Surveillance: Megathreats with Roubini

book of the year for the first time ever. I did it so early in the year on the shock of the war and Vladimir Putin and what we saw. Putin's World is my book of the year. But look at this short readable, mega threads, mega threats. Noira Rabini, crisis economics, coming out of the crisis, and now this shockingly readable Noira Rabini joins us for the entire half hour. I'm gonna go back. I want to give people little

vineyard of years in my relationship. We're sitting at a wood panel doubles like bar and it's a very famous Secretary of Treasury sitting somewhat near us. And you and I walked through the excesses of oh five, oh six, and you nailed two thousand eight. Are we there? Again. Yes, we're here again. But in addition to the economic, monetary and financial risks, and there are new ones. Now we're going towards stagflation like we've never seen since the seventies.

In the book, I point out that there are also geopolitical risk like we're on the confrontation with some revisionist powers like China, Russia, Run or Korea that are challenging the geobolical order of the US and the West, and that's going to lead potentially to conflict. There are environmental risks that are very severe. There are health tries coming from pandemics, and there is a relation between global climate change and pandemics. There are technological coming from AI, machine learning,

robotic automation, the section of jobs. There's a backlass against globalization and we're going to go to a world that is globalized. The political risk with polarization, and we have radical extremist party of the extreme right and extreme lefts coming to power both in advanced economies and in emerging markets. And on top of it, we have amount of the

debt like we've never seen before. Explicit that well, that is a confluence of all these mega threats and of them together the Lipsky and I am F was heated about the debt build up. On the back of your book, you've got a guy named Rogof from Harvard, Bremer of Eurasia. Dr Larian from Cambridge, Martin Wolf always wonderful at the ft and at the very top the quote of the season from TALEB the gravity is returned to the physics. We've got a higher real yield. Now we've got a

risk free rate. Now what are the ramifications in our economic system that the gravity is returned to our physics. Well, there were many insolvent agents in the economy because private and public debt as a sturgy DP has gone from to three fifty globally between two thousand and today in advanced economies more like four h twenty and rising in the US is now higher than after the Great Depression and after World two. And we're not out of a

great depression or a major war. And until now, even if you had zombie households, corporates, banks, shadow banks, governments, countries,

they were built out. There were built out during the global financial crisis, zero policy rates, negative quantities, creditizing, and even during the COVID crisis, many of them were fragile, they were built out again we went back to to do even more of the same this time around instead is different because we have so much debt and central banks like the father to increase interest rates to fight inflation.

So the zombie institutions are going to go bankrupt. That's why not only we're gonna have inflation and stack flation, but whatever stack flationary debt crisis. In the seventies, we had negative supply shocks seventy three seventy nine, but we're very a lot of dead racials, so we didn't have a dead crisis in advanced economies with one in Latin America, Argentina, Mexico, Bazil borrowed to match in the seventies were all jacked

up interested went bankrupt after the DUFC. We had the debt problem, mortgages that at housing, that bank that, and we had the dead crisis, but was a negative aggregate demn shock, and therefore we had low flation and deflation today with the worst of the seventies with a massive amount of stag flassery negative supply shock. In the book, identify eleven new ones over the medium term. And at the same time we have that racial like we've never

seen before, so we get stack flashery, dead crisis. Don't give us to eleven. The general will be here. I was waiting for the elevents jumped in used this phrase in there. I could tell your in the sun bite. I'm not going to give it. You said, zombie institutions. Where aren't they? And you're talking about countries now and not companies, not households, not private banage sheet, So you're talking about countries sovereigns. Well, there are plenty of solveigns

that are in trouble in emergen market. We know what has happened in Lebanon, what has happened in Zambia, what has happened in Sri Lanka, And there's about forty of them that the m F in the World Bank said that they are on the version of having a dead crisis, severe dead crisis because of what's happening. And look what

