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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: It was another volatile day in global markets. Stocks continued

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Speaker 2: to sell off in Asia, Europe, and the United States.

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Speaker 2: President Trump threatened even more tariffs on China. Since Trump

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Speaker 2: announced a raft of new tariffs on April second, more

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Speaker 2: than nine trillion dollars has been wiped off of msci's

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Speaker 2: index of global stocks. But Trump has not blinked. He

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Speaker 2: and his advisors continue to say the economy is in

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Speaker 2: what the President calls an adjustment period. Here he is

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Speaker 2: talking to reporters on Air Force one on Sunday Runion Place.

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Speaker 1: Now, what's gonna happen with the market? I can't tell you,

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Speaker 1: but I can tell you how our country has gotten

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Speaker 1: a lot stronger, and eventually it'll be a country like

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Speaker 1: no other. It'll be the most dominant country economically in

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Speaker 1: the world.

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Speaker 2: The White House says more than fifty trading partners have

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Speaker 2: reached out to try to negotiate trade. Pop among them

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Speaker 2: is Japan, which faces a twenty four percent tariff. President

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Speaker 2: Trump spoke with Japan's Prime minister, and he also talked

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Speaker 2: trade with Benjamin Nett and Yahoo. When the Prime Minister

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Speaker 2: of Israel visited the White House on Monday.

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Speaker 3: We have many, many countries that are coming to negotiate

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Speaker 3: deals with US, and they're going to be fair deals.

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Speaker 3: In certain cases, they're going to be paying substantial tariffs.

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Speaker 2: Meanwhile, as the selloff has deepened, a growing number of

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Speaker 2: market strategists have revised down their targets for where the

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Speaker 2: S and P five hundred will be at the end

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Speaker 2: of the year, and economists that several big banks have

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Speaker 2: updated their forecasts. Some of them now expect to see

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Speaker 2: a recession in the months ahead. Libby Cantrill is the

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Speaker 2: head of public policy at PIMCO, and she told Blomberg

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Speaker 2: there's going to be stickiness to these tariffs, and even if.

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Speaker 4: There are some negotiations and some concessions along the way,

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Speaker 4: I think the direction of travel here is very clear.

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Speaker 4: I don't mean to be sort of a statement of

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Speaker 4: the obvious here, but the tariffs are are going to

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Speaker 4: be high, and I think they're going to be high

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Speaker 4: for a while.

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Speaker 2: I'm David Gerra, and this is the big take from

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Speaker 2: Bloomberg News today. On the show, the seismic effect President

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Speaker 2: Trump's tariffs announcement is having John Arthuris joins US a

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Speaker 2: senior market editor for Bloomberg and a columnist for Bloomberg Opinion.

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Speaker 2: To help us better understand what's happening and the impact

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Speaker 2: President Trump's trade policy is going to have on global

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Speaker 2: markets in the future, John, could you just describe the

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Speaker 2: market reaction that we've seen so far. It hasn't even

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Speaker 2: been a week, But how would you characterize what's been

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Speaker 2: happening in global marketing?

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Speaker 5: Okay, I would characterize it as a horrified response to

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Speaker 5: what is almost universally regarded as an egregious, terrible, damaging

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Speaker 5: policy era. In terms of the what makes this unusual

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Speaker 5: compared to some other sell offs, it's that there hasn't

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Speaker 5: been much of a bounce at any point other than

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Speaker 5: in response to inaccurate news reports. There has been a

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Speaker 5: straightforward downward line when it comes to share prices. The

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Speaker 5: other point that I think needs to be taken on

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Speaker 5: board is that when you have negative news development for risk,

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Speaker 5: the Pavlovian responsive markets is to buy the dollar to

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Speaker 5: get into US assets, even if the source of the

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Speaker 5: problem is the US. That's what happened after the subprime crisis.

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Speaker 5: That's what happened after S and P downgraded US Treasury

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Speaker 5: debt in twenty eleven, people actually bought the dollar. They

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Speaker 5: sold the dollar in the twenty four hours after the

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Speaker 5: tariff announcement. That is very concerning as it suggests that

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Speaker 5: people could be losing their confidence in the US as

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Speaker 5: a jurisdiction. That said, as we're recording this, the dollar

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Speaker 5: has been regained somewhat since early Friday, So I would

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Speaker 5: call that something to monitor.

