WEBVTT - Bloomberg Surveillance TV: June 6, 2025 0:00:02.400 --> 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 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:35.840 Bloomberg Terminal and the Bloomberg Business App. 0:00:36.280 --> 0:00:39.680 Stephanie Rothawolf Research is still with us. Stephanie, your take 0:00:39.800 --> 0:00:41.000 on what we're looking at right here? 0:00:41.440 --> 0:00:43.360 I think the thing to remember is this is a 0:00:43.400 --> 0:00:45.800 period of time that was kind of peak uncertainty for 0:00:46.000 --> 0:00:49.680 the economy given the tariff headwinds. So now looking ahead, 0:00:49.880 --> 0:00:52.000 we should anticipate that payroll gains are going to remain 0:00:52.040 --> 0:00:54.160 fairly solid throughout the course of this year. Now they're 0:00:54.200 --> 0:00:57.040 going to slow down given the immigration trend, but we 0:00:57.040 --> 0:01:00.000 shouldn't expect an environment where the uneployment rate is rising 0:01:00.120 --> 0:01:02.800 significantly and we're in a real layoff situation. We should 0:01:02.800 --> 0:01:05.959 expect a steady slow down in the pace of hiring 0:01:06.040 --> 0:01:08.319 just because immigration is gonna be a big headwind, but 0:01:08.360 --> 0:01:09.360 the economy is gonna. 0:01:09.120 --> 0:01:11.600 Be largely okay, what kind of impact will immigration have? 0:01:11.959 --> 0:01:12.920 Pretty significant? 0:01:12.959 --> 0:01:15.399 So, by the way, this is not getting enough attention. 0:01:15.560 --> 0:01:18.600 But last week the Supreme Court rule that they can 0:01:18.319 --> 0:01:21.760 they can terminate five hundred and thirty thousand visas from 0:01:21.800 --> 0:01:24.840 people from Cuba, Haiti, Nicaragua, Venezuela effectively overnight. 0:01:25.280 --> 0:01:26.360 So this is likely going to. 0:01:26.319 --> 0:01:28.559 Show over the next couple of months as companies really 0:01:28.560 --> 0:01:30.840 realize they have to check visas. But we're gonna we're 0:01:30.840 --> 0:01:34.840 gonna see notable headwind bringing the steady state trended PAYOS 0:01:34.840 --> 0:01:37.559 growth below one hundred thousand. But what we're learning today 0:01:37.640 --> 0:01:40.640 is that might be in an underlying economy that's still fine. 0:01:40.680 --> 0:01:42.280 And what is that due to the unemployment rate? 0:01:42.600 --> 0:01:45.320 It brings it down by a couple by a couple 0:01:45.319 --> 0:01:45.800 of tents. 0:01:46.000 --> 0:01:48.640 So how challenging is that for the Fed to cut. 0:01:48.720 --> 0:01:50.600 They can, it's gonna be a difficult one. If we're 0:01:50.600 --> 0:01:53.640 in an environment where steady state PAYOS growth is running 0:01:53.680 --> 0:01:56.680 call an eighty thousand, and the unemployment rate is steady 0:01:56.720 --> 0:01:59.200 to lower and by the way inflation is running it 0:01:59.440 --> 0:02:01.560 close to three eight percent, they can't do anything. 0:02:01.560 --> 0:02:03.160 They're going to have to just sit and wait it out. 0:02:03.440 --> 0:02:05.680 And why would they if the economy is just running 0:02:05.760 --> 0:02:08.600 kind of fine and the inflation is still risk of 0:02:09.440 --> 0:02:11.120 certainly running notably above their target. 0:02:11.320 --> 0:02:15.000 There's a real question about how much the actual employment 0:02:15.080 --> 0:02:17.920 rate and the payrolls figure is a leading indicator or 0:02:17.919 --> 0:02:21.600 a liking indicator. There has been a belief that companies 0:02:21.680 --> 0:02:25.280 will hold on before firing employees for a much longer 0:02:25.320 --> 0:02:29.240 period of time, especially since the pandemic. At what point 0:02:29.480 --> 0:02:31.960 is this the last thing that's going to fall apart 0:02:32.000 --> 0:02:35.240 as we see other ramifications to the economy and other sectors. 