1 00:00:00,080 --> 00:00:10,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple Coarclay and Android 4 00:00:17,160 --> 00:00:20,560 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:25,040 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,239 --> 00:00:28,760 Speaker 2: Big Headline crossing the terminal just as we take air 7 00:00:28,840 --> 00:00:31,240 Speaker 2: at high noon. It happens every day. That's why you 8 00:00:31,360 --> 00:00:35,240 Speaker 2: listen and watch on YouTube. Search Bloomberg Business News Live. 9 00:00:35,280 --> 00:00:38,400 Speaker 2: We'll be there with our live stream when you arrive. 10 00:00:38,720 --> 00:00:42,920 Speaker 2: Also on Bloomberg Radio nationwide on Sirius XM Channel one 11 00:00:43,000 --> 00:00:47,559 Speaker 2: twenty one. Bessett sees de escalation with China reads the 12 00:00:47,560 --> 00:00:53,120 Speaker 2: headline situation unsustainable even though that is the very situation 13 00:00:53,240 --> 00:00:56,520 Speaker 2: that this White House asked for, with China trying as 14 00:00:56,520 --> 00:01:00,880 Speaker 2: ever to get Beijing to the table. We're watching shares 15 00:01:00,880 --> 00:01:02,920 Speaker 2: of Tesla, by the way, Charlie pointed that out, not 16 00:01:02,960 --> 00:01:05,640 Speaker 2: only because of the implications when it comes to China, right, 17 00:01:05,680 --> 00:01:08,360 Speaker 2: everyone's going to be looking at Nike, be looking at 18 00:01:08,440 --> 00:01:11,720 Speaker 2: Tesla also with earnings in the cards, will we hear 19 00:01:11,760 --> 00:01:14,760 Speaker 2: from Elon Musk in the conference call? That's one question 20 00:01:14,880 --> 00:01:17,320 Speaker 2: we have in one stock that we are watching here 21 00:01:17,600 --> 00:01:21,280 Speaker 2: as we project to the after hour session in the 22 00:01:21,319 --> 00:01:25,160 Speaker 2: meantime at the White House, it's damage control, right, sat 23 00:01:25,200 --> 00:01:27,480 Speaker 2: here at this very time yesterday and we spent two 24 00:01:27,480 --> 00:01:33,080 Speaker 2: hours talking about Pete Hegseth a second signal chat, of course, 25 00:01:33,160 --> 00:01:35,920 Speaker 2: sharing what he says are not war plans with his wife, 26 00:01:35,959 --> 00:01:39,639 Speaker 2: brother and others. And then the departure of four people 27 00:01:39,680 --> 00:01:45,200 Speaker 2: who he hired shown the door for being alleged leakers. Now, 28 00:01:45,240 --> 00:01:46,840 Speaker 2: what do you do in a world like this? We 29 00:01:46,920 --> 00:01:49,480 Speaker 2: already told you that the president was standing behind his man. 30 00:01:49,480 --> 00:01:52,320 Speaker 2: He said so at the Easter egg Roll of all places, yesterday. 31 00:01:52,480 --> 00:01:53,480 Speaker 3: But you got to get out in the. 32 00:01:53,440 --> 00:01:55,040 Speaker 2: Media, right, And of course, when you want to do 33 00:01:55,040 --> 00:01:57,200 Speaker 2: that in the Trump administration, you tend to go to 34 00:01:57,240 --> 00:01:59,800 Speaker 2: Fox News. Pete Hegseth showed up on Fox and Friends 35 00:01:59,840 --> 00:02:01,480 Speaker 2: the morning to make his case. 36 00:02:01,520 --> 00:02:06,120 Speaker 4: Listen, I said, repeatedly, no one's texting war plans. You 37 00:02:06,120 --> 00:02:07,680 Speaker 4: know why I said that, because I'm in the bowels 38 00:02:07,720 --> 00:02:10,400 Speaker 4: of the Pentagon every single day. Just ten minutes ago, 39 00:02:10,680 --> 00:02:12,959 Speaker 4: I was looking at actual war plans of things that 40 00:02:13,000 --> 00:02:16,080 Speaker 4: were ongoing or pending things to happen because that's on 41 00:02:16,120 --> 00:02:20,000 Speaker 4: a regular basis on classified systems. That's my job for 42 00:02:20,080 --> 00:02:22,680 Speaker 4: the war fighters, for the president the United States. I 43 00:02:22,760 --> 00:02:25,960 Speaker 4: look at war plans every single day. What was shared 44 00:02:26,160 --> 00:02:29,840 Speaker 4: over signal then and now, however you characterize it, was 45 00:02:30,240 --> 00:02:33,160 Speaker 4: informal unclassified coordinations. 46 00:02:34,800 --> 00:02:39,320 Speaker 2: Informal unclassified coordinations that also included, of course, the type 47 00:02:39,320 --> 00:02:42,360 Speaker 2: of aircraft, the Fa eighteen fighter jets that were used 48 00:02:42,360 --> 00:02:45,200 Speaker 2: and when they were going to be in position, which 49 00:02:45,240 --> 00:02:48,399 Speaker 2: has raised a lot of questions about the security surrounding 50 00:02:48,400 --> 00:02:49,480 Speaker 2: this whole conversation. 51 00:02:50,480 --> 00:02:53,680 Speaker 3: Yes see, see, however you want to characterize it, he. 52 00:02:53,720 --> 00:02:57,000 Speaker 2: Essentially blamed the agency as well being a house of 53 00:02:57,080 --> 00:02:59,960 Speaker 2: leakers and trying to block the Trump agenda. 54 00:03:00,120 --> 00:03:01,520 Speaker 3: Is this helped to put this to bed? 55 00:03:01,639 --> 00:03:03,040 Speaker 2: I don't know, but this is where we start with 56 00:03:03,120 --> 00:03:06,960 Speaker 2: Kate Sullivan, part of our growing team covering this Trump 57 00:03:07,000 --> 00:03:10,000 Speaker 2: administration Bloomberg White House correspondent, Kate, it's great to see you. 58 00:03:09,919 --> 00:03:11,360 Speaker 3: Thanks for coming in, thanks for having me. 59 00:03:11,639 --> 00:03:15,720 Speaker 2: So we got the first attempt here to tamp this down, 60 00:03:15,760 --> 00:03:17,639 Speaker 2: and by the way, not the first time for Hegseth 61 00:03:17,720 --> 00:03:21,320 Speaker 2: himself following the first signal chat following his confirmation hearings, 62 00:03:21,400 --> 00:03:23,640 Speaker 2: which a lot of people said that he was da. 63 00:03:23,880 --> 00:03:26,000 Speaker 2: This White House isn't budget though, right He's still got 64 00:03:26,040 --> 00:03:26,800 Speaker 2: the support. 65 00:03:26,440 --> 00:03:28,079 Speaker 3: Of the president, that's right. 66 00:03:28,120 --> 00:03:31,600 Speaker 5: I mean we heard Trump yesterday, so and with Trump right, 67 00:03:31,639 --> 00:03:35,000 Speaker 5: he's firmly behind you until he's not. Okay, we will 68 00:03:35,040 --> 00:03:37,640 Speaker 5: see how this plays out, but for right now, we 69 00:03:37,680 --> 00:03:40,560 Speaker 5: definitely are hearing Trump and the White House stand behind him. 70 00:03:40,560 --> 00:03:45,120 Speaker 5: I think also it's important to remember how much political 71 00:03:45,280 --> 00:03:48,440 Speaker 5: capital the president spent on getting heg Seth confirmed. 72 00:03:48,560 --> 00:03:50,960 Speaker 6: I think that's a factor here. 73 00:03:50,800 --> 00:03:54,040 Speaker 5: As we're sort of looking at this because the Hegseth 74 00:03:54,120 --> 00:03:56,840 Speaker 5: confirmation battle was the hardest one and it's the one 75 00:03:56,840 --> 00:03:59,800 Speaker 5: that Trump really got personally involved with, and he spent 76 00:03:59,840 --> 00:04:02,320 Speaker 5: a lot of his own, you know, capital and influence 77 00:04:02,320 --> 00:04:06,040 Speaker 5: on this. So I think having hag Seth leave just 78 00:04:06,080 --> 00:04:08,560 Speaker 5: a few months into the administration would be sort of 79 00:04:08,600 --> 00:04:11,160 Speaker 5: a you know, admission that there was a mistake there 80 00:04:11,240 --> 00:04:14,840 Speaker 5: when it's not something we see very often from the nights. 81 00:04:14,680 --> 00:04:16,000 Speaker 3: On brand for Donald Trump. 