WEBVTT - Bloomberg Surveillance TV: February 25th, 2026 0:00:00.040 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:36.720 Terminal and the Bloomberg Business App. Here's if you're on 0:00:36.720 --> 0:00:39.240 Wall Street this morning. Julian and Emmanuel have evercore writing 0:00:39.280 --> 0:00:43.519 the President's speech last night, celebrated American values, intensified the 0:00:43.600 --> 0:00:46.680 Parlisan divide in Washington, and maintained the uncertainty around the 0:00:46.720 --> 0:00:49.479 situation with Iran. Julian joins us now for more. Julian, good, 0:00:49.479 --> 0:00:52.400 Mornic Coome morning. I read your recent note. Despite valuations, 0:00:52.560 --> 0:00:56.560 despite geopolitical anxiety, despite the political anxiety, despite a series 0:00:56.600 --> 0:00:59.960 of blow ups, the index has been really, really resilient. 0:01:00.040 --> 0:01:00.800 What does that tell you? 0:01:01.440 --> 0:01:04.800 It tells us that you know the backdrop, the macro 0:01:04.920 --> 0:01:08.080 backdrop in a year where we're getting better earnings growth, 0:01:08.120 --> 0:01:10.560 it's likely going to be double digits when all is 0:01:10.640 --> 0:01:14.120 said and done in twenty twenty six. Long term yields 0:01:14.200 --> 0:01:18.520 staying very very you know sedate, particularly when you think 0:01:18.560 --> 0:01:22.640 about the rest of the world stimulus and the potential 0:01:22.680 --> 0:01:26.520 for rate cuts. It says that sucks. Likely going higher, 0:01:26.840 --> 0:01:27.560 definitely passed. 0:01:27.600 --> 0:01:29.280 The state of the union is in Vidia. The big 0:01:29.319 --> 0:01:30.959 event of this week. I mean, how big of a 0:01:30.959 --> 0:01:33.399 signific of a market moving event is just going to be. 0:01:33.560 --> 0:01:37.600 It's very big. I mean, what's fascinating to us is, 0:01:38.400 --> 0:01:41.720 you know, we're comfortable with being contrarians, and when we 0:01:41.760 --> 0:01:45.479 came into twenty twenty six, we felt that, you know, 0:01:46.120 --> 0:01:51.160 being overweight the AI centric names and themes was really 0:01:51.200 --> 0:01:55.040 in consensus, and that changed very quickly. The mood around 0:01:55.040 --> 0:02:01.160 technology remains very guarded, the positioning remains very frankly, and 0:02:01.240 --> 0:02:03.280 a lot of that has to do with the build 0:02:03.360 --> 0:02:06.720 up around Iran and so you know, look, we know 0:02:07.160 --> 0:02:10.560 that the report today will be good. They will beat 0:02:10.600 --> 0:02:13.160 on the metrics. It's just a question of how the 0:02:13.240 --> 0:02:17.960 shares will respond, and frankly, the market is poised for 0:02:18.400 --> 0:02:20.760 likely a good share price response. 0:02:21.120 --> 0:02:23.040 So I'm wonder if what's good for in video is 0:02:23.040 --> 0:02:25.400 bad for everything else. We've seen this rotation through the 0:02:25.440 --> 0:02:27.480 rest of the economy at a time when there's a 0:02:27.520 --> 0:02:30.040 lot of anxiety about the labor market, where you're seeing 0:02:30.040 --> 0:02:32.280 those pressures. We got home depot yesterday, we got lows 0:02:32.320 --> 0:02:37.079 this morning, raising the specter of uncertainty really pressuring consumers. 0:02:37.440 --> 0:02:40.680 At what point is in Nvidia a counter indicator to 0:02:40.720 --> 0:02:43.640 the economic cycle and could their earnings reverse some of 0:02:43.680 --> 0:02:45.440 the broadening out that we've seen. 0:02:46.720 --> 0:02:50.680 Look and again, think about the backdrop that we've had 0:02:51.760 --> 0:02:56.680 the leading sectors this year, energy industrials, the deep cyclicals, 0:02:56.720 --> 0:03:02.000 but also consumer staples. In terms of the action and 0:03:02.040 --> 0:03:06.800 the interpretation of earnings, all is well, except you know, 0:03:06.840 --> 0:03:10.720 you've had these occasional blow ups. But in our mind, 0:03:10.880 --> 0:03:14.680 if anything in Nvidia is likely to and remember, the 0:03:14.720 --> 0:03:19.400 public hasn't really soured on technology because the labor market, 0:03:19.520 --> 0:03:23.359 as difficult as it is to actually fathom with all 0:03:23.360 --> 0:03:27.239 the policy changes of the last year, is still relatively strong, 0:03:27.880 --> 0:03:30.920 and that bodes well really across the S and P. 0:03:31.040 --> 0:03:31.639 Five hundred. 