Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: Right now, Secretary Page joins Sebastian that Page has had
Speaker 2: a global multi asset definitive undiversification here at tea row
Speaker 2: Price Sebastian after this, this non breadth rally, this lack
Speaker 2: of dispersion, I think it's three stocks as the reason
Speaker 2: we're going up. How do you rediversify? How do you rebalance?
Speaker 2: Or do you just stay with it?
Speaker 3: You know, Tom, when you're at a cocktail party and
Speaker 3: someone finds out you're an investment business, want advice right
Speaker 3: and I always feel like you don't have enough time
Speaker 3: to do this, So I always stay stay invested, stay diversified.
Speaker 3: Right now, I would say stay invested, stay diversified. Hedge
Speaker 3: inflation risk. I think it's important investors to diversify their hedges,
Speaker 3: not just treasuries, but holds in cash, some hedged equities,
Speaker 3: some tips, some real asset equities.
Speaker 2: You know, look Sebastian at the card and rule here,
Speaker 2: the technology doesn't play like an industrial if yields go up,
Speaker 2: what does the technology sector typically do?
Speaker 4: You know?
Speaker 3: I think the typical is hard to describe because it's duration,
Speaker 3: it's sensitivity to interest rate moves has been highly unstable historically.
Speaker 3: You know what matters right now, Tom, is the earnings.
Speaker 3: The earnings growth projected for the next twelve months for
Speaker 3: US large gap growth stocks are at twenty eight percent.
Speaker 3: That's the highest it's been in my twenty five year chart. Now,
Speaker 3: you could say that's a high bar, but those are
Speaker 3: companies that tend to meet that high bar. So Tom,
Speaker 3: we're still along the broadening trade, but we've taken about
Speaker 3: half the profits and we've been moving money from international
Speaker 3: back to the US. US ultimately is an et exporter
Speaker 3: of oil. Europe is much more exposed. Those earnings are phenomenal,
Speaker 3: and the evaluations for large cap growth stocks they're actually
Speaker 3: lower than their five year average. So that's the move
Speaker 3: we're doing now. It doesn't mean to your introduction that
Speaker 3: we're concentrating the portfolio. It just boils down to balancing,
Speaker 3: taking a little bit risk of risk, active risk off
Speaker 3: the table. And I go back to stay invested state
Speaker 3: diversified hedge. Inflation risk tom more neutral between stocks and bonds.
Speaker 5: Right now, Sebastian inflation. It's there, and a lot of
Speaker 5: folks are saying it's going to become even more pronounced
Speaker 5: in the back half of twenty twenty. How does one hedge.
Speaker 3: That you can diversify the hedges. One way is to
Speaker 3: have a short duration position, so hold some cash. You
Speaker 3: can also hold some short term tips. Of course, a
Speaker 3: lot of people like to buy gold or metals. We
Speaker 3: like to do that through stocks, so metal stocks and
Speaker 3: energy stocks. I think there's still time to establish those hedges.
Speaker 3: Even though it's already happened, right the oil shock has
Speaker 3: already happened, I think the risk is still there on
Speaker 3: the table. So that's another way. Another way we like
Speaker 3: is just to hedge equities. You know, hedged equities give
Speaker 3: you a little bit of asymmetry. You give up some
Speaker 3: of the upside, but you hedge your tail risk. And
Speaker 3: any portfolio where treasuries might not hedge you really well.
Speaker 3: If you get an inflation shock, you start building some
Speaker 3: positions that help you make up for the failure of
Speaker 3: treasuries and an inflation shock.
Speaker 5: And Sebastially, you call that earnings and we're just finishing up.
Speaker 5: It's turned out to be a really solid earning season
Speaker 5: for corporate America. Are the earnings and earnings forecasts enough
Speaker 5: to support this market?
Speaker 3: I think so, and I think this can continue. The
Speaker 3: earnings momentum is remarkably strong. The last estimate I saw
Speaker 3: for ai cap X is three trillion by twenty twenty eight.
Speaker 3: Of course it sets a high bar, and chips are
Speaker 3: more cyclical than other sectors. Of course, there's a lot
Speaker 3: of this that's priced thin. Look, I don't like the
Speaker 3: bubble comparisons, the tech bubble, the Internet. But you know,
Speaker 3: if you look at trailing price to cash, trailing price
Speaker 3: to sales, those metrics are actually higher than during the
Speaker 3: Dot Com But I will say this fall but margins,
Speaker 3: margins are double.
Speaker 2: Sebastian Page, Thank you so much. Sebastian. You think Montreal
Speaker 2: can do it? You think it past the Savers? Do
Speaker 2: you think Montreal can take out the Carolinas.
Speaker 3: I'm all in on montre all all the time, Tom,
Speaker 3: Given my French Canadian heritage, it's just completely on bias.
