Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg business Week Daily reporting from the magazine
Speaker 2: that helps global leaders stay ahead with insight on the people, companies,
Speaker 2: and trends shaping today's complex economy. Plus global business finance
Speaker 2: and tech news as it happens. The Bloomberg Business Weekdaily
Speaker 2: Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3: A couple legal actions we want to get to you
Speaker 3: right now.
Speaker 4: First of all, earlier today Google partially losing a US
Speaker 4: advertising tech antitrust case, and just moments ago, the US
Speaker 4: Supreme Court saying we'll hear arguments on President Trump's bid
Speaker 4: to start enforcing an executive order that would restrict automatic
Speaker 4: birthright citizenship and upend a longstanding constitutional right.
Speaker 3: The Court saying today.
Speaker 4: Will keep his restrictions on hold in advance of that
Speaker 4: May fifteenth argument.
Speaker 1: I want to bring in Bloomberg News team leader Sarah
Speaker 1: Ford and Sarah joins us from our Washington DC bureau.
Speaker 1: I want to start with the Supreme Court setting to
Speaker 1: hear arguments in the birthright sistemship case. How does this work?
Speaker 1: Give us the sort of schoolhouse rock version of how
Speaker 1: the Supreme Court could change what is written in the
Speaker 1: US Constitution.
Speaker 5: Well, I mean this has been, as you said, a
Speaker 5: longstanding belief of constitutional scholars and others that the right
Speaker 5: to birthright citizenship is sacrosanct. So the fact that they
Speaker 5: are willing to take this up and to start to
Speaker 5: parse it and consider the restrictions that are being proposed
Speaker 5: by the Trump administration means that this right could potentially
Speaker 5: be in play going forward.
Speaker 3: So what's next May fifteenth?
Speaker 5: Is that what we focus So, as you said, the
Speaker 5: restrictions are on hold for now, but May fifteenth will
Speaker 5: be a closely closely followed arguments. This usually takes several
Speaker 5: hours where we listen attentively to what each of the
Speaker 5: justices the questions that they're asking and how that might
Speaker 5: indicate what they're thinking.
Speaker 3: Is I mean, this.
Speaker 4: Would be a significant change in a policy that's been standing.
Speaker 5: Yeah, I mean this has been sacri saying that the
Speaker 5: children of people who are non citizens who are born
Speaker 5: in this country have the right to American citizenship. So
Speaker 5: this will go to hospitals across the country when babies
Speaker 5: are born. Are they going to give those babies a
Speaker 5: Social Security number or not? And so this could start
Speaker 5: to roll back that, and it's part of the Trump
Speaker 5: administration's larger, very aggressive crackdown on immigration to this country
Speaker 5: over multiple What.
Speaker 1: Is the legal case here, because in the Section one
Speaker 1: of the fourteenth Amendment of the Constitution, it does go
Speaker 1: into the fact that all persons born or naturalized in
Speaker 1: the US are subject and subject to the jurisdiction thereof
Speaker 1: are citizens of the US and the state wherein they reside.
Speaker 1: Is the Supreme Court challenging the meaning of that.
Speaker 5: That clause subject to the jurisdiction thereof is the one
Speaker 5: that is being put into question, and the questions whether
Speaker 5: these non citizens who are here are really subject to
Speaker 5: the jurisdiction. And so that is what they're going to
Speaker 5: tease out in part during these arguments.
Speaker 3: So I am curious, what did you just happen? Oh,
Speaker 3: I'm sorry, there's a lot of stuff happening.
Speaker 1: Yeah, producers are talking to Carol, So I'm jumping in
Speaker 1: a little bit. I was asking specifically about Section one
Speaker 1: of the fourteenth Defendment, okay, and how that is open
Speaker 1: to interpretation with this legal case.
Speaker 4: Sorry, it's one of those kind of days and kind
Speaker 4: of these weeks in one of these kind of years.
Speaker 4: I want to flip to Google and the case there
Speaker 4: of Google partially losing a US advertising tech anti trust case.
Speaker 4: This was a federal judge finding Google to have legally
Speaker 4: illegally monopolize some online ad technology markets in a blow
Speaker 4: to what is a really key part of Google's business.
Speaker 3: Walk us through this one.
Speaker 5: Yeah, absolutely. This is the second major ruling against Google
Speaker 5: in a tech anti trust case. And this case has
Speaker 5: to do with the pipeline that Underpins's advertising business. So
Speaker 5: they control the technology soup to nuts, from the ad
Speaker 5: servers to the putting these ads on websites. And this
Speaker 5: judge found that Google monopolizes the part that has to
Speaker 5: do with the ad server tools. And I know this
Speaker 5: is all very wonky, but it goes back to their
Speaker 5: acquisition of a company called double Click in two thousand.
Speaker 1: That was so long ago, long ago.
Speaker 5: So the DOJ actually is in the remedy portion of
Speaker 5: this case, which will follow today's decision, is DJ is
Speaker 5: asking for the judge to order Google to sell off
Speaker 5: that double Click unit. But of course, over the years
Speaker 5: it has been integrated into their business, and so it's
Speaker 5: kind of like trying to unscramble the omelet.
Speaker 3: So is there an appeal coming to we assume so Kenny.
Speaker 5: Google has already said they will appeal this part of
Speaker 5: the case. They did win the part of the case
Speaker 5: that has to do with display ads, so so they're
Speaker 5: safe on that count. But all of this marks a
Speaker 5: bigger reckoning for the tech companies that have gotten so powerful,
Speaker 5: and it shows that we have a rare little spot
Speaker 5: of bipartisan consensus on antitrust and limiting the power of
Speaker 5: big tech because these cases have been taken forward both
Speaker 5: by the first Trump administration who filed the first Google
Speaker 5: case which was about search, and the metacase, which is
Speaker 5: currently playing out in another DC courtroom, and they were
Speaker 5: carried forward by the Biden administration. So we're not seeing
Speaker 5: a lot of light between conservatives and liberals on these cases.
