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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: We welcome all of you across the nation with our

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Speaker 2: questionnaire conversation of the day. Here he is with Gary Gensler.

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Speaker 2: He's a former chairman the Securities and Exchange Commission, Professor

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Speaker 2: of Practice of Global Economics and Management at MIT. Did

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Speaker 2: you ever study under Stanley Fisher? Did you have the privilege?

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Speaker 3: H I got to know stan Fisher, terrific public servant.

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Speaker 3: I got to know him when he served here at

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Speaker 3: the US here in international finance. I also got to

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Speaker 3: know him a little bit when he ran in the

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Speaker 3: Central Bank over in Israel.

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Speaker 2: Katie Greifeld called me up earlier this morning and she said,

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Speaker 2: and folks, gus the horse is okay in the heat.

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Speaker 2: It's serious. And Katie said that the horses are doing

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Speaker 2: fine this morning. And Katie said, can you do the

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Speaker 2: entire interview on crypto? And I said, over Mike, with

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Speaker 2: all that's going on from the Ginstler to the Atkins

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Speaker 2: SEC We're going to get crypto out of the way now, folks.

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Speaker 2: And I'm sorry, Gary Ginsler, it is breaking news. I

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Speaker 2: got Chris Giles in the ft this morning highlighted the

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Speaker 2: Bank of International Settlements research. I adore Raphael Hour's work

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Speaker 2: at BIS. I got rogue off in chapter seventeen, eighteen

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Speaker 2: and nineteen going after stable coin. We need a Genstler update.

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Speaker 2: What are we getting into with tether and stable coin?

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Speaker 3: So Tom, I couldn't agree with you more about your

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Speaker 3: earlier statement. There are so many bigger items going on

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Speaker 3: in this economy. The tariffs, immigration, frankly, a whole attack

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Speaker 3: on some funding, a lot of things that are going

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Speaker 3: to I think hurt long term economic growth. And that's

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Speaker 3: why I joined Simon Johnson and other colleagues from the

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Speaker 3: Center of Economic Policy Research to do a book, a

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Speaker 3: rapid response book about the economic consequences. But in that

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Speaker 3: book you're asking about stable coins. It's interesting, the worldwide

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Speaker 3: dollar market's about forty five trillion, that's when you add

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Speaker 3: everything up, forty five trillion dollars and stable coins are

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Speaker 3: about a quarter trillion. And so you know, the question

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Speaker 3: is is Scott Bessant, Secretary of Treasury. Right he says

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Speaker 3: that's going to grow to two trillion. It starts to say,

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Speaker 3: what's the use of one of these We already have

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Speaker 3: digital dollars. You and I we all Lisa earlier saying

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Speaker 3: I don't understand stable coins. We have stable coins, they're

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Speaker 3: called US dollars, deposits, money market funds, and so forth.

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Speaker 3: The only thing that these companies are offering is an

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Speaker 3: alternative way to move dollars out side of the banking system,

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Speaker 3: which means outside of sanctions, outside of any money laundering laws.

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Speaker 3: And so that's the real risk. It could undermine the

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Speaker 3: US geopolitically.

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Speaker 2: Paul's got any questions. Let me get this in right now,

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Speaker 2: because I think it's so important. The bravest book in

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Speaker 2: my career here was Ken Rogoff, The Curse of Cash.

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Speaker 2: He got death threats off that book. It's nothing more

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Speaker 2: than a use for criminal activity. It replaces illegal one

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Speaker 2: hundred dollars bills in briefcases. How simplistic is that statement

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Speaker 2: that I just made.

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Speaker 3: Well, you're talking about these stable coins.

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Speaker 2: Tethers, stable coin, the whole thing. It's nothing more than

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Speaker 2: a walk around the sec and the rest of the

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Speaker 2: financial world.

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Speaker 3: It looks stable coins. Tether was invented early on about

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Speaker 3: ten and eleven years ago, to be the equivalent of

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Speaker 3: the poker chip at the casino. You could use it

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Speaker 3: to move crypto versus crypt dough because these large exchanges

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Speaker 3: couldn't get bank accounts and so instead you could sidestep

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Speaker 3: any money lawn during in sanctions. At a quarter of

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Speaker 3: a trillion dollars, it's starting to be somewhat meaningful. And

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Speaker 3: here's the cool question, the interesting economic question. Who gets

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Speaker 3: the interest payments, Who gets the float the three and

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Speaker 3: a half or four percent on on you know, for

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Speaker 3: every billion dollars, that's thirty five or forty million dollars

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Speaker 3: of interest, and who gets that interest. I'd rather have

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Speaker 3: a money market fund where I get the interest the investor.

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Speaker 4: Gary The economic consequences of a second Trump administration of

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Speaker 4: preliminary assessment. We're six months into the second administration of

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Speaker 4: President Trump. There's lots of unique economic policies coming out

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Speaker 4: of Washington.

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Speaker 5: Let's start with tariffs.

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Speaker 4: When I was in business school, terrorists were kind of

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Speaker 4: a targeted thing you'd do once in a while if

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Speaker 4: somebody was dumping steel or something else in there.

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Speaker 3: We've never really.

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Speaker 4: Seen them as a whole policy across the globe, across

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Speaker 4: all of our trading partners. How do you think about

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Speaker 4: the President of Trump's economic policies pocusing on strategy on tariffs.

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Speaker 3: I think and thank you for mentioning this book that

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Speaker 3: we did together, and it was a rapid response book.

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Speaker 3: But overall, all our experts said tariffs are going to

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Speaker 3: put downward pressure on economic growth and upward pressure on inflation.

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Speaker 3: And that's the history of these things. We have seen

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Speaker 3: worldwide movements to tariffs, and it was right before the

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Speaker 3: nineteen thirties great depression, and Congress got in and weighed

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Speaker 3: in and so forth. And I would remind listeners that

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Speaker 3: tariffs are only on goods, not on services. And about

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Speaker 3: ninety percent of workers in the US are working outside

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Speaker 3: of the manufacturing field. And one of our authors, Michael Strain,

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Speaker 3: wrote an excellent chapter and Michael says it won't even

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Speaker 3: help manufacturing because manufacturers have to buy all all these goods,

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Speaker 3: these intermediate goods from overseas and the tariffs will be higher.

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Speaker 3: So I don't think the tariffs are going to help.

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Speaker 3: I think they're gonna hurt, and interestingly, they're going to

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Speaker 3: particularly hurt also in rural communities because rural communities have

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Speaker 3: to sell their farm goods, their agricultural products overseas. So

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Speaker 3: it doesn't even necessarily help the president in some of

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Speaker 3: his political base in rural states.

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Speaker 4: A lot of I'm just going to, you know, preempt

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Speaker 4: a lot of email I'm going to get today in

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Speaker 4: my social saying we haven't seen any of it. Tariffs

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Speaker 4: are working. Just find inflation's not there or is it

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Speaker 4: just too.

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Speaker 3: Early, so it's a bit early. But I'd say this

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Speaker 3: to any listeners, You've just had the largest tax increase

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Speaker 3: that you've had in generations. Average tariffs in the US

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Speaker 3: were two point three percent. Globally, adding everything up two

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Speaker 3: point three percent, and that was even after the first

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Speaker 3: Trump administration raised tariffs. In China they are now over

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Speaker 3: ten percent, so the overall teriff rates have gone up fourfold.

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Speaker 3: That's a big tax increase. It takes time, but the

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Speaker 3: International Monetary Fund lowered our growth estimates for this year

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Speaker 3: a full point, so you know we're seeing that happen.

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Speaker 2: Right. I've got to ask We got all sorts of

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Speaker 2: topics to talk to with Gary Ginsler, former Securities in

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Speaker 2: Exchange Commission chairman, and MIT out with a wonderful what

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Speaker 2: do you call it? Like a kindle book?

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Speaker 3: Is there like a well it's it's a real book.

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Speaker 3: We do have it physically, but it's online at the

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Speaker 3: Center for Economic Policy Research, which is a remarkable organization

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Speaker 3: in Europe, and you can get it for free right

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Speaker 3: at the CEPR website.

