WEBVTT - Bloomberg Surveillance TV: November 6th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:36.839 Terminal and the Bloomberg Business app. The Ark and Vest 0:00:36.880 --> 0:00:40.080 CEO Kathy would one of Tesla's biggest spores, the ev maker, 0:00:40.200 --> 0:00:43.720 the top holding in her flagship Arc Innovation ETF, has 0:00:43.760 --> 0:00:46.159 this to say, I do not understand why investors are 0:00:46.200 --> 0:00:48.840 voting against Elon's pay package when they and their clients 0:00:48.880 --> 0:00:52.360 would benefit enormously if he and his incredible team meet 0:00:52.400 --> 0:00:54.680 such high goals. Kathy joined us now for more. Kathy, 0:00:54.680 --> 0:00:56.240 thanks for making some time for us this morning. Good 0:00:56.280 --> 0:00:58.920 morning to you all. Do you think, Kathy, the incentives 0:00:59.000 --> 0:00:59.960 are well alive? 0:01:01.440 --> 0:01:02.040 Yes, we do. 0:01:03.480 --> 0:01:07.640 I do not believe any company anywhere near this size 0:01:08.560 --> 0:01:14.640 has ever delivered a compound annual rate of growth for 0:01:14.959 --> 0:01:18.640 ebit dot, which is a bottom line number of forty 0:01:18.680 --> 0:01:22.080 one percent over ten years. No company has done that, 0:01:22.280 --> 0:01:26.160 so yes, indeed the incentives are aligned. If he and 0:01:26.200 --> 0:01:30.760 his team are able to deliver on that number, the 0:01:31.000 --> 0:01:33.640 stock is going to outperform enormously. 0:01:34.240 --> 0:01:38.640 Kathy, if by chance this proposal is rejected, would you 0:01:38.680 --> 0:01:40.520 consider shedding some of your Tesla position. 0:01:42.360 --> 0:01:46.720 So I'm happy that the prediction markets are at ninety 0:01:46.840 --> 0:01:49.760 to ninety five percent in terms of this is going through, 0:01:49.800 --> 0:01:53.520 so we don't have to think about that clearly. If 0:01:53.560 --> 0:01:57.520 Elon left, we think about it in two ways. One 0:01:57.600 --> 0:02:02.760 we think robotaxis. He has them at the starting gate 0:02:02.800 --> 0:02:06.480 as of June and now they're rolling out, and that 0:02:06.680 --> 0:02:09.880 AI project is well underway. 0:02:10.240 --> 0:02:13.200 If he had left five years ago, three years ago, 0:02:13.560 --> 0:02:14.720 it probably. 0:02:14.320 --> 0:02:18.000 Wouldn't be anywhere near where it is. What we now 0:02:18.200 --> 0:02:22.720 think though, is in order to capitalize on humanoid robots, 0:02:22.760 --> 0:02:28.600 which that's a much more difficult project. That yes, Elon's 0:02:28.840 --> 0:02:33.840 brilliance and the team he has attracted around him are 0:02:33.919 --> 0:02:37.000 going to be necessary to pull that off. Our price 0:02:37.040 --> 0:02:42.000 target twenty six hundred dollars in twenty thirty is ninety 0:02:42.040 --> 0:02:45.840 percent of that valuation is robotaxi, we have very little 0:02:46.720 --> 0:02:53.000 for humanoid robots. If humanoid robots evolve as quickly as 0:02:53.240 --> 0:02:56.880 Elon things, now remember that's Elon time. But he already 0:02:56.880 --> 0:03:03.119 has a running start because robotaxis are robots, they're electric, 0:03:03.480 --> 0:03:06.960 they're powered by AI. Those are the three innovation platforms 0:03:07.040 --> 0:03:10.480 that will power humanoid robots as well. So he's ahead 0:03:10.520 --> 0:03:12.160 of the game on that one as well. But I 0:03:12.240 --> 0:03:15.680 do believe he's the right leader to bring that part 0:03:15.760 --> 0:03:17.119 of the story to life as well. 0:03:17.200 --> 0:03:17.440 Kathy. 0:03:17.480 --> 0:03:18.840 I've got to answer you this though, to follow up 0:03:18.840 --> 0:03:22.080 on Lisa's question. If you wouldn't sell, if he wasn't CEO, 0:03:22.960 --> 0:03:24.880 then why should we pay him that much to be 0:03:24.960 --> 0:03:25.440 the CEO. 0:03:26.720 --> 0:03:32.679 What I'm saying is we would feel comfortable with robotaxi 0:03:32.880 --> 0:03:35.840 part of the model, but we would not be able 0:03:35.880 --> 0:03:40.800 to build with confidence the humanoid robot part of the model. 