Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: We start strong with Frankly Folks. The most important interview
Speaker 2: of the day. Acid allocators are Diamond does and every
Speaker 2: firm's got ten twenty thirty people loving. They want to
Speaker 2: get out there and allocate your assets. Steve chiveron is
Speaker 2: it federated federate inter medicine? He does it with a
Speaker 2: shocking clarity and directness. Are we over diversified right now?
Speaker 2: O wise?
Speaker 3: One depends on where you're investing. I think in the US,
Speaker 3: I think investors are about right. I think being overweight
Speaker 3: the US. I think that home bio is actually appropriate
Speaker 3: right now. And I think the non US equity outperformance
Speaker 3: of the first half will prove to be relatively short lived.
Speaker 2: I was in you say the worst is behind US.
Speaker 3: Worst of the tariffun certainty. Yeah, I agree, I think
Speaker 3: it is, and I think you're in a de escalation
Speaker 3: phase there. I wasn't surprised by the presidents kind of
Speaker 3: slapping around of Europe on Friday. There was a little
Speaker 3: bit of complacency I think, both amongst the negotiating parties
Speaker 3: and the market that you know, once he had de escalated,
Speaker 3: that was it and you could kind of slow walk it.
Speaker 3: So he needed to kind of shock the system a
Speaker 3: little bit. I also wasn't surprised when that had its
Speaker 3: intended effect and he pushed back out to July. But
Speaker 3: Tom talking to investors outside the United States, they were
Speaker 3: shockingly under allocated to the US. You know, you have
Speaker 3: folks on the mainland with maybe only twenty percent in
Speaker 3: US equities, which is sixty percent, seventy percent of the
Speaker 3: global market cap of the kind of MSCI world or
Speaker 3: MSCA country world. And so I think there's still buyers
Speaker 3: to come into this market. And I think the most
Speaker 3: likely outcome here is a slow Sole crushing grind higher
Speaker 3: in US equities that will pull the skeptics in over
Speaker 3: the course of the year.
Speaker 2: Sol Crushing Grind that was on Everston Lincoln Palmer's third album,
Speaker 2: Crazy Crushing.
Speaker 4: There's a reserve going to do here, given some of
Speaker 4: the economic data we're seeing here and some of the
Speaker 4: I guess some of the uncertainty that from the tariff discussions.
Speaker 3: You know, look, I find some of the rhetoric uncertainty
Speaker 3: out of the Federal Reserve a little surprising. I get
Speaker 3: wanting to be patient. I think that's right. I think
Speaker 3: if you think thoughtfully about any impact of tariffs, the
Speaker 3: impacts are much more severe on growth than they are inflation.
Speaker 3: And I think you have an economy that has slowed
Speaker 3: in a consumer that's under some pressure. So I hear
Speaker 3: them talk about patients, I think they're going to cut
Speaker 3: this year. They just don't know it yet.
Speaker 2: You have an advantage of adults, it federated. Are people
Speaker 2: old and grizzled? I mean, you're doing asset allocation and
Speaker 2: that and your clear memo is by American, by technology.
Speaker 2: Is that what your portfolio managers are doing.
Speaker 3: That's what we did this cycle. I mean, you know,
Speaker 3: we said at the beginning of the year I was
Speaker 3: on this show that we were strapping ourselves to the mast.
Speaker 3: We weren't going to get caught in the emotional you know, turmoil,
Speaker 3: and that we wanted to add to equities through the distress.
Speaker 3: And we did and where we added Tom was in
Speaker 3: large cap growth. You got the mag seven and the
Speaker 3: large cap Growth index somewhere around six multiple points below
Speaker 3: it's three year average. You don't pass on a six
Speaker 3: multiple point discount with companies that are generating the kind
Speaker 3: of cash flow and growth that those companies are. And
Speaker 3: so that was the buy this time around. I'll tell
Speaker 3: you I still think and I know it's been waiting
Speaker 3: for goodou, but I think the second half story is
Speaker 3: going to be ones where small caps and cyclicals assert
Speaker 3: themselves as well.
Speaker 4: So what do we we had the U that downgraded,
Speaker 4: I mean, does that kind of call into any question
Speaker 4: recession risk here? I mean? Or we're just kind of
Speaker 4: a slowing economy grind higher.
Speaker 3: As goes the US consumer goes the US economy, and
Speaker 3: as goes the US labor market goes the US consumer.
Speaker 5: You know.
Speaker 3: And here's the thing, and here's why I don't buy
Speaker 3: into the kind of recession views. Companies had a wonderful
Speaker 3: excuse if they wanted it to lay off workers last month.
Speaker 3: They had terriff uncertainty, they had growth slowed downs, They
Speaker 3: could have slashed their guidance.
Speaker 2: They didn't.
Speaker 3: They pulled it in some cases, and they didn't take it.
Speaker 3: And I think this is the lesson of twenty twenty
Speaker 3: when folks, you know, companies fired folks and then it
Speaker 3: took them three years and thirty percent more to hire
Speaker 3: them back. And so unless you see that labor market break,
Speaker 3: I don't think you have recession on the table. I'd
Speaker 3: also say Paul, that you know there's this there's this
Speaker 3: wonderful romanticism around the bond vigilantes, and that's what's pushing
Speaker 3: yields up. But that doesn't explain German bunniel. That doesn't
Speaker 3: explain Japanese government bond yields. And if that really is
Speaker 3: a story of three separate bond market issues, would you
Speaker 3: rather buy the bond when they're raising debt to buy bullets,
Speaker 3: or would you rather buy the US treasury where they're
Speaker 3: raising debt to stimulate.
Speaker 2: I don't care. The reason we hedge in is I
Speaker 2: want you to talk about it is a new way.
Speaker 2: I did this the other day at a fabulous meeting
Speaker 2: with your good competitor PIMCO, and we talked about all
Speaker 2: these new derivative instruments. Federated and your good competitor, PIMCOH
Speaker 2: Fidelity and others are incredibly vanilla you avoid the derivative plague.
