WEBVTT - US Core CPI Picks Up on Services; Goods Inflation More Subdued 0:00:00.080 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.920 --> 0:00:13.240 This is Bloomberg business Week Daily reporting from the magazine 0:00:13.240 --> 0:00:17.880 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.920 --> 0:00:22.800 and trends shaping today's complex economy. Plus global business, finance 0:00:22.840 --> 0:00:26.160 and tech news as it happens. The Bloomberg Business Week 0:00:26.239 --> 0:00:31.600 Daily Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.520 --> 0:00:35.680 Carol Masser along with David Gera. Tim is out on assignment. 0:00:36.080 --> 0:00:38.000 We'll be back tomorrow. So, hey, we want to talk 0:00:38.000 --> 0:00:39.879 a little bit about the inflation report, because David, as 0:00:39.880 --> 0:00:41.360 you mentioned at the top, I mean, it really did 0:00:41.400 --> 0:00:45.000 feel like investors like what we got that there wasn't 0:00:45.040 --> 0:00:46.360 any kind of big surprise here. 0:00:46.560 --> 0:00:48.159 Yeah, just to give everyone an update on what we 0:00:48.159 --> 0:00:51.240 did learn. The core consumer price index, excluding that often 0:00:51.320 --> 0:00:55.040 volatile food and energy categories, increased byo point three percent 0:00:55.080 --> 0:00:56.880 from June from the month before. That's according to the 0:00:56.880 --> 0:00:59.440 Bureau of Labor Statistics data that was released this morning, 0:01:00.120 --> 0:01:02.600 largely in line with what economists were forecasting Carol, and 0:01:02.640 --> 0:01:05.000 on an annual basis, it picked up to three point 0:01:05.040 --> 0:01:06.399 one percent, so of those. 0:01:06.280 --> 0:01:09.440 Wereew okay, not worse than could have been. Let's get 0:01:09.480 --> 0:01:12.080 more on the release, the outlook for US inflation and 0:01:12.080 --> 0:01:14.319 really FED policy. With US is Bloomberg TV and Radio. 0:01:14.360 --> 0:01:18.000 International economics and policy correspondent, of course are Michael McKee. 0:01:18.040 --> 0:01:20.920 He's here in studio. And also with US is Poojam Stream. 0:01:21.120 --> 0:01:24.200 She's vice president of US Economics Research over at Barkley's. 0:01:24.240 --> 0:01:26.800 She's joining us from New York City. Welcome, Welcome to 0:01:26.840 --> 0:01:29.600 both of you. So, Mike, for those who maybe I 0:01:29.640 --> 0:01:32.000 don't know, slept in on this Tuesday, what do we 0:01:32.040 --> 0:01:35.360 need to not you, Mike, what do we need to 0:01:35.400 --> 0:01:37.840 know about the inflation print this morning? 0:01:38.080 --> 0:01:38.240 Well? 0:01:38.280 --> 0:01:40.520 I think what you want to say is don't count 0:01:40.560 --> 0:01:45.560 your chickens before they're priced, because there is some evidence 0:01:45.600 --> 0:01:49.920 of tariff passed through in these numbers. There's maybe some 0:01:50.000 --> 0:01:53.320 evidence that Chris Waller's right that it's a one time increase, 0:01:54.520 --> 0:01:57.160 because we saw things that went up in price last 0:01:57.200 --> 0:02:00.720 month because of tariff's come down. So it may be 0:02:00.720 --> 0:02:03.240 a one off, but it may be a continuing one 0:02:03.280 --> 0:02:07.360 off that pushes inflation higher because you saw things like 0:02:07.520 --> 0:02:11.200 used cars go up half a percent. New car prices 0:02:11.400 --> 0:02:15.000 which had been declining, are now flat, which the President 0:02:15.040 --> 0:02:16.120 claimed as a victory. 0:02:16.600 --> 0:02:17.520 But then you look at the. 0:02:19.560 --> 0:02:23.280 Profit margins for the automakers in the second quarter and 0:02:23.480 --> 0:02:27.440 they were all minuscule or negative because they're absorbing it 0:02:27.680 --> 0:02:29.440 and they're not going to continue to do that. 0:02:29.639 --> 0:02:31.360 So there is no. 0:02:33.080 --> 0:02:36.800 Proof that the tariff issue is over in these numbers. 