Surveillance: EV Transformation With GM CEO

the gridlock of recent years? Well, in terms of economic policy, Tom, probably not. I mean what we're gonna see, I think is some level of stimulus package. It won't be what it would have been, um, you know, had there been a control by the Democrats, but there will be a package. And if you think about the trifecta from a stock market standpoint, you have the FED, you know, holding rates very low for the next two and a half years.

You've got some level of stimios in January, and perhaps most importantly, you have four different vaccines that could basically be announced between the end of November and January, and they're being made in hundreds of millions of doses by

each of the country, each of the companies. The combination of knowing that there would be an end of the pandemic in you know, stimulus in the market sometime in January, and the known who the president is is quite a you know, a bollus of news that can propel the market higher. And I believe that that's a combination of those things that's actually happening right now. The market not really competent in nature of this rally. Well, yeah, and

that's where I wanted to go, David. The market is not a monolith, and right now we're seeing is a doubling down on the growth stocks and the tech stocks and not the reflation trade that people have been hoping for. The neat narrative that we were talking about is the FETE is going to have to provide more support. Rates are going to stay low, and that necessarily we're not going to get that faster growth from a higher fiscal

support pack. It is the neat narrative. Correct Or are we going to get that stimulus in the form of just economic growth and recovery as the vaccine gets implemented. Yeah, I think that that narrative is actually wrong. We'll talk a little bit about the rotation too. But but the reason that the narrative is wrong is that you've got

an enormous sort of you know, tail wind here. You've got basically between twelve and fifteen percent of the global economy shut down in terms of travel, leisure, retail, education, healthcare, all of it shut down. You take a look at consumer demand in the the United States, it's higher than it was in December of two thousand and nineteen before we turn that back on. So there's quite a bit of a tail wind in that way, and also in terms of the actual amount of velocity of money which will

actually take place when everyone leaves their house. Um. And that's where you get to this whole rotation of the market. Um. It's shocking to me that, you know, the Nasdaq is up this way, but that is the defensive trade rates down, technology up, and that's what tells me that people actually are still scared. Um. Once we see that change, I think that will be an indicative of what will have been over the next couple of years as the as the regular market, uh, you know, comes to comes to

bear it. David Gratz, as always David Baiden, that a city group this is a joy. Rick Michigan joins us now Frederick Michigan of Columbia University, a former Federal Reserve governor. And we can wax philosophical about the FED, about our central Bank. Forget about that. Let's wax philosophical about his wonderful textbooks on policy. He has thought more than anyone I know about policy and linking it into the American

good Rick Michigan. Does Mr Biden run a traditional Democratic Party Democratic president policy or does he have to carve a new path if he's elected? Who knows? It's it's so complicated, uh, and uh that what's happened has been a real polarization, not just in terms of Americans but the parties themselves. So we've seen, uh the right in the Republican Party go uh to quite extreme positions, and we've seen the left in the Democratic Party doing the

same thing. Uh. And Biden is is a centrist. But it's going to be very complicated, particularly uh that that the Senate will almost surely be the the Republican Senate, So getting anything done is going to be very difficult. I do think that there will be some stimulus that will put you put in place because it's really clear cut. I think from both parties that something needs to be done.

But it certainly won't be what the Democrats would have liked if, in fact it was a Democratic Senate and a Democratic president, because this is certainly not going to be the kind of money going to the States that the Democrats have initially initially wanted. So it's a very complicated environment for him. I think it's gonna be very tough for for for for Biden, who's you know, I

don't necessarily think that he's a super strong u A person. Uh. He's got a tough, tough shop to do and and uh and of course it's not absolutely sure that he's going to win the election, but it looks increasingly likely the accounting continues. He has his nose in front just about at the moment. Brick, the choreography this morning and the Unted Kingdom was phenomenal. The bank offing the make six cal pulls the decision early. They chance that the

