WEBVTT - US Tariffs on Mexico Delayed 0:00:00.280 --> 0:00:10.560 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:17.800 Eastern on Apple, Corplay and Android Auto with the Bloomberg 0:00:17.880 --> 0:00:21.000 Business App. Listen on demand wherever you get your podcasts, 0:00:21.320 --> 0:00:23.040 or watch us live on YouTube. 0:00:23.760 --> 0:00:26.080 Sorry, let's get back to the policy that's coming out 0:00:26.079 --> 0:00:28.760 and d see fast and Furious. Nathan Dean, Bloomberg Intelligence 0:00:28.840 --> 0:00:32.960 Senior Policy Analyst. Okay, so if we get this news 0:00:33.000 --> 0:00:35.680 out of Mexico that Trump and Shamebaum spoke and they're 0:00:35.680 --> 0:00:37.519 going to delay tariffs by a month while they work 0:00:37.560 --> 0:00:40.320 out other stuff, does this mean that we know why 0:00:40.440 --> 0:00:44.280 tariffs are being put. They're being put as a negotiating tactic, 0:00:44.440 --> 0:00:46.360 full stop. Is that now correct? 0:00:46.720 --> 0:00:46.800 So? 0:00:47.120 --> 0:00:49.160 I certainly think you can think about it from President 0:00:49.159 --> 0:00:51.720 Trump's point of view in terms of his goals. You know, obviously, 0:00:51.760 --> 0:00:54.480 when he's talking about, you know, our trade and balance 0:00:54.600 --> 0:00:57.400 or our trade relationship with Canada Mexico, He's mentioned three 0:00:57.440 --> 0:01:00.320 things in his truth Social posts, all. 0:01:00.360 --> 0:01:01.960 Border security and the economy. 0:01:02.160 --> 0:01:04.840 But from the Canadian and Mexican perspective, it's much easier 0:01:04.880 --> 0:01:06.640 for them to go to President Trump and say, look, 0:01:06.760 --> 0:01:09.760 we'll do something on fentanyl and border security today. We 0:01:09.800 --> 0:01:12.240 could take a longer term approach to the economic imbalance. 0:01:12.280 --> 0:01:15.200 That's certainly something that President Trump still wants, but from 0:01:15.200 --> 0:01:17.720 a negotiation perspective, I wouldn't be. 0:01:17.760 --> 0:01:18.319 So I'm all. 0:01:18.280 --> 0:01:21.360 Surprised by this because it was what they could give 0:01:21.400 --> 0:01:23.600 President Trump in the short term. And we'll see what 0:01:23.640 --> 0:01:26.240 this meaning with Justin Trudeau today at three pm. Maybe 0:01:26.280 --> 0:01:28.560 Canada has a very similar proposition for the president. 0:01:29.480 --> 0:01:32.880 So, I mean, I'm not even sure where to go here, 0:01:32.880 --> 0:01:35.720 but I guess as you kind of phrase it there, Nathan, 0:01:35.760 --> 0:01:37.840 this is a president that likes to negotiate, likes to 0:01:37.959 --> 0:01:42.039 He's transactional, and it seems like if the counterparts are 0:01:42.120 --> 0:01:46.759 equally transactional, then maybe you could avoid a wider trade war. 0:01:47.280 --> 0:01:50.360 Is that kind of expectation for the folks down in DC. 0:01:51.080 --> 0:01:53.600 Yeah, So if you're part of the bull case, I 0:01:53.640 --> 0:01:55.880 think in terms of that, you know, President Trump is 0:01:55.880 --> 0:01:57.200 the negotiator and so forth. 0:01:57.400 --> 0:01:58.680 This is fitting into that narrative. 0:01:58.720 --> 0:02:00.880 I mean, obviously you do have to prepare for tariffs, 0:02:01.120 --> 0:02:03.800 because we do think tariffs are coming, but it just 0:02:03.840 --> 0:02:06.880 really depends on the sectors and also the broad impact 0:02:07.000 --> 0:02:10.079 of those tariffs. So let's just say that if Justin Trudeau, 0:02:10.120 --> 0:02:11.919 the Prime Minister of Canada, and President Trump make a 0:02:11.960 --> 0:02:14.359 deal today at three o'clock and it follows the same 0:02:14.360 --> 0:02:17.320 timeline as Mexico, you get one month. President Trump is 0:02:17.320 --> 0:02:19.359 eventually going to come back and say, okay, well, let's 0:02:19.360 --> 0:02:22.080 talk about those trade and balances. Let's talk about in 0:02:22.120 --> 0:02:25.360 his truth selles through posts but making Canada the fifty 0:02:25.360 --> 0:02:29.200 first state. But you know, again, it's about extracting concessions. 