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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 2: Chinnings Now for an extended conversation synthesizing this economic moment

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Speaker 2: with the Marcus. Michael Darta joins us this morning, thrill

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Speaker 2: that he could be with us with Roth Capital. Michael,

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Speaker 2: you go all hysterical on me here. You go back

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Speaker 2: to President Hubert Heaver nineteen thirty nineteen thirty two, We

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Speaker 2: had a tariff hike and they raise the marginal tax

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Speaker 2: rate on the fancy people. Are we going to get

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Speaker 2: a REDUCS on that? Or is that bluff and bluster

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Speaker 2: from President Trump.

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Speaker 3: Great to be on with you both, Tom. You know

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Speaker 3: a bit of a cautionary tale here, I think for

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Speaker 3: the Republican Party and the Trump administration because obviously, even

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Speaker 3: with this simmering down of trade tensions, the average effective

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Speaker 3: tariff rate is going up meaningfully, you know, the highest

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Speaker 3: one hundred years. So you have to go back to

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Speaker 3: Smoot Hawley Herbert Hoover. President Hoover signed that in June

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Speaker 3: of nineteen thirty and then he also signed a gigantic

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Speaker 3: tax increase, big rise in the top marginal tax rate

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Speaker 3: through the Revenue Act of nineteen thirty two. The Republicans

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Speaker 3: would not see the presidency for two decades, and obviously

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Speaker 3: Smoot and Hally got run out of office in nineteen

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Speaker 3: thirty three, never to be heard from again.

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Speaker 2: I look at this, it's a great walk to a history, folks.

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Speaker 2: And the backdrop of this, of course, is a small

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Speaker 2: mayorship election in Omaha, Nebraska where the Democrats doun. Nobody

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Speaker 2: saw that coming but Michael Darter within the stew that

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Speaker 2: you're looking at at roth Capitol. Now, do you perceive

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Speaker 2: that tariffs will be pulled back ever further from the

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Speaker 2: ridiculous numbers down to thirteen or seventeen percent whatever earning,

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Speaker 2: Tedesky says, and it will bring him down even more

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Speaker 2: so in the coming weeks and months.

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Speaker 3: Well, I think Tom, that you know the China deal

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Speaker 3: announced over the previous weekend is important because those tariff

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Speaker 3: rates were clearly in the prohibitive portion of the Laugher curve.

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Speaker 3: You essentially had a trade embargo with those rates up

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Speaker 3: at one hundred and forty five percent, so no trade,

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Speaker 3: no revenues, right, I mean, this is a good lesson

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Speaker 3: in supply side economics. So getting those down to around

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Speaker 3: thirty I think is important. So it's still a big

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Speaker 3: step up in tariff rates from where we were prior

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Speaker 3: to the administration coming into office, But that backing down

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Speaker 3: I think is important in the sense that if you're

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Speaker 3: just doing a static forecast for how much this could

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Speaker 3: disrupt growth this year, you know, more of a more

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Speaker 3: of a slow down dislocation versus you know, potential contraction.

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Speaker 2: Pauls when he wants to jump in here and Torston

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Speaker 2: Slack publishing seconds ago, we bring that to you, and

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Speaker 2: this goes right to the Dartak conversation. Paul, you look

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Speaker 2: at imports coming in. You think all the money goes

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Speaker 2: to China. That's what the president thinks. Wrong, Torston Slack

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Speaker 2: saying fifty six percent of the money stays in the US,

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Speaker 2: only forty four cents on the dollar goes to whomever

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Speaker 2: in China.

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Speaker 4: Just want to bring that up absolutely so, Michael, can

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Speaker 4: we I mean just as recently as you know, two

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Speaker 4: or three weeks ago, the recession discussion was certainly front

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Speaker 4: and center for a lot of investors. Can we put

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Speaker 4: we put that on the back burner a little bit

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Speaker 4: here now that the President is walking back some of

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Speaker 4: these tariff discussions.

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Speaker 3: I think so, Paul. I mean, you know, we came

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Speaker 3: into the year obviously with Marke it's very hopeful that

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Speaker 3: most of what President Trump was talking about on trade

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Speaker 3: trade was going to be bluster. And you know, obviously

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Speaker 3: Liberation Day was a scorched earth set of proposals that

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Speaker 3: markets did not expect, and then there was some feeling

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Speaker 3: out for where the Trump put would be. So now

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Speaker 3: I think we know, right, I mean, the administration is

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Speaker 3: ultimately sensitive to what's happening in equity and credit markets.

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Speaker 3: It may have been the bond market action in that

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Speaker 3: first week of April that you know, finally finally got

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Speaker 3: the President to start to back off a bit. So

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Speaker 3: I do think we can breathe somewhat of a sigh

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Speaker 3: of relief here. If you look at the high yield

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Speaker 3: debt market, you know, those spreads shot up dramatically going

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Speaker 3: into the first week of April, basically a fifty plus

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Speaker 3: percent recession probability that's now receded down into the teens,

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Speaker 3: if not lower. So that's quite helpful. Now, look, markets

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Speaker 3: can be wrong, but I think in this case, the

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Speaker 3: high yield market and jobless claims watch those two really

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Speaker 3: closely because they've been on the front edge of this

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Speaker 3: soft landing and resilient economy.

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Speaker 4: So, Michael, in that context, here, how does a federal

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Speaker 4: reserve kind of look at the world here? How do

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Speaker 4: you think they're going to behave this year?

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Speaker 3: Yeah, I think you know, related to your previous question,

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Speaker 3: if you know, the tariffs alone really shouldn't put us

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Speaker 3: into recession. I mean, where Tom and I started talking

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Speaker 3: about this mood and Hawley and tariff or Hoover tax

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Speaker 3: and tariff increases. Really, the Federal Reserve was responsible for

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Speaker 3: torpedoing the business cycle in the nineteen thirties, allowing a

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Speaker 3: money supply contraction of thirty percent and nominal GDP to

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Speaker 3: fall fifty percent. Massive monetary contraction. So that's not going

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Speaker 3: to happen this time. But there is some risk that

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Speaker 3: the interaction between tariffs and monetary policy could create some problems.

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Speaker 3: And really it would be that the tariff disruption lowers

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Speaker 3: the neutral rate, and if the Fed is tardy in

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Speaker 3: lowering the policy rate, the business cycle software landing could

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Speaker 3: slip away. Now that these tariffs have been scaled back

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Speaker 3: and moderated, that risk has declined, and the risk of

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Speaker 3: the FED potentially falling behind the curve is also declined.

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Speaker 3: I'm pretty comfortable with where the FED is right now.

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Speaker 3: If you look at bond market inflation expectations, they've been

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Speaker 3: low and stable, consistent with price stability. Nominal wage growth,

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Speaker 3: which is not going to be affected on a first

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Speaker 3: order impact from the tariffs, perfect running right in line

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Speaker 3: with price stability. So the Fed has the flexibility to

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Speaker 3: move if need be. But with the tariff threat being

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Speaker 3: scaled back, then there's going to be, you know, less

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Speaker 3: need for the Fed to move. I still think they

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Speaker 3: will ultimately lower rates, but they're going to want to

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Speaker 3: see a few months of the hard data in my opinion,

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Speaker 3: before they start to move, and that could put us

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Speaker 3: into July perhaps, Michael.

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Speaker 4: How about the consumer here? We're going to get some

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Speaker 4: retail sales here later on this morning, still looking for

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Speaker 4: some decent growth kind of mind month of the month here,

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Speaker 4: How do you view the consumer these days?

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Speaker 3: You know, Paul, it's just been amazing the consumers held

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Speaker 3: in there this well. We know the low end is

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Speaker 3: under pressure, but that's been the case for a while.

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Speaker 3: The high end consumer, you know, drives a bulk of

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Speaker 3: the spending, and you know, with the stock market wobbling,

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Speaker 3: that was a threat in February, in March, but we've

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Speaker 3: had this huge bounce back in risk markets, and at

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Speaker 3: least so far so far, the labor market's been pretty steady.

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Speaker 3: So I think that is going to be the key

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Speaker 3: going forward. Watch those first time jobless claims numbers. If

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Speaker 3: they start to break out, you know, that's going to

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Speaker 3: be more of a potential issue. But you know we've

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Speaker 3: held in there so far, so fingers crossed.

