WEBVTT - Washington Predictions — Tariffs, Tax, Trump 0:00:12.960 --> 0:00:16.400 Hello, and welcome to the Votes and Verdicts podcast, hosted 0:00:16.400 --> 0:00:20.040 by the litigation and policy team at Bloomberg Intelligence, the 0:00:20.079 --> 0:00:25.080 investment research platform of Bloomberg LP. This podcast series examines 0:00:25.079 --> 0:00:29.000 the intersection of business policy and law. I'm Elliott Stein, 0:00:29.040 --> 0:00:32.480 an analysts with Bloomberg Intelligence covering financials litigation. 0:00:32.440 --> 0:00:34.320 And my name is Nathan Deanan. I'm an analyst with 0:00:34.360 --> 0:00:36.360 Bloomberg Intelligence covering financials policy. 0:00:36.680 --> 0:00:39.080 So our topic for today is one of the subjects 0:00:39.120 --> 0:00:42.959 that is going to dominate the news headlines throughout the year, Washington, 0:00:43.080 --> 0:00:46.920 d C. And President Trump. So, with President Trump starting 0:00:46.960 --> 0:00:49.440 the second term, what can we expect from the White House, 0:00:49.520 --> 0:00:52.960 from Congress, from regulators? Will Congress be able to pass 0:00:53.000 --> 0:00:56.840 a big, beautiful bill that extends the twenty seventeen Trump 0:00:56.880 --> 0:01:01.080 era tax cuts, where we have a debt ceiling, how 0:01:01.120 --> 0:01:05.400 will regulators deregulate in their sectors, and probably most importantly, 0:01:05.840 --> 0:01:09.120 how should investors think about President Trump and his approach 0:01:09.319 --> 0:01:13.640 to policy. So joining us today to help answer these 0:01:13.720 --> 0:01:18.560 questions are some of my favorite people distributing policy research 0:01:18.600 --> 0:01:21.120 and analysis to Wall Street, and I could not be 0:01:21.200 --> 0:01:23.959 more delighted to have them on our podcast for a 0:01:24.080 --> 0:01:28.240 second time. We had them around this time last year 0:01:28.280 --> 0:01:32.520 in January, so I'm extremely excited to welcome these two 0:01:32.560 --> 0:01:37.000 guests back. First, I'd like to introduce Henrietta Treys, director 0:01:37.040 --> 0:01:41.880 of Economic Policy Research with Veda Partners. Henrietta has provided 0:01:41.920 --> 0:01:45.600 investors with economic policy analysis for over fifteen years on 0:01:45.640 --> 0:01:50.200 a broad array of topics, including financial services and healthcare reform. 0:01:50.760 --> 0:01:53.680 She's also in a lum of Congress, having worked for 0:01:53.720 --> 0:01:57.160 the Senate Finance Committee and a research fellow for a 0:01:57.200 --> 0:02:01.360 congressional member. And Henrietta is also a frequent contributor to 0:02:01.480 --> 0:02:05.120 Bloomberg TV and Radio, and I'm always excited to get 0:02:05.120 --> 0:02:08.560 her insights. So welcome back to the podcast, Henrietta. 0:02:09.120 --> 0:02:10.240 I'm so happy to be here. 0:02:10.280 --> 0:02:14.360 Thanks for having me and also joining us is another 0:02:14.880 --> 0:02:19.640 very frequent contributor to Bloomberg TV and Radio. Isaac Boltanski 0:02:19.840 --> 0:02:24.560 Managing director and Director of Policy Research at BTIG, where 0:02:24.600 --> 0:02:29.040 he's responsible for coordinating the firm's Washington policy analysis and 0:02:29.160 --> 0:02:35.280 forecasting how potential policy shifts could impact investors, corporations, and 0:02:35.440 --> 0:02:40.919 other market participants. Prior to BTIG, Isaac was the director 0:02:40.960 --> 0:02:45.480 of policy Research at Compass Point Research and Trading, and 0:02:45.600 --> 0:02:48.800 he also served as a research analyst on TARP, the 0:02:48.840 --> 0:02:54.720 Troubled Asset Relief Program Congressional Oversight Panel. So Isaac, welcome 0:02:54.960 --> 0:02:57.200 back as well to the Votes and Verdicts podcast. 