1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day 4 00:00:18,760 --> 00:00:22,320 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,720 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,760 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,360 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,000 Speaker 2: Terminal and the Bloomberg Business app. We begin this out 10 00:00:37,040 --> 00:00:38,960 Speaker 2: with stocks hovering near fresh records on the S and 11 00:00:39,000 --> 00:00:42,640 Speaker 2: P five hundred. COO Group CEO David Balin joined us 12 00:00:42,680 --> 00:00:46,000 Speaker 2: now for more. David Goodmonic, Murriy, pleasure to be congratulations 13 00:00:46,000 --> 00:00:47,599 Speaker 2: on the new seat and we can talk about what 14 00:00:47,760 --> 00:00:49,559 Speaker 2: the company is going to be doing in the not 15 00:00:49,640 --> 00:00:51,680 Speaker 2: too distant future. But I want to take the temperature 16 00:00:51,720 --> 00:00:53,400 Speaker 2: of this market with you. What are your thoughts about 17 00:00:53,400 --> 00:00:55,280 Speaker 2: where we are, where we have been, and where we 18 00:00:55,320 --> 00:00:55,560 Speaker 2: go it. 19 00:00:55,840 --> 00:00:57,840 Speaker 3: Yeah, I mean it's pretty obvious that you've got a 20 00:00:58,400 --> 00:01:01,240 Speaker 3: humanmentum bond situation. You've got out an earning growth situation. 21 00:01:01,320 --> 00:01:04,399 Speaker 3: Earning a broadening situation. I think there are areas of 22 00:01:04,440 --> 00:01:07,120 Speaker 3: the market where you're seeing even more of that internationally. 23 00:01:07,160 --> 00:01:10,520 Speaker 3: You know, seventy percent of international markets last year outperformed 24 00:01:10,520 --> 00:01:15,080 Speaker 3: in the US. US investors virtually exposed to those markets, right, 25 00:01:15,240 --> 00:01:19,080 Speaker 3: lack of diversification in their portfolio. So I like the 26 00:01:19,160 --> 00:01:21,600 Speaker 3: momentum of the market. I like where it's going, but 27 00:01:21,680 --> 00:01:23,680 Speaker 3: I think there are lots of areas where people need 28 00:01:23,720 --> 00:01:26,759 Speaker 3: to go, whether it's in pharmaceuticals, whether it's in energy, 29 00:01:26,800 --> 00:01:30,080 Speaker 3: whether it's at MLPs where there's simply no real action 30 00:01:30,160 --> 00:01:32,520 Speaker 3: on the part of investors. It's all about tech, all 31 00:01:32,600 --> 00:01:35,039 Speaker 3: about big deals all the time. And I think, you know, 32 00:01:35,480 --> 00:01:38,200 Speaker 3: I think the good news is we believe that will continue, 33 00:01:38,319 --> 00:01:42,440 Speaker 3: but we also think that it indicates growing risk in portfolios. 34 00:01:42,480 --> 00:01:44,399 Speaker 2: We let's go to the international story. So I'm with you, 35 00:01:44,400 --> 00:01:46,040 Speaker 2: and we've seen that spreads away from a bigger way 36 00:01:46,080 --> 00:01:48,120 Speaker 2: to start the year. Is it just a different flavor 37 00:01:48,160 --> 00:01:51,240 Speaker 2: of the same story though, just tech tech elsewhere? 38 00:01:52,080 --> 00:01:54,280 Speaker 3: In part that's true, but remember that it's really an 39 00:01:54,320 --> 00:01:56,840 Speaker 3: earning story, right. It's where you're going to see you know, 40 00:01:57,080 --> 00:02:00,360 Speaker 3: lower valuations at higher growth rates internationally, right, And you 41 00:02:00,400 --> 00:02:02,680 Speaker 3: can see that in Japan, you could see that in India, right, 42 00:02:02,720 --> 00:02:04,520 Speaker 3: and you can see it even in pockets of Europe 43 00:02:04,640 --> 00:02:06,600 Speaker 3: and in Germany right as a result of the changes 44 00:02:06,600 --> 00:02:09,720 Speaker 3: of the geopolitics. So you could play all of those things. 45 00:02:09,720 --> 00:02:11,680 Speaker 3: But if you're an investor, you want to own that 46 00:02:11,760 --> 00:02:13,960 Speaker 3: growth at a price if you can, and you can't 47 00:02:13,960 --> 00:02:16,280 Speaker 3: find it at a cheap price in America anymore at all. 48 00:02:16,600 --> 00:02:18,359 Speaker 1: Just to take what you're saying a step further, are 49 00:02:18,400 --> 00:02:21,680 Speaker 1: you saying that anyone who invests completely in the US 50 00:02:21,760 --> 00:02:24,240 Speaker 1: or more heavily in the US is exposed to a 51 00:02:24,280 --> 00:02:27,880 Speaker 1: concentration risk that is historic and potentially really problematic. 52 00:02:28,320 --> 00:02:30,160 Speaker 3: That is the number one thing that we're talking with 53 00:02:30,240 --> 00:02:33,440 Speaker 3: clients about today is the fact that if a client 54 00:02:33,440 --> 00:02:36,240 Speaker 3: has multiple advisors, right, and they're all besting on the 55 00:02:36,240 --> 00:02:39,000 Speaker 3: same thing, and they don't rebalance portfolios, And that is 56 00:02:39,040 --> 00:02:41,760 Speaker 3: the number one observation that we've seen in our data 57 00:02:41,800 --> 00:02:45,079 Speaker 3: this past year, is that everyone is letting these trades ride. 58 00:02:45,400 --> 00:02:48,880 Speaker 3: So you have one of the riskiest stock sectors, right, semiconductors, 59 00:02:49,280 --> 00:02:51,840 Speaker 3: large compan right in Vidiot right leading the company leading 60 00:02:51,880 --> 00:02:53,880 Speaker 3: the stock market, I mean, and it is in a 61 00:02:53,919 --> 00:02:56,400 Speaker 3: highly volatile marketplace, and so we don't think there's a 62 00:02:56,400 --> 00:02:58,920 Speaker 3: problem this year, fair enough. But the question is if 63 00:02:58,919 --> 00:03:01,359 Speaker 3: a person's got you know, that type of concentration, where 64 00:03:01,360 --> 00:03:03,840 Speaker 3: should they move that money and win? Right? And that 65 00:03:03,919 --> 00:03:06,440 Speaker 3: is a twenty twenty six movement as far as we're concerned. 66 00:03:06,480 --> 00:03:08,840 Speaker 1: So you think it's international, is it international equities? Is 67 00:03:08,840 --> 00:03:10,960 Speaker 1: it in the commodity space? I mean, where exactly do 68 00:03:11,000 --> 00:03:14,280 Speaker 1: you see actual diversification against something that's really global? 