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 --> 00:00:37,440 Speaker 2: Bloomberg Terminal and the Bloomberg Business Appasim and Iah of 10 00:00:37,600 --> 00:00:40,839 Speaker 2: b NY Investments and Wealth writing, this volatility is here 11 00:00:40,880 --> 00:00:44,560 Speaker 2: to stay, stay invested, and look for the right diversification. 12 00:00:44,840 --> 00:00:46,680 Speaker 2: Hose joins us now for more. How's it go? Monic? 13 00:00:46,760 --> 00:00:47,440 Speaker 3: Hey, good morning. 14 00:00:47,440 --> 00:00:48,840 Speaker 2: I just want to pick up on that first line, 15 00:00:48,920 --> 00:00:50,520 Speaker 2: Volatility is here to stay. 16 00:00:50,760 --> 00:00:51,360 Speaker 4: Why is that? 17 00:00:51,600 --> 00:00:51,720 Speaker 3: Well? 18 00:00:51,840 --> 00:00:54,639 Speaker 5: I think volatility clearly we were at an all time 19 00:00:54,720 --> 00:00:57,160 Speaker 5: higher peak in terms of the noise in the markets. 20 00:00:57,160 --> 00:00:59,040 Speaker 5: If you just think about back to the beginning of 21 00:00:59,040 --> 00:01:02,200 Speaker 5: the year, team kind of added around twenty six twenty 22 00:01:02,200 --> 00:01:06,320 Speaker 5: seven different policy changes or news news cycles that really 23 00:01:06,360 --> 00:01:10,000 Speaker 5: kind of impacted or jolted the markets. Yet the markets 24 00:01:10,000 --> 00:01:12,320 Speaker 5: are kind of powered through that, right. I think I 25 00:01:12,920 --> 00:01:14,880 Speaker 5: was on one of your shows earlier in the year 26 00:01:14,959 --> 00:01:17,240 Speaker 5: saying around, hey, you should not be risk off. 27 00:01:17,400 --> 00:01:19,280 Speaker 3: And this was like right after Liberation Day. 28 00:01:19,560 --> 00:01:22,360 Speaker 5: Because of what we're seeing in the fundamentals and trying 29 00:01:22,400 --> 00:01:25,920 Speaker 5: to look past this noise seeing a white house and administration. 30 00:01:26,000 --> 00:01:28,039 Speaker 5: There's a little bit around the carrot and the stick. 31 00:01:28,319 --> 00:01:29,880 Speaker 5: We saw a lot of the stick to me only 32 00:01:29,880 --> 00:01:31,280 Speaker 5: a year and now you're seeing more of the carrot, 33 00:01:31,280 --> 00:01:34,720 Speaker 5: and again the markets are responding to that. So it's 34 00:01:34,800 --> 00:01:37,800 Speaker 5: less about today when we talk to our clients around hey, 35 00:01:37,880 --> 00:01:40,160 Speaker 5: what should you be invested in or not or what 36 00:01:40,520 --> 00:01:43,399 Speaker 5: it's more about what are the solutions you're looking for. 37 00:01:43,480 --> 00:01:45,360 Speaker 5: You're seeing more and more of that in the industry, 38 00:01:45,400 --> 00:01:49,200 Speaker 5: whether it's technology with kind of SMA capabilities, what you're 39 00:01:49,240 --> 00:01:51,200 Speaker 5: doing with Mardel portfolios, which we do in B and 40 00:01:51,280 --> 00:01:52,600 Speaker 5: Y advisors. 41 00:01:52,520 --> 00:01:53,240 Speaker 3: Across the board. 42 00:01:53,280 --> 00:01:56,800 Speaker 5: It is about bleeding staying invested through these times, but 43 00:01:56,920 --> 00:01:59,920 Speaker 5: kind of understanding what outcomes you're looking to get. 44 00:02:00,000 --> 00:02:02,600 Speaker 2: Well, that's run with that, stay invested long term time 45 00:02:02,600 --> 00:02:05,360 Speaker 2: horizon got it. What are these strategic can because you're 46 00:02:05,400 --> 00:02:07,800 Speaker 2: offering people to get them comfortable with doing just that. 47 00:02:08,280 --> 00:02:10,000 Speaker 5: Well, I think again, it depends on their needs and 48 00:02:10,000 --> 00:02:12,839 Speaker 5: the outcomes. In some cases it might be hey, they're 49 00:02:12,880 --> 00:02:15,239 Speaker 5: looking for income, right, Like we create a lot of 50 00:02:15,520 --> 00:02:17,280 Speaker 5: what we call like you know, bomb portfolio in a 51 00:02:17,280 --> 00:02:21,320 Speaker 5: box or personal bomb portfolios with our Insight investment platform, 52 00:02:21,520 --> 00:02:23,960 Speaker 5: where it's like we're getting very customized in how we 53 00:02:23,960 --> 00:02:25,760 Speaker 5: deal with our clients. It might depend on when are 54 00:02:25,840 --> 00:02:29,120 Speaker 5: you looking to retire, is their wedding, is their educational 55 00:02:29,160 --> 00:02:32,000 Speaker 5: needs and these things, so you might need principal protection. 56 00:02:32,240 --> 00:02:33,880 Speaker 3: I've got a new niece on the way. 57 00:02:34,320 --> 00:02:35,840 Speaker 5: In that case, I'd be like, hey, you should just 58 00:02:35,840 --> 00:02:38,760 Speaker 5: go long long equities. So again, we could spend a 59 00:02:38,800 --> 00:02:41,519 Speaker 5: lot of time thinking about the noise the volatilities out there. 60 00:02:41,639 --> 00:02:43,639 Speaker 5: If you look at it hasn't paid off to just 61 00:02:43,639 --> 00:02:45,440 Speaker 5: say I'm going to stay off the markets and there's 62 00:02:45,480 --> 00:02:45,760 Speaker 5: still a. 63 00:02:45,760 --> 00:02:46,880 Speaker 3: Lot of cash out there. 64 00:02:47,040 --> 00:02:49,280 Speaker 5: But again that idea of I'm going to stay invested, 65 00:02:49,600 --> 00:02:51,720 Speaker 5: but it might really focus on my solutions and my 66 00:02:51,760 --> 00:02:55,080 Speaker 5: outcomes versus call it a sixty forty type of portfolio. 67 00:02:55,360 --> 00:02:59,560 Speaker 1: Congratulations on your incoming niece and going all equities and 68 00:02:59,639 --> 00:03:04,440 Speaker 1: respect I have for her for her for the niece, 69 00:03:04,480 --> 00:03:07,280 Speaker 1: not necessarily the parents, But I am curious about how 70 00:03:07,360 --> 00:03:10,760 Speaker 1: much going forward the ballast for income comes from the 71 00:03:10,760 --> 00:03:13,600 Speaker 1: same place you said, not necessarily a sixty forty portfolio. 72 00:03:13,600 --> 00:03:15,960 Speaker 1: And let's say someone is conservative and looking for income. 73 00:03:16,360 --> 00:03:19,320 Speaker 1: Does it still come from US treasuries? 