WEBVTT - Trump Tariffs Reshape Global Trade and Geopolitics 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.000 us live on YouTube. 0:00:27.080 --> 0:00:30.639 We begin with Douglas Irwin of Dartmouth College. Against the 0:00:30.720 --> 0:00:34.040 Tide is a definitive history. I read it cover to cover. 0:00:34.159 --> 0:00:35.879 Many other people just buy it and put it on 0:00:35.920 --> 0:00:38.519 a bookshelf so they can pretend they read it. It 0:00:38.600 --> 0:00:41.880 is trenchingt it is deep. And one of the examples 0:00:41.920 --> 0:00:45.519 you see of that is the actual work of Doug Irwin. 0:00:45.920 --> 0:00:48.600 Go back to nineteen ninety seven and you get a 0:00:48.680 --> 0:00:53.080 twenty six page paper out of the NBER Higher Tariffs, 0:00:53.680 --> 0:00:58.240 Lower Revenues analyzing the fiscal aspects of the Great Tariff 0:00:58.280 --> 0:01:02.680 Debate of eighteen eighty eight. Professor Irwin, thank you so 0:01:02.760 --> 0:01:06.880 much for joining us. Are we reliving McKinley in eighteen 0:01:07.000 --> 0:01:07.559 eighty eight? 0:01:09.000 --> 0:01:11.280 You know, the President referred to the eighteen eighties and 0:01:11.319 --> 0:01:14.560 his remarks yesterday, and I think he's succeeded in bringing 0:01:14.640 --> 0:01:17.200 us back there. First of all, the average tariff on 0:01:17.319 --> 0:01:20.280 total imports is going back to levels we haven't seen 0:01:20.360 --> 0:01:23.240 since the eighteen eighties or eighteen nineties. It's taking it 0:01:23.240 --> 0:01:26.880 from about two percent three percent today up to perhaps 0:01:26.959 --> 0:01:32.399 thirty percent, and that's historically unprecedented. He talks about the 0:01:32.440 --> 0:01:35.840 revenue effects as being important tective effects. These were all 0:01:35.880 --> 0:01:38.720 things that were debated in the late nineteenth century, and 0:01:40.080 --> 0:01:41.640 we're reliving that in a real way. 0:01:41.959 --> 0:01:45.240 Off your remit, but I'm going to go there. McKinley 0:01:45.280 --> 0:01:51.720 lost eighty six seats in the congressional election of eighteen ninety. 0:01:51.880 --> 0:01:55.400 Is Trump going to find the same fury at the 0:01:55.400 --> 0:01:56.160 ballot box? 0:01:57.800 --> 0:02:00.320 Well, I think, as you've just reported, you know, car 0:02:00.400 --> 0:02:02.360 prices are going to go up. All sorts of other 0:02:02.400 --> 0:02:04.720 items that we hadn't even thought about are going to 0:02:04.720 --> 0:02:07.680 go up as a result of these tariffs, from avocados 0:02:08.120 --> 0:02:14.320 to phones to shoes. And we've seen in recent years 0:02:14.520 --> 0:02:18.040 the electorate is very sensitive to higher prices than inflation. 0:02:18.760 --> 0:02:23.840 And so, once again speaking historically, anytime there's been a 0:02:23.840 --> 0:02:25.960 major increase in the tariff when there hasn't really been 0:02:25.960 --> 0:02:28.760 a societal consensus behind it, when there hasn't been a 0:02:28.800 --> 0:02:32.799 lot of public support for it, the income party gets 0:02:32.800 --> 0:02:36.320 punished at the midterms, and that happened after Smooth Holly. 0:02:36.360 --> 0:02:39.680 That happened after the McKinley tariff in eighteen ninety, and 0:02:39.760 --> 0:02:41.240 we could be in for a repeat of that. 0:02:41.800 --> 0:02:44.240 Professor Erwin, I was just reading your article in Foreign 0:02:44.240 --> 0:02:48.040 Affairs Magazine, the Incoherent Case for Terrorists. It's very similar 0:02:48.080 --> 0:02:51.080 to what we heard from Professor Furman from Harvard yesterday that 0:02:51.120 --> 0:02:53.880 Tom and I had a conversation with what is the 0:02:54.080 --> 0:02:58.000 counter argument that the President is getting in the White 0:02:58.000 --> 0:02:59.640 House for terrffs. 