WEBVTT - US, China Agree to Continue Talks on Tariff Truce Extension 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.920 --> 0:00:13.240 This is Bloomberg business Week Daily reporting from the magazine 0:00:13.240 --> 0:00:17.880 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.920 --> 0:00:22.800 and trends shaping today's complex economy. Plus global business, finance 0:00:22.840 --> 0:00:26.520 and tech news as it happens. The Bloomberg Business Weekdaily 0:00:26.640 --> 0:00:31.600 Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.159 --> 0:00:35.400 We US and Chinese negotiators have concluded their latest round 0:00:35.760 --> 0:00:38.360 of talks, a trade talks, of course, that were underway 0:00:38.360 --> 0:00:41.240 in Stockholm, with an agreement to extend their tart truth 0:00:41.479 --> 0:00:44.360 truth or so it seems. We have some questions here. 0:00:44.520 --> 0:00:48.239 US Treasury Secretary Scott Besson and US Trade Representative Jamison 0:00:48.320 --> 0:00:51.479 Greer holding a press conference last hour in Stockholm, the 0:00:51.560 --> 0:00:54.680 Treasury Secretary saying an extension not a done deal. 0:00:55.560 --> 0:00:59.319 If we boomerang back to the April second level, if 0:00:59.360 --> 0:01:03.640 they would go to thirty four. I noticed as the 0:01:03.720 --> 0:01:10.039 earlier question said that the Chinese Deputy minister did say 0:01:10.319 --> 0:01:14.320 that we had agreed on a pause. We have not. 0:01:14.319 --> 0:01:18.920 Nothing is agreed until we speak with President Trump. He's 0:01:18.959 --> 0:01:21.960 on Air Force one, I believe, doing a press conference 0:01:22.040 --> 0:01:25.760 right now, and we will be seeing him in the 0:01:25.760 --> 0:01:28.759 Oval tomorrow to go over the deal with him, and 0:01:28.840 --> 0:01:32.720 then he'll decide if the pause continues. 0:01:32.840 --> 0:01:34.959 As is all right. That, of course, was US Treasury 0:01:35.000 --> 0:01:37.800 Secretary Scott bess And earlier in Stockholm with more on 0:01:37.840 --> 0:01:41.000 where we are. Bloomberg News correspondent Oliver Crook was in 0:01:41.040 --> 0:01:44.160 the room where it happened in Stockholm, where that press 0:01:44.160 --> 0:01:47.880 conference was went underway just about thirty thirty five minutes ago. 0:01:48.200 --> 0:01:51.320 Oliver pause, no pause. I think we're all still kind 0:01:51.360 --> 0:01:54.280 of scratching our head to understand exactly what was agreed to. 0:01:54.840 --> 0:01:56.360 Yeah, I think we were too a little bit, and 0:01:56.400 --> 0:01:58.840 that was helpful for the Secretary of the Treasury to 0:01:58.880 --> 0:02:00.600 give a little cast, a little bit more light on that. 0:02:00.640 --> 0:02:02.680 You know, far be it from Donald Trump to withhold 0:02:02.680 --> 0:02:05.720 any suspense from us. Basically, the two days of negotiations 0:02:05.720 --> 0:02:08.160 that we had by the Chinese Vice Premier, the US 0:02:08.360 --> 0:02:12.359 Treasury Secretary I'm the ambassador on trade, Jamison Greer ended 0:02:12.600 --> 0:02:14.960 a couple hours ago. Then they briefed the media and 0:02:15.000 --> 0:02:17.560 it ended, it seemed initially by the Chinese saying that 0:02:17.600 --> 0:02:21.040 they basically a ninety day pause. The continuation of the 0:02:21.080 --> 0:02:23.720 truce between the United States and China that that would 0:02:23.720 --> 0:02:25.520 continue for another period of time. 0:02:25.560 --> 0:02:27.040 They didn't specify the period of time. 0:02:27.280 --> 0:02:29.120 Then we started to hear from the Americans with a 0:02:29.160 --> 0:02:32.480 slightly different story that basically this is still conditional to 0:02:32.560 --> 0:02:35.680 Donald Trump's approval. We understand that Scott Befson did speak 0:02:35.919 --> 0:02:38.760 with Donald Trump after the conversations before he gave that 0:02:38.800 --> 0:02:40.880 press briefing, but he's going to give a more complete 0:02:40.880 --> 0:02:43.960 briefing a little bit tomorrow in the Oval Office in 0:02:44.000 --> 0:02:45.880 the White House in order to get the final sign 0:02:45.919 --> 0:02:48.400 off from Donald Trump, who may you know, change his mind, 0:02:48.400 --> 0:02:50.640 may demand something else. But again, we the deadline that 0:02:50.639 --> 0:02:52.960 we're facing here is August the twelfth, when these terrif 0:02:53.000 --> 0:02:53.880 rates will shoot. 