74 00:03:19,360 --> 00:03:21,520 Speaker 4: Does it still come from credit or. 75 00:03:21,440 --> 00:03:23,919 Speaker 1: Do you have to look elsewhere for that type of ballast. 76 00:03:24,240 --> 00:03:24,320 Speaker 6: No. 77 00:03:24,600 --> 00:03:26,760 Speaker 5: I think the markets are becoming a lot more efficient 78 00:03:26,760 --> 00:03:29,200 Speaker 5: and they are looking elsewhere across the board. Again, we've 79 00:03:29,200 --> 00:03:32,480 Speaker 5: seen the advent of private credit. It kind of plays 80 00:03:32,520 --> 00:03:34,720 Speaker 5: a big part of this. You saw with the Secure 81 00:03:34,760 --> 00:03:39,080 Speaker 5: Income Act, where now annuities and guaranteed income contracts are 82 00:03:39,080 --> 00:03:42,560 Speaker 5: being allowed to be used in four one K portfolios. 83 00:03:42,640 --> 00:03:45,400 Speaker 5: I think these are all important legislations that are all 84 00:03:45,480 --> 00:03:49,280 Speaker 5: kind of recognizing the incredible crisis we have from a 85 00:03:49,360 --> 00:03:52,760 Speaker 5: retirement perspective, not just globally but definitely in this country. 86 00:03:52,920 --> 00:03:54,840 Speaker 3: So you need to kind of look more broadly. 87 00:03:55,240 --> 00:03:58,600 Speaker 1: There's a little bit of skepticism in younger generations. It 88 00:03:58,680 --> 00:04:02,000 Speaker 1: seems there's this concert learn that maybe the same kind 89 00:04:02,120 --> 00:04:06,480 Speaker 1: of gains that the older generation saw in their portfolios 90 00:04:06,560 --> 00:04:09,400 Speaker 1: are not going to subsist in their generation. 91 00:04:09,520 --> 00:04:10,320 Speaker 4: Do you think that it will. 92 00:04:10,360 --> 00:04:11,880 Speaker 1: Do you think that the returns will be the same 93 00:04:12,160 --> 00:04:14,480 Speaker 1: in the next ten years that it has been for 94 00:04:14,520 --> 00:04:17,320 Speaker 1: the past thirty years for a generation that has gotten 95 00:04:17,320 --> 00:04:19,479 Speaker 1: wealthy off stock market returns. 96 00:04:19,680 --> 00:04:20,240 Speaker 3: You know, I don't. 97 00:04:20,279 --> 00:04:22,080 Speaker 5: And what I mean by that is, if you look 98 00:04:22,120 --> 00:04:24,600 Speaker 5: back over the last twenty years, you would have been 99 00:04:24,839 --> 00:04:28,159 Speaker 5: for all this discussion around different investments, hedge funds. 100 00:04:27,880 --> 00:04:28,480 Speaker 3: Private equity. 101 00:04:28,520 --> 00:04:29,640 Speaker 5: At the end of the day, you would have been 102 00:04:29,680 --> 00:04:32,680 Speaker 5: just fine doing pretty a very low fee kind of 103 00:04:32,760 --> 00:04:35,200 Speaker 5: like passive equity funding. You would have been just fine. 104 00:04:35,640 --> 00:04:37,360 Speaker 5: I don't think that's the case in the next ten 105 00:04:37,400 --> 00:04:40,360 Speaker 5: to twenty years. It's just a lot more volatility. There's 106 00:04:40,360 --> 00:04:43,400 Speaker 5: a lot more volatility out there. I think returns are 107 00:04:43,440 --> 00:04:47,160 Speaker 5: going to be more measured. Yet it's again finding response Again. 108 00:04:47,200 --> 00:04:49,560 Speaker 5: It's not about anymore can I find the strategy that 109 00:04:49,680 --> 00:04:51,520 Speaker 5: just I can sit back and it's just going to 110 00:04:51,520 --> 00:04:54,800 Speaker 5: grow fifteen to twenty percent. It's being able to do 111 00:04:54,839 --> 00:04:57,040 Speaker 5: the work around how you diversify your portfolio. 112 00:04:57,240 --> 00:05:00,320 Speaker 2: I apploy at the risk capetite the youngest generation things 113 00:05:00,360 --> 00:05:03,599 Speaker 2: like crypto, don't you. We'll see their risk appetite is 114 00:05:03,680 --> 00:05:06,200 Speaker 2: far higher than it was when we were grabbing. 115 00:05:05,960 --> 00:05:08,320 Speaker 1: Up maybe not necessarily for the same instruments. And this 116 00:05:08,360 --> 00:05:10,520 Speaker 1: is exactly where I was going to go. It's for bitcoin, 117 00:05:10,640 --> 00:05:13,560 Speaker 1: it's for hedge funds, it's for NFTs, it's not necessarily 118 00:05:13,600 --> 00:05:16,080 Speaker 1: for some of these other instruments. And are they correct? 119 00:05:16,400 --> 00:05:16,560 Speaker 3: Yeah? 120 00:05:16,600 --> 00:05:19,039 Speaker 5: I would actually, you know, slightly disagree John a little 121 00:05:19,080 --> 00:05:21,680 Speaker 5: bit that I think if you look at the younger generation, 122 00:05:22,000 --> 00:05:23,800 Speaker 5: they tend to be a lot more risk averse in 123 00:05:23,880 --> 00:05:26,320 Speaker 5: terms of buying a home. They're buying their first home 124 00:05:26,360 --> 00:05:28,200 Speaker 5: and affordability. 125 00:05:28,240 --> 00:05:29,120 Speaker 2: But it kind off thought it. 126 00:05:29,160 --> 00:05:31,599 Speaker 5: Yeah, but I have conversations with some of these folks, 127 00:05:31,839 --> 00:05:34,560 Speaker 5: you know, including in my family, where you know they're 128 00:05:34,640 --> 00:05:37,080 Speaker 5: they're heavy in cash, but if you look at their 129 00:05:37,080 --> 00:05:39,760 Speaker 5: portfolio what they're invested in, they are invested in crypto 130 00:05:40,240 --> 00:05:40,760 Speaker 5: or these things. 131 00:05:40,760 --> 00:05:42,960 Speaker 3: So there's a there's a there's a lean here. 132 00:05:42,800 --> 00:05:45,840 Speaker 5: To technology and some of these quote unquote cool things 133 00:05:45,920 --> 00:05:48,200 Speaker 5: versus look just put your money in a four to one. 134 00:05:48,120 --> 00:05:49,400 Speaker 3: K and max it out. 135 00:05:49,440 --> 00:05:52,080 Speaker 5: Hey, by the way, do a balanced portfolio, set it 136 00:05:52,080 --> 00:05:53,719 Speaker 5: and forget it that stuff. 137 00:05:53,760 --> 00:05:55,239 Speaker 3: I think there's a lot more risk a version. 138 00:05:55,440 --> 00:05:57,520 Speaker 2: Can we get your ideas on what to do with bombs? 