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Speaker 2: We'll see that in claims today at any thirty. Also

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Speaker 2: retail sales here. Thank you to Commonwealth for support of

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Speaker 2: all we do in economics. Michael Darni, whether's or rot Capital,

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Speaker 2: We welcome all of you on your commune across the nation.

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Speaker 2: Goodbardy ninety nine one FM, Washington ninety two nine FM,

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Speaker 2: up to Milanocket. We said the Celtics won last night.

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Speaker 4: I did any one pretty decided? Coming back to the

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Speaker 4: garden Bloomber.

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Speaker 2: Eleventh, three zero of the game, coming up here of

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Speaker 2: basketball in the coming days. Uh Michael darted Kenrougoff with

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Speaker 2: US yesterday and he reframed he didn't get on the

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Speaker 2: disinflationary vector. He got on the stable rate or higher

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Speaker 2: rate vector. And I'm sorry, I'm seeing it ever so

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Speaker 2: slightly on the tape. I got a four ninety five

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Speaker 2: thirty year bond. Should we prepare for a higher nominal

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Speaker 2: interest rate regime?

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Speaker 3: Well, I think you know that is certainly a with

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Speaker 3: fiscal policy makers not really taking the threats seriously. You know,

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Speaker 3: we've seemed to have missed an opportunity here. I mean,

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Speaker 3: Speaker Johnson has his hands full with just a two

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Speaker 3: seat Republican majority, and he's essentially been held hostage by

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Speaker 3: coastal Republicans that really want to boost that salt tax exemption. So,

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Speaker 3: you know, Tom, it goes back to basic public finance

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Speaker 3: theory that I agree brought to possible bait. Brought it

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Speaker 3: brought us possible base with the lowest rates achievable, and

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Speaker 3: if you move away from that, the code becomes less efficient.

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Speaker 3: There's really been no stomach to do meaningful spending, complete

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Speaker 3: entitlement reforms. So you know, the we're not on a

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Speaker 3: sustainable fiscal path.

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Speaker 2: Yeah, Michael, let me cut to the chase. Let's do

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Speaker 2: some Wisconsin whitewater academics here. Rogue offs with us yesterday.

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Speaker 2: Stiglitz is known for the little g The growth rate

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Speaker 2: is really really important when looking at the debt and deficit.

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Speaker 2: Are we finally at the place where in America, like

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Speaker 2: maybe say in Italy, the growth rate doesn't keep up

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Speaker 2: with our fiscal expansion.

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Speaker 3: Yeah, I mean, look, we are on a completely unsustainable

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Speaker 3: fiscal course. I don't even really think there's a debate

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Speaker 3: about that, but it's politically inconvenient to deal with it

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Speaker 3: unless markets are forcing your hand. Are we at that point?

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Speaker 3: You know? I don't think we're at that point just yet,

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Speaker 3: but nobody knows when that's going to come. And then

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Speaker 3: if you're trying to straighten things out in a rush,

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Speaker 3: in a haphazard way where you don't have time to

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Speaker 3: think about what the proper policy adjustments are, that's not

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Speaker 3: going to be an optimal outcome. I will say this

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Speaker 3: on the ten year yield, you know, the yield has

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Speaker 3: been picking up, and that is creating some hand ringing.

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Speaker 3: For sure. That looks a little more orderly to me

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Speaker 3: with risk assets rallying and the macro data being pretty

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Speaker 3: stable on the hard data side in April so far,

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Speaker 3: versus what we were seeing that first week of April,

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Speaker 3: where the yields shot up fifty basis points over five

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Speaker 3: sessions with risk assets cratering. I mean, that is not

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Speaker 3: what you want to see. So I don't think that

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Speaker 3: you know, we're in the list Liz trust moment just yet.

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Speaker 3: It certainly is a risk factor.

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Speaker 4: Pub Hey, Michael, we're going to get some initial job

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Speaker 4: as claims today. You know, a number kind of like

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Speaker 4: two hundred and twenty eight thousand, a number we've been

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Speaker 4: pretty accustomed to. How do you think about this US

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Speaker 4: labor market? It seems pretty solid.

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Speaker 3: Here, It really is. I mean, you know, we are

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Speaker 3: in an unprecedented environment through the lens of financial history,

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Speaker 3: and that is the unemployment rate moved up eight tenths

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Speaker 3: of a percentage point from the lows of the cycle

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Speaker 3: in the spring of twenty twenty three to its recent

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Speaker 3: level in the summer of twenty twenty four. That kind

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Speaker 3: of a movement has never occurred with the unemployment rate

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Speaker 3: leveling off like it has over the last ten months,

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Speaker 3: has never happened. So this is really the first time,

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Speaker 3: maybe in history, that the FED has succeeded in creating

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Speaker 3: a soft landing where all these recession rules of thumb

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Speaker 3: have completely failed. I mean everyone going down the line.

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Speaker 3: So maybe it's luck, maybe it's skill, maybe it's something else,

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Speaker 3: but it's a unique business cycle and this labor market

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Speaker 3: is held in there beautifully. Now. Hiring rates are weak.

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Speaker 3: So if firing rates pick up, the unemployment rate will

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Speaker 3: start rising again. And if that unfold, then I do

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Speaker 3: think the FED will be ready to start easing in

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Speaker 3: a significant way, but probably not until we have evidence

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Speaker 3: of that, and so far we do not.

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Speaker 2: Michael Darted with Roth Capital greatly appreciate it.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: Joining us Tanned and rest at Jed Soroka. He's executive

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Speaker 2: director of everything we do in the LA. The Port

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Speaker 2: of Los Angeles is the muster.

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Speaker 4: I mean, it's acre anchors.

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Speaker 2: How many total.

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Speaker 5: Employees at the Port of Los Angeles A little more

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Speaker 5: than nine hundred every day on those docks, more than

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Speaker 5: one hundred thousand people go to work.

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Speaker 2: Hundred thousand. Yeah, it's just like genormous. Forget about that.

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Speaker 2: A few years ago Roosevelt opened the Panama Canal. You

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Speaker 2: were with American President Lines in the deep port of

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Speaker 2: Cincinnati on the Ohio River. What was your first day

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Speaker 2: like in shipping on the Ohio River?

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Speaker 5: Tom, I came out of graduate school in New Orleans.

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Speaker 5: The price of oil was nine dollars a barrel. Unemployment

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Speaker 5: was going up. We just had a stock market crash

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Speaker 5: in eighty seven. I recall that unfortunately, and I got

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Speaker 5: offered an interview because my dad worked for American Airlines

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Speaker 5: and I could fly up to Cincinnati for free. There

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Speaker 5: you get my first day on the job. I was

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Speaker 5: getting coffee and dry cleaning for the sales reps. Took

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Speaker 5: a car to get it washed. That was my introduction

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Speaker 5: to the shipping industry.

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Speaker 2: This is so important right now. Every kid out there

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Speaker 2: is trying to get a job, and what you used

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Speaker 2: to serve there is when they want coffee jet, it's

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Speaker 2: others to it. What's changed now in the real world

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Speaker 2: of the Port of Los Angeles. I mean sheriffs have

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Speaker 2: been blown up. Is every ship in the nation to

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Speaker 2: want to crowd into your port?

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Speaker 5: I don't think so. But there's a lot of product

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Speaker 5: on the ground in China that was manufactured before the

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Speaker 5: one hundred and forty five percent tariff was introduced. Every

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Speaker 5: conversation I have in business is about what's next. Business

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Speaker 5: community wants certainty. Ninety days of this reprieve tom is

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Speaker 5: not a long runway in our business.

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Speaker 4: So what are you seeing when you I just envisioned

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Speaker 4: you in your office in the port of Los Angeles

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Speaker 4: and you have this view of the Los Angeles Harbor

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Speaker 4: and the Pacific Ocean, You see all these ships coming

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Speaker 4: over the horizon from China. Are the ships coming?

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Speaker 5: Not yet?

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Speaker 4: Not yet?

