WEBVTT - Markets Welcome Tariff Negotiations amid Uncertainty 0:00:00.040 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.320 --> 0:00:30.479 Joining us now with JP Morgan with his leadership and 0:00:30.520 --> 0:00:34.240 fixed income is Bob Michael. Why is the bond market 0:00:34.400 --> 0:00:38.000 so calm? I look at sofur swaps recovering. I look 0:00:38.000 --> 0:00:40.479 at the ten year real yield really coming in in 0:00:40.520 --> 0:00:44.920 a responsible way? Why is the world turned upside down? 0:00:45.320 --> 0:00:46.760 Accepted at Piers bonds? 0:00:47.400 --> 0:00:49.800 Before I answer that, Tom, I have a bone to 0:00:49.880 --> 0:00:53.960 pick with you. As a New Englander, you should know 0:00:54.440 --> 0:00:59.440 that New Hampshire actually has the highest quality black flies. 0:00:59.640 --> 0:01:04.000 They do the more temperate climate the lakes. Vacationers and 0:01:04.080 --> 0:01:06.240 blackflies go there by choice and. 0:01:06.319 --> 0:01:10.280 Now a surveillance audible as well. It is widely understood 0:01:10.480 --> 0:01:14.880 the blackflies of Boden are far more vicious than what 0:01:15.000 --> 0:01:18.400 you see in the burbs of Cold me. You know, 0:01:18.680 --> 0:01:21.280 there's just no question about it. I was once in 0:01:21.319 --> 0:01:24.039 a car. This is ancient history. I got out of 0:01:24.040 --> 0:01:27.080 the car the flies were so bad we just got 0:01:27.120 --> 0:01:29.760 back in the car and left. Thank you for that 0:01:29.880 --> 0:01:33.399 vision of knowing. Michael. Why is there a Colm in 0:01:33.440 --> 0:01:34.440 the market your world? 0:01:35.680 --> 0:01:38.360 Because a couple of things have happened. The first thing 0:01:38.440 --> 0:01:43.200 that happened is the deleveraging pass through the system, the 0:01:43.240 --> 0:01:47.880 forcing of levered investors who had swap trades on who 0:01:47.880 --> 0:01:51.680 were short Europe along the US. All these other things 0:01:51.760 --> 0:01:55.400 got squeezed out of the system. It took yields very high, 0:01:55.520 --> 0:01:58.640 it's deep in the curve, and then it was done. 0:01:58.800 --> 0:02:01.960 All the false narratives out there were proven to be false. 0:02:02.200 --> 0:02:07.360 The thought that foreign official official institutions we're selling treasuries 0:02:07.480 --> 0:02:11.120 was just nonsense. When you look at the Fed's custody data, 0:02:11.160 --> 0:02:15.399 they actually increase their position. And then you had some blinking. 0:02:15.800 --> 0:02:19.079 You've had a couple FED officials acknowledge that yes, they 0:02:19.160 --> 0:02:21.960 have a dual mandate and if something happens in the 0:02:21.960 --> 0:02:25.120 employment market, they'd be poised to step in. And you 0:02:25.160 --> 0:02:29.079 had the administration coming out saying, hey, you know what, 0:02:29.280 --> 0:02:33.160 we're open to talks and we're looking to negotiate. All 0:02:33.240 --> 0:02:36.680 those things created Colm and now have created a reversal 0:02:36.680 --> 0:02:37.560 in the bond market. 0:02:38.360 --> 0:02:41.600 What's the bond market saying about this US economy, Bob Azer, 0:02:42.400 --> 0:02:45.960 I keep hearing strategies coming. Are economists raising their prospects 0:02:46.360 --> 0:02:47.880 and their odds for recession? 0:02:47.919 --> 0:02:49.040 What's the bond market telling you? 0:02:49.600 --> 0:02:54.840 The bond market's telling us watch out as things stand. 