WEBVTT - Bloomberg Surveillance TV: October 24th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:38.280 Terminal and the Bloomberg Business app. CPI coming in below expectations, 0:00:38.360 --> 0:00:40.720 trade us adding to bets for two more rate cuts 0:00:40.720 --> 0:00:44.120 this year, including one next Wednesday. David Kelly of JP 0:00:44.200 --> 0:00:46.680 Morgan Assen Management joins us. Now for more, David, let's 0:00:46.680 --> 0:00:49.760 start with the inflation data. Is three the new two? 0:00:50.200 --> 0:00:51.960 And is it going to stop this feder reserve from 0:00:52.040 --> 0:00:53.280 cunning interest rates? 0:00:53.840 --> 0:00:56.400 Well, I think the Fed's going to keep on cutting rates. 0:00:56.960 --> 0:00:59.120 It's generally a better than expected to report. But I 0:00:59.120 --> 0:01:01.040 think what a really show is we have a K 0:01:01.200 --> 0:01:05.080 shaped economy, and it's sort of a K shaped CPI report. 0:01:05.560 --> 0:01:08.240 The thing that really jumped out of me is first 0:01:08.240 --> 0:01:11.240 of all rental costs coming down. There's you know, we've 0:01:11.240 --> 0:01:15.080 got a big change in demographics here and rents are 0:01:15.400 --> 0:01:17.920 rental inflation is just going away. You also saw US 0:01:18.080 --> 0:01:21.760 vehicle prices full. I thought that was pretty interesting. And 0:01:21.800 --> 0:01:24.360 then the big thing here is core goods prices outside 0:01:24.360 --> 0:01:26.160 of food and energy. That's the stuff that should be 0:01:26.240 --> 0:01:29.360 hit by tariffs. But that's only up two tens of 0:01:29.480 --> 0:01:32.560 percent of one and a half percent year over year. 0:01:33.000 --> 0:01:37.240 It is clear that mainstream retailers don't believe they can 0:01:37.319 --> 0:01:40.080 pass on the tariff increases right now, and that's what's 0:01:40.160 --> 0:01:43.199 making this inflation rate a little bit tamer than people feared. 0:01:43.440 --> 0:01:46.039 David doesn't's just justify what the market's already sussed out, 0:01:46.040 --> 0:01:48.920 which is that inflation fears were overblown earlier this year. 0:01:49.120 --> 0:01:52.120 The Fed can keep cutting and potentially below three percent 0:01:52.480 --> 0:01:54.440 by the end of next year, and that it's not 0:01:54.480 --> 0:01:56.680 going to cause a huge inflation problem. 0:01:57.560 --> 0:02:00.280 Well, I never thought we had a long term inflation problem. 0:02:00.320 --> 0:02:02.280 But I think it is still early days on the 0:02:02.280 --> 0:02:04.960 tariff effects. So what's going to happen is right now 0:02:06.040 --> 0:02:09.120 retailers feel like they can't pass on the price increases. 0:02:09.480 --> 0:02:12.800 But early next year you're going to have this refund bonanza. 0:02:12.840 --> 0:02:15.720 The average incompact refund per household, we believe it's going 0:02:15.760 --> 0:02:18.200 to be able four thousand dollars. Last year is thirty 0:02:18.200 --> 0:02:20.840 two hundred dollars, and that is the exact time when 0:02:20.880 --> 0:02:22.840 retailers are going to feel like they can pass on 0:02:22.840 --> 0:02:24.560 these tariff increases. So I do think we've got a 0:02:24.600 --> 0:02:27.560 little bit of a spurred in tariff inflation still to come. 0:02:27.720 --> 0:02:30.519 But then you know, if nothing else happens, there isn't 0:02:30.520 --> 0:02:32.480 a lot of momentum in this economy, and it'll slow 0:02:32.520 --> 0:02:34.520 down again, and it'll cool down again. So I don't 0:02:34.520 --> 0:02:37.000 think we've got a long term inflation problem. My real 0:02:37.120 --> 0:02:41.160 question is, given how bubbly financial markets are, do you 0:02:41.320 --> 0:02:43.880 really need the Federal Reserve adding more liquidity to the 0:02:43.919 --> 0:02:47.320 party right now? Or should they just hang on in 0:02:47.360 --> 0:02:48.919 there and say this is enough liquidity? 0:02:49.120 --> 0:02:49.720 What are you saying? 