1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,240 Speaker 1: on Apple car Play or Android Auto with the Bloomberg 4 00:00:21,320 --> 00:00:24,840 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:25,280 --> 00:00:27,040 Speaker 1: or watch us live on YouTube. 6 00:00:27,720 --> 00:00:30,479 Speaker 2: Moving on a conversation, Arianne Marie Hordern ed with the 7 00:00:30,520 --> 00:00:33,920 Speaker 2: President of the United States. Amy's joins us right now 8 00:00:34,120 --> 00:00:36,240 Speaker 2: in the studio. I need to get this out of 9 00:00:36,280 --> 00:00:39,839 Speaker 2: the way. Where their New York Yankees mug just to 10 00:00:39,920 --> 00:00:43,920 Speaker 2: harass me? This would be the Undefeated, Yes, New York Ye. 11 00:00:44,080 --> 00:00:46,239 Speaker 3: I didn't realize Paul was a season ticket hall there. 12 00:00:46,440 --> 00:00:48,360 Speaker 3: Oh yeah, Does this mean I get invited now? 13 00:00:48,560 --> 00:00:48,880 Speaker 2: Yeah? 14 00:00:48,920 --> 00:00:50,800 Speaker 4: I guess I'm one of forty in this group, and 15 00:00:50,880 --> 00:00:52,279 Speaker 4: I am after thirty eight years. 16 00:00:52,280 --> 00:00:54,000 Speaker 5: I'm still like the junior person in the group. 17 00:00:54,160 --> 00:00:57,800 Speaker 2: I would suggest the presidents had an active medium morning. 18 00:00:58,280 --> 00:00:59,320 Speaker 2: Why did you speak to him? 19 00:00:59,360 --> 00:01:02,360 Speaker 3: He has an active morning. He's been all over tooth 20 00:01:02,440 --> 00:01:06,119 Speaker 3: social this morning, obviously out immediately this morning with that 21 00:01:07,360 --> 00:01:10,600 Speaker 3: threat really to the Iranians, basically come to the table 22 00:01:10,640 --> 00:01:12,559 Speaker 3: if there's not a deal in a short amount of time, 23 00:01:13,120 --> 00:01:15,760 Speaker 3: and the strait of Hormus is not reopened for business 24 00:01:15,760 --> 00:01:20,720 Speaker 3: as usual. Then he talked about obliterating when it comes 25 00:01:20,720 --> 00:01:24,800 Speaker 3: to electrical facilities, desalination facilities. He also mentioned KRG Island, 26 00:01:24,800 --> 00:01:27,080 Speaker 3: which you mentioned last night as well to the Financial Time. 27 00:01:27,560 --> 00:01:29,160 Speaker 3: This morning, he just said to me that the war 28 00:01:29,280 --> 00:01:31,840 Speaker 3: is going well, unbelievably well was his words. And then 29 00:01:31,880 --> 00:01:33,520 Speaker 3: he said, they want to settle. He's like, that's all 30 00:01:33,520 --> 00:01:34,959 Speaker 3: I can say. They want to settle. 31 00:01:35,160 --> 00:01:39,520 Speaker 2: Who's helping him with this discussion, this assistance and you're 32 00:01:39,560 --> 00:01:42,760 Speaker 2: so good at this resourcing at the Pentagon. Is the 33 00:01:42,840 --> 00:01:45,639 Speaker 2: Pentagon on board with their commander in chief? 34 00:01:46,040 --> 00:01:47,960 Speaker 3: Well, I think so. I think you should really look 35 00:01:48,000 --> 00:01:50,680 Speaker 3: into some look at not even so much what Trump 36 00:01:50,720 --> 00:01:53,680 Speaker 3: says right now, what is Trump doing? He is saying 37 00:01:53,720 --> 00:01:56,160 Speaker 3: that the Iranians do have this moment which feels like 38 00:01:56,200 --> 00:01:59,400 Speaker 3: an off ramp, and it comes on the heels of 39 00:01:59,400 --> 00:02:02,680 Speaker 3: officials other countries that are trying to mediate this conflict, 40 00:02:02,960 --> 00:02:06,000 Speaker 3: having talks in Islamabad over the weekend. But what do 41 00:02:06,080 --> 00:02:08,560 Speaker 3: we have on the ground right now? We had one 42 00:02:08,680 --> 00:02:12,840 Speaker 3: amphibious assault group already in the region that those are 43 00:02:12,880 --> 00:02:15,400 Speaker 3: marines that are trained for things like this, that are 44 00:02:15,400 --> 00:02:17,600 Speaker 3: trained for taking over An island, and then you have 45 00:02:17,639 --> 00:02:20,720 Speaker 3: the eighty second Airborne that's been deployed, and then there's 46 00:02:20,800 --> 00:02:23,640 Speaker 3: reporting from the Washington Post that potentially they're looking at 47 00:02:23,680 --> 00:02:25,880 Speaker 3: more troops on the ground, and the Wall Street Journal 48 00:02:25,919 --> 00:02:29,560 Speaker 3: overnight talked about potentially a group that could go in 49 00:02:30,200 --> 00:02:35,040 Speaker 3: to get the geranium that is buried in Iran. So 50 00:02:35,080 --> 00:02:37,000 Speaker 3: the president has a lot of options right now on 51 00:02:37,120 --> 00:02:40,480 Speaker 3: the menu, clearly, and I think the pentagon of courses 52 00:02:40,480 --> 00:02:43,600 Speaker 3: behind them, especially when you see that troops have been deployed. 53 00:02:44,800 --> 00:02:48,960 Speaker 4: Does the administration does the president have confidence in the 54 00:02:49,000 --> 00:02:52,440 Speaker 4: counterparty that they are speaking with and around represents a 55 00:02:52,480 --> 00:02:54,040 Speaker 4: decision making entity. 56 00:02:54,240 --> 00:02:56,560 Speaker 5: I mean, the folks are talking to cannate the liver. 57 00:02:57,080 --> 00:03:00,000 Speaker 3: That's a great question because the President has for weeks 58 00:03:00,080 --> 00:03:02,639 Speaker 3: said we're not even sure who is running the country 59 00:03:02,720 --> 00:03:04,880 Speaker 3: because of how so much of the top brass has 60 00:03:05,000 --> 00:03:08,160 Speaker 3: been eliminated, the fact that we have not seen or 61 00:03:08,200 --> 00:03:11,919 Speaker 3: heard in public by video from the new Supreme Leader, 62 00:03:12,000 --> 00:03:15,720 Speaker 3: the new Ayahtola, It does seem like this administration is 63 00:03:15,760 --> 00:03:19,000 Speaker 3: speaking to two people. At least, they're definitely taking more 64 00:03:19,080 --> 00:03:22,280 Speaker 3: vocal position when it comes to Iran and the press 65 00:03:22,280 --> 00:03:25,080 Speaker 3: and the media. So it's the Foreign Minister who Steve 66 00:03:25,080 --> 00:03:28,520 Speaker 3: Wickoff and Jared Kushner were dealing with previously. And then 67 00:03:28,560 --> 00:03:31,840 Speaker 3: of course it's the Speaker of the Parliament, Mohammed Golibaff, 68 00:03:32,200 --> 00:03:35,360 Speaker 3: someone who has been trolling the president as well on 69 00:03:35,400 --> 00:03:37,600 Speaker 3: social media when it comes to I mean last night 70 00:03:37,600 --> 00:03:40,280 Speaker 3: he was trying to offer financial advice. These two people 71 00:03:40,360 --> 00:03:44,640 Speaker 3: seem to be individuals that the envoys from the United 72 00:03:44,680 --> 00:03:45,400 Speaker 3: States are dealing with. 73 00:03:45,560 --> 00:03:47,880 Speaker 2: This is joining US across the nation where you choose 74 00:03:47,920 --> 00:03:50,160 Speaker 2: to listen to us in worldwide and ring Harden with 75 00:03:50,320 --> 00:03:54,120 Speaker 2: us speaking with the President of the United States this morning. 76 00:03:54,200 --> 00:03:56,280 Speaker 2: I look at mh to all of this, and I 77 00:03:56,360 --> 00:03:58,960 Speaker 2: think at the end of the discussion is the question 78 00:03:59,040 --> 00:04:01,680 Speaker 2: of which war is fighting? In which war we're fighting? 