0:03:41.400 --> 0:03:46.120 So over time, of course, as the story would depend 0:03:46.240 --> 0:03:48.720 more and more on that leg of the story, we 0:03:48.760 --> 0:03:50.280 would be taking our position down. 0:03:50.560 --> 0:03:53.640 You talked earlier, Kathy, in the past couple of days 0:03:53.800 --> 0:03:56.720 about this reality check that's going on in the tech sector, 0:03:57.240 --> 0:03:59.880 and I understand that Tesla is sort of in its 0:04:00.240 --> 0:04:02.680 place that you do hold them for the long term. 0:04:03.160 --> 0:04:05.760 How do you understand the reality check that's currently going 0:04:05.840 --> 0:04:08.760 on within a lot of the biggest tech stocks and 0:04:08.840 --> 0:04:11.280 the sense of skepticism about whether they can keep growing 0:04:11.280 --> 0:04:14.720 at that rate versus the long term bullish bet. 0:04:15.880 --> 0:04:18.800 You know, I'm really happy that there is so much 0:04:18.839 --> 0:04:22.080 skepticism out there. Anyone who went through the late nineties 0:04:23.000 --> 0:04:27.040 will remember there was no skepticism, and we had valuations 0:04:27.480 --> 0:04:31.359 based on the number of eyeballs on a website maybe 0:04:31.440 --> 0:04:36.479 ten years from then. We're not seeing that right now, 0:04:36.480 --> 0:04:39.880 we are seeing Wait a minute, they're spending a lot 0:04:39.920 --> 0:04:44.239 of money on these data centers. This is a little 0:04:44.240 --> 0:04:47.600 bit of a different story than I was investing in, 0:04:47.720 --> 0:04:50.560 certainly in terms of when I say I the average 0:04:50.560 --> 0:04:54.680 investor was investing in with the mag six, those were 0:04:54.760 --> 0:05:02.200 just cash cows and had huge cash positions. Something's changing here. 0:05:02.320 --> 0:05:08.880 It's making the typical investor a little more i'll say, skeptical. 0:05:09.640 --> 0:05:13.040 This is not just the cash register ringing anymore. This 0:05:13.160 --> 0:05:16.200 is wait, a big bet on the future. So I'm 0:05:16.240 --> 0:05:17.480 happy there's skepticism. 0:05:17.520 --> 0:05:18.360 I think it's a good thing. 0:05:18.640 --> 0:05:20.760 Are you buying right now? Are you seeing the skepticism 0:05:20.839 --> 0:05:23.280 as a chance to build some of your portfolio. 0:05:23.880 --> 0:05:29.279 Oh sure, you know, And probably the most undervalued part 0:05:29.480 --> 0:05:33.520 of our portfolios is in life sciences healthcare, because we 0:05:33.600 --> 0:05:37.919 think that is going to present the most profound application 0:05:38.560 --> 0:05:43.480 of AI out there, and yet it is highly underappreciated 0:05:43.600 --> 0:05:47.080 because you know, healthcare analysts aren't comfortable with tech, and 0:05:47.160 --> 0:05:50.600 tech analysts aren't comfortable with healthcare. And you know, we've 0:05:50.640 --> 0:05:53.279 got a very siloed ecosystem in terms of the way 0:05:53.360 --> 0:05:57.120 research is done at ARC. We're very focused on the 0:05:57.240 --> 0:06:00.679 technologies first and how they're going to scale a sectors. 0:06:00.720 --> 0:06:04.440 So our analysts are organized by technology and we think 0:06:04.440 --> 0:06:06.000 there's a huge inefficiency there. 