WEBVTT - Bloomberg Surveillance TV: May 6, 2025 0:00:02.400 --> 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 --> 0:00:37.120 Terminal and the Bloomberg Business app. Sarah Hunt of Valpine 0:00:37.200 --> 0:00:39.680 saxon Words, writing, it may take a couple of months 0:00:39.800 --> 0:00:41.960 to see the real world effect of the trading slow 0:00:42.000 --> 0:00:44.960 down caused by the tariff situation. It's hard to believe 0:00:45.200 --> 0:00:48.880 this all started only four weeks ago. Sarah, good Morning, 0:00:48.960 --> 0:00:51.360 Good Morning said the same thing yesterday was a month gone. 0:00:51.400 --> 0:00:53.000 This has been brutal, hasn't it. 0:00:53.000 --> 0:00:55.960 It has been quite a lot to happen in a 0:00:55.960 --> 0:00:57.959 short period of time. And I think you know I've 0:00:57.960 --> 0:01:00.360 talked about this before. I think market participates are so 0:01:00.480 --> 0:01:04.200 used to immediate effects and immediate information flow that we 0:01:04.240 --> 0:01:06.720 don't all remember that this all takes time to play 0:01:06.720 --> 0:01:09.360 out through the economy. So this only started four weeks ago. 0:01:09.480 --> 0:01:11.840 The actual effects of that are not even close to 0:01:11.880 --> 0:01:13.920 being seen, And all you're seeing right now is the 0:01:13.920 --> 0:01:15.920 ancillary effects that are people are worried about. 0:01:15.959 --> 0:01:18.120 Equity markets have recovered at the index level on the 0:01:18.200 --> 0:01:20.839 S and P five hundred, policies haven't changed too much. 0:01:21.200 --> 0:01:23.600 What kind of changes people expect them and how quickly? 0:01:24.319 --> 0:01:26.000 Well, I think this is the big question. Right So, 0:01:26.000 --> 0:01:28.320 you had a really decent earning season for the most part. 0:01:28.360 --> 0:01:30.199 You had a number of companies call out the problems. 0:01:30.240 --> 0:01:32.520 You had a number of issues, but the capex was strong, 0:01:32.560 --> 0:01:35.200 the AI story stays intact. That was very helpful I 0:01:35.200 --> 0:01:37.480 think for markets, and that was very important. But now 0:01:37.520 --> 0:01:39.679 we get back to Okay, now what's going to happen 0:01:39.680 --> 0:01:41.800 in trade? And we still don't know, And I think 0:01:41.840 --> 0:01:43.800 that is the sooner we can get any kind of 0:01:43.800 --> 0:01:45.920 clarity on that, the better. But right now I think 0:01:45.920 --> 0:01:48.120 that that just leaves us in a tough position risk 0:01:48.200 --> 0:01:48.800 reward wise. 0:01:49.080 --> 0:01:52.120 If someone were on the US Central Bank, they might 0:01:52.160 --> 0:01:54.120 be really happy that we have so rarely mentioned the 0:01:54.160 --> 0:01:56.360 FED on a day when the two day meeting is 0:01:56.400 --> 0:01:58.600 starting and they do have to come out with some 0:01:58.640 --> 0:02:04.080 prognostications tomorrow. I am wondering how much of a possible 0:02:04.160 --> 0:02:06.840 put this is later in the year if the FED 0:02:07.080 --> 0:02:11.240 were to cut rates more significantly. That's what John and 0:02:11.280 --> 0:02:14.000 Emory were hearing yesterday from Chris Harvey of Wells Fargo. 0:02:14.040 --> 0:02:18.160 Are reaffirming the seven thousand level. Do you buy that well? 0:02:18.160 --> 0:02:19.720 I think that the Fed's in a tough place for 0:02:19.760 --> 0:02:21.720 all the reasons that have been discussed right we have 0:02:21.960 --> 0:02:25.200 still some inflationary pressures. The labor market's holding up, the 0:02:25.360 --> 0:02:27.960 earnings are holding up, the economy is holding up pretty well. 0:02:28.040 --> 0:02:29.600 The question is going to be if you start to 0:02:29.600 --> 0:02:31.800 see deterioration in that labor market, and we certainly have 0:02:31.880 --> 0:02:35.240 heard anecdotally layoffs from different companies. Some of it is 0:02:35.440 --> 0:02:37.840 specific to