0:02:49.919 --> 0:02:51.760 What are you seeing that really is bubbly Given the 0:02:51.800 --> 0:02:56.079 fact that earnings have exceeded expectations, the forecasts have exceeded expectations, 0:02:56.520 --> 0:02:58.359 and we're likely to see more of the same next week. 0:02:58.400 --> 0:03:03.160 With the tech earnings, valuations are extremely high for the 0:03:03.200 --> 0:03:05.840 over now. Obviously, it's a lot of it's concentrated in 0:03:05.840 --> 0:03:08.239 the mega cap stocks, but also profits is a share 0:03:08.280 --> 0:03:12.760 of GDP are extraordinarily high. So overall, the total valuable 0:03:12.840 --> 0:03:15.440 US market cap is about three hundred and sixty five 0:03:15.560 --> 0:03:19.280 percent of GDP right now. It was about two hundred 0:03:19.320 --> 0:03:23.000 and twelve percent before the tech bubble bursts back. 0:03:22.840 --> 0:03:23.560 In two thousand. 0:03:23.680 --> 0:03:26.200 It was eighty seven percent before the eighty seven stock 0:03:26.200 --> 0:03:29.560 market crash. So there's all you know, it's leverage upon leverage, 0:03:29.639 --> 0:03:32.200 high pe ratios on a very high level of earnings 0:03:32.200 --> 0:03:35.040 relative to GDP. Now, I still think this is a 0:03:35.120 --> 0:03:39.360 very good economy for equities, but I wouldn't say that 0:03:39.400 --> 0:03:41.800 you could call the market depressed at this stage. I 0:03:41.840 --> 0:03:43.680 think that, you know, one of the dangers here is 0:03:43.720 --> 0:03:46.080 that everybody gets out over their skis and then you 0:03:46.120 --> 0:03:50.080 have a significant market correction or a bear market. 0:03:50.480 --> 0:03:52.840 So are you talking about potentially if the Fed is 0:03:52.880 --> 0:03:56.320 cutting into strength, they'll be making an error this month. 0:03:57.400 --> 0:04:00.880 Yeah, because it's a different economy. And talking about well 0:04:00.920 --> 0:04:03.280 the Fen's going to tighten to lower inflation, forget about it. 0:04:03.360 --> 0:04:06.760 The federal reserves, short term ingistrates are not impacting growth, 0:04:06.760 --> 0:04:09.680 They're not impacting inflation, but they are impacting financial markets. 0:04:09.840 --> 0:04:12.880 And the big problem that we've had in this century 0:04:12.880 --> 0:04:15.680 of the two thousands hasn't been CPI inflation getting getting 0:04:15.680 --> 0:04:17.760 out of hand. It's asset bubbles, you know, whether it's 0:04:17.800 --> 0:04:22.320 housing bubbles or tech bubbles. And the Federal Reserve should 0:04:22.360 --> 0:04:24.479 not be in the business of blowing up bubbles. So 0:04:24.560 --> 0:04:26.680 I think they should, you know, just take it easy. 0:04:26.720 --> 0:04:28.520 I don't mind if they cut rates a little bitsier, 0:04:28.520 --> 0:04:30.680 but I certainly would have a problem if they cut 0:04:30.760 --> 0:04:33.240 rates below what they think neutral is if the economy 0:04:33.800 --> 0:04:35.919 is you know, is not threatened by a recession, because 0:04:36.040 --> 0:04:39.800 we are seeing money go into financial markets, go into 0:04:39.800 --> 0:04:41.720 financial assets and just not come out. And it's sort 0:04:41.760 --> 0:04:44.039 of it's kind of like a stuck valve, and the 0:04:44.080 --> 0:04:46.360 more money goes in, the more this this market just 0:04:46.400 --> 0:04:47.840 seems to accelerate upon itself. 0:04:47.839 --> 0:04:49.599 And David, if we ask Governor want of this question 0:04:49.760 --> 0:04:51.920 when he was on the program last week, we asked 0:04:51.920 --> 0:04:54.520 whether it's getting lolved into kind of interest rates and 0:04:54.560 --> 0:04:57.720 potentially reducing financial markets. David, do you think there's a 0:04:57.760 --> 0:05:00.200 problem with their interpretation of the dual mandate or just 0:05:00.200 --> 0:05:00.919 the your mandate. 0:05:02.720 --> 0:05:04.000 I think the dual mandate itself. 