Surveillance: GM CEO Sees Positive 2021

to stick with what's working at the moment. Well, the problem is what is working changes on a week to week basis, you know, were there was so much attention obviously on the most heavily short at stocks in the game. Stop saga almost in reading headlines suggesting that this was some brand new phenomenon. But the sort of rise of retail traders and the dominance they're having goes back to

last summer. It's just that when when you first started to see that increase in speculative activity in single stocks in the options market, it was concentrated in those leadership stocks at the time, the fang type stocks, the big five stocks, and then they kind of rode the rotation that really kicked into ernest in November when we got the vaccine news into the energy stocks and the financials, and for probably a variety of reasons, not least being

just the sort of social media kind of driving a flash mob, it went into these more arcane parts of the market. Now it's there, that sort of attention is coming back into more macro earnings related So I don't know whether you're going to notice it as much. We've just been telling investors just the obvious differentiate between gambling and speculating on stocks or areas of the market with no underlying fundamental and longer term investing. Lisen, I'm gonna

bore you with my question. I always asked you, because I think you're better at this and anybody in the industry. What are we actually doing with our money? Chile Schwab has a knowledge of flows second to none. What are

we actually doing with our money? Well, we've seen a slight waning of domestic equity flows in the last couple of months, but interestingly, you're seeing a pickup and flows two markets outside the United States, which which we think is a is a good sign that the whole notion of diversification is no longer as hard to sell as

it's been in the recent past. And then also at the more sector level, flows have started to pick up on the more cyclical parts of the economy, like energy, like materials, like industrials, where you're seeing some outflows out of areas like consumer discretionary and tech. So I think the flows are shifting towards this recovery focus with that

more cyclical, commodity oriented bias. Do you think, Lizanne, that there is complacency in any corners of these markets, that the reflation trade that's underway is under price and that will continue to see inflation expectations climb as we get more stimulised packages past. Is there any signs to you that that consensus has gone too far? Well from an inflation perspective, we we think we're going to uh to see it, but it's going to be more a function

of price shocks. We don't think we're we're sowing the seeds of anything resembling a late seventies early eighties style inflation environment, but one where you have imbalances between demand and supply. Uh. We think you'll see that. Plus the cops get really easy on an inflation front heading into what was the pandemic shutdown period of last year. The question is at what point does it spook investors, UM and or the FED. I think they're going to have

a decent amount of patients. The other area of complacency I worry about is the sense that once we're at heart immunity getting everybody is getting vaccinated, that pent up demand is going to be unleashed in this massive wave. I just think the nature pent up demand on the service society the economy is different than pent up demand on the good side, and we really have met a lot of the demand on the good side autos, housing,

housing related, but on the services side. You know, if if you used to get a haircut once a month and you haven't gotten one, you go back when your salon opens and you get a haircut, you don't get seven of them. You don't You don't go out to breakfast, brunch, launch tea, dinner, and dessert every day to make up for that lost restaurant time. You don't take six vacations

in a row. So I just think we may have to curb our enthusiasm for what pent up demand means to the economy, given that it's more on the services

side than the good side. Listen, is there some inconsistency in your view in the reflation trade that's being priced into many markets that you think is based in reality and treasure yields at less than one Well, I think that you know, yields where they are reflects and improving growth environment less so a aspect for a significant increase in inflation, and ultimately from an equity market perspective, it's not nominal yields that matter, but of course really yields

and and you know that story at least being put out there by the bulls to support still quite high evaluations at this stage hasn't wined. Good catch up. Thanks for paying the sismonic of child swap right now. And this is a joy and indeed an honor for Bloomberg surveillance where we've tried to do as much as we can on this horrific natural disaster. Albert co Is at Yale. He is definitive and epidemiology for havingy courage to go

where the poor are. He owns a high ground of the study of viruses and vaccines not only in Africa, but in South America and particularly the Brazil away from the prosper Alardie of the big cities. Dr co joins us this morning on vaccination, Albert Cole, I've got to go to the southern border of the United States. It is impoverished, it is Hispanic and boy, those statistics are grim. Tell us about this virus, the vaccine path and the poor of America. Yes, Tom, thank you very much for

the invitation to return on your show. Um. Yeah, I think that's all on our all of our bandwidths about you know, first of all, the inequitable, um and disproportionate impact that this pandemic has had are not only the poorest countries, but the poorest segments of our population, and

that includes the impoverished in the South. And I think the second thing that we're worried about is um is vaccine is potentially going to amplify that that inequity or that disproportionate burden, you know, with with how said, uh, with impoverished or um underserved communities having lower access to the vaccine than wealthier communities. What are the best practices from other countries we can affect to get to the

