WEBVTT - Bonus: How Markets Might Be Wrong About Trump ? 0:00:03.120 --> 0:00:09.400 Bloomberg Audio Studios, Podcasts, radio News. 0:00:17.040 --> 0:00:20.200 Hi Stephanie Flanders here with a bonus episode of our 0:00:20.280 --> 0:00:24.040 Botonomics series, because well, we just couldn't resist. It's a 0:00:24.040 --> 0:00:26.200 good one, and who knows, if you enjoy it, there 0:00:26.280 --> 0:00:29.000 might be more to come. In this vein the focus 0:00:29.080 --> 0:00:32.599 is trumpnomics, the economic world of Donald Trump, how he's 0:00:32.640 --> 0:00:35.360 already shaped the global economy, and what on earth is 0:00:35.400 --> 0:00:38.080 going to happen next. To help me tackle this subject, 0:00:38.159 --> 0:00:40.960 I've recruited two of Bloomberg's finest, each with a unique 0:00:41.000 --> 0:00:45.360 perspective on Donald Trump. Anna Wong, chief US economists for 0:00:45.400 --> 0:00:49.000 Bloomberg Economics, and Josh Green, a national correspondent at Bloomberg 0:00:49.040 --> 0:00:53.760 BusinessWeek based in DC who covers politics. Enjoy unless you've 0:00:53.760 --> 0:00:56.160 been living in a very deep forest with bad WiFi. 0:00:56.240 --> 0:00:59.880 You'll have noticed that investors have responded pretty favorably to 0:01:00.080 --> 0:01:03.520 the reelection of Donald Trump. Stocks her up, so's the dollar, 0:01:04.160 --> 0:01:08.720 Tesla stock, Bitcoin is way up. In general, You'd have 0:01:08.760 --> 0:01:12.039 to say Wall Street seems to think that Trump two 0:01:12.120 --> 0:01:14.880 point zero will be good for them, good for capitalists. 0:01:15.080 --> 0:01:16.640 But at the same time you have a long line 0:01:16.640 --> 0:01:19.960 of economists, sometimes working for the same Wall Street institutions 0:01:20.000 --> 0:01:24.400 telling us that Trump's economic policies, if implemented as advertised, 0:01:24.560 --> 0:01:28.039 the stuff he promised on the stump, about tariffs on 0:01:28.319 --> 0:01:33.400 all imports and mass deportations of illegal immigrants, all all 0:01:33.440 --> 0:01:38.440 those things will raise inflation, slow growth, and stoke uncertainty, 0:01:38.720 --> 0:01:42.520 which investors are supposed to hate. So I quite like 0:01:42.600 --> 0:01:46.600 to tease out whether there's a contradiction between some of 0:01:46.640 --> 0:01:50.520 those beliefs. Helping me with that is Anna Wong, Chief 0:01:50.640 --> 0:01:54.200 US Economists for Bloomberg Economics. Before that, she's worked at 0:01:54.200 --> 0:01:57.240 the Federal Reserve Board, and while she was at the FED, 0:01:57.480 --> 0:02:00.680 she served in the Trump White House and twenty nineteen 0:02:00.760 --> 0:02:04.840 twenty twenty on sircumment at the Council of Economic Advisors. 0:02:04.840 --> 0:02:07.120 She's also worked at the US Treasury. We also have 0:02:07.280 --> 0:02:12.400 Josh Green, national correspondent at Bloomberg BusinessWeek, author of several books, 0:02:12.480 --> 0:02:16.120 including I Guess, most relevantly for this purpose, the number 0:02:16.200 --> 0:02:20.840 one New York Times bestseller Devil's Bargain, Steve Bannon, Donald Trump, 0:02:21.120 --> 0:02:24.800 and The Storming of the Presidency. Anna I mentioned those 0:02:25.080 --> 0:02:28.640 two beliefs often held by the same person. Trump's economic 0:02:28.680 --> 0:02:34.040 policies would raise inflation, slow growth, stoke uncertainty, but somehow 0:02:34.280 --> 0:02:37.560 he's still going to be phenomenally good for US investors 0:02:37.800 --> 0:02:40.440 and companies. Am I right? There is a bit of 0:02:40.440 --> 0:02:41.320 a contradiction there. 0:02:41.360 --> 0:02:44.600 I think Wall Street economist and Wall Street traders are 0:02:44.880 --> 0:02:49.040 two different animals. So a lot of traders are very practical. 