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Speaker 2: Krubman's aging he's gone from the New York Times of
Speaker 2: substack and what's he doing? Dials one eight hundred Meal
Speaker 2: Dutta because he wants to find out what a god's
Speaker 2: name is going on Macro Research's renaissance. Macro joins us
Speaker 2: right now, neildt it as well. I want to know,
Speaker 2: I think everybody in the racket. You were my Economist
Speaker 2: of the Year three years ago. You're sitting by the
Speaker 2: bat phone and the Krugman calls up.
Speaker 3: What is that like?
Speaker 4: I mean, I was shocked. I mean, obviously you know
Speaker 4: Tom as you know, I'm just a lowly business economist.
Speaker 4: So to have someone of his stature in the field
Speaker 4: talk to me was, you know, really cool? I mean,
Speaker 4: and he was the nicest guy as not as cutting
Speaker 4: as is written pros that you know that we're all
Speaker 4: used to, so, you know, really the nicest guy. And
Speaker 4: it was just great to talk to him. So yeah,
Speaker 4: I mean, it was always very willing to listen to
Speaker 4: what I had to hear what I said.
Speaker 3: I let's get a Krugman update right now.
Speaker 2: Nominal GDP the combination of real GDP and inflation. You
Speaker 2: look at it, Atlanta GDP. I'm almost framing out a
Speaker 2: negative nominal GDP, which I.
Speaker 3: Know you're going to say is wrong. Where is our
Speaker 3: nominal GDP forward?
Speaker 4: Well, right now, I think nominal GDP's running below four percent.
Speaker 4: If you look at the compensation data that was released,
Speaker 4: the personal income and spending numbers that were released last week.
Speaker 4: We're in a situation now where private sector wage and
Speaker 4: salary growth is barely running three percent and the Fed
Speaker 4: funds rate is over a percentage point above that. So
Speaker 4: whenever you have incomes running below the rate of overnight
Speaker 4: Fed funds, say sure sign that monetary policy is too tight.
Speaker 4: And so we got more confirmation of that last Friday.
Speaker 5: All right, let's do the math here. I got a
Speaker 5: I think it's Liberation Day on Wednesday. What's the math.
Speaker 6: Mean to you?
Speaker 3: Like?
Speaker 5: What are the numbers mean to you? Do I need
Speaker 5: to pay attention to this stuff. I know it's headlines.
Speaker 4: But well, I don't think anyone really knows what any
Speaker 4: of this means. So I think the journals reporting today
Speaker 4: that they're talking about a universal twenty percent tariff, which
Speaker 4: I think would raise about three close to three and
Speaker 4: a half trillion over ten years. So remember during his confirmation,
Speaker 4: Secretary Bessett talked about the various ways that tariffs could
Speaker 4: be used, right. I mean one would be like sort
Speaker 4: of a negotiation. Another way is sort of to get
Speaker 4: Another way that he talked about it was basically revenue source, right,
Speaker 4: I mean a revenue source to pay for you know,
Speaker 4: extending tax legislation and so forth. And if they're talking
Speaker 4: more about universal tariffs, it's clear they're moving away from
Speaker 4: this sort of like let's negotiate lower tariffs across the board, right,
Speaker 4: sort of escalate to de escalate and instead of move
Speaker 4: more towards a pay for mechanism.
Speaker 2: I went back to a twenty eighteen essay at Paul
Speaker 2: Krug been very wonkish, and he skewers in twenty eighteen
Speaker 2: Peter Navarro. Peter Navarro's driving the tariff dialogue at the
Speaker 2: White House. Right now, who's pushing back against Navarro? There's
Speaker 2: no Gary Cohne that I see there. Now, Is it
Speaker 2: the Secretary Treasury who's pushing back against tariffs back to
Speaker 2: the nineteen forties?
Speaker 4: I mean, I think Tom, I mean, my sense of
Speaker 4: it is is that having some belief in tariffs as
Speaker 4: a tool of policy is the price of admission in
Speaker 4: the administration. So at some level all of them agree
Speaker 4: with Trump and they're very they're less likely to push back.
Speaker 3: Where's your unemployment rate right now?
Speaker 2: I mean, I'm on the debate that the FED is
Speaker 2: shifted over to a labor dialogue. Does Neil Datta have
Speaker 2: an unemployment rate out year in that can give pause?
Speaker 4: I think what's important is that the FED has a
Speaker 4: forecast of four point four percent I think for the
Speaker 4: end of the year. We may well be there by
Speaker 4: the middle.
Speaker 3: Of the year.
Speaker 4: And so if you're if we're getting to those year
Speaker 4: and forecasts a couple of quarters ahead of schedule, the likelihood,
Speaker 4: I think is that they start to pull in some
Speaker 4: of the rate cuts that they have in twenty twenty
Speaker 4: six into the current year.
Speaker 5: You know, one of the points from the administration is
Speaker 5: near term pain for longer term gain, and I guess
Speaker 5: longer term gain is more manufacturing on shore here in
Speaker 5: the US. How about the auto industry. That seems like
Speaker 5: one that could happen, but that takes time.
Speaker 4: I would think, right, well, this is one of the
Speaker 4: reasons why I think you have to make the assumption
Speaker 4: that they're moving off tariffs as a negotiating mechanism, because
Speaker 4: at some level you have to keep them on in
Speaker 4: order to force changes in factory capacity. That takes time.