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Speaker 5: And I was on the phone last night with some

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Speaker 5: friends in Singapore and Hong Kong and bookings are picking up,

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Speaker 5: reservations for containers picking up. But here again, it's really

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Speaker 5: quiet in Los Angeles today. By the end of this month,

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Speaker 5: seventeen of eighty scheduled ship arrivals will have been canceled.

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Speaker 5: Our volume down twenty five percent. But even as this

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Speaker 5: booking or reservation system has an uptick, it's going to

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Speaker 5: take about two weeks for the liner shipping companies to

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Speaker 5: reposition their vessels, and then once they load up the

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Speaker 5: cargo that's on the ground, another two weeks to come

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Speaker 5: to LA. Then we have to distribute throughout the country.

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Speaker 4: We still have even though the I'm not even sure

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Speaker 4: where we are right now, but I just I believe

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Speaker 4: the tariffs have come down from their high levels Visa

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Speaker 4: EA China, there's still way higher than they were five

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Speaker 4: months ago. So that has to impact just what Walmart's buying,

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Speaker 4: what every retailer is across the US are buying, and

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Speaker 4: what you're seeing at your port right right.

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Speaker 5: The headlines from just a couple of minutes ago. Walmart's

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Speaker 5: CFO says prices will likely rise towards the end of

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Speaker 5: this month. Now, we have one hundred and twenty five

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Speaker 5: thousand companies that import through the Port of Los Angeles.

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Speaker 5: They're not all the big guys. I'm most concerned about

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Speaker 5: the small to medium sized retailer. Your corner hardware store

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Speaker 5: has to buy now at thirty fifty percent, and if

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Speaker 5: they try to raise the price on the hammer or

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Speaker 5: the toolkit that they're selling, they can't because they're competing.

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Speaker 2: With the big guys.

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Speaker 5: This is a really tough position.

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Speaker 4: Can you explain how the tariffs work? So, when a

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Speaker 4: good comes off a ship in your port, how does

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Speaker 4: a tariff get done?

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Speaker 5: Yeah, depending on the terms of sale and the nuances,

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Speaker 5: et cetera. When an importing company wants to accept the

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Speaker 5: goods take them off the port property, they're given an

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Speaker 5: invoice by customs and Border Protection based on a harmonized

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Speaker 5: code and what products are in that container. Before they

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Speaker 5: can take possession of that box, they will have had

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Speaker 5: to pay that tariff.

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Speaker 4: Okay, all right, so the importer pays the tear. I

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Speaker 4: guess that just happens, right, I mean, because it seems

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Speaker 4: like it's so fluid. I'm not sure what the tariffs

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Speaker 4: are if I'm an importer, right.

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Speaker 5: And think about the customs agent who's got to assess

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Speaker 5: what's in that container, the price of those goods, et cetera.

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Speaker 5: And just to keep up with this is I'm in

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Speaker 5: this business and it's hard to keep up your.

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Speaker 2: Point of Cincinnati, What was your first day in Shangh?

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Speaker 2: I like they send you abroad. You're the ugly American Shanghai.

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Speaker 2: You're looking for a cheap suit. What was it like

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Speaker 2: your first day in Shanghai.

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Speaker 5: Tom, I was thirty four years old and you're on

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Speaker 5: the bund. The bund in Shanghai. Beautiful, the lights up,

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Speaker 5: the architecture, unbelievable. I had people like Frank Chen, William Chen,

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Speaker 5: Philip Shu just holding my hand guiding me through this.

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Speaker 5: But what they said was our hope is that you

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Speaker 5: can learn a lot about what we do here and

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Speaker 5: take that back to America. And for the guys and

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Speaker 5: ladies on the ground here in the US, it was

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Speaker 5: like we have a contact over in Shanghai. I learned

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Speaker 5: a little bit about how to move all this cargo,

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Speaker 5: Who's who, what we can do?

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Speaker 2: What an opportunity. Ring it forward now from the bund

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Speaker 2: down to Ho Chi Minh City down to the booming Vietnam.

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Speaker 2: That Kiming experiment right now identify for all of our

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Speaker 2: listeners across this nation, the China to Vietnam to US

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Speaker 2: trade moment.

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Speaker 5: Yeah, this is interesting too, because I think many of

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Speaker 5: us were surprised once that one hundred and forty five

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Speaker 5: percent tariff was put in. The American importer slammed on

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Speaker 5: the brakes and said, I'm not buying because I don't

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Speaker 5: know if the information is going to change in two hours,

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Speaker 5: two days, or two months. So what the liner shipping

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Speaker 5: companies did was say, look, I've got to profile these vessels.

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Speaker 5: I normally make a call in Shahai or jah Men

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Speaker 5: and then come to La. I'm going to make another

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Speaker 5: call in Haifunk or Ho Chi Minh City. I'm going

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Speaker 5: to try to get cargo from Lomshabog and Sodakeep in Thailand.

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Speaker 5: Because if I don't profile this vessel, it's a cash loser. Right,

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Speaker 5: I've got to get ninety five percent utilization on the

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Speaker 5: ship or else that voyage is cash flow negative. So

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Speaker 5: you saw people just scramble it.

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Speaker 2: So right there, folks as the window, it's no different

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Speaker 2: than the true from Dallas to Amarillo. You've got to

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Speaker 2: have a full truck or it doesn't work. Paul, get

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Speaker 2: one more, one more jeens.

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Speaker 4: So are what are you seeing today? How do you

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Speaker 4: kind of envision the next one month, two months, three

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Speaker 4: months in terms of your port of Los Angeles.

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Speaker 5: I think you'll see a little bit of an upticking

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Speaker 5: cargo Again. May is down precipitously with respect to volume.

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Speaker 5: Folks are going to have to bring product in because

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Speaker 5: we're at a critical point summer fashion, back to school, year,

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Speaker 5: end holidays. We're going to have to have product on

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Speaker 5: the shelf and online to buy. The question is going

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Speaker 5: to be what will be the consumer's willingness to pay.

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Speaker 5: So the retailers are trying to do all this calculation

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Speaker 5: right now, and I don't think anyone has the answer.

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Speaker 4: Is theres going to be any empty shelves in the

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Speaker 4: next several weeks months.

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Speaker 5: I think you'll probably see lower levels of inventory and

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Speaker 5: less selection. Okay, with prices ticking up just a little bit.

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Speaker 2: We don't care. All we want to know is can

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Speaker 2: the Padres stay with the Dodgers?

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Speaker 1: Oh?

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Speaker 5: That National League West is something else? These guys, Manny Machado,

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Speaker 5: these Padres, I tell you want to live there.

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Speaker 2: The bottom line is all the superstars want to.

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Speaker 5: Live and that rivalry is something else. Locally, this is

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Speaker 5: the team to watch.

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Speaker 2: Porter Los Angeles tickets. I mean they're right by the

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Speaker 2: Tom LOWSDA box. Yep, yep, thank you. When are you

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Speaker 2: coming back?

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Speaker 5: We're going to keep up. This information is so fluid,

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Speaker 5: but I really want to thank you guys and Lisa,

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Speaker 5: You're amplifying what the ground truth is in the supply chain,

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Speaker 5: and it really is resonating with the people we do

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Speaker 5: business with.

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Speaker 2: Well, we're trying to thank you. On Coast to Coast

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Speaker 2: Good Morning is on gin Soroka with us her executive director,

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Speaker 2: Porter Los Angeles. Lets not forget Long Beach.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Corplay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Alexa from our Flat New York station.

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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 2: Schoe Meyer was definitive at the Bank of America and

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Speaker 2: in analyzing the consumers. So much of the Bank of

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Speaker 2: America credit card analysis she invented with her team. She

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Speaker 2: was stolen. It's like, you know, a trade with the

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Speaker 2: Yankees in a red sox. Mishall Meyer at master Card

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Speaker 2: Economics Institute is their chief economists as well. That's the

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Speaker 2: curiosity is what does master Card see? What do you

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Speaker 2: actually see in the behavior of American consumers?