Speaker 2: Right now, we got lots of buy right strategies. Everybody's
Speaker 2: got a buffer thing going in that tell me about
Speaker 2: asset allocation and the solution being all these gimmicky investments.
Speaker 5: Yeah.
Speaker 3: Look, I think for very specific client needs, whether it's
Speaker 3: enhancing income or you've got real risk aversion, you know,
Speaker 3: derivatives can play a role over the long run in
Speaker 3: terms of building sustainable, quiet wealth, if you will. The
Speaker 3: story is about staying invested. I mean everything around that
Speaker 3: is just behavioral. It's about staying invested. So the question
Speaker 3: is how do you understand the client, how do you
Speaker 3: understand what their what their risk tolerance is, and then
Speaker 3: build them a long term asset allocation and then be
Speaker 3: tactical enough tom that you don't whips all your way
Speaker 3: out of returns, but you provide the client with enough
Speaker 3: comfort to say, Okay, we're not just sitting here blindly.
Speaker 3: Because at the end of the day, the story is
Speaker 3: really simple. Just because it's difficult doesn't mean that it's complicated.
Speaker 3: Investing is difficult because it's hard to stay invested, it's
Speaker 3: hard to stay unemotional, but it's not nearly as complicated
Speaker 3: as we make it out to be. That's just us
Speaker 3: making ourselves feel better that it's hard.
Speaker 2: See how he gets he just ramps it up there.
Speaker 2: Sure he gets a totally mental engage like stand up.
Speaker 2: That was brilliant. I think we're going to use that
Speaker 2: on single best idea to Steve shiveron Thank you so
Speaker 2: much with feeder airms. What you just heard there, folks, Karanzi.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay.
Speaker 6: And Android Auto with the Bloomberg Business app.
Speaker 1: You can also listen live on Amazon Alexa from our
Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 2: He is definitive as a public service of the nation.
Speaker 2: Nicholas Burns joins us now with this work across our
Speaker 2: State Department, our diplomacy for decades, culminating and extended to
Speaker 2: her duty as ambassador to China. We welcome Nick Burns
Speaker 2: of Wellesley, Massachusetts this morning.
Speaker 5: Nick.
Speaker 2: What I loved great about your eight day work week
Speaker 2: in China was there you would be working doing the
Speaker 2: diplomatic thing in Beijing, and then you get on the
Speaker 2: train here's a caption. Folks, most people in China. Folks
Speaker 2: like me, we go to Hong Kong, Shanghai, to blocks
Speaker 2: of Beijing, and we say we went to China. Nick
Speaker 2: Burns has done further. We crossed the Yellow River at
Speaker 2: Hanan at one hundred and ninety one miles an hour
Speaker 2: on the high speed train. What do we most get wrong,
Speaker 2: Nick Burns, about the inner China that you experienced, Well.
Speaker 7: Good morning, Tom, and it's great pleasure to be with
Speaker 7: you after a long, long stretch. You know, China is
Speaker 7: a multifacet society. On the one hand, you have the
Speaker 7: Communist Party of China, major competitor of the United States
Speaker 7: and military, tech, economic, human rights ground. So I had
Speaker 7: a you know, kind of a combative relationship at times
Speaker 7: with that government, and we had to be aggressive in
Speaker 7: holding the line. On the other hand, the other job
Speaker 7: of being an ambassador is not just to the government
Speaker 7: of China, to the to the one point four billion
Speaker 7: people of China. And I found the Chinese people outside
Speaker 7: the Communist Party to be extraordinarily entrepreneurial, to be very
Speaker 7: very hard working, creative, innovative, and very civil when you
Speaker 7: met them. My wife, Liby and I didn't encounter any
Speaker 7: direct anti americanism when you're talking to the Chinese people.
Speaker 7: I encountered a lot of it when I work with
Speaker 7: the government of China, and so we decided that, you know,
Speaker 7: we had to travel in China to get to know
Speaker 7: party secretaries, governors, business leaders, universities, and we went most
Speaker 7: often by high speed rail because they have a magnificent
Speaker 7: trains and that's how you get to know people on
Speaker 7: the train and see the countryside and get to understand
Speaker 7: the country.
Speaker 2: Do we have a knowledge behind those red doors in Beijing?
Speaker 2: Is it like when we were with the Russians before
Speaker 2: the collapse where our intelligence was lacking. Is there's a
Speaker 2: mystery to ji in the government or do we actually
Speaker 2: have a handle on what's going on? Well, I'd say
Speaker 2: two things.
Speaker 7: First, you know, we had daily contact with the government
Speaker 7: of China, and you I spend a lot of time
Speaker 7: with a Chinese leadership, with ministers, for instance, and so
Speaker 7: you do get to know them. But the party, the
Speaker 7: Communist Party, which is so powerful right now, is very
Speaker 7: good at being opaque and Chinese politicians, political leaders do
Speaker 7: not reveal the private side of them of their lives
Speaker 7: as they do in the United States and most.
Speaker 2: Of the rest of the world.
Speaker 7: So there is a lack of transparency there and sometimes
Speaker 7: it's a guessing game. But we did our best, obviously
Speaker 7: and working with them to get a sense of what
Speaker 7: their motivations were. You know, we were as I said before,
Speaker 7: I figured about eighty percent of my job was competing
Speaker 7: with China on behalf of the United States, and maybe
Speaker 7: twenty percent was working on climate change and working on fentanyl,
Speaker 7: which is a critical issue for US and on the
Speaker 7: cooperative side. And so this is not an easy relationship
Speaker 7: for the United States.
Speaker 4: Nicholas, how do you think that the Chinese government wants
Speaker 4: to proceed with the US? Do they want to engage
Speaker 4: with the West or are they comfortable? And what's kind
Speaker 4: of becoming I guess a new Cold war, certainly technological
Speaker 4: Cold war between China and the West. How do they
Speaker 4: want to approach it?
