WEBVTT - Bloomberg Surveillance TV: March 13, 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 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 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 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.159 Terminal and the Bloomberg Business app Begin this hour. We're 0:00:37.159 --> 0:00:39.760 still struggling to build on yesterday's gains as growth worries 0:00:39.800 --> 0:00:43.479 Linker on Wall Street John Stolfus of Oppenheimer, staining Bullet's writing, 0:00:43.520 --> 0:00:46.520 we remain positive on equities. The broad rotation, which began 0:00:46.560 --> 0:00:48.160 in the rally from the S and P five hundred 0:00:48.240 --> 0:00:51.879 low on October twenty seven, twenty twenty three, has repeatedly 0:00:51.920 --> 0:00:55.240 deflected volatility. John joins us now for more. John and Mornick, 0:00:55.440 --> 0:00:57.920 good morning, Good to see. You've said, is the policy changes? 0:00:58.200 --> 0:01:01.040 Do the policy changes? Does the policy and sentency change 0:01:01.040 --> 0:01:01.360 your view? 0:01:01.400 --> 0:01:03.560 It so? No, it doesn't. 0:01:03.640 --> 0:01:06.600 In fact, we would say, if anything, the policy uncertainty 0:01:06.680 --> 0:01:08.520 takes us to say, well, this is just about what 0:01:08.560 --> 0:01:12.240 you would expect. This is something you know, it's it's 0:01:12.480 --> 0:01:15.880 Monty Python used to say. And now for something completely different. 0:01:16.280 --> 0:01:19.480 If you consider the difference between the prior administration and 0:01:19.520 --> 0:01:23.640 this administration, we can't help but think, you know, it's 0:01:23.760 --> 0:01:27.400 very natural tariff The prospect of tariff wars that could 0:01:27.480 --> 0:01:31.199 last is very concerning. Okay, to business, to the consumer, 0:01:32.360 --> 0:01:36.040 and to governments alike on all borders. But we can't 0:01:36.080 --> 0:01:38.840 help but think that this is a process. This is 0:01:38.840 --> 0:01:41.200 the first president. And by the way, I'm not an 0:01:41.240 --> 0:01:44.399 apologist for the for the Trump administration, nor was I 0:01:44.480 --> 0:01:47.600 for the Biden administration. This is politically agnostic. It's a 0:01:47.640 --> 0:01:50.680 business person talking when we look at it. There, for 0:01:50.760 --> 0:01:53.480 eighty years now, the US has in effact had a 0:01:53.640 --> 0:01:59.160 very lacks policy towards dealing with tariffs against our products 0:01:59.520 --> 0:02:03.840 for decades. We have now exported our production and the 0:02:03.880 --> 0:02:06.320 result of that is the rest of the world are 0:02:06.360 --> 0:02:10.280 the producers and we're the consumers. And without us, those 0:02:10.360 --> 0:02:13.000 other countries would suffer significantly. 0:02:13.240 --> 0:02:15.440 They have over capacity. 0:02:14.760 --> 0:02:20.680 In Asia, in Europe, they have over capacity in Latin America. 0:02:20.800 --> 0:02:24.000 This is for years we have been building up the 0:02:24.040 --> 0:02:27.720 world has been building up capacity to export to the US. 0:02:28.040 --> 0:02:29.720 We can pounk the politics. I think you just have 0:02:29.800 --> 0:02:31.959 to focus on the policy and the objectives. And the 0:02:32.000 --> 0:02:35.080 objective is pretty click even everything you've said, rebalance the 0:02:35.120 --> 0:02:38.120 US economy, rebalance the global economy for that matter, and 0:02:38.200 --> 0:02:41.560 accept in their own words, some disruption a detox. What 0:02:41.600 --> 0:02:42.680 does that mean for markets? 0:02:42.919 --> 0:02:44.600 Well, I think what it means is we have right 0:02:44.639 --> 0:02:47.760 now we're going to be affected very much by an 0:02:47.840 --> 0:02:49.480 increase in volatility. 0:02:49.520 --> 0:02:50.480 That's quite natural. 