0:02:57.600 --> 0:03:00.360 You know, that reminds me that TARP was back. Seven 0:03:00.440 --> 0:03:03.280 hundred billion was a big bailout. You know, it's crazy 0:03:03.320 --> 0:03:08.080 to think of Now that's change under the couch cushion. Now, 0:03:08.760 --> 0:03:09.440 nice to be with you. 0:03:10.560 --> 0:03:13.560 So for our regular listeners, we're going to do things 0:03:13.560 --> 0:03:15.880 a little bit differently for this episode because we have 0:03:16.000 --> 0:03:20.800 this great panel of Washington experts, which also includes our 0:03:20.880 --> 0:03:24.480 very own Nathan Dean from b I. So we're gonna 0:03:24.520 --> 0:03:26.720 sort of do a round robin of some of the 0:03:27.080 --> 0:03:31.640 key questions that we've been getting from clients and colleagues 0:03:31.840 --> 0:03:36.840 and investors. So without further ado, let's jump right into it. 0:03:37.240 --> 0:03:39.320 This is a question for all three of you, and 0:03:39.880 --> 0:03:41.920 Henriette want to we start with you and then we'll 0:03:41.920 --> 0:03:46.080 go to Isaac and then Nathan. We started this episode 0:03:46.160 --> 0:03:48.720 last year as well with sort of the same question, 0:03:49.360 --> 0:03:51.840 and that is, you know, is there one thing in 0:03:52.080 --> 0:03:55.600 twenty twenty five a key prediction that you think the 0:03:55.640 --> 0:03:59.200 market is out of consensus on, or that the market 0:03:59.240 --> 0:04:04.000 is not paying enough attention to and it can be legislative, regulatory, 0:04:04.160 --> 0:04:05.640 or from the executive branch. 0:04:05.840 --> 0:04:09.360 Henrietta, Yeah, thanks for asking. And it's a pleasure to 0:04:09.400 --> 0:04:11.440 be with all of you, especially Isaac and Nathan. 0:04:11.520 --> 0:04:13.120 I get to see you guys all the time on TV, 0:04:13.200 --> 0:04:15.360 so it's lovely to be in the same room. 0:04:15.920 --> 0:04:18.240 I feel very strongly that these tariffs are real. 0:04:18.320 --> 0:04:21.120 The market's been pretty blase about it and taking a 0:04:21.200 --> 0:04:25.880 lot of optimism for some reason from sec Treasury Secretary 0:04:26.120 --> 0:04:29.039 Scott Besson. I don't know why there's any reason for 0:04:29.080 --> 0:04:31.159 optimism there when you say that you want to start 0:04:31.520 --> 0:04:34.120 tireffs two and a half or five percent and escalate 0:04:34.600 --> 0:04:37.279 by five percent every month, which is what Beson said 0:04:37.320 --> 0:04:40.240 on the campaign trail and relate to members during his 0:04:40.279 --> 0:04:44.040 nomination hearing, that is wildly consistent with the first Trump term. 0:04:44.200 --> 0:04:46.640 And we see that we've had now twenty five percent 0:04:46.680 --> 0:04:48.920 tyres on two hundred and fifty billion dollars worth of 0:04:49.000 --> 0:04:51.919 goods from China and seven and a half percent on 0:04:52.000 --> 0:04:54.720 another one hundred and forty billion dollars. I think all 0:04:54.800 --> 0:04:57.200 that will escalate, and then furthermore, I think the tax 0:04:57.240 --> 0:04:59.240 bill is going to take all year to write. We 0:04:59.360 --> 0:05:03.720 are looking at some very bold projections from Speaker Johnson 0:05:03.839 --> 0:05:07.320 going into the release or the final conclusion to their 0:05:07.400 --> 0:05:10.800 members retreat this week. The President is scheduled to give 0:05:10.800 --> 0:05:13.440 a State of the Union address on March fourth. I 0:05:13.480 --> 0:05:15.560 would just make one correction in your injury, he said. 0:05:15.560 --> 0:05:18.279 I was on the Senate Finance Committee. I worked mostly 0:05:18.320 --> 0:05:23.000 with Senator Lautenberg's budget committee responsibilities, and I will say, 0:05:23.000 --> 0:05:26.560 as a budget nerd, the reconciliation instruction that you need 0:05:26.600 --> 0:05:29.040 from the fiscal year twenty five or twenty six budget 0:05:29.080 --> 0:05:32.080 resolution needs to be a hard and fast document, not 0:05:32.279 --> 0:05:35.240 just this blueprint that Speaker Johnson is talking about. We 0:05:35.279 --> 0:05:37.719 need the real deficit number, We need the hard votes. 