1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,240 Speaker 1: us live on YouTube. 6 00:00:27,720 --> 00:00:29,720 Speaker 2: Joining us now and again in the future. Is lifting 7 00:00:29,800 --> 00:00:33,000 Speaker 2: up twenty at forty two is someone who's been much 8 00:00:33,080 --> 00:00:36,400 Speaker 2: maligned and has been fearless in her academics of saying, 9 00:00:36,800 --> 00:00:39,040 Speaker 2: you know what, I'm associated with the dread at our 10 00:00:39,080 --> 00:00:42,320 Speaker 2: word recession, but I don't see it out there. Claudia 11 00:00:42,440 --> 00:00:45,879 Speaker 2: sam has nailed that call. She's chief economist at New 12 00:00:45,960 --> 00:00:49,159 Speaker 2: Century As Advisors, and she joins us here this morning. 13 00:00:49,520 --> 00:00:55,960 Speaker 2: At Claudia, my distant memory is Jeffrey Frankel at Harvard saying, Okay, 14 00:00:56,560 --> 00:01:01,160 Speaker 2: there's a jobs mandate, there's an interest rate in flameation mandate. 15 00:01:01,720 --> 00:01:06,479 Speaker 2: But real GDP and maybe distant nominal GDP really matter. 16 00:01:07,200 --> 00:01:11,560 Speaker 2: Can a dearth of GDP shift the labor market and 17 00:01:11,600 --> 00:01:12,400 Speaker 2: shift the FED? 18 00:01:15,160 --> 00:01:18,560 Speaker 3: Well? Absolutely, I mean these are all growth and employment 19 00:01:18,760 --> 00:01:23,560 Speaker 3: are absolutely tied together, not necessarily quarter by quarter. And 20 00:01:23,880 --> 00:01:26,000 Speaker 3: I think you know, if you're referring to the first quarter, 21 00:01:26,160 --> 00:01:28,759 Speaker 3: the small decline in GDP, like there is a lesson 22 00:01:28,840 --> 00:01:30,680 Speaker 3: from that, But it is not that we are falling 23 00:01:30,760 --> 00:01:33,520 Speaker 3: into a recession. It's that we are facing a major 24 00:01:33,640 --> 00:01:36,679 Speaker 3: cost shock with an increase in tariffs and businesses we're 25 00:01:36,720 --> 00:01:39,319 Speaker 3: responding to that in consumers that cause a lot of 26 00:01:39,360 --> 00:01:43,399 Speaker 3: disruption in the numbers. So that's one example where you 27 00:01:43,440 --> 00:01:46,560 Speaker 3: know that first quarter GDP declient is giving us a 28 00:01:46,600 --> 00:01:48,840 Speaker 3: sense of where we're headed. But it's more about where 29 00:01:48,840 --> 00:01:52,160 Speaker 3: we're headed working through these tariffs, which eventually will have 30 00:01:52,240 --> 00:01:55,040 Speaker 3: some effects on employment, even if we're not seeing them today. 31 00:01:55,400 --> 00:01:58,880 Speaker 2: Okay, way from then the som recession mania. Are you 32 00:01:59,080 --> 00:02:04,440 Speaker 2: modeling out four percent year over year CPI? Is that 33 00:02:04,520 --> 00:02:07,480 Speaker 2: in the New Century Advisor's realm of thinking? 34 00:02:08,800 --> 00:02:12,400 Speaker 3: So I think that's absolutely in the realm of possibility, 35 00:02:12,440 --> 00:02:15,880 Speaker 3: And certainly I feel very that we have we are 36 00:02:15,919 --> 00:02:21,560 Speaker 3: facing slow in growth, rising unemployment, and faster inflation. Now 37 00:02:21,800 --> 00:02:24,520 Speaker 3: magnitudes are going to be absolutely crucial, and I think 38 00:02:24,520 --> 00:02:26,880 Speaker 3: a really big question for the Fed in particular is 39 00:02:26,919 --> 00:02:28,040 Speaker 3: they think about their policy. 40 00:02:28,120 --> 00:02:29,839 Speaker 4: Is the duration right? 41 00:02:29,880 --> 00:02:32,400 Speaker 3: If this is if we're just seeing a kind of 42 00:02:32,480 --> 00:02:35,560 Speaker 3: a blip a move up in inflation, the recedes as 43 00:02:35,600 --> 00:02:37,560 Speaker 3: that we adjust to the tariffs or maybe the jobs 44 00:02:37,600 --> 00:02:40,760 Speaker 3: go away. But that's like a key question that we 45 00:02:40,800 --> 00:02:42,720 Speaker 3: are far from having the answers to see. 46 00:02:42,919 --> 00:02:44,800 Speaker 2: You see how she does this at the University of 47 00:02:44,840 --> 00:02:47,720 Speaker 2: Michigan and they get on the XA Exis she's looking 48 00:02:47,760 --> 00:02:50,760 Speaker 2: at the duration. Yeah, she's looking at the lengthiness, the 49 00:02:50,880 --> 00:02:53,320 Speaker 2: lengthiness of the magnitude. 50 00:02:52,720 --> 00:02:55,440 Speaker 5: Claudia, can this economy avoid a recession? I mean I 51 00:02:55,800 --> 00:02:58,680 Speaker 5: see a jobs number today, I think about Tom's theory 52 00:02:58,720 --> 00:03:02,400 Speaker 5: the companies and people adapt this economy avoid. 53 00:03:02,120 --> 00:03:04,679 Speaker 6: A recession absolutely. 54 00:03:05,080 --> 00:03:08,000 Speaker 3: I mean, we have all the ingredients of a recession. 55 00:03:08,040 --> 00:03:10,720 Speaker 3: We have the tariffs, we have the slot immigration, we 56 00:03:10,760 --> 00:03:14,440 Speaker 3: have the federal cuts and other factors. We have massive uncertainty. 57 00:03:14,560 --> 00:03:16,840 Speaker 3: Like really, if I mean this, we are pointed towards 58 00:03:16,840 --> 00:03:21,320 Speaker 3: the recession, and yet we are in the very early stages. 59 00:03:21,440 --> 00:03:24,360 Speaker 3: And we see sometimes our businesses to build some buffers, 60 00:03:24,639 --> 00:03:27,200 Speaker 3: like a big inventory built getting ahead of the tariffs. 61 00:03:27,240 --> 00:03:31,040 Speaker 3: I mean, we're nobody wants to lay off workers, nobody 62 00:03:31,120 --> 00:03:33,680 Speaker 3: wants to cut back on their spending, right like people 63 00:03:33,760 --> 00:03:36,960 Speaker 3: are trying to make adjustments. So but what needs to 64 00:03:37,080 --> 00:03:39,840 Speaker 3: happen is these aggressive policies have been put in place. 65 00:03:39,920 --> 00:03:42,160 Speaker 3: These cost shocks, they have got to be dialed back 66 00:03:42,160 --> 00:03:44,760 Speaker 3: and really quickly. I mean, there's some damage done already 67 00:03:44,760 --> 00:03:47,040 Speaker 3: that we're going to deal with costs as this year 68 00:03:47,120 --> 00:03:51,160 Speaker 3: goes on. But magnitudes matter, and avoiding the recession, and 69 00:03:51,240 --> 00:03:55,440 Speaker 3: particularly the recession dynamic is when that shock, it just 70 00:03:55,640 --> 00:03:58,800 Speaker 3: spreads through the whole economy, and we really have got 71 00:03:58,840 --> 00:04:00,960 Speaker 3: to nip this in the bed, in the bud before 72 00:04:01,000 --> 00:04:02,920 Speaker 3: you have those feedback effects take cold. 73 00:04:03,240 --> 00:04:05,240 Speaker 5: When you see a lot of companies again, we're probably 74 00:04:05,240 --> 00:04:08,560 Speaker 5: seventy percent away through the earning cycle here, a lot 75 00:04:08,560 --> 00:04:11,920 Speaker 5: of companies are, as you said, either pulling their guidance, 76 00:04:12,440 --> 00:04:16,400 Speaker 5: or if they still have guidance, they're saying, we're concerned here, 77 00:04:16,440 --> 00:04:18,880 Speaker 5: We've got a lot of variability around our businesses. What 78 00:04:18,880 --> 00:04:20,720 Speaker 5: do you take away from some what you heard from 79 00:04:20,760 --> 00:04:21,760 Speaker 5: Corporate America so far? 80 00:04:23,520 --> 00:04:26,680 Speaker 3: So clearly these are big shocks. There's a lot of uncertainty. 81 00:04:26,720 --> 00:04:26,960 Speaker 7: I think. 82 00:04:26,960 --> 00:04:29,320 Speaker 3: The other place I found pretty interesting reading this time 83 00:04:29,400 --> 00:04:31,520 Speaker 3: was going through the Fedspage book, which has a similar 84 00:04:31,600 --> 00:04:34,080 Speaker 3: kind of talking to business contacts, talking to nonprofits in 85 00:04:34,120 --> 00:04:37,000 Speaker 3: the communities, and you just here over and over again, 86 00:04:37,440 --> 00:04:42,240 Speaker 3: contingency planning, getting ready like potentially cutting our potential, but 87 00:04:42,320 --> 00:04:45,680 Speaker 3: not there yet. But it is so clear that a 88 00:04:45,839 --> 00:04:48,200 Speaker 3: massive amount of time and energy is being spent on this. 89 00:04:48,680 --> 00:04:49,960 Speaker 4: What do we do when. 90 00:04:49,760 --> 00:04:53,520 Speaker 2: It hits Claudia, You've sat in the offices at the FED, folks. 91 00:04:53,560 --> 00:04:56,280 Speaker 2: This is not the romance of some big fancy table 92 00:04:56,320 --> 00:04:58,839 Speaker 2: in the Echos building. This is the meat and potatoes 93 00:04:58,880 --> 00:05:01,680 Speaker 2: that doing PhD work at the greatest central bank in 94 00:05:01,720 --> 00:05:05,640 Speaker 2: the world. And the answer is, you guys like smooth curves, 95 00:05:06,000 --> 00:05:09,680 Speaker 2: gradual change. We just had Jeans Soroka, in of the 96 00:05:09,720 --> 00:05:12,039 Speaker 2: Port of Los Angeles, flew in just to talk to 97 00:05:12,120 --> 00:05:18,000 Speaker 2: John Tucker. Claudia. He sees a jump condition, a discontinuous 98 00:05:18,200 --> 00:05:22,359 Speaker 2: event at his port. How do what fancy people like 99 00:05:22,440 --> 00:05:26,360 Speaker 2: you fold in the reality of long shorman in truckers 100 00:05:26,640 --> 00:05:30,480 Speaker 2: in Los Angeles. 