WEBVTT - Hard to See Trump's Google Attack Spurring Change 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.839 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. President 0:00:32.840 --> 0:00:36.560 Trump tweeting Google search results for Trump News shows only 0:00:36.600 --> 0:00:40.120 the viewing slash reporting of fake news media. In other words, 0:00:40.159 --> 0:00:42.040 they have it rigged for me and others so that 0:00:42.120 --> 0:00:45.519 almost all stories and news is bad. Fake CNN is 0:00:45.560 --> 0:00:49.199 prominent Republican conservative, and fair media is shut out. Illegal 0:00:50.440 --> 0:00:54.800 results on Trump News are from that give me a 0:00:54.800 --> 0:00:57.280 look him. I'm gonna keep reading it because it's all 0:00:57.360 --> 0:01:00.320 just seconds ago. And this address is our next discus Sushian, 0:01:00.360 --> 0:01:03.520 which is Google and Searches. Basically, it concludes with this 0:01:03.560 --> 0:01:07.200 is a very serious situation. Will be addressed. Shara Overday, 0:01:07.280 --> 0:01:11.600 Bloomberg Opinion technology columnists joining us now. Google Shares didn't 0:01:11.800 --> 0:01:15.880 initially respond much to President Trump's earlier comments on this, 0:01:16.000 --> 0:01:19.319 but then did after his economic advisor Larry Cutlos, the 0:01:19.319 --> 0:01:24.039 White House was examining this, what do you make of this? Well, 0:01:24.040 --> 0:01:26.560 there's a lot to unpack their I mean, look, the 0:01:26.880 --> 0:01:30.920 core of the president's tweet there is that he believes 0:01:31.360 --> 0:01:36.880 legitimate news sources, including CNN, are biased against him. Right, 0:01:36.920 --> 0:01:40.360 so his beef is really with CNN and with other 0:01:40.640 --> 0:01:45.480 legitimate news sources, not necessarily with Google. Although what he's 0:01:45.520 --> 0:01:50.680 pointing out right is that Google is surfacing legitimate news 0:01:50.720 --> 0:01:55.280 about him. Uh, and he doesn't like that. So look, 0:01:55.560 --> 0:01:59.360 I get it. But also the problem is that this 0:01:59.440 --> 0:02:02.880 is now Google problem. Well, Google actually released a statement 0:02:03.000 --> 0:02:07.440 talking about the algorithms that it has to generate these 0:02:07.440 --> 0:02:10.560 search results. How do they determine that? I mean it 0:02:10.600 --> 0:02:16.000 could there be even political motivation here. So the problem 0:02:16.040 --> 0:02:17.600 is that there is a germ of truth in what 0:02:17.639 --> 0:02:21.880 the president says, which is that the ways that Google 0:02:21.919 --> 0:02:26.480 and Facebook to surface news and information is by design 0:02:26.720 --> 0:02:29.200 a black box that we don't know, We on the 0:02:29.240 --> 0:02:33.680 outside don't exactly know how Google determines these ten blue 0:02:33.680 --> 0:02:37.480 links will appear higher than those ten blue links. And 0:02:37.960 --> 0:02:41.480 you know that again, the black box algorithms of those 0:02:41.520 --> 0:02:46.079 companies makes it more likely for people to believe, rightly 0:02:46.200 --> 0:02:50.200 or wrongly, that the information surface by Google or Facebook 0:02:51.000 --> 0:02:55.720 has some bias inherent in it, and it's algorithms are biased. 0:02:56.320 --> 0:02:59.760 The question is is it biased against conservative voices like 0:02:59.800 --> 0:03:02.720 the resident And I don't think that's the case. Sure, 0:03:02.919 --> 0:03:11.080 can search results be manipulated by third parties? I mean manipulated? 