WEBVTT - Futures Rise as Traders Watch Earnings & Eco Data 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 --> 0:00:27.200 us live on YouTube. 0:00:27.440 --> 0:00:30.280 I have known Peter Navarro for decades. He's a pinata 0:00:30.360 --> 0:00:33.680 for so many in America. I want to reaffirm who 0:00:34.000 --> 0:00:38.600 doctor Navarro is. In nineteen ninety four, a bombshell of 0:00:38.640 --> 0:00:42.239 a book came out of University of California, Irvine. It 0:00:42.320 --> 0:00:46.200 was called The Coming China Wars, and Peter Navarro Agree 0:00:46.240 --> 0:00:51.800 or Disagree invented a franchise and conversation point on America 0:00:52.120 --> 0:00:52.760 in China. 0:00:53.240 --> 0:00:54.200 A guy up in New. 0:00:54.080 --> 0:00:58.120 York, Donald Trumps citizen looked at mister Navarro and said, hey, 0:00:58.480 --> 0:01:01.600 I can agree with that. And of course, Peter Navarro 0:01:01.800 --> 0:01:05.120 advises our second term president of the United States, a 0:01:05.200 --> 0:01:08.880 senior counselor to the President. Doctor Navarro, thank you so 0:01:08.959 --> 0:01:11.080 much for joining Bloomberg today. I want to get right 0:01:11.160 --> 0:01:11.360 to it. 0:01:11.400 --> 0:01:11.640 Peter. 0:01:11.720 --> 0:01:17.200 When you were at Irvine, you lectured on McKinley's capitulation 0:01:17.840 --> 0:01:22.399 on tariffs, McKinley was the arch Trump like protectionist of 0:01:22.440 --> 0:01:26.479 the nineteenth century, and he did the Buffalo pivot where 0:01:26.480 --> 0:01:28.600 he said, We've got to get more open. Are we 0:01:28.680 --> 0:01:31.840 in the process now of a modern Buffalo pivot? 0:01:34.000 --> 0:01:34.280 Tom? 0:01:34.319 --> 0:01:37.119 First of all, I just want to let the Bloomberg 0:01:37.160 --> 0:01:41.320 audience know how much I admire you. For years I've 0:01:41.720 --> 0:01:43.679 I just love what you do. 0:01:43.800 --> 0:01:45.520 So let me get that out of the way. 0:01:46.880 --> 0:01:54.840 McKinley, Henry Clay, Abraham Lincoln, Alexander Hamilton, these are like 0:01:54.920 --> 0:02:00.480 the four people on the Mount Rushmore of American tariffs. 0:02:01.360 --> 0:02:04.840 And we are not in any pivot away from that. 0:02:05.000 --> 0:02:12.000 We are fully embracing a structural shift engineered by Donald 0:02:12.000 --> 0:02:16.880 Trump in the entire international global trading system in a 0:02:16.960 --> 0:02:21.559 way which will make that system better and more prosperous. 0:02:21.600 --> 0:02:25.200 The problem we've had, Tom, is under the rules, the 0:02:25.320 --> 0:02:26.320 very rules of. 0:02:26.280 --> 0:02:31.960 The World Trade Organization, specifically the most Favored Nation rule, 0:02:32.800 --> 0:02:35.519 every other nation in the world has had a license 0:02:35.560 --> 0:02:39.360 to cheat us through higher tariffs, higher non tariff bearers, 0:02:39.960 --> 0:02:44.160 and the costs, particularly after NAFTA and China joined the 0:02:44.160 --> 0:02:47.480 World Trade Organization in two thousand and one, has been 0:02:47.600 --> 0:02:51.400 in the one hundred thousands of factories and the millions 0:02:51.440 --> 0:02:52.480 of jobs. 0:02:52.120 --> 0:02:54.320 And we are reversing that. 0:02:54.680 --> 0:02:57.040 And you can see fifty thousand on the now, which 0:02:57.080 --> 0:02:58.680 I predicted in April. 0:03:00.600 --> 0:03:02.880 Trump, either you or Kevin Hasset, I'm gonna give credit 0:03:02.919 --> 0:03:05.240 for that. Peter Navarre, We're going to go with you 0:03:05.280 --> 0:03:08.680 on the sequence here. You mentioned the follow on from NAFTA. 