Speaker 4: So if people think it's just a temporary negotiating tool,
Speaker 4: they're not going to actually want to put in the
Speaker 4: investment to make, you know, to bring more final assembly
Speaker 4: to the to the US. So yeah, I mean, I
Speaker 4: don't know about long term gain. You know, I do
Speaker 4: think that there's you know, you think about what's happening
Speaker 4: in the markets with with a lot of these auto companies.
Speaker 4: They can't see it just yet clearly investors.
Speaker 5: So how do you think about I guess the retaliatory tariffs.
Speaker 5: I mean, most of our trading partner talking is to
Speaker 5: just sit there and take it. I would suspect that
Speaker 5: they're going to step up and.
Speaker 4: Look, this is this is what you this is. I mean,
Speaker 4: I'm not a trade expert. I'm not I'm not Michael Pettis.
Speaker 4: But what I will say is one of the things
Speaker 4: you learn in any sort of I think introductory international
Speaker 4: trade course in like a prisoner's dilemma type game. If
Speaker 4: one person does tariffs, usually the other party puts on
Speaker 4: the tariffs, and then you have the worst case outcome, right,
Speaker 4: I mean, there's a retaliation, and so this sort of
Speaker 4: tit for tat is what is what is concerning and
Speaker 4: you know, I mean that's kind of where we are.
Speaker 2: So much of this is the X axis. You mentioned
Speaker 2: the four box prisoner's lemo. Okay, fine, but also it's
Speaker 2: got to run across a time continual. We mentioned this
Speaker 2: an hour ago. Everything short term, short term, the market,
Speaker 2: short term, the show is short term. Neil dutt is
Speaker 2: trying to go long term. Where's the horizon the president's
Speaker 2: talking about? The President says he's going to make America
Speaker 2: great again? In that is that out that manufacturing pick
Speaker 2: up Paul mentioned? Is it out one year or is
Speaker 2: it out four or five years?
Speaker 6: Well, I mean I don't know, Tom.
Speaker 4: I sort of reject the premise that this this sort
Speaker 4: of approach will make the country a greater grand I mean,
Speaker 4: I understand the need to kind of you know, for
Speaker 4: security purposes. You know, you want to have a strong
Speaker 4: manufacturing base. I think going after China makes a lot
Speaker 4: of sense. But you know, just think about it at
Speaker 4: the most basic level. I mean, if every state was
Speaker 4: operating as its own country with their own trade policies,
Speaker 4: do you think that better? You know that more prosperity
Speaker 4: would result as that way?
Speaker 3: What or agy and get we had two percent three percent?
Speaker 2: There's somebody's got a beautiful bar chart out where we're
Speaker 2: bombing ourselves. We don't know, but peers, we're bombing ourselves
Speaker 2: back to the nineteen thirties of the nineteen forties. My
Speaker 2: answer is what we ticked five percent unemployment? We get
Speaker 2: a new run rate of unemployment four point x percent
Speaker 2: or maybe months are here at a five percent unemployment.
Speaker 4: Right, I mean you may have higher unemployment, but you'd
Speaker 4: also probably have somewhat higher inflation and weaker productivity growth
Speaker 4: and over over time, I mean that you know, weaker
Speaker 4: productivity compounds, and so that would over you know, that
Speaker 4: would that would hurt our longer own living standards as
Speaker 4: a result. So you know, I think that they're like anything,
Speaker 4: there's balanced. There's no such thing as free trade, all
Speaker 4: trade is managed across countries, right. But I think there's
Speaker 4: a way to do it right, and there's a way
Speaker 4: to do it in a haphazard way. And I think
Speaker 4: we have the latter inflation. Uh, what's your call on inflation?
Speaker 4: Is just going to accelerate inflation? And if so, to
Speaker 4: what level?
Speaker 3: I think?
Speaker 4: I think the growth consequences of what's going on are
Speaker 4: much more important than than than the inflation consequences. I mean, ultimately,
Speaker 4: in my view, inflation comes down to the household's budget constraint.
Speaker 4: And the household's budget constraint, as we just talked about,
Speaker 4: is coming as shifting inward, right, because the labor markets
Speaker 4: have cooled and private sector wage and salary growth is slowing.
Speaker 4: So if you do have let's say, cars costs more,
Speaker 4: people have to allocate more dollars to cars, they'll have
Speaker 4: less money left over. Ultimately, it comes down to the
Speaker 4: household's budget line.
Speaker 2: Neil, I look at the jobs report Friday. Is this
Speaker 2: the first Trump report? Is this the last Biden report?
Speaker 2: Is there a freshness to the data where you can
Speaker 2: say this is finally Trump mathematics, Trump statistics.
Speaker 4: I mean, I think it's a little bit too soon.
Speaker 4: I mean we're talking about what the survey week was
Speaker 4: the twelfth. I mean you started to have some dialing
Speaker 4: up of the rhetoric. But I don't think it affects
Speaker 4: things that quickly. I mean for firms, you're making a
Speaker 4: trade off, right, I mean, it's not like people didn't
Speaker 4: know what they were getting with Trump. He ran on
Speaker 4: tariff being his favorite word in the dictionary, right. So
Speaker 4: to me, it's the sequencing that might have put people off.
