WEBVTT - Bloomberg Surveillance TV: July 1st, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordernt. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:36.800 Bloomberg Terminal and the Bloomberg Business App. Here's a few 0:00:36.800 --> 0:00:38.879 on Wall Street this morning. Julian and Manuel, I've ever 0:00:38.920 --> 0:00:40.879 course saying it's not yet the time to parle in 0:00:41.200 --> 0:00:43.600 right in the following, A pullback is our base case, 0:00:43.880 --> 0:00:47.120 given the parabolic move already and the risks from tariffs 0:00:47.159 --> 0:00:50.159 and policy to the economy. Judy had joined us now 0:00:50.200 --> 0:00:52.199 for more. Julian, good morning, good morning. Aha, we take 0:00:52.240 --> 0:00:55.200 a beat. How's it feel the last quarter? What was 0:00:55.200 --> 0:00:55.840 that like for you? 0:00:57.240 --> 0:00:57.480 Look? 0:00:58.080 --> 0:00:59.959 Incredible in many respects. 0:01:00.040 --> 0:01:04.560 So the market actually did what it was supposed to do. Okay, 0:01:04.959 --> 0:01:09.200 you had this incredible surprise reaction to something where we 0:01:09.200 --> 0:01:12.479 were completely not used to what we were seeing, which 0:01:12.640 --> 0:01:16.280 was a tariff schedule, you know, higher than smooth Holly. 0:01:16.680 --> 0:01:18.880 And then you got what you actually didn't get at 0:01:18.920 --> 0:01:22.559 the bottom in October of twenty twenty two, a volatility event, 0:01:22.680 --> 0:01:28.600 an actual capitulation that really presented the buying opportunity very 0:01:28.720 --> 0:01:34.000 very clearly. And from our point of view, the surprise 0:01:34.360 --> 0:01:40.039 is the unrelenting speed with which the market continues the advance. 0:01:39.800 --> 0:01:42.000 Massive move twenty percent plus off the lows on the 0:01:42.080 --> 0:01:43.920 S and P thirty percent something like that in the 0:01:43.959 --> 0:01:46.240 last nine one hundred. I sait here, and I wonder 0:01:46.280 --> 0:01:48.520 looking out twelve months now, can you say with confidence 0:01:48.520 --> 0:01:50.400 the outlook for runnings is getting better or worse? 0:01:50.680 --> 0:01:54.560 At this point it's it's definitely getting better, okay, because 0:01:54.680 --> 0:02:00.960 basically what has happened is you've had this adjustment from tariffs, 0:02:01.240 --> 0:02:04.200 and now that there is this presumption that you are 0:02:04.200 --> 0:02:06.040 going to get and we can talk about the effect 0:02:06.080 --> 0:02:09.639 on interest rates later or what have you, that you're 0:02:09.680 --> 0:02:12.800 going to get some form of stimulus that is going 0:02:12.840 --> 0:02:17.280 to be more favorable to the twenty twenty six picture. Obviously, 0:02:17.320 --> 0:02:20.280 the twenty twenty five picture remains in flux, and we're 0:02:20.280 --> 0:02:22.480 going to find that out in a couple of weeks 0:02:22.480 --> 0:02:26.240 when the earning seasons start. But in general, the whole 0:02:26.360 --> 0:02:32.040 narrative of the economy having avoided a recession is a 0:02:32.080 --> 0:02:33.520 reasonably positive backdrop. 0:02:33.600 --> 0:02:35.880 Let's put the one big beautiful bill on the side 0:02:35.880 --> 0:02:38.000 for one second and just go to the tariffs, which 0:02:38.000 --> 0:02:40.040 you mentioned are still at the highest going back to 0:02:40.040 --> 0:02:43.880 the nineteen thirties and haven't fully been priced in yet. 0:02:43.880 --> 0:02:46.160 When it comes to whether it's consumer prices, whether it's 0:02:46.200 --> 0:02:48.600 companies absorbing it in the profit margins, what makes you 0:02:48.639 --> 0:02:50.600 think this isn't going to show up in earnings and 0:02:50.600 --> 0:02:53.440 a material hit to profit margins for a significant number 0:02:53.440 --> 0:02:54.000 of companies. 