WEBVTT - Bloomberg Surveillance TV: July 30th, 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 Hordert. 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 --> 0:00:37.760 Terminal and the Bloomberg Business App. Some FED watchers looking 0:00:37.760 --> 0:00:40.000 for two governors to descend for the first time since 0:00:40.080 --> 0:00:43.159 nineteen ninety three, the former Send Lewis FED President Jim 0:00:43.159 --> 0:00:45.720 Bullard telling us previously, I think that the Fed could 0:00:45.760 --> 0:00:49.960 resume its normalization process. September would be a natural focal 0:00:50.000 --> 0:00:52.400 point for that. Jim joined us now for more. Jim, 0:00:52.400 --> 0:00:54.840 welcome back, sir. Just how compelling is the case for 0:00:54.880 --> 0:00:56.000 lower interest rates today? 0:00:58.080 --> 0:01:00.360 I think the policy rates a little bit high for 0:01:00.440 --> 0:01:04.280 the current environment, and so I do think that the 0:01:04.600 --> 0:01:08.480 Committee could set up a September rate cut at this meaning, 0:01:09.600 --> 0:01:12.679 I think the risk for the chair is probably that 0:01:12.680 --> 0:01:17.400 that gets priced in even more than it already is, 0:01:17.560 --> 0:01:21.920 and he can't preserve enough optionality going into September. But 0:01:22.280 --> 0:01:24.280 I'm sure he'll do a good job on that part. 0:01:25.440 --> 0:01:27.920 So I think the committee's in pretty good shape here. 0:01:28.120 --> 0:01:29.680 Do you think that it's good to see descent? That 0:01:29.680 --> 0:01:33.200 that's actually healthy and important right now? 0:01:32.880 --> 0:01:37.959 I've always felt that sents show in some circumstances, they 0:01:38.040 --> 0:01:41.160 just show that there's a lively debate and that various 0:01:41.200 --> 0:01:44.039 points of view of being heard, and that can be 0:01:44.080 --> 0:01:45.000 helpful to the chair. 0:01:45.080 --> 0:01:49.440 I think sometimes you get this, we get if that 0:01:49.560 --> 0:01:51.400 gets criticized for all sides. 0:01:51.080 --> 0:01:53.840 And sometimes when it's always unanimous, you get criticized for 0:01:53.880 --> 0:01:56.400 that as well. Too much group think, So I think 0:01:57.000 --> 0:01:58.240 dessense can be valuable. 0:01:58.480 --> 0:02:00.880 A lot of people are watching today's meeting and press 0:02:00.920 --> 0:02:04.440 conference for any clues of what type of pressure President 0:02:04.520 --> 0:02:07.840 Trump seems to be exerting, at least psychologically. 0:02:07.480 --> 0:02:08.080 On the FED. 0:02:08.320 --> 0:02:11.720 I wonder how much of a cloud you think that is. 0:02:11.720 --> 0:02:14.000 As a former FED member, I know you're probably going 0:02:14.040 --> 0:02:16.360 to say it doesn't factor into their mentality, et cetera, 0:02:16.400 --> 0:02:16.760 et cetera. 0:02:16.800 --> 0:02:18.320 At the same time, the rest. 0:02:18.120 --> 0:02:20.320 Of the market is perceiving it that way and is 0:02:20.360 --> 0:02:23.840 taking everything that happens on the FMC as Oh, this 0:02:23.880 --> 0:02:25.919 person is running to be the next FED chair. Oh 0:02:25.960 --> 0:02:28.880 this person is just trying to show their defiance to 0:02:28.919 --> 0:02:30.320 the President's discussion. 0:02:32.360 --> 0:02:32.960 Yeah, I don't know. 0:02:33.240 --> 0:02:36.200 I don't think the committee pays too much attention. There's 0:02:36.240 --> 0:02:38.519 a lot of data, a lot of analysis. That's the 0:02:38.560 --> 0:02:43.200 way the meeting works. It's a big formal meeting, and 0:02:43.560 --> 0:02:47.880 you know, I think every member takes their role extremely seriously, 0:02:48.720 --> 0:02:53.040 and if they feel like the data is pointing up 0:02:53.040 --> 0:02:55.800 in one direction or another, they make the callumn that's that. 0:02:56.080 --> 0:03:00.560 So I don't really think the theater effects that part 0:03:00.600 --> 0:03:01.320 of the discussion. 