Baltimore Bridge Collapse

Published Mar 26, 2024, 8:29 PM

 Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Balance of Power Anchor Kailey Leinz reports on the latest news on a major commuter bridge in Baltimore collapsing after being rammed by a container ship. Bloomberg News Trade Tsar Brendan Murray discusses the details of his story Baltimore Bridge Chaos to Test Flexibility Again. Chris Gaffney, President of World Markets at EverBank, shares his thoughts on Fed policy and investing. And we Drive to the Close with Leo Kelly, CEO of Verdence Capital Advisors.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan. 

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Let's get to what, as you know, is our top national story, the collapse of the Francis Scott Key Bridge in Baltimore after containership struck it, sending nearly the entire roadway structure crumbling into the water. President Biden, addressing the incident earlier from the White.

House, I told him we're going to send all the federal resources they need as.

We respond to this emergency. I mean all the federal resources, and we're going to rebuild that port together.

Everything so far indicates that this was a terrible accident.

At this time, we have no other indication, no other reason to believe there's any intentional active all.

Right, That, of course, was President Biden earlier from the White House. For the latest. Let's head to Bloomberg co host a Balance of Power Keayley Line. She is on site in Baltimore. Kelly a lot going on, and new information, obviously about this situation continues to come out. So what's the latest. Get us up to speed?

Got well, Carol. Right now, this is still an active search and rescue effort, and officials here say that is still the number one priority. What we know is that at the time this happened one thirty am Eastern time, when the Dolly collided with a structural support of the bridge and it all came crashing down, there was a construction crew on the bridge working on fixing potholes, and a number of individuals fell into the water. Two have been rescued, one of which is hospitalized, but there are still six individuals unaccounted for. So that is really what everyone is focused on most immediately, is that rescue operation. Then of course it will turn to other questions, including the clearing of the debris so that this port, a very busy port of Baltimore, may be able to get back open at some point in time, And of course then there's the other effort of reconstructing this bridge, but again there is no clear timeline. We heard as much from the Maryland Governor Wes Moore when he spoke to reporters earlier today. He really emphasized that the focus right now is on saving lives. He did not put a timeline on anything. And in the interim traffic, commuter traffic, you know, goods getting shipped over the roads and goods getting shipped in transit by the waterways here around Baltimore are going to be disrupted.

Kaylie.

We did hear from the President that everything so far indicates that this was a terrible accident. What do we know about the accident, what do we know about the ship, what do we know about the crew on the Dohli and just how this happened.

Well, the Dolli, of course, is a ship that with Singapore flags, had been chartered by Marriskin was carrying cargo of Marri's customers. Now, what is the law here in Maryland is that the ship actually needed to be piloted in Maryland waters by authorities from the state, so that was who would have been in charge of the vessel at the time this happened. But our understanding at this point, based on the briefing reporters have received from authorities, is essentially that there was a power outage, they lost propulsion, the ability to control the vessel and they did notify poor authorities here in Maryland of that. So Wes Moore actually the Governor talked in the briefing about how authorities did have time to make sure that no more vehicles came on to the bridge. They were able to halt more traffic because they did get warning a may day from the ship that this was happening. But ultimately, this was a ship, according to the Governor, that was traveling at eight knot speed, relatively fast considering they were just coming down the river, and ultimately could not be stopped from colliding into the structural support. So again, as we heard from the President, as we've heard repeatedly from the other authorities, really just looks like a terrible, tragic accident that of course will have consequences human most immediately regionally and even nationally as well.

Kaylee, you've been on the ground for a few hours. Just describe the scene and what you've been noticing over that timeframe.

Well, there are hundreds of people here, Carol, obviously very large media presence from local media here in the DMV area to national media as well, as there have been other trucks, things carrying equipment, even some trailers up to the point of the road that we at least are able to see. Of course, the road ultimately just hits a dead end and there is nothing beyond it because of that part of the bridge had collapsed. But starting to see some equipment coming in, and of course I am watching really at this hour for any time now. This Transportation Secretary Pete buddhaj Edge is expected to be here on site at the invitation of Governor Moore to work with authorities here as this effort is underway. He will likely reiterate a lot of what we've already heard from President Biden in terms of the federal government providing support not just to the search and rescue effort, but the reconstruction effort as well, and any funding that that might require. And even more immediately, I would point out, at two thirty pm Eastern time, we are expecting right here behind me, the NTSB to be delivering a briefing to the press. Of course, will keep all updated on those developments as we get them.