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Speaker 2: Wonderful, So we'll get I'll get that out on LinkedIn

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Speaker 2: and Twitter as well. So I got to get this straight.

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Speaker 2: You're at Pikesville High School, you end up at Wharton,

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Speaker 2: you do better than good in your academics. The world's

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Speaker 2: imploding in private credit, right, Paul, Sure, everybody needs evaluation.

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Speaker 2: You have to be the first call for the University

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Speaker 2: of pen Sylvania. Do you have any handle on the

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Speaker 2: new valuation the mark to market of private credit? And

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Speaker 2: dare I say private equity as well?

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Speaker 3: Well, you're kind I mean, University Pennsylvania was terrific. I'm

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Speaker 3: at MIT now, so I just have to give that

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Speaker 3: shout out. But in terms of private credit, look, this

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Speaker 3: is a field about give or take two trillion dollars

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Speaker 3: of lending and assets under management that has competed with

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Speaker 3: commercial banks, and we made sort of a conscious decision

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Speaker 3: to move some of these risks out of commercial banks

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Speaker 3: and into private credit. I think it's good. It's competition

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Speaker 3: in the capital market here. Am I really took to.

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Speaker 2: The chase of sloan. You're at Sloan with a piece

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Speaker 2: of chalk in your what's the haircut right now on

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Speaker 2: private credit? Is it eighteen percent? Is it greater?

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Speaker 3: Or if you're talking about valuations, it really depends on

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Speaker 3: what the large companies, the Apollos and the Blackstones and

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Speaker 3: so forth, how have they valued it. If they're valuing

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Speaker 3: it properly, then it's not a haircut. But yes, they

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Speaker 3: usually charge higher interest rates.

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Speaker 4: Garret, how do you think the US should from a

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Speaker 4: trade perspective and economic policy perspective, deal with China?

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Speaker 5: Right now?

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Speaker 4: It feels like the globalization trend that you and I

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Speaker 4: and Tom grew up with that seems to have lost

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Speaker 4: a lot of stements out of favor. Now maybe that's

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Speaker 4: a short term trend. I don't know, But specifically with China,

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Speaker 4: how do you put the policies?

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Speaker 3: My experience and we had to negotiate when I was

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Speaker 3: at the SEC, A big consequential transactional situation. Can China

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Speaker 3: keep their companies in the US stock market? And China

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Speaker 3: was not playing ball and following the rules about inspections.

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Speaker 3: We were able to sort that through. And my experience

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Speaker 3: is as you treat them with respect and dignity and consistency,

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Speaker 3: and this oscillation, this big volatile changes of policy, I

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Speaker 3: think is not doing the US well. I think, yes,

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Speaker 3: the President is a risk taker. I respect that he

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Speaker 3: is a fundamentally He's come into office very determined and

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Speaker 3: he wants to readjust with China. But I think China

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Speaker 3: is very savvy. They're going to be able to compete

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Speaker 3: with this in artificial intelligence even if we clamp down

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Speaker 3: on export controls and they have those rare earth minerals

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Speaker 3: that they're able to they have leverage points. Is what

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Speaker 3: I'm trying to say.

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Speaker 2: I've got to go to a new topic here, but

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Speaker 2: Gary goinster. To get to that topic, I used AI.

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Speaker 2: I went to Gemini here and I tipped in the

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Speaker 2: difference between the Genstler and Atkins sec. First of all,

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Speaker 2: Gary Gensler with all as you mentioned Paul Esteemed at

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Speaker 2: GOLDBN Sachs. Paul and I would editorialize you would be

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Speaker 2: on a shortlist to run any major firm in America. Fine,

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Speaker 2: Gary Gensler on AI, what are our kids? What does

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Speaker 2: Lisa Mataio need to know?

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Speaker 3: Well, I would say this, it's one. It's around at

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Speaker 3: least ten years even longer. So it's not just new

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Speaker 3: with open ai and chat Chept two. It's the most

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Speaker 3: transformative technology of the time. And I find myself thinking

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Speaker 3: I'm more of the optimist. I think there'll be a

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Speaker 3: lot of new productivity that comes from this, but also

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Speaker 3: a lot of changes in the job market. Bloomberg will

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Speaker 3: be different, Bloomberg Radio maybe not so different all right

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Speaker 3: at least, but I think it will be very different.

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Speaker 3: And so I think the US versus China is an

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Speaker 3: interesting thing. The big hyperscalers, the big you know, Chap,

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Speaker 3: GPT and Gemini and so forth. Those companies are competing

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Speaker 3: with China, and China's got natural.

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Speaker 2: Deep deep seek whatever it is.

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Speaker 3: Yeah, well they have deep seek, but they have something else.

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Speaker 3: They have one point four billion people, so they have

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Speaker 3: data advantages over We're big, but we're only three hundred

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Speaker 3: and forty million people.

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Speaker 2: Let me go to what I was on with jem

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Speaker 2: and I here and also the AI effort of Bloomberg,

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Speaker 2: and that is the shift from the Genstler SEC over

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Speaker 2: what Paul Atkins has been charged by the President of

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Speaker 2: the United States. You're going to tell me collegially that

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Speaker 2: the ven diagram of Gensler and Atkins is pretty tight.

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Speaker 2: There's differences, but there's a collegial agreement. Beloney. People see

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Speaker 2: this Gary Gensler. Is a sharp shift that we're seeing

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Speaker 2: right now, is it?

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Speaker 3: Look, elections have consequences, and I have a deep respect

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Speaker 3: and you're right, I'm going to be respectful. Chair Atkins

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Speaker 3: has served at the SEC, not once but twice before.

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Speaker 3: He knows the agency well, and I think whether it's

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Speaker 3: Republican or Democrat, what this show is focused on is

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Speaker 3: the markets, the capital markets, and the capital markets do

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Speaker 3: best when there's rules of the road. And that's been

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Speaker 3: true for ninety years and that's what's really critical. Now

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Speaker 3: the SEC has shrunk about twenty percent, so it's not

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Speaker 3: as able to veil the markets and make sure that

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Speaker 3: it's free of fraud and manipulation.

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Speaker 2: Where are your shadows right now? If we go to

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Speaker 2: a more what's the word swashbuckling? Is that right now?

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Speaker 3: Yeah, swashbuckling works.

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Speaker 2: That works if we go to a more Trumpian sec

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Speaker 2: where are the Guenstler's shadows now? Within global Wall Street?

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Speaker 2: Where's the leverage the thing, the portfolio insurance of eighty seven,

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Speaker 2: the surprises of August nineteen ninety eight, where's the shadows

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Speaker 2: for you in the system?

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Speaker 3: Look, I think that overall it's much beyond the Securities

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Speaker 3: and Exchange Commission. It's in terms of the whole financial markets.

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Speaker 3: You probably will have a tendency to greater leverage, meaning

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Speaker 3: more borrowing. But we are also in a heightened risk

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Speaker 3: environment geopolitical. As we lay out in this book, we

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Speaker 3: are pulling back the US from global alliances. So there

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Speaker 3: is definitely a bit more inflation risk, There's a lot

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Speaker 3: more leverage in this sytem. Investors are less well protected

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Speaker 3: with the Frankly, this sort of a large dismantling of

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Speaker 3: something called the consumer financial you know, the CFPB, and

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Speaker 3: so so investors have to be a little bit more aware.

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Speaker 3: There's more risk in the system, big risk. And there's

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Speaker 3: also I would say the US dollar is under pressure.

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Speaker 3: It's down ten percent this year so far, and this

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Speaker 3: is in the environment where the stock market has been

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Speaker 3: quite resilient. You know, we're almost at near all time highs,

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Speaker 3: and so that investors have to say, is there more

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Speaker 3: downside risk than upside potential.

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Speaker 4: Another big area of change within the second Trump administration

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Speaker 4: has been immigration. How is that impacting effectively shutting down

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Speaker 4: the southern border, how does that impact the US labor market?