0:02:55.000 --> 0:02:57.880 If the tariffs go through as they're currently spec out, 0:02:57.960 --> 0:03:02.760 the ninety days passes and there's only some moderate compromise, 0:03:03.200 --> 0:03:06.520 the US is going into recession. I think our economist 0:03:06.639 --> 0:03:09.400 Mike Faroli has made that clear. He's got the back 0:03:09.440 --> 0:03:13.240 half of this year at minus half a percent real GDP. 0:03:13.800 --> 0:03:18.440 When you look at things like tips break evens, they're 0:03:18.919 --> 0:03:22.960 down below or right around two percent. They're not at 0:03:23.040 --> 0:03:26.920 the four percent that everyone's talking about where inflation is 0:03:26.960 --> 0:03:30.360 going to be. The market realizes that a one time 0:03:30.480 --> 0:03:35.160 price reset and inflation will kill top line demand, aggregate 0:03:35.200 --> 0:03:39.280 final demand, and will go barreling into recession, and then 0:03:39.400 --> 0:03:40.840 all the pricing will fade. 0:03:41.560 --> 0:03:43.640 So does that suggest in a fix and co market? 0:03:43.680 --> 0:03:46.400 I really don't want to take much credit risk here today. 0:03:46.440 --> 0:03:49.480 I want to stick to you, stick to the treasury 0:03:49.520 --> 0:03:50.560 market and clip that coupon. 0:03:51.680 --> 0:03:55.440 You can take good quality credit risk. It doesn't I've 0:03:55.480 --> 0:03:57.840 heard a lot of people come on and say, no, 0:03:57.960 --> 0:04:01.040 you've got to be high quality. We're at the top 0:04:01.080 --> 0:04:03.960 of the capital structure. If you own any equities, then 0:04:04.000 --> 0:04:06.400 you should be owning the debt of the companies that 0:04:06.480 --> 0:04:09.640 you own, and a lot of them are below investment grade. 0:04:09.840 --> 0:04:13.839 The key is to find companies that can actually make 0:04:13.880 --> 0:04:18.599 it through a period of taxation with higher prices on 0:04:18.680 --> 0:04:23.360 their input costs and then some loss and demand destruction 0:04:23.680 --> 0:04:25.960 in their sales. There are a lot of companies in 0:04:26.000 --> 0:04:28.240 the investment grade space that will be fine. There's no 0:04:28.320 --> 0:04:31.880 aherea there, and the majority of the high yield market, 0:04:32.000 --> 0:04:34.679 you know, ninety seven plus percent of it will be fined. 0:04:34.880 --> 0:04:36.760 Okay, I'm going to go here because I know you're 0:04:36.760 --> 0:04:40.320 a expert in it. Folks, they did mark to market 0:04:40.360 --> 0:04:43.120 because that's what you did in the nineteenth century. And 0:04:43.200 --> 0:04:46.159 they said FDR down in nineteen thirty eight and said 0:04:46.640 --> 0:04:51.560 this ain't working out, and we changed measuring everything every day, 0:04:51.760 --> 0:04:55.559 every Friday, every moment on Wall Street. It went away, 0:04:56.680 --> 0:04:58.760 and then we brought it back, and we had the 0:04:58.800 --> 0:05:02.680 same challenges within the banking system. Should we be marketing 0:05:02.680 --> 0:05:07.240 to market private equity and private credit or did they 0:05:07.240 --> 0:05:09.320 get a pass in the Bob Michael world. 0:05:11.000 --> 0:05:14.640 I think there's a shadow system there that does mark 0:05:14.680 --> 0:05:17.599 them to market. And I think this is going to 0:05:17.640 --> 0:05:22.240 be highlighted this year because, as you well know, they're 0:05:22.240 --> 0:05:26.080 an awful lot of plans who have expenses to pay. 0:05:26.120 --> 0:05:29.280 Maybe you're a pension fund, you have retirey benefits, maybe 0:05:29.279 --> 0:05:32.800 you're insurance company, you have claims to pay. Maybe your 0:05:33.040 --> 0:05:35.960 university endowment and you've got to run your school and 0:05:36.000 --> 0:05:40.240 your funding's been pulled. And now you're looking at your portfolio. 0:05:40.839 --> 0:05:43.520 What was in alt and a liquid seems not to 0:05:43.560 --> 0:05:46.320 have moved in price, and everything in the public markets 0:05:46.600 --> 0:05:50.400 at one point was down five to fifteen twenty percent, 0:05:50.600 --> 0:05:53.520 but the only thing you could sell was what was down. 0:05:53.600 --> 0:05:56.920 I think you're going to see one some rebalancing and 0:05:57.040 --> 0:06:00.479 two some calls about greater liquidity space. 