139 00:05:57,520 --> 00:05:59,200 Speaker 2: This is what Michael Handa Bank of America had to 140 00:05:59,240 --> 00:06:03,560 Speaker 2: say this morning, perform a decade to date gold worst treasuries, 141 00:06:03,720 --> 00:06:06,680 Speaker 2: cause it a decade of inflation. What should you do 142 00:06:06,760 --> 00:06:08,440 Speaker 2: for the decade ahead? And what do you do with 143 00:06:08,480 --> 00:06:10,920 Speaker 2: that bond portfolio you talked about income. A lot of 144 00:06:10,920 --> 00:06:13,440 Speaker 2: people are very worried about inflation hanging around for too long. 145 00:06:14,160 --> 00:06:16,719 Speaker 5: Yeah, Look, I think we've got a more kind of 146 00:06:16,720 --> 00:06:19,520 Speaker 5: constructive view on inflation. It's why we still see the 147 00:06:19,560 --> 00:06:21,960 Speaker 5: markets kind of maybe topping out or the wide end 148 00:06:21,960 --> 00:06:25,640 Speaker 5: for US as around sixty four hundred SMP. Well, look, 149 00:06:25,680 --> 00:06:28,000 Speaker 5: I think this is a time where like there's likely 150 00:06:28,080 --> 00:06:29,880 Speaker 5: to be more like rate cuts coming. 151 00:06:30,000 --> 00:06:30,160 Speaker 3: Right. 152 00:06:30,200 --> 00:06:32,280 Speaker 5: You can debate whether that matters or not. You were 153 00:06:32,320 --> 00:06:34,599 Speaker 5: just having that conversation. I think it's a good time 154 00:06:34,640 --> 00:06:38,360 Speaker 5: to lock in yields today. And again for us, it's 155 00:06:38,400 --> 00:06:41,560 Speaker 5: not necessarily just about what's going on with treasuries or right. 156 00:06:41,600 --> 00:06:44,040 Speaker 5: It's it's again, how are you looking at your overall 157 00:06:44,080 --> 00:06:46,920 Speaker 5: platform and portfolio. There's a lot of different kind of 158 00:06:47,000 --> 00:06:48,799 Speaker 5: characteristics to take into account. 159 00:06:48,800 --> 00:06:49,040 Speaker 4: How's that. 160 00:06:49,120 --> 00:06:51,480 Speaker 2: Appreciate your time, Thank you, thanks for giving it to us. 161 00:06:51,480 --> 00:06:51,680 Speaker 3: Thank you. 162 00:06:51,760 --> 00:07:03,240 Speaker 2: Howzem and I there have b N one. There's the 163 00:07:03,279 --> 00:07:06,160 Speaker 2: take from Jeanette Low a strategus a bad company. Even 164 00:07:06,160 --> 00:07:08,719 Speaker 2: if some of the tarifft levels issued in Trump letters 165 00:07:08,920 --> 00:07:12,160 Speaker 2: are designed to accelerate negotiations with some countries, not all 166 00:07:12,240 --> 00:07:15,760 Speaker 2: countries will reach deals. Tarifs are going higher from here. 167 00:07:15,920 --> 00:07:18,160 Speaker 2: Jeanette joins U staff for more. Janette, welcome. I just 168 00:07:18,200 --> 00:07:19,960 Speaker 2: want to build on Lisa's point. Do you think this 169 00:07:20,040 --> 00:07:22,520 Speaker 2: record high the equity market is a green light to 170 00:07:22,600 --> 00:07:23,120 Speaker 2: keep pushing. 171 00:07:24,840 --> 00:07:26,640 Speaker 6: I think the important thing is that if you look 172 00:07:26,680 --> 00:07:28,880 Speaker 6: back at what happened on Liberation Day, you know, Trump 173 00:07:28,960 --> 00:07:31,560 Speaker 6: put very aggressive tariffs on the table. We saw a 174 00:07:31,600 --> 00:07:35,280 Speaker 6: sharp stock market reaction, and then you had the threats 175 00:07:35,320 --> 00:07:37,880 Speaker 6: so there could be you know, shortages on the shelves 176 00:07:37,920 --> 00:07:39,800 Speaker 6: and things of that nature, which then started to make 177 00:07:39,840 --> 00:07:43,840 Speaker 6: the president walk that back. Now we have more fiscal 178 00:07:43,880 --> 00:07:46,240 Speaker 6: policy that we have the tax bill, the one big 179 00:07:46,280 --> 00:07:49,320 Speaker 6: beautiful bill app that has been enacted that provides some 180 00:07:49,360 --> 00:07:53,840 Speaker 6: fiscal policy cushion, provides some relief to consumers and businesses 181 00:07:53,880 --> 00:07:57,040 Speaker 6: with regard to the tariffs. And now we have a 182 00:07:57,200 --> 00:08:00,280 Speaker 6: stronger stock market at this point, so the market isn't 183 00:08:00,320 --> 00:08:03,600 Speaker 6: looking like it's as negatively impacted. So that does embolden 184 00:08:03,640 --> 00:08:06,720 Speaker 6: the president to go forward and be more aggressive. Now 185 00:08:06,920 --> 00:08:09,840 Speaker 6: we're also not seeing inflation show up yet, but at 186 00:08:09,840 --> 00:08:12,560 Speaker 6: some point, you know, there may be start to see 187 00:08:12,600 --> 00:08:16,120 Speaker 6: some increases in inflation in the CPI data or even 188 00:08:16,120 --> 00:08:18,880 Speaker 6: in company profits. And that's something else that we're watching 189 00:08:19,200 --> 00:08:21,680 Speaker 6: quite closely, is to see if there starts to be 190 00:08:21,800 --> 00:08:24,120 Speaker 6: more economic pain that might show up. It might not 191 00:08:24,200 --> 00:08:27,040 Speaker 6: be until closer to that August first deadline, but that 192 00:08:27,080 --> 00:08:29,680 Speaker 6: then may make the administration try to rethink how these 193 00:08:29,720 --> 00:08:30,720 Speaker 6: things get calibrated. 194 00:08:30,800 --> 00:08:32,599 Speaker 1: Jane, I want to pick up on something John was 195 00:08:32,640 --> 00:08:36,160 Speaker 1: asking earlier. How much opposition is there to some of 196 00:08:36,200 --> 00:08:39,040 Speaker 1: these policies from the Democratic Party given the fact that 197 00:08:39,400 --> 00:08:41,880 Speaker 1: you know, it's kind of a grand experiment, and if 198 00:08:41,920 --> 00:08:44,920 Speaker 1: the economy doesn't roll over and the income from tariffs 199 00:08:44,920 --> 00:08:48,920 Speaker 1: really offsets the deficit, who's going to really lobby against these. 200 00:08:50,160 --> 00:08:50,360 Speaker 3: Right? 