0:03:08.760 --> 0:03:11.760 I spoke to our Josh Wingrove this morning and he 0:03:11.840 --> 0:03:13.960 made really clear what we need to know is a 0:03:14.040 --> 0:03:19.440 president actually thinking about moving away from our trade agreements 0:03:19.520 --> 0:03:23.320 with Mexico in Canada. Have you heard the president say 0:03:23.680 --> 0:03:27.080 I want out of NAFTA and everything that followed it. 0:03:28.080 --> 0:03:32.440 Tom, I'm one of three people, Stephen Miller Dan Scavino 0:03:32.520 --> 0:03:36.080 being the other two who was with the president from 0:03:36.160 --> 0:03:39.920 the twenty sixteen campaign through all four years of the 0:03:40.000 --> 0:03:44.120 first term. And the reason why that happened, among other things, 0:03:44.200 --> 0:03:46.880 is I never get ahead of the president. I can 0:03:46.920 --> 0:03:56.000 tell you this that USMCA has some significant flaws in 0:03:56.040 --> 0:04:00.280 it and it's going to be reevaluated in July. The 0:04:00.320 --> 0:04:04.960 Great Jamison Greer or US Trade representative will be taking 0:04:05.000 --> 0:04:08.280 the lean on that. But nothing ever happens in the 0:04:08.320 --> 0:04:12.240 White House without the Commander in chief, particularly on trade. 0:04:12.680 --> 0:04:15.880 So as the boss says, uh, let's see what happens. 0:04:15.960 --> 0:04:17.840 But we're in a situation. 0:04:19.160 --> 0:04:20.520 One of one of the things you know, I'm the 0:04:20.640 --> 0:04:22.920 senior Counselor of Trade and Manufacturing, and one of one 0:04:22.920 --> 0:04:25.799 of the things that's really troubling right now, it should 0:04:25.800 --> 0:04:31.080 be troubling to the variant people, is that Mexico UH 0:04:31.240 --> 0:04:36.400 and and to UH extent, Canada are basically being used 0:04:36.440 --> 0:04:42.039 by staging areas for countries like China, UH, some of 0:04:42.080 --> 0:04:46.080 the European countries, in the Asian countries, Japean, Korea, they 0:04:46.120 --> 0:04:51.080 come into China, into Mexico and they leverage NAFTA, UH 0:04:51.120 --> 0:04:53.720 and now U S m c A to get into 0:04:53.800 --> 0:04:57.760 our markets in a way which essentially is terriff avoidance 0:04:57.800 --> 0:04:59.680 at best and tariff of evasion at worst. 0:05:00.360 --> 0:05:01.520 I could have to deal with. 0:05:01.440 --> 0:05:03.400 That, Tom accrastination and worldwide. 0:05:03.400 --> 0:05:06.400 Peter Navarro with us, with the Trump administration, our Paul 0:05:06.440 --> 0:05:07.880 Sweeney with doctor Navarro. 0:05:08.160 --> 0:05:10.159 Mister Navarro, I guess last night we saw in the 0:05:10.160 --> 0:05:13.960 House of Representatives they voted and some of President's tariff 0:05:14.000 --> 0:05:18.520 agenda against Canada. Did they overstep their bounds? What is 0:05:18.600 --> 0:05:20.240 the response of the administration. 0:05:21.080 --> 0:05:27.440 Well, I think it's highly ironic, Paul, that the Democrat 0:05:27.720 --> 0:05:33.960 Party is opposing tariffs on behalf of working class Americans 0:05:34.000 --> 0:05:37.280 when it was the Democrat Party, which is supposed to 0:05:37.279 --> 0:05:40.560 be the party of the working class. They simply because 0:05:40.560 --> 0:05:44.799 they hate Donald Trump, now they're anti tariff. I think 0:05:45.080 --> 0:05:49.000 the bigger story is the shame on the three Republicans 0:05:49.920 --> 0:05:54.840 who defected. Although Thomas Massey I don't consider him of 0:05:55.200 --> 0:05:56.560 being nice anymore. 0:05:57.040 --> 0:06:00.400 I'm being nice. What I'm just selling like it is, 0:06:00.720 --> 0:06:03.080 it's like Nancy. 0:06:02.279 --> 0:06:05.359 Hang on, let me give a compliment to the Democrats, Sez, 0:06:05.680 --> 0:06:11.720 the Democrats hold ranks and we don't, and we got 0:06:11.720 --> 0:06:13.920 to stop not holding ranks, sir. 0:06:13.920 --> 0:06:15.760 Because Okay, it's. 0:06:15.720 --> 0:06:19.720 Very harmful to the party and to this country when 0:06:19.800 --> 0:06:21.479 we have that kind of thing going on. 0:06:21.560 --> 0:06:24.400 Okay, Peter Well said, but let's give two examples right now. 0:06:24.440 --> 0:06:28.279 Tom Barrett, who's the congressman from Lancing, Michigan, he's got 0:06:28.279 --> 0:06:33.680 two GM factories up here, his Republican working class constituents 0:06:33.839 --> 0:06:37.919 who President Trump stole from the Democrats. Tom Barrett is 0:06:37.960 --> 0:06:41.279 going to fight for his life in that congressional district 0:06:41.279 --> 0:06:43.760 of Lancing, Michigan. What do you need to do to 0:06:43.800 --> 0:06:45.400 get Tom Barrett re elected? 