Bloomberg Surveillance TV: July 21st, 2026

Summary

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Bloomberg Surveillance TV: July 21st, 2026

Hosts: Jonathan Ferro, Lisa Abramowicz, and Annmarie Hordern
Featured Guests: Emily Ronan (Manulife), Francisco Blanche (Bank of America), Paul Jacobson (General Motors CFO)
Theme: Navigating Earnings, Inflation, Geopolitics, and Corporate Resilience

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Episode Overview

This episode focuses on the intersection of robust corporate earnings, macroeconomic uncertainty, and escalating geopolitical tensions—particularly in commodity and energy markets. The hosts engage with top industry figures to dissect mega-cap tech earnings, inflation’s nuances, oil price volatility tied to Middle Eastern instability, and how major US firms are navigating cost and supply headwinds. The tone is analytical, candid, and pragmatic, offering timely perspectives for investors and business professionals.

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Key Discussion Points & Insights

1. Earnings Season: Expectations & Sector Rotation

Guest: Emily Ronan, Manulife
[02:17 - 08:54]

• Mega-cap Earnings and Market Sentiment:

  • Markets are shifting focus back to heavyweights in tech as earnings expectations hit new highs.
  • Emily Ronan: “We're 10% through earnings season—51% earnings growth...with financials at 36%. The bar was 5% to start the quarter.” (02:47)
  • Tech sector continues to set a high bar, propelled by semiconductors and hyperscalers, but price appreciation may be running ahead of fundamentals.

• Sector Diversification and Lower Bar Opportunities:

  • Sectors like industrials and healthcare present more manageable expectations (sub-10% earnings growth), offering diversification from tech’s “elevated expectations.”
  • “Those are areas we are looking at in order to diversify from some of those elevated expectations within technology.” (03:53)

• Impact of Rising Crude and Inflation:

  • 3–4% inflation regime is a “sweet spot” for stocks, but persistent oil price elevation could shift dynamics.
  • “It’s all fun and games until the Fed has to pump the brakes.” – Emily Ronan (05:17)
  • Mid-cap and value stocks tend to benefit more than others in these inflationary regimes.

• Fed Policy and Housing’s Role in Inflation:

  • The Fed’s next moves hinge on conflicting pressures: resilient employment, muted shelter inflation, and persistent energy price risks.
  • “The key to us is looking at shelter. Housing is the economic cycle.” (06:36)
  • Slowing shelter costs (only 0.1% YoY growth) help offset broader inflation—critical since shelter is 35% of CPI.

• Limits of Rate Hikes—Supply vs. Demand:

  • “If the Fed does hike, they're not really solving the supply side problem. There's not much the Fed can do on that front...they may risk the employment side of their mandate.” (08:10)
  • Margins remain healthy, but risks lurk if rate hikes raise capital costs and compress profitability.

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2. Energy Markets: Geopolitical Risks and Global Supply

Guest: Francisco Blanche, Bank of America
[09:37 – 18:51]

• Middle East Tensions and Oil Supply Cushions:

  • Fragile supply “cushion” shrinks amid Yemen’s Houthi threats to Saudi ports and ongoing Ukraine-Russia disruptions.
  • “It’s a thinning cushion...I’m increasingly worried...we end up being pushed into a nonlinear event...we start to see spiky behavior.” (10:50)
  • Major product shortages in diesel and gasoline; diesel at $150+/barrel vs. crude in the $90s.

• Product Crises, Chokepoints, and Hoarding:

  • The world faces refining bottlenecks and hoarding, especially as US refiners, flush with cheap inputs, prioritize domestic supply.
  • Ukrainian attacks leave up to 1/3 of Russian refining offline.
  • “You see US refiners are effectively given a license to print money... They're getting relatively cheap input costs and pushing enormous amounts of highly valuable product...” (14:49)

• China’s Role & Strategic Inventories:

  • China eases global pressures with lower crude imports but may need to re-enter markets soon as inventories deplete.
  • “We are drawing down inventories until...we get to rock bottom.” (13:07)

• Crack Spreads and Political Risks:

