WEBVTT - Trump's Tariff Pause Sparks Global Relief Rally 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.720 --> 0:00:13.920 Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. 0:00:14.280 --> 0:00:17.440 We had about of euphoria gripping the US equity market 0:00:17.520 --> 0:00:20.880 in the last session. That came after President Trump paused 0:00:20.960 --> 0:00:25.000 new reciprocal tariffs for dozens of trading partners for ninety days. 0:00:25.239 --> 0:00:25.439 Now. 0:00:25.480 --> 0:00:28.800 These reciprocal duties from most nations will be taxed at 0:00:28.840 --> 0:00:32.440 a baseline rate of ten percent, with the exception of China. 0:00:32.520 --> 0:00:35.400 Trump did raise duties on Chinese goods all the way 0:00:35.479 --> 0:00:38.920 to one hundred and twenty five percent. In a moment, 0:00:38.960 --> 0:00:41.680 we'll be speaking with Rebecca Walzer. She is president of 0:00:41.720 --> 0:00:45.519 wallser Wealth Management. But we begin in Hong Kong. Joining 0:00:45.560 --> 0:00:48.880 me now is Chi Lo, senior market strategist at BNP 0:00:49.040 --> 0:00:52.360 Parabah Asset Management. Chi is on the line from Hong Kong. 0:00:52.440 --> 0:00:55.160 It's always a pleasure. Thank you for making time. Can 0:00:55.200 --> 0:00:58.040 I begin by getting your reaction to the price action 0:00:58.240 --> 0:01:01.080 that we have seen in the last twelve hours or so? 0:01:02.480 --> 0:01:06.520 By summary is in one word for volatility, which is 0:01:06.560 --> 0:01:11.480 what we've been seeing for quite some weeks now. The 0:01:11.480 --> 0:01:16.040 reaction last night, of course, is obviously due to President 0:01:16.080 --> 0:01:21.240 Trump's pausing of the RECIPI reciprocal tariffs on almost all 0:01:21.240 --> 0:01:22.880 other countries except China. 0:01:23.840 --> 0:01:24.960 That's understandable. 0:01:25.480 --> 0:01:25.680 Uh. 0:01:25.800 --> 0:01:29.120 The other reason for the big reaction last night was 0:01:29.160 --> 0:01:33.200 because of the cell of you a week ago, which 0:01:33.480 --> 0:01:36.920 to some extent was an overreaction, and now this is 0:01:36.959 --> 0:01:40.880 another overreaction, but to the upside. So on a net basis, 0:01:40.880 --> 0:01:44.959 we are still seeing the US stocks over all, the 0:01:44.959 --> 0:01:48.600 indices are down a little bit compared with a week ago. 0:01:49.520 --> 0:01:53.720 Going forward, nobody knows how long this rebound could last 0:01:53.800 --> 0:01:58.080 because mister Trump said the pause is about three months, 0:01:58.080 --> 0:02:02.480 but you never know what he will say tomorrow next week. Also, 0:02:02.880 --> 0:02:06.000 so volcidity is due the key thing, and risk management 0:02:06.520 --> 0:02:09.200 is keything could do in terms of investment. 0:02:09.400 --> 0:02:13.000 So it would seem as though the fifty six nations 0:02:13.040 --> 0:02:15.600 plus the European Union that are going to be kind 0:02:15.639 --> 0:02:19.920 of facing these baseline tariffs of ten percent, they are 0:02:19.960 --> 0:02:23.640 in the process of negotiating. China is not negotiating right now. 0:02:23.680 --> 0:02:27.520 And perhaps it was the view of the Trump administration 0:02:27.720 --> 0:02:31.560 that because China retaliated that the new tariff of one 0:02:31.639 --> 0:02:34.480 hundred and twenty five percent was put in place. Do 0:02:34.520 --> 0:02:36.880 you think this is a dangerous exercise. Are we looking 0:02:36.960 --> 0:02:39.519 at a full blown trade war? Forget the other trading 0:02:39.520 --> 0:02:42.359 partners for a moment, let's just talk about Washington Mai Jing. 0:02:42.880 --> 0:02:45.880 Are we dealing with the possibility that we're going to 0:02:45.880 --> 0:02:49.360 see a long protracted trade war between the US and China. 0:02:49.919 --> 0:02:54.240 Well, that possibility actually is always there, and this time 0:02:54.320 --> 0:02:59.000 when we see China's very stern reaction to the reciprocal 0:02:59.080 --> 0:03:03.160 tarrier's buyings from is another evidence that the two nations 0:03:03.160 --> 0:03:06.720 will continue to compete in the long term, long term 0:03:06.720 --> 0:03:10.040 meaning the next ten years, fifteen years, twenty years, in 0:03:10.080 --> 0:03:12.639 the form of trade wars, tag wars, and all these things. 