201 00:08:50,400 --> 00:08:51,839 Speaker 6: I mean? So, I think one of the things that's 202 00:08:51,880 --> 00:08:54,040 Speaker 6: going to be important is at some point, you know, 203 00:08:54,080 --> 00:08:56,480 Speaker 6: we do have inventories that we're pulled forward ahead of 204 00:08:56,480 --> 00:08:59,240 Speaker 6: some of these tariffs. The longer they're in that's going 205 00:08:59,280 --> 00:09:01,520 Speaker 6: to change than they up of this picture. So the 206 00:09:01,559 --> 00:09:04,800 Speaker 6: Democrats have an issue where you know they've wanted to 207 00:09:04,960 --> 00:09:08,920 Speaker 6: put into effect more restrictions on trade in some ways 208 00:09:08,960 --> 00:09:12,160 Speaker 6: to help trade unions in the United States, maybe not 209 00:09:12,160 --> 00:09:14,240 Speaker 6: obviously to the extent that Trump is doing, but it 210 00:09:14,240 --> 00:09:16,040 Speaker 6: does bring up the question of how do you then 211 00:09:16,160 --> 00:09:18,640 Speaker 6: roll these back. I think there is definitely a difference 212 00:09:18,679 --> 00:09:21,000 Speaker 6: when you saw the Biden administration able to keep the 213 00:09:21,080 --> 00:09:23,840 Speaker 6: tariffs on China in place that Trump can post, but 214 00:09:23,920 --> 00:09:27,320 Speaker 6: that's much different than putting in say twenty percent tariffs 215 00:09:27,360 --> 00:09:31,160 Speaker 6: on EU goods or thirty five percent tariffs on Canadian goods. 216 00:09:31,280 --> 00:09:33,360 Speaker 6: So there can start to be that push back there, 217 00:09:33,400 --> 00:09:36,600 Speaker 6: and you did see obviously earlier this year Tim Kaine, 218 00:09:36,720 --> 00:09:40,200 Speaker 6: Senator from Virginia, put forward legislation to kind of walk 219 00:09:40,240 --> 00:09:42,920 Speaker 6: these back. That did not pass, but that is something 220 00:09:42,920 --> 00:09:44,800 Speaker 6: that they're probably going to push again. And if we 221 00:09:44,960 --> 00:09:49,400 Speaker 6: do see more economic slow down because of the tariffs, 222 00:09:49,480 --> 00:09:52,040 Speaker 6: that could be something that then gets more traction later on. 223 00:09:52,440 --> 00:09:55,160 Speaker 1: We initially thought coming into this year that this would 224 00:09:55,200 --> 00:09:57,640 Speaker 1: mostly be about China and the rest of the negotiations 225 00:09:57,640 --> 00:09:58,600 Speaker 1: would be fairly easy. 226 00:09:58,840 --> 00:09:59,760 Speaker 4: That of course, has. 227 00:09:59,640 --> 00:10:02,959 Speaker 1: Been significantly challenged, and now we have the potential for 228 00:10:03,080 --> 00:10:06,640 Speaker 1: some sort of additional meeting between Chinese and US delegates 229 00:10:06,679 --> 00:10:08,720 Speaker 1: in the next couple of days, at the same time 230 00:10:09,120 --> 00:10:11,840 Speaker 1: that the terrify on Canada seems to be similar to 231 00:10:11,880 --> 00:10:14,320 Speaker 1: the one on China. How do you make sense of this? 232 00:10:14,440 --> 00:10:16,360 Speaker 1: What's the ultimate goal when it comes to China. 233 00:10:17,679 --> 00:10:19,920 Speaker 6: Well, I think there's We do still have to keep 234 00:10:19,920 --> 00:10:22,360 Speaker 6: a difference between what is happening with China and what 235 00:10:22,480 --> 00:10:23,880 Speaker 6: is happening with the rest of the world. 236 00:10:24,120 --> 00:10:24,320 Speaker 3: You know. 237 00:10:24,360 --> 00:10:26,680 Speaker 6: One of the things obviously Trump did say that the 238 00:10:26,760 --> 00:10:30,360 Speaker 6: Canadian terms were based on fentanyl, but also other things 239 00:10:30,440 --> 00:10:33,520 Speaker 6: other market access issues mentioned dairy in the letter. We 240 00:10:33,679 --> 00:10:36,720 Speaker 6: have actually seen more fentanyl coming across the border if 241 00:10:36,720 --> 00:10:39,440 Speaker 6: you look at the most recent customs data, so that 242 00:10:39,440 --> 00:10:41,920 Speaker 6: could have been an impetus for this. The Digital services 243 00:10:41,960 --> 00:10:45,120 Speaker 6: tax was also an erk for the Trump administration that 244 00:10:45,160 --> 00:10:47,520 Speaker 6: they wanted to get taken away. But I think that 245 00:10:47,559 --> 00:10:50,160 Speaker 6: they're ultimately you know, if we still have this carve 246 00:10:50,200 --> 00:10:53,679 Speaker 6: out for goods that are USMCA compliant, that is significant. 247 00:10:54,280 --> 00:10:55,640 Speaker 6: You know, I think there's going to probably be a 248 00:10:55,640 --> 00:10:59,800 Speaker 6: push to get more goods to fit that USMCA compliance 249 00:11:00,840 --> 00:11:03,120 Speaker 6: settings that they would be able to enter the US 250 00:11:03,240 --> 00:11:06,640 Speaker 6: TAC traf free. But there's definitely still a difference with China. 251 00:11:06,640 --> 00:11:09,080 Speaker 6: If you look at China, we still have terrorists from 252 00:11:09,120 --> 00:11:12,120 Speaker 6: Trump's first term, those who were never removed, those were 253 00:11:12,160 --> 00:11:15,199 Speaker 6: kept in place by Biden. They were actually increased. Trump 254 00:11:15,200 --> 00:11:17,840 Speaker 6: has now increased them even further. And if you look 255 00:11:17,840 --> 00:11:20,000 Speaker 6: at a lot of the trade deals, that are the 256 00:11:20,160 --> 00:11:24,320 Speaker 6: discussions that have been occurring with the administration of other countries. 257 00:11:24,400 --> 00:11:28,520 Speaker 6: It's also about country of origin. Is China putting goods 258 00:11:28,559 --> 00:11:31,120 Speaker 6: into Vietnam that then get shipped to the United States. 259 00:11:31,360 --> 00:11:33,360 Speaker 6: That is something that the White House would like to stop. 260 00:11:33,400 --> 00:11:35,679 Speaker 6: So we still think that there is much more aggressive 261 00:11:35,720 --> 00:11:39,400 Speaker 6: tone towards trade with China and trying to get production 262 00:11:39,600 --> 00:11:41,839 Speaker 6: out of China and into their countries or back to 263 00:11:41,880 --> 00:11:43,719 Speaker 6: the United States. And that is still going to be 264 00:11:43,760 --> 00:11:46,680 Speaker 6: a difference going forward, regardless of the talks that may happen. 