WEBVTT - Bloomberg Surveillance TV: November 7, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 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 --> 0:00:37.480 Terminal and the Bloomberg Business app. Andrew Holmholds the city 0:00:37.560 --> 0:00:39.879 is alongside us. Now for more, Andrew, good morning to you. 0:00:40.479 --> 0:00:42.319 We'll start with job as claims and then we can 0:00:42.320 --> 0:00:43.239 get to all the. 0:00:43.200 --> 0:00:43.680 Rest of it. 0:00:44.120 --> 0:00:46.559 Claims are really really low, and you've been looking for 0:00:46.600 --> 0:00:50.080 a much weaker labor market into your end. Why doesn't 0:00:50.120 --> 0:00:51.520 that back up that theory. 0:00:51.880 --> 0:00:54.080 It's a strange labor market. It's a different labor market 0:00:54.120 --> 0:00:56.480 than something that we've ever seen before, where we have 0:00:56.760 --> 0:01:00.240 really low hiring rates. We see the jold stato see 0:01:00.320 --> 0:01:02.720 the percentage of people who are getting hired into new jobs, 0:01:02.880 --> 0:01:05.039 and that number is low, so it is hard to 0:01:05.040 --> 0:01:06.240 get hired into a job. 0:01:06.640 --> 0:01:07.440 That's the bad news. 0:01:07.480 --> 0:01:09.240 The good news is what we're seeing in jobless claims 0:01:09.240 --> 0:01:11.200 and the initial claims at least that is showing us that. 0:01:11.160 --> 0:01:12.960 The layoff rate is still low. 0:01:13.240 --> 0:01:15.839 So we have a strange labor market where it seems 0:01:15.920 --> 0:01:17.880 like people are hanging on to the workers that they have, 0:01:18.280 --> 0:01:20.320 but they're not necessarily wanting to hire more workers. 0:01:20.400 --> 0:01:23.080 So you think twenty five today, and you think fifty 0:01:23.280 --> 0:01:25.839 in December, and everyone else is thinking about twenty twenty 0:01:25.840 --> 0:01:27.880 five in the prospect of right hikes and not RT cuts. 0:01:28.400 --> 0:01:31.000 How useful is the price section of. 0:01:31.000 --> 0:01:33.240 The last twenty four hours to project out what twenty 0:01:33.240 --> 0:01:34.160 twenty five might break. 0:01:34.360 --> 0:01:35.560 Yeah, I think not useful at all. 0:01:35.600 --> 0:01:37.480 I really don't think that you're supposed to take a 0:01:37.760 --> 0:01:41.039 macro narrative away or a fed narrative away from what's 0:01:41.120 --> 0:01:44.000 going on in interest rate markets right now. If you 0:01:44.080 --> 0:01:47.160 look at what's happening in the macro fundamentals, we do 0:01:47.240 --> 0:01:49.520 have a softening of the labor market. I think that's 0:01:49.600 --> 0:01:52.240 clear after the last jobs report, where even if you 0:01:52.280 --> 0:01:54.800 adjust that job's report for hurricanes and for strikes, and 0:01:54.840 --> 0:01:56.760 I think that's part of why the market can't react 0:01:56.800 --> 0:01:58.680 to it. We also had the election coming up at 0:01:58.720 --> 0:02:01.880 the time. But with all the distortion, it's hard to see. 0:02:02.000 --> 0:02:03.840 But if you draw a through line through it, what 0:02:03.920 --> 0:02:06.440 you see is the pace of job growth is slowing. 0:02:06.640 --> 0:02:09.440 You see the unemployment rate has risen from its lows, 0:02:09.480 --> 0:02:12.160 and it looks like, if anything, it's still trending higher, 0:02:12.560 --> 0:02:14.480 and that's going to make the FED think there's some 0:02:14.520 --> 0:02:16.760 downside risk to employment. And then you move to the 0:02:16.760 --> 0:02:19.840 inflation side. We just got numbers for the third quarter 0:02:20.080 --> 0:02:24.280 two point one six percent quarterly annualized core PC inflation. 0:02:24.360 --> 0:02:27.480 That's essentially at target inflation. So if you're the FED, 0:02:27.560 --> 0:02:29.560 you're looking at inflation that's close to target. 