0:06:07.279 --> 0:06:10.760 Stay with us. More Bloomberg surveillance coming up after this 0:06:20.680 --> 0:06:23.320 of principle asset management writing where there are threats to 0:06:23.360 --> 0:06:27.640 the risk on stands, particularly amidst lofty valuations. Fundamentals continue 0:06:27.760 --> 0:06:30.480 to underpin markets. Seema joint us Now for more Seema, 0:06:30.480 --> 0:06:33.839 welcome to the program. Meta last week, Palan, AMD and 0:06:33.880 --> 0:06:37.520 now quoll Com all reporting fairly decent numbers for most 0:06:37.560 --> 0:06:40.200 of them, and this equity market has pushed back. What's 0:06:40.240 --> 0:06:41.240 the signal you take from that? 0:06:42.240 --> 0:06:43.360 Hi, John, Thanks having on. 0:06:44.040 --> 0:06:46.520 Yeah, it's been really interesting this earning season to see 0:06:46.520 --> 0:06:50.400 how the market is punching companies even as they're continuing 0:06:50.400 --> 0:06:52.960 to deliver, And I think that speaks to a lot 0:06:53.000 --> 0:06:56.279 of skepticism within the market, which is certainly started to 0:06:56.279 --> 0:06:58.719 really gain momentum I think within the last few weeks 0:06:58.720 --> 0:07:01.560 as well, probably around the size, you know, the kind 0:07:01.560 --> 0:07:03.920 of the size of numbers that we're seeing with regards 0:07:03.920 --> 0:07:06.920 to the A cavax, the hope that these companies are 0:07:06.920 --> 0:07:09.880 really going to continue to promise on some of the 0:07:09.880 --> 0:07:11.160 productivity gains that they. 0:07:11.040 --> 0:07:14.640 Have, so I think the jury is out. 0:07:14.680 --> 0:07:16.440 What we're trying to do is look through some of 0:07:16.440 --> 0:07:18.720 the noise, some of the fears that may be around 0:07:19.240 --> 0:07:21.040 and thinking, want to look look at the earning story, 0:07:21.080 --> 0:07:22.240 look at the macro backdrop. 0:07:22.360 --> 0:07:25.680 There are concerns, absolutely, but in terms. 0:07:25.400 --> 0:07:27.760 Of the data that we're getting through from companies, we 0:07:27.800 --> 0:07:31.360 still have some confidence that this economy can continue to 0:07:31.360 --> 0:07:34.840 perform and companies accroad a broad spectrum can also continue 0:07:34.840 --> 0:07:35.400 to perform too. 0:07:35.600 --> 0:07:36.960 Or say, well, let's talk about some of the good 0:07:36.960 --> 0:07:39.560 news in the last day or so, I some services 0:07:39.600 --> 0:07:41.520 a nice ubside surprise. Do you think that's a sign 0:07:41.560 --> 0:07:43.120 of things to come in our future. 0:07:44.320 --> 0:07:47.040 I'm not sure it's necessarily a sign of things to come. 0:07:47.040 --> 0:07:48.840 And when we're we're taking a step back and we're 0:07:48.840 --> 0:07:51.240 looking at the economy, putting all the data as much 0:07:51.520 --> 0:07:54.120 of it as we have, what we see as an 0:07:54.120 --> 0:07:56.960 economy which is likely to slow down from its current pace, 0:07:57.320 --> 0:07:59.720 is probably going to come down sometime during twenty twenty 0:07:59.760 --> 0:08:02.840 six closer to a trend level. Now that is okay, 0:08:02.920 --> 0:08:05.400 it's not wonderful, but it is still an economy that 0:08:05.480 --> 0:08:09.520 is growing, and so earnings can continue to do well. 0:08:09.720 --> 0:08:11.560 The more concerning pitch, of course, which we have to 0:08:11.600 --> 0:08:13.320 take more notice of, and of course the Fed is 0:08:13.360 --> 0:08:15.600 going to be debating, so much is really around that 0:08:15.680 --> 0:08:18.240 labor market picture. So when we're talking about our forecast, 0:08:18.560 --> 0:08:20.520 we are building in the assumption that the Fed is 0:08:20.560 --> 0:08:23.280 going to continue to deliver some rate cards in order 0:08:23.360 --> 0:08:25.920 to make sure that whatever weaknesses there is in the 0:08:26.000 --> 0:08:28.600 labor market aren't allowed to accelerate. So a lot of 0:08:28.600 --> 0:08:31.280 it is actually resting on this assumption that there continues 0:08:31.320 --> 0:08:33.679 to be some support coming in from policymakers. 