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