0:02:29.600 --> 0:02:31.480 You're looking at an unemployment. 0:02:31.000 --> 0:02:33.919 Rate that's still low but maybe rising. The path is 0:02:33.960 --> 0:02:36.160 going to be towards lower rates. So I really don't 0:02:36.240 --> 0:02:39.760 understand the move in the market or the new narrative 0:02:39.760 --> 0:02:41.400 that this is a FED that might need to hike. No, 0:02:41.520 --> 0:02:42.520 this is a FED that's cutting. 0:02:42.600 --> 0:02:44.320 I think a lot of people would agree that this 0:02:44.320 --> 0:02:46.240 FED probably isn't going to hike, though there was this 0:02:46.280 --> 0:02:49.280 one person out there who did put out the prospect 0:02:49.360 --> 0:02:50.120 of potential rate. 0:02:50.400 --> 0:02:53.000 Highest number of people. Actually there is. 0:02:52.960 --> 0:02:55.280 A feeling though, that they can't cut nearly as much, 0:02:55.480 --> 0:02:57.360 especially at a time where the death is it's probably 0:02:57.400 --> 0:02:59.960 going to expand, and at a time where even if 0:03:00.000 --> 0:03:02.800 if it's not accelerating, this is an economy that's pretty solid. 0:03:03.240 --> 0:03:04.600 How do you push back against that? 0:03:05.000 --> 0:03:06.640 Well, first of all, I'm not sure that it's an 0:03:06.639 --> 0:03:09.680 economy that's pretty solid. I know that we're seeing GDP 0:03:09.800 --> 0:03:12.600 growth that's running close to three percent. On the activity numbers, 0:03:12.639 --> 0:03:15.040 those look fine. Again, if you look at the labor market, 0:03:15.120 --> 0:03:18.680 it doesn't look as strong. And I think we just 0:03:18.720 --> 0:03:20.920 had a referendum in this country in some ways on 0:03:21.080 --> 0:03:24.200 the state of the economy, and the results were not 0:03:24.320 --> 0:03:27.240 positive for how people are experiencing this economy. And you 0:03:27.280 --> 0:03:28.919 see that in some of the survey data. You see 0:03:29.000 --> 0:03:31.720 you ask people, our jobs plentiful, Our job's hard to get. 0:03:31.919 --> 0:03:34.240 You see that hard to get number that's been coming up. 0:03:34.280 --> 0:03:36.440 You see hard to get jobs number that's elevated. 0:03:36.520 --> 0:03:36.960 Right now. 0:03:37.360 --> 0:03:40.080 If you're the Fed, the mandatea is employment and the 0:03:40.120 --> 0:03:43.440 mandate is inflation. Inflation is close to target. You have 0:03:43.440 --> 0:03:45.840 a labor market that's softening. And remember back in August 0:03:45.920 --> 0:03:48.560 Jera Powell said we would not seek or welcome any 0:03:48.600 --> 0:03:50.920 further softening of the labor market. That means you need 0:03:50.960 --> 0:03:52.560 to get policy rates down towards neutral. 0:03:52.600 --> 0:03:54.760 But this really highlights how messy the data is and 0:03:54.760 --> 0:03:56.680 how I can't really understand it because at the same 0:03:56.720 --> 0:03:59.800 time that you're saying that the election was a referendum 0:03:59.800 --> 0:04:02.040 of and that we've seen this in sentiment, at the 0:04:02.040 --> 0:04:05.680 same time, we're seeing the US City Surprise Economic Index 0:04:06.360 --> 0:04:08.640 rise to the clients level going back to April. At 0:04:08.640 --> 0:04:11.520 the same time ISM service as the employment component actually 0:04:11.560 --> 0:04:16.520 increased more than expected. So how much are you looking at, 0:04:16.520 --> 0:04:20.920 say the rising inflation expectations as data to pay attention 0:04:21.000 --> 0:04:23.360 to or not pay attention two for the Federal Reserve, No, 0:04:23.480 --> 0:04:23.760 I think. 