0:05:37.920 --> 0:05:41.360 We need the awful voter rama process, maybe not once, 0:05:41.400 --> 0:05:43.520 but twice. That's going to take a real long time. 0:05:43.600 --> 0:05:45.640 I think they're in a bit of a Kumbaya moment 0:05:45.720 --> 0:05:48.320 right now, and that's going to be very short lived 0:05:48.440 --> 0:05:48.880 in my pin. 0:05:49.240 --> 0:05:51.159 And I should apologize. I was the one who wrote 0:05:51.200 --> 0:05:51.679 your bios. 0:05:51.680 --> 0:05:53.760 So if you come to the Bloomberg office, I will 0:05:53.760 --> 0:05:56.520 buy you a Bloomberg coffee. And for our listeners, just 0:05:56.520 --> 0:05:59.520 know Bloomberg coffees are always free, but. 0:05:59.560 --> 0:06:03.599 I will say the price also reflects the quality of 0:06:03.720 --> 0:06:06.720 that coffee. But it did give you an opportunity to 0:06:06.760 --> 0:06:09.159 give a shout out to a new Jersey senator and 0:06:09.200 --> 0:06:12.920 as a new Jersey resident, I always appreciate that. All right, Isaac, 0:06:13.520 --> 0:06:16.160 let's turn to you. You know, any what do you 0:06:16.160 --> 0:06:18.560 think the market is potentially missing this coming year? 0:06:19.440 --> 0:06:21.480 So you know, I feel like I'm going to agree 0:06:21.480 --> 0:06:25.960 with Henrietta a lot because she's usually right, so I 0:06:25.960 --> 0:06:28.760 think her two points there were spot on. Maybe I'll 0:06:28.760 --> 0:06:32.800 take it to more of a company specific call here 0:06:32.839 --> 0:06:35.720 because I agree with those macro points. And this is 0:06:35.760 --> 0:06:37.599 something near and dear to Nathan's heart because I know 0:06:37.640 --> 0:06:40.640 he's worked on it. I think Wells Fargo finally gets 0:06:40.680 --> 0:06:44.760 out from it's almost seven years under the FED and 0:06:44.920 --> 0:06:50.839 posed asset cap. This is a pretty unprecedented penalty that 0:06:51.120 --> 0:06:55.480 was levied on this bank for good reason. For good reason, 0:06:55.560 --> 0:06:58.719 to be clear, but it's pretty incredible what they've done 0:06:58.720 --> 0:07:01.479 over the past seven years to turn the boat around. 0:07:01.520 --> 0:07:04.440 The investment they've made in compliance, the shifts they've made 0:07:04.440 --> 0:07:08.680 in structure, the new leadership, as I think, really righted 0:07:08.720 --> 0:07:11.080 the ship and I think that they are very very 0:07:11.120 --> 0:07:13.640 close to being out. And if there's one thing that 0:07:13.760 --> 0:07:15.760 I would want to review with you in a year, 0:07:15.840 --> 0:07:18.360 I think it's the call that Wells Fargo will finally 0:07:18.400 --> 0:07:20.080 be out from underneath this asset cap. 0:07:21.040 --> 0:07:24.880 And just this morning we had news that a twenty 0:07:25.040 --> 0:07:29.600 twenty two consent ordered by the CFB on Wells was terminated, 0:07:30.400 --> 0:07:33.960 so that you probably further helps them moving. 0:07:34.080 --> 0:07:36.720 I mean I felt confident before knowing that, because you 0:07:36.880 --> 0:07:38.960 just told me that, so I feel even better now. 0:07:39.000 --> 0:07:40.320 That's perfect, Ellie, Thank you. 0:07:40.440 --> 0:07:42.840 I feel good breaking news to you Isaac on this podcast. 0:07:43.640 --> 0:07:46.320 And we've also said that we think it's either going 0:07:46.360 --> 0:07:48.880 to happen this year or potentially next year, but it 0:07:48.920 --> 0:07:50.920 sounds like you're a little more bullis. 0:07:51.560 --> 0:07:53.560 If I could just throw this on top. I think 0:07:53.600 --> 0:07:56.600 that we now know that these asset caps are part 0:07:56.640 --> 0:08:00.240 of the regulatory toolbox for banks, right, We've seen it elsewhere. 0:08:00.480 --> 0:08:03.360 But in order to make them useful tools, you need 0:08:03.400 --> 0:08:06.160 to be able to also exit from out of them. 0:08:06.320 --> 0:08:06.520 Right. 0:08:06.680 --> 0:08:09.920 In order for these to be reliable, regularly used tools, 0:08:10.160 --> 0:08:12.520 you need a way out. And so I think that 0:08:12.520 --> 0:08:14.040 that's what we're going to see with Wells Fargo. 0:08:14.320 --> 0:08:16.920 That's a good point, all right, Nathan, What do you 0:08:16.920 --> 0:08:17.840 think the market's missing? 