0:02:54.240 --> 0:02:57.680 Well, so, the work that we've done was the expectation 0:02:58.240 --> 0:03:02.440 that roughly it be a fifty to fifty split. You know, 0:03:02.600 --> 0:03:06.560 larger companies will will shoulder less, smaller companies will will 0:03:06.560 --> 0:03:08.160 shoulder more of. 0:03:08.680 --> 0:03:09.480 The tariff hit. 0:03:10.320 --> 0:03:15.239 And yes, it definitely will fall into earnings. But again 0:03:15.360 --> 0:03:18.760 there is this presumption that it is the one time 0:03:18.880 --> 0:03:22.320 hit and that there will be this transition period, which 0:03:22.400 --> 0:03:26.440 obviously for the market began in the spring, but we're 0:03:26.480 --> 0:03:31.240 already sort of pricing through that. And again, what it 0:03:31.320 --> 0:03:36.520 points to is the resilience of corporate America, the ability 0:03:36.600 --> 0:03:39.960 to adapt, the ability to move supply chains, and the 0:03:40.000 --> 0:03:43.320 ability to figure out what a correct pricing strategy is. 0:03:43.480 --> 0:03:46.040 We're putting an economic narrative to a market story, to 0:03:46.120 --> 0:03:48.400 something that really is big tech names that continue to 0:03:48.400 --> 0:03:51.880 innovate in a technological boom that is trickling out into 0:03:51.960 --> 0:03:54.480 other companies at the same time that there are these 0:03:54.520 --> 0:03:57.440 independent factors that are very real that are affecting other 0:03:57.480 --> 0:03:59.720 asset classes. And we talked about the dollar that might 0:03:59.760 --> 0:04:02.320 be some of the vigilantes are going, or this question 0:04:02.440 --> 0:04:04.600 of where the marginal buyer is going to be, how 0:04:04.640 --> 0:04:07.840 the market responds to negative news in the economy. How 0:04:07.920 --> 0:04:10.920 much are we making an economic argument for something that 0:04:11.000 --> 0:04:13.320 is now increasingly divorced from the economy. 0:04:13.800 --> 0:04:18.440 Well, again stepping back the story of this year, and 0:04:18.640 --> 0:04:22.280 in large part from our point of view, the reason 0:04:22.720 --> 0:04:26.479 that the advance off the April bottom has been as 0:04:26.640 --> 0:04:30.479 unrelenting as it's been is because we are now finding 0:04:30.960 --> 0:04:36.000 that corporate America is understanding how to use AI constructively 0:04:36.360 --> 0:04:40.440 across all industries, not just for cost saves, but for 0:04:40.520 --> 0:04:43.760 revenue enhancement well as well. And this is something that 0:04:43.800 --> 0:04:47.280 we think is going to continue to proliferate, and when 0:04:47.320 --> 0:04:49.680 you think about it, is part of the reason. Look, 0:04:49.760 --> 0:04:52.600 we're uncomfortable with where multiples are, which is why we 0:04:52.680 --> 0:04:53.960 think that you're likely. 0:04:53.800 --> 0:04:54.600 To have a pullback. 0:04:54.839 --> 0:04:59.560 But on balance, it is something that supports higher multiples 0:04:59.720 --> 0:05:02.240 x ANTI than what we've seen. 0:05:02.400 --> 0:05:04.159 I'll pull back when though, because you talk about a 0:05:04.160 --> 0:05:05.440 FOMO driven melt up. 0:05:06.000 --> 0:05:08.200 What if you missed that? 0:05:08.680 --> 0:05:13.039 So, look, it could be going on right now, but 0:05:13.560 --> 0:05:16.719 from our point of view, there's enough policy uncertainty out 0:05:16.760 --> 0:05:20.520 there that I would equate this more to the sort 0:05:20.520 --> 0:05:22.960 of FOMO that we had in and around the election. 0:05:23.880 --> 0:05:27.880 Remember a lot of froth there, you know, led by 0:05:27.960 --> 0:05:31.479 crypto names, led by names that were tied into the 0:05:31.520 --> 0:05:34.880 Trump administration. And I think we're seeing a lot of 0:05:34.920 --> 0:05:40.520 the same thing now. But again, the actual activity supporting 0:05:40.960 --> 0:05:46.680 a more prolonged period of FOMO hasn't materialized yet. We 0:05:46.800 --> 0:05:50.719 do think you need to get less policy uncertainty to 0:05:50.800 --> 0:05:51.760 get to that period. 