Speaker 3: Are we now where.
Speaker 2: There's a loss of confidence, there's a loss of consumer confidence,
Speaker 2: there's a loss of business com Yeah.
Speaker 4: I mean I think every month that goes on from
Speaker 4: since the inauguration, it becomes more you know Trump. But
Speaker 4: I will say, look, I mean I do think that
Speaker 4: he was dealt a bad hand. I mean, the economic
Speaker 4: buffer was not the same as it was back in
Speaker 4: like twenty seventeen. Let's say, you know, total hours worked
Speaker 4: in the three months ending in February, we're negative, right.
Speaker 4: We just talked about private sector wage and salary growth
Speaker 4: barely running three percent. That was a February data point.
Speaker 4: So the truth is is that the administration inherited a
Speaker 4: very imbalanced economy. One where the labor markets were frozen,
Speaker 4: the housing market was frozen. That continues, and you could
Speaker 4: argue that they've made a bad situation worse. But I
Speaker 4: also think their communication has been a little bit challenged,
Speaker 4: right because look at how they look, at how they look.
Speaker 4: They sort of talked about the last job's number the
Speaker 4: February report, right, they took credit for the big increase
Speaker 4: in auto manufacturing employment. There was like a nine thousand
Speaker 4: increase in factory employment, and you know for motor vehicle
Speaker 4: in parts manufacturing. I mean, you can't say, oh, this
Speaker 4: is us, but all that bad stuff is Biden, right,
Speaker 4: so you have you have to kind of I think
Speaker 4: they would have been served much better had they talked
Speaker 4: the economy down more on their way in the door, Frankly.
Speaker 5: Fed any role for the FED here, I mean at
Speaker 5: two rate cuts, maybe a third item went back to three?
Speaker 6: Where did they?
Speaker 4: I mean, I think the Fed will be going four
Speaker 4: times this year. I think they'll start in June. I
Speaker 4: wouldn't be surprised if you know they could. They could
Speaker 4: start with fifty. Frankly, I think the labor markets are right,
Speaker 4: aren't a bad spot, and I don't think that they
Speaker 4: want to take any chances. Frankly, and as I mentioned,
Speaker 4: you know, ultimately the growth effects are going to dominate
Speaker 4: the inflation risks and and I think if the FED
Speaker 4: is taking that on board, they're going to be cutting
Speaker 4: more aggressively in the market.
Speaker 3: STA.
Speaker 2: I know you're not in speaking terms with Jeff de Graph,
Speaker 2: but when you do talk through your people with mister
Speaker 2: de Graf link in his market analysis into your economics
Speaker 2: over to the grimness of Atlanta GDP. Now talk about
Speaker 2: you know the growth metric. Those are grim statistics in Atlanta.
Speaker 4: Well, I mean, I think for for Jeff's process, credit
Speaker 4: matters a lot, and so I think that's what he's
Speaker 4: looking at. So the fact that credit spreads are starting
Speaker 4: to wake up a little.
Speaker 3: Bit are the vigiland he's going to tell the FED
Speaker 3: what to.
Speaker 4: Do, don't they always? I mean I think you know,
Speaker 4: I mean, look to me, you have to watch high
Speaker 4: yield credit like all this stuff that you're seeing from
Speaker 4: the street. I mean, you mentioned Goldman.
Speaker 3: Better than me. I mean, it's odor is to.
Speaker 5: At least is on top of the whole credit.
Speaker 3: Yield spreads are finally breaking.
Speaker 4: Well, I mean you mentioned Goldman. They took up their
Speaker 4: recession probabilities. I mean, all they're really doing at this
Speaker 4: point is just following the market. If you look at
Speaker 4: like the Fed's excess, you know, riffs premium right like there,
Speaker 4: their measure of using corporate credit to determine recession probabilities.
Speaker 4: That's basically what's going on. So I think you have
Speaker 4: to watch credit spreads and the higher they go, the
Speaker 4: more likely you have to assume the Fed is going
Speaker 4: to go more.
Speaker 3: Get one more in here.
Speaker 5: So, Neil, what's the data point you're looking at here?
Speaker 5: What should the market look at? I mean, we're gonna
Speaker 5: at Jobs Day on Friday. Is that something that's going to.
Speaker 4: Be I'll tell you right now. Go on your Bloomberg
Speaker 4: terminal p I W G T O t L index.
Speaker 4: You go into the economic work bench, look at that
Speaker 4: year over year and then add in the FED funds rate.
Speaker 4: If the Fed funds rate is over that year over
Speaker 4: year rate of growth, bad things tend to happen. And
Speaker 4: that's where we are right now.
Speaker 5: Oh boy, thanks on that note, Tom, I just you
Speaker 5: didn't fill out a brick. Are you too busy looking
Speaker 5: at that?
Speaker 2: Pi?
Speaker 4: Oh me, Well, I went to a Division III school, Tom,
Speaker 4: I went to NYU.
Speaker 5: I mean, hey, the women's fastball to die for this
Speaker 5: guy dominant?
Speaker 2: Yes, Neil, congratulations, huge impact on the nation's market economics.
Speaker 3: Neil dout of there with Renaissance Macro. Thank you so much.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: Just say Alexa play Bloomberg eleven thirty joining us right now.