0:02:29.240 --> 0:02:30.560 So what do we have to do for us in 0:02:30.600 --> 0:02:32.960 the market sides? You certainly have to prepare for it, 0:02:33.280 --> 0:02:35.400 but also at the end of the game, you know, 0:02:35.639 --> 0:02:38.160 it's very difficult to call because it's just one man's decision, 0:02:38.200 --> 0:02:39.640 and so we're just gonna have to stay tuned and 0:02:39.639 --> 0:02:40.760 see what happens. 0:02:41.160 --> 0:02:43.720 All right, So that's a great point, stay tuned. What 0:02:43.760 --> 0:02:46.079 are you standing us staying tuned for? Like, what are 0:02:46.120 --> 0:02:48.160 going to be the key phrases, the key words, the 0:02:48.240 --> 0:02:50.359 key pressors that you're gonna be watching out for to 0:02:50.400 --> 0:02:51.840 tell you what the reality is going to be. 0:02:52.760 --> 0:02:55.160 So I'm actually looking for whether or not Canada and 0:02:55.200 --> 0:02:57.560 Mexico fall through or at least threaten to fall through 0:02:57.639 --> 0:03:02.320 in terms of their exports. For example, potash not something 0:03:02.360 --> 0:03:04.840 many people talk about, but ninety percent of potash in 0:03:04.880 --> 0:03:08.080 the United States, which is very important for our fertilizer industry, 0:03:08.240 --> 0:03:11.200 comes from Canada. So if Canada wanted to imfact, you know, 0:03:11.520 --> 0:03:14.600 put on ecademic pain on a certain aspect of the 0:03:14.600 --> 0:03:17.680 American system, and especially a system that has voted for 0:03:17.720 --> 0:03:19.920 President Trump, I certainly want to look for something like 0:03:19.960 --> 0:03:22.679 that because for me to see the changing of the guard, 0:03:22.760 --> 0:03:25.280 or at least a pressure on the president, I have 0:03:25.320 --> 0:03:27.720 to see it coming from the trade associations here in Washington, 0:03:27.919 --> 0:03:30.480 not the big ones like the US Chamber, but smaller 0:03:30.480 --> 0:03:33.840 ones like the National Association and manufacturers are the fertilizer 0:03:33.919 --> 0:03:36.160 or the farmers, they're the ones that can put pressure 0:03:36.280 --> 0:03:38.040 on their allies on Capitol Hill to go to the 0:03:38.080 --> 0:03:40.400 White House and say, President Trump, you need to step back. 0:03:40.480 --> 0:03:43.119 So retaliatory tariffs is not something we talk about. 0:03:42.880 --> 0:03:45.800 Here a much in the United States in this context, 0:03:45.960 --> 0:03:47.600 but that's really what I want to see if President 0:03:47.640 --> 0:03:49.480 Trump eventually would move away from these threats. 0:03:49.840 --> 0:03:52.520 How about China, Nathan, I mean, we have, you know, 0:03:52.520 --> 0:03:56.720 obviously generally very good relationships with Canada and Mexico, and 0:03:56.760 --> 0:03:59.800 presumably that that helps in some negotiations like we saw 0:03:59.840 --> 0:04:03.160 with Mexico this morning. How about China. What's the feeling 0:04:03.200 --> 0:04:05.360 within the Beltway about how the US may approach China. 0:04:05.920 --> 0:04:07.760 Yeah, that's a great question, because a lot of the 0:04:07.760 --> 0:04:09.560 airtime right now, and certainly a lot of time in 0:04:09.720 --> 0:04:12.680 Washington is spent on this Canada and Mexico relationship. But 0:04:12.720 --> 0:04:14.720 it should also be said that China received a ten 0:04:14.760 --> 0:04:17.440 percent increase in tariffs as well. Now we saw the 0:04:17.480 --> 0:04:20.880 response from the Chinese government that was more mooted. In particular, 0:04:21.120 --> 0:04:24.040 there wasn't any retaliatory tariffs at this point at least, 0:04:24.040 --> 0:04:26.039 but I think that's certainly going to be part of 0:04:26.040 --> 0:04:28.400 a broader discussion. I think the folks here in Washington 0:04:28.560 --> 0:04:31.560 feel that when it comes to the US China relationship 0:04:31.600 --> 0:04:32.000 they can at. 0:04:32.000 --> 0:04:32.880 Least take a breath. 