WEBVTT - Bloomberg Surveillance TV: April 21, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.080 Bloomberg Terminal and the Bloomberg Business app. Barbara Duran of 0:00:37.159 --> 0:00:40.680 BDA Capital writing, any legitimate threat to the independence of 0:00:40.680 --> 0:00:44.279 the FED is to be taken seriously and negatively, as 0:00:44.280 --> 0:00:46.879 it has the potential to undermine both the dollar and 0:00:47.040 --> 0:00:50.320 US assets as safe havens for investment. Barbara Johnt is 0:00:50.400 --> 0:00:52.519 now for more. Barbara and Mornch, Good morning. Let's talk 0:00:52.560 --> 0:00:55.720 about that first line in that quote. Any legitimate threat 0:00:56.120 --> 0:00:57.480 is to say legitimate threats. 0:00:57.560 --> 0:00:58.840 Yeah, that's the question. 0:00:59.040 --> 0:01:01.760 I mean in the past, you would think, no, it's 0:01:01.800 --> 0:01:05.440 not legitimate because it's so obvious the negative ramifications of this. 0:01:05.880 --> 0:01:11.120 But given the unpredictability we've seen in this president anything's possible. 0:01:11.200 --> 0:01:13.080 And if the Supreme Court, we know this as you 0:01:13.120 --> 0:01:16.280 mentioned earlier, the cases before them, if they ruled that 0:01:16.319 --> 0:01:20.240 the president can replace people in these other independent agencies, 0:01:20.440 --> 0:01:23.160 then I think you might consider it. But if Besson 0:01:23.240 --> 0:01:25.040 is in there, and Besson does seem to be gaining 0:01:25.040 --> 0:01:27.840 an influence with the president, hopefully it's not legitimate. 0:01:28.000 --> 0:01:30.600 We started this year with the rebalancing towards assets out 0:01:30.640 --> 0:01:34.000 sweat European equities ready to sounded to perform. Dollar weakness 0:01:34.120 --> 0:01:36.080 kicked in. This seems to have taken on a new 0:01:36.120 --> 0:01:38.480 phase over the last month or so. What do you 0:01:38.520 --> 0:01:40.480 make of the new leg of this? What's behind it? 0:01:40.760 --> 0:01:41.800 Of the past few weeks? 0:01:41.880 --> 0:01:43.959 Well, I think with the tariff uncertainty, I mean, we 0:01:44.040 --> 0:01:46.120 had the pause. You saw what happened with the market. 0:01:46.319 --> 0:01:48.160 But I think there is a real question about the 0:01:48.160 --> 0:01:51.720 credibility and legitimacy of this as a safe havement. As 0:01:51.760 --> 0:01:55.120 we've seen and everybody's observed, we've had very unusual behavior. 0:01:55.200 --> 0:01:56.880 You know, as terifts go up, we really shouldn't have 0:01:56.920 --> 0:01:59.400 the dollar getting stronger as a flight to safety. It's 0:01:59.440 --> 0:02:02.120 not happening, and in fact, the dollar is down five 0:02:02.160 --> 0:02:05.600 percent against the euro and the pound, and also six 0:02:05.640 --> 0:02:08.320 percents again at the end since early April, that's a lot. 0:02:08.440 --> 0:02:10.120 I mean, as you said earlier, it's just it's been 0:02:10.160 --> 0:02:13.359 parody just relatively recently, a few months ago. So it's 0:02:13.360 --> 0:02:15.320 a real question and it's hard to see that changing 0:02:15.400 --> 0:02:17.560 because even though we have this ninety day. 0:02:17.480 --> 0:02:19.040 Pause, it is just temporary. 0:02:19.440 --> 0:02:21.240 And so we also are waiting to see what they 0:02:21.280 --> 0:02:24.200 decide on semis, on pharma, on lumber and copper and 0:02:24.280 --> 0:02:27.000 all sorts of things. So there's really there's no way 0:02:27.160 --> 0:02:29.920 yet to gauge the impact of these policies. Businesses are 0:02:29.960 --> 0:02:33.080 still on hold, consumers are and every survey that's coming 0:02:33.120 --> 0:02:36.200 in is showing, you know, sentiment is continues to decline, 0:02:36.320 --> 0:02:39.080 so you know, we'll see what happens, but it's it's 0:02:39.160 --> 0:02:39.480 not