0:08:34.400 --> 0:08:36.679 This really goes to the contradiction of the moment where 0:08:36.760 --> 0:08:39.360 you're talking about maybe a slowing in the economy. Some 0:08:39.400 --> 0:08:42.760 people are talking about a reacceleration in the economy, but 0:08:42.840 --> 0:08:45.839 not necessarily in the labor picture. In other words, reacceleration 0:08:45.880 --> 0:08:48.160 of profits from companies that are getting nimble with using 0:08:48.200 --> 0:08:51.280 AI and other efficiencies of scale, while people are not 0:08:51.559 --> 0:08:54.520 finding jobs as easily and wages are not keeping pace. 0:08:54.920 --> 0:08:57.480 As an investor, does that make you more reluctant to 0:08:57.559 --> 0:08:59.840 invest in the United States, or frankly, does it give 0:08:59.880 --> 0:09:03.000 you confidence in the corporate dynamism story of the United States, 0:09:03.040 --> 0:09:06.200 regardless of what happens to the underlying jobs economy. 0:09:07.040 --> 0:09:08.880 It is such an important question, Lisa, and I think 0:09:08.880 --> 0:09:12.319 that question is coming about sooner than people have been anticipating. 0:09:12.600 --> 0:09:15.400 I mean, ultimately, we're in this environment where the structural 0:09:16.000 --> 0:09:19.880 impact of AI both on labor, on wages and then 0:09:19.960 --> 0:09:22.960 general growth and essentially the kind of the bifurcation between 0:09:23.000 --> 0:09:25.360 what's happening in the labor market and earnings growth, and 0:09:25.400 --> 0:09:28.800 it's making it really difficult to try to decipher what 0:09:28.840 --> 0:09:30.600 the new structure of the economy is, what the impact 0:09:30.640 --> 0:09:32.720 is is, and also how the FED is going to 0:09:32.720 --> 0:09:36.560 be responding. In this backdrop, we have to go with, 0:09:36.720 --> 0:09:40.240 I think, clearly diversification, but still this focus on the 0:09:40.320 --> 0:09:44.640 US because it continues to be the most robust, you know, 0:09:44.920 --> 0:09:47.640 the companies with the strongest balance shees continue to play 0:09:47.640 --> 0:09:48.440 out in the US. 0:09:48.880 --> 0:09:49.719 But also at the. 0:09:49.640 --> 0:09:52.680 Same time thinking about where else can we deploy to 0:09:52.840 --> 0:09:57.000 ensure that we are maintaining some kind of diversification against 0:09:57.040 --> 0:09:58.960 the risk that things do start to turn a little 0:09:59.000 --> 0:10:01.560 bit more negative, both from a cyclical side and of 0:10:01.559 --> 0:10:02.840 course on a structural side too. 0:10:03.040 --> 0:10:05.240 So in other words, to sell America trade is over. 0:10:05.600 --> 0:10:08.560 It might be diversify around the edges, but the US 0:10:08.640 --> 0:10:10.959 still is the place that is supposed to be the 0:10:11.000 --> 0:10:12.280 growth engine for the world. 0:10:12.440 --> 0:10:16.040 Is that correct? That is exactly right, So we continue. 0:10:16.080 --> 0:10:18.880 Look, we have skepticism, some concerns I think healthy skepticism 0:10:18.920 --> 0:10:21.800 around the AI story and how these companies are ultimately 0:10:21.800 --> 0:10:23.760 going to deliver, But we do believe in the narrative. 0:10:24.400 --> 0:10:26.480 If you believe in that, then really you should still 0:10:26.520 --> 0:10:27.840 be focused on the US. 0:10:28.400 --> 0:10:31.480 Other countries around the world, specifically Europe for example, just 0:10:31.559 --> 0:10:33.920 doesn't have the same kind of prowess now. At the 0:10:33.960 --> 0:10:36.800 same time, because of those concerns are on AI having 0:10:36.880 --> 0:10:40.520 some diversification in companies across Europe once it maybe can 0:10:40.640 --> 0:10:43.679 leverage on some of the structural benefits that could come 0:10:43.679 --> 0:10:45.800 out from AI. Still, but the other parts of the 0:10:45.840 --> 0:10:49.240 cyclical story is important. And then of course across asset classes. 0:10:49.520 --> 0:10:52.640 So it's not just about regions, but it's about asset classes, equity, 0:10:52.679 --> 0:10:55.760 fixed income, infrastructure, some areas that you can feel some 0:10:55.800 --> 0:10:57.560 safety in this kind of environment. 