0:06:47.800 --> 0:06:51.839 Well, okay, so that's a bigger conversation. I can tell 0:06:51.839 --> 0:06:56.279 you this, The stakes have never been higher in a 0:06:56.320 --> 0:07:01.560 mid term congressional election. If we lose the House in 0:07:01.720 --> 0:07:06.160 twenty twenty sixteen, we will see a repeat of the 0:07:06.160 --> 0:07:11.320 impeachment circus craziness that we saw beginning in twenty eighteen. 0:07:11.960 --> 0:07:17.960 It really was tremendously harmful. The Democrats they hate Trump 0:07:18.120 --> 0:07:21.840 more than they love this country, as Corey Lewandowski once said, 0:07:22.840 --> 0:07:28.200 and our strategy now, look, they're coming at us on 0:07:28.320 --> 0:07:30.480 affordability number one. 0:07:30.800 --> 0:07:33.679 We are turning that around as we speak. 0:07:33.720 --> 0:07:38.000 We're taking a micro approach to the macro problem inflation. 0:07:38.520 --> 0:07:42.320 We're taking it cow by cow, fish by fish, gallon 0:07:42.440 --> 0:07:46.880 by gallon. And nothing is more important to the President 0:07:47.760 --> 0:07:54.080 than strong growth in a deflationary environment. Following the four 0:07:54.200 --> 0:08:00.120 pillars of trump Nomics, tax cuts, we got strategic enter 0:08:00.120 --> 0:08:04.400 g dominance, we got deregulation, and of course fair trade. 0:08:04.520 --> 0:08:08.880 So we're gonna first of all, address the affordability crisis 0:08:09.200 --> 0:08:14.960 head on. We're making great progress on that. The border 0:08:15.040 --> 0:08:22.320 issue remains troublesome. I've got a peace out in a 0:08:22.480 --> 0:08:28.160 rival network thing today that does the body count when 0:08:28.240 --> 0:08:32.640 you let millions of illegal aliens in. 0:08:32.040 --> 0:08:32.959 To this country. 0:08:33.040 --> 0:08:39.880 I mean, we lost two Americans in Minneapolis because of 0:08:39.880 --> 0:08:40.360 what was. 0:08:40.360 --> 0:08:41.320 Going on there. 0:08:41.360 --> 0:08:47.400 But my calculations, tens of thousands of Americans are going 0:08:47.480 --> 0:08:53.160 to be either murdered, burgled, raped, or assaulted by the 0:08:53.280 --> 0:08:55.840 illegal aliens unless we deport them. 0:08:56.360 --> 0:08:59.960 So that's going to be and that bounds your You know, 0:09:00.080 --> 0:09:03.120 one of the things. We saw very strong jobs report yesterday, 0:09:03.960 --> 0:09:05.520 but a lot of economs will say, this is an 0:09:05.559 --> 0:09:09.000 economy that is kind of slow hiring or no hiring, 0:09:09.280 --> 0:09:12.640 but slow or no cuts in jobs. It's just kind 0:09:12.640 --> 0:09:15.040 of hanging out there. If you want this economy to grow, 0:09:15.080 --> 0:09:18.719 many economers would argue, you'd need a larger workforce. Does 0:09:18.760 --> 0:09:22.360 that suggest the Trump administration maybe rethink their immigration policy? 0:09:22.440 --> 0:09:26.119 Hey, hey, god, we had one hundred and seventy thousand 0:09:26.840 --> 0:09:30.760 private sector jobs created last month. 0:09:30.760 --> 0:09:32.280 One hundred and seventy thousand. 0:09:33.120 --> 0:09:35.840 And by the way, Paul, the best answer to your 0:09:35.920 --> 0:09:40.640 question is increase the labor force participation. Oh, it went 0:09:40.720 --> 0:09:43.320 up yesterday in the report. 