good. 0:02:39.600 --> 0:02:42.600 Well, this speaks to the macroprolysis that Jim Zelter of 0:02:42.639 --> 0:02:46.360 Apoloighen was mentioning earlier, talked about how do you gauge 0:02:46.480 --> 0:02:49.560 your longer term acid allocation at a time or so 0:02:49.680 --> 0:02:52.680 much has yet to be determined, Have we seen enough 0:02:53.040 --> 0:02:56.480 to say definitively that you need to diversify away from 0:02:56.520 --> 0:03:01.200 dollars de nominated assets versus traditional portfolio of say five 0:03:01.280 --> 0:03:02.000 years ago. 0:03:03.000 --> 0:03:05.520 Maybe, you know, because the problem here is the question 0:03:05.600 --> 0:03:07.799 is always how much is the market discounting? All right, 0:03:07.880 --> 0:03:11.400 the nastik is down fifteen percent plus a year to date, 0:03:11.720 --> 0:03:15.320 SMP down ten percent. It's probably discounting a lot, but 0:03:15.400 --> 0:03:17.760 we don't know the worst case. It seems that the 0:03:17.760 --> 0:03:20.400 worst case is probably over in terms of the tariffs, 0:03:20.560 --> 0:03:21.000 but there. 0:03:20.880 --> 0:03:21.600 Is no way to judge. 0:03:21.680 --> 0:03:24.040 So, you know, gold continues to make new highs. I 0:03:24.040 --> 0:03:26.639 think it will continue because that the move toward gold 0:03:26.720 --> 0:03:29.520 started before this, and that was really twenty two when 0:03:29.520 --> 0:03:32.359 we froze the assets in Russia and treasure is suddenly like, oh, 0:03:32.440 --> 0:03:35.800 maybe treasuries aren't the safe haven. And I think this continues. 0:03:35.840 --> 0:03:38.800 It So problem with diversifying away, say to Europe all 0:03:38.840 --> 0:03:41.440 the economies, if our worst case tariffs do come in, 0:03:41.600 --> 0:03:43.840 they're going to be hurt as well, so their growth 0:03:43.880 --> 0:03:46.760 is going to slow. So I think that for now 0:03:46.960 --> 0:03:49.720 you just have to sort of diversify a bit, you know. 0:03:49.760 --> 0:03:51.480 And I think a lot of investors are trying to 0:03:51.480 --> 0:03:54.880 reorient their stock portfolios to more dividend, more high quality, 0:03:55.360 --> 0:03:57.520 you know, and including gold. 0:03:57.560 --> 0:04:00.160 At a time when so many people seem to be 0:04:00.200 --> 0:04:03.000 a whip side by sentiment, what's the guiding light? 0:04:03.440 --> 0:04:05.320 Data is messy, The soft data and. 0:04:05.240 --> 0:04:07.520 The hard data aren't cohering, and we're hearing about the 0:04:07.560 --> 0:04:08.880 lag time between the two. 0:04:09.320 --> 0:04:11.000 Earnings are kind of pick. 0:04:10.800 --> 0:04:13.119 Your own adventure, throw a dart and figure. 0:04:12.800 --> 0:04:14.000 Out what your projection is. 0:04:14.520 --> 0:04:17.160 Where is this sense of your north star? 0:04:18.040 --> 0:04:19.400 You know, there isn't, you know? 0:04:19.480 --> 0:04:21.720 I think because right now, all the data that's been 0:04:21.720 --> 0:04:26.000 coming in, whether it's the CPIPPI looks good. Retail still good. 0:04:26.279 --> 0:04:29.880 Balance sheets for both consumers and managements are good. But 0:04:29.920 --> 0:04:32.599 that's looking backwards, and what you're starting to see earning 0:04:32.680 --> 0:04:34.480 season started in earnest as we know a couple of 0:04:34.480 --> 0:04:37.360 weeks ago with the banks, and the banks you know, 0:04:37.480 --> 0:04:40.599 again looking forward, they see no problems as yet and 0:04:40.640 --> 0:04:42.760 are not really increased in the reserves. But a lot 0:04:42.760 --> 0:04:45.400 of company manager are starting to add, well, we can't 0:04:45.440 --> 0:04:49.320 really give great guidance. There's this macro uncertainty read tariffs, 0:04:49.760 --> 0:04:52.320 so it is really hard. I mean, for instance, in 0:04:52.360 --> 0:04:55.000 our portfolios, we're not selling because in the in the 0:04:55.000 --> 0:04:57.240 space of a tweet, the stock market could be up 0:04:57.240 --> 0:05:00.320 a thousand points, and that's the real problem. Here there 0:05:00.360 --> 0:05:03.920 is no predictability, but you have to say, Okay, I 0:05:03.960 --> 0:05:05.920 think the worst is over, so we're holding. 