0:06:00.640 --> 0:06:03.240 Well, this is really important. And radio you don't see this, 0:06:03.360 --> 0:06:06.400 but on YouTube cardinal rule of thumb, when a global 0:06:06.400 --> 0:06:10.520 Wall Street leader puts their hands up and starts measuring things, 0:06:10.920 --> 0:06:13.800 that's when you lean forward and really listen. How big 0:06:13.880 --> 0:06:19.200 is the haircut? Can you estimate for US blended private equity, 0:06:19.440 --> 0:06:22.000 given institution? How much? What's the hit going to be? 0:06:22.960 --> 0:06:24.480 I haven't number in my head. 0:06:24.560 --> 0:06:27.920 Yeah, you know the numbers that have been thrown out 0:06:27.920 --> 0:06:32.720 there are around fifteen percent. Yes, but but there is 0:06:32.880 --> 0:06:35.960 an awful lot of capital that's forum that's gone into 0:06:36.040 --> 0:06:39.080 the secondary space. So I don't think there's going to 0:06:39.120 --> 0:06:42.680 be anything near that headcut, that haircut. I think a 0:06:42.680 --> 0:06:46.400 lot of capital is there dry powder, It will absorb it. 0:06:46.480 --> 0:06:50.200 I know in the private credit space, we look for 0:06:50.320 --> 0:06:53.360 opportunities in secondaries and it's very competitive. 0:06:53.760 --> 0:06:57.640 Well said, yeah, it's Friday, General counsel for JP. Morgan's 0:06:57.640 --> 0:06:58.200 not listening. 0:06:58.240 --> 0:07:03.000 No, that's good chilling out on a Friday. Yeah, getting ready. 0:07:03.520 --> 0:07:06.719 I want you to talk, Bob. And certainly every report 0:07:06.760 --> 0:07:10.920 we've had a surveillance is liquidity's in order, the plumbings 0:07:10.960 --> 0:07:15.160 in order within the American financial system. Where's the leverage? 0:07:15.280 --> 0:07:19.440 The shadow of leverage out there? It amends every ten 0:07:19.560 --> 0:07:23.200 every fifteen years we move to a new leverage. What's 0:07:23.240 --> 0:07:25.400 the new new leverage out there you worry about? 0:07:26.440 --> 0:07:31.240 Well, I think where some of the marginal funding has 0:07:31.480 --> 0:07:35.880 aggregated is clearly in private credit. If you go back 0:07:35.920 --> 0:07:39.200 to two thousand and seven, I don't really recall much 0:07:39.320 --> 0:07:42.160 in the way of private credit except if there was 0:07:42.200 --> 0:07:45.280 some sort of debt exchange or something like that. And 0:07:45.320 --> 0:07:50.160 today estimates are about two trillion dollars, So it's come 0:07:50.280 --> 0:07:52.920 from nowhere to something big. When we look at the 0:07:52.960 --> 0:07:57.400 size of the entire US banking system, the commercial and 0:07:57.480 --> 0:08:00.600 industrial loan book, Paul, you will be able to us 0:08:00.680 --> 0:08:04.280 on that, but that actually is it's three trillion. So 0:08:04.520 --> 0:08:08.640 that's two trillion in borrowing that might have historically gone 0:08:08.960 --> 0:08:12.880 to the public high yield market, the broadly syndicated loan market, 0:08:13.400 --> 0:08:17.120 or two banks. When we look at the public high 0:08:17.160 --> 0:08:21.040 yield market, it looks very clean, even in a fairly 0:08:21.200 --> 0:08:24.840 meaningful recession, thing greater than the Ferole minus half a 0:08:24.920 --> 0:08:28.080 percent for a couple quarters, something closer to one percent. 0:08:28.320 --> 0:08:31.080 We can only get the fault rates up to about 0:08:31.080 --> 0:08:34.320 three percent in the public high yield market, and we 0:08:34.360 --> 0:08:36.760 know there will be more pain. We think that gets 0:08:36.760 --> 0:08:37.840 felt in private credit. 0:08:37.920 --> 0:08:38.120 Now. 0:08:38.400 --> 0:08:40.760 It remains to be seen whether that can all be 0:08:40.880 --> 0:08:44.120 dealt with behind the scenes, but it feels like we're 0:08:44.320 --> 0:08:47.040 about to approach the long way to shake out there. 0:08:47.880 --> 0:08:49.640 Hey, Bob, we were, Tom and I were just talking 0:08:49.640 --> 0:08:52.800 to Megan Graper earlier this morning. She runs Deck Capital 0:08:52.800 --> 0:08:54.880 Markets at Barkley's. If she called you up today and 0:08:54.920 --> 0:08:57.160 she had a new issue in the investment grade market. 