0:10:57.679 --> 0:10:59.760 See and can we finish on trade? Some key fliers 0:10:59.800 --> 0:11:02.960 on a Supreme Court sounding deeply skeptical of the president's 0:11:03.000 --> 0:11:05.839 broad sweeping trade effort. It remains now I think the 0:11:05.920 --> 0:11:09.560 consensus for you coming into Thursday that these tariffs won't last, 0:11:09.559 --> 0:11:11.600 they'll be struck down by the Supreme Court. How well 0:11:11.640 --> 0:11:14.000 priced is that story, How well understood is it. 0:11:14.840 --> 0:11:16.960 I'm not sure it's necessarily very well understood, But I 0:11:16.960 --> 0:11:19.520 think what the market is assuming here is that even 0:11:19.520 --> 0:11:23.360 if they're struck down, the Trump administration will find alternative avenues. 0:11:23.720 --> 0:11:26.600 So we do, for example, think that trade tariffs are 0:11:26.600 --> 0:11:28.080 old when you're going to rise a little bit further 0:11:28.120 --> 0:11:30.160 from here, even in the event that they're struck off. 0:11:30.840 --> 0:11:32.760 I think the bigger question mark is something you've been 0:11:33.200 --> 0:11:35.839 alluding to just earlier, which is what is a near 0:11:35.880 --> 0:11:39.080 to mimpat in terms of revenues from the fiscal story, 0:11:39.160 --> 0:11:40.920 and what is the impact on the bond market going 0:11:40.960 --> 0:11:42.440 to be. I think that's going to be really the 0:11:42.440 --> 0:11:45.440 focus for the market over the coming months with regards 0:11:45.480 --> 0:11:46.280 to that trade story. 0:11:46.760 --> 0:11:50.280 Stay with us more Bloomberg surveillance coming up after this. 0:11:58.920 --> 0:12:01.480 Let's turn to the Federalist of recent dissents highlighting the 0:12:01.559 --> 0:12:04.400 lack of consensus of that institution as the Central Bank 0:12:04.440 --> 0:12:07.360 struggles with a data drought. The former Kansas City FED 0:12:07.360 --> 0:12:09.400 president as the George joins us now for more. As 0:12:09.440 --> 0:12:11.240 the way, we're just tracking that story with Mike McKay. 0:12:11.280 --> 0:12:13.120 I'm sure you were following along. Do you think's fed 0:12:13.120 --> 0:12:16.160 a reserve is attempting to address a structural problem with 0:12:16.280 --> 0:12:16.880 interest rates? 0:12:18.000 --> 0:12:18.240 Yes? 0:12:18.280 --> 0:12:20.680 I do, Jonathan, and I think that's what makes this 0:12:20.840 --> 0:12:23.000 so challenging for the committee. 0:12:23.200 --> 0:12:24.760 You can't ignore the. 0:12:24.640 --> 0:12:27.520 Story you just heard, which is there's something going on 0:12:27.600 --> 0:12:31.000 in the labor market. Things are moving in a way, 0:12:31.280 --> 0:12:34.920 and yet you can't really put your finger on is 0:12:34.960 --> 0:12:38.160 this change happening in real time? Is this going to 0:12:38.240 --> 0:12:42.320 settle out to a more stable view of what's going 0:12:42.400 --> 0:12:46.120 on with that labor market, particularly when you are looking 0:12:46.160 --> 0:12:49.360 at what I would characterize as easy financial conditions and 0:12:49.440 --> 0:12:52.600 many of the other traditional signs that would go along 0:12:52.840 --> 0:12:57.560 with this labor market data would lead you to think 0:12:57.600 --> 0:13:01.480 something different. So it is a challenging time and those 0:13:01.520 --> 0:13:04.640 cross currents of information and data are making it a 0:13:04.679 --> 0:13:06.920 tough job for the FMC, and it's an. 0:13:06.880 --> 0:13:10.480 Even tougher job for investors to understand how the FOMC 0:13:10.520 --> 0:13:12.640 is going to respond to that data because the reaction 0:13:12.760 --> 0:13:15.280 function doesn't seem clear. You have a lot of descent, 0:13:15.360 --> 0:13:17.880 and you've got a lot of fissures on the committee, 0:13:17.920 --> 0:13:21.240 but you also have, frankly, a question of how much 0:13:21.280 --> 0:13:23.920 they're looking at the unemployment rate versus the actual total 0:13:24.000 --> 0:13:26.960 number of jobs, and how much that's taking priority over inflation. 