WEBVTT - Bloomberg Surveillance TV: March 4, 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 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.519 Terminal and the Bloomberg Business app. Junian and Manuel I've 0:00:37.560 --> 0:00:39.680 ever caught our sight joined us around the table. Julian, 0:00:39.720 --> 0:00:42.040 good warning to you. I'm going to use your words 0:00:42.040 --> 0:00:44.160 to set up the first question. The sentiment shift during 0:00:44.159 --> 0:00:47.520 February to the type of pessimism more consistent with major 0:00:47.520 --> 0:00:51.080 bottoms after protracted salofs rather than sold near all time 0:00:51.159 --> 0:00:54.600 highs is nothing short of extraordinary. We're five percent away 0:00:54.600 --> 0:00:55.520 from all time highs. 0:00:55.640 --> 0:00:55.760 VIE. 0:00:55.880 --> 0:00:58.880 Pessimism is falling off the cliff right now. There is 0:00:58.960 --> 0:01:02.240 literally no confidence at the moment from business leaders, from consumers, 0:01:02.280 --> 0:01:04.520 from the people we speak to day after day. What 0:01:04.640 --> 0:01:06.720 gives Eve the sentiment needs to catch out pull the 0:01:06.760 --> 0:01:07.800 market needs to catch down. 0:01:08.040 --> 0:01:12.120 Well, two things, just to highlight how extraordinary it really is. 0:01:12.600 --> 0:01:16.760 We looked at bear sentiment and at these levels the 0:01:17.200 --> 0:01:21.280 average draw down from the high is twenty nine percent. 0:01:21.480 --> 0:01:25.440 When you get these levels, the lowest draw down was 0:01:25.480 --> 0:01:28.400 thirteen percent, and as you mentioned, less than five percent. 0:01:28.720 --> 0:01:32.840 It's really what it is is. You know, again, as 0:01:32.959 --> 0:01:36.880 you pointed out earlier, there was not an expectation that 0:01:37.000 --> 0:01:39.640 we were going to get what we've gotten this morning, 0:01:39.680 --> 0:01:43.119 that the tariffs are actually on and in place, and 0:01:43.240 --> 0:01:45.319 to be fair, our house view is that they will 0:01:45.360 --> 0:01:48.760 not last that long because the damage to the economy 0:01:49.160 --> 0:01:52.880 is too great. But you know, this is classic financial 0:01:52.920 --> 0:01:57.080 market risk reward, and when you talk to investors, they 0:01:57.200 --> 0:02:01.880 don't see the potential reward outweighing the risks of being 0:02:01.960 --> 0:02:02.760 aggressive here. 0:02:02.880 --> 0:02:04.760 We started the show saying that people who thought that 0:02:04.800 --> 0:02:07.600 these tariffs were just a negotiating tool are now saying 0:02:07.640 --> 0:02:09.639 it's not going to last very long, and they're still 0:02:09.680 --> 0:02:12.760 just a negotiating tool. At what point does it become 0:02:12.840 --> 0:02:15.680 irreversible in terms of the effect on markets. The idea 0:02:15.720 --> 0:02:17.760 that even if they stay on for a prolonged period 0:02:17.760 --> 0:02:21.600 of time, that requires some sort of response in supply chains, 0:02:21.639 --> 0:02:25.800 in growth expectations, in frankly, trade relationships globally. 0:02:25.480 --> 0:02:29.040 Well, you're certainly starting to see it. And I think 0:02:29.480 --> 0:02:34.760 the uncertainty is also a function of the geopolitical chess 0:02:34.800 --> 0:02:41.200 pieces being reconfigured as well. And again that ism data, 0:02:41.280 --> 0:02:45.720 you know, incredible price is paid, elevated, you know, in 0:02:45.919 --> 0:02:49.960 terms of precautionary buying of goods, and then of course 0:02:50.040 --> 0:02:53.160 new orders falling off the cliff because you already bought 0:02:53.160 --> 0:02:58.520 the goods. There's a psychology aspect to this which is 0:02:58.600 --> 0:03:01.760 what is very important. And I think it's also interesting 0:03:02.000 --> 0:03:04.440 because if you look back the original trade war in 0:03:04.520 --> 0:03:09.880 twenty eighteen, when the stock market backed off, President Trump's 0:03:09.960 --> 0:03:15.079 rhetoric