0:02:51.120 --> 0:02:53.120 We think the way that work to weather it is 0:02:53.200 --> 0:02:56.840 with prudent diversification that meets the needs objectives and the 0:02:56.919 --> 0:03:00.880 tolerance to volatility for an investor or an institututions mandate. 0:03:01.600 --> 0:03:04.640 But it's it's not something that is indigestible. If anything, 0:03:04.680 --> 0:03:07.960 it's something that has to be digested at this point 0:03:08.040 --> 0:03:10.240 because we it's the first time we've ever seen an 0:03:10.280 --> 0:03:13.840 administration not kick the can down the road in terms 0:03:13.840 --> 0:03:18.280 of the cost of government versus services, actually rendered the 0:03:18.320 --> 0:03:21.440 tariff regimes in the in the around the world and 0:03:21.520 --> 0:03:24.480 could actually once people can meet at the table and 0:03:24.600 --> 0:03:28.000 cooler heads prevail. I think work out pretty well. The 0:03:28.040 --> 0:03:32.240 initial part, there's a lot of political jostling and everybody 0:03:32.360 --> 0:03:35.800 is working to get their constituency to say stand up 0:03:35.840 --> 0:03:39.560 for us and whichever side it is. But once you 0:03:39.600 --> 0:03:44.160 get over that that that human uh uh a lack 0:03:44.200 --> 0:03:47.960 of ability to get to the down to brass tacks quickly. 0:03:48.520 --> 0:03:50.640 Once you get to it, I think we get to 0:03:50.680 --> 0:03:54.680 a much better situation and a reglobalization which would should 0:03:54.720 --> 0:03:57.240 be good for both developed and emerging markets. 0:03:57.280 --> 0:03:59.240 To be clear, I think a lot of people would 0:03:59.280 --> 0:04:00.640 agree with you, and a lot of people in the 0:04:00.640 --> 0:04:02.920 business community would agree with you as well, particularly in 0:04:02.920 --> 0:04:05.640 the United States, who have alluded to exactly what you're 0:04:05.680 --> 0:04:09.080 talking about. The issue is the near term volatility of 0:04:09.120 --> 0:04:11.360 headlines and the path to get there some of the 0:04:11.400 --> 0:04:14.839 negotiation tactics that are making people concerned about how long 0:04:14.880 --> 0:04:17.840 it might take to actually get to that place. You 0:04:17.920 --> 0:04:20.160 say that you need to write size expectations for how 0:04:20.200 --> 0:04:23.280 certain assets will respond to volatility. Does that basically mean 0:04:23.279 --> 0:04:25.359 that you think that they should lower their expectations for 0:04:25.360 --> 0:04:27.000 a whole host of different assets. 0:04:27.200 --> 0:04:29.760 We would say it being realistic, it's like near term 0:04:29.839 --> 0:04:33.719 lower expectations and understand, for example, the sell off that 0:04:33.760 --> 0:04:37.480 we'd seen in the financial stocks for example, let alone 0:04:37.520 --> 0:04:39.839 what we saw in technology, Well, they had a phenomenal 0:04:39.920 --> 0:04:42.880 run last year. So a good place for a haircut 0:04:42.960 --> 0:04:45.880 or a trim, or even a correction would be amongst 0:04:45.920 --> 0:04:49.120 those two sectors and others. So just live with it 0:04:49.240 --> 0:04:52.360 rather than dump and run, you stay with it. 0:04:52.440 --> 0:04:56.400 You're diversified. You know what you own, know why you own. 0:04:56.240 --> 0:04:59.560 It, and have right sized expectations, and like us, you 0:04:59.640 --> 0:05:03.000 might be pleasantly surprised over the course of a forty 0:05:03.080 --> 0:05:03.720 year career. 0:05:04.560 --> 0:05:05.400 Well, when you. 0:05:05.400 --> 0:05:08.960 Talk about diversification, it's taken on a different meaning over time. 0:05:10.400 --> 0:05:12.640 There was a question around bonds diversified. There was a 0:05:12.720 --> 0:05:15.800 question around whether gold was the ultimate diversifier. There was 0:05:15.800 --> 0:05:19.560 a question with geographies versus sectors. How is your understanding 0:05:19.600 --> 0:05:22.680 of what it means to be diversified changed in an 0:05:22.760 --> 0:05:25.440 era where there are some pretty seismic changes going on. 0:05:25.480 --> 0:05:27.160 From the policy perspective. 