0:02:53.639 --> 0:02:54.200 Right back up. 0:02:54.280 --> 0:02:56.080 So for the market, this is really a crucial thing 0:02:56.120 --> 0:02:56.919 to get over the line. 0:02:56.960 --> 0:03:00.160 Interestingly enough, at least the equity market not reacting much 0:03:00.160 --> 0:03:02.799 to this news. Perhaps it was priced in, perhaps there 0:03:03.280 --> 0:03:05.560 was the expectation that there would be some sort of 0:03:05.600 --> 0:03:08.399 extension here. I want to go to rare Earth, specifically 0:03:08.440 --> 0:03:11.160 Oliver and what we learned about the way that rare earths, 0:03:11.200 --> 0:03:13.640 not just today but really over the last few months, 0:03:13.680 --> 0:03:16.639 have taken center stage when it comes to these negotiations, 0:03:16.680 --> 0:03:17.600 what do we know about that? 0:03:17.840 --> 0:03:19.359 Well, what I think is interesting is that there were 0:03:19.360 --> 0:03:22.520 concessions on rare earth. There were concessions in exchange for that, 0:03:22.639 --> 0:03:26.000 on the Age twenty chips by Nvidia, by the United States, 0:03:26.000 --> 0:03:28.360 the allowing of selling them into China. And we should 0:03:28.360 --> 0:03:30.680 say that one could interpret this as a sort of 0:03:30.720 --> 0:03:32.919 act of goodwill on both sides in order to try 0:03:32.919 --> 0:03:35.200 to make progress. But the reality of the situation is 0:03:35.360 --> 0:03:37.760 that for each of these economies, they're dependent on the other. 0:03:37.800 --> 0:03:40.520 There is no alternative for these technologies. This is not 0:03:40.560 --> 0:03:42.920 just an act of good will. This is the leverage 0:03:42.920 --> 0:03:45.000 that China holds over the United States. It is the 0:03:45.080 --> 0:03:47.400 leverage that the United States holds over China. And they 0:03:47.400 --> 0:03:49.920 did manage to make some breakthroughs on that. And again 0:03:50.000 --> 0:03:52.000 this is something that was active in the discussions with 0:03:52.080 --> 0:03:54.320 the delegation from China and the United States. 0:03:54.320 --> 0:03:55.640 Today we heard from Jamison. 0:03:55.360 --> 0:03:58.520 Greer saying that I don't want to talk about magnets basically. Ever, again, 0:03:58.560 --> 0:04:01.280 as far as they're concerned, the magnets should be flowing. 0:04:01.320 --> 0:04:02.560 They are flowing now, and. 0:04:02.480 --> 0:04:04.000 That this should be a close topic and that they 0:04:04.040 --> 0:04:06.320 can then put that aside in order to make progress 0:04:06.320 --> 0:04:09.320 on the many other issues that are sort of large 0:04:09.360 --> 0:04:11.560 issues between the China and the United States, they'd like 0:04:11.640 --> 0:04:13.840 to basically put into it, and as far as they're concerned, 0:04:13.880 --> 0:04:15.800 they hope it's done all right, Oliver. 0:04:16.320 --> 0:04:19.560 Back in June, President she of China, we know, invited 0:04:19.600 --> 0:04:22.760 President Trump to Beijing. Are the two leaders talking at 0:04:22.760 --> 0:04:26.480 all during these talks? Are they just waiting until I 0:04:26.480 --> 0:04:28.640 don't know the final terms. What's what's kind of going 0:04:28.640 --> 0:04:29.599 on behind the scenes here? 0:04:30.080 --> 0:04:32.080 Yeah, I mean our impression is that the last time 0:04:32.080 --> 0:04:33.960 that they spoke, this came up during the press conference, 0:04:34.000 --> 0:04:36.200 was in the call that they held in June. We 0:04:36.279 --> 0:04:39.440 understand that Shijiping did invite Donald Trump and the first 0:04:39.520 --> 0:04:42.720 Lady Millennia Trump to China at some point. There has 0:04:42.720 --> 0:04:44.760 been some discussions today. I think there was a Donald 0:04:44.760 --> 0:04:48.279 Trump truth saying that basically he's not seeking a discussion 0:04:48.320 --> 0:04:50.880 with President Jijenping, but he has been invited. But this 0:04:50.920 --> 0:04:52.600 is really at the crux of the issue here, right. 