Yeah, and we will take those briefings live as we do get them. Hey, Kaylee, I know you mentioned it's a search and rescue operation, is what's happening right now? That is our focus and the other questions will will certainly come later. It does raise questions about what happens to shipping out of Baltimore and what happens on the global shipping front. What can you tell us about the importance of the port and where some of the port traffic will go and how this could snarl a really delicate balance when it comes to global trade.

Yeah, of course, we're all still reeling from the supply chain impacts we saw during COVID nineteen, and in some ways that may make actually more cargo operators and those coordinating these shipments to be a little bit more prepared and being able to reroute things, but that will likely be necessary and frankly for an unknown period of time. As you allude to, Tim, this is a very important port. It is actually the busiest port in the country and has been for thirteen years in a row in terms of the import and export of automobihicles, the vehicles, cars, light trucks. Almost eight hundred and fifty thousand of them went through this port in twenty twenty three, and that is now going to be likely heavily disrupted. We already have or have heard from the Ford executive speaking on Bloomberg earlier talking about how they're going to need to reroute some things in terms of car parks, for example, GM has indicated they'll have to reroute as well. And it's not just the auto industry that could be affected here. There's also a number of key commodities that come in and out of this port, one being cold. We're talking tens of millions of tons per year that could be disrupted in terms of those exports for an unknown period of time. Really, there's just a lot of transit, seaborne transit in particular, that is going to have to go elsewhere, whether that's north to places like New Jersey and New York and those ports there are south to the likes of Norfolk in Virginia. But there's going to have to be moving around. And that's just in terms of what moves over water. Of course, there is a huge part of I six ninety five that is now collapsed and is also submerged, and ground traffic, commuter traffic, and just freight distribution is going to be disrupted as well.

All Right, Gonna leave it there, Hey, Kaylee, thank you so much. Bloomberg co host have balance of power at Kaylee Lines, and we want to continue on the shipping impact and the significance of this port in Baltimore. It is one of the busiest ports, as we heard from Kelly on the US East Coast. With more on that side of the story. Let's bring in Bloomberg News. Trades are Brendan Murray joining us from London. Brendan, we know this is a major distribution hub, the biggest in Maryland specifically, share with us some more about size and scope and the significance of this port to the US supply chain.

Yeah, it's it's not a giant port for containers, but as your previous guests mentioned, there are some there's a diverse array of products that and goods that move in and out of Baltimore. Cars, coal, gypsum, uh, and a lot of the construction equipment, so you know, and farming equipment. You know, it's it's we're getting close to planting season for farmers, We're getting close to sort of spring construction season. So so those kinds of things could cause some logistical uh snarls or hiccups here in the in the weeks and months ahead. UH. A lot of a lot of this cargo will will be diverted to to places near I like New York or or Norfolk, Virginia, although one of the major car terminals that would be an option for Baltimore is in Brunswick, Georgia, and so that's you know, hundreds of miles to the south. So you can imagine that the delays that are going to be involved in shipping something from uh you know, Georgia, uh, you know, up the East coast as opposed to bringing it into Baltimore. So it's those kinds of wrinkles that are going to have to be worked out over the over the coming weeks. But but you know, they're still sort of untangling the mess that the port itself. Some of those auto terminals are on the ocean side of the bridge, so they're not going to be affected some of it if some of it is on the other side of the bridge, which which is apparently going to be closed for for a long time. So there's still a lot of details to work out about the extent of the of the disruptions, but it's they're going to be some at least minor disruptions uh for for a while, and they may turn into they may sort of snowball. If they can't work these out, that's yer over the next couple of weeks.

Yeah, that's what I wanted to talk about. Used terms like hiccups and snarl and wrinkles. At what point do they become bigger disruptions that can affect the greater US and perhaps even global economy. Is that possible with the tragedy like this.

Well, you know, we saw you a pretty clear example during the pandemic that an extra ten or twenty percent of cargo coming into another port that's not really ready for it can cause major congestion. That's what happened in Los Angeles when a lot of consumer demand in the US picked up, and you kind of had this sort of accordion effect where the rail the rail lines couldn't keep couldn't move the goods out of the port, and then the truckers, you know, couldn't move the you know, so it just kind of has this domino effect. So we definitely saw that. So if this cargo has got a divert elsewhere the other ports, if there's not opacity to handle and absorb the absorb that extra cargo, then you could see ships backed up to the extent to which we don't know yet, but that that kind of thing can definitely happen as we've seen before, you.

Know, Brendan too. And I think, and you note this in your story. Let's not forget that, you know, distribution warehouses, right, it's always we talk about it as a great real estate play, a lot of investors do. But nonetheless, there are some massive distribution warehouses from the likes of Amazon, FedEx, under Armor, Home Depot, car companies like around that area in particular. So I guess we're all kind of waiting to see what those companies maybe say specifically about that. But that's another aspect to this story.

