WEBVTT - Markets Await a September Cut 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:26.920 us live on YouTube. 0:00:27.080 --> 0:00:29.920 Join us down what a privileged in studio here Semashaw, 0:00:30.000 --> 0:00:33.440 who really has had an impact on the view of 0:00:33.440 --> 0:00:39.199 global economics, I should say from London, from the United Kingdom. 0:00:39.600 --> 0:00:42.000 She's probably here in pre prep for the president's trip 0:00:42.400 --> 0:00:45.400 do some little protocol and that kind of thing. I 0:00:45.400 --> 0:00:49.320 can understand it. Welcome, Thank you so much for joining today. 0:00:49.360 --> 0:00:52.840 I see your lengthy note here. But what we really 0:00:52.880 --> 0:00:56.240 want to know is how does this equity market keep 0:00:56.320 --> 0:01:00.000 on going? Do you buy the gloom sell the news 0:01:00.240 --> 0:01:02.120 Wednesday at two pm. 0:01:02.720 --> 0:01:05.000 Thanks about having me, it's great to be here. Well, 0:01:05.360 --> 0:01:07.400 we're still positive on the acuity market. I mean, I 0:01:07.440 --> 0:01:09.880 think it's more of a muddling through. There's no it's 0:01:09.920 --> 0:01:12.360 difficult to see any major catalyst which is going. 0:01:12.280 --> 0:01:15.319 To create this very big upward leg from here. 0:01:15.800 --> 0:01:17.720 But as long as the economy is chugging along, and 0:01:17.800 --> 0:01:20.160 yes it's slowing, but we're not expecting recession, you know, 0:01:20.480 --> 0:01:22.759 and its speech is still pretty positive. It can keep 0:01:22.800 --> 0:01:26.120 going up. I just don't expect to see very significant. 0:01:25.560 --> 0:01:30.200 Returns from the animal spirit of nominal GDP. The ECB 0:01:30.480 --> 0:01:34.680 has to confront certainly a sub four percent nominal GDP. 0:01:35.240 --> 0:01:39.520 What's that statistic versus America? There's a huge difference in 0:01:39.560 --> 0:01:42.600 the growthiness of America versus Europe, isn't it? Yeah? 0:01:42.680 --> 0:01:42.959 There is. 0:01:43.000 --> 0:01:45.600 There is a really significant difference. And I think what's 0:01:45.600 --> 0:01:48.200 been interesting is that for this year you've seen that 0:01:48.280 --> 0:01:51.360 investors almost turned away from that very significant difference and 0:01:51.360 --> 0:01:53.960 putting a lot more focus on Europe. That seems like 0:01:54.000 --> 0:01:56.360 it's faded a bit in the last few months, and 0:01:56.520 --> 0:01:58.400 certainly from our analysts, they're looking and saying, look, the 0:01:58.400 --> 0:02:00.080 fundamental picture for Europe. 0:02:00.160 --> 0:02:01.200 Is not as good as the US. 0:02:01.320 --> 0:02:03.360 Yes, there's a slow down in the US, there's likely 0:02:03.400 --> 0:02:05.440 to be slow down in Europe at the same time. 0:02:05.480 --> 0:02:06.600 It's difficult to avoid that. 0:02:07.040 --> 0:02:09.400 So how can you continue to be very positive on 0:02:09.480 --> 0:02:10.440 Europe versus US? 0:02:10.520 --> 0:02:12.760 Will you tell Chairman Paul the operative word? At the 0:02:12.760 --> 0:02:16.200 press conference on Wednesday? Solid he love saying that it's 0:02:16.200 --> 0:02:20.240 a solid economy. It sucks like solid. Last night, did 0:02:20.240 --> 0:02:22.400 they win? I went to they were the same, they won. 0:02:22.639 --> 0:02:25.120 Sem told me the idea I do. 0:02:25.280 --> 0:02:27.160 I do have a tendency to use the word solid 0:02:27.200 --> 0:02:28.800 as well. Yeah, I think that's a good description for 0:02:28.840 --> 0:02:31.480 the US at the moment. You know, we're expecting, as 0:02:31.480 --> 0:02:34.480 I said, slow down the trough in the in the 0:02:34.520 --> 0:02:37.679 growth picture around Q four, Q one, and then a rebound, 0:02:37.680 --> 0:02:40.919 a gentle rebound through twenty twenty six, but not really 0:02:40.960 --> 0:02:42.800 going above tun trend growth in the US. 0:02:42.840 --> 0:02:44.480 So it's it's a picture. 