0:13:27.120 --> 0:13:29.560 Do you have a greater sense of what that reaction 0:13:29.679 --> 0:13:30.280 function is? 0:13:31.880 --> 0:13:34.960 Well, I do not, Lisa, and I think you see 0:13:35.000 --> 0:13:38.000 that in the discussion at the committee level, which is 0:13:38.040 --> 0:13:42.440 to say where are we putting our weight. In September, 0:13:42.679 --> 0:13:45.440 the Committee came out very clearly and said we're putting 0:13:45.440 --> 0:13:48.119 our weight on the labor market. When we see this softening, 0:13:48.679 --> 0:13:52.200 we're inclined to bring our policy rate back to something 0:13:52.280 --> 0:13:56.440 that we are guessing is more normal than where it 0:13:56.480 --> 0:13:59.920 currently sits, and that narrative is held through to two meeting, 0:14:00.679 --> 0:14:04.280 and this meeting, of course we got the question mark, 0:14:04.320 --> 0:14:08.040 I think of whether that narrative would continue. So the 0:14:08.840 --> 0:14:11.600 information coming in and the fact that you don't have 0:14:11.800 --> 0:14:15.000 official data to back up some of those views, it's 0:14:15.040 --> 0:14:18.720 going to make this I think difficult for individual members 0:14:18.760 --> 0:14:23.800 to really reconcile their views and come to terms with that. 0:14:24.400 --> 0:14:26.800 Is this a FED that has a dual mandate still 0:14:27.000 --> 0:14:29.360 or does it have more mandates than that? And I 0:14:29.400 --> 0:14:33.200 wonder if it's also keeping interest rates within a reasonable level, 0:14:33.320 --> 0:14:35.920 especially with the deficit where it is, if that's an 0:14:36.000 --> 0:14:40.360 increasing factor, even if not verbalized in the back of 0:14:40.400 --> 0:14:41.400 people's heads. 0:14:42.480 --> 0:14:45.280 Well, it is the idea that the FED needs to 0:14:45.320 --> 0:14:48.640 keep rates low to assist the federal government's debt position 0:14:48.840 --> 0:14:53.000 is certainly not one of its mandates. Notwithstanding the pressure 0:14:53.040 --> 0:14:55.640 that you see coming from various corners to try to 0:14:56.000 --> 0:14:59.040 accommodate that, it is going to become, I think an 0:14:59.040 --> 0:15:04.560 increasingly difficult issue that will intersect with monetary policy because 0:15:05.160 --> 0:15:09.120 we know that these higher debt levels without some plan 0:15:09.240 --> 0:15:13.840 in place, to bring those deficit spendings down are going 0:15:13.880 --> 0:15:15.880 to put pressure on the Fed. It will put higher 0:15:15.920 --> 0:15:19.360 interest rates in front of them. Inflation issues will begin 0:15:19.440 --> 0:15:23.920 to become more dominant, I think. And so that intersection 0:15:24.400 --> 0:15:28.040 is a very difficult one for a monetary policy group 0:15:28.120 --> 0:15:33.440 that is assigned to judge labor markets and price stability 0:15:33.920 --> 0:15:34.720 in their mandate. 0:15:35.080 --> 0:15:37.320 Aster we do you think will be on December tenth? 0:15:37.520 --> 0:15:39.200 I've got no idea how much dates it will have. 0:15:39.240 --> 0:15:41.120 Do you think we could settle any of these debates 0:15:41.240 --> 0:15:43.720 by the time we get to the middle of next month. 0:15:44.680 --> 0:15:47.200 Well, it doesn't seem likely. And Jonathan, what you hope 0:15:47.280 --> 0:15:49.920 is whenever you're in a period of uncertainty and trying 0:15:49.960 --> 0:15:54.040 to weigh the risk that you don't get an unexpected 0:15:54.080 --> 0:15:57.480 shock to the economy. And again, I don't see anything 0:15:57.520 --> 0:16:01.880 out there that says we resolve this uncertain But I 0:16:01.880 --> 0:16:04.000 think that's why it makes it a difficult time for 0:16:04.080 --> 0:16:08.880 this committee to reconcile views, is because that uncertainty looks 0:16:08.960 --> 0:16:11.000 like it is going to persist for some time. 0:16:11.160 --> 0:16:13.600 So is that another way of saying that race might 0:16:13.720 --> 0:16:16.400 remain on hold for