Speaker 4: Just real quickly, just about twenty seconds here, sour. So
Speaker 4: that's what I was going to ask, because we know
Speaker 4: this was a kind of second major blow to Google
Speaker 4: that was already found to have monopolized the online search
Speaker 4: market in a separate case.
Speaker 3: Is this all Google.
Speaker 4: Specific or I kind of get the feeling it's a
Speaker 4: larger message here for some of those big tech guys.
Speaker 3: Just quickly.
Speaker 5: This is a larger message and we have cases running
Speaker 5: now against Amazon, Meta, Apple, and Google. So yes, it's
Speaker 5: broad all right.
Speaker 1: Just thinking, I'm just thinking of those CEOs of those
Speaker 1: companies were all at the inauguration. I think they were.
Speaker 1: I believe they were just making sure.
Speaker 3: Yeah, it's working out well, cool, all right.
Speaker 4: Bloomberg News Legal team leader Sarah Fordon, thank you so much.
Speaker 4: We really appreciate you joining us.
Speaker 2: You are listening to the Bloomberg Business Week podcast. Catch
Speaker 2: us live weekday afternoons from two to five pm Eastern.
Speaker 2: Listen on Apple CarPlay and Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 3: We want to stay with the future of j. Powell.
Speaker 4: Of course, the fed share things have just come out
Speaker 4: of this press conference that is ongoing here in the
Speaker 4: White House again the President making another comment he should
Speaker 4: do the right cuts. So we want to kind of
Speaker 4: get into this, and we have a great voice we do.
Speaker 1: Let's bring in Katerina Sariva. She joins us from Houston,
Speaker 1: also with us as Michael McKee's Bloomberg News International Economics
Speaker 1: and Policy correspondent. He joins us here in the studio.
Speaker 1: I do want to start with you, because you have
Speaker 1: been monitoring these Powell or these Trump comments. I should say,
Speaker 1: in the context of what we heard from j. Powell yesterday,
Speaker 1: you were there in Chicago, just give me your impression
Speaker 1: of what we're hearing from the President right now and
Speaker 1: what the message is that he has for the Federal Reserve.
Speaker 6: At the moment, I'm still seeing this as saber rattling,
Speaker 6: trying to influence the FED. The President said this morning
Speaker 6: he is a word termination. Other White House officials have
Speaker 6: told other networks that he didn't mean firing him, And
Speaker 6: then today in the Oval office, they said, are you
Speaker 6: trying to get rid of him? And he said, yeah, yeah,
Speaker 6: But what does that really mean. We know he doesn't
Speaker 6: like Powell, and we know he doesn't like the fact
Speaker 6: that the FED is not cutting interest rates as the
Speaker 6: president would like, but there isn't There's a real debate
Speaker 6: about whether the President has any power to get rid
Speaker 6: of the FED chair, which we can go into later.
Speaker 6: But I don't think that we're necessarily any closer to
Speaker 6: Powell being ousted or an attempt to oust him by
Speaker 6: the President. But I think that because Powell spoke yesterday
Speaker 6: and gave the impression they're not going to cut rates soon,
Speaker 6: that he's just venting again on the FED chair.
Speaker 4: I mean, you can't fire a FED chair just because
Speaker 4: you don't like their policy, can you.
Speaker 1: Well, is that I don't.
Speaker 3: Know, is that?
Speaker 1: Cause?
Speaker 6: Like I said, we can go into the whole background.
Speaker 6: But in theory, legal experts say that's not cause, causes
Speaker 6: malfeasance or illegality or something like that. The question is
Speaker 6: not so much cause. It's this whole Article two issue
Speaker 6: about whether the president has unfettered ability to run everything
Speaker 6: in the executive branch, including what are supposed to be
Speaker 6: independent agencies.
Speaker 4: Well, and to that, there are some legal actions that
Speaker 4: are out there that are testing the limits of presidential
Speaker 4: authority to remove agency officials without cause. I want to
Speaker 4: just bring in Bloomberg News Federal Reserve reporter Katerina Sariva,
Speaker 4: who's with us from Houston. Katerina, what do we know
Speaker 4: about these cases and what it could possibly potentially I
Speaker 4: want to be careful here, but what it could mean
Speaker 4: in terms of the presidential authority to possibly get rid
Speaker 4: of the FED chair.
Speaker 7: Yeah, I mean that's you know, as Mike was just saying,
Speaker 7: the big question. So we have a couple cases that
Speaker 7: have kind of filtered their way through the federal court
Speaker 7: system and will are expected to be taken up by
Speaker 7: the Supreme Court soon. So these are kind of They
Speaker 7: both have to do with what's called Humphries Executor, which
Speaker 7: is a provision from nineteen thirty five, a Supreme Court
Speaker 7: ruling that found that the president could not unilaterally fire
Speaker 7: members of boards. Now the Supreme Court has already chipped
Speaker 7: away at that a little bit. There was a twenty
Speaker 7: twenty decision about the CFPB that said, when it's a
Speaker 7: single directory, the President does have that authority to to
Speaker 7: fire that person. But the open question is kind of
Speaker 7: how it applies still to multi member boards. So the
Speaker 7: decisions going up to the Supreme the cases going up
Speaker 7: to the Supreme Court now are not specifically about the
Speaker 7: Federal Reserve. It's other government agencies, but it's a similar
Speaker 7: structure where they have multiple people on the board.
Speaker 1: You know, Katerina, we're monitoring what's going on in the
Speaker 1: Oval Office right now. The President is with Georgia Maloney,
Speaker 1: the Prime Minister of Italy. He's still making more comments.
Speaker 1: Just as you were speaking about the Federal Reserve, he said,
Speaker 1: interest rates are pretty flat. They should be better. Costs
Speaker 1: are down, very little inflation. The Fed owes it to
Speaker 1: Americans to get interest rates down. Powell will have a
Speaker 1: lot of political pressure and the only thing Powell is
Speaker 1: good for is lowering rates. I want to go back
Speaker 1: to Mike McKee, International Economics and Policy correspondent. He's here
Speaker 1: in our studio too. He's looking at these comments as well.
Speaker 1: Just fact check us a little bit with where inflation is,
Speaker 1: where costs are, and how you view the comment that
Speaker 1: the President said the only thing Paul is good for
Speaker 1: is lowering rates.
Speaker 6: Well, it depends on which measure you want to use.
Speaker 6: As always, we say with the inflation numbers, but basically
Speaker 6: they're getting very close to the Fed's target, the CPI down,
Speaker 6: and now we're here after we've had the other numbers
Speaker 6: and people plugged in the data. The Fed's target is
Speaker 6: the PCE index, and that's now forecast to come in
Speaker 6: about two point three percent. So inflation has come down.
Speaker 6: The issue is not that inflation is coming down, because
Speaker 6: if this were an ordinary time, the Fed would be
Speaker 6: probably lining up to cut rates again. I think pretty
Speaker 6: much all of them want to, but they can't because
Speaker 6: they don't know what is going to happen, and this
Speaker 6: may be what set the president off. Powell yesterday saying
Speaker 6: that the tariffs as announced were bigger than people thought,
Speaker 6: and they will have a bigger impact than people thought.
Speaker 6: Inflation will probably go higher than we estimated. And in
Speaker 6: that case, because that's a possibility if Ed doesn't want
Speaker 6: to move right now, and that makes sense.
Speaker 4: So he also said the president, if Europe has cut rates,
Speaker 4: that puts a set in a disadvantage.
Speaker 6: They're not comparable. The European economy is growing barely one percent.
Speaker 6: We've been growing two and a half or better. First
Speaker 6: quarter may not be great, but there may be some
Speaker 6: statistical anomalies there. Their unemployment rate is much higher than ours,
Speaker 6: and their interest rates are lower than ours. So at
Speaker 6: this point you can't really say that it's a comparable situation.
Speaker 4: And we should point out that the remarks and the
Speaker 4: press event in the Oval Office has ended, so that
Speaker 4: should be the end of those headlines. Katherine, I want
Speaker 4: to go back to you for one more thought. I
Speaker 4: mean so legally, I mean how easy would it be
Speaker 4: potentially and I guess, depending on how all these rulings go,
Speaker 4: could it be for the President to maybe remove Fetcher
Speaker 4: J Powell.
Speaker 7: Yeah, I mean if the rulings are broad and not
Speaker 7: very narrow, right, if they if they are seen to
Speaker 7: apply to basically any multi member agency, then yeah, that
Speaker 7: leaves the door wide open for the President to fire
Speaker 7: the fet Share. There are some legal scholars and some folks,
Speaker 7: and we heard it from Chair Powell yesterday as well,
Speaker 7: that think that there is likely to be a carve
Speaker 7: out specifically for the FED. We have heard, we had,
Speaker 7: we've been in a decision a few years ago. Justice
Speaker 7: Alito kind of eluded, you know, talked a little bit
Speaker 7: about how the Federal Reserve is a unique entity. So
Speaker 7: there there might be appetite for that at the Supreme
Speaker 7: Court to kind of carve out the FED. But it
Speaker 7: remains to be seen.
Speaker 5: Now.
Speaker 7: I think one of the important factors for Trump, even
Speaker 7: if he has the permission to do so, is the
Speaker 7: reality of how the markets would react, right, because it
Speaker 7: would be quite a reaction in markets, and that may
Speaker 7: prevent them from ultimately acting.
Speaker 3: All right, really appreciate you, wangan, Katerina. We're going to
Speaker 3: let you go. Thank you so much.
Speaker 4: So, Katerina Saravas, she is Bloomberg News Federal Reserve reporter.
Speaker 4: We're going to continue that a little bit more with
Speaker 4: Mike in terms of Fetcher J. Powell and his tenure.
Speaker 1: Yeah, so, Mike, I do want to bring you back
Speaker 1: in here because and we're going to get to trade
Speaker 1: in just a minute, because there were some headlines on
Speaker 1: the trade side of things coming from that Oval Office meeting.
Speaker 1: But if we think about this in the context of
Speaker 1: what we heard from the president in his first term,
Speaker 1: he would tweet at the time about the FED lowering
Speaker 1: interest rates. The FED chair has in the past addressed
Speaker 1: questions about pressure and political pressure. He's talked about maintaining independence.
Speaker 1: As of now, though, given what we heard from the
Speaker 1: President today, are there any more questions about the pressure
Speaker 1: that he must be feeling or he may be feeling.
Speaker 6: Well, he may be feeling pressure, But he is giving
Speaker 6: the same answer it was asked yesterday and again he said,
Speaker 6: we will do what we do without any regard to
Speaker 6: political pressure. Our job is the mandate that Congress gave
Speaker 6: us maximum employment and stable prices, and that's what we're
Speaker 6: going to do. We'll make our decisions based on what
Speaker 6: gets us to those mandates.
Speaker 3: Fetcher J.
Speaker 4: Powell also said yesterday our independence is a matter of law.
Speaker 4: Congress has it in our statute. We're not removable except
Speaker 4: for cause we serve very long terms, seemingly endless terms,
Speaker 4: he said, So we're protected in the law. So you know,
Speaker 4: Congress could change that law, but there's I don't think
Speaker 4: there's any danger of that. That independence has pretty broad
Speaker 4: support across both political parties. I'm going to ask the obvious.
Speaker 4: I know the answer, but we've got to ask it.
Speaker 4: Maybe for those who are like, well, couldn't you just
Speaker 4: get rid of the FED? I mean, if President Trump
Speaker 4: just got rid of feedcher J. Powell just kind of
Speaker 4: because he wanted to, and there was no real cause,
Speaker 4: what would that say potentially to the independence of the Fed?
Speaker 4: And again, just why having an independent fact is crucial
Speaker 4: and when it doesn't happen, we see what happens two countries.
Speaker 6: That part is easy because there have been many, many
Speaker 6: studies that show countries with independent central banks have much
Speaker 6: lower interest rates, much lower inflation rates, and it's just
Speaker 6: overall better for the economy. And there's no debate among
Speaker 6: economists or I think investors, Wall Street Global, Wall Street
Speaker 6: kind of people about that. Now if the President tried
Speaker 6: to fire Powell, I think there would be a rebellion
Speaker 6: on Wall Street. Krishnaghoo, is I ever core said today
Speaker 6: if you like the reaction to the tariff announcement, just
Speaker 6: wait till you get Trump has fired at US.
Speaker 1: You're saying the bond market could get yippie.
Speaker 6: Yeah, they could get so it's kind of a technical.
Speaker 1: Term, but yeah, okay, that's good to know, Mike. One
Speaker 1: last question to you, this one on trade, because we
Speaker 1: did hear the President and Prime Minister the Resident just
Speaker 1: now saying that they discussed trade other things and that
Speaker 1: Italy will have to increase their imports of LNG. Remind
Speaker 1: us because the European Union is this block. Remind us
Speaker 1: if individual countries can actually go and negotiate their own
Speaker 1: trade deals with the US or do they have to
Speaker 1: do it as the EU.
Speaker 6: Well, they have to do it as an as the
Speaker 6: EU as a block to negotiate a trade agreement. Now,
Speaker 6: there's no reason that Italy couldn't buy more of one product.
Speaker 6: They could say we want more LNG. We saw that
Speaker 6: during the initial phase of the Ukrainian War, countries that
Speaker 6: needed natural gas buying more from the United States and
Speaker 6: other places. But the idea of an overall trade deal
Speaker 6: that would exempt them from tariffs probably has to go
Speaker 6: through Brussels. I mean, that's the structure they have set up.
Speaker 4: All right, We're gonna leave it there. Great timing. Thanks
Speaker 4: for dropping by.
Speaker 6: And it knows when I'm here to make.
Speaker 1: It a coordinate schedules, right, five o'clock, Balance of power,
Speaker 1: five o'clock, talk about it again. To see you next.
Speaker 4: Michael McKee, International Economics and Policy Correspondent, Bloomberg News.
Speaker 2: This is the Bloomberg Business Week podcast. Listen live each
Speaker 2: weekday starting at two pm Eastern on Apple car Play
Speaker 2: and the Android Auto with the Bloomberg Business app. You
Speaker 2: can also listen live on Amazon Alexa from our flagship
Speaker 2: New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 5: Well.
Speaker 1: President Donald Trump said during a meeting with Italian Prime
Speaker 1: Minister Georgia Maloney that he expects to reach a trade
Speaker 1: deal with the EU, but he indicated he's in no
Speaker 1: hurry to finalize tariff agreements.
Speaker 8: We're doing very well with negotiations, I think with all countries,
Speaker 8: and Scott could tell you a little bit, but we
Speaker 8: are doing very well. We have a lot of countries
Speaker 8: that want to make a deal. Frankly, they want to
Speaker 8: make deals more than I do. Tariffs are making those rich.
Speaker 7: Well.
Speaker 1: That was President Trump from the Oval Office, alongside Italian
Speaker 1: Prime Minister Georgia Maloney. The Scott by the way, he
Speaker 1: referred to with Scott Bess and the Treasury Secretary of
Speaker 1: the US separately, well not separately, but also I should say,
Speaker 1: the EU carol is working on a proposal to introduce
Speaker 1: restrictions on some exports to the US as a possible
Speaker 1: retaliatory tactic in that expense of trade war that the
Speaker 1: President initiated last month.
Speaker 4: All right, for the latest, let's head to Stephanie law.
Speaker 4: She's Bloomberg News White House correspondent. She is out there
Speaker 4: in our DC bureau. Hey, Stephanie, So, I just want
Speaker 4: to cut to the chase. Are things moving forward when
Speaker 4: it comes to trade negotiations and should we assume sooner
Speaker 4: rather than later that there could be some kind of deals,
Speaker 4: better deals maybe perhaps announced that maybe kind of cool
Speaker 4: the heat that we've seen and what feels like a
Speaker 4: trade war.
Speaker 9: Yeah, I mean, I think that's what we've all been
Speaker 9: waiting for. But it remains unseen when a deal will
Speaker 9: come together. You know, they've mentioned for a couple I
Speaker 9: guess about a week now that they have about fifteen
Speaker 9: or so offerers and that there are people coming to
Speaker 9: the White House make deals.
Speaker 8: You know.
Speaker 9: Notably, nothing really came out of the Japan talks yesterday.
Speaker 9: Now it was a preliminary meeting, sure, but the President
Speaker 9: still did attend. And so everything we've been hearing from
Speaker 9: our sources, from just what's coming out of the White
Speaker 9: House is that deals are being made, that they're not
Speaker 9: really in a rush. And Trump himself is saying, you know,
Speaker 9: repeatedly in the last week that he really doesn't mind
Speaker 9: waiting because we're bringing in a bunch of revenue and
Speaker 9: money from these exports or the imports that were putting
Speaker 9: tariffs on and so he doesn't seem to be in
Speaker 9: a rush. It seems like his team is very focused
Speaker 9: on making good deals. But you know, one thing that
Speaker 9: the Secretary Treasury Secretary Besent mentioned at this Oval meeting
Speaker 9: was that South Korea is expected to come next week.
Speaker 9: So we're still seeing some trade partners come in. Discussions
Speaker 9: are still happening, but in terms of the timing, it
Speaker 9: doesn't quite seem like an immediate remedy.
Speaker 1: Okay, South Korea, Japan, something's missing, Yeah, I was gonna say,
Speaker 1: and then Italy, of course, what about the big one?
Speaker 1: What about China? Is there any movement there?
Speaker 6: Yeah?
Speaker 9: I mean reporters did press the President on this throughout
Speaker 9: this last week. He doesn't seem to say that he
Speaker 9: has reached out. It's not clear if China has reached out,
Speaker 9: and so it doesn't really seem like we've moved from
Speaker 9: this impasse that we've already encountered earlier last week, when
Speaker 9: the tariffs had started ramping up in this trade war
Speaker 9: continued to escalate.
Speaker 4: All right, good to leave it there, Hey, Stephanie, thank
Speaker 4: you so much. STEPHANIELI Bloomberg News White House correspondent joining
Speaker 4: us from our Washington, DC bureau.
Speaker 1: So that is the latest when it comes to DC
Speaker 1: and the trade war. We're also really interested on how
Speaker 1: companies that import goods are dealing with this. The Notori
Speaker 1: Company is one of those firms that's really caught in
Speaker 1: the crosshairs right now. It's a designer fashion brand that
Speaker 1: does sleep where lingerie, swimwear, Fragrance, Bridle, fine jewelry, and more.
Speaker 1: We've got Kennatory with us. He's the president. We should
Speaker 1: note that before his work at Notori, he worked here
Speaker 1: at Bloomberg Radio and TV. That was until two thousand
Speaker 1: and three. He joins us here in the Bloomberg Interactive
Speaker 1: Brokers studio. Good to see you, Ken. You are the
Speaker 1: perfect guy to talk to about this because of what
Speaker 1: is happening in your world, and I want to know
Speaker 1: what has happened in your world because you manufacture in China,
Speaker 1: you manufacture in the Philippines. What's going on it is?
Speaker 10: First off, thanks for having me always. Great to be
Speaker 10: back at Bloomberg. Feels like I'm coming back home. It's
Speaker 10: just it's really challenging right now. There's just not a
Speaker 10: lot of visibility in terms of what stuff is going
Speaker 10: to be like. Obviously, we had the chaos of the
Speaker 10: beginning of the month. There was a time where we
Speaker 10: thought places outside of China would be really difficult to
Speaker 10: manufacture in because the tariffs in Vietnam Cambodia were much
Speaker 10: higher than expected. Then those came down to ten percent,
Speaker 10: China went even higher. So you know, we've got plans
Speaker 10: for every different scenario, but we don't know what the
Speaker 10: scenario is actually going to be So it's really hard.
Speaker 10: You know, I think a lot of people in our
Speaker 10: industry have just been waiting a little bit to see
Speaker 10: how things would shake out. But we're all in a
Speaker 10: position now where we have to make decisions and it's
Speaker 10: hard to make decisions without visibility.
Speaker 3: Yeah, no, absolutely.
Speaker 4: What's the best and worst case scenarios that you are
Speaker 4: kind of planning for?
Speaker 10: So we thought the worst case. So, you know, we
Speaker 10: have our own manufacturing facility, our own factory in the Filippines
Speaker 10: where we do about seventy percent of our manufacturing of
Speaker 10: the collections that we do in how so that is
Speaker 10: a tremendous advantage. That said, we still have twenty five
Speaker 10: to thirty percent exposure in China, which is a lot.
Speaker 10: You know, we have been building models for twenty five
Speaker 10: percent out of China, forty five percent, tariffs out of
Speaker 10: China one hundred and forty five percent. Yesterday there was
Speaker 10: a rumor of going up to two hundred and forty
Speaker 10: five percent, which is I mean, how do you plan
Speaker 10: business around that? And what's interesting for us is, you know,
Speaker 10: we sell direct to consumer onnry dot com, but we
Speaker 10: also sell to department stores. Our wholesale partners that we've
Speaker 10: been with, you know, throughout our forty eight years as
Speaker 10: a company, right and we've got these long term partnerships.
Speaker 10: They need to know, like what what are we going
Speaker 10: to buy product at? And we have to give they're
Speaker 10: asking for a price, and we don't know what the
Speaker 10: tariff is going to be when we ship in sixty
Speaker 10: to ninety days, So there's so much uncertainty. You know,
Speaker 10: we're working very closely with our retail partners to come
Speaker 10: up with some way for us both to be protected
Speaker 10: because we're you know, we're we have great partnerships, but
Speaker 10: with a complete lack of visibility in terms of what
Speaker 10: those tariffs are actually going to be, it's just it's
Speaker 10: a little bit of a guessing game at this point.
Speaker 10: But everybody has to start taking action, and that's where
Speaker 10: it gets a little scary.
Speaker 1: The President would say, the point of these tariffs are
Speaker 1: to bring manufacturing back to the United States. Is there
Speaker 1: a number that you'd see on China or the Philippines
Speaker 1: that would cause you to move production to the US?
Speaker 10: I mean, I will say if so, you know, if
Speaker 10: tariffs stay at one hundred and forty five percent out
Speaker 10: of China. People will not be able to import apparel
Speaker 10: from China. It's going to move you know, who knows
Speaker 10: what it's going to be in the other countries. If
Speaker 10: he puts one hundred and forty five percent tariff on
Speaker 10: every single country in the world, then eventually, eventually, I
Speaker 10: you know, maybe apparel manufacturing could come back to the
Speaker 10: United States. But that's a long process that doesn't happen overnight.
Speaker 3: How long is that process?
Speaker 1: You know, I don't know.
Speaker 10: I like, I've never thought that we would have to
Speaker 10: like invest in our own manufacturing.
Speaker 4: There's there's a visiblity you could to say, okay, guys,
Speaker 4: you start making it.
Speaker 1: And it's not the facility.
Speaker 10: It's also the skills. Think about like training workers, Like
Speaker 10: how many people do you know in the US We're like, oh, yeah,
Speaker 10: I know how to do that. It's about training a workforce.
Speaker 10: It's about equipment, it's about machinery. So in theory, yeah,
Speaker 10: I'd love to bring jobs back to the US, But
Speaker 10: like right now, like people are like, how are you
Speaker 10: dealing with this? If I sat in my desk and
Speaker 10: called every manufacturer in the US that could make apparel
Speaker 10: for US, yeah, that would take zero seconds. Because I
Speaker 10: don't know, they don't exist for us. Now that's not
Speaker 10: to say.
Speaker 1: It couldn't happened down the road.
Speaker 10: I mean, you know, we could come up with any
Speaker 10: kind of scenario, but as of right now, like what
Speaker 10: we're supposed to do in our seat, it's it's a
Speaker 10: little confusing.
Speaker 1: How much would it cost? Do you think to you know,
Speaker 1: I don't so the world? Is the world just a
Speaker 1: fantasy at this point because the skills don't exist here
Speaker 1: in the US, the manufacturing doesn't exist here in the US.
Speaker 1: Does my question even? Is my question even relevant?
Speaker 10: So it could be relevant to bigger companies, and I
Speaker 10: think you know, you've seen articles where this is really
Speaker 10: going to hurt smaller companies, the independent companies like us.
Speaker 10: Like if you're a bigger company, like if you want
Speaker 10: to go tell Nike or under Armour or Victorious Secret, Hey,
Speaker 10: you guys build yourrone manufacturing in the US, Well maybe
Speaker 10: they have the money to do that and the ability
Speaker 10: to like right, like you know, you know, we're a
Speaker 10: privately held business. The idea of like, hey, we're actually
Speaker 10: going to invest in you know, building building our own
Speaker 10: manufacturing facilities in the US, Like that's that's very difficult,
Speaker 10: and it's not like there are these existing factories that
Speaker 10: we can tap into to move to domestic production.
Speaker 4: What don't we maybe as a society understand about Chinese manufacturing.
Speaker 4: I think we think it's maybe we think of our history,
Speaker 4: you know, dirty factories, industrial factory, you know what I mean,
Speaker 4: and just kind of but they're very sophisticated. Tell us
Speaker 4: a little bit about your experience in terms of time.
Speaker 4: I'm assuming you've visited your factories.
Speaker 1: Yeah, yeah, of course.
Speaker 10: So you know, I spent a lot of time at
Speaker 10: our own company owned factory in the Philippines, but I
Speaker 10: have traveled to China a lot from twenty fifteen to
Speaker 10: twenty twenty obviously to meet with our manufacturing partners there.
Speaker 10: They are very good, They're very dedicated, and you know,
Speaker 10: they know what they're doing and they're willing to do
Speaker 10: the work. And this is you know, it's it's tough
Speaker 10: work to do. It is it is tough work to do.
Speaker 3: So how sophistic is the technology involved in all of that?
Speaker 10: Well, so it depends, you know, for apparel, it's you
Speaker 10: know everything. There are certain parts of making clothes that
Speaker 10: can be machine done. Like if you look at socks
Speaker 10: or hosiery. That's usually like machines and people looking at
Speaker 10: and operating the machines and observing them. But when it
Speaker 10: comes to actual like apparel manufacturing, like the cut and so,
Speaker 10: that involves a lot of handwork. You know, that involves
Speaker 10: sort of detailed work, you know, using a sewing machine,
Speaker 10: and it's you know, it's it's hard work. I'm not
Speaker 10: sure like to get those skills in the US and
Speaker 10: to have legitimate apparel manufacturing and real factories, it would
Speaker 10: take a long time of training a workforce and in
Speaker 10: a long time of building these facilities.
Speaker 1: So I want to go back to what you're doing
Speaker 1: right now, because you essentially described a state of paralysis
Speaker 1: where you really are waiting to see what the decision
Speaker 1: is or how long these tariffs are in place to
Speaker 1: make a decision. How long can you actually wait because
Speaker 1: at a certain point you're going to have to make
Speaker 1: a decision and your partners are going to have to
Speaker 1: get their clothes and you're gonna have to tell the
Speaker 1: folks in China and the Philippines UH to start making
Speaker 1: these things.
Speaker 10: Yeah, so we were paralysis at the beginning of the month,
Speaker 10: and now so for the as I mentioned, we have
Speaker 10: our own factory in the Philippines. To the degree we
Speaker 10: had some programs in China, we are actively trying to
Speaker 10: move those and countersource and move those programs to the Philippines.
Speaker 10: We can't do everything there are there is a there's
Speaker 10: a lot of industry that cannot be done anywhere outside
Speaker 10: of China. And I think that's what's interesting, Like everybody's
Speaker 10: trying to move out of China now. But if you
Speaker 10: think about something like Christmas ornaments, like it's you know,
Speaker 10: I was talking to a department store partner, we were
Speaker 10: visiting with them last week. They're like, we might not
Speaker 10: even have a Christmas ornament department this holiday season because
Speaker 10: that's the only place these things are made. So they're
Speaker 10: going to be you know, the consumers is going to
Speaker 10: see a lot of consumers is certainly going to see
Speaker 10: higher prices, but there could be huge categories of things
Speaker 10: that you expect to see this fall that just might
Speaker 10: might not be there.
Speaker 3: Unbelievable.
Speaker 4: It's just I know, it's kind of amazing to get
Speaker 4: what go ahead materials.
Speaker 1: Yeah, are those are those from separate countries then China
Speaker 1: and the Philippines. We hear a lot about that, and
Speaker 1: that the supply.
Speaker 10: A lot so yet know, a lot of the fabrics,
Speaker 10: a lot of fabrics come out of China. We get
Speaker 10: the higher end fabrics out of out of South Korea,
Speaker 10: but a lot of the fabrics do come from China.
Speaker 10: And frankly, you know, even as a lot of the
Speaker 10: finished goods are coming moving out of China to other places,
Speaker 10: a lot of that fabric is still going to come
Speaker 10: from China. So it's you know, they do a lot
Speaker 10: there that is only done in that country. And could
Speaker 10: it eventually move, yes, but all this stuff takes a
Speaker 10: lot of time.
Speaker 4: So say, I am curious the fashion industry as a whole,
Speaker 4: what kind of you know, uh access do they have
Speaker 4: to the White House? And I'm just curious what they
Speaker 4: are hearing, getting time with and so and of just
Speaker 4: got about thirty seconds left.
Speaker 10: Yeah, I don't have any Yeah, I can tell you that,
Speaker 10: you know, I you know, I know there's like the
Speaker 10: c FDA which is putting out statements. I'm not sure
Speaker 10: what direct access they have. I think their industries is
Speaker 10: probably the White House cares a lot more about than
Speaker 10: the fashion industry, for for better or worse. But you know,
Speaker 10: I think there Wall Street probably has its eyes on
Speaker 10: much bigger things. But I can say from my seat
Speaker 10: it is it's a very interesting time for us, and
Speaker 10: I think everybody's just trying to make the most of it.
Speaker 1: Or just twenty So are you gonna have to lay
Speaker 1: anyone off? Do you think?
Speaker 10: I hope not. Yeah, No, I don't know. We'll see,
Speaker 10: We'll see what happens. It is, it's a very difficult time.
Speaker 10: There's complete uncertainty out there. There's complete uncertainty out there,
Speaker 10: so it's it's challenging.
Speaker 4: Well, you open up a window to really understanding kind
Speaker 4: of how things are made. I think we just take
Speaker 4: things for granted in terms of closing items. Kenna Torrey,
Speaker 4: thank you so much, president of the Notory Company. Joining
Speaker 4: us here in studio.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 2: live weekday afternoons from two to five pm Eastern. Listen
Speaker 2: on Apple CarPlay and the Android Auto with the Bloomberg
Speaker 2: Business app, or watch us live on YouTube.
Speaker 1: MUCA.
Speaker 8: I'll bet you let me drive.
Speaker 1: Oh no, no, no, no, this is not a toy.
Speaker 11: Who's gone to judge Honday?
Speaker 2: Please, I'll do the gravels wait, I want to drive.
Speaker 2: It's a good questions try.
Speaker 1: This is the drive to the close. Now plunks to music.
Speaker 2: We'll drive us Kilda Dawn on Bloomberg Radio.
Speaker 3: All right, TikTok, everybody.
Speaker 4: We've got just about eighteen minutes to go until we
Speaker 4: wrap up with the trading day and the trading week. Remember,
Speaker 4: of course it's a good Friday holiday, so a holiday
Speaker 4: shortened trading week, and we've been bouncing.
Speaker 1: Aroun Land market not even open right now, host it
Speaker 1: to close it.
Speaker 3: To early early right now.
Speaker 4: The Dow Jones industrial average, it is down about one
Speaker 4: percent as we speak. We know United Health has been
Speaker 4: a big drag amy just breaking that down for you
Speaker 4: as well. S and P five hundred just up about
Speaker 4: four tons of a percent. Nastek one call it flat,
Speaker 4: just up about six points.
Speaker 1: I did mention the bond market, so I do want
Speaker 1: to say we did see yields rise ever so slightly today,
Speaker 1: the tenure at four thirty two, four thirty three, we
Speaker 1: can round that up.
Speaker 4: It's been an interesting, mellow, wish kind of week. I
Speaker 4: mean really, although what we did see as a movement,
Speaker 4: I guess it wasn't.
Speaker 1: Yeah, it's all relative. It wasn't like what we saw
Speaker 1: last week, which was just wild in the week before.
Speaker 3: That fix is down about two and a half points.
Speaker 3: We're moving. We're trading around thirty.
Speaker 4: Okay, you know, just you know, remember it was just
Speaker 4: what last week that we were bopping up to sixty
Speaker 4: or so. That was on April seventh, So we've been
Speaker 4: moving our way down.
Speaker 3: Okay, look at that calming down ish?
Speaker 1: Yeah, well, I mean again, it's all relative.
Speaker 3: All right, Let's see what our guest has to say.
Speaker 1: Hey, I want to bring in Rayan Mitrioni. She's the
Speaker 1: founding partner in CFA at Callan Family Office. She joins
Speaker 1: us from West Palm Beach, Florida. Ryan, Good to have
Speaker 1: you with us. The firm's got about seven a half
Speaker 1: billion dollars in assets under management. You know it is
Speaker 1: a wild week. When Carol says this week has been calm,
Speaker 1: I should say a wild period of time. I wonder
Speaker 1: I want to know what the questions that you're getting
Speaker 1: from clients right now are, because we've been hearing a
Speaker 1: lot about people rethinking act allocations going more to Europe.
Speaker 1: What are you hearing?
Speaker 11: Absolutely? Thank you for having me, and it's it's true,
Speaker 11: this week has felt a little calmer, but it is
Speaker 11: all relative, very different than the last couple of years.
Speaker 11: But yeah, I mean, clients are are We're certainly having
Speaker 11: a lot of you know communication. I think that's the
Speaker 11: most important thing when you're in a period like this
Speaker 11: is staying close to clients, making sure they're feeling okay and.
Speaker 3: That are they feeling are they failing okay?
Speaker 5: It really depends.
Speaker 11: I mean, that's when it's about kind of reconfirming where
Speaker 11: risk tolerances are and that allocations are in line with
Speaker 11: where they should be because everyone has a high risk tolerance.
Speaker 11: When the market's going up right, it's a lot easier then.
Speaker 11: So it's like, how do you feel in this period?
Speaker 11: And a lot of the clients we work with are
Speaker 11: really ultra high net worth investors, so it's a little
Speaker 11: bit different.
Speaker 3: So do they say it, do you forget it? Or
Speaker 3: do they still are they kind of you know, do
Speaker 3: they call you and say what are you doing? Like
Speaker 3: should I be worried?
Speaker 8: Exactly?
Speaker 11: They still want to know that we're not just sitting
Speaker 11: on our hands and doing nothing when we're in a
Speaker 11: period like this, and we're not. I mean, we do
Speaker 11: think it's important to stay true to you know, long
Speaker 11: term strategic investment plans, you know, and not get caught
Speaker 11: up in the emotions of these kind of volatility. But
Speaker 11: we can do things like rebalance. I mean, we rebalanced
Speaker 11: a lot kind of coming into this year, pulling back
Speaker 11: on growth and rebalancing a little towards fixed income, towards value,
Speaker 11: rebalancing those exposures. And now we're kind of going a
Speaker 11: little bit incrementally in the other direction where we've nded
Speaker 11: up a little underweight equity targets on this fullback. So
Speaker 11: it gives us the opportunity to do that look at
Speaker 11: loss harvesting opportunities to help our clients offset their tax
Speaker 11: bills in other areas. So we are being active, and yes,
Speaker 11: we are certainly talking to them and telling them what
Speaker 11: we're doing as we're going through this period.
Speaker 8: Ran.
Speaker 1: Because you do work with such high net worth individuals,
Speaker 1: you describe them as ultra high net worth individuals. Do
Speaker 1: they have a higher allocation to alternatives?
Speaker 11: Yes, absolutely we do. When you know, you need to
Speaker 11: have a certain level of wealth to access some forms
Speaker 11: of alternatives, and so that is a big part of
Speaker 11: our investment philosophy and We do believe it's additive to
Speaker 11: returns over time that you get a premium over what
Speaker 11: you can do well.
Speaker 1: Alternative alternatives it's such a broad category, so you know,
Speaker 1: dig into that part of the asset allocation. When we
Speaker 1: talk alternatives, what do you think and are you thinking
Speaker 1: venture capital, private equity, hedge fund, private credit? What is it?
Speaker 1: All the above?
Speaker 11: So we are fully diversified with private capital gets so
Speaker 11: private equity all the way, you know, from from venture
Speaker 11: to buy out to all sorts of different areas.
Speaker 1: Directly invested or are you doing like funds.
Speaker 11: Of funds direct investments. In some cases we'll do you know,
Speaker 11: a secondary strategy that may be more fund of funds
Speaker 11: as part of the allocation, but we invest direct in
Speaker 11: individual strategies typically and we do that on in the
Speaker 11: private credit world. In private real estate, we do allocate
Speaker 11: to hedge funds, which have you know a lot of
Speaker 11: those with more defensive strategies or market neutral approaches have
Speaker 11: held up really well in this environment.
Speaker 3: So kind of across the spectrum, how.
Speaker 4: Are you thinking about the environment, and certainly the news
Speaker 4: flow out of Washington, the trade war. I hate to
Speaker 4: keep saying war, but I don't know that it's a
Speaker 4: trade war. It's just a back and forth of going
Speaker 4: to do this, going to do this, going to do this,
Speaker 4: and we're just watching very carefully.
Speaker 3: Market's definitely move, as you know on that news.
Speaker 4: But I am curious, are you expecting we get to
Speaker 4: the other side and things settle down and we go
Speaker 4: back to quote unquote normal for US equities and for
Speaker 4: the US business environment and the US macro economic environment,
Speaker 4: or are things going.
Speaker 3: To be different.
Speaker 11: We're hoping that we can at least get through this
Speaker 11: kind of whipsod back and forth headline driven just complete
Speaker 11: focus on tariff situation. I mean, what we're hearing is
Speaker 11: that negotiations are in process, and hopefully if we start
Speaker 11: to see some trade deals materialize over the next couple
Speaker 11: of months, hopefully that will help help the market restabilize,
Speaker 11: help the focus kind of shift back to let's see
Speaker 11: what are what's happening with company earnings, what's happening with
Speaker 11: other things, Like are we going to see like focus
Speaker 11: on tax cuts or extending the tax cuts, deregulation, things
Speaker 11: that would be more supportive to the narrative. I think this,
Speaker 11: you know, tariffs, it's going to be part of the
Speaker 11: conversation for a while. But we're hopeful that this kind
Speaker 11: of voluntility we've seen over the last few weeks will
Speaker 11: at least settle.
Speaker 4: Down your background. You've got a Bachelor of Science degree
Speaker 4: in psychology. You've got an MBA as well, but that
Speaker 4: degree in psychology, you know, Tim has cut brought up
Speaker 4: a lot. And you know, we think about sentiment a
Speaker 4: lot in the market, but that University of Michigan consumer
Speaker 4: sentiment number that was that plunged to nearly a three
Speaker 4: year low, and that.
Speaker 3: Was in the last week or so.
Speaker 4: Sentiment in the markets is does it feel healthy, does
Speaker 4: it feel nervous? And how are you? How concerned are you?
Speaker 4: Even the nervousness you're getting from some of your clients
Speaker 4: that that turns into actions and people saying, I want
Speaker 4: to pull back.
Speaker 3: I'm not comfortable.
Speaker 11: That's a very fair question. And we saw a sentiment
Speaker 11: surge following the election, and we've gone the complete opposite direction,
Speaker 11: and we've seen it both on the consumer side and
Speaker 11: the business side that it's just come down so much
Speaker 11: and it is in a concerning spot and that people
Speaker 11: are not feeling good right now. And when you're in
Speaker 11: that spot, then you're having people are spending less, businesses
Speaker 11: are holding off on making investments or doing any hiring,
Speaker 11: and you're kind of coming this in this period where
Speaker 11: we're just on hold and got it when you're not
Speaker 11: kind of a bad spot though, any kind of positive
Speaker 11: news or even halfwic positive news can really help market
Speaker 11: to move up. It's looking for a reason at this point.
Speaker 4: All right, going to leave it there, have a good weekend,
Speaker 4: Ryan Bittrioni. She's founding partner, Founder, Partner and CFA over
Speaker 4: at Callan Family Office. They've got about seven and a
Speaker 4: half billion in assets under management.
Speaker 2: This is the Bloomberg Business Podcast, available on Apple, Spotify,
Speaker 2: and anywhere else you get your podcasts. Listen live weekday
Speaker 2: afternoons from two to five pm Eastern on Bloomberg dot com,
Speaker 2: the iHeartRadio app, tune In, and the Bloomberg Business App.
Speaker 2: You can also watch us live every weekday on YouTube
Speaker 2: and always on the Bloomberg terminal.