  • Crack spreads (difference between refined products & crude) at record levels, indicating the real pain point is refined products—airlines, trucking, etc.
  • “If we have to ration demand, those products need to get to very, very high levels where they actually pinch your pocket.” (13:48)

• US as a Petro-State and Export Policy Dilemmas:

  • US is now the world’s largest energy exporter; any move to ban exports could cause domestic gluts but global dislocations.
  • “We have two lax of monetary policy. We definitely have two lacks of fiscal policy. So it's really hard for prices to normalize...” (18:31)

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3. Corporate Resilience: General Motors’ Strong Q2

Guest: Paul Jacobson, CFO, General Motors
[20:03 – 27:59]

• GM’s Topline & Bottomline Beat:

  • Second quarter outperformance credited to “consistency,” strong go-to-market execution, and digital revenue ramp.
  • “Our full size truck sales are up 4% year to date...It’ll be the most capable pickup truck we've ever produced with a brand new gen 6 V8 engine...” (21:53)

• Margin Expansion Levers:

  • Focus on quality improvement led to $1–1.5 billion year-over-year warranty savings.
  • Digital revenue to exceed $3 billion, with a projected million new subscribers.
  • “When you look at 10 years ago...we were producing about $3–5B a year in free cash flow. Today we're producing over $10B a year in free cash flow.” (23:37)

• Inflation & Tariffs:

  • GM faces up to $1.5B in inflationary pressures, including chips and energy, but has absorbed these through supply chain maneuvering and efficiency gains.
  • “Despite $3 billion of tariff headwinds...we’ve been able to get back into our 8 to 10% margin range in North America.” (25:05)

• Policy Volatility:

  • New Canadian tariffs and other global trade disruptions add to cost uncertainty but GM keeps planning cycles flexible.
  • “Consistency is helpful, especially when you have a multi year planning cycle.” (26:12)
  • Jacobson prefers rules clarity over static policy, emphasizing adaptability: “If it wasn't tariffs, it might be energy prices, it might be global conflict or geopolitical issues...We don't sit around and make excuses.” (27:23)

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Notable Quotes & Moments

• Emily Ronan on market bar:
  “All you have to do is turn into Bloomberg Surveillance to hear it. And now it's like, ‘Don't let me down.’” (02:47)

• Francisco Blanche on US refiners:
  “They are given a license to print money...pushing enormous amounts of highly valuable product out into the US and into the world.” (14:49)

• Paul Jacobson on resilience:
  “If you're pros at worrying, that might set you up to be a CFO someday.” (23:37)

• Emily Ronan on Fed’s dilemma:
  “They're not really solving the supply side problem...they may risk the employment side of their mandate.” (08:10)

• Francisco Blanche on policy:
  “We have two lacks of monetary policy. We definitely have two lacks of fiscal policy. So it's really hard for prices to normalize in that context.” (18:31)

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Timestamps for Key Segments

• Market & Earnings Overview, Emily Ronan: 02:17 – 08:54
• Geopolitics & Energy, Francisco Blanche: 09:37 – 18:51
• GM Earnings & Inflation, Paul Jacobson: 20:03 – 27:59

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Takeaways

• Corporate America is beating, but the margins could get squeezed if rates rise or inflation resurges.
• Energy markets are stressed not by crude supply but by refined product shortages and geopolitical chokepoints.
• US firms are navigating volatility through diversification, digital transformation, and robust supply chains—but policy uncertainty remains a persistent challenge.

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For further detail, tune in to the full Bloomberg Surveillance TV episode from July 21, 2026.

Transcript

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[Jonathan Ferro]

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Hordern. Join us each day for insight from the best in markets, economics and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business App, we begin

this out with stocks rising as investors begin shifting focus back towards mega cap earnings this week. Emily Ronan of Manulife writing Stock returns may not match the gains of the past three to five years, but earnings remain the fair way. Investors may need to be come more comfortable taking a full swing with growth assets over the long run. Emily joins us now for more. Emily, appreciate the golf analogy. It's good to see you. Let's get into the market. We'll focus on that. Earnings have been fantastic. The bars crept higher. Why do you think the bar is not too high this earnings season?

