1 00:00:02,720 --> 00:00:10,520 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,560 --> 00:00:14,520 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:14,560 --> 00:00:17,840 Speaker 1: Eastern on Apple, Corplay and Android Auto with the Bloomberg 4 00:00:17,880 --> 00:00:21,000 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,320 --> 00:00:23,040 Speaker 1: or watch us live on YouTube. 6 00:00:23,560 --> 00:00:25,560 Speaker 2: You're looking at a market that's actually turning around, an 7 00:00:25,640 --> 00:00:26,360 Speaker 2: unbelievable move. 8 00:00:26,400 --> 00:00:28,040 Speaker 3: It's similar to what we saw yesterday. 9 00:00:28,040 --> 00:00:30,760 Speaker 2: Also, the NASTAC now up by five tenths of one percent, 10 00:00:30,840 --> 00:00:33,240 Speaker 2: joining us as Henry to treas Managing partner and director 11 00:00:33,560 --> 00:00:36,800 Speaker 2: of Economic Policy at Beta Partners, Henrietta. What the market 12 00:00:36,840 --> 00:00:39,199 Speaker 2: seems to want to understand is if tomorrow's going to 13 00:00:39,440 --> 00:00:42,519 Speaker 2: be a clearing event or the end of the beginning 14 00:00:42,600 --> 00:00:44,960 Speaker 2: before the next phase here of turmoil. 15 00:00:46,479 --> 00:00:46,720 Speaker 4: Yeah. 16 00:00:46,760 --> 00:00:49,720 Speaker 5: I mean that's obviously the critical question. I see no 17 00:00:49,840 --> 00:00:51,920 Speaker 5: indication that this is going to be a clearing event. 18 00:00:51,960 --> 00:00:53,400 Speaker 4: I'll give you a couple of reasons why. 19 00:00:53,720 --> 00:00:57,240 Speaker 5: Number one, we know that today the President instructed almost 20 00:00:57,320 --> 00:00:58,800 Speaker 5: three months ago, the. 21 00:01:00,320 --> 00:01:02,040 Speaker 4: Federal Trade agencies. 22 00:01:02,000 --> 00:01:07,800 Speaker 5: USTR, Commerce and Treasury to provide him with about fifteen 23 00:01:08,120 --> 00:01:12,520 Speaker 5: or more different reports about different components of our trade landscape, 24 00:01:12,520 --> 00:01:15,600 Speaker 5: trade relations, with twenty different countries, Not a single one 25 00:01:15,640 --> 00:01:19,440 Speaker 5: of those reports has been publicly released yet, So the 26 00:01:19,480 --> 00:01:23,960 Speaker 5: background to justify the forthcoming tariffs is something that you 27 00:01:24,000 --> 00:01:28,240 Speaker 5: would expect to see publicly released, formalized and a Federal 28 00:01:28,280 --> 00:01:32,480 Speaker 5: Register update. We're even discussed with the media in advance 29 00:01:32,520 --> 00:01:35,399 Speaker 5: of a publication, should be all laid out if this 30 00:01:35,440 --> 00:01:36,640 Speaker 5: is going to be clear. 31 00:01:36,400 --> 00:01:37,800 Speaker 4: Cut and ready to go tomorrow. 32 00:01:38,080 --> 00:01:40,919 Speaker 5: So the disarray that we're seeing, the sort of knives 33 00:01:40,959 --> 00:01:44,520 Speaker 5: out reporting we're seeing for Howard Lutnick at Commerce, and 34 00:01:44,640 --> 00:01:48,440 Speaker 5: the general disarray and lack of cohesiveness from the White 35 00:01:48,480 --> 00:01:50,760 Speaker 5: House around this suggests that while we're going to get 36 00:01:50,800 --> 00:01:54,040 Speaker 5: a lot of tariffs announced tomorrow and implemented at midnight, 37 00:01:54,440 --> 00:01:57,040 Speaker 5: there's still going to be a substantial amount of uncertainty. 38 00:01:57,080 --> 00:02:02,240 Speaker 5: I'm especially concerned about India additional Section three h one investigations, 39 00:02:02,720 --> 00:02:04,160 Speaker 5: what it means to pull out of the Phase one 40 00:02:04,200 --> 00:02:06,760 Speaker 5: trade deal with China, declare them in violation, and how 41 00:02:06,800 --> 00:02:09,760 Speaker 5: that impacts the tariffs will see on China and obviously 42 00:02:09,840 --> 00:02:12,880 Speaker 5: Canada and Mexico, which is maybe the most discomforting of 43 00:02:12,919 --> 00:02:15,360 Speaker 5: all the tariffs, especially to the auto manufacturers right. 44 00:02:15,280 --> 00:02:18,359 Speaker 6: Now, Henrietta, maybe it's just me but I haven't heard 45 00:02:18,400 --> 00:02:22,720 Speaker 6: a whole lot from the US Congress either house about 46 00:02:23,040 --> 00:02:26,840 Speaker 6: their views on trade policies and potential changes and potential tariffs. 47 00:02:27,000 --> 00:02:27,720 Speaker 6: Is that unusual. 48 00:02:29,240 --> 00:02:33,280 Speaker 5: It's not unusual, but it is, you know, certainly notable, 49 00:02:33,440 --> 00:02:37,280 Speaker 5: and I think should be relatively embarrassing for a chamber 50 00:02:37,360 --> 00:02:40,800 Speaker 5: that used to pride itself on having authority over you know, 51 00:02:40,919 --> 00:02:44,480 Speaker 5: tax policy and trade policy and has been seating those 52 00:02:45,040 --> 00:02:45,919 Speaker 5: controls to the. 53 00:02:45,880 --> 00:02:48,000 Speaker 4: White House since the seventies, if not before. 54 00:02:48,280 --> 00:02:50,760 Speaker 5: However, I will say they are going to hold a 55 00:02:50,840 --> 00:02:54,680 Speaker 5: vote as early as this evening on the AIPA tariffs 56 00:02:54,680 --> 00:02:57,799 Speaker 5: against Canada, and there are a number of Republicans in 57 00:02:57,840 --> 00:03:00,640 Speaker 5: the Senate who are telegraphing that they're going to cross 58 00:03:00,639 --> 00:03:04,120 Speaker 5: party lines and vote against the President's declaration of national 59 00:03:04,120 --> 00:03:07,000 Speaker 5: emergency against Canada, including Senator. 60 00:03:06,639 --> 00:03:07,680 Speaker 4: Collins of Maine. 61 00:03:08,000 --> 00:03:10,920 Speaker 5: I wouldn't be surprised if Obviously Ram Paul, who's a 62 00:03:10,919 --> 00:03:13,320 Speaker 5: co sponsor of the legislation from Kentucky, will be there, 63 00:03:13,600 --> 00:03:17,320 Speaker 5: Chuck Grassley. Obviously, the farm state senators are the most 64 00:03:17,360 --> 00:03:19,839 Speaker 5: exposed here. We know that the USDA is already talking 65 00:03:19,919 --> 00:03:23,600 Speaker 5: about another bailout for farmers as we head into a 66 00:03:23,720 --> 00:03:26,960 Speaker 5: global transformation of trade that will hurt them substantially. 67 00:03:27,960 --> 00:03:30,160 Speaker 2: Do we get the sense that if there is a 68 00:03:30,320 --> 00:03:32,880 Speaker 2: short term pain for US companies that the administration is 69 00:03:32,880 --> 00:03:34,600 Speaker 2: going to help subsidize it, which is really what we 70 00:03:34,639 --> 00:03:36,920 Speaker 2: saw with farmers back in the first time of administration. 