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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 3: BMP.
Speaker 2: Parabart, a trading unit taking a third quarter hit from
Speaker 2: sering dead. Adding to recent concerns about private credit, Depak
Speaker 2: Puri of Deutsche Bank Private Bank joins us now for more.
Speaker 1: Deepak, Good morning, sir Morny.
Speaker 2: Look, I think David Solomon did a decent job of
Speaker 2: joining a very very big line between systemic risk and
Speaker 2: credit concerns. They're still concerns I think about a turn
Speaker 2: in the credit cycle. Do you share them? Maybe epithodically?
Speaker 4: Right, So seen one of these, you know, inducing credit
Speaker 4: risk every now and then come out for me, Jonathan.
Speaker 4: The biggest risk is this year we've seen two really
Speaker 4: big supply sharks, and we still don't know the full
Speaker 4: term ramifications.
Speaker 1: I'm talking about tariffs and labor supply.
Speaker 4: So once you have those two, you know, I think
Speaker 4: twenty twenty six might be a better test case for
Speaker 4: these kind of supply sharks and their unintended consequences. As
Speaker 4: for now, I think, you know, episodic news with regards
Speaker 4: to credit, I'll take it really episodically.
Speaker 2: Well, at least one of them might be lulling this
Speaker 2: federal reserve into early interest rate reductions. The feed seems
Speaker 2: confused at the moment. We know we've seen it in
Speaker 2: the data, massive step down and pay ross growth. Got that?
Speaker 2: What's behind it? Demand or supply? Which one is it?
Speaker 4: I think labor market is one of those conditions where
Speaker 4: demand adjust to supply in a way. So if the
Speaker 4: supply of you know, workers is reducing, I think demand
Speaker 4: is going to start adjusting to it. And what we're
Speaker 4: seeing is this automation drive from companies that is hurting,
Speaker 4: you know.
Speaker 1: The oral supply. What is also a little bit disturbing
Speaker 1: is the.
Speaker 4: Government shutdown, because I think it sort of exacerbates the
Speaker 4: labor market.
Speaker 2: Can typically depack as you know, and Amory Slaffa, because
Speaker 2: typically we look right through this. It doesn't matter. It's
Speaker 2: a bump in the road, growth comes back. Basically, it's
Speaker 2: growth delayed and not derailed. Sure, the longer it goes on,
Speaker 2: you start to change your thoughts on that.
Speaker 4: I think, yes, primarily because it's after a while it
Speaker 4: becomes exponential in terms of the output activity. So the
Speaker 4: first few weeks, i mean, the consensus is ten basis
Speaker 4: points of economic output gets reduced. But after a certain point,
Speaker 4: let's say this ends up being mid November, you're going
Speaker 4: to start seeing more concerns with regards to the you know,
Speaker 4: the impact it's having on broader economy, and then obviously
Speaker 4: they'll have an impact on the labor market.
Speaker 1: So I would not be completely you.
Speaker 4: Know, negating the fact that, yes, over the years, whenever
Speaker 4: we have a government shutdown, it tends to be you know,
Speaker 4: short lived and painless.
Speaker 1: This time it might be different.
Speaker 5: I'm only laughing because you say the word disturbing, which
Speaker 5: I also find disturbing. The market is creating fresh all
Speaker 5: time high. It's clearly ignoring it. Besides the impacting on
Speaker 5: the economy, how long could this federal reserver investors go
Speaker 5: without economic data.
Speaker 4: Well, they have shown tremendous resilience students to drive their
Speaker 4: policy without much but because they're using anecdotal evidence as
Speaker 4: to get a grasp on where the economy is. And
Speaker 4: I think even there is a gunment shutdown crisis, let's say,
Speaker 4: quote unquote, there's so many other positives that are happening
Speaker 4: in the markets, Henry that I think takes too much
Speaker 4: precedence over gument shutdown. I think the fact that you
Speaker 4: are looking at an AI hyperscale capex spending guidance, which
Speaker 4: might come again a lot better than expected. You have
Speaker 4: a little bit of a framework between the US and
Speaker 4: the Chinese with regards to the trade and tariff. That
Speaker 4: could be potentially a game breaker because within that trade
Speaker 4: and tariff, one of the uncertainties has been the Chinese one,
Speaker 4: you know, because that's really where the bone of contention
Speaker 4: has been. And then, last, but not the least, the Fed.
Speaker 4: There is this expectation maybe the end of QT. You
Speaker 4: look at the SOFA, you know, twenty basis points over
Speaker 4: the FED funds overnight rate, you can argue that there
Speaker 4: is some liquidity tightness where the Fed would be, you know,
Speaker 4: want to.
Speaker 1: Ease some of that.
Speaker 4: So all these three things I think are taking much
Speaker 4: greater presidents over the government shutdown.
Speaker 5: But these three things, it sounds like we have a
Speaker 5: tremendous amount of certainty on the trade story, seems more optimistic.
Speaker 5: With China, we know the Fed is going to cut
Speaker 5: ninety eight percent chance if it's going to be cutting
Speaker 5: interest rates, So what gives the market potentially, well, where
Speaker 5: do you see the market potentially having a little bit
Speaker 5: more of a cautious tone in regards to.
Speaker 4: What Yeah, I think from now to the year end,
Speaker 4: once these three things are not disappointed, right, there's no
Speaker 4: disappointment with these three things. I think the seasonality will
Speaker 4: take over. So from now of the year end, I
Speaker 4: would not be surprised if you see a little bit
Speaker 4: more of this risk taking and then you know investors
Speaker 4: chasing a very high rally market, which is usually the case.
Speaker 4: I think the biggest concern for me is really what
Speaker 4: transpires in the first half of twenty twenty six, where
Speaker 4: you are going to be going through a cyclical sort
Speaker 4: of softness in the markets. And now we'll get to
Speaker 4: know what is the worst outcome with regards to the
Speaker 4: labor markets.
Speaker 1: Because we didn't have the.
Speaker 4: Data for the last two three months in totality, so
Speaker 4: what could potentially happen? And I think if this labor
Speaker 4: market statistics are similar to what we have seen in
Speaker 4: the privacy previous years, where June July was the weakness
Speaker 4: and then it started getting better, then it will be okay. However,
Speaker 4: there is a likelihood that it might not be the
Speaker 4: case that way, And in that particular instance, I think
Speaker 4: the markets are neat to recalibrate to a much starker
Speaker 4: economic reality that the economy is slowing more than expected.
Speaker 2: But what do you think the source of that slowdown
Speaker 2: or that selfness as you'd call it for the first time,
Speaker 2: actually is And to what extent will it be offset
Speaker 2: by the massive tax refunds that I keep hearing about
Speaker 2: that are going to kick in in early next year, right.
Speaker 1: I mean it depends.
Speaker 4: I mean we are thinking it's going to be with
Speaker 4: a zero point six to zero point you know, one percent?
Speaker 4: You know right now you look at GDP now then
Speaker 4: now cast from New York FED everything is showing with
Speaker 4: a three handle.
Speaker 1: So it's much better.
Speaker 4: But these things can change quite quickly, so I would
Speaker 4: not be surprised if you start seeing a below potential
Speaker 4: GDP number for the first half of the year, and
Speaker 4: on top of that, you know, there might be some
Speaker 4: concerns about these credit conditions, these credit stresses that are developing,
Speaker 4: becoming a little bit more broader, default rates going up.
Speaker 4: So I think primarily that's one area of concern. And
Speaker 4: then last, but not the least, I would not be
Speaker 4: you know, the lagged and varying effect of the tariff.
Speaker 4: I think the fact that we are having these bilateral
Speaker 4: you know, MOUs does not necessarily mean that the lagged
Speaker 4: effect of for the tariff rate, which is five times
Speaker 4: what you know the world is used to, is not
Speaker 4: going to have an impact.
Speaker 2: Final question from me, in the forty seconds, we've got
Speaker 2: less greater potential for higher stocks or lower bond yards
Speaker 2: in the first half of next year.
Speaker 1: How about neither?
Speaker 4: I think you said, because last time I came in,
Speaker 4: I said, you don't want to be overly bearish, and
Speaker 4: the question was that the markets can go up and
Speaker 4: bonds could rally, and that was in early September. I
Speaker 4: would not be surprised if you see a little bit
Speaker 4: of a bond weakness going up.
Speaker 1: You know, so the yields going well.