0:05:26.920 --> 0:05:30.440 I would say diversification today the approach should be very 0:05:30.520 --> 0:05:33.040 much like one that is parallel to the one in 0:05:33.680 --> 0:05:37.080 fixed income, which is considered duration. Here it would be 0:05:37.120 --> 0:05:40.320 the duration of the need. In other words, are you longed, 0:05:40.600 --> 0:05:41.880 are your objectives long? 0:05:41.960 --> 0:05:43.080 Term for retirement. 0:05:43.160 --> 0:05:46.520 Are you a retiree who is a relatively young. 0:05:48.800 --> 0:05:50.560 Retiree, how long. 0:05:50.360 --> 0:05:53.640 Are you going to need to be exposed to equities 0:05:53.720 --> 0:05:57.880 to have, based on history, have a greater ability to 0:05:57.960 --> 0:06:00.840 keep your standard of living. And so we are really 0:06:00.839 --> 0:06:02.600 at a point now where you know, the old days 0:06:02.600 --> 0:06:05.400 when the private investor would would appear, they were usually 0:06:05.400 --> 0:06:09.200 the retail investor. It was cocktail party stocks that they 0:06:09.200 --> 0:06:12.080 would talk. Now Diday people invest for need because they 0:06:12.120 --> 0:06:15.680 recognize the fact that things like Social Security will likely 0:06:15.720 --> 0:06:19.680 not be anywhere near the benefit percentage wise. 0:06:19.440 --> 0:06:21.960 What it once was for their parents or their grandparents. 0:06:22.120 --> 0:06:22.640 When we have this. 0:06:22.680 --> 0:06:25.040 Policy uncertainty though, when we see that bleed into the markets, 0:06:25.040 --> 0:06:27.880 we see pullbacks. Are you advocating people buy more? 0:06:28.360 --> 0:06:33.320 Yeah, we actually are advocating dollar cost averaging. We don't 0:06:33.320 --> 0:06:35.800 say buy the dips, but we say buy the babies 0:06:35.839 --> 0:06:38.520 that get tossed out with the bathwater. The type of 0:06:38.600 --> 0:06:43.200 volatility that we are seeing now, we have seen parallels 0:06:43.200 --> 0:06:46.760 to it in the Great Financial Crisis in COVID. Remember 0:06:46.760 --> 0:06:49.560 when COVID struck. I'll never forget an April of what 0:06:49.720 --> 0:06:53.799 was it, April of twenty twenty, wasn't it. April twenty twenty, 0:06:53.800 --> 0:06:56.279 you had some of the smartest people in the world 0:06:56.440 --> 0:07:00.279 on shows saying it could be decades before they find 0:07:00.600 --> 0:07:05.440 a cure for this deadly virus. To me, you know, 0:07:05.800 --> 0:07:08.000 and that we had At that time, Trump was in 0:07:08.000 --> 0:07:10.520 the White House and he said something to the effect of, well, 0:07:10.520 --> 0:07:11.840 we could have you know, in. 0:07:11.840 --> 0:07:13.840 His own inlimit all voice. I'm not going to get. 0:07:13.680 --> 0:07:15.560 To him a date the present, but he said we 0:07:15.600 --> 0:07:18.080 could get it. We could get drugs in a warp 0:07:18.160 --> 0:07:21.720 tie in warp speed, and we did a short period, 0:07:21.760 --> 0:07:23.240 relatively speaking, we had it. 0:07:23.360 --> 0:07:24.600 We don't wear a mask today. 0:07:24.680 --> 0:07:26.360 We had a lot of fair though cross sass there 0:07:26.360 --> 0:07:28.160 and you saw that in credit to yes, you could 0:07:28.200 --> 0:07:30.280 make the argument this morning. You don't see that in 0:07:30.320 --> 0:07:32.640 credit at the moment. I think it was Jonathan Crinsky yesterday. 0:07:32.640 --> 0:07:35.440 I have btig who said that market bottoms need doubt. 0:07:35.840 --> 0:07:37.960 Do you think there is sufficient doubt that you can 0:07:38.000 --> 0:07:38.760 buy this morning? 0:07:39.440 --> 0:07:41.840 You know, I wouldn't back up the truck, but I 0:07:41.880 --> 0:07:44.400 don't have any problem with layering in at this point. 