WEBVTT - Bloomberg Surveillance TV: April 8, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.240 Terminal and the Bloomberg Business App. I'm very pleased to 0:00:37.280 --> 0:00:39.800 say the chaff the White House Council of Economic Advisors, 0:00:39.840 --> 0:00:42.159 Stephen Mara and MS the Chairman, Welcome to the program. 0:00:42.200 --> 0:00:44.800 Sarah Warm, Welcome to Bloomberg Surveillance. I've got to ask 0:00:44.840 --> 0:00:46.199 you the number one question on the lips of a 0:00:46.200 --> 0:00:48.240 lot of people on Wall Street at the moment. Is 0:00:48.280 --> 0:00:51.000 this a negotiation or the new rules of the game? 0:00:51.200 --> 0:00:53.000 How would you frame things for people this morning? 0:00:54.080 --> 0:00:56.560 Good morning, and thanks for having me. How I frame 0:00:56.640 --> 0:00:58.840 things is that it could be either. You know, I 0:00:58.880 --> 0:01:01.440 think the president is female for his negotiating skills. The 0:01:01.440 --> 0:01:04.160 president is renowned for pulling deals out of a hat 0:01:04.280 --> 0:01:06.920 when nobody thought it was even possible. I remind everyone 0:01:06.959 --> 0:01:09.399 that the Phase one China deal in twenty eighteen, sorry 0:01:09.400 --> 0:01:12.360 in twenty nineteen, was a fantastic deal for the United States. 0:01:12.080 --> 0:01:13.040 That the President created. 0:01:13.200 --> 0:01:16.600 It covered intellectual property, it covered market access, it covered 0:01:16.600 --> 0:01:20.760 purchases of agricultural commodities, it covered currenting manipulation, that covered 0:01:20.800 --> 0:01:21.600 all sorts of things. 0:01:21.720 --> 0:01:22.880 And it was a fantastic deal. 0:01:22.880 --> 0:01:25.480 And unfortunately the Biden administration walked away from it and 0:01:25.560 --> 0:01:27.319 refused to enforce it, and that was a. 0:01:27.240 --> 0:01:28.160 Big loss for America. 0:01:28.319 --> 0:01:30.360 So the president is famous for being able to create 0:01:30.400 --> 0:01:32.960 deals when nobody thinks he can. And so that's what 0:01:33.040 --> 0:01:35.160 it can turn into if other countries come and offer 0:01:35.240 --> 0:01:36.720 the right things that persuade the presidents. 0:01:36.760 --> 0:01:37.920 Well, let's talk about the right thing. 0:01:38.080 --> 0:01:40.520 So, as far as we know, Viennam came to the 0:01:40.520 --> 0:01:42.240 table and an offer to drop their taffs to zero. 0:01:42.440 --> 0:01:44.920 That was rejected. The EU offered to drop taffs on 0:01:44.959 --> 0:01:47.920 industrial goods. That's been rejected. What would be the right 0:01:48.000 --> 0:01:50.080 kind of offer? Are they aware of what the right 0:01:50.160 --> 0:01:51.000 kind of offer would be? 0:01:52.280 --> 0:01:52.440 Right? 0:01:52.520 --> 0:01:55.840 So I think that a narrow focus on terror, on 0:01:55.960 --> 0:01:58.720 teriff rates is insufficient because the truth is that the 0:01:58.760 --> 0:02:03.520 non tariff barriers pose enormous, enormous barriers to trade balancing. 0:02:03.520 --> 0:02:06.160 Over the long run, countries have to open their markets 0:02:06.200 --> 0:02:09.840 to US exports. And I don't know exactly what combination 0:02:10.200 --> 0:02:13.640 of what combination of details they have to make in 0:02:13.639 --> 0:02:16.639 an offer, but all I can say is that negotiating 0:02:16.680 --> 0:02:17.840 is better than not negotiating. 0:02:18.120 --> 0:02:21.080 Even the difficulty at the moment, and you're aware of this, 0:02:21.160 --> 0:02:23.880 I'm sure is that they're unclear whether it's about barriers 0:02:23.960 --> 0:02:27.280 to entry or just the deficit, because they are two 0:02:27.280 --> 0:02:28.040 different things. 