Oh absolutely. I mean, these distribution centers are you know, whereas there are money that many of them are automated, so you know, you start throwing curveballs at them like this, and you know there's a kind of the whole system can kind of lock up. So there are definitely going to be problems regionally with shipping around Baltimore and the sort of the Philadelphia Washington corridor. The truck traffic is going to be you know, all that all the hazardous materials have to go over that bridge. That bridge now no longer is passable, so it's going to have to go somewhere else. It can't go through the Baltimore Harbor Tunnel, so you know you're looking at you know, a lot of extra traffic's going to be pushed on different roadways, and you know that's the middle of the Eastern Corridor where lots of goods flow on north and south.

But as you said, still a lot to work out, and we'll find out whether or not what could be minor disruptions become something much more major. Brendan, thank you so much, really appreciate Bloomberg News Trades are Brendan Murray joining us there from London.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple card Play and then Bright Auto with a Bloomberg Business at or wants us Live on YouTube.

A check though on the trade on this Tuesday with an update on that back over to John Tucker.

Right the major average is Carol still higher right now, the advance for the S and P five hundred and the NANSDA Composite Index approaching ten percent since the start of the year. After the two day pullback. Stocks again they were advancing today. And the best performing stock in the S and P five hundred right now, McCormick. It is up over nine percent right now, closing in on ten percent again. That's the best performing stock in the S and P five hundred after delivering an encouraging sales update. Worst performing stock right now that belongs to the United Parcel Service eight percent lower their revenue target beat estimates. But Will Street analysts kind of underwhelmed by the performance there. S and P five hundred eight points higher right now. That's up two tents of a percent, fifty two to twenty six on the index. The down Jones, dust Linemage up sixty seven points, a rise of two tenths of a percent. The NANDAC right now forty points higher, that is up a quarter of a percent. And we check the market for you all day long right here on Bloomberg Radio, I'm John Tucker, and then he's your Bloomberg Business Flash Carolyn tim all right.

John Tucker, So appreciate it, Hey, John, of course, breaking down the trade. Don't forget we did get some economic points earlier today, some data points. It's a busy check full week, if you will, of economic data points. We had US consumer confidence holding steady and March Americans were seguine about their current situations tim but grew slightly more pessimistic about the outlook. And then new orders placed with US factories for durable goods that rose in the month of February for the first time in three months, so suggesting that firms are somewhat optimistic about the direction of the US economy.

On that, gold earlier extended Monday's gain ahead of key US inflation data which we get on Friday that could provide creators with a firm review on when the Fed will start cutting interest rates. Gold did pair most of those gains, but still near an all time high of more than twenty two one hundred dollars per ounce.

All right, So with a look at kind of the broader macro environment and also the precious metal space, we welcome the President World Markets at EverBank. He's Chris Gaffney. He's here in studio. EverBank, by the way, noting on its website thirty six point two billion in assets and twenty seven point nine billion in deposits as of the end of twenty three. Chris nice to have you in studio.

How are you great? Thanks, it's great to be here.

Well, it's great to have you here, and I have to start you guys think about the broad macro and things kind of coming at us, And I am curious if you have any thoughts about what's going on in Baltimore right now. We're looking once again very deeply and closely at US supply chains, and I'm just curious if you have any thoughts in terms of your world and how you think about it might impact potentially if we see some supply chain disruptions in terms of higher prices inflation. And we kind of we know the story.

Here exactly, so you know, it will definitely lead to, if anything, higher inflation and higher inflation reading with supply chain disruptions, which could could.

Lead the FED to.

You know, STUF rate cuts are actually pause on their planned rate cuts right now. We believe that the FED pretty much has a predetermined.

Rate cut path and it's really looking.

For reasons to knock them off their path instead of reasons to cut. And you know, I think June is definitely on the table and they're they're going to.

Look to cut in June.

And how many do you think will the FED will do this?

Well, they're still saying three and not every member of the Fed, right, And they they pulled back a little bit on their twenty twenty five. I think it's really dependent on you know, where they they believe inflation. Where this next PCE report comes in. They ignored the last two, and they seem to be tending to look to let inflation run hotter for longer because.

They believe those longer term inflation expectations are anchored, right, They're sticking to that.

And and you know, they are in kind of a situation where with the amount of debt that we have here, they need to lower interest rates, especially before it really has an impact on the on the global economy and the cost of service exactly, that cost of servicing debt is going to take more and more of the of the budget of the US budget. So by lowering interest rates, they'll have less debt service cost. It's not one of their mandates, you know, I know, it's it's mind you strong labor.