0:02:36.800 --> 0:02:42.360 And the other aspect of it is services prices have 0:02:42.720 --> 0:02:46.640 gone up. They went up more than anticipated. So that's 0:02:46.760 --> 0:02:49.480 something that doesn't have to do with tariffs, but is 0:02:49.480 --> 0:02:52.160 a concern to economists, and it'll obviously be something that 0:02:52.200 --> 0:02:53.040 FED wants to watch. 0:02:53.080 --> 0:02:54.679 Could you pick up on that if you would. 0:02:54.720 --> 0:02:56.919 I was looking bad back in a recent note that 0:02:56.960 --> 0:02:58.880 you wrote before these numbers came out this morning, and 0:02:58.919 --> 0:03:01.120 you said that while firms tend to raise prices, they've 0:03:01.160 --> 0:03:04.360 been restorting to other mitigation measures. First, what did these 0:03:04.440 --> 0:03:06.919 data this morning tell you about the way the economy 0:03:07.000 --> 0:03:10.359 has been reacting? Is reacting to the presence trade policies? 0:03:11.480 --> 0:03:11.760 Yeah? 0:03:11.800 --> 0:03:16.240 Sure, a great question. You know, the release this morning 0:03:16.520 --> 0:03:20.080 was to us a pretty mixed bag. What was interesting 0:03:20.320 --> 0:03:22.360 is a lot of the acceleration that we saw in 0:03:22.400 --> 0:03:26.359 core CPI came from the core services component. Core goods 0:03:26.400 --> 0:03:29.839 prices were up. Inflation. Was you know, on the core 0:03:29.880 --> 0:03:33.040 good side, still a point two percent, very similar to 0:03:33.120 --> 0:03:37.320 what we saw in June. But really the increases in prices, 0:03:37.400 --> 0:03:40.480 they're not as broad based as one would have expected. 0:03:40.960 --> 0:03:41.240 Now. 0:03:41.280 --> 0:03:44.080 To be clear, we think it's too soon for us 0:03:44.120 --> 0:03:47.240 to conclude that the tariff passed through is not happening 0:03:47.720 --> 0:03:50.320 or is more muted. We do think there are a 0:03:50.400 --> 0:03:53.120 couple of things that could have happened in July which 0:03:53.320 --> 0:03:55.480 just made the core good side of the report look 0:03:55.520 --> 0:03:58.800 a little softer. One is, you know, if you remember, 0:03:58.920 --> 0:04:02.640 July was a big motion period. We did have an 0:04:02.680 --> 0:04:06.120 Amazon Prime Day event that lasted longer than usual, and 0:04:06.160 --> 0:04:09.600 we had similar promotions from retailers like Walmart and Target. 0:04:09.960 --> 0:04:13.320 So it's plausible that we just had you know, slightly 0:04:13.400 --> 0:04:16.880 lower looking prices this July, you know, than we did 0:04:16.960 --> 0:04:19.479 last July. And if you look at some of the 0:04:19.560 --> 0:04:23.920 details within categories, that seems to corroborate with this narrative. 0:04:24.279 --> 0:04:27.360 But I also will allude to what Mike McKee pointed 0:04:27.400 --> 0:04:31.320 out earlier. We are seeing signs of early tariff passed 0:04:31.320 --> 0:04:35.760 through already in the economy. Within the CPI release itself, 0:04:36.040 --> 0:04:39.479 We've been flagging for a while that household furnishing prices, 0:04:39.520 --> 0:04:43.039 for example, are up three percent just year to date. 0:04:43.440 --> 0:04:47.839 This is very different from how prices historically have behaved. 0:04:48.560 --> 0:04:52.480 Something very similar can be said about appliances in the US. 0:04:52.839 --> 0:04:56.320 So I just think tariff effects are in train, and 0:04:56.440 --> 0:04:59.800 while today's report may not suggest that we're seeing much 0:05:00.040 --> 0:05:02.400 pid of effects, I just think it's too soon for 0:05:02.520 --> 0:05:04.240 us to dismiss that effect altogether. 0:05:04.440 --> 0:05:06.520 Mike, let me ask you, if I could, about housing. 0:05:06.560 --> 0:05:08.719 We look to these data for some indication of those 0:05:08.760 --> 0:05:12.039 costs as well. We have for many months. Now, what 0:05:12.160 --> 0:05:14.120 is it telling you about the state of the housing 0:05:14.120 --> 0:05:15.159 market in the US today. 