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Speaker 3: All right, let's go to the topic du jour, and
Speaker 3: that's about Trump tariffs and how it actually could affect growth.
Speaker 3: For example, we're looking at economists kind of reevaluating the
Speaker 3: impact of policies on the US economy and then the sequencing, Right,
Speaker 3: if you have tariffs now, but then you have tax
Speaker 3: cuts later, what that winds up looking like then for growth?
Speaker 3: And the current is Bloomberg's a global economy reporter and
Speaker 3: he joins us now from DC. What's the scuttle butt
Speaker 3: among economists when it comes to President Trump's tariffs policy.
Speaker 1: I think moving faster and expected alex is one way
Speaker 1: to think about it. I mean, to be clear, there
Speaker 1: is no you know here that the President is either
Speaker 1: imposing tariffs or that he believes in tariffs as a
Speaker 1: tool of trade policy. But I think there is a
Speaker 1: sense of a shock at the pace of the moves.
Speaker 1: Remember a couple of things. His trade team isn't actually
Speaker 1: a confirmed in office yet it converce actory Howard Lopnik
Speaker 1: and Jameson Greers trade represent that of be formally appointed
Speaker 1: to their roles there. There was an executive order on
Speaker 1: day one of the organization setting out this the remit
Speaker 1: for a study in the US trading policy with partners
Speaker 1: around the world. But already we've had threats of tariffs
Speaker 1: on Columbia, threats of tariff on Mexico and Kinada, actual
Speaker 1: tariffs implemented on China ten percent across the board. Also
Speaker 1: that's new territory, not just intermediate goods across the board.
Speaker 1: And of course now we have the expected announcement of
Speaker 1: tariffs and steel aluminium that the President took yesterday, and
Speaker 1: the reciprocal tariff idea that he's also flooded, due for
Speaker 1: detail again this week. So you know, it's easy to
Speaker 1: say this isn't a shock. He spoke about it during
Speaker 1: the campaign. But the breath and pace that I think
Speaker 1: is catching people off guard.
Speaker 4: So initially on Friday morning, when we got the report
Speaker 4: from Reuters that Trump was considering reciprocal tariffs that day,
Speaker 4: there wasn't really any indication of which country he was
Speaker 4: referring to.
Speaker 5: How are you all.
Speaker 4: Thinking about this whole concept of reciprocal tariffs and what
Speaker 4: the implications could be globally.
Speaker 1: Well, reciprocal tariff idea is going to be a very
Speaker 1: technical one. You know, we really need to see the
Speaker 1: exact details of what the President is thinking about. But
Speaker 1: the rough analysis from people following this trade expert is
Speaker 1: essentially what President is saying is if a the US
Speaker 1: puts the tariff on one country's goods of say two percent,
Speaker 1: and that country puts a tariff on US goods of
Speaker 1: say ten percent, the President wants to.
Speaker 6: Level that up to level of playing field.
Speaker 1: And I think is that this might be a replacement
Speaker 1: to the universal tariff of ten percent that he spoke about.
Speaker 1: So different different ideas there in the mix. But again
Speaker 1: that's a technical one we're going to have to wait
Speaker 1: and see in detail. Where it certainly adds to thee
Speaker 1: of more tariffs coming.
Speaker 3: So the idea that the tariffs center them cells are
Speaker 3: knows surprise, But it's the speed at which President Trump
Speaker 3: is mood but moving on tariffs that is a surprise,
Speaker 3: which then raises the question of the quote unquote positive
Speaker 3: parts of the administration like deregulation and lower corporate taxes
Speaker 3: to then offset the hit we might take from tariffs.
Speaker 3: What do you guys expect in terms of the speed there.
Speaker 1: Yeah, I mean to clear to President and his team
Speaker 1: say that this trade policy, this hole is trade policy
Speaker 1: will drive investment in the US, will bring manufacturing back home,
Speaker 1: It will raise revenue for the government, and it will
Speaker 1: balance trading books.