And I didn't hear Powell say this at all during the press by extra mandate in the background.

And I do believe that, and maybe people.

Have come on and said, you know us debt. You know, all of a sudden you go back ten years, twenty years, it's like every conversation was about it. Right, it's gone to the wayside, but it is up this morning.

And you know, by cutting rates, they'll they'll ease that debt service. And I really think that from what Paul was saying in his pressure, they're going to let inflation round.

A little hotter. I think they'll adjust their inflation target.

I don't think two percent is realistic, and I think they'll adjust their inflation target up. What that does to the markets? You know, is two and a half three percent inflation going to kill the markets?

I don't think so. And I think they continue to lower rates.

Why do they have to make that adjustment? Is it because the macro factors, say, we're in a very different environment post pandemic.

I think this is sticky inflation, and I think the the interest rates are going to settle at a higher level than the markets expecting right now because because of the higher inflation, is stickier inflation and.

Because of macro like, is it like, what is it that's changed in our inflationary environment?

Yeah?

I think that.

You know, we have the supply chain interruptions, but I think in general, the economy is doing well. The labor market is is very resilient, consumers are resilient. We've got very strong US consumers. They don't seem to be adjusting their spending, you know, confident. While the longer term confidence is questionable. US consumers are still very strong, so they're going to continue spending. We see services continuing to you know, inflationary pressures on services. Any supply chain interruption, you know, that's going to add to inflationary pressures also.

So let's get to gold and precious metals. Given the narrative that you just gave, why are we seeing gold near an all time high?

Well, absolutely, it's a a it's kind of an inflation hedge. You know, traditionally it's shown as an inflation hedge. But what we see on Everbank's World Market desk is is individual investors concerned about the global economy. They're using it as a uncertainty hedge or a catastrophe hedge, and we're seeing people come in. Individual investors come in and want to own a hard asset. One of the things that propelled gold to the record levels was central bank buying, and central banks were switching their reserves out of you US dollars into precious metal, into gold, and I think some of the consumers are starting to just start to do that also and wanting that hard asset, wanting the diversification outside of just owning the traditional asset classes.

Chris, because you do see so much on that platform, quantify it for us. Is it back to levels we saw pre pandemic? Is it give us an idea of if you're seeing buying, how much has it how much has it kind of picked up in terms of frequency buying?

Isn't quite back to the levels we saw, you know, post pandemic. We went through a silver shortage and we saw spreads on the physical silver widened dramatically. They're not back there yet. The spreads are narrower. Demand is up though, and we're seeing more and more demand and talking to individuals, it's more about concern about where the global economy is. In the US economy, the valuations on the equity markets, you know, seeing maybe some overvaluation there and really pushing people to have they want to have something to hold. So we're seeing the physical goal precious metals. We haven't seen so much the inflows into the ETFs.

It's more the physical demand. Interesting, Okay, what about demand for for bitcoin? Like because when we think, yeah, well, when we when we talk about some some people come on our program and say, are our bow case for bitcoin is that this is literally digital gold?

Right?

Do you believe it is?

No?

I still supply yes, Uh, we know how much is there?

Yeah, it's not controlled by any certain central government like fiat currencies are. So it does share some of those, It shares some of those. Is it a hard asset though?

Is it? You know?

Where is it? Where is it stored? You know there's question marks. We haven't had a mount coox in a while, but you know, questions about that is it's in the ether. So I think for some investors they feel it's an alternative to gold. I'm still I think the jury's out. I think it's got to establish.

There's a long history with gold.

And so I think that is seen as the safe haven, the uncertainty hedge. People can trust that it's a hard asset, it's there.

In their portfolio.

I still feel bitcoin is more speculation, especially with the volatility it has.

On your platform.

Do you no we do not we do not deal in cryptos.

Yet we do not deal in I mean it's you know, we're we're a bank, so we're not encouraged to deal in the cryptosphere.

There are there are traditional banks getting into crypto.

Sorry, go ahead, Carol, No, no, no, well, I was just going to say thirty seconds, because you guys are a bank and you do see so much. I mean, how do you describe the economy and forgive me because I only do. We only do have about thirty seconds left.

Not a problem.

So you know, I think the US economy remains strong mainly on the back of very strong and resilient US consumers. Labor market's still good, so you know, we'll see the higher interest rates have not had an impact yet. And I think the FED is still going to go ahead and cut and trying to get us to this Goldilock scenario where they can cut rates and still keep inflation down while strong labor markets.