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Speaker 3: So it's interesting again in her book This Economic Consequences

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Speaker 3: of the Second Trump Administration A preliminary, we have a

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Speaker 3: really interesting chapter on this question. And overall, the forecast

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Speaker 3: is that it will cut growth by about zero point

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Speaker 3: seven to one and a half percent, and in terms

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Speaker 3: of the labor market itself, interestingly, it's going to hurt

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Speaker 3: rural America a lot. Now, rar America will also be

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Speaker 3: hurt by medicaid cuts because believe it, medicaid is more

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Speaker 3: used in raw America than an urban America. And also

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Speaker 3: the tariffs, so there's like a triple threat to rural America,

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Speaker 3: which again politically, it's an interesting conundrum for this White

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Speaker 3: House what to do. But on immigration, I would say

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Speaker 3: it's a downward pressure on the economy these policies in

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Speaker 3: addition to the downward pressure from tariffs.

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Speaker 2: Gary, I want to get this in I think it's

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Speaker 2: too important. And this goes to your colleague, the Nobel laureate,

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Speaker 2: Simon Johnson.

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Speaker 3: And wonderful friend in college in.

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Speaker 2: The heart of the world blowing up for me personally.

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Speaker 2: And there was Andrew Ross Sorkin's wonderful book and any others.

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Speaker 2: Roggy Roger out at booth that's a Chicago, that's a school,

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Speaker 2: Gary out in Chicago. You may not be familiar with that,

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Speaker 2: but Simon Johnson's monograph Thirteen Bankers was the definitive book

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Speaker 2: to describe the moment where we lost control in five six,

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Speaker 2: where the SEC opened the floodgates to certain transactions and leverage.

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Speaker 2: Are we at a risk now where we could repeat

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Speaker 2: what Professor Johnson wrote about Chapter four of Thirteen Bankers.

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Speaker 2: This is the piece of paper that opened the risk

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Speaker 2: gate floodgates? Can we do that again? Look?

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Speaker 3: I think we're human Tom and humankind. We abb and

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Speaker 3: flow on risk. The financial system written the warrge is

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Speaker 3: in good shape.

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Speaker 5: But will it.

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Speaker 3: Tend towards greater borrowing against risk assets? And that's when

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Speaker 3: you have challenges. And I think we have a US

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Speaker 3: dollar that people have some question about. You have inflation

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Speaker 3: moving up. You have greater leverage, and you have a

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Speaker 3: tremendous amount of uncertainty policy and geopolitical uncertainty. And those

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Speaker 3: are times you can see, you know, I'll call them

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Speaker 3: spills on all five and you know, financial spills on

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Speaker 3: all five hurt millions of Americans when you lose your

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Speaker 3: jobs or your you know, mortgage rates.

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Speaker 2: Go home. I got six more questions, how many do

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Speaker 2: you have? Yeah, Plank, Sure we are out of time.

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Speaker 2: Gary Goensler, thank you so much. As the former chairman

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Speaker 2: of the Securities in Exchange Commission. Out with a new effort.

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Speaker 2: I'll get it out on LinkedIn and Twitter at cep

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Speaker 2: R with Simon Johnson and his colleagues at mi T.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: Manica Descenzo with us right now with the market lifting.

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Speaker 2: The fancy titleist had a global investment Opportunities a JP

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Speaker 2: Morgan private bank. Far more importantly, she flies around the

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Speaker 2: world talking to high net worth family offices and others

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Speaker 2: with large pots of money for the JP Morgan Bank

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Speaker 2: and way more important, Monica. You were in the trenches

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Speaker 2: of equity research long ago and you did something that

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Speaker 2: probably needed on Wall Street a lot more. You were

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Speaker 2: a rock star and you took a year off. It's amazing, Lisa,

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Speaker 2: and I've been working on this since three am.

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Speaker 3: Yeah.

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Speaker 2: What was it like walking out the door after the

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Speaker 2: addiction of seventy hours a week.

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Speaker 6: Well, everyone thought it lost my mind, including my parents

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Speaker 6: who are very concerned that I'd be living in the basement,

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Speaker 6: but I wanted to try something different. I enjoyed a

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Speaker 6: year traveling all around the world very and then at

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Speaker 6: the end of the year, my former boss, Alexia Quodronni,

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Speaker 6: who I think Paul knows, called me back and said,

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Speaker 6: any interest in coming back to this?

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Speaker 3: And I did.

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Speaker 2: The stereotypist people sort of drift off in the Netherlands,

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Speaker 2: and you came back ever stronger from that year off.

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Speaker 2: How did it make you stronger? Did you rise to

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Speaker 2: such an important level at JP Morgan.

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Speaker 6: I actually think the perspective you get by seeing other

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Speaker 6: parts of the world and meeting people. And I traveled

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Speaker 6: with myself for a year like just alone, which makes

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Speaker 6: you a little more independent. And I think in my

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Speaker 6: role now a little more interesting. You know, all the

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Speaker 6: stuff I saw on people I met. When I talk

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Speaker 6: to clients, they think it's odd and intriguing. And I

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Speaker 6: think when you choose to come back as an adult

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Speaker 6: versus jumping into this career after college where it just

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Speaker 6: feels like the obvious path, that's a very different thing.

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Speaker 2: President Trump femailed me from the actually texted from the

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Speaker 2: Air Force one orosse The atlanticing says, ask Monica, if

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Speaker 2: American exceptionalism still ragns is it still there for your

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Speaker 2: clients worldwide?

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Speaker 6: So worldwide is interesting question. Let's separate US clients versus international.

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Speaker 6: In the US client base the last decade, they have

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Speaker 6: cared mostly about maintaining a very heavy overweight to US

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Speaker 6: equities in US investments. Overall the last six months, we've

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Speaker 6: seen them start to pivot, which I think is important

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Speaker 6: because if you had that sixty to forty portfolio, drift

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Speaker 6: brought you closer to seventy five twenty five over the

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Speaker 6: last just last few years, which means you have more

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Speaker 6: equity than you probably need. You probably have more US

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Speaker 6: than you need, and so our US clients are finally

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Speaker 6: starting to look outside the US, looking at Europe, looking

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Speaker 6: at Japan, looking at local denominated assets to balance out

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Speaker 6: their portfolio. My international clients have always done that, but

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Speaker 6: I will tell you coming out of COVID, my international

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Speaker 6: clients they felt like the US was the safest bet.

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Speaker 6: They thought we were in best position to rally after COVID.

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Speaker 6: I was in London a couple of weeks ago, and

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Speaker 6: that has changed a little bit and again giving up

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Speaker 6: on the US. Certainly, they appreciate our dominance and tech

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Speaker 6: and AI and everything like that, but they're understanding that

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Speaker 6: they need to have more diversity in their portfolios. And

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Speaker 6: so I don't think US stepialism is dead. Is it

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Speaker 6: being chipped away at the on the fringe?

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Speaker 3: Yeah?

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Speaker 6: Absolutely.

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Speaker 4: So for your clients, let's say the family office is

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Speaker 4: a big part of your client base, how do they

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Speaker 4: think about alternative investments? I'm actually surprised that it's a

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Speaker 4: big an allocation, as big an allocation as is.

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Speaker 5: How do you guys think about alternatives with your clients.

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Speaker 6: So when you start to get to the family office,

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Speaker 6: levels's assume you're talking about a billion dollar plus balance

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Speaker 6: sheet at that kind of level. You're talking about generational wealth,

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Speaker 6: and so they can have a higher allocation to alternatives

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Speaker 6: which are less liquid because they probably don't need to

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Speaker 6: tap into that money in the next five ten years.

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Speaker 6: And so there we can see alternative allocations north of

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Speaker 6: fifty percent, wow, which is amazing. For a traditional client,

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Speaker 6: you would be much lower, like half of that, if

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Speaker 6: not less.

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Speaker 5: So where are we or what's your role at JP Morgan?

