Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each
Speaker 2: day for insight from the best in markets, economics, and
Speaker 2: geopolitics from our global headquarters in New York City. We
Speaker 2: are live on Bloomberg Television weekday mornings from six to
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify
Speaker 2: or anywhere else you listen, and as always on the
Speaker 2: Bloomberg Terminal and the Bloomberg Business App. Premier. JP Morkan
Speaker 2: Asset Management joins us now for more precomonic. You followed
Speaker 2: that exchange. What did you make of the explanation coming
Speaker 2: from the Treasury secretary.
Speaker 3: I think the Treasury secretary is doing what a Treasury
Speaker 3: secretary should do, be a cheerleader for the treasury market.
Speaker 4: But you know, I do think he made very valid
Speaker 4: points that.
Speaker 3: Now, what we saw last week, the last few weeks
Speaker 3: massive our shock. You're seeing three sigma six sigma moves
Speaker 3: across assets. You're seeing correlations breakdown. Remember that equity dollar
Speaker 3: correlation that broke down, And so I think investors had
Speaker 3: to delever de risk were they margin calls. So I
Speaker 3: think there was a lot of technical factors that drove
Speaker 3: that treasury sell off.
Speaker 4: In the background, though there is this concern there's.
Speaker 3: Eight trillion of treasure is held by the rest of
Speaker 3: the world, you know, it's the endgame, zero trade deficits.
Speaker 3: I don't think that's the endgame, but concern around foreign
Speaker 3: demand for treasuries may be selling.
Speaker 4: I think that played into that.
Speaker 3: Fear certainly played into the market as well as if
Speaker 3: we're going to get five trillion more deficits because of
Speaker 3: what the House and the Senator talking about.
Speaker 4: I think that just became this perfect storm.
Speaker 3: But I would take a step back and look at fundamentals. Ultimately,
Speaker 3: the treasure market is driven by fundamentals.
Speaker 4: Fundamentals of the hard.
Speaker 3: Data has been strong, but we've just had this massive
Speaker 3: shock to the economy. I think the soft data is
Speaker 3: telling you that the hard data is likely to weaken.
Speaker 3: So I do think treasures are a goodbye. We had
Speaker 3: peak hard to say, but we're getting there.
Speaker 2: Well, you're getting too. The ultimate test what would happen
Speaker 2: if the data weakened would be by treasuries or not
Speaker 2: with the rest of the world allocate capital to the
Speaker 2: United States, which is important. What concerned people last week
Speaker 2: wasn't just a sell off in treasuries, it was what
Speaker 2: was happening elsewhere in other asset classes. Now, we've seen
Speaker 2: moments like this one before where you see forced selling
Speaker 2: a treasuries, big unwineser trades, companies had funds in trouble.
Speaker 2: That's not unique. What was interesting was the persistent dollar
Speaker 2: weakness alongside that, reinforcing the notion that maybe it was
Speaker 2: something else. Perhaps it's not, but that's what unnerved people
Speaker 2: in the past week. How would you reconcile what was
Speaker 2: going on there?
Speaker 3: So I would say that the dollar, I mean, has
Speaker 3: been a highly owned asset right for the last few years.
Speaker 4: Now.
Speaker 3: I think there's structural components to that US exceptionalism.
Speaker 4: Look at where growth is.
Speaker 3: It is US companies profit margins are high, and I
Speaker 3: think right after the election there was this idea of reacceleration,
Speaker 3: so the dollar got some more of a boost there. Plus,
Speaker 3: it was supposed to hedge equity risk. It's supposed to
Speaker 3: hedge risk asses, which is so I think the dollar,
Speaker 3: the structural value in the dollar might still be there.
Speaker 4: Maybe we overdid it.
Speaker 3: In our view, the dollar does still looks overvalued, so I.
Speaker 4: Think that that's correcting. And then you had this.
Speaker 3: Treasury market that was overwhelmed. I think with all of
Speaker 3: the selling. I mean there were a lot of supposedly
Speaker 3: uncorrelated trades. Swap spreads is a supplementary leverage ratio trade,
Speaker 3: German bone treasury or the you know that spread was
Speaker 3: supposed to be about German fiscal stimulus.
Speaker 4: You had an unwind.
Speaker 3: Whether people got a tap on the shoulder, you know,
Speaker 3: whether they're just trying to d risk, whether it's margin calls.
Speaker 4: I think that overwhelms.
Speaker 3: You did have these two forces coming together. But you know,
Speaker 3: it's unnerving when you see correlations break, when you see
Speaker 3: this em market like market moves.
Speaker 4: I think that's what reduced conviction levels.
Speaker 3: And we're seeing headlines every day, So I think uncertainty
Speaker 3: is high, not just for the economy but for investors.