Speaker 2: Someone who could have written How Not to Invest Brian Belski,
Speaker 2: chief investment strategist at FEMO Capital Markets. In times like
Speaker 2: this in corrective emotion, he has been liberated by saying
Speaker 2: stay in the market have curged.
Speaker 3: Brian Belski, are you still a bull this morning?
Speaker 7: Good morning Tom, Yes I am, and I just got
Speaker 7: back from yesterday. I just got back from being in
Speaker 7: Canada for a couple of days, so I have some
Speaker 7: unique perspective on that too.
Speaker 3: Of course.
Speaker 7: Was part of my responsibilities is to forecast the Canadian
Speaker 7: stock market as defined by the TSX index. And I'll
Speaker 7: say this that you know we have a bunch of
Speaker 7: different responsibilities there, some of which is to manage actually
Speaker 7: Canadian equity portfolios. And the majority of our majority of
Speaker 7: I'm not being slambuoyant here, the majority of our Canadian
Speaker 7: clients want to sell America and just being in Canada.
Speaker 7: And we think that that is not only a tactical air,
Speaker 7: it's a longer term strategic air, given the fact that
Speaker 7: from a diversification standpoint, given just the fundamental perspective, US
Speaker 7: as America goes, so it goes Canada. It regardless of
Speaker 7: the outcome of this, the countries are still tied together,
Speaker 7: they're still doing business together. And I think anytime in life,
Speaker 7: litt alone investing Tom, when you make decisions based on
Speaker 7: fear and emotion, they're wrong. And I think that's what
Speaker 7: we're kind of heading into. And that's why the market's
Speaker 7: here today. In the next day or so, until we
Speaker 7: get some clarity, and Paul is talking about uncertainty, Oh
Speaker 7: my gosh, we're in one of these times again. So
Speaker 7: we're we're not changing anything.
Speaker 5: So I guess you're of the opinion, Brian, that this
Speaker 5: uncertainty in the marketplace, it will pass to a certain
Speaker 5: degree at some time in the near future. I'm not
Speaker 5: sure if it's as soon as Wednesday, but sometime sooner
Speaker 5: rather than later.
Speaker 6: Oh, it could be today, it could be tomorrow.
Speaker 7: And I think what the problem is, Paul, is that
Speaker 7: you know, all of us collectively on air right now,
Speaker 7: I've been doing this for a long time, and I
Speaker 7: think there's a couple of problems. Number one is I
Speaker 7: believe that the near termism has been exacerbated since COVID,
Speaker 7: that we've become so reactive. Number two is we have
Speaker 7: to deal in life just like again, investing with things
Speaker 7: that we know. We don't know exactly when this is
Speaker 7: going to stop or change, and it all could change
Speaker 7: to the positive as well.
Speaker 6: And I think too many people that.
Speaker 7: Do what I do, want to make the big negative
Speaker 7: call and want to assume and infer, and that's really difficult.
Speaker 7: And so I think I think what we know is
Speaker 7: the markets have corrected more than ten percent, so we
Speaker 7: are in correction zone.
Speaker 6: That's what we know.
Speaker 7: We also know that this is the fastest correction that
Speaker 7: we've seen in multiple decades, if not ever, especially since
Speaker 7: nineteen ninety. But at the end of the day, I
Speaker 7: do believe that America has the best companies in the world.
Speaker 7: Canada is actually quite put quite close in number two.
Speaker 7: And this is the time where you want to start
Speaker 7: a shopping list because we're seeing some quite exacerbated moves
Speaker 7: to the downside. And this is where you want to
Speaker 7: be a long term investor.
Speaker 3: Brian Belski with U female capital markets for.
Speaker 2: Investors, Brian Belski for whatever, and scared stiff. They don't
Speaker 2: have the Belski confidence. How do they slide into this market?
Speaker 7: Well, you know, we have a lot of faith in
Speaker 7: terms of what we do things, and faith in our
Speaker 7: business as fundamentals and in the fundamental construct of the
Speaker 7: United States stock market has not changed the last eight
Speaker 7: eight weeks.
Speaker 6: And now people are gonna say, what about the tariffs
Speaker 6: and what about state plation? Come on, man, we haven't
Speaker 6: had stake plation since the nineteen seventies.
Speaker 7: They're looking at their academic books to define stake inflation
Speaker 7: and they don't understand what happened in.
Speaker 6: The nineteen seventies. You and I live through that.
Speaker 7: Paul, he's much younger than we are ton so he
Speaker 7: didn't really live through the seventies.
Speaker 6: But at the end of the day, you want to
Speaker 6: find really great companies.
Speaker 7: If I take two steps back and I say, okay,
Speaker 7: what are the top ten companies in the world. Oh,
Speaker 7: by the way, they're all here in the United States,
Speaker 7: And so I think this is where you want to
Speaker 7: make your list, and you want to be an investor
Speaker 7: in Google and Apple and Amazon and Costco and United
Speaker 7: Healthcare and Berkshire Hathaway.
Speaker 6: Tesla's no longer a.
