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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: We begin with Douglas Irwin of Dartmouth College. Against the

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Speaker 2: Tide is a definitive history. I read it cover to cover.

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Speaker 2: Many other people just buy it and put it on

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Speaker 2: a bookshelf so they can pretend they read it. It

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Speaker 2: is trenchingt it is deep. And one of the examples

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Speaker 2: you see of that is the actual work of Doug Irwin.

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Speaker 2: Go back to nineteen ninety seven and you get a

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Speaker 2: twenty six page paper out of the NBER Higher Tariffs,

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Speaker 2: Lower Revenues analyzing the fiscal aspects of the Great Tariff

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Speaker 2: Debate of eighteen eighty eight. Professor Irwin, thank you so

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Speaker 2: much for joining us. Are we reliving McKinley in eighteen

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Speaker 2: eighty eight?

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Speaker 3: You know, the President referred to the eighteen eighties and

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Speaker 3: his remarks yesterday, and I think he's succeeded in bringing

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Speaker 3: us back there. First of all, the average tariff on

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Speaker 3: total imports is going back to levels we haven't seen

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Speaker 3: since the eighteen eighties or eighteen nineties. It's taking it

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Speaker 3: from about two percent three percent today up to perhaps

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Speaker 3: thirty percent, and that's historically unprecedented. He talks about the

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Speaker 3: revenue effects as being important tective effects. These were all

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Speaker 3: things that were debated in the late nineteenth century, and

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Speaker 3: we're reliving that in a real way.

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Speaker 2: Off your remit, but I'm going to go there. McKinley

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Speaker 2: lost eighty six seats in the congressional election of eighteen ninety.

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Speaker 2: Is Trump going to find the same fury at the

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Speaker 2: ballot box?

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Speaker 3: Well, I think, as you've just reported, you know, car

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Speaker 3: prices are going to go up. All sorts of other

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Speaker 3: items that we hadn't even thought about are going to

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Speaker 3: go up as a result of these tariffs, from avocados

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Speaker 3: to phones to shoes. And we've seen in recent years

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Speaker 3: the electorate is very sensitive to higher prices than inflation.

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Speaker 3: And so, once again speaking historically, anytime there's been a

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Speaker 3: major increase in the tariff when there hasn't really been

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Speaker 3: a societal consensus behind it, when there hasn't been a

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Speaker 3: lot of public support for it, the income party gets

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Speaker 3: punished at the midterms, and that happened after Smooth Holly.

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Speaker 3: That happened after the McKinley tariff in eighteen ninety, and

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Speaker 3: we could be in for a repeat of that.

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Speaker 4: Professor Erwin, I was just reading your article in Foreign

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Speaker 4: Affairs Magazine, the Incoherent Case for Terrorists. It's very similar

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Speaker 4: to what we heard from Professor Furman from Harvard yesterday that

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Speaker 4: Tom and I had a conversation with what is the

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Speaker 4: counter argument that the President is getting in the White

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Speaker 4: House for terrffs.

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Speaker 3: But I think actually yesterday provides some clarity about what

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Speaker 3: the purpose was. As Jason and Chad and I and

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Speaker 3: others have pointed out, we don't know are these primarily

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Speaker 3: for revenue, primarily to reduce the trade deficit, primarily to

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Speaker 3: reshore jobs in manufacturing, primarily to strike better deals through reciprocity.

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Speaker 3: And the formula used to calculate these tariffs was based

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Speaker 3: on the trade balance, so it seems like that's the

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Speaker 3: major consideration that they're trying to aim for. But the

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Speaker 3: problem is bilateral tariffs may not affect those bilateral trade

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Speaker 3: balances may not affect the overall trade balance. Of course,

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Speaker 3: if we go into a recession, the trade balance will shrink,

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Speaker 3: but that's not exactly the mechanism by which the administration

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Speaker 3: wants to reduce the trade deficit.

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Speaker 4: So at the end of the day, professor, how do

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Speaker 4: you think these tariffs will be implemented? I mean, how

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Speaker 4: does the mechanism work? How are we as consumers going

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Speaker 4: to kind of see this, do you think?

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Speaker 3: Well, you know, businesses, most of US imports, at least

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Speaker 3: a large chunk are intermediate goods, components, industrial supplies, and

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Speaker 3: things like that. So it will be businesses that will

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Speaker 3: first feel the pinch, but then of course that raises

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Speaker 3: their cost of production or they have to seek alternative

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Speaker 3: sources of supply, and to extent their higher prices they

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Speaker 3: have to pass those on to some extent. Of course,

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Speaker 3: it sort of trickles down in some sense and as

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Speaker 3: whittled down as you get along for the production process.

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Speaker 3: But it's mainly firms that have to adjust these in

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Speaker 3: the short run, and then consumers will see a neptick

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Speaker 3: in some of the prices of the goods they buy

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Speaker 3: later on.

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Speaker 2: The grievance here in folks who are with Douglas Irwin

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Speaker 2: and Dartmouth College Edgiar Denny coming up Elizabeth Economy with

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Speaker 2: us in the nine o'clock are really focused on China,

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Speaker 2: Professor Irwin, The reality is the grievance and retribution of

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Speaker 2: mister Trump and the assembled workers, construction workers, laborers yesterday

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Speaker 2: wrapped around senators in the rose garden. The grievance is

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Speaker 2: a stereotype starts. It's not maple sugar make up in

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Speaker 2: New Hampshire. It's textile workers in North Carolina who lost

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Speaker 2: their jobs to Vietnam. So fancy people in a bow

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Speaker 2: tie could buy a blue shirt made sixty miles northwest

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Speaker 2: of Hanoi? Did he help North Carolina yesterday? Discuss with

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Speaker 2: us this core emotion of America that we were taken

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Speaker 2: to the cleaners by globalization and we want our pride back.

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Speaker 2: Discuss that emotion, Doug Irwin.

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Speaker 3: No, that's certainly a visperable, visceral reaction among many people

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Speaker 3: that we've closed many factories, we've lost manufacturing jobs. But

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Speaker 3: as I and many accomas have pointed out, most of

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Speaker 3: those job losses are due to automation, not due to offshoring.

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Speaker 3: Even if we bring back some of the factories to

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Speaker 3: produce these things because the cost of importing is much higher,

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Speaker 3: the jobs probably won't follow. Even with textiles and apparel,

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Speaker 3: a lot can be automated. And so, you know, when

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Speaker 3: you think about the steel industry, which has always been

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Speaker 3: near and dear to the President's heart. In the nineteen eighties,

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Speaker 3: it took ten worker hours to produce a ton of steel.

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Speaker 3: Now it takes one. We're producing just as much steel,

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Speaker 3: but we just need many fewer workers because and the

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Speaker 3: type of workers that we need to produce steel has

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Speaker 3: changed from blue collar to white collar, from hard labor

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Speaker 3: to engineers monitoring equipment, and so the whole nature of

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Speaker 3: the economy has changed. So we're not in the twentieth

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Speaker 3: century anymore. We're in the twenty first century. And to

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Speaker 3: go back to the nineteenth century is going to be

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Speaker 3: really a hard pull. And that's why the markets are

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Speaker 3: reacting the way they are.

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Speaker 2: What do you recommend from fancy handover? You should see handovers? Gorgeous?

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Speaker 2: Love it absolutely winnival there, it's just gorgeous. What do

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Speaker 2: you say, dugger when too White River junction leveled for forty.

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Speaker 3: Years, that's exactly we're right near here in Hannover, right

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Speaker 3: near many communities that were devastated, But the devastation goes

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Speaker 3: back decades ago, even before the globalization, before and after

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Speaker 3: before the wto structural change in the US economy, a

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Speaker 3: lot of those jobs went from the north to the south.

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Speaker 3: If you go to Manchester, New Hampshire, right along the

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Speaker 3: Merrimack River, there's a mile long brick building enormous used

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Speaker 3: to produce boots, shoes, and textiles, but it hasn't done

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Speaker 3: that for a century. Those jobs were lost in the

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Speaker 3: nineteen fifties or before. Once again in the pre globalization

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Speaker 3: era and those jobs went south. And the same thing

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Speaker 3: has happened with Indiana, Michigan, Ohio, the rest belt in

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Speaker 3: the north, A lot of those we're still manufacturing stuff.

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Speaker 3: It's just in the south it's a different region where

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Speaker 3: labor costs are lower. Union's not so pervasive, and so

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Speaker 3: we think we've lost things as a nation, but we've

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Speaker 3: lost certain regions have lost out and that's a very

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Speaker 3: difficult thing to rejuvenate with tariffs. Tariffs are not going

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Speaker 3: to help White River Junction Professor.

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Speaker 4: Does the US economy risk being isolated in the global economy?

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Speaker 5: Here?

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Speaker 3: Yes, I mean you can see this, there's so much

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Speaker 3: uncertainty about what's happening and what's going to unfold. So

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Speaker 3: it could be that this sparks reprisals. I know that

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Speaker 3: EU is considering countermeasures and what have you, and so

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Speaker 3: the US gets isolated and other countries retaliate in kind.

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Speaker 3: But it also bring a flood of diplomats coming to

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Speaker 3: Washington seat trying to seek a deal to get rid

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Speaker 3: of this terrace on their particular country. Now so many

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Speaker 3: countries have been targeted. That's going to be a lot

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Speaker 3: of bilateral discussions over the next few months and a

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Speaker 3: lot uncertainly about what's going to happen. But it could

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Speaker 3: be the damage could be mitigated over time through that way.

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Speaker 3: But we'll just have to see sort of see how

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Speaker 3: it works out.

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Speaker 2: And your community across the nation, we say good morning

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Speaker 2: to all of you on Apple car Play Android Otto

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Speaker 2: Douglas Erwin with US of Dartmouth at College, Edward Jard

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Speaker 2: Denny coming up here from your Denny Research and Elizabeth Economy.

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Speaker 2: In the nine o'clock hour. After Edieard Denny, we have

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Speaker 2: a Secretary of Commerce with Jonathan Farrell looking for that'll

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Speaker 2: be a heated conversation to say the least Edgiar Denny.

