WEBVTT - EU Leaders Defend US Deal as German Industry Voices Concerns 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.920 --> 0:00:13.240 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.240 --> 0:00:17.840 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.880 --> 0:00:22.760 and trends shaping today's complex economy. Plus global business finance 0:00:22.800 --> 0:00:26.120 and tech news as it happens. The Bloomberg Business Week 0:00:26.239 --> 0:00:31.720 Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.240 --> 0:00:34.479 All Right, as we mentioned, Tim and I are setting 0:00:34.479 --> 0:00:36.560 the stage at the top a lot coming out investors 0:00:36.600 --> 0:00:40.479 this week, and I mentioned Julian Emmanuel over at Evercore 0:00:40.520 --> 0:00:42.720 II calling this a moment of truth for the markets 0:00:42.720 --> 0:00:45.880 because you've got big tech earning some of those mags seven, 0:00:45.920 --> 0:00:48.680 You've got the trade negotiations like we just talked with Catherine, 0:00:48.760 --> 0:00:51.040 You've got the FOMC, the jobs report and earnings report. 0:00:51.159 --> 0:00:51.760 It's a lot. 0:00:51.800 --> 0:00:55.120 Tim, Let's ask Nancy Lazarrel about it. She's chief economist 0:00:55.160 --> 0:00:58.560 for Piper Sandler. She joins us from Aspen, which is 0:00:58.600 --> 0:01:02.440 the biggest element on your radar. This week. We opened 0:01:02.480 --> 0:01:05.399 our program talking about Okay, yes, the trade deals. Those 0:01:05.440 --> 0:01:08.720 are obviously very big. We have everything happening when it 0:01:08.760 --> 0:01:12.199 comes to tariff deadlines. Later this week, We've got earnings 0:01:12.319 --> 0:01:15.400 out this week from some of the megacap tech players, 0:01:15.400 --> 0:01:17.360 and then of course the jobs are coming at us 0:01:17.400 --> 0:01:20.200 on Friday, not to mention fed share, J Powell coming 0:01:20.240 --> 0:01:22.600 at us on Wednesday. How are you making sense of it? 0:01:22.959 --> 0:01:23.080 Well? 0:01:23.120 --> 0:01:25.319 I think really the consumer spending data we're going to 0:01:25.360 --> 0:01:28.440 see for the month of June from an economic perspective, 0:01:28.520 --> 0:01:31.720 is going to be really important. Our best guess is 0:01:31.720 --> 0:01:34.520 that the consumer is going through a soft patch right now. 0:01:34.560 --> 0:01:37.480 We have already clearly seen that in the retail sales data. 0:01:38.000 --> 0:01:41.240 Within consumer spending, we're going to get more information on services. 0:01:41.560 --> 0:01:44.640 We heard last week from some of the service oriented 0:01:44.720 --> 0:01:48.920 consumer companies airlines, hotels, restaurants that consumer spending in the 0:01:48.960 --> 0:01:52.520 service sector also is a little squishy. It's not just goods, 0:01:52.520 --> 0:01:55.400 it's also the service side. So consumer spending, how week 0:01:55.480 --> 0:01:58.320 will it be as we go into second quarter into 0:01:58.320 --> 0:01:59.560 the third quarter? Excuse me? 0:02:00.160 --> 0:02:01.520 We are expecting a soft patch. 0:02:01.560 --> 0:02:04.960 We think it will be on the softer side, reflecting 0:02:05.040 --> 0:02:07.960 in part demand was pulled forward in anticipation of these tariffs, 0:02:08.120 --> 0:02:12.320 and you have already seen price increases and that's also 0:02:12.680 --> 0:02:14.680 impacting consumer consumer spending. 0:02:14.800 --> 0:02:16.040 How do you make sense of that, given what we 0:02:16.040 --> 0:02:17.959 heard from airlines over the last couple of weeks. Not 0:02:18.360 --> 0:02:20.840 every airline, of course, but I'm talking mainly of United 0:02:20.840 --> 0:02:22.720 and Delta, who said, you know, as we got a 0:02:22.720 --> 0:02:26.720 little clarity about what was happening with tariffs late June 0:02:26.840 --> 0:02:29.959 early July, we started to see a real big turnaround 0:02:29.960 --> 0:02:32.200 when it came to consumer spending. How do you gel 0:02:32.240 --> 0:02:32.919 those two things. 