WEBVTT - Trump Keeps TACOing. What If Markets Stop Caring?

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>So far this week and it's only Wednesday, President Trump

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<v Speaker 2>has threatened to raise tariffs on South Korean exports to

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<v Speaker 2>twenty five percent. He said he's okay with a weakening dollar,

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<v Speaker 2>and Trump announced a massive armada is heading to Iran.

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<v Speaker 2>Last night, at a speech in Iowa, the President once

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<v Speaker 2>again criticized the Federal Reserve chair.

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<v Speaker 1>We call him too late. He's too late, Durham, too late, Pal,

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<v Speaker 1>He's too late.

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<v Speaker 2>Trump's latest attack on the Fed's independence came in the

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<v Speaker 2>middle of a two day meeting on interest rates, and

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<v Speaker 2>as expected, policymakers decided not to lower them. It used

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<v Speaker 2>to be any one of these announcements could have upbended

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<v Speaker 2>global markets, but in the second year of President Trump's

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<v Speaker 2>second term, investors seem to be shrugging them off.

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<v Speaker 3>It is Taco Tuesday, but it seems that every day

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<v Speaker 3>is a taco day these days.

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<v Speaker 2>Is that taco trade is sort of emerging here once.

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<v Speaker 3>Again, the taco trade, if you want want to call

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<v Speaker 3>it that.

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<v Speaker 1>The boy who cried.

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<v Speaker 4>Tariff taco, of course stands for Trump always chickens out.

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<v Speaker 4>And this is the theory that Trump is not powerfully

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<v Speaker 4>committed to any policy position in general.

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<v Speaker 2>Rob Armstrong is a columnist for The Financial Times and

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<v Speaker 2>the co host of the Unheedged podcast. He's also responsible

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<v Speaker 2>for that taco moniker. He came up with the acronym.

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<v Speaker 4>So when he makes an extreme threat and he is

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<v Speaker 4>faced by resistance, either from markets or from the body politic,

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<v Speaker 4>he turns around and walks the other direction. The guy

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<v Speaker 4>folds is what it says.

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<v Speaker 2>Since election Day in twenty twenty four, many investors have

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<v Speaker 2>been making a bet that whatever Donald Trump threatens to do,

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<v Speaker 2>he probably won't. It's unlikely to happen.

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<v Speaker 4>The taco trade is the smart money. When the dumb

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<v Speaker 4>money panics and sells on the last crazy thing the

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<v Speaker 4>president says, that's when the smart money buys.

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<v Speaker 2>This week, Bloomberg Economics published a report analyzing all the

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<v Speaker 2>times President Trump threatened to raise tariffs and found that

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<v Speaker 2>roughly three times out of four the tariff he threatened

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<v Speaker 2>didn't materialize. In other words, the taco trade was right

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<v Speaker 2>far more often than it wasn't. When I saw that finding,

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<v Speaker 2>I immediately thought of two people I wanted to talk to.

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<v Speaker 2>Bloomberg opinion columnist John Authors and Rob Armstrong again, the

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<v Speaker 2>columnist who gave us the term taco.

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<v Speaker 4>You can identify me as anakin skywalker to John's Obi

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<v Speaker 4>wan Kenobi. John hired me at the FT fifteen years ago.

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<v Speaker 4>The professional path I currently trot at the FT writing

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<v Speaker 4>a daily newsletter about markets is a path that was

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<v Speaker 4>of course plazed by John. So I'm doubly indebted and

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<v Speaker 4>it's a thrill to just be able to be here

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<v Speaker 4>and chop it.

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<v Speaker 1>Up with him.

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<v Speaker 2>To get these two guys together in a studio on

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<v Speaker 2>a Tuesday night when John was on deadline, I promised

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<v Speaker 2>them we'd line up dinner.

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<v Speaker 4>What's cooking?

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<v Speaker 1>Well, I.

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<v Speaker 2>Couldn't resist the three of us eight, and then we

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<v Speaker 2>talked about how the taco trade has evolved over the

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<v Speaker 2>past year, and how it seems to be changing in

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<v Speaker 2>real time.

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<v Speaker 4>More than one economist has pointed out to me that

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<v Speaker 4>taco seems like an unstable equilibrium because you know, each

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<v Speaker 4>time we go through the cycle, the market is less

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<v Speaker 4>impressed with the stuff Trump says, and so in order

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<v Speaker 4>to get the response that would make him change direction,

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<v Speaker 4>he has to say progressively crazier and crazier stuff, and

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<v Speaker 4>eventually you drive the car over the cliff and the

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<v Speaker 4>jokes on everyone.

