1 00:00:02,400 --> 00:00:09,920 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,880 Speaker 2: Terminal and the Bloomberg Business App. 10 00:00:36,720 --> 00:00:40,240 Speaker 1: Joining us now from Brussels is US Commerce Secretary Howard 11 00:00:40,320 --> 00:00:43,160 Speaker 1: Lucknick Secretarynk, Thank you so much for being with us. 12 00:00:43,479 --> 00:00:46,760 Speaker 1: I want to start on your discussions with the European Union. 13 00:00:47,159 --> 00:00:50,199 Speaker 1: We were hearing some noise that it doesn't necessarily include 14 00:00:50,240 --> 00:00:54,640 Speaker 1: reducing steel and aluminum terroiffts from fifty percent to fifteen percent? 15 00:00:54,720 --> 00:00:57,720 Speaker 1: Is that off the table for now? 16 00:00:59,000 --> 00:01:02,000 Speaker 3: We're talking about everything is on the table when you 17 00:01:02,040 --> 00:01:05,039 Speaker 3: have such a great partner as the European Union. They 18 00:01:05,040 --> 00:01:08,360 Speaker 3: have four hundred and fifty million people and a twenty 19 00:01:08,480 --> 00:01:12,360 Speaker 3: trillion dollar economy, so the opportunity is great. They would 20 00:01:12,640 --> 00:01:16,360 Speaker 3: like to have steel and aluminum as part of this package. 21 00:01:16,440 --> 00:01:19,680 Speaker 3: And we think it is very very important that they 22 00:01:19,920 --> 00:01:25,240 Speaker 3: understand our digital companies and they reconsider their digital regulations 23 00:01:25,480 --> 00:01:28,319 Speaker 3: to be more inviting to our big companies. They tend 24 00:01:28,360 --> 00:01:31,400 Speaker 3: to tax our big companies and attack our big companies, 25 00:01:31,640 --> 00:01:34,000 Speaker 3: and they're not getting the investment that we're getting. Right, 26 00:01:34,040 --> 00:01:38,440 Speaker 3: You're seeing trillions of dollars of our tech companies investing 27 00:01:38,480 --> 00:01:41,440 Speaker 3: in building data centers in America and they're not getting 28 00:01:41,440 --> 00:01:41,839 Speaker 3: them here. 29 00:01:41,880 --> 00:01:43,600 Speaker 4: So we're talking to them about. 30 00:01:43,840 --> 00:01:48,360 Speaker 3: Take your foot off the regulatory statement, build those data 31 00:01:48,400 --> 00:01:52,120 Speaker 3: centers in America, and in exchange for that, we'll come 32 00:01:52,200 --> 00:01:54,880 Speaker 3: up with a cool steal and aluminum deal that we'll 33 00:01:54,920 --> 00:01:55,640 Speaker 3: all be together. 34 00:01:55,960 --> 00:01:59,080 Speaker 4: So it's all trading. These are trade deals. 35 00:01:59,200 --> 00:02:02,920 Speaker 3: You're talking about opportunities together. Let's bring it all on 36 00:02:03,000 --> 00:02:05,080 Speaker 3: the table. Let's see what we can accomplish. 37 00:02:05,200 --> 00:02:09,040 Speaker 1: Secretary Lutnik, what's the threshold in terms of reducing certain 38 00:02:09,080 --> 00:02:13,600 Speaker 1: regulations in Europe on US tech companies that's required in 39 00:02:13,720 --> 00:02:16,160 Speaker 1: order to create some sort of framework for this deal. 40 00:02:19,320 --> 00:02:20,320 Speaker 4: Well, what the. 41 00:02:20,320 --> 00:02:25,079 Speaker 3: European Union does is they say, well, our digital rules 42 00:02:25,560 --> 00:02:28,440 Speaker 3: they only touch companies above a certain threshold. Of course, 43 00:02:28,600 --> 00:02:32,160 Speaker 3: the only companies above those threshold are all American companies. 44 00:02:32,160 --> 00:02:35,639 Speaker 4: So come on, that can't be the rule. Let's take 45 00:02:35,680 --> 00:02:36,120 Speaker 4: it off. 46 00:02:36,720 --> 00:02:40,880 Speaker 3: Let's settle the outstanding cases against Google and against Microsoft 47 00:02:40,880 --> 00:02:41,920 Speaker 3: and against Amazon. 48 00:02:42,160 --> 00:02:43,480 Speaker 4: Let's put them behind us. 49 00:02:43,680 --> 00:02:46,919 Speaker 3: Let's come up with a reasonable framework where these companies 50 00:02:46,919 --> 00:02:51,000 Speaker 3: can grow and build, and then those companies will agree 51 00:02:51,400 --> 00:02:55,600 Speaker 3: to invest hundreds of billions of dollars of data centers here. 52 00:02:55,880 --> 00:02:59,040 Speaker 3: So the idea is, if they take their foot off 53 00:02:59,120 --> 00:03:03,160 Speaker 3: this regulatory framework and make it more inviting for our companies, 54 00:03:03,560 --> 00:03:07,600 Speaker 3: they can get the benefit of hundreds of billions, possibly 55 00:03:07,639 --> 00:03:09,600 Speaker 3: a trillion dollars of investment a year. 56 00:03:09,919 --> 00:03:11,800 Speaker 4: So the idea is, I'm trying. 57 00:03:11,520 --> 00:03:14,720 Speaker 3: To convince them that winning the way Donald Trump is 58 00:03:14,760 --> 00:03:18,320 Speaker 3: winning in America is the way to go. Look at America, 59 00:03:18,360 --> 00:03:20,000 Speaker 3: look at these growth rates. 60 00:03:20,080 --> 00:03:23,280 Speaker 4: Come on to realize our investment in AI. 61 00:03:23,480 --> 00:03:29,160 Speaker 3: Cape's last quarter exceeded consumer spending in America. We had 62 00:03:29,200 --> 00:03:31,880 Speaker 3: three point eight percent GDP growth. We're going to grow 63 00:03:31,919 --> 00:03:34,800 Speaker 3: over four percent and next year we could grow over 64 00:03:34,960 --> 00:03:39,720 Speaker 3: five percent. You got to embrace what's coming. The AI 65 00:03:40,000 --> 00:03:43,400 Speaker 3: world is coming. Come on, embrace it. That's what we're 66 00:03:43,440 --> 00:03:46,800 Speaker 3: here doing, trying to bring and make our deal with Europe, 67 00:03:46,800 --> 00:03:48,960 Speaker 3: which has a great deal done by Donald Trump. 68 00:03:49,240 --> 00:03:50,640 Speaker 4: Let's make that deal better. 69 00:03:51,000 --> 00:03:54,360 Speaker 5: Secretary Letnik just on that point and point take in 70 00:03:54,400 --> 00:03:56,880 Speaker 5: on what you see as the benefit to embracing that 71 00:03:56,960 --> 00:03:59,960 Speaker 5: tech with the EU over and over again has insisted 72 00:04:00,080 --> 00:04:03,360 Speaker 5: said that it's digital laws are not up for discussion. 73 00:04:03,880 --> 00:04:06,920 Speaker 5: Are you seeing any sort of relenting from them as 74 00:04:06,920 --> 00:04:09,200 Speaker 5: you've been pushing it. Does it seem like they would 75 00:04:09,200 --> 00:04:10,320 Speaker 5: agree to you on this point. 76 00:04:13,280 --> 00:04:15,720 Speaker 3: Well, you know, I see a lot of ministers member. 77 00:04:15,960 --> 00:04:20,120 Speaker 3: There's twenty seven countries, so some are more open minded 78 00:04:20,120 --> 00:04:22,960 Speaker 3: than others. But you know, it's a process which is 79 00:04:23,320 --> 00:04:26,560 Speaker 3: talking to them and telling them that if they want 80 00:04:26,680 --> 00:04:30,000 Speaker 3: to get that kind of investment here, they've got to 81 00:04:30,120 --> 00:04:30,960 Speaker 3: change the model. 82 00:04:31,080 --> 00:04:33,120 Speaker 4: So there's the carrot and the stick. 83 00:04:33,160 --> 00:04:36,039 Speaker 3: You know, if you keep taxing these companies, they're not 84 00:04:36,120 --> 00:04:38,919 Speaker 3: going to give you the investment. So that's my job 85 00:04:39,000 --> 00:04:41,120 Speaker 3: to sort of talk about it and help those American 86 00:04:41,160 --> 00:04:44,919 Speaker 3: companies find their way clear to invest here and to 87 00:04:45,000 --> 00:04:47,880 Speaker 3: grow here. And another example for them, I show them 88 00:04:47,880 --> 00:04:52,760 Speaker 3: that you know, they're ruling out clean diesel for batteries, 89 00:04:52,839 --> 00:04:55,760 Speaker 3: and I try to remind them you don't make batteries 90 00:04:55,800 --> 00:04:59,680 Speaker 3: in Europe. Come on, guys, don't make rules that harm 91 00:04:59,760 --> 00:05:03,719 Speaker 3: your self because you don't make batteries. That's not a 92 00:05:03,760 --> 00:05:08,040 Speaker 3: good idea. Stick with clean diesel, stick with combustion engines. 93 00:05:08,120 --> 00:05:13,320 Speaker 3: Come on, be clever about yourselves and just common sense. 94 00:05:13,400 --> 00:05:17,279 Speaker 3: This is the common sense Trump administration here in Europe, 95 00:05:17,320 --> 00:05:20,440 Speaker 3: trying to remind them that they have an amazing economy 96 00:05:20,480 --> 00:05:21,440 Speaker 3: that can grow and build. 