WEBVTT - Bloomberg Surveillance TV: November 8, 2024 0:00:00.120 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.080 Terminal and the Bloomberg Business app. We begin this hour 0:00:37.080 --> 0:00:39.120 with Stoff sitting near all time highs, the S and 0:00:39.120 --> 0:00:42.520 P five hundred approaching six thousand, notching its forty ninth 0:00:42.600 --> 0:00:45.720 record so far this year, Equities heading towards their best 0:00:45.720 --> 0:00:48.000 week of twenty twenty four as Trump takes back the 0:00:48.000 --> 0:00:51.160 White House and Vin Powell continues cunning interest rates. Joining 0:00:51.200 --> 0:00:54.120 us now Mohammad Erin of Queen's College, Cambridge. Mohammed, Welcome 0:00:54.160 --> 0:00:56.360 to the program. I know you watch the news conference, 0:00:56.360 --> 0:00:58.320 so let's start there. What would your takeaway? 0:01:00.160 --> 0:01:01.120 So three takeaways? 0:01:01.160 --> 0:01:05.000 John One is as expected in terms of the characterization 0:01:05.080 --> 0:01:09.800 of policy, desire to maintain optionality. And then where I 0:01:09.880 --> 0:01:14.440 really felt for him, John is not in his response 0:01:14.600 --> 0:01:20.160 to the question Visa VIVI the President elect, where pow 0:01:20.360 --> 0:01:23.920 the lawyer came out very strongly. It is this sort 0:01:23.920 --> 0:01:29.280 of muddled view of what is going on and inability 0:01:29.280 --> 0:01:32.520 to pivot forward. So think of his responses to the 0:01:32.640 --> 0:01:36.760 question of decomposition of the bond yield. Think of his 0:01:37.080 --> 0:01:40.000 characterization of real wages, does he want them higher, does 0:01:40.000 --> 0:01:42.800 he want them lower? Think of his characterization of the 0:01:42.880 --> 0:01:47.280 labor market. And then that key question by Mike McKee 0:01:47.640 --> 0:01:49.120 when he said you've. 0:01:48.960 --> 0:01:51.640 Looked backwards, what about forward? 0:01:52.080 --> 0:01:55.560 And he Powell ended up talking backwards, And you get 0:01:55.680 --> 0:01:58.360 very strongly a couple of feelings. Certainly I did what 0:01:58.520 --> 0:02:01.160 I felt for him. One is he's become totally hostage 0:02:01.240 --> 0:02:05.600 to data. And two is that he is. 0:02:05.520 --> 0:02:07.880 In this world of the seventies. 0:02:07.440 --> 0:02:11.320 And eighties where once you are away from the extremes 0:02:11.360 --> 0:02:14.520 of really high inflation or the threat of deflation, that 0:02:14.639 --> 0:02:18.960 somehow we believe monetary policy can fine tune outcomes, and 0:02:19.040 --> 0:02:22.880 we know that if you overrely on demand management to 0:02:23.000 --> 0:02:26.639 fine tune, you end up with all sorts of creduital damage. 0:02:26.720 --> 0:02:29.760 I really felt for him, but not for the political 0:02:29.800 --> 0:02:31.799 reasons that most of the media is covering right now. 0:02:31.840 --> 0:02:33.560 Somehow, as you've said this a few times, the lack 0:02:33.600 --> 0:02:36.720 of a strategic underpinning. Could you just provide some clarity 0:02:36.760 --> 0:02:38.919 on what you think that underpinning should be. Given the 0:02:38.960 --> 0:02:41.399 lack of clarity we have about the so called trifecta 0:02:41.440 --> 0:02:44.120 down in Washington, d C. What policy might look like, 0:02:44.160 --> 0:02:47.000 the margins that work through to get that clarity for 0:02:47.040 --> 0:02:49.280 twenty twenty five and really to sit there in December, 0:02:49.560 --> 0:02:51.280 which I think we all agree, is that much harder 0:02:51.320 --> 0:02:54.400 meeting to make a decision on interest rates and to 0:02:54.400 --> 0:02:55.400 provide forecasts. 