them, some of it is just general industry 0:02:38.000 --> 0:02:39.560 and a lack of hiring. And I think if that 0:02:39.600 --> 0:02:41.800 starts to catch up, you could see those cuts. But 0:02:41.840 --> 0:02:43.839 because of the other issues and the price is paid 0:02:43.880 --> 0:02:46.560 index and where you're seeing inflation, I think it's very 0:02:46.560 --> 0:02:48.760 difficult to bake in as much as we're baking in 0:02:48.840 --> 0:02:49.160 right now. 0:02:49.200 --> 0:02:50.680 To be fair, I'm trying to figure out if we've 0:02:50.720 --> 0:02:53.680 learned anything that basically companies have been coming in with momentum, 0:02:53.760 --> 0:02:55.400 they have done pretty well if you take a look 0:02:55.400 --> 0:02:57.280 at the earnings as a whole. Mohammad al Aaran was 0:02:57.280 --> 0:03:00.000 saying that the raw data is showing that momentum is 0:03:00.480 --> 0:03:02.840 sort of pretty robust heading into this, and then you 0:03:02.960 --> 0:03:06.160 have a FED that has quite a lot to potentially cut. 0:03:06.240 --> 0:03:08.520 If there is some sort of cheriation of the data, 0:03:08.639 --> 0:03:10.839 is that enough for you to see this as more 0:03:10.880 --> 0:03:12.200 than just a bear market rally. 0:03:12.919 --> 0:03:14.840 Well, I think it really is going to depend on 0:03:14.840 --> 0:03:16.720 a number of things. One of them is getting some 0:03:16.800 --> 0:03:19.000 certainty because we're still seeing a lot of pull forward 0:03:19.080 --> 0:03:21.440 because people don't know, so people are still buying ahead, 0:03:21.520 --> 0:03:24.680 not just companies pulling an inventory, but individuals making choices. 0:03:24.720 --> 0:03:27.119 That makes the data look very good in the near term. 0:03:27.360 --> 0:03:28.960 And the question is is it going to soften at 0:03:28.960 --> 0:03:30.440 the end of the year the hard data, not the 0:03:30.520 --> 0:03:33.240 survey data. So if that starts to be a problem 0:03:33.360 --> 0:03:35.240 and the FED can cut, I think that's going to 0:03:35.240 --> 0:03:37.640 be helpful. But where markets are right now on the 0:03:37.640 --> 0:03:39.760 equity side, I think it's a little difficult to see 0:03:39.840 --> 0:03:42.160 how you can really get that next leg up unless 0:03:42.200 --> 0:03:45.080 you think that there is a path forward that doesn't 0:03:45.080 --> 0:03:47.600 have so much uncertainty and chaos, and I don't think we. 0:03:47.600 --> 0:03:48.200 Know that yet. 0:03:48.280 --> 0:03:50.520 Well, the whole point of the Trump administration they've talked 0:03:50.520 --> 0:03:53.120 about is game theory, strategic uncertainty. But what if we 0:03:53.280 --> 0:03:56.440 end where Trump started ten percent around the world, sixty 0:03:56.440 --> 0:03:59.160 percent on China? How would the market digest that? 0:04:00.120 --> 0:04:02.360 It would be probably some relief in that, to be fair, 0:04:02.440 --> 0:04:04.440 because the numbers were so much higher. And I think 0:04:04.480 --> 0:04:06.240 that that's part of that game theory. I'm going to 0:04:06.240 --> 0:04:07.560 throw out a bunch of numbers and where we're going 0:04:07.600 --> 0:04:10.200 to end up somewhere lower. But in the interim, you 0:04:10.320 --> 0:04:12.480 are seeing some people getting stuck trying to figure out 0:04:12.520 --> 0:04:13.960 do I pay for things at that level? Do I 0:04:14.000 --> 0:04:16.200 cancel this? You've seen a lot of cancelations, and you've 0:04:16.200 --> 0:04:18.560 got a big freight market and an ocean freight market 0:04:18.600 --> 0:04:21.360 that's in a chaotic state right now. So sorting that 0:04:21.400 --> 0:04:23.280 out is going to take some time. And unless there's 0:04:23.320 --> 0:04:24.960 a path on the other side of that where people 0:04:24.960 --> 0:04:26.960 feel comfortable, I think it's going to be difficult. 0:04:27.080 --> 0:04:29.120 Place you brought up the Federal Reserve, the FED, last 0:04:29.160 --> 0:04:32.920 mount of March nineteenth. March nineteenth is a lifetime ago, 0:04:33.200 --> 0:04:35.160 and think about the response to that meeting. I remember 0:04:35.200 --> 0:04:38.080 the Davish interpretation, just the very idea they saw any 0:04:38.160 --> 0:04:41.120 kind of inflation bump as one off. Then the out 0:04:41.240 --> 0:04:43.680 years of twenty six twenty seven, inflation comes back down. 0:04:43.760 --> 0:04:46.360 Super Dovish market is absolutely ripped. And you and I 0:04:46.360 --> 0:04:49.479 remember having a conversation about a more hawkish interpretation, this 0:04:49.640 --> 0:04:52.400 idea that they saw a deceleration in growth and yet 0:04:52.440 --> 0:04:54.720 they didn't increase their outlook for interest rate cuts. And 0:04:54.760 --> 0:04:57.120 I wonder if the more hawkish interpretation becomes that much 0:04:57.160 --> 0:04:59.719 more relevant in the months to come, not oft this meeting, 0:04:59.760 --> 0:05:01.920 but next one when they have to put out fresh 0:05:01.960 --> 0:05:03.080 full cast ale over again. 0:05:03.240 --> 0:05:06.480 Stagflation is a central bank's nightmare. Stagflation is what a 0:05:06.480 --> 0:05:09.279 lot of people are talking about. Are stagflationary likes trends 0:05:09.720 --> 0:05:11.599 at a point when that's what we're seeing on the 0:05:11.640 --> 0:05:16.240 margins communicated in the data like yesterday's ism services, how 0:05:16.240 --> 0:05:18.200 do they respond to that in a way that somehow 0:05:18.240 --> 0:05:21.120 is constructive for this market. Given the fact that stagflation 0:05:21.640 --> 0:05:24.359 really is one of the difficult things that a central 0:05:24.400 --> 0:05:26.880 bank has to deal with they don't have perfect tools 0:05:27.080 --> 0:05:27.760 to counter that. 0:05:27.800 --> 0:05:29.480 I think what the equity market would like to hear 0:05:29.560 --> 0:05:33.000 is Governor Waller his words from cham and Pal. How 0:05:33.160 --> 0:05:33.680 likely is that. 0:05:34.920 --> 0:05:37.000 I think that's a bit difficult at this juncture. So 0:05:37.080 --> 0:05:39.520 I think that it would be you'd need to see 0:05:39.560 --> 0:05:42.120 some real data changes before you could get that shift 0:05:42.160 --> 0:05:44.520 in tone from one to the other. And I'm not 0:05:44.760 --> 0:05:47.520 sure that that is anything we're going to see in 0:05:47.680 --> 0:05:49.719 certainly not this week, I don't think, and into the 0:05:49.760 --> 0:05:50.760 next month we'll see. 0:05:50.800 --> 0:05:54.160 How concerned are you that there appears to be not 0:05:54.200 --> 0:05:59.360 necessarily a shadow FED, but some sort of countervailing force 0:05:59.600 --> 0:06:04.920 on the FOMC that's creating a question around political I 0:06:04.960 --> 0:06:09.159 don't want to say interference, but political clouds hovering around 0:06:09.160 --> 0:06:10.000 the Federal Reserve. 0:06:10.839 --> 0:06:14.080 I think that we've seen it very often that you've 0:06:14.080 --> 0:06:17.120 got this argument between politics and the FED. And I 0:06:17.160 --> 0:06:19.560 don't know that this is any worse except that it 0:06:19.600 --> 0:06:22.799 has been. You now have a president who's actually willing 0:06:22.839 --> 0:06:25.000 to say something out loud in that way. I don't 0:06:25.400 --> 0:06:27.719 think that the FED acts in a political way. I 0:06:27.720 --> 0:06:29.200 think that they are going to continue to do what 0:06:29.240 --> 0:06:31.080 they think they need to do for the economy, but 0:06:31.160 --> 0:06:33.000 it makes it far more difficult, and it makes the 0:06:33.040 --> 0:06:35.320 bar a little bit higher if someone's pushing on you 0:06:35.360 --> 0:06:37.880 to do something that you don't necessarily want to do 0:06:37.920 --> 0:06:39.599 and you don't want to look like you're capitulating. So 0:06:39.600 --> 0:06:40.880 I think that there is an issue there. 