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<v Speaker 2>I'm David Gerrett, and this is the big take from

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<v Speaker 2>Bloomberg News Today on the show, digging into the taco trade,

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<v Speaker 2>Why Wall Street has come to count on President Trump

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<v Speaker 2>backing down and what it could mean if investors keep

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<v Speaker 2>getting rewarded for not taking the President of the United

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<v Speaker 2>States at his word. A pivotal moment in the evolution

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<v Speaker 2>of what FT columnist Robert Armstrong calls taco theory was

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<v Speaker 2>on April second, twenty twenty five.

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<v Speaker 1>Nice crowd, What a good looking group of people will

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<v Speaker 1>we have?

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<v Speaker 2>So that's when President Trump made a big announcement about

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<v Speaker 2>changes to trade policy.

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<v Speaker 1>My fellow Americans, this is liberation Day waiting for a

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<v Speaker 1>long time. April second, twenty twenty five will forever be

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<v Speaker 1>remembered as today American industry was reborn. Today, America's destiny

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<v Speaker 1>was reclaimed.

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<v Speaker 2>Like many of us, Rob and Bloomberg' John authors were

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<v Speaker 2>paying close attention. The President had made a lot of

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<v Speaker 2>noise in the run up to this event in the

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<v Speaker 2>Rose Garden, and John says he was expecting more bluster

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<v Speaker 2>and maybe a flat across the board teriffry.

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<v Speaker 3>And then it turns out that he was doing ten

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<v Speaker 3>percent plus reciprocal tariffs, and then it turns out that

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<v Speaker 3>the reciprocal tariffs were reciprocal in a way that no

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<v Speaker 3>other and effort even attempted to use that word before.

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<v Speaker 3>I was literally open mouthed and started swearing at the

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<v Speaker 3>computer because this is ridiculous, and because it meant I knew,

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<v Speaker 3>knew I was going to be an until midnight. I

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<v Speaker 3>think I spoke to you about got bad, that's right,

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<v Speaker 3>but I just literally couldn't believe that he was doing

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<v Speaker 3>something that stupid.

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<v Speaker 4>I mean, it was just a jaw dropping moment. It

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<v Speaker 4>was so chaotic, it was so weird. They taxed an

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<v Speaker 4>island only with only penguins, all of this stuff, and

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<v Speaker 4>it spoke. It was so bizarre, you were almost paralyzed.

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<v Speaker 2>Rob and John were shocked, and so were markets. Stocks plunged,

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<v Speaker 2>and the bond market tanked.

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<v Speaker 4>The price of bonds fell because everybody at once had

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<v Speaker 4>the very same reaction that John and I had, where

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<v Speaker 4>you're seriously contemplating the possibility that these people are crazy.

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<v Speaker 2>Rob says, it was a real moment of despair for everyone.

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<v Speaker 2>But in the days that followed, President Trump started cutting

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<v Speaker 2>deals and making exceptions, and eventually he took a huge

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<v Speaker 2>step back.

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<v Speaker 1>I did a ninety day pause for the people that

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<v Speaker 1>didn't retaliate, because they told him, if you retaliate, we're

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<v Speaker 1>going to double it.

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<v Speaker 2>And with that announcement that those tariffs were off temporarily,

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<v Speaker 2>markets rejoiced.

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<v Speaker 4>Then it was just straight north. He starts taking a

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<v Speaker 4>step back, and we're on mesk later.

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<v Speaker 2>This is like peragdimatic taco.

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<v Speaker 4>Yeah. Yeah. And those who realized, you know, I wasn't

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<v Speaker 4>one of them who that they don't care about any

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<v Speaker 4>of this stuff. They made a lot of money.

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<v Speaker 2>And a few weeks later Rob wrote about what had happened.

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<v Speaker 4>I ended up writing about this pattern of big talk,

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<v Speaker 4>huffing and puffing, strong market reaction, Trump pulling back, the

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<v Speaker 4>market recovering. I just needed a short way to refer

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<v Speaker 4>to this thing that just kept happening. Taco was funny.