0:04:33.040 --> 0:04:35.080 Things aren't going to be moving at lightning speed they 0:04:35.080 --> 0:04:37.040 are in North America. There can be a little bit 0:04:37.120 --> 0:04:41.120 slower aspect towards those negotiations. But again, this is certainly 0:04:41.120 --> 0:04:44.320 coming and don't be for you know, European Union, they're 0:04:44.360 --> 0:04:46.839 most likely next as well. I mean, President Trump has 0:04:46.880 --> 0:04:48.599 a lot of areas around the world that he wants 0:04:48.640 --> 0:04:51.520 to move into in terms of tariffs. You know, Canada 0:04:51.520 --> 0:04:53.200 and Mexico and China just happened to be the first 0:04:53.200 --> 0:04:53.960 one on his list. 0:04:54.240 --> 0:04:56.200 But if we're learning anything from the market action in 0:04:56.279 --> 0:04:59.600 relation to these headlines, it's that don't trust your first reaction. 0:04:59.720 --> 0:05:00.840 I mean, you're just looking at it. And if you 0:05:00.839 --> 0:05:02.480 look at the S and P mini futures market that 0:05:02.480 --> 0:05:05.400 takes into account yesterday, this morning, and then now today trading, 0:05:05.640 --> 0:05:08.440 it's a whole different world. So how should a market 0:05:08.440 --> 0:05:09.760 participant think about this? 0:05:10.440 --> 0:05:12.120 Yeah, so there's a lot of sentiment right now, and 0:05:12.160 --> 0:05:14.280 I agree with this sentiment that you know, in terms 0:05:14.360 --> 0:05:16.919 of these threats, we're beginning to see that it's just 0:05:16.960 --> 0:05:19.679 the same playbook of that transactional president that he's willing 0:05:19.720 --> 0:05:22.479 to negotiate. You know, it's obviously difficult for those of 0:05:22.520 --> 0:05:24.280 us in the markets to try and figure out what 0:05:24.480 --> 0:05:27.960 President Trump wants from those negotiations. But I think anytime 0:05:28.040 --> 0:05:31.000 you see one of these tariff threat slash opportunities that 0:05:31.080 --> 0:05:33.719 come up, always just keep in mind that there is 0:05:33.800 --> 0:05:36.640 going to be a negotiation that takes place. Whether President 0:05:36.640 --> 0:05:39.400 Trump is talking about fetnol border security. Those are things 0:05:39.400 --> 0:05:41.880 that the Canadian and Mexican governments can easily control, like 0:05:41.920 --> 0:05:44.839 Mexico's example of sending ten thousand troops to the border. 0:05:44.920 --> 0:05:48.040 If President Trump's number one demand is an economic imbalance, 0:05:48.160 --> 0:05:50.960 like with the European Union in terms of increased share 0:05:51.000 --> 0:05:54.320 of GDP spending for its defense, that's a longer term 0:05:54.400 --> 0:05:56.440 thing that the European governments would have to put in place. 0:05:56.520 --> 0:05:58.880 So I would just say, what is President Trump's number 0:05:58.920 --> 0:06:02.120 one goal here? What can the other countries give in exchange? 0:06:02.160 --> 0:06:05.360 And can there be a negotiation timeframe that's long enough 0:06:05.400 --> 0:06:06.520 to not spook the markets? 0:06:07.160 --> 0:06:10.479 Well, tariff certainly has the market's attention today, but tomorrow 0:06:10.640 --> 0:06:14.839 is another day. What from a policy perspective, are you 0:06:15.520 --> 0:06:18.520 and folks in DC kind of looking towards this Congress, 0:06:18.560 --> 0:06:21.680 this administration to move forward on what are the important 0:06:21.680 --> 0:06:22.320 ones coming up? 0:06:22.920 --> 0:06:25.359 Yeah? So this week obviously we have confirmation hearings. 