101 00:05:29,839 --> 00:05:33,160 Speaker 3: Right, it's a moment where to some extent you have 102 00:05:33,240 --> 00:05:36,280 Speaker 3: to look at the models, but put them to the side. Right, 103 00:05:36,320 --> 00:05:39,440 Speaker 3: there's no macroeconomic model that's going to give you the 104 00:05:39,520 --> 00:05:43,279 Speaker 3: kind of discontinuities, the kind of very sharp turns that 105 00:05:43,360 --> 00:05:45,200 Speaker 3: you're seeing in the data. I mean those way we 106 00:05:45,200 --> 00:05:48,520 Speaker 3: should expect. We had this massive surge in imports that 107 00:05:48,600 --> 00:05:51,240 Speaker 3: had a big effect on the composition of GDP in 108 00:05:51,279 --> 00:05:54,400 Speaker 3: the first quarter, We're going to probably see a snapback 109 00:05:54,400 --> 00:05:56,920 Speaker 3: because I mean we from that shipping, those imports are 110 00:05:56,920 --> 00:05:59,400 Speaker 3: going to the floor. So don't come to me and say, oh, 111 00:05:59,480 --> 00:06:02,440 Speaker 3: GDP is three percent in the second quarter, all is great, 112 00:06:02,680 --> 00:06:04,800 Speaker 3: Like that could be under the hood telling us we've 113 00:06:04,839 --> 00:06:07,000 Speaker 3: got a big problem in the second half of this year. 114 00:06:07,480 --> 00:06:10,080 Speaker 3: So you have to, like you have to respond to 115 00:06:10,120 --> 00:06:12,760 Speaker 3: those discontinuities, particularly when you can tie them back to 116 00:06:12,800 --> 00:06:14,760 Speaker 3: a story. There's noise all the time that you want 117 00:06:14,800 --> 00:06:18,600 Speaker 3: to look through. This isn't noise, right, Like we're responding 118 00:06:18,600 --> 00:06:22,240 Speaker 3: to something big, and then that's why that outlook is 119 00:06:22,279 --> 00:06:23,279 Speaker 3: important in the judgment. 120 00:06:23,520 --> 00:06:27,480 Speaker 2: Claudia, with great respect for your impact in American economics, 121 00:06:27,520 --> 00:06:30,839 Speaker 2: I think everybody wants to know this unfair question, but 122 00:06:30,880 --> 00:06:34,400 Speaker 2: I'm going there on this strange Friday. What is your 123 00:06:34,480 --> 00:06:40,719 Speaker 2: counsel to Hasset at Pennsylvania Vestent of Yale and Greer 124 00:06:41,040 --> 00:06:45,040 Speaker 2: our trade representative as they counsel the president. These guys 125 00:06:45,040 --> 00:06:52,440 Speaker 2: are legit academics. What should they do with this unique presidency? 126 00:06:52,320 --> 00:06:56,200 Speaker 3: They need to slow it down, right, you know, I 127 00:06:56,240 --> 00:06:59,520 Speaker 3: disagree with the policies they're pursuing, but I'm strong, I'm 128 00:06:59,640 --> 00:07:02,000 Speaker 3: very turned about the way in which they're being pursued. 129 00:07:02,520 --> 00:07:05,440 Speaker 3: This is very aggressive, this is very fast, and it 130 00:07:05,480 --> 00:07:07,520 Speaker 3: can potentially cause a lot of damage. So even if 131 00:07:07,520 --> 00:07:10,880 Speaker 3: you're in the spirit of having more industrial poalicy, having 132 00:07:10,960 --> 00:07:14,000 Speaker 3: higher tariffs, a smaller government, like, there's a way to 133 00:07:14,120 --> 00:07:18,600 Speaker 3: do this that doesn't cause maximal damage, right, And I'm 134 00:07:18,720 --> 00:07:20,640 Speaker 3: very concerned, and I think the White House and you 135 00:07:20,640 --> 00:07:23,720 Speaker 3: hear some messaging from them that you know, tarafrates aren't 136 00:07:23,720 --> 00:07:27,120 Speaker 3: sustainable with China, and we're doing negotiations, but we need 137 00:07:27,160 --> 00:07:30,280 Speaker 3: to see some action that actually pulls back these costs 138 00:07:30,320 --> 00:07:31,280 Speaker 3: before it's too late. 139 00:07:31,440 --> 00:07:33,920 Speaker 2: Doctor sum Thank you so much, Claudius. I'm joins us 140 00:07:33,920 --> 00:07:37,840 Speaker 2: New Century Advise us here. 141 00:07:40,000 --> 00:07:43,600 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 142 00:07:43,640 --> 00:07:46,800 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 143 00:07:46,880 --> 00:07:50,560 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app or 144 00:07:50,720 --> 00:07:52,200 Speaker 1: watch us live on YouTube. 145 00:07:52,560 --> 00:07:57,280 Speaker 2: James Uroca where the Garcetti appointment in twenty fourteen has 146 00:07:57,320 --> 00:08:00,360 Speaker 2: the most important job in America right now. Every one 147 00:08:00,360 --> 00:08:03,320 Speaker 2: on Global Wall Street wants this view. We're honored off 148 00:08:03,320 --> 00:08:06,440 Speaker 2: the red Eye that the gentlemen of Los Angeles and 149 00:08:06,520 --> 00:08:09,840 Speaker 2: Long Beach Ports joined us this morning. Just thank you 150 00:08:09,920 --> 00:08:14,080 Speaker 2: so much for joining Bloomberg this morning. As simple as 151 00:08:14,120 --> 00:08:16,680 Speaker 2: I can make it, What is a single thing you 152 00:08:16,680 --> 00:08:20,440 Speaker 2: would say today to the long sharman of Long Beach 153 00:08:20,480 --> 00:08:21,480 Speaker 2: in Los Angeles. 154 00:08:21,640 --> 00:08:23,720 Speaker 4: We're going to get through this, even though we're going 155 00:08:23,720 --> 00:08:26,360 Speaker 4: to be down by thirty five percent next week on 156 00:08:26,480 --> 00:08:29,960 Speaker 4: cargo volume coming into the port compared to last year, 157 00:08:30,200 --> 00:08:35,760 Speaker 4: five thirty five percent. Major retailers, big importers have said, 158 00:08:35,840 --> 00:08:37,880 Speaker 4: at one hundred and forty five percent tariffs, I'm not 159 00:08:38,000 --> 00:08:40,360 Speaker 4: shipping out of China. I don't know if this could 160 00:08:40,440 --> 00:08:43,200 Speaker 4: change in two hours, two days, two weeks, So let's 161 00:08:43,280 --> 00:08:45,679 Speaker 4: hit the pause button. But to the long shoreman, We've 162 00:08:45,679 --> 00:08:48,240 Speaker 4: had a great fiscal policy in place for a decade. 163 00:08:48,360 --> 00:08:50,880 Speaker 4: We're going to keep investing. We're going to get through this. 164 00:08:51,280 --> 00:08:53,400 Speaker 4: Every four containers meet a job at the port. 165 00:08:53,440 --> 00:08:56,880 Speaker 2: What would you say to sixteen hundred Pennsylvania Avenue when 166 00:08:56,880 --> 00:09:00,360 Speaker 2: you observe their press moments, their management. 167 00:09:01,600 --> 00:09:05,480 Speaker 4: We're talking about the ground truth. Cargoes down, jobs are down, 168 00:09:05,520 --> 00:09:08,199 Speaker 4: and this is the dock workers, the truckers, warehouse folks. 169 00:09:08,200 --> 00:09:12,400 Speaker 4: But also the manufacturing people. This is Los Angeles County. 170 00:09:12,559 --> 00:09:15,240 Speaker 4: Almost four hundred thousand people go to work every day 171 00:09:15,280 --> 00:09:18,880 Speaker 4: in manufacturing jobs. It's just in Los Angeles, in La County. 172 00:09:19,000 --> 00:09:21,880 Speaker 4: It is the biggest in the nation. Those are the 173 00:09:21,880 --> 00:09:23,320 Speaker 4: folks that we got to keep going too. 174 00:09:24,200 --> 00:09:27,520 Speaker 5: So tell us how a tariff works. When does it 175 00:09:27,559 --> 00:09:30,400 Speaker 5: get assessed, How does it get assessed, who pays it? 176 00:09:30,440 --> 00:09:31,199 Speaker 8: How does that work. 177 00:09:31,520 --> 00:09:35,200 Speaker 4: There's a start date that's announced. If your cargo is 178 00:09:35,600 --> 00:09:39,760 Speaker 4: ingated to that port overseas after the date of announcement, 179 00:09:40,120 --> 00:09:43,160 Speaker 4: it's applied. The tariff has applied. It's assessed when it 180 00:09:43,200 --> 00:09:46,240 Speaker 4: gets off the ship in Los Angeles and assessed by 181 00:09:46,320 --> 00:09:47,000 Speaker 4: US Customs. 182 00:09:47,080 --> 00:09:47,880 Speaker 2: Who pays it? 183 00:09:48,840 --> 00:09:53,760 Speaker 4: The importer of record ammart, big retailer, big manufacturer bringing 184 00:09:53,840 --> 00:09:56,840 Speaker 4: in parts, they pay for it. And what the CEOs 185 00:09:56,880 --> 00:09:59,120 Speaker 4: and board members have been telling me is they're going 186 00:09:59,160 --> 00:10:01,160 Speaker 4: to pass it on to the next in the supply 187 00:10:01,280 --> 00:10:04,880 Speaker 4: chain consumers from the retail guys. The parts are going 188 00:10:04,880 --> 00:10:05,680 Speaker 4: straight to the factory. 189 00:10:05,720 --> 00:10:08,400 Speaker 2: We have somebody just emails in what's the COVID equivalent? 190 00:10:08,559 --> 00:10:12,319 Speaker 2: Is this like, Oh, I'm recalling March of twenty twenty, 191 00:10:12,320 --> 00:10:12,760 Speaker 2: Am I wrong? 192 00:10:12,880 --> 00:10:13,400 Speaker 3: Lall day? 193 00:10:14,120 --> 00:10:17,199 Speaker 4: Yeah? It was March, and our business was cut in half. 194 00:10:17,280 --> 00:10:19,200 Speaker 4: That month. We only did like four hundred and fifty 195 00:10:19,240 --> 00:10:22,880 Speaker 4: thousand containers, but it made a quick return as we 196 00:10:22,920 --> 00:10:26,200 Speaker 4: all started buying online and curbside pickup. I don't know 197 00:10:26,240 --> 00:10:28,319 Speaker 4: when the return date is going to be just yet. 198 00:10:28,840 --> 00:10:32,560 Speaker 5: So what are the Walmarts of the world telling you 199 00:10:32,880 --> 00:10:35,120 Speaker 5: in terms of kind of what they think they're going 200 00:10:35,200 --> 00:10:36,560 Speaker 5: how they're going to behave going forward? 201 00:10:37,480 --> 00:10:41,199 Speaker 4: Again? Hit the pause button. I'm not hiring. Open positions 202 00:10:41,200 --> 00:10:44,640 Speaker 4: are shelved for the time being. Capital investments are on pause, 203 00:10:45,120 --> 00:10:48,760 Speaker 4: and I'm waiting and seeing guys like Walmart and others 204 00:10:49,000 --> 00:10:53,280 Speaker 4: of the large big box variety started bringing in inventory 205 00:10:53,360 --> 00:10:57,320 Speaker 4: back last summertime campaign trail folks were talking about different 206 00:10:57,360 --> 00:11:00,719 Speaker 4: trade policy, tariffs, etc. These guys saw through that a 207 00:11:00,760 --> 00:11:04,199 Speaker 4: little bit, knowing that this day would come. Where I'm 208 00:11:04,240 --> 00:11:07,880 Speaker 4: concerned right now, Paul, are these small to middle sized 209 00:11:07,920 --> 00:11:11,520 Speaker 4: importers that didn't have the ability to bring an inventory warehouse, a, 210 00:11:11,559 --> 00:11:13,720 Speaker 4: et cetera. Now they're faced with a dilemma of do 211 00:11:13,800 --> 00:11:17,520 Speaker 4: I buy at these super exorbitant prices, Can I pass 212 00:11:17,559 --> 00:11:19,040 Speaker 4: it on and still compete with the big guys, or 213 00:11:19,080 --> 00:11:20,800 Speaker 4: do I just sit and wait. I've got to make 214 00:11:20,800 --> 00:11:23,400 Speaker 4: payroll next month with your harborst. 