1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordernt. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,479 Speaker 2: Terminal and the Bloomberg Business app. Stocks holding steady? Is 10 00:00:37,479 --> 00:00:39,599 Speaker 2: Wall Street a waste? The next round of corporate results? 11 00:00:39,800 --> 00:00:42,760 Speaker 2: Daryl Kronk of Wells Fargo, writing, based on our expectations 12 00:00:42,760 --> 00:00:45,760 Speaker 2: for accelerated earnings, we believe the next twelve to fifteen 13 00:00:45,760 --> 00:00:48,800 Speaker 2: months will favor us sequities. Darrell joins us now from 14 00:00:48,800 --> 00:00:51,240 Speaker 2: More Darrek Grim Mornig Majah. What is it about the 15 00:00:51,360 --> 00:00:53,400 Speaker 2: US stock market that this story is going to favor? 16 00:00:54,200 --> 00:00:55,560 Speaker 1: Well, I think it's a number of things. 17 00:00:55,960 --> 00:00:58,360 Speaker 3: So beyond the earning story, which I think you guys 18 00:00:58,400 --> 00:01:00,520 Speaker 3: have well socialized and talk about in a kicked in, 19 00:01:00,960 --> 00:01:03,040 Speaker 3: I think you've got a lot of certainty that is 20 00:01:03,120 --> 00:01:05,679 Speaker 3: coming in vogue, right. I mean, we know the Fed's 21 00:01:05,680 --> 00:01:07,720 Speaker 3: going to cut interest rates. We don't know exactly by 22 00:01:07,760 --> 00:01:10,360 Speaker 3: how much and when, but we have a high degree 23 00:01:10,400 --> 00:01:13,000 Speaker 3: of certainty that monetary policy is going to ease financial 24 00:01:13,000 --> 00:01:15,199 Speaker 3: conditions over the next twelve to fifteen months. 25 00:01:15,800 --> 00:01:18,920 Speaker 1: We know the fiscal rules we're playing by. Now. 26 00:01:18,959 --> 00:01:21,240 Speaker 3: We had the One Big Beautiful Bill in July. There 27 00:01:21,280 --> 00:01:23,800 Speaker 3: is no one Big Beautiful Bill two dot zero and 28 00:01:23,880 --> 00:01:26,720 Speaker 3: the remainder of this president's term. So if corporate America 29 00:01:26,760 --> 00:01:29,560 Speaker 3: is waiting around for mergers and acquisitions and capex and 30 00:01:29,600 --> 00:01:32,560 Speaker 3: everything to kick in because they were uncertain let's say 31 00:01:32,640 --> 00:01:35,520 Speaker 3: last April with Tariff's and Liberation Day, now they're much 32 00:01:35,560 --> 00:01:38,880 Speaker 3: more certain, and there's a lot of stimulus corporately in 33 00:01:38,959 --> 00:01:41,440 Speaker 3: that one Big Beautiful Bill. There's also a lot of 34 00:01:41,480 --> 00:01:43,920 Speaker 3: stimulus in there for the consumer as well. I mean, 35 00:01:43,920 --> 00:01:46,039 Speaker 3: there's going to be big tax refunds in the first 36 00:01:46,080 --> 00:01:48,440 Speaker 3: quarter next year that people are underestimating right now. 37 00:01:48,640 --> 00:01:49,280 Speaker 1: That will kick in. 38 00:01:49,320 --> 00:01:53,520 Speaker 3: And history tells you the consumer spends a dollar seventeen 39 00:01:53,600 --> 00:01:56,120 Speaker 3: cents of every dollar they get back in a tax refund, right, 40 00:01:56,160 --> 00:01:58,800 Speaker 3: so they overspend what that is, So there's I think 41 00:01:58,840 --> 00:02:01,640 Speaker 3: a wave coming that will push through for Corporate America 42 00:02:02,080 --> 00:02:03,960 Speaker 3: and continue to drive that margin line in the bottom 43 00:02:04,000 --> 00:02:04,360 Speaker 3: line righter. 44 00:02:04,440 --> 00:02:07,120 Speaker 2: So the secon thing you like, your favorite is financials. 45 00:02:07,400 --> 00:02:09,399 Speaker 2: Just moments again of the team at Bloomberg broke a story. 46 00:02:09,400 --> 00:02:11,400 Speaker 2: I'm going to share it with you. Rate as follows. 47 00:02:11,680 --> 00:02:13,880 Speaker 2: According to people familiar with the matter, the Federal Reserve 48 00:02:13,919 --> 00:02:16,680 Speaker 2: has shown other US regulators the outlines of a revised 49 00:02:16,720 --> 00:02:19,919 Speaker 2: plan that would dramatically relaxed abiden era bank capital proposal 50 00:02:20,240 --> 00:02:22,080 Speaker 2: for Wall Streets largest lenders. 51 00:02:22,160 --> 00:02:23,560 Speaker 4: I'll spare everyone the details. 52 00:02:23,680 --> 00:02:25,640 Speaker 2: You can read through the details and have like the story, 53 00:02:25,800 --> 00:02:29,160 Speaker 2: But ultimately this feels like the direction of travel. Absolutely 54 00:02:29,320 --> 00:02:32,000 Speaker 2: how big a pillar is that if you're long gone financials, 55 00:02:32,720 --> 00:02:35,680 Speaker 2: So deregulation is a is a pillar, and it matters 56 00:02:35,680 --> 00:02:36,200 Speaker 2: greatly to. 57 00:02:36,160 --> 00:02:38,320 Speaker 3: The gcify banks, right, I mean, and I think to 58 00:02:38,360 --> 00:02:41,200 Speaker 3: your point about where Basel three was heading, you know, 59 00:02:41,240 --> 00:02:43,040 Speaker 3: say twelve eighteen months ago to where it is today, 60 00:02:43,480 --> 00:02:46,240 Speaker 3: huge one hundred and eighty degree turn just in the cinement. 61 00:02:46,680 --> 00:02:49,600 Speaker 3: I think what's more important though, is probably two other pillars. 62 00:02:49,800 --> 00:02:52,160 Speaker 1: One is you know, M and. 63 00:02:52,200 --> 00:02:54,760 Speaker 3: A and CAPEX kicking in right, So you get this 64 00:02:54,800 --> 00:02:57,240 Speaker 3: whole kind of you know, what we thought was going 65 00:02:57,280 --> 00:03:00,000 Speaker 3: to be the merger acquisition cycle that was going to 66 00:03:00,120 --> 00:03:02,560 Speaker 3: happen for all twenty five that got delayed because of tariffs, 67 00:03:02,919 --> 00:03:05,520 Speaker 3: and more importantly and most importantly, maybe is the right 68 00:03:05,560 --> 00:03:07,399 Speaker 3: way to say it. We think we have a high 69 00:03:07,400 --> 00:03:10,120 Speaker 3: conviction the yal curve is going to keep steepening, right. 70 00:03:10,280 --> 00:03:11,880 Speaker 3: I know it's kind of flat in the last couple 71 00:03:11,840 --> 00:03:13,920 Speaker 3: of weeks. But if you think about this, if the 72 00:03:13,960 --> 00:03:18,000 Speaker 3: Fed is going to cut interest rates and you're not 73 00:03:18,040 --> 00:03:21,119 Speaker 3: going to get a recession, right, then those term premiums 74 00:03:21,120 --> 00:03:22,679 Speaker 3: on inflation and growth on the long end of the 75 00:03:22,680 --> 00:03:24,440 Speaker 3: curve have to come up, right, So the Fed's going 76 00:03:24,520 --> 00:03:27,720 Speaker 3: to hold let's say short term rates alongside comes up steepening. 77 00:03:27,840 --> 00:03:28,000 Speaker 1: Right. 78 00:03:28,360 --> 00:03:30,639 Speaker 3: If we're wrong and that doesn't happen, Let's say we're 79 00:03:30,639 --> 00:03:32,840 Speaker 3: on the precipice of a recession or a slower event 80 00:03:32,880 --> 00:03:34,720 Speaker 3: that we don't know, then what has to happen. The 81 00:03:34,720 --> 00:03:37,000 Speaker 3: Fed has to cut interest rates more than what's projected 82 00:03:37,040 --> 00:03:38,480 Speaker 3: by the market right now, drives the. 83 00:03:38,480 --> 00:03:40,280 Speaker 1: Short end down steepening, right. 84 00:03:40,520 --> 00:03:43,360 Speaker 3: So in both cases, you know, when you wargame this out, 85 00:03:43,520 --> 00:03:45,240 Speaker 3: I don't see a way that you don't end up 86 00:03:45,240 --> 00:03:47,840 Speaker 3: with a steeper curve. Steeper curve favors financials. 