WEBVTT - Bloomberg Surveillance TV: December 17th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.320 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.400 --> 0:00:39.920 Turning to airlines, spirit renewing discussions to merge with Frontier 0:00:40.320 --> 0:00:43.600 as a deep discount, airlines struggles to compete. I spoke 0:00:43.640 --> 0:00:46.960 with Jeff Blue CEO Joanna Garrity yesterday about the hurdles 0:00:47.080 --> 0:00:49.040 facing smaller airlines. Take a listen. 0:00:50.880 --> 0:00:53.400 Smaller carriers really need to be given a fair shot 0:00:53.440 --> 0:00:56.320 to win in this environment, and that's not happening right now. 0:00:56.400 --> 0:00:58.800 So we're focus on what we can control. We're focus 0:00:58.880 --> 0:01:01.560 on a whole series of initiative under our Jet Foward program. 0:01:01.600 --> 0:01:03.880 We do need the government to kind of make that 0:01:04.120 --> 0:01:06.400 a more level playing fields so smaller carriers can more 0:01:06.400 --> 0:01:08.840 effectively compete. Twenty twenty six really is the year that 0:01:08.840 --> 0:01:11.600 we should reap the benefits of all these initiatives that 0:01:11.600 --> 0:01:13.039 we put into place in twenty twenty five. 0:01:13.240 --> 0:01:16.600 Chili Kayalu of Jeffries joins us now for more And 0:01:16.680 --> 0:01:20.200 as we talk about mergers once again in the airline space, 0:01:20.240 --> 0:01:23.800 aside from the Big three, how difficult is it for 0:01:23.920 --> 0:01:27.640 companies that are not Delta United or American to survive 0:01:27.800 --> 0:01:29.600 in the current landscape of airlines. 0:01:29.800 --> 0:01:32.479 Yeah, it seems this seems to be more defensive move 0:01:32.920 --> 0:01:35.400 on the part of the airlines right. Consolidation is driven 0:01:35.400 --> 0:01:38.440 by defensive tactics, and airlines in general are a very 0:01:38.440 --> 0:01:41.200 tough business. That's why they trade at sixty percent discount 0:01:41.280 --> 0:01:45.080 to the market. Airplanes are expensive. Boeing knows that costs 0:01:45.120 --> 0:01:47.800 are expensive. Thirty percent is jet fuel, thirty percent is 0:01:47.880 --> 0:01:50.920 labor labor. And when your revenues are growing three percent 0:01:50.960 --> 0:01:53.240 because your pricing is down and your costs are up 0:01:53.280 --> 0:01:55.960 five it creates a very difficult environment for airlines to 0:01:56.040 --> 0:01:58.920 thrive in. Whether that's gate costs like Jet Blue mentioned 0:01:59.000 --> 0:02:02.200 or additional fees. It makes it hard for airlines, so 0:02:02.240 --> 0:02:04.320 they have to consolidate or they have to price down 0:02:04.560 --> 0:02:06.000 to take market share, or. 0:02:05.920 --> 0:02:08.519 They have to become other industries like credit card companies 0:02:08.760 --> 0:02:12.200 or luxury experience providers. I mean, how much is that 0:02:12.280 --> 0:02:14.880 the saving grace, the idea that you could get some 0:02:14.919 --> 0:02:19.560 sort of additional premium customer that people are leaning into experiences. 0:02:18.960 --> 0:02:19.960 Willing to pay for it. 0:02:20.600 --> 0:02:24.079 How much is that, really, truthfully the model going forward? 0:02:24.200 --> 0:02:26.720 That's always been the bookcase on airlines. 0:02:26.800 --> 0:02:31.000 You value Delta sky miles on a credit card multiple. 0:02:31.080 --> 0:02:33.840 You value their MRO business on an aftermarket multiple of 0:02:33.840 --> 0:02:36.600 twenty five times. Ziebada a novel. All of a sudden, 0:02:36.600 --> 0:02:40.040 you're getting an airline for free, essentially. So that's been 0:02:40.080 --> 0:02:43.880 the bookcase. But the separation of those assets is likely hard, 0:02:43.919 --> 0:02:45.120 and we haven't seen that happen. 