215 00:11:23,000 --> 00:11:25,320 Speaker 2: And with the Queen Mary over on Long Beach that 216 00:11:25,440 --> 00:11:28,000 Speaker 2: you know, the tourist thing. The fact is the stuff 217 00:11:28,000 --> 00:11:31,120 Speaker 2: comes off and they gets to get on Highway seven 218 00:11:31,120 --> 00:11:35,319 Speaker 2: to ten or whatever what happens on the interstate highways. 219 00:11:35,679 --> 00:11:37,520 Speaker 2: Given this crisis, you're. 220 00:11:37,360 --> 00:11:40,440 Speaker 4: Going to see truckers who have been hauling four and 221 00:11:40,440 --> 00:11:44,000 Speaker 4: five containers up till now per day move maybe two 222 00:11:44,040 --> 00:11:47,080 Speaker 4: or three. Starting next week, you see less traffic on 223 00:11:47,120 --> 00:11:50,360 Speaker 4: the roads. The warehouses with their vacancy rate at six 224 00:11:50,480 --> 00:11:53,280 Speaker 4: seven percent, that's probably going to dip to Retailers have 225 00:11:53,360 --> 00:11:55,520 Speaker 4: told me that they've got about five to seven weeks 226 00:11:55,600 --> 00:11:59,160 Speaker 4: left of normal inventory and then we'll start seeing spot shortages. 227 00:11:59,280 --> 00:12:01,840 Speaker 4: Give us an exam that you may go to the 228 00:12:01,880 --> 00:12:05,600 Speaker 4: store and you're looking for that blue shirt Duke perfect. 229 00:12:05,360 --> 00:12:06,600 Speaker 2: Duke merchandise right. 230 00:12:06,760 --> 00:12:09,640 Speaker 4: It gives you want to nice blue shirts your size 231 00:12:09,679 --> 00:12:11,880 Speaker 4: and your style with the right kind of collar. You 232 00:12:11,960 --> 00:12:15,080 Speaker 4: may see eleven purple ones on the shelf and one 233 00:12:15,120 --> 00:12:18,680 Speaker 4: blue one that just doesn't match your taste, and the 234 00:12:18,720 --> 00:12:21,120 Speaker 4: price for that blue one is likely up a lot 235 00:12:21,200 --> 00:12:21,959 Speaker 4: more than the others. 236 00:12:22,080 --> 00:12:24,000 Speaker 2: Our interview of the day here, we welcome all of 237 00:12:24,000 --> 00:12:27,760 Speaker 2: you accrastination, particularly early in the morning on the left coast. 238 00:12:27,840 --> 00:12:31,000 Speaker 2: Jeane Soroca with us here of the ports of Los Angeles, 239 00:12:31,120 --> 00:12:32,400 Speaker 2: Long Beach and the rest. 240 00:12:32,440 --> 00:12:33,920 Speaker 4: Paul, Hey, geene I. 241 00:12:34,000 --> 00:12:37,160 Speaker 5: Again, we've got a president who's the situation is very 242 00:12:37,200 --> 00:12:39,959 Speaker 5: fluid in terms of his policy pronouncements. If we were 243 00:12:40,000 --> 00:12:42,480 Speaker 5: to have a president that's maybe dial back some of 244 00:12:42,520 --> 00:12:47,600 Speaker 5: the tariff situation, what's the time frame for your whole process, 245 00:12:47,640 --> 00:12:49,319 Speaker 5: your whole world to start kicking in again. 246 00:12:49,480 --> 00:12:52,800 Speaker 4: Yep, Paul, if we reached a deal today as we're 247 00:12:52,840 --> 00:12:56,360 Speaker 4: speaking with China, whatever that deal may look like, a framework, etc. 248 00:12:57,240 --> 00:12:59,360 Speaker 4: It would take the shipping lines about two weeks to 249 00:12:59,480 --> 00:13:05,360 Speaker 4: reap his their vessels to the major ports Ching Dao, Jamin, Shanghai. 250 00:13:06,040 --> 00:13:08,240 Speaker 4: Then it takes another two weeks after they load up 251 00:13:08,280 --> 00:13:10,960 Speaker 4: to steam over to La So we've got a month 252 00:13:11,160 --> 00:13:13,120 Speaker 4: once we push the button to say, hey, we're back 253 00:13:13,120 --> 00:13:16,559 Speaker 4: in business. And that's why this inventory level at the 254 00:13:16,600 --> 00:13:19,280 Speaker 4: retail folks are telling me about we're starting to we're 255 00:13:19,280 --> 00:13:20,360 Speaker 4: starting to get a little tight here. 256 00:13:20,640 --> 00:13:23,160 Speaker 2: You're maybe the one person in America that can to 257 00:13:23,160 --> 00:13:26,319 Speaker 2: answer this. With great respect for Ambassador Burns Nicholas Burns 258 00:13:26,320 --> 00:13:30,080 Speaker 2: with his public service to China here in the recent years, 259 00:13:30,800 --> 00:13:33,640 Speaker 2: we all understand there's going to be retail shortages here 260 00:13:33,800 --> 00:13:38,040 Speaker 2: empty the four hundred thousand manufacturing types in Los Angeles, 261 00:13:38,600 --> 00:13:42,680 Speaker 2: those Chinese names you pronounced correctly, that I Butcher. What's 262 00:13:42,760 --> 00:13:45,160 Speaker 2: this going to be like for the people in those 263 00:13:45,280 --> 00:13:49,040 Speaker 2: Chinese cities of manufacturing and export? 264 00:13:49,280 --> 00:13:51,320 Speaker 4: Yeah, tom As, you remember I worked in China for 265 00:13:51,320 --> 00:13:53,680 Speaker 4: about four and a half years. They still maintained very 266 00:13:53,720 --> 00:13:56,520 Speaker 4: close ties there to the business community. I'm on the 267 00:13:56,559 --> 00:14:01,320 Speaker 4: phone with guys and friends overnight every night, and basically 268 00:14:01,440 --> 00:14:05,199 Speaker 4: manufacturing has slowed to levels they have not seen before 269 00:14:05,240 --> 00:14:08,480 Speaker 4: since the COVID times. And if folks are out of work, 270 00:14:08,520 --> 00:14:09,760 Speaker 4: the government's going to help them out. 271 00:14:10,200 --> 00:14:11,720 Speaker 2: They have a social safety net. 272 00:14:11,800 --> 00:14:16,679 Speaker 5: Yes, So what are you telling I guess your workers 273 00:14:16,720 --> 00:14:19,160 Speaker 5: at the port, I mean you've got I remember from 274 00:14:19,200 --> 00:14:21,360 Speaker 5: you were so kind to a store in a pandemic 275 00:14:21,360 --> 00:14:23,520 Speaker 5: to explain how this whole supply chain thing works. 276 00:14:23,600 --> 00:14:25,320 Speaker 4: It's not just the people unloading the cargo. 277 00:14:25,360 --> 00:14:28,960 Speaker 5: It's the truckers, it's the it's a warehouse employees, it's. 278 00:14:28,880 --> 00:14:31,240 Speaker 4: Everybody, right right, It's one to nine jobs in the 279 00:14:31,280 --> 00:14:34,480 Speaker 4: five counties Southern California area. A million people go to 280 00:14:34,520 --> 00:14:37,200 Speaker 4: work every day based on what we do at the 281 00:14:37,240 --> 00:14:40,160 Speaker 4: ports of LA and Long Beach, and so what we're 282 00:14:40,160 --> 00:14:42,760 Speaker 4: trying to do is just keep morale up. Again, Let's 283 00:14:42,760 --> 00:14:44,320 Speaker 4: not blink here. We still get a lot of work 284 00:14:44,320 --> 00:14:46,440 Speaker 4: to do. The longshoreman as an example, they can start 285 00:14:46,480 --> 00:14:50,240 Speaker 4: doing preventative maintenance on the machinery when volume dies down 286 00:14:50,280 --> 00:14:52,680 Speaker 4: a little bit. The mechanics can get out there in 287 00:14:52,760 --> 00:14:54,800 Speaker 4: force and make sure that all this equipment is ready. 288 00:14:54,800 --> 00:14:57,200 Speaker 4: When that surge comes back, we're going to be humming 289 00:14:57,560 --> 00:15:01,080 Speaker 4: with the truckers. Let's move around some domestic freight as well. 290 00:15:01,360 --> 00:15:03,720 Speaker 4: So we're just trying to keep the morale up, keep 291 00:15:03,840 --> 00:15:06,960 Speaker 4: the people focused on the job as best we can. 292 00:15:07,280 --> 00:15:11,360 Speaker 4: But knowing that we've got a preparation. We've got preparation here. Now. 293 00:15:11,760 --> 00:15:13,600 Speaker 4: When that cargo picks up, we're going to see it 294 00:15:13,640 --> 00:15:16,280 Speaker 4: forty days before it actually arrives on our shores. We're 295 00:15:16,280 --> 00:15:16,920 Speaker 4: gonna be ready. 296 00:15:16,960 --> 00:15:18,760 Speaker 2: Do you sleep on the Red Eye or do you 297 00:15:18,800 --> 00:15:19,840 Speaker 2: work in the Red Eye? 298 00:15:19,960 --> 00:15:23,040 Speaker 4: You know, I got a couple of winks, but you know, 299 00:15:23,400 --> 00:15:25,760 Speaker 4: I mean just getting here to Manhattan, seeing you guys 300 00:15:25,760 --> 00:15:27,680 Speaker 4: the energy here and with all that's going on in 301 00:15:27,680 --> 00:15:28,760 Speaker 4: our industry. 302 00:15:28,480 --> 00:15:32,000 Speaker 8: We're moving, You're getting energy from this. 303 00:15:31,440 --> 00:15:36,280 Speaker 2: This is yes, John, I regularly appreciate it. I'm thrilled 304 00:15:36,280 --> 00:15:39,280 Speaker 2: to have them with us. A gentleman of Los Angeles 305 00:15:39,320 --> 00:15:43,600 Speaker 2: and all of this important discussion. Jeans sorocas Chief Executive 306 00:15:43,640 --> 00:15:46,560 Speaker 2: Officer the Port of Los Angeles. 307 00:15:46,640 --> 00:15:50,560 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 308 00:15:50,560 --> 00:15:53,880 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 309 00:15:54,000 --> 00:15:56,960 Speaker 1: with the Bloomberg Business app. You can also listen live 310 00:15:57,040 --> 00:16:00,120 Speaker 1: on Amazon Alexa from our flagship New York Stays and 311 00:16:00,560 --> 00:16:04,640 Speaker 1: just say Alexa play Bloomberg eleven thirty good brding, everyone. 