WEBVTT - Bloomberg Surveillance TV: April 30, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.559 Terminal and the Bloomberg Business App. Max Kenter of HSBC 0:00:37.880 --> 0:00:40.400 is sticking with this. We remain tactically risk off and 0:00:40.400 --> 0:00:42.680 stick to our underway stance on the US, but buying 0:00:42.720 --> 0:00:47.120 opportunities should come soon enough. Max Kenner of HSBC joined 0:00:47.159 --> 0:00:49.040 us now for more. Max, Welcome to the program sir. 0:00:49.240 --> 0:00:51.160 You put out a note in the last week why 0:00:51.320 --> 0:00:55.000 washing machines matter? Let's start there, Why a washing machines matter? 0:00:55.120 --> 0:00:55.400 Max? 0:00:57.360 --> 0:00:59.880 Yeah, Number one, it was obviously a bit of clickbaiting. 0:01:00.640 --> 0:01:03.480 Unpleased to see that it worked with you, John, that's 0:01:03.600 --> 0:01:06.880 very good. But number two, it actually was there was 0:01:06.880 --> 0:01:10.360 some truth to that, actually and some sort of underlying 0:01:10.959 --> 0:01:12.600 reason why we looked at it because when we looked 0:01:12.600 --> 0:01:15.440 at the washing machine tariffs in twenty sixteen and twenty eighteen, 0:01:15.800 --> 0:01:17.600 in fact, we've seen quite a bit of sort of 0:01:17.720 --> 0:01:20.880 textbook like behavior what we would expect with tariffs. In 0:01:20.920 --> 0:01:24.440 twenty sixteen, when we had the anti dumping order on China, 0:01:24.520 --> 0:01:27.720 for example, the overall imputs of washing machines to the 0:01:27.760 --> 0:01:31.080 US didn't really change. It was only the imports from 0:01:31.160 --> 0:01:33.960 China that dipped, but worldwide inputs actually, you know, they 0:01:34.000 --> 0:01:37.039 were pretty stable, so we saw the classic substitution effect. 0:01:37.200 --> 0:01:39.840 There was also no effect on prices. That only came 0:01:39.880 --> 0:01:42.840 in twenty eighteen when we saw the global tariffs on 0:01:42.959 --> 0:01:45.840 washing machines slapped on, and what you saw in advance 0:01:45.920 --> 0:01:48.520 for that a couple months before that activity went up, 0:01:48.520 --> 0:01:51.280 we saw this classic sort of front loading that people 0:01:51.320 --> 0:01:54.160 are also talking about right now, some people really rushing 0:01:54.200 --> 0:01:57.360 to buy those washing machines, and then imputs really nosedived 0:01:57.880 --> 0:02:01.360 into into those worldwide tariffs. And the same happened with 0:02:01.440 --> 0:02:05.080 laundry equipment CPI. So with prices on washing machines, they've 0:02:05.120 --> 0:02:07.640 actually went up by ten and a half percent straight 0:02:07.720 --> 0:02:10.920 after those tariffs were slapped on in February twenty eighteen. 0:02:11.160 --> 0:02:14.280 So the parallel that we were drawing really this. I 0:02:14.280 --> 0:02:17.520 think people are a little bit too relaxed now in saying, well, 0:02:17.560 --> 0:02:20.359 you know what, the next couple of quarters, maybe consumers 0:02:20.760 --> 0:02:22.760 are going to dial back spending a bit, and maybe 0:02:22.760 --> 0:02:25.480 we're going to feel a little bit on spending and 0:02:25.560 --> 0:02:29.160 on capis. Whereas I do really fear that in the 0:02:29.200 --> 0:02:31.919 next month and two, so in May and June, we're 0:02:31.960 --> 0:02:35.960 already going to start to see some really really disappointing 0:02:36.040 --> 0:02:39.840 heart data. And because the narrative at the moment is 0:02:39.919 --> 0:02:43.280 so entrenched in the sense that it's only a slowdown, 0:02:43.440 --> 0:02:46.000 it's not a recession. Don't worry, it's just to soften 0:02:46.040 --> 0:02:49.960 the survey data because of that really really widespread narrative. 0:02:50.480 --> 0:02:52.680 In fact, I really do fear that a couple of 0:02:52.720 --> 0:02:55.560 heart data points are already a couple of disappointing heart 0:02:55.639 --> 0:02:58.040 data points are already enough to really drive us a 0:02:58.120 --> 0:02:59.120 leg low and risk assets. 