Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Let's
Speaker 1: bring It. Michael Purvis shout we Weed in chief, Global
Speaker 1: Strategistic Joints us on the phone. Good morning to Mr Purvis. Mike,
Speaker 1: what do your tann in clients this week? Well, I
Speaker 1: think you have to stand back for a second and
Speaker 1: take stock to the fact that Trump has never had
Speaker 1: a stronger hand in which to go at China. Was
Speaker 1: all right, he's got very stable approval ratings. He's got
Speaker 1: a market that just a week and a half ago
Speaker 1: was that fresh highs um. He has also very importantly,
Speaker 1: you know, six months ago we didn't have the Powell
Speaker 1: put and now he does, and he can leverage that. Right,
Speaker 1: So it's an asset that he that that Trump can
Speaker 1: leverage for his policy goals um and and arguably his
Speaker 1: political goals of of really trying to come away with
Speaker 1: a with a real deal in China. So so I
Speaker 1: think that the narrative going into this a week ago
Speaker 1: and said, oh, this is just a couple more tweets
Speaker 1: here and some of the usual back and forth, and
Speaker 1: we're on the sort of slow but steady resolution to trade.
Speaker 1: I think you have to take, uh, you know, just
Speaker 1: step back and realize that a Trump is going to
Speaker 1: push this part. Now's the time and is still far away.
Speaker 1: So can you have to ask yourself the question, can
Speaker 1: Trump a board a six percent drop in the market
Speaker 1: and a fix it stays in the twenties for a
Speaker 1: few weeks or maybe even higher. I would suggest to
Speaker 1: you that he can. Well, let's talk about that. The
Speaker 1: three areas of potential policy support that I hear so
Speaker 1: much from so many people on programs like this. Three puts.
Speaker 1: The pound put the Trump put, the Sheep put the
Speaker 1: pound put effectively being that the Fed will be reactive
Speaker 1: to time of financial conditions. The Trump put a fact
Speaker 1: of the bank that he has market sensitive policy preferences,
Speaker 1: and that she put essentially being that she and China
Speaker 1: is willing to offset risks with more stimulus. The reasons
Speaker 1: to doubt the deployment and all the effectiveness of all
Speaker 1: three of them, Well, you know, I think to a
Speaker 1: certain degree you can you can almost think that Trump
Speaker 1: might be for the moment sort of coloring the market,
Speaker 1: you know, um where there is some sort of Trump
Speaker 1: Trump trump put here. Um. The question is is we
Speaker 1: don't really know the Chinese reaction function. I think the
Speaker 1: working narrative or assumption is is that, hey, you know,
Speaker 1: we've got the stronger hands. So it's just you know,
Speaker 1: you know, if everything is within our control. We don't
Speaker 1: really necessarily know that. We don't know what what what
Speaker 1: what China inks own internal um situation, at least how
Speaker 1: it BET is going to unravel there. So I think
Speaker 1: it's a little bit of a you can't necessarily assume
Speaker 1: that Trump put is is absolutely there because we don't
Speaker 1: know the Chinese reaction Punk, what are you doing on
Speaker 1: this Monday morning? Are you deploying capital to speculation or investment?
Speaker 1: Are you under the purvous desk? You know, you were
Speaker 1: just making a point about you're not seeing the correlations
Speaker 1: across asset classes really come together. And that's absolutely true.
Speaker 1: You started to see some things pick up. You saw
Speaker 1: certainly the Chinese currency volves pick up. That must spill
Speaker 1: over to the d M currency balls. You're not seeing it.
Speaker 1: But again we're just you know, we're just we just
Speaker 1: started with the equity move here. But the theme I
Speaker 1: really think is I've been advocating is that credit spreads
Speaker 1: have yet to back up, but that that's the replay
Speaker 1: of what happened in October equity lead. It's a little
Speaker 1: bit unusual usually creditly, so I think if you're looking,
Speaker 1: I think there's gonna be more risk of coming here. John,
Speaker 1: jump in here. This is Michael. This is really important.