0:05:51.839 --> 0:05:55.760 What uncertainty unnerves you the most? Lisa mentioned tariffs. Right now, 0:05:55.760 --> 0:05:58.000 we have this debate on the one big beautiful bill, 0:05:58.040 --> 0:05:59.560 but no one thinks it's not going to pass. It 0:05:59.640 --> 0:06:01.839 just might be an absolute slog and it's probably not 0:06:01.880 --> 0:06:04.400 going to come on July fourth. What's the uncertainty that 0:06:04.640 --> 0:06:07.520 makes you nervous to really want to add more to 0:06:07.600 --> 0:06:08.279 your exposure? 0:06:08.400 --> 0:06:12.120 So I think it's a what the response is going 0:06:12.160 --> 0:06:15.400 to be in and around July to ninth. That's the 0:06:15.520 --> 0:06:18.679 you know, the tariff story. But again this other idea 0:06:18.839 --> 0:06:22.359 that you know, we're seeing the resilience on the corporate 0:06:22.360 --> 0:06:25.440 earnings front. But if you go back to last Friday, 0:06:25.480 --> 0:06:29.480 it was really the first indication with the inflation numbers 0:06:29.560 --> 0:06:34.280 higher than expected and the income and spending numbers weaker 0:06:34.320 --> 0:06:38.479 than expected. GDP revised down that yes, in fact, this 0:06:38.680 --> 0:06:40.640 theorized pass through. 0:06:40.839 --> 0:06:44.240 From tariffs might actually in fact be dding. What's the 0:06:44.279 --> 0:06:45.680 best outcome for July ninth? 0:06:45.800 --> 0:06:48.119 Ask this question? Yes, and I, as an extended pretend 0:06:48.160 --> 0:06:50.080 keep the Guschett and go ten percent and move on. 0:06:50.440 --> 0:06:51.560 What's the best outcome for you? 0:06:51.960 --> 0:06:57.080 I think it's I think, well, you'd like certainty. I mean, 0:06:57.120 --> 0:07:00.040 if you just went to ten and said that's it, 0:07:00.120 --> 0:07:01.200 that would be fine. 0:07:01.920 --> 0:07:03.320 The market would embrace that. 0:07:04.160 --> 0:07:08.040 But something leads me to believe that it isn't quite 0:07:08.200 --> 0:07:09.520 going to be that simple. 0:07:09.880 --> 0:07:12.080 In negotiation, You're not alone, by the way, And I 0:07:12.120 --> 0:07:13.920 think this is interesting that the market is just sort 0:07:13.920 --> 0:07:16.000 of happy, and I think it was happy several months 0:07:16.000 --> 0:07:18.200 ago with the idea of a ten percent universal tariff. 0:07:18.600 --> 0:07:19.600 Move on to other things. 0:07:19.760 --> 0:07:21.760 Then companies can actually price it in, they can re 0:07:21.920 --> 0:07:25.280 raise your supply chains, and like Julian said, the adapt 0:07:25.400 --> 0:07:27.600 adjusts wi you see in so many different companies is 0:07:27.600 --> 0:07:29.840 what we've already seen with respect to half being absorbed 0:07:29.840 --> 0:07:31.920 by them, a little being absorbed by them, and maybe 0:07:32.080 --> 0:07:34.000 just a small marginal one time price increase. 0:07:34.040 --> 0:07:36.360 And to your point, Jonathan, the market was happy. 0:07:36.520 --> 0:07:38.480 I was there. It was rallying when. 0:07:38.400 --> 0:07:40.480 The President got up in the rose garden said here's 0:07:40.520 --> 0:07:42.960 a ten percent across the board tariff. It only started 0:07:43.000 --> 0:07:46.800 to crater when they came out with the massive billboard 0:07:47.000 --> 0:07:51.520 of the reciprocal tariff rates that were extortioned for some 0:07:51.560 --> 0:07:53.560 countries an kittsult to the extreme. 0:07:53.760 --> 0:07:55.880 And now we're happy with ten percent, and apparently even 0:07:55.920 --> 0:07:59.240 the EU is now happy with a ten percent universal tariff. 