WEBVTT - Trump Policy Proposals and Market Impacts 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app, 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.440 --> 0:00:30.920 Jason Furman has committed himself to policy. There are a 0:00:30.920 --> 0:00:33.760 few others equivalent to him, both Republican and Democrat. He's 0:00:33.760 --> 0:00:38.640 associated with democratic politics, but he's I think been ecumenical 0:00:38.720 --> 0:00:41.720 to use the word that Professor Furman uses a lot, Paul. 0:00:41.800 --> 0:00:44.320 One of the key things with Jason Furman is he 0:00:44.520 --> 0:00:49.320 was voted most handsome freshman on his dorm at Harvard. 0:00:49.360 --> 0:00:52.440 He made out his roommate just by a little bit. 0:00:52.520 --> 0:00:56.440 That would have been Matt Damon from a few years ago. Jason, 0:00:56.480 --> 0:00:59.680 thank you so much for joining us this morning. You're 0:00:59.720 --> 0:01:05.800 an ten and you have to teach ambiguity, microeconomic ambiguity, 0:01:05.840 --> 0:01:08.200 and it can go this way and that. What I 0:01:08.280 --> 0:01:11.759 didn't hear from the Secretary of Treasury is a risk 0:01:11.880 --> 0:01:15.800 of a real or nominal GDP slowdown. With all the 0:01:15.840 --> 0:01:20.080 policy upset the nation faces right now, do you see 0:01:20.319 --> 0:01:23.959 that we could have a lessening of real GDP or 0:01:23.959 --> 0:01:26.280 the animal spirit of nominal GDP. 0:01:28.360 --> 0:01:31.520 Yeah, well, right now, the level of uncertainty is just 0:01:31.760 --> 0:01:36.240 incredibly high. That is definitely a minus for the economy. 0:01:36.640 --> 0:01:39.400 I don't know how big a minus it is, and 0:01:39.480 --> 0:01:42.120 a lot of it depends on how the uncertainty ends 0:01:42.160 --> 0:01:45.560 up getting resolved around things like tariffs, or whether it 0:01:45.600 --> 0:01:48.360 gets resolved. It may be that every month there's a 0:01:48.400 --> 0:01:52.320 new threat, it gets withdrawn, a new threat that gets made. 0:01:52.880 --> 0:01:55.840 That makes it hard to do planning on a global basis. 0:01:56.120 --> 0:02:01.880 And that's the success of American corporations is their global reach. 0:02:02.240 --> 0:02:05.200 Well, help us with the equation then, because everybody focuses 0:02:05.280 --> 0:02:08.040 on consumption, we do the FED parlor game. I was 0:02:08.080 --> 0:02:10.560 amazed we did you know the independence of the fedure. 0:02:10.639 --> 0:02:13.480 We'll talk about that in a moment with Professor Firman, 0:02:13.560 --> 0:02:16.840 but ignore Jason. As you know, is the I and 0:02:16.960 --> 0:02:21.400 the equation business investment as you look at CPI and 0:02:21.480 --> 0:02:26.200 analyze it. How do you analyze business investment right now 0:02:26.320 --> 0:02:27.000 in America? 0:02:28.440 --> 0:02:32.440 Yeah, so consumer spending is the majority of GDP, but 0:02:32.639 --> 0:02:36.880 investment is the majority of fluctuations in GDP because it's 0:02:37.040 --> 0:02:43.400 much more volatile and right now investors. Business investment is 0:02:43.480 --> 0:02:46.600 grappling with continued high interest rates, which are likely to 0:02:46.639 --> 0:02:50.760 stay that way, with an appreciated dollar which is likely 0:02:50.800 --> 0:02:55.600 to stay that way, with uncertainty about global trade, which 0:02:55.639 --> 0:02:58.520 is likely to stay that way. On the other side 0:02:58.560 --> 0:03:01.280 of the ledger, there may be some reductions and investment 0:03:01.720 --> 0:03:05.400 in regulations that will matter more in targeted sectors like 0:03:05.639 --> 0:03:11.200 energy than it does generically across the board. So a 0:03:11.240 --> 0:03:14.640 lot of cross currents right now, but from policy they're 0:03:14.639 --> 0:03:17.120 a little bit more minus than plus on that part 0:03:17.160 --> 0:03:21.720 of GDP that is most critical to business cycle fluctuations. 0:03:22.200 --> 0:03:25.679 Professor of the Federal Reserve is obviously focusing on inflation, 0:03:25.760 --> 0:03:29.120 and inflation was a big, big issue in the recent 0:03:29.400 --> 0:03:34.240 presidential elections. Certainly, are you concerned that inflation in some 0:03:34.320 --> 0:03:36.960 of the policies that Trump administration is talking about, whether 0:03:37.000 --> 0:03:42.040 it's tariffs or changes in immigration policy, could fuel another 0:03:42.200 --> 0:03:43.160 round of inflation. 0:03:45.320 --> 0:03:47.600 I think it's certainly possible, but let's define what we 0:03:47.680 --> 0:03:50.760 mean by another round of inflation. Right now, I believe 0:03:50.840 --> 0:03:55.240 underlying inflation is around two and a half percent, and 0:03:56.000 --> 0:03:59.200 the tariffs that have been done to date on China 0:03:59.240 --> 0:04:01.840 and steel will probably add about a tenth of a 0:04:01.880 --> 0:04:05.480 percentage point to that. If you do another big set 0:04:05.520 --> 0:04:08.720 of tariffs, maybe it adds three four tenths of a 0:04:08.760 --> 0:04:11.960 percent to that. Now you might be at three percent inflation. 0:04:12.440 --> 0:04:15.280 That's a big deal for the FED. That means they're 0:04:15.280 --> 0:04:18.320 not cutting rates. It might mean, depending on their theory, 0:04:18.400 --> 0:04:20.960 but whether or not to look through the price level change, 0:04:21.320 --> 0:04:23.600 that rate increases are back on the table. 0:04:24.000 --> 0:04:24.880 But that isn't. 0:04:24.680 --> 0:04:27.960 Necessarily a huge thing that consumers take note of. I 0:04:27.960 --> 0:04:30.880 don't know how much humans notice the difference between two 0:04:30.960 --> 0:04:35.479 and a half and three percent inflation, but the FED 0:04:35.560 --> 0:04:36.280 certainly does. 0:04:37.240 --> 0:04:39.599 Professor you and I and I think much of our 0:04:39.640 --> 0:04:44.520 audience grew up with this whole concept of internationalism globalization. 0:04:45.560 --> 0:04:49.600 Is that still a thing these days or is kind 0:04:49.640 --> 0:04:53.239 of everybody just kind of trying to enshore friendshore everything 0:04:53.320 --> 0:04:53.839 these days. 0:04:55.360 --> 0:05:01.200 Look, I'm unapologetic in my enthusiasm for globalization. Enormous things 0:05:01.279 --> 0:05:07.320 for American consumers, American producers, the strength of the United States. 0:05:07.880 --> 0:05:10.520 There's no question that politically it's on its back heel 0:05:10.640 --> 0:05:14.360 right now. But it is such an incredibly powerful force 0:05:14.680 --> 0:05:17.039 that to me, it's much more like a dandelion that 0:05:17.080 --> 0:05:19.880 will grow no matter what the conditions are than it 0:05:19.960 --> 0:05:22.320 is like a fragile orchid that needs to be watered 0:05:22.680 --> 0:05:25.520 in just the right way. And look, there's been some 0:05:25.600 --> 0:05:28.680 feedback in the system. If we had tried to put 0:05:28.680 --> 0:05:32.040 twenty five percent tariffs on Canada and Mexico, it would 0:05:32.040 --> 0:05:34.960 have been horrible for the US auto industry. I think 0:05:35.000 --> 0:05:37.480 that might be part of why it didn't happen, and 0:05:37.520 --> 0:05:39.159 part of why I hope it doesn't happen. 0:05:40.000 --> 0:05:42.440 Jason Furman, with US folks on your community across the nation, 0:05:42.600 --> 0:05:45.560 good morning, I'm Bloomberg Surveillance and on YouTube. Thank you 0:05:45.640 --> 0:05:48.440 for letting us be in your living rooms, your offices 0:05:48.640 --> 0:05:51.039 as well, even some people in their cars watching. Sure, 0:05:51.040 --> 0:05:54.839 I don't know. I'm not sure about that, Jason. I 0:05:54.880 --> 0:05:56.720 got to go back to where we are. I want 0:05:56.760 --> 0:05:58.440 you to take a bigger picture here, like look at 0:05:58.440 --> 0:06:02.360 the Washington Post, look at the cacophony of Bloomberg Opinion, etc. 0:06:02.760 --> 0:06:05.599 I got Treasury secretaries. I mean, I know, you go 0:06:05.760 --> 0:06:09.000 back to Albert Gallaton, forget about that. I got Robert 0:06:09.080 --> 0:06:11.200 Rubin and a guy named Summers who used to sign 0:06:11.240 --> 0:06:15.400 your paycheck. I got Jack lou I got James Baker, 0:06:16.000 --> 0:06:19.320 and Company. I mean, the Treasury Secretary is at the 0:06:19.480 --> 0:06:25.680 fulcrum of our executive, legislative, and frankly judicial branch of 0:06:25.920 --> 0:06:29.760 making it work within our financial system. Are we at 0:06:29.920 --> 0:06:32.800 risk now that that financial system is run out of 0:06:32.839 --> 0:06:36.800 the Oval Office. Do we have a Treasury secretary who's 0:06:36.839 --> 0:06:41.039 so diminished that he really can't affect Furman like policy? 0:06:43.400 --> 0:06:48.080 I hope not. Scott the sentis a smart guy. He's 0:06:48.120 --> 0:06:52.480 a talented guy. If this policy making were delegated to him, 0:06:53.120 --> 0:06:56.679 I wouldn't agree with all of it, but I wouldn't 0:06:56.720 --> 0:07:02.119 worry fundamentally about being in deeply unsafe hands. But yeah, 0:07:02.160 --> 0:07:04.839 the tariff calls are being made out of the Oval Office, 0:07:04.960 --> 0:07:06.880 The calls about the FED are being made out of 0:07:06.920 --> 0:07:10.200 the Oval offices. He'scott Descent one moment saying, you know, 0:07:10.280 --> 0:07:12.760 we're comfortable with the FED because we're focused on getting 0:07:12.760 --> 0:07:15.080 down the tenure, which is a great thing to say, 0:07:15.560 --> 0:07:18.520 absolutely makes sense. And then the next moment you see 0:07:18.520 --> 0:07:20.440 Donald Trump commenting on the FED funds. 0:07:20.520 --> 0:07:24.080 Right, Okay, Olivia, we're going to rip up the script 0:07:24.200 --> 0:07:26.160 right now. We can do this with the future vice 0:07:26.200 --> 0:07:28.960 chairman or chairman of the FED. Could you see Governor Furman. 0:07:29.680 --> 0:07:32.560 Come on, let's cut to the chase, Jason. Right now, 0:07:32.600 --> 0:07:35.400 we're beginning to see the percolation. I don't want to 0:07:35.440 --> 0:07:38.960 make editorialize your folks of FED independence. We go back 0:07:39.000 --> 0:07:41.800 to McChesney Martin, We go back to LBJ where he 0:07:41.880 --> 0:07:45.600 took He took McChesney Merrin's years and picked him up 0:07:45.640 --> 0:07:48.480 like the dog back then, Jason Ferban, is this FED 0:07:48.480 --> 0:07:50.480 at risk of its independence? 0:07:51.600 --> 0:07:54.800 Look, I'm nervous so far. I'm a little bit reassured. 0:07:54.840 --> 0:07:58.360 They had a sweeping executive order about independent agencies and 0:07:58.400 --> 0:08:03.640 presidential control, and they explicitly included an exception for monetary 0:08:03.680 --> 0:08:07.720 policy and for the FOMC. It's also hard for them 0:08:07.760 --> 0:08:10.360 to do anything about it because he only gets two 0:08:10.400 --> 0:08:14.120 appointments over the next four years. I hope the courts 0:08:14.120 --> 0:08:16.679 would not let him fire to powel with no reason. 0:08:17.360 --> 0:08:19.520 But you know, but I'm nervous. To me, it's a 0:08:19.680 --> 0:08:23.000 it's a tailorant. It's not the most likely scenario. But 0:08:23.840 --> 0:08:27.560 this is the best economic institution we have, So you know, 0:08:27.560 --> 0:08:29.840 a two percent chance something happens to it, we should 0:08:29.840 --> 0:08:31.120 be we should we should be concerned. 0:08:31.280 --> 0:08:33.600 In your ute, you had to carry water from the 0:08:33.640 --> 0:08:37.360 executive branch over to Capitol Hill. How do you frame 0:08:37.400 --> 0:08:42.600 in your head that the legislative branch, when they choose 0:08:42.679 --> 0:08:47.640 to rebuts a unilateral Trump policy, do you see this 0:08:47.720 --> 0:08:51.360 as given committees like I think of arm services in Putin. 0:08:51.400 --> 0:08:54.079 I'm making this up, Folks, stay with me. But Jason, 0:08:54.440 --> 0:08:58.559 the basic idea is, what's the Firman mechanism about a 0:08:58.679 --> 0:09:03.120 legislative branch responds to this moment in our history. 0:09:04.520 --> 0:09:08.040 Look, when your party's in power, you're frustrated by checks 0:09:08.040 --> 0:09:10.400 and balances, You're like, why can't we do everything we 0:09:10.480 --> 0:09:13.160 want to do? Then when the other parties in power, 0:09:13.200 --> 0:09:15.640 you're like, hey, I appreciate these a bit. I don't 0:09:15.640 --> 0:09:18.000 want them to be able to do every single radical 0:09:18.080 --> 0:09:22.960 idea that they want to do. And you know, I 0:09:23.000 --> 0:09:26.960 think you're going to see maybe less checks and balances 0:09:26.960 --> 0:09:30.880 that I might like coming from Congress, but still a 0:09:31.000 --> 0:09:34.400 decent amount of them. And some of that inertia is bad. 0:09:34.440 --> 0:09:36.280 It means we're not going to get done things we 0:09:36.280 --> 0:09:38.800 should get done. But a lot of that inertia is 0:09:38.800 --> 0:09:42.720 the inherent conservatism of the American system, where you don't 0:09:42.760 --> 0:09:47.240 make large, radical, dramatic changes because conservatives themselves since Burke, 0:09:47.280 --> 0:09:52.360 have understood that that's a recipe for all sorts of problems. 0:09:53.400 --> 0:09:55.280 Jason, as you sit back here and you look at 0:09:55.320 --> 0:09:58.280 some of the economic trends, economic data points coming out here, 0:09:58.280 --> 0:10:01.359 what is the biggest economic concern. 0:10:01.120 --> 0:10:04.080 For you for this US economy. 0:10:04.480 --> 0:10:06.920 I just have the conventional one, which is this stubborn, 0:10:06.960 --> 0:10:10.720 persistent inflation and two and a half percent underlying inflation. 0:10:10.800 --> 0:10:14.200 If it's down three tenths, we're golden. If it's up 0:10:14.240 --> 0:10:18.240 three tenths, we're in a certain amount of hurt. And 0:10:18.600 --> 0:10:24.440 everything else is humming along, basically just fine, assuming we 0:10:24.480 --> 0:10:26.880 don't have very disruptive policies. 0:10:27.000 --> 0:10:29.840 Thank you so much for your interest acrassination. Today on YouTube, 0:10:29.840 --> 0:10:32.960 we are commercial free in this hour a conversation with 0:10:33.000 --> 0:10:36.240 the Treasury Secretary with their Anne Marie Horden. We're honored 0:10:36.240 --> 0:10:40.440 to bring you Jason Furman from Harvard University. Wendy Schiller 0:10:40.440 --> 0:10:43.720 will join us from Bown University. In a moment, never 0:10:43.760 --> 0:10:46.080 in the history of media has there been a joint 0:10:46.080 --> 0:10:51.480 conversation Harvard than Brown. We're not asking either of them 0:10:51.520 --> 0:10:52.800 about the hockey game. 0:10:52.600 --> 0:10:53.439 The hot Exams. 0:10:53.559 --> 0:10:56.200 Furman has tickets you should see where they are. One 0:10:56.200 --> 0:10:58.720 more question please to Professor Furman, Paul. 0:10:58.520 --> 0:11:02.440 Sweeney, Professor uh X ten Principles of economics. How do 0:11:02.480 --> 0:11:05.440 you frame out in the tariff's units? What do you 0:11:05.520 --> 0:11:08.200 talk about in the about terroriffs? 0:11:08.240 --> 0:11:10.280 How do you teach that? What's your thoughts there? 0:11:11.120 --> 0:11:13.120 Look, I'm nervous about that. I'm doing that in about 0:11:13.120 --> 0:11:14.880 a month. I'm going to do it the same way 0:11:14.880 --> 0:11:17.280 that i've tom and I will come up the same 0:11:17.320 --> 0:11:19.880 way that I learned it decades ago. But it's going 0:11:19.960 --> 0:11:23.200 to sound like a rebuttal to Donald Trump. Every single 0:11:23.280 --> 0:11:25.840 sentence is going to sound like the only reason I'm 0:11:25.880 --> 0:11:28.839 saying it is because I want to contradict him, when 0:11:28.880 --> 0:11:30.800 the only reason I'm saying it is that's what's been 0:11:30.840 --> 0:11:33.160 in the textbooks for a long time, and it's been 0:11:33.160 --> 0:11:36.520 in textbooks for a long time for very very good reasons, 0:11:36.600 --> 0:11:38.800 some of which were even a grounded in things like 0:11:38.840 --> 0:11:42.000 accounting identities, which I'm one hundred percent sure or true, 0:11:42.040 --> 0:11:45.280 and not every comment President Trump makes respects them. 0:11:45.559 --> 0:11:49.240 Do you have a magnitude tip point one percent of terroriffs? 0:11:49.280 --> 0:11:53.400 Just ad hoc. I'm talking Krugman Furman here, bring over 0:11:53.600 --> 0:11:57.559 like Glenn Hubbard, even in Columbia, Jason Furman, is there 0:11:57.760 --> 0:12:00.440 a percentage tip point where a blended eight of two 0:12:00.520 --> 0:12:05.280 three percent comes up and it's oops, where's that number? Matters? 0:12:05.280 --> 0:12:05.520 A lot? 0:12:05.559 --> 0:12:06.120 Who they're on. 0:12:06.800 --> 0:12:09.520 Canada and Mexico matter are just so much more than 0:12:09.559 --> 0:12:12.720 any other country. You do ten percent tariffs even on 0:12:12.760 --> 0:12:15.920 the two of them, and an awful lot of the 0:12:15.960 --> 0:12:21.400 way US business is conducted, US employment happens, it gets disrupted, 0:12:21.440 --> 0:12:24.280 frankly to the benefit of a number of other countries. 0:12:24.440 --> 0:12:27.920 Jason, thank you so much for your generous time this morning. 0:12:28.040 --> 0:12:37.080 Jason Furman, you're listening to the Bloomberg Surveillance Podcast. Catch 0:12:37.160 --> 0:12:40.199 us Live weekday afternoons from seven to ten am Eastern. 0:12:40.360 --> 0:12:44.319 Listen on Applecarplay and Android Auto with the Bloomberg Business app, 0:12:44.480 --> 0:12:46.360 or watch us live on YouTube. 0:12:46.520 --> 0:12:49.880 With the single best research note I've seen of this moment, 0:12:50.000 --> 0:12:53.920 Libby Cantrell. Is it Pimco get her research note? Is 0:12:53.960 --> 0:12:56.959 it at the website? And it's titled I Love this. 0:12:57.000 --> 0:13:00.120 I mean this is a cynicism of Cantrell. But but 0:13:00.320 --> 0:13:04.600 but everybody's going but but but but but to find 0:13:04.679 --> 0:13:09.840 the butt on Capitol Hill right now between Republicans and Democrats. 0:13:10.120 --> 0:13:13.280 Between Republicans and Democrats, I mean, even between Hill Republicans 0:13:13.400 --> 0:13:15.559 and the administration. I mean, I think a lot of 0:13:15.600 --> 0:13:20.240 what the administration is doing showing that there's a lot 0:13:20.240 --> 0:13:23.320 of bias towards action. But at the end of the day, 0:13:23.720 --> 0:13:26.400 much of what they're talking about really does fall within 0:13:26.440 --> 0:13:28.800 the remit of Congress. This is where you don't you're 0:13:28.840 --> 0:13:31.800 not seeing a lot of Republicans necessarily push back on 0:13:31.840 --> 0:13:35.760 the president. But as you know, Article one at the 0:13:35.760 --> 0:13:38.680 Constitution pretty clear about who has the power of the purse, 0:13:39.120 --> 0:13:44.840 and ultimately, to really achieve significant savings, for instance, you'll 0:13:44.880 --> 0:13:48.000 need Congress. And so this is where the butt but 0:13:48.200 --> 0:13:51.000 buck comes in in terms of the flurry of executive 0:13:51.040 --> 0:13:54.000 actions we've seen and actually the really the move the market. 0:13:54.160 --> 0:13:56.040 You're gonna need Congress, so you have a faith. 0:13:56.200 --> 0:13:58.960 We talked to Wendy Schiller. It's a college up in Providence. 0:13:59.000 --> 0:14:04.000 Bran Well, yes, familiar with there. Let me cantrol. I mean, 0:14:04.040 --> 0:14:07.680 where are the checks and balances? You're expert the legislative process, 0:14:08.080 --> 0:14:12.280 to the committees, hold forth? Is it leadership? Who's gonna do? 0:14:12.600 --> 0:14:16.040 But but Well, Tom, I think, and this is where 0:14:16.120 --> 0:14:18.360 we're we're just waiting. I think it is a question 0:14:18.520 --> 0:14:21.680 of when and not if the Congress starts asserting themselves. 0:14:22.040 --> 0:14:24.840 But they, you know, Republicans understandably, are trying to give 0:14:24.840 --> 0:14:27.880 the president a wide berth. He has a very high 0:14:27.920 --> 0:14:31.440 approval rating, at least relative to them, and so I 0:14:31.440 --> 0:14:33.960 think they're trying to sort of give him the flexibility 0:14:34.400 --> 0:14:36.880 to do what he can. But again, we're on a 0:14:36.880 --> 0:14:41.480 collision course with either Congress or the Supreme Court, because 0:14:41.880 --> 0:14:44.000 at the end of the day, there are both the 0:14:44.040 --> 0:14:47.120 Constitution and then a law called the Empowerment and Control 0:14:47.160 --> 0:14:50.960 Act that limits what the President can do in terms 0:14:50.960 --> 0:14:54.560 of rescinding or holding back money that's already been appropriated 0:14:54.560 --> 0:14:57.440 by Congress. This is going to make everybody's eyes glaze over. Well, 0:14:57.440 --> 0:15:01.320 we're actually really talking about doges, you know, cost savings. 0:15:01.760 --> 0:15:03.680 At the end of the day, there are going to 0:15:03.720 --> 0:15:05.800 be limits to that. And again, I think this will 0:15:05.840 --> 0:15:09.160 probably be litigated in the courts. And I think the 0:15:09.200 --> 0:15:13.120 broader macro picture for investors from a deficit perspective is 0:15:13.160 --> 0:15:16.560 really to get again these real cost reductions that all 0:15:16.600 --> 0:15:19.320 has to go through Congress. And that's why this the 0:15:19.440 --> 0:15:22.280 tax bill that Reconciliation bill that we're seeing headlines is 0:15:22.320 --> 0:15:23.360 going to be really quite inciting. 0:15:23.400 --> 0:15:24.160 That's kind of I want. 0:15:24.720 --> 0:15:26.960 If I'm just imagining, if I were a portfolio manager 0:15:26.960 --> 0:15:29.720 at PIMCO, I think I'd be calling you and emailing. 0:15:29.320 --> 0:15:31.400 You like five or six times a day. Do I 0:15:31.400 --> 0:15:33.200 pay attention to this? Do I pay attention to that? 0:15:33.600 --> 0:15:36.240 What are you telling your pms to really focus on? 0:15:36.840 --> 0:15:39.240 In terms of the news flow that's coming out of Washing, I. 0:15:39.240 --> 0:15:41.480 Mean, there's honestly so much noise, and I do think 0:15:41.480 --> 0:15:45.280 it's been challenging for everyday Americans, but also for investors 0:15:45.320 --> 0:15:48.200 to really pay attention to the signals. I think, you 0:15:48.200 --> 0:15:51.680 know what we're we're obviously, you know, bond investors dead investors. 0:15:51.720 --> 0:15:55.080 So what's going to move the bond market is going 0:15:55.160 --> 0:15:57.920 to be either fiscal stimulus, it is going to be 0:15:58.040 --> 0:16:01.920 these cost reductions. Again, that's really in the purview of 0:16:02.000 --> 0:16:04.800 Congress in terms of the things that move markets. As 0:16:04.800 --> 0:16:07.880 it relates to executive authority, I mean tariffs, the president 0:16:07.960 --> 0:16:10.240 has a lot of as we know and as I 0:16:10.240 --> 0:16:13.040 think has been demonstrated, he has a lot of unbridled 0:16:13.080 --> 0:16:16.760 authorities around around tariffs, and then also moves for deregulation. 0:16:16.960 --> 0:16:19.200 So there are absolutely things that the president can do 0:16:19.280 --> 0:16:21.360 that you know, are really going to be impactful for markets. 0:16:21.360 --> 0:16:24.680 But on the fiscal side, that really does rest with Congress. 0:16:24.720 --> 0:16:26.920 And this is where the butt butt butt comes from. 0:16:27.080 --> 0:16:30.240 Like a lot of noise, but again kind of pay 0:16:30.280 --> 0:16:32.680 attention to the signal, and the signal really on fiscal 0:16:32.680 --> 0:16:34.160 policy is through Congress. 0:16:34.280 --> 0:16:34.440 You know. 0:16:34.480 --> 0:16:36.520 One of the I guess one of the first issues 0:16:36.520 --> 0:16:40.480 that President Trump took up was just immigration policy large here, 0:16:41.000 --> 0:16:42.440 and a lot of people are saying that could have 0:16:42.480 --> 0:16:44.840 some some serious economic impacts as it relates to the 0:16:44.880 --> 0:16:48.240 labor force as to economic growth, that perhaps some of 0:16:48.280 --> 0:16:50.800 these migrants from the last four or five six years 0:16:50.800 --> 0:16:53.480 have in fact gone into the workforce, are contributing our. 0:16:53.440 --> 0:16:55.960 Paying taxes, and that could be an economic headwind. 0:16:56.160 --> 0:16:56.640 How do you guess? 0:16:57.160 --> 0:16:58.640 Yet, I was remiss not to say, because that he 0:16:58.720 --> 0:17:02.200 does actually have a lot of ult authorities around immigration too. 0:17:02.440 --> 0:17:05.720 I mean, it's interesting because we were already penciling in 0:17:05.840 --> 0:17:08.960 somewhat of a headwind to growth just from President Biden's 0:17:09.000 --> 0:17:13.000 policies on immigration. Back to June twenty twenty four, when 0:17:13.240 --> 0:17:15.679 President Biden, I think acknowledged this was a political issue, 0:17:15.720 --> 0:17:18.840 so he started doing things to really slow the migration. 0:17:19.240 --> 0:17:21.359 So we were already penciling in some slow down. But 0:17:21.359 --> 0:17:24.080 to your point, particularly if you get and again these 0:17:24.119 --> 0:17:26.080 sort of massive portations or what have you, are I 0:17:26.080 --> 0:17:27.960 think going to have to go through Congress and get 0:17:28.000 --> 0:17:30.600 some funding for it. But it could be a headwind. 0:17:30.600 --> 0:17:33.000 And this is where I think that the administration might 0:17:33.040 --> 0:17:34.560 not want to reconcile. I mean, some of the stuff 0:17:34.560 --> 0:17:36.800 that they're going to do could be actually could actually 0:17:36.880 --> 0:17:40.440 slow growth. And you know, tariffs and immigration could actually 0:17:40.440 --> 0:17:41.320 be headwinds to growth. 0:17:41.320 --> 0:17:43.960 And I want to get this in quickly here. I 0:17:43.960 --> 0:17:46.359 think it's too important. I've been picking on a Senate 0:17:46.440 --> 0:17:49.520 Armed Services Committee, particularly with what's going on in Europe. 0:17:49.800 --> 0:17:53.320 Mister Putin, I got three members in each party. Fisher 0:17:53.359 --> 0:17:57.280 of Nevada, Cotton of Arkansas, Rounds of South Dakota has 0:17:57.320 --> 0:18:00.280 been very supportive of this show. Shaheena Newhan, I'm sure 0:18:00.359 --> 0:18:04.120 jillibrand New York and Bloomenthal of Connecticut. What are the 0:18:04.160 --> 0:18:08.600 powers of the committees now after the complete zoo we've 0:18:08.640 --> 0:18:12.200 had for ten years, fifteen years, do the committees have 0:18:12.320 --> 0:18:16.360 power like say, houseways of means add thirty forty years 0:18:16.359 --> 0:18:21.080 ago on form policy issues, not sorry for policy, but 0:18:21.160 --> 0:18:25.159 on Libby Cantrell issues. Does the legislative branch have the 0:18:25.160 --> 0:18:28.720 ability to legislate anymore? I think is what our listening 0:18:28.960 --> 0:18:29.399 And I. 0:18:29.400 --> 0:18:31.800 Think that's such a great question, Tom, because. 0:18:31.560 --> 0:18:33.240 What we do to go with it. 0:18:33.520 --> 0:18:38.400 What we're seeing is the president of Republicans and Democratic 0:18:38.400 --> 0:18:42.680 presidents have taken executive authority and they keep pushing the boundaries. 0:18:42.880 --> 0:18:45.040 We saw this under George W. Bush and then under 0:18:46.520 --> 0:18:48.800 This is not new, It is not new, and honestly, 0:18:48.800 --> 0:18:50.760 this has just been an evolution of something that really 0:18:50.800 --> 0:18:52.360 started at the turn of the centry. And I think 0:18:52.359 --> 0:18:56.000 what happened then you just saw Congress sort of slowly 0:18:56.200 --> 0:19:01.000 seed its authorities as you had very tight height divided Congress. 