WEBVTT - Trump Casts Doubts on Iran Peace Proposal 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.000 or watch us live on YouTube. 0:00:27.160 --> 0:00:31.320 Jeffrey You, senior Email market a strategist at bn Y, 0:00:31.480 --> 0:00:34.520 and really Jeffrey, just honored to have the kernel line 0:00:34.560 --> 0:00:38.400 and then to have you on synthesizing this. What are 0:00:38.440 --> 0:00:42.720 the correlations, jeff you in the market now? Is it equities, bunds, 0:00:43.520 --> 0:00:49.080 currencies and commodities for themselves or are they linked overall? 0:00:49.120 --> 0:00:52.520 I think it's each asset class for itself. I'm looking 0:00:52.560 --> 0:00:55.400 at equity markets right now. Some reaction in somes of 0:00:55.400 --> 0:00:57.680 the futures, but I don't think there's going to be 0:00:57.880 --> 0:01:00.560 too much in the grand scheme of things. Foreign exchange 0:01:00.720 --> 0:01:03.040 much more interested in where dollar en is going, and 0:01:03.080 --> 0:01:04.560 maybe there's going to be more of a knock on 0:01:04.600 --> 0:01:07.480 effect on the treasury market, so when a waste and 0:01:07.560 --> 0:01:10.320 see mode there, and of course some US treasury markets 0:01:10.319 --> 0:01:14.040 focusing on the inflation aspects as well, so individual drivers, 0:01:14.400 --> 0:01:17.120 you know, not one unique force at the space but 0:01:17.240 --> 0:01:19.280 you know, overall, I think markets will take this in. 0:01:19.319 --> 0:01:22.120 It's right over the weekend, jeff and this is your wheelhouse. 0:01:22.360 --> 0:01:25.320 There was a lot of discussion about linear and nonlinear 0:01:25.480 --> 0:01:28.480 movement and yields, which comes back to the belief in 0:01:28.600 --> 0:01:32.560 fixed income. In this case of worry, price down and 0:01:32.760 --> 0:01:36.680 yield up. Are we at a point where yields trip 0:01:37.200 --> 0:01:41.119 and we get a real accelerative tendency to higher yields. 0:01:41.319 --> 0:01:43.160 I think that's the broader fear. But if I look 0:01:43.200 --> 0:01:46.200 at the last few trading days, there's much more concern 0:01:46.560 --> 0:01:51.120 about Japan intervening and the stronger dollar causing Asian reserve 0:01:51.240 --> 0:01:54.400 managers in general and those in the GCC mind you, 0:01:54.520 --> 0:01:57.040 due to the need for dollar preference, will they need 0:01:57.080 --> 0:02:00.440 to sell US treasuries? That seems to be much more 0:02:00.440 --> 0:02:03.640 of a driver compared to the inflation shock. So we 0:02:03.720 --> 0:02:06.000 are looking at the treasury market, We are looking at 0:02:06.040 --> 0:02:08.800 these drivers are but probably these triggers are not where 0:02:09.040 --> 0:02:12.000 we expect them to be. But that confidence of factors 0:02:12.120 --> 0:02:14.160 is something the markets served me attuned to and worried 0:02:14.160 --> 0:02:15.360 about higher yields. 0:02:15.800 --> 0:02:18.799 So Jeffrey and we have seen some movement over the 0:02:18.840 --> 0:02:20.880 past you know, a week or so pronounced movement in 0:02:20.960 --> 0:02:23.360 the Japanese yen here pushing up with the one sixty. 0:02:23.400 --> 0:02:26.800 Now we see it back down to one fifty seven here. 0:02:27.600 --> 0:02:29.280 What do you think's going on in that market? 0:02:29.520 --> 0:02:32.880 So two things are really one inflation inflation expectations. Inflation 0:02:32.960 --> 0:02:35.200 number is actually softening in Japan. But I guess it's 0:02:35.200 --> 0:02:38.680 a unique environment right now, high base effects, inflation expectations 0:02:38.760 --> 0:02:41.280 due to the oil shock. Of course, that is driving 0:02:41.320 --> 0:02:44.160 things higher. But finally the market is saying you've warned 0:02:44.160 --> 0:02:47.280 about intervention. The ad Ministry Finance said, this is a 0:02:47.320 --> 0:02:50.359 final warning and learn the whole They actually came in. 0:02:50.520 --> 0:02:52.480 So now that they've put the money, you know where 0:02:52.520 --> 0:02:54.400 their mouths are. Let's see, you know, whether this can 0:02:54.520 --> 0:02:58.400 drive broader, stronger APAC currencies. In general, this is one 0:02:58.440 --> 0:03:01.320 of the most favorite positions in currency markets. At the 0:03:01.320 --> 0:03:03.840 beginning of the year, you're going to these anchoring things. 