0:07:58.920 --> 0:08:02.840 With carvauts in sure, whatever, that's not what we're going 0:08:02.880 --> 0:08:05.000 to get because we also have sectoral tariffs and you've 0:08:05.000 --> 0:08:08.600 got countries that are waiting for the two through twos. 0:08:08.840 --> 0:08:12.120 These countries aren't arguing about the ten percent universal tariff. 0:08:12.360 --> 0:08:14.400 They're not even debating it with the US at all, 0:08:14.440 --> 0:08:15.040 which goes the. 0:08:15.080 --> 0:08:17.760 Question of if you anchored the extreme, is that the 0:08:17.800 --> 0:08:20.360 way to get people to all accept something that would 0:08:20.400 --> 0:08:21.000 have been extreme? 0:08:21.120 --> 0:08:23.360 It's a massive You turn to when I was in 0:08:23.400 --> 0:08:25.680 the Netherlands last week and they said they would not 0:08:25.760 --> 0:08:28.120 accept a ten percent across the board tariff. Now a 0:08:28.120 --> 0:08:30.520 week later, okay, fine, walk ccept ten percent. We need 0:08:30.520 --> 0:08:31.760 some help on stealing autos. 0:08:31.920 --> 0:08:34.560 What's the relationship between your outlook for the equity market 0:08:34.600 --> 0:08:36.280 and what's been happening in fixed income? 0:08:36.440 --> 0:08:39.200 No, it is definitely a mystery, There's no question about it. 0:08:39.240 --> 0:08:42.880 And it almost makes you wonder as if there might 0:08:42.920 --> 0:08:46.360 be a time where, let's say this bill passes and 0:08:46.440 --> 0:08:50.480 then we wake up and yields start moving higher by 0:08:51.200 --> 0:08:54.200 a reasonably significant amount. But at the end of the day, 0:08:54.600 --> 0:08:58.040 if you look at it, the yields have been going 0:08:58.240 --> 0:09:03.560 sideways for two years. Okay, literally somewhere between four and 0:09:03.679 --> 0:09:06.800 four and a half for two whole years, And frankly, 0:09:07.400 --> 0:09:11.160 that's perfectly fine for the equity market, because again that 0:09:11.320 --> 0:09:13.079 removes part of the uncertainty. 0:09:13.640 --> 0:09:16.280 Well, okay, they say the same, but the backdrop has 0:09:16.360 --> 0:09:17.160 been very different. 0:09:17.200 --> 0:09:17.840 Economically. 0:09:18.080 --> 0:09:18.959 People went from a. 0:09:18.960 --> 0:09:22.439 Very high benchmark industry understanding of the world that was 0:09:22.520 --> 0:09:25.480 high inflation to one that now if you put all 0:09:25.520 --> 0:09:28.640 of the other potential tariffs and other disruptions out of 0:09:28.679 --> 0:09:31.520 the picture, we would be looking at pretty much close 0:09:31.559 --> 0:09:35.520 to two percent inflation rate. We're looking at basically mission accomplished. 0:09:35.679 --> 0:09:40.120 So is this highlighting a new premium that will ultimately 0:09:40.240 --> 0:09:43.680 challenge US valuations and risk markets in a way that 0:09:43.720 --> 0:09:45.240 has not fully been appreciated. 0:09:45.360 --> 0:09:49.600 Well, there's certainly an element to that. However, the countervail 0:09:49.679 --> 0:09:52.480 to that is that we are likely to get a 0:09:52.559 --> 0:09:56.720 new FED chairman sometime next year that is going to 0:09:56.800 --> 0:10:00.800 be let's say a little bit more accommodating in terms 0:10:00.800 --> 0:10:02.120 of ringing infrastrates down. 0:10:02.240 --> 0:10:05.400 Let's say that they are accommodating and taking sharpie messages 0:10:05.760 --> 0:10:08.280 of the world's interest rates and saying, okay, we'll cut 0:10:08.280 --> 0:10:11.840 three percentage points in this meeting, regardless of what happens. 