0:02:35.320 --> 0:02:37.400 Yes, so we need to keep an eynprofit margins, and 0:02:37.440 --> 0:02:40.400 the idea here is effectively how much costs can these 0:02:40.440 --> 0:02:42.680 companies push through when it comes to tariffs. So if 0:02:42.680 --> 0:02:45.360 we're in an environment where consumer inflation is actually running 0:02:45.360 --> 0:02:48.079 close to that three percent in a way, that could 0:02:48.080 --> 0:02:49.919 be an okay thing, because that means you're not really 0:02:49.960 --> 0:02:53.200 feeling the burden from a company perspective. Consumers can probably 0:02:53.200 --> 0:02:56.079 handle a little bit of goods inflation and they're not 0:02:56.120 --> 0:02:58.200 going to have to do layoffs because the companies are 0:02:58.200 --> 0:02:59.640 able to pass through a lot of that cost. 0:03:00.000 --> 0:03:01.840 And this ultimately goes down to the question for the 0:03:01.880 --> 0:03:04.680 FED as well. If you do have companies that are 0:03:04.720 --> 0:03:07.520 absorbing more of it and not passing along the cost 0:03:07.680 --> 0:03:11.960 as much, it also would be more disinflationary or less 0:03:11.960 --> 0:03:14.520 inflationary than otherwise, and it would give them the ability 0:03:14.560 --> 0:03:18.519 to cut rates into what is, by all other measures, 0:03:18.680 --> 0:03:20.960 a softening market. So at what point is that going 0:03:21.000 --> 0:03:22.480 to be the base case at a time where you're 0:03:22.480 --> 0:03:24.520 looking at two rate cuts still fully priced into the 0:03:24.560 --> 0:03:26.040 market by the end of this year. 0:03:26.360 --> 0:03:29.200 Yeah, I'm surprised that the market is still looking for 0:03:29.560 --> 0:03:31.680 two cuts at this point. It's probably just sort of 0:03:31.720 --> 0:03:33.960 the average of all outcomes, right, There's still the chance 0:03:33.960 --> 0:03:36.240 that the economy tips into recession as a result. I 0:03:36.240 --> 0:03:38.920 would say, if you survey a lot of investors, they're 0:03:38.960 --> 0:03:42.200 expecting call it one to two cuts. But I think 0:03:42.280 --> 0:03:45.760 the direction of travel here will be in an environment 0:03:45.800 --> 0:03:47.480 where the FED in the market are going to start 0:03:47.480 --> 0:03:50.640 to price in zero cuts for this year. Maybe towards 0:03:50.680 --> 0:03:53.000 the back half of twenty twenty six. They can cut 0:03:53.040 --> 0:03:56.120 one or two more times, but we're sort of running 0:03:56.120 --> 0:03:56.520 out of time. 0:03:56.720 --> 0:03:58.960 Why is that given the fact that the economy clearly 0:03:59.040 --> 0:04:01.280 is weakening to a lot of different metrics. 0:04:01.640 --> 0:04:04.320 Well, it's weakening because we got hit over the head 0:04:04.320 --> 0:04:06.920 with a tariff headwind and a ton of uncertainty. But 0:04:07.080 --> 0:04:10.280 now the uncertainty is likely to defade to some extent. 0:04:10.320 --> 0:04:12.840 Now we understand this whole taco concept, which is silly, 0:04:12.880 --> 0:04:16.280 but like, it's true that Trump doesn't seem to want 0:04:16.279 --> 0:04:19.280 to intentionally tip the economy into recession. So companies can 0:04:19.320 --> 0:04:21.960 feel better about investing investing in this environment they know 0:04:22.320 --> 0:04:25.239 there's less likely of a chance that the economy actually 0:04:25.440 --> 0:04:27.599 goes south, in which case, all right, my business is 0:04:27.640 --> 0:04:29.440 doing okay. Now I just have to continue to invest 0:04:29.440 --> 0:04:29.760 and grow. 0:04:29.839 --> 0:04:33.279 Our intrepid economics correspondent has been parsing over the data, 0:04:33.440 --> 0:04:36.880 Sephanie Roth of wool Free Search, sticking with us Michael McKee, Oh, 0:04:36.920 --> 0:04:38.440 what do you see as you parse through the data? 0:04:38.880 --> 0:04:43.400 Well, intrepidly looking through the data, we see that basically 0:04:43.560 --> 0:04:47.240 it's as kind of forecasts. Manufacturing jobs were down by 0:04:47.560 --> 0:04:51.320 eight thousand primary metals. We check that out, the steel 0:04:51.360 --> 0:04:55.799 mills one point three thousand, one three hundred additional jobs 0:04:55.960 --> 0:04:59.960 and fabricated metals, same numbers, so no impact from tariffs there. 