0:02:59.160 --> 0:02:59.880 Well, ma's respecting. 0:03:00.080 --> 0:03:02.480 See it this morning at eight thirty Eastern time and GDP, 0:03:02.600 --> 0:03:05.560 but that's just a massive GDP with front loaded imports. 0:03:05.639 --> 0:03:07.200 You're going to see that show up. You might get 0:03:07.200 --> 0:03:09.320 a negative print max. When you say it was sharp 0:03:09.320 --> 0:03:10.960 and hard data, which hard data? 0:03:11.040 --> 0:03:15.880 When? And why? Look, that's that's exactly the point. 0:03:16.040 --> 0:03:18.359 A two months ago, I could have argued, well, it's 0:03:18.400 --> 0:03:21.000 mostly consumer sentiments, right, It's only the soft data and 0:03:21.040 --> 0:03:23.640 the consumer sentiment side, So let's watch that kind of data. 0:03:23.680 --> 0:03:26.560 But now you've got labor market conditions down, right, So 0:03:26.600 --> 0:03:30.320 some of the surveys pointing to lower, maybe even negative 0:03:30.360 --> 0:03:32.920 payroll prints. In the next couple of months, you've got 0:03:32.919 --> 0:03:36.160 CEO confidence down, KAPEX intentions down, whether you look at 0:03:36.200 --> 0:03:38.120 regional FED surveys, you look at PMS, you look at 0:03:38.160 --> 0:03:41.080 small business sentiment. So, in fact, at the moment, I 0:03:41.080 --> 0:03:44.240 think it is way too widespread to say, well, let's 0:03:44.280 --> 0:03:46.880 just dismiss it as soft data weakness. In fact, now 0:03:47.000 --> 0:03:49.280 it's so broad based that I'm looking at the heart data. 0:03:49.320 --> 0:03:51.480 I'm like, I don't really care. I'm not looking only 0:03:51.520 --> 0:03:54.160 at consumer spending now. It could come from anywhere. It 0:03:54.200 --> 0:03:56.720 could be ADP today, it could be GDP today as well. 0:03:56.880 --> 0:03:59.600 Little let's face it, John, today, the GDP data, even 0:03:59.640 --> 0:04:02.040 if it is positive, even if that is the case, 0:04:02.360 --> 0:04:04.960 look consent to are saying consumer spending is going to 0:04:05.000 --> 0:04:07.800 go down from four percent and Q four to one 0:04:07.800 --> 0:04:11.520 point two and Q one in a quarter where most 0:04:11.600 --> 0:04:14.800 likely consumers have actually front loaded activity, and still consumer 0:04:14.840 --> 0:04:17.760 spending is expected to be only a touch above one percent. 0:04:18.040 --> 0:04:19.840 That's not good at all. So to me, it's not 0:04:19.920 --> 0:04:22.120 just consumer spending. It could come from consumers from the 0:04:22.120 --> 0:04:24.360 consumer site, could be on the labor market side, could 0:04:24.360 --> 0:04:27.080 be jobless claims during the summer, right, some sort of 0:04:27.120 --> 0:04:30.240 residual seasonality that we've seen also plan out in twenty 0:04:30.240 --> 0:04:32.840 twenty three and last year, remember the PSALM rule then 0:04:32.880 --> 0:04:35.160 in August, but the market played that already in June 0:04:35.160 --> 0:04:37.159 and July, the sort of the cracks in the labor market. 0:04:37.440 --> 0:04:40.560 So we could genuinely see it from actually a broad 0:04:40.680 --> 0:04:43.520 range of heart data, not just well, I'm looking at 0:04:43.520 --> 0:04:45.880 retail sales and if they don't disappoint then my view 0:04:45.920 --> 0:04:46.159 is wrong. 0:04:46.279 --> 0:04:48.559 No, it's much much more widespread now. Max. 0:04:48.600 --> 0:04:50.560 I've just struck by the fact that three months ago 0:04:50.600 --> 0:04:53.960 you were talking goldilocks and steroids and US exceptionalism nirvana, 0:04:54.000 --> 0:04:55.719 and that was basically the story, and you weren't going 0:04:55.760 --> 0:04:57.280 to fight it, and all of a sudden, your Max 0:04:57.400 --> 0:05:00.280 underweight the United States and you're looking at China as 0:05:00.320 --> 0:05:03.880 a place to really overweight in a significant way. How 0:05:03.960 --> 0:05:06.520 much of a decline would you need to see before 0:05:06.600 --> 0:05:09.400 those buying opportunities start to emerge. 