0:02:49.400 --> 0:02:52.360 So they're basing their bets, pouring all the money and 0:02:52.919 --> 0:02:57.480 stocks right now on the experience from the first Trump administration, 0:02:58.000 --> 0:03:02.480 And if you looked at the stock performance at that period, indeed, 0:03:02.600 --> 0:03:05.480 it was quite phenomenal. So the S and P five 0:03:05.600 --> 0:03:11.080 hundred rose fifty five percent from late twenty sixteen to 0:03:11.400 --> 0:03:14.640 the end of twenty nineteen. Now, in terms of the 0:03:14.760 --> 0:03:19.440 tension created by Donald Trump's threats on tariffs, indeed, it's 0:03:19.480 --> 0:03:23.400 true that I think it's now well documented that every 0:03:23.480 --> 0:03:27.840 time Trump tweets a threat on tariff, the stock market falls. 0:03:28.320 --> 0:03:31.640 And if you add up all these tweets in his 0:03:31.760 --> 0:03:37.200 first administration and looked at the cumulative stock decrease due 0:03:37.240 --> 0:03:41.080 to his tweets, you actually would find that his tweets 0:03:41.120 --> 0:03:45.800 are responsible for about ten percent lower stock market value. 0:03:45.920 --> 0:03:47.400 Now that is news you can use. 0:03:47.400 --> 0:03:49.880 I like that stat We actually did this when I 0:03:49.960 --> 0:03:52.360 was at the CEA. In fact, that was one of 0:03:52.400 --> 0:03:57.960 the study we undertook to document what has the impact 0:03:58.160 --> 0:04:02.920 of all this tariff announcement. Overall? Stock markets still increased 0:04:02.960 --> 0:04:05.720 by fifty five percent, but it could have increased by 0:04:05.720 --> 0:04:09.000 sixty five percent. So I guess in that sense there 0:04:09.080 --> 0:04:12.360 is some tension, but I think the traders are still 0:04:12.360 --> 0:04:16.080 thinking that on net it will be positive. But let's 0:04:16.160 --> 0:04:18.520 keep in mind that in the first Trump administration, a 0:04:18.600 --> 0:04:22.640 lot of the stock market increase was due to the 0:04:22.839 --> 0:04:25.760 tax cuts in TICCHA, and at that time that was 0:04:26.080 --> 0:04:29.520 clearly a big reform in the text code. So corporate 0:04:29.680 --> 0:04:31.719 tax rate fall from you know, in the thirties to 0:04:32.320 --> 0:04:35.840 the twenties, and that is a very sizable increase that 0:04:36.000 --> 0:04:38.039 they're not going to be able to replicate. 0:04:38.240 --> 0:04:40.039 No, I guess the big thing we're talking about in 0:04:40.080 --> 0:04:42.839 that front is just to prevent those text cuts from expiring, 0:04:42.839 --> 0:04:44.800 which you would have thought could not possibly have the 0:04:44.800 --> 0:04:46.760 same kind of impact exactly. 0:04:46.839 --> 0:04:49.440 So I think in one calculus they have to think 0:04:49.440 --> 0:04:52.920 about this time around, is well, suppose that all these 0:04:52.960 --> 0:04:57.159 trade drama knock down, you know, ten to fifteen percent 0:04:57.200 --> 0:05:00.400 of the stock market will a boost from the other 0:05:00.440 --> 0:05:04.120 policies be able to more than offset that. I would 0:05:04.240 --> 0:05:07.240 argue that right now, the stock market is already their 0:05:07.320 --> 0:05:12.159 valuations are already very rich, and there's less upside, but 0:05:12.760 --> 0:05:17.240 just more downside. But you know, I'm not equity a strategy. 0:05:17.440 --> 0:05:20.839 No, Luckily, we don't have any equity statutist. In this conversation, 0:05:22.279 --> 0:05:25.560 you've painted a fantastic sort of picture of people in 0:05:25.560 --> 0:05:28.680 the Council Economic Advisors examining the tweets and then potentially 0:05:28.720 --> 0:05:30.520 going to the President to talk to him about the 0:05:30.560 --> 0:05:32.440 impact on the stock market. And I want to get 0:05:32.440 --> 0:05:34.640 into that and his view of Tariff's in a minute. 0:05:34.640 --> 0:05:37.680 But Josh, I mean you're someone who, in writing that book, 0:05:37.760 --> 0:05:43.280 you were very close to Trump and Steve Bannon as 0:05:43.600 --> 0:05:46.520 as the campaign unfolded and as they went into the 0:05:46.520 --> 0:05:52.000 White House. When you see what's happening at mare A Lago, 0:05:52.320 --> 0:05:57.400 now the dynamics of this potentially this new administration, and 0:05:57.440 --> 0:05:59.440 then think about what Wall Street seems to think about it, 0:05:59.440 --> 0:06:01.120 do you think there'd be hopelessly optimistic? 