0:03:01.520 --> 0:03:04.240 So, Jim, let's talk about the data and where we are. 0:03:04.320 --> 0:03:06.840 By the time we get to September seventeenth, two more 0:03:06.919 --> 0:03:10.560 CPI reports, two more payrolls reports. And there's an assumption 0:03:10.680 --> 0:03:12.560 right now from some that they've got to wait, and 0:03:12.560 --> 0:03:14.080 they've got to wait because they need to see the 0:03:14.120 --> 0:03:17.160 tariff pass through to consumers. How much will we see 0:03:17.400 --> 0:03:19.920 and once they've seen it, to what degree will it 0:03:19.960 --> 0:03:23.120 hang around, to what degree will it actually be transitory 0:03:23.360 --> 0:03:26.400 or will it be sticky? Jim's two CPI reports enough 0:03:26.520 --> 0:03:27.840 to drain any conclusions on that. 0:03:29.520 --> 0:03:33.639 They're going to want to see that data going into September, 0:03:33.760 --> 0:03:37.120 and that'll be the that'll carry the day here today. 0:03:37.160 --> 0:03:43.200 I think they'll, you know, who knows, you can always 0:03:43.200 --> 0:03:46.680 get surprised by the day. You've also got jobs reports 0:03:46.760 --> 0:03:50.440 in there, so they'll want to see that before they 0:03:50.480 --> 0:03:53.120 make a decision, and that'll be the basic idea. But 0:03:53.640 --> 0:03:59.559 I think the notion is that they've already put the. 0:03:58.360 --> 0:04:00.920 Recalibration policy on pause. 0:04:01.520 --> 0:04:04.080 For the first six months of twenty twenty five, waiting 0:04:04.120 --> 0:04:07.000 to see what the policy would be and whether it 0:04:07.040 --> 0:04:08.280 we'd feed through to inflation. 0:04:08.360 --> 0:04:10.120 They don't really get anything out. 0:04:09.960 --> 0:04:13.720 Of that, and that's why the policy rate's sitting a 0:04:13.800 --> 0:04:17.839 little bit high compared to inflation readings and unemployment readings 0:04:17.880 --> 0:04:18.360 right now. 0:04:18.520 --> 0:04:20.040 And James, do you think that, Jim, do you think 0:04:20.040 --> 0:04:21.640 that it's fair to think that next year you're going 0:04:21.680 --> 0:04:24.679 to see some pretty significant rate cuts, not just because 0:04:24.760 --> 0:04:27.760 of the new FED chair, but because you think it 0:04:27.760 --> 0:04:31.480 could be appropriate based on potentially ongoing disinflation. 0:04:32.920 --> 0:04:34.520 I think it is going to be appropriate. 0:04:34.680 --> 0:04:37.839 And I think if they make two rate cuts this 0:04:38.000 --> 0:04:42.800 year September and December, and then they follow that up 0:04:42.839 --> 0:04:45.440 in the first half of twenty twenty six, they would 0:04:45.440 --> 0:04:48.040 start to get to the neutral rate. What the Committee 0:04:48.040 --> 0:04:51.520 thinks the neutral rate is maybe three percent or three 0:04:51.520 --> 0:04:55.360 in a quarter or somewhere in there, and that would 0:04:55.400 --> 0:04:57.599 be the exact rate that you should be at if 0:04:57.600 --> 0:05:01.840 inflation continues to decline toward two SAM and unemployment continues 0:05:01.920 --> 0:05:03.800 to be in the low four percent range. 0:05:04.040 --> 0:05:06.200 Hey, Jim, I appreciate you as always, Sair the former 0:05:06.200 --> 0:05:08.200 San Lewis FED President Jim pull that wank in on 0:05:08.240 --> 0:05:21.640 the decision. Later on the soufternoon, Jeb Amata of Newberger Berman, 0:05:21.680 --> 0:05:26.160 writing macroeconomic policy supports a self lending scenario as inflationary 0:05:26.200 --> 0:05:28.640 pressures continue to selfen, we believe the FED has more 0:05:28.680 --> 0:05:32.320 flexibility to ease policy. Jude John just now for more 0:05:32.400 --> 0:05:35.760 Chack and Mornic goodcrding how much flexibility does a shaman have? 0:05:36.040 --> 0:05:39.080 Later on the southnoon, Well, he's got a