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Speaker 4: How are you kind of working with your clients to

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Speaker 4: deal with the geopolitical risk with the domestic political changes

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Speaker 4: that we have here in the US, with the change

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Speaker 4: in maybe the US not being as safe a haven

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Speaker 4: as it was even six months ago. What's the kind

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Speaker 4: of conversations you're having.

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Speaker 6: Yeah, with as far as it remains think about the US,

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Speaker 6: the US exceptionalism idea there. We've been advocating more global

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Speaker 6: diversification in portfolios. So again, look at Europe, look at Japan,

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Speaker 6: look at local denominated bombs, another EM and another markets.

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Speaker 6: Just have more exposure in your portfolio to things outside

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Speaker 6: the US. When you think about geopolitical risk, we really

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Speaker 6: don't do a whole lot in portfolios that we manage

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Speaker 6: around that because history tells us geopolitical flare ups are

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Speaker 6: pretty bad indicator of pulling out the market. People want

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Speaker 6: to do that, that that's the inclination, But in fact,

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Speaker 6: if you did that, you actually underperformed. And we looked

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Speaker 6: back over three, six and twelve months after geopolitical spikes.

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Speaker 3: Only on a three month basis.

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Speaker 6: Do equities lag so near term it causes volatility intermediate

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Speaker 6: to long term, it generally doesn't matter for a global

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Speaker 6: diversified portfolio.

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Speaker 2: We continue with Monica descends, Head of Global Investment Opportunities,

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Speaker 2: JP Morgan, Private Bank, with headlines out from the testimony

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Speaker 2: of Chairman Powell that we will see later today. The

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Speaker 2: US economy, labor market remain in a solid position. There's

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Speaker 2: many headlines. I'll pick a few. Effects of policy changes

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Speaker 2: on economy remain uncertain. We've heard that uncertain word. Maybe

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Speaker 2: the key to headline here the chairman says, ultimate tariff

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Speaker 2: level will determine the impact of the path forward. Long

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Speaker 2: run inflation consistent one two percent target is your own

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Speaker 2: Powell from all your travels Monica as a central banker to.

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Speaker 6: The world, certainly all eyes are on him. And that

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Speaker 6: was some of the conversations I had in Europe a

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Speaker 6: couple of weeks ago, and I think most people agree

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Speaker 6: with this view that we probably haven't seen the full

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Speaker 6: impact of tariffs and the data, and so most of

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Speaker 6: the people I work with assume that you're looking at

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Speaker 6: a fall, if not later, for any kind of move

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Speaker 6: on rates. I know overnight, there was some last day

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Speaker 6: or so, some questions around maybe July, but still the view.

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Speaker 2: Of most that when you synthesized GP Morgan's research, when

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Speaker 2: does the feel of tariffs click in? Now?

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Speaker 6: The feel is there from a vibe standpoint. If you

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Speaker 6: look at sentiment corporate and consumer, it's there. People are petrified,

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Speaker 6: companies are trying to figure out what they're going to do,

436
00:24:17,720 --> 00:24:19,439
Speaker 6: but it hasn't flowed into all the hard data yet,

437
00:24:19,440 --> 00:24:21,159
Speaker 6: and I think that takes time because we don't actually know.

438
00:24:21,800 --> 00:24:24,280
Speaker 6: If you look at corporate earnings, we're assuming earnings growth

439
00:24:24,280 --> 00:24:27,160
Speaker 6: slows down in Q two from double digit to single digit,

440
00:24:27,240 --> 00:24:30,480
Speaker 6: but still its still okay. And so I think, unfortunately,

441
00:24:30,520 --> 00:24:33,120
Speaker 6: from a data standpoint, you're looking at end of summer,

442
00:24:33,160 --> 00:24:35,119
Speaker 6: if not later, to really have a handle on this,

443
00:24:35,280 --> 00:24:38,119
Speaker 6: and it'd be great to have the administration be somewhat

444
00:24:38,119 --> 00:24:40,200
Speaker 6: consistent in the communication. I think that would help a

445
00:24:40,200 --> 00:24:42,920
Speaker 6: lot and maybe give Powell the amo that he needs

446
00:24:42,960 --> 00:24:45,000
Speaker 6: to actually move. I don't think he's gonna do anything

447
00:24:45,040 --> 00:24:46,520
Speaker 6: without some stability.

448
00:24:46,000 --> 00:24:47,840
Speaker 5: Though thanks to come space.

449
00:24:47,960 --> 00:24:49,840
Speaker 4: I mean we can sit here in a two year

450
00:24:49,840 --> 00:24:51,240
Speaker 4: treasure we can get done.

451
00:24:51,040 --> 00:24:54,600
Speaker 5: Near four percent. Yeah, do your clients want to take

452
00:24:54,600 --> 00:24:57,760
Speaker 5: credit risk at this point or they are comfortable.

453
00:24:57,320 --> 00:25:00,160
Speaker 6: In the treasure mark very comfortable in treasuries where we've

454
00:25:00,160 --> 00:25:01,800
Speaker 6: seen a little more interest in the muni market, So

455
00:25:02,160 --> 00:25:05,399
Speaker 6: some dislocation there, especially in the questions around Wilson. Of

456
00:25:05,440 --> 00:25:08,359
Speaker 6: these universities maintain their tax status, so that's created a

457
00:25:08,359 --> 00:25:10,040
Speaker 6: little bit of volatility. And if you're willing to take

458
00:25:10,280 --> 00:25:13,239
Speaker 6: muni risk, which historically has very low defaults, which most

459
00:25:13,280 --> 00:25:16,240
Speaker 6: of my clients are, that somewhere would lean into high

460
00:25:16,280 --> 00:25:19,199
Speaker 6: yield not so much spread most people feel aren't wide enough.

461
00:25:19,240 --> 00:25:21,440
Speaker 6: You're not getting paid enough. And then the other part

462
00:25:21,600 --> 00:25:26,080
Speaker 6: hybrid instruments like bank preferreds. We love financials here and

463
00:25:26,240 --> 00:25:28,440
Speaker 6: bank preferreds will give you, if you're a US taxpayer,

464
00:25:28,560 --> 00:25:31,480
Speaker 6: high single digit tax equial yields, and so that makes

465
00:25:31,480 --> 00:25:33,399
Speaker 6: a lot of sense if you're not concerned about some

466
00:25:33,560 --> 00:25:34,359
Speaker 6: more large banks.

467
00:25:34,720 --> 00:25:36,760
Speaker 2: Is the lot of the sns of formula just as

468
00:25:36,760 --> 00:25:40,480
Speaker 2: simple as load the boat on Georgetown. Is that what

469
00:25:40,520 --> 00:25:41,160
Speaker 2: you're saying.

470
00:25:41,000 --> 00:25:43,080
Speaker 3: About, George.

471
00:25:41,880 --> 00:25:47,560
Speaker 6: I've not looked at their bonds lately, but perhaps some

472
00:25:47,600 --> 00:25:49,000
Speaker 6: other universities if you feel.

473
00:25:48,800 --> 00:25:50,960
Speaker 3: Comfortable with them. Yeah, and I would want to.

474
00:25:50,920 --> 00:25:53,280
Speaker 6: Diversified UNI portfolio for sure. But I have the privilege

475
00:25:53,320 --> 00:25:56,160
Speaker 6: of paying New York New York City taxes, so I'm

476
00:25:56,200 --> 00:25:57,600
Speaker 6: a big owner of meetings myself.

477
00:25:57,640 --> 00:25:59,840
Speaker 2: You're in a meeting, there's seven fancy people from J

478
00:26:00,040 --> 00:26:04,960
Speaker 2: Pete Morgan, There's you know, some elderly high networth foreign domestic.

479
00:26:05,040 --> 00:26:07,359
Speaker 2: I don't care. With the kids, it's like it's like,

480
00:26:07,480 --> 00:26:10,080
Speaker 2: what's the TV show Succession? It's like she's in the

481
00:26:10,160 --> 00:26:14,160
Speaker 2: room with the Succession. That's our clients. Were they your clients?

482
00:26:14,920 --> 00:26:16,520
Speaker 6: The characters from Succession?