82 00:04:16,160 --> 00:04:17,840 Speaker 2: We're not even out one hundred days yet, right, we're 83 00:04:17,839 --> 00:04:20,880 Speaker 2: about ninety one days. I think today he doesn't want 84 00:04:20,880 --> 00:04:23,479 Speaker 2: that headline didn't get through the first one hundred days. 85 00:04:23,520 --> 00:04:25,680 Speaker 2: You wonder if that milestone means something to him, but 86 00:04:25,680 --> 00:04:28,920 Speaker 2: it also could weaken Pete hag Seth in the long 87 00:04:29,000 --> 00:04:30,680 Speaker 2: term internally, could it not. 88 00:04:31,200 --> 00:04:33,920 Speaker 5: Yes, And I think we're seeing the Pentagon right now, 89 00:04:33,960 --> 00:04:36,000 Speaker 5: really internal turmoil. 90 00:04:36,000 --> 00:04:37,440 Speaker 6: I know you've you've covered. 91 00:04:37,120 --> 00:04:40,560 Speaker 5: This on this show, but you know, what we saw 92 00:04:40,600 --> 00:04:45,440 Speaker 5: from Hegseth this morning was a really defiant in the 93 00:04:45,480 --> 00:04:47,240 Speaker 5: face of all this. You know, as you mentioned, he's 94 00:04:47,279 --> 00:04:50,440 Speaker 5: been through news cycles like this before, but he's he's 95 00:04:50,560 --> 00:04:53,279 Speaker 5: very defiant. He's blamed the media, which is something that 96 00:04:54,000 --> 00:04:56,280 Speaker 5: this present and this White House and this administration, it's 97 00:04:56,320 --> 00:05:00,440 Speaker 5: it's something that they revert to sort of reflexively a lot. 98 00:05:01,240 --> 00:05:02,160 Speaker 6: I will say that. 99 00:05:02,120 --> 00:05:04,800 Speaker 5: It's it's as watching those clips from this morning, you know, 100 00:05:04,839 --> 00:05:07,400 Speaker 5: it is interesting he did not deny the existence. 101 00:05:08,000 --> 00:05:08,760 Speaker 3: I'm glad you mentioned. 102 00:05:08,839 --> 00:05:11,560 Speaker 6: Yeah, I was gonna say, he did not deny the existence. 103 00:05:11,120 --> 00:05:13,479 Speaker 2: Of it, called it old news. So apparently he thought 104 00:05:13,480 --> 00:05:14,719 Speaker 2: we already knew about it. 105 00:05:15,000 --> 00:05:18,400 Speaker 5: Right and so and and it was you know, shared 106 00:05:18,440 --> 00:05:22,440 Speaker 5: with his brother and his wife among other people, sensitive information. 107 00:05:22,560 --> 00:05:26,440 Speaker 5: He says that it was unclassified. And you know, I 108 00:05:26,440 --> 00:05:30,640 Speaker 5: think also it's the venue for for where he did 109 00:05:30,640 --> 00:05:34,719 Speaker 5: this this defiant sort of you know as he's defending himself. 110 00:05:34,960 --> 00:05:36,400 Speaker 5: I also just want to note that, you know, he 111 00:05:36,480 --> 00:05:40,760 Speaker 5: went on Fox and Friends on Fox. Hegseth is a 112 00:05:40,800 --> 00:05:43,680 Speaker 5: former Fox News host. He was appearing with his colleagues. 113 00:05:44,240 --> 00:05:46,600 Speaker 5: He not only was a Fox host, but he was 114 00:05:46,640 --> 00:05:49,599 Speaker 5: a former Fox and Friends weekend host. So so very 115 00:05:49,600 --> 00:05:50,599 Speaker 5: friendly format. 116 00:05:50,360 --> 00:05:53,279 Speaker 2: And the franchise well kill Brian, kill me. The who 117 00:05:53,320 --> 00:05:55,960 Speaker 2: did this interview at one point referred to how difficult 118 00:05:56,000 --> 00:05:58,680 Speaker 2: it is. You're trying to just keep the world under control, 119 00:05:58,720 --> 00:05:59,840 Speaker 2: and we know what a hard job that. 120 00:06:00,160 --> 00:06:02,920 Speaker 3: So they clearly wanted him to have a friendly environment. 121 00:06:03,040 --> 00:06:03,960 Speaker 6: That's right, That's right. 122 00:06:04,120 --> 00:06:06,200 Speaker 2: I wonder if he advanced the story at all here, 123 00:06:06,200 --> 00:06:09,320 Speaker 2: because you're right, he acknowledged essentially that this was real, 124 00:06:09,360 --> 00:06:12,600 Speaker 2: that this signal chat was true. He did not deny it. 125 00:06:12,680 --> 00:06:17,320 Speaker 2: He also made reference to media coordination. Was he preparing 126 00:06:17,320 --> 00:06:18,680 Speaker 2: to send you coordinates on this? 127 00:06:18,760 --> 00:06:19,840 Speaker 3: What was that a reference to? 128 00:06:21,320 --> 00:06:26,159 Speaker 5: I believe you know there's this sense, and you heard 129 00:06:26,160 --> 00:06:30,720 Speaker 5: Caroline Love say this too, that the way they're framing this, 130 00:06:30,800 --> 00:06:32,920 Speaker 5: the way the White House is framing is that there's 131 00:06:32,960 --> 00:06:36,839 Speaker 5: a lot of opposition within the Pentagon to heg Seth himself, 132 00:06:36,920 --> 00:06:39,680 Speaker 5: and they're trying to say, you know, there are people 133 00:06:39,760 --> 00:06:43,440 Speaker 5: there who are just working against and trying to sabotage Hegseeth. 134 00:06:44,200 --> 00:06:47,200 Speaker 5: Heg Seth mentioned in the interview this morning, this investigation 135 00:06:47,320 --> 00:06:50,320 Speaker 5: that they're doing on the leaks. We saw the senior 136 00:06:50,400 --> 00:06:54,520 Speaker 5: aides depart in recent days and he's also there. Was 137 00:06:54,600 --> 00:06:56,720 Speaker 5: it was interesting to me he was trying to really 138 00:06:56,760 --> 00:07:00,160 Speaker 5: distance himself from those people. But some of the saying, 139 00:07:00,279 --> 00:07:03,600 Speaker 5: you know, just that these as if they weren't close 140 00:07:03,600 --> 00:07:05,159 Speaker 5: to him at all, but some of these people have 141 00:07:05,240 --> 00:07:07,280 Speaker 5: been in his orbit, have been close advisors to him 142 00:07:07,320 --> 00:07:07,960 Speaker 5: for a long time. 143 00:07:08,400 --> 00:07:09,600 Speaker 6: So that was interesting to me. 144 00:07:10,080 --> 00:07:13,680 Speaker 5: But overall, just this this sense of, you know, everything 145 00:07:14,040 --> 00:07:16,640 Speaker 5: is sort of the deep state, as you know Trump 146 00:07:16,720 --> 00:07:18,720 Speaker 5: likes to talk about, and that there's this sort of 147 00:07:18,960 --> 00:07:23,120 Speaker 5: overarching effort to undermine his efforts personally, the. 148 00:07:23,040 --> 00:07:25,280 Speaker 2: Calls coming from inside the house, even though he brought 149 00:07:25,280 --> 00:07:28,320 Speaker 2: in the four people who were fired us. Yes, yeah, 150 00:07:28,440 --> 00:07:30,120 Speaker 2: we talked about quite a bit yesterday and by the 151 00:07:30,160 --> 00:07:33,040 Speaker 2: way we understand, there could be more. This John Elliott 152 00:07:33,040 --> 00:07:35,640 Speaker 2: who has shown the door or guests found the door himself, 153 00:07:35,680 --> 00:07:38,200 Speaker 2: depending on who you ask. If he wasn't in charge, 154 00:07:38,200 --> 00:07:40,320 Speaker 2: he wasn't going to run do anything in the Press office, 155 00:07:40,360 --> 00:07:42,400 Speaker 2: he says, the more bombshells to follow. So we'll park 156 00:07:42,440 --> 00:07:45,000 Speaker 2: that for a minute. The fact of the matter is, Kate, 157 00:07:45,080 --> 00:07:47,120 Speaker 2: this has taking our eye off the ball on tariffs 158 00:07:47,160 --> 00:07:48,680 Speaker 2: and a lot of the other stories that you've been 159 00:07:48,680 --> 00:07:51,960 Speaker 2: covering at the White House. The President does have an event. 160 00:07:52,440 --> 00:07:54,760 Speaker 2: It's set for four o'clock. The new SEC chair, well, 161 00:07:54,760 --> 00:07:57,000 Speaker 2: we think he'll make some news. He want to bring 162 00:07:57,040 --> 00:07:59,280 Speaker 2: the press pool in. I mean, this happens every day. 163 00:07:59,360 --> 00:08:00,960 Speaker 2: Right you go to work, it says close press, then 164 00:08:00,960 --> 00:08:02,320 Speaker 2: all of a sudden you're in the Oval office. 