0:06:40.920 --> 0:06:42.720 Have you even watching the press conference tomorrow? 0:06:42.960 --> 0:06:43.839 Always okay? 0:06:43.920 --> 0:06:45.000 So what are you hoping to hear? 0:06:46.400 --> 0:06:49.240 I'm expecting to hear not a whole lot and a 0:06:49.360 --> 0:06:53.080 dance again between that inflation, but the dance between inflation 0:06:53.240 --> 0:06:55.680 and the labor market, right, because that's the tension that 0:06:55.680 --> 0:06:57.440 they're going to keep calling out. The labor market still 0:06:57.440 --> 0:06:59.360 looks pretty good until you start to see that. Solten, 0:06:59.520 --> 0:07:02.720 I think it's hard to say anything that is specific 0:07:02.760 --> 0:07:04.159 about what I'm going to do. I'm going to do 0:07:04.320 --> 0:07:07.599 X if Y happens. So I think I'm looking to 0:07:07.640 --> 0:07:09.360 hear more of that dance and to see if there's 0:07:09.360 --> 0:07:10.480 any changes on the margin. 0:07:10.560 --> 0:07:12.320 Can you just pretend it's going to be really exciting 0:07:12.360 --> 0:07:13.920 for us? Super exciting? 0:07:14.040 --> 0:07:15.440 Absolutely? I can't wait. 0:07:15.720 --> 0:07:18.640 Live coverage one point thirty tomorrow afternoon on Blimback TV. 0:07:19.240 --> 0:07:21.920 I'm blimberk ridio it studying. That's the prim of Sara. 0:07:22.000 --> 0:07:23.480 Let's build on some of this. We've been trading on 0:07:23.560 --> 0:07:28.320 retric the prospective deals negotiations. When does the substance stots 0:07:28.320 --> 0:07:30.600 to Matt, so, what does a deal actually look like? 0:07:31.360 --> 0:07:34.400 I think the problem is that because we don't have substance, 0:07:34.440 --> 0:07:36.960 we can't make those plans out right. I don't know 0:07:37.000 --> 0:07:38.640 what the substance looks like. And I think that's the 0:07:38.640 --> 0:07:42.680 biggest problem is that there isn't a specific absolute I 0:07:42.720 --> 0:07:44.840 know we're looking for this ask, I know we're looking 0:07:44.840 --> 0:07:47.239 for that, and once we get that, we'll have a deal. 0:07:47.560 --> 0:07:50.600 It still continues to be amorphous, and that's why people 0:07:50.640 --> 0:07:53.040 are struggling, both on the corporate side and on the 0:07:53.040 --> 0:07:53.640 investment side. 0:07:53.760 --> 0:07:57.880 Or given how integrated the US and Canada are the economies, 0:07:58.200 --> 0:08:01.920 if this meeting actually does go south, how negative could 0:08:01.960 --> 0:08:03.200 that be for the equity market? 0:08:03.600 --> 0:08:05.800 I think it could be pretty negative, just because it 0:08:05.920 --> 0:08:08.400 is one of the like, this is somebody that we 0:08:08.400 --> 0:08:10.800 shouldn't necessarily be fighting with, right, this is a country 0:08:10.840 --> 0:08:15.000 that we've had a long series of negotiations and agreements with, 0:08:15.160 --> 0:08:18.400 So to put this on footing that becomes very negative. 0:08:18.440 --> 0:08:20.360 I think would be more of an outlook for how 0:08:20.360 --> 0:08:22.240 that's going to go elsewhere than it would be as 0:08:22.320 --> 0:08:25.120 much about the US Canada relationship. But I also think 0:08:25.160 --> 0:08:27.360 that that is an important relationship and you don't want 0:08:27.360 --> 0:08:29.880 to see that go south. And I think that's that 0:08:29.920 --> 0:08:31.679 would be very I think that would be very negative. 0:08:31.840 --> 0:08:34.480 Do you know, to Jonathan's point to Tyler earlier, do 0:08:34.520 --> 0:08:36.240 you know what a win would be for the United 0:08:36.240 --> 0:08:38.239 States when it comes to Canada and trade. 0:08:38.360 --> 0:08:38.520 Well. 0:08:38.559 --> 0:08:41.280 I think this has been the problem throughout this last 0:08:41.360 --> 0:08:43.400 couple of weeks, where we hear about a memorandum of 0:08:43.480 --> 0:08:46.320 understanding or we hear about a trade framework of a framework, 0:08:46.559 --> 0:08:49.000 is that there isn't a clear picture for what winning 0:08:49.040 --> 0:08:52.800 really looks like. So not knowing what those parameters are, 0:08:52.880 --> 0:08:54.560 it's hard to game out what the odds are that 0:08:54.559 --> 0:08:55.959 those parameters are acceptable. 