0:06:01.480 --> 0:06:03.720 I do, and with a proviser that I too, am 0:06:03.800 --> 0:06:09.480 not an equity strategistic your political reporter, I do think 0:06:09.520 --> 0:06:11.279 you know the way I think of it talking to 0:06:11.279 --> 0:06:13.479 people down in mar Alago now, talking to some of 0:06:13.520 --> 0:06:15.520 my Wall Street source. So it is clearly right now 0:06:15.520 --> 0:06:19.200 Trump is in a honeymoon phase. Traders are exuberant. Everybody's 0:06:19.240 --> 0:06:24.040 excited about tax cuts, the regulation mergers, the rise of crypto, 0:06:24.320 --> 0:06:29.480 perhaps the fall of Lena Khan. Expectations are running sky high. 0:06:29.560 --> 0:06:33.159 But I tend to analyze Trump like you have to 0:06:33.160 --> 0:06:37.080 think about two categories. One is the expectations and then 0:06:37.120 --> 0:06:39.839 there's the execution. I think what Wall Street might be 0:06:39.880 --> 0:06:43.320 forgetting right now is that Trump always brings with him 0:06:43.920 --> 0:06:48.479 a certain level of chaos. That means the expectation or 0:06:48.520 --> 0:06:51.280 the execution is never as smooth as he'd like it 0:06:51.320 --> 0:06:55.880 to be. He's an impulsive guy. He gets angry, things 0:06:55.960 --> 0:06:59.760 go wrong, and I think that you know the fact 0:06:59.760 --> 0:07:02.039 that he he's not president yet and he isn't running 0:07:02.040 --> 0:07:06.080 the government yet, has led people perhaps to discount that 0:07:06.640 --> 0:07:09.119 second part of the equation that once he gets in there, 0:07:09.720 --> 0:07:14.600 especially given the types of people that he wants to 0:07:14.640 --> 0:07:17.920 surround himself with in his new administration, things could go 0:07:17.960 --> 0:07:20.640 off the rails very quickly. And that's something that every investor, 0:07:20.640 --> 0:07:22.120 I think, is going to want to keep a close eye. 0:07:22.120 --> 0:07:25.560 It's interesting that goes slightly against you know, the expectation 0:07:25.760 --> 0:07:31.840 had been chaos Trump one point zero, and he's had 0:07:31.880 --> 0:07:34.480 four years to know Licky's wounds, think about his mistakes. 0:07:34.840 --> 0:07:39.920 This is this little storyline. Now he's back, he's less 0:07:39.960 --> 0:07:42.240 constrained in all the ways that we know, lack of 0:07:42.240 --> 0:07:47.560 guard rails, etc. So potentially more radical, but also more disciplined. 0:07:47.600 --> 0:07:49.120 You know, he kind of knows his way around the 0:07:49.120 --> 0:07:51.680 White House, he knows his way around government. You think 0:07:51.800 --> 0:07:53.200 that's not going to make a difference. 0:07:54.600 --> 0:07:57.760 That was the thought process going in. But I think 0:07:57.800 --> 0:08:01.640 that the big revelation about Trump two point is that 0:08:01.880 --> 0:08:06.240 he's not necessarily going to be surrounded by savvy veterans 0:08:06.240 --> 0:08:08.880 of government. Look, the number that jumps out to me 0:08:09.880 --> 0:08:14.400 is that Trump has nominated eleven Fox News personality to 0:08:14.440 --> 0:08:17.840 serve in his administration, including his Secretary of State and 0:08:17.920 --> 0:08:21.720 Attorney General, although the Attorney General, Matt Gates, has now 0:08:21.800 --> 0:08:24.640 bowed out. I mean to me, that raises the question 0:08:24.880 --> 0:08:27.760 of who's actually going to be running the government and 0:08:27.800 --> 0:08:33.080 what happens when a crisis inevitably hits. Is Trump's administration 0:08:33.320 --> 0:08:35.680 going to be able to perform as well as an 0:08:35.760 --> 0:08:40.480 ordinary Democratic or Republican administration, or even Trump's last administration 0:08:40.559 --> 0:08:44.240 where you did have military generals, you had a segment 0:08:44.280 --> 0:08:47.720 of the Republican Party that wasn't MAGA, people like Mitt Romney. 