312 00:16:04,560 --> 00:16:07,280 Speaker 2: Post anytime, keeness jobs say digress right now to the 313 00:16:07,280 --> 00:16:10,600 Speaker 2: earnings that we see in the digestment of Amazon, Apple 314 00:16:10,720 --> 00:16:12,920 Speaker 2: and the others. And when you do that, you look 315 00:16:12,960 --> 00:16:15,720 Speaker 2: at the cloud. I looked at a given cloud ETF 316 00:16:15,720 --> 00:16:18,280 Speaker 2: I went back ten years. I get for anirog Rana, 317 00:16:18,400 --> 00:16:22,240 Speaker 2: a log regression, and I say the reason for the 318 00:16:22,280 --> 00:16:25,400 Speaker 2: shaving of the beard. For those of you on radio, 319 00:16:25,520 --> 00:16:29,080 Speaker 2: you can see this, but on YouTube, it's fine cinema. 320 00:16:29,520 --> 00:16:32,680 Speaker 2: When we go down one point four standard deviations, off 321 00:16:32,680 --> 00:16:36,600 Speaker 2: the ten year trend yep Rana shaves, he's not coming 322 00:16:36,640 --> 00:16:41,360 Speaker 2: back till we tick on the trend. What's your timeline, Ana, Rog? 323 00:16:41,760 --> 00:16:44,480 Speaker 2: I'm getting that beard back on the face. Is it 324 00:16:44,520 --> 00:16:47,280 Speaker 2: going to be a recovery of quarters or years? 325 00:16:48,880 --> 00:16:52,240 Speaker 7: I don't know. It depends on the weather, mostly on Rog. 326 00:16:52,280 --> 00:16:54,000 Speaker 5: What did you learn last night from Amazon? And they 327 00:16:54,000 --> 00:16:57,400 Speaker 5: put an operating income guidance? You know range out there 328 00:16:57,400 --> 00:17:00,240 Speaker 5: that you could drive a fleet of Amazon trucks through 329 00:17:00,240 --> 00:17:00,840 Speaker 5: what's going. 330 00:17:00,680 --> 00:17:03,760 Speaker 7: On, But what you would expect that because the tariff 331 00:17:03,800 --> 00:17:06,080 Speaker 7: uncertainty is so high, you do not know whether the 332 00:17:06,080 --> 00:17:08,560 Speaker 7: goods coming in at what price there would be, what 333 00:17:08,640 --> 00:17:11,199 Speaker 7: customers would buy. I mean, there's a lot going on 334 00:17:11,240 --> 00:17:14,760 Speaker 7: their retail business. But frankly speaking, the Amazon Web Services 335 00:17:14,800 --> 00:17:19,359 Speaker 7: margins were spectacular yesterday at thirty nine point five percent. 336 00:17:19,680 --> 00:17:21,600 Speaker 7: Now that's going to drop down a little bit in 337 00:17:21,680 --> 00:17:25,320 Speaker 7: the next quarter because of compensation reasons. But other than that, 338 00:17:25,600 --> 00:17:28,159 Speaker 7: you know, the operating income is largely dependent on the 339 00:17:28,200 --> 00:17:29,359 Speaker 7: retail business right now. 340 00:17:30,080 --> 00:17:32,200 Speaker 5: And quite frankly, I think are we at the point 341 00:17:32,200 --> 00:17:35,040 Speaker 5: now on aug where we don't even care about Amazon 342 00:17:35,119 --> 00:17:35,520 Speaker 5: dot Com? 343 00:17:35,600 --> 00:17:38,439 Speaker 4: Is it all just really important WS? 344 00:17:39,680 --> 00:17:41,640 Speaker 7: But you know, if you think about it, the rest 345 00:17:41,680 --> 00:17:44,720 Speaker 7: of the businesses do have an impact on their margin structure. 346 00:17:44,800 --> 00:17:46,560 Speaker 7: So you know, you do have to care about it 347 00:17:46,600 --> 00:17:49,360 Speaker 7: because all the benefit that you're getting from the Amazon 348 00:17:49,359 --> 00:17:52,240 Speaker 7: Web Services profit, you know, some of the other businesses 349 00:17:52,280 --> 00:17:54,359 Speaker 7: can can negate that I had. 350 00:17:54,440 --> 00:17:57,720 Speaker 2: Interag Lizzie Sanders was in yesterday and I trotted out Graham, 351 00:17:57,760 --> 00:18:02,119 Speaker 2: Down and Coddle seven hundred pages. Securities analysis. In the 352 00:18:02,119 --> 00:18:05,160 Speaker 2: heart of the matter is a timeline to terminal value. 353 00:18:05,320 --> 00:18:07,760 Speaker 2: When you look at the cloud, do you have a 354 00:18:07,840 --> 00:18:11,679 Speaker 2: three year view, seven year view, decade view? What's the 355 00:18:11,800 --> 00:18:16,240 Speaker 2: RANA terminal value in analysis of cloud cash flow? 356 00:18:17,320 --> 00:18:19,440 Speaker 7: See, when you look at something like a cloud business, 357 00:18:19,440 --> 00:18:20,920 Speaker 7: you know, I rate them as one of the best 358 00:18:20,920 --> 00:18:23,760 Speaker 7: businesses out there. You know, right next to you know 359 00:18:23,800 --> 00:18:27,320 Speaker 7: one could say Visa and mastercout payment processors. The reason 360 00:18:27,359 --> 00:18:30,280 Speaker 7: for that is because once you develop an application in 361 00:18:30,320 --> 00:18:32,679 Speaker 7: the cloud, you know you're not going back and develop 362 00:18:32,680 --> 00:18:34,719 Speaker 7: maing it in house. This is, in our view, one 363 00:18:34,720 --> 00:18:37,520 Speaker 7: of the most durable businesses out there. So my dominant 364 00:18:37,560 --> 00:18:40,080 Speaker 7: value actually is well above ten us on this one. 365 00:18:40,480 --> 00:18:43,239 Speaker 2: What's the electricity story? Paul and I see all this 366 00:18:43,320 --> 00:18:47,359 Speaker 2: gloom and doom retail's gonna pay for so and so's 367 00:18:47,480 --> 00:18:51,359 Speaker 2: next cloud thing in Texas or whatever. Just a quick 368 00:18:51,440 --> 00:18:55,480 Speaker 2: brief here, Should we fear that our utility bills will 369 00:18:55,520 --> 00:18:59,400 Speaker 2: pay for fancy billionaires in the RAA cloud space? 370 00:19:00,760 --> 00:19:02,840 Speaker 7: Yeah, I'll take you back to around two thousand and eight, 371 00:19:02,920 --> 00:19:05,600 Speaker 7: two thousand and nine, when everybody thought that because of China, 372 00:19:05,640 --> 00:19:08,679 Speaker 7: the oil prices will go super cycle two hundred and 373 00:19:08,680 --> 00:19:10,560 Speaker 7: fifty to two hundred bucks. And you know, we haven't 374 00:19:10,600 --> 00:19:13,720 Speaker 7: seen that happen. So I firmly believe that people in 375 00:19:13,720 --> 00:19:16,000 Speaker 7: the power industry will figure out how to take care 376 00:19:16,000 --> 00:19:19,639 Speaker 7: of this shortage of demand that will come from all 377 00:19:19,680 --> 00:19:22,520 Speaker 7: the data center build up. You know, I'm not sweating 378 00:19:22,880 --> 00:19:24,720 Speaker 7: bit that that is going to have a have a 379 00:19:24,720 --> 00:19:27,240 Speaker 7: big impact on the AI boom that we are seeing 380 00:19:27,320 --> 00:19:27,720 Speaker 7: right now. 381 00:19:28,240 --> 00:19:30,359 Speaker 5: Hey, Anrav, we just said Gene Soroka in who runs 382 00:19:30,359 --> 00:19:32,879 Speaker 5: the Port of Los Angeles, he says his shipments next 383 00:19:32,960 --> 00:19:35,920 Speaker 5: week look to be down thirty percent year on year. 384 00:19:36,080 --> 00:19:39,200 Speaker 5: Is that just what's Amazon saying about what they're doing 385 00:19:39,280 --> 00:19:41,720 Speaker 5: in terms of stocking their shelves. 386 00:19:42,440 --> 00:19:45,280 Speaker 7: See, one of the things we'll see is, you know, Amazon, 387 00:19:45,320 --> 00:19:47,520 Speaker 7: both on the one P business and the three pe business, 388 00:19:47,520 --> 00:19:49,679 Speaker 7: you will see a decline in volume. I mean it 389 00:19:49,680 --> 00:19:51,680 Speaker 7: has to be. You know, something that you're paying ten 390 00:19:51,720 --> 00:19:54,520 Speaker 7: dollars for, you you were not going to pay substantially 391 00:19:54,600 --> 00:19:57,200 Speaker 7: more for that, So you will see a lull. Another 392 00:19:57,240 --> 00:19:59,679 Speaker 7: thing we learned from Apple last night was they actually 393 00:19:59,720 --> 00:20:02,919 Speaker 7: brought in a lot more or basically, you build up 394 00:20:02,960 --> 00:20:06,159 Speaker 7: their inventory before the tariff hyves, so at least in 395 00:20:06,160 --> 00:20:08,679 Speaker 7: the June quarter they can fulfill that demand that's going 396 00:20:08,760 --> 00:20:11,040 Speaker 7: to show up. So you could see a lot of 397 00:20:11,200 --> 00:20:15,160 Speaker 7: companies stocking up ahead of this particular tariff raise. Now 398 00:20:15,200 --> 00:20:17,560 Speaker 7: the question is if it continues for another three to 399 00:20:17,640 --> 00:20:20,360 Speaker 7: six months, then there's a bigger problem. And I think 400 00:20:20,400 --> 00:20:22,160 Speaker 7: that's what all of us are trying to figure out, 401 00:20:22,480 --> 00:20:24,560 Speaker 7: is whether this thing gets solved in three months or 402 00:20:24,600 --> 00:20:25,680 Speaker 7: six months or longer. 403 00:20:26,520 --> 00:20:28,959 Speaker 2: Nerik, thank you so much and rug run with us 404 00:20:29,000 --> 00:20:32,400 Speaker 2: here with much more fun publishing in Bloomberg Intelligence Here 405 00:20:32,480 --> 00:20:34,080 Speaker 2: on the cloud. 406 00:20:38,880 --> 00:20:42,800 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 407 00:20:42,840 --> 00:20:46,160 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 408 00:20:46,240 --> 00:20:49,080 Speaker 1: with the Bloomberg Business app. You can also watch us 409 00:20:49,119 --> 00:20:52,480 Speaker 1: live every weekday on YouTube and always on the Bloomberg 410 00:20:52,560 --> 00:20:53,960 Speaker 1: terminal the. 411 00:20:53,840 --> 00:20:58,040 Speaker 2: Peterson Institute for International Economics. This is like twelve years ago, 412 00:20:58,240 --> 00:21:01,000 Speaker 2: had to fill awfully big shoes of Fred Burston, and 413 00:21:01,040 --> 00:21:05,200 Speaker 2: they chose Adam Posen, truly one of the nation's great economists, 414 00:21:05,200 --> 00:21:07,920 Speaker 2: to our duty at the Bank of England years ago 415 00:21:07,960 --> 00:21:11,440 Speaker 2: as an outside member, where thrilled doctor Posen could join 416 00:21:11,560 --> 00:21:15,640 Speaker 2: us because of all the readable noise of the trade war. 417 00:21:16,280 --> 00:21:20,159 Speaker 2: His essay trade wars are easy to lose this on 418 00:21:20,280 --> 00:21:24,520 Speaker 2: April ninth has been the definitive essay that along at 419 00:21:24,560 --> 00:21:28,520 Speaker 2: the Peterson Institute with Olivia Blonchard's work, David Wilcox and 420 00:21:28,560 --> 00:21:31,919 Speaker 2: the Fed, and i'd mentioned from Berkeley Maurice Sobsfeld on 421 00:21:32,119 --> 00:21:35,840 Speaker 2: King Dollar's shaky ground. Doctor Posen, thank you so much 422 00:21:35,880 --> 00:21:39,000 Speaker 2: for joining Bloomberg Surveillance. What did you learn a out 423 00:21:39,080 --> 00:21:42,280 Speaker 2: him at the IMF meetings? How scared of the fancy 424 00:21:42,320 --> 00:21:43,200 Speaker 2: people like you? 425 00:21:45,560 --> 00:21:46,600 Speaker 4: Thanks so much, Tom. 426 00:21:46,800 --> 00:21:49,720 Speaker 6: The partnership with you, Paul and Surveillance gets our analysis 427 00:21:49,800 --> 00:21:53,640 Speaker 6: out to your audience, which we really appreciate. The IMF 428 00:21:53,640 --> 00:21:58,240 Speaker 6: World Bank meetings were the most blank IMF World Bank 429 00:21:58,280 --> 00:22:02,800 Speaker 6: meetings I've ever been involved with. Nothing was talked about 430 00:22:02,840 --> 00:22:07,000 Speaker 6: in any serious way that I'm aware of, because everybody 431 00:22:07,119 --> 00:22:11,359 Speaker 6: was just on tenter hooks. The Treasury Secretary and the 432 00:22:11,400 --> 00:22:14,360 Speaker 6: FED Chair in the G seven and G twenty meetings 433 00:22:14,440 --> 00:22:17,439 Speaker 6: tried to reassure people and it didn't go very well. 434 00:22:18,720 --> 00:22:21,919 Speaker 6: The statements made by the Treasury Secretary to a private 435 00:22:21,960 --> 00:22:28,280 Speaker 6: banking group, which then leaked intentionally, we're seen as not 436 00:22:28,480 --> 00:22:32,320 Speaker 6: that reassuring either, and as covered in the Financial Times, 437 00:22:32,400 --> 00:22:36,280 Speaker 6: in Bloomberg and elsewhere, the CEA chair just made people 438 00:22:36,280 --> 00:22:40,200 Speaker 6: more nervous. So what does that leave you with? A 439 00:22:40,320 --> 00:22:44,840 Speaker 6: basically a very uncertain outlook and bottom line, a bunch 440 00:22:44,880 --> 00:22:46,800 Speaker 6: of central banks who are not the FED, who are 441 00:22:46,800 --> 00:22:47,879 Speaker 6: going to be cutting rates. 442 00:22:48,160 --> 00:22:50,199 Speaker 2: One day, Adam I was in Edinburgh and I did 443 00:22:50,280 --> 00:22:52,679 Speaker 2: a radio interview back to America to Bloomberg on the 444 00:22:52,720 --> 00:22:56,280 Speaker 2: economy from the porch of Adam Smith's house. You gave 445 00:22:56,320 --> 00:23:00,160 Speaker 2: the original Adam Smith lecture at the University of Glasgow. 446 00:23:00,480 --> 00:23:04,240 Speaker 2: What Adam Smith would David Ricardo, would Adam Posen Would 447 00:23:04,240 --> 00:23:06,400 Speaker 2: they call this a new mercantilism? 448 00:23:07,760 --> 00:23:08,480 Speaker 4: Absolutely? 449 00:23:09,400 --> 00:23:13,359 Speaker 6: What Adam Smith and David Ricardo outlined the law of 450 00:23:13,400 --> 00:23:17,960 Speaker 6: comparative advantage, They advantages of specialization and most of all, 451 00:23:18,480 --> 00:23:21,920 Speaker 6: the idea that governments trying to stack up cash at 452 00:23:21,920 --> 00:23:25,399 Speaker 6: the expense of other countries betrays their people's well being. 453 00:23:25,920 --> 00:23:27,040 Speaker 4: They'd be all on that. 454 00:23:27,359 --> 00:23:32,000 Speaker 6: And then there's more sophisticated, more narrow points, more recently 455 00:23:32,080 --> 00:23:35,879 Speaker 6: less profound, but still important that you've said in my 456 00:23:36,000 --> 00:23:39,639 Speaker 6: article on many others that you can't win a trade ward, 457 00:23:39,920 --> 00:23:43,119 Speaker 6: at least not with the large economy you're heavily dependent on, 458 00:23:43,640 --> 00:23:47,560 Speaker 6: and you can't win by creating uncertainty. So this is 459 00:23:47,720 --> 00:23:50,840 Speaker 6: just bad. I mean, I realized the stock market has recovered, 460 00:23:51,080 --> 00:23:54,359 Speaker 6: and I realized that some companies are just getting on 461 00:23:54,480 --> 00:24:00,720 Speaker 6: with it, whether it's corruption or investment or paying field fees. 462 00:24:00,840 --> 00:24:02,160 Speaker 4: But it's bad. 463 00:24:03,000 --> 00:24:05,480 Speaker 5: Adam does as we think about the US and China 464 00:24:05,520 --> 00:24:10,000 Speaker 5: in a trade dispute. Here does either side have an 465 00:24:10,040 --> 00:24:11,280 Speaker 5: inherent advantage here? 466 00:24:13,119 --> 00:24:15,760 Speaker 6: To me, Paul, I think the starting point is both 467 00:24:15,800 --> 00:24:18,000 Speaker 6: sides are better off if you don't play. It's like 468 00:24:18,080 --> 00:24:20,439 Speaker 6: that old movie War Games. You know better not to 469 00:24:20,440 --> 00:24:23,960 Speaker 6: play the game. But if you come right down to it, China, 470 00:24:24,520 --> 00:24:26,560 Speaker 6: if push comes to the shove, has advantaged it. So 471 00:24:26,720 --> 00:24:29,840 Speaker 6: for the US it is depending on the US for 472 00:24:29,920 --> 00:24:32,840 Speaker 6: a few things which it wasn't already getting in terms 473 00:24:32,880 --> 00:24:35,880 Speaker 6: of technology and otherwise as a source of money. Money's good, 474 00:24:35,920 --> 00:24:37,720 Speaker 6: but you can find many ways to make money, and 475 00:24:37,800 --> 00:24:40,080 Speaker 6: if you have to cut back on money, you can 476 00:24:40,119 --> 00:24:43,040 Speaker 6: deal with it. US is dependent on China for a 477 00:24:43,080 --> 00:24:47,600 Speaker 6: whole bunch of things, ranging from pharmaceuticals to air conditioning systems, 478 00:24:47,680 --> 00:24:51,200 Speaker 6: to low end chips that populate our electronics and our autos, 479 00:24:51,600 --> 00:24:55,199 Speaker 6: to rare earth's processing, some of which over time we 480 00:24:55,320 --> 00:24:58,000 Speaker 6: can substitute for, but in the short run we can't 481 00:24:58,000 --> 00:25:01,000 Speaker 6: get elsewhere, and that, to me is the real problem here. 482 00:25:01,080 --> 00:25:05,000 Speaker 6: If the Trump administration had undertaken a major effort which 483 00:25:05,000 --> 00:25:08,280 Speaker 6: would have taken years, to wean the US away from 484 00:25:08,359 --> 00:25:11,240 Speaker 6: dependence on China and worked with other countries and gotten 485 00:25:11,280 --> 00:25:15,080 Speaker 6: alternative sources and subsidized production a whole bunch of things 486 00:25:15,080 --> 00:25:17,320 Speaker 6: to make us less dependent, that would be one thing. 487 00:25:17,840 --> 00:25:20,760 Speaker 6: But starting the trade war when you're totally dependent just 488 00:25:20,880 --> 00:25:23,080 Speaker 6: leads to the kinds of shortages you were talking about. 489 00:25:23,080 --> 00:25:25,680 Speaker 6: Our job was talking about in the Port of Los Angeles. 490 00:25:26,119 --> 00:25:31,280 Speaker 5: Adam, are trade deficits inherently a bad thing for a country? 491 00:25:32,440 --> 00:25:36,000 Speaker 6: No? I mean the US ran trade deficits through much 492 00:25:36,000 --> 00:25:39,679 Speaker 6: of the nineteenth century. And grew very quickly. Australia has 493 00:25:39,720 --> 00:25:42,240 Speaker 6: been running trade deficits for years and it has grown well 494 00:25:42,280 --> 00:25:46,240 Speaker 6: with great equality. Trade deficits can be bad if it 495 00:25:46,280 --> 00:25:49,200 Speaker 6: turns out you're either a on a fixed exchange rate 496 00:25:49,320 --> 00:25:52,560 Speaker 6: system and you don't generate enough currency to keep the 497 00:25:52,640 --> 00:25:55,399 Speaker 6: exchange rate fixed, which is why most countries aren't on 498 00:25:55,440 --> 00:25:59,000 Speaker 6: a fixed exchange rate system, or B if you're just 499 00:25:59,359 --> 00:26:02,600 Speaker 6: basically selling off all the family China, or just to 500 00:26:02,680 --> 00:26:06,520 Speaker 6: keep yourself alive. But for the US, over the last 501 00:26:06,600 --> 00:26:09,040 Speaker 6: fifty years, one hundred years, one hundred and fifty years, 502 00:26:09,040 --> 00:26:12,959 Speaker 6: we've been running trade deficits because people find investing here 503 00:26:13,840 --> 00:26:17,280 Speaker 6: more valuable than investing in other places. And when that 504 00:26:17,400 --> 00:26:22,199 Speaker 6: capital comes in, they're paying us to buy more stuff 505 00:26:22,240 --> 00:26:25,520 Speaker 6: than we have of opportunities, which is great at least 506 00:26:25,640 --> 00:26:26,280 Speaker 6: until now. 507 00:26:26,640 --> 00:26:29,600 Speaker 2: Adam posing with us will continue with the Peterson Institute. 508 00:26:29,600 --> 00:26:32,840 Speaker 2: On this job's day, twenty minutes away from an important report, 509 00:26:32,920 --> 00:26:36,359 Speaker 2: Claudia Sum will lead our coverage our conversation at the 510 00:26:36,359 --> 00:26:41,160 Speaker 2: bottom of the hour equities. As doctor Posen mentioned, lift 511 00:26:41,560 --> 00:26:43,480 Speaker 2: it's been four hundred days in a row. I think 512 00:26:43,520 --> 00:26:46,800 Speaker 2: it's like April didn't occur. Up twenty four on futures down, 513 00:26:46,800 --> 00:26:48,440 Speaker 2: futures up to zero one. 514 00:26:48,560 --> 00:26:52,320 Speaker 5: Paul Adam, what do you think the economic impact of 515 00:26:53,000 --> 00:26:56,399 Speaker 5: the TIFFs, the uncertainty surrounding the terrifsm What do you 516 00:26:56,440 --> 00:26:59,200 Speaker 5: think the economic impact would be on the US economy 517 00:26:59,240 --> 00:27:01,800 Speaker 5: over the next I know, six to twelve months maybe. 518 00:27:02,960 --> 00:27:06,280 Speaker 6: Well, Paul, I think there's three things going on. I mean, 519 00:27:06,280 --> 00:27:08,359 Speaker 6: you can list a dozen, but the three big things 520 00:27:08,400 --> 00:27:13,040 Speaker 6: are first, again where you started the reporting that Port 521 00:27:13,080 --> 00:27:15,000 Speaker 6: of la is a great source of information. But it's 522 00:27:15,000 --> 00:27:16,840 Speaker 6: not just Port of Lee, it's Port of Seattle, it's 523 00:27:16,880 --> 00:27:19,719 Speaker 6: other places that we're going to have shortages, We're going 524 00:27:19,760 --> 00:27:21,800 Speaker 6: to have interruptions, and it's not just going to be, 525 00:27:21,840 --> 00:27:25,399 Speaker 6: as President Trump dismissively put it, fewer doll choices at 526 00:27:25,480 --> 00:27:29,000 Speaker 6: Christmas for rich kids. It's going to be things that 527 00:27:29,280 --> 00:27:32,679 Speaker 6: companies need, small businesses need in order to produce what 528 00:27:32,720 --> 00:27:37,320 Speaker 6: they produce. And so that's going to be big. That's 529 00:27:37,359 --> 00:27:39,880 Speaker 6: going to be stagflationary. It may not turn the whole 530 00:27:39,880 --> 00:27:43,400 Speaker 6: economy a stackulation, but it's a stagflationary force, meaning inflation 531 00:27:43,520 --> 00:27:47,000 Speaker 6: and contraction. The second thing the uncertainty does is it 532 00:27:47,080 --> 00:27:51,680 Speaker 6: paralyzes investment. So essentially, The only way you get corporate 533 00:27:51,720 --> 00:27:54,720 Speaker 6: investment kept cap X in this country when this is 534 00:27:54,800 --> 00:27:58,560 Speaker 6: going on is under force measure or from the US government, 535 00:27:58,640 --> 00:28:02,879 Speaker 6: meaning either a company our country is are twisted and 536 00:28:03,000 --> 00:28:06,399 Speaker 6: punning up some money or huge amounts of money and 537 00:28:06,480 --> 00:28:09,480 Speaker 6: protection is thrown at it. Otherwise, investment grinds to a 538 00:28:09,560 --> 00:28:12,800 Speaker 6: halt basically because people don't know what's worth it or not, Adam. 539 00:28:13,040 --> 00:28:14,359 Speaker 4: And then the third thing, sorry, go. 540 00:28:14,359 --> 00:28:16,720 Speaker 2: Ahead, no, please give us the third thing please. 541 00:28:16,960 --> 00:28:20,320 Speaker 6: Sorry. Sorry. The last point about uncertainty is it means 542 00:28:20,320 --> 00:28:22,480 Speaker 6: that there's no deal. So if you told me that 543 00:28:22,560 --> 00:28:25,320 Speaker 6: you were going to go to Japan and Korea first 544 00:28:25,760 --> 00:28:28,480 Speaker 6: to try to make a deal, I was totally believing 545 00:28:28,520 --> 00:28:32,640 Speaker 6: that that made sense. But even japan officials, who love 546 00:28:33,160 --> 00:28:35,600 Speaker 6: being good with the US are walking out saying, we 547 00:28:35,640 --> 00:28:37,119 Speaker 6: can't make a deal because we don't know what the 548 00:28:37,119 --> 00:28:37,840 Speaker 6: heck's going on. 549 00:28:38,480 --> 00:28:39,560 Speaker 4: And even if. 550 00:28:39,480 --> 00:28:41,440 Speaker 6: We make a deal, they'll just renegg like they did 551 00:28:41,480 --> 00:28:43,960 Speaker 6: on the previous one, Adam. And those are the big things. 552 00:28:44,080 --> 00:28:46,200 Speaker 2: One of the great great memories, doctor Posen, that we 553 00:28:46,320 --> 00:28:49,600 Speaker 2: have is we got the intelligence on the Soviet Union rung. 554 00:28:49,960 --> 00:28:52,440 Speaker 2: I remember Jeff six out of Columbia going over as 555 00:28:52,440 --> 00:28:55,720 Speaker 2: a young kid out of harvardation to say, and all 556 00:28:55,760 --> 00:28:58,920 Speaker 2: of us getting humbled on a new capitalism post Gorbashev 557 00:28:59,360 --> 00:29:03,920 Speaker 2: and such. Your Nicholas Lardi is absolutely definitive on the 558 00:29:03,960 --> 00:29:06,560 Speaker 2: mood of China. A year ago, he writes, I am 559 00:29:06,600 --> 00:29:09,640 Speaker 2: a skeptic on the idea that consumer confidence in China 560 00:29:10,080 --> 00:29:12,720 Speaker 2: is very weak. From the land of Frek Burston in 561 00:29:12,800 --> 00:29:16,240 Speaker 2: the Peterson Institute, do we have good intelligence on what's 562 00:29:16,280 --> 00:29:19,480 Speaker 2: really going on in the Chinese view of the trade war? 563 00:29:21,320 --> 00:29:24,760 Speaker 6: I'm glad you made the analogy to Eastern Europe. I mean, 564 00:29:24,800 --> 00:29:28,680 Speaker 6: I remember going to East Germany for my dissertation research 565 00:29:28,720 --> 00:29:31,760 Speaker 6: starting in nineteen ninety, and you know, and the reports 566 00:29:31,800 --> 00:29:34,400 Speaker 6: where they were a third of our or two thirds 567 00:29:34,400 --> 00:29:36,880 Speaker 6: of our capity income, and the turds out they were 568 00:29:36,960 --> 00:29:39,880 Speaker 6: less than a third. I don't think we have that 569 00:29:40,000 --> 00:29:44,480 Speaker 6: big an intelligence gap with China, because not because they're 570 00:29:44,520 --> 00:29:48,840 Speaker 6: not secretive, but just because it's a different world, more permeable, 571 00:29:48,920 --> 00:29:52,160 Speaker 6: more information is out there, Paul. But there are things 572 00:29:52,200 --> 00:29:56,000 Speaker 6: in China that are hanging on over that. The threat, 573 00:29:56,080 --> 00:29:58,080 Speaker 6: as I argued a couple of years ago, now in 574 00:29:58,120 --> 00:30:02,680 Speaker 6: Foreign Affairs of the Colinya's Communist Party taking away property 575 00:30:02,720 --> 00:30:05,920 Speaker 6: rights from normal so to speak, Chinese people, which wasn't 576 00:30:05,960 --> 00:30:08,160 Speaker 6: seen as a big threat for the last few decades, 577 00:30:08,440 --> 00:30:11,000 Speaker 6: and that has continued to be a drag on the economy. 578 00:30:11,040 --> 00:30:14,680 Speaker 6: You got obviously the real estate hangover, which they can 579 00:30:14,720 --> 00:30:17,280 Speaker 6: cope with, but they're not doing much and they're choosing. 580 00:30:17,280 --> 00:30:20,400 Speaker 6: They've been keeping their powder dry on doing stimulus, in 581 00:30:20,560 --> 00:30:23,400 Speaker 6: part because they were worried what the US might do. 582 00:30:23,600 --> 00:30:25,720 Speaker 6: But now there's the time and they don't seem to 583 00:30:25,760 --> 00:30:28,640 Speaker 6: be doing it. So but I want to go back 584 00:30:28,680 --> 00:30:31,560 Speaker 6: to Lincoln, back to Paul. All the weaknesses in China 585 00:30:32,640 --> 00:30:36,360 Speaker 6: don't mean that China can't win the trade war. The 586 00:30:37,080 --> 00:30:39,840 Speaker 6: two don't contradict each other. They might explain why China 587 00:30:39,840 --> 00:30:42,640 Speaker 6: wouldn't have entered the trade war if the US hadn't 588 00:30:42,640 --> 00:30:46,640 Speaker 6: provoked it, But once we're in it, all these miseries 589 00:30:47,720 --> 00:30:50,400 Speaker 6: just don't do anything about the relative strength of China 590 00:30:50,440 --> 00:30:51,440 Speaker 6: for winning a trade war. 591 00:30:51,880 --> 00:30:54,040 Speaker 5: Adam, you have so much experience as well in the 592 00:30:54,120 --> 00:30:56,920 Speaker 5: United Kingdom. Here. How do our friends in the UK 593 00:30:57,640 --> 00:31:00,320 Speaker 5: and in Europe from an economic trade perspective of how 594 00:31:00,320 --> 00:31:02,880 Speaker 5: are they viewing what's happening these days? 595 00:31:04,720 --> 00:31:06,600 Speaker 6: It's a good question, Paul, and I think the UK 596 00:31:06,720 --> 00:31:09,360 Speaker 6: has a very different view than Europe, but not because 597 00:31:09,440 --> 00:31:11,800 Speaker 6: of Brexit and not because of some of the other 598 00:31:11,880 --> 00:31:15,480 Speaker 6: things that used to go on. I think His Majesty's 599 00:31:15,480 --> 00:31:19,640 Speaker 6: current government in the Labor Government really feels much like 600 00:31:19,760 --> 00:31:22,920 Speaker 6: Tony Blaird and Jordan Brown did thirty or twenty five 601 00:31:23,000 --> 00:31:25,880 Speaker 6: years ago, thirty years ago, that the future for the 602 00:31:26,000 --> 00:31:29,560 Speaker 6: UK is in the security alliance and the economic alliance 603 00:31:29,600 --> 00:31:34,040 Speaker 6: with the US and so whereas in Europe, just like 604 00:31:34,120 --> 00:31:38,080 Speaker 6: in Canada, and to a lesser degree, in Korea, Japan, Australia, 605 00:31:39,120 --> 00:31:43,280 Speaker 6: certainly in Mexico, there is a reconsideration at a very fundamental 606 00:31:43,400 --> 00:31:45,880 Speaker 6: level about how much you can depend on the US 607 00:31:46,520 --> 00:31:49,200 Speaker 6: in the US government, US ability to make deals, us 608 00:31:49,240 --> 00:31:52,520 Speaker 6: ability to be open. So I think there's a genuine 609 00:31:52,560 --> 00:31:56,240 Speaker 6: divergence between the way the UK is approaching this, which 610 00:31:56,280 --> 00:31:59,520 Speaker 6: is Trump has some points, I mean, not like all 611 00:31:59,560 --> 00:32:01,680 Speaker 6: of it, but we're going to make it work, and 612 00:32:02,200 --> 00:32:04,560 Speaker 6: it's good for us to make it work. And given 613 00:32:04,560 --> 00:32:09,080 Speaker 6: our security relationship, there isn't that much we don't like here, 614 00:32:09,400 --> 00:32:12,840 Speaker 6: whereas for a German led Europe or French led Europe 615 00:32:13,320 --> 00:32:18,040 Speaker 6: on environmental issues, on foreign policy issues, on defense of Ukraine, 616 00:32:18,480 --> 00:32:23,640 Speaker 6: on industrial subsidies, on standards. There's a huge set of disagreement, 617 00:32:23,800 --> 00:32:26,240 Speaker 6: so I think you have to separate the two. 618 00:32:26,400 --> 00:32:29,760 Speaker 2: To go to cod in this dangerous word paradigm. Adam Posen. 