0:02:33.280 --> 0:02:36.160 I think it really is a bifurcated consumer. One of 0:02:36.160 --> 0:02:38.480 these days, I look forward to not using that word anymore. 0:02:38.520 --> 0:02:40.600 We've talked about that for a couple of years now, 0:02:40.919 --> 0:02:44.040 but there is really a bifurcation. The higher end business 0:02:44.080 --> 0:02:47.160 oriented airlines are I'm not an airline analyst, but they 0:02:47.160 --> 0:02:50.880 are being supported by the higher end and businesses. Whereas 0:02:50.919 --> 0:02:53.680 the airlines that reported last week, couple of them anyway, 0:02:53.800 --> 0:02:56.760 and again today some layoffs, those are more for the 0:02:56.800 --> 0:02:59.920 lower end consumer, and the lower end consumer is really 0:03:00.040 --> 0:03:03.240 getting squeezed from these terrafs. It is basically a regressive 0:03:03.360 --> 0:03:07.400 tax on the consumer. So the bifurcation companies that are 0:03:07.440 --> 0:03:09.840 geared toward businesses and the higher end consumer can plow 0:03:09.880 --> 0:03:11.800 through this. Those that are more tied to the lower 0:03:11.880 --> 0:03:15.200 end consumer are struggling. The consumer really is looking at 0:03:15.200 --> 0:03:16.200 price points right now. 0:03:16.280 --> 0:03:19.280 I want to get to what our Shawn Donnan wrote 0:03:19.320 --> 0:03:22.560 about on the Bloomberg Today and at Bloomberg dot Com, 0:03:22.600 --> 0:03:25.800 and that has to do Nancy with the damage to 0:03:25.840 --> 0:03:29.520 the global economy from American protectionism. He notes that it's 0:03:29.560 --> 0:03:34.640 becoming increasingly evident even if financial markets get somewhat excited 0:03:34.639 --> 0:03:36.360 as we see trade deals being done. He says it 0:03:36.400 --> 0:03:38.560 all amounts to another step change in the trade barrier 0:03:38.640 --> 0:03:41.760 that the President has erected around America, which is starting 0:03:41.760 --> 0:03:45.560 to reshape trade and investment patterns worldwide. Not his opinion, 0:03:45.600 --> 0:03:48.120 but his reporting out that Shawn has done here at 0:03:48.160 --> 0:03:51.400 Bloomberg and Bloomberg Economics, saying the hit to the world 0:03:51.480 --> 0:03:54.280 economy will reach two trillion by the end of twenty 0:03:54.320 --> 0:03:56.800 twenty seven relative to its pre trade war path. 0:03:57.800 --> 0:04:00.720 It's going to be a different global environment. 0:04:00.920 --> 0:04:03.760 Yes, well, for sure, it's going to be a different 0:04:03.800 --> 0:04:06.000 global environment. But I think we have to look at 0:04:06.040 --> 0:04:09.160 the economy as three dimensional chess, not just as a 0:04:09.200 --> 0:04:13.400 flat as a flat board, no question, tearis our attacks. 0:04:14.720 --> 0:04:17.400 I'm definitely more for free trade, but I'm also for 0:04:17.480 --> 0:04:20.240 fair trade. Maybe we can shake one little positive out 0:04:20.240 --> 0:04:23.279 of this and get some fair trade i e. Incrementally 0:04:23.320 --> 0:04:26.800 sell more to Japan and Europe in particular. But to 0:04:26.880 --> 0:04:29.680 be sure, right now, our effective tariff rate that we're 0:04:29.720 --> 0:04:34.640 calculating is about seventeen. Now it's down dramatically, but seventeen 0:04:34.720 --> 0:04:38.760 is the highest since since the nineteen thirties, and so 0:04:39.040 --> 0:04:41.480 to be sure, that is a headwind to global growth. 0:04:41.640 --> 0:04:43.720 But I think that is just one part of the puzzle. 