97 00:05:21,720 --> 00:05:25,120 Speaker 4: Will help them grow and build with great trade with America. 98 00:05:25,200 --> 00:05:28,640 Speaker 3: But you can't be silly and sort of embrace just 99 00:05:28,839 --> 00:05:31,360 Speaker 3: batteries which you don't make in Europe. So these are 100 00:05:31,400 --> 00:05:34,480 Speaker 3: the kind of conversations I have. They're pretty fun if 101 00:05:34,520 --> 00:05:36,520 Speaker 3: you ask me, because I get to point to the 102 00:05:36,560 --> 00:05:41,080 Speaker 3: growth in America and say, come on, follow our lead 103 00:05:41,600 --> 00:05:45,040 Speaker 3: and we will have a bigger, better, stronger trade deal. 104 00:05:45,279 --> 00:05:48,800 Speaker 3: We'll add to it, will add excitement to it. 105 00:05:49,000 --> 00:05:51,640 Speaker 4: But you've got to come along with us. Secretary interests 106 00:05:51,760 --> 00:05:53,200 Speaker 4: the model, the growth. 107 00:05:52,920 --> 00:05:55,880 Speaker 5: We've been seeing because the AI has been contributing a 108 00:05:55,880 --> 00:05:57,159 Speaker 5: lot to this American economy. 109 00:05:57,160 --> 00:05:58,040 Speaker 4: And as a lot of it has been. 110 00:05:57,920 --> 00:06:00,760 Speaker 5: Said about the two speed nature of it. On one hand, 111 00:06:00,800 --> 00:06:03,159 Speaker 5: AI is doing well, and on the other hand, you 112 00:06:03,200 --> 00:06:06,000 Speaker 5: have consumers that are still feeling high prices. You saw 113 00:06:06,040 --> 00:06:09,200 Speaker 5: that play out through the most recent elections. There's been 114 00:06:09,200 --> 00:06:12,599 Speaker 5: a renewed concentration from this Trump administration to try to 115 00:06:12,640 --> 00:06:18,240 Speaker 5: reduce tariffs, especially on things like food, give food, food goods. 116 00:06:18,560 --> 00:06:20,839 Speaker 5: Are you and the rest of this administration as you 117 00:06:20,880 --> 00:06:24,520 Speaker 5: negotiate terror specifically looking at that, trying to find terras 118 00:06:24,640 --> 00:06:28,120 Speaker 5: to bring down to lower the cost of everyday household 119 00:06:28,200 --> 00:06:29,760 Speaker 5: items for American consumers. 120 00:06:32,760 --> 00:06:33,360 Speaker 4: Exactly. 121 00:06:33,400 --> 00:06:37,760 Speaker 3: The Trump administration is exactly about affordability. We are going 122 00:06:37,880 --> 00:06:41,200 Speaker 3: through every line item to try to make sure we 123 00:06:41,240 --> 00:06:46,520 Speaker 3: can drive affordability across the American consumer landscape. Two things though, 124 00:06:46,880 --> 00:06:52,280 Speaker 3: American earnings are growing, right, the average earnings of America, 125 00:06:52,320 --> 00:06:56,440 Speaker 3: their income is growing. So as that grows and we 126 00:06:56,520 --> 00:06:59,320 Speaker 3: drive prices down, and you're going to feel that Golden 127 00:06:59,360 --> 00:07:03,720 Speaker 3: age coming. So it's the combination of earnings growing and 128 00:07:03,920 --> 00:07:07,320 Speaker 3: we are raisor focused on bringing down prices. That's one 129 00:07:07,320 --> 00:07:09,800 Speaker 3: of the things we're doing here today, working together to 130 00:07:09,840 --> 00:07:13,960 Speaker 3: try to bring down prices on average daily products. 131 00:07:14,120 --> 00:07:16,880 Speaker 4: We are working on it. The Trump administration is on it. 132 00:07:17,160 --> 00:07:19,440 Speaker 4: We have a clear direction from the President. 133 00:07:19,680 --> 00:07:22,840 Speaker 3: We are going to lower prices and like things more affordable, 134 00:07:23,080 --> 00:07:26,920 Speaker 3: build We're also going to raise income, raising income as. 135 00:07:26,760 --> 00:07:29,000 Speaker 1: Well, just to build up what Dan's talking about. Though, 136 00:07:29,080 --> 00:07:31,160 Speaker 1: there is a feeling that there is a limit to 137 00:07:31,160 --> 00:07:33,960 Speaker 1: how much tariffs can go up or how much the 138 00:07:34,000 --> 00:07:37,240 Speaker 1: Trump administration may have to reduce tariffs going forward in 139 00:07:37,400 --> 00:07:41,560 Speaker 1: order to address some concerns about cost of living. Has 140 00:07:41,560 --> 00:07:45,720 Speaker 1: it affected your negotiations at all? 141 00:07:46,200 --> 00:07:47,840 Speaker 4: No, I think it's pretty easy. 142 00:07:47,920 --> 00:07:52,320 Speaker 3: The world understands that there's given take in these trade deals, 143 00:07:52,560 --> 00:07:56,440 Speaker 3: and the benefits are clear that the Trump administration has 144 00:07:56,520 --> 00:07:59,320 Speaker 3: created the greatest set of trade deals. You know, the 145 00:07:59,320 --> 00:08:02,160 Speaker 3: President's talk about a two thousand dollars tariff given. Then 146 00:08:02,280 --> 00:08:04,760 Speaker 3: coming back to the American people, you got the one 147 00:08:04,760 --> 00:08:07,640 Speaker 3: big beautiful bill which is going to cut and there's 148 00:08:07,640 --> 00:08:11,680 Speaker 3: going to be significant income growth from people next year 149 00:08:11,720 --> 00:08:14,280 Speaker 3: as that bill comes into play. And we are going 150 00:08:14,280 --> 00:08:17,800 Speaker 3: to focus on the affordability. You saw coffee and cocoa 151 00:08:17,840 --> 00:08:20,560 Speaker 3: and bananas and all those kind of things. Those prices 152 00:08:20,600 --> 00:08:24,200 Speaker 3: came down. You're going to see prices continuously come down, 153 00:08:24,720 --> 00:08:28,679 Speaker 3: energy prices down. You're going to see affordability across the board. 154 00:08:28,720 --> 00:08:28,920 Speaker 4: Here. 155 00:08:29,240 --> 00:08:33,760 Speaker 3: Trump administration is going to win in affordability and income, 156 00:08:33,880 --> 00:08:36,400 Speaker 3: two sides of the coin we're going to win. 157 00:08:36,559 --> 00:08:38,760 Speaker 1: Secretary Latnik, there's been a huge focus and you've been 158 00:08:38,760 --> 00:08:41,840 Speaker 1: talking about how US tech has definitely been the fashion 159 00:08:42,280 --> 00:08:45,240 Speaker 1: of the economic growth over the past couple of years. 160 00:08:45,440 --> 00:08:48,679 Speaker 1: As the Trump administration decided whether or not to allow 161 00:08:48,800 --> 00:08:51,040 Speaker 1: Nvidia to sell the H two hundred chips into China, 162 00:08:51,040 --> 00:08:54,040 Speaker 1: that's been a discussion and something that increasingly people are 163 00:08:54,080 --> 00:08:55,000 Speaker 1: speculating about. 164 00:08:58,200 --> 00:09:01,600 Speaker 3: Well, I've seen that speculation. That kind of decision sits 165 00:09:01,720 --> 00:09:04,760 Speaker 3: right on the desk of Donald Trump. Right He's got 166 00:09:05,120 --> 00:09:08,040 Speaker 3: Jensen from Nvidio who really wants to sell those chips, 167 00:09:08,080 --> 00:09:09,960 Speaker 3: and he's got a good reasons for it. 168 00:09:10,000 --> 00:09:11,760 Speaker 4: There's an enormous number of other. 169 00:09:11,640 --> 00:09:14,840 Speaker 3: People who think that that's something that should be deeply considered. 170 00:09:15,080 --> 00:09:17,600 Speaker 3: And the benefit that we have is we have Donald 171 00:09:17,600 --> 00:09:19,880 Speaker 3: Trump in the Oval office. He is going to weigh 172 00:09:19,920 --> 00:09:23,720 Speaker 3: those decisions. He understands President she the best. He will 173 00:09:23,760 --> 00:09:26,560 Speaker 3: decide whether we go forward with that or not. That's 174 00:09:26,640 --> 00:09:29,840 Speaker 3: on his desk with lots of different advisors. The President 175 00:09:29,960 --> 00:09:32,199 Speaker 3: loves to hear lots of different voices to make those 176 00:09:32,280 --> 00:09:34,719 Speaker 3: kind of decisions, and he'll decide whether we sell those 177 00:09:34,760 --> 00:09:37,000 Speaker 3: chips or not, and then we will go execute it. 178 00:09:37,080 --> 00:09:38,600 Speaker 4: However, he decides to go forward. 179 00:09:38,600 --> 00:09:41,520 Speaker 1: There's a bigger question here, Secretary Lutnik, about what national 180 00:09:41,559 --> 00:09:44,320 Speaker 1: security is. Is it more of a national security risk 181 00:09:44,480 --> 00:09:47,480 Speaker 1: to give China some of these high powered chips or 182 00:09:47,520 --> 00:09:49,760 Speaker 1: is it more of a national security risk to not 183 00:09:49,840 --> 00:09:51,600 Speaker 1: have US tech in China? 