619 00:32:30,560 --> 00:32:34,480 Speaker 2: If we get post Trump, whatever anybody's politics, listening or 620 00:32:34,560 --> 00:32:39,920 Speaker 2: watching now on YouTube, Adam Posen, post Trump, is there 621 00:32:40,000 --> 00:32:46,800 Speaker 2: a reversion to some form of post Trump Washington consensus, globalization, 622 00:32:47,480 --> 00:32:51,960 Speaker 2: business as usual? Or is there a permanence to this upset? 623 00:32:53,800 --> 00:32:57,959 Speaker 6: It's the big question, Tom, and I'm not trying to stall. 624 00:32:58,320 --> 00:33:01,240 Speaker 6: I think the answer is it's still the I think 625 00:33:01,480 --> 00:33:04,360 Speaker 6: depends partly how badly things go over the next couple 626 00:33:04,400 --> 00:33:08,120 Speaker 6: of years that you could get a real blow up 627 00:33:08,160 --> 00:33:11,440 Speaker 6: economically as well as politically, and that would lead to 628 00:33:11,520 --> 00:33:15,320 Speaker 6: a repudiation of Trump. But even then it's still to 629 00:33:15,360 --> 00:33:18,280 Speaker 6: play for whether that means a different fame of populism 630 00:33:18,440 --> 00:33:20,960 Speaker 6: or a return to rule of law in mainstream. 631 00:33:20,520 --> 00:33:23,040 Speaker 4: Economics, Doctor Post. That's why I'm out. 632 00:33:22,880 --> 00:33:25,960 Speaker 6: Here talking with you, and your program's important, Adam. 633 00:33:26,000 --> 00:33:29,280 Speaker 2: One final question, if we could Paul Sweeney grew up 634 00:33:29,280 --> 00:33:32,600 Speaker 2: on the lawns of Princeton, in all of middle New Jersey. 635 00:33:33,080 --> 00:33:36,000 Speaker 2: You darkened the door of Cambridge. I mentioned, Adam. I 636 00:33:36,000 --> 00:33:38,360 Speaker 2: don't know if you mentioned it. How many times, Adam, 637 00:33:38,360 --> 00:33:40,960 Speaker 2: have you been in the Tasty in Harvard Square a 638 00:33:41,000 --> 00:33:43,840 Speaker 2: few years back? I mean, you know you were in 639 00:33:43,880 --> 00:33:44,560 Speaker 2: there on one. 640 00:33:44,440 --> 00:33:45,479 Speaker 4: Of the stool I liked. 641 00:33:45,920 --> 00:33:48,480 Speaker 6: I liked Elsie's much better than the Tasty, So I 642 00:33:48,560 --> 00:33:50,880 Speaker 6: was only and I was an early night person, so 643 00:33:50,960 --> 00:33:52,680 Speaker 6: I was only in the Tasty a couple times. I 644 00:33:52,720 --> 00:33:54,920 Speaker 6: was in Elsie probably once every week or two. 645 00:33:55,160 --> 00:33:58,920 Speaker 2: This president is going after a universities that gave us 646 00:33:58,960 --> 00:34:02,920 Speaker 2: people like Maurice Obsfield gave us Ken Rogoff gave us 647 00:34:02,960 --> 00:34:06,720 Speaker 2: Adam Posen. How do we get beyond this threat to 648 00:34:06,800 --> 00:34:11,360 Speaker 2: higher education? Or is some of the President's criticism's valid. 649 00:34:13,200 --> 00:34:16,719 Speaker 6: It's insane no matter how valid the criticisms may or 650 00:34:16,800 --> 00:34:18,600 Speaker 6: may not be. And I'm not going to touch that 651 00:34:19,600 --> 00:34:24,080 Speaker 6: because I'm not an academic, thank god. But destroying the 652 00:34:24,120 --> 00:34:31,480 Speaker 6: research capacity of the greatest research complex in human history 653 00:34:32,040 --> 00:34:35,360 Speaker 6: that has been the source of American advantage and well 654 00:34:35,400 --> 00:34:41,920 Speaker 6: being and defense capacity for eighty years is possibly the 655 00:34:41,960 --> 00:34:45,040 Speaker 6: most destructive thing the Trump administration is doing. And I 656 00:34:45,040 --> 00:34:48,560 Speaker 6: don't mean just Harvard, and I don't mean worrying about 657 00:34:49,080 --> 00:34:52,640 Speaker 6: supposed anti Semitism, although I think that's not what really 658 00:34:52,680 --> 00:34:53,399 Speaker 6: motivates them. 659 00:34:53,440 --> 00:34:54,400 Speaker 4: But who the heck knows. 660 00:34:55,000 --> 00:34:59,640 Speaker 6: I think you're destroying National Institute of Health. You're destroying 661 00:35:00,040 --> 00:35:05,160 Speaker 6: at biomedical research across the board. You're undercutting standards for 662 00:35:05,400 --> 00:35:09,520 Speaker 6: research by having an HHS secretary who makes stuff up 663 00:35:09,960 --> 00:35:13,279 Speaker 6: in contrast to all known research. I mean, I could 664 00:35:13,320 --> 00:35:17,520 Speaker 6: just spew on this, sputtering for hours. This is the 665 00:35:17,520 --> 00:35:21,480 Speaker 6: golden goose for the US economy, for the world's well being, 666 00:35:21,640 --> 00:35:24,919 Speaker 6: and we are destroying it. And that's where the UK 667 00:35:25,080 --> 00:35:29,920 Speaker 6: and a few other countries including Japan and Singapore, Australia, Germany, 668 00:35:30,000 --> 00:35:32,520 Speaker 6: we have to help step up and find a home 669 00:35:32,600 --> 00:35:35,840 Speaker 6: for talent and find the money because this is something 670 00:35:35,880 --> 00:35:36,720 Speaker 6: we can't replace. 671 00:35:37,440 --> 00:35:40,879 Speaker 2: I got twenty two seconds left. I'm sorry, it's May one, 672 00:35:41,360 --> 00:35:43,000 Speaker 2: Red Sox seasons over. 673 00:35:44,360 --> 00:35:44,560 Speaker 4: Yeah. 674 00:35:46,440 --> 00:35:51,800 Speaker 2: Thanks, thank you for the brevity of that answer. Adam 675 00:35:51,840 --> 00:35:55,320 Speaker 2: Posen Forever from Brookline, Massachusetts. 676 00:35:55,360 --> 00:35:59,240 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 677 00:35:59,280 --> 00:36:02,799 Speaker 1: starting at seven on Apple Cocklay and Android Auto with 678 00:36:02,880 --> 00:36:05,880 Speaker 1: the Bloomberg Business app. You can also listen live on 679 00:36:05,920 --> 00:36:09,600 Speaker 1: Amazon Alexa from our flagship New York station just say 680 00:36:09,760 --> 00:36:12,959 Speaker 1: Alexa play Bloomberg eleven thirty Constance. 681 00:36:12,680 --> 00:36:17,880 Speaker 2: Hundred, where this chief economist Eiu Claudia begged them to 682 00:36:17,920 --> 00:36:22,719 Speaker 2: slow down on policy. Talk about the degrees of freedom 683 00:36:23,360 --> 00:36:28,040 Speaker 2: you get taking our economics over to policy if you 684 00:36:28,400 --> 00:36:32,040 Speaker 2: just go slower without being too slow. 685 00:36:32,440 --> 00:36:34,800 Speaker 9: Well, I think it's not just a matter of going slow, 686 00:36:34,840 --> 00:36:39,080 Speaker 9: although that would certainly help. I think it's being more predictable, 687 00:36:40,120 --> 00:36:44,200 Speaker 9: having a trajectory and being more predictable. And I'm working 688 00:36:44,200 --> 00:36:46,520 Speaker 9: on a piece that'll probably come out early next week, 689 00:36:46,600 --> 00:36:52,080 Speaker 9: which is about the fallacy of trade negotiations. Right. Clinton 690 00:36:52,120 --> 00:36:55,520 Speaker 9: gets credit for NAFTA. Well, that was started under George W. 691 00:36:55,600 --> 00:36:59,919 Speaker 9: Bush and mostly negotiated by Carla Hills, who is who 692 00:37:00,120 --> 00:37:04,520 Speaker 9: his USTR. Right, these take years. Mircosaur has been underway 693 00:37:04,520 --> 00:37:07,960 Speaker 9: for twenty years with Europe, and so the idea that 694 00:37:08,000 --> 00:37:10,279 Speaker 9: we can rip up these trade agreements and just put 695 00:37:10,280 --> 00:37:14,840 Speaker 9: them back together in ninety days is very inconsistent with 696 00:37:15,480 --> 00:37:16,880 Speaker 9: the way the world has worked. 697 00:37:16,880 --> 00:37:18,480 Speaker 4: Heretofore we had. 698 00:37:18,440 --> 00:37:20,840 Speaker 5: Gene Soroca on at the Port of Los Angeles, and 699 00:37:20,880 --> 00:37:23,919 Speaker 5: he says his scheduled sailings are going to be down 700 00:37:24,320 --> 00:37:28,200 Speaker 5: thirty percent next week. So I mean the ships are 701 00:37:28,200 --> 00:37:32,280 Speaker 5: already you know, turning around. How does that impact the economy? 702 00:37:32,320 --> 00:37:37,600 Speaker 5: I mean even Apple, even Amazon are calling out expected 703 00:37:38,360 --> 00:37:42,640 Speaker 5: economic disruptions goods and services disruptions. That's in their forecast, 704 00:37:43,160 --> 00:37:44,560 Speaker 5: Like how does everybody else deal with well? 705 00:37:44,560 --> 00:37:46,400 Speaker 9: And Paul, this is a great point, right if they're 706 00:37:46,400 --> 00:37:48,880 Speaker 9: calling it out and calling in about out in the 707 00:37:48,920 --> 00:37:52,880 Speaker 9: amounts that they are, and they have huge amounts of cash, 708 00:37:53,080 --> 00:37:55,000 Speaker 9: and if they didn't have cash, they could just go 709 00:37:55,080 --> 00:37:58,480 Speaker 9: to the capital markets and raise some cash to front 710 00:37:58,480 --> 00:38:03,120 Speaker 9: load imports. Think of small businesses, they don't have that ability. 711 00:38:03,360 --> 00:38:04,680 Speaker 4: Right, We're talking about cash flow? 712 00:38:04,760 --> 00:38:08,400 Speaker 9: Is is it best one month of of spare cash flow? 713 00:38:08,560 --> 00:38:09,120 Speaker 3: Right month? 714 00:38:09,440 --> 00:38:13,840 Speaker 2: Right now? It just goes back to the definition of anarchy, 715 00:38:13,960 --> 00:38:17,080 Speaker 2: which is we're all nine meals from anarchy. I mean 716 00:38:17,120 --> 00:38:20,319 Speaker 2: on a trade basis, you know, you wonder well where 717 00:38:20,360 --> 00:38:21,160 Speaker 2: it falls apart. 718 00:38:21,360 --> 00:38:24,279 Speaker 9: And you know, we know that civil unrest happens when 719 00:38:24,320 --> 00:38:25,959 Speaker 9: people can't get food. 720 00:38:26,320 --> 00:38:29,480 Speaker 4: When prices happening. No, I think we're. 721 00:38:29,280 --> 00:38:31,960 Speaker 9: Going to have more a shortage of goods, right, So 722 00:38:32,000 --> 00:38:34,520 Speaker 9: if you if you cannot get the barbies for your 723 00:38:34,560 --> 00:38:37,440 Speaker 9: children at Christmas, brilliant. 724 00:38:38,360 --> 00:38:42,399 Speaker 2: Seriously, both Justin Wolfers of Michigan was brilliant with Stephanie Rule. 725 00:38:42,719 --> 00:38:44,400 Speaker 2: I think it was last night of the night before 726 00:38:44,920 --> 00:38:48,080 Speaker 2: on this. You know, we take it for granted that 727 00:38:48,200 --> 00:38:51,439 Speaker 2: the kids get multiple barbies under the Christmas tree, rich 728 00:38:51,640 --> 00:38:52,759 Speaker 2: or poor in this nation. 729 00:38:53,080 --> 00:38:56,000 Speaker 9: Well, let's and let's bring it back to summers. Summer's 730 00:38:56,000 --> 00:38:58,479 Speaker 9: about to be here. Maybe your kids need new, uh, 731 00:38:58,840 --> 00:39:01,200 Speaker 9: you know, clothing and sports equipment to go to camp 732 00:39:01,200 --> 00:39:03,800 Speaker 9: in the summer and to do their summer activities. That's 733 00:39:03,880 --> 00:39:06,440 Speaker 9: not going to necessarily be on the shelves. 734 00:39:07,239 --> 00:39:09,160 Speaker 2: Yeah, we got to get the market open. Constance Hunter 735 00:39:09,200 --> 00:39:13,120 Speaker 2: will stay with us. Chief economist did Eiu again, A 736 00:39:13,200 --> 00:39:17,840 Speaker 2: futures up twenty something tech angst great jobs report features 737 00:39:17,880 --> 00:39:21,000 Speaker 2: up sixty three into the opening down, futures up four 738 00:39:21,000 --> 00:39:23,640 Speaker 2: to twenty two in the vics, A twenty two handle 739 00:39:23,719 --> 00:39:26,759 Speaker 2: twenty two point seven five. Please stay with us, some 740 00:39:27,000 --> 00:39:32,560 Speaker 2: really good conversation coming up. This is Bloomberg surveillance. Gente. 741 00:39:32,640 --> 00:39:34,759 Speaker 8: All right, there you have at the opening dell at 742 00:39:34,760 --> 00:39:36,600 Speaker 8: the New York Stock Exchange. Right out of the gate, 743 00:39:36,680 --> 00:39:39,200 Speaker 8: the S and P five hundred climbing one percent up 744 00:39:39,200 --> 00:39:41,560 Speaker 8: fifty four points. Right now fifty six fifty eight on 745 00:39:41,600 --> 00:39:44,239 Speaker 8: the index. The down Jones and Dustrial average up four 746 00:39:44,280 --> 00:39:46,919 Speaker 8: hundred and twenty two points. That's a one percent pop. 747 00:39:47,000 --> 00:39:50,240 Speaker 8: Right now, Tech having Nasdaq one hundred one percent higher. 748 00:39:50,239 --> 00:39:52,879 Speaker 8: That is up two hundred points after their earnings after 749 00:39:52,920 --> 00:39:56,319 Speaker 8: the closed yesterday. Shares of Apple four percent lower, and 750 00:39:56,400 --> 00:39:59,520 Speaker 8: shares of Amazon right now in the early going down 751 00:39:59,640 --> 00:40:02,120 Speaker 8: about eight tenth of a percent S and P five 752 00:40:02,200 --> 00:40:05,520 Speaker 8: hundred on the verge of its longest winning streak since 753 00:40:05,600 --> 00:40:08,800 Speaker 8: two thousand and four. I should tell you this report 754 00:40:09,000 --> 00:40:11,840 Speaker 8: is being brought to you by ship Station Calm the 755 00:40:11,960 --> 00:40:16,560 Speaker 8: Chaos with the shipping software that delivers use code Bloomberg 756 00:40:16,600 --> 00:40:20,080 Speaker 8: for a free trial at shipstation dot com. That shipstation 757 00:40:20,200 --> 00:40:23,480 Speaker 8: dot com with the code Bloomberg, and that is your 758 00:40:23,520 --> 00:40:25,120 Speaker 8: opening bail report. 759 00:40:25,360 --> 00:40:26,600 Speaker 4: Paul On Tom John Tucker. 760 00:40:26,640 --> 00:40:28,680 Speaker 2: Thanks somebody's constant hunter with it. Somebody goes to as 761 00:40:28,719 --> 00:40:31,120 Speaker 2: quickly as a tweet for the president in the last 762 00:40:31,160 --> 00:40:34,600 Speaker 2: twenty minutes, Gasoline just broke a dollar ninety eighty gallon 763 00:40:34,960 --> 00:40:38,440 Speaker 2: lowest to years. Groceries and eggs down, energy down, mortgage 764 00:40:38,520 --> 00:40:41,880 Speaker 2: rates down, employments strong. He goes on to say, just 765 00:40:41,880 --> 00:40:45,279 Speaker 2: like I said, we're only in a transition stage just 766 00:40:45,320 --> 00:40:50,520 Speaker 2: getting started. No inflation, the FED should lower its rate DJT. 767 00:40:51,239 --> 00:40:52,600 Speaker 2: Is there inflation constances? 768 00:40:52,640 --> 00:40:57,480 Speaker 9: Hunter, Well, there is always some inflation. Inflation is above 769 00:40:57,640 --> 00:41:01,319 Speaker 9: the Fed's target. Now, I think they're concerned that it 770 00:41:01,400 --> 00:41:05,520 Speaker 9: will instead of continuing to move towards target, will begin 771 00:41:05,640 --> 00:41:07,360 Speaker 9: to you turn away from target. 772 00:41:07,760 --> 00:41:08,000 Speaker 6: Right. 773 00:41:08,280 --> 00:41:10,960 Speaker 9: At the same time, we know that labor market data 774 00:41:11,160 --> 00:41:14,920 Speaker 9: is a lagging indicator, right, So so they're they're in 775 00:41:14,960 --> 00:41:17,880 Speaker 9: a tough place. I don't think given this labor market 776 00:41:17,920 --> 00:41:21,560 Speaker 9: data that they can really cut rates in May. Credibly, 777 00:41:22,120 --> 00:41:23,960 Speaker 9: they're not. They're on their way. And by the way, 778 00:41:23,960 --> 00:41:26,320 Speaker 9: if the tariffs weren't happening, Let's say you took a 779 00:41:26,360 --> 00:41:29,279 Speaker 9: world where these tear none of this was happening, and 780 00:41:29,320 --> 00:41:32,719 Speaker 9: we were status quo on that right and all we 781 00:41:32,960 --> 00:41:36,000 Speaker 9: all we had was, uh, you know, fewer border crossings 782 00:41:36,040 --> 00:41:39,440 Speaker 9: and some labor supply constraints and some and the other 783 00:41:39,600 --> 00:41:43,000 Speaker 9: policies that the administration is putting into place. Would the 784 00:41:43,040 --> 00:41:48,719 Speaker 9: Fed cut rates in May, Absolutely they wouldn't. Inflation is 785 00:41:48,760 --> 00:41:50,600 Speaker 9: on the way to their trajectory, but they would like 786 00:41:50,640 --> 00:41:52,560 Speaker 9: to see it get there before they cut rates, so 787 00:41:52,600 --> 00:41:55,799 Speaker 9: they would likely wait to June or July. Right now, 788 00:41:55,840 --> 00:41:59,400 Speaker 9: we have the tariff tariffs in train. They're about to 789 00:41:59,480 --> 00:42:02,840 Speaker 9: impact what is their impact going to be? Supply supply 790 00:42:02,920 --> 00:42:06,640 Speaker 9: shock and inflation. There's no way the Fed can cut 791 00:42:06,680 --> 00:42:07,200 Speaker 9: into that. 792 00:42:08,320 --> 00:42:11,719 Speaker 5: We've seen the stock market rebound and we retrace, you know, 793 00:42:11,719 --> 00:42:13,480 Speaker 5: maybe a little bit more than half of the losses 794 00:42:13,520 --> 00:42:17,360 Speaker 5: we saw earlier. What has not rebounded is the dollar. 795 00:42:17,400 --> 00:42:18,680 Speaker 5: Continued pressure on the dollar. 796 00:42:18,760 --> 00:42:19,560 Speaker 4: What's going on there? 797 00:42:20,000 --> 00:42:22,799 Speaker 9: Yeah, I mean, I think you're seeing several things. You're 798 00:42:22,800 --> 00:42:27,560 Speaker 9: seeing a reallocation out of US assets, and you have 799 00:42:27,600 --> 00:42:31,760 Speaker 9: a stated policy by the administration that they want less 800 00:42:31,840 --> 00:42:35,680 Speaker 9: trade activity and therefore less demand for dollars. And you 801 00:42:35,680 --> 00:42:38,000 Speaker 9: had Adam Posen on earlier this morning as well. I 802 00:42:38,080 --> 00:42:41,920 Speaker 9: was listening on my way here, and Adam brought up 803 00:42:41,960 --> 00:42:45,120 Speaker 9: a really great point. Our financial account surplus is a 804 00:42:45,280 --> 00:42:48,440 Speaker 9: wonderful thing. It's the opposite of the trade deficit, and 805 00:42:48,480 --> 00:42:52,480 Speaker 9: it means that investors overseas want to bring money to 806 00:42:52,520 --> 00:42:54,560 Speaker 9: the US. They want to put in FDI, they want 807 00:42:54,600 --> 00:42:56,520 Speaker 9: to invest in our equities, they want to invest in 808 00:42:56,560 --> 00:42:59,680 Speaker 9: our stocks, they want to invest in our treasuries, all 809 00:42:59,719 --> 00:43:03,520 Speaker 9: fixed income, you know, private equity, you name it. They 810 00:43:03,560 --> 00:43:06,600 Speaker 9: want to invest in it, and now we have an 811 00:43:06,600 --> 00:43:09,480 Speaker 9: administration that's saying we want the dollar to be weaker, 812 00:43:09,760 --> 00:43:12,399 Speaker 9: we want there to be less activity all around, and 813 00:43:12,480 --> 00:43:14,960 Speaker 9: so I think that's the crux of why you don't 814 00:43:15,040 --> 00:43:18,920 Speaker 9: see the dollar appreciating in the face of tariffs, which 815 00:43:18,960 --> 00:43:21,400 Speaker 9: would be the normal economic reaction. 816 00:43:21,840 --> 00:43:24,000 Speaker 2: Oh, markets appreciate it. CONTs us On here, Thank you 817 00:43:24,040 --> 00:43:25,040 Speaker 2: so much. With EI. 818 00:43:25,880 --> 00:43:30,680 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 819 00:43:30,800 --> 00:43:34,600 Speaker 1: and anywhere else you get your podcasts. Listen live each 820 00:43:34,640 --> 00:43:38,440 Speaker 1: weekday seven to ten am Easter and on Bloomberg dot Com, 821 00:43:38,600 --> 00:43:42,400 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 822 00:43:42,719 --> 00:43:45,800 Speaker 1: You can also watch us live every weekday on YouTube 823 00:43:46,120 --> 00:43:48,120 Speaker 1: and always on the Bloomberg terminal.