couple of 0:05:39.080 --> 0:05:42.840 his team members who are dissenting, so that that puts 0:05:42.880 --> 0:05:44.039 I think him in a little bit more of an 0:05:44.640 --> 0:05:46.720 awkward spot. But I think the FED has been in 0:05:46.760 --> 0:05:49.320 a process to normalize rates over the course of the 0:05:49.400 --> 0:05:52.560 last period of time, and it got derailed a bit by, 0:05:52.680 --> 0:05:54.919 of course, the tariff announcement, So I think there's still 0:05:54.920 --> 0:05:58.440 a movement toward toward that normalization process, which we think 0:05:58.440 --> 0:05:59.960 they're going to be back on track on. We think 0:06:00.000 --> 0:06:03.119 think there'll probably be a couple of cuts this year, 0:06:03.360 --> 0:06:06.360 not today, of course, but probably in September and later 0:06:06.360 --> 0:06:10.440 in the year, reflecting the fact that inflation, while edging 0:06:10.560 --> 0:06:13.360 up a bit, has still been under control, and the 0:06:13.440 --> 0:06:17.840 labor market, while again solid, still showing some signs of weakening. 0:06:17.880 --> 0:06:19.680 The number coming in Friday is going to be one 0:06:19.720 --> 0:06:21.200 of the lower numbers we've had over the course of 0:06:21.200 --> 0:06:21.960 the last number of months. 0:06:22.040 --> 0:06:24.919 How much just a bullishness in risk asset's predicated on 0:06:24.960 --> 0:06:27.840 this idea that there will be two rate cuts from 0:06:27.880 --> 0:06:29.440 the Federal Reserve in twenty twenty five. 0:06:30.200 --> 0:06:32.800 I don't know that broad market bullishness has got to 0:06:32.839 --> 0:06:34.919 be driven by ray cuts. I think you have within 0:06:35.040 --> 0:06:37.000 the internals if you think about small caps, So small 0:06:37.000 --> 0:06:39.360 caps I think do need to see a movement toward 0:06:39.440 --> 0:06:42.520 lower rates and rate cuts, and that historically has been 0:06:42.720 --> 0:06:45.520 sort of a catalyst for small caps to rally. But 0:06:45.560 --> 0:06:47.000 I think what we've seen over the last number of 0:06:47.000 --> 0:06:50.200 months is the hard data has held up well broadly. 0:06:50.600 --> 0:06:53.359 We've gotten some good news on taris off, of course 0:06:53.400 --> 0:06:56.800 the panicky early April announcements, and I think the markets 0:06:56.839 --> 0:07:01.919 reacted to that, and many businesses are are responding quite 0:07:02.000 --> 0:07:05.600 dynamically to this issue of tariffs in maintaining margins. We're 0:07:05.600 --> 0:07:08.120 going to see a little bit of margin pressure in 0:07:08.160 --> 0:07:09.200 this second quarter. 0:07:09.320 --> 0:07:10.920 The margins are still at pretty high. 0:07:10.840 --> 0:07:13.320 Levels, remarkably because tariff's been in place for a number 0:07:13.320 --> 0:07:13.880 of months now. 0:07:14.000 --> 0:07:16.480 So it raises the question about earlier this year, how 0:07:16.520 --> 0:07:19.320 so many people wrote off the United States as being 0:07:19.360 --> 0:07:22.400 the biggest loser from some of these tariffs, and suddenly 0:07:22.480 --> 0:07:25.160 people are coming around to this idea that maybe that 0:07:25.320 --> 0:07:28.720 was too fast. Do you think that sort of the 0:07:28.760 --> 0:07:31.640 FED is a side show to really the crux of 0:07:31.720 --> 0:07:33.480 who is going to bear the brunt of it? In 0:07:33.520 --> 0:07:35.640 our US company is showing in all of these earnings 0:07:35.680 --> 0:07:38.960 reports time and again they're doing just fine, better in 0:07:39.000 --> 0:07:40.960 fact than those in Europe. 0:07:41.600 --> 0:07:43.720 I don't think the Fed's ever a side show, but 0:07:43.760 --> 0:07:46.200 as it relates to it might be today the notion 0:07:46.320 --> 0:07:47.520 of tariffs. 0:07:47.520 --> 0:07:48.760 You have three ways again go right. 