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Speaker 6: So when you look at the trend in spending, consumers

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Speaker 6: are still spending. And I think that the retail sales

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Speaker 6: numbers show that pretty clearly as well. When you look

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Speaker 6: through March and April, March was revised even higher, so

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Speaker 6: pretty exceptional spending, and the fact that April was essentially

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Speaker 6: flat shows that you didn't even see a payback after that,

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Speaker 6: Like typically when you have outsized month of a month

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Speaker 6: games you see a payback thereafter. So looking through the

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Speaker 6: last few month on, certainly consumers are still out there spending,

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Speaker 6: and I think they have the purchasing power to do it.

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Speaker 6: And that's what we're seeing in our data as well.

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Speaker 6: When we look at that pulse of the consumer in

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Speaker 6: terms of expenditures, we see engagement consumer spending.

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Speaker 4: Is that when we think about retail sales consumer spending

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Speaker 4: the folks that you know were you are master Card?

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Speaker 4: Is it really just about the job market? If I

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Speaker 4: have a job, my spending ham much are pretty consistent.

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Speaker 4: Is that how it works?

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Speaker 7: Or I think that is the primary factor.

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Speaker 6: It's do I have a job today, do I expect

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Speaker 6: to have a job tomorrow? And what am I seeing

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Speaker 6: in terms of my income flow to therefore accommodat.

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Speaker 7: Or support my spending needs.

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Speaker 6: Now, of course they're going to be influenced by expectations

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Speaker 6: so how you feel about the future. Are you worried

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Speaker 6: about the stability of your income?

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Speaker 7: Are you worried.

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Speaker 6: About higher prices? Which is obviously something consumers are worried

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Speaker 6: about now. The wealth effect matters, particularly for higher income consumers,

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Speaker 6: and the overall balance sheet matters too in terms of

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Speaker 6: debt levels.

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Speaker 7: But yes, I think you hit it.

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Speaker 6: Exactly right, which is that it's a function of purchasing power,

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Speaker 6: which is driven by the labor market.

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Speaker 4: You know, you see a lot of the survey data,

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Speaker 4: whether it's University of Michigan or others, and it indicates

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Speaker 4: that the consumers is a little uncertain as turfs and

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Speaker 4: so on, and you know, all that kind of stuff.

439
00:23:26,160 --> 00:23:28,640
Speaker 4: How does that do we see that in retail sales?

440
00:23:28,680 --> 00:23:30,480
Speaker 4: I'm not sure we saw it necessarily today.

441
00:23:30,600 --> 00:23:32,800
Speaker 6: Well, look, I mean, consumers have a lot of reasons

442
00:23:32,800 --> 00:23:35,520
Speaker 6: to be uncerted in The headlines have been scary and

443
00:23:35,560 --> 00:23:38,880
Speaker 6: they've been changing rapidly. So if you're trying to plan

444
00:23:39,000 --> 00:23:41,120
Speaker 6: for the future, I do think there's some.

445
00:23:41,240 --> 00:23:42,040
Speaker 7: Concern right now.

446
00:23:42,200 --> 00:23:45,040
Speaker 6: But you need what you need when you need it,

447
00:23:45,119 --> 00:23:47,320
Speaker 6: and if you have the purchasing power to purchase it.

448
00:23:47,240 --> 00:23:47,960
Speaker 1: You do.

449
00:23:48,080 --> 00:23:49,159
Speaker 7: And that's what the data shows.

450
00:23:49,200 --> 00:23:51,560
Speaker 2: I get hate mail, Lisa gets the love notes, Paul

451
00:23:51,600 --> 00:23:53,120
Speaker 2: gets the love notes. I get down.

452
00:23:53,600 --> 00:23:54,360
Speaker 7: I can't imagine.

453
00:23:54,359 --> 00:23:58,119
Speaker 2: And the hate mail is Tom, we're flat on our back.

454
00:23:58,280 --> 00:24:00,280
Speaker 2: And this is what you're expert at. You invent this

455
00:24:00,359 --> 00:24:05,719
Speaker 2: a few years ago. How concentrated is our buoyant consumer?

456
00:24:05,840 --> 00:24:10,560
Speaker 2: Are we down to ten percent of the country's driving consumption?

457
00:24:10,760 --> 00:24:14,000
Speaker 2: Is it twenty? Is it? What's that number in your head?

458
00:24:14,200 --> 00:24:16,240
Speaker 7: Yeah? So yes.

459
00:24:16,320 --> 00:24:20,560
Speaker 6: The upper income cohort drive spending disproportionally, of course, because

460
00:24:20,560 --> 00:24:22,800
Speaker 6: they have the most amount of income, and they have

461
00:24:22,920 --> 00:24:24,160
Speaker 6: that wealth and they.

462
00:24:24,040 --> 00:24:27,720
Speaker 2: Have the confidence people are I look at the delinquency

463
00:24:27,840 --> 00:24:29,280
Speaker 2: rates and all that. I know you don't want to

464
00:24:29,320 --> 00:24:34,520
Speaker 2: talk about it. What percentage of America is doing our consumption?

465
00:24:34,640 --> 00:24:37,760
Speaker 2: It's teen sweens, right, Lisa, that's a technical.

466
00:24:37,359 --> 00:24:39,440
Speaker 7: Phrase, teen sweens?

467
00:24:40,160 --> 00:24:40,960
Speaker 2: How much is it?

468
00:24:41,119 --> 00:24:41,199
Speaker 3: So?

469
00:24:41,720 --> 00:24:41,920
Speaker 7: Yeah?

470
00:24:41,960 --> 00:24:44,000
Speaker 6: I mean if you look at the consumer expenditure survey

471
00:24:44,119 --> 00:24:46,120
Speaker 6: from the Federal Reserve, it will give you a good

472
00:24:46,119 --> 00:24:48,919
Speaker 6: indication something along the lines of forty percent of spending

473
00:24:48,960 --> 00:24:51,520
Speaker 6: is driven by the top twenty percent of the income distribution.

474
00:24:53,000 --> 00:24:55,880
Speaker 6: That and they also have more consistent spending because they

475
00:24:55,880 --> 00:24:58,480
Speaker 6: can smooth through shocks. Right, You talked about the confidence

476
00:24:58,840 --> 00:25:00,919
Speaker 6: that is part of it. They they have the ability

477
00:25:00,960 --> 00:25:04,120
Speaker 6: to navigate economic cycles a lot easier because they.

478
00:25:04,040 --> 00:25:04,600
Speaker 7: Have a cushion.

479
00:25:05,920 --> 00:25:10,520
Speaker 6: But the incremental movement in spending is very much driven

480
00:25:10,600 --> 00:25:14,439
Speaker 6: by not the upper income but the lower income consumers,

481
00:25:14,520 --> 00:25:16,399
Speaker 6: and we saw a lot of that during the post

482
00:25:16,400 --> 00:25:20,880
Speaker 6: pandemic period. We're spending largely exceeded expectations because you had

483
00:25:21,359 --> 00:25:25,040
Speaker 6: very healthy labor market conditions, stimulus had flowed through, they

484
00:25:25,040 --> 00:25:28,240
Speaker 6: had a low level of interest rates, deleveraging on household

485
00:25:28,240 --> 00:25:31,880
Speaker 6: balance sheets, and lower income consumers were much much more active.

486
00:25:32,200 --> 00:25:34,400
Speaker 4: What are the leading indicators that you look at for

487
00:25:34,960 --> 00:25:36,000
Speaker 4: the consumer here?

488
00:25:37,160 --> 00:25:38,879
Speaker 6: So I would say, I love the fact that the

489
00:25:39,000 --> 00:25:42,200
Speaker 6: data is hitting right now because you have a combination

490
00:25:42,280 --> 00:25:45,359
Speaker 6: of amazing data sets, but initial jobless claims, so just

491
00:25:45,440 --> 00:25:49,000
Speaker 6: out I think are extremely important right every Thursday morning,

492
00:25:49,080 --> 00:25:52,040
Speaker 6: eight thirt Eastern, paying attention to see if jobless claims

493
00:25:52,040 --> 00:25:53,040
Speaker 6: are moving from the trend.