Speaker 6: With the rest of the world.
Speaker 1: Along with, as you say, this deregulation policy, and you know,
Speaker 1: making it easier to build things, make it easier to
Speaker 1: extract resources and energy from the ground, getting infrastructure projects moving,
Speaker 1: and you know, it's kind of a pro business deregularty
Speaker 1: attitude writ large. So there is a case that the
Speaker 1: new administration is will at least animal spirits. Economists haven't
Speaker 1: yet down graded their forecast, right anything like that. You
Speaker 1: know that I'm f single out to you experts perform
Speaker 1: once back in January. But you know, nonetheless, there's also
Speaker 1: feeling that, wait a minute, right now, we seem.
Speaker 6: To be at the very least pain stage of this.
Speaker 1: We're seeing those spending cuts this federal level of staff
Speaker 1: lost staff, job cuts at federal level, the terriffs. Of course,
Speaker 1: the sweeteners if you have too wrong in the economy,
Speaker 1: that's the deregulation. Just mentioned that the tax cuts that,
Speaker 1: of course haven't yet been agreed by Congress. So, you know,
Speaker 1: supporters saying, look, this is a big program here, ultimately
Speaker 1: will lead to a stronger and faster going economy, but
Speaker 1: a lot of skeptics are saying that there's potential for
Speaker 1: significant disruption and.
Speaker 6: Pain along the way.
Speaker 1: Very early saying yet, but certainly plenty of skepticism, unspecoid
Speaker 1: support on both sides of this.
Speaker 4: So there's a lot of conversation about what tariffs can
Speaker 4: mean for different countries across the globe. But if we
Speaker 4: were to bring it back to the consumer, how exactly
Speaker 4: would that impact the consumer. Would we see countries just
Speaker 4: passing off tariff costs onto consumers? What does that look like?
Speaker 6: Yeah, it depends on the level of the tier and
Speaker 6: depends on the type of goods.
Speaker 5: Right.
Speaker 1: So, for example, the last trade war between President Trump's
Speaker 1: administration in China was mostly intermediate goods that components and
Speaker 1: materials that factories are buying off of China, you know,
Speaker 1: ultimately didn't have that much of an impact on the
Speaker 1: mainStreet inflation this time around the president that's put ten
Speaker 1: percent tariffs and all the goods coming out of China
Speaker 1: and coming into the US, so that's like consumer goods,
Speaker 1: typical household baskets. Similarly, from Mexico, a big portion of
Speaker 1: exports from Mexico to the US was on food, food
Speaker 1: stuff like fruit and veg and an apparel. So if
Speaker 1: you start putting tariffs on those kind of products, then
Speaker 1: the question becomes who's going to absorb it. Is the
Speaker 1: seller going to cut their prices and absorb that tariff
Speaker 1: or will the buy Will the buyer absorbed the tariff
Speaker 1: in the US, and or will it be passed along
Speaker 1: to consumers? And that's where Commas saying, hang on, some
Speaker 1: of this will surely have to plats on the consumers,
Speaker 1: and that's why they say in the first round, effect
Speaker 1: at least will be inflationary.
Speaker 4: Well, and that's the interesting part.
Speaker 3: I was talking about this a little earlier with Isabelle
Speaker 3: and Nora about commodities, is but commodities are efficient markets,
Speaker 3: so they'll just rerate, So the price of the commodity
Speaker 3: will rebrate to account for the tax. In order to
Speaker 3: have the consumer or the company, whomever's buying it want
Speaker 3: to buy it. If I'm buying a coat, that's not
Speaker 3: the same thing, Like that's not an efficient market. I'm
Speaker 3: just not going to buy the coat. And so there's
Speaker 3: different distinctions based on what's actually.
Speaker 6: Being taxed, very different distinctions.