0:02:45.320 --> 0:02:46.840 Che I know you and the team of Jeffries are 0:02:46.840 --> 0:02:48.920 bullish on United. But I'd like to talk about American 0:02:48.960 --> 0:02:51.639 Airlines and some of the management decisions which has put 0:02:51.639 --> 0:02:54.200 the company in place where it is today. I'm talking 0:02:54.280 --> 0:02:57.280 about Seattle, I'm talking about routing, I'm talking about choice 0:02:57.320 --> 0:03:00.800 of which airplanes to retire. You know, what will it 0:03:00.840 --> 0:03:03.600 take for American Airlines to write the ship here? 0:03:04.360 --> 0:03:06.760 I think the airline set up into twenty six. 0:03:06.960 --> 0:03:09.440 And I say this every January and then I regret 0:03:09.480 --> 0:03:11.000 it in February. 0:03:10.880 --> 0:03:12.840 Because I say the setup is positive. 0:03:12.440 --> 0:03:16.000 For airlines, and I retract those comments pretty quickly, and 0:03:16.120 --> 0:03:17.880 we've done that for America in the last two years. 0:03:17.919 --> 0:03:19.840 But I do think the setup is positive and that 0:03:19.880 --> 0:03:23.600 capacity going into twenty six is fairly tight. That goes 0:03:23.639 --> 0:03:26.200 across the board for the airlines, and American in particular 0:03:26.639 --> 0:03:30.000 has very easy comps. Recall a year and a half 0:03:30.040 --> 0:03:33.200 ago they had a snap foo with their corporate relationship, 0:03:33.280 --> 0:03:36.680 so their corporate is just getting back to twenty twenty 0:03:36.720 --> 0:03:39.119 four levels, so they're about a year behind. And if 0:03:39.280 --> 0:03:41.240 that's where we've seen a lot of the premium growth 0:03:41.280 --> 0:03:43.360 is on that corporate so that could be a huge 0:03:43.440 --> 0:03:47.840 upside driver for them if they take back their share 0:03:47.920 --> 0:03:49.760 and then some, which they seem to do. 0:03:49.800 --> 0:03:50.280 So they have the. 0:03:50.240 --> 0:03:53.440 Easiest comp set, and airlines in general have an easy 0:03:53.440 --> 0:03:56.000 comp set with the shutdown with the tariff impact in 0:03:56.120 --> 0:03:58.840 Q one, so essentially Q one and Q four are 0:03:58.920 --> 0:04:01.640 easy comps for them twenty six, but we'll see. I 0:04:01.720 --> 0:04:05.720 think a rerating takes discipline, capacity in the market and 0:04:05.840 --> 0:04:09.320 pricing for the main cabin to really improve at least 0:04:09.400 --> 0:04:10.240 two flat. 0:04:10.560 --> 0:04:13.160 Well, let's shift gears to the manufacturers. Let's talk about 0:04:13.160 --> 0:04:15.680 Airbus and Boeing. Right, let's talk about how the market's 0:04:15.680 --> 0:04:20.120 coping with these supply chain bottlenecks. I'm talking about forgings, Castings, Interiors. 0:04:20.360 --> 0:04:20.880 Talk to us a. 0:04:20.839 --> 0:04:22.920 Little bit about what your projections for those two companies 0:04:22.960 --> 0:04:23.560 are in the new year. 0:04:23.640 --> 0:04:26.640 Sure, So, I actually had one of my favorite days 0:04:26.680 --> 0:04:28.680 of my career last week. I went up to Seattle 0:04:29.440 --> 0:04:31.520 by myself and got to spend ten hours in rent 0:04:31.520 --> 0:04:34.120 In and Ever and it was the most fun I've 0:04:34.200 --> 0:04:36.920 had in that I saw the Boeing rent In line, 0:04:36.960 --> 0:04:39.719 which creates the seven thirty seven that's about fifty percent 0:04:39.720 --> 0:04:42.160 of their sales of buzzing, for the first time. It 0:04:42.240 --> 0:04:44.480 was really neat to see the three lines cycling at 0:04:44.480 --> 0:04:47.440 forty two. This is a manufacturer that was doing twenty 0:04:47.480 --> 0:04:50.560 five a month in twenty four so did double production 0:04:50.800 --> 0:04:54.080 at the end of this year, and the employment base 0:04:54.320 --> 0:04:55.480 was invigorated. 0:04:55.839 --> 0:04:56.560 They were happy. 0:04:56.720 --> 0:04:58.880 And I think the new CEO, Kelly Orperg who's been 0:04:58.920 --> 0:05:01.799 there for eighteen months, is certainly making that change happen. 