Speaker 2: I do tear up. I get misty eyed like Taylor Kendall,
Speaker 2: and I would be misty eyed if Sebastian Tyler Kendra,
Speaker 2: excuse me if I brought If Sebastian brought in the torch,
Speaker 2: you know, wash your torch, twenty thousand people at the
Speaker 2: Bell Center, Sebastian, that would be great. Sebastian Page, Thank
Speaker 2: you so much from Sherbrook and I've always tea wrote
Speaker 2: price as well. Stay with us more from Bloomberg Surveillance
Speaker 2: coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on Apple,
Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Ian Lincoln taught me this price down yield up, but
Speaker 2: it's the rate of change. You got a five point
Speaker 2: one zero thirty or I've got a four point this up,
Speaker 2: Ian go. Ian Lincoln wouldn't do this, but it's entertainment, Connie,
Speaker 2: and stay with me. Four point five six percent and
Speaker 2: a ten year yield four point zero six and the
Speaker 2: Sweeney two year yield. The interview of the Day for
Speaker 2: Global Wall Street Ian Lincoln of the Bank of Montreal
Speaker 2: Demo Capital Markets. The tickets you got me for Saturday,
Speaker 2: I almost teared up. Thank you, the AA box right
Speaker 2: at the goal line. I looked those up on stub hup.
Speaker 2: Two tickets eighty five hundred dollars. Thank you, Bank of Montreal.
Speaker 2: I'm glad you appreciate it. Good. What's the first and
Speaker 2: second derivative of this bott move the convexity? We say,
Speaker 2: what's the rate of change that we need to know about?
Speaker 6: So I'm really worried that what we're seeing in the
Speaker 6: equity market is going to accelerate. We haven't seen a
Speaker 6: breakout of yields to these levels in quite some time,
Speaker 6: and that five percent level for the long bond that matters,
Speaker 6: and it has in the past for equities. So I'm
Speaker 6: keeping an eye on what happens in the stock market today.
Speaker 5: Frankly, what is pushing rates higher?
Speaker 4: Again?
Speaker 5: You mention at the thirty year at five point one
Speaker 5: zero percent, That really gets people's attention. The ten year
Speaker 5: four point fifty five, that breaks out a little bit.
Speaker 5: What's going on there?
Speaker 6: Well, I think we're still trading the conflict in the
Speaker 6: Middle East. We're still worried about the energy complex, we're
Speaker 6: coming off of a series of inflation prints that have
Speaker 6: demonstrated that we're already starting to see some pass through
Speaker 6: to core. There were a few technical adjustments from the
Speaker 6: BLS that propped up the core numbers, so we weren't
Speaker 6: particularly surprised or worried. But the market clearly is. And
Speaker 6: we just went through the ten and thirty year auctions
Speaker 6: and so they're still in the process of being redistributed.
Speaker 6: And as we have seen in the run up to
Speaker 6: pretty much every weekend, we're worried about the event risk
Speaker 6: of those two days in the Middle East, because frankly,
Speaker 6: anything can happen.
Speaker 5: You don't want to hold a risk position over the
Speaker 5: weekendise exactly. I mean, this is telling me. I'm an
Speaker 5: equity guy, so but you know, I try to stay
Speaker 5: away from the bond market. When I see rates move
Speaker 5: higher like this, that just shows me angst in the marketplace.
Speaker 5: And I guess, yes, the angst is for more persistent,
Speaker 5: more stickire inflation. Is that what we're seeing.
Speaker 2: I think that's part of it.
Speaker 6: There's also a fiscal concern, Okay, so the inflation argument
Speaker 6: is fed into by the by the notion that the
Speaker 6: labor market remains on solid footing. We had a higher
Speaker 6: than expected but still low initial jobless claims number. We
Speaker 6: inflation is moving along fine, but not two kill levels
Speaker 6: that are troubling.
Speaker 4: Yet.
Speaker 6: If the unemployment rate had been materially higher, or we
Speaker 6: hadn't had strong payrolls, I think we'd be in a
Speaker 6: much different macro environment.
Speaker 2: In Lincoln with U BMO Capital Markets. He's taken every
Speaker 2: trophy there isn't fixed in comers note dense in extremely
Speaker 2: read on the morning hours. Get that from the Bank
Speaker 2: of Montreal, BMO Capital Markets, BMO Capital Markets. So I
Speaker 2: look at the real yield. There's a number of ways
Speaker 2: to look at this. I've seen a leap here from
Speaker 2: a one ninety out to a two point zero four.
Speaker 2: I got some history at two point one point one.
Speaker 2: What are the ramifications if the ten year really breaks
Speaker 2: out the new territory.