0:05:04.080 --> 0:05:07.160 I think that I think that if they need, Congress 0:05:07.160 --> 0:05:11.120 needs to recognize, they need to recognize that monetary policy 0:05:11.120 --> 0:05:17.800 has significant impacts on financial conditions, and therefore maintaining stable financial. 0:05:17.480 --> 0:05:18.680 Conditions should be part of the goal. 0:05:19.120 --> 0:05:21.240 It's kind of like with the ECB, who for years 0:05:21.440 --> 0:05:24.360 decided they didn't they weren't supposed to interview if one 0:05:24.480 --> 0:05:28.480 particular country got into significant economic distress and destabilize the eurosystem. 0:05:28.600 --> 0:05:30.880 And then finally Mario drag He said, look, if Greece 0:05:30.960 --> 0:05:33.120 is a problem, we're going to do something about Greece. Well, 0:05:33.160 --> 0:05:35.640 this is a similar situation where the mandate needs to 0:05:35.640 --> 0:05:38.400 be expanded a little to recognize the impact of FED 0:05:38.440 --> 0:05:42.200 policy on financial and other asset price bubbles, to try 0:05:42.240 --> 0:05:44.960 to prevent bubbles or busts, because of course that's what 0:05:45.120 --> 0:05:46.680 you bubble creates a bus and you want to have 0:05:46.760 --> 0:05:50.920 financial market stability, not just economic stability, and I think 0:05:50.920 --> 0:05:52.520 the Federal Reserve can have an impact on that. 0:05:54.000 --> 0:05:57.480 Stay with US multile impact surveillance coming up after this, 0:06:06.480 --> 0:06:10.200 a downside surprise on headline and core CPI unlocking some 0:06:10.279 --> 0:06:12.960 lower bondiolds this morning. Going into that Federal Reserve decision 0:06:13.279 --> 0:06:15.880 next Wednesday. Joining us now to discuss is Tiffany wanting 0:06:15.920 --> 0:06:18.279 of pimcod Tiffany welcome to the program. Is this a 0:06:18.400 --> 0:06:20.960 source of comfort for this Federal Reserve next week? 0:06:23.080 --> 0:06:24.600 Well, I mean, I don't know. 0:06:24.680 --> 0:06:26.520 I mean, I think certainly it's good news on the 0:06:26.520 --> 0:06:29.960 inflationary pressures. But the argument that we've been making, which 0:06:30.160 --> 0:06:32.960 I think is symptomatic of this report, is that the 0:06:33.040 --> 0:06:37.159 economic adjustment that we're seeing to tariffs is coming through 0:06:37.600 --> 0:06:42.080 less on a price adjustment, and instead companies are finding 0:06:42.200 --> 0:06:46.560 ways to defend margins by offsetting other costs. You know. 0:06:46.760 --> 0:06:48.640 I think the fact that you saw another headline this 0:06:48.760 --> 0:06:52.040 morning around a large retailer, you know that is doing 0:06:52.320 --> 0:06:54.320 you know, some layoffs at the you know, kind of 0:06:54.400 --> 0:06:55.640 higher executive levels. 0:06:56.320 --> 0:06:58.760 That's just in our minds symptomatic. 0:06:58.240 --> 0:07:01.160 Of that that that they are I'm finding these other 0:07:01.160 --> 0:07:03.160 ways to cut costs. So you know what that means 0:07:03.160 --> 0:07:06.159 for the Federal Reserve is that there is some downside 0:07:06.240 --> 0:07:08.440 risk to the labor market here. So I don't I 0:07:08.480 --> 0:07:11.480 don't know that they should be you know completely, you know, 0:07:11.520 --> 0:07:13.480 taking a sigh of relief here. We need to see 0:07:13.520 --> 0:07:16.920 the labor market data obviously when the government reopens. But 0:07:17.000 --> 0:07:19.160 as as you and Mike mentioned, we do think they 0:07:19.200 --> 0:07:22.680 cut in October, you know, and of course the median 0:07:22.800 --> 0:07:25.680 expectation from the FED is that they'll cut again in December. 0:07:25.840 --> 0:07:28.040 How much the forward look can they give us at 0:07:28.040 --> 0:07:30.520 the October mating, Tiffany, when chem and Pal goes into 0:07:30.520 --> 0:07:33.920 the news conference, Hey doesn't have much visibility on anything 0:07:34.040 --> 0:07:36.080 right now. How much guidance can he offer us for 0:07:36.120 --> 0:07:37.000 December and beyond. 0:07:38.840 --> 0:07:42.120 Yeah, I mean, I think it's incredibly tricky, and I'm 0:07:42.160 --> 0:07:44.960 not sure that they will offer a lot of guidance. 0:07:45.000 --> 0:07:45.120 You know. 0:07:45.200 --> 0:07:47.920 I think they're going to they're gonna they're going to 0:07:47.920 --> 0:07:49.520 say that we don't have a lot of data to 0:07:49.560 --> 0:07:53.160 go on here. There's private sources of data, but even there, 0:07:53.200 --> 0:07:55.480 it appears that some of the Feds, you know, the 0:07:55.560 --> 0:07:57.360 previous sources of private data that they got in the 0:07:57.400 --> 0:07:59.680 labor market, maybe they're not getting anymore. So it is 0:07:59.680 --> 0:08:03.000 a much more tricky situation for the FED. You know, 0:08:03.040 --> 0:08:05.680 they're going to be looking at you know, markets and 0:08:06.240 --> 0:08:08.640 you know, and I think the news flow in order 0:08:08.680 --> 0:08:11.200 to kind of figure out what's going on here. And 0:08:11.200 --> 0:08:12.760 I think it's going to be really tough for him 0:08:13.080 --> 0:08:16.760 in terms of guiding any further tiffany. 0:08:16.760 --> 0:08:18.480 A lot of people have been looking at the housing. 0:08:18.240 --> 0:08:21.440 Market in particular as a sign of disinflation going forward, 0:08:21.440 --> 0:08:24.000 and one thing that Mike pointed to is owner's equivalent rent. 0:08:24.320 --> 0:08:26.559 Looking at this, it just looks like inflation and owner's 0:08:26.600 --> 0:08:29.040 equivalent rent has fallen to the lowest pace going back 0:08:29.040 --> 0:08:32.080 to twenty twenty one, with a pretty big decline, which 0:08:32.120 --> 0:08:34.040 is one thing that's giving fuel to some of the 0:08:34.440 --> 0:08:36.320 enthusiasm and pun markets this morning. 0:08:36.360 --> 0:08:38.600 I'm just wondering how big of a tell that is 0:08:38.640 --> 0:08:41.200 for you. Yeah. 0:08:41.280 --> 0:08:45.400 No, I mean I think that that the normalization in 0:08:45.440 --> 0:08:48.640 housing and rents is something that you know, the economics 0:08:48.640 --> 0:08:52.000 community has expected for some time, and I would argue 0:08:52.000 --> 0:08:54.559 that it's delayed, and it was delayed because we saw 0:08:54.600 --> 0:08:57.800 a really big immigration boom over the last couple of years. 0:08:58.160 --> 0:09:00.960 Now obviously that the immigration police has taken a big 0:09:01.040 --> 0:09:04.840 u turn, you're not seeing those tailwinds of you know, 0:09:04.880 --> 0:09:08.920 additional population coming into the United States needing housing, and 0:09:09.000 --> 0:09:11.160 as a result of that, you're seeing rens cool off 0:09:11.240 --> 0:09:13.440 quite a bit. So I don't think it's that surprising, 0:09:13.800 --> 0:09:15.839 you know, but I do think it's you know, one 0:09:15.840 --> 0:09:18.200 of one of the things that should give the Federal 0:09:18.240 --> 0:09:21.920 Reserve comfort, you know that they you know, the inflationary 0:09:21.960 --> 0:09:25.040 pressures outside of you know, some terraff related pass through 0:09:25.480 --> 0:09:27.559 are pretty benign at this point, given. 0:09:27.280 --> 0:09:30.480 The fact that we're seeing no inflationary pressures to note 0:09:30.679 --> 0:09:33.360 that really are even beyond what people expected, and you 0:09:33.400 --> 0:09:36.280 are getting these announcements you were talking about the target 0:09:36.320 --> 0:09:40.199 announcements without naming them, laying off about a thousand people 0:09:40.280 --> 0:09:43.959 and removing eight hundred jobs from their listings. We also 0:09:44.000 --> 0:09:48.000 saw GM announcing around of job cuts this morning. I'm 0:09:48.040 --> 0:09:51.480 just wondering how much these are just anecdotes and typical 0:09:51.840 --> 0:09:56.400 versus something that really is softening, that is behind the disinflation, 0:09:56.640 --> 0:09:58.800 as well as the concerns that the Fed has about 0:09:58.840 --> 0:09:59.640 the labor market. 0:10:01.320 --> 0:10:03.559 Yeah, I mean, I mean again, we think it's it's 0:10:03.720 --> 0:10:08.480 very symptomatic of how we see the economy that's ultimately 0:10:08.520 --> 0:10:11.160 adjusting to tariffs. You know, I think the really big 0:10:11.200 --> 0:10:13.360 surprise this year coming in, you know, coming into the 0:10:13.400 --> 0:10:15.320 year and thinking about tariffs is that you'd get some 0:10:15.440 --> 0:10:19.800 price level adjustment. And there's multiple ways that companies can 0:10:19.880 --> 0:10:21.720 adjust to this. You know, and I think what we're 0:10:21.800 --> 0:10:25.120 learning is that, you know, they're not fully adjusting prices 0:10:25.520 --> 0:10:28.000 and that they're trying to offset costs in other ways, 0:10:28.280 --> 0:10:28.440 you know. 0:10:28.440 --> 0:10:30.040 And I think the fact that you're seeing this. 0:10:30.160 --> 0:10:33.680 AI investment boom and some broadening out just in the 0:10:33.720 --> 0:10:38.120 diffusion of AI technology, companies are hoping to get some 0:10:38.280 --> 0:10:43.199 labor saving cost benefits here and investing in capital because 0:10:43.200 --> 0:10:46.280 of the tax the new tax law, the One Big 0:10:46.280 --> 0:10:49.480 Beautiful Bill Act, you know, gives you pretty big you know, 0:10:49.559 --> 0:10:52.720 tax tax incentives with upfront capital expensing. So I think 0:10:52.720 --> 0:10:55.680 companies are really just making this adjustment, you know, more 0:10:55.720 --> 0:10:58.400 so through the labor market and in terms of the 0:10:58.400 --> 0:11:02.120 federal reserve, and they're mandate. You know, that just suggests 0:11:02.120 --> 0:11:05.080 that they have more room to start to uh, you know, 0:11:05.120 --> 0:11:08.440 to adjust policy back towards neutral. If they do cut 0:11:08.480 --> 0:11:10.600 two more times this year, they would be uh, you know, 0:11:10.800 --> 0:11:12.280 three three and a half, which is kind of the 0:11:12.360 --> 0:11:15.679 upper end of the range of neutral estimates that they have. 0:11:16.000 --> 0:11:18.160 And so getting back there and making that adjustment, you know, 0:11:18.160 --> 0:11:20.880 seems very reasonable to us, just given the information that's 0:11:20.880 --> 0:11:21.960 coming in tifically. 0:11:22.000 --> 0:11:25.079 When you say labor saving cost benefits, should we all 0:11:25.080 --> 0:11:27.800 be expecting more layoffs then to be announced in twenty 0:11:27.840 --> 0:11:28.400 twenty six. 0:11:30.440 --> 0:11:32.880 Well, I mean, I think the the economy will will 0:11:32.920 --> 0:11:35.560 need to go through an adjustment as a result of 0:11:35.679 --> 0:11:38.240 you know, these these transitions that we're seeing, whether it 0:11:38.280 --> 0:11:41.600 be you know, the policy related transitions this year or 0:11:42.000 --> 0:11:44.200 you know this tech uh you know sort of tech 0:11:44.240 --> 0:11:46.480 transition that we're seeing. You know, it does seem like 0:11:46.559 --> 0:11:49.440 AI is moving pretty quickly, you know. I think it's 0:11:49.840 --> 0:11:52.559 you know, it's it's still uncertain how how much productivity 0:11:52.600 --> 0:11:55.520 gains will will actually will actually get and how that 0:11:55.600 --> 0:11:58.679 will you know, save costs for companies, you know, but 0:11:58.840 --> 0:12:01.640 I think it we are starting to see the effects 0:12:01.679 --> 0:12:01.920 of that. 0:12:02.240 --> 0:12:03.559 I think you could start to see. 0:12:03.360 --> 0:12:06.520 It at announcements layoff announcements as well at some of 0:12:06.559 --> 0:12:10.160 the tech companies. You know, it is displacing some workers. Now, 0:12:10.160 --> 0:12:13.160 I think what's harder to understand is, you know, eventually 0:12:13.240 --> 0:12:15.040 it will also create new jobs. 0:12:15.200 --> 0:12:18.480 And how quickly will that happen and what. 0:12:18.520 --> 0:12:21.280 Those new jobs will be is more difficult to forecast. 