0:08:56.160 --> 0:08:59.280 And of course it's also a dynamic type of picture, 0:08:59.400 --> 0:09:01.920 as many of the executives have talked about, with the 0:09:01.960 --> 0:09:04.880 market playing a leading role. Julian Emmanuel of evercore is 0:09:05.120 --> 0:09:07.520 I came out and said that because the market had 0:09:07.559 --> 0:09:11.040 performed so much better over the past nine trading days, 0:09:11.440 --> 0:09:14.440 it gave President Trump the room to actually talk more 0:09:14.520 --> 0:09:18.360 tough talk with respect to tariffs, and that would lead 0:09:18.400 --> 0:09:20.679 to a pullback, and it sort of has this range 0:09:20.720 --> 0:09:23.920 that he's playing with to try to use the market 0:09:24.080 --> 0:09:28.600 to understand what his potential guidelines are. How much do 0:09:28.640 --> 0:09:31.000 you think about that from an investing standpoint? 0:09:31.280 --> 0:09:33.640 I think that that is exactly the problem that the 0:09:33.679 --> 0:09:36.080 investment world tries to react so quickly and the real 0:09:36.120 --> 0:09:38.839 world cannot. That we're already over something that hasn't happened 0:09:38.880 --> 0:09:41.400 yet on equity markets, and I think that that's one 0:09:41.440 --> 0:09:44.240 of those reasons that I don't disagree with him. I 0:09:44.280 --> 0:09:46.640 think that there is an absolute case to be made 0:09:46.640 --> 0:09:49.040 for the fact that a recovery in financial markets means 0:09:49.320 --> 0:09:52.080 that you take that as see, we can get through this. 0:09:52.240 --> 0:09:54.920 And part of that recovery was backing off to begin 0:09:55.000 --> 0:09:57.000 with and moving it ninety days, and the other part 0:09:57.000 --> 0:09:59.680 of that recovery was earnings. But how much are those 0:09:59.720 --> 0:10:02.760 earned things going to flow through continuously through the next 0:10:02.800 --> 0:10:05.280 several months, because we don't know where they're going. And 0:10:05.320 --> 0:10:07.720 to Cameron's point, earlier margins are really going to be 0:10:07.760 --> 0:10:10.200 in question because the costs picture is unclear, because the 0:10:10.200 --> 0:10:13.480 supply chain is unclear, So we're already discounting something that 0:10:13.520 --> 0:10:16.000 hasn't even happened, and we've already decided it's okay. 0:10:16.280 --> 0:10:18.920 Over the past couple of decades, there's been this focus 0:10:18.920 --> 0:10:21.720 on Wall Street about getting faster and getting a time 0:10:21.840 --> 0:10:25.200 edge on other people, getting closer to electricity sources, that 0:10:25.240 --> 0:10:27.920 you can respond to information more quickly to everybody else. 0:10:28.440 --> 0:10:31.320 Has this been the death of that that getting information 0:10:31.480 --> 0:10:34.760 first is not any kind of advantage whatsoever, and that 0:10:34.800 --> 0:10:37.719 everybody has to shift to another frame of reference when 0:10:37.760 --> 0:10:40.800 it comes to investing that is longer term, more patient, 0:10:41.320 --> 0:10:44.240 more I don't know, private, something else that is not 0:10:44.440 --> 0:10:45.880 sort of high frequency trading. 