Speaker 1: And you hear some FED officials make the point that
Speaker 1: even if FED officials have different views, like some make
Speaker 1: the point it's a one off, we kind of look
Speaker 1: through that impact. Others saying, wait a minute, this could
Speaker 1: be the kind of start of setting off a longer
Speaker 1: term consumer inflation Expectations that University of Michigan surveyed the
Speaker 1: end of last week show that consumers.
Speaker 6: Are a bit worried about inflation now, especially due to tires.
Speaker 6: So it's you know, it's not a very clear cut
Speaker 6: impact on this and for either side of the argument.
Speaker 1: But remember again there's also a bigger picture of view
Speaker 1: that you have those people who argue this will drive
Speaker 1: investment and employment, but there are also those who say
Speaker 1: will hurt consumer confidence and business confidence because they don't
Speaker 1: have certainty, don't know how to invest. So there'll be
Speaker 1: a lot of confusion in the meantime on tell this
Speaker 1: trade policy to settle down.
Speaker 4: So how are other global leaders responding to this? I know,
Speaker 4: when I was watching the Super Bowl last night, I
Speaker 4: actually saw an ad for from Canada about tariffs, and
Speaker 4: I missed that. Really it was super interesting a cowboy hating.
Speaker 7: No it was not.
Speaker 4: There was no stash flying around, there was no mustaches,
Speaker 4: but it was a really interesting ad. And I'm just curious.
Speaker 4: What are you all seeing in terms of the response
Speaker 4: from other world leaders.
Speaker 1: Well, you know, again early days you get different response
Speaker 1: from different capitals. But broadly speaking, when it comes to
Speaker 1: merchandise goods trade, a lot of the messaging has been
Speaker 1: you know, what do you want us to buy?
Speaker 6: We're willing to step up.
Speaker 1: Mexico stepped up with putting troops in the border for
Speaker 1: that Fentanel and immigration issue, as in Canada, but Canada
Speaker 1: has also made clear that you know, they're in the
Speaker 1: market to buy US goods. The European Union has said
Speaker 1: that they're willing to step up and buy maybe more
Speaker 1: US gas or other products you have. Japan here last
Speaker 1: week prominent s Orshiba talking about one trillion worth an
Speaker 1: investment in the US. And this goes around. If all
Speaker 1: of these world leaders make the point. They're willing to
Speaker 1: invest in buy goods, but they're also making it clear
Speaker 1: that they will retaliate in kind as well if the
Speaker 1: US pushes this faith policy too far. China has already
Speaker 1: retaliate literally today, those tariffs from China have gone into
Speaker 1: fact on agricultural goods, agricultural machinery coming out of the
Speaker 1: US into into China. And of course I've got some
Speaker 1: anti trust measures going on against some US companies as well.
Speaker 1: You have a playbook ready to retaliate if they want to.
Speaker 1: Canada head threatend to Italian as in Mexico. So you know,
Speaker 1: there's a there's a kind of a play nice we'll
Speaker 1: we'll come and see what can we do deal all this,
Speaker 1: but if that does mark out, they're willing to respond
Speaker 1: as well.
Speaker 3: All right, and I really appreciate always the best and
Speaker 3: the current Bloomberg Global Economy reporter joining us on Trump
Speaker 3: tariffs and what that does to growth.
Speaker 2: You were listening to the Bloomberg Intelligence Podcast. Catch the
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Speaker 3: All right, I wanted to get a broader take on
Speaker 3: the Trump administration and some deeper changes at taking place nationally,
Speaker 3: particularly when it comes to diversity, equity and inclusion. Mark Morioll,
Speaker 3: CEO of a National Urban League, joins us now on
Speaker 3: this and side note. Mark was mayor of New Orleans
Speaker 3: from nineteen ninety four to two thousand and two. Mark,
Speaker 3: did you watch the Super Bowl?
Speaker 4: Were you there?
Speaker 6: Hey?
Speaker 7: I was there, and I was an Eagles fan because
Speaker 7: I lived in Philadelphia during my days in college at
Speaker 7: U Penn.