265 00:11:46,840 --> 00:12:00,200 Speaker 2: Jenello Lestretegas a bad company. Jennet, thank you in some 266 00:12:00,200 --> 00:12:03,079 Speaker 2: of these conversations. Angela Zeno a Sfira join just now 267 00:12:03,080 --> 00:12:04,800 Speaker 2: for more. Angela, I want to start with Nvidia. A 268 00:12:04,840 --> 00:12:07,320 Speaker 2: theme of your research over the past few months is 269 00:12:07,360 --> 00:12:10,360 Speaker 2: that Nvidia has derisked the China story. Could you just 270 00:12:10,440 --> 00:12:12,760 Speaker 2: explain to all of us how they've gone about doing 271 00:12:12,840 --> 00:12:13,160 Speaker 2: just that. 272 00:12:14,520 --> 00:12:15,560 Speaker 7: Yeah, now, thanks John. 273 00:12:15,640 --> 00:12:17,480 Speaker 8: So, you know, for the most part, you kind of 274 00:12:17,480 --> 00:12:20,040 Speaker 8: look at just their most recent results and they've essentially 275 00:12:20,160 --> 00:12:23,319 Speaker 8: come out and zeroed out the potential for China, when 276 00:12:23,360 --> 00:12:26,000 Speaker 8: they've actually also said that there was an eight billion 277 00:12:26,040 --> 00:12:28,480 Speaker 8: dollar opportunity in the quarter that they're missing out on 278 00:12:28,600 --> 00:12:31,080 Speaker 8: because of China. So we know there's a massive opportunity 279 00:12:31,080 --> 00:12:34,160 Speaker 8: and a growing opportunity out in China. But in the 280 00:12:34,200 --> 00:12:36,920 Speaker 8: same respect, we know they've derisked it because they've essentially 281 00:12:37,040 --> 00:12:39,880 Speaker 8: zeroed it out and we could to expect China at 282 00:12:39,880 --> 00:12:42,240 Speaker 8: this point to represent less than five percent of sales 283 00:12:42,280 --> 00:12:45,400 Speaker 8: from the company, essentially all of it coming from you know, 284 00:12:45,480 --> 00:12:46,800 Speaker 8: gaming and what have you. 285 00:12:46,960 --> 00:12:49,840 Speaker 7: So that's what we mean by it being de risked. 286 00:12:49,840 --> 00:12:51,960 Speaker 8: I'd also say this, you know, when we saw the 287 00:12:52,000 --> 00:12:56,640 Speaker 8: reversal of the EDA software restrictions kind of lifted last week, 288 00:12:56,880 --> 00:13:00,480 Speaker 8: I think that is also kind of increasing this sentiment 289 00:13:00,800 --> 00:13:04,839 Speaker 8: out there or belief that potentially, you know, in Vidia 290 00:13:04,920 --> 00:13:07,320 Speaker 8: does have that opportunity to get back into China. You 291 00:13:07,440 --> 00:13:10,360 Speaker 8: just kind of heard Ed talk about that opportunity as 292 00:13:10,400 --> 00:13:13,360 Speaker 8: well in terms of a new potential chip out there. 293 00:13:13,400 --> 00:13:15,839 Speaker 8: So I think when you kind of look at the 294 00:13:15,920 --> 00:13:21,640 Speaker 8: dynamics right now, it's tilting more favorably towards in Nvidia 295 00:13:21,720 --> 00:13:24,720 Speaker 8: potentially getting back in there with the respect that right 296 00:13:24,760 --> 00:13:27,880 Speaker 8: now there's nothing coming from that region as well. 297 00:13:28,120 --> 00:13:31,640 Speaker 1: Angelo, There's sort of this deeper psychological question, and it's 298 00:13:31,640 --> 00:13:35,040 Speaker 1: been underpinned by what Ed was outlining from Jensen Huang, 299 00:13:35,080 --> 00:13:38,200 Speaker 1: what he was saying over the weekend that ultimately, if 300 00:13:38,240 --> 00:13:40,800 Speaker 1: the US wants to be dominant in this sphere, which 301 00:13:40,840 --> 00:13:43,880 Speaker 1: is like being the reserve currency, that it needs to 302 00:13:43,920 --> 00:13:46,800 Speaker 1: allow a greater degree of sales into China. Do we 303 00:13:46,840 --> 00:13:50,000 Speaker 1: have any sense of how much that message is resonating 304 00:13:50,120 --> 00:13:50,920 Speaker 1: in the White House. 305 00:13:52,200 --> 00:13:53,960 Speaker 8: I mean, I think it has to be resonating to 306 00:13:54,000 --> 00:13:56,640 Speaker 8: some extent, because I mean it seems like, you know, 307 00:13:56,800 --> 00:14:00,400 Speaker 8: at least right now, the Jensen's got Trump ears and 308 00:14:00,520 --> 00:14:02,640 Speaker 8: in some respect, I mean they're they're having faced to 309 00:14:02,720 --> 00:14:05,240 Speaker 8: face meetings, you know, I think that's definitely a good thing, 310 00:14:05,559 --> 00:14:07,160 Speaker 8: more so than I think, you know, some of these 311 00:14:07,200 --> 00:14:09,839 Speaker 8: other tech leaders are having. So you know, I think 312 00:14:09,840 --> 00:14:12,600 Speaker 8: it's resonating to an extent. I think Trump, you know, 313 00:14:12,920 --> 00:14:17,280 Speaker 8: it definitely respects Jensen, and at the end of the day, 314 00:14:17,360 --> 00:14:19,480 Speaker 8: I mean just looking at some of the recent moves 315 00:14:19,480 --> 00:14:22,720 Speaker 8: that we've seen again with with that software band and 316 00:14:22,720 --> 00:14:27,160 Speaker 8: and just potentially using in Video's chip as of bargaining. Uh, 317 00:14:27,640 --> 00:14:29,400 Speaker 8: you know, their their business as a bargaining chip. But 318 00:14:29,600 --> 00:14:32,120 Speaker 8: like we saw with Saudi Arabia, I think just it 319 00:14:32,280 --> 00:14:35,880 Speaker 8: points to the fact that hey, listen, it is resonating 320 00:14:35,960 --> 00:14:38,800 Speaker 8: that you know, they they're not necessarily looking to block 321 00:14:39,000 --> 00:14:43,440 Speaker 8: Nvidia out across the globe, but they do want to leverage. 322 00:14:43,040 --> 00:14:45,440 Speaker 7: In Nvidia with these trade deals out there. 323 00:14:45,440 --> 00:14:47,440 Speaker 8: So I think it's more along the lines of investors 324 00:14:47,440 --> 00:14:50,000 Speaker 8: at this point being patient. But I do think ultimately 325 00:14:50,600 --> 00:14:52,760 Speaker 8: you do see in Vidia again back into China as 326 00:14:52,800 --> 00:14:54,160 Speaker 8: well as other regions of the globe. 327 00:14:54,240 --> 00:14:56,920 Speaker 1: I wonder how much it's important for analysts like yourself 328 00:14:56,960 --> 00:14:59,720 Speaker 1: to see Jensen wang or with the ear of the president, 329 00:15:00,200 --> 00:15:02,560 Speaker 1: and who doesn't have the ear of the president. And 330 00:15:02,600 --> 00:15:04,640 Speaker 1: I'm thinking of Tim Cook of Apple, who seems to 331 00:15:04,680 --> 00:15:07,800 Speaker 1: be falling off the bandwagon when it comes to his 332 00:15:08,760 --> 00:15:12,400 Speaker 1: favorability in the president's eyes. How much do you agree 333 00:15:12,400 --> 00:15:15,560 Speaker 1: with Walter Pisac of Lifeshad as John was talking about 334 00:15:15,600 --> 00:15:19,200 Speaker 1: this idea that this is somebody who no longer really 335 00:15:19,280 --> 00:15:23,000 Speaker 1: has the creative or even diplomatic helme of Apple in 336 00:15:23,040 --> 00:15:24,280 Speaker 1: a way that benefits the company. 337 00:15:25,040 --> 00:15:25,240 Speaker 3: Yeah. 338 00:15:25,280 --> 00:15:27,280 Speaker 8: I mean, listen, we are a little bit worried about 339 00:15:27,280 --> 00:15:30,360 Speaker 8: Apple in the sense that you know, historically they've been 340 00:15:30,480 --> 00:15:32,600 Speaker 8: very slow to move to changes, right, I mean, and 341 00:15:32,800 --> 00:15:35,320 Speaker 8: it's worked in the past in the sense of, hey, listen, 342 00:15:35,320 --> 00:15:37,680 Speaker 8: we want to make sure we get this right and 343 00:15:37,720 --> 00:15:39,360 Speaker 8: we're not going to be you know, quick to move, 344 00:15:39,400 --> 00:15:41,200 Speaker 8: and we don't necessarily need to be the first ones 345 00:15:41,240 --> 00:15:41,600 Speaker 8: out there. 346 00:15:41,720 --> 00:15:44,400 Speaker 7: However, in an AI driven environment. 347 00:15:44,200 --> 00:15:48,200 Speaker 8: Things move really really fast, and in that type of environment, 348 00:15:48,240 --> 00:15:50,440 Speaker 8: I do think Apple needs to change to an extent. 349 00:15:50,920 --> 00:15:53,800 Speaker 8: Does it necessarily mean that they have to, you know, 350 00:15:54,000 --> 00:15:56,800 Speaker 8: get rid of Tim Cook? I'd probably say that's that's 351 00:15:56,800 --> 00:15:58,640 Speaker 8: something you don't want to do at this point in time. 352 00:15:58,680 --> 00:16:01,200 Speaker 8: And a reason for that is because we are seeing 353 00:16:01,240 --> 00:16:03,520 Speaker 8: a number of departures at the company. At the very 354 00:16:03,600 --> 00:16:05,640 Speaker 8: least right now, I think you need a hold on 355 00:16:05,840 --> 00:16:08,880 Speaker 8: you want to hold on to Tim Cook and have 356 00:16:09,000 --> 00:16:11,800 Speaker 8: that solidified at least at the CEO level. So, but 357 00:16:11,840 --> 00:16:13,720 Speaker 8: I do think changes need to be made. I do 358 00:16:13,800 --> 00:16:16,560 Speaker 8: think the company needs to work faster. Again, does it 359 00:16:16,600 --> 00:16:19,120 Speaker 8: need to be done via some m and a just 360 00:16:19,200 --> 00:16:23,080 Speaker 8: acquiring more talent the way Meta has. I think all 361 00:16:23,120 --> 00:16:24,840 Speaker 8: those should be on the table at this point in time. 362 00:16:24,880 --> 00:16:26,760 Speaker 8: But the most important thing right now, I think is 363 00:16:26,800 --> 00:16:29,480 Speaker 8: really kind of getting the serie integration across the app 364 00:16:29,480 --> 00:16:32,120 Speaker 8: store right, and they need to get that done here 365 00:16:32,160 --> 00:16:34,720 Speaker 8: within the next nine to twelve months to at least 366 00:16:34,760 --> 00:16:37,400 Speaker 8: restore some credibility within the company and with some of 367 00:16:37,440 --> 00:16:38,080 Speaker 8: their developers. 368 00:16:38,160 --> 00:16:39,480 Speaker 2: Do you think that's a chiefe of it with the 369 00:16:39,520 --> 00:16:42,560 Speaker 2: tools and the talent they have in house right now, Angelo, 370 00:16:42,680 --> 00:16:43,840 Speaker 2: I think that's the aultomate question. 371 00:16:46,560 --> 00:16:48,720 Speaker 8: To be honest with you, I don't know. The answer 372 00:16:48,800 --> 00:16:53,000 Speaker 8: probably is probably no. And I think the reason I 373 00:16:53,040 --> 00:16:55,800 Speaker 8: say that right now is because they are looking elsewhere 374 00:16:55,840 --> 00:16:58,080 Speaker 8: in terms of, you know, the perplexities of the world 375 00:16:58,120 --> 00:17:00,000 Speaker 8: and what have you to at least fill avoid or 376 00:17:00,160 --> 00:17:02,400 Speaker 8: even you know, via anthropic or an open AI. So 377 00:17:03,160 --> 00:17:07,240 Speaker 8: I think Apple realizes they are behind. But it's actually 378 00:17:07,280 --> 00:17:09,440 Speaker 8: a good thing that at least they've realized that and 379 00:17:09,480 --> 00:17:11,400 Speaker 8: they're trying to do something about it. And as long 380 00:17:11,440 --> 00:17:13,560 Speaker 8: as they can fill that void, whether it be you know, 381 00:17:13,680 --> 00:17:17,240 Speaker 8: temporary or what have you, that's extremely important I think 382 00:17:17,240 --> 00:17:18,240 Speaker 8: for investors at this. 383 00:17:18,119 --> 00:17:20,600 Speaker 2: Point in time, Angela, I appreciate your time as always, 384 00:17:20,600 --> 00:17:33,920 Speaker 2: thank you saying Angela's in the c FRA. Stephra Shudo 385 00:17:33,960 --> 00:17:36,400 Speaker 2: of Miszoo rights in the following. The lack of systemic 386 00:17:36,480 --> 00:17:38,919 Speaker 2: risk in the economy should ensure the economy will remain 387 00:17:39,280 --> 00:17:42,199 Speaker 2: as impervious to shock. Steve joins us. Now for more, 388 00:17:42,240 --> 00:17:44,480 Speaker 2: Steve coomone, it's good to see you. Let's talk about that, 389 00:17:44,720 --> 00:17:47,760 Speaker 2: the shockproof economy. We've been teasing it omonic out of 390 00:17:47,800 --> 00:17:50,560 Speaker 2: your appearance. What is so shockproof about this economy? What 391 00:17:50,680 --> 00:17:51,520 Speaker 2: makes his shock proof? 392 00:17:51,560 --> 00:17:54,600 Speaker 9: Well, as indicated, there's no systemic risk, there's no asset 393 00:17:54,640 --> 00:17:57,600 Speaker 9: liability mismatches, and there's no a SRA price bumpers. So 394 00:17:57,840 --> 00:18:00,679 Speaker 9: typically systemic risk occurs when there's an asset price bubble 395 00:18:00,720 --> 00:18:04,120 Speaker 9: that is funded by an asset liability mismatch. I you've 396 00:18:04,119 --> 00:18:07,760 Speaker 9: barred short and invested long, and the rising acid price 397 00:18:07,800 --> 00:18:11,280 Speaker 9: bubble eventually a curve inversion changes the economics. The bubble bursts, 398 00:18:11,600 --> 00:18:15,080 Speaker 9: capital is destroyed, and when capitals destroyed, liquidity just sucks 399 00:18:15,119 --> 00:18:17,719 Speaker 9: out of the economy. And in an environment where assets 400 00:18:17,720 --> 00:18:20,280 Speaker 9: and liabilities are matched and there's no asset price bubble, 401 00:18:20,680 --> 00:18:24,560 Speaker 9: a curve inversion had no impact, and the economy because 402 00:18:24,600 --> 00:18:29,320 Speaker 9: balance sheets when you go down the chain through nonfinancial corporates, households, banks, 403 00:18:29,560 --> 00:18:33,359 Speaker 9: shadow banks. Because the balance sheets are strong, everyone's deleveraging. 404 00:18:33,640 --> 00:18:36,520 Speaker 9: Everyone has very, very exceptionally low debt service and costs 405 00:18:36,560 --> 00:18:39,680 Speaker 9: and relatively long duration. You're in an environment where nobody 406 00:18:39,680 --> 00:18:42,919 Speaker 9: has rollover risk, nobody feels the impact of anything that 407 00:18:42,920 --> 00:18:45,680 Speaker 9: happens from the interest rate environment, and therefore you don't 408 00:18:45,720 --> 00:18:48,679 Speaker 9: have the same kind of credit related issues that have 409 00:18:48,800 --> 00:18:50,760 Speaker 9: typically popped up and caused a problem. 410 00:18:50,960 --> 00:18:54,200 Speaker 1: Is this a shock proof economy or a shock proof market. 411 00:18:54,920 --> 00:18:55,040 Speaker 3: Oh? 412 00:18:55,160 --> 00:18:58,760 Speaker 9: No, it's a shockproof economy because corporations are in this 413 00:18:58,800 --> 00:19:02,520 Speaker 9: position as well. Non financial corporations debt service burdens go 414 00:19:02,560 --> 00:19:06,600 Speaker 9: back to nineteen sixty levels, and they've been deleveraging since 415 00:19:06,640 --> 00:19:09,880 Speaker 9: the financial crisis. Even though we have record corporate issuance, 416 00:19:09,920 --> 00:19:12,639 Speaker 9: the amount of corporate debt outstanding is actually continuing to 417 00:19:12,680 --> 00:19:16,400 Speaker 9: go down because we refinance less than we're actually maturing off. 418 00:19:16,880 --> 00:19:20,600 Speaker 9: Corporations in this country are cash rich, and we see 419 00:19:20,600 --> 00:19:22,639 Speaker 9: that in terms of their cash positions, whether it's the 420 00:19:22,680 --> 00:19:24,320 Speaker 9: mag seven or even when you go down the chain 421 00:19:24,359 --> 00:19:27,040 Speaker 9: of two smaller and smaller companies. 422 00:19:27,080 --> 00:19:29,320 Speaker 4: You see this build up of cash that has taken place. 423 00:19:29,520 --> 00:19:31,560 Speaker 9: It's one of the reasons why there's an excess supply 424 00:19:31,600 --> 00:19:33,960 Speaker 9: of savings in the economy that's helping to damp in long. 425 00:19:33,920 --> 00:19:34,600 Speaker 4: Term interest rates. 426 00:19:34,600 --> 00:19:36,480 Speaker 1: Okay, so this is the reason why the economy hasn't 427 00:19:36,480 --> 00:19:38,640 Speaker 1: tanked and why you haven't seen any kind of real 428 00:19:38,680 --> 00:19:42,800 Speaker 1: deterioration and equity evaluations. But can you see ongoing strength 429 00:19:43,240 --> 00:19:46,160 Speaker 1: in the face of potential I don't want to say shock, 430 00:19:46,240 --> 00:19:49,639 Speaker 1: but changes, real changes to trade and potential tariffs that 431 00:19:49,920 --> 00:19:52,200 Speaker 1: could be much higher than people are currently expecting. 432 00:19:52,359 --> 00:19:55,880 Speaker 9: Again, because of the ability for companies in this very 433 00:19:55,920 --> 00:20:00,840 Speaker 9: solid financial position to adjust their businesses, which gets back 434 00:20:00,840 --> 00:20:03,439 Speaker 9: to your Tom King quote, you wind up in an 435 00:20:03,560 --> 00:20:07,439 Speaker 9: environment where basically you have the ability to adjust quicker 436 00:20:07,440 --> 00:20:11,240 Speaker 9: than people think. And this is really what sets the 437 00:20:11,359 --> 00:20:14,480 Speaker 9: US economy largely apart, because we are the largest, most 438 00:20:14,560 --> 00:20:16,560 Speaker 9: leveraged nation in the world. So you have to understand 439 00:20:16,560 --> 00:20:19,280 Speaker 9: credit to understand how the economy functions. And in an 440 00:20:19,359 --> 00:20:22,520 Speaker 9: environment where credit quality is excellent, you see that and spreads. 441 00:20:23,040 --> 00:20:26,080 Speaker 9: You're seeing an environment in which there's really no issue. 442 00:20:26,119 --> 00:20:28,280 Speaker 9: People can get the funding they need to morph their 443 00:20:28,280 --> 00:20:30,760 Speaker 9: businesses or they just use it out of internal earnings. 444 00:20:30,840 --> 00:20:33,480 Speaker 2: One additional task now for economists to navigate policy coming 445 00:20:33,520 --> 00:20:35,880 Speaker 2: from this White House and really understand what the strategy 446 00:20:35,960 --> 00:20:38,520 Speaker 2: is if there is one. You've pushed back against the 447 00:20:38,520 --> 00:20:41,199 Speaker 2: people that have suggested there isn't one. You believe there is. 448 00:20:41,480 --> 00:20:43,000 Speaker 2: Let's get into that. What is the strategy? 449 00:20:43,200 --> 00:20:45,840 Speaker 9: Well, I think you have to understand the strategies on 450 00:20:45,920 --> 00:20:50,119 Speaker 9: three dimensional there's geopolitical, there's socioeconomic and macroeconomic, and we 451 00:20:50,200 --> 00:20:52,919 Speaker 9: and our business tend to just think in the macroeconomic plane. 