0:10:46.520 --> 0:10:48.920 I think you're dead on right now because I think 0:10:48.920 --> 0:10:52.080 that the absolute chaos and uncertainty that we're living through, 0:10:52.440 --> 0:10:55.720 rightly or wrongly for the end outcome, makes that information 0:10:56.320 --> 0:10:58.600 not as important because you don't know which way should 0:10:58.600 --> 0:11:01.800 really direct things. FED meetings. Even before this, you could 0:11:01.800 --> 0:11:03.960 watch the reaction to what the FED said, and that 0:11:04.360 --> 0:11:05.920 markets would be up and down and up and down 0:11:05.920 --> 0:11:09.040 in the same hour because people couldn't figure out which 0:11:09.080 --> 0:11:11.440 way we were actually going. And now I think you've 0:11:11.440 --> 0:11:14.280 just put that on steroids, and you've added other types 0:11:14.320 --> 0:11:16.360 of information to that, not just what the FED things, 0:11:16.360 --> 0:11:18.240 but what's happening both in the economy and what the 0:11:18.280 --> 0:11:21.080 administration wants to do, So getting a piece of information 0:11:21.160 --> 0:11:25.800 first is not necessarily directionally easily interpreted. 0:11:26.000 --> 0:11:28.120 Let's just say that Friday's a great example of that. 0:11:28.240 --> 0:11:31.400 We had the poor director from Los Angeles, Jan Soroka 0:11:31.400 --> 0:11:33.360 and Gene told us what was happening with trade volumes 0:11:33.400 --> 0:11:35.920 as of this week, that we had a thirty percent 0:11:36.040 --> 0:11:38.920 roll off in bookings of arrivals. And we'll sit around 0:11:38.960 --> 0:11:41.040 the table and we're like, Okay, what happens next. And 0:11:41.040 --> 0:11:43.280 there's a big debate about what happens next and over 0:11:43.360 --> 0:11:45.880 what timeline and what it should mean for markets, because 0:11:46.160 --> 0:11:48.520 markets might not even respond to it, they might just 0:11:48.520 --> 0:11:50.920 shake it all off. On the prospective deals and the horizon, 0:11:50.920 --> 0:11:53.640 which gives you a forward look of better economic data 0:11:53.960 --> 0:11:55.880 around the corner, how are we going to trade bad 0:11:56.000 --> 0:11:58.240 data in the next couple of months If the President 0:11:58.320 --> 0:12:01.080 is still going around saying deals, deals, we're going to 0:12:01.080 --> 0:12:02.080 close lots of deals. 0:12:02.280 --> 0:12:04.280 I think that there is a point at which that 0:12:04.440 --> 0:12:07.200 rhetoric no longer is as effective. And because this is 0:12:07.240 --> 0:12:09.720 also recent again, we're talking about a four or five 0:12:09.760 --> 0:12:12.880 week period now, since we even started. The rhetoric has 0:12:12.920 --> 0:12:15.679 been very effective. But the longer you go without having 0:12:15.720 --> 0:12:19.240 something done, the less you can goose things with saying 0:12:19.280 --> 0:12:20.880 it's going to be done. It's going to be done, 0:12:20.960 --> 0:12:24.120 and the more problematic it becomes when when those goods 0:12:24.160 --> 0:12:26.600 are not coming over or going back, and you've got 0:12:26.960 --> 0:12:28.960 not the right things, are not situated in the right 0:12:28.960 --> 0:12:30.920 way to get those trade flows started again. 0:12:31.080 --> 0:12:34.040 This is the window everyone's talking about. The window. No 0:12:34.040 --> 0:12:35.559 one really knows how big it is, but this is 0:12:35.640 --> 0:12:39.760 ultimately it. Ultimately you have to show something otherwise eventually 0:12:39.760 --> 0:12:41.920 you get that bad data and this market will have 0:12:42.000 --> 0:12:42.640 to try it on it. 0:12:42.840 --> 0:12:46.240 Eventually those ships will not have gotten here with those goods, 0:12:46.440 --> 0:12:49.840 and eventually retailers will have to adjust and the pricing 0:12:49.920 --> 0:12:53.040 ramifications will happen, and potentially layoffs will happen. And this 0:12:53.080 --> 0:12:55.840 is the reason why Jane Fraser of City Group yesterday 0:12:55.840 --> 0:12:58.640 at the Melkon conference was talking about this gap between 0:12:58.679 --> 0:13:00.440 hard data and soft data and how it has to 0:13:00.480 --> 0:13:02.760 close even though people say that it could persist, and 0:13:02.840 --> 0:13:04.800 which way it's going to close is not clear, and 0:13:04.880 --> 0:13:06.800 I really mean that because it could close to the 0:13:06.880 --> 0:13:09.839 upside or it could close to the downside. 