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Speaker 2: We have Monica Guerra here in studio with US policy
Speaker 2: analyst at Morgan Stanley, and so as we listen to
Speaker 2: this music in the back, we'll keep it going just
Speaker 2: for some flavor and feel as we go for Monica.
Speaker 2: Great to have you with us. And I'm kind of
Speaker 2: curious how you, as someone who is following this from
Speaker 2: an investor perspectives or processed what we've seen so far
Speaker 2: in the first speech, the formal inaugural address, in the
Speaker 2: kind of second more loose inaugural address that we got
Speaker 2: after that, what's it telling you about how the policies
Speaker 2: of this president are going to be going to be
Speaker 2: rolled out?
Speaker 3: Yeah, I think at first, if you're looking at the
Speaker 3: executive orders, right, he essentially went through his top line
Speaker 3: items immigration, right, immigrate, some strict immigration reforms, and that
Speaker 3: could have a longer term impact on the economy. So
Speaker 3: day one we have to see exactly what that looks like,
Speaker 3: how is it going to take shape, how are they
Speaker 3: going to implement. So one of the things we spend
Speaker 3: a lot of time thinking about and talking about is
Speaker 3: not just the magnitude of the policies, but the pacing
Speaker 3: and sequencing. So if you're just focusing day one on immigration,
Speaker 3: you have to consider that that has the more of
Speaker 3: a five year lag to truly having a pull on
Speaker 3: the economy because you're looking at demographics, fertility rates going down,
Speaker 3: et cetera over time, and so that is a more
Speaker 3: gradual impact. Now, if you're looking at some of his
Speaker 3: more economically stimulative policies that are deregulatory, et cetera, that
Speaker 3: could have a more and a more immediate implication.
Speaker 4: Well, would there be would it be possible to have
Speaker 4: more of an economic shock from immigration policy, whereas the
Speaker 4: effects would not be lagged If indeed he does follow
Speaker 4: through with essentially deporting you know, up to eleven million
Speaker 4: people from.
Speaker 3: This country, That again is a very large number. So
Speaker 3: are you saying magnitude in pacing if it is at
Speaker 3: that magnitude, yes, of.
Speaker 4: Course, is it realistic for us to think about it
Speaker 4: at that magnitude just because of logistical reasons.
Speaker 3: That's essentially where my position today stands. Obviously, if you're
Speaker 3: going to engage the military and have other tactics that
Speaker 3: could change the perception, and I think a lot of
Speaker 3: us here are involved in the waiting game. But if
Speaker 3: you're looking at the five hundred thousand folks who are
Speaker 3: in the criminal justice system already that would be easily deported,
Speaker 3: that's about net two hundred thousand more than the annual
Speaker 3: three hundred thousand that are deported. So that has a
Speaker 3: very different impact. Now, if you're going for that eleven million,
Speaker 3: I find that, you know, it's be a quite you know,
Speaker 3: a large number that would be difficult to quantify in
Speaker 3: a very swift period of time. You could get a
Speaker 3: significant shock. Obviously, the industries that are going to be
Speaker 3: impacted the most. So if you get above that five
Speaker 3: hundred thousand number and you're starting to deport folks who
Speaker 3: are not in the criminal justice system and are already
Speaker 3: not participating in the economy and in labor, it's going
Speaker 3: to be agriculture, services, industry, etc. So we have to
Speaker 3: focus on those areas, especially as investors, as the policies
Speaker 3: actually roll out, all right.
Speaker 5: We also want to bring into the conversation Jennifer Lawless.
Speaker 5: She is Professor of Politics and Public Policy at the
Speaker 5: University of Virginia, Professor at Lawas you've been listening to
Speaker 5: our conversation, are you getting a better feeling of the
Speaker 5: prioritization of policy within the Trump administration by the president
Speaker 5: of the things that we need to kind of keep
Speaker 5: a watch on that you think he initially is going
Speaker 5: to tackle. Is it clear to you yet?
Speaker 6: It seems like this speech today, both the formal speech
Speaker 6: and the informal one, and everything that we've heard since
Speaker 6: the election, is consistent with the campaign trial priorities. So
Speaker 6: immigration will be one of the first things that are tackled,
Speaker 6: Tariffs and how that's going to affect the economy will
Speaker 6: be the second, and on the back burner will be
Speaker 6: things like abortion, where he's ready to act should Congress
Speaker 6: manage to pass that kind of ban. We also saw
Speaker 6: during the speech today that there are symbolic things that
Speaker 6: he's going to be doing to speak to his base
Speaker 6: and to try and demonstrate that he's going to filfil
Speaker 6: campaign promises. So it's very unheard of in an inauguration address,
Speaker 6: for example, to state that gender is binary, and so
Speaker 6: things like that are going to be the kinds of
Speaker 6: things we're going to hear over the course of the
Speaker 6: next few weeks.
Speaker 7: I would assume.
Speaker 2: Jennifer help us out here navigating all of that, because
Speaker 2: I think that's going to be the thorniest part of
Speaker 2: this and the challenge at least in these coming days,
Speaker 2: how you decide what is symbolic and what has teeth,
Speaker 2: what's going to be something that you would be tantamount
Speaker 2: to to a major policy change. How are you going
Speaker 2: to navigate that as we kind of look at the
Speaker 2: rhetoric at these executive orders, at maybe more formal speeches
Speaker 2: and addresses from the president, how do you process all
Speaker 2: of that.
Speaker 6: Well, it's symbolic if Congress ultimately has to act in
Speaker 6: order to change policy and hasn't done that yet, And
Speaker 6: so Donald Trump can say, for example, that we're going
Speaker 6: to become a country again where there are only two genders,
Speaker 6: but it's hard to know what that actually means except
Speaker 6: alienating and isolating large portions of the population. We do
Speaker 6: know that it means that, and there are real ramifications,
Speaker 6: but in terms of policy at this point, his rhetoric
Speaker 6: doesn't change the way that states conduct the business they've
Speaker 6: been conducting when it comes to immigration, where the federal
Speaker 6: government does play a clear and active role, and Donald
Speaker 6: Trump or any president through executive order can shape policy
Speaker 6: that's certainly going to be more than symbolic.