184 00:09:51,760 --> 00:09:53,160 Speaker 6: Has your view on that changed? 185 00:09:56,040 --> 00:09:59,680 Speaker 3: Well, that's the question exactly as well, put and in 186 00:09:59,679 --> 00:10:02,160 Speaker 3: front of the president, which is, do you want to 187 00:10:02,320 --> 00:10:06,760 Speaker 3: sell China some chips and keep them using our tech 188 00:10:07,000 --> 00:10:10,400 Speaker 3: and our tech stack, or do you say to them, look, 189 00:10:10,600 --> 00:10:13,040 Speaker 3: we're not going to sell you our best chips. We're 190 00:10:13,080 --> 00:10:14,839 Speaker 3: just going to hold off on that and we're going 191 00:10:14,880 --> 00:10:17,920 Speaker 3: to compete in the AI race ourselves. So that is 192 00:10:18,000 --> 00:10:20,640 Speaker 3: the question. It's in front of the president. He's going 193 00:10:20,679 --> 00:10:23,760 Speaker 3: to decide. It's a really really interesting question. He's got 194 00:10:23,800 --> 00:10:26,360 Speaker 3: all the information, he's got lots and lots of experts 195 00:10:26,440 --> 00:10:28,559 Speaker 3: talking to him, and he's going to decide which way 196 00:10:28,600 --> 00:10:29,840 Speaker 3: he wants to go forward. 197 00:10:30,200 --> 00:10:31,120 Speaker 6: Secretary Lutnick. 198 00:10:31,200 --> 00:10:34,760 Speaker 5: Meanwhile, use of IEPA for terroiffts in front of the 199 00:10:34,840 --> 00:10:38,319 Speaker 5: Supreme Court. The feedback has been skepticism so far from 200 00:10:38,360 --> 00:10:42,600 Speaker 5: many of the justices, conservative ones included. As this plays out, 201 00:10:42,679 --> 00:10:45,640 Speaker 5: can you walk us through how you prioritize the different 202 00:10:45,640 --> 00:10:50,160 Speaker 5: alternatives should the administration's use of terrorist via IEPA get 203 00:10:50,200 --> 00:10:50,760 Speaker 5: struck down. 204 00:10:53,800 --> 00:10:56,319 Speaker 3: So I was in the Supreme Court. I sat through 205 00:10:56,360 --> 00:11:00,400 Speaker 3: the whole argument. The justices were tough on on the 206 00:11:00,480 --> 00:11:05,440 Speaker 3: beginning on the Department of Justices, you know, our person, 207 00:11:05,679 --> 00:11:08,680 Speaker 3: but then they were much tougher on the other side, 208 00:11:09,360 --> 00:11:13,160 Speaker 3: much much tougher. So I left that day feeling very 209 00:11:13,200 --> 00:11:16,480 Speaker 3: confident that we and the President was going to prevail 210 00:11:16,880 --> 00:11:19,640 Speaker 3: on these IEPA tariffs. So I think you're hearing it 211 00:11:19,679 --> 00:11:21,880 Speaker 3: from me. I think I was there in the courtroom. 212 00:11:22,120 --> 00:11:24,320 Speaker 3: I heard it all the way through. I didn't sort 213 00:11:24,320 --> 00:11:27,360 Speaker 3: of write my story halfway through. I said all the 214 00:11:27,400 --> 00:11:29,800 Speaker 3: way through to the end. The President's going to win 215 00:11:29,880 --> 00:11:32,120 Speaker 3: that case, because that makes sense for. 216 00:11:32,120 --> 00:11:32,600 Speaker 4: Him to win. 217 00:11:32,720 --> 00:11:35,720 Speaker 3: But I want to remind you the president has lots 218 00:11:35,760 --> 00:11:38,400 Speaker 3: of other authorities. He has two thirty twos, he has 219 00:11:38,440 --> 00:11:41,040 Speaker 3: three ozh ones, he has three thirty eights, he has 220 00:11:41,080 --> 00:11:44,480 Speaker 3: a whole variety one twelve, one twenty two. He's got 221 00:11:44,520 --> 00:11:48,720 Speaker 3: all sorts of other powers. And tariffs are going to 222 00:11:48,760 --> 00:11:52,400 Speaker 3: be part of this administration going forward, But I don't 223 00:11:52,480 --> 00:11:55,360 Speaker 3: think they're going to be necessary because the President's going 224 00:11:55,400 --> 00:11:58,280 Speaker 3: to win the IEPA case in front of the Supreme Court. 225 00:11:58,400 --> 00:11:59,200 Speaker 6: Secretary Lutnik. 226 00:11:59,200 --> 00:12:02,079 Speaker 1: Theoretically, if the US did lose that court in front 227 00:12:02,080 --> 00:12:05,280 Speaker 1: of the Supreme Court, in terms of AEPA as justification, 228 00:12:05,480 --> 00:12:09,240 Speaker 1: how quickly could you roll out that package of additional measures, 229 00:12:09,240 --> 00:12:11,360 Speaker 1: whether it's Section three or one or section two thirty two. 230 00:12:14,360 --> 00:12:16,920 Speaker 3: I think many of them could come very very quickly. 231 00:12:17,240 --> 00:12:20,480 Speaker 3: I really I don't think most of the big deals. 232 00:12:20,840 --> 00:12:23,480 Speaker 3: I don't think are in jeopardy. I think the people 233 00:12:23,480 --> 00:12:26,240 Speaker 3: who did those deals, they don't want their. 234 00:12:26,120 --> 00:12:27,000 Speaker 4: Tariffs to go up. 235 00:12:27,240 --> 00:12:29,720 Speaker 3: They want their auto tariffs that's durable. That was in 236 00:12:29,760 --> 00:12:31,760 Speaker 3: a nine to zero at the Supreme Court. You have 237 00:12:31,840 --> 00:12:35,080 Speaker 3: auto tariffs, you have semiconductors, you have pharmaceuticals, you have 238 00:12:35,160 --> 00:12:38,000 Speaker 3: steal and aluminum, you have lumber. All of those are 239 00:12:38,080 --> 00:12:40,840 Speaker 3: durable tariffs. They're not going anywhere. I think our big 240 00:12:41,080 --> 00:12:45,120 Speaker 3: trade deals are here to stay the way they are now. 241 00:12:45,280 --> 00:12:47,000 Speaker 4: Right and the others. 242 00:12:47,160 --> 00:12:49,400 Speaker 3: I think we're going to win the case, but I 243 00:12:49,440 --> 00:12:52,760 Speaker 3: think it would be relatively straightforward for the President to 244 00:12:52,920 --> 00:12:55,680 Speaker 3: replace it with other means. But it's not going to 245 00:12:55,679 --> 00:12:59,360 Speaker 3: be necessary because the President has used AEPA correctly, and 246 00:12:59,400 --> 00:12:59,959 Speaker 3: he's going to win. 247 00:13:00,200 --> 00:13:00,480 Speaker 4: Case. 248 00:13:00,559 --> 00:13:03,160 Speaker 1: Secretary Lutnik, we know you've got a really busy morning, 249 00:13:03,200 --> 00:13:06,000 Speaker 1: but before we let you go, has the Supreme Core 250 00:13:06,160 --> 00:13:09,280 Speaker 1: Case influenced any of your discussions at all with trade 251 00:13:09,320 --> 00:13:12,600 Speaker 1: partners in terms of what the potential limits are to 252 00:13:12,679 --> 00:13:15,880 Speaker 1: your ability to negotiate or potentially keep some of the 253 00:13:15,880 --> 00:13:18,160 Speaker 1: ongoing negotiations that have been already struck. 254 00:13:21,000 --> 00:13:23,840 Speaker 3: So that's exactly the point I'm here in Europe. It 255 00:13:23,880 --> 00:13:26,480 Speaker 3: hasn't come up at all. The fact is we've made 256 00:13:26,520 --> 00:13:29,440 Speaker 3: a great deal with Europe. They think it's important to them, 257 00:13:29,640 --> 00:13:34,559 Speaker 3: it's important to us. Includes semiconductors, it includes pharmaceuticals, it 258 00:13:34,559 --> 00:13:37,719 Speaker 3: includes autos. These are things that are important to the 259 00:13:37,760 --> 00:13:41,160 Speaker 3: European Union, and they're important. The whole trade deal is 260 00:13:41,200 --> 00:13:43,760 Speaker 3: important to America. I think this deal stands. I think 261 00:13:43,760 --> 00:13:47,000 Speaker 3: the question that we are negotiating is how to make 262 00:13:47,000 --> 00:13:49,720 Speaker 3: the deal bigger, how to make it stronger, how to 263 00:13:49,720 --> 00:13:52,880 Speaker 3: make it more inclusive, how to bring in these digital 264 00:13:53,640 --> 00:13:57,000 Speaker 3: markets act and try to improve that for digital America. 265 00:13:57,200 --> 00:13:59,599 Speaker 3: How to maybe do steal and aluminum and how to 266 00:13:59,679 --> 00:14:03,720 Speaker 3: include that, how to do things bigger and better together 267 00:14:03,800 --> 00:14:07,080 Speaker 3: between our two great economies. I think they're going to 268 00:14:07,080 --> 00:14:10,600 Speaker 3: do it standards, make sure they take US autos here, 269 00:14:10,960 --> 00:14:14,640 Speaker 3: and make sure we are working together to extend both 270 00:14:14,679 --> 00:14:18,280 Speaker 3: the European Union standards and American standards throughout the world. 