0:03:01.560 --> 0:03:04.440 But I think actually yesterday provides some clarity about what 0:03:04.520 --> 0:03:08.720 the purpose was. As Jason and Chad and I and 0:03:08.760 --> 0:03:11.239 others have pointed out, we don't know are these primarily 0:03:11.280 --> 0:03:14.320 for revenue, primarily to reduce the trade deficit, primarily to 0:03:14.360 --> 0:03:19.160 reshore jobs in manufacturing, primarily to strike better deals through reciprocity. 0:03:19.680 --> 0:03:22.440 And the formula used to calculate these tariffs was based 0:03:22.480 --> 0:03:24.840 on the trade balance, so it seems like that's the 0:03:24.880 --> 0:03:27.560 major consideration that they're trying to aim for. But the 0:03:27.600 --> 0:03:32.040 problem is bilateral tariffs may not affect those bilateral trade 0:03:32.040 --> 0:03:35.720 balances may not affect the overall trade balance. Of course, 0:03:35.760 --> 0:03:37.800 if we go into a recession, the trade balance will shrink, 0:03:37.840 --> 0:03:40.720 but that's not exactly the mechanism by which the administration 0:03:40.800 --> 0:03:42.160 wants to reduce the trade deficit. 0:03:43.000 --> 0:03:45.440 So at the end of the day, professor, how do 0:03:45.520 --> 0:03:49.520 you think these tariffs will be implemented? I mean, how 0:03:49.520 --> 0:03:52.200 does the mechanism work? How are we as consumers going 0:03:52.280 --> 0:03:55.360 to kind of see this, do you think? 0:03:56.320 --> 0:03:59.520 Well, you know, businesses, most of US imports, at least 0:03:59.560 --> 0:04:03.480 a large chunk are intermediate goods, components, industrial supplies, and 0:04:03.520 --> 0:04:05.640 things like that. So it will be businesses that will 0:04:05.640 --> 0:04:09.080 first feel the pinch, but then of course that raises 0:04:09.080 --> 0:04:11.840 their cost of production or they have to seek alternative 0:04:11.840 --> 0:04:15.160 sources of supply, and to extent their higher prices they 0:04:15.160 --> 0:04:17.559 have to pass those on to some extent. Of course, 0:04:17.800 --> 0:04:20.240 it sort of trickles down in some sense and as 0:04:20.279 --> 0:04:23.120 whittled down as you get along for the production process. 0:04:23.160 --> 0:04:25.560 But it's mainly firms that have to adjust these in 0:04:25.600 --> 0:04:28.640 the short run, and then consumers will see a neptick 0:04:28.680 --> 0:04:30.360 in some of the prices of the goods they buy 0:04:30.600 --> 0:04:31.080 later on. 0:04:31.800 --> 0:04:34.360 The grievance here in folks who are with Douglas Irwin 0:04:34.440 --> 0:04:38.200 and Dartmouth College Edgiar Denny coming up Elizabeth Economy with 0:04:38.360 --> 0:04:41.320 us in the nine o'clock are really focused on China, 0:04:41.360 --> 0:04:46.680 Professor Irwin, The reality is the grievance and retribution of 0:04:46.760 --> 0:04:51.720 mister Trump and the assembled workers, construction workers, laborers yesterday 0:04:51.960 --> 0:04:55.760 wrapped around senators in the rose garden. The grievance is 0:04:55.800 --> 0:05:00.400 a stereotype starts. It's not maple sugar make up in 0:05:00.440 --> 0:05:05.599 New Hampshire. It's textile workers in North Carolina who lost 0:05:05.640 --> 0:05:09.919 their jobs to Vietnam. So fancy people in a bow 0:05:10.000 --> 0:05:14.360 tie could buy a blue shirt made sixty miles northwest 0:05:14.720 --> 0:05:20.039 of Hanoi? Did he help North Carolina yesterday? Discuss with 0:05:20.200 --> 0:05:25.040 us this core emotion of America that we were taken 0:05:25.080 --> 0:05:29.560 to the cleaners by globalization and we want our pride back. 0:05:29.680 --> 0:05:31.640 Discuss that emotion, Doug Irwin. 0:05:32.800 --> 0:05:37.080 No, that's certainly a visperable, visceral reaction among many people 0:05:37.120 --> 0:05:40.880 that we've closed many factories, we've lost manufacturing jobs. But 0:05:41.080 --> 0:05:43.240 as I and many accomas have pointed out, most of 0:05:43.240 --> 0:05:46.320 those job losses are due to automation, not due to offshoring. 0:05:47.240 --> 0:05:49.200 Even if we bring back some of the factories to 0:05:49.200 --> 0:05:51.840 produce these things because the cost of importing is much higher, 0:05:52.080 --> 0:05:55.800 the jobs probably won't follow. Even with textiles and apparel, 0:05:56.279 --> 0:05:59.200 a lot can be automated. And so, you know, when 0:05:59.200 --> 0:06:01.080 you think about the steel industry, which has always been 0:06:01.080 --> 0:06:03.679 near and dear to the President's heart. In the nineteen eighties, 0:06:03.680 --> 0:06:05.960 it took ten worker hours to produce a ton of steel. 0:06:05.960 --> 0:06:08.880 Now it takes one. We're producing just as much steel, 0:06:08.920 --> 0:06:11.240 but we just need many fewer workers because and the 0:06:11.279 --> 0:06:13.480 type of workers that we need to produce steel has 0:06:13.600 --> 0:06:16.640 changed from blue collar to white collar, from hard labor 0:06:16.680 --> 0:06:20.040 to engineers monitoring equipment, and so the whole nature of 0:06:20.040 --> 0:06:22.599 the economy has changed. So we're not in the twentieth 0:06:22.640 --> 0:06:24.600 century anymore. We're in the twenty first century. And to 0:06:24.640 --> 0:06:26.120 go back to the nineteenth century is going to be 0:06:26.200 --> 0:06:28.400 really a hard pull. And that's why the markets are 0:06:28.440 --> 0:06:29.440 reacting the way they are. 0:06:29.560 --> 0:06:34.000 What do you recommend from fancy handover? You should see handovers? Gorgeous? 0:06:34.120 --> 0:06:38.240 Love it absolutely winnival there, it's just gorgeous. What do 0:06:38.320 --> 0:06:42.760 you say, dugger when too White River junction leveled for forty. 0:06:42.520 --> 0:06:48.440 Years, that's exactly we're right near here in Hannover, right 0:06:48.560 --> 0:06:51.680 near many communities that were devastated, But the devastation goes 0:06:51.720 --> 0:06:55.000 back decades ago, even before the globalization, before and after 0:06:55.080 --> 0:06:58.600 before the wto structural change in the US economy, a 0:06:58.600 --> 0:07:00.679 lot of those jobs went from the north to the south. 0:07:01.000 --> 0:07:03.680 If you go to Manchester, New Hampshire, right along the 0:07:03.760 --> 0:07:07.400 Merrimack River, there's a mile long brick building enormous used 0:07:07.440 --> 0:07:10.320 to produce boots, shoes, and textiles, but it hasn't done 0:07:10.320 --> 0:07:12.840 that for a century. Those jobs were lost in the 0:07:12.920 --> 0:07:15.840 nineteen fifties or before. Once again in the pre globalization 0:07:15.920 --> 0:07:19.080 era and those jobs went south. And the same thing 0:07:19.120 --> 0:07:22.600 has happened with Indiana, Michigan, Ohio, the rest belt in 0:07:22.640 --> 0:07:25.160 the north, A lot of those we're still manufacturing stuff. 0:07:25.200 --> 0:07:27.560 It's just in the south it's a different region where 0:07:27.640 --> 0:07:31.000 labor costs are lower. Union's not so pervasive, and so 0:07:31.520 --> 0:07:33.640 we think we've lost things as a nation, but we've 0:07:33.680 --> 0:07:36.760 lost certain regions have lost out and that's a very 0:07:36.960 --> 0:07:40.480 difficult thing to rejuvenate with tariffs. Tariffs are not going 0:07:40.560 --> 0:07:42.960 to help White River Junction Professor. 0:07:43.240 --> 0:07:49.080 Does the US economy risk being isolated in the global economy? 0:07:49.080 --> 0:07:49.560 Here? 0:07:51.200 --> 0:07:53.160 Yes, I mean you can see this, there's so much 0:07:53.240 --> 0:07:56.640 uncertainty about what's happening and what's going to unfold. So 0:07:56.680 --> 0:07:59.320 it could be that this sparks reprisals. I know that 0:07:59.320 --> 0:08:02.680 EU is considering countermeasures and what have you, and so 0:08:03.160 --> 0:08:06.760 the US gets isolated and other countries retaliate in kind. 0:08:07.440 --> 0:08:09.800 But it also bring a flood of diplomats coming to 0:08:09.880 --> 0:08:12.680 Washington seat trying to seek a deal to get rid 0:08:12.720 --> 0:08:15.880 of this terrace on their particular country. Now so many 0:08:15.920 --> 0:08:18.720 countries have been targeted. That's going to be a lot 0:08:18.760 --> 0:08:21.720 of bilateral discussions over the next few months and a 0:08:21.760 --> 0:08:24.400 lot uncertainly about what's going to happen. But it could 0:08:24.440 --> 0:08:28.680 be the damage could be mitigated over time through that way. 0:08:28.880 --> 0:08:30.440 But we'll just have to see sort of see how 0:08:30.440 --> 0:08:31.000 it works out. 0:08:31.200 --> 0:08:33.600 And your community across the nation, we say good morning 0:08:33.640 --> 0:08:35.800 to all of you on Apple car Play Android Otto 0:08:35.840 --> 0:08:38.920 Douglas Erwin with US of Dartmouth at College, Edward Jard 0:08:38.960 --> 0:08:43.199 Denny coming up here from your Denny Research and Elizabeth Economy. 0:08:43.440 --> 0:08:47.720 In the nine o'clock hour. After Edieard Denny, we have 0:08:47.760 --> 0:08:51.280 a Secretary of Commerce with Jonathan Farrell looking for that'll 0:08:51.320 --> 0:08:55.120 be a heated conversation to say the least Edgiar Denny. 0:08:55.240 --> 0:08:58.440 I think I learned from the path from London School 0:08:58.440 --> 0:09:02.680 of Economics to Chicago, a guy named Hayek said we 0:09:02.720 --> 0:09:07.600 would clear markets. All of the press this morning, from Erwin, 0:09:07.840 --> 0:09:11.000 from Furman, all of the experts that we talked to 0:09:11.240 --> 0:09:15.439 posing at Peterson Institute, Chad Bone, this is a disaster. 0:09:16.120 --> 0:09:19.880 Professor Irwin Hayek wants us to clear the market. From 0:09:19.960 --> 0:09:23.720 your economics and trade analysis, How do we clear this 0:09:23.880 --> 0:09:24.480 train wreck? 0:09:25.080 --> 0:09:28.000 Well, unfortunately, what can go up very quickly and fast, 0:09:28.160 --> 0:09:32.280 namely tariffs, don't necessarily come down quickly or fast, namely tariffs. 0:09:32.840 --> 0:09:35.439 We've seen that with history. So cleaning up the mess 0:09:35.480 --> 0:09:37.480 caused by Smooth Holly in the nineteen thirties and the 0:09:37.480 --> 0:09:40.800 Great Depression that took decades. The tariffs went up fast, 0:09:40.800 --> 0:09:43.559 but they came down slowly because you have to negotiate, 0:09:43.640 --> 0:09:47.000 because vested interests have a stake in perpetuating them that 0:09:47.120 --> 0:09:50.280 we weren't there before. That governments become addicted to the revenue. 0:09:50.320 --> 0:09:52.000 I mean, if we're using these tariffs to offsets some 0:09:52.080 --> 0:09:54.560 the tax cuts, it's going to be What that means 0:09:54.679 --> 0:09:56.080 is to get rid of the tariffs, we're going to 0:09:56.080 --> 0:09:59.040 need to increase taxes elsewhere, and that's always a politically 0:09:59.080 --> 0:10:02.400 difficult thing to do, so reversing these things once these 0:10:02.400 --> 0:10:04.600 steps have been taken is very, very difficult. 0:10:04.840 --> 0:10:07.560 With us two giants of the business Douglas eve And and 0:10:07.679 --> 0:10:10.480 Dartmouth College and from Yale University, and of course has 0:10:10.520 --> 0:10:13.839 work with CJ. Lawrence. Nancy Lazara on the other day 0:10:14.000 --> 0:10:17.200 ed Your Danny from Your Danny Research this morning ed 0:10:17.600 --> 0:10:21.880 the reaction to Doug Erwin's failed trade policy is a 0:10:21.920 --> 0:10:25.520 Dow down eleven hundred future points? Is this the beginning 0:10:25.559 --> 0:10:28.520 of a bear market? In a lesser MAGS seven? 0:10:29.240 --> 0:10:31.520 Well, I think so. I mean, up to now the 0:10:31.640 --> 0:10:35.560 bear market has been the Magnificent seven. The S and 0:10:35.559 --> 0:10:38.600 P four hundred and ninety three was actually flat for 0:10:38.720 --> 0:10:42.760 the year until this hit the fan. And now I 0:10:42.760 --> 0:10:47.000 think we've got a broadening of the market to the downside, 0:10:47.000 --> 0:10:52.560 and clearly we're solidly into correction territory. And once you 0:10:52.679 --> 0:10:55.480 do that and you've got a major policy failure, you 0:10:55.559 --> 0:10:58.800 run the risk of turning into a bear market. This 0:10:58.880 --> 0:11:01.320 has been kind of a free fall in the S 0:11:01.400 --> 0:11:06.079 and P five hundred, not so much in the the 0:11:06.920 --> 0:11:08.560 equal weighted SMB five hundred. 0:11:10.000 --> 0:11:12.560 Let's turning now, right, Let's get in one more question. 0:11:12.880 --> 0:11:15.800 Your Denny's playing paddleball with Blanche Flower this morning up 0:11:15.800 --> 0:11:18.080 at Dartmouth, so we got to squeeze in one more 0:11:18.080 --> 0:11:22.480 here with Doug Irwin. Doug, we need to rewrite Against 0:11:22.480 --> 0:11:26.040 the Tide. What's the new prologue the new epilogue looked 0:11:26.120 --> 0:11:28.640 like for your classic textbook this morning. 0:11:30.080 --> 0:11:31.800 Well, you know, Against the Tide is more about the 0:11:31.800 --> 0:11:34.560 intellectual history of trade, and there I think the wisdom 0:11:34.559 --> 0:11:38.040 of Adam Smith still resonates. He had so many insightful 0:11:38.080 --> 0:11:39.880 things to say. He said, there's nothing could be more 0:11:39.880 --> 0:11:41.920 absurd than this whole idea of the balance of trade. 0:11:42.200 --> 0:11:45.199 And that's the whole idea behind these biolateral tariffs. And 0:11:45.280 --> 0:11:47.400 this other book called Clashing over Commerce, which is a 0:11:47.440 --> 0:11:49.959 history of US trade policy. Clearly this is a new 0:11:50.040 --> 0:11:52.360 chapter in the history of US trade policy. Is a 0:11:52.400 --> 0:11:56.080 major development, a huge increase in tariffs we haven't seen 0:11:56.120 --> 0:11:59.720 in decades, decades, and it's going to reshape the global 0:11:59.720 --> 0:12:00.520 trade environment. 0:12:01.120 --> 0:12:04.440 Professor Irwin, thank you so much, patiently waiting after Doug 0:12:04.480 --> 0:12:06.480 Irwin has said, you're Danny and we welcome him from 0:12:06.520 --> 0:12:10.719 your Jenny research a. You have parchment from Yale University. 0:12:11.760 --> 0:12:15.120 Ernie Tedesky and Monica Gimble are up at the Yale 0:12:15.200 --> 0:12:18.240 Budget Lab. Martha Gimble, I should say, are up at 0:12:18.240 --> 0:12:22.080 the Yale Budget Lab just absolutely killing it on their 0:12:22.120 --> 0:12:26.240 analysis of these tariffs. Their analysis is griham. It's a 0:12:26.320 --> 0:12:30.720 three thousand plus dollar weight to every single household in America. 0:12:31.120 --> 0:12:33.800 What does that do to the revenue stream of the 0:12:33.840 --> 0:12:35.719 Dow Jones industrial average. 0:12:36.440 --> 0:12:39.080 It's not good, that's for sure. Matt, may I see 0:12:39.080 --> 0:12:42.600 something on behalf of the stock market vigilantes. 0:12:43.160 --> 0:12:45.679 Would that be all right? Yes? Please on behalf? 0:12:45.800 --> 0:12:48.400 On behalf of the stock market vigilantes. I'd like to say, 0:12:48.720 --> 0:12:52.800 mister President, take down this tariff wall. This is the 0:12:52.840 --> 0:12:57.000 most absurd policy that one could possibly imagine, and it's 0:12:57.000 --> 0:13:00.000 a disaster for the economy. It's a disaster for the stuff. 0:13:01.200 --> 0:13:04.920 And I think the pushback on the administration from the 0:13:04.920 --> 0:13:08.720 stock market vigilantes is already quite intense. This say is 0:13:08.760 --> 0:13:11.760 turning out to be not Liberation Day plus one, It's 0:13:11.760 --> 0:13:14.200 turning out to be d Day in the on Wall Street. 0:13:14.200 --> 0:13:16.040 I mean, Andre Denny, you were weaned to this. I 0:13:16.040 --> 0:13:19.920 mean to go back to the huge academic debates of 0:13:19.960 --> 0:13:23.160 the twentieth century in the development of our great economic 0:13:23.240 --> 0:13:28.359 programs out to Stanford and UCLA as well. This policy 0:13:28.480 --> 0:13:32.319 at Yard Denny isn't a twentieth century debate. How far 0:13:32.360 --> 0:13:35.840 back is the president going? Is he beyond Stanley Jevons? 0:13:35.920 --> 0:13:38.960 Is he beyond John Stuart Mill? Is this guy taking 0:13:39.040 --> 0:13:42.599 us back to a mercantilism of the seventeenth cent? Absolutely? 0:13:43.080 --> 0:13:47.800 Absolutely well, I mean really back in time, and certainly 0:13:48.440 --> 0:13:52.600 well before McKinley, which seems to be his favorite role model, 0:13:52.679 --> 0:13:53.480 favorite president. 0:13:53.559 --> 0:13:54.240 In terms of. 0:13:54.520 --> 0:13:58.320 Tariffs, the President may love tariffs, but nobody else does. 0:13:58.360 --> 0:14:03.079 Nobody in the stock market loves tariffs. They are killers 0:14:03.120 --> 0:14:07.920 of economic growth. They lead to inflation. I mean the 0:14:07.960 --> 0:14:11.560 president seems to be asking for a recession. He said 0:14:11.559 --> 0:14:14.480 that this would cause pain. I don't think he appreciated 0:14:14.520 --> 0:14:16.160 how much pain it could possibly cause. 0:14:17.200 --> 0:14:21.600 So as you think about investment, you know, I don't 0:14:21.600 --> 0:14:24.160 know opportunities risk here? What do you do with a 0:14:24.240 --> 0:14:28.760 portfolio today? What is a strategy in a world where 0:14:29.200 --> 0:14:35.080 we have substantial tariffs and therefore maybe issues with economic growth, 0:14:35.120 --> 0:14:37.640 with inflation. How do you position a portfolio today? 0:14:38.280 --> 0:14:41.520 Well, there's so much uncertainty out there. But my feeling 0:14:41.600 --> 0:14:44.880 right now, and it could change rapidly depending on what 0:14:44.920 --> 0:14:48.480 the President says next, is that it's too late to panic, 0:14:49.480 --> 0:14:51.600 you know. I think if you've got a good portfolio, 0:14:51.640 --> 0:14:55.080 you stay with it. I think that the political pressure 0:14:55.200 --> 0:14:58.480 on the administration to become more reasonable about this whole 0:14:58.480 --> 0:15:00.880 thing quickly is going to be intense. I mean, the 0:15:00.920 --> 0:15:03.800 Republicans are going to lose their majority in the midterm 0:15:03.800 --> 0:15:06.800 elections if nothing changes on this. 0:15:08.680 --> 0:15:11.280 Mistaken course ed. 0:15:12.120 --> 0:15:14.080 I mean, it seems like I don't know where to 0:15:14.120 --> 0:15:15.600 go here. I think a lot of investors are looking 0:15:15.600 --> 0:15:17.480 at their screen this morning, Saint boy. I've got the 0:15:17.560 --> 0:15:20.040 stock market down three four percent. I mean, I've got 0:15:20.440 --> 0:15:25.080 yields plunging. I've even gold is off. 0:15:25.160 --> 0:15:25.360 Yeah. 0:15:25.600 --> 0:15:29.800 One, I'm not sure where to hide here. Any any 0:15:29.840 --> 0:15:30.400 thoughts there? 0:15:31.760 --> 0:15:34.280 Well, I think the only place to hide is in 0:15:34.320 --> 0:15:37.280 your portfolio. Just stay with it. I think we'll get 0:15:37.320 --> 0:15:39.680 through this. I think that there will be a lot 0:15:39.720 --> 0:15:42.440 of pushback to change it. I think I'm not the 0:15:42.480 --> 0:15:45.120 only one calling on the President to take down this 0:15:45.200 --> 0:15:47.480 tariff wall. I think the pressure is going to be 0:15:47.480 --> 0:15:54.000 intense to declare victory by getting some movement on the 0:15:54.040 --> 0:15:57.400 other side of the negotiating table, but to get victory 0:15:57.480 --> 0:15:59.520 and claim victory or rather rapidly. 0:16:00.000 --> 0:16:03.280 Surveillance worldwide across the nation. In your morning commute, good morning, 0:16:03.280 --> 0:16:06.680 good morning on serious XM ninety nine one FM in Washington. 0:16:06.720 --> 0:16:09.200 Good morning, huge interest down there. Thank you so much 0:16:09.800 --> 0:16:12.400 for that ninety two nine FF on Boston. I'm gonna 0:16:12.400 --> 0:16:14.960 be up in Boston this weekend. Really, I couldn't get 0:16:14.960 --> 0:16:17.680 tickets for Opening Day, you know, if you know I got, 0:16:17.720 --> 0:16:19.640 That's a tough ticket I got. I got to sit 0:16:19.720 --> 0:16:22.000 down next to the on deck circle because they're just 0:16:22.040 --> 0:16:24.280 killing it. There's a couple of bars near it. 0:16:24.720 --> 0:16:25.720 I think I can recommend to you. 0:16:25.800 --> 0:16:28.960 Thank you, like you know Seven's on seven on Charles 0:16:28.960 --> 0:16:31.440 Street or over on Peacon Hill. Yeah, maybe I'll be 0:16:31.480 --> 0:16:35.040 at Seven's Friday night. We'll see ninety two nine FM. 0:16:35.360 --> 0:16:37.400 What I do know. We're the ed Yard Denny here 0:16:37.400 --> 0:16:41.520 on YouTube. Subscribe to Bloomberg Podcast commercial free in nine minutes, 0:16:41.560 --> 0:16:45.440 maybe eleven minutes. Howard Lutnik, the Secretary of Commerce for 0:16:45.560 --> 0:16:49.360 President Trump at the White House. Edyard Denny, your work 0:16:49.680 --> 0:16:53.240 the work of a wonderful at Heimen, Nancy Lazar, all 0:16:53.320 --> 0:16:56.600 of c J. Lawrence is a melding of the markets. 0:16:57.160 --> 0:16:59.640 So I've got this economy and let's say I get 0:16:59.640 --> 0:17:03.560 a growth shortfall. Do you just bring that right over 0:17:03.640 --> 0:17:08.199 to single digit revenue growth for Nvidia, Microsoft and the 0:17:08.240 --> 0:17:09.159 other mag seven. 0:17:09.920 --> 0:17:12.920 I think that's the conclusion. They are kind of tight 0:17:12.960 --> 0:17:17.400 at the hips of the market. Clearly is driven by earnings, 0:17:17.400 --> 0:17:21.480 and earnings are driven by the economy. Just a couple 0:17:21.560 --> 0:17:25.760 of days ago, in reaction to the auto tariffs, which 0:17:25.800 --> 0:17:29.040 are just as absurd as all the other ones, I 0:17:29.080 --> 0:17:32.720 lowered my outlook for the economic outlook from two and 0:17:32.760 --> 0:17:34.359 a half to three percent all the way down to 0:17:34.400 --> 0:17:36.960 one and a half percent. It was a painful decision 0:17:37.000 --> 0:17:39.120 to make, but that was the conclusion I came to. 0:17:39.880 --> 0:17:42.240 And what I've got the economy doing now is growing 0:17:42.920 --> 0:17:47.199 by one percent in the first quarter, then in the 0:17:47.240 --> 0:17:50.280 second quarter three percent, because I think people are going 0:17:50.320 --> 0:17:53.240 to scramble here to buy cars before their prices go up, 0:17:53.640 --> 0:17:56.680 and then I think we're looking at a growth slow down, 0:17:56.760 --> 0:18:00.320 maybe no growth in the second half of the year. 0:18:00.640 --> 0:18:03.200 Can it clear though? I mean, I mean everybody showed 0:18:03.280 --> 0:18:06.320 up at the coronation I'm kidding, folks, that was a 0:18:06.440 --> 0:18:09.840 joke with disrespect to President Trump. I'm sorry. If the 0:18:09.880 --> 0:18:13.320 inauguration at your Denny Bezos was there with Missus Bezos 0:18:13.320 --> 0:18:16.080 and all the others. Was Tim Cook there? I can't remember? 0:18:16.520 --> 0:18:21.840 But these can they doctor Yodenny? Can these guys line up, 0:18:22.480 --> 0:18:25.840 sit the guy down and say it's the magnitude or 0:18:25.920 --> 0:18:29.679 that you're doing. It's killing us raised tariffs? But just 0:18:29.760 --> 0:18:33.000 the teens weeds them out. Why can't these corporate titans 0:18:33.040 --> 0:18:35.360 get that done? Well? 0:18:35.400 --> 0:18:38.960 I think up to now, the assumption was that the 0:18:39.000 --> 0:18:43.280 administration collectively knew what they were doing. But clearly with 0:18:43.440 --> 0:18:47.720 the reaction of global stock markets, that's not the case. 0:18:48.480 --> 0:18:51.440 There there is no vote of confidence anywhere, not even 0:18:51.440 --> 0:18:56.760 in gold and what this administration is doing. I mean, 0:18:56.800 --> 0:18:58.880 as you said, there seems to be no place to hide, 0:18:58.960 --> 0:19:02.840 and the only place to hide is to go to 0:19:02.920 --> 0:19:06.600 the White House and tell the President and the administration 0:19:06.800 --> 0:19:10.040 that this policy is just wrong, but. 0:19:10.040 --> 0:19:14.000 It is the policy of the day. So again, what 0:19:14.080 --> 0:19:18.920 do you suggesting investors do here? You know, we oftentimes 0:19:18.960 --> 0:19:22.760 talk about a flight to quality, whether that's quality companies, 0:19:22.840 --> 0:19:26.399 quality stocks, great balance sheets, buying back by Max stock 0:19:26.480 --> 0:19:28.480 lots of cash. How do you what would you say 0:19:28.480 --> 0:19:29.720 to your clients today. 0:19:29.800 --> 0:19:34.320 Well, there's some amazing buying opportunities if you're willing to 0:19:34.359 --> 0:19:38.840 look past all this whenever you get I mean, we've 0:19:38.880 --> 0:19:43.120 really never seen pessimism like this, other than the very 0:19:43.240 --> 0:19:46.320 depth of a recession, the very depth of a bear market. 0:19:46.880 --> 0:19:51.840 Usually when sentiment is this negative, that's from a contrary perspective, 0:19:52.000 --> 0:19:55.960 is a by signal. The problem is that when pessimism 0:19:56.000 --> 0:19:58.960 is this negative, you also get a FED put You 0:19:59.000 --> 0:20:01.919 get the Fed lowering rates. But there's no way that 0:20:02.000 --> 0:20:04.880 the FED can bail out the administration here by lowering 0:20:04.880 --> 0:20:07.600 interest rates because they know, we know that this is 0:20:07.600 --> 0:20:11.040 all going to lead to higher inflation at least for 0:20:11.359 --> 0:20:12.520 three to six months. 0:20:12.960 --> 0:20:15.240 Ed your Denny with us, and we continue with doctor 0:20:15.800 --> 0:20:18.720 your Denny. Of course your Denny research is Yeah, we 0:20:18.760 --> 0:20:20.720 thought we'd take a breaker for those of you on radio. 0:20:20.800 --> 0:20:22.840 You have to observe it on YouTube you can pick 0:20:22.880 --> 0:20:26.080 it up. Edier Denny, what is the name? You didn't 0:20:26.200 --> 0:20:29.960 name the beast behind you on the brown upholstered chair. 0:20:30.480 --> 0:20:32.879 You didn't name that dog? Maynard Keynes? 0:20:33.040 --> 0:20:38.679 Right, No, no, no, that's Max and I am working 0:20:38.720 --> 0:20:44.280 on creating a currency, a cryptocurrency named after Max where 0:20:45.040 --> 0:20:47.480 you may see him with sunglasses. 0:20:47.160 --> 0:20:52.920 Maxim on the coin, worried about the terrorists here is well, 0:20:53.119 --> 0:20:54.640 very relaxed about the whole thing. 0:20:54.760 --> 0:20:55.840 He is smart. 0:20:55.960 --> 0:21:00.280 Speaking of relaxed. A colleague of yours, Robert Schiller, the 0:21:00.359 --> 0:21:03.080 Laurie Yeap, wrote a book. Once. I sat with him 0:21:03.080 --> 0:21:06.120 in the New Orleans airport and we're talking book ideas 0:21:06.119 --> 0:21:09.480 and that, and I take no credit for this. But 0:21:09.640 --> 0:21:13.960 six months later there was Bob Schiller Edyard Denny out 0:21:14.000 --> 0:21:18.320 with a book called The Good Society. The President carries 0:21:18.359 --> 0:21:22.760 a grievance the retribution of a huge part of America. 0:21:23.080 --> 0:21:28.360 We've consistently seen that, including his wonderful interview with John Michelswaite, 0:21:28.720 --> 0:21:32.080 our editor in chief. Talk to the people that are 0:21:32.119 --> 0:21:36.760 not advantaged by a New Haven education, talk to those 0:21:37.080 --> 0:21:40.040 feel the president's grievance and retribution. 0:21:41.200 --> 0:21:46.080 Well, I say this as a non political observation that 0:21:46.280 --> 0:21:50.840 the president got a pretty damn good economy for starters. 0:21:51.040 --> 0:21:54.840 The unemployment rates four point one percent, the inflation rate 0:21:54.920 --> 0:21:59.600 is quite close to two percent. The real GDP's at 0:21:59.600 --> 0:22:03.040 an all time record high consumption per household as an 0:22:03.080 --> 0:22:04.920 all time record high. This is not to say that 0:22:05.200 --> 0:22:08.480 there aren't people who aren't doing well, but all in all, 0:22:08.800 --> 0:22:12.080 from a top down analysis, things are pretty good. But 0:22:12.119 --> 0:22:14.719 you asked me, really from the bottoms up, for the 0:22:14.720 --> 0:22:18.040 people who have been suffering, I don't know that these 0:22:18.080 --> 0:22:20.240 policies are going to make things any better for them. 0:22:21.119 --> 0:22:25.359 And the immediate impact is to do exactly the opposite 0:22:25.400 --> 0:22:28.639