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<v Speaker 4>I wasn't aware that I was doing something wonderfully clever

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<v Speaker 4>at the time. It's a really simple claim underneath there.

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<v Speaker 4>The president doesn't really care about anything, and so if

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<v Speaker 4>he is forced to pay costs in popularity or power

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<v Speaker 4>for a policy, he'll always change it. That could be false,

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<v Speaker 4>but that's the serious underlying thesis, that there is no

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<v Speaker 4>there there.

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<v Speaker 3>And the president's trade on that assum.

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<v Speaker 4>And that markets trade on that assumption exactly right.

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<v Speaker 2>Since Rob's first newsletter about the taco trade, we've seen

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<v Speaker 2>that pattern over and over again.

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<v Speaker 4>It was electronics and then no, we're just kidding about that.

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<v Speaker 4>It was almost any sector specific tariffs we've seen this.

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<v Speaker 4>John has a better memory.

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<v Speaker 3>There was one on India for some reason that went away. Again,

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<v Speaker 3>there was the Bolscenaro tariffs against Brazil that they were

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<v Speaker 3>punishing Brazil for not being very nice to Jia.

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<v Speaker 4>That's a very important example because that is an example

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<v Speaker 4>where the country on the other side of the table

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<v Speaker 4>really stood up and fought in.

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<v Speaker 3>It worked.

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<v Speaker 4>Yeah, and it's one thing to be China and stand

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<v Speaker 4>up and fight, but if you're Brazil and your stand

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<v Speaker 4>up fight, it shows that the range of people who

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<v Speaker 4>could possibly put up meaningful resistance is much larger.

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<v Speaker 2>I want to bring up a study that our colleagues

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<v Speaker 2>at Bloomberg Economics did recently. They wanted to see how

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<v Speaker 2>often President Trump has threatened a tariff that doesn't get implemented.

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<v Speaker 2>They identified forty nine tariff threats or new trade investigations

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<v Speaker 2>between the November twenty twenty four election and January twenty fifth,

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<v Speaker 2>twenty twenty six. They found that about twenty percent of

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<v Speaker 2>those tariffs were imposed in full. Another six percent were

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<v Speaker 2>imposed and then withdrawn the China threats among them. That

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<v Speaker 2>means more than seventy percent of the president's threats of

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<v Speaker 2>tariffs or trade investigations did not pan out. They were

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<v Speaker 2>either imposed in part where they haven't been imposed, they've

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<v Speaker 2>been withdrawn where they're still under investigation. I want to

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<v Speaker 2>be clear here, Bloomberg Economics did not use the taco term,

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<v Speaker 2>but I think you could argue two of you might

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<v Speaker 2>hear that the results imply a taco rate of about

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<v Speaker 2>seventy percent.

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<v Speaker 3>People in the office have been referring to it as

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<v Speaker 3>the taco store.

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<v Speaker 2>Carry on, Yes, if they didn't use the term with

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<v Speaker 2>Brandon get as such, Rob, what do you make of

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<v Speaker 2>that when you look at that raw data?

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<v Speaker 4>Let me tell you answer as if I was a

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<v Speaker 4>taco hater, which there are plenty. The taco hater says,

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<v Speaker 4>just as the President said, this is negotiation. He starts

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<v Speaker 4>with an extreme offer, He pulls you in his direction,

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<v Speaker 4>and he gets something at the end of the negotiation

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<v Speaker 4>and he looks magnanimous. That's the story anyway, And so

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<v Speaker 4>you might if you wanted to write takoof is just

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<v Speaker 4>an idiotic joke by a second rate journalist, you might argue,

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<v Speaker 4>what's the overall tariff rate now? And it's fifteen percent?

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<v Speaker 4>We are we tariff more?

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<v Speaker 3>Now?

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<v Speaker 4>You know, has it achieved the things the president wanted

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<v Speaker 4>that to achieve. You can have a debate, but he

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<v Speaker 4>moved the ball forward on the economic field. So I

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<v Speaker 4>guess that's what I have to reckon with as somebody

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<v Speaker 4>who believes still believes the Taco thesis, is that it's

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<v Speaker 4>not the guy has done nothing right. I mean, I

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<v Speaker 4>think in a way it's more interesting to talk about

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<v Speaker 4>where Taco has failed to hold right and where he

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<v Speaker 4>has followed through. I mean, I got very unpleasant emails

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<v Speaker 4>after the missile strikes on Iran, and I got very

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<v Speaker 4>unpleasant emails after Maduro was snatched up and brought to Brooklyn.