0:04:52.640 --> 0:04:55.080 The Chinese, in the last few decades have been building 0:04:55.080 --> 0:04:56.640 out their economy, have been building out. 0:04:56.480 --> 0:04:58.000 Their status on the global stage. 0:04:58.080 --> 0:05:00.800 They don't want to be seen sort of bowing theatrically 0:05:01.040 --> 0:05:03.520 to the United States on these trade issues. The Europeans 0:05:03.520 --> 0:05:05.480 have much less of a problem with that. They're being 0:05:05.560 --> 0:05:07.760 much more pragmatic about these sorts of things. But for 0:05:07.839 --> 0:05:09.720 the Chinese, this is not just about trade. This is 0:05:09.760 --> 0:05:12.520 about their status on the global stage. And I'll remind 0:05:12.520 --> 0:05:15.560 you that in Trump won the first Trump administration, these 0:05:15.600 --> 0:05:18.479 trade negotiations between the Chinese and the United States, they 0:05:18.520 --> 0:05:21.360 were held in Washington, d C. These discussions today are 0:05:21.400 --> 0:05:24.719 being held in Geneva, the United Kingdom, and Stockholm in 0:05:24.800 --> 0:05:27.560 neutral sort of third party places. And we've seen what 0:05:27.640 --> 0:05:30.400 China's appetite is to escalate this trade where if they 0:05:30.400 --> 0:05:32.080 have to, they shot the tariff up to one hundred 0:05:32.080 --> 0:05:33.800 and twenty five percent, which is how we got to 0:05:33.839 --> 0:05:35.960 this truce. But that is the sort of dynamic going 0:05:35.960 --> 0:05:38.280 into this. Both leaders want to appear strong and need 0:05:38.320 --> 0:05:39.599 to exert their leverage on the other. 0:05:40.279 --> 0:05:44.120 What are the questions that remain unanswered at this point 0:05:44.240 --> 0:05:46.760 in terms of the details, the nitty gritty and what 0:05:46.920 --> 0:05:48.279 really needs to be hashed out here. 0:05:49.080 --> 0:05:51.279 Yeah, so, I mean, there are a panoply of different issues. 0:05:51.279 --> 0:05:53.880 For example, there's the issue of TikTok right, there is 0:05:53.920 --> 0:05:57.240 a buyer potentially for TikTok in the United States, so 0:05:57.279 --> 0:05:59.599 says Donald Trump, the Chinese still need to give a 0:05:59.720 --> 0:06:01.680 nod to sell that. That is apparently something that did 0:06:01.680 --> 0:06:04.080 not come up in these conversations. There is the question 0:06:04.120 --> 0:06:06.440 of fentanyl Bess and says that he is not pleased 0:06:06.440 --> 0:06:09.000 with sort of how things have been progressing there. 0:06:09.200 --> 0:06:10.440 China could still be doing more. 0:06:10.480 --> 0:06:13.080 I mean, there is the issue of Russia, which increasingly 0:06:13.120 --> 0:06:15.839 we've seen Donald Trump change his position on Russia and 0:06:15.960 --> 0:06:19.599 Vladimir Putin, and we had a large discussion apparently between 0:06:19.600 --> 0:06:23.040 the two delegations today on the question of Russia and 0:06:23.200 --> 0:06:26.440 Scott Besson again airing their displeasure at the continued buying 0:06:26.760 --> 0:06:29.200 of fossil fuels both from Russia and China, but also 0:06:29.279 --> 0:06:32.680 that dual use military technology that they're seeing increasingly on 0:06:32.720 --> 0:06:35.640 the battlefield in Ukraine. So these were active discussions. And 0:06:35.680 --> 0:06:38.080 then there's also this question of the secondary sanctions that 0:06:38.120 --> 0:06:41.000 Trump is now talking about imposing on people who buy 0:06:41.040 --> 0:06:43.760 crude oil from Russia if Putin does not come to 0:06:43.800 --> 0:06:45.800 the negotiating table in the next ten days. 0:06:45.960 --> 0:06:47.240 This came up in the. 0:06:47.120 --> 0:06:49.440 Press conference and when asked you know whether or not 0:06:49.480 --> 0:06:52.560 the Chinese position had altered. Scott Besson said, basically, the 0:06:52.640 --> 0:06:54.440 Chinese take their sovereignty very seriously. 