Speaker 7: Magnificent seven, by the way, but Tesla is a fantastic
Speaker 7: technology company, and I think you want to own Tesla
Speaker 7: for the operating system right now, just like you wanted
Speaker 7: to initially buy Apple for the operating system back in
Speaker 7: their early two thousand. So I think that's the way
Speaker 7: you want to kind of think thematically. Now, there's no
Speaker 7: doubt that there's bumps in the road. There's no doubt
Speaker 7: that we don't exactly know what President Trump's going to do,
Speaker 7: or we don't know the retaliatory stuff.
Speaker 6: But again, we are negotiating.
Speaker 7: Nothing is certain, and so I think you have to
Speaker 7: deal with what's certain, And what's certain is make your
Speaker 7: shopping list of the top ten companies in the world
Speaker 7: be consistent. And by the way, nobody, nobody's sold at
Speaker 7: the peak. So this peakda trough analysis that a lot
Speaker 7: of people are starting to talk about it's bunk because
Speaker 7: people don't do that, and actually more people buy at
Speaker 7: the top than they sell at the top.
Speaker 5: What are we doing in the fixed income world, Brian?
Speaker 6: You know fixed income? Paul's a great question.
Speaker 7: I think fixed income is starting to get a little
Speaker 7: more interesting, especially given the fact that what treasuries have done.
Speaker 7: So I do think that you want to start looking
Speaker 7: at ten year treasuries and start looking at this dare
Speaker 7: I say sixty to forty scenario, because if fixed income
Speaker 7: is going to be part of your portfolio, which we
Speaker 7: think it should in this realm of what we've been
Speaker 7: saying for the last two to three years is that
Speaker 7: we're returning to normalization. You can, will, and should have
Speaker 7: fixed income as part of your portfolio, as you should
Speaker 7: have small cap and value, so more of a diversified
Speaker 7: total asset perspective, and I think fixed incomes starting to
Speaker 7: look a lot more interesting.
Speaker 5: How upset are the average Canadian towards towards their friends
Speaker 5: below here?
Speaker 7: Well, I've been a BEAMA over thirteen years and they
Speaker 7: are taking things very very seriously, as they should they're
Speaker 7: taking you very, very personally, and I understand I have
Speaker 7: an excessive amount of empathy in life and empathy.
Speaker 6: I feel very bad for them, But.
Speaker 7: At the end of the day, they also have to
Speaker 7: look at themselves, and they don't for all intentsive purposes,
Speaker 7: they're just it's very like, just blame the United States,
Speaker 7: and I think that's the wrong way to look at
Speaker 7: it in a relationship. It's two sides that people are
Speaker 7: just say, Oh, it's just Trump. No it's not, and
Speaker 7: you have to kind of think about that. So I
Speaker 7: do believe that calmber heads will prevail. And on Canada,
Speaker 7: it's really interesting Paul's that Canada's all performing the US
Speaker 7: this year and no one's talking about this. The actual
Speaker 7: currency is actually tightened up a little bit in terms
Speaker 7: of relative to the US dollar. So I think Canada
Speaker 7: has been our call. Canada is going to continue to
Speaker 7: out perform. Why because from a valuation perspective, well, it
Speaker 7: looks really really good and the banks in particular are
Speaker 7: our favorite assets in Canas along with Shopify.
Speaker 3: Brian Belski, thank you so much.
Speaker 1: You're listening to the Bloomberg Surveillance podcast Catch us Live
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Speaker 2: Joining us now she has been of such advance, Henrietta
Speaker 2: trays with Veda partners. Henrietta, all I'm hearing now is
Speaker 2: we don't we don't know, We don't know, we don't know.
Speaker 3: Does anyone on Capitol Hill know what the President's going
Speaker 3: to do?
Speaker 8: They wish they knew. I can tell when I go
Speaker 8: into member offices and speak with their staff that they
Speaker 8: have very limited ability to sway the president on what's coming.
Speaker 8: Republicans are in a better position than Democrats for obvious reasons.
Speaker 8: But there is more of a reliance from members on
Speaker 8: saying things like, once we have certainty, the markets will
Speaker 8: calm down. Once we have certainty, the manufacturers will know
Speaker 8: what to do, the tariffs will be, you know, not
Speaker 8: lasting past the summer. There's a lot of optimism and
Speaker 8: sort of wishful thinking about how impactful they can be
Speaker 8: on this topic.
Speaker 2: Oh what a beautiful mort Oh did Oklahoma make the
Speaker 2: final four?
Speaker 7: Now?
Speaker 2: Outing an agricultural country, Henrietta treys it's subsidy reducts Republican
Speaker 2: farmers are going to get funds from from Washington because
Speaker 2: they're harmed by the tariffs, right.
Speaker 8: Right, exactly. So it's acknowledgment that the tariffs are harmful
Speaker 8: and simultaneously more expensive. The last administration around, we had
Speaker 8: more bailouts for the farming sector than we had for
Speaker 8: the auto sector during the Great Recession. And already, you know,
Speaker 8: just two months into the administration, we're already talking about
Speaker 8: another round of bailouts for farmers from Brooke Rollins, the
Speaker 8: head of the USDA. So that's absolutely going to be
Speaker 8: a part of this. And I think we need to
Speaker 8: talk to farmers or seed associations or trade manufacturers in
Speaker 8: the agriculture space. They don't want the bailout. They want
Speaker 8: to not lose their market share to Brazil and Argentina
Speaker 8: for soybean crops for the foreseeable future and things like that.