0:07:48.800 --> 0:07:52.280 You either put price increases to customers and they eat it. 0:07:52.400 --> 0:07:53.960 You put a little you know, you eat it as 0:07:54.000 --> 0:07:56.520 a company, and pressure of margins or suppliers eat it. 0:07:56.560 --> 0:07:58.360 So it probably ends up being in combination that we've 0:07:58.360 --> 0:08:00.560 seen inflation tick up a little bit. Signs of that 0:08:00.640 --> 0:08:02.960 right in the last inflation report, particularly around things like 0:08:02.960 --> 0:08:06.480 apparel and home furnishings. You see the margin pressure I referenced, 0:08:06.480 --> 0:08:08.640 and then you know, we don't really have transparency to 0:08:08.720 --> 0:08:12.160 supplier income statements per se, but you know there's probably 0:08:12.200 --> 0:08:14.720 some pressure going on there as well. And remember goods 0:08:14.720 --> 0:08:17.920 are only a portion of the inflation CPI number, it's 0:08:17.960 --> 0:08:21.120 not the full number. And like you referenced just before, 0:08:21.160 --> 0:08:23.240 our right services have been softer than expected. 0:08:23.360 --> 0:08:25.200 I think Lisa was attempting to get you to defend 0:08:25.200 --> 0:08:28.720 your rowight in European ecquencies. So let's be more direct 0:08:28.720 --> 0:08:31.480 the broadening defendquacy exact. 0:08:31.720 --> 0:08:32.320 We've moved. 0:08:32.440 --> 0:08:34.960 We've moved early in the year to a theme of 0:08:35.000 --> 0:08:38.360 broadening out. Right US certainly had you know, it was 0:08:38.400 --> 0:08:40.160 the major driver of markets over the course the last 0:08:40.200 --> 0:08:41.520 number of years, but we did think there'd be a 0:08:41.520 --> 0:08:44.520 broadening out, and that broadening out would include small caps 0:08:44.920 --> 0:08:47.960 value non US right we're very bullish on Japan. 0:08:48.559 --> 0:08:48.959 Europe. 0:08:49.000 --> 0:08:51.360 We think with fiscal stimulus, particularly out of Germany, I 0:08:51.360 --> 0:08:55.280 think is going to show improvement and the relative valuations 0:08:55.320 --> 0:08:58.840 we're attractive. So we we upgraded our developed markets outside 0:08:58.880 --> 0:09:01.120 the US, which would include of course Europe in. 0:09:01.120 --> 0:09:03.360 Japan, so we're sticking with that. We didn't. 0:09:03.360 --> 0:09:06.800 We're not underweight US because US still has so many 0:09:06.880 --> 0:09:09.760 competitive strengths, particularly the tech sector. 0:09:09.840 --> 0:09:10.880 If you look at this. 0:09:11.000 --> 0:09:14.040 Second quarter earnings S and P five hundred earnings, X 0:09:14.080 --> 0:09:17.400 tech will be flat text up seventeen percent. Yeah, but 0:09:17.440 --> 0:09:19.880 what's zup blends to up seven whatever the number. 0:09:19.840 --> 0:09:23.120 Well, what's Europe's tech? It's not weight loss drugs anymore. Artist. 0:09:23.440 --> 0:09:25.040 Europe is a more cyclical economy. 0:09:25.080 --> 0:09:28.040 So if you get higher nominal growth rate spurred by 0:09:28.320 --> 0:09:31.600 they have lower rates, you get some fiscal stimulus, the 0:09:31.640 --> 0:09:34.320 cyclical nature of Europe's economy will improve, and you have 0:09:34.360 --> 0:09:37.280 the relative value differential from evaluation to the point to me, 0:09:37.320 --> 0:09:41.160 it's not necessarily a long term, secular or strategic allocation 0:09:41.240 --> 0:09:42.640 per se. It was more of I don't want to 0:09:42.640 --> 0:09:44.880 call it a trade, but it was more intermediate term. 0:09:46.360 --> 0:09:48.600 Opportunity, which is one thing that we've seen with respect 0:09:48.640 --> 0:09:51.320 to the dollar, and sudden strengthening on the back of 0:09:51.360 --> 0:09:53.040 some of the announcement that we've heard with the EU 0:09:53.120 --> 0:09:55.640 and European Union and how the teriff agreement kind of 0:09:55.679 --> 0:09:57.920 got tied, and suddenly this realization maybe there'll be a 0:09:57.960 --> 0:10:00.600 little pain in Europe. And I just wonder if you 0:10:00.679 --> 0:10:04.080 see a cheapening in European assets at this point, is 0:10:04.080 --> 0:10:06.440 that a buying opportunity or is that a sign that 0:10:06.480 --> 0:10:07.760 this trade is over? 0:10:09.480 --> 0:10:12.920 Well, I think I think it represents a buying opportunity. 