87 00:03:48,080 --> 00:03:50,200 Speaker 5: I'm looking right now on the heels of what John 88 00:03:50,280 --> 00:03:53,120 Speaker 5: is just talking about, Bank of America, Wells Fargo, JP, Morgan, 89 00:03:53,200 --> 00:03:56,640 Speaker 5: the Shire's futures all got a pop on the heels 90 00:03:56,760 --> 00:04:00,240 Speaker 5: of the latest note of deregulation that we're seeing. I'm 91 00:04:00,280 --> 00:04:02,800 Speaker 5: just wondering whether this is a read through to the 92 00:04:02,840 --> 00:04:06,520 Speaker 5: broader economy or whether this is a financial specific sector. 93 00:04:06,800 --> 00:04:08,280 Speaker 6: I mean, this sort of the initial read. 94 00:04:08,160 --> 00:04:11,760 Speaker 5: On earnings has been incredibly positive on the backs of financials, 95 00:04:11,960 --> 00:04:15,440 Speaker 5: but financials haven't been as tied to the broader consumer 96 00:04:15,480 --> 00:04:18,080 Speaker 5: economy as much as in the past. 97 00:04:18,160 --> 00:04:19,800 Speaker 6: So how do you pair those stories? 98 00:04:20,360 --> 00:04:22,080 Speaker 3: Well, I think you know, when you look at the 99 00:04:22,480 --> 00:04:25,720 Speaker 3: after last week's let's call it credit scare, right when 100 00:04:25,760 --> 00:04:27,880 Speaker 3: the regional banks and what's happening in some of the 101 00:04:27,920 --> 00:04:30,520 Speaker 3: private credit markets and stuff, we just don't see it. 102 00:04:30,680 --> 00:04:34,279 Speaker 3: Right in the loan portfolios, the consumer remains strong, the 103 00:04:34,320 --> 00:04:37,560 Speaker 3: small medium sized businesses remain strong, right, so the lending 104 00:04:37,600 --> 00:04:40,479 Speaker 3: portfolios of these banks are pristine. Then you couple that 105 00:04:40,560 --> 00:04:44,200 Speaker 3: with the investment banking piece kicking in and really driving 106 00:04:44,240 --> 00:04:47,479 Speaker 3: earnings a steep or real curve. Right, all the stars 107 00:04:47,560 --> 00:04:49,279 Speaker 3: kind of line up. Now, when you get all the 108 00:04:49,279 --> 00:04:51,520 Speaker 3: stars line up, the problem is something that could go 109 00:04:51,560 --> 00:04:53,560 Speaker 3: wrong in that equation, but we don't see it. To 110 00:04:53,600 --> 00:04:57,839 Speaker 3: your point on deregulation, though, I would unequickly say, it's 111 00:04:57,880 --> 00:04:59,719 Speaker 3: not simply a financial story. 112 00:04:59,800 --> 00:05:00,000 Speaker 1: Right. 113 00:05:00,640 --> 00:05:02,760 Speaker 3: It spills into the healthcare sector. It spills into the 114 00:05:02,880 --> 00:05:06,120 Speaker 3: energy sector, right, it spills into frankly, the industrial sector 115 00:05:06,160 --> 00:05:12,200 Speaker 3: on the reshoring of a lot of the manufacturing and 116 00:05:13,120 --> 00:05:15,839 Speaker 3: that element. So I think all of that plays in 117 00:05:16,240 --> 00:05:19,360 Speaker 3: and probably drives margin and earnings into twenty twenty five. 118 00:05:19,680 --> 00:05:23,120 Speaker 1: We're actually I was twenty twenty six. Sorry, we're actually 119 00:05:23,200 --> 00:05:24,920 Speaker 1: very bullish heading into next year. 120 00:05:25,240 --> 00:05:26,640 Speaker 6: So when was the shift? 121 00:05:26,800 --> 00:05:28,480 Speaker 5: Can you just walk us through the psychology, because I 122 00:05:28,480 --> 00:05:30,240 Speaker 5: remember talking to you a couple months ago and you 123 00:05:30,279 --> 00:05:32,440 Speaker 5: did not sound this positive, and a lot of people 124 00:05:32,440 --> 00:05:34,480 Speaker 5: seemed a lot more worried. And suddenly everyone who comes 125 00:05:34,520 --> 00:05:36,920 Speaker 5: in the show, no one can kind of find the 126 00:05:36,960 --> 00:05:39,080 Speaker 5: real crack in this veneer. 127 00:05:39,200 --> 00:05:41,080 Speaker 6: Right now, they're trying believe me. 128 00:05:41,880 --> 00:05:44,040 Speaker 5: When did you really start to say, hold on a second, 129 00:05:44,080 --> 00:05:47,080 Speaker 5: I need to upgrade my expectations and be more pro risk. 130 00:05:47,520 --> 00:05:49,400 Speaker 3: I think in the middle of the summer, right, I 131 00:05:49,400 --> 00:05:51,640 Speaker 3: think the summer when we started to see where the 132 00:05:51,640 --> 00:05:54,440 Speaker 3: Fed was taking monetary policy, when we knew the fiscal 133 00:05:54,480 --> 00:05:56,720 Speaker 3: clarity was kicking in. You get these big kind of 134 00:05:56,839 --> 00:06:02,320 Speaker 3: multi year secular trends of the re vitalization of manufacturing 135 00:06:02,520 --> 00:06:05,320 Speaker 3: AI of course all that stuff. Those are things that 136 00:06:05,640 --> 00:06:07,440 Speaker 3: when you get I wrote a piece here not so 137 00:06:07,480 --> 00:06:09,919 Speaker 3: long ago called you know, getting through the noise, getting 138 00:06:09,920 --> 00:06:12,320 Speaker 3: the signal above the noise, right, and you start looking 139 00:06:12,320 --> 00:06:15,320 Speaker 3: at these secular trends that we think have legs for 140 00:06:15,360 --> 00:06:17,520 Speaker 3: maybe the next two to four, three to five years. 141 00:06:17,760 --> 00:06:21,720 Speaker 3: They're powerful, right, and when they all align simultaneously, that 142 00:06:21,760 --> 00:06:24,920 Speaker 3: creates a unique environment that you don't see very often, right, 143 00:06:24,960 --> 00:06:27,920 Speaker 3: where you get manufacturing kicking in, you get technology continuing 144 00:06:27,960 --> 00:06:28,520 Speaker 3: to do well. 145 00:06:28,400 --> 00:06:30,760 Speaker 1: You get monetary and fiscal policy alignment. 146 00:06:30,880 --> 00:06:31,040 Speaker 7: Right. 147 00:06:31,080 --> 00:06:34,320 Speaker 3: I mean all those things can actually drive corporate earnings, 148 00:06:34,360 --> 00:06:37,080 Speaker 3: and you also reduce some level uncertainty. I know, the 149 00:06:37,160 --> 00:06:40,080 Speaker 3: day to day noise around uncertainty is high. You know, 150 00:06:40,080 --> 00:06:43,440 Speaker 3: whether we're going to have you know, a g Trump meeting, 151 00:06:43,520 --> 00:06:45,240 Speaker 3: and you know all those kind of things. But I 152 00:06:45,240 --> 00:06:47,520 Speaker 3: think all of that starts to come down and you 153 00:06:47,560 --> 00:06:49,760 Speaker 3: look through that out in the next two to four years. 154 00:06:50,200 --> 00:06:53,360 Speaker 3: I think America does really well in the next couple 155 00:06:53,360 --> 00:06:53,640 Speaker 3: of years. 156 00:06:53,680 --> 00:06:55,120 Speaker 8: So what more was you next year? Then if you 157 00:06:55,120 --> 00:06:57,559 Speaker 8: feel like you've gotten a lot of clarity in twenty 158 00:06:57,600 --> 00:06:59,440 Speaker 8: twenty five, so. 159 00:07:00,120 --> 00:07:03,040 Speaker 3: Question I would say the three eyes, Right, I think 160 00:07:03,120 --> 00:07:04,760 Speaker 3: that this is what I wake up and kind of 161 00:07:04,800 --> 00:07:07,680 Speaker 3: pay attention to inflation of course, right, which we'll get 162 00:07:07,680 --> 00:07:11,160 Speaker 3: the reading Friday, interest rates, what happens because you know, 163 00:07:11,200 --> 00:07:13,280 Speaker 3: if interest rates come down too far, you have to 164 00:07:13,280 --> 00:07:15,880 Speaker 3: start asking the question why are they coming down so far? Right, 165 00:07:15,880 --> 00:07:18,560 Speaker 3: there's a point where lower rates is good and then 166 00:07:18,600 --> 00:07:20,320 Speaker 3: all of a sudden, lower rates start to become bad. 167 00:07:20,640 --> 00:07:22,520 Speaker 3: And the third one that doesn't maybe get as much 168 00:07:22,560 --> 00:07:25,040 Speaker 3: better time as illiquidity. Right, I mean, if you look 169 00:07:25,040 --> 00:07:28,640 Speaker 3: at what's happening in the repo market, you're seeing reserves 170 00:07:28,720 --> 00:07:30,760 Speaker 3: drained down in the banking system, Which is why I 171 00:07:30,760 --> 00:07:33,320 Speaker 3: think here in October, power will come to the table 172 00:07:33,360 --> 00:07:35,400 Speaker 3: and say we're going to start setting the stage to 173 00:07:35,480 --> 00:07:39,160 Speaker 3: ending QT. QT is worth by our math, another twenty 174 00:07:39,160 --> 00:07:41,760 Speaker 3: five basis point interest rate cut. So if we get 175 00:07:41,920 --> 00:07:45,040 Speaker 3: twenty five in actual FED funds in October, you get 176 00:07:45,120 --> 00:07:47,680 Speaker 3: QT happening there's another twenty five. You get twenty five 177 00:07:47,680 --> 00:07:49,920 Speaker 3: in December. Right, All that starts to add up. 178 00:07:50,080 --> 00:07:52,120 Speaker 8: When you say interest rates going saloon, you have to 179 00:07:52,200 --> 00:07:54,120 Speaker 8: question why it's because the economy is so bad. Do 180 00:07:54,120 --> 00:07:56,000 Speaker 8: you think they're being job owned by the White House. 181 00:07:57,080 --> 00:07:59,119 Speaker 1: Well, the reason might be the latter. 182 00:07:59,400 --> 00:08:02,080 Speaker 3: But I think when you start getting interest rates lower, 183 00:08:02,280 --> 00:08:04,680 Speaker 3: you have to start saying, what's going on there? Is 184 00:08:04,720 --> 00:08:06,400 Speaker 3: it a true flight to quality or is it just 185 00:08:06,440 --> 00:08:07,680 Speaker 3: the whole curve shifting down? 186 00:08:07,880 --> 00:08:08,080 Speaker 1: Right? 187 00:08:08,720 --> 00:08:11,800 Speaker 3: Once you get that flight to quality element and narrative 188 00:08:11,800 --> 00:08:13,880 Speaker 3: that enters the discussion, that's where you have to kind 189 00:08:13,880 --> 00:08:16,000 Speaker 3: of pay attention. We're not there yet, we don't think 190 00:08:16,040 --> 00:08:17,840 Speaker 3: we're going to be there, but that's what you would 191 00:08:17,880 --> 00:08:18,440 Speaker 3: want to watch for. 192 00:08:19,480 --> 00:08:20,120 Speaker 4: Stay with us. 193 00:08:20,400 --> 00:08:33,080 Speaker 2: More Bloomberg surveillance coming up After this, trade tensions between 194 00:08:33,120 --> 00:08:36,000 Speaker 2: the United States and China remaining high. President Trump saying 195 00:08:36,040 --> 00:08:38,280 Speaker 2: he expects to reach a good trade deal with China, 196 00:08:38,360 --> 00:08:41,199 Speaker 2: but his meeting with President chiajing Ping in South Korea 197 00:08:41,240 --> 00:08:44,520 Speaker 2: next week may not happen. At Mills of Raymond, James 198 00:08:44,640 --> 00:08:46,920 Speaker 2: writes the following, the big question is how much beyond 199 00:08:46,920 --> 00:08:49,880 Speaker 2: the status quo can get negotiated and it's previously banned 200 00:08:49,960 --> 00:08:52,280 Speaker 2: US technology about to get the green light for the 201 00:08:52,360 --> 00:08:54,880 Speaker 2: Chinese market at join just now for more. And I 202 00:08:54,880 --> 00:08:57,800 Speaker 2: think you're right on the money. What is and isn't 203 00:08:58,000 --> 00:09:00,720 Speaker 2: on the table in these negotiations. What isn't going to 204 00:09:00,720 --> 00:09:02,240 Speaker 2: be pound of any potential deal? 205 00:09:03,120 --> 00:09:05,080 Speaker 7: Yeah, John, I think everything is on the table. I 206 00:09:05,080 --> 00:09:07,199 Speaker 7: think what we're seeing is that if China went into 207 00:09:07,280 --> 00:09:09,600 Speaker 7: this with the status quo, China would come out with 208 00:09:09,679 --> 00:09:12,760 Speaker 7: the status quo. So you're seeing a playbook we've seen 209 00:09:12,800 --> 00:09:16,280 Speaker 7: time and time again. And Trump is moving the goalpost, 210 00:09:16,480 --> 00:09:17,560 Speaker 7: ramping up the pressure. 211 00:09:17,920 --> 00:09:19,040 Speaker 4: She is doing the same. 212 00:09:19,480 --> 00:09:22,080 Speaker 7: She in China has come to Trump two point zero 213 00:09:22,240 --> 00:09:25,360 Speaker 7: much more prepared. They are sending a message We're willing 214 00:09:25,440 --> 00:09:28,800 Speaker 7: to do things that could be mutually a short economic destruction. 215 00:09:29,200 --> 00:09:31,480 Speaker 7: So come to the table and talk. I do think 216 00:09:31,520 --> 00:09:34,680 Speaker 7: the number one thing that she cares about in these 217 00:09:34,720 --> 00:09:38,640 Speaker 7: conversations are these tech controls, the semiconductors and semicap equipment 218 00:09:38,679 --> 00:09:42,200 Speaker 7: that has been banned going into China. The US policy 219 00:09:42,240 --> 00:09:44,880 Speaker 7: is shifting here, John, and it is now the default 220 00:09:45,440 --> 00:09:48,640 Speaker 7: kind of desire of the US government to have the 221 00:09:48,840 --> 00:09:52,760 Speaker 7: US technology be the default full stack globally. And they 222 00:09:52,760 --> 00:09:55,199 Speaker 7: don't think they can kind of shut out the Chinese market. 223 00:09:55,360 --> 00:09:57,640 Speaker 7: So there's more room for negotiation here than I think 224 00:09:57,679 --> 00:09:58,880 Speaker 7: most investors realize. 225 00:09:58,920 --> 00:10:02,240 Speaker 8: And is China basic taking this hardline strategy. And there's 226 00:10:02,240 --> 00:10:05,040 Speaker 8: been some reporting about this because they think Trump will fold. 227 00:10:06,240 --> 00:10:08,960 Speaker 7: I think it's they think Trump will fold, or they 228 00:10:09,000 --> 00:10:11,480 Speaker 7: will think that Trump will give them more if they 229 00:10:11,480 --> 00:10:15,360 Speaker 7: push for more emory. You go back to earlier this year, 230 00:10:15,679 --> 00:10:18,839 Speaker 7: it was their restrictions on rare earths that got Trump 231 00:10:18,920 --> 00:10:21,440 Speaker 7: to walk back those one hundred and forty five percent terrorfs. 232 00:10:21,960 --> 00:10:25,640 Speaker 7: We were dangerously close to having real negative impact on 233 00:10:25,679 --> 00:10:28,240 Speaker 7: our industrial production here in the United States. And while 234 00:10:28,280 --> 00:10:31,560 Speaker 7: we're signing these different critical mineral deals rare earth deals, 235 00:10:31,800 --> 00:10:34,400 Speaker 7: it's going to be five plus years before we're able 236 00:10:34,440 --> 00:10:37,320 Speaker 7: to get most of these. So China does have some 237 00:10:37,440 --> 00:10:40,160 Speaker 7: cards that they can play, and as they play them, 238 00:10:40,480 --> 00:10:43,600 Speaker 7: Trump has been willing to negotiate more. They view Trump 239 00:10:43,679 --> 00:10:46,479 Speaker 7: as a transactor, and so to get him to transact, 240 00:10:46,600 --> 00:10:48,200 Speaker 7: you got to push him in that right direction. 241 00:10:48,480 --> 00:10:51,600 Speaker 8: Do you find it suspect that China hasn't confirmed any meeting. 242 00:10:53,160 --> 00:10:55,840 Speaker 7: It's been the way things have happened all year long. 243 00:10:55,960 --> 00:10:59,240 Speaker 7: What we have seen is the US delegation comes out 244 00:10:59,280 --> 00:11:01,839 Speaker 7: and they give a read out, and then China confirms nothing. 