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<v Speaker 4>And the text of these emails or these social media

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<v Speaker 4>posts was like, who's tacoing now? Right? And I guess

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<v Speaker 4>my response to that is where we are now is

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<v Speaker 4>Taco for the strong faffo for the week. This is

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<v Speaker 4>how I've been characterizing it. If you are a country

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<v Speaker 4>like Iran or Venezuela that is not strong enough to

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<v Speaker 4>push back the taco or Bangladesh, yes, there is no

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<v Speaker 4>no tacos for you. You will be fooling around and

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<v Speaker 4>finding out instead.

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<v Speaker 2>Coming up after the break, the state of the taco trade,

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<v Speaker 2>where it goes from here, and the consequences for everyone

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<v Speaker 2>of wall Street's bet, the president will always back down.

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<v Speaker 2>Last week, President Trump had Europe on edge. The President

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<v Speaker 2>made it clear he wanted to make Greenland part of

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<v Speaker 2>the United States. His administration went so far as to

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<v Speaker 2>say military force was not off the table, a move

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<v Speaker 2>that would pose an existential threat to NATO, and Trump

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<v Speaker 2>said he'd put additional tariffs on European nations that had

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<v Speaker 2>rallied to Denmark's side in the standoff. In a speech

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<v Speaker 2>at the World Economic Forums Annual meeting in Davos, the

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<v Speaker 2>President doubled down on his demands.

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<v Speaker 1>You can say yes and we will be very appreciative,

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<v Speaker 1>or you can say no and we will remember.

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<v Speaker 2>But only a few hours later, Trump announced he'd met

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<v Speaker 2>with NATO Secretary General Mark Ruta and they'd agree on

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<v Speaker 2>a framework for a future deal with respect to Greenland,

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<v Speaker 2>and as the President put it, the entire Arctic region.

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<v Speaker 2>And Trump backed off the threat of those additional tariffs.

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<v Speaker 2>Last Blomberg opinions John Authors and the FT's Rob Armstrong

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<v Speaker 2>if the president's move in Davos could be categorized as

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<v Speaker 2>a taco.

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<v Speaker 4>I think it's an ambiguous case, John May.

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<v Speaker 2>And why is that? Why is the.

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<v Speaker 4>Markets didn't move that much? First of all, complacent during

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<v Speaker 4>the speech in the day markets yeah, yeah, And you know,

0:12:29.960 --> 0:12:32.320
<v Speaker 4>markets were down the doll the dollar was down one

0:12:32.400 --> 0:12:34.400
<v Speaker 4>in a path or something, and the S and P

0:12:34.600 --> 0:12:38.120
<v Speaker 4>was down two percent on this really serious soughing puffing.

0:12:38.480 --> 0:12:41.000
<v Speaker 4>So if he was backing off in the face of pressure,

0:12:41.520 --> 0:12:45.880
<v Speaker 4>it was political pressure in the form of a more

0:12:46.000 --> 0:12:46.880
<v Speaker 4>unified Europe.

0:12:46.960 --> 0:12:49.520
<v Speaker 3>It did look like what's happened off to Liberation Day,

0:12:49.559 --> 0:12:53.560
<v Speaker 3>but just a tiny echo of it. It's tiny, Like, yeah, again,

0:12:54.440 --> 0:12:59.600
<v Speaker 3>you did have the combination of bond yields going up

0:13:00.120 --> 0:13:03.080
<v Speaker 3>the dollar goes down, which is a sort of classic

0:13:03.840 --> 0:13:05.960
<v Speaker 3>emerging markets crisis.

0:13:05.440 --> 0:13:08.480
<v Speaker 2>And Jolyn Rob emphasized it's the bond market, not the

0:13:08.520 --> 0:13:10.400
<v Speaker 2>stock market. It really matters here.

0:13:10.960 --> 0:13:19.600
<v Speaker 3>The stock market, despite appearances matters less. We discovered that

0:13:19.720 --> 0:13:23.480
<v Speaker 3>Donald Trump was actually prepared to look through a fairly

0:13:23.520 --> 0:13:29.040
<v Speaker 3>big reverse in the stock market, and he probably recognizes

0:13:29.120 --> 0:13:32.800
<v Speaker 3>that his people don't care as much about the stock market.

