WEBVTT - Bloomberg Surveillance TV: April 28, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.200 Terminal and the Bloomberg Business app. W Yoda of JP 0:00:37.280 --> 0:00:40.680 Morgan writing, we view the upcoming earning season as important 0:00:40.680 --> 0:00:43.479 for the market as we work through downward revisions. We 0:00:43.520 --> 0:00:46.280 have widened our base case range to fifty seven hundred 0:00:46.320 --> 0:00:50.440 to sixty two hundred to reflect increased volatility and uncertainty. 0:00:50.479 --> 0:00:52.760 Abby joined us now for morgod Morning. Gabby, good morning. 0:00:52.800 --> 0:00:54.880 There's plenty of uncertainty, let's put it that way, and 0:00:55.040 --> 0:00:58.639 companies are using different approaches to offer clarity and visibility 0:00:58.720 --> 0:01:02.520 to investors. Southwest was upfront, brutal, direct, We're in recession. 0:01:02.760 --> 0:01:03.760 What do you have an sway? 0:01:04.240 --> 0:01:06.560 Well, so I actually think all we're talking about last 0:01:06.560 --> 0:01:09.200 week and how strong the performance was. And obviously there 0:01:09.240 --> 0:01:11.039 was a lot going on from a macro perspective and 0:01:11.080 --> 0:01:14.440 the discussions around trade, but on like, actually we were 0:01:14.440 --> 0:01:17.440 getting pretty good earnings results, and particularly as it released 0:01:17.480 --> 0:01:19.640 the aipower demand side, I would say that was like 0:01:19.680 --> 0:01:22.959 an area of particular strength. And I think in terms 0:01:23.000 --> 0:01:27.160 of the way that companies are approaching their guidance, Look, 0:01:27.240 --> 0:01:30.120 this is obviously a very difficult environment for them, but 0:01:30.240 --> 0:01:31.600 we thought it was going to be a lot like 0:01:31.640 --> 0:01:34.280 twenty twenty where they kind of just like no guidance. 0:01:34.400 --> 0:01:36.039 You know, we don't know what's going to happen, so 0:01:36.040 --> 0:01:38.200 we're just going to pull this. And that's not really 0:01:38.200 --> 0:01:41.199 what's happening. Like you're getting them trying to work through 0:01:41.280 --> 0:01:44.080 these different scenarios. Like sometimes you're getting two different scenarios. 0:01:44.120 --> 0:01:46.399 Maybe you're getting a muddle through. And it's been really 0:01:46.400 --> 0:01:49.960 interesting to hear which companies and in our view, become 0:01:50.000 --> 0:01:53.240 more de risk. Let's say they extrapolate April second teriff 0:01:53.280 --> 0:01:55.320 rates throughout the year like that to us is an 0:01:55.320 --> 0:01:58.520 attractive entry point for whatever company that may be. But like, 0:01:58.600 --> 0:02:01.920 you're not really getting these these massive guide downs in 0:02:02.000 --> 0:02:04.640 terms of the full year outlook into US that's you know, 0:02:04.760 --> 0:02:06.560 a lot of that is really driven by the AI 0:02:07.440 --> 0:02:10.160 power demand story that happened last week, but overall has 0:02:10.200 --> 0:02:12.000 just been better than expected in terms of earning. 0:02:12.200 --> 0:02:13.880 Some of the earnings themselves have been pretty decent to 0:02:13.919 --> 0:02:17.200 your point, But I'm finding get difficult door distinction between 0:02:17.400 --> 0:02:20.639 good underlying demand and just a rebuild of Infantry's word 0:02:20.680 --> 0:02:21.880 about supply not being there. 0:02:21.960 --> 0:02:24.680 Yeah, I mean, I think that's a really difficult like 0:02:24.760 --> 0:02:27.520 line to thread in terms of what really is real demand. 