0:02:56.840 --> 0:02:59.560 It shouldn't have been a harder meeting, John, It shouldn't 0:02:59.560 --> 0:03:03.560 have been a hard to meeting because there was great 0:03:03.600 --> 0:03:05.959 clarity back in July, and you and I talked about 0:03:05.960 --> 0:03:11.480 this that it was time to start reducing rates, that 0:03:11.720 --> 0:03:14.760 he could have done it twenty five, twenty five, twenty five, 0:03:15.560 --> 0:03:19.600 we were a distance from most estimate of the neutral rate, 0:03:19.639 --> 0:03:23.600 which is somewhere in the upper threees I think, And 0:03:23.639 --> 0:03:24.560 there's a distance to. 0:03:24.520 --> 0:03:27.560 Go, and you would use the restrict interst of policy. 0:03:27.600 --> 0:03:32.399 Instead, we got no change in July fifty in September, 0:03:32.919 --> 0:03:35.440 then a sense you know what fifty was a mistake, 0:03:35.480 --> 0:03:38.840 We got the twenty five and now, as Lisa pointed out, 0:03:38.880 --> 0:03:42.440 probably is are changing vis December. You know, this is 0:03:42.480 --> 0:03:45.560 not what policy should be doing, but this is what 0:03:45.600 --> 0:03:49.480 policy ends up doing. When you are excessively data dependent. 0:03:50.160 --> 0:03:54.520 You have a pass towards closer to neutral, You have 0:03:54.680 --> 0:03:59.920 reasons why you should pursue this, and if the election 0:04:00.120 --> 0:04:03.200 promises tend to end up to be reality, then you 0:04:03.200 --> 0:04:06.280 could change a strategic view. But as he rightly said, 0:04:06.440 --> 0:04:09.360 we don't know how much of this will end up 0:04:09.400 --> 0:04:10.880 being actual implementation. 0:04:11.440 --> 0:04:14.640 His strategic view, Mohammed seems to be let's cut by 0:04:14.640 --> 0:04:17.320 twenty five as they just did, and then maybe twenty 0:04:17.360 --> 0:04:20.680 five again in December, and then the question really becomes 0:04:20.920 --> 0:04:23.040 a blank slate. He said that they will have more 0:04:23.120 --> 0:04:25.719 data to really make that assessment, putting the focus much 0:04:25.760 --> 0:04:28.520 more on CPI. Do you think it was a mistake 0:04:28.880 --> 0:04:32.120 for him to reintroduce the emphasis on the FEDS mandate 0:04:32.160 --> 0:04:35.040 of inflation after basically kicking it to the curb and 0:04:35.040 --> 0:04:36.839 focusing simply on the employment picture. 0:04:37.839 --> 0:04:40.640 Yeah, it was such a confused discussion. I mean, he 0:04:40.800 --> 0:04:42.320 was pushed on core. 0:04:42.120 --> 0:04:46.719 Inflation twelve months, because he had only focused on headline inflation, 0:04:46.880 --> 0:04:49.240 so the two point one versus two point seven. So 0:04:49.320 --> 0:04:51.359 he got a question, what about the two point seven 0:04:51.400 --> 0:04:54.080 that you haven't mentioned? And then we got into the 0:04:54.120 --> 0:04:57.080 discussion of is it twelve months, is it three months? 0:04:57.160 --> 0:05:00.360 Is it six months? He himself previously I had said, 0:05:00.360 --> 0:05:02.680 look at the twelve month's number. Now we look at 0:05:02.680 --> 0:05:05.160 the three months number six number. Just like we went 0:05:05.240 --> 0:05:08.800 through so many definitions of core and super core. 0:05:08.760 --> 0:05:09.560 And everything else. 0:05:10.240 --> 0:05:14.279 I mean, yes, he added confusion when there's actually little 0:05:14.320 --> 0:05:17.000 need to add confusion right now on that issue. 0:05:17.560 --> 0:05:19.440 So what do you think the FED should be doing 0:05:19.839 --> 0:05:21.799 if ideally if they were going to have a framework, 0:05:22.000 --> 0:05:23.840 or what framework should they follow? And I say this 0:05:23.880 --> 0:05:26.280 as Jim Bianco over at Piancre Research says that right 0:05:26.320 --> 0:05:30.040 now to cut rates again might be worse than transitory. 