1 00:00:00,240 --> 00:00:02,480 Speaker 1: This is Wall Street Week, bringing you a special edition 2 00:00:02,520 --> 00:00:05,440 Speaker 1: of what the US election could mean for Global Wall Street. 3 00:00:05,559 --> 00:00:20,000 Speaker 1: I'm David Weston. This week, the United States had a 4 00:00:20,040 --> 00:00:23,720 Speaker 1: presidential contest we were told could be extremely close, that 5 00:00:23,800 --> 00:00:25,800 Speaker 1: we might not know who had won for days or 6 00:00:25,840 --> 00:00:29,440 Speaker 1: even weeks, reminding us of another election twenty four years ago, 7 00:00:29,680 --> 00:00:31,720 Speaker 1: when it took over a month to get the results. 8 00:00:32,200 --> 00:00:34,440 Speaker 1: In the end, it turned out that the twenty twenty 9 00:00:34,440 --> 00:00:37,400 Speaker 1: four election wasn't so close after all. By early morning 10 00:00:37,440 --> 00:00:40,080 Speaker 1: the day after, we knew that Donald Trump would return 11 00:00:40,159 --> 00:00:42,839 Speaker 1: as the forty seventh president of the United States and 12 00:00:42,840 --> 00:00:45,880 Speaker 1: that his Republican Party would recapture control of the Senate 13 00:00:46,000 --> 00:00:49,519 Speaker 1: by a comfortable margin. Markets reacted quickly as the results 14 00:00:49,520 --> 00:00:52,040 Speaker 1: came in, and they responded very differently from twenty four 15 00:00:52,120 --> 00:00:54,280 Speaker 1: years ago, with the S and P five hundred adding 16 00:00:54,280 --> 00:00:56,280 Speaker 1: two and a half percent by the end of Wednesday. 17 00:00:56,640 --> 00:00:58,920 Speaker 1: So now all our attention can shift from who is 18 00:00:58,960 --> 00:01:01,560 Speaker 1: going to be our next president to what Donald Trump's 19 00:01:01,600 --> 00:01:04,640 Speaker 1: second term is likely to mean for the economy, for business, 20 00:01:04,720 --> 00:01:07,119 Speaker 1: and for markets. Here to get us started on the 21 00:01:07,160 --> 00:01:10,479 Speaker 1: possible consequences of this year's election are Glenn Hubbard, who 22 00:01:10,520 --> 00:01:13,520 Speaker 1: served as chair of President George W. Bush's Economic Council 23 00:01:13,640 --> 00:01:16,080 Speaker 1: and is now a professor of the Columbia Business School, where. 24 00:01:15,920 --> 00:01:17,880 Speaker 2: He served as dean for fifteen years. 25 00:01:18,240 --> 00:01:22,399 Speaker 1: And Rebecca Patterson, former chief investment strategist for Bridgewater Associates. 26 00:01:22,440 --> 00:01:23,720 Speaker 2: So welcome both of you. It's great to have you 27 00:01:23,720 --> 00:01:24,399 Speaker 2: on Wall Street Week. 28 00:01:24,840 --> 00:01:28,320 Speaker 1: Rebecca, start with that market reaction that sounds pretty good. 29 00:01:28,360 --> 00:01:30,600 Speaker 1: Happy days are here again. Do you think that accurate 30 00:01:30,600 --> 00:01:33,679 Speaker 1: reflects where we're headed as an economy and a business sector. 31 00:01:33,880 --> 00:01:36,600 Speaker 3: Well, what we know from history is that markets prefer 32 00:01:36,720 --> 00:01:39,360 Speaker 3: certainty over uncertainty. So the fact that we didn't have 33 00:01:39,400 --> 00:01:41,959 Speaker 3: a repeat of twenty twenty, fact that we had a 34 00:01:42,000 --> 00:01:45,840 Speaker 3: clear outcome, none of that tail risk of undecided elections 35 00:01:45,840 --> 00:01:49,440 Speaker 3: and contested election I think that lowered volatility that added 36 00:01:49,480 --> 00:01:51,560 Speaker 3: to the rally that we got this week. But in 37 00:01:51,600 --> 00:01:55,280 Speaker 3: addition to that, obviously a focus on potential tax cuts, 38 00:01:55,360 --> 00:01:58,000 Speaker 3: which will be made easier by the Senate majority because 39 00:01:58,000 --> 00:02:02,160 Speaker 3: they can use the reconciliation process and deregulation. Both of 40 00:02:02,160 --> 00:02:06,040 Speaker 3: those things seen adding to equity upside. I think there's 41 00:02:06,080 --> 00:02:10,040 Speaker 3: a lot of questions over what policy happens, how big 42 00:02:10,120 --> 00:02:12,680 Speaker 3: is it, when does it get enacted, and there's not 43 00:02:12,800 --> 00:02:14,639 Speaker 3: just a policy to look at. We have to look 44 00:02:14,639 --> 00:02:17,720 Speaker 3: at the policies holistically as well as other market forces, 45 00:02:17,800 --> 00:02:21,280 Speaker 3: whether that's from the ground up industry innovation, things like 46 00:02:21,320 --> 00:02:24,160 Speaker 3: technology that could be very additive to the stock market, 47 00:02:24,280 --> 00:02:26,960 Speaker 3: as we've seen in recent years. And then there's outside 48 00:02:26,960 --> 00:02:30,480 Speaker 3: forces like what's going on in China, Germany, Japan. What 49 00:02:30,560 --> 00:02:32,960 Speaker 3: is happening those countries will affect us as well. So 50 00:02:33,320 --> 00:02:36,799 Speaker 3: I don't think it's as simple as just saying tax cuts, deregulation, 51 00:02:36,919 --> 00:02:40,400 Speaker 3: let's party. But for now, I think the reaction we've 52 00:02:40,440 --> 00:02:41,360 Speaker 3: seen does make sense. 53 00:02:41,840 --> 00:02:44,160 Speaker 1: You know, Washington, Well, nothing is that simple and one 54 00:02:44,160 --> 00:02:48,320 Speaker 1: in Washington, as Rebecca suggests, But overall, net net, knowing 55 00:02:48,320 --> 00:02:50,560 Speaker 1: that some things will get done some things won't, is. 56 00:02:50,480 --> 00:02:51,280 Speaker 2: This pro gross? 57 00:02:51,440 --> 00:02:53,520 Speaker 4: I think it definitely is. I agree with the Rebecca 58 00:02:53,600 --> 00:02:55,960 Speaker 4: that the first and foremost place to start is getting 59 00:02:56,000 --> 00:02:59,680 Speaker 4: more certainty. That's what markets were liking. But lower corporate 60 00:02:59,720 --> 00:03:03,040 Speaker 4: tax are important. You know, the prospect of not raising 61 00:03:03,080 --> 00:03:06,640 Speaker 4: the corporate rate is very positive for business investment, for 62 00:03:06,680 --> 00:03:10,640 Speaker 4: earnings and for corporate valuations, and also just the sense 63 00:03:10,680 --> 00:03:14,120 Speaker 4: of possibility, what's going to happen with technology? What's the 64 00:03:14,200 --> 00:03:18,160 Speaker 4: attitude toward newness, toward dynamism. I think markets are a 65 00:03:18,200 --> 00:03:21,240 Speaker 4: little more positive for President elect Trump in that regard, 66 00:03:21,280 --> 00:03:23,000 Speaker 4: and I think we saw all of that. Will it 67 00:03:23,040 --> 00:03:26,760 Speaker 4: all come to pass, surely not, but the direction is there. 68 00:03:26,960 --> 00:03:28,959 Speaker 2: So the election was clearly the big event of the week. 69 00:03:29,040 --> 00:03:31,760 Speaker 1: But there was another event, actually, which is the Fed 70 00:03:31,800 --> 00:03:34,160 Speaker 1: the FMC coming in. What did you make Glenna for 71 00:03:34,200 --> 00:03:36,440 Speaker 1: their decision to cut another twenty five basis points? 72 00:03:36,720 --> 00:03:39,680 Speaker 4: Well, I think that decision had been fairly baked in 73 00:03:39,760 --> 00:03:42,960 Speaker 4: and telegraphed by the Fed. How much more cutting the 74 00:03:43,000 --> 00:03:46,880 Speaker 4: Fed will do is up for grabs. I personally think 75 00:03:46,920 --> 00:03:50,240 Speaker 4: they probably shouldn't cut much more in the near term, 76 00:03:50,320 --> 00:03:52,920 Speaker 4: given where I think the economy is. But the near 77 00:03:53,040 --> 00:03:56,440 Speaker 4: term economic outlook isn't that much affected by what just 78 00:03:56,520 --> 00:03:58,800 Speaker 4: happened in the election, and I think Chair Powell said 79 00:03:58,800 --> 00:04:01,080 Speaker 4: that Are said as much in his remarks, So I 80 00:04:01,080 --> 00:04:03,800 Speaker 4: think the FED is pretty much on near term autopilot. 81 00:04:04,320 --> 00:04:06,320 Speaker 2: Near term Glenn talks about Rebecca. 82 00:04:06,080 --> 00:04:08,840 Speaker 1: Let's talk about a little medium term twenty five twenty six. 83 00:04:09,120 --> 00:04:10,480 Speaker 1: There are a lot of people who think that this 84 00:04:10,680 --> 00:04:13,960 Speaker 1: might be inflationary, which might actually cause the FED to 85 00:04:14,000 --> 00:04:15,080 Speaker 1: rethink some of those cuts. 86 00:04:15,200 --> 00:04:18,120 Speaker 3: Yeah, and the market has already changed its expectations. If 87 00:04:18,160 --> 00:04:20,839 Speaker 3: you look at the FED Fund's futures, it's now pricing 88 00:04:20,920 --> 00:04:24,000 Speaker 3: in I believe, less than ninety basis points of cuts 89 00:04:24,040 --> 00:04:26,400 Speaker 3: between now and the end of next year. So it's 90 00:04:26,440 --> 00:04:30,359 Speaker 3: pulled back its expectation for easing. But that higher expected 91 00:04:30,360 --> 00:04:33,560 Speaker 3: cost of capital is being offset by these expectations for 92 00:04:33,640 --> 00:04:37,119 Speaker 3: stronger earnings, less regulation, more m and a activity, et cetera. 