WEBVTT - Bloomberg Surveillance TV: November 14, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bramwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:36.960 Terminal and the Bloomberg Business App. Joining us now to 0:00:36.960 --> 0:00:40.479 discuss is Mohammad al Arian of Queen's College, Cambridge. Mohammed, 0:00:40.560 --> 0:00:43.000 welcome to the program, Sir. I'm going to start yesterday. 0:00:43.200 --> 0:00:45.240 I'm going to go back to yesterday morning, a thirty 0:00:45.280 --> 0:00:47.400 easton time CPI drops. We were looking for you and 0:00:47.440 --> 0:00:49.879 you weren't here. You're with us. Now, what's your response 0:00:49.920 --> 0:00:52.239 to that day? To Muhammad? Because at the moment, the 0:00:52.280 --> 0:00:55.480 market is slowly gravitating to paying more attention to levels. 0:00:55.760 --> 0:00:57.880 The federal Reserve at the moment seems to be more 0:00:57.960 --> 0:00:59.760 i would say, gripped by the current trend down in 0:00:59.800 --> 0:01:01.760 curry by it. What are you focused on. 0:01:03.320 --> 0:01:05.640 So, John, sorry, I wasn't with you yesterday. I was 0:01:05.680 --> 0:01:06.520 on the road. 0:01:06.920 --> 0:01:10.400 What I'm focused on is actually summarized really well by 0:01:10.560 --> 0:01:13.920 John Authors of Bloomberg Opinion. I'm a big fan of 0:01:13.959 --> 0:01:17.839 his daily Note, and today is a very thoughtful note, 0:01:17.880 --> 0:01:19.720 and he basically leaves you with three messages. 0:01:20.520 --> 0:01:23.360 One is the fall in inflation is stalling. 0:01:24.240 --> 0:01:28.360 Two, if you look at the components, they suggest that 0:01:28.440 --> 0:01:30.200 it will continue to stall. 0:01:30.880 --> 0:01:32.600 And three is that if you. 0:01:32.560 --> 0:01:35.520 Look at the work that's being done in the different 0:01:35.520 --> 0:01:38.959 groups of economists within the FED, they also confirm that 0:01:39.000 --> 0:01:42.640 we've got a three percent inflation weight. Now, as you know, 0:01:43.360 --> 0:01:45.880 I think the equilibrium inflation weight for these countries between 0:01:45.920 --> 0:01:49.040 two and a half and three. If you continue to 0:01:49.240 --> 0:01:52.200 target two percent, then you're going to have some really 0:01:52.200 --> 0:01:54.520 difficult choices, and I think that is what's facing the 0:01:54.520 --> 0:01:55.160 FED right now. 0:01:55.240 --> 0:01:57.520 Do you think they're also slightly realizing Muhammad without in 0:01:57.560 --> 0:01:59.880 mind that they're not actually as restrictive as they think, 0:02:00.320 --> 0:02:02.560 And are you seeing evidence of that start to creep 0:02:02.600 --> 0:02:05.720 into some of the speeches you're hearing from FED officials. 0:02:06.560 --> 0:02:09.680 Yeah, I think that backing away from the view that 0:02:09.720 --> 0:02:13.360 they expressed in their last meeting, and I think that 0:02:14.160 --> 0:02:16.760 what we're getting is, you know what, maybe I can 0:02:16.800 --> 0:02:21.960 live with two percent plus for a while, because otherwise 0:02:22.320 --> 0:02:23.239 they are. 0:02:23.000 --> 0:02:24.480 In a really difficult situation. 0:02:24.880 --> 0:02:28.560 Look, the market was relieved because the market didn't look 0:02:28.680 --> 0:02:31.320 at the fact that core inflation is stuck at point 0:02:31.360 --> 0:02:35.000 three monthly for the third straight months. The market was 0:02:35.040 --> 0:02:39.080 worried that the numbers would be higher than the consensus forecasts, 0:02:39.080 --> 0:02:40.400 and that didn't happen. 0:02:40.520 --> 0:02:43.800 In the components though the BLS reported that over half 0:02:43.880 --> 0:02:47.640 of the inflation we saw, Mohammad came from shelter prices 0:02:47.720 --> 0:02:51.200 raising Claudia Sam said, we don't have an inflation problem. Now, 0:02:51.480 --> 0:02:54.000 we have a housing problem. And that's been true for 0:02:54.120 --> 0:02:57.560 over a year. We've seen the FED cut rates and 0:02:57.639 --> 0:03:00.560 mortgages move higher. Muhammad, How do you solve an inflation 0:03:00.680 --> 0:03:03.720 problem if it's underpinned by a fickle housing market. 