[Emily Ronan]

Yeah, companies have proven that they can surpass that bar. But the problem John now is that the earnings are amazing story is already an old story. All you have to tune do is turn into Bloomberg surveillance to hear it. And now it's like don't let me down. And we have seen companies absolutely crush it down the fairway. You know, we're 10% through earnings season. 51% earnings growth like that is amazing. You look at financials so far we're looking at 36% earnings growth. The bar was 5% to start the quarter. But we are seeing some company specific challenges are not necessarily related to the macro environment. But if companies are disappointing, they're, they're issuing guidance that's not favorable. You're seeing those stock prices punished. So the bar is high, but so far so good in terms of surpassing it.

[Jonathan Ferro]

IBM is a good example of that, maybe a rare example of that. But if you miss, you'll get obliterated in the stock market if you want. You will get absolutely crushed. Emily, what do you think the setup is for individual parts of the tech sector? Then in the next week, what are the parts of the market you worried about? The parts of the sector you're pretty constructive on?

[Emily Ronan]

Yeah, it's going to be absolutely critical over the next couple of weeks to see these heavy hitters in the tech space. You know, semis have continued to just throw up these amazing earnings. We're looking at 100% earnings growth quarter after quarter. It's really just remarkable. And prices are reflecting that. So we're watching things like the Cosby Index right now to see how these South Korean exports are faring. You look at South Korean exports right now, they're up about 70% year over year. That is a record and that is telling us that demand remains exceptionally strong, strong. But can prices keep up with that? These, some of these moves have been absolutely parabolic. So again, that bar has to be met. You know, we look at the large cap growth space, you know, some of those big hyperscaler names, they haven't seen quite the same price appreciation. So in that case, a bar may be a little bit more manageable here. But overall 50% earnings growth in the tech space, that is a really high bar. I like looking at places that have a lower bar. Industrials, for example, expected to see less than 10% earnings growth this quarter. Again financial as the 5% expected. Wheeler, looking to some of those sectors, health care is another one where the bar is very Reasonable. And those are areas we are looking at in order to diversify from some of those elevated expectations within technology.

[Lisa Abramowicz]

When you're looking at diversifying though, and you see elevated crude prices potentially, does that worry you?

[Emily Ronan]

It does in some cases. And you know, theoretically the idea is that you should see some multiple compression if oil prices keep rising and the cost of capital becomes prohibitive. But we've looked at what happens in higher inflation regimes to stocks and in a 3 to 4% inflation regime, that's actually the sweet spot, companies are able to raise prices. Right now we're seeing that in some of the earnings results and some of the guidance that's out there in particular mid cap stocks and value stocks tend to do particularly well during those higher inflation regimes. I would say, Anne Marie, it's all fun and games until the Fed has to pump the brakes. And right now inflation is not hot enough to really see the Fed doing that. You know, you look at this softer employment report, you look at the lowest CPI data that we've seen in six years. That doesn't exactly scream Fed hike. But if oil prices do remain elevated, that risk comes back into the table. And that's frankly when the party starts, starts to look like it may be over.

[Lisa Abramowicz]

But you hear from the likes of Cleveland Fed President Beth Hammack saying that businesses, consumers are actually going to her and saying, you guys need to do something about inflation. Does that make you nervous that at some point in the next few months the Fed will end up having to hike interest rates?

[Emily Ronan]

It does. You know, it's certainly on the table and that's the biggest concern we have because right now we have these two mega forces colliding of central banks, you know, becoming a little bit more hawkish at the margin at the same time that there's this massive need for liquidity with this huge earnings boom. So those two things coming together are really critical here. But when we look underneath the hood of the inflation reports that we're dealing with. Yes, P. I was a little bit hotter. I would say that probably isn't necessarily a bad thing because it means businesses and manufacturing is booming in the United States. But the key to us is looking at shelter. It's all about shelter. Housing is the economic cycle. And if you looked at that last CPI report, shelter was up 0.1% year over year. That is a remarkably low. And it's finally starting to reflect some of the real time data that we're watching within the housing market. The NAH BE Housing market index slowed to its lowest level in years. The other day, homebuilder sentiment is slowing, etc. So we think that that can keep feeding into the inflation. It's 35% of CPI. So we think that slowing shelter component which, you know, look, mortgage rates still 6, 7%, that is not helping the housing market recover. That can help dampen any inflation that we see coming from higher oil prices or from the good side of the economy.