0:05:06.240 --> 0:05:07.240 If you have cash. 0:05:07.600 --> 0:05:10.600 You know, there are opportunities at individual stocks coming up. 0:05:10.720 --> 0:05:12.520 You can selectively take nibbles. 0:05:12.560 --> 0:05:14.400 But I would not I would not be buying in 0:05:14.440 --> 0:05:15.880 a wholesale way. There's just no way. 0:05:15.920 --> 0:05:21.320 What would make you want to buy. 0:05:18.560 --> 0:05:22.400 If we had some certainty in tariffs, which is hard 0:05:22.400 --> 0:05:24.680 to see right now we've got ninety days, and if 0:05:24.720 --> 0:05:25.400 we had more of. 0:05:25.360 --> 0:05:27.039 A process, I mean, as we saw there. 0:05:27.279 --> 0:05:29.520 There's a real question about the methodology when he brought 0:05:29.520 --> 0:05:31.960 out his famous chart there, and I think there's been 0:05:32.000 --> 0:05:34.360 a lot of questions about that. You know, if for 0:05:34.400 --> 0:05:37.600 some reason in the next few months we saw more stability, 0:05:37.600 --> 0:05:40.280 we had the tariffs that were settled, and we're sure 0:05:40.320 --> 0:05:42.200 that they were settled, and it was a way to 0:05:42.240 --> 0:05:44.400 measure the impact, then you. 0:05:44.360 --> 0:05:45.880 Know, and again depending what that is. 0:05:46.000 --> 0:05:48.480 You know, if they're too high, even at this ten percent, 0:05:48.720 --> 0:05:51.400 how inflationary are they? You know, the Fed has said 0:05:51.400 --> 0:05:53.600 they can't act because they don't know, you know, how 0:05:53.680 --> 0:05:55.800 much is going to impact inflation, how much will grow slow? 0:05:55.839 --> 0:05:58.080 And you're seeing around the street every house is taking 0:05:58.080 --> 0:06:01.400 down their estimates on GDP growth helping their inflation, but 0:06:01.480 --> 0:06:03.600 we really don't know how big it will be. 0:06:03.760 --> 0:06:06.320 Terry Haynes joined us earlier from Washington, and he basically 0:06:06.320 --> 0:06:09.320 said the market's way too focus on tariffs. Jay Powell's 0:06:09.360 --> 0:06:12.040 not going anywhere, and that you have to start focusing 0:06:12.040 --> 0:06:16.400 on tax cuts. This extension of TCGA and maybe another sweetener. 0:06:16.480 --> 0:06:18.640 Is that enough to be excited about your end. 0:06:18.640 --> 0:06:20.840 Not for me, you know, you know, I think they 0:06:20.839 --> 0:06:23.200 were right to focus on the tariffs, and what they're 0:06:23.279 --> 0:06:25.480 the administration is trying to get is to focus on 0:06:25.560 --> 0:06:26.400 coming tax cuts. 0:06:26.440 --> 0:06:27.960 But really, how deep can the cuts be? 0:06:28.279 --> 0:06:31.200 I mean, we're talking really an extension of the cuts, 0:06:31.279 --> 0:06:32.560 and there'll be some of there's a give and take 0:06:32.600 --> 0:06:35.360 going on right now, but I don't see them being draconian, 0:06:35.600 --> 0:06:37.840 and how can they be. I mean, for that exploding 0:06:37.839 --> 0:06:41.120 the deficit even more so in deregulation. I mean, certainly 0:06:41.160 --> 0:06:44.919 the capital one, the approval of capital one taking over discovery. 0:06:45.160 --> 0:06:48.920 That's also will give some investors hope that okay, a 0:06:49.160 --> 0:06:52.480 deregulation is starting, but that will help on the margin. 0:06:52.520 --> 0:06:54.560 But I think the tariffs are so important because that 0:06:54.640 --> 0:06:55.719 infects the entire world. 