0:05:32.040 --> 0:05:34.640 So I don't agree with that. I think that we 0:05:34.839 --> 0:05:39.719 are a distance away from what the neutral rate is. 0:05:40.920 --> 0:05:46.040 I think that inflationary expectations are relatively anchored, not at 0:05:46.080 --> 0:05:49.160 two percent. But you know my view that two percent 0:05:49.320 --> 0:05:51.960 is too low, and certainly now is too low an 0:05:51.960 --> 0:05:56.080 inflation target for this economy unless you want to structurally 0:05:56.120 --> 0:06:00.640 weaken it in a significant manner. They should be on 0:06:00.680 --> 0:06:05.320 a path of until we get significant new information on 0:06:05.400 --> 0:06:06.240 what's ahead. 0:06:06.400 --> 0:06:09.440 I'd stress what's ahead, we will. 0:06:09.200 --> 0:06:12.559 Be on a path for now of maintaining a twenty 0:06:12.560 --> 0:06:15.960 five basis points cut and the other thing I have 0:06:16.000 --> 0:06:19.080 stress it is time to get out about this framework. 0:06:19.200 --> 0:06:21.440 They have this mindset they have that they're the only 0:06:21.520 --> 0:06:23.880 game in town. They are not the only game in town. 0:06:24.080 --> 0:06:27.960 They should leave center stage right now and become more 0:06:28.200 --> 0:06:31.919 of an observer and wait to see what plays out. 0:06:32.000 --> 0:06:34.560 But you know, once you are on center stage, you've 0:06:34.600 --> 0:06:36.640 been the only game in town for so long it 0:06:36.720 --> 0:06:39.240 is really difficult to exit stage left. 0:06:39.480 --> 0:06:42.479 So Muhammad, that's your advice to the policy maker. Is 0:06:42.480 --> 0:06:45.760 your advice different to a market participant? Because markets, as 0:06:45.800 --> 0:06:49.320 you know, are anticipatory. The FED you've suggested is overreactionary. 0:06:49.800 --> 0:06:51.920 So I want to understand from your perspective now what 0:06:51.960 --> 0:06:55.159 you would say to a market sticipant whether they should 0:06:55.160 --> 0:06:58.280 be pricing in a big positive growth shop that could 0:06:58.320 --> 0:06:59.920 come with some additional in flight. 0:07:01.680 --> 0:07:02.119 So attend. 0:07:02.240 --> 0:07:09.279 The direction of travel is clear, more growth, slightly higher inflation, 0:07:10.520 --> 0:07:15.800 a higher public sector borrow requirement and a huge sucking 0:07:15.880 --> 0:07:19.040 sound where a lot of phone capital. 0:07:18.680 --> 0:07:21.320 Will end up in the US. That is the direction 0:07:21.400 --> 0:07:21.920 of travel. 0:07:23.440 --> 0:07:25.880 What you've got to figure out, and it's hard, and 0:07:25.920 --> 0:07:29.200 that's why we've got to market is the magnitudes of 0:07:29.240 --> 0:07:29.840 these things. 0:07:30.160 --> 0:07:32.400 But I think John, the direction of travel is clear. 0:07:33.200 --> 0:07:36.840 The magnitudes are going to become clearer as we get 0:07:37.760 --> 0:07:41.320 firm indications not only of what the policy proposals are, 0:07:41.600 --> 0:07:43.320 but who's going to implement these policies. 0:07:43.360 --> 0:07:45.960 The appointments are going to be very important going forward. 0:07:46.040 --> 0:07:46.920 I couldn't agree more. 0:07:47.320 --> 0:07:49.040 Do you think this could be a bigger problem for 0:07:49.080 --> 0:07:50.680 the rest of the world that it will be the 0:07:50.800 --> 0:07:51.520 United States? 0:07:52.480 --> 0:07:56.600 Oh? Absolutely. This is a period in which US dominance 0:07:56.800 --> 0:08:00.840 of the global system is going to increase, both for 0:08:01.000 --> 0:08:04.840 positive reasons and for negative reasons. In the short term, 0:08:05.000 --> 0:08:08.880 the rest of the world simply cannot build enough pipes. 0:08:08.960 --> 0:08:09.840 Around the US. 0:08:09.880 --> 0:08:13.000 They're trying, and they've been doing it, but these pipes 0:08:13.040 --> 0:08:15.320 are very small compared to the size of the US. 0:08:15.440 --> 0:08:18.720 Over the longer term, you will see more pipes being 0:08:18.720 --> 0:08:21.000 built around the US at the core of the system. 