Speaker 5: Can I just say, I'm thinking about all of the
Speaker 5: HR teams in you know, global corporations or Corporate America
Speaker 5: who are like saying, okay, and how do we address
Speaker 5: this with our employee base in terms of you know,
Speaker 5: just two genders and you know, I'm assuming they're going
Speaker 5: to have to be addressing this. It's just something that
Speaker 5: I'm curious.
Speaker 8: I don't know.
Speaker 7: We'll see how.
Speaker 5: This will play out over the next over this week.
Speaker 4: I don't know if that it matters for companies. This
Speaker 4: might be something. My understanding is this is like the
Speaker 4: federal government and it's passports. It you know, a company
Speaker 4: can do whatever. I think a company can do whatever
Speaker 4: it wants.
Speaker 9: I don't know.
Speaker 5: I guess so, I guess so, I don't know. Like
Speaker 5: I'm curious, you know, Monica, like for your company, Morgan
Speaker 5: Stanley and some of these issues that are coming down,
Speaker 5: I don't mean to put you in the hot seat,
Speaker 5: but I do think about these issues will have to
Speaker 5: be addressed by companies.
Speaker 3: And you know, it is something that Morgan Stanley has
Speaker 3: to deal with on a daily basis. I can't speak
Speaker 3: on behalf of them. I'm not on our legal team.
Speaker 3: That's not an area, right that I.
Speaker 5: Focus on policies in general, right.
Speaker 3: Policies in general, right, I keep an eye on all
Speaker 3: of that. I sometimes have conversations about what we think
Speaker 3: the administration might do. That said, when I'm thinking about messaging,
Speaker 3: I think another sort of pivoting away from the di discussion.
Speaker 3: I want to focus on Tariff's brow just to move
Speaker 3: move the conversation. Definitely done now happy, No with tariffs.
Speaker 3: I think it's important to note that we got a
Speaker 3: lot of really big messaging. And that's why I like
Speaker 3: with the immigration comment, right with the eleven million number,
Speaker 3: I really want to highlight that. With tariff, say came in,
Speaker 3: they were saying they were going to do all of
Speaker 3: this significant action on day one. Now now they're going
Speaker 3: to do a study. So that's why we have to
Speaker 3: see things as they come out, right, you have to
Speaker 3: see the action's actions speak louder than words.
Speaker 5: But when your kid comes to you, I want this toy.
Speaker 5: I want this toy. Right, let me think about it,
Speaker 5: and so we're going to study it.
Speaker 3: So that's important right when we're when we're trying to
Speaker 3: suss through what this means for markets and the economy. Now,
Speaker 3: one of the things that we're really focused on and
Speaker 3: trying to hedge for is, you know, is all that
Speaker 3: enthusiasm around Trump priced in? Is this an opportunity right
Speaker 3: for Trump to disappoint if he doesn't go big on
Speaker 3: on I would say corporate tax cuts, for example, that's
Speaker 3: a really era I would say important area where investors
Speaker 3: are focusing on. They're expecting a cut as deep as
Speaker 3: fifteen percent, But when you're thinking about the broader fiscal system,
Speaker 3: it's important to take into account what they can and
Speaker 3: cannot achieve and if they're trying to offset debt and deficits,
Speaker 3: if they're trying to find and cost savings, cutting a
Speaker 3: corporate tax may not be the first thing on the agenda.
Speaker 4: So if that is not delivered on, do we see
Speaker 4: equity markets and the stock of companies react in a way.
Speaker 9: That is negative?
Speaker 3: Yeah, I say you would see multiples right, have a correction.
Speaker 3: I can't speak to you know how long that would last.
Speaker 3: I don't know what the messaging around.
Speaker 9: In your view is, it is what's.
Speaker 3: Pricing is the fifteen percent. Is the enthusiasm right around
Speaker 3: this pro growth, incredibly pro growth messaging. And so when
Speaker 3: I'm thinking through where are the risks and opportunity sets,
Speaker 3: one of the risks that I'm focused on is the
Speaker 3: corporate tax cut.
Speaker 2: Jennifer Lawless, I want to bring you back in here.
Speaker 2: We were talking a little while ago just about how
Speaker 2: this presence sees himself in the context of history, and
Speaker 2: I'm curious what stood out to you about the remarks
Speaker 2: he made. And I think that that second speech he
Speaker 2: gave with so illuminating in that regard that there's still
Speaker 2: a lot of things that he's clearly ticked off about
Speaker 2: that happened last time around. You know, when we talk
Speaker 2: about of his desires on Greenland and Panama and the like,
Speaker 2: that there's a sense to kind of put a stamp
Speaker 2: on this presidency in a very big and novel expansionary way.
Speaker 2: Talk about that if you would just sort of what
Speaker 2: you observed about the sort of way he sees himself
Speaker 2: in the larger context of American history visa VI that
Speaker 2: that speech that he gave this afternoon.
Speaker 6: It seems to me that Donald Trump does not differentiate
Speaker 6: between being president and the institution of the presidency. Typically,
Speaker 6: what happens is that presidents feel like they're moving into
Speaker 6: a role. They talk about the importance of democracy and
Speaker 6: a smooth transition of power. They talk about the august
Speaker 6: nature of the institution that they'll be occupying, and they
Speaker 6: talk about the importance of bringing the country together and moving.
Speaker 7: Forward to achieve greatness.
Speaker 6: Donald Trump did not do that in twenty seventeen, and
Speaker 6: he did not do that today. In fact, today's speech
Speaker 6: in a lot of ways was even more negative and
Speaker 6: even darker than his first inaugural because it was also
Speaker 6: filled with attitude, an attitude that highlights the importance to
Speaker 6: Donald Trump of retribution and of doing all the things
Speaker 6: that people said that he couldn't do.
Speaker 7: And I think that.
Speaker 6: Nationally and globally, he sent a very clear signal that
Speaker 6: he is basically going to go out there and give
Speaker 6: it a shot to do whatever he wants, whether that's
Speaker 6: renaming the Gulf of Mexico, whether it's taking back Panama Canal,
Speaker 6: whether it's taking greenland, or whether it's just changing national
Speaker 6: policies that the American people have become accustomed to, or
Speaker 6: renaming mountains. And I think he's making this more about
Speaker 6: himself than about moving forward. There was no attempt whatsoever
Speaker 6: to try and unify the country, or even to pay
Speaker 6: lip service to the idea that he would be a
Speaker 6: president for all Americans. I don't think Democrats are surprised
Speaker 6: by this, But this was his first opportunity to veer
Speaker 6: away from the campaign messaging, and he opted not.