Speaker 7: That's such a fascinating subject. On the one hand, given
Speaker 7: the fact that China has the world's largest export economy
Speaker 7: and manufacturing economy, they have to have ties with the
Speaker 7: United States, Japan, Korea, and Europe because that's the market
Speaker 7: for their economy and that keeps their GDP growth rate up,
Speaker 7: So there is a sense a part of China inc.
Speaker 7: Which wants to be integrated with the rest of the world.
Speaker 7: But you're right. I mean what has emerged over the
Speaker 7: last several years is a very close strategic partnership between
Speaker 7: China and Russia and at times when they're on in
Speaker 7: North Korea as well, and that's a formidable set of countries.
Speaker 7: What they're trying to do, which Chijinping is trying to do,
Speaker 7: is offset the real strength of the United States in
Speaker 7: global competition, and that is that we have alliances in
Speaker 7: the East Asia with Japan, South Korea, the Philippines, Thailand,
Speaker 7: in Australia. These are treaty alliances and that gives us
Speaker 7: a weight and leverage over the Chinese that they don't have,
Speaker 7: and so they've tried to offset it with these other relationships.
Speaker 7: But Russia and North Korea and Iran are not the
Speaker 7: economic powers that Japan. Certainly is that India is as
Speaker 7: a partner of the United States. So I think that's
Speaker 7: our big advantage. Maybe that's the number one lesson that
Speaker 7: I learned or relearned as ambassador to China. I'd also
Speaker 7: been ambassador to NATO that we have to count on
Speaker 7: our allies, and we have to be respectful of our
Speaker 7: allies and build those relationships. That's the best way I
Speaker 7: think to deter the Chinese.
Speaker 4: Well, that does not perhaps is the view of the
Speaker 4: Trump administration in terms of how the Trump administration is
Speaker 4: treating US allies. Here does President she in the Chinese
Speaker 4: government view that is potentially an opening to weaken the US,
Speaker 4: I guess influence globally.
Speaker 7: I think they do. You'll remember after April second, when
Speaker 7: the President made his President Trump made his major tariff announcements,
Speaker 7: the Chinese were very quick to say, to the Japanese
Speaker 7: and South Koreans in particular, let's all get together the
Speaker 7: three of US, China, South Korea, and Japan against the
Speaker 7: United States. Of course, Japan and South Korea would not
Speaker 7: have it, but they're seeking. The Chinese are seeking those openings.
Speaker 7: And as the United States in a way diminishes our
Speaker 7: faith in our alliances, the Chinese see that's a real
Speaker 7: vulnerability for the United States. As we demolished USAID, the
Speaker 7: US Agency for International Development, I think was a major
Speaker 7: mistake to fire eight thousand people in two weeks. That
Speaker 7: doesn't make much sense. The Chinese swooped in and began
Speaker 7: to tell countries South, listen, if the United States is
Speaker 7: not going to work with you or help you, we will.
Speaker 7: And so we're in a battle for global influence against China,
Speaker 7: there's no question, and we need a usaid, We need
Speaker 7: our alliances to be compared in that battle.
Speaker 2: We continue with Nicholas Burne's ambassador to China here up
Speaker 2: until the recent months, with all of his work in
Speaker 2: American diplomacy as well. We all await a book. I'm
Speaker 2: sure it's coming out here in two or three years,
Speaker 2: and we can find a free time to do it,
Speaker 2: Nick Burns, just as simple as I can. As you
Speaker 2: mentioned allies earlier, is Vietnam our ally?
Speaker 7: I think Vietnam not in the strict sense of the word.
Speaker 7: When I use the word ally as a diplomat, it's
Speaker 7: a treaty ally, a military ally like the NATO countries
Speaker 7: or Japan. Vietnam's a partner, and it's a country that
Speaker 7: the years China has had to live next door to
Speaker 7: China for all of its history, has a difficult, complicated
Speaker 7: relationship with China. So Vietnam wants to be our military partner,
Speaker 7: but at the same time, like all the other countries
Speaker 7: of Southeast Asia, China's their lead trade partner. They have
Speaker 7: to live with China, and so the Vietnamese are engaged
Speaker 7: like the Malaysians and the Singaporeans and the end it's
Speaker 7: kind of a balancing act between the United States and China.
Speaker 2: So how will this play out in the you know,
Speaker 2: you can call it non multilateral, pseudo bilateral, unilateral Trump
Speaker 2: approach to McKinley trade history, I mean, I mean, I
Speaker 2: don't understand how we battle the natural leakages of a
Speaker 2: bilateral agreement. As trade goes to Vietnam, trade goes to Malaysia,
Speaker 2: trade goes to Mexico for that matter, that's a given right.
Speaker 7: Well, you know, I think there's a little bit of
Speaker 7: a contradiction I would say in President Trump's policy. On
Speaker 7: the one hand, President Trump is right to use tariffs
Speaker 7: as a way to try to push the Chinese to
Speaker 7: be more fair minded in the way they treat American
Speaker 7: companies because they mistreat American companies. The Chinese and President
Speaker 7: Biden put major tariffs on one hundred percent on Chinese
Speaker 7: evs for instance, on China just a year ago. But
Speaker 7: the problem is when President Trump went out and put
Speaker 7: those one hundred and forty five percent tariffs on China.
Speaker 7: He also put tariffs on Japan, South Korea, European Union, Canada,
Speaker 7: and Mexico. Those are our natural allies. They all have
Speaker 7: the same problems with China as we do on trade.
Speaker 7: I think it would have been a better strategy to
Speaker 7: we have really forced on China and had some and
Speaker 7: coalesced with the Japanese, South Koreans and Europeans. It would
Speaker 7: have given us more weight at the negotiating table with
Speaker 7: the Jenese.
Speaker 2: Nick Burns, I've got to ask you about my essay
Speaker 2: of the year three years ago. You were off in
Speaker 2: some train somewhere having a long weekend with the panda's
Speaker 2: outside check do Kai. I'm not going to butcher the
Speaker 2: pronunciation Nick Kaiji c Ai xia acclaim Chinese dissident wrote
Speaker 2: for Foreign Affairs magazine and essay the weakness of Jijingping.
Speaker 2: I was thunderstruck Nick Burns by that essay and the
Speaker 2: idea of almost the thugism, the simplicity of the Chinese
Speaker 2: government are they what's the process you witnessed as ambassador
Speaker 2: of the parochialism of the Xi regime.
Speaker 7: Well, I remember that essay as well, and I was
Speaker 7: impressed by it. I would say this, Dung Chow Ping's
Speaker 7: great insight after Miles's death half century ago was that
Speaker 7: China could not afford one man rule. Mao nearly ruined
Speaker 7: China with the Culture Revolution, and so Dung practice collective leadership.
Speaker 2: That's all gone.
Speaker 7: Now China's back to one man rule, and the one
Speaker 7: man is Shixin Ping. And on the one hand, he's experienced,
Speaker 7: he's obviously very smart, he's very ambitious, he's very strategicly
Speaker 7: directed in terms of Chinese power. But on the other hand,
Speaker 7: he surrounded himself with people who have worked for him
Speaker 7: in the past. There are no peers around him. No
Speaker 7: one's perfect, and so you see Shixin Ping making some
Speaker 7: considerable mistakes. I'll just cite one. He went after the
Speaker 7: Chinese tech intre in twenty twenty one twenty twenty three,
Speaker 7: so that a lot of the tech entrepreneurs who made
Speaker 7: China wealthy, like Jack ma of Alibama, were banished from
Speaker 7: the country. Jack mad lives in Tokyo. So you see
Speaker 7: the weaknesses and some of these strategic eras because you
Speaker 7: don't have people around him to say you know, that
Speaker 7: might not be the best thing to do to question him.
Speaker 7: And I think, you know, as I've participated in our
Speaker 7: own government, we're always better when you have people around
Speaker 7: the American president who can say, you know, mister President,
Speaker 7: I know you want to go down that road roade A,
Speaker 7: but road B is going to be the easier place
Speaker 7: root for you. That doesn't happen in China nowadays, and
Speaker 7: you know, it's kind of a closed leadership. He does
Speaker 7: travel a lot, but he's never lived overseas, he's never
Speaker 7: been in business, so you see some of the limitations
Speaker 7: in Chinese decision making.
Speaker 4: So where does a Commnis party under Ji go from here?
Speaker 4: I mean, he's been in office for as long as
Speaker 4: many people can remember. What's the consensus about how the
Speaker 4: leadership in China plays out? How much longer does he
Speaker 4: stay in power? Does he enjoy the support of the people,
Speaker 4: what's next?
Speaker 7: Well, you know again, Dung Chaoping's practice was that general
Speaker 7: Secretary is of the Commonist Party, the President of China
Speaker 7: would stay in office for no more than two five
Speaker 7: year terms, so ten years. And that was the case
Speaker 7: for forty years, and Chichin Ping is now well beyond that.
Speaker 7: My own impression is that he's probably president for life.
Speaker 7: He's a Since I'm sixty nine, I can say he's
Speaker 7: a relatively young man at seventy one. But still, you know,
Speaker 7: when people get close to eighty, you know all bets
Speaker 7: are off in terms of health, and so you got
Speaker 7: to worry about well, you have to actually be concerned
Speaker 7: about stability when your leader gets older. And there's no
Speaker 7: root of secession, there's no transfer power prescribed in Chinese law.
Speaker 7: They're going to have to make up happens when xin
Speaker 7: Ping leaves power and how he leaves power.
Speaker 2: Nicholas burns with us an extended conversation. We continue with
Speaker 2: him for a little bit more. Heir Paul swinging in
Speaker 2: time keen across the nation. Good morning, as we speak
Speaker 2: to our former ambassador of China. How he did his
Speaker 2: first diplomacy at the Duck Pond in Wellesley, Massachusetts a
Speaker 2: few years ago. What was your first day like, newly minted,
Speaker 2: four languages, fancy degrees and there you were You were
Speaker 2: not wearing bermuda shorts and socks in Mauritania, were you?
Speaker 2: What was your first day like in Mauritania?
Speaker 7: Well, referring to my first job overseas for the US
Speaker 7: government nineteen eighty forty five years ago in the Sahara Desert.
Speaker 7: I was an intern, hoping to then take the oath
Speaker 7: of office and become a full fledged diplomat. And so
Speaker 7: they sent me to this tiny outpost, New Walkshot, Mauritania,
Speaker 7: where we had a two person embassy, and I was
Speaker 7: the second person, you know, doing all the different jobs.
Speaker 7: And it was fascinating. I mean, I must say I
Speaker 7: had wanted to go in the US government in college
Speaker 7: and grad school. And when you finally get in and
Speaker 7: you stand beside the American flag and you're there helping
Speaker 7: to preside over July fourth celebrations, there's an immense pride
Speaker 7: in serving our government. And I hope that you know,
Speaker 7: with all the attack federal government by Elon Musk and others,
Speaker 7: I hope people listening to us will know that the civils,
Speaker 7: the foreign service officers, the military officers, we all take
Speaker 7: an oath to the Constitution.
Speaker 2: So what do you need? Nick Burns from Marco Rubio,
Speaker 2: here's a guy. Everybody adores him. He's one of the
Speaker 2: few people in Washington. It's not worth a gazillion dollars.
Speaker 2: Marco Ruby of Florida, he's serving in the crucible of
Speaker 2: the emotions of President Trump hour by hour. What is
Speaker 2: your counsel to, Marco Rubio for those kids starting out
Speaker 2: in the most coveted job in America.