93 00:04:37,800 --> 00:04:41,359 Speaker 3: What I would caution investors about is that again, taxes 94 00:04:41,400 --> 00:04:43,080 Speaker 3: deregulation are part of the. 95 00:04:42,960 --> 00:04:44,320 Speaker 5: Picture, but not the whole picture. 96 00:04:44,320 --> 00:04:46,800 Speaker 3: And what we saw in Trump's first term was that 97 00:04:46,880 --> 00:04:51,240 Speaker 3: stock markets rallied initially big rally, but then in twenty eighteen, 98 00:04:51,600 --> 00:04:55,239 Speaker 3: as the economy overheated or threatened to overheat, I should say, 99 00:04:55,480 --> 00:04:58,320 Speaker 3: the Fed said, maybe we need to raise rates faster, 100 00:04:58,839 --> 00:05:01,760 Speaker 3: make sure we don't have And the thought of more 101 00:05:01,760 --> 00:05:05,200 Speaker 3: aggressive tightening, coupled with the trade war that really didn't 102 00:05:05,200 --> 00:05:07,960 Speaker 3: get going until mid eighteen, caused the S and P 103 00:05:08,080 --> 00:05:11,240 Speaker 3: to pull back twenty percent in three months. So if 104 00:05:11,279 --> 00:05:15,240 Speaker 3: you bought stocks on inauguration Day in twenty seventeen and 105 00:05:15,320 --> 00:05:18,200 Speaker 3: held them till the end of twenty eighteen, you only 106 00:05:18,200 --> 00:05:21,240 Speaker 3: made four percent, so you gave it all back. It 107 00:05:21,279 --> 00:05:23,360 Speaker 3: was a round trip, and I think not that that'll 108 00:05:23,360 --> 00:05:25,200 Speaker 3: repeat this time. But that's the sort of thing we 109 00:05:25,240 --> 00:05:28,120 Speaker 3: need to be looking at this compendium of factors, not 110 00:05:28,200 --> 00:05:30,080 Speaker 3: just one or two, and the FED certainly plays a 111 00:05:30,160 --> 00:05:33,160 Speaker 3: role there. I think we could see inflation coming from 112 00:05:33,400 --> 00:05:36,920 Speaker 3: the fiscal policy, coming from the trade war, and depending 113 00:05:36,920 --> 00:05:39,800 Speaker 3: on what happens, possibly from immigration, as it could push 114 00:05:39,839 --> 00:05:40,400 Speaker 3: wages up. 115 00:05:40,480 --> 00:05:42,679 Speaker 1: I want to pick up on the overheating point because 116 00:05:42,680 --> 00:05:44,880 Speaker 1: we want a strong economy, we want it growing, but 117 00:05:44,960 --> 00:05:46,800 Speaker 1: you can have too much of a good thing sometimes, 118 00:05:46,839 --> 00:05:49,600 Speaker 1: as I understand it. What about those tax cuts, what 119 00:05:49,680 --> 00:05:52,120 Speaker 1: is the danger? Do we really need the stimulative effect 120 00:05:52,160 --> 00:05:53,760 Speaker 1: of the extending the tax cuts right now? 121 00:05:54,279 --> 00:05:58,000 Speaker 3: Well, I think there's further tax cuts, for example, taking 122 00:05:58,000 --> 00:06:00,960 Speaker 3: the corporate rate down from twenty one to say eighteen 123 00:06:01,040 --> 00:06:05,279 Speaker 3: or fifteen. That's additional news stimulus. Extending the current tax 124 00:06:05,400 --> 00:06:09,440 Speaker 3: levels really isn't news stimulus. It's just giving people what 125 00:06:09,480 --> 00:06:13,000 Speaker 3: they already expect to continue getting. Frankly, so the risk 126 00:06:13,080 --> 00:06:16,000 Speaker 3: there would be not extending things, and people feel an 127 00:06:16,000 --> 00:06:17,000 Speaker 3: effective tax. 128 00:06:16,839 --> 00:06:18,920 Speaker 5: Hike as things revert back. 129 00:06:19,040 --> 00:06:22,400 Speaker 3: So the extension to me isn't a big new fiscal addition. 130 00:06:22,720 --> 00:06:24,560 Speaker 3: It's just steady as she goes. The one I'd be 131 00:06:24,640 --> 00:06:27,920 Speaker 3: watching that's major is the corporate rate if it gets 132 00:06:27,960 --> 00:06:30,800 Speaker 3: lowered further. It is interesting, though, We've already had some 133 00:06:30,920 --> 00:06:34,560 Speaker 3: Republican members of Congress since the vote coming out and saying, 134 00:06:35,080 --> 00:06:36,760 Speaker 3: we need to think about how much of this we 135 00:06:36,839 --> 00:06:40,880 Speaker 3: can do, because how are you going to fund it? 136 00:06:39,720 --> 00:06:42,480 Speaker 3: You know you're not going to fund it with tariffs. 137 00:06:42,520 --> 00:06:46,240 Speaker 3: The math doesn't work right. Income from tariffs is not 138 00:06:46,279 --> 00:06:48,960 Speaker 3: going to be close to filling this hole. You can't 139 00:06:49,200 --> 00:06:51,920 Speaker 3: fill it through government spending cuts because if you look 140 00:06:51,960 --> 00:06:55,680 Speaker 3: at non defense discretionary spending last year, that was about 141 00:06:55,720 --> 00:06:59,040 Speaker 3: nine hundred and twenty billion dollars. We need to fund 142 00:06:59,120 --> 00:07:03,280 Speaker 3: two trillion, and so we're it's going to be interesting 143 00:07:03,320 --> 00:07:07,400 Speaker 3: to see how Republican Congress decides to navigate this over 144 00:07:07,440 --> 00:07:08,200 Speaker 3: the next twelve months. 145 00:07:08,279 --> 00:07:10,320 Speaker 1: Glennt's say, with those tariffs, because that could be a 146 00:07:10,360 --> 00:07:11,720 Speaker 1: speed bump on the road to growth. 147 00:07:12,520 --> 00:07:15,200 Speaker 4: Well, it could be, and it's not really necessary. If 148 00:07:15,200 --> 00:07:18,880 Speaker 4: we wanted to improve incentives to locate activity in the 149 00:07:18,960 --> 00:07:21,480 Speaker 4: United States as part of the redo of the tax 150 00:07:21,520 --> 00:07:23,720 Speaker 4: cut in Jobs Act. We could do that in corporate 151 00:07:23,760 --> 00:07:26,840 Speaker 4: tax reform. We do not need tariffs to do that. Indeed, 152 00:07:26,880 --> 00:07:30,160 Speaker 4: House Republicans were already there before twenty seventeen, so we 153 00:07:30,520 --> 00:07:33,360 Speaker 4: know how to do this. The tariffs also could be 154 00:07:33,400 --> 00:07:37,160 Speaker 4: inflationary for a period of time, complicating the Fed's job. 155 00:07:37,680 --> 00:07:40,720 Speaker 4: And if we care about people and places left behind, 156 00:07:40,760 --> 00:07:42,760 Speaker 4: there are plenty of better ways to deal with that. 157 00:07:42,920 --> 00:07:45,480 Speaker 4: So I think that's probably not a good idea. I 158 00:07:45,520 --> 00:07:49,320 Speaker 4: do worry, per Rebecca about the overheating possibility if we 159 00:07:49,400 --> 00:07:52,280 Speaker 4: go too far on the fiscal side. After all, a 160 00:07:52,320 --> 00:07:55,200 Speaker 4: lot of what got the Biden administration in trouble was 161 00:07:55,240 --> 00:07:58,800 Speaker 4: the American rescue play, and we don't need another fiscal blowout. 162 00:07:58,800 --> 00:08:00,080 Speaker 4: I think we have to be very very careful. We 163 00:08:00,280 --> 00:08:03,440 Speaker 4: can get good pro growth tax policy without a blowout. 164 00:08:03,920 --> 00:08:05,800 Speaker 1: Maybe we don't need a fiscal blowout. Do we need 165 00:08:05,840 --> 00:08:07,480 Speaker 1: to save some money? Let's talk about the debt and 166 00:08:07,520 --> 00:08:09,560 Speaker 1: the deficit, because there's a lot of concern and a 167 00:08:09,600 --> 00:08:11,720 Speaker 1: lot of quarters about that. Right now, what if this 168 00:08:11,800 --> 00:08:13,840 Speaker 1: prospect do you think of the next four years, Glenn, 169 00:08:13,880 --> 00:08:15,520 Speaker 1: And this is sort of making a prediction that we 170 00:08:15,560 --> 00:08:17,440 Speaker 1: could actually have a debt crisis I. 171 00:08:17,440 --> 00:08:19,200 Speaker 4: Don't think we'll have a debt crisis, but I think 172 00:08:19,240 --> 00:08:21,680 Speaker 4: worries will continue to mount. Let me just add to 173 00:08:21,720 --> 00:08:24,480 Speaker 4: it a bit. In addition to everything we've been talking about, 174 00:08:24,520 --> 00:08:26,280 Speaker 4: we're going to be spending a lot more on defense. 175 00:08:27,200 --> 00:08:29,360 Speaker 4: That's just a given given where we are in the world. 176 00:08:29,560 --> 00:08:31,800 Speaker 4: So the pressure on the budget is going to be there. 177 00:08:32,240 --> 00:08:36,600 Speaker 4: The Latin word underlying credit is credo. I believe that's 178 00:08:36,600 --> 00:08:40,320 Speaker 4: what markets have to say. When markets stop saying creato, 179 00:08:40,480 --> 00:08:43,080 Speaker 4: we're in trouble. When that happens, we don't know, but 180 00:08:43,120 --> 00:08:44,600 Speaker 4: I think the pressures will keep building. 