494
00:25:53,119 --> 00:25:55,920
Speaker 2: They're not commercial free for this half hour with two

495
00:25:55,960 --> 00:26:00,720
Speaker 2: important conversations. Michelle Meyer with US with master Card Economics Institute,

496
00:26:00,960 --> 00:26:05,040
Speaker 2: scheduled to be with US Elizabeth Economy from Stanford in

497
00:26:05,080 --> 00:26:08,760
Speaker 2: the Hoover Institution in the Pacific rim as well. Okay,

498
00:26:08,760 --> 00:26:11,000
Speaker 2: I have to ask because they ruined your weekend. I

499
00:26:11,000 --> 00:26:14,320
Speaker 2: Michelle was like, you know, working from home three days

500
00:26:14,359 --> 00:26:17,040
Speaker 2: a week, the whole thing, and they MasterCard ruined your

501
00:26:17,080 --> 00:26:22,239
Speaker 2: weekend the tariff impact that MasterCard sees, what's it going

502
00:26:22,320 --> 00:26:22,480
Speaker 2: to be.

503
00:26:23,040 --> 00:26:24,280
Speaker 7: My weekend was not ruined.

504
00:26:24,320 --> 00:26:27,200
Speaker 6: I had a lovely weekend on baseball fields for my children.

505
00:26:28,760 --> 00:26:32,840
Speaker 6: But no, I think the headlines are obviously essential to follow,

506
00:26:32,840 --> 00:26:34,480
Speaker 6: and we're doing a very close job doing that in

507
00:26:34,480 --> 00:26:39,920
Speaker 6: the Economics Institute. But we're also really trying to be

508
00:26:39,920 --> 00:26:42,879
Speaker 6: careful about swinging around our views and our forecast at

509
00:26:42,920 --> 00:26:47,000
Speaker 6: the Institute too rapidly, given how quickly the situation is evolving.

510
00:26:47,040 --> 00:26:49,439
Speaker 6: So we're living in a world of scenarios like I

511
00:26:49,480 --> 00:26:53,040
Speaker 6: think many others are, and we're responding as we see

512
00:26:53,080 --> 00:26:57,440
Speaker 6: the data change if it changes. And frankly the moment,

513
00:26:57,600 --> 00:27:01,280
Speaker 6: when you look again at consumer spending, you're not significant ships.

514
00:27:02,000 --> 00:27:04,760
Speaker 4: What's the key thing here for you know, mastercro when

515
00:27:04,760 --> 00:27:07,200
Speaker 4: you think about the economic outlook here is the recession.

516
00:27:08,600 --> 00:27:11,400
Speaker 4: Is the risk of a recession less today than maybe

517
00:27:11,400 --> 00:27:13,880
Speaker 4: it was three four weeks ago? Has it changed that much?

518
00:27:13,960 --> 00:27:15,360
Speaker 4: Or again? Are we kind of trying to look through

519
00:27:15,400 --> 00:27:16,000
Speaker 4: all that stuff.

520
00:27:16,080 --> 00:27:18,320
Speaker 6: So I think one of the differences in my seat

521
00:27:18,400 --> 00:27:22,159
Speaker 6: now at the Economics Institute is that relative to my

522
00:27:22,359 --> 00:27:25,840
Speaker 6: prior life on Wall Street and most recently a Bank

523
00:27:25,840 --> 00:27:28,000
Speaker 6: of America, is I think we has a lot more

524
00:27:28,000 --> 00:27:32,080
Speaker 6: flexibility in terms of the forecasting process, right in the

525
00:27:32,119 --> 00:27:34,480
Speaker 6: sense that we have the ability now to look longer term.

526
00:27:34,760 --> 00:27:37,800
Speaker 6: We're trying to guide our clients and our partners around

527
00:27:38,040 --> 00:27:40,320
Speaker 6: the business cycle. Right, where are we going generally in

528
00:27:40,359 --> 00:27:42,199
Speaker 6: the business, likele what are the big themes, what are

529
00:27:42,240 --> 00:27:45,920
Speaker 6: the big trends Versus When I was in my prior role,

530
00:27:45,960 --> 00:27:48,040
Speaker 6: it was it was more markets driven, So you had

531
00:27:48,040 --> 00:27:50,480
Speaker 6: to have a view at that moment is there going

532
00:27:50,520 --> 00:27:51,280
Speaker 6: to be a recession or not?

533
00:27:51,320 --> 00:27:52,320
Speaker 7: And when is that going to be?

534
00:27:52,400 --> 00:27:55,120
Speaker 6: And that's a difficult place to live in an environment

535
00:27:55,160 --> 00:27:57,040
Speaker 6: that we that we that were coming out of.

536
00:27:57,600 --> 00:28:00,360
Speaker 7: So we've been very consistent and I think pretty.

537
00:28:00,800 --> 00:28:04,760
Speaker 6: Relative to other economists in saying we're going to monitor

538
00:28:04,800 --> 00:28:07,240
Speaker 6: the risks, we're going to adapt, we're going to adjust

539
00:28:07,240 --> 00:28:10,160
Speaker 6: our forecast in our views, and we'll talk about scenarios.

540
00:28:10,160 --> 00:28:13,920
Speaker 6: But the modal forecast, frankly, it hasn't moved all that much.

541
00:28:13,800 --> 00:28:16,760
Speaker 2: Mischell Meyer, Thank you so much, Great Brie, Chief Economists

542
00:28:17,040 --> 00:28:20,960
Speaker 2: MasterCard Economics at Institute. Can't say enough about her visceral

543
00:28:21,000 --> 00:28:28,040
Speaker 2: feel for the American consumer.

544
00:28:29,560 --> 00:28:33,439
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

545
00:28:33,480 --> 00:28:36,800
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

546
00:28:36,920 --> 00:28:39,760
Speaker 1: with the Bloomberg Business app. You can also watch us

547
00:28:39,800 --> 00:28:43,680
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

548
00:28:43,960 --> 00:28:49,160
Speaker 2: She's absolutely definitive, and not only China, but this odd

549
00:28:49,200 --> 00:28:54,400
Speaker 2: relationship of Beijing with Washington. Elizabeth Economy Hargrove, Senior Fellow,

550
00:28:55,080 --> 00:28:59,120
Speaker 2: co director of the US China and World Program at

551
00:28:59,160 --> 00:29:03,560
Speaker 2: the Hoover Instatution at Stanford University, and any series of books,

552
00:29:03,600 --> 00:29:06,440
Speaker 2: including Books of the Summer for Me and Books of

553
00:29:06,440 --> 00:29:09,000
Speaker 2: the Year, were thrilled that doctor Economy could join us

554
00:29:09,640 --> 00:29:12,880
Speaker 2: this morning. Liz, I'm not trying to be snarky, but

555
00:29:13,000 --> 00:29:16,200
Speaker 2: what's next for China? I think they got a victory.

556
00:29:16,560 --> 00:29:20,880
Speaker 2: We lowered terriffs, we lowered the import text into America.

557
00:29:21,440 --> 00:29:23,240
Speaker 2: What is next for Beijing?

558
00:29:24,960 --> 00:29:27,480
Speaker 8: I mean, so, let me say, I know that the

559
00:29:27,680 --> 00:29:29,720
Speaker 8: narrative has been that China won.

560
00:29:31,400 --> 00:29:33,960
Speaker 3: I'm not sure there was any real winner in this.