452 00:20:52,920 --> 00:20:54,800 Speaker 9: But you look at things like what Trump is doing, 453 00:20:54,920 --> 00:20:56,800 Speaker 9: like what he just did with Brazil, what he's doing 454 00:20:56,840 --> 00:20:57,960 Speaker 9: with China. 455 00:20:57,600 --> 00:20:59,119 Speaker 4: Those are geopolitical issues. 456 00:20:59,200 --> 00:21:00,879 Speaker 9: Then you look at Mexico and it's large to be 457 00:21:00,960 --> 00:21:05,280 Speaker 9: a socioeconomic issue. So you've got to take apart some 458 00:21:05,359 --> 00:21:08,960 Speaker 9: of these things that seem irrational from a macroeconomic standpoint 459 00:21:09,000 --> 00:21:11,640 Speaker 9: and then look at the macroeconomic piece of it and saying, well, 460 00:21:11,720 --> 00:21:14,600 Speaker 9: what he's doing so far is basically attempting to create 461 00:21:14,600 --> 00:21:17,120 Speaker 9: a level playing field, which corporate America kind of likes. 462 00:21:18,000 --> 00:21:19,760 Speaker 4: Number one. Number two he. 463 00:21:19,640 --> 00:21:22,240 Speaker 9: Really keeps on as we indicated with Mike McKee keeps 464 00:21:22,240 --> 00:21:24,560 Speaker 9: on pushing out the dates of these tariffs, and people 465 00:21:24,560 --> 00:21:25,800 Speaker 9: are beginning to recognize it. 466 00:21:25,800 --> 00:21:29,200 Speaker 4: It is a negotiating trick on his side. 467 00:21:29,240 --> 00:21:32,120 Speaker 9: So you begin to you begin to back away from 468 00:21:32,160 --> 00:21:34,439 Speaker 9: the paranoia that comes out of it, and you have 469 00:21:34,480 --> 00:21:36,560 Speaker 9: to ask yourself a question, does Donald Trump really want 470 00:21:36,600 --> 00:21:39,240 Speaker 9: to destroy the economy going into the midterm elections? The 471 00:21:39,280 --> 00:21:41,480 Speaker 9: answer is now, I think Donald Trump wants to try 472 00:21:41,520 --> 00:21:45,879 Speaker 9: to expand his polarity in the midterm elections to do 473 00:21:45,920 --> 00:21:48,120 Speaker 9: what he really wants to do, which is drain the swamp, 474 00:21:48,440 --> 00:21:50,960 Speaker 9: which means he needs a bigger majority in Congress to 475 00:21:51,080 --> 00:21:54,080 Speaker 9: change some of the laws that have been keeping us 476 00:21:54,160 --> 00:21:56,040 Speaker 9: with a structural death sit of two trillion dollars. 477 00:21:56,160 --> 00:21:58,280 Speaker 2: Is that a recipe that comes with high yields a 478 00:21:58,359 --> 00:22:00,399 Speaker 2: lower yields, high rates rights. 479 00:22:00,800 --> 00:22:03,000 Speaker 9: I think the risk is it comes with higher inflation 480 00:22:03,119 --> 00:22:07,119 Speaker 9: and with it higher yields. I think the presumption that 481 00:22:07,160 --> 00:22:09,600 Speaker 9: the market has had continuously that the Fed needs to 482 00:22:09,640 --> 00:22:13,440 Speaker 9: cut interest rates because the economy is somehow or another weakening. 483 00:22:13,760 --> 00:22:15,800 Speaker 9: This economy is capable of running a trend, and when 484 00:22:15,800 --> 00:22:18,760 Speaker 9: you throw fiscal stimulus on it, you will get above trend. 485 00:22:18,920 --> 00:22:21,840 Speaker 9: And even though you could say over the long term, 486 00:22:21,960 --> 00:22:24,320 Speaker 9: the Trump tax cut and the terriffs may net out 487 00:22:24,680 --> 00:22:27,400 Speaker 9: in the twenty twenty five twenty twenty six period. In particular, 488 00:22:28,160 --> 00:22:32,520 Speaker 9: the tax cut is front loaded, so you wind up 489 00:22:32,560 --> 00:22:35,480 Speaker 9: with the net stimulus helping to lift the economy in 490 00:22:35,520 --> 00:22:36,400 Speaker 9: twenty twenty six. 491 00:22:36,720 --> 00:22:39,840 Speaker 1: Given that if the Federal Reserve does cut rates this year, 492 00:22:40,119 --> 00:22:43,639 Speaker 1: will that lead to harder than expected inflation in the 493 00:22:43,680 --> 00:22:45,480 Speaker 1: medium term? That challenges that. 494 00:22:46,119 --> 00:22:48,399 Speaker 9: I think it'll lead to a backup in yields almost 495 00:22:48,440 --> 00:22:51,240 Speaker 9: every bit as much as they cut your term interest rates, 496 00:22:51,280 --> 00:22:53,840 Speaker 9: as we saw happened last year. You know, I think 497 00:22:53,840 --> 00:22:55,800 Speaker 9: when you cut interest rates when you don't need to 498 00:22:55,800 --> 00:23:00,320 Speaker 9: cut interest rates, it's not a good policy prescription. And 499 00:23:00,480 --> 00:23:03,439 Speaker 9: they clearly made a mistake last year, and I think 500 00:23:03,640 --> 00:23:05,800 Speaker 9: they're sitting here this year with as. 501 00:23:05,560 --> 00:23:07,560 Speaker 4: Mike indicated, You've all indicated that you. 502 00:23:07,560 --> 00:23:11,080 Speaker 9: Have situations in terms of the potential of tariffs coming 503 00:23:11,080 --> 00:23:13,479 Speaker 9: down the pipeline to lift prices, and you have an 504 00:23:13,480 --> 00:23:16,480 Speaker 9: economy that's proving to be very, very resilient. You've got 505 00:23:16,480 --> 00:23:19,000 Speaker 9: a labor market that's proving to be very resilient. What 506 00:23:19,119 --> 00:23:21,280 Speaker 9: would be the benefit of cutting interest rates? 507 00:23:21,359 --> 00:23:23,160 Speaker 2: Stave if you've called the economy really well so far. 508 00:23:23,280 --> 00:23:25,119 Speaker 2: Credit to you. It's going to catch out. Thank you, 509 00:23:25,160 --> 00:23:27,560 Speaker 2: Thank you very much. Steve A shudder there of Miszoo. 510 00:23:28,440 --> 00:23:32,000 Speaker 2: This is the Bloomberg Sevenants podcast, bringing you the best 511 00:23:32,040 --> 00:23:35,359 Speaker 2: in markets, economics, antient politics. You can watch the show 512 00:23:35,400 --> 00:23:38,359 Speaker 2: live on Bloomberg TV weekday mornings from six am to 513 00:23:38,480 --> 00:23:42,240 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 514 00:23:42,400 --> 00:23:44,600 Speaker 2: or anywhere else you listen, and as always on the 515 00:23:44,640 --> 00:23:47,000 Speaker 2: Bloomberg Terminal and The Bloomberg Business Out