483
00:26:17,359 --> 00:26:18,119
Speaker 3: The actors are not.

484
00:26:18,359 --> 00:26:20,800
Speaker 6: I would love to meet many of the very quickly here.

485
00:26:20,920 --> 00:26:23,119
Speaker 2: If they say we've loaded the boat an apple or

486
00:26:23,160 --> 00:26:26,040
Speaker 2: pick a big stock, how do you talk about us

487
00:26:26,040 --> 00:26:27,160
Speaker 2: selling the mother load.

488
00:26:27,720 --> 00:26:30,080
Speaker 6: It's a big struggle from many families they work with

489
00:26:30,160 --> 00:26:33,760
Speaker 6: now because they have massive embedded gains, and so oftentimes

490
00:26:33,800 --> 00:26:36,480
Speaker 6: the tax tail wags the dog and people don't want

491
00:26:36,480 --> 00:26:38,639
Speaker 6: to sell now. There are things you can do to

492
00:26:39,119 --> 00:26:41,560
Speaker 6: chip away over time. There were loss harvesting strategies. There

493
00:26:41,560 --> 00:26:43,760
Speaker 6: are things like exchange funds you can put a concert

494
00:26:43,880 --> 00:26:48,040
Speaker 6: position into. But I'm a big advocate of diversifying that concentration.

495
00:26:48,119 --> 00:26:50,200
Speaker 6: The constitutions are great for creating wealth, they're not great

496
00:26:50,200 --> 00:26:52,680
Speaker 6: for sustaining wealth over the long term, and so we

497
00:26:52,840 --> 00:26:55,399
Speaker 6: need to get the diversification going. It's just it can

498
00:26:55,440 --> 00:26:57,600
Speaker 6: be very difficult when someone's tethered to the stories.

499
00:26:58,200 --> 00:27:00,960
Speaker 2: Jamie from Central Parks just emails ask her if she's

500
00:27:01,000 --> 00:27:03,439
Speaker 2: taken another year off, are you taking another year off?

501
00:27:03,560 --> 00:27:05,720
Speaker 6: If Jamie's listening and he wants to offer that, I'd

502
00:27:05,760 --> 00:27:08,800
Speaker 6: be willing to to come back with perspective in a year.

503
00:27:09,040 --> 00:27:11,879
Speaker 2: Thanks you so much. Monica Descenzo on a beach somewhere

504
00:27:12,400 --> 00:27:15,080
Speaker 2: here in the coming month. She is with JP Morgan.

505
00:27:15,600 --> 00:27:19,479
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

506
00:27:19,520 --> 00:27:22,560
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

507
00:27:22,600 --> 00:27:25,600
Speaker 1: Auto with the Bloomberg Business app. You can also listen

508
00:27:25,720 --> 00:27:28,920
Speaker 1: live on Amazon Alexa from our flagship New York station,

509
00:27:29,520 --> 00:27:32,120
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.

510
00:27:32,280 --> 00:27:35,160
Speaker 2: Henrietta Trace joins in sentw in studio. We could talk

511
00:27:35,200 --> 00:27:39,359
Speaker 2: here for hours and hours. Richard Hass yesterday was heated

512
00:27:40,000 --> 00:27:44,639
Speaker 2: that the legislative branch, Capitol Hill, you're expert, has given

513
00:27:44,680 --> 00:27:48,919
Speaker 2: away the right to declare award after years and years

514
00:27:49,119 --> 00:27:53,560
Speaker 2: and years and years with this action, it's over the

515
00:27:53,680 --> 00:27:55,920
Speaker 2: president handles the Pentagon.

516
00:27:56,720 --> 00:27:59,920
Speaker 7: Yeah, it's absolutely true. And you know, Leadershoomer's gonna file

517
00:28:00,000 --> 00:28:03,359
Speaker 7: War Powers resolution. They'll vote on that on Wednesday. But

518
00:28:03,520 --> 00:28:06,160
Speaker 7: this is a very partisan situation. I'd say like eighty

519
00:28:06,280 --> 00:28:08,800
Speaker 7: five to even ninety percent of the Republican conference is

520
00:28:08,920 --> 00:28:11,520
Speaker 7: very much behind the President making the choices that he made,

521
00:28:11,560 --> 00:28:13,119
Speaker 7: and so they're not they just don't have the votes

522
00:28:13,400 --> 00:28:15,840
Speaker 7: to force the issue. But absolutely, and I think Brand

523
00:28:15,840 --> 00:28:17,439
Speaker 7: Paul would very much agree with that sentiment.

524
00:28:18,080 --> 00:28:21,159
Speaker 4: Where do we go here on the domestic stuff, the

525
00:28:21,280 --> 00:28:23,359
Speaker 4: one big beautiful bill?

526
00:28:23,800 --> 00:28:25,080
Speaker 5: Where are we with that right now?

527
00:28:25,320 --> 00:28:28,080
Speaker 7: Yeah, we are in a much tougher place than I

528
00:28:28,160 --> 00:28:30,560
Speaker 7: think it appears from the outside. I was with some

529
00:28:30,920 --> 00:28:34,720
Speaker 7: Republican Senate folks last night and talk to them constantly, obviously,

530
00:28:35,200 --> 00:28:38,320
Speaker 7: and I think that underneath the surface they are paddling

531
00:28:38,480 --> 00:28:41,240
Speaker 7: very furiously. I increase my odds from twenty percent to

532
00:28:41,320 --> 00:28:43,160
Speaker 7: forty percent that they could get this done by the

533
00:28:43,200 --> 00:28:46,520
Speaker 7: fourth of July, really, but that's mostly because there they

534
00:28:46,600 --> 00:28:51,520
Speaker 7: have the advantage of these crises, Launching weapons in Iran,

535
00:28:51,920 --> 00:28:54,560
Speaker 7: deploying the National Guard out to California. That all helps

536
00:28:54,680 --> 00:28:59,600
Speaker 7: advance the narrative around the immigration spending and the military spending.

537
00:29:00,000 --> 00:29:03,719
Speaker 7: The tax package itself, the medicaid cuts are very problematic,

538
00:29:04,040 --> 00:29:06,280
Speaker 7: and what the American public does know about this bill,

539
00:29:06,360 --> 00:29:09,240
Speaker 7: they don't like. It's got a sixty seven percent disapproval

540
00:29:09,320 --> 00:29:11,760
Speaker 7: rating on the healthcare side, and it's seventy one percent

541
00:29:11,800 --> 00:29:15,320
Speaker 7: disapproval rating from independent voters generally nationwide. So they need

542
00:29:15,360 --> 00:29:17,880
Speaker 7: to jam it through. That can grease the wheels, But

543
00:29:17,960 --> 00:29:19,880
Speaker 7: there's a lot of details to iron.

544
00:29:19,720 --> 00:29:22,160
Speaker 4: Out, all right, Just I don't know how to put this.

545
00:29:22,520 --> 00:29:25,480
Speaker 4: Where's the Republican Party, I guess just in general? Where's

546
00:29:25,840 --> 00:29:28,640
Speaker 4: the Democratic Party? I'm sorry, where's the Democratic Party in general?

547
00:29:28,680 --> 00:29:30,840
Speaker 5: And maybe as it relates to this legislation.

548
00:29:30,800 --> 00:29:34,320
Speaker 7: The Democratic Party is not even remotely keeping up with

549
00:29:34,520 --> 00:29:37,560
Speaker 7: the pace of the conversation, especially around this. Yeah, not

550
00:29:37,680 --> 00:29:41,200
Speaker 7: at all. They're not even on target on an hourly basis,

551
00:29:41,280 --> 00:29:44,120
Speaker 7: let alone a daily basis, and I think that that's

552
00:29:44,280 --> 00:29:45,120
Speaker 7: really a part of the problem.