Speaker 6: Well, I think that it depends on how that occurs.
Speaker 6: If it occurs with a compression of break evens because
Speaker 6: inflation expectations have moderated, then I think that the real
Speaker 6: economy can absorb that in it.
Speaker 2: It's a more voyant economy, productivity, innovation in that.
Speaker 6: But if it's a flip side, and you see why
Speaker 6: native break evens and higher real rates that is a
Speaker 6: vote of non confidence of treasuries.
Speaker 2: Nicely explained. Now you're a grizzled pro at this. He's
Speaker 2: got three bloomberg you should see it. I mean, twirivere
Speaker 2: darkens what he dunes in his Bloomberg. Okay, so you've
Speaker 2: got a bond market complexity and the answer is there
Speaker 2: have to be trip points. What's the Ian lingoln trip
Speaker 2: point is that the five year yield the ten year yield?
Speaker 2: Is it something esoteric?
Speaker 6: Well, I think that the world looks at ten year yields.
Speaker 6: I look at the two year yield. There's nothing more
Speaker 6: than reflection of near term monetary policy expectations. And so
Speaker 6: anytime we're over four percent in this environment, that means
Speaker 6: that we're really contemplating rate heights, which I don't think
Speaker 6: should be on the table. The long bond is more
Speaker 6: of an inflation story, and as we see, five handle
Speaker 6: on the thirty year is troubling for a lot of
Speaker 6: different asset classes. So I do think that the shape
Speaker 6: of the curve is going to be the story to
Speaker 6: follow this year.
Speaker 5: Kevin Walsh can be stepping into the big chair at
Speaker 5: the FED that's going to be a little uncomfortable given
Speaker 5: some of the data we're seeing here. I mean, what
Speaker 5: do you think the messaging that's going to come out
Speaker 5: of this new FED chair will be should be? Because
Speaker 5: we're going to hear from in the next few days probably.
Speaker 6: So he has been given a very difficult FED to
Speaker 6: take over. At the moment, Powell's still going to be
Speaker 6: in the room. He's coming in with three descents against
Speaker 6: some of the language within the statement. It's interesting that
Speaker 6: the descents were against the language and not against the
Speaker 6: move itself, as is typically the case. I suspect that
Speaker 6: he's going to have a very hard time building consensus
Speaker 6: over the summer to do anything outside of potentially scale
Speaker 6: back some of the forward guidance. Normally, I would say
Speaker 6: one of his objectives is to talk less in terms
Speaker 6: of being a FED leader, and that could mean at
Speaker 6: some point reducing the SEPs or the dot loot. But
Speaker 6: I don't think anything's happening.
Speaker 2: Say I mentioned this earlier, Governor Myron on yesterday, Faro grilledim.
Speaker 2: I thought John did a great job on the interview,
Speaker 2: and the distinction there is the inflation not so much
Speaker 2: at one off. But is it various supply side even
Speaker 2: demand side shocks or is there a fiscal persistency finally
Speaker 2: to it, how do you parse that? When you look
Speaker 2: at the dynamics of the ian LNCOLN bomb market.
Speaker 6: It does feel as though forward inflation expectations are moving
Speaker 6: higher for the average consumer and the average household. And
Speaker 6: that's what the Fed needs to worry about, because you
Speaker 6: can drill down into CPI and you can see that
Speaker 6: in April, core goods or effectively flat, and that's what
Speaker 6: everyone was worried about last year, the past through. So
Speaker 6: we're beyond the tariff story, but now we're worried about airfares,
Speaker 6: energy prices flowing through to products at the end of
Speaker 6: the day. But that takes months to actually see zero diet.
Speaker 2: A nice summary of a Goldman Sachs note where they
Speaker 2: triangle it out to a four point sixty zero percent
Speaker 2: ten ure yield being important. Do you have in your
Speaker 2: head that trip point on the ten year where things
Speaker 2: change for the stock market.
Speaker 6: I would say that we're right up against it. I
Speaker 6: would say four seventy five. But right now we're just
Speaker 6: chopping around in a range that is reasonably well defined
Speaker 6: and again we're the level of conviction that is in
Speaker 6: this market is so low right now when we talk
Speaker 6: to clients and make the rounds, people just don't know.
Speaker 6: In fixed income space.
Speaker 5: Ten year at four fifty six, I mean the year ender.
Speaker 5: Are we higher here?
Speaker 2: Do you think?
Speaker 6: I think we're lower? But the floor has been certainly
Speaker 6: been increased given the events of the last eight weeks.