0:05:15.600 --> 0:05:18.920 Well, we're not saying price declines, but certainly the price 0:05:19.160 --> 0:05:20.719 increases have leveled off. 0:05:20.760 --> 0:05:21.680 This is the third. 0:05:21.440 --> 0:05:23.680 Month in a row that owner's equivalent rent was up 0:05:23.720 --> 0:05:27.120 three tenths of eight percent, and on a year over 0:05:27.200 --> 0:05:30.960 year basis, we see slight declines here in home prices. 0:05:31.000 --> 0:05:35.200 We're seeing in the more immediate data that the case 0:05:35.200 --> 0:05:37.919 shillers and things like that, that home prices are not 0:05:38.080 --> 0:05:42.039 rising as fast because at this point people have give 0:05:42.040 --> 0:05:44.640 it up on selling, it appears, and so they're not 0:05:45.120 --> 0:05:49.479 raising prices because it's a seller's market. But let's see 0:05:49.600 --> 0:05:52.680 what happens going forward. The interesting question is going to 0:05:52.720 --> 0:05:56.080 be how does the housing market recover. Is a FED 0:05:56.160 --> 0:05:59.400 rate cut or two going to be enough? How much 0:06:00.000 --> 0:06:03.440 does it have to go down before people get out 0:06:03.480 --> 0:06:04.640 there and start buying again. 0:06:05.080 --> 0:06:06.520 One thing I wanted to ask both of you, and Mike, 0:06:06.640 --> 0:06:07.960 let me start with you first, is that I think 0:06:07.960 --> 0:06:10.440 I heard it on surveillance this morning, the idea or 0:06:10.480 --> 0:06:13.719 the concept of it's not just the number and where 0:06:13.760 --> 0:06:16.560 it goes to, but the percentage of the increase or decrease. 0:06:16.680 --> 0:06:19.240 So when we think about that, I mean, I know 0:06:19.240 --> 0:06:21.919 the numbers came in line, but what we've seen in 0:06:22.000 --> 0:06:26.120 terms of trends in inflation, are we seeing it continue 0:06:26.680 --> 0:06:29.920 to kind of move down in a significant way like 0:06:30.120 --> 0:06:31.720 that percentage change. 0:06:33.440 --> 0:06:36.320 Use if you have a Bloomberg go ahead and put 0:06:36.360 --> 0:06:42.599 in cpiyoy index GP and graphic. And in the last 0:06:43.040 --> 0:06:46.320 two and a half three months, the inflation arrow has 0:06:46.920 --> 0:06:49.960 changed from going down into the right to going up 0:06:50.400 --> 0:06:54.279 and to the right. It's not been a huge change yet, 0:06:54.440 --> 0:06:58.000 and we don't know for sure that that's going to 0:06:58.000 --> 0:07:00.240 happen or if it's just going to come to you 0:07:00.320 --> 0:07:04.160 to steadily rise, but it definitely shows the inflation trajectory 0:07:04.279 --> 0:07:05.080 has changed. 0:07:05.520 --> 0:07:07.200 All right, So let's cut to the chase. What does 0:07:07.240 --> 0:07:09.400 this mean for the Fed? Pooja weigh in on this. 0:07:10.000 --> 0:07:11.960 I know Mike tends to say, and he's always right 0:07:12.000 --> 0:07:14.520 about this, that like there's a lot more data come 0:07:14.560 --> 0:07:16.840 in our way before the next FED meeting. So has 0:07:16.880 --> 0:07:21.240 this changed anything for J. Powell and company? Well, I 0:07:21.280 --> 0:07:21.720 think not. 0:07:22.680 --> 0:07:26.080 The Barclays baseline for a while now has been one 0:07:26.200 --> 0:07:28.520 rate cut and all the way at the end of 0:07:28.560 --> 0:07:33.000 the year in December. Now we're looking quite out of consensus, admittedly, 0:07:33.200 --> 0:07:35.520 but we think, you know, there is a lot of 0:07:35.600 --> 0:07:39.800 data to come. Nothing in this inflation print to us 0:07:40.920 --> 0:07:45.480 was you know, was suggestive of inflation being more muted 0:07:45.640 --> 0:07:48.680 or the tariff effects are not coming. So we do 0:07:48.760 --> 0:07:51.880 think that, you know, the next employment report is going 0:07:51.920 --> 0:07:54.360 to be the big one to watch out for. Also, 0:07:54.360 --> 0:07:56.760 we're going to hear from Chair Powell at Jackson Hall 0:07:57.760 --> 0:08:00.720 and so we think those would be good signals to 0:08:00.800 --> 0:08:03.800 watch for. But right now we maintain our call the 0:08:03.880 --> 0:08:07.120 Fed is in rush to cut ryds, and we have 0:08:07.200 --> 0:08:08.120 a call for December. 0:08:08.640 --> 0:08:10.680 Mike's getting is you mentioned? 0:08:11.480 --> 0:08:13.880 Mike lights up? You can't see it on the Getting Ready. 0:08:15.800 --> 0:08:17.760 But Mike, how are you sort of thinking about the 0:08:17.800 --> 0:08:20.080 way this influence is for FED decision making going forward, 0:08:20.120 --> 0:08:21.680 the report today, and of course sort of what this 0:08:21.800 --> 0:08:24.040 might tell us about the PCE report coming up little 0:08:24.040 --> 0:08:24.360 bit later. 0:08:24.680 --> 0:08:26.440 Well, I think it puts them in the category of 0:08:26.520 --> 0:08:29.800 if we get the same numbers that we've gotten, and 0:08:30.200 --> 0:08:34.280 by that I mean inflation numbers and the another round 0:08:34.320 --> 0:08:37.880 of bad jobs numbers, the FED might be more inclined 0:08:37.920 --> 0:08:40.560 to cut. But when you parse who the voters are 0:08:40.840 --> 0:08:44.360 and what they've said since the last FED meeting, you 0:08:44.440 --> 0:08:46.600 got about two people who think they should go down, 0:08:46.679 --> 0:08:49.040 two people who think they should not, and two people 0:08:49.120 --> 0:08:52.199 who are undecided. The rest have yet to weigh in. 0:08:52.360 --> 0:08:54.920 So we will hear more over the next couple of weeks, 0:08:54.960 --> 0:08:58.920 including from the chair, and we'll see where they are 0:08:58.920 --> 0:09:02.240 going into September. But again, there's another jobs report, and 0:09:02.320 --> 0:09:06.120 another CPI report, and a PCE inflation report, and so 0:09:06.240 --> 0:09:09.000 there's a lot of information to come that will help 0:09:09.160 --> 0:09:14.120 decide what's going to happen. The odds are now ninety 0:09:14.160 --> 0:09:17.040 six percent that they cut in September, but I wouldn't 0:09:17.040 --> 0:09:18.640 put money into that market right now. 0:09:18.679 --> 0:09:20.920 I feel like I've seen this movie before, expectations that 0:09:21.000 --> 0:09:24.000 change very quickly on a data point. Michael McKee, thank 0:09:24.040 --> 0:09:26.760 you so much. I always appreciate it, And of course Projirium, 0:09:27.120 --> 0:09:29.720 vice president of Yous Economics Research at Barkley's Hey. Coming 0:09:29.840 --> 0:09:31.959 up later next week, do join us for our live 0:09:32.000 --> 0:09:35.320 coverage from Jackson, Hull. We'll be on the ground in Wyoming, Well, 0:09:35.400 --> 0:09:38.680 we meaning Mike and team covering the Kansas City Fed's 0:09:38.679 --> 0:09:42.920 Annual Economic Policy Symposium and highly anticipated remarks from fedscher J. Powell. 0:09:43.440 --> 0:09:46.520 All happens and starts Wednesday, August twentieth, and finishes up 0:09:46.520 --> 0:09:50.480 with a special edition of Bloomberg Surveillance. Tom Keene, Lisa Bromoitz, 0:09:50.520 --> 0:09:52.240 and the one and only Mike McKee will all be 0:09:52.280 --> 0:09:56.200 part of that special Starting at nine am Eastern on Friday. 0:09:56.080 --> 0:09:59.760 You are listening to the Bloomberg Business Weekdaily Podcast. Catch 0:09:59.840 --> 0:10:03.199 us live weekday afternoons from two to five pm Eastern. 0:10:03.320 --> 0:10:06.320 Listen on Apple CarPlay and Android Auto with the Bloomberg 0:10:06.440 --> 0:10:09.679 Business app, or watch us live on YouTube. 0:10:10.000 --> 0:10:12.199 David Gura in for Tim Steneviek, who's on assignment with 0:10:12.280 --> 0:10:14.720 Carol Masser here on Bloomberg Business Week, and we got 0:10:14.760 --> 0:10:17.160 news yesterday from the White House that Presdon Trump has 0:10:17.160 --> 0:10:20.600 decided to extend that ninety day pause yet again on 0:10:20.640 --> 0:10:23.880 those heightened tariffs on China. China very much in focus 0:10:23.920 --> 0:10:25.439 here in the US, of course, as we wait to 0:10:25.440 --> 0:10:27.960 see sort of what happens with those trade talks, but 0:10:28.040 --> 0:10:30.280 also playing an incredibly important. 