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Speaker 3: As we've been saying, the Sell America trade definitely gathering
Speaker 3: some momentum, Charlie, of course, just breaking down the numbers
Speaker 3: concern President Trump will act upon his threat of firing
Speaker 3: Fetcher J. Powell implement policies then that could lead to
Speaker 3: a recession. President Trump reiterated his call for the Fed
Speaker 3: to reduce rates earlier today on Truth Social Writing. Preemptive
Speaker 3: cuts and interest rates are being called for my many
Speaker 3: That again, Tim, of course, is President Trump's words.
Speaker 4: Well, let's get to it with us as a Bloomberg
Speaker 4: News economics eder, Molly Smith.
Speaker 5: She joins us here in the studio.
Speaker 4: Also with us is Columbia Law School Associate Professor of
Speaker 4: LA Levmonard, joining us from New York. Molly, I do
Speaker 4: want to start with you in your world, how serious
Speaker 4: is it with economists and the like talking what feels
Speaker 4: like a threat by President Trump against the independence of
Speaker 4: the Federal Reserve.
Speaker 6: I mean, it's definitely a serious consideration right now. And
Speaker 6: the way that Trump just keeps going after Powell day
Speaker 6: after day in all these different tweets, whether people are
Speaker 6: taking seriously this idea of preemptive cuts quote being discussed
Speaker 6: by many that is definitely refutable and not at all
Speaker 6: being priced in. I mean, there's a roughly like, I
Speaker 6: don't know, sixteen percent chance right now looking at the
Speaker 6: Bloomberg warp screen of a rate cut in May, which
Speaker 6: is coming in a week or two. So no one's
Speaker 6: really thinking about that happening right now. And if raatecuts
Speaker 6: are to happen, people are saying that's because the economy
Speaker 6: is going to slow because of Trump's policies, not because
Speaker 6: inflation is slowing. Key claims exactly.
Speaker 3: Professor man En In on all of this, the Supreme
Speaker 3: Court considering a petition from the President that could allow
Speaker 3: him to override some legislation establishing independent agencies such as
Speaker 3: the FED and remove their leaders without cause or notice.
Speaker 3: What exactly is this case about? Why are we talking
Speaker 3: about it? Especially since this case does not involve any
Speaker 3: FED officials and why is it, though potentially so significant
Speaker 3: for the FED, for FED governors and perhaps other heads
Speaker 3: of different organizations in the government.
Speaker 7: So if FED is one of many independent agencies in
Speaker 7: the government, and its seven member board enjoy the same
Speaker 7: sort of protection from at will removal by the president
Speaker 7: as other agencies like the Federal Trade Commission, the National
Speaker 7: Labor Relations Board, and President Trump, in his few months
Speaker 7: in office so far, has already challenged the laws protecting
Speaker 7: these officials from removal at pleasure by the president, and
Speaker 7: those challenges he removes officials illegally. Those challenges are making
Speaker 7: their way through the courts right now, and the Supreme
Speaker 7: Court of the United States is currently considering a petition
Speaker 7: from the government from Trump to allow him to push
Speaker 7: these officials out of office until their cases make their
Speaker 7: way through the whole courts, which could be months and months,
Speaker 7: and that petition could be decided this week, and if
Speaker 7: Trump were to prevail, then he could go ahead potentially
Speaker 7: and fire the whole FED Board, not just chair Pale,
Speaker 7: as soon as this week, and those officials, if they
Speaker 7: wanted to challenge those removals, would be out of a
Speaker 7: job during the tendency of the litigation, Professor.
Speaker 4: Man Aand given what you know about the case, what
Speaker 4: you know about the arguments and the history, and of
Speaker 4: course the justices as well, do you have a prediction
Speaker 4: what is likely to happen if the Supreme cour Court
Speaker 4: rules one way.
Speaker 5: Or the other.
Speaker 7: It's really hard to say, but based on the last segment,
Speaker 7: I think markets are really not pricing in the risk here.
Speaker 7: So already we have an administrative stay issued by Chief
Speaker 7: Justice Roberts in this case Trumphy Wilcox last week, which
Speaker 7: meant that Willcox, who had been put back in her
Speaker 7: job at the NLRB by the lower courts, was taken
Speaker 7: out of her job while the Supreme Court considers President
Speaker 7: Trump's emergency application. That suggests to me that there are
Speaker 7: many members of the Court who might consider granting this
Speaker 7: stay pending appeal on an ongoing basis. I think that
Speaker 7: there are members of the Court who have expressed in
Speaker 7: prior cases real reservations about allowing the expansion of presidential
Speaker 7: power to touch the FED. There's a desire to carve
Speaker 7: out a FED exception. But the more uncertainty there is
Speaker 7: in this space, the more likely we would see President
Speaker 7: Trump potentially testing the boundaries, and so that might not
Speaker 7: mean a removal of Chairpwell, but it could mean a
Speaker 7: removal of Governor Barr, Governor Cook in the coming weeks.
Speaker 3: Whatever happened to checks and balances? Professor man Hanne, I'm
Speaker 3: just curious. We always just thought this government, how incredible, right,
Speaker 3: three separate branches, checks and balances? Are you, as someone
Speaker 3: who teaches, who studies and the power of the Supreme Court, like,
Speaker 3: are we losing that? Have we lost it?
Speaker 7: We are very much losing checks and balances. This is
Speaker 7: not a new thing. This is the culmination of forty
Speaker 7: plus years of efforts to reconceptualize the presidency under the
Speaker 7: Constitution in such a way that Congress's laws attempting to
Speaker 7: constrain presidential power can be violated by the president. And
Speaker 7: Ronald Reagan was the first really to push this in
Speaker 7: nineteen eighty one when he took office, and there was
Speaker 7: a Democratic House, and there have been a Democratic House
Speaker 7: as long as anybody could remember. In administration, officials sought
Speaker 7: to assert presidential authority under the Constitution to do certain
Speaker 7: things that they didn't have the votes for in Congress.
Speaker 7: Those moves were ultimately embraced by the Clinton White House,
Speaker 7: and we've had a sort of ever expanding conception that
Speaker 7: the Supreme Court has validated at several points, starting in
Speaker 7: twenty ten with the Roberts Court decision in a case
Speaker 7: called Free Enterprise, which restricted the ability of Congress to
Speaker 7: protect the independence of the PCAOB, the board within the
Speaker 7: sec that regulates accountants. We had a series of cases
Speaker 7: that validated more and more this once fring sort of
Speaker 7: constitutional theory of the presidency. And now we have President
Speaker 7: Trump in his second term trying to do a full
Speaker 7: bear hog of this sort of of this presidentialist theory.
Speaker 7: It's called unitary executive theory, and that is very inconsistent
Speaker 7: with traditional checks and balances.
Speaker 6: Just to expand on this idea of checks and balances,
Speaker 6: it's not so much one that's afforded by the law
Speaker 6: and the different branches of government, but just within the FED.
Speaker 6: Something that I don't think we speak about enough with
Speaker 6: respect to who makes decisions on interest rates is that
Speaker 6: the chair of the Fed does not act similarly to
Speaker 6: the President of the United States. They don't have executive
Speaker 6: power to just unilaterally make a decision for the entire
Speaker 6: Federal Open Market Committee, which is comprised of twelve members,
Speaker 6: which includes the six governors on the board, which Powell.
Speaker 8: Is one of those people.
Speaker 6: And to what the professor was just saying that if
Speaker 6: Trump were to remove Powell, then that would also then
Speaker 6: set a president. Is he going to go after all
Speaker 6: these other governors? But again, this is a decision that
Speaker 6: on interest rates, it's set by this whole committee. It
Speaker 6: is not just by one person, And there would be
Speaker 6: some real credibility concerns if people were to come in
Speaker 6: that all these other people who are on the board
Speaker 6: or on the committee rather, who have been advocating for
Speaker 6: keeping interest rates to steady, are they really just going
Speaker 6: to go along with this new person just because Howell
Speaker 6: was fired.
Speaker 4: Look, I understand why the president wants interest rates to
Speaker 4: be lower. He has a background in real estate. He
Speaker 4: likes low rates. You know, we've talked about this in
Speaker 4: the past, But Carol, I would think that a leader
Speaker 4: of a country would want a strong, independent federal Reserve
Speaker 4: because of the confidence it gives markets and because of
Speaker 4: the way that historically the US has been looked at.
Speaker 4: As as Eric just told us, the Central Bank for
Speaker 4: the entire world.
Speaker 3: Gold standard like in terms of the US Central Bank.
Speaker 3: And I do think about this, Molly, that if essentially,
Speaker 3: if it's not just the FED chair but goes after
Speaker 3: the other FED governors, that's a whole new ballgame just quickly.
Speaker 6: Yeah, of course, I mean this is we're talking about
Speaker 6: half of the Federal Open Market Committee right there. If
Speaker 6: he goes after all those other people, so right, and
Speaker 6: again all of them are. And the thing though, that
Speaker 6: I guess maybe gives me some confidence is that no
Speaker 6: one is calling for these preemptive break cuts. I don't
Speaker 6: know what economist Trump is going to find who is
Speaker 6: calling for that.
Speaker 3: Right now, but it also plays into the game of
Speaker 3: instability if we can constantly see this kind of movement.
Speaker 3: Both of you, thank you so much. Professor Levmanan, thank you,
Speaker 3: Thank you. Columbia Law School Associate Professor of Law. Joining
Speaker 3: us along with our Bloomberg News Economics editor Mollie Smith
Speaker 3: right here in studio.
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Speaker 4: Spring meetings of the IMF and World Bank. We got
Speaker 4: Vice President Jade Vance holding trade talks with India's Prime minister.
Speaker 4: We've got the anecdotes from the beij book comming the
Speaker 4: President meeting with CEOs of major retailers.
Speaker 5: To talk tariffs.
Speaker 4: I didn't even mention anything about earnings, which we're going
Speaker 4: to get to later in our program. But that's kind
Speaker 4: of like the backdrop.
Speaker 5: Carol for it's a busy week. Yeah, what's happening? Spring
Speaker 5: breaks over, spring break, spring break twenty five, move on.
Speaker 4: Oh, we're also seeing a sell off in US as
Speaker 4: that's as the President stepped up criticism of J.
Speaker 5: Powell on social media.
Speaker 4: We just got the details from Charlie, but the S
Speaker 4: and P five hundred still down three percent, though off
Speaker 4: its worst levels of the day. We got a great
Speaker 4: roundtable to help us make sense of what's happening in
Speaker 4: the global economy right now. Stuart Paul is US economists
Speaker 4: for Bloomberg Economics, and the Current is Global economy reporter
Speaker 4: for Bloomberg News. Stuart joins us here in the studio
Speaker 4: and joining us from Washington, d C. Stuart, We've got
Speaker 4: longer data treasuries joining stocks, the dollar deepening, it's slump.
Speaker 5: What is concerning to you and what's.
Speaker 4: Not concerning to you when you look across what's happening
Speaker 4: in the markets and in the economy.
Speaker 9: The thing that's most concerning to me is that the
Speaker 9: US is basically retreating from the existing global commercial order.
Speaker 9: Just this series of arrangements that we have for trading
Speaker 9: across borders, for engaging with our allies and giving them
Speaker 9: favored treatment, giving them access to the US markets. We're
Speaker 9: retreating from that.
Speaker 5: Role, and you're seeing that with the dollar slump.