0:03:31.760 --> 0:03:33.720 You mentioned Iran the Present spent a lot of time 0:03:33.800 --> 0:03:36.480 last night talking about this. Do you think that this 0:03:36.560 --> 0:03:38.560 is going to be potentially an next catalyst for the market. 0:03:38.680 --> 0:03:41.440 There's no question about it. And what's interesting is is, 0:03:42.040 --> 0:03:44.520 you know sometimes there is an eye roll when we 0:03:44.560 --> 0:03:48.560 talk about options, but actually the options market is telling 0:03:48.600 --> 0:03:53.080 you right now that investors are very edged for a 0:03:53.120 --> 0:03:58.080 more challenging outcome in Iran. You look at the prediction markets, 0:03:58.120 --> 0:04:01.000 the market, they think something is going to happen. While 0:04:01.080 --> 0:04:04.600 I got news for you. The skew the price of 0:04:04.680 --> 0:04:08.880 downside puts versus upside calls in the triple ques is 0:04:08.920 --> 0:04:12.520 as wide as it was during the trough of the 0:04:12.560 --> 0:04:16.559 April tariff tantrum and so very contrariant. And the same 0:04:16.640 --> 0:04:19.839 thing in terms of bullishness in the oil market, as 0:04:20.000 --> 0:04:23.120 bullish as it was when oil was one hundred and 0:04:23.120 --> 0:04:26.480 twenty dollars a barrel when Russia invaded Ukraine initially. 0:04:26.560 --> 0:04:30.520 So the market is screaming military intervention, not diplomatic offramp. 0:04:30.640 --> 0:04:31.120 That's right. 0:04:31.200 --> 0:04:35.160 And so for us, the surprise, I mean our base cases, 0:04:35.240 --> 0:04:39.479 we think there will be some either off ramp or 0:04:40.040 --> 0:04:43.520 limited military engagement. Because think about it, we heard it 0:04:43.640 --> 0:04:45.839 last night, we hear it all the time. If the 0:04:45.880 --> 0:04:49.480 oil price spikes further, you are losing the war on 0:04:49.520 --> 0:04:52.799 the affordability issue, and that means you're going to lose 0:04:53.160 --> 0:04:57.640 the midterms. So that's really, you know, a least desired outcome. 0:04:57.720 --> 0:04:59.800 They give news so far as the rights have banked 0:05:00.120 --> 0:05:01.839 that we've got ten year bond yods back down to 0:05:02.279 --> 0:05:04.680 four percent. What's the signal an equity gund like you 0:05:04.760 --> 0:05:06.760 takes from the move that we've seen in fixed income. 0:05:07.000 --> 0:05:12.080 Well, it's this dual edge, you know, thought that the 0:05:12.839 --> 0:05:16.279 you know, the violence under the surface. You've had crashes 0:05:16.320 --> 0:05:19.960 in software, you've had crashes in silver, you've had crashes 0:05:20.040 --> 0:05:25.159 in all to investment managers that the message from all 0:05:25.200 --> 0:05:28.360 of this is that the credit market is disturbed and 0:05:28.440 --> 0:05:31.400 maybe we're having a growth scare. But frankly, if you 0:05:31.440 --> 0:05:35.400 look at the broad credit market, it still behaves very nicely, 0:05:35.839 --> 0:05:37.719 even though there's pockets of distress. 0:05:37.920 --> 0:05:40.160 Jenny, Let's talk about the consumer and how that's been 0:05:40.240 --> 0:05:42.920 priced in the equity market. We've got discretionary down by 0:05:42.960 --> 0:05:44.880 close to four percent for the year so far, state 0:05:45.000 --> 0:05:47.520 was up fifteen Ist an economic story in there or 0:05:47.560 --> 0:05:48.320 is that all AI? 0:05:49.400 --> 0:05:52.920 It is very largely AI, frankly, and if you think 0:05:52.960 --> 0:05:56.720 about it, so when we did our foundational work on AI, 0:05:56.760 --> 0:06:02.599 we really digested what the job impact would be across sectors. 0:06:03.040 --> 0:06:07.719 And actually, when thinking about it, right, the least impacted 0:06:07.760 --> 0:06:13.920 sectors metals and mining, agriculture, consumer staples, all the sectors 0:06:13.920 --> 0:06:19.920 that have ripped year to day. The most impacted sectors financials, software, 0:06:20.200 --> 0:06:23.520 the legal profession, all of the places where you've seen 0:06:23.920 --> 0:06:27.560 tape bombs on and off. And so you know, to us, 0:06:27.880 --> 0:06:30.279 this is also typical behavior that you get in the 0:06:30.279 --> 0:06:32.880 first quarter of the new year, that kind of rotation. 0:06:33.440 --> 0:06:36.520 But there isn't really in our mind a broader. 0:06:36.240 --> 0:06:39.719 Message financials and the banks, where a consensus overweight into 0:06:39.720 --> 0:06:42.000 the new year has not changed for the year ahead. 0:06:41.800 --> 0:06:47.040 For you, we've had it and inline rating. Look that 0:06:47.120 --> 0:06:51.960 they have been expensive, they remain expensive. And obviously, again 0:06:53.240 --> 0:06:56.599 you know, while we don't see anything systemic, this is 0:06:56.640 --> 0:07:00.400 an environment where we're shooting first and asking questions later. 0:07:00.640 --> 0:07:03.839 We'd rather not be in areas where there's going to 0:07:03.839 --> 0:07:04.520 be more shooting. 0:07:05.240 --> 0:07:08.720 Stay with us more Bloomberg surveillance coming up after this. 0:07:18.080 --> 0:07:21.160 President Trump defending his economic record in a marathon State 0:07:21.200 --> 0:07:24.120 of the Union. According to a recent poll from IPSOS, 0:07:24.160 --> 0:07:26.680 americans are split on who can better handle the cost 0:07:26.720 --> 0:07:29.800 of living crisis, including thirty three percent who say they 0:07:29.840 --> 0:07:33.240 trust neither Trump nor congressional Democrats joining us now to 0:07:33.280 --> 0:07:35.680 discuss his anam post of the Peterson Institute Adam a 0:07:35.800 --> 0:07:38.760 one welcome bank to the program. As always a affordability 0:07:38.800 --> 0:07:40.840 issue set to get worse and no better in the 0:07:40.880 --> 0:07:41.400 year ahead. 0:07:42.720 --> 0:07:45.200 I think they are John, thanks for having me back, 0:07:45.400 --> 0:07:48.520 and I feel the first time in my life, I 0:07:48.520 --> 0:07:50.960 feel a little bit of sympathy for Donald Trump because 0:07:50.960 --> 0:07:53.480 it's just not that much he can do on affordability. 0:07:54.920 --> 0:07:59.400 He would have to try to intervene directly into particular 0:07:59.520 --> 0:08:04.400 market that matter, like housing or food, which he's not 0:08:04.480 --> 0:08:07.560 averse to doing, but even the Congress is not willing 0:08:07.600 --> 0:08:09.680 to do, and it's not clear those would be more 0:08:09.720 --> 0:08:14.400 than for show. And I think there remains a headwind, 0:08:14.640 --> 0:08:18.000 excuse me, a tailwind to prices because the labor market's 0:08:18.040 --> 0:08:20.760 a lot stronger than people think, because the FED is 0:08:20.800 --> 0:08:24.040 not as tight as people think because of the tariffs, 0:08:24.080 --> 0:08:27.800 and in the background, the migration issue is starting to hit. 0:08:28.560 --> 0:08:31.600 The other point, though, is as Lisa and Anne, Marie 0:08:31.640 --> 0:08:34.599 and everybody said, he didn't make any major budget proposals. 0:08:34.600 --> 0:08:37.400 He didn't make any major policy proposals of any kind, 0:08:37.880 --> 0:08:40.560 and so against my prior forecast that there was going 0:08:40.600 --> 0:08:42.959 to be a handout, Maybe inflation will be a little 0:08:42.960 --> 0:08:45.840 lower than I feared, because he's not going to blow 0:08:45.880 --> 0:08:47.240 out the budget quite as much. 0:08:47.280 --> 0:08:49.800 But Adam, couldn't he do something when it comes to affordability, 0:08:49.800 --> 0:08:52.840 when it comes to terror, specifically, just let the Supreme 0:08:52.880 --> 0:08:56.360 Court's ruling stand and don't now have new deals of 0:08:56.400 --> 0:08:58.680 ten or fifteen percent with one twenty two's. 0:09:01.120 --> 0:09:04.600 I didn't mention that because it's something he's clearly not 0:09:04.720 --> 0:09:09.760 willing to do. He could take down tariffs unilaterally, and 0:09:10.000 --> 0:09:14.640 just since basically every ally we trade with, including Canada, 0:09:14.679 --> 0:09:19.240 including Europe, including Japan, including Korea, has lower tariffs on 0:09:19.360 --> 0:09:22.800 US now than we have on them. And as Governor 0:09:22.880 --> 0:09:25.640 Svan Burger pointed out, none of the things he claimed 0:09:25.640 --> 0:09:30.439 about manufacturing or jobs or trade deficits were true. Some 0:09:30.480 --> 0:09:32.280 of the things he said were true, but those weren't. 0:09:33.559 --> 0:09:36.720 And so yeah, he could reduce prices, but even that 0:09:36.840 --> 0:09:40.240 wouldn't That'd be a great idea, and it'd be good 0:09:40.240 --> 0:09:42.600 for the country and good for the average working American, 0:09:43.160 --> 0:09:48.080 but it wouldn't necessarily translate into price drops. So as 0:09:48.280 --> 0:09:50.640 all of you have been saying, a decline in the 0:09:50.720 --> 0:09:54.120 rate of inflation isn't the same as seeing prices for 0:09:54.200 --> 0:09:57.840 things people spend on declining. You need real income growth 0:09:57.880 --> 0:09:59.040 for that, Adam. 0:09:59.200 --> 0:10:01.440 The one thing that struck me as a potential market 0:10:01.480 --> 0:10:05.680 moving influence was his discussion of tariffs as reshaping the 0:10:05.720 --> 0:10:07.680 way we pay income taxes. In other words, no income 0:10:07.720 --> 0:10:11.840 taxes and increased tariffs to account for the bulk of 0:10:11.880 --> 0:10:14.240 all income for the nation. He went on to say, 0:10:14.400 --> 0:10:16.400 as time goes by, I believe the tariffs paid for 0:10:16.559 --> 0:10:19.040 by foreign countries will, like in the past, talking about 0:10:19.040 --> 0:10:22.520 the late seventeen hundreds, eighteen hundreds substantially replaced the modern 0:10:22.600 --> 0:10:25.480 day system of income tax Is there anything that you 0:10:25.559 --> 0:10:27.960 take from that that could be codified. Do you see 0:10:28.000 --> 0:10:29.600 that as a feasible path forward. 0:10:30.360 --> 0:10:33.719 It's not feasible, Lisa, I mean, it's just wrong when 0:10:33.760 --> 0:10:37.520 the US government was surrounding on taxes, just like some 0:10:37.559 --> 0:10:41.880 subsa Aeran, African and Central American countries today have tariffs. 0:10:41.920 --> 0:10:44.440 That's a big part of their tax It's because they 0:10:44.480 --> 0:10:47.000 can't collect taxes in a more efficient way. All they've 0:10:47.040 --> 0:10:50.520 got our troops at the border. And because the society 0:10:50.559 --> 0:10:54.040 and the economies are not very well developed, a tariff 0:10:54.120 --> 0:10:57.600 system doesn't work. It also isn't paid for by the 0:10:57.640 --> 0:11:00.440 foreign countries. No matter how many times the president says that, 0:11:00.520 --> 0:11:04.200 no matter how many times his people try to attack research, 0:11:04.440 --> 0:11:08.560 it's universally recognized. It's just right there in the data. Now, 0:11:08.640 --> 0:11:11.880 how much of that's the consumer versus companies is a question. 0:11:12.040 --> 0:11:14.680 How much that becomes inflation is a question, but there's 0:11:14.720 --> 0:11:17.920 absolutely no question it is the American purchasers of the 0:11:17.960 --> 0:11:21.960 inputs and of the products who pay the terriffs. But finally, 0:11:22.280 --> 0:11:25.920 even with the Supreme Court ruling, tariff revenues are going 0:11:25.960 --> 0:11:30.800 to go down because if tariffs stay up, then people 0:11:30.920 --> 0:11:34.319 change behavior. They start buying more American products, or they 0:11:34.320 --> 0:11:38.360 start forgoing foreign products, or they start substituting in ways 0:11:38.360 --> 0:11:41.600 that are not good, or over time, you bring some 0:11:41.640 --> 0:11:45.000 stuff home even though it's less competitive, and so what 0:11:45.120 --> 0:11:48.360 happens is you end up spending less on foreign goods. Now, 0:11:48.360 --> 0:11:51.920 that's not a good thing, but from a revenue point 0:11:51.920 --> 0:11:54.719 of view, it's definitely not a good thing, because then 0:11:54.760 --> 0:11:57.160 if you're spending less on foreign goods, there's less terriffs, 0:11:57.240 --> 0:11:59.840 and so my view is we're already well passed peak 0:12:00.360 --> 0:12:03.480 tear for revenues, even if the President were to let 0:12:03.480 --> 0:12:04.000 them laves. 0:12:04.400 --> 0:12:06.079 And I'm just to final question, just to go back 0:12:06.120 --> 0:12:08.840 to the summer of twenty twenty four, you warned ahead 0:12:08.840 --> 0:12:11.320 of that election, given the policies that we're being proposed, 0:12:11.360 --> 0:12:13.840 that this Federal Reserve might have to prepare the market 0:12:14.040 --> 0:12:16.800 and the country for higher interest rates. They can't interest 0:12:16.880 --> 0:12:20.360 rates subsequently in the year ahead, Adam, Given where things 0:12:20.360 --> 0:12:23.160 stand and your revision to your outlook on inflation, where 0:12:23.160 --> 0:12:25.840 are you now on Fed policy? 0:12:25.920 --> 0:12:28.800 John? Thanks for asking. If it turns out that the 0:12:28.840 --> 0:12:33.319 President doesn't put in a budget request for bailouts and 0:12:33.840 --> 0:12:36.480 handouts to people and out of the midterm elections, I'll 0:12:36.520 --> 0:12:39.240 be surprised. But then I have to reduce my happily 0:12:39.360 --> 0:12:42.320 my inflation forecast from four percent to three point five 0:12:42.400 --> 0:12:44.520 or less on CPI at the end of the year. 0:12:45.400 --> 0:12:49.240 But I also think that the Fed, as a large 0:12:49.320 --> 0:12:52.960 number of FMC members have indicated over the last several weeks, 0:12:53.360 --> 0:12:56.760 the FED is not going forward with an easing bias. 0:12:56.880 --> 0:12:59.400 They should not be going forward with an easing bias. 0:12:59.480 --> 0:13:02.520 The labor market is much stronger than people think. The 0:13:02.559 --> 0:13:05.400 pain is real for people, but that's different from us 0:13:05.400 --> 0:13:08.240 saying that there's a cyclical weakness in the labor market. 0:13:08.280 --> 0:13:12.040 You have to separate those two things. And in that situation, 0:13:12.240 --> 0:13:15.839 and as your guests and manual mentioned, credit markets are 0:13:15.840 --> 0:13:18.680 holding up pretty darn well and a Reming credit remains 0:13:18.720 --> 0:13:22.280 pretty available. So I don't think the Fed's going to 0:13:22.320 --> 0:13:24.720 be cutting as many times this year, even before we 0:13:24.800 --> 0:13:29.920 get into the independence politics, as markets currently project. 0:13:30.120 --> 0:13:43.000 Stay with us. Maulblinberg Savandan's coming up offter this by 0:13:43.040 --> 0:13:45.400 some facts in that state of the Union, President Trump 0:13:45.400 --> 0:13:49.560 remaining defile, that is, tarifagenda will continue despite the Supreme 0:13:49.600 --> 0:13:50.199 Court's ruling. 0:13:51.559 --> 0:13:55.160 They're a little more complex, but they're actually probably better. 0:13:55.280 --> 0:13:57.760 Congressional action will not be necessary. 0:13:57.800 --> 0:13:59.400 It's already time tested. 0:13:59.120 --> 0:14:02.360 And approved, and as time goes by, I believe the 0:14:02.360 --> 0:14:06.840 tariffs paid for by foreign countries will, like in the past, 0:14:07.520 --> 0:14:11.520 substantially replaced the modern day system of income tax. 0:14:12.120 --> 0:14:14.280 Formacenia White House trying to devise a county on show 0:14:14.360 --> 0:14:15.800 rights in the follow and it may not be a 0:14:15.880 --> 0:14:18.040 straight cuts and pace, but I expect at least some 0:14:18.080 --> 0:14:21.240 tariffs to increase the fifteen percent in the coming days. 0:14:21.320 --> 0:14:23.560 Canny On Johness, Nawim Walk Kenny and welcome to the program. 0:14:23.560 --> 0:14:26.400 Help us understand where we are. It was ten, then 0:14:26.400 --> 0:14:27.880 I of the weekend it was fifteen, and then we 0:14:27.920 --> 0:14:30.000 came into the weaken it's ten. What is it and 0:14:30.040 --> 0:14:30.640 what's it goin to be? 0:14:31.880 --> 0:14:34.480 Well, right now it's a hurry up and wait. 0:14:34.600 --> 0:14:37.880 So it's technically a ten percent tariff that went into 0:14:37.920 --> 0:14:41.680 effect at twelve oh one am yesterday, but I do 0:14:41.800 --> 0:14:44.360 understand from the administration that they are still looking to 0:14:44.400 --> 0:14:48.840 implement the President's fifteen percent tariff increase. Part of the 0:14:48.920 --> 0:14:51.680 challenge is that Section one twenty two. It's a really 0:14:51.800 --> 0:14:55.440 wonky statute. It's never been used. It does allow you 0:14:55.480 --> 0:14:58.000 to carve some countries out, it allows you to carve 0:14:58.040 --> 0:14:59.000 out some goods. 0:14:59.120 --> 0:15:00.400 It's not really clear that it. 0:15:00.400 --> 0:15:03.160 Allows you to differentiate between countries in terms of the 0:15:03.240 --> 0:15:07.200 overall tariff rate. So once you get to fifteen, you're 0:15:07.240 --> 0:15:11.240 actually increasing tariffs above some of these agreed trade agreements, 0:15:11.240 --> 0:15:13.800 and you're also putting tariffs on countries like Australia, the 0:15:13.920 --> 0:15:16.200 UK and a lot of Western hem countries, so it's 0:15:16.600 --> 0:15:18.640 a little more complicated to work out legally. 0:15:18.880 --> 0:15:20.040 I think that's part of the delay. 0:15:20.040 --> 0:15:22.720 But I'm still expecting that fifteen percent tariff increase. 0:15:23.000 --> 0:15:25.400 So if the rate is higher than what this administration 0:15:25.520 --> 0:15:27.720 has agreed to with some trading partners, and they want 0:15:27.720 --> 0:15:30.600 trading partners to abide, but those agreements, are we going 0:15:30.640 --> 0:15:31.440 to get carve outs. 0:15:32.800 --> 0:15:35.000 So I've actually talked to some of our trading partners 0:15:35.000 --> 0:15:36.920 about this, and you know, some of them are a 0:15:37.680 --> 0:15:39.400 little concerned that they're going to end up with a 0:15:39.480 --> 0:15:42.720 teriff rate that's above the agreed rate, and they're talking 0:15:42.720 --> 0:15:46.000 to the administration about that. So I think the administration 0:15:46.080 --> 0:15:48.240 is going to look for some flexibilities in terms of 0:15:48.240 --> 0:15:52.520 whatever proclamation comes out next, but you know they're going 0:15:52.560 --> 0:15:54.840 to have to do so within legal constraints. They just 0:15:54.880 --> 0:15:57.200 had IEPA tariff struck down, They're going to be really 0:15:57.240 --> 0:16:00.440 conscious of not wanting to have these ones enjoying struck 0:16:00.480 --> 0:16:00.840 down to. 0:16:01.160 --> 0:16:03.680 Well, are one twenty twos legal? They have never been 0:16:03.760 --> 0:16:04.800 used either in the past. 0:16:05.840 --> 0:16:07.960 Well, certainly a law on the books, and if you 0:16:08.000 --> 0:16:12.400 look at the CIIT decision that initially struck down the tariffs, 0:16:12.680 --> 0:16:15.600 one of the bases was because the core thought that 0:16:15.680 --> 0:16:17.600 the president should have used one twenty two in the 0:16:17.600 --> 0:16:20.760 first place. So there's certainly scope to use Section one 0:16:20.840 --> 0:16:23.000 twenty two. It's just really a matter of how you 0:16:23.080 --> 0:16:25.680 implement it. And I think that's really what the administrations 0:16:26.000 --> 0:16:27.960 wanting to make sure they're doing, to make sure that 0:16:28.000 --> 0:16:29.800 these tariffs don't get struck down again. 0:16:29.920 --> 0:16:32.360 There was at tension yesterday, Kelly, in between this focus 0:16:32.360 --> 0:16:35.520 and affordability and this focus on tariffs and trying to 0:16:35.560 --> 0:16:38.280 explain how tariffs are actually structurally going to be better 0:16:38.320 --> 0:16:41.600 longer term because it could potentially reduce income taxes and 0:16:41.680 --> 0:16:45.760 other aspects that consumers pay. I just wonder how capped, 0:16:46.040 --> 0:16:49.440 how it hampered the president is from increasing either the 0:16:49.480 --> 0:16:52.280 one twenty twos to fifteen percent or implementing some of 0:16:52.280 --> 0:16:55.960 the others based on the affordability aspects of his agenda. 0:16:57.440 --> 0:16:59.080 Yeah, I think it's a great question. 0:16:59.240 --> 0:17:02.560 I mean, really, what's going on here is the administration 0:17:02.640 --> 0:17:04.919 looks at the data, they look at the tariffs, and 0:17:04.960 --> 0:17:08.879 they say that, look, we haven't seen significant price increases 0:17:08.920 --> 0:17:11.160 on the backs of some of these, in some cases 0:17:11.320 --> 0:17:12.840 really high tariff rates. 0:17:13.119 --> 0:17:14.400 We haven't seen some of the. 0:17:14.359 --> 0:17:18.359 Economic catastrophes that everyone predicted would happen if the administration 0:17:18.440 --> 0:17:22.160 put in a universal baseline tariff. And so this idea 0:17:22.320 --> 0:17:26.040 that tariffs are leading to this affordability crisis doesn't really register, 0:17:26.600 --> 0:17:28.840 but it does register in the minds of voters. And 0:17:28.880 --> 0:17:31.720 you have a situation in which voters are linking tariff 0:17:31.760 --> 0:17:35.000 increases to price increases and to the fact that they're 0:17:35.040 --> 0:17:39.040 having trouble affording grocery store, energy prices and a lot 0:17:39.080 --> 0:17:41.280 of things that voters will vote on in terms of 0:17:41.320 --> 0:17:44.800 how they're feeling about the economy. And so the administration 0:17:44.880 --> 0:17:46.960 has some work to do in terms of trying to 0:17:47.040 --> 0:17:50.400 message this to the American people going into the midterms, 0:17:50.760 --> 0:17:53.920 but I don't see the administration significantly pivoting. You heard 0:17:53.960 --> 0:17:56.719 the President doubling down last night that tariffs were a 0:17:56.720 --> 0:17:59.679 core part of his economic policy. We might see some 0:17:59.720 --> 0:18:02.560 tea on the margins, but I don't expect a full 0:18:02.600 --> 0:18:04.760 scale reversal of any of this policy. 0:18:04.880 --> 0:18:07.560 There's also a question of what the IEPA ruling by 0:18:07.600 --> 0:18:10.600 the Supreme Court does to international agreements, so with some 0:18:10.640 --> 0:18:13.880 of our trade partners, given that certainly the European Union 0:18:13.920 --> 0:18:15.760 has already pushed back We're going to be speaking with 0:18:15.840 --> 0:18:18.560 Ambassador Jamison Greer, the trade representative for the United States, 0:18:18.640 --> 0:18:20.919 later this morning. I'm just wondering what you're wondering about, 0:18:21.080 --> 0:18:22.920 what your biggest questions are for him. 0:18:24.359 --> 0:18:28.120 Yeah, and certainly seeing the EU hit pause on its 0:18:28.160 --> 0:18:32.159 consideration of that implementing legislation was predictable. I think the 0:18:32.200 --> 0:18:34.919 EU in some cases has been looking for a reason 0:18:35.000 --> 0:18:37.399 to kind of walk away from this deal for some time. 0:18:37.840 --> 0:18:40.320 The US implemented back in August. 0:18:40.480 --> 0:18:42.720 The EU hasn't cut a single tariff line since that 0:18:42.800 --> 0:18:45.760 turn Bary agreement. So this isn't a surprise, but I 0:18:45.800 --> 0:18:48.560 do expect that to escalate. I think in terms of 0:18:48.560 --> 0:18:51.760 what to ask Ambassador Greer, I'm curious about when we'll 0:18:51.760 --> 0:18:54.880 see some of these Section three oh one investigations, what 0:18:54.960 --> 0:18:57.280 the TERRAFF structure might look like, whether it's going to 0:18:57.320 --> 0:19:00.400 cover all trading partners or just some trading partners. 0:19:00.800 --> 0:19:01.520 Really trying to. 0:19:01.480 --> 0:19:03.520 Get a sense of what the next five to six 0:19:03.560 --> 0:19:06.520 months look like. This companies are trying to navigate this 0:19:06.600 --> 0:19:07.680 new tariff landscape. 0:19:07.800 --> 0:19:09.680 Let's talk about the next two months. So A Marie 0:19:09.760 --> 0:19:12.520 mentioned that matig in China between the President and the 0:19:12.600 --> 0:19:15.200 Chinese leader KellyAnn, do you sense that he's lost some 0:19:15.280 --> 0:19:18.680 leverage here, given how constrained he might be now at 0:19:18.680 --> 0:19:21.119 home and the point that over the last year that 0:19:21.200 --> 0:19:25.200 China has run a record trade surplus even with these tariffs. 0:19:26.480 --> 0:19:28.960 Yeah, I think it's a good question as well, especially 0:19:28.960 --> 0:19:32.119 going into the President Trump President She visit. 0:19:32.600 --> 0:19:36.240 But I guess my big takeaway is long term, the. 0:19:36.240 --> 0:19:40.480 United States already has teriff leverage over China. They're doing 0:19:40.520 --> 0:19:42.800 all of these three oh one investigations to get more 0:19:42.880 --> 0:19:46.120 terrorf authority over other countries, but we have that existing 0:19:46.160 --> 0:19:46.800 three oh one. 0:19:47.280 --> 0:19:49.200 We also have an ongoing three. 0:19:49.160 --> 0:19:52.760 Oh one investigation into China's compliance with the Phase one deal, 0:19:53.240 --> 0:19:56.000 and there's a host of other levers the United States has, 0:19:56.040 --> 0:20:00.360 from financial tools to export controls and other mechanisms really 0:20:00.440 --> 0:20:04.120 get leverage over China. Going into some of these discussions, 0:20:04.560 --> 0:20:06.720 I think my base case for an outcome is pretty 0:20:06.760 --> 0:20:09.080 low to begin with. I think the administration is really 0:20:09.080 --> 0:20:12.560 looking to just keep a stable relationship between President Trump 0:20:12.560 --> 0:20:16.680 and President She and the trade arrangement that they negotiated 0:20:16.680 --> 0:20:20.200 in Busan, not expecting any massive deliverables there. 0:20:20.240 --> 0:20:22.480 So I think it's a pretty steady state. 0:20:22.200 --> 0:20:26.200 With China remarkably, But it is a good question as 0:20:26.200 --> 0:20:28.040 to what some of this means in terms of the 0:20:28.080 --> 0:20:31.399 President's negotiations with other trading partners, where it's not as 0:20:31.480 --> 0:20:34.199 clear what teriff authority he has to threaten some of 0:20:34.200 --> 0:20:36.040 these big foreign policy related. 0:20:35.760 --> 0:20:37.800 Tariff kumming and we have tariffs on them, But do 0:20:37.840 --> 0:20:42.359 we have influence since we still have influence, I. 0:20:42.880 --> 0:20:45.159 Do, but I do think the next few days are 0:20:45.200 --> 0:20:47.960 a bit rocky until we do get some more certainty 0:20:48.200 --> 0:20:51.639 over what the president's tariff agenda is going to look like, 0:20:52.040 --> 0:20:55.240 the authorities that he's going to use. I think the 0:20:55.280 --> 0:20:58.840 relationships with most of our trading partners will be stabilized. 0:20:59.240 --> 0:21:02.520 You know, when it comes to the US China relationship, 0:21:02.840 --> 0:21:05.160 there's a lot of soft power at play, and I think. 0:21:04.960 --> 0:21:06.119 That's what you're alluding to. 0:21:06.720 --> 0:21:09.840 And certainly having a core decision which goes against one 0:21:09.880 --> 0:21:14.240 of the President's key policies isn't the best thing going 0:21:14.240 --> 0:21:16.440 into this meeting, But at the same time, I don't 0:21:16.480 --> 0:21:19.000 think it's devastating, and I think there's a really long 0:21:19.080 --> 0:21:22.359 time between now and March thirtieth when the President goes 0:21:22.400 --> 0:21:25.639 in terms of actions that can be taken, that's a 0:21:25.680 --> 0:21:28.720 lifetime in terms of the trade agenda and the negotiating agenda, 0:21:28.800 --> 0:21:31.119