Speaker 9: To do it.
Speaker 4: Professor, does he need to do that? He's won, He's
Speaker 4: not running again. Can't run again. Maybe he would like
Speaker 4: to run it again, he can't run again. Does he
Speaker 4: need to appeal to all Americans?
Speaker 6: He doesn't need to appeal two years.
Speaker 7: He doesn't need to appeal to them.
Speaker 6: The question is does he want to actually move the
Speaker 6: country in a direction that most Americans and I don't
Speaker 6: mean just a tiny margin, you know, want him to
Speaker 6: move the country in. And typically in their second terms,
Speaker 6: presidents do have some flexibility to do that because they're
Speaker 6: not seeking reelection, and the new nominee won't be seeking
Speaker 6: election for two years. Donald Trump has definitely made this
Speaker 6: more about retribution than unification.
Speaker 5: You know, I think you bring up a good point, Monica,
Speaker 5: come on back in, because I do think about you know,
Speaker 5: I want to say the two Americas, but I think
Speaker 5: there's more than just two. And we know that there
Speaker 5: are folks who are in the market that we know
Speaker 5: there are folks that are wealthy that have done very
Speaker 5: very well over the last couple of years. There are
Speaker 5: a lot of Americans that have not. And so how
Speaker 5: do we really find you know, what do we need
Speaker 5: in terms of a president that can really appeal to
Speaker 5: the broader population that benefits more.
Speaker 3: I think that Trump did that in this election cycle.
Speaker 3: I think that it speaks for.
Speaker 5: Itself appealed, but does he actually follow through with policy
Speaker 5: that helps more Americans.
Speaker 3: Well, that's the important thing about Congress, and people seem
Speaker 3: to forget about the role of Congress. He can do
Speaker 3: a lot with executive orders, one hundred percent, He's going
Speaker 3: to go big on day one. But when we think
Speaker 3: about what can Congress do, especially around the tax piece
Speaker 3: that's really important. We do think that there's going to
Speaker 3: be a full extension of the individual tax components, which
Speaker 3: could be supportive of you know, multiple layers of wealth,
Speaker 3: but you know you're also going to see a continuation
Speaker 3: of support for things like the higher earners when you're
Speaker 3: thinking about no changes to capital gains tax I think
Speaker 3: is a really good example where the most wealthy will
Speaker 3: be able to continue to accruve that wealth. They don't
Speaker 3: think that's a secret. That's something that you know, we
Speaker 3: are focused on and we do consider. But when we're
Speaker 3: looking through the broader agenda and sort of what's top
Speaker 3: of mind for folks, we want to see, you know,
Speaker 3: where can you actually benefit across the board, and one
Speaker 3: of those areas you could surprisingly be in the clean
Speaker 3: energy sector as far as creating new jobs. And I
Speaker 3: really want to emphasize that now the IRA the Inflation
Speaker 3: Reduction Act, about eighty percent of the funding went to
Speaker 3: red states, and in red states where maybe they haven't
Speaker 3: had the same type of economy, the same sort of
Speaker 3: agglomeration that we experience here in New York. Right with
Speaker 3: all these jobs, these are opportunities for those that growth
Speaker 3: sector to continue to employ people in those states. So
Speaker 3: we think, for example, that clean energy might be a
Speaker 3: sleeper agent. You have oil sort of at the when
Speaker 3: you're thinking about messaging oil Drill, baby, drill. All of
Speaker 3: that sounds really exciting because it's going to lower prices
Speaker 3: at the gas pump. Again, that's also would be a
Speaker 3: regressive tax and help lower income folks if they're able
Speaker 3: to lower the price of gas. But what's important about
Speaker 3: that is that if you're lowering the price of gas,
Speaker 3: you're lowering the cost of oil in the markets. Right,
Speaker 3: it will sell off. I think it has sold off
Speaker 3: today if I was correct. And with that, comparatively, we
Speaker 3: think that clean energy could have a nice opportunity to outperform,
Speaker 3: not just on a relative basis, but also because it's
Speaker 3: sensitive to rates, and if we do get some rate
Speaker 3: cuts at the latter half of the year, we could
Speaker 3: see clean energy make a surprise upturn.
Speaker 5: All Right, we're going to leave it on that note. Manica,
Speaker 5: thank you so much. Policy analyst at Morgan Stanley. Jennifer
Speaker 5: Our thanks out to you as well, politics professor at
Speaker 5: the University of Virginia for joining us at our roundtable.
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Speaker 5: All right, folks, we're going to continue to monitor the
Speaker 5: comings and goings at the Capital Wan Arena and certainly
Speaker 5: bring you those incidents and activities that are certainly important
Speaker 5: to the Bloomberg audience in the meantime. Henrietta tre is
Speaker 5: important because she certainly passes through some of the business
Speaker 5: development's political developments and what it means for investors in
Speaker 5: the Bloomberg community. She's co founder and director of economic
Speaker 5: policy at the investment advisory and consultancy firm VEDA Partners.
Speaker 5: Joining us on this inauguration day Monday, Henrietta, as we
Speaker 5: continue to watch the festivities at the Capitol One Arena,
Speaker 5: talk to us about this day and for you what
Speaker 5: has been maybe most important as Donald Trump has now
Speaker 5: begun his second term here.
Speaker 7: Yeah, thanks you so much for having me.
Speaker 8: The most exciting part for me is to watch all
Speaker 8: the staff go into the White House, which of course
Speaker 8: occurs behind the scenes, but starting to see the rollout
Speaker 8: of executive orders of the memos that were released earlier
Speaker 8: in the day, and now obviously President Trump, as expected,
Speaker 8: is going to hold very ceremonial signings of a lot
Speaker 8: of these executive orders that Congress is going to take
Speaker 8: a really long time to pass any legislation after this
Speaker 8: Lincoln Riley Bill, and so this is really going to
Speaker 8: be some of the first one two punch stuff that
Speaker 8: Trump can do during his second term in office.