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Speaker 2: I think I learned from the path from London School

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Speaker 2: of Economics to Chicago, a guy named Hayek said we

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Speaker 2: would clear markets. All of the press this morning, from Erwin,

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Speaker 2: from Furman, all of the experts that we talked to

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Speaker 2: posing at Peterson Institute, Chad Bone, this is a disaster.

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Speaker 2: Professor Irwin Hayek wants us to clear the market. From

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Speaker 2: your economics and trade analysis, How do we clear this

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Speaker 2: train wreck?

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Speaker 3: Well, unfortunately, what can go up very quickly and fast,

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Speaker 3: namely tariffs, don't necessarily come down quickly or fast, namely tariffs.

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Speaker 3: We've seen that with history. So cleaning up the mess

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Speaker 3: caused by Smooth Holly in the nineteen thirties and the

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Speaker 3: Great Depression that took decades. The tariffs went up fast,

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Speaker 3: but they came down slowly because you have to negotiate,

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Speaker 3: because vested interests have a stake in perpetuating them that

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Speaker 3: we weren't there before. That governments become addicted to the revenue.

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Speaker 3: I mean, if we're using these tariffs to offsets some

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Speaker 3: the tax cuts, it's going to be What that means

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Speaker 3: is to get rid of the tariffs, we're going to

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Speaker 3: need to increase taxes elsewhere, and that's always a politically

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Speaker 3: difficult thing to do, so reversing these things once these

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Speaker 3: steps have been taken is very, very difficult.

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Speaker 2: With us two giants of the business Douglas eve And and

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Speaker 2: Dartmouth College and from Yale University, and of course has

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Speaker 2: work with CJ. Lawrence. Nancy Lazara on the other day

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Speaker 2: ed Your Danny from Your Danny Research this morning ed

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Speaker 2: the reaction to Doug Erwin's failed trade policy is a

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Speaker 2: Dow down eleven hundred future points? Is this the beginning

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Speaker 2: of a bear market? In a lesser MAGS seven?

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Speaker 6: Well, I think so. I mean, up to now the

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Speaker 6: bear market has been the Magnificent seven. The S and

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Speaker 6: P four hundred and ninety three was actually flat for

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Speaker 6: the year until this hit the fan. And now I

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Speaker 6: think we've got a broadening of the market to the downside,

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Speaker 6: and clearly we're solidly into correction territory. And once you

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Speaker 6: do that and you've got a major policy failure, you

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Speaker 6: run the risk of turning into a bear market. This

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Speaker 6: has been kind of a free fall in the S

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Speaker 6: and P five hundred, not so much in the the

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Speaker 6: equal weighted SMB five hundred.

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Speaker 2: Let's turning now, right, Let's get in one more question.

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Speaker 2: Your Denny's playing paddleball with Blanche Flower this morning up

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Speaker 2: at Dartmouth, so we got to squeeze in one more

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Speaker 2: here with Doug Irwin. Doug, we need to rewrite Against

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Speaker 2: the Tide. What's the new prologue the new epilogue looked

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Speaker 2: like for your classic textbook this morning.

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Speaker 3: Well, you know, Against the Tide is more about the

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Speaker 3: intellectual history of trade, and there I think the wisdom

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Speaker 3: of Adam Smith still resonates. He had so many insightful

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Speaker 3: things to say. He said, there's nothing could be more

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Speaker 3: absurd than this whole idea of the balance of trade.

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Speaker 3: And that's the whole idea behind these biolateral tariffs. And

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Speaker 3: this other book called Clashing over Commerce, which is a

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Speaker 3: history of US trade policy. Clearly this is a new

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Speaker 3: chapter in the history of US trade policy. Is a

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Speaker 3: major development, a huge increase in tariffs we haven't seen

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Speaker 3: in decades, decades, and it's going to reshape the global

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Speaker 3: trade environment.

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Speaker 2: Professor Irwin, thank you so much, patiently waiting after Doug

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Speaker 2: Irwin has said, you're Danny and we welcome him from

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Speaker 2: your Jenny research a. You have parchment from Yale University.

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Speaker 2: Ernie Tedesky and Monica Gimble are up at the Yale

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Speaker 2: Budget Lab. Martha Gimble, I should say, are up at

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Speaker 2: the Yale Budget Lab just absolutely killing it on their

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Speaker 2: analysis of these tariffs. Their analysis is griham. It's a

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Speaker 2: three thousand plus dollar weight to every single household in America.

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Speaker 2: What does that do to the revenue stream of the

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Speaker 2: Dow Jones industrial average.

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Speaker 6: It's not good, that's for sure. Matt, may I see

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Speaker 6: something on behalf of the stock market vigilantes.

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Speaker 2: Would that be all right? Yes? Please on behalf?

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Speaker 6: On behalf of the stock market vigilantes. I'd like to say,

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Speaker 6: mister President, take down this tariff wall. This is the

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Speaker 6: most absurd policy that one could possibly imagine, and it's

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Speaker 6: a disaster for the economy. It's a disaster for the stuff.

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Speaker 6: And I think the pushback on the administration from the

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Speaker 6: stock market vigilantes is already quite intense. This say is

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Speaker 6: turning out to be not Liberation Day plus one, It's

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Speaker 6: turning out to be d Day in the on Wall Street.

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Speaker 2: I mean, Andre Denny, you were weaned to this. I

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Speaker 2: mean to go back to the huge academic debates of

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Speaker 2: the twentieth century in the development of our great economic

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Speaker 2: programs out to Stanford and UCLA as well. This policy

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Speaker 2: at Yard Denny isn't a twentieth century debate. How far

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Speaker 2: back is the president going? Is he beyond Stanley Jevons?

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Speaker 2: Is he beyond John Stuart Mill? Is this guy taking

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Speaker 2: us back to a mercantilism of the seventeenth cent? Absolutely?

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Speaker 6: Absolutely well, I mean really back in time, and certainly

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Speaker 6: well before McKinley, which seems to be his favorite role model,

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Speaker 6: favorite president.

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Speaker 2: In terms of.

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Speaker 6: Tariffs, the President may love tariffs, but nobody else does.

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Speaker 6: Nobody in the stock market loves tariffs. They are killers

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Speaker 6: of economic growth. They lead to inflation. I mean the

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Speaker 6: president seems to be asking for a recession. He said

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Speaker 6: that this would cause pain. I don't think he appreciated

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Speaker 6: how much pain it could possibly cause.

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Speaker 4: So as you think about investment, you know, I don't

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Speaker 4: know opportunities risk here? What do you do with a

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Speaker 4: portfolio today? What is a strategy in a world where

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Speaker 4: we have substantial tariffs and therefore maybe issues with economic growth,

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Speaker 4: with inflation. How do you position a portfolio today?

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Speaker 6: Well, there's so much uncertainty out there. But my feeling

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Speaker 6: right now, and it could change rapidly depending on what

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Speaker 6: the President says next, is that it's too late to panic,

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Speaker 6: you know. I think if you've got a good portfolio,

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Speaker 6: you stay with it. I think that the political pressure

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Speaker 6: on the administration to become more reasonable about this whole

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Speaker 6: thing quickly is going to be intense. I mean, the

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Speaker 6: Republicans are going to lose their majority in the midterm

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Speaker 6: elections if nothing changes on this.

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Speaker 2: Mistaken course ed.

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Speaker 4: I mean, it seems like I don't know where to

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Speaker 4: go here. I think a lot of investors are looking

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Speaker 4: at their screen this morning, Saint boy. I've got the

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Speaker 4: stock market down three four percent. I mean, I've got

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Speaker 4: yields plunging. I've even gold is off.

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Speaker 3: Yeah.

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Speaker 4: One, I'm not sure where to hide here. Any any

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Speaker 4: thoughts there?

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Speaker 6: Well, I think the only place to hide is in

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Speaker 6: your portfolio. Just stay with it. I think we'll get

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Speaker 6: through this. I think that there will be a lot

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Speaker 6: of pushback to change it. I think I'm not the

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Speaker 6: only one calling on the President to take down this

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Speaker 6: tariff wall. I think the pressure is going to be

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Speaker 6: intense to declare victory by getting some movement on the

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Speaker 6: other side of the negotiating table, but to get victory

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Speaker 6: and claim victory or rather rapidly.

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Speaker 2: Surveillance worldwide across the nation. In your morning commute, good morning,

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Speaker 2: good morning on serious XM ninety nine one FM in Washington.

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Speaker 2: Good morning, huge interest down there. Thank you so much

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Speaker 2: for that ninety two nine FF on Boston. I'm gonna

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Speaker 2: be up in Boston this weekend. Really, I couldn't get

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Speaker 2: tickets for Opening Day, you know, if you know I got,

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Speaker 2: That's a tough ticket I got. I got to sit

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Speaker 2: down next to the on deck circle because they're just

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Speaker 2: killing it. There's a couple of bars near it.

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Speaker 4: I think I can recommend to you.

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Speaker 2: Thank you, like you know Seven's on seven on Charles

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Speaker 2: Street or over on Peacon Hill. Yeah, maybe I'll be

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Speaker 2: at Seven's Friday night. We'll see ninety two nine FM.

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Speaker 2: What I do know. We're the ed Yard Denny here

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Speaker 2: on YouTube. Subscribe to Bloomberg Podcast commercial free in nine minutes,

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Speaker 2: maybe eleven minutes. Howard Lutnik, the Secretary of Commerce for

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Speaker 2: President Trump at the White House. Edyard Denny, your work

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Speaker 2: the work of a wonderful at Heimen, Nancy Lazar, all

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Speaker 2: of c J. Lawrence is a melding of the markets.

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Speaker 2: So I've got this economy and let's say I get

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Speaker 2: a growth shortfall. Do you just bring that right over

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Speaker 2: to single digit revenue growth for Nvidia, Microsoft and the

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Speaker 2: other mag seven.