0:06:55.880 --> 0:06:57.560 You touched on something that I've heard quite a few 0:06:57.600 --> 0:07:00.240 times after the last week, people who are super badish 0:07:00.240 --> 0:07:03.080 but aren't selling because they're worried about one positive headline 0:07:03.120 --> 0:07:05.600 cross in the Bloomberg at least to some massive upside 0:07:05.640 --> 0:07:08.360 move on the S and P. And I wonder, actually, 0:07:08.360 --> 0:07:10.880 what's going to make people start selling again, because in 0:07:10.920 --> 0:07:13.880 the meantime the data seems to be distorted by what 0:07:13.880 --> 0:07:16.640 we're seeing in a pull forward of purchases by consumers 0:07:16.680 --> 0:07:19.320 companies alike, that maybe that data is flattered for the 0:07:19.360 --> 0:07:21.560 time being. What would it take to start selling again 0:07:21.880 --> 0:07:22.960 in the sancuity market. 0:07:22.960 --> 0:07:24.760 Well, that is a good question because I think, you know, 0:07:24.800 --> 0:07:27.040 what we've seen to date and certain venture on retail 0:07:27.080 --> 0:07:30.000 behavior is buying on weakness, which has not not been 0:07:30.040 --> 0:07:32.560 a good thing. And so I think that once we 0:07:32.640 --> 0:07:36.120 get some established you know, presence here or even anytime 0:07:36.400 --> 0:07:38.520 we have a sudden tweet they sends the market one thousand, 0:07:38.560 --> 0:07:40.720 you've got to be lightening up. So and I think 0:07:40.760 --> 0:07:42.560 that's you know, look, last week, you didn't have time 0:07:42.920 --> 0:07:44.600 or in two weeks ago what had happened. Mark was 0:07:44.640 --> 0:07:46.560 teve thousand and gave back half of that the next day. 0:07:46.920 --> 0:07:49.440 So the rapidity of these moves, it's very hard. Unless 0:07:49.440 --> 0:07:51.880 you're a trader or your algorithmic trader, it's very hard 0:07:51.960 --> 0:07:54.520 to take action. So you know, I think you know 0:07:54.600 --> 0:07:56.920 for us, it's just you are in good stocks, you're 0:07:56.960 --> 0:08:00.000 in good fundamentals, high quality. You just have to wait 0:08:00.080 --> 0:08:01.320 out the storm and storm. 0:08:01.320 --> 0:08:03.680 It is futures right now down about one percent on 0:08:03.720 --> 0:08:05.880 the SMP. Barmbara, good to see you as always, thanks 0:08:05.880 --> 0:08:16.880 to drop and bite. Barmba A on the of BDA 0:08:18.000 --> 0:08:20.760 to extend the conversation, Terry Haynes of Panchee Policy joined 0:08:20.800 --> 0:08:22.840 us now for more. Terry, welcome to the program. A 0:08:22.880 --> 0:08:25.640 lot of bark here. How strong is the potential bite? 0:08:26.520 --> 0:08:29.880 I think not that strong, John, Thanks, Uh, you know. 0:08:29.960 --> 0:08:34.199 I My summary of this really comes down to about 0:08:34.240 --> 0:08:37.880 three things. One is that Trump is trying to pass 0:08:37.960 --> 0:08:41.720 the buck to Pal for whatever market problems exist. Markets 0:08:41.720 --> 0:08:44.240 aren't going to bite on that, of course, they're very 0:08:44.280 --> 0:08:48.120 fixed on Trump. Secondly, you've got a situation where as 0:08:48.160 --> 0:08:53.200 you've been reporting, the Wall Street community is already reacting 0:08:53.679 --> 0:08:56.839 this time to the possibility of PALS removal in a 0:08:56.880 --> 0:09:00.319 way that they haven't before. So that's a real con 0:09:00.600 --> 0:09:04.960 And finally, as Lisa mentioned earlier, you had the folks 0:09:05.000 --> 0:09:08.360 in Congress on the Sunday shows all basically providing a 0:09:08.360 --> 0:09:12.360 little bit of subtle pushback. So there's I think there's 0:09:12.400 --> 0:09:16.000 at least three reasons of why the bark is worse 0:09:16.040 --> 0:09:16.520 than the bite. 0:09:16.640 --> 0:09:16.840 Terry. 0:09:16.880 --> 0:09:18.520 I love to get your thoughts though on what Kevin 0:09:18.600 --> 0:09:21.400 Hassett said, the NEC director, and he said that they're 0:09:21.480 --> 0:09:22.760 studying that option. 