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Speaker 2: You and I sitting near each other, we were here

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Speaker 2: late into the night on April second, and there was

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Speaker 2: a moment when you and I walked over to the

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Speaker 2: televisions and sort of saw the Asian market's response in

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Speaker 2: real time. What did you get a sense of how

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Speaker 2: broad based and widespread the reaction was going to be as.

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Speaker 5: The tariffs announced are as widespread as they could be,

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Speaker 5: like ten percent on everybody, which even without the frankly

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Speaker 5: ridiculous reciprocal tariffs, which are just economically indefensible, even without

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Speaker 5: those ten percent blanket tariffs, would have been the biggest

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Speaker 5: change to the global trading order in many decades. This

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Speaker 5: is going to bite out of companies profits, This is

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Speaker 5: going to bite out of economic growth. That means any

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Speaker 5: assets connected to profits or growth are going to have

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Speaker 5: to be cheaper. We don't know exactly how much cheaper yet,

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Speaker 5: because of all these concerns about exactly whether this policy happens,

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Speaker 5: because of doubts about exactly how other countries will respond.

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Speaker 5: But this is one of the interesting things. Until Friday,

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Speaker 5: volatility as it's normally measured wasn't that high. This was

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Speaker 5: an orderly, let's get out of here response, rather than

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Speaker 5: my hair is on fire or the sky is falling.

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Speaker 2: A basic question what is driving this sell off? Is

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Speaker 2: it uncertainty about what these tariffs are going to be

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Speaker 2: eventually and is President Trump going to blink or not?

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Speaker 2: Or is it the certainty that this is going to

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Speaker 2: be something that really upends the world as we know

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Speaker 2: it in terms of markets and the economy.

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Speaker 5: I mean, we've had the uncertainty for a while, and

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Speaker 5: actually markets were fairly calm about it. A big part

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Speaker 5: of this sell off is that evidently very many people

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Speaker 5: had assumed this wasn't going to happen. There is no

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Speaker 5: other explanation for how extreme the market reaction was other

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Speaker 5: than that we really didn't think you were going to

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Speaker 5: do this, mister president.

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Speaker 2: And why was that? I mean, as you say, he's

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Speaker 2: been talking about it for so long. Why did it

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Speaker 2: seem if you look at Valatilly, for instance, why did

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Speaker 2: it seem to get to Wall Street off.

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Speaker 5: I mean, he had been talking about tariffs for just

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Speaker 5: as long minus eight years when he took over the

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Speaker 5: first time, and that time around. You can disagree about

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Speaker 5: protectionism versus free trade, but he went around those tariffs

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Speaker 5: in a fundamentally sensible way. He gave dew warning and

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Speaker 5: then he did targeted tariffs on the countries where there

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Speaker 5: was a real argument to be made that they were

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Speaker 5: behaving unfairly, i China, but he didn't go any further

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Speaker 5: than that. The other critical point from Trump one point

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Speaker 5: zero is that he does care about the stock market.

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Speaker 5: He really didn't like the stock market going down. He

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Speaker 5: set great store by saying how great he was because

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Speaker 5: the stock market was doing well. This is very hard

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Speaker 5: to explain here, but this is a complete inverse.

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Speaker 2: We got commentary from the headch of manager, Bill Lackman.

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Speaker 2: We got this letter from Jamie Diamond to JP Morgan shareholders.

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Speaker 2: Every year he writes this many dozens of pages long letter. Yes,

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Speaker 2: and in this year, as he said, terrorists will increase

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Speaker 2: inflation and quote the quicker this issue is resolved, the

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Speaker 2: better because some of the negative facts increase cumulatively over

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Speaker 2: time and would be hard to reverse. Yes, how important

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Speaker 2: is the last part.