245 00:11:02,360 --> 00:11:04,560 Speaker 7: And then what we've seen is that everything that the 246 00:11:04,720 --> 00:11:07,200 Speaker 7: US side has said has actually followed through. 247 00:11:08,000 --> 00:11:09,600 Speaker 4: I do think this meeting happens. 248 00:11:09,880 --> 00:11:12,120 Speaker 7: I do think part of this is that she does 249 00:11:12,160 --> 00:11:14,760 Speaker 7: not want to appear to be weak. Some of the 250 00:11:14,760 --> 00:11:17,600 Speaker 7: calculus that China has had is that what Trump wanted 251 00:11:17,640 --> 00:11:19,840 Speaker 7: the most was to have this meeting, so they gave 252 00:11:19,920 --> 00:11:22,600 Speaker 7: him a meeting. I'm also okay with the fact that 253 00:11:22,640 --> 00:11:24,760 Speaker 7: we've already set up a home and away after this. 254 00:11:25,120 --> 00:11:27,840 Speaker 7: Trump is supposed to go to Beijing, she is supposed 255 00:11:27,840 --> 00:11:30,360 Speaker 7: to come to the United States, so that takes away 256 00:11:30,400 --> 00:11:33,120 Speaker 7: a little bit of the pressure here. That hasn't been 257 00:11:33,120 --> 00:11:36,559 Speaker 7: confirmed necessarily by the Chinese side either, but we can 258 00:11:36,600 --> 00:11:40,600 Speaker 7: get some flourish, big announcements coming out, but really working 259 00:11:40,640 --> 00:11:43,880 Speaker 7: on these details to be determined later on, which has 260 00:11:43,880 --> 00:11:46,360 Speaker 7: happened on every other trade deal so far this year. 261 00:11:46,520 --> 00:11:48,640 Speaker 5: And it seems like they're both buying time, both the 262 00:11:48,720 --> 00:11:51,960 Speaker 5: Chinese and the United States, and trying to rearrange some 263 00:11:52,040 --> 00:11:54,160 Speaker 5: of the supply chains the technological backdrop. 264 00:11:54,200 --> 00:11:54,800 Speaker 6: In the meantime. 265 00:11:54,800 --> 00:11:56,800 Speaker 5: I just wonder what the negotiating chips are going to 266 00:11:56,840 --> 00:11:59,360 Speaker 5: be to buy time. How much Taiwan is going to 267 00:11:59,360 --> 00:12:01,960 Speaker 5: come into play, how much the Russia Ukraine war is 268 00:12:01,960 --> 00:12:02,280 Speaker 5: going to. 269 00:12:02,200 --> 00:12:02,800 Speaker 6: Come into play. 270 00:12:02,840 --> 00:12:04,640 Speaker 5: Do you have a sense of how much that's on 271 00:12:04,720 --> 00:12:06,439 Speaker 5: the table if there is some sort of meeting. 272 00:12:07,360 --> 00:12:09,920 Speaker 7: Yeah, So Trump has said that he expects there to 273 00:12:09,920 --> 00:12:13,160 Speaker 7: be some level of conversation about Taiwan. I do think 274 00:12:13,240 --> 00:12:15,600 Speaker 7: that this is obviously the big focus of a lot 275 00:12:15,600 --> 00:12:17,559 Speaker 7: of investors, and I get a ton of questions about. 276 00:12:17,400 --> 00:12:18,400 Speaker 4: That at Raymond James. 277 00:12:19,320 --> 00:12:21,920 Speaker 7: Trump has said that they don't have a plan to invade. 278 00:12:21,960 --> 00:12:24,120 Speaker 7: I think trying to bring down a little bit of 279 00:12:24,160 --> 00:12:27,520 Speaker 7: those tensions. The last meeting between a US president and 280 00:12:27,559 --> 00:12:31,880 Speaker 7: she occurred at the last APEC summit, and she supportedly 281 00:12:32,120 --> 00:12:34,440 Speaker 7: said that there was no kind of need for a 282 00:12:34,440 --> 00:12:38,320 Speaker 7: military intervention as long as a peaceful reunification occurs. I 283 00:12:38,360 --> 00:12:40,040 Speaker 7: do think that a lot of folks look at that 284 00:12:40,080 --> 00:12:43,280 Speaker 7: Trump as a transactor to say, is Taiwan more on 285 00:12:43,320 --> 00:12:47,320 Speaker 7: the table than we could normally see? Beyond that, Trump 286 00:12:47,400 --> 00:12:52,040 Speaker 7: has also been very concerned about the agricultural purchases of China. 287 00:12:52,080 --> 00:12:54,240 Speaker 4: So can Chinda make some kind. 288 00:12:54,160 --> 00:12:57,480 Speaker 7: Of agricultural purchases make that commitment for a trillion dollars 289 00:12:57,480 --> 00:13:00,000 Speaker 7: of investment in the United States, and therefore we can 290 00:13:00,160 --> 00:13:03,600 Speaker 7: send them those semiconductors and that semicap equipment, especially if 291 00:13:03,600 --> 00:13:06,160 Speaker 7: we're moving to this idea that US technology needs to 292 00:13:06,160 --> 00:13:07,480 Speaker 7: be the default technology. 293 00:13:07,960 --> 00:13:10,679 Speaker 4: Those are the things that I'm watching here in these negotiations. Lisa, 294 00:13:11,480 --> 00:13:12,120 Speaker 4: stay with us. 295 00:13:12,440 --> 00:13:25,160 Speaker 2: More Bloomberg surveillance coming up after this first turn back 296 00:13:25,160 --> 00:13:28,000 Speaker 2: to markets, what a move and gold extending losses after 297 00:13:28,000 --> 00:13:30,280 Speaker 2: its steepest sell off in over a decade. The precious 298 00:13:30,280 --> 00:13:34,120 Speaker 2: metals record run before yesterday's sparking concern at a US 299 00:13:34,120 --> 00:13:37,680 Speaker 2: debasement trade. Jane Furley of Rabbabank debunking that theory writing 300 00:13:37,679 --> 00:13:40,040 Speaker 2: the basement would imply and move away from the dollar 301 00:13:40,320 --> 00:13:43,360 Speaker 2: and US treasuries into assets such as gold, and there 302 00:13:43,400 --> 00:13:46,440 Speaker 2: is very little evidence to back up these flows. Jane 303 00:13:46,520 --> 00:13:47,360 Speaker 2: joins us now for more. 304 00:13:47,480 --> 00:13:48,480 Speaker 4: Jane, welcome to the program. 305 00:13:48,520 --> 00:13:51,040 Speaker 2: It's been a really curious year because the narrative around 306 00:13:51,120 --> 00:13:54,400 Speaker 2: foreign exchange was born in one quarter, and it was 307 00:13:54,440 --> 00:13:56,800 Speaker 2: the first quarter of twenty twenty five, and I find 308 00:13:56,840 --> 00:13:58,640 Speaker 2: it difficult to find evidence that the rest of the 309 00:13:58,720 --> 00:14:01,200 Speaker 2: year really drives with that narrative at all. We had 310 00:14:01,240 --> 00:14:05,199 Speaker 2: a big blast of dollar weakness. Jane, what's followed, Well, 311 00:14:05,240 --> 00:14:05,920 Speaker 2: you're quite right. 312 00:14:05,960 --> 00:14:07,800 Speaker 9: I mean most of that dollar weakness has really done 313 00:14:07,840 --> 00:14:10,360 Speaker 9: in the first five months of the year and ever since. 314 00:14:10,400 --> 00:14:13,439 Speaker 9: We'll actually over the last month or two, I keep 315 00:14:13,520 --> 00:14:15,760 Speaker 9: on finding myself saying, well, no, actually that the dollar 316 00:14:15,960 --> 00:14:17,960 Speaker 9: isn't we it's been one of the better performers in 317 00:14:18,200 --> 00:14:20,600 Speaker 9: I think it's a better performance right now in the 318 00:14:20,640 --> 00:14:22,680 Speaker 9: months today and perhaps over the one month. 319 00:14:22,520 --> 00:14:22,960 Speaker 4: For you too. 320 00:14:23,040 --> 00:14:25,600 Speaker 9: So actually, essentially, if we look at the dollar index, 321 00:14:25,600 --> 00:14:28,080 Speaker 9: for instance, that's sort of gone nowhere since at the 322 00:14:28,080 --> 00:14:30,840 Speaker 9: beginning of July. And what are we looking at in 323 00:14:30,880 --> 00:14:33,640 Speaker 9: euro dollar? You know, a currency at the dollar that 324 00:14:33,800 --> 00:14:36,040 Speaker 9: is certainly well off. It's those versus the euro. So 325 00:14:36,840 --> 00:14:39,400 Speaker 9: we we aren't looking at a week dollar as as 326 00:14:39,440 --> 00:14:42,840 Speaker 9: we as we stand. But yes, the theme really was 327 00:14:42,840 --> 00:14:44,840 Speaker 9: set at the start of the year by that huge 328 00:14:44,880 --> 00:14:45,920 Speaker 9: bat of dollar weekness. 