0:08:21.280 --> 0:08:23.680 Muhammad the journalist yesterday and the press conference get a 0:08:23.800 --> 0:08:26.880 for effort for trying to get J Powell talk about politics, 0:08:26.880 --> 0:08:29.880 but he wasn't going anywhere near this. Do you actually 0:08:29.920 --> 0:08:31.840 have concerns about the independence of the FED? 0:08:33.320 --> 0:08:34.960 So I would have gone even less. I mean, he 0:08:35.000 --> 0:08:36.560 gave the legal response. 0:08:36.600 --> 0:08:40.360 This was J Pile, J Powell the lawyer, coming out 0:08:40.640 --> 0:08:43.360 in a very strong way. If I had been him, 0:08:43.480 --> 0:08:45.720 I would have simply said, I'm not going to discuss 0:08:45.760 --> 0:08:46.240 this issue. 0:08:46.320 --> 0:08:48.280 I wouldn't have said no. I would have said I. 0:08:48.240 --> 0:08:50.240 Would simply say I would not have discussed this issue. 0:08:50.559 --> 0:08:53.920 Saying no opens up a whole new host of things. 0:08:54.320 --> 0:08:57.240 Do you think saying no was hostile to the former 0:08:57.280 --> 0:08:58.840 president going to be future president? 0:09:00.559 --> 0:09:04.320 I think if it wouldn't surprise me if it's viewed 0:09:04.360 --> 0:09:07.200 as hostile. I think what Chair Power was trying to 0:09:07.200 --> 0:09:10.880 do is give the legal answer. However, it can be 0:09:10.920 --> 0:09:12.120 easily viewed as hostile. 0:09:12.200 --> 0:09:16.040 Yes, based on your view of the US gaining that 0:09:16.160 --> 0:09:18.800 sucking sound of capital away from the rest of the world, 0:09:19.280 --> 0:09:21.640 do you think that sucking sound will also go to 0:09:21.720 --> 0:09:23.360 finance the deficit in a way that. 0:09:23.400 --> 0:09:24.640 Really caps off yields. 0:09:24.800 --> 0:09:26.720 It doesn't really allow them to rise as high as 0:09:26.760 --> 0:09:28.600 some people are threatening such as five percent. 0:09:30.040 --> 0:09:32.560 Yes, I mean so, there's two interpretations of why yields 0:09:32.559 --> 0:09:33.040 came down. 0:09:33.760 --> 0:09:35.719 One is the market has revisited. 0:09:36.360 --> 0:09:39.960 The other, which I favor more, is that US bonds 0:09:39.960 --> 0:09:42.720 relative to the rest of the world became really cheap 0:09:43.559 --> 0:09:45.920 and people reallocated away. 0:09:46.000 --> 0:09:46.840 If you look at what. 0:09:46.760 --> 0:09:49.440 Happened to the differentials visa be the rest of the world, 0:09:49.760 --> 0:09:52.800 US bond in relative space, and most of the time, 0:09:52.880 --> 0:09:56.120 as you know, Lisa, this market solves in relative space 0:09:56.120 --> 0:09:59.959 in the advanced world. It solves more in absolute space 0:10:00.240 --> 0:10:03.840 in emerging markets, but in the advanced world they tend. 0:10:03.800 --> 0:10:05.520 To solve in relative space. 0:10:05.559 --> 0:10:10.040 And relative to other advanced economies, the US yields were looking. 0:10:09.920 --> 0:10:11.600 Very attractive, Muhammed. 0:10:11.679 --> 0:10:13.160 It's wonderful to catch up with you, sir. 0:10:13.360 --> 0:10:24.520 We're lucky to get some time with you. You want 0:10:24.520 --> 0:10:26.800 to get now? Is Ryan Peterson a flex sport right? 0:10:26.920 --> 0:10:29.520 Welcome to the program, sir, let's start with this. How 0:10:29.559 --> 0:10:32.800 busy are you right now? And as business increased a 0:10:32.880 --> 0:10:34.560 ton over the last few weeks. 