Treasury follows up. They work hand in glove almost perfectly over the last several hours, Rick Doy, You assume that the Federal Reserve and the person leading that institution is going to be much much closer to the president and whoever that president might be, not just through the next four years, but over the next several decades. Well. I think that that there's clearly an issue in terms of the relationship between j Powell and Donald Trump. Is was

not good at all. We've never seen quite the vociferous tax that we've seen from President Trump. In fact, uh mentioned by textbook in a new addition coming out, I have a whole new section on presidential attacks on on the FED and how unique these are. There always been some attacks, but these are really very unique. So I think, certainly, uh uh, if Joe Biden is elected, that the relationship between the FED and the the president will be much

better than it will have been before. In fact, I think that Joe Biden will just leave the FED alone and let it do it do its job. Now. In practice, it really hasn't influenced very much what the FED has done the criticisms of Donald Trump, but it does politicize the FED. So hopefully the little less politicization of the FED, I think that would be a good thing, but we'll have to wait and see. I think the FED has

a very tough job right now. They're Basically you're out of tools that the action really has to come from from from federal government spending. Uh, and that's something that FED can control. They clearly want more expansionary and policy from the from the federal government, but who knows exactly

how much that will be. Well, when you say that they're basically out of tools of profession Michigan, this is really important to people are saying they aren't a tools, but doesn't mean they're not going to act further, whether it's expanding the balance sheet or playing around with other ways of stimulating the economy. Do you expect them to double down on their existing policies even if they are

not proving to be effective and actually stimulating economic growth. Well, it's a key issue is is what do you mean by effective That you're supposed to do what you what you can to help. It's just that you have to be aware that that the tools are not sufficient at this point. UH. This is one of the problems that occurs when we hit what we call the zero lower bound or effective lower bound on policy rates. You can't go much below zero. In fact, countries have tried to

go below zero zero. It's not all clear that that actually even helps. So the FED has a has an issue to conduced things through suiciassi and purchases and its lending. In fact, I thought that the FED performed brilliantly uh in the early phase of the of the coronavirus pandemic, but to make sure that we didn't have another depression, to be honest, that things were very scary right then. Luckily the FED had basically done more games by actually

figuring out what to do. It took about eighteen months in total to do everything during the global financial crisis. They were able to basically do it in two weeks, so that was very helpful. But all that could do is stabilize the situation, getting u uh the economy to bounce back when the coronavirus seems to be getting worse. I mean, my view is right now, it's happened economy,

it's all about the coronavirus. Coronavirus pandemic. Uh. Clearly we have not handled this particularly well UH and it has actually uh we're now at at record level cases. I think it's gonna get much worse in the winter. Just think about people getting together Thanksgiving and then not being able to go outside when it gets really cold. I think it's gonna be pretty grim and that's gonna be a real problem for the economy. And the FED basically

is gonna do what it has to do. But on the other hand, h it can't solve the problem, and that's why we we actually need action from the from the Federal Gun. We would love to get you back on the program soon. We appreciate your time this morning, Sir Frederick Misganet, formerly of the Federal Reserve Board of Governors. Always with questions for the feed is Peter Hooper. He is the Deutsche Bank and their global head of economic research. What a thrill to speak on one day to David

Fulkers Lando and now to his colleague Dr Hooper. Peter Hooper, There's so much to talk about, but I need to immediately go to the cautious view Deutsche Bank has had on the American economy. Do you reaffirm that within this political moment, yes, Tom uh near term, certainly things are there are studding slow. We have had a very good September, but but the data for October have hadn't begun to soften. And what we're seeing in the labor market right now,

I think agrees with that. This morning's number certainly don't in line with the sense that the labor market is not improving further ADP number yesterday three six five. We we may get some downward surprise, downward drift in in payroll games on Friday as well. So our sense is the economy is slowing too noticeably below the consensus expectation. Consensus still around something like three and a half four

percent growth in the fourth quarter. We put it a bit under one percent, perhaps given what we're seeing now as some slowing in consumer spending. We had a drop off in auto sales. UH, some high frequency numbers on apparel purchases also pointing in this direction. What's happening here is that the drop in support the unemployment unemployment benefit, the extra unemployment benefits came off in October. Household income growth is slowed substantially. We're starting to take it out

of saving. So yes, we do think the economy is flowing near term, and the election results UH certainly at this point have taken out the upside risk on on substantial fiscal stimulus next year. Peter, what is the nature of grid luck right now? When you talked to Matt Lozetti about an American Deutsche Bank view. Does a grid luck get us closer to stimulus salvation? Good luck getting