0:05:01.839 --> 0:05:04.159 He's changed about forty percent of the leadership in order 0:05:04.200 --> 0:05:06.520 to do that. So really good news on the three 0:05:06.640 --> 0:05:09.400 seven front and that the production rate is actually going up. 0:05:09.760 --> 0:05:13.280 Airlines will have planes, and it's a matter of certification 0:05:13.480 --> 0:05:16.120 on large programs like the Triple seven X they have, 0:05:16.279 --> 0:05:18.719 which they took a big charge for in Q three. 0:05:18.960 --> 0:05:21.360 So will that be certified at the end of next year. 0:05:21.520 --> 0:05:24.040 It sounds like all of the airline and airplane related 0:05:24.040 --> 0:05:26.280 executives saying twenty twenty six will be our year. Twenty 0:05:26.279 --> 0:05:28.880 twenty five wasn't exactly it due to all of the 0:05:29.200 --> 0:05:33.240 machinations throughout the throughout this year. I do want to 0:05:33.279 --> 0:05:35.000 end with Frontier and Spirit. I know you can't talk 0:05:35.040 --> 0:05:37.120 to these specific names. I do want to get a 0:05:37.200 --> 0:05:40.400 general sense though, about whether the feeling right now in 0:05:40.400 --> 0:05:42.600 the c suite is that this administration will be more 0:05:42.600 --> 0:05:45.880 amenable to some of these tie ups and be more 0:05:46.040 --> 0:05:49.560 open on a regulatory front than they have been. It's 0:05:49.560 --> 0:05:51.600 been a mess every single time that companies have been 0:05:51.600 --> 0:05:53.280 trying to that have tried to tie up. 0:05:53.440 --> 0:05:55.280 Yeah, this is clearly a defensive move. 0:05:55.320 --> 0:05:57.839 It'll take about five percent of capacity out of the market. 0:05:58.120 --> 0:06:01.560 It'll help remove capacity to strain markets where you're seeing 0:06:01.600 --> 0:06:05.080 pricing down, So you know, I think airline consolidation is 0:06:05.120 --> 0:06:06.599 something we haven't seen a lot. 0:06:06.440 --> 0:06:08.039 Of in aerospace on the hand. 0:06:08.040 --> 0:06:10.080 On the other hand, going back a dal a day, 0:06:10.080 --> 0:06:15.680 in aerospace and defense tech, it's been very prolific for 0:06:15.800 --> 0:06:19.559 transactions in that market, whether it's manufacturers or defense tech, 0:06:19.600 --> 0:06:22.800 with the administration really supporting growth in the industry. 0:06:22.839 --> 0:06:24.200 So that's been a positive. 0:06:24.080 --> 0:06:26.920 Stay with US multiple IMPEG Savanance coming up. 0:06:27.080 --> 0:06:27.600 Off to this. 0:06:37.080 --> 0:06:38.160 Joining us now for more. 0:06:38.200 --> 0:06:40.880 I'm so pleased to say, as Republican Congressman French Hill 0:06:41.000 --> 0:06:44.080 of Arkansas congressman, thank you so much for being with us. 0:06:44.120 --> 0:06:47.440 I want to start with this disagreement in Congress about 0:06:47.480 --> 0:06:49.400 even being able to vote. 0:06:49.080 --> 0:06:50.440 On these subsidies. 0:06:50.800 --> 0:06:55.440 Have you ever seen Congress Republicans in general more divided 0:06:55.640 --> 0:06:57.400 over this issue than they are right now? 0:06:58.600 --> 0:07:00.000 Well, Lisa, it's good to be with you. 0:07:00.000 --> 0:07:03.360 Merry Christmas, Eppie, Hanika to all your viewers and everybody 0:07:03.440 --> 0:07:08.719 at Bloomberg. Well, first, let's be clear the tax credits 0:07:08.760 --> 0:07:12.840 for Obamacare policies are not expiring, the ones that were 0:07:12.880 --> 0:07:17.360 expanded by Joe Biden during the COVID nineteen pandemic. Are expiring, 0:07:17.680 --> 0:07:20.640 but that base tax credit that dates back to the 0:07:20.680 --> 0:07:25.440 beginning of Obamacare for moderate income families with children is 0:07:25.480 --> 0:07:27.640 still in place, So let's be clear about that. And 0:07:27.680 --> 0:07:30.800 I'm not sure I agree with the estimate that was cited. 