0:04:43.880 --> 0:04:46.159 The second thing that's going on in the United States 0:04:46.320 --> 0:04:50.599 is the capital spending cycle, and the tax legislation or 0:04:50.640 --> 0:04:53.280 that was just passed actually in the one Big Beautiful 0:04:53.279 --> 0:04:58.719 bill indeed does very very very significant accelerated depreciation for 0:04:58.800 --> 0:05:03.680 capital spending apex appreciation for eighty percent of capex. That 0:05:03.800 --> 0:05:06.240 is going to be a significant boost to cash flow, 0:05:06.760 --> 0:05:07.679 corporate cash flow. 0:05:07.760 --> 0:05:08.800 We've already heard that. 0:05:08.920 --> 0:05:11.560 Last week we had four companies AT and T, Verizon, 0:05:11.600 --> 0:05:15.400 T Mobile, and United Rental. I'll say this tax legislation 0:05:15.600 --> 0:05:18.800 is a support for their cash flow. So against I 0:05:18.800 --> 0:05:20.839 think we can't just look at one level. We have 0:05:20.920 --> 0:05:23.400 to look at what's going to happen to capital spending 0:05:23.600 --> 0:05:26.240 and capital spending. I call it the ugly duckling of 0:05:26.279 --> 0:05:29.960 economic data. It's underappreciated for what it does for growth. 0:05:30.040 --> 0:05:34.240 It creates productivity, profitability and lists potential GDP growth and 0:05:34.240 --> 0:05:37.200 that eventually lists living standards. So quite frankly, I think 0:05:37.200 --> 0:05:39.440 that article is a little bit way too one sided, 0:05:39.440 --> 0:05:42.080 and you need to look at the bigger picture and 0:05:42.400 --> 0:05:45.479 near term again, this economic soft patch for sure, but 0:05:45.600 --> 0:05:48.360 you're already seeing signs the companies that I mentioned, you're 0:05:48.360 --> 0:05:51.599 seeing it in data where US capital spending is picking up, 0:05:51.680 --> 0:05:54.279 and that's going to come back and help not only 0:05:55.240 --> 0:05:58.000 productivity but the job cycle as we go through twenty 0:05:58.040 --> 0:06:00.400 twenty six. So it's important to look at the bigger picture. 0:06:00.440 --> 0:06:03.520 And I didn't mention deregulation. I'll stop, but that's also 0:06:03.560 --> 0:06:06.080 another really important support for the US and therefore the 0:06:06.120 --> 0:06:06.920 global economy. 0:06:06.960 --> 0:06:07.880 But is it okay? 0:06:07.960 --> 0:06:09.160 And you know, one of the things I want to 0:06:09.160 --> 0:06:11.200 go back to is you say support for the labor market. 0:06:11.200 --> 0:06:13.680 We had Rob kaplan On, former president of the Dallas Fed, 0:06:14.640 --> 0:06:18.279 on Friday and he said, you talked repeatedly over the 0:06:18.279 --> 0:06:21.520 tight labor market and the impact of immigration perhaps on 0:06:21.560 --> 0:06:24.320 that and how that could then impact US growth. 0:06:24.360 --> 0:06:26.080 So I just want to throw that out there. 0:06:26.200 --> 0:06:28.200 But when you talk about capex and what it can 0:06:28.240 --> 0:06:32.760 do for growth, certainly great for company balance sheets, Does 0:06:32.800 --> 0:06:38.000 it help workers? Does it actually provide momentum throughout the economy. 0:06:39.360 --> 0:06:42.679 Absolutely, Again, it's called a business cycle for a reason, 0:06:42.760 --> 0:06:47.080 and when businesses invest again, they improve their profitability through productivity. 0:06:47.200 --> 0:06:49.800 And if companies aren't making more money, if their cash 0:06:49.800 --> 0:06:53.200 flow is indeed going up, that is incentive to spend 0:06:53.240 --> 0:06:56.280 not only on capital spending, but eventually on jobs and 0:06:56.760 --> 0:06:59.280 in wages. And you see it, you see it historically 0:06:59.800 --> 0:07:03.719 in in the data. Again, capital spending always grows faster 0:07:03.800 --> 0:07:09.000 than housing capital spending, accept potentially in recession, capital spending 0:07:09.120 --> 0:07:13.800 always grows faster than consumer spending. So it's really really underappreciated. 0:07:14.080 --> 0:07:18.920 Businesses create jobs and pay and pay weaight and pay wages. 0:07:18.960 --> 0:07:22.320 So near term, absolutely, I would argue we're in a 0:07:22.360 --> 0:07:26.600 soft patch. The unemployment rate is grinding higher the Although 0:07:26.880 --> 0:07:30.200 initial claims have come down a little bit, continuing claims 0:07:30.240 --> 0:07:33.320 remain elevated. Companies, I'm not sure the labor market is tight. 