0:08:17.920 --> 0:08:19.760 So I just let me first by saying that I 0:08:19.800 --> 0:08:22.440 completely agree with Henrietta and Isaac. 0:08:22.480 --> 0:08:23.240 I love that call. 0:08:23.360 --> 0:08:25.800 Yeah, I know the folks listening can't see me smile 0:08:25.840 --> 0:08:27.720 when I say that, but I love that call because 0:08:28.240 --> 0:08:30.840 you know, our Wells Fargo investors are really going to 0:08:30.880 --> 0:08:31.520 be paying. 0:08:31.280 --> 0:08:33.000 Attention to that in twenty twenty five. 0:08:33.360 --> 0:08:35.640 And I'm gonna stick with the deregulatory theme here, and 0:08:35.720 --> 0:08:37.360 I'm just going to say that I think there's a 0:08:37.360 --> 0:08:41.120 lot of sentiment about, especially in the financial services sector, 0:08:41.240 --> 0:08:44.320 about deregulation, and a lot of folks think that there's 0:08:44.360 --> 0:08:47.480 this magical wand that President Trump can just weave and 0:08:47.520 --> 0:08:50.960 say go forth and deregulate and that magic wand just 0:08:51.040 --> 0:08:53.600 I don't see how it exists in the financial services 0:08:53.600 --> 0:08:56.240 sector because you know, if you say that, you know 0:08:56.280 --> 0:08:59.160 Michael Barr, who's the current Advice Chair Supervision, if he 0:08:59.760 --> 0:09:02.440 leaves on February twenty eighth, Well, the Democrats still have 0:09:02.480 --> 0:09:04.720 a four to three majority on the FED Board, and 0:09:04.760 --> 0:09:07.839 one of those Republicans is Jerome Powell, and so it's 0:09:07.880 --> 0:09:10.640 going to take time for President Trump to influence FED 0:09:11.240 --> 0:09:14.280 policy actions. I don't want to talk about monetary policy. 0:09:14.280 --> 0:09:14.800 That's different. 0:09:14.840 --> 0:09:18.079 But in terms of the regulatory side, I think twenty 0:09:18.120 --> 0:09:19.840 twenty five is going to be what I call the 0:09:19.840 --> 0:09:24.040 Great Pause for financial regulation because I just don't see 0:09:24.040 --> 0:09:27.280 a lot of the deregulatory effort taking place. Maybe at 0:09:27.320 --> 0:09:29.400 the end of this year they'll start the process of 0:09:29.440 --> 0:09:30.920 trying to figure out what it looks like. But in 0:09:31.040 --> 0:09:34.360 terms of like stress, capital buffer and liquidity and capital 0:09:34.440 --> 0:09:36.640 review and so forth, I think that's a twenty twenty 0:09:36.679 --> 0:09:39.120 six more likely a twenty twenty seven story. 0:09:39.679 --> 0:09:44.319 So let's you know, Henriette, you mentioned tariffs, and you 0:09:44.400 --> 0:09:46.160 also mentioned the tax bill. We're going to talk about 0:09:46.200 --> 0:09:48.079 that in a little bit as well. But's let's jump 0:09:48.120 --> 0:09:50.240 frightens of tariffs. I mean, you know, this weekend we 0:09:50.320 --> 0:09:54.400 had like a six hour trade war with Columbia, and 0:09:54.760 --> 0:09:57.280 you know, just yesterday Scott Besen was talking about the 0:09:57.320 --> 0:10:00.400 universal tariffs at you know, two and a half percent 0:10:00.440 --> 0:10:02.800 that will then retcht up over time. I think President 0:10:02.800 --> 0:10:07.200 Trump said he wants a higher number, you know, in 0:10:07.240 --> 0:10:08.840 your mind. And we can start with Henriette and then 0:10:08.880 --> 0:10:11.440 go around the horn again. You know, how should markets 0:10:11.480 --> 0:10:17.320 prepare for Trump's tariffs? You know, it sounds like in 0:10:17.360 --> 0:10:19.920 your mind it's not just a negotiating tactic, or maybe 0:10:19.960 --> 0:10:22.680 it is, but you think it's it's a real threat. 0:10:23.080 --> 0:10:25.520 Is it just hard talk? Are we going to see these? 