0:07:31.120 --> 0:07:34.440 What Republicans are trying to do are side with American 0:07:34.480 --> 0:07:37.600 families across the board and lower premiums across the board, 0:07:37.640 --> 0:07:41.120 and we consistently brought bills to the House floor to 0:07:41.160 --> 0:07:44.600 do that, and we've had Democrats reject them. Last week, 0:07:44.640 --> 0:07:47.640 the Senate could not find a consensus on this, and 0:07:47.760 --> 0:07:50.720 that's the definitive place. That was the commitment made during 0:07:50.800 --> 0:07:55.280 the spending votes. So I think everybody, Democrats, independence, Republicans 0:07:55.600 --> 0:08:00.240 all are suffering from the cost of living burden to 0:08:00.360 --> 0:08:03.960 us by the nine percent inflation from the Biden administration. 0:08:04.160 --> 0:08:05.040 That's coming down. 0:08:05.160 --> 0:08:07.760 But there's much more work to do, and that includes 0:08:07.800 --> 0:08:11.560 on passing bills that will actually lower premiums for all 0:08:11.560 --> 0:08:12.960 Americans across the board. 0:08:13.360 --> 0:08:15.200 Congressman Hile, I'm wondering if you could talk to us 0:08:15.200 --> 0:08:17.640 a little bit about the Housing for twenty first Century Act, 0:08:17.680 --> 0:08:21.200 the act that's expected to streamline housing development provide incentives 0:08:21.200 --> 0:08:23.880 for builders just exactly what is the act and how 0:08:23.960 --> 0:08:25.800 is it going to alleviate the lack of supplying the 0:08:25.880 --> 0:08:26.680 US housing market. 0:08:27.080 --> 0:08:29.000 You bet, thanks David. It's such a big issue. 0:08:29.000 --> 0:08:31.920 We have so many people and so many markets that 0:08:32.000 --> 0:08:35.440 have experienced a run up in house prices during the 0:08:35.480 --> 0:08:38.240 past five years and certainly a run up in mortgage 0:08:38.320 --> 0:08:42.000 rates due to the FED fighting the Biden inflation from 0:08:42.040 --> 0:08:45.680 twenty one and twenty two, and that's really caused a 0:08:45.679 --> 0:08:47.880 lot of people to not have access to the house 0:08:47.960 --> 0:08:50.520 that they want. So what we're doing today is we're 0:08:50.520 --> 0:08:53.720 marking up bills that will reduce regulatory costs to building 0:08:53.760 --> 0:08:59.240 new houses, improve zoning to encourage better density, more different 0:08:59.320 --> 0:09:03.360 kinds of unit across different cities in the US. We're 0:09:03.400 --> 0:09:07.360 talking about improving opportunities for rural housing development, make it 0:09:07.440 --> 0:09:10.320 easier for a veteran to get a veteran's loan, and 0:09:10.360 --> 0:09:13.280 hold HUT accountable on what I think is a deplorable 0:09:13.400 --> 0:09:16.199 job that they've done over the past decade or so 0:09:16.400 --> 0:09:20.320 in managing public housing for our neediest citizens across the 0:09:20.320 --> 0:09:23.600 country who I think have poor many poor conditions, and 0:09:23.679 --> 0:09:27.040 HUT is not holding either private landlords or their own 0:09:27.600 --> 0:09:29.200 housing authorities accountable. 0:09:29.679 --> 0:09:32.360 Congressman Hill us housing affordability as we know as at 0:09:32.360 --> 0:09:34.960 an all time loan. I'm wondering, what is the act 0:09:35.040 --> 0:09:37.640 or the bill, the proposal. How does it address home 0:09:37.640 --> 0:09:41.079 owner expenses, utilities, insurance. I mean, we know that you 0:09:41.160 --> 0:09:45.160 know op X has really risen over the past few years. 0:09:45.480 --> 0:09:47.880 Does it do anything to alleviate the stress on homeowners? 0:09:49.679 --> 0:09:53.480 Well on homeowners again, eighty percent of the cost that 0:09:53.559 --> 0:09:57.679 goes into a house or local zoning, local code decisions, 0:09:57.760 --> 0:10:01.559 local development fees that are charged urged on building new houses. 0:10:02.040 --> 0:10:03.800 If you want to bring down. 0:10:03.760 --> 0:10:07.800 The cost of the mortgage or the cost of property 0:10:07.800 --> 0:10:11.040 and casualty insurance, you need to confront inflation. Which is 0:10:11.040 --> 0:10:14.200 why I believe the Fed's primary focus is price stability. 