a stimulus salvation. I suppose Ben's Ben is on your point of view, but but certainly we're not going to be getting anything like the two two, two, three, four trillion dollar packages that people were dreaming about under a blue wave. Uh misch. McConnell came out yesterday he said, we have to put high priority and getting something done before the end of the year. The Republican Senate had been talking, had been talking about a five billion dollar

support package. I think, uh, it's it's with the election results we're seeing at this point. My sense is and with a present if if, if the things turn out the way they seem to be right now, if if Biden as president, a president that's going to be trying to do something to bring the country together to get something done here. Yes, you have a bridlock, you have a Republican Senate and a a Democratic House with a democratic administration, but you're going to have, I think, an

effort to try to get things done. So I'm not quite as pessimistic. Peter's still a lot of ivs. The counting continues. One thing we can look at is the economic data, the hard data claims we have the I m out yesterday services, the employment component, a little bit of sluggishness in the mix their page. I just wanted from your perspective, how you think the Federal Reserve when they meet today will actually pour through the job stats

we've seen in the last couple of weeks. I think they'll be seeing economy that was starting a slow and this certainly tells you why Pal has been upfront saying we need more physical stimulus at this juncture. It's it's an economy that's still herding from the show that it's that it's faced, and the support coming off is going to be giving us a significant slowing of growth. It's

not enough to get them to do anything today. I expect to see something, Uh if if, if the numbers come in the way we're anticipating, I wouldn't be surprised to see some action by the December meeting, in in in terms of balance sheet increasing, the maturity of purchases, this sort of thing. Wait, let's build on that, bitter How much do you expect the Fed to potentially expand their balance sheet if there is no promise of fiscal support. Um,

you know, on on on balance sheet. The first thing I expect is in increasing the maturity of their purchases, on actually expanding from the pace of a hundred and twenty billion per month. Uh. They told us that they would continue at at least that pace. So certainly, if the economy is flowing, we could see some pick up on that. How much we haven't made a we haven't made a forecast on that yet, but be surprised to

see some something. Uh. If we don't get any more fiscal support before the end of the year, If the economy is slowing to well below, well below current expectations, yes, I think the fetch steps in and because it begins to do something there all right. So how big is the spread between the streets expectation currently of growth in the US versus Deutsche banks house view of growth given

where we are politically, given where we are with the virus. Okay, our our current forecast is in the range of half a percent for the annual growth in the fourth quarter. I think the the latest Bloomberg survey that I've seen is in the in the neighborhood of three and a half to four percent, so well above the numbers we're putting in there. We do see growth picking up next year too, between three and a half and four percent,

even without the extra UH. I mean we we had viewed, we had viewed the possibility of a large stimulus package next year as an upside risk to our baseline forecast. At this point, we're looking at something in the in the half half a trillion to one trillion range of fiscal emaulists next year, which supports that growth picking up into the three and a half four percent range, along with the assumption that we will get released through vaccination

and better testing. Peter Hope, great to catch up you, sir. Thank you Deutsche Bank ahead of global economic research. Right now we need to consider Michigan. We need to consider the state of the Michigan economy, in the state of General Motors, and there was no one more qualified to do that. David Weston here with Ms Barr. David, thank you so very much, Tom Keane. We now welcome the General Motors Chairman and CEO. She is Mary Barrows. So Mary, thank you for being with us. Do you have your

earnings at just a short time ago? I think congratulations are in order or you exceed the expectations people thought you'd come back. You'd come back more than people thought. Give us your perspective on what drove that. How much of that was general motors and what you're doing general was how much of that was the economy and some of the massive stimulus that's going to the pockets of Americans. Well,

thanks David, it's great to be here. And you know, really, when you look at one of the key reasons was the GM team members. Uh, they have done just a phenomenal job across all areas of our business, working and demonstrating their commitment to the business. Also priced prioritizing safety and following our safety protocols, and that has been a key ingredient to driving this very successful quarter. I would

also say it's on the strong demand for trucks. A couple of years ago, as we started to roll out our new full size trucks, we talked about the fact that we were going to cover the whole market um both from a value perspective but also from a feature perspective. That strategy is working out extremely well, and we see very high demand for our full size pickups at all levels, but especially in those high end pickups with the A

T four for example. With the GMC, we also continue to have very strong cost performance, not only the specific austerity measures that we took because of the pandemic, but also the work we've already been doing as part of the transformation. And then finally g MFU performed extremely well. So all of that coming together, I think our products, the discipline of the team, and are just our focus on costs is what allowed us to have this strong quarter.