181 00:08:45,200 --> 00:08:46,480 Speaker 5: And I would just add to that. 182 00:08:46,600 --> 00:08:50,120 Speaker 3: You know, we've seen two downgrades of US credit ratings 183 00:08:50,120 --> 00:08:53,400 Speaker 3: already in twenty eleven and twenty twenty three. Moody's has 184 00:08:53,440 --> 00:08:55,920 Speaker 3: put the US has changed the outlook for the US. 185 00:08:56,400 --> 00:08:59,240 Speaker 3: And even if we have a functional government, which I 186 00:08:59,240 --> 00:09:01,480 Speaker 3: certainly hope we do and I think we can expect to, 187 00:09:02,240 --> 00:09:05,600 Speaker 3: if we have greater concerns about our debt, if we're 188 00:09:05,600 --> 00:09:08,440 Speaker 3: on a trajectory to one hundred and thirty percent debt GDP, 189 00:09:09,040 --> 00:09:11,800 Speaker 3: it's possible we get a third credit writing downgrade. If 190 00:09:11,840 --> 00:09:15,000 Speaker 3: the US truly loses its triple A status. I don't 191 00:09:15,000 --> 00:09:16,679 Speaker 3: know if that would be a catalyst for a debt 192 00:09:16,720 --> 00:09:19,199 Speaker 3: crisis per se, but it certainly would be moving us 193 00:09:19,240 --> 00:09:20,199 Speaker 3: towards that risk. 194 00:09:20,440 --> 00:09:22,800 Speaker 1: Such an interesting point, actually, I hadn't really thought of 195 00:09:22,840 --> 00:09:24,679 Speaker 1: necessarily go on. That is the fact that there was 196 00:09:24,720 --> 00:09:29,000 Speaker 1: such a clear decision on Tuesday and to Wednesday maybe 197 00:09:29,160 --> 00:09:33,000 Speaker 1: limits some of the dysfunction around fiscal issues such as 198 00:09:33,080 --> 00:09:35,280 Speaker 1: debt ceilings and things. Maybe we don't have to go 199 00:09:35,360 --> 00:09:37,760 Speaker 1: through that almost near death experience. 200 00:09:38,400 --> 00:09:41,240 Speaker 4: I think that's right. My concern is that we avoid 201 00:09:41,320 --> 00:09:44,480 Speaker 4: going for the near death experience by just blowing up 202 00:09:44,520 --> 00:09:46,960 Speaker 4: the fisk, and that we shouldn't do well. 203 00:09:46,960 --> 00:09:49,480 Speaker 1: But when you say we have some time perhaps on this, 204 00:09:49,840 --> 00:09:51,040 Speaker 1: what about Social Security? 205 00:09:51,320 --> 00:09:53,080 Speaker 2: I mean because there is a ticking. 206 00:09:53,160 --> 00:09:55,760 Speaker 1: Clock on that, as I recall, as well as Medicare, 207 00:09:56,320 --> 00:09:58,400 Speaker 1: where at some point we run out of the trust 208 00:09:58,400 --> 00:10:00,240 Speaker 1: fund and then we got to figure out how we're 209 00:10:00,240 --> 00:10:01,040 Speaker 1: going to fund that. 210 00:10:01,040 --> 00:10:03,880 Speaker 4: That's true in the mid twenty thirties, which, unfortunately in 211 00:10:04,040 --> 00:10:08,480 Speaker 4: Washington time is infinite way. It's actually not hard. 212 00:10:08,520 --> 00:10:08,680 Speaker 2: You know. 213 00:10:08,720 --> 00:10:11,880 Speaker 4: We could strengthen social securities protection for low and moderate 214 00:10:11,880 --> 00:10:15,800 Speaker 4: income Americans and then flatten it out and make it 215 00:10:16,000 --> 00:10:19,120 Speaker 4: make the system more progressive. It's not hard in economics, 216 00:10:19,520 --> 00:10:21,280 Speaker 4: it's super hard in politics. 217 00:10:21,440 --> 00:10:23,319 Speaker 1: What does it say to an investor when you're putting 218 00:10:23,320 --> 00:10:26,560 Speaker 1: together portfolio? Do you change your allocations this week based 219 00:10:26,559 --> 00:10:27,240 Speaker 1: on what we saw. 220 00:10:28,080 --> 00:10:32,080 Speaker 3: I'm anxious to change something in a meaningful way right now, 221 00:10:32,160 --> 00:10:34,960 Speaker 3: because again, we don't know when we're going to get 222 00:10:34,960 --> 00:10:37,560 Speaker 3: policies enacted, and the timing matters. We don't know how 223 00:10:37,640 --> 00:10:40,720 Speaker 3: large they will be. On January twentieth, do we get 224 00:10:40,960 --> 00:10:44,000 Speaker 3: ten percent round the world tear of sixty percent on China? 225 00:10:44,640 --> 00:10:46,920 Speaker 3: Or is it a threat and maybe a ramping up 226 00:10:46,960 --> 00:10:50,600 Speaker 3: over time? That matters a lot. What size of tax 227 00:10:50,640 --> 00:10:53,080 Speaker 3: cuts do we get. How easily and quickly are they enacted? 228 00:10:53,120 --> 00:10:55,959 Speaker 3: That's going to matter a lot. We know regulation takes 229 00:10:56,000 --> 00:10:57,640 Speaker 3: time to work through, so there's a. 230 00:10:57,640 --> 00:10:58,360 Speaker 5: Number of things. 231 00:10:58,679 --> 00:11:01,960 Speaker 3: Without having a little bit more specifics, it's very difficult 232 00:11:01,960 --> 00:11:04,480 Speaker 3: in my mind to know how much you would want 233 00:11:04,520 --> 00:11:06,560 Speaker 3: to change a portfolio. So I would be looking at 234 00:11:06,559 --> 00:11:09,720 Speaker 3: this incrementally. In my mind when we're looking at this, 235 00:11:10,160 --> 00:11:11,800 Speaker 3: US exceptionalism remains. 236 00:11:11,960 --> 00:11:13,480 Speaker 5: I want to be overweight the US. 237 00:11:13,679 --> 00:11:17,080 Speaker 3: I want to be wary of China because I do 238 00:11:17,160 --> 00:11:19,600 Speaker 3: think whether tariffs are large or small or a threat. 239 00:11:19,920 --> 00:11:22,200 Speaker 3: They're going to continue to struggle, and the stimulus they 240 00:11:22,200 --> 00:11:24,920 Speaker 3: announced this week isn't going to change the picture for 241 00:11:24,960 --> 00:11:26,319 Speaker 3: them in any meaningful way. 242 00:11:27,280 --> 00:11:28,720 Speaker 5: I want to be wary of Europe. 243 00:11:28,840 --> 00:11:30,719 Speaker 3: I think it's interesting that we could have a new 244 00:11:30,760 --> 00:11:33,439 Speaker 3: German chancellor as early as January who could be a 245 00:11:33,480 --> 00:11:36,720 Speaker 3: little less fiscally hawkish. It doesn't change the picture in 246 00:11:36,760 --> 00:11:39,440 Speaker 3: a meaningful way. And then you have to think about 247 00:11:39,520 --> 00:11:41,760 Speaker 3: US sectors. You know, tech is probably going to still 248 00:11:41,760 --> 00:11:45,040 Speaker 3: do quite well. It's extraordinary to me that you in 249 00:11:45,080 --> 00:11:47,160 Speaker 3: the next year are going to see five hundred billion 250 00:11:47,240 --> 00:11:50,520 Speaker 3: dollars in CAPEX and R and D from the Magnificent seven. 251 00:11:50,840 --> 00:11:52,440 Speaker 3: So I think there's a lot of reason to stay 252 00:11:52,440 --> 00:11:56,240 Speaker 3: in the US be focused there. The banks certainly should benefit. 253 00:11:56,360 --> 00:11:58,280 Speaker 3: Question there is how much is already priced in? 254 00:11:58,720 --> 00:12:01,520 Speaker 1: Okay, many thanks for Rebecca Patterson and Glenn Hubbard of 255 00:12:01,520 --> 00:12:04,080 Speaker 1: the Columbia Business School. Coming up will turn to what 256 00:12:04,120 --> 00:12:07,320 Speaker 1: the outcoming election could mean for US relations with the 257 00:12:07,360 --> 00:12:10,560 Speaker 1: rest of the world, with Zanni Minton Bettos of The 258 00:12:10,600 --> 00:12:16,000 Speaker 1: Economists and Elizabeth Economy of the Hoover Institution. That's next 259 00:12:16,040 --> 00:12:23,679 Speaker 1: on Wall Street Week on Bloomberg this is a special 260 00:12:23,720 --> 00:12:25,320 Speaker 1: election edition of Wall Street Week. 261 00:12:25,480 --> 00:12:26,400 Speaker 2: I'm David Weston. 262 00:12:26,600 --> 00:12:30,240 Speaker 1: Elections have consequences, and this US election may have consequences 263 00:12:30,240 --> 00:12:32,240 Speaker 1: going well beyond the shores. 264 00:12:31,960 --> 00:12:32,880 Speaker 2: Of the United States. 265 00:12:33,080 --> 00:12:35,640 Speaker 1: To take us through those consequences, we welcome now Zanni 266 00:12:35,760 --> 00:12:39,040 Speaker 1: Minton Beddos, Editor in chief of The Economists, and Elizabeth Economy, 267 00:12:39,120 --> 00:12:41,920 Speaker 1: Senior Fellow and co chair of the program on the US, 268 00:12:42,160 --> 00:12:44,880 Speaker 1: China and the World at the Hoover Institution. So welcome 269 00:12:44,920 --> 00:12:46,880 Speaker 1: both of you. It's good to have you back on Wall 270 00:12:46,920 --> 00:12:49,200 Speaker 1: Street Week. So let's start with China, because that was 271 00:12:49,240 --> 00:12:52,800 Speaker 1: in the campaign right the way through. What does China 272 00:12:52,840 --> 00:12:55,520 Speaker 1: have to look forward to out of the second Trump administration. 273 00:12:56,080 --> 00:12:58,320 Speaker 6: I think China's probably looking at the return of Donald 274 00:12:58,320 --> 00:13:02,679 Speaker 6: Trump as a short term but potentially long term strategic gain. 275 00:13:03,080 --> 00:13:04,880 Speaker 6: I think the short term pain is everything that we 276 00:13:04,920 --> 00:13:08,200 Speaker 6: heard during the election during the campaign, which is President 277 00:13:08,240 --> 00:13:12,040 Speaker 6: Trump promising to levy sixty percent tariffs across the board 278 00:13:12,080 --> 00:13:14,840 Speaker 6: on all Chinese goods coming into the United States. There's 279 00:13:14,880 --> 00:13:17,040 Speaker 6: nothing good in that for China. It's going to take 280 00:13:17,040 --> 00:13:19,839 Speaker 6: a hit to their economy, could cost them something like 281 00:13:19,880 --> 00:13:22,079 Speaker 6: two hundred billion dollars, and they have to find new 282 00:13:22,080 --> 00:13:25,679 Speaker 6: export markets for half of what they're already exporting to 283 00:13:25,720 --> 00:13:27,680 Speaker 6: the United States. So it's a big problem for them 284 00:13:27,720 --> 00:13:30,600 Speaker 6: at a time when their economy is already struggling. I 285 00:13:30,600 --> 00:13:33,720 Speaker 6: think they'll try to forestall that scenario. They'll maybe try 286 00:13:33,720 --> 00:13:35,880 Speaker 6: to play the price is right, or let's make a 287 00:13:35,920 --> 00:13:38,640 Speaker 6: deal with President Trump and figure out is there a 288 00:13:38,640 --> 00:13:40,920 Speaker 6: new trade deal to be had or some kind of 289 00:13:40,960 --> 00:13:44,240 Speaker 6: phasing in the tariffs. But I think fundamentally on the 290 00:13:44,280 --> 00:13:47,480 Speaker 6: economic side, Donald Trump poses a real challenge for China. 