WEBVTT - Bloomberg Surveillance TV: January 24, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:35.840 Bloomberg Terminal and the Bloomberg Business App. 0:00:36.520 --> 0:00:38.960 Steve Englander of stand Chart joins us. 0:00:39.000 --> 0:00:39.280 Now. 0:00:39.440 --> 0:00:41.640 Steve, thank you so much for joining us. So this 0:00:41.840 --> 0:00:44.599 was pretty much baked in. But really, depending on where 0:00:44.760 --> 0:00:47.400 US policy goes, is that going to be the deciding 0:00:47.440 --> 0:00:49.400 factor for this BOJ. 0:00:51.680 --> 0:00:55.440 Well, you know, if you read and watch what the 0:00:55.440 --> 0:00:59.680 boj is saying. Yesterday, they lifted up their inflation forecast, 0:00:59.760 --> 0:01:02.200 talk talked about upside risk. I actually think that a 0:01:02.240 --> 0:01:06.240 lot of this is driven by what's happening in Japan. 0:01:07.600 --> 0:01:12.920 The timing, I think is dictated by concerns over you know, 0:01:13.040 --> 0:01:16.679 is it going to be you know, full Trump or 0:01:16.760 --> 0:01:19.440 mini Trump in terms of the policy actions that he's 0:01:19.480 --> 0:01:22.880 taking in the disruption that he causes. But it's you know, 0:01:23.120 --> 0:01:25.600 I think the big surprise yesterday because a lot of 0:01:25.600 --> 0:01:28.480 people came into the meeting thinking that Boj was going 0:01:28.560 --> 0:01:31.919 to hike and then say, you know, we can afford 0:01:31.920 --> 0:01:35.000 to wait. They seem to have much more intensity about 0:01:35.000 --> 0:01:37.360 further hikes. We think that's all hike twice more this year, 0:01:37.400 --> 0:01:38.640 going up to one. 0:01:38.480 --> 0:01:42.839 Percent, and yet it's a yen that's reaction has kind 0:01:42.880 --> 0:01:47.520 of disappeared from this market. Steve, your interpretation seems to 0:01:47.560 --> 0:01:50.720 be one of a more hawkish Ueita and Boj than 0:01:50.760 --> 0:01:53.720 perhaps this market was expecting. Are you surprised we're not 0:01:53.760 --> 0:01:56.040 seeing more strength at this moment from the end. 0:01:57.080 --> 0:02:00.600 Yeah, I'm actually doubly surprised, because you know, it's not 0:02:00.680 --> 0:02:05.240 responding obviously to the sort of great differential story and 0:02:05.920 --> 0:02:09.640 at the short end, and in addition, in the past 0:02:09.639 --> 0:02:13.480 that's actually been pretty well correlated with CNH and the 0:02:13.520 --> 0:02:15.760 fact that the CNH has strengthened a lot and yet 0:02:15.840 --> 0:02:17.800 hasn't said, you know, done much this week. 0:02:17.840 --> 0:02:19.919 I think is remains a surprise. 0:02:20.080 --> 0:02:23.000 But I think if the market begins to think that 0:02:23.080 --> 0:02:25.320 the BOJ is serious about hiking. 0:02:26.960 --> 0:02:29.519 You know, we'll see those great differentials clothes. 0:02:29.560 --> 0:02:32.760 I mean, the rates gap between the UK and Switzerland 0:02:33.000 --> 0:02:36.840 is actually quite much wider than between the US and Japan. 0:02:37.480 --> 0:02:40.480 So I think that the you know, that story over time, 0:02:40.560 --> 0:02:41.480 I think will evolve. 0:02:42.120 --> 0:02:45.000 Steve, maybe we can add tripley surprise to this, because 0:02:45.040 --> 0:02:49.120 this is the week of Trump's inauguration, most asset classes 0:02:49.160 --> 0:02:51.359 have been trading and arranged. The place that we've seen 0:02:51.400 --> 0:02:54.839 the most volatility has come from this currency market, whether 0:02:54.960 --> 0:02:58.600 it be dollar, mex whether it be the Canadian looney. 0:02:59.080 --> 0:03:01.760 That's where we've seen the even strength coming from the euro. 0:03:01.880 --> 0:03:03.720 What do you make of the fact that it's been 0:03:03.919 --> 0:03:06.440 FX this week, the asset class that's seen the most 0:03:06.560 --> 0:03:09.160 reactiveness to the things coming from the Trump administration. 