0:05:00.279 --> 0:05:04.799 Construction up by four Retail jobs fell off by six thousand, 0:05:04.960 --> 0:05:08.560 five hundred, warehouses and couriers. People were looking at that 0:05:08.680 --> 0:05:11.919 because of the idea of pulling forward orders, and we 0:05:12.000 --> 0:05:18.279 do see slight increases in the couriers six five hundred, 0:05:18.480 --> 0:05:22.360 a drop of fivey one hundred in warehousing. Government though 0:05:22.440 --> 0:05:26.080 interesting number from the federal government down twenty two thousand. 0:05:26.680 --> 0:05:29.120 Of course, we have to double check and make sure 0:05:29.200 --> 0:05:33.560 that's not the US Postal Service, which mostly is. But 0:05:33.680 --> 0:05:38.480 federal government accept the postal service down fifteen point eight thousands, 0:05:38.480 --> 0:05:41.760 so we're starting to see some doge cuts there. The 0:05:42.240 --> 0:05:45.880 three digit unemployment rates four point two four four. That 0:05:46.080 --> 0:05:49.080 is up a little bit from four point one eighty seven, 0:05:49.160 --> 0:05:53.560 but not worth even worrying about at this point. The 0:05:53.600 --> 0:05:57.120 reason it looks like unemployment not changed very much is 0:05:57.160 --> 0:06:00.440 the number of employed falls by six hundred ninety six thousand. 0:06:00.520 --> 0:06:03.560 The number of unemployed rises by only seventy one thousand, 0:06:03.560 --> 0:06:06.239 but the labor force falls by six hundred and twenty 0:06:06.240 --> 0:06:08.960 five thousand. That may be the story of this report. 0:06:09.240 --> 0:06:12.279 As immigration gets halted at the border, the labor force 0:06:12.320 --> 0:06:16.240 if that continues to shrink, will hold down any changes 0:06:16.320 --> 0:06:17.880 in the unemployment rate for a while. 0:06:17.960 --> 0:06:21.440 Yeah, to Stephanie Ross's point, the idea of just generally 0:06:21.600 --> 0:06:25.839 lower numbers as the immigration trends really shift. Michael mckayth, 0:06:25.839 --> 0:06:28.560 thank you as always joining us now as Jeff Rosenberg 0:06:28.600 --> 0:06:31.080 of Blackrock. Jeff, we take a look at this report. 0:06:31.200 --> 0:06:33.520 Nothing to see here. Markets are taking it in stride, 0:06:33.560 --> 0:06:34.880 albeit with a little bit of a lift at the 0:06:34.920 --> 0:06:37.440 front end of the yield curve. What's your big takeaway 0:06:37.640 --> 0:06:41.200 as you do see numbers tempering but not exactly falling off. 0:06:41.080 --> 0:06:45.600 Cliff, Yeah, I think the big takeaway is slowing but 0:06:45.800 --> 0:06:48.320 still a strong labor market. And I think that's why 0:06:48.320 --> 0:06:50.640 you're seeing a little bit of the bond market reaction here, 0:06:51.040 --> 0:06:53.520 pricing out a bit of that expectations in terms of 0:06:53.520 --> 0:06:56.440 the FED. But it's pretty close to expectations, a little 0:06:56.440 --> 0:06:57.359 bit on the high side. 0:06:57.400 --> 0:06:59.320 I think the wage number is kind of the most 0:06:59.320 --> 0:07:00.159 interesting thing. 0:07:00.680 --> 0:07:03.359 Doesn't seem to be affected by the wage week, so 0:07:03.720 --> 0:07:05.920 you know, this is part of the strength coming into it. 0:07:06.120 --> 0:07:08.680 But I smiled when you asked the question to Stephanie, 0:07:08.839 --> 0:07:11.040 you know what is really the forward looking out look 0:07:11.040 --> 0:07:14.040 here for labor markets. They'll come a point where we'll 0:07:14.080 --> 0:07:16.920 talk about labor markets and this labor market report, and 0:07:16.960 --> 0:07:19.840 it will be validating a trend that we may be 0:07:19.960 --> 0:07:22.200 concerned about and that will be told to us first 0:07:22.240 --> 0:07:24.080 by what's going on with profit margins. 