Speaker 2: I mean, I'm pounded the bloomberg here. I'm trying to
Speaker 2: pretend like I mean Lincoln no on a triple high
Speaker 2: top at a thirty year bond, pall out of five
Speaker 2: point one zero five point one point one. We're you
Speaker 2: know there there now? If I go c t thirty
Speaker 2: Ian Lncoln taught me how to do this. I went
Speaker 2: to bond camp with Ian Lincoln. Okay, you should say
Speaker 2: Kumbaya and ie bring tears here. If I look at
Speaker 2: the current thirty year bond, I don't know if it's
Speaker 2: going to give me much information here. Let me see
Speaker 2: if I can get it up. But I believe there's
Speaker 2: a price decline involved. If yields go up, prices go down.
Speaker 2: Is it hard for institutions forget about all this financial
Speaker 2: media stuff like alexis the way you quote the yield,
Speaker 2: it brings tears to my eyes. Nobody cares. It's about
Speaker 2: price down right. Is there pain out there into this weekend.
Speaker 6: Into this weekend? I would say less so than we
Speaker 6: saw at the beginning of the conflict. There were a
Speaker 6: lot of position stop outs when this all started. People
Speaker 6: were caught on the wrong direction on the curve, caught
Speaker 6: the wrong direction on duration. Now positions have been paired back,
Speaker 6: and frankly, there's plenty of shorts in the market, so
Speaker 6: this run up could actually be benefiting certain holders.
Speaker 5: But again, as you mentioned, the two year well above
Speaker 5: four percent now, and we don't typically see that in
Speaker 5: this in the last I don't, however, long But I
Speaker 5: mean is that I mean again, that kind of tells
Speaker 5: me that the Fed is more as likely to raise
Speaker 5: rates than the cut rates the next time they move.
Speaker 6: So I think that the two year is very interesting
Speaker 6: at this moment because if you believe what the FED
Speaker 6: has been saying, which is we're pausing on the way
Speaker 6: to further normalization, then two year yields should be at
Speaker 6: or below effective FED funds, and that's in the mid
Speaker 6: three sixties, and we're well above that. So the market
Speaker 6: is saying, either we know the bestone's going to do
Speaker 6: a lot of borrowing in the front.
Speaker 2: Ad Come on, it's a hope and a prayer that
Speaker 2: the hormones opens up, right, I mean, that's all words unlikely.
Speaker 2: An air force one flying back right now, Bemo has
Speaker 2: a golf student should see it's Montreal Canadian colors. It's wonderful,
Speaker 2: red les, blue, be rouge. Okay, So whatever airplane you're
Speaker 2: on in your fancy like Ian Lincoln, this is just
Speaker 2: a hope and a prayer that Iran gets over oil
Speaker 2: breaks and we all go back to fed normal, right.
Speaker 6: I do think that there's a lot of optimism implied
Speaker 6: in the notion it's going to reopen, and you also
Speaker 6: see it in in oil futures. Oil futures should be higher,
Speaker 6: and in the doors are going to draw down. Over
Speaker 6: the summer, I go.
Speaker 2: You know, when I took the Bemoh summer camp with
Speaker 2: the Ligan course, you don't look at the c T thirty.
Speaker 2: You look at the old old like there's different old
Speaker 2: old bonds, Paul. Since the end of February, the thirty
Speaker 2: year bond on price, not yield, folks, not the way
Speaker 2: bow type people talk ian We're down seven point five
Speaker 2: five percent thirty one percent annualized. Is that a bear
Speaker 2: market in bonds? Is that where we are.
Speaker 6: Certainly has been a bear market in the thirty year sector.
Speaker 6: There's no question about that.
Speaker 5: You know, movements in the bond marker. We're talking bomb marking.
Speaker 5: I'm all fired up. Where's Lisa Rows?
Speaker 2: I just start going. She's off the door. She's going.
Speaker 2: She's like she's rocking it. She's going skiing somewhere.
Speaker 7: Ohe like way like North Okay, like band for something?
Speaker 7: Can I do one more question? I mean they didn't
Speaker 7: pull Dobish last night. I mean Montreal took out Buffalo.
Speaker 2: It was enough. It was just magical to see. Explain
Speaker 2: the culture. I mean, we're all witnessing this as outsiders.
Speaker 2: Twenty thousand mental people in the Bell Center, twenty thousand
Speaker 2: mental people outside the Bell mentor they have a portrait
Speaker 2: of Leonard Cohen on a Bank of Montreal building and
Speaker 2: they got up dressed in a habs explain culture of
Speaker 2: the Montreal Canadians to the Bank of Montreal and all
Speaker 2: of the city.
Speaker 6: I do think there's a lot of history and they're
Speaker 6: very proud of that history. I think you can see
Speaker 6: it in the sports, you can see it in the culture,
Speaker 6: you can see it in the music. So I do
Speaker 6: think that the Bank of Montreal is a very good
Speaker 6: representation of that culture.