0:03:11.200 --> 0:03:14.160 Is um boy that it's a little bit of a 0:03:14.600 --> 0:03:20.880 skewed word. Look, they're legitimate ways, including search engine optimization 0:03:21.040 --> 0:03:25.600 tactics right, to make to make certain web links appear 0:03:25.720 --> 0:03:29.400 higher in Google search results, right, And we I mean 0:03:29.400 --> 0:03:31.320 that would not have anything to do with Google. That 0:03:31.320 --> 0:03:34.040 would have to do with third parties that, for whatever reason, 0:03:34.080 --> 0:03:37.400 they want a certain product or service that's listed higher, 0:03:37.480 --> 0:03:39.440 so that when you type in the name of let's 0:03:39.440 --> 0:03:41.800 say you want an air fair, then it will take 0:03:41.800 --> 0:03:43.680 you there. Right. So if you google, you know, running 0:03:43.680 --> 0:03:46.880 shoes Brooklyn. Right. There are companies that make sure that 0:03:46.960 --> 0:03:50.720 their websites are optimized at a certain and you can 0:03:50.720 --> 0:03:54.000 buy and you can buy keywords. All that's a different issue, right, 0:03:54.080 --> 0:03:58.200 that's more about paid ads on Google rather than surfacing 0:03:58.760 --> 0:04:05.160 content on their own. So yeah, there is some um 0:04:05.280 --> 0:04:08.560 ways to game the system, legitimate and illegitimate ways to 0:04:08.600 --> 0:04:11.240 game the system. But again, what the President is talking about, 0:04:11.800 --> 0:04:16.320 is UM is gaming the system for political reasons? And 0:04:16.560 --> 0:04:18.560 again I just don't think that's happening. But it's part 0:04:18.600 --> 0:04:22.719 of this broader complaints that we've heard more recently than 0:04:22.960 --> 0:04:28.080 than previous years about bias by US Internet companies against 0:04:28.120 --> 0:04:33.559 conservative voices or censorship or suppressing conservative points of view. Again, 0:04:33.560 --> 0:04:36.880 I think most of those are bogus UM and are 0:04:37.000 --> 0:04:40.840 are basically done for political reasons, but it has become 0:04:40.839 --> 0:04:44.159 impossible for the Internet companies to ignore. One question that 0:04:44.240 --> 0:04:48.000 I have is what can Congress or frankly, the President 0:04:48.080 --> 0:04:52.159 himself do. I don't know what Larry Cutlow is talking 0:04:52.200 --> 0:04:54.800 about UM in terms of what they could do to 0:04:54.839 --> 0:04:57.799 regulate search results. Some members of Congress have talked about 0:04:57.839 --> 0:05:02.719 cracking down on a aw that essentially protects Internet companies 0:05:02.760 --> 0:05:07.560 from legal liability from content posted by their users and 0:05:07.880 --> 0:05:10.320 UM that I think would be a real risk to 0:05:10.480 --> 0:05:13.640 Internet companies, Google and others. I just don't know what 0:05:13.760 --> 0:05:18.120 the odds are of that law changing. Well done, Thank 0:05:18.160 --> 0:05:21.400 you very much for enlightening us. As always, Shara over 0:05:21.520 --> 0:05:26.960 there are Bloomberg technology opinion writer knows everything about technology. 0:05:27.080 --> 0:05:31.039 Have you got a new iPhone yet? Still still the 0:05:31.080 --> 0:05:33.880 old one, all right, it will take up a collection 0:05:33.920 --> 0:05:51.800 for you. Thanks very much for being with us. The 0:05:51.920 --> 0:05:54.719 SMP five hundred is of about eight and a half 0:05:54.760 --> 0:05:58.240 percent so far this year. Jim Paulson is the chief 0:05:58.279 --> 0:06:02.520 investment strategist wore the youthhol Group. They're based in Minneapolis. 0:06:02.560 --> 0:06:05.359 They help to manage more than one and a half 0:06:05.520 --> 0:06:08.640 billion dollars. Jim Paulson always a pleasure to hear what 0:06:08.680 --> 0:06:12.640 you've got to say about investing. And I'm wondering, what 0:06:13.320 --> 0:06:17.360 is this term called capacity challenge? You talk about the 0:06:17.400 --> 0:06:22.640 bull market is now capacity challenge? What does that mean? Well, 0:06:22.640 --> 0:06:24.960 one of the things PIM that I always think about is, 0:06:25.480 --> 0:06:27.560 you know, just the question we get lost and is 0:06:27.600 --> 0:06:29.760 there a lot of downside risk in this market or not? 0:06:30.279 --> 0:06:32.640 But I think an equal important question is just how 0:06:32.720 --> 0:06:37.040 much potential is left in this bull market, whether it's 0:06:37.160 --> 0:06:40.599 you know, whether it goes up for first uh several 0:06:40.640 --> 0:06:42.880 more years or not. Just how much upside is there? 