Speaker 1: Credit spreads it not backed up, and I know we're
Speaker 1: weeks away from the next episode of the Real Yield John.
Speaker 1: The bond market is pricing economic slowdown this morning. Forget
Speaker 1: about spread. Let's distinction. Let's draw a distinction between the
Speaker 1: bond market you're talking about in the high yield market,
Speaker 1: the sovereign debt market treasuries Yes, yields a lot at
Speaker 1: the front end, and the way that they are suggesting
Speaker 1: that we have a market that is still believing that
Speaker 1: the next move could be a right cut the credit
Speaker 1: markets home. We had a great week of of issuance
Speaker 1: last week for investment cred and high and it was
Speaker 1: all sucked up and taken away pretty well. Spreads to
Speaker 1: widey yes, but I don't think the credit mark is
Speaker 1: this price for a material slowdown just yet. I don't
Speaker 1: see that, Michael, do you no? And that you know?
Speaker 1: I think if you go back to the narrative in
Speaker 1: October November, the framework back then was the credit wasn't
Speaker 1: really seeing a big economic slowdown. It was really sort
Speaker 1: of what happened was that there was a rerating of
Speaker 1: the equity risk premium and then that persisted UM and
Speaker 1: and all of a sudden there was pan risked off
Speaker 1: into November December, and then you know, that's when the
Speaker 1: credit spread, the high yield spread started backing up. That's
Speaker 1: what I'm saying right now. If you're looking, we're hedging,
Speaker 1: you know where the vics we're where it's at. Right.
Speaker 1: You can find cheaper hedging by simply taking a view
Speaker 1: that you know you can buy puts, for example on
Speaker 1: the h y G E t F that that tracks
Speaker 1: the high yield universe UM, which is where that ball
Speaker 1: is cheap. And that has looked a little bit, but
Speaker 1: not that much. I just think if there's more risk
Speaker 1: off coming, it will spread and you will see that
Speaker 1: cross ass a correlation spike. Final question, Let's talk about
Speaker 1: regions globally, there is a belief quite widely how that
Speaker 1: the hierarchy of vulnerability globally speaking is China first, then
Speaker 1: Europe M, and then the United States, the United States
Speaker 1: being the most relatively it's so insulated to the trade
Speaker 1: story that was playbook any different, um, it's a very
Speaker 1: fair question. Look, and you're we're talking economics not markets here, right,
Speaker 1: both consequentially? Okay, well, you know, just you know, economically,
Speaker 1: that would seem to be the right narrative there. I
Speaker 1: do think that there's a there's a real case though
Speaker 1: that the you know, Europe as the sort of this
Speaker 1: this UH spillover effect onto these China US focused trade
Speaker 1: that's that is very very significant here. So I'm not
Speaker 1: sure how much of a distinction throw on between China
Speaker 1: and Europe right now in terms of economic sensitivity there.
Speaker 1: I would certainly on the market side, I do think
Speaker 1: that the US equity market is certainly going to be
Speaker 1: among the most vulnerable, only because we've you know, we've
Speaker 1: added on two pe points since UH since December, and
Speaker 1: we've had record valuations relative valuations for example, the text
Speaker 1: sector relative to the SPX and so forth. That you
Speaker 1: have to leave it there with the market valuation and
Speaker 1: negative thirty seven and down Michael Purvis with weed this morning, John,
Speaker 1: you've got a plan, You've got a script with Stephen Roach,
Speaker 1: and then you've got tweets. What happened tweets? You just
Speaker 1: rip up the screw the tweet storm? Can you tweet? Professor?
Speaker 1: I can, but I don't. Well, you should come on.