0:03:10.639 --> 0:03:12.720 Well, the way I see it, and if you if 0:03:12.760 --> 0:03:13.280 you look at what. 0:03:13.280 --> 0:03:17.280 Happened, say from the beginning of October when Trump presidential 0:03:17.320 --> 0:03:19.960 out started going up to you know, say the middle 0:03:20.000 --> 0:03:24.480 of last week, dollar strengthened way ahead, way beyond what 0:03:24.560 --> 0:03:27.919 interest rate differentials were telling you it should strengthen. And 0:03:28.200 --> 0:03:30.360 we think a lot of that was risk premium markets 0:03:30.360 --> 0:03:33.799 were going into the inauguration thinking sixty percent Haras on China, 0:03:33.919 --> 0:03:36.880 you know whatever, ten percent to twenty five percent, on 0:03:37.680 --> 0:03:41.040 the US's friends in the world, and a lot of 0:03:41.120 --> 0:03:43.760 risk premium, I think, and the focus was the FX 0:03:43.840 --> 0:03:47.360 market because that was kind of ground zero for where 0:03:47.400 --> 0:03:49.800 all of this would play out. And so I think 0:03:49.800 --> 0:03:52.120 what we're seeing is then unwind of that. You know, 0:03:52.160 --> 0:03:54.440 there's still a bit to go, but you know, euro 0:03:54.520 --> 0:03:56.600 could go up one percent and you could say it's 0:03:56.680 --> 0:03:59.120 risk premium. If it went up three percent, it would 0:03:59.120 --> 0:04:02.000 have to be something beyond that at this stage. 0:04:03.440 --> 0:04:08.640 Steve Michael Purvis here this is maybe a slightly bizarre question, 0:04:08.680 --> 0:04:11.520 but do you think Trump can make Europe great again? 0:04:11.600 --> 0:04:15.320 And what I mean by that is will if he 0:04:15.440 --> 0:04:20.560 goes aggressive on Europe, will it put the European countries, 0:04:20.960 --> 0:04:23.719 for example Germany in a place where they're going to 0:04:23.720 --> 0:04:27.320 be more fiscally expansive than they have been in the 0:04:27.360 --> 0:04:30.760 past and maybe even putting some reforms into their economies. 0:04:31.480 --> 0:04:35.039 There is that a scenario that we should be looking at. 0:04:36.040 --> 0:04:38.479 It couldn't be, but you know, I worked at the 0:04:38.880 --> 0:04:42.520 OECD thirty years ago and in the same structural issues 0:04:43.160 --> 0:04:45.880 that are still existing in Europe existed. 0:04:45.920 --> 0:04:47.679 Then it's a generation and a half ago. 0:04:48.839 --> 0:04:50.960 I do think you're right, and we think you're right 0:04:51.040 --> 0:04:54.479 that there's a chance that say, if we you know, 0:04:54.520 --> 0:04:57.600 we have a change in government, not to the a 0:04:57.680 --> 0:05:00.000 FD of course, but to the center and the strong 0:05:00.000 --> 0:05:05.040 longer cent as government, that they will sort of ease 0:05:05.160 --> 0:05:08.680 up on the death situation and they could do more 0:05:08.680 --> 0:05:11.919 fiscal expansion. I mean, if I had to bet on 0:05:11.960 --> 0:05:15.840 Europe changing policy for whatever reason, they may change macro. 0:05:16.360 --> 0:05:19.600 They seem determined not to do the sorts of things 0:05:19.600 --> 0:05:23.400 that you and I would call structural, fundamental micro structural reforms. 0:05:24.200 --> 0:05:26.400 Wow, Steve England or thank you so much for joining 0:05:26.480 --> 0:05:37.840 us this morning. Begin this hour, though with stocks at 0:05:37.839 --> 0:05:40.560 record highs after President Trump said he would rather not 0:05:40.920 --> 0:05:44.560 impose tariffs on China, Margie Patel of all Spring Global Investments, 0:05:44.600 --> 0:05:48.440 writing quote, Trump administration has announced many changes to regulations 0:05:48.480 --> 0:05:51.200 and new initiatives. It is too early to judge their 0:05:51.240 --> 0:05:54.440 effects in the economy and financial markets, but we believe 0:05:54.560 --> 0:05:57.279 many will reinforce the areas of the economy which we 0:05:57.360 --> 0:06:00.600 have expected strong growth. And Margie joins us. Now, thank 0:06:00.640 --> 0:06:03.080 you so much for joining us this morning. I would 0:06:03.120 --> 0:06:05.240 love to just get your reaction to the past twenty 0:06:05.240 --> 0:06:09.520 four hours. And what surprised you the most about what 0:06:09.520 --> 0:06:12.640 we've heard from forty seventh President Donald Trump and the 0:06:12.680 --> 0:06:17.560 second administration seemingly touching every part of global financial markets. 