0:05:09.680 --> 0:05:13.919 Yeah, so some of our fundamental models, the different or 0:05:13.960 --> 0:05:16.960 the gap between those fundamentals what we're seeing what's being 0:05:17.000 --> 0:05:21.560 priced in in terms of growth expectations top down growth expectations, 0:05:21.920 --> 0:05:24.960 and what's priced into the equity market. Think globally cyclicals 0:05:25.000 --> 0:05:28.560 over defensives. That gap is around nine percentage points, So 0:05:28.640 --> 0:05:30.600 that really needs to be close. I don't think it 0:05:30.640 --> 0:05:33.880 is enough if we're seeing things like Microsoft or Amazon 0:05:34.000 --> 0:05:37.520 or some of the mag seven disappointing and that then 0:05:37.640 --> 0:05:39.039 driving the equity market down. 0:05:39.160 --> 0:05:40.880 No, it is, in fact, really. 0:05:40.800 --> 0:05:44.320 Particularly the cyclicals globally that are holding up to well, 0:05:44.320 --> 0:05:46.279 and particularly also in the US. I think, you know, 0:05:46.320 --> 0:05:48.800 you look at the US, things like consumer cyclicals, but 0:05:48.839 --> 0:05:51.960 also the russell things like small caps really are a 0:05:52.120 --> 0:05:55.640 pretty pretty decent levels to go underweight and to sell 0:05:55.680 --> 0:05:57.320 again at this at this point. 0:05:57.120 --> 0:05:59.000 Now, yeah, I'm sure at the end of last year 0:05:59.000 --> 0:06:01.320 people were saying that the US would be able to 0:06:01.360 --> 0:06:04.640 weather tarriffs much more effectively than any other economy around 0:06:04.640 --> 0:06:06.240 the world, and all of a sudden, one hundred days 0:06:06.279 --> 0:06:09.080 into Trump's administration, and that story is but Toronto's head, 0:06:09.080 --> 0:06:11.960 and you're basically talking about overweighting everything else except for 0:06:12.040 --> 0:06:15.279 the United States. Why has that narrative shifted to such 0:06:15.360 --> 0:06:17.440 degree that the pain will be maximally fell to the 0:06:17.520 --> 0:06:22.719 United States and US assets rather than Europe, rather than Asia. 0:06:23.040 --> 0:06:23.840 It's a great question. 0:06:23.960 --> 0:06:26.760 It's very, very different from what we expected perhaps three 0:06:26.760 --> 0:06:29.119 months ago. Remember three months ago we had the first 0:06:29.160 --> 0:06:32.440 tariff round with Canada and with Mexico, and you know 0:06:32.520 --> 0:06:35.360 the narrative, Well, I think the broad consensus was this 0:06:35.440 --> 0:06:38.640 is mostly negotiation tactic. And remember this was all solved 0:06:38.640 --> 0:06:41.200 within twenty four hours. We kind of freaked out. FX 0:06:41.240 --> 0:06:43.720 week freaked out, right, We had the Mexican pays off, 0:06:43.960 --> 0:06:46.680 the Canadian dollar cell offs, so most most of the 0:06:46.720 --> 0:06:49.040 tariff effects were really absorbed in FX. 0:06:50.080 --> 0:06:53.040 But then it will result twenty fives. 0:06:53.160 --> 0:06:55.839 So we all thought, okay, let's move on. This isn't 0:06:55.880 --> 0:06:59.080 really something to take seriously. This is mostly noise. No 0:06:59.200 --> 0:07:01.560 need to price that. If anything, it's going to hurt 0:07:01.600 --> 0:07:04.040 the others more than the US because it's just that noise. 