backed off. Okay, the danger here is, particularly when 0:03:15.120 --> 0:03:18.320 you look at fifty seven hundred in our view, is 0:03:18.360 --> 0:03:21.680 important because that's where the market was on election day 0:03:21.720 --> 0:03:24.800 twenty twenty four, and he's never had what we'd call 0:03:24.840 --> 0:03:27.920 an adverse mark to market in either Trump forty five 0:03:28.000 --> 0:03:31.720 or obviously Trump forty seven. Does the rhetoric change and 0:03:31.760 --> 0:03:33.680 the market is not so certain of that, you. 0:03:33.680 --> 0:03:35.720 Mean, the test of the Trump put whether that actually 0:03:35.840 --> 0:03:40.240 still is in effect, if it isn't in effect, what's 0:03:40.280 --> 0:03:42.880 the downside? I mean, are you becoming actually bearish or 0:03:42.880 --> 0:03:45.160 are you just saying that there's more heightened uncertainty on 0:03:45.200 --> 0:03:45.800 both sides. 0:03:45.920 --> 0:03:51.120 So we have viewed twenty twenty five as a continuation 0:03:51.880 --> 0:03:56.360 of the rally, but with the different character of what 0:03:56.480 --> 0:04:00.160 we call three steps forward, two steps back heightened volatility. 0:04:00.520 --> 0:04:04.040 So whatever the baseline of volatility was in the Vics 0:04:04.120 --> 0:04:07.880 last year fourteen fifteen, that number is now more consistent 0:04:07.920 --> 0:04:11.520 with the long run average of nineteen Could you get 0:04:11.560 --> 0:04:16.000 to a downside where growth sub two percent and inflation 0:04:16.520 --> 0:04:20.919 sticky towards three percent without a recession causes a test 0:04:20.920 --> 0:04:23.719 of a number like fifty two hundred. It's certainly not 0:04:23.920 --> 0:04:27.160 outside of the realm of possibility. We'd treat that as 0:04:27.160 --> 0:04:30.880 a buying opportunity. But when you have this kind of uncertainty, 0:04:31.120 --> 0:04:33.719 you have to expand how you're thinking about the tales 0:04:33.880 --> 0:04:34.720 Julian only. 0:04:34.560 --> 0:04:36.640 Six weeks into this administration, though, if he was to 0:04:36.720 --> 0:04:39.359 back off, now that he's a boy who cried wolf 0:04:39.400 --> 0:04:41.120 for every other date on that calendar. 0:04:41.720 --> 0:04:45.840 Yeah, and that's part of the fact that you know, again, 0:04:46.640 --> 0:04:49.680 what did he learn from the first administration? Is that 0:04:50.200 --> 0:04:54.960 history tells you, regardless of circumstances, you're likely to lose 0:04:55.040 --> 0:04:58.240 the majority in the House in twenty eighteen, and we 0:04:58.320 --> 0:05:02.040 know the way politics works, they'll start running. They'll start 0:05:02.120 --> 0:05:06.719 running for the twenty twenty six campaign this fall. You've 0:05:06.760 --> 0:05:10.600 got to front load everything. So the accumulated uncertainty is 0:05:10.640 --> 0:05:13.520 in these first few weeks, and it's sort of you know, 0:05:14.440 --> 0:05:16.479 let the chips fall where they're going to fall. 0:05:16.560 --> 0:05:17.320 Would you buy stock? 0:05:17.400 --> 0:05:21.920 Say we want to see a little bit more despair 0:05:22.160 --> 0:05:28.200 quite honestly consistent with that bearish reading. Yes, the market 0:05:28.279 --> 0:05:34.520 has acted as if it is approaching despair. But to us, 0:05:34.839 --> 0:05:37.599 when you think about all the catalysts, you think about 0:05:37.600 --> 0:05:40.440 that speech tonight where clearly he's going to talk tough, 0:05:40.800 --> 0:05:46.200 no question about it. You think about the potential for 0:05:46.240 --> 0:05:50.039 the government shut down on March fourteenth, which matters now 0:05:50.120 --> 0:05:55.760 because of the reception of Doge. The risk is not 0:05:55.920 --> 0:05:58.640 quite balanced versus the reward at this point. 0:05:58.480 --> 0:06:01.200 Feedle March nineteenth, What does all this change that meeting 0:06:01.520 --> 0:06:03.680 in a couple of weeks time, two weeks tomorrow. 