0:03:13.240 --> 0:03:17.600 It is a dangerous game, a dangerous chickens game. As 0:03:17.600 --> 0:03:19.880 far as this game is concerned, this time is concerned, 0:03:19.919 --> 0:03:23.760 I think it depends on who flinches first. On the 0:03:23.880 --> 0:03:26.919 US side, they think that China will extinct significant losses 0:03:26.960 --> 0:03:30.880 and economic pains and they will blink first. But from 0:03:30.919 --> 0:03:34.240 the Chinese side, they think similarly that the US would 0:03:34.240 --> 0:03:37.600 be heard at least as much as China, if not 0:03:38.280 --> 0:03:41.720 more so. In a trade war situation like this, nobody wins, 0:03:42.160 --> 0:03:45.400 and it really depends on who gets hurt more. Now, 0:03:45.440 --> 0:03:48.400 when you look at the tray numbers. Of course, it 0:03:48.440 --> 0:03:51.440 seems that China would be hurt more because China exports 0:03:51.520 --> 0:03:56.080 much more to the than US exports to China, which 0:03:56.080 --> 0:03:58.880 means that the tarriest impact negative times impact on Chinese 0:03:58.920 --> 0:04:02.680 exports will be much big than the Chinese tarioft impact 0:04:02.760 --> 0:04:06.240 on US exports. But that's only half the equation. The 0:04:06.280 --> 0:04:09.760 other half of the equation is about foreign investment in 0:04:09.840 --> 0:04:14.280 each other's country. The foreign direct investment in China is 0:04:14.480 --> 0:04:18.279 significantly more than the Chinese foreign direct investment in the US, 0:04:18.800 --> 0:04:23.320 which means that Beijing can hit the American companies operating 0:04:23.360 --> 0:04:28.120 in China with significantly more negative impact than the US 0:04:28.200 --> 0:04:31.200 could hit Chinese companies or Chinese investment in the US. 0:04:31.600 --> 0:04:34.839 So when you put that into the equation, it really 0:04:35.279 --> 0:04:37.640 it is going to be very messy that we could 0:04:37.680 --> 0:04:42.919 see both sides mm c's Chinese SI USI TRADESI or 0:04:42.960 --> 0:04:43.520 get heart. 0:04:44.240 --> 0:04:46.800 So I'm wondering about the response that Beijing may have 0:04:47.240 --> 0:04:50.400 domestically right now. Put stimulus aside for the moment. We 0:04:50.440 --> 0:04:53.400 can talk about that in a sec but I'm getting 0:04:53.400 --> 0:04:57.120 indications that Beijing has launched a coordinated government effort to 0:04:57.160 --> 0:05:00.839 support the stock market. That's one thing that can happen 0:05:00.880 --> 0:05:03.880 in a near term here. The other is that the 0:05:03.920 --> 0:05:06.320 currency can be allowed to weaken a little bit more 0:05:06.640 --> 0:05:10.200 so could those two options provide a little bit of 0:05:10.240 --> 0:05:12.160 support at least in the near term. 0:05:13.080 --> 0:05:16.560 The two options through currency depreciation. 0:05:16.320 --> 0:05:21.279 And also stock market support, will provide some short term 0:05:22.120 --> 0:05:25.560 support to the Chinese stock market. The policy signal is 0:05:25.640 --> 0:05:28.599 more important that China is sending the world a policy 0:05:28.640 --> 0:05:30.359 signal that yeah, you may like. 0:05:30.960 --> 0:05:32.440 You may argue that the. 0:05:32.440 --> 0:05:35.880 Chinese goes in with the national team buying up Chinese 0:05:35.920 --> 0:05:37.160 stocks and supporting the market. 0:05:37.360 --> 0:05:38.320 But the point here is. 0:05:38.240 --> 0:05:43.200 That among all these volcidity and geopolitical tensions, the Chinese 0:05:43.240 --> 0:05:46.320 are telling the world that they have its mechanism. 0:05:46.120 --> 0:05:50.400 To protect investors investments. So I think that that's important 0:05:50.640 --> 0:05:51.799 for those people who. 0:05:51.680 --> 0:05:56.680 Are assessing volatility risk in markets like China that will 0:05:56.720 --> 0:06:01.279 get government support and in markets like the others who will. 0:06:01.080 --> 0:06:05.040 Not get government support. But these are only short term measures. 