0:10:11.880 --> 0:10:13.640 What happens the long end, that's true, you. 0:10:13.679 --> 0:10:17.280 Will get a yield curve steepening the likes of which 0:10:17.559 --> 0:10:23.640 most investors do not remember that twenty years ago and 0:10:23.679 --> 0:10:27.280 so on, twos tens was more in the neighborhood of 0:10:27.320 --> 0:10:30.720 one hundred and fifty over rather than fifty over. A 0:10:31.120 --> 0:10:34.240 very rapid steepening. And frankly, when we think about what 0:10:34.320 --> 0:10:37.960 the risks to the equity market are, ten year yields 0:10:38.080 --> 0:10:41.280 going through five percent far and away at this point 0:10:41.600 --> 0:10:43.040 are the most significant risk. 0:10:43.280 --> 0:10:44.120 What can that happen? 0:10:46.800 --> 0:10:47.160 Again? 0:10:47.640 --> 0:10:51.600 It just the psychology right now is telling you it 0:10:51.640 --> 0:10:55.400 doesn't seem likely, you know, because as John pointed out, 0:10:55.760 --> 0:10:59.240 you know, counter to expectations, and really the same way 0:10:59.520 --> 0:11:03.160 the dollar. This is counter to the expectations of people 0:11:03.200 --> 0:11:03.840 that thought. 0:11:03.679 --> 0:11:05.319 Tariffs would be bullish to the dollar. 0:11:06.600 --> 0:11:12.720 It really just takes a turnaround in psychology that we 0:11:12.800 --> 0:11:16.320 don't see. But I would suggest that if the inflation 0:11:16.520 --> 0:11:20.880 data continues to firm, at the same time we get 0:11:20.920 --> 0:11:24.480 more sort of pushback on the direction of tariffs, that's 0:11:24.559 --> 0:11:25.240 the mix that. 0:11:25.600 --> 0:11:28.120 The dollar move. I think Julian speaks to exactly the 0:11:28.200 --> 0:11:31.160 risks you describe. Just go through the scenario. You face 0:11:31.200 --> 0:11:34.240 a situation where you do get a fed chair, let's 0:11:34.240 --> 0:11:36.360 say it's more willing to drop interest rates regardless of 0:11:36.360 --> 0:11:38.880 what's happening gaswag, you get the curve stinkning you describe, 0:11:38.920 --> 0:11:40.880 you get all the debt issued at the front end 0:11:41.280 --> 0:11:44.000 with a Federal Reserve cutting interest rates, then it's precisely 0:11:44.040 --> 0:11:46.320 one of the reasons you're seeing the dollar strength has 0:11:46.360 --> 0:11:48.480 been developingly so over the last several months. 0:11:48.559 --> 0:11:49.920 What is the fear that this is going to be 0:11:49.960 --> 0:11:51.760 a FED that's going to try to monetize the debt 0:11:51.960 --> 0:11:55.360 that's going to try to essentially print money to offset 0:11:55.400 --> 0:11:57.800 this by having rates at a very low level and 0:11:57.840 --> 0:12:00.400 then just printing money at that level. And how much 0:12:00.480 --> 0:12:03.400 does it take at this point to create dollar strength, 0:12:03.640 --> 0:12:06.560 given that that fear has been embedded in the overall 0:12:06.559 --> 0:12:07.360 investor base. 0:12:07.200 --> 0:12:09.360 It's in the President actually arguing for that right now 0:12:09.679 --> 0:12:12.880 over the last several months, almost explicitly saying that he 0:12:12.920 --> 0:12:14.880 wants the Federal Reserve to drop interest rights so they 0:12:14.880 --> 0:12:16.920 can issue that at the front end and get lower 0:12:17.000 --> 0:12:17.520 interest rates. 0:12:17.600 --> 0:12:20.240 He's saying there is a direct connection between the FED 0:12:20.440 --> 0:12:23.440 rate policy and what the US pays and interest payments. 0:12:23.440 --> 0:12:25.360 And then Scott bess And came out and said, yeah, 0:12:25.400 --> 0:12:26.720 we're not going to turn out the debt, We're going 0:12:26.760 --> 0:12:28.680 to focus on the front end because right now the 0:12:28.760 --> 0:12:31.200 term premium is just too great. So you put those together, 0:12:31.240 --> 0:12:35.000 and that is to your point explicit explicitly calling for 0:12:35.120 --> 0:12:38.400 the FED to help the country lower its interest payments. 0:12:38.400 --> 0:12:40.360 In the sharpie black and white, you have cost the 0:12:40.440 --> 0:12:43.680 USA a fortune and continue to do so. He's talking 0:12:43.679 --> 0:12:46.000 about the net interest we are paying on our debt, 0:12:46.120 --> 0:12:50.520 which has basically toppled the entire US budget higher than Defenseman. 0:12:50.240 --> 0:12:52.240 Quick found of word dollar witness how much for a 0:12:52.280 --> 0:12:54.920 tail whend does that for the S and P five hundred. 0:12:55.080 --> 0:12:59.240 It's definitely been significant, and it has definitely contributed, among 0:12:59.320 --> 0:13:03.559 other reasons for the large cap our performance over small 0:13:03.600 --> 0:13:06.840 cap In general, it tends to be a positive, but 0:13:07.040 --> 0:13:11.760 again there's always sort of until it isn't. And I 0:13:11.800 --> 0:13:14.800 would suggest, and it's not our base case, that there 0:13:14.840 --> 0:13:17.679 are going to be issues around getting this bill passed. 0:13:18.160 --> 0:13:21.360 But if we start getting towards August and again not 0:13:21.480 --> 0:13:25.280 our base case, chill, that is where you run into problems. 0:13:25.280 --> 0:13:27.880 So many reasons for dollar weakness, which I think makes 0:13:27.920 --> 0:13:30.800 the pain. Try to Q three dollar strength, that's going 0:13:30.840 --> 0:13:32.640 to be the pain. Try to Q three dollars strength. 0:13:32.679 --> 0:13:33.520 Who's position for. 0:13:33.480 --> 0:13:35.840 That I couldn't agree more. I was thinking, people say 0:13:35.840 --> 0:13:37.720 that there's going to be a stimulative effect. No memory 0:13:37.760 --> 0:13:41.080 would agree argue with this from the one big beautiful bill, 0:13:41.280 --> 0:13:43.800 Let's say that plays in with better than expected earnings 0:13:43.800 --> 0:13:44.720 and economic data. 0:13:44.760 --> 0:13:45.520 What does a dollar do? 0:13:45.800 --> 0:13:47.319 Jitdy, and it's gott to say you s thanks for 0:13:47.360 --> 0:13:48.920 dropping by, thank you doning in to mind We that 0:13:49.000 --> 0:13:51.520 of evicle as we kick off the second half of 0:13:51.600 --> 0:13:55.280 twenty twenty five. Up next the former NEC Deputy director 0:13:55.320 --> 0:13:57.640 Evera Eisenstadt as the EU comes to the table for 0:13:57.679 --> 0:14:00.680 trade talks plus Your Moves with Danny Berger the latest 0:14:01.040 --> 0:17:54.600 on Tesla. 0:15:22.800 --> 0:16:08.240 In case you missed it on the opening trade, I. 0:16:08.200 --> 0:16:10.720 Think we could go to say one forty, that's that's right, 0:16:10.880 --> 0:16:13.600 one one four zero absolutely, that's. 0:16:13.480 --> 0:16:14.920 Where at one fourteen right now? 0:16:14.960 --> 0:16:20.320 Well one fourteen yeah, yes, yeah, yeah. This is the 0:16:20.320 --> 0:16:22.600 scale of moves over what time for it? This could 0:16:22.600 --> 0:16:26.480 be within one or two years, that's the that's first. 0:16:26.800 --> 0:16:29.240 That's fast. Absolutely, yeah, yeah, yeah. I mean if you 0:16:29.320 --> 0:16:32.680 look at how fast the dollar fell from two thousand 0:16:32.680 --> 0:16:34.600 and two to two thousand and four, it was similarly 0:16:34.720 --> 0:16:36.240 large as this. To me, it's not out of the 0:16:36.280 --> 0:16:37.080 realm's possibility. 0:16:37.120 --> 0:16:37.880 So I'm just sitting. 0:16:39.560 --> 0:16:42.160 I can't quite Yeah, So take us to the US economy. 0:16:42.160 --> 0:16:44.120 I mean, does the underlying state of the US economy 0:16:44.160 --> 0:16:47.320 matter in that trade? It seems as if interest rate 0:16:47.360 --> 0:16:49.280 differentials in the state of the US economy may be 0:16:49.280 --> 0:16:52.840 pushed to the sideline by this border big picture narratives. 0:16:52.400 --> 0:16:53.000 That you describe. 