WEBVTT - Bloomberg Surveillance TV: November 24th, 2025 0:00:02.400 --> 0:00:09.920 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business App. 0:00:36.720 --> 0:00:40.240 Joining us now from Brussels is US Commerce Secretary Howard 0:00:40.320 --> 0:00:43.160 Lucknick Secretarynk, Thank you so much for being with us. 0:00:43.479 --> 0:00:46.760 I want to start on your discussions with the European Union. 0:00:47.159 --> 0:00:50.199 We were hearing some noise that it doesn't necessarily include 0:00:50.240 --> 0:00:54.640 reducing steel and aluminum terroiffts from fifty percent to fifteen percent? 0:00:54.720 --> 0:00:57.720 Is that off the table for now? 0:00:59.000 --> 0:01:02.000 We're talking about everything is on the table when you 0:01:02.040 --> 0:01:05.039 have such a great partner as the European Union. They 0:01:05.040 --> 0:01:08.360 have four hundred and fifty million people and a twenty 0:01:08.480 --> 0:01:12.360 trillion dollar economy, so the opportunity is great. They would 0:01:12.640 --> 0:01:16.360 like to have steel and aluminum as part of this package. 0:01:16.440 --> 0:01:19.680 And we think it is very very important that they 0:01:19.920 --> 0:01:25.240 understand our digital companies and they reconsider their digital regulations 0:01:25.480 --> 0:01:28.319 to be more inviting to our big companies. They tend 0:01:28.360 --> 0:01:31.400 to tax our big companies and attack our big companies, 0:01:31.640 --> 0:01:34.000 and they're not getting the investment that we're getting. Right, 0:01:34.040 --> 0:01:38.440 You're seeing trillions of dollars of our tech companies investing 0:01:38.480 --> 0:01:41.440 in building data centers in America and they're not getting 0:01:41.440 --> 0:01:41.839 them here. 0:01:41.880 --> 0:01:43.600 So we're talking to them about. 0:01:43.840 --> 0:01:48.360 Take your foot off the regulatory statement, build those data 0:01:48.400 --> 0:01:52.120 centers in America, and in exchange for that, we'll come 0:01:52.200 --> 0:01:54.880 up with a cool steal and aluminum deal that we'll 0:01:54.920 --> 0:01:55.640 all be together. 0:01:55.960 --> 0:01:59.080 So it's all trading. These are trade deals. 0:01:59.200 --> 0:02:02.920 You're talking about opportunities together. Let's bring it all on 0:02:03.000 --> 0:02:05.080 the table. Let's see what we can accomplish. 0:02:05.200 --> 0:02:09.040 Secretary Lutnik, what's the threshold in terms of reducing certain 0:02:09.080 --> 0:02:13.600 regulations in Europe on US tech companies that's required in 0:02:13.720 --> 0:02:16.160 order to create some sort of framework for this deal. 0:02:19.320 --> 0:02:20.320 Well, what the. 0:02:20.320 --> 0:02:25.079 European Union does is they say, well, our digital rules 0:02:25.560 --> 0:02:28.440 they only touch companies above a certain threshold. Of course, 0:02:28.600 --> 0:02:32.160 the only companies above those threshold are all American companies. 0:02:32.160 --> 0:02:35.639 So come on, that can't be the rule. Let's take 0:02:35.680 --> 0:02:36.120 it off. 0:02:36.720 --> 0:02:40.880 Let's settle the outstanding cases against Google and against Microsoft 0:02:40.880 --> 0:02:41.920 and against Amazon. 0:02:42.160 --> 0:02:43.480 Let's put them behind us. 0:02:43.680 --> 0:02:46.919 Let's come up with a reasonable framework where these companies 0:02:46.919 --> 0:02:51.000 can grow and build, and then those companies will agree 0:02:51.400 --> 0:02:55.600 to invest hundreds of billions of dollars of data centers here. 0:02:55.880 --> 0:02:59.040 So the idea is, if they take their foot off 0:02:59.120 --> 0:03:03.160 this regulatory framework and make it more inviting for our companies, 0:03:03.560 --> 0:03:07.600 they can get the benefit of hundreds of billions, possibly 0:03:07.639 --> 0:03:09.600 a trillion dollars of investment a year. 0:03:09.919 --> 0:03:11.800 So the idea is, I'm trying. 