0:06:19.560 --> 0:06:22.599 Well, I think that's really coming out strong and stating 0:06:22.600 --> 0:06:25.680 a lot of his positions and positions as you pointed out, 0:06:25.720 --> 0:06:28.359 maybe he doesn't expect to be achieved, but it's a 0:06:28.360 --> 0:06:30.080 good place to negotiate from. 0:06:30.600 --> 0:06:31.600 And I think the most. 0:06:31.360 --> 0:06:35.560 Important thing, frankly, is that the idea of higher taxes 0:06:35.640 --> 0:06:37.599 is totally off the board. That was a big risk 0:06:37.680 --> 0:06:40.640 of the market last year looking out into twenty twenty five. 0:06:40.720 --> 0:06:43.120 So I think that's the number one important thing is 0:06:43.760 --> 0:06:47.160 no increases in taxes and maybe even some lower taxes 0:06:47.200 --> 0:06:49.760 as well as lower regulation, which of course will be 0:06:49.839 --> 0:06:51.160 very positive for the markets. 0:06:51.320 --> 0:06:54.000 Margie, you are describing as status quo of sorts though, 0:06:54.120 --> 0:06:56.720 just an extension of the tax cuts. And Anne Marie 0:06:56.800 --> 0:06:59.640 got to this when she was reading some of your thoughts. 0:07:00.080 --> 0:07:02.960 How do you disaggregate the strength that this market is 0:07:03.040 --> 0:07:06.280 pricing in and the continued strength of equities just being 0:07:06.279 --> 0:07:10.000 a good business environment from a strong starting place versus 0:07:10.040 --> 0:07:14.000 actual policy. How dominant will politics actually be for risk assets. 0:07:15.720 --> 0:07:18.280 Well, I hope not too strong. I hope that the 0:07:18.360 --> 0:07:21.600 changes that are made will in fact reinforce the areas 0:07:21.640 --> 0:07:24.080 of strong growth that we've seen. And I think this 0:07:24.280 --> 0:07:26.880 year is going to be another year of continuing trends 0:07:26.880 --> 0:07:31.480 where technology is very strong, data center investments is very strong, 0:07:31.800 --> 0:07:35.040 Improving electrical grid is very strong, and we'll see more 0:07:35.080 --> 0:07:38.400 investment in our domestic energy sector. So those were all 0:07:38.400 --> 0:07:40.800 in play last year and I think they'll continue and 0:07:40.840 --> 0:07:43.960 this will be another year of surprisingly good profits and 0:07:44.040 --> 0:07:45.680 a surprisingly good equity market. 0:07:46.000 --> 0:07:48.080 There has been a shift though, over the past month 0:07:48.160 --> 0:07:51.280 or so, since about mid December, marking what you've seen outperform. 0:07:51.560 --> 0:07:57.920 It's been energy, utilities, industrials, financial cyclical parts of this 0:07:58.040 --> 0:08:00.360 market that are sensitive to growth. It is this extreme 0:08:00.440 --> 0:08:03.800 growth optimism that we're pricing in. Does that continue on 0:08:03.960 --> 0:08:05.920 or do we have an amend that makes us run 0:08:05.960 --> 0:08:07.920 back to the safety corners of the mag seven. 0:08:09.440 --> 0:08:12.160 Well, I don't think it's extreme optimism. I think when 0:08:12.200 --> 0:08:15.440 you look basically, putting aside the politics and we may 0:08:15.600 --> 0:08:18.720 get out of the new administration, is the US economy 0:08:18.840 --> 0:08:22.080 is really in good shape. We're growing at a sustained level, 0:08:22.120 --> 0:08:24.000 of you know, say two two and a half percent, 0:08:24.520 --> 0:08:27.200 and there are signs that growth may even be stronger, 0:08:27.320 --> 0:08:30.600 maybe closer to three percent. So that's really very very positive, 0:08:30.600 --> 0:08:32.600 and that would allow the stock market to be up 0:08:32.679 --> 0:08:36.640 say a ten twelve percent conservatively this year, maybe even higher. 