Speaker 1: We'd love to hear from you. We would love to
Speaker 1: hear from from Professor Stephen Roach on Twitter. Come on,
Speaker 1: of Yeah, he's joined us in the studio. Great to
Speaker 1: see you, professor, the President saying the following there was
Speaker 1: no reason for the West consumer to pay the tariffs
Speaker 1: which take effect on China today. This has been proven
Speaker 1: recently when only four points were paid by the US
Speaker 1: twenty one points by China, because China subsidize his product
Speaker 1: to such a large degree. We've of course got to
Speaker 1: draw a distinction between who pays the tariff and who
Speaker 1: absorbs the higher cost. Mean, by definition, the importers pays
Speaker 1: the tariff, but who absorbs the higher cost? Far more nuance,
Speaker 1: wouldn't you say, professor, Not not nearly as nuanced as
Speaker 1: the President is trying to oviskate and have you believe
Speaker 1: you said it, Jonathan. Tariffs are attacks on importers. We
Speaker 1: are the importers. China is the exporter uh and um
Speaker 1: you know al to only if um uh, if there's
Speaker 1: diversion of trade away from China for a saving short
Speaker 1: US economy. Uh, those costs will go up because we'll
Speaker 1: be importing from higher cost nations other than China. Uh.
Speaker 1: And and so the President's got it completely wrong in
Speaker 1: terms of the impact of tariffs on US businesses and consumers.
Speaker 1: But at the beginning, you can't talk it products with
Speaker 1: high valuability of substitutes. You can talk at products that
Speaker 1: have high elasticity of demand. It puts the onus then
Speaker 1: on the exports to absorb the cost. There has been
Speaker 1: several research reports that suggests that has been the case.
Speaker 1: And the only pot that tried dispute. And I don't
Speaker 1: know what kind of research you're reading. I've seen two
Speaker 1: studies on the impact of Trump's tariffs put out by
Speaker 1: All Star casts of economists, and they have concluded that
Speaker 1: literally one of the President's tariffs have been borne by
Speaker 1: the costs of which have been born by US businesses,
Speaker 1: in US consumers by and I can give you one
Speaker 1: such report right now. ACoM polled Europe Network of Research
Speaker 1: is in the European Union. They essentially say that four
Speaker 1: point five percent have been paid by US consumers of
Speaker 1: the tariff, twenty five percent Chinese producers. And with all
Speaker 1: due respect, it's wrong. I don't I don't know where
Speaker 1: you get your research from. You read the paper to you, Okay,
Speaker 1: well I've got one out there too. I'll bring it
Speaker 1: in and one we'd love to look at it. Yeah.
Speaker 1: I look at the partial differentials of all this and
Speaker 1: to me, Steve Roach, it's like moving from the X
Speaker 1: y space. You're at Yale University, you're teaching, and the
Speaker 1: adults are in the x y Z space. They're in
Speaker 1: a three dimensional space. What is all the punditry missing here?
Speaker 1: What are we missing about the complexity and richness of this?
Speaker 1: William Klein oh I Adore Peterson Institute would say, the leakages,
Speaker 1: the adjacence eas here are off the chart, and nobody's
Speaker 1: talking about him Tom And that's a deep and important question.
Speaker 1: But but the you know, the the issue here is
Speaker 1: um I think, um, you know what. The there's a
Speaker 1: perception that America is strong, and we've been um egregiously
Speaker 1: damaged by China for generations, and so at this moment
Speaker 1: of great strength, we need to put them in in
Speaker 1: their place. And its absolutely allows for no possibility that
Speaker 1: this is a two way relationship. That yes, China relies
Speaker 1: on us, but we also rely on China, and so
Speaker 1: when we take actions against somebody that we rely on,
Speaker 1: there are consequences. That China has yet to respond to
Speaker 1: the increase in US tariffs, I can assure you they're
Speaker 1: going to UH and those responses will bear critically on
Speaker 1: our companies. Who is our biggest exporter, Tom the company
Speaker 1: it's it's Boeing Bowing is under a lot of pressure
Speaker 1: for other reasons. Do you think Wing is gonna get
Speaker 1: a uh, you know, a free pass in this next
Speaker 1: round of UH? Very quickly here, if Apple is a
Speaker 1: big exporter, or at least a prestigious exporter, and Apple
Speaker 1: doesn't get a free pass either, no one gets a
Speaker 1: free pass. I mean, whiskey from McConnell's Kentucky doesn't get
Speaker 1: a free pass. We all get that, But what about Apple?