[Jonathan Ferro]

Emily, this is the challenge this Federal Reserve has got. The drivers of inflation right now are arguably rate insensitive. And if they hike, it's going to pick a bad phrase, I'll pick a different one that I could be just whistling in the wind. I don't think Emily makes much of a difference now.

[Emily Ronan]

And I think that's why it's so notable that Warsh has said that these things are mutually exclusive. The employment side of the mandate and the inflation side of the mandate. You know, that's a very different tone than what we've seen historically. And we think that they that doesn't necessarily play out because if the Fed does hike, they're not really solving the supply side problem. There's not much the Fed can do on that front. And they may risk the employment side of their mandate if this cost of capital becomes higher and company margins potentially get compressed. It's not our base case. Margins are great, earnings are phenomenal, like we've talked about. But if that cost of capital goes up, that is the Fed that's going to really kind of pull it, be pulling the punch bowl away from the party.

[Jonathan Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

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[Jonathan Ferro]

As Yemen's Houthi rebels add to uncertainty across the Middle east, the group issuing a warning for vessels planning to use Saudi Arabian ports. Francisco Blanche of Bank of America, writing the following if tensions do not abate for weeks, Brent could retest again above $100 a barrel. Francisco joins us now for more. Francisco could Morning.

[Francisco Blanche]

Good morning.

[Jonathan Ferro]

First of all, congratulations, you're in the stadium Sunday evening. Share with us what that was like to watch your Spain Win another World Cup.

[Francisco Blanche]

It was an absolute amazing feeling, you know, just. It was also such a, such a tough game, you know, where there's a lot of biting and kicking.

[Jonathan Ferro]

If I may say, did you feel outnumbered in that stadium? Because definitely number overwhelmingly there was Argentinian support topping Spanish support in that room. Absolutely.

[Francisco Blanche]

I think it's five to one, six to one.

[Jonathan Ferro]

Crazy.

[Francisco Blanche]

But you know, it was, it was just one of those, one of those games that is just history in the making.

[Jonathan Ferro]

Right?

[Francisco Blanche]

I mean, second star for Spain that, that's doesn't get bigger than that.

[Jonathan Ferro]

Well, congrats to you and your country. Let's pretend you weren't here for that and you're here for this. All right, let's talk about crude cushions. Cushions matter. Clearly we had a big cushion coming into the initial war at the start of March, the end of February. How big is that cushion now to support this market?

[Francisco Blanche]

It's a thinning cushion, John. And I'm increasingly worried that this tensions could eventually turn what's been relatively orderly market where prices have moved in a linear fashion, more or less, and we end up being pushed into a nonlinear event. Meaning that rather than just steady movements, we start to see spiky behavior. And in fact, I think crude oil doesn't really tell the full story. The full story is being told by deep Diesel is being told by gasoline prices. I mean, you see crude oil at 90, but look at diesel trading 150 plus dollars a barrel. Gasoline approaching $150 a barrel. We have a true petroleum product shortfall here. And even natural gas not in the US but globally starting to trend higher again with prices hitting €60amegawatt hour. So that's where the price pressures, where the pain points are quickly, the potential

[Lisa Abramowicz]

risks in the future, the first one being the Red Sea. How much product could we see be taken off the market if the Houthis were to get involved and make it quite difficult for ships to go through the Bab El Mandeb Strait?

[Francisco Blanche]

Well, so. So it'll be another choke point, I think. I think for product is maybe not as big. I think Balmandev is a lot bigger for crude oil and of course for Saudi Arabia, which has been moving oil from east to west as being one of the big relief valves for this Hormuz shutdown has been rerouting through the other end of the Arabian Peninsula. But I think the issue with products is that we have Ukraine hammering Russian refineries and we have up to a third of Russian refining capacity being hit or being damaged by Ukrainian military activity. On top of that, we have obviously a lot of oil, petroleum products that go through the strait of hormones. And then just to top that up, you have a lot of countries in Asia, starting with China, the world's largest refinery toolkit, with the US hoarding petroleum products and not being active in the export market in order to protect their domestic economy. So we have some of the biggest players in the world just hoarding, either hoarding back or being damaged by military action. So effectively, the US remains the place where you can come and buy your diesel and gasoline if you don't have any. So that's the irony of this.