0:08:48.240 --> 0:08:51.040 All those people are gone this type around, this time around, 0:08:51.080 --> 0:08:53.920 and Trump has made clear that he wants to come in. 0:08:54.280 --> 0:08:59.080 He wants to aggressively impose tariffs, cut taxes, toport millions 0:08:59.120 --> 0:09:02.559 of immigrants. I was talking to a Democratic source yesterday 0:09:02.600 --> 0:09:05.160 who said, the thing that people aren't thinking about is 0:09:05.200 --> 0:09:07.880 Trump wants to drive one hundred miles an hour, but 0:09:08.000 --> 0:09:09.959 this time there are no guardrails in the highway. I 0:09:09.960 --> 0:09:11.800 think that's the right way to think about Trump. 0:09:12.120 --> 0:09:14.760 Anna. The Council of Economic Advisors was perhaps it was 0:09:14.800 --> 0:09:17.040 a haven of efficiency. 0:09:16.960 --> 0:09:17.040 But. 0:09:19.559 --> 0:09:23.240 Absolutely not all right, So, I mean, what does that 0:09:23.320 --> 0:09:24.400 ring true to you? Anna? 0:09:24.840 --> 0:09:28.440 I have to disagree a bit with Josh here. I 0:09:28.520 --> 0:09:33.080 have only been focused on the economic personnel nomination, and 0:09:33.160 --> 0:09:37.200 I thought that the economic nominees that Trump has announced 0:09:37.200 --> 0:09:41.840 so far sounds like business as usual. In fact, I 0:09:41.880 --> 0:09:45.880 think that the nomination of Scott Dissent and Kevin Hassett 0:09:46.400 --> 0:09:52.560 actually felt more solid than the first administration and in 0:09:52.679 --> 0:09:57.600 terms of chaos, Josh, you mentioned chaos, I think there 0:09:57.640 --> 0:10:02.400 are other words to describe it. Maybe another you could 0:10:02.480 --> 0:10:07.079 think about it as a euphemism, but one word would 0:10:07.080 --> 0:10:07.840 be a team. 0:10:07.640 --> 0:10:08.480 Of rifle. 0:10:10.240 --> 0:10:16.000 Because I so, while I have not briefed the president 0:10:16.559 --> 0:10:21.839 uh a former president, I had briefed principles on these 0:10:22.080 --> 0:10:26.520 potus meetings, and I got debriefed from it. And the 0:10:26.559 --> 0:10:30.319 sense I got from it is that Donald Trump enjoys 0:10:30.760 --> 0:10:37.200 seeing his economic cabinet officials debates or fights. I think 0:10:37.200 --> 0:10:40.400 it's part of his style, this chaotic process, if you 0:10:40.440 --> 0:10:43.880 want to describe it that way, is for him to 0:10:44.440 --> 0:10:48.360 hear a range of views. So the idea that he 0:10:48.679 --> 0:10:52.840 is a just this out of touch emperor only listening 0:10:52.880 --> 0:10:57.000 to this that he wants to hear, I think that 0:10:57.120 --> 0:11:01.480 is not accurate. The chaos I personally experience in their 0:11:01.520 --> 0:11:07.199 first administration, outside of just being there during the thick 0:11:07.240 --> 0:11:10.360 of the pandemic while it was happening and during the 0:11:10.360 --> 0:11:14.080 trade war. Outside of those policy related drama, the drama 0:11:14.080 --> 0:11:18.320 I experience is the leaks whenever there is a policy proposal, 0:11:18.880 --> 0:11:24.079 and in all administration there will be crazy economic proposals. 0:11:24.160 --> 0:11:27.680 I mean the the the objective of CEA is to 0:11:28.040 --> 0:11:34.400 do an objective analysis on any kind of crazy economic 0:11:35.480 --> 0:11:37.920 right and then shoot it down. We just shoot down 0:11:37.960 --> 0:11:40.520 a lot of stuff, right. But then what what in 0:11:40.520 --> 0:11:43.319 a Trump administration, what will usually happen is when a 0:11:43.400 --> 0:11:46.400 proposals come in and suddenly the next day it would 0:11:46.520 --> 0:11:49.040 it will show up in the media. And in fact, 0:11:49.120 --> 0:11:53.120 I remember one very specific incident where it actually showed 0:11:53.200 --> 0:11:57.320 up in the Bloomberg and then the next day the 0:11:57.400 --> 0:12:00.240 Chao is a order. 0:12:00.280 --> 0:12:04.479 I really did appreciate all the lead as an insider. 