Speaker 1: They won't get a free pass. Um. It's it's ludicrous
Speaker 1: to think that big companies who are account for a
Speaker 1: large portion of the bilateral trade flows between these two countries.
Speaker 1: All of a sudden, I get exact dispensation. I know
Speaker 1: you've got to go to run out of timer? How's
Speaker 1: a great inflation at yell? Are you giving out enough season?
Speaker 1: You know? You know we have we have, we have
Speaker 1: a good balance in our good bodies. And you know,
Speaker 1: not all students get, you know, the top grade that
Speaker 1: they aspired to. I just turned in my grades on Friday,
Speaker 1: and you know most of them have a small seminar,
Speaker 1: did extremely well, some of them did less well. Very good,
Speaker 1: Stephen Roach, thank you so much your university on an
Speaker 1: important day. Were thrilled. Thank you. This is an immense
Speaker 1: joy to have Kidgin with us, who's with a London
Speaker 1: School of Economics and has just an exceptional perspective on
Speaker 1: China the US. We do this with futures at negative
Speaker 1: forty down futures a negative three and Professor, what I
Speaker 1: want to do is go to u A seven names,
Speaker 1: g Lee, another Lee, Awang, Awangao and a Han that
Speaker 1: is the Chinese Communist Party committee that the trade delegation
Speaker 1: has to go home to in Beijing. How do they
Speaker 1: distill or respond to what they served in Washington. UM.
Speaker 1: For first of all, they have the Chinese people to
Speaker 1: to face, not just the top leadership. UM. The Chinese
Speaker 1: people UH still wants the Chinese government to stay strong
Speaker 1: against the US UM kind of demands. UH. The US tension.
Speaker 1: Trade tensions have caused a rise in the surgein nationalism
Speaker 1: in China. And the argument is also that if we
Speaker 1: if the Chinese cave in this time around, what's going
Speaker 1: to happen next? There will be in a worse position
Speaker 1: in the future. Well, the markets down in priced down
Speaker 1: and with the correlations that we're beginning to see the
Speaker 1: two year yield in five basis points, how does an
Speaker 1: international relations expert like you correlate all this politics into
Speaker 1: market moves? Uh. There are various forces at least inside
Speaker 1: the Chinese economy that is contributing to the to the
Speaker 1: market reactions. UM. Not only the uncertainty that has been
Speaker 1: brought about by trade war. Of course, the direct direct
Speaker 1: effects of the trade war has yet to be seen,
Speaker 1: but certainly uncertainty has caused much panic. But there is
Speaker 1: also a slowdown of the Chinese economy that has nothing
Speaker 1: to do with the trade war. And in particular more
Speaker 1: to do with the deleveraging process and in general policy uncertainty,
Speaker 1: how the Chinese businesses, the private entrepreneurs will be treated.
Speaker 1: These are all confounding elements. Just looking at the moves
Speaker 1: in the pre market. So I'm got to bring up
Speaker 1: pop but down five percent, red headline just across the
Speaker 1: blame bog terminal down five We're going to try and
Speaker 1: talk about this a little bit later. Not great futures,
Speaker 1: futures connecative fort sm down by one point four Excuse me,
Speaker 1: Professor I will come back in with a trade related
Speaker 1: question for you. We will avoid the uber conversation. A
Speaker 1: lot of people are looking for China's next move is
Speaker 1: both in terms of retaliation and in terms of the
Speaker 1: next move on stimulus. You've touched on that just a
Speaker 1: little bit. Talk to me about how limited the appetite
Speaker 1: is of the current government to actually reach for a
Speaker 1: full scale, large scale stimulus in a way that they
Speaker 1: had done in years previously. Why that's not happening this
Speaker 1: time around. The large stimulus in the past have created
Speaker 1: these huge credit expansions and credit cycles. That's causing a
Speaker 1: lot of the macroeconomic woes that we're observing today, So
Speaker 1: they want to avoid over using this kind of policies. Um.
Speaker 1: And of course we still have bubbles looming in the
Speaker 1: Chinese background, in the economic background. Um. But in terms
Speaker 1: of trade tensions, they of course want to seek a solution.