0:06:54.440 --> 0:06:56.040 They don't really want to be told what to do. 0:06:56.200 --> 0:06:58.200 And if they want to pay one hundred percent tariffs 0:06:58.360 --> 0:07:01.080 as a consequence of buying Russian oil, than they will. 0:07:01.279 --> 0:07:04.840 Secretary of the Treasury Scott Essen said, we understand China's 0:07:04.880 --> 0:07:08.240 agenda much better. What is really the Chinese agenda? What 0:07:08.320 --> 0:07:10.760 is really the US agenda? Is it just for both 0:07:10.760 --> 0:07:12.320 to kind of get wins here ultimately. 0:07:12.720 --> 0:07:14.600 Well, what's interesting is again what we see in the 0:07:14.640 --> 0:07:16.320 dynamic with the European Union. 0:07:16.080 --> 0:07:16.880 And the United States. 0:07:16.960 --> 0:07:19.280 You have a situation with Japan, the UK, the EU 0:07:19.320 --> 0:07:21.800 where they almost want to appear to be giving more 0:07:21.840 --> 0:07:24.440 to Trump than they are sort of potentially giving these 0:07:24.440 --> 0:07:26.680 sort of you know, big, sort of sweeping statements of 0:07:26.680 --> 0:07:29.240 committing to buying you know, seven hundred and fifty billion 0:07:29.280 --> 0:07:33.160 dollars of energy, you know, investment pledges of six hundred billion. 0:07:33.280 --> 0:07:35.240 These are sort of big concessions. But again, there is 0:07:35.280 --> 0:07:37.080 a lot of room to fudge these sorts of things. 0:07:37.240 --> 0:07:39.360 With China, you have sort of the opposite dynamic where 0:07:39.400 --> 0:07:41.560 the Chinese do not want to appear to be giving more. 0:07:41.640 --> 0:07:44.000 They want to appear to be giving less. And I 0:07:44.040 --> 0:07:46.600 think that really is the tone in these discussions. And 0:07:46.600 --> 0:07:48.400 I think that again, what this meeting was supposed to 0:07:48.480 --> 0:07:50.720 do is to kick the can down the road another 0:07:50.800 --> 0:07:53.160 ninety days. You didn't get that today. I think that 0:07:53.200 --> 0:07:55.880 everyone is hopeful, and we should say overall, the tone 0:07:55.920 --> 0:07:58.240 that we got from this press conference from the ambassador, 0:07:58.480 --> 0:08:00.680 from the Treasury Secretary, they were saying, these were very, 0:08:00.760 --> 0:08:03.040 very constructive discussions, and even if we didn't get a 0:08:03.080 --> 0:08:05.400 deal today, they're sort of were signalings maybe why you're 0:08:05.400 --> 0:08:07.560 seeing modest reaction in the market that they will get 0:08:07.560 --> 0:08:08.480 it over the line, right, And. 0:08:08.480 --> 0:08:10.080 We know another thing that will be a focal point 0:08:10.160 --> 0:08:12.160 is the Treasury Secretary say that they'll meet with the 0:08:12.160 --> 0:08:14.640 President in the Oval Office tomorrow. All Right, Gonna leave 0:08:14.640 --> 0:08:17.840 it there, Oliver, Thank you so much. Oliver Crook, Bloomberg 0:08:17.840 --> 0:08:19.679 News out there in Stockholm. 0:08:19.920 --> 0:08:23.920 You're listening to the Bloomberg Business Weekdaily Podcast. Catch us 0:08:24.000 --> 0:08:27.440 live weekday afternoons from two to five pm Eastern Listen 0:08:27.480 --> 0:08:31.000 on Apple CarPlay and Android Auto with the Bloomberg Business app, 0:08:31.160 --> 0:08:36.400 or watch us live on YouTube, Mac. 0:08:36.559 --> 0:08:36.920 I'll about you. 0:08:37.000 --> 0:08:37.560 Let me drive. 0:08:37.800 --> 0:08:42.880 Oh no, no, no, no, this is not a toy, honey. 