165 00:08:02,400 --> 00:08:02,800 Speaker 6: That happened. 166 00:08:02,800 --> 00:08:05,640 Speaker 5: That actually happened to me on Friday, Doctor oz Is 167 00:08:06,080 --> 00:08:08,120 Speaker 5: swearing in was supposed to be close pressed, and then 168 00:08:08,160 --> 00:08:10,080 Speaker 5: they opened it up, and it was actually a great 169 00:08:10,080 --> 00:08:13,520 Speaker 5: opportunity to ask Trump those you know, whenever they do 170 00:08:13,600 --> 00:08:15,680 Speaker 5: open it up and whenever you do bring reporters into 171 00:08:15,720 --> 00:08:19,640 Speaker 5: the Oval offices, it's a really important opportunity to ask 172 00:08:19,640 --> 00:08:21,360 Speaker 5: the president questions directly. 173 00:08:21,520 --> 00:08:23,360 Speaker 3: Tends to move the markets on a lot of times. 174 00:08:23,160 --> 00:08:24,200 Speaker 6: That's exactly right. 175 00:08:24,240 --> 00:08:26,160 Speaker 5: And so you know, I'm not sure about later today 176 00:08:26,160 --> 00:08:28,320 Speaker 5: exactly what's going to come out of that, but you know, 177 00:08:28,760 --> 00:08:31,440 Speaker 5: if there are opportunities for questions or if there are 178 00:08:31,920 --> 00:08:33,760 Speaker 5: reporters in the room, and or even if we're just 179 00:08:33,760 --> 00:08:36,080 Speaker 5: waiting for a readout. I think, yeah, definitely there could be. 180 00:08:36,280 --> 00:08:38,200 Speaker 2: Is the life of a White House correspondent. You're hearing 181 00:08:38,200 --> 00:08:40,160 Speaker 2: about it in real time. We only have a minute left, Kate. 182 00:08:40,840 --> 00:08:42,959 Speaker 2: There was news from the White House of the President 183 00:08:42,960 --> 00:08:44,720 Speaker 2: in fact on truth Social had a phone call with 184 00:08:44,920 --> 00:08:47,920 Speaker 2: Benjamin Netanya, who, well, Israel be the first country to 185 00:08:47,960 --> 00:08:49,560 Speaker 2: cut a deal on tariffs? 186 00:08:49,640 --> 00:08:52,160 Speaker 6: You know, we we don't know, is the short answer. 187 00:08:52,200 --> 00:08:55,240 Speaker 5: But I think net nya who you know, made a 188 00:08:55,240 --> 00:08:58,160 Speaker 5: big show to come in person to talk to Trump. 189 00:08:58,200 --> 00:09:00,480 Speaker 5: I think a lot of people in Israel, a lot 190 00:09:00,520 --> 00:09:04,760 Speaker 5: of officials were really surprised by that seventeen percent tariff. 191 00:09:04,800 --> 00:09:07,560 Speaker 5: I think that they thought that because of some of 192 00:09:07,600 --> 00:09:09,880 Speaker 5: the overtures that they had made and some of the 193 00:09:10,920 --> 00:09:13,240 Speaker 5: you know, how they'd been handling this, that it wouldn't 194 00:09:13,240 --> 00:09:16,240 Speaker 5: be quite so high. So the White House has said 195 00:09:16,240 --> 00:09:20,680 Speaker 5: that they are actively considering, like on paper, proposals from 196 00:09:21,200 --> 00:09:24,720 Speaker 5: fifteen different nations, and so we will see if Israel 197 00:09:24,800 --> 00:09:25,880 Speaker 5: is one of the first, or if they do. 198 00:09:25,960 --> 00:09:29,120 Speaker 6: Some kind of a batch of them. But yeah, we're not. 199 00:09:29,080 --> 00:09:30,160 Speaker 3: Sure yet, you need to go to Rome. 200 00:09:30,200 --> 00:09:34,199 Speaker 2: First President will be attending the papal funeral on Saturday. 201 00:09:34,320 --> 00:09:36,640 Speaker 2: Kate Sullivan, thank you so much for being with us, 202 00:09:36,640 --> 00:09:40,120 Speaker 2: Bloomberg White House Correspondent. Don't be a stranger. This conversation 203 00:09:40,200 --> 00:09:41,440 Speaker 2: isn't going to end anytime soon. 204 00:09:43,760 --> 00:09:47,240 Speaker 1: You're listening to the Bloomberg Balance of Power podcasts. Catch 205 00:09:47,320 --> 00:09:50,160 Speaker 1: us live weekdays at noon and five pm e's durn 206 00:09:50,280 --> 00:09:53,720 Speaker 1: on Apple Cockley and Android Auto with the Bloomberg Business App. 207 00:09:53,760 --> 00:09:56,800 Speaker 1: You can also listen live on Amazon Alexa from our 208 00:09:56,800 --> 00:10:01,319 Speaker 1: flagship New York station. Just say Alexa They Bloomberg eleven thirty. 209 00:10:02,800 --> 00:10:06,840 Speaker 2: The pandemic is officially over at the Department of Education 210 00:10:08,120 --> 00:10:12,360 Speaker 2: April twenty one. Just yesterday, word went out from the agency. 211 00:10:13,679 --> 00:10:17,720 Speaker 2: The debt collector will soon be calling Department of Education 212 00:10:17,800 --> 00:10:20,720 Speaker 2: to begin federal student loan collections and other actions, it 213 00:10:20,720 --> 00:10:23,920 Speaker 2: says to help borrowers get back into repayment collections to 214 00:10:24,040 --> 00:10:30,200 Speaker 2: restart May fifth Struggling borrowers urge to act now. When 215 00:10:30,240 --> 00:10:34,880 Speaker 2: you look at the statement here from the Department of Education, quote, 216 00:10:34,960 --> 00:10:40,079 Speaker 2: there will not be any mass loan forgiveness unquote, remembering 217 00:10:40,080 --> 00:10:42,600 Speaker 2: more than forty two million people. This affects a lot 218 00:10:42,679 --> 00:10:46,360 Speaker 2: of people hold student loans from the federal government. They 219 00:10:46,400 --> 00:10:50,040 Speaker 2: total more than one point six trillion dollars in debt. 220 00:10:50,080 --> 00:10:52,800 Speaker 2: According to the Department, more than five million holders of 221 00:10:52,880 --> 00:10:57,920 Speaker 2: student loans have not made a repayment in the past year, 222 00:10:59,000 --> 00:11:00,880 Speaker 2: and so the phone call are going to start coming 223 00:11:00,960 --> 00:11:02,640 Speaker 2: in at the beginning of next month. That is where 224 00:11:02,679 --> 00:11:05,000 Speaker 2: we start our conversation with our political panel A lot 225 00:11:05,080 --> 00:11:08,439 Speaker 2: to cover today with Rick Davis, Bloomberg Politics contributor, Republican 226 00:11:08,520 --> 00:11:11,520 Speaker 2: strategist and partner at Stone Court Capital. And if you're 227 00:11:11,520 --> 00:11:14,840 Speaker 2: with us on YouTube, you see kristin hand, Democratic strategists, 228 00:11:15,200 --> 00:11:18,120 Speaker 2: partner at Rock Solutions. Great to see you both, Kristen, 229 00:11:18,280 --> 00:11:21,360 Speaker 2: Welcome back. We talked a lot about loan forgiveness in 230 00:11:21,400 --> 00:11:23,760 Speaker 2: the Biden administration. I guess this is the other side 231 00:11:23,760 --> 00:11:24,160 Speaker 2: of the coin. 232 00:11:26,720 --> 00:11:29,719 Speaker 7: Yeah, I mean, I think that we were going through 233 00:11:29,720 --> 00:11:32,839 Speaker 7: a pandemic. There was the loan forgiveness and then there 234 00:11:32,920 --> 00:11:37,320 Speaker 7: was the delay, you know, with having people repay their loans. Now, 235 00:11:37,320 --> 00:11:39,679 Speaker 7: the people who have had loan forgiveness there there has 236 00:11:39,720 --> 00:11:44,000 Speaker 7: been a bit of whiplash from administration to administration with 237 00:11:44,120 --> 00:11:46,400 Speaker 7: these policies. So we need to take that into account 238 00:11:46,400 --> 00:11:49,240 Speaker 7: when we're thinking about people's planning and ability to repay 239 00:11:49,280 --> 00:11:53,880 Speaker 7: these loans. That said, you know, those those commitments should 240 00:11:53,880 --> 00:11:57,560 Speaker 7: be honored to the people whose loans have already been forgiven. 241 00:11:57,720 --> 00:12:00,160 Speaker 7: You know, I'm not that we're not asking people to 242 00:12:00,160 --> 00:12:03,600 Speaker 7: pay the money back right now, but who have been forgiven. 