WEBVTT - Warren Buffet to Retire, Tyson Earnings 0:00:02.720 --> 0:00:10.520 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:17.799 Eastern on Apple, Cocklay and Android Auto with the Bloomberg 0:00:17.880 --> 0:00:21.000 Business app. Listen on demand wherever you get your podcasts, 0:00:21.320 --> 0:00:23.040 or watch us live on YouTube. 0:00:23.840 --> 0:00:26.560 It was the bombshell news over the weekend. Even my 0:00:26.720 --> 0:00:29.080 husband talked to me about it. And that is Warren 0:00:29.120 --> 0:00:34.560 Buffett leaving the CEO head at Berkshire Hathaway. Matthew Palazoa 0:00:34.720 --> 0:00:37.960 is Bloomberg Intelligence Senior analyst for PNC Insurance. He was 0:00:38.040 --> 0:00:41.319 there on the ground. Matthew, what was it like when 0:00:41.320 --> 0:00:43.720 he said that in the last few minutes of his address. 0:00:44.200 --> 0:00:46.159 I was there boots on the ground, so I have 0:00:46.200 --> 0:00:50.560 to admit. So it's cold in there, it's dark. People 0:00:50.560 --> 0:00:52.599 are up since four o'clock in the morning right now. 0:00:52.640 --> 0:00:52.800 Yeah. 0:00:52.920 --> 0:00:55.240 Get The guy in front of me is slumped over 0:00:55.560 --> 0:00:58.560 asleep in his chair. And I looked at my watch 0:00:58.600 --> 0:01:00.279 and I said, oh, there's only five minutes least. And 0:01:00.280 --> 0:01:03.160 I say, it's kind of not that eventful of a meeting. 0:01:03.200 --> 0:01:06.160 It literally said five minutes left. And then Buffett's looks 0:01:06.200 --> 0:01:07.800 up and he says, I've just gotten alert this five 0:01:07.840 --> 0:01:11.600 minutes left. I have to say something before the meeting ends. 0:01:11.840 --> 0:01:13.520 And once he said that, I think everyone in the 0:01:13.520 --> 0:01:18.119 building knew what was coming. I was personally really sad, 0:01:18.280 --> 0:01:21.680 Like I was almost choked up. It was it was 0:01:21.720 --> 0:01:24.160 a sad moment he talked about he got a big 0:01:24.160 --> 0:01:28.839 standing ovation. It was you know, you could definitely feel 0:01:28.880 --> 0:01:30.280 the emotion in the building. 0:01:30.560 --> 0:01:33.240 What do we know about Greg Gable? He's been kind 0:01:33.240 --> 0:01:36.960 of the successor to mister Buffett. He's been kind of 0:01:37.000 --> 0:01:39.520 running things really for a number of years now, right. 0:01:39.560 --> 0:01:41.800 Yeah, And I mean a couple of things on Greg. 0:01:41.959 --> 0:01:46.000 So number one, he's been with Berkshire since the early nineties, 0:01:46.240 --> 0:01:49.120 so he's been around for a long time. He's vice 0:01:49.160 --> 0:01:54.160 chairman twenty eighteen. We've talked about over the years, how 0:01:54.240 --> 0:01:57.320 Buffett has talked about at these meetings that he's been 0:01:57.440 --> 0:02:01.520 seeding a lot of responsibilities and control to Greg, and 0:02:01.560 --> 0:02:03.840 how he's been working on, you know, kind of these 0:02:03.880 --> 0:02:05.520 bigger deals to go over time. 0:02:07.120 --> 0:02:09.680 What do we think the premium is going to be worth? 0:02:09.760 --> 0:02:10.000 Now? 0:02:11.200 --> 0:02:14.079 No one can replicate Warren Buffett period. The structure could 0:02:14.080 --> 0:02:16.280 still be there to run a very successful behemoth right, 0:02:16.320 --> 0:02:18.480 but it's not going to be the same. Yeah, what 0:02:18.600 --> 0:02:19.239 the premium there? 0:02:19.240 --> 0:02:22.040 Do you think certainly some of the magic has gone 0:02:22.200 --> 0:02:27.200 right and the buffet premium, You know, I would argue that, 0:02:27.760 --> 0:02:29.200 you know, let's see, you see the stocks down I 0:02:29.200 --> 0:02:32.680 think was six percent when I left my desk. You know, 0:02:32.720 --> 0:02:34.160 it kind of makes sense to me. He probably had 0:02:34.200 --> 0:02:38.600 people with large unrealized gain positions in it, and they're 0:02:38.639 --> 0:02:41.640 like kind of buffets out now I'm out, similar to 0:02:41.680 --> 0:02:44.840 why Berkshire itself sold their positions in Apple Bank of America. 