0:03:04.639 --> 0:03:07.320 So I don't think that's the only issue, Danny, but 0:03:07.360 --> 0:03:08.600 it's an important issue. 0:03:08.840 --> 0:03:11.960 And again I'll point you to john Author's note. 0:03:12.440 --> 0:03:14.560 You can tell I really like it because you've got 0:03:14.639 --> 0:03:17.360 such a good detailed work. We love Johnson where he 0:03:17.480 --> 0:03:19.880 looks at trim the measures, where he looks at all that. 0:03:20.080 --> 0:03:24.359 The problem is services, and within services is wages. 0:03:24.919 --> 0:03:29.440 It's a good thing for the average American that real 0:03:29.480 --> 0:03:32.320 wages are growing by more than one percent. Now, that's 0:03:32.360 --> 0:03:36.200 a good thing. But it's feeding into services and that's 0:03:36.240 --> 0:03:40.360 the big issue. And it's happening at the time when 0:03:41.000 --> 0:03:43.680 grocery inflation has come down a lot, where there are 0:03:43.840 --> 0:03:48.160 negative price increases for certain food items. And the concern 0:03:48.600 --> 0:03:51.600 is that services aren't going to come down fast enough 0:03:51.640 --> 0:03:56.360 inflation wise, before good services goods inflation starts. 0:03:56.000 --> 0:03:58.920 Going up, Mohammed, If we're going to be an environment 0:03:59.240 --> 0:04:02.320 where aid potentially is the priority of this White House, 0:04:02.360 --> 0:04:05.120 tariffs are put on and American companies are broad or 0:04:05.120 --> 0:04:08.440 forced to come back and they're forced to pay American workers, 0:04:08.800 --> 0:04:10.680 is this problem not going to get a whole lot worse. 0:04:12.200 --> 0:04:15.760 So I'm in the UK here, Danny, where everybody the 0:04:15.840 --> 0:04:18.279 companies have found it totally normal to say the minute 0:04:18.320 --> 0:04:20.040 might cost go up, I'm going to pass it on. 0:04:20.440 --> 0:04:23.560 And you hear that over and over again from companies 0:04:23.640 --> 0:04:27.039 in reaction to the budget. So there is this mentality 0:04:27.160 --> 0:04:31.440 right now in the corporate world that forget about your profits, 0:04:31.480 --> 0:04:36.159 forget about all the dividends and all the share buybacks 0:04:36.160 --> 0:04:39.119 you do. If your costs go up, then you should 0:04:39.160 --> 0:04:40.640 pass it on to the consumers. 0:04:40.800 --> 0:04:41.720 So there is that risk. 0:04:41.720 --> 0:04:44.640 But I want to stress that it's really hard to 0:04:44.760 --> 0:04:52.800 model what the president elects economic promises. First you have 0:04:52.880 --> 0:04:55.520 to decide how many are going to be implemented, and 0:04:55.560 --> 0:04:59.400 then you have to decide the two counter forces. Yes, 0:05:00.000 --> 0:05:05.400 arosty inflationary, Yes, higher budget deficit will tend to put pressure. 0:05:05.520 --> 0:05:08.480 But on the other side you have a major deregulation 0:05:09.000 --> 0:05:11.160 and on the other side you have a major promise 0:05:11.680 --> 0:05:15.520 to act on the expenditure side of the budget. So 0:05:15.600 --> 0:05:18.760 when you look at these two things, the first even 0:05:18.800 --> 0:05:20.559 when you try to net it out, it is not clear. 0:05:20.600 --> 0:05:23.680 And then the second round effects get really complicated. And 0:05:23.720 --> 0:05:27.599 I tell people, regardless of what happens, we now have 0:05:27.680 --> 0:05:30.159 an inflation that's not going to go to two percent. Now, 0:05:30.200 --> 0:05:32.760 before you jump immediately to what's going to happen next, 0:05:33.920 --> 0:05:37.160 understand that you got to wait because it's really complicated 0:05:37.240 --> 0:05:38.680 economics sorting all this out. 0:05:39.120 --> 0:05:41.159 Muhammad, you have a new piece out today and you say, 0:05:41.200 --> 0:05:43.800 once again it was the economy stupid, im project syndicate, 0:05:43.839 --> 0:05:46.159 And I think, and you can tell us here. Are 0:05:46.160 --> 0:05:48.480 you trying to answer a question that our own colleague, 0:05:48.520 --> 0:05:53.479 Craig Tours asked J. Powell in the press conference, which was, 0:05:53.520 --> 0:05:56.400 did you learn anything about Americans think about the economy 0:05:56.640 --> 0:05:57.839 from the election results? 0:05:59.360 --> 0:06:00.880 Yeah? 0:05:59.720 --> 0:06:05.640 And Marie, it's fascinating because there were two economic messages 0:06:05.720 --> 0:06:07.239 sent and they're both correct. 0:06:07.960 --> 0:06:08.600 There was the. 0:06:08.520 --> 0:06:12.479 One that the Republicans pounced on, repeating the nineteen eighty 0:06:12.560 --> 0:06:15.520 Reagan question are you better off? And they were talking 0:06:15.520 --> 0:06:20.080 about the price level and people really still have sticker 0:06:20.160 --> 0:06:23.640 shock when they go to the grocery store, so that 0:06:23.800 --> 0:06:26.240 is what the average person focused on. 0:06:27.000 --> 0:06:28.960 Well, you asked a question as well in your piece, 0:06:29.120 --> 0:06:32.640 will the Democrats and establishment in quotes you put experts 0:06:32.680 --> 0:06:33.440 get the message? 0:06:33.480 --> 0:06:33.880 Will they? 0:06:34.960 --> 0:06:38.680 Well, they haven't so far because they're focused on the 0:06:38.720 --> 0:06:42.280 economic exceptionalism, which is also true, but in a ca 0:06:42.600 --> 0:06:46.520 shaped economy that doesn't trickle down as much as you'd 0:06:46.560 --> 0:06:50.200 like it to. So the Democrats stuck with the economic exceptionalism. 0:06:50.240 --> 0:06:53.560 They didn't understand that that message wasn't getting through for 0:06:53.760 --> 0:06:57.520 good reason, because people were concerned about the price level. 0:06:57.800 --> 0:06:59.680 And you know, and Marie that the more you tell 0:06:59.800 --> 0:07:03.800 some a message that doesn't speak to their reality. The 0:07:03.800 --> 0:07:06.680 more they questioned you, the more they lose trust in you. 0:07:07.440 --> 0:07:11.440 And the economists did a terrible job. The mainstream economists 0:07:11.440 --> 0:07:13.880 did a terrible job of trying to reconcile the two views, 0:07:13.880 --> 0:07:19.360 which are moreconcilable. But unfortunately the reality is that people 0:07:19.400 --> 0:07:21.640 will continue to focus on the prist level because it 0:07:21.720 --> 0:07:23.680 has been such a large shock. We're not used to 0:07:23.680 --> 0:07:26.120 seeing inflation at nine percent, which is where it was 0:07:26.160 --> 0:07:28.840 in June twenty twenty two, and that impact hasn't gone away. 0:07:28.920 --> 0:07:31.320 Mohammed, What did your thoughts on the price action? Let's 0:07:31.320 --> 0:07:33.160 talk about that. A little bit ahead of the election, 0:07:33.800 --> 0:07:35.720 you were looking at what was happening in the bond market, 0:07:35.720 --> 0:07:37.400 in the high yields, and this line came up in 0:07:37.400 --> 0:07:40.080 your Bloomberg opinion column. Well, most analysts agree on the 0:07:40.080 --> 0:07:43.120 list of potential contributors to this unusual development. FET's cutting 0:07:43.160 --> 0:07:46.160 interest rates, yields a rising there is little consensus on 0:07:46.200 --> 0:07:48.600 their relative importance. You went on to say that over 0:07:48.640 --> 0:07:50.720 the next week we should get some clarity on that. 0:07:50.760 --> 0:07:53.600 Do you have clarity now on what is driving long rates? 