Speaker 2: Can you get rush tickets for the summer? Ian? Thank
Speaker 2: you so much. I love busting his chops because Ian
Speaker 2: plays it so straight and he is so excellent with
Speaker 2: his work over the years with Pimo at Capital Marcus
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: What we're gonna do here, which a lot of people
Speaker 2: don't know, is how did we get here? And I
Speaker 2: don't mean Kissinger's sitting in the Piece hotel in Shanghai.
Speaker 2: Are on the way to Beijing. And for all of
Speaker 2: us fossils the shock of seventy two and Nixon with us,
Speaker 2: Robert Hormants, some people talk other people? Do you? And
Speaker 2: Winston Lord got this going back then? There had to
Speaker 2: be literally like Columbus looking over the horizon. Tell us
Speaker 2: about what Winston Lord, with your assistance on economics, Ambassador,
Speaker 2: what was the shing I communicate like to jumpstart this
Speaker 2: new Asia US nexus.
Speaker 4: It's a great question, and I wrote a piece about
Speaker 4: it in Foreign Affairs to document this. The goal at
Speaker 4: that point was to try to make the relationship more normal,
Speaker 4: to deal with a whole series of problems that had
Speaker 4: been built up over twenty five years of no communication,
Speaker 4: no trade, no investment. And of course the key issue
Speaker 4: on the minds of both the Chinese and the Americans
Speaker 4: was Taiwan and Joe and Lai, who was the premier
Speaker 4: of China who was their negotiator, and Henry Kissinger, who
Speaker 4: Wasson's negotiator, and both formidable people on their own, decided
Speaker 4: they would need some compromise language and the Shinghai Declaration
Speaker 4: that still is the centerpiece of China US relations on
Speaker 4: that issue was worked out between the two of them,
Speaker 4: and that opened the way to a building up of confidence.
Speaker 4: And then after that we came up with a few
Speaker 4: economic issues that we can use to normalize relations, to
Speaker 4: increase trade incrementally, and it built from there. But it
Speaker 4: was trust and confidence and precise planning, and we're critical
Speaker 4: to this and trust.
Speaker 2: Which of course the Trump administration is wonderful and just
Speaker 2: because of time and Paul wants to get in here
Speaker 2: with some real questions. I've got to ask you this
Speaker 2: President g seems to venerate the pre cho in like China.
Speaker 2: He wants to go back to Mao. He wants to
Speaker 2: go back to a more rigid, tougher China. When you
Speaker 2: see the turmoil with their defense leaders, generals, they're admirals,
Speaker 2: when you see just the clock ticking, is there any
Speaker 2: chance President, she can pull back and become more like
Speaker 2: the China.
Speaker 4: Robert Pormance new Well, I think he's I know him
Speaker 4: quite well because I've worked with him since he was
Speaker 4: the Party secretary and Juan Province, which was in the nineties.
Speaker 4: He's a very methodical person and he does sort of
Speaker 4: venerate Mao, but he also realizes Mao had a number
Speaker 4: of issues that made him controversial. But there are two
Speaker 4: parts of the Mau background that are extremely important to understand.
Speaker 4: Mao made one point that we've been bullied by the
Speaker 4: foreigners over the last one hundred years, and we're not
Speaker 4: going to be bullied again, and she is very much
Speaker 4: of the view that that must be a critical part
Speaker 4: of China's strategy to be invulnerable to bullying or pressure
Speaker 4: or leveraged by the foreigners. The second is that Mao understood,
Speaker 4: and she understands that the fall of the Soviet Union
Speaker 4: was in part because they did not have a lot
Speaker 4: of trading partners. They were confined to very few products
Speaker 4: that they produced and a very few countries to sell
Speaker 4: them too. And he Shi Jinpain was going to make
Speaker 4: sure that China had a broad range of trading partners
Speaker 4: and had a very diversified economy and therefore could not
Speaker 4: be leveraged by the United States or anyone else. Those
Speaker 4: were really two key points that he draws from the
Speaker 4: mal period and the fall of the Soviet Union. And
Speaker 4: let me make one other point follows up your point, Tom,
Speaker 4: and that is, if we learned anything from this summit,
Speaker 4: it is that for the first time in nearly one
Speaker 4: hundred years, the US has a peer competitor, a peer
Speaker 4: competitor on military issues, political issues, technology issues, and he
Speaker 4: can issues and appear both in scale and in skill.
Speaker 2: We have.
Speaker 4: If we didn't know that before, we know it now.
Speaker 2: If Paul David Weston had a brilliant insight I think
Speaker 2: it was yesterday or the day before on how we
Speaker 2: were back in the time of Robert Hormance and there's
Speaker 2: a whole new China out there.