0:10:12.920 --> 0:10:15.719 You know, we're not we're not looking for opportunities that 0:10:15.840 --> 0:10:17.960 last a month or two right in the context of 0:10:18.000 --> 0:10:20.960 allocating into clients, so we're looking for something that has 0:10:20.960 --> 0:10:21.640 some legs to it. 0:10:21.720 --> 0:10:22.559 We still we think there. 0:10:22.600 --> 0:10:25.840 I mean, the amount of fiscal stimulus that's going to 0:10:25.880 --> 0:10:28.520 go into the ground in Germany is massive relative to 0:10:28.559 --> 0:10:30.520 the size of that economy, in the European economy, we 0:10:30.520 --> 0:10:31.839 haven't seen that in a long long time, So I 0:10:31.840 --> 0:10:34.040 think that does have some legs to it in terms 0:10:34.080 --> 0:10:38.679 of the opportunity. The dollar took a very significant pullback, 0:10:39.080 --> 0:10:41.840 so that's rare to see that that, you know, move 0:10:41.880 --> 0:10:44.520 that fast, that that much We still think the dollar 0:10:44.559 --> 0:10:47.120 will grind lower over time, but because US hard data 0:10:47.160 --> 0:10:49.520 is held up and rates have probably stayed up higher 0:10:49.559 --> 0:10:51.760 a little longer than expected, the dollar has come back. 0:10:52.000 --> 0:10:55.200 Are you expending any any adverse developments in bone markets 0:10:55.200 --> 0:10:59.640 in Europe that might hold back that I could story? 0:10:58.960 --> 0:10:59.880 We do? 0:11:00.080 --> 0:11:01.839 You worry a bit about that? Right? 0:11:01.880 --> 0:11:05.120 You know, if you look at the fiscal situations of 0:11:05.160 --> 0:11:08.240 different countries in Europe, While Germany has lots of room 0:11:08.320 --> 0:11:11.080 to stimulate, there are other countries in the region that 0:11:11.160 --> 0:11:13.199 don't you know, from in terms of what their local 0:11:13.240 --> 0:11:16.600 bond markets are. So we're watching that closely in terms 0:11:16.640 --> 0:11:21.040 of the spreads in whether it's you know, Italian bonds 0:11:21.120 --> 0:11:23.280 versus buns or versus treasuries. 0:11:23.000 --> 0:11:24.679 Or what have you. But I think they have enough 0:11:24.760 --> 0:11:26.560 room right now to stimulate. 0:11:26.640 --> 0:11:28.600 So how do you play the European story? At the moment, 0:11:29.040 --> 0:11:31.440 someone might look at this situation and say, okay, up 0:11:31.480 --> 0:11:34.440 on etf this tracks the eurostocks fifty. Is that the 0:11:34.440 --> 0:11:35.760 way to do it? Or is there a better way 0:11:35.800 --> 0:11:36.160 to do this? 0:11:37.120 --> 0:11:40.320 Well, you were an active manager, so we have strategies 0:11:40.360 --> 0:11:44.480 that manage you know, European stocks or what have you. 0:11:44.520 --> 0:11:48.640 So we're looking at high quality global companies that happen 0:11:48.720 --> 0:11:53.160 to be domiciled in Europe, that have flexibility. We'll get 0:11:53.200 --> 0:11:56.720 some benefit from a local economy being stimulated, but you know, 0:11:56.720 --> 0:11:59.559 we're still looking for quality companies that have global. 0:11:59.160 --> 0:12:02.920 Reach away of course Japan and Europe. Not on India. 0:12:02.960 --> 0:12:04.960 This just dropping from the President of the United States 0:12:05.000 --> 0:12:07.640 just moments ago. India will be paying a tariff of 0:12:08.240 --> 0:12:10.880 twenty five percent. This just dropping from the President just 0:12:10.920 --> 0:12:11.400 moments ago. 0:12:11.640 --> 0:12:14.240 A huge disappointment from Narentromodi, given the fact that they 0:12:14.240 --> 0:12:16.800 were looking for something closer to that nineteen percent that 0:12:16.840 --> 0:12:18.000 we saw from Thailand. 