0:07:34.120 --> 0:07:37.760 Continuing claims remain very elevated. Companies are reluctant to hire 0:07:37.880 --> 0:07:40.840 given the trade. Given the trade uncertainty. We think as 0:07:40.840 --> 0:07:44.040 we go into twenty twenty six, the improvement in corporate profits, 0:07:44.040 --> 0:07:46.320 which right now are sluggish but they'll improve into twenty 0:07:46.360 --> 0:07:49.800 twenty six, then leads to a stronger a stronger labor market. 0:07:49.880 --> 0:07:53.520 So yes, there's nothing more beneficial for the consumer than 0:07:53.560 --> 0:07:57.559 stronger productivity growth a low inflationary environment, and that gives 0:07:57.560 --> 0:07:59.040 you stronger real income growth. 0:07:59.280 --> 0:08:02.400 To what extent is that productivity growth, in your view, 0:08:02.920 --> 0:08:05.400 hampered or not by tariffs. 0:08:06.240 --> 0:08:09.120 I don't think it really is hampered by tariffs per se, 0:08:09.200 --> 0:08:13.760 incrementally maybe from a higher cost of certain certain investments. 0:08:13.800 --> 0:08:15.840 As a result, we are seeing an increase in the 0:08:15.880 --> 0:08:18.800 price of certain capital goods. So at the margin that 0:08:18.920 --> 0:08:20.280 is a little bit of a nick. But this is 0:08:20.600 --> 0:08:25.720 this is a very significant full capex depreciation, which again 0:08:25.760 --> 0:08:28.160 those four companies early on in this earning season. I 0:08:28.200 --> 0:08:30.160 can't wait to hear what happens over the next couple 0:08:30.160 --> 0:08:34.960 of weeks that I have seen significant savings in cash 0:08:35.000 --> 0:08:37.960 in cash flow, So we don't know yet the full 0:08:38.200 --> 0:08:42.440 quote unquote saving to companies from this a new depreciation schedule, 0:08:42.600 --> 0:08:44.800 and it could more than offset anything which I think 0:08:44.800 --> 0:08:47.920 it does from a tariff from a tear perspective. So 0:08:47.960 --> 0:08:52.160 tariffs are a one time tax versus capital spending, has 0:08:52.200 --> 0:08:55.400 a very long tail and will help the economy at 0:08:55.440 --> 0:08:57.240 least through twenty six, not into twenty sex. 0:08:57.360 --> 0:08:59.600 So Nancy, we've got a FED meeting, as you well know, 0:09:00.120 --> 0:09:01.959 FED decision on Wednesday. So you say we're in a 0:09:02.000 --> 0:09:04.640 bit of a soft patch right now, but you are 0:09:04.640 --> 0:09:07.360 looking for improvement in twenty twenty six, and you see 0:09:07.360 --> 0:09:10.199 profits leading to a stronger labor market. If we've already 0:09:10.240 --> 0:09:13.040 got stimulus coming as a result of some of the 0:09:13.040 --> 0:09:16.760 tax measures by the President's big beautiful bill, then does 0:09:16.760 --> 0:09:20.040 the FED really should they not do anything for maybe 0:09:20.080 --> 0:09:21.000 the rest of the year. 0:09:20.880 --> 0:09:21.760 Because they don't need to. 0:09:21.760 --> 0:09:23.880 They're stimulus already coming, and they've got to be careful 0:09:23.920 --> 0:09:24.559 about inflation. 0:09:24.679 --> 0:09:26.040 Just got about forty seconds. 0:09:26.640 --> 0:09:28.679 Yes, I would agree that the FED doesn't need the 0:09:28.720 --> 0:09:31.120 cut rates. Our guests that they probably do, according to 0:09:31.160 --> 0:09:34.240 my colleague Benson, at least once, but we don't really 0:09:34.280 --> 0:09:36.240 need more than that. They already cut rates one hundred 0:09:36.240 --> 0:09:39.840 basis points last fall and that's still working its way 0:09:39.880 --> 0:09:44.079 through into the economy. So good point. Combination of the 0:09:44.400 --> 0:09:47.120 incremental I don't want to call it physical stimulus. It's 0:09:47.200 --> 0:09:51.680 basically tax at tax and implicit tax cut for corporations, 0:09:51.720 --> 0:09:55.720 and the regulation are not inflationary. They're actually disinflationary through 0:09:55.760 --> 0:09:58.760 improving productivity growth. But net no, we really don't need it, 0:09:58.800 --> 0:10:00.760 but we'll probably will probably to get at least one. 0:10:00.920 --> 0:10:03.320 All right, great to get some time with you again, Nancy, 0:10:03.360 --> 0:10:05.160 Thank you so much. Have a good week, Nancy Lazar. 0:10:05.200 --> 0:10:07.280 She's chief economist over at Piper Sandler. 0:10:07.880 --> 0:10:11.880 You're listening to the Bloomberg Business Weekdaily podcast. Catch us 0:10:11.920 --> 0:10:15.400 live weekday afternoons from two to five pm Eastern. Listen 0:10:15.400 --> 0:10:19.000 on Applecarplay and Android Auto with the Bloomberg Business app, 0:10:19.120 --> 0:10:21.720 or watch us live on YouTube. 0:10:22.000 --> 0:10:24.480 The US and Chinese officials finished their first two days 0:10:24.480 --> 0:10:26.959 of talks aimed at extending their tariff truth beyond a 0:10:27.200 --> 0:10:30.640 mid August deadline and hashing out ways to maintain trade 0:10:30.679 --> 0:10:35.520 ties while safeguarding economic security. The agenda includes giving more 0:10:35.520 --> 0:10:37.840 time for high stakes negotiations to play out on issues 0:10:37.920 --> 0:10:41.400 ranging from US levies tied to fentanyl trafficking to Chinese 0:10:41.400 --> 0:10:45.439 purchases of sanctioned Russian and Iranian oil. Andrew Bishop is 0:10:45.480 --> 0:10:48.319 following this all He's Senior Partner Global Head of Policy 0:10:48.360 --> 0:10:53.600 Research at Signam Global Advisors. He joins us from Washington, DC, Andrew, 0:10:54.040 --> 0:10:57.040 giving your view of what has happened over these first 0:10:57.280 --> 0:11:00.600 of two days of trade talks. Do you think that 0:11:01.000 --> 0:11:02.880 this tariff truths will be extended? 0:11:04.600 --> 0:11:06.160 Oh, yes, very much so. 0:11:06.240 --> 0:11:08.480 I think the tariff truth is absolutely going to be extended. 0:11:09.280 --> 0:11:11.800 But the main reason for that is not so much 0:11:11.840 --> 0:11:14.480 because I think there's great progress being made on the 0:11:14.520 --> 0:11:18.280 substance of these talks. Rather, I think President Trump essentially 0:11:18.320 --> 0:11:22.439 realized back in April May that high tariffs on China 0:11:22.520 --> 0:11:25.400 just don't work because the impact on the US economy 0:11:25.520 --> 0:11:27.640 is too great and China has. 0:11:27.559 --> 0:11:29.520 Too much leverage in the form of its control over 0:11:29.600 --> 0:11:30.280 rare earths. 0:11:30.400 --> 0:11:32.840 So as a consequence of that, I think the President 0:11:33.040 --> 0:11:36.120 is in very much de escalation mode and trying to 0:11:36.120 --> 0:11:38.600 buy time make sure that the US receives the rare 0:11:38.640 --> 0:11:41.240 earth that China has promised in Geneva and London. And 0:11:41.280 --> 0:11:44.440 therefore he's definitely interested in extending that pause. 0:11:44.760 --> 0:11:48.400 So if China has, in the in the words of 0:11:48.400 --> 0:11:52.760 Donald Trump, maybe has the cards in this negotiation, in 0:11:52.800 --> 0:11:56.240 your words, has too much leverage in this negotiation, then 0:11:57.000 --> 0:11:59.920 what does the US have Aside from an economy that 0:12:00.080 --> 0:12:01.640 relies on goods from China. 0:12:01.760 --> 0:12:05.080 The US really only has a terror freight, which is 0:12:05.120 --> 0:12:07.400 why I think the Chinese side is going to be 0:12:08.200 --> 0:12:12.240 bargaining hard for a reduction in tariffs as well as 0:12:12.400 --> 0:12:16.240 a reduction or at least a stabilization in export controls, 0:12:16.880 --> 0:12:18.680 in particular of semiconductors. 0:12:19.200 --> 0:12:21.920 What's interesting in the latest recent. 0:12:21.679 --> 0:12:24.960 Events of the past couple of weeks is that the 0:12:25.000 --> 0:12:28.400 Trump detmonstration has reversed some of its earlier export controls 0:12:28.440 --> 0:12:30.640 on VSH twenty chips, for example. 0:12:30.679 --> 0:12:33.040 As I'm sure you're well aware, that was. 0:12:32.960 --> 0:12:35.720 A view that we had at Signum that this would 0:12:35.720 --> 0:12:37.680 be part of the deal that they struck in London. 0:12:38.080 --> 0:12:40.400 The problem for the Trumpet demonstration is that that move 0:12:40.480 --> 0:12:42.680 is already getting enormous pushback. 