WEBVTT - Bessent Says No Unilateral US Offer to Cut Tariffs on China 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business app. 0:00:18.600 --> 0:00:21.840 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.040 US live on YouTube. 0:00:23.760 --> 0:00:26.799 US Treasury Secretary Scott Bessont participating in a Q and 0:00:26.840 --> 0:00:31.120 A session with the Institute of International Finance. The President 0:00:31.120 --> 0:00:33.600 there and CEO Tim Adams having a little conversation about 0:00:33.640 --> 0:00:36.600 the economy, about trade policy, and we want to you know, 0:00:37.000 --> 0:00:38.760 get a sense of kind of where we go from here. 0:00:38.840 --> 0:00:41.320 Let's bring our next guest, Stewart Paul, us economist with 0:00:41.360 --> 0:00:46.120 Bloomberg Economic Stewary. It seems like Secretary Bessant and even 0:00:46.159 --> 0:00:49.720 the President in his most recent tweets and social media posts, 0:00:50.560 --> 0:00:52.920 I guess, seemingly pulling back from some of the most 0:00:53.920 --> 0:00:57.680 you know, stringent tariff requirements. How are you guys reading that? 0:00:57.680 --> 0:01:00.160 From an economic perspective, is a US trying to to 0:01:00.280 --> 0:01:02.320 be I guess less confrontational. 0:01:02.400 --> 0:01:06.080 From a trade perspective, I think the US is less confrontation, 0:01:06.319 --> 0:01:08.760 is trying to be a little bit less confrontational, especially 0:01:08.760 --> 0:01:12.039 when it comes to dealing with our global trading partners, 0:01:12.040 --> 0:01:14.840 that we need to offset what we typically would get 0:01:14.880 --> 0:01:17.640 from China, and I think that that's an important thing 0:01:17.680 --> 0:01:19.920 to keep in mind. When we have, let's say, a 0:01:20.040 --> 0:01:23.720 universal tariff of twenty five percent, or an average effect 0:01:23.760 --> 0:01:26.800 of tarifrate of twenty five percent, net's relatively evenly spread 0:01:26.800 --> 0:01:29.280 across all of our trading partners. That gives us a 0:01:29.319 --> 0:01:35.200 relatively limited ability to substitute across sources and across suppliers. 0:01:35.760 --> 0:01:40.480 When we ramp up our efforts to combat China with 0:01:41.160 --> 0:01:46.039 tariffs with trade barriers, and we lower our trade barriers 0:01:46.040 --> 0:01:50.280 everywhere else, we are becoming less confrontational globally. We're directing 0:01:50.320 --> 0:01:53.600 more of our efforts specifically towards China, and in doing so, 0:01:54.000 --> 0:01:57.960 we open up other sources for inputs to production that 0:01:58.000 --> 0:02:02.600 we might need, so probably less confrontational, and we're just 0:02:02.640 --> 0:02:06.960 becoming more specifically targeted towards China. That's probably a good 0:02:06.960 --> 0:02:09.960 thing in terms of maintaining the global commercial order, but 0:02:10.040 --> 0:02:12.480 it also will make it an especially difficult list when 0:02:12.480 --> 0:02:14.359 it comes to negotiating some sort of a trade deal 0:02:14.400 --> 0:02:18.280 with China, who's responsible for eleven twelve percent of our imports. 0:02:19.160 --> 0:02:21.320 He did say that the goal isn't too decoupled. But 0:02:21.320 --> 0:02:23.760 then as each day passes with no resolution or no 0:02:23.840 --> 0:02:26.799 dramatic lowering of tariffs, the viability of businesses and other 0:02:26.840 --> 0:02:29.680 things remain at risk. What can we expect, like how 0:02:29.720 --> 0:02:32.760 long can this keep on going? I guess is the question? 0:02:33.320 --> 0:02:36.560 Yeah, it's going to be a slow de escalation. I 0:02:36.639 --> 0:02:38.359 think that that's the direction that we're going to be going. 0:02:38.360 --> 0:02:40.880 So you could talk about both the level and the direction. 0:02:41.080 --> 0:02:44.160 Right the level is, things are bad. We are at 0:02:44.280 --> 0:02:48.040 an all time a difficult moment when it comes to 0:02:48.280 --> 0:02:52.919 our relationship with China and especially our economic relationship with China. 