0:12:18.320 --> 0:12:19.840 It raises this issue. 0:12:19.520 --> 0:12:21.640 That we were talking about earlier. What were the main 0:12:21.679 --> 0:12:24.600 sticking points that ended up with a tariff agreement that 0:12:24.720 --> 0:12:27.680 was substantially higher than the region expected And frankly something 0:12:27.720 --> 0:12:29.560 that a lot of retailers in particular are going to 0:12:29.559 --> 0:12:32.200 have to factor in if they move their manufacturing there 0:12:32.200 --> 0:12:34.199 and produced a lot of textiles in particular. 0:12:34.360 --> 0:12:37.360 This from the President, the statement just dropping just moments ago. Remember, 0:12:37.440 --> 0:12:39.440 while India is our friend, we have over the years 0:12:39.480 --> 0:12:42.360 done relatively little business with them because their tariffs are 0:12:42.400 --> 0:12:45.000 far too high. The President goes on to say, among 0:12:45.040 --> 0:12:46.959 the highest in the world, and they have the most 0:12:47.000 --> 0:12:51.800 strenuous and obnoxious non monetary trade barriers of any country. 0:12:51.840 --> 0:12:53.640 A twenty five percent tariff for India. 0:12:53.760 --> 0:12:54.000 Yeah. 0:12:54.160 --> 0:12:57.360 He also went on to mention Russia and saying that 0:12:57.440 --> 0:13:00.600 India has always bought a vast majority of their military 0:13:00.640 --> 0:13:03.439 equipment from Russia. They also are some big energy buyers 0:13:03.440 --> 0:13:05.800 from Russia. Suddenly, this goes back to what we were 0:13:05.800 --> 0:13:08.720 talking about earlier. This is a key negotiating tool, the 0:13:08.760 --> 0:13:13.280 geopolitical positioning, what the relationship is with different countries in Russia, 0:13:13.320 --> 0:13:15.560 how much they are going to connect with China. That 0:13:15.679 --> 0:13:18.839 is all part of the tariff negotiation in a very different. 0:13:18.559 --> 0:13:20.560 Way than it but then previous years. That's the leasis 0:13:20.640 --> 0:13:22.280 on trade. This morning, Joey's got to see you. Thanks 0:13:22.320 --> 0:13:34.160 for dropping by. Thank you, Sir Joe Marta of Newberger, Burma. 0:13:35.040 --> 0:13:37.880 To extend the conversation, Haidi Krebo Redika of the Council 0:13:38.040 --> 0:13:40.360 on FIGN Relations, Heidi, welcome to the program. I just 0:13:40.400 --> 0:13:42.160 want to pick up on two lines that came from 0:13:42.160 --> 0:13:45.720 the Treasury Secretary scombson we don't want to decouple, we 0:13:45.920 --> 0:13:48.840 just need to d risk. Is that the more diplomatic 0:13:48.840 --> 0:13:51.520 way of saying, we want to decouple, but we're not 0:13:51.520 --> 0:13:53.679 in a position too until we d risk. 0:13:54.880 --> 0:13:57.000 I think you hit the nail on the head. I 0:13:57.040 --> 0:14:01.440 mean decoupling is actually I'm not so sure that that's 0:14:01.640 --> 0:14:05.080 the best final objective anyway. I mean, the de risking 0:14:05.160 --> 0:14:08.800 is really because we have vulnerabilities where we have put 0:14:09.480 --> 0:14:11.760 all our eggs in one basket, particularly when it comes 0:14:11.840 --> 0:14:15.719 to Rare Earth's Rare Earth magnets and the related technology 0:14:15.760 --> 0:14:19.400 and some critical minerals, some other products as well, But 0:14:20.000 --> 0:14:23.520 China really dominates that space. And we're trying to de 0:14:23.680 --> 0:14:26.600 risk in the US, but it's in our allies as well, 0:14:26.640 --> 0:14:29.800 but it's very, very very difficult. China has the choke 0:14:29.800 --> 0:14:34.520 hold on those particular commodities, and I think they're going 0:14:34.560 --> 0:14:39.560 to continue to use them whether