71 00:03:36,960 --> 00:03:37,760 Speaker 3: And is that kind of. 72 00:03:37,680 --> 00:03:40,400 Speaker 2: What the tax bill will be or is it going 73 00:03:40,440 --> 00:03:41,440 Speaker 2: to be something more beefy. 74 00:03:42,760 --> 00:03:45,480 Speaker 5: No, the tax bill should not be considered subsidization because 75 00:03:45,480 --> 00:03:47,760 Speaker 5: it's an extension of the status quo and it's so 76 00:03:47,920 --> 00:03:51,440 Speaker 5: expensive already four point six trillion dollars just to keep 77 00:03:51,680 --> 00:03:54,200 Speaker 5: things where they are that you should not expect additional 78 00:03:54,240 --> 00:03:58,000 Speaker 5: subsidization or tax cuts for either businesses or individuals. That 79 00:03:58,120 --> 00:04:02,080 Speaker 5: is a point blank declaration from Senate staff that I 80 00:04:02,120 --> 00:04:04,680 Speaker 5: speak with on Capitol Hill. I would go a little 81 00:04:04,680 --> 00:04:08,560 Speaker 5: bit further and say the endeavor they they endeavor to 82 00:04:08,920 --> 00:04:11,960 Speaker 5: cut the deficit by one and a half trillion dollars. 83 00:04:12,080 --> 00:04:14,320 Speaker 5: My expectation is they ultimately come in at around four 84 00:04:14,360 --> 00:04:16,440 Speaker 5: hundred to eight hundred billion dollars and more. 85 00:04:16,480 --> 00:04:18,080 Speaker 4: Paid lip service to deficit reduction. 86 00:04:18,360 --> 00:04:21,080 Speaker 5: But you cannot call it deficit reduction when you'll simultaneously 87 00:04:21,080 --> 00:04:23,360 Speaker 5: writing off a four point six trillion dollar extension of 88 00:04:23,400 --> 00:04:27,760 Speaker 5: the existing rates. So unless you consider, like many staffers do, 89 00:04:28,400 --> 00:04:32,720 Speaker 5: the idea that providing certainty and permanency for individual tax 90 00:04:32,839 --> 00:04:36,000 Speaker 5: rates constitute stimulus, there will not be stimulus in this 91 00:04:36,080 --> 00:04:38,640 Speaker 5: tax bill. So these TIFFs are coming, they are tax hikes. 92 00:04:38,839 --> 00:04:40,120 Speaker 5: There are not tax cuts coming. 93 00:04:41,480 --> 00:04:44,240 Speaker 6: Henriette, can you explain to politics of this tariff thing here? 94 00:04:44,320 --> 00:04:47,200 Speaker 6: I mean the markets, you know, stock markets down nine 95 00:04:47,200 --> 00:04:51,280 Speaker 6: to ten percent, the dollars trading lower. The markets are 96 00:04:51,520 --> 00:04:54,160 Speaker 6: just don't like the uncertainty, I guess more than anything else. 97 00:04:55,200 --> 00:04:58,440 Speaker 6: And the concern is it may slow down in this economy, 98 00:04:58,480 --> 00:05:01,240 Speaker 6: may push it into a recession, may cause some inflation. 99 00:05:02,160 --> 00:05:05,239 Speaker 6: Historically that's not been good politically, it's the economy stupid. 100 00:05:05,640 --> 00:05:08,120 Speaker 6: What's the political call here? On behalf of President Trump 101 00:05:08,160 --> 00:05:08,840 Speaker 6: and the administration. 102 00:05:09,960 --> 00:05:12,640 Speaker 5: The view from the White House is that they have 103 00:05:12,680 --> 00:05:15,760 Speaker 5: a mandate. They have the House, the Senate, and the presidency. 104 00:05:16,520 --> 00:05:21,560 Speaker 5: They won the swing states, and they have successfully come 105 00:05:21,560 --> 00:05:23,360 Speaker 5: back from a loss in twenty twenty. So they are 106 00:05:23,400 --> 00:05:26,520 Speaker 5: going as if this is something that all of America 107 00:05:26,560 --> 00:05:29,279 Speaker 5: and certainly their voters, are fully behind. 108 00:05:29,480 --> 00:05:31,719 Speaker 4: The polls suggest that that's not the case. 109 00:05:31,960 --> 00:05:34,760 Speaker 5: The lowest amount of support for President Trump comes on 110 00:05:34,839 --> 00:05:38,159 Speaker 5: his tariff's strategy. The American public is very aware that 111 00:05:38,200 --> 00:05:41,080 Speaker 5: tariffs are not tax cuts, as the President has proclaimed, 112 00:05:41,240 --> 00:05:41,840 Speaker 5: and they do not. 113 00:05:41,880 --> 00:05:43,600 Speaker 4: View tomorrow as liberation Day. 114 00:05:44,200 --> 00:05:46,440 Speaker 5: They view it as a scenario where we're going to 115 00:05:46,480 --> 00:05:50,680 Speaker 5: see more tariffs and taxes, mostly because, of course, that 116 00:05:50,800 --> 00:05:52,279 Speaker 5: is what is coming, and you can see it in 117 00:05:52,279 --> 00:05:55,960 Speaker 5: the pull forward purchases at auto sectors, for example, or 118 00:05:56,080 --> 00:05:56,839 Speaker 5: auto sales. 119 00:05:57,200 --> 00:05:58,680 Speaker 4: So you have a. 120 00:05:58,640 --> 00:06:01,640 Speaker 5: Pretty material disconnect between what the White House things that 121 00:06:01,680 --> 00:06:05,400 Speaker 5: does a mandate for, and what voters are suggesting they support. 122 00:06:05,760 --> 00:06:08,800 Speaker 5: But on Capitol Hill, as you point out, the Senators 123 00:06:08,839 --> 00:06:10,800 Speaker 5: and the House members, the best that they can do, 124 00:06:10,920 --> 00:06:15,080 Speaker 5: given President Trump's stranglehold on their voters and the incredible 125 00:06:15,120 --> 00:06:18,720 Speaker 5: popularity that he shares, is that they have to go 126 00:06:18,760 --> 00:06:20,440 Speaker 5: along with this now. And the best they can do 127 00:06:20,960 --> 00:06:25,359 Speaker 5: is expect that the uncertainty is really the problem here. 128 00:06:25,560 --> 00:06:28,320 Speaker 5: So once we get past tomorrow, you'll hear folks say 129 00:06:28,360 --> 00:06:30,680 Speaker 5: eighty percent of the whole market downturn is because things 130 00:06:30,720 --> 00:06:34,560 Speaker 5: are uncertain. It's much more likely that once we get 131 00:06:34,600 --> 00:06:36,640 Speaker 5: past tomorrow, things will calm down, and then they're very 132 00:06:36,640 --> 00:06:39,719 Speaker 5: optimistic that some of these tariffs on especially Canada and 133 00:06:39,720 --> 00:06:42,040 Speaker 5: Mexico will start to come off over the summer in 134 00:06:42,080 --> 00:06:44,080 Speaker 5: time for a turnaround going into the twenty twenty six 135 00:06:44,200 --> 00:06:46,559 Speaker 5: midterm elections, which is about eighteen months away. 136 00:06:46,839 --> 00:06:49,880 Speaker 2: Is there any real data that points to the fact 137 00:06:49,920 --> 00:06:50,839 Speaker 2: that that could happen. 