0:16:53.040 --> 0:16:57.080 Absolutely. Yeah, the normal cyclical dynamics much less important with 0:16:57.120 --> 0:16:58.600 this type of structural change. 0:16:59.040 --> 0:17:06.879 Miss the Opening Trade every weekday in case you missed 0:17:06.880 --> 0:17:08.040 it on the Pulse. 0:17:08.240 --> 0:17:10.320 I think the idea of wait and see and pause. 0:17:10.400 --> 0:17:14.080 As Bill Yesterday's news, our best advice to CEOs right 0:17:14.119 --> 0:17:17.639 now is that if you're not operating differently than you 0:17:17.680 --> 0:17:20.800 were a year ago, you may be falling behind. Yes, 0:17:20.840 --> 0:17:23.760 we need to build resilient, but we need to also 0:17:24.040 --> 0:17:28.520 build growth despite the environment, and that requires a different 0:17:28.560 --> 0:17:29.720 strategy than. 0:17:29.680 --> 0:17:30.320 Just a year ago. 0:17:31.320 --> 0:17:40.640 Don't miss the Pulse live every weekday. 0:17:41.800 --> 0:17:44.000 Welcome to the second half LI from New York City 0:17:44.000 --> 0:17:46.479 this morning. Good morning, Your scores look like their secretary 0:17:46.520 --> 0:17:48.600 feature is negative by two tenths of one percent on 0:17:48.640 --> 0:17:51.480 the SMP, following back to back all time highs on 0:17:51.480 --> 0:17:53.919 a benchmark in the United States. We're coming into Q 0:17:54.040 --> 0:17:56.560 three on a three day winning streak. Come then, that's 0:17:56.640 --> 0:17:58.800 that one hundred after a major rally off the lows 0:17:58.840 --> 0:18:01.600 of April, we're down just zero zero point three percent 0:18:01.840 --> 0:18:04.760 with threeans until the opening bout. Let's get you some morning. 0:18:04.520 --> 0:18:11.240 Movers, henri to trace us at the papers. 0:18:13.760 --> 0:18:14.640 Of the House. 0:18:14.640 --> 0:18:18.919 We'll roll over and accept the Senate's more material deficit increases. 0:18:19.160 --> 0:18:21.239 Henrietta joins us. Now for more, henri to welcome back 0:18:21.240 --> 0:18:23.639 to the program. Just describe what's taking place in the 0:18:23.680 --> 0:18:26.639 Senate right now and whether you believe we're pretty close 0:18:26.840 --> 0:18:27.640 to getting this done. 0:18:28.680 --> 0:18:31.399 Yeah, it looks like we're enforce it mode. We've got 0:18:31.480 --> 0:18:35.560 jd Vance going up to the Senate clearly indicating with 0:18:35.600 --> 0:18:37.719 some muscle that he's there to break a vote if 0:18:37.720 --> 0:18:41.120 he needs to and be the holdout. But I want 0:18:41.119 --> 0:18:44.200 to just emphasize one thing here. Him having to vote 0:18:44.240 --> 0:18:46.679 for the bill now means that over the last seventy 0:18:46.720 --> 0:18:50.879 two hours, the trajectory of this bill has actually lost 0:18:51.160 --> 0:18:53.959 a Senator along the way. So his vote was not 0:18:54.040 --> 0:18:57.240 needed for the motion to proceed on Saturday night, and 0:18:57.280 --> 0:19:00.280 now it is, and that's not necessarily that's how not 0:19:00.320 --> 0:19:01.720 a good sign. And I think a big part of 0:19:01.720 --> 0:19:04.439 that could be the distributional tables that were released by 0:19:04.480 --> 0:19:07.240 the JCT at about two o'clock this morning, which show 0:19:07.400 --> 0:19:10.920 the top bracket is going to see twelve five hundred 0:19:10.960 --> 0:19:13.840 dollars when this bill has passed, and the lowest bracket 0:19:13.880 --> 0:19:15.960 is going to see one hundred and fifty bucks. So 0:19:16.160 --> 0:19:19.280 that's really the fallout here, that's what's got Alaska flipped out. 0:19:19.320 --> 0:19:20.560 We've got some problems. 0:19:20.160 --> 0:19:21.200 Still, Henritta. 