blood. He's the chief Legal and Corporate Affairs officer and company secretary at A

B and BEV. And one of the great things about the beer category is it's an affordable luxury. You can go out this weekend, you can have a stellar artois right, you can go in, you can enjoy yourself. The price point is right there. We have a portfolio approach at all different price points, so it's really a great luxury

that you can have in these types of times. I mean, one of the things that I'm so floored with talking to you and your senior um executive space is that you guys have to understand your supply chaine so well, right, because it just if things don't go well, uh, it just all breaks down. And you also understand the impact of climate change on that supply chain in big way, which is why your sustainability initiatives are really impressive and you've had them in place for a long time. Having

said that, how would you describe your supply chains today. Yeah, for us. If you think about beer, right, for us, take the United States for an example of what we sell in the US is brewed here. We're talking US farmers. We're talking folks in the US making it, distributing it, brewing it, getting it there. So that's but that doesn't mean we're not immune to the world, right, And that doesn't mean that we also look out and say what can we do to plan, what can we do to

get ahead of things? What tools do we have in our toolkit? And because we're a global business, we have a business in China, we have a business in South America, we have a business in Europe. Talking to those folks about what's on the ground is important for us as well. I want to hear about what you're hearing from the farmers on the ground here in the US, because it's been a tough run for farmers with fertilizer prices going up, with severe weather in many parts of the country shortening

this season. What are you hearing from barley farmers, from hops farmers? Yeah, so for barley and hops there, this is something that we try to plan out as best as we can, and particularly when you take a look at something like organic. Right. One of the beers that we have is an organic brew right called organic Pure Gold, which is a Michael ultraproduct. And to get someone right to the farmer to come in and say, hey, we want you to plan organic barley, right, that's gonna take

some time. Right, we have to work with them. We have to give them those long term contracts. And we really see ourselves in the industry and you need to look at yourself as part of the whole chain. So we feel for those farmers. We try to give them those contracts to give them the stability going forward to say, particularly the organic side, we're gonna work with you in

the long term so you can transition to that. John, I feel like this is so into some of the conversations we're just talking with Peter Farcy uh, the CEO of sun Power, and just talking about you know, certainly when it comes to trade tensions between the U S and China that impacts certainly the solar industry. UM, but I also think about that, you know, what is the

responsibility when it comes to our global supply chains. You guys have just taken the initiatives a lot on your own right to make sure you ensure the stability and purity of those supply chains. What is the government role, especially when it comes to things like and I know this isn't your wheelhouse, but whether it's semiconductors or water or what have you, because some of becomes like national

security issues, And I do wonder is your responsibility. You know, I'm sure you're dealing with folks in Washington from time to tu, So I do wonder the conversations that are coming out or that need to be have, that we need to be having when it comes to our national

supply chains, especially coming off of the pandemic. Yeah, well, I love this question because it really hits home that if you think, as a business executive, you're gonna solve any of this by yourself, and you're gonna sit in your room and you're gonna get a power point open, you're gonna plan something out, you're mistaken. You need to work with partnerships. You need to work with your stakeholders. And the first thing to understand is who are your stakeholders.

So your stakeholders are national governments, your stakeholders are farmers, Your stakeholders are these consumers. But your stakeholders are the communities as well where you're looking for these supplies to come out of. So if in fact you're working with folks who farm in another country, what are you doing with them to make sure that they're planning? How can you give them something as simple as maybe financial literacy.

We have a program where we work with a lot of our farmers to say we want to help you become better farmers. But more importantly, we're not going to teach you that you're going to learn from other farmers

in other countries. You're gonna learn from other farmers down the street, and we'll put that together so you can understand when the weather changes about what's the best technique you can share that because at the end of the day, that community is something that can learn from each other, and we can be a vehicle to that one thing we wanted to get to because you are a company

that has really laid out sustainability goals. We talk a lot about e s G getting a reckoning and people wanting transparency as part of e s G. Though you guys think about safe drinking, talk to us are smart drinking? Talk to us about that and how it fits in because right we're living in a world where there are multiple stakeholders and that includes our consumer. Yeah, thanks Karen. When I think about smart drinking, right, when I think about what we do with our product, right, I think

about my family. Right, My kids ride their bikes on the street. Right. I want to make sure that we have the best programs for anti drunk driving. Right. I want to make sure that we have the best programs for people to remind them about smart drinking. Really, what we call social norms marketing. This is something where you're not just in the old days of like, hey, we're going to raise awareness, right, that's ten twenty years ago.