0:07:24.280 --> 0:07:25.840 Absolutely agree with that point. 0:07:26.000 --> 0:07:30.160 It's really the pausing point that we're at here with 0:07:30.240 --> 0:07:36.000 this market report not really moving us either confirming the 0:07:36.040 --> 0:07:38.120 concerns that we had a month and a half ago 0:07:38.280 --> 0:07:43.480 around a recession or validating the response in financial markets 0:07:43.520 --> 0:07:46.400 that you know, the peak of uncertainty is over. I 0:07:46.400 --> 0:07:50.200 think we're still in that uncertainty environment and the data 0:07:50.360 --> 0:07:53.200 still that we need to validate whether or not which 0:07:53.240 --> 0:07:57.000 way that economy is going to go is still in 0:07:57.000 --> 0:07:58.800 front of us. So this is a little bit backward 0:07:58.840 --> 0:08:03.000 looking bagging. To answer your earlier question to Stephanie. 0:08:03.200 --> 0:08:05.720 So, Jeff, let's say we're sitting here in a couple 0:08:05.760 --> 0:08:07.880 of months and yeah, maybe payroll's growth are still slowing 0:08:07.880 --> 0:08:11.960 but holding in somewhat. Okay, what would be the driving factor? 0:08:12.000 --> 0:08:14.040 Is it the reconciliation bill? Is it that tariffs are 0:08:14.080 --> 0:08:16.200 having less of an impact? What's the upside story to 0:08:16.240 --> 0:08:17.200 the economy here. 0:08:18.240 --> 0:08:20.640 Yeah, And I think it's what you were highlighting before 0:08:20.840 --> 0:08:24.160 about whether or not this is the peak. Uncertainty is 0:08:24.240 --> 0:08:28.840 behind us and its impact on decision making is not 0:08:28.960 --> 0:08:31.960 as greatly, not as great as we might have feared 0:08:32.600 --> 0:08:35.120 in the middle of April. And so I think that's 0:08:35.160 --> 0:08:38.559 really the determination is what impact does all this uncertainty, 0:08:38.720 --> 0:08:41.920 which I think we still have. We haven't resolved a 0:08:41.960 --> 0:08:44.520 lot of that uncertainty. We could debate that point, but 0:08:44.600 --> 0:08:47.040 really it comes down to what do we think about 0:08:47.080 --> 0:08:47.800 the uncertainty? 0:08:47.960 --> 0:08:50.000 But what do we do about the uncertainty? 0:08:50.200 --> 0:08:54.079 Do we press ahead and just make decisions, make investments, 0:08:54.240 --> 0:08:57.840 hiring as if nothing had happened, or is there a 0:08:57.920 --> 0:09:01.720 cooling effect on all of those decisions, whether they're on 0:09:01.760 --> 0:09:04.640 the business side or on the consumption side. 0:09:04.800 --> 0:09:06.600 That's what's going to drive that economy. 0:09:06.640 --> 0:09:11.000 It's going to drive the you know, the consumption side 0:09:11.840 --> 0:09:16.120 in terms of demand, and it's gonna drive business confidence 0:09:16.160 --> 0:09:19.559 in terms of what we see in terms of investment. 0:09:20.200 --> 0:09:21.719 And that's I think what the narrative is going to 0:09:21.800 --> 0:09:24.040 be two three, four months from now. 0:09:24.160 --> 0:09:26.800 Well, do you think the business community will just keep 0:09:26.840 --> 0:09:29.280 treading water? How do you make those decisions. I mean, 0:09:29.320 --> 0:09:32.679 just moments ago, Peter Navarro, a trade aid to President Trump, 0:09:32.720 --> 0:09:35.480 is telling reporters that the China MEANE is expected in 0:09:35.520 --> 0:09:38.200 seven days, So in a week's time we could be 0:09:38.280 --> 0:09:40.000 dealt with a fresh blow of uncertainty. 