0:10:29.920 --> 0:10:30.880 Role around the world. 0:10:30.880 --> 0:10:33.360 We saw the Brazilian President Lula de Silva speaking with 0:10:33.360 --> 0:10:37.000 the Chinese leader, exchanging their views on international affairs. President 0:10:37.080 --> 0:10:42.240 she calling for coordinated efforts against unilateralism and protectionism. News 0:10:42.240 --> 0:10:45.280 today also that India and China set to resume direct 0:10:45.280 --> 0:10:48.080 flight connections as soon as next month. And we're seeing 0:10:48.360 --> 0:10:51.800 oil playing a critical role here as the contours of 0:10:51.840 --> 0:10:54.439 this trade war continue to come into Folks, it does 0:10:54.520 --> 0:10:57.120 feel like, in a way, many parts of the world 0:10:57.120 --> 0:11:01.200 are moving on and increasingly away from the US. Let's 0:11:01.200 --> 0:11:03.480 get to a roundtable now to understand China's goals here, 0:11:03.520 --> 0:11:05.680 what they're thinking in terms of the role they're playing 0:11:05.800 --> 0:11:08.560 in the world. US very clear of course about wanting 0:11:08.559 --> 0:11:10.559 a higher tariff world for those looking to sell into 0:11:10.600 --> 0:11:14.079 the US. Shouldadkazi joints as Chief Operating Officer Managment Director 0:11:14.080 --> 0:11:15.920 at the China BAIG book here with us in the 0:11:15.960 --> 0:11:19.120 studio and from our bureau in Buenos Aires, Aminasuniga with 0:11:19.240 --> 0:11:22.760 US geoeconomic analysts for Latin America at Bloomberg Economics and 0:11:22.760 --> 0:11:25.679 shouldsod Let me start with you and maybe just give 0:11:25.760 --> 0:11:28.679 us your sense of how China is thinking about all this. 0:11:28.720 --> 0:11:32.960 We've had a series of three meetings now Geneva, London, Stockholm. 0:11:33.080 --> 0:11:35.079 The pause continues here as we get perilously close. I 0:11:35.080 --> 0:11:37.360 think to the Christmas holiday when people are going to 0:11:37.360 --> 0:11:38.680 be buying a lot of gifts and are going to 0:11:38.720 --> 0:11:40.880 be very worried if a lot of these tariffs come 0:11:41.160 --> 0:11:43.680 to pass. How is China thinking about the kind of 0:11:43.720 --> 0:11:46.120 trajectory of these negotiations with the US. 0:11:46.760 --> 0:11:49.240 You know, when the year began, we would have thought 0:11:49.240 --> 0:11:53.080 that their primary objective was to bring the tariff levels 0:11:53.160 --> 0:11:56.640 down and negotiate just about trade. But what we've learned 0:11:57.120 --> 0:11:59.920 is that they are much more concerned about US exp 0:12:00.120 --> 0:12:03.800 controls because that is ultimately what hurts them far more 0:12:04.120 --> 0:12:06.120 than even tariffs do. Because they have ways to get 0:12:06.160 --> 0:12:08.920 around the tariffs, and so what they've done is they've 0:12:09.080 --> 0:12:13.480 used their chokehold on rare it's minerals and magnets, and 0:12:13.600 --> 0:12:17.920 forced compelled really the administration to relent and roll back 0:12:18.000 --> 0:12:21.520 US export controls while also bringing down the tariffs. So 0:12:21.679 --> 0:12:24.720 two wins for Shujinping in the last several months. 0:12:24.800 --> 0:12:26.560 But what kind of relationship do you think he wants 0:12:26.600 --> 0:12:28.560 with the United States going forward? 0:12:29.320 --> 0:12:31.600 Well, he'd love nothing more than to be able to 0:12:31.679 --> 0:12:34.360 sell as much as possible and be able to import 0:12:34.400 --> 0:12:37.560 the things they care about, the most advanced technology, not 0:12:37.600 --> 0:12:39.920 just ships, but across the board. Right, that's in an 0:12:39.960 --> 0:12:43.400 ideal world. Now, that's probably not what he's getting right away, 0:12:43.440 --> 0:12:46.760 but he's getting pretty close to it. I don't think 0:12:46.800 --> 0:12:48.840 he feels a pressure to do anything more. I don't 0:12:48.840 --> 0:12:50.960 think he feels a pressure today to say I'm going 0:12:51.000 --> 0:12:54.439 to pledge like Japan