0:09:43.440 --> 0:09:45.840 Even as the unemployment rate went down. 0:09:45.920 --> 0:09:49.280 How many times do you see that we're looking at 0:09:49.400 --> 0:09:54.640 five percent GDP growth, and we're looking at earnings which 0:09:54.679 --> 0:09:58.840 you're off the charts and back in April April seventh, 0:09:58.960 --> 0:10:02.400 to be exact, when the futures for the Dow word 0:10:02.520 --> 0:10:08.120 thirty eight thousand, my friend, thirty eight thousand Onipical Titanic. 0:10:08.520 --> 0:10:11.000 I said fifty thousand. 0:10:10.600 --> 0:10:12.640 On the data tied out to Hasset. That's all. 0:10:12.640 --> 0:10:16.680 Look, Peter Navarre with Kevin wrote a book like years ago. 0:10:16.840 --> 0:10:19.480 He never said fifty thousand on the Dow this year. 0:10:19.559 --> 0:10:22.199 I've just to be clear, Peter Navarro with us here 0:10:22.320 --> 0:10:25.360 nationwide and of course some miservine California as well. Peter, 0:10:25.640 --> 0:10:28.760 you mentioned the midterm elections. Here's the reality for the 0:10:28.800 --> 0:10:32.679 president right now. You go out I eight across Illinois, 0:10:33.000 --> 0:10:36.440 you run into the Big River and there's Davenport, Iowa. 0:10:36.760 --> 0:10:40.959 The Republican in the first congressional district won that district 0:10:41.360 --> 0:10:46.560 by six votes last time around. They didn't cross the 0:10:46.600 --> 0:10:50.080 aisle yesterday to vote with the Democrats. But they've had 0:10:50.120 --> 0:10:53.680 it with the Navarro Trump trade. What do you need 0:10:53.720 --> 0:10:58.280 to amend to get Republicans re elected in November? 0:10:58.880 --> 0:11:02.559 I just so disagree with that. 0:11:02.840 --> 0:11:08.640 We Iowa loves Donald Trump and by the way, farmers 0:11:08.840 --> 0:11:09.960 love Donald Trump. 0:11:10.080 --> 0:11:11.559 Farmers above all. 0:11:11.559 --> 0:11:16.559 Understand the necessity for tariffs. And every time there's been 0:11:16.640 --> 0:11:21.560 retaliation by China or the Europeans or by the Canadians, guess. 0:11:21.360 --> 0:11:22.880 Who's had the farmers back. 0:11:22.960 --> 0:11:26.640 I've personally been involved with the great Brook rawlings over 0:11:26.640 --> 0:11:30.360 at the Department of Agriculture and making sure that farmers 0:11:30.440 --> 0:11:34.520 are made whole and can't be used as bargaining chips 0:11:34.559 --> 0:11:37.600 and pawns in a bigger game. So, I you know, 0:11:37.760 --> 0:11:43.040 Iowa is Trump country, and I just it's like you're 0:11:43.080 --> 0:11:47.000 making assertions that I just I mean, if you start 0:11:47.040 --> 0:11:49.599 with an assertion that's wrong, then everything that else that 0:11:49.760 --> 0:11:51.319 follows is not. 0:11:52.120 --> 0:11:53.720 Peter, what we're talking about. 0:11:53.920 --> 0:11:56.160 This is too important, and Paul wants to talk about 0:11:56.200 --> 0:12:00.480 the legal background as well. Peter Navarro a two to 0:12:00.559 --> 0:12:04.200 three percent terraf regime for whatever reasons, and you were 0:12:04.240 --> 0:12:07.400 providing leadership on this. We had Liberation Day in the 0:12:07.520 --> 0:12:10.280 Rose Garden and we went up, up and away, and 0:12:10.559 --> 0:12:13.560 Toby n Angle at the Ft has brilliantly shown that 0:12:13.600 --> 0:12:16.960 we've pulled back our blended terrifyrate right now I'm guessing 0:12:17.440 --> 0:12:22.240 to ten to eleven percent, where is Peter Navarro's optimum 0:12:22.280 --> 0:12:26.160 blended terrifyrate if it's not the two to three percent 0:12:26.480 --> 0:12:28.959 that President Biden and others had before you. 0:12:30.640 --> 0:12:37.160 Great question, and the way I like to think about it. 0:12:35.800 --> 0:12:37.400 Is the trade deficit. 0:12:37.600 --> 0:12:42.320 The trade deficit, when it's chronic like it has been, 0:12:42.440 --> 0:12:47.200 and large like it has been, is toxic to the 0:12:47.240 --> 0:12:49.880 future of this country. First of all, a big trade 0:12:49.960 --> 0:12:55.520 deficit that's chronic, that's opposed to occasional, is a proxy 0:12:55.679 --> 0:12:58.840 for all the factories and jobs and supply chains that 0:12:58.960 --> 0:13:02.600 go offshore that happens. That not only hurts us economically, 0:13:03.000 --> 0:13:06.199 it's hurts us from a national security point of view, 0:13:06.240 --> 0:13:09.000 as the pandemic underscored. 