0:02:27.560 --> 0:02:30.520 But I think for the most part, right if we're 0:02:30.560 --> 0:02:34.240 thinking about the banks who reported earlier on like overall, 0:02:34.400 --> 0:02:37.080 like the overall spend outlook like you didn't see a 0:02:37.120 --> 0:02:38.920 massive bump in terms of it was like mid single 0:02:38.919 --> 0:02:41.120 digit spend. In terms of a consumer outlook, that's pretty 0:02:41.160 --> 0:02:42.880 in line with what we've seen over the past couple 0:02:42.919 --> 0:02:45.760 of months. And importantly, looking forward, you know, you didn't 0:02:45.760 --> 0:02:49.640 see really massive reserve builds in terms of the banks either, 0:02:49.680 --> 0:02:52.720 so their outlook doesn't feel like it's that uncertain as 0:02:52.760 --> 0:02:53.760 it relates to the consumer. 0:02:53.800 --> 0:02:56.079 At the moment, I'm feeling a massive disconnect right now. 0:02:56.160 --> 0:02:58.200 We just spoke with Christian Keller if Barclay is talking 0:02:58.240 --> 0:03:00.240 about how recession of the US's base came. So we 0:03:00.280 --> 0:03:02.760 were talking with Lori Calvasina of RBC. We said, if 0:03:02.760 --> 0:03:05.600 a session actually does transpire in the US, you're talking 0:03:05.639 --> 0:03:08.079 about forty two hundred to forty five hundred for the 0:03:08.120 --> 0:03:11.360 baseline S and P five hundred, you're talking about gains 0:03:11.360 --> 0:03:14.800 from here. Fifty seven hundred is you're low in terms 0:03:14.800 --> 0:03:16.560 of this range at a time where we're currently at 0:03:16.560 --> 0:03:19.480 fifty five twenty five. Why is there such a disconnect 0:03:19.639 --> 0:03:22.200 between economists and stock analysts. 0:03:22.320 --> 0:03:25.000 Well, because, look, I think and taking a step back 0:03:25.040 --> 0:03:27.440 and thinking about where we came into the year, like 0:03:27.600 --> 0:03:29.679 we're coming off of a really strong base. Like I 0:03:29.680 --> 0:03:31.959 think comparing this to like the twenty eighteen period is 0:03:32.000 --> 0:03:33.919 a little bit difficult because it was a completely different 0:03:33.919 --> 0:03:36.880 economic backdrop. Right, We're coming into the year and we're 0:03:36.880 --> 0:03:39.160 in like a pretty solid footing from both a consumer 0:03:39.200 --> 0:03:42.280 and a corporate standpoint, And so you do like there 0:03:42.360 --> 0:03:44.360 is a position of strength that we're coming from that 0:03:44.560 --> 0:03:47.280 like we can take somewhat of a hit. Obviously, time 0:03:47.360 --> 0:03:50.520 is taking in terms of how long this uncertainty persists. 0:03:50.560 --> 0:03:53.160 And you know, the President heard this from some companies 0:03:53.240 --> 0:03:55.080 last week when he met with them, saying like, look, 0:03:55.160 --> 0:03:57.520 this is a matter of weeks in terms of empty shelves, 0:03:57.520 --> 0:03:59.560 and that is very important, right, Like, the longer this 0:03:59.640 --> 0:04:04.000 goes on, the more uncertain and the uncertainty pervades, the 0:04:04.160 --> 0:04:07.120 less likely, you know, the upside becomes becomes a reality. 0:04:07.200 --> 0:04:09.880 How many companies are actually gaming out that anything even 0:04:09.920 --> 0:04:13.200 close to the tariffs as announced on Liberation Day are 0:04:13.240 --> 0:04:16.160 going to stick? In other words, how many of the analysts, 0:04:16.320 --> 0:04:19.200 how much of the ranges and the outlooks that companies 0:04:19.240 --> 0:04:22.560 are coming up with are basically expecting to go back 0:04:22.560 --> 0:04:25.080 to something like that ten percent baseline as well as 0:04:25.080 --> 0:04:26.200 subsectoral tariffs. 0:04:26.240 --> 0:04:28.160 Well, so I would say the amount of companies that 0:04:28.200 --> 0:04:29.960 are going back to April second is like kind of 0:04:29.960 --> 0:04:31.840 few and far between. And again those are like kind 0:04:31.880 --> 0:04:34.279 of gems to us in terms of the opportunity set. 0:04:34.480 --> 0:04:36.720 But what you are getting is you're getting some idea 0:04:36.760 --> 0:04:38.920 of like what it's going to cost from a tariff 0:04:38.960 --> 0:04:41.159 perspective from companies. And this is across the board, Like 0:04:41.160 --> 0:04:43.480 pharma companies, We've heard from a lot of healthcare companies 0:04:43.520 --> 0:04:46.039 and like we haven't even had those sectoral tariffs announced, 0:04:46.240 --> 0:04:48.360 and they're trying to like figure out how much they're 0:04:48.400 --> 0:04:50.480 going to have to spend, and so we're assuming it's 0:04:50.480 --> 0:04:53.520 based on the current environment, right without having to really extrapolate, 0:04:54.360 --> 0:04:56.440 and so there is like a cost structure around it, 0:04:56.520 --> 0:04:58.560 and there's obviously a revenue headwind that they're trying to 0:04:58.560 --> 0:05:01.479 take into account. So wrapping heads around how they're getting 0:05:01.480 --> 0:05:03.760 there is like important for us to help us think. 0:05:03.560 --> 0:05:04.839 Through the ear ahead. 0:05:04.839 --> 0:05:06.320 But I wouldn't say there was like a ton of 0:05:06.360 --> 0:05:09.279 companies that took April second and extrapolated, but they're at 0:05:09.360 --> 0:05:11.560 least incorporating I think that ten percent universal. 0:05:11.600 --> 0:05:14.560 When you think of the potential upside to your figures, 0:05:14.600 --> 0:05:16.000 what would it take? Is it policy? 0:05:16.080 --> 0:05:16.640 Is it the Fed? 0:05:17.040 --> 0:05:19.599 Yeah, it's policy. I mean I think the Fed. You know, 0:05:19.640 --> 0:05:21.680 if for like a couple of weeks ago and you 0:05:21.720 --> 0:05:23.479 got asked like what would be the bull like what 0:05:23.480 --> 0:05:25.240 would cause the bowl case? I think it would have 0:05:25.279 --> 0:05:27.760 included the FED, and it would have included some policy 0:05:27.760 --> 0:05:30.920 pivot from the administration. I think a FED pivot at 0:05:30.920 --> 0:05:33.960 this point wouldn't necessarily be short term positive, right because 0:05:34.000 --> 0:05:36.400 it would be because the FED saw weakness. So I 0:05:36.440 --> 0:05:39.440 think really The only like bullish outcome is that you 0:05:39.480 --> 0:05:41.960 see this pivot from the administration, and the market obviously 0:05:42.040 --> 0:05:43.719 seems to be sniffing that out. In terms of what 0:05:43.720 --> 0:05:45.960 we're seeing from a PE perspective, we're at like close 0:05:46.000 --> 0:05:48.839 to twenty times again and again only down two percent 0:05:48.920 --> 0:05:51.960 since Liberation Day, So there is an element of that, 0:05:52.000 --> 0:05:54.800 But I do think that's where the ball case is now. 0:05:54.800 --> 0:05:56.880 They're talking a lot about these eighteen deals. I can 0:05:56.880 --> 0:05:58.800 get with other trading partners, but when you're talking about 0:05:58.800 --> 0:06:02.760 a bullish case, talking about one, right it's China, what 0:06:02.800 --> 0:06:03.719 do you need to see? 0:06:04.120 --> 0:06:06.200 Well, I mean, I think in terms of what the 0:06:06.240 --> 0:06:10.279 market's probably thinking, it's closer to like thirty to fifty percent. 0:06:10.320 --> 0:06:13.479 In terms of the effective teriff right there. I think 0:06:13.480 --> 0:06:16.640 that would bring down the overall terif rate, like effective 0:06:16.720 --> 0:06:19.640 terror rate for the US something between ten to fifteen percent, 0:06:19.680 --> 0:06:22.200 which is like digestible and something that like if we 0:06:22.240 --> 0:06:24.760 think about again going back into expectations for the beginning 0:06:24.800 --> 0:06:26.440 of the year, that's probably where it would have been, 0:06:26.560 --> 0:06:29.240 right like ten to fifteen maybe worst case scenario, still 0:06:29.279 --> 0:06:32.440 a massive increase in terms of where we were prior. 0:06:32.560 --> 0:06:34.559 But I think at least more digestible than the twenty 0:06:34.560 --> 0:06:36.640 five to thirty percent that we had on Liberation Day. 0:06:36.680 --> 0:06:38.120 This week is going to be check full of things 0:06:38.120 --> 0:06:39.880 other than tariff talk, which is going to be exciting 0:06:39.880 --> 0:06:41.800 for people looking to sink their teeth into something that's 0:06:42.000 --> 0:06:44.640 more concrete with numbers and that reflect things that. 0:06:44.560 --> 0:06:45.440 Have already happened. 0:06:45.520 --> 0:06:47.120 I wonder how you look at some of the economic 0:06:47.160 --> 0:06:49.200 data that we're going to be getting. A labor market 0:06:49.279 --> 0:06:51.960 report that a lot of people preemptively are dismissing is 0:06:52.000 --> 0:06:56.599 backward looking and not really important jolts, data, ism, manufacturing. 0:06:56.920 --> 0:06:59.240 How much does it matter to you based on what 0:06:59.279 --> 0:07:01.200 you just said, which we are coming from a very 0:07:01.240 --> 0:07:04.320 different place economically than we were in twenty eighteen. 0:07:04.600 --> 0:07:06.320 Well, I think, Look, I think it's important, but I 0:07:06.320 --> 0:07:09.400 think it's also juxtaposed to what's happening in terms like 0:07:09.440 --> 0:07:11.400 we're going to be focused mostly on earnings. Like you said, 0:07:11.400 --> 0:07:13.360 we have forty percent of market cap reporting and some 0:07:13.400 --> 0:07:15.120 of the biggest names, and I think that's going to 0:07:15.160 --> 0:07:17.280 be Like what has been the story for the S 0:07:17.280 --> 0:07:19.000 and P five hundred over the past couple of years. 0:07:19.080 --> 0:07:21.200 Is this AI story which nobody seems to be talking 0:07:21.200 --> 0:07:24.320 about anymore. So you're getting these like very you know, 0:07:24.440 --> 0:07:27.000 high growth, high quality companies at a discount at the 0:07:27.000 --> 0:07:29.480 moment obviously aside from what we saw last week, but 0:07:29.600 --> 0:07:31.760 still trading at a discount. And so that's really where 0:07:31.760 --> 0:07:33.800 our focus is right because it's part of our bullish 0:07:33.800 --> 0:07:35.840 thesis is that you continue to see that spend and 0:07:35.840 --> 0:07:39.120 that's pervasive through the rest of the market in terms 0:07:39.120 --> 0:07:40.760 of a capack. So we're going to get a lot 0:07:40.760 --> 0:07:43.200 of information there and I think that's what we're going 0:07:43.280 --> 0:07:45.480 to be focused on from an equity market standpoint this 0:07:45.520 --> 0:07:46.800 week's aside from mac. 0:07:46.840 --> 0:07:48.280 The thing that conflicts with that, as you know, is 0:07:48.280 --> 0:07:50.680 that they are cycular Gris, but they're also facing an 0:07:50.720 --> 0:07:54.120 international bank job which is increasingly fragmented. I'm thinking more 0:07:54.880 --> 0:07:57.400 like Apple directly. Apple. I'm just going to bring up 0:07:57.440 --> 0:08:00.360 the name directly. They're facing a big situation China. They 0:08:00.440 --> 0:08:02.600 can have to spend a lot of money moving supply 0:08:02.680 --> 0:08:05.080 out of China into places like India. For those kind 0:08:05.080 --> 0:08:08.239 of companies have difficult Is this moment for them, Well, look. 0:08:08.080 --> 0:08:09.680 I think this isn't the first time they've seen this. 0:08:09.800 --> 0:08:11.840 These tensions have been going on in terms of trade 0:08:11.880 --> 0:08:15.120 as it relates to particular industries like semiconductors since twenty eighteen, 0:08:15.160 --> 0:08:18.120 it was continued throughout you know, the past couple of 0:08:18.200 --> 0:08:20.440 years under the Biden administration as well, So this isn't 0:08:20.480 --> 0:08:22.920 new news. And obviously a lot of this and a 0:08:22.920 --> 0:08:25.120 lot of that re routing had already taken place post 0:08:25.200 --> 0:08:28.760 twenty eighteen. So look, it's not easy. It's still difficult, 0:08:28.800 --> 0:08:31.480 but they have you know, their global supply chains. They 0:08:31.520 --> 0:08:35.320 at least have negotiating power as it relates to you know, 0:08:35.400 --> 0:08:37.840 other other countries and suppliers, so they at least are 0:08:37.840 --> 0:08:40.000 coming from a position of strength. And that standpoint when 0:08:40.040 --> 0:08:43.720 I'm talking about these large diversified companies, and so I think, 0:08:43.800 --> 0:08:46.240 I think it's not easy, but if anyone's going to 0:08:46.280 --> 0:08:47.719 be able to navigate it, I think it would be 0:08:47.760 --> 0:08:48.520 these larger companies. 0:08:48.600 --> 0:08:50.840 So that one's a must watch. Apple reporting on Thursday, 0:08:50.840 --> 0:08:52.760 IBB be good to say a soays thanks for being here, 0:08:52.760 --> 0:09:05.839 Abbyoda that of JP Morgan, a former senior Trump try 0:09:05.920 --> 0:09:08.760 devisor canay on Shaw writing, I do not expect to 0:09:08.760 --> 0:09:12.400 see a full blown US China trade deal this year. 0:09:12.679 --> 0:09:14.520 Callyan joins US now for more Kenney and welcome to 0:09:14.559 --> 0:09:17.680 the program. What can be achieved in the interim between 0:09:17.679 --> 0:09:18.760 now and gear end? 0:09:20.040 --> 0:09:21.440 Good morning, Thanks for having me. 0:09:21.520 --> 0:09:24.040 Well, we're certainly in a he said, She said, when 0:09:24.040 --> 0:09:26.480 it comes to US China relations, and I'll put that 0:09:26.920 --> 0:09:28.960 to the side just for a moment. I think in 0:09:29.000 --> 0:09:32.160 the short term, the administration is looking to ink potentially 0:09:32.240 --> 0:09:35.640 up to seventeen deals. Now that those won't be full 0:09:35.679 --> 0:09:39.240 blown trade deals, but they will be agreements in principle, 0:09:39.280 --> 0:09:41.600 and we'll get the details of those written by lawyers 0:09:41.600 --> 0:09:44.760 in the months to come. But that is part of 0:09:44.800 --> 0:09:48.080 the negotiation strategy with China, and that is to lay 0:09:48.120 --> 0:09:50.360 the groundwork where the US has deals with a number 0:09:50.360 --> 0:09:53.280 of key trading partners, going into a broader discussion with 0:09:53.400 --> 0:09:55.400 China so that they have more of a leg up. 0:09:55.760 --> 0:09:58.280 China is taking a very similar strategy, and it's charm 0:09:58.320 --> 0:10:01.480 offensive with a number of countries around the world. But 0:10:01.640 --> 0:10:04.439 this US China relationship is going to get worked out 0:10:04.480 --> 0:10:05.520 over years. 0:10:05.200 --> 0:10:05.880 And not months. 0:10:06.080 --> 0:10:07.760 Kelly on how do the Europeans fits in. 0:10:09.120 --> 0:10:14.880 Well, A US europe deal has eluded multiple administrations for decades. Now, 0:10:15.280 --> 0:10:17.680 I do think that there is a genuine effort between 0:10:17.720 --> 0:10:20.640 the administration and some European leaders to see what they 0:10:20.679 --> 0:10:23.320 can do in terms of stopping the bleeding with respect 0:10:23.360 --> 0:10:27.280 to these twenty percent reciprocal tariffs. But the European Union 0:10:27.440 --> 0:10:31.760 is a very advanced and entrench regulatory system and it's 0:10:31.800 --> 0:10:34.040 going to be very very hard for them to pivot 0:10:34.200 --> 0:10:36.360 and to change and to concede on some of the 0:10:36.400 --> 0:10:38.200 requests that the Trump administration has. 0:10:38.240 --> 0:10:40.560 So I'm not particularly optimistic, Kelly. 0:10:40.640 --> 0:10:43.439 What are those requests that the Trump administration is telling 0:10:43.480 --> 0:10:45.679 the Europeans they have to see in order to get 0:10:45.679 --> 0:10:46.400 a trade agreement. 0:10:47.440 --> 0:10:50.600 Well, they haven't made those demands public except for this 0:10:50.760 --> 0:10:54.120 National Trade Estimate, which President Trump and Jamison Grewer have 0:10:54.200 --> 0:10:56.800 held up on multiple occasions and said, here are the 0:10:56.840 --> 0:11:00.120 list of non tariff barriers. But they are long stan 0:11:00.280 --> 0:11:03.080 and well known. So they are talking about the VAT tax, 0:11:03.120 --> 0:11:07.360 but some of the regulatory barriers in agriculture, in automotive, 0:11:08.040 --> 0:11:11.720 some of the EU's subsidy programs, the digital services taxes 0:11:11.760 --> 0:11:14.760 that a number of EU countries maintain. There are quite 0:11:14.800 --> 0:11:16.760 a few barriers to trade that are going to make 0:11:16.760 --> 0:11:19.400 it very very challenging. And tariffs really are just the 0:11:19.440 --> 0:11:20.800 tip of the iceberg. 0:11:20.520 --> 0:11:22.960 When it comes to China. What needs to happen for 0:11:23.160 --> 0:11:26.080 one of them, either Beijing or Washington, to blink, because 0:11:26.160 --> 0:11:28.400 right now it's just a tremendous amount of noise. 0:11:29.720 --> 0:11:33.240 Yeah, certainly, and drama is certainly a feature of US 0:11:33.360 --> 0:11:34.760 China trade negotiations. 0:11:34.760 --> 0:11:35.960 It was during Trump one. 0:11:36.040 --> 0:11:38.680 I fully expect it to remain a part of Trump 0:11:38.679 --> 0:11:41.920 two point zero. I do think that behind the scenes, 0:11:41.960 --> 0:11:45.320 both sides are looking for a political off ramp that 0:11:45.520 --> 0:11:48.120 saves face. These one hundred and twenty five percent and 0:11:48.120 --> 0:11:50.960 one hundred and forty five percent tariffs are not sustainable 0:11:51.400 --> 0:11:54.600 in the short or medium or long term. So I 0:11:54.640 --> 0:11:57.480 do expect to see some sort of de escalation in 0:11:57.559 --> 0:12:00.760 the coming weeks or potentially months, But in terms of 0:12:00.800 --> 0:12:03.480 a full blown trade deal, I don't know that that's 0:12:03.600 --> 0:12:05.760 possible anytime soon, if at all. 0:12:06.600 --> 0:12:06.800 Now. 0:12:06.880 --> 0:12:09.520 I do think both sides will at some point sit 0:12:09.600 --> 0:12:12.320 down and try to work out some of their shared differences. 0:12:12.679 --> 0:12:14.599 But at the end of four years, I think the 0:12:14.720 --> 0:12:16.840 US and China are going to do less trade with 0:12:16.880 --> 0:12:18.080 one another and not more. 0:12:18.280 --> 0:12:20.719 But you're talking about an off ramp potentially we could 0:12:20.760 --> 0:12:22.880 see before they sit down. When do you think that 0:12:22.920 --> 0:12:25.200 offramp would be well. 0:12:25.440 --> 0:12:27.679 I was hopeful that the two sides could have found 0:12:27.679 --> 0:12:28.439 something in. 0:12:28.440 --> 0:12:29.840 The first couple of weeks. 0:12:30.679 --> 0:12:33.360 But you've got, on the one hand, President Trump saying 0:12:33.360 --> 0:12:35.520 that I only want to do this at the leader level. 0:12:35.880 --> 0:12:38.400 On the other hand, you have President she who's saying 0:12:38.480 --> 0:12:40.400 I'm not going to do this at the leader level, 0:12:40.440 --> 0:12:44.160 appoint someone else. And so both sides are engaged in 0:12:44.200 --> 0:12:47.280 this game of chicken, arguing that the other side has 0:12:47.360 --> 0:12:50.400 more to lose than they do now. Back in Trump 0:12:50.559 --> 0:12:53.440 one point zero, we had the G twenty and these 0:12:53.480 --> 0:12:56.880 other international forum that were happening around the same time 0:12:57.000 --> 0:12:59.160 as the trade war, which gave the two leaders a 0:12:59.200 --> 0:13:02.640 political opportunity to meet on the sidelines. We don't have 0:13:02.720 --> 0:13:05.440 that in the short term. So it is either going 0:13:05.480 --> 0:13:09.160 to be President Trump saying okay, I'll appoint someone, or 0:13:09.200 --> 0:13:12.080 some backchanneling, potentially some Track one point five or Track 0:13:12.120 --> 0:13:15.240 two diplomacy between CEOs going back and forth to try 0:13:15.280 --> 0:13:16.040 to work things out. 0:13:16.200 --> 0:13:17.920 Kelly On, you pointed out that we're about two and 0:13:17.920 --> 0:13:21.720 a half months into President Trump's three month window to 0:13:21.920 --> 0:13:25.320 make trade deals with virtually every nation in the entire world, 0:13:25.480 --> 0:13:28.280 and it points to how unfeasible infeasible. This is how 0:13:28.360 --> 0:13:31.760 much is this just a period of time to reset 0:13:31.840 --> 0:13:35.600 the narrative before having another extension and then another extension 0:13:35.679 --> 0:13:38.600 before there's a realistic timeframe for how long it takes 0:13:38.600 --> 0:13:39.400 trade deals. 