WEBVTT - Bloomberg Surveillance TV: February 14, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.560 Terminal and the Bloomberg Business App. Jim Bianco of Bianco 0:00:37.680 --> 0:00:40.280 Research is watching ten year bonyields and writes the following. 0:00:40.440 --> 0:00:43.440 If rates are steady, then ten year bonields should continue 0:00:43.479 --> 0:00:47.320 sideways before heading above five percent, and the curve will steepen. 0:00:47.440 --> 0:00:49.479 Jim joins us now for more. Jim Bianco, I want 0:00:49.479 --> 0:00:51.159 to go to a quote from Michael Hartner Bank for 0:00:51.159 --> 0:00:53.160 America and get your thoughts on this take this morning, 0:00:53.360 --> 0:00:56.720 we say hot three percent USCPI January is a blessing 0:00:56.760 --> 0:00:59.560 in disguise for both bonds and starks. Michael and the 0:00:59.560 --> 0:01:02.080 team go on to say rising inflation means Trump must 0:01:02.120 --> 0:01:04.760 go small, not big. On terraff and immigration in the 0:01:04.800 --> 0:01:08.800 coming months to avoid fanning a second wave of inflation. Jim, 0:01:08.920 --> 0:01:11.880 would you agree with that sake, No. 0:01:11.880 --> 0:01:14.600 I would not. I mean, we all know the phrases. 0:01:14.680 --> 0:01:17.560 You're supposed to take Trump seriously, but not literally. And 0:01:17.600 --> 0:01:19.080 that's what I think we've seen in the market in 0:01:19.080 --> 0:01:23.280 the last twenty four hours. They're torturing themselves to basically, 0:01:23.480 --> 0:01:27.360 you know, micro read what Trump has said, but take 0:01:27.400 --> 0:01:30.200 them seriously. He intends on doing tariffs, and we are 0:01:30.240 --> 0:01:32.720 going to get tariffs, and they're going to come. And 0:01:32.880 --> 0:01:34.760 as much as we want to try and talk ourselves 0:01:34.800 --> 0:01:37.399 out of it, they are coming later this year. And 0:01:37.440 --> 0:01:40.200 I might add markets get things wrong all the time. 0:01:40.400 --> 0:01:43.360 It convinced itself in January twenty twenty COVID wasn't going 0:01:43.440 --> 0:01:44.560 to be anything, and it was. 0:01:45.080 --> 0:01:47.640 It convinced itself in August. 0:01:47.240 --> 0:01:49.760 Of twenty twenty that, you know, the young carry trade 0:01:49.880 --> 0:01:52.840 unwined was the biggest deal we've ever seen, and it wasn't. 0:01:53.040 --> 0:01:57.120 So it gets things wrong a lot. And take Trump seriously. 0:01:56.720 --> 0:01:58.160 Aside, Jim, With that in mind, as you look at 0:01:58.200 --> 0:02:00.120 bonds and stocks, and you look at stocks, clothes to 0:02:00.160 --> 0:02:02.440 old time highs and bond yields near the low end 0:02:02.440 --> 0:02:04.000 of the range for the year so far. 0:02:04.080 --> 0:02:06.960 What do you think is more vulnerable, Oh, I think 0:02:06.960 --> 0:02:09.600 the bond market is probably more vulnerable at this point. 0:02:10.200 --> 0:02:13.120 The hot CPI number, I think is still a tell 0:02:13.520 --> 0:02:16.240 that the at least at a minimum, the road to 0:02:16.280 --> 0:02:19.040 two percent is now. You know, we've been talking about 0:02:19.080 --> 0:02:20.960 the last mile for two years, and we're probably going 0:02:21.000 --> 0:02:22.880 to have to talk about it for another two years 0:02:23.080 --> 0:02:24.560 before we get there to two percent. 0:02:24.960 --> 0:02:26.359 That we've got sticky inflation. 0:02:26.520 --> 0:02:29.560 And if we've got sticky inflation, the Fed is probably 0:02:29.600 --> 0:02:33.320 going to be done raising cutting rates, if not maybe 0:02:33.360 --> 0:02:35.800 one more this year, although I think they might be 0:02:35.840 --> 0:02:38.040 done for the year, meaning that the funds rate is 0:02:38.040 --> 0:02:40.359 still going to end the year with a four handle 0:02:40.400 --> 0:02:42.359 on it, even with one more cut. And if the 0:02:42.400 --> 0:02:45.080 yield curve continues to steep in and we see some 0:02:45.160 --> 0:02:47.520 kind of normalization of the curve, which we've been seeing 0:02:47.520 --> 0:02:49.760 for the last several months, that means that you could 0:02:49.800 --> 0:02:53.440 be pushing the tenure yield above five percent sometime later 0:02:53.520 --> 0:02:53.840 this year. 0:02:53.840 --> 0:02:55.440 And I still think that that's in the cards. 0:02:55.760 --> 0:02:58.680 Jim, when you take a step back, it feels like 0:02:58.720 --> 0:03:00.800 it's a little bit of a numbing and ironment. There 0:03:00.880 --> 0:03:03.440 is so much noise you have. On one hand, about 0:03:03.480 --> 0:03:06.119 three days ago, we were talking about that inflationary risk, 0:03:06.120 --> 0:03:07.799 and you would have had a lot of compatriots talking 0:03:07.840 --> 0:03:11.120 about five percent treasure yields. At the same time, you 0:03:11.200 --> 0:03:13.520 got inflation data that looked bad on the surface, but 0:03:13.560 --> 0:03:16.960 people got enough comfort from the individual details to say, actually, 0:03:17.000 --> 0:03:20.120 this means that disinflation is intact. How do you strip 0:03:20.120 --> 0:03:23.120 out the noise and have conviction about inflation call and 0:03:23.160 --> 0:03:26.639 the possibility of expectations getting truly unmoored. 0:03:27.639 --> 0:03:29.000 Well, I think if you look at the way that 0:03:29.040 --> 0:03:31.639 the markets have been trading, and if you say start 0:03:31.639 --> 0:03:33.840 with the stock market, the S ANDP is at the 0:03:33.880 --> 0:03:34.720 higher end of a range. 0:03:34.760 --> 0:03:36.680 It's been since two weeks after the election. 0:03:36.840 --> 0:03:39.240 It's been trading in about a fifty eight hundred to 0:03:39.240 --> 0:03:42.480 sixty one hundred range for like I said, over two months, 0:03:42.520 --> 0:03:44.160 and it's just at the top end of the range. 0:03:44.240 --> 0:03:45.880 And the same thing has been happening with the bond 0:03:45.920 --> 0:03:48.960 market too. On November fifteenth, we're four to fifty, we're 0:03:49.000 --> 0:03:52.120 four fifty three. We ended the year at four fifty six. 0:03:52.440 --> 0:03:54.800 So there's a lot of noise and the markets move 0:03:54.840 --> 0:03:57.720 around a lot. Yesterday was a big individual day in 0:03:57.760 --> 0:04:00.760 the stock market, but the trend is still sideway, and 0:04:00.760 --> 0:04:04.280 that says that that's still a market that is has 0:04:04.360 --> 0:04:07.480 little convictioners unsure of where to go next. So it 0:04:07.560 --> 0:04:10.600 sees all the news and it's not really reacting to 0:04:10.640 --> 0:04:13.000 it other than having big days here or there, but 0:04:13.200 --> 0:04:13.920 moving sideways. 0:04:13.920 --> 0:04:16.240 And I think ultimately it's going to give a way too. 0:04:16.279 --> 0:04:18.000 There's going to be terrifts, there's going to be a 0:04:18.040 --> 0:04:20.520 little bit more inflation, and interest rates are going to 0:04:20.520 --> 0:04:21.040 go higher. 0:04:21.520 --> 0:04:24.120 Jim, when you talk about the inflationary impulse, are you 0:04:24.160 --> 0:04:27.279 really attributing that to policy or do you see something 0:04:27.320 --> 0:04:28.960 in the internals of the data that a lot of 0:04:28.960 --> 0:04:32.800 people are just dismissing as highlighting some sort of pressure 0:04:33.200 --> 0:04:34.840 that everyone is closing their eyes to. 0:04:36.000 --> 0:04:37.800 No, I see something in the data. 0:04:38.320 --> 0:04:41.400 Every time we have a financial crisis or recession, and 0:04:41.440 --> 0:04:44.559 we had both in twenty twenty, the economy changes. Change 0:04:44.600 --> 0:04:47.760 is not worse, it's not dystopian. The big change that 0:04:47.880 --> 0:04:50.240 happened in the economy coming out of twenty twenty. 