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Speaker 6: I think that's the conclusion. They are kind of tight

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Speaker 6: at the hips of the market. Clearly is driven by earnings,

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Speaker 6: and earnings are driven by the economy. Just a couple

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Speaker 6: of days ago, in reaction to the auto tariffs, which

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Speaker 6: are just as absurd as all the other ones, I

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Speaker 6: lowered my outlook for the economic outlook from two and

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Speaker 6: a half to three percent all the way down to

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Speaker 6: one and a half percent. It was a painful decision

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Speaker 6: to make, but that was the conclusion I came to.

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Speaker 6: And what I've got the economy doing now is growing

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Speaker 6: by one percent in the first quarter, then in the

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Speaker 6: second quarter three percent, because I think people are going

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Speaker 6: to scramble here to buy cars before their prices go up,

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Speaker 6: and then I think we're looking at a growth slow down,

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Speaker 6: maybe no growth in the second half of the year.

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Speaker 2: Can it clear though? I mean, I mean everybody showed

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Speaker 2: up at the coronation I'm kidding, folks, that was a

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Speaker 2: joke with disrespect to President Trump. I'm sorry. If the

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Speaker 2: inauguration at your Denny Bezos was there with Missus Bezos

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Speaker 2: and all the others. Was Tim Cook there? I can't remember?

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Speaker 2: But these can they doctor Yodenny? Can these guys line up,

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Speaker 2: sit the guy down and say it's the magnitude or

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Speaker 2: that you're doing. It's killing us raised tariffs? But just

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Speaker 2: the teens weeds them out. Why can't these corporate titans

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Speaker 2: get that done? Well?

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Speaker 6: I think up to now, the assumption was that the

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Speaker 6: administration collectively knew what they were doing. But clearly with

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Speaker 6: the reaction of global stock markets, that's not the case.

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Speaker 6: There there is no vote of confidence anywhere, not even

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Speaker 6: in gold and what this administration is doing. I mean,

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Speaker 6: as you said, there seems to be no place to hide,

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Speaker 6: and the only place to hide is to go to

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Speaker 6: the White House and tell the President and the administration

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Speaker 6: that this policy is just wrong, but.

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Speaker 4: It is the policy of the day. So again, what

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Speaker 4: do you suggesting investors do here? You know, we oftentimes

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Speaker 4: talk about a flight to quality, whether that's quality companies,

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Speaker 4: quality stocks, great balance sheets, buying back by Max stock

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Speaker 4: lots of cash. How do you what would you say

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Speaker 4: to your clients today.

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Speaker 6: Well, there's some amazing buying opportunities if you're willing to

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Speaker 6: look past all this whenever you get I mean, we've

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Speaker 6: really never seen pessimism like this, other than the very

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Speaker 6: depth of a recession, the very depth of a bear market.

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Speaker 6: Usually when sentiment is this negative, that's from a contrary perspective,

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Speaker 6: is a by signal. The problem is that when pessimism

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Speaker 6: is this negative, you also get a FED put You

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Speaker 6: get the Fed lowering rates. But there's no way that

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Speaker 6: the FED can bail out the administration here by lowering

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Speaker 6: interest rates because they know, we know that this is

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Speaker 6: all going to lead to higher inflation at least for

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Speaker 6: three to six months.

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Speaker 2: Ed your Denny with us, and we continue with doctor

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Speaker 2: your Denny. Of course your Denny research is Yeah, we

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Speaker 2: thought we'd take a breaker for those of you on radio.

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Speaker 2: You have to observe it on YouTube you can pick

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Speaker 2: it up. Edier Denny, what is the name? You didn't

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Speaker 2: name the beast behind you on the brown upholstered chair.

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Speaker 2: You didn't name that dog? Maynard Keynes?

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Speaker 6: Right, No, no, no, that's Max and I am working

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Speaker 6: on creating a currency, a cryptocurrency named after Max where

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Speaker 6: you may see him with sunglasses.

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Speaker 2: Maxim on the coin, worried about the terrorists here is well,

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Speaker 2: very relaxed about the whole thing.

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Speaker 5: He is smart.

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Speaker 2: Speaking of relaxed. A colleague of yours, Robert Schiller, the

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Speaker 2: Laurie Yeap, wrote a book. Once. I sat with him

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Speaker 2: in the New Orleans airport and we're talking book ideas

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Speaker 2: and that, and I take no credit for this. But

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Speaker 2: six months later there was Bob Schiller Edyard Denny out

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Speaker 2: with a book called The Good Society. The President carries

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Speaker 2: a grievance the retribution of a huge part of America.

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Speaker 2: We've consistently seen that, including his wonderful interview with John Michelswaite,

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Speaker 2: our editor in chief. Talk to the people that are

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Speaker 2: not advantaged by a New Haven education, talk to those

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Speaker 2: feel the president's grievance and retribution.

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Speaker 6: Well, I say this as a non political observation that

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Speaker 6: the president got a pretty damn good economy for starters.

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Speaker 6: The unemployment rates four point one percent, the inflation rate

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Speaker 6: is quite close to two percent. The real GDP's at

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Speaker 6: an all time record high consumption per household as an

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Speaker 6: all time record high. This is not to say that

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Speaker 6: there aren't people who aren't doing well, but all in all,

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Speaker 6: from a top down analysis, things are pretty good. But

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Speaker 6: you asked me, really from the bottoms up, for the

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Speaker 6: people who have been suffering, I don't know that these

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Speaker 6: policies are going to make things any better for them.

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Speaker 6: And the immediate impact is to do exactly the opposite

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Speaker 6: of what most Americans voted for when they voted for.

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Speaker 6: Those who voted for Donald Trump wanted to see prices

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Speaker 6: coming down. Instead, we're going to see auto prices go

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Speaker 6: up five to ten thousand dollars. We're going to see

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Speaker 6: auto insurance go up even more, Maintaining and repairing cars

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Speaker 6: is going to go up. The immediate impact is not

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Speaker 6: going to be a happy one for anybody in America.

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Speaker 4: So Ed, I mean, there's you know, obviously from the

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Speaker 4: Trump administration, it's all about I guess they would say

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Speaker 4: free trade has not been good for the US. We

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Speaker 4: are getting ripped off. Is there evidence to suggest that

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Speaker 4: free trade is not working for the United States? It

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Speaker 4: seems like just a few months ago we were talking

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Speaker 4: about US economic exceptionalism.

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Speaker 2: How we're doing better than the rest of the world.

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Speaker 2: I don't know where the problem is.

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Speaker 6: Well, you know, everybody goes shopping and they shop in Walmart,

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Speaker 6: and they shopped in Costco and other places, and a

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Speaker 6: lot of the goods that we buy voluntarily without anybody

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Speaker 6: forcing us come from overseas. I mean, do we really

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Speaker 6: think it's realistic that Nike can make us sneakers here

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Speaker 6: at the without the price going up dramatically?

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Speaker 2: This is I don't mean to interrupt out to you, dennybody,

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Speaker 2: we got economic data. Wo minute, we'll give that to you.

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Speaker 2: Continuing claims out some other stuff here. Paul Sweeny at

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Speaker 2: ten am with the Ism Services Index pedeductor your Denny.

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Speaker 2: Alexander Skaggs over it. Wrigglesworth brought us to us this

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Speaker 2: morning over at FT Alpha. She said, Look, we don't

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Speaker 2: grow Banan. I mean, that's how simplistic this train wreck is. Yes,

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Speaker 2: yes we have. Yeah, well that's what she said. I mean,

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Speaker 2: Alexandra nailed it. I mean, Paul, you can't buy a

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Speaker 2: Vespa in America. You're not if you bring a Vespa

433
00:24:16,720 --> 00:24:20,280
Speaker 2: over to America, is it? How about your BMW Paul

434
00:24:20,520 --> 00:24:21,359
Speaker 2: made in Alabama?

435
00:24:21,400 --> 00:24:23,639
Speaker 4: How about just last week? I bought a Honda. I

436
00:24:23,680 --> 00:24:30,120
Speaker 4: bought a Honda CRV hybrid, you know vehicle. I don't

437
00:24:30,160 --> 00:24:31,400
Speaker 4: know where it was built. I think it was probably

438
00:24:31,440 --> 00:24:33,639
Speaker 4: built somewhere in the United States. But I mean, am

439
00:24:33,720 --> 00:24:36,840
Speaker 4: I going to pay twenty or twenty five more for that?

440
00:24:37,400 --> 00:24:38,000
Speaker 5: I don't know?

441
00:24:38,359 --> 00:24:40,640
Speaker 2: This is this is really important. Let's frame this out.

442
00:24:40,680 --> 00:24:45,040
Speaker 2: Sweety's got a six car garage around the Mansa, Jersey

443
00:24:45,119 --> 00:24:50,880
Speaker 2: Beach professor or Denny, America in particularly doing better than

444
00:24:50,920 --> 00:24:55,959
Speaker 2: good America. They like their foreign things. Politically, how does

445
00:24:56,000 --> 00:24:57,520
Speaker 2: that butters into your work?

446
00:24:58,720 --> 00:25:01,560
Speaker 6: Well, look, I've always and of the opinion that at

447
00:25:01,560 --> 00:25:05,200
Speaker 6: the end of the day, what's key to understanding what

448
00:25:06,000 --> 00:25:08,960
Speaker 6: the standard of living is in America is consumption per

449
00:25:09,000 --> 00:25:13,280
Speaker 6: household at the end, you know, maybe that's too materialistic,

450
00:25:13,359 --> 00:25:16,200
Speaker 6: but that's an easy way to measure it. Another way

451
00:25:16,200 --> 00:25:19,720
Speaker 6: to measure it is real wages. Real wages are all

452
00:25:19,760 --> 00:25:22,040
Speaker 6: time record high. I know there's been a lot of

453
00:25:22,080 --> 00:25:25,960
Speaker 6: controversy about that, but that's what the data shows. Inflation

454
00:25:26,000 --> 00:25:28,879
Speaker 6: adjusted wages of all time record high. Employment is it

455
00:25:28,920 --> 00:25:32,000
Speaker 6: an all time record high, and consumption per household is

456
00:25:32,000 --> 00:25:34,119
Speaker 6: an all time record high. You can't explain any of

457
00:25:34,119 --> 00:25:37,600
Speaker 6: that just by saying that the richer getting richer. There's

458
00:25:37,640 --> 00:25:41,000
Speaker 6: just not enough rich to account for all those developments.