0:12:04.520 --> 0:12:09.560 What happened is actually sow's distrust between everybody because there's 0:12:09.640 --> 0:12:11.480 only a small group of people who are in the 0:12:11.640 --> 0:12:14.760 in the no and then suddenly the story appears in 0:12:14.800 --> 0:12:18.240 the media and the whole policy process just breaks down. 0:12:18.400 --> 0:12:21.520 There's and then people started behaving in a way where 0:12:21.600 --> 0:12:24.080 I don't trust you, you don't trust me. Let's control the information. 0:12:24.440 --> 0:12:26.520 Okay, But you started off disagreeing with Josh, and then 0:12:26.600 --> 0:12:28.800 you may seem to be coming back to a slightly 0:12:28.880 --> 0:12:29.839 more chaotic vision. 0:12:30.240 --> 0:12:32.200 And I made a great point there about the economic team. 0:12:32.240 --> 0:12:34.560 That is the one exception to what I was talking 0:12:34.559 --> 0:12:36.959 about earlier. And let me emphasize to Scott Bess in 0:12:37.000 --> 0:12:40.400 his Treasury secretary, a story that Bloomberg News broke. By 0:12:40.400 --> 0:12:42.400 the way, I think the most positive. 0:12:42.120 --> 0:12:43.880 You may have been on the byline I seem to 0:12:44.240 --> 0:12:45.360 I might have been. I might have been. 0:12:45.920 --> 0:12:48.360 It's probably the most positive sign I think for Wall 0:12:48.360 --> 0:12:52.160 Streets and Marcus. A universal praise among my Democratic and 0:12:52.200 --> 0:12:54.959 Republican political sources that a quote unquote adult in the 0:12:55.040 --> 0:12:57.880 room is going to be Treasury Secretary. To me, however, 0:12:57.960 --> 0:13:00.360 as a political reporter, as somebody you know who writes 0:13:00.400 --> 0:13:02.760 about all the backstabbing, is the recipient of some of 0:13:02.800 --> 0:13:05.640 these leaks. The difficult thing is, at the end of 0:13:05.640 --> 0:13:08.200 the day, Trump is still Trump, and the people around 0:13:08.240 --> 0:13:10.640 Trump behave in a certain kind of way that I 0:13:10.679 --> 0:13:13.360 don't think people like Scott Besson, who have no experience 0:13:13.400 --> 0:13:17.079 working for Trump are necessarily accustomed to. So the big 0:13:17.200 --> 0:13:19.760 question I have in my mind is I don't have 0:13:19.800 --> 0:13:23.360 any doubt that Scott Besson would be a steady hand 0:13:23.440 --> 0:13:26.720 on the tiller of the economy if he's allowed to 0:13:26.800 --> 0:13:29.160 steer it. I want to know is what happens when 0:13:29.200 --> 0:13:32.120 Trump decides he wants to do something that Besson doesn't 0:13:32.160 --> 0:13:35.360 think is necessarily a great idea for the economy, for 0:13:35.400 --> 0:13:40.199 global markets, what have you? Does he have the stature 0:13:40.320 --> 0:13:42.280 and power and where we're all to stand up to 0:13:42.320 --> 0:13:46.360 Trump and to convince him to do otherwise, or is 0:13:46.400 --> 0:13:49.040 he in the position that a lot of Trump cabinet 0:13:49.040 --> 0:13:53.839 officials have been historically where you either get steamrolled or 0:13:53.920 --> 0:13:57.240 pushed out or layered over and aren't able to keep 0:13:57.280 --> 0:13:58.680 the car on the highway. To go back to my 0:13:58.720 --> 0:14:00.000 earlier metaphor. 0:14:00.640 --> 0:14:06.320 When we think about whether this administration will be broadly 0:14:06.400 --> 0:14:08.320 good for the economy, good for Wall Street, or not, 0:14:08.400 --> 0:14:11.280 I think there's a sort of a big question to 0:14:11.320 --> 0:14:14.440 be asked about one particular set policies, which is the tariffs. 0:14:14.520 --> 0:14:15.760 So I just want to spend a little bit of 0:14:15.800 --> 0:14:17.839 time on that. I mean, you're very interesting Anna on 0:14:18.480 --> 0:14:21.840 how that panned out in the first administration. 