79 00:04:02,920 --> 00:04:04,840 Speaker 2: Is Israel in the US on the same page? I 80 00:04:04,880 --> 00:04:05,880 Speaker 2: do not see it. 81 00:04:05,880 --> 00:04:09,000 Speaker 3: It's a great question. It's unclear at this moment. It's 82 00:04:09,040 --> 00:04:11,160 Speaker 3: unclear of they in the same page, because I do 83 00:04:11,200 --> 00:04:14,840 Speaker 3: think they do have different objectives. There was a report 84 00:04:14,840 --> 00:04:17,520 Speaker 3: that I thought was very telling. It was just a report, 85 00:04:17,520 --> 00:04:19,680 Speaker 3: but it was a report that Pakistan went to the 86 00:04:19,800 --> 00:04:23,280 Speaker 3: United States to try to get the United States WI 87 00:04:23,360 --> 00:04:26,159 Speaker 3: sounds like maybe they did to go to Israel to say, 88 00:04:26,560 --> 00:04:30,880 Speaker 3: please take the Foreign Minister Abbas Aachi and the Speaker 89 00:04:30,920 --> 00:04:34,640 Speaker 3: of Parliament Mohammed Galibav, please take them off your target lists. 90 00:04:35,040 --> 00:04:37,799 Speaker 3: And so far those two individuals have not been targeted. 91 00:04:38,480 --> 00:04:41,039 Speaker 3: They are still alive, they are tweeting, So that says 92 00:04:41,080 --> 00:04:44,760 Speaker 3: to me, then the administration potentially does feel like these 93 00:04:44,760 --> 00:04:47,800 Speaker 3: are the two individuals they could have a diplomatic dialogue. 94 00:04:47,800 --> 00:04:49,440 Speaker 2: So I mean, Paul, this is the major issue of 95 00:04:49,440 --> 00:04:51,760 Speaker 2: the weekend is the two wars that are being fought 96 00:04:51,800 --> 00:04:53,800 Speaker 2: on one of the United States. 97 00:04:53,680 --> 00:04:57,240 Speaker 4: Emory the Treasury Secretary Scott pss and just just moments 98 00:04:57,240 --> 00:05:00,520 Speaker 4: ago on Fox he says that over time, the US 99 00:05:00,560 --> 00:05:02,880 Speaker 4: is going to retake control of the Straits of wur Moves, 100 00:05:03,360 --> 00:05:05,760 Speaker 4: and that would be freedom of navigation, whether it's through 101 00:05:05,880 --> 00:05:10,400 Speaker 4: US escorts or multinational escort. What I understand, and what 102 00:05:10,440 --> 00:05:12,400 Speaker 4: I think we all understand from experts is that's kind 103 00:05:12,400 --> 00:05:15,560 Speaker 4: of a big ask logistically to secure the Strait of 104 00:05:15,600 --> 00:05:16,000 Speaker 4: for Moves. 105 00:05:16,000 --> 00:05:18,720 Speaker 5: It's that's in the administration is still working towards. 106 00:05:18,640 --> 00:05:21,680 Speaker 3: I think given the troops that they deployed and exactly 107 00:05:21,720 --> 00:05:23,880 Speaker 3: what kind of troops they deployed. Yes, also we saw 108 00:05:23,880 --> 00:05:26,240 Speaker 3: this in the eighties with the tanker wars, right, you 109 00:05:26,279 --> 00:05:29,040 Speaker 3: did have the US Navy out there trying to escort 110 00:05:29,320 --> 00:05:32,880 Speaker 3: ships through. So this is a possibility for the United States. 111 00:05:33,080 --> 00:05:35,560 Speaker 3: I think the president though, that is being set right now. 112 00:05:35,640 --> 00:05:38,480 Speaker 3: Is one that is very interesting. In Iranian parliament over 113 00:05:38,480 --> 00:05:41,680 Speaker 3: the weekend we got more from this draft bill. They 114 00:05:41,680 --> 00:05:44,159 Speaker 3: are essentially have and they essentially have a new toll 115 00:05:44,240 --> 00:05:46,360 Speaker 3: at Tehran toll. If you want to pass the Strait 116 00:05:46,400 --> 00:05:49,600 Speaker 3: of removes, you need to play basically saying these are 117 00:05:49,640 --> 00:05:53,120 Speaker 3: no longer and in these are no longer international bodies 118 00:05:53,160 --> 00:05:56,360 Speaker 3: of water, and they are going to charge a fee 119 00:05:56,400 --> 00:06:00,000 Speaker 3: that's not going to be acceptable to not just use Ministry, 120 00:06:00,400 --> 00:06:03,960 Speaker 3: but the wider world, especially Oman and the United Air Emirates. 121 00:06:04,040 --> 00:06:07,120 Speaker 2: I want you to talk is Amory. I mean, let 122 00:06:07,160 --> 00:06:09,120 Speaker 2: me make this clear, folks. I think the first time 123 00:06:09,160 --> 00:06:14,080 Speaker 2: I saw Amory she was in Vladivostok sipping vodka with Putin. 124 00:06:14,160 --> 00:06:18,000 Speaker 2: She's a lot of vodka out of London years ago, 125 00:06:18,400 --> 00:06:22,640 Speaker 2: like on the ground in the Middle East, in across Russia, 126 00:06:22,680 --> 00:06:25,800 Speaker 2: across Asia as well. I want you to speak right now, 127 00:06:25,920 --> 00:06:30,960 Speaker 2: Amh to the parents, to the family members of troops 128 00:06:31,000 --> 00:06:35,040 Speaker 2: on the ground, American Army, Navy, Air Force. Dare I 129 00:06:35,120 --> 00:06:39,200 Speaker 2: say coast Guard at risk? Here? I grew up weaned 130 00:06:39,320 --> 00:06:42,440 Speaker 2: on column Powell one oh one, which is you throw 131 00:06:42,640 --> 00:06:45,719 Speaker 2: everything you've got at them. Are we doing Colin Powell 132 00:06:46,040 --> 00:06:47,120 Speaker 2: one on one right now? 133 00:06:47,440 --> 00:06:49,280 Speaker 3: I don't think so. In terms of you look at 134 00:06:49,279 --> 00:06:53,120 Speaker 3: the numbers of troop deployment, this is not like hundreds 135 00:06:53,120 --> 00:06:55,799 Speaker 3: of thousands we saw in Iraq. This is very different. 136 00:06:56,320 --> 00:07:00,880 Speaker 3: But losing one service member is a tragedy. So this 137 00:07:01,080 --> 00:07:04,120 Speaker 3: is also from lo This is absolutely this would be 138 00:07:04,160 --> 00:07:07,160 Speaker 3: absolutely horrific, and we saw that with the service members. 139 00:07:06,920 --> 00:07:09,680 Speaker 2: Are read to work. But I mean, you've been in 140 00:07:09,720 --> 00:07:12,200 Speaker 2: London where you and I have sat on the floor 141 00:07:12,520 --> 00:07:16,320 Speaker 2: and the entire nation is transfixed as one casket comes 142 00:07:16,320 --> 00:07:18,640 Speaker 2: off the plane. Is that where the United States of 143 00:07:18,680 --> 00:07:19,880 Speaker 2: America is right now? 144 00:07:20,160 --> 00:07:22,040 Speaker 3: I don't think that's the direction of travel they would 145 00:07:22,120 --> 00:07:24,160 Speaker 3: like to go. Which is why in the reporting, when 146 00:07:24,160 --> 00:07:26,400 Speaker 3: you have you see these stories, whether it's the Washington 147 00:07:26,440 --> 00:07:28,800 Speaker 3: Post or the Wall Street Journal, that talk about all 148 00:07:28,800 --> 00:07:32,040 Speaker 3: the options that are available to the president, he still 149 00:07:32,080 --> 00:07:34,680 Speaker 3: is concerned because he doesn't want to put you, as 150 00:07:34,720 --> 00:07:35,880 Speaker 3: service members in danger. 151 00:07:36,680 --> 00:07:39,200 Speaker 4: In terms of negotiations, with Iran and just in that 152 00:07:39,280 --> 00:07:41,440 Speaker 4: part of the world does the President have the most 153 00:07:41,720 --> 00:07:44,440 Speaker 4: trust in. I guess it's son in law Jared Kushner 154 00:07:44,440 --> 00:07:47,280 Speaker 4: and mister Widcoff as opposed to perhaps the Secretary of 155 00:07:47,280 --> 00:07:50,640 Speaker 4: State mister Rubio and the All State Department and that apparatus, 156 00:07:50,640 --> 00:07:52,440 Speaker 4: it seems to be a little bit different. 157 00:07:52,760 --> 00:07:54,880 Speaker 3: Well, I think when it comes to Iran, you know, 158 00:07:55,280 --> 00:07:59,240 Speaker 3: their negotiations are always indirect. There's never always this full 159 00:07:59,360 --> 00:08:02,800 Speaker 3: come like contact, direct contact. I believe a few times 160 00:08:02,840 --> 00:08:05,240 Speaker 3: it's happened with Kushner and Wikoff, but it's not happening, 161 00:08:05,320 --> 00:08:08,160 Speaker 3: of course, right now. And sometimes this is done through 162 00:08:08,240 --> 00:08:11,320 Speaker 3: back channels, which sometimes makes it easier to be done 163 00:08:11,360 --> 00:08:15,160 Speaker 3: through envoys that are just focused on one specific issue. 