Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I'm Marie joined us
Speaker 1: now in Washinton with a special guest. I am Marie.
Speaker 1: Good morning John.
Speaker 2: That's right, I'm joined with a friend of the show,
Speaker 2: David Malpass.
Speaker 1: He's the former head of a World Bank.
Speaker 2: Of course, he was the head of the bank when
Speaker 2: Trump was in office in twenty nineteen.
Speaker 1: David, thank you so much for joining us.
Speaker 2: So we were talking about all morning this trade anxiety
Speaker 2: really going into the weekend because Trump yesterday said that
Speaker 2: when it comes to the pause on Canada Mexico, the
Speaker 2: twenty five percent those tariffs will go through, and then
Speaker 2: he added an additional ten percent on China.
Speaker 1: How should we be reading this?
Speaker 3: A big change in the direction of trade, But then
Speaker 3: the trading system wasn't working, and.
Speaker 1: So you think those tariffs hold for true?
Speaker 3: I think those this time the tariffs will hold. But
Speaker 3: that also begins this process of trying to adjust the
Speaker 3: whole global trading system into one that works better and
Speaker 3: specifically better for the US. This is going to quickly,
Speaker 3: I think, get into intellectual property rights and the other
Speaker 3: trading practices that China has been involved in, also transhipment
Speaker 3: and the issues of back doors into the United States
Speaker 3: with trade. So I think those will go on for months.
Speaker 2: We already know those conversations are happening in terms of
Speaker 2: the back door between Mexico and China.
Speaker 1: Almost sixty percent of.
Speaker 2: US adults though Bloomberg did a survey with Harris Pohl,
Speaker 2: almost sixty percent of US adults expect Trump's tariffs will
Speaker 2: lead to higher prices. How concerned review about this stoking
Speaker 2: inflation and potentially stagflationary fears creeping into this economy.
Speaker 3: Products are going up and down all the time, so
Speaker 3: some products will go up. But then the question is
Speaker 3: what does the US economy, this amazing economy that we have,
Speaker 3: what does it do to react? And I think there
Speaker 3: will be a huge rush by US companies to make
Speaker 3: things in the US and also to find other sources.
Speaker 3: They're already doing that. Companies are preparing. They've known this
Speaker 3: is coming. There's been some preparation time, and so they'll
Speaker 3: make adjustments and that will create jobs in new areas,
Speaker 3: which is the point on net. You get that. Plus
Speaker 3: the bigger changes that President Trump is doing is on
Speaker 3: the regulatory side, on the tax side, those are positive
Speaker 3: for output in the US. One of the important spots
Speaker 3: is energy, and I think there really will be a
Speaker 3: lot more energy produced by the US, which also is
Speaker 3: stimulative for growth.
Speaker 2: So you see the economy right now in a good place.
Speaker 2: So do you think the FED then should be on
Speaker 2: hold for the rest.
Speaker 1: Of the year.
Speaker 3: I would like to see a lower yield curve across
Speaker 3: the board, that's on the short end and the long end,
Speaker 3: and I think to do that you have to exude
Speaker 3: confidence in the US dollar and in your ability to
Speaker 3: control your spending. That wasn't being done in the previous administration.
Speaker 3: So there are opportunities now to get a lower yield
Speaker 3: curve across the board. They're not embarked on that yet.
Speaker 3: It's maybe a little early.
Speaker 1: But we know what Treasury Secretary said.
Speaker 2: He wants a lower ten yure yield, and that seems
Speaker 2: to be a key point in the markets that this
Speaker 2: administration is watching. What do you think they want to
Speaker 2: see and how can they achieve it?
Speaker 3: Stick with the eye on the prize that is abundance
Speaker 3: and you want common sense. If you really apply those
Speaker 3: two things, you will get a lower yield curve. That's
Speaker 3: because the US economy is so strong. What we're talking
Speaker 3: about with treasury rates both shortened and to an extent.
Speaker 3: Long end is is that your your confidence in your
Speaker 3: ability to pay and to pay on that and be consistent,
Speaker 3: and the US can up that these are supposed to
Speaker 3: be the riskless rates, so they can be lower if
Speaker 3: you if you create confidence within the economy and within
Speaker 3: the dollars.
Speaker 2: Do you think the FED should be cutting into a
Speaker 2: good economy.
Speaker 3: We can hope that the deregulation is implemented, the energy
Speaker 3: production is implemented, and the FED will have an opportunity
Speaker 3: to be cutting into a deregulating, faster, growing, more efficient economy.
Speaker 1: Yes, we have seen with the jojeffect.
Speaker 2: President Slash take the US out of the who usaid commitments.
Speaker 1: You used to run the World Bank. Do you think
Speaker 1: the World Bank is next?
Speaker 3: I think there'll be a look at all of the
Speaker 3: international organizations. What is the US getting for them, what's
Speaker 3: the governance structure of them? And are they doing work
Speaker 3: that's actually necessary for governments to be doing. One challenge
Speaker 3: for the IMF and the World Bank is they were
Speaker 3: created in nineteen forty four, so you can imagine that
Speaker 3: their mission has grown vague, that they're older. They served
Speaker 3: the purpose that they were originally set up to. So
Speaker 3: one of the challenges for all these organizations is to
Speaker 3: stay small and stay on mission, and I think that
Speaker 3: needs to be done.
Speaker 1: David, thanks so much for your time this morning.
Speaker 2: Jonathan, of course the former head of the World Bank
Speaker 2: under Trump one point zero David Malpass ending there that
Speaker 2: potentially imf World Bank maybe maybe next when it comes
Speaker 2: to how much the US might support them.
Speaker 1: Amory, I appreciate the update, Amrie that down in Washington,
Speaker 1: d C.