459
00:25:41,119 --> 00:25:43,360
Speaker 2: And one more questionnaire as we tee up for John

460
00:25:43,440 --> 00:25:47,000
Speaker 2: Faroh with the Secretary of Commerce, professor, I say, I

461
00:25:47,040 --> 00:25:50,600
Speaker 2: call him professor, your Denny. He's running a research note. Folks,

462
00:25:50,600 --> 00:25:53,639
Speaker 2: subscribe to the Denny Note. It's really good. He's got

463
00:25:53,680 --> 00:25:56,040
Speaker 2: someone work with him who's better than good. Makes it happen.

464
00:25:56,480 --> 00:25:58,639
Speaker 2: You know, I look at your Denny, at where we

465
00:25:58,680 --> 00:26:03,040
Speaker 2: are in the answer is the panic is go to cash?

466
00:26:03,480 --> 00:26:06,760
Speaker 2: You are the great optimist. I'm sorry, Brian Belski, Your

467
00:26:06,800 --> 00:26:10,120
Speaker 2: Dennie's a great optimist? Ed youar Denny this morning? Are

468
00:26:10,119 --> 00:26:12,120
Speaker 2: you saying go to cash?

469
00:26:12,480 --> 00:26:15,560
Speaker 6: No, no, no, no, it's I think again I could

470
00:26:15,600 --> 00:26:18,240
Speaker 6: be wrong about this. I think it's too late to panic.

471
00:26:18,600 --> 00:26:20,719
Speaker 6: I think the Republicans are going to panic. I think

472
00:26:20,760 --> 00:26:23,880
Speaker 6: they're going to realize that this policy is a disaster.

473
00:26:24,080 --> 00:26:27,719
Speaker 6: I think the pushback from senators and representatives is going

474
00:26:27,760 --> 00:26:29,800
Speaker 6: to be awesome. I mean, look at all these people

475
00:26:29,800 --> 00:26:31,960
Speaker 6: that are retiring. People my age. I still have to

476
00:26:32,000 --> 00:26:33,840
Speaker 6: work for a living because I got five kids and

477
00:26:33,880 --> 00:26:34,399
Speaker 6: four daughters.

478
00:26:34,440 --> 00:26:35,880
Speaker 2: Oh, I would not know about that.

479
00:26:37,640 --> 00:26:40,280
Speaker 6: But my friends are all retiring, and they were really

480
00:26:40,320 --> 00:26:43,200
Speaker 6: happy because they went on their cruises and watched their

481
00:26:43,280 --> 00:26:47,200
Speaker 6: their stock portfolios going up. Now there's there's Matt. They

482
00:26:47,200 --> 00:26:49,480
Speaker 6: are Matt as Helen. They're not gonna take it anymore.

483
00:26:49,760 --> 00:26:53,560
Speaker 6: They're going to be flooding Congress with complaints about how

484
00:26:54,200 --> 00:26:58,119
Speaker 6: instead of creating wealth, the president is destroying wealth and.

485
00:26:58,359 --> 00:27:02,960
Speaker 2: Is including pizza. Is Yale University popping one hundred thousand

486
00:27:03,440 --> 00:27:06,080
Speaker 2: a year? You guys popping one hundred k up at

487
00:27:06,080 --> 00:27:07,320
Speaker 2: New Haven? Now on tuition?

488
00:27:08,080 --> 00:27:11,960
Speaker 6: Hallie, Well, I'm not a professor. I'm not there anymore.

489
00:27:12,000 --> 00:27:14,760
Speaker 6: I'm here at my home office in Long Island, so

490
00:27:14,800 --> 00:27:17,919
Speaker 6: I have not a clue what it costs. And my

491
00:27:18,040 --> 00:27:19,160
Speaker 6: kids are beyond college.

492
00:27:19,200 --> 00:27:22,239
Speaker 2: Thank god. I pity anybody that's not the case. Thank you,

493
00:27:22,320 --> 00:27:24,200
Speaker 2: Max and Dog love to having you on the show.

494
00:27:24,320 --> 00:27:25,680
Speaker 2: Ed Jo Denny, thank you so much.

495
00:27:31,320 --> 00:27:34,920
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

496
00:27:34,960 --> 00:27:38,119
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

497
00:27:38,200 --> 00:27:41,879
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

498
00:27:42,040 --> 00:27:43,520
Speaker 1: watch us live on YouTube.

499
00:27:43,640 --> 00:27:46,800
Speaker 2: No introduction necessary. Robert Michael, Bob Michael joins US now

500
00:27:46,920 --> 00:27:50,200
Speaker 2: CIO with JP Morgan Asset Management. Thank you for joining

501
00:27:50,200 --> 00:27:53,199
Speaker 2: Bloomberg today. I really appreciate it. I can't imagine I've

502
00:27:53,240 --> 00:27:55,720
Speaker 2: been up since twelve thirty five pm. I know Michael

503
00:27:55,760 --> 00:28:01,440
Speaker 2: Faroli has in Caswine right now Dovetail the Casman Farole

504
00:28:01,840 --> 00:28:05,560
Speaker 2: analysis of price up, yield down to a four to

505
00:28:05,600 --> 00:28:09,560
Speaker 2: ZHO three handle and the ten year yield. Does it

506
00:28:09,960 --> 00:28:14,120
Speaker 2: aggressively changed your own Powell's life? Does it change Wall

507
00:28:14,160 --> 00:28:18,159
Speaker 2: Street in the fixed income market? Some? The JP Morgan

508
00:28:18,200 --> 00:28:21,520
Speaker 2: analysis has occurred since five pm yesterday?

509
00:28:22,640 --> 00:28:25,959
Speaker 5: Yeah, great question, Tom, and I've spent the last twelve

510
00:28:25,960 --> 00:28:28,480
Speaker 5: hours coming through our research and at all points to

511
00:28:28,520 --> 00:28:33,680
Speaker 5: the same thing, which is given as how tariff's stand

512
00:28:33,920 --> 00:28:37,080
Speaker 5: as they were announced. That's going to push the US

513
00:28:37,200 --> 00:28:44,560
Speaker 5: economy into recession. They're dramatic its attacks on businesses and households.

514
00:28:44,840 --> 00:28:49,120
Speaker 5: It's going to cause them to retrench. It's worse than

515
00:28:49,360 --> 00:28:54,040
Speaker 5: most expectations. I think the caveat is we don't know

516
00:28:54,080 --> 00:28:57,000
Speaker 5: what the policy response will look like. We still have

517
00:28:57,200 --> 00:29:00,520
Speaker 5: until April ninth for the majority of the times to

518
00:29:00,560 --> 00:29:03,000
Speaker 5: be enacted, so there could be a lot of negotiation.

519
00:29:03,600 --> 00:29:06,560
Speaker 5: You have the FED sitting with a lot of dry powder.

520
00:29:06,560 --> 00:29:09,520
Speaker 5: At four and three eight percent, they could bring rates

521
00:29:09,560 --> 00:29:12,240
Speaker 5: down quite a bit. And you don't know what's going

522
00:29:12,280 --> 00:29:15,360
Speaker 5: to happen overseas. You could see freskal stimulus.

523
00:29:15,760 --> 00:29:18,160
Speaker 2: Tell me what you read in the bond market. You've

524
00:29:18,200 --> 00:29:21,880
Speaker 2: got your team of people, he has twelve report to him.

525
00:29:22,320 --> 00:29:25,600
Speaker 2: The team. What you see across full faith and credit,

526
00:29:26,120 --> 00:29:29,480
Speaker 2: high yield spread in all? What have you observed since

527
00:29:29,560 --> 00:29:30,760
Speaker 2: five pm yesterday?

528
00:29:31,120 --> 00:29:35,440
Speaker 5: I see confusion. I see the market trying to digest.

529
00:29:35,840 --> 00:29:40,440
Speaker 5: Inflation could go above four percent. The Fed's hands are tied,

530
00:29:40,880 --> 00:29:44,400
Speaker 5: and recession could mean unemployment cruises through four and a

531
00:29:44,440 --> 00:29:46,480
Speaker 5: half percent to five percent?

532
00:29:47,040 --> 00:29:50,360
Speaker 2: Is JP Morgan publishing a five percent? What if an unemployment?

533
00:29:50,440 --> 00:29:50,680
Speaker 7: No?

534
00:29:50,680 --> 00:29:52,800
Speaker 2: No, I got to make some news here. Lease has

535
00:29:52,800 --> 00:29:53,560
Speaker 2: failed me today.

536
00:29:53,680 --> 00:29:55,360
Speaker 5: Okay, I've got news for you.

537
00:29:55,400 --> 00:29:55,760
Speaker 2: Please.

538
00:29:55,800 --> 00:29:59,640
Speaker 5: The Fed's hands aren't tied and you'll love this. Where

539
00:29:59,760 --> 00:30:03,240
Speaker 5: is Samuelson econ one oh one text?

540
00:30:03,320 --> 00:30:06,680
Speaker 2: Do you mean the nineteen forty eight textbook? The difference is, folks,

541
00:30:06,800 --> 00:30:09,280
Speaker 2: I read it in the English, Michael read it in Greek.

542
00:30:09,680 --> 00:30:12,520
Speaker 2: Tell Us about Samuelson nineteen forty eight.

543
00:30:12,960 --> 00:30:17,080
Speaker 5: There is a difference in where the inflation is coming from.

544
00:30:17,480 --> 00:30:22,800
Speaker 5: Demand pull is something the FED responds to by hiking rates.