0:12:21.360 --> 0:12:22.760 But I think at least in the near term you 0:12:22.840 --> 0:12:26.400 will see some you know, some labor saving you know, 0:12:26.440 --> 0:12:30.600 displacement here and the companies need that and are forced 0:12:30.600 --> 0:12:33.040 to try to get it because they have more terar 0:12:33.080 --> 0:12:33.880 for related costs. 0:12:34.520 --> 0:12:37.960 Stay with US mult Bloomberg Surveillance Coming up after this, 0:12:47.000 --> 0:12:49.840 President Donald Trump and Chinese President Chaing Ping is set 0:12:49.840 --> 0:12:52.560 to meet on Thursday in South Korea as the world's 0:12:52.600 --> 0:12:55.800 two lunchest economies looked at East trade sentience. To extend 0:12:55.800 --> 0:12:59.120 the conversation, George Pollack of Signum joined US. Now for more, George, 0:12:59.120 --> 0:13:02.360 that's Guy's for the issue rare raths, soybeans, and then 0:13:02.360 --> 0:13:04.920 we've got the issues around fence and O. Of those three, 0:13:05.160 --> 0:13:08.079 what's the higher, Rocky, what's the more difficult one to achieve? 0:13:09.320 --> 0:13:11.160 I think for the President, the most difficult one to 0:13:11.200 --> 0:13:14.199 achieve is rare earth because China understands that with rare 0:13:14.200 --> 0:13:18.000 earths they have the US and a disadvantageous position. And 0:13:18.040 --> 0:13:21.320 they remember when these tiers were first implemented earlier this year, 0:13:21.679 --> 0:13:24.280 the car manufacturers came to the president and said, if 0:13:24.320 --> 0:13:26.319 you don't get the rare earths started, we're going to 0:13:26.400 --> 0:13:29.199 have to shut down production. And China knows that, and 0:13:30.000 --> 0:13:31.680 that's where the President's probably going to have to be 0:13:31.760 --> 0:13:34.760 most aggressive. But at the same time, understand China has 0:13:34.800 --> 0:13:35.559 the advantage. 0:13:35.960 --> 0:13:39.320 Is China sending any signals that they're prepared to walk 0:13:39.400 --> 0:13:41.840 back what they plant, what they have been doing when 0:13:41.840 --> 0:13:42.680 it comes to rare earth. 0:13:44.480 --> 0:13:48.160 I think China's understanding of this rare issue is we 0:13:48.240 --> 0:13:51.480 haven't really done anything, and what we have done was 0:13:51.520 --> 0:13:54.120 more a response to your restrictions, and all we're doing 0:13:54.160 --> 0:13:57.080 is setting up a new licensing regiment. Rare earth are 0:13:57.120 --> 0:13:59.160 going to continue to come out, and you don't have 0:13:59.240 --> 0:14:02.839 to worry. It's be happy with the status quote. But 0:14:02.920 --> 0:14:05.520 you decided to change things up and you've decided to 0:14:05.559 --> 0:14:07.800 overreact and become more pugnacious. 0:14:08.000 --> 0:14:11.440 Well, it's not just a new regime when it comes 0:14:11.480 --> 0:14:14.880 to rare Earth's any material that China exports it has 0:14:14.960 --> 0:14:17.920 an ounce of a trace of a rare earth needs 0:14:17.920 --> 0:14:20.240 to get a specific export license, which is why the 0:14:20.240 --> 0:14:25.560 Europeans are even considering using their anti coercion tool, George. 0:14:25.680 --> 0:14:27.760 The fact that the Europeans are willing to go to 0:14:27.800 --> 0:14:30.960 the third rail, a tool they've never used in any negotiation, 0:14:31.600 --> 0:14:33.960 is that at the moment helping the United States into 0:14:34.040 --> 0:14:35.119 Thursday's meeting. 0:14:35.800 --> 0:14:38.600 I think for the President from Scott Bessen's O viewpoint, 0:14:38.680 --> 0:14:41.440 it is helping, It is helping the president give him 0:14:41.880 --> 0:14:44.520 a more global power and a more global idea that 0:14:44.600 --> 0:14:48.160 this can't go on. But at the same time, China's 0:14:48.200 --> 0:14:51.200 responded to this as that's great that you're united, but 0:14:51.280 --> 0:14:53.920 we still have the advantage and we don't understand why 0:14:53.920 --> 0:14:57.200 you're being so aggressive with us back and why you're 0:14:57.200 --> 0:14:58.840 deciding to play it so fast and loose. 0:14:59.400 --> 0:15:02.000 So what's your case then, for Thursdays, it's just a 0:15:02.040 --> 0:15:04.680 continuing rolling truth. 0:15:06.000 --> 0:15:08.480 Our base case is a continuing rolling truth where the 0:15:08.600 --> 0:15:11.680 US and China understand the current situation where the presence 0:15:11.680 --> 0:15:14.640 of threating increased tariffs and the continuing threat that is 0:15:14.640 --> 0:15:17.880 a new licensing regime kind of rolls back to an 0:15:17.920 --> 0:15:21.080 extent where we get back to the Geneva London understanding. 0:15:21.480 --> 0:15:24.040 But that doesn't mean it's a positive situation because we're 0:15:24.080 --> 0:15:26.760 still going to be having these situations pop up every 0:15:26.760 --> 0:15:29.320 couple of weeks where either the President is frustrated or 0:15:29.440 --> 0:15:30.440 China is frustrated. 0:15:30.640 --> 0:15:32.280 In the fact, in the past few weeks, it seems 0:15:32.280 --> 0:15:34.640 like the US has been trying to mend relations with 0:15:34.640 --> 0:15:38.920 a number of traditional allies and create closer ties, which 0:15:38.960 --> 0:15:42.040 is the reason why, in the wake of the announced 0:15:42.080 --> 0:15:45.400 meeting between Jijinpang and President Trump, the new tensions with 0:15:45.480 --> 0:15:46.600 Canada are interesting. 0:15:46.840 --> 0:15:48.800 How do you sort of understand. 0:15:48.360 --> 0:15:51.160 That in the bigger sphere of negotiations with. 0:15:51.240 --> 0:15:55.200 China in terms of the attentions with Canada. The way 0:15:55.240 --> 0:15:57.600 we view this is Canada's right now between a rock 0:15:57.640 --> 0:15:59.680 and a hard place within the Canola tariffs and ev 0:15:59.800 --> 0:16:02.080 tears they've placed on China, and they need to get 0:16:02.080 --> 0:16:04.120 that restarted. But at the same time they need to 0:16:04.160 --> 0:16:07.960 deal with USMCA renegotiation. And we've always thought that USMCA 0:16:08.080 --> 0:16:10.520 is going to be an aggressive renegotiation from the President 0:16:10.760 --> 0:16:13.320 and things like transhipment and rules of origin are going 0:16:13.360 --> 0:16:15.960 to come into play. And I think for the President, 0:16:16.040 --> 0:16:18.480 he's making clear to Canada, you're either with US the 0:16:18.600 --> 0:16:21.960 United States, or are you with China. You can't get both. 0:16:22.600 --> 0:16:25.920 This feels like a long game of leverage, and that's 0:16:25.960 --> 0:16:28.240 sort of been the big question between the US and China. 0:16:28.280 --> 0:16:30.720 Who has the leverage, And people argue on both sides. 0:16:30.920 --> 0:16:33.200 China having the leverage and rare earth minerals, maybe the 0:16:33.280 --> 0:16:34.960 US having a bit of an edge when it comes 0:16:34.960 --> 0:16:36.440 to technology, and just the. 0:16:36.480 --> 0:16:40.080 Dynamism in the US economy. I just wonder how much. 0:16:40.000 --> 0:16:43.360 You expect there to be some discussion of Russia and 0:16:43.480 --> 0:16:46.920 oil purchases, how much that's on the table versus just 0:16:47.160 --> 0:16:50.000 getting there and figuring out how to job own and 0:16:50.080 --> 0:16:52.200 kind of poke your elbows out, sort of have the 0:16:52.240 --> 0:16:53.520 same thing that we have right now. 0:16:54.360 --> 0:16:55.880 I have no doubt that there's people in the White 0:16:55.880 --> 0:16:57.760 House who would like to discuss Russia, whould like to 0:16:57.760 --> 0:17:00.480 discuss oil. But I think the President's made clear hisorities are, 0:17:00.480 --> 0:17:03.360 among other things, fentanel and soybeans, and I think that's 0:17:03.360 --> 0:17:05.919 where his focus is going to be. He is thinking 0:17:05.960 --> 0:17:08.520 short term right now, and his most likely his biggest 0:17:08.520 --> 0:17:11.800 short term weakness is the farmers, and is their inability 0:17:11.840 --> 0:17:14.240 to get assistance during the shutdown, and inability to get 0:17:14.240 --> 0:17:16.720 assistance because China, what for the first time in seven 0:17:16.800 --> 0:17:19.440 years in September did not purchase a single soybean. 