0:02:44.520 --> 0:02:47.200 It's nothing particularly exciting, but you don't necessarily need to 0:02:47.200 --> 0:02:49.640 have exciting to see equity markets continue to rally. 0:02:49.720 --> 0:02:52.400 We wait with baited breath for that statement and whatever 0:02:52.440 --> 0:02:55.600 adject title descriptive that the chair uses to describe the economy. 0:02:55.800 --> 0:02:57.880 There is this debate, as I mentioned, between twenty five 0:02:57.960 --> 0:03:00.040 or fifty at this meeting, how do you see that 0:03:00.440 --> 0:03:03.360 shaking out? Can you understand the ration now? For those 0:03:03.400 --> 0:03:05.200 who do think that the Fed might want to go 0:03:05.200 --> 0:03:05.680 bigger at this. 0:03:05.680 --> 0:03:09.240 Point in time, I mean, I'm sending very heavily in 0:03:09.240 --> 0:03:11.280 the twenty five base point camp. I've been saying that 0:03:11.360 --> 0:03:14.760 a fifty would be really about politics more than economics. 0:03:15.600 --> 0:03:18.639 Having said that, I guess I do have to pay 0:03:18.680 --> 0:03:20.240 some kind of lip service to the fact that, look, 0:03:20.240 --> 0:03:22.920 once the unemployment rate starts to rise in a normal environment, 0:03:22.960 --> 0:03:26.280 take out the labor supply issues, then it does typically spiral, 0:03:26.720 --> 0:03:27.480 so you do want to. 0:03:27.440 --> 0:03:28.120 Get ahead of it. 0:03:28.639 --> 0:03:31.359 But at this phase, looking across the broad set of 0:03:31.400 --> 0:03:36.360 economic data, earnings, credit spreads, there is very little here 0:03:36.440 --> 0:03:39.080 at this point in time to justify that kind of 0:03:39.120 --> 0:03:41.640 emergency sized cut. So I would have to say there's 0:03:41.640 --> 0:03:44.560 something political if you get a fifty base puish, did you. 0:03:44.600 --> 0:03:46.800 Then interpret what we've seen over the last week or 0:03:46.840 --> 0:03:49.160 so in terms of labor market data? So first that 0:03:49.760 --> 0:03:53.800 monthly jobs report, the Revision's weekly claims which which surprits 0:03:53.840 --> 0:03:56.240 the downside as well. Taking all of that and nargrogant, 0:03:56.240 --> 0:03:58.200 what's your sense of where this labor market is and 0:03:58.200 --> 0:03:58.800 where it's going. 0:03:59.600 --> 0:04:02.120 I think there is a slowdown and labor demand. I 0:04:02.120 --> 0:04:06.000 think we can clearly see that, but the labor supply 0:04:06.120 --> 0:04:09.640 issue is almost offsetting the magnitude of that weakness. 0:04:10.000 --> 0:04:12.200 So there is something underway. It does need to be getting, 0:04:12.400 --> 0:04:13.800 you know, the FED does need to get in front 0:04:13.840 --> 0:04:14.080 of it. 0:04:14.520 --> 0:04:16.440 But are we moving to a point where we can 0:04:16.440 --> 0:04:19.640 start talking about recession realistically. I don't think we're there, 0:04:19.720 --> 0:04:21.760 but the Fed does need to come in now in 0:04:21.880 --> 0:04:24.360 order to stop it from deteriorating to that point where 0:04:24.440 --> 0:04:27.440 you do become you know, recession does become the keyword again. 0:04:27.600 --> 0:04:30.320 How does a dollar fold into this? I mean, I know, 0:04:30.400 --> 0:04:34.000 I did one chart today, folks, in the in betweenness 0:04:34.000 --> 0:04:36.719 of the dollar right now is remarkable. I guess it's resilient. 0:04:37.040 --> 0:04:39.520 That's the way the street's looking at it. But are 0:04:39.520 --> 0:04:42.360 you looking for a catalyst for dollar movement or do 0:04:42.400 --> 0:04:43.919 we just get used to sleepy dollar. 