0:13:09.400 --> 0:13:13.200 The President likes to wanka negotiations to the extreme, which 0:13:13.200 --> 0:13:15.160 is why it goes out there with some pretty flamboyant 0:13:15.160 --> 0:13:18.439 statements at time. The Europeans have been quite reserved through 0:13:18.520 --> 0:13:20.720 all of this over the last several weeks. This just 0:13:20.840 --> 0:13:23.960 drops this report that the EU is targeting one hundred 0:13:24.000 --> 0:13:28.040 billion euros of US goods with Taris IV talks fail, 0:13:28.400 --> 0:13:30.080 just setting up the talks in a different way from 0:13:30.120 --> 0:13:32.040 the European side over the coming weeks. 0:13:32.040 --> 0:13:34.760 The fantastic scoop from our colleagues over in Europe. What 0:13:34.800 --> 0:13:37.160 you see here playing out is a caarden stick approach 0:13:37.200 --> 0:13:39.600 now from Brussels. Last week was in the Financial Times 0:13:39.640 --> 0:13:42.319 they were looking at fifty billion euros worth of purchases 0:13:43.080 --> 0:13:46.160 of US goods like soybeans, like LNG. And now what 0:13:46.200 --> 0:13:48.520 they're saying, if we don't get a deal, we are 0:13:48.520 --> 0:13:50.199 going to go after one hundred billion. 0:13:50.040 --> 0:13:51.680 Euros worth of US goods. 0:13:51.880 --> 0:13:53.760 What I find so interesting right now about the Europeans 0:13:53.800 --> 0:13:56.040 is they don't come up a lot in conversations I 0:13:56.080 --> 0:13:59.600 have with administration officials. It's all about Japan, or India 0:13:59.679 --> 0:14:01.760 or South Korea. What's going on with Canada. We're going 0:14:01.800 --> 0:14:04.880 to meet with China at some point. Europe it seems 0:14:04.880 --> 0:14:05.760 to be silent. 0:14:06.000 --> 0:14:09.000 At the same time, the trade chief in Europe came 0:14:09.040 --> 0:14:11.559 out this morning and talked about how if you tally 0:14:11.679 --> 0:14:14.400 up all the goods that could potentially have some reciprocal 0:14:14.440 --> 0:14:17.000 tariffs on them from under President Trump, it would equal 0:14:17.040 --> 0:14:19.920 six hundred and twenty two billion dollars worth. So they're 0:14:20.360 --> 0:14:23.880 writing down on pieces of paper, calculating like something's not adding. 0:14:24.160 --> 0:14:25.840 So we're going to have to come out here with 0:14:25.920 --> 0:14:29.280 a threat, and maybe that's what predicated this discussion this morning. 0:14:29.280 --> 0:14:31.920 Stock's responding to that headline. We're down by about three 0:14:31.960 --> 0:14:34.240 quarters to one percent, just an extra inch lower on 0:14:34.280 --> 0:14:36.240 the screen on the S and P. Five hundred. Stock's 0:14:36.280 --> 0:14:38.480 a little softer. Sarah, thank you. I'm going to see 0:14:38.480 --> 0:14:47.479 you as always, Sarah Hunt. There a vampire Saxon Woods 0:14:50.720 --> 0:14:53.440 turn back to policy, taxes and tariffs and focus with 0:14:53.520 --> 0:14:57.040 Treasury Secretary Scale Busts and testifying before Congress today and 0:14:57.080 --> 0:15:00.360 tomorrow joining us now, Congressman Frenchhill, how if they House 0:15:00.760 --> 0:15:04.440 Financial Services Committee, Congressman, our good friend, welcome back to 0:15:04.440 --> 0:15:06.960 the program, sir, talk us through and just frame if 0:15:06.960 --> 0:15:08.960 you can your approach to these hearings over the next 0:15:09.000 --> 0:15:09.480 few days. 0:15:09.480 --> 0:15:12.400 What do you want to hear you bet well, Jonathan, 0:15:12.440 --> 0:15:16.640 great to be with you this morning. Secretary Investment comes 0:15:16.680 --> 0:15:20.160 to both the House Appropriations Committee and House Financial Services 0:15:20.200 --> 0:15:23.560 today for the first time as Treasury Secretary, and I 0:15:23.600 --> 0:15:28.280 think you'll see questions about the President's economic policy. He's 0:15:28.440 --> 0:15:33.440 put his policy as the centerpiece of deregulation, right sizing regulation, 0:15:34.160 --> 0:15:36.760 making sure that the American businesses and families don't have 0:15:36.800 --> 0:15:39.280 a big tax increase at the end of the year, 0:15:39.920 --> 0:15:43.440 and using a trade strategy that encourages investment in the 0:15:43.520 --> 0:15:46.800 United States, foreign direct investment in the US, and more 0:15:46.840 --> 0:15:49.840 fairness for American products and services abroad. 