0:08:42.720 --> 0:08:43.360 Please. 0:08:45.040 --> 0:08:53.600 Lest I want to drive. It's a good question. This 0:08:54.000 --> 0:08:56.319 is the drive to the clothes plunks for me. 0:08:56.760 --> 0:08:59.840 Well, Ja don on Bloomberg Radio. 0:09:00.040 --> 0:09:02.160 All right, TikTok, everybody, just about eighteen minutes to go 0:09:02.240 --> 0:09:04.719 until we wrap up the trade on this Tuesday. It's 0:09:04.800 --> 0:09:06.959 kind of fomcee because we know. 0:09:06.920 --> 0:09:08.600 The Fed is fed Tuesday. 0:09:09.320 --> 0:09:11.920 For it is kind of ish. They began their two 0:09:11.960 --> 0:09:12.760 day meeting today. 0:09:12.880 --> 0:09:13.679 Yeah. 0:09:13.720 --> 0:09:13.959 For J. 0:09:14.120 --> 0:09:15.440 Powell, every day is a FED day. 0:09:15.600 --> 0:09:17.120 Yeah, I guess it is. 0:09:17.520 --> 0:09:20.199 Some days, Mike's key. Every day is a FED day. 0:09:20.040 --> 0:09:22.280 Some days a construction day. Some days I mean a 0:09:22.400 --> 0:09:22.959 pressure day. 0:09:23.000 --> 0:09:23.680 We'll talk about that. 0:09:23.960 --> 0:09:26.319 We do have stocks hovering near their loads of the session. 0:09:26.360 --> 0:09:29.760 We did see yields ticking down a little bit. We 0:09:29.760 --> 0:09:32.120 had a lot of economic news that came our way. 0:09:32.200 --> 0:09:35.000 Let's get to it with Danielle di Martino Booth. She 0:09:35.120 --> 0:09:38.480 is CEO and chief strategist of QI Research, formerly at 0:09:38.480 --> 0:09:41.760 the Dallas Fed. Back here in our Bloomberg Interactive Brokers studio. 0:09:41.840 --> 0:09:44.240 Nice to have you here. How are you. I'm doing 0:09:44.400 --> 0:09:45.079 very well today. 0:09:45.080 --> 0:09:48.920 How are you doing okay to be here, counting my blessings, happy, 0:09:48.920 --> 0:09:50.560 my children are healthy, all of those things. 0:09:50.640 --> 0:09:53.200 Yeah, I agree, right like every day. Those are the 0:09:53.200 --> 0:09:56.319 things that certainly matter and make us feel much better. 0:09:56.360 --> 0:09:59.559 Having said that, we're thinking about the FED and kind 0:09:59.600 --> 0:10:04.440 of the late that lays ahead of them, or that 0:10:04.480 --> 0:10:08.479 they're considering right now, the plate of economic data, anecdotal 0:10:08.600 --> 0:10:11.960 data news from the White House a day where we 0:10:12.080 --> 0:10:15.080 think there's an extension between US China talks, but it 0:10:15.200 --> 0:10:18.600 sounds like that hasn't been confirmed quite yet. What do 0:10:18.600 --> 0:10:20.000 you think is top of mind for the FED as 0:10:20.000 --> 0:10:22.319 they are sitting and meeting. You know, there's a lot 0:10:22.360 --> 0:10:22.760 going on. 0:10:23.360 --> 0:10:26.520 I think there's probably a sense of despondency and regret 0:10:26.640 --> 0:10:27.199 right now. 0:10:27.040 --> 0:10:27.560 At the FED. 0:10:27.800 --> 0:10:31.760 I think that the full array of data would have 0:10:31.800 --> 0:10:35.840 them cutting rates tomorrow if not for you know, the 0:10:36.080 --> 0:10:39.880 constancy of the humiliation coming out of the White House. So, 0:10:40.440 --> 0:10:42.960 I mean, you don't see the labor differential in the 0:10:43.200 --> 0:10:47.680 Consumer Confidence report decline for seven months, which it did today, 0:10:47.800 --> 0:10:49.800 Jobs hard to get rose up to the highest since 0:10:49.800 --> 0:10:51.640 March of twenty twenty one. You don't see that outside 0:10:51.640 --> 0:10:53.600 of We've never seen it outside of recession. 0:10:54.040 --> 0:10:57.040 So what I'm hearing you say is that the pressure 0:10:57.080 --> 0:10:59.360 from the White House is to ky rates is having 0:10:59.360 --> 0:11:01.439 the exact opposite effect on the Federal Reserve. 