As you say, I looked at your Waterfall truck there carefully and so it was price and some of was cost saving. So well done. You have a balance. Let's talk about tracks. They clearly powered you. You've talked about them for some time. Now your pickup trucks. Do you have enough of them? Can you produce enough? What are you seeing in demand? We're seeing a strong and growing demand and right now we're building every truck we can

make that. I think very shortly you'll hear us taking action to how we're going to further our capability to to build more trucks, because what we see is the man continues to grow. We think the shift to trucks, especially with the luxury trucks, the premium trucks that we're offering for both GMC and Chevrolet, that that is going to be a continuing trend. So, Mary, you talked about the safety of your colleagues at General Motors. Is the coronavirus at this point inhibiting at all your ability to

produce enough product, enough trucks. Well, you know, we've worked hand in hand, not only with all of the GM team members, and I'm just so proud of the way everyone is following the safety protocols and staying safe. And I think there are even in many cases taking them home.

Our employees tell us they feel safer at work than they do at a grocery store, and I think that's that speaks to um what we're doing and their commitment to to following the protocols that we jointly developed with the U a W and our peers across the industry. We've shared all that with the supply base and that is allowing us to continue to make sure we have

the parts necessary. It's it's a very dynamic situation and we just worked to address each situation as it occurs, but right now really pleased with how the team is being creative to keep keep our ability to build as many trucks as we can looking out into the future. You have been consistent in saying an important part of the GM strategy is electric vehicles and autonomous vehicles. Give us a little bit of insight of that, particularly as we are now waiting for a result on the election.

Does it make a material difference to your strategy whether we have a Democrat or Republican in the White House because they have very different approaches to things like fossil fuels and green energy. We are committed to e V s and we're working to accelerate our our e V transformation. I think some of the examples of that are the GMC hummery V, the Catalect Lyric, and then the bolt

Um e V as well. We also just recently announced a multibillion dollar manufacturing commitments at Factory zero and Detroit ham Tramic, the ulti um cell Um LLC in Lordstown, Ohio, and then just most recently at our spring Hill assembly plan in Tennessee. So we've got the manufacturing capability, we have great vehicles, and we've got the expertise and the technology with ultium speed is vitally important as well, and

that's why we're working so quickly. So regardless of who wins the election, we're going to continue on a rapid pace to transform to two E vs. Mary, you mentioned the Hummer EV. A lot of people out there are excited about that Hummer V. How many orders pre orders have you got so far? Are The demand has well exceeded our expectation. As you know, this is a very premium um entry, So we're incredibly pleased at the strong demand and uh, you know, we'll continue to monitor that

as we go forward. And so Mary, it's not just electric vehicles, it's also fuel cell. You announced the deal with nicola As. I understand that there's a deadline on that deal in December. Where are you on that right now? Do you expect to go through it and will there be material changes in the terms of the deal. So right now we are in ongoing discussions with nicola Um regarding the transaction. That transaction has not closed and so

we'll provide for their updates at the appropriate time. But I think what's important to note is our fuel cell technology, the hydro tech hydrogen fuel cells that we've developed with Honda. They they are industry leading, and that's from external sources, and so we're going to continue to look for ways to not only UM commercialize our fuel cells, but also the ultium battery platform because I think that continues to advance our zero emission future. Finally, very briefly, do you

expect a continued rebound? One? What are you looking at? Uh? You know, a lot depends on UM. If we across the globe, get the coronavirus under control, and we know what we need to do from a safety protocol perspective, so we're hopeful that will start to make some progress there. Obviously in the United States were monitoring if they're what

will happen with additional stimulus. But if those factors UH stay uh, if we get the virus under control and other elements stay on track, we think we can continue the recovery into twenty one and definitely we believe we'll continue to see strong full face truck demand. Mary, it's always a great treat to get to talk to you. Thank you so much as Mary Barr, She's General Motors chairman and CEO. Tom David Weston, thank you so much,

really appreciate that. Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio