1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,239 Speaker 2: Terminal and the Bloomberg Business app. We begin this hour 10 00:00:37,280 --> 00:00:39,959 Speaker 2: with stock steady ahead of fresh inflation data at eight 11 00:00:40,040 --> 00:00:43,040 Speaker 2: thirty Eastern time. Victoria Fanadez a Crossmark, writing, we have 12 00:00:43,159 --> 00:00:46,400 Speaker 2: witnessed a definite shift from the animal spirits driving markets 13 00:00:46,440 --> 00:00:48,080 Speaker 2: to a new all time hire just a few weeks 14 00:00:48,080 --> 00:00:51,000 Speaker 2: ago to now an increased probability of recession becoming the 15 00:00:51,040 --> 00:00:54,400 Speaker 2: topic of conversation. Victoria joined us now for more. Victoria, 16 00:00:54,440 --> 00:00:57,680 Speaker 2: welcome back. A week away from Liberation Day early next week. 17 00:00:57,720 --> 00:00:59,600 Speaker 2: That's going to be the big focus for this market. 18 00:01:00,000 --> 00:01:02,040 Speaker 2: It feels like you've changed you a few on things. 19 00:01:02,240 --> 00:01:02,960 Speaker 2: What's changed? 20 00:01:04,440 --> 00:01:06,679 Speaker 3: Well, I think it's actually kind of what you guys 21 00:01:06,680 --> 00:01:09,160 Speaker 3: were talking about it's that sentiment of the consumer. 22 00:01:09,360 --> 00:01:10,920 Speaker 4: When we look over the past year. 23 00:01:11,040 --> 00:01:13,280 Speaker 3: You know, we kept saying, there's so many red flags 24 00:01:13,280 --> 00:01:15,160 Speaker 3: that tell us we should be in a pullback, we 25 00:01:15,200 --> 00:01:17,920 Speaker 3: should be in a recession, but the consumer. 26 00:01:17,520 --> 00:01:18,440 Speaker 4: Was always there. 27 00:01:18,480 --> 00:01:21,360 Speaker 3: We talk about a FED put or a Trump put, 28 00:01:21,360 --> 00:01:24,679 Speaker 3: but really it was the consumer put for the longest. 29 00:01:24,240 --> 00:01:26,760 Speaker 4: Period of time. That's what has changed. 30 00:01:26,800 --> 00:01:29,039 Speaker 3: Now we see the consumer and you guys have already 31 00:01:29,040 --> 00:01:31,960 Speaker 3: talked about it this morning, all those companies coming out 32 00:01:31,959 --> 00:01:34,360 Speaker 3: on their earnings on their conference calls talking about the 33 00:01:34,400 --> 00:01:35,640 Speaker 3: concern that they're seeing. 34 00:01:35,840 --> 00:01:38,240 Speaker 4: Lulu Women being the late latest example. 35 00:01:38,280 --> 00:01:41,000 Speaker 3: I mean, I thought my kids alone would help support 36 00:01:41,040 --> 00:01:43,800 Speaker 3: the numbers at Lulu Women with their purchases, but apparently 37 00:01:44,160 --> 00:01:46,880 Speaker 3: it is not enough, and the consumers are starting to 38 00:01:46,920 --> 00:01:50,280 Speaker 3: pull back, and you get in that negative feedback loop. 39 00:01:50,360 --> 00:01:52,320 Speaker 4: As the consumers start to. 40 00:01:52,240 --> 00:01:56,320 Speaker 3: Pull back, revenues come down, margins start to get affected. 41 00:01:56,400 --> 00:01:59,960 Speaker 3: What happens nine months after margins get affected, companies start 42 00:02:00,120 --> 00:02:03,240 Speaker 3: laying off. And we've seen that with the Challenger layoffs 43 00:02:03,440 --> 00:02:05,480 Speaker 3: in the last month. And so I think it's that 44 00:02:05,640 --> 00:02:09,320 Speaker 3: consumer element that has changed that's giving us more concern, 45 00:02:09,560 --> 00:02:11,840 Speaker 3: especially with potentially more tariffs coming. 46 00:02:12,000 --> 00:02:14,240 Speaker 5: How much is this company's kitchen sinking it? Though you 47 00:02:14,280 --> 00:02:17,840 Speaker 5: mentioned Lululemon and your kids would single handedly cause this 48 00:02:18,120 --> 00:02:19,880 Speaker 5: shared to go up, But a lot of the kids 49 00:02:19,919 --> 00:02:22,120 Speaker 5: are actually getting baggy stuff right now, and that was 50 00:02:22,160 --> 00:02:24,800 Speaker 5: something they address that actually the styles are moving past 51 00:02:24,840 --> 00:02:28,400 Speaker 5: that sort of trademark legging spandex Look, I'm just wondering 52 00:02:28,680 --> 00:02:31,320 Speaker 5: how do you parse through how significant the hit is 53 00:02:31,360 --> 00:02:33,640 Speaker 5: and how big of a slowdown you have to price 54 00:02:33,680 --> 00:02:35,000 Speaker 5: into market expectations. 55 00:02:35,840 --> 00:02:38,079 Speaker 3: Yeah, I mean it's going to be different for every company, 56 00:02:38,120 --> 00:02:40,639 Speaker 3: and the companies that have been out there talking about 57 00:02:40,680 --> 00:02:43,680 Speaker 3: the slowdown have been along a wide range. It's not 58 00:02:44,160 --> 00:02:49,400 Speaker 3: just apparel, right We saw Best Buy as one of those. Yes, 59 00:02:49,440 --> 00:02:52,480 Speaker 3: there was Nike and Lululemon, but you see Walmart, which 60 00:02:52,520 --> 00:02:55,240 Speaker 3: is a different cohort of a consumer. And I think 61 00:02:55,400 --> 00:02:58,720 Speaker 3: part of the issue, Lisa, is that it's not just 62 00:02:59,200 --> 00:03:02,640 Speaker 3: the low incoming middle income consumer anymore. We've talked for 63 00:03:02,680 --> 00:03:04,919 Speaker 3: the last year year and a half on that high 64 00:03:05,000 --> 00:03:08,799 Speaker 3: income consumer really supporting that economy and continuing to spend. 65 00:03:09,080 --> 00:03:12,560 Speaker 3: Even if they shifted their spending habits they went maybe 66 00:03:12,560 --> 00:03:17,120 Speaker 3: from a higher element kind of store now shopping at Walmart. 67 00:03:17,160 --> 00:03:18,480 Speaker 4: We saw Walmart gain a lot of. 68 00:03:18,440 --> 00:03:20,600 Speaker 3: Share, but now they're talking about even the high end 69 00:03:21,120 --> 00:03:24,280 Speaker 3: income consumer pulling back. So I think you have to 70 00:03:24,320 --> 00:03:26,440 Speaker 3: take that longer term approach and say, as we go 71 00:03:26,560 --> 00:03:28,720 Speaker 3: through this year and consumer start to pull back as 72 00:03:28,720 --> 00:03:31,760 Speaker 3: they're worried about their jobs, and we see that in 73 00:03:31,800 --> 00:03:34,639 Speaker 3: the quits rate coming down, we see it with hiring 74 00:03:34,720 --> 00:03:37,720 Speaker 3: rates slowing. That's the element you have to look at 75 00:03:37,760 --> 00:03:41,480 Speaker 3: to determine what does growth look like if that consumer 76 00:03:41,520 --> 00:03:43,120 Speaker 3: engine is not there driving it. 77 00:03:43,240 --> 00:03:45,800 Speaker 1: Peter Cheer earlier told Bloomberg TV that the US is 78 00:03:45,840 --> 00:03:49,119 Speaker 1: trading kap trade flows for capital flows and the rest 79 00:03:49,160 --> 00:03:50,720 Speaker 1: of the world is going to outperform. 80 00:03:50,960 --> 00:03:51,880 Speaker 4: Do you look to the rest of. 81 00:03:51,880 --> 00:03:54,760 Speaker 1: The world ahead of Liberation Day because you're really unsure 82 00:03:54,800 --> 00:03:57,120 Speaker 1: about what is going to happen here in the United States. 83 00:03:57,960 --> 00:03:59,320 Speaker 4: Yeah, I think the rest of the world. 84 00:03:59,320 --> 00:04:02,600 Speaker 3: We've heard from plenty of leaders around the globe talking 85 00:04:02,640 --> 00:04:06,119 Speaker 3: about the concerns and already trying to make steps beforehand. 86 00:04:06,160 --> 00:04:08,160 Speaker 3: We've seen it come out of India, We've seen it 87 00:04:08,160 --> 00:04:10,480 Speaker 3: come out of some of the European countries, where what 88 00:04:10,560 --> 00:04:14,680 Speaker 3: can we do and before the idea of reciprocal tariffs 89 00:04:14,680 --> 00:04:16,240 Speaker 3: come to lower that rate. 90 00:04:16,320 --> 00:04:19,520 Speaker 4: What can we do to help our consumers. We saw 91 00:04:19,640 --> 00:04:21,760 Speaker 4: inflation this morning. 