271 00:14:18,679 --> 00:14:23,280 Speaker 3: I don't feel that the AIPA case is here at all. 272 00:14:23,680 --> 00:14:25,880 Speaker 3: I think the opportunities for us to grow and do 273 00:14:25,960 --> 00:14:26,720 Speaker 3: business together. 274 00:14:27,040 --> 00:14:27,840 Speaker 4: People want to. 275 00:14:27,840 --> 00:14:30,720 Speaker 3: Have their trade deals with America, and I think these deals. 276 00:14:30,440 --> 00:14:34,640 Speaker 2: Are durable, stay with us. Mulblindex Savanna's coming up off to. 277 00:14:34,680 --> 00:14:46,960 Speaker 1: This bil dot a runmap writing odds for December should 278 00:14:47,000 --> 00:14:49,720 Speaker 1: be sub fifty. That Daily is saying December is an 279 00:14:49,760 --> 00:14:53,560 Speaker 1: open question means it's probably caput. No December, it means 280 00:14:53,560 --> 00:14:54,280 Speaker 1: no January. 281 00:14:54,360 --> 00:14:56,080 Speaker 6: Neil joins us now he is grumpy. 282 00:14:56,120 --> 00:14:58,560 Speaker 1: He wants the rate cuts, he doesn't see them. Why 283 00:14:58,560 --> 00:15:00,720 Speaker 1: do you put this off so much given the fact 284 00:15:01,040 --> 00:15:03,760 Speaker 1: that New York Fed President John Williams seemed to really 285 00:15:03,800 --> 00:15:06,200 Speaker 1: open the door to a rate cut next week and 286 00:15:06,320 --> 00:15:08,960 Speaker 1: next month, and we do have that closeness between him 287 00:15:09,440 --> 00:15:10,040 Speaker 1: and Fed shir J. 288 00:15:10,160 --> 00:15:10,480 Speaker 6: Powell. 289 00:15:10,520 --> 00:15:12,520 Speaker 7: Well, you're doing me not a solid there. I mean 290 00:15:12,560 --> 00:15:15,160 Speaker 7: I wrote that before Williams came out. 291 00:15:15,240 --> 00:15:18,720 Speaker 1: I mean it's again Meal data is positive for December 292 00:15:18,760 --> 00:15:20,200 Speaker 1: rate because of John Williams. 293 00:15:20,240 --> 00:15:22,440 Speaker 7: I mean, I don't look, I think the sort of 294 00:15:23,760 --> 00:15:26,840 Speaker 7: I think the bigger problem is that we're even debating 295 00:15:27,640 --> 00:15:29,720 Speaker 7: whether it is or isn't really right. I mean, if 296 00:15:29,720 --> 00:15:32,280 Speaker 7: they don't go in December, maybe they wait for the data. 297 00:15:32,320 --> 00:15:34,680 Speaker 7: We know that the employment and the inflation numbers come 298 00:15:34,720 --> 00:15:37,840 Speaker 7: out actually after the FED meeting, So perhaps they come 299 00:15:37,920 --> 00:15:41,200 Speaker 7: up with some consensus where they pause, they want to 300 00:15:41,200 --> 00:15:43,000 Speaker 7: see the data, then they go in January. I mean 301 00:15:43,040 --> 00:15:45,760 Speaker 7: that's possible too, But to me, the bigger issue is 302 00:15:46,000 --> 00:15:49,200 Speaker 7: what's really there to debate and why are we having 303 00:15:49,200 --> 00:15:52,200 Speaker 7: this debate. I mean, unemployment has been climbing. It's actually 304 00:15:52,240 --> 00:15:55,520 Speaker 7: been rising for three consecutive months. It wasn't We were 305 00:15:55,600 --> 00:15:57,240 Speaker 7: very close to going to four and a half percent. 306 00:15:57,360 --> 00:16:01,320 Speaker 7: Everything that's come out since September. In October, we saw 307 00:16:01,400 --> 00:16:05,120 Speaker 7: that war notices, the worker adjustment retraining notices rose, we 308 00:16:05,160 --> 00:16:09,320 Speaker 7: saw layoff announcements rise. So what makes anyone think that 309 00:16:09,400 --> 00:16:11,160 Speaker 7: unemployment is going to stabilize here? 310 00:16:11,800 --> 00:16:11,960 Speaker 6: You know? 311 00:16:12,040 --> 00:16:14,080 Speaker 7: My sense is that it's much easier to tell a 312 00:16:14,080 --> 00:16:16,880 Speaker 7: story for why unemployment is going up then why inflation 313 00:16:16,960 --> 00:16:19,840 Speaker 7: is going to reaccelerate, and so the fact that we're 314 00:16:19,840 --> 00:16:22,880 Speaker 7: having this big debate about whether or not we can 315 00:16:22,920 --> 00:16:26,880 Speaker 7: go twenty five in December or January, to me is 316 00:16:27,400 --> 00:16:28,160 Speaker 7: a bit ridiculous. 317 00:16:28,200 --> 00:16:29,400 Speaker 6: I mean, it almost feels like I. 318 00:16:29,400 --> 00:16:32,040 Speaker 7: Don't want to be fatalistic, but it does feel like 319 00:16:32,440 --> 00:16:34,600 Speaker 7: the train has already kind of left the station. I mean, 320 00:16:35,000 --> 00:16:38,160 Speaker 7: even if they are able to cobble together at consensus, Lisa, 321 00:16:39,120 --> 00:16:43,120 Speaker 7: the likelihood is is that that's probably going to be it. 322 00:16:43,200 --> 00:16:46,120 Speaker 7: They're not going to signal a path of ease and 323 00:16:46,200 --> 00:16:46,840 Speaker 7: going forward. 324 00:16:47,040 --> 00:16:47,840 Speaker 6: So the train has. 325 00:16:47,840 --> 00:16:49,680 Speaker 1: Left the station implies that you see a greater chance 326 00:16:49,720 --> 00:16:50,160 Speaker 1: of recession. 327 00:16:50,240 --> 00:16:52,400 Speaker 6: Is that correct? I do so for next year? 328 00:16:52,440 --> 00:16:54,280 Speaker 1: You see actually a greater chance of re session next year, 329 00:16:54,280 --> 00:16:57,120 Speaker 1: which is completely counter we're hearing from every company and 330 00:16:57,240 --> 00:16:58,160 Speaker 1: every Wall Street. 331 00:16:57,920 --> 00:16:59,920 Speaker 6: Strategist, which is often how it happens. But that's what 332 00:17:00,160 --> 00:17:02,080 Speaker 6: you say, Yeah, I do. 333 00:17:02,160 --> 00:17:03,960 Speaker 7: I mean I think if you go like sort of 334 00:17:04,000 --> 00:17:06,679 Speaker 7: industry by industry, like, what area do you think is 335 00:17:06,720 --> 00:17:08,119 Speaker 7: going to look better going forward? 336 00:17:08,160 --> 00:17:08,640 Speaker 4: I mean. 337 00:17:10,440 --> 00:17:13,240 Speaker 7: With respect to employment? Right, I mean, so you know 338 00:17:13,320 --> 00:17:17,439 Speaker 7: I've talked about residential construction. Home builders are sitting on 339 00:17:17,480 --> 00:17:19,520 Speaker 7: more on soold inventory. So which way do we think 340 00:17:19,560 --> 00:17:23,320 Speaker 7: residential construction jobs will go? The freight sector is in recession. 341 00:17:23,560 --> 00:17:26,880 Speaker 7: It's in recession going into the holidays. As capacity comes 342 00:17:26,880 --> 00:17:28,879 Speaker 7: out of the freight industry, which way do we think 343 00:17:29,359 --> 00:17:32,880 Speaker 7: trucking and rail and trans employment is going to go? 344 00:17:33,119 --> 00:17:35,040 Speaker 7: What about restaurants? I mean, if you pull up a 345 00:17:35,119 --> 00:17:37,640 Speaker 7: chart of restaurants, I mean their margins are being squeezed, 346 00:17:37,640 --> 00:17:40,160 Speaker 7: they're telling us that they're holding the line on price. 347 00:17:40,240 --> 00:17:42,240 Speaker 7: If their margins are being squeezed, which way do we 348 00:17:42,280 --> 00:17:44,280 Speaker 7: think employment is going to go for them? Look at 349 00:17:44,359 --> 00:17:47,640 Speaker 7: lumber prices, oil prices. You know, if you're a sawmill, 350 00:17:47,720 --> 00:17:50,400 Speaker 7: can you actually make a profit with lumber prices where 351 00:17:50,400 --> 00:17:50,720 Speaker 7: they are? 352 00:17:50,760 --> 00:17:51,359 Speaker 6: Probably not? 353 00:17:51,480 --> 00:17:54,080 Speaker 7: So if you're in the woods product employment, which way 354 00:17:54,119 --> 00:17:56,320 Speaker 7: do we think that's going? How about people working on 355 00:17:56,359 --> 00:17:59,919 Speaker 7: oil rigs? Also probably down? So you know, there's a 356 00:18:00,080 --> 00:18:03,520 Speaker 7: lot of this sort of myopic fixation on initial jobless claims, 357 00:18:03,520 --> 00:18:05,600 Speaker 7: and you know initial claims have to go up. 358 00:18:05,600 --> 00:18:06,840 Speaker 6: We haven't seen initial claims. 359 00:18:06,880 --> 00:18:10,080 Speaker 7: Well, initial claims aren't really a leading indicator, right, They're 360 00:18:10,080 --> 00:18:13,399 Speaker 7: just an indicator that comes out every week. What we 361 00:18:13,440 --> 00:18:16,240 Speaker 7: know about how businesses behave is they shut hiring off 362 00:18:16,280 --> 00:18:19,040 Speaker 7: first they've done that, and then they lay people off 363 00:18:19,080 --> 00:18:20,800 Speaker 7: as a last resort. And so if you have to 364 00:18:20,800 --> 00:18:23,520 Speaker 7: ask me which is the direction of layoffs over the 365 00:18:23,560 --> 00:18:25,800 Speaker 7: next six to twelve months, my argument would be as 366 00:18:25,840 --> 00:18:26,639 Speaker 7: probably higher. 