0:10:35.640 --> 0:10:38.400 Yeah, well, you know, not just necessarily because of the Trump, 0:10:38.440 --> 0:10:40.600 of the possibility of a trumple actually, but we also 0:10:40.640 --> 0:10:42.880 have a looming port strike on the East Coast. Remember 0:10:43.080 --> 0:10:47.120 the Port they went on strike last month, but they 0:10:47.160 --> 0:10:50.880 got a ninety day hiatus and January fifteenth that contract end, 0:10:50.960 --> 0:10:53.200 so that all the East Coast sports right before Trump 0:10:53.240 --> 0:10:54.800 gets elected may go back on striking. So a lot 0:10:54.800 --> 0:10:56.920 of people are trying to get goods in before that 0:10:57.040 --> 0:11:00.000 might happen. So there's always something in global trade. 0:11:00.440 --> 0:11:03.520 Was called union Joe, how do you think the port 0:11:03.520 --> 0:11:06.520 negotiations will go under President elect Trump? 0:11:07.400 --> 0:11:08.760 Yeah, it's a really big question. 0:11:08.800 --> 0:11:10.400 It's sort of like who he listens to, because he 0:11:10.520 --> 0:11:13.240 himself says back in October made statements in favor of 0:11:13.240 --> 0:11:15.880 the union and saying, hey, they need to write to negotiate. 0:11:15.440 --> 0:11:18.080 Against these FOURIGN companies. 0:11:19.400 --> 0:11:21.520 At the same time, his main advisor and how Elon 0:11:21.600 --> 0:11:24.800 Musk has said, well that the union's demands for no 0:11:24.880 --> 0:11:28.600 automation are ridiculous and need to be stopped. So it's 0:11:28.640 --> 0:11:30.880 a really big open question who's Trump going to listen 0:11:30.920 --> 0:11:32.560 to and how does that play out? 0:11:32.840 --> 0:11:35.600 Because of that dynamic, do you think these talks could 0:11:35.720 --> 0:11:38.320 really drag on and how long could we see them 0:11:38.360 --> 0:11:39.720 dragging into twenty twenty five? 0:11:40.440 --> 0:11:42.680 Well, that's one big concern is sort of the talks 0:11:42.679 --> 0:11:46.960 are happening five days before the inauguration, and so is 0:11:47.640 --> 0:11:50.559 you know, what's the current BIDE administration's. 0:11:50.040 --> 0:11:52.480 Role and how committed are they to making that happen. 0:11:52.480 --> 0:11:54.400 And then that's of course with the backdrop of territs WI, 0:11:55.000 --> 0:11:57.000 which we were also alluding to here in your intros. 0:11:57.640 --> 0:11:59.679 Trump's going to want to come in and have that priority. 0:11:59.720 --> 0:12:02.280 But it's very hard to govern when there's always something 0:12:02.280 --> 0:12:03.800 coming at you, right, Ryan. 0:12:03.840 --> 0:12:05.600 Just to zoom out a little bit, there is this 0:12:05.720 --> 0:12:08.680 question you mentioned that things are getting very busy. A 0:12:08.720 --> 0:12:11.120 lot of people are front loading some of their orders 0:12:11.160 --> 0:12:14.080 to get a hoad of both whatever policy changes might come, 0:12:14.120 --> 0:12:16.680 as well as that potential strike. Can you give us 0:12:16.720 --> 0:12:19.920 some sense, some scope of just how much busier it is, 0:12:19.960 --> 0:12:22.040 how much rates are able to go up for you 0:12:22.400 --> 0:12:25.240 as people do try to get ahead of that uncertainty. 0:12:26.080 --> 0:12:29.440 Yeah, I mean, you know you're seeing volumes a little 0:12:29.440 --> 0:12:31.439 bit higher, but it's very hard to attribute to any 0:12:31.440 --> 0:12:34.679 one thing in this It's a very complex, dynamic world. 0:12:34.760 --> 0:12:36.760 So I wouldn't want to say, oh, the volumes are 0:12:36.840 --> 0:12:41.000 up this much because of because of tariffs or because 0:12:41.040 --> 0:12:44.280 of looming changes in policy. So I don't have a 0:12:44.320 --> 0:12:47.160 specific number to tie to it. That said, we've seen 0:12:47.200 --> 0:12:50.040 it every time. Whenever there's new tariffs, you see a 0:12:50.040 --> 0:12:52.720 big surge. You saw it with the BIDA mistration earlier 0:12:52.760 --> 0:12:56.120 this year when they increased three oho one Section three 0:12:56.200 --> 0:12:59.839 oh one tariffs on Chinese steel, for example. That led 0:12:59.840 --> 0:13:03.359 to a big push and ocean freight rates went up about. 