0:10:14.559 --> 0:10:17.439 And we've made progress from the nine percent we experienced 0:10:17.480 --> 0:10:21.680 under Joe Biden's fiscal mismanagement and the Fed's mismanagement coming 0:10:21.679 --> 0:10:25.760 out of the pandemic, and there's a sustained pressure there 0:10:25.800 --> 0:10:29.439 to bring down costs and that will in turn bring 0:10:29.480 --> 0:10:32.160 down property and casually insurances that will bring down the 0:10:32.160 --> 0:10:35.199 cost of financing. This is a prime goal for the administration. 0:10:35.640 --> 0:10:38.240 But what this bill focuses on is lowering the cost 0:10:38.679 --> 0:10:43.000 to manage housing, lower the cost to build housing, and 0:10:43.040 --> 0:10:46.280 that's something I think will increase supply, and increase supply 0:10:46.400 --> 0:10:50.240 will lower prices. We've already seen a modest break in 0:10:50.320 --> 0:10:54.719 that five year high in price appreciation. About eleven top 0:10:54.760 --> 0:10:58.120 twenty five markets are seeing some easing off on pricing. 0:10:58.440 --> 0:11:01.720 Congress Fan, one thing that we keep talking about is 0:11:01.760 --> 0:11:05.480 the affordability crisis. And you've talked about President Biden several times. 0:11:05.480 --> 0:11:07.920 At what point do you think the President Trump needs 0:11:07.960 --> 0:11:11.520 to also, though, take some responsibility for the idea that 0:11:11.640 --> 0:11:14.360 inflation still is above its two percent target. He's talking 0:11:14.360 --> 0:11:18.480 about keeping rates even lower at the same time that 0:11:18.760 --> 0:11:21.880 he's been talking about the affordability crisis as a hoax. 0:11:23.800 --> 0:11:26.800 Well, look, the affordability crisis is not a hoax. I 0:11:26.800 --> 0:11:29.040 mean we see it in the grocery store when we shop. 0:11:29.080 --> 0:11:32.320 We've seen it in the price level that increased as 0:11:32.360 --> 0:11:35.040 a result. As I said of the Biden inflation, that 0:11:35.080 --> 0:11:38.200 will come down over time. There's work to be done. 0:11:38.400 --> 0:11:40.719 I think the President's put his attention on doing that 0:11:40.800 --> 0:11:44.680 by lowering long term energy prices, by increasing We're going 0:11:44.720 --> 0:11:47.840 to vote this week to increase permitting on federal lands, 0:11:47.840 --> 0:11:51.360 which will open up future development for oil on gas production. 0:11:51.600 --> 0:11:52.160 That's good. 0:11:52.520 --> 0:11:55.600 Encouraging production across the country will bring down gas prices 0:11:55.640 --> 0:11:57.120 over the next few years. 0:11:57.120 --> 0:11:59.600 And patrollum goes into everything that we make. 0:11:59.480 --> 0:12:02.400 So that will bring down prices as well as some 0:12:02.440 --> 0:12:06.720 of the things we're tackling on deregulation and financing. I've 0:12:06.720 --> 0:12:09.480 worked hard in my committee to bring down the cost 0:12:09.520 --> 0:12:13.360 of financing by making our banks of all sizes more competitive, 0:12:13.360 --> 0:12:16.679 to have more capital to lend to people who are 0:12:16.679 --> 0:12:19.720 building houses or wanting to have a mortgage on their 0:12:19.760 --> 0:12:20.200 first house. 0:12:20.480 --> 0:12:21.680 It's been just about a minute left. 0:12:21.720 --> 0:12:24.920 But how much will further FED rate cuts actually help 0:12:24.960 --> 0:12:28.360 with the affordability crisis? If price stability is you said, 0:12:28.559 --> 0:12:29.920 is their pre eminent mandate. 