0:19:01.000 --> 0:19:02.760 I think this is also the issue is that like 0:19:03.160 --> 0:19:06.479 no real party has had a significant majority. I mean, 0:19:06.480 --> 0:19:07.920 there's been like you know, right, a bottom in the 0:19:07.960 --> 0:19:10.040 first year, what have you. But really in terms of 0:19:10.080 --> 0:19:13.439 either a filibuster proof majority or large majority in the House, 0:19:13.920 --> 0:19:16.240 it's just hasn't happened. And so I think as a result, 0:19:16.359 --> 0:19:19.800 executive branch has gotten you know, frustrated with Congress and 0:19:19.840 --> 0:19:20.800 they have moved forward. 0:19:20.920 --> 0:19:23.119 Paul, I were talking about you before he came in 0:19:24.480 --> 0:19:27.359 going to be with this. I saw a chart that 0:19:27.600 --> 0:19:32.679 showed Kansas City and everybody else in America rooting for 0:19:32.720 --> 0:19:37.080 the Eagles. You lead the Committee of Hate the Chiefs. 0:19:37.480 --> 0:19:39.360 What was it like to see the Eagles? 0:19:39.640 --> 0:19:42.000 It was And just to be clear, I'm not necessarily 0:19:42.040 --> 0:19:44.160 an Eagles fan, but I am a very staunched Denver 0:19:44.200 --> 0:19:46.720 Broncos fan, and Denver Broncos we've always we've. 0:19:46.520 --> 0:19:48.440 Never liked the Chiefs. You know. It's like we've never 0:19:48.520 --> 0:19:49.080 liked the Raiders. 0:19:49.080 --> 0:19:51.160 We've always been Raiders haters and we've always we've always 0:19:51.160 --> 0:19:51.720 just liked. 0:19:51.560 --> 0:19:53.520 You get past a third momosa. 0:19:53.600 --> 0:19:54.640 It was fantastic. 0:19:54.760 --> 0:19:55.480 I have to say. 0:19:55.520 --> 0:19:57.000 It was just total vindication. 0:19:57.640 --> 0:20:00.520 You know, we were all wearing green and a little 0:20:00.520 --> 0:20:04.239 bit more in just for you know, the head nod 0:20:04.359 --> 0:20:05.080 to the Broncos. 0:20:05.160 --> 0:20:07.320 But it was a great It was a great thanky. 0:20:07.440 --> 0:20:11.000 Thank you so much. Don't thank peace that more off. 0:20:11.600 --> 0:20:15.480 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:20:15.520 --> 0:20:18.560 starting at seven am Eastern on Apple, Corplay and Android 0:20:18.560 --> 0:20:21.600 Auto with the Bloomberg Business app. You can also listen 0:20:21.680 --> 0:20:24.920 live on Amazon Alexa from our flagship New York station, 0:20:25.480 --> 0:20:28.119 Just say Alexa, play Bloomberg eleven thirty. 0:20:28.280 --> 0:20:30.240 This is a tree. We really try to stake out 0:20:30.280 --> 0:20:33.480 a good amount of time here with David Saurby. He 0:20:33.480 --> 0:20:36.800 has a really interesting history working with the City of Detroit, 0:20:37.200 --> 0:20:41.120 among others, the iconic Loomis sales years ago, and now 0:20:41.160 --> 0:20:46.520 with NCORA looking at not only industrial America. You know, 0:20:46.560 --> 0:20:49.520 it's like Canadian National. They got the train across Canada 0:20:49.560 --> 0:20:53.000 and there they go north south, north south down the 0:20:53.000 --> 0:20:57.080 Mississippi River. But just a twisted and different look with 0:20:57.160 --> 0:21:01.359 a tilted mid cap and small cap. David, can you 0:21:01.440 --> 0:21:04.920 explain to me how Walmart makes five six seven cents 0:21:04.920 --> 0:21:09.119 of the dollar and they're trading in a forty multiple? Please? 0:21:09.240 --> 0:21:11.640 Is that in the Wayne State textbook? 0:21:12.720 --> 0:21:16.880 No, it's not an evaluation textbook, Tom, And in a way, 0:21:17.600 --> 0:21:21.199 it's reminiscent, reminiscent of what we saw in Walmart in 0:21:21.240 --> 0:21:24.879 the late nineties early two thousands when its valuation got 0:21:25.040 --> 0:21:28.160 very stretched to the retail group and then it went 0:21:28.240 --> 0:21:31.240 through an extended period of underperformance. So we'll see what 0:21:31.280 --> 0:21:32.840 happens out of this number today. 0:21:33.160 --> 0:21:35.800 Does this end ugly? I mean. What all our listeners 0:21:35.840 --> 0:21:39.040 want to know from David Sowerby is okay, we're all 0:21:39.080 --> 0:21:42.800 fat and happy in our five oh one ks. David Sowerby, 0:21:43.080 --> 0:21:44.119 does this end ugly? 0:21:45.640 --> 0:21:48.359