0:02:46.080 --> 0:02:48.240 But I would look forward to the future and. 0:02:48.160 --> 0:02:52.000 Say, you know, maybe you're not getting these kind of 0:02:52.160 --> 0:02:56.280 home run deals, but maybe you're getting better capital allocation. 0:02:56.440 --> 0:02:58.959 Maybe you're getting a dividends, so you know, maybe those 0:02:58.960 --> 0:02:59.880 things offset each other. 0:02:59.880 --> 0:03:00.519 Just degree. 0:03:00.680 --> 0:03:02.320 That's where we got to go. What's what's a three 0:03:02.360 --> 0:03:07.000 hundred and fifty billion three fifty billion amongst friends? Got 0:03:07.040 --> 0:03:09.079 to put up a significant dividen, you'll, and you got 0:03:09.080 --> 0:03:10.880 to stop buying back some stuff. Yeah, I mean, so 0:03:11.400 --> 0:03:12.520 what that happened today? 0:03:12.919 --> 0:03:15.040 I don't so I don't think it's happening today. I 0:03:15.080 --> 0:03:16.600 probably don't think. I don't think it's going to happen 0:03:16.680 --> 0:03:19.880 this year, right. I think when when Greg takes over, 0:03:20.040 --> 0:03:23.600 I think he will be very cognizant of making dramatic changes. 0:03:24.760 --> 0:03:27.360 But I also feel like Berkshire got away with a 0:03:27.400 --> 0:03:32.280 lot because Buffett right, so that that will not hold 0:03:32.320 --> 0:03:36.360 water anymore. And I think it would behoove able to 0:03:37.800 --> 0:03:40.080 really do something with the capital, and it. 0:03:40.160 --> 0:03:43.280 Would investor questions would carry more weight. 0:03:44.120 --> 0:03:46.080 How is the how is the company doing? 0:03:47.680 --> 0:03:49.920 Fine? The first quarter I didn't I didn't love the 0:03:49.920 --> 0:03:50.560 first quarter is. 0:03:51.240 --> 0:03:52.080 A great love. 0:03:52.120 --> 0:03:53.640 The word fine, I mean. 0:03:53.480 --> 0:03:56.520 Ten billion dollars a quarter is good, right, that's the 0:03:56.640 --> 0:03:59.960 kind of earnings power. They were just a couple of 0:04:00.200 --> 0:04:03.560 signals in the first quarter results that I didn't love. 0:04:03.640 --> 0:04:06.920 And I'm an insurance guide. And they had adverse development, 0:04:06.960 --> 0:04:10.440 which means some claims from prior years were costing more 0:04:10.480 --> 0:04:13.160 than they expected. The wild fire losses were a little 0:04:13.200 --> 0:04:14.600 bit more than I thought they were going to be. 0:04:15.640 --> 0:04:18.400 The fire loss is not that's not a go forward thing, 0:04:18.440 --> 0:04:22.200 but the reserve issues are a little concerning. But the 0:04:22.920 --> 0:04:26.400 beauty of the company is such a behemoth, so many 0:04:26.440 --> 0:04:29.800 streams of differentiated earnings that they kind of upset each other. 0:04:29.920 --> 0:04:31.960 So their earnings have been better. 0:04:31.760 --> 0:04:33.479 Than expected the past couple of quarters, so I thought 0:04:33.480 --> 0:04:36.800 they were in line for a kind of slight disappointment. 0:04:37.040 --> 0:04:41.000 Thirty seconds. Some of the parts valuation, where are we. 0:04:40.960 --> 0:04:46.840 Are Bloomberg Intelligence midpoint? Some of the parts analysis comes 0:04:46.960 --> 0:04:50.320 up to like one point one trillion, which was kind 0:04:50.360 --> 0:04:54.280 of before the meeting, the stock was trading slightly above that. 0:04:55.520 --> 0:04:57.520 I don't know if it's you know, below that now, 0:04:57.560 --> 0:04:59.560 and I mean, you know, I don't claim to know 0:04:59.560 --> 0:05:02.159 what Buffet knows, but they haven't been buying max shares 0:05:02.200 --> 0:05:04.360 for a couple of quarters, so I think he's probably 0:05:04.440 --> 0:05:07.239 viewing it very much in the same way as fully valued, 0:05:07.680 --> 0:05:10.120 and the stock's at all time highs. 