0:13:09.160 --> 0:13:10.520 So there is that. 0:13:10.840 --> 0:13:16.720 Secondly, when you run a chronic trade deficit, you're basically 0:13:16.880 --> 0:13:21.680 shipping your wealth offshore. We've done that by the last calculation, 0:13:21.840 --> 0:13:25.000 I made something like fifteen trillion. 0:13:24.679 --> 0:13:27.040 Dollars of our property. 0:13:30.600 --> 0:13:33.840 Bottom line time is when the trade deficit gets to zero, 0:13:34.840 --> 0:13:37.960 then you've got to run with that thing. Well but 0:13:38.080 --> 0:13:42.680 by the way, by the way, the goal here is 0:13:42.760 --> 0:13:45.800 simply fair trade. And what we're doing, what the President 0:13:45.880 --> 0:13:50.679 is doing with Jamison Greer, Scott Bessen, Howard Lugnik are 0:13:50.840 --> 0:13:55.320 doing is working with our allies and countries around the 0:13:55.360 --> 0:13:59.760 world to get them to lower their tariffs and trade bearers. 0:14:00.160 --> 0:14:04.240 Who in bloomberg Land could disagree with that as. 0:14:04.360 --> 0:14:06.800 Okay, So Peter disagree with the results. 0:14:06.840 --> 0:14:09.120 Tom, I gotta get this in because Sweeney's like all 0:14:09.160 --> 0:14:12.040 Supreme Court right now. Peter and NEvAr, you didn't answer 0:14:12.040 --> 0:14:15.000 my question. We came up, we had Liberation Day, we 0:14:15.080 --> 0:14:17.160 did No, you did not that. 0:14:17.440 --> 0:14:20.960 Your question was what will satisfy Peter Navar? And I said, 0:14:21.000 --> 0:14:21.760 when the trail. 0:14:21.960 --> 0:14:27.680 What is the what is the optimum blended terrifrate? James 0:14:27.720 --> 0:14:30.520 Diamond wants to know that. Brian moynan wants to know that. 0:14:31.160 --> 0:14:33.680 Solomon over at Golden Sax wants to know that. And 0:14:33.720 --> 0:14:37.040 the people in the first Congressional District of Iowa, where 0:14:37.080 --> 0:14:40.280 are we heading? Is these exemptions come in? Do you 0:14:40.320 --> 0:14:44.560 see a seven percent optimal terrifright? Four percent? Do we 0:14:44.600 --> 0:14:47.160 capitulate and go right back to two to three percent? 0:14:48.040 --> 0:14:54.120 So here's a Kevin Spacey aside here, Jamie Diamond, lower 0:14:54.160 --> 0:14:55.320 your fringing. 0:14:55.120 --> 0:14:56.640 Credit card interest rates. 0:14:56.960 --> 0:14:59.480 You are a criminal the way you charge the American 0:14:59.520 --> 0:15:03.200 people at twenty two twenty five and thirty percent, and 0:15:03.240 --> 0:15:06.920 the President wants you to lower that. So until Jamie, 0:15:08.080 --> 0:15:10.400 until you do that, please refrain. 0:15:10.120 --> 0:15:12.440 From commenting on other public policies. 0:15:12.600 --> 0:15:15.720 Okay, got that off my church. Now answer with respect 0:15:15.720 --> 0:15:16.520 to your question. 0:15:16.880 --> 0:15:17.240 Please. 0:15:17.880 --> 0:15:21.400 The way we think about it, Tom, and this is important, is. 0:15:21.320 --> 0:15:26.120 That every country that we trade with is like figure prints, right, 0:15:26.160 --> 0:15:29.040 they're unique, which is to say they cheat us in 0:15:29.120 --> 0:15:32.520 their own way. It's like some countries like India have 0:15:32.680 --> 0:15:37.280 had the highest tariffs, some countries like Japan have had 0:15:37.600 --> 0:15:41.480 the highest non tariff barriers, some countries like China have 0:15:41.720 --> 0:15:44.600 all of that stuff going on. So when you ask 0:15:44.720 --> 0:15:49.760 me what the appropriate tariff would be, it's it's bespoke. 