0:13:03.120 --> 0:13:06.800 Three x earlier this year. From long run. 0:13:06.679 --> 0:13:10.040 Historical average, it costs about two thousand dollars to ship 0:13:10.040 --> 0:13:12.760 a container from Asia to the US. That went up 0:13:12.800 --> 0:13:15.640 to over six seven thousand dollars in the spot market 0:13:15.760 --> 0:13:18.280 this summer, and it was it was driven by that. 0:13:18.360 --> 0:13:19.360 It was driven by. 0:13:19.840 --> 0:13:22.560 People pulling goods in both before the port strike and 0:13:22.720 --> 0:13:24.960 before the tariffs. So we've seen this movie before, and 0:13:25.200 --> 0:13:27.120 we're probably heading right back into something similar. 0:13:27.320 --> 0:13:29.000 I'd like to lead into this idea that we've seen 0:13:29.040 --> 0:13:31.680 this movie before. We've had the experience of the twenty 0:13:32.200 --> 0:13:36.280 eighteen different tariffs that came to play twenty seventeen, twenty eighteen. 0:13:36.480 --> 0:13:39.440 There's a real question about how much companies have already 0:13:39.480 --> 0:13:43.080 rejiggered their supply chains to adjust to a new reality, 0:13:43.120 --> 0:13:46.720 new pressures, a new focus on near shoring and on shoring. 0:13:46.920 --> 0:13:49.800 How much have you seen a real shift in the 0:13:49.880 --> 0:13:52.280 patterns of your clients in terms of where they ship 0:13:52.320 --> 0:13:53.680 from now. 0:13:53.600 --> 0:13:55.840 It's been massive over the last decade, and not just 0:13:55.920 --> 0:13:59.000 driven by the terriffs, although it's a big factor, but 0:13:59.320 --> 0:14:02.679 also driven by labor costs Chinese. Chinese labor costs have 0:14:02.720 --> 0:14:04.760 gone up, and good for the workers in China, they're 0:14:04.760 --> 0:14:07.080 getting paid more, but they're no longer the low cost 0:14:07.160 --> 0:14:09.880 source of labor for the world, and so companies have 0:14:09.880 --> 0:14:12.800 been relocating that the companies that can have been relocating, 0:14:13.240 --> 0:14:16.280 especially Vietnam, India, Mexico have been sort of like three 0:14:16.320 --> 0:14:18.360 big winners, but many other countries too. 0:14:18.840 --> 0:14:22.080 And that said, there are a lot of supply. 0:14:21.880 --> 0:14:25.200 Chains where you just can't get it done outside of China. 0:14:25.240 --> 0:14:31.360 The manufacturing expertise the ecosystem of component suppliers and for 0:14:31.400 --> 0:14:34.280 that I'm specifically talking about electronics or a few other sectors, 0:14:34.280 --> 0:14:36.800 but really the electronics sector has a real hard time 0:14:36.840 --> 0:14:40.560 moving out of moving manufacturing out of China. And then 0:14:40.600 --> 0:14:43.160 the other big factor, the other big industry here is 0:14:43.280 --> 0:14:47.880 e commerce. Chinese e commerce parcels, so going direct to 0:14:47.960 --> 0:14:50.880 consumer all the way from China are close to fifty 0:14:50.920 --> 0:14:54.120 percent of the world's air freight now, and that is 0:14:55.040 --> 0:14:58.640 already being discussed to shut that down or to impost 0:14:58.680 --> 0:15:01.720 tariffs on it. Remember, those fly duty free under the 0:15:01.760 --> 0:15:06.400 current regulations, and even the Biden administrations and the current 0:15:06.480 --> 0:15:10.080 CBP has a directive Customs and Border Protection excuse me 0:15:10.280 --> 0:15:14.040 as a directive to take away those tariff exemptions that 0:15:14.080 --> 0:15:15.640 may make those non competitive. 0:15:16.440 --> 0:15:18.040 So there's a lot of different. 