164 00:08:15,160 --> 00:08:17,880 Speaker 3: Of course, there was another name that was thrown into this, 165 00:08:18,240 --> 00:08:20,680 Speaker 3: and that was the Vice President, Jade Vance. All of 166 00:08:20,760 --> 00:08:23,360 Speaker 3: a sudden, potentially he is part of this group that 167 00:08:23,440 --> 00:08:25,960 Speaker 3: and there was reports fling around obviously never happened that 168 00:08:25,960 --> 00:08:28,120 Speaker 3: would go to Islamabad and have these discussions. 169 00:08:28,400 --> 00:08:30,760 Speaker 2: Okay, quickly, here, you're working twenty four to seven. What 170 00:08:30,760 --> 00:08:32,320 Speaker 2: are you going to focus on this afternoon? 171 00:08:33,000 --> 00:08:37,000 Speaker 3: This afternoon, I'm going to focus on more of these 172 00:08:37,040 --> 00:08:41,720 Speaker 3: truth social posts and what the president I think his communications? Yeah, 173 00:08:41,760 --> 00:08:44,640 Speaker 3: what is he signaling to the American people? Remember, of course, 174 00:08:44,760 --> 00:08:47,199 Speaker 3: this is a president who ran as not wanting to 175 00:08:47,240 --> 00:08:51,440 Speaker 3: start any more foreign wars, and right now we are 176 00:08:51,679 --> 00:08:53,480 Speaker 3: in a war. He doesn't like calling it this as 177 00:08:53,480 --> 00:08:54,440 Speaker 3: a military operation. 178 00:08:54,559 --> 00:08:56,280 Speaker 2: This is a war. We got to go. I started 179 00:08:56,320 --> 00:08:59,120 Speaker 2: with my conversation with handing it to treys on Sam Graves, 180 00:08:59,520 --> 00:09:04,920 Speaker 2: sixth District, Missouri, Siya. The Republican retirements are just absolutely stunning. 181 00:09:05,160 --> 00:09:08,680 Speaker 3: Republican retirements are stunning, probably because they know, why would 182 00:09:08,679 --> 00:09:12,040 Speaker 3: you want to stand for election this year? The midterms 183 00:09:12,040 --> 00:09:14,599 Speaker 3: are going to be incredibly challenging for the goopaeator on 184 00:09:14,679 --> 00:09:15,559 Speaker 3: Emory Horden. 185 00:09:15,320 --> 00:09:18,120 Speaker 2: Thank you so much for conversation with the President of 186 00:09:18,160 --> 00:09:23,560 Speaker 2: the United States. Stay with us. More from Bloomberg Surveillance 187 00:09:23,640 --> 00:09:24,959 Speaker 2: coming up after this. 188 00:09:32,240 --> 00:09:35,800 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 189 00:09:35,880 --> 00:09:39,040 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 190 00:09:39,120 --> 00:09:42,760 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 191 00:09:42,920 --> 00:09:44,520 Speaker 1: watch us live on YouTube. 192 00:09:44,640 --> 00:09:48,040 Speaker 2: This is a blur for Pauday is just an extraordinary 193 00:09:48,960 --> 00:09:53,320 Speaker 2: advantage of wonderful conversations and then somebody will say something 194 00:09:53,880 --> 00:09:56,440 Speaker 2: which sticks with me. I'm walking down the street six 195 00:09:56,440 --> 00:10:01,040 Speaker 2: months later, I'm going, damn that, Nancy something last year 196 00:10:01,080 --> 00:10:03,760 Speaker 2: that made it my interview of the year of this 197 00:10:03,840 --> 00:10:08,600 Speaker 2: American labor economy joining us now from Piper Sandler. They're 198 00:10:08,679 --> 00:10:14,800 Speaker 2: chief global economists, truly iconic. Nancy Lazarre, you basically said 199 00:10:15,640 --> 00:10:19,320 Speaker 2: the strong labor economy is a fiction. It's all government 200 00:10:19,400 --> 00:10:23,959 Speaker 2: and healthcare supported, and that the private investment in private 201 00:10:24,120 --> 00:10:28,240 Speaker 2: jobs formation is broken. What does a war do to that? 202 00:10:29,080 --> 00:10:31,000 Speaker 6: Well, that was a year ago, as you said, and 203 00:10:31,040 --> 00:10:33,040 Speaker 6: I would actually argue that you're starting to see a 204 00:10:33,080 --> 00:10:35,920 Speaker 6: healing in the private sector labor market. 205 00:10:36,040 --> 00:10:36,240 Speaker 5: Now. 206 00:10:36,280 --> 00:10:39,120 Speaker 6: A war, to be sure, will curb business confidence. But 207 00:10:39,200 --> 00:10:41,160 Speaker 6: wait a second, I just got a bunch of business 208 00:10:41,160 --> 00:10:45,120 Speaker 6: confidence surveys, a group of manufacturing surveys through March, which 209 00:10:45,200 --> 00:10:46,920 Speaker 6: captured the war and the increase of the price of 210 00:10:46,920 --> 00:10:50,720 Speaker 6: oil and their employment in disease actually arose. So I 211 00:10:50,720 --> 00:10:52,600 Speaker 6: think you have to look at the economy broader than 212 00:10:52,720 --> 00:10:54,600 Speaker 6: just a war and increase in the price of oil. 213 00:10:54,760 --> 00:10:57,800 Speaker 2: I look at the Guadalcanal Low. How miserable we were 214 00:10:57,800 --> 00:11:01,600 Speaker 2: in forty one, forty two into that battle in the 215 00:11:01,640 --> 00:11:03,880 Speaker 2: South Pacific that we didn't want to talk about at 216 00:11:03,880 --> 00:11:06,760 Speaker 2: the time, and then up, up, and away we went 217 00:11:07,360 --> 00:11:11,000 Speaker 2: for a year, basically for years into the deflationary fifties. 218 00:11:11,880 --> 00:11:14,440 Speaker 2: I guess is it the same thing as well, that 219 00:11:14,520 --> 00:11:16,600 Speaker 2: this work could be a stimulus of sorts. 220 00:11:16,920 --> 00:11:19,200 Speaker 6: I'm not sure the war itself is a stimulus other 221 00:11:19,280 --> 00:11:22,040 Speaker 6: than the backbone of the US economy is indeed strong. 222 00:11:22,280 --> 00:11:24,480 Speaker 6: We've had surges in the price of oil several times 223 00:11:24,520 --> 00:11:27,120 Speaker 6: over the past thirty forty years. Obviously, in the nineteen 224 00:11:27,160 --> 00:11:30,240 Speaker 6: ninety goal for the economy wasn't as strong then as 225 00:11:30,240 --> 00:11:33,040 Speaker 6: it is today, but boy, as that thing ended, oil 226 00:11:33,080 --> 00:11:36,280 Speaker 6: prices came down strong. Obviously, the next leg was the 227 00:11:36,400 --> 00:11:39,680 Speaker 6: US tech Revolution, and then after two thousand and eight 228 00:11:39,720 --> 00:11:41,959 Speaker 6: you also had a surge in the price of price 229 00:11:42,000 --> 00:11:45,560 Speaker 6: of oil. Then you had almost a decade prior to COVID, 230 00:11:45,840 --> 00:11:49,120 Speaker 6: a decade of a stronger US economy supported by domestic 231 00:11:49,160 --> 00:11:52,240 Speaker 6: capital spending. We had, even more recently a surge in 232 00:11:52,280 --> 00:11:54,840 Speaker 6: the price of oil. Obviously, back in twenty one you 233 00:11:54,880 --> 00:11:57,080 Speaker 6: went from fifty to one hundred and twenty dollars. The 234 00:11:57,160 --> 00:12:00,240 Speaker 6: US economy stumbled slightly in the first part of twenty two, 235 00:12:00,440 --> 00:12:03,800 Speaker 6: but then we took off again, supported by capital, supported 236 00:12:03,800 --> 00:12:07,040 Speaker 6: by capital spending. So the thing that I keep reminding 237 00:12:07,080 --> 00:12:09,360 Speaker 6: myself is that the economy is not just driven by 238 00:12:09,480 --> 00:12:12,319 Speaker 6: one variable. It's not just oil. It's a function of 239 00:12:12,360 --> 00:12:15,880 Speaker 6: monetary physical policy in general. And physical policy right now 240 00:12:15,920 --> 00:12:19,839 Speaker 6: is underappreciated as a support and what I would call 241 00:12:19,880 --> 00:12:22,320 Speaker 6: the right way, not through a boom in government spending, 242 00:12:22,640 --> 00:12:25,240 Speaker 6: but companies have just seen one hundred and eighty billion 243 00:12:25,280 --> 00:12:29,760 Speaker 6: decline in their tax cash tax payments because they're incentivized 244 00:12:29,800 --> 00:12:34,240 Speaker 6: to do capital spending. Deregulation is underway, and that's beneficial 245 00:12:34,280 --> 00:12:37,400 Speaker 6: to small medium sized businesses. I hear it particularly from 246 00:12:37,440 --> 00:12:41,599 Speaker 6: the banking banking system. Banks are easing lending lending standards. 247 00:12:41,600 --> 00:12:44,360 Speaker 6: So right now, we for sure are at risk of 248 00:12:44,400 --> 00:12:47,480 Speaker 6: the US economy slowing stalling out depends upon how long 249 00:12:47,920 --> 00:12:51,320 Speaker 6: sure surgeon the price of oil goes on. But this 250 00:12:51,360 --> 00:12:52,600 Speaker 6: is a pretty strong economy. 251 00:12:52,960 --> 00:12:55,480 Speaker 5: How's the US consumer doing with this backdrop here? 252 00:12:55,640 --> 00:12:57,880 Speaker 6: So the consumer is a little bit in a tug 253 00:12:57,880 --> 00:13:01,280 Speaker 6: of war. On one hand, they obviously consumer confidence is down. 254 00:13:01,320 --> 00:13:03,839 Speaker 6: We have a daily survey of consumer confidence which is 255 00:13:03,880 --> 00:13:06,760 Speaker 6: a little nuts, but it works. And it is down 256 00:13:06,800 --> 00:13:09,240 Speaker 6: about fifteen points, but it's still above where it was 257 00:13:09,360 --> 00:13:12,640 Speaker 6: during the government shutdown, way above where it was during 258 00:13:12,679 --> 00:13:15,160 Speaker 6: the COVID low, way above where it was during the 259 00:13:15,200 --> 00:13:18,920 Speaker 6: GF during the GFC, So confidence, consumer confidence has gotten hit. 260 00:13:19,280 --> 00:13:22,920 Speaker 6: But at the same time, we monitor your weekly retail 261 00:13:22,960 --> 00:13:25,920 Speaker 6: sales data and actually they through mid March we're on 262 00:13:25,920 --> 00:13:29,000 Speaker 6: the stronger side. That is, again, consumer is driven by 263 00:13:29,000 --> 00:13:32,400 Speaker 6: more than just gasoline. We have these tax refunds, to 264 00:13:32,440 --> 00:13:34,199 Speaker 6: be sure, some of them are being eaten up by 265 00:13:34,240 --> 00:13:37,280 Speaker 6: the higher gasoline prices. But the labor market, as I mentioned, 266 00:13:37,320 --> 00:13:39,719 Speaker 6: if you look at unemployment claims, and I'm seeing more 267 00:13:39,760 --> 00:13:43,320 Speaker 6: and more commentary on Bloomberg on other news programs that wow, 268 00:13:43,360 --> 00:13:45,320 Speaker 6: the labor market may not be as weak as I thought. 269 00:13:45,400 --> 00:13:48,520 Speaker 6: Claims are indeed in a declining trends. That's helping the consumer. 270 00:13:48,679 --> 00:13:50,959 Speaker 5: So how do we think about inflation here? 271 00:13:51,040 --> 00:13:54,240 Speaker 4: Because you did mention consumers are seeing it at the pump, 272 00:13:54,280 --> 00:13:56,440 Speaker 4: a big increase, and we'll probably see it in other 273 00:13:56,840 --> 00:13:59,720 Speaker 4: parts of the economy as it higher energy costs flow 274 00:13:59,760 --> 00:14:04,680 Speaker 4: through to you know, fertilizers and food and all that 275 00:14:04,679 --> 00:14:05,199 Speaker 4: type of stuff. 276 00:14:05,200 --> 00:14:06,120 Speaker 5: How do you think better inflation? 277 00:14:06,720 --> 00:14:10,839 Speaker 6: So First, energy spikes are a tax on the YOS 278 00:14:10,840 --> 00:14:14,160 Speaker 6: economy unless the FED monetizes them, as they did during 279 00:14:14,200 --> 00:14:15,199 Speaker 6: the nineteen seventies. 280 00:14:15,240 --> 00:14:17,520 Speaker 5: So to do that like just cutting rates. 281 00:14:17,320 --> 00:14:20,120 Speaker 6: Cutting rates, putting liquidity in the economy. You had double 282 00:14:20,120 --> 00:14:23,040 Speaker 6: digit money growth in the seventies, very very and you 283 00:14:23,080 --> 00:14:25,760 Speaker 6: had double digit money growth twenty one twenty two, which 284 00:14:25,760 --> 00:14:28,240 Speaker 6: is why inflation was indeed more sticky. But similar to 285 00:14:28,280 --> 00:14:30,920 Speaker 6: a year ago when you had the tariffs. Almost a 286 00:14:30,960 --> 00:14:33,680 Speaker 6: year ago you had the tariffs. Our point then was 287 00:14:33,800 --> 00:14:36,680 Speaker 6: it was a tax, and you did see one price 288 00:14:36,720 --> 00:14:38,840 Speaker 6: went up, other prices went down, And so I think 289 00:14:38,880 --> 00:14:42,280 Speaker 6: you're going to see the same thing today. Energy takes 290 00:14:42,280 --> 00:14:45,560 Speaker 6: time to flow through to overall GDP consumer spending. It 291 00:14:45,720 --> 00:14:48,640 Speaker 6: very quickly impacts the CPI, So the marge CPI will 292 00:14:48,720 --> 00:14:51,840 Speaker 6: be bad zero point six, zero point seven percent. But 293 00:14:52,280 --> 00:14:54,200 Speaker 6: again it's a tax. I. Think as you go through 294 00:14:54,240 --> 00:14:56,080 Speaker 6: the year, you can see other prices go down. 295 00:14:56,640 --> 00:14:59,800 Speaker 2: What's the state of American capitalism? Now you've done so 296 00:14:59,880 --> 00:15:03,960 Speaker 2: much much thinking about the arc of the larger picture. Now, 297 00:15:04,000 --> 00:15:09,080 Speaker 2: how do we incentivize ourselves to better productivity, better prosperity. 298 00:15:09,320 --> 00:15:11,600 Speaker 6: So I was actually in Europe last week and I 299 00:15:11,640 --> 00:15:14,520 Speaker 6: have a chart of US productivity relative to Europe and 300 00:15:14,560 --> 00:15:16,920 Speaker 6: the rest of the world. Yeah, no, it's do we. 301 00:15:17,000 --> 00:15:20,080 Speaker 2: Just work longer hours. As I look at Alexis Christopher's 302 00:15:20,120 --> 00:15:24,480 Speaker 2: over there, and we French have the same productivity we do. 303 00:15:24,800 --> 00:15:27,520 Speaker 2: They just worked less hours. Yeah, they're smarter than we are. 304 00:15:27,640 --> 00:15:32,080 Speaker 6: Actually, actually they don't. But we also invest in technology. 305 00:15:32,080 --> 00:15:35,240 Speaker 6: I'm just sitting in this beautiful room, and again I 306 00:15:35,280 --> 00:15:38,560 Speaker 6: heard over and over again that Europe is indeed right 307 00:15:38,640 --> 00:15:41,920 Speaker 6: way behind from an investment perspective, from a technological innovation, 308 00:15:42,040 --> 00:15:45,680 Speaker 6: embracing it, allowing creative destruction which they don't allow, which 309 00:15:45,720 --> 00:15:49,320 Speaker 6: we do. And so productivity has been in an accelerating 310 00:15:49,360 --> 00:15:52,560 Speaker 6: trend for about ten years. We're back up to something 311 00:15:52,600 --> 00:15:55,040 Speaker 6: close to two two and a half percent. And given 312 00:15:55,120 --> 00:15:57,000 Speaker 6: all the R and D that's going on right now 313 00:15:57,000 --> 00:16:00,280 Speaker 6: within corporate America and being incentivized to do more R 314 00:16:00,320 --> 00:16:03,640 Speaker 6: and D through the tax to the tax legislation, we 315 00:16:03,720 --> 00:16:06,920 Speaker 6: think productivity growth can move up towards three percent. So 316 00:16:07,600 --> 00:16:12,400 Speaker 6: the state of American capitalism with these capex incentives, with deregulation, 317 00:16:13,080 --> 00:16:14,480 Speaker 6: we think is pretty healthy. 318 00:16:14,840 --> 00:16:19,040 Speaker 4: There's little to no population growth in this country these days, 319 00:16:19,080 --> 00:16:21,200 Speaker 4: so for this economy to growth, Can it grow because 320 00:16:21,240 --> 00:16:23,040 Speaker 4: of increased productivity? 