0:10:26.720 --> 0:10:28.959 And you know, besides Canada, Mexico and China, what other 0:10:29.040 --> 0:10:32.000 areas of the world should we be thinking about? Yeah? 0:10:32.040 --> 0:10:35.840 I think what investors are looking out right now for 0:10:35.920 --> 0:10:38.840 the most part, and certainly in the broad strokes if 0:10:38.840 --> 0:10:41.120 you're just reading the news. This idea of a universal 0:10:41.160 --> 0:10:45.000 tariff is a perfect example of how President Trump is 0:10:45.000 --> 0:10:48.120 proposing something dramatic and wide ranging. And I think it's 0:10:48.160 --> 0:10:51.720 a mistake and it's inconsistent with his first term, which 0:10:51.920 --> 0:10:55.599 was guided by the highly confident hand of USTR Lightheiser 0:10:55.679 --> 0:10:59.280 and will be continued by Jamison Greer, Lightheiser's former chief 0:10:59.320 --> 0:11:02.200 of staff. What I would encourage folks to look for 0:11:02.440 --> 0:11:05.880 is using the trade law as your template for how 0:11:05.920 --> 0:11:09.000 to invest. So as opposed to universal tariffs, which are 0:11:09.080 --> 0:11:13.920 very inconsistent with his first term, consider instead AIBA against Canada, 0:11:13.960 --> 0:11:17.680 Mexico and China. Consider Section two thirty two against the EU, 0:11:17.760 --> 0:11:20.840 which has a hard deadline or not a deadline necessarily, 0:11:21.080 --> 0:11:24.120 more like a catalyst for raised tariffs on the EU 0:11:24.280 --> 0:11:27.839 via Section two thirty two, the suspension of the steel 0:11:27.840 --> 0:11:31.640 and aluminum tariffs that we levied on the EU during 0:11:31.640 --> 0:11:35.280 Trump's first term. The suspension expires on March thirty first. 0:11:35.320 --> 0:11:38.240 That's a perfect opportunity for the USTR and Commerce to 0:11:38.280 --> 0:11:40.440 come in and say, you know what, we have a 0:11:40.640 --> 0:11:42.679 continued problem with steel aluminum, but we also have a 0:11:42.760 --> 0:11:44.839 bone to pick with you on agriculture and autos. I 0:11:44.840 --> 0:11:48.360 think autos from the EU are a tremendously underappreciated risk. 0:11:48.640 --> 0:11:51.200 If you watch Trump on the campaign trail, he loves 0:11:51.280 --> 0:11:53.400 to go to the mat about how awful it is 0:11:53.679 --> 0:11:57.679 that the EU produces their high skilled transmission and battery 0:11:57.679 --> 0:12:01.840 components and produces and creates those in the EU, and 0:12:01.880 --> 0:12:04.800 then effectively we're a chop shop that puts the hood 0:12:04.840 --> 0:12:06.840 on the car. And they say that in various sort 0:12:06.880 --> 0:12:10.640 of derogatory terms. I think that's a material risk that 0:12:10.679 --> 0:12:12.160 we should expect at the end of March. 0:12:12.760 --> 0:12:14.120 And then with Section. 0:12:13.840 --> 0:12:17.120 Three oh one on China, not only do I expect 0:12:17.120 --> 0:12:19.400 Trump to pull out of the Phase one trade deal, 0:12:19.840 --> 0:12:22.480 my only question is whether they adhere the enforcement mechanism 0:12:22.559 --> 0:12:24.800 that would put tariffs on maybe five months after in 0:12:24.880 --> 0:12:29.000 April conclusion to the review process, But do they pull 0:12:29.040 --> 0:12:32.680 out earlier than that and just immediately start implementing higher tariffs. 0:12:32.800 --> 0:12:35.400 The number one area that I want to look out 0:12:35.440 --> 0:12:38.240 for in the buzzwords in my mind are anything to 0:12:38.280 --> 0:12:42.240 do with List four B. This is heavily consumer facing items. 0:12:42.480 --> 0:12:48.800 This is smartphones, laptops. But then just your basic everyday purchases. 0:12:48.840 --> 0:12:50.920 When you go to the grocery store, anything with a 0:12:50.960 --> 0:12:55.200 powdered milk component or an alcohol preservative, that's everything you're buying, 0:12:55.240 --> 0:12:59.000 not just at Walmart, but at Dollar General. So I 0:12:59.000 --> 0:13:01.640 think the way to drilled down on tariffs and take 0:13:01.640 --> 0:13:04.959 Trump literally as opposed to, you know, figuratively or whatever 0:13:04.960 --> 0:13:07.839 the phrase is, is to really pay attention to the 0:13:07.880 --> 0:13:11.080 specific statutes of Trade lamp and appreciate that it's not 0:13:11.080 --> 0:13:13.079 going to I don't think a universal tariff is coming. 