0:02:53.040 --> 0:02:55.240 But in terms of the direction of travel, things are 0:02:55.400 --> 0:02:58.560 moving slowly in the right direction, and it can take years. 0:02:58.639 --> 0:03:00.840 It can last well beyond the Trump administration. As we 0:03:00.840 --> 0:03:03.520 saw in the first Trump administration, he imposed Section three 0:03:03.600 --> 0:03:06.840 zero one tariffs that lasted through the Biden administration with 0:03:06.919 --> 0:03:10.200 no material change. Now there's been a ramp up. We're 0:03:10.240 --> 0:03:13.760 starting to change direction, and the de escalation process can 0:03:13.800 --> 0:03:14.359 take years. 0:03:14.960 --> 0:03:19.280 So I guess, is Bloomberg Economics forecasting every recession. 0:03:19.600 --> 0:03:22.240 We are not forecasting a recession at this point. We 0:03:22.320 --> 0:03:25.400 have very modest growth of just over half a percent 0:03:25.560 --> 0:03:29.280 for twenty twenty five. The contour of growth is going 0:03:29.320 --> 0:03:32.440 to be determined in large part by what segments of 0:03:32.520 --> 0:03:36.080 GDP are driving quarter to quarter dynamics. So we know 0:03:36.160 --> 0:03:38.320 that in the first quarter we should see slow growth 0:03:38.440 --> 0:03:42.320 because we've front loaded our imports of inputs to production 0:03:42.480 --> 0:03:48.160 ahead of tariff implementation. Then when uncertainty really hits, When 0:03:48.200 --> 0:03:50.640 in certain uncertainty really hits in Q two and into 0:03:50.760 --> 0:03:53.800 Q three, we should see slower fixed investment growth That 0:03:53.840 --> 0:03:56.520 should hollow out GDP growth in the middle of the year, 0:03:57.080 --> 0:04:01.520 but probably not enough to offer set the rebound that 0:04:01.560 --> 0:04:04.200 we'll get in that export in the middle of the year. 0:04:04.680 --> 0:04:07.720 So the contour of GDP and the dynamics for the 0:04:07.720 --> 0:04:10.240 different components of GDP are probably going to be enough 0:04:10.240 --> 0:04:12.920 to just keep modest positive growth throughout the year. 0:04:12.960 --> 0:04:15.960 We think President Trump said that the US was doing 0:04:16.160 --> 0:04:19.160 just fine quote unquote with Beijing and did not anticipate 0:04:19.160 --> 0:04:23.240 a quote hardball negotiation. What was your team's reaction. Did 0:04:23.279 --> 0:04:25.880 you anticipate that it's. 0:04:25.760 --> 0:04:27.640 Going to be hardball? I mean, the President's going to 0:04:27.640 --> 0:04:29.320 be able to do The President could say whatever he wants, 0:04:29.360 --> 0:04:33.240 but The reality is that the metals, let's say that 0:04:33.320 --> 0:04:37.440 we need for just base metals, inputs of production, raw 0:04:37.480 --> 0:04:41.279 materials for building buildings, electure for the electric grade for 0:04:41.320 --> 0:04:44.400 battery production, they come from China. China needs a lot 0:04:44.440 --> 0:04:46.920 of food from US. They're going to try to replace 0:04:47.120 --> 0:04:50.080 US food, but let's say food from Brazil. So this 0:04:50.279 --> 0:04:55.400 is just a massive geopolitical upset that's going on right out. 0:04:55.640 --> 0:04:57.960 You do have to play hardball. You do have to 0:04:58.040 --> 0:05:01.120 manage your trading partners. You have to you have to 0:05:01.160 --> 0:05:05.920 prohibit let's say, geopolitical and economic promiscuity between trading partners 0:05:05.960 --> 0:05:08.680 who stand between the US and China. And so it 0:05:08.720 --> 0:05:11.440 is going to be hardball for a while. Trump likes 0:05:11.480 --> 0:05:14.760 to say that he holds all the cards to use 0:05:14.760 --> 0:05:20.760 a different analogy, but it doesn't entirely seem to be 0:05:20.800 --> 0:05:25.800 the case. Yes, China does need food imports from the US, 0:05:26.360 --> 0:05:29.080 and they've shown they're not going to retaliate one for one, 0:05:29.240 --> 0:05:32.520 because they've only imposed you know, low double digitarifs on 0:05:32.640 --> 0:05:36.240 US corn for example. But it is going to have 0:05:36.279 --> 0:05:39.160 the opportunity to source food elsewhere, and so over the 0:05:39.200 --> 0:05:42.159 long run, it's going to be a difficult a difficult negotiation. 