Speaker 9: And we're seeing where it's being reflected in the market
Speaker 9: is in the dollar slump. Because as the US is
Speaker 9: retreating from the global commercial order, folks are starting to
Speaker 9: get a little bit worried about whether they should hold
Speaker 9: dollar denominated assets. Period Usually, if there were a recession,
Speaker 9: there could be a haven bid for something like treasuries,
Speaker 9: and you wouldn't see the sell off in treasuries at
Speaker 9: the same sign that you're seeing the selloff inequities, which
Speaker 9: is being most clearly expressed by dollar weakness. Again, that
Speaker 9: retreat from US dollar denominated assets. So it's that dynamic
Speaker 9: that has me most fearful right now. The thing that
Speaker 9: I actually find a heartening is that as an economist,
Speaker 9: I just have this deep and profound belief that people
Speaker 9: do not stay irrational. Irrationality cannot persist, and so when
Speaker 9: you suffer the consequences of poor policy decisions, eventually you
Speaker 9: reverse course. So just as just as I am frustrated
Speaker 9: and you know, discouraged in one moment by exactly what
Speaker 9: we're seeing in markets, maybe it's that economics bone that
Speaker 9: just kicks in and keeps me from being totally perplexed
Speaker 9: in perpetuity.
Speaker 3: So and do you do you share Stuart's I guess
Speaker 3: enthusiasm that we could get kind of.
Speaker 5: Hiding under this desk right now. Let's just they will.
Speaker 3: Ultimately get a course correct, that things kind of find
Speaker 3: their way in the right way. Or I'm curious if
Speaker 3: you agree, But is it also depending on when that
Speaker 3: course correct happens, because a lot of damage can be
Speaker 3: done to the US economy, the global economy, and the
Speaker 3: US is standing in the world the longer this this
Speaker 3: goes on.
Speaker 10: Yes, No, I think Stuart has set to the table
Speaker 10: very well there. I mean, for example, this week, Carol,
Speaker 10: we will have all of these finance officials, economic policy
Speaker 10: makers from around the world visiting DC, and it's going
Speaker 10: to be useful for two reasons to your point. The
Speaker 10: first is we get a temperature check in terms of
Speaker 10: how much economic damage is being done. You know, how
Speaker 10: real is the pain for their companies, for their exporters,
Speaker 10: for the trading partners of the US, and how are
Speaker 10: they viewing the US as the guardian of the global
Speaker 10: economy by saying of that. So we're going to get
Speaker 10: a good temperature check in terms of the perception and
Speaker 10: US reputation in all of this through the comments we'll
Speaker 10: get overcoming days. We'll also obviously get new growth forecasts
Speaker 10: in IMF that we'll put numbers in terms of what
Speaker 10: damage people see. But in the other part of this
Speaker 10: week we'll also see, you know, how much of this
Speaker 10: can be undone To your point, will there be scope
Speaker 10: for deals. We'll have lots of finance ministers here and
Speaker 10: we'll look am out and say, yep, we spoke with
Speaker 10: the US officials. We see a way out of this,
Speaker 10: and X y Z might come out of it over
Speaker 10: the coming weeks. That's an optimistic take, or we might
Speaker 10: we get more fractious comments. Making the point that. Look,
Speaker 10: there's no easy way out of all of this. Tariffs
Speaker 10: are easy to put on and take off, and the
Speaker 10: mood might be more sour at the end of the
Speaker 10: week than it is beginning. So I think in terms
Speaker 10: of how this all plays plays out in the world economy,
Speaker 10: this week is a pretty unique one, giving the amount
Speaker 10: of visitors coming to DC. And I think by the
Speaker 10: end of it, we'll have a sense both of US
Speaker 10: reputation and the role in stoking this and if there's
Speaker 10: a way out in new term at least.
Speaker 5: And what does you know?
Speaker 4: You mentionedial for deals, and maybe we'll start hearing about deals. Look,
Speaker 4: it depends on a country specifically, but what could a
Speaker 4: deal look like with a trading partner for example.
Speaker 10: Yeah, Look, as you say, a lot of specifics we
Speaker 10: don't yet know. But broadly speaking to President Trump talks
Speaker 10: a lot about not just tariffs but non tariff barriers.
Speaker 10: He talks about exchange rates, he talks about subsidies, he
Speaker 10: talks about IP theft. He had a figure or think
Speaker 10: of one trillion worth lots of the US economy from
Speaker 10: copper at night ip theft this morning. So one would
Speaker 10: assume these are the topics on the table alongside the tariffs,
Speaker 10: and you'll have to see now the finance ministers coming here,
Speaker 10: and some of them will bring their trade officials who
Speaker 10: will presumably be putting something on the table, providing the
Speaker 10: US has specific asks. But remember there's two ways of
Speaker 10: looking at this. If you want to call it the
Speaker 10: war China, maybe maybe not their scope for some deals there.
Speaker 10: I mean the music or the signals from Japan last
Speaker 10: week were more mixed than the signals. President Trump said,
Speaker 10: the EUS sent some fairly mixed signals. But let's just
Speaker 10: say there's some scope for a meeting of minds when
Speaker 10: it comes to the US and the rest of the
Speaker 10: world ex China. But none of that solves what will
Speaker 10: come after, which is a big piece in all of this,
Speaker 10: the forty five percent tariffs on China. I mean, that's
Speaker 10: a whole other story. No hint of negotiations kicking off there,
Speaker 10: and I kin't of imagine we'll have much progress on
Speaker 10: that here in DC this week.
Speaker 5: Either.
Speaker 3: Sometimes it's good to be in a category all your own,
Speaker 3: and sometimes it's not. Certainly when it comes to tariff's.
Speaker 3: Come on back in Stuart, because what is it that
Speaker 3: the Bloomberg Economics team, how are you looking at the
Speaker 3: US economy?
Speaker 8: Recession? No recession this year.
Speaker 3: A lot of people are also talking about twenty twenty
Speaker 3: six and some downbeat expectations. I think we got a
Speaker 3: little bit of that from some of our earlier guests,
Speaker 3: So I'm just curious how you guys see it.
Speaker 9: We don't yet have a recession in our immediate in
Speaker 9: our immediate forecast window, we are expecting material slow down
Speaker 9: in growth full year growth.
Speaker 3: Well, let's feel it will be so slow that it'll
Speaker 3: feel like a recession.
Speaker 9: It's definitely possible that the contour of how it feels
Speaker 9: is going to change throughout the year. For example, this
Speaker 9: year or in the first quarter, were front loading imports.