138 00:06:52,160 --> 00:06:54,719 Speaker 5: Well, there's no real data on anything except for what's 139 00:06:54,720 --> 00:06:55,719 Speaker 5: in Trump's. 140 00:06:55,320 --> 00:06:58,560 Speaker 4: Mind on what could come and what might come off. 141 00:06:58,800 --> 00:07:01,920 Speaker 5: But there is very real concrete data that I think 142 00:07:02,000 --> 00:07:04,839 Speaker 5: keeps being ignored, which is that the president has imposed 143 00:07:05,200 --> 00:07:08,240 Speaker 5: twenty percent tariffs on nearly five hundred billion dollars worth 144 00:07:08,279 --> 00:07:11,080 Speaker 5: of goods coming in from China and twenty five percent 145 00:07:11,160 --> 00:07:14,520 Speaker 5: tariffs on all trade coming from Canada and Mexico on 146 00:07:14,680 --> 00:07:19,280 Speaker 5: about forty percent of imports. There's also an underreported narrative 147 00:07:19,280 --> 00:07:20,920 Speaker 5: that I think we'll hear about in the coming months, 148 00:07:21,080 --> 00:07:25,040 Speaker 5: which is that the disruption at the border is incredibly 149 00:07:25,080 --> 00:07:30,040 Speaker 5: widespread and underappreciated because you have no one to go 150 00:07:30,080 --> 00:07:33,160 Speaker 5: to at USTR that you can get recourse for if 151 00:07:33,160 --> 00:07:36,360 Speaker 5: you want to explain that you are USMCA compliant or 152 00:07:36,640 --> 00:07:37,800 Speaker 5: seeking an exclusion. 153 00:07:38,160 --> 00:07:39,080 Speaker 4: So there's these. 154 00:07:38,880 --> 00:07:42,440 Speaker 5: Backlogs and confusion at the border taking place right now. 155 00:07:42,680 --> 00:07:45,040 Speaker 5: The most concrete example would be when the president be 156 00:07:45,160 --> 00:07:47,960 Speaker 5: executive order changed the deminimous rules and created such a 157 00:07:47,960 --> 00:07:51,240 Speaker 5: logjam we had to pull it off. That's actually occurring 158 00:07:51,280 --> 00:07:53,880 Speaker 5: at the border right now. It's being underreported, I think 159 00:07:53,920 --> 00:07:57,480 Speaker 5: in part because businesses are still trying to get exclusions 160 00:07:57,480 --> 00:07:59,400 Speaker 5: and they're not able to speak with anybody that they 161 00:07:59,440 --> 00:08:02,600 Speaker 5: don't want to rough feathers in the anticipation of hopefully 162 00:08:02,600 --> 00:08:04,280 Speaker 5: being able to get an audience in the months ahead. 163 00:08:04,880 --> 00:08:07,920 Speaker 6: All Right, it's not just terifs. At some point, Congress 164 00:08:07,920 --> 00:08:09,520 Speaker 6: has got to fund the government and do all that 165 00:08:09,560 --> 00:08:11,120 Speaker 6: kind of stuff. How should we think about the to 166 00:08:11,200 --> 00:08:14,320 Speaker 6: do list for Congress in the coming days and weeks. 167 00:08:14,880 --> 00:08:17,680 Speaker 4: There's so much there, Okay, So first things. 168 00:08:17,480 --> 00:08:22,920 Speaker 5: First, I would say, the Senate budget that they're working 169 00:08:22,920 --> 00:08:24,880 Speaker 5: on right now, I understand, is going to include a 170 00:08:24,920 --> 00:08:27,760 Speaker 5: five trillion dollar hike to the debt ceiling. 171 00:08:28,400 --> 00:08:30,240 Speaker 4: Now, that is an exorbitant figure. 172 00:08:30,480 --> 00:08:32,560 Speaker 5: The last time we hiked the debt ceiling by any 173 00:08:32,559 --> 00:08:35,480 Speaker 5: dollar figure, it was one point two trillion dollars. 174 00:08:35,200 --> 00:08:37,440 Speaker 4: So five trillion is shocking. 175 00:08:38,080 --> 00:08:42,440 Speaker 5: This belies the reality that current policy baseline accounting for 176 00:08:42,520 --> 00:08:43,839 Speaker 5: extending the existing. 177 00:08:43,480 --> 00:08:46,920 Speaker 4: Tax rates is not free. It does matter to the Treasury. 178 00:08:47,000 --> 00:08:49,840 Speaker 5: They do need a five trillion dollar increase in the 179 00:08:49,840 --> 00:08:52,360 Speaker 5: debt ceiling, and by the way, that's only to get 180 00:08:52,360 --> 00:08:52,600 Speaker 5: through the. 181 00:08:52,559 --> 00:08:53,800 Speaker 4: Twenty twenty six midterms. 182 00:08:54,000 --> 00:08:55,880 Speaker 5: That's not for Trump's full term, which is what I 183 00:08:55,920 --> 00:08:58,800 Speaker 5: originally anticipated when I heard that number a month ago. 184 00:08:59,280 --> 00:09:01,720 Speaker 4: So first things first, we have to deal with that. 185 00:09:01,840 --> 00:09:03,160 Speaker 5: I expect it to be in the budget that we 186 00:09:03,160 --> 00:09:05,000 Speaker 5: should see from the Senate as early as tonight. 187 00:09:05,240 --> 00:09:06,920 Speaker 4: That'll come due in July. 188 00:09:07,200 --> 00:09:09,360 Speaker 5: Secretary Bessett will give us an update on that in May, 189 00:09:09,840 --> 00:09:11,280 Speaker 5: and then, as you point out, we do have a 190 00:09:11,280 --> 00:09:13,800 Speaker 5: government funding bill that's going to be due September thirtieth, 191 00:09:13,840 --> 00:09:15,840 Speaker 5: and I think that's where we're going to see the 192 00:09:15,920 --> 00:09:20,680 Speaker 5: farmers bailout, housed aid to California wildfires, and depending on 193 00:09:20,679 --> 00:09:22,719 Speaker 5: the scale and scope of this tax bill, it could 194 00:09:22,760 --> 00:09:24,679 Speaker 5: be where you see an expansion of the child tax 195 00:09:24,760 --> 00:09:28,000 Speaker 5: credit and extension of the ECA subsidies. The reality is 196 00:09:28,000 --> 00:09:31,439 Speaker 5: you need probably ten to twenty Democratic votes in the 197 00:09:31,480 --> 00:09:34,000 Speaker 5: Senate for any bill to keep the government open, and 198 00:09:34,040 --> 00:09:36,480 Speaker 5: we all saw what happened to Minority Leader Schumer last 199 00:09:36,520 --> 00:09:39,800 Speaker 5: go around, so I expect that September period to be 200 00:09:39,920 --> 00:09:44,840 Speaker 5: really fraught with negotiations and a lot of tension, much 201 00:09:44,840 --> 00:09:47,000 Speaker 5: of which we'll see play out as a result of 202 00:09:47,040 --> 00:09:50,840 Speaker 5: the elections in Florida's sixth and first districts tonight. So 203 00:09:50,920 --> 00:09:53,000 Speaker 5: that'll be a fascinating precursor to how this will all 204 00:09:53,000 --> 00:09:53,640 Speaker 5: play out. 205 00:09:53,760 --> 00:09:56,320 Speaker 2: All right, Henrita, thanks a lot. We really appreciate your analysis, 206 00:09:56,320 --> 00:09:58,800 Speaker 2: Henry A. Trist Managing partner and director of Economic Policy 207 00:09:58,800 --> 00:10:00,640 Speaker 2: of Beta Partners. Which then raised the question too, and 208 00:10:00,679 --> 00:10:02,800 Speaker 2: we talk about a clearing event with all that in store, 209 00:10:03,240 --> 00:10:04,679 Speaker 2: how could anything be a clearing event. 