0:07:04.360 --> 0:07:08.400 I think what we've all underestimated, including myself, is the 0:07:08.520 --> 0:07:11.680 kind of confidence and sentiment shock, and the kind of 0:07:11.760 --> 0:07:15.640 broad based confidence and sentiment shock that we've really seen 0:07:15.960 --> 0:07:18.320 in the US economy. Again we can I think that 0:07:18.600 --> 0:07:20.600 the only reason why we're talking about the ins and 0:07:20.640 --> 0:07:24.160 outs of daily tweets or you know these you guys 0:07:24.160 --> 0:07:26.560 were just talking about the autos and the kind of 0:07:27.400 --> 0:07:30.480 nitty gritty around those autotariffs. The only reason why we 0:07:30.520 --> 0:07:33.040 can still afford to talk about that is because the 0:07:33.080 --> 0:07:36.040 soft data versus heart data narrative is still holding up, 0:07:36.080 --> 0:07:38.800 because we are not seeing yet the weakness in this 0:07:38.880 --> 0:07:39.400 heart data. 0:07:39.440 --> 0:07:40.880 And I think that's really where. 0:07:40.720 --> 0:07:43.160 I'm scared about in May and in June, where we 0:07:43.200 --> 0:07:46.040 could be seeing the first cracks in jobless claims, the 0:07:46.040 --> 0:07:48.640 first cracks in the heart data, and because of that 0:07:48.720 --> 0:07:51.440 widespread narrative of it's just a slow down, it's not 0:07:51.480 --> 0:07:54.880 a recession, it's just the soft data that is weakening. 0:07:55.160 --> 0:07:57.440 Because of that widespread narrative, I don't need to see 0:07:57.480 --> 0:07:59.440 the whites of the eyes of recession. I think it's 0:07:59.480 --> 0:08:02.120 totally enough for a bearer view like ourselves to see 0:08:02.320 --> 0:08:05.720 two three heart data points disappointing and already that narrative 0:08:05.760 --> 0:08:06.600 I think will be in chatter. 0:08:06.760 --> 0:08:07.000 Max. 0:08:07.040 --> 0:08:08.960 I just want to pick up on one trade in particular, 0:08:09.040 --> 0:08:12.000 just to close this conversation out. You've increased your overweight 0:08:12.040 --> 0:08:14.680 into em local debt. There's two assumptions you're making care 0:08:15.120 --> 0:08:17.080 that if the US economy gets into trouble, the rest 0:08:17.120 --> 0:08:19.840 of the world won't as much. And you're also making 0:08:19.840 --> 0:08:22.120 a call on the FX market as well, because typically 0:08:22.120 --> 0:08:24.200 when you see a global economy go into a downturn, 0:08:24.440 --> 0:08:27.680 the dollar strengthens, it doesn't weaken. Where do these assumptions 0:08:27.720 --> 0:08:29.840 come from. 0:08:30.160 --> 0:08:31.800 I think that's totally right, John. 0:08:31.840 --> 0:08:33.839 I think most of that really is something or is 0:08:33.880 --> 0:08:36.680 the assumption that is mostly a US centric risk off, 0:08:36.679 --> 0:08:39.880 that it's a US centric slowdown. Let's face it, in 0:08:39.880 --> 0:08:43.360 the last two months, we've also seen several of several 0:08:43.400 --> 0:08:46.320 puts from the US administration, so several sort of U 0:08:46.360 --> 0:08:49.840 turns from the US administration. I don't expect this time 0:08:49.880 --> 0:08:52.520 to be any different. I don't expect that if the 0:08:52.559 --> 0:08:55.520 heart data really turns, if of you like ours is correct, 0:08:55.840 --> 0:08:59.600 that really the US administration will press on regardless. I 0:08:59.640 --> 0:09:02.240 do there will be some sort of you know, some 0:09:02.280 --> 0:09:04.760 sort of concessions to the market and some sort of 0:09:04.840 --> 0:09:08.280 U turns where then is exactly precisely those kind of 0:09:08.280 --> 0:09:11.600 buying opportunities that you were alluding to in the very beginning. 0:09:11.800 --> 0:09:13.120 I think that's what we're going to see in the 0:09:13.120 --> 0:09:15.720 next two three months. And that of course means it 0:09:15.800 --> 0:09:17.880 is not an environment where you want to go longer 0:09:17.960 --> 0:09:20.360 dollar and where you say, oh, that's the ultimate safe haven. 0:09:20.600 --> 0:09:23.760 It's mostly really a US risk off where the dollar 0:09:23.840 --> 0:09:27.760 sells off and where weirdly and oddly enough, this this 0:09:27.760 --> 0:09:32.320 this divergence between emerging market local rates and broader risk assets. 