0:06:05.480 --> 0:06:08.520 A longer term, we still need to see aggressive and 0:06:09.120 --> 0:06:12.480 assertive Chinese easing to push the message sector to fight 0:06:12.520 --> 0:06:13.120 the tariff war. 0:06:13.360 --> 0:06:16.480 What about more stimulus chie how much more can Beijing 0:06:16.520 --> 0:06:20.920 afford to unleash at this moment before it becomes problematic, 0:06:21.120 --> 0:06:24.839 before we talk about an even larger debt bubble in China. 0:06:26.080 --> 0:06:26.760 At this point, I. 0:06:26.800 --> 0:06:32.320 Think the risk freshold probably is another two position points 0:06:32.360 --> 0:06:36.279 of GDP on the downside, which means that if the 0:06:36.360 --> 0:06:41.400 tariff impact shaves of between two and three percentage points 0:06:41.440 --> 0:06:46.480 of GDP in China, Beijing will have to increase fiscal 0:06:47.160 --> 0:06:51.320 stimulus by a similar amount a similar amount to offset 0:06:51.400 --> 0:06:52.320 that impact. 0:06:52.640 --> 0:06:53.920 And I believe China. 0:06:53.720 --> 0:06:56.720 Still has the room to do it because government borrowing 0:06:57.640 --> 0:07:06.320 is still reasonably level and the reception to Chinese boring 0:07:06.720 --> 0:07:09.800 internationally and locally in China are. 0:07:09.720 --> 0:07:15.760 Still very high. So, assuming there is no disaster. 0:07:15.480 --> 0:07:20.960 Earthquake hitting the Chinese economy, I think the tariff impact 0:07:21.160 --> 0:07:24.200 it's going to be painful, but it's still manageable at. 0:07:24.080 --> 0:07:29.280 This point by the Chinese with more aggressive fiscal stabilism. 0:07:29.560 --> 0:07:32.880 Gee, we've talked about the macro. I'm interested now in 0:07:32.920 --> 0:07:36.520 a practical investment strategy, and I'm curious as to whether 0:07:36.560 --> 0:07:40.000 that would include what has been up until this point 0:07:40.200 --> 0:07:42.880 a bright spot for the Chinese equity market, which is 0:07:42.960 --> 0:07:45.680 high technology. What is going to work in the next 0:07:46.080 --> 0:07:49.160 six to nine, let's say even twelve months right now, 0:07:49.200 --> 0:07:51.600 if I had to put money to work in China. 0:07:52.440 --> 0:07:54.880 For the sick, next six months probably is too early 0:07:54.960 --> 0:07:59.120 to really go or eat into China beyond six months, 0:07:59.280 --> 0:08:03.880 assuming the tariff does get settled one way or the other. UH, 0:08:03.920 --> 0:08:09.480 the Chinese tax sector, Chinese stocks actually are reasonably positioned 0:08:09.680 --> 0:08:15.880 to recover assuming that Beijing comes up with more aggressive easing. 0:08:15.960 --> 0:08:16.840 That's the key point. 0:08:17.120 --> 0:08:20.520 If we don't see aggressive easing by Beijing, then you 0:08:20.560 --> 0:08:24.160 can forget about Chinese assets for a while longer. But 0:08:24.280 --> 0:08:26.840 if we do see that, which I think there's a 0:08:27.040 --> 0:08:30.440 reasonable chance that Mayjing will be more aggressive in easing 0:08:31.120 --> 0:08:35.320 beyond six months. Once when the does steffled, we could 0:08:35.320 --> 0:08:39.520 see we we could see a reasonable recovery in Chinese 0:08:40.200 --> 0:08:43.760 asset prices and also UH the economy for the simple 0:08:43.800 --> 0:08:48.560 fact that exports, or net exports to be more precise, 0:08:49.200 --> 0:08:51.119 it's not a key driver. 0:08:51.000 --> 0:08:52.880 For Chinese growth and earnings growth. 0:08:53.280 --> 0:08:55.760 You know, there's going to be pains with net expots down, 0:08:56.080 --> 0:08:58.520 but they are not the key driver for Chinese growth. 0:08:58.559 --> 0:09:02.480 Scenes GFC more than ten years ago, the domestic sector 0:09:02.720 --> 0:09:06.240 is the primary drive growth for growth, so that's why 0:09:06.280 --> 0:09:09.400 it's so important that Beijing will have to push the 0:09:09.400 --> 0:09:14.040 domestic sector with more aggressive easing in order to turn 0:09:14.080 --> 0:09:14.559 things around. 