0:09:23.000 --> 0:09:25.160 He basically left the door open. 0:09:26.320 --> 0:09:28.600 Well, I think he should, right. 0:09:29.880 --> 0:09:32.559 He's a lot of things, but fundamentally, he's a staffer, 0:09:32.720 --> 0:09:36.160 and if he publicly descends from whatever the President's doing, 0:09:36.200 --> 0:09:37.920 he's going to be out of there pretty quickly. So 0:09:38.800 --> 0:09:40.440 you know, I look at that as a matter of 0:09:40.480 --> 0:09:43.000 staff loyalty and not much else. You know, they've been 0:09:43.000 --> 0:09:45.800 studying this since twenty eighteen or twenty nineteen, by the way, 0:09:45.880 --> 0:09:48.400 so I welcome their continued study. 0:09:48.920 --> 0:09:51.560 I want to get your thoughts. What I also asked 0:09:51.640 --> 0:09:52.240 Marvin Lowe. 0:09:52.280 --> 0:09:54.880 The fact that we're having this discussion out loud, the 0:09:54.880 --> 0:09:57.160 fact that the President didn't make clear what he said 0:09:57.480 --> 0:09:59.640 last week, which talking about his termination. 0:10:00.480 --> 0:10:01.840 Is that enough to do. 0:10:01.840 --> 0:10:07.720 Damage to damage to Trump or to Powell, to Trump. 0:10:07.720 --> 0:10:10.600 To the position as well as to financial market. 0:10:11.400 --> 0:10:13.800 I think it doesn't help financial markets. I certainly don't 0:10:13.800 --> 0:10:15.640 think it helps the president. I mean, you know, you 0:10:15.720 --> 0:10:19.040 can parse the statement that you all have been running 0:10:19.040 --> 0:10:21.520 in the bumpers and you know, if I want him 0:10:21.520 --> 0:10:22.719 out of there, he'll be out of there. 0:10:22.720 --> 0:10:24.600 Well, you know, he's not out of there. 0:10:24.600 --> 0:10:27.839 And you don't like his policies, so you know, so 0:10:27.920 --> 0:10:32.080 he's staying, so you must like his policies. So there's 0:10:32.760 --> 0:10:36.440 that kind of circularity. And number one and number two, 0:10:36.520 --> 0:10:38.839 you know, the last thing that the Trump needs right 0:10:38.880 --> 0:10:41.760 now is is Wall Street fleeing on him when he's 0:10:41.760 --> 0:10:43.400 in the middle of when he's in the middle of 0:10:43.440 --> 0:10:46.920 the terrified firstly, and secondly when tax cuts, which are 0:10:46.960 --> 0:10:49.720 still very very likely at eighty percent having come online. 0:10:49.760 --> 0:10:52.080 Yet it feels like President Trump is playing good cop, 0:10:52.120 --> 0:10:53.600 bad cop with markets right now. 0:10:53.840 --> 0:10:54.520 Bad cop, I. 0:10:54.480 --> 0:10:56.480 Don't know about your own Powell, good cop, Let's make 0:10:56.520 --> 0:10:58.360 a deal. All of a sudden, all of these deals 0:10:58.360 --> 0:11:01.080 potentially are on the table with Japan, with EU. And 0:11:01.120 --> 0:11:03.360 that's the upside that people are looking for. What if 0:11:03.360 --> 0:11:06.719 this actually leads to some sort of resolution. How much 0:11:06.800 --> 0:11:09.520 to expect that to really take the brunt of oxygen. 0:11:09.920 --> 0:11:14.120 This week, well, I think this week the White House 0:11:14.160 --> 0:11:18.640 would be smart to continue to bring out the prospect 0:11:18.640 --> 0:11:21.760 of deals being done. And I think they were reasonably 0:11:21.800 --> 0:11:23.800 effective at that the last couple of weeks. 0:11:23.920 --> 0:11:25.679 And that's all of the good. 0:11:26.800 --> 0:11:30.440 The better it is for what's best for the White 0:11:30.480 --> 0:11:32.360 House and what's best for the markets at this point 0:11:32.360 --> 0:11:35.000 are really the same thing, which are to see progress 0:11:35.080 --> 0:11:39.760 being made on the tariff deals, and to clarify what 0:11:39.840 --> 0:11:42.040 I always think of as kind of the best and 0:11:42.160 --> 0:11:45.640 descendant role here, which is that these things are supposed 0:11:45.640 --> 0:11:48.480 to be path dependent, and if we do deals, tariff 0:11:48.600 --> 0:11:52.319 rates to excuse me, tariff barriers and ex tariff barriers 0:11:52.320 --> 0:11:56.559 come down for the United States and for others benefiting markets. 