210 00:10:04,880 --> 00:10:05,439 Speaker 6: That's a great point. 211 00:10:05,520 --> 00:10:06,520 Speaker 3: Yeah, at this point, yep. 212 00:10:06,640 --> 00:10:08,640 Speaker 6: So I mean you're going to have tomorrow some terrors. 213 00:10:08,679 --> 00:10:10,480 Speaker 6: Hopefully that will provide a little bit of clarity for 214 00:10:10,920 --> 00:10:12,080 Speaker 6: some members of the marketplace. 215 00:10:13,760 --> 00:10:17,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 216 00:10:17,520 --> 00:10:20,640 Speaker 1: weekdays at ten am Eastern on Apple, Coarcklay, and Android 217 00:10:20,640 --> 00:10:23,920 Speaker 1: Auto with the Bloomberg Business app, Listen on demand wherever 218 00:10:24,000 --> 00:10:27,120 Speaker 1: you get your podcasts, or watch us live on YouTube. 219 00:10:27,600 --> 00:10:29,480 Speaker 6: Right now, let's go to Tim Fiori break it down 220 00:10:29,880 --> 00:10:32,840 Speaker 6: the He's the chairman of the Manufacturing Business Survey for 221 00:10:32,880 --> 00:10:36,120 Speaker 6: the Institute for Supply Management. Tim talk to us about 222 00:10:36,120 --> 00:10:38,839 Speaker 6: this im data. The manufacturing headline came into forty nine, 223 00:10:38,880 --> 00:10:40,680 Speaker 6: below the consensus and below last month. 224 00:10:41,760 --> 00:10:44,120 Speaker 7: Yeah, I think we disappointed here, but there's no huge 225 00:10:44,160 --> 00:10:46,640 Speaker 7: surprise to this. I think the important thing is after 226 00:10:46,720 --> 00:10:48,839 Speaker 7: I look through all the data, I had to step 227 00:10:48,880 --> 00:10:51,800 Speaker 7: back and say what am I seeing here? And essentially 228 00:10:51,840 --> 00:10:53,920 Speaker 7: what you got here is we're not sure what to 229 00:10:53,960 --> 00:10:57,679 Speaker 7: do and we're so confused. So if you look at 230 00:10:57,679 --> 00:11:01,200 Speaker 7: the three elements, outputs, demands, and input, this PMI is 231 00:11:01,200 --> 00:11:04,400 Speaker 7: being supported again by the input strength, which is really 232 00:11:04,440 --> 00:11:06,200 Speaker 7: being driven by the terriff issue. 233 00:11:06,520 --> 00:11:06,920 Speaker 6: So if you. 234 00:11:06,960 --> 00:11:08,800 Speaker 7: Remove that out, this month would have been about a 235 00:11:08,840 --> 00:11:11,000 Speaker 7: forty eight three, just like last month would have been 236 00:11:11,000 --> 00:11:13,760 Speaker 7: a forty eight three. Our demand is still non existent 237 00:11:13,800 --> 00:11:16,880 Speaker 7: really because we're waiting to make investments. But I think 238 00:11:16,880 --> 00:11:19,400 Speaker 7: the biggest the biggest story here in this month's report 239 00:11:19,840 --> 00:11:22,559 Speaker 7: is that revenue is down this month. We're continuing to 240 00:11:22,640 --> 00:11:25,600 Speaker 7: d staff and it's all being driven by the uncertainty 241 00:11:25,800 --> 00:11:29,600 Speaker 7: around the near term the moderate term market development as 242 00:11:29,640 --> 00:11:32,320 Speaker 7: tariffs get deployed. The good thing is tomorrow should shed 243 00:11:32,320 --> 00:11:33,000 Speaker 7: a lot more light. 244 00:11:33,559 --> 00:11:39,600 Speaker 2: Yes, well maybe tim to that point. If this uncertainty persists, 245 00:11:39,760 --> 00:11:42,720 Speaker 2: what's the end result to that, like is it more destocking, 246 00:11:42,760 --> 00:11:45,560 Speaker 2: is it more layoffs, is it less investment, or is 247 00:11:45,559 --> 00:11:46,520 Speaker 2: it just deferred. 248 00:11:47,360 --> 00:11:50,000 Speaker 7: Well, so you know our inventory number will drop because 249 00:11:50,000 --> 00:11:51,600 Speaker 7: we're probably trying to get two or three months with 250 00:11:51,640 --> 00:11:54,320 Speaker 7: the inventory in hand here to avoid the first hits 251 00:11:54,320 --> 00:11:56,400 Speaker 7: of the of the tariffs. But I think it's becoming 252 00:11:56,440 --> 00:11:58,720 Speaker 7: clear now that these things probably aren't going to go away. 253 00:11:59,280 --> 00:12:00,920 Speaker 7: So what's going to happen. Happening is is that it's 254 00:12:00,960 --> 00:12:03,800 Speaker 7: going to limit our willingness to invest in capital. We 255 00:12:03,840 --> 00:12:06,960 Speaker 7: are investing in inventory, as you can see, we're not 256 00:12:07,080 --> 00:12:10,280 Speaker 7: investing in capital goods to replace capital, to expand capital, 257 00:12:10,600 --> 00:12:13,160 Speaker 7: R and D capital. That's really all on hold here 258 00:12:13,240 --> 00:12:15,520 Speaker 7: until this whole thing settles out. Here, we are one 259 00:12:15,600 --> 00:12:18,400 Speaker 7: day before a major day and we're still not sure 260 00:12:18,400 --> 00:12:21,000 Speaker 7: of the details, So a lot of uncertainty here. You know, 261 00:12:21,200 --> 00:12:24,680 Speaker 7: the market manufacturer does not like uncertainty. We're in the 262 00:12:24,720 --> 00:12:26,920 Speaker 7: middle of the uncertainty here. Going to need a little 263 00:12:26,920 --> 00:12:28,559 Speaker 7: bit more time to see where this goes. But in 264 00:12:28,600 --> 00:12:30,760 Speaker 7: the meantime, you think this would have been a forty 265 00:12:30,760 --> 00:12:34,120 Speaker 7: eight to five forty eight three if it was denormalize 266 00:12:34,160 --> 00:12:36,800 Speaker 7: for a normal behavior here, which right now we don't have, 267 00:12:36,920 --> 00:12:39,840 Speaker 7: so we did disappoint I think we underperformed forty nine. 268 00:12:40,000 --> 00:12:41,800 Speaker 7: I think the average was supposed to be forty nine 269 00:12:41,840 --> 00:12:44,440 Speaker 7: to five. Not a huge difference. You know, we're not 270 00:12:44,480 --> 00:12:47,800 Speaker 7: collapsing here, but we're still reducing our revenue and reducing 271 00:12:47,800 --> 00:12:50,080 Speaker 7: our head count, which in a moderate term may not 272 00:12:50,120 --> 00:12:51,920 Speaker 7: be good in any kind of recovery cycle. 