0:06:05.560 --> 0:06:09.080 I don't know that the rhetoric is going to deviate 0:06:09.279 --> 0:06:15.680 that much. You might see downgrades to their economic forecast 0:06:15.760 --> 0:06:21.000 a little bit. If you're thinking about market confidence, you 0:06:21.120 --> 0:06:24.600 might want to see a slight downgrade to the inflation forecast, 0:06:24.680 --> 0:06:27.159 but you're not likely to see it because we really 0:06:27.200 --> 0:06:30.080 don't know what the effect of the tariffs are. The 0:06:30.080 --> 0:06:34.240 bond market's telling you that the inflation problem is not 0:06:34.360 --> 0:06:38.719 the problem, it's growth, but the statistics don't confirm that yet. 0:06:38.800 --> 0:06:42.200 The final question, you're in price target sixty eight hundred, correct. 0:06:42.520 --> 0:06:44.919 It is for a lot of people looking back to 0:06:44.920 --> 0:06:47.440 the election in that November they made the argument that 0:06:47.480 --> 0:06:50.240 the overall policy mix was positive for stocks, pro risk, 0:06:50.720 --> 0:06:53.480 pro growth. The trade was going to be a tricky 0:06:53.520 --> 0:06:55.200 part of it, but it was one piece of a 0:06:55.279 --> 0:06:58.280 much bigger policy platform. Is that still the correct way 0:06:58.680 --> 0:07:00.080 to look at this country? 0:06:59.640 --> 0:07:05.240 It is, but again there has to be an understanding 0:07:05.320 --> 0:07:09.680 of how the pieces fit and the sensitivity around the 0:07:09.720 --> 0:07:14.800 fact that words, clearly even before the actions have been implemented, 0:07:15.440 --> 0:07:19.040 have consequences. And you know, from our point of view, 0:07:19.480 --> 0:07:24.560 are our guiding light is that earnings growth still looks 0:07:24.640 --> 0:07:27.400 nine percent to us. We have not moved. We don't 0:07:27.440 --> 0:07:29.040 anticipate that's going to come off it. 0:07:29.160 --> 0:07:31.880 Julian appreciate your time, as always say what a start 0:07:31.960 --> 0:07:44.720 at the way Julian and Manuel of everco side at 0:07:44.760 --> 0:07:46.560 Knows of Ryman James Jones just now for more, Ed, 0:07:46.680 --> 0:07:49.040 welcome to the programs. We said just moments ago that 0:07:49.040 --> 0:07:51.120 the people who didn't believe this day would come now 0:07:51.200 --> 0:07:53.440 believe this day won't last very long. And what's your 0:07:53.480 --> 0:07:54.080 message for them? 0:07:55.040 --> 0:07:56.720 My message is, I feel like I've been the Paul 0:07:56.800 --> 0:07:59.840 Revere of tariffs all this year, kind of the tariffs 0:07:59.880 --> 0:08:02.600 are coming, the tariffs are coming, and no one has 0:08:02.680 --> 0:08:06.400 really believed me. I think that there is an element 0:08:06.520 --> 0:08:10.800 of this that is absolutely about negotiation, absolutely about using 0:08:10.840 --> 0:08:14.040 the economic strength of the United States to push our 0:08:14.200 --> 0:08:18.000 allies in many cases to make changes. And I think 0:08:18.040 --> 0:08:20.840 that's the base case. But I also have told folks 0:08:20.880 --> 0:08:23.880 here at Raymond James, expect a lot of these tariffs. 0:08:24.280 --> 0:08:26.920 If it's not at twenty five percent permanently, does it 0:08:27.040 --> 0:08:30.280 come in at five or ten percent permanently? Because bucket 0:08:30.320 --> 0:08:33.840 one is changing policy, Bucket two is having enough revenue 0:08:34.080 --> 0:08:36.760 to potentially pay for policies like the extension of the 0:08:36.840 --> 0:08:38.280 tax cuts in a couple of months. 0:08:38.320 --> 0:08:40.520 Here, Ed, what kind of timeline are you giving for 0:08:40.600 --> 0:08:43.120 some of these exemptions or potentially the lowering of the 0:08:43.200 --> 0:08:43.800 tariff freight. 