0:04:44.560 --> 0:04:46.000 I think that the dollar can move a little bit 0:04:46.000 --> 0:04:47.760 lower over the coming months simply just you know, just 0:04:47.800 --> 0:04:50.800 from a central bank perspective, globally, the US is the 0:04:50.800 --> 0:04:52.920 one which is still cutting rates. You're seeing a lot 0:04:52.960 --> 0:04:54.680 of the other central banks at least coming to a 0:04:54.800 --> 0:04:58.839 pause or if not a complete halt. So from a 0:04:58.880 --> 0:05:01.600 fundamental perspective, I should put a little bit further down 0:05:01.680 --> 0:05:03.800 the pressure on the dollar. I think the key question 0:05:03.880 --> 0:05:05.839 is is you know, as we know about you know, 0:05:05.880 --> 0:05:07.680 the smile for the dollar when you do see that 0:05:07.720 --> 0:05:11.360 global weakness, so US weakness, so typically the dollars tends 0:05:11.360 --> 0:05:13.880 to strengthen. That's what we've seen in the last week 0:05:13.960 --> 0:05:15.719 or two. I don't necessarily think that's going to hold, 0:05:15.880 --> 0:05:19.080 especially if you continue to see this pressure on Lisa 0:05:19.160 --> 0:05:21.800 Cooke on FED independence. Those are all things which are 0:05:21.800 --> 0:05:23.720 slowly eating away at the other strength. 0:05:23.880 --> 0:05:25.839 Talk a bit about that, because we're this kind of 0:05:25.839 --> 0:05:28.599 pivotal moment where we don't really know which personnel they 0:05:28.560 --> 0:05:30.600 are going to be around the table when this decision 0:05:30.680 --> 0:05:33.160 is made this week. Lisa Cooke fighting to be there 0:05:33.279 --> 0:05:35.359 is kind of a normal governor fighting that out in 0:05:35.360 --> 0:05:37.880 the courts. The government course pushing against her. The administration 0:05:38.480 --> 0:05:40.680 is Steph Muren has a vote tonight in the Senate. 0:05:40.680 --> 0:05:43.520 Will he make it in time? We'll see, seems likely. 0:05:43.680 --> 0:05:46.080 How much does personnel matter as the FED gets together 0:05:46.120 --> 0:05:47.239 to make this policy decision. 0:05:47.720 --> 0:05:50.320 I don't think it necessarily matters for the great decision 0:05:50.400 --> 0:05:53.000 on Wednesday. I think it's when when you get further 0:05:53.080 --> 0:05:56.720 out into questions really about the independence. You know, how 0:05:56.800 --> 0:06:00.599 quickly can a FED government bee be fired at will? 0:06:01.520 --> 0:06:04.080 But also at some point in time the numbers game 0:06:04.120 --> 0:06:06.039 starts to really play through, and I think that for 0:06:06.120 --> 0:06:08.240 twenty twenty five, I think the forecast is fairy clears, 0:06:08.240 --> 0:06:10.280 you know, two or three cuts. It's when you get 0:06:10.320 --> 0:06:13.720 into twenty twenty six and you can't forget about the politics. 0:06:13.920 --> 0:06:15.800 And I think that's where the muddiness of the forecasts 0:06:15.800 --> 0:06:17.400 are really sitting Semashaw with. 0:06:17.480 --> 0:06:20.120 Us to get a started today. A good conversation here 0:06:20.160 --> 0:06:23.880 with the Principal group. Futures up thirteen, Death Features up 0:06:23.920 --> 0:06:27.880 seventy five. Good morning across awaking America. Good morning to 0:06:27.960 --> 0:06:30.200 the nation. Henrietta Treys will be with us here in 0:06:30.240 --> 0:06:34.040 a bit on Washington on YouTube. Subscribe to Bloomberg Podcasts 0:06:34.480 --> 0:06:37.279 out on YouTube. But it has been an extraordinary three 0:06:37.360 --> 0:06:41.000 or four days here. Thank you for your support, David. 0:06:41.000 --> 0:06:45.960 How about this, Seema Shaw, June of gloom June of 0:06:46.000 --> 0:06:49.719 twenty twenty in the FT. I got to read it 0:06:49.760 --> 0:06:54.080 in entirety, folks, because it's shocking when apparently positive signals 0:06:54.080 --> 0:06:58.600 can turn negative June of twenty twenty, big negative and 0:06:58.720 --> 0:07:01.320 back again in a short time frame. It makes sense 0:07:01.360 --> 0:07:06.120 to wait portfolios with a high quality defensive assets such 0:07:06.160 --> 0:07:10.680 as megacap, tex, tax and investment grade credit with a 