0:04:50.040 --> 0:04:50.760 Was remote work. 0:04:51.400 --> 0:04:54.040 Over a quarter of the country is now doing remote work, 0:04:54.080 --> 0:04:56.599 and we know what Jamie Diamond's attitude about that is 0:04:56.600 --> 0:04:57.720 from a couple of days ago. 0:04:57.920 --> 0:04:59.560 He doesn't like it at all. 0:05:00.080 --> 0:05:02.400 It is here, it is not going away, and that 0:05:02.560 --> 0:05:06.040 is a fundamental change not only to the. 0:05:05.520 --> 0:05:08.360 Way we work, but also to the way we live 0:05:08.400 --> 0:05:09.000 our lives. 0:05:09.160 --> 0:05:12.120 And I think that that is building excess pressures on 0:05:12.240 --> 0:05:15.560 prices and leaving us with higher inflation, not eight ten 0:05:15.640 --> 0:05:19.240 or Zimbabwe inflation, but more like three to four percent inflation. 0:05:19.680 --> 0:05:23.240 And core CPI just finished it's forty fifth month in 0:05:23.279 --> 0:05:24.720 a row above. 0:05:24.440 --> 0:05:27.839 Three percent, So we've been seeing that kind of pressure, 0:05:28.080 --> 0:05:31.080 although we continue to try and tell ourselves that no 0:05:31.160 --> 0:05:33.280 we're going to go back to two percent. That you 0:05:33.360 --> 0:05:36.120 know we're going to return, as Jpal says, to a 0:05:36.160 --> 0:05:39.240 pre pandemic environment, the cycle changed. 0:05:39.320 --> 0:05:40.800 We're in a different cycle right now. 0:05:40.960 --> 0:05:43.240 Jim, I just love to quickly get your thoughts before 0:05:43.240 --> 0:05:45.640 we end on what you actually think is going on 0:05:45.720 --> 0:05:48.440 with tariffs, because you say the market should be taking 0:05:48.440 --> 0:05:51.560 Trump seriously and they didn't. But he didn't actually sign 0:05:51.760 --> 0:05:56.480 anything formidable yesterday. It's an investigation into these countries. There 0:05:56.560 --> 0:05:59.440 was not a single tar iff placed yesterday. And my 0:05:59.560 --> 0:06:02.400 read is he's a negotiating mode to get some sort 0:06:02.400 --> 0:06:05.120 of concessions, especially out of the European Union. Would you 0:06:05.160 --> 0:06:05.840 not agree with that? 0:06:06.680 --> 0:06:07.000 Yeah. 0:06:07.200 --> 0:06:09.240 I think tariffs are leverage, and I think they are 0:06:09.360 --> 0:06:11.719 big leverage. And I think that when it comes to 0:06:11.839 --> 0:06:16.000 negotiating with our partners, whether it's Canada, Mexico or the 0:06:16.040 --> 0:06:19.400 European Union, Trump holds more cards than they do, and 0:06:19.480 --> 0:06:22.240 I think that these tariffs are a threat and he 0:06:22.360 --> 0:06:25.280 wants something else. Now, in the case of Europe, I 0:06:25.279 --> 0:06:28.279 think what he wants is he wants more security arrangements. 0:06:28.279 --> 0:06:30.400 He wants them to spend five percent of their budget 0:06:30.680 --> 0:06:33.360 on a defense and he even said yesterday he wants them, 0:06:33.360 --> 0:06:35.239 when they're spending five percent of their budget on defense, 0:06:35.279 --> 0:06:35.760 to buy. 0:06:35.600 --> 0:06:37.840 More stuff from defense makers in the United States. 0:06:38.120 --> 0:06:41.320 So I think that all of this is more leverage 0:06:41.760 --> 0:06:45.960 than an external revenue service to raise revenues. I think 0:06:46.000 --> 0:06:47.480 he wants some of that too, but I think it's 0:06:47.520 --> 0:06:50.200 really about negotiating and we need to understand that that's 0:06:50.240 --> 0:06:51.000 what he's trying to do. 0:06:51.279 --> 0:06:53.200 Hi, Jim Grid's kickoff this morning with you. I am 0:06:53.279 --> 0:07:06.120 freciate it. Jim Pianco at Biancout Research Pit, a chair 0:07:06.120 --> 0:07:09.600 of Academy Securities, saying maybe we need to squeeze some shorts. 0:07:09.600 --> 0:07:12.600 But I suspect we're going to see tariff related headlines 0:07:12.640 --> 0:07:14.960 to spook the market as early as the next week. 0:07:15.080 --> 0:07:16.960 Pet Joined, just now for more, Pete, good morning, it's 0:07:16.960 --> 0:07:19.600 good morning. Yeah, what happened yesterday? Should we start there? 0:07:19.720 --> 0:07:19.920 Yeah? 0:07:19.960 --> 0:07:22.520 I feel like it wasn't really Donald Trump speaking. I 0:07:22.520 --> 0:07:25.320 feel like he got sucked into his advised advisors to 0:07:25.440 --> 0:07:27.200 come up with this very mellow message. Right, if you 0:07:27.240 --> 0:07:29.520 think about Trumpets, We're gonna take over Greenland. 0:07:29.520 --> 0:07:31.040 Canada should be the fifty first state. 0:07:31.120 --> 0:07:34.000 Right, there's no nuances about well, Quebec doesn't like Ontario. 0:07:35.120 --> 0:07:38.280 He's always very aggressive, even on the initial set of tariff. 0:07:38.280 --> 0:07:39.880 So I feel like the rest of the world's kind 0:07:39.880 --> 0:07:42.720 of like, Okay, what was really said? And I do 0:07:42.840 --> 0:07:46.440 think tariffs resonates with people, trade protection resonates with people. 0:07:46.480 --> 0:07:48.920 I'm not even sure that resonates. So I feel that 0:07:49.000 --> 0:07:50.960 sometime next week he's going to be like, no one's 0:07:51.000 --> 0:07:51.920 taking this seriously. 0:07:52.160 --> 0:07:53.520 I'm not going to listen to my advisors. 0:07:53.520 --> 0:07:55.320 I'm going to go back to being myself and I'm 0:07:55.360 --> 0:07:56.440 going to send a clear message. 0:07:56.440 --> 0:07:58.200 I'd love to have Potin back in the G seven. 0:07:58.280 --> 0:08:00.520 Russia should be sitting at the table that was restrained 0:08:00.600 --> 0:08:02.320 version of the president yesterday. 0:08:02.640 --> 0:08:03.760 So that was an interesting one. 0:08:03.800 --> 0:08:06.600 I think it's again you go back and why Russia 0:08:06.680 --> 0:08:08.240 was brought into the G seven or G eight at 0:08:08.240 --> 0:08:10.920 the time was Okay, maybe if they work with us, 0:08:11.360 --> 0:08:13.880 you'll move forward. I think it's a little bit incorrect 0:08:13.960 --> 0:08:15.920 right now because there should be some sort of punishment 0:08:15.960 --> 0:08:18.200 for the invasion, and certainly this is going to send Europe, 0:08:18.240 --> 0:08:20.040 you know, in a tizzy. Right Europe's not gonna be 0:08:20.040 --> 0:08:22.120 comfortable with us at all. Europe's not comfortable with any 0:08:22.120 --> 0:08:24.480 form of peace right now, let alone bringing him back. 0:08:24.600 --> 0:08:26.280 So again, I think there's all this friction, and I 0:08:26.280 --> 0:08:26.840 think people have. 0:08:26.800 --> 0:08:28.040 Been very when we jump in. 0:08:28.200 --> 0:08:30.680 Europe's not comfortable with any kind of peace right now. 0:08:30.800 --> 0:08:33.280 Can you translate that, because that just sends shocking too people. 0:08:33.280 --> 0:08:33.880 What does that mean? 0:08:34.040 --> 0:08:36.520 I think Europe, much more than US, is very worried 0:08:36.520 --> 0:08:38.839 about If you give Putin an inch, you've given them 0:08:38.840 --> 0:08:41.600 a mile, and that's any sort of a core that 0:08:41.640 --> 0:08:45.280 gives Putin time to you know, take his win, consolidate, 0:08:45.520 --> 0:08:47.439 leads him coming back for more than two years down 0:08:47.440 --> 0:08:49.800 the road. That's I think very prevalent within Europe. It's 0:08:49.840 --> 0:08:52.240 a thought that's much more concerning to them, and they 0:08:52.240 --> 0:08:54.440 are sitting there much closer to the front lines, so 0:08:54.520 --> 0:08:56.720 I think their view of a piece is very different 0:08:56.720 --> 0:08:57.560 than ours, which. 