329 00:14:46,040 --> 00:14:48,640 Speaker 2: So Jane, let's talk about reality and the last few weeks, 330 00:14:48,640 --> 00:14:50,800 Speaker 2: and then we can get to the peculiar move yesterday, 331 00:14:50,840 --> 00:14:53,600 Speaker 2: the wild swing we saw in gold. Well recently we 332 00:14:53,680 --> 00:14:56,680 Speaker 2: have seen gold rip high started to go vertical the 333 00:14:56,680 --> 00:14:59,160 Speaker 2: middle of August and never looked back. And alongside that 334 00:14:59,200 --> 00:15:01,960 Speaker 2: we did have dollar stri and participate as well. So Jane, 335 00:15:01,960 --> 00:15:04,800 Speaker 2: what explains those moves? What's the relationship if there is 336 00:15:04,840 --> 00:15:07,040 Speaker 2: one between the two, you. 337 00:15:07,000 --> 00:15:08,720 Speaker 9: Know what I mean? Normally, of course, when you get 338 00:15:08,720 --> 00:15:11,240 Speaker 9: a stronger dollar, then a profit taking sets in. And 339 00:15:11,280 --> 00:15:13,200 Speaker 9: I think with respect to gold, yeah, there are good 340 00:15:13,240 --> 00:15:16,320 Speaker 9: reasons I think for many portfolios to think about diversification 341 00:15:17,040 --> 00:15:19,440 Speaker 9: this year, and I think that's still a valid theme 342 00:15:19,480 --> 00:15:21,920 Speaker 9: and I think gold, you know, can be held along 343 00:15:22,000 --> 00:15:24,360 Speaker 9: those lines. But you know, I do think there was 344 00:15:24,400 --> 00:15:27,360 Speaker 9: lots of fomo you a phrase that I've heard, you know, 345 00:15:27,400 --> 00:15:30,160 Speaker 9: in your channel quite a lot over the last few weeks, 346 00:15:30,160 --> 00:15:32,280 Speaker 9: and certainly you know, at the start of this week 347 00:15:32,320 --> 00:15:34,800 Speaker 9: the Australian press work we're showing pictures of the retail 348 00:15:34,880 --> 00:15:37,760 Speaker 9: investors queueing around the block to get their hands on 349 00:15:37,840 --> 00:15:40,560 Speaker 9: some gold. And I think for many institutional investors, you know, 350 00:15:40,600 --> 00:15:43,920 Speaker 9: that was perhaps the last stort, so profit taking pushed 351 00:15:43,920 --> 00:15:47,240 Speaker 9: in as well with the stronger dollar. I think as 352 00:15:47,240 --> 00:15:50,120 Speaker 9: we go into the next year, there's probably still a theme, 353 00:15:50,200 --> 00:15:53,600 Speaker 9: a reason to diversify her portfolios, and maybe gold again 354 00:15:53,720 --> 00:15:56,040 Speaker 9: is part of that. But I think it is going 355 00:15:56,080 --> 00:16:00,320 Speaker 9: to struggle quite clearly to match those very recent high 356 00:16:00,600 --> 00:16:01,960 Speaker 9: in the very near future. 357 00:16:01,840 --> 00:16:05,200 Speaker 5: Jane, is the concept of debasement just overly binary. And 358 00:16:05,240 --> 00:16:08,520 Speaker 5: there's something else afoot that is maybe along the same 359 00:16:08,640 --> 00:16:11,160 Speaker 5: kind of theme but isn't quite as strong, which is 360 00:16:11,480 --> 00:16:14,080 Speaker 5: more people are considering that the dollar isn't the only 361 00:16:14,120 --> 00:16:14,640 Speaker 5: thing in town. 362 00:16:14,680 --> 00:16:16,120 Speaker 6: There is a discussion. 363 00:16:16,000 --> 00:16:19,440 Speaker 5: Yesterday about how Ethiopia is trying to transfer loans that 364 00:16:19,520 --> 00:16:22,200 Speaker 5: had been dollars denominated into U and I mean, honestly, 365 00:16:22,240 --> 00:16:24,560 Speaker 5: this is not necessarily something that's going to cause alarm 366 00:16:24,560 --> 00:16:27,040 Speaker 5: bells everywhere, but there is the sense that people are 367 00:16:27,120 --> 00:16:30,400 Speaker 5: looking for alternatives. At what point is that a realistic 368 00:16:30,520 --> 00:16:33,800 Speaker 5: narrative to really play into your calculations. 369 00:16:34,520 --> 00:16:37,080 Speaker 9: You know, I think we'd probably could be having the 370 00:16:37,120 --> 00:16:40,080 Speaker 9: same sort of conversation in twenty or thirty years time 371 00:16:40,120 --> 00:16:43,520 Speaker 9: that there is a theme of you know, reduced dollars 372 00:16:43,520 --> 00:16:45,760 Speaker 9: for instance in global reserves, and you know, we can 373 00:16:45,760 --> 00:16:48,040 Speaker 9: trace that being back, you know, to the start of 374 00:16:48,080 --> 00:16:50,440 Speaker 9: this century if we like. There is a theme also, 375 00:16:50,840 --> 00:16:53,920 Speaker 9: you know, in China they want to internationalize their currency 376 00:16:54,120 --> 00:16:57,200 Speaker 9: a lot more the Euro. We've had several times from 377 00:16:57,440 --> 00:17:01,080 Speaker 9: Christine regard from the ECB sins this year that she 378 00:17:01,240 --> 00:17:03,480 Speaker 9: wants to have a bigger role for the euro on 379 00:17:03,520 --> 00:17:06,120 Speaker 9: an international basis. So we can assume maybe the eural 380 00:17:06,119 --> 00:17:08,480 Speaker 9: will makes some progress, or remember will continue to make 381 00:17:08,680 --> 00:17:10,800 Speaker 9: that the progress that it's been making. But the dollar 382 00:17:11,000 --> 00:17:15,640 Speaker 9: has a massive advantage. It's already a huge transactional currency 383 00:17:15,720 --> 00:17:20,040 Speaker 9: around the globe, across Africa, Latin America, across Asia, and 384 00:17:20,080 --> 00:17:22,480 Speaker 9: the US Treasury will be making attempts, you know, to 385 00:17:22,560 --> 00:17:25,920 Speaker 9: protect that, not the least with you know, with stable coin. 386 00:17:26,000 --> 00:17:28,480 Speaker 9: So it is going to be something that the ustroasure 387 00:17:28,480 --> 00:17:30,760 Speaker 9: will fight back on. But yeah, there might still be 388 00:17:30,800 --> 00:17:37,600 Speaker 9: incremental benefits, perhaps an international loalization for remomb beats or Europe. 389 00:17:37,600 --> 00:17:41,199 Speaker 9: But I still think that that's that those games are 390 00:17:41,200 --> 00:17:42,399 Speaker 9: going to be really quite modest. 391 00:17:42,680 --> 00:17:44,880 Speaker 6: Jane, how many questions do you still get about bitcoin? 392 00:17:46,960 --> 00:17:49,639 Speaker 9: Not that many more about stable coin. I think this 393 00:17:49,760 --> 00:17:52,679 Speaker 9: year less about bitcoin. I mean bitcoin, you know, certainly 394 00:17:52,840 --> 00:17:55,159 Speaker 9: very much in the news, but I think most people 395 00:17:55,359 --> 00:17:56,960 Speaker 9: have come to terms with this. You know, this is 396 00:17:56,960 --> 00:17:58,960 Speaker 9: something that you know, it's an asset. Perhaps it's part 397 00:17:58,960 --> 00:18:01,919 Speaker 9: of that diversifications story again, but it used to be 398 00:18:02,359 --> 00:18:06,080 Speaker 9: perhaps a different type of comprehension about where bitcoin was, 399 00:18:06,119 --> 00:18:09,560 Speaker 9: and perhaps in misunderstanding that it was a currency in 400 00:18:09,600 --> 00:18:11,320 Speaker 9: the way you know that the yen or the euro, 401 00:18:11,400 --> 00:18:14,320 Speaker 9: that the dollar was. And I think that misunderstanding really 402 00:18:14,359 --> 00:18:16,040 Speaker 9: now has more or less ebbed away. 403 00:18:16,760 --> 00:18:17,000 Speaker 7: Jane. 404 00:18:17,000 --> 00:18:20,160 Speaker 8: When it comes to gold, if there's too much momentum 405 00:18:20,200 --> 00:18:22,199 Speaker 8: and that's starting to wane, what do you make of 406 00:18:22,240 --> 00:18:25,640 Speaker 8: everyone talking about five thousand dollars an ounce next year? 407 00:18:28,119 --> 00:18:30,080 Speaker 9: You know, I think if we were to look at 408 00:18:30,080 --> 00:18:33,240 Speaker 9: you know, really big movements, we'd have to be looking at, 409 00:18:33,800 --> 00:18:37,280 Speaker 9: you know, significant movements in the backdrops for the world economy. 410 00:18:37,320 --> 00:18:39,800 Speaker 9: So maybe you know, we would have to be expecting 411 00:18:40,000 --> 00:18:43,399 Speaker 9: or seen a shock rise in inflation perhaps, or you know, 412 00:18:43,480 --> 00:18:47,120 Speaker 9: maybe more geopolitical tension perhaps, And I think if we 413 00:18:47,119 --> 00:18:50,600 Speaker 9: were looking down those lines and seeing that type of stress, 414 00:18:51,280 --> 00:18:54,440 Speaker 9: then I think that there is perhaps the reason is 415 00:18:54,520 --> 00:18:56,440 Speaker 9: to carry on moving to inter gold, and it's you know, 416 00:18:56,480 --> 00:18:58,879 Speaker 9: because of its intrinsic value, et cetera. But you know, 417 00:18:59,000 --> 00:19:01,960 Speaker 9: we're not looking at huge amounts of inflation anymore. I mean, 418 00:19:02,000 --> 00:19:03,919 Speaker 9: if we go back, you know, to the start of 419 00:19:03,920 --> 00:19:06,800 Speaker 9: the year, people were panicking about the degree of inflation 420 00:19:06,840 --> 00:19:10,360 Speaker 9: that we could see in the US. We're not panicking anymore, 421 00:19:10,400 --> 00:19:12,679 Speaker 9: you know, we're seeing far more moderate types of inflation. Yes, 422 00:19:12,720 --> 00:19:15,040 Speaker 9: we're still focused on you know that there's the potential 423 00:19:15,040 --> 00:19:18,040 Speaker 9: for worsening in the trade front, which could create inflation, 424 00:19:18,320 --> 00:19:20,560 Speaker 9: but there isn't that panic anymore. And assuming that we 425 00:19:20,600 --> 00:19:24,760 Speaker 9: don't get panic either run inflation or the geopolitics, then 426 00:19:25,080 --> 00:19:27,280 Speaker 9: I think these sorts of games are really going to 427 00:19:27,280 --> 00:19:27,680 Speaker 9: calm down. 428 00:19:28,240 --> 00:19:29,800 Speaker 2: Jane wanted to finish on the move of the day 429 00:19:30,080 --> 00:19:33,280 Speaker 2: in foreign exchange is Sterling inflation came in a little 430 00:19:33,280 --> 00:19:36,520 Speaker 2: bit lighter than expected, yielded down across the curve, particularly 431 00:19:36,560 --> 00:19:38,520 Speaker 2: the front end. We're now down by about eleven basis 432 00:19:38,520 --> 00:19:41,399 Speaker 2: points on a two year guilt this morning. Sterling's a 433 00:19:41,400 --> 00:19:44,400 Speaker 2: whole lot weaker for a fourth session one thirty three seventeen. 434 00:19:44,440 --> 00:19:47,040 Speaker 2: Out of the corner of my eye, Jane, what's behind 435 00:19:47,080 --> 00:19:49,040 Speaker 2: the latest move? And do you think the Bank of 436 00:19:49,080 --> 00:19:52,359 Speaker 2: England will embrace this move lower in inflation and ultimately 437 00:19:52,640 --> 00:19:53,679 Speaker 2: deliver more rate cards. 438 00:19:54,800 --> 00:19:56,439 Speaker 9: You know, I think they're still a world count here 439 00:19:56,480 --> 00:19:59,320 Speaker 9: because yes, the inflation data was better than expected, lower 440 00:19:59,320 --> 00:20:01,800 Speaker 9: than expected. Yes, it's still well above where the Bank 441 00:20:01,840 --> 00:20:04,119 Speaker 9: of England wants it to be. But between now and 442 00:20:04,240 --> 00:20:07,520 Speaker 9: the December Bank of England meeting, which is the one 443 00:20:07,560 --> 00:20:09,720 Speaker 9: the market is now focusing on for a possible cut, 444 00:20:09,960 --> 00:20:13,080 Speaker 9: we do have that November twenty sixth budget in the UK, 445 00:20:13,200 --> 00:20:16,600 Speaker 9: and there is speculation that Richurieson may cut the eighty 446 00:20:16,760 --> 00:20:19,680 Speaker 9: on energy bills in order to bring inflation down further, 447 00:20:19,720 --> 00:20:22,240 Speaker 9: and that maybe could give the Bank of England the 448 00:20:22,280 --> 00:20:25,160 Speaker 9: sort of confidence that they need to cut infistrates again. 449 00:20:25,280 --> 00:20:29,560 Speaker 2: See stay with us more Bloomberg surveillance coming up after this. 450 00:20:38,720 --> 00:20:42,600 Speaker 2: President Trump reiterating his pledge to revive American manufacturing, the 451 00:20:42,680 --> 00:20:46,480 Speaker 2: Commonwealth of Virginia securing thirteen billion dollars in new domestic 452 00:20:46,480 --> 00:20:50,000 Speaker 2: investments between July and October of this year alone. I'm 453 00:20:50,080 --> 00:20:51,760 Speaker 2: very pleased to say that joining the program now is 454 00:20:51,800 --> 00:20:54,399 Speaker 2: the Republican Governor Glenn Youngkin of Virginia. He joins us 455 00:20:54,440 --> 00:20:56,720 Speaker 2: now for more. Governor, welcome to the program. So always 456 00:20:56,720 --> 00:20:57,600 Speaker 2: good to catch up with you. 457 00:20:59,040 --> 00:21:01,480 Speaker 10: Yeah, good morning, John, And it has been a very 458 00:21:01,600 --> 00:21:04,359 Speaker 10: very busy few months for us as we have welcomed 459 00:21:04,720 --> 00:21:08,399 Speaker 10: a lot of manufacturing into Virginia, particularly from the pharmaceutical sector, 460 00:21:08,800 --> 00:21:11,320 Speaker 10: and I think it demonstrates that we're leading not just 461 00:21:11,400 --> 00:21:14,880 Speaker 10: in Virginia but in America and resoring this critical supply chain. 462 00:21:14,960 --> 00:21:16,800 Speaker 2: So, Governor of the serenadly a consensus, we need to 463 00:21:16,840 --> 00:21:19,920 Speaker 2: do more of that, produce more manufacture more domestically here 464 00:21:20,200 --> 00:21:22,040 Speaker 2: in the United States. Can you share with us what 465 00:21:22,080 --> 00:21:24,960 Speaker 2: you've done in Virginia to attract more of that investment 466 00:21:25,000 --> 00:21:27,800 Speaker 2: from overseas and bring it back home. And perhaps she's 467 00:21:27,880 --> 00:21:29,439 Speaker 2: murk as a good example of that. 468 00:21:31,240 --> 00:21:35,680 Speaker 10: Yeah, we identified three years ago that pharmaceutical manufacturing had 469 00:21:35,720 --> 00:21:37,800 Speaker 10: to come back to the United States. It's a national 470 00:21:37,800 --> 00:21:41,520 Speaker 10: security imperative where all of the active pharmaceutical ingredients were 471 00:21:41,560 --> 00:21:44,760 Speaker 10: being manufactured overseas and a lot of them in China, 472 00:21:44,840 --> 00:21:45,480 Speaker 10: and we needed to. 473 00:21:45,400 --> 00:21:45,920 Speaker 11: Bring it back. 474 00:21:45,960 --> 00:21:48,679 Speaker 10: But on top of that, we saw big investments coming 475 00:21:48,760 --> 00:21:52,760 Speaker 10: from the pharmaceutical manufacturers, and so we prepared a great 476 00:21:52,800 --> 00:21:57,400 Speaker 10: workforce development program. We lessened all of our regulations. We've 477 00:21:57,400 --> 00:22:00,399 Speaker 10: cut almost thirty percent of our regulations in Virginia. And 478 00:22:00,440 --> 00:22:03,119 Speaker 10: then finally we made sure that we had sites ready 479 00:22:03,119 --> 00:22:05,239 Speaker 10: for them. We're a business friendly state, ready to go, 480 00:22:05,280 --> 00:22:07,840 Speaker 10: and then we went and recruited them. And you combine 481 00:22:07,880 --> 00:22:11,520 Speaker 10: that with President Trump's strong push against the pharmaceutical industry 482 00:22:11,560 --> 00:22:15,399 Speaker 10: to bring manufacturing to America. And we've just seen a 483 00:22:15,680 --> 00:22:19,360 Speaker 10: huge drive of reshoring and investment, and yes, it's been 484 00:22:19,400 --> 00:22:22,200 Speaker 10: thirteen billion dollars in work. Was our latest big announcement 485 00:22:22,240 --> 00:22:25,720 Speaker 10: this week with a three billion dollar facility to set 486 00:22:25,800 --> 00:22:30,359 Speaker 10: up their active Pharmaceutical and Small Molecule Manufacturing Center of 487 00:22:30,400 --> 00:22:34,080 Speaker 10: Excellence here in Virginia. They're going to hire five hundred 488 00:22:34,119 --> 00:22:37,680 Speaker 10: people direct and there's going to be thousands of indirect 489 00:22:37,760 --> 00:22:40,639 Speaker 10: jobs plus construction jobs. And it's just another big step 490 00:22:40,920 --> 00:22:43,639 Speaker 10: of bringing manufacturing home. I like to say made in 491 00:22:43,640 --> 00:22:45,320 Speaker 10: America means made in Virginia. 492 00:22:45,400 --> 00:22:45,760 Speaker 6: Governor. 493 00:22:45,800 --> 00:22:48,600 Speaker 8: We've all seen a lot of tech companies invest in Virginia. 494 00:22:48,640 --> 00:22:51,760 Speaker 8: There's a lot of data centers in Northern Virginia. We've 495 00:22:51,800 --> 00:22:54,760 Speaker 8: also seen, though, the cost of electricity prices go up. 496 00:22:54,840 --> 00:22:56,800 Speaker 6: How are you balancing the two? 497 00:22:58,880 --> 00:23:01,320 Speaker 10: Well, we first start with it's an imperative to have 498 00:23:01,440 --> 00:23:05,320 Speaker 10: an all of the above, all American energy plan, and 499 00:23:05,359 --> 00:23:08,359 Speaker 10: that means that, yeah, we have to embrace natural gas 500 00:23:08,480 --> 00:23:12,439 Speaker 10: and nuclear and yes, of course the renewables that we 501 00:23:12,520 --> 00:23:14,600 Speaker 10: already have, but we've got to build a. 502 00:23:14,560 --> 00:23:16,640 Speaker 11: Lot more power on top of that. 503 00:23:16,840 --> 00:23:19,720 Speaker 10: Because Virginia is the data center capital of the world, 504 00:23:19,800 --> 00:23:23,199 Speaker 10: and we're seeing investment all over the state. Now we 505 00:23:23,320 --> 00:23:27,000 Speaker 10: also are driving bring your own power initiatives and so 506 00:23:27,119 --> 00:23:31,960 Speaker 10: power goes behind the meter. That actually keeps rate payers whole, 507 00:23:32,080 --> 00:23:35,040 Speaker 10: so they don't get charged with a disproportionate amount of 508 00:23:35,080 --> 00:23:38,560 Speaker 10: the cost of the infrastructure build necessary to support the 509 00:23:38,640 --> 00:23:42,320 Speaker 10: data center industry. And again, this is a national security 510 00:23:42,359 --> 00:23:46,119 Speaker 10: imperative that we're so pleased as happening in Virginia. You know, 511 00:23:46,200 --> 00:23:48,639 Speaker 10: since I became governor, we've had one hundred and forty 512 00:23:48,800 --> 00:23:53,439 Speaker 10: billion dollars of commitments from businesses to expand here or 513 00:23:53,520 --> 00:23:57,280 Speaker 10: come here. And that's manufacturing and distribution and research and development. 514 00:23:57,640 --> 00:23:59,640 Speaker 10: And I think it just goes to show that when 515 00:23:59,680 --> 00:24:02,520 Speaker 10: you care create a business friendly environment, where a right 516 00:24:02,560 --> 00:24:06,000 Speaker 10: to work state we have deregulated, we have made sure 517 00:24:06,000 --> 00:24:08,760 Speaker 10: we have the best workforce in the country, businesses will 518 00:24:08,760 --> 00:24:12,959 Speaker 10: come and invest, and that creates opportunity for not just Virginians, 519 00:24:13,240 --> 00:24:16,160 Speaker 10: but I think to supply in all of these critical 520 00:24:16,240 --> 00:24:20,359 Speaker 10: critical needs that once we're manufactured overseas and they're all 521 00:24:20,400 --> 00:24:20,880 Speaker 10: coming home. 522 00:24:21,119 --> 00:24:24,119 Speaker 8: You talk about an all of energy approach. The Trump 523 00:24:24,119 --> 00:24:28,520 Speaker 8: administration has canceled federal funding for things like offshore wind 524 00:24:28,520 --> 00:24:31,520 Speaker 8: and some renewable projects. Has that become a problem for 525 00:24:31,640 --> 00:24:34,720 Speaker 8: you as you are dealing with higher electricity prices. 526 00:24:36,080 --> 00:24:38,840 Speaker 11: Well, it hasn't. It hasn't for us in Virginia. 527 00:24:39,720 --> 00:24:43,880 Speaker 10: We of course have been really pushing to build new 528 00:24:43,960 --> 00:24:47,280 Speaker 10: natural gas plants and we hope to lead the nation 529 00:24:47,400 --> 00:24:50,080 Speaker 10: and the development of small modular reactors, and we do 530 00:24:50,160 --> 00:24:54,560 Speaker 10: have wind and solar projects underway. The reality is the 531 00:24:54,600 --> 00:25:00,760 Speaker 10: previous Democrat administration in Virginia so underestimated the growth aspects 532 00:25:00,880 --> 00:25:04,879 Speaker 10: of Virginia that we're behind, and that's why we're massively 533 00:25:04,920 --> 00:25:07,719 Speaker 10: building in order to catch back up on top of that. 534 00:25:07,800 --> 00:25:10,120 Speaker 10: I do believe it's one of the great challenges for 535 00:25:10,160 --> 00:25:13,760 Speaker 10: our nation, and that's why President Trump's initiative for energy 536 00:25:13,800 --> 00:25:19,920 Speaker 10: dominance has to be a top imperative because we're finding that, Yes, 537 00:25:20,040 --> 00:25:23,240 Speaker 10: when we're building data centers and advanced manufacturing and of 538 00:25:23,280 --> 00:25:27,960 Speaker 10: course electrifying just about everything, power demand goes up substantially. 539 00:25:28,080 --> 00:25:30,680 Speaker 11: We've seen China developing. 540 00:25:30,080 --> 00:25:34,080 Speaker 10: Gas plants, nuclear plants like crazy, and we're behind, and 541 00:25:34,160 --> 00:25:36,800 Speaker 10: so we have to build in America, and we need 542 00:25:36,840 --> 00:25:39,399 Speaker 10: to do that fast so that we cannot just catch up, 543 00:25:39,440 --> 00:25:43,000 Speaker 10: but we can supply all of the reshoring of American 544 00:25:43,080 --> 00:25:46,080 Speaker 10: manufacturing that is going to secure our future. 545 00:25:46,440 --> 00:25:49,359 Speaker 5: Governor, you really are at the vanguard in Virginia of 546 00:25:49,440 --> 00:25:51,720 Speaker 5: a lot of trends around the nation, particularly when it 547 00:25:51,720 --> 00:25:52,720 Speaker 5: comes to the labor market. 548 00:25:52,840 --> 00:25:54,119 Speaker 6: You are bringing jobs back. 549 00:25:54,400 --> 00:25:57,800 Speaker 5: You also have a heavy investment from the likes of Amazon, 550 00:25:58,000 --> 00:26:02,800 Speaker 5: which is supposedly on the way to replacing a lot 551 00:26:02,880 --> 00:26:06,560 Speaker 5: of roles with robots. And I'm just wondering what role 552 00:26:06,840 --> 00:26:10,359 Speaker 5: you see in terms of job training to try to 553 00:26:10,520 --> 00:26:14,920 Speaker 5: adapt to a rapidly shifting backdrop in terms of technology. 