Speaker 9: So one of the major items that's going to be
Speaker 9: dragging on GDP growth is imports. It's not necessarily going
Speaker 9: to be consumer spending in fixed investment. As we start
Speaker 9: getting into the summer, I think it's going to hurt
Speaker 9: quite a bit more where folks do start pulling back.
Speaker 9: As Geno is saying, people or a lot of companies
Speaker 9: are reporting disappointing top line numbers already. That was in
Speaker 9: the first quarter. That's part of why we do think
Speaker 9: that fixed investment is going to slow in the middle
Speaker 9: of the year. Firms didn't realize that revenue in the
Speaker 9: first quarter, so investment plans are going to slow in
Speaker 9: the middle of the year end. When investment plans slow,
Speaker 9: so too does hiring. So as we get into year end,
Speaker 9: we're expecting to see five percent unemployment, But we don't
Speaker 9: think it's until we get to basically that point that
Speaker 9: the FED would then step in with another rate cut.
Speaker 9: We think that the FED is going to stay pretty
Speaker 9: laser focused throughout most of the year on the price
Speaker 9: stability objective within its loual mandate before offering any sort
Speaker 9: of relief in the quarter.
Speaker 4: And one more for you, stored on unemployment. And I
Speaker 4: want to bring Enda back in here because he's got
Speaker 4: a great story out today about the immigration crackdown, compounding
Speaker 4: and the blow from tariffs. But how would you characterize
Speaker 4: a rise in unemployment right now at a time where
Speaker 4: we're actually seeing immigration slow down.
Speaker 9: Well, you have a few different dynamics. The first is
Speaker 9: the availability of labor supply. So if you have less immigration,
Speaker 9: then you're going to have relatively less labor supply. And
Speaker 9: what really matters, though, is less immigration less labor supply,
Speaker 9: is the existing supply going to be absorbed by firm's
Speaker 9: demand and is that balance that we're looking for right
Speaker 9: and right now we are seeing waning demand for labor.
Speaker 9: We're starting to see less wage pressures emanating from the
Speaker 9: labor market. Right now, the ratio of jobs that are
Speaker 9: available to the number of unemployed workers is below that
Speaker 9: which persisted pre COVID, when excuse me, and core inflation
Speaker 9: was running under two percent. So the feedback that we're
Speaker 9: getting from the labor market into price pressures just isn't there.
Speaker 11: The labor market is cool.
Speaker 9: The price pressures that we're seeing right now are from
Speaker 9: undersaving and from the supply side.
Speaker 4: So and to come on in on this, because we
Speaker 4: had a really interesting conversation earlier with Thomas Carroll. He's
Speaker 4: over at Ballast Rock. They focus on multifamily in the Sunbelt,
Speaker 4: and he mentioned that he's already seeing prices of stuff
Speaker 4: they import to build these multifamilies go up as a
Speaker 4: result of tariffs on Canada and on Mexico, so those
Speaker 4: raw materials. And then also he's speaking to subcontractors who
Speaker 4: are having trouble finding talent when it comes to those
Speaker 4: skilled trades to actually do the work and get it done.
Speaker 4: So he's sort of hearing and feeling this on both sides.
Speaker 4: How does that kind of compound with what you and
Speaker 4: the team wrote about today.
Speaker 10: Yeah, I mean there are definitely many aspects that it's
Speaker 10: a steward just mentioned, but just put it on the
Speaker 10: headline basis. The surge of immigration over the past few
Speaker 10: years was considered to have been important to offset labor shortages,
Speaker 10: keep a lid on inflation, and help the economy avoid recession. Now,
Speaker 10: the concern at the moment is that even before we
Speaker 10: get to the mass depretation phase, that the big crackdown
Speaker 10: on immigration. Business people and the economists are not advocating for
Speaker 10: illegal immigration or chaos on the border per se, but
Speaker 10: the end result has been a big crackdown in immigration.
Speaker 10: The concern is that some of those sectors like construction
Speaker 10: for example, are going to struggle to find workers, some
Speaker 10: of those most exposed for those kind of labor intensive jobs,
Speaker 10: maybe in food processing sector, in the farming sector for example.
Speaker 10: Those are areas that are going to find it hard
Speaker 10: to get workers now at a time when they need them.
Speaker 10: So that concern is there coming top of the tiers,
Speaker 10: but of course short of saying the bigger picture is
Speaker 10: the employment market is slowing too, of course, and that
Speaker 10: will offset some of those pressures.
Speaker 3: Just quickly to wrap up in twenty seconds here, and
Speaker 3: I mean, if the US goes into economy goes into
Speaker 3: a recession, should we assume that the global economy will
Speaker 3: also go into a recession just quickly?
Speaker 10: Definition of global session is quite I refer to Stuart,
Speaker 10: But yeah, if US a recession, that's not good for
Speaker 10: the world.
Speaker 8: All right, the ball's in your court, Stuart. If we
Speaker 8: get a US recession, should assume a global recessions coming.
Speaker 9: There's been so much stimulus that's been put forward in
Speaker 9: the rest of the world. I think it's possible that
Speaker 9: enough stimulus in China and Europe could stave off a
Speaker 9: more material recession. But you know how it is, as
Speaker 9: the US goes, so it does the rest of the world.
Speaker 9: So if we do enter a US recession, it would
Speaker 9: be difficult for me to be a long Europe for example.
Speaker 3: It makes me wonder if we could once again have
Speaker 3: an earnings recession but not necessarily an economic recession. Because
Speaker 3: Gina talked about the numbers being brought down certainly for
Speaker 3: the rest of this year, but also starting to look
Speaker 3: at I guess the early part of twenty twenty six.
Speaker 8: Folks, Thank you so much.
Speaker 3: Stuart paul Us economist for Bloomberg Economics and Endocurrent, is
Speaker 3: global economy reporter for Bloomberg News Stewart here in our
Speaker 3: New York.
Speaker 8: Studio and out there in DC. Guys, thank you so much.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 2: New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 5: It is today's big Tig.
Speaker 4: It's also one of the most read stories on the
Speaker 4: Bloomberg terminal. It's about this self described boring budget guy
Speaker 4: who's best known for co authoring the nine hundred page
Speaker 4: policy playbook of the Heritage Foundation's Project twenty twenty five.
Speaker 4: It's become something of a bible for President Trump's second term.
Speaker 4: And it's he, not Elon Musk, who's steering the Trump
Speaker 4: administration's doje crusade business.
Speaker 5: We call himis.
Speaker 4: Max Chafkin writes about Russell Vote for Bloomberg BusinessWeek. He's
Speaker 4: also the co host of the Elonink podcast and the
Speaker 4: author of the contrarion Peter Tiel in Silicon Valley's Pursuit
Speaker 4: of Power, he joins us from our Dallas bureau, Max,
Speaker 4: who is Russell Vote?
Speaker 12: Yeah, Russell vote. Well, he is the director of the
Speaker 12: Office of Management and Budget. But more than that, Tim,
Speaker 12: as you said.
Speaker 8: He is one of the core.
Speaker 12: Idealogues behind this presidency.
Speaker 11: So russ vote.
Speaker 12: He served as the head of OMB at the end
Speaker 12: of the last Trump presidency, and his big idea really
Speaker 12: goes around executive power. And it's this idea that the
Speaker 12: executive that's the president, Donald Trump, should be able to
Speaker 12: have much much wider discretion to run the government and
Speaker 12: really to run the country. Then I think most even
Speaker 12: either Democrats or Republicans, have generally allowed in the past.
Speaker 12: He's also a big time deficit hawk. You know, he
Speaker 12: started his career working for Phil Graham. He was a
Speaker 12: senator starting in the in the eighties. Was one of
Speaker 12: the key people behind the effort to like balance the
Speaker 12: budget in the in the eighties and the nineties, and
Speaker 12: so Vote has these two threads, one deficit hawkery and
Speaker 12: the other being executive power. And as you kind of
Speaker 12: hinted in that intro, those two things work really nicely
Speaker 12: with what Elon Musk is trying to do, because, of
Speaker 12: course DOGE is about both of those things. It's about
Speaker 12: cutting the deficit, but also sort of doing things more aggressively,
Speaker 12: you know, with the power of the presidency. And so
Speaker 12: so Vote and Elon Musk had this kind of interesting alliance,
Speaker 12: and it's specially interesting because they're so different. They're like,
Speaker 12: they couldn't be more different from one another.
Speaker 3: All Right, So, having said that, we focus so much
Speaker 3: on Elon Musk, he's been the face out there in
Speaker 3: public in the Oval office when Donald Trump is holding
Speaker 3: the president Donald Trump of course is holding press conference
Speaker 3: about what DOGE is doing, and so on and so forth.
Speaker 8: So I guess there's an assumption.
Speaker 3: That once maybe you know, there's been some speculation that
Speaker 3: maybe Elon Musk his days at DOGE are numbered, that
Speaker 3: that's it.
Speaker 8: And yet that's not the case, is it? If that
Speaker 8: well plays out.
Speaker 12: You know, people within the Trump administertration definitely don't see
Speaker 12: it that way. I mean, as you say, Carol. At
Speaker 12: some point Elon Musk is going to have to give
Speaker 12: up his full time role in the Trump administration because
Speaker 12: he is a temporary government employee that is going to
Speaker 12: sunset after one hundred and thirty days. We don't know
Speaker 12: exactly what that'll be, how how exactly they're counting the days,
Speaker 12: and it would not surprise me if it stretches on.
Speaker 12: But at some point Musk is going to take a
Speaker 12: step back. And and certainly within Trump world, this is
Speaker 12: seen as being part of Russ Vote's domain and that
Speaker 12: he and people around him are ready to pick up
Speaker 12: where Elon Musk left off. And and and it's not
Speaker 12: as if Elon. I don't think Elon Musk is going
Speaker 12: to go away from from from the world of Trump.
Speaker 12: I think he'll still be very vocal on social media,
Speaker 12: but when you're talking about that day to day role,
Speaker 12: it will go away. And if you're thinking that Musk
Speaker 12: going away is going to change the trajectory of of
Speaker 12: what Trump is trying to do, I think you would
Speaker 12: be mistaken because Vote has been working on these issues
Speaker 12: for years, long before Elon Musk proposed the idea of DOJE.
Speaker 12: Vote was proposing sort of very similar things from his
Speaker 12: perch as the head of this you know, MAGA think
Speaker 12: Tank as being one of the kind of leading lights
Speaker 12: intellectually in Trump world.
Speaker 3: All right, And as you talked about, I mean, he's
Speaker 3: very different than Elon Musk, And so I do wonder, like,
Speaker 3: what's the speculation about how these cuts and things might
Speaker 3: play out if Elon Musk leaves.
Speaker 8: And vote is he's in charge?
Speaker 12: Yeah, I mean the difference is it's it's almost comical.
Speaker 12: So Musk, of course, he's he loves to be front
Speaker 12: and center, vote, very low profile, barely talks about himself,
Speaker 12: you know, you know, rarely gives interviews, you know, rarely
Speaker 12: gives up any any personal information. You know, we know
Speaker 12: everything there is to know about Elon musk personal life. Musk,
Speaker 12: of course, ideologically scattered. Vote is very, very disciplined. And
Speaker 12: you know that you could see that in two different ways.
Speaker 12: On one hand, I think there's some people who see
Speaker 12: Musk kind of working against Vote and some of the
Speaker 12: ideological components of Trump's space. On the other hand, Vote
Speaker 12: and people close to him see Musk as this kind
Speaker 12: of force multiplier, as this face of this otherwise maybe
Speaker 12: political like difficult to sell operation. You have this very popular,
Speaker 12: you know, out there guy and Elon Musk representing these
Speaker 12: changes in the public. Meanwhile, behind the scenes you have
Speaker 12: Russ Vote and his allies doing actual work.
Speaker 4: Well, so, what have they been able to accomplish thus far?