poor faster. So I think I think, you know, I would hold up certain You know, countries such as Brazil, as you mentioned where I worked, where they have had mass vaccination programs from measles for yellow fever, and they run them effectively. I think the most important thing is to keep things simple and the second thing is is to provide access and and intense you know, numbers of clinics and vaccination sites in those communities that have um

uh lower uptakes and less access in general. Um in that sense, you know, countries like India, Brazil, they're they're kind of models for us to to follow. Dr co John referenced earlier this study showing that in the United Kingdom, one dose of the fire Beyond in Tech vaccine offered

two thirds of the protection against getting the virus. This is very good news and indicate you're going to get an acceleration of the impact of a vaccination even before the complete dose has taken Do we have a sense of how much the vaccine has already acted as a circuit breaker to stop the pandemic. Yeah, so, Lisa, So

that's certainly promising news. And there's a there's also information and very good quality information coming out of places like Israel, which has been rolling out the vaccine very quickly and giving us a snapshot of what what could happen here in the United States, you know where to roll out

across the population in large numbers. So at this moment um, you know, unfortunately, in order to really get what we call that herd immuni effect, that population level benefit of the vaccines through either the first dose or the and as well as receiving the second dose, it's going to require us vacinating much larger numbers, but much larger suabs of our population to do that. Right now, you know, we're we're still less than ten percent of our country

has has been vaccinated. We need to really get those numbers up much higher and much faster, and that's going to be even more important when we're thinking about the threat of variants. Do you think we need to recalibrate then to optimize the rollout. Doctor given to the UK did roll the dice on this in many ways. I'm sure it was supported by some medical evidence, but some people push back at the same time about doing a one dose and then pushing out the time between the

first dose and the second dose. Is that something that resonates with you, sir, something you would endorse. Yes, I uh, you know, I think again, first of all, Vagina, I think we have to be humble. Um, we're going to be We've learned a lot, you know, in a very short time about this, uh, this virus, and we're continuously learning.

And as these studies come out, and particularly the UK study that Lisa said, and that makes us more confident that, you know, the policy that that England had proposed, which is giving the first shot in delaying the second shot so they can they can immunize or vaccinate larger population, you know, larger proportional population may be successful. Now we're going to obviously everyone's going to be looking at the scientific evidence as it rolls out, but it's certainly pointing

that way. John, Dr Co I'm a little bit reluctant to ask you this because I don't think I want to know the answer. But the post pandemic future coronavirus is not going away. It's probably going to mutate. That's what all of the professionals in the field say. Are we going to be masthless? What will it look like as this continues to become part of the medical backdrop of the world. Yes, At Lisa, I think let me

break that down into two parts. The short term. In the long term, UM, we know that these variants are emerging, and those variants are being fueled by mutations, and those mutations in of themselves being fueled by mass you know,

large scale, widespread, uncontrolled transmission. And as long as we're not controlling transmission, we are going to set ourselves up for continued selection of variants that potentially may escape not only natural infection or the immunity caused by natural infection, but also that let alicit to there conferred by vaccines. And let me make a second point, is is that you know this can't be done just like in the

UK or the United States and South Africa. Has to be done, you know, the control of transmission as a driver for these variants has to be done throughout the world because we know these variants can can travel in one place to the other. So that that that's really

certainly the concern in the short run. In the long run, that means exactly unfortunately, we see your fears that that we're going to have to keep keep continuing the public health practice of mass social gathering UM reduction in social distances. It's going to be really difficult to reopen international travel anytime soon now, But thank you for your time today. Don't to wrap a how that of the yel skild of medicine. Michelle Meyer joins us out with Bank of

America and they've done some brilliant maths. We went through it with their colleague Ethan Harris a couple of days ago. Michelle, four percent, g d pause nine g d P g d P. You've got that big fiscal pop. Good morning, professor Summers. Up against inflation, which breaks? Do we break inflation higher or do we get a fiscal job done? Um? So, I think the way that we're thinking about it is certainly in the near term there's a big pushed into

the economy as a result of stimulus. There's a lot of money slashing around there already and more is to come, and that will generate higher consumers spending. Um And as Mike outlined, I think quite clearly for certain industries there could be supply constraints and that can exert upward pressure. But to me to understand whether and it's a sustainable

turn higher in inflation, there's two critical components. One inflation expectations right, that will that will move this transitory inflation shock to something more permanent if people reathet expectations and if pricing power picks up on the business side, and again people are willing to spend more because they have this cash on hand um and that kind of feeds