0:05:10.240 --> 0:05:13.440 Won what he does now? Like you're warn he's ninety. 0:05:13.480 --> 0:05:17.720 Digital chairman, right, you gotta do, you're ninety four? 0:05:18.000 --> 0:05:22.400 Like no, just relax, Yes, exactly, I take that I 0:05:23.200 --> 0:05:25.240 would too, all right, Matthew Palizo, Well, thank you so much. 0:05:25.279 --> 0:05:27.960 We appreciate that, Matt Palizzoli. He's a senior Anniston covers 0:05:28.000 --> 0:05:31.480 all the property and casualty insurance companies for Bloomberg Intelligence. 0:05:31.520 --> 0:05:34.560 Boots on the ground in Omaha over the weekend, mister 0:05:34.600 --> 0:05:37.640 Bethey as Tom Keener first Tom stepping down at the 0:05:37.720 --> 0:05:42.200 age of ninety four and just obviously historic, historic run. 0:05:42.279 --> 0:05:47.320 Now you're listening to the Bloomberg Intelligence podcast. Catch us 0:05:47.400 --> 0:05:50.440 live weekdays at ten am Eastern on Apple, Cocklay and 0:05:50.440 --> 0:05:53.720 Android Auto with the Bloomberg Business App. Listen on demand 0:05:53.760 --> 0:05:57.320 wherever you get your podcasts, or watch us live on YouTube. 0:05:58.240 --> 0:06:00.799 It is earning season, folks, and we got the Tyson's 0:06:00.839 --> 0:06:03.200 Foods reporting earnings. I don't know, maybe it's just me. 0:06:03.240 --> 0:06:06.400 I think of Tyson's food I just think chicken. But 0:06:06.400 --> 0:06:11.080 they're also in the beef business as well. That's the 0:06:11.120 --> 0:06:13.719 extent of my knowledge. Stocks trading off on some earnings. 0:06:13.800 --> 0:06:16.599 Jen Bartashis joins us. She's a senior retail staples and 0:06:16.640 --> 0:06:20.920 packaged foods analysts for Bloomberg Intelligence. Jen the street doesn't 0:06:21.000 --> 0:06:26.400 like what they heard from tyson Foods Springdale, Arkansas. What 0:06:26.560 --> 0:06:28.800 happened there, Well, it's. 0:06:28.680 --> 0:06:30.960 Really two things, Paul. The first thing is that the 0:06:30.960 --> 0:06:34.839 beef business did worse than people expected. But secondly, the 0:06:34.960 --> 0:06:37.560 company held their guidance for the fiscal year, which is 0:06:37.600 --> 0:06:40.520 generally a good thing, except that they're ahead of paste 0:06:40.920 --> 0:06:43.799 for the top of their guidance for adjusted operating income 0:06:43.880 --> 0:06:46.280 for both the chicken and the pork segment. So there 0:06:46.279 --> 0:06:48.440 are a lot of questions on why, given the strong 0:06:48.480 --> 0:06:51.520 first half performance they've had that they didn't actually raise 0:06:51.560 --> 0:06:54.000 their guidance overall. And so between those two things, that's 0:06:54.000 --> 0:06:55.679 what's putting pressure on the stock today. 0:06:55.680 --> 0:06:58.000 Do we get the sense that that's a demand concern 0:06:58.240 --> 0:06:59.760 or is it an input concern? 0:07:00.720 --> 0:07:03.480 Well, on the beef side, it's an input concern. And 0:07:03.839 --> 0:07:07.240 actually there's a piece to that puzzle that Tyson touched on, 0:07:07.320 --> 0:07:09.800 but they didn't really go into detail, and that's that 0:07:10.040 --> 0:07:13.200 they talk about how consumers have really still had a 0:07:13.200 --> 0:07:15.760 lot of demand for beef, which is true, except that 0:07:15.800 --> 0:07:18.680 when you look at the consumer they're trading down into 0:07:18.800 --> 0:07:23.640 like ground beef. Now when you have a shortage of cows, 0:07:23.760 --> 0:07:27.120 you know, the problem that Tyson has is that they 0:07:27.240 --> 0:07:30.520 have to put higher quality parts of the animal into 0:07:30.560 --> 0:07:32.600 grind in order to sell it, which means that their 0:07:32.640 --> 0:07:36.080 profit per animal is coming down. And that's a concern 0:07:36.120 --> 0:07:39.960 over the long term if those changes in behavior patterns 0:07:40.320 --> 0:07:42.160 don't alter in the near future. 