Speaker 5: There is, so Bob, what is some of your takeaways
Speaker 5: or what are some of your takeaways from this President Trump,
Speaker 5: President g I guess we call it a summit here.
Speaker 5: I'm not sure what was really accomplished, But what are
Speaker 5: your takeaways?
Speaker 4: Well, my takeaway is that Trump came to understand that
Speaker 4: China is a peer competitor, unlike any we have seen
Speaker 4: for as I say, nearly one hundred years. The second
Speaker 4: is that China does business negotiates in a very different
Speaker 4: way Trump Trump came in with a great deal of
Speaker 4: flattery of she Chinese does not necessarily take the flattery.
Speaker 4: And she came in with a very crisp agenda and
Speaker 4: was particularly crisp on Taiwan. And I think it was
Speaker 4: because he had picked up and the Chinese authorities had
Speaker 4: picked up that there was a lot of pressure in
Speaker 4: Washington on Trump to in effect give away a little
Speaker 4: bit on Taiwan, to move closer to the Chinese position
Speaker 4: on Taiwan. But also so the people in Washington wanted
Speaker 4: a statement or something that was clear that said we
Speaker 4: would we would toughen up our support for Taiwan. And
Speaker 4: she wanted to make sure that that issue did not
Speaker 4: arise and that the United States did not use this
Speaker 4: summit to make any statements that were pro Taiwan or
Speaker 4: gave Taiwan additional power in terms of at least verbal
Speaker 4: support from the United States. Trump she wanted to avoid that.
Speaker 4: That's why he made the statement very early on I
Speaker 4: mess around with Taiwan.
Speaker 5: Yeah, the first two readouts of the first day were
Speaker 5: very different. President Trump brought a planeload of American CEOs
Speaker 5: over to Beijing. Here. Do you think Beijing as wants
Speaker 5: to do business with the US with the West?
Speaker 2: Here?
Speaker 4: Yes, I think that they realized that they have a need.
Speaker 4: They see a lot of companies looking for new supply
Speaker 4: chains diversifying away from China.
Speaker 2: Yep.
Speaker 4: They want to make sure that they don't that that
Speaker 4: does not continue. And therefore I think it was smart
Speaker 4: to bring those CEOs and every one of them has
Speaker 4: the potential to make a deal that can actually enhance
Speaker 4: our capability and maybe theirs. The problem is has a
Speaker 4: lot of them encounter a lot of complex difficulties on
Speaker 4: regulatory issues, intellectual property issues.
Speaker 2: So they killed me, Bob Homer sos, they've been to
Speaker 2: interrupt here. So we brought over a bowtload of billionaires.
Speaker 2: See you there were what's the shoes of the white souls? Yeah,
Speaker 2: they're all decked out of the Laura Piano shoes. Hormance
Speaker 2: would be called dem noos. We didn't take Nicholas Burns,
Speaker 2: we didn't take William Burns. We didn't take Robert Ormatz,
Speaker 2: we didn't take the detrees of James Baker out of
Speaker 2: Rice University. Can we rebuild your world at State?
Speaker 4: Not in the way we're doing it now. If you
Speaker 4: look at the number of diplomats who Trump took over
Speaker 4: relative to the number of CEOs he took over, the
Speaker 4: latter vastly outnumbered the former. And I think that China
Speaker 4: is a matter of building trust, and China trusts a
Speaker 4: few people who've worked on China, not that they always
Speaker 4: agree with them, but there are a lot of There
Speaker 4: are several diplomats, and Nick Burns is certainly one. I
Speaker 4: think I'm another, and there's several others who have a
Speaker 4: long history with China. I think he would have done
Speaker 4: well to consult with those people and bring them over
Speaker 4: to show continuity with the China, the knowledgeable people about
Speaker 4: China from the past, not necessarily that we agree with
Speaker 4: that quick. That would be a way I got a run.
Speaker 2: Can we do a once a month thing with you?
Speaker 2: Can your people talk to my people so we can
Speaker 2: figure out it once a month? Stay with us. More
Speaker 2: from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us live on YouTube.
Speaker 2: We welcome all of you across America as we try
Speaker 2: to recover from China, the pomp, the circumstance. Henrietta Trees,
Speaker 2: of course with Ada Partners, is fab on this and
Speaker 2: she remembers Monday, February twenty eighth, nineteen seventy two, Richard
Speaker 2: Nixon got off the airplane at Andrews Air Force Base
Speaker 2: and it was a ginormous deal back then.
Speaker 8: It's a big deal now and it's amazing that the
Speaker 8: core takeaway is Taiwan and not know the tariffs or
Speaker 8: soybean purchases or even ai with all those CEOs on board,
Speaker 8: it's Taiwan.