0:07:55.600 --> 0:07:59.320 I have more clarity on what's driving long rates, and 0:07:59.520 --> 0:08:02.480 it's exactly what you have been talking about the market 0:08:02.880 --> 0:08:06.600 is front running economic announcements, including who's. 0:08:06.360 --> 0:08:08.360 Going to be in Treasury and that's going to be 0:08:08.440 --> 0:08:11.400 really important. And I agree with and earlier today saying 0:08:11.400 --> 0:08:12.560 that that really matters. 0:08:13.000 --> 0:08:15.360 You see that the economy has continued to surprise on 0:08:15.400 --> 0:08:19.120 the upside and that has an impact. Meanwhile in Europe, 0:08:19.240 --> 0:08:21.560 and I'm glad you've been focusing on the effects situation. 0:08:22.160 --> 0:08:25.080 Things have gone in the opposite direction, John. The yield 0:08:25.080 --> 0:08:31.120 differential between tenure treasuries and tenure German government bonds, the 0:08:31.160 --> 0:08:35.160 boons are back over two hundred basis points. That's been 0:08:35.200 --> 0:08:38.240 a massive move, and it just the market has understood 0:08:38.840 --> 0:08:42.160 that divergence is a major story going forward. 0:08:42.240 --> 0:08:45.240 Now, Hammd, how much more divergent things possibly get? We've 0:08:45.280 --> 0:08:48.480 already seen aggressive widening over the past week. I was 0:08:48.520 --> 0:08:50.760 mentioning in a conversation earlier this morning at the front end, 0:08:50.800 --> 0:08:52.800 if you compare the German two year to the US 0:08:52.840 --> 0:08:55.360 two year only back in September that was treading around 0:08:55.360 --> 0:08:58.360 one thirty now is something like two twenty, so almost 0:08:58.360 --> 0:09:01.080 the one hundred basis point move on that spread. Mhammed, 0:09:01.120 --> 0:09:02.720 how much wider can things get? 0:09:04.040 --> 0:09:06.559 I think they can get wider, John, I think you know, 0:09:07.000 --> 0:09:08.400 if you look at the good, the bad, and the 0:09:08.480 --> 0:09:11.800 ugly of the global economy, Unfortunately Europe is in the ugly. 0:09:12.840 --> 0:09:17.040 Cyclically that challenged, secularly that challenged. 0:09:18.280 --> 0:09:19.040 There is no. 0:09:20.640 --> 0:09:24.600 Definitive political leadership in the two countries where you need 0:09:24.640 --> 0:09:29.000 it most, Germany and France. There's a roadmap the DRUGA report, 0:09:29.480 --> 0:09:34.080 but they're nowhere near even talking about implementation, let alone implementation. 0:09:34.760 --> 0:09:38.480 And these dynamics today mean that if you're lagging, you 0:09:38.520 --> 0:09:41.360 are likely to lag even more so, John, it wouldn't 0:09:41.400 --> 0:09:43.640 surprise me if you see that differential go higher. 0:09:43.640 --> 0:09:45.920 It wouldn't surprise me if you see the year orgo weaker. 0:09:46.160 --> 0:09:48.680 So that makes it easier, relatively speaking, to call the 0:09:48.679 --> 0:09:52.280 ECP for twenty twenty five, they're going to cut interest rates, Muhammad. 0:09:52.280 --> 0:09:55.679 There is overwhelming consensus the FED reduces rates again in December. 0:09:56.000 --> 0:09:58.360 I would love your base case for twenty twenty five. 0:09:58.679 --> 0:10:00.200 Before we get to the end of the year. You're 0:10:00.240 --> 0:10:02.160 thinking about how much work this FED can actually do 0:10:02.679 --> 0:10:05.440 and whether you think ultimately just in terms of how 0:10:05.520 --> 0:10:08.320 the communication has evolved over the past few days, we're 0:10:08.320 --> 0:10:10.960 setting ourselves out for a pause into twenty five. 0:10:12.240 --> 0:10:14.480 So first I agree with you that we are likely 0:10:14.520 --> 0:10:18.120 to see another twenty five basis points cut in December, 0:10:18.120 --> 0:10:21.640 and we should see another basis point twenty five basis. 