1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,240 Speaker 2: Terminal and the Bloomberg Business App. I'm very pleased to 10 00:00:37,280 --> 00:00:39,800 Speaker 2: say the chaff the White House Council of Economic Advisors, 11 00:00:39,840 --> 00:00:42,159 Speaker 2: Stephen Mara and MS the Chairman, Welcome to the program. 12 00:00:42,200 --> 00:00:44,800 Speaker 2: Sarah Warm, Welcome to Bloomberg Surveillance. I've got to ask 13 00:00:44,840 --> 00:00:46,199 Speaker 2: you the number one question on the lips of a 14 00:00:46,200 --> 00:00:48,240 Speaker 2: lot of people on Wall Street at the moment. Is 15 00:00:48,280 --> 00:00:51,000 Speaker 2: this a negotiation or the new rules of the game? 16 00:00:51,200 --> 00:00:53,000 Speaker 2: How would you frame things for people this morning? 17 00:00:54,080 --> 00:00:56,560 Speaker 3: Good morning, and thanks for having me. How I frame 18 00:00:56,640 --> 00:00:58,840 Speaker 3: things is that it could be either. You know, I 19 00:00:58,880 --> 00:01:01,440 Speaker 3: think the president is female for his negotiating skills. The 20 00:01:01,440 --> 00:01:04,160 Speaker 3: president is renowned for pulling deals out of a hat 21 00:01:04,280 --> 00:01:06,920 Speaker 3: when nobody thought it was even possible. I remind everyone 22 00:01:06,959 --> 00:01:09,399 Speaker 3: that the Phase one China deal in twenty eighteen, sorry 23 00:01:09,400 --> 00:01:12,360 Speaker 3: in twenty nineteen, was a fantastic deal for the United States. 24 00:01:12,080 --> 00:01:13,040 Speaker 4: That the President created. 25 00:01:13,200 --> 00:01:16,600 Speaker 3: It covered intellectual property, it covered market access, it covered 26 00:01:16,600 --> 00:01:20,760 Speaker 3: purchases of agricultural commodities, it covered currenting manipulation, that covered 27 00:01:20,800 --> 00:01:21,600 Speaker 3: all sorts of things. 28 00:01:21,720 --> 00:01:22,880 Speaker 4: And it was a fantastic deal. 29 00:01:22,880 --> 00:01:25,480 Speaker 3: And unfortunately the Biden administration walked away from it and 30 00:01:25,560 --> 00:01:27,319 Speaker 3: refused to enforce it, and that was a. 31 00:01:27,240 --> 00:01:28,160 Speaker 4: Big loss for America. 32 00:01:28,319 --> 00:01:30,360 Speaker 3: So the president is famous for being able to create 33 00:01:30,400 --> 00:01:32,960 Speaker 3: deals when nobody thinks he can. And so that's what 34 00:01:33,040 --> 00:01:35,160 Speaker 3: it can turn into if other countries come and offer 35 00:01:35,240 --> 00:01:36,720 Speaker 3: the right things that persuade the presidents. 36 00:01:36,760 --> 00:01:37,920 Speaker 5: Well, let's talk about the right thing. 37 00:01:38,080 --> 00:01:40,520 Speaker 2: So, as far as we know, Viennam came to the 38 00:01:40,520 --> 00:01:42,240 Speaker 2: table and an offer to drop their taffs to zero. 39 00:01:42,440 --> 00:01:44,920 Speaker 2: That was rejected. The EU offered to drop taffs on 40 00:01:44,959 --> 00:01:47,920 Speaker 2: industrial goods. That's been rejected. What would be the right 41 00:01:48,000 --> 00:01:50,080 Speaker 2: kind of offer? Are they aware of what the right 42 00:01:50,160 --> 00:01:51,000 Speaker 2: kind of offer would be? 43 00:01:52,280 --> 00:01:52,440 Speaker 4: Right? 44 00:01:52,520 --> 00:01:55,840 Speaker 3: So I think that a narrow focus on terror, on 45 00:01:55,960 --> 00:01:58,720 Speaker 3: teriff rates is insufficient because the truth is that the 46 00:01:58,760 --> 00:02:03,520 Speaker 3: non tariff barriers pose enormous, enormous barriers to trade balancing. 47 00:02:03,520 --> 00:02:06,160 Speaker 3: Over the long run, countries have to open their markets 48 00:02:06,200 --> 00:02:09,840 Speaker 3: to US exports. And I don't know exactly what combination 49 00:02:10,200 --> 00:02:13,640 Speaker 3: of what combination of details they have to make in 50 00:02:13,639 --> 00:02:16,639 Speaker 3: an offer, but all I can say is that negotiating 51 00:02:16,680 --> 00:02:17,840 Speaker 3: is better than not negotiating. 52 00:02:18,120 --> 00:02:21,080 Speaker 2: Even the difficulty at the moment, and you're aware of this, 53 00:02:21,160 --> 00:02:23,880 Speaker 2: I'm sure is that they're unclear whether it's about barriers 54 00:02:23,960 --> 00:02:27,280 Speaker 2: to entry or just the deficit, because they are two 55 00:02:27,280 --> 00:02:28,040 Speaker 2: different things. 56 00:02:28,320 --> 00:02:29,120 Speaker 5: Which one is it? 57 00:02:30,000 --> 00:02:32,000 Speaker 3: Of course there are two different things, but they're they're 58 00:02:32,160 --> 00:02:36,040 Speaker 3: you know, deeply related, and you know, inextricably related. If 59 00:02:36,040 --> 00:02:38,280 Speaker 3: you reduce your barriers to entry, you open your market 60 00:02:38,360 --> 00:02:40,600 Speaker 3: to US exports, of course, the trade deficit will responded 61 00:02:40,600 --> 00:02:40,760 Speaker 3: to that. 62 00:02:41,160 --> 00:02:42,840 Speaker 4: I think that there's no question about that. 63 00:02:43,360 --> 00:02:45,600 Speaker 6: When you talked about yesterday, I know you gave a speech, 64 00:02:45,600 --> 00:02:48,040 Speaker 6: you talked about this way of burden sharing and some 65 00:02:48,160 --> 00:02:51,840 Speaker 6: other measures partners could take to potentially get to a deal, 66 00:02:51,960 --> 00:02:54,079 Speaker 6: things like even writing checks to the treasury. 67 00:02:54,120 --> 00:02:57,560 Speaker 4: How exactly would that work? Well, I think there's a 68 00:02:57,600 --> 00:02:59,160 Speaker 4: variety of ways that could work. You know. 69 00:02:59,240 --> 00:03:01,200 Speaker 3: For one thing, they could just, you know, sort of 70 00:03:01,200 --> 00:03:03,920 Speaker 3: simply say, hey, you know, America is providing us with, 71 00:03:04,360 --> 00:03:07,399 Speaker 3: you know, with a defense umbrella, which creates prosperity, which 72 00:03:07,400 --> 00:03:11,320 Speaker 3: creates peace, which allows us to prosper economically. They could say, hey, 73 00:03:11,400 --> 00:03:14,200 Speaker 3: America is creating global trading system, backed by backed by 74 00:03:14,200 --> 00:03:17,000 Speaker 3: this defense umbrella, which which again allows us to trade, 75 00:03:17,000 --> 00:03:19,360 Speaker 3: which creates our prosperity, and we're going to help share 76 00:03:19,360 --> 00:03:21,160 Speaker 3: the We're gonna help share the cost of those things. 77 00:03:21,160 --> 00:03:23,160 Speaker 3: We're gonna, you know, we're gonna we're gonna send some 78 00:03:23,200 --> 00:03:25,520 Speaker 3: money to the United States to help it provide those things. 79 00:03:25,560 --> 00:03:26,920 Speaker 4: I think that would be a fruitful outcome. 80 00:03:27,000 --> 00:03:28,639 Speaker 3: But of course, but again, of course, you know, it 81 00:03:28,919 --> 00:03:32,200 Speaker 3: depends on what the President decides. The President will negotiate 82 00:03:32,280 --> 00:03:34,600 Speaker 3: the deals that he thinks are best for America, best 83 00:03:34,600 --> 00:03:37,480 Speaker 3: for Americans, and you know, I can't get ahead of 84 00:03:37,520 --> 00:03:38,240 Speaker 3: him on those issues. 