and Europe did you know five 0:12:54.520 --> 0:12:56.880 hundred billion dollars worth of investment, or I'm going to 0:12:56.920 --> 0:13:00.280 pledge to buy all this US agricultural output the way 0:13:00.280 --> 0:13:03.640 I did in the past. I think they've demonstrated she specifically, 0:13:03.920 --> 0:13:05.840 we've got a lot of leverage and we don't need 0:13:05.920 --> 0:13:07.160 to play ball. If you don't feel like I do. 0:13:07.200 --> 0:13:08.920 Think it's interesting that they want all the high tech, 0:13:08.920 --> 0:13:11.400 and yet Beijing is urging what local companies to avoid 0:13:11.480 --> 0:13:16.400 using in Vidia's H twenty processors, particularly for government related purposes. 0:13:16.440 --> 0:13:20.440 So yes, but there's always caveat Hamena com on in 0:13:20.480 --> 0:13:23.440 on this because in the meantime, Latin America is watching 0:13:23.679 --> 0:13:26.920 very closely, I'm sure, and remind us of the relationship 0:13:26.960 --> 0:13:31.160 that already exists with China across Latin America and maybe 0:13:31.160 --> 0:13:33.319 what they hope to even solidify even further. 0:13:35.440 --> 0:13:41.760 Thank you, Carol. Yes, you know, g and Lula just 0:13:41.880 --> 0:13:46.280 talked and they said the relationship is as strong as ever. 0:13:47.280 --> 0:13:50.439 But so far the support from China to Brazil seems 0:13:50.480 --> 0:13:52.920 to have been largely rhetorical. 0:13:53.040 --> 0:13:53.280 Right. 0:13:53.920 --> 0:14:00.280 They have said they have shared views on multilajournalism and 0:14:00.520 --> 0:14:04.160 unilateralism on behalf of the US, condemning that, and China 0:14:04.240 --> 0:14:07.560 has been very keen on jumping on this collective criticism 0:14:08.160 --> 0:14:13.880 of the US. But even though Trump's tarifsts may be 0:14:14.040 --> 0:14:18.880 giving bricks the blog that Brazil and China have, along 0:14:18.960 --> 0:14:23.160 with India, Russia and other smaller partners, even though Trump 0:14:23.200 --> 0:14:26.200 tariffs seemed to be giving it some mortar, it's still 0:14:26.280 --> 0:14:28.960 far from operating as a block and it's not really 0:14:29.000 --> 0:14:33.600 coordinating a response, a collective response to the Trump tariffs. 0:14:33.920 --> 0:14:36.760 Him man on that note, do you anticipate that's likely 0:14:36.800 --> 0:14:38.840 to happen? I remember that moment a few months ago 0:14:39.320 --> 0:14:41.280 when there was a meeting of the bricks countries. There 0:14:41.360 --> 0:14:43.680 was this tacit threat that they were going to work 0:14:43.720 --> 0:14:46.720 more closely together in opposition to what the United States 0:14:46.760 --> 0:14:50.880 was doing. President Trump, clearly irritated agitated by that threatned 0:14:50.880 --> 0:14:54.480 even more punitive sanctions, more tariffs on those bricks countries. 0:14:54.480 --> 0:14:57.400 As a result of that. What would the catalyst be 0:14:57.440 --> 0:14:59.440 that would get them to do more than, as you say, 0:15:00.160 --> 0:15:02.680 talk about presenting a more united front against the United States. 0:15:04.640 --> 0:15:08.360 I think there are two main issues that are blocking 0:15:08.600 --> 0:15:12.280 a more integrated response, more coordinating response. One is the 0:15:12.400 --> 0:15:16.320 very diverse membership of the group in general, and also 0:15:16.360 --> 0:15:19.680 with respect to the Trump tariffs, they're facing slightly different issues, 0:15:20.000 --> 0:15:23.480 although they are becoming increasingly closer in the sense that, 0:15:23.560 --> 0:15:27.040 for example, now Brazil and India are similarly targeted, but 0:15:27.160 --> 0:15:30.400 for example, Russia has so far not been targeted with tariffs, 0:15:30.440 --> 0:15:33.160 although they have other issues with the US, of course, 0:15:34.160 --> 0:15:36.480 but the key thing is that China doesn't really need 0:15:36.480 --> 0:15:39.800 the blogs as much as the other members of the 0:15:39.840 --> 0:15:43.720 blog need China or would benefit from a coordinating response 0:15:43.760 --> 0:15:47.400 with China. As Jas just said, China has a lot 0:15:47.400 --> 0:15:49.640 of leverage, has demonstrated has a lot of leverage to 0:15:49.680 --> 0:15:55.480 push back without offering any dramatic concessions as other countries 0:15:55.520 --> 0:15:58.560 have done. Uh and the US has back down. So 0:15:59.280 --> 0:16:02.280 China does not really need to have the collective weight 0:16:02.480 --> 0:16:05.680 and have took the bricks block to stand up to Trump. 