or not USTR Career 0:14:39.840 --> 0:14:41.880 ever wants to talk about them ever again or not. 0:14:42.600 --> 0:14:45.480 How much Heidi, has the US gotten more leverage when 0:14:45.560 --> 0:14:47.840 it comes to getting some sort of coalition of willing 0:14:47.920 --> 0:14:51.960 coalition of trade partners to work on tamping down on 0:14:52.080 --> 0:14:54.400 the threats that some of the perceive is coming from 0:14:54.480 --> 0:14:56.240 China right now? Do you think that they are in 0:14:56.280 --> 0:15:00.120 a stronger position if there is yet another ninety day delay. 0:15:01.360 --> 0:15:04.120 So first I think as to the ninety day delay, 0:15:04.280 --> 0:15:06.960 if it if it is what happens, I think that 0:15:07.120 --> 0:15:10.560 is the very best option right now. And the coalition 0:15:10.600 --> 0:15:13.800 of the willing is, you know, to look at both 0:15:13.880 --> 0:15:17.680 the offense and defense. The offense meaning you want to 0:15:17.680 --> 0:15:22.720 be able to to make the investments in, you know, 0:15:22.800 --> 0:15:27.080 in all of the areas collectively that protect economic security 0:15:27.480 --> 0:15:33.160 from weaponization from China, the you know, the the You 0:15:33.200 --> 0:15:35.080 also want to make sure that if you're going to 0:15:35.640 --> 0:15:41.720 rattle the saber of Russian secondary tariffs or secondary sanctions, 0:15:41.720 --> 0:15:44.800 however you want to categorize them, you know that you 0:15:44.920 --> 0:15:48.200 have to be prepared if you impose those on China 0:15:48.320 --> 0:15:52.000 that they're probably going to, you know, reinstate some of 0:15:52.000 --> 0:15:55.960 those export control restrictions because that is literally their chow 0:15:56.040 --> 0:15:56.760 point right now. 0:15:57.080 --> 0:15:58.800 How much do you get a sense that that has 0:15:58.880 --> 0:16:01.440 been the crux of a lot of the discussions, particularly 0:16:01.480 --> 0:16:04.320 with the European Union, but also Japan and certainly is 0:16:04.400 --> 0:16:06.680 Southeast Asia, which has been a conduit for a lot 0:16:06.720 --> 0:16:10.840 of Chinese goods into the United States through those nations. 0:16:10.880 --> 0:16:13.960 How much has that been one of the main discussion 0:16:14.040 --> 0:16:16.800 points and part of the negotiations versus just sort of 0:16:16.840 --> 0:16:19.240 an ancillary part oh. 0:16:19.280 --> 0:16:23.440 I think critical minerals and mirrors have been key the 0:16:23.480 --> 0:16:26.920 all the other issues that that Secretary besn't mentioned on 0:16:27.040 --> 0:16:30.880 over capacity that affects everybody. You know, you have both 0:16:30.960 --> 0:16:34.000 developed and developing countries that are feeling the brunt of 0:16:34.040 --> 0:16:37.880 the the auto you know, the the you know, excuse 0:16:38.080 --> 0:16:40.280 the use of tsunami on a daylight today, but the 0:16:40.320 --> 0:16:46.080 sumant tsunami of of of Chinese auto exports, flooding, flooding 0:16:46.120 --> 0:16:51.200 markets everywhere from the EU to UH to Brazil. But 0:16:52.400 --> 0:16:56.960 I think, you know, the one caveat is that because 0:16:57.000 --> 0:17:01.560 we have proven ourselves, unfortunately to be the most trustworthy 0:17:01.680 --> 0:17:07.040 trading partner, and one of Trump's big objectives is really 0:17:07.119 --> 0:17:11.840 to upend both the trading and the security system the architecture. 