0:06:25.400 --> 0:06:27.600 I mean, I think most people think are going to 0:06:27.640 --> 0:06:30.159 get through Telca Gabbert I think is the one that 0:06:30.200 --> 0:06:31.640 if she were not to get through, I wouldn't be 0:06:31.680 --> 0:06:33.720 surprised by that. You know, Jamison Greer, who is the 0:06:33.800 --> 0:06:36.520 US Trade representative of his confirmation hearing is on Thursday, 0:06:36.760 --> 0:06:38.440 certainly important because he's going to be one of the 0:06:38.440 --> 0:06:41.359 most important voices in this administration towards tariffs. So a 0:06:41.360 --> 0:06:43.560 lot of questions may be asked, Hey, why would you 0:06:43.560 --> 0:06:45.960 know we do this if potash and those farmers are 0:06:45.960 --> 0:06:47.960 going to be harmed? But I would also point out 0:06:48.000 --> 0:06:49.720 that the House Budget Committee is trying to come up 0:06:49.720 --> 0:06:53.680 with their reconciliation blueprint about trying this is the instructions 0:06:53.720 --> 0:06:57.599 for this major multi trillion dollar techs extension bill, and 0:06:57.640 --> 0:06:59.600 if they can't get it done, that serves our narrative 0:06:59.640 --> 0:07:01.240 that this is going to take a lot of time 0:07:01.320 --> 0:07:04.120 to work out and if you lose any votes. And 0:07:04.120 --> 0:07:07.360 for example, the Republican Study Committee has already said they're 0:07:07.360 --> 0:07:10.560 not going to support anything that doesn't decrease the deficit. Well, 0:07:10.600 --> 0:07:12.840 how do you include things like no taxes on tips 0:07:12.880 --> 0:07:16.000 without decreasing the deficit. It's an extremely difficult question, and 0:07:16.040 --> 0:07:17.480 so I think we're going to be looking to see 0:07:17.480 --> 0:07:19.600 what those negotiations take place as well. 0:07:20.320 --> 0:07:21.880 Can we just switch gears for a second and talk 0:07:21.880 --> 0:07:25.680 about the Elon Musk and the government and what we've 0:07:25.720 --> 0:07:28.520 seen from him and Doge in the last twenty four hours. 0:07:30.240 --> 0:07:32.360 Yeah, so obviously, you know, we've seen reports over the 0:07:32.360 --> 0:07:35.360 weekend that the Doge Committee is in Treasury accessing Treasury 0:07:35.600 --> 0:07:38.120 payment systems. This is with the idea that eventually they 0:07:38.160 --> 0:07:41.920 could cut off payments in wake of the federal freeze 0:07:42.160 --> 0:07:44.640 executive order that was then rescinded. And this is an 0:07:44.720 --> 0:07:46.840 idea about empoundment. And I think this is something that's 0:07:46.840 --> 0:07:48.840 coming to the courts. And even if you listen to 0:07:48.880 --> 0:07:51.040 the Elon Musk last night on his Twitter spaces or 0:07:51.040 --> 0:07:53.480 his x spaces, he even said that he may need 0:07:53.520 --> 0:07:56.440 the courts support in this this idea of impoundment. Let's 0:07:56.440 --> 0:07:58.240 just say the Congress decides that if they're going to 0:07:58.240 --> 0:08:00.200 give one hundred million dollars to the Department of Education, 0:08:00.560 --> 0:08:02.520 President Trump could just come back and say, now, I'm 0:08:02.520 --> 0:08:04.720 not going to pay for it, but somebody is eventually 0:08:04.720 --> 0:08:06.960 going to sue over that that will eventually get to 0:08:06.960 --> 0:08:08.720 the Supreme Court. And there are already laws that put 0:08:08.760 --> 0:08:11.840 in place about empowerment. So it's sort of unclear does 0:08:11.840 --> 0:08:13.720 the president have the ability to say we're. 0:08:13.520 --> 0:08:14.760 Not going to spend this money. 0:08:15.080 --> 0:08:17.800 But look, if from Elon Musk's perspective, there's a lot 0:08:17.800 --> 0:08:19.840 of regulatory red tape, there's a lot of bloat in 0:08:19.840 --> 0:08:22.280 the US government. We should certainly try, and it looks 0:08:22.280 --> 0:08:24.920 like they're starting with the USAID first. 0:08:25.880 --> 0:08:29.000 What's the feeling in DC about doze here? Is this 0:08:29.080 --> 0:08:33.280 a credible I don't know. Effort, if you will, organization, 0:08:33.360 --> 0:08:36.839 if you will, will actual change happen. 