0:15:18.280 --> 0:15:20.480 Factors here, and I think you'll see an escalation because remember, 0:15:20.520 --> 0:15:22.960 these new tariffs are on top of the ones that 0:15:23.000 --> 0:15:26.320 the Trump and Biden administration put in. They're not It's 0:15:26.360 --> 0:15:29.600 not just like we're back to Trump's tariffs. Biden never 0:15:29.600 --> 0:15:32.040 took them away, and they'll be talking about adding on 0:15:32.080 --> 0:15:32.480 to those. 0:15:32.720 --> 0:15:35.920 You mentioned Vietnam and you mentioned Mexico, and I just wonder, 0:15:36.200 --> 0:15:38.360 especially given some of the threats that we've heard from 0:15:38.360 --> 0:15:42.200 the Trump campaign, how much you see from the flows 0:15:42.480 --> 0:15:45.560 that Mexico is kind of a trojan horse for Chinese 0:15:45.600 --> 0:15:48.120 goods And the same with Vietnam. 0:15:49.560 --> 0:15:52.440 Yeah, in both cases, you've seen exports from China to 0:15:52.560 --> 0:15:56.400 these countries increase by twenty percent over the last two years, 0:15:57.120 --> 0:16:00.600 and so that implies there were either being goods there 0:16:00.640 --> 0:16:03.520 as raw materials into a manufacturing process, or in some 0:16:03.600 --> 0:16:06.040 cases there's probably some fraud where they're just relabeling things 0:16:06.080 --> 0:16:08.480 and saying made in Mexico was actually made in China. 0:16:08.560 --> 0:16:11.440 I think it's probably much more of the former, much 0:16:11.480 --> 0:16:14.600 more of raw materials moving in, and so it's not 0:16:14.640 --> 0:16:17.560 necessarily the market finds a way. You know, it's very 0:16:17.560 --> 0:16:20.400 hard to when when a country like China is so 0:16:20.520 --> 0:16:25.040 good at manufacturing, very hard for businesses to avoid using that. 0:16:25.480 --> 0:16:28.000 They're just going to have a competitive advantage and the 0:16:28.400 --> 0:16:31.640 markets route around it. And the other factor here is 0:16:31.640 --> 0:16:35.040 that it's it's expensive. Trucking is expensive, so moving a 0:16:35.040 --> 0:16:39.560 container or a truckload of cargo from Mexico up to 0:16:39.560 --> 0:16:43.000 the United States is not cheaper than shipping a container 0:16:43.000 --> 0:16:45.960 from Vietnam to the United States. Ocean freight, the physics 0:16:45.960 --> 0:16:49.480 are unmatched, so it's so much cheaper than land freight. 0:16:49.600 --> 0:16:53.560 So it's not necessarily that just because Mexico is closer 0:16:53.560 --> 0:16:55.160 in terms of distance, that it's cheaper. 0:16:55.520 --> 0:16:57.560 There's one sailing rood I wanted to ask you about, 0:16:57.680 --> 0:16:59.920 given we were going to have a change of an 0:16:59.840 --> 0:17:03.880 administration come January, the Red Sea, do you think We're 0:17:03.920 --> 0:17:05.720 going to see more freight go through there. 0:17:07.320 --> 0:17:10.760 We've already started to see a little bit of restoring 0:17:10.800 --> 0:17:13.760 of services through the Red Sea just in the last month. 0:17:13.800 --> 0:17:16.600 And that's before Trump. You know, even anyone had an 0:17:16.600 --> 0:17:20.119 idea that Trump would win. Some carriers are starting to 0:17:20.160 --> 0:17:23.879 brave that. I think there's a real possibility for a breakthrough, 0:17:23.920 --> 0:17:26.679 but I'm not I don't have any insight into, you know, 0:17:26.680 --> 0:17:28.960 what Trump might do with her on or the HOOTI 0:17:29.080 --> 0:17:31.360 rebels there, but I think you should expect a new 0:17:31.520 --> 0:17:36.120 set of initiatives, policies, and potentially potentially military. 0:17:35.680 --> 0:17:38.280 Action, but very unclear. 