0:13:39.160 --> 0:13:39.640 To be inked. 0:13:41.080 --> 0:13:44.000 Yeah, And this is where there's a distinction between these 0:13:44.040 --> 0:13:48.480 full blown trade deals versus these agreements in principle. And 0:13:48.559 --> 0:13:51.679 I do think that it is possible to reach agreements 0:13:51.679 --> 0:13:54.000 in principle, which is basically an outline of some of 0:13:54.040 --> 0:13:55.560 the key components. 0:13:55.000 --> 0:13:58.079 Of what will be in those deals in a short 0:13:58.120 --> 0:13:59.000 period of time. 0:13:59.240 --> 0:14:02.280 But if you want to have drafted text that captures 0:14:02.360 --> 0:14:04.440 these trade deals, that's going to take months and months 0:14:04.480 --> 0:14:07.240 and months of time and a ton of work by 0:14:07.320 --> 0:14:11.400 various lawyers. Now, that said, if you're still dealing with 0:14:11.440 --> 0:14:14.080 seventeen or eighteen countries, that's still a lot to do 0:14:14.200 --> 0:14:17.120 between now and July ninth. So I do think for 0:14:17.240 --> 0:14:21.760 countries where substantial progress has been made, the president is 0:14:21.880 --> 0:14:24.400 likely to extend that period of time, although he has 0:14:24.400 --> 0:14:26.560 not said that he will do that. And then for 0:14:26.640 --> 0:14:29.600 countries that are maybe not as far along, the president's 0:14:29.640 --> 0:14:31.840 going to feel some pressure to turn those terrorists back 0:14:31.880 --> 0:14:34.760 on so that his threat means something and to try 0:14:34.760 --> 0:14:37.200 to squeeze some countries at the end of that ninety 0:14:37.280 --> 0:14:39.600 day period, So I think we'll see a mix. 0:14:39.680 --> 0:14:42.640 On April second, there was a big question around what 0:14:42.720 --> 0:14:45.880 the ultimate goal was of this new Terra regime. Was 0:14:45.920 --> 0:14:50.480 it revenue raising, was it penalizing national security issues or 0:14:50.520 --> 0:14:52.960 potential trade partners that hadn't been doing the right thing? 0:14:53.000 --> 0:14:55.600 Or was it fairness. Now that we've seen some of 0:14:55.600 --> 0:14:58.160 these negotiations, do we have a better sense of the 0:14:58.200 --> 0:15:01.000 overarching framework of what the goal really is. 0:15:02.400 --> 0:15:05.920 Yeah, And I think that different tariffs have different goals. 0:15:05.960 --> 0:15:08.920 So clearly one of the north stars of the administration 0:15:09.160 --> 0:15:13.840 is addressing this substantial one point two trillion dollar trade deficit, 0:15:14.240 --> 0:15:16.600 and that, to me, is what this ten percent global 0:15:16.640 --> 0:15:19.680 baseline tariff is about. But when it comes to these 0:15:19.680 --> 0:15:23.840 more advanced reciprocal tariffs like that forty six percent on Vietnam, 0:15:23.920 --> 0:15:27.480 that twenty percent on the EU, that is about fairness 0:15:27.520 --> 0:15:30.320 and leveling the playing field and addressing some of the 0:15:30.440 --> 0:15:34.680 unfair trade practices, the unbalanced trade that the President has 0:15:34.720 --> 0:15:39.280 been talking about. National security tariffs are really those sectoral tariffs, 0:15:39.280 --> 0:15:43.400 so those on semiconductors, pharma, steel, aluminum and autos. And 0:15:43.440 --> 0:15:45.960 then this revenue point which the President raises to me 0:15:46.080 --> 0:15:49.160 is more about messaging. It's about selling that domestically to 0:15:49.200 --> 0:15:52.720 the American people about why leaving tariffs in place, particularly 0:15:52.720 --> 0:15:55.960 why negotiations are ongoing, may not be the worst thing 0:15:56.000 --> 0:15:57.960 in the world because look at the tariff revenue that's 0:15:58.000 --> 0:15:58.400 coming in. 0:15:58.440 --> 0:16:00.000 But I don't see that as one of the prime 0:16:00.120 --> 0:16:00.720 Mary goals. 