Speaker 5: And I tell you what, I didn't expect that outcome.
Speaker 7: I felt Philadelphia would win, but I thought it was
Speaker 7: going to be a competitive game all the way down
Speaker 7: to the end. It wasn't really a competitive game. The
Speaker 7: Eagles really really dominate.
Speaker 4: Yeah, they took it.
Speaker 5: It was surprising.
Speaker 3: It was from somebody who like literally just started to
Speaker 3: understand football yesterday. I'm actually not kidding.
Speaker 4: I was like, what is this Jeeves?
Speaker 6: Huh?
Speaker 3: What what is that team? Anyway, side, I'm glad you went.
Speaker 3: I'm glad you got to see it. Either way, it
Speaker 3: was always a fun experience.
Speaker 4: To watch. Mark.
Speaker 3: You are CEO of the National Urban League. It's the
Speaker 3: largest historical civil rights and urban advocacy organization in the country.
Speaker 3: What are you guys doing right now to combat sort
Speaker 3: of anti DEI rhetoric and policy from DC.
Speaker 7: So, we are working very hard to get institutions, leaders,
Speaker 7: corporations to reaffirm their commitment. Jamie Diamond and JP Morgan
Speaker 7: Chase have done so. Roger Bigodell in the National Football
Speaker 7: League have done so. Companies like Delta and Target, and
Speaker 7: there's an entire list. Those that have reaffirmed their commitment
Speaker 7: may not have gotten as much media attention as those
Speaker 7: that have walked away. I'm dismayed by those who say
Speaker 7: they have walked away. What every company in America should
Speaker 7: be doing is living up to the meaning of the
Speaker 7: Civil Rights Act of nineteen sixty four prevents non discrimination,
Speaker 7: or rather is a non discrimination law which prevents discrimination
Speaker 7: based on race, creed.
Speaker 5: Color, religion, and national origin.
Speaker 7: Many of those who are promoting from behind the scenes
Speaker 7: the antide and I movement are trying to roll back
Speaker 7: progress this nation is made over the last seventy years. Women,
Speaker 7: African Americans, latinos Asians, indigenous Americans, disabled Americans, LGBTQ Americans
Speaker 7: have had a chance over the last seventy years to
Speaker 7: participate in the mainstream of American life, in jobs and
Speaker 7: business opportunities, around corporate board tables, in elected office. This
Speaker 7: is a full scale attack on all of that progress
Speaker 7: based on a false and misleading narrative that somehow diversity
Speaker 7: equity and inclusion promotes quotas and undermines narritive. I take
Speaker 7: great exception to that, because what diversity equity inclusion says
Speaker 7: is give everyone with merit a chance, not just some,
Speaker 7: not just men, not just white men. Give everybody, including
Speaker 7: a chance for the opportunities that America represents.
Speaker 5: That's what this is all about.
Speaker 7: And so we are going to continue to work and
Speaker 7: fight and advocate for continuation of this country's commitment to
Speaker 7: equal opportunity.
Speaker 4: Well, market sounds like last week was a really big
Speaker 4: week for you. You were inducted into the Nola Wall
Speaker 4: of Walk of Fame on Thursday, and you received a
Speaker 4: Humanitarian Award the first time a non sports person was
Speaker 4: chosen for this award at the Super Bowl party on Saturday.
Speaker 4: So very big week for you. But back on the
Speaker 4: notion of companies walking back their commitments. Do you think
Speaker 4: this is really just a sigh of relief for companies
Speaker 4: that weren't necessarily genuine about these commitments, or do you
Speaker 4: think maybe corporations just want to have the freedom to
Speaker 4: make their own decisions without having to necessarily report and
Speaker 4: be held accountable in those ways.