Speaker 7: That you can believe that young people who join and
Speaker 7: middle aged people the federal government are non partisan, take
Speaker 7: an oath to be nonpartisan. It's actually a law, the
Speaker 7: Hatch Act of nineteen fifty two. And I served across
Speaker 7: I served Republican presidents and Democratic presidents. I never asked
Speaker 7: any of my colleagues, hey, what party do you belong to,
Speaker 7: because it would have been really inappropriate to that. And
Speaker 7: what bothers me about the mass firing of our civil
Speaker 7: servants in Washington is that there's somehow this suspicion that
Speaker 7: they're all Democrats and progressives, which is absolutely not the case.
Speaker 7: People just want to serve the country. So I do think,
Speaker 7: respectfully sectary Rubio and President Trump, they've really weakened the
Speaker 7: ability of the United States to put good people in
Speaker 7: the field on the military side, on the million side.
Speaker 2: Paul, get one more question in here, but I forgot
Speaker 2: to tell you Paul Burns's people said, we can't ask
Speaker 2: about the red sox.
Speaker 7: No, we don't.
Speaker 4: Ask so Nick, just real quickly here, what's the view
Speaker 4: of the people you talk to outside of the US government,
Speaker 4: in foreign governments, what's their view of the US these days?
Speaker 7: Well, I think, you know, there's a sense that the
Speaker 7: United States is withdrawing from I would say, what made
Speaker 7: us create our alliances. So people in NATO are really
Speaker 7: worried that the United States is no longer going to be.
Speaker 2: The leader of NATO.
Speaker 7: The Ukrainians are worried that We're going to leave them
Speaker 7: high and dry to face the Russian War a machine.
Speaker 7: The Japanese and Filipinos are wondering will the United States
Speaker 7: be there if China continues to press against their borders.
Speaker 7: And so I think the United States has become kind
Speaker 7: of a risk our government. It's the unpredictability of our government.
Speaker 7: The seesaw back and forth in terms of what the
Speaker 7: leader says, our leader says, and that worries me. I
Speaker 7: you know, listen, I'm going to patriotic American. I want
Speaker 7: President Trump to succeed in the world. I want his
Speaker 7: government to succeed in the world. Who wouldn't if you're
Speaker 7: an American citizen, but I think there's a disquiet and
Speaker 7: uncertainty about sometimes the direction that our government is heading,
Speaker 7: in part the other terrorf issue.
Speaker 2: Nick Burns, thank you so much generous time with us
Speaker 2: this morning. Investor Burns, of course to China and the
Speaker 2: Mauritania a few years ago.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am.
Speaker 6: He's durn Listen on Applecarplay and Android Otto with the
Speaker 6: Bloomberg Business app, or watch us live on YouTube.
Speaker 2: Paul and I both agreed we desperately need to talk
Speaker 2: to Jane Foley. She's at Rabobank. Absolutely definitive and cross
Speaker 2: currents of the foreign exchange market. Jane is a weaker
Speaker 2: dollar vector in place.
Speaker 5: Well it would appear to be so. I mean, you know,
Speaker 5: it is going to be difficult for the Fed because
Speaker 5: the weekid dollar is a course inflationary. But what we
Speaker 5: appear still to have is an awful lot of investors
Speaker 5: really really evaluating those dollar trades, those po pro dollar
Speaker 5: trades really of the last few years when everyone was
Speaker 5: very much of the with buy America. Right now, it
Speaker 5: seems that the theme for this year and it's still ongoing,
Speaker 5: is that people are reevaluating options elsewhere, whether or not
Speaker 5: that be defense in Europe or you know, Japan, and
Speaker 5: with the Japanese JGB market perhaps a little bit topsy
Speaker 5: turvy at the moment, but certainly Japanese assets have been
Speaker 5: you know, on the radar again of investors this year.
Speaker 5: And I think the weaker dollar is just a mimicking
Speaker 5: of this commentary that we've been hearing, you know, quite
Speaker 5: a lot that you know, buy America. The story of
Speaker 5: the past few years has been really reevaluated.
Speaker 2: Okay, Jimi and s sorry, taught me how to do this.
Speaker 2: I brought up Taiwan dollar, a boy, Korean Wan and
Speaker 2: sing dollar. I'm sorry, Jane. Those charts are elegant strong,
Speaker 2: Singapore strong, Taiwan strong. Career. What are the ramifications if
Speaker 2: they break break through to new currency strength versus the dollar.
Speaker 5: Well, they don't necessarily want that, you know, this is
Speaker 5: that be of significant mover and executic pressure, you know,
Speaker 5: on their economies if that were the case. But certainly
Speaker 5: that's been an idea which has been very much caught
Speaker 5: up in you know, speculator's minds over the last few weeks.
Speaker 5: Clearly we do need to see some of the progress
Speaker 5: made on trade deals between the US and a variety
Speaker 5: of other countries for this type of speculation, you know,
Speaker 5: to be put to better at least to have, you know,
Speaker 5: a little bit better of an anchor. So that's what
Speaker 5: we need to see. There's been a lot of speculation
Speaker 5: as to whether or not currencies are would form part
Speaker 5: of these trade deals, whether or not the weeker dollar
Speaker 5: that Trump has been talking about in previous years is
Speaker 5: going to be part of that, And that's what the
Speaker 5: market is is sort of a little bit frightened about.
Speaker 5: But certainly, you know, I would have thought that if
Speaker 5: Trump wanted a week a dollar to make American experts cheaper,
Speaker 5: which has been part of his manager you know, for
Speaker 5: a long time, he would want that under his control.
Speaker 5: And and I think what we've seen recently this year
Speaker 5: is not a dollar weakening because you know, Trump wants
Speaker 5: it to weaken. It's been a dollar weekening because market
Speaker 5: investors have been reevaluating the value that they're now seeing
Speaker 5: in US assets as opposed to assets elsewhere. And that's
Speaker 5: not necessarily what the treasure you want.
Speaker 2: Well, I'm not going to sing dollar. This from the
Speaker 2: second week of April, it's been a five percent strengthening
Speaker 2: of Singapore dollar. It's a wicked elegant chart. I went
Speaker 2: to logs for Jane Foley. You know, that's the way
Speaker 2: we roll, and it's our two standard deviations strength here
Speaker 2: the trend is in place. Weaker US dollar.
Speaker 4: Week or US dollar see that in a Bloomberg Dollar
Speaker 4: index are still plumbing some lows here, Jane. A lot
Speaker 4: of Americans are getting ready to come over to Europe
Speaker 4: for summer holiday. Here, they're not like in the euro
Speaker 4: here at one thirteen. How high can a euro go here?
Speaker 5: Well, you know that of course is a big question.
Speaker 5: If we go back a month or so. There were
Speaker 5: some views out there thinking, oh, you know, your a
Speaker 5: dollar is a course you know for one twenty this year.
Speaker 5: I still think that one twenty is a fair way off.
Speaker 5: I mean, we've got to consider this from the ECB's
Speaker 5: perspective too, or from the Eurozone perspective. I mean, think
Speaker 5: about Germany. Yes, there was that loosening of the debt
Speaker 5: breaker a couple of months ago. Yes, you know that
Speaker 5: really has reinvigorated investor interest and you know, defense, infrastructure etc.
Speaker 5: In the outlook for German growth in the coming years.
Speaker 5: But you know, the bundesbankers warn that Germany you could
Speaker 5: still see recession this year. Most big forecasters think that
Speaker 5: that boost to German growth won't start until next year.
Speaker 5: And we've still got the headwinds possibly of trade wars
Speaker 5: coming through as well. So if Germany sees recession this year,
Speaker 5: well you know these heb definitely you don't want to
Speaker 5: see a Euro strengthening significantly. And I think if we
Speaker 5: did see the Euro, you know, ratcheting up at a
Speaker 5: pace from these sorts of levels, we could see a
Speaker 5: more duvish ECB to try and counter some of that move.
Speaker 5: So yes, we might see one twenty. I don't think
Speaker 5: going to see it this year. Would we see it
Speaker 5: by the end of next year, well, certainly, colk, But
Speaker 5: that would, of course, we depend on how that growth
Speaker 5: engine starts to work in Germany and the rest of
Speaker 5: Europe too.
Speaker 4: Boy, I got a lot of pounds sterling coins and
Speaker 4: script scrolling all away. You know, all all my jewors
Speaker 4: here too. It's up Tom, like eleven point four percent.
Speaker 2: Is this is the folks, This is why you watch surveillance.
Speaker 2: Michael bar Lisa Matteo Paul. While you were yapping with Jane,
Speaker 2: I did what Jane does every day. I looked at
Speaker 2: an air mess tie. I go over to Paris. Yep,
Speaker 2: take United fifty seven, go over to Paris. And that
Speaker 2: bow tie right now is two hundred and forty euros.
Speaker 2: If it's one point fifteen, if it's one point one
Speaker 2: point five, it's two hundred and seventy six dollars. And
Speaker 2: if it goes to one point two zero, Jane Foley
Speaker 2: knows it goes to two hundred and eighty eight dollars.
Speaker 2: That's real. I mean that is real money. That is
Speaker 2: twelve dollars increase because of Macron. There's no other way
Speaker 2: to put it. And get one more in here to
Speaker 2: Jane Fowley while I prep the tire, I'm not going
Speaker 2: to buy.
Speaker 4: Yeah, I do not think so. So talk to us
Speaker 4: about the pound sterling, Jane, what's the story there?
Speaker 5: Well, of course, we did see that stronger than expected
Speaker 5: CPI inflation data last week two, and we saw retail
Speaker 5: sales managing to a bit a bit be hit my
Speaker 5: robust too than the market had expected. And of course,
Speaker 5: if we go back a couple of weeks before that
Speaker 5: we had the GDP data for the first quarter coming
Speaker 5: in a little bit more robust, and of course there's
Speaker 5: been the news that the UK did manage to sign
Speaker 5: a trade deal with the US and also in the
Speaker 5: same week with one in India as well, So there
Speaker 5: has been a fair amount of better than expected news
Speaker 5: for the UK. I think that has given Sterling a
Speaker 5: little bit of a fillip and we see that and
Speaker 5: setting in in cable, you know, above the recent range,
Speaker 5: and so Sterling's had some decent news. Now that's not
Speaker 5: to say that we are not going to have those headwinds.
Speaker 5: We know that growth this year and it's still going
Speaker 5: to be difficult in June. We've got the Chancellor again.
Speaker 5: She has to do a spending review in June.
Speaker 8: That's going to be.
Speaker 5: Tough because UK dad is so high. So it's not
Speaker 5: all plain sailing, but Sterling certainly has seen some benefit recently.
Speaker 2: Have you recovered from Tottenham winning the Europa Jane? I
Speaker 2: mean it was too much.
Speaker 5: Well we had the Crystal Palace winning a big match.
Speaker 5: Did you see that it's my local team. Well that's
Speaker 5: just a road from me, so that was pretty good.
Speaker 2: Have you watched ted Lasso or they filmed the TV
Speaker 2: show at Crystal Palace.
Speaker 5: I didn't see that though, so much to watch for me.
Speaker 2: You have to watch ted Lasso. You'll love it. They
Speaker 2: filmed in Crystal Palace. They're you know, I mean Crystal
Speaker 2: Palace one on What's Next? World's going to a mess?
Speaker 2: Jane Fowley, thank you so much, greatly appreciate.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern.
Speaker 6: On Apple Corplay and with the Bloomberg Business App.
Speaker 1: You can also listen live on Amazon Alexa from our
Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Huge response from the Hendry out of Trace is on
Speaker 2: let's bring it in with Veda partners here on the
Speaker 2: madness in Washington between the left, the right, the center,
Speaker 2: and four other flavors. So well, Henrietta, quickly here. You
Speaker 2: were on a number of times ago and you said
Speaker 2: sixty three congressional seats are in play. Do you stand
Speaker 2: by that or is it a different number?
Speaker 8: If I'm not mistaken, it's actually sixty nine. That's based
Speaker 8: off of the Florida First and Florida.
Speaker 9: Six special elections that happened two months ago or so,
Speaker 9: and it puts at risk basically any district that's our
Speaker 9: plus five orient Jeffrey's view R plus ten or more.
Speaker 2: Very cool. Let's move on just as the new slow
Speaker 2: is extraordinary. I think America, including Tom Keane, is ignorant
Speaker 2: about the nuances of the GOP Senate. We love to
Speaker 2: parse the House. We know that story. How divided is
Speaker 2: the Senate for the senator from the Dakotas, This is.
Speaker 8: An interesting question.
Speaker 9: Kevin Kramer, who I assume we're talking about, or he
Speaker 9: could be speaking about later. Thune is different in that
Speaker 9: there are members who are actively benefiting from things like
Speaker 9: the Inflation Reduction Act, from the clean energy subsidies that
Speaker 9: came from a purely Democrat only past bill, who are
Speaker 9: extraordinarily opposed to the president's tariffs but are unwilling to
Speaker 9: rain him in.
Speaker 8: And the Senators from the Dakota's represent that faction.
Speaker 9: So they are out there, you know, going to Canada
Speaker 9: trying to pass legislation to almost provide something that the
Speaker 9: Republican Party can talk about that is not related to
Speaker 9: the tariffs and not related to the President's maybe more
Speaker 9: social items on his agenda, and that's really what they're
Speaker 9: representing right now. When you say Dakota's that's who I
Speaker 9: think of.
Speaker 4: How about just in tariffs in general, Henriette, we have again,
Speaker 4: once again, we're seeing this playbook play out time and
Speaker 4: time again, announced big tariffs, big headlines, and never more
Speaker 4: them back as it relates to Europeers, what's the how
Speaker 4: do you think this whole tariff thing is going to
Speaker 4: play out? Because it has been the number one item
Speaker 4: on the President's agenda since.
Speaker 8: They won, since the nineteen eighties.
Speaker 9: My view is that Liberation two point zero is coming.
Speaker 9: Liberation Day two point zero is fast approaching, and it
Speaker 9: doesn't have to just be July ninth.
Speaker 8: Think about what is coming down the pipe.
Speaker 9: Number one, we have sectoral tariffs across pharmaceuticals and semiconductors.
Speaker 8: The comment period is over. Those tariffs could hit at
Speaker 8: any moment.
Speaker 9: The pharmaceutical sector and the European Union are heavily concerned
Speaker 9: about those tariffs hitting in the next two to three weeks,
Speaker 9: if not before.
Speaker 8: Those would come in.
Speaker 9: If history is president at twenty five percent rates, that's
Speaker 9: what the president has tariffed.
Speaker 8: Aluminum, steel automobiles and everything else on with the national
Speaker 8: security tariffs.
Speaker 9: So those are pending, and there are a litany of
Speaker 9: those that will come for the remainder of the summer
Speaker 9: to the rest of this year across lumber, copper, trucking,
Speaker 9: air jets, cargo, et cetera. Then we have July ninth,
Speaker 9: and what's happening already is that even nations that we
Speaker 9: are close to or should have trade deals with, as
Speaker 9: suggested by Secretaries Bessett and Lutnik, are nowhere near completion. Indeed,
Speaker 9: South Korea, the one that I anticipated or I understood
Speaker 9: Lutnik and Bessett. We're talking about weeks ago when they
Speaker 9: started saying trade deals could be announced, you know, just
Speaker 9: a week after Liberation Day, are nowhere near completed. They
Speaker 9: have an election on June third, and they're saying they
Speaker 9: need a delay beyond July ninth. The same is true
Speaker 9: for Japan, who doesn't even have a date for their
Speaker 9: election yet. So when I think about what's coming down
Speaker 9: the pike for investors, it's more tires, both sectoral and
Speaker 9: a hike specifically with the EU above their current ten
Speaker 9: percent rate, I think the President's itching to get to
Speaker 9: twenty at least, if not higher, as evidenced by his
Speaker 9: forty eight hours of considering fifty percent.
Speaker 4: How does all this CAFF talk, How is it playing
Speaker 4: out politically? Is there any feedback, any polling that people care?
Speaker 4: Are they concerned that the fundation is going to hit?
Speaker 2: Let me stop and say, this is the question of
Speaker 2: the more than's the key questions.
Speaker 8: I'm so glad you ask.
Speaker 9: You know, we cover all kinds of macroeconomic policy items,
Speaker 9: and we can talk about wonky stuff like current policy
Speaker 9: baseline or carried interest, tax rates. The American public understands tariffs.
Speaker 9: What's shocking to me is to go and you know,
Speaker 9: go to my local grocery store. See the front page
Speaker 9: news and the side advert is for buy your appliances
Speaker 9: now before the tarifs hit, buy them now before President
Speaker 9: Trump implements Liberation Day tarifs.
Speaker 8: I mean those are front page news items in states
Speaker 8: like Louisiana. The American public knows what taris are.
Speaker 9: They know for sure that they are now tax cut,
Speaker 9: and they know that they're coming.
Speaker 2: The history of this with McKinley taking it back to
Speaker 2: someone that the president worships, Henry, it to Troy's McKinley
Speaker 2: quarters or years after his heavy tariffs repealed them. Do
Speaker 2: we even get to heavy tariffs or do you just
Speaker 2: assume Hill verbally retrench retreat at some point like too.
Speaker 8: I feel really startling that we need to stop.
Speaker 9: I know I just did it, but like we need
Speaker 9: to concentrate on the fact that these tariffs are on.
Speaker 9: Y'all have some great reporting and charts in the Bloomberg
Speaker 9: terminal today about exactly how much money is coming into
Speaker 9: customs and border patrol just now for this month. It
Speaker 9: is just starting to hit. Those prices will be passed
Speaker 9: on to consumers, whether that's at Costco or Walmart. And
Speaker 9: as I mentioned, the American public, Republicans, Democrats, and independents
Speaker 9: have a very negative view of these tariffs. They don't
Speaker 9: like when you know, Peter Tomorrow comes out and says
Speaker 9: these are tax cuts.