Speaker 2: Henry had to ask you a question. I've asked a
Speaker 2: few other guests, and we're trying to see if anybody
Speaker 2: knows the answer to it. As we watch the Butler
Speaker 2: Fire Department parade in and of course President Trump was
Speaker 2: shot in Butler County and a member of that fire
Speaker 2: brigade was killed during that attack that took place over
Speaker 2: the course of the summer. We're curious about tariffs and
Speaker 2: trade policy timing. I know that's something you're monitoring very
Speaker 2: closely as well. Jamison Greer, the presidents picked to be
Speaker 2: the next US trade representative. We gather there won't be
Speaker 2: an announcement about trade policy today. What's your sense of
Speaker 2: how that's coming together. Sequencing is a word we've heard
Speaker 2: a lot over the course of our broadcast today. What's
Speaker 2: your sense of the sequencing and we might get some
Speaker 2: more detail on that trade policy.
Speaker 8: Yeah, interesting question, and some of it sort of answered
Speaker 8: or at least implied by the profits circumstances of today.
Speaker 7: Some of the least.
Speaker 8: Well received commentary from President Trump during the earlier ceremonies
Speaker 8: from Republicans in the Senate came around his announcements he
Speaker 8: was about to impose tariffs. And the first thing that
Speaker 8: really comes to my mind is that USCR Jamison Greer
Speaker 8: has not been confirmed yet and the Senators get to
Speaker 8: vote on that. So I think from a sequencing perspective,
Speaker 8: it makes sense to hold his hearings and have his
Speaker 8: vote in the United States Senate before he implements additional tariffs,
Speaker 8: either under Phase one of.
Speaker 7: The US China trade war or even against Canada with DAIPA.
Speaker 8: Whatever happens on tariffs is going to land on Howard
Speaker 8: Lutnick and Commerce and Jamison Greer at USTR, Scott Bessett
Speaker 8: to an extent at Treasury, and those are Senate confirmed roles.
Speaker 8: So some of those are going to start tonight with
Speaker 8: Marco Rubio, we understand, and then throughout the rest of
Speaker 8: his week. So I would expect some initial trade action
Speaker 8: right after those folks get confirmed. Otherwise, those Republican senators
Speaker 8: from farm states who are going to be hit the
Speaker 8: hardest in any retaliatory measures are going to have problems
Speaker 8: and maybe hold up some of his nominees.
Speaker 7: So I think it makes sense to expect this to.
Speaker 8: Date a couple of days before you see a major action,
Speaker 8: aside from just you know, signing some executive orders to
Speaker 8: study the issue of tariffs.
Speaker 4: How do you read into the report that Bloomberg News
Speaker 4: in the Wall Street Journal had earlier today about the
Speaker 4: President not going through with tariffs on day one going
Speaker 4: through with tariffs immediately. Is that instead forming this sort
Speaker 4: of study, doing this sort of study of trade policy
Speaker 4: in order to come up with something that may be
Speaker 4: different than what he talked about on the campaign trail,
Speaker 4: Is that a win for people in the administration such
Speaker 4: as Scott Bessant or more traditional Wall Street folks.
Speaker 9: How are you viewing that?
Speaker 8: Yeah, I would separate Scott Besson from traditional Wall Street folks.
Speaker 8: Scott Besson, of course supports a gradual escalation of tariff's.
Speaker 8: I've heard him say directly five percent increases per month,
Speaker 8: So I wouldn't expect him to be the voice of
Speaker 8: opposing tarifs whole sale.
Speaker 7: That's not in his agenda.
Speaker 8: My expectation is that We have a lot of very
Speaker 8: serious campaign promises that Trump promised to deliver on the
Speaker 8: trail on day one, and most of the pertain to immigration,
Speaker 8: which we're seeing, transgender rights, energy policies. So I think
Speaker 8: there's going to be you know, one hundred different executive orders.
Speaker 7: There's a lot there to chew on.
Speaker 8: When it comes to the tariffs, one of the things
Speaker 8: that I've really wondered about is whether Jamison Greer at
Speaker 8: USTR would adhere to the enforcement mechanism of the Phase
Speaker 8: one trade agreement, which if he does, by my mouth
Speaker 8: map and calculations, if he suggested that he's going to
Speaker 8: pull out of Phase one today, that doesn't necessarily lead
Speaker 8: to tariffs today.
Speaker 7: It leads to tariffs.
Speaker 8: In May June period after you have a series of
Speaker 8: pre set negotiating times and interactions with the Vice Premier
Speaker 8: in China, with other trade officials, the deputy secretaries at USTR.
Speaker 8: So a lot of that is going to depend on
Speaker 8: depend on the specific enforcement mechanism in the trade Phase
Speaker 8: one deal with China where Canada and Mexico are concerned.
Speaker 8: What we've seen in the past is announcements of AIPA tariffs,
Speaker 8: but then a ten day lag period, and then just
Speaker 8: before the lag period in Canada or Mexico have announced
Speaker 8: their retaliation, the tyroffs get pulled off. We saw that
Speaker 8: both with AIPA and with Section two thirty two with Canadis.
Speaker 8: So I think everything is very much on the same trajectory.
Speaker 8: I would caution against being optimistic. You know, five hours
Speaker 8: into Trump's term that we're not going to see tariffs.
Speaker 7: That doesn't really stand a reason to me.
Speaker 5: No, that's fair, that's fair. I will point on our
Speaker 5: live blog Brad Bechtel, head of FX over Jeffries sharing
Speaker 5: his views with our team and saying, well, there's some
Speaker 5: relief in the markets. Again, markets are closed, but we
Speaker 5: are watching futures trade and we did see them move
Speaker 5: a little bit higher, maybe on some relief that maybe
Speaker 5: the tariffs weren't forthcoming, at least not today, and we
Speaker 5: did see the dollar slide. Many still feel tariffs will
Speaker 5: eventually come, so Monday's dollar decline may only be temporary.
