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 --> 00:00:37,280 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. Premier. JP Morkan 10 00:00:37,320 --> 00:00:40,360 Speaker 2: Asset Management joins us now for more precomonic. You followed 11 00:00:40,400 --> 00:00:42,400 Speaker 2: that exchange. What did you make of the explanation coming 12 00:00:42,400 --> 00:00:43,520 Speaker 2: from the Treasury secretary. 13 00:00:43,880 --> 00:00:46,400 Speaker 3: I think the Treasury secretary is doing what a Treasury 14 00:00:46,440 --> 00:00:49,200 Speaker 3: secretary should do, be a cheerleader for the treasury market. 15 00:00:49,360 --> 00:00:51,600 Speaker 4: But you know, I do think he made very valid 16 00:00:51,640 --> 00:00:52,199 Speaker 4: points that. 17 00:00:52,840 --> 00:00:55,600 Speaker 3: Now, what we saw last week, the last few weeks 18 00:00:55,640 --> 00:00:59,800 Speaker 3: massive our shock. You're seeing three sigma six sigma moves 19 00:01:00,280 --> 00:01:04,320 Speaker 3: across assets. You're seeing correlations breakdown. Remember that equity dollar 20 00:01:04,360 --> 00:01:08,320 Speaker 3: correlation that broke down, And so I think investors had 21 00:01:08,319 --> 00:01:12,120 Speaker 3: to delever de risk were they margin calls. So I 22 00:01:12,120 --> 00:01:14,800 Speaker 3: think there was a lot of technical factors that drove 23 00:01:14,880 --> 00:01:15,840 Speaker 3: that treasury sell off. 24 00:01:16,920 --> 00:01:19,160 Speaker 4: In the background, though there is this concern there's. 25 00:01:19,040 --> 00:01:21,000 Speaker 3: Eight trillion of treasure is held by the rest of 26 00:01:21,040 --> 00:01:24,360 Speaker 3: the world, you know, it's the endgame, zero trade deficits. 27 00:01:24,400 --> 00:01:27,560 Speaker 3: I don't think that's the endgame, but concern around foreign 28 00:01:27,640 --> 00:01:29,840 Speaker 3: demand for treasuries may be selling. 29 00:01:29,840 --> 00:01:31,160 Speaker 4: I think that played into that. 30 00:01:31,280 --> 00:01:34,200 Speaker 3: Fear certainly played into the market as well as if 31 00:01:34,200 --> 00:01:37,000 Speaker 3: we're going to get five trillion more deficits because of 32 00:01:37,040 --> 00:01:39,240 Speaker 3: what the House and the Senator talking about. 33 00:01:39,560 --> 00:01:42,160 Speaker 4: I think that just became this perfect storm. 34 00:01:42,319 --> 00:01:46,000 Speaker 3: But I would take a step back and look at fundamentals. Ultimately, 35 00:01:46,080 --> 00:01:48,080 Speaker 3: the treasure market is driven by fundamentals. 36 00:01:48,240 --> 00:01:49,320 Speaker 4: Fundamentals of the hard. 37 00:01:49,200 --> 00:01:51,640 Speaker 3: Data has been strong, but we've just had this massive 38 00:01:51,640 --> 00:01:55,000 Speaker 3: shock to the economy. I think the soft data is 39 00:01:55,080 --> 00:01:57,160 Speaker 3: telling you that the hard data is likely to weaken. 40 00:01:57,400 --> 00:01:59,960 Speaker 3: So I do think treasures are a goodbye. We had 41 00:02:00,120 --> 00:02:02,600 Speaker 3: peak hard to say, but we're getting there. 42 00:02:02,680 --> 00:02:04,760 Speaker 2: Well, you're getting too. The ultimate test what would happen 43 00:02:04,800 --> 00:02:06,840 Speaker 2: if the data weakened would be by treasuries or not 44 00:02:07,040 --> 00:02:09,160 Speaker 2: with the rest of the world allocate capital to the 45 00:02:09,240 --> 00:02:12,679 Speaker 2: United States, which is important. What concerned people last week 46 00:02:12,760 --> 00:02:15,160 Speaker 2: wasn't just a sell off in treasuries, it was what 47 00:02:15,240 --> 00:02:17,959 Speaker 2: was happening elsewhere in other asset classes. Now, we've seen 48 00:02:18,000 --> 00:02:21,080 Speaker 2: moments like this one before where you see forced selling 49 00:02:21,080 --> 00:02:24,880 Speaker 2: a treasuries, big unwineser trades, companies had funds in trouble. 50 00:02:25,520 --> 00:02:28,920 Speaker 2: That's not unique. What was interesting was the persistent dollar 51 00:02:28,960 --> 00:02:32,480 Speaker 2: weakness alongside that, reinforcing the notion that maybe it was 52 00:02:32,480 --> 00:02:35,160 Speaker 2: something else. Perhaps it's not, but that's what unnerved people 53 00:02:35,440 --> 00:02:37,520 Speaker 2: in the past week. How would you reconcile what was 54 00:02:37,520 --> 00:02:38,120 Speaker 2: going on there? 55 00:02:38,680 --> 00:02:40,840 Speaker 3: So I would say that the dollar, I mean, has 56 00:02:40,919 --> 00:02:44,720 Speaker 3: been a highly owned asset right for the last few years. 57 00:02:44,840 --> 00:02:45,000 Speaker 4: Now. 58 00:02:45,040 --> 00:02:47,880 Speaker 3: I think there's structural components to that US exceptionalism. 59 00:02:48,200 --> 00:02:49,280 Speaker 4: Look at where growth is. 60 00:02:49,520 --> 00:02:54,200 Speaker 3: It is US companies profit margins are high, and I 61 00:02:54,240 --> 00:02:57,320 Speaker 3: think right after the election there was this idea of reacceleration, 62 00:02:57,480 --> 00:03:00,280 Speaker 3: so the dollar got some more of a boost there. Plus, 63 00:03:00,280 --> 00:03:03,000 Speaker 3: it was supposed to hedge equity risk. It's supposed to 64 00:03:03,000 --> 00:03:06,080 Speaker 3: hedge risk asses, which is so I think the dollar, 65 00:03:06,160 --> 00:03:09,320 Speaker 3: the structural value in the dollar might still be there. 66 00:03:09,360 --> 00:03:10,520 Speaker 4: Maybe we overdid it. 67 00:03:10,720 --> 00:03:14,079 Speaker 3: In our view, the dollar does still looks overvalued, so I. 68 00:03:14,000 --> 00:03:16,520 Speaker 4: Think that that's correcting. And then you had this. 69 00:03:16,520 --> 00:03:19,200 Speaker 3: Treasury market that was overwhelmed. I think with all of 70 00:03:19,240 --> 00:03:21,560 Speaker 3: the selling. I mean there were a lot of supposedly 71 00:03:21,680 --> 00:03:26,640 Speaker 3: uncorrelated trades. Swap spreads is a supplementary leverage ratio trade, 72 00:03:27,480 --> 00:03:31,359 Speaker 3: German bone treasury or the you know that spread was 73 00:03:31,400 --> 00:03:33,480 Speaker 3: supposed to be about German fiscal stimulus. 74 00:03:33,600 --> 00:03:34,680 Speaker 4: You had an unwind. 75 00:03:35,320 --> 00:03:38,040 Speaker 3: Whether people got a tap on the shoulder, you know, 76 00:03:38,040 --> 00:03:40,480 Speaker 3: whether they're just trying to d risk, whether it's margin calls. 77 00:03:40,560 --> 00:03:41,760 Speaker 4: I think that overwhelms. 78 00:03:41,840 --> 00:03:45,320 Speaker 3: You did have these two forces coming together. But you know, 79 00:03:45,400 --> 00:03:49,160 Speaker 3: it's unnerving when you see correlations break, when you see 80 00:03:49,200 --> 00:03:51,840 Speaker 3: this em market like market moves. 81 00:03:52,240 --> 00:03:54,560 Speaker 4: I think that's what reduced conviction levels. 82 00:03:54,560 --> 00:03:57,680 Speaker 3: And we're seeing headlines every day, So I think uncertainty 83 00:03:57,760 --> 00:03:59,840 Speaker 3: is high, not just for the economy but for investors. 84 00:03:59,880 --> 00:04:02,000 Speaker 4: And and I think that's why you didn't see all this. 85 00:04:02,080 --> 00:04:05,280 Speaker 3: Buying from domestic investors who might be concerned about the economy. 86 00:04:05,280 --> 00:04:07,520 Speaker 1: How much comfort do you get from the potential response function, 87 00:04:07,600 --> 00:04:09,520 Speaker 1: not just from the Federal Reserve but also the Treasury 88 00:04:09,520 --> 00:04:12,720 Speaker 1: Department with a Treasure Secretary scut Pasen saying that they 89 00:04:12,720 --> 00:04:14,480 Speaker 1: could buy back off the run treasuries. 