92 00:04:21,440 --> 00:04:23,800 Speaker 3: Out of Europe actually come in lower than expected and 93 00:04:23,920 --> 00:04:28,560 Speaker 3: ECB rate cuts moving higher, So you have to, you know, 94 00:04:30,040 --> 00:04:32,080 Speaker 3: look at it and see what are rates going to 95 00:04:32,160 --> 00:04:34,640 Speaker 3: do between the two What does it look like on 96 00:04:34,720 --> 00:04:38,520 Speaker 3: exchange rates? International has done much better because of the 97 00:04:38,560 --> 00:04:42,800 Speaker 3: concept of growth continuing, especially in Europe with the steps 98 00:04:42,800 --> 00:04:44,320 Speaker 3: that Germany has making in defense. 99 00:04:44,360 --> 00:04:46,360 Speaker 4: But has some of that already run out? 100 00:04:46,440 --> 00:04:49,880 Speaker 3: Is that already priced in to the European market? So 101 00:04:49,960 --> 00:04:51,880 Speaker 3: I might wait for a little bit of a pullback 102 00:04:51,880 --> 00:04:54,800 Speaker 3: on international before putting my toe on the water if 103 00:04:54,839 --> 00:04:58,160 Speaker 3: I haven't already, and let that consolidate a little bit 104 00:04:58,200 --> 00:04:58,920 Speaker 3: before going there. 105 00:04:59,080 --> 00:05:01,800 Speaker 2: Victoria. This is not only headwind for markets. In fact, 106 00:05:01,839 --> 00:05:04,400 Speaker 2: that dominant headwind has been the pain trade, and the 107 00:05:04,440 --> 00:05:07,880 Speaker 2: pain trade's been TechEd so far in twenty twenty five. Stayside, 108 00:05:08,040 --> 00:05:09,920 Speaker 2: Let's think about the shots that's been fired at tech 109 00:05:09,960 --> 00:05:12,520 Speaker 2: over the last week or so. Reports that Microsoft is 110 00:05:12,520 --> 00:05:15,560 Speaker 2: pulling back on data cent to spending, Ali Bamba firing 111 00:05:15,600 --> 00:05:19,599 Speaker 2: shots about over capacity and bubbles, and then overnight a 112 00:05:19,640 --> 00:05:23,479 Speaker 2: heavily downsized IPO from core Weave. How constrained is the 113 00:05:23,480 --> 00:05:25,000 Speaker 2: AI trade at the moment? 114 00:05:25,800 --> 00:05:28,479 Speaker 3: Yeah, I mean no one likes that word bubble, but 115 00:05:28,960 --> 00:05:32,000 Speaker 3: there is a lot of questions now going into hearing 116 00:05:32,160 --> 00:05:34,839 Speaker 3: all of the money the KAPEC spends that people that 117 00:05:35,000 --> 00:05:38,320 Speaker 3: companies are going to do in regards to AI. Seeing 118 00:05:38,320 --> 00:05:40,520 Speaker 3: some of that pull back you mentioned Microsoft is a 119 00:05:40,560 --> 00:05:43,560 Speaker 3: perfect example of it, and what does that mean going forward? 120 00:05:43,640 --> 00:05:46,640 Speaker 4: I think, you know, look tech, as we went. 121 00:05:46,560 --> 00:05:50,400 Speaker 3: Into this correction, Tech had already pulled back. They haven't 122 00:05:50,440 --> 00:05:54,320 Speaker 3: become leadership during this correction period that we're in, So 123 00:05:54,400 --> 00:05:56,279 Speaker 3: I don't think we should look to tech to be 124 00:05:56,320 --> 00:05:59,120 Speaker 3: the leaders coming out of this correction. I think they're 125 00:05:59,160 --> 00:06:02,000 Speaker 3: going to continue to struggle because of some of the 126 00:06:02,000 --> 00:06:04,680 Speaker 3: headlines that you've mentioned. Maybe you start to look at 127 00:06:04,720 --> 00:06:09,440 Speaker 3: some of the secondary companies that will benefit from productivity 128 00:06:09,520 --> 00:06:13,320 Speaker 3: enhancements from AI and not necessarily the tech names, the 129 00:06:13,400 --> 00:06:16,720 Speaker 3: data warehouse components of it that people were really looking at. 130 00:06:16,880 --> 00:06:19,560 Speaker 3: We've seen utility sector pull back a little bit as 131 00:06:19,600 --> 00:06:22,279 Speaker 3: well because of the headlines that you're mentioning. So I 132 00:06:22,279 --> 00:06:25,000 Speaker 3: think we continue to see some struggles in tech and 133 00:06:25,000 --> 00:06:28,000 Speaker 3: you're probably going to have to look at places like healthcare, 134 00:06:28,720 --> 00:06:32,839 Speaker 3: maybe certain types of materials, financials. These are the sectors 135 00:06:32,880 --> 00:06:35,000 Speaker 3: I think that will lead us coming out of the 136 00:06:35,040 --> 00:06:35,960 Speaker 3: correction that we're in. 137 00:06:36,040 --> 00:06:37,440 Speaker 4: That's where you should probably focus. 138 00:06:37,720 --> 00:06:40,480 Speaker 5: Can you walk us through how all of these prongs 139 00:06:40,600 --> 00:06:44,640 Speaker 5: of sentiment hits have translated into your view shift over 140 00:06:44,720 --> 00:06:47,000 Speaker 5: how you should allocate your assets? And I ask this 141 00:06:47,080 --> 00:06:49,479 Speaker 5: at a time when gold is at recordize and people 142 00:06:49,520 --> 00:06:51,640 Speaker 5: aren't sure whether to go into bonds or whether to 143 00:06:51,680 --> 00:06:52,600 Speaker 5: go into healthcare. 144 00:06:53,520 --> 00:06:53,760 Speaker 4: Yeah. 145 00:06:53,800 --> 00:06:55,560 Speaker 3: Well, I mean, look, you know you're talking to the 146 00:06:55,600 --> 00:06:58,400 Speaker 3: bond girl here, So I would always recommend having some 147 00:06:58,440 --> 00:07:02,200 Speaker 3: bonds in your portfolio. People want to hedge what they're seeing, 148 00:07:02,760 --> 00:07:06,080 Speaker 3: and when there's concerns around growth, gold is the hedge 149 00:07:06,160 --> 00:07:09,320 Speaker 3: that people go into when that's not the concern. When 150 00:07:09,360 --> 00:07:11,640 Speaker 3: growth is actually looking like it might pick up, then 151 00:07:11,680 --> 00:07:14,800 Speaker 3: you see people go more into industrial metals or things 152 00:07:14,880 --> 00:07:18,560 Speaker 3: like copper. Copper's actually down this morning after having a 153 00:07:18,560 --> 00:07:21,760 Speaker 3: pretty good run, gold continues to move higher, so you 154 00:07:21,840 --> 00:07:25,680 Speaker 3: see there's that concern around growth. We look at centiment 155 00:07:25,920 --> 00:07:28,600 Speaker 3: and it's always important to break cinniment down and say 156 00:07:28,600 --> 00:07:31,800 Speaker 3: what's driving that number? Is it the more volatile component 157 00:07:31,840 --> 00:07:35,040 Speaker 3: of centiment that's the expectations part, or is it the 158 00:07:35,080 --> 00:07:39,360 Speaker 3: present situation that's driving it. That's usually more focused on 159 00:07:39,480 --> 00:07:43,440 Speaker 3: jobs and fundamentals. We saw both elements come down in 160 00:07:43,480 --> 00:07:47,000 Speaker 3: the last sentiment numbers, so there is maybe a little 161 00:07:47,040 --> 00:07:49,920 Speaker 3: bit of support to that stagflation argument that people are 162 00:07:49,960 --> 00:07:53,440 Speaker 3: talking about as we have concerns around the growth component 163 00:07:53,760 --> 00:07:57,760 Speaker 3: which supports gold, and still have concerns around inflation and 164 00:07:57,800 --> 00:07:59,920 Speaker 3: how sticky that's going to be. Obviously we have pa 165 00:08:00,480 --> 00:08:03,080 Speaker 3: later today, but I think you have to look at 166 00:08:03,320 --> 00:08:06,480 Speaker 3: sentiment and say this feeds into the story of a 167 00:08:06,520 --> 00:08:09,960 Speaker 3: pullback of the consumer, pulling back of growth concerns, of 168 00:08:10,040 --> 00:08:13,160 Speaker 3: GDP concerns at least in the first half of this year. 169 00:08:13,280 --> 00:08:15,560 Speaker 5: Since you're a bond girl, could you really say that 170 00:08:15,600 --> 00:08:17,720 Speaker 5: bonds are going to have the same kind of a 171 00:08:17,920 --> 00:08:21,200 Speaker 5: buffering effect that they have traditionally at a time where 172 00:08:21,200 --> 00:08:23,360 Speaker 5: inflation expectations are actually rising. 173 00:08:24,200 --> 00:08:24,440 Speaker 6: Yeah. 174 00:08:24,480 --> 00:08:27,320 Speaker 3: I don't think you're going to go into fixed income 175 00:08:27,400 --> 00:08:29,880 Speaker 3: right now and say, oh wow, spreads are going to tighten. 176 00:08:30,200 --> 00:08:31,680 Speaker 4: I'm going to get, you know, a. 177 00:08:31,600 --> 00:08:35,000 Speaker 3: Lot of a price return coming out of that part 178 00:08:35,040 --> 00:08:37,160 Speaker 3: of the market. I don't think that's what you're going 179 00:08:37,160 --> 00:08:39,720 Speaker 3: into fixed income for right now, I think you're going 180 00:08:39,760 --> 00:08:42,559 Speaker 3: into fixed income to lock in some steady cash flow 181 00:08:42,600 --> 00:08:45,760 Speaker 3: components in your portfolio. Some people may like to do 182 00:08:45,800 --> 00:08:48,400 Speaker 3: that with dividend payers in the equity market, but that's 183 00:08:48,440 --> 00:08:50,640 Speaker 3: a little more volatile. If you can lock in some 184 00:08:50,679 --> 00:08:53,200 Speaker 3: steady cash flow on the short end and the long 185 00:08:53,320 --> 00:08:55,520 Speaker 3: end of the treasury curve, it gives you a little 186 00:08:55,520 --> 00:08:58,160 Speaker 3: bit more buffer in your portfolio, as we think we're 187 00:08:58,200 --> 00:09:01,160 Speaker 3: going to continue to see volatility at least for the 188 00:09:01,200 --> 00:09:03,480 Speaker 3: next six months in the equity side. 189 00:09:03,280 --> 00:09:03,840 Speaker 4: Of the market. 190 00:09:04,160 --> 00:09:06,520 Speaker 2: Victoria, I appreciate your take on things going into the weekend. 191 00:09:06,600 --> 00:09:19,280 Speaker 2: Victoria Fernandez a crossmark Nvidia backed coal Weave, raising one 192 00:09:19,320 --> 00:09:22,080 Speaker 2: point five billion with a starting share price of forty 193 00:09:22,160 --> 00:09:24,280 Speaker 2: The firm initially seeking to raise as much as two 194 00:09:24,320 --> 00:09:26,920 Speaker 2: point seven billion ahead of its first day of trading. 195 00:09:26,960 --> 00:09:30,000 Speaker 2: Later on today, Angela Zino CFI eight joined us Now 196 00:09:30,040 --> 00:09:31,960 Speaker 2: for more. Angela, welcome to the program. What kind of 197 00:09:31,960 --> 00:09:34,640 Speaker 2: signal do you take from this heavily discounted IPO. 198 00:09:35,960 --> 00:09:38,360 Speaker 7: Well, you know, well, first off, thanks for having me. 199 00:09:38,440 --> 00:09:40,040 Speaker 7: But when we kind of look at this, I mean, 200 00:09:40,040 --> 00:09:42,520 Speaker 7: we're not necessarily surprised by the discount here and I 201 00:09:42,559 --> 00:09:45,520 Speaker 7: don't think most of the market are necessarily surprised kind 202 00:09:45,520 --> 00:09:47,840 Speaker 7: of in light of recent events and what we've seen 203 00:09:47,880 --> 00:09:51,400 Speaker 7: over the last couple of weeks from just overall sentiment 204 00:09:51,480 --> 00:09:53,719 Speaker 7: on the tech side of things just you know, really 205 00:09:53,800 --> 00:09:57,200 Speaker 7: kind of going sour overall. You've got these tariff macro 206 00:09:57,320 --> 00:10:00,240 Speaker 7: issues out there and the implications that they're having on 207 00:10:00,960 --> 00:10:03,559 Speaker 7: you know, tech. You've got these you know, obviously the 208 00:10:03,800 --> 00:10:06,839 Speaker 7: Deep Seek concerns out there and the implicated creations on 209 00:10:07,440 --> 00:10:09,440 Speaker 7: the tech side of things there. I think also as 210 00:10:09,480 --> 00:10:13,199 Speaker 7: far as four Weave is concerned, specifically, when you kind 211 00:10:13,200 --> 00:10:15,600 Speaker 7: of look at that business model and kind of, you know, 212 00:10:15,640 --> 00:10:17,800 Speaker 7: how they handle the financing side of things, kind of 213 00:10:17,800 --> 00:10:21,959 Speaker 7: being more of this kind of GPU infrastructure backed lending 214 00:10:22,040 --> 00:10:24,920 Speaker 7: type of company, I think that's a business model that 215 00:10:25,000 --> 00:10:27,880 Speaker 7: really doesn't kind of, you know, bode well with a 216 00:10:27,920 --> 00:10:31,560 Speaker 7: lot of investors out there, especially amidst a period where 217 00:10:31,720 --> 00:10:34,319 Speaker 7: kind of the a, we've got a risk off trade 218 00:10:35,120 --> 00:10:36,320 Speaker 7: for AI right now. 219 00:10:36,760 --> 00:10:38,600 Speaker 2: It's a huge risk off trade and has been ever 220 00:10:38,679 --> 00:10:41,400 Speaker 2: since the Deep Seeks revelations. Angelo, So let's build on that. 221 00:10:41,600 --> 00:10:43,840 Speaker 2: It's not just that Ali Papa out this week. The 222 00:10:43,920 --> 00:10:46,600 Speaker 2: chairman came out and said maybe there's some other capacity, 223 00:10:46,640 --> 00:10:48,679 Speaker 2: perhaps even a bubble. Then we had a report from 224 00:10:48,679 --> 00:10:51,360 Speaker 2: td count that suggested Microsoft was pulling back from projects 225 00:10:51,400 --> 00:10:53,880 Speaker 2: in both the United States and in Europe too. It's 226 00:10:53,880 --> 00:10:56,840 Speaker 2: a question we asked earlier Angelo, just how constrained is 227 00:10:56,880 --> 00:10:57,880 Speaker 2: this trade at the moment? 228 00:10:59,640 --> 00:11:01,400 Speaker 7: Listen. I think when you kind of look at the 229 00:11:01,440 --> 00:11:05,120 Speaker 7: sentiment out there, I mean, it's it's pretty it's pretty negative. 230 00:11:05,200 --> 00:11:08,160 Speaker 7: I mean we kind of look at the hyperscalers out there, 231 00:11:08,200 --> 00:11:12,640 Speaker 7: from the likes of Microsoft, Oracle, Metas out there declining 232 00:11:12,679 --> 00:11:15,319 Speaker 7: anywhere from fifteen to twenty five percent. When you kind 233 00:11:15,320 --> 00:11:17,600 Speaker 7: of look at the AI semi names out there, they've 234 00:11:17,679 --> 00:11:20,280 Speaker 7: kind of declined more notably, kind of in the twenty 235 00:11:20,320 --> 00:11:23,760 Speaker 7: five to fifty percent range out there. So a lot 236 00:11:23,800 --> 00:11:26,880 Speaker 7: of kind of the uncertainty out there whether it's kind 237 00:11:26,880 --> 00:11:29,599 Speaker 7: of what you alluded to as far as the Microsoft 238 00:11:29,640 --> 00:11:32,200 Speaker 7: situation is concerned. And I think that'll be the most 239 00:11:32,240 --> 00:11:36,040 Speaker 7: important event this earning season, is that earning's call from Microsoft. 240 00:11:36,040 --> 00:11:38,640 Speaker 7: We really need to hear from them, find out exactly 241 00:11:38,760 --> 00:11:41,920 Speaker 7: what their intent out there is. I Mean our view 242 00:11:42,040 --> 00:11:44,400 Speaker 7: is it partly has to do with that open AI 243 00:11:44,559 --> 00:11:47,400 Speaker 7: relationship as well, as the fact that hey, listen, maybe 244 00:11:47,440 --> 00:11:50,760 Speaker 7: they're well and they will clearly articulately the fact that 245 00:11:50,760 --> 00:11:53,440 Speaker 7: they are going to shift more towards their server side 246 00:11:53,480 --> 00:11:55,959 Speaker 7: of things and less towards the infrastructure side of things, 247 00:11:56,040 --> 00:11:57,800 Speaker 7: which we think makes a lot of sense. We do 248 00:11:57,960 --> 00:12:01,160 Speaker 7: like the Microsoft's trade at this point time, given the pullback, 249 00:12:01,440 --> 00:12:03,600 Speaker 7: but there's a lot of uncertainty as far as all 250 00:12:03,640 --> 00:12:05,920 Speaker 7: that is concerned out there. We think a little bit 251 00:12:06,000 --> 00:12:07,960 Speaker 7: kind of to an extreme, and we do think a 252 00:12:07,960 --> 00:12:09,719 Speaker 7: lot of those valuations are kind of baking some of 253 00:12:09,720 --> 00:12:10,920 Speaker 7: that stuff into it. 254 00:12:10,720 --> 00:12:13,199 Speaker 5: To build on that. I'm kind of whipsid here because 255 00:12:13,240 --> 00:12:14,880 Speaker 5: it was just a couple months ago that we had 256 00:12:14,880 --> 00:12:18,319 Speaker 5: people on here who are saying that truly these hyperscalers 257 00:12:18,360 --> 00:12:21,920 Speaker 5: can't invest enough in infrastructure, and that frankly, the energy 258 00:12:21,920 --> 00:12:25,440 Speaker 5: system and the infrastructure currently out there is nowhere near 259 00:12:25,520 --> 00:12:28,360 Speaker 5: what's necessary for the AI build out as people imagine it. 260 00:12:28,440 --> 00:12:31,480 Speaker 5: So which is it? How do you understand how much 261 00:12:31,520 --> 00:12:34,520 Speaker 5: what we're hearing from China is fact versus fiction in 262 00:12:34,600 --> 00:12:38,760 Speaker 5: terms of just how much technological advances transforms that story. 263 00:12:39,440 --> 00:12:41,280 Speaker 7: Yeah, No, I think that's a great question, And I 264 00:12:41,280 --> 00:12:43,560 Speaker 7: don't know if there's an actual way to answer that, 265 00:12:43,600 --> 00:12:45,480 Speaker 7: to be honest with you, But when we kind of 266 00:12:45,520 --> 00:12:47,520 Speaker 7: look at it, right, I think deep Seak did change 267 00:12:47,559 --> 00:12:50,720 Speaker 7: things more than people kind of want to acknowledge out there. 268 00:12:50,720 --> 00:12:53,280 Speaker 7: I think you kind of take a look at China, 269 00:12:53,520 --> 00:12:56,600 Speaker 7: look at the efficiencies that they've kind of accomplished on 270 00:12:56,720 --> 00:12:59,400 Speaker 7: their end of things, and then you kind of look 271 00:12:59,400 --> 00:13:01,440 Speaker 7: at what's happening in the US, and I think kind 272 00:13:01,440 --> 00:13:03,400 Speaker 7: of that's the bigger issue out there, because if you 273 00:13:03,480 --> 00:13:05,440 Speaker 7: kind of look at the pace that these kind of 274 00:13:05,480 --> 00:13:09,240 Speaker 7: hyperscalers are investing at and now at a point in 275 00:13:09,320 --> 00:13:12,160 Speaker 7: time right where we do have these tariff concerns out there, 276 00:13:12,160 --> 00:13:14,880 Speaker 7: we do have those growth concerns out there at a 277 00:13:14,920 --> 00:13:17,440 Speaker 7: point where we could potentially see some pressures on the 278 00:13:17,480 --> 00:13:20,440 Speaker 7: top line, whether you know, come from some deceleration on 279 00:13:20,480 --> 00:13:22,520 Speaker 7: the cloud side of things, whether it be you know, 280 00:13:22,600 --> 00:13:26,280 Speaker 7: some challenges on the digital ads side of things that 281 00:13:26,320 --> 00:13:30,200 Speaker 7: puts pressure kind of on these hyperscalers out there. Not 282 00:13:30,280 --> 00:13:33,280 Speaker 7: to mention, these tariffs out there also increase the cost 283 00:13:33,640 --> 00:13:36,559 Speaker 7: of kind of installing these servers out there, So these 284 00:13:36,800 --> 00:13:40,120 Speaker 7: these hyperscalers are going to have to, you know, look 285 00:13:40,160 --> 00:13:42,920 Speaker 7: to be a little bit more efficient in nature and 286 00:13:42,960 --> 00:13:45,040 Speaker 7: in many cases, what we've seen here over the last 287 00:13:45,120 --> 00:13:47,080 Speaker 7: couple of months is really going to force them to 288 00:13:47,120 --> 00:13:48,040 Speaker 7: do that is core. 289 00:13:48,080 --> 00:13:50,680 Speaker 5: We have a litmus test for other potential companies that 290 00:13:50,800 --> 00:13:53,240 Speaker 5: want to IPO this year in the tech space or 291 00:13:53,720 --> 00:13:56,280 Speaker 5: is it idiosyncratic and I hate to use that word, 292 00:13:56,400 --> 00:14:00,520 Speaker 5: but special because of its connection particularly to some of 293 00:14:00,559 --> 00:14:03,080 Speaker 5: these areas that are part of the peak uncertainty. 294 00:14:03,760 --> 00:14:06,920 Speaker 7: Yeah, I mean we personally wouldn't be using them as 295 00:14:06,920 --> 00:14:10,440 Speaker 7: a benchmark for other potential tech IPOs and other IPOs 296 00:14:10,480 --> 00:14:12,920 Speaker 7: in the market out there. Again, this isn't the name 297 00:14:12,960 --> 00:14:15,800 Speaker 7: that we would potentially or would like to see us 298 00:14:15,880 --> 00:14:18,040 Speaker 7: kind of that first name being thrown out there in 299 00:14:18,080 --> 00:14:20,920 Speaker 7: this tech IPO market kind of you know, since the 300 00:14:21,560 --> 00:14:24,680 Speaker 7: Trump administration has taken over. But that said, this is 301 00:14:24,680 --> 00:14:27,520 Speaker 7: what we've got out there. It is going to be 302 00:14:27,520 --> 00:14:29,320 Speaker 7: somewhat of a test out there. We'll see what the 303 00:14:29,360 --> 00:14:32,280 Speaker 7: sentiment looks like. But in our view, no, it shouldn't 304 00:14:32,320 --> 00:14:35,600 Speaker 7: kind of be used as kind of this test longer 305 00:14:35,680 --> 00:14:38,040 Speaker 7: term or over the next nine to twelve months in 306 00:14:38,160 --> 00:14:40,880 Speaker 7: terms of, you know, what the sentiment looks like for 307 00:14:41,400 --> 00:14:42,200 Speaker 7: tech longer term. 308 00:14:42,280 --> 00:14:46,640 Speaker 2: So Angela for you, right, now to pick what is it. 309 00:14:46,640 --> 00:14:49,120 Speaker 7: It's a great question. We've told investors over the last 310 00:14:49,120 --> 00:14:53,680 Speaker 7: couple of months to continue to shift towards software over semiconductors. Now, 311 00:14:53,800 --> 00:14:56,680 Speaker 7: you know, we'd acknowledge that neither side have really kind 312 00:14:56,680 --> 00:14:59,000 Speaker 7: of worked that well, but we'd say the lesser of 313 00:14:59,040 --> 00:15:01,200 Speaker 7: both evils. Right now, I was still on the software 314 00:15:01,240 --> 00:15:03,880 Speaker 7: side of things. We remain believers kind of on the 315 00:15:03,920 --> 00:15:05,840 Speaker 7: side of things where you are going to see more 316 00:15:06,080 --> 00:15:08,240 Speaker 7: M and A on that side of things. We also 317 00:15:08,320 --> 00:15:10,640 Speaker 7: believe that kind of the fundamentals are also going to 318 00:15:10,680 --> 00:15:13,760 Speaker 7: hold better up better on the software side of things. 319 00:15:13,840 --> 00:15:17,120 Speaker 7: And for us, a name like Microsoft that these levels 320 00:15:17,240 --> 00:15:20,680 Speaker 7: is a name that I feel pretty confident recommending to investors. 321 00:15:20,720 --> 00:15:23,000 Speaker 7: I think Salesforce is another name which has seen a 322 00:15:23,000 --> 00:15:25,440 Speaker 7: notable pick pullback as well, which is a name you 323 00:15:25,480 --> 00:15:27,000 Speaker 7: can kind of be looking at at these levels. 324 00:15:27,080 --> 00:15:29,320 Speaker 2: Angela, I appreciate the input as always, Thank you, sir. 325 00:15:29,360 --> 00:15:31,760 Speaker 2: I have a good weekend, Angela. Zina There of CFL 326 00:15:31,880 --> 00:15:44,200 Speaker 2: Rating Center. Republicans working on changes to the House GOP 327 00:15:44,360 --> 00:15:47,400 Speaker 2: tax plan looking to require few accounts in Medicaid benefits 328 00:15:47,400 --> 00:15:50,080 Speaker 2: for the poor and disabled. The move aiming to appease 329 00:15:50,120 --> 00:15:53,200 Speaker 2: members of the party worried about public backlash, and please 330 00:15:53,240 --> 00:15:54,960 Speaker 2: decide the good friend of this program, a good friend 331 00:15:54,960 --> 00:15:57,560 Speaker 2: of ours. The Congressman from Arkansas French Hill, joins us 332 00:15:57,560 --> 00:15:59,320 Speaker 2: now for more. Congressman, good to see you, Sir. 333 00:15:59,280 --> 00:16:03,280 Speaker 6: Jonathan with you and Lisa and Anne Marie always going 334 00:16:03,320 --> 00:16:04,120 Speaker 6: to be back in New York? 335 00:16:04,280 --> 00:16:05,800 Speaker 2: Is it tennangasp be as much fun as you thought 336 00:16:05,800 --> 00:16:08,720 Speaker 2: it would be? Don in Washington every day is a 337 00:16:08,840 --> 00:16:11,560 Speaker 2: joy eight pril Second, how much of a joy is that? 338 00:16:11,560 --> 00:16:11,920 Speaker 2: Can it be? 339 00:16:12,200 --> 00:16:14,240 Speaker 6: I'm just glad it's not April first, because that would 340 00:16:14,280 --> 00:16:16,040 Speaker 6: even increase even more. 341 00:16:16,400 --> 00:16:18,920 Speaker 2: Actually, what are your constituents telling you about what's hanniganaw 342 00:16:18,960 --> 00:16:19,880 Speaker 2: counsaw on the ground. 343 00:16:20,000 --> 00:16:24,480 Speaker 6: Yeah, look on the relations to tariffs. About thirty percent 344 00:16:24,720 --> 00:16:28,360 Speaker 6: of our output in Arkansas goes to Mexico or Canada, 345 00:16:29,200 --> 00:16:31,840 Speaker 6: and that's food and manufactured goods and back and forth. 346 00:16:31,880 --> 00:16:34,200 Speaker 6: And then you have the North American Free Trade Agreement 347 00:16:34,240 --> 00:16:38,320 Speaker 6: now under USMCA that was crafted to make North America 348 00:16:38,600 --> 00:16:42,360 Speaker 6: the destination for manufacturing. So for thirty years it's been 349 00:16:42,440 --> 00:16:46,360 Speaker 6: knitted together. And so I think the first thing that 350 00:16:46,360 --> 00:16:49,960 Speaker 6: I'm hearing is certainty and just lay out the plan 351 00:16:50,080 --> 00:16:51,880 Speaker 6: on how you want to use tariffs to open up 352 00:16:51,880 --> 00:16:54,960 Speaker 6: more markets for Americans, have reciprocity on fairness and certain 353 00:16:54,960 --> 00:17:00,960 Speaker 6: markets that are highly disportionate disportionate treatment like for example. 354 00:17:02,360 --> 00:17:07,960 Speaker 6: But when it comes to North America, let's renegotiate USMCA. 355 00:17:08,119 --> 00:17:12,280 Speaker 6: If you want to limit certain inputs from China into Canada, 356 00:17:12,359 --> 00:17:14,399 Speaker 6: Mexico or the United States, you can do that in 357 00:17:14,480 --> 00:17:17,679 Speaker 6: the agreement. Those countries can do that on an input basis. 358 00:17:17,680 --> 00:17:20,680 Speaker 6: If you want to have the American manufactured content higher, 359 00:17:20,720 --> 00:17:24,320 Speaker 6: you could negotiate to do that, as President Trump successfully 360 00:17:24,320 --> 00:17:28,160 Speaker 6: did last time he was president on the North American 361 00:17:28,200 --> 00:17:31,480 Speaker 6: auto content. He got more American content. So I think 362 00:17:31,480 --> 00:17:36,000 Speaker 6: it's best to tackle this Canadian and Mexican issue inside 363 00:17:36,000 --> 00:17:37,920 Speaker 6: a new and revised USMCA. 364 00:17:38,000 --> 00:17:41,080 Speaker 1: But USMCA was done under Trump. It replaced NAFTA, So 365 00:17:41,160 --> 00:17:43,960 Speaker 1: you want USMCA. Part two is do you think that's 366 00:17:43,960 --> 00:17:46,480 Speaker 1: what he's getting at Donald Trump? Here, the president he's 367 00:17:46,520 --> 00:17:49,520 Speaker 1: getting at the start bringing those twenty twenty six talks 368 00:17:49,600 --> 00:17:51,160 Speaker 1: up into the mid twenty twenty five. 369 00:17:51,240 --> 00:17:54,240 Speaker 6: Yeah, potentially, And I think that's not wrong thinking on 370 00:17:54,320 --> 00:17:58,560 Speaker 6: his part. If you're concerned about Chinese dumping through transshipment 371 00:17:58,640 --> 00:18:02,240 Speaker 6: of steel, for example, or Mexico. Let's deal with that 372 00:18:02,400 --> 00:18:05,399 Speaker 6: inside the agreement. Let's have Mexico deal with that in 373 00:18:05,440 --> 00:18:08,680 Speaker 6: their own trade policy on inputs coming into the country. 374 00:18:10,200 --> 00:18:12,320 Speaker 6: Because at the same that's how I think you have 375 00:18:12,400 --> 00:18:16,280 Speaker 6: a more robust, competitive international system where manufacturing is at 376 00:18:16,280 --> 00:18:18,760 Speaker 6: the heart of America. I think President Trump strategically in 377 00:18:18,800 --> 00:18:21,359 Speaker 6: trade diplomacy, I'd like to see more things made in 378 00:18:21,400 --> 00:18:26,560 Speaker 6: America that takes time to do. It's not overnight. We 379 00:18:26,640 --> 00:18:28,920 Speaker 6: had steal an aluminum terraffs, you know, for the past 380 00:18:29,200 --> 00:18:32,880 Speaker 6: five or six years, and they haven't you been overnight 381 00:18:32,960 --> 00:18:34,800 Speaker 6: changes across the board. 382 00:18:34,880 --> 00:18:37,200 Speaker 1: Walmart is headquartered in your state. They went to China 383 00:18:37,240 --> 00:18:39,159 Speaker 1: and said, look, we're dealing with tariffs. You're going to 384 00:18:39,200 --> 00:18:40,679 Speaker 1: have to eat some of this costs. And the Chinese 385 00:18:40,680 --> 00:18:42,800 Speaker 1: are saying, no, are you concerned about the cost being 386 00:18:42,840 --> 00:18:44,000 Speaker 1: passed on to consumers? 387 00:18:44,800 --> 00:18:47,159 Speaker 6: I am when I don't know what the strategy is. 388 00:18:47,920 --> 00:18:50,080 Speaker 6: This is the whole point. You have trade diplomacy on 389 00:18:50,200 --> 00:18:54,000 Speaker 6: using trade as a sanctioned potential, like you saw the 390 00:18:54,040 --> 00:18:58,760 Speaker 6: President do on Columbia on repatriation of immigrants. You had 391 00:18:59,160 --> 00:19:03,600 Speaker 6: trade used for prosty to bring down actual barriers benefit 392 00:19:03,680 --> 00:19:06,320 Speaker 6: actually both countries potentially over time, and we did that 393 00:19:06,359 --> 00:19:10,240 Speaker 6: successfully for forty years. We did it targeted when I 394 00:19:10,320 --> 00:19:13,560 Speaker 6: was in the White House working during the Bush administration. 395 00:19:13,960 --> 00:19:17,800 Speaker 6: We use Section three oh one to target bad activities 396 00:19:17,840 --> 00:19:22,280 Speaker 6: by the principally then Japan to open those markets doing 397 00:19:22,800 --> 00:19:26,280 Speaker 6: this kind of terriff activity and limitation on imports to 398 00:19:26,359 --> 00:19:29,320 Speaker 6: the US. So you can do that in a classic 399 00:19:29,359 --> 00:19:33,359 Speaker 6: trade diplomacy situation. But when you have across the board 400 00:19:33,359 --> 00:19:36,240 Speaker 6: and not clear on what the timeframe is for the 401 00:19:36,280 --> 00:19:39,240 Speaker 6: increased production of the US, I think that's the challenging part. 402 00:19:39,280 --> 00:19:40,840 Speaker 1: But is it your sense when you speak to the 403 00:19:40,840 --> 00:19:44,120 Speaker 1: White House that April second is the start of negotiations, 404 00:19:44,160 --> 00:19:45,680 Speaker 1: that at the end of the day, the President is 405 00:19:45,680 --> 00:19:47,760 Speaker 1: a deal maker and wants to get deals done. 406 00:19:48,080 --> 00:19:49,920 Speaker 6: Well, I hear from my colleagues on the House they 407 00:19:49,920 --> 00:19:54,440 Speaker 6: want clarity, like the American business once. So you tell 408 00:19:54,520 --> 00:19:57,199 Speaker 6: us what components and what timeframes you want to do 409 00:19:57,240 --> 00:19:59,639 Speaker 6: trade diplomacy. You want to use reciprocity, you want to 410 00:19:59,640 --> 00:20:01,960 Speaker 6: protect certain industries in the US where you want to 411 00:20:02,000 --> 00:20:06,440 Speaker 6: have achievable gains in production here. But when it comes 412 00:20:06,520 --> 00:20:09,080 Speaker 6: to autos, which is the most important topic of the day. 413 00:20:09,160 --> 00:20:13,000 Speaker 6: I think I think that's best done through advancing changes 414 00:20:13,040 --> 00:20:16,439 Speaker 6: to the USMCA that President Trump led successfully with the 415 00:20:16,480 --> 00:20:18,760 Speaker 6: Mexicans and the Canadians in his first term. 416 00:20:18,840 --> 00:20:21,400 Speaker 1: The Market's also looking for clarity on all of Trump's proposals, 417 00:20:21,480 --> 00:20:25,040 Speaker 1: especially tax cuts. The Senate, the Republicans Eric Wawson are 418 00:20:25,080 --> 00:20:27,480 Speaker 1: reporter Washington, DC, is talking about how they want fewer 419 00:20:27,520 --> 00:20:30,560 Speaker 1: cuts to medicate health benefits for the poor, disabled, which 420 00:20:30,600 --> 00:20:33,320 Speaker 1: would be different what the House is talking about. Do 421 00:20:33,400 --> 00:20:35,639 Speaker 1: you think House Republicans Senate Republicans can come to an 422 00:20:35,640 --> 00:20:37,520 Speaker 1: agreement on how much can be cut? 423 00:20:37,960 --> 00:20:39,720 Speaker 6: I do. I think we'll come to an agreement. I 424 00:20:39,760 --> 00:20:42,680 Speaker 6: think we can come to an agreement rather quickly on 425 00:20:42,840 --> 00:20:46,520 Speaker 6: a joint House and Senate resolution for reconciliation so the 426 00:20:46,520 --> 00:20:49,199 Speaker 6: committees can get to work. And I just referred to 427 00:20:49,240 --> 00:20:52,560 Speaker 6: the Wall Street Journal story today talking about duplicate payments 428 00:20:52,960 --> 00:20:57,159 Speaker 6: and medicaid across the states and how large that number is. 429 00:20:57,520 --> 00:21:02,040 Speaker 6: House Republicans are looking ways to improve medicaid, focus medicaid 430 00:21:02,160 --> 00:21:06,639 Speaker 6: on the most vulnerable, the young, the poor, the disabled, 431 00:21:06,880 --> 00:21:10,320 Speaker 6: and tried to ring costs out of the systems Democrats. 432 00:21:10,359 --> 00:21:12,399 Speaker 6: I think in a political charge are, Well, you're going 433 00:21:12,440 --> 00:21:17,360 Speaker 6: to cut benefits for Medicaid. That's an assumption by Democrats politically, well, because. 434 00:21:17,160 --> 00:21:19,120 Speaker 1: The math doesn't work when you're talking about eight hundred 435 00:21:19,160 --> 00:21:20,760 Speaker 1: and eighty and also that's. 436 00:21:20,600 --> 00:21:22,879 Speaker 6: The charge for the whole committee, right. 437 00:21:23,240 --> 00:21:25,160 Speaker 1: But most of that money goes to medicare. 438 00:21:25,240 --> 00:21:27,400 Speaker 6: Well, but look at the numbers, and I think that's 439 00:21:27,400 --> 00:21:29,000 Speaker 6: what the House and Senate want to do. Let's get 440 00:21:29,000 --> 00:21:32,320 Speaker 6: to a Senate resolution and let's let these committees work 441 00:21:32,359 --> 00:21:34,719 Speaker 6: to mark those bills up to find the savings that 442 00:21:34,760 --> 00:21:35,439 Speaker 6: we can produce. 443 00:21:35,560 --> 00:21:38,800 Speaker 1: Besides the extension of TCJ, what other tax cuts do 444 00:21:38,840 --> 00:21:42,240 Speaker 1: you think are actually feasible. The President has talked about 445 00:21:42,240 --> 00:21:44,879 Speaker 1: no tax on Social Security, no tax on tips. Just 446 00:21:44,920 --> 00:21:47,160 Speaker 1: this week, no tax on auto loans apparently is being 447 00:21:47,600 --> 00:21:49,840 Speaker 1: thrown out there, and he's flirting with what actually can 448 00:21:49,840 --> 00:21:50,399 Speaker 1: get pasted. 449 00:21:50,600 --> 00:21:53,280 Speaker 6: Well, this is the beauty of the reconciliation process because 450 00:21:53,359 --> 00:21:55,840 Speaker 6: the President puts his plan out there, his best idea 451 00:21:55,880 --> 00:21:58,399 Speaker 6: is what he wants to try to accomplish, and then 452 00:21:58,440 --> 00:22:00,200 Speaker 6: the House and Senate have to come to get there 453 00:22:00,200 --> 00:22:03,040 Speaker 6: and figure out what we can do in the context 454 00:22:03,080 --> 00:22:05,119 Speaker 6: of that budget resolution. Can we find the cuts? Can 455 00:22:05,119 --> 00:22:08,320 Speaker 6: we find the offset. Do we agree in the in 456 00:22:08,400 --> 00:22:12,239 Speaker 6: the House and Senate on the economic forecasts? And so 457 00:22:12,280 --> 00:22:15,280 Speaker 6: I won't pre judge what the possibilities are. I just 458 00:22:15,320 --> 00:22:17,159 Speaker 6: know how hard the work is going to be. I 459 00:22:17,200 --> 00:22:19,800 Speaker 6: want to put an emphasis on things that grow the economy. 460 00:22:20,480 --> 00:22:23,920 Speaker 6: So if we have to narrow the focus on of 461 00:22:23,960 --> 00:22:26,120 Speaker 6: what amount of tax cuts we're going to have, what's 462 00:22:26,119 --> 00:22:30,680 Speaker 6: focus on ones that preserve that produce production, more jobs, 463 00:22:30,800 --> 00:22:32,080 Speaker 6: faster economic growth. 464 00:22:32,200 --> 00:22:35,159 Speaker 5: Do tariffs increase revenues and turbo charge growth? 465 00:22:36,320 --> 00:22:39,280 Speaker 6: Again, this depends on the strategy, Lisa. You know you 466 00:22:39,280 --> 00:22:43,720 Speaker 6: can have an across the board modest tariff that might 467 00:22:43,840 --> 00:22:48,280 Speaker 6: raise revenue and not impact growth economically, But what is 468 00:22:48,320 --> 00:22:51,359 Speaker 6: your goal? Is it reciprocity, is it market opening in 469 00:22:51,400 --> 00:22:53,800 Speaker 6: new countries, is it level of the playing field? Or 470 00:22:53,840 --> 00:22:56,239 Speaker 6: is it increasing production in the US? Those things are 471 00:22:57,520 --> 00:22:58,640 Speaker 6: sometimes in conflict. 472 00:22:58,760 --> 00:23:01,280 Speaker 5: What number are you penciling in for the tariff revenue 473 00:23:01,280 --> 00:23:02,560 Speaker 5: to offset some of their cuts? 474 00:23:03,160 --> 00:23:07,480 Speaker 6: So in Congress we're actually not penciling in tariff revenue 475 00:23:07,480 --> 00:23:11,239 Speaker 6: because it's not accounted by this Congressional Budget Office as 476 00:23:11,280 --> 00:23:14,240 Speaker 6: an offset, which doesn't mean we can't count it. Like 477 00:23:14,320 --> 00:23:17,159 Speaker 6: if there was a strategy and it laid out. The 478 00:23:17,200 --> 00:23:20,520 Speaker 6: two budget committees could agree we will accept some revenue 479 00:23:20,920 --> 00:23:27,320 Speaker 6: from projected tariffs in the revenue estimates and the reconciliation package, 480 00:23:27,640 --> 00:23:31,120 Speaker 6: but we're not as of now counting that where that's 481 00:23:31,119 --> 00:23:33,440 Speaker 6: a hypothetical that we're actually not counting on. 482 00:23:33,440 --> 00:23:36,159 Speaker 2: Right as willmomp in touch, I imagine they must have 483 00:23:36,240 --> 00:23:39,280 Speaker 2: reached out to you and other representatives of anconsas how 484 00:23:39,359 --> 00:23:40,399 Speaker 2: upset are they about this? 485 00:23:41,359 --> 00:23:43,800 Speaker 6: Well, they want I think so many businesses and they 486 00:23:43,840 --> 00:23:46,920 Speaker 6: report on your broadcast on a regular basis. They can 487 00:23:47,040 --> 00:23:49,639 Speaker 6: live with certain things that they know what the plan is. 488 00:23:50,280 --> 00:23:54,240 Speaker 6: And so Walmart's concerned about the number one thing they 489 00:23:54,320 --> 00:23:57,040 Speaker 6: think about every single day, which is the American family 490 00:23:57,080 --> 00:23:59,600 Speaker 6: they serve, and they want to make sure that that 491 00:23:59,640 --> 00:24:02,400 Speaker 6: can be in an affordable way. That's their goal in life. 492 00:24:02,480 --> 00:24:04,719 Speaker 6: So this could interfere with that, but that's we need 493 00:24:04,760 --> 00:24:06,520 Speaker 6: to wait and see what the ultimate goal is. 494 00:24:06,600 --> 00:24:08,960 Speaker 2: Do you think the White House appreciates that because we 495 00:24:09,040 --> 00:24:11,359 Speaker 2: hear this every single day and we've said on this 496 00:24:11,440 --> 00:24:14,760 Speaker 2: program confidence coming into twenty five with sky high, we 497 00:24:14,800 --> 00:24:17,320 Speaker 2: wanted to see that sky high confidence translate into hiring, 498 00:24:17,359 --> 00:24:20,040 Speaker 2: into investment, and the lack of currency the lack of 499 00:24:20,080 --> 00:24:22,119 Speaker 2: certainty is really how things back, and you see that 500 00:24:22,160 --> 00:24:24,439 Speaker 2: in the sentiment surveys. Now just the White House, in 501 00:24:24,480 --> 00:24:27,359 Speaker 2: your opinion, sort of understand that the lack of certainty, 502 00:24:27,359 --> 00:24:29,320 Speaker 2: the lack of clarency, is holding this economy back. 503 00:24:29,440 --> 00:24:32,639 Speaker 6: That's worry. I think Treasure secretary percent in a National 504 00:24:32,680 --> 00:24:37,440 Speaker 6: Economic Council leader has to know that they're very experienced 505 00:24:37,480 --> 00:24:40,879 Speaker 6: in economic policy making. And my view is you've got 506 00:24:41,040 --> 00:24:45,200 Speaker 6: a I think clarity about right sizing regulatory costs and 507 00:24:45,240 --> 00:24:48,040 Speaker 6: the economy. You've got clarity about trying to reduce the 508 00:24:48,119 --> 00:24:50,960 Speaker 6: bureaucracy in the government. You've got clarity on where we 509 00:24:51,000 --> 00:24:53,800 Speaker 6: want to go on tax policy. We need an equal 510 00:24:53,880 --> 00:24:57,159 Speaker 6: amount of clarity on the strategy in and around tearos 511 00:24:57,240 --> 00:25:01,000 Speaker 6: and increasing manufacturing. Here, President Trump's a big picture point 512 00:25:01,040 --> 00:25:03,080 Speaker 6: is a good one, but you've got to develop a 513 00:25:03,119 --> 00:25:05,600 Speaker 6: workable strategy to do that. And I think that's what 514 00:25:05,960 --> 00:25:09,040 Speaker 6: the role of the treasure Secretary, of the Commerce Secretary 515 00:25:09,040 --> 00:25:11,800 Speaker 6: and the National Economic Advisor, that's their principal mission. 516 00:25:11,800 --> 00:25:14,479 Speaker 1: Congress'man at Leastahonic is going to be staying put in Washington, 517 00:25:14,560 --> 00:25:16,080 Speaker 1: d C. Not coming to New York to work at 518 00:25:16,080 --> 00:25:17,560 Speaker 1: the UN And do you think that's an admission by 519 00:25:17,560 --> 00:25:20,439 Speaker 1: the White House that they're nervous about getting this tax 520 00:25:20,480 --> 00:25:22,919 Speaker 1: bill done through Congress they have the votes. 521 00:25:23,960 --> 00:25:27,000 Speaker 6: Well, it surprised me. I'll be candidate. I think Elise 522 00:25:27,080 --> 00:25:29,760 Speaker 6: as an outstanding member of our leadership team. We welcome 523 00:25:29,840 --> 00:25:31,919 Speaker 6: her back to the Congress. But I also thought she 524 00:25:32,040 --> 00:25:34,560 Speaker 6: was going to be an exceptionally well trained and qualified 525 00:25:34,800 --> 00:25:38,920 Speaker 6: ambassador for the President at the United Nations. It could 526 00:25:38,960 --> 00:25:41,520 Speaker 6: signal that. I think President Trump's own quote says, we 527 00:25:41,680 --> 00:25:43,600 Speaker 6: need to make sure we have the votes in the House. 528 00:25:43,640 --> 00:25:47,920 Speaker 6: So if you consider that an admission we welcome her back. 529 00:25:48,960 --> 00:25:51,199 Speaker 6: I think it says that maybe replacing her with a 530 00:25:51,240 --> 00:25:54,720 Speaker 6: Republican they think might be tough in New York as 531 00:25:54,760 --> 00:25:57,800 Speaker 6: a political strategy, which is that's been a red district, 532 00:25:58,480 --> 00:26:01,000 Speaker 6: but you know that may be indicate that and we 533 00:26:01,040 --> 00:26:03,359 Speaker 6: need every vote we have. We have the most narrow margin, 534 00:26:03,440 --> 00:26:06,400 Speaker 6: Mike Johnson has the most narrow margin since World War One, 535 00:26:07,119 --> 00:26:09,840 Speaker 6: and so we don't want to have a gap there. 536 00:26:09,880 --> 00:26:12,119 Speaker 6: And when we pass tax cuts and jobs back in 537 00:26:12,160 --> 00:26:15,480 Speaker 6: President Trump's first term, I think some twenty Republicans voted no, 538 00:26:16,080 --> 00:26:18,399 Speaker 6: so we don't have the luxury of that this time. 539 00:26:18,600 --> 00:26:20,879 Speaker 2: Congressman, we always appreciate your time. It's going to see it. 540 00:26:21,800 --> 00:26:24,360 Speaker 2: Thank you, sir. Congressman French Show and also the chair 541 00:26:24,400 --> 00:26:37,159 Speaker 2: of the House Financial Services Committee. To build on this conversation, 542 00:26:37,359 --> 00:26:38,760 Speaker 2: I'm pleased to say that joining us now is the 543 00:26:38,800 --> 00:26:41,280 Speaker 2: former Sen. Lewis FED President Jim Pullott. Jim, welcome back 544 00:26:41,280 --> 00:26:43,480 Speaker 2: to the program, sir. It's been a while. We haven't 545 00:26:43,480 --> 00:26:45,480 Speaker 2: spoken to you, I believe since Chairman Pal spoke in 546 00:26:45,560 --> 00:26:47,199 Speaker 2: the news conference. So we've got to watch you. We 547 00:26:47,240 --> 00:26:50,280 Speaker 2: need your reaction. The T word making a comeback the 548 00:26:50,280 --> 00:26:51,639 Speaker 2: Federal serve. What did you make of that? 549 00:26:53,080 --> 00:26:55,919 Speaker 8: It's now making it come back with me. I'm now 550 00:26:56,040 --> 00:26:56,800 Speaker 8: using that word. 551 00:26:57,400 --> 00:27:01,439 Speaker 9: So I think that the I do think that the 552 00:27:01,480 --> 00:27:06,520 Speaker 9: Committee has, you know, a good reason to stick with 553 00:27:06,560 --> 00:27:10,159 Speaker 9: the policy rate where it is. Inflation expectations for the 554 00:27:10,160 --> 00:27:12,960 Speaker 9: next two years and the tips market they've been rising. 555 00:27:13,520 --> 00:27:15,760 Speaker 8: They're about three and a quarter today. 556 00:27:15,840 --> 00:27:18,639 Speaker 9: That's a CPI based measure, but if you put that 557 00:27:18,800 --> 00:27:22,159 Speaker 9: over to PCE based measure, it be you know, around 558 00:27:22,160 --> 00:27:25,040 Speaker 9: three percent pc inflation over the next two years. 559 00:27:25,080 --> 00:27:27,959 Speaker 8: That's what the market is thinking. That's too high for 560 00:27:28,000 --> 00:27:28,560 Speaker 8: the committee. 561 00:27:28,560 --> 00:27:31,840 Speaker 9: The Committee's trying to get you know, especially core PC inflation, 562 00:27:31,880 --> 00:27:32,400 Speaker 9: which came. 563 00:27:32,320 --> 00:27:33,399 Speaker 8: In a little bit hot here. 564 00:27:33,880 --> 00:27:36,600 Speaker 9: You're trying to get core PC inflation down to two percent, 565 00:27:36,640 --> 00:27:38,480 Speaker 9: so they're going to have to be higher for longer, 566 00:27:39,840 --> 00:27:41,720 Speaker 9: and if it goes too much farther, they're going to 567 00:27:41,720 --> 00:27:42,920 Speaker 9: have to raise the policy rate. 568 00:27:43,160 --> 00:27:45,560 Speaker 5: Wait, hold on a second, because Jim, this is exactly 569 00:27:45,640 --> 00:27:49,080 Speaker 5: what people thought that Fetcher Powell did last week when 570 00:27:49,080 --> 00:27:51,760 Speaker 5: he said transitory the word that you will not go 571 00:27:51,840 --> 00:27:54,080 Speaker 5: so far as to say is that you would be 572 00:27:54,119 --> 00:27:57,280 Speaker 5: willing on some level to look past here related it 573 00:27:57,320 --> 00:28:00,560 Speaker 5: boosts to inflation in the short term, especially of growth 574 00:28:00,600 --> 00:28:03,040 Speaker 5: was sagging, and that the said would have to or 575 00:28:03,119 --> 00:28:05,879 Speaker 5: be open to responding to slow in growth. Are you 576 00:28:06,000 --> 00:28:10,640 Speaker 5: saying that inflation should it be above expectations because. 577 00:28:10,320 --> 00:28:11,359 Speaker 4: Of care for somewhere else? 578 00:28:11,520 --> 00:28:14,359 Speaker 9: It's going to be interesting that committee should be hitting 579 00:28:14,440 --> 00:28:17,600 Speaker 9: their inflation target two years from them, and what the 580 00:28:17,640 --> 00:28:19,600 Speaker 9: market is saying is no, you're not going to hit it. 581 00:28:19,600 --> 00:28:20,720 Speaker 8: You're going to hit three percent. 