0:03:11.520 --> 0:03:14.720 To convince them that winning the way Donald Trump is 0:03:14.760 --> 0:03:18.320 winning in America is the way to go. Look at America, 0:03:18.360 --> 0:03:20.000 look at these growth rates. 0:03:20.080 --> 0:03:23.280 Come on to realize our investment in AI. 0:03:23.480 --> 0:03:29.160 Cape's last quarter exceeded consumer spending in America. We had 0:03:29.200 --> 0:03:31.880 three point eight percent GDP growth. We're going to grow 0:03:31.919 --> 0:03:34.800 over four percent and next year we could grow over 0:03:34.960 --> 0:03:39.720 five percent. You got to embrace what's coming. The AI 0:03:40.000 --> 0:03:43.400 world is coming. Come on, embrace it. That's what we're 0:03:43.440 --> 0:03:46.800 here doing, trying to bring and make our deal with Europe, 0:03:46.800 --> 0:03:48.960 which has a great deal done by Donald Trump. 0:03:49.240 --> 0:03:50.640 Let's make that deal better. 0:03:51.000 --> 0:03:54.360 Secretary Letnik just on that point and point take in 0:03:54.400 --> 0:03:56.880 on what you see as the benefit to embracing that 0:03:56.960 --> 0:03:59.960 tech with the EU over and over again has insisted 0:04:00.080 --> 0:04:03.360 said that it's digital laws are not up for discussion. 0:04:03.880 --> 0:04:06.920 Are you seeing any sort of relenting from them as 0:04:06.920 --> 0:04:09.200 you've been pushing it. Does it seem like they would 0:04:09.200 --> 0:04:10.320 agree to you on this point. 0:04:13.280 --> 0:04:15.720 Well, you know, I see a lot of ministers member. 0:04:15.960 --> 0:04:20.120 There's twenty seven countries, so some are more open minded 0:04:20.120 --> 0:04:22.960 than others. But you know, it's a process which is 0:04:23.320 --> 0:04:26.560 talking to them and telling them that if they want 0:04:26.680 --> 0:04:30.000 to get that kind of investment here, they've got to 0:04:30.120 --> 0:04:30.960 change the model. 0:04:31.080 --> 0:04:33.120 So there's the carrot and the stick. 0:04:33.160 --> 0:04:36.039 You know, if you keep taxing these companies, they're not 0:04:36.120 --> 0:04:38.919 going to give you the investment. So that's my job 0:04:39.000 --> 0:04:41.120 to sort of talk about it and help those American 0:04:41.160 --> 0:04:44.919 companies find their way clear to invest here and to 0:04:45.000 --> 0:04:47.880 grow here. And another example for them, I show them 0:04:47.880 --> 0:04:52.760 that you know, they're ruling out clean diesel for batteries, 0:04:52.839 --> 0:04:55.760 and I try to remind them you don't make batteries 0:04:55.800 --> 0:04:59.680 in Europe. Come on, guys, don't make rules that harm 0:04:59.760 --> 0:05:03.719 your self because you don't make batteries. That's not a 0:05:03.760 --> 0:05:08.040 good idea. Stick with clean diesel, stick with combustion engines. 0:05:08.120 --> 0:05:13.320 Come on, be clever about yourselves and just common sense. 0:05:13.400 --> 0:05:17.279 This is the common sense Trump administration here in Europe, 0:05:17.320 --> 0:05:20.440 trying to remind them that they have an amazing economy 0:05:20.480 --> 0:05:21.440 that can grow and build. 0:05:21.720 --> 0:05:25.120 Will help them grow and build with great trade with America. 0:05:25.200 --> 0:05:28.640 But you can't be silly and sort of embrace just 0:05:28.839 --> 0:05:31.360 batteries which you don't make in Europe. So these are 0:05:31.400 --> 0:05:34.480 the kind of conversations I have. They're pretty fun if 0:05:34.520 --> 0:05:36.520 you ask me, because I get to point to the 0:05:36.560 --> 0:05:41.080 growth in America and say, come on, follow our lead 0:05:41.600 --> 0:05:45.040 and we will have a bigger, better, stronger trade deal. 0:05:45.279 --> 0:05:48.800 We'll add to it, will add excitement to it. 0:05:49.000 --> 0:05:51.640 But you've got to come along with us. Secretary interests 0:05:51.760 --> 0:05:53.200 the model, the growth. 