0:17:38.800 --> 0:17:41.600 One interesting story I thought didn't get enough attention was 0:17:41.640 --> 0:17:45.760 that this allegation that the houtis the rebels in Yemen 0:17:45.920 --> 0:17:48.879 or the really the government in Yemen has been taking 0:17:48.960 --> 0:17:52.400 bribes effectively and running a toll road to the tune 0:17:52.400 --> 0:17:55.840 of two billion dollars a year from ocean carriers and 0:17:55.880 --> 0:17:58.720 ocean shippers to move cargo through and sort of. 0:17:58.800 --> 0:18:00.600 A payoff to not shoot down. 0:18:00.640 --> 0:18:03.680 That's a really crazy development if true, and I like 0:18:03.720 --> 0:18:06.080 to see more about it. I don't have any sources 0:18:06.080 --> 0:18:08.160 on that other than reading it in the news. 0:18:08.280 --> 0:18:10.239 Well, I now a reporter around this table. That's going 0:18:10.240 --> 0:18:11.840 to change that story a little bit more now, Ryan, 0:18:11.960 --> 0:18:12.720 appreciate that. 0:18:12.960 --> 0:18:13.240 Ryan. 0:18:13.400 --> 0:18:15.520 Let's do this again soon. This was super sharp. Really 0:18:15.520 --> 0:18:28.040 appreciate your time, Ryan Peterson. There of flex for Casey 0:18:28.040 --> 0:18:30.840 of signum Global Advice is writing. Broadly speaking, we see 0:18:30.840 --> 0:18:36.040 Trump beginning his second term unrestrained Republican trifecta Supreme Court majority, 0:18:36.320 --> 0:18:38.880 popular mandate. This may be a once in a generation 0:18:39.040 --> 0:18:42.440 chance for Republicans to ennact sweeping change. Rob John just 0:18:42.520 --> 0:18:44.680 now for more, Rob, Good morning morning. Can we start 0:18:44.720 --> 0:18:47.200 with a trifecta you think it gets done? What kind 0:18:47.240 --> 0:18:48.320 of margins are you looking for? 0:18:48.840 --> 0:18:51.040 Really tate margins. I mean it's going to be as 0:18:51.359 --> 0:18:53.480 if not tighter than what we're seeing currently. Of the 0:18:53.520 --> 0:18:56.600 twenty five seats still to be called, I think Republicans 0:18:56.720 --> 0:18:59.040 very easily win or comfortably win nine of them, so 0:18:59.040 --> 0:19:01.480 that gets them to two nineteen, and there. 0:19:01.400 --> 0:19:02.840 Are other sheets Democrats will win in there. 0:19:02.880 --> 0:19:05.640 There are about five or six seats that are absolutely 0:19:05.720 --> 0:19:06.280 toss ups. 0:19:06.119 --> 0:19:06.520 At this point. 0:19:06.520 --> 0:19:08.760 So the best Republicans can hope for, I think is 0:19:08.800 --> 0:19:10.439 two twenty maybe two twenty one. 0:19:10.240 --> 0:19:12.080 But it looks a lot like it does today. 0:19:12.280 --> 0:19:15.160 House majority with Tom Emmer this morning Punchable News says, 0:19:15.160 --> 0:19:17.120 I don't care if it's two eighteen, two nineteen, two twenty. 0:19:17.160 --> 0:19:18.440 I don't give a damn. As long as you have 0:19:18.520 --> 0:19:20.560 the majority, we're going to be successful. But if you 0:19:20.560 --> 0:19:23.040 have two eighteen, basically everyone becomes a king. 0:19:23.119 --> 0:19:26.359 No, yeah, everybody becomes a king. I think it's worse 0:19:26.400 --> 0:19:28.960 for at least Deephonik, who would like to be appointed 0:19:28.960 --> 0:19:30.480 somewhere else, and they don't want to deal with the 0:19:30.520 --> 0:19:32.520 special election in New York at this point that would 0:19:32.560 --> 0:19:33.680 take away their majority. 0:19:33.400 --> 0:19:34.360 If it was that slim. 0:19:35.119 --> 0:19:38.080 But I mean, frankly, Donald Trump is president elect, which 0:19:38.119 --> 0:19:39.679 means in the House, Donald Trump is king. I mean 0:19:39.840 --> 0:19:41.439 they are going to take their shots not from Mike 0:19:41.520 --> 0:19:42.800 Johnson or anybody else. 0:19:43.200 --> 0:19:44.320 They're going to take them from Trump. 0:19:44.440 --> 0:19:46.280 So besides at least Stefan and who may go over 0:19:46.359 --> 0:19:49.280 to the UN, what does the leadership look like in 0:19:49.280 --> 0:19:49.679 the House. 0:19:50.119 --> 0:19:53.040 I think it's Speaker Johnson. I think it's Speaker Johnson 0:19:53.080 --> 0:19:54.240