243 00:12:03,679 --> 00:12:06,640 Speaker 7: But I do think, you know, we're moving on from 244 00:12:06,640 --> 00:12:09,679 Speaker 7: the pandemic. It was a really tough time. People were 245 00:12:09,720 --> 00:12:14,480 Speaker 7: struggling financially, you know, due to circumstances beyond their control. 246 00:12:14,960 --> 00:12:17,560 Speaker 7: But we're getting back to a more normal economy and 247 00:12:17,640 --> 00:12:21,720 Speaker 7: people should pay back their loans, you know. That said, 248 00:12:21,840 --> 00:12:25,360 Speaker 7: I think if our economy dives into a recession due 249 00:12:25,400 --> 00:12:28,840 Speaker 7: to some of the President's policies, people might have more 250 00:12:28,880 --> 00:12:32,840 Speaker 7: problems problems doing that. But you know, asking people to 251 00:12:32,880 --> 00:12:35,760 Speaker 7: start making payments on their loans, maybe it should have 252 00:12:35,760 --> 00:12:37,760 Speaker 7: been a little bit more of a lee time is 253 00:12:37,800 --> 00:12:38,360 Speaker 7: not a bad thing. 254 00:12:39,400 --> 00:12:40,520 Speaker 3: What do you think about this rick? 255 00:12:40,559 --> 00:12:43,600 Speaker 2: More than five million holders of student loans have not 256 00:12:43,640 --> 00:12:47,640 Speaker 2: made a repayment in the past year. Is that because 257 00:12:47,679 --> 00:12:50,680 Speaker 2: of the language that was coming out of the Biden 258 00:12:50,720 --> 00:12:53,079 Speaker 2: White House stand by for forgiveness. 259 00:12:53,800 --> 00:12:56,280 Speaker 8: It's hard to tell what was the motivation, whether it 260 00:12:56,280 --> 00:13:00,840 Speaker 8: was their own economic circumstances, whether they thought they could 261 00:13:00,960 --> 00:13:04,520 Speaker 8: get away with not repaying any of the loans. 262 00:13:04,960 --> 00:13:06,800 Speaker 9: Or whether or not. This is sort of typical for 263 00:13:06,880 --> 00:13:09,000 Speaker 9: the loan program. I mean, I don't know how many. 264 00:13:10,880 --> 00:13:18,199 Speaker 8: Say deadbeat loan holders are typical even before the pandemic hit. 265 00:13:18,320 --> 00:13:19,920 Speaker 8: I mean, it is kind of the end of the 266 00:13:20,040 --> 00:13:26,320 Speaker 8: last pandemic refuge put into place back in twenty twenty, 267 00:13:26,440 --> 00:13:30,080 Speaker 8: so it makes sense that we'd finally get this done. 268 00:13:30,320 --> 00:13:32,880 Speaker 8: I'd say the whiplash that we've been talking about on 269 00:13:32,920 --> 00:13:34,160 Speaker 8: this program is. 270 00:13:34,160 --> 00:13:35,960 Speaker 9: Really what happened to Joe Biden. 271 00:13:36,000 --> 00:13:39,280 Speaker 8: He kept trying to give relief to student loanholders and 272 00:13:39,320 --> 00:13:41,679 Speaker 8: the courts told him no twice. 273 00:13:42,120 --> 00:13:44,240 Speaker 9: And so that era is over. 274 00:13:44,679 --> 00:13:51,160 Speaker 8: You won't see the president trying to find ways to 275 00:13:51,200 --> 00:13:56,120 Speaker 8: create debt relief by folks who hold these loans. If anything, 276 00:13:56,840 --> 00:13:59,320 Speaker 8: turning these over to debt collectors is going to cause 277 00:14:00,240 --> 00:14:02,280 Speaker 8: you know, legitimate misery and if they. 278 00:14:02,160 --> 00:14:05,200 Speaker 9: Don't pay, they could wind up having wages garnished and 279 00:14:05,240 --> 00:14:05,800 Speaker 9: things like that. 280 00:14:05,920 --> 00:14:09,520 Speaker 8: So this is entering a whole new cycle. You know, 281 00:14:09,640 --> 00:14:13,800 Speaker 8: elections have consequences. Well, folks, guess what your debt is due. 282 00:14:15,120 --> 00:14:18,600 Speaker 2: Yeah, that's right, and some nine million could find themselves 283 00:14:18,720 --> 00:14:22,360 Speaker 2: in default here once we get past May fifth if 284 00:14:22,360 --> 00:14:27,760 Speaker 2: payments aren't made. Kristen, did Joe Biden confuse a lot 285 00:14:27,760 --> 00:14:29,600 Speaker 2: of voters to think they didn't have to pay their 286 00:14:29,640 --> 00:14:30,360 Speaker 2: loans anymore? 287 00:14:30,360 --> 00:14:30,520 Speaker 7: Here? 288 00:14:30,560 --> 00:14:33,160 Speaker 2: What do you make of the numbers that we're seeing here? 289 00:14:33,200 --> 00:14:36,200 Speaker 2: Do you, as a Democrat regret that being a major 290 00:14:36,280 --> 00:14:38,880 Speaker 2: pillar of the Biden administration? He came back time and 291 00:14:38,920 --> 00:14:41,280 Speaker 2: again shot down by the Supreme Court and made this 292 00:14:41,840 --> 00:14:46,280 Speaker 2: a major priority for his administration. Remember the save plan 293 00:14:46,400 --> 00:14:49,520 Speaker 2: that's been frozen by the court since August. Was it 294 00:14:49,560 --> 00:14:50,360 Speaker 2: a waste of time? 295 00:14:52,160 --> 00:14:54,480 Speaker 10: Not true of waste, It was a waste time. 296 00:14:54,600 --> 00:14:58,200 Speaker 7: I know a number of people who, you know, working 297 00:14:58,240 --> 00:15:02,120 Speaker 7: government service on Capitol Hill in the agencies who really 298 00:15:03,040 --> 00:15:06,960 Speaker 7: have benefited from some of that loan forgiveness and put 299 00:15:07,000 --> 00:15:08,880 Speaker 7: it to good use and done good work and even 300 00:15:08,920 --> 00:15:11,920 Speaker 7: gone back to work for the government. So, you know, 301 00:15:12,000 --> 00:15:14,880 Speaker 7: I don't think it was all loss. I think communicating 302 00:15:14,920 --> 00:15:16,960 Speaker 7: it to the American public should have been a pillar 303 00:15:17,000 --> 00:15:20,040 Speaker 7: of what we were doing. I'm not sure about that, 304 00:15:20,360 --> 00:15:25,800 Speaker 7: but you know, communicating it better, you know, certainly it 305 00:15:25,800 --> 00:15:27,840 Speaker 7: could have been better. But like I said, when you 306 00:15:28,000 --> 00:15:31,440 Speaker 7: have that's the problem, when you have these executive orders, 307 00:15:31,480 --> 00:15:33,920 Speaker 7: no matter what they are. Like I said, it's like 308 00:15:33,920 --> 00:15:36,960 Speaker 7: whiplash from one administration to the next. Same thing with 309 00:15:37,000 --> 00:15:40,480 Speaker 7: our foreign policy and our trade policy, you know, only 310 00:15:40,840 --> 00:15:45,240 Speaker 7: long lasting. You know, change comes through a Biparson compromise 311 00:15:45,280 --> 00:15:46,920 Speaker 7: and goes through the legislative process. 312 00:15:47,320 --> 00:15:49,240 Speaker 10: So this will continue to go back and forth. 313 00:15:49,280 --> 00:15:52,840 Speaker 7: I think when you see and confuse the American people 314 00:15:52,880 --> 00:15:56,160 Speaker 7: when you see, you know, these eos taking effect. 315 00:15:56,800 --> 00:15:59,480 Speaker 2: Now I don't know how many Harvard students we're talking 316 00:15:59,480 --> 00:16:03,040 Speaker 2: about here, Rick, but there is news about Harvard and 317 00:16:03,080 --> 00:16:05,320 Speaker 2: its federal funding, which is something that we've talked about 318 00:16:05,360 --> 00:16:07,640 Speaker 2: quite a bit lately, as the administration moves to cut 319 00:16:07,640 --> 00:16:11,240 Speaker 2: off some two billion dollars in grants two point two billion, 320 00:16:11,320 --> 00:16:15,000 Speaker 2: and so Harvard, maybe no surprise, is suing suing the 321 00:16:15,320 --> 00:16:18,960 Speaker 2: US agencies involved here and top officials for freezing the funding, 322 00:16:20,440 --> 00:16:21,840 Speaker 2: creating a real standoff. 