0:07:42.320 --> 0:07:45.400 All right, you know, during our little egg shortage, my 0:07:45.560 --> 0:07:50.480 scientific analysis was basically just make more chickens. Tyson's are 0:07:50.520 --> 0:07:53.480 the chicken people. I think, what are they saying about 0:07:53.480 --> 0:07:56.040 the chicken population these days and eggs and all that 0:07:56.120 --> 0:07:58.040 kind of stuff, because they're the folks that know. 0:07:58.840 --> 0:08:02.080 Yeah, so the chicken supply is actually pretty healthy from 0:08:02.520 --> 0:08:05.240 a standpoint of the chickens that are used for consumption, 0:08:06.200 --> 0:08:09.240 they really weren't impacted all that much by avian influenza, 0:08:09.280 --> 0:08:12.119 and so that was the good news. The bad news 0:08:12.160 --> 0:08:15.640 is that the mortality rates on the type of chicken 0:08:15.640 --> 0:08:18.240 that they're currently using is still pretty high. So that 0:08:18.360 --> 0:08:21.240 means that they're not getting as many chickens into the 0:08:21.280 --> 0:08:24.880 processing plants that they normally would given the number of 0:08:24.880 --> 0:08:27.560 eggs that are being laid, and so that is an 0:08:27.560 --> 0:08:32.120 inherent top or cap to supply. So supply is robust. 0:08:32.200 --> 0:08:35.320 It's going to grow about one percent this year, but 0:08:36.280 --> 0:08:38.640 there are some constraints there with how much more they 0:08:38.679 --> 0:08:40.840 could actually grow supply overall. 0:08:41.000 --> 0:08:44.800 What's the tariff impact, if any, on Tyson? On both 0:08:44.840 --> 0:08:46.160 sides the demand and supply. 0:08:47.240 --> 0:08:50.560 For Tyson, Actually they have very limited exposure for tariffs. 0:08:51.160 --> 0:08:53.319 They set on their call today about ninety five percent 0:08:53.360 --> 0:08:55.439 of their revenue comes from product that's sold in the 0:08:55.559 --> 0:09:00.559 United States. Their export is relatively small, and they've had 0:09:00.559 --> 0:09:03.880 some time to work on contingency plans, so finding different 0:09:04.000 --> 0:09:06.679 end markets that they can send some of the parts 0:09:06.679 --> 0:09:10.520 of animals that US consumers just don't eat. So right 0:09:10.559 --> 0:09:12.439 now it doesn't appear to be a very large risk 0:09:12.480 --> 0:09:13.199 for Tyson at all. 0:09:13.559 --> 0:09:17.560 You mentioned maybe some issue with the cow herd. I mean, 0:09:17.600 --> 0:09:21.400 I watched Yosemite. I know all about the ranching business 0:09:21.559 --> 0:09:23.679 to see it. Yeah, so I mean, can't we make 0:09:23.720 --> 0:09:25.000 more cows? What's going on there? 0:09:25.880 --> 0:09:30.280 We can make more cows. The problem is that for ranchers, 0:09:30.320 --> 0:09:33.520 it's a tough environment to decide to actually build up herds. 0:09:33.880 --> 0:09:36.680 Interest rates are still relatively high, there's still high cost 0:09:36.760 --> 0:09:41.120 to expand operations. We've had drought that's only just reversing 0:09:41.160 --> 0:09:43.600 in a lot of the key areas where we raise cattle, 0:09:44.280 --> 0:09:49.199 and so that decision has been coming. But the problem 0:09:49.280 --> 0:09:51.680 is that once you even start, you know, it takes 0:09:51.720 --> 0:09:53.920 eighteen months to get a cattle for birth to market. 0:09:54.559 --> 0:09:56.800 So even if they start today, we're not going to 0:09:56.800 --> 0:09:58.880 see an influxus supply for quite some time. 0:09:59.400 --> 0:10:00.880 I feel like just a few years ago it was 0:10:00.920 --> 0:10:04.760 all about alternative protein. I remember, particularly with Cargil for example, 0:10:04.800 --> 0:10:07.560 they're making a really big push into that. Has that 0:10:07.679 --> 0:10:09.880 trend for these guys shifted now? 0:10:10.720 --> 0:10:13.839 It has. When we look at the consumer consumption data, 0:10:13.960 --> 0:10:18.559 the luster around plant based has really fallen off. And 0:10:18.600 --> 0:10:22.480 so you know, right now there's a core