Speaker 8: So it's a major source of anxiety. But they nonetheless
Speaker 8: support the president more than they support any other candidates,
Speaker 8: and that keeps them in the playing field and keeps
Speaker 8: Trump capable of putting these tariffs into effect, which is
Speaker 8: why we think they will.
Speaker 5: Be Henriette, I thank you for your research. Note here
Speaker 5: it lays it out day for day what we should
Speaker 5: expect here this week, because it's going to be a
Speaker 5: long week here, So folks, Henriette's research is absolutely must
Speaker 5: read here for to get a stay on top of
Speaker 5: what's happening down in DC. And you note that tonight,
Speaker 5: Monday night, Congress actually comes back to d C. What's
Speaker 5: on there to do list here?
Speaker 8: This is going to be a fascinating week. So first off,
Speaker 8: we know that the Senate Republican Conference is trying to
Speaker 8: pull forward their consideration of the budget resolution. And the
Speaker 8: budget resolution, of course, is the key that we need
Speaker 8: to unlock before we can write the tax bill, and
Speaker 8: they're using this really novel approach where because the House
Speaker 8: and the Senate do not agree on whether to cut
Speaker 8: the deficit, whether to cut six hundred billion dollars for medicaid,
Speaker 8: whether to cut into a whole host of things, to
Speaker 8: the corporate salt deduction, raise corporate taxes, there's no agreement
Speaker 8: right now between the two chambers. So what they're choosing
Speaker 8: to do for the first time is past different budgets
Speaker 8: for each chamber. So the House gets to write their
Speaker 8: own tax bill and the Senate gets to write their
Speaker 8: own time, and they're going to kickstart that process tonight
Speaker 8: votes on Wednesday, and then also the Senate Democrats are
Speaker 8: going to force a vote on the AIPA TIS against Canada,
Speaker 8: which will be fascinating to watch right now.
Speaker 2: And folks, we do them with the Monday Audible with
Speaker 2: Henrietta tras is only we can do with Henrietta Trays. Henriette,
Speaker 2: maybe off your remit, but I'm going there. There's a
Speaker 2: zeitgeist out.
Speaker 3: There that the judiciary is going to come to the rescue.
Speaker 2: How do you respond when people say, on appeal, federal
Speaker 2: courts or the Supreme Court will somehow write the American ship.
Speaker 8: Yes, you're right, that is definitely outside of my jurisdiction.
Speaker 8: I only like to talk about things that I know about.
Speaker 8: I would segue and pivot to answer your question and
Speaker 8: say that the Democrats on Capitol Hill are very much
Speaker 8: counting on the judicial branch to do any of the
Speaker 8: blocking that needs to be done, because they have no
Speaker 8: recourse in Congress to stop any of this, and the
Speaker 8: Republican Conference is supportive of it, so it has to
Speaker 8: be reliant on the courts.
Speaker 2: There is no alternative, Okay, Henretta, thank you so much
Speaker 2: for your commitment to Bloomberg Surveillance, just so important.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.
Speaker 2: Critty goop through with us of course in London, driving
Speaker 2: our morning coverage in London. Back end of her day today, Critty,
Speaker 2: I just looked at Lewis Viewton. Mister Arnault is on
Speaker 2: really good terms with mister Trump, and there's I think
Speaker 2: the journal had the article the family and they went
Speaker 2: to the inauguration and all that.
Speaker 3: Critty.
Speaker 2: The drawdown of Lewis Viewton is negatives thirty seven percent
Speaker 2: back to a spring of twenty twenty one pricing. How
Speaker 2: upset is mister Arnaud. How upset are European come these
Speaker 2: liberation day?
Speaker 9: Very upset? And I think Louis Vuitton is one example
Speaker 9: of that. Especially the reason it needs to be kind
Speaker 9: of you tread with caution if you're an international company,
Speaker 9: and of course European companies have way more exposure abroad
Speaker 9: than they do where they're based. I think Louis Vutan
Speaker 9: is a great example there where they're based in France.
Speaker 9: But the majority of the revenue comes from the two
Speaker 9: major superpowers of the world, the two largest economies of
Speaker 9: the world, and that is China and the United States.
Speaker 9: So the tariff story is going to hit them hard.
Speaker 9: They also own a spirit's business as well, a piece
Speaker 9: of their business, so a lot of the wine tarraff,
Speaker 9: champagne tariffs, all of that that's coming from the White
Speaker 9: House and the Trump administration is going to hit Bernard Arnau.
Speaker 5: Very hard and kritty what's the feeling across the UK
Speaker 5: and Europe as to their ability and their appetite to
Speaker 5: put on reciprocal tariffs on US goods.