323 00:16:21,920 --> 00:16:24,080 Speaker 3: Here is the first school to say no. 324 00:16:24,360 --> 00:16:26,920 Speaker 2: And now to sue, Rick, you may not be surprised 325 00:16:27,560 --> 00:16:28,840 Speaker 2: by this, but can Harvard win? 326 00:16:30,480 --> 00:16:32,120 Speaker 8: You know, Look, I mean they've got a case to 327 00:16:32,160 --> 00:16:36,080 Speaker 8: be made at Harvard. The administration is even admitted that 328 00:16:36,120 --> 00:16:39,200 Speaker 8: the letter they sent to Harvard require wing, you know, 329 00:16:39,280 --> 00:16:44,640 Speaker 8: basically an overseer for their programs and management of the university, 330 00:16:45,200 --> 00:16:45,880 Speaker 8: was a mistake. 331 00:16:46,880 --> 00:16:48,040 Speaker 9: But it's not like they've. 332 00:16:47,800 --> 00:16:50,360 Speaker 8: Resented any of these threats, right, It's not like they said, oh, 333 00:16:50,400 --> 00:16:53,359 Speaker 8: forget about it, that nine billion dollars were good for it. 334 00:16:53,920 --> 00:16:57,720 Speaker 8: And so, you know, Harvard is being precautious and going 335 00:16:57,760 --> 00:17:00,280 Speaker 8: to the courts. I mean, just like we were just 336 00:17:00,320 --> 00:17:03,120 Speaker 8: talking about, you know, Joe Biden's challenges with the courts 337 00:17:03,280 --> 00:17:06,680 Speaker 8: on his student own program. Donald Trump's been challenged by 338 00:17:06,680 --> 00:17:10,960 Speaker 8: the courts on virtually every EEO he's submitted. And maybe 339 00:17:11,000 --> 00:17:16,720 Speaker 8: we're just in this litigious kind of rule by legal fiat, 340 00:17:16,880 --> 00:17:18,480 Speaker 8: and you know, I'm just going to do whatever I 341 00:17:18,520 --> 00:17:20,679 Speaker 8: want to do as an administration, regardless of way the 342 00:17:20,760 --> 00:17:24,679 Speaker 8: rules work, ignoring the idea of a bipartisan compromise on 343 00:17:24,720 --> 00:17:27,560 Speaker 8: Capitol Hill to get things done, which christ and Han's right, 344 00:17:27,680 --> 00:17:32,000 Speaker 8: that's the way to actually govern. But yeah, this is 345 00:17:32,040 --> 00:17:35,159 Speaker 8: this is a very similar thing where now Harvard's going 346 00:17:35,240 --> 00:17:37,720 Speaker 8: to say, we're calling your cards. You know, if you've 347 00:17:37,720 --> 00:17:39,680 Speaker 8: got an ason there, and you better show it because 348 00:17:39,720 --> 00:17:42,639 Speaker 8: otherwise we're actually going to make it harder. 349 00:17:42,280 --> 00:17:45,080 Speaker 9: In the future for the administration to take on universities. 350 00:17:46,359 --> 00:17:48,679 Speaker 2: Well, of course, you know the story, well, Kristin. The 351 00:17:48,680 --> 00:17:52,640 Speaker 2: administration claims that Harvard failed to enforce civil rights laws 352 00:17:52,640 --> 00:17:56,680 Speaker 2: to protect Jewish students. The lawsuit reads, the government has 353 00:17:56,720 --> 00:18:00,960 Speaker 2: not and cannot identify any rational connection between anti Semitism 354 00:18:01,040 --> 00:18:04,919 Speaker 2: concerns and the medical, scientific, technological, and other research that 355 00:18:05,000 --> 00:18:08,439 Speaker 2: it has frozen that aims to save American lives, foster 356 00:18:08,560 --> 00:18:13,560 Speaker 2: American success, preserve American security, and maintain America's position as 357 00:18:13,600 --> 00:18:17,560 Speaker 2: a global leader in innovation. If Harvard wins this lawsuit, 358 00:18:18,240 --> 00:18:20,960 Speaker 2: will that be the precedent for every other university we're 359 00:18:21,000 --> 00:18:22,840 Speaker 2: talking about here, Columbia and so on. 360 00:18:24,320 --> 00:18:25,760 Speaker 7: I mean, I think you're looking at a lot of 361 00:18:25,880 --> 00:18:29,920 Speaker 7: universities across the board, and yes, I mean certainly, if 362 00:18:29,920 --> 00:18:32,600 Speaker 7: Harvard wins, the legal precedent would be very important for 363 00:18:33,119 --> 00:18:34,959 Speaker 7: like they said, I mean you're looking at I mean, 364 00:18:35,000 --> 00:18:38,639 Speaker 7: a lot of the research and development r and D 365 00:18:38,760 --> 00:18:41,639 Speaker 7: that comes out of the United States of America is 366 00:18:41,800 --> 00:18:45,440 Speaker 7: born at our colleges and universities. It's not just Harvard, 367 00:18:45,480 --> 00:18:48,639 Speaker 7: it's in you know, states all over this country. On 368 00:18:48,840 --> 00:18:52,119 Speaker 7: any number of different in any number of different areas. So, 369 00:18:52,400 --> 00:18:54,280 Speaker 7: you know, I think that it would be an important 370 00:18:54,359 --> 00:18:56,280 Speaker 7: legal precedent to be set. 371 00:18:57,000 --> 00:18:59,680 Speaker 10: If Harvard wins this, that's. 372 00:18:59,520 --> 00:19:02,720 Speaker 2: The end of this drive by the White House. If 373 00:19:02,720 --> 00:19:06,920 Speaker 2: Harvard wins here, Rick right, what happens to Columbia, Northwestern 374 00:19:06,920 --> 00:19:07,800 Speaker 2: Cornell and the rest. 375 00:19:09,240 --> 00:19:11,679 Speaker 8: Well, If Harvard wins, Columbia is going to have a 376 00:19:11,680 --> 00:19:14,600 Speaker 8: lot of you know, sort of regrets that they cut 377 00:19:14,600 --> 00:19:17,800 Speaker 8: it deer the trumpet station and there are you know, 378 00:19:17,880 --> 00:19:21,080 Speaker 8: one hundred university presidents have just signed, you know, a 379 00:19:21,160 --> 00:19:24,760 Speaker 8: compact to talk about how the government should stay out 380 00:19:24,760 --> 00:19:27,919 Speaker 8: of their business basically, so you are seeing this. 381 00:19:27,920 --> 00:19:31,360 Speaker 9: Sort of coalition get created. 382 00:19:31,400 --> 00:19:33,840 Speaker 8: I mean, obviously we got thousands of universities in the 383 00:19:33,920 --> 00:19:37,080 Speaker 8: United States, but when you start seeing universities working together 384 00:19:37,200 --> 00:19:45,199 Speaker 8: like this, you realize that, you know, there are constituencies for. 385 00:19:43,400 --> 00:19:45,240 Speaker 9: For the way things have been working. 386 00:19:45,320 --> 00:19:47,600 Speaker 8: And look, I've always thought it was kind of an 387 00:19:47,640 --> 00:19:52,879 Speaker 8: odd thing to attack universities over their poor management of 388 00:19:53,600 --> 00:19:57,320 Speaker 8: keeping their campuses free of anti Semitism when so much 389 00:19:57,359 --> 00:20:01,040 Speaker 8: of what you're talking about impacting them has nothing to 390 00:20:01,119 --> 00:20:03,879 Speaker 8: do with that kind of an issue. I mean, the 391 00:20:03,960 --> 00:20:07,159 Speaker 8: congressional hearings I thought did a better job of creating 392 00:20:07,359 --> 00:20:11,280 Speaker 8: change with the universities after the Spring uprisings on these 393 00:20:11,400 --> 00:20:15,320 Speaker 8: university campuses, because they changed the leadership. They didn't do 394 00:20:15,400 --> 00:20:18,640 Speaker 8: a good job of managing their universities, and so they 395 00:20:18,640 --> 00:20:20,760 Speaker 8: got a new they got a new president. 396 00:20:20,920 --> 00:20:21,880 Speaker 9: And I thought that. 397 00:20:21,920 --> 00:20:28,200 Speaker 8: Was particularly useful role for Congress to show that these 398 00:20:28,280 --> 00:20:31,960 Speaker 8: are universities that were poorly managed, but to actually get 399 00:20:32,000 --> 00:20:34,080 Speaker 8: into the nitty gritty of deciding what programs are going 400 00:20:34,160 --> 00:20:34,520 Speaker 8: to teach. 401 00:20:34,960 --> 00:20:36,720 Speaker 9: Yeah, that's a even. 402 00:20:36,520 --> 00:20:40,240 Speaker 8: For Americans who aren't that happy with liberal teachings at 403 00:20:40,280 --> 00:20:42,920 Speaker 8: the universities, that's probably step too far. 404 00:20:43,960 --> 00:20:45,800 Speaker 3: You do wonder what the real end goal is here. 405 00:20:46,000 --> 00:20:49,840 Speaker 2: Kristen Linda McMahon, secretary at least for now Department of 406 00:20:49,920 --> 00:20:52,679 Speaker 2: Education while it exists, was on the other network this 407 00:20:52,800 --> 00:20:55,679 Speaker 2: morning said that the letter that they sent to Harvard, 408 00:20:55,720 --> 00:21:00,439 Speaker 2: the demand letter, was quote a point of negotiation and 409 00:21:00,480 --> 00:21:03,359 Speaker 2: since she hopes the university would come back to the table. 410 00:21:04,040 --> 00:21:05,520 Speaker 3: So is this just like the tariffs? 411 00:21:07,440 --> 00:21:09,639 Speaker 7: I was about to say, I think that you have 412 00:21:09,680 --> 00:21:13,280 Speaker 7: to think about in any negotiation who you are negotiating with, 413 00:21:13,880 --> 00:21:18,560 Speaker 7: and clearly Harvard is taking a very strong stand and 414 00:21:18,640 --> 00:21:26,720 Speaker 7: defending their activities and their research and everything that they 415 00:21:26,760 --> 00:21:29,960 Speaker 7: have to offer. And they know that they're setting a 416 00:21:30,040 --> 00:21:34,280 Speaker 7: precedent for other colleges and universities with major departments like 417 00:21:34,320 --> 00:21:36,919 Speaker 7: this across the country. So I think they may have 418 00:21:37,040 --> 00:21:39,240 Speaker 7: overplayed their cards a little bit here. 419 00:21:41,680 --> 00:21:44,119 Speaker 2: Well, I'll tell you it's an interesting day with you 420 00:21:44,280 --> 00:21:47,320 Speaker 2: talk about the whiplash, the back and forth and the uncertainty. 421 00:21:47,840 --> 00:21:51,040 Speaker 2: It's an up day on Wall Street. It's whipping higher 422 00:21:51,119 --> 00:21:53,080 Speaker 2: here after what we heard from Scott Bessen, and we'll 423 00:21:53,080 --> 00:21:54,800 Speaker 2: get into that a little bit more in our next hour. 424 00:21:58,040 --> 00:22:01,520 Speaker 1: You're listening to the Bloomberg bellth of Power podcast Ketch 425 00:22:01,600 --> 00:22:04,440 Speaker 1: us live weekdays at noon and five pm. E's den 426 00:22:04,560 --> 00:22:08,000 Speaker 1: on Apple, Coarclay, and Android Auto with the Bloomberg Business App. 427 00:22:08,160 --> 00:22:11,440 Speaker 1: Listen on demand wherever you get your podcasts, or watch 428 00:22:11,480 --> 00:22:13,040 Speaker 1: us live on YouTube. 429 00:22:14,240 --> 00:22:17,520 Speaker 11: Let's talk about the economic outlook changing that we got 430 00:22:17,520 --> 00:22:20,520 Speaker 11: from the IMF today as it downgrades its global growth 431 00:22:21,080 --> 00:22:24,040 Speaker 11: forecasts and big hit to the forecast specifically for the 432 00:22:24,160 --> 00:22:27,240 Speaker 11: US and China, given the circumstances with which we were 433 00:22:27,280 --> 00:22:29,800 Speaker 11: just discussing. We heard from the IMF Chief Economist Pierre 434 00:22:29,800 --> 00:22:33,040 Speaker 11: Olivier Gorenshaw about the forecast earlier today. 435 00:22:33,840 --> 00:22:37,760 Speaker 12: Beyond the abrupt increasing tariffs, the surge in policy and 436 00:22:37,920 --> 00:22:42,959 Speaker 12: certainty is a major driver of the economic outlook. If sustained, 437 00:22:43,640 --> 00:22:48,280 Speaker 12: the increasing trade tensions and uncertainty will slow global growth significantly. 438 00:22:50,680 --> 00:22:53,040 Speaker 11: So let's get more into this now with Bloomberg International 439 00:22:53,040 --> 00:22:55,560 Speaker 11: Economics and Policy correspondent Michael McKee, who is here with 440 00:22:55,640 --> 00:22:58,879 Speaker 11: us in Washington. And when we consider the uncertainty in 441 00:22:58,920 --> 00:23:01,040 Speaker 11: this forecast, we also have to consider the time at 442 00:23:01,040 --> 00:23:05,480 Speaker 11: which these forecasts were made April fourth, is what assumptions 443 00:23:05,480 --> 00:23:07,760 Speaker 11: they were using tariffs that stood as they were on 444 00:23:07,800 --> 00:23:09,760 Speaker 11: that day. We have seen a mass of escalation in 445 00:23:09,800 --> 00:23:11,840 Speaker 11: the tariffs between the US and China since then, So 446 00:23:11,880 --> 00:23:15,159 Speaker 11: when they're issuing warnings about growth being downgraded for the 447 00:23:15,240 --> 00:23:17,879 Speaker 11: US and China, there's actually plenty of room for that 448 00:23:17,920 --> 00:23:18,400 Speaker 11: to get worse. 449 00:23:18,480 --> 00:23:23,880 Speaker 13: Mike, Yeah, And that was their second goal, estimating what 450 00:23:23,960 --> 00:23:25,800 Speaker 13: was going to happen to the global economy, because they'd 451 00:23:25,800 --> 00:23:28,840 Speaker 13: already started preparing and then when Trump announced the tariffs, 452 00:23:28,880 --> 00:23:31,000 Speaker 13: they had to throw all that out and start over again. 453 00:23:31,240 --> 00:23:34,760 Speaker 13: They did several different scenarios, and the one that we 454 00:23:34,840 --> 00:23:37,440 Speaker 13: are all talking about is what they're calling the reference scenario. 455 00:23:37,480 --> 00:23:39,680 Speaker 13: It's sort of their baseline at this point. But obviously 456 00:23:39,760 --> 00:23:42,320 Speaker 13: things are going to change because we have no idea 457 00:23:42,560 --> 00:23:44,679 Speaker 13: as of today what the tariffs are going to be. 458 00:23:45,040 --> 00:23:48,119 Speaker 13: But you're right, they do forecast a big drop in growth, 459 00:23:48,320 --> 00:23:50,320 Speaker 13: not only for the US and China but for the world. 460 00:23:50,480 --> 00:23:52,399 Speaker 13: The US takes it on the chin by almost a 461 00:23:52,440 --> 00:23:56,600 Speaker 13: full percentage point, down to one point five percent growth 462 00:23:56,680 --> 00:24:00,760 Speaker 13: this year. That's from their forecast in jail, So in 463 00:24:00,760 --> 00:24:03,800 Speaker 13: two months we've lost a percentage point and the Chinese 464 00:24:03,880 --> 00:24:07,160 Speaker 13: they say, well, grow just three point two percent. As 465 00:24:07,200 --> 00:24:09,399 Speaker 13: you know, they don't seem to like the idea of 466 00:24:09,440 --> 00:24:11,640 Speaker 13: going below five percent, even if they have to kind 467 00:24:11,640 --> 00:24:13,080 Speaker 13: of massage the numbers. 468 00:24:13,359 --> 00:24:17,399 Speaker 2: Gornishaw says, we are entering a new era. The global 469 00:24:17,400 --> 00:24:19,919 Speaker 2: economic system that has operated for the last eighty years 470 00:24:20,080 --> 00:24:22,919 Speaker 2: is being reset. How long does it take for a 471 00:24:22,960 --> 00:24:24,840 Speaker 2: new era to be set. 472 00:24:24,960 --> 00:24:27,520 Speaker 13: Well, we'd all love to know. And part of the 473 00:24:27,560 --> 00:24:31,840 Speaker 13: problem there is what is Donald Trump going to do? 474 00:24:32,040 --> 00:24:34,000 Speaker 13: And then how long is it going to take him? 475 00:24:34,000 --> 00:24:36,639 Speaker 13: And then what does he continue to do? At some 476 00:24:36,800 --> 00:24:39,800 Speaker 13: point does he say, Okay, this is it, We're going 477 00:24:39,840 --> 00:24:42,080 Speaker 13: ahead with tariffs. At some point does he say, Okay, 478 00:24:42,119 --> 00:24:45,000 Speaker 13: we've accomplished what we want. Maybe he makes trade deals 479 00:24:45,040 --> 00:24:47,560 Speaker 13: instead of doing tariffs. So nobody really knows what's going 480 00:24:47,600 --> 00:24:50,520 Speaker 13: to happen. I think that the bottom line for what 481 00:24:50,760 --> 00:24:53,919 Speaker 13: Pierre Leivier is saying is that nobody can trust the. 482 00:24:54,000 --> 00:24:55,000 Speaker 9: United States anymore. 