0:05:52.920 --> 0:05:55.880 We've been seeing because the AI has been contributing a 0:05:55.880 --> 0:05:57.159 lot to this American economy. 0:05:57.160 --> 0:05:58.040 And as a lot of it has been. 0:05:57.920 --> 0:06:00.760 Said about the two speed nature of it. On one hand, 0:06:00.800 --> 0:06:03.159 AI is doing well, and on the other hand, you 0:06:03.200 --> 0:06:06.000 have consumers that are still feeling high prices. You saw 0:06:06.040 --> 0:06:09.200 that play out through the most recent elections. There's been 0:06:09.200 --> 0:06:12.599 a renewed concentration from this Trump administration to try to 0:06:12.640 --> 0:06:18.240 reduce tariffs, especially on things like food, give food, food goods. 0:06:18.560 --> 0:06:20.839 Are you and the rest of this administration as you 0:06:20.880 --> 0:06:24.520 negotiate terror specifically looking at that, trying to find terras 0:06:24.640 --> 0:06:28.120 to bring down to lower the cost of everyday household 0:06:28.200 --> 0:06:29.760 items for American consumers. 0:06:32.760 --> 0:06:33.360 Exactly. 0:06:33.400 --> 0:06:37.760 The Trump administration is exactly about affordability. We are going 0:06:37.880 --> 0:06:41.200 through every line item to try to make sure we 0:06:41.240 --> 0:06:46.520 can drive affordability across the American consumer landscape. Two things though, 0:06:46.880 --> 0:06:52.280 American earnings are growing, right, the average earnings of America, 0:06:52.320 --> 0:06:56.440 their income is growing. So as that grows and we 0:06:56.520 --> 0:06:59.320 drive prices down, and you're going to feel that Golden 0:06:59.360 --> 0:07:03.720 age coming. So it's the combination of earnings growing and 0:07:03.920 --> 0:07:07.320 we are raisor focused on bringing down prices. That's one 0:07:07.320 --> 0:07:09.800 of the things we're doing here today, working together to 0:07:09.840 --> 0:07:13.960 try to bring down prices on average daily products. 0:07:14.120 --> 0:07:16.880 We are working on it. The Trump administration is on it. 0:07:17.160 --> 0:07:19.440 We have a clear direction from the President. 0:07:19.680 --> 0:07:22.840 We are going to lower prices and like things more affordable, 0:07:23.080 --> 0:07:26.920 build We're also going to raise income, raising income as. 0:07:26.760 --> 0:07:29.000 Well, just to build up what Dan's talking about. Though, 0:07:29.080 --> 0:07:31.160 there is a feeling that there is a limit to 0:07:31.160 --> 0:07:33.960 how much tariffs can go up or how much the 0:07:34.000 --> 0:07:37.240 Trump administration may have to reduce tariffs going forward in 0:07:37.400 --> 0:07:41.560 order to address some concerns about cost of living. Has 0:07:41.560 --> 0:07:45.720 it affected your negotiations at all? 0:07:46.200 --> 0:07:47.840 No, I think it's pretty easy. 0:07:47.920 --> 0:07:52.320 The world understands that there's given take in these trade deals, 0:07:52.560 --> 0:07:56.440 and the benefits are clear that the Trump administration has 0:07:56.520 --> 0:07:59.320 created the greatest set of trade deals. You know, the 0:07:59.320 --> 0:08:02.160 President's talk about a two thousand dollars tariff given. Then 0:08:02.280 --> 0:08:04.760 coming back to the American people, you got the one 0:08:04.760 --> 0:08:07.640 big beautiful bill which is going to cut and there's 0:08:07.640 --> 0:08:11.680 going to be significant income growth from people next year 0:08:11.720 --> 0:08:14.280 as that bill comes into play. And we are going 0:08:14.280 --> 0:08:17.800 to focus on the affordability. You saw coffee and cocoa 0:08:17.840 --> 0:08:20.560 and bananas and all those kind of things. Those prices 0:08:20.600 --> 0:08:24.200 came down. You're going to see prices continuously come down, 0:08:24.720 --> 0:08:28.679 energy prices down. You're going to see affordability across the board. 