0:09:40.080 --> 0:09:44.320 Jeff, Yeah, I think the honest answer is we just 0:09:44.360 --> 0:09:47.800 don't know because the new data that's coming out, whether 0:09:47.880 --> 0:09:50.520 it's the challenges from the legal perspective, whether it's the 0:09:50.640 --> 0:09:54.120 change in terms of the negotiations, what is actually in 0:09:54.160 --> 0:09:58.440 those negotiations in terms of how much they relieve the uncertainty. 0:09:59.160 --> 0:10:01.560 We just don't know, And I think there is a 0:10:01.600 --> 0:10:05.439 cooling effect in the interim. It doesn't show up because 0:10:05.480 --> 0:10:07.640 the data is still lagged, so it'll show up in 0:10:07.679 --> 0:10:12.480 the next couple of months. So I just think we 0:10:12.520 --> 0:10:16.240 don't quite know on the trade impact given. 0:10:16.040 --> 0:10:17.959 The lag Do you think then the FED is going 0:10:18.040 --> 0:10:20.880 to be behind the curve? I mean Elon Musk, an 0:10:20.920 --> 0:10:23.600 insider who's now on the outs, was saying yesterday that 0:10:23.640 --> 0:10:25.880 Trump's tarers will mean a recession the second half of 0:10:25.880 --> 0:10:26.200 the year. 0:10:28.200 --> 0:10:28.360 You know. 0:10:28.400 --> 0:10:30.760 I think the FED has been very clear in their 0:10:30.800 --> 0:10:34.679 communications that the headline is weight and see and that 0:10:34.720 --> 0:10:37.559 the economy is in a good enough position where they 0:10:37.559 --> 0:10:40.480 can adopt that approach. I think if there's one thing 0:10:40.520 --> 0:10:43.440 to this report today, it kind of validates that approach. 0:10:43.720 --> 0:10:43.840 Right. 0:10:43.880 --> 0:10:46.320 We're not seeing an aggressive move in terms of the 0:10:46.360 --> 0:10:50.199 slowdown impact and hiring in the economy. We're not seeing 0:10:50.400 --> 0:10:52.880 a huge acceleration. I do you think there's some strength, 0:10:53.400 --> 0:10:56.680 some lingering strength there in wages, but not enough to 0:10:56.760 --> 0:10:59.440 really press on the inflationary concerns. 0:11:00.160 --> 0:11:01.640 And so the Fed's in a good spot here to 0:11:01.679 --> 0:11:05.439 wait and see. Will they be lagged? Yes, This is kind. 0:11:05.320 --> 0:11:10.319 Of the impact of moving from forecast dependence to data 0:11:10.320 --> 0:11:13.080 dependence is that the FED has to be reactive, and 0:11:13.120 --> 0:11:15.680 so they'll be lagged. The issue for the markets will be, 0:11:16.000 --> 0:11:19.280 you know, will they aggressively catch up if they are indeed, 0:11:20.000 --> 0:11:22.480 you know, behind the curve. In the event that the 0:11:22.520 --> 0:11:25.720 trade and tariff uncertainty, you know, leads to a bigger slowdown, 0:11:25.800 --> 0:11:27.599 then they're going to have to get more aggressive. 0:11:27.800 --> 0:11:30.040 That's not priced in to the bond market. 0:11:29.880 --> 0:11:31.560 As we were talking about, it's only one to two 0:11:31.600 --> 0:11:35.200 cuts because it's not yet showing up in the data. 0:11:35.280 --> 0:11:35.480 You know. 0:11:35.760 --> 0:11:37.360 I want to take a step back and talk about 0:11:37.400 --> 0:11:40.600 what you and Stephanie both brought up that this labor 0:11:40.640 --> 0:11:44.719 market information isn't necessarily going to be as tradable as 0:11:44.760 --> 0:11:47.160 some of the earnings data that we get with respect 0:11:47.160 --> 0:11:49.679 to profit margins, and I wonder if there's something of 0:11:49.720 --> 0:11:52.520 a paradigm shift where we were so data dependent and 0:11:52.640 --> 0:11:55.240 every economic indicator that came out for the past couple 0:11:55.280 --> 0:11:59.240 of years was a huge tradable moment that was going 0:11:59.280 --> 0:12:01.280 to give some sort of insight into what the Fed 0:12:01.320 --> 0:12:01.679 would do. 0:12:02.160 --> 0:12:03.240 Is that era over? 0:12:03.480 --> 0:12:06.320 And are we now earnings dependent, not necessarily when it 0:12:06.320 --> 0:12:09.120 comes to figuring out how much money they're making, but 0:12:09.400 --> 0:12:12.680 what companies are doing with what we're hearing about in 0:12:12.720 --> 0:12:15.880 the mess in real time in a way that this 0:12:16.000 --> 0:12:17.520 data cannot tell us anymore. 