291 00:13:48,080 --> 00:13:50,679 Speaker 6: I think the bigger picture for Shijinping, though, is in 292 00:13:50,760 --> 00:13:54,560 Speaker 6: the longer term picture is potentially a big opportunity for him, 293 00:13:54,880 --> 00:13:56,880 Speaker 6: because what he's tried to do over the past decade 294 00:13:56,920 --> 00:14:00,079 Speaker 6: is really reclaimed Chinese centrality on the global stage, and 295 00:14:00,120 --> 00:14:02,760 Speaker 6: the chief obstacle to that has been the United States. 296 00:14:03,120 --> 00:14:05,760 Speaker 6: The United States is the major guarantor of security on 297 00:14:05,760 --> 00:14:09,480 Speaker 6: the global stage. They are traditionally the protector of you know, 298 00:14:09,559 --> 00:14:12,960 Speaker 6: open markets and free trade and of course the strongest 299 00:14:12,960 --> 00:14:17,160 Speaker 6: supporter of democracy, and for sigen Ping, you know, that's 300 00:14:17,200 --> 00:14:19,640 Speaker 6: a problem and so but Donald Trump, you know, has 301 00:14:19,640 --> 00:14:23,600 Speaker 6: not had that same vision. He has a much smaller, 302 00:14:23,760 --> 00:14:25,000 Speaker 6: narrower sense of. 303 00:14:24,960 --> 00:14:26,200 Speaker 5: The role of the United States. 304 00:14:26,760 --> 00:14:29,240 Speaker 6: He's pulled US out during his first term, pulled US 305 00:14:29,240 --> 00:14:32,960 Speaker 6: out of a number of international institutions like the World 306 00:14:32,960 --> 00:14:38,400 Speaker 6: Health Organization, the Paris Climate Accords, the UN Human Rights Commission. 307 00:14:39,200 --> 00:14:43,080 Speaker 6: He downplays our allies, you know, and doesn't see them 308 00:14:43,120 --> 00:14:45,480 Speaker 6: as beneficial, necessarily sees them as more of a burden 309 00:14:45,520 --> 00:14:48,400 Speaker 6: than an asset. So the sense of the United States 310 00:14:48,840 --> 00:14:51,800 Speaker 6: may pull back from its leadership position, I think opens 311 00:14:51,880 --> 00:14:54,200 Speaker 6: up an opportunity for xigen Ping to fill the gap, 312 00:14:54,240 --> 00:14:55,160 Speaker 6: to step into the breach. 313 00:14:55,440 --> 00:14:55,680 Speaker 2: Zamy. 314 00:14:55,720 --> 00:14:58,360 Speaker 1: We've heard repeatedly that Donald Trump likes tariffs. He just 315 00:14:58,520 --> 00:15:01,800 Speaker 1: likes tariffs, periodicular with respect to China. But some people 316 00:15:01,880 --> 00:15:04,200 Speaker 1: around him say, really, he doesn't mean those tariffs. He 317 00:15:04,200 --> 00:15:07,200 Speaker 1: means to change the behavior of China. It's a negotiat employee. 318 00:15:07,240 --> 00:15:09,400 Speaker 1: What are the prospects that China would actually change its 319 00:15:09,400 --> 00:15:11,360 Speaker 1: behavior in response to big tariffs? 320 00:15:11,800 --> 00:15:14,040 Speaker 7: So I think I think I completely agree with Elizabeth. 321 00:15:14,080 --> 00:15:15,520 Speaker 7: I think that in the short term this is a 322 00:15:15,600 --> 00:15:17,520 Speaker 7: challenge for China, and I think China would love to 323 00:15:17,560 --> 00:15:19,280 Speaker 7: do a deal in the same way that it did 324 00:15:19,320 --> 00:15:23,120 Speaker 7: a deal in Trump one. The question of Trump and tariffs, 325 00:15:23,120 --> 00:15:25,560 Speaker 7: I think, is one you know, right now, the entire 326 00:15:25,600 --> 00:15:27,480 Speaker 7: the trips have been thrown out. We have no idea 327 00:15:27,560 --> 00:15:30,000 Speaker 7: exactly where they're going to land. But one air Lots 328 00:15:30,040 --> 00:15:31,920 Speaker 7: of people say to me, oh, on tariffs, this is 329 00:15:31,960 --> 00:15:35,480 Speaker 7: really just a negotiating ploy. He wants to do a deal. True, 330 00:15:35,200 --> 00:15:38,880 Speaker 7: But Donald Trump for the last three decades has talked 331 00:15:38,880 --> 00:15:41,640 Speaker 7: about taris. He loves tarts. He says he loves tariffs, 332 00:15:41,680 --> 00:15:43,240 Speaker 7: and he has a kind of and I don't know 333 00:15:43,280 --> 00:15:45,800 Speaker 7: how much he has studied the detail of late nineteenth 334 00:15:45,840 --> 00:15:49,520 Speaker 7: century economic history in detail, but he talks about that. 335 00:15:49,600 --> 00:15:51,520 Speaker 7: He harks back to that period as being a great 336 00:15:51,560 --> 00:15:54,040 Speaker 7: period of American strength. And he has talked on the 337 00:15:54,080 --> 00:15:58,040 Speaker 7: campaign trail about replacing the income tax with tariffs. So 338 00:15:58,160 --> 00:16:00,960 Speaker 7: I think he has a fairly fundamental belief that tariffs 339 00:16:01,000 --> 00:16:03,400 Speaker 7: are a good way of raising revenue, which suggests to 340 00:16:03,440 --> 00:16:05,680 Speaker 7: me that it's not just a negotiating tool. I think 341 00:16:05,680 --> 00:16:07,760 Speaker 7: it'll be a bit of both. And so I think 342 00:16:07,760 --> 00:16:10,560 Speaker 7: Elizabeth is absolutely right. In the short term, this is 343 00:16:10,600 --> 00:16:14,160 Speaker 7: a challenge for China because its economy is already slowing, 344 00:16:14,200 --> 00:16:16,160 Speaker 7: and so if there is a big tariff hit, that's 345 00:16:16,160 --> 00:16:19,120 Speaker 7: not great. But I think exigenping is already banking on 346 00:16:19,200 --> 00:16:22,480 Speaker 7: a decoupling world economy. He's already banking that the world 347 00:16:22,480 --> 00:16:25,160 Speaker 7: has been going in that direction, not least because Joe 348 00:16:25,160 --> 00:16:28,000 Speaker 7: Biden didn't roll back the first set of Trump tariff's 349 00:16:28,240 --> 00:16:31,240 Speaker 7: And he says, thinks that in this world where Trump 350 00:16:31,360 --> 00:16:35,120 Speaker 7: is HARKing back to a less extensive role for America 351 00:16:35,160 --> 00:16:37,800 Speaker 7: and we really are now in the post post Cold 352 00:16:37,800 --> 00:16:40,600 Speaker 7: War era, this is the moment kind of the end 353 00:16:40,640 --> 00:16:42,520 Speaker 7: of that world that was started in nineteen forty five. 354 00:16:42,600 --> 00:16:44,640 Speaker 7: It will have ended in twenty twenty four. And in 355 00:16:44,680 --> 00:16:48,040 Speaker 7: this new world, China thinks that it doesn't have America 356 00:16:48,080 --> 00:16:50,200 Speaker 7: setting the rules and there is much more leeway for 357 00:16:50,280 --> 00:16:52,040 Speaker 7: it to shape the world as it wants. 358 00:16:52,840 --> 00:16:57,160 Speaker 1: So, Elizabeth, does Taiwan's profobial stock go up because of 359 00:16:57,200 --> 00:16:58,600 Speaker 1: this or down because of this? 360 00:16:59,400 --> 00:17:01,440 Speaker 6: I mean, I think in the short term it's probably 361 00:17:01,440 --> 00:17:04,800 Speaker 6: going down. It's a very complicated picture for Taiwan with 362 00:17:04,880 --> 00:17:07,840 Speaker 6: Donald Trump, I mean, for most American presidents, for the 363 00:17:07,920 --> 00:17:10,040 Speaker 6: US Congress, Taiwan. 364 00:17:09,720 --> 00:17:10,520 Speaker 5: Is really important. 365 00:17:10,720 --> 00:17:14,159 Speaker 6: It's important strategically right. It's part of the first island 366 00:17:14,200 --> 00:17:17,560 Speaker 6: change from Japan to Taiwan to the Philippines through Thailand, 367 00:17:17,680 --> 00:17:21,040 Speaker 6: so it provides a kind of bulwark really against the 368 00:17:21,080 --> 00:17:23,199 Speaker 6: expansion of China, you know, toward the. 369 00:17:23,280 --> 00:17:24,520 Speaker 5: United States through the Pacific. 370 00:17:24,920 --> 00:17:27,480 Speaker 6: It's an important trading partner, tenth largest trading partner of 371 00:17:27,520 --> 00:17:31,760 Speaker 6: the United States. You know, two point six trillion dollars 372 00:17:31,800 --> 00:17:35,240 Speaker 6: of maritime trade goes through the Taiwan straight and Taiwan 373 00:17:35,280 --> 00:17:39,000 Speaker 6: is a robust democracy that's playing a really important role 374 00:17:39,760 --> 00:17:43,920 Speaker 6: in supporting emerging democracies. Not to mention the fact that, 375 00:17:44,000 --> 00:17:47,160 Speaker 6: you know, we source most of our advanced chips from 376 00:17:47,480 --> 00:17:52,240 Speaker 6: Taiwan Semiconductor Corporation, from TSMC, so you know, most people 377 00:17:52,280 --> 00:17:55,800 Speaker 6: recognize that Taiwan matters and matters a lot. Donald Trump 378 00:17:55,880 --> 00:17:59,440 Speaker 6: has promised to make Taiwan pay for its defense. He's 379 00:17:59,480 --> 00:18:03,000 Speaker 6: talked about Taiwan is having taken our chip industry away. 380 00:18:03,440 --> 00:18:06,399 Speaker 6: You know, there are some probably faulty facts and assumptions 381 00:18:06,440 --> 00:18:09,000 Speaker 6: built into those two statements, and it's possible, I think 382 00:18:09,000 --> 00:18:12,040 Speaker 6: that his advisors will you know, sort of help correct 383 00:18:12,080 --> 00:18:15,200 Speaker 6: some of the misinformation and will you know. 384 00:18:15,119 --> 00:18:16,000 Speaker 5: Have a steady state. 