483 00:24:55,000 --> 00:24:55,880 Speaker 3: And it used to be that. 484 00:24:55,840 --> 00:24:57,000 Speaker 9: The US was the load star. 485 00:24:57,040 --> 00:25:00,600 Speaker 13: Everybody followed what the US was doing, But now people 486 00:25:00,640 --> 00:25:03,000 Speaker 13: can't do that, so they have to prepare. Central banks 487 00:25:03,040 --> 00:25:07,639 Speaker 13: have to prepare, Legislators have to prepare and try to 488 00:25:07,680 --> 00:25:11,359 Speaker 13: figure out what works best for their country absent any 489 00:25:11,400 --> 00:25:12,800 Speaker 13: idea what the US is going to do. 490 00:25:13,040 --> 00:25:15,160 Speaker 11: Well on your point on central Bankspike, it stands out 491 00:25:15,200 --> 00:25:17,439 Speaker 11: to me that the growth figures the IMF release today 492 00:25:17,760 --> 00:25:20,800 Speaker 11: the worst since two thousand and nine, or since COVID, 493 00:25:20,920 --> 00:25:23,480 Speaker 11: second worst since two thousand and nine, times at which 494 00:25:23,520 --> 00:25:26,960 Speaker 11: we were seeing central banks respond to these massive economic 495 00:25:27,040 --> 00:25:29,919 Speaker 11: issues by easing policy. And yet, at least for the 496 00:25:29,920 --> 00:25:32,240 Speaker 11: Federal Reserve, they don't necessarily find themselves in a place 497 00:25:32,320 --> 00:25:34,359 Speaker 11: right now where they're eager to ease policy because of 498 00:25:34,359 --> 00:25:37,000 Speaker 11: inflationary risks that are out there, the response will be 499 00:25:37,000 --> 00:25:37,640 Speaker 11: different this day. 500 00:25:37,680 --> 00:25:40,399 Speaker 13: The IMFA is forecasting that inflation is going to go 501 00:25:40,520 --> 00:25:42,680 Speaker 13: up in the United States not much, in the rest 502 00:25:42,680 --> 00:25:45,280 Speaker 13: of the world a little bit because it'll be somewhat 503 00:25:45,840 --> 00:25:49,399 Speaker 13: disinflationary since the economies of all these countries are going 504 00:25:49,440 --> 00:25:51,960 Speaker 13: to slow. But in the US we're going to slow, 505 00:25:52,119 --> 00:25:54,880 Speaker 13: but we're also going to see faster inflation, which leaves 506 00:25:54,920 --> 00:25:57,080 Speaker 13: the US in this awful position that Jay Powell was 507 00:25:57,119 --> 00:26:00,199 Speaker 13: talking about last week of what do you do. Do 508 00:26:00,240 --> 00:26:02,920 Speaker 13: you raise rates to choke off inflation, in which case 509 00:26:02,960 --> 00:26:06,640 Speaker 13: you make the slowdown worse or vice versa. So at 510 00:26:06,640 --> 00:26:11,600 Speaker 13: this point, the IMF view was, we really don't know 511 00:26:11,880 --> 00:26:14,520 Speaker 13: what's going to happen, but whatever it is, it's not 512 00:26:14,520 --> 00:26:15,040 Speaker 13: going to be good. 513 00:26:15,359 --> 00:26:18,119 Speaker 2: Bloomberg's Michael McKee with us in Washington. Nice to have 514 00:26:18,160 --> 00:26:20,159 Speaker 2: you in the Capitol for a couple of days. We're 515 00:26:20,160 --> 00:26:22,760 Speaker 2: going to have a lot to talk about with mister McKee, 516 00:26:22,760 --> 00:26:25,240 Speaker 2: as we had the voice of Constance Hunter, chief economist 517 00:26:25,320 --> 00:26:26,320 Speaker 2: Eiu Constance. 518 00:26:26,359 --> 00:26:27,960 Speaker 3: It's great to have you with us here on Bloomberg 519 00:26:28,040 --> 00:26:28,800 Speaker 3: TV and Radio. 520 00:26:28,880 --> 00:26:33,240 Speaker 2: The IMF forecast that we're talking about increases the odds 521 00:26:33,280 --> 00:26:36,080 Speaker 2: of a recession here in the US to forty percent, 522 00:26:36,160 --> 00:26:38,119 Speaker 2: up from twenty seven in October. 523 00:26:38,160 --> 00:26:38,639 Speaker 3: Where are you. 524 00:26:40,640 --> 00:26:42,840 Speaker 14: We're much higher than that, I would say, closer to 525 00:26:42,920 --> 00:26:46,840 Speaker 14: eighty percent. And that's because the level of uncertainty that 526 00:26:46,880 --> 00:26:50,400 Speaker 14: we're seeing is so significantly high. I mean, it is 527 00:26:50,920 --> 00:26:54,480 Speaker 14: higher than the global financial crisis. It is higher than 528 00:26:54,560 --> 00:26:58,560 Speaker 14: when the US debt was downgraded in twenty eleven, and 529 00:26:58,680 --> 00:27:02,160 Speaker 14: higher than any previous recession going back to the eighties 530 00:27:02,200 --> 00:27:07,560 Speaker 14: when this index was created. So we think that that 531 00:27:07,840 --> 00:27:11,040 Speaker 14: means that there is a significant reduction in capex. 532 00:27:12,040 --> 00:27:14,240 Speaker 15: We hear that from our clients. 533 00:27:14,320 --> 00:27:17,040 Speaker 14: We also are starting to see signs that you're seeing 534 00:27:17,080 --> 00:27:21,639 Speaker 14: discretionary spending pullback on the part of consumers, and of 535 00:27:21,680 --> 00:27:24,040 Speaker 14: course that leads to a vicious circle where you see 536 00:27:24,080 --> 00:27:27,480 Speaker 14: pewer and pure jobs growth eventually a negative jobs print. 537 00:27:27,520 --> 00:27:31,840 Speaker 14: And so we're actually our baseline forecast is for negative 538 00:27:31,920 --> 00:27:34,600 Speaker 14: zero point one percent growth for all of twenty twenty 539 00:27:34,600 --> 00:27:35,719 Speaker 14: five for the US. 540 00:27:37,040 --> 00:27:41,080 Speaker 11: So considering that a picture you're painting constance, it doesn't 541 00:27:41,119 --> 00:27:44,320 Speaker 11: look like a very optimistic one for the US economy. 542 00:27:44,920 --> 00:27:47,720 Speaker 11: I wonder what you made when President Trumpy yesterday spoke 543 00:27:47,880 --> 00:27:50,959 Speaker 11: on True Social about the calls for preemptive cuts from 544 00:27:51,000 --> 00:27:53,879 Speaker 11: the federal Reserve. He obviously think inserts rates need to 545 00:27:53,880 --> 00:27:56,160 Speaker 11: go down now. Is there a case to be made 546 00:27:56,200 --> 00:27:59,240 Speaker 11: for that view if there is indeed such a dour 547 00:27:59,240 --> 00:28:00,000 Speaker 11: outlook ahead of US. 548 00:28:00,040 --> 00:28:05,639 Speaker 14: Yes, well, as Mike Key pointed out, and we've been saying, 549 00:28:05,800 --> 00:28:09,879 Speaker 14: the US is going to import inflation and export disinflation 550 00:28:10,040 --> 00:28:13,840 Speaker 14: deflation to the rest of the world. And so I 551 00:28:13,880 --> 00:28:18,119 Speaker 14: think what we're seeing from the President is perhaps the 552 00:28:18,200 --> 00:28:22,600 Speaker 14: setting up of escapegoat or someone to blame, saying, oh, well, 553 00:28:22,640 --> 00:28:25,000 Speaker 14: we wouldn't have this slowdown on growth if the FED 554 00:28:25,160 --> 00:28:28,520 Speaker 14: just acted sooner. And of course, whatever happens, we will 555 00:28:28,600 --> 00:28:32,880 Speaker 14: never have the counterfactual. But we do know that if 556 00:28:32,920 --> 00:28:35,920 Speaker 14: the FED were cut to cut too soon, it would 557 00:28:36,080 --> 00:28:40,760 Speaker 14: risk igniting inflation. We think that risk is somewhat mitigated 558 00:28:40,800 --> 00:28:43,440 Speaker 14: because of what we're seeing in terms of the behavior 559 00:28:43,560 --> 00:28:47,200 Speaker 14: of the tenure rates, right. We even with Scott Assn's 560 00:28:47,200 --> 00:28:51,200 Speaker 14: comments today, we don't see the tenure rallying all that much. 561 00:28:51,720 --> 00:28:54,680 Speaker 14: And so if the FED were to cut too soon, 562 00:28:55,160 --> 00:28:58,520 Speaker 14: right and that risk of inflation gets elevated, you're going 563 00:28:58,600 --> 00:29:02,640 Speaker 14: to see tenure rates go up. So it's not clear 564 00:29:02,760 --> 00:29:05,360 Speaker 14: that that would actually help the economy that much. Where 565 00:29:05,360 --> 00:29:08,960 Speaker 14: it really could serve to un anchor inflation expectations. 566 00:29:09,400 --> 00:29:10,320 Speaker 15: So we think not. 567 00:29:10,200 --> 00:29:13,280 Speaker 14: Only is the FED going to be so called fashionably late, 568 00:29:13,720 --> 00:29:18,160 Speaker 14: but we think, given their dual mandate, they are constitutionally 569 00:29:18,640 --> 00:29:21,480 Speaker 14: or I should say congressionally mandated to be a little 570 00:29:21,480 --> 00:29:24,000 Speaker 14: bit late, and they're likely not to cut rates until 571 00:29:24,080 --> 00:29:24,600 Speaker 14: June or so. 572 00:29:26,480 --> 00:29:26,920 Speaker 3: Constance. 573 00:29:26,960 --> 00:29:30,720 Speaker 2: You mentioned Scott Besson's remarks earlier today prompting quite a rally. 574 00:29:30,760 --> 00:29:33,160 Speaker 2: I just wonder what you make of what he said. 575 00:29:33,240 --> 00:29:37,600 Speaker 2: Wall Street is finding a positive spin on this. The 576 00:29:37,640 --> 00:29:41,080 Speaker 2: status quo here apparently not sustainable. But if the Treasury 577 00:29:41,120 --> 00:29:43,960 Speaker 2: Secretary is calling for de escalation, does that mean that 578 00:29:44,000 --> 00:29:46,120 Speaker 2: the reciprocal tariffs didn't work. 579 00:29:49,280 --> 00:29:49,440 Speaker 10: Well? 580 00:29:49,480 --> 00:29:50,960 Speaker 15: Of That's an interesting question. 581 00:29:52,640 --> 00:29:56,160 Speaker 14: I mean, I would say it depends on what from 582 00:29:56,160 --> 00:29:57,160 Speaker 14: whose perspective? 583 00:29:57,200 --> 00:29:58,760 Speaker 15: And how are we defined working? 584 00:29:58,880 --> 00:29:59,040 Speaker 2: Right? 585 00:29:59,080 --> 00:30:03,240 Speaker 14: Like, if you're a China uh and you and this 586 00:30:03,400 --> 00:30:06,640 Speaker 14: is going to really hurt your economy, and you've put 587 00:30:06,680 --> 00:30:09,880 Speaker 14: on retaliatory tariffs, and now the US is saying we're 588 00:30:09,880 --> 00:30:11,880 Speaker 14: gonna we're gonna walk back some of our side of 589 00:30:11,920 --> 00:30:15,280 Speaker 14: the tariffs, then I guess from China's perspective it did work. 590 00:30:17,000 --> 00:30:20,720 Speaker 15: From our perspective, did it work? What are we trying 591 00:30:20,720 --> 00:30:21,360 Speaker 15: to achieve. 592 00:30:21,800 --> 00:30:24,880 Speaker 14: You know, there's been a lot of muddle communication with 593 00:30:24,920 --> 00:30:27,440 Speaker 14: regard to what are these tariffs trying to achieve. Are 594 00:30:27,440 --> 00:30:32,200 Speaker 14: they a revenue generator? Are they supposed to reduce imports 595 00:30:32,240 --> 00:30:34,320 Speaker 14: and reduce our deficits, in which case they would not 596 00:30:34,440 --> 00:30:37,520 Speaker 14: be generating as much revenue. Are they supposed to bring 597 00:30:37,600 --> 00:30:40,840 Speaker 14: manufacturing back to the United States or bring manufacturing to 598 00:30:40,960 --> 00:30:44,920 Speaker 14: the United States. It's not clear that that that is 599 00:30:45,080 --> 00:30:47,680 Speaker 14: necessarily the one of the goals, and if it is, 600 00:30:47,800 --> 00:30:51,239 Speaker 14: we are we import so many intermediate goods that are 601 00:30:51,320 --> 00:30:55,000 Speaker 14: part of our manufacturing process that tariffs are not really going. 602 00:30:54,960 --> 00:30:56,880 Speaker 15: To help facilitate that occurring. 603 00:30:58,040 --> 00:31:00,720 Speaker 14: Is it a wan perone type policy where we're saying 604 00:31:00,760 --> 00:31:02,920 Speaker 14: we actually want to make everything in the United States 605 00:31:02,920 --> 00:31:04,640 Speaker 14: and we're not going to be integrated with the rest 606 00:31:04,640 --> 00:31:06,720 Speaker 14: of the world at all. We know that's not a 607 00:31:06,800 --> 00:31:10,040 Speaker 14: terribly successful policy tract to take. So it's kind of 608 00:31:10,160 --> 00:31:14,960 Speaker 14: unclear when we say work, what is the ultimate objective 609 00:31:15,160 --> 00:31:18,280 Speaker 14: of the tariffs and what is the ordering in which 610 00:31:18,280 --> 00:31:20,960 Speaker 14: we should rank the various objectives that have been thrown 611 00:31:20,960 --> 00:31:22,640 Speaker 14: out by the administration. 612 00:31:23,680 --> 00:31:24,160 Speaker 6: Constance. 613 00:31:24,160 --> 00:31:26,560 Speaker 11: We just have a minute left here, But when you 614 00:31:26,560 --> 00:31:28,960 Speaker 11: look at the bond market right now. What do you 615 00:31:29,120 --> 00:31:30,880 Speaker 11: see and how worried about it are you? 616 00:31:32,240 --> 00:31:34,240 Speaker 15: I see an increase in term premium. 617 00:31:34,760 --> 00:31:38,240 Speaker 14: I see the sell off as being part of a 618 00:31:38,320 --> 00:31:42,080 Speaker 14: global reallocation out of US assets, and what we see 619 00:31:42,160 --> 00:31:44,200 Speaker 14: day to day, of course, is the liquid assets. 620 00:31:44,480 --> 00:31:45,840 Speaker 15: But we're also going. 621 00:31:45,640 --> 00:31:47,480 Speaker 14: To begin to see, and we are already beginning to 622 00:31:47,480 --> 00:31:49,880 Speaker 14: see in terms of real estate, the selling of less 623 00:31:49,880 --> 00:31:53,920 Speaker 14: liquid assets, and so that increase in term premium is 624 00:31:53,960 --> 00:31:57,640 Speaker 14: going to prove, I think, very expensive if we continue 625 00:31:57,640 --> 00:31:58,560 Speaker 14: along this direction. 626 00:32:00,280 --> 00:32:02,640 Speaker 11: All right, Constant's great to have you on Bloomberg TV 627 00:32:02,840 --> 00:32:06,680 Speaker 11: and Radio. Constant Centers, chief economist at EIU joining us 628 00:32:06,720 --> 00:32:09,920 Speaker 11: here on balance of power as we consider this downgraded growth. 629 00:32:09,640 --> 00:32:11,640 Speaker 6: Outlook and how it is timed. 630 00:32:11,840 --> 00:32:15,000 Speaker 11: With the words of Scott Besten, though not technically on 631 00:32:15,040 --> 00:32:16,880 Speaker 11: the record, not in public, not in front of the media, 632 00:32:17,000 --> 00:32:19,160 Speaker 11: just sources saying that he views the tariffs with China 633 00:32:19,200 --> 00:32:21,760 Speaker 11: is unsustainable. He thinks there will be a de escalation. 634 00:32:21,840 --> 00:32:24,320 Speaker 11: The problem is, Joe, no one is seemingly taking that 635 00:32:24,400 --> 00:32:26,280 Speaker 11: first de escalatory step at this point. 636 00:32:26,320 --> 00:32:28,040 Speaker 2: That is the problem. You have to pick up the 637 00:32:28,080 --> 00:32:30,320 Speaker 2: phone and have a meeting at some point. Coming off 638 00:32:30,320 --> 00:32:32,200 Speaker 2: our highs, so the S and P five hundred still 639 00:32:32,240 --> 00:32:38,000 Speaker 2: up one hundred points. Thanks for listening to the Balance 640 00:32:38,040 --> 00:32:41,680 Speaker 2: of Power podcast. Make sure to subscribe if you haven't already, 641 00:32:41,680 --> 00:32:45,000 Speaker 2: at Apple, Spotify, or wherever you get your podcasts, and 642 00:32:45,040 --> 00:32:47,680 Speaker 2: you can find us live every weekday from Washington, DC 643 00:32:47,840 --> 00:32:50,520 Speaker 2: at noontime Eastern at Bloomberg dot com.