Speaker 7: Well, reporting being accountable is what the law requires, It's
Speaker 7: always required that. That's our system of laws, our systems
Speaker 7: of the constitution. But I think some companies are frankly
Speaker 7: being intimidated. There's a behind the scenes ever to intimidate,
Speaker 7: to deveain, to threaten companies. I heard one story where
Speaker 7: a company was told that if they did not walk
Speaker 7: back their Dee and I, this group would launch a
Speaker 7: social media campaign and show some lewde and lascivious videos
Speaker 7: that may have taken place at an event that the
Speaker 7: company co sponsored.
Speaker 5: This is what we're faced.
Speaker 7: We're faced with a smear campaign, a campaign of attacks,
Speaker 7: a campaign of division, and yes, it is a campaign
Speaker 7: of hate. Major corporations in America operate under rubric of law.
Speaker 7: They follow that law. That law makes things fair and
Speaker 7: equitable for everyone. All diversity, equity, inclusion is is a
Speaker 7: program to implement non discrimination laws.
Speaker 5: That's what it represents, and this nation cannot walk back.
Speaker 7: And we are going to battle and fight and work
Speaker 7: in the courts and in every way, shape or form
Speaker 7: possible to ensure that this nation remains committed to equal opportunity.
Speaker 3: Hey, Mark, it's really good to catch up with you.
Speaker 3: Congratulations on the host of the awards. Congratulations on the
Speaker 3: Eagles winning as well. Thank you so much for your
Speaker 3: time today. Mark Mariral joining us their CEO of the
Speaker 3: National Urban League.
Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: you get your podcasts, or watch us live on YouTube.
Speaker 4: Today we are joined by Michael Hale, and he is
Speaker 4: Bloomberg Intelligence senior restaurant and food service analysts here to
Speaker 4: talk about McDonald's earnings. So we have McDonald's sales that
Speaker 4: improved on stronger international results. What is your broad read
Speaker 4: on this, Michael?
Speaker 8: You know, the most important piece of the report really
Speaker 8: is the US recovery post E Coli, and we got
Speaker 8: some good news on that front. So traffic was actually
Speaker 8: positive in December, so I think that was much better
Speaker 8: than anyone had expected. They cited kind of a choppy
Speaker 8: January here, but the only region is still impacted by
Speaker 8: E COLI seems to be the Rocky Mountain region where
Speaker 8: the outbreak occurred. And they expect a full US recovery
Speaker 8: by the beginning of the second quarter.
Speaker 6: Which is good news.
Speaker 3: What about the rest of the world versus the US,
Speaker 3: It was the rest of the world that really performed
Speaker 3: well yeah, yeah.
Speaker 8: And a big part of that was just lapping like
Speaker 8: pretty weak year ago results, right, so we wrapped the
Speaker 8: start of the of the Israel Hamas war, and so
Speaker 8: the Middle East was stronger. Countries with large Muslim populations
Speaker 8: were also stronger. And then also China lapped a very
Speaker 8: weak result last year and management cited some stabilization in
Speaker 8: that market, which is encouraging for them. So the easy
Speaker 8: comps was what really fueled international sales. You know, we're
Speaker 8: kind of more bullish on the US moving forward than international,
Speaker 8: you know, because outside of the Middle East, in China,
Speaker 8: Europe we think is going to continue to kind of
Speaker 8: be an issue for them. The Arizona is experienced it's
Speaker 8: seeing much higher inflation than the US, and that's really
Speaker 8: crimping low income and family spending on the continent.
Speaker 4: Are people still buying the Big Mac?
Speaker 8: They don't break out Big Mac sales, but they cited
Speaker 8: pretty strong results out of the Chicken Big Mac, which
Speaker 8: I was kind of surprised about. You know, my associate
Speaker 8: tried it, he was not a big fan. But but yeah,
Speaker 8: they cited you know, pretty strong results out of the
Speaker 8: Chicken Big Mac in the United States and other markets.
Speaker 8: I think France was who they called out specifically and
Speaker 8: to the point where they're going to continue to to
Speaker 8: you know, bring it back as a limited time offare
Speaker 8: in the future.