0:09:14.800 --> 0:09:16.880 Gee, what about the high tech sector. We've seen the 0:09:17.040 --> 0:09:20.200 enthusiasm post Deep Seek. I'm wondering whether or not that 0:09:20.320 --> 0:09:23.000 still has legs. What do you think it has legs? 0:09:23.000 --> 0:09:24.839 But it's in the longer term. 0:09:24.960 --> 0:09:28.640 A short term forget about it, because the near term 0:09:28.679 --> 0:09:33.040 factors are still the macro volatility, political risk, tariff war 0:09:33.080 --> 0:09:36.800 and so on. But beyond this short term, you know, 0:09:36.840 --> 0:09:42.000 as I said that it doesn't settle. The Chinese tech sector, 0:09:42.200 --> 0:09:47.720 especially companies and industries that serve domestic markead still has 0:09:47.960 --> 0:09:52.000 a positive future because it is a national policy that 0:09:52.520 --> 0:09:55.800 China has to develop itself into a high tech economy 0:09:56.240 --> 0:09:58.400 to compete in the US. And this is not a 0:09:58.440 --> 0:10:02.960 short term policy. This is a long term policy direction. 0:10:03.520 --> 0:10:08.640 So domestic oriented tech companies, industries, sectors are going to 0:10:08.679 --> 0:10:12.280 be positive in the long term, while those rely more 0:10:12.320 --> 0:10:15.439 on the on the external market for revenues and stuff 0:10:15.800 --> 0:10:19.480 will not be as positive as the domestic oriented companies. 0:10:19.720 --> 0:10:21.400 She will leave it there. Thank you so much for 0:10:21.480 --> 0:10:23.240 joining us. It's always a pleasure to chat with you 0:10:23.400 --> 0:10:27.760 Chi Lo, their senior market strategist at BNP PAABO Asset Management, 0:10:28.000 --> 0:10:30.400 on the line from Hong Kong. Here on the Daybreak 0:10:30.440 --> 0:10:40.640 Asia podcast. Welcome back to the Debreak Asia Podcast. I'm 0:10:40.679 --> 0:10:45.040 Doug Chrisner. So President Trump ignited an explosive rally in 0:10:45.040 --> 0:10:48.600 the equity market today when he paused new reciprocal tariffs 0:10:48.640 --> 0:10:51.960 for dozens of trading partners for ninety days, and we 0:10:52.000 --> 0:10:55.000 saw the biggest burst of buying for US stocks since 0:10:55.240 --> 0:10:57.680 two thousand and eight. The S and P five hundred 0:10:57.720 --> 0:10:59.960 surge ninety and to a half percent, while the next 0:11:00.200 --> 0:11:03.520 DAK composit rallied more than twelve percent today. Joining me 0:11:03.600 --> 0:11:06.040 now for a closer look is Rebecca Waalzer. She is 0:11:06.080 --> 0:11:09.080 the president of wallser Wealth Management. She is on the 0:11:09.120 --> 0:11:12.400 line from Tampa, Florida. Rebecca, it's always a pleasure to 0:11:12.480 --> 0:11:14.720 visit with you. What did you make of today's price section? 0:11:15.440 --> 0:11:15.840 Wow? 0:11:16.360 --> 0:11:18.200 What can I say, Doug? I mean, this is a 0:11:18.320 --> 0:11:21.840 day for the record books. You know, we this is 0:11:22.040 --> 0:11:24.839 this is unprecedented. I mean, you know, we haven't seen 0:11:25.160 --> 0:11:28.160 the gains on the Dow since, like you know, before 0:11:28.240 --> 0:11:31.920 dot Com basically now as DAK twenty four year record 0:11:32.000 --> 0:11:34.360 here that we're talking about. Obviously the S and P 0:11:34.559 --> 0:11:37.160 had was more affected with the global financial crisis two 0:11:37.160 --> 0:11:40.520 thousand and eight, but literally it's for the record books, Doug. 0:11:40.600 --> 0:11:44.240 And it just shows you that, you know, and an administration 0:11:44.280 --> 0:11:48.320 can really come in and leverage there might economically and 0:11:48.520 --> 0:11:53.960 have reverberations geopolitically globally across the world. So it's it's unbelievable. 