Speaker 5: He weighing in on this, Henrietta, how do you your
Speaker 5: clients if they reach out to you and say, okay,
Speaker 5: but what are we supposed to take seriously? When Donald
Speaker 5: Trump Trump talks about President Trump talks about Greenland, or
Speaker 5: Gulf of Mexico becoming Gulf of America, talks about taking
Speaker 5: back the Panama Canal. You know, what is the realistic
Speaker 5: conversation that you have with clients around this.
Speaker 11: Well, when it comes to Greenland, I think a lot
Speaker 11: of the conversation when we talk about it revolves around
Speaker 11: some of the other components that we see from nations
Speaker 11: like Canada and Russia and China.
Speaker 8: Where are we getting minerals from? What is the purpose
Speaker 8: of this Greenland conversation? There's an expectation or view on
Speaker 8: the street that this is more just for show. I'm
Speaker 8: not sure exactly what market moving event would come from
Speaker 8: designating the big the Gulf of Mexico and the Gulf
Speaker 8: of America.
Speaker 7: You know, I'm not sure that.
Speaker 8: You necessarily invest that way, So I don't.
Speaker 7: Spend a lot of time talking about it with clients.
Speaker 7: But we do have some really poor.
Speaker 8: Focus points on things like do you close the Fama Canal?
Speaker 8: Are we really putting tires on Mexico to close the
Speaker 8: immigration border? Things along those lines we focus on for sure.
Speaker 2: Let me ask you lastly about taxes, and it's something
Speaker 2: that we heard from Scott Besson when he was at
Speaker 2: his confirmation hearing. He's saying this was the biggest priority
Speaker 2: for him and for this administration. When don't we see
Speaker 2: the conversation about that among lawmakers begin in earnest on
Speaker 2: extending those Trump era tax.
Speaker 7: Cuts, that is very much well underway.
Speaker 8: You have seen now a number of different sort of
Speaker 8: like working papers from small committee groups and then also
Speaker 8: the broader budget.
Speaker 7: And Ways and Means committees.
Speaker 8: So that conversation is advancing on the House side, because
Speaker 8: of course the House and Senate have two different ideas.
Speaker 8: The Senate wants to move forward with a two track
Speaker 8: reconciliation package that would get Trump a win in the
Speaker 8: first six months of his administration, where the tax bill
Speaker 8: is really more realistically not going to pass until December.
Speaker 7: So I think those conversations are already well under way.
Speaker 8: You can see it with the Salt Caucus going down
Speaker 8: to mar A Lango. That's all about these deficit numbers
Speaker 8: that are going to have to be incurred, how to
Speaker 8: proceed with the budget reconciliation strategy and passing a budget resolution.
Speaker 8: We're very much already seeing that in the works, and
Speaker 8: I think it's really gonna come to a head starting
Speaker 8: probably next week when they have to pick one or
Speaker 8: two reconciliation bills. I'm biased towards the United States Senate
Speaker 8: as a former Senate staffer, so I have eighty percent
Speaker 8: on that we do the two reconciliation bill path. But
Speaker 8: that's really already underway, and I think we're going to
Speaker 8: have to see members move in that direction the next
Speaker 8: couple of days.
Speaker 5: All Right, We're going to leave it on that note, Henrietta,
Speaker 5: thank you so much. Really appreciate you joining us and
Speaker 5: weighing in today. Henrietta Trees, she's co founder and director
Speaker 5: of Economic policy at Veda Partners. Joining us from New Orleans.
Speaker 10: You are listening to the Bloomberg Business Week podcast. Catch
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Speaker 5: In our studio is Stefan Seelig. He's back with us.
Speaker 5: He's managing partner at Bridge Park Advisors, the financing advisory firm.
Speaker 5: Joining us now. You might recall he's been a frequent
Speaker 5: guest for US Undersecretary former Undersecretary of Commerce for International
Speaker 5: Trade at the US Department of Commerce. That was during
Speaker 5: the Obama administration. He also headed the International Trade Administration,
Speaker 5: spending all nearly three decades on Wall Street. As we
Speaker 5: like to say, Stephan, you're this great intersection of public
Speaker 5: private policy. How are you feeling on this inauguration Monday?
Speaker 12: Look, I think Carol, we all have to feel optimistic
Speaker 12: because we're Americans and that's kind of our job, and
Speaker 12: we're all rooting for the president and the new administration.
Speaker 12: He's clearly entering the White House with a whole host
Speaker 12: of challenges, both economic challenges and foreign policy challenges that
Speaker 12: he didn't face in his first go around. And so
Speaker 12: as we say, godspeed.
Speaker 2: What did you learn during the first rodeo that you're
Speaker 2: going to come and kind of refer to this time
Speaker 2: around when it comes to what he's saying, what he's telegraphing,
Speaker 2: How useful is it to you having lived through this before,
Speaker 2: as you think through the implications of his policy proposals.
Speaker 12: You know, Look, and I think that's the question. Are
Speaker 12: they policy proposals? Are they bargaining chips? Is it bluster?
Speaker 12: Is it things he says for self amusement or to
Speaker 12: be vindictive to others, and so I think we have
Speaker 12: to take a fair amount of what the president says
Speaker 12: cum Grano salis.
Speaker 9: As we used to stay in school.
Speaker 12: That being said, you know, the fact is is the
Speaker 12: country is facing a whole raft of challenges that I
Speaker 12: think the American population has felt that political leadership on
Speaker 12: both sides of the aisle has not been effective and addressing.
Speaker 4: Does it look to you like business leaders are getting
Speaker 4: too political? We had a Bloomberg analysis about one point
Speaker 4: three trillion dollars in wealth on stage during that inauguration,
Speaker 4: people like Mark Zuckerberg Elon Musk.
Speaker 12: Well, the most amazing thing, Tim is probably in five companies.
Speaker 9: Yeah exactly. I mean it's like three or four individuals.
Speaker 9: It's like the stock market.
Speaker 5: And it keeps like the mag simon We're happy inaugirl.
Speaker 4: Is that is that a relationship that, in your view
Speaker 4: as a leader, is risky at all to these companies?
Speaker 12: You know, Look, I think companies have to do what
Speaker 12: is best for their companies, their constituents, and their shareholders.