0:19:21.359 --> 0:19:23.920 Is it when it comes to the Senator of Alaska 0:19:24.119 --> 0:19:27.400 Lisa Murkowski? Is she the one that Majority Leader Johnson 0:19:27.480 --> 0:19:28.080 has to flip? 0:19:29.320 --> 0:19:32.240 She's essential to the package. What we always watch, and 0:19:32.280 --> 0:19:34.840 you know it's been decades now is the combination of 0:19:34.880 --> 0:19:38.120 Collins and Murkowski. And let's not forget that Dan Sullivan 0:19:38.280 --> 0:19:40.919 is one of the Alaska Senators that's actually up next cycle. 0:19:41.280 --> 0:19:43.199 So when you get thirty five percent of the Medicaid 0:19:43.240 --> 0:19:45.880 recipients in Alaska that are under risk of seeing their 0:19:45.960 --> 0:19:50.159 cuts or their healthcare lost, that's a material problem for 0:19:50.200 --> 0:19:52.119 the state. But then we still have the IRA issues 0:19:52.119 --> 0:19:55.240 that are critical to Maine and a whole host of 0:19:55.280 --> 0:19:57.119 other states as well. So I think we actually have 0:19:57.440 --> 0:19:59.359 a little bit longer to go before this is all 0:19:59.440 --> 0:19:59.880 nailed down. 0:20:00.240 --> 0:20:02.320 In your note, you think that in the end the 0:20:02.359 --> 0:20:05.640 final passage will get Moretowski and Senator of Collins vote. 0:20:05.680 --> 0:20:09.040 But Senator Collins had an amendment earlier this morning when 0:20:09.080 --> 0:20:12.200 it would give more money to rural hospitals in lieu 0:20:12.240 --> 0:20:15.040 of raising the tax rate on those making twenty five 0:20:15.080 --> 0:20:17.840 million dollars more, and that was struck down. So is 0:20:17.840 --> 0:20:20.720 she a no now given her amendment went down in flames? 0:20:21.760 --> 0:20:23.919 You know, in my experience, that's more of a messaging document. 0:20:23.920 --> 0:20:25.640 You're not going to get Republicans to vote for tax 0:20:25.760 --> 0:20:28.560 increases for any individual brackets. Even President Trump tried to 0:20:28.600 --> 0:20:30.679 do that earlier on in the year and the party 0:20:30.840 --> 0:20:33.040 killed it pretty quickly. So I see that more of 0:20:33.080 --> 0:20:36.080 as a message and you know, pretty serious signals to 0:20:36.080 --> 0:20:39.200 Senator Collins, who was also upper reelection next cycle, that 0:20:39.280 --> 0:20:42.160 she has another workaround. But the fact again that Vance 0:20:42.240 --> 0:20:43.960 is there means she might be a no vote. And 0:20:44.040 --> 0:20:45.919 she made it really clear during the motion to proceed 0:20:46.040 --> 0:20:48.600 on Saturday night that she was only voting to proceed 0:20:48.720 --> 0:20:50.760 she did not have support for the underlying bill. So 0:20:51.080 --> 0:20:53.560 Vance being there suggests that they have lost the senator 0:20:53.680 --> 0:20:54.960 from the process. 0:20:54.480 --> 0:20:55.720 Alone, Henrietta. 0:20:55.760 --> 0:20:57.280 Then this goes to the House and you think the 0:20:57.280 --> 0:20:59.879 House just accepts it, although we're already seeing some housemen 0:21:00.240 --> 0:21:02.639 come out the Salt Caucus. I don't like what they 0:21:02.720 --> 0:21:05.399 did to tweak what happened with the salt cap. You 0:21:05.440 --> 0:21:08.960 have the House Freedom Caucus saying, actually, this raises the deficit. 0:21:09.040 --> 0:21:11.920 We're going to be increasing spending. Why are you so short? 0:21:11.960 --> 0:21:13.560 The House is just going to take this on the chin. 0:21:14.440 --> 0:21:15.439 Yeah, and I'm. 0:21:15.320 --> 0:21:16.680 Sorry, it's been a long night, but I got to 0:21:16.680 --> 0:21:18.199 say the Salt caucaus has to sit down. I mean, 0:21:18.200 --> 0:21:19.840 they've gotten enough of their carve out. They got a 0:21:19.840 --> 0:21:22.440 forty k cap, They've got it up to five hundred 0:21:22.440 --> 0:21:25.440 thousand dollars for an income bracket. So they've gotten what 0:21:25.480 --> 0:21:27.640 they're going to get. That's why the distributional tables are 0:21:27.680 --> 0:21:31.920