0:09:32.640 --> 0:09:36.000 Think US equities, think global equities. That broader divergence we've 0:09:36.000 --> 0:09:38.360 seen in the last two months that will still hold 0:09:38.400 --> 0:09:42.040 and where a lot of emerging market, particularly high beta countries, 0:09:42.400 --> 0:09:46.680 think places like Eveni and Asia, but like South Africa, 0:09:46.760 --> 0:09:49.480 I think Mexico for example. A lot of those high 0:09:49.520 --> 0:09:52.000 beta names have a really really attractive risk premium. 0:09:52.040 --> 0:09:56.080 Here, Max, appreciate the cold today, Max Kenada of HSBC. 0:10:06.400 --> 0:10:09.480 I'm joined with, of course Ryan Peterson, the CEO of Flexport, 0:10:09.520 --> 0:10:11.120 a friend of the show. We're so happy to have 0:10:11.200 --> 0:10:13.559 him in person in DC. You're in the thick of 0:10:13.600 --> 0:10:16.160 this trade story, representing all these companies that are trying 0:10:16.200 --> 0:10:18.360 to figure out where these tariff freights are going. We're 0:10:18.400 --> 0:10:20.800 gonna get GDP numbers today that are going to show 0:10:20.880 --> 0:10:23.760 a tremendous amount of front loading. Where are we right 0:10:23.840 --> 0:10:25.960 now when it comes to shipping, especially in China. 0:10:26.720 --> 0:10:29.360 Yeah, so flexfort is one of the largest logistics companies 0:10:29.360 --> 0:10:31.240 in the United States and the world really, and what 0:10:31.280 --> 0:10:34.280 we've seen since the tariff, since April ninth is a 0:10:34.360 --> 0:10:37.120 sixty percent decline in bookings. And that's not a Flexport number. 0:10:37.120 --> 0:10:41.000 That's industry wide for ocean freight. Now, a booking is 0:10:41.280 --> 0:10:43.559 you place a booking about three weeks before the container 0:10:43.679 --> 0:10:46.839 leaves China and then it arrives, of course in the 0:10:46.920 --> 0:10:49.440 US about a month after that. So this all started 0:10:49.440 --> 0:10:51.520 about three weeks ago. You're going to start to see 0:10:52.200 --> 0:10:55.040 arrivals that the port of Long beachs drop from China 0:10:55.240 --> 0:10:57.360 by sixty percent in the next few weeks, and then 0:10:57.800 --> 0:11:00.640 weeks after that for East coastports, golf cup sports. So 0:11:00.840 --> 0:11:05.400 it's gonna be a massive impact on consumers prices and 0:11:05.480 --> 0:11:07.760 obviously you know the bigger impacts here as companies and 0:11:08.320 --> 0:11:10.640 therefore jobs if they can continue to employ as many 0:11:10.640 --> 0:11:11.199 people and. 0:11:11.160 --> 0:11:13.520 We've seen companies reach out to the White House. Last week, 0:11:13.559 --> 0:11:16.520 you had Walmart target those executives in the Oval Office 0:11:16.559 --> 0:11:19.640 explaining this picture you're describing right now. And then yesterday 0:11:19.640 --> 0:11:23.520 we had really this dramatic episode with Amazon. Amazon was 0:11:23.559 --> 0:11:26.079 going to potentially carve out the tariff price on their 0:11:26.080 --> 0:11:29.880 website and administration called that a hostile and political act. 0:11:30.360 --> 0:11:32.760 Do you tell your businesses how they should maybe deal 0:11:32.800 --> 0:11:34.680 with this White House when it comes to trade policy. 0:11:34.920 --> 0:11:38.480 Well, you know, our businesses is a flexport. Customers are 0:11:38.600 --> 0:11:40.680 kind of mostly small business, small medium sized business. 0:11:40.679 --> 0:11:42.120 We do work with a few large enterprises. 