0:10:21.320 --> 0:10:23.840 Point cut longer term. 0:10:24.200 --> 0:10:26.800 You know the range if you look at the dots 0:10:26.840 --> 0:10:29.720 of what where is the terminal weight where from about 0:10:29.720 --> 0:10:34.200 three and a half to just over sorry, from two 0:10:34.200 --> 0:10:36.480 and a quarter to just over three and three quarters, 0:10:36.600 --> 0:10:38.640 And I've argued it's towards the upper end. 0:10:39.000 --> 0:10:41.680 I suspect that that now is about four percent. That 0:10:41.800 --> 0:10:45.120 is the terminal weight for where we're going. So we 0:10:45.200 --> 0:10:49.520 will have a couple more cuts, and then it gets really. 0:10:49.160 --> 0:10:53.080 Hard to cut more unless you're willing to have the 0:10:53.120 --> 0:10:55.600 difficult discussions. And this is this is not a FED 0:10:55.679 --> 0:10:57.800 that's willing to have a difficult discussion. This is a 0:10:57.800 --> 0:11:03.680 FED that will continue to stand behind this notion of 0:11:03.760 --> 0:11:07.240 data dependency. And this is a fact that may be 0:11:07.240 --> 0:11:10.040 built out on inflation by what's happening away from it, 0:11:10.640 --> 0:11:13.400 and build out in the wrong way, meaning that inflation 0:11:13.880 --> 0:11:16.360 doesn't go to two percent, and they'll just say it's 0:11:16.360 --> 0:11:16.880 not our fault. 0:11:17.360 --> 0:11:18.880 Muhamma, and I had taught you all day, we all 0:11:18.920 --> 0:11:21.520 could what do you mean by the difficult discussion. What 0:11:21.640 --> 0:11:23.600 is the discussion that you'd like the Federal Reserved to 0:11:23.640 --> 0:11:25.480 have as soon as today? What would you like to 0:11:25.480 --> 0:11:28.360 hear from Chairman Pow at three pm Eastern time that 0:11:28.480 --> 0:11:29.559 you're not expecting to hear. 0:11:30.960 --> 0:11:33.800 So I'm definitely not expecting to hear the question. Is 0:11:33.840 --> 0:11:37.199 two percent still the right inflation target? He's not going 0:11:37.240 --> 0:11:42.240 to touch this? Hopefully behind closed door they are, because 0:11:42.440 --> 0:11:44.600 even if you don't want to change your inflation target 0:11:44.720 --> 0:11:46.840 and they won't change the inflation target. 0:11:47.000 --> 0:11:49.440 The path to that really matters. 0:11:49.960 --> 0:11:53.000 So I'm hoping that they're having a discussion what is 0:11:53.040 --> 0:11:57.120 the white neutral weight in this economy right now? 0:11:57.120 --> 0:11:58.560 What is the white inflation target? 0:11:59.000 --> 0:12:02.200 That discussion, if you had it without the historical context 0:12:02.840 --> 0:12:06.079 and without the legacy of having missed so badly on 0:12:06.520 --> 0:12:09.559 your inflation target since twenty twenty one, would be it's 0:12:09.600 --> 0:12:11.800 more between two and a half and three and that's 0:12:11.800 --> 0:12:15.200 probably the range it should be. But that's not a 0:12:15.400 --> 0:12:17.559 discussion that he will ever have publicly, not. 0:12:17.600 --> 0:12:19.800 This fat Mohammed. It's good to hear from you, sir. 0:12:19.840 --> 0:12:23.040 I appreciate your time. Mohammed al Erindav of Queen's College Cambridge. 0:12:23.080 --> 0:12:35.440 Thank you, sir, President ELK. Donald Trump's priorities coming into 0:12:35.440 --> 0:12:38.560 sharper focus. Rob Casey of Signum Global Advisors saying, we 0:12:38.640 --> 0:12:42.640 believe President elect Trump and trade advisor Robert Leiheiser are 0:12:42.679 --> 0:12:46.440 committed to implementing an aggressive terariff agenda, likely beginning with 0:12:46.480 --> 0:12:49.640 Europe and ending with China. Rob joins us Now for 0:12:49.679 --> 0:12:50.840 more Rob, Good morning John. 0:12:50.920 --> 0:12:51.559 The sequence. 0:12:51.760 --> 0:12:55.120 It's a big focus for financial market participants worldwide. You 0:12:55.240 --> 0:12:57.679 think that it's going to start with trade and it 0:12:57.720 --> 0:12:59.040 will start with Europe. 