0:08:57.480 --> 0:08:59.040 Is the reason why a lot of the commentary that 0:08:59.040 --> 0:09:01.000 we hear out of the Earth Union as well as 0:09:01.040 --> 0:09:03.959 analysts in the United States is this doesn't really move 0:09:04.000 --> 0:09:06.760 the needle further towards some sort of peace agreement that 0:09:06.840 --> 0:09:09.600 is viable and long lasting. You have a lot of 0:09:09.640 --> 0:09:13.440 generals ed at your firm at Academy Securities. Do they 0:09:13.480 --> 0:09:16.600 agree or do they think that actually having conversations is 0:09:17.080 --> 0:09:19.720 a really solid step, just like the market seems to imply. 0:09:19.880 --> 0:09:21.200 So we think there is going to be a deal 0:09:21.200 --> 0:09:22.960 done this year. I think whether Europe likes it or not, 0:09:23.080 --> 0:09:26.040 it's going to happen. We think that the Russian frozen 0:09:26.040 --> 0:09:27.800 dollar reserves are going to play a big part of that. 0:09:28.160 --> 0:09:30.160 So that's going to be the carot and stick right Pudin. 0:09:30.320 --> 0:09:31.920 We could try and fight you and keep all these 0:09:31.960 --> 0:09:33.920 dollar reserves, or we can give you some back and 0:09:34.000 --> 0:09:35.760 if you make peace Ukraine, you get a bunch of 0:09:35.840 --> 0:09:37.880 dollar reserves to give up some land and do the rebuilding. 0:09:37.920 --> 0:09:39.360 So I think that's a big part of it. 0:09:39.400 --> 0:09:41.520 There'll be some sort of vague path for China or 0:09:41.600 --> 0:09:44.400 sorry for Ukraine to head towards NATO that Pudin probably 0:09:44.400 --> 0:09:46.360 won't believe in, and there's a chance, right if you. 0:09:46.360 --> 0:09:48.640 Pull people together. I think most of our generals. 0:09:48.640 --> 0:09:50.520 Again, I think one of the more interesting questions we've 0:09:50.520 --> 0:09:53.120 been asked periods, what would you do most as a 0:09:53.240 --> 0:09:55.480 general to ensure peace for the US? 0:09:55.640 --> 0:09:58.880 US like fund the State Department. More so, I think. 0:09:58.760 --> 0:10:01.280 Talking and engaging with countries, that's a way to pull 0:10:01.320 --> 0:10:03.720 it together. So I don't know that there's an obvious 0:10:03.760 --> 0:10:06.400 lasting piece, but if you stop the war, you get 0:10:06.440 --> 0:10:07.840 people talking, there's that potential. 0:10:08.200 --> 0:10:10.360 Markets are sniffing this out, and there's a question of 0:10:10.400 --> 0:10:12.880 how much that is giving sort of a turbo charged 0:10:12.880 --> 0:10:15.520 effect to some of the optimism that we heard a 0:10:15.520 --> 0:10:18.280 couple months ago about the euro Maybe things have gotten 0:10:18.320 --> 0:10:19.800 so bad they can't get any worse. 0:10:20.240 --> 0:10:21.080 Do you lean into that? 0:10:21.160 --> 0:10:23.199 And it's not just with Europe but also with China 0:10:23.280 --> 0:10:26.079 that if there is discussion and there is some semblance 0:10:26.120 --> 0:10:29.480 of deal making, then maybe that could actually reignite some 0:10:29.559 --> 0:10:30.960 of the growth in the rest of the world, not 0:10:31.000 --> 0:10:31.640 just the US. 0:10:31.800 --> 0:10:33.400 So at the start of the year we are very adamant. 0:10:33.440 --> 0:10:36.679 We call the geopolitical opportunities and risk, and I think 0:10:36.679 --> 0:10:38.240 everyone talks about geopolitical risks. 0:10:38.400 --> 0:10:39.480 We felt there'd be some sort. 0:10:39.320 --> 0:10:41.680 Of resolution this year in Ukraine, Russia, there'd be some 0:10:41.720 --> 0:10:44.240 sort of resolution with Iran Israel. Those are going to 0:10:44.240 --> 0:10:46.400 be very positive for those regions. I think Germany can 0:10:46.440 --> 0:10:48.520 Actually this might help Germany out of the slump, especially 0:10:48.520 --> 0:10:51.880 if Ukraine's given these dollar reserves to rebuild. Poland I 0:10:51.920 --> 0:10:53.440 think is going to be a huge beneficiary of this. 0:10:53.480 --> 0:10:54.800 I think in the next few years you're going to 0:10:54.800 --> 0:10:57.400 see Poland's importance grow more and more. And even when 0:10:57.480 --> 0:10:59.720 Vance talks about pulling troops out of Germany, at least 0:10:59.720 --> 0:11:02.040 in the past Trump administration, it was pulling troops out 0:11:02.040 --> 0:11:04.280 of Germany and putting them in the Baltics, putting them 0:11:04.280 --> 0:11:06.800 in Poland for two reasons. One closer to Russia, so 0:11:06.840 --> 0:11:09.560 more important, and two this goes back to Trump. Having 0:11:09.640 --> 0:11:13.000 a US military base in your country provides huge economic 0:11:13.160 --> 0:11:15.920 benefits to that country. Right, the military spends money, the 0:11:15.920 --> 0:11:19.440 people there spend money. So if Germany's not spending their 0:11:19.480 --> 0:11:21.520 three percent, let's give it to the Baltics who are 0:11:21.559 --> 0:11:23.720 spending their three percent. Let's give it to Poland, who's 0:11:23.720 --> 0:11:25.199 done a lot. So I think there's going to be 0:11:25.200 --> 0:11:28.520 a lot of you know, thought about this and it's 0:11:28.559 --> 0:11:29.400 not simplistic. 0:11:29.720 --> 0:11:33.000 Do you think that maybe then the long dollar trade 0:11:33.000 --> 0:11:36.040 is crowded because right now what we're seeing is actually 0:11:36.120 --> 0:11:39.679 a push towards the rest of the world. Gets your 0:11:39.679 --> 0:11:40.199 house in order. 0:11:40.280 --> 0:11:42.120 Yes, So I would say right now the portfolio we're 0:11:42.120 --> 0:11:46.520 recommending people is very contrayan. But we still like despite 0:11:46.520 --> 0:11:48.559 all the friction that we see with China, despite China 0:11:48.679 --> 0:11:51.719 as national security threat number one, FXI and k web 0:11:51.720 --> 0:11:53.040 By thinking you're going to continue to do to well, 0:11:53.040 --> 0:11:53.960 they're heavily under owned. 0:11:54.200 --> 0:11:55.439 China's trying to do its own thing. 0:11:55.480 --> 0:11:57.719 Trump seems to back off and then periodically I think 0:11:57.720 --> 0:12:00.560 that could explode higher. I like European stocks, and I 0:12:00.640 --> 0:12:02.400 do like the chip makers in the US, but I 0:12:02.520 --> 0:12:04.640 like the ones that can be domestic chip makers. I 0:12:04.640 --> 0:12:05.960 think you're seeing more and more of this. We've been 0:12:05.960 --> 0:12:08.280 talking about it since day one of Trump. He wants 0:12:08.320 --> 0:12:10.880 a domestic chip industry. We need to be able to 0:12:10.920 --> 0:12:12.920 make chips. That's going to be part of national security. 0:12:13.080 --> 0:12:15.000 I think that's just starting to take off. And we've 0:12:15.000 --> 0:12:18.040 seen some single stock reactions this week that I think 0:12:18.200 --> 0:12:20.000 are just the beginning of what can come. 0:12:20.200 --> 0:12:22.079 Everything you're saying to me, I keep thinking Trump is 0:12:22.200 --> 0:12:25.079 very transactional, this nuance, this idea of pulling troops out 0:12:25.080 --> 0:12:26.560 of Germany, but not to pull them out of Europe, 0:12:26.559 --> 0:12:29.000 but put them in the Baltics. Isn't that what the 0:12:29.040 --> 0:12:32.240 Europeans are Going back to Jonathan's point, Trump yesterday saying 0:12:32.280 --> 0:12:34.080 he liked to see Putin back at the table to 0:12:34.120 --> 0:12:37.880 the G eight. Well, Russia was kicked out because of 0:12:37.920 --> 0:12:41.600 annexation illegal annexation of Crimea. At the same time Germany 0:12:41.640 --> 0:12:44.040 was still willing to build Lord Stream too years later. 0:12:44.320 --> 0:12:46.800 Yeah, and one thing I would say, there's I think 0:12:46.840 --> 0:12:48.600 one thing. Europe's getting a little bit ahead of itself. 0:12:48.679 --> 0:12:51.000 I don't think Russia is coming back to deliver cheap 0:12:51.080 --> 0:12:52.600 gas to Germany anytime soon. 0:12:52.640 --> 0:12:54.280 I think Russia's really moved on. 0:12:54.320 --> 0:12:56.400 They're like, well, China's going to be a better customer, 0:12:56.400 --> 0:12:57.960 India is going to be a better customer. They're both 0:12:57.960 --> 0:13:00.240 going to be buying fossil fuels for fifty year in 0:13:00.240 --> 0:13:02.000 the future. Germany wakes up every day saying we're not 0:13:02.000 --> 0:13:04.080 going to use fossil fuels ever again, and then uses 0:13:04.080 --> 0:13:06.640 fossil fuels. So I don't think you're going to see this, 0:13:06.800 --> 0:13:08.840 you know, return to what it was. That switch has 0:13:08.880 --> 0:13:11.360 been broken. It's not coming back. I think the US 0:13:11.400 --> 0:13:14.520 has a better chance of establishing relationships with this And 0:13:14.600 --> 0:13:15.440 the other thing I think. 0:13:15.280 --> 0:13:16.800 You pointed out earlier is tariffs. 0:13:17.040 --> 0:13:19.040 Trump is going to be carrot and stick with everyone. 0:13:19.160 --> 0:13:20.600 Here's what you get if you behave nicely. 0:13:20.800 --> 0:13:21.599 Here's what you know. 0:13:22.200 --> 0:13:24.360 And that may work, it may backfire. That's going to 0:13:24.400 --> 0:13:25.079 be the big question. 0:13:25.360 --> 0:13:27.280 So right now, what do you think he wants his 0:13:27.400 --> 0:13:29.280 major concessions when it comes to teriffs. 0:13:30.160 --> 0:13:33.680 I think he does want something that allows us manufacturing 0:13:33.720 --> 0:13:36.360 to grow, something that makes it easier to build things here. 0:13:36.800 --> 0:13:38.240 And of all things we look at, I think the 0:13:38.280 --> 0:13:39.960 one he's most committed to and the one where we 0:13:40.040 --> 0:13:42.679 might get subsidies is the chip industry. I think everything 0:13:42.679 --> 0:13:44.920 else would be nice. I think that's a must have. 0:13:45.040 --> 0:13:47.360 And so when you think about must haves, it's the 0:13:47.400 --> 0:13:48.080 chip industry. 0:13:48.320 --> 0:13:50.600 You said, the GI who said it would be the GI. 0:13:51.480 --> 0:13:53.480 You're thinking Canada gets kicked out because they'll be part 0:13:53.520 --> 0:13:54.600 of the fifty first state, so. 0:13:54.559 --> 0:13:55.800 Then it's still the G seven. 0:13:55.960 --> 0:13:56.839 Just stand up in minded. 0:13:57.080 --> 0:13:58.000 I know that's what you're thinking. 0:13:58.160 --> 0:13:59.440 If you said it to me yesterday. 0:13:59.679 --> 0:14:04.280 The pressure was building into these comforts again on Canada yesterday, 0:14:04.400 --> 0:14:04.720 wasn't it. 0:14:04.720 --> 0:14:05.640 What's that all about? 0:14:05.760 --> 0:14:05.920 You know? 0:14:06.000 --> 0:14:08.040 I think again that's why I found what he says 0:14:08.040 --> 0:14:10.880 about Canada, for example, versus what he did on your 0:14:10.880 --> 0:14:13.320 global tariffs so interesting. So if you're Canada in Mexico 0:14:13.400 --> 0:14:15.800 right now or even some extent China, you're still facing 0:14:15.840 --> 0:14:19.040 the first round of tariffs and your fentanyl negotiations. Then 0:14:19.040 --> 0:14:21.760 you got slapped with twenty five percent on aluminum steel, 0:14:21.920 --> 0:14:24.520 and now there's this vague talk about reciprocals and what 0:14:24.560 --> 0:14:26.760 are you even negotiating now? I think his message was 0:14:26.800 --> 0:14:30.400 too muddled yesterday. I think markets took it comfortably because Okay, 0:14:30.440 --> 0:14:32.640 this isn't going anywhere. I think that's where he gets 0:14:32.640 --> 0:14:34.480 disappointed in the next few days, when people don't show 0:14:34.520 --> 0:14:37.600 up to kiss the ring, don't come saying, hey, President Trump, 0:14:37.600 --> 0:14:37.840 what do. 0:14:37.800 --> 0:14:38.360 We need to do? 0:14:38.800 --> 0:14:41.120 And that's when I think he ups the rhetoric because 0:14:41.120 --> 0:14:42.800 he does want people to come to the table. I 0:14:42.840 --> 0:14:45.040 just don't think yesterday's message brings people to the table. 0:14:45.160 --> 0:14:47.480 Right now, the marcut's not taking a seriously, that's for Showupay, 0:14:47.520 --> 0:14:49.200 it's going to say as a wis pit a chair 0:14:49.280 --> 0:15:01.200 that academy, let's get you to I love Oshatagas who 0:15:01.280 --> 0:15:03.280 joins us now, Janet, I think a tough question. What 0:15:03.320 --> 0:15:06.000 do you say to clients at the moment? Who asks you, Jeanette, 0:15:06.040 --> 0:15:08.040 what do you think is going to happen on April first? 0:15:08.080 --> 0:15:08.840 What'd you tell them? 0:15:10.280 --> 0:15:10.400 So? 0:15:10.560 --> 0:15:12.560 I think the one thing that we've noticed is that 0:15:12.600 --> 0:15:15.280 it is important to have a difference between tariffs on 0:15:15.360 --> 0:15:17.800 China and tariffs on the rest of the world. We 0:15:17.960 --> 0:15:21.240 have noticed that Trump has proposed tariffs several times and 0:15:21.240 --> 0:15:24.280 in the beginning for four weeks of his administration, but 0:15:24.400 --> 0:15:27.040 only the tariffs on China the additional ten percent, have 0:15:27.080 --> 0:15:30.120 actually gone into effect. Everything else seems to be up 0:15:30.120 --> 0:15:34.040 for negotiation. So we did have Canada and Mexico already negotiate, 0:15:34.080 --> 0:15:38.280 We had Columbia already negotiate. They're setting up a timeframe 0:15:38.360 --> 0:15:41.280 saying you have basically until April first to start making 0:15:41.360 --> 0:15:44.520 some offers. Obviously, you had Prime Minister Mody coming into 0:15:44.640 --> 0:15:47.880 Washington yesterday. He came ready to offer some things to 0:15:47.920 --> 0:15:52.280 Trump to try to fix that reciprocal trade relationship with 0:15:52.360 --> 0:15:54.640 the US. And also the fact that these tariffs were 0:15:54.640 --> 0:15:58.120 announced while jd. Vance is in Europe for the Munich 0:15:58.280 --> 0:16:01.360 Security Conference is also important to try to say Europe, 0:16:01.440 --> 0:16:03.720 you need to do something to change the relationship with 0:16:03.960 --> 0:16:04.800 the United States. 0:16:04.960 --> 0:16:06.680 Well, Janette, we do have the head of the European 0:16:06.720 --> 0:16:09.520 Parliament Trade Committee saying that they're willing to lower the 0:16:09.600 --> 0:16:12.760 tariff when it comes to autos. What else could Europe 0:16:12.840 --> 0:16:16.160 give the United States in terms of concessions in these negotiations. 0:16:17.440 --> 0:16:19.800 So I think definitely the autos has been a thorn 0:16:19.920 --> 0:16:22.120 in Trump's side for quite some time. So getting that 0:16:22.240 --> 0:16:24.600 rate down from ten percent to closer to two point 0:16:24.640 --> 0:16:27.760 five and matching the US rate would be quite important. Obviously, 0:16:27.880 --> 0:16:30.360 US l G has also been really important during the 0:16:30.520 --> 0:16:34.760 entire Ukraine conflict. I think that Trump is definitely looking 0:16:34.800 --> 0:16:37.200 for Europe to buy and more US LERG and then 0:16:37.280 --> 0:16:39.600 also defense. So I think one of the things that 0:16:39.640 --> 0:16:43.560