Speaker 4: Because Project twenty twenty five was brought up during the
Speaker 4: campaign quite a bit in fact by Democrats in the
Speaker 4: president at that time distance himself from Project twenty twenty five.
Speaker 5: What have they been able to accomplish?
Speaker 12: Yeah, there's a lot there. I mean, Project twenty twenty
Speaker 12: five has a large number of co authors in terms
Speaker 12: of and there are different positions, Like if you look
Speaker 12: at the tariff section of Project twenty twenty five, there
Speaker 12: was a pro tariff section and an anti tariff section.
Speaker 12: They're actually like two dueling proposals. Vote is pretty much
Speaker 12: aligned with Trump on everything, so he was for the tariff.
Speaker 12: He was publishing, you know, these very hawkish pieces about
Speaker 12: tariffs in the years running up to the election. And
Speaker 12: in terms of sort of executive power of this idea
Speaker 12: that Trump should be able to run the government, I mean,
Speaker 12: that is a place where they're making a lot of changes.
Speaker 12: I mean we're seeing, you know, some of this has
Speaker 12: been is caught up in court right now, and it's
Speaker 12: unclear how many of these attempts to you know, drastically
Speaker 12: close or reduce the size of federal agencies, how much
Speaker 12: of that will stick. But you know, in the story
Speaker 12: we talk about the CFPB, that's the Consumer of Financial
Speaker 12: Protection Bureau. Vote is also running the cfp PB, And
Speaker 12: right now this is locked up in court. It's not
Speaker 12: clear what's going to happen. But when you talk to
Speaker 12: people who work there, I mean nothing is happening right now.
Speaker 12: You know, the agency has not been shuttered, but it
Speaker 12: also is clear that its ability to do stuff has
Speaker 12: been drastically reduced. And so in that sense, he's done
Speaker 12: a lot. That said, there is this, there is there
Speaker 12: are the questions around, you know, how much of this
Speaker 12: is is going to stand in court? How much of
Speaker 12: it will you know, stand up to congressional scrutiny, a
Speaker 12: change of power and so on. So the jury is
Speaker 12: still out there.
Speaker 4: Well before the jury was even out there, our team
Speaker 4: spoke to Kevin Roberts, the president of the Heritage Foundation,
Speaker 4: that was back just after President Trump won the election.
Speaker 4: This was on November eleventh. He was on balance of
Speaker 4: power check out what he had to say about the
Speaker 4: opportunity that he saw.
Speaker 13: Then we think that this is the beginning of a
Speaker 13: golden era of conservative reform. I will say that because
Speaker 13: the work of Project twenty twenty five represents the conservative movement.
Speaker 13: It would be very difficult for anybody to implement policies
Speaker 13: on aed you cation, on the border, on taxation without
Speaker 13: at least consulting those ideas in people.
Speaker 11: That's not some arrogant or hubristic comment on our part.
Speaker 11: That's just the nature of how policy making works.
Speaker 4: That was Kevin Roberts, the president of the Heritage Foundation,
Speaker 4: back on November eleventh, twenty twenty four, joining us on
Speaker 4: a balance of power, Max. When you think about this
Speaker 4: term versus Trump's first term, are there ideological differences because
Speaker 4: of the influence of the Heritage Foundation of Project twenty
Speaker 4: twenty five. Do you see differences in.
Speaker 5: The way that he's.
Speaker 4: Well making rules or the way that he's putting policy
Speaker 4: into effect?
Speaker 5: Do you see it for sure?
Speaker 7: Now?
Speaker 12: I think the difference is that during the last Trump presidency,
Speaker 12: Trump came in without this kind of broad base of support.
Speaker 12: You know, it had been a closely contested nomination. You know,
Speaker 12: there were a lot of competing factions within Trump World,
Speaker 12: and in particular, you had this kind of business faction
Speaker 12: right that was pushing against some of these policies that
Speaker 12: we've been talking about a lot, you know, whether we're
Speaker 12: talking about tariffs or you know, various erratic behavior on
Speaker 12: the economy. And what's happened instead is you have this
Speaker 12: kind of base of committed ideologues who have spent years
Speaker 12: preparing for this moment. That's what Project twenty twenty five
Speaker 12: was all about. It was like, let's well, you know,
Speaker 12: the last time we had this, you know, as they
Speaker 12: see at this like deep state that was thwarting them.
Speaker 11: Now now we're going to.
Speaker 12: Figure out how to actually do stuff. So what they're
Speaker 12: trying to do is avoid the kind of checks of
Speaker 12: these more moderate factions within Trump world. And Vote is
Speaker 12: a really interesting person here because Vote was kind of
Speaker 12: dead center of some of the biggest controversies of the
Speaker 12: last term. So Vote was involved in holding the money up,
Speaker 12: the aid to Ukraine up that happened through the Office
Speaker 12: of Management and Budget. Now that led to obviously an
Speaker 12: impeachment hearing and everything. As Vote saw it, that was
Speaker 12: the deep state, you know, trying to stop Donald Trump.
Speaker 12: So there's a lot of ways in which these the
Speaker 12: guys involved with Project twenty twenty five, including Russ Vote,
Speaker 12: have been sort of preparing for this moment for years,
Speaker 12: and I think that's one of the reasons this presidency
Speaker 12: has been so much more hardline ideologically than the previous one.
Speaker 8: Well, that's what I find interesting.
Speaker 3: And you go into some great history about his time
Speaker 3: working for Senator Phil Graham, I mean, pull out your
Speaker 3: political history books, but Texas Republican fiscal hawk, and you
Speaker 3: say he certainly had quite an impact on vote in
Speaker 3: terms of where he got that from. But I think
Speaker 3: what's really interesting is, you know, this idea of these
Speaker 3: views on executive power.
Speaker 8: I mean, I think we thought.
Speaker 3: I mean that, I think is what's so fascinating right
Speaker 3: about this second Trump term, consolidating executive power like we've
Speaker 3: never seen before, and he certainly is helping the president
Speaker 3: do this. And forgive me, we've got about fifty seconds here, Max.