0:11:54.080 --> 0:11:54.400 Wow. 0:11:54.600 --> 0:11:56.280 When when you look at the tariff story, we know 0:11:56.360 --> 0:11:59.360 that President Trump paused those new reciprocal tariffs on a 0:11:59.360 --> 0:12:02.720 dozen trading hardness for ninety days. That was only thirteen 0:12:02.760 --> 0:12:05.800 hours after they went into effect. But I'm wondering whether 0:12:05.840 --> 0:12:08.360 the markets guided him. Was this a little bit of 0:12:08.360 --> 0:12:10.400 a capitulation on the part of the president? 0:12:10.840 --> 0:12:12.520 You know, I think that there's going to be a 0:12:12.559 --> 0:12:15.560 lot of dissection of exactly that question, Doug. You're hitting 0:12:15.600 --> 0:12:18.720 the nail on the head there, because the question is 0:12:18.960 --> 0:12:21.600 does he all along realize that what he's doing is 0:12:21.679 --> 0:12:28.400 so evasive and we'll have such a deep and important 0:12:28.440 --> 0:12:31.680 impact to every corner of trade and the globe that 0:12:31.720 --> 0:12:35.120 he expects it to be met with total, you know, 0:12:35.880 --> 0:12:39.040 consternation and immediate like let's fix this. I mean, he 0:12:39.080 --> 0:12:41.200 did say in the press release on True Social that 0:12:41.240 --> 0:12:45.959 seventy five countries had called to basically negotiate what they 0:12:45.960 --> 0:12:48.800 could do to have a more equal in his and 0:12:48.880 --> 0:12:52.079 his learning I'm summarizing now, but you know, to do 0:12:52.280 --> 0:12:56.720 negotiate a more balanced tariff arrangement between between trade and 0:12:57.000 --> 0:13:01.120 you know, to Secretary Treasury Secretary best point to his 0:13:01.200 --> 0:13:04.400 point is we need ninety days to actually work through 0:13:04.480 --> 0:13:06.320 these trade deals, and there's going to be a lot 0:13:06.400 --> 0:13:09.080 of negotiation that happens over the next ninety days. I 0:13:09.080 --> 0:13:12.280 think the biggest issue that the market is sort of 0:13:12.320 --> 0:13:14.880 ignoring and discounting right now is what you said earlier 0:13:14.920 --> 0:13:18.440 in the open, which is trade war with China is 0:13:18.520 --> 0:13:21.320 squarely the peg that is in front of us. Now, 0:13:21.520 --> 0:13:23.880 what has happened is all of these superfluous noise of 0:13:23.960 --> 0:13:26.880 all of the other countries has now dissipated and fallen 0:13:26.920 --> 0:13:32.439 away really exponentially immediately today with this pause, and now 0:13:32.440 --> 0:13:37.760 we're literally looking at a tit for tat with China directly, 0:13:38.080 --> 0:13:41.600 and so obviously the policy that he had put in place. 0:13:42.320 --> 0:13:46.600 China counter acted and raised their thirty four percent average 0:13:46.640 --> 0:13:51.160 tariffs across US imports to eighty four percent, which then 0:13:51.360 --> 0:13:55.400 obviously prompted Trump to respond again and raise again from 0:13:55.440 --> 0:13:57.640 over one hundred percent tariff to one hundred and twenty 0:13:57.640 --> 0:14:01.200 five percent. So, Doug, this is a setup, complete setup 0:14:01.400 --> 0:14:05.440 to one for one have a direct trade war with China. 0:14:05.800 --> 0:14:08.080 And although that is a very uncomfortable thing for me 0:14:08.120 --> 0:14:12.040 to say, it is about time because you know, one 0:14:12.080 --> 0:14:14.600 thing that I can just say universally that I think 0:14:14.640 --> 0:14:17.520 most economists would agree on is that China is the 0:14:17.600 --> 0:14:20.800 number two largest economy in the world, in some cases 0:14:21.040 --> 0:14:25.200 larger than America in some certain instances. And from that perspective, 0:14:25.440 --> 0:14:28.320 they shouldn't have what we call most Favored Nation status 0:14:28.320 --> 0:14:30.560 at the World Trade Organization as if they were a 0:14:30.600 --> 0:14:34.160 disadvantaged country, and them having that status, as you know, Doug, 0:14:34.480 --> 0:14:36.960 allows them to do and to circumvent a lot of 0:14:37.000 --> 0:14:41.120 protections that other countries like America, industrialized countries have to 0:14:41.280 --> 0:14:44.080 live within. So I think that there's at least a 0:14:44.120 --> 0:14:46.880 fairness conversation that this is going to make happen now, 0:14:47.000 --> 0:14:49.920 and it's going to alert the players of the world 0:14:50.080 --> 0:14:53.040 to the unfairness potentially of some of our interactions with China. 