0:12:59.240 --> 0:13:02.480 Why, yeah, Well, first and foremost, it's not to say 0:13:02.480 --> 0:13:04.600 that we don't think that they're not going to wait 0:13:04.640 --> 0:13:06.839 on China for very long, but we do think that 0:13:06.880 --> 0:13:10.079 Europe is the day one priority mostly, you know, speaking 0:13:10.200 --> 0:13:12.200 very bluntly because we don't think Trump likes you up 0:13:12.280 --> 0:13:15.760 a whole lot. And you know, essentially we're dealing with 0:13:15.800 --> 0:13:18.280 a what is not a net neutral landscape but a 0:13:18.280 --> 0:13:22.280 net negative landscape. Seabam, deforestation, steel, airbus. They are all 0:13:22.280 --> 0:13:25.040 of these trip wires that you know, the pro EU 0:13:25.120 --> 0:13:27.320 presidency of Joe Biden was not able to deal with, 0:13:27.440 --> 0:13:30.079 was not able to handle. We think Trump comes into 0:13:30.120 --> 0:13:33.760 office essentially with all those tripwires laid out, not really 0:13:33.760 --> 0:13:34.600 looking to avoid them. 0:13:34.760 --> 0:13:37.199 Ron Desandis the governor of Florida is in Italy right 0:13:37.240 --> 0:13:39.480 now on a trade mission. Who do you think Trump 0:13:39.600 --> 0:13:42.960 views as someone he could work with in Europe? 0:13:43.080 --> 0:13:44.959 Well, I think it's it's Orbon first, and then when 0:13:44.960 --> 0:13:46.760 Trump realized that Auburn actually doesn't have a whole lot 0:13:46.760 --> 0:13:48.760 of power in the EU, it will be Maloney second. 0:13:49.000 --> 0:13:50.880 So when it comes to the tariffs, and if you 0:13:50.920 --> 0:13:53.760 think they're going to be enacted, first, personnel's policy, as 0:13:53.800 --> 0:13:56.240 you know in Washington, d C. Where does he put Lightheiser? 0:13:57.080 --> 0:13:59.080 We think Lightheyser could be at USTR. 0:13:59.120 --> 0:14:00.080 He could go back to us. 0:14:00.080 --> 0:14:02.480 You are, but you know, if I'm Robert Leitheiser, honestly, 0:14:02.480 --> 0:14:05.880 I'm looking for a slightly larger portfolio, a little bit 0:14:05.880 --> 0:14:08.080 of a you know, a bigger role, and that could be. 0:14:08.080 --> 0:14:11.000 A commerce that's terriffs, let's tell it taxes. Let's talk 0:14:11.000 --> 0:14:13.800 about what can actually get through Congress, and you'll view 0:14:13.840 --> 0:14:15.920 and what took place in the Senate in the last 0:14:15.960 --> 0:14:19.120 twenty four hours. How constrained will this presidency be by 0:14:19.120 --> 0:14:22.240 a Senate that for some people stand down the President 0:14:22.320 --> 0:14:24.760 elect and made its own decision a backg a different way. 0:14:25.200 --> 0:14:26.720 Yeah, well, I think we can all be sort of 0:14:26.760 --> 0:14:28.320 relieved and happy that it's going to be John Thune, 0:14:28.320 --> 0:14:31.160 who is to his core an institutionalist, so to the 0:14:31.200 --> 0:14:33.360 extent that it's not Rick Scott. John Thune presents a 0:14:33.400 --> 0:14:35.680 little bit more of a constraint, but I mean he's 0:14:35.680 --> 0:14:37.480 got fifty three votes in the Senate, so I don't 0:14:37.520 --> 0:14:40.240 think it's going to be a huge constraint moving forward. 0:14:40.280 --> 0:14:42.280 But tendor Thoon has said he will not get rid 0:14:42.280 --> 0:14:44.920 of the filibuster. So basically the only thing that can 0:14:45.040 --> 0:14:47.160 the Senate can do with that kind of majority at 0:14:47.160 --> 0:14:51.880 fifty three is tax and budget correct, Yeah, totally. 0:14:52.000 --> 0:14:55.160 We think it'll be a very big budget reconciliation package. 0:14:55.440 --> 0:14:57.400 You know, they're talking about getting it done in the 0:14:57.440 --> 0:14:59.600 first one hundred days of the term. I think that 0:14:59.680 --> 0:15:02.440 will be exceedingly difficult. We also have to realize, frankly, 0:15:02.440 --> 0:15:05.480 that we're running up to a budget cliff in December 0:15:05.520 --> 0:15:07.040 as well, so they're going to have to pass a 0:15:07.080 --> 0:15:07.920 cr in the short. 0:15:07.800 --> 0:15:09.520 Term with the current Congress. 0:15:09.680 --> 0:15:11.520 If they pass it out to January February, they're going 0:15:11.560 --> 0:15:13.880 to have to deal with that first. A larger reconciliation 0:15:13.960 --> 0:15:17.520 package after that. But there's now talk about extending the 0:15:17.520 --> 0:15:20.560 CR to September October November to give them kind of 0:15:20.560 --> 0:15:23.000 that first one hundred days latitude to get the budget 0:15:23.040 --> 0:15:24.040 or conciliation deal done. 0:15:24.120 --> 0:15:25.760 So with soon at the helm, What do you make 0:15:25.800 --> 0:15:27.760 of how the confirmation hearings are going to go. 0:15:28.560 --> 0:15:30.720 I think we can safely say, or at least I 0:15:30.760 --> 0:15:32.640 will predict that mat Gates does not get confirmed as 0:15:32.640 --> 0:15:35.280 Attorney General, so he may wind up being sort of 0:15:35.320 --> 0:15:39.800 the sacrificial lamb of the cabinet picks. I think everybody 0:15:39.840 --> 0:15:42.800 else probably gets through. Again, Trump can lose one or 0:15:42.800 --> 0:15:46.640 two Republicans in any confirmation vote and still still passes nominees. 0:15:46.680 --> 0:15:50.600 So you know, Hagseth probably going to be a longer, 0:15:50.920 --> 0:15:53.680 more difficult process. Just give them that he's not really 0:15:53.680 --> 0:15:56.280 on the books of regarding policy at all. I think 0:15:56.280 --> 0:15:58.000 mac Gates is probably the one who's struck down, and 0:15:58.080 --> 0:15:59.200 everybody else probably. 0:15:58.920 --> 0:15:59.840 Gets through Seth. 0:16:00.080 --> 0:16:02.400 Gates, though, showed us that Trump is willing to nominate 0:16:02.440 --> 0:16:04.720 people who hadn't been on anyone's list. I don't think 0:16:04.720 --> 0:16:07.080 anyone expected either of them to be put up for 0:16:07.120 --> 0:16:07.760 these jobs. 0:16:08.200 --> 0:16:09.000 Does that show us. 0:16:08.960 --> 0:16:10.920 That maybe we're too sanguine that when it comes to 0:16:10.960 --> 0:16:13.320 Treasury secretary will get kind of a classic pick, a 0:16:13.360 --> 0:16:14.320 market friendly. 0:16:14.080 --> 0:16:16.920 Pick on Treasury. 0:16:17.080 --> 0:16:19.440 I mean, I think it's going to be Best in 0:16:19.440 --> 0:16:22.880 Our or Lutnik. Frankly so to the extent that that 0:16:22.960 --> 0:16:24.680 sort of hams us in. I think that's good news. 0:16:25.280 --> 0:16:27.360 But we have to be honest and saying that Trump 0:16:27.360 --> 0:16:29.520 received a whether or not it was landslide I think 0:16:29.600 --> 0:16:32.640 is up for debate, but a national mandate, right, and 0:16:32.680 --> 0:16:34.920 he's going to put people into these jobs that a 0:16:35.160 --> 0:16:37.120 he likes and B we're very loyal to him, and 0:16:37.520 --> 0:16:39.160 he's not really going to apologize for it. He doesn't 0:16:39.160 --> 0:16:41.360 have to apologize for it. He won the national popular vote. 0:16:41.440 --> 0:16:43.960 He's got to send up majority. And so do I 0:16:43.960 --> 0:16:45.720 think we could get more surprises from here, or at 0:16:45.760 --> 0:16:48.560 least really more trump accolytes from here. Whether or not 0:16:48.600 --> 0:16:50.800 that's a surprise, yeah, I think we could. 0:16:50.920 --> 0:16:52.520 But does soons. 0:16:52.160 --> 0:16:54.280 Lifting up as leader or not show us that there 0:16:54.360 --> 0:16:57.760 is some resistance to some of Trump's ideas and who 0:16:57.800 --> 0:16:58.240 he wants. 