0:07:10.720 --> 0:07:15.040 bias towards the United States. Anything much riskier than that 0:07:15.120 --> 0:07:19.160 looks set for a white knuckle ride. You crushingly nailed 0:07:19.200 --> 0:07:22.520 it there. I mean, just do you just reprint that 0:07:22.600 --> 0:07:23.720 paragraph again here? 0:07:24.000 --> 0:07:26.400 I should, I should have it plastered on my forehead, 0:07:26.400 --> 0:07:28.640 not though, do mean? Well, but I think you know 0:07:28.800 --> 0:07:31.920 that in twenty twenty not many people got it wrong, 0:07:32.120 --> 0:07:37.600 right either you if you got on the market about 0:07:37.600 --> 0:07:40.400 the book, you know, I think there's a really big 0:07:40.480 --> 0:07:42.560 learning there from twenty twenty, which is that, look, we 0:07:43.520 --> 0:07:47.080 it looked horrific the global economy went through so much, 0:07:47.520 --> 0:07:50.360 and yet in terms of the US dynamics, US market, 0:07:50.640 --> 0:07:53.800 it recovered really really quickly. And to me, that's one 0:07:53.800 --> 0:07:55.640 of the key things there is it it's very difficult 0:07:55.640 --> 0:07:58.640 for the US to have a prolonged recession. It's very 0:07:58.680 --> 0:08:01.680 difficult unless you know, have major colleges because of the chase. 0:08:01.800 --> 0:08:05.040 In June of twenty twenty, you said free casual is 0:08:05.080 --> 0:08:08.240 going to sustain in the United States of America, including 0:08:08.320 --> 0:08:10.880 mega cap. Can you say the same thing today? 0:08:11.640 --> 0:08:15.160 Yeah, I think with slightly less enthusiasm per Suddenly we 0:08:15.240 --> 0:08:17.760 are long term holders of that megacap tech trade. 0:08:17.760 --> 0:08:21.239 We believe that you know, there will be volatility. 0:08:20.800 --> 0:08:23.560 That'll be question marks about her earnings, there'll be moments 0:08:23.600 --> 0:08:26.720 where the market will be rattled, but we do generally 0:08:26.760 --> 0:08:29.920 believe that that is the frontier of productivity for the world, 0:08:30.240 --> 0:08:32.160 and so you want to keep having exposure. I think 0:08:32.160 --> 0:08:34.160 maybe the thing that investors really need to not thinking 0:08:34.200 --> 0:08:37.320 about is where next, Where beyond the megacap tech trade 0:08:37.360 --> 0:08:39.200 do you want to be looking? And then I think 0:08:39.240 --> 0:08:41.720 there are lots of opportunities to cross all sectors, and 0:08:41.760 --> 0:08:43.559 that's what's going to really set apart the winners from 0:08:43.559 --> 0:08:44.080 the losers. 0:08:44.280 --> 0:08:46.920 I've seen a string of these stories casting doubt on 0:08:47.679 --> 0:08:50.520 the viability of the AI narrative. There was the study 0:08:50.520 --> 0:08:53.440 out of MIT ninety five percent of whatever isn't working 0:08:53.480 --> 0:08:54.960 out in the way that people thought it would. I 0:08:54.960 --> 0:08:57.000 saw this latest thing from Anthropic that we're not using 0:08:57.040 --> 0:08:58.280 it to sort of do anything more than boost or 0:08:58.320 --> 0:09:01.760 individual productivity. It's maybe a dumb question, but do you 0:09:01.760 --> 0:09:04.880 as an investor have to buy into that narrative fully 0:09:05.679 --> 0:09:08.320 or you just look at the way that these megacaps 0:09:08.320 --> 0:09:10.480 are performing and take the right In other words, how 0:09:10.679 --> 0:09:12.760 much conviction do you have to have in the story itself? 0:09:14.000 --> 0:09:16.040 I think you need to have some kind of conviction 0:09:16.320 --> 0:09:19.800 in what the future of the world is. But I 0:09:19.800 --> 0:09:21.880 think it's fair to have your moments where you become 0:09:21.920 --> 0:09:22.760 a little bit cynical. 0:09:23.040 --> 0:09:24.800 Do you look at evaluation, Yes, exactly. 0:09:24.920 --> 0:09:27.640 You look at those valuations, you say, how much longer 0:09:27.679 --> 0:09:30.240 can they can really continue to deliver these kind of 0:09:30.240 --> 0:09:30.959 revenue growth. 