0:08:57.960 --> 0:09:00.199 Would you buy that? Are you open to that? In 0:09:00.280 --> 0:09:02.079 all the craziness that's going out there in the world. 0:09:02.920 --> 0:09:10.000 Absolutely, one hundred percent nice because because don't worry. I'm 0:09:10.000 --> 0:09:14.160 sure they have. Yes, Corporate America is going into this 0:09:14.360 --> 0:09:20.120 in really good shape. Profit margins are very compelling. Actually, 0:09:20.640 --> 0:09:23.280 consumer balance sheets are in pretty good shape too, So 0:09:23.480 --> 0:09:28.320 businesses and households can withstand some level of pain on 0:09:28.480 --> 0:09:33.120 taris and investment. Great companies were not all that that 0:09:33.240 --> 0:09:36.720 worried about, and generally they these new deals come with 0:09:36.800 --> 0:09:39.520 a bit of a concession. We have to know what 0:09:39.600 --> 0:09:43.240 the company is, you know what what their industry looks like. 0:09:43.280 --> 0:09:46.320 Where are they issuing all the usual credit research things. 0:09:46.320 --> 0:09:47.160 But yeah, we're buying. 0:09:47.280 --> 0:09:50.400 The president just making comments. These are tape comments, folks 0:09:50.400 --> 0:09:53.240 in Oregona's way to roam in the funeral of the 0:09:53.280 --> 0:10:00.960 Pope gave us presidential statements on negotiations. Everything's wonderful, full everything. 0:10:01.160 --> 0:10:02.840 I think he literally said, it's going to be a 0:10:02.880 --> 0:10:06.400 wealthier nation. The rest of them. America's turned upside down 0:10:06.400 --> 0:10:11.880 here worrying about shipping arrivals in Los Angeles, and that 0:10:12.400 --> 0:10:15.320 if we almost on a Hyagen basis, if we clear 0:10:15.400 --> 0:10:18.920 the market, Bob Michael, is it just like it used 0:10:18.960 --> 0:10:22.600 to be? Do we go to something new here within 0:10:22.760 --> 0:10:26.560 American Wall Street? Or do we if we clear all 0:10:26.600 --> 0:10:28.800 these troubles, do we go back to what we knew? 0:10:29.040 --> 0:10:30.800 What would Paul deep into January? 0:10:31.040 --> 0:10:31.240 Yes? 0:10:31.480 --> 0:10:34.079 I mean do we just revert back to what we knew? 0:10:34.640 --> 0:10:39.480 So we're in an interesting couple months here. As I 0:10:39.640 --> 0:10:43.600 was listening to Lisa talk about the bottom of the 0:10:43.640 --> 0:10:47.120 capital structure, I think they're called equities. I'm not entirely 0:10:47.200 --> 0:10:52.200 sure shape something. One of those markets was up a 0:10:52.200 --> 0:10:56.520 couple tents. I think the NASDAC, you know, the specious companies. 0:10:57.520 --> 0:11:00.400 We're in a period of a couple months where we 0:11:00.440 --> 0:11:04.960 should see good news. Where we're in that ninety day 0:11:05.040 --> 0:11:09.400 delay on tariffs, that pause, You've already had the administration 0:11:09.559 --> 0:11:13.200 come out and tell us good things. Negotiations are underway, 0:11:13.240 --> 0:11:16.920 there are paths to compromise, we're working things out. You've 0:11:16.960 --> 0:11:20.080 got the Federal Reserve out there telling us, yeah, we're 0:11:20.120 --> 0:11:22.920 keeping an eye on the labor market, and you've got 0:11:23.120 --> 0:11:26.400 Secretary Besson out there saying we've got this. There are 0:11:26.400 --> 0:11:29.200 a lot of things we can do in the treasury market. 0:11:29.280 --> 0:11:33.079 So all of those things are calm, which didn't exist 0:11:33.559 --> 0:11:36.320 a couple of weeks ago. The second thing is it's 0:11:36.360 --> 0:11:39.920 too early for the hard data to turn, and we 0:11:40.080 --> 0:11:44.840 fully expect unless there's a meaningful roll back on the 0:11:44.920 --> 0:11:48.440 TWERF policy as it sits now, then the hard data 0:11:48.520 --> 0:11:51.079 will turn. But for now the next couple months, everything 0:11:51.120 --> 0:11:54.040 looks to be smooth selling. I think you could retrace 0:11:54.160 --> 0:11:57.199 all of the selloff of thank you, of March April 0:11:57.280 --> 0:11:57.520 thank you. 0:11:57.520 --> 0:11:59.160 I'm letting on a Friday, we got to I think 0:11:59.200 --> 0:11:59.880 I can get through the week. 0:12:00.480 --> 0:12:02.720 One time I didn't expect to be positive myself. 