0:08:28.720 --> 0:08:28.920 Here. 0:08:29.240 --> 0:08:33.760 Trump administration is going to win in affordability and income, 0:08:33.880 --> 0:08:36.400 two sides of the coin we're going to win. 0:08:36.559 --> 0:08:38.760 Secretary Latnik, there's been a huge focus and you've been 0:08:38.760 --> 0:08:41.840 talking about how US tech has definitely been the fashion 0:08:42.280 --> 0:08:45.240 of the economic growth over the past couple of years. 0:08:45.440 --> 0:08:48.679 As the Trump administration decided whether or not to allow 0:08:48.800 --> 0:08:51.040 Nvidia to sell the H two hundred chips into China, 0:08:51.040 --> 0:08:54.040 that's been a discussion and something that increasingly people are 0:08:54.080 --> 0:08:55.000 speculating about. 0:08:58.200 --> 0:09:01.600 Well, I've seen that speculation. That kind of decision sits 0:09:01.720 --> 0:09:04.760 right on the desk of Donald Trump. Right He's got 0:09:05.120 --> 0:09:08.040 Jensen from Nvidio who really wants to sell those chips, 0:09:08.080 --> 0:09:09.960 and he's got a good reasons for it. 0:09:10.000 --> 0:09:11.760 There's an enormous number of other. 0:09:11.640 --> 0:09:14.840 People who think that that's something that should be deeply considered. 0:09:15.080 --> 0:09:17.600 And the benefit that we have is we have Donald 0:09:17.600 --> 0:09:19.880 Trump in the Oval office. He is going to weigh 0:09:19.920 --> 0:09:23.720 those decisions. He understands President she the best. He will 0:09:23.760 --> 0:09:26.560 decide whether we go forward with that or not. That's 0:09:26.640 --> 0:09:29.840 on his desk with lots of different advisors. The President 0:09:29.960 --> 0:09:32.199 loves to hear lots of different voices to make those 0:09:32.280 --> 0:09:34.719 kind of decisions, and he'll decide whether we sell those 0:09:34.760 --> 0:09:37.000 chips or not, and then we will go execute it. 0:09:37.080 --> 0:09:38.600 However, he decides to go forward. 0:09:38.600 --> 0:09:41.520 There's a bigger question here, Secretary Lutnik, about what national 0:09:41.559 --> 0:09:44.320 security is. Is it more of a national security risk 0:09:44.480 --> 0:09:47.480 to give China some of these high powered chips or 0:09:47.520 --> 0:09:49.760 is it more of a national security risk to not 0:09:49.840 --> 0:09:51.600 have US tech in China? 0:09:51.760 --> 0:09:53.160 Has your view on that changed? 0:09:56.040 --> 0:09:59.680 Well, that's the question exactly as well, put and in 0:09:59.679 --> 0:10:02.160 front of the president, which is, do you want to 0:10:02.320 --> 0:10:06.760 sell China some chips and keep them using our tech 0:10:07.000 --> 0:10:10.400 and our tech stack, or do you say to them, look, 0:10:10.600 --> 0:10:13.040 we're not going to sell you our best chips. We're 0:10:13.080 --> 0:10:14.839 just going to hold off on that and we're going 0:10:14.880 --> 0:10:17.920 to compete in the AI race ourselves. So that is 0:10:18.000 --> 0:10:20.640 the question. It's in front of the president. He's going 0:10:20.679 --> 0:10:23.760 to decide. It's a really really interesting question. He's got 0:10:23.800 --> 0:10:26.360 all the information, he's got lots and lots of experts 0:10:26.440 --> 0:10:28.559 talking to him, and he's going to decide which way 0:10:28.600 --> 0:10:29.840 he wants to go forward. 0:10:30.200 --> 0:10:31.120 Secretary Lutnick. 