0:07:44.520 --> 0:07:46.080 And where would you layer in because there are a 0:07:46.120 --> 0:07:48.040 lot of babies to use your words that have been 0:07:48.080 --> 0:07:50.880 tossed out Tesla Panetin in the video. The list goes 0:07:50.920 --> 0:07:54.600 on and on. Even Apple was struggling yesterday. Where are 0:07:54.640 --> 0:07:55.280 those babies? 0:07:55.400 --> 0:07:57.880 Well, okay, as you know, because I managed ruddy it 0:07:57.960 --> 0:07:58.680 up and hurry, they don't. 0:07:58.720 --> 0:07:59.920 I mean, just describe it. 0:08:00.000 --> 0:08:06.120 I give you please me technol information technology, Communications services, 0:08:06.840 --> 0:08:10.360 which has which has the search engines, the streamers, and 0:08:10.400 --> 0:08:15.000 the social media. I would also be looking at a 0:08:15.040 --> 0:08:19.280 consumer discretionary. The American shopper persists at shopping, even though 0:08:19.320 --> 0:08:24.200 now a discount private label perhaps, but still shopping. Businesses 0:08:24.240 --> 0:08:26.840 are still doing what they're doing. And so we would 0:08:26.880 --> 0:08:30.720 look at financials and the industrials. You know, the industrials 0:08:30.760 --> 0:08:33.280 are so well positioned to take us into the next 0:08:33.360 --> 0:08:37.559 chapter of AI. Industrial equipment that needs to be advanced 0:08:37.600 --> 0:08:41.440 to create all kinds of developments in terms of whether 0:08:41.480 --> 0:08:44.920 it's the electric grid, whether it's medicine, whether it's just 0:08:45.000 --> 0:08:47.199 in finance, what it can do to help us get 0:08:47.200 --> 0:08:49.000 through all the data that gets What. 0:08:48.920 --> 0:08:51.280 About the travel names, John, given the downgrades we've seen 0:08:51.320 --> 0:08:53.720 from the airlines early this suite, what about the travel names? 0:08:53.760 --> 0:08:56.119 You know, I would have to say that's not surprising. 0:08:56.200 --> 0:08:59.200 Airlines have been remarkably strong for a fairly long. 0:08:59.000 --> 0:08:59.880 Period of time. 0:09:00.480 --> 0:09:03.079 Uh. You know, we've never been big fans of airlines, 0:09:03.080 --> 0:09:05.520 whether we're at the airport or whether we're considering what 0:09:05.640 --> 0:09:08.920 to buy, only because of the nature of that business 0:09:09.000 --> 0:09:13.319 and the ability of the traveler to suddenly stop traveling 0:09:14.080 --> 0:09:18.319 abruptly or keep traveling much longer, the ability to charge 0:09:18.400 --> 0:09:21.920 ridiculously high fares. Uh, you know, it's still I haven't 0:09:21.960 --> 0:09:29.040 been to Europe in years. But my point is is 0:09:29.080 --> 0:09:32.119 what happens is it's we need to see more competition 0:09:32.280 --> 0:09:33.640 come in, and that's going to hurt earning. 0:09:33.720 --> 0:09:35.960 What's the old joke, the fastest White's become a millionass 0:09:35.960 --> 0:09:38.360 start with a billion by a length something like that. 0:09:38.400 --> 0:09:41.040 There you go, And I think Buffett learned that years 0:09:41.040 --> 0:09:43.880 ago at one point, think it was it was it 0:09:44.080 --> 0:09:47.360 US Air. There was some airline that that Buffett took 0:09:47.360 --> 0:09:49.400 a position and he limped away from it, which he 0:09:49.520 --> 0:09:50.559 rarely limps away from that. 0:09:50.600 --> 0:09:52.360 A lot of people have been burnt over the decades, 0:09:52.400 --> 0:09:54.680 that's for sure. Johny's going to see you as always appreciated, 0:09:54.720 --> 0:10:06.920 John steffis there of Oppenheimen. Let's turn back to the 0:10:06.960 --> 0:10:09.880 tride story. Tariffs. They former New York Fed President Bill 0:10:09.960 --> 0:10:13.360 Dutley saying Trump's tariffs will be worse than market's thing right, 0:10:13.360 --> 0:10:15.719 saying markets seem to think that if the President once 0:10:15.760 --> 0:10:19.439 stopped the damage, the FED will. I think they're too complacent. 