0:11:56.600 --> 0:11:57.319 That's all good. 0:11:57.800 --> 0:11:59.640 By the time you get to next week, what you're 0:11:59.640 --> 0:12:03.280 going to say is more progress being made on tax cuts, 0:12:03.600 --> 0:12:06.120 the idea of a third quarter, fourth quarter deal, and 0:12:06.960 --> 0:12:09.120 you know, hopefully that helps them get through this patch. 0:12:09.400 --> 0:12:09.679 Terry. 0:12:09.720 --> 0:12:12.160 Should and will are two very different things, and it 0:12:12.240 --> 0:12:15.000 seems like you believe that markets do have some sort 0:12:15.040 --> 0:12:17.439 of I don't want to say veto power, but certainly 0:12:17.520 --> 0:12:21.160 wait in the president's mind what gives you that concrete sense, 0:12:21.200 --> 0:12:22.760 Given the fact that there have been a number of 0:12:22.840 --> 0:12:25.760 occasions where President Trump has come out and pushed back 0:12:25.800 --> 0:12:29.480 against caring whatsoever about the move in the markets, I. 0:12:29.480 --> 0:12:33.000 Think it's really this, you know, I was one of 0:12:33.000 --> 0:12:34.800 the first, maybe the first, to say that I think 0:12:34.840 --> 0:12:37.880 Trump cared about markets on tariffs with respect to to 0:12:38.120 --> 0:12:39.000 imposing them. 0:12:39.679 --> 0:12:40.439 Tariffs, in my. 0:12:40.480 --> 0:12:43.040 View, have always been part of a much broader economic 0:12:43.760 --> 0:12:46.680 plan that includes tax cuts and some other things. They've 0:12:46.679 --> 0:12:49.520 been I think, very clear about that. But at the 0:12:49.520 --> 0:12:53.400 same time, it is not in the President's political interest 0:12:53.480 --> 0:12:56.800 at all to have markets go seriously wobbly on him 0:12:56.800 --> 0:12:58.600 at a time where he's trying to impose a lot 0:12:58.640 --> 0:13:01.480 of those things. So I think I think that market 0:13:01.559 --> 0:13:06.520 pressure actually helps define the situation a little bit better 0:13:06.559 --> 0:13:08.400 politically as well as economically. 0:13:08.520 --> 0:13:10.960 Terry, you keep mentioning tax cuts, the market is pricing 0:13:10.960 --> 0:13:12.360 an extension of TCGA. 0:13:12.520 --> 0:13:13.719 What cuts are you. 0:13:13.720 --> 0:13:15.520 Talking about now? 0:13:15.600 --> 0:13:18.160 I'm talking about the extension of the twenty seventeen cuts, 0:13:18.160 --> 0:13:20.720 And then you're going to see a bunch of a 0:13:20.760 --> 0:13:23.640 bunch of tweaks to that, not just the taxes on 0:13:23.679 --> 0:13:26.959 tips thing that President keeps talking about and other things. 0:13:27.080 --> 0:13:29.160 But I think you're also going to see a restructuring 0:13:29.920 --> 0:13:37.559 to really favor increased US manufacturing and including reshoring, among 0:13:37.600 --> 0:13:38.040 other things. 0:13:38.440 --> 0:13:40.720 Terry, I appreciate your input as always. Thanks for catching 0:13:40.800 --> 0:13:50.800 up with this this morning. Terry Hanes there Panchaia policy, 0:13:53.200 --> 0:13:56.839 Johnna's Commas Ministry writing, if such a situation occurs, China 0:13:57.040 --> 0:14:00.800 will never accept it and will resolutely take reciprocal countermeasures. 0:14:00.920 --> 0:14:02.920 Lada middle of the China basebook joins us now for 0:14:03.080 --> 0:14:05.360 more Leada and welcome to the program. So let's talk 0:14:05.360 --> 0:14:07.920 about China. The President keeps saying China wants to come 0:14:07.920 --> 0:14:09.640 to the table and make a deal. Are you seeing 0:14:09.720 --> 0:14:12.800 any sign that China is willing to come to the table. 