Speaker 2: Well, Lindsay Graham's going to say, I don't care about Taiwan,
Speaker 2: even though I do. What are we going to do
Speaker 2: about jerrymandering? What are we going to do about the midterms?
Speaker 2: For these midterms is it's so messed up in a
Speaker 2: Henrietta tresway that the new September is may. I mean,
Speaker 2: are we just more intense and closer to the election
Speaker 2: now that.
Speaker 9: We think we are very close to the election.
Speaker 8: You're right to point out September people vote early more now,
Speaker 8: especially since the pandemic, and people are really engaged and
Speaker 8: ready to vote, and you can see that in the
Speaker 8: swings that we're seeing in the special elections. Unfortunately, it's
Speaker 8: disproportionately in favor of Democrats right now. They're winning the
Speaker 8: special elections by an average of twelve points, and that's
Speaker 8: because of huge democratic engagement, independent voter engagement, and there's
Speaker 8: new polling data out this morning that shows that voters
Speaker 8: support their party jerrymandering the heck out of the House
Speaker 8: of Representatives. There's huge support from Republicans and Democrats to
Speaker 8: do whatever it takes get your guy in.
Speaker 2: So I would.
Speaker 5: If I would at the Republican National Committee, I don't
Speaker 5: know what to do. I'd be apoplectic. I've got tariffs
Speaker 5: not polling well. I've got higher energy prices not polling well.
Speaker 5: The Warner around and not polling well. What did the
Speaker 5: Republicans do come to these midterms?
Speaker 8: Yeah, and I think that there's going to be a
Speaker 8: real interest in seeing whether these gerryman during efforts are
Speaker 8: going to work, because the data that they're working off
Speaker 8: of was a hugely robust Republican wave in twenty twenty four.
Speaker 8: When you've got majorities in the House, the Senate, and
Speaker 8: the President. But now you're hemorrhaging votes with black voters,
Speaker 8: Hispanic voters, and in particular, young males, and you've lost
Speaker 8: independence precisely because of the reasons that you just listed.
Speaker 8: It's inflation, it's energy costs. Voters didn't like the tariffs,
Speaker 8: and they didn't like the developments and the killings in Minnesota,
Speaker 8: and they absolutely hate the fact that they're paying more
Speaker 8: for gas.
Speaker 5: Right now, that being said, I'm not seeing anything out
Speaker 5: of the Democrats. I thought I seeing some voices just
Speaker 5: come pop up and say this is my time. I mean,
Speaker 5: these guys Republicans are really at rich. I'm going to
Speaker 5: pop up at it and you know, anywhere around the
Speaker 5: country and say I'm the voice of the Democrats. Are
Speaker 5: I'm not seeing that?
Speaker 9: No, definitely not.
Speaker 8: And you have individual states where there's a member that
Speaker 8: can really pipe up. I would say Mary Peltola and Alaska,
Speaker 8: tall Ico and Texas. There's some interest obviously in Maine.
Speaker 8: But you're absolutely right, there's still a even less.
Speaker 9: Popular than Republicans as Democrats.
Speaker 2: In studio on Friday Henrietta Trees Veta partners as well.
Speaker 2: So paint this picture for us and give us your
Speaker 2: wonderful perspective. Mister Clydeburne of the Carolinas, I guess is
Speaker 2: protected from jerymandering the Black Caucus is Does the Black
Speaker 2: Caucus go away? Does it become an artifact of the
Speaker 2: nineteen sixties.
Speaker 8: Well, I don't know that clyburn seat is necessarily going
Speaker 8: to be safe. I mean South Carolina is thinking about
Speaker 8: what they want to do in terms of jerrymandering and
Speaker 8: the response.
Speaker 9: You can see it across the country.
Speaker 8: I mean I live in louis and they just wiped
Speaker 8: out two seats in Louisiana as well, from both black representatives.
Speaker 8: It's it's a very heavy lift, and it's happening right
Speaker 8: when they had been making games with black voters. You know,
Speaker 8: you see thirty percent approval ratings in the conference that
Speaker 8: want to vote, and that's a huge win amongst black
Speaker 8: voters going out mince words.
Speaker 2: The tweet of the day yesterday was Gety goopin at
Speaker 2: the Harvard who put out the photo with a blistering
Speaker 2: note on how it was all male in China. Everybody
Speaker 2: looked the same on the right side of the table
Speaker 2: as a stereotype, everybody looked the same on the left
Speaker 2: side of the table. Are we going back to an
Speaker 2: all white Congress?
Speaker 8: That's definitely the direction that you're seeing, especially on the
Speaker 8: House side.
Speaker 9: The Senate at least has.
Speaker 2: That is Congress is the House.
Speaker 8: Yeah, yeah, the House side is definitely moving away from
Speaker 8: anything that looks like a voting rights Act. You know,
Speaker 8: the reason that we passed it, and that's that's been
Speaker 8: wiped out now.