Speaker 12: And I think basically what they are doing is, you know,
Speaker 12: getting behind the president. I think there is a general perception,
Speaker 12: not just in the technology sector that the last administration
Speaker 12: was not particularly pro business, and that was particularly the
Speaker 12: case in the healthcare and pharmaceutical industries, amongst others. And
Speaker 12: I think they're all hopeful that in this administration there's
Speaker 12: going to be a much more business friendly environment. And
Speaker 12: I think, as I start off saying, they're Americans too, uh,
Speaker 12: they're and they're getting behind the president and the administration
Speaker 12: to put their particular companies in the best position that
Speaker 12: they can be in. And that's kind of their jobs.
Speaker 5: You know, Stephan, I keep thinking about, you know, notes
Speaker 5: you shared and what you said when you kicked off
Speaker 5: the conversation about the world that Donald Trump is coming
Speaker 5: into in his second term. It is more complex, it seems,
Speaker 5: there is more volatility. It's not just something we see
Speaker 5: a play out actually in the financial markets to some extent.
Speaker 5: So what's his first test? Is it Russia? Ukraine? Is
Speaker 5: it continuation of the Middle East peace or cease fire?
Speaker 9: Like?
Speaker 5: What is his first test? Do you think on this front?
Speaker 9: You know, I'm not sure.
Speaker 5: You more domestic?
Speaker 12: You know, you do it, Siriatum. I think they're going
Speaker 12: to all come together and he's going to address them.
Speaker 12: I think he's probably Carol going to focus on the
Speaker 12: things where he's likely to be able to be the
Speaker 12: most impactful. So, for example, he's probably learned from his
Speaker 12: North Korea experience that there are certain fights that are,
Speaker 12: you know, not necessarily worth getting into. But I think
Speaker 12: he is going to sense that he has a real opportunity.
Speaker 12: He's got a real opportunity in the Middle East. He's
Speaker 12: got a real opportunity with Russia and the Ukraine. He's
Speaker 12: got a real opportunity to reset our relationship with Europe.
Speaker 12: So I think there's a whole host of both domestic,
Speaker 12: economic and foreign policy opportunities that the President's going to
Speaker 12: go after.
Speaker 2: As a marching band from Middletown, Ohio, which I believe
Speaker 2: is a JD. Van's hometown, makes its way through Capital
Speaker 2: One Arena. Let me ask you about your former job
Speaker 2: at the Commerce Department. We were talking with Henrietta Trades
Speaker 2: a moment ago about waiting to announce trade policy until
Speaker 2: the US Trade Representative is in place. I've been thinking
Speaker 2: a lot about how this economic team works altogether. If
Speaker 2: it's going to be fractious, who's going to call the shots?
Speaker 2: Can you just talk about the relationship between Commerce and
Speaker 2: the US Trade Representative and the White House when it
Speaker 2: comes to hatching and imposing trade policy. How does it
Speaker 2: all work together? How should it all work together?
Speaker 11: Well?
Speaker 12: It is, you know, the bifurcation historically has been that
Speaker 12: the United States Trade Representative was primarily focused on trade
Speaker 12: agreements and negotiating trade agreements, and with the exception maybe
Speaker 12: of the renegotiation of the USMCA, I think everybody expects
Speaker 12: that there'll be very few trade agreements that it's really
Speaker 12: not going to be part of the presidents in this
Speaker 12: administration's trade arsenal. So I think, frankly, the Commerce Department
Speaker 12: will be much more central and central and driving two things,
Speaker 12: which is to create a leveling field for US companies
Speaker 12: to compete most effectively overseas, and to attract foreign direct
Speaker 12: investment into the United States.
Speaker 9: The tariff issue.
Speaker 12: You know, frankly, is not just will not just come
Speaker 12: from both of those departments, but will come from this
Speaker 12: new external external revenue service these taking about. I'm not
Speaker 12: sure how that I'm not sure how that will necessarily
Speaker 12: be different than the you know, customs, customs arrangements that
Speaker 12: already take place. But what I would say is that
Speaker 12: the tariff conversation is not particularly well understood. So the
Speaker 12: President today focused primarily on the revenue raising benefits of tariffs.
Speaker 12: That for sure is true if in fact they're paid,
Speaker 12: because if they're paid, the Treasury then gets the money.
Speaker 12: But he also talked about creating opportunities to have the
Speaker 12: restoring and resourcing of American manufacturing. If because of those tariffs,
Speaker 12: foreign goods are not going to be coming into American
Speaker 12: chores because they're more expensive, then there's not going to
Speaker 12: be the revenue opportunity. It's not going to be collected.
Speaker 12: So it's kind of you can't have it both ways.
Speaker 5: We had an earlier guests who suggested, I can't remember
Speaker 5: who it was that said, maybe he doesn't understand tariffs
Speaker 5: and how they work.
Speaker 8: Well.
Speaker 12: I'm not sure people on both sides of the aisle
Speaker 12: particularly understand it, because Carol, they're quite complex. The other complexity,
Speaker 12: of course, is with tariffs usually come a higher dollar,
Speaker 12: and the President's been very aggressive about not wanting a
Speaker 12: higher dollar. The dollar is already overvalue because it's the
Speaker 12: world's reserve currency, and that will make exports more expensive
Speaker 12: for buyers, and that will further exacerbate the trade deficit
Speaker 12: as US goods exports become more expensive for foreign foreign buyers.
Speaker 12: So none of these things are actually simplistic. And most importantly,
Speaker 12: the benefits of tariffs are many, full, but they're often conflicting.
Speaker 4: I think maybe if President Trump were sitting here listening
Speaker 4: to this, he would say, to you, the idea of
Speaker 4: tariffs is to get more of these goods made here
Speaker 4: in the United States so we don't have to import
Speaker 4: these things. I think an economist would say, well, we
Speaker 4: don't live in a world where that's necessarily efficient because
Speaker 4: of what we do here in the US versus specialties
Speaker 4: outside of the world. Is there, though, a world that
Speaker 4: exists that's a happy medium between the two, where we
Speaker 4: do start to see nearshoring and onshoring from American companies
Speaker 4: that have outsourced manufacturing.
