1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,200 Speaker 1: us live on YouTube. 6 00:00:27,720 --> 00:00:32,720 Speaker 2: A really interesting path to investment management. Russ coster Rich 7 00:00:32,800 --> 00:00:37,120 Speaker 2: is out of Brandeis and Boston College Law, also at Columbia. 8 00:00:37,240 --> 00:00:40,720 Speaker 2: Really just a wonderful set of academics. We're thrilled at. 9 00:00:40,760 --> 00:00:45,279 Speaker 2: Russ Costs could join this morning from Blackrock, where he 10 00:00:45,680 --> 00:00:51,120 Speaker 2: has a focus on scientific active equities. Rostcon strance is 11 00:00:51,240 --> 00:00:56,080 Speaker 2: science right now is a new study of international investment. 12 00:00:56,160 --> 00:01:00,120 Speaker 2: You push against that, you say beware a focus on 13 00:01:00,280 --> 00:01:01,600 Speaker 2: international investment. 14 00:01:01,720 --> 00:01:05,800 Speaker 3: Discuss that and more and tom so right now. 15 00:01:05,800 --> 00:01:07,679 Speaker 4: We've had an unusual start to the year, to put 16 00:01:07,720 --> 00:01:10,479 Speaker 4: it mildly, and one of the many things that's been 17 00:01:10,480 --> 00:01:13,440 Speaker 4: going on which was not expected when we started twenty 18 00:01:13,480 --> 00:01:18,760 Speaker 4: twenty five, was this dramatic outperformance of international markets, particularly Europe, 19 00:01:18,920 --> 00:01:21,679 Speaker 4: and people will remember that began early in the year, 20 00:01:21,760 --> 00:01:24,920 Speaker 4: before we really knew the full extent of the tariffs. 21 00:01:25,280 --> 00:01:28,039 Speaker 4: But it's actually continued, albeit at a slower pace. So, 22 00:01:28,120 --> 00:01:30,320 Speaker 4: you know, one of the questions we're getting from our 23 00:01:30,360 --> 00:01:34,600 Speaker 4: clients frequently with the Global Allocation Fund is should we 24 00:01:34,680 --> 00:01:37,240 Speaker 4: be more invested in international? And while I do think 25 00:01:37,319 --> 00:01:41,200 Speaker 4: that there's always a good argument for international diversification, it's 26 00:01:41,319 --> 00:01:45,360 Speaker 4: not clear to us that that strong outperformance of Germany 27 00:01:45,360 --> 00:01:48,160 Speaker 4: of the rest of Europe that began the year can 28 00:01:48,240 --> 00:01:52,000 Speaker 4: continue in an environment in which economic growth is slowing. 29 00:01:52,320 --> 00:01:55,200 Speaker 4: There's a lot of policy and certainty, and trade is 30 00:01:55,360 --> 00:01:57,560 Speaker 4: likely to be very different than it's been for the 31 00:01:57,560 --> 00:02:00,160 Speaker 4: past several decades. So we are still of the you 32 00:02:00,680 --> 00:02:03,120 Speaker 4: that many of the best companies in a multi assid 33 00:02:03,120 --> 00:02:05,680 Speaker 4: portfolio are going to be from the United States. 34 00:02:06,840 --> 00:02:08,320 Speaker 5: So, Russ, how do you think about some of this? 35 00:02:09,160 --> 00:02:11,639 Speaker 5: You know, all the headwinds investors are trying to deal 36 00:02:11,680 --> 00:02:15,720 Speaker 5: with right now. Has that changed the way you allocate 37 00:02:15,760 --> 00:02:19,320 Speaker 5: between stocks and bonds and maybe alternatives? Are you trying 38 00:02:19,360 --> 00:02:21,560 Speaker 5: to get at play a little closer to the vest 39 00:02:21,639 --> 00:02:24,120 Speaker 5: a little bit more conservative or defensive? How are you 40 00:02:24,120 --> 00:02:24,799 Speaker 5: guys playing this? 41 00:02:25,600 --> 00:02:27,680 Speaker 4: Well, that's definitely the case you and we have brought 42 00:02:27,720 --> 00:02:30,360 Speaker 4: in our risks. So we had an equity overweight for 43 00:02:30,400 --> 00:02:33,840 Speaker 4: most of twenty and twenty four actually much of twenty 44 00:02:33,840 --> 00:02:36,240 Speaker 4: three as well. We've brought that closure to home. We've 45 00:02:36,280 --> 00:02:39,400 Speaker 4: added a little bit of duration back into portfolio. So yes, 46 00:02:39,680 --> 00:02:43,280 Speaker 4: given the uncertainty, we're definitely thinking about where do we 47 00:02:43,320 --> 00:02:44,080 Speaker 4: want to bring. 48 00:02:43,960 --> 00:02:45,600 Speaker 3: Risk and where do we want to make our bests. 49 00:02:45,720 --> 00:02:47,280 Speaker 4: But there are a couple of other areas too that 50 00:02:47,320 --> 00:02:49,600 Speaker 4: I think go to your question, one of which our 51 00:02:49,680 --> 00:02:51,160 Speaker 4: bond's going to work as a hedge. 52 00:02:51,520 --> 00:02:53,560 Speaker 3: Now we've shifted from. 53 00:02:53,400 --> 00:02:55,359 Speaker 4: An environment where for a lot of the last three 54 00:02:55,440 --> 00:02:58,359 Speaker 4: years the concern was inflation to more of a concern 55 00:02:58,360 --> 00:03:02,959 Speaker 4: about recession. Session is the issue? Then generally bonds work 56 00:03:03,040 --> 00:03:06,040 Speaker 4: better and mitigating equity risk. The question is are we 57 00:03:06,040 --> 00:03:07,600 Speaker 4: going to get a recession or we can to see 58 00:03:07,639 --> 00:03:09,840 Speaker 4: higher inflation in the back of the tariffs. That's one 59 00:03:09,840 --> 00:03:12,520 Speaker 4: thing we're wrestling with. The other, which has definitely had 60 00:03:12,560 --> 00:03:14,720 Speaker 4: an impact on how we allocate and goes to the 61 00:03:14,800 --> 00:03:19,079 Speaker 4: question about alternatives, is gold Right now? The biggest risk 62 00:03:19,160 --> 00:03:22,960 Speaker 4: to markets is uncertainty. There's also a risk about whether 63 00:03:23,040 --> 00:03:26,200 Speaker 4: or not international investors are going to trim their allocation 64 00:03:26,320 --> 00:03:30,000 Speaker 4: to dollar denominated assets. In that environment, we found that 65 00:03:30,080 --> 00:03:34,120 Speaker 4: gold is actually very helpful in the portfolio obviously it 66 00:03:34,280 --> 00:03:37,840 Speaker 4: record highs. That's another place we've actually been increasing our 67 00:03:37,880 --> 00:03:40,120 Speaker 4: bet to over the last three to six months. 68 00:03:41,800 --> 00:03:44,040 Speaker 5: So you know, in terms of fixed income RUSS, is 69 00:03:44,080 --> 00:03:47,680 Speaker 5: there any call here to take credit risk or do 70 00:03:47,720 --> 00:03:49,320 Speaker 5: you just sit kind of in the three to five 71 00:03:49,440 --> 00:03:51,960 Speaker 5: year treasury kind of belly of the curve kind of thing. 72 00:03:52,760 --> 00:03:54,600 Speaker 4: Well, I think it's actually both. I think we do 73 00:03:54,720 --> 00:03:56,560 Speaker 4: like the belly of the curve in general. We've been 74 00:03:56,560 --> 00:03:58,320 Speaker 4: cautious about the long end of the curve for a 75 00:03:58,360 --> 00:04:00,600 Speaker 4: while and it really hasn't done too much so far 76 00:04:00,720 --> 00:04:03,920 Speaker 4: year to date. But absolutely we think that credit is 77 00:04:03,920 --> 00:04:07,240 Speaker 4: one of the areas you can actually find opportunity. And 78 00:04:07,280 --> 00:04:10,000 Speaker 4: the reason is there's a lot of risk on the economy. 79 00:04:10,360 --> 00:04:12,280 Speaker 4: But even if we were to get a recession, our 80 00:04:12,400 --> 00:04:15,520 Speaker 4: views would be a mode recession. Corporate balance sheets, at 81 00:04:15,600 --> 00:04:18,520 Speaker 4: least for large companies, are in good shape. Many of 82 00:04:18,520 --> 00:04:20,880 Speaker 4: them turned out their debt back in twenty and twenty one. 83 00:04:20,920 --> 00:04:23,640 Speaker 4: In other words, that extended the maturity of their debt 84 00:04:23,800 --> 00:04:26,240 Speaker 4: and for the first time in years, really more than 85 00:04:26,240 --> 00:04:29,919 Speaker 4: a decade, you can build a portfolio with high quality 86 00:04:29,960 --> 00:04:33,280 Speaker 4: credit get seven seven and a half percent. That's looking 87 00:04:33,320 --> 00:04:36,920 Speaker 4: pretty good at an environment where equity returns are obviously 88 00:04:37,000 --> 00:04:39,960 Speaker 4: more questionable and you get more volatility. So credit is 89 00:04:39,960 --> 00:04:42,080 Speaker 4: one of the areas we definitely like in a multi 90 00:04:42,120 --> 00:04:43,040 Speaker 4: asset portfolio. 91 00:04:43,200 --> 00:04:44,719 Speaker 2: Russ got to get you into the studio here to 92 00:04:44,760 --> 00:04:46,760 Speaker 2: do it much longer, and you a couple more questions 93 00:04:46,800 --> 00:04:50,880 Speaker 2: here before we dash to Canada risk costurage like the 94 00:04:50,960 --> 00:04:54,440 Speaker 2: Blackrocks Science and Technology Fund. What Tony Kim is doing. 95 00:04:55,080 --> 00:04:58,800 Speaker 2: The bottom line is, is what retail loves big tech companies 96 00:04:58,839 --> 00:05:01,880 Speaker 2: as well with it AWE as you mentioned the Maelstrom 97 00:05:02,000 --> 00:05:04,919 Speaker 2: of the Q one the first one hundred days of 98 00:05:04,960 --> 00:05:09,080 Speaker 2: President Trump. Are the persistent cash flows of those science 99 00:05:09,120 --> 00:05:14,480 Speaker 2: and technology leaders in Nvidia, Amazon, Microsoft, the rest. Are 100 00:05:14,520 --> 00:05:15,560 Speaker 2: they still in place? 101 00:05:16,880 --> 00:05:19,440 Speaker 4: I think so, Tom Now Tony could do much more 102 00:05:19,440 --> 00:05:21,600 Speaker 4: adjustice to that question than I Can't sure, but I 103 00:05:22,080 --> 00:05:24,240 Speaker 4: think it's the right question because this is something that's 104 00:05:24,240 --> 00:05:27,080 Speaker 4: going to become increasingly important. We came into the year 105 00:05:27,160 --> 00:05:30,480 Speaker 4: expecting a stronger economy. If we have a weaker economy, 106 00:05:30,480 --> 00:05:33,880 Speaker 4: which is almost certain, we're going to focus on companies 107 00:05:33,920 --> 00:05:36,680 Speaker 4: that can produce reliable cash flow. And yes, there are 108 00:05:36,720 --> 00:05:40,240 Speaker 4: questions about the buildout on AI, but the reality is 109 00:05:40,320 --> 00:05:43,520 Speaker 4: many of the companies you mentioned. These are platform companies. 110 00:05:43,720 --> 00:05:48,000 Speaker 4: Their profitability is much higher than average, their earnings are 111 00:05:48,080 --> 00:05:48,679 Speaker 4: much more. 112 00:05:48,520 --> 00:05:49,800 Speaker 3: Consistent than average. 113 00:05:50,000 --> 00:05:52,240 Speaker 4: This is still an opportunity long term for a lot 114 00:05:52,240 --> 00:05:54,359 Speaker 4: of investors. And I said in the beginning, while we 115 00:05:54,400 --> 00:05:57,159 Speaker 4: still like the US because we find more of these 116 00:05:57,160 --> 00:06:00,720 Speaker 4: companies in the US than other regions, Russ. 117 00:06:00,520 --> 00:06:02,600 Speaker 2: We got to leave it there. I'm so sorry. Russ Costrich. 118 00:06:02,640 --> 00:06:04,719 Speaker 2: Please get into her studio. He's got to get into 119 00:06:04,760 --> 00:06:05,200 Speaker 2: the studio. 120 00:06:05,400 --> 00:06:05,640 Speaker 4: Sure. 121 00:06:05,800 --> 00:06:08,560 Speaker 2: I mean, you know exactly, Russ. The food court. You'll 122 00:06:08,600 --> 00:06:10,680 Speaker 2: love it. Russ Costrich, Black Rock, Thank you. 123 00:06:11,040 --> 00:06:14,960 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 124 00:06:15,000 --> 00:06:18,279 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 125 00:06:18,400 --> 00:06:21,360 Speaker 1: with the Bloomberg Business app. You can also listen live 126 00:06:21,440 --> 00:06:25,039 Speaker 1: on Amazon Alexa from our flagship New York station, Just 127 00:06:25,080 --> 00:06:27,559 Speaker 1: say Alexa, play Bloomberg eleven thirty. 128 00:06:27,640 --> 00:06:30,800 Speaker 2: If she was in Michigan and did a paper or 129 00:06:30,839 --> 00:06:33,120 Speaker 2: whatever and it ended up being a book, The River 130 00:06:33,240 --> 00:06:37,640 Speaker 2: runs Black, think of what Oppenheimer, Barbie, that's the way 131 00:06:37,680 --> 00:06:41,560 Speaker 2: the River Run Black worked. Within the academics on China, 132 00:06:41,640 --> 00:06:46,520 Speaker 2: Elizabeth Economy immediately rose to a claim on analysis of 133 00:06:46,560 --> 00:06:49,760 Speaker 2: the Pacific Rim. She's followed up with any set of books, 134 00:06:49,760 --> 00:06:52,960 Speaker 2: including the World according to China and The Third Revolution. 135 00:06:53,080 --> 00:06:56,320 Speaker 2: We know her public service to the nation with Secretary 136 00:06:56,320 --> 00:07:00,400 Speaker 2: of Romando at Commerce. She is the Hargro Senior Fellow 137 00:07:00,440 --> 00:07:04,040 Speaker 2: co Director US China and World Program. This on the 138 00:07:04,120 --> 00:07:09,960 Speaker 2: Left Coast Hoover Institution at Stanford University, Doctor Economy. When 139 00:07:10,000 --> 00:07:15,520 Speaker 2: you hear diplomats of China in an organized manner called 140 00:07:15,520 --> 00:07:18,840 Speaker 2: the President of the United States for bullying, how do 141 00:07:18,880 --> 00:07:19,840 Speaker 2: you translate that? 142 00:07:21,120 --> 00:07:25,880 Speaker 6: I think it's pretty straightforward. Look, I think right now 143 00:07:26,280 --> 00:07:29,320 Speaker 6: the two countries aren't a game of chicken, and the 144 00:07:29,440 --> 00:07:32,760 Speaker 6: Chinese are waiting for a real signal from President Trump 145 00:07:33,440 --> 00:07:37,560 Speaker 6: in the form of dropping the unilateral tariffs or reducing 146 00:07:37,560 --> 00:07:41,840 Speaker 6: them substantially. I think actually President Trump did blink last 147 00:07:41,880 --> 00:07:45,800 Speaker 6: week when he said that he expected to reduce those tariffs. 148 00:07:46,200 --> 00:07:48,960 Speaker 6: But I think the Chinese decided not to recognize that. 149 00:07:49,000 --> 00:07:51,680 Speaker 6: At least the Chinese officials decided not to recognize it. 150 00:07:52,320 --> 00:07:54,840 Speaker 6: Maybe they saw it more as a wink than a blink, 151 00:07:55,040 --> 00:07:58,200 Speaker 6: and they don't trust it. But I think, you know, 152 00:07:58,240 --> 00:08:00,720 Speaker 6: it's not just the Chinese, frankly world, and I think 153 00:08:00,800 --> 00:08:04,520 Speaker 6: China's being pretty confident in their assessment of President Trump, 154 00:08:04,560 --> 00:08:07,840 Speaker 6: and that you know, many other countries are also looking 155 00:08:07,840 --> 00:08:10,000 Speaker 6: at the United States in the same way. 156 00:08:09,920 --> 00:08:14,000 Speaker 2: Within the gi real politic. Do they have the power 157 00:08:14,120 --> 00:08:17,760 Speaker 2: in the leverage to say to other nations, if you 158 00:08:18,320 --> 00:08:22,880 Speaker 2: dance with President Trump, you won't dance with China. Do 159 00:08:22,960 --> 00:08:26,480 Speaker 2: they have that power to say that to act on that. 160 00:08:27,280 --> 00:08:29,360 Speaker 6: You know, It's been interesting to me as I've watched 161 00:08:29,400 --> 00:08:32,600 Speaker 6: the Chinese go around, first with the charm offensive in 162 00:08:32,679 --> 00:08:36,920 Speaker 6: Asia and Europe and then with the more coercive sort 163 00:08:36,960 --> 00:08:41,000 Speaker 6: of approach that you just noted. I've been surprised at 164 00:08:41,040 --> 00:08:44,679 Speaker 6: the extent to which China has not managed to translate, 165 00:08:45,520 --> 00:08:49,080 Speaker 6: you know, the sort of chaotic policy and bullying behavior 166 00:08:49,240 --> 00:08:53,480 Speaker 6: of the United States into a sort of a greater 167 00:08:53,640 --> 00:08:57,000 Speaker 6: leverage for China itself. I think we saw Australia say, 168 00:08:57,120 --> 00:08:59,240 Speaker 6: you know, when China reached out to them, you know, no, 169 00:08:59,400 --> 00:09:01,840 Speaker 6: thank you, We're not about to join hands. We saw 170 00:09:01,880 --> 00:09:05,600 Speaker 6: Canada do the same. I think the EU is flirting 171 00:09:05,600 --> 00:09:07,960 Speaker 6: with China, but you know, they have their own economic 172 00:09:08,000 --> 00:09:10,959 Speaker 6: problems with China, and they're also you know, there continue 173 00:09:11,000 --> 00:09:15,319 Speaker 6: to be extremely unhappy with China. Support for Russia and Ukraine. 174 00:09:15,720 --> 00:09:17,720 Speaker 6: So what I've seen really is that China has not 175 00:09:17,760 --> 00:09:22,880 Speaker 6: been able, either through coercive messaging or through sort of 176 00:09:22,880 --> 00:09:26,720 Speaker 6: a more positive approach to bring countries to its side. 177 00:09:26,920 --> 00:09:29,240 Speaker 6: That being said, I think there are probably some countries, 178 00:09:29,960 --> 00:09:33,959 Speaker 6: you know, emerging in middle income economies that are heavily 179 00:09:34,000 --> 00:09:37,800 Speaker 6: reliant on China where that kind of coercive tactic is 180 00:09:38,000 --> 00:09:40,320 Speaker 6: likely to work. But I think it's important to remember 181 00:09:40,360 --> 00:09:43,600 Speaker 6: that while China is the largest trading partner for most 182 00:09:43,640 --> 00:09:46,120 Speaker 6: countries in the world, that the US is a larger 183 00:09:46,280 --> 00:09:50,679 Speaker 6: export market for most countries in the world, and I 184 00:09:50,720 --> 00:09:52,320 Speaker 6: think that's also playing into this. 185 00:09:53,040 --> 00:09:57,040 Speaker 5: So we saw Elizabeth just yesterday up in Canada, we 186 00:09:57,080 --> 00:09:59,920 Speaker 5: saw the result of President Trump's kind of verbal attacks 187 00:10:00,080 --> 00:10:02,040 Speaker 5: on Canada, fifty first state and all that type of 188 00:10:02,040 --> 00:10:08,560 Speaker 5: stuff really united the people of Canada here behind a candidate. 189 00:10:08,559 --> 00:10:12,800 Speaker 5: Here is something similar happening in China. Are the people 190 00:10:12,960 --> 00:10:17,599 Speaker 5: uniting behind President g on this hey, this nationalism platform? 191 00:10:18,640 --> 00:10:21,800 Speaker 6: Absolutely? I mean, I think the terriffs in that regard 192 00:10:22,360 --> 00:10:25,520 Speaker 6: have been a real boon to see jinping into his standing. 193 00:10:25,600 --> 00:10:29,040 Speaker 6: I think, you know, previously you saw that there was 194 00:10:29,080 --> 00:10:31,960 Speaker 6: a lot of negative sentiment, for example, in social media 195 00:10:32,000 --> 00:10:35,360 Speaker 6: and China about the state of Chinese economy, and it 196 00:10:35,440 --> 00:10:40,319 Speaker 6: was really directed towards the Chinese government. With the tariffs, basically, 197 00:10:40,440 --> 00:10:43,360 Speaker 6: the US has become a scapegoat for all of China's 198 00:10:43,440 --> 00:10:46,520 Speaker 6: economic ills, and so there's a rally around the flag 199 00:10:47,160 --> 00:10:50,560 Speaker 6: element to what's going on in China. And frankly, I 200 00:10:50,600 --> 00:10:52,679 Speaker 6: was in Hong Kong last week, and I will tell 201 00:10:52,720 --> 00:10:56,200 Speaker 6: you that there's increasing confidence in China. And I was 202 00:10:56,240 --> 00:10:59,960 Speaker 6: at a conference with a lot of leaders from China's 203 00:11:00,080 --> 00:11:03,720 Speaker 6: tech sector, and there, you know, they not only feel 204 00:11:03,720 --> 00:11:08,439 Speaker 6: that they can get around any kind of export restrictions 205 00:11:08,559 --> 00:11:10,760 Speaker 6: or other kinds of tariffs that the US might be 206 00:11:10,800 --> 00:11:14,280 Speaker 6: placing on China, but they also just have they're just 207 00:11:14,320 --> 00:11:16,960 Speaker 6: looking at the United States and thinking how many own 208 00:11:17,040 --> 00:11:20,679 Speaker 6: goals can the US government score here? And so I 209 00:11:20,760 --> 00:11:23,640 Speaker 6: just I think that that's what's that is what the 210 00:11:23,679 --> 00:11:25,840 Speaker 6: tariffs are triggering, primarily in China. 211 00:11:25,920 --> 00:11:28,840 Speaker 2: A good evening to the Pacific rim on YouTube. Thank 212 00:11:28,880 --> 00:11:31,280 Speaker 2: you so much for tuning in with us our conversation 213 00:11:31,400 --> 00:11:35,240 Speaker 2: of the month, indeed, perhaps the second quarter. Elizabeth Economy, 214 00:11:35,360 --> 00:11:40,120 Speaker 2: Hargrove's senior fellow at the Hoover Institution at Stanford University 215 00:11:40,760 --> 00:11:43,880 Speaker 2: here on all of our expertise on China, and now 216 00:11:43,960 --> 00:11:47,760 Speaker 2: the America must and will respond. We do this with 217 00:11:47,800 --> 00:11:50,920 Speaker 2: reading green and screen. The Secretary Treasury is scheduled to 218 00:11:50,960 --> 00:11:54,480 Speaker 2: speak here in twenty minutes. That'll be interesting, Paul. 219 00:11:54,559 --> 00:11:59,000 Speaker 5: Which country has the stronger hand here in negotiations going forward? 220 00:12:00,600 --> 00:12:04,160 Speaker 6: You know, I think to some extent, China has the 221 00:12:04,240 --> 00:12:07,480 Speaker 6: stronger hand. I think we had a little bit of 222 00:12:07,480 --> 00:12:10,120 Speaker 6: an arrogance on our part because we thought, given that 223 00:12:10,160 --> 00:12:12,520 Speaker 6: there's a you know, three hundred billion dollar trade deficit, 224 00:12:12,600 --> 00:12:14,840 Speaker 6: and you know, China is so much more reliant on 225 00:12:14,920 --> 00:12:16,920 Speaker 6: the US market than the US is on the China 226 00:12:16,960 --> 00:12:19,680 Speaker 6: market in terms of exports. I think we thought that 227 00:12:19,760 --> 00:12:22,440 Speaker 6: we had the upper hand, but think it ignored a 228 00:12:22,520 --> 00:12:25,840 Speaker 6: couple of important facts. Number one, that we are reliant 229 00:12:25,880 --> 00:12:30,000 Speaker 6: on China for some very critical inputs like critical minerals 230 00:12:30,000 --> 00:12:33,560 Speaker 6: and rare earths magnets that we need for our technology 231 00:12:33,559 --> 00:12:36,880 Speaker 6: and defense industries. And in fact, you know, for thirty 232 00:12:36,920 --> 00:12:40,920 Speaker 6: percent of the products that we import from China, we 233 00:12:40,960 --> 00:12:44,640 Speaker 6: are reliant on them to seventy percent or more, right, 234 00:12:44,720 --> 00:12:49,160 Speaker 6: so we have more close to single source supply a 235 00:12:49,200 --> 00:12:52,480 Speaker 6: dependency on China than they do on US. So I 236 00:12:52,480 --> 00:12:55,760 Speaker 6: think there's that element is playing out. That being said, 237 00:12:55,840 --> 00:12:59,280 Speaker 6: the Chinese economy was struggling before we put the tariffs on. 238 00:13:00,120 --> 00:13:04,000 Speaker 6: I think you know, many Chinese factories, low and low 239 00:13:04,120 --> 00:13:09,240 Speaker 6: margin factories do consumer electronics and apparel and toys, are 240 00:13:09,240 --> 00:13:13,320 Speaker 6: extremely concerned because the US market was really important. And 241 00:13:13,400 --> 00:13:17,520 Speaker 6: so I do think there are calls now in China 242 00:13:17,720 --> 00:13:22,319 Speaker 6: for the Chinese government to recognize actually that President Trump 243 00:13:22,360 --> 00:13:25,040 Speaker 6: did blink last week, and to say take the win 244 00:13:25,520 --> 00:13:27,920 Speaker 6: and get to the negotiating table. And we just saw 245 00:13:27,960 --> 00:13:32,480 Speaker 6: a really interesting article come out in the Chinese newspaper Unsigned, 246 00:13:32,520 --> 00:13:35,000 Speaker 6: which signals that it's coming from the Chinese government that 247 00:13:35,120 --> 00:13:38,959 Speaker 6: basically said, you know, go look at Mao's on protracted 248 00:13:39,000 --> 00:13:42,439 Speaker 6: war and get hunkered down and stop talking about getting 249 00:13:42,480 --> 00:13:43,600 Speaker 6: back to the negotiating table. 250 00:13:43,600 --> 00:13:44,480 Speaker 7: Well, this is the heart of me. 251 00:13:44,800 --> 00:13:47,280 Speaker 6: Yeah, there's a debate going on in China, but this is. 252 00:13:47,200 --> 00:13:49,920 Speaker 2: Brilliant Elizabeth economy. This is the heart of the matter. 253 00:13:50,000 --> 00:13:52,000 Speaker 2: As we have experts like you, I think at Leland 254 00:13:52,000 --> 00:13:55,000 Speaker 2: Miller China based book of course, the Giants Spence and 255 00:13:55,120 --> 00:13:59,280 Speaker 2: Orville Shell. You read the material and you say this 256 00:13:59,360 --> 00:14:01,760 Speaker 2: is the voice of the government. Now. In your book 257 00:14:01,800 --> 00:14:05,840 Speaker 2: The Third Revolution, you talk about the lion awakens, you 258 00:14:05,960 --> 00:14:10,800 Speaker 2: talk about the road forward because of President Trump. Is 259 00:14:10,840 --> 00:14:15,040 Speaker 2: the road forward for g radically different now? And does 260 00:14:15,080 --> 00:14:18,560 Speaker 2: he have a new power given to him by the 261 00:14:18,720 --> 00:14:21,000 Speaker 2: stumbling of President Trump? 262 00:14:22,120 --> 00:14:24,280 Speaker 6: I mean, I think it depends on how long the 263 00:14:24,320 --> 00:14:27,320 Speaker 6: president stumbles and in which direction. I mean, I think 264 00:14:27,520 --> 00:14:29,640 Speaker 6: there's a stumble, one might say on the tariffs. There's 265 00:14:29,640 --> 00:14:33,920 Speaker 6: a stumble on, you know, undercutting investment in our universities. 266 00:14:33,920 --> 00:14:37,240 Speaker 6: There's probably a stumble and moving away from you know, 267 00:14:37,320 --> 00:14:39,760 Speaker 6: clean energy, which is you know, the choice of most 268 00:14:39,760 --> 00:14:42,360 Speaker 6: of the world for the twenty first century. So while 269 00:14:42,360 --> 00:14:45,840 Speaker 6: we're looking backwards to the nineteen fifties and the rest 270 00:14:45,840 --> 00:14:47,960 Speaker 6: of the world is looking to twenty fifties. I think 271 00:14:48,000 --> 00:14:50,400 Speaker 6: there are a number of different stumbles. But it really 272 00:14:50,440 --> 00:14:53,600 Speaker 6: we're only one hundred days into this administration and there's 273 00:14:53,640 --> 00:14:56,680 Speaker 6: plenty of time for I think, course correction, and it's 274 00:14:56,680 --> 00:14:59,960 Speaker 6: really going to depend on people, I think in this industry. 275 00:15:00,800 --> 00:15:03,760 Speaker 2: I got to ask this question, Paul. It's really it's 276 00:15:03,760 --> 00:15:09,000 Speaker 2: a really rude, rude question. If the Secretary of Commerce 277 00:15:09,080 --> 00:15:14,400 Speaker 2: now took Raymundo manners one oh one, would Howard Lutnik 278 00:15:14,480 --> 00:15:18,040 Speaker 2: be a lot more effective if he had the grace 279 00:15:18,080 --> 00:15:19,960 Speaker 2: of your former boss at Commerce. 280 00:15:21,640 --> 00:15:24,920 Speaker 6: I don't think it's just a matter of grace. I 281 00:15:24,960 --> 00:15:30,080 Speaker 6: think I think there's an essential fundamental understanding of the 282 00:15:30,120 --> 00:15:34,160 Speaker 6: way the government works, of the way the economy works, 283 00:15:35,040 --> 00:15:39,360 Speaker 6: and an understanding of what American workers and businesses want most. 284 00:15:39,680 --> 00:15:42,560 Speaker 6: I think, you know, she brings the whole package. You know, 285 00:15:42,840 --> 00:15:46,440 Speaker 6: I'm not exactly sure what Secretary Lutnik is bringing to 286 00:15:46,480 --> 00:15:47,520 Speaker 6: the table at this point. 287 00:15:47,600 --> 00:15:50,960 Speaker 2: Well, that was diplomatic exactly, Elizabeth. 288 00:15:51,040 --> 00:15:53,320 Speaker 5: I think about a company like Apple, it's just so 289 00:15:53,520 --> 00:15:58,400 Speaker 5: inextrictably linked to China, And then I kind of just 290 00:15:58,440 --> 00:16:01,520 Speaker 5: take that out to the overall US. Are the two 291 00:16:01,600 --> 00:16:05,320 Speaker 5: sides here really prepared to decouple here? It just seems like, 292 00:16:06,160 --> 00:16:08,960 Speaker 5: in this global world, can you really do that? Does 293 00:16:09,000 --> 00:16:10,120 Speaker 5: either side really want that? 294 00:16:11,400 --> 00:16:11,640 Speaker 3: You know? 295 00:16:11,720 --> 00:16:16,240 Speaker 6: I think certainly US business, most US business that's engaged 296 00:16:16,280 --> 00:16:20,880 Speaker 6: in business, whether exporting or invested manufacturing in China, is 297 00:16:20,920 --> 00:16:24,160 Speaker 6: not interested in a complete decoupling. I do think based 298 00:16:24,160 --> 00:16:27,360 Speaker 6: on COVID, based on the Russia's invasion of Ukraine, there 299 00:16:27,400 --> 00:16:29,400 Speaker 6: has been a shift in many boardrooms in terms of 300 00:16:29,480 --> 00:16:33,720 Speaker 6: their understanding of you know, an overdependence on any single source, 301 00:16:33,760 --> 00:16:37,120 Speaker 6: in particular China. But I don't think there's an interest 302 00:16:37,160 --> 00:16:39,880 Speaker 6: in decoupling. That being said, I think within the US 303 00:16:40,040 --> 00:16:44,560 Speaker 6: government there are definitely people at this senior most levels 304 00:16:44,800 --> 00:16:47,880 Speaker 6: who wouldn't mind a complete decoupling. And I think, look, 305 00:16:48,280 --> 00:16:51,760 Speaker 6: you know, supply chain movement began during the Biden administration. 306 00:16:52,040 --> 00:16:55,160 Speaker 6: There was definitely a push to you know, encourage companies 307 00:16:55,480 --> 00:16:59,480 Speaker 6: to rethink their China strategy and to begin to manufacture elsewhere. 308 00:17:00,360 --> 00:17:03,120 Speaker 6: Under the Trump administration, I think that's you know, ten 309 00:17:03,360 --> 00:17:06,879 Speaker 6: you know, magnified tenfold. And I think there are people 310 00:17:06,920 --> 00:17:10,680 Speaker 6: who are actually driving toward decoupling. It would include someone 311 00:17:10,760 --> 00:17:13,840 Speaker 6: like Peter Navarro in that group, and they do have 312 00:17:13,920 --> 00:17:16,160 Speaker 6: the President's here, so you know, I'm not sure where 313 00:17:16,200 --> 00:17:18,480 Speaker 6: this you know all is going. I think the administration 314 00:17:18,560 --> 00:17:19,480 Speaker 6: is actually divided. 315 00:17:20,080 --> 00:17:23,600 Speaker 2: One final question, doctor Economy, and you mentioned earlier that 316 00:17:23,640 --> 00:17:27,160 Speaker 2: the Trump administration is trying to look back to another 317 00:17:27,240 --> 00:17:30,560 Speaker 2: time and place. A g platform was to look back 318 00:17:30,600 --> 00:17:33,960 Speaker 2: to maw in all the different certitudes of the fifties 319 00:17:33,960 --> 00:17:37,480 Speaker 2: and the sixties in China. Do the people of China 320 00:17:37,800 --> 00:17:39,119 Speaker 2: want to look back. 321 00:17:40,680 --> 00:17:44,919 Speaker 6: So I would say that Sheijinping looked back politically and 322 00:17:45,040 --> 00:17:49,480 Speaker 6: know most people in China don't support the very regressive 323 00:17:49,480 --> 00:17:53,840 Speaker 6: and repressive policies that Sheijinping has instituted. On the other hand, 324 00:17:53,880 --> 00:17:57,879 Speaker 6: when it comes to innovation and technology, Sheijinping is full 325 00:17:57,920 --> 00:18:01,120 Speaker 6: on twenty first century and beyond. And I think that's 326 00:18:01,119 --> 00:18:03,840 Speaker 6: what we're seeing, not only in the innovation sector, but 327 00:18:03,880 --> 00:18:07,560 Speaker 6: in the deployment of new technologies of robotics and AI. 328 00:18:07,800 --> 00:18:10,160 Speaker 6: That's where they're really going to eat our launch if 329 00:18:10,200 --> 00:18:14,120 Speaker 6: we don't get our app together. So I think politically, yes, 330 00:18:14,359 --> 00:18:18,160 Speaker 6: backwards move, but in terms of tech and innovation, they're 331 00:18:18,240 --> 00:18:20,720 Speaker 6: charging one hundred times faster forward than we are. 332 00:18:20,840 --> 00:18:23,720 Speaker 2: Elizabeth Economy, Thank you so much, Hargo's senior fellow the 333 00:18:23,760 --> 00:18:24,640 Speaker 2: Hoover Institution. 334 00:18:30,920 --> 00:18:34,480 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 335 00:18:34,560 --> 00:18:37,720 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 336 00:18:37,800 --> 00:18:41,480 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 337 00:18:41,640 --> 00:18:43,120 Speaker 1: watch us live on YouTube. 338 00:18:43,160 --> 00:18:46,040 Speaker 2: Thank you Ethan Harris for your support. Legendary at Lehman 339 00:18:46,680 --> 00:18:49,640 Speaker 2: at Bank of America. Ethan Harris said, I'll be retired 340 00:18:49,680 --> 00:18:53,359 Speaker 2: but I'm not just writing on LinkedIn. Absolutely brilliant, Ethan. 341 00:18:53,680 --> 00:18:57,600 Speaker 2: Thank you for the LinkedIn expertise. I love your headline 342 00:18:58,280 --> 00:19:02,200 Speaker 2: of a few days ago, two weeks ago. Beatings will 343 00:19:02,240 --> 00:19:08,240 Speaker 2: continue until Morell improves. Tell us doctor Harris, how bad 344 00:19:08,280 --> 00:19:10,840 Speaker 2: the beatings are for the American consumer. 345 00:19:12,080 --> 00:19:14,720 Speaker 8: Well, one of the amazing things that we've seen in 346 00:19:14,760 --> 00:19:18,720 Speaker 8: the last three months is that the negotiating tactic of 347 00:19:18,800 --> 00:19:24,040 Speaker 8: the Trump administration is to create uncertainty, to put your 348 00:19:24,520 --> 00:19:30,480 Speaker 8: opponent off the balance by talking in very aggressive terms. 349 00:19:30,520 --> 00:19:33,040 Speaker 8: This is certainly the way the trade war is playing out. 350 00:19:33,119 --> 00:19:38,399 Speaker 8: It's also true for downsizing government and for encouraging immigrants 351 00:19:38,440 --> 00:19:41,159 Speaker 8: to self deport. So you've got this kind of shock 352 00:19:41,200 --> 00:19:46,679 Speaker 8: and awe approach to trying to change policy. But the 353 00:19:46,720 --> 00:19:50,600 Speaker 8: problem is that everyone's hearing this, including business leaders and 354 00:19:50,680 --> 00:19:57,080 Speaker 8: consumers and investors, and so it's really bad for the 355 00:19:57,160 --> 00:20:00,719 Speaker 8: markets and the economy to have this super aggress talking 356 00:20:00,760 --> 00:20:03,480 Speaker 8: to approach. And that's what I mean by the beatings. 357 00:20:03,480 --> 00:20:07,160 Speaker 8: It's kind of like, you know, it's if they don't 358 00:20:07,200 --> 00:20:10,240 Speaker 8: stop this tactic, we will get. 359 00:20:10,200 --> 00:20:14,080 Speaker 2: The appointed and assigned is Bessant of the hedge fund industry. 360 00:20:14,280 --> 00:20:17,440 Speaker 2: Bessant used to work for mister Soros Bessant, who is 361 00:20:17,520 --> 00:20:22,840 Speaker 2: Secretary Treasury. Do you believe the secretary can modify the 362 00:20:22,880 --> 00:20:25,880 Speaker 2: beatings that will continue until Morell improoves. 363 00:20:26,960 --> 00:20:31,280 Speaker 8: I think he's the best hope for that. I do 364 00:20:31,359 --> 00:20:35,119 Speaker 8: think that, uh, he's gotten the ear of the President 365 00:20:36,040 --> 00:20:38,560 Speaker 8: pointed out that the way we're heading, you're gonna have 366 00:20:38,600 --> 00:20:43,280 Speaker 8: a really bad equity market going forward. And he's I 367 00:20:43,320 --> 00:20:48,080 Speaker 8: think the architect of the recent softening of rhetoric. So 368 00:20:48,119 --> 00:20:51,720 Speaker 8: he's he's gonna he's helping. And because he comes from 369 00:20:51,720 --> 00:20:54,800 Speaker 8: a more moderate background than a lot of the other advisors. 370 00:20:55,440 --> 00:20:57,680 Speaker 8: The problem is, of course that I don't think this 371 00:20:57,760 --> 00:21:00,879 Speaker 8: is going to end quickly. This back and forth and 372 00:21:00,960 --> 00:21:05,440 Speaker 8: threats and counter threats and nasty negotiations. We have to 373 00:21:05,480 --> 00:21:07,760 Speaker 8: get used to it. That's this is the new normal 374 00:21:07,840 --> 00:21:11,080 Speaker 8: for a while here, and so it's going to continue 375 00:21:11,080 --> 00:21:12,919 Speaker 8: to be a big headwind to the economy. 376 00:21:13,080 --> 00:21:16,800 Speaker 2: Surveillance idea, Paul, should we have doctor Harrison every time 377 00:21:16,840 --> 00:21:18,800 Speaker 2: I think we're waiting for a press conference? 378 00:21:18,840 --> 00:21:19,920 Speaker 3: I think is brilliant. 379 00:21:20,000 --> 00:21:20,840 Speaker 5: I think we can do that. 380 00:21:20,840 --> 00:21:23,440 Speaker 8: You're gonna have to raise my pay. 381 00:21:24,440 --> 00:21:27,320 Speaker 5: We know some people here, Hey, I mean you do 382 00:21:27,359 --> 00:21:30,320 Speaker 5: an undergraduate degree and then a PhD in economics. I'm 383 00:21:30,359 --> 00:21:33,879 Speaker 5: guessing you had a class or two on tariffs. Are 384 00:21:33,960 --> 00:21:38,160 Speaker 5: there scenarios where tariffs are effective economic policy? And are 385 00:21:38,160 --> 00:21:39,960 Speaker 5: we employing them in that way this time? 386 00:21:41,119 --> 00:21:43,960 Speaker 8: Well, I think that there's an agreement among economists that 387 00:21:44,640 --> 00:21:48,680 Speaker 8: there are issues with completely free trade that you need 388 00:21:48,720 --> 00:21:53,119 Speaker 8: to You want to protect regional economies when there's a 389 00:21:53,160 --> 00:21:55,960 Speaker 8: flood of foreign competition coming in, you don't want to 390 00:21:56,040 --> 00:21:59,160 Speaker 8: let that just roll over the economy without any support. 391 00:21:59,520 --> 00:22:02,399 Speaker 8: And we didn't do that. We didn't support local communities. 392 00:22:02,400 --> 00:22:05,880 Speaker 8: So there were problems in the expansion of free trade, 393 00:22:06,200 --> 00:22:08,040 Speaker 8: and they're all in. A lot of that was China. 394 00:22:08,119 --> 00:22:12,360 Speaker 8: It was China just dumping really cheap stuff on global markets. 395 00:22:12,359 --> 00:22:15,200 Speaker 8: So I think that economists would agree that you need 396 00:22:15,240 --> 00:22:21,120 Speaker 8: to deal with China and the unfair trade practices of China, 397 00:22:21,240 --> 00:22:25,280 Speaker 8: but that's not what they're doing. China should be the focus. 398 00:22:25,640 --> 00:22:28,760 Speaker 8: Why are we beating up on Canada and Mexico. We 399 00:22:28,800 --> 00:22:32,280 Speaker 8: have a free trade agreement with them, They are closest allies. 400 00:22:32,560 --> 00:22:35,840 Speaker 8: Why are we beating up in Europe? Europe's trade is 401 00:22:35,920 --> 00:22:40,800 Speaker 8: relatively unfettered with the United States, so it's not the 402 00:22:40,880 --> 00:22:43,199 Speaker 8: right way to go about it. The tariffs should be 403 00:22:43,240 --> 00:22:49,520 Speaker 8: focused on issues of geopolitics and on unfairness, not this 404 00:22:49,720 --> 00:22:54,359 Speaker 8: kind of us against everyone. America alone is not a 405 00:22:54,359 --> 00:22:55,160 Speaker 8: good policy. 406 00:22:55,880 --> 00:22:58,280 Speaker 5: Ethan. I think some of the uncertainty that you talk 407 00:22:58,320 --> 00:23:00,520 Speaker 5: about that we all kind of are are are hearing 408 00:23:00,520 --> 00:23:04,280 Speaker 5: about from companies as they talk about their guidance. Is 409 00:23:04,320 --> 00:23:07,080 Speaker 5: it uncertainly as it leads to economic growth or is 410 00:23:07,119 --> 00:23:09,520 Speaker 5: it more on the inflation side. Where's the bigger concern 411 00:23:09,600 --> 00:23:09,920 Speaker 5: for you? 412 00:23:11,440 --> 00:23:14,240 Speaker 8: Well, I'm actually a bit more worried about the growth 413 00:23:14,400 --> 00:23:18,600 Speaker 8: hit here. You know what's happening right now is that 414 00:23:18,640 --> 00:23:21,320 Speaker 8: the corporate sector is like a deer in the headlights. 415 00:23:21,400 --> 00:23:23,320 Speaker 8: They don't know what to do. I mean, if you're 416 00:23:24,160 --> 00:23:27,159 Speaker 8: if you're a corporation that has heavy dealings with the 417 00:23:27,200 --> 00:23:34,199 Speaker 8: federal government, that deal has a immigrant workforce that is 418 00:23:34,560 --> 00:23:39,000 Speaker 8: involved in trade, all of those sectors are being touched 419 00:23:39,040 --> 00:23:44,200 Speaker 8: by high levels of uncertainty. You can't figure out where 420 00:23:44,200 --> 00:23:46,600 Speaker 8: to put your next plant if you don't know where 421 00:23:46,640 --> 00:23:48,760 Speaker 8: what tariffs are going to be four years from now. 422 00:23:50,119 --> 00:23:53,719 Speaker 8: You can't You can't go out and hire workers if 423 00:23:53,760 --> 00:23:55,879 Speaker 8: you know that your workplace is going to be rated 424 00:23:56,040 --> 00:23:59,680 Speaker 8: any minute and you may end up with serious penalties. 425 00:24:00,359 --> 00:24:03,800 Speaker 8: You can't do government. It's anything related to government if 426 00:24:03,840 --> 00:24:06,560 Speaker 8: you don't know who's going to be working at the agency. 427 00:24:07,080 --> 00:24:12,199 Speaker 8: So it's uh, it's very broad. Uh you know, uncertainty 428 00:24:12,240 --> 00:24:15,919 Speaker 8: shock that that just is freezing up activity. 429 00:24:16,080 --> 00:24:19,720 Speaker 2: But this is Ethan Harris rumor as he's retired. I 430 00:24:19,720 --> 00:24:22,040 Speaker 2: don't buy it for a minute of Lehman and iconic 431 00:24:22,080 --> 00:24:27,440 Speaker 2: at Bank of America out of Scenic Clark University, oldest 432 00:24:27,560 --> 00:24:34,359 Speaker 2: university in New English. Yeah, it's out there a big background. 433 00:24:34,359 --> 00:24:36,160 Speaker 8: I'm actually on a golf course right now. 434 00:24:36,160 --> 00:24:40,040 Speaker 2: That's good. Okay, that's good to know Ethan to go 435 00:24:40,119 --> 00:24:43,320 Speaker 2: to Ned Phelps, the giant so supportive of what I do. 436 00:24:43,960 --> 00:24:49,640 Speaker 2: In his modern word of dynamism, his President Trump broken 437 00:24:50,080 --> 00:24:53,560 Speaker 2: America's dynamism. 438 00:24:53,880 --> 00:24:56,320 Speaker 8: I don't think he's broken it, but he certainly puts 439 00:24:56,440 --> 00:25:00,320 Speaker 8: some major sand in the gears. You know, there's a 440 00:25:00,320 --> 00:25:02,520 Speaker 8: short run problem that we've been talking about, which is 441 00:25:02,640 --> 00:25:06,480 Speaker 8: the kind of deer and headlights effect on business activity. 442 00:25:06,600 --> 00:25:10,160 Speaker 8: There are other things, though, that are even deeper, fundamental issues, 443 00:25:10,240 --> 00:25:13,600 Speaker 8: like what's going to happen to our stem community, our 444 00:25:13,720 --> 00:25:18,000 Speaker 8: scientific community going forward. This is the secret sauce of 445 00:25:18,040 --> 00:25:21,679 Speaker 8: American capitalism. We have the best tech sector in the world, 446 00:25:22,160 --> 00:25:24,520 Speaker 8: we have the best scientists in the world, and we 447 00:25:24,640 --> 00:25:27,200 Speaker 8: draw the smartest people in the world into the US 448 00:25:27,400 --> 00:25:32,960 Speaker 8: educational system. That's actually a longer run kind of damage 449 00:25:33,640 --> 00:25:37,399 Speaker 8: that nobody's really talking about because it seems like a 450 00:25:37,400 --> 00:25:41,199 Speaker 8: political fight. But we really need to get the smartest 451 00:25:41,200 --> 00:25:43,200 Speaker 8: people in the world to keep coming to the US 452 00:25:43,280 --> 00:25:47,479 Speaker 8: because Americans don't seem to want to do science. You 453 00:25:47,480 --> 00:25:52,160 Speaker 8: know that we've got too many economists not enough engineers. 454 00:25:53,160 --> 00:25:58,159 Speaker 8: But yeah, there's little bits of more permanent effects we 455 00:25:58,240 --> 00:26:00,159 Speaker 8: start to play out, and I would point to that 456 00:26:00,560 --> 00:26:02,840 Speaker 8: as my number one long run. 457 00:26:02,680 --> 00:26:06,399 Speaker 5: Concern ethan what role, if any, can the Federal Reserve 458 00:26:06,560 --> 00:26:11,280 Speaker 5: play in kind of inserting itself in this time of 459 00:26:11,320 --> 00:26:12,000 Speaker 5: uncertainty here? 460 00:26:13,000 --> 00:26:15,840 Speaker 8: I mean, they're a steady hand. I think that Pole 461 00:26:16,000 --> 00:26:19,359 Speaker 8: is doing exactly what he should do. Keep reiterating that 462 00:26:19,359 --> 00:26:23,119 Speaker 8: we're an independent central bank. We don't play politics. We 463 00:26:23,240 --> 00:26:26,800 Speaker 8: can't react to what we're seeing right now because there's 464 00:26:26,840 --> 00:26:29,680 Speaker 8: too much uncertainty and we don't know whether we're dealing 465 00:26:29,680 --> 00:26:32,800 Speaker 8: with an inflation problem or a growth problem. And so 466 00:26:32,920 --> 00:26:36,800 Speaker 8: I think they're a steady end on the Tiller here 467 00:26:37,160 --> 00:26:38,760 Speaker 8: and that's about all they can do. 468 00:26:39,320 --> 00:26:42,800 Speaker 2: Fold in the fiscal analysis this morning, folks in the 469 00:26:42,880 --> 00:26:47,280 Speaker 2: zeitgeist is the two Congresses, one looking for a hurried, 470 00:26:47,400 --> 00:26:51,080 Speaker 2: rushed large text program and the other with some patients 471 00:26:51,440 --> 00:26:56,040 Speaker 2: to guess what another debt ceiling debate. This debate's different, 472 00:26:56,119 --> 00:26:59,560 Speaker 2: doctor Harris, because of our fiscal situation, isn't it. 473 00:27:00,960 --> 00:27:05,760 Speaker 8: Yeah. I think that there's certainly a fiscal hawk wing 474 00:27:05,800 --> 00:27:09,760 Speaker 8: of the Republican Party that's making it harder to reach 475 00:27:09,800 --> 00:27:13,200 Speaker 8: these budget deals. And the deficit is out of control, 476 00:27:14,160 --> 00:27:18,960 Speaker 8: and you look at the proposals on the table. X 477 00:27:19,040 --> 00:27:22,320 Speaker 8: cuts are much bigger than the spending cuts. So it's 478 00:27:22,359 --> 00:27:25,199 Speaker 8: not like we're in the process of coming to terms 479 00:27:25,240 --> 00:27:29,439 Speaker 8: with this, and so it's going to continue to be 480 00:27:29,480 --> 00:27:32,800 Speaker 8: a weight around uncertainty in the markets. It may be 481 00:27:32,880 --> 00:27:35,439 Speaker 8: starting to affect the bond market. It may be the 482 00:27:35,440 --> 00:27:39,280 Speaker 8: bond market is starting to wonder whether there's an adequate 483 00:27:39,400 --> 00:27:44,240 Speaker 8: funding for the massive and growing budget deficit, particularly when 484 00:27:44,280 --> 00:27:48,520 Speaker 8: you have these trade wars going on. So it's something 485 00:27:48,520 --> 00:27:50,720 Speaker 8: we need to keep one eye on. Even though it's 486 00:27:51,200 --> 00:27:54,960 Speaker 8: old stuff and we've seen these fights over and over again. 487 00:27:55,240 --> 00:28:00,719 Speaker 8: They usually end up okay. But it's the stakes are 488 00:28:00,800 --> 00:28:02,000 Speaker 8: higher now, Ethan. 489 00:28:02,080 --> 00:28:04,320 Speaker 2: Let me slip in one final question here, and we 490 00:28:04,359 --> 00:28:06,920 Speaker 2: may have to cut you off as we go, but 491 00:28:07,040 --> 00:28:10,600 Speaker 2: let's be optimistic. And that is simply the recession call. 492 00:28:10,760 --> 00:28:13,560 Speaker 2: You are expert at this, at Lehman Brothers, at the 493 00:28:13,600 --> 00:28:18,640 Speaker 2: Bank of America, many are positing a ninety recession. I'll 494 00:28:18,720 --> 00:28:22,800 Speaker 2: let you decide. Isn't a huge body of America in 495 00:28:22,880 --> 00:28:26,120 Speaker 2: recession right now? No? 496 00:28:26,359 --> 00:28:30,440 Speaker 8: I don't think so. I think we're entering. I don't 497 00:28:30,440 --> 00:28:34,320 Speaker 8: think we've tipped into a recession yet, and I do 498 00:28:34,359 --> 00:28:36,960 Speaker 8: think it's in the hands of the Trump administration. They 499 00:28:36,960 --> 00:28:40,160 Speaker 8: can decide are they going to continue to back off 500 00:28:40,160 --> 00:28:42,000 Speaker 8: from shock and awe? And by the way, I think 501 00:28:42,000 --> 00:28:45,120 Speaker 8: the best in today will probably try to be assuring 502 00:28:45,160 --> 00:28:49,240 Speaker 8: for the markets. If that continues, I think we avoid 503 00:28:49,240 --> 00:28:54,080 Speaker 8: a recession. If it doesn't, the damage just builds and 504 00:28:54,160 --> 00:28:56,800 Speaker 8: we do get recession. So I'm a two armed economist. 505 00:28:56,840 --> 00:28:58,480 Speaker 8: You know, I'm gonna tell you, maybe we get a 506 00:28:58,520 --> 00:28:59,880 Speaker 8: recession and maybe we don't. 507 00:29:00,080 --> 00:29:02,640 Speaker 2: Where you retired for one or two days, how did 508 00:29:02,680 --> 00:29:07,280 Speaker 2: that work, Ethan? I think it was zero zero. 509 00:29:08,000 --> 00:29:11,720 Speaker 8: Yeah, I never really wanted to fully retire. I love 510 00:29:11,800 --> 00:29:15,120 Speaker 8: this stuff. This is amazed time to be an economist, 511 00:29:15,240 --> 00:29:16,280 Speaker 8: no question about it. 512 00:29:16,360 --> 00:29:19,080 Speaker 2: I can speak for all of Bloomberg. Ethan Harris, thank 513 00:29:19,120 --> 00:29:21,840 Speaker 2: you so much for the output. Again, folks, I can't 514 00:29:21,880 --> 00:29:25,320 Speaker 2: state enough the LinkedIn what Microsoft has done there, the 515 00:29:25,440 --> 00:29:28,680 Speaker 2: LinkedIn value when you see it in the essays of 516 00:29:28,800 --> 00:29:32,120 Speaker 2: Ethan Harris. Thank you so much, doctor Harris for a 517 00:29:32,160 --> 00:29:35,960 Speaker 2: brief involving a lot of perspective over at the years. 518 00:29:36,360 --> 00:29:40,240 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 519 00:29:40,280 --> 00:29:43,680 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 520 00:29:43,720 --> 00:29:46,680 Speaker 1: with the Bloomberg Business app. You can also listen live 521 00:29:46,760 --> 00:29:50,320 Speaker 1: on Amazon Alexa from our flagship New York station, Just 522 00:29:50,360 --> 00:29:52,920 Speaker 1: say Alexa play Bloomberg eleven thirty. 523 00:29:53,160 --> 00:29:57,080 Speaker 2: It is an honor in knowing Mark Kearney for years. 524 00:29:57,080 --> 00:30:02,320 Speaker 2: I should state that, And of course mister Kearney did 525 00:30:02,320 --> 00:30:04,720 Speaker 2: board work for Bloomberg ELP. I want to state that 526 00:30:05,240 --> 00:30:09,920 Speaker 2: as well. We have seen history in Canada. We went 527 00:30:09,960 --> 00:30:13,160 Speaker 2: out today and we looked for a voice that understands 528 00:30:13,200 --> 00:30:19,200 Speaker 2: completely the modern Canada. David Dodge Queen's University, and of 529 00:30:19,200 --> 00:30:23,880 Speaker 2: course Princeton is the esteemed economist of Canada. He's the 530 00:30:23,880 --> 00:30:27,280 Speaker 2: former governor of the Central Bank of Canada equivalent to 531 00:30:27,320 --> 00:30:30,760 Speaker 2: our chairman of the Federal Reserve. So honored that doctor 532 00:30:30,800 --> 00:30:35,400 Speaker 2: Dodge could join us this morning, Doctor Dodge, what does 533 00:30:35,440 --> 00:30:37,000 Speaker 2: the new Canada look like? 534 00:30:39,000 --> 00:30:43,560 Speaker 7: Slightly confused, because it's the first time and a very 535 00:30:43,600 --> 00:30:47,400 Speaker 7: long time, that you basically got a parliament that has 536 00:30:47,600 --> 00:30:52,920 Speaker 7: just the two parties, the minor parties, which have been 537 00:30:53,080 --> 00:30:58,320 Speaker 7: very important in being part of governing coalition. We're basically 538 00:30:58,360 --> 00:31:07,640 Speaker 7: decimated last night. Mister Corney is now Prime Minister without 539 00:31:07,960 --> 00:31:16,720 Speaker 7: a a dominant majority. He's a few seats still, a 540 00:31:16,720 --> 00:31:24,760 Speaker 7: few seats short, and so he is going to be governing, governing, 541 00:31:25,560 --> 00:31:33,000 Speaker 7: having to govern with his eyes always on his ability 542 00:31:33,080 --> 00:31:35,000 Speaker 7: to get the votes in Parliament. 543 00:31:35,240 --> 00:31:39,560 Speaker 2: How will he defend against the abruptness, some would say 544 00:31:39,640 --> 00:31:43,480 Speaker 2: rudeness of a request for a fifty first state. I 545 00:31:43,480 --> 00:31:47,800 Speaker 2: mean this, this dream of selected Americans goes back easily 546 00:31:47,840 --> 00:31:52,520 Speaker 2: into the nineteenth century. David Dodge, How should mister Kearney, 547 00:31:52,520 --> 00:31:56,480 Speaker 2: how should Canada push away the idea of a fifty 548 00:31:56,520 --> 00:31:57,160 Speaker 2: first state? 549 00:31:59,040 --> 00:32:02,720 Speaker 7: Well, the first thing is the day to day negotiations 550 00:32:02,760 --> 00:32:06,640 Speaker 7: which are going to have to take place on trade, uh, 551 00:32:07,560 --> 00:32:14,680 Speaker 7: not just the Canada, US, but the three countries in 552 00:32:14,840 --> 00:32:19,880 Speaker 7: North American h North American agreement, that's all got to 553 00:32:19,920 --> 00:32:23,080 Speaker 7: be redone and that that's kind of a very practical 554 00:32:24,080 --> 00:32:27,760 Speaker 7: thing that mister Carney is going to have to focus 555 00:32:27,840 --> 00:32:34,600 Speaker 7: on as well, uh, as well the President of Mexico. 556 00:32:36,200 --> 00:32:40,280 Speaker 7: And that all becomes really important to understand. Then what 557 00:32:40,640 --> 00:32:46,000 Speaker 7: is the role of the United States in terms of 558 00:32:47,160 --> 00:32:50,200 Speaker 7: a trade block, if you will, in the world, as 559 00:32:50,320 --> 00:32:56,160 Speaker 7: the world seems to be dividing itself in the blocks. 560 00:32:57,560 --> 00:33:03,880 Speaker 7: And then what how does North America fit? Because obviously 561 00:33:04,880 --> 00:33:10,080 Speaker 7: North America is stronger taken as a whole uh than not. 562 00:33:10,560 --> 00:33:14,959 Speaker 7: And so the practical thing is going to be to 563 00:33:15,000 --> 00:33:24,680 Speaker 7: discuss with the American administration not just the economic can 564 00:33:24,720 --> 00:33:29,560 Speaker 7: trade arrangements, but the security arrangement for North America, which 565 00:33:29,600 --> 00:33:34,200 Speaker 7: is particularly important. How we're going to deal with the Arctic, 566 00:33:35,800 --> 00:33:41,240 Speaker 7: which is very important. So when you say how will 567 00:33:41,280 --> 00:33:44,120 Speaker 7: we deal with it? What we'll start with the practicalities 568 00:33:44,640 --> 00:33:47,640 Speaker 7: of dealing with those things that have to be dealt 569 00:33:47,640 --> 00:33:52,520 Speaker 7: with on both sides, the American side and ourselves. 570 00:33:52,080 --> 00:33:55,520 Speaker 5: Doctor Dodge. Realistically, what can mister Carney do to try 571 00:33:55,560 --> 00:34:01,600 Speaker 5: to reorient the Canadian economy with less reliance on the 572 00:34:01,720 --> 00:34:02,280 Speaker 5: US trade. 573 00:34:02,440 --> 00:34:06,480 Speaker 9: Yeah, that that that is the big issue that that 574 00:34:06,640 --> 00:34:11,880 Speaker 9: was has been the issue basically since the Great Financial Crisis, 575 00:34:12,960 --> 00:34:15,000 Speaker 9: when investment has been. 576 00:34:14,920 --> 00:34:21,480 Speaker 7: Lagging UH in Canada UH and innovation has been lagging UH. 577 00:34:21,719 --> 00:34:26,440 Speaker 7: And so that that requires really quite a major reset. 578 00:34:27,120 --> 00:34:32,120 Speaker 7: And the difficulty in that reset. It essentially means that 579 00:34:32,160 --> 00:34:36,719 Speaker 7: there's going to be a smaller share of GDP UH 580 00:34:37,040 --> 00:34:40,760 Speaker 7: is going to go to consumption and a larger share 581 00:34:40,840 --> 00:34:43,840 Speaker 7: has to go to investment. And that means for the 582 00:34:44,000 --> 00:34:49,600 Speaker 7: ordinary middle class, that means slower growth in consumption UH 583 00:34:50,400 --> 00:34:53,799 Speaker 7: in the short run over the next few years in 584 00:34:53,920 --> 00:34:59,600 Speaker 7: order to get UH, get productivity up and hence have 585 00:35:00,160 --> 00:35:01,440 Speaker 7: growth in the future. 586 00:35:01,719 --> 00:35:05,440 Speaker 2: David Dodge one final question, if we may Ken Dryden 587 00:35:05,680 --> 00:35:09,440 Speaker 2: change the perspective of America on Canada not only in 588 00:35:09,480 --> 00:35:13,160 Speaker 2: the hockey with the Montreal Canadians, but he changed college 589 00:35:13,200 --> 00:35:17,120 Speaker 2: hockey at Cornell as well working as a public official 590 00:35:17,160 --> 00:35:20,239 Speaker 2: in Canada. And you know Ken Dryden's well quote in 591 00:35:20,280 --> 00:35:23,520 Speaker 2: the Toronto Globe and Mail, we have never been a 592 00:35:23,560 --> 00:35:27,920 Speaker 2: big guy like the United States. What does Canada need 593 00:35:28,000 --> 00:35:30,600 Speaker 2: to do to defend against the big guy? 594 00:35:31,200 --> 00:35:35,920 Speaker 7: Well, defend the best defense is a good offense, and 595 00:35:36,239 --> 00:35:39,600 Speaker 7: that offense has to be to come with a proposition 596 00:35:39,719 --> 00:35:45,880 Speaker 7: on trade and security that is good not just for Canada, 597 00:35:45,920 --> 00:35:48,120 Speaker 7: but good good for the United States. It has to 598 00:35:48,160 --> 00:35:53,040 Speaker 7: be good for both parties, and so that that will 599 00:35:53,120 --> 00:35:58,080 Speaker 7: be that will be the issue going forward. And he 600 00:35:58,440 --> 00:36:03,880 Speaker 7: Mark Carney is laid out some of the key parameters 601 00:36:03,920 --> 00:36:10,080 Speaker 7: in that, and his problem is going to be trying 602 00:36:10,120 --> 00:36:17,920 Speaker 7: to ensure that there is some way to manage the 603 00:36:18,000 --> 00:36:22,200 Speaker 7: fact domestically that for a period of time the amount 604 00:36:22,280 --> 00:36:26,360 Speaker 7: of the average household as for consumption is not going to. 605 00:36:26,360 --> 00:36:29,440 Speaker 2: Grow, right, David, we have to leave it there, of 606 00:36:29,440 --> 00:36:32,000 Speaker 2: a doctor Dodge, thank you so much for joining Bloomberg 607 00:36:32,040 --> 00:36:35,680 Speaker 2: this morning. David Dodge, of course, the seventh Governor of 608 00:36:35,719 --> 00:36:38,160 Speaker 2: the Bank of Canada, thrilled that it could be with 609 00:36:38,280 --> 00:36:47,000 Speaker 2: us on some important day north of our border. 610 00:36:47,719 --> 00:36:51,640 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 611 00:36:51,640 --> 00:36:54,680 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 612 00:36:54,680 --> 00:36:57,680 Speaker 1: Auto with the Bloomberg Business app. You can also watch 613 00:36:57,760 --> 00:37:00,719 Speaker 1: us live every weekday on YouTube and always on the 614 00:37:00,760 --> 00:37:01,840 Speaker 1: Bloomberg terminal. 615 00:37:02,000 --> 00:37:05,959 Speaker 2: It's the key reason that YouTube is growing, of course, 616 00:37:06,120 --> 00:37:08,359 Speaker 2: is Lisa Monteo's newspapers. Let us begin. 617 00:37:08,640 --> 00:37:10,040 Speaker 10: I need some bird chirping again. 618 00:37:10,120 --> 00:37:11,719 Speaker 8: That's what we need to make this go through. 619 00:37:12,520 --> 00:37:14,480 Speaker 10: I want to start with an interesting look at those 620 00:37:14,520 --> 00:37:18,200 Speaker 10: buy now, pay later options like apps like after pay Klarna. 621 00:37:18,440 --> 00:37:21,799 Speaker 10: So they're popular for luxury ittems like appliances, things like that. 622 00:37:22,239 --> 00:37:24,680 Speaker 10: But now there's an interesting take. A new study says 623 00:37:24,680 --> 00:37:28,040 Speaker 10: more people are using it for every day items like grocery. Really, 624 00:37:28,120 --> 00:37:32,120 Speaker 10: so they're using these leader never used. Tilarna is really popular, 625 00:37:32,160 --> 00:37:33,560 Speaker 10: so I know a lot of people who use that. 626 00:37:34,320 --> 00:37:36,400 Speaker 10: So it showed that one quarter shoppers have used a 627 00:37:36,440 --> 00:37:39,120 Speaker 10: service for groceries. That's up fourteen percent from a year ago. 628 00:37:39,160 --> 00:37:41,520 Speaker 10: So more people are doing it. But here's a kicker 629 00:37:41,600 --> 00:37:44,560 Speaker 10: forty one percent. So they paid back that loan late 630 00:37:44,800 --> 00:37:47,400 Speaker 10: over the past year, so they're using the thank you 631 00:37:47,440 --> 00:37:51,120 Speaker 10: for the bird chirping. Now I feel better. They're using 632 00:37:51,160 --> 00:37:54,600 Speaker 10: these apps and things like that, but they're not even 633 00:37:54,640 --> 00:37:55,919 Speaker 10: paying them back on time too. 634 00:37:57,040 --> 00:37:58,360 Speaker 5: I'm guessing they're high. 635 00:37:59,239 --> 00:37:59,960 Speaker 1: See that's the thing. 636 00:38:00,000 --> 00:38:02,880 Speaker 10: They're popular who for people want to avoid the risks 637 00:38:02,920 --> 00:38:04,879 Speaker 10: like with credit cards, are paying interests on a loan. 638 00:38:05,120 --> 00:38:07,200 Speaker 10: But the thing is is that it can also lead 639 00:38:07,239 --> 00:38:10,560 Speaker 10: to overspending and people are kind of extending their debt 640 00:38:10,600 --> 00:38:13,000 Speaker 10: even further because of these and that's the problem with it. 641 00:38:13,440 --> 00:38:15,319 Speaker 10: But it just goes an interesting take on like how 642 00:38:15,360 --> 00:38:18,399 Speaker 10: inflation is starting to affect people in different ways. 643 00:38:18,239 --> 00:38:23,160 Speaker 2: That one sign huge story and it's not daily, it's percolating. Say, 644 00:38:23,360 --> 00:38:25,080 Speaker 2: huge story just on groceries. 645 00:38:25,120 --> 00:38:27,560 Speaker 5: Yeah, that's not next we groceries. Okay. 646 00:38:27,680 --> 00:38:30,680 Speaker 10: Single women across Asia they're opening their hearts and their 647 00:38:30,680 --> 00:38:34,399 Speaker 10: wallets for a new mobile dating game. Okay, it's called 648 00:38:34,920 --> 00:38:38,840 Speaker 10: Love and Deep Space, and women love the fictional character. 649 00:38:38,880 --> 00:38:41,920 Speaker 10: His name is Silas. He's six foot two, red eyes 650 00:38:42,080 --> 00:38:43,880 Speaker 10: not blue, twenty eight, he's an arees. 651 00:38:43,920 --> 00:38:45,480 Speaker 2: Okay, does they have a trust fund? 652 00:38:45,880 --> 00:38:48,480 Speaker 10: Does not have a trust fund. But it's not just him, 653 00:38:48,520 --> 00:38:51,040 Speaker 10: there's like five love interests. But the thing is the 654 00:38:51,040 --> 00:38:53,799 Speaker 10: app is free to download, but women are on this 655 00:38:53,920 --> 00:38:57,320 Speaker 10: thing for like four hours a day, and they're spending 656 00:38:57,400 --> 00:38:59,520 Speaker 10: not on the game because it's free, but they spend 657 00:38:59,520 --> 00:39:01,640 Speaker 10: on the things kind of like how these other video 658 00:39:01,719 --> 00:39:04,440 Speaker 10: games you use them for like outfits and you buy 659 00:39:04,480 --> 00:39:06,719 Speaker 10: you know, extra money, did it spend on this or 660 00:39:06,800 --> 00:39:09,719 Speaker 10: that way? And they're spending like some spend like three 661 00:39:09,760 --> 00:39:12,399 Speaker 10: thousand dollars a year, you know, to on all these 662 00:39:12,480 --> 00:39:16,759 Speaker 10: like online different things to improve their character. But it's 663 00:39:16,920 --> 00:39:19,680 Speaker 10: huge in Asia, Like there's hundreds of women are showing 664 00:39:19,760 --> 00:39:23,960 Speaker 10: up to these live events for this game. It's crazy 665 00:39:24,880 --> 00:39:25,120 Speaker 10: to me. 666 00:39:25,200 --> 00:39:27,680 Speaker 2: It's the digital you know, this new digital world we're 667 00:39:27,719 --> 00:39:31,240 Speaker 2: living in and people are basically running through their charge 668 00:39:31,239 --> 00:39:34,359 Speaker 2: card without knowing it and you know they're consuming Yep. 669 00:39:35,120 --> 00:39:37,960 Speaker 2: It's it's a you know, forget about the finance of it. 670 00:39:37,960 --> 00:39:39,200 Speaker 2: It's a psychology. 671 00:39:39,160 --> 00:39:42,320 Speaker 10: Yes, and they say they like the idea of dating 672 00:39:42,360 --> 00:39:43,960 Speaker 10: but not having to deal with a real man. 673 00:39:45,160 --> 00:39:47,160 Speaker 2: It's a fictional guy. It's a fictional guy. 674 00:39:47,200 --> 00:39:49,359 Speaker 8: Yes, okay, yeah, right, there's nothing like that. 675 00:39:50,280 --> 00:39:52,560 Speaker 2: I think there was a diver who called me. 676 00:39:52,480 --> 00:39:58,040 Speaker 10: That, okay, this could be dangerous, so watch out for this. 677 00:39:58,120 --> 00:40:00,759 Speaker 10: There's another way to make purchases online and that's for 678 00:40:01,120 --> 00:40:04,879 Speaker 10: chat GPT. Open Aye has been trying to extend people 679 00:40:05,320 --> 00:40:09,160 Speaker 10: were having more users, so they have the competition from Anthropic, 680 00:40:09,239 --> 00:40:12,960 Speaker 10: you know, Alphabet's Google Elon musk Xai. So how it 681 00:40:13,040 --> 00:40:15,120 Speaker 10: works is that they have about like five hundred million 682 00:40:15,200 --> 00:40:18,960 Speaker 10: active users. So you go on there, you compare, you 683 00:40:18,960 --> 00:40:21,200 Speaker 10: can ask to compare different products and it will actually 684 00:40:21,239 --> 00:40:23,400 Speaker 10: send you a link and you can click on that 685 00:40:23,440 --> 00:40:26,080 Speaker 10: link and go to that person's website and or company's 686 00:40:26,080 --> 00:40:29,080 Speaker 10: website and buy the product there. So now it's another 687 00:40:29,160 --> 00:40:32,960 Speaker 10: way that you can buy different products off you can 688 00:40:33,040 --> 00:40:37,240 Speaker 10: spend money. It makes it like it makes it easy 689 00:40:37,560 --> 00:40:38,520 Speaker 10: to buy things. 690 00:40:39,440 --> 00:40:43,720 Speaker 5: So this whole AI thing I think is a existential 691 00:40:43,719 --> 00:40:45,240 Speaker 5: threat to Google search business. 692 00:40:45,360 --> 00:40:45,560 Speaker 7: It is. 693 00:40:45,600 --> 00:40:48,719 Speaker 5: I don't understand it. I'm surprised this stock is hanging 694 00:40:48,760 --> 00:40:50,799 Speaker 5: in there. Maybe maybe I just don't get it, But man, 695 00:40:50,840 --> 00:40:54,439 Speaker 5: I could see a scenario where well, type it into 696 00:40:54,440 --> 00:40:56,560 Speaker 5: the Google search. It's just it ain't happening. 697 00:40:56,760 --> 00:41:00,439 Speaker 2: But what you just said is really important. We don't 698 00:41:00,480 --> 00:41:00,759 Speaker 2: get it. 699 00:41:01,040 --> 00:41:05,200 Speaker 10: Yeah, we don't wonder because Google just said their search engine, 700 00:41:05,320 --> 00:41:06,319 Speaker 10: you know, numbers great. 701 00:41:06,360 --> 00:41:06,880 Speaker 5: I know. 702 00:41:07,520 --> 00:41:09,600 Speaker 10: And you're looking at this and you're saying it doesn't 703 00:41:09,640 --> 00:41:10,120 Speaker 10: make sense. 704 00:41:10,320 --> 00:41:13,480 Speaker 2: Whatever, Potato, thanks so much the newspaper. She's off to 705 00:41:14,640 --> 00:41:17,719 Speaker 2: look at some Asian data things. I don't understand. 706 00:41:18,360 --> 00:41:23,239 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 707 00:41:23,320 --> 00:41:27,640 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 708 00:41:27,760 --> 00:41:31,200 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 709 00:41:31,320 --> 00:41:35,319 Speaker 1: iHeartRadio app tune in, and the Bloomberg Business App. You 710 00:41:35,360 --> 00:41:38,719 Speaker 1: can also watch us live every weekday on YouTube and 711 00:41:38,920 --> 00:41:40,640 Speaker 1: always on the Bloomberg terminal