0:08:37.720 --> 0:08:40.200 So I think if you talk about like the internal 0:08:40.280 --> 0:08:43.920 structures of the US government, and specifically within the executive branch, 0:08:44.320 --> 0:08:48.040 so agencies like the USAID, President Trump and the DOGE 0:08:48.080 --> 0:08:50.120 Committee can do a lot of work in terms of 0:08:50.160 --> 0:08:52.959 restructuring it and also, going back to that impoundment fight 0:08:53.000 --> 0:08:55.040 that I just mentioned, shrinking it. I think you have 0:08:55.080 --> 0:08:57.679 some Republicans who are completely on board with that idea. 0:08:57.760 --> 0:09:00.000 You have also some Republicans who are sort of uneasy 0:09:00.240 --> 0:09:02.400 about the idea that the White House would then have 0:09:02.440 --> 0:09:05.200 the power to just take back this spending, because look, 0:09:05.440 --> 0:09:08.360 eventually we will get a democratic president back, and when 0:09:08.360 --> 0:09:11.640 a Democratic president comes back, he or she be able 0:09:11.679 --> 0:09:13.040 to say, well, you know what, I'm not going to 0:09:13.080 --> 0:09:16.360 spend these policy goals that Congress has implemented as well. 0:09:16.679 --> 0:09:19.720 So I think there's some unease amongst the Republican Party 0:09:19.760 --> 0:09:22.559 that he's doing this, but also supporting the narrative that 0:09:22.640 --> 0:09:24.360 there is a lot of blow in the federal government 0:09:24.559 --> 0:09:26.320 and so I think it's just one of those. Again, 0:09:26.440 --> 0:09:28.600 stay tuned and see what happens over the next few months. 0:09:29.280 --> 0:09:31.480 All right, Nathan Deane, thank you so much. We appreciate 0:09:31.520 --> 0:09:34.640 that stay tuned. Every day is a new day in 0:09:34.720 --> 0:09:36.720 this news flow. 0:09:37.120 --> 0:09:40.839 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:40.920 --> 0:09:43.960 weekdays at ten am Eastern on Apple Coarcklay and Android 0:09:44.000 --> 0:09:47.319 Otto with the Bloomberg Business App. Listen on demand wherever 0:09:47.360 --> 0:09:50.480 you get your podcasts, or watch us live on YouTube. 0:09:51.760 --> 0:09:53.120 All right, let's take a look at what you do 0:09:53.280 --> 0:09:53.960 in this market. 0:09:53.960 --> 0:09:54.080 Now. 0:09:54.080 --> 0:09:56.120 I'm taking only the S ANDP mini futures contracts. We 0:09:56.160 --> 0:09:58.320 are all the lows of the session that we hit 0:09:58.400 --> 0:10:00.320 earlier in the morning before the cash show, and so 0:10:00.400 --> 0:10:03.000 keeping that a little bit in mind, Carol Pepper, founder 0:10:03.080 --> 0:10:06.000 and CEO of Pepper International, joins us. So Carol makes 0:10:06.040 --> 0:10:10.200 a question, do you buy this dip? Yes? 0:10:10.360 --> 0:10:13.440 Well, as you guys know, I manage money for families 0:10:13.480 --> 0:10:15.960 with over one hundred million dollars who are typically family 0:10:16.000 --> 0:10:19.640 offices and I would say wait a little bit longer 0:10:19.679 --> 0:10:21.679 to see how much the dip is going to dip. 0:10:22.280 --> 0:10:24.800 This is a dip. It's a two four percent dip. 0:10:24.840 --> 0:10:25.320 Not bad. 0:10:25.880 --> 0:10:27.760 You can buy this dip if you want to, but 0:10:27.800 --> 0:10:30.400 we may if it looks like these tariffs really will 0:10:30.440 --> 0:10:31.200 be implemented. 0:10:31.280 --> 0:10:33.200 This is just the beginning of a dip, right. 