0:12:02.840 --> 0:12:07.000 One final question, I am so honored to ask you this. 0:12:07.600 --> 0:12:14.400 With Pennsylvania classics including COLSD one four Roman America, we 0:12:14.480 --> 0:12:17.160 will have a funeral this weekend in Rome. I have 0:12:17.320 --> 0:12:22.600 stood in Santa Pudenziana Church three point thirteen AD, built 0:12:22.600 --> 0:12:25.960 on Roman ruins, and it was literally where the Pope 0:12:26.080 --> 0:12:29.800 slept before they built two or three churches before Saint 0:12:29.800 --> 0:12:33.880 Peter's link in this thing that we have within the 0:12:33.960 --> 0:12:39.160 Catholic Church back to biblical times, back to Roman times. 0:12:39.360 --> 0:12:42.480 How do you perceive the Catholic Church back to what 0:12:42.600 --> 0:12:44.080 you studied at Pennsylvania. 0:12:45.080 --> 0:12:47.640 Well, that's way outside of my level of ex perceise. 0:12:47.720 --> 0:12:50.360 I will tell you I've been to the Vatican a 0:12:50.400 --> 0:12:54.400 couple of times, and I'm always impressed. And I do 0:12:54.520 --> 0:12:58.920 see the classics everywhere. I see the Romans laboring away 0:12:59.080 --> 0:13:01.559 constructing a city. It's just spectacular. 0:13:01.679 --> 0:13:03.640 Bob Michael, thank you so much. What he really is 0:13:03.679 --> 0:13:05.079 going to say is we're going to get a fifty 0:13:05.120 --> 0:13:08.079 eight page and a report letter from the new Pope, 0:13:08.280 --> 0:13:11.000 just like we get from mister Diamond. Mister Michael is 0:13:11.040 --> 0:13:12.040 a JP Morgan. 0:13:17.880 --> 0:13:21.480 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:13:21.520 --> 0:13:24.680 weekday afternoons from seven to ten am Eastern. Listen on 0:13:24.760 --> 0:13:28.440 Applecarplay and Android Otto with the Bloomberg Business app, or 0:13:28.600 --> 0:13:30.080 watch us live on YouTube. 0:13:30.120 --> 0:13:34.000 Without question, the most important conversation of the day for 0:13:34.120 --> 0:13:37.520 Global Wall Street. Let me describe mister Adams to you 0:13:37.640 --> 0:13:41.160 as we talk of this moment in American history. He 0:13:41.360 --> 0:13:44.240 is a student of American history out of the University 0:13:44.240 --> 0:13:48.720 of Kentucky. His public service to Bush Senior, his many 0:13:48.760 --> 0:13:53.840 public services to Bush Junior into a legitimate lobbying effort 0:13:53.920 --> 0:13:59.280 in Washington, and he is the banker's lobbyist in Washington, 0:14:00.080 --> 0:14:03.400 President the chief executive officer of what is called THEIF. 0:14:04.320 --> 0:14:07.240 And the other day he had a modest conversation with 0:14:07.320 --> 0:14:11.960 the Secretary of Treasury Tim just as a general thrilled 0:14:11.960 --> 0:14:14.680 you with us today from the meetings in Washington is 0:14:14.720 --> 0:14:19.880 a general statement, how scared is Global Wall Street? How 0:14:19.960 --> 0:14:25.080 scared is Manhattan Wall Street of this moment in banking? Yeah? 0:14:25.200 --> 0:14:27.520 Sure, Tom, thank you for the intro. It's the best 0:14:27.520 --> 0:14:29.360 intro I've had in a long time. It's such an 0:14:29.400 --> 0:14:32.240 honorary back on your show. I listened to you every day. Look, 0:14:32.560 --> 0:14:35.440 people are worried because of just the enormous uncertainty and 0:14:35.480 --> 0:14:39.320 the daily changes that are coming out of Washington. Although 0:14:39.320 --> 0:14:41.120 I will say this week was a breakout week for 0:14:41.160 --> 0:14:43.520 Secretary Best, and I think he really established himself as 0:14:43.520 --> 0:14:46.280 the anchor voice in this administration, a sober voice or reason. 