Speaker 9: It is the last card that they have to play
Speaker 9: and they know oh as well. And then you've seen
Speaker 9: them do this in pieces where a great example is
Speaker 9: when the wine tariffs were actually put on, champagne tariffs
Speaker 9: were actually put on, the equal amount was also put
Speaker 9: on from the EU on things like American whiskey or
Speaker 9: American exports in the drink space as well. They match
Speaker 9: it eye for eye but they don't go any further,
Speaker 9: and that's simply because the impact is harder when it
Speaker 9: comes to the European growth story when Europe as reciprocal
Speaker 9: tariffs versus the other way around. The problem is this
Speaker 9: is the last card they have to play. So if
Speaker 9: they were able to put on those reciprocal tariffs or
Speaker 9: do something like put on quotas, that is really the
Speaker 9: last thing they can do. But there's a couple of
Speaker 9: other ways that they can tackle it. And this is
Speaker 9: kind of the Hail Mary from Europe, which is starting
Speaker 9: to tackle things like digital services, technology and financial services,
Speaker 9: which means that a lot of the trade that happens
Speaker 9: between New York and London, or New York and Paris,
Speaker 9: or New York and wherever would get halted.
Speaker 2: He crity an unfair question and you know I'm making jokes,
Speaker 2: So it's Curtty's killing herself twenty four to seven on
Speaker 2: this between Run and The London Show with Anna Edwards
Speaker 2: and also like doing all the great work with everyone except.
Speaker 3: Nathan Hager Critty.
Speaker 2: I look at where we are and the Ian Bremer
Speaker 2: is at every nation for itself in Europe, including Turkey,
Speaker 2: or does Brussels have actually a part to play.
Speaker 6: Brussels has no part to play.
Speaker 9: And I think a great example of that is what
Speaker 9: came out of the summit last week, the Coalition of
Speaker 9: the willing summit when it comes to the likes of Ukraine,
Speaker 9: for example, and yet they weren't at the table when
Speaker 9: it came to a ceasefire, even negotiation between the United
Speaker 9: States and Russia in riyod Or, even with Turkey's involvement.
Speaker 9: And Turkey, by the way, is the number one defense
Speaker 9: spender with Russia, but is also a NATO member and
Speaker 9: technically a US ally as well. They're also kind of
Speaker 9: situated on the Black Sea where a lot of the
Speaker 9: grain that comes out of Ukraine and Russia and ultimately
Speaker 9: hits American cereal and American bread comes from. So the
Speaker 9: irony of the situation is that the Europeans are trying
Speaker 9: to have a voice at a table and in a
Speaker 9: room that the door is completely closed to.
Speaker 5: Pretty streets of London, streets of Paris, Milan. Are the
Speaker 5: folks there? Did they recognize that, you know, things are
Speaker 5: changing here in US in a big way economically, politically, militarily.
Speaker 5: Do they see the changes that are or do they
Speaker 5: feel the changes that are taking place. I think they
Speaker 5: absolutely feel it.
Speaker 9: And a great example, I think in the we kind
Speaker 9: of talked for the economics of it. It's very similar
Speaker 9: here where people are kind of voting politically with the
Speaker 9: pinch that they're feeling in their pocket. So a lot
Speaker 9: of the kind of voting that happens, say in the
Speaker 9: last twenty twenty election was in some ways a response
Speaker 9: to immigration or response to the economy. It's the exact
Speaker 9: same story here. You see that in terms of support
Speaker 9: for some of the far right here in the UK,
Speaker 9: but certainly for the far right in France. And I
Speaker 9: think that has been the story of the morning, especially
Speaker 9: with Marie La Penn now getting banned from running for office.
Speaker 9: This is a big deal for an international audience that
Speaker 9: is really being compared to Europe's kind of Trump moment.
Speaker 3: So one day, I'm in a restaurant insect a part South.
Speaker 2: Kritty Gupta, and my back is to the door. It's
Speaker 2: right behind me, and there's a stir you could feel
Speaker 2: the restaurant stirring. And I turn around and there is Shack.
Speaker 2: There is Shaquille O'Neal with an entourage of four or five,
Speaker 2: six people In Kritty the shack is carrying the Lewis
Speaker 2: Viwton steamer bag forty five that Audrey Heppern used in charade.
Speaker 3: Okay, this puppy comes in.
Speaker 2: This is a big bag, folks, that shack can carry
Speaker 2: around his tax forms.
Speaker 3: And he's a big guy.
Speaker 2: Yeah, big guy, big bag five nine hundred and fifty dollars.
Speaker 2: Does Kritty koopta just teck one thousand bucks on?
Speaker 3: That? Is that how this is going to work.
Speaker 9: Kreaty Gupta doesn't tack anything on anything, but it's a
Speaker 9: great example of why Americans come to Europe to buy
Speaker 9: the same bag, for example, for much much less. And
Speaker 9: it's kind of addressing another key piece that Donald Trump
Speaker 9: likes to talk about in this terrafour and the reciprocal tearfour,
Speaker 9: which is not just tariffs that are put on product,
Speaker 9: but things what he's calling non tariff barrier. So that
Speaker 9: includes things like regulation, it also includes things like VAT.
Speaker 9: I have plenty of friends from both sides of the
Speaker 9: Atlantic who've gone to the EU, bought them, bought say
Speaker 9: an Apple iPhone product for example, bought them in that country,
Speaker 9: come back and kind of redeemed the VAT refund. That
Speaker 9: is the key piece of this agenda, and that things
Speaker 9: cost more abroad and maybe less expensive on the your
Speaker 9: op union. That's the kind of economics that the Trump
Speaker 9: administration is trying to tackle.
Speaker 2: Pretty group to thanks so much, greatly appreciated.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
Speaker 1: us live every weekday on YouTube and always on the
Speaker 1: Bloomberg terminal.