Speaker 12: Yeah, and that's certainly where these kind of libertarian you know,
Speaker 12: Phil Graham has a long and interesting career, but I'd
Speaker 12: say he's more of the sort of libertarian bent than
Speaker 12: somebody like Russ Vote that and that's where the difference is, right,
Speaker 12: Whereas a lot of these deficit hawks, the old oldline
Speaker 12: deficit hawks, were really interested in Congress as the forcing
Speaker 12: function for russ vote. It's the executive. It's it's kind
Speaker 12: of clearing the field and letting Donald Trump have as
Speaker 12: much leeway as possible.
Speaker 13: You know.
Speaker 12: Of course critics are going to say too much leeway,
Speaker 12: we're you know, bordering on an imperial presidency. And so
Speaker 12: that's the kind of like ideological conflict that's playing out
Speaker 12: behind the scenes, you know, as Trump does his thing.
Speaker 8: Yeah, it's just you know, fascinating a story like yours.
Speaker 3: You know, the people that are so instrumental in shaping
Speaker 3: what this Trump term looks like.
Speaker 8: Just really amazing. Steph.
Speaker 3: Max, thank you so much, really appreciate maxchaff and Comus
Speaker 3: at Bloomberg Business be co host of the Elon Inc.
Speaker 8: Podcast.
Speaker 3: Check out his story This is on the Bloomberg coming
Speaker 3: also in the new issue.
Speaker 8: Of Bloomberg BusinessWeek magazine. You can find it at Bloomberg dot com.
Speaker 9: Toomucle how about you let me drive?
Speaker 5: Oh no, no, no, no, this is not a toy.
Speaker 2: Who's going to drive?
Speaker 8: Honey, Please gravel let's wait.
Speaker 7: I want to drive.
Speaker 9: It's a good question.
Speaker 1: Good this is the drive to the clothes punks, the
Speaker 1: music well run on Bloomberg Radio.
Speaker 3: I love watching kind of the last hour of trading
Speaker 3: because we'll see if this holds. But definitely off our
Speaker 3: worst levels of the session. But you were just looking
Speaker 3: at the S and P two. I mean, we've seen
Speaker 3: broad based selling throughout the day, but right now you've
Speaker 3: got I mean it's only twenty two names that are
Speaker 3: actually higher in the S and P five hundred, four
Speaker 3: hundred and eighty one to the downside. Thank you.
Speaker 8: Fingers cross, fingers crossed.
Speaker 4: Hey, I want to see what Jeff maclaan has to
Speaker 4: say about the CEO saw Areity Wealth. He joins us
Speaker 4: here in our Bloomberg Interactive Broker's studio in the wealth
Speaker 4: management business. They've got just under seven hundred million dollars
Speaker 4: in assets under management. Jeff, good to see you, welcome back.
Speaker 4: When you walked in, you actually mentioned that they were
Speaker 4: you were seeing some buying into the close. Taken together
Speaker 4: everything we've seen over the last few weeks, what does
Speaker 4: the environment look like to you right now?
Speaker 14: I mean, obviously the sentiment is so negative, I think
Speaker 14: that's part of the frustrating thing because the data is
Speaker 14: not there to support it. You're seeing consumer sentiment surveys
Speaker 14: down at like two thousand and eight, two thousand and
Speaker 14: nine levels.
Speaker 5: Yeah, do I.
Speaker 14: Think it's two thousand and eight two thousand and nine.
Speaker 14: I do not, And so that's part of the surprise.
Speaker 14: A bit of how do you think it's worse? No, definitely,
Speaker 14: Oh imagine.
Speaker 4: Why are you so optimistic? I mean, we can go
Speaker 4: over the list of concerns that people have today. Top
Speaker 4: of mind for folks is fear about the independence of
Speaker 4: the central bank here in the US and what the
Speaker 4: President has said about the chair of the Federal Reserve.
Speaker 4: There's the tariff concerns as the President meets with some
Speaker 4: of the heads of the big retailers at the White
Speaker 4: House today, and the concerns about as we heard from J.
Speaker 4: Powell last week, price is rising as a result of
Speaker 4: these tariffs.
Speaker 5: Yeah, growth flowing.
Speaker 14: There's a common adominator to everything you just said, tariffs,
Speaker 14: which is President Trump, right, the Trump administration, and so
Speaker 14: a lot of this it's not based on some market
Speaker 14: fundamental It's not based on something broken like in two
Speaker 14: thousand and eight, two thousand and nine, the housing sector
Speaker 14: and credit default swaps and all the issues that came
Speaker 14: up through that. It's all based on what's coming out
Speaker 14: of the White House. Well, so that's why I'm both
Speaker 14: nervous but also excited long term, because there's nothing fundamentally
Speaker 14: broken right now. It is, it can be cleaned up now.
Speaker 14: How he's going about it, it's not ideal, and it's
Speaker 14: freaking out people. It's creating uncertainty, which is the buzzword.
Speaker 14: Like we're talking about as a firm. Uncertainty is killing
Speaker 14: the market right now. And you can point to any
Speaker 14: of those policies you just said, that's what's driving it is.
Speaker 14: People don't know what's happening next.
Speaker 5: I just want to remind you we're three months into
Speaker 5: the administration.
Speaker 11: Yeah, and these are four year terms.
Speaker 14: Yeah, yeah, yeah, But I do think there is a
Speaker 14: long term plan associated with tariffs. Of again, it's a
Speaker 14: shock in awe he's going into I think long term
Speaker 14: everyone but China. I think those tariff issues get worked
Speaker 14: out here over the next twelve months. China I think
Speaker 14: consistently will go for the life of his presidency.
Speaker 11: That trade war, trade battle issue.
Speaker 5: Yeah, one hundred and forty five percent tariff for the home.
Speaker 14: I think they'll be fighting over trade policy the entire time.
Speaker 14: Present She President Trump are going to be battling because
Speaker 14: he has this fundamental view present Trump does of how
Speaker 14: unfair they are. Now, whether you agree with Trump or not,
Speaker 14: the data is pretty clear that China has been very
Speaker 14: lopsided in their trade policy of anti US, stealing intellectual
Speaker 14: property and doing a variety of different things to hurt us.