0:14:14.520 --> 0:14:16.839 Not yet, But I don't think coming to the table 0:14:16.920 --> 0:14:18.840 is that big a lift for either side. You know, 0:14:18.840 --> 0:14:20.440 if you if you read the headlines, it makes it 0:14:20.480 --> 0:14:22.760 look like the United States is spiraling in one direction, 0:14:23.160 --> 0:14:25.920 China's spiraling in the other direction. There's just nothing that 0:14:25.960 --> 0:14:28.800 could bridge the gap. But the real gap right now 0:14:28.880 --> 0:14:31.960 is these enormously high teriffs. But there's there's just not 0:14:32.000 --> 0:14:34.240 that much difference between one hundred and forty five percent 0:14:34.280 --> 0:14:37.000 tariffs one hundred and forty five thousand percent terraffs because 0:14:37.000 --> 0:14:39.080 you just don't have Chinese goods that are competitive at 0:14:39.120 --> 0:14:41.920 anywhere near that level. So there is a you know, 0:14:41.920 --> 0:14:44.440 whether it's one forty five down to some other level, 0:14:44.480 --> 0:14:46.560 to one twenty five, one oh five eighty five, there's 0:14:46.720 --> 0:14:50.560 these are arbitrary levels. There's nothing economically significant about staying 0:14:50.560 --> 0:14:53.440 at these levels, which means the President could take these 0:14:53.520 --> 0:14:56.840 levels down, not be giving up anything of economic substance, 0:14:56.880 --> 0:14:59.200 but bring the Chinese back to the table. Are they 0:14:59.200 --> 0:15:01.680 prepared to do that? Maybe not yet, but they have 0:15:01.800 --> 0:15:03.280 that card in their pocket. And I think that if 0:15:03.400 --> 0:15:06.040 if that was something that the White House dangled, then 0:15:06.040 --> 0:15:07.720 I think that the Chinese would be recepted to it. 0:15:07.760 --> 0:15:09.800 And Lena one that it goes once the negotiations began, 0:15:09.920 --> 0:15:12.440 what would you anticipate the negotiations would be over. 0:15:13.640 --> 0:15:15.920 Well, that is the big question, and that's actually the 0:15:15.960 --> 0:15:17.960 big question with every trade deal, you know, the you. 0:15:17.920 --> 0:15:19.360 Know, the talk. 0:15:19.160 --> 0:15:21.600 Coming out a lot of these these uh these negotiation 0:15:21.720 --> 0:15:23.920 rooms is what in the world does the United States want? 0:15:23.920 --> 0:15:25.520 Does it simply want to narrow the trade deve sit 0:15:25.560 --> 0:15:28.320 does it want some sort of other uh you know, uh, 0:15:28.360 --> 0:15:28.720 you know. 0:15:28.840 --> 0:15:32.200 Victories in other lanes. Nobody really knows. 0:15:32.480 --> 0:15:35.360 I would say that the US China trade negotiations could 0:15:35.360 --> 0:15:38.320 go in two different directions. You could have a you know, 0:15:38.360 --> 0:15:41.800 a TikTok, a feednel cooperation, and you know, maybe some 0:15:41.840 --> 0:15:46.280 concessions about Panama Canal look, you know, uh, properties, along 0:15:46.320 --> 0:15:48.800 with some more buying, which is basically phase one plus. 0:15:49.320 --> 0:15:50.640 That's something that Chinese. 0:15:50.360 --> 0:15:52.800 Are probably very interested in coming to the table with 0:15:52.840 --> 0:15:55.320 if they can get a receptive audience to the US side. 0:15:55.520 --> 0:15:58.200 If it's more than that, if there are more uss 0:15:58.200 --> 0:16:00.520 this becomes a lot more difficult certainly the United States 0:16:00.560 --> 0:16:01.680 and not gon to be able to tell China to 0:16:01.760 --> 0:16:05.440 restructure and have that happen. So basically, the administration has 0:16:05.480 --> 0:16:06.840 to come out with a list of demands and then 0:16:06.880 --> 0:16:09.200 the Chinese can see whether they're serious or not. Until 0:16:09.240 --> 0:16:11.320 that happens, you know, they're talking past each. 0:16:11.200 --> 0:16:13.800 Other leland who has the more leverage at this point, 0:16:13.920 --> 0:16:16.960 Given the fact that some people believe that the US 0:16:16.960 --> 0:16:20.520 would be disproportionately hurt by some of the export bands 0:16:20.600 --> 0:16:23.280 or the export restrictions put on by China. 