561
00:29:34,720 --> 00:29:38,360
Speaker 8: I think China demonstrated that yes, it could go toe

562
00:29:38,400 --> 00:29:41,480
Speaker 8: to toe with the United States, but both sides, you know,

563
00:29:41,720 --> 00:29:45,240
Speaker 8: reduce the tariffs. You know, China had called for the

564
00:29:45,360 --> 00:29:49,160
Speaker 8: United States to completely erase the tariffs before it even

565
00:29:49,200 --> 00:29:51,680
Speaker 8: sat down at the table. I think people have forgotten

566
00:29:51,720 --> 00:29:55,280
Speaker 8: that an administration didn't do that. They did come to

567
00:29:55,320 --> 00:29:59,280
Speaker 8: the table with, you know, a pretty concrete proposal on

568
00:29:59,600 --> 00:30:03,400
Speaker 8: how to you control the feedenol precursor exports that has

569
00:30:03,440 --> 00:30:06,920
Speaker 8: been so central to the Trump administration, and they took

570
00:30:06,920 --> 00:30:11,160
Speaker 8: off all of the non tariff sort of punishments that

571
00:30:11,160 --> 00:30:14,280
Speaker 8: they had put on the administration, things like the export

572
00:30:14,280 --> 00:30:17,160
Speaker 8: controls on critical minerals and rare earths. So I just

573
00:30:17,200 --> 00:30:18,920
Speaker 8: want to I want to level set a little bit

574
00:30:19,120 --> 00:30:23,360
Speaker 8: just because I think, you know, let's understand the full

575
00:30:24,080 --> 00:30:27,240
Speaker 8: sort of scope of this negotiation in terms of where

576
00:30:27,320 --> 00:30:30,080
Speaker 8: China goes next. I think what we've seen already is

577
00:30:30,120 --> 00:30:33,200
Speaker 8: that China is going to move very aggressively to diversify

578
00:30:33,440 --> 00:30:36,880
Speaker 8: their exports away from the United States. You know, in

579
00:30:37,280 --> 00:30:40,640
Speaker 8: part there was a twenty percent drop in Chinese exports

580
00:30:40,880 --> 00:30:44,120
Speaker 8: to the US. There was a twenty percent increase in

581
00:30:44,280 --> 00:30:47,520
Speaker 8: Chinese exports to Southeast Asia over the past month or so,

582
00:30:47,880 --> 00:30:50,320
Speaker 8: and even I think in the sort of low margin

583
00:30:51,000 --> 00:30:54,920
Speaker 8: you know, factories, apparel, boys, et cetera. They're all talking

584
00:30:55,200 --> 00:30:58,520
Speaker 8: about how to move how to reduce their dependence on

585
00:30:58,520 --> 00:30:59,280
Speaker 8: the US market.

586
00:30:59,320 --> 00:31:01,040
Speaker 3: So I think we've really.

587
00:31:00,760 --> 00:31:05,920
Speaker 8: Introduced a pretty significant new factor into the Chinese thinking

588
00:31:05,960 --> 00:31:08,640
Speaker 8: about the dependence of the United I mean, about the

589
00:31:08,200 --> 00:31:12,440
Speaker 8: liability of the United States. I think that's the big

590
00:31:12,480 --> 00:31:13,600
Speaker 8: next thing for China.

591
00:31:14,120 --> 00:31:18,600
Speaker 4: So, Elizabeth, if you're China, are they looking to really

592
00:31:19,560 --> 00:31:22,720
Speaker 4: kind of go it alone visa VI the West or

593
00:31:22,840 --> 00:31:25,440
Speaker 4: do they feel like it's in the best long term

594
00:31:25,440 --> 00:31:29,640
Speaker 4: interest to have a stronger relationship with the West strong

595
00:31:29,840 --> 00:31:30,600
Speaker 4: broadly defined.

596
00:31:31,600 --> 00:31:31,680
Speaker 2: No.

597
00:31:31,840 --> 00:31:34,440
Speaker 8: I think they're definitely not looking to go it alone

598
00:31:34,640 --> 00:31:36,479
Speaker 8: and move away from the West.

599
00:31:36,600 --> 00:31:39,000
Speaker 3: I mean they've made a big play.

600
00:31:38,880 --> 00:31:42,080
Speaker 8: Over the past couple of months, you know, because of

601
00:31:42,160 --> 00:31:46,120
Speaker 8: the sort of overall chaos that the Trump administration has

602
00:31:46,440 --> 00:31:50,400
Speaker 8: induced globally with these global tariffs, They've made a big

603
00:31:50,440 --> 00:31:55,560
Speaker 8: play to try to assert themselves as the global stabilizing force.

604
00:31:55,840 --> 00:31:58,560
Speaker 8: You know, They've gone to Australia and said please join hands.

605
00:31:58,600 --> 00:32:01,000
Speaker 8: They've gone to Europe. I think they would love to

606
00:32:01,040 --> 00:32:06,240
Speaker 8: revive the Comprehensive Agreement on investment that you know sunk

607
00:32:06,280 --> 00:32:09,040
Speaker 8: about eight years ago. Now they love to bring that back.

608
00:32:09,080 --> 00:32:12,000
Speaker 8: I don't think the Europeans are interested, but the Chinese

609
00:32:12,040 --> 00:32:14,040
Speaker 8: would like to do that. So I think, you know,

610
00:32:14,320 --> 00:32:18,320
Speaker 8: their strategy is to try to present themselves as a

611
00:32:18,400 --> 00:32:22,760
Speaker 8: responsible and reliable trade and investment partner where the.

612
00:32:22,760 --> 00:32:23,360
Speaker 3: US is not.

613
00:32:23,680 --> 00:32:26,240
Speaker 8: And they'll do that, you know, with the dance market

614
00:32:26,240 --> 00:32:28,000
Speaker 8: economies and with the global South.

615
00:32:28,600 --> 00:32:30,920
Speaker 2: Well, as we were talking and this goes back, I can't.

616
00:32:30,960 --> 00:32:33,280
Speaker 2: This is like when she was at Michigan as a freshman.

617
00:32:33,360 --> 00:32:37,040
Speaker 2: This is ten years ago. Elizabeth Economy here on China's

618
00:32:37,120 --> 00:32:40,320
Speaker 2: rise in Southeast Asia. One of the teams we're addressing

619
00:32:40,400 --> 00:32:44,120
Speaker 2: Elizabeth Economy is that China has other outros. It's not

620
00:32:44,200 --> 00:32:48,240
Speaker 2: a bilateral outcome or dare I say unilateral for mister Trump.

621
00:32:48,720 --> 00:32:53,240
Speaker 2: And that you can funnel China trade through Vietnam, through Malaysia,

622
00:32:53,840 --> 00:32:56,200
Speaker 2: through other nations as well. Is that just a given

623
00:32:56,320 --> 00:32:56,640
Speaker 2: for you?

624
00:32:58,280 --> 00:33:01,360
Speaker 8: I mean, I think certainly we know that we've seen that,

625
00:33:01,440 --> 00:33:05,160
Speaker 8: and frankly, in the Biden administration, we became aware of

626
00:33:05,200 --> 00:33:08,040
Speaker 8: that when I served with Secretary Mundo in the Commerce

627
00:33:08,080 --> 00:33:11,920
Speaker 8: Department in sort of some of the critical technologies, like

628
00:33:12,000 --> 00:33:15,440
Speaker 8: advanced chips. That became a real problem because this was

629
00:33:15,480 --> 00:33:18,120
Speaker 8: a good way for the you know, to avoid the

630
00:33:18,120 --> 00:33:21,720
Speaker 8: export controls. Actually was US chips going through Southeast Asia

631
00:33:21,720 --> 00:33:24,880
Speaker 8: and to China. So that corridor, which you know works

632
00:33:24,880 --> 00:33:27,160
Speaker 8: both ways, can be problematic, and I do think that's

633
00:33:27,160 --> 00:33:31,840
Speaker 8: something that the Trump administration negotiations with countries in Southeast Asia,

634
00:33:31,880 --> 00:33:35,600
Speaker 8: with Mexico, with others, They're trying to plug that hole

635
00:33:36,160 --> 00:33:39,320
Speaker 8: to prevent China from doing that sort of third party

636
00:33:39,360 --> 00:33:42,760
Speaker 8: shipping through to the US to avoid any kind of

637
00:33:42,800 --> 00:33:45,480
Speaker 8: restrictions or tariffs or other controls that the US might

638
00:33:45,520 --> 00:33:49,280
Speaker 8: be placing on Chinese products. So to their credit, I

639
00:33:49,280 --> 00:33:53,080
Speaker 8: think the Trump administration is trying to manage that process.

640
00:33:53,720 --> 00:33:57,120
Speaker 4: Elizabeth, in the world of global technology, that appears to be,

641
00:33:57,880 --> 00:34:01,600
Speaker 4: you know, a cold war that has developed is developing

642
00:34:01,680 --> 00:34:06,600
Speaker 4: between China and the West. A. Do you agree with

643
00:34:06,640 --> 00:34:09,200
Speaker 4: that and be how do you think that might play

644
00:34:09,200 --> 00:34:09,960
Speaker 4: out going forward?

645
00:34:11,560 --> 00:34:12,560
Speaker 3: Yeah, I mean, I think.