0:11:01.520 --> 0:11:02.880 It absolutely is. 0:11:02.960 --> 0:11:04.440 I mean, at this point it's kind of a matter 0:11:04.480 --> 0:11:07.200 of integrity because you don't want to appear that you're 0:11:07.240 --> 0:11:10.240 cow towing, acquiessing, whatever you want to call it. But 0:11:10.400 --> 0:11:12.440 it's to the detriment of the of the real economy. 0:11:12.559 --> 0:11:15.000 And that's exactly what we're seeing, and for heaven's sake, 0:11:15.040 --> 0:11:18.120 it's on both sides of the dual mandate. When we 0:11:18.160 --> 0:11:20.840 had case Shiller hit this morning, three months ago, the 0:11:20.840 --> 0:11:23.520 three month annualized rate was plus one point six percent. 0:11:23.760 --> 0:11:26.520 This morning, the three month annualized rate was negative three 0:11:26.600 --> 0:11:29.840 point seven three percent. There is a fast decline in 0:11:29.880 --> 0:11:32.840 shelter inflation going on, and that is the biggest input 0:11:32.880 --> 0:11:36.240 to CPI. So the Fed is winning big on the 0:11:36.240 --> 0:11:38.640 inflation front and it is losing on the labor front. 0:11:38.800 --> 0:11:41.840 So if the Fed can't cut tomorrow as a result 0:11:41.880 --> 0:11:46.559 of politics fifty basis points in September and signal that 0:11:46.600 --> 0:11:47.199 they're doing that. 0:11:47.400 --> 0:11:50.720 From Jackson Hall, is it twenty twenty four. 0:11:51.320 --> 0:11:52.600 It's not. It's twenty twenty five. 0:11:52.640 --> 0:11:54.040 I know, but that would be an exact repeat, now, 0:11:54.040 --> 0:11:54.800 wouldn't it. 0:11:54.800 --> 0:11:56.640 It would be it would be do you think they 0:11:56.640 --> 0:11:57.199 should do that? 0:11:57.840 --> 0:11:59.880 I think they're going to end up doing that. 0:12:00.280 --> 0:12:04.360 And you know, I'll add another little tidbit on politics. 0:12:05.600 --> 0:12:09.600 Just because Waller and Christopher Waller and Michelle Bowman are 0:12:09.640 --> 0:12:13.480 Trump appointees, I don't think that should necessarily negate their 0:12:13.559 --> 0:12:15.000 expected descents tomorrow. 0:12:15.320 --> 0:12:15.559 Well. J. 0:12:15.720 --> 0:12:17.960 Powell is a Trump appointing, of course he was. 0:12:18.600 --> 0:12:22.960 Of course he was, and to thumping Senate votes that 0:12:23.000 --> 0:12:27.160 were even almost as thumping when he was reconfirmed. So 0:12:27.240 --> 0:12:31.360 he's very much a bipartisan type of FED chair. Again, 0:12:31.400 --> 0:12:33.640 it's a shame. It's a shame that they're not able 0:12:33.720 --> 0:12:34.959 to act tomorrow. 0:12:35.960 --> 0:12:41.160 Danielle, do you think the presidential policies and certainly how 0:12:41.160 --> 0:12:47.000 they were presented in terms of tax cuts and spending, 0:12:47.480 --> 0:12:50.600 that they would be good for the economy? And we 0:12:50.640 --> 0:12:52.679 certainly had a guest on yesterday who thinks that there 0:12:52.880 --> 0:12:56.160 will be somewhat stimulative and that the FED doesn't necessarily 0:12:56.880 --> 0:13:01.040 need to be cutting rates at this point. To be fair, 0:13:01.200 --> 0:13:03.280 we do have an extension on this US China trade deal, 0:13:03.320 --> 0:13:05.680 so we don't know exactly what this is going to 0:13:05.679 --> 0:13:08.400 play out. And to be fair, we do know that 0:13:08.559 --> 0:13:11.559 tariffs are going to be higher they already have been, 0:13:11.960 --> 0:13:15.160 So why wouldn't it be smart for the Fed to 0:13:15.240 --> 0:13:18.920 maybe hold back until they really know what they're dealing with, 0:13:20.000 --> 0:13:21.319 because it would be terrible right to. 0:13:21.240 --> 0:13:22.960 Have the Fed cut and they have to raise rates again. 0:13:23.000 --> 0:13:25.880 It would be Arthur Burns all over again and the reducs. 0:13:25.920 --> 0:13:30.400 And I completely understand that. But your vacation intentions are falling. 