0:16:00.880 --> 0:16:03.920 Over the weekend, the Treasury Secretary was asked about this 0:16:03.960 --> 0:16:07.520 whole strategy putting tariffs on pulling them back, and the 0:16:07.560 --> 0:16:11.960 Treasure Secretary said, actually, it's called strategic uncertainty and game theory. 0:16:12.120 --> 0:16:15.040 You were an individual at the negotiating table. Do you 0:16:15.080 --> 0:16:18.840 think this strategic uncertainty is damaging or actually useful? 0:16:20.080 --> 0:16:22.320 Well, I think it depends on where you're sitting. 0:16:22.640 --> 0:16:25.040 And as a negotiator, I used to say that, and 0:16:25.080 --> 0:16:27.360 I spent ten years as a negotiator for the US 0:16:27.480 --> 0:16:30.400 government that I had the most fun working for President 0:16:30.400 --> 0:16:33.040 Trump because my trading partner sitting on the other side 0:16:33.120 --> 0:16:35.640 really had no idea what my leader was going to do, 0:16:36.080 --> 0:16:38.720 which actually gave me a fair amount of leverage at 0:16:38.720 --> 0:16:41.960 the table to try to advance US interests. Now sitting 0:16:41.960 --> 0:16:47.440 on the other side now representing companies. That uncertainty, that 0:16:47.560 --> 0:16:50.920 lack of clarity that will we have tariffs tomorrow won't 0:16:50.920 --> 0:16:54.760 we is incredibly challenging in terms of making investment decisions 0:16:54.800 --> 0:16:58.960 and supply chain decisions. But that strategic ambiguity is really 0:16:59.000 --> 0:17:02.040 aimed at other trades partners, and the message is not 0:17:02.080 --> 0:17:04.399 for the business community, and so I think that tension 0:17:04.440 --> 0:17:07.600 makes it a bit challenging, particularly for domestic stakeholders, while 0:17:07.640 --> 0:17:08.560 the President. 0:17:08.200 --> 0:17:08.880 Works this out. 0:17:09.200 --> 0:17:11.440 Kelly, I appreciate your time as always, Kelly, I'm sure 0:17:11.600 --> 0:17:23.760 they Former senior Trump trade advisor Amanda Line of a 0:17:23.800 --> 0:17:26.520 black Rock writing, we see scope for additional spread widening 0:17:26.560 --> 0:17:29.520 and credit. Underpinning this view is our expectation for a 0:17:29.560 --> 0:17:32.720 more challenging growth inflation mix, as well as our expectation 0:17:32.880 --> 0:17:36.320 that the hard economic data will eventually catch down to 0:17:36.359 --> 0:17:39.320 the soft sentiment data. Amanda joins us now for more. Amanda, 0:17:39.320 --> 0:17:41.600 good morning, morning, Thank you for having me. Eventually, can 0:17:41.640 --> 0:17:43.359 we put some details on eventually? 0:17:44.080 --> 0:17:47.560 So I think taking a step back, the market seems 0:17:47.560 --> 0:17:49.119 to be taking a bit of I would say, a 0:17:49.160 --> 0:17:51.399 temporary reprieve from the fact that we haven't seen this 0:17:51.480 --> 0:17:54.600 soft data translate directly into hard data immediately if you 0:17:54.680 --> 0:17:57.080 actually look at what these companies are saying though, which 0:17:57.240 --> 0:18:00.000 even the companies over the last seven days of report 0:18:00.600 --> 0:18:04.080 haven't really baked in expectations of shifts and trade policy, 0:18:04.119 --> 0:18:06.359 and so I think actually what we're looking for is 0:18:06.359 --> 0:18:08.119 the second half of this year. If you look at 0:18:08.119 --> 0:18:10.440 home builders, they're not expecting higher costs to hit closing 0:18:10.560 --> 0:18:13.359 until the third quarter or fourth quarter. Industrial companies aren't 0:18:13.359 --> 0:18:16.119 expecting higher costs until they work through inventory, possibly to 0:18:16.200 --> 0:18:18.760 the second half of this year. So corporates are I 0:18:18.800 --> 0:18:21.960 think we're still figuring this out to a large degree, 0:18:22.000 --> 0:18:24.159 so it's not surprising that we haven't seen it in 0:18:24.200 --> 0:18:26.600