0:14:46.640 --> 0:14:48.920 And I think the time that the industry spent within 0:14:49.040 --> 0:14:52.120 this week was a calming experience. And I think if 0:14:52.160 --> 0:14:54.880 the administration in the White House will let Scott Secretary 0:14:54.920 --> 0:14:56.960 Best and get out on the front more often, I 0:14:56.960 --> 0:14:58.720 think that would help our industry, and I think it 0:14:58.760 --> 0:14:59.480 would help markets. 0:14:59.520 --> 0:15:02.120 Okay, I'll go with you there. But basically what they 0:15:02.120 --> 0:15:05.000 did they put a cork in the mouth of selected 0:15:05.120 --> 0:15:08.480 other Trump bites. Let's say we continue with the cork 0:15:08.560 --> 0:15:11.720 in the mouth. That's great. Besson asks to talk to 0:15:11.800 --> 0:15:15.840 Trump about what this nation needs first, sing Paul Sweeney 0:15:15.920 --> 0:15:19.440 said this morning, mister Adams is shipping in Los Angeles 0:15:19.760 --> 0:15:22.640 is off a cliff. How far off a cliff do 0:15:22.720 --> 0:15:25.480 your bankers see the American economy? 0:15:26.120 --> 0:15:29.840 Yeah, they're very worried. Obviously, the soft indicators of what 0:15:29.840 --> 0:15:32.680 we've seen initially. I think about Q three, Q four, 0:15:32.720 --> 0:15:35.840 you're going to see real indicators show that the real 0:15:35.840 --> 0:15:39.080 economy is beginning slow. The workers that this administrations say 0:15:39.120 --> 0:15:42.800 they want to help manufacturing factory workers are going to 0:15:42.800 --> 0:15:45.440 get hurt. It doesn't need to happen. I think Secretary 0:15:45.520 --> 0:15:48.680 Bessence again, sober voice or reason. I think if the 0:15:48.680 --> 0:15:51.560 President would listen more to Scott and let him lead 0:15:51.600 --> 0:15:55.240 on these discussions and really put in place a thoughtful policy, 0:15:55.440 --> 0:15:57.560 I think we can avoid the worst. But right now 0:15:57.560 --> 0:15:58.520 it hangs in the balance. 0:15:59.320 --> 0:16:02.400 Jimmy, you're down in our Washington, DC Bureau. 0:16:02.400 --> 0:16:05.200 As we speak, you've been in meeting with some of 0:16:05.240 --> 0:16:08.080 the folks in the IMF, which has been in Washington 0:16:08.160 --> 0:16:08.560 this week. 0:16:08.800 --> 0:16:11.720 What are our global trading partners what are they telling 0:16:11.800 --> 0:16:13.360 you these days? 0:16:14.360 --> 0:16:16.480 Well, first, there was a sigh relief this week when 0:16:16.760 --> 0:16:20.840 the United States and articularly about Secretary Vestent, agreed to 0:16:20.840 --> 0:16:24.280 stay in a leadership role in the Brightwoods Institution, the IMF, 0:16:24.280 --> 0:16:26.880 the World Bank, and other iffies. I think there was 0:16:26.920 --> 0:16:29.160 some concern that the US was going to pull back 0:16:29.280 --> 0:16:32.400 or downsize or try to undermine these institutions. But what 0:16:32.480 --> 0:16:35.280 we heard from the Secretary was a reaffirmation of not 0:16:35.320 --> 0:16:38.280 only the US a belief in these institutions, but they 0:16:38.280 --> 0:16:40.040 want to play a leadership role. They want to get 0:16:40.080 --> 0:16:42.920 back to factory settings. I get that. I actually agree 0:16:42.920 --> 0:16:45.280 with it, so I think a reaffirmation. The second is 0:16:45.320 --> 0:16:48.040 just the uncertainty over trade in tariffs, and that's really 0:16:48.080 --> 0:16:50.880 creating turmoil around the world and enormous uncertainty about the 0:16:50.960 --> 0:16:51.960 trajectory of growth. 0:16:52.720 --> 0:16:55.960 Tim Again, when you talk to your counterparts in DC 0:16:56.160 --> 0:16:59.000 and then the IMF and all our global trading partners, 0:16:59.320 --> 0:17:03.040 is there since that globalization as kind of we've grown 0:17:03.120 --> 0:17:06.000 up with the last I don't know, thirty forty fifty 0:17:06.040 --> 0:17:07.200 sixty years. 