0:13:31.160 --> 0:13:34.800 Hilton just announced negative one point five percent year over 0:13:34.920 --> 0:13:38.800 year for revenue per available room. Domestic air travel is down, 0:13:40.040 --> 0:13:42.600 Spending on services is down as much as it is 0:13:42.679 --> 0:13:45.440 because if there is any goods inflation, they're simply you 0:13:45.480 --> 0:13:47.760 can't squeeze blood out of a rock. There's only so 0:13:47.880 --> 0:13:51.440 much in a household budget when inflation adjusted earnings are falling, 0:13:51.520 --> 0:13:55.960 which they are. And underemployment is just off the Richter scale. 0:13:56.040 --> 0:14:00.400 So these are very real phenomena, and I promise you 0:14:00.400 --> 0:14:02.079 the FIT is deliberating about all of them. 0:14:02.200 --> 0:14:05.520 You said unemployment is off the rich underemployment. 0:14:05.000 --> 0:14:08.280 Okaycter employment just a few years ago. 0:14:08.400 --> 0:14:10.679 If you were going from where my mother lives in 0:14:10.760 --> 0:14:14.200 College Station to the Bush Airport in Houston. An Uber 0:14:14.280 --> 0:14:17.960 driver is making ninety dollars for that particular ride. Now 0:14:18.000 --> 0:14:20.520 they're making thirty five forty dollars for the same exact drive. 0:14:20.560 --> 0:14:20.720 Why. 0:14:20.800 --> 0:14:23.960 Because the gig economy is saturated with individuals who have 0:14:24.080 --> 0:14:27.640 exhausted their unemployment benefits. Right, your exhaustion rate for continuing 0:14:27.720 --> 0:14:30.960 claimants continuing jobless claimants is thirty nine point six percent. 0:14:31.280 --> 0:14:33.320 That means it thirty nine point six percent of people 0:14:33.360 --> 0:14:36.080 who are among the almost two million continuing job as 0:14:36.200 --> 0:14:39.040 claimants have run through what the states pay. You better 0:14:39.080 --> 0:14:40.480 be driving for Uber or door Dash. 0:14:40.640 --> 0:14:43.520 I had this, this exact conversation that Daniel's outlining with 0:14:43.720 --> 0:14:46.600 a lift driver in San Diego when we were there, Carol. 0:14:46.680 --> 0:14:50.120 He had been out of work since the pandemic, highly 0:14:50.240 --> 0:14:54.520 qualified to work in I believe, aeronautical engineering, and could 0:14:54.560 --> 0:14:55.280 not find a job. 0:14:56.120 --> 0:14:58.200 Look who would have said that two years ago. 0:15:00.000 --> 0:15:01.480 So again, this is an anecdote coming from me. 0:15:01.560 --> 0:15:05.360 It's an anecdotomy, I understand. But I have a rising 0:15:05.760 --> 0:15:09.400 college senior. I cannot tell you how many of his 0:15:09.760 --> 0:15:11.280 friends are coming to me and saying I can't get 0:15:11.320 --> 0:15:11.560 a job. 0:15:11.560 --> 0:15:12.880 I can't get a job. I can't get a job. 0:15:13.000 --> 0:15:15.360 I couldn't get an into my internship was canceled. There's 0:15:15.360 --> 0:15:18.640 a hiring freeze. I mean, there is a class of 0:15:18.720 --> 0:15:20.760 twenty twenty four. The only thing that's better about it 0:15:21.000 --> 0:15:22.840 is that it's better than the class of twenty twenty five. 0:15:23.240 --> 0:15:25.520 Yeah, I know, it's interesting anecdotal because I've seen the 0:15:25.600 --> 0:15:27.400 reporting too, and I too have a daughter who just 0:15:27.440 --> 0:15:29.880 graduated and she's got a job, thankful, and has since 0:15:29.960 --> 0:15:32.640 last fall. And all of our peers they have gotten jobs. 0:15:32.680 --> 0:15:35.040 So it's like, I don't know, I'm trying to understand 0:15:35.120 --> 0:15:37.640 exactly where this economy is. The Atlanta Fedge is coming 0:15:37.680 --> 0:15:41.640 out and upping its GDP forecasts. I mean that export 0:15:41.760 --> 0:15:43.640 number is higher than we thought it was going to be. 0:15:43.760 --> 0:15:46.800 I mean that's like GDP trade math. But who's not 0:15:46.840 --> 0:15:48.840 going to be paying attention to consumption when we see 0:15:48.880 --> 0:15:49.640 GDP in the morning. 0:15:49.720 --> 0:15:52.760 But net, net, how do you see the Trump administration policies? 