0:03:03.880 --> 0:03:05.799 Of course, balance of payments shifting a bit. But now 0:03:05.800 --> 0:03:07.359 with the end move this could be one of the 0:03:07.400 --> 0:03:08.920 bigger themes for the rest of the year. And this 0:03:08.960 --> 0:03:10.880 is good for the US by the way, greater purchasing 0:03:10.880 --> 0:03:13.000 power for Asia to buy US assets. 0:03:13.160 --> 0:03:15.360 Jeffery you were US with the B and Y. What 0:03:15.440 --> 0:03:18.079 you've heard there, folks, was a really sophisticated as you'd 0:03:18.080 --> 0:03:25.760 always get from JEFFU idea of yield guessing inflation versus flows. 0:03:26.400 --> 0:03:30.520 Right now, JEFFU is Chairman Walsh in the Funneral Reserve, 0:03:30.639 --> 0:03:35.160 central banker to the world. And then if the Japanese 0:03:35.240 --> 0:03:38.680 have troubles or any other nation, it is swaps to 0:03:38.800 --> 0:03:39.559 the rescue. 0:03:39.720 --> 0:03:41.320 Well, the US will help itself. 0:03:41.360 --> 0:03:44.320 The most amazing thing we've seen in US treasury markets 0:03:44.320 --> 0:03:48.880 this year, our clients are US clients. In our data, 0:03:49.280 --> 0:03:53.120 they are buying US treasuries phenomenal amounts. Actually, domestic clients 0:03:53.400 --> 0:03:56.320 in Europe, domestic clients in the UK they are buying 0:03:56.360 --> 0:03:59.120 their own debt and phenomenal amounts. Why I look at 0:03:59.120 --> 0:04:02.760 the brake even, I look inflation break even barely moved right, 0:04:02.840 --> 0:04:07.120 So your real yields are tremendous right now, foreign aging population. 0:04:07.200 --> 0:04:09.160 This is happening all over the Western world. I wouldn't 0:04:09.160 --> 0:04:11.440 be worried about the trophy market with real yields at 0:04:11.480 --> 0:04:11.800 least that. 0:04:11.920 --> 0:04:14.280 Is brilliant, folks. Can we get him back? 0:04:14.400 --> 0:04:15.000 He's pretty good? 0:04:15.280 --> 0:04:18.159 I mean, if the Red Sox win three in a row, Jeffrey, 0:04:18.160 --> 0:04:20.840 you will come back, maybe if Tottenham stays out of 0:04:20.880 --> 0:04:23.520 relegation and they'll come back, jeff you this is just 0:04:23.560 --> 0:04:27.360 so so so and important here. If you look at 0:04:27.360 --> 0:04:30.920 the ten year real yield, however you measure it, how 0:04:31.000 --> 0:04:36.240 a whack is it because of insatiable war demand for 0:04:36.360 --> 0:04:38.120 our full faith and credit debt? 0:04:38.520 --> 0:04:42.600 Well, right now it's the break evens. I'm just looking 0:04:42.640 --> 0:04:45.240 at ten year right now. They're barely above levels where 0:04:45.240 --> 0:04:47.240 we were a year ago, right so, you know, holding 0:04:47.279 --> 0:04:50.039 well about two and a half percent, yet nominal yields 0:04:50.040 --> 0:04:52.719 are higher. So I think there is this absolute belief 0:04:52.760 --> 0:04:55.440 that the AI trade will bring up, will push up 0:04:55.560 --> 0:05:00.000 US productivity and productivity differentials, and sometimes it's about differentials. 0:05:00.080 --> 0:05:02.560 The rest of the world will be so strong versus 0:05:02.560 --> 0:05:05.359 the rest of the world such that inflation is not 0:05:05.480 --> 0:05:07.400 now and will not really be a problem for the 0:05:07.440 --> 0:05:09.880 foreseeable future. So yes, you can have a supply shop 0:05:10.160 --> 0:05:13.119 AI and productivity growth in the US will be able 0:05:13.160 --> 0:05:16.000 to deal with it. And this is helping domestic investors 0:05:16.000 --> 0:05:18.240 who don't have to worry about FX anchor the U 0:05:18.320 --> 0:05:20.680 S creasury market as well. So I think Stan I 0:05:20.760 --> 0:05:22.600 really don't worry about the US creasury market either. 0:05:22.760 --> 0:05:24.960 Jeffrey, you thank you so much. Too short a visit, 0:05:25.120 --> 0:05:29.279 stay with us. More from Bloomberg Surveillance coming up after this. 0:05:36.520 --> 0:05:40.119 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:05:40.160 --> 0:05:43.320 weekday afternoons from seven to ten am Eastern Listen on 0:05:43.400 --> 0:05:47.120 Applecarplay and Android Otto with the Bloomberg Business app, or 0:05:47.240 --> 0:05:48.640 watch us Live on YouTube. 0:05:48.760 --> 0:05:51.200 It's a joy at Mattlizetti in the studio with a 0:05:51.360 --> 0:05:54.200 Deutsche Bank and all of his US economics because they 0:05:54.200 --> 0:05:57.040 see him like on the feddicides and he's got to 0:05:57.080 --> 0:05:58.920 run to his clients, so he's down for like four 0:05:58.960 --> 0:06:02.520 minutes twenty two seconds. John's asking a five minute question. 0:06:02.960 --> 0:06:06.279 So I'm toast great to have you here. The heritage 0:06:06.279 --> 0:06:11.760 of Deutsche Bank folks. Deutsche Bank owned hydrocarbon coverage twenty 0:06:11.800 --> 0:06:15.600 years ago. Adam Saminski, Paul Sanki. It was legendary. They 0:06:15.600 --> 0:06:21.279 had this huge Asian a projection. I should say, where's 0:06:21.320 --> 0:06:24.880 your mentally in your head? Where's your gallon of gas? 0:06:25.240 --> 0:06:27.560 Tip point for the American consumer. 0:06:27.920 --> 0:06:30.840 Yeah, So for us, our forecast is kind of based 0:06:30.839 --> 0:06:32.360 on the idea that oilfesers are going to come down 0:06:32.360 --> 0:06:35.039 over the course of this year. Our house view is 0:06:35.040 --> 0:06:36.600 that we're going to be down closer to eighty or 0:06:36.600 --> 0:06:39.000 eighty five dollars a barrel on brent by the end 0:06:39.040 --> 0:06:39.400 of the year. 0:06:39.520 --> 0:06:42.520 Not not too far offrom where market pricing is, but. 0:06:42.520 --> 0:06:45.280 We've identified if Brent were to be moving up towards 0:06:45.279 --> 0:06:47.840 one hundred and fifty dollars a barrel, that's roughly forty 0:06:47.880 --> 0:06:50.200 dollars more than where we are today being there on 0:06:50.240 --> 0:06:52.040 a sustained basis. That's where we've become a little bit 0:06:52.040 --> 0:06:54.840 more worried about the growth side of this picture rather 0:06:54.880 --> 0:06:57.359 than the inflation side. I think there you kind of 0:06:57.360 --> 0:06:59.720 clearly wipe out the benefits from the tax cuts in 0:06:59.720 --> 0:07:02.040 the one big beautiful bill and be a little bit 0:07:01.640 --> 0:07:04.359 more worried about consumer spending. Obviously, the consumer sentiment has 0:07:04.360 --> 0:07:06.919 already taken a big hit. So that's the oil price 0:07:07.640 --> 0:07:10.400 level that we're more worried about. What do you think 0:07:10.400 --> 0:07:12.080 the federal banks are worried about? We heard from the 0:07:12.120 --> 0:07:14.720 Fed last week. What did you take away from that? 0:07:15.400 --> 0:07:17.440 Yeah, it was you know, an interesting one. 0:07:17.760 --> 0:07:19.080 You know, all the debate was about whether or not 0:07:19.120 --> 0:07:21.720 they would keep their Ford guidance language or not they 0:07:21.720 --> 0:07:25.760 did that had a very slight cutting bias or dubbish bias. 0:07:26.040 --> 0:07:28.680 But we got three descents to the statement, which is 0:07:28.720 --> 0:07:31.760 an unusual outcome for the FED. And initially when I 0:07:31.760 --> 0:07:33.400 saw it on the headlines, it was an eight to 0:07:33.400 --> 0:07:35.280 four decision. It looked more like the Bank of England 0:07:35.360 --> 0:07:38.320 than it did the Federal Reserve. I think you have 0:07:38.320 --> 0:07:40.640 a FED that is kind of inching in a Hawkers direction. 0:07:41.080 --> 0:07:43.760 Pal said that the center of mass is moving to 0:07:44.120 --> 0:07:46.760 more neutral. I think you have a committee that you 0:07:46.800 --> 0:07:49.600 know at the June meeting could have rates unchanged in 0:07:49.640 --> 0:07:51.880 their own dot plot, and it's possible. At that point 0:07:51.920 --> 0:07:54.720 you have people that show rate hikes. But key for 0:07:54.760 --> 0:07:58.120 them is how sustained this oil price shock is. The 0:07:58.160 --> 0:07:59.880 more sustained it is, the more the more worried that 0:08:00.080 --> 0:08:02.880 come about inflation pressures, the less likely they are to 0:08:02.880 --> 0:08:03.400 cut this year. 0:08:04.200 --> 0:08:06.520 How about other central banks? The Bank of England, the 0:08:06.640 --> 0:08:10.600 ECB looks like they may be more on a hiking trajectory. 0:08:10.760 --> 0:08:13.240 So the ECB we do have with great hikes, we 0:08:13.280 --> 0:08:15.880 expect that they cut twenty five basis points in June. 0:08:16.800 --> 0:08:18.920 It's I think the bar is somewhat high for them 0:08:18.920 --> 0:08:20.440 to not cut, but it's still a possibility that they 0:08:20.440 --> 0:08:22.360 don't cut at the GYM meeting. We then have them 0:08:22.360 --> 0:08:24.520 falling up with another twenty five basis point cut later 0:08:24.560 --> 0:08:27.600 this year. Okay, you know other central banks, they're dealing 0:08:27.600 --> 0:08:30.600 with a little bit different outcomes than what you're seeing 0:08:30.560 --> 0:08:31.120 from the FED. 0:08:31.160 --> 0:08:31.760 At this point in time. 0:08:31.800 --> 0:08:34.840 The US economy is more insulated from the oil price shock, 0:08:35.320 --> 0:08:37.959 which is a good outcome. At the same time, you 0:08:38.040 --> 0:08:39.760 do have a bit more of pass through from oil 0:08:39.760 --> 0:08:42.079 price shocks to core inflation in other economies. 0:08:42.400 --> 0:08:44.920 I mean, this is all great, but here's the reality. 0:08:44.960 --> 0:08:46.920 When you were u c LA, you had a super 0:08:46.960 --> 0:08:49.320 woo where you could see through the floor d three 0:08:49.360 --> 0:08:53.360 hundred thousand miles on it. Now you're driving the Maserati 0:08:53.400 --> 0:08:56.240 after the bonaw you got from Deutsche Bank, and you're 0:08:56.240 --> 0:08:59.080 pulling up to the little home by Union seventy six. 0:08:59.280 --> 0:09:03.080 There's this GA station by USC. It's like it's like 0:09:03.320 --> 0:09:07.280 it's like a historic monument. They're popping for fancy gas 0:09:07.360 --> 0:09:10.600 or seven dollars fifty five cents. I mean, that's the 0:09:10.679 --> 0:09:13.480 reality our listeners and viewers are facing. 0:09:13.800 --> 0:09:15.680 Yeah, I'm thankful for being in New Jersey and not 0:09:15.720 --> 0:09:17.880 having to pay those gas prices and driving a Masa 0:09:17.960 --> 0:09:21.200 rather than a Maserati is helping me a little bit. 0:09:21.240 --> 0:09:25.120 But look, no doubt it's a big hit for household 0:09:25.200 --> 0:09:26.560 disposable incomes. 0:09:26.360 --> 0:09:27.960 As we look ahead, we. 0:09:27.880 --> 0:09:30.439 Do think that households are buffered from this to a 0:09:30.480 --> 0:09:33.760 reasonable extent. You have savings titchs which have been a 0:09:33.800 --> 0:09:36.599 little bit more elevated. The labor market is accelerating a 0:09:36.640 --> 0:09:38.520 little bit here. We think we'll get data on that 0:09:38.520 --> 0:09:41.880 this week. Household wealthy income ratios at record high levels. 0:09:42.360 --> 0:09:45.199 Financial positions are very easy. You have the tax cut 0:09:45.240 --> 0:09:46.360 benefits coming through refile. 0:09:46.520 --> 0:09:50.560 Where's the real wage, the inflation adjusted wage for all 0:09:50.600 --> 0:09:52.800 the Deutsche Bank enthusiasm. 0:09:52.320 --> 0:09:54.560 Yeah, it's been positive recently, but it's going to get 0:09:54.559 --> 0:09:56.760 turn negative on as headline inflation. 0:09:56.600 --> 0:09:58.360 Finally think negative. 0:09:59.320 --> 0:10:00.040 I want to view that. 0:10:00.080 --> 0:10:02.679 Within the context of the broad aggregate consumer and the 0:10:02.720 --> 0:10:05.160 broad economy, which I think the data that we continue 0:10:05.160 --> 0:10:06.320 to get there is resilient. 0:10:06.520 --> 0:10:07.920 The labor market data, the job. 0:10:08.760 --> 0:10:11.680 Macause forty two people in AI are making a jillion 0:10:11.760 --> 0:10:14.840 dollars and going to the med gale. Half of America's 0:10:14.880 --> 0:10:15.720 flat on their back. 0:10:15.800 --> 0:10:17.199 Look, I think, no doubt that's part of it. 0:10:17.240 --> 0:10:19.360 I mean, we got the Durbal goods orders data last 0:10:19.360 --> 0:10:22.880 week where AI related investment is really driving. You look 0:10:22.880 --> 0:10:24.480 at the year of a year growth rate of computer 0:10:24.559 --> 0:10:27.760 and perperal equipment, it's at a twenty year high. You 0:10:27.840 --> 0:10:31.439 do have a as you always do, a US consumer 0:10:31.880 --> 0:10:35.080 that is very heterogeneous and very divided in terms of 0:10:35.080 --> 0:10:37.040 their ability to absorb these shots. 0:10:37.440 --> 0:10:38.079 So no doubt. 0:10:38.440 --> 0:10:40.080 But as we think about the Federal Reserve and as 0:10:40.080 --> 0:10:43.000 we think about monetary policy, it is that aggregate picture 0:10:43.000 --> 0:10:45.720 that I think matters more to the FED than the 0:10:45.760 --> 0:10:47.439 dispersion economic growth. 0:10:47.480 --> 0:10:49.600 I need growth in my labor pool. 0:10:49.640 --> 0:10:50.880 I need productivity. 0:10:51.600 --> 0:10:53.920 I don't have any growth of my labor pool these days. 0:10:54.240 --> 0:10:57.040 Is productivity we do intern activity? 0:10:57.280 --> 0:11:00.440 And is that an AI productivity or is that just 0:11:00.679 --> 0:11:01.720 me and Tom working harder? 0:11:02.120 --> 0:11:02.320 What? 0:11:02.360 --> 0:11:02.480 Well? 0:11:02.520 --> 0:11:04.080 You and Tom are working very hard, I think, and 0:11:04.120 --> 0:11:04.880 helping us all out. 0:11:05.120 --> 0:11:08.200 But you know, I think so far it's mostly just 0:11:08.280 --> 0:11:10.000 looking at backward looking. 0:11:11.240 --> 0:11:13.720 Historic tightening in the labor market. And what we've seen. 0:11:14.280 --> 0:11:16.360 Back over history is when you have very tight labor markets, 0:11:16.400 --> 0:11:18.920 labor is expensive and hard to find. 0:11:18.960 --> 0:11:20.080 That leads to productivity gains. 0:11:20.120 --> 0:11:22.319 So I think we're still reaping the benefits of the 0:11:22.440 --> 0:11:25.240 very tight labor market in twenty twenty one, twenty twenty two. 0:11:25.640 --> 0:11:27.600 I think you're beginning to see some early evidence that 0:11:27.640 --> 0:11:29.360 it is AI related. When I have a chart in 0:11:29.400 --> 0:11:31.640 my chart book where you look at AI adoption across 0:11:31.679 --> 0:11:35.800 sectors versus productivity across the different sectors, there's an emerging 0:11:35.920 --> 0:11:39.439 positive relationship between those two things. Ultimately, I think as 0:11:39.440 --> 0:11:42.240 you look ahead, we expect AI to be driving productivity 0:11:42.240 --> 0:11:44.079 growth fifty to seventy five basis points higher. 0:11:44.080 --> 0:11:48.800 Wow, let me get this in. Are you nominal GDP agnostic? 0:11:49.240 --> 0:11:52.400 If it comes from real GDP or the growth comes 0:11:52.400 --> 0:11:57.120 from the inflation part for American corporations, it really doesn't matter. 0:11:57.160 --> 0:11:58.760 There's just a pop there, right. Yeah. 0:11:58.760 --> 0:12:00.959 I think there's a very big difference between the stock 0:12:00.960 --> 0:12:03.400 market and bond market on this one, because the Fed 0:12:03.440 --> 0:12:05.559 cares a lot about that breakdown, whether or not it's 0:12:05.600 --> 0:12:08.520 inflation or real growth. 0:12:08.559 --> 0:12:11.160 The more it is inflation, the higher for longer they are. 0:12:11.160 --> 0:12:12.760 We think that the Fed does not cut rates this 0:12:12.840 --> 0:12:16.520 year as a result of this inflationary environment, and so 0:12:16.559 --> 0:12:20.240 that that that mix matters a lot. Our own forecast 0:12:20.240 --> 0:12:22.319 has moved a bit more towards the inflation side. We've 0:12:22.320 --> 0:12:25.760 marked up our core PC inflation forecast about fifty basis 0:12:25.760 --> 0:12:27.760 points from two point four to two point nine percent 0:12:27.800 --> 0:12:28.200 this year. 0:12:28.280 --> 0:12:30.800 We've kept our real growth forecast at two point four 0:12:30.800 --> 0:12:31.800 percent two point three. 0:12:32.440 --> 0:12:37.720 Gas station UCLA. It's just wild, how gorgeous. 0:12:37.280 --> 0:12:38.400 That is everything. 0:12:38.720 --> 0:12:40.880 It's like everything is gorgeous out there. 0:12:41.679 --> 0:12:43.480 It's just great. And then what they're doing, and I 0:12:43.480 --> 0:12:46.559 could see your maserati there right now in the photo. 0:12:47.720 --> 0:12:51.040 Thank you so much. Stay with us. More from Bloomberg 0:12:51.160 --> 0:12:53.160 Surveillance coming up after this. 0:13:00.440 --> 0:13:04.000 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:13:04.080 --> 0:13:07.240 weekday afternoons from seven to ten am Eastern Listen on 0:13:07.320 --> 0:13:11.000 Applecarplay and Android Otto with the Bloomberg Business app, or 0:13:11.120 --> 0:13:13.280 watch us live on YouTube and you're. 0:13:13.240 --> 0:13:17.560 Detrees, joins us out co founder at Veda Partners, Henriette. 0:13:17.559 --> 0:13:20.000 I've never done this, but I'm going to do it 0:13:20.040 --> 0:13:23.760 because a cacophony of headlines this weekend was stunning into 0:13:23.800 --> 0:13:27.800 this morning. Does anyone in Washington have a plan or 0:13:27.840 --> 0:13:31.439 is it every congress type and senator for themselves? 0:13:32.520 --> 0:13:34.120 That's a really solid question. 0:13:34.360 --> 0:13:38.440 There are so many disparate factions in Capitol Hill right 0:13:38.480 --> 0:13:41.959 now that I wouldn't say there is a plan. I 0:13:42.000 --> 0:13:44.600 would say that lots of different groups have their own 0:13:44.640 --> 0:13:46.840 agenda that they'd like to see. You know, there are 0:13:46.880 --> 0:13:49.800 some really hardline Republicans who want to see the president 0:13:49.840 --> 0:13:53.280 perpetuate this war with iron, who are encouraging the President 0:13:53.320 --> 0:13:56.600 to stay the course, actively encouraging him not to back down. 0:13:57.280 --> 0:13:59.320 And there are folks who are even calling for more 0:13:59.320 --> 0:14:02.480 military as escalation from here. Senator Tillis as a plan 0:14:02.559 --> 0:14:05.320 to give the president a year long authority to wage 0:14:05.320 --> 0:14:07.680 this war however he sees fit. And then you have 0:14:07.760 --> 0:14:11.000 other members who are looking at gas prices and see, 0:14:11.160 --> 0:14:13.160 you know, it costs one hundred and sixty two dollars 0:14:13.240 --> 0:14:15.880 to fill up the tank of the most popular car 0:14:15.880 --> 0:14:18.720 in America, and they have a problem going into an election. 0:14:18.880 --> 0:14:21.360 So it really is pretty disparate. 0:14:21.320 --> 0:14:24.560 When you look at this. Do you have the optimism 0:14:24.640 --> 0:14:27.840 that this will get solved at the ballance box, that 0:14:27.960 --> 0:14:31.480 our ability to go into a secret place and vote 0:14:32.000 --> 0:14:33.560 will fix it. 0:14:34.000 --> 0:14:35.160 No, definitely not. 0:14:35.920 --> 0:14:38.280 For example, I get this question a lot, because you know, 0:14:38.320 --> 0:14:40.360 there's a strong sense that the House will flip to 0:14:40.400 --> 0:14:43.600 democratic control and maybe even growing possibility that the Democratic 0:14:43.800 --> 0:14:46.480 Democrats take the Senate. But think about what the margins 0:14:46.520 --> 0:14:49.200 would be, you know, most and you're talking if Dems 0:14:49.200 --> 0:14:51.880 were able to pick up red states like Texas at Ohio. 0:14:52.200 --> 0:14:54.800 You're looking at fifty one seats for democratic control in 0:14:54.840 --> 0:14:57.200 the United States Senate. So in that scenario, you're not 0:14:57.240 --> 0:14:59.600 passing legislation to reign in the president. You don't have 0:14:59.640 --> 0:15:02.400 sixty to overcome a filibuster. You sure ise don't have 0:15:02.480 --> 0:15:05.920 sixty seven to overwrite a veto. So you're working on 0:15:06.320 --> 0:15:10.160 just investigations. And so for investors trying to see what 0:15:10.240 --> 0:15:12.920 are the fallouts if Democrats take the House. In the Senate, 0:15:13.080 --> 0:15:16.600 it's actually usually what investors like best, which is no 0:15:16.760 --> 0:15:21.440 action from DC. No legislation on tax policy, no legislation 0:15:21.600 --> 0:15:24.680 on really anything. It's still just the executive branch. So 0:15:24.720 --> 0:15:28.120 that's where you get tariffs and foreign intervention like we're 0:15:28.120 --> 0:15:28.680 seeing right now. 0:15:29.200 --> 0:15:33.200 Henrietta, I can't recall the last piece of meaningful legislation 0:15:33.320 --> 0:15:34.000 that was pass me. 0:15:34.200 --> 0:15:34.680 That's just me. 0:15:34.840 --> 0:15:38.000 But what is Congress working on? What should they be 0:15:38.040 --> 0:15:40.960 looking at? Should we be expecting anything from this Congress. 0:15:41.720 --> 0:15:43.760 You forgot about the one big beautiful bill. I guess 0:15:43.840 --> 0:15:45.920 that's about a year ago. No, it's okay. 0:15:45.920 --> 0:15:49.160 I mean we've been dealing with government shutdowns effectively since then. 0:15:49.240 --> 0:15:50.960 So we had a forty three day shutdown and then 0:15:50.960 --> 0:15:55.040 a sixty seven day shutdown or whatever. Right now, they 0:15:55.080 --> 0:15:57.720 have just passed a flurry of legislation on the House side, 0:15:57.800 --> 0:15:58.800 and what tells. 0:15:58.600 --> 0:15:59.680 You everything that you need to know. 0:16:00.040 --> 0:16:02.240 So they passed all their work and then they left 0:16:02.280 --> 0:16:03.640 town schedule to recess. 0:16:03.640 --> 0:16:05.000 They get me out of here. They're gone for the 0:16:05.040 --> 0:16:05.680 next twelve. 0:16:05.480 --> 0:16:09.800 Days, so they're operating in like fits and starts. When 0:16:09.800 --> 0:16:12.160 they get back, they'll be in for about two weeks. 0:16:12.520 --> 0:16:15.160 They'll hopefully have a reconciliation bill that they can pass, 0:16:15.200 --> 0:16:17.640 and that bill is really just an appropriations which I 0:16:17.640 --> 0:16:19.240 don't want to get too nerdy, but it's really just 0:16:19.240 --> 0:16:22.280 funding for immigration and it'll clear the decks on immigration 0:16:22.320 --> 0:16:23.080 for the next two and. 0:16:23.040 --> 0:16:23.720 A half years. 0:16:24.600 --> 0:16:27.120 And then they're going to go on recess again. So 0:16:27.920 --> 0:16:31.120 we're not working on massive, you know, new deal style 0:16:31.200 --> 0:16:32.080 legislation right now. 0:16:33.040 --> 0:16:36.160 So what is the next thing coming out of DC here? 0:16:36.240 --> 0:16:36.320 Is? 0:16:36.440 --> 0:16:40.200 Are we just still at the waiting for the next 0:16:40.400 --> 0:16:42.480 social media posts from the White House. 0:16:43.200 --> 0:16:45.480 Yeah, the White House definitely is a very firm control 0:16:45.560 --> 0:16:49.440 over DC. Democrats are in full campaign mode. Republicans are 0:16:49.920 --> 0:16:53.560 very much catering, i think, to the administration, and that's 0:16:53.600 --> 0:16:55.720 going to persist through the rest of this month. As 0:16:55.760 --> 0:16:57.880 I've discussed with y'all before, when it comes to the war, 0:16:57.960 --> 0:17:00.480 there are two real inflection points five dollars gas lane, 0:17:00.480 --> 0:17:02.880 which we're not yet at but rising quickly and could 0:17:02.920 --> 0:17:05.320 be at before Memorial Day. So that's something to be 0:17:05.400 --> 0:17:08.000 extraordinarily anxious about. You know, when it takes that one 0:17:08.040 --> 0:17:10.200 hundred and sixty two dollars to phillip An f one fifty, 0:17:10.200 --> 0:17:12.840 you have a problem. And then the month of June 0:17:12.880 --> 0:17:15.800 and June is optically in DC considered the time when 0:17:15.800 --> 0:17:18.840 the president really needs to migrate to domestic politics and 0:17:18.920 --> 0:17:22.399 really concentrate on affordability, where he pulls the worst and 0:17:22.560 --> 0:17:24.920 is also the most important thing to the American voter. 0:17:25.119 --> 0:17:27.119 And that's why the president's disapproval numbers are in the 0:17:27.119 --> 0:17:27.960 sixty four percent. 0:17:28.040 --> 0:17:30.639 Right, You've got to have that conversation. 0:17:30.880 --> 0:17:35.040 Okay, brilliantly said quickly. Here, Then what happens in June. 0:17:35.160 --> 0:17:38.600 What do you expect to see in June at. 0:17:38.440 --> 0:17:40.359 That point where at the ninety day marker of the war. 0:17:40.600 --> 0:17:43.080 So there are a couple of senators Senator John Curtis 0:17:43.200 --> 0:17:45.960 or Republican of Utah and most recently Senator Collins of 0:17:46.000 --> 0:17:48.280 Maine who's in a very real fight for her Senate 0:17:48.320 --> 0:17:51.879 seat in Maine. They have crossed the aisle effectively or 0:17:51.880 --> 0:17:53.840 told us that they're going to when we get to 0:17:53.880 --> 0:17:56.560 that ninety day point, or in the case of Susan Collins, 0:17:56.720 --> 0:18:00.439 already rain and the President's authority on the war Powers solution, 0:18:00.920 --> 0:18:03.640 try to have some messaging boats that ninety day threshold 0:18:03.760 --> 0:18:07.159 is really what's most optically important to members. If you 0:18:07.280 --> 0:18:10.119 simultaneously had five dollars gasoline, there's going to be a 0:18:10.119 --> 0:18:13.160 lot of political pressure on the administration. You've already seen 0:18:13.440 --> 0:18:15.359 spared our lines go out of business. I was just 0:18:15.359 --> 0:18:18.280 talking about that with your colleagues on TV. I mean, 0:18:18.960 --> 0:18:21.960 the compounding effects are cascading now. It's going to be 0:18:21.960 --> 0:18:24.480 in food prices, it's going to be in services. 0:18:24.840 --> 0:18:27.320 This is not ending. As long as the straight is closed. 0:18:27.400 --> 0:18:29.760 I don't care if there's a ceasefire or a blockade 0:18:29.840 --> 0:18:30.760 or whatever, it doesn't matter. 0:18:30.880 --> 0:18:31.880 You need a straight reopen. 0:18:32.119 --> 0:18:34.800 Henrietta, thank you so much. Really appreciate Hanny to Trey's 0:18:34.840 --> 0:18:37.480 there on a Monday to get us as started here 0:18:37.520 --> 0:18:42.000 on the cascating moment. We are all stay with us. 0:18:42.240 --> 0:18:45.480 More from Bloomberg Surveillance coming up after this. 0:18:52.720 --> 0:18:56.320