367 00:18:26,920 --> 00:18:28,920 Speaker 5: This is an economy though that defied a lot of 368 00:18:28,960 --> 00:18:32,399 Speaker 5: the worst expectations for a downturn after COVID, and a 369 00:18:32,400 --> 00:18:34,440 Speaker 5: lot of it was attributed to the government giving out 370 00:18:34,480 --> 00:18:37,240 Speaker 5: more stimulus. If we don't get cuts from the Fed. 371 00:18:37,480 --> 00:18:40,200 Speaker 5: But what we do get is Washington, DC handing out 372 00:18:40,240 --> 00:18:43,600 Speaker 5: two thousand dollars tare freebate checks. You get tax rebates 373 00:18:43,640 --> 00:18:46,159 Speaker 5: too from the one big beautiful bill. Could that be 374 00:18:46,320 --> 00:18:48,920 Speaker 5: enough to save a recession from this economy? 375 00:18:48,960 --> 00:18:50,960 Speaker 7: Well, I mean, I've never in my career been able 376 00:18:51,000 --> 00:18:53,359 Speaker 7: to figure out a way to make tax refunds useful 377 00:18:53,359 --> 00:18:55,800 Speaker 7: in terms of predicting what happens with consumption, because it 378 00:18:55,800 --> 00:18:59,960 Speaker 7: doesn't actually change permanent income. That's what ultimately drives consumer spend. 379 00:19:00,359 --> 00:19:04,960 Speaker 7: So to me, it's probable that people save the refunds 380 00:19:04,960 --> 00:19:07,880 Speaker 7: that they get because they're worried about job loss. Right, 381 00:19:07,920 --> 00:19:10,440 Speaker 7: So to me, it's that income constraint that matters. That's 382 00:19:10,480 --> 00:19:13,119 Speaker 7: more binding than whatever people get with the refunds. You know, 383 00:19:13,160 --> 00:19:16,000 Speaker 7: I don't really have an opinion on two thousand dollars rebates. 384 00:19:16,320 --> 00:19:19,960 Speaker 7: Treasury Secretary Bessett has said that they probably need Congress 385 00:19:20,000 --> 00:19:23,240 Speaker 7: for that, So you know, the President can say what 386 00:19:23,280 --> 00:19:27,720 Speaker 7: he wants, but ultimately, you know, to me, this is 387 00:19:27,760 --> 00:19:32,119 Speaker 7: really about monetary policy being too tight, and that's kind 388 00:19:32,160 --> 00:19:34,680 Speaker 7: of setting in motion a slowing in the economy. 389 00:19:34,720 --> 00:19:37,400 Speaker 5: So then there's a question about the five speakers voting 390 00:19:37,400 --> 00:19:39,439 Speaker 5: speakers we've heard from that don't want cuts. What do 391 00:19:39,480 --> 00:19:41,080 Speaker 5: they see that you don't reas appoint It's one of 392 00:19:41,119 --> 00:19:44,840 Speaker 5: the possibilities Corporate America is really strong. Another possibility, and 393 00:19:44,880 --> 00:19:47,320 Speaker 5: this was raised a few weeks ago by Evercore, was 394 00:19:47,320 --> 00:19:51,080 Speaker 5: that it is FOMC members digging their heels in ahead 395 00:19:51,080 --> 00:19:53,560 Speaker 5: of what they see as a Trump appointed chair who 396 00:19:53,600 --> 00:19:56,320 Speaker 5: will want cuts, and then setting the groundwork now for 397 00:19:56,400 --> 00:19:58,520 Speaker 5: fighting back against that. Do you think there is some 398 00:19:58,600 --> 00:20:01,280 Speaker 5: politics to play behind what these officials are saying. 399 00:20:02,119 --> 00:20:04,199 Speaker 7: I mean, it's possible, but I also take them out 400 00:20:04,240 --> 00:20:06,720 Speaker 7: their word. I mean, their basic argument seems to be 401 00:20:06,840 --> 00:20:09,199 Speaker 7: that inflation has been high for a while and that 402 00:20:09,440 --> 00:20:13,159 Speaker 7: as a result that, you know, expectations can become unanchored. 403 00:20:13,800 --> 00:20:15,919 Speaker 7: I really see very little evidence for that. I mean, 404 00:20:15,920 --> 00:20:18,639 Speaker 7: if you look at business inflation expectations just from the 405 00:20:18,720 --> 00:20:22,000 Speaker 7: Atlanta Fed released last week, I mean, it's basically where 406 00:20:22,040 --> 00:20:24,480 Speaker 7: it was last year, even before all the tariff started going. 407 00:20:24,520 --> 00:20:26,920 Speaker 7: So if the price setters in the economy don't see 408 00:20:26,960 --> 00:20:29,720 Speaker 7: higher inflation expectations, it's really challenging to see where it 409 00:20:29,760 --> 00:20:30,120 Speaker 7: comes from. 410 00:20:30,240 --> 00:20:30,280 Speaker 8: You. 411 00:20:30,520 --> 00:20:33,640 Speaker 1: I'm old enough to remember when I was feeling bearish 412 00:20:33,760 --> 00:20:36,000 Speaker 1: and you are yelling at me, like things are going 413 00:20:36,080 --> 00:20:39,080 Speaker 1: so well, what are you talking about? And now I'm saying, 414 00:20:39,119 --> 00:20:41,040 Speaker 1: you know, companies are doing really well, and you're saying 415 00:20:41,119 --> 00:20:43,200 Speaker 1: it's not going to work. The train has left the 416 00:20:43,240 --> 00:20:45,800 Speaker 1: station without rate cuts. When was the last time you 417 00:20:45,840 --> 00:20:47,960 Speaker 1: were so negative on the state of the economy. 418 00:20:48,440 --> 00:20:52,320 Speaker 6: I mean, I'm a pretty young guy, so it's been 419 00:20:52,359 --> 00:20:52,760 Speaker 6: a while. 420 00:20:52,840 --> 00:20:55,359 Speaker 7: I mean, you know, probably when I started my career, 421 00:20:56,000 --> 00:20:58,800 Speaker 7: I worked for someone who was very bear so maybe 422 00:20:58,800 --> 00:21:03,040 Speaker 7: that was the last time, and six maybe, But yeah, 423 00:21:03,119 --> 00:21:07,920 Speaker 7: I mean, look, you can't say I'm a perma anything, right, 424 00:21:08,000 --> 00:21:10,200 Speaker 7: So yeah, I mean I think that there's reason, there's 425 00:21:10,200 --> 00:21:12,280 Speaker 7: more reasons to be cautious than bullish right now. 426 00:21:13,119 --> 00:21:14,400 Speaker 6: That's sort of the way I'm looking at. 427 00:21:14,320 --> 00:21:16,080 Speaker 1: It going forward, who do you expect the next feed 428 00:21:16,160 --> 00:21:17,960 Speaker 1: chair to be? Evidently we were supposed to get a 429 00:21:17,960 --> 00:21:19,760 Speaker 1: pick now than it was going to be next month 430 00:21:19,840 --> 00:21:23,680 Speaker 1: now evidently January. Is there an indication to you based 431 00:21:23,720 --> 00:21:26,680 Speaker 1: on the timeline that keeps getting moved depending on the moment. 432 00:21:27,240 --> 00:21:29,960 Speaker 7: I think the longer the process goes on, the more 433 00:21:30,119 --> 00:21:33,920 Speaker 7: likely it is is that Secretary Besson becomes the fet chair. 434 00:21:34,200 --> 00:21:37,679 Speaker 7: That's my view. I mean, I just think that what 435 00:21:37,720 --> 00:21:40,760 Speaker 7: do we know. I mean, we know that President Trump 436 00:21:41,640 --> 00:21:44,399 Speaker 7: wants secretary. Could you imagine being one of these other people? 437 00:21:44,920 --> 00:21:46,919 Speaker 7: Like Kevin has it like it's so obvious that you're 438 00:21:47,000 --> 00:21:50,040 Speaker 7: number two, because time every chance he gets to talk 439 00:21:50,080 --> 00:21:52,480 Speaker 7: about the fetcher, he's like, well, I wish this guy over. 440 00:21:52,280 --> 00:21:54,119 Speaker 6: Here would do and he's playing to Scott Besson and 441 00:21:54,440 --> 00:21:57,240 Speaker 6: neber One doesn't want it right and he keeps saying no, 442 00:21:57,800 --> 00:21:58,159 Speaker 6: I don't know. 443 00:21:58,240 --> 00:22:00,320 Speaker 7: I mean to me, it's almost like a bet on 444 00:22:00,359 --> 00:22:02,679 Speaker 7: do you think that Trump President Trump gets to make 445 00:22:02,720 --> 00:22:06,480 Speaker 7: his personnel decisions or not? And if you do, then 446 00:22:06,680 --> 00:22:09,280 Speaker 7: you have to assume that Secretary Besson is the one 447 00:22:09,280 --> 00:22:11,679 Speaker 7: that takes the seat. The longer the process goes on, 448 00:22:11,720 --> 00:22:13,440 Speaker 7: I think the more likely it is he's the. 449 00:22:13,359 --> 00:22:14,040 Speaker 4: One in that seat. 450 00:22:14,359 --> 00:22:17,200 Speaker 2: Stay with us, Molblemberg, Savannah's coming up. 451 00:22:17,359 --> 00:22:17,800 Speaker 4: Off to this. 452 00:22:27,160 --> 00:22:29,920 Speaker 1: The team at Morgan Stanley releasing their outlook for twenty 453 00:22:29,960 --> 00:22:32,720 Speaker 1: twenty six, writing, we raise our S and P five 454 00:22:32,800 --> 00:22:36,240 Speaker 1: hundred price target to seventy eight hundred, driven by strong 455 00:22:36,320 --> 00:22:38,280 Speaker 1: earnings growth. We believe that we're in the midst of 456 00:22:38,320 --> 00:22:42,000 Speaker 1: a new bull market and earnings cycle, especially for many 457 00:22:42,119 --> 00:22:45,520 Speaker 1: of the lagging areas. Mich Wilson of Morgan Stanley joins, Now, 458 00:22:45,760 --> 00:22:48,240 Speaker 1: wonderful to see you, Mike, Thanks Lisa. So let's start 459 00:22:48,280 --> 00:22:51,439 Speaker 1: on the optimism. We have an optimistic for quite a while, 460 00:22:51,560 --> 00:22:54,359 Speaker 1: talking about the rotation into the adopters, not just the 461 00:22:54,400 --> 00:22:57,959 Speaker 1: AI tech behemoths. Why are you getting even more optimistic 462 00:22:58,160 --> 00:22:59,080 Speaker 1: as the year goes on. 463 00:22:59,440 --> 00:23:02,760 Speaker 9: We say, it's just a changing It's an evolving narrative 464 00:23:02,800 --> 00:23:05,840 Speaker 9: we've had, which is that we think that the policy 465 00:23:05,920 --> 00:23:08,960 Speaker 9: still misunderstood right, that they essentially came in this year 466 00:23:09,280 --> 00:23:11,280 Speaker 9: to the growth negative stuff first, and now we're looking 467 00:23:11,280 --> 00:23:13,720 Speaker 9: at the growth positive stuff. I'm not worried about the economy. 468 00:23:13,720 --> 00:23:15,480 Speaker 9: What I am a little bit worried about is that 469 00:23:15,560 --> 00:23:18,080 Speaker 9: the FED is kind of dragging its feet. So I 470 00:23:18,119 --> 00:23:20,520 Speaker 9: would agree with Neil's comment, like the FED needs to cut, 471 00:23:20,680 --> 00:23:22,679 Speaker 9: but not to save the economy, but to see the 472 00:23:22,680 --> 00:23:25,560 Speaker 9: full rotation into these lagging parts of the market, the 473 00:23:25,600 --> 00:23:27,600 Speaker 9: interest rates sensitive parts of the market, which is really 474 00:23:27,640 --> 00:23:29,360 Speaker 9: our story for twenty twenty eight or. 475 00:23:29,320 --> 00:23:30,000 Speaker 8: Twenty twenty six. 476 00:23:30,280 --> 00:23:32,359 Speaker 9: We think that seventy eight hundred is dependent on the 477 00:23:32,359 --> 00:23:33,640 Speaker 9: earning cycle broadening out. 478 00:23:34,119 --> 00:23:35,480 Speaker 6: So there's a lot to unpack there. 479 00:23:35,480 --> 00:23:37,280 Speaker 1: I want to start with you agreeing with Neil, because 480 00:23:37,280 --> 00:23:40,080 Speaker 1: Neil had a pretty negative assessment of the overall economy, 481 00:23:40,119 --> 00:23:42,879 Speaker 1: saying he suspects the trains already left the station with 482 00:23:42,920 --> 00:23:45,640 Speaker 1: respect to the pain from the FED keeping rates where 483 00:23:45,640 --> 00:23:47,480 Speaker 1: they are for as long as they have, and that 484 00:23:47,560 --> 00:23:49,800 Speaker 1: we could be looking at a recession. You seem to 485 00:23:49,800 --> 00:23:52,840 Speaker 1: disagree on that. So where's the nuance here. What's the 486 00:23:52,880 --> 00:23:59,000 Speaker 1: difference between preventing recession and really allowing the rotation into 487 00:23:59,080 --> 00:24:00,160 Speaker 1: some of these other names. 488 00:24:00,280 --> 00:24:02,520 Speaker 9: Yeah, I mean, I think our view has been differentiated 489 00:24:02,520 --> 00:24:04,800 Speaker 9: that we think we have had a recession. We went 490 00:24:04,800 --> 00:24:07,600 Speaker 9: through a rolling recession in the private economy. So I 491 00:24:07,640 --> 00:24:09,680 Speaker 9: would agree with Neils that the economy is weak, but 492 00:24:10,640 --> 00:24:13,360 Speaker 9: it's rebalancing now. Towards the private economy. I mean, many 493 00:24:13,400 --> 00:24:15,639 Speaker 9: parts of the economy have been suffering, housing, all the 494 00:24:15,680 --> 00:24:18,400 Speaker 9: interest rates, that durable goods, you know, consumer goods which 495 00:24:18,400 --> 00:24:22,040 Speaker 9: have been under pressure, commodity sectors, transportation, There's been no 496 00:24:22,200 --> 00:24:25,920 Speaker 9: volume going through the economy, no velocity in the real economy, 497 00:24:26,160 --> 00:24:29,760 Speaker 9: and the way that the administration is changing the policy. 498 00:24:29,960 --> 00:24:32,680 Speaker 9: In addition to the FED now cutting, hopefully next year 499 00:24:32,960 --> 00:24:35,919 Speaker 9: you'll see the private economy now doing much better, the 500 00:24:35,960 --> 00:24:38,239 Speaker 9: government no longer crowding out these areas that have been 501 00:24:38,320 --> 00:24:40,520 Speaker 9: under pressure. But we do need to get that trend 502 00:24:40,560 --> 00:24:42,520 Speaker 9: that if the FED needs to do more, the FED 503 00:24:42,560 --> 00:24:44,600 Speaker 9: needs to cut race and they need to probably provide 504 00:24:44,640 --> 00:24:45,280 Speaker 9: some balance sheet. 505 00:24:45,600 --> 00:24:45,920 Speaker 4: I say. 506 00:24:45,920 --> 00:24:47,560 Speaker 5: One of the things that Neil talked about was his 507 00:24:47,600 --> 00:24:50,159 Speaker 5: fear that even if they cut in December, they're not 508 00:24:50,200 --> 00:24:52,920 Speaker 5: going to lay out a path for continuous cuts, and 509 00:24:53,040 --> 00:24:57,120 Speaker 5: Fed Governor Waller seemingly enforcing that speaking on Fox moments ago, 510 00:24:57,200 --> 00:24:58,960 Speaker 5: saying you might see more of a meeting by meeting 511 00:24:59,000 --> 00:25:02,040 Speaker 5: approach once you get to January. If you do get 512 00:25:02,040 --> 00:25:04,720 Speaker 5: that posturing from the FED that maybe they cut in December, 513 00:25:05,400 --> 00:25:07,919 Speaker 5: but it's a meeting by meeting approach, They're not necessarily 514 00:25:07,920 --> 00:25:10,840 Speaker 5: going to cut in every single one. Is that enough 515 00:25:10,880 --> 00:25:11,560 Speaker 5: to allow. 516 00:25:11,320 --> 00:25:12,040 Speaker 4: For that rotation? 517 00:25:12,200 --> 00:25:14,080 Speaker 5: Or do you need a clear passive cuts to get it? 518 00:25:14,200 --> 00:25:15,560 Speaker 9: No, we need a ladder. And I think we're going 519 00:25:15,600 --> 00:25:17,600 Speaker 9: to get there one of two ways. Either the data, 520 00:25:17,720 --> 00:25:19,960 Speaker 9: you know, the labor data is going to basically support 521 00:25:20,000 --> 00:25:21,920 Speaker 9: our view or my view that we had a rate 522 00:25:21,960 --> 00:25:24,960 Speaker 9: of change trough and the labor markets in April, okay, 523 00:25:24,960 --> 00:25:26,600 Speaker 9: and so that data they will allow the FED to 524 00:25:26,640 --> 00:25:29,000 Speaker 9: cut more or signal they're going to cut more. The 525 00:25:29,040 --> 00:25:31,360 Speaker 9: second one is that we get more financial stress. 526 00:25:31,560 --> 00:25:33,040 Speaker 8: Okay, that's what's been going on. 527 00:25:33,080 --> 00:25:34,840 Speaker 9: We think the market We wrote about this back in 528 00:25:34,840 --> 00:25:37,000 Speaker 9: September early October, we thought the market was going to 529 00:25:37,000 --> 00:25:39,800 Speaker 9: have a ten to fifteen percent correction because the liquidity 530 00:25:39,880 --> 00:25:42,439 Speaker 9: wasn't there, that the balance you was tightening, And we 531 00:25:42,440 --> 00:25:45,480 Speaker 9: think there's evidence that that correction is well advanced. Okay, 532 00:25:45,520 --> 00:25:48,399 Speaker 9: all the momentum stocks, you know, Crypto obviously is the 533 00:25:48,440 --> 00:25:51,040 Speaker 9: topic of the day, down thirty percent for bitcoin. I mean, 534 00:25:51,080 --> 00:25:53,440 Speaker 9: these things are telling you that the market is worried 535 00:25:53,440 --> 00:25:57,280 Speaker 9: about this liquidity. So as usual, the markets will dictate 536 00:25:58,000 --> 00:26:00,680 Speaker 9: the fed's timing. So if the market really once and Look, 537 00:26:00,720 --> 00:26:02,920 Speaker 9: markets are like children, right, they have a little temper 538 00:26:02,960 --> 00:26:03,960 Speaker 9: tantrum and then and. 539 00:26:03,880 --> 00:26:05,119 Speaker 8: Then the Federal respond to that. 540 00:26:05,560 --> 00:26:08,399 Speaker 9: So is this like a Many twenty eighteen in that regard, right, 541 00:26:08,680 --> 00:26:10,000 Speaker 9: that you kind of go into end of the year 542 00:26:10,280 --> 00:26:12,600 Speaker 9: and then there's stress in some of these financial metrics 543 00:26:12,600 --> 00:26:14,840 Speaker 9: that the Fed cares about, and then they provide more 544 00:26:14,880 --> 00:26:17,600 Speaker 9: balance sheet So we think there's sort of this title 545 00:26:17,640 --> 00:26:20,000 Speaker 9: war going back and forth, but ultimately it results in 546 00:26:20,040 --> 00:26:21,280 Speaker 9: a more dubbish policy path. 547 00:26:21,520 --> 00:26:23,520 Speaker 5: On the point of Crypto, a lot was made, I mean, 548 00:26:23,560 --> 00:26:26,000 Speaker 5: even from Bill Ackman basically saying things that he thought 549 00:26:26,000 --> 00:26:28,159 Speaker 5: weren't correlated all of a sudden were that Fanny and 550 00:26:28,200 --> 00:26:30,480 Speaker 5: Freddy were selling off because the people who were buying 551 00:26:30,480 --> 00:26:33,520 Speaker 5: Crypto were the same people in those names did last 552 00:26:33,560 --> 00:26:36,440 Speaker 5: week in the week before's episode. Given how much crypto falls, 553 00:26:36,480 --> 00:26:40,200 Speaker 5: show some vulnerability within the market structure, within who owns 554 00:26:40,240 --> 00:26:43,159 Speaker 5: these stocks, and how fragile and weak some of those hands. 555 00:26:42,920 --> 00:26:44,920 Speaker 8: Are, I don't think it's showing anything new. I think 556 00:26:44,920 --> 00:26:46,119 Speaker 8: this has been their whole time, right, I. 557 00:26:46,119 --> 00:26:47,680 Speaker 9: Mean, I don't people waking up to the idea that 558 00:26:47,760 --> 00:26:50,040 Speaker 9: liquidity is important for the market. I mean, obviously I 559 00:26:50,080 --> 00:26:52,080 Speaker 9: don't know what they're doing. I mean that's kind of crazy. 560 00:26:52,240 --> 00:26:55,320 Speaker 9: Of course, liquidity matters. I mean liquidity is, and especially 561 00:26:55,359 --> 00:26:57,560 Speaker 9: the last ten years or so, I think that the 562 00:26:57,560 --> 00:26:59,520 Speaker 9: hard part about liquidity is it's sort of this sort 563 00:26:59,520 --> 00:27:00,440 Speaker 9: of nebul this thing. 564 00:27:00,760 --> 00:27:01,639 Speaker 8: It's hard to measure. 565 00:27:02,080 --> 00:27:03,920 Speaker 9: And I've spent a lot, like the last two or 566 00:27:03,920 --> 00:27:06,720 Speaker 9: three years trying to develop a better skill set around that, 567 00:27:06,800 --> 00:27:08,639 Speaker 9: and I think we've got a better handle, but I 568 00:27:09,040 --> 00:27:11,200 Speaker 9: would I would say it still is one of these 569 00:27:11,240 --> 00:27:13,439 Speaker 9: things that's sort of the invisible hand. And so what 570 00:27:13,480 --> 00:27:14,679 Speaker 9: you have to do is you have to look at 571 00:27:14,720 --> 00:27:17,840 Speaker 9: the market to tell you when liquidity is tight or not. 572 00:27:18,200 --> 00:27:20,600 Speaker 1: So you kept mentioning the balance sheet. Are you saying 573 00:27:20,680 --> 00:27:21,760 Speaker 1: QUE is going to start again? 574 00:27:22,160 --> 00:27:23,800 Speaker 9: Well, they may not call it Q, but yeah, the 575 00:27:23,800 --> 00:27:27,199 Speaker 9: balance sheet needs to expand, not only to support financial markets, 576 00:27:27,240 --> 00:27:29,439 Speaker 9: but to support the better growth that I think is 577 00:27:29,440 --> 00:27:31,760 Speaker 9: coming next year. Right, So if CAPEX really picks up 578 00:27:31,760 --> 00:27:34,720 Speaker 9: for the first time in ten years. OK, let's be honest, 579 00:27:34,800 --> 00:27:37,400 Speaker 9: we haven't seen much capital spending, but the big beautiful 580 00:27:37,400 --> 00:27:40,280 Speaker 9: bill is in scenting that that's a usage of capital 581 00:27:40,560 --> 00:27:42,320 Speaker 9: that needs to be supplied by somebody. 582 00:27:42,359 --> 00:27:44,360 Speaker 8: So the balance sheet needs to grow. 583 00:27:44,040 --> 00:27:47,040 Speaker 9: Just to help the economy and the markets, and so 584 00:27:47,080 --> 00:27:49,560 Speaker 9: we can call it QE, call it not QE, but 585 00:27:49,680 --> 00:27:50,960 Speaker 9: generally they need to expand that. 586 00:27:51,040 --> 00:27:53,679 Speaker 1: How much is a seventy eight hundred target predicated on 587 00:27:53,720 --> 00:27:55,920 Speaker 1: the idea of the FED cutting rates and using its 588 00:27:55,920 --> 00:27:57,600 Speaker 1: balance sheet to help support liquidity. 589 00:27:57,680 --> 00:27:58,400 Speaker 8: It's very important. 590 00:27:58,440 --> 00:28:00,439 Speaker 9: I mean, I would say, if we don't get at 591 00:28:00,520 --> 00:28:03,760 Speaker 9: least one of those items surprising the market's meaning more 592 00:28:03,800 --> 00:28:06,320 Speaker 9: than three cuts, or we get more balance sheet expansion, 593 00:28:06,359 --> 00:28:09,080 Speaker 9: call a queue, call it something else, okay, yo, curve control. 594 00:28:08,840 --> 00:28:09,720 Speaker 8: Whatever you want to call it. 595 00:28:09,880 --> 00:28:10,080 Speaker 4: Okay. 596 00:28:10,080 --> 00:28:12,320 Speaker 9: If we don't get some combination of that, then we're 597 00:28:12,359 --> 00:28:13,240 Speaker 9: not going to reach our target. 598 00:28:13,320 --> 00:28:15,200 Speaker 8: So I'm assuming that we get. 599 00:28:15,000 --> 00:28:18,360 Speaker 9: There either through the labor data or through some financial stress. 600 00:28:18,480 --> 00:28:20,280 Speaker 1: So it has been so far that the AI trade 601 00:28:20,280 --> 00:28:23,800 Speaker 1: has maintained any kind of equity valuation, despite the fact 602 00:28:23,840 --> 00:28:26,040 Speaker 1: that people are getting increasingly worried about an economy that 603 00:28:26,040 --> 00:28:26,840 Speaker 1: you think already. 604 00:28:26,560 --> 00:28:27,520 Speaker 6: Has gone through recession. 605 00:28:27,960 --> 00:28:30,280 Speaker 1: I just wonder do you think that ship sailed in 606 00:28:30,359 --> 00:28:32,560 Speaker 1: terms of AI leadership propic things up. Do you think 607 00:28:32,600 --> 00:28:36,199 Speaker 1: that if we don't get the real economy reaccelerating, you 608 00:28:36,280 --> 00:28:38,480 Speaker 1: cannot get the multiples that we currently have. 609 00:28:38,520 --> 00:28:40,360 Speaker 6: Been seeing on the big tech names. 610 00:28:40,440 --> 00:28:42,400 Speaker 9: Yeah, I think it's one of the same. I mean, obviously, 611 00:28:42,480 --> 00:28:44,760 Speaker 9: the investment in AI is on the premise that it 612 00:28:44,760 --> 00:28:47,880 Speaker 9: will lead to higher productivity, adoption and all that works. 613 00:28:47,880 --> 00:28:50,760 Speaker 9: I mean, that's the way technology investment works. So you're 614 00:28:50,800 --> 00:28:51,920 Speaker 9: not going to these stocks are not. 615 00:28:51,920 --> 00:28:52,280 Speaker 8: Going to work. 616 00:28:52,480 --> 00:28:55,040 Speaker 9: Leaders aren't going to work if the foundation itself isn't 617 00:28:55,040 --> 00:28:57,960 Speaker 9: being supported by the technology investment. We assume that is 618 00:28:58,000 --> 00:29:00,000 Speaker 9: going to happen in twenty twenty six. That is part 619 00:29:00,080 --> 00:29:02,760 Speaker 9: of our thesis, Okay, but it's not without risk. So 620 00:29:02,880 --> 00:29:05,360 Speaker 9: our job is to lay out our narrative, which we 621 00:29:05,400 --> 00:29:08,040 Speaker 9: have conviction in, but then to highlight these risks in 622 00:29:08,080 --> 00:29:09,800 Speaker 9: the short term or in the medium term that could 623 00:29:09,880 --> 00:29:11,600 Speaker 9: throw that They could throw that narrative off. 624 00:29:12,080 --> 00:29:12,400 Speaker 8: And he R. 625 00:29:12,440 --> 00:29:14,800 Speaker 5: Denny also joined us earlier just saying that some of 626 00:29:14,840 --> 00:29:17,280 Speaker 5: the air is being taken out of the AI bubble, 627 00:29:17,320 --> 00:29:19,600 Speaker 5: and to him that meant that the melt tup that 628 00:29:19,640 --> 00:29:21,520 Speaker 5: we've been seeing is going to be harder to come by. 629 00:29:22,120 --> 00:29:24,760 Speaker 5: Has something changed, at least with that blind willingness to 630 00:29:24,800 --> 00:29:27,960 Speaker 5: continue to buy AI related stocks regardless of how much 631 00:29:28,000 --> 00:29:30,080 Speaker 5: they're spending and what the return on that spend. 