Speaker 1: But on the other hand, they probably don't want to
Speaker 1: have a reach of full solutions so that they can
Speaker 1: still continue the arguments with the US, because if the
Speaker 1: trade gets resolved, what's next? Those are more intractable problems
Speaker 1: for China to deal with. Wrestler. I brought this up
Speaker 1: with Steve Roach. It's one of the great books of
Speaker 1: the giant Jonathan Spence of Yale University that CON's great
Speaker 1: continent China in the Western mind is the thought process
Speaker 1: of modern Chinese leaders anywhere remotely near to China nine
Speaker 1: China eighty, you know, obviously not China nine fifty. But
Speaker 1: is this a modern set of leaders that were possibly
Speaker 1: going to miscalculate on? The modern set of leaders that
Speaker 1: we're thinking about will be the next generation of leaders,
Speaker 1: possibly the one that will succeed President She Okay, he
Speaker 1: will leave his term, don't don't you worry, um. But
Speaker 1: there is a lot of similarity still in terms of
Speaker 1: the paternalism in the system, the the stability, the kind
Speaker 1: of organization, the discipline, the outward view. And I would
Speaker 1: say that with President she Uh, there's definitely a stronger
Speaker 1: Chinese kind of a stance that China somehow not really
Speaker 1: going to sit in some global existing order, but possibly
Speaker 1: shaping it. And that's one big difference we've seen with
Speaker 1: compared to the past two leaders. Well, then let's get
Speaker 1: you out of the ivory tower in in into market tactics.
Speaker 1: What would you expect given what you just said, Is
Speaker 1: they quote unquote retaliate or not? They will? I suspect
Speaker 1: they will do some form of retaliation, if not fully
Speaker 1: symmetric or full scale, because that's not realistic that they
Speaker 1: will have to respond. Yes, professor, just the final question
Speaker 1: for you, your base case for retaliation from the Chinese?
Speaker 1: We still wait. The market is still nervously looking to
Speaker 1: see what it will be. You can't have accurate tip
Speaker 1: fitat of course, because China running imports so much from
Speaker 1: the United States versus what the United States imports from China.
Speaker 1: So what kind of scale are you looking for in
Speaker 1: terms of retaliation. I think they will still go for
Speaker 1: narrow UM industries, UM and agriculture, and those that will
Speaker 1: hurt the States that are political support based for President Trump.
Speaker 1: But it's really hard to say. Professor, thank you so much.
Speaker 1: Kay gin with us with a lot of moving news
Speaker 1: this morning. She is at the London School of Economics. Professor,
Speaker 1: we really look forward to seeing you at Queen Victoria
Speaker 1: Street here soon. This is the interview of the Day
Speaker 1: on Trade. A book came out a number of years ago,
Speaker 1: two eight pages. It's a Council on Foreign Relations book,
Speaker 1: and it's one of those books you hate because it's
Speaker 1: so intelligent, so densely intelligent, intelligently written that the two
Speaker 1: pages feels like four. But it's worth plowing through because
Speaker 1: it makes us so smart about the President's America and
Speaker 1: all of our America. Edward Alden. The book is Failure
Speaker 1: to Adjust, How Americans got left behind in the global economy.
Speaker 1: It was one of my books of the summer a
Speaker 1: few years ago. Ted Aldon. If you sat down with
Speaker 1: the President of the United States and you handed him
Speaker 1: a brief summary of Failure to Adjust, what would you
Speaker 1: tell President Trump? Well, I'd tell him that the United
Speaker 1: States made a lot of mistakes in the first era
Speaker 1: of globalization, and his job is to make sure we
Speaker 1: don't make a whole new series of mistakes in the
Speaker 1: era that we're in right now. And I'm afraid that's
Speaker 1: exactly what he's doing. Hopefully, hopefully he'd he'd pay attention
Speaker 1: long enough for me to say that, let us go
Speaker 1: to the theory and get it out of the way first.
Speaker 1: GLIB TV radio people like me can say it's mercantil
Speaker 1: is m The President's defenders would say, China has been
Speaker 1: cheating for years. Is it one the other? Is it both?