553
00:29:45,240 --> 00:29:46,800
Speaker 2: Can let's just cut to the chase. We have an

554
00:29:46,800 --> 00:29:49,719
Speaker 2: election going on this morning in New York. We'll get

555
00:29:49,760 --> 00:29:52,440
Speaker 2: Henrietta Trece's view on that in a moment. She's the

556
00:29:52,480 --> 00:29:55,200
Speaker 2: only one I know who understands ring choice voting except

557
00:29:55,240 --> 00:30:00,640
Speaker 2: Gina Cervetti and Robert Brockton. What's so important your is

558
00:30:00,720 --> 00:30:04,000
Speaker 2: hockeing Jeffries seems to be where everybody goes to. Isn't

559
00:30:04,040 --> 00:30:05,760
Speaker 2: he supposed to be visible.

560
00:30:05,480 --> 00:30:08,960
Speaker 7: And vocal, so much more visible and vocal than where

561
00:30:09,000 --> 00:30:12,240
Speaker 7: he is right now? And they're nowhere in terms of

562
00:30:12,440 --> 00:30:14,640
Speaker 7: getting a discussion about what's in this bill. The bill

563
00:30:14,720 --> 00:30:18,720
Speaker 7: is unpopular. Go talk about the unpopular stuff on every mediac.

564
00:30:18,560 --> 00:30:22,240
Speaker 2: But you're in that chair fourteen at the Capitol girl

565
00:30:22,320 --> 00:30:27,440
Speaker 2: in Washington, you live there. Why Why for Republicans and

566
00:30:27,520 --> 00:30:33,280
Speaker 2: Democrats listening, Why is mister Jeffries, who everyone considers articulate silent?

567
00:30:33,960 --> 00:30:36,360
Speaker 7: I think he can't break through and keep up with

568
00:30:36,480 --> 00:30:39,040
Speaker 7: the cycle, is really what I've seen. I don't understand

569
00:30:39,040 --> 00:30:41,000
Speaker 7: why they're not on tariffs all day, every day. If

570
00:30:41,040 --> 00:30:43,560
Speaker 7: you're making the price of a can of beer more expensive,

571
00:30:43,760 --> 00:30:45,480
Speaker 7: talk about it all day long, talk about it going

572
00:30:45,480 --> 00:30:48,840
Speaker 7: into the fourth of July Memorial Day. They're nowhere on tariffs,

573
00:30:49,600 --> 00:30:52,360
Speaker 7: they're nowhere on this War Powers resolution. They don't even

574
00:30:52,400 --> 00:30:54,760
Speaker 7: have a unanimous front there. They're expecting maybe one hundred

575
00:30:54,760 --> 00:30:57,000
Speaker 7: and ninety Democrats to sign on to the War Powers

576
00:30:57,040 --> 00:30:59,040
Speaker 7: Resolution bill in the House, but they're not going to

577
00:30:59,080 --> 00:31:04,400
Speaker 7: be comprehensive, and the pushback to this Senate bill is

578
00:31:04,720 --> 00:31:08,080
Speaker 7: not nearly as forceful or detailed or even talking about

579
00:31:08,080 --> 00:31:10,360
Speaker 7: the medicaid stuff, I think they're relying on the institutional

580
00:31:10,440 --> 00:31:13,760
Speaker 7: knowledge of the American voter to rail against medicaid cuts,

581
00:31:13,840 --> 00:31:16,400
Speaker 7: which the American voter can do very quickly. But I

582
00:31:16,440 --> 00:31:18,240
Speaker 7: don't think Democrats are advancing the narrative.

583
00:31:18,480 --> 00:31:19,640
Speaker 5: So do you believe?

584
00:31:20,040 --> 00:31:20,080
Speaker 2: So?

585
00:31:20,200 --> 00:31:22,040
Speaker 4: We have just explained to us of the timing here.

586
00:31:22,320 --> 00:31:24,680
Speaker 4: We're going to get July fourth, is what date? And

587
00:31:24,760 --> 00:31:26,120
Speaker 4: then what do we do after July fourth?

588
00:31:26,440 --> 00:31:29,680
Speaker 7: July fourth is meaningless. July fourth is a manufactured feel

589
00:31:29,760 --> 00:31:32,840
Speaker 7: good story. It doesn't do anything. The only deadline that

590
00:31:33,000 --> 00:31:35,680
Speaker 7: is real, and I just heard Kevin McCarthy say this

591
00:31:35,880 --> 00:31:38,320
Speaker 7: is the debt ceiling deadline, and that is, of course

592
00:31:38,400 --> 00:31:40,960
Speaker 7: exactly correct. The debt ceiling breach is going to happen

593
00:31:41,040 --> 00:31:42,840
Speaker 7: in mid August. They don't need to pass this bill

594
00:31:42,880 --> 00:31:45,120
Speaker 7: until they're ready to leave for the August vacasion, so

595
00:31:45,440 --> 00:31:46,120
Speaker 7: they've got time.

596
00:31:46,600 --> 00:31:49,760
Speaker 2: Matt from large amount emails and it says, okay, salt

597
00:31:50,040 --> 00:31:52,920
Speaker 2: I think is back to forty thousand, but with a

598
00:31:53,040 --> 00:31:56,200
Speaker 2: lower income hurdle or something are we going to get

599
00:31:57,200 --> 00:32:00,520
Speaker 2: Would you explain, for Matt and for me, why does

600
00:32:00,600 --> 00:32:05,800
Speaker 2: Oklahoma salt in New York or New Jersey or California

601
00:32:06,400 --> 00:32:07,440
Speaker 2: needs to be adjusted?

602
00:32:07,720 --> 00:32:08,120
Speaker 3: They don't.

603
00:32:08,360 --> 00:32:10,800
Speaker 7: They absolutely do not. West Virginia for sure doesn't care.

604
00:32:11,560 --> 00:32:13,720
Speaker 7: And we've heard all the senators from those states say

605
00:32:13,760 --> 00:32:17,720
Speaker 7: that for years now. The reality on this bill is

606
00:32:17,760 --> 00:32:20,520
Speaker 7: that the senators have about a trillion dollars that they

607
00:32:20,600 --> 00:32:22,880
Speaker 7: can throw at various problems. We have a lot of

608
00:32:23,040 --> 00:32:25,160
Speaker 7: big problems. There's one hundred and twenty two billion dollars

609
00:32:25,200 --> 00:32:28,000
Speaker 7: they got stripped out of the snap cuts that the

610
00:32:28,040 --> 00:32:31,080
Speaker 7: parliamentarium won't allow. We have to fix the salt cap

611
00:32:31,160 --> 00:32:34,040
Speaker 7: more than ten k. It needs to stay probably at

612
00:32:34,080 --> 00:32:36,840
Speaker 7: forty K, but drop down to three hundred thousand dollars

613
00:32:36,920 --> 00:32:40,160
Speaker 7: in an income bracket, which is extremely expensive. Salt alone

614
00:32:40,240 --> 00:32:42,320
Speaker 7: is a one point two trillion dollar revenue raiser. We

615
00:32:42,440 --> 00:32:45,040
Speaker 7: need to extend more money on the IRA and get

616
00:32:45,080 --> 00:32:47,320
Speaker 7: some of these Medicaid cuts out so I can spend

617
00:32:47,360 --> 00:32:49,960
Speaker 7: a trillion dollars real fast, and that's what they need

618
00:32:50,000 --> 00:32:53,120
Speaker 7: to do. But even now in July fourth, so it.

619
00:32:53,120 --> 00:32:56,080
Speaker 4: Looks like the Republicans do they have the run of Washington.

620
00:32:56,160 --> 00:32:58,760
Speaker 4: It just feels like obviously they have the majorities, but

621
00:32:59,080 --> 00:32:59,880
Speaker 4: slim majorities.

622
00:33:00,000 --> 00:33:02,400
Speaker 5: But it feels not that slim. It feels like they

623
00:33:02,400 --> 00:33:04,200
Speaker 5: can get pretty much anything they want here.

624
00:33:04,480 --> 00:33:07,080
Speaker 4: And that's good for policy maybe if you want to

625
00:33:07,120 --> 00:33:09,440
Speaker 4: get stuff done, But is that kind of where we are?

