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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. Joining us now, very

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Speaker 2: pleased to say pin and Navarro, the Director of the

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Speaker 2: Office of Trade and Manufacturing Policy at the White House

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Speaker 2: Dot Navarro, it's been too long, sir.

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Speaker 3: It's good to see you. Thanks for being here.

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Speaker 1: Been a long time. Joan, it is good to see

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Speaker 1: you too, sir.

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Speaker 3: Thank you, sir.

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Speaker 1: First class digs here, my friend.

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Speaker 2: Well, I'm pleased we're looking after you. Let's kick it

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Speaker 2: off with these talks this weekend. We just heard from

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Speaker 2: the President just moments ago, and he mentioned an eighty

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Speaker 2: percent tariff might be about right. Some to the Treasury secretary.

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Speaker 2: We understand you won't want to get ahead of those negotiations.

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Speaker 2: But I just wonder could you offer some clarity on

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Speaker 2: what about right means when the President says eighty percent

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Speaker 2: TAF on China seems right, seems right for the talks

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Speaker 2: this weekend, or seems right for the foreseeable future.

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Speaker 1: Yeah, it was one of three people that was with

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Speaker 1: the White House the first term, for all four years.

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Speaker 1: One of the big reasons is I never got ahead

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Speaker 1: of the president. Let me tell you about Geneva, which

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Speaker 1: is kind of I've got a very warm memories. It

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Speaker 1: was my finest hour as a negotiator. I went there

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Speaker 1: to lead the negotiations for the United Postal Union reforms

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Speaker 1: that essentially got China rates fear to We save billions

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Speaker 1: on that. But I mentioned this because Geneva has symbolic

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Speaker 1: value in this negotiation. It is the headquarters of the

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Speaker 1: World Trade Organization. And the scariest thing I ever saw

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Speaker 1: in Geneva was the size of the China delegation at

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Speaker 1: the World Trade Organization. And they've played the WTO like

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Speaker 1: a fiddle. So let's see what happens tomorrow. I'd be

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Speaker 1: happy to come back on Monday do the debrief, but

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Speaker 1: I don't want to get ahead of the boss or

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Speaker 1: Scott Besting. And don't forget Scott's going with Jamison Greer,

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Speaker 1: the United States Trade representative. He's the guy who learned

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Speaker 1: that the knee of bob bliteheis for the first time around,

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Speaker 1: was there for all the China stuff. And he's the

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Speaker 1: guy who was the architect, along with Howard Lutnik of

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Speaker 1: the UK deal. So let's see what happens.

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Speaker 3: It's in the very best.

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Speaker 2: We'll sell the pensylin the weekend for the markets. Well,

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Speaker 2: pencil in appearance with you for Monday. No worries about that.

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Speaker 2: I'm looking forward to that conversation. Just got into the

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Speaker 2: weekend and reflected on your experience dealing with the Chinese

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Speaker 2: then on the UK. This is not the same relationship.

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Speaker 2: The trade relationship is tremendously unbalanced and has been for

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Speaker 2: a long long time. Can you frame for us how

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Speaker 2: difficult it has been previously for you to negotiate with

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Speaker 2: the Chinese and how much long it could take with

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Speaker 2: a Chinese relative to set the UK and other tripatas well.

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Speaker 1: I could tell you. I think I sat face to

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Speaker 1: face with the China team maybe seven times during the

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Speaker 1: first term and twice Shi Jinping was there. It was

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Speaker 1: G seven. Just give me the G twenty both. I

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Speaker 1: think it was Tokyo and h and our Buenos Aires.

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Speaker 1: What's interesting, So what's so interesting to me, Jonathan about

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Speaker 1: China is that they have continuity. The same people are

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Speaker 1: going to be in Geneva or the same people back then.

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Speaker 1: And you know, our our regimes change, we we have

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Speaker 1: different governments and things like that. But they have the

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Speaker 1: advantage of that kind of continuity. But look, it'll be

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Speaker 1: interesting again. I don't I don't want to get ahead

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Speaker 1: of Scott and Jamison or the president. I think let's

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Speaker 1: see what happens. You know, my role, and we've got

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Speaker 1: fifteen countries we run enormous trade deficits. With that, we've

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Speaker 1: got to renegotiate the whole structure of those deals. And

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Speaker 1: there's another one hundred countries that cheat us in some

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Speaker 1: ways but smaller ways. My role in the administration on

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Speaker 1: all of this is to do the background analytics to

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Speaker 1: see how each country's cheating us, which basically sets up

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Speaker 1: the terms of the negotiation. And every country like fingerprints,

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Speaker 1: like India's the Maharajia tariffs, they have the highest tariffs.

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Speaker 1: Of any of our major trading partners, Japan is the

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Speaker 1: most clever at protecting its own markets with a combination

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Speaker 1: of domestic protectionism non tariff barriers. You know Germany they

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Speaker 1: have auto tariffs at ten percent, We have them at

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Speaker 1: two and a half percent, but they also have the

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Speaker 1: VAT tax which acts as another twenty nine to what

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Speaker 1: is it nineteen percent tariff and in exports subject. So

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Speaker 1: what I do is do the background and look at

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Speaker 1: kind of how these countries are doing what to us,

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Speaker 1: and we get great deals from there. People. I think

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Speaker 1: the UK deal is very interesting. I think the significance

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Speaker 1: is not just that it's a deal, but that's a

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Speaker 1: template for the future deals. What we do done is

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Speaker 1: there's like four or five verticals we look at. It's

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Speaker 1: the tariffs, the non tariff barriers, the digital taxes, and

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Speaker 1: then the various kinds of cheating, the dumping, the currency

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Speaker 1: manipulation and things like that. And then from there we

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Speaker 1: assess what the asks are, what we need and go

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Speaker 1: forward from there to see you get to see a

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Speaker 1: steady wave of deals. The USTR building is right across

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Speaker 1: the street from the White House. It's got the most

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Speaker 1: staff negotiating these deals, and it's like you go to

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Speaker 1: the Delhi and you have to take a number and

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Speaker 1: get in line. Every day there's delegations from around the

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Speaker 1: world lining up to meet with Jamison Greer and Howard

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Speaker 1: Ludnick and I've seen I looked yesterday at the schedule.

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Speaker 1: Was kind of fun out the July and it's just

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Speaker 1: you know, one after the others.

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Speaker 4: Well, Peter looking at the countries lining up. One key

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Speaker 4: aspect of the UK deal was of course bringing down

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Speaker 4: the auto tariff to ten percent. So right now you

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Speaker 4: have a tariff rate that's lower for Bentley's, which is

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Speaker 4: a car that most American families can't afford made in

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Speaker 4: the UK, where Chevys have a higher rate if they're

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Speaker 4: made in Canada or Mexico. Is there an expectation that

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Speaker 4: the next trade deals auto tariffs will be coming down

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Speaker 4: those rates.

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Speaker 1: It's going to be country by country. I mean, the

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Speaker 1: beauty about the UK is that very small amount of

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Speaker 1: exports they send us and we have a hard cap

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Speaker 1: I think it's one hundred thousand units where it goes

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Speaker 1: right back up to twenty five percent. And again we're

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Speaker 1: trying to do something that's mutually beneficial to both countries

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Speaker 1: to get to a better place. Well at the same

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Speaker 1: time changing the level of the playing field so that

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Speaker 1: it is more level. I think for me, the beauty

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Speaker 1: of the UK deal. Besides that was all of the

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Speaker 1: good stuff we had for AG. I mean, one of

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Speaker 1: the problems we have is this non tariff barriers like FIDO,

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Speaker 1: sanitary standards, what's that that's like these things they do

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Speaker 1: to keep our pork out, our chicken out, our beef.

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Speaker 1: Right now we're going to be able to sell a

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Speaker 1: lot more beef, poultry, dairy, and ethanol. I mean, they

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Speaker 1: had a really high tariff, almost a lockout tariff on

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Speaker 1: ethanol and that's made from corn. So folks in Iowa

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Speaker 1: are very happy about that. So this is the way

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Speaker 1: we're going to go forward on net The United States

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Speaker 1: is going to be far better off, and all we're

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Speaker 1: doing is trying to level the playing fielding. I saw

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Speaker 1: the EU kind of rattling sabers I think it was

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Speaker 1: yesterday about some kind of retaliation, and I would just

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Speaker 1: say to anybody who's who's in the European Union, I mean,

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Speaker 1: how can you look a US in the face and

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Speaker 1: threaten us when your tariffs are higher. You have lost

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Speaker 1: cases repeatedly at the wt O on US selling you

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Speaker 1: things like beef and poultry, and you won't even honor that.

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Speaker 4: So yesterday the President called Ursula Vonderline fantastic, and he

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Speaker 4: said he hopes to meet her. But are you saying

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Speaker 4: that the European Union is not as high on the

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Speaker 4: priority list and say other trading partners like Oria Japan

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Speaker 4: not at all?

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Speaker 1: I mean the EU to be clear here, we have

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Speaker 1: the second highest trade deficit with the EU, behind China,

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Speaker 1: so they're very high on the list. All I'm saying

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Speaker 1: here is that I I thought I found it unfortunate

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Speaker 1: that the EU kind of fired I think some term

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Speaker 1: was fired shots across our bow. It's like retaliation will

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Speaker 1: not work against the United States. We shouldn't have that.

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Speaker 1: Let's talk, Let's figure this out, and it would be

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Speaker 1: nice here. Let's give peace a chance here. All we're

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Speaker 1: asking for here in the United States of America is fairness.

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Speaker 1: I mean, hold on, would you agree? Is there any

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Speaker 1: disagreement on this set or on your set that the

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Speaker 1: tariffs of the EU are higher, and that the non

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Speaker 1: tariff bearers are higher, and that the wt O in

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Speaker 1: Geneva is basically sanctioning that through tuesdays one is the

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Speaker 1: But would you agree with that?

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Speaker 5: I think there's a bigger question FactCheck there. There's a

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Speaker 5: bigger question here. There's a bigger question here. And this

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Speaker 5: is something that the German Finance Minister has come out

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Speaker 5: and talked about, which is they'd be willing to drop

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Speaker 5: all tariffs to zero if the US were willing to

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Speaker 5: drop all tariffs to zero, there is a willingness to

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Speaker 5: negotiate aground the board to a lower tariff regime. Would

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Speaker 5: that be acceptable to you?

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Speaker 3: Or is ten percent?

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Speaker 1: So stay with that. See that's such a misdirection. Okay,

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Speaker 1: it's the non tariff barrier. Stupid to kind of paraphrase

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Speaker 1: Bill Clinton. It's like, it's the non tariff barriers. So

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Speaker 1: when countries like Vietnam or entities like the EU say

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Speaker 1: to US, oh, let's all go to zero tariffs and

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Speaker 1: everything will be okay, that's not the problem. It's part

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Speaker 1: of the problem. But the bigger problem is the non

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Speaker 1: tariff barriers in Europe. It's the vat tax. I mean,

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Speaker 1: I don't know if you know this, but the United

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Speaker 1: States has tried going back to the nineteen seventies to

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Speaker 1: get equity treatment for the that tax which most countries

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Speaker 1: of the world use versus the income tax which we use.

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Speaker 1: We haven't been able to get it because the WTO

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Speaker 1: has a majority of people who benefit from sticking it

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Speaker 1: to the United States, so they do so. The zero

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Speaker 1: road tariff thing, that's that's misdirection and on your set,

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Speaker 1: you should call it on that. Let's lower the bad

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Speaker 1: terror barriers and let's let's let's give you relief on

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Speaker 1: the VAT tax. Now we're talking the VAT.

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Speaker 5: Tax is a slightly different mechanism. This is all going

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Speaker 5: to take a long time, and there are a lot

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Speaker 5: of competing factors here in terms of who can possibly

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Speaker 5: pull these levers. And I'm just wondering, we've got two

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Speaker 5: months left in this ninety day negotiating period that is

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Speaker 5: paused for the retaliatory tariffs. Does that just get extended

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Speaker 5: out another ninety days as you have to deal with

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Speaker 5: different legislative bodies to possibly remedy what you.

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Speaker 1: See, Well, we don't have to deal with legislative body. Well, okay,

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Speaker 1: in the EU perhaps, but you know, like coin a

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Speaker 1: term in Trump time, which is to say do it

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Speaker 1: as fast as possible without screwing it up. And that's

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Speaker 1: all we're trying to do. I go back to the

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Speaker 1: observation that the United States trade representative and that building,

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Speaker 1: which is historic building, by the way, beautiful to see

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Speaker 1: if you ever get there. The lines, you know, they're

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Speaker 1: they're coming in and out. We're talking, and we're talking,

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Speaker 1: and you know, let's as the Boss says, let's see

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Speaker 1: what happens. I mean, it's in everybody's interests around the

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Speaker 1: world to level the playing field with the United States

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Speaker 1: in a way which allows us to restructure this international

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Speaker 1: trade environment which is fundamentally skewed against the United States.

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Speaker 1: I mean, we're losing because of this system. The United

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Speaker 1: States is losing our manufacturing base, We're losing our defense

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Speaker 1: industrial base. And when push comes to shev and folks

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Speaker 1: around the world are looking for the United States to

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Speaker 1: help defend them. I mean, we get to a point

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Speaker 1: where we can't do that, what good is that? So trade?

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Speaker 1: Trade economic security is national security is one of the

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Speaker 1: guiding principles of President Trump in this administration. So we're

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Speaker 1: we're just trying to get fairness here, give give fairness

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Speaker 1: a chance here, and work with.

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Speaker 3: Us looking forward to an update on Mondays.

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Speaker 2: It's going to see it once again, sir, Thank you,

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Speaker 2: Director of the Office of Trade a Manufacturing Policy at

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Speaker 2: the White House. Heading into the weekend, we can extend

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Speaker 2: the conversation with Sarah Pianke of eviCore. Sarah, we've had

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Speaker 2: positioning now for weeks ahead of these talks. Here they are,

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Speaker 2: who's got the leverage?

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Speaker 6: Well, look at this point, look, I think China has

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Speaker 6: a bit more leverage. But the reality is both sides

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Speaker 6: would like these tariffs to come down from these levels that,

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Speaker 6: as they all say, are basically an embargo. So I

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Speaker 6: think both sides will be delighted to you know, just

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Speaker 6: use even good mood music out of these talks to

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Speaker 6: take things down to the escalator. So I do expect

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Speaker 6: at some point next week we'll see these tariffs come

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Speaker 6: down to the sixty percent ranging on the US side,

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Speaker 6: and I think I do think China will we'll matchine

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Speaker 6: in some way.

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Speaker 4: Sarah, how are you thinking about this weekend? Is it

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Speaker 4: talks about talks or do you really think that they

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Speaker 4: are going to hash out some trade issues.

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Speaker 6: I think they are going to hash out minimal trade issues.

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Speaker 6: As you know, the one thing we've been saying in

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Speaker 6: all these countries is trade. Actual trade talks is hard

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Speaker 6: and long, but this is not hard. This is trying

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Speaker 6: to get down to something just manageable. While they begin talk,

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Speaker 6: so I think they'll they will talk about rare earths,

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Speaker 6: they will talk about some of these other issues, perhaps

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Speaker 6: if you purchase agreements, but in general, everybody wants this

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Speaker 6: to come down from these unsustainable levels and then which

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Speaker 6: by the way, sixty to fifty percent still really really high,

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Speaker 6: then that can at least, do you know, put us

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Speaker 6: on a path for an actual discussion, an actual outline

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Speaker 6: of what they're trying.

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Speaker 1: To achieve to drop that rate.

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Speaker 4: Does the US need to see a concession from Beijing.

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Speaker 6: I don't think so. I think, look, they have to

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Speaker 6: make sure it doesn't appear that it's just a purely

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Speaker 6: unilateral a walk away. But I I think they can

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Speaker 6: use the cover of a good conversation, a commitment on

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Speaker 6: a small commitment on fetanol. I think it can be

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Speaker 6: largely symbolic or policies that perhaps are already in place.

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Speaker 6: Pretty much. I don't think there's a lot here, because

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Speaker 6: again I think Beijing has a lot more patience and

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Speaker 6: pain tolerance in the United States. But nobody's really happy

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Speaker 6: with where we're at right now.

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Speaker 1: Sarah.

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Speaker 2: We're hearing from the President right now saying China should

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Speaker 2: open up its market to the USA. It would be

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Speaker 2: good for them. Closed markets don't work anymore.

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Speaker 3: Sarah.

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Speaker 2: You lift some of these negotiations with the Chinese before

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Speaker 2: as the deputy US trained representative in a previous administration.

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Speaker 2: How difficult is it to get China to move to

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Speaker 2: where the US would like it to be. What is

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Speaker 2: it that they're refusing to open up that we'd like

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Speaker 2: to see them open up?

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Speaker 6: Well, I'm not sure that opening up is really kind

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Speaker 6: of what honestly, what where the tensions really are? To

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Speaker 6: be honest, last time the President got trying to agree

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Speaker 6: to a bunch of purchase agreements, a particularly around ag

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Speaker 6: I had the honor of trying to see if those

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Speaker 6: were enforceable. There was not a lot. There was pretty

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Speaker 6: clear that China wasn't going to do that, And so

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Speaker 6: one of the challenges is not just what the agreement is,

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Speaker 6: but does anybody actually ever listen to it? The truth is,

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Speaker 6: what China really wants from the US is more access

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Speaker 6: to some of our technology and chips, and that's why

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Speaker 6: we always think this quote grand bargain is very very difficult.

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Speaker 6: We think the best you can do is sort of

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Speaker 6: a package of trades and exchanges and maybe a little

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Speaker 6: bit more market opening, but that's really not the core

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Speaker 6: of the issue.

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Speaker 2: Sarah, I appreciate your time, as always, so Yankee out

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Speaker 2: of the call with this around of table relationship of

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Speaker 2: being my wilth alisiha good moniic in warning you were

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Speaker 2: following that conversation he said he didn't want to get

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Speaker 2: ahead of negotiations this week, and what's the best case

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Speaker 2: Monday morning?

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Speaker 3: What do we waking up to?

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Speaker 7: So you know, at six am the best case was

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Speaker 7: a fifty or sixty percent tariff rate and ten percent universal,

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Speaker 7: and then an hour later it was eighty percent tariffs

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Speaker 7: on China. The news changes quickly. Interestingly, the markets have

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Speaker 7: been hanging in there. I mean, the futures actually have

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Speaker 7: not reacted to that, And I think the message that

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Speaker 7: the markets have learned is that this is one grand

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Speaker 7: negotiating strategy and there's good cop bad cop in the administration.

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Speaker 7: And it's very clear with what the direction of travel is,

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Speaker 7: and the direction of travel is lowering of the tariffs

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Speaker 7: and getting to deals. I think it's also no accident

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Speaker 7: that doctor Navarro was on today before the negotiations in

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Speaker 7: Switzerland this weekend, since he has seen to be the

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Speaker 7: most hawkish when it comes to tariffs and particularly on China.

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Speaker 7: So if this is part of a negotiating strategy, I

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Speaker 7: think the markets have learned it's a negotiating strategy.

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Speaker 1: So what do you make.

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Speaker 5: Of that idea that there's been sort of I don't

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Speaker 5: want to say benumbing of markets, but the response to

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Speaker 5: headlines has been coming in again and again. Does that

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Speaker 5: give you actually a sense of comfort?

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Speaker 1: Oh?

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Speaker 7: Yes, I mean, look what really happened, you know somehow

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Speaker 7: April ninth was the ninety day pause. Was the message

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Speaker 7: to markets that were moving the whole probability curve over

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Speaker 7: to the right and the worst tailed scenario, that highest

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Speaker 7: risk tail scenario is actually off the table. That's why

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Speaker 7: the markets were able to rally and bounced off the lows.

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Speaker 7: That continues to be the case. And if you think

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Speaker 7: about it just in terms of numbers, because this business

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Speaker 7: is all about numbers. The original tariffs of April seconds

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Speaker 7: were about six hundred billion worth of tariffs six hundred

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Speaker 7: billion dollars, which was basically attacks of two percent on

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Speaker 7: the US economy. US economy is about thirty trillion dollars

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Speaker 7: of GDP, so six hundred billion in tariffs was about

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Speaker 7: two percent hit, which is why you had the odds

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Speaker 7: of recession go straight up, because if you think growth

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Speaker 7: rates are about two percent, you put it too percent

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Speaker 7: tax on it, you get to zero. Now, with all

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Speaker 7: the walkbacks, worried about four hundred billion in tarras. Okay,

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Speaker 7: so we've walked back about one third of that, and

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Speaker 7: I think ultimately we get to somewhere of about two

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Speaker 7: hundred billion in Tariff's still very high, but it's not

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Speaker 7: a two percent hit to the economy. And that's what

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Speaker 7: the market's been pricing in the whole time. Earnings are

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Speaker 7: probably higher for next year than that immediate base case

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Speaker 7: in April second, and at some point the markets are

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Speaker 7: going to look to twenty twenty six, and by the

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Speaker 7: summer we're looking at twenty six and not twenty five anymore.

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Speaker 7: And I think that's what's happening in the market.

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Speaker 3: Weekend, and a weekend this weekend doesn't feel like it

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Speaker 3: doesn't not in this business.

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Speaker 7: I mean, I mean, look, we've all glued to our

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Speaker 7: screens for a long time. So there's now weekend, there's

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Speaker 7: the Sunday nights checking the futures.

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Speaker 1: We're going to do that again.

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Speaker 7: But I think the intensity of it, as I said,

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Speaker 7: the markets have learned, this is negotiating. This is a

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Speaker 7: negotiation with doctor Navarro on to set the stake in

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Speaker 7: the ground, to commit the US on unnegotiating.

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Speaker 2: Saturday, Denis went bust ranking. We're saying China tech waking

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Speaker 2: up to the revolution with the US Chinese trite sensions

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Speaker 2: abound down John's staff for more. Alongside of Leasha to

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Speaker 2: NY Town, it's going to say a sink we kind

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Speaker 2: of tried tos Why does tech fits in?

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Speaker 3: It's all of this.

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Speaker 8: Look, I think Tech news that they're walking back from

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Speaker 8: the cliff in terms of what they're going to need

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Speaker 8: to do right because the reality is that that's the hearts.

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Speaker 1: And lungs of the supply chain.

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Speaker 8: And I think what you've seen the Nvidia moment really

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Speaker 8: essentially giving Huawei the China market. I think that was

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Speaker 8: really that was the start of this. I think it

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Speaker 8: was the start of the administration recognized they're gonna have

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Speaker 8: to pull back, pull back, and look, you can't you

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Speaker 8: can't argue with the data.

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Speaker 2: How self sufficient is Chinese tech without US tech?

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Speaker 8: Look, they need US tech. But which is be someone

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Speaker 8: that spends so much time in China. I mean if

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Speaker 8: you put them in a room with a Selser bottle,

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Speaker 8: toothpick and you know, in a straw, they come out

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Speaker 8: with an AI chip. So the problem is is that

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Speaker 8: you don't want to put China in the situation that

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Speaker 8: they're going to have to ultimately innovate, because it's my view,

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Speaker 8: for the first time in thirty years, the US has

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Speaker 8: been ahead of China when it comes to tech. So

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Speaker 8: the last thing you want to do is cut US

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Speaker 8: tech off at the knees. And I think now the

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Speaker 8: administration is part what we're seeing in the market. They've

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Speaker 8: taken steps back and I think now at least getting

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Speaker 8: to some sort of balance. But still look, a lot

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Speaker 8: of you know, definitely allow more wood to chop ahead.

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Speaker 4: They're resenting the diffusion rule onto the Biden administration. So

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Speaker 4: some of these geopolitical swing states are going to get.

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Speaker 3: More access to US chips.

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Speaker 4: How does China take advantage of that?

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Speaker 8: I mean, look, China definitely is gonna, you know, from

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Speaker 8: a market share perspective, go after. I think we've already

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Speaker 8: seen in terms of Quai and others what they're going after.

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Speaker 8: But the reality is really the H twenty right like

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Speaker 8: ones you restrict the age twenty in terms of Nvidia,

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Speaker 8: that sort of started this sort of game of Thrones

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Speaker 8: battle that we're seeing in China. Definitely edging in terms

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Speaker 8: of what I've used the AI revolution Boba, you know,

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Speaker 8: I think front and center, but US continues to own

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Speaker 8: the AI revolution, and I think the one thing as

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Speaker 8: we go into Switzerland, you go into talks, the last

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Speaker 8: thing you want to see here is administration just double

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Speaker 8: down because if you do that and you don't lower

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Speaker 8: the tension, you don't de escalate, it's US tech that

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Speaker 8: gets hurt. And right now, I think that's sort of

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Speaker 8: the tenuous situation we're in, although much more positive than

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Speaker 8: called three four weeks ago.

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Speaker 5: And Alisha really points to what we've seen in the

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Speaker 5: markets recently, which is as the tone has softened, we

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Speaker 5: have seen a huge ripporring rally in tech and everyone's

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Speaker 5: been piling in. It's the hey, AI stories back on,

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Speaker 5: Let's go? Is that going to be the leadership again

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Speaker 5: or is this a tenuous rally in face of some

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Speaker 5: of the uncertainties of how far some of these negotiats

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Speaker 5: tactics can work.

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Speaker 7: So the one the thing that uncertainty is that it

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Speaker 7: creates a two way market, and I think many investors

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Speaker 7: see this as a great entry point. The multiples are

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Speaker 7: much lower, the stocks have been crushed, and you know, ultimately,

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Speaker 7: I think the narrative that US exceptionalism is over has

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Speaker 7: been has been very strong, and we saw this rush

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Speaker 7: into global markets, and the question is today I'm just

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Speaker 7: going to point out that the S and P has

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Speaker 7: outperformed developed international month to day, and there's a reason

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Speaker 7: for that, and that's partly because the tech earnings. With

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00:23:31,160 --> 00:23:34,359
Speaker 7: the multiples and the cash flow, you can't get around it.

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Speaker 7: And ultimately, as an investor, you're investing in future cash flows.

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Speaker 7: And what we saw from these companies is that there's

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Speaker 7: nobody else that can touch these companies.

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Speaker 8: And to your point, it was a jail in Bruns

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Speaker 8: and movement for the taxpase, let's say the nixtent.

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Speaker 1: And it was a jail and Brune and six bucks.

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Speaker 8: You've seen ultimately what happened here in terms of the AI.

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Speaker 2: Right, the AI race flash points allow me to sort

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Speaker 2: of date town a compo Deep sixx one. Okay, big

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Speaker 2: upset be on Tride. Let's forget right, Deep six one

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Speaker 2: the second one. I think this week Apple coming out

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Speaker 2: and saying so is paked on Google.

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Speaker 3: What was your reaction to that headline? That was a shot.

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Speaker 1: Across the bow, right.

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Speaker 8: I mean, just given what we're seeing, even on the

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00:24:13,960 --> 00:24:16,880
Speaker 8: regulatory fronts, the last thing Alphabet needed to see. Look,

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Speaker 8: I think barxworts and a bite there, and it's like

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Speaker 8: it's our search queries like where AI is not ending

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Speaker 8: Alphabet's hearts and lungs in terms of, you know, their core,

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Speaker 8: their core money train. But it shows Apple when it

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Speaker 8: comes to AI and building it out, they're gonna have

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Speaker 8: to do their own path and they're gonna have to

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Speaker 8: build some of that out.

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Speaker 1: And you talk about deep seek to almost kind of

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Speaker 1: put it in a bow.

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Speaker 8: Look this every big tech firm wants to be. They

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Speaker 8: want to be the seed at the table. No one's

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Speaker 8: gonna say, okay, hey, Apple, Google, you could be our

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00:24:50,840 --> 00:24:53,040
Speaker 8: our AI or open AI. And I think that's the

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Speaker 8: reality that we're seeing here.

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Speaker 2: At least it just quickly. Has the tech trait changed?

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Speaker 2: Is it different now? Do you have to play it differently?

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Speaker 3: I think you do.

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Speaker 7: You have to differently. I mean it's no longer close

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Speaker 7: your eyes and just throw the dart at the magnificent seven.

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Speaker 7: I mean, there's clearly different growth rates here. But the

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Speaker 7: power of the size of the companies, we think is

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00:25:09,800 --> 00:25:12,520
Speaker 7: still going to actually drive the SMP here. So we

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Speaker 7: think the American exceptionalism trade lives on and maybe in

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Speaker 7: different ways. But look at industrials have been rallying, you know, aerospace,

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Speaker 7: defense has been rallying, Tech has been rallying. This is

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Speaker 7: the base of the US economy and the SMP. It

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Speaker 7: does suggest also just say that some of the conversation

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Speaker 7: coming from the White House is finding its way back

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Speaker 7: into the market in a positive way and not just

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Speaker 7: putting a lid on things. Like we said weeks ago,

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Speaker 7: the forty eight hundred low is in. It's a regardless

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Speaker 7: of recession.

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Speaker 2: Eliza Levine Dan ives from New York and this is Bloomberg.

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00:25:48,080 --> 00:25:51,640
Speaker 2: This is the Bloomberg Sevenants podcast, bringing you the best

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00:25:51,680 --> 00:25:54,760
Speaker 2: in markets, economics, an gio politics. You can watch the

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00:25:54,760 --> 00:25:57,760
Speaker 2: show live on Bloomberg TV weekday mornings from six am

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00:25:57,920 --> 00:26:01,879
Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify,

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00:26:02,040 --> 00:26:04,240
Speaker 2: or anywhere else you listen, and as always, on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business Out

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Speaker 7: M HM.