0:13:34.720 --> 0:13:40.280
<v Speaker 3>The bond market is normally, when you're scared, you buy bonds.

0:13:41.040 --> 0:13:42.679
<v Speaker 3>When you are scared in such a way that you

0:13:42.760 --> 0:13:46.359
<v Speaker 3>sell bonds, that is very dangerous. That's a very unusual

0:13:46.480 --> 0:13:51.160
<v Speaker 3>state of affairs, and that puts far more direct pressure

0:13:51.720 --> 0:13:54.880
<v Speaker 3>on the government itself and on the economy. So the

0:13:54.880 --> 0:13:58.760
<v Speaker 3>bond market is very, very big. The market for treasuries

0:13:59.080 --> 0:14:03.040
<v Speaker 3>makes from the stock market look illiquid by comparison. It's

0:14:03.160 --> 0:14:07.840
<v Speaker 3>very difficult to move once it has started moving against you.

0:14:08.000 --> 0:14:10.120
<v Speaker 4>The kind of classic Wall Street way to phrase this

0:14:10.720 --> 0:14:13.080
<v Speaker 4>is that the bond market is math and the stock

0:14:13.160 --> 0:14:16.680
<v Speaker 4>market is a bunch of adrenaline adult risk monkeys. Yes,

0:14:17.080 --> 0:14:20.200
<v Speaker 4>and so the uh so that you get these much

0:14:20.240 --> 0:14:25.280
<v Speaker 4>more dramatic responses much more quickly in the stock market,

0:14:25.320 --> 0:14:27.880
<v Speaker 4>but you kind of expect it from the monkeys. When

0:14:27.920 --> 0:14:30.480
<v Speaker 4>the grown ups in the bond market start to freak out,

0:14:30.520 --> 0:14:32.400
<v Speaker 4>then you really have a problem.

0:14:32.640 --> 0:14:36.760
<v Speaker 2>There's another dynamic, as the idea of taco is absorbed

0:14:36.800 --> 0:14:40.320
<v Speaker 2>widely with more investors. Assuming Trump will walk back his threats,

0:14:40.760 --> 0:14:43.720
<v Speaker 2>the taco trade loses its power, and it takes bolder

0:14:43.800 --> 0:14:45.280
<v Speaker 2>threats to make markets respond.

0:14:45.800 --> 0:14:50.560
<v Speaker 4>Like any good economic insight, it degrades itself over time,

0:14:50.840 --> 0:14:54.360
<v Speaker 4>the market incorporates it, and it starts to disappear. So

0:14:54.600 --> 0:14:56.280
<v Speaker 4>you know, these things have a half life, and I

0:14:56.280 --> 0:14:58.400
<v Speaker 4>think taco has had a lot of its half life.

0:14:58.880 --> 0:15:02.240
<v Speaker 2>The economist Aaron Do at the University of Massachusetts has

0:15:02.240 --> 0:15:05.960
<v Speaker 2>written about a kind of taco cycle as markets learned

0:15:06.000 --> 0:15:09.440
<v Speaker 2>to shrug off increasingly extreme statements from the president that

0:15:09.480 --> 0:15:12.560
<v Speaker 2>could encourage him to make even bolder promises before he

0:15:12.600 --> 0:15:15.480
<v Speaker 2>has to contend with a market reaction. I asked John

0:15:15.480 --> 0:15:19.120
<v Speaker 2>and Rob about the risks of increasing brinksmanship setting off

0:15:19.160 --> 0:15:20.360
<v Speaker 2>a kind of vicious cycle.

0:15:20.840 --> 0:15:26.080
<v Speaker 3>I am inclined to agree with that. I guess the

0:15:27.680 --> 0:15:30.040
<v Speaker 3>I mean again, it's just this agonizing thing that we

0:15:30.080 --> 0:15:33.080
<v Speaker 3>will have to spend so much of our time gauging

0:15:33.840 --> 0:15:39.040
<v Speaker 3>the thought process of this one individual whose thought processes

0:15:39.240 --> 0:15:45.160
<v Speaker 3>are idiosyncratic. Reverting to my ft training for a second

0:15:45.200 --> 0:15:46.960
<v Speaker 3>to give you some British understatement.