0:08:36.880 --> 0:08:39.840 So I think the surprises might be continued growth and 0:08:39.920 --> 0:08:42.400 maybe even stronger than we're expected. Maybe that's what the 0:08:42.440 --> 0:08:47.479 market is really telegraphing, is continuation and further strengthening, particularly 0:08:47.559 --> 0:08:50.160 when we see these other areas that have broadened. 0:08:49.720 --> 0:08:50.440 Out a little bit. 0:08:52.400 --> 0:08:55.800 Margie, one question for you. You know, we're dealing with 0:08:55.840 --> 0:08:58.280 a very high valuation on the S and P five 0:08:58.400 --> 0:09:02.760 hundred and through a lot of the sub and disease there. 0:09:02.920 --> 0:09:04.720 You know, it's about you know, sort of top two 0:09:04.800 --> 0:09:10.760 percent valuations here. Do you see at multiple compression as 0:09:10.800 --> 0:09:12.719 sort of something that's going to happen or do you 0:09:12.760 --> 0:09:15.679 think the market will the earnings will be so explosive 0:09:15.679 --> 0:09:18.440 this year that it will actually bring the multiple down 0:09:18.520 --> 0:09:22.040 to more normalized levels that way, Well. 0:09:22.120 --> 0:09:24.200 I don't think the market is you know, an average 0:09:24.240 --> 0:09:26.440 doesn't tell you the whole story. If you look, you 0:09:26.520 --> 0:09:29.000 have a small, relatively small number of stocks that have 0:09:29.160 --> 0:09:32.120 very high growth, you know, earnings growth of say twenty percent. 0:09:32.520 --> 0:09:34.760 Those are the ones that are trading at big premiums 0:09:34.800 --> 0:09:37.200 for PE. And then a lot of the market that's 0:09:37.760 --> 0:09:41.319 actually having very low growth has a relatively more modest PE. 0:09:41.360 --> 0:09:43.439 So when you put it together, it looks optically a 0:09:43.480 --> 0:09:45.960 little higher. But I think the market is fairly priced, 0:09:46.280 --> 0:09:48.040 and I think that a lot of the uncertainty that 0:09:48.120 --> 0:09:51.679 we have has has really gone out. There's a more 0:09:51.720 --> 0:09:54.400 positive outlook. I do think though last year we had 0:09:54.480 --> 0:09:57.200 a lot of our total return in the standard pores, 0:09:57.240 --> 0:10:00.559 which was up twenty five percent, was due to expansion 0:10:00.600 --> 0:10:03.480 of the price earnings multiple. I think this year we'll 0:10:03.480 --> 0:10:07.160 probably see more companies whose earnings are high will get 0:10:07.360 --> 0:10:10.280 a higher stock price, and not that expansion in PE 0:10:10.480 --> 0:10:14.200 just really look more dependent on the profit growth of companies. 0:10:14.679 --> 0:10:15.079 Gotcha. 0:10:15.840 --> 0:10:17.840 So PE's going to stay where they are. But are 0:10:17.920 --> 0:10:20.560 you Are you bullish on the rotation away from big 0:10:20.600 --> 0:10:24.960 tech in the more cyclical parts right now? 0:10:26.480 --> 0:10:28.800 Well, I think only those cyclical parts that are part 0:10:28.840 --> 0:10:32.440 of this more secular change in secular growth, which is 0:10:32.480 --> 0:10:35.560 I think the reshoring back to America is real and 0:10:35.600 --> 0:10:38.480 it's going to continue. I think the investment we need 0:10:38.520 --> 0:10:42.400 for data centers is a decade long process. And also 0:10:42.559 --> 0:10:45.840 the electrical grid, which looks very stable for a long time, 0:10:45.920 --> 0:10:48.800 now suddenly looks as if we'll have growth in demand 0:10:48.880 --> 0:10:51.840 for power and we need to strengthen the grid expanding it. 0:10:52.080 --> 0:10:54.880 So that's a lot of additional revenue for the industrial 0:10:54.960 --> 0:10:57.480 sector and technology is part of that. So we think 0:10:57.480 --> 0:11:00.520 those will continue. And the energy, domestic energy, it looks 0:11:00.600 --> 0:11:02.319 now as if there was sort of a cloud over 0:11:02.640 --> 0:11:05.880 that energy sector, I think is actually more positive. We 0:11:05.880 --> 0:11:08.160 may see more investment from the energy sector. 