0:02:28.320 --> 0:02:29.120 Which one is it? 0:02:30.000 --> 0:02:32.000 Of course there are two different things, but they're they're 0:02:32.160 --> 0:02:36.040 you know, deeply related, and you know, inextricably related. If 0:02:36.040 --> 0:02:38.280 you reduce your barriers to entry, you open your market 0:02:38.360 --> 0:02:40.600 to US exports, of course, the trade deficit will responded 0:02:40.600 --> 0:02:40.760 to that. 0:02:41.160 --> 0:02:42.840 I think that there's no question about that. 0:02:43.360 --> 0:02:45.600 When you talked about yesterday, I know you gave a speech, 0:02:45.600 --> 0:02:48.040 you talked about this way of burden sharing and some 0:02:48.160 --> 0:02:51.840 other measures partners could take to potentially get to a deal, 0:02:51.960 --> 0:02:54.079 things like even writing checks to the treasury. 0:02:54.120 --> 0:02:57.560 How exactly would that work? Well, I think there's a 0:02:57.600 --> 0:02:59.160 variety of ways that could work. You know. 0:02:59.240 --> 0:03:01.200 For one thing, they could just, you know, sort of 0:03:01.200 --> 0:03:03.920 simply say, hey, you know, America is providing us with, 0:03:04.360 --> 0:03:07.399 you know, with a defense umbrella, which creates prosperity, which 0:03:07.400 --> 0:03:11.320 creates peace, which allows us to prosper economically. They could say, hey, 0:03:11.400 --> 0:03:14.200 America is creating global trading system, backed by backed by 0:03:14.200 --> 0:03:17.000 this defense umbrella, which which again allows us to trade, 0:03:17.000 --> 0:03:19.360 which creates our prosperity, and we're going to help share 0:03:19.360 --> 0:03:21.160 the We're gonna help share the cost of those things. 0:03:21.160 --> 0:03:23.160 We're gonna, you know, we're gonna we're gonna send some 0:03:23.200 --> 0:03:25.520 money to the United States to help it provide those things. 0:03:25.560 --> 0:03:26.920 I think that would be a fruitful outcome. 0:03:27.000 --> 0:03:28.639 But of course, but again, of course, you know, it 0:03:28.919 --> 0:03:32.200 depends on what the President decides. The President will negotiate 0:03:32.280 --> 0:03:34.600 the deals that he thinks are best for America, best 0:03:34.600 --> 0:03:37.480 for Americans, and you know, I can't get ahead of 0:03:37.520 --> 0:03:38.240 him on those issues. 0:03:38.360 --> 0:03:41.160 We also talked about how partners can invest in and 0:03:41.160 --> 0:03:44.920 install factories in America or trading partners. Could China do that? 0:03:46.760 --> 0:03:47.000 Uh? 0:03:47.040 --> 0:03:49.920 You know, I think I think they could, but you know, 0:03:49.960 --> 0:03:52.120 it remains to be seen whether they be willing to. 0:03:52.480 --> 0:03:55.120 I think China's policy has been to try and you know, 0:03:55.160 --> 0:03:57.960 sort of steal all the all the manufacturing market share 0:03:57.960 --> 0:04:00.120 for themselves, not only for the United States, but for 0:04:00.200 --> 0:04:02.880 many of our trading partners as well. And you know, 0:04:03.120 --> 0:04:06.120 it seems to me unlikely that China would be willing 0:04:06.120 --> 0:04:08.360 to make that concession upfront. However, you know I would 0:04:08.360 --> 0:04:08.800 welcome it. 0:04:09.240 --> 0:04:13.120 So China said yesterday they will withdraw the Trump said yesterday, 0:04:13.120 --> 0:04:16.040 excuse me that if China does not withdraw the retaliatory tariffs, 0:04:16.080 --> 0:04:19.520 the US will oppose an additional fifty percent less than 0:04:19.760 --> 0:04:23.280 twenty four hours starting tomorrow. Do you expect those additional 0:04:23.279 --> 0:04:25.000 fifty percent tarishs to come into play? 0:04:26.640 --> 0:04:28.800 I think that depends on the Chinese. And you know, 0:04:28.880 --> 0:04:30.400 my advice to them would be that they have a 0:04:30.440 --> 0:04:32.960 lot more to lose than America does. That America holds 0:04:33.000 --> 0:04:36.919 a leverage and everybody knows that, and therefore they should 0:04:37.160 --> 0:04:39.760 seek a detant and they should offer concessions which would 0:04:39.760 --> 0:04:42.200 persuade the presidents to relent. 