0:10:31.200 --> 0:10:34.760 Meanwhile, use of IEPA for terroiffts in front of the 0:10:34.840 --> 0:10:38.319 Supreme Court. The feedback has been skepticism so far from 0:10:38.360 --> 0:10:42.600 many of the justices, conservative ones included. As this plays out, 0:10:42.679 --> 0:10:45.640 can you walk us through how you prioritize the different 0:10:45.640 --> 0:10:50.160 alternatives should the administration's use of terrorist via IEPA get 0:10:50.200 --> 0:10:50.760 struck down. 0:10:53.800 --> 0:10:56.319 So I was in the Supreme Court. I sat through 0:10:56.360 --> 0:11:00.400 the whole argument. The justices were tough on on the 0:11:00.480 --> 0:11:05.440 beginning on the Department of Justices, you know, our person, 0:11:05.679 --> 0:11:08.680 but then they were much tougher on the other side, 0:11:09.360 --> 0:11:13.160 much much tougher. So I left that day feeling very 0:11:13.200 --> 0:11:16.480 confident that we and the President was going to prevail 0:11:16.880 --> 0:11:19.640 on these IEPA tariffs. So I think you're hearing it 0:11:19.679 --> 0:11:21.880 from me. I think I was there in the courtroom. 0:11:22.120 --> 0:11:24.320 I heard it all the way through. I didn't sort 0:11:24.320 --> 0:11:27.360 of write my story halfway through. I said all the 0:11:27.400 --> 0:11:29.800 way through to the end. The President's going to win 0:11:29.880 --> 0:11:32.120 that case, because that makes sense for. 0:11:32.120 --> 0:11:32.600 Him to win. 0:11:32.720 --> 0:11:35.720 But I want to remind you the president has lots 0:11:35.760 --> 0:11:38.400 of other authorities. He has two thirty twos, he has 0:11:38.440 --> 0:11:41.040 three ozh ones, he has three thirty eights, he has 0:11:41.080 --> 0:11:44.480 a whole variety one twelve, one twenty two. He's got 0:11:44.520 --> 0:11:48.720 all sorts of other powers. And tariffs are going to 0:11:48.760 --> 0:11:52.400 be part of this administration going forward, But I don't 0:11:52.480 --> 0:11:55.360 think they're going to be necessary because the President's going 0:11:55.400 --> 0:11:58.280 to win the IEPA case in front of the Supreme Court. 0:11:58.400 --> 0:11:59.200 Secretary Lutnik. 0:11:59.200 --> 0:12:02.079 Theoretically, if the US did lose that court in front 0:12:02.080 --> 0:12:05.280 of the Supreme Court, in terms of AEPA as justification, 0:12:05.480 --> 0:12:09.240 how quickly could you roll out that package of additional measures, 0:12:09.240 --> 0:12:11.360 whether it's Section three or one or section two thirty two. 0:12:14.360 --> 0:12:16.920 I think many of them could come very very quickly. 0:12:17.240 --> 0:12:20.480 I really I don't think most of the big deals. 0:12:20.840 --> 0:12:23.480 I don't think are in jeopardy. I think the people 0:12:23.480 --> 0:12:26.240 who did those deals, they don't want their. 0:12:26.120 --> 0:12:27.000 Tariffs to go up. 0:12:27.240 --> 0:12:29.720 They want their auto tariffs that's durable. That was in 0:12:29.760 --> 0:12:31.760 a nine to zero at the Supreme Court. You have 0:12:31.840 --> 0:12:35.080 auto tariffs, you have semiconductors, you have pharmaceuticals, you have 0:12:35.160 --> 0:12:38.000 steal and aluminum, you have lumber. All of those are 0:12:38.080 --> 0:12:40.840 durable tariffs. They're not going anywhere. I think our big 0:12:41.080 --> 0:12:45.120 trade deals are here to stay the way they are now. 0:12:45.280 --> 0:12:47.000 Right and the others. 0:12:47.160 --> 0:12:49.400 I think we're going to win the case, but I 0:12:49.440 --> 0:12:52.760 think it would be relatively straightforward for the President to 0:12:52.920 --> 0:12:55.680 replace it with other means. But it's not going to 0:12:55.679 --> 0:12:59.360 be necessary because the President has used AEPA correctly, and 0:12:59.400 --> 0:12:59.959 he's going to win. 0:13:00.200 --> 0:13:00.480 Case. 0:13:00.559 --> 0:13:03.160 Secretary Lutnik, we know you've got a really busy morning, 0:13:03.200 --> 0:13:06.000 but before we let you go, has the Supreme Core 0:13:06.160 --> 0:13:09.280 Case influenced any of your discussions at all with trade 0:13:09.320 --> 0:13:12.600 partners in terms of what the potential limits are to 0:13:12.679 --> 0:13:15.880 your ability to negotiate or potentially keep some of the 0:13:15.880 --> 0:13:18.160 ongoing negotiations that have been already struck. 