69 00:03:14,600 --> 00:03:17,120 Speaker 3: So you can actually do that through dividend shares in 70 00:03:17,160 --> 00:03:19,480 Speaker 3: Europe and specific sectors. Right, you can do it in 71 00:03:19,480 --> 00:03:22,920 Speaker 3: pharmaceuticals here in the US and internationally, you could do 72 00:03:23,000 --> 00:03:25,200 Speaker 3: it in tech in Asia in certain areas right in 73 00:03:25,320 --> 00:03:27,840 Speaker 3: terms of what is where AIS can to influence consumer 74 00:03:27,880 --> 00:03:30,760 Speaker 3: markets and consumer brands. So there's lots of places where 75 00:03:30,800 --> 00:03:33,840 Speaker 3: you get the growth story, but you also get diversification 76 00:03:33,880 --> 00:03:36,640 Speaker 3: as the industry. Everything that we're doing is focused on 77 00:03:36,680 --> 00:03:40,400 Speaker 3: where earnings are going in those places, so it's lower evaluations, 78 00:03:40,680 --> 00:03:43,680 Speaker 3: higher earnings growth rates non US. We're now about twenty 79 00:03:43,760 --> 00:03:46,560 Speaker 3: percent non US in terms of our portfolios, which we 80 00:03:46,600 --> 00:03:50,160 Speaker 3: can do because we're not limited to where we were 81 00:03:50,200 --> 00:03:51,440 Speaker 3: when I was working a large bank. 82 00:03:51,600 --> 00:03:53,960 Speaker 4: You also say treat cash as an asset class. Yes, 83 00:03:54,120 --> 00:03:55,920 Speaker 4: how much should people be allocating? 84 00:03:56,200 --> 00:03:58,560 Speaker 3: So two facts that I don't think people know. The 85 00:03:58,680 --> 00:04:01,080 Speaker 3: average family right has more than nine percent of their 86 00:04:01,120 --> 00:04:03,640 Speaker 3: portfolio and cash and has had it there for basically 87 00:04:03,680 --> 00:04:06,480 Speaker 3: five to ten years, saying they'll be opportunistic, and they 88 00:04:06,520 --> 00:04:08,920 Speaker 3: never are. The average cash yield to that family is 89 00:04:08,920 --> 00:04:11,720 Speaker 3: two point seven percent. They could be earning four percent 90 00:04:11,720 --> 00:04:14,040 Speaker 3: of treasuries. They could be earning five percent if they 91 00:04:14,080 --> 00:04:16,760 Speaker 3: have a blended portfolio. And one of the reasons why 92 00:04:16,800 --> 00:04:18,960 Speaker 3: that's true is that they have their cash in fifteen 93 00:04:19,000 --> 00:04:22,040 Speaker 3: different accounts, none of it's aggregated, and it's not managed. 94 00:04:22,240 --> 00:04:24,400 Speaker 3: So why is that the case. It's largely because it's 95 00:04:24,400 --> 00:04:27,400 Speaker 3: a little bit everywhere, and so that's an enormous opportunity. 96 00:04:27,400 --> 00:04:29,440 Speaker 3: If you have nine percent of your portfolio and you 97 00:04:29,440 --> 00:04:31,320 Speaker 3: can make an extra one hundred and fifty basis points 98 00:04:31,320 --> 00:04:33,240 Speaker 3: at it, right, you should be doing that. And these 99 00:04:33,240 --> 00:04:35,440 Speaker 3: are the observations that we're now able to see because 100 00:04:35,960 --> 00:04:37,760 Speaker 3: when you look across all of the accounts that the 101 00:04:37,800 --> 00:04:40,360 Speaker 3: family as, you can actually just see how it is 102 00:04:40,600 --> 00:04:42,960 Speaker 3: that they are really undermanaging certain assets. And that's why 103 00:04:43,000 --> 00:04:45,440 Speaker 3: we call cashes an asset class, because it's a large 104 00:04:45,440 --> 00:04:48,000 Speaker 3: portion of the portfolio and it's largely undermanaged. 105 00:04:48,080 --> 00:04:50,320 Speaker 2: You'll land the foundations for broad a conversation about what 106 00:04:50,320 --> 00:04:52,919 Speaker 2: you're doing now, how much extra insight do you have 107 00:04:53,040 --> 00:04:55,800 Speaker 2: now versus what you had previously, And would you go 108 00:04:55,839 --> 00:04:57,839 Speaker 2: as far as saying that this industry is letting some 109 00:04:57,839 --> 00:04:58,760 Speaker 2: of those families down. 110 00:04:59,160 --> 00:05:01,160 Speaker 3: I would actually go far as to say that I 111 00:05:01,160 --> 00:05:03,840 Speaker 3: really didn't think that a year ago, right. But it's 112 00:05:03,880 --> 00:05:06,440 Speaker 3: not only it's a structural issue, because if they can't 113 00:05:06,440 --> 00:05:09,120 Speaker 3: see the assets, theoretically they can't comment on them. But 114 00:05:09,200 --> 00:05:12,240 Speaker 3: what's really interesting to me is that the industry is 115 00:05:12,360 --> 00:05:16,520 Speaker 3: charging an enormous amount in fees for the advice that 116 00:05:16,560 --> 00:05:18,640 Speaker 3: they get. So the average family is probably paying one 117 00:05:18,640 --> 00:05:20,760 Speaker 3: point four percent if you add up the cost of 118 00:05:20,760 --> 00:05:22,920 Speaker 3: the funds they own and the cost of their advice, right, 119 00:05:23,120 --> 00:05:25,599 Speaker 3: which in a fifteen percent a year is nine percent 120 00:05:25,640 --> 00:05:29,320 Speaker 3: of what they actually made right, And yet they're basically 121 00:05:29,360 --> 00:05:33,400 Speaker 3: index oriented. They're getting all of this exposure without getting diversification, 122 00:05:33,800 --> 00:05:36,200 Speaker 3: and they're getting not very good yields on their cash. 123 00:05:36,200 --> 00:05:39,000 Speaker 3: So I would just say that they're not getting the 124 00:05:39,040 --> 00:05:41,680 Speaker 3: implementation of the advice that they should about you're following 125 00:05:41,680 --> 00:05:44,640 Speaker 3: the basic rules of finance, which is diversification and meaning it. 126 00:05:45,040 --> 00:05:46,640 Speaker 3: And that's what I would say, Yes. 127 00:05:46,520 --> 00:05:48,840 Speaker 1: That's true at a time when there's so much focus 128 00:05:49,040 --> 00:05:51,840 Speaker 1: on wealth management at big banks. Why do you think 129 00:05:51,880 --> 00:05:53,880 Speaker 1: this is? Is it just groupthink or is it that 130 00:05:53,920 --> 00:05:57,120 Speaker 1: there are certain incentives to be invested in certain areas. 