545
00:30:23,080 --> 00:30:27,840
Speaker 5: That's what we saw after COVID. Cost push is what

546
00:30:27,880 --> 00:30:32,320
Speaker 5: the FED responds to by cutting rates because of the

547
00:30:32,400 --> 00:30:36,880
Speaker 5: impact it has to businesses who see profitability eroad and

548
00:30:36,920 --> 00:30:39,360
Speaker 5: two households who see their purchasing power.

549
00:30:39,600 --> 00:30:42,200
Speaker 2: Well, did you see bought Michael's Lapel's why.

550
00:30:42,120 --> 00:30:45,640
Speaker 4: It makes exist talk about the nineteen forties exactly.

551
00:30:46,120 --> 00:30:46,840
Speaker 2: So, Bob, what I mean?

552
00:30:47,640 --> 00:30:50,360
Speaker 4: You're sitting there, JP Morgan Asset Management. What are you

553
00:30:50,400 --> 00:30:53,280
Speaker 4: telling your men and women who are putting money to

554
00:30:53,320 --> 00:30:55,520
Speaker 4: work today? What are you telling them to do today?

555
00:30:55,560 --> 00:30:58,800
Speaker 4: Do you do you dive into the sell off here?

556
00:30:58,880 --> 00:31:01,440
Speaker 4: Do you just say we need to recalibrate here because

557
00:31:01,480 --> 00:31:05,000
Speaker 4: there's a new world order, maybe a recession in the offing.

558
00:31:05,880 --> 00:31:09,560
Speaker 5: I tell them bonds look great. This isn't a market

559
00:31:09,760 --> 00:31:13,240
Speaker 5: with the FED down around zero one percent, the ECB

560
00:31:13,520 --> 00:31:16,240
Speaker 5: at minus a half minus three quarters of a percent.

561
00:31:16,720 --> 00:31:19,280
Speaker 5: This is a FED at four and three eighths with

562
00:31:19,320 --> 00:31:22,280
Speaker 5: a lot of firepower to bring rates down. If there

563
00:31:22,480 --> 00:31:25,720
Speaker 5: is no grand bargain and these towers hit in full

564
00:31:25,800 --> 00:31:29,240
Speaker 5: force and there's some retaliation, the FED could bring rates

565
00:31:29,280 --> 00:31:32,000
Speaker 5: down two hundred basis points two and a quarter two

566
00:31:32,040 --> 00:31:35,080
Speaker 5: and a half percent, the entire treasury curve goes down

567
00:31:35,120 --> 00:31:37,560
Speaker 5: to the low twos. So get in. We'll put you

568
00:31:37,640 --> 00:31:38,520
Speaker 5: in the right bonds.

569
00:31:38,720 --> 00:31:43,080
Speaker 2: Do you put these at a slow day? Instrue?

570
00:31:43,200 --> 00:31:45,200
Speaker 4: JP Morgan asset Management, I love them.

571
00:31:45,640 --> 00:31:46,120
Speaker 2: Credit risk?

572
00:31:46,200 --> 00:31:49,200
Speaker 4: Do I take credit risk? I can't even imagine taking

573
00:31:49,240 --> 00:31:51,360
Speaker 4: credit risk today because I think a lot of people

574
00:31:51,400 --> 00:31:53,720
Speaker 4: are just looking at the futures here. People are just

575
00:31:53,760 --> 00:31:54,480
Speaker 4: stepping back.

576
00:31:54,960 --> 00:31:57,360
Speaker 5: You can take some I think clearly you want to

577
00:31:57,400 --> 00:32:00,880
Speaker 5: be up in quality. Uh, there's a lot in the

578
00:32:00,920 --> 00:32:06,040
Speaker 5: banking system and financial services where banks look structurally over

579
00:32:06,200 --> 00:32:10,200
Speaker 5: capitalized because of all the regulatory environments in the last

580
00:32:10,200 --> 00:32:13,080
Speaker 5: few years. But generally you're right. You just want to

581
00:32:13,080 --> 00:32:15,480
Speaker 5: pull back a little bit, see where the dust settles.

582
00:32:15,800 --> 00:32:18,320
Speaker 5: I want to see more pricing in of potential recession.

583
00:32:18,480 --> 00:32:20,360
Speaker 2: Unfair question. I don't want you to get in trouble

584
00:32:20,360 --> 00:32:22,800
Speaker 2: with the general counsel. Working for mister Diamond today it

585
00:32:22,840 --> 00:32:25,720
Speaker 2: works like a six hour day. It's amazing, Bob Michael,

586
00:32:25,760 --> 00:32:27,920
Speaker 2: It's as simple as this. We didn't know on a

587
00:32:28,000 --> 00:32:31,880
Speaker 2: day in October eighty seven about portfolio insurance. We didn't

588
00:32:31,880 --> 00:32:34,640
Speaker 2: know Myron Schulz was working a hedge fund with a

589
00:32:34,720 --> 00:32:37,600
Speaker 2: twenty to one thirty to one leverage in nineteen ninety eight.

590
00:32:38,080 --> 00:32:40,920
Speaker 2: So here we are. Now. We all agree that banks,

591
00:32:40,920 --> 00:32:44,320
Speaker 2: including your brilliant bank, are solid, and you know, thank

592
00:32:44,360 --> 00:32:47,000
Speaker 2: you two thousand and eight. It's a fortress diamond in that.

593
00:32:47,600 --> 00:32:52,480
Speaker 2: But there's other leverage issues out there, like private equity,

594
00:32:52,880 --> 00:32:56,640
Speaker 2: private credit. They're not on your remit. But we're all

595
00:32:56,640 --> 00:33:01,560
Speaker 2: in this together. Do you worry about shocks or systemic

596
00:33:01,760 --> 00:33:05,280
Speaker 2: risks out there from this Trump trauma? See?

597
00:33:05,280 --> 00:33:07,960
Speaker 5: Tom, there you go. We knew those things. We knew

598
00:33:07,960 --> 00:33:11,960
Speaker 5: about portfolio insurance, we knew about everything that you talked about,

599
00:33:12,000 --> 00:33:15,000
Speaker 5: but we ignored it. I think private capital is a

600
00:33:15,000 --> 00:33:17,880
Speaker 5: big one that's out there. When we look at the

601
00:33:17,880 --> 00:33:22,120
Speaker 5: private credit markets that have about two trillion dollars, that's

602
00:33:22,200 --> 00:33:25,520
Speaker 5: two thirds the size of the entire US banking system.

603
00:33:25,800 --> 00:33:29,320
Speaker 5: When you look at their commercial and industrial loan unregulated,

604
00:33:30,520 --> 00:33:35,960
Speaker 5: let's call it lightly regulated. Is it right for a shakeout? Yes?

605
00:33:36,240 --> 00:33:41,200
Speaker 5: Is it disaster brewing? Absolutely not so. Yeah, there are

606
00:33:41,240 --> 00:33:43,640
Speaker 5: areas like that which we're looking at. You could see

607
00:33:43,640 --> 00:33:47,680
Speaker 5: a shakeout, but there's nothing out there that tells you

608
00:33:47,760 --> 00:33:51,120
Speaker 5: this could evolve into a significant crisis.

609
00:33:51,440 --> 00:33:53,320
Speaker 4: So what are you telling your clients today. I'm sure

610
00:33:53,320 --> 00:33:54,840
Speaker 4: you're going to be on the phone. You're going to

611
00:33:54,880 --> 00:33:57,960
Speaker 4: be doing zooms all day with your clients. What's the

612
00:33:58,040 --> 00:33:58,840
Speaker 4: message today?

613
00:34:00,160 --> 00:34:04,000
Speaker 5: It is that next week is a long time away.

614
00:34:04,960 --> 00:34:09,239
Speaker 5: The administration has left the door open for negotiation. Let's

615
00:34:09,280 --> 00:34:12,680
Speaker 5: see what happens. But we're going to be left with

616
00:34:12,800 --> 00:34:16,520
Speaker 5: some level of tariffs. And some level of tariffs is

617
00:34:16,600 --> 00:34:20,480
Speaker 5: a tax on businesses and households that will slow things

618
00:34:20,560 --> 00:34:25,040
Speaker 5: down and inflation yep, that will pop up mid threes,

619
00:34:25,160 --> 00:34:28,479
Speaker 5: maybe up to four percent. The Fed has already told

620
00:34:28,520 --> 00:34:32,240
Speaker 5: us they're going to look through that because that's cost

621
00:34:32,360 --> 00:34:36,640
Speaker 5: push inflation. So expect that if things slow down too much,

622
00:34:36,960 --> 00:34:39,200
Speaker 5: the Fed will bring forward rate cuts.

623
00:34:39,280 --> 00:34:41,360
Speaker 2: One minute, here, I got the first print and the

624
00:34:41,400 --> 00:34:43,640
Speaker 2: ten year real yield today, folks who are at two

625
00:34:43,680 --> 00:34:47,319
Speaker 2: point zero percent a senka ago, and now we come in,

626
00:34:47,360 --> 00:34:49,759
Speaker 2: we're at one point seven two percent on the first

627
00:34:49,800 --> 00:34:54,120
Speaker 2: print in seven basis points. Where where is a ten

628
00:34:54,200 --> 00:34:57,640
Speaker 2: year real yield? Where you say we're back to what

629
00:34:57,680 --> 00:34:59,719
Speaker 2: we used to know in terms of low yields. Is

630
00:34:59,719 --> 00:35:02,560
Speaker 2: it a one fifty? Is it a one twenty ten

631
00:35:02,640 --> 00:35:05,399
Speaker 2: year real yield? What's the Bob Michael number there.

632
00:35:05,920 --> 00:35:09,520
Speaker 5: Yeah, I think a real yield on the ten yere

633
00:35:10,080 --> 00:35:14,960
Speaker 5: should average about two percent. I will tell you this quarter,

634
00:35:15,200 --> 00:35:18,680
Speaker 5: I'm willing to accept a much lower real yield on

635
00:35:18,800 --> 00:35:23,440
Speaker 5: ten year treasuries to protect me to the downside against recession.

636
00:35:23,840 --> 00:35:26,760
Speaker 5: So I'll go as low as a one percent real yield.

637
00:35:27,239 --> 00:35:29,480
Speaker 2: Thank you so much for coming in. We have two

638
00:35:29,560 --> 00:35:31,319
Speaker 2: chairs there. Lisa needs to go up and get a

639
00:35:31,320 --> 00:35:34,640
Speaker 2: gluten free breakfast. Bring mister Diamond with you next time

640
00:35:35,080 --> 00:35:37,799
Speaker 2: to interview Diamond and Michael together would be really cool.

641
00:35:37,800 --> 00:35:39,239
Speaker 4: We're going to do a remote when they open their

642
00:35:39,239 --> 00:35:42,640
Speaker 4: headquarters on Park Avenue. I've alreadyalked to Jamie work or

643
00:35:42,680 --> 00:35:43,200
Speaker 4: working on that.

644
00:35:43,520 --> 00:35:44,920
Speaker 5: You know. They got to come on over.

645
00:35:45,280 --> 00:35:47,200
Speaker 2: Have you picked up the collar of your carpet yet

646
00:35:47,239 --> 00:35:47,960
Speaker 2: in your office?

647
00:35:48,040 --> 00:35:52,640
Speaker 5: I walked through the building two days ago. It's fantastic.

648
00:35:52,719 --> 00:35:55,120
Speaker 5: Can't like to move an end of August. Come on

649
00:35:55,200 --> 00:35:55,920
Speaker 5: over and go up.

650
00:35:56,120 --> 00:35:59,040
Speaker 2: Don't you pick out the maroon carpet like Bill Murray

651
00:35:59,080 --> 00:36:00,279
Speaker 2: and lost a Translate.

652
00:36:01,120 --> 00:36:04,319
Speaker 5: Corporate will pick it out.

653
00:36:05,440 --> 00:36:09,240
Speaker 2: Happy and I can't imagine the number of designers involved

654
00:36:09,600 --> 00:36:12,560
Speaker 2: in that decision. Bob Michael, thank you so much. For

655
00:36:12,560 --> 00:36:14,880
Speaker 2: coming in a huge day for JP Morgan.

656
00:36:15,200 --> 00:36:19,120
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

657
00:36:19,120 --> 00:36:22,120
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

658
00:36:22,160 --> 00:36:25,200
Speaker 1: Auto with the Bloomberg Business App. You can also listen

659
00:36:25,280 --> 00:36:28,560
Speaker 1: live on Amazon Alexa from our flagship New York station,

660
00:36:29,120 --> 00:36:31,760
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

661
00:36:31,960 --> 00:36:36,600
Speaker 2: Joining US now Surveillance Irrationality correspondent Tina Fordham. She is

662
00:36:36,640 --> 00:36:40,319
Speaker 2: with Fordham Global Foresight in London. Tina, let me cut

663
00:36:40,360 --> 00:36:43,680
Speaker 2: to the chase. How will the Prime minister respond to this?

664
00:36:45,480 --> 00:36:48,440
Speaker 8: Well, the Prime Minister here in the UK will respond

665
00:36:48,480 --> 00:36:53,280
Speaker 8: with relief. Britain got off lightly with ten percent tariffs.

666
00:36:53,320 --> 00:36:57,120
Speaker 8: Now that is partly because the UK is an exporter

667
00:36:57,440 --> 00:37:01,920
Speaker 8: of services more than goods. By like all politicians in

668
00:37:01,920 --> 00:37:05,880
Speaker 8: this environment, Keir Starmer will be glad to take credit

669
00:37:06,840 --> 00:37:11,640
Speaker 8: for having a successful policy with President Trump.

670
00:37:12,760 --> 00:37:17,200
Speaker 2: Algerschmating just mentioned a two month interlude to straighten out

671
00:37:17,200 --> 00:37:21,960
Speaker 2: as he said, this irrationality. Tina Fordham, can our listeners

672
00:37:21,960 --> 00:37:26,120
Speaker 2: and viewers survive two months until the adults show up?

673
00:37:28,400 --> 00:37:32,759
Speaker 8: I think that sounds like an eternity, and I suspect

674
00:37:32,840 --> 00:37:38,160
Speaker 8: that we're going to see a fairly nuanced and sophisticated

675
00:37:38,200 --> 00:37:42,360
Speaker 8: response from the European Union. I think the tension is

676
00:37:42,760 --> 00:37:49,880
Speaker 8: best framed as between placating Trump and retaliation, and if

677
00:37:49,920 --> 00:37:53,880
Speaker 8: you look at public opinion data in the European Union,

678
00:37:54,600 --> 00:38:00,200
Speaker 8: there's strong public support for retaliating against the US. But

679
00:38:00,280 --> 00:38:04,200
Speaker 8: there will also be, of course, a desire to play

680
00:38:04,280 --> 00:38:07,960
Speaker 8: nice I think to start with and try to see

681
00:38:08,000 --> 00:38:11,600
Speaker 8: about taking these down a bit, because twenty percent is.

682
00:38:13,320 --> 00:38:14,240
Speaker 7: Harsh.

683
00:38:14,640 --> 00:38:17,640
Speaker 4: Yep, so, Tina, I'm just looking at your notes here.

684
00:38:17,880 --> 00:38:19,360
Speaker 5: Liberation Day will.

685
00:38:19,200 --> 00:38:22,719
Speaker 4: Go down in history, but not for the reasons President

686
00:38:22,800 --> 00:38:24,279
Speaker 4: Trump expects. What do you mean by that?

687
00:38:26,480 --> 00:38:28,040
Speaker 8: Oh, I think you know what I need.

688
00:38:29,360 --> 00:38:31,280
Speaker 4: Let's play it out for us.

689
00:38:31,560 --> 00:38:34,000
Speaker 8: Yes, I mean it was astonishing.

690
00:38:34,480 --> 00:38:35,319
Speaker 7: Let me put it this way.

691
00:38:35,360 --> 00:38:37,640
Speaker 8: I was watching in London with my seventeen year old

692
00:38:37,640 --> 00:38:42,040
Speaker 8: and my twenty year old, and my seventeen year old said, mum,

693
00:38:42,160 --> 00:38:46,280
Speaker 8: is this how the Great Depression started in the United States?

694
00:38:46,920 --> 00:38:51,600
Speaker 8: Because he's studying that period right now. It will go

695
00:38:51,680 --> 00:38:55,920
Speaker 8: down in history as a voluntary act of self harm

696
00:38:56,520 --> 00:39:00,000
Speaker 8: when the biggest and most powerful nation in the world

697
00:39:00,080 --> 00:39:06,120
Speaker 8: world abdicated from its position in the global system and

698
00:39:06,960 --> 00:39:11,920
Speaker 8: moved out of that into a deals based, seemingly ad

699
00:39:11,960 --> 00:39:18,160
Speaker 8: hoc set of relationships with highly unpredictable policy that's going

700
00:39:18,200 --> 00:39:22,640
Speaker 8: to end up costing US consumers among other things.

701
00:39:23,360 --> 00:39:27,040
Speaker 4: It's interesting, Tina we I was just speaking to John Tucker,

702
00:39:27,280 --> 00:39:30,560
Speaker 4: who Deals talked with our radio affiliates all across the

703
00:39:30,600 --> 00:39:33,440
Speaker 4: country here in the United States, and he was saying,

704
00:39:33,640 --> 00:39:35,520
Speaker 4: you know, in the last couple of days, he's heard

705
00:39:35,520 --> 00:39:39,799
Speaker 4: nothing but positive, positive support for President Trump and his

706
00:39:40,719 --> 00:39:45,160
Speaker 4: terriff ISSU policies here. So, I mean, there's a lot

707
00:39:45,200 --> 00:39:47,520
Speaker 4: of folks that feel like the Americans are getting the

708
00:39:47,560 --> 00:39:50,520
Speaker 4: short end of the stick from global trade. What do

709
00:39:50,560 --> 00:39:52,759
Speaker 4: you say to those folks?

710
00:39:54,239 --> 00:39:59,480
Speaker 8: And it's very moving, of course to see the UAW

711
00:39:59,719 --> 00:40:05,719
Speaker 8: guy in the audience coming on stage. De Industrialization hit

712
00:40:05,880 --> 00:40:11,400
Speaker 8: America very hard, and that speaks to what happened with globalization,

713
00:40:11,760 --> 00:40:15,279
Speaker 8: the you know, stagnation of wages and everything else. So,

714
00:40:15,880 --> 00:40:18,160
Speaker 8: you know, let's be clear that there is no question

715
00:40:18,280 --> 00:40:21,200
Speaker 8: that there were a lot of people left behind by

716
00:40:21,200 --> 00:40:23,600
Speaker 8: globalization and they are Trump supporters.

717
00:40:24,000 --> 00:40:26,520
Speaker 7: But looking at the data.

718
00:40:26,400 --> 00:40:31,920
Speaker 8: Trump's approval ratings have declined slightly from around forty seven

719
00:40:32,920 --> 00:40:36,640
Speaker 8: present to about forty three percent. The ratings have dropped

720
00:40:36,640 --> 00:40:39,800
Speaker 8: more on economic competence. And so here's where I would

721
00:40:39,800 --> 00:40:45,160
Speaker 8: introduce a little nuance. The tariffs are not popular. You know,

722
00:40:45,200 --> 00:40:48,399
Speaker 8: it does seem that Americans understand that this is likely

723
00:40:48,440 --> 00:40:50,840
Speaker 8: to cost them money, and we've seen that hit in

724
00:40:51,000 --> 00:40:57,440
Speaker 8: consumer sentiment. Righting the wrongs of globalization is popular. And

725
00:40:57,520 --> 00:41:01,640
Speaker 8: so the question is whether these policies accomplish that, isn't

726
00:41:01,640 --> 00:41:02,880
Speaker 8: it if.