on itself. The other critical factor is the health of the labor market, to the extent that this demand push actually helps to also heal the labor market faster, bring the unemployment rate down more quickly. That will provide a more again persistent um income support for the consumer through wage growth through labor income. We keep them Yeah, well, we keep referencing this Bill Dudley column, and I want to get your view on some of the specific points

within it. What he's saying will cause higher inflation. One of them is that he sees demand picking up at a time when supply is still reduced. You've got restaurants that have gone on businesses, a lot of small businesses, uh that have not recovered. So given the fact that there are fewer establishments out there, they'll be able to charge more since they'll be in this influx of demand. Do you see that as a potential driver of inflation? Sure?

I think that's a very fair argument that you have an imbalance where demand for certain activities picks up very quickly and you don't have the supply we thought it actually in the reverse on the good side. I mean, think about back in this spring and summer when demand was picking up impressively for autos, for household appliances, for electronics, and there wasn't enough supply initially, and that created this kind of one off level shift higher in prices on goods,

which are now reversing once supply has returned. So this supplied demanding balance should be somewhat temporary, right. The demand will pick up for something like restaurants, which was cited, and then capacity will come back online over time, and that will create a little bit more of a of a ceiling on the price pressure. So again, to make it persistent, it has to be resetting inflation expectations and

driving much stronger labor fundamentals as well. The only question that matters ready, Michelle, for market participants, will the fet be bold enough to look through that burst that bust we all anticipate at some point like this year. Do you think there will be? I do? I do? I think certainly the base effects in the spring. They're ready

for them. They've been talking about them. As Tom and Mike, we're just talking about you know, it's just simple math when you look at the year of your comparisons, um and I think what they're the FED is going to do rightfully so is to look at the bottoms up analysis of inflation. Where is inflation picking up on a sector basis, and given that, can they make the argument that it's a short term supply issue versus something more persistent.

If they get a turnaround and you know, a notable increase in some of these more trimmed mean measures or something like shelter, which is more a function to business cycle, then they might start to anticipate a higher trend of inflation. But they're going to be looking at the components to understand whether it's transying or not. It's all That's what's amazing about this discussion right now. The Fett is talent. You what's going to happen, and it's probably going to happen.

The base effects will kick in. This is what happens when people will re engage with the economy as well. And they're also telling us what they will do when this happens, yet we are still going to be having the same conversation for nine months. This goes up to the joke I made earlier about the inflation east does mischell Meyer. I turned to the e c I, the measurement of wages and benefits, And the key thing here

is how do you have wage inflation? With Heidie Sheerold's and e p I saying nine million bodies are out of commission and if you extrap laid out of a no pandemic boom, it's a more like eleven or twelve million bodies out of commission. Where does wage inflation return? So I think that it's very hard to understand the wage dynamics right now. E c I, as you mentioned, tom, is a preferred measure. It's better in real time than

average early earnings. But there is no perfect measure right now because there's been such dislocations the labor market, and you have these compositional issues where the lower paid individuals experience more job cuts, and as a result, you've seen this shift in terms of aggregate income or aggregate wages. So I think in the meantime, we just kind of have to wait it out until we have a more comprehensive and full, you know, broad based labor market recovery

to properly understand these wage dynamics. Chell great to catch up as always, Michelle, thank for America Security's head of u SE Economics. Now it's our great pleasure to turn to the chairman and CEO of General Motors. Shere's Mary Borrow. Mary, thank you so much for being with us. Good to see you again. Let me start by saying, barring from Queen Elizabeth, this could easily have been an annis horebulus for General Motors, given the pandemic, shutting down plants, repurposing

to make ventilators, and yet it wasn't. You basically beat across the board expectations fourth quarter and for the year. So from the inside, how did you do it? Well? I think it was everybody coming together. It really represented the great work and the teamwork at General Motors. With our all of our employees are suppliers or dealers. We all came together to make sure we could keep our employees safe but then also protect our customers and protect

the business. So I couldn't be more proud of everything the team accomplished last year. As it turned out, your biggest problem was manufacturing enough, particularly those trucks and those SUVs, because the demand came back. Were you surprised how fast the demand came back? Well, you know, we have a very strong full size truck in our full size SUVs that we launched on time last year even with the pandemic, and I think it just it speaks to how popular

the truck is. We have very very different models that reach different segments and so we've been able to grow share and we're very proud of our truck leadership. So, Mary, as you know so well, investors immediately say what have you done for me lately? So let's look forward now to what you're expecting. You're protecting a strong year as well, even though you do have some headwinds from things like