131 00:05:57,279 --> 00:05:59,800 Speaker 3: I just simply think that the industry is going under 132 00:06:00,160 --> 00:06:02,839 Speaker 3: an amount of consolidation right now. You know RAA roll 133 00:06:02,920 --> 00:06:08,400 Speaker 3: ups banks basically buying other wealth management institutions, consolidation and 134 00:06:08,440 --> 00:06:12,200 Speaker 3: asset management. It's an extremely profitable time for the industry, right, 135 00:06:12,360 --> 00:06:14,640 Speaker 3: so there's no real reason to take a look at 136 00:06:14,640 --> 00:06:17,880 Speaker 3: the very nature of its fee structure given all of that, right, 137 00:06:18,040 --> 00:06:20,720 Speaker 3: if you think about it right, clients can get I'll 138 00:06:20,760 --> 00:06:23,240 Speaker 3: give you an example. If you take in our asset 139 00:06:23,240 --> 00:06:25,479 Speaker 3: allocation and you actually look at the cost of the 140 00:06:25,520 --> 00:06:28,440 Speaker 3: funds that we use, it's eighteen basis points to actually 141 00:06:28,440 --> 00:06:30,760 Speaker 3: buy all of the atfs in the United States that 142 00:06:30,800 --> 00:06:35,880 Speaker 3: we like, with extraordinary specificity as to what individual sectors 143 00:06:35,880 --> 00:06:37,200 Speaker 3: you want to get exposure to. If you want to 144 00:06:37,200 --> 00:06:41,480 Speaker 3: get exposure to ETFs in MLPs right now, which we're doing, 145 00:06:41,720 --> 00:06:45,440 Speaker 3: or in pharma right, or in biotechnology you can literally 146 00:06:45,440 --> 00:06:47,880 Speaker 3: buy those at very inexpensive things, so you can assemble 147 00:06:47,880 --> 00:06:50,239 Speaker 3: a portfolio that way, or you can pay for active 148 00:06:50,240 --> 00:06:52,800 Speaker 3: management at sixty or seventy basis points and not get 149 00:06:52,800 --> 00:06:53,680 Speaker 3: any benefit from it. 150 00:06:53,760 --> 00:06:54,000 Speaker 1: Right. 151 00:06:54,200 --> 00:06:56,960 Speaker 3: Well, the industry is largely stuck on the way that 152 00:06:57,000 --> 00:06:59,159 Speaker 3: it's done it. It has no incentive to change. 153 00:06:59,640 --> 00:07:02,280 Speaker 2: Just before you go, it's a wealth bracket in particular 154 00:07:02,600 --> 00:07:04,480 Speaker 2: that you think is vulnerable to some of the issues 155 00:07:04,480 --> 00:07:05,200 Speaker 2: you just explained. 156 00:07:06,800 --> 00:07:09,400 Speaker 3: Yes, it's a very wide bracket. But if a family 157 00:07:09,440 --> 00:07:12,680 Speaker 3: has ten to five hundred million dollars, they're using multiple 158 00:07:12,720 --> 00:07:15,560 Speaker 3: and they're using multiple advisors, which is a huge amount 159 00:07:15,600 --> 00:07:16,960 Speaker 3: of wealth and extraordinary. 160 00:07:17,000 --> 00:07:17,160 Speaker 5: Right. 161 00:07:17,240 --> 00:07:19,680 Speaker 3: But if they've got ten to five hundred million dollars, right, 162 00:07:19,800 --> 00:07:23,200 Speaker 3: and they're using multiple advisors, the probability that they're beating 163 00:07:23,200 --> 00:07:25,440 Speaker 3: the market so that they actually have their money adequately 164 00:07:25,480 --> 00:07:27,520 Speaker 3: and diversified and investor is extremely low. 165 00:07:27,760 --> 00:07:30,400 Speaker 2: What happens five hundred and now they tend. 166 00:07:30,280 --> 00:07:33,240 Speaker 3: To get more advice by having an individual inside the 167 00:07:33,280 --> 00:07:37,280 Speaker 3: family who is actually coordinating the professional activities. And interesting 168 00:07:37,880 --> 00:07:40,560 Speaker 3: is they actually have goals and an ips that they're 169 00:07:40,600 --> 00:07:44,440 Speaker 3: following and are being checked on. It's when they don't 170 00:07:44,440 --> 00:07:47,240 Speaker 3: have that and they're relying on multiple providers that they 171 00:07:47,280 --> 00:07:48,720 Speaker 3: end up not having a sense of direction. 172 00:07:49,040 --> 00:07:52,560 Speaker 2: Stay with us. Mult Bloomberg Surveillance coming up after this. 173 00:08:01,840 --> 00:08:04,480 Speaker 2: John Builton of JP Morgan Asset Management, writing, given our 174 00:08:04,520 --> 00:08:06,880 Speaker 2: expectation of a moderate pickup in the pace of growth 175 00:08:06,880 --> 00:08:10,760 Speaker 2: in twenty six, we see potential for positive equity returns. 176 00:08:10,800 --> 00:08:12,840 Speaker 2: John joined us now for Mott, JUHNK and Monich. Morning, 177 00:08:12,880 --> 00:08:14,720 Speaker 2: it's going to see you. We've been flattered, We've been 178 00:08:14,720 --> 00:08:17,400 Speaker 2: blessed by some really really decent double digit gains on 179 00:08:17,440 --> 00:08:19,840 Speaker 2: the S and P five hundred. Is there more to come? 180 00:08:20,720 --> 00:08:23,120 Speaker 6: Well, I think if you believe that the economy is 181 00:08:23,200 --> 00:08:25,240 Speaker 6: in a decent place, you believe we're going to get 182 00:08:25,320 --> 00:08:29,480 Speaker 6: fiscal stimulus coming through this year. We see unemployment behaving 183 00:08:29,480 --> 00:08:32,559 Speaker 6: itself per your earlier comments just now. If we see 184 00:08:32,640 --> 00:08:36,199 Speaker 6: the impact which is always delayed, of the FED cuts 185 00:08:36,280 --> 00:08:39,080 Speaker 6: coming through and actually supporting the economy, which we think 186 00:08:39,280 --> 00:08:41,880 Speaker 6: they will, then if you look back through history, nine 187 00:08:41,960 --> 00:08:45,240 Speaker 6: times out of ten in a year with no recession, 188 00:08:45,480 --> 00:08:47,080 Speaker 6: and we're not calling for a recession, we think the 189 00:08:47,080 --> 00:08:50,920 Speaker 6: odds are pretty low. Then the SMP delivers positive total returns. 