0:13:13.280 --> 0:13:15.320 If anything like a universal tariff is going to come, 0:13:15.360 --> 0:13:17.320 it's going to be through something called a Balance of 0:13:17.360 --> 0:13:20.920 Payments authority, which allows the President, at his discretion with 0:13:21.000 --> 0:13:23.240 any nation that has a trade deficit with US, to 0:13:23.240 --> 0:13:26.319 put edval orem tireffs in fifteen percent for one hundred 0:13:26.320 --> 0:13:28.760 and fifty days on any nation he sees fit. The 0:13:28.840 --> 0:13:34.480 first Trump term had a very unilateral approach to specific nations. 0:13:34.520 --> 0:13:36.280 It doesn't make any sense to me that they'd put 0:13:36.320 --> 0:13:41.040 a blanket, you know, earthwide tarifon when their real strategy 0:13:41.080 --> 0:13:43.800 is to go one by one through offending nations. In 0:13:43.840 --> 0:13:46.280 the longer term, I think that India is an area 0:13:46.280 --> 0:13:48.920 where there will be material risk in the future, maybe 0:13:48.960 --> 0:13:50.640 you know, twenty six, twenty seven to twenty eight to 0:13:50.679 --> 0:13:53.600 out years after we get past the tax bill, pharmaceuticals 0:13:53.600 --> 0:13:54.880 and chemicals are already coming up. 0:13:54.920 --> 0:13:56.600 That's a major issue we have with India. 0:13:56.640 --> 0:13:58.880 And I would be surprised if there's not a Section 0:13:58.920 --> 0:14:00.840 three oh one investigation lunch there as well. 0:14:02.720 --> 0:14:05.520 That's a pretty good survey of all the different countries 0:14:05.720 --> 0:14:08.000 and sectors, Isaac, anything you want to add. 0:14:07.880 --> 0:14:11.280 To that, Yeah, Look, I'll just say, and to amplify 0:14:12.200 --> 0:14:16.319 Henrietta's point, you know, you should take Donald Trump seriously, 0:14:16.440 --> 0:14:18.360 even if you don't take him literally, which is the 0:14:19.000 --> 0:14:22.440 phrase that she mentioned and one that has been surprisingly 0:14:22.560 --> 0:14:26.360 forgotten by a lot of clients over the past few days. Right, 0:14:26.680 --> 0:14:29.640 just because he didn't immediately levy these tariffs on day 0:14:29.640 --> 0:14:32.800 one doesn't mean they're not coming. Of course, they're coming. 0:14:32.840 --> 0:14:36.600 It takes time, and you know, when you promise as 0:14:36.600 --> 0:14:39.840 many things as we're promised for day one, of course 0:14:39.880 --> 0:14:41.880 some of them are going to slip to day ten 0:14:42.280 --> 0:14:45.000 and day twenty and day fifty. Right, that's just the 0:14:45.040 --> 0:14:47.880 reality of it. I think the interesting question for me, 0:14:48.080 --> 0:14:50.720 and I'd be interested in Harry Ott's response to this, is, 0:14:51.160 --> 0:14:54.160 you know, how much does the White House care about 0:14:54.200 --> 0:14:57.520 broader economic conditions and the impact on the consumer. And 0:14:57.600 --> 0:15:00.400 you mentioned that list for b for example. Is that 0:15:00.520 --> 0:15:02.200 something where they're going to be a little bit more 0:15:02.200 --> 0:15:04.080 caut just take a little bit more time because of 0:15:04.120 --> 0:15:07.400 the consumer impact. That's an interesting question. I know, I 0:15:07.440 --> 0:15:09.560 don't know the answer to I would probably argue the 0:15:09.600 --> 0:15:12.240 White House doesn't know yet, but by an interest in 0:15:12.640 --> 0:15:14.640 where that comes out. 0:15:14.760 --> 0:15:18.360 Yeah, I mean, the Biden administration made it very clear 0:15:18.600 --> 0:15:22.440 to me during their term that if it wasn't painful, 0:15:22.480 --> 0:15:24.720 if it wasn't as hard, they would have done it. 0:15:25.920 --> 0:15:30.000 I think that the Trump administration and all of the 0:15:30.040 --> 0:15:33.400 cabinet secretaries have laid a tremendous amount of groundwork with 0:15:33.440 --> 0:15:36.080 the American voter and Trump supporters in particular, who have 0:15:36.080 --> 0:15:40.160 a fifty seven percent support threshold for tariffs is remarkable, 0:15:40.200 --> 0:15:43.040 not just because you have a plurality