0:16:58.480 --> 0:17:01.280 There's some I would say there is some resistance, or 0:17:01.280 --> 0:17:03.000 at least it's clear that the Senate isn't going to 0:17:03.000 --> 0:17:05.119 just roll over for Trump every single time, right, And 0:17:05.359 --> 0:17:07.119 I think John Thune will be He'll be a very 0:17:07.119 --> 0:17:09.320 good majority leader. He'll be a strong majority leader. And 0:17:09.440 --> 0:17:11.200 to the extent that he wants or has to stand 0:17:11.240 --> 0:17:12.639 up to Trump, I think he will be able to. 0:17:13.640 --> 0:17:13.720 That. 0:17:13.800 --> 0:17:17.560 Being said, though, on policy right on tax policy, on tariffs, 0:17:17.560 --> 0:17:20.240 et cetera, I think most of the Republican majorities in 0:17:20.240 --> 0:17:23.240 Congress are in line with Trump. So Tune is not 0:17:23.240 --> 0:17:25.280 going to stand up on policy. He may stand up 0:17:25.320 --> 0:17:26.560 on some of these personnel decisions. 0:17:26.560 --> 0:17:28.720 When Trump went to the House the other day, when 0:17:28.720 --> 0:17:31.240 he also had the meeting with Biden, he brought Musk 0:17:31.640 --> 0:17:34.160 alongside him. I just wonder what the presence of Musk, 0:17:34.160 --> 0:17:37.080 who has become this huge donor for the Republican class, 0:17:37.359 --> 0:17:40.600 does to affect sentiment in Capitol Hill. Is there almost 0:17:40.600 --> 0:17:42.560 an element where they need to follow the money and 0:17:42.600 --> 0:17:45.080 that Musk represents a greater threat to them and maybe 0:17:45.080 --> 0:17:47.879 even funding challengers to those who don't support Trump. 0:17:48.200 --> 0:17:48.400 Yeah. 0:17:48.400 --> 0:17:50.119 Well, I think one of the biggest stories over the 0:17:50.119 --> 0:17:51.800 next two years may wind up being Trump and Musk 0:17:51.800 --> 0:17:55.400 falling out, just because two very talented political individuals, two 0:17:55.520 --> 0:17:57.600 very big egos in the same room together. That that 0:17:57.680 --> 0:17:59.960 only works for so long, right, So, I mean it's 0:18:00.040 --> 0:18:02.440 jams as though Musk is attached to Donald Trump's hip 0:18:02.480 --> 0:18:05.479 at this point, you know he's running this government if 0:18:05.520 --> 0:18:07.119 he has this government efficiency mandate. 0:18:07.160 --> 0:18:08.240 Now, we'll see how that goes. 0:18:09.119 --> 0:18:11.160 Do Republicans want to keep him on side at least 0:18:11.200 --> 0:18:14.040 until the midterms? Definitely? Will Trump be able to We'll 0:18:14.280 --> 0:18:16.600 keep him on side and keep it friendly. I honestly 0:18:16.600 --> 0:18:18.080 think it's easier said than them. 0:18:18.200 --> 0:18:20.440 Do you think Democrats could have avoided this if they'd 0:18:20.480 --> 0:18:22.959 shown as much love to Elon Musk as they had 0:18:23.000 --> 0:18:25.680 shown to Mary Barrat of GM, Could this school have 0:18:25.760 --> 0:18:26.280 been avoided? 0:18:27.800 --> 0:18:30.560 I mean yes, But I also think that in terms 0:18:30.560 --> 0:18:35.600 of Trump's not cabinet but kind of broader universe, it 0:18:35.680 --> 0:18:37.680 was there for the taking from Musk, it was there 0:18:37.720 --> 0:18:40.919 for the purchasing, and to the extent that Democrats were 0:18:41.000 --> 0:18:44.160 nice or not to Trump to Musk, I think less 0:18:44.160 --> 0:18:46.439 important because Trump was able to give Musk really what 0:18:46.480 --> 0:18:47.240 he wanted it and that. 0:18:47.240 --> 0:18:48.240 Is power Trump. 0:18:48.840 --> 0:18:51.600 John brought up the Democrats yesterday. There was a report 0:18:51.680 --> 0:18:54.520 that the reason why Kama Harris didn't said down with 0:18:54.600 --> 0:18:58.120 Joe Rogan and tap his fifteen million subscribers is because 0:18:58.160 --> 0:19:00.919 they were worried about the progressive pushback. How does the 0:19:00.920 --> 0:19:03.000 Democratic Party pick up the pieces. 0:19:03.119 --> 0:19:06.480 Well, there's going to have to be a reckoning for sure. Obviously, 0:19:06.600 --> 0:19:10.480