0:11:42.160 --> 0:11:44.480 I feel like they're able to handle relations with government 0:11:44.480 --> 0:11:46.199 on their own, but the small business really doesn't have 0:11:46.200 --> 0:11:46.800 a voice in all this. 0:11:46.880 --> 0:11:48.920 So it's kind of like been to some. 0:11:48.960 --> 0:11:51.640 Extent, my role, our company's role is helping to tell 0:11:51.679 --> 0:11:54.600 that story, showing this data, making it clear like the 0:11:54.640 --> 0:11:57.920 impact is disroportionate on small business. Larger companies tend to 0:11:57.920 --> 0:12:01.000 have more resources to be able to multi source the 0:12:01.040 --> 0:12:03.240 same product. They can buy it in Vietnam and buy 0:12:03.240 --> 0:12:06.560 it in other countries, so as China starts to become 0:12:06.640 --> 0:12:10.240 non competitive, they just shift manufacturing. Small business doesn't have 0:12:10.240 --> 0:12:12.800 that luxury. They can't have multiple factories. They barely convinced 0:12:12.840 --> 0:12:14.480 one factory to produce their item. 0:12:14.559 --> 0:12:16.640 And they're kind of lasting line. 0:12:16.360 --> 0:12:19.720 When it comes to Amazon though, and this entire debacle 0:12:19.760 --> 0:12:22.719 that played out yesterday, what we saw is Amazon come 0:12:22.760 --> 0:12:26.440 out almost immediately and blank and say we were. 0:12:26.320 --> 0:12:27.600 Just doing this under discussion. 0:12:27.720 --> 0:12:29.880 We're actually not going to go forward with this. And 0:12:29.920 --> 0:12:32.480 this was of course after the President as well called 0:12:32.600 --> 0:12:36.320 Jeff Bezos. Was that the right reaction from Jeff Bezos 0:12:36.360 --> 0:12:37.199 in corporate America? 0:12:37.640 --> 0:12:39.360 You know, I'm not going to tell the Amazon team 0:12:39.400 --> 0:12:39.960 how to do their job. 0:12:40.000 --> 0:12:40.960 They're pretty good at life. 0:12:40.960 --> 0:12:43.600 But I thought if it was me, I would be like, yeah, 0:12:43.679 --> 0:12:45.600 putting you know, the tariffs on there to make it 0:12:45.640 --> 0:12:47.920 clear that Chinese products are not competitive, you should buy 0:12:47.920 --> 0:12:51.160 American products, look, no duty on the American listings. And 0:12:51.280 --> 0:12:53.880 they could have positioned that as a win really easily. 0:12:53.920 --> 0:12:55.800 I don't know why they just backed off right away. 0:12:56.000 --> 0:12:58.600 But Amazon, as you said, they're one of the bigger players. 0:12:58.640 --> 0:13:01.200 They'll be fine. What happens with these small businesses? Do 0:13:01.240 --> 0:13:02.520 we see businesses go bankrupt? 0:13:02.640 --> 0:13:03.120 Yeah? Definitely. 0:13:03.160 --> 0:13:06.079 I mean if they don't change this policy, and Trump 0:13:06.200 --> 0:13:08.400 is hinted that they will. It's sort of clear that 0:13:08.440 --> 0:13:11.280 this all escalated very quickly in a tip for tat cycle. 0:13:11.960 --> 0:13:14.199 If they don't bring the tariffs way back down on China, 0:13:14.320 --> 0:13:17.319 like yeah, like thousands, maybe millions of small businesses will 0:13:17.320 --> 0:13:19.200 go out of business. I mean so many companies buy 0:13:19.200 --> 0:13:21.160 from It's four hundred and forty billion dollars worth the 0:13:21.200 --> 0:13:22.800 goods we buy from China every year. 0:13:22.920 --> 0:13:25.320 Like the Treasury Secretary told me a few weeks ago, 0:13:25.559 --> 0:13:29.240 one forty five percent. These levels are unsustainable. What would 0:13:29.240 --> 0:13:31.840 be your advice into the administration at what level they should 0:13:31.880 --> 0:13:35.920 set where it's still potentially is a carrot and stick 0:13:35.960 --> 0:13:38.640 approach with some businesses to move manufacturing elsewhere, but it 0:13:38.640 --> 0:13:40.320 doesn't actually put people out of work. 0:13:41.240 --> 0:13:42.800 Yeah, you know, like you don't want to ask me 0:13:42.840 --> 0:13:44.040 my adviceorial administration. 0:13:44.040 --> 0:13:46.720 I'm like a free trader. I go like zero per se, let's. 0:13:46.559 --> 0:13:48.520 Go, let's you know, open this up and let people 0:13:48.559 --> 0:13:50.160 buy from whoever they want to buy from. 0:13:50.200 --> 0:13:50.480 I don't. 0:13:50.640 --> 0:13:53.160 I don't think that's like what advice would you tell them? 0:13:53.160 --> 0:13:56.040 And then on a timeline, how quickly do they need 0:13:56.040 --> 0:13:56.720 to bring these levels? 