0:09:30.800 --> 0:09:32.720 And these growth So I think that's fair. 0:09:33.280 --> 0:09:37.479 But I do think that for some companies, for some strategies, 0:09:37.760 --> 0:09:39.720 that is very much a long term theme. You know, 0:09:39.720 --> 0:09:41.400 we're not talking about one or two years. We're looking 0:09:41.400 --> 0:09:43.360 at from a five to ten year perspective. So you 0:09:43.400 --> 0:09:45.400 have to be able to be willing to live through 0:09:45.440 --> 0:09:46.400 some of those dips. 0:09:46.080 --> 0:09:48.000 On a Monday, Can we do an audible Sure? You 0:09:48.000 --> 0:09:50.679 know it's still you know, we're not deep into Tuesday 0:09:50.760 --> 0:09:53.160 yet I won't be here. I see it like the 0:09:53.280 --> 0:09:57.160 chart this weeknd that France has a worse fixed in 0:09:57.200 --> 0:10:02.400 compositions in Spain just exam from the city in London. 0:10:02.640 --> 0:10:07.440 Are you are you watching the tumult of Europe and 0:10:07.559 --> 0:10:10.480 saying it's over there, it's distant, it's not going to 0:10:10.559 --> 0:10:14.000 upset the apple cart or is it inextricaly part of 0:10:14.040 --> 0:10:14.760 what's going on? 0:10:16.440 --> 0:10:18.880 I think that they are two separate situations. 0:10:19.559 --> 0:10:23.240 But the UK has its own very meaningful fiscal situation 0:10:23.280 --> 0:10:25.560 which has nothing to do with France, cannot be rectified 0:10:25.960 --> 0:10:29.480 by maybe France resolving its own situation. I think this 0:10:29.520 --> 0:10:32.360 is a global theme, but they're all very kind of 0:10:32.400 --> 0:10:35.320 individual stories which are going on around the world. For 0:10:35.400 --> 0:10:37.880 the UK, I you know, obviously for France and the UK, 0:10:38.000 --> 0:10:39.719 these are quite urgent situations. 0:10:40.880 --> 0:10:41.920 I struggle to see. 0:10:41.760 --> 0:10:44.920 How, for example, the UK can emerge from this completely unscathed. 0:10:45.920 --> 0:10:47.920 The budget is going to be a very very difficult 0:10:47.960 --> 0:10:51.120 moment for Rachel Ruves and for me for when I 0:10:51.120 --> 0:10:53.160 look across the UK to the guilt market, I do 0:10:53.200 --> 0:10:55.800 have genuine concerns about where we go from here. 0:10:55.720 --> 0:10:56.080 For the UK. 0:10:56.280 --> 0:10:58.920 Is that a traditional concern or it's just out longer 0:10:59.000 --> 0:11:02.120 duration or can it really upset the entire curve? 0:11:03.000 --> 0:11:04.880 I think it could upset the entire curve. I think 0:11:04.880 --> 0:11:10.200 there's enough concerns about the credibility of the government. Essentially, 0:11:10.240 --> 0:11:12.680 what is the escape route for the UK? And I 0:11:12.679 --> 0:11:15.120 think it's very difficult to know what that is because 0:11:15.160 --> 0:11:19.880 the typical drivers of that would be productivity, growth, immigration. 0:11:19.960 --> 0:11:21.640 Those are two things that we seem to close the 0:11:21.640 --> 0:11:21.920 door on. 0:11:21.960 --> 0:11:24.920 But am I correct to those of us distracted by 0:11:24.960 --> 0:11:28.880 the Detroit Lions scoring fifty two points this weekend. One 0:11:28.960 --> 0:11:32.920 hundred thousand plus people protested in London this weekend. That 0:11:33.040 --> 0:11:36.800 is correct if we have a Trump I'm being very simplistic, Seema. 0:11:36.920 --> 0:11:41.400 If we had a Trump moment in reform one, how 0:11:41.400 --> 0:11:47.320 would that change finance and fixed income in the United Kingdom. 