0:15:50.640 --> 0:15:51.400 I think all. 0:15:51.280 --> 0:15:54.520 Those things will be subjects of questions in both committees. 0:15:54.720 --> 0:15:58.160 You, of course, French represent the home state of Walmart. Congressman, 0:15:58.600 --> 0:16:00.840 what do they want to hear of the next twenty 0:16:00.840 --> 0:16:06.280 four Ultimately what is the company CINCA. 0:16:04.520 --> 0:16:07.880 Well, all my constituents, including Walmart, have made it very 0:16:07.880 --> 0:16:11.240 clear to President Trump and to their trade associations who 0:16:11.240 --> 0:16:13.440 interned have made it very clear to the White House 0:16:14.160 --> 0:16:17.240 they want resolution and certainty as about to what the 0:16:17.360 --> 0:16:21.320 care of strategy is and as it relates to imported 0:16:21.360 --> 0:16:24.720 goods that would be found in Walmart or a department store, 0:16:25.040 --> 0:16:27.600 those decisions have to be made pretty promptly or you're 0:16:27.640 --> 0:16:30.760 going to see, in my judgment, impact on what's on 0:16:30.880 --> 0:16:33.880 store shelves this fall and even this summer, and you're 0:16:33.880 --> 0:16:37.720 going to see price increases this summer potentially as well. 0:16:38.040 --> 0:16:41.760 I think that message was delivered quite clearly by American 0:16:42.160 --> 0:16:44.360 retail businesses principally. 0:16:44.840 --> 0:16:48.720 Well, the message was delivered, But is there understanding you 0:16:48.760 --> 0:16:52.760 got from Walmart from your other constituents that they received 0:16:53.040 --> 0:16:55.760 an optimistic tone from this White House about where the 0:16:55.800 --> 0:16:57.840 future of trade is actually going to end up. 0:16:59.240 --> 0:17:01.480 Well, this is something that we've continued to talk about 0:17:01.960 --> 0:17:05.960 on this show in Congress, which is what is the strategy. 0:17:06.040 --> 0:17:09.080 You have a China strategy, you have a trade fairness 0:17:09.080 --> 0:17:12.879 and reciprocity strategy. You have a bring business back to 0:17:12.920 --> 0:17:16.679 the US strategy. Sometimes those things are in conflict and 0:17:16.720 --> 0:17:19.199 they're tough to do all at once. That's why I 0:17:19.240 --> 0:17:22.480 think that the idea of let's square things away at 0:17:22.640 --> 0:17:25.919 USMCA with Canada and Mexico, Let's make sure we're on 0:17:26.000 --> 0:17:30.119 the same page with Japan Korea and the European Union. 0:17:30.359 --> 0:17:31.800 Those are first and foremost. 0:17:31.840 --> 0:17:34.280 I think that will help us then get the best 0:17:34.359 --> 0:17:36.240 kind of leverage we can as we work on the 0:17:36.280 --> 0:17:40.320 toughest nut in the group, which is how do we 0:17:40.400 --> 0:17:44.960 have trade fairness and in China's mercantilistic trade policy around 0:17:45.000 --> 0:17:45.359 the world. 0:17:45.520 --> 0:17:48.199 Congressman though, did Walmart though, leave that meeting in the 0:17:48.240 --> 0:17:51.760 Oval Office feeling like the President heard them and that 0:17:52.000 --> 0:17:53.760 they're listening to their concerns. 0:17:55.480 --> 0:17:58.400 Well, from the reports I've got, the answer was yes. 0:17:58.480 --> 0:18:01.480 I mean President Trump worked very hard in his first 0:18:01.560 --> 0:18:06.359 term to make sure that consumers were not immediately impacted 0:18:06.400 --> 0:18:09.679 by his tariff negotiations, as he attempted to design a 0:18:09.760 --> 0:18:12.240