Speaker 4: And and I think that's why you didn't see all this.
Speaker 3: Buying from domestic investors who might be concerned about the economy.
Speaker 1: How much comfort do you get from the potential response function,
Speaker 1: not just from the Federal Reserve but also the Treasury
Speaker 1: Department with a Treasure Secretary scut Pasen saying that they
Speaker 1: could buy back off the run treasuries.
Speaker 3: So I think from market functioning point of view, I
Speaker 3: think though that buy back operation is useful. The Treasury
Speaker 3: launched it because the dealer balance sheet, you know, has
Speaker 3: been constrained as the treasure market's grown.
Speaker 4: Can they help market dysfunction?
Speaker 3: Yes, can they help? They still have to issue a
Speaker 3: lot of debt. So I think we're going to be
Speaker 3: watching beyond all the tariff news, We're going to be
Speaker 3: watching what's happening on the tax front.
Speaker 4: You know, are we going to get those spending.
Speaker 3: Cuts that were sort of promised by Speaker Johnson. If
Speaker 3: you don't get those spending cuts, the market has to
Speaker 3: then grapple with a lot more deficit, and maybe that
Speaker 3: end point of how low rates can go in a
Speaker 3: recession or in a slowdown is going to be higher
Speaker 3: because we've got all.
Speaker 4: This fiscal stimulus.
Speaker 3: I'm a little bit more comforted by the Fed response function,
Speaker 3: and I think Governor Waller yesterday was crystal clear two scenarios.
Speaker 4: I mean as clear as.
Speaker 3: He could be given that the the you know, there's
Speaker 3: a lot of uncertainty, but just telling us how they
Speaker 3: think came out tariffs, and he talked about good news
Speaker 3: cuts and bad news cuts, showing you that asymmetry.
Speaker 1: Okay, but here's the issue, and this is something that
Speaker 1: I haven't heard anybody address. If they were to cut
Speaker 1: rates in response to potential weakness that hasn't shown up
Speaker 1: enough yet in the data, wouldn't the long end just
Speaker 1: yield searge price drop?
Speaker 3: And you could argue maybe some of that happened last
Speaker 3: year when the Fed cut rates from five and a half,
Speaker 3: you have that long end selling off, But I would say,
Speaker 3: look at what was happening to hard data at that point,
Speaker 3: it was actually looking okay. Remember we were concerned August September,
Speaker 3: we were concerned about the labor market. It's stabilized, and
Speaker 3: that's why the long end set sold off. I think
Speaker 3: to your point, yes, the Fed has to be concerned.
Speaker 3: Will they let inflation expectations those tips break evens that
Speaker 3: have been declining? Does that reverse? Which is why they're
Speaker 3: not They can't be preemptive. I think that's what they're
Speaker 3: telling us. They're trying to explain their reaction function so
Speaker 3: that that first really bad hard data, and maybe it's
Speaker 3: the labor market. I don't know, Maybe it's hiring, maybe
Speaker 3: it's retail sales. We're going to be looking not so
Speaker 3: much as there's this frontloading of demand. We're going to
Speaker 3: be looking at discretion spending. If I am going out
Speaker 3: to buy more because I think prices are going to
Speaker 3: go up, do I cut back.
Speaker 4: On other things? And you know? So we're trying to understand.
Speaker 3: How the consumers responding, how corporate's responding. Are they just
Speaker 3: not hiring or are they actually trying to protect margins
Speaker 3: and laying off as that data worsens. I think then
Speaker 3: the FED response doesn't unanchor inflation expectations. It actually helps
Speaker 3: stabilize it because those inflation expectations will create when the
Speaker 3: data weakens, and then the FED can say, no, we
Speaker 3: got your back, but I think you have to first
Speaker 3: see it.
Speaker 4: In the data.
Speaker 2: This is the communication dilembra, the feder reserve feedshaed Japow
Speaker 2: con come run talking like Governor Ballercamp. First and foremost
Speaker 2: you have to pledge to anchor inflation expectations to prayers point.
Speaker 2: Then if you get the hit to growth and inflation
Speaker 2: expectations roll over, you can lean into the d you're
Speaker 2: going to kint interest rates. They can shape the events
Speaker 2: they anticipate, and that's the big issue for them. You
Speaker 2: put out an outlook and it can influence inflation expectations
Speaker 2: even off themselves. To your point, if Chairman Powell comes
Speaker 2: out and start speaking like Governor Walla, what do you
Speaker 2: think is going to happen? Some people would argue exactly
Speaker 2: what you think is going to happen. Maybe inflation expectations
Speaker 2: start to creep higher because we start to have arguments
Speaker 2: around this table. Oh, they don't care about inflation expectations.
Speaker 2: That's the dilemma they're in.