0:10:19.720 --> 0:10:22.160 They'll joined us now for more. Bill, welcome to the program, sir, 0:10:22.360 --> 0:10:24.439 great pace, let's talk about it. Why do you think 0:10:24.440 --> 0:10:25.319 that's too complacent. 0:10:26.720 --> 0:10:29.000 I think the problem is that layers are bad for 0:10:29.080 --> 0:10:32.640 growth and bad for inflation, which puts a FED in 0:10:32.679 --> 0:10:36.319 a buying Basically, they're missing by more on both sides 0:10:36.320 --> 0:10:38.480 of their mandate. So I think in the near term 0:10:38.559 --> 0:10:41.880 the Fed's could basically be on hold waiting for more information. 0:10:42.200 --> 0:10:45.000 Trump administration making the matter worse because not only are 0:10:45.000 --> 0:10:47.520 they putting tariffs in place that are much larger than 0:10:47.559 --> 0:10:49.040 they do during the first term, they're doing it in 0:10:49.080 --> 0:10:52.199 a very haphazard, irregular way, which is creating a lot 0:10:52.240 --> 0:10:57.280 of uncertainty. You know, the decline in merger activity in 0:10:57.320 --> 0:10:59.400 the from months of this year is pretty striking. People 0:10:59.400 --> 0:11:02.640 expect activity pick up with the Trump administration. It's actually 0:11:02.640 --> 0:11:05.319 gone down because nobody knows what the rules of the 0:11:05.679 --> 0:11:07.760 game are going to be in terms of relative prices. 0:11:07.760 --> 0:11:11.679 For inputs relative prices for exports. So people are very 0:11:11.679 --> 0:11:13.760 confused and people are just sitting on their hands. 0:11:14.360 --> 0:11:16.880 Bill, as John was just saying, you wrote this line. 0:11:16.960 --> 0:11:19.040 Market seem to think that if the President won't stop 0:11:19.040 --> 0:11:23.080 the damage, the Federal Reserve will with rate cuts. Where 0:11:23.120 --> 0:11:25.800 do you think they have the political leverage to not 0:11:25.960 --> 0:11:28.440 cut rates at a time when they are seeing quite 0:11:28.480 --> 0:11:31.840 a bit of potential destruction to the US economic outlook. 0:11:32.559 --> 0:11:35.000 Well, it all depends on what happens to inflation, how 0:11:35.040 --> 0:11:37.440 high does it go, and too does it get into 0:11:37.440 --> 0:11:42.240 inflation expectations. The inflation expectations are the key issue for 0:11:42.280 --> 0:11:44.360 the Fed. The second thing they're going to be focusing 0:11:44.440 --> 0:11:46.520 on how much does the unemployment rate rise. It's not 0:11:46.559 --> 0:11:49.600 about job creation, it's about the unemployent rate. One thing 0:11:49.640 --> 0:11:52.040 that people don't really understand, I think well is the 0:11:52.080 --> 0:11:54.240 fact that we don't need a lot of job creation 0:11:54.320 --> 0:11:56.240 to keep the unemployment rate here, because the growth rate 0:11:56.240 --> 0:11:59.520 of the labor force has collapsed with the Trump administration 0:12:00.080 --> 0:12:03.160 deep tape or deporting workers. The number of people coming 0:12:03.160 --> 0:12:05.679 over the borders has collapsed. The growth rate of the 0:12:05.760 --> 0:12:09.240 native border population is really slow. So top speed for 0:12:09.240 --> 0:12:11.160 the US of commune in terms of keeping unemployer rate 0:12:11.160 --> 0:12:12.920 where it is probably a fifty thousand in the payroll 0:12:12.960 --> 0:12:15.440 employment a month, and I think people think that one 0:12:15.520 --> 0:12:17.280 hundred and fifty two hundred thousand, if it slows to 0:12:17.320 --> 0:12:20.120 fifty thousand, the Fed's going to cut I think that's wrong. 0:12:20.480 --> 0:12:22.640 Well, I understand the argument that the FED put isn't 0:12:22.640 --> 0:12:24.520 exactly there, that the FED is going to come in 0:12:24.960 --> 0:12:27.920 and cut rates in response to market turmoil. At the 0:12:27.960 --> 0:12:31.160 same time, there is an argument that some of the 0:12:31.400 --> 0:12:35.360 terriff related inflationary forces are one time price adjustments that 0:12:35.400 --> 0:12:39.360 will eventually come down, especially with a weakening economic outlook, 0:12:39.400 --> 0:12:41.000 and that they can look through that a bit more 0:12:41.000 --> 0:12:43.800 in place of bigger emphasis on the unemployment rate and 0:12:43.840 --> 0:12:47.080 other economic indicators. Do you push back against that. 0:12:47.880 --> 0:12:51.599 Well, again, it depends on whether it gets into inflation expectations. 