0:12:17.600 --> 0:12:21.400 Jeff, Yeah, you know. I mean there's a long. 0:12:21.280 --> 0:12:24.320 History to the payroll report in terms of moving the 0:12:24.360 --> 0:12:25.200 bond market. 0:12:25.520 --> 0:12:27.640 You know, has it lost some of its efficacy? 0:12:27.720 --> 0:12:29.560 I mean, certainly, you know, we've come out of this 0:12:29.679 --> 0:12:34.640 period where inflation has been the bigger driver. Clearly that 0:12:34.720 --> 0:12:36.520 has been the story of the last couple of years, 0:12:36.559 --> 0:12:39.440 and so the payroll report isn't really the kind of 0:12:39.440 --> 0:12:42.960 pre eminent data release on inflation. It has an important 0:12:42.960 --> 0:12:45.880 component with regards to to wages and wage inflation. 0:12:45.960 --> 0:12:47.560 As it was just highlighting, you know. 0:12:47.559 --> 0:12:50.320 When you think about kind of the demand side shocks 0:12:50.400 --> 0:12:53.959 that we typically associate with recessions, the payroll report can 0:12:54.000 --> 0:12:59.160 be you know, more confirmative on those trends and solidify 0:12:59.320 --> 0:13:02.240 the expectations for the FED. That's where the linkage is 0:13:02.280 --> 0:13:04.480 and the importance to the bond market comes from. But 0:13:04.559 --> 0:13:07.000 when the issues are more supply side, and we can 0:13:07.080 --> 0:13:09.640 kind of think of tariffs and the tariff shock as 0:13:09.679 --> 0:13:11.920 more of a supply side, it has both elements of 0:13:11.960 --> 0:13:14.079 the supply side and demand side. But when you think 0:13:14.080 --> 0:13:17.280 about economic shocks driving financial markets that are more from 0:13:17.320 --> 0:13:19.680 the supply side, yes, the labor markets kind of lose 0:13:19.760 --> 0:13:23.800 their primacy of being kind of the pre eminent data 0:13:23.840 --> 0:13:24.800 release that we focus on. 0:13:24.920 --> 0:13:27.800 Jeff Rosenberger, Blackrock, thank you as always for being with us. 0:13:38.080 --> 0:13:40.000 Dan Ives of wood Bush writing. 0:13:40.000 --> 0:13:42.480 This view does not change our bullish view of TESLA 0:13:42.600 --> 0:13:45.559 and the autonomous view, but clearly does put a fly 0:13:45.679 --> 0:13:48.600 on the ointment of the Trump regulatory framework going forward. 0:13:48.679 --> 0:13:49.320 Dan joins us. 0:13:49.320 --> 0:13:51.439 Now, Dan, great to see you, greed to be here, 0:13:51.559 --> 0:13:53.240 very curious to hear what you have to say about this, 0:13:53.440 --> 0:13:56.120 the fact that you do not change your bullish outlook 0:13:56.160 --> 0:13:59.320 on Tesla, even though it seems like there is a 0:13:59.520 --> 0:14:03.280 massive key Man risk. Please explain how you dismiss that. 0:14:03.400 --> 0:14:05.679 Look, I mean, this is a its friend. It's like 0:14:05.720 --> 0:14:08.360 a Frenemi is in junior high school. That's essentially going 0:14:08.400 --> 0:14:09.520 on between Trump and Musk. 0:14:09.600 --> 0:14:12.040 We're billionaires and leaders of massive empires. 0:14:12.360 --> 0:14:15.480 And Look, the reality is that our view is that 0:14:15.760 --> 0:14:19.440 this is something where the friendship it doesn't end. In 0:14:19.440 --> 0:14:22.680 other words, I still believe that this will be resolved 0:14:22.720 --> 0:14:25.040 potential by the end of the day, by the weekend. 0:14:25.400 --> 0:14:29.640 And it's not our view that this changes the regulatory landscape. 0:14:30.040 --> 0:14:32.520 Four Musk when it comes to autonomous and the. 0:14:32.480 --> 0:14:35.680 Broader vision, How do we even talk about the fundamental backdrop? 