0:04:42.600 --> 0:04:45.640 Uncertainty might be a good negotiating tactic, but it's really 0:04:45.680 --> 0:04:47.880 bad for business. That's been the message from a lot 0:04:47.880 --> 0:04:51.599 of corporate executives. And what you're seeing certainly in markets. 0:04:51.920 --> 0:04:54.120 Are you worried that US companies are going to stop 0:04:54.120 --> 0:04:56.839 investing that that could style me some of the progress 0:04:56.880 --> 0:04:58.400 that you're hoping to engineer. 0:04:59.520 --> 0:05:02.960 Yeah, the President has been very clear that you know 0:05:03.040 --> 0:05:05.320 that that that what he's engaging in is is a 0:05:05.360 --> 0:05:07.840 long term improvement in the economic welfare of the United 0:05:07.880 --> 0:05:10.960 States and a long term improvement in putting American workers 0:05:10.960 --> 0:05:12.880 on fair ground viasa of either the rest of the world. 0:05:13.240 --> 0:05:16.120 Some temporary uncertainty will come along with the transition and 0:05:16.160 --> 0:05:18.760 with the imposition of those policies. That that's that's without 0:05:18.800 --> 0:05:21.920 a question. However, I think it's important to understand that 0:05:22.040 --> 0:05:25.839 uncertainty doesn't really cause recessions. You know, I don't think 0:05:25.839 --> 0:05:28.320 that there's been a recession that was caused by people wondering, 0:05:28.440 --> 0:05:30.440 you know, what's you know, what's going to happen tomorrow. 0:05:31.080 --> 0:05:35.080 Uncertainty can delay decisions, for sure, as you're saying, you know, 0:05:35.160 --> 0:05:37.960 there could be some some transfer of investment decisions, some 0:05:38.000 --> 0:05:39.680 transfer of hiring decisions. 0:05:39.360 --> 0:05:40.520 From one month to another. 0:05:40.640 --> 0:05:43.880 That's absolutely possible, but there's limits to that because eventually 0:05:43.920 --> 0:05:45.920 a firm is going to decide, hey, I really need 0:05:45.960 --> 0:05:48.360 to add this capacity, or hey, I really need to 0:05:48.400 --> 0:05:50.400 make a decision about what's going on, and at some 0:05:50.480 --> 0:05:53.120 point waiting becomes not worth it. So is there a 0:05:53.200 --> 0:05:56.720 chance that the uncertainty causes you know, sort of distortions 0:05:56.800 --> 0:05:58.360 in the in the month to month or quarter to 0:05:58.440 --> 0:06:01.400 quarter macroeconomic data that make one quarter look weaker and 0:06:01.400 --> 0:06:06.320 another quarter look stronger. Absolutely, that's likely, right, If it's 0:06:06.360 --> 0:06:09.479 not only possible, it's quite likely. But companies can delay 0:06:09.480 --> 0:06:11.760 decisions forever. Eventually they got to pull the trigger and 0:06:11.800 --> 0:06:14.000 they got to invest based on their evaluation of the 0:06:14.000 --> 0:06:16.440 most likely policy landscape in the future. And the President 0:06:16.480 --> 0:06:18.000 has been very clear about what that policy is. 0:06:18.000 --> 0:06:20.560 In fairness, so a lot of people, in particular Wall 0:06:20.600 --> 0:06:22.920 Street economists have come out and so that actually uncertainty 0:06:22.960 --> 0:06:25.440 can cause a recession, and we have heard that from 0:06:25.480 --> 0:06:27.839 a number of different Wall Street firms for a number 0:06:27.920 --> 0:06:30.960 of different companies, and frankly, the Small Business consumer survey 0:06:31.000 --> 0:06:33.400 came out this morning and so the steepest plunge that 0:06:33.400 --> 0:06:35.920 we've seen going back years. There is a question here 0:06:35.920 --> 0:06:38.640 about yes, they have to ultimately make decisions, but when 0:06:38.640 --> 0:06:40.080 do they start laying people off? 0:06:40.160 --> 0:06:41.560 At what point are you worried. 0:06:41.279 --> 0:06:43.719 About execution risk at a time where some of the 0:06:43.760 --> 0:06:46.560 structural changes take a lot longer than some of these 0:06:46.600 --> 0:06:48.560 policies are taking to implement. 0:06:49.800 --> 0:06:53.400 Yeah, well, look, there isn't really any material sign of 0:06:54.320 --> 0:06:56.800 layoffs in the macroeconomic data, So that's not something that 0:06:56.800 --> 0:06:58.880 I'm that's not something that I'm seeing right now at all. 0:06:59.560 --> 0:07:01.880 And I I would say is again to remind people 0:07:01.880 --> 0:07:03.400 that there are three legs to the stool. 0:07:03.760 --> 0:07:05.080 One is trade renegotiation. 0:07:05.320 --> 0:07:08.320 The other two are deregulation and tax reform, and those 0:07:08.360 --> 0:07:10.640 are still in the pipeline. We're waiting on Congress to 0:07:11.080 --> 0:07:14.320 extend the President's historic tax cuts from twenty seventeen will 0:07:14.480 --> 0:07:17.200 which will sort of preserve low marginal rates in American 0:07:17.240 --> 0:07:19.520 workers and firms. But on top of that, you know, 0:07:19.560 --> 0:07:21.880 what we experienced in Liberation Day was a roughly thirteen 0:07:21.920 --> 0:07:27.239 percentage point rise in the effective terror freight on all imports. 0:07:27.280 --> 0:07:30.280 And that's going to create enormous amounts of revenue, hundreds 0:07:30.280 --> 0:07:32.520 of billions of dollars of revenue that can be used 0:07:32.560 --> 0:07:35.760 to provide additional tax relief for Americans. And the President 0:07:35.760 --> 0:07:38.040 has been pretty clear laying out certain forms of the 0:07:38.040 --> 0:07:39.680 tax relief, and I think that their scope to go 0:07:39.800 --> 0:07:42.120 even further than that, I would you know, I personally 0:07:42.120 --> 0:07:45.200 would like to. However, you know, it depends on what 0:07:45.240 --> 0:07:47.760 Congress works out and negotiates with the President on that. 0:07:48.440 --> 0:07:51.080 You know, I don't always get you know, I'm not 0:07:51.120 --> 0:07:52.920 the president, right the president is the one who will 0:07:52.920 --> 0:07:56.080 decide in collaboration with Congress. But I think that using 0:07:56.080 --> 0:07:59.040 that revenue for additional tax relief would be a fantastic outcome. 0:07:59.280 --> 0:08:02.680 I think that regulation is underway, and the combination of 0:08:02.680 --> 0:08:06.040 making America more competitive via tariffs with making it easier 0:08:06.040 --> 0:08:09.000 to build and invest in higher here is a is 0:08:09.000 --> 0:08:11.520 a fantastic outcome. And when you look ahead to the future, 0:08:11.680 --> 0:08:13.520 when you look ahead to the future, there's going to 0:08:13.520 --> 0:08:15.080 be in America that's the best place in the world 0:08:15.080 --> 0:08:18.080 to do business because the tariffs make a competitive, regulation 0:08:18.280 --> 0:08:21.400 deregulation makes it easy, and tax reform makes it efficient. 0:08:21.480 --> 0:08:24.200 And tax reform keeps more money in people's pockets, makes 0:08:24.240 --> 0:08:26.640 it easier hire, easier to invest, and those are all 0:08:26.640 --> 0:08:28.480 great things, and the markets will look forward to that 0:08:29.000 --> 0:08:30.560 if it should be forward looking, Yeah. 0:08:30.520 --> 0:08:34.400 You're talking about the entire policy proposal. Markets are forward looking. 0:08:34.440 --> 0:08:37.960 They're already pricing in just that the extension of TCGA. 0:08:38.120 --> 0:08:40.640 What more can be done on the tax side. Do 0:08:40.679 --> 0:08:42.720 you think we will get no tax on tip, no 0:08:42.800 --> 0:08:44.079 tax on Social Security? 0:08:45.440 --> 0:08:47.319 Yeah, I think we'll. I think we'll see I think 0:08:47.320 --> 0:08:50.000 we'll see that. And you know, I can't get ahead 0:08:50.000 --> 0:08:51.560 of Congress. I can't get ahead of the president. But 0:08:51.640 --> 0:08:53.800 the President's been clear and calling for those things, and 0:08:53.840 --> 0:08:56.440 I'm optimistic that we'll get them. And I'm also optimistic 0:08:56.440 --> 0:08:58.280 if it we'll get some form of further tax relief. 0:08:58.280 --> 0:09:01.160 Beyond that, what format takes, you know, will be up 0:09:01.200 --> 0:09:03.360 to Congress and the President. But I think that I 0:09:03.360 --> 0:09:05.400 think that it would be a fantastic outcome for American 0:09:05.440 --> 0:09:08.400 workers if we took money raised by tariffs levied from 0:09:08.440 --> 0:09:11.480 foreigners and use that to lower taxes on Americans. That 0:09:11.520 --> 0:09:14.520 would create a more efficient, dynamic, competitive economy. 0:09:14.760 --> 0:09:17.359 That would that would transition into the present's new Golden. 0:09:17.080 --> 0:09:19.160 Age, Steven, how can it be both? How can it 0:09:19.160 --> 0:09:21.800 be both a source of revenue to provide tax relief 0:09:22.240 --> 0:09:23.880 and an option for negotiations. 0:09:26.640 --> 0:09:29.240 Well, tariffs raise revenue, and then I've got that revenue. 0:09:29.400 --> 0:09:31.600 Yeah, yeah, sure, but you said you can negotiate this. 0:09:33.559 --> 0:09:37.160 Oh oh, because the negotiation Okay, so yes, so I. 0:09:37.240 --> 0:09:41.440 Understand what you're saying. So so, presumably if the negotiations. 0:09:40.800 --> 0:09:43.600 Lead to materially better trade terms for American firms, then 0:09:43.640 --> 0:09:45.760 you create a booming economy because there's much more demand 0:09:45.760 --> 0:09:46.360 for our exports. 0:09:46.400 --> 0:09:50.000 And then we tie the tax relief back, well, then 0:09:50.040 --> 0:09:52.160 you don't have this additional revenue to pay for that 0:09:52.200 --> 0:09:52.840 tax relief. 0:09:52.960 --> 0:09:55.520 But nevertheless, Congress and the President are determined to extend 0:09:55.600 --> 0:09:58.640 the original tax the original tax cuts, and provide the 0:09:58.640 --> 0:10:01.439 additional relief at the president I've spoken about. So it's 0:10:01.440 --> 0:10:03.360 a question how much further beyond that can you go. 0:10:03.679 --> 0:10:05.120 We'll keep struggling to make sense of it. 0:10:05.120 --> 0:10:07.560 We appreciate you how This morning, Steven Maron there the 0:10:07.559 --> 0:10:19.599 White House Council of Economic Advisor's share. We begin this 0:10:19.640 --> 0:10:22.000 sound with stocks pushing KaiA as markets look for signs 0:10:22.040 --> 0:10:25.080 of policy clarity. Julian and Manuel of ever Core cutting 0:10:25.080 --> 0:10:26.840 his year end price target on the S and P 0:10:26.960 --> 0:10:30.319 to fifty six hundred from sixty eight. Right in the following, 0:10:30.600 --> 0:10:34.920 prolonged uncertainty has raised asset volatility, damage confidence, and increase 0:10:34.960 --> 0:10:39.319 the odds. Soft data eventually infects the hard causing stagflation 0:10:39.720 --> 0:10:41.000 or outright recession. 0:10:41.200 --> 0:10:41.920 Julian joins us. 0:10:41.960 --> 0:10:45.960 Now for more, Julian, good Mornic, Why so bullish even 0:10:46.000 --> 0:10:48.040 with the price target cut based on what we're seeing 0:10:48.040 --> 0:10:48.800 over the last few days. 0:10:48.800 --> 0:10:49.960 Where does the bullishness come from? 0:10:50.120 --> 0:10:54.640 The bullishes comes from an expectation that if we look 0:10:54.760 --> 0:10:58.719 at the last couple of weeks, we have arrived at 0:10:58.720 --> 0:11:01.000 the point of maximum uncertainty. 0:11:01.200 --> 0:11:01.600 Okay. 0:11:02.000 --> 0:11:04.480 And it's like, whether you think about it in terms 0:11:04.480 --> 0:11:10.320 of market volatility, uncertainty measures, you know, frankly, tariff rates, 0:11:10.360 --> 0:11:14.880 which is the crux of where the uncertainty is from. 0:11:15.240 --> 0:11:19.880 All these things really aren't sustainable in the long term 0:11:20.240 --> 0:11:24.400 because what ends up happening is you get the recession scenario. 0:11:24.679 --> 0:11:27.439 And I think as an investor, you have to believe 0:11:27.480 --> 0:11:30.840 a couple of things here. You really have to believe 0:11:30.920 --> 0:11:34.200 that uncertainty is arriving at peak, and you have to 0:11:34.240 --> 0:11:38.720 believe in and we do that Washington has no desire 0:11:38.840 --> 0:11:43.320 to precipitate a recession because frankly, precipitating a recession has 0:11:43.360 --> 0:11:46.679 a lot of other knock on unintended consequences. 0:11:46.720 --> 0:11:48.360 None of us can get into the mind at the president. 0:11:48.400 --> 0:11:50.560 I've got no idea what he's thinking this morning, going 0:11:50.559 --> 0:11:53.319 ahead to the tarish that will kick in overnight. Can 0:11:53.360 --> 0:11:55.640 we touch on valuations? What's the forward multiple on the 0:11:55.760 --> 0:11:56.560 S and P right now? 0:11:57.080 --> 0:11:58.920 It's well over. 0:11:58.760 --> 0:12:05.360 Twenty still beak to maximum and certainty it does not, okay, 0:12:05.440 --> 0:12:08.280 but we have maintained this for two years now and 0:12:08.320 --> 0:12:10.920 it's certainly worked reasonably well over. 0:12:10.760 --> 0:12:11.600 The last two years. 0:12:11.640 --> 0:12:16.560 Is that valuation alone doesn't end a market cycle, okay. 0:12:16.920 --> 0:12:21.920 What ends a market cycle is an oncoming recession, an 0:12:22.040 --> 0:12:25.800 uncooperative FED, or bond yields moving higher. And if we 0:12:25.840 --> 0:12:28.320 think about the last couple of weeks, look, there have 0:12:28.440 --> 0:12:32.640 been two significant wins here. Number One, oil prices are 0:12:32.679 --> 0:12:34.880 a lot lower than I think any one of us 0:12:35.080 --> 0:12:38.160 would have expected, given the fact that Russia and Ukraine 0:12:38.360 --> 0:12:41.319 is still in escalation mode and the Middle East is 0:12:41.360 --> 0:12:43.240 still in escalation mode for the most part. 0:12:43.880 --> 0:12:46.600 And bond yields things. 0:12:46.640 --> 0:12:51.160 And I was just thinking tick FED showing no woodingness 0:12:51.200 --> 0:12:53.600 to step in yesterday, bond yields will higher. 0:12:54.120 --> 0:12:54.960 What's the circuit brank? 0:12:55.160 --> 0:12:59.800 So you have to differentiate between a FED FED willing 0:12:59.840 --> 0:13:03.920 to step in and a FED who's going to say inflation, 0:13:04.280 --> 0:13:07.240 which now in our view is in the mid threes 0:13:07.360 --> 0:13:10.559 for twenty twenty five. I don't think he's going to 0:13:10.720 --> 0:13:15.719 remove the word transitory because and our research shows that 0:13:15.920 --> 0:13:20.600 essentially the real threat is less inflation. It's the one 0:13:20.640 --> 0:13:25.320 time hit from wherever we go. And our operating view 0:13:25.640 --> 0:13:29.520 is that tariffs will actually settle in around fifteen to 0:13:29.559 --> 0:13:33.280 sixteen percent on a global weighted basis, call it by 0:13:33.320 --> 0:13:36.960 the end of the third quarter. That's how investors can 0:13:37.000 --> 0:13:40.840 live with it going forward, but that the real threat 0:13:41.840 --> 0:13:46.360 is the new tariff regime slowing growth perhaps even more, 0:13:46.480 --> 0:13:46.760 is it. 0:13:46.720 --> 0:13:49.160 Overly complacent to view this as just business as usual 0:13:49.480 --> 0:13:53.040 to not really consider a structural change that, frankly is 0:13:53.080 --> 0:13:56.440 the goal of this administration that could potentially reorder trade 0:13:56.520 --> 0:13:59.640 and potentially cause a decoupling between the US and China. 0:14:00.000 --> 0:14:06.240 Oh again, in eighty days, you're trying to remake a 0:14:06.320 --> 0:14:11.200 global trading system that took eighty years to build. So 0:14:11.520 --> 0:14:15.880 to call it business as usual, you would be someone 0:14:15.960 --> 0:14:20.760 who perhaps didn't take defensive measures to his or her portfolio. 0:14:20.680 --> 0:14:22.160 In the last number of weeks. 0:14:22.160 --> 0:14:27.160 And the question is is are we going to get 0:14:27.200 --> 0:14:31.360 And I think Secretary Bessant was right and proper in 0:14:31.560 --> 0:14:34.800 making the point that there needs to be more singing 0:14:34.880 --> 0:14:40.280 from the same hymn sheet and an openness to cut deals. 0:14:40.520 --> 0:14:43.000 One of the big concerns yesterday was what happened in 0:14:43.040 --> 0:14:45.560 the bond market, and we were talking about it. A 0:14:45.560 --> 0:14:47.280 lot of people called me. They said, what are you 0:14:47.320 --> 0:14:50.000 hearing about this? People didn't have an understanding, but it 0:14:50.080 --> 0:14:52.160 spooked people. So the biggest sell off in thirty year 0:14:52.160 --> 0:14:55.160 bonds going back to the pandemic and why, I don't know, 0:14:55.400 --> 0:14:58.440 maybe because of disruption, maybe because of basis trades, maybe because. 0:14:58.200 --> 0:14:59.000 Of foreign selling. 0:14:59.440 --> 0:15:02.440 At what point point does that type of disruption fundamentally 0:15:02.480 --> 0:15:05.440 spook you and frankly your bullish call for gains by 0:15:05.440 --> 0:15:06.280 the end of the year. 0:15:06.320 --> 0:15:11.080 Well, actually, at this level, yields perfectly reasonable. And now 0:15:11.160 --> 0:15:14.960 again remember part of what we're saying is that asset 0:15:15.000 --> 0:15:18.840 price volatility all over the place is much larger. So 0:15:18.920 --> 0:15:23.160 if we're ranging between three ninety and four thirty or 0:15:23.240 --> 0:15:26.920 four forty or so in the ten year yield, that's okay, 0:15:27.000 --> 0:15:30.040 we deal with live with the volatility. But you know, 0:15:30.120 --> 0:15:33.520 on balance, that is a rate for you know, forward 0:15:33.560 --> 0:15:36.920 discounting of share price multiples that we can live with. 0:15:37.200 --> 0:15:40.920 It's you know, the question is what was behind yesterday's selling. 0:15:41.280 --> 0:15:44.560 We don't buy into the fact that it was international 0:15:44.560 --> 0:15:47.040 investors dumping bonds. 0:15:47.280 --> 0:15:48.800 We buy into the fact. 0:15:48.480 --> 0:15:51.480 That logically, if you think about it, given the moves 0:15:51.480 --> 0:15:54.840 that we've had in the last several weeks, it's asset allocation. 0:15:55.040 --> 0:15:57.280 But to me, the idea that one headline could drive 0:15:57.320 --> 0:15:59.680 two and a half trillion dollars of value destruction and 0:16:00.000 --> 0:16:03.240 creation over again just a blip. 0:16:03.720 --> 0:16:05.200 That's emerging market like trading. 0:16:05.520 --> 0:16:08.360 That is not the deepest, most liquid market in the country, 0:16:08.360 --> 0:16:10.560 in the world. That is not what we're used to, 0:16:10.640 --> 0:16:12.200 and that is not the reason why people go to 0:16:12.240 --> 0:16:14.160 the United States on a risk adjust a basis. That 0:16:14.200 --> 0:16:17.920 completely undermines the whole premise of the US market. Why 0:16:18.000 --> 0:16:20.480 does that not shake your confidence that there can be 0:16:20.520 --> 0:16:23.240 the same kind of dynamic going forward of some sort 0:16:23.240 --> 0:16:24.600 of American market exceptionalist. 0:16:24.680 --> 0:16:27.240 No, you're absolutely right about that, Lisa. 0:16:26.960 --> 0:16:31.320 And that drives home the point that we have to 0:16:31.480 --> 0:16:34.920 have I wouldn't necessarily call it off ramps. We have 0:16:35.000 --> 0:16:38.920 to understand what the path forward could look like to 0:16:39.000 --> 0:16:42.360 be able to deal with and make assumptions and make 0:16:42.440 --> 0:16:46.840 capital allocation decisions, whether you're an investor or a corporate, 0:16:46.920 --> 0:16:52.040 And that's why the emerging policy has to have a 0:16:52.280 --> 0:16:56.720 direction of travel to where we've maxed out on uncertainty, 0:16:56.920 --> 0:17:00.160 we've maxed out on potential tariffs, and we are going 0:16:59.960 --> 0:17:03.280 to get in the art of the deal mode. That's why, again, 0:17:03.680 --> 0:17:07.400 given this incredible volatility that we've seen in asset markets, 0:17:07.520 --> 0:17:12.320 which does undermine confidence, the month of April is as important. 0:17:11.800 --> 0:17:14.560 As it is to sort of subdue. 0:17:14.240 --> 0:17:17.480 The feeling in markets, and to the good we would say, 0:17:17.480 --> 0:17:20.880 if you look at it, the bearest sentiment is as 0:17:21.400 --> 0:17:24.159 intense as I've ever seen it, going back to the 0:17:24.200 --> 0:17:27.080 financial crisis in two thousand and eight. You look at 0:17:27.080 --> 0:17:30.520 the share of volumes the last two days off the charts, 0:17:30.600 --> 0:17:33.840 record share of volumes that tends to happen closer to 0:17:33.920 --> 0:17:38.080 trend changes than trend continuations. So you know, it's almost 0:17:38.119 --> 0:17:41.040 getting to a point where it's so negative that at 0:17:41.160 --> 0:17:42.720 least there's a ray of sunlight. 0:17:42.840 --> 0:17:44.800 You offered up a timeline the end of the third quarter, 0:17:44.840 --> 0:17:47.520 you think terrifies who come down anywhere between ten to 0:17:47.600 --> 0:17:50.280 sixteen percent. So basically for back to school what about 0:17:50.280 --> 0:17:53.840 all the damage that could be done between different administration 0:17:53.920 --> 0:17:57.159 officials singing from different hymn sheets between now and the 0:17:57.240 --> 0:17:58.040 end of September. 0:17:58.280 --> 0:18:00.000 Well, that's the critical issue. 0:18:00.440 --> 0:18:04.000 And again that's why I think, you know, Treasury Secretary 0:18:04.080 --> 0:18:07.520 Vesant is trying to get people to sort of come 0:18:07.560 --> 0:18:10.080 together on this, and to the extent that it does 0:18:10.160 --> 0:18:14.400 or it doesn't, it really will be reflected in asset prices. 0:18:14.440 --> 0:18:17.560 But you know, the shock that we've had to the 0:18:17.680 --> 0:18:21.440 system over the last month and in particular the last 0:18:21.480 --> 0:18:25.600 week and a half is such that you're in the 0:18:25.720 --> 0:18:32.080 zone where the sentiment data could materially infect the hard data. 0:18:32.160 --> 0:18:36.320 And to your point, you know, in home selling season, 0:18:36.600 --> 0:18:39.440 which we're in the peak of right now, and then 0:18:39.560 --> 0:18:43.080 back to school, et cetera, you know, that's where the 0:18:43.119 --> 0:18:44.680 economic risk lies. 0:18:44.480 --> 0:18:47.320 Allow me things held Eric Shaska yesterday at the Economic 0:18:47.320 --> 0:18:49.119 Club in New York that the CEOs that he speaks 0:18:49.160 --> 0:18:52.119 to think we're already in a recession. I just wonder 0:18:52.400 --> 0:18:54.600 what we're hear from the CEOs on Wall straight on 0:18:54.680 --> 0:18:56.199 Friday when the onies come out. 0:18:56.240 --> 0:18:57.360 What do you think the're gonna sund us? 0:18:58.240 --> 0:19:02.000 I would think that Jamie Dimon will will warn the 0:19:02.040 --> 0:19:08.600 way he has about her policy implementation and uncertainty. And look, 0:19:08.680 --> 0:19:11.480 this is going to be an earning season where you know, 0:19:12.240 --> 0:19:15.240 it's sort of similar to the unemployment report on Friday. 0:19:15.520 --> 0:19:19.040 It doesn't matter what the numbers are, It absolutely doesn't matter. 0:19:19.200 --> 0:19:24.320 What matters is the level of expressed you know, uncertainty, 0:19:24.880 --> 0:19:27.320 and you know, will companies pull their guidance and I'm 0:19:27.359 --> 0:19:28.920 sure there are a few that will. 0:19:29.000 --> 0:19:31.040 Yeah, Jian, it's going to see it. Thank you, sir, 0:19:31.080 --> 0:19:33.080 thanks for dropping by Gilian A man. Well, they're a 0:19:33.160 --> 0:19:46.080