321 00:16:22,880 --> 00:16:25,440 Speaker 5: Maybe AI enhancing that bingo? 322 00:16:25,520 --> 00:16:27,480 Speaker 6: I mean so much. I hear from Wall Street, Oh, 323 00:16:27,600 --> 00:16:29,920 Speaker 6: the fantastic cut rates because there's no labor force growth, 324 00:16:29,920 --> 00:16:32,480 Speaker 6: and it's like, wait, potential GDP growth is two has 325 00:16:32,520 --> 00:16:35,520 Speaker 6: two components. One is labor force growth population growth, and 326 00:16:35,560 --> 00:16:37,880 Speaker 6: the other is productivity growth. And they seem to forget 327 00:16:37,920 --> 00:16:41,640 Speaker 6: about that. And productivity growth is boosting. All you have 328 00:16:41,680 --> 00:16:43,920 Speaker 6: to do is look at the CBO data. CBO has 329 00:16:44,000 --> 00:16:47,040 Speaker 6: data on potential GDP growth and it has moved up 330 00:16:47,320 --> 00:16:49,640 Speaker 6: to about two and a half percent, which I don't 331 00:16:49,640 --> 00:16:52,320 Speaker 6: hear anybody talking about, which suggests that real interest rates 332 00:16:52,320 --> 00:16:55,440 Speaker 6: are about right. We don't need cuts and interst rates obviously, 333 00:16:55,440 --> 00:16:57,680 Speaker 6: now the community is talking about higher rates. We don't 334 00:16:57,680 --> 00:17:00,280 Speaker 6: think that either, simply because this is a tax on 335 00:17:00,320 --> 00:17:03,720 Speaker 6: the economy. FED policy is not overly aggressive. So at 336 00:17:03,760 --> 00:17:05,440 Speaker 6: the end of the day, we think rates are about right. 337 00:17:06,280 --> 00:17:08,080 Speaker 4: So I mean, again, if you look at the w 338 00:17:08,200 --> 00:17:10,600 Speaker 4: I RP function on the Bloomberg criminal, the market kind 339 00:17:10,600 --> 00:17:11,199 Speaker 4: of agrees with you. 340 00:17:11,240 --> 00:17:13,760 Speaker 5: I mean, you get some people looking for a little bit. 341 00:17:14,200 --> 00:17:15,920 Speaker 2: Because I don't know how to look up that to 342 00:17:16,000 --> 00:17:18,400 Speaker 2: help you, Paul, where are we on that we're looking 343 00:17:18,440 --> 00:17:19,720 Speaker 2: at no rate of nothing out? 344 00:17:19,800 --> 00:17:23,040 Speaker 5: Yeah, I mean kind of just she goes. 345 00:17:22,800 --> 00:17:23,240 Speaker 2: I get that. 346 00:17:23,280 --> 00:17:25,480 Speaker 6: We have that right, it is. We had that call 347 00:17:25,640 --> 00:17:28,800 Speaker 6: before the oil shot, before the war. Because again, we 348 00:17:28,920 --> 00:17:31,879 Speaker 6: have a fiscal policy which is stimulative to growth to 349 00:17:31,880 --> 00:17:34,040 Speaker 6: the tune about one and a half percent of GDP. 350 00:17:34,280 --> 00:17:37,000 Speaker 6: It's again, it's the right stimulus. It's tax incentive, it's 351 00:17:37,000 --> 00:17:40,600 Speaker 6: capex incentives. Second, the FED has already cut rates one 352 00:17:40,680 --> 00:17:44,520 Speaker 6: hundred and seventy five bases points. They're below nominal GDP growth. 353 00:17:44,840 --> 00:17:47,840 Speaker 6: And then and then third, banks are easing lending standards, 354 00:17:47,840 --> 00:17:49,640 Speaker 6: and so there is liquidity in the economy. 355 00:17:50,320 --> 00:17:52,640 Speaker 4: What do you think about this whole AI thing. How 356 00:17:52,640 --> 00:17:54,720 Speaker 4: do you put that into context? Because you know, prior 357 00:17:54,800 --> 00:17:57,359 Speaker 4: to this war, that was it for the market. It 358 00:17:57,400 --> 00:17:59,600 Speaker 4: was all AI. It's all we talked about. How do 359 00:17:59,600 --> 00:18:01,880 Speaker 4: you think of at it in terms of how big 360 00:18:01,960 --> 00:18:03,200 Speaker 4: is it going to be for this economy? 361 00:18:03,320 --> 00:18:06,440 Speaker 6: So, as Tom often reminds, views, I've been in the 362 00:18:06,480 --> 00:18:09,439 Speaker 6: business a long time and I started in the nineteen 363 00:18:09,480 --> 00:18:11,720 Speaker 6: in the nineteen eighties when there were computers. 364 00:18:11,800 --> 00:18:14,520 Speaker 2: Yes, for the first hetta calculator. 365 00:18:14,760 --> 00:18:19,760 Speaker 6: Yeah, that was in the seventies, in the eighties. I 366 00:18:21,080 --> 00:18:24,240 Speaker 6: remember that too. In high school in the in the eighties, 367 00:18:24,560 --> 00:18:26,560 Speaker 6: we went from a typewriter and a terminal to a 368 00:18:26,600 --> 00:18:28,679 Speaker 6: computer and it was IBM at the time, and that 369 00:18:28,800 --> 00:18:32,119 Speaker 6: was very, very disruptive. I mean, accountants, etcetera. All of 370 00:18:32,160 --> 00:18:34,520 Speaker 6: a sudden you could do things very quickly on computers. 371 00:18:34,840 --> 00:18:37,920 Speaker 6: And the productivity that created for the for I worked 372 00:18:37,920 --> 00:18:40,520 Speaker 6: at C. J. Lawrence was tremendous. And it didn't it 373 00:18:40,520 --> 00:18:43,720 Speaker 6: did make a huge difference. And over the past forty 374 00:18:43,800 --> 00:18:47,200 Speaker 6: five years, every every level of technological motivation has gotten 375 00:18:47,200 --> 00:18:49,200 Speaker 6: smarter and smarter and more and more and more productive. 376 00:18:49,200 --> 00:18:52,600 Speaker 6: And I'm excited about AI as far as again we're 377 00:18:52,640 --> 00:18:54,760 Speaker 6: making these leaps and bounds in other countries. 378 00:18:54,760 --> 00:18:58,840 Speaker 2: Are Richard mentioned worldwide? It was heymen Lazaar. It was 379 00:18:58,880 --> 00:19:01,840 Speaker 2: like a thing, you know, It's like red Sox pitching. 380 00:19:02,359 --> 00:19:04,919 Speaker 2: There were two pictures. So and then you go on 381 00:19:04,960 --> 00:19:07,600 Speaker 2: to edge. R. Denny. Does Nancy Loss believe in Yard 382 00:19:07,640 --> 00:19:10,600 Speaker 2: Denny's bond vigilantes? Is this a market that's going to 383 00:19:10,720 --> 00:19:12,280 Speaker 2: tell the president what to do? 384 00:19:12,720 --> 00:19:17,080 Speaker 6: But I do believe in the bond market vigilante, big, big, big, 385 00:19:17,119 --> 00:19:20,199 Speaker 6: big time, And I don't believe that the Fed's going 386 00:19:20,240 --> 00:19:23,000 Speaker 6: to do financial market repression. And yeah, I think I 387 00:19:23,040 --> 00:19:25,120 Speaker 6: think the bond market, bond deals have moved up some. 388 00:19:25,240 --> 00:19:27,639 Speaker 6: I think that's quite frankly, not the right call. I 389 00:19:27,640 --> 00:19:30,280 Speaker 6: don't think inflation is a problem. I don't think the 390 00:19:30,280 --> 00:19:32,679 Speaker 6: FED has to raise rates. But at the margin, are 391 00:19:32,720 --> 00:19:34,760 Speaker 6: these higher yields a little bit of a of a 392 00:19:34,800 --> 00:19:37,560 Speaker 6: signal to to to Washington to be careful. 393 00:19:38,119 --> 00:19:41,040 Speaker 5: What is your biggest concern about this economy these days? 394 00:19:41,440 --> 00:19:43,440 Speaker 6: Well, it has to be in the uncertainty about what's 395 00:19:43,480 --> 00:19:45,680 Speaker 6: going on in the Middle in in in in the 396 00:19:45,720 --> 00:19:48,080 Speaker 6: Middle East. That is my h to be sure, my 397 00:19:48,480 --> 00:19:49,280 Speaker 6: single the. 398 00:19:49,280 --> 00:19:52,119 Speaker 5: Companies are holding back either like on capital spending. 