727
00:41:02,719 --> 00:41:06,080
Speaker 2: There's a ballot box repair of folks In eighteen ninety

728
00:41:06,320 --> 00:41:10,600
Speaker 2: with McKinley, the Republicans were destroyed in the election. They

729
00:41:10,640 --> 00:41:14,719
Speaker 2: lost eighty six eighty six seats in eighteen ninety. I'm

730
00:41:14,760 --> 00:41:17,960
Speaker 2: not predicting that or anything like that, but Tina Fordam,

731
00:41:18,200 --> 00:41:20,720
Speaker 2: do you have an assumption here that, on your reading

732
00:41:20,760 --> 00:41:25,480
Speaker 2: of history, that trade and tariff excesses are solved at

733
00:41:25,480 --> 00:41:26,320
Speaker 2: the ballot box.

734
00:41:29,200 --> 00:41:30,360
Speaker 7: It doesn't look good for that.

735
00:41:30,560 --> 00:41:34,280
Speaker 8: And I mean, we know that President Trump and members

736
00:41:34,320 --> 00:41:38,120
Speaker 8: of his cabinet and advisors are drawn to this late

737
00:41:38,200 --> 00:41:42,839
Speaker 8: nineteenth century period when you perceived US power was at

738
00:41:42,840 --> 00:41:45,719
Speaker 8: its peak. But the world has moved on since then,

739
00:41:45,960 --> 00:41:48,040
Speaker 8: and it's not clear whether you can turn back the

740
00:41:48,080 --> 00:41:52,120
Speaker 8: clock and whether manufacturing jobs are really the answer. And

741
00:41:52,480 --> 00:41:59,840
Speaker 8: this is where policy types like me are very unimpressed

742
00:42:00,320 --> 00:42:03,720
Speaker 8: with these efforts. They do play well to people because

743
00:42:03,719 --> 00:42:07,000
Speaker 8: there's a very strong sense and I call it stop

744
00:42:07,080 --> 00:42:07,480
Speaker 8: the world.

745
00:42:07,520 --> 00:42:08,400
Speaker 7: I want to get off.

746
00:42:08,840 --> 00:42:11,279
Speaker 8: You know that things are moving too fast, that the

747
00:42:11,320 --> 00:42:16,080
Speaker 8: world has become unrecognizable. And this is where politicians that

748
00:42:16,280 --> 00:42:20,160
Speaker 8: offer a prescription are. You know, it's resonating with people.

749
00:42:20,200 --> 00:42:23,120
Speaker 8: And sorry, the point about what happens at the midterms.

750
00:42:24,480 --> 00:42:28,879
Speaker 8: You know, Wisconsin, judge went one way and Florida another way.

751
00:42:29,080 --> 00:42:33,319
Speaker 8: We're only three months in. Historically, the party in power, though,

752
00:42:33,480 --> 00:42:36,800
Speaker 8: does get hammered at midterms. And that's even apart from

753
00:42:37,600 --> 00:42:43,080
Speaker 8: having taken such dramatic steps to alter the global system.

754
00:42:43,280 --> 00:42:45,280
Speaker 2: Tanta, thank you so much. Can't wait to see the writing.

755
00:42:45,280 --> 00:42:48,920
Speaker 2: As Paul mentioned the researcher notes from Fordham Global Foresight,

756
00:42:49,040 --> 00:42:50,840
Speaker 2: I can't wait to see those in the coming days.

757
00:42:56,400 --> 00:43:00,160
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each week

758
00:43:00,200 --> 00:43:03,000
Speaker 1: days starting at seven am Eastern on Apple, Corplay and

759
00:43:03,000 --> 00:43:06,000
Speaker 1: Android Auto with the Bloomberg Business app. You can also

760
00:43:06,120 --> 00:43:09,279
Speaker 1: watch us live every weekday on YouTube and always on

761
00:43:09,320 --> 00:43:10,560
Speaker 1: the Bloomberg terminal.

762
00:43:11,000 --> 00:43:13,160
Speaker 2: Her book The Third Revolution was my book of the

763
00:43:13,160 --> 00:43:16,040
Speaker 2: summer a number of years ago, another book, A World

764
00:43:16,080 --> 00:43:19,759
Speaker 2: according to China. She's someone that's done great duty for

765
00:43:20,239 --> 00:43:24,800
Speaker 2: America with Ramando at commerce here a few years ago.

766
00:43:25,000 --> 00:43:27,840
Speaker 2: We're thrilled that she could join us now from Stanford

767
00:43:27,920 --> 00:43:33,280
Speaker 2: University doctor economy. Beijing takes us in. How will they respond?

768
00:43:34,440 --> 00:43:37,880
Speaker 7: Yeah, I mean, I think they've already started to respond.

769
00:43:38,040 --> 00:43:40,879
Speaker 7: I think, you know, they've they clearly stated that they

770
00:43:40,920 --> 00:43:44,640
Speaker 7: want the Trump ad administration to rescind the terrace. But

771
00:43:44,719 --> 00:43:50,200
Speaker 7: beyond that, they put a stop measure on all Chinese

772
00:43:50,280 --> 00:43:52,920
Speaker 7: investment into the United States. Not that that's such a

773
00:43:52,920 --> 00:43:55,359
Speaker 7: big deal. It's only a couple billion dollars last year,

774
00:43:55,400 --> 00:43:58,000
Speaker 7: I think, so it's not that meaningful. But I think

775
00:43:58,000 --> 00:44:00,680
Speaker 7: we can expect, you know, that they have developed their

776
00:44:00,719 --> 00:44:03,799
Speaker 7: retaliatory toolkit to a very fine degree. So we will

777
00:44:03,840 --> 00:44:06,960
Speaker 7: see some reciprocal tariffs. We will see some punishment of

778
00:44:07,120 --> 00:44:12,240
Speaker 7: US companies, you know, investigations, you know, antitrust investigations, things

779
00:44:12,239 --> 00:44:16,160
Speaker 7: that they'll just create to cause problems for US companies.

780
00:44:16,400 --> 00:44:19,399
Speaker 7: We may even see some boycotts of companies that sell

781
00:44:19,440 --> 00:44:25,240
Speaker 7: their products, you know, consumer products into China. Probably again,

782
00:44:25,680 --> 00:44:32,239
Speaker 7: some new restrictions on critical minerals, licensing requirements potentially. You know,

783
00:44:32,719 --> 00:44:34,680
Speaker 7: they have a lot of different things that they can do,

784
00:44:34,719 --> 00:44:36,759
Speaker 7: and we can expect to see the whole range of them.

785
00:44:37,960 --> 00:44:40,360
Speaker 2: Some people are writing this morning out of Yale University

786
00:44:40,400 --> 00:44:43,160
Speaker 2: that these are basically a level of tariffs and harm.

787
00:44:43,840 --> 00:44:47,160
Speaker 2: Back to nineteen oh nine, doctor Economy, let us go

788
00:44:47,239 --> 00:44:51,719
Speaker 2: back not as far nineteen eleven. China was a ching dynasty.

789
00:44:52,320 --> 00:44:55,120
Speaker 2: There was a revolution, there was a failure of their

790
00:44:55,120 --> 00:44:58,640
Speaker 2: democracy to stagger through ten twenty years to get out

791
00:44:58,640 --> 00:45:02,480
Speaker 2: the MAU. What is the political stability right now of

792
00:45:02,560 --> 00:45:09,279
Speaker 2: the g regime across China given this unilateral shock from Donald.

793
00:45:08,960 --> 00:45:14,319
Speaker 7: Trump, Well, the Chinese have a pretty high capacity to

794
00:45:14,480 --> 00:45:17,480
Speaker 7: endure pain. And the truth is that what the United

795
00:45:17,520 --> 00:45:20,480
Speaker 7: States is doing will simply enable. She didn't pint to

796
00:45:20,680 --> 00:45:23,720
Speaker 7: rally the troops behind him. And this is not even

797
00:45:23,760 --> 00:45:27,120
Speaker 7: something that's just targeted at China. It's a Trump, you know,

798
00:45:27,400 --> 00:45:31,520
Speaker 7: worldwide effort, and that means that he didn't pink and

799
00:45:31,600 --> 00:45:34,480
Speaker 7: pink the United States as sort of an unstable partner

800
00:45:34,680 --> 00:45:38,319
Speaker 7: and irrational actor. And so it's not a It will

801
00:45:38,360 --> 00:45:41,279
Speaker 7: hurt China economically, no doubt, particularly at the low end.

802
00:45:41,360 --> 00:45:45,120
Speaker 7: You know, manufacturing, some of the e commerce exporters like

803
00:45:45,200 --> 00:45:48,640
Speaker 7: Tan they will clearly take a huge hit. This is

804
00:45:48,880 --> 00:45:51,280
Speaker 7: not coming at a good time for them. Their economy

805
00:45:51,280 --> 00:45:54,239
Speaker 7: has been struggling, haven't you know, rebounded yet to pre

806
00:45:54,280 --> 00:45:57,439
Speaker 7: pandemic levels of consumer spending. They're doing their best to

807
00:45:57,560 --> 00:46:00,280
Speaker 7: try to, you know, improve that, but it's been difficult, Alton,

808
00:46:00,280 --> 00:46:03,040
Speaker 7: and will continue to be difficult. So it's tough, but

809
00:46:03,160 --> 00:46:06,480
Speaker 7: they will soldier through this. And Chijin thing is already

810
00:46:06,520 --> 00:46:08,520
Speaker 7: out there, you know. He was just in Japan and

811
00:46:08,560 --> 00:46:11,799
Speaker 7: South Korea talking about making more progress on a free

812
00:46:11,800 --> 00:46:15,520
Speaker 7: trade agreement, talking about working together with them on supply chains.

813
00:46:15,520 --> 00:46:19,560
Speaker 7: He's heading off to Vietnam and Malaysia soon. So he's

814
00:46:19,560 --> 00:46:21,759
Speaker 7: going to take advantage of what the United States is

815
00:46:21,800 --> 00:46:25,880
Speaker 7: doing globally to improve China's position, its trade position, its

816
00:46:25,920 --> 00:46:29,200
Speaker 7: economic position globally. He's going to try to present China

817
00:46:29,480 --> 00:46:34,400
Speaker 7: as the stable pro globalization power in contrast to the

818
00:46:34,480 --> 00:46:35,200
Speaker 7: United States.