0:15:47.760 --> 0:15:50.240
<v Speaker 2>In the past, markets have acted as a kind of

0:15:50.360 --> 0:15:53.760
<v Speaker 2>check on policymaking. If a president did or said something

0:15:53.840 --> 0:15:58.040
<v Speaker 2>unexpected that would spook Wall Street. Well, Rob wonders, if

0:15:58.080 --> 0:15:59.120
<v Speaker 2>those days are done?

0:15:59.800 --> 0:16:05.160
<v Speaker 4>Is a relationship between markets and American presidential power forever

0:16:05.280 --> 0:16:08.320
<v Speaker 4>changed by Trump? Is the game different now?

0:16:08.800 --> 0:16:09.160
<v Speaker 3>I don't.

0:16:09.280 --> 0:16:13.000
<v Speaker 4>I don't, but that you know, will what will the

0:16:13.040 --> 0:16:18.760
<v Speaker 4>next person to sit in the Oval office? Learn about

0:16:19.280 --> 0:16:21.640
<v Speaker 4>the kind of dance that presidents have to dance with

0:16:21.680 --> 0:16:22.800
<v Speaker 4>the market from Trump?

0:16:22.960 --> 0:16:26.960
<v Speaker 3>And I think, okay, that's a fascinating question. Way to

0:16:27.000 --> 0:16:30.280
<v Speaker 3>put it, throwing things forward. I think a lot depends

0:16:30.320 --> 0:16:34.320
<v Speaker 3>on the midterms the administration. The reason markets are doing

0:16:34.400 --> 0:16:36.640
<v Speaker 3>as well as they are at the moment is because

0:16:36.920 --> 0:16:40.840
<v Speaker 3>there is an awful lot of stimulus and liquidity out there,

0:16:41.200 --> 0:16:45.160
<v Speaker 3>and the administration, it's not being shy about this, is

0:16:45.200 --> 0:16:48.960
<v Speaker 3>trying to stimulate the economy to push us through the midterms.

0:16:49.800 --> 0:16:53.440
<v Speaker 3>If it succeeds, that will be very much taken. In Britain,

0:16:53.480 --> 0:16:56.680
<v Speaker 3>where the incumbent party could choose when to go to

0:16:56.760 --> 0:17:00.640
<v Speaker 3>the polls, you had the concept of stop going economics,

0:17:00.680 --> 0:17:04.119
<v Speaker 3>that you would prime the pump, win your election and

0:17:04.200 --> 0:17:06.840
<v Speaker 3>then give people their medicine for a year or two

0:17:06.840 --> 0:17:09.760
<v Speaker 3>before you prime the pump again. You might find that

0:17:09.800 --> 0:17:13.480
<v Speaker 3>there is an attempt to impose that cycle again here

0:17:13.600 --> 0:17:16.000
<v Speaker 3>or at least when there isn't gridlock in Congress, that

0:17:16.000 --> 0:17:18.840
<v Speaker 3>there's some kind of an attempt to make that work.

0:17:19.000 --> 0:17:24.120
<v Speaker 4>When I talked to shell shocked market participants about being

0:17:24.160 --> 0:17:27.520
<v Speaker 4>exhausted in the way John described and not knowing how

0:17:27.560 --> 0:17:31.159
<v Speaker 4>to read this stuff and being worried about their portfolios,

0:17:31.200 --> 0:17:33.240
<v Speaker 4>which is what they're paid to do, is worry all along,

0:17:33.680 --> 0:17:36.119
<v Speaker 4>the topic of the Supreme Court comes up pretty quickly,

0:17:37.440 --> 0:17:40.080
<v Speaker 4>that the lease a cookcase, and of course.

0:17:41.359 --> 0:17:44.639
<v Speaker 3>Yap whether he was allowed to do the tariffs in

0:17:44.680 --> 0:17:45.240
<v Speaker 3>the first place.

0:17:45.359 --> 0:17:49.480
<v Speaker 4>Yes, these are really in front of investor's eyes and

0:17:49.760 --> 0:17:53.960
<v Speaker 4>a real reason for hope and optimism, not about politics,

0:17:54.000 --> 0:17:56.920
<v Speaker 4>and it's just stability, knowing the rules and being able

0:17:56.960 --> 0:17:59.840
<v Speaker 4>to play by them. In the taco world as it.