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Speaker 5: Of that very if you can find a way to

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Speaker 5: resolve this which suggests to the rest of the will

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Speaker 5: that they can trust the States, and frankly to American

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Speaker 5: businesses that they can trust US government still not to

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Speaker 5: do something this stupid and arbitrary. This isn't just about

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Speaker 5: protectionism versus free trade. This is about how dumbly this

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Speaker 5: was done. If you can't resolve this in a way

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Speaker 5: that suggests the system still basically works, that we can

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Speaker 5: follow the will of the people, but do it in

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Speaker 5: a way that doesn't ultimately hurt those people produce results

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Speaker 5: that nobody ever wanted. If we can get to such

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Speaker 5: a situation, then this is that much less damaging. If

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Speaker 5: you're in a position, however, where you have the sense

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Speaker 5: that if what they've done already and the fact that

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Speaker 5: it's been allowed to happen means we have to forget

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Speaker 5: about trusting Uncle Sam from now on. That's very dangerous.

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Speaker 2: After the break, we turned to the rest of the

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Speaker 2: world and whether we're heading toward a quick resolution or

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Speaker 2: a drawn out trade war. Trade was on the agenda

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Speaker 2: when Israel's Prime Minister Benjamin NETANYAHUO met with President Trump

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Speaker 2: at the White House on Monday. The White House imposed

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Speaker 2: a seventeen percent tariff on Israel. The President wrote in

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Speaker 2: a post on truth Social that quote, countries from all

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Speaker 2: over the world are talking to us, including Japan. John.

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Speaker 2: In the run up to April second, many investors thought

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Speaker 2: that these tariffs were going to be a negotiating gambit.

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Speaker 2: From what we're seeing from these meetings phone calls, do

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Speaker 2: you think that they are that.

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Speaker 5: On balance? No, No, I do think he had in

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Speaker 5: mind that there would be negotiations. He's a transactional guy.

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Speaker 5: The reasons I think otherwise, however, First of all, a

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Speaker 5: number of the big investment banks did huge research on

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Speaker 5: what reciprocal tariffs meant. So this is where you break

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Speaker 5: down product line by product line, work out what tariff's

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Speaker 5: a chance to whom.

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Speaker 2: If you do it for real, it's a lot of work.

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Speaker 5: If you do it for real, it needs a lot

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Speaker 5: of computing. Parents like mining of a bitcoin, there are

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Speaker 5: tens of thousands of pairs and ubs, which I wrote

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Speaker 5: up about a month ago, came up with this great

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Speaker 5: report which from memory said that if the US moved

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Speaker 5: to reciprocal tariffs with everything on their fifty biggest trading partners,

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Speaker 5: that would increase the overall tariff level by about one

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Speaker 5: and a half percentage points. This is actually not that

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Speaker 5: big a deal. It also found out that there were

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Speaker 5: a number of countries, including most of the countries in

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Speaker 5: the EU and Japan, that would need to increase their

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Speaker 5: tariff slightly more than the US would do. The US

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Speaker 5: is actually not as hard done by as some other

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Speaker 5: developed markets. So this is the problem that you can

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Speaker 5: have a big negotiation, but the other countries don't have

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Speaker 5: much to offer because they're not tariffing the US very

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Speaker 5: much in the first place. We've had decades of moving

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Speaker 5: towards a broadly free trade system. But the idea that

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Speaker 5: has been in circulation is that you could get a

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Speaker 5: bunch of other countries agreeing to revalue their currency higher

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Speaker 5: against the dollar in return for Trump making these tariffs

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Speaker 5: go away. That isn't a stupid idea that there is

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Speaker 5: plain common sense in it. You need China to be

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Speaker 5: a part of it. That is going to be very

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Speaker 5: difficult if you don't have China as a part of it.

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Speaker 5: There's not much point, and you probably want to start

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Speaker 5: from a basis where people's electorates are going to be

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Speaker 5: okay with you doing this.

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Speaker 2: There is this old sar that China has the capacity

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Speaker 2: to weather events over a longer time horizon than say

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Speaker 2: the US does. How do you see them responding to

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Speaker 2: the incredibly sizable tariffs that the president has put in place,

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Speaker 2: others that he's threatened. What is that government that economy

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Speaker 2: able to do in the phase of that.