0:05:42.440 --> 0:05:44.159 All right, we will stay on top of it, of course. 0:05:44.200 --> 0:05:47.160 Stuart Paul, us economists for Bloomberg Economics, joining us slid 0:05:47.160 --> 0:05:49.039 here in our Bloomberg Interactive Broker studio. 0:05:50.720 --> 0:05:54.400 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:54.480 --> 0:05:57.599 weekdays at ten am Eastern on Apple Coarclay and Android 0:05:57.600 --> 0:06:01.039 Auto with the Bloomberg Business Apps and demand wherever you 0:06:01.080 --> 0:06:04.080 get your podcasts, or watch us live on YouTube. 0:06:04.839 --> 0:06:08.360 Tesla stocks up just under eight percent today. It came 0:06:08.400 --> 0:06:10.720 out with numbers last week that last night, which were 0:06:10.800 --> 0:06:14.400 really bad, will blow expectations the worst we've seen in 0:06:14.800 --> 0:06:18.320 years yet to stock trading out because Elon Musk says 0:06:18.320 --> 0:06:21.080 that he will devote quote far more of his time 0:06:21.120 --> 0:06:23.960 to Tesla starting next month, and that's clearly what investors 0:06:24.000 --> 0:06:27.080 wanted to hear. Craig Trudell joins us Global autos editor 0:06:27.320 --> 0:06:31.719 for Bloomberg News, joining us from London via that Zoom thing. So, Craig, 0:06:31.800 --> 0:06:34.920 is just as simple as Elon's coming back. Let's buy 0:06:34.920 --> 0:06:35.320 the stock. 0:06:37.000 --> 0:06:39.640 Yeah, you know, I think as as our colleague Liam 0:06:39.720 --> 0:06:43.480 Denning put it. You know, the cure for musks missteps 0:06:43.600 --> 0:06:47.039 is more Musk apparently, so, you know, I do think 0:06:47.080 --> 0:06:49.400 that there were a lot of investors who wanted to 0:06:49.400 --> 0:06:53.240 see him, you know, sort of come come back and 0:06:54.000 --> 0:06:56.880 you know, devote more of his time. You know, I 0:06:56.880 --> 0:06:59.600 think you can find people who can say that, you know, 0:06:59.680 --> 0:07:03.560 that will necessarily fix all that that ails the company. 0:07:03.680 --> 0:07:06.400 And you do have to wonder when he was saying 0:07:06.440 --> 0:07:08.760 in the same breath last night that you know he'll 0:07:09.160 --> 0:07:12.000 still you know, one or two days a week. Uh, 0:07:12.240 --> 0:07:16.160 you know, advise for the administration. Just how much he's 0:07:16.280 --> 0:07:18.600 he's really going to step back here. I would be 0:07:18.640 --> 0:07:21.120 surprised to see him. He's he's not much of a 0:07:21.160 --> 0:07:24.160 sort of backseat driver. He likes to be in control. 0:07:24.840 --> 0:07:27.600 And Tesla sales started to really slow even before Musks 0:07:27.640 --> 0:07:30.000 through his waight around politics, and they also go through 0:07:30.320 --> 0:07:32.680 guidance for the year ahead. What are you going to 0:07:32.720 --> 0:07:35.920 look at now that he's back and we're getting more 0:07:35.960 --> 0:07:36.640 elon Musk? 0:07:38.080 --> 0:07:40.880 Yeah, I mean I think, you know, the first thing 0:07:40.920 --> 0:07:43.320 that comes to mind for me is is, uh, you know, 0:07:43.600 --> 0:07:46.679 given all of all of the challenge challenges they're having 0:07:46.760 --> 0:07:50.600 with growing sales, you know, around this time last year 0:07:50.680 --> 0:07:53.000 is when we saw the company make these really dramatic 0:07:53.560 --> 0:07:58.000 uh you know, changes to to uh you know, headcount 0:07:58.120 --> 0:08:01.120 and and you know, restructure in this really aggressive way. 0:08:01.120 --> 0:08:04.960 I think Tesla cut quite a lot of employees last year. 0:08:05.000 --> 0:08:07.880 And do we see Musk in his words, you know, 0:08:08.000 --> 0:08:11.440 come back and be hardcore and sort of uh you know, 0:08:11.520 --> 0:08:14.000 throw