0:16:06.840 --> 0:16:12.560 If it did, however, it could really expand its geopolitical cloud, 0:16:12.560 --> 0:16:14.600 and it would mean the bricks would function more as 0:16:14.600 --> 0:16:19.440 a block. But so far, I think China is very 0:16:19.560 --> 0:16:23.240 focused on its national interest and as long as as 0:16:23.240 --> 0:16:25.240 it can stand up to Trump on its own, and 0:16:25.280 --> 0:16:27.520 it has the leveraged to do it, it is unlikely 0:16:27.680 --> 0:16:31.520 to compromise its national interest to expand the bricks theft. 0:16:31.680 --> 0:16:34.560 We're talking with him in a Suniga geoeconomic analyst for 0:16:34.640 --> 0:16:38.960 Latin America out there in our Buenos Aires Bureau, and 0:16:39.000 --> 0:16:41.920 also with US Shazad Kazi, chief Operating Officer, Managing Director 0:16:42.000 --> 0:16:44.840 China Basebook and Studio. All right, so let's shift a 0:16:44.840 --> 0:16:47.080 little bit to China and India, which I think is 0:16:47.160 --> 0:16:49.400 kind of interesting and you know, just a little headline. 0:16:49.400 --> 0:16:51.800 As David mentioned, that looks like Indian China set to 0:16:51.840 --> 0:16:54.400 resume direct flight connections as soon as next month, according 0:16:54.440 --> 0:16:57.760 to those familiar, as they look to kind of reset 0:16:57.800 --> 0:17:01.640 their political ties as the US and India, after years 0:17:01.680 --> 0:17:04.399 and years of working on improving that relationship, seem to 0:17:04.560 --> 0:17:07.639 have taken some steps back. China and India. What's China's 0:17:07.640 --> 0:17:08.119 goal there? 0:17:08.800 --> 0:17:11.120 Well, I think, you know, they have an incredibly complex 0:17:11.160 --> 0:17:15.439 relationship because whereas they trade, it is absolutely not They 0:17:15.440 --> 0:17:18.080 have very serious national security concerns about each other, more 0:17:18.119 --> 0:17:21.000 specifically India with regards to China, and of course are 0:17:21.040 --> 0:17:25.199 constantly having these bottles battles rather than skirmishes at the border, 0:17:25.800 --> 0:17:28.480 long running problems there. So you know, I think I 0:17:28.480 --> 0:17:29.000 think the traders. 0:17:29.160 --> 0:17:31.480 Is any of this real or is it just for show? 0:17:31.880 --> 0:17:33.480 I think it's real to the extent that they want 0:17:33.480 --> 0:17:35.320 to do business with each other, but it's not it 0:17:35.359 --> 0:17:38.960 doesn't go towards, you know, anything beyond that. I mean India. 0:17:39.119 --> 0:17:40.720 So let's be clear, India does not want to be 0:17:40.720 --> 0:17:42.840 seen as a country that's going to counterbalance China and 0:17:42.840 --> 0:17:44.520 all the rest on behalf of the US. It wants 0:17:44.560 --> 0:17:47.160 to be seen as a power in its own merit, 0:17:47.240 --> 0:17:50.320 on its own right. But by that token though, still, 0:17:50.359 --> 0:17:52.440 they also don't want to blow up their business relationship 0:17:52.440 --> 0:17:54.960 with China. This is far more complex than I think 0:17:55.000 --> 0:17:57.800 traditional models of geopolitics would suggest. 