happened to the United Kingdom. But now it started to be priced in like an emerging market with the fiscal stimulus reckless, forcing the Bank of England essentially to monetize it, and then the currency falling and it's going much higher until they reverse themselves so it has happened in Greece, it's happening in the UK, it could happen in Italy. Of course, we have a large number of not only emerging markets that are at risks, but also of advanced

economies that there is a risk. So over the last ten years we've had a series of kind of cyclical circuit. Right, yes, fiscal had the capacity to do that, central banks had the capacity to do that. Seemingly we're questioning the capacity of those institutions, central banks, soft foreigns to be able to do so this time around. You offer solutions in this book too, What aren't they Well, for every one

of these mega threats, there is a solution. But then the two final chapter one about a dystopian future where all these threads materialized. They feed on each other, and it's not just the end of the world economy, could be even global war. And there is a less dystopian future in chapter twelve, where we have the policies nationally and international delids to a better outcome. The problem is that are both domestic political constraints and geopolitical political constraints

to achieving the best solution. And I'll give you an example of global climate change. Domestically in this country, half of the county doesn't believe into it too. There is a conflict between generation. The young people care about the future of the elder care less. At the international level, there is a free rider problem. If a country catch a mission to zero, nobody else does it, then they

don't get benefit and only the cost. And now because of geopolitics, we are telling Indian China, you should cut your emission out to zero the next twenty years. But we created a problem in the last years. The stock of a mission came from advanced economies, and now we're telling them, don't grow, don't become rich because there is a problem. It's through the flow of new issues coming

mostly from China and India. So there are four elements of conflict to domestic and to international that essentially implied that we're not going to find their solutions. So there's lots of greenwashing, duren wishing during thick Leaves. A lot of the SG is just talk and action. Glasgow cop was just a total failure and order, slow motion train wreck, which goes to your point on about electric vehicles and nine pounds evs in the United States, because they are Green.

There is an issue they're going forward with the central banks, and whether a lot of your thesis and real is predicated on their inability to go through with what they need to do to get inflation down. Is that your base case is that the most likely outcome? Yeah, right now, all central banks are playing tough and talking tough and acting tough hawkish because they have a problem of credibility. But in my view, there are two problems. One problem is that they if they try to get to two

percent inflation, they cause a recession. And this recession is not going to be short and shallow, is not gonna be guarded. Valiety is not going to be playing the neal. It's not gonna be two quarters of negative growth and

the inflation collapses and they can ease again. In the book, I explain all the reasons why it's going to be a severe session because of the that ratio, because we're going into physical and monetary tightening, and at the same time you not only have an economic crush, You're gonna have also a physical crush. We're not only in physical dominance in this game of chicken between treasury and central bank, wherein what the folks at the Bank of International Settlement

called a debt trap. There is so much private and public debt that if central banks try to fight inflation, because a crash of financial markets and not just the stock market that's the least important credit market, bond markets, and that crush and financial crash feeds on the economic crush and vice versa, and therefore they're gonna winp out, and they're gonna break. And the first one was the Bank of England. The FED is gonna do the same.

This is going to do the same. Have you been surprised that we haven't seen some sort of catalysts, some sort of financial stress so far, given how quickly quickly the FEDS already hied rates, Well, we have not yet seen. It's some people worried some major financial institution not in the US may go bust. I think that the financial strains are going to become more severe because right now the FED is on the way to go from three

towards five percent. You already have a stock market down twenty five percent NASA given more public reads thirty three percent. You have the crash of Mimi of spark, bubble, of the crypto bubble, private equity venture capital growth. Everything is down, credit is down, leverage market is shutting down, Celo market shutting down. And the only thing they used to be

saved there were government bonds. Now the price is correlated positive equities because when inflation is rising, you lose money on your equity side, use money on your bond side. You'll have gone from one to four. And the price action downward on bond has been worse than an equities thirty percent losses. So any sixty forty seventy thirty or is party portfolio lost money on both hands. There was no worthwide even cash give you a negative real return