0:11:48.040 --> 0:11:51.360 I think what we could see is again you have 0:11:51.400 --> 0:11:54.040 to take a long term perspective from a political perspective 0:11:54.080 --> 0:11:56.240 for the UK, and you do get to a point 0:11:56.240 --> 0:11:59.760 where the productivity concerns really do start to explode. Once 0:11:59.800 --> 0:12:02.719 you have these kind of movements, there's a very potential 0:12:02.880 --> 0:12:05.199 change for the government. Change of government at the next 0:12:05.240 --> 0:12:09.600 election to that far right movement, a ton of implications 0:12:09.720 --> 0:12:11.440 for the long term growth of the UK. 0:12:11.760 --> 0:12:15.800 I spent on please I wanted tone about tott Nanda 0:12:16.000 --> 0:12:16.760 before we get there. 0:12:17.760 --> 0:12:20.080 Many of us here became familiar with Minutia Fique when 0:12:20.160 --> 0:12:22.800 she was at Columbia University. Some of us know of 0:12:22.840 --> 0:12:25.040 her from her tenure at LC before that. She's now 0:12:25.080 --> 0:12:27.839 back in government, has this role as economic advisor to 0:12:27.679 --> 0:12:30.640 the to the Prime Minister. What does that dynamic look 0:12:30.679 --> 0:12:33.199 like between her and Rachel reaps going forward here? How 0:12:33.280 --> 0:12:35.960 is she how is her expertise going to be used? 0:12:36.679 --> 0:12:38.800 Are we just setting the stage here for a conflict 0:12:38.840 --> 0:12:42.000 or she stands some key role here in trying to 0:12:42.000 --> 0:12:43.559 write the ship that you're describing. 0:12:43.880 --> 0:12:45.600 I think she does have a key role here. 0:12:47.120 --> 0:12:49.679 But I think that the UK it goes beyond just 0:12:49.720 --> 0:12:53.520 the kind of the simple economics for the and I 0:12:53.559 --> 0:12:57.480 don't know if she can genuinely push this narrative of 0:12:57.640 --> 0:12:59.840 changing the entire makeup of the UK. 0:13:00.240 --> 0:13:01.040 Where is it heading? 0:13:01.320 --> 0:13:05.680 So I think they're really deeper almost you know, introspective 0:13:05.760 --> 0:13:07.640 questions that the UK needs to be asking that goes 0:13:07.640 --> 0:13:09.960 beyond economics. So I think it's great and it's great 0:13:09.960 --> 0:13:13.040 to have a credible, absolutely have incredible policy makers like 0:13:13.080 --> 0:13:15.480 that really does help the UK at a time when 0:13:15.480 --> 0:13:18.320 there's so many question marks about who is in government 0:13:18.360 --> 0:13:21.200 and who is you know, who's essentially ruling. 0:13:21.679 --> 0:13:23.840 But I think they have the challenges ready cut up, 0:13:23.880 --> 0:13:24.800 it's your questions. 0:13:25.200 --> 0:13:27.319 I guess two lates, we'll do it next time. We'll 0:13:27.360 --> 0:13:29.240 do it next time. After they lost four. 0:13:29.200 --> 0:13:31.959 In a row, I'm happy about that. 0:13:32.120 --> 0:13:36.880 Yeah, I know, you know, you know all the fine 0:13:37.280 --> 0:13:38.079 you know, it's like. 0:13:38.320 --> 0:13:40.480 You're you're all alone in your a Tottenham fandom. 0:13:41.040 --> 0:13:44.080 Wait a lawyer. Well, I had no idea how Lona was. 0:13:44.200 --> 0:13:47.120 I was having a cigar at some fancy London hotel. 0:13:47.559 --> 0:13:50.120 Everyone in a room was an Arsenal fan. Yeah, like 0:13:50.160 --> 0:13:54.360 one hundred and ten percent. It's ridiculous. Missus Keene had 0:13:54.400 --> 0:13:57.800 the tot name had. So we got the bad service, 0:13:58.000 --> 0:14:00.440 we got semen show. Thank you stay one of us. 0:14:00.640 --> 0:14:03.880 More from Bloomberg Surveillance coming up after this. 0:14:11.120 --> 0:14:14.720 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:14:14.760 --> 0:14:17.920 weekday afternoons from seven to ten am Eastern Listen on 0:14:18.000 --> 0:14:21.680 Applecarplay and Android Otto with the Bloomberg Business app, or 0:14:21.840 --> 0:14:23.240 watch us live on YouTube. 0:14:23.240 --> 0:14:28.360 Showings on Henrietta Trey's Veda Partners on Your Washington, Henriette, 0:14:28.360 --> 0:14:29.920 I want to do an audible here. David's got a 0:14:29.960 --> 0:14:33.240 lot of smart things to talk about. But I noticed 0:14:33.240 --> 0:14:37.280 ten US senators twenty seven House members already have announced 0:14:37.320 --> 0:14:41.440 their retirements into next year's election. Why are we seeing 0:14:41.480 --> 0:14:43.840 so many retire as the two this weekend. 