Speaker 1: I think it's both. I mean, I think the President's
Speaker 1: approaches clearly mercantilists, but the Chinese have been a mercantilist
Speaker 1: power for decades now, and the constraints of the w
Speaker 1: t O in a variety ways proved inadequate. I really
Speaker 1: think we didn't use the system as fully as we
Speaker 1: should have. But the President's complaints about China are legitimate.
Speaker 1: The concern is over the tactics, and that's obviously what
Speaker 1: the markets in the world are concerned over. I don't
Speaker 1: think anybody's arguing over the diagnosis. It's the prescription that's
Speaker 1: the problem. So it ted just specifically about the most
Speaker 1: the most recent round of negotiations. What do you think
Speaker 1: went wrong that derailed the momentum that seemed to be
Speaker 1: building up until maybe a week or two ago. Well,
Speaker 1: I mean, I I'm relying on the reporting here like
Speaker 1: everyone else, but I think it's clear that the Chinese
Speaker 1: backslided on some issues. I mean, the Chinese are tough negotiators, right,
Speaker 1: They're they're going to give as little as they can
Speaker 1: get away with. I think they thought they were in
Speaker 1: a stronger position than they were. What surprised me a
Speaker 1: little bit was the ferocity of the President's reaction to
Speaker 1: move so quickly to impose additional tariffs. And then we've
Speaker 1: got another round them that's going to be announced, possibly today,
Speaker 1: certainly sometime this week. The issues are huge, and I
Speaker 1: think anyone who believed there was going to be an
Speaker 1: easy deal was not paying attention. But I certainly expected
Speaker 1: we would get, you know, some kind of preliminary accord
Speaker 1: and then we'd see where it went next. But but
Speaker 1: things obviously work look a lot worse right at the moment.
Speaker 1: All Right, So China has reacted with its set of
Speaker 1: tariffs on some remaining goods. What do you think China
Speaker 1: will do next, Well, I mean China, as it actually
Speaker 1: has throughout this conflict, is behaving pretty cautiously. I mean,
Speaker 1: this is a retaliation that certainly doesn't come close to
Speaker 1: matching the dollar value of the of the U s tariffs.
Speaker 1: They're delaying in position until June one, and even then
Speaker 1: they're following the US lead and saying it's goods and transit.
Speaker 1: So that's another couple of weeks for ocean going goods.
Speaker 1: So I think the hope is that maybe when the
Speaker 1: President and Shijing paying meet for the G twenty SMIT
Speaker 1: in Japan, that that they can call the halts in this.
Speaker 1: So I think there's there's still h some room of
Speaker 1: playout the negotiations. The Chinese have been remarkably constrained in
Speaker 1: terms of their reaction, but as you know, these things
Speaker 1: can change quickly. Right if they reach a conclusion that
Speaker 1: there's no deal to be had, we could see ramp
Speaker 1: up pretty rapidly. Ted Alden, where this the book is
Speaker 1: failure to adjust, we are going to continue. I need
Speaker 1: to do a data check down. We go on the
Speaker 1: opening with a very nice bid to the market, and
Speaker 1: we're retesting that right now. We're a negative for eighty
Speaker 1: Now we're negative five twenty on the Dow, fifty nine
Speaker 1: SMP points down and the vix was under twenty now
Speaker 1: back above twenty, showing that new angst in the market.
Speaker 1: What am I watching most closely? We are now at
Speaker 1: lows in yield for the two year today two point
Speaker 1: one eight eight four, well under two point one nine percent.
Speaker 1: I'm looking for a retest of yen. We're almost there,
Speaker 1: Paul Sweeney on a one o nine o nine yen.