because of inflation. There are other alternatives that can protect you against the stale risk, but they're not the traditional ones. You're a man of high conviction. We know it was some very smart friends. Any pushback to this book that's convinced you absolutely anything makes you rethink how bad things might be, impossibly made you think that possibly they could turn out better than you think. Honestly, everyone was ready at any level. As said, the threats you're talking about

their all too reel. Of course, there may bee solution to them, and I discussed them chapter by chapter. In the final chapter, about the last dystopian future. But think of it this way. I have gray hair. I grew up in the sixties seventies in in in Italy. At that time, did I ever hear about climate change? The never concept? Did I worry about the nuclear war? After that? The town between Soviet US, there was nothing they worry about AI destroying. Most jobs were in the eye winter.

With the stable democracy, we didn't have pandemics. Last time around was nineteen eighteen. We had low that ratios, We had law implicit that because there was no aging of population and all that fund the liabilities, there were no major financial economic crisis. This is the quantum shift. There was a period in nine and the mid eighties that was something of a stable period of global prosperity, welfare,

peace and so on. Today these are threats that did not exist, and those threats are more similar to the period in nineteen eighteen and teen forty five when word World War one, World two, the Great Depression, trade war, financial crisis, inflation, hyper inflation, deflation, Nazis, fascists in German, Italy, Spain and Japan, and word World War two, and then with the Holocaust, and then where the Korean war, as as Neil Ferguson on Bloomberg is saying right now this

column this week, he says, we'll be lucky if you repeat the nineteen seventies, because it's more possible we end up like in the mteen fourties, meaning it's talking about World War three. I love Can we be clear that wasn't a column, that was a book. If you read that, it's can you tell Neil the columns are short. I love his column because you know he's speaking about it. He's speaking about the fact that's a meaningful chance that we have to inflict between I write it about in

my own book. There's chapter about the new cold within us and these revisionist power and I say it could end up into a haltwer it's a significant risk. I want to go to the past. And I was so pleased that you mentioned on page thirty seven your colleague Alberto Alssina. I still can't believe we lost them at such a young age. You two looked at the politics

of our economic system Rubini and Albert Alberto Alsina. I want to bring it forward to where we are now, which is a massive dollar shortage and central banks that got a plan but they're gonna be overrun by a global dollar shortage any m and frankly in developing economies as well. Is there a dollar shortage now? And is that the catalyst for central banks to blink is going

to be one of the catalysts. There is a dollar shortage, and there is an interests in the United States is particularly dramatic for em They have in terms of trade, chalk, those that are important commodities, They have rising interest rates because of what the fat does, and they have they're on the take inflation, and that the weakening of the currency that increases the real value in local currency of drown debt. So for them is this is a perfect storm.

Some of them have a lot of reserves, some of them don't have reserves, Some of them are received I left money. But there is right now a strengthening of the dollar that is implying even further tightening of financial conditions in the rest of the world. Now, I think that eventually the dollar is gonna have to fall very sharply because we have a twin physical and current account eficits.

In other advanced ecology of a physical deficit, but the current account surplus and now we're essentially using the dollar is a tool of national security and foreign policy. We're weaponizing it rightly, so sanctions against Russia, against Iran, nor Korea, China, we're starting, by the way, tact war with China. Economic world is weakness. How do we get there? Forget about this? Plus, the company of Left is going to be essentially the

FED whimping out. Once you see a severe resertion, that means blinking, blinking, They're gonna blink and wimp out because you'll have a severe session financial out. Well, either you're how care you'r a whimp or a dog in this case, But that's going to happen. And once the fact is going to essentially prevent an economic and financial KASO, try to prevent it by essentially stop raising rates. Even inflation is too high, then the dollar is going to start

sharply weakened. That's gonna be the trigger for it. What's raising the dollar is of course the type monetary policy viewer wrote in and wants to know what you're doing with your money, considering that it seems pretty bleak out there. You know, if you just stuff into a mattress, No, you don't stuff in the matters because then even cash loses money because of inflation. There are three solutions to the problems of inflation the basement of yet currency, political

and geopolitical risk, and environmental risk. Solution Number one is to have very very short term treasuries that are just in rates and don't have the price action of long bonds that ever fall enterprise. Secondly, you want to be into tips, even if tips right now have not yet done well because in pression expectations are not yet the anchored. I think you want to go into gold and precious metal. Again, gold is not done very well because you have tight

multi REPULSI strong dollar. But if central banks are gonna blink and win pout, gold is gonna rise in value. Gold are gonna rising values because the enemies of the US are subject to sanctions China Andize worried. There are three dollars of reserves in dollar have to move to other things. It's you're in the end. They can be seized.

The only thing that cannot be seis is gold. Of course, not in the volved in New York or London, but in Beijing or in mosculines on and finally, appropriate types of real estate that are environmentally resilient because real estate compared to equities in a recessions as well because you have more pricing power for rents and so on. So a combination of these assets provide you, in an optimized way, a hedge against some of these theris. On the flip side,

you've always been brilliant, un leveraged in the system. I'm credit and we've heard from one fund manager after another that there is reason alliance in this corporate credit sector, even with the death that they have, even with the low coupons that are currently paying that what we set higher. Do you disagree? Do you think that people are overly

sanguine about the upcoming credit cycle? They are. Right before the COVID crisis, the FED was writing reports on financial stability, pointing out the leverage of the corporate sector of course high yield and fallen angels. But then during COVID these folks should have gone past, but they were built out. We both even high yield that you remember, commercial paper

and everybody under the sun. So the zombies were built out, and the excesses of having leverage loans CEE los Co of Light got even worse, and people got even more indebted. This time around, the party is over because the FED for now left to raise rates because that service rations

got become impossible. And you get the double one me for those corporates, you get a p n L because income is gonna fall because of the recession, and you get that problem with that service in racial rising, and therefore there will be a corporate that crisis one we avoided during the GFS and during the COVID crimes. It's scarring. Now they see a low and leverageable market are shutting down right now. I want to get to chapter twelve. You talk about a more optimistic future, utopian future. You

started by quoting the economist Yogi Barra. I thought that was very good. You go right in there about predictions and Yogi in the future and all that. How do you get from Yogi Berra to a more optimistic future. Well, the more the place in the future starts with essentially technologically innovations, like for example, I don't think it's gonna be renewable, maybe fusion. If fusion happens, then you can have unlimited amount of essentially energy and cheap costs with

no green out gas emissions. We look like we are however, only fifteen to twenty years away from fusion becoming a reality. If it comes faster than we can increase the economic pie. We're gonna reduce the cost of energy, We're gonna stop greenout emissions. We can grow more. What about fractured What about our fractured political system, whether you're Italy in the turn there to the right or what we see in the election He're coming up in two weeks. How we

get beyond this fractured political system? For now we're going to god the world that is even more divided domestic and there's more polarization, there's lack of partnership, and it's happening. I mean, you have outwoor Tanni regimes in power. You have put In in Russia, you have Erdogan in Turkey, you have Kausinsky in Poland, you have Urban in Hungary, you have Melane in Italy. You have these Nazi Swedish Democrats. Now in Sweden you have the Brexit phenomenal, you have

the Trump phenomenal. And in Latin America used to be only Venezuela Argentina populist of the left, but in the last two years, Chile, Ecuador, Peru, Colombia or the left. That's the world we're going, unfortunately, is a world that is not liberal Democratsy if you saw the movie right here, No, not the Capri who love playing Rubini nor Roubini. Where this's the book is mega threats. We get lucky this morning,

jump Ovan around the table with us. They had of the Black Rock Investment Institute and formerly so much more than that, joan fantasticy catch up with the s. I read the weekly note from the Black Rock Investment Institute that came out just yesterday, and you talked about the significance of the mid terms, and you guys don't think they're that significant. The future returns over the next several months. Why,

First of all, it's so great to be here. Um. No, we think the usual playbook for the mid term is that, you know, if you have divided government, divided government or houses, um, it tends to be a booze for markets. But as anything else this time around them and usual playbooks don't apply. We think, um, the main stories about their fore told recession that we're gonna have, we believe in in the

quarantin the next year. And as a result, we think that this is the second side show um, the the important for the future of the country and everything, but in terms of markets, we don't think that's an important driver. Swap lines front and center. Major question at the meetings in Washington here a week or so ago. Give us black Rocks estimate of how countries will have to go to the FED given a global dollar shortage the liquidities

that are out there. Is seeing in f R A oh yes, yeah, um, you know the important thing is here we were seeing like the most rapid tightening of financial condition in a in a generation, in a very long time. We haven't seen ready the cracks yet here in the system. It's remarkable to see all the all the strengthening of the US dollar we you've seen without like the knock on effect or cracks, we would have

seen another circumstances. I think that creates a level of anxiety that was really clear at the I m F A lot of conversations about how we show up the system in that context. Swap line will be uh will be a key, key tool potentially in that environment. But I think so far what is very surprising is that you know it's been very stable despite despite what your academics at Princeton and your work with the Bank of Canada.

If we believe it's nonlinear as we disinflate, do you think we can succeed that with stability or are there going to be instabilities witnessed with Damian says are yesterday we looked at the Columbia piece going from ninety eight down to sixty three on a price of bund that's a crack. I think it's very hard to see something that's gonna be smooth landing in any way. That's true for the economy, that's true for the financial market in

this context. That's why you know, we think we're in the clear part towards over tightening of Montree policy, but it's gonna be very rocky. We're underweight equities, you know, as as various as we've ever been against in terms of broad risk taking at this moment. At some point that's going to change. But the reason is really because um, that tightening is um is it could be nonlinear, as you say, and um, we haven't seen its cry. I think the UK we've seen over the last month is

like an accelerated peak in the future. Uh, And I think that's um. That's where we need to guard against Jean If you believe in a hard landing, why not by treasuries here, How that's a that's a great question, and that's another aspect of the current environment. We wear the playbook. The typical playbook might not be applying. We don't think it's gonna apply. We are going to see a recession, but it's gonna be a recession the context where inflation is gonna won't be under control, and it's

aftone recession. It's ready the recession caused by Montrey policy. Ready, that's the way by which inflation will get under control. And as a result, when we get to that recession, you won't see the typical reaction of yields falling uh and bonds playing their safety role. So the typical playbook of go find refugion bonds in this recession, I think multiply.

Is this part of the reason why perhaps the stability that you talked about, the surprising resilience of markets is almost a headwind to them because it won't necessarily stop the rising rate environment. It won't necessarily change where we are in a wholesale value. How high can yields go and stay for a prolonged period of time before something

breaks in the financial system. So in our estimates, like if we go to five percent as now, we kind of assume for early next year, Uh, this is a world where we're gonna see a very significant slowdown of activity, decline activities. That two percent we think as a as a minimum of GDP, it's three million jobs that would

need to be lost in that context. That so in the world where five percent to sustain UM and I think in the world like this, the financial system leverage as it is as it is, we'll start to see some some response and and that's the So five percent is um is where we're heading. We don't think we can go much further than that. That's why over the course of the first half of next year, we're going to see central banks having forced into some stopping pause

before they can go further. It only said recession forced out. I'm interested by that phrase. You've also talked about the appropriate time horizon to bring inflation back to target, and I think you've explained conveyed your disappointment that central banks aren't having that discussion a whole lot more. Does it have to pay this way? I think what is very interesting.

And yeah, and we we've written about this is the fact that you know there's your you to be two sides to any decision in central banking, Like it's not typically obvious what you have to do. UM. And I think this environment is as tricky as it has ever been. I mean, I don't think there's been any so sharp trade up that we had to deal with. UM. You know, we have to go back the seventies and the seventies with a different situation altogether. UM, there's a tendency to

apply the apply the playbook of the seventies. But we're not in the seventies. And so this lack of two sided debate on what's gonna happen or nuance is troubling. And UM that's why we think that we are going to get over tightening. Um. That's not necessarily the outcome that had to be, but I think it's happening. Um. At some point, I think the pressure the forces will be pretty pretty strong. And we've seen that in the UK, right, I mean we've seen the accenrated version. You're go in

one direction. Um, markets will put some pressure and I think we'll see some forced pause. That's not great for credibility. I think it's better for central banks to be on the front foot. And UM, you know, I've signaled that there are some nuances here we might need to deal with. UM, but this is not the situation where and so I think we're gonna be forced into, you know, a wake up call, and and we'll look like a pause, but one that has been forced as opposed to be playing

quickly here. And I could go for an hour with you on this. There was a guy named Bernanke who emailed you when you were a kid and said, do you want to try for a PhD at Princeton. You talked about it the day he won the Nobel Prize. What did he and Anna Schwartz and Milton Friedman do

so he didn't repeat a depression? Well, I think the key lesson of the Great Depression that uh An, Ashwartz and Freeman at first like more from an anecdotal perspective or documenting the depression was and the Ben Bernanki and others of more formalized was that, um, if you tightened montre policy as the economy is uh is is going down, you create this financial acceperator dynamic. By the true the banking systems. That what we're doing right now and with

and with bank runs. UM. And I think that was very much in his mind when two thousand came. I was interesting in the speech he gave in two thousand two in the anniversary of Freeman that he said, we heard you, we won't do it again. That was that was reference to the depression. He said he was abusing his status at the time, but not his future status. He was he was he was a governor, but became chairman afterwards. The thing though, is at this time, I

don't think this is the playbook. This is not the playbook for the current situation. This is not a demand driven financial crisis bank run story. This is a massive supply shock that we're dealing through. UM. I'm not sure that those lessons apply right now. So that was for two thousand and eight in the city. For twenty twenty and after. Joan Vvan of Black Crock Jean fantastic to

have you within the shade. If you were a student of the Midwest and you had parents that were industrial on your college list was the West Point of manufacturing and engineering. It was called General Motors Institute, now cattering and never did they know that one of their students would come out to provide leadership for General Motors. She has Marie Barra and Matt Miller brings us to her today the engineer from the General Motors. I'm looking forward

to it. Mary, thanks so much for joining us, Really appreciated on such a busy day for you. Let me pick up where these guys left off and ask you about the stronger dollar. Obviously, the lion share of your revenue comes here in the US, but you still buy purchase a lot of parts in your supply chain from outside of the country. Is the stronger dollar a tail wind for you? Well, I think you know there's a

lot of pressures right now. When you look at commodity cost transportation, it's just one of the elements and that we're facing, UH is not as significant for as it is for other companies, just based on our strong position in North America, but we continue to monitor and be impacted by each of these factors. Rate's obviously a huge factor as well. We've seen it UM impacting other lenders, and I'm wondering how it's impacting GM Financial. Well, we are seeing GM Financial get back to I would say

historically strong performance. I think we had especially strong performance last year in the year prior due to the strength of use cares pricing that's coming down with interest rates. We are seeing a little softening on leasing, but overall GMF is performing very well. You know, the CEOs of JP Morgan and Goldman Sachs both UH this morning, have said they see a recession as likely for the US. I'm wondering your view. You have an unique position. Um,

what's the economy look like to you? How how is it unfolding and car sales specifically, Well, I'm gonna let calling a recession to the economists, not not my UH expertise, but what I'll tell you what I We are seeing and we're seeing still very strong demand for our products. We're seeing uh strong UH average transaction prior seen that we we continue to be able to build on and so you know, we are starting to see inventory build just a little bit, but well below levels that were

in the past. So overall, we're still seeing a very strong consumer for our products. And uh, you know, we're watching carefully all the different signs, but right now it's still very strong. But what about inflation and the pressure on margins. I mean, um, does the stronger dollar balance that out? Are you seeing a big inflation in arise in the costs that you need to pay out for