0:14:22.320 --> 0:14:25.400 Yeah, so, Stephanie. I think the main point that I 0:14:25.440 --> 0:14:28.400 would try to make is that it's important to separate 0:14:28.560 --> 0:14:32.440 the drama from the execution. As Sean Dannen wrote in 0:14:32.480 --> 0:14:35.000 Our Big Take earlier this week, I think that's a 0:14:35.040 --> 0:14:38.720 great way to describe how to think about the tariffs 0:14:38.720 --> 0:14:41.480 in the next four years. If you were a person 0:14:41.640 --> 0:14:45.080 who was in Mars in twenty sixteen to twenty twenty, 0:14:45.120 --> 0:14:47.640 and you came back, and so you didn't live through 0:14:47.680 --> 0:14:52.040 the Twitter all the tweets. I did watch TV at all. 0:14:52.480 --> 0:14:54.880 And then they are just looking at the numbers, looking 0:14:54.960 --> 0:14:58.200 at the escalation tranches of the tariffs, looking at the 0:14:58.680 --> 0:15:03.360 CPI data, looking at the unemployment, manufacturing employment data. You 0:15:04.720 --> 0:15:07.520 this person from MARS would think that, well, it turns 0:15:07.560 --> 0:15:10.640 out that most of the tariffs had very little negative 0:15:10.680 --> 0:15:14.840 impact on employment in twenty eighteen, and inflation in twenty 0:15:14.920 --> 0:15:18.400 nineteen ended up even below two percent. And this person 0:15:18.440 --> 0:15:21.680 would also look at the execution of the tariff and 0:15:21.720 --> 0:15:25.600 thinking that there is an internal logic and strategy to 0:15:25.760 --> 0:15:28.360 how they executed the tariffs. So if you look at it, 0:15:29.240 --> 0:15:33.200 the first tranches of tariffs were on solar panels and steel, 0:15:33.520 --> 0:15:36.640 and it happened in early twenty eighteen. And this was 0:15:36.880 --> 0:15:42.520 after the Republicans passed the Text Jobs and Cuts Act 0:15:42.600 --> 0:15:45.800 in December seventeen, right in the first year of the 0:15:45.840 --> 0:15:49.280 Trump administration. There was no tariffs at all. And I 0:15:49.280 --> 0:15:52.000 think there's a logic to why they want to sequence 0:15:52.160 --> 0:15:56.160 the tariffs increase after the tax cuts was passed, so 0:15:56.160 --> 0:15:59.240 that it could in case there was negative effect. So 0:15:59.360 --> 0:16:04.600 that's what observation that there's a strategic sequencing to when 0:16:04.640 --> 0:16:08.920 these escalation of tariffs will happen. The second part is 0:16:08.960 --> 0:16:13.160 that you also look at how these tariffs trunches are designed. 0:16:13.440 --> 0:16:17.280 It turns out that the first three trunches on China, 0:16:17.320 --> 0:16:21.520 as well as the solar panel and the steel were 0:16:21.880 --> 0:16:26.840 mainly on intermediate goods and capital goods. Economic theory actually 0:16:26.840 --> 0:16:30.600 tells you that if of the tariffs is on these 0:16:30.680 --> 0:16:34.240 type of goods, it tends to be not as inflationary. 0:16:34.480 --> 0:16:37.360 So that's actually what the data was showing that throughout 0:16:37.760 --> 0:16:42.640 the first four waves of tariffs and twenty eighteen, manufacturing 0:16:42.640 --> 0:16:47.320 employment was climbing, and so I think Trump remember that 0:16:47.440 --> 0:16:50.880 part of the data. But what also happened is when 0:16:50.920 --> 0:16:54.920 he started imposing the really big Section three oh one 0:16:55.000 --> 0:16:59.240 tariffs on China, and it starts getting into consumer goods 0:16:59.280 --> 0:17:00.840 because they just ran. 0:17:00.720 --> 0:17:02.320 Out, and those are the things that when you're putting 0:17:02.360 --> 0:17:05.600 tarifts on consumer goods just to sort of that's it's 0:17:05.640 --> 0:17:07.880 harder for the retailers to know, they end up having 0:17:07.880 --> 0:17:10.800 to pass it on to consumers exactly. 0:17:11.160 --> 0:17:14.919 So towards the last two waves, which are the Section 0:17:15.040 --> 0:17:18.199 three or one tariffs on Chinese goods. That's when you 0:17:18.320 --> 0:17:22.440 started seeing employment in manufacturing sectors dropping. 0:17:22.480 --> 0:17:23.399 It's very clear the. 0:17:23.480 --> 0:17:26.680 Moment three on one terrors are imposed, then you start 0:17:26.760 --> 0:17:29.120 seeing the manufacturing employment going down. 0:17:29.320 --> 0:17:30.200 Has he forgotten that? 0:17:31.080 --> 0:17:33.640 So I was about to get there going. 0:17:33.480 --> 0:17:36.360 Back, sorry, going back to. 0:17:36.440 --> 0:17:39.879 Josh point about who is Trump? Like, what is Trump? 0:17:39.960 --> 0:17:41.840 Is his own men at the end of the day, 0:17:41.880 --> 0:17:47.080 And I totally agree, right, I would not rely on 0:17:47.440 --> 0:17:52.240 the voice of Scott dissent as the sole countervailing voice. 