Speaker 3: So I was actually talking to an IB user, a
Speaker 3: Bloomberg user about this. Why are McDonald's franchises elsewhere like
Speaker 3: a rest of world so much better than in the US,
Speaker 3: and that like you can get like super good food
Speaker 3: that doesn't take like fast food.
Speaker 4: Why is that?
Speaker 8: Yeah, Jonathan Farrowe asked me the same thing this morning.
Speaker 8: He said he wants them all to be like the
Speaker 8: you know McDonald's in Italy, you know, And the answer
Speaker 8: I had there was just more discerning tastes.
Speaker 3: Right, that might be it, no, but really, like is
Speaker 3: it I mean, does it affect margins, Like, what are
Speaker 3: the margins like in the US versus rest of the world.
Speaker 8: We don't we don't have that information, you know what
Speaker 8: I mean. It's a franchise business, right, So you know
Speaker 8: what I mean, So we don't have a ton of
Speaker 8: color on all the different franchise markets and what kind
Speaker 8: of margins they pull in. You know, the US generally
Speaker 8: is a lower margin for the franchise business, just because
Speaker 8: they have a lot more franchisees and need a lot
Speaker 8: more oversight. The international franchise business tends to generate wider margins.
Speaker 4: So I always used to think about McDonald's is a
Speaker 4: really cheap place, a discount fast food place, but prices
Speaker 4: are getting higher. Are we still seeing demand from lower
Speaker 4: income consumers for the brand?
Speaker 8: You know, it continues to be the weak spot at
Speaker 8: McDonald's and for anyone that has a lot of exposure
Speaker 8: to low income consumers. So the entire QSR space, right,
Speaker 8: Jack in the Box, Wendy's, Burger King, you know, a
Speaker 8: lot a lot of chains, you know struggled last year
Speaker 8: because of their inability to draw low income consumers. You know,
Speaker 8: they're impacted most by inflation, right, We've had four plus
Speaker 8: years of restaurant price hikes and higher costs across the board, right,
Speaker 8: and so you know, chains that are exposed to low
Speaker 8: income consumers are going to continue to press on value
Speaker 8: to try to bring them into the fold. You know,
Speaker 8: it seemed like it didn't seem like restaurants and sales
Speaker 8: did improve for a quick service in the fourth quarter,
Speaker 8: and we think a big part of that is just
Speaker 8: a re establishing of their value proposition.
Speaker 6: Right.
Speaker 8: McDonald's early last year got a lot of shade about
Speaker 8: the eighteen dollars big mac meal in Connecticut, right, and
Speaker 8: so they decided to push hard on value, and prior
Speaker 8: to the E Coli outbreak, you know, October had some
Speaker 8: really good results. They were drawing customers in with that
Speaker 8: five dollars meal deal, and traffic was positive for the
Speaker 8: first time during the year. So value pushing on value
Speaker 8: has been successful for McDonald's. That's not good for their
Speaker 8: competitors because Donald's has the most scale, right, But we
Speaker 8: think this is going to continue throughout twenty twenty five
Speaker 8: in the quick service industry.
Speaker 4: So just to confirm you're seeing, there was a meal
Speaker 4: that came up to eighteen dollars. You totally missed this.
Speaker 3: She totally missed this one.
Speaker 8: Yeah, yeah, it was one franchisee in Connecticut. Of course
Speaker 8: it was Connecticut, right, no comment, no, fair enough, fair enough.
Speaker 8: But he was he was pushing back because he, you know,
Speaker 8: he was dealing with a lot of inflation and he
Speaker 8: was just you know, he wanted to make some money
Speaker 8: on the big mcneilie was trying to make a point in.
Speaker 6: The frintage specialty.
Speaker 3: Oh wow, so many things I think about on that.
Speaker 4: All right, Michael, thanks a love. Were gonna leave it there.
Speaker 3: Michael Halen, a Bloomberg Intelligence in Your Restaurant and Food
Speaker 3: Service analyst, joining us on McDonald's.
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