UM parts? And is that sort of squeezing your margins here? Well, we have, yes, we we have seen you know, commodities, logistics, uh. You know, we work with our suppliers to make sure that we have a very healthy supplier base. So all of those factors we tend to work to offset. And you know, we predicted this year would be about a five thousand or excuse me, five billion dollar impact and

we are seeing that. But we have worked effectively to find offsets and and that's you know, part of our we're all uh equation for this year, which is allowing us to still maintain guidance. One big boost is going to be the Inflation Reduction Act at least UVS says they see the i R a A is very generous. They say it has the potential to make the US a global evy battery hub. How do you see the

Inflation Reduction Act for GM? Well, General Motors was already investing in North America or in the United States for instance. You know, we have a battery plant in Ohio that's ramping right now. We have two others, one in Michigan one in Tennessee that are also ramping. So we were making the investments because we wanted to make sure we had a resilient supply chain after we've lived through so much disruption over the last few years. So as the i ra A came into UH was passed and we're

looking now for Treasury to set the rules. We think we're very very well positioned and we do believe that the benefits of our ira A will drive stronger EV adoption with the American consumers. So we think it's going to do a exactly what was intended to do, and we're well positioned to benefit and and work with our consumers to make sure they have an EV that's affordable that they can really enjoy the benefits of an e V. Are you still on track to sell a million e

vis and beyond? We absolutely are. You know, when you look at the lineup that we have, you know, starting with the Hummer to the Lyric to now that the Chevy Silverado e V. We just last week I'll launch the GMC Sierra e V along with the Chevrolet Blazer e V and the Equinox EV. I think we're going to be well positioned covering the important segments in the

portfolio to reach that million unit level. By you do get a huge boost also from big truck margins, and I imagine that helps you um to fund the e V business and and get towards that target. If we have a recession and you see sales of those big trucks, those big I C trucks drop, can you continue to fund e V boost? We very much believe we're We have a strong enough balance sheet and the strength of

the business. When you look at the truck we have truck leadership, we've had it since and we just did a major refresh to our late duty UH full size trucks. We have strong SUVs as well, and now the heavy duties we just revealed they'll be next year. So we think our product portfolio is going to position us well

in the truck market. I would also say mid sized crossovers are very strong as well, and the truck consumer, especially the full size truck consumer, they generally are not They don't shop as many segments as maybe other customers of other segments to so we think we're well positioned and obviously will moderate based on what happens from an economy, in a in a consumer buying perspective. You know, earlier this year, people were asking if we were going to

get back to a seventeen million star. UM. Now I'm hearing people ask if we're gonna go down to a twelve million star. What do you expect for car sales next year? Well, we UM, you know, because of all of the economic UH conditions around the globe. You know, we are looking and we're planning for a more modest level. We're still going to protect for the upside because we don't know next year. But you know, we're at really depressed levels right now because of all the semiconductor shortages

and other supply chain issues. So we think there's an opportunity to go up ever so slightly next year. But we're going to be very conservative as we plan for next year, but be ready to take advantage if there is upside and there's still a lot of unknowns. Will provide more information on how we view UH and early next year. All right, Mary, thanks so much for joining us. Real pleasure talking to you on earnings day. General Motors Chief executive Officer Mary barrat Mila just awesome as always.