0:11:08.559 --> 0:11:11.480 It's something Washington, DC is definitely focused on, whether it's 0:11:11.520 --> 0:11:14.640 AI data centers or just unleashing more when it comes 0:11:14.640 --> 0:11:17.560 to American energy. Margie Patel, thank you so much for 0:11:17.559 --> 0:11:20.520 your time this morning. Of course, of all Spring global investments, 0:11:30.600 --> 0:11:33.400 Mohammab and Salman made a six hundred billion dollar pledge 0:11:33.440 --> 0:11:37.360 to Trump on Wednesday. Former senior US intelligence official Norman 0:11:37.440 --> 0:11:40.880 Rule calling the pledge quote powerful evidence that real believes 0:11:40.880 --> 0:11:44.400 the US will remain its foundational security and economic partner 0:11:44.640 --> 0:11:47.440 for decades. Norman, thank you so much for joining us 0:11:47.480 --> 0:11:50.400 this morning. He's also part of CSIS. When it comes 0:11:50.440 --> 0:11:53.240 to the Saudi's investing this amount of money into the 0:11:53.320 --> 0:11:55.439 United States. Now Trump up a nanny and saying, maybe 0:11:55.480 --> 0:11:56.839 we can get to a trillion dollars. Like the way 0:11:56.880 --> 0:11:59.160 that sounds better at the end of the day is 0:11:59.280 --> 0:12:01.760 just as Red choosing Washington over Beijing. 0:12:03.760 --> 0:12:04.360 Good morning. 0:12:04.600 --> 0:12:08.360 In part, this is Riod choosing Washington over the world. 0:12:08.720 --> 0:12:12.200 But this is also Riod choosing the American high tech 0:12:12.280 --> 0:12:17.000 sector over the world. Saudi Arabia's drivers are the success 0:12:17.040 --> 0:12:20.760 of the Vision twenty thirty, transformation of its society as 0:12:20.800 --> 0:12:25.840 well as its economy. It believes that artificial intelligence will 0:12:26.160 --> 0:12:31.280 accelerate that process, provide jobs for a rising generation, transform 0:12:31.400 --> 0:12:34.680 the kingdom's industries, and all of that goodness, all of 0:12:34.720 --> 0:12:38.480 that power will come from a long term relationship with 0:12:38.520 --> 0:12:39.400 the United States. 0:12:39.679 --> 0:12:41.959 It's not the only place that Trump made headlines when 0:12:41.960 --> 0:12:44.120 it comes to Saudi. Norm he also said that he 0:12:44.160 --> 0:12:47.400 would ask Saudi to lower the price of oil. Is 0:12:47.440 --> 0:12:50.320 that relationship strong enough? Is what Saudi gets out of 0:12:50.360 --> 0:12:53.319 the US when it comes to economic security. Some of 0:12:53.320 --> 0:12:56.240 the things you're talking about enough of an incentive for 0:12:56.320 --> 0:12:59.040 them to act in a way that might be against 0:12:59.240 --> 0:13:01.199 some of their economic benefit. 0:13:02.400 --> 0:13:06.000 Well, here's it. Becomes more complicated. First, this is an 0:13:06.000 --> 0:13:09.680 OPECK plus decision. There are some OPECK plus members that 0:13:09.880 --> 0:13:13.400 might be willing to produce more, but some are at capacity. 0:13:13.520 --> 0:13:17.400 So this really does just leave Saudi Arabia, the Emirates 0:13:17.480 --> 0:13:18.120 and Kuwait. 0:13:18.440 --> 0:13:20.800 But there's a bit of a tension here. 0:13:21.240 --> 0:13:25.360 The lower oil prices become, the less revenue Sadi will 0:13:25.360 --> 0:13:28.400 have to invest, not only in its Vision twenty thirty 0:13:28.400 --> 0:13:31.360 domestic plans, but within the United States itself. 0:13:31.640 --> 0:13:33.479 So I think you're looking at oil. 0:13:33.240 --> 0:13:36.959 Prices that once they would say, reach the sixty dollars sixties, 0:13:37.640 --> 0:13:40.240 really cutting into the amount of money that Saudi Arabia 0:13:40.280 --> 0:13:43.679 would have to put it to meet its investment promises 0:13:43.720 --> 0:13:44.800 to the Trump administration. 