Speaker 8: We know that they're not. We know that inflation is real,
Speaker 8: and now it's because of the tariffs.
Speaker 2: I got to do this morning. Henry Ritta, thank you
Speaker 2: so much. I just can't say enough about it. We're
Speaker 2: Kenny of the Trey's there and the key item there
Speaker 2: at the beginning, she's taken out from sixty three to
Speaker 2: sixty nine seats in play as we go to the
Speaker 2: mid terms of two thousand twenty six.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on applecar.
Speaker 6: Play and Android Auto with the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal.
Speaker 2: He's the newspapers with Lisa Motev. She and I are
Speaker 2: doing battling prime stories. Her stories are uglier than mine.
Speaker 10: It's a stressful time, let me tell you, especially for
Speaker 10: the girls. Okay, so we have this trend right wealthy
Speaker 10: people buying sports teams. Well, that could be taking a
Speaker 10: little bit of a time out because the house builder
Speaker 10: we've talked about is targeting tax breaks for team owners.
Speaker 10: So what it does It includes the tech to the
Speaker 10: tax fot. It could cut in half the tax write
Speaker 10: off that is potentially worth hundreds of millions of dollars
Speaker 10: to some team owners. This according to The New York Times,
Speaker 10: I mean NFL, NBA, other major leaguers. They've been able
Speaker 10: to write off like the entire value of their team's quote,
Speaker 10: intangible assets, player contracts, media rights, sponsorships over fifteen years,
Speaker 10: so now that could change, And what they're saying is
Speaker 10: that maybe that could stop cooling this trend of wealthy
Speaker 10: people wanting to buy teams because they won't get as
Speaker 10: much of a tax.
Speaker 2: So we've heard this before, Paul, Right, yep, sure you
Speaker 2: know this circles around Yep.
Speaker 4: Been there, It's been there, it's been there.
Speaker 2: I watched some ball this weekend, and I'm not sure
Speaker 2: I understand the correlation of money to it, other than
Speaker 2: there's teams that are loaded and there's teams that are not.
Speaker 4: Well it's I mean, they've the NFL.
Speaker 2: They brought private equity.
Speaker 4: Now invest in the NFL, so that's we're having to
Speaker 4: ten percent of these franchises.
Speaker 2: So we're seeing a lot of that in the NFL.
Speaker 2: Is there a week group like in Major League Baseball
Speaker 2: p there are week teams, but no week franchises. The
Speaker 2: values is so cool. It's not Chicago White Sox, you know.
Speaker 4: I mean, I just kind of feel like, even if
Speaker 4: you're in a small market like Jacksonville, you know, the
Speaker 4: value creation there is extraordinary. So we'll see, all right.
Speaker 10: So we go from sports, Yeah, I can okay, Okay,
Speaker 10: business trips. Okay, you mentioned you have one coming out right, Okay,
Speaker 10: I have one coming up next week. Tom's here.
Speaker 4: No, We're going to the nation's capital to the National Shores,
Speaker 4: the Gay Lord Resort down there just outside of DC
Speaker 4: for an event. Alex Steele and I will be there.
Speaker 2: Very cool. Yeah, so you pick up.
Speaker 10: You're that business trip right next week, I'm going to
Speaker 10: San Francisco. Tom's staying here, yeah.
Speaker 4: John Tumer is going nowhere.
Speaker 2: So the golf So you're the one that has a
Speaker 2: golf streams.
Speaker 5: Okay.
Speaker 10: So the question that's coming up from this story is
Speaker 10: do you bring a plus one on your business trips?
Speaker 10: So that's the question blended travel right, leisure is like
Speaker 10: a big thing now business leisure. But a new study
Speaker 10: is saying that gen z ers and millennials they're more
Speaker 10: likely to bring a friend or spouse, and they say
Speaker 10: that they won't tell their boss because they're afraid what
Speaker 10: their boss might say. So then they have their friend
Speaker 10: or spouse kind of dipping and ducking and hiding the boss.
Speaker 2: On the trap.
Speaker 10: But they're just talking about this whole idea, and it
Speaker 10: brings a question like would you bring do you bring
Speaker 10: a spouse? Or a plus one on a business trip.
Speaker 10: Is it okay? Some companies are actually saying they encourage
Speaker 10: it because it makes things more enjoyable and brings stress
Speaker 10: level down.
Speaker 4: So yeah, I got a plus one?
Speaker 8: You got it?
Speaker 5: Okay?
Speaker 4: Sure, the going down to DC.
Speaker 10: And you're not a gen z and Rolani.
Speaker 2: Trend, do what I want to do.
Speaker 4: I'm at that point in my life when this.
Speaker 2: Is it's more stressful.
Speaker 10: You think it's more stress Yeah, because look if.
Speaker 2: I in London for five days and take plus one
Speaker 2: with me, she's like plus Bond Street plus. Let's go
Speaker 2: over to Dublin the Guinness, Let's go look at some
Speaker 2: museum and get you know, a zillion dollars. You do,
Speaker 2: it's definitely more stressful. That's one more.
Speaker 10: Okay, Big Memorial Day box office. Not sure if you
Speaker 10: went out to the movies, but a lot of people did.
Speaker 10: Three hundred and twenty six million dollars in North America.
Speaker 10: That's between Lilo and Stitch and the Mission Impossible movie. Big, big, big.
Speaker 10: The theaters needed it. This was like kind of boosts
Speaker 10: that they wanted.
Speaker 4: Yeah, I mean it's I think as we get farther
Speaker 4: and farther from the pandemic getting a little bit closer
Speaker 4: to normalization. I'm not sure normalization is pre pandemic levels,
Speaker 4: but it's gonna be a it's gonna be a continue
Speaker 4: to be a big, big, important window for these movies.
Speaker 2: The newspapers Lisa Manteo a strong start to the week.
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Easter and on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal