WEBVTT - Bloomberg Surveillance TV: July 15th, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 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 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:35.840 Terminal and the Bloomberg Business App. 0:00:36.520 --> 0:00:37.760 It's time for some calm. 0:00:37.840 --> 0:00:40.360 Joining us now the seventy ninth Secretary of the Treasury, 0:00:40.680 --> 0:00:43.920 Skill Besson. Mister Secretary, welcome to the program sir. Let's 0:00:43.920 --> 0:00:46.280 pick up on that theme, not you calm in the markets, 0:00:46.320 --> 0:00:49.080 but on inflation and where rates should be. As Amori 0:00:49.120 --> 0:00:51.599 pointed out, we've had a string of softer th expected 0:00:51.640 --> 0:00:54.360 inflation reads in this country. We've had four, we might 0:00:54.400 --> 0:00:57.080 get five at a thirty Eastern time. Why do you 0:00:57.120 --> 0:00:59.160 believe that's signal and non noise? 0:01:00.720 --> 0:01:04.600 Well, I mean there's some persistence there, Jonathan. And look, 0:01:04.680 --> 0:01:08.559 I do have access to the number of the night before, 0:01:08.600 --> 0:01:10.840 but when I'm coming on TV. I don't look at it, 0:01:10.880 --> 0:01:12.520 so I don't know what the number is going to 0:01:12.560 --> 0:01:16.640 be at eight thirty, and I wouldn't. I don't know 0:01:16.680 --> 0:01:19.959 whether it's going to be down, up, or flat, but 0:01:20.080 --> 0:01:24.200 I wouldn't put too much emphasis on one number. I 0:01:24.520 --> 0:01:28.520 think it's the trend. And I think one thing that 0:01:28.800 --> 0:01:33.240 Wall Street, a lot of economist market in general got 0:01:33.240 --> 0:01:37.560 wrong early on was that tariffs were going to cause 0:01:37.720 --> 0:01:40.920 a substantial price level rise, which just hasn't happened. 0:01:41.120 --> 0:01:43.279 And there are some people on the FMC the Federal 0:01:43.280 --> 0:01:46.000 Reserve still worried about the prospect of that happening. Through 0:01:46.000 --> 0:01:48.600 the summer, We've all sensed the frustration from the White 0:01:48.600 --> 0:01:51.640 House across the administration with FED Chair J Powell, and 0:01:51.720 --> 0:01:53.240 a lot of confusion. I think at this point that 0:01:53.320 --> 0:01:56.440 maybe we can address in this conversation, is firing the 0:01:56.440 --> 0:02:00.280 Federal Reserve Chair under active consideration in the White in 0:02:00.320 --> 0:02:02.120 the Treasury in your administration. 0:02:03.360 --> 0:02:07.240 President Trump said numerous times he's not going to fire J. Powell. 0:02:07.640 --> 0:02:12.320 You know, he's working the refs. And I've said before 0:02:12.639 --> 0:02:15.040 I'm a basketball fan. There are two schools of working 0:02:15.040 --> 0:02:18.280 the refs. There's the Bobby Knight school, and there's the 0:02:18.560 --> 0:02:22.040 Dean Smith School. President Trump seems to prefer the Bobby 0:02:22.120 --> 0:02:24.839 Knight school. And I'll tell you, I went back over 0:02:24.880 --> 0:02:28.960 the weekend and looked, and Bobby Knight won three NCAA championships. 0:02:29.600 --> 0:02:31.320 My hero Dean Smith only won two. 0:02:31.960 --> 0:02:34.560 Then Seat Director Kevin Hassett, I'm not sure what you'd 0:02:34.560 --> 0:02:36.960 call him, but he was asked over the weekend, can 0:02:37.000 --> 0:02:39.280 the FED chair be fired? He said, that's the thing 0:02:39.760 --> 0:02:42.680 this being looked into. How should we understand those comments? 0:02:44.240 --> 0:02:49.679 Look? And I will point out Kevin was a collegiate 0:02:49.720 --> 0:02:55.799 basketball player. And I think, as President Trump said, he's 0:02:55.919 --> 0:03:00.720 not looking to fire Chair Powell. And as I've said, 0:03:00.880 --> 0:03:03.600 I'm not going to come. I'm not going to comment 0:03:03.720 --> 0:03:07.600 on future policy or future mistakes the federal make. I'll 0:03:07.600 --> 0:03:11.280 only comment on past mistakes. And look, they've had some 0:03:11.320 --> 0:03:14.600 big forecasting errors and this may be one. 0:03:14.680 --> 0:03:17.440 Now is there a reason for not firing Kim? And 0:03:17.480 --> 0:03:19.760 I asked that question because the presidents also said that 0:03:20.160 --> 0:03:22.720 his term is about to expire in May of next year. 0:03:22.840 --> 0:03:25.400 Is that the reason to ultimately just wait? Or is 0:03:25.440 --> 0:03:28.359 it something come? So you convinced by the negative consequences 0:03:28.360 --> 0:03:30.120 associates it with such a move. 0:03:31.280 --> 0:03:36.119 Look, I think an independent central bank is very important 0:03:36.240 --> 0:03:40.240 for the conduct of monetary policy, and we can see 0:03:40.280 --> 0:03:44.480 that in terms of both the financial markets, the term 0:03:44.600 --> 0:03:46.880 premium and longer term debt. 0:03:47.560 --> 0:03:50.560 You said previously the interview process would begin later on 0:03:50.600 --> 0:03:52.800 in the fall. There's been plenty of speculation as to 0:03:52.800 --> 0:03:55.640 whether that process would be brought forward, Missus Secretary, do 0:03:55.640 --> 0:03:58.320 you still, as far as you understand, believe that's when 0:03:58.360 --> 0:04:00.560 the interview process to replace the feed che will begin 0:04:00.640 --> 0:04:03.560 in the fall, or as a formal process already started. 0:04:04.360 --> 0:04:07.720 Well, look, there's a formal process that's already starting. There 0:04:07.760 --> 0:04:11.680 are a lot of great candidates, and we'll see how 0:04:12.000 --> 0:04:16.800 rapidly it progresses. It's President Trump's decision and it will 0:04:16.839 --> 0:04:18.680 move at his speed. 0:04:19.040 --> 0:04:21.760 Do you see any merits at all and selecting maybe 0:04:21.760 --> 0:04:24.760 a candidate that's already on the committee on the FMC 0:04:24.960 --> 0:04:27.920 versus taking a look at someone outside of the Federal Reserve. 0:04:29.320 --> 0:04:32.240 Again, there are a lot of good candidates inside and 0:04:32.320 --> 0:04:33.479 outside the Federal Reserve. 0:04:33.560 --> 0:04:37.360 Jonathan has the chairman himself the Fed shat Jake Paw, 0:04:37.520 --> 0:04:40.640 given you any indication whatsoever as to what he would 0:04:40.680 --> 0:04:44.120 do once his term has expired, WILLI f ak as 0:04:44.120 --> 0:04:45.680 the governor at the Federal Reserve. 0:04:46.800 --> 0:04:52.880 Well, traditionally the FED chair also steps down as a governor, 0:04:53.120 --> 0:04:55.919 and there's been a lot of talk of a shadow 0:04:56.040 --> 0:05:01.800 FED chair causing confusion in advance of his or her nomination, 0:05:02.080 --> 0:05:03.960 And I can tell you I think it'd be very 0:05:04.000 --> 0:05:07.359 confusing for the market for a former FED chair to 0:05:07.600 --> 0:05:08.560 stay on. 0:05:08.800 --> 0:05:12.080 Also, mister Treasury Secretary, I love to talk to you 0:05:12.120 --> 0:05:15.080 about what's going on in Video. This morning, Jensen Wang, 0:05:15.120 --> 0:05:18.200 the CEO, out in a blog statement saying that the 0:05:18.240 --> 0:05:21.480 company has quote provided an update to customers, noting that 0:05:21.520 --> 0:05:25.279 in Nvidia is finding applications to sell the H twenty 0:05:25.360 --> 0:05:29.000 GPU again. The US government has assured the company that 0:05:29.080 --> 0:05:31.800 licenses will be granted, and the video hopes to start 0:05:31.839 --> 0:05:32.760 deliveries soon. 0:05:33.520 --> 0:05:35.360 Can you attest whether that. 0:05:35.200 --> 0:05:37.680 That's true or not the United States is willing to 0:05:37.800 --> 0:05:41.400 let Nvidia sell H twenties once again in China? 0:05:41.480 --> 0:05:44.920 Well again, I emrie. I think that'd be a judgment 0:05:45.360 --> 0:05:52.880 that the Chinese indigenous manufacturers, namely Huawei and some others 0:05:53.000 --> 0:05:57.359 already have an equivalent chip. So if there's an equivalent chip, 0:05:57.520 --> 0:06:01.080 then the Nvidia H twenty could be sold because I 0:06:01.080 --> 0:06:03.960 can tell you the one thing that we do not 0:06:04.120 --> 0:06:10.440 want is a digital Belton road springing up around the 0:06:10.480 --> 0:06:17.360 world because other countries or China are substituting for our 0:06:17.400 --> 0:06:19.000 American chip manufacturers. 0:06:19.560 --> 0:06:22.360 This is the same chip though, that the Trump administration 0:06:22.640 --> 0:06:26.599 blocked with export controls in April. So why the change 0:06:26.600 --> 0:06:27.880 in policy now. 0:06:29.480 --> 0:06:34.960 Emery, you might say that that was a negotiating chip 0:06:35.040 --> 0:06:38.159 that we used in Geneva and in London. 0:06:39.040 --> 0:06:41.080 So this was part of the trade talks when it 0:06:41.080 --> 0:06:42.600 comes to Washington and Beijing. 0:06:43.440 --> 0:06:46.120 Yes, was it a quid pro quo then. 0:06:46.760 --> 0:06:49.400 As you said, it wasn't, But was it potentially to 0:06:49.480 --> 0:06:51.599 make sure that you can get the licenses when it 0:06:51.640 --> 0:06:53.400 comes to rare earths. 0:06:54.000 --> 0:06:57.680 I think it was all part of a mosaic. They 0:06:57.760 --> 0:07:00.839 had things we wanted, we have things they wanted, and 0:07:01.200 --> 0:07:03.920 we're in a very good place. I expect to meet 0:07:03.960 --> 0:07:08.000 my Chinese counterpart, the vice premiere, in the next few weeks. 0:07:08.520 --> 0:07:12.080 So when and where will that meeting take place. 0:07:13.680 --> 0:07:17.040 We're still working on that. The Chinese leadership has a 0:07:17.080 --> 0:07:20.600 big conclave at the beginning of August, so we're trying 0:07:20.640 --> 0:07:23.119 to work out whether that could be in a third 0:07:23.120 --> 0:07:25.480 country before or after that conclave. 0:07:25.880 --> 0:07:29.800 Well, the administration released the framework of the Geneva and 0:07:29.920 --> 0:07:31.880 London talks. 0:07:31.960 --> 0:07:36.720 Well, we have released some of it, and I'll tell 0:07:36.760 --> 0:07:43.640 you that now having settled on tariffs on the export controls, 0:07:43.960 --> 0:07:46.640 we can move on to the next stage of talks. 0:07:46.760 --> 0:07:50.600 And I think it's very important both for the global economy, 0:07:50.600 --> 0:07:54.200 for the US economy and for the Chinese economy, for 0:07:54.960 --> 0:07:59.560 US to move on and talk about China opening its 0:07:59.640 --> 0:08:04.800 market and the increase domestic and consumer production. 0:08:04.920 --> 0:08:05.200 There. 0:08:05.640 --> 0:08:08.120 Are you hoping to get to that next phase before 0:08:08.280 --> 0:08:13.240 August twelfth, when that's currently the day taunt between these 0:08:13.280 --> 0:08:14.080 two economies. 0:08:15.240 --> 0:08:18.560 Yeah, Look, I think we're in a very good place. 0:08:18.720 --> 0:08:23.520 And I tell market participants not to worry about August twelfth. 0:08:23.680 --> 0:08:26.200 Should they worry about what's happening with Europe with respect 0:08:26.240 --> 0:08:28.640 to thirty percent teriff rate? They don't seem to be worrying. 0:08:28.640 --> 0:08:31.040 But I'm just curious whether that's the final rate or 0:08:31.080 --> 0:08:34.120 whether the letter was part of a negotiation that Europe 0:08:34.400 --> 0:08:35.720 received from President Trump. 0:08:37.120 --> 0:08:40.720 Well, Lisa, you know what I would say is President 0:08:40.760 --> 0:08:43.960 Trump's able to create a lot of leverage here, a 0:08:44.000 --> 0:08:48.760 lot of leverage because he's indifferent. He's indifferent whether we 0:08:48.920 --> 0:08:52.880 take in the thirty percent rate or whether the Europeans 0:08:52.920 --> 0:08:56.240 come to us with a much better deal. As I've 0:08:56.280 --> 0:09:01.400 been saying for a while that if countries or trading 0:09:01.440 --> 0:09:04.679 blocks don't come with their best deals, then the rates 0:09:04.720 --> 0:09:10.360 could boomerang back. So President Trump's leading this, And what 0:09:10.400 --> 0:09:13.280 I will tell you is that a lot of the deals, 0:09:13.360 --> 0:09:16.840 and this is where his leadership has been invaluable. A 0:09:16.880 --> 0:09:19.439 lot of the deals that I thought were excellent deals 0:09:19.679 --> 0:09:22.720 keep getting improved upon every time he takes up the 0:09:22.760 --> 0:09:24.160 maximum pressure strategy. 0:09:24.400 --> 0:09:26.840 There is a theory in markets, and you don't even 0:09:26.920 --> 0:09:27.720 have to calm them. 0:09:27.760 --> 0:09:28.640 They're pretty calm. 0:09:28.720 --> 0:09:31.240 They're watching all of these rates and they're not freaking 0:09:31.240 --> 0:09:35.040 out in parlance on Wall Street. They're taking this in stride. 0:09:35.240 --> 0:09:37.360 We're close to all time highs, if not at all 0:09:37.400 --> 0:09:39.720 time highs. Do you see this as giving a green 0:09:39.800 --> 0:09:42.400 light to Trump? To President Trump to keep going, to 0:09:42.679 --> 0:09:45.680 take hardline approaches and to keep trying to get better 0:09:45.720 --> 0:09:46.440 and better deals. 0:09:47.720 --> 0:09:52.400 Look, I think this narrative of this subsessive focus on 0:09:52.440 --> 0:09:56.120 the market isn't right. President Trump views this as a 0:09:56.280 --> 0:10:01.600 generational opportunity to reset trade in a fair and sound 0:10:01.840 --> 0:10:07.800 manner for the American people. So the idea that some 0:10:07.920 --> 0:10:11.480 market ups or downs are going to be the deciding 0:10:11.520 --> 0:10:17.440 factor here. What we are concerned about, and President Trump 0:10:17.559 --> 0:10:21.520 is laser focused on, is getting the best deals because 0:10:22.720 --> 0:10:28.880 we were not having fair trade and now we're seeing 0:10:29.360 --> 0:10:33.000 with these countries coming to the table, the quality of 0:10:33.000 --> 0:10:35.439 the deals gets better and better. So we're not going 0:10:35.480 --> 0:10:38.680 to rush just because of some market deadline. Now. I 0:10:38.720 --> 0:10:42.200 think what the market's seeing is market's willing to look 0:10:42.240 --> 0:10:46.240 forward three, six, twelve months and this is going to 0:10:46.240 --> 0:10:48.000 be good for the US, is going to be good 0:10:48.000 --> 0:10:49.080 for the global economy. 0:10:49.360 --> 0:10:51.120 If you do get some sort of signal from the 0:10:51.160 --> 0:10:52.840 market though that this isn't going to be good for 0:10:52.840 --> 0:10:55.240 the US economy, Is there a trigger point? Is there 0:10:55.280 --> 0:10:57.560 sort of a sense at which it acts as a 0:10:57.559 --> 0:10:59.840 gut check and sort of pulls back some of them 0:10:59.880 --> 0:11:01.079 to negotiating tactics. 0:11:02.440 --> 0:11:05.480 Look, I think that the market understands what we're doing. 0:11:05.480 --> 0:11:11.440 Sometimes individual market people don't. Sometimes the television personalities don't. 0:11:11.480 --> 0:11:15.440 But good thing about President Trump is he always tells 0:11:15.480 --> 0:11:17.600 you what he wants and what he wants this fair 0:11:17.640 --> 0:11:18.120 trade here. 0:11:18.480 --> 0:11:20.560 I won't take that as a slight on me and 0:11:20.600 --> 0:11:23.920 my colleagues around the table, mister Treasury Secretary, But you 0:11:24.160 --> 0:11:27.160 did tell me on April second, on Liberation Day, that 0:11:27.240 --> 0:11:30.000 this was the ceiling when it comes to those rates. 0:11:30.040 --> 0:11:33.800 But since then we have actually had some tariff rates 0:11:33.840 --> 0:11:37.320 the President announced in letters higher than those rates he 0:11:37.400 --> 0:11:40.640 announced on that big chart on April second. So is 0:11:40.679 --> 0:11:43.880 there no longer a ceiling when it comes to tariff rates? 0:11:44.120 --> 0:11:45.960 When you are dealing with trading partners. 0:11:47.240 --> 0:11:51.800 I think that I said, if they come and they 0:11:52.000 --> 0:11:56.040 negotiate in good faith in those are ceilings. And some 0:11:56.120 --> 0:12:00.000 of the talks got off to very slow starts. 0:12:00.360 --> 0:12:03.080 So who's negotiating good faith at this moment? Who's not? 0:12:04.960 --> 0:12:09.600 Again? I congratulated the UK the other day, as I 0:12:09.679 --> 0:12:12.520 told many of our trading partners, and Anne Marie I 0:12:12.559 --> 0:12:14.840 may have said on that day or a few days 0:12:14.880 --> 0:12:18.520 after April second, I'd advise countries to move quickly because 0:12:18.559 --> 0:12:21.520 the President Trump the first deals are usually the best deals, 0:12:22.240 --> 0:12:26.000 and the UK came in early, they got a great deal, 0:12:26.520 --> 0:12:30.080 and everybody else is kind of dragging right now. 0:12:30.160 --> 0:12:32.760 Well, when it comes to Japan, you're headed there at 0:12:32.800 --> 0:12:34.520 the end of this week, do you expect to come 0:12:34.520 --> 0:12:35.240 back with a deal. 0:12:36.240 --> 0:12:40.480 I'm going to Japan to represent the United States government 0:12:40.480 --> 0:12:45.000 and the American people at the International Expo, which we 0:12:45.160 --> 0:12:47.559 used to know as the World's Fairs. So this coming 0:12:47.600 --> 0:12:50.440 Saturday is going to be America's Day and I'll be 0:12:50.559 --> 0:12:55.360 taking a delegation includes the Labor Secretary, Deputy Secretary of 0:12:55.480 --> 0:12:59.880 State will be representing the US. So this is a 0:13:00.200 --> 0:13:02.359 celebration of the US more than trade. 0:13:02.080 --> 0:13:03.280 Talks, MISSUS Secretary. 0:13:03.280 --> 0:13:05.679 Before you go, just to final question, I'm embarrassed to 0:13:05.720 --> 0:13:08.160 say that my knowledge of college basketball is nothing like yours, 0:13:08.160 --> 0:13:09.520 but I can tell you back in the nineties in 0:13:09.559 --> 0:13:12.679 English football, there used to be a concept of player managers. 0:13:12.920 --> 0:13:15.320 There used to be certain managers of football teams that 0:13:15.400 --> 0:13:18.480 also put themselves on the field, and they play too effectively. 0:13:18.520 --> 0:13:19.400 They had two jobs. 0:13:19.800 --> 0:13:22.840 And I'm wondering, from your perspective, whether that's something you'd 0:13:22.880 --> 0:13:23.480 be interested in. 0:13:23.600 --> 0:13:25.120 We've seen that throughout the administration. 0:13:25.240 --> 0:13:27.680 Is that something you think that you could pursue both 0:13:27.720 --> 0:13:30.120 the Treasury Secretary and the Fed chap. 0:13:31.400 --> 0:13:34.679 Look, I think I have the best job in town. 0:13:35.400 --> 0:13:38.600 I will do what President Trump wants. We got a 0:13:38.600 --> 0:13:43.920 lot of great fed candidates, and I'm confident it's going 0:13:43.960 --> 0:13:45.520 to be a robot process. 0:13:45.600 --> 0:13:49.800 Jonathan has he asked you, what's that? Has he asked you? 0:13:50.080 --> 0:13:51.240 Are you part of the process. 0:13:52.800 --> 0:13:55.559 I am part of the decision making process, but again 0:13:55.679 --> 0:13:58.440 it's the final decision is going to be President Trump's. 0:13:58.640 --> 0:14:02.080 Mister Secretary. I appreciate time. Thank you, the Treasury Secretary. 0:14:02.080 --> 0:14:04.640 There scale beston on a range of issues, including trade 0:14:04.960 --> 0:14:17.559 and the future of this Federal Reserve. Inflation data too 0:14:17.720 --> 0:14:20.520 at eight thirty Eastern time, about an hour away joining 0:14:20.600 --> 0:14:23.040 us now as Sarah Hunt of Alpine Saxon words, Sarah 0:14:23.120 --> 0:14:23.840 and Mornic. 0:14:23.600 --> 0:14:24.040 Good morning. 0:14:24.200 --> 0:14:25.000 Is inflation dead? 0:14:26.520 --> 0:14:29.000 I think it's quiet at the moment, but I wouldn't 0:14:29.000 --> 0:14:31.320 completely rule it out. I think that there's some possibilities 0:14:31.320 --> 0:14:32.920 that it could pick its head up. But I think 0:14:32.920 --> 0:14:35.200 that it's hard for people to anticipate data when we 0:14:35.200 --> 0:14:36.960 spend a whole lot of time anticipating a bunch of 0:14:36.960 --> 0:14:38.960 stuff that didn't happen. So I think there's a little 0:14:39.000 --> 0:14:41.000 bit of fatigue there. So it's hard to say right now. 0:14:41.040 --> 0:14:43.560 It's difficult to forecast. There's still some debate over the data. 0:14:43.560 --> 0:14:46.880 We've already had, what's underpinning the softer than expected reads 0:14:46.880 --> 0:14:48.440 and why won't it last? 0:14:48.600 --> 0:14:51.640 So if we think about whether or not companies did 0:14:52.000 --> 0:14:54.640 pull a huge full of inventory forward and or people 0:14:54.640 --> 0:14:56.880 started changing their behavior because they knew what was coming, 0:14:57.200 --> 0:14:59.640 you can argue why that's soft now and why it 0:14:59.680 --> 0:15:02.640 should rise if the rates are going higher. But you 0:15:02.880 --> 0:15:05.560 still see these moving of the goalposts in terms of timing, 0:15:05.680 --> 0:15:08.200 which allows companies to bring inventories back in again and 0:15:08.240 --> 0:15:11.360 refresh that. So I could see a lot of bumpiness 0:15:11.360 --> 0:15:13.000 in the data. And I also think that companies have 0:15:13.040 --> 0:15:14.760 had a lot of time to prepare for this. And 0:15:14.840 --> 0:15:16.840 if I'm sitting there, I want my margins to stay 0:15:16.880 --> 0:15:18.160 where they are, so I'm going to try to do 0:15:18.200 --> 0:15:20.680 whatever substituting i can. So I also think that there's 0:15:20.720 --> 0:15:23.800 probably a lack of understanding how much of that substitution 0:15:23.920 --> 0:15:26.440 has gone on, and I think that that is why 0:15:26.480 --> 0:15:29.760 it could be bumpier and less dramatically higher than people 0:15:29.840 --> 0:15:32.160 are expecting because they're expecting a really fast move. 0:15:32.280 --> 0:15:35.760 I just wonder, can we expect immaculate disinflation ongoing immaculate 0:15:35.760 --> 0:15:38.520 disinflation where there is no pain in the overall economy 0:15:38.640 --> 0:15:41.280 at the same time that inflation is dead. Does that 0:15:41.320 --> 0:15:43.280 seem consistent with you or is there kind of a 0:15:43.360 --> 0:15:46.880 tension right now between employment data that's pretty okay, albeit 0:15:47.000 --> 0:15:51.240 with very slow activity, and inflation that seems to be maybe, 0:15:51.280 --> 0:15:52.640 if not dead in hospice. 0:15:54.000 --> 0:15:56.720 It is one of those periods of time wherein figuring 0:15:56.720 --> 0:15:58.720 out what that data means is going to be tricky. 0:15:58.800 --> 0:16:01.240 It remains tricky. The earnings are going to matter for 0:16:01.280 --> 0:16:04.160 the stock market. Inflation's going to matter to some degree, 0:16:04.360 --> 0:16:06.960 but only if it's really surprising or gets much higher 0:16:06.960 --> 0:16:09.520 than people are looking for, and then people start to 0:16:09.560 --> 0:16:11.840 investors really start to worry. The question is what are 0:16:11.880 --> 0:16:14.640 those trends look like. I mean, to Treasury Secretary Vessin's point, 0:16:14.800 --> 0:16:16.560 it's not just about one number. It's about where the 0:16:16.600 --> 0:16:18.600 trend is going. If it looks like the trend is reversing, 0:16:19.000 --> 0:16:20.720 investors are going to like that a whole lot less. 0:16:20.840 --> 0:16:22.680 Do you just not pay attention to the data at all? 0:16:22.720 --> 0:16:25.680 And by ai Biden video and just you know, call 0:16:25.720 --> 0:16:26.280 it a day. 0:16:26.280 --> 0:16:28.040 It would have been the good trade for this year, right. 0:16:28.080 --> 0:16:30.040 I mean, that's sort of what happened, is that you 0:16:30.040 --> 0:16:32.760 had alldes concern about II going into the beginning of 0:16:32.800 --> 0:16:35.360 the year. Then you had the trade situation. Everybody started 0:16:35.400 --> 0:16:37.800 looking at every single earnings call from Microsoft or every 0:16:37.840 --> 0:16:40.400 hyperscaler to parse exactly what they're spending was going to be. 0:16:40.520 --> 0:16:41.400 There was this little bit of. 0:16:41.320 --> 0:16:43.200 Freak out and then everybody got over it really quickly. 0:16:43.440 --> 0:16:45.800 So that would have been that reversal, and that goes 0:16:45.840 --> 0:16:47.880 back to the idea that the companies that have growth 0:16:47.920 --> 0:16:49.520 and the companies that generate a ton of cash and 0:16:49.560 --> 0:16:51.560 have good margins are the places that they end up 0:16:51.600 --> 0:16:53.000 performing better than the rest of the market. 0:16:53.040 --> 0:16:54.560 Anyway, it would have been good to get in on 0:16:54.720 --> 0:16:56.880 Nvidia just last night, given the fact that they have 0:16:56.880 --> 0:16:59.160 a blog post out saying that those eight twenty chips 0:16:59.160 --> 0:17:01.960 at this administration and blocked are now going to be 0:17:01.960 --> 0:17:03.040 able to go to China. 0:17:03.520 --> 0:17:04.000 How do you. 0:17:04.040 --> 0:17:08.040 Deal with this basically flip flop almost within weeks or 0:17:08.119 --> 0:17:11.119 months of this administration when you're trying to direct what 0:17:11.280 --> 0:17:12.399 to do in a portfolio. 0:17:13.119 --> 0:17:15.919 Well, I mean, flip flop is an interesting term. I 0:17:15.920 --> 0:17:20.320 think it's more about I mean, again to Treasury point, 0:17:20.560 --> 0:17:23.760 it's changing those dynamics may have been part of that 0:17:23.800 --> 0:17:26.280 discussion all along. So you have to assume that some 0:17:26.359 --> 0:17:28.320 of the things that are coming out as X or 0:17:28.480 --> 0:17:31.159 Y maybe x or Y under certain circumstances. But if 0:17:31.160 --> 0:17:32.879 I change my mind, they're going to be different. So 0:17:32.920 --> 0:17:34.720 that's got to be And I don't think that that's 0:17:34.920 --> 0:17:38.280 entirely different from things that the way the world works anyway, 0:17:38.320 --> 0:17:40.760 but I think that certainly in the near term, this 0:17:40.880 --> 0:17:44.560 administration has been much different about market changes than other administrations. 0:17:44.560 --> 0:17:47.600 It's not just in Nvidia, it's AMD, just Crossing resuming 0:17:47.640 --> 0:17:51.280 ship chip shipments to China, wants their license clears that 0:17:51.400 --> 0:17:53.040 stock is off in the free market as well. 0:17:53.160 --> 0:17:55.679 Look, China's a big business for all of these chip providers, 0:17:55.760 --> 0:17:58.000 and the key question is can they understand the rules 0:17:58.000 --> 0:18:00.720 of the game enough to create chips that are compliant 0:18:00.880 --> 0:18:02.639 with some of the constraints that have been put on 0:18:02.680 --> 0:18:04.000 them from the US government. 0:18:04.119 --> 0:18:06.560 Sarah, it's good to see you, Sarah Hunt, Vampoint, Snacks 0:18:06.640 --> 0:18:18.600 and Woods. I want to bring a NILT data of 0:18:18.640 --> 0:18:22.200 Renaissance Macro Neil. Welcome to the program, sir. That's not four, 0:18:22.359 --> 0:18:24.960 it's five. Why is that signal and not noise? 0:18:27.080 --> 0:18:31.200 Well, I mean I think look, we're obviously tariff revenues 0:18:31.240 --> 0:18:36.160 are going up, right, and the effective tariff rate is rising. 0:18:36.440 --> 0:18:40.639 That was the case in June. And despite that, inflation 0:18:41.400 --> 0:18:46.760 missed expectations. So that means that I mean tariff's increased costs. 0:18:47.200 --> 0:18:50.560 We all know that who ends up bearing the cost 0:18:50.720 --> 0:18:55.280 is where the debate is. And you know, I think 0:18:55.320 --> 0:18:57.840 at the margin, this probably reflects more of a margin 0:18:57.920 --> 0:19:00.480 squeeze than anything else. It's not like prices for core 0:19:00.520 --> 0:19:04.679 goods aren't going up. They are, but you have you know, 0:19:04.720 --> 0:19:06.480 I mean, I was just looking at the data. You 0:19:06.520 --> 0:19:10.760 see big increases in appliances, you see big increases in 0:19:11.480 --> 0:19:16.160 all sorts of household furnishing and supplies. But it's also 0:19:16.280 --> 0:19:20.520 important to remember that service sector inflation. Service sector prices 0:19:20.560 --> 0:19:24.720 represents the lion's share of what people spend their money on, 0:19:24.800 --> 0:19:27.520 and prices in those areas continue to go down. You know, 0:19:27.600 --> 0:19:31.040 ultimately it's going to come down to nominal dollars spent, right, 0:19:31.119 --> 0:19:33.119 So to the extent that people shift more of their 0:19:33.160 --> 0:19:36.080 household budgets towards goods because the prices of those things 0:19:36.119 --> 0:19:40.480 are going up, they'll have less leftover to spend elsewhere, 0:19:40.920 --> 0:19:43.960 and that means that services are at risk and that's 0:19:43.960 --> 0:19:47.000 why they'll ultimately see the prices for those things coming down. 0:19:47.040 --> 0:19:49.760 So that to me seems to be what's going on. 0:19:50.320 --> 0:19:54.439 The nominal anchor isn't changing to tariffs are resulting in 0:19:54.440 --> 0:19:58.760 a relative price shift that's pushing up the prices for 0:19:58.840 --> 0:20:01.680 consumer goods. That is clear if you look at the data. 0:20:01.680 --> 0:20:04.439 That's obvious. Look at just look at household furnishings in 0:20:04.560 --> 0:20:10.200 the latest report. But services are providing an important offset. 0:20:10.320 --> 0:20:12.280 No is that a good enough reason for two FED 0:20:12.320 --> 0:20:14.800 governors on the FMC later on this month to shake 0:20:14.880 --> 0:20:17.240 their hand up and say, I think we should count rights. 0:20:19.720 --> 0:20:21.919 I mean, I don't think they'll be as noisy about 0:20:21.920 --> 0:20:26.760 it in July, only because you know, the last employment 0:20:26.840 --> 0:20:29.680 report gave them some colm, right, because the unemployment rate 0:20:29.720 --> 0:20:32.439 went down. But you know, ultimately, you know, for me, 0:20:32.520 --> 0:20:35.800 it's about you know, what is nominal income doing. When 0:20:35.840 --> 0:20:39.080 you take like the sum product of jobs, hours and 0:20:39.119 --> 0:20:41.280 earnings and you look at it over the last several months, 0:20:41.320 --> 0:20:44.800 it doesn't look particularly encouraging. At the same time, you've 0:20:44.840 --> 0:20:48.920 seen the work week decline, particularly in the areas that 0:20:49.040 --> 0:20:53.080 are seeing the most robust jobs growth, like education and health. Right, 0:20:53.119 --> 0:20:55.280 So if you start to see jobs in those areas 0:20:55.320 --> 0:21:00.800 slow down what's left, So you know, I still continue 0:21:00.800 --> 0:21:03.520 to have like concerns about the job market over the summer, 0:21:04.119 --> 0:21:07.199 but that just reinforces this weakness and nomenal income that 0:21:07.280 --> 0:21:10.880 we've seen. So ultimately, you know, it all comes down 0:21:10.960 --> 0:21:14.840 to like the household budget constraint and to the extent 0:21:16.040 --> 0:21:19.560 that prices arising in one area, that means that quantity 0:21:19.600 --> 0:21:21.080 is going to go down in other areas. 0:21:21.200 --> 0:21:23.000 So Neil, just to sort of sum up what you've 0:21:23.040 --> 0:21:24.919