0:17:07.640 --> 0:17:10.920 Is that over Well, it certainly feels like we're moving 0:17:10.920 --> 0:17:13.960 into a new chapter. I actually think globalization of the 0:17:14.040 --> 0:17:17.720 last forty fifty years improved a lot of tens of millions, 0:17:17.760 --> 0:17:19.840 if not hundreds of millions of people globally, and actually 0:17:19.840 --> 0:17:21.920 think it was good for the US economy. But they 0:17:21.920 --> 0:17:24.240 had that discussion the last election. Let's move on to 0:17:24.240 --> 0:17:26.359 figure out what what does the next chapter look like? 0:17:26.600 --> 0:17:29.320 And I think we want an outcome that works for 0:17:29.320 --> 0:17:32.280 the United States and works for others. Alliances and trades 0:17:32.359 --> 0:17:34.800 still mattered, David Ricardo Toad is that two hundred and 0:17:34.800 --> 0:17:37.000 fifty years ago. We just need to stay true to 0:17:37.000 --> 0:17:40.320 the lessons we've learned over time. But I understand that 0:17:40.680 --> 0:17:43.440 the US wants a better deal from some countries, including China. 0:17:43.480 --> 0:17:45.840 I get that. Let's move on to that, resolve that 0:17:45.960 --> 0:17:48.360 dispute and then get back to basics. 0:17:48.960 --> 0:17:51.600 Tim, you mentioned China, and obviously that's a huge trading 0:17:51.640 --> 0:17:54.240 partner with the United States. 0:17:54.640 --> 0:17:55.400 Any sense of. 0:17:55.400 --> 0:17:59.880 Kind of what the administration's strategy is as it relates. 0:17:59.840 --> 0:18:01.520 To China at this point. 0:18:02.040 --> 0:18:05.520 Well, so far it's been to try to isolate and 0:18:05.880 --> 0:18:08.720 bludge in a bit. You know, I've been going to 0:18:08.760 --> 0:18:10.760 China for thirty years. I don't know that that's going 0:18:10.840 --> 0:18:14.240 to work. I understand that the President believes in his strategy. 0:18:14.280 --> 0:18:17.960 He's certainly a you know a history of negotiations. So 0:18:18.000 --> 0:18:19.480 we'll see if it works. I think you've got to 0:18:19.520 --> 0:18:22.480 find characteristics. I think that you've got to build an alliance, 0:18:22.720 --> 0:18:25.080 and I think you've got to treat China with respect. 0:18:25.680 --> 0:18:27.399 Trying to bludge in them to come to the table 0:18:27.600 --> 0:18:29.240 hasn't worked in the past. I don't think it's going 0:18:29.280 --> 0:18:29.960 to work this time. 0:18:30.200 --> 0:18:33.399 Tim Adams with us the IF after his conversation with 0:18:33.440 --> 0:18:38.080 the Secretary of Treasury, just a terrific perspective not only 0:18:38.160 --> 0:18:41.159 on our banking industry and the people he represents with 0:18:41.280 --> 0:18:44.399 the IIF, but also of course with his Kentucky and 0:18:44.440 --> 0:18:47.359 the Republican Party. Tim Adams, let me shift gears with 0:18:47.440 --> 0:18:50.040 you right now, and this is going to go out 0:18:50.080 --> 0:18:53.240 of your sense of Kentucky. Kessius Marcellus Clay started a 0:18:53.280 --> 0:18:57.720 Republican Party a few years ago in Kentucky out of 0:18:57.760 --> 0:19:00.359 the Civil War, and you know, it was an old 0:19:00.400 --> 0:19:03.480 style Kentucky party, and then it goes on to what 0:19:03.600 --> 0:19:06.640 you lived with a Bush family. There was a certain 0:19:06.840 --> 0:19:12.119 character to a Republican Party at Walker's Point in Kennebunkport 0:19:12.800 --> 0:19:16.760 that's been blown up. Just look at the Oval office 0:19:16.800 --> 0:19:19.080 with the gold and then you know, I probably think 0:19:19.080 --> 0:19:21.960 got Tim adams portrait up there and all the rest 0:19:22.280 --> 0:19:26.560 Tim Adams. What does the old Republican Party do? Do 0:19:26.640 --> 0:19:30.119 they vote Democrat? Is there a third party here? What 0:19:30.680 --> 0:19:34.879 does your Republican Party do in the next four years? 