0:12:51.679 --> 0:12:55.959 The first term Trump, the tariff increases were relatively modest. 0:12:56.360 --> 0:12:58.920 It wasn't an inflation issue because inflation was running below 0:12:58.960 --> 0:12:59.720 the FEDS two percent. 0:12:59.720 --> 0:13:01.040 Of this time. 0:13:01.040 --> 0:13:04.560 The teriff increases our orders of magnitude larger, and it's 0:13:04.559 --> 0:13:06.559 happening at the time that inflation has been running well 0:13:06.559 --> 0:13:09.839 above the FES two percent. Objective for four years, So 0:13:10.040 --> 0:13:14.120 inflation expectations are the key, and one troubling indicator in 0:13:14.120 --> 0:13:17.640 that regard is what the University of Michigan Household Expectations 0:13:17.679 --> 0:13:20.680 Survey showed last month. For five to ten year forward 0:13:20.679 --> 0:13:23.680 inflation expectations, it rose to three and a half percent, 0:13:24.000 --> 0:13:27.520 the highest level since the nineteen nineties. So if that 0:13:27.679 --> 0:13:32.600 is co corroborated by other inflation expectations indicators, that's going 0:13:32.640 --> 0:13:34.199 to make it much more difficult. 0:13:33.840 --> 0:13:34.240 For the Fed. 0:13:34.520 --> 0:13:36.880 Bill You're talking about the upcoming economic projections we're going 0:13:36.920 --> 0:13:38.839 to get from the Fed, and you say inflation will 0:13:38.840 --> 0:13:41.040 be increased, but the path for the unemployment rate won't 0:13:41.080 --> 0:13:44.240 change much as labor force growth slows along with hiring. 0:13:44.480 --> 0:13:47.360 Are you basically saying the Fed and their projections are 0:13:47.360 --> 0:13:49.520 going to almost pinpoint stagflation. 0:13:51.080 --> 0:13:54.360 Well, I think they have to lower their growth estimates 0:13:54.520 --> 0:13:56.760 given the uncertainty that the terists are causing and the 0:13:56.760 --> 0:14:00.520 fact that it makes the real income for lowering households 0:14:00.600 --> 0:14:02.000 very much squeeze, so they're not going to be able 0:14:02.040 --> 0:14:04.400 to spend very much. They have to raise inflation because 0:14:04.440 --> 0:14:06.080 the price level of a lot of these important goods 0:14:06.160 --> 0:14:08.240 is going to go up pretty significantly, so I think 0:14:08.240 --> 0:14:10.400 that's sort of in the cards. I think what's going 0:14:10.440 --> 0:14:12.240 to surprise people is that they're not going to raise 0:14:12.280 --> 0:14:15.280 their unemployment rate projectory very much. And I think that 0:14:15.320 --> 0:14:17.480 people maybe be surprised that they're not going to increase 0:14:17.520 --> 0:14:19.720 the number of rate cuts they have in their forecasts. 0:14:20.000 --> 0:14:22.800 Last time, they had two rate cuts for twenty twenty five, 0:14:22.960 --> 0:14:24.200 and I think they'll keep it right there. 0:14:24.280 --> 0:14:26.800 Bill, let's just talk about those forecasts. What is the 0:14:26.840 --> 0:14:29.760 approach to putting forecasts together in a moment like this. 0:14:29.800 --> 0:14:35.320 How much of a conversation happens between individual policymakers actually with. 0:14:35.280 --> 0:14:37.680 Regard to the summary of economic projections, everyone sort of 0:14:37.680 --> 0:14:41.360 does their own, so this is not coordinated. You are allowed, 0:14:42.640 --> 0:14:45.080 towards the end of the Federal over Market Committed meeting 0:14:45.120 --> 0:14:48.360 to change your forecast based on what you've heard from others, 0:14:48.600 --> 0:14:51.160 but people rarely do that, So these things are really 0:14:51.160 --> 0:14:54.880 put into place before the meeting starts and hardly ever changed. 