0:14:35.760 --> 0:14:35.960 Though? 0:14:36.200 --> 0:14:39.040 When you have a war of words whip sawing this 0:14:39.120 --> 0:14:41.640 company by more than one hundred and fifty billion dollars 0:14:41.640 --> 0:14:45.400 of market capitalization, does that introduce a risk that a 0:14:45.440 --> 0:14:47.720 lot of institutions just won't take. 0:14:48.200 --> 0:14:50.240 Look, but we always start and we've turn on the 0:14:50.240 --> 0:14:54.000 ship for decades. It comes down like with Tesla, that's 0:14:54.040 --> 0:14:56.400 the reality. I mean, you're going to have the volatility, 0:14:56.440 --> 0:14:58.800 it's part of what we've seen with Musk. But in 0:14:58.840 --> 0:15:01.200 our view is that you have I have to see 0:15:01.280 --> 0:15:04.200 through the noise, understand the autonomous vision. 0:15:04.320 --> 0:15:04.760 It's r V. 0:15:04.840 --> 0:15:07.040 Ultimately, Waimo's at the kids table when it comes to 0:15:07.120 --> 0:15:11.280 autonomous and the AI future. And look this is it's 0:15:11.400 --> 0:15:14.200 Rod Serling. It's an episode out of the Twilight Zone yesterday. 0:15:14.200 --> 0:15:17.480 I mean, in my opinion, in all my years covering Tesla, 0:15:17.880 --> 0:15:21.080 it might win the prize top three, maybe top one 0:15:21.360 --> 0:15:23.160 for one of the strangers days that I've ever seen. 0:15:23.440 --> 0:15:25.960 So last year Elon mus said, take away the subsidies. 0:15:26.000 --> 0:15:27.080 It only helped Tesla. 0:15:27.240 --> 0:15:28.360 Why does he or. 0:15:28.640 --> 0:15:31.120 Based on reporting out of the Speaker Johnson, out of 0:15:31.160 --> 0:15:33.800 President Trump, why has there been this reversal from him 0:15:33.880 --> 0:15:35.080 regarding the eed subsidies. 0:15:35.120 --> 0:15:36.440 He's no longer in the White House. 0:15:36.520 --> 0:15:38.760 I mean, you've talked about it. It comes down to 0:15:38.840 --> 0:15:41.680 like he's now trying to distance himself for a few reasons. 0:15:41.760 --> 0:15:44.800 One that would hurt Tesla not as. 0:15:44.800 --> 0:15:46.920 Much as the others in terms of Detroit Big Three. 0:15:47.400 --> 0:15:49.480 But then you also look at what's happening here. 0:15:49.520 --> 0:15:52.600 I believe there's some poker going on as well that 0:15:52.760 --> 0:15:56.360 he's trying to distance himself from Trump because of China, 0:15:56.440 --> 0:15:58.440 because he also needs to play nice in the sandbox 0:15:58.520 --> 0:16:01.400 in Beijing with in that we see as given the 0:16:01.520 --> 0:16:03.760 China market raw material is how. 0:16:03.760 --> 0:16:05.520 Important that is from a demand perspective. 0:16:05.840 --> 0:16:08.880 He's trying to be sure that I think balances and 0:16:09.280 --> 0:16:11.240 for a Musk, even though some of it could come 0:16:11.320 --> 0:16:13.720 out sort of spur of the moment, I do believe 0:16:13.840 --> 0:16:15.520 potential there's a longer game here. 0:16:15.760 --> 0:16:18.520 Is he rebranding for a midterm election where most people 0:16:18.560 --> 0:16:20.720 think the Republicans are going to get absolute shellacking. 0:16:21.200 --> 0:16:23.360 Well, look in the reality is is that That's why 0:16:23.440 --> 0:16:25.800 in d C. I mean, you know, if you're a 0:16:25.880 --> 0:16:28.440 hater or whatever, a Musk he is going to be 0:16:28.520 --> 0:16:31.080 a huge player. And that's why for all parties. That's 0:16:31.120 --> 0:16:33.160 why White House, you know, it seems trying to put 0:16:33.200 --> 0:16:36.560 together this phone call because no one's a winner, Trump 0:16:36.960 --> 0:16:39.200 or Musk in this front of me his battle. I 0:16:39.240 --> 0:16:41.400 think it's two kids in the sandbox. I do think 0:16:41.440 --> 0:16:43.680 the play date will be back on at one point. 