0:10:33.080 --> 0:10:36.360 Well, just a red headline crossing the Bloomberg trumbinal right now. 0:10:36.840 --> 0:10:41.400 Mexico's shinebaumb says tariffs delayed for a month, so we'll 0:10:41.440 --> 0:10:45.240 have more reporting on that. Apparently the Mexican president had 0:10:45.280 --> 0:10:49.240 a conference call early today with President Trump, so perhaps 0:10:49.240 --> 0:10:52.559 some relief there. Carol, As we just kind of step 0:10:52.679 --> 0:10:55.800 back here and think about some of the volatility or 0:10:55.840 --> 0:10:58.800 the news flow that tends to come out of a 0:10:58.840 --> 0:11:03.880 President Trump administration, how do you tell your clients to 0:11:03.960 --> 0:11:05.240 kind of deal with that? 0:11:06.880 --> 0:11:09.400 Well, I think you have to again keep your eyes 0:11:09.440 --> 0:11:12.959 on a longer term prize. What sectors over the long 0:11:13.040 --> 0:11:15.600 term are going to do well, not within the first 0:11:15.679 --> 0:11:19.559 thirty days of a brand new administration, but what trends 0:11:19.840 --> 0:11:23.080 that have been true for years are continuing to accelerate, 0:11:23.120 --> 0:11:27.120 And I think those trends will work no matter what 0:11:27.280 --> 0:11:32.680 comes out of the new administration's strategic statements in the 0:11:32.679 --> 0:11:36.120 first month as they're trying to put their stamp on 0:11:36.360 --> 0:11:37.000 the government. 0:11:37.679 --> 0:11:40.600 So if you look at things like defense. 0:11:40.240 --> 0:11:42.760 Technology, the entire world has burned through a lot of 0:11:42.760 --> 0:11:45.880 weapons that is going to continue to be upgraded with AI. 0:11:46.559 --> 0:11:48.560 There's going to be more robotics, there's going to be 0:11:48.600 --> 0:11:50.320 more drones, there's going to be. 0:11:50.200 --> 0:11:52.800 More data centers. AI is not going to go away. 0:11:53.440 --> 0:11:55.920 Consumers are going to continue to switch and shop on 0:11:56.000 --> 0:11:57.160 Amazon rather than. 0:11:57.000 --> 0:11:58.360 In bricks and mortar stores. 0:11:58.480 --> 0:12:01.480 All the things that we've been talking about still apply 0:12:01.640 --> 0:12:05.280 today with the threat of tariffs if they're now or 0:12:05.320 --> 0:12:08.360 in a month or two, So you still have to 0:12:08.440 --> 0:12:10.920 keep your eye and then think about entry. 0:12:10.640 --> 0:12:14.280 Point when should you enter these stocks. And so that's 0:12:14.320 --> 0:12:15.240 really what we're doing. 0:12:15.520 --> 0:12:19.040 We're not changing our basic thesis because we do believe 0:12:19.040 --> 0:12:21.640 it is going to continue as we suspect it. 0:12:22.440 --> 0:12:24.560 There is more risk off in the market. 0:12:24.600 --> 0:12:27.360 That means that's going to depress the growth stock priceis, 0:12:27.400 --> 0:12:28.280 which is good. 0:12:28.120 --> 0:12:30.559 News for you if you're long term ball. Your long 0:12:30.640 --> 0:12:32.560 term ball, you kind of like this time to have 0:12:32.640 --> 0:12:35.560 an entry point. It even a little bit more slippage. 0:12:35.600 --> 0:12:37.760 Maybe we'll get a five or six percent down on 0:12:37.800 --> 0:12:38.840 some of these big names. 0:12:38.840 --> 0:12:41.960 Wouldn't it be nice to enter five or six percent lower. 0:12:42.400 --> 0:12:44.760 You know, a week ago we also speaking of AI, 0:12:44.880 --> 0:12:47.160 we would have been talking about how the AI hyperscaler 0:12:47.200 --> 0:12:50.680 spending theme is pretty intact no matter what happens with 0:12:50.800 --> 0:12:53.240 tariffs and that got disrupted. Is that still sort of 0:12:53.240 --> 0:12:54.560 a major core theme for you? 0:12:55.480 --> 0:12:55.720 Yes? 0:12:55.800 --> 0:12:56.400 Absolutely. 0:12:56.679 --> 0:12:58.680 I mean I talk to a lot of folks who 0:12:58.720 --> 0:13:02.240 are busy building data centers. There are energy, energy and 0:13:02.360 --> 0:13:05.920 data centers are getting very intertwined. So people are off 0:13:05.960 --> 0:13:09.280 taking energy that before they might have made carbon credits 0:13:09.280 --> 0:13:12.079 out of it and capturing it and making data centers 0:13:12.080 --> 0:13:14.880 in places like middle of the country, in Oklahoma, in 0:13:14.880 --> 0:13:18.360 places like this, So those themes are going to continue. 