0:17:59.760 --> 0:18:03.600
<v Speaker 2>Were, markets historically have been a guardrail. We've talked about

0:18:03.720 --> 0:18:05.520
<v Speaker 2>the degree to which the taco trade, of the taco

0:18:05.560 --> 0:18:08.520
<v Speaker 2>theory is baked in. Now investors expect there to be

0:18:08.600 --> 0:18:11.680
<v Speaker 2>this walk back time and time again. Rob will start

0:18:11.720 --> 0:18:15.960
<v Speaker 2>with you, what is lost if markets aren't providing the

0:18:16.080 --> 0:18:18.320
<v Speaker 2>kind of guardrail that they have been in the past.

0:18:19.080 --> 0:18:26.680
<v Speaker 4>In a world where markets don't believe anything the government says. Uh.

0:18:27.240 --> 0:18:33.920
<v Speaker 4>The worry is that markets realize too late the damage

0:18:33.960 --> 0:18:38.040
<v Speaker 4>that has actually been done. So markets don't believe that

0:18:38.119 --> 0:18:41.760
<v Speaker 4>the stuff he's saying is gonna happen. If they wake

0:18:41.880 --> 0:18:45.560
<v Speaker 4>up to the reality that something big has happened too late,

0:18:46.200 --> 0:18:48.960
<v Speaker 4>I mean, that's the risk. That's the risk. But by

0:18:49.000 --> 0:18:51.119
<v Speaker 4>the way, I believe the guardrails are in place. We

0:18:51.160 --> 0:18:52.119
<v Speaker 4>just saw it in Minnesota.

0:18:52.240 --> 0:18:54.520
<v Speaker 3>Americans didn't like him trying to grab greenlands, and they

0:18:54.560 --> 0:18:56.840
<v Speaker 3>sent and they didn't like you know, civilians getting shots

0:18:56.880 --> 0:19:00.920
<v Speaker 3>on the streets of Minneapolis. That's polling badly. It's getting

0:19:01.600 --> 0:19:05.679
<v Speaker 3>you know, opposition politicians and his own politicians riled up

0:19:05.720 --> 0:19:09.560
<v Speaker 3>against him, and it seems to be having an effect. Certainly,

0:19:09.600 --> 0:19:14.199
<v Speaker 3>both the Supreme Court and the Republican majorities in the

0:19:14.280 --> 0:19:17.560
<v Speaker 3>two houses of Congress have been less of a tight

0:19:17.800 --> 0:19:23.280
<v Speaker 3>guardrail than one would have expected ahead of time. Plainly

0:19:23.320 --> 0:19:28.480
<v Speaker 3>those guardrails have been less strong or less they haven't

0:19:28.480 --> 0:19:31.360
<v Speaker 3>been utilized in quite the way that you might have expected,

0:19:31.359 --> 0:19:32.120
<v Speaker 3>but they are still there.

0:19:32.359 --> 0:19:34.280
<v Speaker 4>The action is at the FED right from the point

0:19:34.280 --> 0:19:39.119
<v Speaker 4>of view of us, of marketspeople, the action is, can

0:19:39.680 --> 0:19:43.840
<v Speaker 4>Trump bring this institution to its knees, and once he

0:19:43.880 --> 0:19:47.480
<v Speaker 4>does that, it almost doesn't matter what the rate decisions

0:19:47.520 --> 0:19:51.840
<v Speaker 4>are or whatever. Just the message that the federal Reserve

0:19:52.240 --> 0:19:55.960
<v Speaker 4>is now responsive to the President first and foremost, that

0:19:56.119 --> 0:20:01.760
<v Speaker 4>message would be a disaster. And so for markets people,

0:20:02.160 --> 0:20:05.080
<v Speaker 4>that's where the guardrails need to be, and that's where

0:20:05.119 --> 0:20:05.760
<v Speaker 4>the test is.

0:20:10.880 --> 0:20:13.400
<v Speaker 2>This is the Big Take from Bloomberg News. I'm David Gura.

0:20:13.680 --> 0:20:15.959
<v Speaker 2>To get more from The Big Take and unlimited access

0:20:16.000 --> 0:20:18.960
<v Speaker 2>to all of Bloomberg dot com, subscribe today at Bloomberg

0:20:19.000 --> 0:20:22.440
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0:20:22.600 --> 0:20:24.639
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0:20:24.680 --> 0:20:27.000
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0:20:27.480 --> 0:20:29.280
<v Speaker 2>Thanks for listening. We'll be back tomorrow