0:13:21.000 --> 0:13:23.840 So that's exactly the point I'm here in Europe. It 0:13:23.880 --> 0:13:26.480 hasn't come up at all. The fact is we've made 0:13:26.520 --> 0:13:29.440 a great deal with Europe. They think it's important to them, 0:13:29.640 --> 0:13:34.559 it's important to us. Includes semiconductors, it includes pharmaceuticals, it 0:13:34.559 --> 0:13:37.719 includes autos. These are things that are important to the 0:13:37.760 --> 0:13:41.160 European Union, and they're important. The whole trade deal is 0:13:41.200 --> 0:13:43.760 important to America. I think this deal stands. I think 0:13:43.760 --> 0:13:47.000 the question that we are negotiating is how to make 0:13:47.000 --> 0:13:49.720 the deal bigger, how to make it stronger, how to 0:13:49.720 --> 0:13:52.880 make it more inclusive, how to bring in these digital 0:13:53.640 --> 0:13:57.000 markets act and try to improve that for digital America. 0:13:57.200 --> 0:13:59.599 How to maybe do steal and aluminum and how to 0:13:59.679 --> 0:14:03.720 include that, how to do things bigger and better together 0:14:03.800 --> 0:14:07.080 between our two great economies. I think they're going to 0:14:07.080 --> 0:14:10.600 do it standards, make sure they take US autos here, 0:14:10.960 --> 0:14:14.640 and make sure we are working together to extend both 0:14:14.679 --> 0:14:18.280 the European Union standards and American standards throughout the world. 0:14:18.679 --> 0:14:23.280 I don't feel that the AIPA case is here at all. 0:14:23.680 --> 0:14:25.880 I think the opportunities for us to grow and do 0:14:25.960 --> 0:14:26.720 business together. 0:14:27.040 --> 0:14:27.840 People want to. 0:14:27.840 --> 0:14:30.720 Have their trade deals with America, and I think these deals. 0:14:30.440 --> 0:14:34.640 Are durable, stay with us. Mulblindex Savanna's coming up off to. 0:14:34.680 --> 0:14:46.960 This bil dot a runmap writing odds for December should 0:14:47.000 --> 0:14:49.720 be sub fifty. That Daily is saying December is an 0:14:49.760 --> 0:14:53.560 open question means it's probably caput. No December, it means 0:14:53.560 --> 0:14:54.280 no January. 0:14:54.360 --> 0:14:56.080 Neil joins us now he is grumpy. 0:14:56.120 --> 0:14:58.560 He wants the rate cuts, he doesn't see them. Why 0:14:58.560 --> 0:15:00.720 do you put this off so much given the fact 0:15:01.040 --> 0:15:03.760 that New York Fed President John Williams seemed to really 0:15:03.800 --> 0:15:06.200 open the door to a rate cut next week and 0:15:06.320 --> 0:15:08.960 next month, and we do have that closeness between him 0:15:09.440 --> 0:15:10.040 and Fed shir J. 0:15:10.160 --> 0:15:10.480 Powell. 0:15:10.520 --> 0:15:12.520 Well, you're doing me not a solid there. I mean 0:15:12.560 --> 0:15:15.160 I wrote that before Williams came out. 0:15:15.240 --> 0:15:18.720 I mean it's again Meal data is positive for December 0:15:18.760 --> 0:15:20.200 rate because of John Williams. 0:15:20.240 --> 0:15:22.440 I mean, I don't look, I think the sort of 0:15:23.760 --> 0:15:26.840 I think the bigger problem is that we're even debating 0:15:27.640 --> 0:15:29.720 whether it is or isn't really right. I mean, if 0:15:29.720 --> 0:15:32.280 they don't go in December, maybe they wait for the data. 0:15:32.320 --> 0:15:34.680 We know that the employment and the inflation numbers come 0:15:34.720 --> 0:15:37.840 out actually after the FED meeting, So perhaps they come 0:15:37.920 --> 0:15:41.200 up with some consensus where they pause, they want to 0:15:41.200 --> 0:15:43.000 see the data, then they go in January. I mean 0:15:43.040 --> 0:15:45.760 that's possible too, But to me, the bigger issue is 0:15:46.000 --> 0:15:49.200 what's really there to debate and why are we having 0:15:49.200 --> 0:15:52.200 this debate. I mean, unemployment has been climbing. It's actually 0:15:52.240 --> 0:15:55.520 been rising for three consecutive months. It wasn't We were 0:15:55.600 --> 0:15:57.240 very close to going to four and a half percent. 