0:14:44.920 --> 0:14:48.440 Yeah, they're dropping like flies. I have the benefit of 0:14:48.440 --> 0:14:51.080 having this incredible mentor. A woman named Ashley Miller back 0:14:51.080 --> 0:14:53.120 at the US Chamber of Commerce and she told me 0:14:53.160 --> 0:14:56.280 several years ago that Senators and congressmen are. 0:14:56.120 --> 0:14:57.160 Heading for the exits. 0:14:57.440 --> 0:15:01.120 DC is incredibly unpleasant to be and we are knocking 0:15:01.160 --> 0:15:03.760 at the door of eliminating the filibuster, which any Senate 0:15:03.760 --> 0:15:05.720 staff or will tell you is what keeps the Senate 0:15:05.720 --> 0:15:08.240 from being the House, and they mean that as an insult. 0:15:08.760 --> 0:15:10.960 So it's definitely not a good time to be down 0:15:11.000 --> 0:15:14.720 there right now. I think the assassination of Charlie Kirk 0:15:14.920 --> 0:15:19.800 is certainly in forefront of people's minds. The physical violence 0:15:19.880 --> 0:15:22.760 component of it really can't be under stressed. 0:15:23.560 --> 0:15:26.680 I saw Michael McCall also announcing his resignation or not resignation, 0:15:26.720 --> 0:15:28.840 but not seeking reelection once again. So this is happening 0:15:28.840 --> 0:15:29.880 in the House as well, isn't it. 0:15:30.920 --> 0:15:33.640 Yeah, it absolutely is happening in the House. We're up 0:15:33.640 --> 0:15:36.720 to two House Republicans from Texas if I'm not mistaken. 0:15:37.120 --> 0:15:37.720 The one that was. 0:15:37.680 --> 0:15:40.080 Really surprising to me is some of the farms take 0:15:40.760 --> 0:15:45.160 members I'm thinking of like Joni Ernst for example. Those 0:15:45.240 --> 0:15:48.160 members should be in really safe re elections, but you 0:15:48.200 --> 0:15:51.360 know the potential for having to vote on tariffs the 0:15:51.520 --> 0:15:56.000 trade wars, the discontent with farmers are all issues that 0:15:56.040 --> 0:15:58.400 are plaguing them, aside from just the general lack of 0:15:58.440 --> 0:15:59.240 comedy in DC. 0:15:59.400 --> 0:16:03.120 Range are grizzled pros of this. I'm the heck David, 0:16:03.400 --> 0:16:07.239 they're just retiring because they're getting out front of Democrats 0:16:07.280 --> 0:16:10.000 winning the House? Am I too simplistic? 0:16:10.120 --> 0:16:12.240 That might be a little too simplistic, I think, But Henrietta, 0:16:12.280 --> 0:16:15.600 you bring up the kind of difficulty in farm country especially, 0:16:15.680 --> 0:16:18.000 and I think there's been a theme to the newspapers 0:16:18.000 --> 0:16:19.480 and news sites I've looked at over the course of 0:16:19.520 --> 0:16:23.120 the last week, and that is this level of dissatisfaction 0:16:23.240 --> 0:16:27.200 and worry amongst soybean farmers in particular about their prospects 0:16:27.200 --> 0:16:29.400 in light of these trade policies, not having a buyer 0:16:29.480 --> 0:16:32.280 in China. How does all of this sort itself out? 0:16:33.680 --> 0:16:36.360 This needs to be sorted out at the top levels, 0:16:36.520 --> 0:16:39.360 like this needs to be a prominent topic of conversation 0:16:39.480 --> 0:16:43.600 between Bessett and jameson Greer in Spain today with their 0:16:43.680 --> 0:16:47.080 Chinese counterparts. We need to be talking about sey purchases. Unfortunately, 0:16:47.760 --> 0:16:50.840 when we start inserting Nvidia and tiktoking and the conversation 0:16:51.480 --> 0:16:54.160 I don't think there's a place for any kind of 0:16:54.200 --> 0:16:57.320 give on soy purchases, and we're seeing in the farmer's 0:16:57.440 --> 0:17:00.520 main concern is that they are permanently losing market share 0:17:00.600 --> 0:17:03.600 to Brazil and Argentina from the world's largest purchaser of. 0:17:03.520 --> 0:17:05.000 Soybeans and sixty one percent. 