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Speaker 5: Yes, China is prone to long term thinking. That said, actually,

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Speaker 5: the Chinese Communist Party in recent years has actually been

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Speaker 5: pretty opportunistic and reactionary. If things go wrong, it will,

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Speaker 5: it will weave, it will change. What has happened so

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Speaker 5: far is they can spend a lot of money. They've

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Speaker 5: been doing that and it hasn't necessarily helped, but they

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Speaker 5: can try doing it again. Thanks to the lack of

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Speaker 5: confidence in the Chinese economy to grow, you can borrow

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Speaker 5: very cheaply. If you're the Chinese government, one and a

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Speaker 5: half percent two percent yields, which is extraordinary. They do

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Speaker 5: have control over their currency. There are some limits on

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Speaker 5: that control. It does have some of the attributes of

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Speaker 5: a normal traded currency, but not all of them. They

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Speaker 5: have they've decided they're not allowing capital to flow fully and.

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Speaker 2: They're not wringing their hands over central bank independence.

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Speaker 5: Oh and so you have seen I think you can

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Speaker 5: call it a warning, a shot across the bows. The

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Speaker 5: yuan is still not at its weakest. It's like there's

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Speaker 5: a ceiling that it has come and approach two or

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Speaker 5: three times and bounced from. It's approaching it again. We've

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Speaker 5: just had the sharpest devaluation in the in the yuan

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Speaker 5: in some months. I think that's a warning sign with guys,

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Speaker 5: we can weaken the yuan if we want to. We

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Speaker 5: haven't been doing that because for we've been kind of

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Speaker 5: agreeing that we left we took things too far in

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Speaker 5: the early years after China joined the WTA, which is

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Speaker 5: plainly true. By the way, if they want to, they

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Speaker 5: can make their currency much weaker again, and that will

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Speaker 5: be a problem for the States. Less of a problem

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Speaker 5: than it was when China was substantially all of the

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Speaker 5: global growth fifteen to twenty years ago, but a problem.

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Speaker 5: The question that has to reside over China is just

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Speaker 5: that their economy isn't the perpetual growth machine that it was.

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Speaker 5: They are not able to weather this as easily as

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Speaker 5: they did in the past. This will hurt. At the moment,

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Speaker 5: it appears that their response is going to be we

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Speaker 5: will spend more money here, we will really attack them back,

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Speaker 5: and we'll see if we can muddle through.

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Speaker 2: The message that we seem to be hearing from European

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Speaker 2: policy makers is there is a keenness to negotiate here,

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Speaker 2: but they're not going to wait forever. What does their

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Speaker 2: strategy tell you about their approach.

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Speaker 5: It's a very difficult situation for Europe because the European

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Speaker 5: economy is not in a good place. The problem they

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Speaker 5: have is that they don't, in fact have all that

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Speaker 5: much to offer, because despite what you might have heard,

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Speaker 5: European Union does not put particularly big restraints barriers on

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Speaker 5: trade from the US. They don't have much to offer

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Speaker 5: that way. There has been and this is a very

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Speaker 5: intriguing and sensible possibility, the notion that this becomes a

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Speaker 5: big transaction in which they say, Okay, we're going to

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Speaker 5: buy x amount of liquefied natural gas from the US,

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Speaker 5: or we are going to rearm as you ask to,

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Speaker 5: and we're going to buy it all from Lockheed. Those

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Speaker 5: are variance of those things are possible, but I would

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Speaker 5: caution that the way that the administration has gone about

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Speaker 5: things in the last three months makes it really hard

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Speaker 5: for European leaders to do those things. The last time

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Speaker 5: I was in Britain and when I was in Germany,

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Speaker 5: Donald Trump and JD. Vance have made themselves very, very unpopular.

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Speaker 5: This is not normal. There is a degree of anti

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Speaker 5: Americanism in Britain and Europe. Yes, this is not like that.

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Speaker 5: This is something qualitatively different that does make it harder,

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Speaker 5: not easier, to make a deal.

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Speaker 2: Let's wrap up here by returning to Wall Street, and

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Speaker 2: I wonder, as you see strategists rethinking there s and

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Speaker 2: p forecasts, and economists uttering the word recession more than

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Speaker 2: they were a few weeks or months ago, what that

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Speaker 2: makes you think about the path forward or how Wall

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Speaker 2: Street sees the path forward.