Speaker 14: But I think over time, again, a lot of this
Speaker 14: can be corrected by President Trump. That's why I'm a
Speaker 14: little bit bullish, because it's again, nothing's broken right now,
Speaker 14: but it can lead to disaster. That's where he's on
Speaker 14: a dangerous game right now. Consumer sentiment is so negative
Speaker 14: that unless it turns, this will lead to a recession.
Speaker 14: Without question, it has to turn or we're in a recession.
Speaker 3: Having said that, if we are seeing though, ultimately, even
Speaker 3: if trade deals are worked out and there are tariffs
Speaker 3: and goods that come into the United States, higher prices
Speaker 3: for Americans, right, and that changes the dynamic of potentially
Speaker 3: with the US economy, right, people have just so much
Speaker 3: money to play around with, so something will be cut
Speaker 3: back on potentially and that changes kind of the composition
Speaker 3: and velocity within the US economy. So even though a
Speaker 3: deal might be worked out and we cross that off
Speaker 3: the list, you come back to different fundamentals.
Speaker 11: Yeah, and it really depends on the type of deals.
Speaker 5: Right.
Speaker 14: Even the ten percent tariffs on all the other countries
Speaker 14: are a problem, right, And so if he can ten percent.
Speaker 3: Maybe sounds like not a lot, but what we're at
Speaker 3: two percent, three percent, I mean that's a big jump.
Speaker 14: But if he can wipe out as part of this,
Speaker 14: again it's not to go too much into the political side,
Speaker 14: but if he can wipe out the tariffs that they
Speaker 14: have on US and all the other non tear of
Speaker 14: trade policies going country back country, that can be a huge.
Speaker 2: Moves is the long term burg An issue past his
Speaker 2: short term can drive a Spotify And there's no way
Speaker 2: you get your podcast.
Speaker 14: Being a reelected a half years from two if he
Speaker 14: drives us in a deeper sent on Bloomberg Dot that
Speaker 14: is that is had.
Speaker 11: So I think he's playing it is.
Speaker 8: That's concern, the recession that's on the US every week.
Speaker 11: His concern Bloomberg.
Speaker 3: Saying, like I think about the longer term damage right
Speaker 3: of you know, do we have another generation that comes
Speaker 3: out of college and can't get jobs and that means
Speaker 3: you can't buy houses and you can't you've got student debt.
Speaker 8: Like I just I do wonder when do we move towards.
Speaker 3: Thinking all right, folks, there's going to be some longer
Speaker 3: term impacts. Yeah, and certainly Americans and the American economy.
Speaker 14: Yeah, I think I think the American economy and specific
Speaker 14: around like job market, I think those always turn in
Speaker 14: a positive manner over time. The issue long term to
Speaker 14: me is the international view of US investment. That is
Speaker 14: concerning of where my worry lies of long term, especially
Speaker 14: around the treasury market. So if you're a person coming
Speaker 14: out right now or just an average worker trying to
Speaker 14: get a new home and get a mortgage right now,
Speaker 14: good luck. Right, your thirty year average is starting with
Speaker 14: a seven handle roughly, right, that's really high than what
Speaker 14: we're used to, a lot less than what our parents paid, right,
Speaker 14: double digit mortgage rates, right, But like still, that is
Speaker 14: a difference maker. And so I think that's why he's
Speaker 14: trying to beat down the Fed chairman a little bit
Speaker 14: and inappropriate ways to get those mortgage rates down, because
Speaker 14: he knows. If he has a slowdown in the stock
Speaker 14: market and the cost of buying a house is high,
Speaker 14: jobs start being few and far between.
Speaker 11: He's creating a tempest to fight through.
Speaker 4: Speaking of beating down, yeah, segue to Novo Nordis, Yeah,
Speaker 4: a stock that has been beaten down, but you're optimistic
Speaker 4: on and you've taken a position.
Speaker 11: In Yeah, we took a position last week.
Speaker 14: We like Novo for this it's back down to almost
Speaker 14: its pre golp one life.
Speaker 11: That's wild, right, and so huge decline.
Speaker 4: I mean we're reading stories in the last couple of
Speaker 4: years like this is Mark's economy.
Speaker 14: Yeah, truly, Yeah, yeah, And the thing is the fundamental
Speaker 14: business that they already had diabetes, insulin not going anywhere
Speaker 14: right as the world gets wealthier, diabetes, insulin, OBC, all
Speaker 14: those things go up. And so you're basically getting the
Speaker 14: golp one business for free right now because it's back
Speaker 14: down to roughly pre gop one taking off levels and
Speaker 14: so for us down nearly sixty percent year every year.
Speaker 14: Still a great management team. They I think there's plenty
Speaker 14: of space to be had in the golp one market.
Speaker 14: Everyone's looking at Lily right now as the clear leader.
Speaker 14: I think there's plenty to be had there. We're still
Speaker 14: in the early innings of GLP one, remaking the health
Speaker 14: area and having people as a contingent that.
Speaker 8: They are able to create a pill just like Lily.
Speaker 14: I think there's gonna be a lot of inization there.
Speaker 14: I'm not worried about the method of intake, whether it's
Speaker 14: a pill, a shot, whether it's something that dissolves in
Speaker 14: your mouth right whatever, a patch like. I think the
Speaker 14: method of intake is less concerning to me. It's more
Speaker 14: just the business itself. And Wagavi has staining power, right,
Speaker 14: and so I'm getting it for free. Essentially, I'm buying
Speaker 14: the diabetes insulin business and we're getting GLP one for free.
Speaker 14: I mean that to me is marketable. The management team
Speaker 14: is good. I trust the Danes right. We'll see what
Speaker 14: they can fall through on, but they look good.
Speaker 3: We had a run. Thank you so much. Yeah, good
Speaker 3: to spend some time. Jeff McLain, CEO of Solidarity.
Speaker 11: Well.
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