385 00:18:16,560 --> 00:18:18,320 Speaker 6: There will also be a lot of debate within his 386 00:18:18,320 --> 00:18:21,680 Speaker 6: own party because Congress and Republicans in Congress are strongly 387 00:18:21,680 --> 00:18:25,080 Speaker 6: supportive of Taiwan. So I think you know, near term, 388 00:18:25,119 --> 00:18:28,280 Speaker 6: it's problematic. Taiwan doesn't know what you know. President Trump 389 00:18:28,320 --> 00:18:31,040 Speaker 6: is going to try. But I think over the long 390 00:18:31,119 --> 00:18:33,240 Speaker 6: term he'll be hard pressed to make a major shift 391 00:18:33,240 --> 00:18:33,960 Speaker 6: in our policy. 392 00:18:34,119 --> 00:18:36,600 Speaker 1: So's any when it comes to China, perhaps short term 393 00:18:36,640 --> 00:18:39,360 Speaker 1: loss long term gained from Xiji and Ping's point view. 394 00:18:39,600 --> 00:18:41,919 Speaker 1: What about other places that may be losers? Certainly if 395 00:18:41,920 --> 00:18:44,480 Speaker 1: you look at the Peso, it didn't look like Mexico 396 00:18:44,520 --> 00:18:46,200 Speaker 1: came out of this at least short term very well. 397 00:18:46,640 --> 00:18:49,160 Speaker 7: Yeah, I think there are two other places that are 398 00:18:49,280 --> 00:18:52,480 Speaker 7: really looking at seriously bumpy right. Absolutely, Mexico and we'll 399 00:18:52,480 --> 00:18:55,040 Speaker 7: come to it Europe too, But Mexico, if you my 400 00:18:55,160 --> 00:18:58,240 Speaker 7: so shorthand for thinking about what Donald Trump will imply 401 00:18:58,880 --> 00:19:03,800 Speaker 7: is taxa, tariffs, deregulation, deportation. Those are the four variables, 402 00:19:03,960 --> 00:19:06,359 Speaker 7: and it depends how much he does how fast in 403 00:19:06,400 --> 00:19:09,159 Speaker 7: each of those. And if I was in any country, 404 00:19:09,200 --> 00:19:11,359 Speaker 7: and I would think about that country's prospects by thinking 405 00:19:11,359 --> 00:19:13,439 Speaker 7: what do those four variables mean for me? And if 406 00:19:13,480 --> 00:19:16,399 Speaker 7: you're in Mexico right now, his deportation agenda is not 407 00:19:16,480 --> 00:19:18,520 Speaker 7: great for you. It's not great for you politically, and 408 00:19:18,560 --> 00:19:20,520 Speaker 7: he's going to use he said it just a few 409 00:19:20,560 --> 00:19:22,520 Speaker 7: days ago. Again, he's going to use tariffs as the 410 00:19:22,560 --> 00:19:26,720 Speaker 7: negotiating weapon. If they don't stop these illegal migrants coming through, 411 00:19:26,720 --> 00:19:28,680 Speaker 7: if they don't take deporties, then there are going to 412 00:19:28,680 --> 00:19:31,040 Speaker 7: be tariffs. So I think the Mexican paeser was hit hard. 413 00:19:31,040 --> 00:19:32,920 Speaker 7: It has come back a bit, but it's going to 414 00:19:32,960 --> 00:19:36,320 Speaker 7: be a very difficult environment for Mexico, not least because 415 00:19:36,359 --> 00:19:40,640 Speaker 7: a lot of the investment that was coming into Mexico 416 00:19:40,920 --> 00:19:44,240 Speaker 7: really as part of the decoupling from China. Donald Trump 417 00:19:44,320 --> 00:19:46,639 Speaker 7: is not going to like the fact that Chinese companies 418 00:19:46,640 --> 00:19:49,040 Speaker 7: are setting up manufacturing plants in Mexico. He wants them 419 00:19:49,080 --> 00:19:51,560 Speaker 7: in the United States, not Mexico. So I think the 420 00:19:51,600 --> 00:19:55,920 Speaker 7: renegotiation of USMCA, which was the trade deal that he 421 00:19:56,200 --> 00:19:58,840 Speaker 7: created instead of NAFTA, it comes up in twenty twenty six. 422 00:19:59,160 --> 00:20:00,800 Speaker 7: I think that's going to be a very very tough 423 00:20:00,880 --> 00:20:03,199 Speaker 7: negotiation and I would not want to be Mexico, but 424 00:20:03,240 --> 00:20:05,320 Speaker 7: to be honest, and you know, with my accent, it's 425 00:20:05,359 --> 00:20:08,199 Speaker 7: not so great coming from Europe either. I sometimes I'm 426 00:20:08,200 --> 00:20:10,280 Speaker 7: glad we're not in the EU from this perspective, because 427 00:20:10,320 --> 00:20:11,920 Speaker 7: the EU is going to have I think a very 428 00:20:11,960 --> 00:20:16,159 Speaker 7: tough time the Europeans. Not only have you know, Germany, 429 00:20:16,240 --> 00:20:19,399 Speaker 7: huge trade surplus with the United States. And one thing, 430 00:20:19,440 --> 00:20:22,640 Speaker 7: Donald Trump really does see trade in these very binary terms. 431 00:20:22,720 --> 00:20:25,240 Speaker 7: You have a trade surplus that means you're ripping us off. 432 00:20:25,320 --> 00:20:27,880 Speaker 7: That's basically the way he sees trade. And I think 433 00:20:27,880 --> 00:20:30,080 Speaker 7: he doesn't like much like Germany. It's been my sense 434 00:20:30,359 --> 00:20:33,800 Speaker 7: from Trump one and the Europeans. So they have a 435 00:20:33,840 --> 00:20:37,080 Speaker 7: trade issue, they also have a security issue because one 436 00:20:37,080 --> 00:20:39,560 Speaker 7: of this is this is not straight economic ground. But 437 00:20:39,960 --> 00:20:42,600 Speaker 7: it is very clear that he thinks they should spend 438 00:20:42,640 --> 00:20:44,359 Speaker 7: more on defense. It's not clear what he's going to 439 00:20:44,400 --> 00:20:47,840 Speaker 7: do in Ukraine. There is much greater obligations coming on 440 00:20:47,880 --> 00:20:49,959 Speaker 7: to the Europeans, and the Europeans right now are just 441 00:20:50,000 --> 00:20:51,720 Speaker 7: in no fit state to deal with this. We've got 442 00:20:51,760 --> 00:20:54,440 Speaker 7: a crisis in the German government right now, We've got 443 00:20:54,440 --> 00:20:58,119 Speaker 7: incredibly weak leadership in France. We've got the prospect of 444 00:20:58,160 --> 00:21:00,840 Speaker 7: Marine lapenn higher now in twenty twenty seven, then it 445 00:21:01,000 --> 00:21:04,399 Speaker 7: was thanks to Donald Trump. So I think Europe is 446 00:21:04,440 --> 00:21:05,960 Speaker 7: going to have a tough few years ahead. And the 447 00:21:06,040 --> 00:21:09,000 Speaker 7: real question is can Europe sort of get its own 448 00:21:09,040 --> 00:21:11,960 Speaker 7: house in order to take on more of its responsibilities itself. 449 00:21:12,440 --> 00:21:14,480 Speaker 1: Thus far, we've been talking really about what the United 450 00:21:14,520 --> 00:21:16,760 Speaker 1: States and Donald Trump in the second term would do 451 00:21:16,840 --> 00:21:17,680 Speaker 1: to other countries. 452 00:21:17,920 --> 00:21:19,679 Speaker 2: What about other countries doing things. 453 00:21:19,560 --> 00:21:21,399 Speaker 1: In the United States, because it's a two way street, 454 00:21:21,400 --> 00:21:22,480 Speaker 1: like for example, with China. 455 00:21:22,760 --> 00:21:24,360 Speaker 2: What are the options open to President g. 456 00:21:24,800 --> 00:21:27,760 Speaker 6: I mean, yeah, absolutely, cjmping has not been sitting still 457 00:21:27,840 --> 00:21:31,719 Speaker 6: since you know, Trump won. He has really strengthened his 458 00:21:31,840 --> 00:21:36,360 Speaker 6: retaliatory toolbox. So of course, if President Trump goes through 459 00:21:36,359 --> 00:21:38,840 Speaker 6: with the tariffs, I'm sure we will see a response 460 00:21:39,080 --> 00:21:42,800 Speaker 6: in tariffs, you know, probably on agriculture, chemicals, machinery, you know, 461 00:21:42,840 --> 00:21:45,439 Speaker 6: from the Chinese. But they also have a number of 462 00:21:45,480 --> 00:21:49,040 Speaker 6: other sort of options. For example, they've sort of put 463 00:21:49,040 --> 00:21:51,800 Speaker 6: together a whole new export control law, so we've seen, 464 00:21:52,359 --> 00:21:56,640 Speaker 6: you know that they've put export controls on gallium, germanium, 465 00:21:57,200 --> 00:22:00,760 Speaker 6: you know, licensing restrictions on antimony, so they can look 466 00:22:00,840 --> 00:22:04,840 Speaker 6: at you know, they control a significant part of the 467 00:22:04,880 --> 00:22:08,280 Speaker 6: you know, mining of our critical minerals in the world 468 00:22:08,520 --> 00:22:11,960 Speaker 6: and probably eighty to ninety percent of the processing. So 469 00:22:12,040 --> 00:22:13,880 Speaker 6: when we're looking at our tech industry, when we're looking 470 00:22:13,920 --> 00:22:17,399 Speaker 6: at our defense industry, China really has the opportunity to 471 00:22:17,720 --> 00:22:21,240 Speaker 6: put a chokehold on the development of those industries in 472 00:22:21,280 --> 00:22:23,840 Speaker 6: the United States if it chooses to do so. So 473 00:22:23,880 --> 00:22:26,360 Speaker 6: I think we have to be very careful about how 474 00:22:26,359 --> 00:22:28,080 Speaker 6: far down the rabbit hole we want to go in 475 00:22:28,160 --> 00:22:32,240 Speaker 6: terms of our you know, economic gamesmanship with China, because 476 00:22:32,280 --> 00:22:34,160 Speaker 6: they really do hold a lot of leverage. 477 00:22:34,359 --> 00:22:38,280 Speaker 1: So Zanni, what about Europe? Might Europe Italia doesn't have 478 00:22:38,640 --> 00:22:40,359 Speaker 1: things that really could hurt the United States? 479 00:22:40,960 --> 00:22:43,360 Speaker 7: Well, I think Europe face is potentially a trade war 480 00:22:43,400 --> 00:22:46,920 Speaker 7: on two fronts because it was already starting to raise 481 00:22:46,960 --> 00:22:49,680 Speaker 7: tariffs against China on electric vehicles because it was worried 482 00:22:49,680 --> 00:22:52,680 Speaker 7: about having its auto industry completely wiped out. There will 483 00:22:52,680 --> 00:22:56,359 Speaker 7: definitely be political calls if Donald Trump and poses tariffs 484 00:22:56,400 --> 00:22:58,600 Speaker 7: of any sort on Europe, there will be calls for retaliation. 485 00:22:59,240 --> 00:23:02,199 Speaker 7: But that is the direction that you go to wrecking 486 00:23:02,200 --> 00:23:06,800 Speaker 7: the world economy. It is tariff's retaliatory, tariff's trade war. 487 00:23:06,960 --> 00:23:09,720 Speaker 7: Quickly bounce it up, and we all know what happened 488 00:23:09,760 --> 00:23:13,399 Speaker 7: in the nineteen thirties. And you know, I am determinedly 489 00:23:13,400 --> 00:23:18,119 Speaker 7: staying optimistic, and I'm you know, I worried about the 490 00:23:18,160 --> 00:23:20,640 Speaker 7: potential tail risks of a Trump presidency because of all 491 00:23:20,640 --> 00:23:22,439 Speaker 7: of the things he said in all the four areas 492 00:23:22,480 --> 00:23:25,160 Speaker 7: that I spoke about. I think the risks are very high, 493 00:23:25,240 --> 00:23:27,800 Speaker 7: but it is not certain, and so for the moment, 494 00:23:27,880 --> 00:23:31,560 Speaker 7: I am going to determinedly stay optimistic and consider that 495 00:23:31,560 --> 00:23:33,720 Speaker 7: tariffs will be used as a negotiating tool and we 496 00:23:33,760 --> 00:23:36,320 Speaker 7: will not fall into a tit for tach trade war. 497 00:23:36,400 --> 00:23:38,680 Speaker 7: But you're absolutely right, the risks are definitely there, and 498 00:23:38,720 --> 00:23:41,560 Speaker 7: I think if you are any country that is subject 499 00:23:41,600 --> 00:23:43,320 Speaker 7: to Donald Trump's tariffs, that's going to be a very 500 00:23:43,320 --> 00:23:45,879 Speaker 7: tough decision. How far do you go to retaliate. 501 00:23:46,200 --> 00:23:48,920 Speaker 1: Well, we'll all have that determination to stay optimistic. Thank 502 00:23:48,960 --> 00:23:51,240 Speaker 1: you so much to Elizabeth Economy of the Hoover Institution, 503 00:23:51,520 --> 00:23:53,320 Speaker 1: Sandy Mitton Bedows of the Economists. 504 00:23:53,440 --> 00:23:55,080 Speaker 2: It's sticking with us. Coming up. 505 00:23:55,160 --> 00:23:57,480 Speaker 1: Republicans and Democrats were on the ballot this week, But 506 00:23:57,640 --> 00:24:00,440 Speaker 1: was capitalism as well? And if so, how to do 507 00:24:00,680 --> 00:24:03,000 Speaker 1: We'll talk about what this week's election meant for the 508 00:24:03,080 --> 00:24:06,160 Speaker 1: role of capitalism overall, as we're joined again by former 509 00:24:06,160 --> 00:24:10,040 Speaker 1: Bridgewater Chief Investment strategists Rebecca Patterson. That's next on this 510 00:24:10,119 --> 00:24:20,840 Speaker 1: special election edition of Wall Street Week on Bloomberg. This 511 00:24:20,920 --> 00:24:23,400 Speaker 1: is a special election edition of Wall Street Week. I'm 512 00:24:23,480 --> 00:24:27,080 Speaker 1: David Weston. This program each week presents stories of capitalism, 513 00:24:27,280 --> 00:24:30,840 Speaker 1: the force that underlies the economy, markets, and business. In 514 00:24:30,920 --> 00:24:34,040 Speaker 1: voting for various candidates. This week, Americans may have been 515 00:24:34,080 --> 00:24:36,800 Speaker 1: casting votes not only for the candidates, but on the 516 00:24:36,920 --> 00:24:40,040 Speaker 1: role of capitalism in our society as well. To begin 517 00:24:40,080 --> 00:24:42,639 Speaker 1: to tell the story of how capitalism fared, we welcome 518 00:24:42,640 --> 00:24:45,160 Speaker 1: back now, Zanni Mitton, beto's editor in chief of the Economist, 519 00:24:45,320 --> 00:24:48,720 Speaker 1: and former Bridgewater Chief investment strategist Rebecca Patterson. So I'm 520 00:24:48,720 --> 00:24:50,880 Speaker 1: going to start with you, Zanny. If we really say 521 00:24:51,119 --> 00:24:52,679 Speaker 1: capitalism was on about it, how. 522 00:24:52,520 --> 00:24:52,879 Speaker 2: Did it do? 523 00:24:53,840 --> 00:24:56,320 Speaker 7: So there were two very different visions of capitalism on 524 00:24:56,359 --> 00:24:59,760 Speaker 7: the ballot. I think the Commonaharis vision, which was really 525 00:24:59,760 --> 00:25:03,080 Speaker 7: in a ex tension of the Biden administration, was a 526 00:25:03,119 --> 00:25:07,600 Speaker 7: big state, a state which had pushed used industrial policy 527 00:25:07,680 --> 00:25:10,560 Speaker 7: actively to push for domestic jobs, but which had allowed, 528 00:25:10,600 --> 00:25:13,280 Speaker 7: because of its very big stimulus, inflation to get out 529 00:25:13,320 --> 00:25:16,000 Speaker 7: of control. But it's really a kind of more protective state, 530 00:25:16,280 --> 00:25:19,800 Speaker 7: quite a lot of redistribution. The vision that Donald Trump 531 00:25:19,960 --> 00:25:26,680 Speaker 7: promises is a unleashing Elon Musk style of capitalism, capitalist innovation, 532 00:25:27,240 --> 00:25:30,400 Speaker 7: massive tax cutting, getting rid of the kind of burden 533 00:25:30,480 --> 00:25:33,520 Speaker 7: of the state. But also, interestingly, I think two elements 534 00:25:33,560 --> 00:25:36,960 Speaker 7: which run counter to that, the deportations, which are really 535 00:25:37,320 --> 00:25:41,040 Speaker 7: huge infringements on the free movement of people, and the tariffs, 536 00:25:41,080 --> 00:25:45,000 Speaker 7: which are blocking competition from abroad. So, you know, trum quonomics, 537 00:25:45,040 --> 00:25:47,040 Speaker 7: if you will, has a kind of an interesting vision 538 00:25:47,040 --> 00:25:49,000 Speaker 7: of capitalism because it talks a big game about it 539 00:25:49,040 --> 00:25:51,760 Speaker 7: being the free market, but actually it's not completely free. 540 00:25:51,760 --> 00:25:54,439 Speaker 7: And I think the other interesting element to me is 541 00:25:54,640 --> 00:25:57,560 Speaker 7: just how much this becomes a capitalism for special interests, 542 00:25:57,960 --> 00:26:00,840 Speaker 7: because there are if you are a powerful person who 543 00:26:00,840 --> 00:26:03,600 Speaker 7: has the presidents here, I think for the coming four years, 544 00:26:03,840 --> 00:26:05,719 Speaker 7: you are going to be so much better off than 545 00:26:05,760 --> 00:26:08,560 Speaker 7: if you are a powerful person who the president doesn't like. 546 00:26:08,880 --> 00:26:13,159 Speaker 7: And so I think we could see a deregulatory wave 547 00:26:13,400 --> 00:26:15,600 Speaker 7: which would be good for growth and would be more 548 00:26:15,600 --> 00:26:18,040 Speaker 7: akin to the sort of free market capitalism, but with 549 00:26:18,119 --> 00:26:21,159 Speaker 7: these constraints that come from tariffs, and then this very 550 00:26:21,320 --> 00:26:24,040 Speaker 7: weird winner picking that depends on whether President Trump likes 551 00:26:24,080 --> 00:26:24,399 Speaker 7: you or not. 552 00:26:24,920 --> 00:26:26,560 Speaker 1: So, Recca, I want to pick up on what Zanny 553 00:26:26,560 --> 00:26:29,159 Speaker 1: said talking about the free movement of people across borders 554 00:26:29,240 --> 00:26:31,640 Speaker 1: what about the movement of capital, because an essential part 555 00:26:31,680 --> 00:26:34,520 Speaker 1: of capitalism is free movement of capital, and we hear, 556 00:26:34,760 --> 00:26:39,560 Speaker 1: for example, inbound investment regulations protectedly on China. Will the 557 00:26:39,600 --> 00:26:42,520 Speaker 1: Trump administration this time allow capital. 558 00:26:42,160 --> 00:26:42,840 Speaker 2: To move freely? 559 00:26:43,080 --> 00:26:46,480 Speaker 3: Well, certainly there's a hope that these tariffs, and we've 560 00:26:46,480 --> 00:26:48,600 Speaker 3: heard this on the campaign trail, that the tariffs will 561 00:26:48,640 --> 00:26:51,280 Speaker 3: force foreign companies to invest more in America. If you 562 00:26:51,280 --> 00:26:54,000 Speaker 3: don't want to be tariffed, bring your companies, your workers, 563 00:26:54,000 --> 00:26:57,040 Speaker 3: your technology, your money here. I think there's a question 564 00:26:57,080 --> 00:26:59,960 Speaker 3: if that will happen. You know, in Trump's first turn, 565 00:27:00,240 --> 00:27:02,280 Speaker 3: we actually saw a bit of a slowing in foreign 566 00:27:02,320 --> 00:27:05,840 Speaker 3: direct investment into the United States. And I don't know 567 00:27:05,880 --> 00:27:07,960 Speaker 3: what will happen. I don't think anyone does for sure. 568 00:27:08,000 --> 00:27:11,320 Speaker 3: But if we had tariffs across the world around everyone, 569 00:27:11,880 --> 00:27:14,159 Speaker 3: is it going to make our foreign allies more or 570 00:27:14,240 --> 00:27:18,120 Speaker 3: less excited about putting money here? And so I worry 571 00:27:18,160 --> 00:27:20,680 Speaker 3: a little bit about capital coming in, and that capital 572 00:27:20,720 --> 00:27:24,040 Speaker 3: is important. You know, we talk about a manufacturing renaissance. 573 00:27:24,119 --> 00:27:27,680 Speaker 3: Last year, almost a quarter of all manufacturing jobs were 574 00:27:27,680 --> 00:27:31,399 Speaker 3: for US affiliates of foreign companies. So this FDI is 575 00:27:31,440 --> 00:27:35,200 Speaker 3: foreign direct investment that comes in builds factories, it gives 576 00:27:35,320 --> 00:27:39,800 Speaker 3: US tech transfer which helps our capitalism TSMC Taiwan, Semi 577 00:27:40,040 --> 00:27:43,720 Speaker 3: in Arizona, great case in point, but it does create jobs. 578 00:27:43,760 --> 00:27:45,399 Speaker 3: So I think we need to be careful about that 579 00:27:45,480 --> 00:27:48,879 Speaker 3: capital movement. And to your point, Siphius, so basically the 580 00:27:49,040 --> 00:27:52,760 Speaker 3: multi agency group that's trying to oversee. 581 00:27:52,200 --> 00:27:54,119 Speaker 5: Money coming in and out of the country. 582 00:27:53,720 --> 00:27:57,160 Speaker 3: For national security reasons, there's a good chance that gets 583 00:27:57,200 --> 00:28:00,440 Speaker 3: tightened further, and so that could also slow capital coming 584 00:28:00,560 --> 00:28:05,399 Speaker 3: across borders. And I generally think the more of those restrictions, 585 00:28:06,000 --> 00:28:08,479 Speaker 3: all else equal, I think it can be a net 586 00:28:08,560 --> 00:28:09,040 Speaker 3: negative for. 587 00:28:09,040 --> 00:28:09,560 Speaker 5: The US Now. 588 00:28:09,560 --> 00:28:12,159 Speaker 3: Of course, national security matters, but we want to be 589 00:28:12,200 --> 00:28:14,200 Speaker 3: careful we don't push that envelope too far. 590 00:28:15,040 --> 00:28:16,960 Speaker 7: I mean, the interesting thing about the US is that 591 00:28:17,080 --> 00:28:19,840 Speaker 7: it's I mean, this election has happened at a time 592 00:28:19,920 --> 00:28:22,879 Speaker 7: when the US economy is, as you've discussed many times 593 00:28:22,880 --> 00:28:26,280 Speaker 7: on this show, is in an extraordinarily strong situation. And 594 00:28:26,400 --> 00:28:29,120 Speaker 7: that doesn't mean I'm not belittling the very real concerns 595 00:28:29,119 --> 00:28:31,840 Speaker 7: people have had about high inflation. But right now, this 596 00:28:31,920 --> 00:28:33,760 Speaker 7: is an economy that is the envy of the world, 597 00:28:34,040 --> 00:28:35,800 Speaker 7: and it's been the envy of the world because it 598 00:28:35,840 --> 00:28:38,720 Speaker 7: is a magnet for global capital. It's a place where 599 00:28:38,720 --> 00:28:42,360 Speaker 7: innovative ideas, thanks to liquid capital markets and venture capital 600 00:28:42,360 --> 00:28:45,479 Speaker 7: and so forth, can be turned into huge businesses very quickly. 601 00:28:45,800 --> 00:28:48,920 Speaker 7: There is a relatively light regulatory touch, but there is 602 00:28:48,960 --> 00:28:51,160 Speaker 7: a rule of law that people believe in, and there 603 00:28:51,200 --> 00:28:54,400 Speaker 7: is a kind of stability that comes from institutions that 604 00:28:54,800 --> 00:28:57,360 Speaker 7: are there and sort of set the rules. And I 605 00:28:57,360 --> 00:29:00,160 Speaker 7: think all of those things are potentially kind of being 606 00:29:00,200 --> 00:29:02,320 Speaker 7: thrown up in the air, and they may come to 607 00:29:02,400 --> 00:29:05,200 Speaker 7: a better place. I mean, if Elon Musk comes in 608 00:29:05,240 --> 00:29:07,760 Speaker 7: with his Department of Cost Cutting and finds too trillion 609 00:29:07,840 --> 00:29:10,560 Speaker 7: to slash from the federal spending, it's going to be 610 00:29:10,640 --> 00:29:13,920 Speaker 7: dramatic change. Some of that change may be good, some 611 00:29:14,080 --> 00:29:16,560 Speaker 7: of it, I would imagine, would be, you know, gut 612 00:29:16,600 --> 00:29:20,600 Speaker 7: wrenching and probably not so good. Similarly, deregulation, I think 613 00:29:20,640 --> 00:29:22,960 Speaker 7: there are plenty of errors actually whether you could usefully 614 00:29:22,960 --> 00:29:26,960 Speaker 7: deregulate in this country permitting reform desperately necessary to build 615 00:29:26,960 --> 00:29:30,400 Speaker 7: the infrastructure that's necessary. But if you throw away all rules, 616 00:29:30,440 --> 00:29:33,080 Speaker 7: Let's say, in artificial intelligence, do we really want a 617 00:29:33,160 --> 00:29:37,040 Speaker 7: free for all in AI with no guards whatsoever? And 618 00:29:37,080 --> 00:29:39,600 Speaker 7: so What worries me is that you're going to have 619 00:29:39,640 --> 00:29:42,840 Speaker 7: a kind of deregulatory agenda that is defined by special interests. 620 00:29:43,040 --> 00:29:45,200 Speaker 7: I hope that's not the case, but I really worry 621 00:29:45,240 --> 00:29:48,720 Speaker 7: that it is the people closest to Donald Trump, who 622 00:29:48,720 --> 00:29:52,160 Speaker 7: get his ear, who get to define what a regulatory 623 00:29:52,200 --> 00:29:53,680 Speaker 7: agenda is and what the capitalism is. 624 00:29:53,680 --> 00:29:55,600 Speaker 1: If you will, let me add one other elematis, and 625 00:29:55,640 --> 00:29:59,240 Speaker 1: that's industrial policy, which was on the ascendancy under I 626 00:29:59,280 --> 00:30:01,440 Speaker 1: think a person Biden with things like the Chips and 627 00:30:01,440 --> 00:30:03,680 Speaker 1: Science Act and then Fish and Production Act, and it's 628 00:30:03,680 --> 00:30:05,240 Speaker 1: been a bond of contention between the United States and 629 00:30:05,280 --> 00:30:07,200 Speaker 1: Europe to some extent. Does that go away now or 630 00:30:07,200 --> 00:30:08,040 Speaker 1: at least diminish? 631 00:30:08,440 --> 00:30:10,240 Speaker 7: I think it just changes, it has a different form. 632 00:30:10,560 --> 00:30:12,560 Speaker 7: I don't think it goes away at all, in the 633 00:30:12,560 --> 00:30:15,800 Speaker 7: sense that you know, tariffs, selected tariffs are effectively a 634 00:30:15,800 --> 00:30:19,840 Speaker 7: form of industrial policy. They're favoring certain domestic industries. Will 635 00:30:19,920 --> 00:30:24,880 Speaker 7: all of the or some of the IRA's subsidies go, yes, 636 00:30:25,040 --> 00:30:27,600 Speaker 7: although it's worth remembering that most of those subsidies go 637 00:30:27,680 --> 00:30:29,920 Speaker 7: to red steaks, and so there will be a lot 638 00:30:29,960 --> 00:30:33,240 Speaker 7: of Republican politicians and indeed a lot of Republican voting 639 00:30:33,400 --> 00:30:35,600 Speaker 7: CEOs who have benefited from them, who are going to 640 00:30:35,600 --> 00:30:38,840 Speaker 7: be lobbying furiously that they get that those tax credits stay. 641 00:30:39,560 --> 00:30:42,600 Speaker 1: President Trump has a close friend in tech named Elon Musk. 642 00:30:43,240 --> 00:30:45,200 Speaker 1: Tell us about what this means for tech and particularly AI, 643 00:30:45,320 --> 00:30:47,880 Speaker 1: which is the big topic we talk about NonStop around here. 644 00:30:47,960 --> 00:30:49,360 Speaker 2: Did AI win or lose this week? 645 00:30:49,480 --> 00:30:53,200 Speaker 3: Well, I think oh AI definitely wins this week. And 646 00:30:53,240 --> 00:30:56,080 Speaker 3: I think AI and the US is comparative advantage, and 647 00:30:56,160 --> 00:30:59,800 Speaker 3: technology generally is a huge, huge support for our economy, 648 00:31:00,080 --> 00:31:02,040 Speaker 3: for our stock market, given the waight it has in 649 00:31:02,080 --> 00:31:04,640 Speaker 3: the stock market. A lot of the outperformance of the 650 00:31:04,720 --> 00:31:06,960 Speaker 3: US versus the rest of the world is because of tech. 651 00:31:08,160 --> 00:31:09,320 Speaker 5: I agree with Zanny though. 