1 00:00:02,520 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple, Cocklay and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:25,040 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,360 --> 00:00:27,880 Speaker 2: We got two separate statements from spokes people for the 7 00:00:27,920 --> 00:00:30,520 Speaker 2: White House yesterday in the aftermath of what was immense 8 00:00:30,920 --> 00:00:34,080 Speaker 2: selling pressure taking stocks down to the lows of well 9 00:00:34,120 --> 00:00:36,160 Speaker 2: before election day, In fact, the worst day we saw 10 00:00:36,240 --> 00:00:38,640 Speaker 2: on the tech heavy Nasdaq one hundred going back to 11 00:00:38,720 --> 00:00:42,000 Speaker 2: twenty twenty two, with no real direct remark from President Trump, 12 00:00:42,400 --> 00:00:44,000 Speaker 2: no saying markets calm down. 13 00:00:44,040 --> 00:00:46,600 Speaker 3: My tariff policy won't actually that bet be that bad. 14 00:00:46,680 --> 00:00:49,200 Speaker 2: Instead, actually what we got today was a doubling down 15 00:00:49,200 --> 00:00:50,920 Speaker 2: on the thread of tariffs, at least in the case 16 00:00:50,960 --> 00:00:53,120 Speaker 2: of Canada, going from a twenty five percent rate on 17 00:00:53,159 --> 00:00:55,760 Speaker 2: steel and aluminum to now fifty percent, and. 18 00:00:55,720 --> 00:00:58,400 Speaker 4: A promise shut down the auto industry in Canada while 19 00:00:58,440 --> 00:01:02,640 Speaker 4: he's at it, which we're pretty intertwined with here. These 20 00:01:02,720 --> 00:01:05,000 Speaker 4: as you mentioned, Kayla, you're set to take effect at midnight, 21 00:01:05,040 --> 00:01:07,760 Speaker 4: would be along with all the other countries facing steel 22 00:01:07,800 --> 00:01:11,200 Speaker 4: and aluminum tariffs and a market that just doesn't know 23 00:01:11,240 --> 00:01:12,959 Speaker 4: what to do with it. As we told you, the 24 00:01:12,959 --> 00:01:15,000 Speaker 4: President will be speaking to the Business Roundtable a bit 25 00:01:15,080 --> 00:01:17,560 Speaker 4: later on today. You were there when he spoke as 26 00:01:17,600 --> 00:01:20,800 Speaker 4: a candidate. Very different world we're in, i'd say now, 27 00:01:20,800 --> 00:01:23,320 Speaker 4: But the very same people who were expressing concern over 28 00:01:23,400 --> 00:01:25,720 Speaker 4: policies like these will be there, and we're going to 29 00:01:25,800 --> 00:01:28,039 Speaker 4: talk in a moment with Joe Lavorgnia, of course, former 30 00:01:28,680 --> 00:01:33,039 Speaker 4: Trump economic advisor. First, Laura Davison, Bloomberg Politics editor, is 31 00:01:33,040 --> 00:01:34,600 Speaker 4: with us at the table as we try to get 32 00:01:34,800 --> 00:01:36,960 Speaker 4: our arms around all of this. It's good to see, Laura. 33 00:01:37,000 --> 00:01:38,760 Speaker 4: This is a president that was supposed to be obsessed 34 00:01:38,800 --> 00:01:41,560 Speaker 4: with Wall Street driven by the markets. Not so much this. 35 00:01:41,560 --> 00:01:44,199 Speaker 5: Time around, Well at least right now, though, it's clear 36 00:01:44,240 --> 00:01:46,560 Speaker 5: that both he and his allies are very worried about 37 00:01:46,600 --> 00:01:47,320 Speaker 5: what they're seeing. 38 00:01:47,080 --> 00:01:47,559 Speaker 3: In the markets. 39 00:01:47,560 --> 00:01:50,000 Speaker 5: We didn't hear at all from the President yesterday. That's 40 00:01:50,040 --> 00:01:52,480 Speaker 5: really unusual. Normally he comes out and speaks to the 41 00:01:52,520 --> 00:01:55,559 Speaker 5: press at least once. Later today he set to speak 42 00:01:55,600 --> 00:01:57,640 Speaker 5: with a bunch of CEOs in Washington. 43 00:01:58,280 --> 00:01:59,920 Speaker 3: We'll see how that goes. 44 00:02:01,440 --> 00:02:04,280 Speaker 5: The CEOs are very concerned about these tariff policies they 45 00:02:04,320 --> 00:02:07,160 Speaker 5: see and really the uncertainty of their you know, set 46 00:02:07,160 --> 00:02:08,639 Speaker 5: at one level, the next day, they could be double 47 00:02:08,720 --> 00:02:10,320 Speaker 5: the next repealed the final day. 48 00:02:10,480 --> 00:02:11,480 Speaker 3: Nobody knows how to plan. 49 00:02:11,560 --> 00:02:13,560 Speaker 5: And that's what really what's feeding into a lot of 50 00:02:13,600 --> 00:02:15,079 Speaker 5: the market reaction we're seeing today. 51 00:02:15,320 --> 00:02:17,760 Speaker 2: Well, and I'm sure that is what business leaders would 52 00:02:17,800 --> 00:02:20,560 Speaker 2: have to say to President Trump this afternoon, that they 53 00:02:20,600 --> 00:02:24,600 Speaker 2: notoriously don't like uncertainty. Nor do people who are trading 54 00:02:24,639 --> 00:02:25,440 Speaker 2: financial markets. 55 00:02:25,480 --> 00:02:25,560 Speaker 6: Do. 56 00:02:25,600 --> 00:02:27,160 Speaker 2: We have a sense of if this is going to 57 00:02:27,200 --> 00:02:29,840 Speaker 2: be a two directional conversation, lauris he going giving a 58 00:02:29,880 --> 00:02:32,000 Speaker 2: speech and leaving without hearing them out. 59 00:02:32,280 --> 00:02:35,200 Speaker 5: Generally, how these exchanges have gone in the past, there 60 00:02:35,200 --> 00:02:37,720 Speaker 5: has been some sort of question and answer where CEOs 61 00:02:37,760 --> 00:02:40,160 Speaker 5: get to pose questions to the president. Generally, this has 62 00:02:40,160 --> 00:02:42,000 Speaker 5: not been in front of the press. Even staff is 63 00:02:42,040 --> 00:02:43,919 Speaker 5: generally not allowed in the rooms. The idea is to 64 00:02:44,040 --> 00:02:46,680 Speaker 5: keep these meetings very tight that we have gotten some 65 00:02:46,720 --> 00:02:51,600 Speaker 5: readouts in previous from previous meetings back in the spring 66 00:02:51,600 --> 00:02:53,840 Speaker 5: when he met last spring before the election, when he 67 00:02:53,840 --> 00:02:55,239 Speaker 5: met with them, he said he was going to lower 68 00:02:55,280 --> 00:02:57,720 Speaker 5: the corporate rate to twenty percent. I think we'll also 69 00:02:57,720 --> 00:02:59,680 Speaker 5: see some questions from CEO saying, hey, you know, we're 70 00:02:59,720 --> 00:03:01,200 Speaker 5: really HEARDing from these tariffs. 71 00:03:01,240 --> 00:03:02,680 Speaker 3: When are we going to get these tax cuts? 72 00:03:02,800 --> 00:03:05,280 Speaker 4: Boy, I don't know what the message will be or 73 00:03:05,320 --> 00:03:07,280 Speaker 4: whether even if we'll hear it, because this will be 74 00:03:07,400 --> 00:03:10,720 Speaker 4: largely behind closed doors. From what we understand, that would 75 00:03:10,720 --> 00:03:13,320 Speaker 4: be typical for the business round table. But every time 76 00:03:13,360 --> 00:03:15,960 Speaker 4: Donald Trump goes on truth social you know, the market's 77 00:03:16,480 --> 00:03:18,600 Speaker 4: kind of brace for what's coming next here. And we've 78 00:03:18,639 --> 00:03:21,920 Speaker 4: got a CPI report tomorrow morning. We've also got a 79 00:03:22,040 --> 00:03:24,920 Speaker 4: vote on a stop gap to keep the government running. Here, 80 00:03:26,040 --> 00:03:27,639 Speaker 4: We've got a lot of plates we're spinning in the 81 00:03:27,720 --> 00:03:30,760 Speaker 4: air right now. What's the Communications Office going to be 82 00:03:30,800 --> 00:03:32,360 Speaker 4: doing at the White House in the next twelve to 83 00:03:32,400 --> 00:03:33,200 Speaker 4: twenty four hours. 84 00:03:33,280 --> 00:03:35,760 Speaker 5: They're clearly trying to spin this forward, saying, look, you know, 85 00:03:35,800 --> 00:03:37,680 Speaker 5: this is going to be just a period of you know, 86 00:03:37,680 --> 00:03:40,080 Speaker 5: a little bit of unrest, but soon the market will 87 00:03:40,080 --> 00:03:43,040 Speaker 5: figure out and decide that these policies are correct. I mean, 88 00:03:43,040 --> 00:03:44,480 Speaker 5: this is really going to be the issue. If you've 89 00:03:44,520 --> 00:03:46,840 Speaker 5: got donors, you've got other people who are already concerned. 90 00:03:47,040 --> 00:03:49,520 Speaker 5: Businesses are cutting their forecast saying look, we just don't 91 00:03:49,560 --> 00:03:52,160 Speaker 5: know how to plan. Consumer sentiment is shaky, small business 92 00:03:52,200 --> 00:03:55,280 Speaker 5: second sentiment is shaky. This is not just one bad indicator. 93 00:03:55,320 --> 00:03:57,520 Speaker 5: This is a lot of bad indicators, and it's going 94 00:03:57,560 --> 00:03:59,200 Speaker 5: to be very difficult for the White House to just 95 00:03:59,240 --> 00:04:00,440 Speaker 5: talk their way out of one. 96 00:04:00,520 --> 00:04:00,680 Speaker 7: Well. 97 00:04:00,680 --> 00:04:02,600 Speaker 2: And I would imagine that's why the White House through 98 00:04:02,720 --> 00:04:04,760 Speaker 2: at least right now, Vice President Jady Vance, who is 99 00:04:04,800 --> 00:04:08,320 Speaker 2: dispatched to Capitol Hill today, are emphasizing extra that a 100 00:04:08,320 --> 00:04:11,440 Speaker 2: continuing resolution to keep the government funded beyond midnight Friday 101 00:04:11,600 --> 00:04:13,680 Speaker 2: is necessary to pass urging no dissent. 102 00:04:14,200 --> 00:04:16,080 Speaker 5: Yeah, so we see the House they've already decided they're 103 00:04:16,160 --> 00:04:17,760 Speaker 5: going to devote today and then leave to try to 104 00:04:17,839 --> 00:04:20,000 Speaker 5: jam the Senate. That could also potentially, you know, throw 105 00:04:20,040 --> 00:04:22,279 Speaker 5: a wrench into the system. It's really just not a 106 00:04:22,320 --> 00:04:23,800 Speaker 5: good day to be at the White House. You have 107 00:04:23,839 --> 00:04:26,080 Speaker 5: a lot of things that could potentially go wrong. And 108 00:04:26,120 --> 00:04:28,240 Speaker 5: if you know, there is a shutdown, even a short one, 109 00:04:28,400 --> 00:04:31,640 Speaker 5: or you know, we see you know, Marcus continue to fall, 110 00:04:31,640 --> 00:04:33,760 Speaker 5: there's a bad meeting with the CEOs, all this could 111 00:04:33,800 --> 00:04:35,120 Speaker 5: really just continue this tailspin. 112 00:04:35,400 --> 00:04:35,760 Speaker 6: All right. 113 00:04:35,839 --> 00:04:39,120 Speaker 2: Laura Davison, Bloomberg Politics Editor, thank you so much. And 114 00:04:39,200 --> 00:04:41,400 Speaker 2: tailspin is one way to describe it, Joe. But what 115 00:04:41,440 --> 00:04:45,840 Speaker 2: we're seeing is not just a down pressure on risk assets, 116 00:04:45,880 --> 00:04:49,200 Speaker 2: but you're also seeing some specific language floating around out there, 117 00:04:49,240 --> 00:04:52,640 Speaker 2: be it stagflation, people floating the idea that it's the 118 00:04:52,760 --> 00:04:57,000 Speaker 2: end of US exceptionalism, and increasingly the word recession seems 119 00:04:57,040 --> 00:04:57,800 Speaker 2: to be entering. 120 00:04:58,040 --> 00:05:01,120 Speaker 4: Yeah, the conversation that was the fallout from the weekend. 121 00:05:01,120 --> 00:05:03,800 Speaker 4: That was why we were blaming losses yesterday on this 122 00:05:03,839 --> 00:05:06,320 Speaker 4: and it's still resonating, and I'll be curious to hear 123 00:05:06,360 --> 00:05:08,760 Speaker 4: if the R word starts to emerge in more conversations 124 00:05:08,760 --> 00:05:11,960 Speaker 4: with credible economists. It was really just a Sunday morning interview. Yeah, 125 00:05:12,080 --> 00:05:14,120 Speaker 4: President didn't want to rule it out that got us 126 00:05:14,240 --> 00:05:14,599 Speaker 4: this far. 127 00:05:14,839 --> 00:05:17,320 Speaker 2: Well, it did emerge in one conversation between a former 128 00:05:17,360 --> 00:05:20,520 Speaker 2: Treasury secretary, Larry Summers, who sat down with our colleague 129 00:05:20,640 --> 00:05:23,159 Speaker 2: David Weston earlier today and had this to say. 130 00:05:23,880 --> 00:05:26,600 Speaker 8: I think you have to say that there's in the 131 00:05:26,760 --> 00:05:31,279 Speaker 8: range of i'd say, still slightly below a fifty percent 132 00:05:31,400 --> 00:05:35,440 Speaker 8: chance of a recession starting this year. 133 00:05:38,000 --> 00:05:40,320 Speaker 2: So let's see if our next guest agrees with that. 134 00:05:40,440 --> 00:05:42,479 Speaker 2: Joining us now here on Bloomberg TV and Radio as 135 00:05:42,560 --> 00:05:45,080 Speaker 2: Joe Lavornia. He's a former Special Assistant to the President 136 00:05:45,120 --> 00:05:47,919 Speaker 2: and chief economist at the National Economic Council during the 137 00:05:47,920 --> 00:05:51,160 Speaker 2: first Trump administration. He's now chief economist and Managing director 138 00:05:51,160 --> 00:05:55,240 Speaker 2: for smb NCO Securities America. Joe, welcome back to Balance 139 00:05:55,279 --> 00:05:57,360 Speaker 2: of Power. I don't know if you think receession odds 140 00:05:57,400 --> 00:06:00,440 Speaker 2: are in the ballpark of being a coin flip here, 141 00:06:00,440 --> 00:06:03,200 Speaker 2: but do you at least see greater risk of it 142 00:06:03,279 --> 00:06:07,640 Speaker 2: now than perhaps before. Seems to be the prevailing wisdom 143 00:06:07,960 --> 00:06:08,520 Speaker 2: on the street. 144 00:06:09,920 --> 00:06:12,440 Speaker 7: It's higher, Kley than it was before, because it seems 145 00:06:12,480 --> 00:06:14,960 Speaker 7: like this administration is not actually going to be very 146 00:06:15,000 --> 00:06:19,440 Speaker 7: serious to the extent possible in trimming a government spending 147 00:06:19,480 --> 00:06:22,080 Speaker 7: which has been a huge prop to growth the. 148 00:06:22,080 --> 00:06:23,440 Speaker 9: Last several years. 149 00:06:23,440 --> 00:06:27,000 Speaker 7: So that does increase, if not recession, certainly a period 150 00:06:27,000 --> 00:06:28,760 Speaker 7: of subpar growth, but that clearly would be a good 151 00:06:28,760 --> 00:06:32,280 Speaker 7: trade off or will be a much more sustainable fiscal trajectory. 152 00:06:32,640 --> 00:06:34,719 Speaker 7: The recession risk is not as high in my opinion 153 00:06:35,440 --> 00:06:38,039 Speaker 7: as what Larry Summers just mentioned, but it is rising. 154 00:06:38,760 --> 00:06:40,480 Speaker 7: That may be the price to pay though, to get 155 00:06:40,480 --> 00:06:45,320 Speaker 7: inflation back under control and to really rejigger the government's 156 00:06:45,360 --> 00:06:46,880 Speaker 7: finances which are really a mess. 157 00:06:48,880 --> 00:06:53,320 Speaker 4: That would though, portend Joe and welcome back a more 158 00:06:53,360 --> 00:06:56,839 Speaker 4: optimistic view for the long term, wouldn't it. I know 159 00:06:56,880 --> 00:06:59,640 Speaker 4: you're a chief economist and not achieve investment strategist, but 160 00:06:59,640 --> 00:07:02,880 Speaker 4: what do you make of this visceral reaction on Wall Street, 161 00:07:03,279 --> 00:07:05,240 Speaker 4: which is of course trying to price out where we're 162 00:07:05,279 --> 00:07:06,680 Speaker 4: going to be six to nine months from now. 163 00:07:07,800 --> 00:07:10,440 Speaker 9: Right now, Joe, thank you for having me again. Right now. 164 00:07:10,560 --> 00:07:11,400 Speaker 9: This is a correction. 165 00:07:12,080 --> 00:07:14,240 Speaker 7: And the market S and P had been up twenty 166 00:07:14,320 --> 00:07:17,600 Speaker 7: percent plus the last couple of years. The very narrow 167 00:07:17,640 --> 00:07:21,960 Speaker 7: growth concentrated into very select number of stocks. P ratio 168 00:07:22,000 --> 00:07:26,360 Speaker 7: is very high, the equity risk premium very low. We 169 00:07:26,480 --> 00:07:29,640 Speaker 7: had good growth last year, Unemployment was very low, but 170 00:07:29,680 --> 00:07:33,440 Speaker 7: we ran a budget deficit to GDP almost at seven percent. 171 00:07:34,120 --> 00:07:35,280 Speaker 9: That's not sustainable. 172 00:07:36,000 --> 00:07:39,280 Speaker 7: I am optimistic, very optimistic on the outlook because I 173 00:07:39,360 --> 00:07:43,680 Speaker 7: see productivity trend, productivity which started to recover rapidly under 174 00:07:43,680 --> 00:07:46,559 Speaker 7: President Trump and continued over the last few years. 175 00:07:46,600 --> 00:07:48,760 Speaker 9: You've got this huge AI boon. 176 00:07:49,560 --> 00:07:53,240 Speaker 7: We need to get capital expensing back full thrust to 177 00:07:53,320 --> 00:07:54,360 Speaker 7: keep KAPEC strong. 178 00:07:54,400 --> 00:07:56,840 Speaker 9: So I'm very upbeat on the outlook. 179 00:07:56,880 --> 00:07:59,880 Speaker 7: I think we're living remarkable times, but it's going to 180 00:07:59,880 --> 00:08:02,160 Speaker 7: take some time. As the Treasury Secretary, I believe said 181 00:08:02,240 --> 00:08:05,000 Speaker 7: last week, we're going to be in a detox phase, 182 00:08:05,040 --> 00:08:06,680 Speaker 7: and this is what we're living in right now. 183 00:08:08,200 --> 00:08:10,240 Speaker 2: Well, so, if it is all about the outlook and 184 00:08:10,240 --> 00:08:13,000 Speaker 2: what's going to happen longer term, Joe. Usually markets being 185 00:08:13,000 --> 00:08:16,080 Speaker 2: discount mechanisms that are forward looking would reflect what's going 186 00:08:16,120 --> 00:08:18,800 Speaker 2: to happen in the future. It's not just about right now. 187 00:08:18,800 --> 00:08:21,800 Speaker 2: Typically they can look ahead to what's coming down the road, 188 00:08:21,880 --> 00:08:25,360 Speaker 2: and that doesn't seem to be happening at this moment. 189 00:08:25,400 --> 00:08:28,520 Speaker 3: Are the market I would saying, or is this site no? Please? 190 00:08:28,640 --> 00:08:30,480 Speaker 7: And I think the markets are wrong. I mean, if 191 00:08:30,480 --> 00:08:32,760 Speaker 7: you look at credit spreads, they've held it very tight. 192 00:08:32,800 --> 00:08:35,200 Speaker 7: If there was real recession risk, we'd see much more 193 00:08:35,240 --> 00:08:38,160 Speaker 7: stress there. The bond market tends to sniff that out 194 00:08:38,240 --> 00:08:40,679 Speaker 7: much sooner. It ten see much more accurate than the 195 00:08:40,720 --> 00:08:43,000 Speaker 7: equity market. As I said, we had a huge rally 196 00:08:43,720 --> 00:08:46,520 Speaker 7: in the equity market, and this is correction phase. Once 197 00:08:46,559 --> 00:08:48,760 Speaker 7: the market gets clarity, and there will be clarity at 198 00:08:48,800 --> 00:08:52,079 Speaker 7: some point. There will be attacks bill passed this year. 199 00:08:52,120 --> 00:08:55,439 Speaker 7: The sooner the better that will provide clarity. Once we 200 00:08:55,480 --> 00:08:57,839 Speaker 7: get a gettuing resolution to fund the government through the 201 00:08:57,880 --> 00:09:00,280 Speaker 7: end of the year, that will provide clarity. And as 202 00:09:00,280 --> 00:09:04,680 Speaker 7: he moved into April, after the April to reciprocal tariff dates, 203 00:09:04,679 --> 00:09:06,480 Speaker 7: we're going to get some clarity on that as well. 204 00:09:06,800 --> 00:09:08,840 Speaker 7: So I think, Kelly, we're going to see the markets 205 00:09:08,920 --> 00:09:12,360 Speaker 7: kind of congeal and sort of stabilize that have actually 206 00:09:12,400 --> 00:09:14,360 Speaker 7: moved higher if there's no recession. 207 00:09:15,880 --> 00:09:19,040 Speaker 4: Is Donald Trump a changed man here? Joe, you've actually 208 00:09:19,040 --> 00:09:20,640 Speaker 4: had a chance to sit in the room. You ran 209 00:09:20,720 --> 00:09:24,760 Speaker 4: the National Economic Council in the first Trump administration. You've 210 00:09:24,760 --> 00:09:28,200 Speaker 4: talked about his view on the stock market, and that's 211 00:09:28,200 --> 00:09:30,560 Speaker 4: always been the wrap. He's driven by the markets. He 212 00:09:30,640 --> 00:09:33,839 Speaker 4: kind of measures his success by the markets. But now 213 00:09:33,880 --> 00:09:36,160 Speaker 4: we're talking about a drug war, not a trade war, 214 00:09:36,200 --> 00:09:38,920 Speaker 4: and a different set of principles, and there are new 215 00:09:39,000 --> 00:09:41,599 Speaker 4: questions about whether he cares about this market reaction. He 216 00:09:41,640 --> 00:09:43,200 Speaker 4: said just a couple of days ago, he hasn't been 217 00:09:43,200 --> 00:09:43,559 Speaker 4: watching it. 218 00:09:43,600 --> 00:09:47,280 Speaker 7: What do you think He definitely cares about the markets. 219 00:09:47,320 --> 00:09:50,720 Speaker 7: But Joe, really is where is the stock market? Where 220 00:09:50,760 --> 00:09:54,520 Speaker 7: is the economy in twelve months, twenty four months, forty 221 00:09:54,559 --> 00:09:57,240 Speaker 7: eight months? Where are we over the next handful of years. 222 00:09:57,760 --> 00:10:00,320 Speaker 7: As you know from following markets, I've been doing this 223 00:10:00,360 --> 00:10:03,280 Speaker 7: for a long time. People get nervous and they tend 224 00:10:03,360 --> 00:10:06,200 Speaker 7: to overreact. There's a people I think right now are 225 00:10:06,240 --> 00:10:09,480 Speaker 7: being way too a motive. The President certainly cares about 226 00:10:09,480 --> 00:10:11,680 Speaker 7: the markets, cares about Wall Street, but cares more about 227 00:10:11,679 --> 00:10:15,760 Speaker 7: Main Street. And it's his strong view that eventually we're 228 00:10:15,760 --> 00:10:19,600 Speaker 7: going to bear significant positive fruit to Main Street, because 229 00:10:19,600 --> 00:10:21,880 Speaker 7: that was the case in his first administration when you 230 00:10:21,920 --> 00:10:25,680 Speaker 7: had roughly a six thousand increase in media and real 231 00:10:25,720 --> 00:10:28,400 Speaker 7: family income, which was about six times what had been 232 00:10:28,400 --> 00:10:29,600 Speaker 7: the prior sixteen years. 233 00:10:29,640 --> 00:10:31,640 Speaker 9: So the President cares about these things. 234 00:10:31,720 --> 00:10:33,640 Speaker 7: As they said, this is going to be an adjustment, 235 00:10:33,640 --> 00:10:37,440 Speaker 7: a reset process, and the market ultimately we'll see in 236 00:10:37,440 --> 00:10:40,160 Speaker 7: a positive light despite the volatility we have right now. 237 00:10:41,840 --> 00:10:43,920 Speaker 2: Well, and it doesn't seem that the market is only 238 00:10:43,960 --> 00:10:47,000 Speaker 2: paying attention exclusively to what the President says. Joe, you 239 00:10:47,040 --> 00:10:49,520 Speaker 2: can also look at what we're getting out of corporations, 240 00:10:49,600 --> 00:10:53,720 Speaker 2: warnings from retailers today, from airlines about waning demand or 241 00:10:53,720 --> 00:10:56,520 Speaker 2: the impact of tariffs. The business community does seem to 242 00:10:56,520 --> 00:10:59,000 Speaker 2: be signaling that there is going to be an impact, 243 00:10:59,040 --> 00:11:01,439 Speaker 2: certainly on their bottom lines. But as they see shifts 244 00:11:01,800 --> 00:11:04,319 Speaker 2: in consumer behavior. Some of these very same business leaders 245 00:11:04,320 --> 00:11:06,200 Speaker 2: could be in the room when the President addresses the 246 00:11:06,200 --> 00:11:09,920 Speaker 2: business roundtable this afternoon. What do those leaders need to 247 00:11:09,960 --> 00:11:12,960 Speaker 2: hear from him in order to restore business confidence and 248 00:11:13,040 --> 00:11:14,079 Speaker 2: consumer confidence? 249 00:11:14,920 --> 00:11:17,360 Speaker 9: Well, well, let me say that the business confidence. 250 00:11:17,400 --> 00:11:20,000 Speaker 7: If you look at the NFIB we had the data today, Yes, 251 00:11:20,040 --> 00:11:22,040 Speaker 7: you had a big increase of uncertainty as it relates 252 00:11:22,040 --> 00:11:24,520 Speaker 7: to tariffs, and of course the tax bill. 253 00:11:24,559 --> 00:11:25,680 Speaker 9: Let's not exclude that. 254 00:11:25,960 --> 00:11:28,440 Speaker 7: To me, the tax bill, the uncertainty whether those tax 255 00:11:28,440 --> 00:11:31,720 Speaker 7: cuts get extended is very important. But small business confidence 256 00:11:31,800 --> 00:11:33,839 Speaker 7: is very high still over one hundred. I mean at 257 00:11:33,840 --> 00:11:36,040 Speaker 7: the corporate level, and we're earnings come in. That was 258 00:11:36,080 --> 00:11:38,280 Speaker 7: a function of the economy prior to when the President 259 00:11:38,280 --> 00:11:41,160 Speaker 7: came in office. Clearly CEOs are worried about the outlook. 260 00:11:41,160 --> 00:11:43,800 Speaker 7: But these tariffs really have not been fully put into 261 00:11:43,840 --> 00:11:46,760 Speaker 7: effect yet. We don't know exactly what the impact is 262 00:11:46,800 --> 00:11:49,240 Speaker 7: and to the extent there will ultimately be higher tariffs. 263 00:11:49,280 --> 00:11:51,880 Speaker 7: I do think there'll be some level of higher tariff 264 00:11:51,880 --> 00:11:54,360 Speaker 7: than what we had if it comes at the expense 265 00:11:54,400 --> 00:11:57,079 Speaker 7: of the continuation of low marginal rates or reduction and 266 00:11:57,120 --> 00:12:01,280 Speaker 7: corporate tax rates, lower tax on tips, over time, and 267 00:12:01,320 --> 00:12:02,040 Speaker 7: social security. 268 00:12:02,080 --> 00:12:03,719 Speaker 9: That is, to me, is a very good trade off. 269 00:12:03,760 --> 00:12:07,280 Speaker 7: Those supply side initiatives, I'd argue, would offset any weakness 270 00:12:07,280 --> 00:12:09,840 Speaker 7: that people are worried about on the demand side, which 271 00:12:09,880 --> 00:12:12,400 Speaker 7: I think too often maybe a Corporate America focus is 272 00:12:12,400 --> 00:12:14,920 Speaker 7: too much on short term demand and that long term 273 00:12:14,960 --> 00:12:19,080 Speaker 7: sustainable supply innovations that keep productivity and living standards ultimately higher. 274 00:12:20,360 --> 00:12:23,480 Speaker 4: Question from a listener on the terminal here, Joe, what's 275 00:12:23,520 --> 00:12:25,640 Speaker 4: the endgame with the tariffs? Is it to strike a 276 00:12:25,679 --> 00:12:28,960 Speaker 4: deal on a so called mar a lago accord? I 277 00:12:28,960 --> 00:12:31,920 Speaker 4: guess to maybe expand on that a little bit. Is 278 00:12:31,920 --> 00:12:35,160 Speaker 4: there a grand scheme here that maybe the market doesn't 279 00:12:35,200 --> 00:12:38,079 Speaker 4: know about? Or is Donald Trump riffing every day throwing 280 00:12:38,080 --> 00:12:39,439 Speaker 4: stuff at the wall to see what sticks. 281 00:12:39,520 --> 00:12:41,640 Speaker 9: No, they're definitely now. If you look at how many 282 00:12:41,640 --> 00:12:42,880 Speaker 9: executive orders. 283 00:12:42,600 --> 00:12:46,439 Speaker 7: There have been, it's been unprecedented because the administration clearly 284 00:12:46,440 --> 00:12:49,160 Speaker 7: had a very strategic view of what they wanted to 285 00:12:49,200 --> 00:12:52,679 Speaker 7: accomplish when they came in. I believe they know what 286 00:12:52,679 --> 00:12:54,720 Speaker 7: they want to do on tariffs, but they're not going 287 00:12:54,800 --> 00:12:58,200 Speaker 7: to say it publicly because that is a negotiation and 288 00:12:58,240 --> 00:13:01,160 Speaker 7: you wouldn't tell people exactly what they're doing. And I 289 00:13:01,200 --> 00:13:03,240 Speaker 7: have to think that ultimately there will be some sort 290 00:13:03,280 --> 00:13:05,920 Speaker 7: of deal. The president's very transactional, it's got a very 291 00:13:05,920 --> 00:13:09,800 Speaker 7: good business sense, very good business skills, and there will 292 00:13:09,840 --> 00:13:12,080 Speaker 7: be some resolution. But what it looks like, Joe, I 293 00:13:12,120 --> 00:13:15,080 Speaker 7: don't know. But ultimately the benefit is going to be 294 00:13:15,160 --> 00:13:17,960 Speaker 7: geared towards the US performing well, and that's not President Trump. 295 00:13:18,040 --> 00:13:20,920 Speaker 7: Ultimately will be measured where are we four years from now? 296 00:13:20,960 --> 00:13:23,760 Speaker 7: Where's the equity market, where's the unemployment rate? Is the 297 00:13:23,840 --> 00:13:26,680 Speaker 7: inflation rate back down well below two percent as it 298 00:13:26,720 --> 00:13:28,280 Speaker 7: was in his first term, or is it up near 299 00:13:28,320 --> 00:13:31,280 Speaker 7: three percent? All those factors will come into play. And 300 00:13:31,280 --> 00:13:34,000 Speaker 7: I think too often we want results too quickly, We're 301 00:13:34,040 --> 00:13:34,760 Speaker 7: too impatient. 302 00:13:35,280 --> 00:13:36,679 Speaker 9: And you know, it's only March. 303 00:13:36,960 --> 00:13:38,880 Speaker 7: If we haven't e finished the firste hundred days yet, 304 00:13:38,920 --> 00:13:42,120 Speaker 7: and here we're talking about losing US exceptionalism. I think 305 00:13:42,160 --> 00:13:45,640 Speaker 7: that's very that's too much doomsday. 306 00:13:47,559 --> 00:13:50,440 Speaker 2: Well, Joe, we could add to that list potentially in 307 00:13:50,720 --> 00:13:53,000 Speaker 2: terms of where the unemployment rate is or what have you. 308 00:13:53,080 --> 00:13:55,640 Speaker 2: Also where borrowing costs are, what the average thirty year 309 00:13:55,679 --> 00:13:58,559 Speaker 2: mortgage rate is. What does all of this conversation due 310 00:13:58,559 --> 00:14:04,320 Speaker 2: to your expectations around monetary policy will change right now. 311 00:14:04,160 --> 00:14:05,440 Speaker 9: I see the Fed on hold. 312 00:14:05,720 --> 00:14:08,240 Speaker 7: I do think rates ultimately a move lower, getting rates 313 00:14:08,320 --> 00:14:11,920 Speaker 7: ultimately probably down to three percent, maybe a bit less. 314 00:14:12,240 --> 00:14:13,560 Speaker 9: That assumes an economy that's q. 315 00:14:13,800 --> 00:14:16,600 Speaker 7: Roughly three percent, that Kale would take the ten year 316 00:14:16,640 --> 00:14:19,080 Speaker 7: note on a sustainable basis to around three seventy five 317 00:14:19,160 --> 00:14:22,000 Speaker 7: maybe four percent, so lower, well, a steper curve at 318 00:14:22,000 --> 00:14:24,760 Speaker 7: lower yields that would also be consistent with an. 319 00:14:24,680 --> 00:14:26,120 Speaker 9: Inflation rate around two percent. 320 00:14:26,520 --> 00:14:28,480 Speaker 7: I mean the world that I envision is one that 321 00:14:28,560 --> 00:14:31,760 Speaker 7: is very similar to what we had prior to the pandemic. 322 00:14:32,000 --> 00:14:35,800 Speaker 7: GDP growth around three percent, low and stable inflation, very 323 00:14:35,840 --> 00:14:38,840 Speaker 7: low and stable unemployment, and a very strong equity market. 324 00:14:41,000 --> 00:14:42,520 Speaker 4: Joe, it's great to have you back. We'd love to 325 00:14:42,520 --> 00:14:45,360 Speaker 4: compare notes once we understand how this conversation went with 326 00:14:45,440 --> 00:14:47,760 Speaker 4: the Business Roundtable. You're always welcome here, of course, former 327 00:14:47,800 --> 00:14:50,720 Speaker 4: Special Assistant to the President and the first Trump administration 328 00:14:50,800 --> 00:14:55,840 Speaker 4: Chief Economists, National Economic Council now SMBC, NCO Securities America. 329 00:14:55,920 --> 00:14:58,440 Speaker 4: Really interesting, Kley, as we try to feel our way 330 00:14:58,440 --> 00:15:00,720 Speaker 4: through this with so much uncertain tea in the air 331 00:15:00,760 --> 00:15:02,080 Speaker 4: in a market that's pointing lower. 332 00:15:02,680 --> 00:15:05,080 Speaker 2: Yeah, and of course not for the first time. It 333 00:15:05,080 --> 00:15:07,560 Speaker 2: has been a pretty brutal several weeks, and yet no 334 00:15:07,640 --> 00:15:10,680 Speaker 2: direct comment on that from the President, at least at 335 00:15:10,680 --> 00:15:12,960 Speaker 2: this point, beyond saying yesterday he's not looking at the 336 00:15:13,000 --> 00:15:13,640 Speaker 2: stock market. 337 00:15:13,640 --> 00:15:15,640 Speaker 3: I think it's hard not to be looking this week, 338 00:15:15,720 --> 00:15:16,160 Speaker 3: that's true. 339 00:15:16,200 --> 00:15:17,520 Speaker 4: I guess we'll lead to say something a little bit 340 00:15:17,560 --> 00:15:19,360 Speaker 4: later on. We'll assemble our panel next. We've got an 341 00:15:19,360 --> 00:15:20,960 Speaker 4: important vote in the House today to try to keep 342 00:15:20,960 --> 00:15:23,560 Speaker 4: the lights on this weekend. This is Bloomberg. 343 00:15:25,720 --> 00:15:29,200 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 344 00:15:29,280 --> 00:15:32,320 Speaker 1: us live weekdays at noon and five pm Eastern on 345 00:15:32,440 --> 00:15:35,680 Speaker 1: Apple Cockley and Android Auto with the Bloomberg Business app. 346 00:15:35,720 --> 00:15:38,760 Speaker 1: You can also listen live on Amazon Alexa from our 347 00:15:38,760 --> 00:15:43,960 Speaker 1: flagship New York station Just Say Alexa played Bloomberg eleven thirty. 348 00:15:44,680 --> 00:15:47,200 Speaker 2: Here in Washington, an important vote set to take place 349 00:15:47,360 --> 00:15:50,120 Speaker 2: just hours from now in the House of Representatives, where 350 00:15:50,120 --> 00:15:52,720 Speaker 2: a continuing resolution that would keep the government funded through 351 00:15:52,720 --> 00:15:55,880 Speaker 2: the end of the fiscal year September thirtieth is set 352 00:15:55,880 --> 00:15:56,640 Speaker 2: to hit the floor. 353 00:15:57,120 --> 00:15:57,680 Speaker 9: The thing is. 354 00:15:57,560 --> 00:16:01,600 Speaker 2: Republican leadership is not counting on any Democratic votes for 355 00:16:01,680 --> 00:16:04,400 Speaker 2: this measure, which means they have to keep basically the 356 00:16:04,520 --> 00:16:07,360 Speaker 2: entire conference together on this one because there's only so 357 00:16:07,400 --> 00:16:09,600 Speaker 2: many votes that they can afford to lose, presuming that 358 00:16:09,680 --> 00:16:14,160 Speaker 2: you have attendance that is as expected on both sides. 359 00:16:14,240 --> 00:16:16,200 Speaker 3: The thing is, though, Joe, already you. 360 00:16:16,200 --> 00:16:20,440 Speaker 2: Have one hard no, likely unchangeable no in Congressman Tom Massey, 361 00:16:20,480 --> 00:16:22,800 Speaker 2: the gentleman from Kentucky who is now being threatened with 362 00:16:22,920 --> 00:16:24,960 Speaker 2: a primary challenge by President Trump. 363 00:16:25,160 --> 00:16:26,120 Speaker 3: But there's others too. 364 00:16:26,760 --> 00:16:29,320 Speaker 2: Not necessarily is Heart taking as hard line as Massy 365 00:16:29,400 --> 00:16:31,800 Speaker 2: on this, but saying at this time, even after meeting 366 00:16:31,800 --> 00:16:34,200 Speaker 2: with the Vice President Jady Vance on the Hill earlier today, 367 00:16:34,600 --> 00:16:37,520 Speaker 2: they remain undecided on whether they're going to vote for 368 00:16:37,520 --> 00:16:38,600 Speaker 2: this similar names. 369 00:16:38,600 --> 00:16:44,280 Speaker 4: We've been hearing Burchett, Crane, McCormick, Ogles, Gonzales, and about 370 00:16:44,320 --> 00:16:46,440 Speaker 4: a half dozen here on the fence. So I suspect 371 00:16:46,440 --> 00:16:48,840 Speaker 4: that the phone call will start coming in from the 372 00:16:48,880 --> 00:16:52,200 Speaker 4: White House soon, unless, of course, the strategy is to 373 00:16:52,240 --> 00:16:55,480 Speaker 4: bring everybody on the floor and dare them to vote now. 374 00:16:55,920 --> 00:16:58,280 Speaker 2: Yeah, which we have seen in the past, mind you, 375 00:16:58,320 --> 00:17:00,480 Speaker 2: when they were trying to pass their budget ten which 376 00:17:00,520 --> 00:17:02,880 Speaker 2: is setting the stage for the reconciliation battle that still 377 00:17:02,880 --> 00:17:04,480 Speaker 2: has yet to come, because we have so much to 378 00:17:04,520 --> 00:17:07,160 Speaker 2: look forward to. They let everyone leave the floor, then 379 00:17:07,160 --> 00:17:09,920 Speaker 2: called them back immediately, and suddenly the votes. 380 00:17:09,680 --> 00:17:11,000 Speaker 4: Were there thirteen minutes later. 381 00:17:11,080 --> 00:17:12,240 Speaker 3: Pressure is an amazing thing. 382 00:17:12,320 --> 00:17:14,680 Speaker 4: Well, we heard from the speaker a little bit earlier, 383 00:17:14,760 --> 00:17:18,720 Speaker 4: of course, Kayley, speaking optimistically about these hold outs. Here's 384 00:17:18,720 --> 00:17:19,160 Speaker 4: what he said. 385 00:17:20,119 --> 00:17:21,919 Speaker 10: You can all read the bills nine to nine pages. 386 00:17:22,400 --> 00:17:27,959 Speaker 10: This clean cr contains no poison pill riders, no policy 387 00:17:27,960 --> 00:17:31,399 Speaker 10: writers there at all, no cuts to Medicare, medicator so 388 00:17:31,520 --> 00:17:36,200 Speaker 10: security zero, No cuts to veterans benefits zero. In fact, 389 00:17:36,200 --> 00:17:39,520 Speaker 10: as was noted, we plus up the accounts for veterans. 390 00:17:41,359 --> 00:17:43,640 Speaker 4: Wouldn't want to be Tom Massey today. I can only 391 00:17:43,640 --> 00:17:46,040 Speaker 4: imagine the emails and phone calls. Donald Trump takes the 392 00:17:46,080 --> 00:17:49,399 Speaker 4: truth social referring to him as a congressman with quotation marks. 393 00:17:50,119 --> 00:17:52,280 Speaker 4: I won't read this whole thing, it's another long one, 394 00:17:52,280 --> 00:17:54,399 Speaker 4: but he says, Thomas Massey is a grand stander, and 395 00:17:54,440 --> 00:17:56,200 Speaker 4: the great people of Kentucky are going to be watching 396 00:17:56,240 --> 00:17:59,960 Speaker 4: a very interesting primary in the not too distant future. 397 00:18:00,080 --> 00:18:02,159 Speaker 4: This on Bloomberg TV or YouTube you can take and 398 00:18:02,200 --> 00:18:05,280 Speaker 4: read yourself. As we assembled our signature panel. Rick Davis 399 00:18:05,359 --> 00:18:08,080 Speaker 4: is here, a Republican strategist and partner at Stone Court Capital, 400 00:18:08,119 --> 00:18:12,359 Speaker 4: alongside Jeanie Shanzano or Democratic Analyst, senior Democracy Fellow with 401 00:18:12,400 --> 00:18:15,000 Speaker 4: the Center for the Study of the Presidency and Congress. 402 00:18:15,080 --> 00:18:17,280 Speaker 4: What do you think, Rick, does the pressure play work? 403 00:18:17,320 --> 00:18:18,000 Speaker 3: Does this pass? 404 00:18:19,280 --> 00:18:19,440 Speaker 11: Well? 405 00:18:19,440 --> 00:18:22,160 Speaker 12: I think they're beyond pressure with top Massy. Now it's 406 00:18:22,200 --> 00:18:26,159 Speaker 12: just recrimination. And we have to look at the history 407 00:18:26,160 --> 00:18:28,959 Speaker 12: and every time there's been a big vote, even before 408 00:18:29,040 --> 00:18:30,800 Speaker 12: Donald Trump was elected. 409 00:18:30,760 --> 00:18:33,760 Speaker 11: When he intervened, he changed people to his position. 410 00:18:33,960 --> 00:18:36,720 Speaker 12: So my guess is you'll get what he wants out 411 00:18:36,760 --> 00:18:39,080 Speaker 12: of this, and frankly he should because I mean, the 412 00:18:39,119 --> 00:18:42,119 Speaker 12: reality is this as much to do about nothing. 413 00:18:42,600 --> 00:18:45,960 Speaker 11: We got to keep the government floated financially. 414 00:18:47,000 --> 00:18:50,320 Speaker 12: This is insane that we're even having a conversation about 415 00:18:50,320 --> 00:18:52,520 Speaker 12: a full year cr It is. 416 00:18:52,480 --> 00:18:54,440 Speaker 11: An indictment on Washington. 417 00:18:54,600 --> 00:18:59,320 Speaker 12: You can't pass appropriations bills, you can't set policy. They 418 00:18:59,359 --> 00:19:02,720 Speaker 12: should all turn in their paychecks for last year. It's 419 00:19:02,760 --> 00:19:06,600 Speaker 12: just amazing, but that's where we are. It should be 420 00:19:06,640 --> 00:19:10,359 Speaker 12: non controversial, and I think not only will the House 421 00:19:10,400 --> 00:19:12,480 Speaker 12: pass this bill, but I think the sentence lined up 422 00:19:12,520 --> 00:19:13,200 Speaker 12: to do the same. 423 00:19:14,520 --> 00:19:17,600 Speaker 2: Well, and typically we've seen, at least in recent years, 424 00:19:17,640 --> 00:19:20,080 Speaker 2: not only is this it's always controversial, but at the 425 00:19:20,160 --> 00:19:23,920 Speaker 2: very least it can be nonpartisan or a bipartisan effort. 426 00:19:23,960 --> 00:19:24,360 Speaker 3: Genie. 427 00:19:24,359 --> 00:19:28,159 Speaker 2: Typically Democrats do support or provide the votes needed to 428 00:19:28,240 --> 00:19:31,000 Speaker 2: keep the government open when it counts. They have signaled 429 00:19:31,040 --> 00:19:33,679 Speaker 2: they are not willing to do that this time. At 430 00:19:33,760 --> 00:19:36,159 Speaker 2: least leadership has signaled that. And I do wonder if 431 00:19:36,200 --> 00:19:38,840 Speaker 2: you expect every Democrat to stay in line with Hakeem 432 00:19:38,880 --> 00:19:40,720 Speaker 2: Jeffreys when this thing goes to the floor, if there 433 00:19:40,720 --> 00:19:42,840 Speaker 2: could be some breaks to his guidance. 434 00:19:44,160 --> 00:19:46,919 Speaker 13: There may be some breaks. I mean, he has really 435 00:19:46,960 --> 00:19:49,800 Speaker 13: been whipping a hard no on this. And of course 436 00:19:49,840 --> 00:19:52,800 Speaker 13: for Democrats, they had no input on the bill. And 437 00:19:53,040 --> 00:19:55,800 Speaker 13: the clip you just played, we heard Mike Johnson talking 438 00:19:55,840 --> 00:19:59,119 Speaker 13: about how this is a clean cr well almost clean. 439 00:19:59,160 --> 00:20:02,000 Speaker 13: It's not quite clean according to the Democrats, and in 440 00:20:02,080 --> 00:20:05,919 Speaker 13: particular the fact that it does give the executive branch 441 00:20:06,200 --> 00:20:10,000 Speaker 13: more discretion the federal government to spend money, and that 442 00:20:10,080 --> 00:20:13,080 Speaker 13: of course is a non starter for the base of 443 00:20:13,119 --> 00:20:17,600 Speaker 13: the Democratic Party, very concerned about an emboldened Doge, and 444 00:20:17,680 --> 00:20:21,160 Speaker 13: so it's not clean from their perspective. But I do 445 00:20:21,240 --> 00:20:24,760 Speaker 13: think most Democrats will stick with Hopking Jeffries, but I 446 00:20:24,800 --> 00:20:28,200 Speaker 13: agree with Rick in all likelihood this gets through the House. 447 00:20:28,240 --> 00:20:31,199 Speaker 13: At least that's been the record. Mike Johnson seems to 448 00:20:31,200 --> 00:20:33,119 Speaker 13: go right up to the line and then they pass. 449 00:20:33,560 --> 00:20:36,919 Speaker 13: And if they get out of town, I think the 450 00:20:37,200 --> 00:20:39,720 Speaker 13: I think the Senate will be able to avoid a filibuster, 451 00:20:39,800 --> 00:20:41,720 Speaker 13: which means you're going to need to see about eight 452 00:20:41,760 --> 00:20:44,760 Speaker 13: Democrats go over. But I just think it's hard at 453 00:20:44,760 --> 00:20:48,120 Speaker 13: this point for Democrats to imagine shutting down the government. 454 00:20:48,560 --> 00:20:50,600 Speaker 13: That said, this is going to be very tight, and 455 00:20:50,640 --> 00:20:52,919 Speaker 13: a lot of this depends, for instance, on things like 456 00:20:53,080 --> 00:20:56,600 Speaker 13: who's actually present today when they call this vote, which 457 00:20:56,600 --> 00:20:58,400 Speaker 13: it looks like we'll be later this afternoon. 458 00:21:00,119 --> 00:21:02,879 Speaker 4: Talking about the stock market here quite a bit for 459 00:21:03,000 --> 00:21:05,959 Speaker 4: obvious reasons over the last couple of days, including this one, 460 00:21:06,440 --> 00:21:08,560 Speaker 4: and we can tell you the headline just crossed the terminal. 461 00:21:08,600 --> 00:21:10,560 Speaker 4: The S and P five hundred set to enter correction 462 00:21:11,119 --> 00:21:13,919 Speaker 4: territory after falling ten percent, that of course, being the 463 00:21:13,960 --> 00:21:17,600 Speaker 4: definition from the record high and Kaylee. It follows some 464 00:21:17,640 --> 00:21:20,360 Speaker 4: commentary from the Press secretary being asked about this. As 465 00:21:20,400 --> 00:21:24,800 Speaker 4: you would suspect, a snapshot of a moment in time. 466 00:21:25,480 --> 00:21:26,920 Speaker 4: She describes the market. 467 00:21:26,640 --> 00:21:29,320 Speaker 2: After saying that we're in a period of economic transition. 468 00:21:29,520 --> 00:21:31,919 Speaker 2: Very similar language to what President Trump said in that 469 00:21:32,040 --> 00:21:34,440 Speaker 2: interview on Sunday Morning Futures that ran over the weekend, 470 00:21:34,480 --> 00:21:38,200 Speaker 2: in which she refused to rule out a recession. Noteworthy though, 471 00:21:38,240 --> 00:21:40,359 Speaker 2: to now be speaking about the stock market as a 472 00:21:40,400 --> 00:21:44,960 Speaker 2: snapshot of a moment in time, compared to the language 473 00:21:44,960 --> 00:21:48,520 Speaker 2: about the stock market we heard in the first Trump administration. Yep, 474 00:21:48,600 --> 00:21:51,679 Speaker 2: perhaps Trump's language about the stock market when President Biden 475 00:21:51,800 --> 00:21:54,360 Speaker 2: was president. It does seem like there is a bit 476 00:21:54,359 --> 00:21:57,440 Speaker 2: of a tone shift underway here as we're seeing equities 477 00:21:57,440 --> 00:22:00,480 Speaker 2: obviously taking tariffs on the chin. Not just a ten 478 00:22:00,520 --> 00:22:03,600 Speaker 2: percent correction territory now for the S and P five hundred, 479 00:22:03,600 --> 00:22:05,080 Speaker 2: but the Nasdaq is already well below. 480 00:22:05,119 --> 00:22:07,560 Speaker 4: It's already the territory S and P five hundred down 481 00:22:07,560 --> 00:22:09,320 Speaker 4: eighty three points right now. By the way, we're down 482 00:22:09,359 --> 00:22:11,560 Speaker 4: one and a half percent at the moment, and a 483 00:22:11,560 --> 00:22:13,520 Speaker 4: bit of a fit here. After Donald Trump made that 484 00:22:13,560 --> 00:22:15,800 Speaker 4: post on truth Social there was talk of a recovery 485 00:22:15,800 --> 00:22:18,880 Speaker 4: today and that has obviously gone out the window. Rick, 486 00:22:18,920 --> 00:22:21,879 Speaker 4: when you have the uncertainty over government funding over the 487 00:22:21,960 --> 00:22:26,040 Speaker 4: debt ceiling over Trump tax cuts. How important is this 488 00:22:26,160 --> 00:22:28,320 Speaker 4: vote today for the view of the market. 489 00:22:29,600 --> 00:22:33,160 Speaker 12: You know, look, it's a confidence building exercise. They can't 490 00:22:33,160 --> 00:22:36,960 Speaker 12: really do any good with this. They're not like showing 491 00:22:37,080 --> 00:22:40,840 Speaker 12: fiscal responsibility. It's a cr it's just to kick the 492 00:22:40,880 --> 00:22:45,680 Speaker 12: can funding mechanism. But if it doesn't pass, it's a 493 00:22:45,800 --> 00:22:48,639 Speaker 12: huge problem. So they're not going to get any credit 494 00:22:48,680 --> 00:22:52,280 Speaker 12: for doing the cowards way out, but they will get 495 00:22:52,320 --> 00:22:56,800 Speaker 12: blamed if, for whatever reason something this benign doesn't get passed. 496 00:22:57,160 --> 00:22:59,760 Speaker 12: And I think Democrats and Republicans take it on the chin. 497 00:22:59,840 --> 00:23:03,480 Speaker 12: They will both get blamed by the market because we'll 498 00:23:03,640 --> 00:23:07,240 Speaker 12: enter this period of political instability that we've seen in 499 00:23:07,280 --> 00:23:11,919 Speaker 12: the past, where you can't make business decisions based on 500 00:23:12,119 --> 00:23:15,720 Speaker 12: the political instability of the system in Washington. And I 501 00:23:15,800 --> 00:23:18,960 Speaker 12: think that's what today's all about, is avoiding that appearance. 502 00:23:19,359 --> 00:23:21,879 Speaker 12: Last thing we want is Moodies looking at the federal 503 00:23:21,920 --> 00:23:25,040 Speaker 12: government and saying, you know, potential downgrade because they can't 504 00:23:25,040 --> 00:23:27,280 Speaker 12: get their act together. I mean, that's like a horrible 505 00:23:27,320 --> 00:23:29,280 Speaker 12: indictment on the system and the people in it. 506 00:23:31,560 --> 00:23:34,440 Speaker 2: Well, and I guess the White House is very much 507 00:23:34,480 --> 00:23:37,120 Speaker 2: trying to read the market activity is not being an 508 00:23:37,160 --> 00:23:40,920 Speaker 2: indictment of the president's policies. But Genie, the suggestion from 509 00:23:40,960 --> 00:23:44,199 Speaker 2: the Press secretary that what financial markets are reflecting right now, 510 00:23:44,280 --> 00:23:46,960 Speaker 2: or where stock market levels are is just a moment 511 00:23:47,480 --> 00:23:50,800 Speaker 2: in time. Are you surprised by this language coming from 512 00:23:50,800 --> 00:23:53,320 Speaker 2: the White House, given how previously they've talked about the 513 00:23:53,320 --> 00:23:56,399 Speaker 2: stock market. Just weeks ago, President Trump was touting stocks 514 00:23:56,400 --> 00:23:57,240 Speaker 2: at record highs. 515 00:23:58,760 --> 00:24:01,720 Speaker 13: Yeah, I am so surprised. First of all, they obviously 516 00:24:01,840 --> 00:24:05,240 Speaker 13: haven't been listening the last couple years when we raked 517 00:24:05,560 --> 00:24:09,080 Speaker 13: Joe Biden over the Coohals for using the term transitory, 518 00:24:09,160 --> 00:24:12,280 Speaker 13: And to me, a snapshot is very much just a 519 00:24:12,320 --> 00:24:16,480 Speaker 13: synonym of transitory. And the other thing is that, you know, 520 00:24:17,400 --> 00:24:21,360 Speaker 13: right before his inauguration, Donald Trump went to the arena 521 00:24:21,720 --> 00:24:26,600 Speaker 13: and he talked about with great celebratory you know, sort 522 00:24:26,640 --> 00:24:29,280 Speaker 13: of look at me, look what all I've done to 523 00:24:29,320 --> 00:24:33,959 Speaker 13: the market. That's all been wiped away. And now they're saying, well, 524 00:24:34,080 --> 00:24:38,240 Speaker 13: it's just transitory. You know, This to me is quite 525 00:24:38,400 --> 00:24:44,159 Speaker 13: stunning from a man who typically likes to tout the crowds, 526 00:24:44,359 --> 00:24:47,359 Speaker 13: likes to tout the strong numbers, who ran on making 527 00:24:47,400 --> 00:24:52,040 Speaker 13: America affordable again, and all I can just imagine is 528 00:24:52,080 --> 00:24:55,719 Speaker 13: that this explains his silence over the last twenty four 529 00:24:55,760 --> 00:24:58,800 Speaker 13: to forty eight hours, except for his tweet, is his 530 00:24:58,960 --> 00:25:02,800 Speaker 13: truthing again to Canada and about Elon Musk. He has 531 00:25:02,880 --> 00:25:05,400 Speaker 13: been suspiciously quiet and we have to wait to see 532 00:25:05,440 --> 00:25:08,919 Speaker 13: what he says to the roundtable. But the communication strategy 533 00:25:08,960 --> 00:25:12,280 Speaker 13: here from Donald Trump speaks volumes, because it's not like 534 00:25:12,359 --> 00:25:13,920 Speaker 13: Donald Trump to be quiet. 535 00:25:15,200 --> 00:25:17,160 Speaker 4: Well, We've got a couple headlines coming out of the 536 00:25:17,480 --> 00:25:20,760 Speaker 4: press briefing Rick before our global television audience joined us. 537 00:25:21,119 --> 00:25:23,760 Speaker 4: We were talking about Donald Trump's post on truth Social 538 00:25:23,800 --> 00:25:27,360 Speaker 4: after Midnight, in which he pledged to buy a Tesla 539 00:25:27,920 --> 00:25:31,280 Speaker 4: to help support Elon Musk, who he says is under 540 00:25:31,480 --> 00:25:35,240 Speaker 4: a great distress here and being criticized by the other side. 541 00:25:36,040 --> 00:25:39,119 Speaker 4: Press secretaire says, a tesla is on the way to 542 00:25:39,160 --> 00:25:42,920 Speaker 4: the White House. Now, remembering Donald Trump was gifted a 543 00:25:42,960 --> 00:25:47,879 Speaker 4: cyber truck on the campaign. I mentioned this, Rick, because 544 00:25:47,920 --> 00:25:50,720 Speaker 4: Elon Musk is a big factor here and I wonder 545 00:25:50,760 --> 00:25:52,960 Speaker 4: the extent to which you see him playing into the 546 00:25:53,040 --> 00:25:55,960 Speaker 4: uncertainty on Wall Street. How much of this is tariffs 547 00:25:56,480 --> 00:26:00,240 Speaker 4: versus the rest of the DOGE policy and the host 548 00:26:00,240 --> 00:26:01,760 Speaker 4: cutting efforts in this White House. 549 00:26:02,720 --> 00:26:05,960 Speaker 12: Well, there's no question that Elon Musk is taking the 550 00:26:06,000 --> 00:26:10,320 Speaker 12: brunt of the downsizing the federal government argument for those 551 00:26:10,359 --> 00:26:13,240 Speaker 12: people who aren't happy with what they're seeing, right. I mean, 552 00:26:13,280 --> 00:26:16,800 Speaker 12: it's just actually amazing how much Elon Musk has been 553 00:26:16,960 --> 00:26:20,080 Speaker 12: this tip of the spear on a policy that Donald 554 00:26:20,119 --> 00:26:23,320 Speaker 12: Trump's been talking about for almost ten years. 555 00:26:22,920 --> 00:26:25,760 Speaker 11: And so that's been a huge help to Donald Trump. 556 00:26:25,880 --> 00:26:28,600 Speaker 12: The fact that he doesn't have to take all the barbs, 557 00:26:28,640 --> 00:26:31,280 Speaker 12: he doesn't have people at the town hall screaming his 558 00:26:31,359 --> 00:26:38,000 Speaker 12: name to Republican officeholders about their unhappiness is a huge advantage. 559 00:26:38,040 --> 00:26:41,440 Speaker 12: And honestly, this is a part of Donald Trump's kind 560 00:26:41,440 --> 00:26:47,240 Speaker 12: of attractive He actually care about Elon musk feelings and 561 00:26:47,600 --> 00:26:51,119 Speaker 12: the fact that being hurt because he's thrown himself into 562 00:26:51,119 --> 00:26:54,920 Speaker 12: the political friend Washington, Look, put on your big boy 563 00:26:55,000 --> 00:26:56,000 Speaker 12: pants and go to work. 564 00:26:56,560 --> 00:26:57,320 Speaker 11: There are things to be. 565 00:26:57,280 --> 00:27:01,200 Speaker 12: Done in Washington, and you shouldn't have to someone's tesla 566 00:27:01,359 --> 00:27:03,200 Speaker 12: to make them go into the office in the morning. 567 00:27:03,200 --> 00:27:09,440 Speaker 2: Come on, Well, Rick Davis and Genie Shanzanos certainly shown 568 00:27:09,520 --> 00:27:11,680 Speaker 2: up for work today, joining us here on Balance of Power. 569 00:27:11,720 --> 00:27:14,800 Speaker 2: Our signature signature panel. Thank you both so much. As 570 00:27:14,840 --> 00:27:18,359 Speaker 2: we keep one eye on domestic politics, another on geopolitics 571 00:27:18,359 --> 00:27:21,080 Speaker 2: with US and Ukraine's talks underway and Saudi Arabia. We'll 572 00:27:21,119 --> 00:27:22,560 Speaker 2: have more on that in just a moment, as we 573 00:27:22,600 --> 00:27:25,199 Speaker 2: also keep our third eye, I guess on financial markets, 574 00:27:25,200 --> 00:27:28,080 Speaker 2: the S and P five hundred touching into correction territory. 575 00:27:28,119 --> 00:27:29,440 Speaker 2: We'll have a check on those for you on the 576 00:27:29,440 --> 00:27:36,880 Speaker 2: other side of the break. Here on Bloomberg TV and radio. 577 00:27:35,560 --> 00:27:39,000 Speaker 1: You're listening to the Bloomberg Balance of Power podcast Ketch 578 00:27:39,080 --> 00:27:41,920 Speaker 1: US live weekdays at noon and five pm. E's den 579 00:27:42,080 --> 00:27:45,480 Speaker 1: on Apple, Cocklay and Android Auto with the Bloomberg Business App. 580 00:27:45,640 --> 00:27:48,880 Speaker 1: Listen on demand wherever you get your podcasts, or watch 581 00:27:49,000 --> 00:27:50,160 Speaker 1: us live on YouTube. 582 00:27:51,720 --> 00:27:54,200 Speaker 2: The trading on this Tuesday, which initially we thought might 583 00:27:54,640 --> 00:27:56,800 Speaker 2: see the start of a rebound after the brutal selling 584 00:27:56,840 --> 00:27:59,879 Speaker 2: pressure that rippled across US equity markets yesterday, and instead 585 00:27:59,880 --> 00:28:03,600 Speaker 2: of true social post from President Trump raising the planned 586 00:28:03,600 --> 00:28:06,560 Speaker 2: tariffs on steel and aluminum for cannabis specifically to fifty 587 00:28:06,600 --> 00:28:08,760 Speaker 2: percent set to take effect at midnight, seems to have 588 00:28:08,800 --> 00:28:11,920 Speaker 2: sapped risk sentiment all over again, and dip buying doesn't 589 00:28:11,920 --> 00:28:14,960 Speaker 2: necessarily seem to be materializing at this moment as we 590 00:28:14,960 --> 00:28:17,359 Speaker 2: look at correction territory on the S and P five hundred. 591 00:28:17,400 --> 00:28:19,920 Speaker 2: So for more, as Charlie promised, we go to Mike Reagan, 592 00:28:20,119 --> 00:28:22,159 Speaker 2: Bloomberg senior editor, who was joining. 593 00:28:21,960 --> 00:28:22,800 Speaker 3: Us from New York. 594 00:28:23,240 --> 00:28:26,280 Speaker 2: Mike, at what point is this just the selling pressure 595 00:28:26,400 --> 00:28:29,359 Speaker 2: kind of amplifies itself and we're looking at technical levels 596 00:28:29,400 --> 00:28:32,040 Speaker 2: here and kind of algorithms kicking in, or does this 597 00:28:32,080 --> 00:28:35,880 Speaker 2: still seem to be active decision making on the part 598 00:28:35,920 --> 00:28:38,600 Speaker 2: of traders to trade off of what we're hearing from 599 00:28:38,600 --> 00:28:39,160 Speaker 2: the president. 600 00:28:39,600 --> 00:28:41,440 Speaker 14: Yeah, Kelly, I think my guess is that it's a 601 00:28:41,440 --> 00:28:44,760 Speaker 14: little bit of both. From a technical perspective, if you 602 00:28:44,800 --> 00:28:47,480 Speaker 14: look at the chart of the stock market, it's really 603 00:28:47,640 --> 00:28:52,160 Speaker 14: just a classic down trend since the last high in 604 00:28:52,160 --> 00:28:54,640 Speaker 14: the S and P five hundred on February nineteenth. So 605 00:28:55,560 --> 00:28:58,960 Speaker 14: you know that trend until it's breached, and it looks like, 606 00:28:59,320 --> 00:29:03,240 Speaker 14: you know, it's broke that down trend. Technically minded traders 607 00:29:03,280 --> 00:29:05,960 Speaker 14: are going to be a little bit nervous about what 608 00:29:06,000 --> 00:29:08,360 Speaker 14: this market looks like right now. The S and P 609 00:29:08,560 --> 00:29:12,120 Speaker 14: is below it's two hundred day moving average first closed 610 00:29:12,200 --> 00:29:14,760 Speaker 14: yesterday in a long time, below that average that's another 611 00:29:15,280 --> 00:29:18,600 Speaker 14: signal to technically minded traders that you know, this this 612 00:29:18,680 --> 00:29:22,320 Speaker 14: sell off is not your classic, you know, sort of 613 00:29:22,560 --> 00:29:26,480 Speaker 14: minor correction, that it is potentially something more serious. But 614 00:29:26,840 --> 00:29:28,920 Speaker 14: as I was saying earlier, I would also point out that, 615 00:29:29,000 --> 00:29:31,080 Speaker 14: you know, this has kind of gone beyond just the 616 00:29:31,600 --> 00:29:34,480 Speaker 14: headlines from Trump and his posts on social media and 617 00:29:34,480 --> 00:29:39,320 Speaker 14: his comments about tariffs. We are seeing companies themselves, you know, 618 00:29:39,440 --> 00:29:44,120 Speaker 14: Coals today, Dick Sporting Goods really giving sort of alarming 619 00:29:44,240 --> 00:29:49,160 Speaker 14: forecasts for their profit in the rest of the year. 620 00:29:49,240 --> 00:29:54,160 Speaker 14: That is really catching investors attention, and those stocks are 621 00:29:54,200 --> 00:29:58,280 Speaker 14: down pretty significantly. You know, it really looks like it's 622 00:29:58,320 --> 00:30:04,080 Speaker 14: being translated from just sort of tweets and posts from 623 00:30:04,360 --> 00:30:07,800 Speaker 14: Donald Trump and sort of confusion about tariffs to actually 624 00:30:08,480 --> 00:30:11,280 Speaker 14: what looks like to be the start of damage to 625 00:30:12,200 --> 00:30:16,680 Speaker 14: Corporate America's profitability. Doing in part because obviously, if you 626 00:30:16,720 --> 00:30:20,080 Speaker 14: fire a lot of government workers, that's going to reduce 627 00:30:20,120 --> 00:30:24,520 Speaker 14: some consumer demand, and it makes other consumers nervous, it 628 00:30:24,560 --> 00:30:28,000 Speaker 14: makes companies confused about how they should respond to these 629 00:30:28,080 --> 00:30:31,440 Speaker 14: tariff threats. So you know, it is getting beyond just 630 00:30:32,040 --> 00:30:34,520 Speaker 14: sort of the headline risk and the social media post 631 00:30:34,600 --> 00:30:37,600 Speaker 14: risk from Donald Trump into something more serious with these 632 00:30:37,640 --> 00:30:40,040 Speaker 14: companies warning about their profit forecast. 633 00:30:40,280 --> 00:30:44,440 Speaker 4: Kelly, I just wonder, Mike, you know what capitulation looks like. 634 00:30:44,480 --> 00:30:47,640 Speaker 4: Here you've got a VIX bumping up against twenty nine. Now, 635 00:30:48,200 --> 00:30:51,200 Speaker 4: and we heard another call this morning fifty five hundred, 636 00:30:51,520 --> 00:30:54,280 Speaker 4: much like we heard from Mike Wilson and Goldman Sachs, JP, 637 00:30:54,400 --> 00:30:57,960 Speaker 4: Morgan Asset Managements David Leibovitz. He says it's time to 638 00:30:57,960 --> 00:30:59,840 Speaker 4: start writing a shopping list. Mike, when do we know 639 00:30:59,880 --> 00:31:00,360 Speaker 4: it time? 640 00:31:01,400 --> 00:31:03,800 Speaker 14: I think, you know, you know, Joe, I'm not sure 641 00:31:03,800 --> 00:31:07,560 Speaker 14: that that's consensus that this is a dip that is 642 00:31:07,720 --> 00:31:09,880 Speaker 14: to be bought at a certain level. You know, we 643 00:31:09,960 --> 00:31:14,920 Speaker 14: have seen other strategists being much more cautious, so you know, 644 00:31:14,960 --> 00:31:17,760 Speaker 14: it's hard to really say where the bottom of this is. 645 00:31:17,840 --> 00:31:21,640 Speaker 14: I think what Wall Street really craves now is a 646 00:31:21,640 --> 00:31:24,840 Speaker 14: little bit of a softer tone from President Trump on 647 00:31:25,640 --> 00:31:28,280 Speaker 14: the tariffs, and not to mention all of the other 648 00:31:28,440 --> 00:31:32,120 Speaker 14: you know, the cuts and spending, you know, all the 649 00:31:32,200 --> 00:31:37,160 Speaker 14: DOGE cuts being made and the firing of government workers. 650 00:31:37,360 --> 00:31:39,560 Speaker 14: A lot of this is adding up to real concern 651 00:31:40,080 --> 00:31:42,600 Speaker 14: about the strength of the consumer for the rest of 652 00:31:42,600 --> 00:31:44,920 Speaker 14: the year. So I'm not sure it's one of those 653 00:31:44,960 --> 00:31:47,920 Speaker 14: sort of dips that reaches a level where, you know, 654 00:31:48,840 --> 00:31:51,200 Speaker 14: you see this knee jerk response and people start to 655 00:31:51,800 --> 00:31:56,080 Speaker 14: buy into it. That certainly could happen, But I you know, 656 00:31:56,160 --> 00:31:59,680 Speaker 14: I think this correction, this sort of draw down from 657 00:31:59,720 --> 00:32:02,880 Speaker 14: the high eyes, is likely here to stay for a while, 658 00:32:03,000 --> 00:32:06,880 Speaker 14: and so we learn more about how aggressive President Trump 659 00:32:06,960 --> 00:32:08,720 Speaker 14: really wants to be with these tariffs. You know, he's 660 00:32:08,840 --> 00:32:12,600 Speaker 14: he's very flexible and sort of tends to change what 661 00:32:12,720 --> 00:32:15,520 Speaker 14: he wants to do with tariffs quite a bit. And 662 00:32:15,600 --> 00:32:18,040 Speaker 14: I think we Wall Street's really coming to grips with 663 00:32:18,160 --> 00:32:21,040 Speaker 14: right now is that this correction in the stock market 664 00:32:21,960 --> 00:32:25,680 Speaker 14: is not yet enough to really change his mind about 665 00:32:25,720 --> 00:32:29,280 Speaker 14: trade policy and all his other policies. So, you know, 666 00:32:29,320 --> 00:32:32,320 Speaker 14: I think this drawdown is here to stay until there's 667 00:32:32,360 --> 00:32:36,480 Speaker 14: more clarity on exactly you know, where the line in 668 00:32:36,520 --> 00:32:38,960 Speaker 14: the sand is for Trump as far as how aggressive 669 00:32:38,960 --> 00:32:41,800 Speaker 14: he wants to get with tariffs and with you know, 670 00:32:41,960 --> 00:32:45,120 Speaker 14: cutting government spending and the job cuts that come along 671 00:32:45,120 --> 00:32:45,360 Speaker 14: with it. 672 00:32:47,120 --> 00:32:49,600 Speaker 4: Mike, we can't thank you enough. Mike Reagan, Bloomberg Senior Editor, 673 00:32:49,640 --> 00:32:51,600 Speaker 4: is super helpful these last couple of days, and we 674 00:32:51,680 --> 00:32:54,480 Speaker 4: might need to stay close on this, joining us live 675 00:32:54,640 --> 00:32:57,800 Speaker 4: from World Headquarters in New York. Of course, Kaylee, we're 676 00:32:57,800 --> 00:32:59,960 Speaker 4: going to be watching the meeting of the Business Roundtable 677 00:33:00,040 --> 00:33:02,920 Speaker 4: after the closing bell five pm Eastern time. Donald Trump 678 00:33:02,920 --> 00:33:06,720 Speaker 4: will hold forth with some pretty important executives who have already, 679 00:33:07,120 --> 00:33:09,680 Speaker 4: upon his last visit as a candidate, expressed some concern 680 00:33:09,760 --> 00:33:13,240 Speaker 4: about the impact of these very policies we're talking about tariffs, 681 00:33:13,280 --> 00:33:14,440 Speaker 4: tax cuts put together. 682 00:33:14,720 --> 00:33:17,280 Speaker 2: Yeah, we're looking forward to hearing hopefully from the President 683 00:33:17,280 --> 00:33:19,480 Speaker 2: in the five o'clock hour in the late edition of 684 00:33:19,560 --> 00:33:21,320 Speaker 2: Balance of Power. And I would also keep in mind 685 00:33:21,360 --> 00:33:24,280 Speaker 2: we're actively waiting to hear from the Secretary of State 686 00:33:24,320 --> 00:33:27,400 Speaker 2: Marco Rubio. He's been expected to gaggle with press gathered 687 00:33:27,400 --> 00:33:30,200 Speaker 2: in Saudi Arabia with US and Ukraine talks now underway. 688 00:33:30,200 --> 00:33:33,960 Speaker 2: It seems those talks have been lasting for an extended 689 00:33:34,000 --> 00:33:36,080 Speaker 2: period of time that has delayed those remarks, But of 690 00:33:36,080 --> 00:33:38,920 Speaker 2: course we're eager to hear what the Secretary has to say, 691 00:33:38,960 --> 00:33:42,080 Speaker 2: as the US is suggesting both Ukraine and Russia are 692 00:33:42,120 --> 00:33:44,280 Speaker 2: going to have to make some concessions here. 693 00:33:44,360 --> 00:33:47,160 Speaker 4: That's right, Secretary of State Marco Rubio in the room, 694 00:33:47,240 --> 00:33:50,240 Speaker 4: Mike Waltz back there, Steve Witkoff as well. Our producer 695 00:33:50,360 --> 00:33:54,160 Speaker 4: James told us about nine hours in. James, is that correct? 696 00:33:54,240 --> 00:33:57,080 Speaker 4: At this point they still have not emerged. I wanted 697 00:33:57,120 --> 00:33:59,360 Speaker 4: to talk to Maura Rubbin about this. This is obviously 698 00:33:59,480 --> 00:34:01,640 Speaker 4: it could be a pivotal meeting here, professor at the 699 00:34:01,720 --> 00:34:04,600 Speaker 4: University of Virginia's Miller Center, former US diplomat with us 700 00:34:04,600 --> 00:34:06,480 Speaker 4: back here on Bloomberg, Mar it's great. 701 00:34:06,360 --> 00:34:06,720 Speaker 6: To see you. 702 00:34:06,800 --> 00:34:09,120 Speaker 4: Does the length of this meeting, the fact that it's 703 00:34:09,120 --> 00:34:11,160 Speaker 4: going into overtime encourage. 704 00:34:10,800 --> 00:34:14,920 Speaker 6: You, well, I think it's it's better than if it 705 00:34:14,960 --> 00:34:18,680 Speaker 6: was an abrupt meeting. They certainly a lot to talk about, 706 00:34:19,440 --> 00:34:20,280 Speaker 6: and in Mike. 707 00:34:20,200 --> 00:34:27,200 Speaker 15: Waltz and Secretary of Rubio, you have serious thinkers who 708 00:34:27,480 --> 00:34:32,279 Speaker 15: understand the ramifications of what the President and others have 709 00:34:32,400 --> 00:34:33,160 Speaker 15: put out there. 710 00:34:33,680 --> 00:34:36,359 Speaker 6: And so I'm hoping that this could be a sign 711 00:34:36,440 --> 00:34:41,839 Speaker 6: that there are serious discussions underway and recognizing that all 712 00:34:41,920 --> 00:34:45,640 Speaker 6: parties involved are going to need to be able to 713 00:34:45,680 --> 00:34:50,680 Speaker 6: stay clearly what their bottom lines are. And it's particularly 714 00:34:50,719 --> 00:34:54,040 Speaker 6: tough for Ukraine because all of the negotiating is literally 715 00:34:54,080 --> 00:34:57,400 Speaker 6: going on on their territory or about their territory and 716 00:34:57,480 --> 00:35:00,719 Speaker 6: about their sovereignty, which puts an ad burden on them, 717 00:35:00,719 --> 00:35:03,920 Speaker 6: which I certainly hope that Secretary Rubio and Mike Waltz 718 00:35:04,040 --> 00:35:10,239 Speaker 6: understand and appreciate and appreciate why US interests are so 719 00:35:10,480 --> 00:35:14,120 Speaker 6: at play here in terms of protecting Ukrainian sovereignty. 720 00:35:15,960 --> 00:35:17,640 Speaker 2: Well, we do know this came up in the White 721 00:35:17,680 --> 00:35:19,960 Speaker 2: House Press briefing just a moment ago, as the Press 722 00:35:19,960 --> 00:35:23,200 Speaker 2: Secretary Caroline Lovitt says that the President has received positive 723 00:35:23,200 --> 00:35:25,759 Speaker 2: briefs about the meeting so far today and that they'll 724 00:35:25,760 --> 00:35:28,440 Speaker 2: have a full readout later on. But Mar to your 725 00:35:28,440 --> 00:35:32,000 Speaker 2: point about Ukrainian territory being in question here, what Russia 726 00:35:32,040 --> 00:35:33,640 Speaker 2: is going to be able to keep hold of versus 727 00:35:33,719 --> 00:35:36,360 Speaker 2: what Ukraine may be able to claw back. How do 728 00:35:36,440 --> 00:35:38,840 Speaker 2: you see the minerals deal that the US still seems 729 00:35:38,840 --> 00:35:41,759 Speaker 2: intent on signing with Ukraine. Factoring into that knowing that 730 00:35:42,000 --> 00:35:44,160 Speaker 2: where a lot of that material actually is is in 731 00:35:44,280 --> 00:35:48,640 Speaker 2: territory currently occupied by Russia, does that actually give Ukraine 732 00:35:48,760 --> 00:35:50,480 Speaker 2: some leverage via the United States? 733 00:35:52,000 --> 00:35:52,600 Speaker 9: Hard to say. 734 00:35:52,680 --> 00:35:56,160 Speaker 6: I suspect that the United States has also been talking 735 00:35:56,200 --> 00:36:01,680 Speaker 6: to Russia on the minerals topic, and it's understandable for 736 00:36:01,880 --> 00:36:07,120 Speaker 6: any US administration to recognize that the United States needs 737 00:36:07,160 --> 00:36:12,239 Speaker 6: to do far better in building and protecting a resilient 738 00:36:12,560 --> 00:36:15,480 Speaker 6: critical mineral supply chain. I don't happen to disagree. I 739 00:36:15,480 --> 00:36:18,560 Speaker 6: don't happen to agree with how this administration has gone 740 00:36:18,600 --> 00:36:21,960 Speaker 6: about making those claims or assertions, but I expect to 741 00:36:22,040 --> 00:36:25,080 Speaker 6: having conversations with both Russia and Ukraine. For Ukraine, what's 742 00:36:25,239 --> 00:36:28,880 Speaker 6: most important and presidence of Zelenski's chief of staff has 743 00:36:28,920 --> 00:36:33,160 Speaker 6: already stated that publicly is the need for security guarantees 744 00:36:33,200 --> 00:36:36,120 Speaker 6: from the United States with whatever Ukraine may put on 745 00:36:36,160 --> 00:36:39,799 Speaker 6: the table, in addition to their openness on the critical mineral. 746 00:36:39,520 --> 00:36:45,760 Speaker 4: Side, there was talk of signing that deal at this meeting, Maara, 747 00:36:45,880 --> 00:36:47,400 Speaker 4: is that your expectation. 748 00:36:48,480 --> 00:36:50,400 Speaker 6: I would I guess I would be surprised if the 749 00:36:50,480 --> 00:36:54,399 Speaker 6: deal is signed at this meeting. Certainly you've got the 750 00:36:54,760 --> 00:37:00,279 Speaker 6: Ukrainian Defense minister there and the foreign affairs minister. Maybe 751 00:37:00,280 --> 00:37:06,040 Speaker 6: it's possible, but I wouldn't expect that coming out of 752 00:37:06,040 --> 00:37:08,920 Speaker 6: a discussion like this, particularly because the Ukrainians still need 753 00:37:08,920 --> 00:37:10,600 Speaker 6: to know where the Russians are and what the Russian 754 00:37:10,640 --> 00:37:13,400 Speaker 6: bottom lines are here, and we've heard very little discussion 755 00:37:13,440 --> 00:37:14,280 Speaker 6: of that publicly. 756 00:37:15,680 --> 00:37:17,640 Speaker 2: Well, one of the Russian bottom lines we understand, which 757 00:37:17,680 --> 00:37:19,439 Speaker 2: goes back to the point you were just making about 758 00:37:19,480 --> 00:37:21,920 Speaker 2: security guarantees, is that there will be no presence of 759 00:37:22,000 --> 00:37:26,160 Speaker 2: NATO troops in Ukraine to keep the peace, which is 760 00:37:26,200 --> 00:37:28,359 Speaker 2: something that France and the UK have offered the so 761 00:37:28,440 --> 00:37:31,360 Speaker 2: called Coalition of the Willing. If it can't be the 762 00:37:31,440 --> 00:37:35,840 Speaker 2: Europeans Mara, who realistically could serve that peacekeeping role. 763 00:37:36,840 --> 00:37:39,160 Speaker 6: Well, I should say, and it is important that France 764 00:37:39,200 --> 00:37:43,760 Speaker 6: and Britain have offered to do that. They also want 765 00:37:43,800 --> 00:37:45,960 Speaker 6: to know the United States is there as a backup. 766 00:37:46,400 --> 00:37:48,759 Speaker 6: So what the United States is willing to do and 767 00:37:48,920 --> 00:37:53,160 Speaker 6: how is critically important. Russia has already shown time and again, 768 00:37:53,239 --> 00:37:56,680 Speaker 6: frankly that they will take all that they can take 769 00:37:57,360 --> 00:38:00,719 Speaker 6: and that their word means very little. That you have 770 00:38:00,800 --> 00:38:04,520 Speaker 6: to those on the opposite side need some backups of 771 00:38:04,640 --> 00:38:07,120 Speaker 6: force and they need the strength of the United States 772 00:38:07,560 --> 00:38:10,399 Speaker 6: there to ensure that Russia complies. And that's why it's 773 00:38:10,480 --> 00:38:13,239 Speaker 6: so important that the United States indicates some willingness on 774 00:38:13,280 --> 00:38:18,040 Speaker 6: the security guarantee side and also in supporting what France 775 00:38:18,120 --> 00:38:20,920 Speaker 6: and the UK have put forward in terms of on 776 00:38:21,040 --> 00:38:22,200 Speaker 6: the ground peacekeepers. 777 00:38:23,760 --> 00:38:27,279 Speaker 4: Does President Zelenski need to come back to Washington, sit 778 00:38:27,360 --> 00:38:29,880 Speaker 4: down with Donald Trump, get back in the oval, smiles 779 00:38:29,920 --> 00:38:33,080 Speaker 4: on their faces, saying thank you, and so forth, to 780 00:38:33,120 --> 00:38:35,480 Speaker 4: get this back on track or to move the ball forward. 781 00:38:36,840 --> 00:38:40,200 Speaker 6: I would hope that for the United States and for 782 00:38:40,360 --> 00:38:44,799 Speaker 6: this administration, our keen eye is on what how to 783 00:38:44,800 --> 00:38:48,239 Speaker 6: best serve US interests and how to best protect US 784 00:38:48,320 --> 00:38:53,400 Speaker 6: national security. And that shouldn't be by requiring a formula 785 00:38:53,680 --> 00:38:59,040 Speaker 6: of magic words to the President of the United States 786 00:38:59,080 --> 00:39:01,879 Speaker 6: to make him feel better. Be his job should be 787 00:39:01,960 --> 00:39:04,440 Speaker 6: in looking out for US interests were at large, and 788 00:39:04,480 --> 00:39:07,440 Speaker 6: so getting the deal done that best serves US interests 789 00:39:07,440 --> 00:39:10,279 Speaker 6: should be through whatever route we can get that deal done. 790 00:39:10,320 --> 00:39:12,560 Speaker 6: I hope that is part of what Mike Waltz and 791 00:39:13,000 --> 00:39:15,640 Speaker 6: Marco Rubio are trying to figure out and assess in 792 00:39:15,680 --> 00:39:17,680 Speaker 6: their negotiations and their discussions. 793 00:39:17,719 --> 00:39:22,239 Speaker 2: Now, well, do you think that President Trump, though, is 794 00:39:22,239 --> 00:39:25,680 Speaker 2: of the belief that a stronger, better fortified Western Europe 795 00:39:25,760 --> 00:39:28,879 Speaker 2: is actually in the US interest Considering when we've heard 796 00:39:28,920 --> 00:39:31,680 Speaker 2: him talk about European allies frequently, he's talking about that, yes, 797 00:39:31,760 --> 00:39:34,400 Speaker 2: they have not spent enough on defense, but also that 798 00:39:34,480 --> 00:39:36,920 Speaker 2: he views them as kind of economic adversaries in the 799 00:39:36,960 --> 00:39:39,759 Speaker 2: sense who have unfair trade relationships. He's threatening them with 800 00:39:39,880 --> 00:39:41,319 Speaker 2: tariffs while all this is going on. 801 00:39:41,440 --> 00:39:45,400 Speaker 6: Maura, Yeah, listen, my concern about President Trump is that, 802 00:39:46,000 --> 00:39:48,239 Speaker 6: at least in all of the public statements he's made 803 00:39:48,280 --> 00:39:50,719 Speaker 6: thus far, he seems much more eager to cozy up 804 00:39:50,760 --> 00:39:56,560 Speaker 6: to strongmen and other authoritarian and authoritarian leaders and to 805 00:39:57,120 --> 00:40:00,600 Speaker 6: work out deals with Russia and China, for example, while 806 00:40:00,600 --> 00:40:03,600 Speaker 6: the rest of the world needs to just scramble around 807 00:40:03,680 --> 00:40:06,320 Speaker 6: the margins. I don't think that's what sort of the 808 00:40:06,440 --> 00:40:10,799 Speaker 6: security interests of the United States, nor obviously the rest 809 00:40:10,800 --> 00:40:13,800 Speaker 6: of the world. But that's my concerned about him. So yes, 810 00:40:14,280 --> 00:40:19,319 Speaker 6: that's completely consistent with the view that he doesn't recognize 811 00:40:19,360 --> 00:40:22,400 Speaker 6: the importance of friends and allies and partnerships of the 812 00:40:22,520 --> 00:40:26,160 Speaker 6: United States has worked so hard to cultivate and ensure 813 00:40:26,280 --> 00:40:28,920 Speaker 6: over the last years. I hope that there are people 814 00:40:28,920 --> 00:40:32,080 Speaker 6: around him who are trying to correct and adjust that 815 00:40:32,400 --> 00:40:36,520 Speaker 6: view and work with him to have him understand the 816 00:40:36,560 --> 00:40:39,920 Speaker 6: importance of these relationships. All right. 817 00:40:39,960 --> 00:40:43,000 Speaker 2: Mara Rudmand, professor at the University of Virginia's Miller Center 818 00:40:43,040 --> 00:40:45,720 Speaker 2: and former US diplomat joining us here on balance of Power, 819 00:40:46,080 --> 00:40:48,239 Speaker 2: Thank you very much, and again to reiterate, we did 820 00:40:48,239 --> 00:40:50,400 Speaker 2: hear from the White House Press secretary that the President 821 00:40:50,400 --> 00:40:53,239 Speaker 2: has received positive word from these talks so far in 822 00:40:53,239 --> 00:40:56,640 Speaker 2: Saudi Arabia. Full readout expecting later, as well as potentially 823 00:40:56,640 --> 00:40:59,120 Speaker 2: remarks to the press from the Secretary of State Marco 824 00:40:59,200 --> 00:41:00,319 Speaker 2: Review have. 825 00:41:00,560 --> 00:41:02,480 Speaker 4: Quite a bit more to talk about when we get 826 00:41:02,520 --> 00:41:04,560 Speaker 4: back on the air at five pm. I hope you 827 00:41:04,560 --> 00:41:06,920 Speaker 4: can join us on the late edition of Balance of 828 00:41:06,960 --> 00:41:09,920 Speaker 4: Power as we track a couple of storylines here this meeting, 829 00:41:09,960 --> 00:41:12,960 Speaker 4: of course in Saudi Arabia, Donald Trump's meeting the President 830 00:41:13,000 --> 00:41:15,279 Speaker 4: going to the business roundtable right as we take air, 831 00:41:15,320 --> 00:41:17,799 Speaker 4: following the closing bell today, and then of course a 832 00:41:17,840 --> 00:41:20,720 Speaker 4: four pm vote on a stopgap to keep the government 833 00:41:20,719 --> 00:41:23,160 Speaker 4: from shutting down on Friday. That happens in the House, Kaylee. 834 00:41:23,200 --> 00:41:24,680 Speaker 4: And we have no idea how that's going to. 835 00:41:24,680 --> 00:41:26,200 Speaker 3: End, No, we don't. 836 00:41:26,239 --> 00:41:28,719 Speaker 2: The votes don't seem necessarily to be firmly there at 837 00:41:28,719 --> 00:41:31,040 Speaker 2: this point. And of course, the backdrop to everything Joe 838 00:41:31,080 --> 00:41:33,799 Speaker 2: just said, financial markets that are still under pressure today. 839 00:41:33,800 --> 00:41:35,560 Speaker 2: We're off the lows on the S and P five hundred, 840 00:41:35,600 --> 00:41:40,640 Speaker 2: but it did touch into correction territory. 841 00:41:43,000 --> 00:41:46,200 Speaker 4: Thanks for listening to the Balance of Power podcast. Make 842 00:41:46,239 --> 00:41:49,160 Speaker 4: sure to subscribe if you haven't already, at Apple, Spotify, 843 00:41:49,280 --> 00:41:51,839 Speaker 4: or wherever you get your podcasts, and you can find 844 00:41:51,920 --> 00:41:55,160 Speaker 4: us live every weekday from Washington, DC at noontime Eastern 845 00:41:55,440 --> 00:41:56,840 Speaker 4: at Bloomberg dot com