0:04:23.640 --> 0:04:25.520 It's a fair point, and I think the signal to 0:04:25.600 --> 0:04:27.960 noise ratio in the data is just lower than it 0:04:28.040 --> 0:04:29.960 used to be. And in some ways we know why 0:04:30.000 --> 0:04:32.120 that's happening. If you look at the jobs report, the 0:04:32.120 --> 0:04:35.040 payrolls report, for instance, the response rate is much lower 0:04:35.040 --> 0:04:36.840 than it used to be, and that just means that 0:04:36.839 --> 0:04:39.400 that data is going to be noisier, and we see 0:04:39.400 --> 0:04:41.640 that in some of the revisions we've had just consistent 0:04:41.680 --> 0:04:43.880 downward revisions to those jobs figures. So we get a 0:04:43.920 --> 0:04:46.240 jobs figure, you look at the city Economic Surprise Index 0:04:46.320 --> 0:04:47.200 as a positive surprise. 0:04:47.240 --> 0:04:48.240 The market reacts to that. 0:04:48.560 --> 0:04:50.240 Well, then I'm not sure if people are paying as 0:04:50.320 --> 0:04:53.320 much attention when a month later, two months later, sometimes 0:04:53.320 --> 0:04:56.120 a year later. Right with those preliminary benchmark provisions to 0:04:56.200 --> 0:04:58.760 the payrolls numbers that turned out to be eight hundred 0:04:58.760 --> 0:05:01.280 and eighteen thousand lower in terms of the level of jobs, 0:05:01.320 --> 0:05:04.120 and we thought it was those revisions have been to 0:05:04.200 --> 0:05:06.400 the downside, and that means we're actually looking at a 0:05:06.440 --> 0:05:08.960 weaker labor market than we thought. But the market's already reacted, 0:05:09.000 --> 0:05:11.359 the narrative has already shifted. So what we're trying to 0:05:11.360 --> 0:05:13.120 do is look at the data as best we can 0:05:13.360 --> 0:05:16.200 draw those through lines in terms of where things are headed. Yes, 0:05:16.240 --> 0:05:18.599 I would agree right now we're running, you. 0:05:18.600 --> 0:05:19.960 Know, good GDP growth. 0:05:20.200 --> 0:05:23.400 We have an unemployment rate that's low four percents. That's 0:05:23.440 --> 0:05:25.320 not a bad thing either, not a bad place to be. 0:05:25.360 --> 0:05:26.840 But the question is where are we going from here? 0:05:26.960 --> 0:05:29.480 I want to pick up your point about a referendum, 0:05:29.720 --> 0:05:32.720 was that because of jobs or price pressure and inflation? 0:05:33.279 --> 0:05:35.280 I think it's a combination of the two, right, And 0:05:35.279 --> 0:05:37.080 that's why there is this idea that you're supposed to be, 0:05:37.160 --> 0:05:39.159 you know, maybe adding the unemployment rate. 0:05:39.040 --> 0:05:40.039 To the inflation rate. 0:05:40.560 --> 0:05:43.599 But when you look at the consumer sentiment surveys, for instance, 0:05:43.720 --> 0:05:44.560 you're absolutely right. 0:05:44.600 --> 0:05:46.320 People are saying prices are high. 0:05:46.440 --> 0:05:48.599 That's one of the reasons that they're unhappy with where 0:05:48.600 --> 0:05:49.360 the economy is. 0:05:49.880 --> 0:05:52.400 The other thing that I think matters. 0:05:52.000 --> 0:05:53.200 And maybe we don't pick it up as well in 0:05:53.200 --> 0:05:55.120 some of the survey data is look where interest rates are. 0:05:55.160 --> 0:05:56.840 And it goes back to the discussion that we're having 0:05:56.880 --> 0:06:00.640 with Lisa that you with fiscal concern. It means that 0:06:00.720 --> 0:06:03.560 longer term interest rates have risen again. It means mortgage 0:06:03.600 --> 0:06:05.680 rates are going to be close to their highs again. 0:06:05.760 --> 0:06:05.920 Right. 0:06:05.920 --> 0:06:07.520 We thought they were going lower because the Fed was 0:06:07.560 --> 0:06:10.480 cutting interest rates. Now they're higher again. Those are actually 0:06:10.480 --> 0:06:13.040 reasons that the Fed might end up being more dubvish. 