90 00:04:15,000 --> 00:04:17,479 Speaker 3: So I think from market functioning point of view, I 91 00:04:17,480 --> 00:04:20,480 Speaker 3: think though that buy back operation is useful. The Treasury 92 00:04:20,560 --> 00:04:23,760 Speaker 3: launched it because the dealer balance sheet, you know, has 93 00:04:23,800 --> 00:04:25,839 Speaker 3: been constrained as the treasure market's grown. 94 00:04:26,120 --> 00:04:27,640 Speaker 4: Can they help market dysfunction? 95 00:04:27,839 --> 00:04:30,800 Speaker 3: Yes, can they help? They still have to issue a 96 00:04:30,839 --> 00:04:33,000 Speaker 3: lot of debt. So I think we're going to be 97 00:04:33,040 --> 00:04:35,720 Speaker 3: watching beyond all the tariff news, We're going to be 98 00:04:35,720 --> 00:04:37,679 Speaker 3: watching what's happening on the tax front. 99 00:04:38,080 --> 00:04:40,280 Speaker 4: You know, are we going to get those spending. 100 00:04:39,960 --> 00:04:43,240 Speaker 3: Cuts that were sort of promised by Speaker Johnson. If 101 00:04:43,279 --> 00:04:45,400 Speaker 3: you don't get those spending cuts, the market has to 102 00:04:45,560 --> 00:04:48,680 Speaker 3: then grapple with a lot more deficit, and maybe that 103 00:04:49,040 --> 00:04:51,919 Speaker 3: end point of how low rates can go in a 104 00:04:51,960 --> 00:04:54,560 Speaker 3: recession or in a slowdown is going to be higher 105 00:04:54,600 --> 00:04:55,400 Speaker 3: because we've got all. 106 00:04:55,360 --> 00:04:56,400 Speaker 4: This fiscal stimulus. 107 00:04:56,839 --> 00:04:59,960 Speaker 3: I'm a little bit more comforted by the Fed response function, 108 00:05:00,120 --> 00:05:04,240 Speaker 3: and I think Governor Waller yesterday was crystal clear two scenarios. 109 00:05:04,240 --> 00:05:06,000 Speaker 4: I mean as clear as. 110 00:05:05,800 --> 00:05:09,320 Speaker 3: He could be given that the the you know, there's 111 00:05:09,360 --> 00:05:11,600 Speaker 3: a lot of uncertainty, but just telling us how they 112 00:05:11,640 --> 00:05:14,360 Speaker 3: think came out tariffs, and he talked about good news 113 00:05:14,400 --> 00:05:17,120 Speaker 3: cuts and bad news cuts, showing you that asymmetry. 114 00:05:17,120 --> 00:05:18,920 Speaker 1: Okay, but here's the issue, and this is something that 115 00:05:18,960 --> 00:05:21,279 Speaker 1: I haven't heard anybody address. If they were to cut 116 00:05:21,360 --> 00:05:24,560 Speaker 1: rates in response to potential weakness that hasn't shown up 117 00:05:25,040 --> 00:05:28,359 Speaker 1: enough yet in the data, wouldn't the long end just 118 00:05:28,720 --> 00:05:30,360 Speaker 1: yield searge price drop? 119 00:05:31,200 --> 00:05:33,279 Speaker 3: And you could argue maybe some of that happened last 120 00:05:33,360 --> 00:05:36,080 Speaker 3: year when the Fed cut rates from five and a half, 121 00:05:36,200 --> 00:05:38,200 Speaker 3: you have that long end selling off, But I would say, 122 00:05:38,200 --> 00:05:40,200 Speaker 3: look at what was happening to hard data at that point, 123 00:05:40,640 --> 00:05:44,760 Speaker 3: it was actually looking okay. Remember we were concerned August September, 124 00:05:44,760 --> 00:05:47,200 Speaker 3: we were concerned about the labor market. It's stabilized, and 125 00:05:47,200 --> 00:05:49,680 Speaker 3: that's why the long end set sold off. I think 126 00:05:49,800 --> 00:05:51,719 Speaker 3: to your point, yes, the Fed has to be concerned. 127 00:05:51,720 --> 00:05:54,919 Speaker 3: Will they let inflation expectations those tips break evens that 128 00:05:54,920 --> 00:05:57,760 Speaker 3: have been declining? Does that reverse? Which is why they're 129 00:05:57,800 --> 00:06:00,279 Speaker 3: not They can't be preemptive. I think that's what they're 130 00:06:00,279 --> 00:06:03,720 Speaker 3: telling us. They're trying to explain their reaction function so 131 00:06:03,760 --> 00:06:06,800 Speaker 3: that that first really bad hard data, and maybe it's 132 00:06:06,839 --> 00:06:10,080 Speaker 3: the labor market. I don't know, Maybe it's hiring, maybe 133 00:06:10,120 --> 00:06:12,760 Speaker 3: it's retail sales. We're going to be looking not so 134 00:06:12,839 --> 00:06:14,800 Speaker 3: much as there's this frontloading of demand. We're going to 135 00:06:14,800 --> 00:06:17,680 Speaker 3: be looking at discretion spending. If I am going out 136 00:06:17,680 --> 00:06:19,599 Speaker 3: to buy more because I think prices are going to 137 00:06:19,600 --> 00:06:21,000 Speaker 3: go up, do I cut back. 138 00:06:20,839 --> 00:06:24,520 Speaker 4: On other things? And you know? So we're trying to understand. 139 00:06:24,200 --> 00:06:26,920 Speaker 3: How the consumers responding, how corporate's responding. Are they just 140 00:06:26,920 --> 00:06:30,240 Speaker 3: not hiring or are they actually trying to protect margins 141 00:06:30,240 --> 00:06:33,479 Speaker 3: and laying off as that data worsens. I think then 142 00:06:33,560 --> 00:06:38,480 Speaker 3: the FED response doesn't unanchor inflation expectations. It actually helps 143 00:06:38,480 --> 00:06:41,560 Speaker 3: stabilize it because those inflation expectations will create when the 144 00:06:41,640 --> 00:06:44,520 Speaker 3: data weakens, and then the FED can say, no, we 145 00:06:44,600 --> 00:06:46,280 Speaker 3: got your back, but I think you have to first 146 00:06:46,320 --> 00:06:46,640 Speaker 3: see it. 147 00:06:46,560 --> 00:06:47,000 Speaker 4: In the data. 148 00:06:47,160 --> 00:06:50,440 Speaker 2: This is the communication dilembra, the feder reserve feedshaed Japow 149 00:06:50,520 --> 00:06:53,440 Speaker 2: con come run talking like Governor Ballercamp. First and foremost 150 00:06:53,440 --> 00:06:56,200 Speaker 2: you have to pledge to anchor inflation expectations to prayers point. 151 00:06:56,640 --> 00:06:58,080 Speaker 2: Then if you get the hit to growth and inflation 152 00:06:58,160 --> 00:07:00,200 Speaker 2: expectations roll over, you can lean into the d you're 153 00:07:00,200 --> 00:07:02,839 Speaker 2: going to kint interest rates. They can shape the events 154 00:07:02,839 --> 00:07:05,240 Speaker 2: they anticipate, and that's the big issue for them. You 155 00:07:05,240 --> 00:07:08,520 Speaker 2: put out an outlook and it can influence inflation expectations 156 00:07:08,560 --> 00:07:11,160 Speaker 2: even off themselves. To your point, if Chairman Powell comes 157 00:07:11,200 --> 00:07:12,840 Speaker 2: out and start speaking like Governor Walla, what do you 158 00:07:12,840 --> 00:07:15,000 Speaker 2: think is going to happen? Some people would argue exactly 159 00:07:15,040 --> 00:07:17,720 Speaker 2: what you think is going to happen. Maybe inflation expectations 160 00:07:17,760 --> 00:07:19,520 Speaker 2: start to creep higher because we start to have arguments 161 00:07:19,560 --> 00:07:22,800 Speaker 2: around this table. Oh, they don't care about inflation expectations. 162 00:07:22,920 --> 00:07:23,920 Speaker 2: That's the dilemma they're in. 163 00:07:24,040 --> 00:07:25,720 Speaker 1: And this is the reason why markets don't believe that 164 00:07:25,760 --> 00:07:27,440 Speaker 1: they won't step in when there is a problem in 165 00:07:27,520 --> 00:07:29,240 Speaker 1: the data. And that's the reason why you have the 166 00:07:29,400 --> 00:07:32,480 Speaker 1: likes of Andrew hollend horriz orver at City Group reaffirming 167 00:07:32,520 --> 00:07:34,440 Speaker 1: his belief in one hundred and twenty five faces points 168 00:07:34,440 --> 00:07:35,280 Speaker 1: of free cuades this year. 169 00:07:35,320 --> 00:07:37,160 Speaker 2: I'll leave Preer out of this debate because you won't 170 00:07:37,160 --> 00:07:39,120 Speaker 2: want to wait in. But this is the advantage you 171 00:07:39,160 --> 00:07:41,800 Speaker 2: have being a governor and not the FED share. The 172 00:07:41,840 --> 00:07:44,520 Speaker 2: governor can create some distance between himself and the rest 173 00:07:44,520 --> 00:07:47,000 Speaker 2: of the committee. If say, he wanted to become the 174 00:07:47,040 --> 00:07:49,520 Speaker 2: next FED share potentially in the next year or so. 175 00:07:49,520 --> 00:07:51,720 Speaker 1: So you know, do we trust that or do we 176 00:07:51,800 --> 00:07:53,000 Speaker 1: trust fed? Shair Powell? 