So no stress points.

Real quickly, Oh, there's the debt. The debt levels and and on both consumer and government is really the stress level and that's the real question mark. And then of course the geopolitical.

Tensions, so appreciate it thank you so much and for going along with us because we know we had a lot of breaking news. Chris Caffney, thank you, President of World Markets at EverBank, joining us in studio Blue Mack.

Journal.

How about you let me drive?

Oh no, no, no, no, honey, please, I'll do the gravels.

I want to drive.

It's a good question.

This is good drive to the Globe.

Dot com for me.

Think well, jo it on on Bloomberg Radio.

All right, TikTok, everybody, Just about seven minutes left in the Tuesday trading, and for a second day in a row, we're seeing some selling here into the close. We're pretty much just around our worst levels, if not at our worst levels, as John Tucker just mentioned for the S and P, Dow and the Nasdaq one hundred. So let's get to our drive to the close.

Guest, h Yeah, we got with us. Leo Kelly, founder and CEO at Verdan's Capitol Advisors. He joins us from Hunt Valley, Maryland. Leo, good to have you back with us. Look, before we talk markets, you're joining us from just north of Baltimore, only about half an hour from the collapse. Francis Scott keep Bridge. We've been covering the story all day. We're thinking about everyone affected by the tragedy. Just give us an idea about how important this bridge is that crosses the Outer Harbor.

Well, it's the east side of Baltimore and it is a significant thoroughfare. So the disruption is going to be pretty extraordinary, especially because the folks just on either side of that bridge. The next path from one side to the other is a long, long commute. Plus you've got the port shutdown, so it's an extraordinary event. Obviously, it's at the front of everybody's mind here in Baltimore and the surrounding area. So we're praying for the folks that are impacted, both both now and over the next in the next couple of years. And Baltimore. Baltimore didn't need this break, so we're hoping this will be a quick recovery.

Obviously, Yeah, we.

Do too, and we've certainly heard from the President, from the Transportation Secretary and other officials saying that this is going to be certainly priority and they're going to commit whatever efforts and I guess money it sounds like in federal funds to get this done as quickly as possible, you know, Having said that, Leo, and we certainly we know that there's still a lot to be known, and there's you know, lives that's you know that we're waiting to hear if there's been you know, lives lost and so.

And so forth.

But it made me kind of think, you know, we live in a world where we are constantly reminding that things can come at us from unexpected directions, different magnitudes, different scale, if you will. But it kind of keeps us on our toes and we're waiting to assess how much of this might have an impact on the US apply chains and a lot to be known, and obviously the longer it's a problem, the longer are the higher potential for it to become a supply chain problem. Having said that, how do you think about kind of where we are in this market environment? Does it feel tenuous at all? Does it feel like sure footed? How do you see it?

It does feel a little bit tenuous in today's activity side, it does feel a little bit tenuous, And I think it feels tenuous because you have a pocket of the market that's running up to extraordinary levels. I think the last time we were on we were talking about some of the AI bubble that was brewing, and we're really at this interesting tug of war right now. The FED is still trying to battle back inflation. Inflation is being very persistent, and we've talked about this before. It's just because there's so much capital flushing around in the system. So the market is excited about the fact that the economy is being resilient. It's excited about the fact that inflation has slowed, but I would stress slowing inflation is still inflation and the FED is still fighting it. So I think one of the challenges that the economy has that the market has is that when the FED gets more aggressive, inflation does slow, but then we start to see an economy showing danger signals, so the FED slows down or stops rates. I mean, this concept of six rate cuts this year I always thought was absurd because as soon as you start to get the least bit dubbish, the inflation numbers start to signal higher again. So this is going to be an interesting tug of war with valuations higher. So, and we haven't had much volatility for the since October. I do think this is a time for discipline.

Quite frankly, Hey, Leo very briefly, what are some of those warning signs that you're starting to see, if any right now?

Well, I think you have a mixed message around the economy. Small business confidence has been down, inflation is going back up. We get mixed messages with the ism surveys versus the employment numbers. So I think that's one of the first challenges, right, some of the lead indicators. And so really what's interesting about this current economic data that's coming out is anybody who wants to come to a conclusion can find the data. If you want to be positive, you can find the data. If you want to be negative, you can find the data. Where I'm concerned is that inflation has remained persistent, got it? And the Fed, I mean, the FED keeps talking about the fact that they're going to cut rates, and they just start to get a little more dubbish.

Okay, forgive us, forgive us, Leo, We've got to run. We'll check in with you soon. Leo Kelly, founder and CEO at Burden's Capital Advisors there in Maryland.

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