throw his weight around. Because I think that the 0:08:14.120 --> 0:08:18.200 challenge that we're going to find this company have until 0:08:18.240 --> 0:08:21.840 and unless they follow through on these promises for you know, 0:08:21.920 --> 0:08:25.960 more affordable vehicles in the offering, uh you know, and 0:08:25.960 --> 0:08:28.760 and also I think vehicles that sort of are differentiated 0:08:28.760 --> 0:08:31.520 from just what they already have, uh, they're they're going 0:08:31.560 --> 0:08:34.160 to have trouble you know, continuing to grow and and 0:08:34.240 --> 0:08:36.520 so there's I think real concern about you know, if 0:08:36.559 --> 0:08:40.600 they're just offering a you know, de contented version of 0:08:40.640 --> 0:08:43.360 the Model Y and or the Model three, is that 0:08:43.559 --> 0:08:45.480 really going to be enough to sort of move the 0:08:45.520 --> 0:08:48.440 needle and sort of you know, tie them over until 0:08:49.640 --> 0:08:52.600 they make some headway on on other efforts that are 0:08:52.679 --> 0:08:55.640 sort of going to take them more time, like say 0:08:55.720 --> 0:08:58.080 autonomous driving or robots. 0:08:58.600 --> 0:09:01.480 So just with the core auto business, I know mister 0:09:01.559 --> 0:09:03.400 Musk would like to people look to other parts of 0:09:03.440 --> 0:09:06.320 his company, but the core auto business, one can argue 0:09:06.360 --> 0:09:09.000 it's never been a tougher time to compete for them. 0:09:09.040 --> 0:09:12.360 I mean, you just think it just feels like China 0:09:12.520 --> 0:09:16.040 by D specifically just kind of taken over the global 0:09:16.920 --> 0:09:20.440 EV market. What's the competitive landscape book for TESTA these days. 0:09:21.760 --> 0:09:23.839 Yeah, I think that's a great point. You know, the 0:09:24.280 --> 0:09:28.240 Chinese market is incredibly competitive. We're seeing you know, just 0:09:28.320 --> 0:09:31.800 this week, uh, you know, fresh indication of just how 0:09:31.800 --> 0:09:34.760 tough the sledding is there at the Shanghai Auto Show, 0:09:35.200 --> 0:09:39.000 where you know, Jaomi is turning lots of heads. You know, 0:09:39.200 --> 0:09:42.000 it's it's sort of the Apple car that that Apple 0:09:42.120 --> 0:09:46.160 decided they couldn't pull off making their su seven that 0:09:46.360 --> 0:09:49.520 that really has done well there. You know, b y 0:09:49.640 --> 0:09:52.320 D continues to just go from sort of strength to 0:09:52.400 --> 0:09:56.880 strength and really dominate in that market, and Tesla hasn't 0:09:56.920 --> 0:10:00.560 really had answers. You know, they they play in higher 0:10:00.559 --> 0:10:05.079 priced you know brackets. It's not that they are are 0:10:05.440 --> 0:10:08.439 you know, falling apart there, but in terms of of 0:10:08.559 --> 0:10:11.120 you know, being able to sort of hang on to 0:10:11.280 --> 0:10:15.200 the position that they have, it's becoming more difficult when 0:10:15.240 --> 0:10:19.000 you have you know, a fairly stale lineup and your 0:10:19.040 --> 0:10:23.480 competitors are of peppering the market with fresh product and 0:10:23.720 --> 0:10:26.600 innovating in a way that we used to you know, 0:10:27.040 --> 0:10:31.240 kind of find Tesla was able to. The Chinese industry 0:10:31.400 --> 0:10:34.320 has really sort of taken up the mantle in this regard. 0:10:35.120 --> 0:10:37.080 Can you talk to us more about how much of 0:10:37.120 --> 0:10:40.320 the tire of discussion was in the call, which took 0:10:40.360 --> 0:10:43.480 longer than usual. We have must sing it's pretty expensive 0:10:43.520 --> 0:10:45.720 to bring in things from China right now, and that 0:10:45.800 --> 0:10:48.400 he'll continue to advocate for lower tireff so we know 0:10:48.480 --> 0:10:50.719 that this has hurt his business, which does a lot 0:10:50.760 --> 0:10:52.520 of production and manufacturing in China. 0:10:53.960 --> 0:10:55.319 Yeah, it was. It was a long call. It was 0:10:55.360 --> 0:10:57.840 a late night for those of us tuning in from London, 0:10:58.000 --> 0:11:02.319 so you know, it was I was a little bit surprised, 0:11:02.320 --> 0:11:04.719 I would say to hear Musk, you know, be as 0:11:04.720 --> 0:11:07.920 frank as he was about tariffs. He's of course a 0:11:08.040 --> 0:11:10.559 very frank person, but he has tended to be very 0:11:10.559 --> 0:11:13.880 careful about, you know how and when he speaks about 0:11:14.080 --> 0:11:17.240 having any daylight between him and President Trump. But he 0:11:17.360 --> 0:11:20.800 was he was very you know, uh, sort of honest 0:11:20.840 --> 0:11:23.560 and open about this idea that he does not think 0:11:23.600 --> 0:11:27.720 that you know, tariffs are the best approach to prosperity, 0:11:27.760 --> 0:11:31.000 as he put it. And you know, while Tesla is 0:11:31.040 --> 0:11:34.640 somewhat insulated and that they make the vehicles they stell 0:11:34.679 --> 0:11:39.559 in the US, you know, in the US, and they 0:11:39.600 --> 0:11:42.920 have a plant in Shanghai that is is massive and 0:11:42.920 --> 0:11:46.240 and you know a huge source of their exports for 0:11:46.720 --> 0:11:50.320 places other than the US. UH, the company is still 0:11:50.320 --> 0:11:54.720 affected and and particularly on the side of their energy business, 0:11:54.760 --> 0:11:57.120 which has been a bright spot, the fact that they 0:11:57.160 --> 0:12:01.520 import battery cells from China for that business. You know, 0:12:01.520 --> 0:12:02.920 there's a big concern. 0:12:02.679 --> 0:12:05.400 There, Craig, excellent reporting. Thank you very much, appreciate it. 0:12:05.400 --> 0:12:08.040 Craig Trudelle, Global autos editor for Bloomberg News, joining us 0:12:08.040 --> 0:12:10.840 from London on Tesla. 0:12:11.440 --> 0:12:15.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:15.240 --> 0:12:18.600 weekdays at ten am Eastern on Applecarplay and Android Auto 0:12:18.720 --> 0:12:21.800 with the Bloomberg Business app. Listen on demand wherever you 0:12:21.840 --> 0:12:24.800 get your podcasts, or watch us live on YouTube. 0:12:25.720 --> 0:12:29.079 We're talking about Boeing putting up some results that were 0:12:29.080 --> 0:12:31.280 a little bit better and expected, and I've learned from 0:12:31.280 --> 0:12:33.480 George Ferguson that I need to focus on the cash 0:12:33.520 --> 0:12:37.160 situation of this company, particularly their free cash flow, because 0:12:37.160 --> 0:12:39.280 they need to get the free cash flow positive sooner 0:12:39.400 --> 0:12:41.240 rather than the later. And they made some progress there 0:12:41.440 --> 0:12:43.319 is what is what my read is. So let's check 0:12:43.360 --> 0:12:46.120 in with the extra George Ferguson. He covers airspace, he 0:12:46.120 --> 0:12:48.240 covers the airlines and all that kind of stuff for 0:12:48.280 --> 0:12:52.000 Bloomberg Intelligence. George talk to us about Boeing stocks up 0:12:52.040 --> 0:12:54.199 seven percent here today? What at the company? What did 0:12:54.280 --> 0:12:55.480 your takeaways from their earnings? 0:12:56.080 --> 0:12:57.840 Yeah, I mean, I think the biggest issue there was 0:12:58.160 --> 0:13:03.840 a cash general came in a billion dollars better than expectations. 0:13:04.240 --> 0:13:05.920 I mean, I kind of get the sense that Boeing 0:13:06.000 --> 0:13:07.040 management has sort of. 0:13:08.720 --> 0:13:12.440 Give us some pretty conservative estimates for cash generation for 0:13:12.520 --> 0:13:15.200 the year. I think they showed it in the first quarter, 0:13:15.280 --> 0:13:18.280 coming up, coming out pretty strong. I think there's a 0:13:18.679 --> 0:13:24.439 real good potential that Boeing could be sort of cash flat, 0:13:24.520 --> 0:13:26.960 meaning no usage for the year, or maybe even a 0:13:26.960 --> 0:13:27.760 bit of generation. 0:13:28.760 --> 0:13:29.800 And I think as we've. 0:13:29.640 --> 0:13:33.200 Gotten into the earnings call what we've heard ish the 0:13:33.280 --> 0:13:37.320 tariff effects are pretty manageable outside of China. 0:13:37.800 --> 0:13:39.080 China's a bit of a challenge. 0:13:39.120 --> 0:13:41.280 They know that, but again, a lot of the backlog 0:13:41.360 --> 0:13:44.080 is is not Chinese airplanes. A lot of that's been 0:13:44.640 --> 0:13:47.440 the Chinese haven't placed many orders, and you know, Boeing 0:13:47.440 --> 0:13:49.559 has been sort of busy getting deliveries out to them 0:13:49.640 --> 0:13:52.240 to get some of those airplanes they've already built for 0:13:52.280 --> 0:13:56.200 them off the balance sheet. So China the major issue 0:13:56.240 --> 0:14:00.319 again not not not big though. And the rest of 0:14:00.360 --> 0:14:04.080 tariff world sounds like where there's occasions that they have 0:14:04.120 --> 0:14:07.000 to pay, they're paying. They can claw back some of 0:14:07.040 --> 0:14:11.559 those costs from the administration. So it sounds like I 0:14:11.600 --> 0:14:16.200 would say things are continued to be on track for recovery, 0:14:16.240 --> 0:14:17.160 for a strong recovery. 0:14:17.160 --> 0:14:17.880 Hopefully it's here. 0:14:18.240 --> 0:14:20.280 Yes, And Boeing last earned a profit in mid twenty 0:14:20.320 --> 0:14:22.920 twenty one, and it's definitely coming off. It's worse there 0:14:23.000 --> 0:14:26.400 and it's century long history. We have the CEO okay 0:14:26.640 --> 0:14:30.000 or break saying at twenty twenty five is the turnaround here? 0:14:30.400 --> 0:14:32.440 What ising going to do differently? 0:14:33.880 --> 0:14:36.120 Well, I mean I think they're going to deliver airplanes, right, 0:14:36.160 --> 0:14:40.200 So that's the biggest challenge. When you're an aircraft manufacturer 0:14:40.800 --> 0:14:43.880 and you stop delivering airplanes and you have quality problems, 0:14:44.240 --> 0:14:46.840 that's why they stop delivering. You're just not going to 0:14:46.880 --> 0:14:51.360 generate cash. They've really been trying to keep the supply 0:14:51.480 --> 0:14:56.440 chain I would say warm, by buying components from the 0:14:56.480 --> 0:14:59.520 supply chain, and that's why they've seen inventories balloon to 0:14:59.640 --> 0:15:03.600 like eighty seven billion dollars. I got to check and 0:15:03.600 --> 0:15:05.440 see what it was on today's balance sheet, but last 0:15:05.440 --> 0:15:08.080 balance sheet eighty seven billion dollars. So, I mean a 0:15:08.080 --> 0:15:12.200 lot of the turnaround is build those airplanes with existing inventory. 0:15:12.760 --> 0:15:16.160 Means the cash generation for the airplanes they build and 0:15:16.200 --> 0:15:16.960 deliver ought to. 0:15:16.960 --> 0:15:19.200 Be higher than historically. 0:15:19.880 --> 0:15:22.360 Use that money to pay it, do on debt, keep 0:15:22.400 --> 0:15:25.000 the balance sheet, or heal the balance sheet. 0:15:25.160 --> 0:15:27.160 That's the recovery plan, George. 0:15:27.160 --> 0:15:28.920 I know, if I'm talking to you and reading your research, 0:15:29.280 --> 0:15:32.320 the cash story hinges in large part on getting those 0:15:32.360 --> 0:15:35.400 seven three sevens out the door. Talk to us about 0:15:35.640 --> 0:15:38.800 where production is today and where do you think it's 0:15:38.800 --> 0:15:39.720 going to go in the future. 0:15:40.320 --> 0:15:43.760 Yeah, So they said that they were the factory was 0:15:43.800 --> 0:15:48.640 building at thirty low thirties number of aircraft per month. 0:15:48.680 --> 0:15:50.120 You know, we had kind of been tracking and I 0:15:50.120 --> 0:15:53.160 think we saw high twenty. So probably Kelly's got maybe 0:15:53.200 --> 0:15:56.800 just a more current number on that. I think that 0:15:56.840 --> 0:16:00.760 they'll they'll get up to the thirty eight limits. This 0:16:00.800 --> 0:16:03.480 is all on the seven thirty seven that the FAA 0:16:03.560 --> 0:16:06.440 is put in place for them this year and go 0:16:06.520 --> 0:16:06.920 past that. 0:16:06.960 --> 0:16:08.080 I think they'll get an. 0:16:08.040 --> 0:16:10.680 FA approval for that, and probably at the back half 0:16:10.720 --> 0:16:12.480 of the year, we're kind of looking for them to 0:16:12.480 --> 0:16:17.040 be forty ish. And so again that you know, the 0:16:17.480 --> 0:16:20.120 more you use the factory, the more overhead gets absorbed 0:16:20.160 --> 0:16:24.200 over a larger number of airplanes. The more profitable you are, 0:16:24.600 --> 0:16:25.960 the more cash you're going to generate. 