[Lisa Abramowicz]

Hasn't China, though, sort of put a lid on all of this by softening their imports?

[Francisco Blanche]

They have, but they have softened their crude oil imports, not their gasoline or diesel exports. Right, that's, remember, that's what China does. They import crude oil and at the margin they export some petroleum products. But yes, I mean, they've, they've eased the pressure on the crude market and they may have to come back depending on the duration of this conflict, because right now they're just drawing down inventory. That's what we're doing. We are drawing down inventories until, until, you know, we get to rock bottom.

[Jonathan Ferro]

So there's a phrase that I've heard a lot, heard it from you, crack spreads. Can you just explain to our audience outside of your world that might not be familiar with that, what it means and how big they are right now?

[Francisco Blanche]

Yeah, so. So crack spreads are the differential between the refined product, diesel, gasoline, and the actual crude input that goes into making it. And right now we are, we are record seasonal levels for a lot of, a lot of products like particularly gasoline and diesel. And refining margins are also exploding collectively because you have gasoline and diesel just running up together again, reflecting that scarcity of refining capabilities. So it's a major concern because if we have to ration demand, those products need to get to very, very high levels where they actually pinch your pocket. So even if crude oil at 80, 90 a barrel is manageable, it may have to be the petroleum product price that forces demand lower. If we can't supply it just quickly,

[Jonathan Ferro]

if politicians start to see those spreads and they start to suggest that something else is happening here, something opportunistic. What would you say back to that, purely from a market perspective, what is actually going on and why they're wrong?

[Francisco Blanche]

Well, so, I mean, I think the issue is obviously who's making the most money right now. You see us refiners are Effectively given a license to print money. And that's what's happening. They're getting relatively cheap input costs and they are pushing enormous amounts of highly valuable product out into the US and into the world. So that's one part of the market that's really benefiting from this situation. I think. I think the broader concern is that prices, because consumers don't consume crude oil, airlines fly on jet fuel, and trucks run on diesel. If you're a transportation company, you can get hurt pretty badly. I think the view maybe in the US is because America is such a large energy exporter these days. The US is effectively the world's biggest petro state. Right. It's 20% plus of the world's production and a third of the world's gas. So I think there's the perception that US won't be as negatively impacted by all these tensions globally, but there will be other countries that, that will be hit hard that won't be able to afford eventually this prices.

[Jonathan Ferro]

I remember TK used to call it Saudi America 10 years ago when the shell production, 15 years ago when the shale production boom really picked up. What's the client call like at the moment? I'm intrigued by that because I can tell you the reception we get every time we cover this story at the moment, overwhelmingly, I'd say 80% of the audience right now kind of pushing back. Don't need to worry about this, don't care. You talked about this all the time back in March and April. Didn't matter then. Why does it matter now?

[Francisco Blanche]

Well, so, so I think back then, inventories were very high. We've been drawing those inventories. And I think if you look at US gasoline inventories, US Diesel inventories, US Crude oil inventories are cushing the strategic, the reserve. They're all stocking up, right? So commodities move in a nonlinear fashion when you run out of stocks. And again, we haven't run out yet. I mean, we probably have another two to three months on crude oil, which is why Brent is not going crazy yet. But we are really running very close to tank bottoms for the petroleum products. And, you know, I think, I think maybe China comes out to save the day. You've seen more aluminum exports from China as prices picked up. But, but it's unclear to me that Chinese have the appetite to, to essentially start using their system to release a lot of petroleum products into the Asian region. And we do need those products to run the economy.

[Lisa Abramowicz]

What would be the impact if the United States bans exports?

[Francisco Blanche]

Well, so that's well, first of all, the US Would will have a glut, right? Because the US Such a large exporter, the US is the biggest exporter of petroleum products in the world, is around 7 million barrels a day of crude and liquids, sorry, petroleum products on liquids. So, so I think you have a domestic glut. I don't really think it'd be a very practical thing to do because you just know create a major market dislocation. But there are sort of things that can be done to try to, to pressure down domestic prices which frankly are starting to go up again. Right. So you talked about price pressures. I mean, I get this question, why, why are price pressures not abating? Well, in my mind, you know, we run a very, very lax fiscal policy which wants to be laxer because there's more potential for military spending right up down the road. And then at the same time, and Kevin Warsh has said this, interest rates may just be too low for the level of inflation that we have. I mean we do have real rates pretty much flat to negative, not just in the US in a lot of places.

[The Hartford Representative]

Right.

[Francisco Blanche]

So we may have two lacks of monetary policy. We definitely have two lacks of fiscal policy. So it's really hard for prices to normalize in that context and that includes commodities. But also it's difficult to rein in demand because again, as long as money keeps on gushing, oil does to stay with us.

[Jonathan Ferro]

More Bloomberg surveillance coming up after this.

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[Jonathan Ferro]

The General Motors company exceeding estimates on the top and bottom line for the second quarter. The automaker also raising its full year profit forecast by another $500 million. The GM CFO Paul Jacobson joins us now for more. Paul, welcome to the program and congratulations on the result. It's a beat and a raise. I'm intrigued by the race Paul, so let's start there. What powered that raise this morning, I'm sure.

[Paul Jacobson]

Well, good morning Jonathan and team. Thanks so much for having us today. You know, we're here to celebrate in large part the accomplishments and achievements of the GM team across the board. And I think the theme for the day is consistency. You know, the team has really executed well over the last few years. Our go to market strategy, our inventory discipline, our incentives remain below the industry average across the board. The consumers remain resilient across the board as well. And we've seen some, some good tailwinds coming in the form of continued warranty improvement, our EV profitability journey as well as pretty significant ramp in our digital revenues across the board. So when we look at that and measure it against even some of the macro headwinds that are out there, we felt confident raising our full year guidance by another $500 million, effectively taking our outperformance in the first year and banking it and, and really, really continuing to drive those results. But incredibly proud of the team and what we've been able to accomplish.

[Jonathan Ferro]

I can see that this morning, Paul. Also the pricing power, let's just sit on that just for a beat. The pricing power is impressive. We see gasoline prices back to $4 a gallon for the first time in something like a month. That problem has persisted through Q2 into Q3. You've got great experience of dealing with energy prices in your time over at Delta. It's different in the same seat over at gm. But can you describe how this works when you see gas saline prices push up the way they have? What is the relationship between that and sales for General Motors?

[Paul Jacobson]

Well, certainly the airline industry has a lot more ups and downs than the auto industry does as it relates to oil prices. But you know, what we look at is where is the health of the consumer, where is the demand? And you know, our full size Truck sales are up 4% year to date. We expect that to be flat for the year because mainly because of production, because we're cutting over to the next generation of trucks which we're really excited about. It'll be the most capable pickup truck we've ever produced with a brand new gen 6v8 engine as well as diesel options across the board. So you know, the success that we've seen in the last year of, of a generation of trucks is really unprecedented and we've held in on price and demand as well, and that's remained consistent. So as we look at the overall all energy price environment, it hasn't really impacted us. We're still selling full size SUVs as quickly as we can make them, but we have a much broader product portfolio. You know, we, we like to talk about here that, you know, when you look at our crossover portfolio, the profitability is up 4x from where it was just in 2020. So we've gotten much more efficient at a broader portfolio to be able to meet customers wherever they are.

[Jonathan Ferro]

Paul, there's a line in the statement this morning from, from Mary and it reads as follows, just a short quote. We have multiple engines of margin expansion. Can we just sit on the margin expansion as well? I think this is really important. You know what we're like, Paul? We sit around this table every morning and we worry for three hours about a bunch of risks you have to execute. We've spoken this morning about higher prices for chips, higher prices for energy, the prospect of increased tariffs. How do you make sure that you've got that cost discipline to make sure you've got the flexibility as well to see those margins and that March performance continue even with that price pressure coming from all directions?