0:08:44.960 --> 0:08:48.319 It's really hard to give a timeline because most, if 0:08:48.520 --> 0:08:51.720 not all, of this tariff authority is solely within Donald 0:08:51.760 --> 0:08:55.719 Trump's discretion. He can decide at twelve o'clock today to 0:08:55.800 --> 0:08:57.520 take it all off, you can decide at twelve oh 0:08:57.600 --> 0:08:59.679 one to put it all in. When I've talked to 0:08:59.679 --> 0:09:02.880 Cloueiences at Raymond James, they're expecting there to be exemptions 0:09:02.960 --> 0:09:07.000 on medical equipment, things for humanitarian aids, things that are 0:09:07.080 --> 0:09:11.599 going to be specifically important to consumers, like energy. We 0:09:11.720 --> 0:09:15.240 do have a lower energy rate here from Canada. Donald 0:09:15.240 --> 0:09:19.240 Trump very much cares about inflation, but he also wants 0:09:19.320 --> 0:09:22.080 to be able to show as we have the Joint 0:09:22.160 --> 0:09:23.840 Session of Congress, I'm not going in at the State 0:09:23.880 --> 0:09:27.240 of the Union tonight where he is going to push 0:09:27.360 --> 0:09:30.760 hard and we're going to have reciprocal tariffs come April first, 0:09:31.080 --> 0:09:34.200 April second, more terrorists. This is a steady drum beat 0:09:34.240 --> 0:09:36.640 that's going to happen, and Donald Trump turning it on, 0:09:36.760 --> 0:09:39.800 turning it off is going to be part of the negotiation. 0:09:40.360 --> 0:09:43.360 What's driving these tariffs is really the fentanyl deaths. Donald 0:09:43.360 --> 0:09:45.400 Trump has talked about that. The president as well as 0:09:45.480 --> 0:09:48.000 officials have spoken to me about that as well. Kelly 0:09:48.120 --> 0:09:50.559 and Shaw negotiator Trump. One point, I said on Bloomberg 0:09:50.600 --> 0:09:53.440 Television earlier this morning, this is the new normal. They 0:09:53.480 --> 0:09:57.000 seem to be swapping what maybe you'd use sanctions for tariffs, 0:09:57.040 --> 0:09:59.520 and this is the new real politic. In that sense, 0:09:59.600 --> 0:10:04.360 then how do you decipher what's negotiation for national security 0:10:04.440 --> 0:10:05.839 and what's going to be a revenue raiser. 0:10:07.240 --> 0:10:08.920 That's up to Donald Trump as well. I mean, I 0:10:08.960 --> 0:10:12.200 think Amory, you're absolutely right. Donald Trump has been very 0:10:12.280 --> 0:10:15.920 concerned about fentanyl, and I think with a conversation about China, 0:10:16.040 --> 0:10:20.400 a conversation about Mexico absolutely part of the conversation and 0:10:20.520 --> 0:10:23.559 absolutely a huge issue that needs to be dealt with. 0:10:23.920 --> 0:10:28.760 When I talk to my Canadian clients, they're not, you know, 0:10:28.880 --> 0:10:31.720 not really understanding why ventanyl is as big of an issue. 0:10:31.840 --> 0:10:34.920 There has been shipments across the Canadian border, but it 0:10:35.000 --> 0:10:39.920 doesn't actually happen all that often, as especially compared to others. 0:10:40.520 --> 0:10:43.280 Donald Trump is going to use whatever excuse he has 0:10:43.760 --> 0:10:47.160 to push forward these tariffs trying to get those changes, 0:10:47.480 --> 0:10:49.839 and it's not quite clear exactly what he asked for. 0:10:49.960 --> 0:10:52.640 When I talk to a lot of my contacts, foreign 0:10:52.760 --> 0:10:57.319 leaders are concerned about trying to strike a deal with 0:10:57.760 --> 0:11:00.720 Donald Trump only to be embarrassed. We'll get the Oval 0:11:00.760 --> 0:11:03.079 Office meeting with Zelensky last week. If you are a 0:11:03.160 --> 0:11:06.560 foreign leader, you say, do I actually respond to these 0:11:06.640 --> 0:11:09.480 and how aggressively do I respond to these? Or if 0:11:09.520 --> 0:11:11.040 I get to the White House, I think I have 0:11:11.120 --> 0:11:13.880 a deal and it just evolves from there. That's a 0:11:13.960 --> 0:11:15.200 real concern globally. 0:11:15.720 --> 0:11:17.280 And has there been a shift in tone from your 0:11:17.320 --> 0:11:19.640 clients in terms of their belief and just this being 0:11:19.760 --> 0:11:22.719 sequencing that the hard stuff comes first and that good 0:11:22.760 --> 0:11:23.559 stuff comes later. 0:11:24.840 --> 0:11:28.040 So I'm right now at the Raymond James Institutional Investor Conference. 0:11:28.200 --> 0:11:32.040 We have over a thousand companies and investors, and every 0:11:32.160 --> 0:11:35.120 single conversation I had last night was is this going 0:11:35.200 --> 0:11:38.120 to be worse than we expected? We don't have a 0:11:38.200 --> 0:11:40.800 lot of conviction. There is a lot of angst out there. 0:11:41.120 --> 0:11:45.240 You go company by company, they haven't really disclosed exactly 0:11:45.320 --> 0:11:48.640 what the impact for them, oftentimes because they did not 0:11:48.840 --> 0:11:52.040 think this was going to happen, And so that uncertainty 0:11:52.720 --> 0:11:55.920 is a huge shift in tone, that kind of concerned 0:11:55.960 --> 0:11:59.439 that this could last. Is a huge shift in tone 0:12:00.120 --> 0:12:02.160 hopeful that this comes off. And I think the base 0:12:02.240 --> 0:12:05.840 case is that twenty five percent on Canada in Mexico 0:12:06.000 --> 0:12:08.280 does not last for very long. But as soon as 0:12:08.320 --> 0:12:11.199 that gets pulled off, what happens with the Europe, what 0:12:11.280 --> 0:12:14.880 happens with the rest of the world. Those concerns which 0:12:14.920 --> 0:12:17.800 were kind of completely pushed aside Lisa, are our front 0:12:17.840 --> 0:12:20.640 and center in every conversation I'm having right now at 0:12:20.679 --> 0:12:22.680 our Raymond James conference, And how. 0:12:22.679 --> 0:12:24.839 Much at those dinners were people saying that they just 0:12:24.920 --> 0:12:27.680 are putting everything on hold. This is just a time 0:12:27.760 --> 0:12:30.320 to wait and see and any plans of very investment, 0:12:30.360 --> 0:12:32.719 any plans for deals are just going to have to 0:12:32.800 --> 0:12:34.480 wait until there is some more clarity. 0:12:35.280 --> 0:12:38.720 Yeah, I think for investors, most need to be fully invested, 0:12:38.800 --> 0:12:42.200 so they are trying to figure out where they can hide, 0:12:42.760 --> 0:12:46.040 what are the opportunities for them to not get kind 0:12:46.040 --> 0:12:49.400 of hit by a buzzsaw on transactions and m and 0:12:49.480 --> 0:12:54.079 A on IPOs that is a lot more frozen or 0:12:54.240 --> 0:12:57.560 sluggish than expected. And that was a big theme as 0:12:57.600 --> 0:13:01.880 well in my conversations, like what was expected after November 0:13:01.920 --> 0:13:05.199 and into December, and that euphoria. People are like, we 0:13:05.400 --> 0:13:08.120 need to understand where rates go, where terrorifts go, what 0:13:08.360 --> 0:13:12.800 tax policy is? The long list of Trump concerns is 0:13:12.920 --> 0:13:16.080 the new conversation I'm having with clients at Raymond James. 0:13:16.120 --> 0:13:17.839 It's a big change from where we were a few 0:13:17.880 --> 0:13:20.040 months ago. And appreciate your time, sir, Thank you at 0:13:20.120 --> 0:13:33.040 Millstare of Raymond Change. Let's turn to foreign exchange traders 0:13:33.120 --> 0:13:37.040 digesting President Trump's twenty five percent tariffs on Mexico and Canada, 0:13:37.120 --> 0:13:39.800 Kitchens of Soft Gen writes in This This Morning sharka 0:13:40.280 --> 0:13:43.920 is the Canadian dollar is up despite tariffs arriving. Friday's 0:13:43.920 --> 0:13:47.560 Canadian jobs numbers might be important as the US wants 0:13:47.720 --> 0:13:49.880 kit joined US now for more. Kate, welcome to the program. 0:13:50.000 --> 0:13:52.000 Let's talk about that muted response, if we can call 0:13:52.040 --> 0:13:55.720 it that in foreign exchange, kid, what gives well? 0:13:55.840 --> 0:13:57.760 I mean, the big response in the sense has been 0:13:58.080 --> 0:14:01.959 this is bad for growth in states. And you've heard 0:14:02.000 --> 0:14:04.360 some of that the market's pricing in rate moose that 0:14:04.480 --> 0:14:07.920 it wasn't or more rate mooves that it was and 0:14:08.040 --> 0:14:12.640 looking negative. We have seen no shift in consensus forecasts 0:14:12.720 --> 0:14:15.560 down in the US GDP growth yet and We've seen 0:14:15.640 --> 0:14:18.760 a series of upward revisions to economists forecasts for this 0:14:18.920 --> 0:14:22.200 year since September that drove the dollar higher. But what 0:14:22.320 --> 0:14:25.360 we're seeing is the market is going ahead away from 0:14:25.400 --> 0:14:28.280 the economy. It's the strategist to getting negative. The traders, 0:14:28.320 --> 0:14:31.080 the investors are nervous about what this means. So we 0:14:31.160 --> 0:14:33.960 have a weeker dollar and that protects the Canadian dollar 0:14:34.200 --> 0:14:36.280 where we've been talking about the taris for a while 0:14:36.320 --> 0:14:38.480 and the Canadian dollar has been beaken up. But I 0:14:38.520 --> 0:14:40.440 do think it means that it puts more of a 0:14:40.560 --> 0:14:43.920 focus in a sense on growth in North America. What 0:14:44.080 --> 0:14:46.120 is the ism service number can look like tomorrow in 0:14:46.120 --> 0:14:48.000 the States, what a payrol is going to look like 0:14:48.080 --> 0:14:50.240 on Friday, and what a Canadian job is going to 0:14:50.280 --> 0:14:53.880 look like on Friday. Because all this betting on more 0:14:53.960 --> 0:14:57.400 rate cuts faster is going to need some validation reasonably 0:14:57.480 --> 0:14:59.240 quickly to be able to sustain itself. 0:14:59.480 --> 0:15:03.120 K saying that people expected tariffs to be worse for 0:15:03.160 --> 0:15:05.880 the rest of the world than the United States late 0:15:05.960 --> 0:15:08.520 last year and early this year, and that that story 0:15:08.640 --> 0:15:10.880 has shifted and now people are thinking that base and 0:15:10.920 --> 0:15:13.640 where valuations are. This actually could be a bigger hit 0:15:13.720 --> 0:15:18.000 to the US economic growth trajectory based on expectations than 0:15:18.040 --> 0:15:18.840 the rest of the world. 0:15:19.440 --> 0:15:19.600 Yeah. 0:15:19.680 --> 0:15:22.640 Look, I think we start from the US exceptionalism position, 0:15:22.840 --> 0:15:25.960 where we've been revising up US growth forecasts for a 0:15:26.040 --> 0:15:29.560 long time, revising them down everywhere else, talking about how 0:15:29.720 --> 0:15:33.320 exceptional the US is, expecting higher rates than in other places, 0:15:33.360 --> 0:15:37.320 and watching the dollar get to extraordinary heights. So we're 0:15:37.400 --> 0:15:39.840 hyper sensitive, if you like, to anything that suggests that 0:15:40.080 --> 0:15:44.920 actually the US economy might really be able to slow. Now, 0:15:45.680 --> 0:15:47.720 whether it's going to slow as fast or as much 0:15:47.800 --> 0:15:50.640 as people are contemplating. What you have is a big 0:15:50.720 --> 0:15:54.080 position adjustment in the market, a growing awareness of the 0:15:54.160 --> 0:15:56.840 fact that foreigners own sixty five trillion dollars worth of 0:15:56.960 --> 0:16:00.840 US assets and if they get nervous, that is a problem. 0:16:01.520 --> 0:16:04.600 And so you know, these stories are beginning to happen. 0:16:04.840 --> 0:16:07.480 That the reaction in the market looks big relative to 0:16:07.560 --> 0:16:09.560 the news flow so far, but I guess that's what 0:16:09.680 --> 0:16:11.800 happens when you're at a turning punt kit. 0:16:11.880 --> 0:16:13.520 Right now, I'm looking at the euro that's actually at 0:16:13.560 --> 0:16:17.160 the strongest level going back to early December versus the dollar. 0:16:17.440 --> 0:16:20.160 Is this because of concerns about US growth or is 0:16:20.200 --> 0:16:22.520 this because of optimism of some sort of spending plan 0:16:22.920 --> 0:16:24.800 is laid out by Ursula V underline today. 