0:14:53.200 --> 0:14:54.960 So about twenty hours ago, we had a bit of 0:14:55.000 --> 0:14:58.720 a meltdown in the treasury market and yield spiked, particularly 0:14:58.760 --> 0:15:01.760 on the ten year. That may have been a catalyst 0:15:02.080 --> 0:15:04.800 for a bit of rethink on the part of the administration. 0:15:05.000 --> 0:15:08.760 We don't know exactly, but clearly China holds a trillion 0:15:08.840 --> 0:15:11.440 dollars worth of US treasuries. This has to be considered 0:15:11.440 --> 0:15:12.720 as part of the story too, right. 0:15:13.440 --> 0:15:16.680 I mean, there is a rumor, and we won't discuss rumors, 0:15:16.680 --> 0:15:18.840 but there's a there's a title of it and everything. 0:15:18.920 --> 0:15:21.680 It's Operation Sandman, where we could literally see, you know, 0:15:21.760 --> 0:15:26.040 a coordinated effort of multiple nations across the globe dumping 0:15:26.120 --> 0:15:31.000 selling US treasuries simultaneously, which would be a disaster for 0:15:31.240 --> 0:15:34.880 the US dollar. And so I can't say that I 0:15:34.920 --> 0:15:37.600 have direct confirmation, but I think that it's very obvious 0:15:37.600 --> 0:15:40.320 dead that there is no doubt that the pressure on 0:15:40.400 --> 0:15:45.040 the ten year is absolutely problematic. It was problematic for 0:15:45.280 --> 0:15:48.320 the auctions that are happening this week. And I also 0:15:48.640 --> 0:15:52.320 will recognize that we have nine trillion dollars of US 0:15:52.400 --> 0:15:55.800 federal debt that has to be refinanced in twenty twenty five. 0:15:56.080 --> 0:15:58.880 Of the thirty six trillion that we have, and we 0:15:59.120 --> 0:16:03.560 can't afford to finance that, you know, in the four 0:16:03.600 --> 0:16:06.640 percent range. We just can't because you know, that's debt 0:16:06.880 --> 0:16:09.160 that was written, you know, from the two thousand and 0:16:09.160 --> 0:16:12.360 eight to the twenty twenty two timeframe, when our cost 0:16:12.720 --> 0:16:15.920 you know, our FED funds rate was twenty five basis points, Doug. 0:16:16.000 --> 0:16:19.160 So we just are in a much different place and 0:16:19.240 --> 0:16:20.920 that debt has to be refinanced, and of course we 0:16:20.960 --> 0:16:23.960 need our auctions to continue to be seen throughout the 0:16:23.960 --> 0:16:25.800 world as stable and ongoing. 0:16:26.320 --> 0:16:29.720 So the President raised duties today on Chinese goods all 0:16:29.720 --> 0:16:32.360 the way to one hundred and twenty five percent, and 0:16:32.400 --> 0:16:34.680 he did say later in the day that he can't 0:16:34.720 --> 0:16:38.640 imagine increasing them further. But he did say that sectoral 0:16:38.680 --> 0:16:42.640 tariffs are still coming and pharmaceutical companies will be facing 0:16:42.680 --> 0:16:45.240 tariffs as well. So the dust, i think we can agree, 0:16:45.440 --> 0:16:48.200 has not completely settled. So when you look at the 0:16:48.200 --> 0:16:51.480 potential here for more volatility in the equity market, would 0:16:51.520 --> 0:16:54.000 you expect there to be maybe not the level that 0:16:54.040 --> 0:16:57.760 we saw over the last three trading days, but a 0:16:57.760 --> 0:16:58.960 lot more volatility. 0:16:59.040 --> 0:17:02.960 Nonetheless, absolutely, Doug, and I think that is the best 0:17:03.040 --> 0:17:05.720 message that if anyone walks away from this conversation and 0:17:05.800 --> 0:17:08.640 has one takeaway. It has to be that this has 0:17:08.880 --> 0:17:11.520 just begun, and I don't think that, you know, one 0:17:11.520 --> 0:17:13.119 of the best trading days that we've had to the 0:17:13.200 --> 0:17:19.520 upside today should give anybody super confident footing because the 0:17:19.880 --> 0:17:23.760 ground is still moving beneath us. And it is uncomfortable 0:17:23.800 --> 0:17:25.399 when the ground is shifting