0:17:12.119 --> 0:17:13.679 I think there's not a lot of trust out there, 0:17:13.680 --> 0:17:15.600 and one thing that you really need when you're dealing 0:17:15.680 --> 0:17:18.880 with the coalition and building a coalition is you need 0:17:18.880 --> 0:17:21.199 trusted partners. So we need to make sure that we 0:17:21.240 --> 0:17:24.520 don't lose that trust along the way in order to 0:17:24.560 --> 0:17:26.919 be able to implement collectively some of the things that 0:17:26.960 --> 0:17:30.160 we want to do on economic coercion, Hadi. 0:17:30.200 --> 0:17:33.200 It makes me think of Canada, supposedly a North American 0:17:33.240 --> 0:17:35.760 friend of the United States of America, left out in 0:17:35.760 --> 0:17:38.600 the cold. And I've been surprised. I know you are too, 0:17:38.720 --> 0:17:40.600 that the two key issues really that are left on 0:17:40.640 --> 0:17:44.240 the table put China to one side. It's Mexico and 0:17:44.280 --> 0:17:46.840 it's Canada, and we're not hearing enough. I don't think 0:17:46.840 --> 0:17:49.200 about what's about to happen. What do you think is 0:17:49.240 --> 0:17:49.960 about to happen? 0:17:51.200 --> 0:17:55.080 So you know, you know, President Trump has been very 0:17:55.119 --> 0:17:59.000 dismissive of any deal being reached with Canada, and we 0:17:59.080 --> 0:18:01.880 traded more than nine billion in goods and services last 0:18:01.960 --> 0:18:04.080 year with Canada. They are the country to our north. 0:18:05.160 --> 0:18:08.399 It's not a small player. There are closest partner in 0:18:08.440 --> 0:18:14.080 addressing many things, including our critical mineral challenge. We've you know, 0:18:14.160 --> 0:18:17.520 a lot of the investments that have been really for 0:18:17.760 --> 0:18:21.399 shared economic security have been together with Canada because we 0:18:21.480 --> 0:18:24.640 are so complementary in terms of what we can both 0:18:24.680 --> 0:18:29.160 extract and refine and produce together for on the critical 0:18:29.200 --> 0:18:33.199 minerals front. So I think, you know, I'm very worried 0:18:33.680 --> 0:18:37.080 about the fact that the Canada has not been more 0:18:37.080 --> 0:18:40.240 front and center in particular, Mexico has. I think it 0:18:40.280 --> 0:18:44.040 comes with a different set of issues. They're connected, But 0:18:44.640 --> 0:18:47.919 you know, I think Canada in particular is one that 0:18:48.000 --> 0:18:49.200 I am truly worried about. 0:18:49.480 --> 0:18:49.800 Honey. 0:18:49.840 --> 0:18:52.080 Do you think that's because they just haven't focused on 0:18:52.119 --> 0:18:54.600 it or do you think that's just the natural consequence 0:18:54.600 --> 0:18:57.120 of the fact that we have USMCA and we can 0:18:57.160 --> 0:18:59.360 renego shad it next year. Which one do you think 0:18:59.359 --> 0:18:59.639 it is? 0:19:00.720 --> 0:19:03.720 So, I mean, it's a good question. The you know, 0:19:03.920 --> 0:19:06.679 we do have the ability and obviously are going to 0:19:06.720 --> 0:19:10.159 renegotiate U s m c A. But at the same time, 0:19:10.720 --> 0:19:16.719 you know, the the feeling that that President Trump really 0:19:16.800 --> 0:19:19.840 likes to have the the like all the cards to play, 0:19:20.200 --> 0:19:23.240 and feels like Canada has very few cards to play 0:19:23.280 --> 0:19:26.720 because they haven't diversified. They're they're so tied to the 0:19:26.840 --> 0:19:30.359 US economy and they're really trying to figure out how 0:19:30.840 --> 0:19:34.840 quickly they can diversify their energy exports, their critical mineral exports. 0:19:35.080 --> 0:19:39.920 They have very you know, a very comprehensive political backing 0:19:40.119 --> 0:19:43.439 for d risking from the United States right now. I 0:19:43.440 --> 0:19:48.120 think that's unhealthy. But I do also think that that 0:19:48.160 --> 0:19:51.640 the that the President is going to use whatever leverage 0:19:51.640 --> 0:19:54.520 he has to strike the best deal he can. And 0:19:54.840 --> 0:19:57.399 but I do, I do, I do worry that he 0:19:57.960 --> 0:20:01.159 is probably more likely to be conducive to working with 0:20:01.280 --> 0:20:06.479 Mexico than he will be with Canada, and I just 0:20:07.320 --> 0:20:08.200 I'm worried about that. 0:20:08.480 --> 0:20:11.240