0:13:56.720 --> 0:13:58.319 So I think the timeline is really important. I think 0:13:58.480 --> 0:14:00.360 every day that goes buy more damage kits done. You 0:14:00.360 --> 0:14:03.439 have the sixty percent declient in bookings. You just what 0:14:03.720 --> 0:14:07.400 twenty five percent of ocean sailings, So container ships have 0:14:07.480 --> 0:14:10.360 now been canceled. The sailings from China to the US 0:14:10.679 --> 0:14:12.800 have a lot of those who have been diverted. It's 0:14:12.800 --> 0:14:14.959 not a permanent move, but it takes a long time 0:14:15.000 --> 0:14:17.880 to reposition these ships back. So they they're now sailing 0:14:17.920 --> 0:14:20.760 from Vietnam, they're going to Europe. They're just re routing 0:14:20.760 --> 0:14:23.120 the container ships. So when they turn this back on, 0:14:23.360 --> 0:14:25.760 if they do when and if they do lower the tariffs, 0:14:26.000 --> 0:14:28.120 you're going to see there's not enough ships and containers 0:14:28.120 --> 0:14:30.520 to move the cargo, and you're going to see prices 0:14:30.560 --> 0:14:32.920 spike because of that. So, like you know, the economies 0:14:32.920 --> 0:14:35.720 are very complex systems. They're not meant to be centrally 0:14:35.760 --> 0:14:39.560 planned at the White House, and we've somehow forgot that 0:14:39.680 --> 0:14:42.440 lesson that made America so successful to as theme try 0:14:42.880 --> 0:14:43.280 Thank you so. 0:14:43.320 --> 0:14:44.640 Much for your time this morning, John. 0:14:44.680 --> 0:14:46.960 That was Ryan Peterson, the CEO of Flexbord of course, 0:14:47.040 --> 0:14:50.200 really in the thick of this trade warrantys in Washington, 0:14:50.280 --> 0:14:52.560 DC today offered up a little advice from the administration. 0:15:02.080 --> 0:15:05.200 Earnings just around the corner as well. Meta sets report earnings. 0:15:05.200 --> 0:15:08.680 After the closing balance, the industry faces continued regulatory pressure. 0:15:08.920 --> 0:15:11.600 Facebook co founder Chris hughs arguing in the US as 0:15:11.640 --> 0:15:14.120 a history of striking a balance between free markets and 0:15:14.200 --> 0:15:17.320 state capitalism, writ in quote, we organize many of our 0:15:17.360 --> 0:15:20.160 markets for the common good, choosing to cultivate them rather 0:15:20.200 --> 0:15:23.240 than plan them outright. The work is a craft, not 0:15:23.320 --> 0:15:26.960 unlike the work of a sculptor or painter. Chris is 0:15:26.960 --> 0:15:29.240 the author of the new book Market Crafters, and he 0:15:29.360 --> 0:15:31.200 joins us now for more. Chris Camrnic good to see you, 0:15:31.280 --> 0:15:32.800 Thanks for having me. Let's start big and then we 0:15:32.800 --> 0:15:33.720 can get some meta anser. 0:15:33.880 --> 0:15:34.240 Let's do it. 0:15:34.280 --> 0:15:36.720 The secret source of the US economy, how would you 0:15:36.760 --> 0:15:37.840 describe it? 0:15:37.840 --> 0:15:40.320 It's the dance between the private sector and the government. 0:15:40.520 --> 0:15:44.160 So I make the case that policymakers have often harnessed 0:15:44.200 --> 0:15:47.400 and guided markets toward public goals, in order to make 0:15:47.400 --> 0:15:51.640 Americans richer, say for their lives, more economically stable. And 0:15:51.640 --> 0:15:53.880 there's a hidden history of US doing this from the 0:15:53.960 --> 0:15:55.920 nineteen thirties all the way to the present. It's a 0:15:55.920 --> 0:16:00.080 Republican project as much as it's a democratic project, and 0:16:00.120 --> 0:16:01.760 we're going to have to pull out some of the 0:16:01.920 --> 0:16:04.440 lessons from that if we're going to rebuild on the 0:16:04.520 --> 0:16:05.440 other side of the chaos. 0:16:05.440 --> 0:16:07.560 It's happening right now. Talk about the chass. So we're 0:16:07.560 --> 0:16:08.960 doing a good job of it right now. 0:16:09.520 --> 0:16:09.720 Yeah. 0:16:09.760 --> 0:16:12.000 I mean, someone said this is more like market crashing 0:16:12.040 --> 0:16:13.520 than market crafting. 