273 00:12:52,200 --> 00:12:53,840 Speaker 6: All right, Tim, thank you so much for joining us. 274 00:12:53,880 --> 00:12:56,880 Speaker 6: Tim Fury, chairman of the Manufacturing Business Survey the Institute 275 00:12:56,920 --> 00:13:00,000 Speaker 6: for Supply Management. Again the ICE in headline data, manufacturing 276 00:13:00,040 --> 00:13:02,760 Speaker 6: data came into forty nine. The consensus was forty nine 277 00:13:02,760 --> 00:13:05,080 Speaker 6: to five, so anything below fifty means a contraction into 278 00:13:05,120 --> 00:13:10,560 Speaker 6: manufacturing economy. The ICE prices paid search the sixty nine 279 00:13:10,600 --> 00:13:14,199 Speaker 6: point four, well above where folks were looking. And employment 280 00:13:14,880 --> 00:13:19,200 Speaker 6: remains weak and actually weaker than expectations, so some issues 281 00:13:19,200 --> 00:13:22,640 Speaker 6: there in the manufacturing sector as well. 282 00:13:22,800 --> 00:13:26,520 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 283 00:13:26,600 --> 00:13:29,959 Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto 284 00:13:30,080 --> 00:13:33,160 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 285 00:13:33,200 --> 00:13:36,160 Speaker 1: get your podcasts, or watch us live on YouTube. 286 00:13:37,160 --> 00:13:38,800 Speaker 3: This is Bloomberg Intelligence Radio. 287 00:13:38,880 --> 00:13:41,120 Speaker 2: We cover all the top news and business, economics and 288 00:13:41,160 --> 00:13:43,640 Speaker 2: finance through a lens of our Bloomberg intelligence folks. They 289 00:13:43,640 --> 00:13:45,920 Speaker 2: cover two thousand companies and one hundred and thirty industries 290 00:13:46,240 --> 00:13:48,600 Speaker 2: all around the world, and we also like updating you 291 00:13:48,720 --> 00:13:52,040 Speaker 2: on the view outside of Bloomberg. Sarah Ponzik is financial 292 00:13:52,040 --> 00:13:54,840 Speaker 2: officer at UBS Private Wealth Management. She joins us now 293 00:13:54,880 --> 00:13:58,240 Speaker 2: from Boca Raton, Florida for her take on the market. Sarah, 294 00:13:58,320 --> 00:14:00,280 Speaker 2: you have private wealth, so your clients are in this 295 00:14:00,360 --> 00:14:03,280 Speaker 2: for the long term, but uncertainty can last for quite 296 00:14:03,320 --> 00:14:06,640 Speaker 2: a long time. How do you rethink of portfolio to 297 00:14:06,679 --> 00:14:10,120 Speaker 2: take advantage of upside but also protection in this weird. 298 00:14:09,840 --> 00:14:13,880 Speaker 8: Time, uncertainty can last for a long time. And what's 299 00:14:13,920 --> 00:14:17,600 Speaker 8: interesting is, although you can say ever since we entered 300 00:14:17,600 --> 00:14:20,760 Speaker 8: the new year, ever since the new administration took over, 301 00:14:20,960 --> 00:14:23,800 Speaker 8: there's been uncertainty, really hasn't been that long. It's only 302 00:14:23,880 --> 00:14:25,840 Speaker 8: been a couple of months. But I think we can 303 00:14:25,880 --> 00:14:28,520 Speaker 8: all agree it feels like a lifetime. And we have 304 00:14:28,600 --> 00:14:32,560 Speaker 8: certainly seen it affect sentiment in sentiment surveys and also 305 00:14:32,840 --> 00:14:35,360 Speaker 8: in you know, sentiment from our clients as well. Plenty 306 00:14:35,400 --> 00:14:38,680 Speaker 8: of calls, plenty of emails are having conversations every day. 307 00:14:39,160 --> 00:14:41,480 Speaker 8: But as your question Alex of how do you think 308 00:14:41,480 --> 00:14:45,200 Speaker 8: about this in terms of long term portfolios and rejriggering portfolios, 309 00:14:45,440 --> 00:14:46,760 Speaker 8: I think at the end of the day, we all 310 00:14:46,800 --> 00:14:48,920 Speaker 8: have to understand volatilities here today. 311 00:14:49,200 --> 00:14:50,000 Speaker 4: It's not going away. 312 00:14:50,040 --> 00:14:53,080 Speaker 8: It's not as though tomorrow is Liberation Day. We're going 313 00:14:53,120 --> 00:14:55,120 Speaker 8: to find out exactly what's happening with tariffs and all 314 00:14:55,120 --> 00:14:57,040 Speaker 8: of a sudden it's going to be the sailing from here. 315 00:14:57,200 --> 00:14:59,000 Speaker 8: That's not the case. There's still going to be a 316 00:14:59,000 --> 00:15:00,920 Speaker 8: lot of back and forth, a lot of ups and 317 00:15:00,960 --> 00:15:03,440 Speaker 8: downs in markets, a lot of inter day volatility, and 318 00:15:03,480 --> 00:15:05,760 Speaker 8: we have to get used to it. But something that 319 00:15:05,800 --> 00:15:09,640 Speaker 8: I do think is very important for people to understand 320 00:15:09,680 --> 00:15:13,800 Speaker 8: here is that in the past ten percent corrections, which 321 00:15:13,840 --> 00:15:15,600 Speaker 8: is just about where we are on the S and 322 00:15:15,680 --> 00:15:19,640 Speaker 8: P five hundred, have been great entry points into the 323 00:15:19,680 --> 00:15:20,280 Speaker 8: stock market. 324 00:15:20,360 --> 00:15:21,360 Speaker 9: And yes, you have to. 325 00:15:21,440 --> 00:15:23,640 Speaker 8: Have a very strong stomach to be able to weather 326 00:15:23,640 --> 00:15:24,960 Speaker 8: the volatility. 327 00:15:24,400 --> 00:15:25,280 Speaker 4: As it continues. 328 00:15:25,720 --> 00:15:28,280 Speaker 8: But if you look at if you what have you know, 329 00:15:28,360 --> 00:15:30,920 Speaker 8: phased into the stock market at a ten percent correction 330 00:15:31,480 --> 00:15:34,200 Speaker 8: on average throughout history, you would have been well off 331 00:15:34,240 --> 00:15:34,920 Speaker 8: into the future. 332 00:15:35,760 --> 00:15:37,960 Speaker 6: What are your clients doing sir, are they going to cash, 333 00:15:38,040 --> 00:15:39,560 Speaker 6: are they buying the dip? What are they doing? 334 00:15:40,880 --> 00:15:43,800 Speaker 8: So we've had some clients ask about going to cash, 335 00:15:43,840 --> 00:15:47,040 Speaker 8: but that's not necessarily our recommendation at this point in time. 336 00:15:47,520 --> 00:15:48,040 Speaker 4: One. 337 00:15:48,320 --> 00:15:50,280 Speaker 8: I also think it's important to point out if you're 338 00:15:51,400 --> 00:15:55,479 Speaker 8: you know someone who's an investor, and you are well diversified, 339 00:15:55,520 --> 00:15:59,200 Speaker 8: you're also diversified in high quality bonds, some private investments 340 00:15:59,240 --> 00:16:02,720 Speaker 8: like private credit, private equity. You're not only invested in 341 00:16:02,760 --> 00:16:04,840 Speaker 8: tech in the market. Yes, it might be a significant 342 00:16:04,840 --> 00:16:07,320 Speaker 8: part of your portfolio, but that's not your only investment. 