Speaker 1: So a new retest to this market at nine fifty
Speaker 1: three Wall Street Time. Thanks so, Ted. Just I mean,
Speaker 1: one of the things I think the market was looking for,
Speaker 1: are you know, really over the last several months, is
Speaker 1: maybe just some type of headline deal. Is that still
Speaker 1: on the table. It seems like it's certainly in both
Speaker 1: sides best interest, But even a minimalist type deal, do
Speaker 1: you think that is still a near term opportunity. I mean,
Speaker 1: I think there's still a possibility that the reality of
Speaker 1: Traine negotiations like this is they always go right to
Speaker 1: the edge of the cliff and there's always these heart
Speaker 1: stopping moments, and so I think we were never going
Speaker 1: to get a deal unless something like this happened. Just
Speaker 1: very hard to predict with this administration because Trump likes
Speaker 1: tariffs and he's made it very clear that he's happy
Speaker 1: with the tariffs, and so I I don't want interrupt,
Speaker 1: but we just got a headline out, which is why
Speaker 1: we've come down China to raise tariffs on imports of
Speaker 1: US rare earths to We're with Ted Alden of of CFR,
Speaker 1: which is wonderful. What is the US rare earth are
Speaker 1: as as far as as far as I know, and
Speaker 1: you guys can check quickly on your terminals. U S
Speaker 1: production rarers is very small. I mean, China is by
Speaker 1: far the world's largest rare producer. There are minds I
Speaker 1: think in Vietnam, a couple exactly Southeast Asia. The US
Speaker 1: is trying to get its capacity back in response to
Speaker 1: a Chinese export ban on rarers some years ago that
Speaker 1: we actually challenge successfully in the w t O. That
Speaker 1: was one of the places where the w t O worked.
Speaker 1: The United States, Japan and other countries took China to
Speaker 1: the w t O said WO forbid export bands, and
Speaker 1: China relented. We am puzzled by that way. We had
Speaker 1: two thousand I'm puzzled. We're puzzled by everything right now,
Speaker 1: Ted Alden, there's twenty products. What's the banner headline across
Speaker 1: the Bloomberg that you're gonna wait for? Which product obviously soybeans,
Speaker 1: but which product matters to you within the obscure stuff
Speaker 1: of trade? Well, I mean, you know, if you're looking
Speaker 1: at the U. S. Action, obviously the next round is
Speaker 1: gonna Co're gonna cover smartphones. Right if we go to
Speaker 1: the whole of Chinese trade, it's gonna hit Apple, and
Speaker 1: that's gonna have a major impact, even if it takes
Speaker 1: a while to be put in place. And from the
Speaker 1: Chinese and the big shoe that hasn't dropped his U S.
Speaker 1: Aerospace exports. I'm out here in Washington State. Boeing is
Speaker 1: a very important to the economy out here. That's a
Speaker 1: big shoe that that hasn't dropped yet. So so those
Speaker 1: are the ones I'm gonna be watching. You mentioned Apple,
Speaker 1: that stock is is down five today, so entering in
Speaker 1: correction territory for that one. So, Ted, it seems like
Speaker 1: you know both sides again are incented to get a
Speaker 1: deal done. Is you have a sense of who will
Speaker 1: blink first, Well, I mean, I think that the Chinese are,
Speaker 1: in the short run, at least in the weaker position.
Speaker 1: I think they would not have been so conciliatory sending
Speaker 1: lou Hey to Washington last week responding on a delayed
Speaker 1: timetable with its own tariffs. And the Chinese very much
Speaker 1: want to deal. But there's certainly a limit as to
Speaker 1: how far the United States can can push. Uh. There
Speaker 1: are big dangers, and Wall Street Journal is very good
Speaker 1: on that. I think over the weekend, big dangers of miscalculation,
Speaker 1: that each side thinks it's in a stronger position than
Speaker 1: it actually is. And and so even though I do
Speaker 1: believe China is in the weaker position, it doesn't mean
Speaker 1: that the Trump administration can continue to push and push
Speaker 1: and push with the faith that China will always respond favorably.
Speaker 1: At some point it will say no and then and
Speaker 1: then things will really take a tumble. Ted, I've got
Speaker 1: another our questions. We'll have to do that later. Ted
Speaker 1: alden Uh coming to us from the West Coast this morning.
Speaker 1: We greatly thank his attention with the Counsel on Foreign Relations.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
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