Speaker 1: And this is the reason why markets don't believe that
Speaker 1: they won't step in when there is a problem in
Speaker 1: the data. And that's the reason why you have the
Speaker 1: likes of Andrew hollend horriz orver at City Group reaffirming
Speaker 1: his belief in one hundred and twenty five faces points
Speaker 1: of free cuades this year.
Speaker 2: I'll leave Preer out of this debate because you won't
Speaker 2: want to wait in. But this is the advantage you
Speaker 2: have being a governor and not the FED share. The
Speaker 2: governor can create some distance between himself and the rest
Speaker 2: of the committee. If say, he wanted to become the
Speaker 2: next FED share potentially in the next year or so.
Speaker 1: So you know, do we trust that or do we
Speaker 1: trust fed? Shair Powell?
Speaker 2: You know, this is the little Imma prayer. It is
Speaker 2: good to see it. I'm sure you're welcome being left
Speaker 2: out of that primers er, JP Morgan, Thank you. Terry Hanks,
Speaker 2: a Pangea policy joins us now for more, Terry, welcome
Speaker 2: to the program. The administration I think has done a
Speaker 2: very good job. I think President Trump's done a good
Speaker 2: job of articulating the problem for a number of years.
Speaker 2: Now come back decades, the remedy to the problem and
Speaker 2: the execution of that remedy. What's your reaction to that
Speaker 2: over the past few weeks.
Speaker 5: Well, it's been scattershot, John Frankly and good morning, both
Speaker 5: on strategy and execution. But you know, if there's a
Speaker 5: consistency in the Trump presidencies, I think what you can
Speaker 5: see is that what he tends to do is kind
Speaker 5: of go big, bold, clear, motivational, and then start embroidering
Speaker 5: off the exceptions and the like. And that's certainly the pattern. Now,
Speaker 5: you know, it's you know, I want to be very
Speaker 5: clear about the direction we're moving in in terms of,
Speaker 5: you know, what we're manufacturing, where we're manufacturing, and how
Speaker 5: we're doing it. But then, uh, you know, we're going
Speaker 5: to wait to have the industries come back and separate
Speaker 5: the week from the chaff on what's legitimate and what's not.
Speaker 5: So it is a difficult process for everybody. I understand that,
Speaker 5: and at a very difficult process. And at the same time, uh,
Speaker 5: that's how they operate.
Speaker 1: John has asked this question many times. Who are they
Speaker 1: negotiating with? And yes, they're negotiating with themselves inside the cabinet,
Speaker 1: they're negotiating with companies, they're negotiating with countries, and then
Speaker 1: negotiating with.
Speaker 4: A market terry.
Speaker 1: How does that complicate understanding exactly how to get to
Speaker 1: the goals that they ultimately have laid out.
Speaker 5: I think what they end up doing is they prioritize
Speaker 5: those overlap but they're not they're not completely congruent. You know,
Speaker 5: you you you negotiate as best you can with the
Speaker 5: individual countries involved, and again push push forward bilaterals. Uh,
Speaker 5: you know, get your get your best results, move on,
Speaker 5: get some future, get some future promise as well, move
Speaker 5: on the cabinet understands that at the end of the day,
Speaker 5: the president's the decision maker, and so they fold in
Speaker 5: around and as to the rest. You know, these companies
Speaker 5: buy and large that we're talking about today are big
Speaker 5: companies that have, among other things, pretty sophisticated lobbying operations
Speaker 5: and they're fully engaged as well.
Speaker 1: So, yeah, last night Emrie talking to treasure Secretary Scotts
Speaker 1: Scott Bestont had a message. He wanted to talk about
Speaker 1: the three legged stool of policy, and the tariffs are
Speaker 1: one wing of that, one leg of that, and then
Speaker 1: you had deregulation, and then you had some of the
Speaker 1: tax relief and what was getting passed through Congress. Those
Speaker 1: other two legs of the stool have been caused called
Speaker 1: into question recently in terms of how big they can
Speaker 1: be and how much they can offset. Some of the
Speaker 1: concerns over the tariffs. You have a sense of how
Speaker 1: that's going well.
Speaker 5: I have tax cuts at eighty percent likely to happen
Speaker 5: in the fourth quarter of calendar twenty twenty five, and
Speaker 5: I think there's a rising possibility that it happens sooner.
Speaker 5: It's not for nothing that Trump picks July fourth is
Speaker 5: the day on the next direction on tariffs, and they'd
Speaker 5: very much like to goose Congress as fast as they
Speaker 5: possibly can to get the tax cuts in place for
Speaker 5: the third quarter as well. So you know, but I'm
Speaker 5: optimistic that the Congress gets this done. There's an awful
Speaker 5: lot of alignment on that. As to the numbers, what
Speaker 5: the Senate and the House are talking about is something
Speaker 5: on the order of five trillion tax cuts over ten years,
Speaker 5: without a lot of offsetting, without a lot of pay
Speaker 5: for offsets. And the reason for that is they've chosen,
Speaker 5: as I've been talking about for a while, this current
Speaker 5: policy baseline that allows them.