177 00:07:53,360 --> 00:07:55,160 Speaker 2: You know, this is the little Imma prayer. It is 178 00:07:55,160 --> 00:07:57,160 Speaker 2: good to see it. I'm sure you're welcome being left 179 00:07:57,160 --> 00:08:09,280 Speaker 2: out of that primers er, JP Morgan, Thank you. Terry Hanks, 180 00:08:09,280 --> 00:08:11,760 Speaker 2: a Pangea policy joins us now for more, Terry, welcome 181 00:08:11,800 --> 00:08:13,640 Speaker 2: to the program. The administration I think has done a 182 00:08:13,720 --> 00:08:15,800 Speaker 2: very good job. I think President Trump's done a good 183 00:08:15,840 --> 00:08:18,240 Speaker 2: job of articulating the problem for a number of years. 184 00:08:18,280 --> 00:08:21,160 Speaker 2: Now come back decades, the remedy to the problem and 185 00:08:21,240 --> 00:08:23,560 Speaker 2: the execution of that remedy. What's your reaction to that 186 00:08:23,840 --> 00:08:24,880 Speaker 2: over the past few weeks. 187 00:08:25,840 --> 00:08:31,920 Speaker 5: Well, it's been scattershot, John Frankly and good morning, both 188 00:08:32,000 --> 00:08:36,000 Speaker 5: on strategy and execution. But you know, if there's a 189 00:08:36,040 --> 00:08:39,240 Speaker 5: consistency in the Trump presidencies, I think what you can 190 00:08:39,280 --> 00:08:42,360 Speaker 5: see is that what he tends to do is kind 191 00:08:42,400 --> 00:08:48,959 Speaker 5: of go big, bold, clear, motivational, and then start embroidering 192 00:08:49,000 --> 00:08:54,080 Speaker 5: off the exceptions and the like. And that's certainly the pattern. Now, 193 00:08:54,320 --> 00:08:56,800 Speaker 5: you know, it's you know, I want to be very 194 00:08:56,800 --> 00:08:59,319 Speaker 5: clear about the direction we're moving in in terms of, 195 00:08:59,360 --> 00:09:02,520 Speaker 5: you know, what we're manufacturing, where we're manufacturing, and how 196 00:09:02,559 --> 00:09:05,080 Speaker 5: we're doing it. But then, uh, you know, we're going 197 00:09:05,160 --> 00:09:09,160 Speaker 5: to wait to have the industries come back and separate 198 00:09:09,200 --> 00:09:11,440 Speaker 5: the week from the chaff on what's legitimate and what's not. 199 00:09:11,679 --> 00:09:16,200 Speaker 5: So it is a difficult process for everybody. I understand that, 200 00:09:16,520 --> 00:09:20,360 Speaker 5: and at a very difficult process. And at the same time, uh, 201 00:09:20,559 --> 00:09:21,440 Speaker 5: that's how they operate. 202 00:09:22,040 --> 00:09:23,800 Speaker 1: John has asked this question many times. Who are they 203 00:09:23,840 --> 00:09:27,640 Speaker 1: negotiating with? And yes, they're negotiating with themselves inside the cabinet, 204 00:09:27,640 --> 00:09:31,079 Speaker 1: they're negotiating with companies, they're negotiating with countries, and then 205 00:09:31,080 --> 00:09:31,959 Speaker 1: negotiating with. 206 00:09:31,920 --> 00:09:32,640 Speaker 4: A market terry. 207 00:09:32,679 --> 00:09:34,959 Speaker 1: How does that complicate understanding exactly how to get to 208 00:09:35,000 --> 00:09:36,680 Speaker 1: the goals that they ultimately have laid out. 209 00:09:37,800 --> 00:09:40,040 Speaker 5: I think what they end up doing is they prioritize 210 00:09:40,600 --> 00:09:45,680 Speaker 5: those overlap but they're not they're not completely congruent. You know, 211 00:09:45,720 --> 00:09:48,320 Speaker 5: you you you negotiate as best you can with the 212 00:09:48,320 --> 00:09:52,640 Speaker 5: individual countries involved, and again push push forward bilaterals. Uh, 213 00:09:52,920 --> 00:09:56,240 Speaker 5: you know, get your get your best results, move on, 214 00:09:56,640 --> 00:10:01,360 Speaker 5: get some future, get some future promise as well, move 215 00:10:01,400 --> 00:10:05,920 Speaker 5: on the cabinet understands that at the end of the day, 216 00:10:05,960 --> 00:10:09,200 Speaker 5: the president's the decision maker, and so they fold in 217 00:10:09,280 --> 00:10:14,160 Speaker 5: around and as to the rest. You know, these companies 218 00:10:14,200 --> 00:10:17,440 Speaker 5: buy and large that we're talking about today are big 219 00:10:17,480 --> 00:10:22,000 Speaker 5: companies that have, among other things, pretty sophisticated lobbying operations 220 00:10:21,360 --> 00:10:23,760 Speaker 5: and they're fully engaged as well. 221 00:10:23,840 --> 00:10:28,840 Speaker 1: So, yeah, last night Emrie talking to treasure Secretary Scotts 222 00:10:29,200 --> 00:10:31,400 Speaker 1: Scott Bestont had a message. He wanted to talk about 223 00:10:31,400 --> 00:10:33,600 Speaker 1: the three legged stool of policy, and the tariffs are 224 00:10:33,600 --> 00:10:36,400 Speaker 1: one wing of that, one leg of that, and then 225 00:10:36,440 --> 00:10:39,200 Speaker 1: you had deregulation, and then you had some of the 226 00:10:39,240 --> 00:10:42,520 Speaker 1: tax relief and what was getting passed through Congress. Those 227 00:10:42,559 --> 00:10:45,120 Speaker 1: other two legs of the stool have been caused called 228 00:10:45,120 --> 00:10:48,160 Speaker 1: into question recently in terms of how big they can 229 00:10:48,200 --> 00:10:50,680 Speaker 1: be and how much they can offset. Some of the 230 00:10:50,720 --> 00:10:53,360 Speaker 1: concerns over the tariffs. You have a sense of how 231 00:10:53,360 --> 00:10:55,199 Speaker 1: that's going well. 232 00:10:55,400 --> 00:10:58,160 Speaker 5: I have tax cuts at eighty percent likely to happen 233 00:10:58,800 --> 00:11:02,200 Speaker 5: in the fourth quarter of calendar twenty twenty five, and 234 00:11:02,240 --> 00:11:05,600 Speaker 5: I think there's a rising possibility that it happens sooner. 235 00:11:05,880 --> 00:11:11,240 Speaker 5: It's not for nothing that Trump picks July fourth is 236 00:11:11,280 --> 00:11:16,000 Speaker 5: the day on the next direction on tariffs, and they'd 237 00:11:16,080 --> 00:11:18,320 Speaker 5: very much like to goose Congress as fast as they 238 00:11:18,360 --> 00:11:21,480 Speaker 5: possibly can to get the tax cuts in place for 239 00:11:21,559 --> 00:11:25,520 Speaker 5: the third quarter as well. So you know, but I'm 240 00:11:25,559 --> 00:11:28,600 Speaker 5: optimistic that the Congress gets this done. There's an awful 241 00:11:28,600 --> 00:11:32,679 Speaker 5: lot of alignment on that. As to the numbers, what 242 00:11:32,720 --> 00:11:34,680 Speaker 5: the Senate and the House are talking about is something 243 00:11:34,720 --> 00:11:37,480 Speaker 5: on the order of five trillion tax cuts over ten years, 244 00:11:38,520 --> 00:11:43,200 Speaker 5: without a lot of offsetting, without a lot of pay 245 00:11:43,240 --> 00:11:45,760 Speaker 5: for offsets. And the reason for that is they've chosen, 246 00:11:45,800 --> 00:11:50,240 Speaker 5: as I've been talking about for a while, this current 247 00:11:50,280 --> 00:11:52,720 Speaker 5: policy baseline that allows them. 248 00:11:52,520 --> 00:11:52,960 Speaker 4: To do that. 249 00:11:53,200 --> 00:11:56,840 Speaker 5: So you know, what you're going to see is a 250 00:11:57,000 --> 00:11:59,880 Speaker 5: very big tax cut number coming through, I think, and 251 00:12:00,960 --> 00:12:05,559 Speaker 5: and I think that probably balances or more of the 252 00:12:06,160 --> 00:12:07,400 Speaker 5: tariff shocks Terry. 