0:17:52.240 --> 0:17:55.280 And I don't think anyone would have the power to 0:17:56.440 --> 0:18:01.000 like single handedly pull Trump away from whatever he decided, 0:18:01.040 --> 0:18:03.800 because Trump, after all, is the president. But I think 0:18:03.800 --> 0:18:08.399 Trump is a rational president putting outside the drama once again. 0:18:08.800 --> 0:18:11.800 So what happened in twenty nineteen is as I was 0:18:11.840 --> 0:18:15.480 saying that economic data start turning, business investments start flowing 0:18:15.520 --> 0:18:21.800 down meaningfully, yield curve inverted, manufacturing employments start plunging, and 0:18:22.080 --> 0:18:26.720 within the FED, there was a burgeoning body of literature 0:18:26.760 --> 0:18:31.480 looking at trade policy uncertainty and clearly tracing the impact 0:18:31.600 --> 0:18:35.399 of all these tariff announcements to lower investment. And so 0:18:35.960 --> 0:18:40.359 we presented all this evidence to Jared Kushner and then 0:18:40.400 --> 0:18:44.080 later to Trump, and he was actually quite receptive to 0:18:44.160 --> 0:18:48.159 it that he does look at economic evidence. He cares 0:18:48.240 --> 0:18:51.399 about the stock market, he cares about the performance of 0:18:51.440 --> 0:18:55.040 the economy. So if you do show him evidence, clear 0:18:55.080 --> 0:18:59.400 evidence that this is hurting the economy, then he will 0:18:59.440 --> 0:19:01.720 pull back. And that was the one of the key 0:19:01.760 --> 0:19:05.919 reason for why he decided to de escalate by accepting 0:19:05.960 --> 0:19:09.240 the Phase one deal in December of twenty nine. 0:19:09.320 --> 0:19:11.520 I actually spoke to Trump in July with some of 0:19:11.520 --> 0:19:13.760 my Bloomer Business we colleagues for the cover story we did, 0:19:13.800 --> 0:19:16.520 and we brought up the issues of terriffs, and to me, 0:19:16.720 --> 0:19:19.080 the interesting tension in Trump's mind that Anna did a 0:19:19.080 --> 0:19:21.520 really nice job of describing is that when we said 0:19:21.640 --> 0:19:25.439 most mainstream economists agree the inflation or the terroiffsre inflationary, 0:19:25.760 --> 0:19:28.280 Trump jumped in and said, no, they're not. And just 0:19:28.280 --> 0:19:30.760 look at my last administration imposed tariffs, and we didn't 0:19:30.760 --> 0:19:33.679 get the kind of runaway inflation that people warning about. Therefore, 0:19:34.040 --> 0:19:36.360 this is not something I'm worried about in the next 0:19:36.359 --> 0:19:39.119 Trump presidency. And I thought that was interesting. In speaking 0:19:39.119 --> 0:19:44.199 to people around Washington policy expert types, everybody seems to 0:19:44.480 --> 0:19:47.480 understand that this is Trump's belief, and so I think 0:19:47.600 --> 0:19:50.080 one of the worries that people have that investor should 0:19:50.080 --> 0:19:52.760 at least be aware of is that if Trump doesn't 0:19:52.760 --> 0:19:56.440 believe the tariffs are inflationary or the expectation is that 0:19:56.480 --> 0:19:59.359 he's going to push to impose them until the point 0:19:59.520 --> 0:20:01.960 comes that we really do see inflation or that the 0:20:01.960 --> 0:20:04.240 stock market falls. So I'd said earlier there really aren't 0:20:04.240 --> 0:20:06.320 any guardrails around Trump, but I do think that that 0:20:06.440 --> 0:20:09.679 one kind of guardrail, and alluded to was the stock market. 0:20:09.720 --> 0:20:12.560 Are oddly enough that Trump has always viewed the stock 0:20:12.600 --> 0:20:15.400 market as a measure, a gauge of his own success, 0:20:16.000 --> 0:20:18.400 and if he shoots too far on tariffs or any 0:20:18.440 --> 0:20:20.560 other kind of inflationary policy, if he does get a 0:20:20.600 --> 0:20:22.680 negative reaction to him the stock market, I think the 0:20:22.720 --> 0:20:24.600 evidence is that that he will pull back, or that 0:20:24.640 --> 0:20:26.640 he's at least willing to pull back. But I think 0:20:26.680 --> 0:20:29.119 what that means is we look ahead to a second 0:20:29.119 --> 0:20:31.640 Trump administration, is that it's going to be a really 0:20:31.680 --> 0:20:35.240 wild ride for either way, and like, really the smart 0:20:35.240 --> 0:20:36.919 thing to do is just to kind of buckle in 0:20:37.600 --> 0:20:39.120 and keep reading Bloomberg. 