0:16:13.400 --> 0:16:15.160 And that seemed apt to me. 0:16:15.320 --> 0:16:15.480 No. 0:16:15.520 --> 0:16:20.680 I mean, this administration is at best impulsive and at 0:16:20.680 --> 0:16:24.440 worst completely disorganized. The way to do this in the 0:16:24.520 --> 0:16:26.160 right way would be to say we have a mission 0:16:26.560 --> 0:16:30.720 like bringing back manufacturing jobs or even the auto industry. 0:16:30.840 --> 0:16:34.600 Then you'd create trade policy tariffs that would be targeted 0:16:34.960 --> 0:16:38.240 not on avocados and cars, but targeted. You do it 0:16:38.280 --> 0:16:41.560 in collaboration with allies, and you'd pair it with industrial 0:16:41.560 --> 0:16:44.120 policy investments to make sure that those plans can get 0:16:44.120 --> 0:16:46.880 online quickly and that they can do it cheaply. And 0:16:47.920 --> 0:16:50.640 there is a recipe for crafting a particular market. 0:16:50.360 --> 0:16:54.440 Along those lines. This is just chaos. Use to use 0:16:54.480 --> 0:16:54.760 the word. 0:16:54.800 --> 0:16:56.960 You don't know where the tariffs are, whether they're on 0:16:57.000 --> 0:16:59.480 this week or last week, and people are trying to 0:16:59.480 --> 0:16:59.960 figure it out. 0:17:00.080 --> 0:17:03.200 Taking a step back, though further, there is this feeling 0:17:03.240 --> 0:17:05.960 about what the engine of US exceptionalism has been and 0:17:06.000 --> 0:17:08.000 it's been in the world, so that you co founded 0:17:08.480 --> 0:17:10.960 with respect to Facebook, which is big tech, and this 0:17:11.080 --> 0:17:14.199 idea that the technological expertise that has been cultivated in 0:17:14.200 --> 0:17:16.560 the United States has been superior and has been the 0:17:16.560 --> 0:17:18.640 reason why so many people have wanted to invest here. 0:17:19.080 --> 0:17:22.480 Do you see that unable to continue in this certain 0:17:23.080 --> 0:17:25.239 sort of less predictable moment, or do you see that 0:17:25.560 --> 0:17:28.639 as continuing to chug along in a healthy way that 0:17:28.720 --> 0:17:31.720 does lead to some sort of evolution. 0:17:32.400 --> 0:17:34.960 It is certainly on shaky ground, that's for sure. I 0:17:35.000 --> 0:17:38.480 think the story of American technical leadership is also one 0:17:38.480 --> 0:17:41.320 where we see private sector innovation as a critical engine 0:17:41.359 --> 0:17:44.320 of growth, paired with public sector decisions. 0:17:44.359 --> 0:17:45.920 So I'll give a crisp example. 0:17:46.240 --> 0:17:48.520 We've all been talking about semiconductors and chips for the 0:17:48.600 --> 0:17:52.440 last few years, and that's been incredibly important in bringing 0:17:52.480 --> 0:17:56.080 back advanced semiconductor manufacturing in the United States. However, the 0:17:56.119 --> 0:17:59.240 real story of how to support the high tech industry 0:17:59.359 --> 0:18:02.080 in the US starts more in the nineteen eighties with 0:18:02.240 --> 0:18:04.080 Reagan era industrial policy. 0:18:04.560 --> 0:18:06.520 At that point, Japan's share. 0:18:06.280 --> 0:18:10.760 Of global semiconductor production was increasing quickly, and there was 0:18:10.880 --> 0:18:13.520 a man, Robert Nois, the co founder of Intel, who 0:18:13.560 --> 0:18:18.320 teamed up with other semiconductor producers to go to Washington say, hey, 0:18:18.359 --> 0:18:20.760 we have a national security problem on our hands. The 0:18:20.800 --> 0:18:23.440 Department of Defense degree, so did White House in Congress, 0:18:23.760 --> 0:18:27.000 and they came together to first do a structured trade 0:18:27.040 --> 0:18:30.200 policy on Japan to prevent them dumping in the market, 0:18:30.240 --> 0:18:33.640 and then secondly make a big public investment in semiconductor production. 0:18:33.760 --> 0:18:35.800