190 00:08:51,120 --> 00:08:53,600 Speaker 6: So sure, if you want to bet against stocks, go crazy, 191 00:08:53,720 --> 00:08:55,200 Speaker 6: but the odds are not your way. 192 00:08:55,240 --> 00:08:57,199 Speaker 2: Skater, where the puck is going? Where do I want 193 00:08:57,200 --> 00:09:00,400 Speaker 2: to be now? Already to take advantage to some of this, well, 194 00:09:00,440 --> 00:09:01,040 Speaker 2: we think that what. 195 00:09:00,960 --> 00:09:03,120 Speaker 6: We're going to be seeing this year is, you know 196 00:09:03,200 --> 00:09:05,560 Speaker 6: a little bit more in terms of the continuation from 197 00:09:05,600 --> 00:09:07,840 Speaker 6: some of the themes last year, things like that gradual 198 00:09:07,880 --> 00:09:10,079 Speaker 6: weakening of the dollar, which is going to flatter some 199 00:09:10,120 --> 00:09:13,240 Speaker 6: of the international markets. Of course, if we look at 200 00:09:13,240 --> 00:09:16,560 Speaker 6: what happened with Europe with the US, you know, the 201 00:09:16,559 --> 00:09:19,240 Speaker 6: indices in terms of their returns in local currency, we're 202 00:09:19,360 --> 00:09:22,000 Speaker 6: not too dissimilar. But you've got a big boost as 203 00:09:22,000 --> 00:09:24,080 Speaker 6: a US dollar investor if you were beginning to be 204 00:09:24,120 --> 00:09:27,840 Speaker 6: a bit more adventurous and look outside. We've obviously got 205 00:09:27,880 --> 00:09:30,840 Speaker 6: that Ai trade which continues. We think it's important in 206 00:09:30,880 --> 00:09:34,040 Speaker 6: the US, but remember it's a concentrated piece of the market. 207 00:09:34,120 --> 00:09:36,520 Speaker 6: People want to be able to find a different way 208 00:09:36,559 --> 00:09:39,040 Speaker 6: to invest. Asia looks pretty good there, you know, some 209 00:09:39,160 --> 00:09:42,480 Speaker 6: of the impact in terms of the investments that have 210 00:09:42,559 --> 00:09:45,280 Speaker 6: been made in the last few years start to bear fruit. 211 00:09:45,280 --> 00:09:47,760 Speaker 6: Does it broaden out across the economy. I think that's 212 00:09:47,840 --> 00:09:50,120 Speaker 6: the sort of themes that folks are looking for this year, 213 00:09:50,280 --> 00:09:51,960 Speaker 6: trying to put a few more eggs in a few 214 00:09:51,960 --> 00:09:52,760 Speaker 6: different baskets. 215 00:09:52,840 --> 00:09:54,400 Speaker 1: I was going to ask, how adventurous do you want 216 00:09:54,400 --> 00:09:56,760 Speaker 1: to get Vamsung or Venezuela bonds? 217 00:09:57,040 --> 00:09:57,559 Speaker 2: I think we. 218 00:10:00,080 --> 00:10:02,400 Speaker 5: Okay, there's a few things there, aren't there. I mean, 219 00:10:02,520 --> 00:10:04,480 Speaker 5: one of the other things which I think is supportive 220 00:10:04,520 --> 00:10:08,079 Speaker 5: of the economy generally is is this emphasis on oil 221 00:10:08,120 --> 00:10:11,040 Speaker 5: prices coming down. Right, So anything which is freeing up 222 00:10:11,040 --> 00:10:13,680 Speaker 5: supply potentially being a bit of a sort of downward 223 00:10:13,760 --> 00:10:17,000 Speaker 5: pressure on oil prices ultimately good for the consumer. 224 00:10:17,559 --> 00:10:20,760 Speaker 6: That's ultimately good in the US. It's supportive globally as well, 225 00:10:20,800 --> 00:10:22,680 Speaker 6: of course, but that's going to be something which matters 226 00:10:22,679 --> 00:10:25,560 Speaker 6: a great deal, you know, just having another year of 227 00:10:25,559 --> 00:10:29,880 Speaker 6: the economy being a global a going concern globally, I 228 00:10:29,880 --> 00:10:32,880 Speaker 6: think that's really important for confidence, which in the US, 229 00:10:32,960 --> 00:10:36,640 Speaker 6: if we look at consumer confidence, it's been hit pretty hard. Actually, 230 00:10:36,640 --> 00:10:38,600 Speaker 6: if you look at where the stock market is versus 231 00:10:38,640 --> 00:10:41,600 Speaker 6: where consumer sentiment is, you know, there's a big dichotomy there, 232 00:10:41,600 --> 00:10:43,040 Speaker 6: and it's even worse in Europe. 233 00:10:43,200 --> 00:10:45,440 Speaker 1: It's really a difficult narrative to get my head around. 234 00:10:45,480 --> 00:10:47,559 Speaker 1: Pretty much the entirety of this year is going to 235 00:10:47,559 --> 00:10:49,240 Speaker 1: be difficult thing to get my head around. But I 236 00:10:49,240 --> 00:10:51,439 Speaker 1: am wondering. People say the commodity costs are going down 237 00:10:51,440 --> 00:10:53,240 Speaker 1: because oil prices are going down, and then we look 238 00:10:53,280 --> 00:10:55,680 Speaker 1: in copper, that we look at lithium, then we look 239 00:10:55,720 --> 00:10:58,320 Speaker 1: at some of the other inputs at all time highs 240 00:10:58,320 --> 00:11:01,160 Speaker 1: continuing to skyrocket at golden et cetera. So some of 241 00:11:01,160 --> 00:11:03,760 Speaker 1: the other inputs that we're going to be using increasingly 242 00:11:03,800 --> 00:11:06,720 Speaker 1: electricity costs. So how do you square this idea of 243 00:11:06,760 --> 00:11:10,040 Speaker 1: the disinflation from oil prices and frankly the inflation from 244 00:11:10,080 --> 00:11:11,599 Speaker 1: the rest of the commodity sector, which a lot of 245 00:11:11,600 --> 00:11:12,960 Speaker 1: people are betting will continue. 246 00:11:13,040 --> 00:11:14,800 Speaker 6: Well, I think you put it into the chain. It 247 00:11:14,840 --> 00:11:17,520 Speaker 6: works in that the push up in commodities prices is 248 00:11:17,559 --> 00:11:20,080 Speaker 6: a symptom of the investment that's being made. And the 249 00:11:20,080 --> 00:11:22,320 Speaker 6: investments that are being made at the moment are in 250 00:11:22,360 --> 00:11:26,400 Speaker 6: building productive capacity. It's in electrification, which will ultimately bring 251 00:11:26,480 --> 00:11:29,480 Speaker 6: down costs. It's also in data centers, which is a 252 00:11:29,600 --> 00:11:33,160 Speaker 6: huge part of the AI sort of infrastructure build out. 253 00:11:33,160 --> 00:11:35,680 Speaker 6: We're going through a massive building phase at the moment, 254 00:11:36,000 --> 00:11:38,880 Speaker 6: a phase where we're building productive capacity, and we know 255 00:11:38,960 --> 00:11:42,120 Speaker 6: that the biggest driver of total factor productivity over the 256 00:11:42,120 --> 00:11:45,559 Speaker 6: long run is the investment made in those productive assets. 