Speaker 4: And stock markets having a little bit of a recalibration
Speaker 4: come twenty early parts of twenty twenty.
Speaker 1: Six stay with US multile IMPERC surveillance coming up.
Speaker 2: After this, stock sent kaya as investors gear up for
Speaker 2: a crucial week of earnings. Ustin quanav whilst Fargo racing
Speaker 2: his year und price target on the S and P
Speaker 2: from sixty six fifty to seventy one hundred and writing
Speaker 2: the following with a big code this morning calling for
Speaker 2: an everything rally into year end. Coal is the bylow
Speaker 2: quality junk, high beta and small and mid AI capex
Speaker 2: beneficiaries a full risk on trade some joints is now
Speaker 2: for more US and good morning, good morning. I mean
Speaker 2: that's quite a cool So let's get into it. What's
Speaker 2: the source of that's changed for you?
Speaker 6: Yeah, So we see about five potential care lists in
Speaker 6: two year end.
Speaker 3: We're bullish. So those five are seasonality.
Speaker 6: Obviously, November December has been the best two months for
Speaker 6: the SMP, but not just for the SMP, but especially
Speaker 6: for the laggers.
Speaker 3: After texts harvesting in oppo war.
Speaker 6: We typically see laggers rallying in November through January.
Speaker 3: Number two AI cappecks.
Speaker 6: I think we're going to see another upper surprise in
Speaker 6: AI cappacks when Hyperscalars report this week. Number three potential
Speaker 6: Terriffy fund so IBA hearing is going to be next week.
Speaker 6: The ruling is probably going to be in January, and
Speaker 6: there's about sixty percent chance according to betting markets, that
Speaker 6: it gets repealed. And if that happens, we're talking about
Speaker 6: one hundred and sixty billion dollars of terraces collected being
Speaker 6: distributed to the economy, which is going to be a
Speaker 6: huge reflationary. Number four, the OBBB tax return. We estimate
Speaker 6: about eight hundred dollars incremental tax return per filer. This
Speaker 6: upcoming textra thurn season which is going to be ballished
Speaker 6: for the consumer as well. And lastly, potential government reopening
Speaker 6: that's going to be bullished as well.
Speaker 2: Okay, so let's break down some of this. I'm going
Speaker 2: to let Amrie handle everything to do with Washington d C.
Speaker 2: I want to ask you about tech spending, So the
Speaker 2: Capex story and what we're going to hear from the
Speaker 2: major tech plans on Wednesday and Thursday.
Speaker 1: They're spending lots.
Speaker 2: Do they need to report some really robust revenue growth
Speaker 2: alongside that for investors to continue tolerating this.
Speaker 6: I think for Hyperscalers as a group, we're not that
Speaker 6: bolish because they are the capex spenders. They're free cash
Speaker 6: flowers coming down there. Historically, you want to avoid companies
Speaker 6: that are invest that are in an investment cycle, which
Speaker 6: is basically Hyperscalers today. The areas there were more bolish
Speaker 6: is really thex takers, especially the smaller cap companies that
Speaker 6: are really starting to benefit from this Hyperscaler's capex increasing.
Speaker 6: The major players right now, even the capex takers, they're
Speaker 6: at full capacity. There are a lot of crumbles that
Speaker 6: are falling off the table, and those crumbles are huge
Speaker 6: for those smaller guys.
Speaker 3: So that's really the group that we like.
Speaker 6: We have a basket of about twenty five smaller cap
Speaker 6: AI capex manificiaries that we like.
Speaker 5: Let's go to tariffs because I think theepest story is
Speaker 5: underappreciated right now in the market and the fact that
Speaker 5: you can have morth of ninety billion dollars having to
Speaker 5: be repaid back.
Speaker 3: To these businesses.
Speaker 5: But the Trump administration basically has other ways to get
Speaker 5: around tariff. So doesn't that get rid of that reimbursement
Speaker 5: because companies are going to have to pay it, just
Speaker 5: it's going to have a different title to it.
Speaker 3: Yeah.
Speaker 6: Well, I think into that event, potential event, that binary event,
Speaker 6: we're going to see some reflation industry because investors will
Speaker 6: want to position for that potential repeal of tariffs. I
Speaker 6: think the New York is obviously be varya bullies for equities,
Speaker 6: rates probably higher and goal higher on physical concerns. But
Speaker 6: in the medium to longer term this could potentially create
Speaker 6: more uncertainty.
Speaker 5: Then there's a shutdown. If the market is struggling off,
Speaker 5: now why would they carryhen it reopens.
Speaker 6: Yeah, I mean government shutdowns historically have been non events basically,
Speaker 6: but coming out of shutdowns we typically see the SMP
Speaker 6: valuing even harder. No news actually has been good news
Speaker 6: for the market because there's no data coming out and
Speaker 6: there's no negative catalysts for the market.
Speaker 3: Even if the.
Speaker 6: Government reopens, there's probably going to be about at least
Speaker 6: two week period where we still don't see much data.
Speaker 6: It's more going to be what computer is saying and
Speaker 6: how the third party data is suggesting. So I think
Speaker 6: that's still a pretty bullish setup for equities.
Speaker 1: Low quality and junk. What is low quality and junk?
Speaker 6: Yeah, so unprofitable tech, so more speculative stocks, some laggers
Speaker 6: that have underperformed, that are really struggling. So we're essentially
Speaker 6: pitching a catchup trade into year end because I think
Speaker 6: it's going to be full risk one into year end.
Speaker 2: You need the FEDER receive to come along for the
Speaker 2: ride and keep signaling more account Yeah, I mean, I think.
Speaker 6: FAT is basically a done deal. They're probably gonna go
Speaker 6: on Wednesday. And if that's the case, I think FAT
Speaker 6: is probably we are in a real easing cycle.
Speaker 3: So the FAED is done.
Speaker 6: It's more fundamentals now, and you know, some of the
Speaker 6: risks that we are seeing that have been proven to
Speaker 6: be less of a risk than what we had expected initially.
Speaker 5: This picture you're painting, I feel like, is the meme
Speaker 5: stock frenzy we saw? Are you expecting almost something like that?
Speaker 6: We could see a little bit of that too, you know,
Speaker 6: we until last week we were seeing some of that
Speaker 6: happening in some of the meme stocks and the retail
Speaker 6: driven names. I think last week was a little weird
Speaker 6: that the setup itself was pretty unfavorable because last week,
Speaker 6: if you think about all the earnings that came out,
Speaker 6: it was mostly regionals and industrials, which were obviously facing
Speaker 6: more headwinds. There was no AI earnings, and we had
Speaker 6: the CPI overhang on Friday, So I think that set up.
Speaker 6: The calendar setup itself was a little shaky. CPI was
Speaker 6: obviously very positive and into this weege where we when
Speaker 6: we were going to hear from all the AI companies,
Speaker 6: We have the FED.
Speaker 3: We also have US China on Friday, So I.
Speaker 6: Think the setup is pretty favorable for us of the
Speaker 6: lower quality stocks.
Speaker 5: If you have seventy one hundred for this year, what
Speaker 5: does that mean for your seventy two hundred target next year?
Speaker 6: Yeah, we're thinking about that. We're going to revisit our
Speaker 6: twenty twenty six numbers.
Speaker 3: I still see sounds like a world spire. Yeah, I
Speaker 3: still seeing more offside to that number.
Speaker 2: We had a guest on the program that said maybe
Speaker 2: we could see a self patch in their staff of
Speaker 2: twenty six.
Speaker 3: You must have had it.
Speaker 2: Maybe I'm right before you. What gives you hope that
Speaker 2: this can continue through twenty six? I'm not going to
Speaker 2: pin you down for a new price target. We'll wait
Speaker 2: for the annual outload. But what gives you hope that's
Speaker 2: the case?
Speaker 3: Yeah, I mean it's really going to be driven by earnings.
Speaker 3: We still see a pretty healthy backdropt for earnings.
Speaker 6: We're forecasting eleven percent growth for twenty six followed by
Speaker 6: another twelve percent in twenty twenty seven. So if that's
Speaker 6: the case, even in multiple staateses thing we're talking about,
Speaker 6: you know, little teens return inequity.
Speaker 2: I'm not going to question the nix because every time
Speaker 2: I do that Wednesday Thursday hits in earning season, the
Speaker 2: tank plans come out and they knock out the park.
Speaker 2: So I won't question the NIX. I do wonder how
Speaker 2: you think about the rest of the world. The international
Speaker 2: stock story had its moment in the sun the first
Speaker 2: quarter of the year. Everything kind of ripped and things
Speaker 2: have settled down. Since where aren't you in the US
Speaker 2: versus the rest of the world.
Speaker 6: Yeah, I think ye still looks more favorable in terms
Speaker 6: of the AI story.
Speaker 3: I mean the rest of the world.
Speaker 6: We could potentially see a catchup trade there too, if
Speaker 6: we start to see the manufacturing cycle really turn. But
Speaker 6: the areas that we are more bullish are really around?
Speaker 2: AI is the one thing that makes you nervous given
Speaker 2: how bully she said, I mean, we've been through all
Speaker 2: the bill case. Is the one thing that just sort
Speaker 2: of nickels at you a little bit?
Speaker 6: Yeah, I mean I think Hyperscalers probably because their free
Speaker 6: cashwow is coming down and they are the biggest companies
Speaker 6: in the SMB five hundreds. So if you start to
Speaker 6: see more of a rotation type of true redlant broadening
Speaker 6: out with everything rallying, then that's not going to be
Speaker 6: good for the SMP at the index level.
Speaker 2: Stay with us more Bloomberg surveillance coming up after this.
Speaker 2: Katie Kaminski of Oupha Simplex Group writing the rally inequities
Speaker 2: has been relatively broad based, with big tech slightly outperforming.
Speaker 2: Katie joins us now for more Katie, Welcome to the program.
Speaker 2: Jan Caffrey of JP Morgan kicked off the program with
Speaker 2: us and said, you don't want to find this ball market?
Speaker 1: Do you agree?
Speaker 7: I have to agree, And actually you have to start
Speaker 7: asking yourself the question, what are the things that could.
Speaker 1: Be a sort of a stop for this big.
Speaker 7: Rally that we've seen, And there isn't anything that's obvious.
Speaker 7: I think I am watching though what FED commentary will
Speaker 7: be this week, just given the fact that we don't
Speaker 7: have data for future meetings. So I think that is
Speaker 7: one potential curve ball. But in general, earnings are good,
Speaker 7: growth is good, and the trend has been very strong.
Speaker 1: From a technical perspective.
Speaker 2: Kedy, that's the equity market. The equity market is pricing
Speaker 2: at a rebound in economic growth. I wonder what you
Speaker 2: think the bond market is pricing. Because this rally, particularly
Speaker 2: long end, coming out of the summer of surprise many
Speaker 2: what do you think explains it well?
Speaker 7: I think you know, bonds have really been focused on
Speaker 7: sort of potential rate cuts and seeing more creative inflation
Speaker 7: data is also very positive for bonds, especially on the
Speaker 7: long end. I think an interesting point is we haven't
Speaker 7: seen a steepener. We've seen sort of a pause in
Speaker 7: that particular move in bond movements, which which means basically
Speaker 7: that you're seeing a flatter yield curve. So I think
Speaker 7: bonds are very focused on rate cuts and that has
Speaker 7: been pretty consistent, but trend signals have not been very
Speaker 7: good at timing those moves in bonds, and there haven't
Speaker 7: been sort of very strong themes to follow, except for
Speaker 7: that bonds have been slightly up, so I'd say it's
Speaker 7: still a little tricky to trade bonds.
Speaker 2: This year, Katy has been tricky to track the correlations.
Speaker 2: Everything seems to be rallying and give the same time stalks,
Speaker 2: bonds and predcious metals too, until very very recently, when
Speaker 2: the gold trades down it to one whap. Do you
Speaker 2: see that as an isolated story in its own asset
Speaker 2: class or does it speak to something else happening somewhere.
Speaker 7: Well, I think gold is something we really should watch
Speaker 7: because it's the only thing that's telling us something interesting
Speaker 7: right now. I think you know, you've seen this very
Speaker 7: strong gold theme for the past couple of months, and
Speaker 7: you have to start asking yourself how much of this
Speaker 7: is an over extended rally and you know, deleveraging out
Speaker 7: of sort of what has been a very profitable trade,
Speaker 7: and how much of it is a shift in sentiment
Speaker 7: about concerns because I often see gold as something that
Speaker 7: people use to hedge their concern for things like inflation,
Speaker 7: and you know, the recent moves in gold could give
Speaker 7: you pause that something might be changing that we haven't
Speaker 7: really understood yet, Well.
Speaker 5: What could be changing Is the market just feeling better
Speaker 5: about the geopolitical situation and the trade narrative coming from
Speaker 5: the Trump administration.
Speaker 7: I think that's the case, So maybe it's a change
Speaker 7: in sentiment, but it also could be And this is
Speaker 7: the one kind of wild card question is like, let's
Speaker 7: say that we have a little bit of a pause
Speaker 7: from the FED. That would affect real rates, which also
Speaker 7: affects gold prices. So I think, you know, gold is
Speaker 7: an interesting one. It's the only thing that's kind of
Speaker 7: moving in a different direction right now. So some of
Speaker 7: it could be sentiment drifting more positive. That means everything
Speaker 7: is kind of in the same direction, but you know,
Speaker 7: we'll have to see.
Speaker 1: It is something to pay attention to.
Speaker 5: Okay, there's a lot of catalysts just this in this
Speaker 5: In this week alone, we have tech earnings, the FED meeting,
Speaker 5: and of course the President sitting down with Shijipang.
Speaker 1: What are you most acutely focused on?
Speaker 7: I would say I think the rhetoric around China has
Speaker 7: been very important. I mean, you saw those moves. It
Speaker 7: has the ability to move the market, and it is
Speaker 7: a theme that the market has been concerned and focused
Speaker 7: on I mean, obviously earnings are important, but I think,
Speaker 7: you know, some resolution of some of the volatility we've
Speaker 7: seen around that has been received very positively by the market,
Speaker 7: So I think that's something we're watching. We're also seeing
Speaker 7: in commodities take a look at soybean prices, for example,
Speaker 7: and so you could see, you know, other moves as
Speaker 7: a result of that particular discussion.
Speaker 2: The casey dangerous territory for me to ask this question
Speaker 2: and to wrap up this conversation with it, is there
Speaker 2: a credible bear case going into twenty twenty six and if.
Speaker 3: There is, what is it?
Speaker 7: I think this is a really hard one. And you know,
Speaker 7: I love to be a bear, but you know, you're
Speaker 7: not seeing it in the data right now. And I
Speaker 7: think gold was one of the themes that was a
Speaker 7: little bit of a hedge position, I'd say, so, I'd say,
Speaker 7: right now, there's really very little signals that suggest a
Speaker 7: bear move. I do think the FED potentially pausing due
Speaker 7: to lack of data, could you know, kind of cause
Speaker 7: some stress for the markets.
Speaker 1: Is it a bear case? I'm not sure.
Speaker 7: We'll just have to see, but you're right, there's not
Speaker 7: a lot of bear signals out there.
Speaker 2: Stay with US mult Bloomberg surveillance coming up. After this,
Speaker 2: it's the President prising new Japanese Prime Minister at Takaichi
Speaker 2: and offering her, quote, anything you want to strengthen diplomatic ties,
Speaker 2: the leadst signing trade and critical mineral stales. But the
Speaker 2: details remained vague. Still, this could not.
Speaker 1: Have gone better for Japan.
Speaker 5: I know we're still waiting for some details when it
Speaker 5: comes to some of these specifics on trade and on
Speaker 5: business investment. But you have to thank you are a
Speaker 5: brand new prime minister.
Speaker 1: The President of the United.
Speaker 5: States coming over after dealing with incredibly at times difficult
Speaker 5: rhetoric when it comes to trade. He's saying, I will
Speaker 5: go above and beyond for you, especially when it comes
Speaker 5: to defense. So as Kelly and Shaw was saying she
Speaker 5: just got back from Japan when she was hearing from
Speaker 5: executives and some individuals close to the government a little
Speaker 5: bit of nervousness to the president coming over for Japan,
Speaker 5: this couldn't have gone any better.
Speaker 1: It's a pretty interesting sequence, isn't it.
Speaker 2: SiGe up things with your allies in the region in
Speaker 2: Asia and then move on to South Korea and sit
Speaker 2: down with a Chinese leader. Just how much leverage has
Speaker 2: the president got, how much to what extent is this
Speaker 2: deal already signed down?
Speaker 1: This deal it.
Speaker 5: Sounds like from what Kelly and Shaw was saying, who
Speaker 5: was there at the table during Trump one, is almost done.
Speaker 5: There is a framework. Will that framework be made public?
Speaker 5: This does feel like a work in progress, And as
Speaker 5: Kelly Ann said, it's really about managing this relationship from
Speaker 5: this point on, potentially not this grand bargain that a
Speaker 5: lot of people thought we would maybe get with Beijing
Speaker 5: going into Trump's second term.
Speaker 1: That's the latest on Trient. Let's turn to tag.
Speaker 2: Quollcom shares up slightly after hitting a fifteen month high
Speaker 2: on Monday, the jump following the unveiling of new chips
Speaker 2: and computers for the AI data center market as the
Speaker 2: company tries to challenge in video. That stock is down
Speaker 2: this morning by one point four percent, and finally, GOMT
Speaker 2: SAX CEO David Solomon saying he doesn't see any systemic
Speaker 2: risk looming in the credit market. Solomon describing recent losses
Speaker 2: at regional banks as idiosyncratic events. The servers are remind
Speaker 2: us to stay vigilant about underwriting standards. David Solomon catching
Speaker 2: gut wi Chamana Pissecci over in Riad, Saudi Arabia. We're
Speaker 2: going to hear from Jamana a little bit later this
Speaker 2: morning when she sits down with a JP Morgan executive
Speaker 2: Mary Urdos. Let's turn to the shutdown. Democrats now facing
Speaker 2: pressure from the largest federal workers union to put an
Speaker 2: end to the week's long stalemate in Washington. Joining us
Speaker 2: now as the Republican Congressman French Shill of Arkansas, Congressman,
Speaker 2: Welcome back to the program, sir. We've had a couple
Speaker 2: of guest talk up, maybe this ending at the end
Speaker 2: of November. What are your constituents saying to you, sir.
Speaker 8: Well, John, it's nice to be with you. Well, this
Speaker 8: Schumer shutdown has been a disaster. Well, they try to
Speaker 8: get one point five trillion in new spending, undo all
Speaker 8: the reforms to the Medicaid program, just to name two items.
Speaker 8: We're putting farmers at risk in my state. I met
Speaker 8: with farmers last week. They're desperate for the Congress to
Speaker 8: come back into session work with Secretary Brooke Rawlins on
Speaker 8: a particular effort to have a stopgap measure to help
Speaker 8: them between now and the benefits in the great, big,
Speaker 8: beautiful bill in the next fiscal year to help our
Speaker 8: farm economy, which is in desperate shafe. We have record
Speaker 8: Chapter twelve bankruptcies in Arkansas. I've got four hundred National
Speaker 8: Guardsmen that are on furload and on unemployment this week.
Speaker 3: In my district.
Speaker 8: So my best advice is that if Schumer would release
Speaker 8: these Democratic senators, let'st the government back open and continue
Speaker 8: our negotiations on appropriations.
Speaker 5: Congressman, do you think that Republicans should all be back
Speaker 5: on the hill to potentially await maybe a single funding
Speaker 5: measure to either pay those individuals like you're talking about
Speaker 5: in your district that are not getting paid or federal workers.
Speaker 8: Well, the Senate has put those bills on the floor
Speaker 8: with the senators right there. Chuck Schumer has blocked the
Speaker 8: motion to proceed to pay federal workers, to take other
Speaker 8: targeted actions to pay military employees. I mean, this is
Speaker 8: the kind of shameful rhetoric and approach that Chuck Schumer
Speaker 8: has taken. He's holding federal employees and state employees that
Speaker 8: are funded by federal grant programs hostage. And that's why
Speaker 8: the employee union of the federal government spoke out yesterday.
Speaker 8: But that's what I hear from folks in my district
Speaker 8: every day. The House is at call. We did our
Speaker 8: work five weeks ago.
Speaker 1: We're on call.
Speaker 8: We can be back here in minutes if the Senate
Speaker 8: moves to open the government. And as this drags on,
Speaker 8: we're just going to be confronted with another vote on
Speaker 8: the Continuing Resolution in just a few days. So we've
Speaker 8: missed all this time of important work on agriculture, on banking,
Speaker 8: on reviewing housing policy, all because Schumer wants to spend
Speaker 8: one point five trillion more and do away with all
Speaker 8: the reforms that we made in the Medicaid program.
Speaker 5: Rshan is is Speaker Johnson, and you and your colleagues
Speaker 5: willing to vote for some of these one off spending
Speaker 5: bills if the Senate was able to pass it.
Speaker 8: Well, look, the Senate. What needs to happen is Chuck
Speaker 8: Schumer needs to open the government. That's what needs to happen, Emory,
Speaker 8: that's the easiest thing to do. Five weeks ago, we
Speaker 8: offered a clean cr that had democratic support. You have
Speaker 8: Democratic senators saying that Chuck Schumer is wrong. You have
Speaker 8: Democratic House members saying that Chuck Schumer is wrong. So
Speaker 8: he just needs to get with reality and recognize that
Speaker 8: we should be opening the government and then we can
Speaker 8: continue the work on FY twenty six spending.
Speaker 5: You mentioned agricultural and some of the farmers that are
Speaker 5: suffering right now. A lot of that is the fact
Speaker 5: that in retaliation to the Trump administration's tariffs, China is
Speaker 5: no longer buying soybeans. Well, that we're expected to change
Speaker 5: today or this week. How is your district reacting to
Speaker 5: what is going on in terms of trade relationships this
Speaker 5: administration is having with China.
Speaker 8: Well, the principal challenge to our row crop farmers in
Speaker 8: Arkansas is that we're potentially entering the fourth year of
Speaker 8: bad finances. One point five billion in losses is forecast
Speaker 8: for this farm year. That's the three years, and we're
Speaker 8: getting ready to enter a fourth year brought about by
Speaker 8: higher cost due to the inflation during the Biden administration
Speaker 8: and the inflationary effects of the Russia's invasion of Ukraine.
Speaker 8: These have crushed the cost side of producing a crop,
Speaker 8: and then prices have stayed fairly reasonable all during this period,
Speaker 8: but we've had surplus crops around the world. You're right
Speaker 8: that Joe Biden did not enforce Trump's agricultural products deal
Speaker 8: in his term, and that only about sixty percent of
Speaker 8: the soybeans that China promised to pay, and Trump won
Speaker 8: where those purchases were made. So I hope that President
Speaker 8: Trump can get that market back open for American growers.
Speaker 8: But we also have to recognize that four bad years
Speaker 8: in a row is going to put the banks in
Speaker 8: trouble and the farmers in trouble. Before I was in Congress,
Speaker 8: I was an agricultural lender. I know about how challenging
Speaker 8: it is with two back to back losses, But you
Speaker 8: do a third or start a fourth, you're going to
Speaker 8: put a lot of farmers out of business.
Speaker 2: A Congressman, this is a slightly uncomfortable question. I understand
Speaker 2: that because of what this business means to the people
Speaker 2: of your state. But at the moment, the US is making,
Speaker 2: I think a well articulated decision to de risk from
Speaker 2: China that would therefore in some ways make it difficult
Speaker 2: to alarm China being a buyer of anything for the
Speaker 2: foreseeable future. Do you think that's something we have to
Speaker 2: reconcile with farm production in this country that we can
Speaker 2: no longer rely on the Chinese buy even if we
Speaker 2: get some temporary relief and a soybean stale this week.
Speaker 8: Well, I think that's why you see Secretary Vestment and
Speaker 8: Secretary Lutniqu emphasizing soybean markets all around the world besides China.
Speaker 8: We don't want to ever in business put all your
Speaker 8: eggs in one basket, and we've been very dependent on
Speaker 8: the Chinese market, as you know, for the past three decades.
Speaker 8: But we have to recognize we've got to open up
Speaker 8: other markets around the world. We've produced the best soybeans
Speaker 8: in the world at the best price, and we have
Speaker 8: the best farmers, and so we just need to make
Speaker 8: sure that we diversify that market because you're right, our
Speaker 8: farmers at risk as long as we're in the middle
Speaker 8: of a de risking strategy from China. But that's not
Speaker 8: just a nag products, but across the board.
Speaker 3: Obviously.
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