0:16:25.520 --> 0:16:26.800 I mean it's a little bit of both in the 0:16:26.840 --> 0:16:28.240 sense if you look at if you look at it, 0:16:28.440 --> 0:16:31.520 you're a dollar tracks to to year interrastrate differential painfully 0:16:31.600 --> 0:16:34.880 closely at the moment. And what's happened, Well, we've taken 0:16:35.000 --> 0:16:37.480 us to your rates down. So that's been the single 0:16:37.520 --> 0:16:40.320 biggest driver of that over the last few days. There 0:16:40.400 --> 0:16:42.480 is some optimism about the program. There would have been 0:16:42.560 --> 0:16:45.560 much more optimism into the Europe if you had a 0:16:45.720 --> 0:16:49.040 sweeping win for a party in the German government elections 0:16:49.120 --> 0:16:51.120 last week last week home how long ago was now 0:16:52.000 --> 0:16:54.880 that there would have delivered an end to the debt 0:16:54.960 --> 0:16:59.840 break that hamstrings their fiscal policy and is completely ludicrous 0:17:00.120 --> 0:17:02.720 that that would be a bigger game changer. Also, we're 0:17:02.760 --> 0:17:04.639 also we're saying, you know, we spent the last two 0:17:04.720 --> 0:17:07.560 years in a zero point ninety five one thirteen range, 0:17:07.800 --> 0:17:09.840 not a big range. We're just drifting up to the 0:17:09.880 --> 0:17:10.280 middle of it. 0:17:10.880 --> 0:17:13.680 But kit what happens on April second, when potentially we 0:17:13.800 --> 0:17:16.960 get tariffs on the European Union from the United States, 0:17:17.280 --> 0:17:19.200 That one oh five. Directionally, where does it go? 0:17:20.080 --> 0:17:22.600 Well, I think that I think that that's the sort 0:17:22.640 --> 0:17:24.520 of thing that can you know, makes me think that 0:17:24.600 --> 0:17:27.800 a move to one ten looks really unlikely. Unfortunately, it 0:17:27.960 --> 0:17:31.040 anchors us. That's where we've been for a long time now, 0:17:31.160 --> 0:17:34.040 is anchored with a very cheap dollar, sorry, very cheap, 0:17:34.080 --> 0:17:36.680 you'roine a very expensive dollar. We get a focus on 0:17:37.000 --> 0:17:39.280 the on the tariffs on Europe when we get growth 0:17:39.320 --> 0:17:41.879 concerns coming through. I think that just keeps US in 0:17:41.960 --> 0:17:44.600 a range. If I want euro dollars to go back 0:17:44.680 --> 0:17:47.160 to that one thirteen level, that it's the highest it's 0:17:47.280 --> 0:17:52.200 been in two years, I need some signs of growth, 0:17:52.920 --> 0:17:55.280 helped by easier fiscal policy or help by anything. I 0:17:55.480 --> 0:17:56.240 just need some growth. 0:17:56.640 --> 0:17:58.280 What about a peace agreement? Would that do it? 0:17:59.400 --> 0:18:01.840 Yep? That would that a proper preasea agreement is you know, 0:18:02.280 --> 0:18:04.479 particularly if I've got a peace agreement with an agreement 0:18:04.520 --> 0:18:06.320 that we're going to do some investing, that we're going 0:18:06.400 --> 0:18:08.919 to walk back some of this ridiculously type fiscal policy 0:18:09.560 --> 0:18:12.719 or that that would be a massive game changer. I mean, 0:18:13.119 --> 0:18:15.879 deregulation in Europe would be another game changer. But so 0:18:15.960 --> 0:18:17.840 I can see things that could change it. I do 0:18:18.000 --> 0:18:18.840 not have those yet. 0:18:18.960 --> 0:18:21.720 Unfortunately, Kit plenty of headline risk on the horizon. I 0:18:21.720 --> 0:18:24.240 appreciate your time as always, Kit Jukes there of sof 0:18:24.320 --> 0:18:37.560 gen Ever Eisenstadt, the former NEC deputy director, writing business 0:18:37.680 --> 0:18:40.760 must brace for unpredictable and shopping waters over the next 0:18:40.800 --> 0:18:44.040 few months as more actions are likely to come. Ever, 0:18:44.080 --> 0:18:46.520 it joins us now for more, So, Efverett, walk us 0:18:46.560 --> 0:18:48.639 through what you think happens here, because there are some 0:18:48.840 --> 0:18:51.280 people a lot of people watching this program right now 0:18:51.359 --> 0:18:53.800 who don't believe the tariffs that went on overnight will 0:18:53.880 --> 0:18:56.040 stay on for very long. What's your message for them? 0:18:57.800 --> 0:19:00.239 I think they will stay on. The President had an 0:19:00.280 --> 0:19:03.280 opportunity to delay these tariffs again. He decided not to 0:19:03.400 --> 0:19:06.159 do that. And so unless there's some see change in 0:19:06.480 --> 0:19:10.520 how Canada and Mexico are dealing with the fetodol crisis, 0:19:10.600 --> 0:19:12.800 is satisfied as the President and I don't see immediate 0:19:12.840 --> 0:19:15.720 a relief in the near term. So I think the 0:19:15.800 --> 0:19:18.480 tariffs are on for a bit yet effort. 