257 00:11:45,800 --> 00:11:48,000 Speaker 6: That's what we're seeing today. Yes, of course there's going 258 00:11:48,040 --> 00:11:50,640 Speaker 6: to be tightless in places. I mean, the swing demand 259 00:11:50,760 --> 00:11:54,480 Speaker 6: today for copper is not China as it always was 260 00:11:54,520 --> 00:11:56,920 Speaker 6: for many, many years. It's much more what's going on 261 00:11:56,960 --> 00:11:59,120 Speaker 6: in terms of electric vehicles, it's what's going on in 262 00:11:59,200 --> 00:12:02,800 Speaker 6: terms of data center. So it's a symptom I believe 263 00:12:02,840 --> 00:12:05,480 Speaker 6: of a bigger theme, which is this big investment phase 264 00:12:05,480 --> 00:12:06,360 Speaker 6: that we're seeing right now. 265 00:12:06,440 --> 00:12:09,440 Speaker 4: You say that you're becoming more constructive on Europe, specifically Germany. 266 00:12:09,440 --> 00:12:12,480 Speaker 4: This made in Germany. How that possible when China has 267 00:12:12,520 --> 00:12:14,439 Speaker 4: been decimating their industrial base. 268 00:12:15,240 --> 00:12:16,679 Speaker 6: Well, I think we've got a few things. I mean, 269 00:12:16,840 --> 00:12:19,679 Speaker 6: this is not new news. Chinese competition in Europe has 270 00:12:19,679 --> 00:12:22,600 Speaker 6: been a big deal for the European Union for some time. 271 00:12:22,720 --> 00:12:26,560 Speaker 6: There's been a lot of talk about concerns over product dumping, 272 00:12:26,559 --> 00:12:29,480 Speaker 6: that sort of thing, But what's been happening beneath the 273 00:12:29,559 --> 00:12:32,360 Speaker 6: surface is that you've gone through a couple of years 274 00:12:32,440 --> 00:12:35,880 Speaker 6: of German industrial production really being on its knees, very 275 00:12:35,920 --> 00:12:39,760 Speaker 6: little inward investment, very little infrastructure investment. And really what 276 00:12:39,800 --> 00:12:42,000 Speaker 6: we saw last year was the opening up with the 277 00:12:42,000 --> 00:12:46,400 Speaker 6: fiscal taps very rapidly followed by opening up of capex taps. 278 00:12:46,840 --> 00:12:51,440 Speaker 6: Now European savings rates for households currently see it at 279 00:12:51,440 --> 00:12:54,880 Speaker 6: fifteen point three percent. That's the highest level outside of 280 00:12:54,880 --> 00:12:57,880 Speaker 6: the pandemic. You've got the biggest consumer block in the 281 00:12:57,920 --> 00:13:02,360 Speaker 6: world not spending this year, We've got incomes now rising 282 00:13:02,960 --> 00:13:06,320 Speaker 6: above the pace of inflation. Start to turn that back on. 283 00:13:06,400 --> 00:13:06,839 Speaker 5: And I'm not. 284 00:13:06,760 --> 00:13:11,200 Speaker 6: Suggesting European consumers suddenly become US consumer like, but just 285 00:13:11,240 --> 00:13:13,160 Speaker 6: at the margin that can give a big boost. And 286 00:13:13,200 --> 00:13:16,040 Speaker 6: although the pmis earlier this week were a little bit 287 00:13:16,120 --> 00:13:19,320 Speaker 6: softer than expected, they're still coming in in line with 288 00:13:19,559 --> 00:13:22,520 Speaker 6: a one point six percent GDP growth rate, which is 289 00:13:23,160 --> 00:13:25,240 Speaker 6: half as much again as the growth rate in the 290 00:13:25,280 --> 00:13:26,320 Speaker 6: first half of last year. 291 00:13:26,360 --> 00:13:29,280 Speaker 4: Do you think the German fiscal impulse translates to the 292 00:13:29,280 --> 00:13:30,920 Speaker 4: rest of continental Europe. 293 00:13:31,320 --> 00:13:33,439 Speaker 6: Not necessarily, because this is the issue with Europe. But 294 00:13:33,480 --> 00:13:35,680 Speaker 6: what holds it back in many regards is not everyone 295 00:13:35,720 --> 00:13:38,400 Speaker 6: has the same fiscal space. But make no mistake, I 296 00:13:38,440 --> 00:13:42,240 Speaker 6: mean the Germany still remained the biggest block within Eurozone, 297 00:13:42,280 --> 00:13:45,080 Speaker 6: and it really is the heartland of industrial production within 298 00:13:45,080 --> 00:13:47,880 Speaker 6: the Eurozone. So really sort of getting that piece right 299 00:13:48,040 --> 00:13:50,200 Speaker 6: to sit alongside some of the strength we've seen in 300 00:13:50,240 --> 00:13:53,440 Speaker 6: Spain other parts of the periphery and offset some of 301 00:13:53,440 --> 00:13:55,920 Speaker 6: the concerns in France. That's a big deal in terms 302 00:13:55,960 --> 00:13:58,800 Speaker 6: of taking it from a continent that many folks had forgotten, 303 00:13:58,960 --> 00:14:01,480 Speaker 6: that still managed to do in dollar terms thirty percent 304 00:14:01,520 --> 00:14:03,719 Speaker 6: on its equity index last year, and all of a 305 00:14:03,760 --> 00:14:05,480 Speaker 6: sudden it can come out and surprise people. 306 00:14:05,679 --> 00:14:07,240 Speaker 2: John, Can we finish on a simple but I think 307 00:14:07,320 --> 00:14:09,880 Speaker 2: highly consequential question, which is what are the indicators I 308 00:14:09,920 --> 00:14:12,120 Speaker 2: should track this year and what should ignore? We've got 309 00:14:12,120 --> 00:14:15,120 Speaker 2: ADP in about six minutes time, we got payrolls on Friday. 310 00:14:15,360 --> 00:14:18,120 Speaker 2: If I tracked those and just said, you know what, 311 00:14:18,280 --> 00:14:20,240 Speaker 2: based on that data point, I'm going to be long 312 00:14:20,360 --> 00:14:22,520 Speaker 2: or short this equity market, I'd've got things very wrong 313 00:14:22,920 --> 00:14:25,000 Speaker 2: in the last twelve months. What should ignore? What should 314 00:14:25,000 --> 00:14:25,760 Speaker 2: I pay attention to? 315 00:14:26,040 --> 00:14:28,360 Speaker 6: Well, I think you know, if only there was one 316 00:14:28,360 --> 00:14:30,320 Speaker 6: indicator we could all watch, I mean, you know, then 317 00:14:30,320 --> 00:14:31,520 Speaker 6: frankly I'd be out of a job. 318 00:14:31,560 --> 00:14:34,280 Speaker 2: So can to help you more? 319 00:14:34,360 --> 00:14:37,480 Speaker 6: What I think matters most of all is the fundamentals. 