0:12:31.040 --> 0:12:32.840 Well, look, this is why the FED has a tough 0:12:32.920 --> 0:12:36.000 job to determine what the right price level is, what 0:12:36.040 --> 0:12:39.800 the right level of ample reserves are. And prices have 0:12:39.920 --> 0:12:44.040 been coming down, they just have gotten sticky right above 0:12:44.160 --> 0:12:47.120 the Fed's target. So I just simply say that the 0:12:47.160 --> 0:12:50.280 biggest tax on the American people is inflation, and we've 0:12:50.320 --> 0:12:52.720 witnessed a forty year high of it due to the 0:12:52.760 --> 0:12:55.280 mistakes made by the FED coming out of the pandemic, 0:12:55.640 --> 0:12:59.000 and Joe Biden's decision to spend six trillion dollars more 0:12:59.520 --> 0:13:02.240 borrowed in the markets that I think was not the 0:13:02.320 --> 0:13:05.040 right decision to take, and we got inflation as a 0:13:05.120 --> 0:13:08.600 result of too many dollars chasing too few goods for 0:13:08.679 --> 0:13:09.480 those two years. 0:13:09.559 --> 0:13:13.000 Stay with us mulplindex Savana's coming up off to this. 0:13:22.480 --> 0:13:24.880 One thing that has been really strong this year has 0:13:24.880 --> 0:13:27.200 been discussions around trade. The White House keeping on the 0:13:27.240 --> 0:13:30.840 pressure on China, Treasure Secretary Scott Best and telling media 0:13:30.960 --> 0:13:34.960 the country's one trillion dollar trade surplus is unsustainable. Joining 0:13:35.040 --> 0:13:38.160 us now as Elizabeth Economy Senior Fellow at the Hoover 0:13:38.320 --> 0:13:42.160 Institution and one of the stalwart experts and scholars of 0:13:42.200 --> 0:13:44.920 the Chinese economy. Elizabeth, thank you so much for being 0:13:44.960 --> 0:13:47.320 with us. I want to start with your take on 0:13:47.360 --> 0:13:49.400 the trade war so far this year. 0:13:49.720 --> 0:13:50.880 Is there a clear winner? 0:13:51.000 --> 0:13:53.920 Has there been any progress? Has it reshaped the relationship 0:13:54.080 --> 0:13:55.360 between the US and China? 0:13:56.559 --> 0:13:56.839 Sure? 0:13:56.920 --> 0:13:59.120 Lots of questions wrapped up into that. 0:14:00.160 --> 0:14:00.360 You know. 0:14:00.400 --> 0:14:03.840 Look, I think the good news is the Bussan summit 0:14:03.920 --> 0:14:08.720 between Presidency and Trump really did establish a new equilibrium 0:14:09.200 --> 0:14:12.400 between the two countries that really you know, we took 0:14:12.440 --> 0:14:16.080 back some of the moves we'd made on export controls 0:14:16.120 --> 0:14:18.680 both sides. That was really important, especially for the United 0:14:18.760 --> 0:14:21.720 States because of China's hold on the you know, critical 0:14:21.720 --> 0:14:23.200 minerals and rare earth elements. 0:14:23.720 --> 0:14:24.600 We took back. 0:14:24.400 --> 0:14:28.680 The shipping port dot fees, you know, so, and we 0:14:28.920 --> 0:14:31.280 took off ten percent off the tariffs that we had 0:14:31.360 --> 0:14:33.480 on China, you know, so from fifty seven down to 0:14:33.520 --> 0:14:36.720 forty seven percent. So I think a new equilibrium. But 0:14:36.760 --> 0:14:38.280 that's not to say that there aren't going to be 0:14:38.360 --> 0:14:42.400 perturbations to the system. And we've already seen just over 0:14:42.440 --> 0:14:45.320 the past week with the announcement out of the State 0:14:45.360 --> 0:14:49.560 Department of pax Silica this you know, new arrangement between 0:14:49.600 --> 0:14:52.640 the United States and eight other countries to try to 0:14:52.680 --> 0:14:56.680 develop really a trusted supply chain from you know, Ai 0:14:56.840 --> 0:14:59.760 for the AI semiconductor supply chain all the way from 0:15:00.080 --> 0:15:03.600 you know investments in Australia in rare earth elements and 0:15:03.600 --> 0:15:07.600 critical minerals all the way through the UAE, with you know, 0:15:07.680 --> 0:15:10.600 providing financing. And then of course Taiwan is a special 0:15:10.640 --> 0:15:13.400 partner to the group because of course, you know, ninety 0:15:13.400 --> 0:15:16.120 percent of there are more of this advanced semiconductors that 0:15:16.240 --> 0:15:19.280 certainly the US relies on come from Taiwan. So you know, 0:15:19.480 --> 0:15:21.600 we took that action, and then the Chinese, you know, 0:15:21.880 --> 0:15:25.040 put back on some export controls around gallium and germanium 0:15:25.080 --> 0:15:28.160 and graphite, and put some companies that are involved in 0:15:28.200 --> 0:15:31.880 this new pack silica on their Unreliable Entities list, and 0:15:31.920 --> 0:15:34.240 so you know they're going to be these kind of 0:15:34.280 --> 0:15:37.880 tit for tat moves. Clearly, you know, the administration is 0:15:37.920 --> 0:15:40.520 not stomping in terms of what it wants to see 0:15:41.160 --> 0:15:43.920 in the tech competition space. It's going to do what 0:15:43.920 --> 0:15:46.320 it wants to do, and Shine is going to respond 0:15:46.360 --> 0:15:46.840 in kind. 0:15:47.360 --> 0:15:48.480 You know, hopefully we don't. 0:15:48.280 --> 0:15:50.080 Go into a free fall, we don't end up back 0:15:50.080 --> 0:15:51.760 at the you know, one hundred and fifty one hundred 0:15:51.760 --> 0:15:55.320 and seventy five percent caraff level. But I don't think 0:15:55.360 --> 0:15:56.560 it's going to be smooth sailing. 0:15:57.040 --> 0:15:59.680 There has been this bigger question about which economy is 0:15:59.720 --> 0:16:03.400 strong and better to withstand some of this volatility. Over 0:16:03.400 --> 0:16:05.040 the past couple of days, we've gotten data out of 0:16:05.160 --> 0:16:09.640 China signifying that there has been an ongoing decline, weakening 0:16:09.760 --> 0:16:13.720 and consumer appetite this concern about prices that are falling 0:16:14.040 --> 0:16:16.440 too rapidly. Do you think that this is laying the 0:16:16.440 --> 0:16:20.080 groundwork for some sort of stimulus to support the economy 0:16:20.200 --> 0:16:23.400 during this prolonged tip for tag I. 0:16:23.320 --> 0:16:26.880 Mean, look that Chinese you know playbook is basically, you know, 0:16:27.040 --> 0:16:30.520 more investment, and you know, over the past couple of years, 0:16:30.560 --> 0:16:33.000 that investment has moved away from the property sector, which 0:16:33.000 --> 0:16:35.560 has been in a prolonged slump, to the tech sector, 0:16:36.040 --> 0:16:39.600 you know, clean tech, legacy semiconductors, the whole array of 0:16:39.880 --> 0:16:43.760 made in China, twenty twenty five technologies, you know, where 0:16:43.840 --> 0:16:46.680 China wants to dominate, Chinese companies to dominate at home 0:16:46.680 --> 0:16:49.800 and then become global champions. So that includes new materials 0:16:49.840 --> 0:16:53.200 and evs and AI, all these you know, important cutting 0:16:53.320 --> 0:16:56.240 edge technologies. That is the playbook, and that is what 0:16:56.280 --> 0:16:59.760 they've been doing. But I think that's running its course. 0:17:00.040 --> 0:17:03.080 Local governments have you been building up their you know debt. 0:17:03.080 --> 0:17:06.200 The property sector is still slumping, There's no consumer confidence. 0:17:06.240 --> 0:17:08.960 The country has done very little to reshape the social 0:17:09.000 --> 0:17:12.840 welfare net to make people feel confident right that they're 0:17:12.840 --> 0:17:14.639 not going to have to spend their savings on some 0:17:14.720 --> 0:17:19.160 healthcare emergency or on their children's education. So the pension 0:17:19.240 --> 0:17:22.920 system is you know, basically broken in about a third 0:17:22.960 --> 0:17:26.600 of the provinces. So they have to do more to 0:17:26.640 --> 0:17:30.439 boost consumer confidence. They've been reluctant to do that and 0:17:30.520 --> 0:17:32.840 people are not and that's why they're not buying. And 0:17:32.960 --> 0:17:36.440 you know, as an aside, you know, also the birth 0:17:36.520 --> 0:17:41.119 rate continues to fall, and birth rate tracks with consumer confidence. 0:17:41.119 --> 0:17:43.720 So if they want to begin to address their demographic challenges, 0:17:43.720 --> 0:17:46.959 which are also enormous, they need to do more to 0:17:47.000 --> 0:17:48.480 address their consumer confidence. 0:17:48.680 --> 0:17:51.720 That's right, Elizabeth, demographic challenges, it's real estate crisis is 0:17:51.840 --> 0:17:54.399 entering it's fifth year in a row. Yet insiders are 0:17:54.480 --> 0:17:57.640 calling for a stronger you on despite the fact that 0:17:57.960 --> 0:18:00.640 it's an exportlet economy. I mean, I think sports rose 0:18:00.680 --> 0:18:02.600 above one trillion dollars for the first time on record 0:18:02.720 --> 0:18:05.439 last month. To talk to us about you know why, 0:18:05.560 --> 0:18:08.479 our insiders, why is China looking for the you want 0:18:08.560 --> 0:18:11.680 to appreciate in twenty twenty six, Well, I. 0:18:11.640 --> 0:18:15.000 Think it reflects a policy debate within China, and you know, 0:18:15.200 --> 0:18:18.560 a strong view one would encourage you know, consumers to 0:18:18.600 --> 0:18:21.520 buy more. It would give China greater credibility on the 0:18:21.640 --> 0:18:25.359 international stage in terms of you know, saying that It's 0:18:25.600 --> 0:18:28.440 currency should be the you know, should become a real 0:18:28.520 --> 0:18:31.600 reserve currency in the future as it pushes to dedollarize 0:18:31.600 --> 0:18:34.800 the global economy, and it would relieve some of the 0:18:34.840 --> 0:18:38.000 pressure that it's beginning to face from the international community 0:18:38.040 --> 0:18:41.080 now in terms of all those exports, right, because it's 0:18:41.119 --> 0:18:44.439 not just the United States that is calling out China 0:18:44.560 --> 0:18:48.040 for its you know, export of its over capacity and 0:18:48.119 --> 0:18:51.040 all those you know, evs and batteries, et cetera. It's 0:18:51.080 --> 0:18:54.480 now it's Europe, it's Mexico for example. It's threatening I think, 0:18:54.520 --> 0:18:58.119 fifty percent tariffs on Chinese goods. So I think China 0:18:58.200 --> 0:19:01.679 has a problem again not only with the United States 0:19:01.680 --> 0:19:03.920 and some of the advanced economies, but also with middle 0:19:03.960 --> 0:19:07.439 income and increasingly emerging economies that are seeing you know, 0:19:07.480 --> 0:19:10.639 their markets flooded with these Chinese goods, and their nascent 0:19:10.720 --> 0:19:12.720 industries are never going to be never going to have 0:19:12.760 --> 0:19:15.399 a chance to compete. So I think that would be 0:19:15.440 --> 0:19:17.359 those would be some of the reasons that the Chinese 0:19:17.400 --> 0:19:20.200 government might make a move toward appreciating. 0:19:19.600 --> 0:19:22.719 The Yan Yeah, I mean, Elizabeth, Chinese equities are up 0:19:22.720 --> 0:19:24.800 I think one point eight two percent overnight following that 0:19:24.840 --> 0:19:27.919 successful IPO of Meta X. I think the Chinese equity 0:19:27.920 --> 0:19:29.360 markets up sixteen seventeen. 0:19:29.080 --> 0:19:29.760 Percent year to date. 0:19:30.400 --> 0:19:33.160 Talk to us about foreign interest in Chinese equities. I mean, 0:19:33.359 --> 0:19:35.720 for me, I mean I look at the variable interest 0:19:35.800 --> 0:19:38.679 and toity structure as a putoff, right, I mean, you 0:19:38.680 --> 0:19:41.200 don't own anything really. You're owning a hold co in 0:19:41.240 --> 0:19:43.239 the Caymans. You're not really owning an op goo. 0:19:43.600 --> 0:19:44.679 Talk to us about how. 0:19:44.960 --> 0:19:47.479 An investor, a foreign investor here in the US, can 0:19:47.480 --> 0:19:49.520 get comfortable owning Chinese shares. 0:19:50.400 --> 0:19:53.399 Okay, so you're pushing me past what I, you know, 0:19:53.680 --> 0:19:54.840 actually focus on. 0:19:54.920 --> 0:19:57.480 So I don't want to be giving investment advice to 0:19:57.560 --> 0:20:00.960 of course, Well let me to say, I think, you know, 0:20:01.000 --> 0:20:04.000 the Chinese stark stock market, you know, has been compared 0:20:04.000 --> 0:20:07.920