Speaker 5: So I'm not sure if Congress is back in session,
Speaker 5: because every time I talk to you, you're telling me
Speaker 5: they're either in recess or so I'm on recess.
Speaker 2: She's working like a three day work.
Speaker 5: Exactly what's on the to do list for our congress
Speaker 5: these days?
Speaker 8: That's a great question, and I think it provides a
Speaker 8: lot of direction about how long the street's going to
Speaker 8: be closed, what lawmakers are actually thinking. There are two
Speaker 8: bills that I would concentrate on right now. The first
Speaker 8: is the Authorization and Military Force. There's a bill that's
Speaker 8: introduced that will allow the president to perpet the weight
Speaker 8: the war through September first. Okay, that's the shortest version.
Speaker 8: The longest one is Tom Tillis's, which is a year.
Speaker 8: And then even more telling is the gas tax holiday.
Speaker 8: They don't have the votes for it, but in order
Speaker 8: to understand how long they think gas prices are going
Speaker 8: to be high, note that they give the president through
Speaker 8: December fifteenth, of twenty twenty six to suspend the gas
Speaker 8: can I.
Speaker 2: Do a Friday audible post. Sure. I was talking to
Speaker 2: somebody up in the food court last yesterday. I was,
Speaker 2: you know, having a I think it was a mohito
Speaker 2: know something like yeah like that, And here was his zeitgeist.
Speaker 2: Rubio's going to step away after the terms best will
Speaker 2: become Secretary of State, preparing to be vice president under
Speaker 2: President Rubio. Are animals like you in Washington actually thinking
Speaker 2: things like that.
Speaker 8: Well, animals like me have to think about it, because
Speaker 8: animals like hedge funds have to think about it. And
Speaker 8: they definitely asked me this question all the time. The
Speaker 8: question is is it going to be Vance at the
Speaker 8: top of the ticket or Rubio? The way that I
Speaker 8: think about it, and I'm a veteran of New Jersey politics,
Speaker 8: so we go after whoever is the least unpopular, and
Speaker 8: Marco Rubio is substantially less unpopular than JD. Vance Right now,
Speaker 8: I think it's about twelve points. So in the parlor
Speaker 8: game of who's at the top, I think Rubio.
Speaker 2: For should he raise money?
Speaker 8: Oh, absolutely no question from the Florida Republican juggernaut that
Speaker 8: exists now, I think absolutely Well.
Speaker 2: Get one more, something more smarter.
Speaker 5: Than mid terms coming up again. I think the consensus
Speaker 5: was building that the Democrats would have a chance to
Speaker 5: really get control of the House, maybe even the Senate.
Speaker 5: That has that changed with some of the jerry mandering
Speaker 5: or redistricting rulings.
Speaker 8: My odds are still very high. The Democrats take the House.
Speaker 8: I'm at ninety percent or so. The margin is going
Speaker 8: to be much smaller. So if you thought maybe Democrats
Speaker 8: with a six point average in the generic polling would
Speaker 8: pick up maybe twenty five thirty seats due to jerrymandering,
Speaker 8: it's more like eight to fifteen at the most now.
Speaker 8: So they're still win the Chamber, but it won't be
Speaker 8: by a huge majority like we saw in twenty eighteen
Speaker 8: or twenty twenty one.
Speaker 5: Is the president maybe on campaign trail in these midterms,
Speaker 5: do you think?
Speaker 8: I mean, theoretically he was supposed to turn the campaign
Speaker 8: trail on affordability back in January. What I hear from
Speaker 8: Senate Republicans is that they want the president on the
Speaker 8: trail come June.
Speaker 9: So that's coming right up.
Speaker 2: So, like you're in New York, so like you have
Speaker 2: lunch with hedge funds, after lunch with hedge funds, dinner
Speaker 2: with hedge funds.
Speaker 9: All day, every day.
Speaker 2: What's the number one question, they asked quickly.
Speaker 8: Right now, it's on energy prices right now, eight dollars
Speaker 8: a barrel, exactly. We talk a lot about the fiscal situation, though,
Speaker 8: debt and deficit.
Speaker 9: One of the bond markets.
Speaker 2: Going because of the American debt and deficit.
Speaker 8: I think so, yeah, there's there's a tension. It's not
Speaker 8: at a fever pitch yet, not enough to make lawmakers
Speaker 8: do anything about it.
Speaker 2: But I got headlines. I got to go to Hendry
Speaker 2: had us more important than the headlines. But Henrietta, thank
Speaker 2: you on behalf of a team Surveillance. Thank you for
Speaker 2: all of your wonderful at work today.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Easter and on Bloomberg dot com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal