1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:35,840 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. 10 00:00:36,280 --> 00:00:39,680 Speaker 1: Stephanie Rothawolf Research is still with us. Stephanie, your take 11 00:00:39,800 --> 00:00:41,000 Speaker 1: on what we're looking at right here? 12 00:00:41,440 --> 00:00:43,360 Speaker 3: I think the thing to remember is this is a 13 00:00:43,400 --> 00:00:45,800 Speaker 3: period of time that was kind of peak uncertainty for 14 00:00:46,000 --> 00:00:49,680 Speaker 3: the economy given the tariff headwinds. So now looking ahead, 15 00:00:49,880 --> 00:00:52,000 Speaker 3: we should anticipate that payroll gains are going to remain 16 00:00:52,040 --> 00:00:54,160 Speaker 3: fairly solid throughout the course of this year. Now they're 17 00:00:54,200 --> 00:00:57,040 Speaker 3: going to slow down given the immigration trend, but we 18 00:00:57,040 --> 00:01:00,000 Speaker 3: shouldn't expect an environment where the uneployment rate is rising 19 00:01:00,120 --> 00:01:02,800 Speaker 3: significantly and we're in a real layoff situation. We should 20 00:01:02,800 --> 00:01:05,959 Speaker 3: expect a steady slow down in the pace of hiring 21 00:01:06,040 --> 00:01:08,319 Speaker 3: just because immigration is gonna be a big headwind, but 22 00:01:08,360 --> 00:01:09,360 Speaker 3: the economy is gonna. 23 00:01:09,120 --> 00:01:11,600 Speaker 4: Be largely okay, what kind of impact will immigration have? 24 00:01:11,959 --> 00:01:12,920 Speaker 5: Pretty significant? 25 00:01:12,959 --> 00:01:15,399 Speaker 3: So, by the way, this is not getting enough attention. 26 00:01:15,560 --> 00:01:18,600 Speaker 3: But last week the Supreme Court rule that they can 27 00:01:18,319 --> 00:01:21,760 Speaker 3: they can terminate five hundred and thirty thousand visas from 28 00:01:21,800 --> 00:01:24,840 Speaker 3: people from Cuba, Haiti, Nicaragua, Venezuela effectively overnight. 29 00:01:25,280 --> 00:01:26,360 Speaker 5: So this is likely going to. 30 00:01:26,319 --> 00:01:28,559 Speaker 3: Show over the next couple of months as companies really 31 00:01:28,560 --> 00:01:30,840 Speaker 3: realize they have to check visas. But we're gonna we're 32 00:01:30,840 --> 00:01:34,840 Speaker 3: gonna see notable headwind bringing the steady state trended PAYOS 33 00:01:34,840 --> 00:01:37,559 Speaker 3: growth below one hundred thousand. But what we're learning today 34 00:01:37,640 --> 00:01:40,640 Speaker 3: is that might be in an underlying economy that's still fine. 35 00:01:40,680 --> 00:01:42,280 Speaker 5: And what is that due to the unemployment rate? 36 00:01:42,600 --> 00:01:45,320 Speaker 3: It brings it down by a couple by a couple 37 00:01:45,319 --> 00:01:45,800 Speaker 3: of tents. 38 00:01:46,000 --> 00:01:48,640 Speaker 4: So how challenging is that for the Fed to cut. 39 00:01:48,720 --> 00:01:50,600 Speaker 3: They can, it's gonna be a difficult one. If we're 40 00:01:50,600 --> 00:01:53,640 Speaker 3: in an environment where steady state PAYOS growth is running 41 00:01:53,680 --> 00:01:56,680 Speaker 3: call an eighty thousand, and the unemployment rate is steady 42 00:01:56,720 --> 00:01:59,200 Speaker 3: to lower and by the way inflation is running it 43 00:01:59,440 --> 00:02:01,560 Speaker 3: close to three eight percent, they can't do anything. 44 00:02:01,560 --> 00:02:03,160 Speaker 5: They're going to have to just sit and wait it out. 45 00:02:03,440 --> 00:02:05,680 Speaker 3: And why would they if the economy is just running 46 00:02:05,760 --> 00:02:08,600 Speaker 3: kind of fine and the inflation is still risk of 47 00:02:09,440 --> 00:02:11,120 Speaker 3: certainly running notably above their target. 48 00:02:11,320 --> 00:02:15,000 Speaker 1: There's a real question about how much the actual employment 49 00:02:15,080 --> 00:02:17,920 Speaker 1: rate and the payrolls figure is a leading indicator or 50 00:02:17,919 --> 00:02:21,600 Speaker 1: a liking indicator. There has been a belief that companies 51 00:02:21,680 --> 00:02:25,280 Speaker 1: will hold on before firing employees for a much longer 52 00:02:25,320 --> 00:02:29,240 Speaker 1: period of time, especially since the pandemic. At what point 53 00:02:29,480 --> 00:02:31,960 Speaker 1: is this the last thing that's going to fall apart 54 00:02:32,000 --> 00:02:35,240 Speaker 1: as we see other ramifications to the economy and other sectors. 55 00:02:35,320 --> 00:02:37,400 Speaker 3: Yes, so we need to keep an eynprofit margins, and 56 00:02:37,440 --> 00:02:40,400 Speaker 3: the idea here is effectively how much costs can these 57 00:02:40,440 --> 00:02:42,680 Speaker 3: companies push through when it comes to tariffs. So if 58 00:02:42,680 --> 00:02:45,360 Speaker 3: we're in an environment where consumer inflation is actually running 59 00:02:45,360 --> 00:02:48,079 Speaker 3: close to that three percent in a way, that could 60 00:02:48,080 --> 00:02:49,919 Speaker 3: be an okay thing, because that means you're not really 61 00:02:49,960 --> 00:02:53,200 Speaker 3: feeling the burden from a company perspective. Consumers can probably 62 00:02:53,200 --> 00:02:56,079 Speaker 3: handle a little bit of goods inflation and they're not 63 00:02:56,120 --> 00:02:58,200 Speaker 3: going to have to do layoffs because the companies are 64 00:02:58,200 --> 00:02:59,640 Speaker 3: able to pass through a lot of that cost. 65 00:03:00,000 --> 00:03:01,840 Speaker 1: And this ultimately goes down to the question for the 66 00:03:01,880 --> 00:03:04,680 Speaker 1: FED as well. If you do have companies that are 67 00:03:04,720 --> 00:03:07,520 Speaker 1: absorbing more of it and not passing along the cost 68 00:03:07,680 --> 00:03:11,960 Speaker 1: as much, it also would be more disinflationary or less 69 00:03:11,960 --> 00:03:14,520 Speaker 1: inflationary than otherwise, and it would give them the ability 70 00:03:14,560 --> 00:03:18,519 Speaker 1: to cut rates into what is, by all other measures, 71 00:03:18,680 --> 00:03:20,960 Speaker 1: a softening market. So at what point is that going 72 00:03:21,000 --> 00:03:22,480 Speaker 1: to be the base case at a time where you're 73 00:03:22,480 --> 00:03:24,520 Speaker 1: looking at two rate cuts still fully priced into the 74 00:03:24,560 --> 00:03:26,040 Speaker 1: market by the end of this year. 75 00:03:26,360 --> 00:03:29,200 Speaker 3: Yeah, I'm surprised that the market is still looking for 76 00:03:29,560 --> 00:03:31,680 Speaker 3: two cuts at this point. It's probably just sort of 77 00:03:31,720 --> 00:03:33,960 Speaker 3: the average of all outcomes, right, There's still the chance 78 00:03:33,960 --> 00:03:36,240 Speaker 3: that the economy tips into recession as a result. I 79 00:03:36,240 --> 00:03:38,920 Speaker 3: would say, if you survey a lot of investors, they're 80 00:03:38,960 --> 00:03:42,200 Speaker 3: expecting call it one to two cuts. But I think 81 00:03:42,280 --> 00:03:45,760 Speaker 3: the direction of travel here will be in an environment 82 00:03:45,800 --> 00:03:47,480 Speaker 3: where the FED in the market are going to start 83 00:03:47,480 --> 00:03:50,640 Speaker 3: to price in zero cuts for this year. Maybe towards 84 00:03:50,680 --> 00:03:53,000 Speaker 3: the back half of twenty twenty six. They can cut 85 00:03:53,040 --> 00:03:56,120 Speaker 3: one or two more times, but we're sort of running 86 00:03:56,120 --> 00:03:56,520 Speaker 3: out of time. 87 00:03:56,720 --> 00:03:58,960 Speaker 1: Why is that given the fact that the economy clearly 88 00:03:59,040 --> 00:04:01,280 Speaker 1: is weakening to a lot of different metrics. 89 00:04:01,640 --> 00:04:04,320 Speaker 3: Well, it's weakening because we got hit over the head 90 00:04:04,320 --> 00:04:06,920 Speaker 3: with a tariff headwind and a ton of uncertainty. But 91 00:04:07,080 --> 00:04:10,280 Speaker 3: now the uncertainty is likely to defade to some extent. 92 00:04:10,320 --> 00:04:12,840 Speaker 3: Now we understand this whole taco concept, which is silly, 93 00:04:12,880 --> 00:04:16,280 Speaker 3: but like, it's true that Trump doesn't seem to want 94 00:04:16,279 --> 00:04:19,280 Speaker 3: to intentionally tip the economy into recession. So companies can 95 00:04:19,320 --> 00:04:21,960 Speaker 3: feel better about investing investing in this environment they know 96 00:04:22,320 --> 00:04:25,239 Speaker 3: there's less likely of a chance that the economy actually 97 00:04:25,440 --> 00:04:27,599 Speaker 3: goes south, in which case, all right, my business is 98 00:04:27,640 --> 00:04:29,440 Speaker 3: doing okay. Now I just have to continue to invest 99 00:04:29,440 --> 00:04:29,760 Speaker 3: and grow. 100 00:04:29,839 --> 00:04:33,279 Speaker 1: Our intrepid economics correspondent has been parsing over the data, 101 00:04:33,440 --> 00:04:36,880 Speaker 1: Sephanie Roth of wool Free Search, sticking with us Michael McKee, Oh, 102 00:04:36,920 --> 00:04:38,440 Speaker 1: what do you see as you parse through the data? 103 00:04:38,880 --> 00:04:43,400 Speaker 6: Well, intrepidly looking through the data, we see that basically 104 00:04:43,560 --> 00:04:47,240 Speaker 6: it's as kind of forecasts. Manufacturing jobs were down by 105 00:04:47,560 --> 00:04:51,320 Speaker 6: eight thousand primary metals. We check that out, the steel 106 00:04:51,360 --> 00:04:55,799 Speaker 6: mills one point three thousand, one three hundred additional jobs 107 00:04:55,960 --> 00:04:59,960 Speaker 6: and fabricated metals, same numbers, so no impact from tariffs there. 108 00:05:00,279 --> 00:05:04,799 Speaker 6: Construction up by four Retail jobs fell off by six thousand, 109 00:05:04,960 --> 00:05:08,560 Speaker 6: five hundred, warehouses and couriers. People were looking at that 110 00:05:08,680 --> 00:05:11,919 Speaker 6: because of the idea of pulling forward orders, and we 111 00:05:12,000 --> 00:05:18,279 Speaker 6: do see slight increases in the couriers six five hundred, 112 00:05:18,480 --> 00:05:22,360 Speaker 6: a drop of fivey one hundred in warehousing. Government though 113 00:05:22,440 --> 00:05:26,080 Speaker 6: interesting number from the federal government down twenty two thousand. 114 00:05:26,680 --> 00:05:29,120 Speaker 6: Of course, we have to double check and make sure 115 00:05:29,200 --> 00:05:33,560 Speaker 6: that's not the US Postal Service, which mostly is. But 116 00:05:33,680 --> 00:05:38,480 Speaker 6: federal government accept the postal service down fifteen point eight thousands, 117 00:05:38,480 --> 00:05:41,760 Speaker 6: so we're starting to see some doge cuts there. The 118 00:05:42,240 --> 00:05:45,880 Speaker 6: three digit unemployment rates four point two four four. That 119 00:05:46,080 --> 00:05:49,080 Speaker 6: is up a little bit from four point one eighty seven, 120 00:05:49,160 --> 00:05:53,560 Speaker 6: but not worth even worrying about at this point. The 121 00:05:53,600 --> 00:05:57,120 Speaker 6: reason it looks like unemployment not changed very much is 122 00:05:57,160 --> 00:06:00,440 Speaker 6: the number of employed falls by six hundred ninety six thousand. 123 00:06:00,520 --> 00:06:03,560 Speaker 6: The number of unemployed rises by only seventy one thousand, 124 00:06:03,560 --> 00:06:06,239 Speaker 6: but the labor force falls by six hundred and twenty 125 00:06:06,240 --> 00:06:08,960 Speaker 6: five thousand. That may be the story of this report. 126 00:06:09,240 --> 00:06:12,279 Speaker 6: As immigration gets halted at the border, the labor force 127 00:06:12,320 --> 00:06:16,240 Speaker 6: if that continues to shrink, will hold down any changes 128 00:06:16,320 --> 00:06:17,880 Speaker 6: in the unemployment rate for a while. 129 00:06:17,960 --> 00:06:21,440 Speaker 1: Yeah, to Stephanie Ross's point, the idea of just generally 130 00:06:21,600 --> 00:06:25,839 Speaker 1: lower numbers as the immigration trends really shift. Michael mckayth, 131 00:06:25,839 --> 00:06:28,560 Speaker 1: thank you as always joining us now as Jeff Rosenberg 132 00:06:28,600 --> 00:06:31,080 Speaker 1: of Blackrock. Jeff, we take a look at this report. 133 00:06:31,200 --> 00:06:33,520 Speaker 1: Nothing to see here. Markets are taking it in stride, 134 00:06:33,560 --> 00:06:34,880 Speaker 1: albeit with a little bit of a lift at the 135 00:06:34,920 --> 00:06:37,440 Speaker 1: front end of the yield curve. What's your big takeaway 136 00:06:37,640 --> 00:06:41,200 Speaker 1: as you do see numbers tempering but not exactly falling off. 137 00:06:41,080 --> 00:06:45,600 Speaker 7: Cliff, Yeah, I think the big takeaway is slowing but 138 00:06:45,800 --> 00:06:48,320 Speaker 7: still a strong labor market. And I think that's why 139 00:06:48,320 --> 00:06:50,640 Speaker 7: you're seeing a little bit of the bond market reaction here, 140 00:06:51,040 --> 00:06:53,520 Speaker 7: pricing out a bit of that expectations in terms of 141 00:06:53,520 --> 00:06:56,440 Speaker 7: the FED. But it's pretty close to expectations, a little 142 00:06:56,440 --> 00:06:57,359 Speaker 7: bit on the high side. 143 00:06:57,400 --> 00:06:59,320 Speaker 5: I think the wage number is kind of the most 144 00:06:59,320 --> 00:07:00,159 Speaker 5: interesting thing. 145 00:07:00,680 --> 00:07:03,359 Speaker 7: Doesn't seem to be affected by the wage week, so 146 00:07:03,720 --> 00:07:05,920 Speaker 7: you know, this is part of the strength coming into it. 147 00:07:06,120 --> 00:07:08,680 Speaker 7: But I smiled when you asked the question to Stephanie, 148 00:07:08,839 --> 00:07:11,040 Speaker 7: you know what is really the forward looking out look 149 00:07:11,040 --> 00:07:14,040 Speaker 7: here for labor markets. They'll come a point where we'll 150 00:07:14,080 --> 00:07:16,920 Speaker 7: talk about labor markets and this labor market report, and 151 00:07:16,960 --> 00:07:19,840 Speaker 7: it will be validating a trend that we may be 152 00:07:19,960 --> 00:07:22,200 Speaker 7: concerned about and that will be told to us first 153 00:07:22,240 --> 00:07:24,080 Speaker 7: by what's going on with profit margins. 154 00:07:24,280 --> 00:07:25,840 Speaker 5: Absolutely agree with that point. 155 00:07:26,000 --> 00:07:30,160 Speaker 7: It's really the pausing point that we're at here with 156 00:07:30,240 --> 00:07:36,000 Speaker 7: this market report not really moving us either confirming the 157 00:07:36,040 --> 00:07:38,120 Speaker 7: concerns that we had a month and a half ago 158 00:07:38,280 --> 00:07:43,480 Speaker 7: around a recession or validating the response in financial markets 159 00:07:43,520 --> 00:07:46,400 Speaker 7: that you know, the peak of uncertainty is over. I 160 00:07:46,400 --> 00:07:50,200 Speaker 7: think we're still in that uncertainty environment and the data 161 00:07:50,360 --> 00:07:53,200 Speaker 7: still that we need to validate whether or not which 162 00:07:53,240 --> 00:07:57,000 Speaker 7: way that economy is going to go is still in 163 00:07:57,000 --> 00:07:58,800 Speaker 7: front of us. So this is a little bit backward 164 00:07:58,840 --> 00:08:03,000 Speaker 7: looking bagging. To answer your earlier question to Stephanie. 165 00:08:03,200 --> 00:08:05,720 Speaker 3: So, Jeff, let's say we're sitting here in a couple 166 00:08:05,760 --> 00:08:07,880 Speaker 3: of months and yeah, maybe payroll's growth are still slowing 167 00:08:07,880 --> 00:08:11,960 Speaker 3: but holding in somewhat. Okay, what would be the driving factor? 168 00:08:12,000 --> 00:08:14,040 Speaker 3: Is it the reconciliation bill? Is it that tariffs are 169 00:08:14,080 --> 00:08:16,200 Speaker 3: having less of an impact? What's the upside story to 170 00:08:16,240 --> 00:08:17,200 Speaker 3: the economy here. 171 00:08:18,240 --> 00:08:20,640 Speaker 7: Yeah, And I think it's what you were highlighting before 172 00:08:20,840 --> 00:08:24,160 Speaker 7: about whether or not this is the peak. Uncertainty is 173 00:08:24,240 --> 00:08:28,840 Speaker 7: behind us and its impact on decision making is not 174 00:08:28,960 --> 00:08:31,960 Speaker 7: as greatly, not as great as we might have feared 175 00:08:32,600 --> 00:08:35,120 Speaker 7: in the middle of April. And so I think that's 176 00:08:35,160 --> 00:08:38,559 Speaker 7: really the determination is what impact does all this uncertainty, 177 00:08:38,720 --> 00:08:41,920 Speaker 7: which I think we still have. We haven't resolved a 178 00:08:41,960 --> 00:08:44,520 Speaker 7: lot of that uncertainty. We could debate that point, but 179 00:08:44,600 --> 00:08:47,040 Speaker 7: really it comes down to what do we think about 180 00:08:47,080 --> 00:08:47,800 Speaker 7: the uncertainty? 181 00:08:47,960 --> 00:08:50,000 Speaker 5: But what do we do about the uncertainty? 182 00:08:50,200 --> 00:08:54,079 Speaker 7: Do we press ahead and just make decisions, make investments, 183 00:08:54,240 --> 00:08:57,840 Speaker 7: hiring as if nothing had happened, or is there a 184 00:08:57,920 --> 00:09:01,720 Speaker 7: cooling effect on all of those decisions, whether they're on 185 00:09:01,760 --> 00:09:04,640 Speaker 7: the business side or on the consumption side. 186 00:09:04,800 --> 00:09:06,600 Speaker 5: That's what's going to drive that economy. 187 00:09:06,640 --> 00:09:11,000 Speaker 7: It's going to drive the you know, the consumption side 188 00:09:11,840 --> 00:09:16,120 Speaker 7: in terms of demand, and it's gonna drive business confidence 189 00:09:16,160 --> 00:09:19,559 Speaker 7: in terms of what we see in terms of investment. 190 00:09:20,200 --> 00:09:21,719 Speaker 7: And that's I think what the narrative is going to 191 00:09:21,800 --> 00:09:24,040 Speaker 7: be two three, four months from now. 192 00:09:24,160 --> 00:09:26,800 Speaker 4: Well, do you think the business community will just keep 193 00:09:26,840 --> 00:09:29,280 Speaker 4: treading water? How do you make those decisions. I mean, 194 00:09:29,320 --> 00:09:32,679 Speaker 4: just moments ago, Peter Navarro, a trade aid to President Trump, 195 00:09:32,720 --> 00:09:35,480 Speaker 4: is telling reporters that the China MEANE is expected in 196 00:09:35,520 --> 00:09:38,200 Speaker 4: seven days, So in a week's time we could be 197 00:09:38,280 --> 00:09:40,000 Speaker 4: dealt with a fresh blow of uncertainty. 198 00:09:40,080 --> 00:09:44,320 Speaker 7: Jeff, Yeah, I think the honest answer is we just 199 00:09:44,360 --> 00:09:47,800 Speaker 7: don't know because the new data that's coming out, whether 200 00:09:47,880 --> 00:09:50,520 Speaker 7: it's the challenges from the legal perspective, whether it's the 201 00:09:50,640 --> 00:09:54,120 Speaker 7: change in terms of the negotiations, what is actually in 202 00:09:54,160 --> 00:09:58,440 Speaker 7: those negotiations in terms of how much they relieve the uncertainty. 203 00:09:59,160 --> 00:10:01,560 Speaker 7: We just don't know, And I think there is a 204 00:10:01,600 --> 00:10:05,439 Speaker 7: cooling effect in the interim. It doesn't show up because 205 00:10:05,480 --> 00:10:07,640 Speaker 7: the data is still lagged, so it'll show up in 206 00:10:07,679 --> 00:10:12,480 Speaker 7: the next couple of months. So I just think we 207 00:10:12,520 --> 00:10:16,240 Speaker 7: don't quite know on the trade impact given. 208 00:10:16,040 --> 00:10:17,959 Speaker 4: The lag Do you think then the FED is going 209 00:10:18,040 --> 00:10:20,880 Speaker 4: to be behind the curve? I mean Elon Musk, an 210 00:10:20,920 --> 00:10:23,600 Speaker 4: insider who's now on the outs, was saying yesterday that 211 00:10:23,640 --> 00:10:25,880 Speaker 4: Trump's tarers will mean a recession the second half of 212 00:10:25,880 --> 00:10:26,200 Speaker 4: the year. 213 00:10:28,200 --> 00:10:28,360 Speaker 1: You know. 214 00:10:28,400 --> 00:10:30,760 Speaker 7: I think the FED has been very clear in their 215 00:10:30,800 --> 00:10:34,679 Speaker 7: communications that the headline is weight and see and that 216 00:10:34,720 --> 00:10:37,559 Speaker 7: the economy is in a good enough position where they 217 00:10:37,559 --> 00:10:40,480 Speaker 7: can adopt that approach. I think if there's one thing 218 00:10:40,520 --> 00:10:43,440 Speaker 7: to this report today, it kind of validates that approach. 219 00:10:43,720 --> 00:10:43,840 Speaker 1: Right. 220 00:10:43,880 --> 00:10:46,320 Speaker 7: We're not seeing an aggressive move in terms of the 221 00:10:46,360 --> 00:10:50,199 Speaker 7: slowdown impact and hiring in the economy. We're not seeing 222 00:10:50,400 --> 00:10:52,880 Speaker 7: a huge acceleration. I do you think there's some strength, 223 00:10:53,400 --> 00:10:56,680 Speaker 7: some lingering strength there in wages, but not enough to 224 00:10:56,760 --> 00:10:59,440 Speaker 7: really press on the inflationary concerns. 225 00:11:00,160 --> 00:11:01,640 Speaker 5: And so the Fed's in a good spot here to 226 00:11:01,679 --> 00:11:05,439 Speaker 5: wait and see. Will they be lagged? Yes, This is kind. 227 00:11:05,320 --> 00:11:10,319 Speaker 7: Of the impact of moving from forecast dependence to data 228 00:11:10,320 --> 00:11:13,080 Speaker 7: dependence is that the FED has to be reactive, and 229 00:11:13,120 --> 00:11:15,680 Speaker 7: so they'll be lagged. The issue for the markets will be, 230 00:11:16,000 --> 00:11:19,280 Speaker 7: you know, will they aggressively catch up if they are indeed, 231 00:11:20,000 --> 00:11:22,480 Speaker 7: you know, behind the curve. In the event that the 232 00:11:22,520 --> 00:11:25,720 Speaker 7: trade and tariff uncertainty, you know, leads to a bigger slowdown, 233 00:11:25,800 --> 00:11:27,599 Speaker 7: then they're going to have to get more aggressive. 234 00:11:27,800 --> 00:11:30,040 Speaker 5: That's not priced in to the bond market. 235 00:11:29,880 --> 00:11:31,560 Speaker 7: As we were talking about, it's only one to two 236 00:11:31,600 --> 00:11:35,200 Speaker 7: cuts because it's not yet showing up in the data. 237 00:11:35,280 --> 00:11:35,480 Speaker 8: You know. 238 00:11:35,760 --> 00:11:37,360 Speaker 1: I want to take a step back and talk about 239 00:11:37,400 --> 00:11:40,600 Speaker 1: what you and Stephanie both brought up that this labor 240 00:11:40,640 --> 00:11:44,719 Speaker 1: market information isn't necessarily going to be as tradable as 241 00:11:44,760 --> 00:11:47,160 Speaker 1: some of the earnings data that we get with respect 242 00:11:47,160 --> 00:11:49,679 Speaker 1: to profit margins, and I wonder if there's something of 243 00:11:49,720 --> 00:11:52,520 Speaker 1: a paradigm shift where we were so data dependent and 244 00:11:52,640 --> 00:11:55,240 Speaker 1: every economic indicator that came out for the past couple 245 00:11:55,280 --> 00:11:59,240 Speaker 1: of years was a huge tradable moment that was going 246 00:11:59,280 --> 00:12:01,280 Speaker 1: to give some sort of insight into what the Fed 247 00:12:01,320 --> 00:12:01,679 Speaker 1: would do. 248 00:12:02,160 --> 00:12:03,240 Speaker 5: Is that era over? 249 00:12:03,480 --> 00:12:06,320 Speaker 1: And are we now earnings dependent, not necessarily when it 250 00:12:06,320 --> 00:12:09,120 Speaker 1: comes to figuring out how much money they're making, but 251 00:12:09,400 --> 00:12:12,680 Speaker 1: what companies are doing with what we're hearing about in 252 00:12:12,720 --> 00:12:15,880 Speaker 1: the mess in real time in a way that this 253 00:12:16,000 --> 00:12:17,520 Speaker 1: data cannot tell us anymore. 254 00:12:17,600 --> 00:12:21,400 Speaker 5: Jeff, Yeah, you know. I mean there's a long. 255 00:12:21,280 --> 00:12:24,320 Speaker 7: History to the payroll report in terms of moving the 256 00:12:24,360 --> 00:12:25,200 Speaker 7: bond market. 257 00:12:25,520 --> 00:12:27,640 Speaker 5: You know, has it lost some of its efficacy? 258 00:12:27,720 --> 00:12:29,560 Speaker 7: I mean, certainly, you know, we've come out of this 259 00:12:29,679 --> 00:12:34,640 Speaker 7: period where inflation has been the bigger driver. Clearly that 260 00:12:34,720 --> 00:12:36,520 Speaker 7: has been the story of the last couple of years, 261 00:12:36,559 --> 00:12:39,440 Speaker 7: and so the payroll report isn't really the kind of 262 00:12:39,440 --> 00:12:42,960 Speaker 7: pre eminent data release on inflation. It has an important 263 00:12:42,960 --> 00:12:45,880 Speaker 7: component with regards to to wages and wage inflation. 264 00:12:45,960 --> 00:12:47,560 Speaker 5: As it was just highlighting, you know. 265 00:12:47,559 --> 00:12:50,320 Speaker 7: When you think about kind of the demand side shocks 266 00:12:50,400 --> 00:12:53,959 Speaker 7: that we typically associate with recessions, the payroll report can 267 00:12:54,000 --> 00:12:59,160 Speaker 7: be you know, more confirmative on those trends and solidify 268 00:12:59,320 --> 00:13:02,240 Speaker 7: the expectations for the FED. That's where the linkage is 269 00:13:02,280 --> 00:13:04,480 Speaker 7: and the importance to the bond market comes from. But 270 00:13:04,559 --> 00:13:07,000 Speaker 7: when the issues are more supply side, and we can 271 00:13:07,080 --> 00:13:09,640 Speaker 7: kind of think of tariffs and the tariff shock as 272 00:13:09,679 --> 00:13:11,920 Speaker 7: more of a supply side, it has both elements of 273 00:13:11,960 --> 00:13:14,079 Speaker 7: the supply side and demand side. But when you think 274 00:13:14,080 --> 00:13:17,280 Speaker 7: about economic shocks driving financial markets that are more from 275 00:13:17,320 --> 00:13:19,680 Speaker 7: the supply side, yes, the labor markets kind of lose 276 00:13:19,760 --> 00:13:23,800 Speaker 7: their primacy of being kind of the pre eminent data 277 00:13:23,840 --> 00:13:24,800 Speaker 7: release that we focus on. 278 00:13:24,920 --> 00:13:27,800 Speaker 1: Jeff Rosenberger, Blackrock, thank you as always for being with us. 279 00:13:38,080 --> 00:13:40,000 Speaker 5: Dan Ives of wood Bush writing. 280 00:13:40,000 --> 00:13:42,480 Speaker 1: This view does not change our bullish view of TESLA 281 00:13:42,600 --> 00:13:45,559 Speaker 1: and the autonomous view, but clearly does put a fly 282 00:13:45,679 --> 00:13:48,600 Speaker 1: on the ointment of the Trump regulatory framework going forward. 283 00:13:48,679 --> 00:13:49,320 Speaker 5: Dan joins us. 284 00:13:49,320 --> 00:13:51,439 Speaker 1: Now, Dan, great to see you, greed to be here, 285 00:13:51,559 --> 00:13:53,240 Speaker 1: very curious to hear what you have to say about this, 286 00:13:53,440 --> 00:13:56,120 Speaker 1: the fact that you do not change your bullish outlook 287 00:13:56,160 --> 00:13:59,320 Speaker 1: on Tesla, even though it seems like there is a 288 00:13:59,520 --> 00:14:03,280 Speaker 1: massive key Man risk. Please explain how you dismiss that. 289 00:14:03,400 --> 00:14:05,679 Speaker 9: Look, I mean, this is a its friend. It's like 290 00:14:05,720 --> 00:14:08,360 Speaker 9: a Frenemi is in junior high school. That's essentially going 291 00:14:08,400 --> 00:14:09,520 Speaker 9: on between Trump and Musk. 292 00:14:09,600 --> 00:14:12,040 Speaker 1: We're billionaires and leaders of massive empires. 293 00:14:12,360 --> 00:14:15,480 Speaker 9: And Look, the reality is that our view is that 294 00:14:15,760 --> 00:14:19,440 Speaker 9: this is something where the friendship it doesn't end. In 295 00:14:19,440 --> 00:14:22,680 Speaker 9: other words, I still believe that this will be resolved 296 00:14:22,720 --> 00:14:25,040 Speaker 9: potential by the end of the day, by the weekend. 297 00:14:25,400 --> 00:14:29,640 Speaker 9: And it's not our view that this changes the regulatory landscape. 298 00:14:30,040 --> 00:14:32,520 Speaker 9: Four Musk when it comes to autonomous and the. 299 00:14:32,480 --> 00:14:35,680 Speaker 1: Broader vision, How do we even talk about the fundamental backdrop? 300 00:14:35,760 --> 00:14:35,960 Speaker 9: Though? 301 00:14:36,200 --> 00:14:39,040 Speaker 1: When you have a war of words whip sawing this 302 00:14:39,120 --> 00:14:41,640 Speaker 1: company by more than one hundred and fifty billion dollars 303 00:14:41,640 --> 00:14:45,400 Speaker 1: of market capitalization, does that introduce a risk that a 304 00:14:45,440 --> 00:14:47,720 Speaker 1: lot of institutions just won't take. 305 00:14:48,200 --> 00:14:50,240 Speaker 9: Look, but we always start and we've turn on the 306 00:14:50,240 --> 00:14:54,000 Speaker 9: ship for decades. It comes down like with Tesla, that's 307 00:14:54,040 --> 00:14:56,400 Speaker 9: the reality. I mean, you're going to have the volatility, 308 00:14:56,440 --> 00:14:58,800 Speaker 9: it's part of what we've seen with Musk. But in 309 00:14:58,840 --> 00:15:01,200 Speaker 9: our view is that you have I have to see 310 00:15:01,280 --> 00:15:04,200 Speaker 9: through the noise, understand the autonomous vision. 311 00:15:04,320 --> 00:15:04,760 Speaker 5: It's r V. 312 00:15:04,840 --> 00:15:07,040 Speaker 9: Ultimately, Waimo's at the kids table when it comes to 313 00:15:07,120 --> 00:15:11,280 Speaker 9: autonomous and the AI future. And look this is it's 314 00:15:11,400 --> 00:15:14,200 Speaker 9: Rod Serling. It's an episode out of the Twilight Zone yesterday. 315 00:15:14,200 --> 00:15:17,480 Speaker 9: I mean, in my opinion, in all my years covering Tesla, 316 00:15:17,880 --> 00:15:21,080 Speaker 9: it might win the prize top three, maybe top one 317 00:15:21,360 --> 00:15:23,160 Speaker 9: for one of the strangers days that I've ever seen. 318 00:15:23,440 --> 00:15:25,960 Speaker 4: So last year Elon mus said, take away the subsidies. 319 00:15:26,000 --> 00:15:27,080 Speaker 4: It only helped Tesla. 320 00:15:27,240 --> 00:15:28,360 Speaker 5: Why does he or. 321 00:15:28,640 --> 00:15:31,120 Speaker 4: Based on reporting out of the Speaker Johnson, out of 322 00:15:31,160 --> 00:15:33,800 Speaker 4: President Trump, why has there been this reversal from him 323 00:15:33,880 --> 00:15:35,080 Speaker 4: regarding the eed subsidies. 324 00:15:35,120 --> 00:15:36,440 Speaker 5: He's no longer in the White House. 325 00:15:36,520 --> 00:15:38,760 Speaker 9: I mean, you've talked about it. It comes down to 326 00:15:38,840 --> 00:15:41,680 Speaker 9: like he's now trying to distance himself for a few reasons. 327 00:15:41,760 --> 00:15:44,800 Speaker 5: One that would hurt Tesla not as. 328 00:15:44,800 --> 00:15:46,920 Speaker 9: Much as the others in terms of Detroit Big Three. 329 00:15:47,400 --> 00:15:49,480 Speaker 5: But then you also look at what's happening here. 330 00:15:49,520 --> 00:15:52,600 Speaker 9: I believe there's some poker going on as well that 331 00:15:52,760 --> 00:15:56,360 Speaker 9: he's trying to distance himself from Trump because of China, 332 00:15:56,440 --> 00:15:58,440 Speaker 9: because he also needs to play nice in the sandbox 333 00:15:58,520 --> 00:16:01,400 Speaker 9: in Beijing with in that we see as given the 334 00:16:01,520 --> 00:16:03,760 Speaker 9: China market raw material is how. 335 00:16:03,760 --> 00:16:05,520 Speaker 5: Important that is from a demand perspective. 336 00:16:05,840 --> 00:16:08,880 Speaker 9: He's trying to be sure that I think balances and 337 00:16:09,280 --> 00:16:11,240 Speaker 9: for a Musk, even though some of it could come 338 00:16:11,320 --> 00:16:13,720 Speaker 9: out sort of spur of the moment, I do believe 339 00:16:13,840 --> 00:16:15,520 Speaker 9: potential there's a longer game here. 340 00:16:15,760 --> 00:16:18,520 Speaker 4: Is he rebranding for a midterm election where most people 341 00:16:18,560 --> 00:16:20,720 Speaker 4: think the Republicans are going to get absolute shellacking. 342 00:16:21,200 --> 00:16:23,360 Speaker 9: Well, look in the reality is is that That's why 343 00:16:23,440 --> 00:16:25,800 Speaker 9: in d C. I mean, you know, if you're a 344 00:16:25,880 --> 00:16:28,440 Speaker 9: hater or whatever, a Musk he is going to be 345 00:16:28,520 --> 00:16:31,080 Speaker 9: a huge player. And that's why for all parties. That's 346 00:16:31,120 --> 00:16:33,160 Speaker 9: why White House, you know, it seems trying to put 347 00:16:33,200 --> 00:16:36,560 Speaker 9: together this phone call because no one's a winner, Trump 348 00:16:36,960 --> 00:16:39,200 Speaker 9: or Musk in this front of me his battle. I 349 00:16:39,240 --> 00:16:41,400 Speaker 9: think it's two kids in the sandbox. I do think 350 00:16:41,440 --> 00:16:43,680 Speaker 9: the play date will be back on at one point. 351 00:16:44,200 --> 00:16:47,000 Speaker 9: It's just going through definitely some little tension here. 352 00:16:47,080 --> 00:16:50,840 Speaker 1: Wait, you're actually suggesting something that's pretty important that there 353 00:16:51,120 --> 00:16:55,720 Speaker 1: is an aspect of deliberateness to this by Elon Musk 354 00:16:55,920 --> 00:16:59,440 Speaker 1: to revive the brand around Tesla, to try to paint 355 00:16:59,520 --> 00:17:02,560 Speaker 1: it with a less maga type of brush after a 356 00:17:02,640 --> 00:17:04,960 Speaker 1: lot of blowback and a lot of falloff in sales, 357 00:17:05,040 --> 00:17:08,680 Speaker 1: particularly outside of the United States. Do you really think 358 00:17:09,040 --> 00:17:12,480 Speaker 1: that actually this is a vocal way of his distancing 359 00:17:12,600 --> 00:17:15,520 Speaker 1: himself and that he can get back in good with 360 00:17:15,680 --> 00:17:18,040 Speaker 1: President Trump. But this is an effort to revive a 361 00:17:18,119 --> 00:17:20,640 Speaker 1: brand that suffered a black eye, just like Elon Musk. 362 00:17:20,680 --> 00:17:22,960 Speaker 9: Look, I think there's some of that potentially at play, 363 00:17:23,080 --> 00:17:25,080 Speaker 9: but you don't burn the house down just so you 364 00:17:25,119 --> 00:17:27,440 Speaker 9: can meet the firefighters. I mean, the point is you 365 00:17:27,600 --> 00:17:30,120 Speaker 9: need to navigate this situation very carefully. 366 00:17:30,560 --> 00:17:33,240 Speaker 5: You need Trump as a friend, not a foe. 367 00:17:33,680 --> 00:17:36,000 Speaker 9: And that's why Tessa down so much, is because if 368 00:17:36,000 --> 00:17:38,480 Speaker 9: you're on the regulatory it's going to be a green 369 00:17:38,560 --> 00:17:42,200 Speaker 9: light when it comes to autonomous and especially Tesla, and 370 00:17:42,280 --> 00:17:44,920 Speaker 9: I view is a huge advantage there. You can say, 371 00:17:44,920 --> 00:17:48,960 Speaker 9: way mow Little as well. You don't need Trump now 372 00:17:49,400 --> 00:17:52,359 Speaker 9: as an enemy, you need him as a friend. Hopefully 373 00:17:52,440 --> 00:17:54,960 Speaker 9: by the end of the day the candlehight dinners back on. 374 00:17:55,560 --> 00:18:00,560 Speaker 9: I just do not believe that these friends become enemies again. 375 00:18:00,680 --> 00:18:03,520 Speaker 9: It's a frend of me's junior high school situation between two, 376 00:18:03,640 --> 00:18:05,400 Speaker 9: as we know, a very stubborn individual. 377 00:18:05,520 --> 00:18:08,320 Speaker 1: Let's say in episode six they still haven't gotten back together. 378 00:18:08,440 --> 00:18:10,760 Speaker 1: Do you change your view and become more bearished on Tesla. 379 00:18:10,920 --> 00:18:13,840 Speaker 9: Look, if this continues to continue to play out longer 380 00:18:13,920 --> 00:18:14,880 Speaker 9: and longer term. 381 00:18:14,880 --> 00:18:16,440 Speaker 5: Obviously that would be a huge negative. 382 00:18:16,840 --> 00:18:19,600 Speaker 9: But my view just say junior high school, they will 383 00:18:19,680 --> 00:18:23,480 Speaker 9: get back together as friends, but it's going to take 384 00:18:23,560 --> 00:18:26,320 Speaker 9: some intermediaries. That's why the White House, there's a lot 385 00:18:26,359 --> 00:18:28,159 Speaker 9: in DC on the Republican Party and everywhere. 386 00:18:28,280 --> 00:18:30,160 Speaker 4: Well, the distance is already there, and there's some things 387 00:18:30,200 --> 00:18:34,040 Speaker 4: that happened yesterday that potentially the White House are really 388 00:18:34,119 --> 00:18:36,719 Speaker 4: upset with and maybe are going to create a lot 389 00:18:36,760 --> 00:18:39,560 Speaker 4: of tension for a long term, even if they start 390 00:18:39,600 --> 00:18:40,520 Speaker 4: playing a little bit nicer. 391 00:18:40,800 --> 00:18:42,280 Speaker 5: Is this an opportunity potentially for. 392 00:18:42,400 --> 00:18:45,560 Speaker 4: China to use BYD We can see BYD cars made 393 00:18:45,600 --> 00:18:46,520 Speaker 4: in the United States. 394 00:18:46,680 --> 00:18:49,080 Speaker 9: Look, I think this is just a broader game of 395 00:18:49,200 --> 00:18:53,120 Speaker 9: poker going on, and Musk and Trump are key players 396 00:18:53,359 --> 00:18:55,720 Speaker 9: at that poker bakra on table. Whatever you want to 397 00:18:55,760 --> 00:18:59,440 Speaker 9: think about it, China definitely is watching this carefully because 398 00:18:59,480 --> 00:19:03,040 Speaker 9: also remember or musk Is, I'd say, along with Cook, 399 00:19:03,080 --> 00:19:07,000 Speaker 9: I mean to know the China market better. They also 400 00:19:07,040 --> 00:19:09,639 Speaker 9: play nice in Beijing as well, So there is some 401 00:19:09,840 --> 00:19:12,800 Speaker 9: bounds going on here. But look, must we want him 402 00:19:12,840 --> 00:19:16,280 Speaker 9: to distance himself from Trump still be a friend. It's 403 00:19:16,359 --> 00:19:19,639 Speaker 9: been a very strange few weeks, a few months, and 404 00:19:19,720 --> 00:19:22,480 Speaker 9: obviously twenty four hours. But I do believe by the 405 00:19:22,640 --> 00:19:25,399 Speaker 9: end of the day and going into the weekend, I 406 00:19:25,520 --> 00:19:27,840 Speaker 9: don't expect this to get work. I do believe this 407 00:19:27,960 --> 00:19:30,399 Speaker 9: will start to be cooler. Heads prevailed, and that's why 408 00:19:30,480 --> 00:19:33,200 Speaker 9: Tessa stock will be up there. I think Tessa is 409 00:19:33,440 --> 00:19:37,560 Speaker 9: way over sold. Like, unless you think draconian, this goes 410 00:19:37,600 --> 00:19:40,159 Speaker 9: into like a dark period to me, I think we 411 00:19:40,320 --> 00:19:41,440 Speaker 9: view this as an opportunity. 412 00:19:41,920 --> 00:19:46,320 Speaker 10: So Dan, let's get back to the American consumer for 413 00:19:46,440 --> 00:19:49,080 Speaker 10: a second. So what I hear you saying is you're 414 00:19:49,119 --> 00:19:51,960 Speaker 10: assuming that Elon is not going to form a third 415 00:19:52,000 --> 00:19:54,680 Speaker 10: political party, which I think we can all say we're 416 00:19:54,880 --> 00:20:01,560 Speaker 10: relieved about. Has what's happened caused a measure of irreversible damage? 417 00:20:01,640 --> 00:20:04,320 Speaker 10: And if not, how long is this going to take 418 00:20:04,840 --> 00:20:09,000 Speaker 10: for the American consumer to disentangle Hammer herself from the 419 00:20:09,080 --> 00:20:09,920 Speaker 10: politics of all. 420 00:20:10,000 --> 00:20:12,680 Speaker 9: And first, I'm disappointing you. I feel we were matched today. 421 00:20:12,680 --> 00:20:15,800 Speaker 9: But I'm not going to artorial splendor. I think so 422 00:20:15,960 --> 00:20:21,040 Speaker 9: it's but it's file. Look I don't I don't view that. 423 00:20:21,560 --> 00:20:23,760 Speaker 9: I think it's something there is brand damage and there 424 00:20:23,880 --> 00:20:26,840 Speaker 9: was there is things that must needs to turn around. 425 00:20:26,880 --> 00:20:29,600 Speaker 9: In terms of us, we said five seven potentially ten 426 00:20:29,640 --> 00:20:32,920 Speaker 9: percent brand damage the American consumer. Look, I think there's 427 00:20:33,000 --> 00:20:36,359 Speaker 9: confusion when it comes to us because obviously alienated you 428 00:20:36,440 --> 00:20:37,840 Speaker 9: know Many and Democratic Party. 429 00:20:37,960 --> 00:20:39,720 Speaker 5: Now you actually alienate in the Republic. 430 00:20:39,880 --> 00:20:41,680 Speaker 9: So now it's like, if you want to alienate everyone, 431 00:20:41,960 --> 00:20:44,520 Speaker 9: you've actually done a great job. Okay, So now it's 432 00:20:44,640 --> 00:20:46,800 Speaker 9: point like, okay, how do we sort of build this back? 433 00:20:47,040 --> 00:20:49,920 Speaker 9: Does the board get involved? Because again it goes back 434 00:20:49,960 --> 00:20:53,040 Speaker 9: to the board needs. I think in a situation like this, 435 00:20:53,200 --> 00:20:55,560 Speaker 9: they do need to play a hand in some way 436 00:20:56,000 --> 00:20:58,879 Speaker 9: to make sure that this doesn't go off the rails. 437 00:20:59,000 --> 00:21:01,480 Speaker 1: If it's a junior high schoo situation, there needs to 438 00:21:01,520 --> 00:21:02,680 Speaker 1: be an adult in the room. 439 00:21:02,760 --> 00:21:05,159 Speaker 5: Do you need a doom you need to do on 440 00:21:05,200 --> 00:21:07,440 Speaker 5: the room with the pro Yeah, come on, get home, 441 00:21:07,520 --> 00:21:09,359 Speaker 5: it's your curfew. Dan, I haves of wood Bush. 442 00:21:09,440 --> 00:21:12,000 Speaker 1: Thank you, so much with your sartorial splendor, Julian, I 443 00:21:12,080 --> 00:21:24,760 Speaker 1: love that phrase. Joining us now is ad Mills of 444 00:21:24,880 --> 00:21:26,840 Speaker 1: Raymond James, and I do want to start on the 445 00:21:26,960 --> 00:21:30,480 Speaker 1: China and You as trade negotiation, just simply because maybe 446 00:21:30,520 --> 00:21:33,600 Speaker 1: it has a bit longer legs. Maybe we don't really know. 447 00:21:33,800 --> 00:21:36,600 Speaker 1: I just am curious about your takeaways yesterday from what 448 00:21:36,720 --> 00:21:39,280 Speaker 1: we know about that phone call and what we don't know. 449 00:21:40,680 --> 00:21:43,200 Speaker 8: Yeah, Lisa, I think it's so fascinating to see this 450 00:21:43,359 --> 00:21:45,160 Speaker 8: focus on the rare earth minerals. 451 00:21:45,440 --> 00:21:45,560 Speaker 3: Uh. 452 00:21:45,920 --> 00:21:48,840 Speaker 8: The day after some of these restrictions came in from China, 453 00:21:48,880 --> 00:21:50,680 Speaker 8: I got a phone call here at Raymond James and said, 454 00:21:50,960 --> 00:21:53,720 Speaker 8: do you realize that we have about six months supply 455 00:21:53,840 --> 00:21:56,600 Speaker 8: of this and at the end of that, we can't 456 00:21:56,640 --> 00:21:59,240 Speaker 8: make a missile, we can't build a car, we can't 457 00:21:59,240 --> 00:22:03,320 Speaker 8: build a near place. Our industrial capacity is permanently impeered 458 00:22:03,560 --> 00:22:05,680 Speaker 8: if we do not have access to these rare earth 459 00:22:05,680 --> 00:22:08,560 Speaker 8: and critical minerals. So China and Trump two point zero 460 00:22:09,040 --> 00:22:12,960 Speaker 8: know exactly where those choke points are and they're using them, Lisa, 461 00:22:13,359 --> 00:22:16,920 Speaker 8: and so because of that, I am optimistic that we 462 00:22:17,200 --> 00:22:21,200 Speaker 8: ultimately get a deal because we cannot sustain this and 463 00:22:21,320 --> 00:22:23,920 Speaker 8: I do think that longer term, we are going to 464 00:22:24,040 --> 00:22:26,359 Speaker 8: see a lot more production here in the United States, 465 00:22:26,440 --> 00:22:28,760 Speaker 8: and a lot of these trade deals look to get 466 00:22:28,840 --> 00:22:32,480 Speaker 8: those rare earth and critical minerals from other sources from China. 467 00:22:32,720 --> 00:22:36,200 Speaker 8: We had a Defense Production Act signing last week from 468 00:22:36,280 --> 00:22:39,240 Speaker 8: Trump where it says you can bypass a lot of 469 00:22:39,280 --> 00:22:41,920 Speaker 8: the normal routes to make sure we can get that, 470 00:22:42,440 --> 00:22:46,160 Speaker 8: and so focusing on that and realizing that that's important 471 00:22:46,600 --> 00:22:49,200 Speaker 8: is where we get the deal. The final piece here 472 00:22:49,680 --> 00:22:52,600 Speaker 8: is Lutnik getting added to the list of folks that 473 00:22:52,840 --> 00:22:56,959 Speaker 8: will be in the next trade delegation. Lutnick's Commerce department 474 00:22:57,040 --> 00:22:59,680 Speaker 8: has been putting a lot of restrictions on semiconductors and 475 00:23:00,080 --> 00:23:03,600 Speaker 8: other exports into China that China also really needs. So 476 00:23:04,040 --> 00:23:06,560 Speaker 8: working on that, but I'm not quite sure that the 477 00:23:06,640 --> 00:23:09,399 Speaker 8: Commerce Department, Lutnik and the Trump administration is going to 478 00:23:09,720 --> 00:23:12,920 Speaker 8: ease up on our restrictions. So China is going to 479 00:23:13,000 --> 00:23:14,200 Speaker 8: be very tough on theirs. 480 00:23:14,520 --> 00:23:16,879 Speaker 5: Can we just stick for a segment the rare earths? 481 00:23:17,119 --> 00:23:19,800 Speaker 4: Why do you think that actually there's going to be 482 00:23:19,880 --> 00:23:22,520 Speaker 4: a loosening of these restrictions and the ability for the 483 00:23:22,640 --> 00:23:25,240 Speaker 4: US to get licenses given the fact that the easing 484 00:23:25,320 --> 00:23:29,240 Speaker 4: of the controls was not in the Chinese readout, so. 485 00:23:29,680 --> 00:23:32,720 Speaker 8: I think because we need them, because there's not really 486 00:23:32,760 --> 00:23:35,359 Speaker 8: another alternative. I do think that the United States is 487 00:23:35,400 --> 00:23:37,639 Speaker 8: probably going to have to ease up on some of 488 00:23:37,680 --> 00:23:40,399 Speaker 8: the things that we are doing. First and foremost, it 489 00:23:40,520 --> 00:23:42,120 Speaker 8: was easing up on that one hundred and forty five 490 00:23:42,200 --> 00:23:46,480 Speaker 8: percent terra freight. I think that China is going to 491 00:23:46,520 --> 00:23:48,959 Speaker 8: be able to ask for more in some of these 492 00:23:49,040 --> 00:23:52,480 Speaker 8: negotiations than I think that Trump expects. I do think 493 00:23:52,520 --> 00:23:56,520 Speaker 8: that there's ultimately other sources of this. Globally, rare earths 494 00:23:56,600 --> 00:23:59,560 Speaker 8: are not actually all that rare. What is rear is 495 00:23:59,680 --> 00:24:02,879 Speaker 8: where we are willing to extract them where we're willing 496 00:24:03,000 --> 00:24:05,880 Speaker 8: to refine them, but that is going to take years, 497 00:24:05,920 --> 00:24:08,440 Speaker 8: an Marie, So I do think that they are willing 498 00:24:08,560 --> 00:24:11,280 Speaker 8: to provide that as long as the United States is 499 00:24:11,440 --> 00:24:15,159 Speaker 8: willing to provide other things to China, such as some 500 00:24:15,240 --> 00:24:18,119 Speaker 8: of the technology that we're restricting. But politically that's a 501 00:24:18,240 --> 00:24:18,959 Speaker 8: really tough thing. 502 00:24:19,320 --> 00:24:22,240 Speaker 4: Well, with Commerce Secretary Howard Lutnex inclusion now and the 503 00:24:22,280 --> 00:24:24,760 Speaker 4: trade negotiations, and we're waiting for a time and place. 504 00:24:24,880 --> 00:24:27,760 Speaker 4: Do you think it's going to ease Beijing's ability to 505 00:24:27,880 --> 00:24:30,919 Speaker 4: get a handle in these semiconductors, or actually potentially make 506 00:24:31,000 --> 00:24:32,360 Speaker 4: it harder because he's quite hawkish. 507 00:24:33,240 --> 00:24:36,600 Speaker 8: Yeah, if I had to choose something, it's harder. What 508 00:24:36,720 --> 00:24:39,440 Speaker 8: we are seeing is we've had a lot of conversations 509 00:24:39,480 --> 00:24:43,119 Speaker 8: about IEPA, this International Emergency Economic Powers Act, which has 510 00:24:43,160 --> 00:24:47,000 Speaker 8: been used to put the tariffs globally challenged by the courts. 511 00:24:47,440 --> 00:24:50,920 Speaker 8: But look for AEPA to be used next to further 512 00:24:51,040 --> 00:24:53,720 Speaker 8: restrict a lot of technology that is going into China. 513 00:24:54,240 --> 00:24:58,000 Speaker 8: Since that meeting in Geneva, there has been a worldwide 514 00:24:58,160 --> 00:25:03,080 Speaker 8: ban on Huawei from being used from our allies. If 515 00:25:03,119 --> 00:25:05,760 Speaker 8: they use that, that's a violation of US export controls. 516 00:25:06,040 --> 00:25:10,440 Speaker 8: We are going to see an uptick in other SEMIICAP equipment, 517 00:25:11,040 --> 00:25:14,920 Speaker 8: EDA software, things that are important and critical on making 518 00:25:14,960 --> 00:25:18,719 Speaker 8: semiconductors in China. All of those things have bipartisan support, 519 00:25:18,720 --> 00:25:20,720 Speaker 8: and if you look to the Hill, they want the 520 00:25:20,760 --> 00:25:24,280 Speaker 8: administration to go even further geolocation on any chip that 521 00:25:24,440 --> 00:25:28,040 Speaker 8: goes into China to make sure that chips that shouldn't 522 00:25:28,040 --> 00:25:29,600 Speaker 8: be going there do not go there. 523 00:25:29,640 --> 00:25:32,200 Speaker 1: Emory ed Mills of Raymond James, thank you so much 524 00:25:32,240 --> 00:25:34,000 Speaker 1: for being with us this morning as we try to 525 00:25:34,119 --> 00:25:36,720 Speaker 1: figure out which story has staying power for the next 526 00:25:36,760 --> 00:25:37,560 Speaker 1: couple of hours. 527 00:25:38,359 --> 00:25:41,840 Speaker 2: This is the Bloomberg Sevenants podcast, bringing you the best 528 00:25:41,920 --> 00:25:45,480 Speaker 2: in markets, economics, angiopolitics. You can watch the show live 529 00:25:45,560 --> 00:25:48,520 Speaker 2: on bloombag TV weekday mornings from six am to nine 530 00:25:48,600 --> 00:25:52,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 531 00:25:52,359 --> 00:25:54,760 Speaker 2: anywhere else you listen, and as always on the bloom 532 00:25:54,760 --> 00:25:56,880 Speaker 2: Blog Terminal and the Bloomberg Business Amp.