646
00:34:12,360 --> 00:34:17,040
Speaker 8: It's important to recognize that China began the process of

647
00:34:17,160 --> 00:34:22,560
Speaker 8: sort of technological decoupling around Made in China twenty twenty five.

648
00:34:22,640 --> 00:34:25,440
Speaker 8: Back in twenty fifteen, and we've talked about that before

649
00:34:25,880 --> 00:34:29,239
Speaker 8: on this show. Basically China's effort to ensure that its

650
00:34:29,280 --> 00:34:33,320
Speaker 8: companies dominated in the manufacturing of components and ten critical

651
00:34:33,360 --> 00:34:36,480
Speaker 8: cutting edge areas of technology like new materials and AI

652
00:34:36,800 --> 00:34:41,200
Speaker 8: and evs, and that then they become became these Louisville champions.

653
00:34:41,840 --> 00:34:44,359
Speaker 8: So they started, you know, by trying to close off

654
00:34:44,400 --> 00:34:47,960
Speaker 8: their market in many areas so that Chinese companies would dominate.

655
00:34:48,239 --> 00:34:50,920
Speaker 8: I think the US has been more concerned about the

656
00:34:50,960 --> 00:34:55,719
Speaker 8: strategic and security ramifications of some of these technologies, and

657
00:34:55,760 --> 00:34:58,719
Speaker 8: so we saw, you know, beginning with the first Trump administration,

658
00:34:58,800 --> 00:35:01,719
Speaker 8: through Biden and now Trump again, you know, a dramatic

659
00:35:01,880 --> 00:35:05,560
Speaker 8: increase in the use of our economic tools like export

660
00:35:05,600 --> 00:35:09,920
Speaker 8: controls in an outbound investment screening, trying to move supply chains,

661
00:35:10,000 --> 00:35:12,840
Speaker 8: you know, out of any sort of soul source dependency,

662
00:35:12,840 --> 00:35:15,200
Speaker 8: but particularly in a country like China where we feel

663
00:35:15,200 --> 00:35:18,520
Speaker 8: that they're not a reliable partner, where they do use

664
00:35:18,560 --> 00:35:22,560
Speaker 8: their economic leverage in coercive ways. So there's been I

665
00:35:22,560 --> 00:35:24,919
Speaker 8: think this this pull in this you know, a way

666
00:35:25,520 --> 00:35:30,400
Speaker 8: between China and the advanced market democracies. Whether that continues,

667
00:35:30,440 --> 00:35:32,200
Speaker 8: I think is going to remains to be seen. I

668
00:35:32,239 --> 00:35:34,480
Speaker 8: mean President Trump, you know, has sort of thrown a

669
00:35:34,520 --> 00:35:37,400
Speaker 8: rentional plan. He talked about this massive reset in the

670
00:35:37,480 --> 00:35:40,759
Speaker 8: US China relationship as a result of these talks, you know,

671
00:35:40,920 --> 00:35:44,200
Speaker 8: in Geneva's not clear what that means, but he did

672
00:35:44,239 --> 00:35:46,080
Speaker 8: say we are going to open our market to them.

673
00:35:46,120 --> 00:35:48,960
Speaker 8: They're going to open their market to US. I don't

674
00:35:49,000 --> 00:35:52,160
Speaker 8: know what he means by that, but one possibility would

675
00:35:52,200 --> 00:35:56,840
Speaker 8: be to permit some of those companies, Chinese companies like

676
00:35:56,920 --> 00:36:01,960
Speaker 8: c at L, which produce batteries, to actually manufacture.

677
00:36:01,320 --> 00:36:02,000
Speaker 2: In the US.

678
00:36:02,320 --> 00:36:06,840
Speaker 8: So we may see some rethinking about that technology balance.

679
00:36:07,160 --> 00:36:11,640
Speaker 2: Liz thirty seconds. Should we let China evs into America?

680
00:36:12,080 --> 00:36:14,239
Speaker 8: I have to say this is an area where I

681
00:36:14,280 --> 00:36:19,040
Speaker 8: think we need to protect our market and or we

682
00:36:19,120 --> 00:36:21,600
Speaker 8: need to find a way to, I think, thoughtfully address

683
00:36:21,640 --> 00:36:24,759
Speaker 8: the subsidies that China puts in not only EVS, all

684
00:36:24,800 --> 00:36:27,640
Speaker 8: of those made in China twenty twenty five products. I

685
00:36:27,640 --> 00:36:29,920
Speaker 8: think until we do that, the tariffs are probably a

686
00:36:29,960 --> 00:36:30,399
Speaker 8: good move.

687
00:36:30,640 --> 00:36:32,759
Speaker 2: See how she goes British. There she goes right back

688
00:36:32,800 --> 00:36:37,480
Speaker 2: to infant industry theory. Elizabeth economy, thank you, thank you

689
00:36:37,560 --> 00:36:40,120
Speaker 2: so much. Out of Michigan and how it stands for

690
00:36:40,160 --> 00:36:43,600
Speaker 2: the Hoover Institution. And I can't say enough about her books.

691
00:36:43,600 --> 00:36:46,240
Speaker 2: I'll do something out on Twitter and LinkedIn and today

692
00:36:46,280 --> 00:36:50,359
Speaker 2: with some of her brilliant books on Beijing and their politics.

693
00:36:50,920 --> 00:36:54,840
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

694
00:36:54,880 --> 00:36:57,920
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

695
00:36:57,920 --> 00:37:00,960
Speaker 1: Auto with the Bloomberg Business app. You can also listen

696
00:37:01,040 --> 00:37:04,320
Speaker 1: live on Amazon Alexa from our flagship New York station.

697
00:37:04,840 --> 00:37:07,680
Speaker 1: Just say Alexa, play Bloomberg eleven thirty.

698
00:37:07,640 --> 00:37:09,440
Speaker 2: Sign for the newspaper. It's going to get right to it.

699
00:37:09,520 --> 00:37:13,600
Speaker 2: She had a choice of like fourteen really crazy stories

700
00:37:13,600 --> 00:37:16,239
Speaker 2: today she would have down to eight. What do you got, Lisa?

701
00:37:16,360 --> 00:37:16,879
Speaker 2: What do you have this?

702
00:37:17,160 --> 00:37:17,399
Speaker 4: Okay?

703
00:37:17,400 --> 00:37:18,920
Speaker 9: I want to start with some tech news. This was

704
00:37:18,960 --> 00:37:22,160
Speaker 9: a good one from Mark German. He says Apple plants

705
00:37:22,160 --> 00:37:25,040
Speaker 9: to add this eye scrolling feature to that nearly thirty

706
00:37:25,040 --> 00:37:30,560
Speaker 9: five hundred dollars vision pro headset. Okay, So side I scroll, Okay,

707
00:37:30,600 --> 00:37:34,000
Speaker 9: not ie roll that your teenagers give you my scroll? Okay,

708
00:37:34,080 --> 00:37:35,959
Speaker 9: Like if you're looking on YouTube, it's when your eyes

709
00:37:36,040 --> 00:37:39,120
Speaker 9: kind of up and down and you can change the apps. Okay,

710
00:37:39,120 --> 00:37:41,960
Speaker 9: So how it works? Yes, you scroll through the software

711
00:37:42,239 --> 00:37:45,439
Speaker 9: with your eyes on the vision Pro headset. Okay, works

712
00:37:45,480 --> 00:37:49,520
Speaker 9: across all their apps. What users are doing now is

713
00:37:49,560 --> 00:37:52,760
Speaker 9: that they're scrolling with their eyes, but then they select

714
00:37:52,880 --> 00:37:56,799
Speaker 9: by pinching their fingers, So now you don't need the

715
00:37:56,800 --> 00:37:58,960
Speaker 9: fingers apparently you'll just do the eyes.

716
00:37:59,480 --> 00:38:01,640
Speaker 5: But it works.

717
00:38:02,480 --> 00:38:06,600
Speaker 2: Is all this stuff remotely successful? Not only Apple, but

718
00:38:07,200 --> 00:38:10,319
Speaker 2: Facebook and the others. I just I get the whole

719
00:38:10,600 --> 00:38:12,600
Speaker 2: dream of it. I don't want to be an old

720
00:38:12,840 --> 00:38:16,799
Speaker 2: you know, fogy boring born. But the future are your

721
00:38:16,880 --> 00:38:18,480
Speaker 2: kids using it? My kids have no.

722
00:38:18,480 --> 00:38:20,640
Speaker 9: Interest in My kids have no interest in it, but

723
00:38:20,719 --> 00:38:23,400
Speaker 9: they they've tried the eck. They've tried the eye tracking

724
00:38:23,400 --> 00:38:25,360
Speaker 9: feature before with the iPhone. I mean it was for

725
00:38:25,440 --> 00:38:28,359
Speaker 9: like people with disabilities and things like that, and other

726
00:38:28,400 --> 00:38:31,759
Speaker 9: people have tried it. But they're just trying anything to

727
00:38:31,800 --> 00:38:33,480
Speaker 9: get this Vision Pro like you know, the.

728
00:38:34,920 --> 00:38:35,879
Speaker 3: Pro starts at.

729
00:38:38,239 --> 00:38:39,319
Speaker 2: Yeah, there you go, there you go?

730
00:38:39,440 --> 00:38:42,920
Speaker 9: Enough said next, they're trying to get some spark behind it. Okay,

731
00:38:42,960 --> 00:38:45,680
Speaker 9: So what does it mean to be a reader? We're

732
00:38:45,680 --> 00:38:48,239
Speaker 9: talking about eyes right reading a book. So the Financial

733
00:38:48,320 --> 00:38:51,239
Speaker 9: Time says that gen z could be changing the definition

734
00:38:51,320 --> 00:38:53,880
Speaker 9: of what it means to be a reader because a

735
00:38:53,920 --> 00:38:56,080
Speaker 9: lot of these are early teens to late twenties. Just

736
00:38:56,160 --> 00:38:58,640
Speaker 9: to give you an idea, A lot of reports show

737
00:38:58,719 --> 00:39:01,000
Speaker 9: that they're not reading for pleasure, They're not doing this,

738
00:39:01,520 --> 00:39:04,600
Speaker 9: but what Financial Times it says they are. Readers are

739
00:39:04,680 --> 00:39:08,520
Speaker 9: just shifting in how they read. So for example, they

740
00:39:08,719 --> 00:39:11,880
Speaker 9: like audio books, they like online reading communities, they like

741
00:39:11,920 --> 00:39:15,480
Speaker 9: heading to YouTube, social media, following book influencers. So it's

742
00:39:15,600 --> 00:39:19,319
Speaker 9: changing how reading is by books less.

743
00:39:19,360 --> 00:39:21,080
Speaker 4: And I'm really just said about that. I used to

744
00:39:21,120 --> 00:39:24,080
Speaker 4: be a very good reader, not a very good okay,

745
00:39:24,120 --> 00:39:27,279
Speaker 4: but I I'm not. And I say this summer, I'm

746
00:39:27,280 --> 00:39:29,160
Speaker 4: going to be reading on the beach. That's but I

747
00:39:29,160 --> 00:39:29,920
Speaker 4: said that last summer.

748
00:39:29,920 --> 00:39:31,200
Speaker 9: Is it because you're on your phone?

749
00:39:31,239 --> 00:39:35,040
Speaker 4: Yes, yes, okay, yeah it's Joe wasn't.

750
00:39:34,920 --> 00:39:38,160
Speaker 2: All about this. And we're both actively reading at home

751
00:39:39,920 --> 00:39:44,040
Speaker 2: just as almost as a symbol. Again it's a protest.

752
00:39:44,800 --> 00:39:47,600
Speaker 2: I would say, yeah, and I'm going I'm failing at

753
00:39:47,640 --> 00:39:49,439
Speaker 2: home every day with the kids. It's like we could

754
00:39:49,440 --> 00:39:50,279
Speaker 2: see why look at that.

755
00:39:50,360 --> 00:39:54,879
Speaker 4: You know, university campuses at one of the market centerpieces

756
00:39:54,920 --> 00:39:58,080
Speaker 4: of Loemost, every campus is the library. My question is

757
00:39:58,200 --> 00:40:01,560
Speaker 4: what function does A lot I very served today, I don't.

758
00:40:03,040 --> 00:40:05,799
Speaker 2: Know, you know, to me.

759
00:40:07,360 --> 00:40:09,799
Speaker 9: Next that was terriblest Sorry, I knew you would get

760
00:40:09,880 --> 00:40:10,399
Speaker 9: under your skin.

761
00:40:10,440 --> 00:40:11,319
Speaker 2: That's why I picked these.

762
00:40:11,400 --> 00:40:11,719
Speaker 1: Come on.

763
00:40:12,480 --> 00:40:15,160
Speaker 9: Okay, So if you haven't decided on your summer vacation yet,

764
00:40:15,480 --> 00:40:19,160
Speaker 9: trip Advisor has their annual summer Summer Travel Index, so

765
00:40:19,360 --> 00:40:19,840
Speaker 9: here you go.

766
00:40:19,920 --> 00:40:20,720
Speaker 7: When it comes to.

767
00:40:20,560 --> 00:40:24,319
Speaker 9: Top global sum summer travel destinations for Americans, number one

768
00:40:24,360 --> 00:40:27,080
Speaker 9: is actually Cancun, Mexico. If you want to be on

769
00:40:27,120 --> 00:40:29,360
Speaker 9: the beach, you can't coun Mexico. Apparently that's the number

770
00:40:29,360 --> 00:40:33,719
Speaker 9: one on spot Paris, France. Second, there you go, Tom Third, London.

771
00:40:34,520 --> 00:40:35,359
Speaker 3: So that's the order.

772
00:40:35,400 --> 00:40:37,839
Speaker 9: Now when you talk domestic like here in the US,

773
00:40:38,440 --> 00:40:46,000
Speaker 9: lots of vacant yes, yes, yes, Number two, Hey, we

774
00:40:46,000 --> 00:40:47,600
Speaker 9: don't have to go far. It's New York City, So

775
00:40:47,800 --> 00:40:50,960
Speaker 9: there you go. And then number three is Myrtle Beach.

776
00:40:51,360 --> 00:40:53,680
Speaker 9: But they say they also want yes, I do do,

777
00:40:54,200 --> 00:40:56,000
Speaker 9: and we'll do, we'll get the drive.

778
00:40:56,400 --> 00:40:57,960
Speaker 4: You can do everything there, Yes.

779
00:40:57,719 --> 00:41:00,239
Speaker 9: And you can, and it's beautiful. But would be they're

780
00:41:00,239 --> 00:41:02,560
Speaker 9: saying too, is they want more experiences. So I don't

781
00:41:02,560 --> 00:41:04,560
Speaker 9: know if when you go on vacation, if you do

782
00:41:04,880 --> 00:41:07,480
Speaker 9: the whole excursion thing, and like they're saying more people

783
00:41:07,520 --> 00:41:09,480
Speaker 9: want that rather than just sit on the beach.

784
00:41:09,960 --> 00:41:13,719
Speaker 2: That's the whole travel thing is turned upside down. And

785
00:41:13,760 --> 00:41:17,279
Speaker 2: I noticed in the inflation report yesterday airlines actually at

786
00:41:17,280 --> 00:41:19,399
Speaker 2: a negative statistic. Yeah, it was down.

787
00:41:19,719 --> 00:41:22,160
Speaker 4: All the airlines kind of hould their guidance, lower their guidance.

788
00:41:22,239 --> 00:41:26,040
Speaker 2: Yeah, yeah, newspapers. Lisa Mateo, thank you so much, greatly

789
00:41:26,080 --> 00:41:26,759
Speaker 2: appreciate that.

790
00:41:27,239 --> 00:41:32,080
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

791
00:41:32,200 --> 00:41:36,480
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

792
00:41:36,640 --> 00:41:39,840
Speaker 1: seven to ten am Easter and on Bloomberg dot Com,

793
00:41:40,000 --> 00:41:43,800
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

794
00:41:44,120 --> 00:41:47,240
Speaker 1: You can also watch us live every weekday on YouTube

795
00:41:47,520 --> 00:41:49,520
Speaker 1: and always on the Bloomberg terminal