253 00:12:07,440 --> 00:12:09,720 Speaker 2: You think they go beyond extending existing law. 254 00:12:11,440 --> 00:12:13,600 Speaker 5: I think they do in some respects, in part because 255 00:12:13,679 --> 00:12:17,480 Speaker 5: they in part because you know, that's what Trump's wanted. 256 00:12:17,520 --> 00:12:20,200 Speaker 5: You know, these these tax on tips and you know, 257 00:12:20,240 --> 00:12:22,680 Speaker 5: the salt business, all kinds of things they need to do. 258 00:12:22,720 --> 00:12:25,160 Speaker 5: In order to get votes and get a signature into 259 00:12:25,240 --> 00:12:27,920 Speaker 5: law number one, number two, they're gonna have to change 260 00:12:27,960 --> 00:12:30,760 Speaker 5: the tax code for a variety of things, including providing 261 00:12:31,120 --> 00:12:37,120 Speaker 5: additional incentives for reshoring and on shoring manufacturing. So I'd 262 00:12:37,160 --> 00:12:37,800 Speaker 5: look for all that. 263 00:12:38,280 --> 00:12:40,680 Speaker 2: Terry Hanks, appreciate the input. Thank you, sir, Terry Hanes 264 00:12:40,679 --> 00:12:52,400 Speaker 2: of Panjier Policy. It's kind of it's Ken leyar a 265 00:12:52,480 --> 00:12:54,760 Speaker 2: CFIRA about that. Ken welcome to the program. What have 266 00:12:54,880 --> 00:12:58,320 Speaker 2: we learned about credit quality in America in this banking season? 267 00:12:59,360 --> 00:13:02,200 Speaker 6: So I think what Brian moynihan is going to speak 268 00:13:02,240 --> 00:13:05,240 Speaker 6: about is comfort zones, which is really main street, the 269 00:13:05,280 --> 00:13:08,599 Speaker 6: consumer and small business. And what we saw in the 270 00:13:09,120 --> 00:13:13,760 Speaker 6: release today is that credit risk committees make decisions on 271 00:13:14,200 --> 00:13:19,400 Speaker 6: the current environment, not the forward environment. So that's credit Again. 272 00:13:19,640 --> 00:13:24,439 Speaker 6: The results are more in terms of the high volatility. 273 00:13:24,760 --> 00:13:28,840 Speaker 6: The benefit for trading bank stocks never get rewarded in 274 00:13:28,960 --> 00:13:32,600 Speaker 6: terms of multiple expansions for trading profits. But it shores 275 00:13:32,720 --> 00:13:35,360 Speaker 6: up the full year. Second quarter is going to be choppy, 276 00:13:36,120 --> 00:13:39,760 Speaker 6: you know. It's really kind of like the beginning of 277 00:13:39,800 --> 00:13:43,520 Speaker 6: COVID where analysts like myself looked to the second half 278 00:13:43,559 --> 00:13:46,040 Speaker 6: of this year, is it V shape or U shape. 279 00:13:46,120 --> 00:13:49,480 Speaker 6: We're optimistic, we think the capital markets are going to 280 00:13:49,480 --> 00:13:51,600 Speaker 6: be open, but it's going to be the second half 281 00:13:51,640 --> 00:13:54,800 Speaker 6: of this year, and what we're seeing is institutions and 282 00:13:54,880 --> 00:13:59,520 Speaker 6: fund managers realign their portfolios, and that's good for equity trading. 283 00:14:00,120 --> 00:14:01,839 Speaker 1: A V shape will be a U shape, or we'll 284 00:14:01,920 --> 00:14:03,360 Speaker 1: just be a straight line because I don't see a 285 00:14:03,400 --> 00:14:05,440 Speaker 1: dip right now. I mean talking about the fact that 286 00:14:05,440 --> 00:14:08,640 Speaker 1: you're getting healthy credit quality pretty much across the board. 287 00:14:08,679 --> 00:14:10,599 Speaker 1: That's the message from Bank of America, P and C, 288 00:14:11,120 --> 00:14:13,679 Speaker 1: a smaller but the biggest regional bank came out earlier 289 00:14:13,760 --> 00:14:16,640 Speaker 1: this morning talking the same kind of tone that Frankly, 290 00:14:16,679 --> 00:14:19,560 Speaker 1: provisions for credit losses came in lighter than expected. Does 291 00:14:19,600 --> 00:14:22,600 Speaker 1: this make you more excited for the forward look for banks? 292 00:14:23,120 --> 00:14:25,400 Speaker 6: I don't think the story is credit here, it's way 293 00:14:25,440 --> 00:14:28,680 Speaker 6: too early. It's really what happens in the capital markets 294 00:14:29,160 --> 00:14:34,360 Speaker 6: and what is confidence for CEOs for capital raising. So again, 295 00:14:34,480 --> 00:14:36,240 Speaker 6: the second half of this year, if it's going to 296 00:14:36,240 --> 00:14:39,840 Speaker 6: be stronger, it's not the worries about credit. It's really 297 00:14:39,880 --> 00:14:43,280 Speaker 6: going to be what happens in the capital markets. Clearly, 298 00:14:44,200 --> 00:14:47,640 Speaker 6: if there's going to be any severe recession, then it's 299 00:14:47,680 --> 00:14:50,480 Speaker 6: game off and then we can start talking with red 300 00:14:50,560 --> 00:14:54,480 Speaker 6: lights for credits. CFURA. We look at every metric of 301 00:14:54,520 --> 00:14:59,280 Speaker 6: every bank on delinquencies, lon loss provisions and reserve build 302 00:14:59,600 --> 00:15:00,800 Speaker 6: or reserve or reverse. 303 00:15:01,080 --> 00:15:03,760 Speaker 5: We're just not there yet going forward. 304 00:15:03,840 --> 00:15:06,480 Speaker 1: Can you still get optimistic about the banks if M 305 00:15:06,480 --> 00:15:09,800 Speaker 1: and A doesn't revive, but you do have credit quality 306 00:15:09,840 --> 00:15:11,920 Speaker 1: that hangs in there, and you have yields that are 307 00:15:12,000 --> 00:15:13,040 Speaker 1: higher than previously. 308 00:15:14,000 --> 00:15:18,200 Speaker 6: So the large banks are formidable. They have, as Jamie says, 309 00:15:18,320 --> 00:15:23,280 Speaker 6: fortress balance sheets. They are formidable in their industry. And 310 00:15:23,680 --> 00:15:27,960 Speaker 6: we have never seen in equity market outperform without financials 311 00:15:27,960 --> 00:15:32,200 Speaker 6: and banks coming along for the ride. We're overweighted in financials, 312 00:15:32,400 --> 00:15:34,680 Speaker 6: we would say to you from two thousand and seven 313 00:15:34,760 --> 00:15:37,720 Speaker 6: versus twenty twenty five. When you look at the top 314 00:15:37,920 --> 00:15:41,520 Speaker 6: ten constituents of the financial sector, banks being a big 315 00:15:41,560 --> 00:15:44,360 Speaker 6: part of it, they're a little less cyclical, they're more stable, 316 00:15:44,640 --> 00:15:48,240 Speaker 6: and companies like Goldman Sachs with David Solomon talks about 317 00:15:49,280 --> 00:15:53,720 Speaker 6: moving to more durable, recurring fee revenue, whether it be 318 00:15:53,800 --> 00:15:57,120 Speaker 6: an asset or wealth management, or more principal investments in 319 00:15:57,240 --> 00:16:00,480 Speaker 6: areas like alternatives. So the banks are very different than 320 00:16:00,480 --> 00:16:02,920 Speaker 6: when we had this discussion back in two thousand and 321 00:16:02,960 --> 00:16:06,040 Speaker 6: seven or eight, And again they're not the problem. So 322 00:16:06,400 --> 00:16:10,480 Speaker 6: again we'll see what Scott Besson says in the market 323 00:16:10,480 --> 00:16:11,720 Speaker 6: and advises the president. 324 00:16:11,920 --> 00:16:14,720 Speaker 2: Again, there's a difference between existential risk and a recession, though, 325 00:16:15,160 --> 00:16:17,360 Speaker 2: do you really think they perform well in an economic downturn? 