demographic that 0:10:22.520 --> 0:10:26.120 will always be interested in that product, but at the 0:10:26.320 --> 0:10:29.199 at the moment, it's not growing. The sales are continuing 0:10:29.240 --> 0:10:31.760 to contract. Part of that is that the cost of 0:10:32.360 --> 0:10:36.199 regular meat has come down, and we had food inflation 0:10:36.240 --> 0:10:39.880 which pushed the cost of special ingredients for alternative meat 0:10:39.920 --> 0:10:43.160 way up. So the price gap between alternative proteins and 0:10:43.200 --> 0:10:45.839 conventional proteins got a lot wider in the last couple 0:10:45.840 --> 0:10:48.840 of years, and it still hasn't completely collapsed again. And 0:10:48.880 --> 0:10:51.480 so until that gets a little bit closer, it's going 0:10:51.520 --> 0:10:54.000 to be harder to get consumers to get interested again 0:10:54.000 --> 0:10:55.199 in alternative proteins. 0:10:55.679 --> 0:10:58.000 So what is it the tysons of the world, What 0:10:58.000 --> 0:11:00.920 are they saying about their consumer these days? 0:11:01.840 --> 0:11:04.840 So you know, they talk about the demand for protein, 0:11:05.280 --> 0:11:08.800 and this is something where at the Bloomberg Bloomberg Intelligence 0:11:08.840 --> 0:11:11.160 Farm Food Fuel Conference we had a whole suit of 0:11:11.200 --> 0:11:16.160 panelists on protein and the demand for protein is really strong, 0:11:16.200 --> 0:11:19.520 Whether you're talking about animal protein, whether you're talking about dairy, 0:11:20.920 --> 0:11:24.720 current diet trends are high protein based, and so that 0:11:24.800 --> 0:11:29.440 really bodes well for for producers like Tyson as as 0:11:29.520 --> 0:11:32.920 the consumer is willing to still spend on protein and 0:11:32.960 --> 0:11:35.199 it's in the majority of their purchases when they're going 0:11:35.200 --> 0:11:36.160 to the grocery store. 0:11:36.800 --> 0:11:39.360 So true big protein person. 0:11:39.240 --> 0:11:41.119 Well, who isn't who doesn't. 0:11:41.360 --> 0:11:44.440 Like to actively search for protein that feels different? 0:11:44.480 --> 0:11:46.480 Doesn't it? 0:11:46.600 --> 0:11:46.920 All? Right? 0:11:47.000 --> 0:11:47.400 Fair enough? 0:11:48.280 --> 0:11:48.679 Last night? 0:11:49.840 --> 0:11:53.240 Yeah burgers, but then you get cholesterol issues. Okay, anyway, Jen, 0:11:53.280 --> 0:11:55.560 thanks a lot. Jennifer Bartasha's as she joins us from 0:11:55.559 --> 0:11:59.000 Bloomberg Intelligence and your analyst retail staples and packaged food. 0:12:00.679 --> 0:12:04.360 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:04.440 --> 0:12:07.520 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:07.559 --> 0:12:10.840 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:10.920 --> 0:12:14.480 you get your podcasts, or watch us live on YouTube. 0:12:14.679 --> 0:12:16.880 Alex del poulswehen you live here, and a Bloomberg Interactive 0:12:16.920 --> 0:12:20.560 broker's studio streaming live on YouTube as well. On the 0:12:20.559 --> 0:12:24.839 trade front, President Trump suggests that some trade deals may 0:12:24.880 --> 0:12:26.920 come as soon as this week. How about that? And 0:12:27.040 --> 0:12:30.560 the current global economy reporter for Bloomberg News. He joins us, 0:12:30.559 --> 0:12:33.360 he's down there in DC, and how do you think 0:12:33.400 --> 0:12:34.920 this thing is going to play out here? Is it 0:12:35.080 --> 0:12:38.040 country by country by country by country that we're going 0:12:38.120 --> 0:12:41.560 to have to wait for trade deals to be announced. 0:12:42.679 --> 0:12:44.679 Well, it's something of a tease from President Trump. We're 0:12:44.679 --> 0:12:47.480 about a month now, it's just over months Liberation Day. 0:12:48.120 --> 0:12:49.760 The presidents picked the point that there may or may 0:12:49.840 --> 0:12:51.840 not be some agreements coming in this week. And he 0:12:51.920 --> 0:12:54.360 wasn't being specific. He wasn't He was quite vague, and 0:12:54.400 --> 0:12:57.280 he was being asked by reporters about this. But what 0:12:57.360 --> 0:13:00.240 we do know from an administration efficiency is that folks 0:13:00.280 --> 0:13:04.600 are ongoing with several countries they have identified at different times. 