0:14:55.080 --> 0:14:57.280 A lot of people expect the statement of economic projection 0:14:57.360 --> 0:14:59.920 not to really move that significantly, and if they do, 0:15:00.480 --> 0:15:03.680 for it to essentially be irrelevant because they don't know anything. 0:15:03.920 --> 0:15:05.440 Do you disagree, do you think that it will be 0:15:05.600 --> 0:15:10.520 indicative of what kinds of scenario analysis individual members are 0:15:10.560 --> 0:15:13.960 doing and how much they're incorporating policy for their outlook. 0:15:14.920 --> 0:15:17.400 I think the reason that matters is the fact that 0:15:17.440 --> 0:15:19.240 I think people are looking for the FED to sort 0:15:19.240 --> 0:15:22.560 of come to the rescue of the economy by cutting rays. 0:15:22.600 --> 0:15:25.040 And you've seen it in the decline and your treasure 0:15:25.080 --> 0:15:27.600 note heels over the last few months. And I think 0:15:27.600 --> 0:15:30.040 the Fed's doing a signal through the Summary of Economic 0:15:30.120 --> 0:15:33.880 Projections and in chairman press conference, is that no, we're 0:15:33.880 --> 0:15:35.200 sitting on our hands for the time being. 0:15:35.640 --> 0:15:38.680 Bill Tompley with the license great pay sample in black opinion. 0:15:48.080 --> 0:15:50.600 The Common Secretary had Laton joined us now from Washington, 0:15:50.680 --> 0:15:52.640 d C. It's the Secretary, welcome back to the program. 0:15:52.760 --> 0:15:55.040 So always appreciate your time. If we could just take 0:15:55.040 --> 0:15:57.280 a step back and set the table. What are the 0:15:57.320 --> 0:16:01.080 stakes for today's mate thing between you and Canadian officials. 0:16:03.680 --> 0:16:06.720 Well, I think the stakes today, if you take a 0:16:06.720 --> 0:16:09.320 look at it from the big picture, is the United 0:16:09.320 --> 0:16:13.240 States said we need to have steel and aluminum domestically 0:16:13.400 --> 0:16:15.040 in America. 0:16:15.120 --> 0:16:16.560 In national security. 0:16:16.960 --> 0:16:20.800 You need medals to make bullets, you need metals to 0:16:20.880 --> 0:16:22.640 make munitions. 0:16:22.680 --> 0:16:24.000 You need medals to make everything. 0:16:24.000 --> 0:16:27.240 And Donald Trump is very focused on let's make sure 0:16:27.640 --> 0:16:32.280 the key ingredients that are necessary to defend America are 0:16:32.320 --> 0:16:35.160 made here in America. And these other countries they just 0:16:35.200 --> 0:16:37.800 don't pay attention. I mean, how many times do I 0:16:37.840 --> 0:16:41.520 have to say national security is important? And if you 0:16:41.560 --> 0:16:44.960 do like the EU, and you respond by putting a 0:16:45.040 --> 0:16:49.560 terrifying Kentucky bourbon which used to piss off Mitch McConnell, 0:16:49.800 --> 0:16:53.600 which doesn't really matter anymore, you gotta wonder, really, really 0:16:53.680 --> 0:16:55.080 do I have to deal with this stuff? 0:16:55.200 --> 0:16:58.720 But alas we do, miss the Secretary, Let's get to 0:16:58.760 --> 0:17:00.720 Europe in a moment. Let's just stand Canada and that 0:17:00.800 --> 0:17:02.400 will work our way to the EU if we can. 0:17:02.640 --> 0:17:04.840 For the Canadians, as you know, they've put tariffs on 0:17:05.080 --> 0:17:07.439 around twenty one billion dollars of US goods. Well, that 0:17:07.560 --> 0:17:09.240 changed your approach to today's mating. 0:17:11.720 --> 0:17:13.640 Well, I mean take a look at that again. Let's 0:17:13.720 --> 0:17:16.240 take a step back national security. 0:17:16.280 --> 0:17:19.520 We put a tariff on stealing aluminum to make sure 0:17:19.640 --> 0:17:22.960 the dumping countries of the world stop and we can 0:17:23.000 --> 0:17:25.879 build up our stealing aluminum in America. 0:17:25.960 --> 0:17:28.080 And what does Canada do? They put a. 0:17:28.040 --> 0:17:32.399 Tariff on sports equipment. I mean, really, this is just 0:17:32.600 --> 0:17:37.040 its tone death. Listen to the President national security matters, 0:17:37.280 --> 0:17:42.040 when he calls out things like semiconductors, he calls out pharmaceuticals, 0:17:42.320 --> 0:17:45.639 he calls out autos. These are things that matter to 0:17:45.760 --> 0:17:48.200 us as a country. And if you're going to respond 0:17:48.240 --> 0:17:51.480 to us with sports equipment, you're just not listening to 0:17:51.600 --> 0:17:52.439 President Trump. 0:17:52.720 --> 0:17:55.960 Satary Lonak, how much are the conversations today actually about 0:17:56.000 --> 0:18:04.480 bringing up the negotiations when it comes to USNCA. 0:18:02.560 --> 0:18:07.600 Well, USMCA, we set aside USMCA. So the United States 0:18:07.640 --> 0:18:10.880 made a deal with both Mexico and Canada that said 0:18:10.880 --> 0:18:15.080 if you have enough US content in certain products or 0:18:15.080 --> 0:18:19.200 it's actually made domestically, they can trade between our countries 0:18:19.560 --> 0:18:20.200 tax free. 0:18:20.680 --> 0:18:22.879 That remains intact. 0:18:23.240 --> 0:18:26.520 What is outside of that is both things that don't 0:18:26.560 --> 0:18:29.400 have that American content that are imported from other countries. 0:18:29.840 --> 0:18:31.320 So that has a tarrify on it. 0:18:31.520 --> 0:18:34.840 And now the President has said, look, there are certain 0:18:34.920 --> 0:18:40.000 topics I need to have US make in America, and 0:18:40.040 --> 0:18:41.680 stealing aluminum is key. 0:18:41.960 --> 0:18:43.600 I mean we all understand that. 0:18:43.920 --> 0:18:47.560 So why not allow the greatest country in the world 0:18:47.720 --> 0:18:52.160 who completely feeds Canada Canada exists. 0:18:51.960 --> 0:18:53.920 Completely feeds off of. 0:18:53.840 --> 0:18:57.800 The amazing economy of the United States of America. Let 0:18:57.880 --> 0:19:00.800 us build up our steel and aluminum so that we 0:19:00.880 --> 0:19:04.400 can protect ourselves. And by the way, we protect Canada. 0:19:04.560 --> 0:19:07.680 I think Canada's got sixty planes. Oh yeah, they're really 0:19:07.720 --> 0:19:11.240 going to protect themselves. They're really They're the lowest investor 0:19:11.400 --> 0:19:15.000 in NATO. They totally rely on us, and yet they 0:19:15.000 --> 0:19:17.639 think they need to respond to steal in aluminum tariffs. 0:19:17.920 --> 0:19:21.639 I mean, everybody is so used to picking off America, 0:19:22.160 --> 0:19:25.000 so used to it that they can't even stop. Donald 0:19:25.040 --> 0:19:28.280 Trump is here to say, we need to be treated fairly, 0:19:28.400 --> 0:19:30.240 and we need to be treated fairly. 0:19:30.680 --> 0:19:33.199 Now do you think this approach, if you articulate this 0:19:33.280 --> 0:19:35.639 to the Canadians today, will help bring down the temperature? 0:19:38.240 --> 0:19:38.840 I do. 0:19:38.920 --> 0:19:44.040 I think once you actually breathe and think steal and aluminum, 0:19:44.240 --> 0:19:46.520 American needs steal in aluminum. 0:19:46.600 --> 0:19:47.200 I mean, if you. 0:19:47.240 --> 0:19:50.880 Respond like the British didn't respond, the Mexicans didn't respond, 0:19:51.200 --> 0:19:56.200 you have some countries that actually thoughtfully examine how they 0:19:56.200 --> 0:19:58.119 do business with us, and then you have people like 0:19:58.160 --> 0:20:02.040 the Canadians who are in a so you have no idea. 0:20:02.200 --> 0:20:05.520 You think it's about a trade war. This is their 0:20:05.600 --> 0:20:08.840 way of getting election votes. And the EU, you know, 0:20:08.920 --> 0:20:12.440 the EU is just so many years treated us so harshly. 0:20:12.720 --> 0:20:14.000 They just can't stop. 0:20:14.280 --> 0:20:16.760 Look, their tariffs are way up here and our tariffs 0:20:16.800 --> 0:20:17.400 are down here. 0:20:17.720 --> 0:20:20.600