632 00:29:29,880 --> 00:29:31,640 Speaker 9: Is well, I mean, this is a natural evolution of 633 00:29:31,640 --> 00:29:33,720 Speaker 9: any capital spending cycle. There's always going to be a 634 00:29:33,800 --> 00:29:36,040 Speaker 9: challenge on the return you're going to get. And this 635 00:29:36,120 --> 00:29:37,959 Speaker 9: is you know, we've seen this multiple times. 636 00:29:37,960 --> 00:29:38,880 Speaker 8: We saw it a year ago. 637 00:29:38,920 --> 00:29:41,240 Speaker 9: We've talked about this, you know multiple times. In July 638 00:29:41,400 --> 00:29:44,240 Speaker 9: of twenty twenty four, that was the peak and sort 639 00:29:44,240 --> 00:29:47,200 Speaker 9: of an AI CAMPACKX deceleration. So this is an EBB 640 00:29:47,240 --> 00:29:49,160 Speaker 9: and flow. What I like to look at is the 641 00:29:49,240 --> 00:29:52,160 Speaker 9: AI spenders, how are those stocks reacting? Is the market 642 00:29:52,240 --> 00:29:56,520 Speaker 9: enforcing discipline on the AI spenders, which then trickles down 643 00:29:56,520 --> 00:29:59,640 Speaker 9: into the campacks beneficiaries. But we think this is going 644 00:29:59,680 --> 00:30:01,960 Speaker 9: to happen. The money's been raised now, so we don't 645 00:30:02,000 --> 00:30:04,360 Speaker 9: think the debt markers are now involved, and so that 646 00:30:04,400 --> 00:30:06,120 Speaker 9: money is not going to sit on these balancees. 647 00:30:06,160 --> 00:30:07,040 Speaker 8: It's going to be spent. 648 00:30:07,400 --> 00:30:10,360 Speaker 9: The question is what's the payoff look like and what's 649 00:30:10,400 --> 00:30:12,320 Speaker 9: the timing of that payoff. We think we'll see some 650 00:30:12,360 --> 00:30:14,400 Speaker 9: of that in twenty twenty six, twenty twenty seven, and 651 00:30:14,720 --> 00:30:17,080 Speaker 9: so now it's just this transition. You're kind of trading 652 00:30:17,080 --> 00:30:18,400 Speaker 9: back and forth. So I want to make it clear 653 00:30:18,680 --> 00:30:21,040 Speaker 9: we think there's a broadening out. That doesn't mean that 654 00:30:21,160 --> 00:30:23,880 Speaker 9: all the AI stuff gets killed and everything else does 655 00:30:23,880 --> 00:30:26,240 Speaker 9: really really well. It can work in harmony. In fact, 656 00:30:26,280 --> 00:30:28,320 Speaker 9: it needs to work in harmony to some degree. 657 00:30:28,480 --> 00:30:30,640 Speaker 5: If you do get a scenario though where let's say 658 00:30:30,720 --> 00:30:32,960 Speaker 5: I don't know, Meta that seems to be one of 659 00:30:32,960 --> 00:30:35,680 Speaker 5: the poster children for not getting that return doesn't get 660 00:30:35,720 --> 00:30:37,200 Speaker 5: it as much, and they need to pull back on 661 00:30:37,240 --> 00:30:39,479 Speaker 5: their spending, but everybody else is still spending. Do you 662 00:30:39,480 --> 00:30:42,760 Speaker 5: only need one pillar to fall to really hurt this 663 00:30:42,920 --> 00:30:45,640 Speaker 5: trade or can just any sort of spending happening within 664 00:30:45,680 --> 00:30:47,960 Speaker 5: this trade, regardless of who the winner is, continue to 665 00:30:48,000 --> 00:30:49,120 Speaker 5: lift all the boats. 666 00:30:49,200 --> 00:30:50,640 Speaker 9: Well, look, I mean, look what's been going on, right, 667 00:30:50,680 --> 00:30:54,280 Speaker 9: So we've seen a massive bifurcation or dispersion and the 668 00:30:54,280 --> 00:30:56,959 Speaker 9: performance of not only the hyperscalers but names within that. 669 00:30:57,160 --> 00:30:59,840 Speaker 9: To me, that's healthy. That's like, not everybody's going to 670 00:30:59,880 --> 00:31:03,120 Speaker 9: win like that. There's all trophies here. I mean, you 671 00:31:03,160 --> 00:31:05,240 Speaker 9: have to actually win the game. But all of these 672 00:31:05,280 --> 00:31:08,520 Speaker 9: companies are competing for the trophy. So in that competition, 673 00:31:08,600 --> 00:31:11,000 Speaker 9: I think we continue to see this velocity of spend, 674 00:31:11,320 --> 00:31:13,320 Speaker 9: and then we're going to see the most exciting part 675 00:31:13,360 --> 00:31:16,120 Speaker 9: about this AI spend to me is we don't even 676 00:31:16,280 --> 00:31:18,520 Speaker 9: know yet. Okay, these new businesses that are going to 677 00:31:18,520 --> 00:31:20,960 Speaker 9: be created, these new industries that are going to be created, 678 00:31:20,960 --> 00:31:23,200 Speaker 9: the efficiencies we're going to get in areas like healthcare 679 00:31:23,480 --> 00:31:27,240 Speaker 9: or education or manufacturing, that's on the come. That's wheally, 680 00:31:27,320 --> 00:31:29,240 Speaker 9: real wealth creation is going to be coming from. 681 00:31:29,320 --> 00:31:31,560 Speaker 1: So next year or maybe the end of this year, 682 00:31:31,600 --> 00:31:33,240 Speaker 1: when we find out who the next FED chair is 683 00:31:33,240 --> 00:31:35,800 Speaker 1: going to be, how much will that matter to you 684 00:31:36,000 --> 00:31:38,520 Speaker 1: in terms of whether your goal case will get realized? 685 00:31:38,520 --> 00:31:40,440 Speaker 6: I mean, who will necessarily be. 686 00:31:40,440 --> 00:31:42,440 Speaker 1: Good for that and who might be a little more 687 00:31:42,480 --> 00:31:43,320 Speaker 1: problematic for that. 688 00:31:43,640 --> 00:31:44,120 Speaker 8: You probably not. 689 00:31:44,120 --> 00:31:46,400 Speaker 9: Don't like my answer, but it doesn't matter to me 690 00:31:46,520 --> 00:31:48,360 Speaker 9: because ultimately, the market's going to tell the. 691 00:31:48,320 --> 00:31:48,880 Speaker 8: FED what to do. 692 00:31:49,320 --> 00:31:51,440 Speaker 9: I mean, that's my general That's always been my view. 693 00:31:51,480 --> 00:31:53,840 Speaker 9: People hate it, but like I'm a markets person, Okay, 694 00:31:53,880 --> 00:31:56,719 Speaker 9: the market's dominant. The markets tell investors what to do, right, 695 00:31:56,760 --> 00:32:00,000 Speaker 9: So the markets will you kind of force their hands. 696 00:32:00,040 --> 00:32:02,760 Speaker 9: And if the markets believe they need more liquidity, they 697 00:32:02,760 --> 00:32:04,560 Speaker 9: will force the faces hand. If the market believes it 698 00:32:04,600 --> 00:32:06,560 Speaker 9: needs more ray cuts, it will force the hand. Because 699 00:32:07,080 --> 00:32:09,480 Speaker 9: we become so financialized at this point right. The FED 700 00:32:09,600 --> 00:32:12,880 Speaker 9: now is basically obligated to make sure that we have 701 00:32:12,920 --> 00:32:15,200 Speaker 9: financial stability to some degree, and they're also they have 702 00:32:15,240 --> 00:32:17,600 Speaker 9: an obligation to help Treasury fund the government. 703 00:32:17,720 --> 00:32:19,720 Speaker 8: So I don't believe the FED is independent. 704 00:32:19,760 --> 00:32:22,640 Speaker 9: I believe they're trying to work in the best interests 705 00:32:22,640 --> 00:32:25,320 Speaker 9: of Americans. Okay, I'm not saying they're dictated by the 706 00:32:25,320 --> 00:32:27,479 Speaker 9: White House, but they are not independent of the markets. 707 00:32:27,480 --> 00:32:30,920 Speaker 9: They're not independent of the funding requirements of the US government. Okay, 708 00:32:30,960 --> 00:32:33,640 Speaker 9: So the Treasury and the FED will work together to 709 00:32:33,680 --> 00:32:35,320 Speaker 9: do the best they can to solve those issues. 710 00:32:36,760 --> 00:32:40,320 Speaker 2: This is the Bloomberg Sevendics podcast, bringing you the best 711 00:32:40,320 --> 00:32:43,400 Speaker 2: in markets, economics, an gio politics. You can watch the 712 00:32:43,440 --> 00:32:46,440 Speaker 2: show live on Bloomberg TV weekday mornings from six am 713 00:32:46,560 --> 00:32:50,560 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 714 00:32:50,680 --> 00:32:52,920 Speaker 2: or anywhere else you listen, and as always, on the 715 00:32:52,920 --> 00:32:55,360 Speaker 2: Bloomberg Terminal and the Bloomberg Business Amp.