Where you stand depends on where you sit.

~Miles Law

Skeptics of the efficacy of Miles Law need look no farther than a six minute interview on this morning’s edition of CNBC’s “Squawk Box.”  Co-anchors Becky Quick’s and Joe Kernan’s guest was Michael Wieder, president of Lalo, a baby products company founded in 2019 by Wieder and partner Greg Davidson. 

The interview, as evidenced by the following transcript, is best described as a “tale of two careers.”  Quick’s education and professional pursuits are centered on the field of journalism.  While working towards a B.A. in political science at Rutgers University, she served as editor-in-chief of The Daily Targum, the school newspaper, and was awarded a Times-Mirror fellowship.  Before joining CNBC, Quick reported on retail and e-commerce for The Wall Street Journal.

Kernen is “a host of a different color.”  Despite a University of Colorado B.S. in cellular biology and an M.S. in molecular biology from MIT, he began his career as a stockbroker at Merrill Lynch before taking management positions at EF Hutton and Smith Barney.  He then joined the Financial News Network as a stock analyst moving to CNBC following the 1991 merger with FNN.

With this background information, no one should be surprised how the segment played out.  Quick introduced Wieder, during which she explained why he had been invited on the program.  Lalo is a small business that imports much of its inventory from foreign suppliers. 

QUICK:  He estimates he may need to pass on 10-20 percent increased costs from tariffs to consumers at this point.

WIEDER:  We import product from several foreign countries including China, Turkey, Taiwan, Vietnam and Thailand.  We anticipated this. We dropped prices on a lot of products.  We expected tariffs.  People may find that shocking, but the cost of child care has gone through the roof.  We didn’t want the price of essential products to go up, but this changes everything.

QUICK:  How did you do that?

WIEDER:  Deepening relationships with our partners.  Negotiating. Three week ago we launched in Target.  We are reaching way more consumers through that market.  We launched the company one year to the day of the COVID lockdown.  All of these challenges test the resiliency of a small business.

QUICK:  I would imagine you are also trying to figure out your own margins in the face of these tariffs which were higher and more extreme than anyone was expecting.

WIEDER: The number we should be focusing on is not even 34 percent. It’s 79 percent because it’s stacking.  This is not a supply chain that exists anywhere else in the world.  Most of our products are made in China and that’s because over decades there has been an industry focused on creating regulated, safe products for parents and children in China.  That doesn’t exist anywhere else.  We don’t want to jeopardize safety.  We don’t want parents to make decisions based on the cost of the goods.  What happens if you don’t put your child in a car seat because it’s too expensive or a high chair or a proper bath tub?

QUICK: What would it take to get you to manufacture back here in the United States?

WIEDER:  To be honest, it’s not even really possible.  There are decades of engineering talent, compliance talent understanding the safety and regulatory components that go into making the products that we make.  We looked into it.  China is making food grade silicone.  The United States is making dirty industrial products.  So it’s a massive shift.  It can’t happen overnight.

[At this point Kernen jumps in, dressed in a crop top, pleated skirt, waving pompoms to derail Wieder’s affirmation that the Trump assessment his tariff roll-out is “going really well,” is complete BS.]

KERNEN: Didn’t they have that terrible baby formula.  When was that?  [Several seconds of dead air] So there’s no way you can bring it home?

WIEDER:  Unfortunately not.  Not in a considerable amount of time…

KERNEN:  [again interrupts Wieder]  You’re not talking about labor over there.

WIEDER:  Labor does play a part because there is assembly over there.  But for us, we want to make the highest quality products and we want to make sure we’re delivering safe products.  And at the right price.

QUICK:  Do you hope there are exemptions?

WIEDER:  Yes, you look at Section 301.  List 4b included baby products for a reason.  The administration protected American families.  Our hope is that will continue.  [NOTE: This exemption was negotiated in December 2019 by Trump’s trade representative and remained in effect until Tuesday’s “Liberation Day” announcement.]

KERNEN:  [Again interrupts with a smirk on his face] Actually it was 17 years ago, [reading from a piece of paper] Chinese dairy company intentionally tainted baby products to increase profits and pass quality control tests.  Six infants died and 6,200 were sickened.  So you’re saying your main thing is silicone.  [Wieder starts to respond but Kernen interrupts] You can’t get clean silicone in the United States?  What do they put in breast implants?  No, seriously.

WIEDER: I’m not familiar with that industry.  But what silicone is made in the United States is mostly industrial products, car parts and things like that.  You don’t have that talent that understands the compliance and regulatory requirements.

QUICK:  Thank you for joining us this morning.

I will leave it to the reader to decide whether Kernen’s contributions to this discussion are (a) irrelevant, (b) offensive, (c) moronic or (d) all of the above.  But it might not surprise anyone this was not a one-off.  After all, Joe Kernen is the same guy who asked a guest during a discussion of bank notes in India:

[Imitating an Indian accent no less] Is the Indian rupee accepted as currency at 7-Eleven stores?

My guess is Kernen honed his faux Indian accent listening to South Asian classmates at MIT who actually became molecular biologists instead of chasing a fast buck on Wall Street.

For what it’s worth.
Dr. ESP