0:12:42.920 --> 0:12:45.040 Right So, while China is going to be. 0:12:45.040 --> 0:12:48.959 Demanding more of that, more repeal of export controls, it's 0:12:49.000 --> 0:12:51.280 going to be hard for President Trump to agree to 0:12:51.320 --> 0:12:54.840 that without facing major backlash domestically. And that's why I 0:12:54.840 --> 0:12:59.400 think he'll start pivoting the conversation away towards tariff. 0:12:59.000 --> 0:13:01.920 Relief, just not as emminently as this week. 0:13:01.960 --> 0:13:05.199 I don't think who has more at stake here? We 0:13:05.760 --> 0:13:10.719 so often, Andrew talk about the relationship and the dependent 0:13:10.960 --> 0:13:15.600 relationship between the United States and China. But when you 0:13:15.720 --> 0:13:20.000 look at this relationship, does one of the countries have 0:13:20.080 --> 0:13:21.080 more at stake here? 0:13:21.679 --> 0:13:21.719 So? 0:13:21.920 --> 0:13:24.199 I think the answer to that is, and the reason 0:13:24.240 --> 0:13:28.240 why you get different answers right, is that China definitely 0:13:28.280 --> 0:13:31.840 has more to lose economically than the US does. The 0:13:31.920 --> 0:13:36.240 problem is the US has a lower political pain tolerance, 0:13:36.800 --> 0:13:39.680 and as consequence, though even though the US economy is 0:13:39.720 --> 0:13:42.760 far more resilient and can absorb these shocks from a 0:13:42.800 --> 0:13:45.599 political standpoint, you have a president and it would be 0:13:45.679 --> 0:13:48.840 the case with any other president that essentially faces a 0:13:48.880 --> 0:13:51.160 Taco situation as soon as they come under pressure. 0:13:51.640 --> 0:13:52.560 So then talk to us. 0:13:52.640 --> 0:13:55.840 Take us to China in terms of what is happening 0:13:56.240 --> 0:13:58.920 in their economy right now, and we know that you're 0:13:59.000 --> 0:14:03.520 right in terms of pain tall tolerance, that many much 0:14:03.600 --> 0:14:05.840 has been reported. I guess I should say in terms 0:14:05.880 --> 0:14:07.600 of the Chinese government that they'll do what they need 0:14:07.640 --> 0:14:13.640 to do right in terms of potentially inflicting pain economic 0:14:13.720 --> 0:14:16.920 pain on their citizens. But tell us about what is 0:14:16.960 --> 0:14:19.640 the truth or reality, at least as you know it 0:14:19.680 --> 0:14:21.360 to be the Chinese economy today. 0:14:21.560 --> 0:14:23.880 So what's interesting is you see a lot of vulnerabilities 0:14:23.880 --> 0:14:28.040 in the Chinese economy. Youth unemployment is a major one, 0:14:28.960 --> 0:14:33.440 you know, sort of misallocated savings and low consumption is another, 0:14:34.560 --> 0:14:36.680 and of course problems and the major problems in the 0:14:36.680 --> 0:14:39.080 real estate market. But what's interesting is that a lot 0:14:39.120 --> 0:14:43.120 of those problems aren't directly related to President Trump's tariff 0:14:43.200 --> 0:14:45.600 threats or tariff enactments, if you will. 0:14:46.320 --> 0:14:48.040 So there are two ways of looking at that. 0:14:48.240 --> 0:14:52.320 You could say, any marginal worsening of the situation due 0:14:52.320 --> 0:14:55.680 to Trump makes the Chinese position even harder to sustain. 0:14:56.080 --> 0:14:59.480 But a different interpretation, which I would lean with, is that, 0:14:59.640 --> 0:15:02.560 you know, because China is aware that these are structural 0:15:02.600 --> 0:15:05.760 problems that it's on its way to at least, you know, 0:15:05.880 --> 0:15:09.800 resolve or at least tackle on its own. President Trump 0:15:09.920 --> 0:15:12.960 really isn't the major agenda item on the table here, 0:15:13.280 --> 0:15:16.200 and he can be sort of kept at bay and 0:15:16.360 --> 0:15:19.880 handled almost like as a single singular issue in its 0:15:19.880 --> 0:15:21.520 own bucket, if you will. 0:15:21.360 --> 0:15:24.080 We've spent a lot of time over the last few 0:15:24.120 --> 0:15:25.960 weeks and all over the last few months talking about 0:15:26.120 --> 0:15:29.240 rare earths talking about tariff rates. But one thing that 0:15:29.280 --> 0:15:32.560 hasn't necessarily come up a lot of late has been 0:15:32.880 --> 0:15:35.800 the fate of TikTok and how TikTok could or could 0:15:35.840 --> 0:15:39.680 not be used as a bargaining chip in these negotiations. 0:15:39.680 --> 0:15:40.280 What's your view? 0:15:40.880 --> 0:15:42.320 So my view on that is. 0:15:43.960 --> 0:15:46.320 My view on that is that you can have a 0:15:46.360 --> 0:15:49.680 TikTok deal any day, right as long as the US 0:15:49.800 --> 0:15:54.120 is willing to accept the situation where China continues to 0:15:54.120 --> 0:15:56.600 control the algorithm. So that could look at one that 0:15:57.120 --> 0:15:59.880 could look one of two ways. Either China controls the 0:16:00.040 --> 0:16:03.760 algorithm and there are essentially two tiktoks, a Chinese TikTok 0:16:03.760 --> 0:16:06.520 and an American TikTok, and the American TikTok is sort 0:16:06.560 --> 0:16:09.360 of fully US owned but it just doesn't have that 0:16:09.440 --> 0:16:13.800 initial algorithm. Or you have a situation where the TikTok 0:16:14.040 --> 0:16:17.800 platform in the US still has the underlying algorithm, but 0:16:17.840 --> 0:16:21.320 there's an existing dependency on China. What I don't see 0:16:21.400 --> 0:16:23.920 is China agreeing to part ways with that algorithm. So 0:16:24.640 --> 0:16:27.720 a simpler, a simpler version of that is to say, 0:16:29.040 --> 0:16:31.800 China is not going to give away the real TikTok. 0:16:32.080 --> 0:16:34.760 So the question is whether the US wants to continue 0:16:34.800 --> 0:16:38.640 with the status quo or downgrade TikTok's quality. 0:16:38.280 --> 0:16:40.520 If you like, Hey Andrew, something we talked about in 0:16:40.560 --> 0:16:43.760 the two o'clock hour about all of these trade agreements that. 0:16:45.040 --> 0:16:46.480 The devil's in the details, right. 0:16:46.320 --> 0:16:48.120 And it just feels like in many ways we're just 0:16:48.160 --> 0:16:51.800 getting kind of agreements to do something. Something like a 0:16:51.920 --> 0:16:54.280 US China trade deal is going to be a complicated 0:16:54.280 --> 0:16:58.200 one and lots and lots of pages and items to discuss. 0:16:58.800 --> 0:17:03.320 So I guess what my question is is we will 0:17:03.360 --> 0:17:07.960 probably not know the specific details for a while. So 0:17:08.640 --> 0:17:11.439 investors trading off of, I mean, what should they trade 0:17:11.440 --> 0:17:13.920 off of, what do they be looking for in terms 0:17:13.920 --> 0:17:16.840 of specifics when it comes to a US China trade 0:17:16.880 --> 0:17:18.480 deal and how long might that take? 0:17:19.119 --> 0:17:21.320 And so I think one thing that they can trade 0:17:21.320 --> 0:17:25.760 on is direction of travel, right, So, very concretely, experts 0:17:25.760 --> 0:17:27.840 debate whether there's going to be a minor terror for 0:17:27.920 --> 0:17:31.400 Leaf tomorrow or in November or some time in between. 0:17:31.880 --> 0:17:34.840 But most experts at this stage agree that there is 0:17:34.880 --> 0:17:37.520 a floor under the relationship and that it's unlikely we're 0:17:37.520 --> 0:17:40.040 going to see TEFF increase, right, So one answer is 0:17:40.800 --> 0:17:43.720 things are probably going to get better, not worse, over 0:17:43.760 --> 0:17:46.800 the coming six months, different if you look over the two. 0:17:46.600 --> 0:17:49.119 To five here horizon. But that's a separate question. So 0:17:49.119 --> 0:17:49.760 that's one answer. 0:17:49.840 --> 0:17:53.040 The second answer would be any deal is likely to 0:17:53.080 --> 0:17:56.280 involve purchase commitments from China, right, so similar to the 0:17:56.280 --> 0:17:58.720 Phase one trade agreement that they struck back during President 0:17:58.760 --> 0:18:02.200 Trump's first term. China will probably promise to buy more 0:18:02.240 --> 0:18:06.600 American things items, including agricultural goods. Those targets are not 0:18:06.800 --> 0:18:09.280 likely to be as high as during the first agreement. 0:18:09.359 --> 0:18:12.200 They were unrealistic back then. But that's a second component. 0:18:13.080 --> 0:18:15.879 The third is again, oh sorry. 0:18:15.720 --> 0:18:18.200 No offurtunately, we've got to wrap it and leave it here, 0:18:18.280 --> 0:18:19.560 which is a mega te Well. 0:18:19.480 --> 0:18:22.720 Honey, back to talk about the third one. Okay, that's 0:18:22.720 --> 0:18:23.800 what we call a megates. 0:18:24.119 --> 0:18:26.199 That was great though. We really appreciate Andrew Bishop. 0:18:26.200 --> 0:18:28.680 He's Senior Partner, Global Head of Policy Research at Signum 0:18:28.720 --> 0:18:30.280 Global Advisors, joining us from DC. 0:18:31.880 --> 0:18:36.000 This is the Bloomberg Business Week Daily Podcast. Listen live 0:18:36.080 --> 0:18:39.320 each weekday starting at two pm Eastern on Applecarplay and 0:18:39.320 --> 0:18:42.359 Android Auto with the Bloomberg Business app. You can also 0:18:42.480 --> 0:18:46.119 listen live on Amazon Alexa from our flagship New York station. 0:18:46.680 --> 0:18:50.760 Just say Alexa play Bloomberg eleven thirty Now to a. 0:18:50.880 --> 0:18:53.159 Very serious global issue. We're going to start in the 0:18:53.200 --> 0:18:55.720 Middle East, where President Donald Trump said the US would 0:18:55.720 --> 0:18:58.159 work on a new effort to provide food aid to 0:18:58.280 --> 0:19:02.520 alleviate starvation and gaza, along with other governments and organizations, 0:19:02.960 --> 0:19:06.560 including the UK and the European Union. His comments from 0:19:06.560 --> 0:19:08.560 this morning from Scotland in a press conference with the 0:19:08.640 --> 0:19:10.400 UK Prime Minister Keir Starmer. 0:19:11.359 --> 0:19:14.879 The United States will be helping with the food. You know, 0:19:14.960 --> 0:19:16.879 we have a lot of access to food. We got 0:19:16.880 --> 0:19:19.440 a lot of food ourselves, and we're going to bring 0:19:19.440 --> 0:19:21.000 it over there. We're also going to make sure that 0:19:21.040 --> 0:19:23.080 they don't have barriers stopping people. We're going to be 0:19:23.160 --> 0:19:26.320 getting some good, strong food. We can save a lot 0:19:26.359 --> 0:19:28.840 of people. I mean, some of those kids are that's 0:19:28.920 --> 0:19:33.199 real starvation stuff. I see it, and you can't fake that. 0:19:33.760 --> 0:19:36.960 So we're going to be even more involved. 0:19:37.600 --> 0:19:39.800 That's President Trump earlier today from Scotland. We're going to 0:19:39.840 --> 0:19:42.359 head to tele Aviv. Now to Bloomberg News Israel Bureau 0:19:42.440 --> 0:19:46.240 Chief Ethan Bronner. Ethan, we've all seen the pictures by 0:19:46.320 --> 0:19:50.840 now of starving Palestinians, many of whom are children. You've 0:19:50.880 --> 0:19:53.080 wrote about this, and you wrote about this last week, 0:19:53.119 --> 0:19:55.239 and the back and forth, what the Israeli government has 0:19:55.240 --> 0:19:59.040 said is happening, what many in the worldwide community has 0:19:59.080 --> 0:20:02.440 said is happening. The World Health Organization said is happening. 0:20:02.960 --> 0:20:04.320 In your view, what is going on. 0:20:05.080 --> 0:20:07.399 Tim, I mean, you know, I wish I had the 0:20:07.440 --> 0:20:11.200 wisdom for a genuinely deep answer. I think there can 0:20:11.240 --> 0:20:15.320 be no question that people are going hungry in Gaza. 0:20:15.520 --> 0:20:19.520 I think that we are now beyond any discussion of that. 0:20:19.280 --> 0:20:23.440 The issue begins to get complicated when we're talking about 0:20:23.520 --> 0:20:27.080 famine or starvation and whose fault it is and how 0:20:27.160 --> 0:20:29.840 long it's been going on. And I have to tell 0:20:29.880 --> 0:20:32.920 you that as a reporter here who can't get into Gaza, 0:20:33.000 --> 0:20:36.159 I mean, the Israeli military and government have barred us 0:20:36.160 --> 0:20:40.040 from going in. It's been a source of enormous frustration 0:20:40.280 --> 0:20:43.640