0:17:05.320 --> 0:17:08.159 So the farming community is doing something that really you 0:17:08.200 --> 0:17:10.800 don't see from a lot of other businesses. I would 0:17:10.840 --> 0:17:13.480 talk about, you know, car dealerships, for example. They're a 0:17:13.560 --> 0:17:17.120 huge political donor base, and they're being really quiet about 0:17:17.119 --> 0:17:21.199 the tariffs. They're only hiking new car prices by one percent, 0:17:21.280 --> 0:17:23.680 but used car prices, which is the bulk of their sales, 0:17:23.680 --> 0:17:25.840 are up six percent as they try to stay on 0:17:25.880 --> 0:17:28.760 Trump's good side. The farmers, though, are putting out public 0:17:28.840 --> 0:17:31.080 letters and they have been for several weeks now and 0:17:31.160 --> 0:17:35.400 giving a lot of news interviews on the record saying 0:17:35.440 --> 0:17:38.800 how problematic the president's trade war is for them. They 0:17:38.880 --> 0:17:41.399 do not have any sales to China going forward, and 0:17:41.440 --> 0:17:43.160 that's that's a death now for them. 0:17:44.440 --> 0:17:48.280 I look at this and wonder is a bailout inevitable? 0:17:48.359 --> 0:17:52.280 So I gather that Trump one isn't prologue for all 0:17:52.280 --> 0:17:56.160 the farm made, farm made yelling also good play as 0:17:56.160 --> 0:17:59.440 he is. I think, I think tonight. But you know, Henry, 0:17:59.480 --> 0:18:01.440 I'm curious, is that where all of this is headed? 0:18:01.440 --> 0:18:03.040 Are we going to see a twenty thirty billion dollars 0:18:03.040 --> 0:18:04.440 bail out the likes of which we saw the last 0:18:04.440 --> 0:18:04.959 time around? 0:18:05.640 --> 0:18:07.639 Yeah, we got three of them last time around. I 0:18:07.680 --> 0:18:10.199 suspect we'll get another one this time around. There's already 0:18:10.359 --> 0:18:13.359 rumblings from members, specifically on the House side and the 0:18:13.400 --> 0:18:16.480 agriculture committees, calling for the insertion of a farm aid 0:18:16.880 --> 0:18:20.840 package in the upcoming cr that will have a government shutdown, 0:18:21.200 --> 0:18:22.840 so it's definitely already part of it. 0:18:22.880 --> 0:18:24.840 There was some of that in the One Big Beautiful Bill. 0:18:24.920 --> 0:18:28.000 There was some rejiggering of some of the methodologies and 0:18:28.040 --> 0:18:30.879 accounting for how farmers get subsidized, and that's going to 0:18:30.880 --> 0:18:32.720 be branded on in the next package. 0:18:32.720 --> 0:18:36.400 I again, another dumb question. Only handring out of trades 0:18:36.440 --> 0:18:40.280 would know this. When there's a farm bailout, who gets 0:18:40.280 --> 0:18:43.000 a check? A mom and pop farmer with two hundred 0:18:43.000 --> 0:18:45.639 pigs on a ranch and you know, I don't know 0:18:45.760 --> 0:18:49.560 Kansas or or is it like corporate America gets the check? 0:18:50.480 --> 0:18:54.080 It's both and it's usually run through the Department of Agriculture, 0:18:54.160 --> 0:18:57.840 through a really small entity there that was heavily accessed 0:18:57.880 --> 0:19:00.480 during the president's first term. Is the US trying to 0:19:00.520 --> 0:19:04.359 trade war kicked off, they replenish this fund that goes 0:19:04.400 --> 0:19:08.199 specifically to commodity purchases, and that's how the money gets bundled. 0:19:08.240 --> 0:19:09.920 And I suspect that's what they'll do again. 0:19:10.080 --> 0:19:13.879 That's they're having like pretty advanced talks about it now, 0:19:13.920 --> 0:19:15.919 but still relatively rudimentary. 0:19:15.960 --> 0:19:18.719 There's no text, but I would imagine that's what they do. 0:19:18.960 --> 0:19:22.720 If we're growing tomatoes on the deck, do I get 0:19:23.840 --> 0:19:26.800