We're gonna catch up with Jordan Rochester now the strategist over Nomura and Jordan, I taste it a little bit earlier, a few minutes ago. Let's go there. I saw the number one sixty and Dolly next to it in your note walk us through it. Well, that wasn't my view, John, that was the view from clients. So this time last week on Monday, I'll set next to you guys in

that table. So we met clients around the New York area in Connecticut as well, and we're looking for one fifty five at num in Dolly n I think after this banker Jopan intervention, what you've clearly seen over the past let's say twelve hours is extreme lack of qualite city. Now we're in a forty pit range where the previous two weeks we've been a big vol higher in terms of that march up to nearly a D fifty two.

Then that near six n swing down on that intervention on Friday, done during New York hours when liquidity was very thin, and just after that Wall Street Journal article talking about the FED. Because perhaps a bit more dovish in terms of when they will slow down rate hikes. So I think we've had some temporary setbacks for that long dollar dolly n trade, but the fundamentals still pretty clear John that the US interest rate a rising, the Japanese are not. That is your long dollar Dolly Enne

Carrie trade. But for me on the fundamental side, from the trade side, the dolly n is likely to keep rising from Japanese importers this winter going out and buying energy, buying coal, buying oil, even though energy prices are cooling down seasonally. As we get into winter, those poems should accelerate, pushing dolly and higher towards one fifty five. The honor of a formal tea at the Bank of Japan with all the pump and circumstances different than the FED. Folks

at the FED. You're over at Starbucks and you're paying for it. That's how they do it in America. Jordan, give us an insight on the debate at the Bank of Japan. Is a corota son only or is there actually a debate there like there is a bore at FED. It's definitely a debate. Qurotas of course, representing the rest of the bank Japan when he speaks on their behalf, but he is also the guy in charge. And when we get to March and April, the question for clients is Krotas comes to an end, who will be the

next to lead the Bank Japan? And will that leads to policy change? And if you look at rates markets, rates markets would tell you yes, we think that something will change, at least on the ten year parts of the curve. Will the bands be wider on the yield curve control? Will they give it up altogether on the ten year move it to the five If you look at the Japanese JGB curve, even tenors below ten years are trading above the sort of levels set by the

ten year yield curve control. So the markets are challenging the Bank Japan. As we speak, they're holding onto their their their ten year but the rest of the curve is pricing a change in policy to come. And it's a message so far for this year Jordan's the currency vigilantes will win that we're seeing that when it comes, perhaps eventually to Japan, although it hasn't happened yet, and then it will has come already to a Great Britain where you see a little bit more upside at least

versus where you used to with the pound. Indeed, well for the beginning, used to be everyone's risk off hedge of choice. The only lines I've met who are long the yen are using it in their portfolio as their potential risk off in case we get dollar weakness, and as you've seen over past year, that just hasn't worked. The fundamentals really did change for the end compared to the global financial crash. The carry trade still drives the pair. It does track U S yields quite well, but on

the trade side now have a trade deaf sit. It's not your risk off currency of choice when this is a risk off driven by energy prices. And then for the UK, I think the UK is the canary in the coal mine for everybody around the world, for even for the US, for Janet Yellen, for the Fed. You don't want to do a UK seems to be the conclusion from talking to foreign policymakers. When it comes to

budgetary constraints, don't push it. And also when it comes to interest rates, don't suddenly get dubbish and allow inflation to run hot. I know we were just talking about the previous section use car prices. I think they will continue to fall, perhaps quite aggressively, but labor markets are really tight, and the risk now it's the second round effects for services and that's a lot harder to tain that inflation dragon. So I think for the time being

the Fed to go do seventy five. Then they'll do seventy five again, then slow down into the new year. That Wall Street Journal talking about the idea of perhaps slowing down to fifties come December. That's the debate for the dollar right now. That's why you're own cable will become quite boring to trade. Just that everyone everyone's waiting

for this FED meeting next week. I think the message will be noe, we're going ahead, We're still staying hawkish, and the dollar will rally and Christmas and then waiting for the CPI print the week after that. Jordan awesome to catch up. Buddy has always Jordan Rochester there of Nomura. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten a m Eastern.

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