and you don't feel like 0:17:25.400 --> 0:17:29.040 you have your footing. But that is what this president 0:17:29.560 --> 0:17:34.000 basically ran on, changing the global dynamic with the world 0:17:34.640 --> 0:17:37.439 on the economic side, and he is determined to do that. 0:17:37.520 --> 0:17:39.200 And if you have read the Art of the Deal, 0:17:39.280 --> 0:17:41.639 you know that he leverages the power that he has 0:17:41.960 --> 0:17:45.240 to negotiate the absolute best deal, and some of his 0:17:45.359 --> 0:17:48.959 negotiations sometime is very uncomfortable. So he's doing this on 0:17:49.000 --> 0:17:51.119 a very public scale that we have to live through 0:17:51.160 --> 0:17:53.480 through our four to one k's in our iras, which 0:17:53.520 --> 0:17:55.800 makes it very uncomfortable for a lot of people. But 0:17:56.280 --> 0:17:58.920 the point of Trump and the Art of the Deal 0:17:59.040 --> 0:18:01.679 is to be the last one standing with the negotiation. 0:18:01.960 --> 0:18:06.200 So the pharmaceutical industry being as as it's become, and 0:18:06.720 --> 0:18:10.080 even China into China doug Interestingly enough, if you look 0:18:10.119 --> 0:18:13.800 at the percentage. Somewhere eighty plus percent of our pharmaceutical 0:18:14.119 --> 0:18:18.399 ingredients come from China directly, and that is a huge 0:18:18.400 --> 0:18:20.320 problem if you look at like the global pandemic of 0:18:20.320 --> 0:18:23.359 twenty twenty coronavirus. If we have another thing like that 0:18:23.520 --> 0:18:25.400 and we're in some kind of trade war with China 0:18:25.400 --> 0:18:28.239 and they decide to just cut off our ingredients, we 0:18:28.280 --> 0:18:31.200 could literally have a situation where we can't even take 0:18:31.240 --> 0:18:34.439 care of our health and our own country autonomously. So 0:18:34.960 --> 0:18:38.800 I don't think that the pharmaceuticals being so intertwined into 0:18:38.880 --> 0:18:43.160 China is not it's not a coincidence. It's tied together 0:18:43.560 --> 0:18:47.720 to his almost to me, and I'm not suggesting that 0:18:47.760 --> 0:18:50.200 he's anti China or he's against China, but I do 0:18:50.240 --> 0:18:53.760 see that he is very His policies are antagonistic because 0:18:53.800 --> 0:18:55.399 he thinks that China is so unfair, and we know 0:18:55.440 --> 0:18:57.200 their ip stealing is unfair, we know they're doing a 0:18:57.240 --> 0:19:01.240 lot of unfair trade practices. But he's really directly head 0:19:01.280 --> 0:19:04.159 on with the fact that we are so beholden to 0:19:04.200 --> 0:19:06.560 them as a country. We are not autonomous in a 0:19:06.560 --> 0:19:07.159 lot of ways. 0:19:07.280 --> 0:19:10.879 So after the tweak to tariff policy today, Goldman Sachs, 0:19:10.920 --> 0:19:13.879 the economist at the firm, withdrew their forecast for a 0:19:14.000 --> 0:19:17.000 US recession. Although if you listen to what some corporate 0:19:17.080 --> 0:19:20.960 leaders are saying, whether they're at Delta Airlines or Walmart, 0:19:21.240 --> 0:19:24.200 they're warning of a wave of pessimism. Are you confident 0:19:24.240 --> 0:19:26.000 that we can avoid recession here? 0:19:26.760 --> 0:19:29.000 No, not at all, doug As you know, I've been 0:19:29.040 --> 0:19:31.280 more on the bearish side for a while, and the 0:19:31.359 --> 0:19:35.000 reason is it's a metro macroeconomic reason. The reason is 0:19:35.440 --> 0:19:40.480 we simply globally printed way too much Fiat currency after coronavirus, 0:19:40.520 --> 0:19:43.000 after twenty twenty, between the years of twenty twenty to 0:19:43.040 --> 0:19:46.200 twenty twenty three, the world has to absorb that currency. 