0:19:18.560 --> 0:19:21.280 Speaking to some sources this morning, what I hear from 0:19:21.320 --> 0:19:25.000 them is they want more private sector growth, less public spending, 0:19:25.040 --> 0:19:27.240 and they want manufacturing back to the United States. But 0:19:27.359 --> 0:19:30.600 how does that work with a very intricate supply chain 0:19:30.640 --> 0:19:33.320 when it comes to an auto sector, and already that's 0:19:33.440 --> 0:19:35.600 under a trade agreement of USMCA. 0:19:37.320 --> 0:19:40.359 This is pretty incredible, honestly, I think to see such 0:19:40.880 --> 0:19:44.679 a rapid change in the market so quickly with two 0:19:44.680 --> 0:19:46.680 of our largest trading partner, It's going to impact a 0:19:46.800 --> 0:19:49.840 lot of companies in different ways. And some companies may 0:19:49.880 --> 0:19:53.240 be able to absorb those tariffs or put them distribute 0:19:53.280 --> 0:19:56.520 the costs throughout their supply chains. Others may simply not 0:19:56.600 --> 0:19:59.040 have any choice and may may be forced with actually 0:19:59.160 --> 0:20:02.000 thinking about move to the United States. And I think 0:20:02.040 --> 0:20:04.480 the President has a mindset that he's going to do 0:20:04.600 --> 0:20:07.800 everything he can to facilitate more manufacturing investment in the 0:20:07.920 --> 0:20:10.800 United States. So the terriff actions seem to be part 0:20:10.840 --> 0:20:15.679 of a larger picture of deregulation, investment incentives, and perhaps 0:20:15.800 --> 0:20:18.959 tax cuts to draw more manufacturing back to the United States. 0:20:19.560 --> 0:20:22.040 So this is the first part of a very long story, 0:20:22.080 --> 0:20:24.320 I'm afraid, but I think we were in for, as 0:20:24.400 --> 0:20:27.200 I said earlier, some choppy waters in the near term. 0:20:27.480 --> 0:20:30.040 I was reminded by another source very early this morning 0:20:30.080 --> 0:20:32.000 that in Trump one point oh, a few months after 0:20:32.080 --> 0:20:35.440 some tariffs went on, there were exceptions. Do you expect 0:20:35.480 --> 0:20:36.520 that to happen this time? 0:20:37.520 --> 0:20:40.520 We'll have to see. There are some products that we 0:20:40.680 --> 0:20:43.600 cannot get in the United States. We simply don't produce them, 0:20:43.840 --> 0:20:46.040 and so for those I would think it would seem 0:20:46.119 --> 0:20:49.680 to make sense to include exceptions for those products. There's 0:20:49.680 --> 0:20:53.400 really no reason not to, but I think we'll see. 0:20:53.600 --> 0:20:56.560 Another thing to keep in mind is, on top of 0:20:56.640 --> 0:20:59.560 the terriffs that went into effect last night, we've got 0:20:59.600 --> 0:21:04.119 this steel tariffs that are going into effect on March twelfth, 0:21:04.160 --> 0:21:06.920 and those are going to be broader, They're going to 0:21:06.960 --> 0:21:09.880 cover more products, they're going to be difficult to administer, 0:21:10.640 --> 0:21:15.160 and over time, as these begin to resonate throughout the economy, 0:21:15.200 --> 0:21:17.520 I think there are going to be calls for some exceptions. 0:21:18.600 --> 0:21:21.440 Even if we've got exactly what the President wanted, which 0:21:21.480 --> 0:21:23.720 is to get all manufacturing back to the United States, 0:21:23.800 --> 0:21:26.879 it simply can't happen overnight. So at a minimum, it 0:21:26.880 --> 0:21:31.159 would seem that a delay to enable some manufacturing to 0:21:31.240 --> 0:21:34.159 come back would make sense. Today we're not seeing that, 0:21:34.320 --> 0:21:36.439 but we'll have to see how these terrorists they resonate 0:21:36.520 --> 0:21:39.720