0:13:19.200 --> 0:13:22.960 Wealthy families are piling into the construction of data centers, 0:13:23.000 --> 0:13:25.920 whether the chips are in Nvidia or someone else. The 0:13:26.040 --> 0:13:28.840 data center construction isn't something that takes a few days. 0:13:28.840 --> 0:13:32.160 That will continue to create jobs. So data centers are 0:13:32.200 --> 0:13:35.800 still a good play. They're already started, they're already under contract, 0:13:35.840 --> 0:13:38.040 and they're not going to stop just because a teriff 0:13:38.120 --> 0:13:38.680 is implosed. 0:13:39.800 --> 0:13:42.120 Carol about on the fixed income side, how are your 0:13:42.120 --> 0:13:45.120 clients playing fixed the come these days? They can actually 0:13:45.200 --> 0:13:49.680 clip some pretty competitive coupons these days, that's right. 0:13:49.960 --> 0:13:52.200 I think it's so hard to tell in fixed income 0:13:52.240 --> 0:13:55.240 because we really don't know yet what are going to 0:13:55.280 --> 0:13:58.960 be effect of the tariffs on potential inflation and what 0:13:59.080 --> 0:14:02.400 Powell can or can not do. Obviously, real estate to 0:14:02.440 --> 0:14:05.480 me is still a sector at risk. It's been holding 0:14:05.480 --> 0:14:08.440 on by its fingernails now for a few years. You know, 0:14:08.480 --> 0:14:09.120 extend and. 0:14:09.080 --> 0:14:12.760 Pretend that might have to go on a bit longer. 0:14:12.480 --> 0:14:15.880 Now if we have a situation where inflation ticks up, 0:14:15.920 --> 0:14:18.679 if they're R and D tariffs and posed, that's going 0:14:18.720 --> 0:14:20.400 to make it very hard for Powell to lower the 0:14:20.480 --> 0:14:23.120 rates and therefore give some relief to real estate. 0:14:23.240 --> 0:14:25.560 So that's a sector I think people need to kind 0:14:25.600 --> 0:14:26.440 of watch out for. 0:14:26.600 --> 0:14:28.440 It's I don't think we're out of the woods yet 0:14:28.480 --> 0:14:31.680 on real estate, but you're right, and the short term 0:14:31.680 --> 0:14:34.080 as well, not a bad time to have a little 0:14:34.120 --> 0:14:36.240 bit of fixed income, but more on the shorter side 0:14:36.280 --> 0:14:38.720 because the swings on the long end are not worth 0:14:38.760 --> 0:14:42.440 it for most individuals. That's much more an institutional play. 0:14:43.200 --> 0:14:45.960 What about safety plays? Like, what do you recommend to 0:14:46.000 --> 0:14:48.800 your clients that just need a portion of their investment 0:14:48.840 --> 0:14:52.200 portfolio that's saved. It's liquid, like, it's cash still the place. 0:14:53.120 --> 0:14:56.920 Money markets and cash some people like gold. Bitcoin was 0:14:56.920 --> 0:14:59.440 looking exciting, but look at what happened with ethereum. 0:14:59.520 --> 0:15:01.560 It just collapse now that. 0:15:01.920 --> 0:15:05.400 The environment looks a little bit more risky. So yes, 0:15:05.520 --> 0:15:08.200 I think cash is still king. It's always been king, 0:15:08.240 --> 0:15:11.720 it will continue to be king. And US dollar cash 0:15:11.760 --> 0:15:13.560 is still the king because it is still the. 0:15:13.520 --> 0:15:14.800 World's reserve currency. 0:15:15.360 --> 0:15:18.360 Other countries might try to take that position, but I 0:15:18.400 --> 0:15:20.760 don't think it's going to happen anytime soon. So sitting 0:15:20.800 --> 0:15:23.800 in cash is no shame, and making some decent returns 0:15:23.840 --> 0:15:28.480 into your money market fund while the dust settles absolutely straightforward. 0:15:28.520 --> 0:15:31.640 Play Carol, thank you so much for joining us. Krol 0:15:31.640 --> 0:15:34.840 Pepper found and CEO of Pepper International, joining us again. 0:15:36.600 --> 0:15:40.280 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:15:40.400 --> 0:15:43.480 weekdays at ten am Eastern on Apple, Colocklay, and Android 0:15:43.480 --> 0:15:46.800 Otto with the Bloomberg Business App. Listen on demand wherever 0:15:46.840 --> 0:15:49.960 you get your podcasts, or watch us live on YouTube. 