0:13:45.800 --> 0:13:48.600 That's one of the contradictions of asking for more production 0:13:48.679 --> 0:13:50.520 if you think it's going to lower prices, because in 0:13:50.559 --> 0:13:52.880 the end, what you end up doing is saying, Okay, 0:13:53.080 --> 0:13:55.920 where's that volume versus price argument? And so I think 0:13:55.960 --> 0:13:58.880 that they probably have the most spare capacity, But you 0:13:58.920 --> 0:14:02.400 could also vision that there might be a small give 0:14:02.480 --> 0:14:04.880 back on production because they are holding some back as 0:14:04.880 --> 0:14:07.120 opposed to a major giveback on production. Do you have 0:14:07.160 --> 0:14:09.440 any thought about how that actually plays out? In the 0:14:09.440 --> 0:14:11.160 real world as opposed to just a request. 0:14:12.400 --> 0:14:15.800 Sure, the Kingdom has two primary goals market. 0:14:15.559 --> 0:14:22.200 Stability and maintaining a capacity to be a swing producer 0:14:22.440 --> 0:14:26.080 driver to prevent any sudden shifts within the market. That 0:14:26.080 --> 0:14:28.480 will drive a relationship with Russia because they have a 0:14:28.520 --> 0:14:32.040 capacity to impact the market. But the Kingdom actually has 0:14:32.200 --> 0:14:35.240 less control over what happens in the United States in 0:14:35.320 --> 0:14:38.360 terms of its market. So we're sort of reaching the 0:14:38.760 --> 0:14:40.960 end or the high point of what fracking can do. 0:14:41.040 --> 0:14:44.360 The Kingdom can produce probably another million or two million 0:14:44.400 --> 0:14:47.520 barrels of on the market. The Emirates could do the 0:14:47.560 --> 0:14:49.760 same thing, and I think some from Kuwait. But I 0:14:49.760 --> 0:14:52.160 think in the end, stability in the market is going 0:14:52.240 --> 0:14:54.840 to be the driver that shapes where OPEC plus goes. 0:14:55.480 --> 0:14:58.080 Norm When it comes to the three big adversaries in 0:14:58.080 --> 0:15:01.120 the United States, China, Russian Iron we've seen President Trump 0:15:01.200 --> 0:15:04.200 in his first week really focus in on Russia and 0:15:04.280 --> 0:15:06.440 putting the onus on Putin to get to the table. 0:15:06.720 --> 0:15:09.000 What's the strategy when it comes to ending this war. 0:15:10.200 --> 0:15:12.480 Well, I think the strategy is clear. 0:15:12.960 --> 0:15:16.200 First, he has assigned General Keith Kellogg, a very experienced 0:15:16.280 --> 0:15:19.720 national security official, to work this and General Kellogg's work 0:15:19.800 --> 0:15:23.360 is continuing, but it is low profile. Second, he has 0:15:23.400 --> 0:15:25.440 gone to the Ukrainians and has said, you know, you 0:15:25.520 --> 0:15:28.280 need a deal. But at the same time, just as 0:15:28.320 --> 0:15:32.720 Trump produces to encourages NATO to increase his spending against Russia, 0:15:32.920 --> 0:15:37.200 he has encouraged Ukraine to enlist eighteen to twenty five 0:15:37.280 --> 0:15:41.320 year olds in its army. So I think Ukraine, he believes, 0:15:41.400 --> 0:15:43.560 is ready for a deal, but Russia. 0:15:43.240 --> 0:15:45.520 Has yet to come to the table in a meaningful way. 0:15:45.560 --> 0:15:49.520 And that explains the President's comments on Russia's the pressure 0:15:49.560 --> 0:15:51.960 we bring on Russia's economy, which are real. I mean, 0:15:52.040 --> 0:15:55.360 Russia is spending a tremendous amount of money in this war. 0:15:55.800 --> 0:15:59.120 We're talking over forty percent of its budget is now 0:15:59.120 --> 0:16:04.080 devoted to military issues. Its labor market is being squeezed 0:16:04.080 --> 0:16:07.840 to the limits. You're looking at a collapse of foreign investment. 0:16:07.920 --> 0:16:10.360 It's lost markets. I mean, this is a This is 0:16:10.440 --> 0:16:13.320 really a tremendous blow to any of the world's economy. 