0:06:42.880 --> 0:06:45.640 And I think it comes down to how much capacity 0:06:45.720 --> 0:06:49.039 does this bull market have left to improve things that 0:06:49.120 --> 0:06:52.600 will make the market go higher. And if you just 0:06:52.640 --> 0:06:54.720 look at some of the central things, if you think 0:06:54.760 --> 0:06:58.599 about p monibles, or valuation. You know they're right now. 0:06:58.640 --> 0:07:02.159 The trailing p motibles the eighties, second percentile of post 0:07:02.200 --> 0:07:06.360 war history. It could move up, but not a lot. 0:07:07.000 --> 0:07:09.760 Bond yields they don't have much room or interest rates 0:07:09.760 --> 0:07:12.760 in general to move lower anymore. They're kind of spent 0:07:12.880 --> 0:07:16.640 on that. Regard the unemployment rate below four percent, it's 0:07:16.640 --> 0:07:18.920 not like we could push that a lot lower, at 0:07:19.000 --> 0:07:22.520 least not without issues like overheating and other costs and 0:07:22.680 --> 0:07:26.720 interest rate pressures. Profit margins are record highs for the 0:07:26.840 --> 0:07:30.679 SMP five. Not a lot of room there, which means 0:07:30.720 --> 0:07:35.080 probably at best earnings grow at sales even and it 0:07:35.160 --> 0:07:38.440 could be worse at margin new road. And then finally confidence. 0:07:38.480 --> 0:07:42.120 We just reported consumer confidence today and it went up 0:07:42.160 --> 0:07:46.160 almost to post war highs. To think about what to 0:07:46.240 --> 0:07:48.680 get potential on this market? What lever are you going 0:07:48.720 --> 0:07:52.960 to push at this point or improve to get the 0:07:53.000 --> 0:07:56.080 market to continue to go higher? Alright, So given that, 0:07:56.200 --> 0:07:59.800 how are you allocating well? You know, at least what 0:08:00.200 --> 0:08:02.920 well we're doing is I think there's the other The 0:08:02.960 --> 0:08:06.480 other big issue is recession, and if we don't have recession, 0:08:07.280 --> 0:08:10.640 then the likelihood of a bear market is not great. 0:08:11.040 --> 0:08:15.320 We have had bear markets without recessions, but not frequently. 0:08:15.840 --> 0:08:18.280 I don't see the elements of recession right now, so 0:08:18.600 --> 0:08:22.040 I don't think i'd exit the stock market per se. 0:08:22.080 --> 0:08:26.280 But what I would do is diversify today in a 0:08:26.400 --> 0:08:28.480 much bigger way than I have up till now. And 0:08:28.760 --> 0:08:30.840 I'll just throw out a few things that you might 0:08:30.880 --> 0:08:33.800 want to consider. In that regard, I certainly would overrate 0:08:33.920 --> 0:08:37.280 the international markets relative to the United States. I think 0:08:37.840 --> 0:08:42.439 most of the risk UH and excess and over optimism 0:08:42.520 --> 0:08:46.240 and stretched values are in the domestic marketplace. I'd look 0:08:46.320 --> 0:08:49.960 to the international markets, both developed and emerging in a 0:08:49.960 --> 0:08:52.680 bigger way, that have been already beat up pretty solidly 0:08:52.760 --> 0:08:56.120 and under owned and our better values. I'd also raised 0:08:56.120 --> 0:08:58.600 a little cash. If the FED is gonna pay you 0:08:58.679 --> 0:09:02.079 two percent now finally to have that asset. And if 0:09:02.080 --> 0:09:04.280 we hit an air pocket of panic, you have some 0:09:04.840 --> 0:09:08.360 dry powder to buy someone else's what someone else wants 0:09:08.360 --> 0:09:11.200 to give away. I'd look to add a commodity e 0:09:11.320 --> 0:09:15.720 t f UH in lieu of equity exposure of from 0:09:15.760 --> 0:09:18.800 here at a three unemployment rate. If we continue to 0:09:18.840 --> 0:09:20.960 grow in this recovery, I think we're going to continue 0:09:20.960 --> 0:09:25.319 to disascerbate inflation pressure and commodities might outperform stocks. In 0:09:25.360 --> 0:09:29.200 the balance, I'd allocate some to a hedge fund. Uh. 0:09:29.360 --> 0:09:31.160 They don't make much sense that the market's going to 0:09:31.200 --> 0:09:34.240 go up a year. But a hedge fund that can 0:09:34.280 --> 0:09:37.800 give you mid the upper single digit returns without the 0:09:37.840 --> 0:09:41.080 downside risk of the stock market, I think makes good sense. 0:09:41.120 --> 0:09:43.880 Now in the balance of this recovery, I'd add a 0:09:43.920 --> 0:09:46.880 little gold. Um, it's been beat up, and if there 0:09:46.920 --> 0:09:49.800 is any panic along the way here between now in 0:09:49.880 --> 0:09:52.959 the end goal to be UH, probably do pretty well. 0:09:53.400 --> 0:09:57.840 The sector exposures, I'd barbell my exposure. From here, I'd 0:09:57.840 --> 0:10:01.719 still own some cyclical sectors merely in place and beneficiaries 0:10:01.800 --> 0:10:06.920 like energy and industrials and materials financials, but I also 0:10:07.000 --> 0:10:11.240 barbell that with traditional defensive sectors, whether it be low 0:10:11.320 --> 0:10:15.719 vall or or dividend aristocrats or the utilities and staples 0:10:16.280 --> 0:10:19.080 UM and LOU. From here, and then finally, i'd look 0:10:19.160 --> 0:10:23.320 to defang my portfolio. If you if you've owned some 0:10:23.440 --> 0:10:29.160 of the most popular faying stocks, UM, I would congratulate yourself, 0:10:29.240 --> 0:10:32.120 pat yourself in the back, and then let someone else 0:10:32.160 --> 0:10:35.480 own them. From here, it might still own some technology, 0:10:35.520 --> 0:10:39.160 but I'd look to do that away from those overpopularized, 0:10:39.240 --> 0:10:42.920 over owned names. That that leaves you in this market 0:10:42.920 --> 0:10:44.680 if it continues to climb, but it gives you a 0:10:44.679 --> 0:10:49.720 completely different risk profile on the downside. Uh, should the 0:10:49.760 --> 0:10:54.280 market that's getting old come apart at some point, Jim Paulson, 0:10:55.280 --> 0:10:58.000 It certainly sounds like you're preparing for something that is 0:10:58.040 --> 0:11:02.480 not good with the just of gold adding to cash 0:11:02.880 --> 0:11:07.679 by a hedge fund lock in some low price commodities. Right, Well, 0:11:07.679 --> 0:11:11.800 I think the Yeah, I really think PIM that the 0:11:12.520 --> 0:11:14.560 what I'm struggling with. I think the bulk could last 0:11:14.600 --> 0:11:16.720 a while, but I don't think it's upside it's going 0:11:16.760 --> 0:11:18.360 to be that great. I think it's going to deliver 0:11:18.960 --> 0:11:23.760 buy and hold SMP probably delivers mid single digit returns 0:11:23.840 --> 0:11:28.800 and the balance of this recovery at best and um 0:11:28.880 --> 0:11:33.320 So if that's the case, there's other assets now that 0:11:33.520 --> 0:11:37.440 have very competitive profiles to that type of return profile, 0:11:37.640 --> 0:11:41.040 and they offer those without the risk that you're exposed 0:11:41.080 --> 0:11:45.200 to late in a bowl market. In in just long only, 0:11:45.920 --> 0:11:49.160 this is actually a really important point. What is the 0:11:49.280 --> 0:11:53.120 return target that is reasonable for investors to go after 0:11:53.559 --> 0:11:56.559 in order to sort of figure out what could be 0:11:56.559 --> 0:12:00.959 potentially valuable to hold to own. I there's a lot 0:12:01.000 --> 0:12:03.960 of things that I look at, you know, uh, Lisa, 0:12:04.160 --> 0:12:07.960 Like if you look historically from four percent unemployment rates 0:12:08.040 --> 0:12:10.040 or less, what's the return of the market. If you 0:12:10.080 --> 0:12:14.760 look at p mobibles where they are historically, what's the 0:12:14.800 --> 0:12:17.040 return of the market going forward. If you look at 0:12:17.040 --> 0:12:20.880 where interramarket correlations are today that are low, what's the 0:12:21.000 --> 0:12:23.520 turn of the market. And a lot of those things 0:12:23.559 --> 0:12:25.960 when you come when you deal with them, come up 0:12:26.080 --> 0:12:30.640 around on average like five percent buy and hold total returns. 