0:19:35.960 --> 0:19:38.200 Well, if you remember Bush forty one, who I worked 0:19:38.200 --> 0:19:40.600 for as a young White House staffer, talked about a kinder, 0:19:40.720 --> 0:19:42.719 gentler country, and I think that's true. And I had 0:19:42.720 --> 0:19:44.919 the honor working for Bush forty three as well, and 0:19:44.960 --> 0:19:48.520 they believed in real decorum. Look, I think there are 0:19:48.520 --> 0:19:50.240 a lot of people across the country trying to figure 0:19:50.240 --> 0:19:52.239 out which of the two boxes they fit in. I 0:19:52.280 --> 0:19:54.399 just would like to find a party that wants to 0:19:54.440 --> 0:19:58.160 be pro growth, pro business, pro capital formation, pro risk taking, 0:19:58.320 --> 0:20:00.640 that believes in trade. As I said about two hundred 0:20:00.640 --> 0:20:04.239 fifty years of experience, that trade actually makes us wealthier. Right, 0:20:04.440 --> 0:20:06.800 So that's what I'm looking for. And you know, there's 0:20:06.800 --> 0:20:09.199 no reason why the Republican Party can't offer that or 0:20:09.200 --> 0:20:11.480 the Democratic Party right now. I think the Democratic Party 0:20:11.520 --> 0:20:14.639 is a bit lost, but there's an opportunity to reinvent themselves. 0:20:15.560 --> 0:20:18.879 Avestant of the Treasury worked for sous years ago. He 0:20:18.920 --> 0:20:22.480 seems to be able to work with everyone. Marco Rubio, 0:20:22.520 --> 0:20:25.359 I would suggest Tim Adams as someone iif and the 0:20:25.400 --> 0:20:28.840 bankers can deal with. These are more traditional Republican in 0:20:28.920 --> 0:20:31.480 this Donning Brook around. Look at the economists covered this 0:20:31.560 --> 0:20:34.879 week of the Bandaged Eagle. Tim Adams, are you looking 0:20:34.880 --> 0:20:39.520 to Secretary Rubio and bestent for leadership to help the 0:20:39.560 --> 0:20:42.640 president get back to where we were? Yes? 0:20:42.960 --> 0:20:45.840 Absolutely, And look you've got great leadership on the Capitol Hill. 0:20:46.840 --> 0:20:49.760 Chairman of Finished Services Committee, French Hill I spoke with 0:20:49.800 --> 0:20:52.040 this week, known him for thirty years. Also that way, 0:20:52.640 --> 0:20:55.840 Bill Haggerty, Dave McCormick. There are people on Capitol Hill. 0:20:55.840 --> 0:20:58.359 They're Senators and House members that I think also believe 0:20:58.400 --> 0:21:02.920 in engagement, free trade and just cap aformation and growth. 0:21:02.960 --> 0:21:04.440 We need a pro growth strategy. 0:21:05.160 --> 0:21:09.560 Yeah, I'm Paul, I got eight more quests jump exactly, 0:21:09.880 --> 0:21:11.520 Tim and I are going to start talking about Henry 0:21:11.560 --> 0:21:12.240 Clay in a moment. 0:21:12.640 --> 0:21:15.520 All save this, Hey, Tim, talk to us about regulatory 0:21:15.560 --> 0:21:18.280 policy here. How do you think this administration is kind 0:21:18.280 --> 0:21:22.560 of just viewing how they want to regulate US commerce. 0:21:22.600 --> 0:21:24.200 I mean, there was a belief at the election that 0:21:24.480 --> 0:21:27.760 this is going to be a pro growth administration, maybe 0:21:27.800 --> 0:21:31.160 a little bit light handed as it relates to regulation. 0:21:31.440 --> 0:21:32.840 How do you think that's developing here? 0:21:33.680 --> 0:21:36.480 Yeah, I think they do. I think philosophically that's exactly 0:21:36.520 --> 0:21:37.760 where they want to go. Now you have to do 0:21:37.800 --> 0:21:39.720 on a sector best sector basis, and we're seeing in 0:21:39.720 --> 0:21:43.280 the energy sector a real push as he said, you know, drill, baby, drill, 0:21:43.359 --> 0:21:46.760 let's find ways to increase oil and gas production on 0:21:46.800 --> 0:21:49.280 top of the US being already the largest oil producer 0:21:49.280 --> 0:21:51.600 at thirteen point two million barrels a day. So I 0:21:51.640 --> 0:21:54.400 think that's true. On financial services, they're finding their way through. 0:21:54.600 --> 0:21:56.600 I think we'll get to a good point. It really 0:21:56.600 --> 0:21:59.040 depends on the sector. I do think they do want 0:21:59.040 --> 0:21:59.959 to focus on the regulation. 0:22:00.480 --> 0:22:04.560