0:16:44.200 --> 0:16:47.000 It's just going through definitely some little tension here. 0:16:47.080 --> 0:16:50.840 Wait, you're actually suggesting something that's pretty important that there 0:16:51.120 --> 0:16:55.720 is an aspect of deliberateness to this by Elon Musk 0:16:55.920 --> 0:16:59.440 to revive the brand around Tesla, to try to paint 0:16:59.520 --> 0:17:02.560 it with a less maga type of brush after a 0:17:02.640 --> 0:17:04.960 lot of blowback and a lot of falloff in sales, 0:17:05.040 --> 0:17:08.680 particularly outside of the United States. Do you really think 0:17:09.040 --> 0:17:12.480 that actually this is a vocal way of his distancing 0:17:12.600 --> 0:17:15.520 himself and that he can get back in good with 0:17:15.680 --> 0:17:18.040 President Trump. But this is an effort to revive a 0:17:18.119 --> 0:17:20.640 brand that suffered a black eye, just like Elon Musk. 0:17:20.680 --> 0:17:22.960 Look, I think there's some of that potentially at play, 0:17:23.080 --> 0:17:25.080 but you don't burn the house down just so you 0:17:25.119 --> 0:17:27.440 can meet the firefighters. I mean, the point is you 0:17:27.600 --> 0:17:30.120 need to navigate this situation very carefully. 0:17:30.560 --> 0:17:33.240 You need Trump as a friend, not a foe. 0:17:33.680 --> 0:17:36.000 And that's why Tessa down so much, is because if 0:17:36.000 --> 0:17:38.480 you're on the regulatory it's going to be a green 0:17:38.560 --> 0:17:42.200 light when it comes to autonomous and especially Tesla, and 0:17:42.280 --> 0:17:44.920 I view is a huge advantage there. You can say, 0:17:44.920 --> 0:17:48.960 way mow Little as well. You don't need Trump now 0:17:49.400 --> 0:17:52.359 as an enemy, you need him as a friend. Hopefully 0:17:52.440 --> 0:17:54.960 by the end of the day the candlehight dinners back on. 0:17:55.560 --> 0:18:00.560 I just do not believe that these friends become enemies again. 0:18:00.680 --> 0:18:03.520 It's a frend of me's junior high school situation between two, 0:18:03.640 --> 0:18:05.400 as we know, a very stubborn individual. 0:18:05.520 --> 0:18:08.320 Let's say in episode six they still haven't gotten back together. 0:18:08.440 --> 0:18:10.760 Do you change your view and become more bearished on Tesla. 0:18:10.920 --> 0:18:13.840 Look, if this continues to continue to play out longer 0:18:13.920 --> 0:18:14.880 and longer term. 0:18:14.880 --> 0:18:16.440 Obviously that would be a huge negative. 0:18:16.840 --> 0:18:19.600 But my view just say junior high school, they will 0:18:19.680 --> 0:18:23.480 get back together as friends, but it's going to take 0:18:23.560 --> 0:18:26.320 some intermediaries. That's why the White House, there's a lot 0:18:26.359 --> 0:18:28.159 in DC on the Republican Party and everywhere. 0:18:28.280 --> 0:18:30.160 Well, the distance is already there, and there's some things 0:18:30.200 --> 0:18:34.040 that happened yesterday that potentially the White House are really 0:18:34.119 --> 0:18:36.719 upset with and maybe are going to create a lot 0:18:36.760 --> 0:18:39.560 of tension for a long term, even if they start 0:18:39.600 --> 0:18:40.520 playing a little bit nicer. 0:18:40.800 --> 0:18:42.280 Is this an opportunity potentially for. 0:18:42.400 --> 0:18:45.560 China to use BYD We can see BYD cars made 0:18:45.600 --> 0:18:46.520 in the United States. 0:18:46.680 --> 0:18:49.080 Look, I think this is just a broader game of 0:18:49.200 --> 0:18:53.120 poker going on, and Musk and Trump are key players 0:18:53.359 --> 0:18:55.720 at that poker bakra on table. Whatever you want to 0:18:55.760 --> 0:18:59.440 think about it, China definitely is watching this carefully because 0:18:59.480 --> 0:19:03.040 also remember or musk Is, I'd say, along with Cook, 0:19:03.080 --> 0:19:07.000 I mean to know the China market better. They also 0:19:07.040 --> 0:19:09.639 play nice in Beijing as well, So there is some 0:19:09.840 --> 0:19:12.800