85 00:03:38,360 --> 00:03:41,160 Speaker 6: We also talked about how partners can invest in and 86 00:03:41,160 --> 00:03:44,920 Speaker 6: install factories in America or trading partners. Could China do that? 87 00:03:46,760 --> 00:03:47,000 Speaker 4: Uh? 88 00:03:47,040 --> 00:03:49,920 Speaker 3: You know, I think I think they could, but you know, 89 00:03:49,960 --> 00:03:52,120 Speaker 3: it remains to be seen whether they be willing to. 90 00:03:52,480 --> 00:03:55,120 Speaker 3: I think China's policy has been to try and you know, 91 00:03:55,160 --> 00:03:57,960 Speaker 3: sort of steal all the all the manufacturing market share 92 00:03:57,960 --> 00:04:00,120 Speaker 3: for themselves, not only for the United States, but for 93 00:04:00,200 --> 00:04:02,880 Speaker 3: many of our trading partners as well. And you know, 94 00:04:03,120 --> 00:04:06,120 Speaker 3: it seems to me unlikely that China would be willing 95 00:04:06,120 --> 00:04:08,360 Speaker 3: to make that concession upfront. However, you know I would 96 00:04:08,360 --> 00:04:08,800 Speaker 3: welcome it. 97 00:04:09,240 --> 00:04:13,120 Speaker 6: So China said yesterday they will withdraw the Trump said yesterday, 98 00:04:13,120 --> 00:04:16,040 Speaker 6: excuse me that if China does not withdraw the retaliatory tariffs, 99 00:04:16,080 --> 00:04:19,520 Speaker 6: the US will oppose an additional fifty percent less than 100 00:04:19,760 --> 00:04:23,280 Speaker 6: twenty four hours starting tomorrow. Do you expect those additional 101 00:04:23,279 --> 00:04:25,000 Speaker 6: fifty percent tarishs to come into play? 102 00:04:26,640 --> 00:04:28,800 Speaker 3: I think that depends on the Chinese. And you know, 103 00:04:28,880 --> 00:04:30,400 Speaker 3: my advice to them would be that they have a 104 00:04:30,440 --> 00:04:32,960 Speaker 3: lot more to lose than America does. That America holds 105 00:04:33,000 --> 00:04:36,919 Speaker 3: a leverage and everybody knows that, and therefore they should 106 00:04:37,160 --> 00:04:39,760 Speaker 3: seek a detant and they should offer concessions which would 107 00:04:39,760 --> 00:04:42,200 Speaker 3: persuade the presidents to relent. 108 00:04:42,600 --> 00:04:45,640 Speaker 1: Uncertainty might be a good negotiating tactic, but it's really 109 00:04:45,680 --> 00:04:47,880 Speaker 1: bad for business. That's been the message from a lot 110 00:04:47,880 --> 00:04:51,599 Speaker 1: of corporate executives. And what you're seeing certainly in markets. 111 00:04:51,920 --> 00:04:54,120 Speaker 1: Are you worried that US companies are going to stop 112 00:04:54,120 --> 00:04:56,839 Speaker 1: investing that that could style me some of the progress 113 00:04:56,880 --> 00:04:58,400 Speaker 1: that you're hoping to engineer. 114 00:04:59,520 --> 00:05:02,960 Speaker 3: Yeah, the President has been very clear that you know 115 00:05:03,040 --> 00:05:05,320 Speaker 3: that that that what he's engaging in is is a 116 00:05:05,360 --> 00:05:07,840 Speaker 3: long term improvement in the economic welfare of the United 117 00:05:07,880 --> 00:05:10,960 Speaker 3: States and a long term improvement in putting American workers 118 00:05:10,960 --> 00:05:12,880 Speaker 3: on fair ground viasa of either the rest of the world. 119 00:05:13,240 --> 00:05:16,120 Speaker 3: Some temporary uncertainty will come along with the transition and 120 00:05:16,160 --> 00:05:18,760 Speaker 3: with the imposition of those policies. That that's that's without 121 00:05:18,800 --> 00:05:21,920 Speaker 3: a question. However, I think it's important to understand that 122 00:05:22,040 --> 00:05:25,839 Speaker 3: uncertainty doesn't really cause recessions. You know, I don't think 123 00:05:25,839 --> 00:05:28,320 Speaker 3: that there's been a recession that was caused by people wondering, 124 00:05:28,440 --> 00:05:30,440 Speaker 3: you know, what's you know, what's going to happen tomorrow. 125 00:05:31,080 --> 00:05:35,080 Speaker 3: Uncertainty can delay decisions, for sure, as you're saying, you know, 126 00:05:35,160 --> 00:05:37,960 Speaker 3: there could be some some transfer of investment decisions, some 127 00:05:38,000 --> 00:05:39,680 Speaker 3: transfer of hiring decisions. 128 00:05:39,360 --> 00:05:40,520 Speaker 4: From one month to another. 129 00:05:40,640 --> 00:05:43,880 Speaker 3: That's absolutely possible, but there's limits to that because eventually 130 00:05:43,920 --> 00:05:45,920 Speaker 3: a firm is going to decide, hey, I really need 131 00:05:45,960 --> 00:05:48,360 Speaker 3: to add this capacity, or hey, I really need to 132 00:05:48,400 --> 00:05:50,400 Speaker 3: make a decision about what's going on, and at some 133 00:05:50,480 --> 00:05:53,120 Speaker 3: point waiting becomes not worth it. So is there a 134 00:05:53,200 --> 00:05:56,720 Speaker 3: chance that the uncertainty causes you know, sort of distortions 135 00:05:56,800 --> 00:05:58,360 Speaker 3: in the in the month to month or quarter to 136 00:05:58,440 --> 00:06:01,400 Speaker 3: quarter macroeconomic data that make one quarter look weaker and 137 00:06:01,400 --> 00:06:06,320 Speaker 3: another quarter look stronger. Absolutely, that's likely, right, If it's 138 00:06:06,360 --> 00:06:09,479 Speaker 3: not only possible, it's quite likely. But companies can delay 139 00:06:09,480 --> 00:06:11,760 Speaker 3: decisions forever. Eventually they got to pull the trigger and 140 00:06:11,800 --> 00:06:14,000 Speaker 3: they got to invest based on their evaluation of the 141 00:06:14,000 --> 00:06:16,440 Speaker 3: most likely policy landscape in the future. And the President 142 00:06:16,480 --> 00:06:18,000 Speaker 3: has been very clear about what that policy is. 143 00:06:18,000 --> 00:06:20,560 Speaker 1: In fairness, so a lot of people, in particular Wall 144 00:06:20,600 --> 00:06:22,920 Speaker 1: Street economists have come out and so that actually uncertainty 145 00:06:22,960 --> 00:06:25,440 Speaker 1: can cause a recession, and we have heard that from 146 00:06:25,480 --> 00:06:27,839 Speaker 1: a number of different Wall Street firms for a number 147 00:06:27,920 --> 00:06:30,960 Speaker 1: of different companies, and frankly, the Small Business consumer survey 148 00:06:31,000 --> 00:06:33,400 Speaker 1: came out this morning and so the steepest plunge that 149 00:06:33,400 --> 00:06:35,920 Speaker 1: we've seen going back years. There is a question here 150 00:06:35,920 --> 00:06:38,640 Speaker 1: about yes, they have to ultimately make decisions, but when 151 00:06:38,640 --> 00:06:40,080 Speaker 1: do they start laying people off? 152 00:06:40,160 --> 00:06:41,560 Speaker 7: At what point are you worried. 153 00:06:41,279 --> 00:06:43,719 Speaker 1: About execution risk at a time where some of the 154 00:06:43,760 --> 00:06:46,560 Speaker 1: structural changes take a lot longer than some of these 155 00:06:46,600 --> 00:06:48,560 Speaker 1: policies are taking to implement. 156 00:06:49,800 --> 00:06:53,400 Speaker 3: Yeah, well, look, there isn't really any material sign of 157 00:06:54,320 --> 00:06:56,800 Speaker 3: layoffs in the macroeconomic data, So that's not something that 158 00:06:56,800 --> 00:06:58,880 Speaker 3: I'm that's not something that I'm seeing right now at all. 159 00:06:59,560 --> 00:07:01,880 Speaker 3: And I I would say is again to remind people 160 00:07:01,880 --> 00:07:03,400 Speaker 3: that there are three legs to the stool. 161 00:07:03,760 --> 00:07:05,080 Speaker 4: One is trade renegotiation. 162 00:07:05,320 --> 00:07:08,320 Speaker 3: The other two are deregulation and tax reform, and those 163 00:07:08,360 --> 00:07:10,640 Speaker 3: are still in the pipeline. We're waiting on Congress to 164 00:07:11,080 --> 00:07:14,320 Speaker 3: extend the President's historic tax cuts from twenty seventeen will 165 00:07:14,480 --> 00:07:17,200 Speaker 3: which will sort of preserve low marginal rates in American 166 00:07:17,240 --> 00:07:19,520 Speaker 3: workers and firms. But on top of that, you know, 167 00:07:19,560 --> 00:07:21,880 Speaker 3: what we experienced in Liberation Day was a roughly thirteen 168 00:07:21,920 --> 00:07:27,239 Speaker 3: percentage point rise in the effective terror freight on all imports. 169 00:07:27,280 --> 00:07:30,280 Speaker 3: And that's going to create enormous amounts of revenue, hundreds 170 00:07:30,280 --> 00:07:32,520 Speaker 3: of billions of dollars of revenue that can be used 171 00:07:32,560 --> 00:07:35,760 Speaker 3: to provide additional tax relief for Americans. And the President 172 00:07:35,760 --> 00:07:38,040 Speaker 3: has been pretty clear laying out certain forms of the 173 00:07:38,040 --> 00:07:39,680 Speaker 3: tax relief, and I think that their scope to go 174 00:07:39,800 --> 00:07:42,120 Speaker 3: even further than that, I would you know, I personally 175 00:07:42,120 --> 00:07:45,200 Speaker 3: would like to. However, you know, it depends on what 176 00:07:45,240 --> 00:07:47,760 Speaker 3: Congress works out and negotiates with the President on that. 177 00:07:48,440 --> 00:07:51,080 Speaker 3: You know, I don't always get you know, I'm not 178 00:07:51,120 --> 00:07:52,920 Speaker 3: the president, right the president is the one who will 179 00:07:52,920 --> 00:07:56,080 Speaker 3: decide in collaboration with Congress. But I think that using 180 00:07:56,080 --> 00:07:59,040 Speaker 3: that revenue for additional tax relief would be a fantastic outcome. 