0:15:52.840 --> 0:15:55.840 Are they stimulative? They are certainly sold as being good 0:15:56.080 --> 0:15:59.640 back for the US economy. That's your original question. Than 0:15:59.680 --> 0:16:02.400 Mike concern is or I think many would say their 0:16:02.440 --> 0:16:04.360 concern is that the Fed's got to be really careful. 0:16:04.480 --> 0:16:06.520 So the assumption is that the horse that we lead 0:16:06.560 --> 0:16:09.160 to water is going to drink right, because the only 0:16:09.960 --> 0:16:13.360 the thrust of the bill is preventing a negative income 0:16:13.400 --> 0:16:16.320 shock such that the tax cuts do not expire at 0:16:16.320 --> 0:16:16.880 the end of this year. 0:16:16.960 --> 0:16:18.600 So you're preventing a negative income shock. 0:16:18.760 --> 0:16:21.640 You're certainly not sending money out into the economy in 0:16:21.760 --> 0:16:23.720 the sense that it was in the post pandemic era 0:16:23.840 --> 0:16:24.480 the Cares Act. 0:16:25.120 --> 0:16:25.960 That's not happening. 0:16:26.360 --> 0:16:28.640 So I mean, maybe uber and lyft drivers are going 0:16:28.720 --> 0:16:30.360 to get a lift right because they're not going to 0:16:30.400 --> 0:16:33.280 get taxed on those on the tips that they make. 0:16:33.360 --> 0:16:37.800 But again, we are seeing consistent and persistent declines in 0:16:37.880 --> 0:16:41.200 capital expenditure plans, and so you. 0:16:41.320 --> 0:16:43.160 Can lead the horse to water, but can you make 0:16:43.200 --> 0:16:46.720 that horse drink? So just fifteen seconds. So the valuations, 0:16:46.720 --> 0:16:48.280 the record after record that we've seen the S and 0:16:48.320 --> 0:16:50.680 P five hundred, do you think that's not warranted? Considering 0:16:50.760 --> 0:16:53.840 it sounds like I don't is hope a strategy? So 0:16:53.960 --> 0:16:56.280 you would say, no, we're overvalued, and it's I would 0:16:56.320 --> 0:16:58.000 certainly think, so, all right, going to leave it there. 0:16:58.200 --> 0:17:00.480 Fun to have you here, Danielle de Martin. You know Booth. 0:17:00.560 --> 0:17:03.640 She's CEO and chief strategiest of QI Research, joining us here. 0:17:05.320 --> 0:17:09.160 This is the Bloomberg Business Week Daily Podcast. Listen live 0:17:09.280 --> 0:17:12.159 each weekday starting at two pm Eastern on Apple car 0:17:12.280 --> 0:17:15.040 Play and the Android Auto with the Bloomberg Business App. 0:17:15.160 --> 0:17:17.919 You can also listen live on Amazon Alexa from our 0:17:17.960 --> 0:17:22.080 flagship New York station Just Say Alexa played Bloomberg eleven thirty. 0:17:22.920 --> 0:17:25.200 Carol summed up well on our editorial call this morning 0:17:25.560 --> 0:17:28.359 when she said, let's get Brook Sutherland on to talk planes, 0:17:28.400 --> 0:17:30.240 trains and automobiles. 0:17:29.840 --> 0:17:32.480 And so Brook, we all love to know this space. 0:17:32.600 --> 0:17:34.119 That's why she's here with us. I just want to 0:17:34.160 --> 0:17:35.920 give everyone an idea of the planes part of this. 0:17:36.600 --> 0:17:39.040 Boeing almost halted its cash burn in the second quarter 0:17:39.119 --> 0:17:42.960 and I reported a smaller than expected loss. The trainsportion 0:17:43.080 --> 0:17:46.080 of this is Union Pacific a green to acquire Norfolk 0:17:46.200 --> 0:17:49.720 Southern in a seventy two billion dollar cash and stock transaction. 0:17:50.440 --> 0:17:52.560 And automobiles. We have to stretch this one a little bit, 0:17:52.680 --> 0:17:55.160 I know. So Okay ups shares tumbled after the company 0:17:55.200 --> 0:17:58.040 said economic volatile, they continues to roil its operations, but hey, 0:17:58.119 --> 0:18:00.399 they got a lot of trucks Carol think it's fair 0:18:00.440 --> 0:18:02.320 to say it counts as automobiles, all right, So let's 0:18:02.320 --> 0:18:02.639 get to it. 0:18:02.720 --> 0:18:05.280 Let's get to Brook Sutherland. She's Bloomberg News Boston Bureau, 0:18:05.359 --> 0:18:07.879