652 00:31:09,360 --> 00:31:11,440 Speaker 3: I mean, when you think about the executive order that 653 00:31:11,480 --> 00:31:14,920 Speaker 3: got passed last year in the United States around artificial intelligence, 654 00:31:15,360 --> 00:31:18,960 Speaker 3: it wasn't trying to stemy innovation. It was meant to 655 00:31:19,080 --> 00:31:21,719 Speaker 3: ensure that there was collaboration between the public and private 656 00:31:21,760 --> 00:31:25,440 Speaker 3: sector and between the US government and its allies. So 657 00:31:25,640 --> 00:31:29,320 Speaker 3: we're all understanding leading edge technology the same way, and 658 00:31:29,360 --> 00:31:31,440 Speaker 3: we can look out for those risks and make sure 659 00:31:31,440 --> 00:31:34,400 Speaker 3: that AI gives us the benefits, and hopefully we minimize 660 00:31:34,560 --> 00:31:37,040 Speaker 3: some of the negative tails that could come from AI. 661 00:31:37,520 --> 00:31:39,960 Speaker 3: So my hope is that by the time President Trump 662 00:31:40,000 --> 00:31:43,360 Speaker 3: goes back into office, someone's whispered in his ear that 663 00:31:44,320 --> 00:31:47,080 Speaker 3: it's not a guardrail, it's not slowing us down, it's 664 00:31:47,120 --> 00:31:49,600 Speaker 3: helping us protect from that tail risk. You don't want 665 00:31:49,640 --> 00:31:51,680 Speaker 3: to wake up and see happened while you were sleeping. 666 00:31:51,840 --> 00:31:54,480 Speaker 7: I think it's going to depend so often, right policy 667 00:31:54,600 --> 00:31:58,400 Speaker 7: is personnel, and it really depends who he puts into positions, 668 00:31:58,400 --> 00:32:03,040 Speaker 7: particularly on everything, but certainly on AI and I. You know, 669 00:32:03,160 --> 00:32:05,600 Speaker 7: is he going to be in favor of open source? 670 00:32:05,680 --> 00:32:07,360 Speaker 7: Is he going to be in favor of the big 671 00:32:07,800 --> 00:32:08,520 Speaker 7: leading models? 672 00:32:08,560 --> 00:32:08,720 Speaker 1: You know. 673 00:32:08,800 --> 00:32:12,640 Speaker 7: On the one hand, you know, you think, as you say, rightly, 674 00:32:12,640 --> 00:32:14,480 Speaker 7: the US is in a very strong position because these 675 00:32:14,760 --> 00:32:18,840 Speaker 7: dominant companies in AI are US companies. On the other hand, 676 00:32:19,200 --> 00:32:21,680 Speaker 7: you know, Vice President elect jd Vance has been has 677 00:32:21,720 --> 00:32:23,960 Speaker 7: said a lot of things very favorable about Lena Khan 678 00:32:24,080 --> 00:32:26,960 Speaker 7: and about the importance of trustbusting and the importance of competition. 679 00:32:27,480 --> 00:32:31,840 Speaker 7: The capabilities, as you discussed very frequently, are growing so dramatically. 680 00:32:32,360 --> 00:32:34,719 Speaker 7: So now is the time to be cognizant of what 681 00:32:34,760 --> 00:32:38,440 Speaker 7: all of this means and to think about it, worry 682 00:32:38,440 --> 00:32:40,080 Speaker 7: about it. I'm not in the camp that you should 683 00:32:40,080 --> 00:32:43,200 Speaker 7: sort of over regulate, but you should have serious people 684 00:32:43,240 --> 00:32:45,480 Speaker 7: thinking seriously about what do we want to do. And 685 00:32:45,480 --> 00:32:47,520 Speaker 7: and I worry that we're going to be infused a 686 00:32:47,520 --> 00:32:50,280 Speaker 7: little bit with that kind of West Coast mentality of 687 00:32:50,400 --> 00:32:53,800 Speaker 7: gopher brogue. And you know, no government is better always 688 00:32:53,800 --> 00:32:56,560 Speaker 7: and who cares about the consequences, and the terroriffs have 689 00:32:56,640 --> 00:32:58,760 Speaker 7: the potential to really splinter things. 690 00:32:59,000 --> 00:33:01,440 Speaker 3: You know that China continues to push on its own 691 00:33:01,480 --> 00:33:05,360 Speaker 3: that this bricks grouping of countries gets even more strength 692 00:33:05,400 --> 00:33:05,880 Speaker 3: within it. 693 00:33:05,840 --> 00:33:07,080 Speaker 5: Because they think they have to. 694 00:33:07,160 --> 00:33:09,640 Speaker 3: And that could include things like AI and technology, it 695 00:33:09,640 --> 00:33:14,600 Speaker 3: could include financial markets, the dollar based system. And then meanwhile, 696 00:33:14,800 --> 00:33:18,480 Speaker 3: we need our allies. We need ASML in the Netherlands 697 00:33:18,840 --> 00:33:22,000 Speaker 3: to do what we're doing, We need companies around the world. 698 00:33:22,080 --> 00:33:23,920 Speaker 3: And so are we going to continue to have that 699 00:33:23,960 --> 00:33:27,880 Speaker 3: cooperation and collaboration if we're continuing to put up the 700 00:33:27,920 --> 00:33:30,960 Speaker 3: walls at home? And I'm hoping that these countries realize 701 00:33:30,960 --> 00:33:33,360 Speaker 3: it's in their interest to keep working with us, regardless 702 00:33:33,360 --> 00:33:36,240 Speaker 3: of who's in office and the policies. But it is 703 00:33:36,280 --> 00:33:38,200 Speaker 3: something I would put on my keep me up at night. 704 00:33:38,280 --> 00:33:38,480 Speaker 7: List. 705 00:33:38,960 --> 00:33:41,600 Speaker 1: So one last quick one, which is after the election, 706 00:33:42,040 --> 00:33:44,520 Speaker 1: come back to foreign direct investment. Is it more likely 707 00:33:44,560 --> 00:33:46,920 Speaker 1: the United States will attract more foreign direct investment? 708 00:33:48,520 --> 00:33:51,680 Speaker 3: I mean President elect Trump has suggested he's going to 709 00:33:51,720 --> 00:33:56,360 Speaker 3: create low tax zones focused on manufacturing to try to 710 00:33:56,400 --> 00:33:59,280 Speaker 3: bring in these companies. You won't have tariffs if you 711 00:33:59,360 --> 00:34:00,760 Speaker 3: put money here, and we're going to give. 712 00:34:00,600 --> 00:34:01,520 Speaker 5: You these tax breaks. 713 00:34:01,880 --> 00:34:04,560 Speaker 3: I'm curious to see what actually gets enacted, what gets past, 714 00:34:04,640 --> 00:34:08,719 Speaker 3: what happens how quickly. But if you are, you know, 715 00:34:08,760 --> 00:34:12,120 Speaker 3: one of these discount retailers or apparel makers in China 716 00:34:12,200 --> 00:34:15,719 Speaker 3: right now, and your supply is coming from there, how 717 00:34:15,719 --> 00:34:17,960 Speaker 3: big is that price change if you come to the US, 718 00:34:18,040 --> 00:34:21,319 Speaker 3: even with those tax breaks. I don't know if that's 719 00:34:21,360 --> 00:34:22,880 Speaker 3: going to be their first port of call or if 720 00:34:22,880 --> 00:34:24,719 Speaker 3: they're going to be shopping around the world first. 721 00:34:24,760 --> 00:34:28,160 Speaker 7: Yeah, I'm not sure that. If I was an parale maker, 722 00:34:28,480 --> 00:34:30,560 Speaker 7: I would be rushing here, but pretty much everybody else 723 00:34:30,600 --> 00:34:33,480 Speaker 7: will be. This was already an economy that was attracting 724 00:34:33,719 --> 00:34:35,799 Speaker 7: enormous amounts of foreid investment, and it was doing so 725 00:34:35,880 --> 00:34:38,400 Speaker 7: because it's got cutting edge technology and it's called booming 726 00:34:38,400 --> 00:34:44,080 Speaker 7: growth and subsidies yes, and subsidies, but I think you'll 727 00:34:44,160 --> 00:34:48,520 Speaker 7: still get assistance for favored sectors. You will still have 728 00:34:48,600 --> 00:34:52,000 Speaker 7: a fast growing economy. And if you have the good 729 00:34:52,040 --> 00:34:54,840 Speaker 7: elements of or potentially good elements of a Trump agenda, 730 00:34:54,920 --> 00:34:57,319 Speaker 7: So if you have, you know, corporate tax cuts, they'll 731 00:34:57,320 --> 00:34:59,920 Speaker 7: be unaffordable eventually, but they'll be fine for a few years, 732 00:35:00,320 --> 00:35:03,520 Speaker 7: and you have significant deregulation. I think this will be 733 00:35:03,560 --> 00:35:06,680 Speaker 7: a magnet for places, and it will be politically expedient 734 00:35:06,719 --> 00:35:11,279 Speaker 7: for companies to be seen to be doing something. So unfortunately, 735 00:35:11,440 --> 00:35:13,800 Speaker 7: I totally agree with you that this fragmentation of the 736 00:35:13,800 --> 00:35:15,799 Speaker 7: world economy in the medium to long term, I think 737 00:35:15,880 --> 00:35:18,279 Speaker 7: is a terrible thing. And I'm you know, I work 738 00:35:18,320 --> 00:35:20,279 Speaker 7: for a newspaper magazine that has spent one hundred and 739 00:35:20,280 --> 00:35:22,200 Speaker 7: eighty years arguing against the tariff's and I'm not going 740 00:35:22,239 --> 00:35:24,560 Speaker 7: to change my mind now. But in the short term, 741 00:35:24,640 --> 00:35:27,239 Speaker 7: it is possible that they put together a cocktail that 742 00:35:27,280 --> 00:35:28,600 Speaker 7: will draw in a lot. 743 00:35:28,400 --> 00:35:31,920 Speaker 1: Of money, but we'll remain determinedly optimistic. 744 00:35:33,360 --> 00:35:34,640 Speaker 7: It's my new resolution. 745 00:35:34,880 --> 00:35:35,279 Speaker 2: I'm with that. 746 00:35:35,360 --> 00:35:38,160 Speaker 1: It's any mitten Bedos and Rebecca Patterson, thank you so 747 00:35:38,239 --> 00:35:40,600 Speaker 1: much for being here on Wall Street Week. That does 748 00:35:40,600 --> 00:35:43,040 Speaker 1: it for this episode of Wall Street Week, I'm David Weston. 749 00:35:43,120 --> 00:35:44,000 Speaker 2: This is Bloomberg. 750 00:35:44,200 --> 00:35:59,400 Speaker 1: See you next week for more stories of capitalism.