0:15:49.880 --> 0:15:51.680 It's like what President Trump does. 0:15:51.720 --> 0:15:55.360 He goes country by country by country and he sets 0:15:55.400 --> 0:15:58.800 the tariffs according to how badly they're cheating us. So 0:15:58.840 --> 0:16:02.000 there's no blended tariff concept here. 0:16:02.040 --> 0:16:03.600 It's like a country specifically. 0:16:03.600 --> 0:16:05.920 Thank you for that. Let's get Paul Sweeney in here, hitter. 0:16:05.880 --> 0:16:09.880 Just real quickly. There's some of President Trump's tariff policies 0:16:09.920 --> 0:16:12.200 in front of the Supreme Court. To the extent the 0:16:12.240 --> 0:16:16.520 Supreme Court rules against the administration, what will be its response. 0:16:17.080 --> 0:16:19.520 Well, first of all, let's let's talk about the law 0:16:19.720 --> 0:16:23.720 and the use of i EPAH. If the Supreme Court 0:16:23.800 --> 0:16:27.560 wants to rule in favor of President Trump, the law 0:16:27.720 --> 0:16:31.440 is clearly on the Supreme Court side, and you have. 0:16:33.680 --> 0:16:35.520 Is a teriff attacks, No, it's a. 0:16:35.520 --> 0:16:42.360 Tariff on foreigners, and is a tariff a form of 0:16:42.480 --> 0:16:46.920 restriction on imports. Of course, it is just like quotas 0:16:46.960 --> 0:16:51.280 and other things and embargoes. So those are the two 0:16:51.360 --> 0:16:55.480 points of law which this case is about. And if 0:16:55.520 --> 0:16:59.440 the Supreme Court wants to rule in President's favor. 0:16:59.520 --> 0:17:01.200 Clearly laws on their side. 0:17:01.280 --> 0:17:04.239 With respect to Plan B, of course, we have a 0:17:04.240 --> 0:17:07.000 Plan B, but this is not the place. 0:17:06.760 --> 0:17:07.959 For me to talk about it. 0:17:08.800 --> 0:17:12.600 If the decision comes out next Friday, which would be 0:17:12.680 --> 0:17:15.280 the next time the Supreme Court is going to be 0:17:15.320 --> 0:17:20.520 releasing decisions, then the President will speak first on what's 0:17:20.560 --> 0:17:23.760 going to happen, and then folks like me will come 0:17:23.760 --> 0:17:26.640 in behind him and explain the details. 0:17:26.760 --> 0:17:28.520 Peter, thank you so much for joining us. 0:17:28.520 --> 0:17:30.920 Thank you for commenting on the realities for the first 0:17:31.000 --> 0:17:32.520 Congressional District of Iowa. 0:17:33.160 --> 0:17:34.280 I believe it's the eighth. 0:17:34.160 --> 0:17:37.760 Congressional District of Michigan, as well, and on the world 0:17:37.880 --> 0:17:41.159 of trade Peter Navarro, Senior Counselor to the President for 0:17:41.240 --> 0:17:45.120 Trade and Manufacturing for the President of the United States. 0:17:46.960 --> 0:17:47.680 Stay with us. 0:17:47.920 --> 0:17:51.160 More from Bloomberg Surveillance coming up after this. 0:17:58.400 --> 0:18:02.000 You're listening to The Bloombergs Valen's podcast. Catch us Live 0:18:02.040 --> 0:18:05.199 weekday afternoons from seven to ten am Eastern Listen on 0:18:05.280 --> 0:18:08.720 Apple Karplay and Android Otto with the Bloomberg Business app, 0:18:08.880 --> 0:18:10.600 or watch us Live on YouTube. 0:18:10.840 --> 0:18:12.320 You're going to get a good amount of time here 0:18:12.320 --> 0:18:15.119 with Brian Belski to reframe this bull market. 0:18:15.400 --> 0:18:16.879 I'm looking at this Brian, and I'm. 0:18:16.720 --> 0:18:19.879 Looking company to company and Paul and I remember times 0:18:19.920 --> 0:18:25.959 where there was exuberance without profit. I'm absolutely overwhelmed at 0:18:25.960 --> 0:18:31.440 the set of companies that have extraordinary profit. We've never 0:18:31.520 --> 0:18:34.359 seen the margins of some of these companies. 0:18:34.800 --> 0:18:37.520 We've never seen the margins of some of these companies, Tom, 0:18:37.880 --> 0:18:40.440 But I think more importantly, we haven't seen the consistency 0:18:40.480 --> 0:18:43.200 and earnings that I think people are missing. I think 0:18:43.720 --> 0:18:47.280 at the end of the day, this fourth year, the 0:18:47.280 --> 0:18:49.960 bullmarket that started in October of twenty twenty two, part 0:18:50.000 --> 0:18:53.119 of our big secular bullmarket call that we've had in 0:18:53.160 --> 0:18:56.600 place since two thousand and nine twenty ten, we're transitioning. 