Speaker 12: So I think tim that is exactly the point. So
Speaker 12: if you go back to the economist and the seventeen hundreds,
Speaker 12: David Ricardo, it was quite simplistic, which is, you know,
Speaker 12: everybody should produce and have a comparative advantage. What I
Speaker 12: think we're learning around the world, and where I think
Speaker 12: this debate fundamentally comes down to, is the economic benefits
Speaker 12: of trade may have to be subordinated to some of
Speaker 12: the other important aspects of trade, and that includes primarily employment,
Speaker 12: domestic employment, which has been eviscerated in the United States
Speaker 12: in many rural areas, in manufacturing in particular, because of
Speaker 12: the benefits of tradeational security where there are certain goods
Speaker 12: we don't want to have to rely on end and
Speaker 12: we saw that in the pandemic. So finding that perfect balance,
Speaker 12: I think is exactly what it's going to be the
Speaker 12: nuance of this argument. And the fact is trade has,
Speaker 12: with all the benefits that we all understand for trade,
Speaker 12: it's left a lot of Americans behind, and it has
Speaker 12: left Americans behind in communities that did benefit from globalization,
Speaker 12: and that's exacerbated inequality, and it's created political division that
Speaker 12: I think everybody is recognizing as a real problem in
Speaker 12: this country and around the world.
Speaker 2: Should we be worried about how disorienting it can be
Speaker 2: when major policy changes happen suddenly. So I think about
Speaker 2: trade policy and the opposition of these huge tariffs, which
Speaker 2: are not going to be as I gather, narrowly tailored
Speaker 2: but blunter. I look at immigration and the administration's promised
Speaker 2: to deport, not just hundreds of thousands of people, but
Speaker 2: millions of people. That happening very suddenly, and how that
Speaker 2: might unsettle the labor market. We're talking about something that's
Speaker 2: not going to happen in certainly not a smooth way.
Speaker 2: It's going to be sudden, and I wonder what the
Speaker 2: consequences of making decisions like that are. Policy moves like
Speaker 2: that are yes to the economy, but to markets as well.
Speaker 2: It's going to be sudden and I imagine quite jarring.
Speaker 9: You know, Look, it's one.
Speaker 12: Of the costs of our political system, right, I mean
Speaker 12: other countries around the world. China has the benefit of
Speaker 12: the stability of an ongoing, long term, consistent leadership role,
Speaker 12: but it also has costs. Right, You don't you don't
Speaker 12: have the ability for their populations to elect new leaders
Speaker 12: on a regular basis. So I think, of course there's
Speaker 12: going to be some disruption. But with that disruption cause
Speaker 12: creates the opportunity for change. And I think one of
Speaker 12: the things we're seeing in this election is the American
Speaker 12: people were quite clear is that we need a.
Speaker 9: Change in Washington.
Speaker 12: We need a change in direction, and hopefully that change
Speaker 12: will lead to some of the results that benefit Americans.
Speaker 5: Is the US no longer a superpower or is it
Speaker 5: headed in that direction?
Speaker 12: You know, we are the superpower, Carol at this moment,
Speaker 12: and I think we will continue to be. We have
Speaker 12: unrivaled benefits. So the President talked about our energy self sufficiency.
Speaker 12: We have the most powerful military in the world. We
Speaker 12: have the most innovative economy in the world. We have
Speaker 12: the broadest and deepest capital markets in the world. There
Speaker 12: are so many things that differentia ourselves from every other country.
Speaker 12: That being said, I think the role of the superpower
Speaker 12: is going to change, and so countries are not going
Speaker 12: to be able to rely on us in a blank
Speaker 12: check way. One of the things I think you've heard
Speaker 12: from the President today there is going to be a
Speaker 12: cost associated with the benefits of relying on the United
Speaker 12: States as a superpower, and a lot of the people
Speaker 12: that have benefited from that umbrella are going to have
Speaker 12: to contribute in different ways.
Speaker 5: Is that a good evolution.
Speaker 9: I think it is a good evolution.
Speaker 12: But most importantly, it's a realistic evolution because the world
Speaker 12: has changed since the Cold War, since the end of
Speaker 12: the World War II, and a lot of the world order,
Speaker 12: the liberal world order, which is called which it's often
Speaker 12: referred to, was put in place at the end of
Speaker 12: the Second World War, and the end of the Second
Speaker 12: World War is not the world of twenty twenty five.
Speaker 12: We had the Cold War. After that, the Cold War ended,
Speaker 12: and now we have a different world. We were competing
Speaker 12: with China in a different way. We have various global
Speaker 12: disruptions and competitors who were forming this axis of resistance
Speaker 12: that didn't exist just a handful of years ago. And
Speaker 12: as a result, our systems and our policies are going
Speaker 12: to have to change and adopt to a changing world.
Speaker 4: So you worked in a democratic administration, It was pretty
Speaker 4: remarkable to look up there today and see President Clinton,
Speaker 4: President Bush. You also have President Obama there as well
Speaker 4: as a lot of folks up there who had run
Speaker 4: for president unsuccessfully. What should Democrats be doing right now
Speaker 4: to prepare to take back the White House or win
Speaker 4: more seats in Congress in the next two and four years,
Speaker 4: given that the world has undergone such a major shift,
Speaker 4: and that this country has undergone such a major shift.
Speaker 12: Look, I think the Democrats are rightly licking their wounds
Speaker 12: at the moment, and I think the parts of the
Speaker 12: Democratic Party clearly pulled the last administration too far to
Speaker 12: the left, and there was a wholesale rejection of that,
Speaker 12: and that came across in both social issues and economic
Speaker 12: issues and certain foreign policy issues. And hopefully, and I
Speaker 12: think built Clinton, you mentioned President Clinton on the stage,
Speaker 12: really understood the importance of centrism because we are a
Speaker 12: centrist country and the politics of this country has become,
Speaker 12: as I've said, much more divided. And it would be
Speaker 12: my personal preference for both parties, including the Democratic Party,
Speaker 12: we moved much more towards the center and governed from
Speaker 12: the sen You know.