343 00:16:07,960 --> 00:16:09,720 Speaker 8: I think a lot of people might be surprised to 344 00:16:09,800 --> 00:16:12,160 Speaker 8: understand that if you look at your portfolios your to date, 345 00:16:12,480 --> 00:16:14,720 Speaker 8: you're maybe flat to down two percent. 346 00:16:15,280 --> 00:16:16,440 Speaker 1: We really have not. 347 00:16:16,840 --> 00:16:22,040 Speaker 8: Seen big moves yet to the downside that would really 348 00:16:22,200 --> 00:16:27,000 Speaker 8: qualify as something extremely scary or extremely extreme. So when 349 00:16:27,040 --> 00:16:28,840 Speaker 8: you think about the flip side, if you're going to 350 00:16:28,880 --> 00:16:31,520 Speaker 8: go sell investments that you've held for a long time, 351 00:16:31,680 --> 00:16:34,360 Speaker 8: go to cash. One, you're probably going to be facing 352 00:16:34,360 --> 00:16:36,320 Speaker 8: a big tax bill next year because you're going to 353 00:16:36,320 --> 00:16:38,120 Speaker 8: be taking realize gains at the end of the day, 354 00:16:38,360 --> 00:16:40,240 Speaker 8: and know you don't want the tax to tail to 355 00:16:40,400 --> 00:16:42,480 Speaker 8: waighl the to wag of the investment dog. 356 00:16:42,560 --> 00:16:44,520 Speaker 4: You don't want to be the only reason you don't 357 00:16:44,520 --> 00:16:45,080 Speaker 4: do anything. 358 00:16:45,600 --> 00:16:48,760 Speaker 8: But it's more so investors and clients of ours who 359 00:16:48,760 --> 00:16:50,680 Speaker 8: have had cash on the sidelines and who have been 360 00:16:50,720 --> 00:16:54,600 Speaker 8: waiting for an opportunity. It's more so you take advantage 361 00:16:54,600 --> 00:16:56,840 Speaker 8: of the stock market. You take advantage of this volatility, 362 00:16:56,840 --> 00:16:58,920 Speaker 8: You get your cash to work slowly, and you also, 363 00:16:59,240 --> 00:17:01,640 Speaker 8: you know, do assessment. If you're someone who sees your 364 00:17:01,640 --> 00:17:04,400 Speaker 8: portfolio down two percent year to date and you're freaking out, 365 00:17:04,720 --> 00:17:06,879 Speaker 8: maybe you have too much risk in your portfolio, that 366 00:17:06,960 --> 00:17:07,920 Speaker 8: is a reason to do risk. 367 00:17:08,200 --> 00:17:09,080 Speaker 3: It's such a good point. 368 00:17:09,640 --> 00:17:11,520 Speaker 2: The other side of it is if we see rates 369 00:17:11,880 --> 00:17:14,400 Speaker 2: a little lower, a little higher for longer, and there's 370 00:17:14,440 --> 00:17:16,520 Speaker 2: obviously a debate for that, because we're seeing a big 371 00:17:16,560 --> 00:17:19,200 Speaker 2: bid into the bond market. Goldman Sachs now sees three 372 00:17:19,240 --> 00:17:21,760 Speaker 2: cuts for the Fed this year. But if we don't 373 00:17:21,800 --> 00:17:24,639 Speaker 2: get that because there is inflation and it's stickier, you 374 00:17:24,640 --> 00:17:28,520 Speaker 2: need to diversify more into higher yielding products. 375 00:17:29,240 --> 00:17:32,800 Speaker 8: Well, it gives you the ability to honestly sit in 376 00:17:32,840 --> 00:17:37,000 Speaker 8: cash or buy bombs for longer and lock in interest rates. 377 00:17:37,000 --> 00:17:39,639 Speaker 8: I know so many people have been talking about you know, 378 00:17:39,800 --> 00:17:42,200 Speaker 8: locking and cash rates, locking and cash rates for really 379 00:17:42,200 --> 00:17:44,320 Speaker 8: the past year and a half because the expectation where 380 00:17:44,400 --> 00:17:46,800 Speaker 8: rates were going to come down and rates just didn't 381 00:17:46,800 --> 00:17:50,959 Speaker 8: come down as quickly as expected. They've been, you know, 382 00:17:51,119 --> 00:17:54,320 Speaker 8: pretty tough in staying where they are. So if you're 383 00:17:54,359 --> 00:17:56,760 Speaker 8: an investor who still has plenty of cash, it's giving 384 00:17:56,760 --> 00:17:59,359 Speaker 8: you this opportunity to lock and yields further into the 385 00:17:59,359 --> 00:18:02,280 Speaker 8: future by quality bonds and make sure you do lock 386 00:18:02,400 --> 00:18:05,040 Speaker 8: yields before rates come down. Our economists are of the 387 00:18:05,160 --> 00:18:08,919 Speaker 8: view that, you know that Chair Powell has said that 388 00:18:08,960 --> 00:18:11,920 Speaker 8: he expects any inflationary pressures from teriffs to be more so. 389 00:18:12,240 --> 00:18:14,400 Speaker 8: I don't want to say transitory, because everyoney's that word. 390 00:18:14,520 --> 00:18:17,560 Speaker 8: Now after a couple of years ago you put, you know, 391 00:18:17,640 --> 00:18:20,840 Speaker 8: not long standing, and that if there are more so 392 00:18:21,040 --> 00:18:23,800 Speaker 8: pressures on growth on the economy, if there are concerns 393 00:18:23,800 --> 00:18:26,920 Speaker 8: about the teeriating growth in a recession, than our economists 394 00:18:26,920 --> 00:18:29,160 Speaker 8: are of the view that the FED, even with tariffs 395 00:18:29,160 --> 00:18:31,240 Speaker 8: in place, would probably start to cut rates at that 396 00:18:31,280 --> 00:18:32,040 Speaker 8: point in time too. 397 00:18:32,560 --> 00:18:35,520 Speaker 6: So dividends are they important in the UBS kind of 398 00:18:35,520 --> 00:18:36,520 Speaker 6: equity allocation? 399 00:18:38,000 --> 00:18:40,959 Speaker 8: They are I would say dividends are certainly important, especially 400 00:18:41,000 --> 00:18:43,840 Speaker 8: if you are an income focused investor. I think the 401 00:18:43,880 --> 00:18:46,760 Speaker 8: problem with solely focusing on dividends, you know, there are 402 00:18:46,760 --> 00:18:49,080 Speaker 8: some investors who just think, Okay, I want to focus 403 00:18:49,080 --> 00:18:51,960 Speaker 8: on equity income. I'm only going to invest in stocks 404 00:18:51,960 --> 00:18:54,080 Speaker 8: that give me the highest dividend rates. A lot of 405 00:18:54,119 --> 00:18:58,600 Speaker 8: times both stocks, as you know, are value companies, and. 406 00:18:58,520 --> 00:19:00,720 Speaker 4: What's happened over the past five ten. 407 00:19:00,640 --> 00:19:03,720 Speaker 8: Years, frankly, as if you've only invested or focused on 408 00:19:03,760 --> 00:19:06,840 Speaker 8: that part of the market is you haven't been invested 409 00:19:07,280 --> 00:19:11,280 Speaker 8: in the very companies that have driven much of the 410 00:19:11,359 --> 00:19:14,399 Speaker 8: games over the last five to ten years, being big 411 00:19:14,480 --> 00:19:18,520 Speaker 8: tech and growth companies. So yes, I think having you know, 412 00:19:18,760 --> 00:19:22,000 Speaker 8: value in your portfolio is important, especially if you're an 413 00:19:22,040 --> 00:19:25,200 Speaker 8: income oriented investor looking for different ways to get income 414 00:19:25,240 --> 00:19:27,560 Speaker 8: in your portfolio and not just from the bond market 415 00:19:27,840 --> 00:19:30,040 Speaker 8: is very important. But I think you also want to 416 00:19:30,080 --> 00:19:34,440 Speaker 8: be very careful in not focusing too exclusively on evidents, 417 00:19:34,480 --> 00:19:36,399 Speaker 8: because if you had done that, you would have underperformed 418 00:19:36,400 --> 00:19:39,240 Speaker 8: the S and P five hundred pretty significantly, you know, 419 00:19:39,320 --> 00:19:40,120 Speaker 8: over the last. 420 00:19:39,880 --> 00:19:42,760 Speaker 2: Cycle, with the exception of the last three months, or 421 00:19:42,880 --> 00:19:46,120 Speaker 2: value actually being with the extend. 422 00:19:46,040 --> 00:19:47,280 Speaker 4: Over the last three months. 423 00:19:47,280 --> 00:19:50,359 Speaker 8: But you know, I'm still not counting growth out, in 424 00:19:50,440 --> 00:19:53,399 Speaker 8: counting chech out. We still see the long term growth 425 00:19:53,400 --> 00:19:56,159 Speaker 8: potential of tech and growth or we don't think that. 426 00:19:56,200 --> 00:19:58,840 Speaker 8: What we've seen over the last couple of months is 427 00:19:58,880 --> 00:20:02,200 Speaker 8: you know, a death now to these megacap tech companies. 428 00:20:02,240 --> 00:20:04,840 Speaker 8: Oh my gosh, they're no longer what they were. We'd 429 00:20:04,880 --> 00:20:07,880 Speaker 8: rather see this as an opportunity to write size exposure 430 00:20:07,920 --> 00:20:09,600 Speaker 8: if you've been under exposed all these years. 431 00:20:10,240 --> 00:20:12,520 Speaker 3: Yeah, Sarah, great stuff. Really appreciate it. Thank you so much. 432 00:20:12,520 --> 00:20:13,760 Speaker 3: Always good to get your perspective. 433 00:20:13,800 --> 00:20:17,520 Speaker 2: Sarah Ponzik, Financial Advisor, ubs A Private wealth management. 434 00:20:19,240 --> 00:20:22,920 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 435 00:20:23,040 --> 00:20:26,120 Speaker 1: weekdays at ten am Eastern on Apple Coarcklay, and Android 436 00:20:26,119 --> 00:20:29,440 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 437 00:20:29,480 --> 00:20:32,760 Speaker 1: you get your podcasts, or watch US live on YouTube. 438 00:20:33,400 --> 00:20:35,800 Speaker 6: Let's stay on the topic of global auto Steve Man 439 00:20:35,880 --> 00:20:40,160 Speaker 6: joins US Global Autos and Industrials research channels for Bloomberg Intelligence. Steve, 440 00:20:40,200 --> 00:20:43,960 Speaker 6: what are you telling clients about the impact we may 441 00:20:44,040 --> 00:20:48,760 Speaker 6: see tomorrow from President Trump and tariffs on the global 442 00:20:48,760 --> 00:20:49,639 Speaker 6: auto business. 443 00:20:51,080 --> 00:20:52,359 Speaker 9: I've been telling clients that. 444 00:20:53,320 --> 00:20:55,960 Speaker 10: I think we're pretty much done for all terriffs for now. 445 00:20:56,440 --> 00:20:58,760 Speaker 9: I think the big big thing that's going to come 446 00:20:58,880 --> 00:21:01,840 Speaker 9: up next is really on how parts are going to 447 00:21:01,920 --> 00:21:08,159 Speaker 9: be taxed going forward, and you know, it's it's a 448 00:21:08,200 --> 00:21:11,560 Speaker 9: big chunk. We had a report out there today. You know, 449 00:21:11,680 --> 00:21:15,000 Speaker 9: Tesla even though they make cars, a lot of cars here, 450 00:21:15,880 --> 00:21:18,639 Speaker 9: but about a third of their parts actually are imported 451 00:21:18,760 --> 00:21:23,840 Speaker 9: from elsewhere, mainly low cost country like Mexico. And surprisingly 452 00:21:24,000 --> 00:21:26,880 Speaker 9: Ford does build Ford Motor Company does build a lot 453 00:21:26,920 --> 00:21:29,880 Speaker 9: of companies here, a lot of cars here in the US, 454 00:21:30,240 --> 00:21:35,680 Speaker 9: but they only have some thirty percent content that's actually 455 00:21:36,160 --> 00:21:39,560 Speaker 9: based in the US. So lots to come on on 456 00:21:39,600 --> 00:21:42,160 Speaker 9: the auto parts section of the tariffs. 457 00:21:42,600 --> 00:21:45,000 Speaker 2: Yeah, so let's just understand that a little bit more 458 00:21:45,000 --> 00:21:48,480 Speaker 2: so you have the actual whole imported car versus the 459 00:21:48,520 --> 00:21:51,240 Speaker 2: car part, and the whole imported car stuff should happen 460 00:21:51,320 --> 00:21:56,520 Speaker 2: tomorrow or Thursday, whereas the car park is amazing? Am 461 00:21:56,560 --> 00:21:58,240 Speaker 2: I getting that relatively correct? 462 00:21:59,320 --> 00:22:03,520 Speaker 9: Yeah, that's right. So it's it could be really huge. 463 00:22:03,600 --> 00:22:07,200 Speaker 9: For example, we talked about I was just talking about Ford, right, 464 00:22:07,320 --> 00:22:10,439 Speaker 9: anything that comes in from Mexico, for example, the Machi 465 00:22:11,200 --> 00:22:15,520 Speaker 9: which they're losing tons of money on already comes from Mexico. 466 00:22:15,880 --> 00:22:19,000 Speaker 9: And then you know, if on top of that the 467 00:22:19,080 --> 00:22:22,080 Speaker 9: parts are actually coming from Mexico or any other low 468 00:22:22,119 --> 00:22:25,560 Speaker 9: cost country, that could actually lift the price of the 469 00:22:25,640 --> 00:22:27,320 Speaker 9: vehicle even even higher. 