326 00:16:19,640 --> 00:16:24,320 Speaker 6: I'm sorry, I think when you look at the economic outlook, 327 00:16:24,520 --> 00:16:28,320 Speaker 6: you know again Goldman, Yes, they noted that they're now 328 00:16:28,400 --> 00:16:31,360 Speaker 6: still positive, but it was above two percent zero point 329 00:16:31,400 --> 00:16:35,040 Speaker 6: five percent. There's also the question on duration and also 330 00:16:35,240 --> 00:16:38,760 Speaker 6: just a technical definition of recession versus a recession that 331 00:16:38,880 --> 00:16:42,520 Speaker 6: hurts the consumer, and President Trump will pay attention to that. 332 00:16:42,880 --> 00:16:45,440 Speaker 2: Ken appreciate the update. Thank you, sir, Ken Leon of 333 00:16:45,520 --> 00:16:58,960 Speaker 2: Cfon Ray joining ustand the Republican Governor of Virginia, Glenn 334 00:16:58,960 --> 00:16:59,960 Speaker 2: young kiin Comy young Kin good. 335 00:17:00,480 --> 00:17:01,920 Speaker 7: Great to be with you. Thanks for having me. It's 336 00:17:01,920 --> 00:17:03,880 Speaker 7: super to be back in studio with you. So I 337 00:17:03,960 --> 00:17:05,240 Speaker 7: just appreciate you making time. 338 00:17:05,080 --> 00:17:07,040 Speaker 2: For well, thanks to drop him by. Let's talk about 339 00:17:07,040 --> 00:17:09,320 Speaker 2: how exposed you might be to this tariff PUS. You've 340 00:17:09,320 --> 00:17:12,280 Speaker 2: got some very launch aerospace and defense companies in the state. 341 00:17:12,640 --> 00:17:15,119 Speaker 2: How are you helping those companies and individuals that might 342 00:17:15,160 --> 00:17:17,800 Speaker 2: be affected by some of this In the meantime, John, 343 00:17:17,840 --> 00:17:18,320 Speaker 2: I think we have. 344 00:17:18,280 --> 00:17:22,080 Speaker 7: To step back first and put the current moment in 345 00:17:22,160 --> 00:17:27,080 Speaker 7: the tariff evolution in context. From while he was running 346 00:17:27,080 --> 00:17:29,199 Speaker 7: all the way up until today, President Trump has been 347 00:17:29,240 --> 00:17:32,520 Speaker 7: really consistent on the elements of his economic plan. First, 348 00:17:32,560 --> 00:17:36,760 Speaker 7: he's going to use tariffs to reset trade balances and 349 00:17:37,119 --> 00:17:39,159 Speaker 7: decades of bad deals. He's talked about. You've heard these 350 00:17:39,160 --> 00:17:41,600 Speaker 7: words out of his mouth over and over again. Second 351 00:17:41,600 --> 00:17:44,199 Speaker 7: of all, he's going to make sure that manufacturing is 352 00:17:44,240 --> 00:17:47,680 Speaker 7: reshored and that we reinflate or reinvigorate the hollowed out 353 00:17:47,760 --> 00:17:52,080 Speaker 7: middle class. Third, we're going to re establish fiscal responsibility 354 00:17:52,080 --> 00:17:55,360 Speaker 7: in Washington. Fourth, we're going to re establish energy dominance, 355 00:17:55,400 --> 00:17:58,440 Speaker 7: and finally, through deregulation, we're going to make it even 356 00:17:58,520 --> 00:18:01,359 Speaker 7: better to do business in America. And those elements are 357 00:18:01,440 --> 00:18:04,800 Speaker 7: all in motion at the same time. The trade moment 358 00:18:04,920 --> 00:18:07,679 Speaker 7: for us, in the tariff moment for US is also 359 00:18:08,200 --> 00:18:12,120 Speaker 7: this ninety day pause, which is giving the opportunity for deals, 360 00:18:12,320 --> 00:18:16,440 Speaker 7: and every Cabinet member has repeated there's seventy five countries 361 00:18:16,480 --> 00:18:19,040 Speaker 7: in motion right now, and I would expect that there 362 00:18:19,080 --> 00:18:22,200 Speaker 7: will be some significant trade deals struck. I do think 363 00:18:22,280 --> 00:18:25,439 Speaker 7: that there will be a level of ongoing tariffs and 364 00:18:25,520 --> 00:18:27,520 Speaker 7: the ten percent number wasn't one picked out of a 365 00:18:27,560 --> 00:18:31,720 Speaker 7: hats and they call that the base tariff. But I'm 366 00:18:31,720 --> 00:18:34,560 Speaker 7: a governor watching, but I do expect that there will 367 00:18:34,560 --> 00:18:37,399 Speaker 7: be deals cut and those deals importantly will be with 368 00:18:37,480 --> 00:18:40,840 Speaker 7: some of our largest trading partners, India and Japan and Korea. 369 00:18:40,920 --> 00:18:43,879 Speaker 7: And so this is what's going to happen over the 370 00:18:43,920 --> 00:18:47,640 Speaker 7: next many many months, and most importantly, I think that 371 00:18:47,760 --> 00:18:51,520 Speaker 7: will bring some confidence to the market that this reset, 372 00:18:51,560 --> 00:18:54,440 Speaker 7: which has to happen and disruption is part of a reset, 373 00:18:54,760 --> 00:18:58,800 Speaker 7: will will open up long term opportunity. Now Virginia, Virginia, 374 00:18:58,880 --> 00:19:02,080 Speaker 7: we're going to We're seeing that long term opportunity every day, 375 00:19:02,119 --> 00:19:05,600 Speaker 7: and that's through our economic development pipeline. We've had an 376 00:19:05,640 --> 00:19:09,920 Speaker 7: incredibly robust three years. We've had record investment or commitments 377 00:19:09,960 --> 00:19:13,240 Speaker 7: from businesses expanding in Virginia one hundred billion dollars in 378 00:19:13,280 --> 00:19:16,240 Speaker 7: three years, by far the largest amount. In that time period. 379 00:19:16,440 --> 00:19:19,040 Speaker 7: We've seen record job growth. Virginia went from bottom third 380 00:19:19,040 --> 00:19:21,880 Speaker 7: in job growth to top three five ten every year 381 00:19:21,920 --> 00:19:25,320 Speaker 7: in job growth, and that has allowed us to run 382 00:19:25,320 --> 00:19:28,960 Speaker 7: surplus after surplus after surplus. The net of that is 383 00:19:29,000 --> 00:19:31,359 Speaker 7: that we have open jobs in Virginia two hundred and 384 00:19:31,400 --> 00:19:34,520 Speaker 7: fifty thousand open jobs for folks to take. But on 385 00:19:34,600 --> 00:19:37,800 Speaker 7: top of that, our economic development pipeline has been as 386 00:19:37,880 --> 00:19:41,360 Speaker 7: full as it's ever been and we're seeing businesses, international 387 00:19:41,400 --> 00:19:43,760 Speaker 7: companies want to come to the United States. We're viewed 388 00:19:43,800 --> 00:19:45,680 Speaker 7: as the top state in America for business and they 389 00:19:45,680 --> 00:19:48,200 Speaker 7: want to come to Virginia. And so that's a really 390 00:19:48,240 --> 00:19:51,880 Speaker 7: good foundation for us as there is a period of disruption, 391 00:19:52,320 --> 00:19:54,240 Speaker 7: but I think there's a long term opportunity and I 392 00:19:54,240 --> 00:19:55,320 Speaker 7: think Virginia will really do. 393 00:19:55,280 --> 00:19:57,440 Speaker 2: Well link seal command the long term opportunity. In the 394 00:19:57,480 --> 00:19:59,600 Speaker 2: full of policy platform, you just want to keep it 395 00:19:59,640 --> 00:20:03,040 Speaker 2: on Trent just for a moment. On trade, the methodology 396 00:20:03,040 --> 00:20:04,879 Speaker 2: it does feel like was pulled from a hamp in 397 00:20:04,920 --> 00:20:07,560 Speaker 2: the last few weeks, and the criticism we hear around 398 00:20:07,600 --> 00:20:10,920 Speaker 2: this table quite a lot. They will acknowledge the problem, 399 00:20:11,080 --> 00:20:13,399 Speaker 2: and they will acknowledge that the President has articulated that 400 00:20:13,440 --> 00:20:16,480 Speaker 2: consistently and well over the period of decades, not just 401 00:20:16,520 --> 00:20:19,840 Speaker 2: weeks and months. It's the remedy to that problem. At 402 00:20:19,880 --> 00:20:22,240 Speaker 2: the moment, what we hear from the bank CEOs, from 403 00:20:22,240 --> 00:20:24,760 Speaker 2: investors is this economy is drifted into a wait and 404 00:20:24,840 --> 00:20:27,280 Speaker 2: see moment that they aren't going to make those big 405 00:20:27,320 --> 00:20:29,960 Speaker 2: CAPEC decisions until they really know the rules of the game, 406 00:20:30,200 --> 00:20:31,919 Speaker 2: the rules of the road. Do you think we'll know 407 00:20:31,960 --> 00:20:33,560 Speaker 2: the answer to that within ninety days. 408 00:20:33,760 --> 00:20:36,119 Speaker 7: I think we'll see a lot of clarity over the 409 00:20:36,160 --> 00:20:38,399 Speaker 7: course of the next now eighty days, I guess, or 410 00:20:38,520 --> 00:20:39,280 Speaker 7: eighty two days. 411 00:20:39,400 --> 00:20:40,120 Speaker 2: Amazing camp. 412 00:20:40,600 --> 00:20:44,639 Speaker 7: But the net of it is that the President Trump 413 00:20:44,720 --> 00:20:48,280 Speaker 7: was clear, He's continued to be clear that in resetting 414 00:20:48,600 --> 00:20:52,159 Speaker 7: bad trade deals over the last decades and re establishing 415 00:20:52,880 --> 00:20:58,280 Speaker 7: reciprocal trade opportunities. By the way, with nations that our allies, 416 00:20:59,000 --> 00:21:02,560 Speaker 7: China's a whole different top, but with nations that are 417 00:21:02,600 --> 00:21:05,760 Speaker 7: our allies, we just need fair trade and we haven't 418 00:21:05,800 --> 00:21:08,679 Speaker 7: had it. And so in to reset those trade in 419 00:21:08,880 --> 00:21:11,679 Speaker 7: those reset those trade imbalances, you see him do what 420 00:21:11,760 --> 00:21:15,200 Speaker 7: he does well, which just creates space for negotiating. And 421 00:21:15,320 --> 00:21:19,200 Speaker 7: I think that's exactly what's happening. When the first weekend 422 00:21:19,440 --> 00:21:23,320 Speaker 7: after April second, you read in every publication that seventy 423 00:21:23,320 --> 00:21:27,520 Speaker 7: five countries had called within a day to start the negotiations, 424 00:21:27,560 --> 00:21:32,439 Speaker 7: and you've already seen those negotiations at least reported in rumor. 425 00:21:33,000 --> 00:21:34,879 Speaker 7: I think this will be this opportunity to take a 426 00:21:34,880 --> 00:21:36,720 Speaker 7: big step in resetting hold On, and I think that's 427 00:21:36,720 --> 00:21:37,640 Speaker 7: what the market needs to see. 428 00:21:37,720 --> 00:21:38,120 Speaker 2: Part of the. 429 00:21:38,080 --> 00:21:40,560 Speaker 1: Problem, I think, and you know this very well, having 430 00:21:40,720 --> 00:21:44,040 Speaker 1: invested heavily as a co CEO of Carlisle and been 431 00:21:44,320 --> 00:21:48,119 Speaker 1: investing in infrastructure, which takes a long time. There's a 432 00:21:48,160 --> 00:21:51,560 Speaker 1: maturity mismatch between when some of this negotiation is happening, 433 00:21:51,640 --> 00:21:54,160 Speaker 1: when these tariffs go on, and how long it takes 434 00:21:54,200 --> 00:21:56,679 Speaker 1: to bring that investment to the United States. There is 435 00:21:56,720 --> 00:21:59,080 Speaker 1: a lack of clarity about whether those policies will be 436 00:21:59,160 --> 00:22:02,800 Speaker 1: continued in perpetuity, and it's leading to paralysis at so 437 00:22:02,880 --> 00:22:05,720 Speaker 1: many companies. What do you tell the companies in your 438 00:22:05,800 --> 00:22:09,000 Speaker 1: jurisdiction who's come to you and say, how can I plan? 439 00:22:09,160 --> 00:22:11,560 Speaker 4: How can I hire? How can I invest? When this 440 00:22:11,600 --> 00:22:12,120 Speaker 4: could change? 441 00:22:12,280 --> 00:22:14,440 Speaker 1: I don't even understand the parameters we're talking about. 442 00:22:14,680 --> 00:22:18,200 Speaker 7: Yeah, I have to disagree with you on the long 443 00:22:18,280 --> 00:22:23,639 Speaker 7: term planning, because we're seeing a pipeline of economic investment 444 00:22:24,200 --> 00:22:25,919 Speaker 7: that has been as full as it's ever been. And 445 00:22:26,000 --> 00:22:30,320 Speaker 7: these are long term investments. Fortune fifty companies wanting to 446 00:22:30,640 --> 00:22:34,680 Speaker 7: build in America and in Virginia. Hopefully, if we can 447 00:22:34,720 --> 00:22:38,040 Speaker 7: recruit them there. And these are long term investments. And 448 00:22:38,200 --> 00:22:41,800 Speaker 7: you saw in Vidia yesterday talk about five hundred billion dollars. 449 00:22:41,880 --> 00:22:45,879 Speaker 7: We've seen most of the big pharmaceutical companies commit to 450 00:22:45,920 --> 00:22:49,760 Speaker 7: building in the United States. We're seeing technology investments, advanced 451 00:22:49,760 --> 00:22:53,639 Speaker 7: manufacturing all in the United States. These are long term investments. 452 00:22:53,960 --> 00:22:56,520 Speaker 7: I think the difference in a lot of people's understanding 453 00:22:56,720 --> 00:22:59,920 Speaker 7: is that during market ups and downs, well, yes, IPO 454 00:23:00,400 --> 00:23:04,520 Speaker 7: get postponed, and yes, corporate deals get postponed, but these 455 00:23:04,600 --> 00:23:09,040 Speaker 7: long term commitments are actually coming in very large numbers. 456 00:23:09,240 --> 00:23:11,800 Speaker 7: And that's good for states like Virginia. I mean, listen, 457 00:23:11,800 --> 00:23:14,720 Speaker 7: we're in the sec of economic development. I compete every 458 00:23:14,800 --> 00:23:19,080 Speaker 7: day with Tennessee and North Carolina, South Carolina, Georgia, Florida, Texas, 459 00:23:19,800 --> 00:23:22,680 Speaker 7: and we've got to compete. And I think that much 460 00:23:22,720 --> 00:23:25,119 Speaker 7: of that investment will come to this region. And that 461 00:23:25,320 --> 00:23:28,000 Speaker 7: is a long term commitment. And so the uncertainty in 462 00:23:28,040 --> 00:23:30,320 Speaker 7: the near term, yes, I get it, I understand it. 463 00:23:30,840 --> 00:23:33,879 Speaker 7: But the long term expectation that America is going to 464 00:23:33,880 --> 00:23:35,840 Speaker 7: be the best place in the world to invest is 465 00:23:35,960 --> 00:23:38,080 Speaker 7: clear and real, and that's what we're seeing in our 466 00:23:38,119 --> 00:23:39,240 Speaker 7: economic development pipeline. 467 00:23:39,280 --> 00:23:41,400 Speaker 1: There's also an issue of staffing all of this up, 468 00:23:41,440 --> 00:23:42,239 Speaker 1: but how we do this. 469 00:23:42,520 --> 00:23:43,440 Speaker 4: Not only is there a. 470 00:23:43,359 --> 00:23:46,119 Speaker 1: Maturity mismatch, but also potentially a skills mismatch. And I 471 00:23:46,160 --> 00:23:49,320 Speaker 1: know that your state has been significantly affected by some 472 00:23:49,359 --> 00:23:51,439 Speaker 1: of the DOGE cuts, and you've talked about that and 473 00:23:51,440 --> 00:23:54,440 Speaker 1: how you plan to provide for some of these workers. 474 00:23:54,480 --> 00:23:57,920 Speaker 1: But how do you reskill people to work for different 475 00:23:58,000 --> 00:24:00,520 Speaker 1: types of jobs given that they've worked in a very 476 00:24:00,560 --> 00:24:02,720 Speaker 1: specific field and there might not be jobs in that 477 00:24:02,760 --> 00:24:05,120 Speaker 1: field and what we're trying to build up hasn't been 478 00:24:05,119 --> 00:24:06,280 Speaker 1: there for a long time. 479 00:24:06,600 --> 00:24:11,880 Speaker 7: Well, first you go to work and prepare an education 480 00:24:12,119 --> 00:24:14,719 Speaker 7: and training ecosystem to do exactly that. And we've been 481 00:24:14,720 --> 00:24:17,440 Speaker 7: doing this for the last three years in Virginia, which 482 00:24:17,520 --> 00:24:22,000 Speaker 7: is resetting the career pass and the education pass for 483 00:24:22,160 --> 00:24:26,160 Speaker 7: lots of Virginians with opportunity. And today we have an 484 00:24:26,160 --> 00:24:30,120 Speaker 7: incredibly high labor participation rate. It's bounced back from lows 485 00:24:30,280 --> 00:24:32,560 Speaker 7: during the pandemic and the previous administration to near one 486 00:24:32,600 --> 00:24:34,920 Speaker 7: of the national highs. We have one of the best 487 00:24:34,960 --> 00:24:37,600 Speaker 7: workforce training programs in America. We were just named for 488 00:24:37,640 --> 00:24:39,600 Speaker 7: the third year in a row of having the best 489 00:24:39,680 --> 00:24:41,959 Speaker 7: customized job training program in America. 