582 00:28:21,200 --> 00:28:24,920 Speaker 9: That was my story here, So that doesn't sound very 583 00:28:24,920 --> 00:28:26,120 Speaker 9: good to the committee. 584 00:28:26,160 --> 00:28:27,320 Speaker 8: Now maybe the market's wrong. 585 00:28:27,800 --> 00:28:30,600 Speaker 9: They often have you know, and I'm talking about two 586 00:28:30,640 --> 00:28:35,240 Speaker 9: year tips here, and they can move around, yes, but. 587 00:28:36,760 --> 00:28:38,760 Speaker 8: It's a good reason for the Committee to stay where 588 00:28:38,800 --> 00:28:40,560 Speaker 8: it is. I have argued that the Committe is in 589 00:28:40,600 --> 00:28:41,440 Speaker 8: good shape here. 590 00:28:42,240 --> 00:28:45,760 Speaker 9: They didn't go as far as was previu that previously 591 00:28:45,840 --> 00:28:49,240 Speaker 9: expected on cutting the policy rate, so they stayed a 592 00:28:49,280 --> 00:28:49,880 Speaker 9: little bit higher. 593 00:28:49,880 --> 00:28:51,360 Speaker 8: I think that's turned out to be wise. 594 00:28:52,800 --> 00:28:57,560 Speaker 10: The tariffs, I mean when I say tariffs don't cause inflation, 595 00:28:57,760 --> 00:29:01,240 Speaker 10: what I mean is that inflation's of product monetary policy 596 00:29:01,320 --> 00:29:04,320 Speaker 10: over the medium term, and it's not up. 597 00:29:04,200 --> 00:29:06,480 Speaker 8: To the trade representative to control inflation. 598 00:29:06,560 --> 00:29:10,000 Speaker 9: It's up to the policy makers to control inflation, and 599 00:29:10,000 --> 00:29:13,320 Speaker 9: they have to adjust policy appropriately given everything else. 600 00:29:13,480 --> 00:29:16,680 Speaker 8: That's going on in the economune so and over a. 601 00:29:16,600 --> 00:29:19,800 Speaker 9: Two year horizon, that's something you should be able to influence. 602 00:29:19,840 --> 00:29:24,400 Speaker 9: But right now markets are saying that the Committee doesn't 603 00:29:24,400 --> 00:29:27,840 Speaker 9: look tight enough to get down to two percent at 604 00:29:27,880 --> 00:29:28,800 Speaker 9: the end of two years. 605 00:29:29,080 --> 00:29:30,560 Speaker 5: Jim, do you think that the Fed should open the 606 00:29:30,600 --> 00:29:32,080 Speaker 5: possibility of hiking rates again? 607 00:29:33,800 --> 00:29:37,760 Speaker 9: Well, it's not my base case, but I think the 608 00:29:37,840 --> 00:29:40,480 Speaker 9: probability on that is rising slightly here. 609 00:29:40,960 --> 00:29:44,120 Speaker 8: And this wasn't that radical of a. 610 00:29:43,680 --> 00:29:47,880 Speaker 9: Data release here, but I do think that possibility is rising. 611 00:29:47,920 --> 00:29:51,920 Speaker 9: We really haven't made any progress on getting core PC 612 00:29:52,120 --> 00:29:54,840 Speaker 9: inflation down, let's say over the last year. 613 00:29:54,960 --> 00:29:57,600 Speaker 8: You know, I think the man on the street. 614 00:29:57,320 --> 00:30:00,840 Speaker 9: Would look at those numbers and say, now has basically 615 00:30:00,840 --> 00:30:02,320 Speaker 9: been flat for the last year. 616 00:30:02,840 --> 00:30:03,040 Speaker 6: Jim. 617 00:30:03,120 --> 00:30:06,160 Speaker 2: One thing we've heard repeatedly from some economists, and this 618 00:30:06,600 --> 00:30:08,480 Speaker 2: labor market is just not as tight as it was. 619 00:30:08,960 --> 00:30:11,600 Speaker 2: And because it's not, that dampens down the potential for 620 00:30:11,640 --> 00:30:14,240 Speaker 2: second round effects from the inflationary kick up that you 621 00:30:14,280 --> 00:30:16,600 Speaker 2: get from tariffs. What would you say back to that, 622 00:30:16,680 --> 00:30:19,280 Speaker 2: How fertile do you think this environment is for second 623 00:30:19,360 --> 00:30:19,920 Speaker 2: round effects? 624 00:30:21,320 --> 00:30:21,840 Speaker 8: I don't know. 625 00:30:22,160 --> 00:30:27,600 Speaker 9: Come on, unemployment insurance claims ridiculously low, and that's your 626 00:30:27,600 --> 00:30:32,960 Speaker 9: best week to week indicator. Unemployment rates, if anything, is 627 00:30:33,000 --> 00:30:37,720 Speaker 9: probably below the natural rate for the US economy, but 628 00:30:37,840 --> 00:30:39,960 Speaker 9: certainly low by historical standards. 629 00:30:40,200 --> 00:30:43,880 Speaker 8: I just don't see it right now. Now there's fear 630 00:30:44,120 --> 00:30:47,840 Speaker 8: of the future and what might happen. And we know 631 00:30:47,920 --> 00:30:49,520 Speaker 8: that the last era of war. 632 00:30:49,520 --> 00:30:54,160 Speaker 9: In twenty eighteen twenty nineteen did cause to slow down 633 00:30:54,160 --> 00:30:56,680 Speaker 9: in the economy, and if that did react to that 634 00:30:57,120 --> 00:30:58,560 Speaker 9: by lowering the policy rate. 635 00:30:59,120 --> 00:31:02,280 Speaker 8: So we'll see if history repeats itself here. So it's 636 00:31:02,360 --> 00:31:06,160 Speaker 8: the expectation that people might be thinking about. But as 637 00:31:06,160 --> 00:31:07,000 Speaker 8: far as where. 638 00:31:06,800 --> 00:31:10,840 Speaker 9: The labor market is right now and whether that's disinflationary 639 00:31:10,840 --> 00:31:12,080 Speaker 9: pressure coming from there. 640 00:31:11,920 --> 00:31:12,520 Speaker 8: I don't think so. 641 00:31:12,920 --> 00:31:13,120 Speaker 6: Jim. 642 00:31:13,160 --> 00:31:15,000 Speaker 2: Can we have a best guest from you? Next move 643 00:31:15,240 --> 00:31:17,280 Speaker 2: cuttle Hike, what would your best guest be? 644 00:31:17,440 --> 00:31:17,840 Speaker 7: Right now? 645 00:31:20,320 --> 00:31:23,840 Speaker 9: I still think the committee can stick to its baseline 646 00:31:23,920 --> 00:31:26,240 Speaker 9: that there will be further cuts, but they're being pushed 647 00:31:26,280 --> 00:31:28,320 Speaker 9: farther and farther out into the future. 648 00:31:29,240 --> 00:31:35,160 Speaker 11: And now with a hotter core PCE, you're over year number, 649 00:31:36,000 --> 00:31:39,120 Speaker 11: you might start pushing those out into twenty twenty six 650 00:31:39,720 --> 00:31:40,960 Speaker 11: instead of the twenty twenty five. 651 00:31:40,960 --> 00:31:43,840 Speaker 8: We'll suit the market does in the days I had. 652 00:31:43,880 --> 00:31:46,160 Speaker 2: Jim before you go. Boiler Makers played tonight on nine 653 00:31:46,200 --> 00:31:46,920 Speaker 2: Sweet sixteen. 654 00:31:47,640 --> 00:31:49,680 Speaker 7: Yes, and a little bit about. 655 00:31:49,400 --> 00:31:53,880 Speaker 8: That victory for the Boilers. Here we're playing in Indianapolis. 656 00:31:54,240 --> 00:31:56,719 Speaker 8: They don't lose at home very often, so I think 657 00:31:56,760 --> 00:31:57,520 Speaker 8: they've got a good. 658 00:31:57,360 --> 00:31:58,400 Speaker 2: Shot Boiler up. 659 00:31:58,760 --> 00:31:59,480 Speaker 7: I'll do that, BOI. 660 00:32:00,520 --> 00:32:04,240 Speaker 2: You know the manager who does my reviews, Purdue appreciate it. 661 00:32:04,280 --> 00:32:06,920 Speaker 2: Thank you, sir, Former Sen Lewis Ben President Jim for Jim, 662 00:32:07,000 --> 00:32:07,280 Speaker 2: thank you. 663 00:32:07,280 --> 00:32:08,640 Speaker 5: That's why I picked Perdue as well. 664 00:32:08,720 --> 00:32:13,080 Speaker 2: Right, this is the Bloomberg Surveillance Podcast, bringing you the 665 00:32:13,080 --> 00:32:16,440 Speaker 2: best in markets, economics, and geopolitics. You can watch the 666 00:32:16,480 --> 00:32:19,480 Speaker 2: show live on Bloomberg TV weekday mornings from six am 667 00:32:19,600 --> 00:32:23,560 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 668 00:32:23,720 --> 00:32:25,960 Speaker 2: or anywhere else you listen, and as always, on the 669 00:32:25,960 --> 00:32:28,400 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.