Speaker 2: I watched a number of these confirmation hearings last week,
Speaker 2: and you know what stood out to me, in part
Speaker 2: from Pete hegxsa's confirmation hearing, is how he'd met with
Speaker 2: no Democratic members of the Senate of that committee. And
Speaker 2: you know, stuff like that happens, It kind of rolls
Speaker 2: by you. But that's like a pretty extraordinary, pretty extraordinary thing,
Speaker 2: and that wasn't the case for every nominee. But what
Speaker 2: does that tell you just about the stability of the
Speaker 2: center that you're talking about the willingness of both of
Speaker 2: these parties to find some common ground, some comedy among
Speaker 2: the two of them and to you know, return to
Speaker 2: a mode in which people get a fair hearing and
Speaker 2: you you listen to the other side and you kind
Speaker 2: of assess a person's biography and skills based on kind
Speaker 2: of a neutral understanding.
Speaker 12: David, it's it's it's very unfortunate that the that that
Speaker 12: we have seen, we're seeing less civility in public discourse
Speaker 12: generally and certainly amongst our political leaders. I know when
Speaker 12: I was getting confirmed from my position by the Finance
Speaker 12: Committee of the United States Senate, would at the time
Speaker 12: was chaired by a Republican or an Hatch who's passed away,
Speaker 12: the Senator from Utah. He went after me in all
Speaker 12: sorts of ways, and at the end of my hearing
Speaker 12: he said, mister Celik, you were more than qualified to
Speaker 12: be the under Secretary of Commerce for the United States
Speaker 12: of America. You will get this committee support and you
Speaker 12: will get confirmed. And it was a very to me
Speaker 12: poignant moment where there was an opportunity to fight for him,
Speaker 12: to make his points in a very public setting, but
Speaker 12: at the end of the day do what he believed
Speaker 12: was the right thing to do and communicate it in
Speaker 12: a highly professional and constructive way. To me, and I
Speaker 12: just hope there are other senators and political leaders in
Speaker 12: the country that would take that as an example.
Speaker 5: Can I ask you, is there too much money in
Speaker 5: politics at this point? And maybe that's why we're not
Speaker 5: necessarily getting policy that benefits more or most of America.
Speaker 9: No, Carol has ever not been money in politics.
Speaker 4: I mean, were you doing this show?
Speaker 9: Is before Rome.
Speaker 4: Socided change something? I mean it allowed these people like
Speaker 4: Elon Musk to go spend two hundred and fifty million dollars.
Speaker 5: It's on a whole other level.
Speaker 12: It's politics and time, right. I mean, you know that
Speaker 12: these processes take too long, but you know you could
Speaker 12: come up with a whole host of things. You can
Speaker 12: add that to the list. The electoral college at the moment,
Speaker 12: that jerry mandering, there's a whole host of things that
Speaker 12: I think in an ideal world we would change for sure.
Speaker 12: And if you look around most of the other major
Speaker 12: democracies in the world, they are not doing it the
Speaker 12: way we're doing it. And so if they're not doing
Speaker 12: it the way we're doing it, you got to scratch
Speaker 12: your head and say, we're really doing.
Speaker 9: It the right way.
Speaker 2: I guess this gets so what we've been talking about,
Speaker 2: is this desire clearly for watching to be fixed or
Speaker 2: made different, And I think that the frustrations are widely
Speaker 2: are widely shared.
Speaker 3: Well, I think it gets.
Speaker 5: To the point too of just having you know, you've
Speaker 5: come on too, and we've talked about, you know, people
Speaker 5: doing really well and if you've been in the stock market,
Speaker 5: if you've been an investor, you've done really well. But
Speaker 5: there are you know, K shaped recovery, the K shaped economy.
Speaker 5: There's so many people who haven't benefited benefited, and so
Speaker 5: how do we get back there? I mean, is Donald
Speaker 5: Trump a step in that right direction?
Speaker 9: Well?
Speaker 12: I think I think certainly he is recognizing it. This
Speaker 12: goes back to your first question about you know, what's
Speaker 12: going to what's going to be the actual policies and
Speaker 12: what's going to be the outcome as opposed to the
Speaker 12: campaign rhetoric, and that we will have to see. But
Speaker 12: I think, you know, this gets back to the ten point,
Speaker 12: which is pure economic theory works in the classroom. We're
Speaker 12: not in a classroom. And for for example, China you know,
Speaker 12: doesn't play really by the wto rules that everybody that
Speaker 12: is that everybody is is was trying to abide by
Speaker 12: which broke the system. And as a result of that,
Speaker 12: you know, we really are going to have to be
Speaker 12: much more realistic about and commercial about how we adopt
Speaker 12: and implement policies and understand that whether it's tariff's trade
Speaker 12: the dollar, that there are consequences for a whole host,
Speaker 12: for a whole section of our population who've got to
Speaker 12: be quite sensitive to.
Speaker 4: We certainly saw that portion of the population, and we
Speaker 4: also saw the message loud and clear during this last
Speaker 4: election that what a lot of people thought was working
Speaker 4: was not working and they wanted President Trump back. I'll
Speaker 4: ask you the same question I asked ed Price earlier.
Speaker 4: What happens if those people's lives do not improve over
Speaker 4: the next four years. What's sort of the next evolution
Speaker 4: of this boy.
Speaker 12: I'm not a particular alarmist him, but what I would
Speaker 12: say is, you know, you have no other choice but
Speaker 12: to kind of go back to the drawing board, and
Speaker 12: then you have another election.
Speaker 9: I think it's as simple. It's as simple as that.
Speaker 5: Well, and I do wonder about the kind of back
Speaker 5: and forth that we've seen coming off of Barack Obama
Speaker 5: and then going to Donald Trump and then going to
Speaker 5: Joe Biden. Yeah, right, And it just speaks to you, right,
Speaker 5: the American dissatisfaction, at least some Americans saying, listen, this
Speaker 5: is not.
Speaker 12: The way Foks carol that to me, and that, by
Speaker 12: the way, is not an American point, right. You're seeing
Speaker 12: that in the United Kingdom and elsewhere. And I think that,
Speaker 12: to me is the point, which is political leaders globally
Speaker 12: have failed their populations. And that is a global phenomenon.
Speaker 12: And I think the single thing that I am most
Speaker 12: excited about as President Trump takes office is the potential
Speaker 12: benefits of a real disruptive force is going to do
Speaker 12: something different than traditional Democrats or Republicans might have done.
Speaker 12: And I think we really are ready for some disruption.
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