399 00:19:51,800 --> 00:19:53,960 Speaker 2: Or M and A or I don't see it. 400 00:19:54,280 --> 00:19:56,560 Speaker 6: I don't either. I mean, we just got these manufacturing 401 00:19:56,600 --> 00:19:59,600 Speaker 6: surveys for the month of March from the regional FED districts, 402 00:19:59,640 --> 00:20:03,840 Speaker 6: and their CAPEX components are like moonshots. And I think 403 00:20:03,880 --> 00:20:06,240 Speaker 6: again it takes a step back that there's incentives to 404 00:20:06,280 --> 00:20:07,680 Speaker 6: do CAPEX and companies are doing it. 405 00:20:08,280 --> 00:20:12,639 Speaker 2: They are you concerned about the way that the mag seven, 406 00:20:12,720 --> 00:20:15,960 Speaker 2: the data centers and all are doing capex or can 407 00:20:16,000 --> 00:20:18,160 Speaker 2: they just do it? Like we learned in school, take 408 00:20:18,200 --> 00:20:21,359 Speaker 2: it out of a bond investment and instead of using 409 00:20:21,359 --> 00:20:24,199 Speaker 2: all cash, go to the bond market, get cash and 410 00:20:24,240 --> 00:20:27,480 Speaker 2: build this out. Well, that's toe We've built the railroads, true. 411 00:20:27,680 --> 00:20:30,120 Speaker 6: And that's classic. And there is also incentives that these 412 00:20:30,119 --> 00:20:33,720 Speaker 6: companies can write off with the one big beautiful act. 413 00:20:33,760 --> 00:20:36,440 Speaker 6: They can write off all of their investment software, R 414 00:20:36,480 --> 00:20:38,760 Speaker 6: and D. They can't write off the box of the 415 00:20:38,800 --> 00:20:43,840 Speaker 6: data center itself, but everything they put in it they can, 416 00:20:44,119 --> 00:20:47,240 Speaker 6: and then then they can borrow. But that's you know, 417 00:20:47,320 --> 00:20:48,760 Speaker 6: classic business likele stuff. 418 00:20:48,920 --> 00:20:51,159 Speaker 2: Have you ever been pessimistic? Oh? 419 00:20:51,240 --> 00:20:54,600 Speaker 6: Yeah, I was too pessimistic in twenty three I quite frankly, 420 00:20:54,600 --> 00:20:56,359 Speaker 6: Am is some of the stuff that I've just talked about, 421 00:20:57,000 --> 00:20:58,080 Speaker 6: and so. 422 00:20:58,320 --> 00:21:00,520 Speaker 5: Yeah, I just was no. 423 00:21:01,040 --> 00:21:03,640 Speaker 2: Nancy Blizzar, thank you, thank you, thank you so much 424 00:21:04,280 --> 00:21:07,080 Speaker 2: for coming in this morning. I just can't say enough 425 00:21:07,119 --> 00:21:10,160 Speaker 2: about her effort, folks. She's a Piper Sandler. 426 00:21:11,920 --> 00:21:12,640 Speaker 4: Stay with us. 427 00:21:12,880 --> 00:21:16,160 Speaker 2: More from Bloomberg Surveillance coming up after this. 428 00:21:23,359 --> 00:21:26,960 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 429 00:21:27,040 --> 00:21:30,560 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on Apple, 430 00:21:30,600 --> 00:21:33,919 Speaker 1: Karplay and Android Auto with the Bloomberg Business app or 431 00:21:34,080 --> 00:21:35,679 Speaker 1: watch us live on YouTube. 432 00:21:35,720 --> 00:21:38,200 Speaker 2: There is a silence a Paul, if you will over 433 00:21:38,240 --> 00:21:41,159 Speaker 2: in New York City, and it's this horrific accident that 434 00:21:41,200 --> 00:21:45,520 Speaker 2: we saw at LaGuardia a number of days ago. And 435 00:21:45,560 --> 00:21:49,919 Speaker 2: to symbolize for all of Canada, how perfect that the 436 00:21:49,960 --> 00:21:54,320 Speaker 2: two pilots that died, one from Ontario age twenty four 437 00:21:54,520 --> 00:22:00,040 Speaker 2: and one from Quebec age thirty, so typical of the 438 00:22:00,080 --> 00:22:03,800 Speaker 2: way Canada runs. There has been an uproar that the 439 00:22:03,880 --> 00:22:09,640 Speaker 2: Chief executive Officer of Eric Canada gave a speech without 440 00:22:09,680 --> 00:22:15,040 Speaker 2: speaking in French, reducting a similar lesser uproar in twenty 441 00:22:15,160 --> 00:22:19,000 Speaker 2: twenty one. He has removed summarily this morning. I should 442 00:22:19,040 --> 00:22:22,679 Speaker 2: point out that Prime Minister mister Carney was not amused 443 00:22:23,200 --> 00:22:27,320 Speaker 2: by the lack of sensitivities to the French to Quebec 444 00:22:27,400 --> 00:22:31,720 Speaker 2: into Antoine for a or forrest and unfortunately I don't 445 00:22:31,760 --> 00:22:35,560 Speaker 2: know the pronunciation. Who does is Derek Decluay. He is 446 00:22:35,640 --> 00:22:40,080 Speaker 2: Bloomberg News reporter out of Carlton, definitive at the Globe 447 00:22:40,080 --> 00:22:43,960 Speaker 2: and Mail for years and we're thrilledies with Bloomberg Toronto jerk. 448 00:22:44,200 --> 00:22:48,520 Speaker 2: This is something, as Paul mentioned, so foreign to Americans, 449 00:22:48,880 --> 00:22:54,679 Speaker 2: but it is forever part of Canada. This English French sensitivity. 450 00:22:55,720 --> 00:22:58,840 Speaker 7: Yeah, I mean, the French language is just widely important. 451 00:22:59,440 --> 00:23:01,719 Speaker 7: It's one of the official languages of Canada, and it's 452 00:23:01,720 --> 00:23:05,439 Speaker 7: specially especially important for a company like this one. Not 453 00:23:05,560 --> 00:23:08,840 Speaker 7: only is Er Canada legally bound to provide its services 454 00:23:08,600 --> 00:23:11,640 Speaker 7: in both of those languages, but of course it's headquartered 455 00:23:11,680 --> 00:23:15,719 Speaker 7: in Montreal, that is one of the major Montreal based 456 00:23:15,880 --> 00:23:19,119 Speaker 7: companies with the global footprint. And so you know, it 457 00:23:19,240 --> 00:23:22,399 Speaker 7: was already a bit of a sensitive point for a 458 00:23:22,480 --> 00:23:25,359 Speaker 7: number of years that Michael Russeau, the CEO, did not 459 00:23:25,640 --> 00:23:28,880 Speaker 7: speak good French. And he he he tried, He took 460 00:23:29,000 --> 00:23:32,600 Speaker 7: hundreds of hours of lessons, but it's not that easy 461 00:23:32,640 --> 00:23:36,639 Speaker 7: to to learn a second language, especially when you're in 462 00:23:36,680 --> 00:23:42,800 Speaker 7: your sixties, I guess. And but the fact that he 463 00:23:42,840 --> 00:23:47,040 Speaker 7: gave this video about this tragic incident and said only 464 00:23:47,080 --> 00:23:50,879 Speaker 7: two words of French was just not just not going 465 00:23:50,960 --> 00:23:51,439 Speaker 7: to stand. 466 00:23:51,840 --> 00:23:54,080 Speaker 2: Where does the nation go from here? Where does Air 467 00:23:54,240 --> 00:23:56,280 Speaker 2: Canada go from here? 468 00:23:58,280 --> 00:24:01,720 Speaker 7: Yeah, I mean I think that this, you know, his 469 00:24:01,720 --> 00:24:05,439 Speaker 7: his departure is is the thing that that local leaders 470 00:24:05,440 --> 00:24:09,040 Speaker 7: in Quebec wanted. In fact, the provincial legislature voted ninety 471 00:24:09,040 --> 00:24:12,480 Speaker 7: two to zero on last late last week to call 472 00:24:12,520 --> 00:24:15,120 Speaker 7: for his resignation. That was not binding on the company, 473 00:24:15,160 --> 00:24:17,920 Speaker 7: but it was a symbol of sort of the importance 474 00:24:17,920 --> 00:24:20,280 Speaker 7: of this that there was kind of all all party 475 00:24:20,320 --> 00:24:22,800 Speaker 7: support that he needed to go. And and as you 476 00:24:22,880 --> 00:24:26,760 Speaker 7: mentioned in your opening, you know, the Prime Minister himself 477 00:24:26,840 --> 00:24:31,959 Speaker 7: had had lambasted Michael Russo for the insensitivity of this. 478 00:24:32,359 --> 00:24:34,280 Speaker 7: I mean, if you watch the video, the thing you 479 00:24:34,280 --> 00:24:36,879 Speaker 7: have to understand is he's clearly reading it. You know, 480 00:24:36,960 --> 00:24:39,840 Speaker 7: he's clearly reading off of a teleprompter, some sort of prompter. 481 00:24:41,000 --> 00:24:43,159 Speaker 7: Why could some of those words not have been in French? 