0:16:26.520 --> 0:16:27.320 Part of that story. 0:16:27.840 --> 0:16:29.440 Can you talk to us a bit more about how 0:16:29.520 --> 0:16:33.320 much the tariff headwind will affect the company's top line 0:16:33.400 --> 0:16:37.000 or bottom line, especially with this really heated tit for 0:16:37.120 --> 0:16:40.160 tat it seems with China, well. 0:16:39.960 --> 0:16:44.600 So again, China has really become much less of an 0:16:44.640 --> 0:16:48.400 issue for Boeing. The Chinese have placed sixteen orders this 0:16:48.520 --> 0:16:53.000 decade for airplanes. There's some four hundred orders on the 0:16:53.040 --> 0:16:57.080 Boeing books. Still that's of a backlog, that's six thousand large. 0:16:57.360 --> 0:17:00.480 Kelly Orberg is just talking on the call that you 0:17:00.520 --> 0:17:03.360 know he's prepared to He was planning and delivering forty 0:17:03.400 --> 0:17:06.679 to fifty into China this year, So not a lot 0:17:06.720 --> 0:17:09.479 of airplanes that would be mostly seven thirty sevens and 0:17:09.520 --> 0:17:12.280 that's out of an expected build of maybe four hundred 0:17:12.280 --> 0:17:14.360 and seven thirty sevens or so this year. 0:17:14.400 --> 0:17:16.399 So you can already see the sizes and that large. 0:17:16.680 --> 0:17:19.480 And he's ready to go out and he's going to 0:17:19.480 --> 0:17:21.080 talk to the customers, see what they want to do, 0:17:21.119 --> 0:17:23.520 and he's ready to go out and remarket those airplanes. 0:17:23.560 --> 0:17:25.720 I think we've already seen Air India raise their hand 0:17:26.080 --> 0:17:28.800 say hey, we'd take some airplanes. And there's other folks 0:17:28.840 --> 0:17:31.160 around the world that just haven't gotten the deliveries they wanted. 0:17:31.200 --> 0:17:34.000 They're ready to take airplanes too. So on the top line, 0:17:34.040 --> 0:17:37.680 I just don't see China impacting things that much. 0:17:37.760 --> 0:17:39.520 The bottom line again. 0:17:39.280 --> 0:17:43.119 Boeing said eighty percent of their supplier base is US based. 0:17:43.560 --> 0:17:45.639 A lot more a lot of the other stuff is 0:17:45.720 --> 0:17:47.960 Canada and Mexico, which you're under. 0:17:48.280 --> 0:17:51.480 You know, the agreement between those countries that allows things 0:17:51.560 --> 0:17:55.760 to flow without a tariff. And then there's cases where 0:17:55.800 --> 0:17:58.480 when airplanes would be sold overseas, they can call those 0:17:58.520 --> 0:17:59.040 tariffs back. 0:17:59.200 --> 0:18:00.880 Excell and George, we got go to some breaking news. 0:18:00.880 --> 0:18:03.879 George ferguson covering the airlines and aerospace companies. 0:18:05.520 --> 0:18:09.200 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:09.280 --> 0:18:12.680 weekdays at ten am Eastern on Applecarclay, and Android Auto 0:18:12.800 --> 0:18:15.840 with the Bloomberg Business App. Listen on demand wherever you 0:18:15.880 --> 0:18:18.880 get your podcasts, or watch us live on YouTube. 0:18:19.760 --> 0:18:22.880 Markets are moving. Let's see what the professionals are doing. 0:18:22.920 --> 0:18:24.640 I mean, you can get whipsawed around here. I don't 0:18:24.640 --> 0:18:27.800 care who you are. Shelby McFadden joins US investment analyst 0:18:27.960 --> 0:18:32.840 for Motley Full Asset Management, located down in Arlington, Virginia. Shelby, 0:18:32.880 --> 0:18:36.000 how are you guys kind of day to day dealing 0:18:36.040 --> 0:18:38.840 with the volatility of this market? Again, We've got a 0:18:38.920 --> 0:18:41.320 VIX that's come in today but still up near thirty. 0:18:41.880 --> 0:18:43.200 How do you guys deal with the volatility? 0:18:44.560 --> 0:18:47.199 At this point, we've really just buckled ourselves in, you know, 0:18:47.240 --> 0:18:49.320 that sort of overhead harness that you pull down when 0:18:49.359 --> 0:18:51.879 you're on a roller coaster. That's been our tool of choice, 0:18:51.960 --> 0:18:54.359 and it's mainly because the swings that we've seen in 0:18:54.400 --> 0:18:56.960 the market, they're usually the up and down swing tend 0:18:56.960 --> 0:18:59.359 to be about the same magnitude down nine hundred, up 0:18:59.520 --> 0:19:02.720 thousand next day or within thirty six to forty eight hours. 0:19:03.040 --> 0:19:05.040 And the other thing too, is that the swings have 0:19:05.080 --> 0:19:07.959 been pretty broad, right, We're not seeing any major changes 0:19:08.000 --> 0:19:10.919 in sort of like relative valuations up until today, with 0:19:11.000 --> 0:19:14.240 you know, consumer discretionary outperforming. It tends to just be 0:19:14.320 --> 0:19:18.440 a really big, sort of congealed swing in the market, 0:19:18.600 --> 0:19:20.800 which doesn't leave too too much room for the sort 0:19:20.840 --> 0:19:24.400 of relative valuation opportunity. So we are watching the headlines 0:19:24.480 --> 0:19:26.840 a little bit more closely, not because we want to 0:19:26.880 --> 0:19:28.680 trade on them, but we're trying to be able to 0:19:28.720 --> 0:19:30.600 see where the dust is going to settle. And so 0:19:30.680 --> 0:19:32.399 I think today what we're seeing in the market is 0:19:32.400 --> 0:19:35.320 a reaction to the prospect that the dust will be 0:19:35.400 --> 0:19:38.920 settling soon. And I don't really expect there to be 0:19:39.000 --> 0:19:42.560 too much of an overreaction to Secretary buston sort of 0:19:42.560 --> 0:19:46.199 follow up headline. So yeah, I think as active investors 0:19:46.680 --> 0:19:50.000 we have sat tight so that we can really get 0:19:50.000 --> 0:19:52.520 a better lay of the land and waited for the 0:19:52.560 --> 0:19:55.600 real opportunity to show up and not necessarily just move 0:19:55.720 --> 0:19:59.600 at every sort of down opportunity. Really trying to say 0:19:59.600 --> 0:20:01.480 discipline and what we believe to be fair. 0:20:01.359 --> 0:20:04.360 Value, Sitting tight seems to be the consensus these days. 0:20:04.400 --> 0:20:06.879 But how are you allocating your funds? Have you shifted 0:20:07.200 --> 0:20:11.840 anything recently, cut something to overweight or boosted something to overweight. 0:20:13.600 --> 0:20:15.600 Yeah, that's a great question. In terms of allocation, what 0:20:15.640 --> 0:20:18.280 we have looked at is, I would say, in terms 0:20:18.320 --> 0:20:20.280 of at the top, we've taken a look at what 0:20:20.320 --> 0:20:22.480 is our cyclical exposure, so whether that's going to be 0:20:22.520 --> 0:20:25.240 industrials or consumer cyclical. That was one of the first 0:20:25.240 --> 0:20:28.840 things that we had to look at really after inauguration. 0:20:29.080 --> 0:20:32.320 So at election we pretty much had to sit down 0:20:32.320 --> 0:20:34.040 and said, Okay, what are the main sort of like 0:20:34.119 --> 0:20:36.639 tax policies that we think are going to be the 0:20:36.680 --> 0:20:39.879 most impactful. But right now it's more so been okay, 0:20:40.040 --> 0:20:43.399 what is going to be the most sensitive to any 0:20:43.440 --> 0:20:47.040 sort of slowdown because we've been back and forth right 0:20:47.040 --> 0:20:48.280 on whether or not we're going to be able to 0:20:48.320 --> 0:20:52.199 hold on to this soft landing that was so they 0:20:52.240 --> 0:20:54.800 worked so hard for or is it going to sort 0:20:54.840 --> 0:20:57.959 of fall through our fingers. So allocation has been a 0:20:58.000 --> 0:21:01.639 lot more focused on, Okay, the company is doing very well. 0:21:01.960 --> 0:21:04.159 We know that they're going to probably perform ahead of 0:21:04.200 --> 0:21:06.240