0:17:19.760 --> 0:17:22.120 Can you tell me, George, your day on the calendar 0:17:22.240 --> 0:17:24.080 was circled when you think the shutdown finishes. 0:17:25.000 --> 0:17:27.120 I think we're still taking the place that this ends 0:17:27.119 --> 0:17:31.080 in November first for US Democrats. Send Democrats understand that 0:17:31.119 --> 0:17:35.080 at November first, the open care healthcare woman opens up. 0:17:35.520 --> 0:17:38.040 Republican voters are going to see the other premiums increase, 0:17:38.160 --> 0:17:40.439 and for Democrats that will be well will be negative 0:17:40.440 --> 0:17:42.600 for voters. Democrats will be able to say we wanted 0:17:42.680 --> 0:17:44.439 to fix this, Republicans were the one. 0:17:44.280 --> 0:17:44.840 Who said no. 0:17:45.440 --> 0:17:48.880 So you're basically saying it ends November first because Democrats 0:17:48.920 --> 0:17:51.560 will line up for the continuing resolution, not because they 0:17:51.560 --> 0:17:53.640 struck a deal with Republicans on healthcare. 0:17:54.520 --> 0:17:56.439 I think we will have to happen as Senator Schumer 0:17:56.480 --> 0:17:58.719 will have to walk with a hard line to not 0:17:58.920 --> 0:18:01.840 go down, but to navigate his caucus and to allow 0:18:02.119 --> 0:18:04.600 either the retiring members or the more moderate members to 0:18:04.680 --> 0:18:07.560 vote for it, and then message saying Democrats wanted to 0:18:07.560 --> 0:18:10.240 fix your healthcare. Democrats wanted you to avoid these premiums, 0:18:10.280 --> 0:18:12.760 but Republicans were the one who are saying no. And 0:18:12.800 --> 0:18:15.680 that will be the I guess the Democratic win will 0:18:15.720 --> 0:18:17.960 be one making healthcare an issue in the elect In 0:18:18.000 --> 0:18:20.800 the election, two Democrats being able to take the eighty 0:18:20.880 --> 0:18:22.800 twenty side of an issue the eighty side of an 0:18:22.840 --> 0:18:26.120 eighty twenty issue, and Democrats being able to say Republicans 0:18:26.160 --> 0:18:28.119 are the ones to blame for what is happening with 0:18:28.160 --> 0:18:30.399 your premiums, and if you want to punish them, the 0:18:30.400 --> 0:18:31.960 best way to do that is to vote for us. 0:18:33.160 --> 0:18:33.800 Stay with us. 0:18:34.119 --> 0:18:46.800 More Bloomberg Surveillance coming up after this, stocks rising, its 0:18:46.800 --> 0:18:49.760 markets are way. The latest read on inflation, John Stoffers 0:18:49.760 --> 0:18:52.760 of Oppenheimer writing, our intermediate and longer term outlook for 0:18:52.800 --> 0:18:56.120 the US economy and the stock market remains decidedly drum 0:18:56.200 --> 0:18:59.960 roll bullish, John, the most bullish man on the street. 0:19:00.240 --> 0:19:01.880 Let to see a second month, to see you too. 0:19:02.080 --> 0:19:04.800 Let's get to somebody these questions regarding inflation. How relevant 0:19:04.800 --> 0:19:07.880 is this morning CPISA to today's market. 0:19:08.160 --> 0:19:10.960 I think as long as it comes in in line 0:19:11.040 --> 0:19:14.440 or close to inline, I think we'll be fine. If 0:19:14.480 --> 0:19:19.040 it's a drastic surprise, then of course to higher inflation, 0:19:19.680 --> 0:19:22.520 not so. And if it's also much lower inflation than 0:19:22.560 --> 0:19:24.600 people say, we're in trouble. Is the Fed going to 0:19:24.600 --> 0:19:27.240 do fifty in set of twenty five? So it's any 0:19:27.320 --> 0:19:29.920 kind of action that can create BIPs for the traders 0:19:30.320 --> 0:19:32.199