0:13:05.120 --> 0:13:07.320 Japan is near the top of that list. India could 0:13:07.320 --> 0:13:09.200 be near the top of that list. South Korea could 0:13:09.240 --> 0:13:11.760 be near the top of that list. So there could 0:13:11.800 --> 0:13:14.800 be some kind of agreement reached with one of those 0:13:15.040 --> 0:13:15.880 at some point soon. 0:13:16.240 --> 0:13:16.440 Now. 0:13:16.640 --> 0:13:19.000 The question then becomes the details of that agreement, and 0:13:19.080 --> 0:13:23.079 that's where everybody will be parising this. Well, what sort 0:13:23.120 --> 0:13:25.400 of moves had been made on non tariff barriers to 0:13:25.440 --> 0:13:28.280 satisfy in Washington, for example, what kind of concessions have 0:13:28.400 --> 0:13:28.959 been made on. 0:13:28.960 --> 0:13:32.160 Maybe investment into the US. Where will the actual US 0:13:32.280 --> 0:13:33.120 tariffs settle? 0:13:33.480 --> 0:13:36.880 All of those may well obviously offer nuggets, for sure, 0:13:36.920 --> 0:13:39.640 but it also may off our roadmap for other economies 0:13:39.679 --> 0:13:41.600 to say, I am like, we can do that too, 0:13:41.760 --> 0:13:43.400 and come to the table to the US to try 0:13:43.400 --> 0:13:44.240 and work it out. 0:13:44.800 --> 0:13:46.720 So, you know, we don't have specifics yet. 0:13:46.760 --> 0:13:49.120 It's a little bit vague, but clearly something's coming down 0:13:49.160 --> 0:13:50.240 the pipes at some point soon. 0:13:51.440 --> 0:13:54.600 But I understand that the agreement versus like an MoU 0:13:54.720 --> 0:13:57.600 versus a deal, they all mean different things. But do 0:13:57.640 --> 0:14:00.360 we think anything that's on paper at this point, even 0:14:00.400 --> 0:14:03.280 as a member of understanding, would that count as getting 0:14:03.320 --> 0:14:05.080 something done and tick that box? 0:14:06.000 --> 0:14:07.520 And as the role of Congress and all of this 0:14:07.640 --> 0:14:11.160 that there's so skeptics say, look, negotiating a real meaningful 0:14:11.679 --> 0:14:15.920 trade deal takes months, if not years, of protracted trade talks. Okay, 0:14:15.960 --> 0:14:19.400 so clearly that can't be done in weeks. Nonetheless, I 0:14:19.480 --> 0:14:22.560 think what people are looking at for is a first 0:14:22.560 --> 0:14:25.600 of all, what is actually greed, but most importantly, where 0:14:25.640 --> 0:14:28.400 will US tariff rates settle in the air terms. 0:14:28.440 --> 0:14:29.040 Remember, all of. 0:14:29.040 --> 0:14:32.360 Those what were described as reciprocal tariffs or those levels 0:14:32.360 --> 0:14:34.800 that were set pretty high for you know, money. 0:14:34.520 --> 0:14:35.960 Trading partners right around the world. 0:14:36.320 --> 0:14:39.200 If the tariff level is maybe back towards this ten 0:14:39.240 --> 0:14:42.960 percent based on level, then that might suggest that, you know, 0:14:43.040 --> 0:14:44.920 that's where things might settle. If you could deal with 0:14:44.960 --> 0:14:46.840 the US, could deal with the US, and you settle 0:14:46.880 --> 0:14:48.720 for that based on ten percent, that's the way for 0:14:48.920 --> 0:14:49.840 But of course. 0:14:49.800 --> 0:14:51.840 If it's not on that tariff level is higher. That's 0:14:51.880 --> 0:14:53.360 what I think about. A lot of people are going 0:14:53.400 --> 0:14:54.360 to keep an eye out for. 0:14:55.080 --> 0:14:57.360 Who's driving the bus here. Is it the President? Is 0:14:57.400 --> 0:15:00.520 it his trade advisors? Who's kind of because there's a 0:15:00.600 --> 0:15:02.120 lot of balls in the area when you think about 0:15:02.400 --> 0:15:05.840 all the countries that are presumably in negotiations with the US. 0:15:06.240 --> 0:15:08.640 Yeah, I think there must be at least a dozen 0:15:08.760 --> 0:15:11.600 or so in serious negotiations, and of course they say 0:15:11.600 --> 0:15:13.560 they're talking to up to seventy. I think it is 0:15:13.640 --> 0:15:16.040 all governments all together. It's you know, it seems to 0:15:16.080 --> 0:15:19.520 be different personal he's playing different roles treasure sectors. Got president, 0:15:19.560 --> 0:15:22.400 it's clearly front and center for the aged trade talks. 0:15:22.240 --> 0:15:26.000 He's kind of made that clear. The trade representative career 0:15:26.120 --> 0:15:29.680 obviously is kind of the technical guy behind the scenes, 0:15:29.720 --> 0:15:31.400 he would be involved in all of this, and of 0:15:31.400 --> 0:15:34.960 course Commerce Secretary Howard Lutnik, He's seems to be more vocal, 0:15:35.000 --> 0:15:36.720 maybe in the European side, but they're all playing the 0:15:36.840 --> 0:15:39.760 role or all part of it. But ultimately, you know, 0:15:39.880 --> 0:15:42.080 as the older officials say, and as we can say, 0:15:42.160 --> 0:15:44.920 the anside looking and ultimately President Trump will make that agreement, 0:15:44.960 --> 0:15:48.280 He will decide whatever will be decided. The market rally 0:15:48.440 --> 0:15:50.720 in recent weeks will of course give the administration a 0:15:50.760 --> 0:15:53.400 lot of confidence that what they're trying to do is 0:15:53.560 --> 0:15:56.800 the right thing. But at the same time, we all 0:15:56.840 --> 0:16:00.240 know that they got pretty nervous, you know, couple of 0:16:00.280 --> 0:16:02.000 weeks ago, and they did pull back for the pose 0:16:02.040 --> 0:16:04.480 ownership with Carr. So a lot of folks on what 0:16:04.960 --> 0:16:07.160 kind of what level of terwer will be great in 0:16:07.200 --> 0:16:09.560 their term and what the roadmap will be from there 0:16:09.560 --> 0:16:12.040 on for these for all the countries involvement. 0:16:12.680 --> 0:16:14.840 And super appreciate thank you so much and the current 0:16:14.840 --> 0:16:18.120 Bloomberg Global Ecademy reporter joining us on those three deals 0:16:18.120 --> 0:16:20.320 that may come as soon as this week. 0:16:22.000 --> 0:16:25.680 You're listening to the Bloomberg Intelligence podcast Catch US live 0:16:25.760 --> 0:16:28.880 weekdays at ten am Eastern on Apple Coarcklay and Android 0:16:28.880 --> 0:16:32.160 Auto with the Bloomberg Business App. Listen on demand wherever 0:16:32.240 --> 0:16:35.800 you get your podcasts, or watch us live on YouTube. 0:16:36.360 --> 0:16:38.480 Alex Still, Paul Swinni live here in our Bloomberg Interactive 0:16:38.480 --> 0:16:43.920 Broker Studio, streaming live on YouTube. Michael McKee joins us here. Mike, 0:16:43.960 --> 0:16:45.880 what do you think about some of the economic data 0:16:45.920 --> 0:16:48.400 we get the it Some services came out, you know, 0:16:48.440 --> 0:16:51.120 better and expected, But boy, that pricious paid number you 0:16:51.160 --> 0:16:53.040 kind of jump out at you. How do you pick 0:16:53.080 --> 0:16:53.520 that all in? 0:16:53.640 --> 0:16:56.600 Well, I think you're seeing the beginning. I'd better hear 0:16:56.640 --> 0:16:57.560 more about John Touch. 0:16:59.440 --> 0:16:59.960 Back in the day. 0:17:00.480 --> 0:17:02.840 I think what you're seeing is the beginnings of the 0:17:02.880 --> 0:17:08.000 impacts of the tariffs. This is soft data, essentially, but 0:17:08.320 --> 0:17:11.879 it has a sort of a hard component to it, 0:17:11.920 --> 0:17:15.160 in that the ism is asking what's happening in your 0:17:15.240 --> 0:17:18.560 business this month? And if you go under the hood, 0:17:18.640 --> 0:17:23.800 you see that imports have dropped a lot and prices 0:17:23.960 --> 0:17:27.360 paid went up a lot, and those two things are 0:17:27.400 --> 0:17:31.320 probably going to be connected. Also, inventories went up because 0:17:31.359 --> 0:17:35.600 people front loaded ordering. The interesting thing about it, though, 0:17:35.760 --> 0:17:39.600 was that new orders were still rising. So it may 0:17:39.640 --> 0:17:43.080 be that the businesses are retrenching but the customers have 0:17:43.240 --> 0:17:46.480 not yet, or it may be that the customers are 0:17:46.520 --> 0:17:50.679 looking to those who import to keep them going, which 0:17:51.320 --> 0:17:52.440 they may or may not be. 0:17:52.440 --> 0:17:52.960 Able to do. 0:17:53.600 --> 0:17:57.320 Yeah, eleven industries reported growth last month, led by accommodation 0:17:57.480 --> 0:18:01.200 and food service. Is only six industries contracted. When do 0:18:01.200 --> 0:18:03.320 you think we're going to get a clean read on 0:18:03.359 --> 0:18:04.200 all these numbers. 0:18:04.840 --> 0:18:07.680 It's going to probably be over a period of time, 0:18:08.200 --> 0:18:12.040 depending on the number and how businesses react to a 0:18:12.119 --> 0:18:17.239 specific data point. I would imagine that you're not going 0:18:17.320 --> 0:18:21.359 to get a full picture of it until either July 0:18:21.520 --> 0:18:26.320 or August, when we know what the tariffs are. Remember 0:18:26.400 --> 0:18:30.760 the reciprocal tariffs are postponed until July, so that could 0:18:30.760 --> 0:18:32.919 hang out there for a long time. When we know 0:18:33.000 --> 0:18:36.560 that the tariffs are, that will help, and when we 0:18:37.119 --> 0:18:40.600 see how people react to it, both other countries, whether 0:18:40.600 --> 0:18:47.360 they're reciprocal tariffs or whether they come to some kind 0:18:47.359 --> 0:18:49.880 of a deal. So at this point, it's really hard 0:18:49.920 --> 0:18:54.439 to say when you'll know, but I suspect it's going 0:18:54.480 --> 0:18:58.320 to be one of those things that slowly becomes obvious. 0:18:59.000 --> 0:19:00.840 How about to the federies are they going to be 0:19:01.960 --> 0:19:04.679 slow to kind of recognize what may be happening out 0:19:04.720 --> 0:19:06.600 there in terms of inflation and growth. 0:19:06.720 --> 0:19:09.320 Unless we get some sort of rapid movement in either 0:19:09.359 --> 0:19:12.280 one of those things, which nobody is really predicting at 0:19:12.320 --> 0:19:14.440 the moment, they're going to be slow because there's no 0:19:15.640 --> 0:19:20.080 benefit to them to moving quickly. If the economy is 0:19:20.160 --> 0:19:25.280 slowing down, then the question becomes how slow And with 0:19:25.400 --> 0:19:30.080 inflation still above target et cetera, et cetera, then the 0:19:30.119 --> 0:19:32.760 Fed doesn't want to get into a situation where it's 0:19:33.040 --> 0:19:36.679 boosting inflation by cutting rates too quickly, so they'll just 0:19:36.760 --> 0:19:40.840 wait and see. And the economy is in pretty good 0:19:40.840 --> 0:19:44.280 shape right now, appears with the numbers still doing okay 0:19:44.359 --> 0:19:50.000 and inflation still slowly coming down, so no problem for them. 0:19:50.359 --> 0:19:53.160 That's one of the arguments too for the OPEC plus 0:19:53.880 --> 0:19:56.840 production increase, right It's like, hey, listen, the hard dat 0:19:56.960 --> 0:19:59.280 is actually okay. Maybe there can There are lots of 0:19:59.280 --> 0:20:01.440 reasons why this is to do it, but maybe it's 0:20:01.880 --> 0:20:04.280 the market can actually absorb it because we haven't seen 0:20:04.880 --> 0:20:06.840 demand necessarily a fall off a cliff. 0:20:07.040 --> 0:20:09.959 Well, it sets up an interesting question about how consumers 0:20:10.000 --> 0:20:14.320 will react if gasoline prices start going down, and then 0:20:14.400 --> 0:20:17.920 how the FED reacts to that. I guess if in 0:20:18.200 --> 0:20:21.959 headline inflation goes down because gasoline prices and energy prices 0:20:22.000 --> 0:20:24.560