181 00:07:59,280 --> 00:08:02,680 Speaker 3: I think that regulation is underway, and the combination of 182 00:08:02,680 --> 00:08:06,040 Speaker 3: making America more competitive via tariffs with making it easier 183 00:08:06,040 --> 00:08:09,000 Speaker 3: to build and invest in higher here is a is 184 00:08:09,000 --> 00:08:11,520 Speaker 3: a fantastic outcome. And when you look ahead to the future, 185 00:08:11,680 --> 00:08:13,520 Speaker 3: when you look ahead to the future, there's going to 186 00:08:13,520 --> 00:08:15,080 Speaker 3: be in America that's the best place in the world 187 00:08:15,080 --> 00:08:18,080 Speaker 3: to do business because the tariffs make a competitive, regulation 188 00:08:18,280 --> 00:08:21,400 Speaker 3: deregulation makes it easy, and tax reform makes it efficient. 189 00:08:21,480 --> 00:08:24,200 Speaker 3: And tax reform keeps more money in people's pockets, makes 190 00:08:24,240 --> 00:08:26,640 Speaker 3: it easier hire, easier to invest, and those are all 191 00:08:26,640 --> 00:08:28,480 Speaker 3: great things, and the markets will look forward to that 192 00:08:29,000 --> 00:08:30,560 Speaker 3: if it should be forward looking, Yeah. 193 00:08:30,520 --> 00:08:34,400 Speaker 6: You're talking about the entire policy proposal. Markets are forward looking. 194 00:08:34,440 --> 00:08:37,960 Speaker 6: They're already pricing in just that the extension of TCGA. 195 00:08:38,120 --> 00:08:40,640 Speaker 6: What more can be done on the tax side. Do 196 00:08:40,679 --> 00:08:42,720 Speaker 6: you think we will get no tax on tip, no 197 00:08:42,800 --> 00:08:44,079 Speaker 6: tax on Social Security? 198 00:08:45,440 --> 00:08:47,319 Speaker 3: Yeah, I think we'll. I think we'll see I think 199 00:08:47,320 --> 00:08:50,000 Speaker 3: we'll see that. And you know, I can't get ahead 200 00:08:50,000 --> 00:08:51,560 Speaker 3: of Congress. I can't get ahead of the president. But 201 00:08:51,640 --> 00:08:53,800 Speaker 3: the President's been clear and calling for those things, and 202 00:08:53,840 --> 00:08:56,440 Speaker 3: I'm optimistic that we'll get them. And I'm also optimistic 203 00:08:56,440 --> 00:08:58,280 Speaker 3: if it we'll get some form of further tax relief. 204 00:08:58,280 --> 00:09:01,160 Speaker 3: Beyond that, what format takes, you know, will be up 205 00:09:01,200 --> 00:09:03,360 Speaker 3: to Congress and the President. But I think that I 206 00:09:03,360 --> 00:09:05,400 Speaker 3: think that it would be a fantastic outcome for American 207 00:09:05,440 --> 00:09:08,400 Speaker 3: workers if we took money raised by tariffs levied from 208 00:09:08,440 --> 00:09:11,480 Speaker 3: foreigners and use that to lower taxes on Americans. That 209 00:09:11,520 --> 00:09:14,520 Speaker 3: would create a more efficient, dynamic, competitive economy. 210 00:09:14,760 --> 00:09:17,359 Speaker 4: That would that would transition into the present's new Golden. 211 00:09:17,080 --> 00:09:19,160 Speaker 2: Age, Steven, how can it be both? How can it 212 00:09:19,160 --> 00:09:21,800 Speaker 2: be both a source of revenue to provide tax relief 213 00:09:22,240 --> 00:09:23,880 Speaker 2: and an option for negotiations. 214 00:09:26,640 --> 00:09:29,240 Speaker 4: Well, tariffs raise revenue, and then I've got that revenue. 215 00:09:29,400 --> 00:09:31,600 Speaker 5: Yeah, yeah, sure, but you said you can negotiate this. 216 00:09:33,559 --> 00:09:37,160 Speaker 3: Oh oh, because the negotiation Okay, so yes, so I. 217 00:09:37,240 --> 00:09:41,440 Speaker 4: Understand what you're saying. So so, presumably if the negotiations. 218 00:09:40,800 --> 00:09:43,600 Speaker 3: Lead to materially better trade terms for American firms, then 219 00:09:43,640 --> 00:09:45,760 Speaker 3: you create a booming economy because there's much more demand 220 00:09:45,760 --> 00:09:46,360 Speaker 3: for our exports. 221 00:09:46,400 --> 00:09:50,000 Speaker 2: And then we tie the tax relief back, well, then 222 00:09:50,040 --> 00:09:52,160 Speaker 2: you don't have this additional revenue to pay for that 223 00:09:52,200 --> 00:09:52,840 Speaker 2: tax relief. 224 00:09:52,960 --> 00:09:55,520 Speaker 3: But nevertheless, Congress and the President are determined to extend 225 00:09:55,600 --> 00:09:58,640 Speaker 3: the original tax the original tax cuts, and provide the 226 00:09:58,640 --> 00:10:01,439 Speaker 3: additional relief at the president I've spoken about. So it's 227 00:10:01,440 --> 00:10:03,360 Speaker 3: a question how much further beyond that can you go. 228 00:10:03,679 --> 00:10:05,120 Speaker 5: We'll keep struggling to make sense of it. 229 00:10:05,120 --> 00:10:07,560 Speaker 2: We appreciate you how This morning, Steven Maron there the 230 00:10:07,559 --> 00:10:19,599 Speaker 2: White House Council of Economic Advisor's share. We begin this 231 00:10:19,640 --> 00:10:22,000 Speaker 2: sound with stocks pushing KaiA as markets look for signs 232 00:10:22,040 --> 00:10:25,080 Speaker 2: of policy clarity. Julian and Manuel of ever Core cutting 233 00:10:25,080 --> 00:10:26,840 Speaker 2: his year end price target on the S and P 234 00:10:26,960 --> 00:10:30,319 Speaker 2: to fifty six hundred from sixty eight. Right in the following, 235 00:10:30,600 --> 00:10:34,920 Speaker 2: prolonged uncertainty has raised asset volatility, damage confidence, and increase 236 00:10:34,960 --> 00:10:39,319 Speaker 2: the odds. Soft data eventually infects the hard causing stagflation 237 00:10:39,720 --> 00:10:41,000 Speaker 2: or outright recession. 238 00:10:41,200 --> 00:10:41,920 Speaker 5: Julian joins us. 239 00:10:41,960 --> 00:10:45,960 Speaker 2: Now for more, Julian, good Mornic, Why so bullish even 240 00:10:46,000 --> 00:10:48,040 Speaker 2: with the price target cut based on what we're seeing 241 00:10:48,040 --> 00:10:48,800 Speaker 2: over the last few days. 242 00:10:48,800 --> 00:10:49,960 Speaker 5: Where does the bullishness come from? 243 00:10:50,120 --> 00:10:54,640 Speaker 8: The bullishes comes from an expectation that if we look 244 00:10:54,760 --> 00:10:58,719 Speaker 8: at the last couple of weeks, we have arrived at 245 00:10:58,720 --> 00:11:01,000 Speaker 8: the point of maximum uncertainty. 246 00:11:01,200 --> 00:11:01,600 Speaker 9: Okay. 247 00:11:02,000 --> 00:11:04,480 Speaker 8: And it's like, whether you think about it in terms 248 00:11:04,480 --> 00:11:10,320 Speaker 8: of market volatility, uncertainty measures, you know, frankly, tariff rates, 249 00:11:10,360 --> 00:11:14,880 Speaker 8: which is the crux of where the uncertainty is from. 250 00:11:15,240 --> 00:11:19,880 Speaker 8: All these things really aren't sustainable in the long term 251 00:11:20,240 --> 00:11:24,400 Speaker 8: because what ends up happening is you get the recession scenario. 252 00:11:24,679 --> 00:11:27,439 Speaker 8: And I think as an investor, you have to believe 253 00:11:27,480 --> 00:11:30,840 Speaker 8: a couple of things here. You really have to believe 254 00:11:30,920 --> 00:11:34,200 Speaker 8: that uncertainty is arriving at peak, and you have to 255 00:11:34,240 --> 00:11:38,720 Speaker 8: believe in and we do that Washington has no desire 256 00:11:38,840 --> 00:11:43,320 Speaker 8: to precipitate a recession because frankly, precipitating a recession has 257 00:11:43,360 --> 00:11:46,679 Speaker 8: a lot of other knock on unintended consequences. 258 00:11:46,720 --> 00:11:48,360 Speaker 5: None of us can get into the mind at the president. 259 00:11:48,400 --> 00:11:50,560 Speaker 2: I've got no idea what he's thinking this morning, going 260 00:11:50,559 --> 00:11:53,319 Speaker 2: ahead to the tarish that will kick in overnight. Can 261 00:11:53,360 --> 00:11:55,640 Speaker 2: we touch on valuations? What's the forward multiple on the 262 00:11:55,760 --> 00:11:56,560 Speaker 2: S and P right now? 263 00:11:57,080 --> 00:11:58,920 Speaker 9: It's well over. 264 00:11:58,760 --> 00:12:05,360 Speaker 8: Twenty still beak to maximum and certainty it does not, okay, 265 00:12:05,440 --> 00:12:08,280 Speaker 8: but we have maintained this for two years now and 266 00:12:08,320 --> 00:12:10,920 Speaker 8: it's certainly worked reasonably well over. 267 00:12:10,760 --> 00:12:11,600 Speaker 9: The last two years. 