554 00:26:16,640 --> 00:26:19,399 Speaker 10: Yeah, we have been out in front here because of 555 00:26:19,440 --> 00:26:24,520 Speaker 10: course artificial intelligence particularly is now part of every aspect 556 00:26:24,600 --> 00:26:28,240 Speaker 10: of the business supply chain. Of course, from design and 557 00:26:28,320 --> 00:26:32,000 Speaker 10: engineering all the way through to manufacturing, marketing. Everything is 558 00:26:32,040 --> 00:26:36,600 Speaker 10: being fundamentally changed. And so we initiated, in partnership with Google, 559 00:26:37,000 --> 00:26:42,480 Speaker 10: ten thousand AI credentials that allow folks free to come 560 00:26:42,520 --> 00:26:45,520 Speaker 10: in and build their capabilities. And I think mean as 561 00:26:45,560 --> 00:26:49,760 Speaker 10: we see technology rapidly transforming the way we do business, 562 00:26:49,840 --> 00:26:52,640 Speaker 10: we have to rapidly transform the way we prepare our 563 00:26:52,680 --> 00:26:53,880 Speaker 10: workforce to. 564 00:26:53,880 --> 00:26:55,080 Speaker 11: Thrive in that environment. 565 00:26:55,320 --> 00:26:57,359 Speaker 10: Listen, we got a lot of jobs in Virginia we 566 00:26:57,359 --> 00:26:59,960 Speaker 10: have two hundred and seventy seven thousand more people working 567 00:27:00,080 --> 00:27:03,320 Speaker 10: today than when we started, two hundred twenty thousand open 568 00:27:03,320 --> 00:27:06,000 Speaker 10: and available jobs, and the one hundred and forty billion 569 00:27:06,000 --> 00:27:10,080 Speaker 10: of capital investment underpins another eighty five thousand jobs and 570 00:27:10,160 --> 00:27:13,640 Speaker 10: nearly forty thousand construction jobs. So we've got a lot 571 00:27:13,640 --> 00:27:15,960 Speaker 10: of work to do here to prepare a workforce to 572 00:27:16,000 --> 00:27:18,800 Speaker 10: take advantage of that opportunity. And I think making sure 573 00:27:18,840 --> 00:27:22,400 Speaker 10: that workforce is AI ready is really important, and that's 574 00:27:22,400 --> 00:27:24,560 Speaker 10: why we've been way out in front to make sure 575 00:27:24,600 --> 00:27:26,199 Speaker 10: that that workforce is prepared for it. 576 00:27:26,480 --> 00:27:28,879 Speaker 5: Governor, I remember talking to you when you used to 577 00:27:28,880 --> 00:27:31,680 Speaker 5: be at Carlisle, and you've had this incredible dual hat 578 00:27:32,000 --> 00:27:35,239 Speaker 5: where you've been investing on one side in infrastructure and 579 00:27:35,280 --> 00:27:37,399 Speaker 5: then you are responsible. 580 00:27:36,800 --> 00:27:39,399 Speaker 6: For helping to plan and bring jobs in. 581 00:27:39,440 --> 00:27:41,879 Speaker 5: I'm just wondering, does it concern you some of the 582 00:27:42,240 --> 00:27:46,400 Speaker 5: private investments that we've seen in some of the infrastructure 583 00:27:46,440 --> 00:27:50,520 Speaker 5: spending and some of the speculation that maybe things could 584 00:27:50,520 --> 00:27:52,320 Speaker 5: be getting a little bit frothy in that space. 585 00:27:54,520 --> 00:27:57,439 Speaker 10: Listen, the big difference that we're seeing now is the 586 00:27:57,720 --> 00:28:02,840 Speaker 10: capital investments, particularly around data centers and AI and machine learning, 587 00:28:03,320 --> 00:28:08,280 Speaker 10: are tied to business commitments in order to drive forward 588 00:28:08,359 --> 00:28:14,080 Speaker 10: this transformation, and therefore it needs to get invested behind. 589 00:28:14,160 --> 00:28:17,000 Speaker 10: We need to see the power investment, and we're competing 590 00:28:17,000 --> 00:28:18,880 Speaker 10: against China day in and day out. 591 00:28:18,960 --> 00:28:20,320 Speaker 11: Listen, this is a race. 592 00:28:20,800 --> 00:28:24,600 Speaker 10: We need to make sure that we have the appropriate 593 00:28:24,640 --> 00:28:27,960 Speaker 10: stop gaps and just in case that the application of 594 00:28:28,000 --> 00:28:34,280 Speaker 10: AI begins to overwhelm the interface between humans and decisions. 595 00:28:34,280 --> 00:28:38,720 Speaker 10: And my Artificial Intelligence Executive Order that I wrote last 596 00:28:38,760 --> 00:28:42,280 Speaker 10: year said that we are going to incorporate artificial intelligence 597 00:28:42,320 --> 00:28:44,680 Speaker 10: and what we're doing in government, but we're also going 598 00:28:44,760 --> 00:28:48,200 Speaker 10: to make sure that we have people between advice and decisions, 599 00:28:48,560 --> 00:28:50,360 Speaker 10: and I think that's one of our big steps. But 600 00:28:50,480 --> 00:28:53,680 Speaker 10: with regards to the investment that we are seeing, I 601 00:28:53,800 --> 00:28:58,040 Speaker 10: firmly believe that this investment will grow great capabilities and 602 00:28:58,080 --> 00:29:00,360 Speaker 10: those capabilities will be put to work. And that's why 603 00:29:00,400 --> 00:29:03,080 Speaker 10: it's so important that we win the artificial intelligence race 604 00:29:03,120 --> 00:29:04,280 Speaker 10: and not allow China to win it. 605 00:29:04,360 --> 00:29:06,680 Speaker 8: Governor Runkin, just quickly, have you spoken to the Trump 606 00:29:06,720 --> 00:29:10,880 Speaker 8: administration speaker Johnson Leader soon about reopening the government because 607 00:29:10,920 --> 00:29:13,720 Speaker 8: your constituents, hundreds of thousands of them, are not getting 608 00:29:13,720 --> 00:29:14,400 Speaker 8: paid right now. 609 00:29:16,200 --> 00:29:19,680 Speaker 10: Yeah, this is the Schumer shutdown is such a tragedy 610 00:29:20,080 --> 00:29:24,360 Speaker 10: because they're holding America and Virginia hostage at a time 611 00:29:24,800 --> 00:29:27,600 Speaker 10: when they need to be doing their jobs, which is 612 00:29:27,960 --> 00:29:33,440 Speaker 10: of course funding government. The Schumer Democrats voted in support 613 00:29:33,640 --> 00:29:37,720 Speaker 10: of a clean se are thirteen times during the Biden administration. 614 00:29:38,120 --> 00:29:40,960 Speaker 10: There's a clean cr sitting on their desks, and they 615 00:29:41,080 --> 00:29:43,680 Speaker 10: just need to vote and open up the government. I 616 00:29:43,680 --> 00:29:46,120 Speaker 10: will tell you, we're starting to see some real pressures. 617 00:29:46,440 --> 00:29:49,280 Speaker 10: I applaud the Trump administration for making sure that the 618 00:29:49,320 --> 00:29:52,880 Speaker 10: military and law enforcement are getting paid. I know they're 619 00:29:52,880 --> 00:29:55,640 Speaker 10: working hard to try to lessen the pain on the 620 00:29:55,640 --> 00:29:58,480 Speaker 10: American people. But at the end of the day, we're 621 00:29:58,520 --> 00:30:01,560 Speaker 10: starting to worry about snap benefit next month. And to 622 00:30:01,640 --> 00:30:05,160 Speaker 10: say that the Schumer shutdown is going to hold hostage 623 00:30:05,360 --> 00:30:10,400 Speaker 10: Americans who need support for food insecurity is absolutely crazy. 624 00:30:11,720 --> 00:30:15,280 Speaker 2: This is the Bloomberg Surveillance podcast, bringing you the best 625 00:30:15,320 --> 00:30:18,640 Speaker 2: in markets, economics, antient politics. You can watch the show 626 00:30:18,680 --> 00:30:21,640 Speaker 2: live on Bloomberg TV weekday mornings from six am to 627 00:30:21,760 --> 00:30:25,520 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 628 00:30:25,680 --> 00:30:27,880 Speaker 2: or anywhere else you listen, and as always on the 629 00:30:27,920 --> 00:30:30,320 Speaker 2: Bloomberg terminal and the Bloomberg Business app