0:15:57.360 --> 0:16:01.320 Everything that's come out since September. In October, we saw 0:16:01.400 --> 0:16:05.120 that war notices, the worker adjustment retraining notices rose, we 0:16:05.160 --> 0:16:09.320 saw layoff announcements rise. So what makes anyone think that 0:16:09.400 --> 0:16:11.160 unemployment is going to stabilize here? 0:16:11.800 --> 0:16:11.960 You know? 0:16:12.040 --> 0:16:14.080 My sense is that it's much easier to tell a 0:16:14.080 --> 0:16:16.880 story for why unemployment is going up then why inflation 0:16:16.960 --> 0:16:19.840 is going to reaccelerate, and so the fact that we're 0:16:19.840 --> 0:16:22.880 having this big debate about whether or not we can 0:16:22.920 --> 0:16:26.880 go twenty five in December or January, to me is 0:16:27.400 --> 0:16:28.160 a bit ridiculous. 0:16:28.200 --> 0:16:29.400 I mean, it almost feels like I. 0:16:29.400 --> 0:16:32.040 Don't want to be fatalistic, but it does feel like 0:16:32.440 --> 0:16:34.600 the train has already kind of left the station. I mean, 0:16:35.000 --> 0:16:38.160 even if they are able to cobble together at consensus, Lisa, 0:16:39.120 --> 0:16:43.120 the likelihood is is that that's probably going to be it. 0:16:43.200 --> 0:16:46.120 They're not going to signal a path of ease and 0:16:46.200 --> 0:16:46.840 going forward. 0:16:47.040 --> 0:16:47.840 So the train has. 0:16:47.840 --> 0:16:49.680 Left the station implies that you see a greater chance 0:16:49.720 --> 0:16:50.160 of recession. 0:16:50.240 --> 0:16:52.400 Is that correct? I do so for next year? 0:16:52.440 --> 0:16:54.280 You see actually a greater chance of re session next year, 0:16:54.280 --> 0:16:57.120 which is completely counter we're hearing from every company and 0:16:57.240 --> 0:16:58.160 every Wall Street. 0:16:57.920 --> 0:16:59.920 Strategist, which is often how it happens. But that's what 0:17:00.160 --> 0:17:02.080 you say, Yeah, I do. 0:17:02.160 --> 0:17:03.960 I mean I think if you go like sort of 0:17:04.000 --> 0:17:06.679 industry by industry, like, what area do you think is 0:17:06.720 --> 0:17:08.119 going to look better going forward? 0:17:08.160 --> 0:17:08.640 I mean. 0:17:10.440 --> 0:17:13.240 With respect to employment? Right, I mean, so you know 0:17:13.320 --> 0:17:17.439 I've talked about residential construction. Home builders are sitting on 0:17:17.480 --> 0:17:19.520 more on soold inventory. So which way do we think 0:17:19.560 --> 0:17:23.320 residential construction jobs will go? The freight sector is in recession. 0:17:23.560 --> 0:17:26.880 It's in recession going into the holidays. As capacity comes 0:17:26.880 --> 0:17:28.879 out of the freight industry, which way do we think 0:17:29.359 --> 0:17:32.880 trucking and rail and trans employment is going to go? 0:17:33.119 --> 0:17:35.040 What about restaurants? I mean, if you pull up a 0:17:35.119 --> 0:17:37.640 chart of restaurants, I mean their margins are being squeezed, 0:17:37.640 --> 0:17:40.160 they're telling us that they're holding the line on price. 0:17:40.240 --> 0:17:42.240 If their margins are being squeezed, which way do we 0:17:42.280 --> 0:17:44.280 think employment is going to go for them? Look at 0:17:44.359 --> 0:17:47.640 lumber prices, oil prices. You know, if you're a sawmill, 0:17:47.720 --> 0:17:50.400 can you actually make a profit with lumber prices where 0:17:50.400 --> 0:17:50.720 they are? 0:17:50.760 --> 0:17:51.359 Probably not? 0:17:51.480 --> 0:17:54.080 So if you're in the woods product employment, which way 0:17:54.119 --> 0:17:56.320 do we think that's going? How about people working on 0:17:56.359 --> 0:17:59.919 oil rigs? Also probably down? So you know, there's a 0:18:00.080 --> 0:18:03.520 lot of this sort of myopic fixation on initial jobless claims, 0:18:03.520 --> 0:18:05.600 and you know initial claims have to go up. 0:18:05.600 --> 0:18:06.840 We haven't seen initial claims. 