0:15:51.160 --> 0:15:54.760 The story today for global markets, Global Wall Street are 0:15:54.840 --> 0:15:57.560 these tariffs and the economic impacts that they may or 0:15:57.560 --> 0:15:59.520 may not have. Brian Whalen joins US. He's a chief 0:15:59.520 --> 0:16:04.440 investment in the generalist portfolio manager at tc W in 0:16:04.640 --> 0:16:06.840 Los Angeles. Hey, Brian, I know you and your team 0:16:07.040 --> 0:16:10.120 you think kind of about global markets here, How do 0:16:10.200 --> 0:16:14.040 you guys think about kind of just tariffs in general. 0:16:14.120 --> 0:16:16.360 We're not really sure what degree they'll be imposed for 0:16:16.480 --> 0:16:19.240 how long? How do you guys factor that into your calculus? 0:16:20.320 --> 0:16:23.520 It's hard? What a morning? Huh? Yeah? Can you can 0:16:23.520 --> 0:16:25.400 you believe deep steak was just a week ago? Right? 0:16:25.680 --> 0:16:26.080 Monthly? 0:16:28.280 --> 0:16:30.560 Look, I think you know the term we've been using 0:16:30.600 --> 0:16:34.120 around here. We're using the term fat tails, which is 0:16:34.200 --> 0:16:36.040 just kind of a reflection of like in a traditional 0:16:36.120 --> 0:16:39.640 investing environment, you've got your base case scenario, maybe you've 0:16:39.640 --> 0:16:41.920 got a seventy percent probability assigned to it, and then 0:16:41.920 --> 0:16:44.080 you got your two other options. You know, you got 0:16:44.080 --> 0:16:47.240 fifteen percent of the downside fifteen percent the other way. 0:16:47.280 --> 0:16:49.400 I mean, you know, with regards to you know, this 0:16:49.480 --> 0:16:53.040 new administration and the volatility, fat tails for US means 0:16:53.080 --> 0:16:55.120 we still have our base case, but you know there's 0:16:55.120 --> 0:16:58.080 a lower probability on that and then we've got, you know, 0:16:58.200 --> 0:17:00.320 maybe something like a fifty in the middle, and then 0:17:00.400 --> 0:17:04.720 twenty five we have this US exceptionalism, high growth, low inflation. 0:17:04.800 --> 0:17:07.399 On the other side, maybe a lot of this towerst 0:17:07.440 --> 0:17:10.800 for instance, cause I'll pull down on both domestic and 0:17:10.880 --> 0:17:14.000 international growth and it up ends the job market and 0:17:14.000 --> 0:17:15.080 maybe we have a recession. 0:17:15.520 --> 0:17:18.119 And so for us as portfolio managers, what we. 0:17:18.119 --> 0:17:20.119 Think about at TCW is like, you still got. 0:17:20.000 --> 0:17:22.080 To instruct around your base case. 0:17:22.640 --> 0:17:26.359 But in an environment, particularly one where it's not that 0:17:26.440 --> 0:17:29.680 expensive to buy optionality, volatility is still low, at least 0:17:29.720 --> 0:17:32.439 the priced one. You try to do things that you 0:17:32.440 --> 0:17:35.280 know help your portfolio not lose so much and if 0:17:35.280 --> 0:17:37.199 it goes one way, or maybe even gain if it 0:17:37.240 --> 0:17:39.600 goes another. And that's kind of the things we've been 0:17:39.640 --> 0:17:41.720 doing the last couple of months, have to do about 0:17:41.760 --> 0:17:44.400 putting things in place in the portfolio that actually help 0:17:44.960 --> 0:17:46.560 even if our base case isn't realize. 0:17:46.720 --> 0:17:49.040 So, Brian, why is volatility And I'm just looking at 0:17:49.080 --> 0:17:51.359 the move in next with the JP Morgan volatility and next, 0:17:51.400 --> 0:17:52.920 why is it low? 0:17:54.640 --> 0:17:57.359 Well, a lot of that, I think you know what's transpired, 0:17:57.560 --> 0:17:59.880 you know, from the FED, particularly once we got into 0:17:59.880 --> 0:18:03.080 the late months of twenty twenty four, and even what 0:18:03.160 --> 0:18:05.920 you just heard them say, you know, powisay last week, 0:18:05.960 --> 0:18:09.399 which is basically, you know, we're good, which is, you know, 0:18:09.440 --> 0:18:11.480 we kind of like where you know, the FED funds 0:18:11.520 --> 0:18:12.320 is right now. 0:18:12.359 --> 0:18:14.320