Speaker 3: The newspapers, Lisa Matteo, what do you have?
Speaker 5: Okay?
Speaker 10: So Yankees in the spotlight right everybody's talking about it.
Speaker 5: I knew your Star stadium on.
Speaker 10: Say I was there, Saddy, I was there for.
Speaker 5: The twenty Yeah.
Speaker 10: Well nine in one game, that was crazy, but fifteen
Speaker 10: total in three games, I mean, come on, it was incredible.
Speaker 5: But the reports are.
Speaker 10: Saying it's because of these new torpedo bats that they have.
Speaker 10: So it's all about the way the weight is distributed
Speaker 10: in the bat, So the wood is moved lower near
Speaker 10: the barrel right after the label. So basically it's putting
Speaker 10: the masks in the sweet spot, like where you want
Speaker 10: to hit the.
Speaker 3: Ball, but we want twenty run games? Do we want?
Speaker 10: Like it was right off the bat, it was like one, two, three,
Speaker 10: and it was like whoa.
Speaker 5: Okay, Okay, well, I don't know. I guess there's questions.
Speaker 5: Are the bats contributing to these home runs?
Speaker 3: I don't know?
Speaker 5: Right, And that's what.
Speaker 10: Just to put it out there, Aaron Judge did not
Speaker 10: use one of those bats, and he used a regular
Speaker 10: conventional bat Classic, but it was developed by an MIT
Speaker 10: physicist turned Marlin coach, Aaron Right.
Speaker 3: It sounds like a Jimmy Stewart movie. It happens every
Speaker 3: spring from a million years ago. Next, if we go on,
Speaker 3: it's all I'm going to talk about. I think it's
Speaker 3: so stupid.
Speaker 10: Oh okay, so we have to go to Costco. Right, Okay,
Speaker 10: let's go the Kirkland signature brand that it uses at
Speaker 10: private label. It's actually using it as a negotiating tool
Speaker 10: with suppliers because it's been so successful. I mean it
Speaker 10: created it like three decades ago. Right, makes everything from
Speaker 10: like toilet paper to.
Speaker 5: Vodka private brands. Yes, I have to admit I've been
Speaker 5: going private brand.
Speaker 10: Over the brand and it's catching on twenty twenty four
Speaker 10: sales of private labels like Kirkland grew about four times
Speaker 10: faster than national brand so it was a record high.
Speaker 10: But the co founder telling the Wall Street Journal kind
Speaker 10: of the story behind it, like they started with this
Speaker 10: idea of selling a limited number of brands, but sell
Speaker 10: a lot of them, and then they decided, you know what,
Speaker 10: We're going to introduce the own brand because you know,
Speaker 10: keeps keeps it going. But Kirkland attracts customers who like
Speaker 10: the lower prices. But yes, it's allowing them to dictate
Speaker 10: what they want for their shoppers. So for example, they're
Speaker 10: negotiating like tied detergent and ziploc bags, they can negotiate that,
Speaker 10: and the egg up date is still the same price.
Speaker 3: If they haven't come down, what a shot shot.
Speaker 10: But they're not going up, so that that's the good news.
Speaker 3: Okay.
Speaker 5: Next, have either of you gotten your real I D yet?
Speaker 3: No?
Speaker 5: What as it's a new jersey, you can't get. You
Speaker 5: go into the website, you can't get you can't. It's
Speaker 5: hard to get an appointment.
Speaker 10: I got mine like last year.
Speaker 5: Because this is.
Speaker 10: It's like you're supposed to do it. This has been
Speaker 10: like years in the making, has been delayed since a
Speaker 10: pandemic like three times. But the deadline is May seventh,
Speaker 10: So now everyone is like rushing, but they're not making.
Speaker 5: It easy just click a button. I gotta go to deal.
Speaker 10: You have to go in person with your points of ID,
Speaker 10: like you have to go there.
Speaker 5: The travislations worked worked well. It's been many years since
Speaker 5: I read about this.
Speaker 3: Last night.
Speaker 2: Texas wins. They have like eighty percent or whatever because
Speaker 2: they made it simple.
Speaker 3: Yeah, and is like in the last.
Speaker 2: Place twenty percent or whatever. I use my passport.
Speaker 5: Yes, you can't still use the passport for domestic it's
Speaker 5: just for the global entry. That also, I think is
Speaker 5: a substitute. I've got that card. Yeah.
Speaker 10: But the weird thing is that they have like d
Speaker 10: MV lines are crazy and scalpers. They're hawking appointments.
Speaker 8: These appointments, now.
Speaker 3: Whatever's Texas doing?
Speaker 5: Just do it, Texas.
Speaker 6: Yeah, so get on it.
Speaker 10: May seventh deadline. Make sure you do it. You are
Speaker 10: going to be crazy.
Speaker 5: Yes, you're right.
Speaker 2: So it's like it's like March thirty first, is the
Speaker 2: season over for the Red Sox.
Speaker 3: Can we go there already? Oh? It was painful, It's
Speaker 3: just yeah, get some fay FM in Boston.
Speaker 2: There's a red Sox banner on the top of Mount
Speaker 2: Washington this morning.
Speaker 3: The newspapers Lisa Tape.
Speaker 1: Thank You So Much is the Bloomberg Surveillance podcast, available
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