268 00:12:11,640 --> 00:12:16,560 Speaker 8: Is that valuation alone doesn't end a market cycle, okay. 269 00:12:16,920 --> 00:12:21,920 Speaker 8: What ends a market cycle is an oncoming recession, an 270 00:12:22,040 --> 00:12:25,800 Speaker 8: uncooperative FED, or bond yields moving higher. And if we 271 00:12:25,840 --> 00:12:28,320 Speaker 8: think about the last couple of weeks, look, there have 272 00:12:28,440 --> 00:12:32,640 Speaker 8: been two significant wins here. Number One, oil prices are 273 00:12:32,679 --> 00:12:34,880 Speaker 8: a lot lower than I think any one of us 274 00:12:35,080 --> 00:12:38,160 Speaker 8: would have expected, given the fact that Russia and Ukraine 275 00:12:38,360 --> 00:12:41,319 Speaker 8: is still in escalation mode and the Middle East is 276 00:12:41,360 --> 00:12:43,240 Speaker 8: still in escalation mode for the most part. 277 00:12:43,880 --> 00:12:46,600 Speaker 9: And bond yields things. 278 00:12:46,640 --> 00:12:51,160 Speaker 2: And I was just thinking tick FED showing no woodingness 279 00:12:51,200 --> 00:12:53,600 Speaker 2: to step in yesterday, bond yields will higher. 280 00:12:54,120 --> 00:12:54,960 Speaker 5: What's the circuit brank? 281 00:12:55,160 --> 00:12:59,800 Speaker 8: So you have to differentiate between a FED FED willing 282 00:12:59,840 --> 00:13:03,920 Speaker 8: to step in and a FED who's going to say inflation, 283 00:13:04,280 --> 00:13:07,240 Speaker 8: which now in our view is in the mid threes 284 00:13:07,360 --> 00:13:10,559 Speaker 8: for twenty twenty five. I don't think he's going to 285 00:13:10,720 --> 00:13:15,719 Speaker 8: remove the word transitory because and our research shows that 286 00:13:15,920 --> 00:13:20,600 Speaker 8: essentially the real threat is less inflation. It's the one 287 00:13:20,640 --> 00:13:25,320 Speaker 8: time hit from wherever we go. And our operating view 288 00:13:25,640 --> 00:13:29,520 Speaker 8: is that tariffs will actually settle in around fifteen to 289 00:13:29,559 --> 00:13:33,280 Speaker 8: sixteen percent on a global weighted basis, call it by 290 00:13:33,320 --> 00:13:36,960 Speaker 8: the end of the third quarter. That's how investors can 291 00:13:37,000 --> 00:13:40,840 Speaker 8: live with it going forward, but that the real threat 292 00:13:41,840 --> 00:13:46,360 Speaker 8: is the new tariff regime slowing growth perhaps even more, 293 00:13:46,480 --> 00:13:46,760 Speaker 8: is it. 294 00:13:46,720 --> 00:13:49,160 Speaker 1: Overly complacent to view this as just business as usual 295 00:13:49,480 --> 00:13:53,040 Speaker 1: to not really consider a structural change that, frankly is 296 00:13:53,080 --> 00:13:56,440 Speaker 1: the goal of this administration that could potentially reorder trade 297 00:13:56,520 --> 00:13:59,640 Speaker 1: and potentially cause a decoupling between the US and China. 298 00:14:00,000 --> 00:14:06,240 Speaker 8: Oh again, in eighty days, you're trying to remake a 299 00:14:06,320 --> 00:14:11,200 Speaker 8: global trading system that took eighty years to build. So 300 00:14:11,520 --> 00:14:15,880 Speaker 8: to call it business as usual, you would be someone 301 00:14:15,960 --> 00:14:20,760 Speaker 8: who perhaps didn't take defensive measures to his or her portfolio. 302 00:14:20,680 --> 00:14:22,160 Speaker 9: In the last number of weeks. 303 00:14:22,160 --> 00:14:27,160 Speaker 8: And the question is is are we going to get 304 00:14:27,200 --> 00:14:31,360 Speaker 8: And I think Secretary Bessant was right and proper in 305 00:14:31,560 --> 00:14:34,800 Speaker 8: making the point that there needs to be more singing 306 00:14:34,880 --> 00:14:40,280 Speaker 8: from the same hymn sheet and an openness to cut deals. 307 00:14:40,520 --> 00:14:43,000 Speaker 1: One of the big concerns yesterday was what happened in 308 00:14:43,040 --> 00:14:45,560 Speaker 1: the bond market, and we were talking about it. A 309 00:14:45,560 --> 00:14:47,280 Speaker 1: lot of people called me. They said, what are you 310 00:14:47,320 --> 00:14:50,000 Speaker 1: hearing about this? People didn't have an understanding, but it 311 00:14:50,080 --> 00:14:52,160 Speaker 1: spooked people. So the biggest sell off in thirty year 312 00:14:52,160 --> 00:14:55,160 Speaker 1: bonds going back to the pandemic and why, I don't know, 313 00:14:55,400 --> 00:14:58,440 Speaker 1: maybe because of disruption, maybe because of basis trades, maybe because. 314 00:14:58,200 --> 00:14:59,000 Speaker 7: Of foreign selling. 315 00:14:59,440 --> 00:15:02,440 Speaker 1: At what point point does that type of disruption fundamentally 316 00:15:02,480 --> 00:15:05,440 Speaker 1: spook you and frankly your bullish call for gains by 317 00:15:05,440 --> 00:15:06,280 Speaker 1: the end of the year. 318 00:15:06,320 --> 00:15:11,080 Speaker 8: Well, actually, at this level, yields perfectly reasonable. And now 319 00:15:11,160 --> 00:15:14,960 Speaker 8: again remember part of what we're saying is that asset 320 00:15:15,000 --> 00:15:18,840 Speaker 8: price volatility all over the place is much larger. So 321 00:15:18,920 --> 00:15:23,160 Speaker 8: if we're ranging between three ninety and four thirty or 322 00:15:23,240 --> 00:15:26,920 Speaker 8: four forty or so in the ten year yield, that's okay, 323 00:15:27,000 --> 00:15:30,040 Speaker 8: we deal with live with the volatility. But you know, 324 00:15:30,120 --> 00:15:33,520 Speaker 8: on balance, that is a rate for you know, forward 325 00:15:33,560 --> 00:15:36,920 Speaker 8: discounting of share price multiples that we can live with. 326 00:15:37,200 --> 00:15:40,920 Speaker 8: It's you know, the question is what was behind yesterday's selling. 327 00:15:41,280 --> 00:15:44,560 Speaker 8: We don't buy into the fact that it was international 328 00:15:44,560 --> 00:15:47,040 Speaker 8: investors dumping bonds. 329 00:15:47,280 --> 00:15:48,800 Speaker 9: We buy into the fact. 330 00:15:48,480 --> 00:15:51,480 Speaker 8: That logically, if you think about it, given the moves 331 00:15:51,480 --> 00:15:54,840 Speaker 8: that we've had in the last several weeks, it's asset allocation. 332 00:15:55,040 --> 00:15:57,280 Speaker 1: But to me, the idea that one headline could drive 333 00:15:57,320 --> 00:15:59,680 Speaker 1: two and a half trillion dollars of value destruction and 334 00:16:00,000 --> 00:16:03,240 Speaker 1: creation over again just a blip. 335 00:16:03,720 --> 00:16:05,200 Speaker 7: That's emerging market like trading. 336 00:16:05,520 --> 00:16:08,360 Speaker 1: That is not the deepest, most liquid market in the country, 337 00:16:08,360 --> 00:16:10,560 Speaker 1: in the world. That is not what we're used to, 338 00:16:10,640 --> 00:16:12,200 Speaker 1: and that is not the reason why people go to 339 00:16:12,240 --> 00:16:14,160 Speaker 1: the United States on a risk adjust a basis. That 340 00:16:14,200 --> 00:16:17,920 Speaker 1: completely undermines the whole premise of the US market. Why 341 00:16:18,000 --> 00:16:20,480 Speaker 1: does that not shake your confidence that there can be 342 00:16:20,520 --> 00:16:23,240 Speaker 1: the same kind of dynamic going forward of some sort 343 00:16:23,240 --> 00:16:24,600 Speaker 1: of American market exceptionalist. 344 00:16:24,680 --> 00:16:27,240 Speaker 9: No, you're absolutely right about that, Lisa. 345 00:16:26,960 --> 00:16:31,320 Speaker 8: And that drives home the point that we have to 346 00:16:31,480 --> 00:16:34,920 Speaker 8: have I wouldn't necessarily call it off ramps. We have 347 00:16:35,000 --> 00:16:38,920 Speaker 8: to understand what the path forward could look like to 348 00:16:39,000 --> 00:16:42,360 Speaker 8: be able to deal with and make assumptions and make 349 00:16:42,440 --> 00:16:46,840 Speaker 8: capital allocation decisions, whether you're an investor or a corporate, 350 00:16:46,920 --> 00:16:52,040 Speaker 8: And that's why the emerging policy has to have a 351 00:16:52,280 --> 00:16:56,720 Speaker 8: direction of travel to where we've maxed out on uncertainty, 352 00:16:56,920 --> 00:17:00,160 Speaker 8: we've maxed out on potential tariffs, and we are going 353 00:16:59,960 --> 00:17:03,280 Speaker 8: to get in the art of the deal mode. That's why, again, 354 00:17:03,680 --> 00:17:07,400 Speaker 8: given this incredible volatility that we've seen in asset markets, 355 00:17:07,520 --> 00:17:12,320 Speaker 8: which does undermine confidence, the month of April is as important. 