0:18:57.000 --> 0:19:00.240 We're transitioning to more of an earnings driven market, and 0:19:00.400 --> 0:19:05.240 traditionally and historically an earnings driven market still positive, but 0:19:05.400 --> 0:19:09.560 not as positive as a multiple driven market, momentum driven market, 0:19:09.600 --> 0:19:12.960 which we've clearly been in since early twenty twenty three. 0:19:13.000 --> 0:19:15.160 So I think investors are having a hard time understanding that. 0:19:15.520 --> 0:19:17.639 But I think the biggest thing, too, is that the 0:19:17.680 --> 0:19:21.159 broadening out is real and it's showing up in the 0:19:21.280 --> 0:19:24.320 fundamental numbers where you're seeing smaller areas in the market, 0:19:24.359 --> 0:19:26.280 not just the s top five hundred, but smaller cap 0:19:26.320 --> 0:19:30.320 companies are actually showing great earnings and better earnings than 0:19:30.320 --> 0:19:32.639 the large cap But more importantly, something that you and 0:19:32.680 --> 0:19:34.800 I and Paul's been involved in a conversation too, is 0:19:34.840 --> 0:19:37.359 we talk about price or free cash flow and cash 0:19:37.359 --> 0:19:39.760 on these companies continue to grow, and that's something to 0:19:39.840 --> 0:19:42.639 us that is very, very very positive in terms of 0:19:42.640 --> 0:19:44.879 how we talk about our small MidCap portfolio that we 0:19:44.920 --> 0:19:46.040 offer clients. 0:19:46.080 --> 0:19:47.480 Brian, one of the things we have seen over the 0:19:47.560 --> 0:19:50.040 least three months, let's call it is a little bit 0:19:50.080 --> 0:19:52.120 of a rotation out of some of the growth parts 0:19:52.160 --> 0:19:55.040 of the market into some more cyclical sectors of the market, 0:19:55.080 --> 0:19:57.520 maybe even small in mid cap. Is that a short 0:19:57.600 --> 0:20:00.399 term trade? Is that a longer term rotation? How do 0:20:00.440 --> 0:20:01.160 you think about that? 0:20:01.359 --> 0:20:04.159 I think it's a longer term rotation. You know, the 0:20:04.200 --> 0:20:07.600 market had these fits and starts into small cap through 0:20:07.600 --> 0:20:10.040 the years, as the last couple of years in particular 0:20:10.160 --> 0:20:13.040 when the ten year treasury went down, and then everybody 0:20:13.080 --> 0:20:15.760 just kind of assimilated to you buy small caps because 0:20:15.760 --> 0:20:17.280 the rates are downe and you buy small caps from 0:20:17.280 --> 0:20:21.880 a fundamental perspective because they have better growth or attractive valuations. Again, 0:20:21.960 --> 0:20:24.240 going back to the operating performance with respect to return 0:20:24.280 --> 0:20:26.840 on equity, return on invested cap, all these things, they're 0:20:26.840 --> 0:20:30.679 looking really, really great. And I think I think that 0:20:30.800 --> 0:20:33.440 ten years from now we're going to be kicking ourselves 0:20:33.440 --> 0:20:35.200 that we didn't own more small cap companies. 0:20:35.440 --> 0:20:38.560 Brian Belski with this with him list. We're waiting on 0:20:38.600 --> 0:20:41.480 Peter Navara. We'll go to him at age fifteen. Here 0:20:41.600 --> 0:20:45.280 the trade representative for the President of the United States, 0:20:45.320 --> 0:20:48.080 Paul Sweety with Brian Belski here in New York City. 0:20:48.280 --> 0:20:51.560 Earning seemed pretty solid. Brian or sixty seventy percent away 0:20:51.560 --> 0:20:53.680 through the S and P five hundred reporting double digit 0:20:53.720 --> 0:20:57.000 earnings growth. I mean, corporate America continues to come through. Here, 0:20:57.000 --> 0:21:00.639 are these good quality earnings are enough to support this market? 