0:12:31.320 --> 0:12:33.240 I think that's what we're looking at now in the 0:12:33.320 --> 0:12:38.319 public US marketplace, particularly among large guest times, and with 0:12:38.600 --> 0:12:41.439 the potential that ultimately a bear comes in, there's downside 0:12:41.520 --> 0:12:45.440 risk if that that's kind of the profile. You don't 0:12:45.480 --> 0:12:47.480 necessarily want to be completely out of it. What if 0:12:47.520 --> 0:12:50.480 it goes on for another three years? Okay? But on 0:12:50.520 --> 0:12:56.160 the other hand, I think there's other things to Pim's point, commodities, cash, 0:12:56.280 --> 0:12:59.240 hedge funds, other things that can match that return if 0:12:59.240 --> 0:13:02.920 not do better and don't have near the risk profile 0:13:02.960 --> 0:13:06.280 at the end of it. Jim Paulson, thank you so 0:13:06.360 --> 0:13:08.480 much for being with us. Jim Paulson is chief investments 0:13:08.480 --> 0:13:11.280 tragist at the louth Old Group, overseeing about one and 0:13:11.280 --> 0:13:31.400 a half billion dollars from Minneapolis. Our next guest says 0:13:31.440 --> 0:13:35.480 that President Donald Trump doesn't understand how much NAFTA has 0:13:35.640 --> 0:13:40.480 enriched the United States, Mexico and Canada. Joano Sarah is 0:13:40.480 --> 0:13:45.079 a columnist for Bloomberg Opinion, and you can follow Joe 0:13:45.320 --> 0:13:49.800 on Twitter at no Sarah b v. All Right, Jana 0:13:49.920 --> 0:13:53.720 Sarah tell us why the president doesn't understand what NAFTA 0:13:53.760 --> 0:13:56.040 has done. First of all, you can now follow me 0:13:56.240 --> 0:14:02.280 on Opinion. Underscore, Joe, I switched, Okay, I was asked 0:14:02.320 --> 0:14:04.800 to switch my handle. Is that like, we're no longer 0:14:04.880 --> 0:14:08.000 calling it NAFTA, We're calling it something, the US Mexico 0:14:08.040 --> 0:14:10.800 Trade Agreement that maybe Canada will be allowed to be 0:14:10.880 --> 0:14:15.240 part of or not, depending on how nicely they negotiate 0:14:15.360 --> 0:14:19.440 with US. Yeah. Yeah, that's gonna happen. Sure. Um I 0:14:19.840 --> 0:14:22.720 I started thinking about this a while back when I 0:14:22.760 --> 0:14:26.320 was in South Texas. And if you go to South Texas, 0:14:26.320 --> 0:14:28.880 if you go to McCallan or El Paso or any 0:14:28.960 --> 0:14:32.040 any of the towns on the border, what you see 0:14:32.760 --> 0:14:36.560 is prosperity. You really do in a way that did 0:14:36.560 --> 0:14:38.720 not exist when I lived in Texas in the nineteen 0:14:38.760 --> 0:14:42.040 eighties before and NAFTA past. And if you ask anybody there, 0:14:42.080 --> 0:14:45.600 they will very specifically say this is due to NAFTA. 0:14:45.800 --> 0:14:48.480 And if you look at the trade statistics, you know, um, 0:14:49.560 --> 0:14:53.240 trading is dramatically increased between the three countries. And when 0:14:53.280 --> 0:14:59.280 trade increases, jobs increase, and so um, you know, the 0:14:59.360 --> 0:15:02.440 idea that NAFTA is the worst deal ever or whatever 0:15:02.480 --> 0:15:07.240 it is the President says, is just bologny. Okay, fair enough. 0:15:07.400 --> 0:15:10.520 There have been some jobs though, that have been lost 0:15:10.560 --> 0:15:13.800 as a result of NAFTA in the US, in terms 0:15:13.920 --> 0:15:16.480 of say, car companies that have decided to build cars 0:15:16.480 --> 0:15:19.400 in Mexico rather than the US because labor is cheaper there. 0:15:19.880 --> 0:15:22.840 So let's say, yes, net net, there have been more 0:15:22.920 --> 0:15:26.800 jobs that created than lost. Couldn't you make the argument 0:15:26.920 --> 0:15:30.040 that it could be tweaked to be better so that 0:15:30.400 --> 0:15:33.440 there was a more significant benefit for the United States? 0:15:34.640 --> 0:15:40.120 Uh I. My own belief is that, um, the real 0:15:40.240 --> 0:15:44.720 crime here was outside of the sphere of NAFTA in 0:15:44.840 --> 0:15:48.240 the UH in the in the way that the United 0:15:48.280 --> 0:15:51.280 States with the government just kind of ignored the people 0:15:51.280 --> 0:15:54.440 who lost their jobs, there was no retraining, there wasn't 0:15:54.440 --> 0:16:01.600 a whole lot of economic benefits. UM. And I think that, know, yes, 0:16:01.720 --> 0:16:03.320 maybe it could be tweaked to make it a little 0:16:03.320 --> 0:16:05.160 better for the United States. Maybe they have this new 0:16:05.480 --> 0:16:08.200 thing in it that says a certain percentage of the 0:16:08.320 --> 0:16:11.720 content has to be made by workers making sixteen dollars 0:16:11.760 --> 0:16:16.120 an hour, which is double what UM the day rate 0:16:16.200 --> 0:16:19.200 is in Mexico. So maybe that will be something that 0:16:19.200 --> 0:16:22.040 that does that. UM. On the other hand, you know, 0:16:22.560 --> 0:16:28.440 the NAFTA has created these complex supply chains that if 0:16:28.480 --> 0:16:31.520 you try to muck with them, you're gonna really wreck 0:16:32.080 --> 0:16:35.880 the entire system in which the way cars are built. 0:16:36.480 --> 0:16:39.440 Uh and many other things too. Uh. One of the 0:16:39.480 --> 0:16:43.520 things about low tariffs is they allow for you know, uh, 0:16:43.720 --> 0:16:46.400 factories to be put on both sides of the border, 0:16:46.480 --> 0:16:49.680 and parts uh and various other things to go back 0:16:49.680 --> 0:16:51.800 and forth across the border as they as they make 0:16:51.840 --> 0:16:54.080 the parts and as they make the car, and and 0:16:54.120 --> 0:16:56.280 all of this is a net good and a job creator. 0:16:57.200 --> 0:17:01.720 John O. Sarah, Is this just politics? Well, some would 0:17:01.720 --> 0:17:04.840 say it's a diversion tactic for the president given what's 0:17:04.840 --> 0:17:07.120 been happening in the last few days. That's that's one 0:17:07.160 --> 0:17:10.560 thing as as worth noting that the deal with Mexico 0:17:10.680 --> 0:17:13.240 isn't even completed. I mean it's not even done yet 0:17:13.280 --> 0:17:16.639 and they declaring victory um. And and third, there's the 0:17:16.680 --> 0:17:19.600 whole Canada aspect of it, which is that you know, 0:17:19.720 --> 0:17:21.520 how are you really going to have a NAFTA if 0:17:21.560 --> 0:17:23.960 you don't have Canada in it. It's it's kind of ridiculous. 0:17:24.160 --> 0:17:26.240 I want to home in on something that you're talking about, 0:17:26.240 --> 0:17:30.760 where what the jobs that were lost there was some 0:17:30.800 --> 0:17:33.399 sort of lack of action on the part of if 0:17:33.480 --> 0:17:35.920 not the government and somebody else in terms of retraining 0:17:35.960 --> 0:17:39.000 some of these employees. Which regions are you talking about? 0:17:39.080 --> 0:17:40.960 And it is this part of what we're seeing with 0:17:41.119 --> 0:17:46.480 persistently high underemployment rates among white working age men in particular. 0:17:47.040 --> 0:17:49.080 I think that's exactly right. I think the reasons we're 0:17:49.080 --> 0:17:52.720 talking about is is, you know, the northeast, the Michigan's, 0:17:52.760 --> 0:17:57.000 the Indiana's, uh, the Pennsylvania's, that that part of the 0:17:57.040 --> 0:18:01.320 country swing states. Yeah, swing states with with white men 0:18:01.359 --> 0:18:03.960 who vote for Donald Trump, which is also really telling 0:18:04.000 --> 0:18:06.800 because it's right ahead of the midterm elections, which makes 0:18:06.800 --> 0:18:09.800 me wonder how much trying to come to some agreement 0:18:09.920 --> 0:18:11.920 or trying to say things are going to be better 0:18:12.320 --> 0:18:15.080 in particular for for carmakers or people who have those jobs. 0:18:15.080 --> 0:18:18.120 How much is that playing exactly to the mid term 0:18:18.160 --> 0:18:21.760 election conversation. I think it's I think it's part of it, 0:18:21.800 --> 0:18:23.840 but I don't think it's all of it, because you know, 0:18:23.880 --> 0:18:26.720 three months from now, there will be no effective change, 0:18:26.800 --> 0:18:29.240 nothing will have changed. It's it's too it's too stun 0:18:29.359 --> 0:18:31.520 it's too quick. But I'm sure that's part of I'm 0:18:31.520 --> 0:18:33.399 sure that's part of the way he's thinking about it. 0:18:35.119 --> 0:18:38.080 Best case scenario, do you think that nothing changes except 0:18:38.119 --> 0:18:41.080 for a name and President Trump can declare victory, but 0:18:41.800 --> 0:18:44.480 the trades, that the supply chains just continue as they were. 0:18:45.440 --> 0:18:48.280 That is the best case scenario. The worst case scenarios 0:18:48.640 --> 0:18:52.640 is that this constant bullying of Canada forces Canada to 0:18:52.800 --> 0:18:56.240 act in a in a drastic way. Uh that causes 0:18:56.320 --> 0:18:59.879 some of this to fall apart. Like what that can 0:19:00.400 --> 0:19:03.160 the Canada that they don't have an agreement, that that 0:19:03.240 --> 0:19:05.760 maybe NAFTA goes away, maybe he does. Maybe the president 0:19:05.800 --> 0:19:08.280 does throw NAFTA out the window. Um, which would be 0:19:08.320 --> 0:19:11.240 a terrible thing, terrible for the economy and terrible for 0:19:11.280 --> 0:19:17.159 the three nations. More terrible for Canada than the United States. Probably, Yeah, probably, 0:19:17.200 --> 0:19:20.359 it's a smaller economy, it's more dependent on the United States. Yeah. Absolutely, 0:19:20.400 --> 0:19:23.560 every everybody's back into a corner here. Canada's back into 0:19:23.600 --> 0:19:25.480 the corner of the United States is back into the corner. 0:19:25.560 --> 0:19:27.400 We'll hold on a second. Let's take a step back, 0:19:27.440 --> 0:19:30.159 because President Trump can't do this on his own. He 0:19:30.280 --> 0:19:33.680 needs Congress to step up behind him and actually uh 0:19:34.000 --> 0:19:36.760 ratify something, so you know, he could say whatever he wants. 0:19:36.760 --> 0:19:39.959 But it doesn't seem like Congress is necessarily on board here, 0:19:40.040 --> 0:19:43.080 especially considering the fact that Congress is probably going to 0:19:43.200 --> 0:19:48.000 change in composition following this fall. Uh. That's true. But 0:19:48.119 --> 0:19:50.800 it's hard to know how the Democratic Congress would react 0:19:50.840 --> 0:19:54.240 to um to a new nafter or we changed nafter. 0:19:54.320 --> 0:19:56.639 And second of all, um, I may be wrong about this, 0:19:56.680 --> 0:19:58.280 and I could I could well be wrong about this. 0:19:58.320 --> 0:20:00.399 But but doesn't the president have you would need to 0:20:00.400 --> 0:20:07.959 aggregate the agreement without Congress? Uh huh, there's a question. 0:20:08.440 --> 0:20:10.760 I think that they need six months though, to even 0:20:11.520 --> 0:20:14.840 take it up and and to decide, so, I mean, 0:20:15.359 --> 0:20:17.719 I don't know a good question. I think good question. 0:20:18.200 --> 0:20:20.600 I don't know. There are some steps he could take 0:20:20.600 --> 0:20:23.760 by himself, but my understanding is for any substantive change 0:20:23.800 --> 0:20:26.600 in the agreement, it really does have to be signed 0:20:26.600 --> 0:20:28.879 off by Congress. Am I wrong on that? I believe. 0:20:28.880 --> 0:20:31.200 I'm sure that's right for any new trade agreement. There's 0:20:31.200 --> 0:20:33.760 one other factor here, which is that if they don't 0:20:33.760 --> 0:20:35.520 have an agreement by this Friday, and this is what 0:20:35.560 --> 0:20:37.919 makes it so ridiculous. If they don't have an agreement 0:20:37.920 --> 0:20:41.800 by this Friday, the six month time span bumps into 0:20:41.800 --> 0:20:46.200 the new Mexican president's tenure, and who knows what he's 0:20:46.200 --> 0:20:47.720 gonna want. Who knows if he's going to say I 0:20:47.760 --> 0:20:49.480 want this exactly the way it is, or if he's 0:20:49.480 --> 0:20:53.800 going to have his own series of changes. What happened 0:20:53.840 --> 0:20:57.920 on Monday. It's really kind of inexplicable, not in terms 0:20:57.920 --> 0:21:00.200 of the politics of it, but in terms of the 0:21:00.200 --> 0:21:03.399 the implications. And you can just ask you in the 0:21:03.480 --> 0:21:07.080 details of all of this. When you talk about let's say, automobiles, right, 0:21:08.480 --> 0:21:14.320 SUVs and crossover vehicles are what Detroit really wants to sell, 0:21:14.760 --> 0:21:16.840 but those are made in the United States. That's my 0:21:17.000 --> 0:21:21.960 point that all of this consternation and challenge between let's 0:21:21.960 --> 0:21:25.560 say the United States and Canada, the United States and Mexico. 0:21:26.400 --> 0:21:29.000 You've got Ford announcing they're not even gonna make sedans 0:21:29.040 --> 0:21:34.720 except for the Mustang. Right, So, I mean sedans are 0:21:34.760 --> 0:21:38.879 being made in the American South by non union American labor. 0:21:39.560 --> 0:21:43.199 Trucks and SUVs are being made in Detroit because they 0:21:43.200 --> 0:21:46.359 can make a profit paying uh, you know, sixty and eighteen, 0:21:47.640 --> 0:21:51.199 and Americans and in Kansas City, and and American sedans 0:21:51.200 --> 0:21:53.760 are being made in Mexico. I mean it's pretty simple, right. 0:21:54.560 --> 0:21:57.000 I just want to give people a sense of how 0:21:57.119 --> 0:21:59.880 the new nafter and I put nafter in quotes because 0:22:00.000 --> 0:22:01.760 Resident Trump would like to change the name of it, 0:22:02.080 --> 0:22:05.960 how it would differ from the old one. Probably the 0:22:05.960 --> 0:22:07.760 biggest has to do with the auto industry, as we 0:22:07.760 --> 0:22:12.440 were just talking about, which would require that of car 0:22:12.520 --> 0:22:16.119 content be made in the US or Mexico under the 0:22:16.160 --> 0:22:20.480 current agreement, that is a minimum of sixty two point 0:22:20.560 --> 0:22:24.840 five percent. Also, to Joe's point, it's the sixteen dollars 0:22:24.920 --> 0:22:30.320 per hour wages for workers who are working on these autos. 0:22:30.359 --> 0:22:35.119 So definitely, UM, definitely a focus here on the auto industry, 0:22:35.160 --> 0:22:39.440 and I wonder how it's playing in the auto industry. 0:22:39.480 --> 0:22:42.679 I wonder how Detroit is looking at this, given the 0:22:42.720 --> 0:22:45.480 fact that they look to be the vain subject here right, Well, 0:22:45.480 --> 0:22:48.639 Detroit does not really want to mess with NAFTA the 0:22:48.680 --> 0:22:51.520 way it is. They just don't. And uh, you know 0:22:51.560 --> 0:22:54.239 the idea that that that that the president is going 0:22:54.280 --> 0:22:57.600 to insist that a certain number of workers make sixteen 0:22:57.920 --> 0:22:59.720 an hour, that that that's going to stick in their 0:22:59.720 --> 0:23:02.320 crawl and anything that mocks up their supply chain. They 0:23:02.359 --> 0:23:07.200 spent years creating these supply chains, um, and anything that 0:23:07.240 --> 0:23:10.399 mocks up the supply chain they will not be happy with. Alright. 0:23:10.440 --> 0:23:12.080 I don't know, Sarah, Thank you so much. Always a 0:23:12.080 --> 0:23:14.159 pleasure having you on. It's always a pleasure to be 0:23:14.160 --> 0:23:16.760 on the Pim and Lisa show. Jo't know. Sarah is 0:23:16.960 --> 0:23:37.760 Bloomberg opinion columnist writing on All Things. All things. Consumers 0:23:37.880 --> 0:23:41.480 are really confident right now, that is according to a 0:23:41.520 --> 0:23:45.639 whole host of consumer confidence measures. But what does it 0:23:45.720 --> 0:23:48.680 say about the economy going forward? Joining us now is 0:23:48.760 --> 0:23:51.800 Lynn Franco, Director of Economic Indicators at the Conference Board, 0:23:51.800 --> 0:23:55.399 as well as their own Lenava, senior US economist at 0:23:55.440 --> 0:24:00.080 Bloomberg Economics, Lena, let's start with you. We do have 0:24:00.200 --> 0:24:05.760 a new Conference Board Consumer Confidence Index out. What do 0:24:05.800 --> 0:24:09.639 we know. We know that consumers continue to sort of 0:24:09.760 --> 0:24:12.840 ride this confidence high, so to speak. So we've had 0:24:12.880 --> 0:24:16.480 extremely long, strong levels now for for more than a year, 0:24:16.480 --> 0:24:18.560 and I think what this is telling us is that 0:24:18.600 --> 0:24:21.320 we're going to expect sort of a strong second half 0:24:21.320 --> 0:24:23.879 with growth around three and a half percent. This is 0:24:23.920 --> 0:24:28.080 the best level since October of two thousand, absolutely, and 0:24:28.119 --> 0:24:30.399 it's coming on both fronts. They're telling us a that 0:24:30.520 --> 0:24:33.879 present situation has improved both in terms of business conditions 0:24:33.880 --> 0:24:37.719 and employment, which are two key pillars of confidence, and 0:24:37.880 --> 0:24:41.439 expectations of well have rebounded as well after back to 0:24:41.480 --> 0:24:46.080