0:20:40.359 --> 0:20:42.160 Well, I think you've already won the award for most 0:20:42.160 --> 0:20:44.360 Bloomberg plug. Yeah episode. 0:20:44.600 --> 0:20:47.399 I've actually had sources during the transition reach out to 0:20:47.440 --> 0:20:49.880 me and say, hey, is it possible could you give 0:20:49.880 --> 0:20:51.679 me this? In fact, one of them is your report 0:20:51.720 --> 0:20:53.800 Anna and Bloomer Anna. Could you give me this Bloomberg 0:20:53.880 --> 0:20:56.240 story or this Bloomberg report. It's great, it's wonderful for 0:20:56.359 --> 0:20:59.000 source buildings. But it made me aware of just how 0:20:59.080 --> 0:21:02.560 closely people in my world, the kind of politics and finance, 0:21:02.720 --> 0:21:04.960 are paying attention to what's going to happen, what people 0:21:05.000 --> 0:21:08.160 are expecting, where the various effects might show up, because 0:21:08.160 --> 0:21:09.480 at the end of the day, none of us really 0:21:09.480 --> 0:21:10.280 know what's going to happen. 0:21:10.960 --> 0:21:13.400 Obviously, he cares a lot about the stock market. You've 0:21:13.400 --> 0:21:16.280 talked in the past about his need to be a 0:21:16.320 --> 0:21:19.879 plutocratic populist. You know, all these billionaires backing him, and 0:21:19.920 --> 0:21:23.479 certainly a lot of Wall Street think individual capitalists on 0:21:23.520 --> 0:21:25.440 Wall Street thinking they're going to be made better off 0:21:25.480 --> 0:21:29.080 by him. But also the great achievement of his reelection 0:21:29.240 --> 0:21:33.199 has been to bring into the Republican fold all of 0:21:33.240 --> 0:21:38.280 these very angry working class people who may stay angry 0:21:38.400 --> 0:21:40.719 if he's doing all the things he needs to do 0:21:40.840 --> 0:21:43.119 to keep the stock market high. So how does that work? 0:21:43.600 --> 0:21:45.480 I think the challenge for Trump is that he was 0:21:45.480 --> 0:21:49.920 elected by a multiracial, working class group of voters who 0:21:50.119 --> 0:21:54.040 very clearly sided with him because they were angry about 0:21:54.080 --> 0:21:56.800 high prices and inflation and thought Trump could do a 0:21:56.800 --> 0:22:00.320 better job than Joe Biden and Kamala Harris had And 0:22:00.400 --> 0:22:04.080 if Trump is too aggressive with tariffs, with cutting taxes, 0:22:04.440 --> 0:22:07.400 with doing things to drive up inflation, that coalition could 0:22:07.480 --> 0:22:11.840 quickly fall apart. Looking at what Trump seems to want 0:22:11.880 --> 0:22:14.200 to do in his first one hundred days, the focus 0:22:14.280 --> 0:22:17.080 is going to be on extending those Trump tax cuts, 0:22:17.720 --> 0:22:19.600 not the sort of thing I think that's going to 0:22:19.640 --> 0:22:22.280 excite a lot of the working class folks that are 0:22:22.359 --> 0:22:25.800 angry about prices at the grocery store. So the balancing 0:22:25.840 --> 0:22:28.280 act for Trump is going to be to do these 0:22:28.320 --> 0:22:33.639 exciting plutocratic things that have investors in Wall Street so happy, 0:22:34.800 --> 0:22:40.480 while not angering the group of voters who moved from 0:22:40.560 --> 0:22:43.440 Joe Biden to Donald Trump because they were expecting lower 0:22:43.480 --> 0:22:44.840 prices in a stronger economy. 0:22:45.960 --> 0:22:47.800 Do you think you can do it with this team? 0:22:48.680 --> 0:22:48.960 Boy? 0:22:49.119 --> 0:22:51.520 As a political reporter, I'm not supposed to. 0:22:53.760 --> 0:22:56.040 What should we be looking for to get clues as 0:22:56.080 --> 0:22:57.240 to how he's squaring this. 0:22:57.600 --> 0:22:58.800 I would look at the feed, and I would look 0:22:58.800 --> 0:23:01.680