819
00:46:35,680 --> 00:46:41,160
Speaker 4: Elizabeth, you mentioned the health of the Chinese economy. Do

820
00:46:41,239 --> 00:46:45,040
Speaker 4: they have the ability to engage in a trade war

821
00:46:45,680 --> 00:46:48,120
Speaker 4: successfully with the United States? Do they have that economic

822
00:46:48,480 --> 00:46:49,279
Speaker 4: case capability?

823
00:46:50,560 --> 00:46:53,680
Speaker 7: I mean, they have the economic capability to the extent that.

824
00:46:54,560 --> 00:46:57,640
Speaker 7: You know, they have spent some time over the past

825
00:46:57,920 --> 00:47:02,040
Speaker 7: four years beginning to diversify their economy away from the

826
00:47:02,120 --> 00:47:05,080
Speaker 7: United States, both in terms of ensuring that they have

827
00:47:05,760 --> 00:47:08,719
Speaker 7: you know, their own supply chains domestically that's cheating things

828
00:47:08,760 --> 00:47:11,320
Speaker 7: dual circulation. He wants China to be able to innovate,

829
00:47:11,400 --> 00:47:16,080
Speaker 7: manufacture and consume largely within itself. They've also shifted production

830
00:47:16,200 --> 00:47:18,760
Speaker 7: to other countries to try to get around the previous

831
00:47:19,200 --> 00:47:22,120
Speaker 7: Trump tariffs. So you know, they've been making more in

832
00:47:22,239 --> 00:47:25,480
Speaker 7: Vietnam and Mexico and other places. Of course, given the

833
00:47:25,520 --> 00:47:29,000
Speaker 7: Trump tariffs now that'll be more problematic for them. But again,

834
00:47:29,080 --> 00:47:31,400
Speaker 7: they're exports to the United States. I think are only

835
00:47:31,760 --> 00:47:34,800
Speaker 7: the only export fourteen percent now to the United States,

836
00:47:35,560 --> 00:47:38,960
Speaker 7: and they've reduced it significantly over the past several years.

837
00:47:39,000 --> 00:47:41,200
Speaker 7: It will be difficult, but they will find their way

838
00:47:41,239 --> 00:47:43,680
Speaker 7: through just because of time.

839
00:47:43,719 --> 00:47:45,279
Speaker 2: I got a ways to go here. Is this a

840
00:47:45,320 --> 00:47:49,280
Speaker 2: four hour conversation with doctor I think so Well's economy.

841
00:47:50,000 --> 00:47:52,399
Speaker 2: I guess I got to go here, and it's it's

842
00:47:52,480 --> 00:47:56,000
Speaker 2: never off your remit because you're so definitive on Pacific rim.

843
00:47:56,600 --> 00:48:02,280
Speaker 2: But the unspoken is to worry about Taiwan. The president

844
00:48:02,360 --> 00:48:07,719
Speaker 2: goes after Taiwan's semiconductor. We've got two military bases on

845
00:48:07,760 --> 00:48:11,839
Speaker 2: the north tip of Luzana Island in the Philippines, and

846
00:48:11,880 --> 00:48:16,520
Speaker 2: on and on. Should our listeners worldwide have a concern

847
00:48:16,840 --> 00:48:21,239
Speaker 2: about opportunistic Beijing taking out Formosa.

848
00:48:22,719 --> 00:48:26,160
Speaker 7: No doubt there should be concern. I mean, Chi Jinping

849
00:48:26,239 --> 00:48:29,360
Speaker 7: has said that unification with Taiwan it's one of his

850
00:48:29,480 --> 00:48:32,600
Speaker 7: fourteen must do items for the great rejuvenation of the

851
00:48:32,680 --> 00:48:36,240
Speaker 7: Chinese nation. We've seen a dramatic ratcheting up of Chinese

852
00:48:36,320 --> 00:48:43,040
Speaker 7: military exercises around Taiwan. They've clearly been practicing to do

853
00:48:43,080 --> 00:48:46,680
Speaker 7: a blockade. So I think we definitely need to be concerned.

854
00:48:46,840 --> 00:48:50,080
Speaker 7: And President Trump has been very noncommittal about Taiwan. I

855
00:48:50,080 --> 00:48:54,000
Speaker 7: think his administration, you know, is split we have in

856
00:48:54,080 --> 00:48:56,600
Speaker 7: terms of whether or not the United States would come

857
00:48:56,640 --> 00:48:59,640
Speaker 7: to the aid of Taiwan. We're China to take military action.

858
00:49:00,000 --> 00:49:03,799
Speaker 7: I think National Security Advisor Texeth and Secretary of State

859
00:49:03,880 --> 00:49:07,480
Speaker 7: Rubio have both been pretty firm in their commitment and

860
00:49:07,760 --> 00:49:11,920
Speaker 7: overall pretty internationalists in terms of our Asian allies, Whereas

861
00:49:11,920 --> 00:49:15,200
Speaker 7: I think, you know, Elon Musk has likened Taiwan to China,

862
00:49:15,239 --> 00:49:18,680
Speaker 7: as Hawaii to the United States, and you know, President

863
00:49:18,680 --> 00:49:23,360
Speaker 7: Trump's moves to get TSMC to do these major investments

864
00:49:23,560 --> 00:49:26,400
Speaker 7: on top of chips and science Act, his call for

865
00:49:26,640 --> 00:49:30,640
Speaker 7: Taiwan to spend ten percent of its GDP on defense,

866
00:49:31,040 --> 00:49:35,160
Speaker 7: which is you know, crazy. But nonetheless, they can be seen,

867
00:49:35,200 --> 00:49:37,200
Speaker 7: as you know, in two different ways. They could be

868
00:49:37,239 --> 00:49:40,440
Speaker 7: seen as President Trump saying, you do these things and

869
00:49:40,480 --> 00:49:43,000
Speaker 7: that's enough to satisfy us that you're taking your security

870
00:49:43,040 --> 00:49:45,400
Speaker 7: seriously and we will be there for you. Or they

871
00:49:45,440 --> 00:49:48,160
Speaker 7: could be seen as President Trump actively trying to reduce

872
00:49:48,320 --> 00:49:53,319
Speaker 7: US dependents or on Taiwan semiconductors and basically signaling that

873
00:49:53,360 --> 00:49:55,880
Speaker 7: We're not going to come to their aid. So everything's

874
00:49:55,960 --> 00:49:56,520
Speaker 7: up in the air.

875
00:49:56,719 --> 00:49:59,239
Speaker 2: Paul, get one more question in here. I mean, she's

876
00:49:59,280 --> 00:50:02,040
Speaker 2: a trooper for YEP. Were theres from Stanford this morning?

877
00:50:02,120 --> 00:50:03,960
Speaker 2: Get one more question in the doctor.

878
00:50:04,280 --> 00:50:07,640
Speaker 4: Elizabeth to the extent that the US is backing away

879
00:50:08,000 --> 00:50:15,400
Speaker 4: from the global stage, are Asian countries something Vietnam, Malaysia,

880
00:50:15,640 --> 00:50:18,640
Speaker 4: just that, South Korea, even maybe even Japan. Are they

881
00:50:19,360 --> 00:50:22,160
Speaker 4: have any snare where they would engage with maybe even

882
00:50:22,200 --> 00:50:23,280
Speaker 4: embrace China.

883
00:50:24,520 --> 00:50:27,839
Speaker 7: I mean, they're already embracing China to some extent. We

884
00:50:27,880 --> 00:50:33,280
Speaker 7: saw that with the meeting with Japan, South Korea and China.

885
00:50:33,480 --> 00:50:36,040
Speaker 7: I think it was just last week where they talked

886
00:50:36,040 --> 00:50:39,040
Speaker 7: about moving forward on a regional free trade agreement, working

887
00:50:39,080 --> 00:50:42,680
Speaker 7: on supply chains together. I'm just waiting for, you know,

888
00:50:42,760 --> 00:50:45,040
Speaker 7: Japan and Australia to signal that they're going to welcome

889
00:50:45,160 --> 00:50:51,399
Speaker 7: China's move into the Comprehensive and Progressive WOW CPTPP right,

890
00:50:52,239 --> 00:50:54,759
Speaker 7: a trade agreement that we pulled out of in Trump one.

891
00:50:54,840 --> 00:50:57,040
Speaker 2: You got a time and date on that, Doctor Economy.

892
00:50:57,080 --> 00:50:58,080
Speaker 2: I mean I want to, I don't.

893
00:50:58,239 --> 00:51:00,880
Speaker 7: I don't, And I'm praying against you know, all on

894
00:51:01,000 --> 00:51:03,759
Speaker 7: praying and praying that that doesn't come to pass. But

895
00:51:03,840 --> 00:51:07,000
Speaker 7: I am quite concerned because these are issues that just

896
00:51:07,320 --> 00:51:11,440
Speaker 7: six months ago. Supply chains, you know, and you know,

897
00:51:12,040 --> 00:51:16,480
Speaker 7: trade and engagement on technologies, all of these things were

898
00:51:16,520 --> 00:51:18,880
Speaker 7: things that we were doing with our allies like Japan

899
00:51:18,920 --> 00:51:21,799
Speaker 7: and South Korea. And now it's chime right.

900
00:51:22,920 --> 00:51:25,400
Speaker 2: Liz, thank you so much for joining us on Bloomberg

901
00:51:25,440 --> 00:51:29,240
Speaker 2: Surveillance today. Director Economy, the classic is a river run Blacks,

902
00:51:29,280 --> 00:51:32,239
Speaker 2: so many tour de forces along the way. We anticipate

903
00:51:32,280 --> 00:51:35,799
Speaker 2: her next book of Course from Stanford University.

904
00:51:36,440 --> 00:51:41,279
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

905
00:51:41,400 --> 00:51:45,680
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906
00:51:45,800 --> 00:51:49,040
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907
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908
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909
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