356 00:17:11,800 --> 00:17:14,560 Speaker 9: As it is to sort of subdue. 357 00:17:14,240 --> 00:17:17,480 Speaker 8: The feeling in markets, and to the good we would say, 358 00:17:17,480 --> 00:17:20,880 Speaker 8: if you look at it, the bearest sentiment is as 359 00:17:21,400 --> 00:17:24,159 Speaker 8: intense as I've ever seen it, going back to the 360 00:17:24,200 --> 00:17:27,080 Speaker 8: financial crisis in two thousand and eight. You look at 361 00:17:27,080 --> 00:17:30,520 Speaker 8: the share of volumes the last two days off the charts, 362 00:17:30,600 --> 00:17:33,840 Speaker 8: record share of volumes that tends to happen closer to 363 00:17:33,920 --> 00:17:38,080 Speaker 8: trend changes than trend continuations. So you know, it's almost 364 00:17:38,119 --> 00:17:41,040 Speaker 8: getting to a point where it's so negative that at 365 00:17:41,160 --> 00:17:42,720 Speaker 8: least there's a ray of sunlight. 366 00:17:42,840 --> 00:17:44,800 Speaker 6: You offered up a timeline the end of the third quarter, 367 00:17:44,840 --> 00:17:47,520 Speaker 6: you think terrifies who come down anywhere between ten to 368 00:17:47,600 --> 00:17:50,280 Speaker 6: sixteen percent. So basically for back to school what about 369 00:17:50,280 --> 00:17:53,840 Speaker 6: all the damage that could be done between different administration 370 00:17:53,920 --> 00:17:57,159 Speaker 6: officials singing from different hymn sheets between now and the 371 00:17:57,240 --> 00:17:58,040 Speaker 6: end of September. 372 00:17:58,280 --> 00:18:00,000 Speaker 9: Well, that's the critical issue. 373 00:18:00,440 --> 00:18:04,000 Speaker 8: And again that's why I think, you know, Treasury Secretary 374 00:18:04,080 --> 00:18:07,520 Speaker 8: Vesant is trying to get people to sort of come 375 00:18:07,560 --> 00:18:10,080 Speaker 8: together on this, and to the extent that it does 376 00:18:10,160 --> 00:18:14,400 Speaker 8: or it doesn't, it really will be reflected in asset prices. 377 00:18:14,440 --> 00:18:17,560 Speaker 8: But you know, the shock that we've had to the 378 00:18:17,680 --> 00:18:21,440 Speaker 8: system over the last month and in particular the last 379 00:18:21,480 --> 00:18:25,600 Speaker 8: week and a half is such that you're in the 380 00:18:25,720 --> 00:18:32,080 Speaker 8: zone where the sentiment data could materially infect the hard data. 381 00:18:32,160 --> 00:18:36,320 Speaker 8: And to your point, you know, in home selling season, 382 00:18:36,600 --> 00:18:39,440 Speaker 8: which we're in the peak of right now, and then 383 00:18:39,560 --> 00:18:43,080 Speaker 8: back to school, et cetera, you know, that's where the 384 00:18:43,119 --> 00:18:44,680 Speaker 8: economic risk lies. 385 00:18:44,480 --> 00:18:47,320 Speaker 2: Allow me things held Eric Shaska yesterday at the Economic 386 00:18:47,320 --> 00:18:49,119 Speaker 2: Club in New York that the CEOs that he speaks 387 00:18:49,160 --> 00:18:52,119 Speaker 2: to think we're already in a recession. I just wonder 388 00:18:52,400 --> 00:18:54,600 Speaker 2: what we're hear from the CEOs on Wall straight on 389 00:18:54,680 --> 00:18:56,199 Speaker 2: Friday when the onies come out. 390 00:18:56,240 --> 00:18:57,360 Speaker 5: What do you think the're gonna sund us? 391 00:18:58,240 --> 00:19:02,000 Speaker 8: I would think that Jamie Dimon will will warn the 392 00:19:02,040 --> 00:19:08,600 Speaker 8: way he has about her policy implementation and uncertainty. And look, 393 00:19:08,680 --> 00:19:11,480 Speaker 8: this is going to be an earning season where you know, 394 00:19:12,240 --> 00:19:15,240 Speaker 8: it's sort of similar to the unemployment report on Friday. 395 00:19:15,520 --> 00:19:19,040 Speaker 8: It doesn't matter what the numbers are, It absolutely doesn't matter. 396 00:19:19,200 --> 00:19:24,320 Speaker 8: What matters is the level of expressed you know, uncertainty, 397 00:19:24,880 --> 00:19:27,320 Speaker 8: and you know, will companies pull their guidance and I'm 398 00:19:27,359 --> 00:19:28,920 Speaker 8: sure there are a few that will. 399 00:19:29,000 --> 00:19:31,040 Speaker 2: Yeah, Jian, it's going to see it. Thank you, sir, 400 00:19:31,080 --> 00:19:33,080 Speaker 2: thanks for dropping by Gilian A man. Well, they're a 401 00:19:33,160 --> 00:19:46,080 Speaker 2: Bellico Skotta Montgomery, Countick of Barclay's writing. Dollar negativity is 402 00:19:46,119 --> 00:19:51,600 Speaker 2: now consensus and our sentiment index is a maximum parish territory. Historically, 403 00:19:51,720 --> 00:19:55,959 Speaker 2: this has been a fairly reliable reversal sign Skyla, Johnnapamore, 404 00:19:56,080 --> 00:19:59,399 Speaker 2: Skyla historically. I just wonder how different this time might be. 405 00:20:01,240 --> 00:20:03,879 Speaker 10: Yeah, I mean it's interesting because I think the reaction 406 00:20:04,600 --> 00:20:06,480 Speaker 10: to tariffs was unexpected for the dollar. 407 00:20:06,640 --> 00:20:07,440 Speaker 7: All Lsequell. 408 00:20:07,480 --> 00:20:10,679 Speaker 10: We know that US tariff should boost the dollar, but 409 00:20:10,720 --> 00:20:13,080 Speaker 10: I do think there's a logical explanation here in that 410 00:20:13,560 --> 00:20:16,840 Speaker 10: you know, our import substitution model shows that dollar strengths 411 00:20:16,960 --> 00:20:20,359 Speaker 10: does occur on US tariffs but it also shows dollar 412 00:20:20,400 --> 00:20:24,119 Speaker 10: weakness if all tariff countries responding kind, because in that 413 00:20:24,160 --> 00:20:27,040 Speaker 10: situation a larger share of US exports would be tariff 414 00:20:27,119 --> 00:20:29,960 Speaker 10: than say Europe, which only has new tariffs on exports 415 00:20:30,000 --> 00:20:32,760 Speaker 10: to the US. So this tells us that within FX, 416 00:20:32,840 --> 00:20:36,960 Speaker 10: we'll reliant on how the economies respond to US tariffs. 417 00:20:37,160 --> 00:20:39,160 Speaker 10: The second point has to do with growth and confidence. 418 00:20:39,200 --> 00:20:41,760 Speaker 10: I think there's this growing concern over US policy. From 419 00:20:41,760 --> 00:20:44,919 Speaker 10: an economic perspective. Tariffs are not wrong if there's an 420 00:20:44,920 --> 00:20:49,240 Speaker 10: existing distortion, but sweeping tariffs with very little nuance are 421 00:20:49,240 --> 00:20:52,639 Speaker 10: clearly suboptimal and they raise recession ods. US growth was 422 00:20:52,680 --> 00:20:55,960 Speaker 10: already slowing with confidence under pressure, and the one clear 423 00:20:56,000 --> 00:20:58,840 Speaker 10: conclusion from Paris is that they are US growth negative. 424 00:20:58,880 --> 00:21:02,119 Speaker 10: Whether they stay in place the board, are renegotiated in 425 00:21:02,160 --> 00:21:04,959 Speaker 10: some places, are not. On the other side, that means 426 00:21:05,160 --> 00:21:07,919 Speaker 10: if you know, there is also likely still some hope 427 00:21:07,960 --> 00:21:09,760 Speaker 10: that there are deals, and we don't know where those 428 00:21:09,800 --> 00:21:12,160 Speaker 10: deals would be yet. So I think that reflects of 429 00:21:12,480 --> 00:21:14,760 Speaker 10: why you have this dollar downside. But I think it's 430 00:21:14,840 --> 00:21:17,960 Speaker 10: very hard to maintain an environment of slowing global growth. 431 00:21:18,119 --> 00:21:20,760 Speaker 2: Scarlet One thing we've discussed on this program repeatedly is 432 00:21:20,760 --> 00:21:23,200 Speaker 2: not just the shock to the cycle, but the potential 433 00:21:23,240 --> 00:21:26,400 Speaker 2: shock to the system. We'll catch up with Stephen Myron later, 434 00:21:26,560 --> 00:21:28,600 Speaker 2: the Chair of the Council of Economic Advices to the 435 00:21:28,600 --> 00:21:31,080 Speaker 2: White House in about an half from now. And one 436 00:21:31,080 --> 00:21:33,480 Speaker 2: thing he said, particularly in the last twenty four hours 437 00:21:33,920 --> 00:21:37,000 Speaker 2: is that the security umbrella that the United States is 438 00:21:37,040 --> 00:21:39,320 Speaker 2: off of the world, together with the reserve assets that 439 00:21:39,359 --> 00:21:43,159 Speaker 2: facilitate trade. He's making the point that that's distorted the 440 00:21:43,280 --> 00:21:46,720 Speaker 2: US dollar. There seems to be a pushback against the system. 441 00:21:47,160 --> 00:21:49,600 Speaker 2: And is that something that we can fully internalize now? 442 00:21:49,640 --> 00:21:51,639 Speaker 2: I don't think so. But in coming weeks and months, 443 00:21:51,680 --> 00:21:54,280 Speaker 2: coming years, how are you thinking about those changes? 444 00:21:55,760 --> 00:21:56,000 Speaker 1: Yeah? 445 00:21:56,040 --> 00:21:58,399 Speaker 10: I think because we have these great worries of a 446 00:21:58,520 --> 00:22:00,879 Speaker 10: US policy, they have brought in question the role of 447 00:22:00,920 --> 00:22:03,040 Speaker 10: the US and it's brought into question the role of 448 00:22:03,080 --> 00:22:06,479 Speaker 10: the dollar in the global system. In this market narrative 449 00:22:06,520 --> 00:22:09,840 Speaker 10: around a broad reallocation away from US assets and that 450 00:22:10,160 --> 00:22:12,280 Speaker 10: in turn putting pressure on the dollar. 451 00:22:12,720 --> 00:22:13,520 Speaker 7: We think it's too early. 452 00:22:14,119 --> 00:22:16,359 Speaker 10: They didn't make that called minimum. I think for money 453 00:22:16,359 --> 00:22:18,480 Speaker 10: to move to foreign markets, you need some kind of 454 00:22:18,520 --> 00:22:21,440 Speaker 10: improved asset returns in these markets, which seems like a 455 00:22:21,560 --> 00:22:24,800 Speaker 10: very high bar with global growth stelling. So, for example, 456 00:22:24,800 --> 00:22:28,120 Speaker 10: in China, margins are mid to high single digits terris 457 00:22:28,119 --> 00:22:30,600 Speaker 10: on the scale the US is imposing pretty much completely 458 00:22:30,640 --> 00:22:32,879 Speaker 10: wipe that out. Even if you pass a significant portion 459 00:22:32,960 --> 00:22:35,720 Speaker 10: of that onto the consumer for bonds, U s els 460 00:22:35,720 --> 00:22:38,600 Speaker 10: are still relatively attractive, while there still isn't a large 461 00:22:38,640 --> 00:22:42,040 Speaker 10: liquid alternative market. This is also not the first time 462 00:22:42,160 --> 00:22:44,639 Speaker 10: that the market has falsely gotten excited about this narrative 463 00:22:44,680 --> 00:22:47,399 Speaker 10: and it wasn't sustainable. You know, we've had more than 464 00:22:47,440 --> 00:22:50,520 Speaker 10: a decade of policy that's very much favored the US, 465 00:22:50,560 --> 00:22:53,840 Speaker 10: and it's very hard to undo that. So maybe just 466 00:22:53,880 --> 00:22:56,199 Speaker 10: finish off by saying that, you know, even if it 467 00:22:56,280 --> 00:22:59,479 Speaker 10: is the start of a massive rotation, that's something that 468 00:22:59,640 --> 00:23:01,760 Speaker 10: will take a decade or more to play out, So 469 00:23:01,800 --> 00:23:03,840 Speaker 10: there's still time to position for it, and you don't 470 00:23:03,840 --> 00:23:06,159 Speaker 10: need to take on the early signal in case it's false. 471 00:23:06,520 --> 00:23:08,560 Speaker 1: How do you get ahead of the idea that maybe 472 00:23:08,640 --> 00:23:12,360 Speaker 1: China will allow the renminbeed to weaken disproportionately to offset 473 00:23:12,640 --> 00:23:15,360 Speaker 1: some of the damage that we're seeing or potentially increase 474 00:23:15,560 --> 00:23:16,679 Speaker 1: their export power. 475 00:23:17,920 --> 00:23:19,720 Speaker 10: Yeah, I mean, I think that's kind of our base 476 00:23:19,760 --> 00:23:22,359 Speaker 10: case in terms of China, one of the places that 477 00:23:22,440 --> 00:23:25,200 Speaker 10: rhetor referent trade has been very clear. Tariffs have gone 478 00:23:25,200 --> 00:23:27,840 Speaker 10: into place, They're very large in scale, and they've only 479 00:23:27,960 --> 00:23:31,520 Speaker 10: escalated since Trump has been in office. Authorities in China 480 00:23:31,800 --> 00:23:35,000 Speaker 10: have been artificially supporting the currency. So current terrif rates 481 00:23:35,040 --> 00:23:37,680 Speaker 10: imply that dollar C and Y should be much much 482 00:23:37,800 --> 00:23:40,439 Speaker 10: higher than current levels, and there is this view that 483 00:23:40,480 --> 00:23:42,600 Speaker 10: they won't let the currency go because they're worried about 484 00:23:42,600 --> 00:23:45,520 Speaker 10: capital flight, but capital flight will also leave if the 485 00:23:45,560 --> 00:23:48,679 Speaker 10: growth out the deteriorates significantly, even if you keep the 486 00:23:48,680 --> 00:23:52,000 Speaker 10: currency study. So when the economy deteriorates, they can either 487 00:23:52,040 --> 00:23:55,760 Speaker 10: take the hit, moderate it via significant subsidies, or they 488 00:23:55,800 --> 00:23:58,600 Speaker 10: can let the currency go. And they've been unwilling to 489 00:23:58,600 --> 00:24:01,520 Speaker 10: do large scale stimulus or enough at least to really 490 00:24:01,560 --> 00:24:03,160 Speaker 10: prompt the consumer to spend again. 491 00:24:03,560 --> 00:24:04,880 Speaker 5: So we think it's more likely that. 492 00:24:04,800 --> 00:24:07,000 Speaker 10: They do let the currency go in part to support 493 00:24:07,040 --> 00:24:09,400 Speaker 10: their export market, and so we do like being long 494 00:24:09,400 --> 00:24:11,399 Speaker 10: dollar C in one and our target on that is 495 00:24:11,520 --> 00:24:13,240 Speaker 10: around seven fifty Skyler. 496 00:24:13,320 --> 00:24:15,679 Speaker 1: There's this question about how Europe will respond, and we 497 00:24:15,680 --> 00:24:17,840 Speaker 1: were talking about the haven SETUS of the US and 498 00:24:17,880 --> 00:24:21,159 Speaker 1: just how fundamental it is to the overall system. In Europe, 499 00:24:21,320 --> 00:24:24,000 Speaker 1: they are planning to do fiscal stimulus, there could potentially 500 00:24:24,000 --> 00:24:26,600 Speaker 1: be other offsets regardless of whether there's a deal struck. 501 00:24:27,000 --> 00:24:30,879 Speaker 1: How do you calculate the fiscal impulse into at what 502 00:24:31,040 --> 00:24:34,240 Speaker 1: point the euro could potentially strengthen in a more material way. 503 00:24:35,240 --> 00:24:37,600 Speaker 10: Yeah, So I think the euro in the last week 504 00:24:37,720 --> 00:24:39,399 Speaker 10: or so it's benefited from the fact that it's the 505 00:24:39,400 --> 00:24:42,320 Speaker 10: liquid alternatives to the dollar. It's more trading off of 506 00:24:43,000 --> 00:24:47,800 Speaker 10: US enter negativity more than it's trading off of Europe's positives. 507 00:24:48,000 --> 00:24:50,280 Speaker 10: And now there's this tug of war between tarras and 508 00:24:50,320 --> 00:24:54,840 Speaker 10: the piscal response. And by that I mean we do 509 00:24:54,920 --> 00:25:02,320 Speaker 10: expect you the European economy into recession. That's definitely what 510 00:25:02,440 --> 00:25:04,960 Speaker 10: we've already seen urges scale fifth quantify that is, you 511 00:25:05,000 --> 00:25:08,400 Speaker 10: can look at fiscal and around one percent of GDP 512 00:25:08,520 --> 00:25:12,800 Speaker 10: and fiscal expansion is around thirty to thirty five basis points. 513 00:25:12,920 --> 00:25:13,600 Speaker 7: On the long end. 514 00:25:13,720 --> 00:25:17,040 Speaker 10: You can then take the beta between yields and effects 515 00:25:17,040 --> 00:25:20,680 Speaker 10: to find what kind of policy response feeds into euro dollar. 516 00:25:21,400 --> 00:25:23,600 Speaker 10: So for US, we're very much waiting on what the 517 00:25:23,640 --> 00:25:25,920 Speaker 10: size of that stimulus is to have an idea of 518 00:25:25,960 --> 00:25:28,639 Speaker 10: where we think your dollar fair value is, but you 519 00:25:28,680 --> 00:25:31,760 Speaker 10: also need to consider there are other components, right and 520 00:25:31,920 --> 00:25:34,959 Speaker 10: y weekends materially that will also put down a pressure 521 00:25:34,960 --> 00:25:37,640 Speaker 10: on euro So you need quite a big fiscal stimulus. 522 00:25:37,680 --> 00:25:40,280 Speaker 10: I think to offset the tariffs that we've seen with 523 00:25:40,359 --> 00:25:42,119 Speaker 10: one measure, saying that you know, the fiscal that we 524 00:25:42,160 --> 00:25:44,800 Speaker 10: got from Germany already adds around forty basis points to 525 00:25:44,840 --> 00:25:48,439 Speaker 10: European growth, but a five percent takes away forty basis 526 00:25:48,440 --> 00:25:49,639 Speaker 10: points and we're at twenty percent. 527 00:25:50,160 --> 00:25:52,040 Speaker 2: Hie Kinley, We've got to leave it there. I appreciate 528 00:25:52,080 --> 00:25:54,560 Speaker 2: your time. Scilla Montgomery counting there if Barclay's thank you. 529 00:26:04,560 --> 00:26:07,600 Speaker 2: Nancy Lizarre of Pipers Sandler, seeing tarif related inflation as 530 00:26:07,600 --> 00:26:10,960 Speaker 2: a one off and saying quote easy aggressively now would 531 00:26:11,040 --> 00:26:14,920 Speaker 2: risk a sharp inflation reacceleration in twenty six. As of now, 532 00:26:14,920 --> 00:26:17,320 Speaker 2: after the one off tariff inflation hits the economy in 533 00:26:17,359 --> 00:26:21,040 Speaker 2: twenty five, inflation is likely to slow in twenty six. 534 00:26:21,160 --> 00:26:23,680 Speaker 2: Nancy joined us now for more, Nancy, good morning, good morning. 535 00:26:23,720 --> 00:26:25,120 Speaker 2: Are you suggesting they just wait then? 536 00:26:25,520 --> 00:26:29,000 Speaker 7: I would prefer the Fed be more easier, very slowly, 537 00:26:29,320 --> 00:26:31,119 Speaker 7: because again, what you don't want to do is repeat 538 00:26:31,119 --> 00:26:33,920 Speaker 7: what we did in twenty twenty one, which was eased 539 00:26:34,040 --> 00:26:36,800 Speaker 7: in a temporary shock and then create way too much 540 00:26:36,840 --> 00:26:39,560 Speaker 7: liquidity and inflation indeed comes back. I didn't like the 541 00:26:39,560 --> 00:26:42,320 Speaker 7: fact to use the word transitory. Again, not many people did. 542 00:26:42,800 --> 00:26:46,000 Speaker 2: Yeah, JP Morgan Asset Management Bob michael on the program 543 00:26:46,000 --> 00:26:48,240 Speaker 2: with us on Sunday evening, as we waited for equity 544 00:26:48,280 --> 00:26:50,800 Speaker 2: futures to open on the S and P five hundred, 545 00:26:51,000 --> 00:26:53,560 Speaker 2: he said, maybe this FED couldn't wait until the next meeting. 546 00:26:53,840 --> 00:26:56,280 Speaker 2: The next meeting is the first week of May. Can 547 00:26:56,320 --> 00:26:57,000 Speaker 2: they wait that long? 548 00:26:57,119 --> 00:26:57,280 Speaker 10: Oh? 549 00:26:57,280 --> 00:26:59,639 Speaker 7: I would say, again, this is not an interest rate problem. 550 00:26:59,680 --> 00:27:01,840 Speaker 7: In fact, the lag effects of a FED easing cycle 551 00:27:02,040 --> 00:27:04,560 Speaker 7: are still going to help the economy once uncertainty can 552 00:27:04,600 --> 00:27:06,760 Speaker 7: come down and these price shocks convade. So the FED 553 00:27:06,760 --> 00:27:09,280 Speaker 7: doesn't already ease, let's not forget that, and as we 554 00:27:09,320 --> 00:27:10,760 Speaker 7: move into the back half of the year, they could 555 00:27:10,760 --> 00:27:13,760 Speaker 7: actually already help to support growth. So yes, later rather 556 00:27:13,800 --> 00:27:15,960 Speaker 7: than sooner would be healthier for the long run. 557 00:27:15,960 --> 00:27:19,560 Speaker 1: Inslation Outlook, what's the historic analog to now where we 558 00:27:19,640 --> 00:27:22,679 Speaker 1: can get some sense of how inflation has behaved with 559 00:27:22,800 --> 00:27:25,920 Speaker 1: tariffs at a time where potentially you could also see 560 00:27:26,119 --> 00:27:27,200 Speaker 1: some sort of demand shock. 561 00:27:27,560 --> 00:27:29,639 Speaker 7: So you can go back to twenty eighteen where you 562 00:27:29,640 --> 00:27:32,280 Speaker 7: had two industries in particular that had big tariffs on them, 563 00:27:32,320 --> 00:27:36,280 Speaker 7: both washing machines and furniture, and you saw an increase 564 00:27:36,320 --> 00:27:39,199 Speaker 7: in price immediately, and then you had a decline in 565 00:27:39,280 --> 00:27:41,879 Speaker 7: unit sales immediately, and then over the next year you 566 00:27:41,960 --> 00:27:44,760 Speaker 7: started to see prices actually declined because of that weakness 567 00:27:44,800 --> 00:27:47,600 Speaker 7: and also the substitution effect. So again it takes it 568 00:27:47,640 --> 00:27:49,159 Speaker 7: would be it'd be best for the Fed to be 569 00:27:49,280 --> 00:27:53,040 Speaker 7: patient as we go through this price shock, see a 570 00:27:53,080 --> 00:27:55,920 Speaker 7: dip in the economy, maybe one percent GDP growth. As 571 00:27:55,960 --> 00:27:58,040 Speaker 7: we move into second and into the third quarter, and 572 00:27:58,080 --> 00:28:01,280 Speaker 7: then by the back half fourth or into twenty twenty six, 573 00:28:01,320 --> 00:28:03,879 Speaker 7: you can see an incremental improvement in the economy, and 574 00:28:03,920 --> 00:28:05,480 Speaker 7: the Fed doesn't have to do much to get that. 575 00:28:05,880 --> 00:28:08,760 Speaker 1: Some people would argue, including the likes of big Wall 576 00:28:08,760 --> 00:28:10,800 Speaker 1: Street firms, and a number of Wall Street firms have 577 00:28:10,880 --> 00:28:13,959 Speaker 1: predicted a base case now of recession, including JP Morgan. 578 00:28:14,720 --> 00:28:17,479 Speaker 1: Why should the Fed look through that? Given what the 579 00:28:17,480 --> 00:28:20,960 Speaker 1: surveys are showing, and given the fact that companies may 580 00:28:21,040 --> 00:28:23,320 Speaker 1: come out and give some guidance other than Levi's, but 581 00:28:23,440 --> 00:28:24,600 Speaker 1: may give some guidance. 582 00:28:24,240 --> 00:28:24,840 Speaker 5: To that effect. 583 00:28:24,880 --> 00:28:27,120 Speaker 7: Well, they may not look through it, they may incrementally ease, 584 00:28:27,160 --> 00:28:29,520 Speaker 7: but again the Fed has already eased. Our models were 585 00:28:29,520 --> 00:28:32,679 Speaker 7: actually pretty optimistic for twenty twenty five seeing any healing 586 00:28:32,720 --> 00:28:35,280 Speaker 7: in the economy as we move through the year because 587 00:28:35,320 --> 00:28:37,440 Speaker 7: of the easing cycle that we saw last year, lower 588 00:28:37,480 --> 00:28:40,440 Speaker 7: bond yields that we have started to see now oil 589 00:28:40,480 --> 00:28:43,600 Speaker 7: prices are down. There are basic supports for the economy. 590 00:28:43,600 --> 00:28:46,360 Speaker 7: This is a one time price shock, and to ease 591 00:28:46,360 --> 00:28:49,160 Speaker 7: too aggressively again risk creating this inflation next year. 592 00:28:49,240 --> 00:28:51,560 Speaker 2: Let's talk about those risks of it not being a 593 00:28:51,600 --> 00:28:54,280 Speaker 2: one time price shock. What are the sources of inflation 594 00:28:54,360 --> 00:28:56,480 Speaker 2: that would concern you coming forward from here? 595 00:28:56,720 --> 00:28:59,320 Speaker 7: Well, wage inflation, Actually, it has been very sticky over 596 00:28:59,320 --> 00:29:02,440 Speaker 7: the past year. Even average early earnings have basically stopped 597 00:29:02,440 --> 00:29:06,200 Speaker 7: slowing even prior to the current current current environment, which 598 00:29:06,240 --> 00:29:09,400 Speaker 7: told us that inflation was again sticky in twenty twenty four. 599 00:29:09,800 --> 00:29:12,120 Speaker 7: And I think the Fed should should heed that. And 600 00:29:12,160 --> 00:29:14,040 Speaker 7: you've also seen it in some of the price measures 601 00:29:14,080 --> 00:29:16,360 Speaker 7: again here in the first part of the year, where 602 00:29:16,360 --> 00:29:19,120 Speaker 7: you've seen the ism price measures increase pretty much across 603 00:29:19,160 --> 00:29:20,960 Speaker 7: the board within the regional FED measures, and. 604 00:29:20,960 --> 00:29:23,240 Speaker 2: No Dust has made a similar point from Renmack about 605 00:29:23,280 --> 00:29:25,320 Speaker 2: the risk of second round effects. It talks about the 606 00:29:25,360 --> 00:29:27,920 Speaker 2: anxiety of the consumers right now, and you see it 607 00:29:27,960 --> 00:29:31,200 Speaker 2: in the reports in the surface. They're anxious about high 608 00:29:31,240 --> 00:29:33,120 Speaker 2: unemployment in the future. And if that's the case, the 609 00:29:33,200 --> 00:29:35,040 Speaker 2: idea that they're going to go around to bid up 610 00:29:35,040 --> 00:29:39,120 Speaker 2: their wages anytime soon is difficult to get your head around. 611 00:29:39,520 --> 00:29:41,120 Speaker 1: Which is the reason why a lot of people aren't 612 00:29:41,120 --> 00:29:44,760 Speaker 1: looking to that kind of inflation. Are you arguing that 613 00:29:44,840 --> 00:29:48,520 Speaker 1: potentially a federate cut of even fifty basis points could 614 00:29:48,560 --> 00:29:51,160 Speaker 1: engineer that confidence at a time where this stock isn't 615 00:29:51,200 --> 00:29:52,040 Speaker 1: coming from elsewhere. 616 00:29:52,160 --> 00:29:53,880 Speaker 7: No, I don't think a FED rate cut. I think 617 00:29:53,920 --> 00:29:56,280 Speaker 7: the next major issue for the markets are going to 618 00:29:56,280 --> 00:30:00,480 Speaker 7: be one what inflation does in say April in May, 619 00:30:00,600 --> 00:30:02,640 Speaker 7: you're going to get a price shock, a big price 620 00:30:02,680 --> 00:30:04,960 Speaker 7: increase from the teriffs that are being put in place. 621 00:30:05,400 --> 00:30:08,920 Speaker 7: We think CPI could accelerate to around a five percent 622 00:30:09,360 --> 00:30:11,960 Speaker 7: quarter to quarter annualized run rate, and that's going to 623 00:30:11,960 --> 00:30:14,760 Speaker 7: take consumer spending down. And we're watching our daily consumer 624 00:30:14,800 --> 00:30:17,200 Speaker 7: confidence survey. So no, we think the Fed can ease. 625 00:30:17,200 --> 00:30:20,360 Speaker 7: They just can't ease aggressively, and they've already been in 626 00:30:21,600 --> 00:30:24,800 Speaker 7: an easying cycle. They've pulled back on QT and so 627 00:30:25,040 --> 00:30:27,840 Speaker 7: let's not get carried away, because there are longer term 628 00:30:27,880 --> 00:30:30,160 Speaker 7: supports for the economy as we come out of this, 629 00:30:31,080 --> 00:30:33,160 Speaker 7: which we hopefully is by the fourth quarter of this year. 630 00:30:33,200 --> 00:30:35,200 Speaker 1: A couple of weeks ago, people were talking about the 631 00:30:35,200 --> 00:30:38,600 Speaker 1: sequencing of the policies coming out of this administration, that 632 00:30:38,720 --> 00:30:41,760 Speaker 1: the difficult stuff came first, the tariffs, some of the 633 00:30:41,760 --> 00:30:44,360 Speaker 1: negative growth shocks, and then the pro growth shocks come 634 00:30:44,440 --> 00:30:47,760 Speaker 1: later on with respect to tax cuts and deregulation other aspects. 635 00:30:48,080 --> 00:30:52,920 Speaker 1: How much are people overlooking that as a potential catalyst 636 00:30:53,040 --> 00:30:56,800 Speaker 1: for some growth and frankly, potentially even inflation, and discounting 637 00:30:57,040 --> 00:30:59,160 Speaker 1: how much of an upward stimulus that could be on 638 00:30:59,240 --> 00:30:59,880 Speaker 1: the economy. 639 00:31:00,280 --> 00:31:02,240 Speaker 7: I think that is a very very significant point. I 640 00:31:02,280 --> 00:31:04,560 Speaker 7: started in the summer of nineteen eighty one, and it 641 00:31:04,640 --> 00:31:08,200 Speaker 7: was chaos in the summer of nineteen eighty one. Volker 642 00:31:08,280 --> 00:31:10,280 Speaker 7: wasn't sure if he was going to be successful. Reagan 643 00:31:11,440 --> 00:31:14,440 Speaker 7: did similarly, he was going to take some pain near term, 644 00:31:14,480 --> 00:31:16,440 Speaker 7: allowing Volker to do what he wanted to do. He 645 00:31:16,600 --> 00:31:19,360 Speaker 7: fired people. I'm not comparing Reagan to Trump. But I'm 646 00:31:19,360 --> 00:31:22,480 Speaker 7: just suggesting it's not unusual for an administration to do that. 647 00:31:22,840 --> 00:31:26,320 Speaker 7: And the longer term positives are positives to have on shoring, 648 00:31:26,400 --> 00:31:28,520 Speaker 7: which I've been focused on for fifteen years, is an 649 00:31:28,520 --> 00:31:31,520 Speaker 7: incredible positive. There are people who want to work in factories, 650 00:31:32,520 --> 00:31:37,120 Speaker 7: clarity on the tax reform, deregulation, a smaller government. So 651 00:31:37,240 --> 00:31:40,760 Speaker 7: there are some longer term positives if we can potentially 652 00:31:40,800 --> 00:31:43,680 Speaker 7: negotiate some with these tariffs. I'm also for free trade. 653 00:31:43,680 --> 00:31:45,800 Speaker 7: I'm also for fair trade, and if we come out 654 00:31:45,840 --> 00:31:49,240 Speaker 7: of this current turmoil with some fairer trade, then yes, 655 00:31:49,280 --> 00:31:50,760 Speaker 7: there are You can add that to the list of 656 00:31:50,800 --> 00:31:52,720 Speaker 7: positives for twenty twenty five. 657 00:31:52,720 --> 00:31:53,000 Speaker 5: And I see. 658 00:31:53,000 --> 00:31:55,440 Speaker 2: I share that sentiment almost entirely. I'm pleased you said it. 659 00:31:55,560 --> 00:31:56,800 Speaker 2: I think this has been a problem for a. 660 00:31:56,720 --> 00:31:58,360 Speaker 5: Long long time. It goes back decades. 661 00:31:58,600 --> 00:32:00,880 Speaker 2: I think this administration, led by this president, has done 662 00:32:00,880 --> 00:32:04,480 Speaker 2: a tremendous job of articulating that problem. The President's done 663 00:32:04,480 --> 00:32:06,400 Speaker 2: it going all the way back to the nineteen eighties. 664 00:32:06,720 --> 00:32:09,240 Speaker 2: This is about whether this is the right policy executed 665 00:32:09,280 --> 00:32:12,000 Speaker 2: in the right way to try and remedy this situation 666 00:32:12,120 --> 00:32:14,440 Speaker 2: leads and I think they're two separate conversations. I think 667 00:32:14,440 --> 00:32:17,280 Speaker 2: you've got to be able to acknowledge the former and 668 00:32:17,320 --> 00:32:19,640 Speaker 2: then have a debate about the latter. And that's the 669 00:32:19,680 --> 00:32:21,280 Speaker 2: struggle that a lot of people are seeming to have 670 00:32:21,360 --> 00:32:22,960 Speaker 2: at the moment over the past week or so. 671 00:32:23,120 --> 00:32:25,640 Speaker 1: I'm so glad that you framed it that way, because 672 00:32:25,640 --> 00:32:27,800 Speaker 1: I think a lot of people do agree that there 673 00:32:27,800 --> 00:32:31,520 Speaker 1: are some issues, some problems that are very correctly identified 674 00:32:31,640 --> 00:32:32,600 Speaker 1: by the administration. 675 00:32:33,200 --> 00:32:34,400 Speaker 7: It's execution risk. 676 00:32:34,640 --> 00:32:38,000 Speaker 1: It's this question of the uncertainty itself that does have 677 00:32:38,160 --> 00:32:40,200 Speaker 1: a prolonged period of time and how it is a 678 00:32:40,280 --> 00:32:43,720 Speaker 1: key feature in the way that maybe these deals might 679 00:32:43,760 --> 00:32:45,520 Speaker 1: be being negotiated or not, or maybe this is just 680 00:32:45,560 --> 00:32:46,560 Speaker 1: simply simply policy. 681 00:32:46,600 --> 00:32:48,720 Speaker 2: Joan, Nancy is going to see you, yes dropping bye, 682 00:32:48,720 --> 00:32:51,920 Speaker 2: Thank you. Nancy's out there, of Pipers Sandler. This is 683 00:32:51,960 --> 00:32:56,320 Speaker 2: the Bloomberg Sevenants podcast, bringing you the best in markets, economics, 684 00:32:56,320 --> 00:32:59,280 Speaker 2: angiot politics. You can watch the show live on Bloomberg 685 00:32:59,320 --> 00:33:03,240 Speaker 2: TV mornings from six am to nine am Eastern. Subscribe 686 00:33:03,280 --> 00:33:06,600 Speaker 2: to the podcast on Apple, Spotify or anywhere else you listen, 687 00:33:06,840 --> 00:33:09,480 Speaker 2: and as always on the Bloomberg Terminal and the Bloomberg 688 00:33:09,480 --> 00:33:10,040 Speaker 2: Business out 689 00:33:14,000 --> 00:33:14,040 Speaker 4: M