0:16:13.320 --> 0:16:15.920 And I think the President's views of I will put 0:16:16.000 --> 0:16:19.320 more pressure on that economy is how he plans to 0:16:19.320 --> 0:16:20.120 bring this forward. 0:16:20.560 --> 0:16:22.280 Norman, thank you so much for your time this morning. 0:16:22.280 --> 0:16:34.720 Norman Rule of CSIS joining US now is Libby Cantrell 0:16:34.840 --> 0:16:37.400 of PIMPKO. So he's making a ton of news. It's 0:16:37.440 --> 0:16:40.600 the first full week, basically working week of his administration, 0:16:41.320 --> 0:16:44.920 slew of executive orders, John voting the Fed, telling the 0:16:44.960 --> 0:16:47.480 Saudis to add more barrels to the market, and then 0:16:47.560 --> 0:16:51.480 last night seemingly signaling to China that he has the 0:16:51.560 --> 0:16:53.200 power in tariff them, but he doesn't want to use 0:16:53.240 --> 0:16:55.040 them yet. What do you take away from all of this? 0:16:55.320 --> 0:16:57.680 Yeah, I mean it has been flooding the zone. You 0:16:57.760 --> 0:17:01.720 forgot about the big Ai announcement. Course itself would have 0:17:01.760 --> 0:17:04.280 been a massive announcement that would have driven news for 0:17:04.280 --> 0:17:06.080 a week, and yet it was a little bit drowned 0:17:06.160 --> 0:17:08.959 out because of all these executive orders. I mean, obviously 0:17:08.960 --> 0:17:11.320 a lot of our clients very focused on tariff risk. 0:17:11.600 --> 0:17:14.800 I think, you know, taking some comfort in the fact 0:17:14.880 --> 0:17:19.320 that President Trump hasn't done anything at least definitive on 0:17:19.480 --> 0:17:21.879 China or other countries. I mean, we think it's a 0:17:21.920 --> 0:17:25.119 little premature to start celebrating, and we think the direction 0:17:25.160 --> 0:17:28.199 of travel here is very clear. They did issue an 0:17:28.200 --> 0:17:32.520 America First Trade memorandum that made it was basically a 0:17:32.600 --> 0:17:35.960 roadmap for how they are thinking about trade. It goes 0:17:36.000 --> 0:17:39.320 from everything from kind of rewriting free trade agreements to 0:17:39.440 --> 0:17:43.600 looking at currency relationships to looking at outbound investment from 0:17:43.640 --> 0:17:45.920 the US to China. So I think what we are 0:17:46.040 --> 0:17:48.240 telling our clients and then also I'm telling our traders 0:17:48.280 --> 0:17:50.960 is let's not sort of celebrate this too prematurely. This 0:17:51.000 --> 0:17:53.400 is a deep seated ideology. As we've talked about, there's 0:17:53.400 --> 0:17:56.520 a revenue component here, but there's also you know, I 0:17:56.520 --> 0:17:58.960 think you know, he believes in tariffs. He believes in 0:17:58.960 --> 0:18:01.000 tariff's work in terms of you've seen the trade deficit 0:18:01.240 --> 0:18:03.879 as it relates to China. I mean, it is complicated, right, 0:18:03.880 --> 0:18:06.080 There are other things that I think the President wants 0:18:06.080 --> 0:18:09.560 from China as it relates to the Ukraine War, for instance, 0:18:10.280 --> 0:18:13.000 And I think that he will is intentionally sort of 0:18:13.000 --> 0:18:16.199 slow walking a tariffs or actions on China. I just 0:18:16.359 --> 0:18:19.000 we should not conflate that though with no future action, 0:18:19.080 --> 0:18:21.440 because I do believe that teriffs will be increasing, probably 0:18:21.480 --> 0:18:23.440 across the board, but also in China in particular. 0:18:23.520 --> 0:18:25.880 Well, when it comes to the signal he's sending, maybe 0:18:25.880 --> 0:18:28.240 he's slow walking it. That's been a huge relief rally 0:18:28.280 --> 0:18:32.280 even just today in Asia, in Europe, in global currencies, 0:18:32.320 --> 0:18:35.240 you know, the dollars much much weaker. When it comes 0:18:35.280 --> 0:18:37.120 to China. It's not just the war in Ukraine, it's 0:18:37.119 --> 0:18:40.000 also TikTok. There's so many levers he's trying to pull. 0:18:40.520 --> 0:18:42.720 Where does all of this stack up in terms of 0:18:42.760 --> 0:18:43.920 the priority list. 0:18:44.320 --> 0:18:46.680 Yeah, well, I think that's that's an no good question. 