Speaker 4: To do that.
Speaker 5: So you know, what you're going to see is a
Speaker 5: very big tax cut number coming through, I think, and
Speaker 5: and I think that probably balances or more of the
Speaker 5: tariff shocks Terry.
Speaker 2: You think they go beyond extending existing law.
Speaker 5: I think they do in some respects, in part because
Speaker 5: they in part because you know, that's what Trump's wanted.
Speaker 5: You know, these these tax on tips and you know,
Speaker 5: the salt business, all kinds of things they need to do.
Speaker 5: In order to get votes and get a signature into
Speaker 5: law number one, number two, they're gonna have to change
Speaker 5: the tax code for a variety of things, including providing
Speaker 5: additional incentives for reshoring and on shoring manufacturing. So I'd
Speaker 5: look for all that.
Speaker 2: Terry Hanks, appreciate the input. Thank you, sir, Terry Hanes
Speaker 2: of Panjier Policy. It's kind of it's Ken leyar a
Speaker 2: CFIRA about that. Ken welcome to the program. What have
Speaker 2: we learned about credit quality in America in this banking season?
Speaker 6: So I think what Brian moynihan is going to speak
Speaker 6: about is comfort zones, which is really main street, the
Speaker 6: consumer and small business. And what we saw in the
Speaker 6: release today is that credit risk committees make decisions on
Speaker 6: the current environment, not the forward environment. So that's credit Again.
Speaker 6: The results are more in terms of the high volatility.
Speaker 6: The benefit for trading bank stocks never get rewarded in
Speaker 6: terms of multiple expansions for trading profits. But it shores
Speaker 6: up the full year. Second quarter is going to be choppy,
Speaker 6: you know. It's really kind of like the beginning of
Speaker 6: COVID where analysts like myself looked to the second half
Speaker 6: of this year, is it V shape or U shape.
Speaker 6: We're optimistic, we think the capital markets are going to
Speaker 6: be open, but it's going to be the second half
Speaker 6: of this year, and what we're seeing is institutions and
Speaker 6: fund managers realign their portfolios, and that's good for equity trading.
Speaker 1: A V shape will be a U shape, or we'll
Speaker 1: just be a straight line because I don't see a
Speaker 1: dip right now. I mean talking about the fact that
Speaker 1: you're getting healthy credit quality pretty much across the board.
Speaker 1: That's the message from Bank of America, P and C,
Speaker 1: a smaller but the biggest regional bank came out earlier
Speaker 1: this morning talking the same kind of tone that Frankly,
Speaker 1: provisions for credit losses came in lighter than expected. Does
Speaker 1: this make you more excited for the forward look for banks?
Speaker 6: I don't think the story is credit here, it's way
Speaker 6: too early. It's really what happens in the capital markets
Speaker 6: and what is confidence for CEOs for capital raising. So again,
Speaker 6: the second half of this year, if it's going to
Speaker 6: be stronger, it's not the worries about credit. It's really
Speaker 6: going to be what happens in the capital markets. Clearly,
Speaker 6: if there's going to be any severe recession, then it's
Speaker 6: game off and then we can start talking with red
Speaker 6: lights for credits. CFURA. We look at every metric of
Speaker 6: every bank on delinquencies, lon loss provisions and reserve build
Speaker 6: or reserve or reverse.
Speaker 5: We're just not there yet going forward.
Speaker 1: Can you still get optimistic about the banks if M
Speaker 1: and A doesn't revive, but you do have credit quality
Speaker 1: that hangs in there, and you have yields that are
Speaker 1: higher than previously.
Speaker 6: So the large banks are formidable. They have, as Jamie says,
Speaker 6: fortress balance sheets. They are formidable in their industry. And
Speaker 6: we have never seen in equity market outperform without financials
Speaker 6: and banks coming along for the ride. We're overweighted in financials,
Speaker 6: we would say to you from two thousand and seven
Speaker 6: versus twenty twenty five. When you look at the top
Speaker 6: ten constituents of the financial sector, banks being a big
Speaker 6: part of it, they're a little less cyclical, they're more stable,
Speaker 6: and companies like Goldman Sachs with David Solomon talks about
Speaker 6: moving to more durable, recurring fee revenue, whether it be
Speaker 6: an asset or wealth management, or more principal investments in
Speaker 6: areas like alternatives. So the banks are very different than
Speaker 6: when we had this discussion back in two thousand and
Speaker 6: seven or eight, And again they're not the problem. So
Speaker 6: again we'll see what Scott Besson says in the market
Speaker 6: and advises the president.
Speaker 2: Again, there's a difference between existential risk and a recession, though,
Speaker 2: do you really think they perform well in an economic downturn?
Speaker 6: I'm sorry, I think when you look at the economic outlook,
Speaker 6: you know again Goldman, Yes, they noted that they're now
Speaker 6: still positive, but it was above two percent zero point
Speaker 6: five percent. There's also the question on duration and also
Speaker 6: just a technical definition of recession versus a recession that
Speaker 6: hurts the consumer, and President Trump will pay attention to that.
Speaker 2: Ken appreciate the update. Thank you, sir, Ken Leon of
Speaker 2: Cfon Ray joining ustand the Republican Governor of Virginia, Glenn
Speaker 2: young kiin Comy young Kin good.
Speaker 7: Great to be with you. Thanks for having me. It's
Speaker 7: super to be back in studio with you. So I
Speaker 7: just appreciate you making time.
Speaker 2: For well, thanks to drop him by. Let's talk about
Speaker 2: how exposed you might be to this tariff PUS. You've
Speaker 2: got some very launch aerospace and defense companies in the state.
Speaker 2: How are you helping those companies and individuals that might
Speaker 2: be affected by some of this In the meantime, John,
Speaker 2: I think we have.
Speaker 7: To step back first and put the current moment in
Speaker 7: the tariff evolution in context. From while he was running
Speaker 7: all the way up until today, President Trump has been
Speaker 7: really consistent on the elements of his economic plan. First,
Speaker 7: he's going to use tariffs to reset trade balances and
Speaker 7: decades of bad deals. He's talked about. You've heard these
Speaker 7: words out of his mouth over and over again. Second
Speaker 7: of all, he's going to make sure that manufacturing is
Speaker 7: reshored and that we reinflate or reinvigorate the hollowed out
Speaker 7: middle class. Third, we're going to re establish fiscal responsibility
Speaker 7: in Washington. Fourth, we're going to re establish energy dominance,
Speaker 7: and finally, through deregulation, we're going to make it even
Speaker 7: better to do business in America. And those elements are
Speaker 7: all in motion at the same time. The trade moment
Speaker 7: for us, in the tariff moment for US is also
Speaker 7: this ninety day pause, which is giving the opportunity for deals,
Speaker 7: and every Cabinet member has repeated there's seventy five countries
Speaker 7: in motion right now, and I would expect that there
Speaker 7: will be some significant trade deals struck. I do think
Speaker 7: that there will be a level of ongoing tariffs and
Speaker 7: the ten percent number wasn't one picked out of a
Speaker 7: hats and they call that the base tariff. But I'm
Speaker 7: a governor watching, but I do expect that there will
Speaker 7: be deals cut and those deals importantly will be with
Speaker 7: some of our largest trading partners, India and Japan and Korea.
Speaker 7: And so this is what's going to happen over the
Speaker 7: next many many months, and most importantly, I think that
Speaker 7: will bring some confidence to the market that this reset,
Speaker 7: which has to happen and disruption is part of a reset,
Speaker 7: will will open up long term opportunity. Now Virginia, Virginia,
Speaker 7: we're going to We're seeing that long term opportunity every day,
Speaker 7: and that's through our economic development pipeline. We've had an
Speaker 7: incredibly robust three years. We've had record investment or commitments
Speaker 7: from businesses expanding in Virginia one hundred billion dollars in
Speaker 7: three years, by far the largest amount. In that time period.
Speaker 7: We've seen record job growth. Virginia went from bottom third
Speaker 7: in job growth to top three five ten every year
Speaker 7: in job growth, and that has allowed us to run
Speaker 7: surplus after surplus after surplus. The net of that is
Speaker 7: that we have open jobs in Virginia two hundred and
Speaker 7: fifty thousand open jobs for folks to take. But on
Speaker 7: top of that, our economic development pipeline has been as
Speaker 7: full as it's ever been and we're seeing businesses, international
Speaker 7: companies want to come to the United States. We're viewed
Speaker 7: as the top state in America for business and they
Speaker 7: want to come to Virginia. And so that's a really
Speaker 7: good foundation for us as there is a period of disruption,
Speaker 7: but I think there's a long term opportunity and I
Speaker 7: think Virginia will really do.