0:06:13.160 --> 0:06:16.600 I understand it's a complicated scenario when you have loose 0:06:16.600 --> 0:06:18.800 fiscal policy that's raising interest rates and. 0:06:18.760 --> 0:06:19.600 I can't jump in down. 0:06:19.640 --> 0:06:22.120 Don't you think that that fifty basis point cut contributed 0:06:22.160 --> 0:06:25.279 to higher long end yields? Because before we're even talking 0:06:25.320 --> 0:06:27.880 about a Trump presidency or a Trump suite in a 0:06:27.960 --> 0:06:32.000 material way. Ever since they cut interest rates, yields bottomed 0:06:32.040 --> 0:06:35.000 within twenty four rounds at that period. They've been up 0:06:35.040 --> 0:06:37.920 by sixty seventy. I haven't twenty di since, but we're 0:06:37.960 --> 0:06:41.240 at three sixty last time around, So it's called eighty. 0:06:41.520 --> 0:06:43.800 Had an eighty basis point move on a tenure. Don't 0:06:43.800 --> 0:06:46.200 you think the FED easing has had something to do 0:06:46.279 --> 0:06:46.600 with that? 0:06:47.000 --> 0:06:49.680 Well, all else equal, if the FED is more dubbish, 0:06:49.720 --> 0:06:52.200 you're going to get a steeper yield curve. The level 0:06:52.240 --> 0:06:54.440 of short term interest rates is going to be lower 0:06:54.600 --> 0:06:56.800 relative to the level of long term interest rates. If 0:06:56.839 --> 0:06:59.159 you have a more dubbish FED, then you should be 0:06:59.200 --> 0:07:02.880 more concerned about medium term risks to inflation, about upside 0:07:02.960 --> 0:07:04.800 risks to growth in the longer run, and that's where 0:07:04.800 --> 0:07:05.880 you're going to have longer. 0:07:05.680 --> 0:07:07.040 Higher yields further out the curve. 0:07:07.240 --> 0:07:09.160 I think what happened here, though, was we were coming 0:07:09.160 --> 0:07:11.880 into that FOMC meeting. The data looked pretty bad, right, 0:07:11.920 --> 0:07:14.080 We had that jobs report that look pretty scary, the 0:07:14.120 --> 0:07:17.280 unemployment rate accelerating, and so the FED cut fifty basis points, 0:07:17.280 --> 0:07:19.000 and I think they were thinking maybe they should have 0:07:19.000 --> 0:07:20.960 cut twenty five basis points at the previous meetings to 0:07:21.040 --> 0:07:23.680 kind of roll those together, and you cut fifty the movie. 0:07:23.720 --> 0:07:24.760 We've had higher in yields. 0:07:24.880 --> 0:07:26.520 I would really go back to what Lisa is saying, 0:07:26.680 --> 0:07:30.120 we've had these consistent upside surprises in the data, and 0:07:30.200 --> 0:07:32.880 yields just track that higher. On the election, I think 0:07:32.920 --> 0:07:35.040 also playing into that move higher that you have in yields. 0:07:35.040 --> 0:07:37.680 But the longer discussion around that, I think is where 0:07:37.720 --> 0:07:39.000 is monetary policy going. 0:07:38.880 --> 0:07:40.560 To be relative to fiscal policy. 0:07:40.760 --> 0:07:43.880 We still have large deficits and that is going to 0:07:43.920 --> 0:07:44.640 be in the longer term. 0:07:44.720 --> 0:07:45.440 Yields are higher. 0:07:45.560 --> 0:07:47.640 So my opinion on this doesn't matter, But I have 0:07:47.680 --> 0:07:50.160 to respect the price section of the last twenty four hours. 0:07:50.520 --> 0:07:52.440 They aren't going to be service workers in the matter 0:07:52.480 --> 0:07:54.320 that don't have to pay taxes on tips anymore. 0:07:54.400 --> 0:07:56.400 We're a few house seats away from this reality. 0:07:56.840 --> 0:07:58.880 We're going to have corporate tax rates coming down from 0:07:58.920 --> 0:08:01.480 twenty one to fifteen conditions. I know these are big 0:08:01.560 --> 0:08:05.800 changes for the US economy, which should stimulate demand. You're 0:08:05.800 --> 0:08:08.520 already seeing that kind of confidence level being baked into 0:08:08.520 --> 0:08:13.680 bank stocks. That's the market screaming, and later on this afternoon. 0:08:13.720 --> 0:08:15.679 We can have a Federal Reserve with an easing bias 0:08:15.720 --> 0:08:17.400 talking about an economy and the way that you do. 0:08:18.040 --> 0:08:18.920 I just feel like we're on. 0:08:18.920 --> 0:08:21.560 Two completely different planets right now. Financial markets are going 0:08:21.560 --> 0:08:23.440 to be right over here, and SHAREM and pound is 0:08:23.440 --> 0:08:25.760 going to be right over there for how long when 0:08:25.760 --> 0:08:28.760 they put out projections for December? How much weight is 0:08:28.760 --> 0:08:31.000 a market participant? Can I put on their dob plot? 0:08:31.320 --> 0:08:32.480 He's going to be doing a news. 0:08:32.280 --> 0:08:35.160 Conference today based on a dot plot from September eighteenth, 0:08:35.280 --> 0:08:38.760 Andrew this Federal Reserve news conference today is absolutely ridiculous, 0:08:39.120 --> 0:08:42.120 And I just wonder how different the conversation is behind 0:08:42.160 --> 0:08:42.840 closed doors. 0:08:43.280 --> 0:08:45.040 Can we at least acknowledge. 0:08:44.559 --> 0:08:47.079 That that the conversation we hear in the news conference 0:08:47.080 --> 0:08:50.440 today is going to be radically different to the conversation 0:08:50.559 --> 0:08:53.080 behind closed doors. These guys have got to consider now 0:08:53.559 --> 0:08:57.920 a very, very very real different scenario for twenty twenty 0:08:57.920 --> 0:08:59.360 five than they had to a few months ago. 0:08:59.640 --> 0:09:00.559 I think that's guaranteed. 0:09:00.640 --> 0:09:02.720 I think that there will be a very interesting discussion 0:09:02.760 --> 0:09:05.240 that's going on at this FOMC meeting, and we'll see 0:09:05.240 --> 0:09:07.559 that in a number of years. In the transcript, we're 0:09:07.559 --> 0:09:09.480 going to hear today in the press conference is going 0:09:09.520 --> 0:09:11.800 to be as little guidance as possible, right, because they 0:09:11.800 --> 0:09:15.200 don't know, and really we don't know in general, because 0:09:15.400 --> 0:09:18.400 we didn't have a very robust policy discussion going into 0:09:18.400 --> 0:09:20.880 this election. Right, we talked a lot about politics, not 0:09:20.960 --> 0:09:21.640 a lot about. 0:09:21.800 --> 0:09:24.000 You know that they're in the risk management business. So 0:09:24.040 --> 0:09:26.040 if I'm in the risk management business, and I face 0:09:26.080 --> 0:09:29.199 two very different scenarios in twenty twenty five, which is 0:09:29.320 --> 0:09:32.720 the polar opposite of each other. Your world recession and 0:09:32.760 --> 0:09:37.080 higher unemployment and Donald Trump's objectives low unemployment and a 0:09:37.120 --> 0:09:39.680 domestic boom. If you're the risk management business, why are 0:09:39.720 --> 0:09:40.920 you coming fifty in December? 0:09:41.080 --> 0:09:44.240 I come back to inflation, right, because that's the other mandate. 0:09:44.280 --> 0:09:46.520 That's the other thing that I worry about. Is this 0:09:46.800 --> 0:09:50.640 potential stronger growth outcome in the economy going to drive inflation. 0:09:51.080 --> 0:09:53.120 Everything we're seeing is going in the opposite direction. 0:09:53.360 --> 0:09:53.600 Right. 0:09:53.960 --> 0:09:56.920 We have demand that is running below supply. Now, we 0:09:57.000 --> 0:09:59.719 have goods inflation that's come down. We have housing and 0:09:59.720 --> 0:10:01.920 inflat again. We're talking about mortgage rates that are back 0:10:02.000 --> 0:10:04.400 up towards their highs. We have the housing sector that's 0:10:04.440 --> 0:10:06.480 in contraction, So that's why the FED is in a 0:10:06.600 --> 0:10:08.640 very different position than the market here, because the Fed 0:10:08.720 --> 0:10:11.559 is looking at this and saying inflation looks under control. 0:10:11.840 --> 0:10:13.439 That's what they're saying behind closed sorts. They're not going 0:10:13.440 --> 0:10:14.880 to say that to it in the press conference. Inflation 0:10:14.920 --> 0:10:18.640 looks under control. And I have this risk downside risk 0:10:18.720 --> 0:10:22.000 of the employment man did Now, if I'm wrong and 0:10:22.040 --> 0:10:25.120 we get stronger job growth and stronger GDP group, that's great. 0:10:25.679 --> 0:10:27.440 But I'm not going to be wrong at cutting rates now. 0:10:27.440 --> 0:10:28.520 That's why they're going to cut today. 0:10:28.600 --> 0:10:30.400 It's going to be a very interesting few months ahead 0:10:30.400 --> 0:10:32.040 of us. Andrew, appreciate your time. So I was going 0:10:32.080 --> 0:10:34.360 to see it, buddy. Thank you, sir, Andrew Hanholst f 0:10:34.400 --> 0:10:47.280 citys Tonal. Trump pledging to boost the US economy when 0:10:47.280 --> 0:10:51.160 he returns to the presidency and deliver sweeping new tariff policies. 0:10:51.360 --> 0:10:53.960 Heidi Kruber Reddika of the Council and Form Relations saying 0:10:54.200 --> 0:10:57.760 Trump is clear, promise is made, promises kept his top 0:10:57.800 --> 0:10:59.800 two promises on tarifs and deportations. 0:10:59.840 --> 0:11:03.360 He can move on unilaterally. Believe what he says. Heid. 0:11:03.400 --> 0:11:05.720 He joined this now for more heardy, welcome to the program. 0:11:05.800 --> 0:11:07.679 I just want to reflect on twenty sixteen, just for 0:11:07.720 --> 0:11:10.160 a moment. In twenty sixteen, when he came into Pawer 0:11:10.280 --> 0:11:13.080 the year afterwards, the focus was on taxes. It took 0:11:13.080 --> 0:11:16.000 a couple of years to really start to shift towards tariffs. 0:11:16.120 --> 0:11:18.360 How quickly do you think you'll start with tariffs this 0:11:18.480 --> 0:11:19.080 time around? 0:11:19.160 --> 0:11:20.840 And why so? 0:11:20.960 --> 0:11:24.040 I think you know it's all going to be about tariffs, 0:11:24.120 --> 0:11:27.760 tariffs and more tariffs here because he can move very quickly. 0:11:28.200 --> 0:11:32.000 I'm thinking like day one, week one quickly, and the 0:11:32.040 --> 0:11:34.520 taxes are going to be in negotiation with Congress, so 0:11:34.960 --> 0:11:39.520 he doesn't have the unilateral authority to actually move on taxes. 0:11:39.600 --> 0:11:44.400 So be prepared for big time tariffs that he promised, 0:11:44.920 --> 0:11:47.520 you know, ten to twenty percent across the board and 0:11:48.480 --> 0:11:51.679 sixty percent on China, and that's that's those are big numbers. 0:11:51.720 --> 0:11:56.640 So other countries are preparing to retaliate, and that will 0:11:56.720 --> 0:12:01.080 hit our exports. You will have supply chain disruptions. And 0:12:01.120 --> 0:12:02.800 so I think one of the debates right now is 0:12:03.280 --> 0:12:05.640 just how much of a shock we're looking at is 0:12:05.679 --> 0:12:08.880 a one time shock on the three plus three plus 0:12:08.920 --> 0:12:12.520 trillion that we have that we import, and how do 0:12:12.520 --> 0:12:17.000 we calculate in factor in retaliation. Right now, Trump is 0:12:17.520 --> 0:12:21.040 actually not going to have his agencies staff to actually 0:12:21.360 --> 0:12:25.040 look at how you remedy or negotiate out of these 0:12:25.800 --> 0:12:29.160 the unilateral across the board, we trade with about two hundred, 0:12:29.360 --> 0:12:33.080 you know, two hundred countries and territories. So this is 0:12:33.559 --> 0:12:35.280 this is be long, and it's going to be messy, 0:12:35.480 --> 0:12:37.840 and it's going to be inflationary. It's going to be 0:12:37.840 --> 0:12:40.480 targeted at China, but Mexico is going to take the 0:12:40.520 --> 0:12:44.040 BNT of it, EU big trading partners. It's where you 0:12:44.080 --> 0:12:48.360 saw a lot of the FX movement in Japan UH 0:12:48.679 --> 0:12:52.840 yesterday and UH and in the in the Yuan so 0:12:53.000 --> 0:12:55.000 and the PASA. So I think you're going to have 0:12:55.080 --> 0:12:57.679 a lot that's going to come and hit that first 0:12:57.679 --> 0:12:59.319 week that he's in office, because he knows what he 0:12:59.360 --> 0:12:59.839 wants to do. 0:13:00.120 --> 0:13:02.920 Did you already think we're seeing the fallout of Trump's 0:13:02.920 --> 0:13:05.560 promises in the sense that basically we'll have the collapse 0:13:05.600 --> 0:13:06.439 of German government? 0:13:08.880 --> 0:13:12.000 So I think that we I mean, Germany has its 0:13:12.040 --> 0:13:15.199 own dynamics. So it's a very good it's a very 0:13:15.200 --> 0:13:17.880 good question. But I think you know what what I 0:13:18.040 --> 0:13:21.920 what I would focus on more is what the direct 0:13:22.840 --> 0:13:25.880 impact will be on the on the US economy. You 0:13:25.960 --> 0:13:30.080 have a lot of reshuffling in various countries trying to 0:13:30.080 --> 0:13:32.320 figure out, you know, how they're going to manage uh, 0:13:32.720 --> 0:13:36.960 this transition to a Trump presidency in terms of UH. 0:13:37.120 --> 0:13:40.760 You know, I think you talk about the changes happening 0:13:40.800 --> 0:13:44.000 in Germany, Well, the whole dynamic with Europe is about 0:13:44.000 --> 0:13:45.360 to change in a very big way. 0:13:46.000 --> 0:13:47.080 You are going to have. 0:13:48.800 --> 0:13:52.480 On the back of a very different policy towards Russia 0:13:52.600 --> 0:13:56.480 and Ukraine and and dealing with NATO. You're going to 0:13:56.520 --> 0:14:00.120 have a lot of deep conversations about what Europe and 0:14:00.200 --> 0:14:00.840 security is. 0:14:00.840 --> 0:14:02.240 Going to look like moving forward. 0:14:02.679 --> 0:14:04.760 Heidi, you think that Trump's going to come in and 0:14:04.760 --> 0:14:08.800 put his promises directly in focus. You have some individuals 0:14:08.800 --> 0:14:10.400 that are close to FOREGM presidents that say this is 0:14:10.440 --> 0:14:13.640 a negotiating tool. If he was to put sixty percent 0:14:13.760 --> 0:14:16.720 tariffs on Chinese imports, we could see a meltdown in 0:14:16.800 --> 0:14:19.600 financial markets. And what we learned from Trump from Trump 0:14:19.720 --> 0:14:23.120 one point zero is that he keeps an eye on 0:14:23.120 --> 0:14:26.920 what stocks are doing. Is that going to be basically 0:14:26.920 --> 0:14:30.960 a regulating force on Trump and his administration, So. 0:14:30.920 --> 0:14:35.320 He does focus very much on the stock market. I think, 0:14:36.360 --> 0:14:39.680 you know, at some point he will have to focus on. 0:14:41.320 --> 0:14:42.080 What's happening in. 0:14:42.080 --> 0:14:45.720 Rates as well, because this is going to, you know, 0:14:45.800 --> 0:14:50.760 significantly complicate you know, we have FMC later today, and 0:14:50.800 --> 0:14:54.400 it complicates the Fed's job next year because you will 0:14:54.400 --> 0:14:58.440 have this combination of inflation growth and tax cuts on 0:14:58.520 --> 0:15:01.400 the table, so you're going to have a slower pace 0:15:01.440 --> 0:15:06.840 of easing. I can see some very difficult public conversations 0:15:07.160 --> 0:15:10.080 between j Powell and Trump that we didn't there's a 0:15:10.160 --> 0:15:13.280 lack of them last time. But I think he's also 0:15:13.400 --> 0:15:15.160 Trump has also made it clear he wants a lot 0:15:15.200 --> 0:15:16.840 more influence on the FED. 0:15:17.240 --> 0:15:18.760 But there are a lot of spillovers. 0:15:18.800 --> 0:15:22.440 So if you're talking about fewer you know, lesser easing 0:15:22.760 --> 0:15:25.520 or a real potential of of rate hikes, which I 0:15:25.600 --> 0:15:30.840 think is plausible. The spillovers are to hire mortgage costs 0:15:30.840 --> 0:15:34.080 and corporate borrowing and huge spillovers. Not that I'm not 0:15:34.120 --> 0:15:36.600 sure Trump would care about emerging markets, but from from 0:15:36.640 --> 0:15:38.920 market perspective, emerging. 0:15:38.520 --> 0:15:40.240 Markets will take the hit as well. 0:15:40.320 --> 0:15:43.160 So you have a whole new, a whole new. 0:15:45.360 --> 0:15:49.400 Risk set of risks on the table for for next year. 0:15:49.880 --> 0:15:52.360 Heidi, you went through a lot there, and I want 0:15:52.400 --> 0:15:55.600 to pick out one aspect of it, the stock market performance, 0:15:55.600 --> 0:15:58.480 particularly of financials. There is this expectation that they'll be 0:15:58.640 --> 0:16:00.800 a mass wave of do you regulate that will really 0:16:00.840 --> 0:16:02.120 help the banking stocks. 0:16:02.400 --> 0:16:04.200 You actually orchestrated. 0:16:04.200 --> 0:16:09.080 Bank regulation, bank legislation heading into twenty eleven, and I'm 0:16:09.160 --> 0:16:13.320 just wondering how difficult will it be for Donald Trump's 0:16:13.360 --> 0:16:16.120 unilaterally deregulate the banking sector. 0:16:17.960 --> 0:16:23.280 So I think anything that involves, you know, anything that 0:16:23.360 --> 0:16:27.920 involves any other parties and negotiating with any other parties 0:16:28.520 --> 0:16:33.200 is challenging. So deregulation on a whole host of issues 0:16:33.240 --> 0:16:39.160 banking or anything having to do with wanting to cut 0:16:39.200 --> 0:16:41.200 red tape in all of the and all of the 0:16:41.240 --> 0:16:45.960 permitting that he's that he's looking to do it, It's 0:16:46.000 --> 0:16:48.840 more complicated than I think anybody knows when they're going 0:16:48.880 --> 0:16:52.800 into government. So I do think that it is going 0:16:53.320 --> 0:16:56.600 going to continue to be I mean, deregulation is going 0:16:56.640 --> 0:17:01.640 to be positive for certain industries and you know that 0:17:01.800 --> 0:17:04.680 is I think that is going to continue to be, 0:17:04.840 --> 0:17:09.520 you know, a longer term play in terms of what 0:17:09.600 --> 0:17:13.960 to watch for the Again, I'm going to go back 0:17:13.960 --> 0:17:17.919 to where I started. The real the real risk that 0:17:17.960 --> 0:17:20.760 I see near term is the impact on that that 0:17:20.880 --> 0:17:22.160 is tariff policy will have. 0:17:22.359 --> 0:17:25.000 So it seems like just in terms of sequencing tariff's first, 0:17:25.080 --> 0:17:27.320 the deregulation will take a lot longer, and that'll be 0:17:27.320 --> 0:17:30.520 a more protracted type of implementation. You said something else, 0:17:30.560 --> 0:17:32.680 and I thought it was really interesting that you don't 0:17:32.720 --> 0:17:35.919 see some of these offices that are going to be 0:17:36.040 --> 0:17:41.080 negotiating with different countries and different agencies fully staffed. Why 0:17:41.160 --> 0:17:43.720 do you think so? 0:17:43.720 --> 0:17:46.080 So, I mean, it takes a lot of time to 0:17:46.080 --> 0:17:48.840 get the right people in place and up to speed 0:17:49.040 --> 0:17:50.600 on the agenda. 0:17:50.640 --> 0:17:52.280 Whether you have, you know, no. 0:17:52.160 --> 0:17:57.040 Matter how talented your people are or how prepared your 0:17:57.040 --> 0:17:59.840 transition is you can have, it still takes a long 0:17:59.840 --> 0:18:01.840 time time to get up to speed and actually meet 0:18:01.880 --> 0:18:02.800 your counterparts. 0:18:03.680 --> 0:18:05.800 So we do have and I think. 0:18:05.720 --> 0:18:09.760 That you know, there are there are certain countries where 0:18:09.800 --> 0:18:12.840 I think Trump himself will want to have the direct 0:18:13.640 --> 0:18:18.040 bilateral negotiation, but there are only so many countries that 0:18:18.080 --> 0:18:19.920 he can that he can do that with, and they're 0:18:19.960 --> 0:18:22.520