This is evidence based programs that give people actionable advice. Now it's simple action, a little advice. It'll be things like hydrate between drinks, have a non alcohol beer with the beer, eat before and while you drink. Simple things like don't drink if you're pregnant, plan to have a ride home. Those are the social norms advertising that's away from drink responsibly. Drink responsibly. We do want people to drink responsibly, but we need more than that today. You

need to be more action oriented. What prompted that change, because drink responsibly is something that I remember going back, you know, decades at this point when it comes to marketing. What changed this to actionable advice? What was that pivotal point? Two things to him. One is the science right when we work with academics, they tell us this actionable advice,

this social norm advice can make a difference. And the second is about five years ago, right, we were looking at our programs and we said, we have all these smart drinking programs around the world, and we think they were We've been doing them for years. And then we asked ourselves, does anyone have any data if they work or not? Have we has anyone tested this? And how do you test it? And that's where the process started.

We wanted to test it. We wanted to make it evidence based, and by the way, we share the evidence with all those who want to look. We have a foundation that does it. We work with the academics whoever wants to look and look at it. We test the programs and go with the ones that have the biggest and best impact. What's the biggest piece of advice, you

know for our kids? The guy grew up in a family where older parents, I don't know, like different era, like there was alcohol in the house, and I had my first drink with my parents, you know, at a platively young age, for better for worse. But I and I and I am responsible about drinking today. But like, what is how do we approach this with kids? Yeah, and this is a fascinating question because if you take a look at the US and you take a look

at the rest of the world, right, there are cultural norms. Right, there are laws as well. Of course, we tell kids do not drink. Right when the law says, whatever it is, that's the law, you need to enforce it. However, right when we deal with alcohol, right, when we deal with what we call these social norms, it's so important right that when we deal with it, we remember that alcohol is often part of the special and beer in particular is part of those meaningful moments in life when someone says,

let's grab a beer. Right there in part talking about the beer, but they're talking about the social connection oftentime. When someone says let's grab a beer, they want to have a meaningful interaction with you, right, They want to have a real conversation, they want to be together, and sort of balancing that in the right way is what you really need. To talk to everyone about right. You need to talk to them about this is how you respect the product. This is how you enjoy the product

by treating it the right way. And that's what smart drinking is all about, reminding people, say, nudging them right. Social norms also is about some people might think, oh, on Thursday night, my friends go out and they drink six or seven beers. You know what, when you look at the data, it's not the case, right there drinking one or two. When you remind people of that, you can then nudge and change the social norms so people behave differently. And that's what social norms is all about.

What about when it comes to drunk driving right now? Because annh hazard Bush has decided to ride campaign has partnered with Uber, and I think back to just my own experience in my twenties and I lived in the mountains and there was no Uber, there was no lift. There was a huge problem where I lived when it came to drunk driving. Uh. There was this terrible joke that you know, to be a local and veil you needed to have a c L surgery and a d

U I because then you really lived there. And I wonder how much Uber and lift and ridehiling has changed this because it is so easy to find a ride. You know, it is all about sort of embracing the moment. Right. When technology gives you something that allows you to nudge society towards a healthier pattern, towards a social norm that's positive,

you need to embrace it. And that's why we're so happy with Uber and Mothersn' getting strunk driving right as part of that program of decide to ride right saying to folks, you know what, there is a solution, and it's very important to remember to him as well. When we talk about decide to ride, it's not just oh hey, you get a free ride home or you get a discount ride home. It's about the mindset of I'm gonna plan,

I'm gonna plan to ride. And I love your generational approach here because if you talk to the twenty three year olds, right, it's almost instinctual now like, well, no, I'm gonna use uber the why would I take the rid? Why would I do this? And it's a different mindset because I'm a little older than you, Tim, but I

remember that attitude even worse. And what social norms about is nudging is changing the way people behave in act and that mindset is super powerful and that's why you see drunk driving numbers over the last years coming down our thanks to John Blood, a bnbev's a chief legal in corporate affairs officer and company secretary. You can catch that full conversation on our podcast feed that wraps up the weekend edition of Bloomberg Business Week from Bloomberg Radio.

Thanks so much for joining us. I'm Carol Masser and I'm Tim Stenebek. Be sure to tune into Bloomberg Business Week Monday through Friday. It starts at two bm Wall Street time on Bloomberg Radio. You can also watch our daily broadcast on YouTube just search Bloomberg Global News. Also check out our Bloomberg Business Week podcast. You can find it at Bloomberg dot com, Apple, or wherever you get your podcasts. Bloomberg Business Week is available on newstands now,

at Bloomberg dot com and on the Bloomberg Terminal. You can also see me on Bloomberg Quick Take available at Bloomberg dot com, slash qt, and streaming platforms like Roadku, Apple TV, Samsung TV, and more. Have a great weekend, everyone, stay safe and If you do drink, drink responsibly. This is Bloomberg