0:19:46.240 --> 0:19:49.560 It's certainly inflated pockets. We can in America export a 0:19:49.560 --> 0:19:52.760 lot of our ination because we are the world's reserve currency, 0:19:53.119 --> 0:19:56.280 but we still felt it and we still do feel it, 0:19:56.359 --> 0:19:59.160 and there is the market has been priced i would 0:19:59.200 --> 0:20:02.360 say the last at least twenty thirty months. I'll say 0:20:02.359 --> 0:20:04.880 the last thirty months, we've been almost priced for perfection, 0:20:05.200 --> 0:20:07.760 so that anything that went wrong is going to cause 0:20:07.760 --> 0:20:10.199 a problem. If the job markets comes in during the 0:20:10.200 --> 0:20:12.680 Biden administration, it looks like the FED might ease rates 0:20:12.680 --> 0:20:16.240 again after raising rates, then the market's positive with bad 0:20:16.320 --> 0:20:18.720 jobs number because the Fed's going to intervene. So we've 0:20:18.760 --> 0:20:23.560 had a lot of monetary policy, modern monetary theory, print print, print, print, 0:20:23.960 --> 0:20:26.560 and that has got to be dealt with. And the 0:20:26.640 --> 0:20:29.520 fact that we are refinancing and we are dealing with 0:20:29.560 --> 0:20:32.679 the trade war with China. This is going to be disruptive. 0:20:32.920 --> 0:20:37.160 And we already had weak global demand and global growth 0:20:37.240 --> 0:20:40.400 forecast for twenty twenty five, a separate apart from all 0:20:40.400 --> 0:20:44.720 of this teriff situation. So the weakness of the growth 0:20:44.800 --> 0:20:46.879 of the twenty twenty five year for the globe was 0:20:46.960 --> 0:20:49.720 already felt it felt in the United States. So with 0:20:49.920 --> 0:20:52.920 the trade war continuing and not being fully resolved and 0:20:52.960 --> 0:20:54.760 for us to have to go through something before it 0:20:54.800 --> 0:20:58.000 gets resolved, I do think that a recession is very 0:20:58.080 --> 0:21:00.320 much in the cards because there's just not a lot 0:21:00.320 --> 0:21:02.639 of positive to bring us away from problems. 0:21:02.760 --> 0:21:04.720 I'm so glad you brought up the FED because we 0:21:04.800 --> 0:21:07.520 had the minutes of the last FED meeting release today 0:21:07.520 --> 0:21:10.199 and they seem to challenge this notion of aggressive easing. 0:21:10.440 --> 0:21:13.760 They clearly show that officials view the risk to inflation 0:21:13.920 --> 0:21:16.320 is being tilted to the upside, and at the same time, 0:21:16.359 --> 0:21:20.200 the risk to employment tilted to the downside. Last question, 0:21:20.400 --> 0:21:23.480 to kind of put a bow on everything we're talking about, 0:21:23.520 --> 0:21:24.600 where does this leave the FED. 0:21:25.880 --> 0:21:29.680 It's really difficult because pow Is really wants to be independent, 0:21:29.800 --> 0:21:32.560 and Trump is already obviously publicly calling for him to, 0:21:33.680 --> 0:21:37.199 you know, lower rates because obviously the terror policy, you know, 0:21:37.600 --> 0:21:41.040 you know his I believe I'm speaking and I'm summarizing 0:21:41.119 --> 0:21:42.919 what my opinion is for Trump. I believe that he 0:21:43.000 --> 0:21:45.560 is going to try to offset any kind of tariff 0:21:45.640 --> 0:21:49.160 impact two ways. One, he wants the FED to lower 0:21:49.240 --> 0:21:50.639 rate so that the cost of capital is less so 0:21:50.680 --> 0:21:52.879 that the credit card debt is lower and you feel 0:21:52.880 --> 0:21:55.760 like you're paying less for your car and your credit card. 0:21:56.640 --> 0:21:59.919 He also wants to make energy more abundant, so that 0:22:00.119 --> 0:22:01.960 the cost of energy goes down, so that it feels 0:22:01.960 --> 0:22:03.719 like it's cheaper at the gas station and we can 0:22:03.760 --> 0:22:06.520 all go on our summer holidays. So I feel like 0:22:06.600 --> 0:22:09.240 he's attacking these things two waste, but he absolutely does 0:22:09.320 --> 0:22:13.280 need the FED to be accommodative. And I'm of a 0:22:13.320 --> 0:22:16.520 different mindset than that. I think that modern monetary theory 0:22:16.560 --> 0:22:19.159 and US printing printing, printing the printing press of the 0:22:19.200 --> 0:22:22.359 FED will only cause us more problems at this stage. 0:22:22.400 --> 0:22:24.320 Jug And it's really a matter of the fact that 0:22:24.359 --> 0:22:27.800 we are accumulating debt now too fast. Every one hundred 0:22:27.880 --> 0:22:29.600