320 00:14:37,520 --> 00:14:40,640 Speaker 6: It's what a company's doing. Are they able to translate 321 00:14:41,000 --> 00:14:44,960 Speaker 6: this massive investment flow into earnings. Remember, with the labor market, 322 00:14:45,000 --> 00:14:48,080 Speaker 6: we've gone through seismic change last year. We've gone from 323 00:14:48,120 --> 00:14:52,160 Speaker 6: a huge oversupply, a lot of excess capacity coming into 324 00:14:52,200 --> 00:14:55,400 Speaker 6: the labor market that's now gone. So we've gone through 325 00:14:55,400 --> 00:14:56,960 Speaker 6: that sort of right sizing, if you like. In the 326 00:14:57,000 --> 00:14:59,680 Speaker 6: labor market. It's a much lower level of payrolls needed 327 00:15:00,120 --> 00:15:03,160 Speaker 6: to keep track with trend GDP growth. It's in the 328 00:15:03,160 --> 00:15:05,800 Speaker 6: fifty to sixty thousand range, not in the two hundred 329 00:15:05,800 --> 00:15:08,720 Speaker 6: thousand ranges it was. She's talking smaller numbers. But at 330 00:15:08,720 --> 00:15:12,440 Speaker 6: the end of the day, America's superpower is its corporate sector. 331 00:15:12,720 --> 00:15:15,760 Speaker 6: If its corporate sector is building profits and it's creating 332 00:15:15,840 --> 00:15:19,480 Speaker 6: a positive return on the massive investment that's coming through, 333 00:15:20,080 --> 00:15:22,160 Speaker 6: then that's a reason to be constructive. 334 00:15:22,400 --> 00:15:25,960 Speaker 2: Stay with us. More Bloomberg surveillance coming up after this. 335 00:15:35,240 --> 00:15:37,680 Speaker 2: So here's the latest this morning. President Donald Trump pushing 336 00:15:37,760 --> 00:15:40,320 Speaker 2: House Republicans to own the healthcare issue ahead of the 337 00:15:40,320 --> 00:15:43,800 Speaker 2: midterms as voters show they are more concerned with affordability 338 00:15:44,120 --> 00:15:47,320 Speaker 2: than foreign affairs. Jonathan samri If Bloomberg Government joins us 339 00:15:47,320 --> 00:15:49,600 Speaker 2: now from Washington for more, Jonathan, that's at the top 340 00:15:49,600 --> 00:15:52,800 Speaker 2: of the agenda for Americans in this country. How are 341 00:15:52,840 --> 00:15:54,400 Speaker 2: they going to speak to that, What are they going 342 00:15:54,480 --> 00:15:56,200 Speaker 2: to do in the year ahead. 343 00:15:57,440 --> 00:15:59,680 Speaker 7: That's the really big question. One of the challenges for 344 00:16:00,040 --> 00:16:03,640 Speaker 7: Looks is that they haven't laid out a clear affordability agenda. 345 00:16:03,840 --> 00:16:05,680 Speaker 7: You know, the President is talking about trying to lower 346 00:16:05,720 --> 00:16:09,960 Speaker 7: gas prices. He's made this kind of targeted pitch on healthcare, 347 00:16:10,080 --> 00:16:12,040 Speaker 7: but these days are going to be really hard to 348 00:16:12,080 --> 00:16:15,360 Speaker 7: make to happen quickly. Right now, there are millions of 349 00:16:15,400 --> 00:16:18,200 Speaker 7: Americans who are paying higher premiums through the Affordable Care 350 00:16:18,240 --> 00:16:22,280 Speaker 7: Act because some subsidies expired under Republicans watch this past year, 351 00:16:22,680 --> 00:16:25,040 Speaker 7: and so it's a major challenge. And they have a 352 00:16:25,160 --> 00:16:27,080 Speaker 7: very narrow majority in the House, so it's going to 353 00:16:27,080 --> 00:16:29,480 Speaker 7: be hard to get any major legislation passed this year. 354 00:16:29,640 --> 00:16:32,480 Speaker 2: Jonathan. We talked about the pitch that's going to come 355 00:16:32,480 --> 00:16:35,120 Speaker 2: from Republicans. It's going to be the tax refunds and 356 00:16:35,120 --> 00:16:37,640 Speaker 2: hopefully the economy picks up coming into the middle of 357 00:16:37,640 --> 00:16:40,040 Speaker 2: the year. What's the pitch from the Democrats. What are 358 00:16:40,040 --> 00:16:43,240 Speaker 2: they offering up gun into midterms, so. 359 00:16:43,160 --> 00:16:45,720 Speaker 7: They yet to lay out their own affirmative agenda, which 360 00:16:45,800 --> 00:16:47,720 Speaker 7: is a big challenge for them. It's something they've really 361 00:16:47,760 --> 00:16:50,640 Speaker 7: struggled with during the Trump years. Right now, they're basically 362 00:16:50,720 --> 00:16:53,320 Speaker 7: saying Trump promised you that he was going to lower prices, 363 00:16:53,360 --> 00:16:56,360 Speaker 7: lower inflation, and that his focus has been elsewhere, that 364 00:16:56,400 --> 00:16:59,280 Speaker 7: his focus has been on Venezuela, on immigration, on all 365 00:16:59,320 --> 00:17:03,000 Speaker 7: these other things, and not on not on lowering prices 366 00:17:03,000 --> 00:17:06,280 Speaker 7: the way he promised. As far as an affirmative democratic agenda, 367 00:17:06,320 --> 00:17:09,520 Speaker 7: we're still honestly waiting for that outside of the healthcare space. 368 00:17:09,720 --> 00:17:12,640 Speaker 2: Jonathan, Samawick, Downe and Washington. Jonathan, thank you. I appreciate 369 00:17:12,680 --> 00:17:14,240 Speaker 2: you making some time for us this morning to build 370 00:17:14,240 --> 00:17:18,160 Speaker 2: on this conversation. Henrita Trice A Vita Pounce joined usnapamore, Henriette, 371 00:17:18,200 --> 00:17:20,280 Speaker 2: So happy new year and a welcome to the program, 372 00:17:20,280 --> 00:17:22,320 Speaker 2: A warm welcome. What's it a company agenda? Do you 373 00:17:22,359 --> 00:17:25,000 Speaker 2: think for Republicans what's achievable in the months ahead? 374 00:17:26,080 --> 00:17:28,880 Speaker 8: Well, with a one seat majority, you have almost nothing 375 00:17:28,920 --> 00:17:31,479 Speaker 8: that's achievable. And that's the state of play for Speaker 376 00:17:31,560 --> 00:17:34,040 Speaker 8: Johnson right now. So, when President Trump spoke to the 377 00:17:34,040 --> 00:17:36,560 Speaker 8: Conference yesterday. He laid out a whole host of things 378 00:17:36,600 --> 00:17:39,160 Speaker 8: that Republicans would like to see, But the bottom line 379 00:17:39,240 --> 00:17:42,200 Speaker 8: is this is where an understanding and being a legislative 380 00:17:42,200 --> 00:17:44,399 Speaker 8: wonk is really helpful. You just don't have the votes, 381 00:17:44,720 --> 00:17:47,879 Speaker 8: so talking about reorganizing healthcare is not an option. The 382 00:17:47,920 --> 00:17:50,840 Speaker 8: best that they could do is extend the ACA subsidies 383 00:17:50,840 --> 00:17:52,960 Speaker 8: that expired at the end of the last year. Twenty 384 00:17:53,000 --> 00:17:55,800 Speaker 8: four million people, some people paying one thousand dollars more 385 00:17:55,800 --> 00:17:58,399 Speaker 8: at ACU subsidies. That's going to be the bulk of it. 386 00:17:58,480 --> 00:18:00,760 Speaker 8: And the real news from that event yesterday was around 387 00:18:00,800 --> 00:18:03,199 Speaker 8: the High Amendment, which is related to abortion. We're on 388 00:18:03,240 --> 00:18:06,000 Speaker 8: the same old issues we've been focused on for sixteen years, 389 00:18:06,000 --> 00:18:09,280 Speaker 8: so expecting radical change on the healthcare front is just unrealistic. 390 00:18:09,359 --> 00:18:09,679 Speaker 2: Henry. 391 00:18:09,760 --> 00:18:13,760 Speaker 4: Is their appetite within the Republican Conference to expand those 392 00:18:13,800 --> 00:18:14,840 Speaker 4: healthcare subsidies. 393 00:18:16,160 --> 00:18:19,000 Speaker 8: I think there's appetite to extend, definitely, not to expand. 394 00:18:19,080 --> 00:18:23,000 Speaker 8: So they put wage requirements on their duration requirements on 395 00:18:23,040 --> 00:18:26,359 Speaker 8: there wouldn't be open ended. The duration is anywhere between 396 00:18:26,400 --> 00:18:28,920 Speaker 8: six months to three years. There's even a five year bill, 397 00:18:28,960 --> 00:18:32,280 Speaker 8: but expansion is not on the table, and so that's 398 00:18:32,320 --> 00:18:33,480 Speaker 8: that's one of the best that they can help for 399 00:18:33,600 --> 00:18:34,080 Speaker 8: going into this. 400 00:18:34,200 --> 00:18:35,719 Speaker 4: So does this mean we will not have a government 401 00:18:35,760 --> 00:18:36,840 Speaker 4: shut down at the end of the month. 402 00:18:37,520 --> 00:18:39,119 Speaker 8: I don't think we're going to shut it down. I 403 00:18:39,119 --> 00:18:42,240 Speaker 8: think Democrats feel like they proved their point. They got 404 00:18:42,240 --> 00:18:46,200 Speaker 8: the narrative in the United States around the voting demographics 405 00:18:46,240 --> 00:18:48,840 Speaker 8: to focus on affordability, and as y'all were just pointing out, 406 00:18:49,000 --> 00:18:52,240 Speaker 8: they don't need a proactive agenda in their view, they 407 00:18:52,320 --> 00:18:55,880 Speaker 8: just have to keep the conversation on affordability and housing 408 00:18:55,960 --> 00:19:00,000 Speaker 8: in particular. And so that's where Schumer and Hakeem Jeffrey 409 00:19:00,119 --> 00:19:02,400 Speaker 8: are going to focus the narrative as they go out 410 00:19:02,440 --> 00:19:05,199 Speaker 8: into the campaign trail. And you know, obviously the President 411 00:19:05,280 --> 00:19:07,600 Speaker 8: is very concerned as he has been throughout all of 412 00:19:07,680 --> 00:19:10,200 Speaker 8: last year with maintaining control of the House, but now 413 00:19:10,200 --> 00:19:13,720 Speaker 8: even the Senate is slightly at play for the Democratic conference, 414 00:19:13,760 --> 00:19:16,199 Speaker 8: and that issue of affordability is paramount. As you were 415 00:19:16,240 --> 00:19:16,919 Speaker 8: just pointing out. 416 00:19:16,920 --> 00:19:19,399 Speaker 4: Well, the President yesterday said this quote, I wish you 417 00:19:19,400 --> 00:19:21,480 Speaker 4: could explain to me what the hell's going on with 418 00:19:21,520 --> 00:19:24,080 Speaker 4: the mind of the public, Henrietta when it comes to 419 00:19:24,119 --> 00:19:26,800 Speaker 4: the president and has pitched the American people when it 420 00:19:26,840 --> 00:19:29,720 Speaker 4: comes to affordability. He has gotten gas prices lower, but 421 00:19:29,760 --> 00:19:33,520 Speaker 4: grocery prices are higher. He has stopped the inflow of 422 00:19:34,200 --> 00:19:37,520 Speaker 4: immigration at the border, something he pitched the American people. 423 00:19:37,920 --> 00:19:40,359 Speaker 4: But at the same time, right now he's taking a 424 00:19:40,520 --> 00:19:44,640 Speaker 4: very aggressive foreign policy posture. Is this something Americans want 425 00:19:44,640 --> 00:19:48,120 Speaker 4: to sign up for when it comes to the midterm elections? 426 00:19:48,160 --> 00:19:52,560 Speaker 8: Such an exceptional statement to seize on the president's commentary 427 00:19:53,160 --> 00:19:56,000 Speaker 8: shows that there is, you know, honestly kind of gas 428 00:19:56,040 --> 00:19:58,160 Speaker 8: lighting going on within the White House. And I would 429 00:19:58,160 --> 00:20:01,159 Speaker 8: start with the tariffs. The tariffs are widely understood by 430 00:20:01,200 --> 00:20:04,400 Speaker 8: the American public. Everybody watched the news on Liberation Day, 431 00:20:04,440 --> 00:20:08,040 Speaker 8: and every small business that's importing anything, whether it's a 432 00:20:08,080 --> 00:20:11,880 Speaker 8: children's toy or refrigerator, is focused on what happens next, 433 00:20:11,880 --> 00:20:13,760 Speaker 8: what happens at the Supreme Court? Do I need to 434 00:20:13,760 --> 00:20:17,359 Speaker 8: pay this harmonized tiff schedule number? What's my tire freate? 435 00:20:17,480 --> 00:20:20,600 Speaker 8: Every single person in the United States is concerned about tariffs, 436 00:20:20,720 --> 00:20:23,440 Speaker 8: and they do not like them. This is a rare 437 00:20:23,600 --> 00:20:26,840 Speaker 8: example where Trump is out of sixty forty sometimes even 438 00:20:26,920 --> 00:20:30,800 Speaker 8: seventy thirty deficit with the American public. He likes the tariffs. 439 00:20:31,040 --> 00:20:33,760 Speaker 8: America does not. And so when he says, you know 440 00:20:33,800 --> 00:20:36,760 Speaker 8: what's going on, it's the tariffs. The foreign policy thing 441 00:20:36,880 --> 00:20:39,760 Speaker 8: is actually very consistent with what we've seen from Americans 442 00:20:39,760 --> 00:20:43,640 Speaker 8: for generations now. They just do not care. Four percent 443 00:20:43,720 --> 00:20:46,680 Speaker 8: of Americans think that the drug trade in Latin America 444 00:20:46,800 --> 00:20:50,399 Speaker 8: is worth prioritizing. They just don't care. Bring the prices down, 445 00:20:50,680 --> 00:20:51,560 Speaker 8: nothing else matters. 446 00:20:51,720 --> 00:20:53,800 Speaker 1: Henriya, What does that mean in terms of if the 447 00:20:53,840 --> 00:20:56,920 Speaker 1: Supreme Court does strike down tariffs and the AEPA Act, 448 00:20:57,280 --> 00:21:00,199 Speaker 1: whether the President will be willing to go forward on 449 00:21:00,240 --> 00:21:03,280 Speaker 1: a cocktail of additional tariffs and put them on given 450 00:21:03,359 --> 00:21:04,680 Speaker 1: that they are so unpopular. 451 00:21:05,720 --> 00:21:08,399 Speaker 8: There's a disparate view in DC. If you are a 452 00:21:08,480 --> 00:21:13,480 Speaker 8: trade policy person, you are looking at the tariff laws 453 00:21:13,560 --> 00:21:15,520 Speaker 8: and the code and say, what can I do? Can 454 00:21:15,520 --> 00:21:18,159 Speaker 8: I migrate to a balance of payments authority and collect 455 00:21:18,200 --> 00:21:20,639 Speaker 8: fifteen percent tires for the next one hundred and fifty days. 456 00:21:20,840 --> 00:21:23,639 Speaker 8: Sure you can totally do that. That is reasonable to 457 00:21:23,960 --> 00:21:27,320 Speaker 8: physically do, But think about it from the perspective of 458 00:21:27,359 --> 00:21:30,960 Speaker 8: the manufacturing base or any importer or business or American voter. 459 00:21:31,520 --> 00:21:34,520 Speaker 8: You now have to go through liberation day all over again. 460 00:21:34,800 --> 00:21:38,159 Speaker 8: You have to figure out what tariff schedule you're exposed to, 461 00:21:38,480 --> 00:21:40,639 Speaker 8: what the rate's going to be, how long it's going 462 00:21:40,720 --> 00:21:42,840 Speaker 8: to be there for, whether it will come back if 463 00:21:42,840 --> 00:21:45,160 Speaker 8: they use three three eight that's never been used before 464 00:21:45,160 --> 00:21:47,359 Speaker 8: in history. We're going to go through this whole rigmarole 465 00:21:47,480 --> 00:21:49,639 Speaker 8: where it goes to the Court of International Trade, the 466 00:21:49,680 --> 00:21:52,320 Speaker 8: Court of Appeals, and the Supreme Court all over again. 467 00:21:52,600 --> 00:21:55,119 Speaker 8: So it's that uncertainty, which was the buzzword of all 468 00:21:55,119 --> 00:21:57,760 Speaker 8: a twenty twenty five, that will come rushing back. And 469 00:21:57,840 --> 00:22:00,880 Speaker 8: my view is the president has to take that to consideration, 470 00:22:01,240 --> 00:22:03,600 Speaker 8: especially now that we're eleven months away from a midterm 471 00:22:03,600 --> 00:22:06,800 Speaker 8: election cycle where Republicans are about to get slacked with 472 00:22:06,880 --> 00:22:09,280 Speaker 8: a D plus four generic ballot situation. 473 00:22:09,440 --> 00:22:11,800 Speaker 2: Henrysy did we just finish on one thing? Just take 474 00:22:11,800 --> 00:22:14,480 Speaker 2: a step back. Why is everyone in Washington so bad 475 00:22:14,520 --> 00:22:18,600 Speaker 2: at handling this issue. We torched the Biden administration quite 476 00:22:18,720 --> 00:22:21,760 Speaker 2: rightly when they were talking about prices. Inflation was heading 477 00:22:21,760 --> 00:22:23,600 Speaker 2: towards double digits, and they were like, there's nothing to 478 00:22:23,600 --> 00:22:26,119 Speaker 2: see here. Everything's fine, it's a great economy. It certainly 479 00:22:26,160 --> 00:22:28,760 Speaker 2: wasn't for many people. Unfortunately for the president. He now 480 00:22:28,760 --> 00:22:31,000 Speaker 2: owns the issue. He's the president of the United States, 481 00:22:31,000 --> 00:22:33,520 Speaker 2: and the Republicans control Congress, they own the issue too. 482 00:22:33,960 --> 00:22:37,479 Speaker 2: Why are we seeing successive governments perform so poorly on 483 00:22:37,560 --> 00:22:39,320 Speaker 2: such a key issue for the American public. 484 00:22:40,880 --> 00:22:44,560 Speaker 8: I think the inflation memory bank is really strong. We're 485 00:22:44,640 --> 00:22:48,040 Speaker 8: still in the mindset of the post pandemic era. Is 486 00:22:48,080 --> 00:22:50,800 Speaker 8: that sort of what the data suggests. I would point 487 00:22:50,840 --> 00:22:52,920 Speaker 8: out the idea that you can't follow the University of 488 00:22:52,960 --> 00:22:56,920 Speaker 8: Michigan consumer pricing and our consumer sentiment index anymore. It's 489 00:22:56,960 --> 00:22:59,239 Speaker 8: because now all of your views of the economy are 490 00:22:59,280 --> 00:23:01,520 Speaker 8: shaped by your power. So if you like Trump, you 491 00:23:01,560 --> 00:23:03,679 Speaker 8: think the economy is great. If you don't like Trump, 492 00:23:03,840 --> 00:23:05,960 Speaker 8: you don't like the economy. And now we have this 493 00:23:06,280 --> 00:23:10,240 Speaker 8: mix up between understanding your own personal finances, the state 494 00:23:10,240 --> 00:23:12,600 Speaker 8: of US economy, and whether you like the person in charge. 495 00:23:12,640 --> 00:23:15,600 Speaker 8: It's just a polarized United States economy and it's seeped 496 00:23:15,600 --> 00:23:16,240 Speaker 8: into everything. 497 00:23:17,080 --> 00:23:20,600 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 498 00:23:20,680 --> 00:23:24,000 Speaker 2: in markets, economics, angio politics. You can watch the show 499 00:23:24,040 --> 00:23:27,000 Speaker 2: live on Bloomberg TV weekday mornings from six am to 500 00:23:27,119 --> 00:23:30,879 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 501 00:23:31,040 --> 00:23:33,240 Speaker 2: or anywhere else you listen, and as always, on the 502 00:23:33,280 --> 00:23:35,720 Speaker 2: Bloomberg terminal and the Bloomberg Business app.