[Paul Jacobson]

Well, if you're pros at worrying, that might set you up to be a CFO someday. So keep at it because we have to worry a lot, you know, in our desk as well. But you know, we've really also got to focus on what is that playbook that we can do, can execute to overcome. And I think what the team has really done is we don't make excuses. We're out there trying to find productivity where we can enhancements across the board. So when you look at what the team is doing with quality improvement and you know, we've increased our warranty savings year over year from a billion, which we came out at the beginning of the year, to one to one and a half billion dollars. Our digital revenue, which we're really excited about, will be over $3 billion this year and we expect to add a million new subscribers to our digital channels. So the team is really executing and I think that's what's, what's really different. When you look at 10 years ago, we were producing about 3 to 5 billion dollars a year in free cash flow. Today we're producing over $10 billion a year in free cash flow and it's driving that efficiency in spite of what everybody would argue is probably a more challenging macro environment than where we were a decade ago. So, you know, we're really proud of these results and we're continuing to execute and expect that the market is going to continue to see that.

[Lisa Abramowicz]

Building on Jonathan's point though, when it comes to TSMC this morning, they're looking at 10% higher prices next year for their chips. Do you at some point have to start passing chip costs specifically to the down to the consumer?

[Paul Jacobson]

Well, we look at it in the, in the entire equation. So coming into the year, we talked about a billion to a billion and a half dollars of inflationary pressures. We took that up after we saw the Iran conflict. Some of that is chip inflation as well. So our supply chain team is out there sourcing everything that we can. The first and most most important thing is that we don't impact production and we've been very, very consistent in that space. So while we are seeing some inflation, the opportunities and the tailwinds we have elsewhere were in the business have been more than enough to overcome it. And that's why we've been able to get back into our 8 to 10% margin range in North America despite $3 billion of tariff headwinds and other inflationary pressures as well. And you know, we think many of those opportunity sets that we have are going to carry us in with even more momentum into 2027 and beyond.

[Lisa Abramowicz]

I'm glad you mentioned tariffs. I know you've done a lot to try to reduce the tariff bill. But are you having some peak PTSD this morning when you wake up and you see the President is talking about Canadian tariffs once again, which is key for your supply chain?

[Paul Jacobson]

Well, there always seems to be something happening the day before earnings. But you know, in this circumstance, this isn't anything that is impacting us. These new tariffs that were announced don't fall under Section 232, which is what covers autos. And you know, and I think, you know, if, if we could encourage the parties, we would love to be able to get the deals done with Canada and Mexico. Mexico seems to be a little bit ahead of Canada right now. But you know, I think a good trading bloc that meets all of the country's needs is really important for us competitively. We've got a lot of capital that we've been putting in place almost $6 billion into the United States to onshore production of both vehicles, full size trucks, as well as the new Gen 6 engines that are coming in. We're increasing production across the board. We'll have over 2 million units produced in the United States when all this is said and done. So you know, I think we've been able to make adjustments but you know, consistency is helpful, especially when you have a multi year planning cycle.

[Jonathan Ferro]

Paul, I don't want to put words in your mouth, but it's not a frustration for you and the team, for the executive team, for the whole team at gm. You just want to know the rules and you'll get on with it.

[Paul Jacobson]

Well, I wouldn't classify it as frustration, Jonathan. I would just simply say, you know, there's a lot of volatility in the world and if it wasn't tariffs, it might be energy prices, it might be global conflict or geopolitical issues. And that's why I say we as a team, we don't sit around and make excuses. We look into and figure out what is that playbook that we're going to execute. We're going to where are we going to continue to try to find the opportunities to expand margin. And what the team has done is pretty remarkable. And it's now three years straight that we've delivered these types of results and feel very, very optimistic about our ability to weather the storms wherever they might come from.

[Jonathan Ferro]

This is the Bloomberg Surveillance Podcast bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app.

[Nathan Hager]

Hi, I'm Barry Ritholtz inviting you to join me for the Masters in Business podcast. Every week we bring you conversations with the people who shape markets, investing and business. I speak with CEOs, Nobel laureates, market innovators, and legendary investors. Whether you own stocks, bonds, real estate, commodities, even crypto, these are discussions you absolutely need to hear. Subscribe to the Masters in Business podcast on Apple, Spotify or anywhere you listen to.