a majority of 0:15:43.040 --> 0:15:46.640 those voters who support tariffs, but it's the change that's 0:15:46.680 --> 0:15:49.320 so interesting to me. The Republican Party used to be 0:15:49.360 --> 0:15:52.200 the party of free trade, which is effectively zero percent 0:15:52.280 --> 0:15:54.840 tariff rates, and now they've swung all the way to 0:15:54.920 --> 0:15:58.240 mostly being the party of fair trade, which apparently now 0:15:58.280 --> 0:16:01.320 implies tariffs. So it's not just that if seven percent threshold, 0:16:01.480 --> 0:16:04.160 it's the fact that it's swung from negative one hundred 0:16:04.240 --> 0:16:05.280 to now plus fifty seven. 0:16:05.320 --> 0:16:06.000 It's material. 0:16:06.040 --> 0:16:08.200 So I think there's a tremendous amount of support for 0:16:08.280 --> 0:16:09.560 imposing tires, regardless of. 0:16:09.520 --> 0:16:11.000 The pain that it imposes on the consumer. 0:16:11.000 --> 0:16:12.280 And if you can get out on the media and 0:16:12.320 --> 0:16:15.200 say inflation's not real and stop talking about eng crisis, 0:16:15.200 --> 0:16:16.320 I think you can get away with murder. 0:16:17.120 --> 0:16:19.160 Yeah, And look, I think I throw on top of it. 0:16:19.160 --> 0:16:23.400 It's another reminder that this is not our collective Grandfather's 0:16:23.880 --> 0:16:26.440 Republican Party, right. I mean, I've seen things, and I 0:16:26.480 --> 0:16:28.840 know Nathan stumbwork on this. If you look at what 0:16:28.840 --> 0:16:32.720 this CFTC has done with sports gambling, for example, now 0:16:32.720 --> 0:16:36.640 we have a federal mandate effectively allowing sports gambling in 0:16:36.720 --> 0:16:40.400 states where they have purposely not allowed it. I would 0:16:40.400 --> 0:16:43.120 also say, and this is something Henrietta's worked on. I mean, 0:16:43.160 --> 0:16:46.640 my goodness, they're progressive. Excuse to me populous Republicans who 0:16:46.680 --> 0:16:50.280 are pushing aggressively for a child tax credit expansion, right, 0:16:50.360 --> 0:16:52.720 and so let's throw that into the mix. It's just 0:16:52.800 --> 0:16:55.960 it's different than what we all grew up with fifteen 0:16:56.000 --> 0:16:56.480 years ago. 0:16:57.440 --> 0:16:59.880 A love of spending coming our way to massive. 0:17:00.320 --> 0:17:02.640 For sure, Nathan, anything you want to add. 0:17:03.120 --> 0:17:05.040 The only thing I would add is is that you know, 0:17:05.200 --> 0:17:08.080 presidents in their second term tend to become lame dunk 0:17:08.280 --> 0:17:11.640 sooner than they think. And when they become a lame duck, 0:17:11.640 --> 0:17:13.520 and we saw this under a President Obama, we saw 0:17:13.520 --> 0:17:14.359 this under George W. 0:17:14.440 --> 0:17:14.920 Bush. 0:17:15.240 --> 0:17:17.240 They focus on the areas that they have the power 0:17:17.240 --> 0:17:19.520 of the presidency is more powerful, and a lot of 0:17:19.560 --> 0:17:23.720 those international relations, foreign security and trade and tariffs. And 0:17:23.760 --> 0:17:27.600 so I think this is a four year issue and 0:17:27.800 --> 0:17:30.440 I wouldn't be surprised that even if Europe right now 0:17:30.520 --> 0:17:33.320 is not in President Trump's I mean Obviously we saw 0:17:33.359 --> 0:17:37.000 in the speech in Davos he repeated his remark about 0:17:36.520 --> 0:17:38.840 GDP spending. 0:17:38.840 --> 0:17:40.400 As a part of defense and so forth. 0:17:40.440 --> 0:17:43.400 But I just if you have any type of trade 0:17:43.440 --> 0:17:45.639 relationship with the United States, which I think all one 0:17:45.720 --> 0:17:48.399 hundred and ninety seven countries in the United Nations do, 0:17:49.280 --> 0:17:51.680 there's going to be some pretty awkward questions asked over 0:17:51.720 --> 0:17:52.520 the next four years. 