0:16:24.240 --> 0:16:26.720 Well it's tricky because if this were a bilateral spat, 0:16:26.760 --> 0:16:31.400 the US would have considerably more leverage because of the 0:16:31.440 --> 0:16:34.600 size of the of the trade deficit. That doesn't mean 0:16:34.600 --> 0:16:37.200 that China hasn't worked for years in order to create 0:16:37.240 --> 0:16:41.000 supply chain choke points to create other vulnerabilities, you know, 0:16:41.000 --> 0:16:44.400 in US supply chains. That's absolutely true, But I think 0:16:44.440 --> 0:16:46.280 the United States would have more in a one on 0:16:46.280 --> 0:16:48.400 one matchup. The problem is this is going on in 0:16:48.440 --> 0:16:52.680 the backdrop of huge dislocations around the globe in trade. 0:16:52.680 --> 0:16:55.120 As tariffs are being weighed. Are they going to stay lower, 0:16:55.160 --> 0:16:57.560 are they going to be much much higher? Nobody really knows. 0:16:57.600 --> 0:17:00.400 So with the uncertainty, it's create another complica shi for 0:17:00.400 --> 0:17:03.800 the administration in saying we're solid here, We're going to 0:17:03.840 --> 0:17:07.040 force this on you. It just muddies the picture in 0:17:07.080 --> 0:17:08.719 a way that would not be true if this were 0:17:08.760 --> 0:17:09.639 a one on one battle. 0:17:09.800 --> 0:17:12.879 Adding on to the muddied pictures, some people are speculating 0:17:12.920 --> 0:17:15.679 that in the United States, as the government looks to 0:17:15.760 --> 0:17:19.320 a trench spending and start to really just get its 0:17:19.359 --> 0:17:22.280 balance seat in order, China's expanding and you're going to 0:17:22.280 --> 0:17:23.879 see the growth on the back end of that, and 0:17:24.000 --> 0:17:27.000 you're already starting to see consumer activity picking back up, 0:17:27.320 --> 0:17:29.520 I know that Leland, you track this really well in 0:17:29.600 --> 0:17:33.840 terms of anecdotal and non government sources, in terms of 0:17:33.880 --> 0:17:37.360 the economic activity. How much is the truth matching the narrative. 0:17:38.720 --> 0:17:41.600 Well, you'll be shocked to hear the truth right now 0:17:41.680 --> 0:17:45.399 is not matching the narrative. Obviously, Beijing has a reason 0:17:45.480 --> 0:17:47.960 to look like they have fortified their economy for whatever 0:17:48.040 --> 0:17:49.840 is to come. And I think to some degree they 0:17:49.880 --> 0:17:52.560 have preped prepped the system for being able to do 0:17:52.600 --> 0:17:54.040 bigger fiscal etc. 0:17:54.359 --> 0:17:56.520 If they need to do it down the line. 0:17:56.640 --> 0:17:59.000 But you look at our data and you see consumption 0:17:59.040 --> 0:18:01.680 conse sometion is very weak. You know, Q one wasn't 0:18:01.720 --> 0:18:05.520 a terrible quarter, but March was weak. Consumption was weak. 0:18:05.760 --> 0:18:08.200 Why why were some of the things not worse off? 0:18:08.280 --> 0:18:10.600 Because you had a sort of rebound in property and 0:18:10.640 --> 0:18:14.760 you had a rebound in parts of industry. The consumption, 0:18:14.960 --> 0:18:17.080 the consumption side of things do not look good. So 0:18:17.200 --> 0:18:19.640 nothing they're doing on that side is showing a real effect. 0:18:19.880 --> 0:18:22.480 So I don't think that they're not falling off a cliff. 0:18:22.480 --> 0:18:25.480 They're not. They're not in doomsday yet, but they're certainly not. 0:18:26.480 --> 0:18:28.400 The consumer is not coming to the rescue right now 0:18:28.440 --> 0:18:30.520