0:17:57.960 --> 0:18:00.119 You know, we were talking about sort of the the 0:18:00.240 --> 0:18:02.479 gap that might be left if the training relationship has 0:18:02.560 --> 0:18:05.439 ruined between the United States and China. How confident is 0:18:05.520 --> 0:18:08.280 China that it could get, yes, the rare earths, the 0:18:08.280 --> 0:18:11.320 critical minerals exported to other countries if the US isn't 0:18:11.359 --> 0:18:13.200 able to buy them. I guess what I'm saying is 0:18:13.240 --> 0:18:15.480 how sure they are in their ability to pivot to 0:18:15.480 --> 0:18:17.480 other markets if the US is no longer what it 0:18:17.520 --> 0:18:17.880 has been. 0:18:18.320 --> 0:18:21.439 So they demonstrated, I think that everybody is desperate for 0:18:21.560 --> 0:18:24.320 Chinese rare arts. And if you remember what they did 0:18:24.400 --> 0:18:26.920 was briefly they said export controls on more or less everyone, 0:18:27.200 --> 0:18:30.639 so that they could prevent us from transshipping those rare 0:18:30.640 --> 0:18:33.360 ets right into the US the way. You know, obviously 0:18:33.440 --> 0:18:37.200 China takes advantage of transshipment. So I think I don't 0:18:37.200 --> 0:18:39.440 know if that's really the big concern, because there's such 0:18:39.480 --> 0:18:42.120 desperation given the chokehold that they have as a sole 0:18:42.160 --> 0:18:44.920 supplier really of most of these things, including some really 0:18:44.960 --> 0:18:47.600 critical things like samarium, which you need for weapons development, 0:18:47.640 --> 0:18:49.800 and how dependent we are on that and by the way, 0:18:49.800 --> 0:18:51.560 they are not letting that out human. 0:18:51.600 --> 0:18:55.240 I also wonder, you know, if some great deal happens 0:18:55.240 --> 0:18:57.480 between the US and China after, you know, if the 0:18:57.520 --> 0:19:01.600 delays are done, you know, we'll Latin America as a 0:19:01.640 --> 0:19:05.840 whole or specific countries be like, okay, missed opportunity. You know, 0:19:05.920 --> 0:19:09.080 we're out because we understand the importance of that US 0:19:09.160 --> 0:19:12.280 China relationship, and especially if they if China gets better 0:19:12.359 --> 0:19:16.280 terms in terms of tariffs. Finally, what do you mean 0:19:16.320 --> 0:19:16.840 we're out? 0:19:16.960 --> 0:19:20.919 Sorry, Well, meaning that they won't necessarily have such an 0:19:20.920 --> 0:19:25.159 open door perhaps or the conversation lines, you know, between 0:19:25.240 --> 0:19:28.280 China and Latin America might go away if ultimately the 0:19:28.400 --> 0:19:31.959 US trade deal and tariff deal that they come together 0:19:32.040 --> 0:19:35.080 with China is not as onerous as maybe has been 0:19:35.119 --> 0:19:37.679 put out before that ultimately US and China come to 0:19:37.800 --> 0:19:40.119 terms that are good for both sides. 0:19:40.320 --> 0:19:42.439 So does that China kind of back off again from 0:19:42.520 --> 0:19:43.160 Latin America. 0:19:44.720 --> 0:19:47.200 Yeah, in a way, I think that China is very 0:19:47.200 --> 0:19:50.400 present in Latin America if you think of it outside Mexico, 0:19:50.520 --> 0:19:53.920 who exports eighty percent of its schoods towards the US. 0:19:55.200 --> 0:20:01.679 China is the main markets or most of the are bigger, 0:20:02.040 --> 0:20:08.120 biggest economies, including Brazil, Argentina and tile Peru. And so 0:20:08.520 --> 0:20:11.639 I don't think that Latin America can choose between the 0:20:11.760 --> 0:20:13.919 US and China. For Latin America, the best would be 0:20:14.000 --> 0:20:16.440 not to have to choose, and for a while it 0:20:16.600 --> 0:20:22.320 cultivated positive pragmatic relationships with both with both markets that 0:20:22.359 --> 0:20:24.920 are important not only in terms of trade, but also 0:20:26.080 --> 0:20:30.200 in terms of financing and in terms of tourism. Both 0:20:30.400 --> 0:20:33.760 both markets are critical to region in different respects depending 0:20:33.760 --> 0:20:37.760 on the country. If having to choose, a lot of 0:20:37.760 --> 0:20:40.640 countries would not we try to push back a lot 0:20:40.760 --> 0:20:43.920 not to be not to have to choose. They would 0:20:43.920 --> 0:20:47.680 continue to trade with China, they would continue to have 0:20:47.960 --> 0:20:51.160