0:17:54.560 --> 0:17:59.119 All right, so let's pivot slightly and talk about the 0:17:59.160 --> 0:18:02.600 Federal Reserve. Obviously one of the concerns with terroris is 0:18:02.680 --> 0:18:09.359 the risk of increasing inflation. You know, just this week, 0:18:10.240 --> 0:18:13.080 I think Trump insinuated that he knows more about interest 0:18:13.160 --> 0:18:17.800 rates than Federal Reserve chair. It's your own Powell. And 0:18:17.840 --> 0:18:21.000 you know there's been during the campaign or maybe after 0:18:21.040 --> 0:18:23.800 the election, there was talk about some sort of like 0:18:23.920 --> 0:18:30.320 shadow FED chair that Trump could sort of put in place. 0:18:31.640 --> 0:18:36.120 But you know, curious to get your thoughts on how 0:18:36.160 --> 0:18:40.040 this dynamic plays out. Do you think that we see 0:18:40.040 --> 0:18:43.840 a situation in twenty twenty five where Trump, you know, 0:18:43.960 --> 0:18:48.080 proactively tries to influence FED policy beyond just public statements. 0:18:48.720 --> 0:18:50.560 What does he do? You know, does he try to 0:18:50.800 --> 0:18:56.240 remove Powell? I've written a little bit about the legality 0:18:57.000 --> 0:19:00.000 around that. But I'm curious to get your thoughts. Maybe, Isaac, 0:19:00.000 --> 0:19:02.080 why don't why don't we start with you on this one. 0:19:03.240 --> 0:19:05.040 Yeah, Look, I'll say this. I think it's going to 0:19:05.080 --> 0:19:07.240 be messy. I think it's going to be unpleasant. I 0:19:07.240 --> 0:19:10.560 think it's going to be uncomfortable for investors given the 0:19:10.600 --> 0:19:13.320 deficit realities that Henrietta mentioned, and I think all of 0:19:13.400 --> 0:19:16.720 us are preparing for right. You want a strong independent 0:19:16.760 --> 0:19:20.960 central bank. But I think I am heartened by the 0:19:21.000 --> 0:19:25.320 fact that it appears to me that Trump, at least 0:19:25.320 --> 0:19:28.960 for now, does not appear likely to go after Powell himself. 0:19:29.000 --> 0:19:31.960 It seems like they got their win with bar exiting 0:19:32.040 --> 0:19:35.560 the vice chair for supervision. I think that that should 0:19:35.560 --> 0:19:38.000 be enough to satiate those concerns, at least in the 0:19:38.040 --> 0:19:41.120 near term. So, look, this is something that I think 0:19:41.200 --> 0:19:44.840 is concerning over the medium and longer term, just in 0:19:44.920 --> 0:19:48.320 terms of when we are in the position we're in. 0:19:48.440 --> 0:19:52.360 You want a strong independent central bank, and I'm always 0:19:52.520 --> 0:19:59.800 always concerned of interference with that and and politicians challenging 0:19:59.840 --> 0:20:02.400 this central bank. But at least for now, I think 0:20:02.400 --> 0:20:06.800 that we should all understand that. Getting bar to step 0:20:06.880 --> 0:20:10.400 down from the Vice chair for supervision. Spot was seen 0:20:10.440 --> 0:20:12.479 as a meaningful win, and I think that that's going 0:20:12.520 --> 0:20:15.800 to let them focus on replacing him and then see 0:20:15.800 --> 0:20:16.800 what's next. 0:20:17.880 --> 0:20:19.600 Nathan, why don't we go to you any thoughts on 0:20:19.640 --> 0:20:24.600 this and who you think might replace Bar in that role? 0:20:25.160 --> 0:20:27.680 Well, I mean, obviously, I think Michelle Bowman is the 0:20:28.320 --> 0:20:30.840 current name that everybody's floating out. You know, she is 0:20:30.880 --> 0:20:37.160 a former state banking supervisor I believe from Kansas. And 0:20:37.280 --> 0:20:39.320 you know, when you have only two Republicans you can 0:20:39.400 --> 0:20:42.280 choose from. Obviously, I think you know, with Bar leaving 0:20:42.640 --> 0:20:45.240 or sorry Bar remaining a member of the board, you're 0:20:45.280 --> 0:20:47.880 sort of handcuffed in terms of who you can pick. 0:20:47.960 --> 0:20:52.160 But I've also thought, you know what, you know, can 0:20:52.240 --> 0:20:55.879 you essentially run the FED without a vice Chair of Supervision? 0:20:56.640 --> 0:20:59.120 I mean, you know, if you don't need a vice 0:20:59.200 --> 0:21:01.000 chair of Supervision and you can still I mean think 0:21:01.000 --> 0:21:03.320 of Dan Trula when he was there. You know, he 0:21:03.440 --> 0:21:06.240