1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:07,800 --> 00:00:10,360 Speaker 2: We turn now to Dexis, where our Texas Bureau Chief 3 00:00:10,440 --> 00:00:13,160 Speaker 2: Julie Fine is sitting down with Robert Kaplan, the former 4 00:00:13,200 --> 00:00:14,560 Speaker 2: president of the Dallas FED. 5 00:00:14,680 --> 00:00:18,160 Speaker 3: Julie, Hey, Rob, thanks so much for being with us. 6 00:00:18,600 --> 00:00:20,599 Speaker 3: You know, they were just talking about Joe and Kayley 7 00:00:20,640 --> 00:00:23,840 Speaker 3: were just discussing tariffs are set to go into effect tomorrow. 8 00:00:23,880 --> 00:00:26,560 Speaker 3: In your role as vice president at Goldman Sachs, you're 9 00:00:26,600 --> 00:00:29,720 Speaker 3: talking to CEOs all over the country. How are they 10 00:00:29,760 --> 00:00:33,360 Speaker 3: handling this possibility, What changes are they making to their businesses. 11 00:00:34,680 --> 00:00:39,000 Speaker 2: So there's there's a little bit of skepticism as to 12 00:00:39,080 --> 00:00:42,560 Speaker 2: whether ultimately they're going to be tariffs on Mexico and Canada. 13 00:00:42,600 --> 00:00:46,720 Speaker 2: And the reason for that is logistics and supply chain 14 00:00:46,840 --> 00:00:52,480 Speaker 2: arrangements with Mexico and Canada are so central to domiciling 15 00:00:52,560 --> 00:00:56,720 Speaker 2: manufacturing in the United States and global competitiveness. I think 16 00:00:56,760 --> 00:00:59,920 Speaker 2: there's still a hope that even if they're put on, 17 00:01:00,080 --> 00:01:03,080 Speaker 2: they want on beyond beyond for long, and maybe they'll 18 00:01:03,120 --> 00:01:04,880 Speaker 2: be threatened and never get put on. 19 00:01:05,160 --> 00:01:06,840 Speaker 1: I think they feel differently about. 20 00:01:06,600 --> 00:01:11,480 Speaker 2: Tariffs on China, maybe relating to Europe, but I think 21 00:01:11,520 --> 00:01:15,200 Speaker 2: people believe Eventually there needs to be a North American 22 00:01:15,280 --> 00:01:19,440 Speaker 2: strategy for US trade, and that means Mexico and Canada 23 00:01:19,560 --> 00:01:22,959 Speaker 2: are very central to that North American strategy. 24 00:01:23,120 --> 00:01:25,840 Speaker 3: So do you think that CEOs are changing their businesses 25 00:01:25,920 --> 00:01:28,280 Speaker 3: right now planning? You know, what are you hearing in 26 00:01:28,280 --> 00:01:28,959 Speaker 3: that realm? 27 00:01:29,280 --> 00:01:35,240 Speaker 2: I'd say they are pausing and trying not to overreact, 28 00:01:36,720 --> 00:01:39,080 Speaker 2: but are being prepared that they may have to make 29 00:01:39,120 --> 00:01:41,839 Speaker 2: substantial changes. I don't think we're to the point where 30 00:01:42,360 --> 00:01:47,720 Speaker 2: they're they're jumping at some of these potential tariffs or threats, 31 00:01:47,760 --> 00:01:51,520 Speaker 2: particularly again on Mexico and Canada, but they're they're getting 32 00:01:51,560 --> 00:01:53,440 Speaker 2: prepared to make alternative plans. 33 00:01:53,760 --> 00:01:54,840 Speaker 1: The concern is. 34 00:01:56,520 --> 00:02:01,440 Speaker 2: It will raise costs and it may undermine their competitiveness globally, 35 00:02:02,160 --> 00:02:05,760 Speaker 2: and those are things that I think are probably you'd 36 00:02:05,800 --> 00:02:06,640 Speaker 2: prefer not to have. 37 00:02:07,760 --> 00:02:10,560 Speaker 3: How do you think the FED will should respond and 38 00:02:10,639 --> 00:02:13,519 Speaker 3: are there any long term term concerns for the economy? 39 00:02:14,120 --> 00:02:16,240 Speaker 2: So the FED will be more likely to look at 40 00:02:16,280 --> 00:02:21,320 Speaker 2: the whole puzzle, not just one action. So government spending cuts, changes, 41 00:02:21,360 --> 00:02:25,520 Speaker 2: the immigration changes, the energy ecosystem changes, the regulation, and 42 00:02:25,560 --> 00:02:28,320 Speaker 2: then tariffs are part of that puzzle. And what you're 43 00:02:28,320 --> 00:02:31,320 Speaker 2: seeing in the economy is it appears to be a 44 00:02:31,480 --> 00:02:35,760 Speaker 2: slowing of GDP growth. Will know better as the weeks 45 00:02:35,800 --> 00:02:40,120 Speaker 2: go on, so probably somewhat slower growth and price is 46 00:02:40,160 --> 00:02:43,360 Speaker 2: staying sticky. So I think the FED, at least in 47 00:02:43,400 --> 00:02:46,440 Speaker 2: this upcoming meeting is most likely to do nothing, and 48 00:02:46,480 --> 00:02:48,440 Speaker 2: they're going to take at one meeting at the time 49 00:02:48,680 --> 00:02:50,400 Speaker 2: and try to assess these changes. 50 00:02:51,280 --> 00:02:54,040 Speaker 3: Elon Muss you're well familiar living here in Texas now 51 00:02:54,080 --> 00:02:57,639 Speaker 3: running dough. She's meeting the cabinet meeting just this weekend. 52 00:02:57,720 --> 00:03:01,200 Speaker 3: He said on exit the FED is absurdly overstaffed. 53 00:03:01,240 --> 00:03:02,000 Speaker 1: What do you think of that? 54 00:03:02,040 --> 00:03:04,000 Speaker 3: And what do you think of his role in the administration. 55 00:03:04,560 --> 00:03:08,440 Speaker 1: He's made comments like that before. This isn't new. 56 00:03:09,480 --> 00:03:13,040 Speaker 2: I think the FED will not be exempt from every 57 00:03:13,040 --> 00:03:16,680 Speaker 2: other government agency that's going to have to look at 58 00:03:17,680 --> 00:03:25,519 Speaker 2: a costs efficiency, pruning headcount, and I think the federal 59 00:03:25,600 --> 00:03:27,040 Speaker 2: have to be looking at that also. 60 00:03:27,480 --> 00:03:30,400 Speaker 3: Yeah, I mean that's just another example of uncertainty. I 61 00:03:30,400 --> 00:03:34,720 Speaker 3: mean there's so much uncertainty right now for businesses. 62 00:03:35,520 --> 00:03:38,760 Speaker 2: Yeah, so some of the uncertainty we have to go through. 63 00:03:38,920 --> 00:03:40,800 Speaker 1: I would argue we've. 64 00:03:40,560 --> 00:03:45,680 Speaker 2: Had up to now a government excess, government spending led economy, 65 00:03:46,160 --> 00:03:49,480 Speaker 2: and so we're going to try to move maybe painful, 66 00:03:49,520 --> 00:03:53,200 Speaker 2: but move to more normal fiscal spending. And so we 67 00:03:53,280 --> 00:03:56,160 Speaker 2: knew that some of these cuts and squeezes are going 68 00:03:56,200 --> 00:03:59,840 Speaker 2: to slow growth. Then there's the uncertainty that comes with 69 00:04:01,000 --> 00:04:03,160 Speaker 2: what are we gonna do on tariffs? And there's also 70 00:04:03,280 --> 00:04:08,080 Speaker 2: uncertainty on what is workforce growth going to be and 71 00:04:08,280 --> 00:04:12,480 Speaker 2: how far will the deportations go, and are we gonna 72 00:04:12,480 --> 00:04:15,400 Speaker 2: have We're gonna have challenges on finding workers in the 73 00:04:15,440 --> 00:04:18,839 Speaker 2: service sector. Those last two uncertainties I think can be 74 00:04:18,960 --> 00:04:21,920 Speaker 2: addressed at some point by giving more clarity. 75 00:04:22,400 --> 00:04:24,440 Speaker 1: The first one government spending cuts. 76 00:04:24,680 --> 00:04:27,200 Speaker 2: I think we just have to go through that, and yes, 77 00:04:27,320 --> 00:04:30,880 Speaker 2: that will slow growth and it will create uncertainty, but 78 00:04:31,000 --> 00:04:33,880 Speaker 2: I think it's part of de leveraging and we probably 79 00:04:33,880 --> 00:04:34,640 Speaker 2: have to go through it. 80 00:04:34,880 --> 00:04:37,200 Speaker 3: And you touched on this, but there have not been 81 00:04:37,480 --> 00:04:41,119 Speaker 3: mass deportations at this point, but yet there are still 82 00:04:41,160 --> 00:04:45,479 Speaker 3: people very concerned about that. Another area that businesses have 83 00:04:45,560 --> 00:04:46,960 Speaker 3: to tackle in terms of uncertainty. 84 00:04:47,080 --> 00:04:51,599 Speaker 2: Yeah, so I hear this in regular conversations. We may 85 00:04:51,680 --> 00:04:55,800 Speaker 2: only wind up deporting say three hundred thousand or four 86 00:04:55,839 --> 00:04:59,840 Speaker 2: hundred thousand criminals that have come in having said that 87 00:05:00,000 --> 00:05:02,880 Speaker 2: there are millions of workers in this country that are 88 00:05:03,000 --> 00:05:07,800 Speaker 2: undocumented or have temporary status who are uncertain as to 89 00:05:07,839 --> 00:05:09,760 Speaker 2: whether they're going to be allowed to stay here, whether 90 00:05:09,760 --> 00:05:11,600 Speaker 2: they're going to stay in the workforce, whether they should 91 00:05:11,600 --> 00:05:15,239 Speaker 2: go out and spend, and that maybe having some chilling 92 00:05:15,320 --> 00:05:19,280 Speaker 2: effect on the workforce. It can be rectified by some 93 00:05:19,480 --> 00:05:23,520 Speaker 2: clarity about what the intentions are, but many businesses and 94 00:05:23,640 --> 00:05:24,919 Speaker 2: workers are dealing. 95 00:05:24,640 --> 00:05:25,520 Speaker 1: With that uncertainty. 96 00:05:25,880 --> 00:05:26,839 Speaker 3: What do they do in the meantime? 97 00:05:28,040 --> 00:05:30,520 Speaker 2: I think right now, again, we're only five weeks into 98 00:05:30,560 --> 00:05:34,400 Speaker 2: the administration, and people reminding themselves of that. People are 99 00:05:34,440 --> 00:05:40,520 Speaker 2: optimistic about regulatory relief. They're optimistic, but they're pausing. 100 00:05:40,920 --> 00:05:42,719 Speaker 1: And I hear from a lot of businesses. 101 00:05:42,720 --> 00:05:45,760 Speaker 2: We're going to take certain actions, but we're going to 102 00:05:45,800 --> 00:05:49,200 Speaker 2: slow it down because of the uncertain end. So it 103 00:05:49,320 --> 00:05:53,560 Speaker 2: will cause businesses to be more cautious for the time being. 104 00:05:53,720 --> 00:05:55,800 Speaker 2: Maybe not indefinitely, but for the time being. 105 00:05:55,880 --> 00:05:58,080 Speaker 3: You know, it was just like seven weeks ago that 106 00:05:58,120 --> 00:06:01,160 Speaker 3: we talked to you, so that was right before. As 107 00:06:01,160 --> 00:06:03,479 Speaker 3: we're discussing here, a lot has happened in that short 108 00:06:03,480 --> 00:06:06,440 Speaker 3: period of time. We're seeing things like the cryptocurrency market 109 00:06:06,520 --> 00:06:09,960 Speaker 3: rally after the President announced plans for a strategic reserve. 110 00:06:10,279 --> 00:06:13,240 Speaker 3: So what are the trends at this point like that 111 00:06:13,240 --> 00:06:14,520 Speaker 3: that are really sticking out to you? 112 00:06:15,520 --> 00:06:20,720 Speaker 2: So the crypto is I would argue more specific situation 113 00:06:21,279 --> 00:06:24,840 Speaker 2: because Trump has said he wants to elevate crypto as 114 00:06:24,880 --> 00:06:26,840 Speaker 2: an industry and he wants to be a leader in it, 115 00:06:27,120 --> 00:06:29,360 Speaker 2: and they've announced, as you know, that we're going to 116 00:06:29,400 --> 00:06:32,599 Speaker 2: hold more in reserves. I don't think that's parts. I 117 00:06:32,600 --> 00:06:36,640 Speaker 2: don't think that's central to the narrative. The narrative is 118 00:06:37,160 --> 00:06:43,080 Speaker 2: a more organically led economy, less regulated, higher productivity, less 119 00:06:43,120 --> 00:06:44,080 Speaker 2: government spending. 120 00:06:44,720 --> 00:06:46,040 Speaker 1: Eventually we'll be able to. 121 00:06:46,040 --> 00:06:51,040 Speaker 2: Sell treasury securities, you know, sell greater duration, have a 122 00:06:51,040 --> 00:06:55,560 Speaker 2: more financiable government. But we're going through all that right now. 123 00:06:56,040 --> 00:07:00,599 Speaker 2: I think to help this puzzle fit more clear on 124 00:07:00,680 --> 00:07:02,359 Speaker 2: what we plan to do on terrace and what we 125 00:07:02,400 --> 00:07:04,680 Speaker 2: plan to do the workforce, I think that will make 126 00:07:04,760 --> 00:07:08,080 Speaker 2: this puzzle work better. And right now we have a 127 00:07:08,120 --> 00:07:11,120 Speaker 2: broad range of uncertainty. I think it may be helpful 128 00:07:11,160 --> 00:07:15,040 Speaker 2: to narrow it down in order and so that we 129 00:07:15,080 --> 00:07:20,120 Speaker 2: don't slow growth unnecessarily as we're going through this restructuring. 130 00:07:20,520 --> 00:07:22,200 Speaker 3: I want to ask you before I let you go 131 00:07:22,320 --> 00:07:25,080 Speaker 3: being here in Texas about Goldman Sachs. Right down the 132 00:07:25,080 --> 00:07:28,160 Speaker 3: street from us, your new large building. Can you tell 133 00:07:28,240 --> 00:07:30,880 Speaker 3: us if it's on time, what you expect? And I 134 00:07:30,920 --> 00:07:32,600 Speaker 3: do want to ask you when you see all these 135 00:07:32,600 --> 00:07:35,720 Speaker 3: financial companies moving down south, do you expect that to continue? 136 00:07:35,920 --> 00:07:36,120 Speaker 1: Yeah? 137 00:07:36,160 --> 00:07:38,800 Speaker 2: I think it probably will continue. Listen, the story of 138 00:07:38,840 --> 00:07:41,600 Speaker 2: Texas is a story of migration of people and firms 139 00:07:41,640 --> 00:07:44,920 Speaker 2: to the state. Goldman Sachs we have forty five hundred 140 00:07:44,960 --> 00:07:45,840 Speaker 2: people here. 141 00:07:46,360 --> 00:07:47,360 Speaker 1: We are very. 142 00:07:47,160 --> 00:07:50,600 Speaker 2: Optimistic about our business generally, and about the future of 143 00:07:50,640 --> 00:07:53,440 Speaker 2: Texas and about being here in Dallas. We're going to 144 00:07:53,560 --> 00:07:59,320 Speaker 2: serve our clients globally from this Dallas hub. We'll eventually 145 00:07:59,320 --> 00:08:01,880 Speaker 2: have even more people than we do now. We'll move 146 00:08:01,880 --> 00:08:03,960 Speaker 2: into a new building. But I think it's part of 147 00:08:04,000 --> 00:08:07,760 Speaker 2: a story of not only the growth of Texas, but 148 00:08:07,840 --> 00:08:10,280 Speaker 2: we think this is a fantastic place to build our 149 00:08:10,320 --> 00:08:13,160 Speaker 2: business in order to serve our clients not only in 150 00:08:13,160 --> 00:08:14,560 Speaker 2: the United States but globally. 151 00:08:14,920 --> 00:08:16,640 Speaker 3: Rob Cathlin, thanks so much for being with us.