626
00:33:09,440 --> 00:33:12,160
Speaker 7: Absolutely this is the Trump effect. So when you look

627
00:33:12,200 --> 00:33:14,120
Speaker 7: at the details of this bill and to get even

628
00:33:14,160 --> 00:33:16,920
Speaker 7: more granular, the reason Lisa Murkowski of Alaska is out

629
00:33:16,960 --> 00:33:19,640
Speaker 7: right now talking about maybe not supporting this bill is

630
00:33:19,680 --> 00:33:23,080
Speaker 7: because thirty five percent of Medicaid recipients in Alaska will

631
00:33:23,160 --> 00:33:25,760
Speaker 7: lose their coverage with this package. Dan Sullivan is up

632
00:33:25,800 --> 00:33:28,640
Speaker 7: for reelection this cycle, so there are members who are

633
00:33:28,680 --> 00:33:32,040
Speaker 7: taking a lot of heat from the members who are

634
00:33:32,080 --> 00:33:32,480
Speaker 7: at risk.

635
00:33:32,600 --> 00:33:35,680
Speaker 2: So give us a vignette, Henri, to your expert this. Unfortunately,

636
00:33:35,880 --> 00:33:39,640
Speaker 2: we're near out of time a given congress person in

637
00:33:39,800 --> 00:33:43,160
Speaker 2: a room or over lunch like in the movies, Redford's

638
00:33:43,160 --> 00:33:46,800
Speaker 2: there the rest of them do they just say this

639
00:33:47,000 --> 00:33:49,760
Speaker 2: is all that matters to me. If I don't get this,

640
00:33:50,040 --> 00:33:53,160
Speaker 2: I won't vote for the bill. Does that Hollywood drama happen?

641
00:33:53,480 --> 00:33:55,080
Speaker 7: Some of the members are like that. Ran Paul is

642
00:33:55,160 --> 00:33:57,000
Speaker 7: like that, he's a no go just because the debt ceiling.

643
00:33:57,320 --> 00:34:00,360
Speaker 7: But what really happens in these caucus lunches is members

644
00:34:00,400 --> 00:34:02,720
Speaker 7: will get much more vocal towards the end of the process.

645
00:34:02,800 --> 00:34:05,320
Speaker 7: So last night Tom Tillis of North Carolina, who's in

646
00:34:05,360 --> 00:34:09,280
Speaker 7: a tough race, Yeah, with a piece of paper showing

647
00:34:09,400 --> 00:34:11,600
Speaker 7: the top ten states who are going to lose Medicare coverage,

648
00:34:11,760 --> 00:34:14,239
Speaker 7: Medicaid coverage. He's going to lose six hundred thousand people

649
00:34:14,320 --> 00:34:16,680
Speaker 7: just in North Carolina. So members will go to the

650
00:34:16,760 --> 00:34:20,040
Speaker 7: mat for their individual issues. The Trump effect also is

651
00:34:20,120 --> 00:34:22,440
Speaker 7: such that they're trying to keep members from speaking out

652
00:34:22,480 --> 00:34:25,319
Speaker 7: publicly about their concerns. If you have a problem, goes

653
00:34:25,360 --> 00:34:27,600
Speaker 7: straight to the President, goes straight to Leader thun And

654
00:34:27,760 --> 00:34:32,759
Speaker 7: that keeps the expectation or the negative vibe, if you will, down.

655
00:34:33,040 --> 00:34:35,480
Speaker 7: But it is very much alive in these caucus meetings,

656
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Speaker 7: especially right now.

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Speaker 5: Who's driving the bus here in Congress?

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00:34:39,719 --> 00:34:39,880
Speaker 2: Is it?

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Speaker 5: I mean, who's pushing all this through?

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Speaker 7: Leader Thun is doing a lot of heavy lifting on

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Speaker 7: the set side with Lindsay Graham.

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Speaker 2: Is the President near in the vicinity like the Red

663
00:34:51,680 --> 00:34:54,000
Speaker 2: Sox or a lame duck? Okay, they're playing five hundred

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Speaker 2: ball again? Is the President near a lame duck?

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Speaker 7: I think the reason he floats the idea of running

666
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Speaker 7: a third term is because he doesn't want anybody to

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Speaker 7: talk about him being a lame duck. Indeed, I also

668
00:35:03,680 --> 00:35:06,120
Speaker 7: heard that straight from the former speaker, So I think

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Speaker 7: he is presenting as though he will run again and

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Speaker 7: allowing that confusion to list so that there won't be

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Speaker 7: a shadow presidency.

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Speaker 2: Do you know that New Orleans is seven degrees cooler

673
00:35:15,520 --> 00:35:16,799
Speaker 2: than New York City? Right now?

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Speaker 3: Come on down, Henrietta Treys, thank.

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00:35:21,000 --> 00:35:24,240
Speaker 2: You so much. With Vada Partner's just a hugely popular

676
00:35:24,680 --> 00:35:29,080
Speaker 2: value add for the machinery of the Washington we're within.

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00:35:35,080 --> 00:35:38,960
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

678
00:35:39,000 --> 00:35:42,040
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

679
00:35:42,080 --> 00:35:45,040
Speaker 1: Auto with the Bloomberg Business app. You can also watch

680
00:35:45,120 --> 00:35:48,040
Speaker 1: us live every weekday on YouTube and always on the

681
00:35:48,120 --> 00:35:49,160
Speaker 1: Bloomberg terminal.

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00:35:49,360 --> 00:35:53,320
Speaker 2: If you look at Emily Kilcreasee's bag collection, it's unbelievable.

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00:35:53,520 --> 00:35:56,600
Speaker 2: She's never had an introduction like that joining us now

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00:35:57,000 --> 00:35:59,439
Speaker 2: this is the conversation today for those of you coast

685
00:35:59,480 --> 00:36:04,400
Speaker 2: to coast looking at tariffs and trade. Emily kilcrease is

686
00:36:04,920 --> 00:36:10,120
Speaker 2: earned ability within our trade, our thinking of international affairs

687
00:36:10,200 --> 00:36:13,799
Speaker 2: with the National Security Council and working with mister Litthheiser

688
00:36:14,360 --> 00:36:16,440
Speaker 2: a few years ago. Emily, thank you so much for

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00:36:16,560 --> 00:36:21,960
Speaker 2: joining Bloomberg Surveillance. How different is the day to day

690
00:36:22,120 --> 00:36:27,080
Speaker 2: trade tariff grind of Trump II versus Trump one, which

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00:36:27,160 --> 00:36:27,640
Speaker 2: you lived.

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00:36:29,239 --> 00:36:32,640
Speaker 8: It's a great question. The trade space is fundamentally different

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00:36:32,840 --> 00:36:36,680
Speaker 8: under the second Trump administration. He came into this term

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00:36:36,880 --> 00:36:39,719
Speaker 8: willing to use tariffs at a scale we've just never

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00:36:39,840 --> 00:36:43,120
Speaker 8: seen before in the era of a globalized economy. He

696
00:36:43,239 --> 00:36:46,000
Speaker 8: used them faster, he used them harder, and on both

697
00:36:46,080 --> 00:36:49,920
Speaker 8: strategic competitors like China as well as on close US allies.

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00:36:50,160 --> 00:36:54,239
Speaker 8: So the goals of his tariff program have changed substantially,

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00:36:54,320 --> 00:36:56,960
Speaker 8: and the candidly the chaos that we've seen in some

700
00:36:57,080 --> 00:36:59,239
Speaker 8: of his trade policy is just much different than what

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00:36:59,360 --> 00:37:00,360
Speaker 8: we saw the first time around.

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00:37:00,520 --> 00:37:04,680
Speaker 2: You lived Lightheiser's book, No Trade Is Free. He came

703
00:37:04,760 --> 00:37:08,560
Speaker 2: out of a desperate northeastern Ohio and said, we need

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00:37:08,640 --> 00:37:12,640
Speaker 2: to fix the system. What ice Emily killcrease is just simple.