470 00:22:28,600 --> 00:22:32,480 Speaker 6: So are the US automakers is this going to benefit them? 471 00:22:32,520 --> 00:22:34,959 Speaker 6: And if so, how on to what degree? I'm not 472 00:22:35,000 --> 00:22:35,880 Speaker 6: I'm unclear here. 473 00:22:36,760 --> 00:22:40,159 Speaker 9: Well, I mean it's philosophical, there's I think debate on 474 00:22:40,280 --> 00:22:45,320 Speaker 9: both sides. Uh, you know, automated, but automobiles are high 475 00:22:45,440 --> 00:22:49,800 Speaker 9: value products. There's no argument against that. And you know, 476 00:22:50,240 --> 00:22:53,199 Speaker 9: the design of the vehicle, the production of the vehicle, 477 00:22:53,240 --> 00:22:56,440 Speaker 9: the manufacturing of the vehicles creates a lot of jobs 478 00:22:56,880 --> 00:23:00,720 Speaker 9: in the US in the manufacturing alone bym you know, 479 00:23:00,800 --> 00:23:07,159 Speaker 9: quoting some economists, every job that manufacturing creates, it creates 480 00:23:07,200 --> 00:23:12,000 Speaker 9: another point four jobs, you know, peripheral jobs for that 481 00:23:12,200 --> 00:23:14,840 Speaker 9: to support that manufacturing. So it does create a lot 482 00:23:14,840 --> 00:23:18,680 Speaker 9: of jobs. It does create a lot of innovation. Example, 483 00:23:18,840 --> 00:23:22,199 Speaker 9: you know, we just had Rivian on a lot of 484 00:23:22,200 --> 00:23:26,000 Speaker 9: these peer plays like Rivian of Tesla. 485 00:23:26,600 --> 00:23:29,920 Speaker 11: Uh, they make a lot of the high value components 486 00:23:30,000 --> 00:23:33,680 Speaker 11: in house and in the US already, and that has 487 00:23:33,800 --> 00:23:36,960 Speaker 11: created a lot of innovation around cars. 488 00:23:37,480 --> 00:23:38,640 Speaker 9: And around how to. 489 00:23:38,680 --> 00:23:44,600 Speaker 10: Make cars as in a cheap way a less expensive way. 490 00:23:45,560 --> 00:23:46,440 Speaker 10: And you know, I. 491 00:23:46,400 --> 00:23:49,080 Speaker 9: Think there's debate right a lot of the likeas the 492 00:23:49,119 --> 00:23:54,119 Speaker 9: automakers have you know, outsource that manufacturing to low cost 493 00:23:54,160 --> 00:23:56,720 Speaker 9: country and maybe that's why they're facing a lot of 494 00:23:56,720 --> 00:24:00,520 Speaker 9: the competition around the world where they can ain't really 495 00:24:00,560 --> 00:24:05,720 Speaker 9: built cars cheaply to the masses. 496 00:24:06,560 --> 00:24:08,400 Speaker 2: Is it possible that some of the winners are actually 497 00:24:08,440 --> 00:24:11,720 Speaker 2: going to be other foreign companies, Like we're talking about 498 00:24:11,960 --> 00:24:15,480 Speaker 2: Paul just at least a hybrid that was built either 499 00:24:15,520 --> 00:24:19,880 Speaker 2: in Ohio or what was it, Virginia? Some US based 500 00:24:19,920 --> 00:24:22,280 Speaker 2: so but it's a Honda. You can make the same 501 00:24:22,359 --> 00:24:25,080 Speaker 2: argument for Toyota, like are those cars actually going to 502 00:24:25,080 --> 00:24:26,120 Speaker 2: be the bigger winners here? 503 00:24:27,760 --> 00:24:31,240 Speaker 9: It could be like Japanese if you look at you know, 504 00:24:31,280 --> 00:24:37,560 Speaker 9: potentially increasing prices for consumer from an automaker's perspective, you know, 505 00:24:37,680 --> 00:24:39,919 Speaker 9: I think the Japanese are in a better position because 506 00:24:39,960 --> 00:24:43,119 Speaker 9: the there's huge still a lot of demand for their vehicles. 507 00:24:43,720 --> 00:24:48,240 Speaker 9: Their inventory is relatively low, around thirty days to forty 508 00:24:48,320 --> 00:24:52,640 Speaker 9: days of sales versus the average industry is like seventy days. 509 00:24:53,480 --> 00:24:57,440 Speaker 9: Some automakers are over one hundred days. So in terms 510 00:24:57,520 --> 00:25:01,399 Speaker 9: of pricing, I think the consumers will be willing to 511 00:25:01,520 --> 00:25:05,600 Speaker 9: pay a little bit extra, and so Honda and you 512 00:25:05,600 --> 00:25:08,800 Speaker 9: know examples of Honda and Toyota may be able to 513 00:25:09,119 --> 00:25:11,440 Speaker 9: get the consumers to absorb some of the higher tear 514 00:25:11,440 --> 00:25:12,159 Speaker 9: of costs. 515 00:25:12,720 --> 00:25:16,120 Speaker 6: Have we heard any US auto manufacturer announced plans for 516 00:25:16,400 --> 00:25:20,399 Speaker 6: new factories or they're going to add jobs. What have 517 00:25:20,440 --> 00:25:22,320 Speaker 6: we heard from the US manufacturers? 518 00:25:23,080 --> 00:25:25,679 Speaker 9: Not yet? Not yet. I think there's a lot of 519 00:25:25,720 --> 00:25:30,080 Speaker 9: discussion on you know, can we you know, with Trump 520 00:25:30,119 --> 00:25:35,720 Speaker 9: about not taxing parts certain parts auto parts, but there 521 00:25:35,760 --> 00:25:38,879 Speaker 9: we haven't heard of restoring. But you know, we've also 522 00:25:38,920 --> 00:25:41,360 Speaker 9: had a lot of analysis. We've done a lot of analysis 523 00:25:41,400 --> 00:25:44,560 Speaker 9: on restoring. It's going to be a huge cash flow 524 00:25:45,560 --> 00:25:48,840 Speaker 9: headwind for the automakers, you know, if they have to 525 00:25:49,000 --> 00:25:52,080 Speaker 9: if the automaker have to build a green field plant 526 00:25:53,320 --> 00:25:56,280 Speaker 9: back in the US, that could cost upwards of four 527 00:25:56,280 --> 00:26:00,760 Speaker 9: billion dollars just for one plant. So that's that's humongous. 528 00:26:01,680 --> 00:26:03,280 Speaker 10: So we haven't heard. 529 00:26:03,359 --> 00:26:06,720 Speaker 9: I think I think the automakers are hoping that these 530 00:26:06,800 --> 00:26:08,960 Speaker 9: terrorists don't last forever. 531 00:26:09,840 --> 00:26:12,919 Speaker 10: But you know, it's you know, I'm sure in the 532 00:26:12,920 --> 00:26:17,919 Speaker 10: boardrooms they're thinking about the contingencies around how to manage 533 00:26:17,960 --> 00:26:22,200 Speaker 10: that cap ax and probably asking the administration for financial 534 00:26:22,280 --> 00:26:25,000 Speaker 10: support if they do have to bring back a lot 535 00:26:25,040 --> 00:26:27,359 Speaker 10: of that manufacturing into the US. 536 00:26:27,520 --> 00:26:29,360 Speaker 3: All Right, we really appreciate Steve. Thanks so much. 537 00:26:29,480 --> 00:26:31,840 Speaker 2: Steve Mann, Bloomberg Intelligence, Senior autos Analyst. 538 00:26:32,680 --> 00:26:37,359 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 539 00:26:37,560 --> 00:26:41,000 Speaker 1: and anywhere else you get your podcasts. Listen live each 540 00:26:41,080 --> 00:26:44,800 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com, 541 00:26:44,920 --> 00:26:48,440 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 542 00:26:48,880 --> 00:26:51,800 Speaker 1: You can also watch us live every weekday on YouTube 543 00:26:52,200 --> 00:26:54,440 Speaker 1: and always on the Bloomberg terminal. 544 00:26:54,720 --> 00:26:58,320 Speaker 6: You