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Speaker 5: I think Wall Street still sees the path forward as

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Speaker 5: being that these towers don't last somehow or other, and

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Speaker 5: that we return to a path that is inferior, from

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Speaker 5: their point of view, weaker for growth than it would

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Speaker 5: have been that it was likely to be twelve months ago.

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Speaker 5: The reason we haven't seen even more of a sell

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Speaker 5: off than we have. Is a belief that this will

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Speaker 5: make tax cuts or at least continuation of the first

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Speaker 5: Trump term tax cuts, even more important. It will make

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Speaker 5: deregulation even more important. It will light a fire under

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Speaker 5: Republicans in Congress to make sure those things happen. But

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Speaker 5: ultimately there is a belief that this cannot hold and

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Speaker 5: that there will be some kind of a climb down.

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Speaker 5: They don't know how it's going to happen. There's a

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Speaker 5: degree there is enough uncertainty about how exactly the climb

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Speaker 5: down will happen and where it will end that you

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Speaker 5: don't have calm in the markets, that you're not going

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Speaker 5: to get stability in the markets. But there is still

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Speaker 5: an ultimate belief that that's going to happen. If you

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Speaker 5: look at the Fed Fund's futures market, there is confidence

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Speaker 5: that the Fed is going to be cutting by a

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Speaker 5: full percentage point this year, even though j. Powell just

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Speaker 5: said inflation looks worse than it did and I'm in

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Speaker 5: no hurry to cut, but you would have thought would

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Speaker 5: have been a pretty good reason not to be betting

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Speaker 5: on a percentage points worth of cuts. But there is

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Speaker 5: a belief that this is going to do economic damage

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Speaker 5: and the Fed is going to have no choice but

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Speaker 5: to cut. And there is also a belief but it

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Speaker 5: doesn't appear to be about the stock market. It will

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Speaker 5: ultimately about polls and Republicans in Congress asserting themselves. But

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Speaker 5: there is also a belief that politically there is a

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Speaker 5: level that will force Trump to change his mind to all.

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Speaker 2: To course, let me take advantage of the fact that

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Speaker 2: you are a columnist and you have the lattitude to

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Speaker 2: opine and play clairvoyant. How long does this last? How

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Speaker 2: long does the sell off gone?

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Speaker 5: It lasts until there is some clear sign that the

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Speaker 5: tariffs has announced last week won't happen as announced. That

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Speaker 5: could be because a few big countries say they're going

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Speaker 5: to make deals or prepare to talk in a way

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Speaker 5: that could allow a backtrack why without losing face for

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Speaker 5: the administration. It could be because some of the moves

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Speaker 5: we've seen in Congress actually have an effect. Or it

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Speaker 5: could be I think this is highly unlikely because the

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Speaker 5: White House comes out and says we're not doing this,

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Speaker 5: or we are announcing a delay, but we need some

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Speaker 5: clear sign that this isn't necessarily going to happen. The

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Speaker 5: reason we got continued to sell off some Monday morning

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Speaker 5: was because the administration dug in on Sunday when they

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Speaker 5: could have put up suggestions that they were that they

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Speaker 5: were ready to talk. But in terms of a stabilized bottom,

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Speaker 5: a return to some kind of normality in marketing, it's

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Speaker 5: where you could feel comfortable investing. You need something to

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Speaker 5: happen to change the policy, Essey, It's been announced, John,

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Speaker 5: Thank you very much. Thank you.

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Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.

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Speaker 2: This episode is produced by Rachel Lewis Chrisky and Alex Tie.

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Speaker 2: It was edited by Patty Hirsch and Sid Verma. It

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Speaker 2: was fact checked by Adrian A. Tapia and mixed and

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Speaker 2: sound designed by Alex Sagura. Our senior producer is Naomi Shaven,

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Speaker 2: Our senior editor is Elizabeth Ponso, Our deputy executive producer

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Speaker 2: is Julia Weaver, and our executive producer is Nicole beemster Borg.

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