490 00:24:42,119 --> 00:24:42,800 Speaker 5: This is what you do. 491 00:24:42,840 --> 00:24:43,560 Speaker 2: You go to work. 492 00:24:44,000 --> 00:24:46,560 Speaker 7: I do think that the expectation that there will be 493 00:24:46,640 --> 00:24:50,040 Speaker 7: job losses, particularly under the federal government, is real. We 494 00:24:50,080 --> 00:24:52,200 Speaker 7: haven't seen them yet that much in Virginia. I mean, 495 00:24:52,480 --> 00:24:55,800 Speaker 7: our first time claims and unemployment are still at historic lows. 496 00:24:56,800 --> 00:24:59,960 Speaker 7: But listen, I do think that the federal government's downside 497 00:25:00,400 --> 00:25:02,920 Speaker 7: is necessary. Listen, we're running. We're at thirty seven and 498 00:25:02,960 --> 00:25:05,040 Speaker 7: a half trillion dollars a debt, two trillion dollars a 499 00:25:05,160 --> 00:25:07,879 Speaker 7: year of incremental debt. We can't do that, and so 500 00:25:08,520 --> 00:25:13,760 Speaker 7: resizing the federal government and recognizing fiscal responsibility is critical 501 00:25:13,800 --> 00:25:16,200 Speaker 7: to the future of the country is real. What does 502 00:25:16,200 --> 00:25:17,680 Speaker 7: that mean in a state like Virginia. We have a 503 00:25:17,720 --> 00:25:21,040 Speaker 7: lot of federal workers, a lot now. A disproportionate amount 504 00:25:21,040 --> 00:25:23,760 Speaker 7: of those are in the defense and in the intelligence 505 00:25:23,760 --> 00:25:25,960 Speaker 7: and national security area, and we're seeing more money go 506 00:25:26,040 --> 00:25:28,640 Speaker 7: into those areas. But I still expect that there will 507 00:25:28,680 --> 00:25:31,800 Speaker 7: be real disruption for some folks in Virginia. My dad 508 00:25:31,840 --> 00:25:33,679 Speaker 7: lost his job twice when I was growing up, and 509 00:25:33,800 --> 00:25:35,960 Speaker 7: I've seen this in families my own, and it is 510 00:25:36,200 --> 00:25:39,480 Speaker 7: really hard. And that's why a pathway to a new 511 00:25:39,480 --> 00:25:42,800 Speaker 7: career is so important because of our economic growth. We 512 00:25:42,840 --> 00:25:46,720 Speaker 7: have two hundred and fifty thousand open but unfilled jobs 513 00:25:46,760 --> 00:25:49,800 Speaker 7: in Virginia, and over one hundred thousand of those require 514 00:25:49,800 --> 00:25:52,159 Speaker 7: a bachelor's degree. These are good jobs, but there are 515 00:25:52,200 --> 00:25:55,320 Speaker 7: also jobs that pay well, and so opening up that 516 00:25:55,359 --> 00:25:59,000 Speaker 7: pathway to folks who find themselves with job loss is 517 00:25:59,080 --> 00:26:02,399 Speaker 7: really really important. So we launched something called Virginia has Jobs, 518 00:26:03,080 --> 00:26:05,719 Speaker 7: and it's for folks to get jobs in Virginia from 519 00:26:05,760 --> 00:26:07,920 Speaker 7: all over the country, but at a time when we're 520 00:26:07,920 --> 00:26:10,800 Speaker 7: seeing this dislocation from the federal government. It's a real 521 00:26:10,840 --> 00:26:16,400 Speaker 7: opportunity pathway two hundred and fifty thousand jobs, pathways for training, coaching, 522 00:26:16,800 --> 00:26:19,720 Speaker 7: resume riding, but also for making sure folks on how 523 00:26:19,760 --> 00:26:22,080 Speaker 7: to file for unemployment and keep their health care. This 524 00:26:22,160 --> 00:26:25,119 Speaker 7: is a pathway that I'm really hoping that people who 525 00:26:25,200 --> 00:26:27,679 Speaker 7: do have job disruption can find a way to a 526 00:26:27,760 --> 00:26:31,399 Speaker 7: great career in Virginia because Virginia has lots and lots 527 00:26:31,400 --> 00:26:33,400 Speaker 7: of jobs, and people can go to Virginia has Jobs 528 00:26:33,400 --> 00:26:36,480 Speaker 7: dot Com and actually find one. And that's part of 529 00:26:36,560 --> 00:26:41,760 Speaker 7: I think this movement of really public sector employment to 530 00:26:41,840 --> 00:26:43,960 Speaker 7: private sector employment. And we've seen it. 531 00:26:44,000 --> 00:26:44,560 Speaker 4: In Virginia. 532 00:26:44,640 --> 00:26:46,960 Speaker 7: We've had great job growth over the last three years. 533 00:26:46,960 --> 00:26:50,280 Speaker 7: It's led to record surplus after surplus after surplus, which 534 00:26:50,280 --> 00:26:52,960 Speaker 7: has allowed us to reduce taxes. It's allowed us to 535 00:26:52,960 --> 00:26:55,960 Speaker 7: invest in education and law enforcement, and by the way, 536 00:26:55,960 --> 00:26:59,439 Speaker 7: in economic development and job training. But it's also I 537 00:26:59,480 --> 00:27:02,320 Speaker 7: think change people's view of long term in Virginia. We 538 00:27:02,400 --> 00:27:04,680 Speaker 7: used to have were for ten years we had more 539 00:27:04,720 --> 00:27:07,160 Speaker 7: people move away from the Commonwealth of Virginia than move 540 00:27:07,160 --> 00:27:09,680 Speaker 7: into from the other forty United States. And last year 541 00:27:09,720 --> 00:27:12,840 Speaker 7: we became one of the top importers of talent in America. 542 00:27:12,960 --> 00:27:16,400 Speaker 7: So this works, and at a time when President Trump 543 00:27:16,480 --> 00:27:20,200 Speaker 7: again is trying to run a very very full policy 544 00:27:20,240 --> 00:27:25,240 Speaker 7: agenda resetting trade, balancing the federal budget, of making America 545 00:27:25,359 --> 00:27:30,160 Speaker 7: dominant again and energy, restoring manufacturing, and restoring this middle 546 00:27:30,200 --> 00:27:32,640 Speaker 7: class what has been what's been eviscerated over the last 547 00:27:32,680 --> 00:27:35,040 Speaker 7: twenty years, and doing all of that while deregulating to 548 00:27:35,040 --> 00:27:37,560 Speaker 7: make America even a better place for business. I think 549 00:27:37,600 --> 00:27:39,400 Speaker 7: we can look at Virginia and say, hey, we've seen 550 00:27:39,400 --> 00:27:41,679 Speaker 7: at least a little microcosm of that, and it works. 551 00:27:42,280 --> 00:27:45,120 Speaker 2: Governor the Stikes of High I'm please you mentioned your 552 00:27:45,520 --> 00:27:49,000 Speaker 2: experience growing gup. You like me, we were professional dishwashers. 553 00:27:49,200 --> 00:27:51,640 Speaker 2: You went on to have a fantastic career lead in Karlisle, 554 00:27:51,680 --> 00:27:54,400 Speaker 2: and now you're dedicating yourself to public service. There are 555 00:27:54,480 --> 00:27:57,359 Speaker 2: now people much younger than us who believe that dream 556 00:27:57,440 --> 00:28:00,000 Speaker 2: is not available to them. The upward mobility is not 557 00:28:00,040 --> 00:28:02,920 Speaker 2: along as something available in the United States. And at 558 00:28:02,920 --> 00:28:05,880 Speaker 2: the moment, as you know, filling stadiums around this country 559 00:28:06,640 --> 00:28:11,640 Speaker 2: is left wing people like Congresswoman a Cassio Cotez Senator 560 00:28:11,800 --> 00:28:16,760 Speaker 2: Bernie Sandez. If this administration gets this wrong, we could 561 00:28:16,800 --> 00:28:19,240 Speaker 2: see a swing in the pendulum all the way to 562 00:28:19,280 --> 00:28:21,399 Speaker 2: the fi left. It's not unthinkable. You can see that 563 00:28:21,480 --> 00:28:24,359 Speaker 2: taking place. How high are the stakes. What happens if 564 00:28:24,359 --> 00:28:27,640 Speaker 2: this administration screws it out, well. 565 00:28:27,840 --> 00:28:31,399 Speaker 7: First and foremost don't believe they will. And therefore I 566 00:28:31,440 --> 00:28:33,600 Speaker 7: think what people will see over the course of this 567 00:28:33,680 --> 00:28:38,040 Speaker 7: administration is the realization of this long term opportunity. And 568 00:28:38,120 --> 00:28:41,040 Speaker 7: that's why all of the elements that in play are critical. 569 00:28:41,320 --> 00:28:43,840 Speaker 7: You know, there are so many people in government who 570 00:28:43,840 --> 00:28:46,960 Speaker 7: believe there's one policy solution, this magic wand that will 571 00:28:46,960 --> 00:28:52,280 Speaker 7: fix everything. This is an incredibly complex economic transition model. 572 00:28:52,640 --> 00:28:55,040 Speaker 7: And that's why having all of the elements in play 573 00:28:55,080 --> 00:28:59,240 Speaker 7: at one time, while complicating, is critical because they're each 574 00:28:59,280 --> 00:29:02,280 Speaker 7: going to contribute for the long term success. And if 575 00:29:02,320 --> 00:29:06,000 Speaker 7: you peel out one energy dominance, listen, getting energy prices 576 00:29:06,040 --> 00:29:09,160 Speaker 7: to a place where they're sustainably affordable at the gas 577 00:29:09,200 --> 00:29:12,960 Speaker 7: pump and in the supply chains critical. America should basically 578 00:29:13,000 --> 00:29:15,760 Speaker 7: dominate the world of power and energy. Making sure we 579 00:29:15,800 --> 00:29:19,080 Speaker 7: have a balanced fiscal moment, not running two trillion dollar 580 00:29:19,160 --> 00:29:24,800 Speaker 7: deficits critical for the long term success of America. Reshoring, manufacturing, 581 00:29:24,840 --> 00:29:27,600 Speaker 7: and think about what's happened over the last decades where 582 00:29:27,600 --> 00:29:31,840 Speaker 7: we watched critical, very high paying jobs move around the 583 00:29:31,840 --> 00:29:34,840 Speaker 7: world away from America and hollow out our middle class. 584 00:29:35,120 --> 00:29:38,360 Speaker 7: That's the opportunity that has really been missing because we've 585 00:29:38,400 --> 00:29:42,440 Speaker 7: seen literally the middle class not participate in the economic 586 00:29:43,480 --> 00:29:46,120 Speaker 7: growth of America over the past few decades. This is 587 00:29:46,120 --> 00:29:48,880 Speaker 7: what is this opportunity is all about. And I've said 588 00:29:48,880 --> 00:29:50,640 Speaker 7: many times, I think the number one job we have 589 00:29:50,680 --> 00:29:53,880 Speaker 7: as Americans is to help this administration be successful, and 590 00:29:54,200 --> 00:29:57,719 Speaker 7: that success will translate into an even better America than 591 00:29:57,720 --> 00:29:58,120 Speaker 7: we have to. 592 00:29:58,120 --> 00:30:00,400 Speaker 2: At least set it around this typo. I hope they 593 00:30:00,400 --> 00:30:03,280 Speaker 2: are just a final question. What's the future a comverany 594 00:30:03,320 --> 00:30:04,800 Speaker 2: young kid? What you want to do next? 595 00:30:05,120 --> 00:30:08,360 Speaker 7: Well, I finish up next January, and I just want 596 00:30:08,400 --> 00:30:12,320 Speaker 7: to begin by saying this has been the most purposeful 597 00:30:12,400 --> 00:30:15,080 Speaker 7: moment in my entire professional career, and I've loved it, 598 00:30:15,760 --> 00:30:18,400 Speaker 7: and I want to make sure this last year is 599 00:30:18,680 --> 00:30:22,400 Speaker 7: incredibly productive for Virginia. Listen, you only get four years 600 00:30:22,480 --> 00:30:24,800 Speaker 7: in a governor's job in Virginia, and I've got one 601 00:30:24,880 --> 00:30:26,360 Speaker 7: year left, and I got to get four years of 602 00:30:26,400 --> 00:30:28,280 Speaker 7: work done in this year because we've had a great 603 00:30:28,360 --> 00:30:30,000 Speaker 7: first three years, and I want to get a second 604 00:30:30,040 --> 00:30:34,640 Speaker 7: term jammed into this last year. But I also recognize 605 00:30:34,720 --> 00:30:38,000 Speaker 7: that there are a lot of folks who spend all 606 00:30:38,000 --> 00:30:39,959 Speaker 7: their time planning for their next job. I'm not one 607 00:30:40,000 --> 00:30:42,200 Speaker 7: of those folks. I'm going to spend one hundred percent, 608 00:30:42,200 --> 00:30:44,200 Speaker 7: if not one hundred and fifty percent of my effort 609 00:30:44,360 --> 00:30:47,120 Speaker 7: making sure that Virginia continues to thrive. We've got a 610 00:30:47,160 --> 00:30:50,160 Speaker 7: really important election this year. Our Lieutenant governor wins some 611 00:30:50,240 --> 00:30:53,200 Speaker 7: Earl Sears has been a great partner for me through 612 00:30:53,240 --> 00:30:55,680 Speaker 7: this entire economic revival in Virginia, and I want to 613 00:30:55,720 --> 00:30:58,560 Speaker 7: make sure that she gets the Baton. I think voters 614 00:30:58,600 --> 00:31:00,800 Speaker 7: will trust us and trust her and want to elect 615 00:31:00,800 --> 00:31:03,080 Speaker 7: her the next governor of Virginia. And then we'll decide 616 00:31:03,080 --> 00:31:05,240 Speaker 7: what I do after I've watched her be inaugurated. 617 00:31:05,320 --> 00:31:07,480 Speaker 2: Young Convents twenty eight I'll watch. 618 00:31:07,520 --> 00:31:10,040 Speaker 7: I'll decide when I when I after I'm done in 619 00:31:10,120 --> 00:31:11,000 Speaker 7: January twenty twelve. 620 00:31:11,040 --> 00:31:12,440 Speaker 2: I ha's a tryank governor. It's good to see it. 621 00:31:12,560 --> 00:31:14,240 Speaker 7: I will, I will, I will repeat, though, the most 622 00:31:14,240 --> 00:31:16,600 Speaker 7: important thing that we need to be doing right now 623 00:31:16,760 --> 00:31:20,440 Speaker 7: is to be helping this administration be successful. And I 624 00:31:20,480 --> 00:31:23,560 Speaker 7: think the elements are in place. It is a complicated 625 00:31:23,600 --> 00:31:25,960 Speaker 7: set of movements in order to reset so many things 626 00:31:25,960 --> 00:31:28,720 Speaker 7: at one time, but I have great faith that the 627 00:31:28,760 --> 00:31:31,200 Speaker 7: long term opportunities really are going to be great, and 628 00:31:31,200 --> 00:31:33,280 Speaker 7: we're seeing that in companies who are investing all across 629 00:31:33,360 --> 00:31:34,480 Speaker 7: Virginia in America. 630 00:31:34,200 --> 00:31:35,600 Speaker 2: For the good of this country. I think a lot 631 00:31:35,600 --> 00:31:37,920 Speaker 2: of people agree with you. I hope, we hope you're right. 632 00:31:38,000 --> 00:31:39,920 Speaker 2: Thank you, Governor. I appreciate your time. Thank you, sir, 633 00:31:40,360 --> 00:31:44,120 Speaker 2: the Virginia Governor, Glenn youngkin Net. This is the Bloomberg 634 00:31:44,160 --> 00:31:48,840 Speaker 2: Sevenants podcast, bringing you the best in markets, economics, antiet politics. 635 00:31:49,120 --> 00:31:51,600 Speaker 2: You can Watch the show live on Bloomberg TV weekday 636 00:31:51,600 --> 00:31:54,840 Speaker 2: mornings from six am to nine am Eastern. Subscribe to 637 00:31:54,880 --> 00:31:58,480 Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen, and, 638 00:31:58,520 --> 00:32:01,360 Speaker 2: as always, on the Bloomberg Terminal and The Bloomberg Business 639 00:32:01,400 --> 00:32:02,320 Speaker 2: Out