0:18:06.880 --> 0:18:10.080 Well, initial claims aren't really a leading indicator, right, They're 0:18:10.080 --> 0:18:13.399 just an indicator that comes out every week. What we 0:18:13.440 --> 0:18:16.240 know about how businesses behave is they shut hiring off 0:18:16.280 --> 0:18:19.040 first they've done that, and then they lay people off 0:18:19.080 --> 0:18:20.800 as a last resort. And so if you have to 0:18:20.800 --> 0:18:23.520 ask me which is the direction of layoffs over the 0:18:23.560 --> 0:18:25.800 next six to twelve months, my argument would be as 0:18:25.840 --> 0:18:26.639 probably higher. 0:18:26.920 --> 0:18:28.920 This is an economy though that defied a lot of 0:18:28.960 --> 0:18:32.399 the worst expectations for a downturn after COVID, and a 0:18:32.400 --> 0:18:34.440 lot of it was attributed to the government giving out 0:18:34.480 --> 0:18:37.240 more stimulus. If we don't get cuts from the Fed. 0:18:37.480 --> 0:18:40.200 But what we do get is Washington, DC handing out 0:18:40.240 --> 0:18:43.600 two thousand dollars tare freebate checks. You get tax rebates 0:18:43.640 --> 0:18:46.159 too from the one big beautiful bill. Could that be 0:18:46.320 --> 0:18:48.920 enough to save a recession from this economy? 0:18:48.960 --> 0:18:50.960 Well, I mean, I've never in my career been able 0:18:51.000 --> 0:18:53.359 to figure out a way to make tax refunds useful 0:18:53.359 --> 0:18:55.800 in terms of predicting what happens with consumption, because it 0:18:55.800 --> 0:18:59.960 doesn't actually change permanent income. That's what ultimately drives consumer spend. 0:19:00.359 --> 0:19:04.960 So to me, it's probable that people save the refunds 0:19:04.960 --> 0:19:07.880 that they get because they're worried about job loss. Right, 0:19:07.920 --> 0:19:10.440 So to me, it's that income constraint that matters. That's 0:19:10.480 --> 0:19:13.119 more binding than whatever people get with the refunds. You know, 0:19:13.160 --> 0:19:16.000 I don't really have an opinion on two thousand dollars rebates. 0:19:16.320 --> 0:19:19.960 Treasury Secretary Bessett has said that they probably need Congress 0:19:20.000 --> 0:19:23.240 for that, So you know, the President can say what 0:19:23.280 --> 0:19:27.720 he wants, but ultimately, you know, to me, this is 0:19:27.760 --> 0:19:32.119 really about monetary policy being too tight, and that's kind 0:19:32.160 --> 0:19:34.680 of setting in motion a slowing in the economy. 0:19:34.720 --> 0:19:37.400 So then there's a question about the five speakers voting 0:19:37.400 --> 0:19:39.439 speakers we've heard from that don't want cuts. What do 0:19:39.480 --> 0:19:41.080 they see that you don't reas appoint It's one of 0:19:41.119 --> 0:19:44.840 the possibilities Corporate America is really strong. Another possibility, and 0:19:44.880 --> 0:19:47.320 this was raised a few weeks ago by Evercore, was 0:19:47.320 --> 0:19:51.080 that it is FOMC members digging their heels in ahead 0:19:51.080 --> 0:19:53.560 of what they see as a Trump appointed chair who 0:19:53.600 --> 0:19:56.320 will want cuts, and then setting the groundwork now for 0:19:56.400 --> 0:19:58.520 fighting back against that. Do you think there is some 0:19:58.600 --> 0:20:01.280 politics to play behind what these officials are saying. 0:20:02.119 --> 0:20:04.199 I mean, it's possible, but I also take them out 0:20:04.240 --> 0:20:06.720 their word. I mean, their basic argument seems to be 0:20:06.840 --> 0:20:09.199