0:18:48.200 --> 0:18:51.200 And I do think, I mean, these are our different dimensions. 0:18:51.240 --> 0:18:55.040 I think different advisors care about different things here. Of course, 0:18:55.200 --> 0:18:57.240 you know, as we've talked about, he has a cadre 0:18:57.320 --> 0:18:59.600 of folks who are advising him under Trump two point zero, 0:18:59.600 --> 0:19:01.840 who are all so they're under Trump one point zero, 0:19:02.280 --> 0:19:05.200 who don't necessarily trust the Chinese. They view that the 0:19:05.320 --> 0:19:07.920 Chinese do not honor the Phase one trade agreement. I 0:19:07.960 --> 0:19:10.040 think there's going to be a real review. I mean, 0:19:10.280 --> 0:19:14.399 in this memorandum, there's an order to actually look at 0:19:14.440 --> 0:19:16.080 the Phase one trade agreement, to kind of create a 0:19:16.080 --> 0:19:18.840 scorecard around that, and to publish that. So I do 0:19:18.960 --> 0:19:21.720 think again, this is you know, actions are likely coming 0:19:21.800 --> 0:19:24.520 on China. I do think the market, though, should celebrate 0:19:24.600 --> 0:19:26.720 the fact that it's going to be intentional, it's going 0:19:26.800 --> 0:19:28.879 to be thought out. It's going to be strategic and 0:19:28.920 --> 0:19:31.920 maybe not sort of the worst fear that the market 0:19:31.920 --> 0:19:32.760 at least was predicted. 0:19:32.800 --> 0:19:34.439 Can I just go back to where we started, this 0:19:34.680 --> 0:19:37.359 very simple fact that we got so much this week. 0:19:37.440 --> 0:19:38.919 I mean, it is a reminder of what it was 0:19:39.000 --> 0:19:42.040 like around last time that you have him talking to reporters, 0:19:42.040 --> 0:19:45.000 making news, posting things on social media and making news, 0:19:45.040 --> 0:19:46.080 giving different speeches. 0:19:46.119 --> 0:19:47.159 It is a lot. 0:19:47.359 --> 0:19:50.120 What is your advice to your traders, to your clients 0:19:50.680 --> 0:19:52.359 and how to sort through all of it, what to 0:19:52.400 --> 0:19:54.919 pay attention to and maybe what you can ignore. 0:19:55.400 --> 0:19:56.520 Yeah, I mean, great question. 0:19:57.640 --> 0:19:59.800 I think you know from US from a fixed income perspective, 0:20:00.160 --> 0:20:04.679 you know what drives bond yields, growth, inflation, currency, and 0:20:04.680 --> 0:20:06.119 of course obviously the FED at the end of the 0:20:06.200 --> 0:20:07.040 day in terms. 0:20:06.800 --> 0:20:07.440 Of the US. 0:20:08.040 --> 0:20:11.080 So anything that really will have a tangible impact on 0:20:11.160 --> 0:20:14.320 those drivers. A lot of these executive orders, I call 0:20:14.359 --> 0:20:16.399 them kind of more sizzle than steak. A lot of 0:20:16.400 --> 0:20:18.720 them are, you know, for the sort of shock and 0:20:18.800 --> 0:20:21.560 awe value versus actually the substance value. Now, a lot 0:20:21.560 --> 0:20:23.440 of them will be more substantive, and I think even 0:20:23.840 --> 0:20:26.000 on the federal workforce, some of the things he's done 0:20:26.000 --> 0:20:29.000 in terms of the hiring freeze, rolling back the DEI. 0:20:29.440 --> 0:20:31.439 While that may have a long tail, that will have 0:20:31.480 --> 0:20:33.560 an impact in terms of you know, employment of federal 0:20:33.560 --> 0:20:36.800 workforce and potentially incrementally on the budget. The end of 0:20:36.840 --> 0:20:39.320 the day, though, the big things that drive the markets 0:20:39.359 --> 0:20:41.320 are going to be again the big macro movers. A 0:20:41.400 --> 0:20:43.240 lot of that has to do with Congress, and we 0:20:43.280 --> 0:20:45.919 haven't you know, Congress, we Van Marie and I Lament. 0:20:46.000 --> 0:20:49.480 You know, Congress is understandably trying to get their ducks 0:20:49.520 --> 0:20:53.560