Speaker 2: Well link seal command the long term opportunity. In the
Speaker 2: full of policy platform, you just want to keep it
Speaker 2: on Trent just for a moment. On trade, the methodology
Speaker 2: it does feel like was pulled from a hamp in
Speaker 2: the last few weeks, and the criticism we hear around
Speaker 2: this table quite a lot. They will acknowledge the problem,
Speaker 2: and they will acknowledge that the President has articulated that
Speaker 2: consistently and well over the period of decades, not just
Speaker 2: weeks and months. It's the remedy to that problem. At
Speaker 2: the moment, what we hear from the bank CEOs, from
Speaker 2: investors is this economy is drifted into a wait and
Speaker 2: see moment that they aren't going to make those big
Speaker 2: CAPEC decisions until they really know the rules of the game,
Speaker 2: the rules of the road. Do you think we'll know
Speaker 2: the answer to that within ninety days.
Speaker 7: I think we'll see a lot of clarity over the
Speaker 7: course of the next now eighty days, I guess, or
Speaker 7: eighty two days.
Speaker 2: Amazing camp.
Speaker 7: But the net of it is that the President Trump
Speaker 7: was clear, He's continued to be clear that in resetting
Speaker 7: bad trade deals over the last decades and re establishing
Speaker 7: reciprocal trade opportunities. By the way, with nations that our allies,
Speaker 7: China's a whole different top, but with nations that are
Speaker 7: our allies, we just need fair trade and we haven't
Speaker 7: had it. And so in to reset those trade in
Speaker 7: those reset those trade imbalances, you see him do what
Speaker 7: he does well, which just creates space for negotiating. And
Speaker 7: I think that's exactly what's happening. When the first weekend
Speaker 7: after April second, you read in every publication that seventy
Speaker 7: five countries had called within a day to start the negotiations,
Speaker 7: and you've already seen those negotiations at least reported in rumor.
Speaker 7: I think this will be this opportunity to take a
Speaker 7: big step in resetting hold On, and I think that's
Speaker 7: what the market needs to see.
Speaker 2: Part of the.
Speaker 1: Problem, I think, and you know this very well, having
Speaker 1: invested heavily as a co CEO of Carlisle and been
Speaker 1: investing in infrastructure, which takes a long time. There's a
Speaker 1: maturity mismatch between when some of this negotiation is happening,
Speaker 1: when these tariffs go on, and how long it takes
Speaker 1: to bring that investment to the United States. There is
Speaker 1: a lack of clarity about whether those policies will be
Speaker 1: continued in perpetuity, and it's leading to paralysis at so
Speaker 1: many companies. What do you tell the companies in your
Speaker 1: jurisdiction who's come to you and say, how can I plan?
Speaker 4: How can I hire? How can I invest? When this
Speaker 4: could change?
Speaker 1: I don't even understand the parameters we're talking about.
Speaker 7: Yeah, I have to disagree with you on the long
Speaker 7: term planning, because we're seeing a pipeline of economic investment
Speaker 7: that has been as full as it's ever been. And
Speaker 7: these are long term investments. Fortune fifty companies wanting to
Speaker 7: build in America and in Virginia. Hopefully, if we can
Speaker 7: recruit them there. And these are long term investments. And
Speaker 7: you saw in Vidia yesterday talk about five hundred billion dollars.
Speaker 7: We've seen most of the big pharmaceutical companies commit to
Speaker 7: building in the United States. We're seeing technology investments, advanced
Speaker 7: manufacturing all in the United States. These are long term investments.
Speaker 7: I think the difference in a lot of people's understanding
Speaker 7: is that during market ups and downs, well, yes, IPO
Speaker 7: get postponed, and yes, corporate deals get postponed, but these
Speaker 7: long term commitments are actually coming in very large numbers.
Speaker 7: And that's good for states like Virginia. I mean, listen,
Speaker 7: we're in the sec of economic development. I compete every
Speaker 7: day with Tennessee and North Carolina, South Carolina, Georgia, Florida, Texas,
Speaker 7: and we've got to compete. And I think that much
Speaker 7: of that investment will come to this region. And that
Speaker 7: is a long term commitment. And so the uncertainty in
Speaker 7: the near term, yes, I get it, I understand it.
Speaker 7: But the long term expectation that America is going to
Speaker 7: be the best place in the world to invest is
Speaker 7: clear and real, and that's what we're seeing in our
Speaker 7: economic development pipeline.
Speaker 1: There's also an issue of staffing all of this up,
Speaker 1: but how we do this.
Speaker 4: Not only is there a.
Speaker 1: Maturity mismatch, but also potentially a skills mismatch. And I
Speaker 1: know that your state has been significantly affected by some
Speaker 1: of the DOGE cuts, and you've talked about that and
Speaker 1: how you plan to provide for some of these workers.
Speaker 1: But how do you reskill people to work for different
Speaker 1: types of jobs given that they've worked in a very
Speaker 1: specific field and there might not be jobs in that
Speaker 1: field and what we're trying to build up hasn't been
Speaker 1: there for a long time.
Speaker 7: Well, first you go to work and prepare an education
Speaker 7: and training ecosystem to do exactly that. And we've been
Speaker 7: doing this for the last three years in Virginia, which
Speaker 7: is resetting the career pass and the education pass for
Speaker 7: lots of Virginians with opportunity. And today we have an
Speaker 7: incredibly high labor participation rate. It's bounced back from lows
Speaker 7: during the pandemic and the previous administration to near one
Speaker 7: of the national highs. We have one of the best
Speaker 7: workforce training programs in America. We were just named for
Speaker 7: the third year in a row of having the best
Speaker 7: customized job training program in America.
Speaker 5: This is what you do.
Speaker 2: You go to work.
Speaker 7: I do think that the expectation that there will be
Speaker 7: job losses, particularly under the federal government, is real. We
Speaker 7: haven't seen them yet that much in Virginia. I mean,
Speaker 7: our first time claims and unemployment are still at historic lows.
Speaker 7: But listen, I do think that the federal government's downside
Speaker 7: is necessary. Listen, we're running. We're at thirty seven and
Speaker 7: a half trillion dollars a debt, two trillion dollars a
Speaker 7: year of incremental debt. We can't do that, and so
Speaker 7: resizing the federal government and recognizing fiscal responsibility is critical
Speaker 7: to the future of the country is real. What does
Speaker 7: that mean in a state like Virginia. We have a
Speaker 7: lot of federal workers, a lot now. A disproportionate amount
Speaker 7: of those are in the defense and in the intelligence
Speaker 7: and national security area, and we're seeing more money go
Speaker 7: into those areas. But I still expect that there will
Speaker 7: be real disruption for some folks in Virginia. My dad
Speaker 7: lost his job twice when I was growing up, and
Speaker 7: I've seen this in families my own, and it is
Speaker 7: really hard. And that's why a pathway to a new
Speaker 7: career is so important because of our economic growth. We
Speaker 7: have two hundred and fifty thousand open but unfilled jobs
Speaker 7: in Virginia, and over one hundred thousand of those require
Speaker 7: a bachelor's degree. These are good jobs, but there are
Speaker 7: also jobs that pay well, and so opening up that
Speaker 7: pathway to folks who find themselves with job loss is
Speaker 7: really really important. So we launched something called Virginia has Jobs,
Speaker 7: and it's for folks to get jobs in Virginia from
Speaker 7: all over the country, but at a time when we're
Speaker 7: seeing this dislocation from the federal government. It's a real
Speaker 7: opportunity pathway two hundred and fifty thousand jobs, pathways for training, coaching,
Speaker 7: resume riding, but also for making sure folks on how
Speaker 7: to file for unemployment and keep their health care. This
Speaker 7: is a pathway that I'm really hoping that people who
Speaker 7: do have job disruption can find a way to a
Speaker 7: great career in Virginia because Virginia has lots and lots
Speaker 7: of jobs, and people can go to Virginia has Jobs
Speaker 7: dot Com and actually find one. And that's part of
Speaker 7: I think this movement of really public sector employment to
Speaker 7: private sector employment. And we've seen it.
Speaker 4: In Virginia.
Speaker 7: We've had great job growth over the last three years.
Speaker 7: It's led to record surplus after surplus after surplus, which
Speaker 7: has allowed us to reduce taxes. It's allowed us to
Speaker 7: invest in education and law enforcement, and by the way,
Speaker 7: in economic development and job training. But it's also I
Speaker 7: think change people's view of long term in Virginia. We
Speaker 7: used to have were for ten years we had more
Speaker 7: people move away from the Commonwealth of Virginia than move
Speaker 7: into from the other forty United States. And last year
Speaker 7: we became one of the top importers of talent in America.
Speaker 7: So this works, and at a time when President Trump
Speaker 7: again is trying to run a very very full policy
Speaker 7: agenda resetting trade, balancing the federal budget, of making America
Speaker 7: dominant again and energy, restoring manufacturing, and restoring this middle
Speaker 7: class what has been what's been eviscerated over the last
Speaker 7: twenty years, and doing all of that while deregulating to
Speaker 7: make America even a better place for business. I think
Speaker 7: we can look at Virginia and say, hey, we've seen
Speaker 7: at least a little microcosm of that, and it works.
Speaker 2: Governor the Stikes of High I'm please you mentioned your
Speaker 2: experience growing gup. You like me, we were professional dishwashers.
Speaker 2: You went on to have a fantastic career lead in Karlisle,
Speaker 2: and now you're dedicating yourself to public service. There are
Speaker 2: now people much younger than us who believe that dream
Speaker 2: is not available to them. The upward mobility is not
Speaker 2: along as something available in the United States. And at
Speaker 2: the moment, as you know, filling stadiums around this country
Speaker 2: is left wing people like Congresswoman a Cassio Cotez Senator
Speaker 2: Bernie Sandez. If this administration gets this wrong, we could
Speaker 2: see a swing in the pendulum all the way to
Speaker 2: the fi left. It's not unthinkable. You can see that
Speaker 2: taking place. How high are the stakes. What happens if
Speaker 2: this administration screws it out, well.
Speaker 7: First and foremost don't believe they will. And therefore I
Speaker 7: think what people will see over the course of this
Speaker 7: administration is the realization of this long term opportunity. And
Speaker 7: that's why all of the elements that in play are critical.
Speaker 7: You know, there are so many people in government who
Speaker 7: believe there's one policy solution, this magic wand that will
Speaker 7: fix everything. This is an incredibly complex economic transition model.
Speaker 7: And that's why having all of the elements in play
Speaker 7: at one time, while complicating, is critical because they're each
Speaker 7: going to contribute for the long term success. And if
Speaker 7: you peel out one energy dominance, listen, getting energy prices
Speaker 7: to a place where they're sustainably affordable at the gas
Speaker 7: pump and in the supply chains critical. America should basically
Speaker 7: dominate the world of power and energy. Making sure we
Speaker 7: have a balanced fiscal moment, not running two trillion dollar
Speaker 7: deficits critical for the long term success of America. Reshoring, manufacturing,
Speaker 7: and think about what's happened over the last decades where
Speaker 7: we watched critical, very high paying jobs move around the
Speaker 7: world away from America and hollow out our middle class.
Speaker 7: That's the opportunity that has really been missing because we've
Speaker 7: seen literally the middle class not participate in the economic
Speaker 7: growth of America over the past few decades. This is
Speaker 7: what is this opportunity is all about. And I've said
Speaker 7: many times, I think the number one job we have
Speaker 7: as Americans is to help this administration be successful, and
Speaker 7: that success will translate into an even better America than
Speaker 7: we have to.
Speaker 2: At least set it around this typo. I hope they
Speaker 2: are just a final question. What's the future a comverany
Speaker 2: young kid? What you want to do next?
Speaker 7: Well, I finish up next January, and I just want
Speaker 7: to begin by saying this has been the most purposeful
Speaker 7: moment in my entire professional career, and I've loved it,
Speaker 7: and I want to make sure this last year is
Speaker 7: incredibly productive for Virginia. Listen, you only get four years
Speaker 7: in a governor's job in Virginia, and I've got one
Speaker 7: year left, and I got to get four years of
Speaker 7: work done in this year because we've had a great
Speaker 7: first three years, and I want to get a second
Speaker 7: term jammed into this last year. But I also recognize
Speaker 7: that there are a lot of folks who spend all
Speaker 7: their time planning for their next job. I'm not one
Speaker 7: of those folks. I'm going to spend one hundred percent,
Speaker 7: if not one hundred and fifty percent of my effort
Speaker 7: making sure that Virginia continues to thrive. We've got a
Speaker 7: really important election this year. Our Lieutenant governor wins some
Speaker 7: Earl Sears has been a great partner for me through
Speaker 7: this entire economic revival in Virginia, and I want to
Speaker 7: make sure that she gets the Baton. I think voters
Speaker 7: will trust us and trust her and want to elect
Speaker 7: her the next governor of Virginia. And then we'll decide
Speaker 7: what I do after I've watched her be inaugurated.
Speaker 2: Young Convents twenty eight I'll watch.
Speaker 7: I'll decide when I when I after I'm done in
Speaker 7: January twenty twelve.
Speaker 2: I ha's a tryank governor. It's good to see it.
Speaker 7: I will, I will, I will repeat, though, the most
Speaker 7: important thing that we need to be doing right now
Speaker 7: is to be helping this administration be successful. And I
Speaker 7: think the elements are in place. It is a complicated
Speaker 7: set of movements in order to reset so many things
Speaker 7: at one time, but I have great faith that the
Speaker 7: long term opportunities really are going to be great, and
Speaker 7: we're seeing that in companies who are investing all across
Speaker 7: Virginia in America.
Speaker 2: For the good of this country. I think a lot
Speaker 2: of people agree with you. I hope, we hope you're right.
Speaker 2: Thank you, Governor. I appreciate your time. Thank you, sir,
Speaker 2: the Virginia Governor, Glenn youngkin Net. This is the Bloomberg
Speaker 2: Sevenants podcast, bringing you the best in markets, economics, antiet politics.
Speaker 2: You can Watch the show live on Bloomberg TV weekday
Speaker 2: mornings from six am to nine am Eastern. Subscribe to
Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen, and,
Speaker 2: as always, on the Bloomberg Terminal and The Bloomberg Business
Speaker 2: Out