some time, at least until say, 0:16:16.400 --> 0:16:17.280 spring of next year. 0:16:18.760 --> 0:16:20.760 Well, they could, and you're going to have people argue 0:16:20.800 --> 0:16:24.240 for that for sure. But I also think the committee 0:16:24.280 --> 0:16:27.320 will have to wrestle with the narrative of the labor 0:16:27.400 --> 0:16:31.960 market signs of weakening, and that was the beginning of 0:16:32.000 --> 0:16:34.360 their rate cut, So the Chairman's put the markets on 0:16:34.480 --> 0:16:38.240 notice not to presume that that cut is coming. On 0:16:38.280 --> 0:16:42.320 the other hand, if the data, however informal, however pieced 0:16:42.360 --> 0:16:45.800 together it might be, does not change that narrative, they 0:16:45.840 --> 0:16:48.120 could be inclined to continue that cutting cycle. 0:16:48.320 --> 0:16:51.200 As tu. If the Supreme Court overturns the president's use 0:16:51.200 --> 0:16:54.080 of IEPA for tariffs, and you don't have that revenue 0:16:54.080 --> 0:16:57.360 coming in, and that isn't necessarily any kind of discussion 0:16:57.360 --> 0:17:00.360 on the inflationary pressure. If that money gets refunded, do 0:17:00.400 --> 0:17:04.120 you think that gives the incentive to the frenteral reserves 0:17:04.119 --> 0:17:06.399 the FOMC to cut rates more aggressively. 0:17:08.320 --> 0:17:09.720 Well, not necessarily, Lison. 0:17:09.800 --> 0:17:12.159 The reason I think that is because I think this 0:17:12.359 --> 0:17:17.359 throws another log of uncertainty onto the fire. If the 0:17:17.400 --> 0:17:22.320 federal government has to do something different with those tariffs, 0:17:22.920 --> 0:17:26.560 that then raised the prospect of where do we find 0:17:26.800 --> 0:17:28.040 that happening? 0:17:28.400 --> 0:17:29.680 Will it be sectorial. 0:17:29.920 --> 0:17:33.880 Is it going to be in terms of lowering revenues 0:17:34.119 --> 0:17:38.040 immediately or in the long term. It is another, I 0:17:38.080 --> 0:17:44.320 think reminder of why it is so important for policy makers, 0:17:44.840 --> 0:17:47.760 not at the FED, but policymakers that are thinking about 0:17:47.760 --> 0:17:52.040 our fiscal situation to really begin to be more forward 0:17:52.119 --> 0:17:55.360 looking about what we face as a way to lay 0:17:55.680 --> 0:18:00.240 a foundation for future economic growth, because right now we're 0:18:00.240 --> 0:18:02.720 in a bit of a soup that isn't isn't providing 0:18:02.800 --> 0:18:05.480 the kind of foundation that I think we need. 0:18:06.040 --> 0:18:09.560 Stay with us more Bloomberg surveillance coming up after this 0:18:18.240 --> 0:18:20.800 track in the White House, and the President Lisa doesn't 0:18:20.800 --> 0:18:22.920 appear that this is on top of the priority list 0:18:22.920 --> 0:18:25.040 for them this week. The major one in the last 0:18:25.080 --> 0:18:26.520 week has been the last twenty four hours at the 0:18:26.560 --> 0:18:27.280 Supreme Court. 0:18:27.400 --> 0:18:29.920 There's been more commentary about that. Yes, we are hearing 0:18:29.960 --> 0:18:31.840 about ratcheting up the pressure and I'm looking and if 0:18:31.840 --> 0:18:34.480 you're leaving any major airport anywhere around the country, you 0:18:34.520 --> 0:18:36.240 will get to laid at some point. That's basically the 0:18:36.440 --> 0:18:39.760 takeaway here. Nonetheless, the focus really is will the primary 0:18:39.880 --> 0:18:43.000 trade objective get overturned by the top court in the 0:18:43.080 --> 0:18:44.760 United States, and what are the consequences of that. 0:18:44.920 --> 0:18:46.600 This at the moment just background noise. Of course, that 0:18:46.600 --> 0:18:48.480 could change, but certainly at the moment, just kind of 0:18:48.480 --> 0:18:50.720 background noise. John Lieber, if you're RAIS a group is 0:18:50.720 --> 0:18:52.280 in a studio here in New York for more, johnk 0:18:52.280 --> 0:18:55.520 and Mornich, let's start with trade. How instructive was yesterday's 0:18:55.520 --> 0:18:56.440 hearing for you and the team? 0:18:56.480 --> 0:18:56.960 I thought it was. 0:18:57.520 --> 0:19:00.000 I mean, the justices were clearly skeptical of the government's argument. 0:19:00.240 --> 0:19:02.840 So if I'm the Trump administration, I'm not feeling great 0:19:02.880 --> 0:19:04.960 about the ability the fact that the court is going 0:19:05.000 --> 0:19:08.880 to uphold my signature project right now, and if that happens, 0:19:09.119 --> 0:19:11.640 there's a lot of uncertainty in questions that generates, such 0:19:11.680 --> 0:19:15.600 as will there be refunds generated for people who paid 0:19:15.600 --> 0:19:18.320 the tariffs already? And what's the fiscal path going forward? 0:19:18.320 --> 0:19:20.520 Because this is for trillion dollars in revenue over the 0:19:20.600 --> 0:19:23.160 next four years. They'll be able to recreate that wall 0:19:23.200 --> 0:19:25.719 through other methods over time, but there's going to be 0:19:25.960 --> 0:19:28.400 This introduces a big dose of uncertainty into twenty twenty 0:19:28.480 --> 0:19:31.520 six on who's getting tariffs, what does it mean for 0:19:31.560 --> 0:19:33.720 the status of the deals that have been struck with Japan, 0:19:33.800 --> 0:19:36.720 with Korea, with China, with the UK, and I think 0:19:36.720 --> 0:19:39.280 the administration doesn't isn't offering answers to that right now. 0:19:39.320 --> 0:19:41.719 They're hoping the court sides with them. But there's at 0:19:41.800 --> 0:19:45.480 least three conservative justices that looked very skeptical of their 0:19:45.560 --> 0:19:49.359 arguments yesterday, and it does look more today more like 0:19:49.359 --> 0:19:51.399 those tariffs will be struck down than it did two 0:19:51.480 --> 0:19:51.880 days ago. 0:19:51.960 --> 0:19:54.879 How surprised were you that there was such definitive tone 0:19:55.000 --> 0:19:57.320 out of the Supreme Court justices, including those in the 0:19:57.320 --> 0:20:01.200 conservative block of the court give and that pretty much 0:20:01.280 --> 0:20:03.879 most people were expecting that they would okay this, they 0:20:03.880 --> 0:20:06.120 would essentially sign off on it, as they have other 0:20:06.119 --> 0:20:07.280 initiatives by the president. 0:20:07.320 --> 0:20:09.200 Well, if you look at the lower court arguments, they're 0:20:09.240 --> 0:20:12.240 pretty solid. I mean, this is the terroiffs have raised 0:20:12.240 --> 0:20:14.879 a number of questions as the presidential authority. You know, 0:20:14.880 --> 0:20:17.280 there's questions about whether or not the power to regulate 0:20:17.359 --> 0:20:20.200 trade includes the power of attacks. That's something that Neil 0:20:20.240 --> 0:20:23.000 Gorsich was focused on. And then some of these tariffs 0:20:23.040 --> 0:20:25.760 I think are just clearly not related to national security 0:20:25.800 --> 0:20:28.280 at all. You can't put tariffs on Brazil because you 0:20:28.280 --> 0:20:30.639 don't like the way they're treating your political ally and 0:20:30.680 --> 0:20:34.159 then claim that's an economic national security emergency. I think 0:20:34.200 --> 0:20:36.679 there's obviously some tariffs here that are weaker, and there 0:20:36.680 --> 0:20:39.400 are some that are potentially stronger, like the fentanyl tariffs, 0:20:39.520 --> 0:20:41.480 which you could claim is an emergency. 0:20:41.720 --> 0:20:44.240 Is President Trump losing his clutch over the narrative? And 0:20:44.280 --> 0:20:47.040 I say this given that he really dominated the Republican Party, 0:20:47.240 --> 0:20:51.120 But now you have conservative leading justices talking about tariff's attacks, 0:20:51.400 --> 0:20:54.320 which is exactly what he is pushing back against, and 0:20:54.560 --> 0:20:57.199 talking about things that Democrats have been talking about for 0:20:57.200 --> 0:20:59.879