0:21:00.680 --> 0:21:00.880 Nice? 0:21:00.960 --> 0:21:02.560 We think they are, and I think earnings are actually 0:21:02.600 --> 0:21:04.200 going to continue to grow because we're going to continue 0:21:04.200 --> 0:21:08.000 to see them from other areas, including financials, parts of industrials, 0:21:08.560 --> 0:21:13.359 consumer discretionary, and communication services. Is not just all about tech. 0:21:13.400 --> 0:21:16.119 We haven't even mentioned it yet. So how amazing is 0:21:16.119 --> 0:21:19.399 that that we haven't talked about tech. But at the 0:21:19.440 --> 0:21:21.520 end of the day, we think the broadening out and 0:21:21.640 --> 0:21:24.240 we're seeing a broader distribution of earnings, which is very, 0:21:24.320 --> 0:21:27.280 very positive. Number of years ago we talked about how 0:21:28.160 --> 0:21:31.640 we need to see more of a normalization of the market. Yep, 0:21:31.920 --> 0:21:33.439 And I think that one of the last times I 0:21:33.480 --> 0:21:35.160 was here live and Soon we talked about the ninety 0:21:35.200 --> 0:21:37.240 five ninety six market when I was at Dane and 0:21:37.280 --> 0:21:40.360 you're at Rauscher, Tom, and we talked about how that 0:21:40.440 --> 0:21:43.399 market was probably the last time we've seen more normalized trading. 0:21:44.080 --> 0:21:45.840 I look at this, folks, I want to go to Kimilis. 0:21:45.920 --> 0:21:48.480 So what the story is? Belski He didn't like. 0:21:48.480 --> 0:21:52.840 His mantre Canadian ticket and see it Cimill's investment strategies 0:21:52.880 --> 0:21:56.040 and the website really pretty cool. And you have something 0:21:56.080 --> 0:21:59.280 that I'm huge on away from the mathematics of any 0:21:59.359 --> 0:22:07.160 finance will intentional concentration. Yeah, discuss intentional concentration when Apple's 0:22:07.240 --> 0:22:10.879 up sixteen percent twelve months trailing and Microsoft is flat 0:22:10.960 --> 0:22:11.959 twelve months trailing. 0:22:12.600 --> 0:22:13.399 It's a great question. 0:22:13.440 --> 0:22:17.560 That's why our tagline is investing with conviction and humility. 0:22:17.640 --> 0:22:20.399 You know, in my old institutional days that I that 0:22:20.480 --> 0:22:23.560 I ended late October when I left my prior employer 0:22:23.760 --> 0:22:26.080 and started off my own shop. When you go into 0:22:26.119 --> 0:22:29.280 an institutional account and you talk to a fancy portfolio 0:22:29.280 --> 0:22:30.880 manager one of the big banks, they own two hundred 0:22:30.880 --> 0:22:35.720 stocks yep. And to me, that's not conviction. And so 0:22:35.920 --> 0:22:40.520 we typically and historically have run portfolios now since two 0:22:40.560 --> 0:22:43.440 thousand and five, real live money that we like to 0:22:43.520 --> 0:22:46.560 run fifty stock portfolios are back testing in terms of 0:22:46.760 --> 0:22:50.160 all of the fancy portfolio analysis tools that we have 0:22:50.600 --> 0:22:52.800 and still have shown that that fifty numbers is pretty 0:22:52.800 --> 0:22:55.560 good number. So we have an opportunity to have this 0:22:55.600 --> 0:22:58.280 thing called tracking here To answer Tom's question, so you 0:22:58.320 --> 0:23:01.119 can be you can place your quote unquote bets. I 0:23:01.119 --> 0:23:03.159 don't like that phrase, but it's probably the best way 0:23:03.240 --> 0:23:04.919 to say it. So do I want to own eight 0:23:04.960 --> 0:23:07.400 percent Apple and four percent Microsoft? Or do I want 0:23:07.400 --> 0:23:09.240 to flip around? We want to continue to own both 0:23:09.280 --> 0:23:11.879 those names, but from the conviction side of things, we 0:23:11.920 --> 0:23:15.960 can own order less or more through time, but add 0:23:16.000 --> 0:23:18.920 and delete the actual position. So that's how we run money. 0:23:18.920 --> 0:23:21.480