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00:37:13,080 --> 00:37:17,080
Speaker 2: It's a question of magnitude. Can this nation survive even

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00:37:17,120 --> 00:37:21,359
Speaker 2: a blended seventeen percent tariff? Isn't that beyond Lightheiser.

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00:37:23,040 --> 00:37:24,000
Speaker 6: It's a good point.

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Speaker 8: You know, tariffs do have a role in addressing unfair

709
00:37:27,280 --> 00:37:31,280
Speaker 8: trade practices that we've seen from other countries, mostly China. Clearly,

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00:37:31,360 --> 00:37:34,080
Speaker 8: Investor Lightheiser and President Trump have been focused on that

711
00:37:34,680 --> 00:37:38,000
Speaker 8: they can have a role in protecting critical industries. But

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00:37:38,120 --> 00:37:40,680
Speaker 8: the question that you've identified is can we use tariffs

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00:37:41,080 --> 00:37:43,520
Speaker 8: at high levels for all of the different goals that

714
00:37:43,560 --> 00:37:46,279
Speaker 8: the Trump administration is now trying to use them for.

715
00:37:46,680 --> 00:37:48,880
Speaker 8: Can we use tariffs to generate revenue? Can we use

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00:37:48,960 --> 00:37:51,239
Speaker 8: them to fix trade deficits? Can we use them to

717
00:37:51,840 --> 00:37:55,200
Speaker 8: combat unfair trade practices? When you add all of that up,

718
00:37:55,560 --> 00:37:58,040
Speaker 8: you do end up with a very high tariff rate

719
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Speaker 8: that could have some serious consequences for the US economy,

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00:38:01,160 --> 00:38:04,080
Speaker 8: for US productivity and ultimately for the US workers that

721
00:38:04,160 --> 00:38:06,680
Speaker 8: the Trump administration is trying to help. So it's a

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00:38:06,760 --> 00:38:09,920
Speaker 8: really big risk. It's a big experiment, and there are

723
00:38:10,080 --> 00:38:12,480
Speaker 8: certainly very good reasons to think that it might not

724
00:38:12,640 --> 00:38:14,719
Speaker 8: work out the way that the Trump administration wants it

725
00:38:14,800 --> 00:38:18,040
Speaker 8: to if you do have a tariff wall that exceeds

726
00:38:18,239 --> 00:38:19,279
Speaker 8: twenty percent or more.

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Speaker 4: Emily, I think the premise for President Trump and his

728
00:38:23,960 --> 00:38:27,480
Speaker 4: economic supporters and his policies is that somehow the United

729
00:38:27,520 --> 00:38:30,040
Speaker 4: States is at some disadvantage or is not treated fairly

730
00:38:30,120 --> 00:38:31,440
Speaker 4: by some of.

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Speaker 5: Its trading partners.

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00:38:32,400 --> 00:38:35,000
Speaker 4: But others would pushed back and say, hey, since World

733
00:38:35,080 --> 00:38:39,279
Speaker 4: War Two, no one has benefited better or greater than

734
00:38:39,360 --> 00:38:41,320
Speaker 4: the United States from free global trade.

735
00:38:43,120 --> 00:38:44,640
Speaker 5: How do you think we should think about that?

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Speaker 8: So there is a small bit of truth in what

737
00:38:48,640 --> 00:38:52,160
Speaker 8: the Trump administration is saying, what the President is criticizing

738
00:38:52,280 --> 00:38:55,320
Speaker 8: in terms of how our trading system works today, we

739
00:38:55,480 --> 00:38:58,440
Speaker 8: have a trading system that treats China the way it

740
00:38:58,520 --> 00:39:01,320
Speaker 8: treats everybody else. Are you politically that doesn't make a

741
00:39:01,360 --> 00:39:04,400
Speaker 8: lot of sense anymore. We also know that it's been

742
00:39:04,480 --> 00:39:07,720
Speaker 8: really hard to get even some of our closer trading partners,

743
00:39:07,840 --> 00:39:11,520
Speaker 8: like Europe to address long standing trade irritance in the relationship.

744
00:39:11,600 --> 00:39:14,279
Speaker 8: Trade is hard, it's hard to get other economies to

745
00:39:14,480 --> 00:39:18,000
Speaker 8: fix regulations, fixed barriers to trade sometimes. So it's not

746
00:39:18,200 --> 00:39:21,000
Speaker 8: that the Trump administration is completely wrong. It's a question

747
00:39:21,239 --> 00:39:24,440
Speaker 8: of whether their approach to fixing these problems is actually

748
00:39:24,480 --> 00:39:25,640
Speaker 8: going to have the effect they wanted to.

749
00:39:25,920 --> 00:39:31,040
Speaker 2: Emily Gilchrist, your essay in Foreign Affairs is blistering, and

750
00:39:31,239 --> 00:39:34,239
Speaker 2: there has to be a change here in process. Is

751
00:39:34,320 --> 00:39:37,000
Speaker 2: a change here to go from Trump and deal making

752
00:39:37,600 --> 00:39:40,359
Speaker 2: back to a diplomacy of say the Uruguay round.

753
00:39:42,400 --> 00:39:44,520
Speaker 8: So I don't think there's going back, right. I don't

754
00:39:44,520 --> 00:39:47,880
Speaker 8: think there's going back to a wto led system. I

755
00:39:47,960 --> 00:39:50,560
Speaker 8: don't think there's going back even to kind of a

756
00:39:50,680 --> 00:39:53,640
Speaker 8: more mild approach that we saw on the first Trump administration.

757
00:39:54,239 --> 00:39:56,319
Speaker 8: The point that I make in the essay in Foreign

758
00:39:56,320 --> 00:39:58,920
Speaker 8: Affairs with my co author Jeff Gertz is really one

759
00:39:58,920 --> 00:40:01,640
Speaker 8: about US credibility, and that's where we argue that the

760
00:40:01,800 --> 00:40:05,120
Speaker 8: US and particularly the Trump administration needs to show that

761
00:40:05,360 --> 00:40:07,920
Speaker 8: not only is it going to threaten tariffs, that it

762
00:40:08,000 --> 00:40:11,720
Speaker 8: can credibly commit to not impose tariffs if our trading

763
00:40:11,800 --> 00:40:13,200
Speaker 8: partners do what we ask them.

764
00:40:13,280 --> 00:40:13,560
Speaker 7: To do.

765
00:40:14,520 --> 00:40:16,880
Speaker 8: So far, we haven't seen that. We've seen continued threats

766
00:40:16,880 --> 00:40:19,480
Speaker 8: of tariffs. We've seen continued back and forth on again,

767
00:40:19,560 --> 00:40:23,000
Speaker 8: off again terror proposals that really hurts the US ability

768
00:40:23,080 --> 00:40:26,080
Speaker 8: to kind of usher the economic order into a better,

769
00:40:26,160 --> 00:40:28,360
Speaker 8: more sustainable state, and in many ways it's undermining the

770
00:40:28,360 --> 00:40:29,680
Speaker 8: Trump administration's own goals.

771
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Speaker 2: Emily, thank you so much, and I'll get the essay

772
00:40:32,200 --> 00:40:35,800
Speaker 2: out from Foreign Affairs. Very valuable, short suite and really

773
00:40:35,960 --> 00:40:40,279
Speaker 2: thought provoking on this new regime of terrors. Emily killed

774
00:40:40,360 --> 00:40:44,439
Speaker 2: Crease joins us this morning off the Foreign Affairs Essay.

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00:40:44,960 --> 00:40:49,759
Speaker 1: This is the Bloomberg Surveillance podcast, available on apples, Spotify,

776
00:40:49,920 --> 00:40:54,160
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

777
00:40:54,360 --> 00:40:57,279
Speaker 1: seven to ten am Easter and on Bloomberg dot Com,

778
00:40:57,719 --> 00:41:01,480
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

779
00:41:01,840 --> 00:41:04,920
Speaker 1: You can also watch us live every weekday on YouTube

780
00:41:05,239 --> 00:41:07,200
Speaker 1: and always on the Bloomberg terminal