482 00:24:43,200 --> 00:24:46,160 Speaker 7: That's that's that's the argument. So the Air Canada board 483 00:24:46,200 --> 00:24:49,480 Speaker 7: will now undertake a search. They said, they've you know, 484 00:24:49,480 --> 00:24:53,200 Speaker 7: they've been working on CEO succession for years as as 485 00:24:53,200 --> 00:24:56,800 Speaker 7: a as a board properly will do for so sixty 486 00:24:56,800 --> 00:24:59,080 Speaker 7: eight years old. So in any event, you know, they 487 00:24:59,119 --> 00:25:01,359 Speaker 7: were going to be looking for or a new CEO 488 00:25:01,600 --> 00:25:04,439 Speaker 7: at some point in the near future. Anyway, and if 489 00:25:04,480 --> 00:25:06,440 Speaker 7: you look at their statement this morning, they're very clear 490 00:25:06,520 --> 00:25:09,320 Speaker 7: that the capacity to speak the French language is going 491 00:25:09,359 --> 00:25:11,960 Speaker 7: to be an important criteria for whoever gets the job. 492 00:25:12,280 --> 00:25:15,560 Speaker 4: And Derek, I, you know, I'm ignorant of the sensitivity 493 00:25:15,560 --> 00:25:17,959 Speaker 4: of this for Canadians, but so I just googled it, 494 00:25:18,040 --> 00:25:20,520 Speaker 4: and you know, according to the twenty twenty one census, 495 00:25:20,600 --> 00:25:23,280 Speaker 4: approximately twenty one percent of Canadians have French as their 496 00:25:23,320 --> 00:25:26,840 Speaker 4: first official language, and for those that live outside of Quebec, 497 00:25:27,119 --> 00:25:30,120 Speaker 4: those that live outside of Quebec, roughly three point five 498 00:25:30,240 --> 00:25:33,840 Speaker 4: percent of the population has French as the first official language. 499 00:25:33,880 --> 00:25:36,719 Speaker 5: So the point is most Canadians are not bilingual. 500 00:25:36,960 --> 00:25:41,480 Speaker 4: Is the requirement for a senior position at a leading 501 00:25:41,520 --> 00:25:45,080 Speaker 4: Canadian company is that these folks will be bilingual. 502 00:25:45,960 --> 00:25:48,679 Speaker 7: Or not as a general rule, but for some companies 503 00:25:49,880 --> 00:25:52,919 Speaker 7: it is a requirement. And certainly French is is the 504 00:25:52,920 --> 00:25:56,960 Speaker 7: primary language of business in Quebec, where where it's the 505 00:25:57,119 --> 00:25:59,840 Speaker 7: you know, it's the majority language. And the Quebec government 506 00:25:59,840 --> 00:26:04,080 Speaker 7: has has taken pains over many decades to implement a 507 00:26:04,200 --> 00:26:07,560 Speaker 7: number of French language laws to ensure that despite its 508 00:26:07,680 --> 00:26:12,520 Speaker 7: minority status as a language in Canada, that that French persists. 509 00:26:12,800 --> 00:26:15,399 Speaker 7: There's an even deeper history here, which is, you know, 510 00:26:16,560 --> 00:26:19,440 Speaker 7: which is a history if you go way back of 511 00:26:19,600 --> 00:26:23,679 Speaker 7: discrimination against French Canadians in Quebec companies where you know, 512 00:26:23,840 --> 00:26:26,679 Speaker 7: prior to the nineteen sixties, it was very typical for 513 00:26:27,160 --> 00:26:29,679 Speaker 7: the very senior management of big companies in Quebec to 514 00:26:29,720 --> 00:26:32,600 Speaker 7: be you know, Anglophone and then you know the people 515 00:26:32,600 --> 00:26:37,000 Speaker 7: below that were worth French speaking and so so that's 516 00:26:37,000 --> 00:26:39,439 Speaker 7: one of the reasons why there's a great deal of 517 00:26:39,560 --> 00:26:45,040 Speaker 7: kind of historical you know, importance put on this because 518 00:26:45,080 --> 00:26:48,000 Speaker 7: that was over a long period of time, a situation 519 00:26:48,080 --> 00:26:51,800 Speaker 7: that's that's gotten better for for French speakers in Quebec, 520 00:26:51,880 --> 00:26:54,920 Speaker 7: but it's still still a very important thing. 521 00:26:55,200 --> 00:26:57,400 Speaker 2: Derek, thank you so much for joining us in short 522 00:26:57,440 --> 00:27:01,320 Speaker 2: notice for this brief really important Derek. Definitely, Bloomberg News 523 00:27:01,359 --> 00:27:05,480 Speaker 2: Canada greatly appreciate that this morning the CEO of Air 524 00:27:05,640 --> 00:27:12,160 Speaker 2: Canada is out after this horrific accident at LaGuardia. Stay 525 00:27:12,200 --> 00:27:16,040 Speaker 2: with us. More from Bloomberg Surveillance coming up after this. 526 00:27:23,320 --> 00:27:26,880 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 527 00:27:26,960 --> 00:27:30,119 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 528 00:27:30,200 --> 00:27:33,840 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 529 00:27:34,000 --> 00:27:35,480 Speaker 1: watch us live on YouTube. 530 00:27:35,800 --> 00:27:39,160 Speaker 2: Laurie Calvasinia gets a start in this our important conversation 531 00:27:39,760 --> 00:27:44,320 Speaker 2: on the equity markets. I peruse barons this weekend, Lourie, 532 00:27:45,240 --> 00:27:47,480 Speaker 2: and you know they're sort of like, Okay, I guess 533 00:27:47,520 --> 00:27:50,200 Speaker 2: it's a bear market, it's a correction. Whatever it is, 534 00:27:50,760 --> 00:27:54,080 Speaker 2: it's hard to be optimistic. Let's start with what kind 535 00:27:54,160 --> 00:27:57,800 Speaker 2: of market is this? Is this a correction market? 536 00:27:59,600 --> 00:28:02,120 Speaker 8: Well, him, great to talk to you on Monday, And 537 00:28:02,280 --> 00:28:05,240 Speaker 8: you know, I think that it's premature to declare it 538 00:28:05,320 --> 00:28:07,920 Speaker 8: to bear market. We're down as of last week's low 539 00:28:07,960 --> 00:28:11,960 Speaker 8: point about eight point seven percent from the January high. 540 00:28:12,000 --> 00:28:14,320 Speaker 8: That's what we would call on our team a tier 541 00:28:14,400 --> 00:28:17,840 Speaker 8: one garden variety pullback, which we characterize as any move 542 00:28:17,960 --> 00:28:20,080 Speaker 8: lower between the five to ten percent range. Now, I 543 00:28:20,160 --> 00:28:22,520 Speaker 8: know some stocks have been hit a lot worse. I 544 00:28:22,600 --> 00:28:24,960 Speaker 8: know we've had much more compression in the pe multiple 545 00:28:24,960 --> 00:28:27,679 Speaker 8: and I know it has felt absolutely awful. Believe me, 546 00:28:27,720 --> 00:28:29,920 Speaker 8: my iPhone tells me. You know, I'm getting like four 547 00:28:30,000 --> 00:28:31,639 Speaker 8: or five hours of sleep at night, so I'm right 548 00:28:31,680 --> 00:28:35,119 Speaker 8: there with everybody else. But the reality is that this 549 00:28:35,320 --> 00:28:38,320 Speaker 8: is not that out of the ordinary. I do think 550 00:28:38,440 --> 00:28:41,000 Speaker 8: risks have grown that we could enter into a tier 551 00:28:41,040 --> 00:28:43,160 Speaker 8: two pullback, which is a draw down of fourteen to 552 00:28:43,200 --> 00:28:46,160 Speaker 8: twenty percent. A growth scare. I don't think it's inevitable, 553 00:28:46,680 --> 00:28:49,320 Speaker 8: but we've had five of those since the financial crisis 554 00:28:49,320 --> 00:28:51,640 Speaker 8: that have you know, kind of had some rhyming with 555 00:28:51,680 --> 00:28:55,200 Speaker 8: what might be going on today, new situations, fears of 556 00:28:55,200 --> 00:28:58,600 Speaker 8: things falling out of control, and potentially growth fears, you 557 00:28:58,680 --> 00:29:00,400 Speaker 8: know that start to percolate. I don't think we've had 558 00:29:00,400 --> 00:29:03,000 Speaker 8: the growth fears perk up yet. They might be starting, 559 00:29:03,000 --> 00:29:05,120 Speaker 8: but we're just going to have to see it's coming. 560 00:29:05,480 --> 00:29:07,000 Speaker 2: Should we have a daily Lorie? 561 00:29:07,200 --> 00:29:08,240 Speaker 4: Yes, exactly. 562 00:29:08,880 --> 00:29:11,520 Speaker 5: That's experience right there speaking to you, Laurie. 563 00:29:11,840 --> 00:29:13,240 Speaker 8: Can I Can I tell you? Can I tell you? 564 00:29:13,560 --> 00:29:15,880 Speaker 8: I was actually I've had this conversation with like five 565 00:29:15,920 --> 00:29:18,400 Speaker 8: people about COVID, and I did have someone who was 566 00:29:18,400 --> 00:29:20,520 Speaker 8: on the more worried side of things bring up COVID 567 00:29:20,600 --> 00:29:22,880 Speaker 8: last week. And I have this chart where we just 568 00:29:22,880 --> 00:29:24,720 Speaker 8: did a timeline on COVID and looked at all the 569 00:29:24,760 --> 00:29:27,120 Speaker 8: warnings heading in and the market fell for about a month. 570 00:29:27,440 --> 00:29:30,640 Speaker 8: Guess what it put in a typical recession draw down 571 00:29:30,720 --> 00:29:33,760 Speaker 8: of thirty four percent. And remember how horrible it all 572 00:29:33,760 --> 00:29:36,360 Speaker 8: felt at the time. It ended up being a garden 573 00:29:36,480 --> 00:29:38,560 Speaker 8: variety recession and we bounced out of it. 574 00:29:38,720 --> 00:29:38,880 Speaker 2: Yep. 575 00:29:38,960 --> 00:29:40,800 Speaker 4: Absolutely, that's kind of where I wanted to go, Laurie. 576 00:29:40,800 --> 00:29:42,800 Speaker 4: A lot of folks over the last several days, the 577 00:29:42,840 --> 00:29:45,640 Speaker 4: conversations we've been having are like, yes, this is a 578 00:29:45,680 --> 00:29:48,680 Speaker 4: black swan, this is a shock, but boy, the economic 579 00:29:48,760 --> 00:29:52,240 Speaker 4: fundamentals out there for much of this US economy remain 580 00:29:52,680 --> 00:29:58,000 Speaker 4: pretty darn strong, which should translate into continued solid earnings growth. 581 00:29:58,080 --> 00:30:00,080 Speaker 4: And to the extent you can look past this all, well, 582 00:30:00,400 --> 00:30:02,080 Speaker 4: that might be a little bit constructive. 583 00:30:03,360 --> 00:30:05,440 Speaker 8: I think that's fair, Paul, and you know, we you know, 584 00:30:05,480 --> 00:30:07,080 Speaker 8: and so I do have a lot of sympathy for 585 00:30:07,160 --> 00:30:10,680 Speaker 8: the view of things are starting from a very good point. 586 00:30:10,920 --> 00:30:13,000 Speaker 8: I think there's a lot of uncertainty in terms of 587 00:30:13,000 --> 00:30:15,160 Speaker 8: what these impacts are going to be, and it's a 588 00:30:15,160 --> 00:30:17,920 Speaker 8: bit of a discovery process, unfortunately, that we're going through 589 00:30:18,000 --> 00:30:20,400 Speaker 8: right now. Most of the clients I talked to last 590 00:30:20,440 --> 00:30:22,360 Speaker 8: week are in the camp that this war will be 591 00:30:22,360 --> 00:30:25,520 Speaker 8: of shorter duration one to a few weeks. And if 592 00:30:25,560 --> 00:30:27,480 Speaker 8: you look at earnings for the S and P five hundred, 593 00:30:27,480 --> 00:30:29,920 Speaker 8: the bottom up consensus actually went up three bucks over 594 00:30:29,960 --> 00:30:32,560 Speaker 8: the past week, from like three nineteen to three twenty three, 595 00:30:32,600 --> 00:30:35,240 Speaker 8: and it was around three thirteen at some point in January. 596 00:30:35,720 --> 00:30:38,840 Speaker 8: A lot of that is tech and AI driven, and 597 00:30:39,320 --> 00:30:41,680 Speaker 8: you have to sort of ask yourselves, like what parts 598 00:30:41,720 --> 00:30:43,440 Speaker 8: of the market are going to be more exposed, what 599 00:30:43,440 --> 00:30:45,400 Speaker 8: are going to be less exposed. I would assume that 600 00:30:45,400 --> 00:30:47,880 Speaker 8: that AI trade, that big tech trade, maybe not one 601 00:30:47,960 --> 00:30:51,880 Speaker 8: hundred percent immune, but does have some inoculation against this issue. 602 00:30:51,960 --> 00:30:54,280 Speaker 2: Do you assume, Laurie, I mean, I don't think I've 603 00:30:54,280 --> 00:30:57,400 Speaker 2: ever asked us. Maybe I did Persian golf one, But 604 00:30:57,520 --> 00:31:00,360 Speaker 2: do you assume that there will be earnings starting with say, 605 00:31:00,520 --> 00:31:05,200 Speaker 2: conversationally with JP Morgan, and that basically all that will 606 00:31:05,240 --> 00:31:08,880 Speaker 2: matter on the conference call is the view forward? 607 00:31:10,400 --> 00:31:13,120 Speaker 8: I think that's I think that's fair because you know, 608 00:31:13,160 --> 00:31:15,040 Speaker 8: and I was I'm trying to remember who told me this, 609 00:31:15,160 --> 00:31:17,600 Speaker 8: if it was, if it was my economist or someone else, 610 00:31:17,640 --> 00:31:20,600 Speaker 8: but you know, someone was talking within the last few 611 00:31:20,600 --> 00:31:23,000 Speaker 8: months totally different issue about how turning points can often 612 00:31:23,040 --> 00:31:25,280 Speaker 8: be messy, right, because you're coming into things with very 613 00:31:25,280 --> 00:31:28,120 Speaker 8: strong backward looking data and it's all about the forward look. 614 00:31:28,600 --> 00:31:31,040 Speaker 8: And we do know that corporate sentiment has been high 615 00:31:31,080 --> 00:31:34,120 Speaker 8: in the C suite surveys. The commentary I've been watching 616 00:31:34,160 --> 00:31:36,600 Speaker 8: in Russell two thousand, Russell three thousand, s and P 617 00:31:36,720 --> 00:31:39,080 Speaker 8: fifteen hundred companies has been we don't really know what 618 00:31:39,120 --> 00:31:42,080 Speaker 8: the impacts are yet, and things have looked pretty strong, 619 00:31:42,360 --> 00:31:45,120 Speaker 8: but I do think investors want to know if we 620 00:31:45,160 --> 00:31:48,000 Speaker 8: are going to get earnings downgrades when those start. I've 621 00:31:48,000 --> 00:31:50,480 Speaker 8: been asked that question several times over the past week, 622 00:31:50,520 --> 00:31:52,560 Speaker 8: and what I've told people tom is, actually, I wouldn't 623 00:31:52,600 --> 00:31:55,800 Speaker 8: listen too much to the financials. They are good barometers 624 00:31:55,840 --> 00:31:57,880 Speaker 8: on the broader economy, but they're not on the field 625 00:31:58,040 --> 00:32:01,040 Speaker 8: lines of this issue. I'm actually, you know, I'm going 626 00:32:01,080 --> 00:32:03,680 Speaker 8: to be spending more time rooting through industrials, I think 627 00:32:03,760 --> 00:32:06,360 Speaker 8: because I think they're more at the intersection of all 628 00:32:06,400 --> 00:32:09,800 Speaker 8: the issues. I don't know if everybody is going to 629 00:32:09,880 --> 00:32:11,520 Speaker 8: be able to tell us what all the impacts are 630 00:32:11,640 --> 00:32:13,680 Speaker 8: right now. It might not be until the two Q 631 00:32:13,840 --> 00:32:17,080 Speaker 8: reporting season in July and August. So make sure you 632 00:32:17,120 --> 00:32:20,000 Speaker 8: take your laptop on your summer vacation is one thing. Frankly, 633 00:32:20,040 --> 00:32:22,360 Speaker 8: I'm telling people I'm never not taking it. 634 00:32:22,480 --> 00:32:26,040 Speaker 2: Lori Kelvisena, thank you so much with RBC Capital. 635 00:32:26,320 --> 00:32:31,200 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apples, Spotify, 636 00:32:31,280 --> 00:32:35,560 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 637 00:32:35,720 --> 00:32:38,960 Speaker 1: seven to ten am Easter and on Bloomberg dot Com, 638 00:32:39,080 --> 00:32:42,880 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 639 00:32:43,200 --> 00:32:46,320 Speaker 1: You can also watch us live every weekday on YouTube 640 00:32:46,600 --> 00:32:48,640 Speaker 1: and always on the Bloomberg Terminal