shortage of chips. Yeah, we think we're going to have a very positive year in one, not only from a financial perspective, but also the continued acceleration of our EV and our a V business. We're really excited that very shortly we're going to be launching the Chevrolet Bold EUV,

which is a great vehicle. And that's uh, that's days away. Uh, And then you know later this year will be UH serving the market with the GMC Hummer UH e V and then the catalec Lyric comes shortly after that as well as tremendous progress being made from an autonomous perspective as well. So we're really excited about the year, the growth opportunities that we have in front of us. UH and so it's a year of execution and you know, the issues with chips, this is a short term mission,

will work through it. Well, is general mode is basically the same boat as everyone else? Or are there things that you can do to get something of advantage over other automakers? Well, I think in general this is an industry issue. Of course, we're working every single day with a cross functional team to look for opportunities of how do we minimize the impact. So we'll continue to do that. You know, we did provide the guidance with a fairly wide range and we'll work at every day and provide

updates as we go forward. As you said, you've got a lot of e V models come out, including as you say, the Bold EUV and the Bold EV new model coming out. You're investing twenty seven billion dollars. This is part of a multi year plan here as a practical matter, what are the difficulties in that plan? And particularly I want to talk about supply chains things like battery cells some of the lithium issues. Do you anticipate

possible problems with supply chains into your battery operation? Well, I think you know, we're one of only two UH automakers that are doing cell manufacturer in this country. We also are doing a tremendous amount of development on our own and our own g M, R and D, as well as partnering with startups and our of course our joint venture with LG KEM that is development as well

as production. So you know, we're working hard to make sure we have all the cells we need and we've worked you know, through the supply base to make sure we do because we are as as we've talked about, we're accelerating our v e vs with thirty and you know, really covering the whole market. So you know, we continue to work it, but we think we've got a very

strong plan. I did some rough math here. It might be wrong, but basically if you made all of your vehicles as electric vehicles, you would actually be using more than the total mono lithium produced in the entire world by yourself. So does that mean we'll have less lithium used or we're going to find new sources of it? Well, I think you know, we're working on securing the supply that we need, but we're also working on development that

allows us to use less precious metals overall. So it's kind of a yes, and both are things that we're working on at the same time. When we talk about things like the Bolt EV that's coming out, questions come up with profitability. We had din lawer competitor come out and say by the end of the decade they will be making as much or more out of electric fields as they do off. A question engines, what's your profitability

path for electric vehicles? Well, we have set a goal for ourselves to have margins from our auto business be

at ten percent. That's not changing. Uh. We don't talk about individual product line profitability, but I can tell you with the progress that we're making because of the work we do with battery development, from our our first generation bowl TV to when we get to ultim we see about at improvement and we're already working on the next generation of our ultium technology that should take it to

accumulative sixty or more. So, you know, I'm very confident that as we move forward and continue to make advancements not only in the cost, but in the energy energy density, that's going to allow us to to have margins similar that we have today as we get into the mid and later part of the decades. How much help do you anticipate getting out of the government. We have a new president present Biden, who says he really wants to go to amission few vehicles in the government fleet very quickly.

He basically wants to replace them all over period of time, create one million new jobs. Is that going to help a lot your move at General Motors over to electric vehicles? Well, I absolutely think so. I think understanding evs, understanding the importance, and really we have to work together. Business and governments need to work together to make sure we have a

whole ecosystem that encourages e v adoption. We need to make sure there's the right charging and that's why the you know, the work going on for infrastructure is so important. So we're having regular conversations with members of the administration as well as members of Congress to make sure they understand all the pieces that need to come together to

support an ali V future. Finally, Mary, we all watched the Super Bowl, we watch Will Ferrell, and I guess my main question is what have you got to get to Norway? There seems to be some grudge with Norway here. Well, I think you know, when you look at Norway, they've have the highest DV adoption and so I think it's

driving awareness. Um, we're really um pleased with the added it resonated across so many, so many groups, but you know, especially uh millennials and how they look at the future, and to drive that awareness we think is really important. And I'm virtually finish, so I have a natural affiliation with the Scandinavian countries, but it's more highlighting what Norway has done and making sure people understand, um that evs

are a very important part of our future. And I'm a quarter Swedish, so it was satisfying you know that Wilfaller actually ended up in Sweden at the end of the end. Thank you so much. May always great to talk to me. That's very far. She is chairman and CEO of General Motors. 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 Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio