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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Welcome to Trump Andomics, the Bloomberg podcast that looks at

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Speaker 2: the economic world of Donald Trump, how he is shaping

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Speaker 2: the global economy, and what on Earth will happen next.

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Speaker 2: We're hosting this episode in front of a live audience.

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Speaker 2: I can't help emphasizing the word live because the last show,

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Speaker 2: the last show we did was at the World Economic

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Speaker 2: Forum in Davos. But I think you're very alive and

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Speaker 2: much more excitingly, you're at the New York Bloomberg headquarters.

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Speaker 2: We have put together top class panel of Bloomberg experts

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Speaker 2: to help us unpack the topic of the week. Kind

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Speaker 2: of hard to pick these days what the one topic is.

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Speaker 2: But I think what is trump Andomics two point oh?

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Speaker 2: What have we actually learnt in the first few weeks

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Speaker 2: of this administration? Is not a bad place to start.

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Speaker 2: You know, Donald Trump has always made his own weather.

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Speaker 2: People tend to talk a lot about him flooding the zone,

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Speaker 2: because last weekend we had not so much flooding the

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Speaker 2: zone as threatening to blow it up. In the case

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Speaker 2: of the closest economic relationships that the US has with

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Speaker 2: its neighbors, Canada and Mexico. We talked a bit about

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Speaker 2: that in the last episode of Trump Andnomics, but we're

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Speaker 2: going to broaden it out with this excellent panel we

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Speaker 2: have here to consider. What have we learned about the

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Speaker 2: way the president's making his decisions, Who's up, who's down?

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Speaker 2: And especially important, I hope to Bloomberg subscribers, what's the

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Speaker 2: impact on this for markets and for investors. So let's

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Speaker 2: get to it. We have a couple of Trump Andomics regulars.

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Speaker 2: This is only what the third or fourth episode, but

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Speaker 2: we can still we can call you regulars. Nancy Cook,

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Speaker 2: who I thank very much for taking the train from

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Speaker 2: DC to be with us tonight, our senior national political correspondent.

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Speaker 2: Thanks Nancy, thanks for having me.

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Speaker 1: It's so nice to be in New York.

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Speaker 2: Did you get a moment of piece, touch a tiny

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Speaker 2: moment of piece as you sat on the train or

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Speaker 2: was it just hopeless to me?

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Speaker 1: I went out to dinner last night and Trump said

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Speaker 1: that he was going to take over Gaza, So I thought,

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Speaker 1: we welcome to Trump to point out you can't go

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Speaker 1: out to dinner, okay.

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Speaker 2: And we have Tim o'briane, Senior Executiveloper of Bloomberg opinion,

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Speaker 2: and crucially for the purpose of the podcast, author of

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Speaker 2: Trump Nation, The Art of Being the Donald, Tim very

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Speaker 2: good to see you, and later we're going to have

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Speaker 2: Bloomberg and Ka Katie Gryfield and senior editor Ed Harrison.

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Speaker 2: That'll be the more sort of money part of things.

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Speaker 2: But part of the challenge with this administration, I was

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Speaker 2: alluding to it before, is not so much distinguishing a

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Speaker 2: signal from the noise as just kind of drawing breath.

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Speaker 2: So I think it's particularly important for us, in sort

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Speaker 2: of podcasts like this and events like this, to sort

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Speaker 2: of step back and think what we've learned. So, Nancy,

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Speaker 2: I know you've been tearing around reporting out how some

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Speaker 2: of these decisions are being made, how the tariff news

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Speaker 2: came together, So give us a bit of an insight

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Speaker 2: into that.

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Speaker 1: You Know, one thing I've learned i've covered Trump since

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Speaker 1: twenty fifteen is often decisions are made on the fly,

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Speaker 1: and I would say with the tariff decision, that was

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Speaker 1: the case there as well. We wrote a story last

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Speaker 1: week saying as of Thursday, they really hadn't made a decision,

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Speaker 1: and that was true. There were some advisors calling for

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Speaker 1: gradual tariffs, some people trying to say, well, let's just

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Speaker 1: teariff certain industries or certain countries. There was a tiny

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Speaker 1: group of people in the White House, including Stephen Miller,

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Speaker 1: who many people know, who's one of the deputy chiefs

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Speaker 1: of staff, who was advocating for things. The Treasury Secretary

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Speaker 1: Scott Besson had just gotten in there. Trump was hearing

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Speaker 1: from all these different people, also including Peter Navarro. We

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Speaker 1: can't forget about him. He's quite hawkish on China and

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Speaker 1: tariffs in general. But they were basically building the tariff policy,

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Speaker 1: you know, as he was making the threats and sort

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Speaker 1: of having all these meetings, and at the end of

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Speaker 1: the day, Trump's decided that he was going to do it,

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Speaker 1: and it was really like a sort of twelve hour decision. Okay,

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Speaker 1: we're going to teariff these two major US allies.

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Speaker 2: And do you think, just to remind ourselves, the people

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Speaker 2: that he'd said were officially in charge of trade policy

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Speaker 2: are not confirmed, and when you didn't mention them in your.

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Speaker 1: Description, just then yeah, they're not even there yet. So

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Speaker 1: officially the Commerce Secretary, who if he's confirmed, will be

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Speaker 1: Howard Luttnik, who was in charge of Canter Fitzgerald. He

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Speaker 1: will be in charge of it, along with the US

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Speaker 1: Trade Representative Jamerson Greer, who worked in the first Trump

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Speaker 1: administration as the chief of staff to Bob Leittheiser. And

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Speaker 1: they're supposed to be in charge, but they're not even

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Speaker 1: confirmed yet. And there was really not a political appointees

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Speaker 1: at these agencies. And so right now these huge trade

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Speaker 1: decisions are basically being made by Donald Trump and then

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Speaker 1: three aids in the White House.

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Speaker 2: Do you get the impression on the Sunday and Monday

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Speaker 2: as we trying to manage the blowback from this announcement,

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Speaker 2: was there sort of an disagreement about how to respond,

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Speaker 2: how quickly to give in?

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Speaker 1: Well, I think that there is. There was disagreement, a

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Speaker 1: ton of disagreement in the first Trump administration about trade policy,

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Speaker 1: and I think there continues to be disagreement. You know,

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Speaker 1: Peter Navarro, who I mentioned, is much more sort of

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Speaker 1: hawkish and wanting to teariff everything.

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Speaker 3: You know.

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Speaker 1: I would put Howard Lutnik, the incoming Commerce Secretary, in

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Speaker 1: that camp, but Scott Besnt wanted to make it more gradual.

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Speaker 1: But just one more example of how Trump makes these

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Speaker 1: decisions on the fly. When he threatened the tariffs on Columbia.

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Speaker 1: For instance, he was in Miami and golfing at his

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Speaker 1: club in Durrell and you know, one source told me

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Speaker 1: he was on the golf cart and pulled out his

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Speaker 1: phone and on true social announced that he was going

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Speaker 1: to terror.

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Speaker 2: He explains what he misspelled. Columbia.

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Speaker 1: Yes, announced like while he was, you know, in his

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Speaker 1: golf outfit, said he's going to put tariffs on Columbia,

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Speaker 1: you know, and if they don't take action in one week,

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Speaker 1: they will rise to fifty And then got back on

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Speaker 1: the golf cart. And so that is really I think

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Speaker 1: the perfect metaphor for how he is making these decisions.

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Speaker 1: You know, you could sort of make fun of it,

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Speaker 1: or you could say, oh, he's doing this on the fly.

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Speaker 1: But I will say, having covered him for a long

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Speaker 1: time and spent a lot of time with him on

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Speaker 1: the campaign trail, he is like a much more self

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Speaker 1: assured leader this time. And I do think knows what

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Speaker 1: he wants even more so, I.

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Speaker 2: Mean tim there is this sort of line developing of oh,

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Speaker 2: this was again, you know, policy being done without the

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Speaker 2: grown ups in charge some of these, or with the

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Speaker 2: grown ups not in the room. He's on his golf court,

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Speaker 2: car whatever. But I know you're always saying, we shouldn't

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Speaker 2: be surprised by any of this. This is his modus oparendum.

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Speaker 4: Yeah, I mean he's you know, he's been this way

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Speaker 4: since he was seven. This shouldn't surprise anybody. He's not

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Speaker 4: a linear thinker. He doesn't think strategically. He thinks emotionally,

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Speaker 4: and everyone around him, you know it's calling it trade

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Speaker 4: policy is almost a misnomer because I think what is

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Speaker 4: real intention is to use it as a cudgel, at

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Speaker 4: least in the near term, to have various groups that

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Speaker 4: he wants to flex around. I think he's also, particularly

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Speaker 4: on Mexico, there's this confluence of campaign promises he's trying

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Speaker 4: to keep around trade, immigration, drugs, and they were all

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Speaker 4: critiques he had of the Bided administration. So when one

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Speaker 4: fell swot he's trying to say, I will solve immigration,

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Speaker 4: trade and other things that ail US as quickly as

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Speaker 4: possible and with as much blunt force as possible. But

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Speaker 4: the advisors he has around has around him, none of

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Speaker 4: them think massive tariffs are really good. They know it's

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Speaker 4: bad for trade, they know it's bad for economies, they

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Speaker 4: know it dense global diplomacy, but there's succoming because you

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Speaker 4: don't become a member of Trump's White House unless you

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Speaker 4: get the agenda.

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Speaker 3: And so.

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Speaker 4: Kevin Hassett was on CNBC yesterday saying, I guess I

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Speaker 4: shouldn't say the any of our competitor another network saying

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Speaker 4: that this isn't a trade war, it's a drug war.

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Speaker 4: And some of that is threading an eel around the

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Speaker 4: legalities that Trump would need to deploy in order to

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Speaker 4: act unilaterally around this. And then Scott Bessens, who also

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Speaker 4: knows better the Treasury secretary, is advocating a rigorous escalation

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Speaker 4: of tariffs, even though for all of his adult life

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Speaker 4: he understands the virtues and importance as of free trade,

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Speaker 4: and Trump himself really does not have a sophisticated grasp

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Speaker 4: of economics or trade. He is interested, I think, in

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Speaker 4: creating chaos because it keeps people back on their heels

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Speaker 4: and it gives him room to maneuver. He did it

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Speaker 4: in his business life before Trump one point zero. He

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Speaker 4: did it in his first term. He will do it

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Speaker 4: for the next four years. And it generally is coming

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Speaker 4: from a desire to occupy the spotlight and to keep

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Speaker 4: everyone else guessing about what he wants to do next.

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Speaker 4: And that's an effective campaign strategy, he's proven that. But

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Speaker 4: as a governing strategy, or as a way of messaging

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Speaker 4: to the business community that needs to think ahead about

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Speaker 4: investing long term, hiring long term, having long term trading relationships,

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Speaker 4: it's an utter disaster.

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Speaker 2: It's interesting. I would push back on a few this.

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Speaker 2: I do think we learned. In fact, I'm allowed. I'm

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Speaker 2: allowed to disagree with people. I disagree with you. No,

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Speaker 2: I think we did learn actually from the president's interview

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Speaker 2: with our own editor in chief John Wicklithwaite. Then he

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Speaker 2: does have a theory of tariffs. I think he actually had,

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Speaker 2: and he actually has an idea of using them for

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Speaker 2: different things. Because we were pushing him back. John mclwaite was

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Speaker 2: pushing him on isn't it inconsistent to say you're going

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Speaker 2: to raise lots of money but also move production, because

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Speaker 2: if you move production and reduce the amount of imports,

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Speaker 2: you're not going to be able to raise the money.

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Speaker 2: And he was quite clear he's like, some things we

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Speaker 2: want to raise money on, we put it at a

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Speaker 2: low rate. Other things we actually want to bring it

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Speaker 2: back home. And that's what I think the danger that's

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Speaker 2: not a theory, no, well, the Dane, well, it is

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Speaker 2: that this is a selective tariff theory. I just made

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Speaker 2: it up, but I think the and actually on the

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Speaker 2: this week's episode of Trumponomics and A Wong, the Chief

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Speaker 2: US Economists was introducing us the idea of optimal tariff theory,

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Speaker 2: which I'm not sure he's read that book. It sounded

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Speaker 2: way too complicated. But the difference this time is that

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Speaker 2: he's also seeming to want to use it for any

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Speaker 2: as a bludgeon, as you say, for lots of different things,

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Speaker 2: and as a way he's using it in the same

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Speaker 2: way that he used the kind of dramatic statements about

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Speaker 2: Mexico paying for the wall in the first administration, or

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Speaker 2: some of the sort of ground standing with NATO, and

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Speaker 2: the economic costs of that could be quite significant.

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Speaker 4: That much uncertainty, and I think in a world that

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Speaker 4: is naturally populated with uncertainties and threats, you, I think

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Speaker 4: you want leaders in various and stakeholders across society to

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Speaker 4: engage in certainty and rationality. And I don't think either

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Speaker 4: one of those things are going to be his strong suits.

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Speaker 4: So I think people trying to sort through how you

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Speaker 4: make your own decisions, either as a business leader or

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Speaker 4: an investor, as a citizen, it's just going to be

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Speaker 4: constantly left on their heels, and that's exactly how we

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Speaker 4: want it. I would also, I would say, though I

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Speaker 4: don't think there's a theory. I think there is just

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Speaker 4: a need to occupy the conversation. I think that's different.

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Speaker 2: Just going back to Scott Beston, because you've both mentioned him,

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Speaker 2: and it struck me. I mean, he had been he

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Speaker 2: was one of the early members of the administration that

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Speaker 2: was nominated and was felt to be gave that dose

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Speaker 2: of normality along with Marco Rubio and particularly on the economics,

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Speaker 2: on the trumpnomics, he's supposed to be this critical figure

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Speaker 2: of sort of stability as Wall Street background and investing background.

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Speaker 2: I feel like changed our view of him a bit

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Speaker 2: over the last couple of weeks. It seems like he's

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Speaker 2: signing the permission slips for Elon Musk's people, letting them

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Speaker 2: resting him run wild in the Department of Treasury. I mean, Nasi,

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Speaker 2: is that Do you think we should think of him

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Speaker 2: as a different kind of figure in this administration or

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Speaker 2: is it two early days.

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Speaker 1: I think that it's a little bit early, but I

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Speaker 1: will say my owner reporting from he's been Treasury Secretary

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Speaker 1: for a week, and I think.

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Speaker 2: It's been a really quiet week for the Treasury.

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Speaker 1: But I do think that he has been in a

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Speaker 1: tough spot. I would say he's been in charge of

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Speaker 1: one of the key agencies for just a short period

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Speaker 1: of time, and Elon Musk has rolled up in there

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Speaker 1: and now has access to the Treasury payment system, and

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Speaker 1: that is a huge thing to control or like even

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Speaker 1: have access to. Scott Besson did not get his pick,

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Speaker 1: for instance, for the IRS Commissioner. You know, have reporting

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Speaker 1: that he did not want the former Congressman Billy Long

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Speaker 1: to get that job, so he sort of overruled on that.

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Speaker 1: You know, there was a lot of fighting during the

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Speaker 1: transition between Scott Besson and Howard Lutnik over who would

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Speaker 1: actually get the Treasury secretary job. So I'm looking ahead

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Speaker 1: to that and what the tension is between the two

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Speaker 1: of them both leading trade stuff, and also just you

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Speaker 1: know how that level of infighting develops. So I think

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Speaker 1: it's been a tricky week and Scott is someone who

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Speaker 1: I would say Wall Street respects and bond market respects,

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Speaker 1: and I think people did think he was going to

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Speaker 1: be the grown up in the room, and he did

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Speaker 1: a pretty good job of courting sort of fringe Trump

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Speaker 1: allies and building his own coalition to get the Treasury

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Speaker 1: secretary job. But now that he is in there, being

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Speaker 1: in Trump world does require real survival skills and real

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Speaker 1: sort of political infighting skills, and I will be curious

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Speaker 1: to see how he fares in that political environment.

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Speaker 2: How he fared Slash losts well.

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Speaker 4: You know. The other thing is that the Treasury secretary

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Speaker 4: is a weak cabinet position and FED chairman, you know,

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Speaker 4: that was where the action is in terms of having

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Speaker 4: I think real power to affect the economy. And I

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Speaker 4: think Treasury secretaries are spokespeople for an administration's economic worldview.

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Speaker 4: And the ones who've been I think very effective at it,

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Speaker 4: Jim Baker during the Bush administration, Bob Rubin during the

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Speaker 4: Clinton administration. They're in sync with their presidents. There's a

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Speaker 4: unified philosophy, and they're the ones out in the world

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Speaker 4: saying these are our economic goals. And it's very hard

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Speaker 4: for Trump advisors to be in sync with Trump because

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Speaker 4: he's unpredictable, and then secondly, I think whatever Bessen's is

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Speaker 4: saying now about Trump and his approaches to these things,

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Speaker 4: it runs up against how I think Bessant has rolled

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Speaker 4: through most of his career, and so he's going to be,

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Speaker 4: I think, constantly caught between Irock and a hard place philosophically.

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Speaker 1: Yeah, I think Besson has also recently told allies. I

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Speaker 1: think he's trying to set expectations in Washington, and he

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Speaker 1: has told people my number one priority for twenty twenty

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Speaker 1: five is really getting through a sweeping tax bill. And

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Speaker 1: so I think he's trying to steer clear of some

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Speaker 1: of the landmines like trade policy and focus on this

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Speaker 1: one thing. And I just think that's an interesting thing.

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Speaker 1: Because I disagree with you. I think Treasury is is

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Speaker 1: a great job. You're in charge of like sanctions, tax policy,

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Speaker 1: international diplomacy, Like there's such a range of things that

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Speaker 1: you're in charge of. You at your own plane, This.

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Speaker 2: Is a cool job.

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Speaker 1: I disagree with you. I don't want to be I'm

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Speaker 1: happy as a reporter, but I think it's a big job.

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Speaker 1: But I do think he is trying to set expectations

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Speaker 1: like I will get through the tax bill, and that

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Speaker 1: will be I'll be successful if I get that through.

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Speaker 2: Well, I'm glad you said that. That's it. I agree

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Speaker 2: with you, and I definitely have to agree with Tim

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Speaker 2: because having worked for Bob Rumer, that's Treasury I saw,

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Speaker 2: I think Treasury at a particularly powerful time. And we

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Speaker 2: might just add that it was the last time we

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Speaker 2: had a budget surplus. I'm just saying, all right, so

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Speaker 2: we're going to get that gets us very nicely onto

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Speaker 2: the sort of more economic y market bit of the discussion.

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Speaker 2: But Nancy and Tim, thank you very much, and we're

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Speaker 2: going to get you back for questions a bit later on.

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Speaker 2: But thanks very much. Thanks, So we're going to bring

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Speaker 2: on the other speakers. The last time we did do

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Speaker 2: one of these events was at the World Economic Forum,

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Speaker 2: though not with subscribers because the describers didn't make it

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Speaker 2: up the hill. But the feeling there was that the

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Speaker 2: investors were so incredibly positive about everything to do with

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Speaker 2: the US. The markets were kind of pricing. I felt

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Speaker 2: it was like pricing for the best of all possible trumps,

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Speaker 2: you know, all the good things for markets, the deregulation,

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Speaker 2: the extension of tax cuts, none of the bad things.

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Speaker 2: And I don't know. I mean, one of the things

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Speaker 2: we will get onto is whether the events of the

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Speaker 2: last couple of weeks have sort of changed that feeling

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Speaker 2: of a sort of fair weather for markets on Donald Trump,

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Speaker 2: and I was very struck. One of my former colleagues

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Speaker 2: at JP, Morgan Bruce Kasman, put out a note in

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Speaker 2: the last couple of days saying this weekend's announcements point

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Speaker 2: towards a materially different US policy mix than built into

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Speaker 2: our outlook, and challenge the underlying view that the Trump

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Speaker 2: administration will strive to limit disruptive policies. In fact, the

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Speaker 2: risk is that the policy mix is tilting into a

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Speaker 2: business unfriendly stance. So that's I think as sort of

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Speaker 2: framing for this second part of the conversation. I'm very

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Speaker 2: excited to welcome Katie Greifeld, Bloomberg TV hosts many of

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Speaker 2: you will know, and co host of the Money Stuff podcast. Katie,

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Speaker 2: thank you very much for joining us, Thanks for having

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Speaker 2: me and Ed Harrison, senior editor and author of the

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Speaker 2: Everything Risk newsletter, who's also come from Washington to be here.

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Speaker 2: Katy on that, do you get the sense with all

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Speaker 2: the guests that you talk to on Bloomberg TV and elsewhere,

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Speaker 2: that the mood is shifting, that there is a fear

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Speaker 2: that this is going to be a business unfriendly administration,

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Speaker 2: at least with this kind of uncertainty.

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Speaker 3: What I keep coming back to, both with guests and

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Speaker 3: you know, with my Bloomberg team, is that it's only

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Speaker 3: week two, so it's really hard to say, but I

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Speaker 3: will say the experience with tariffs I think rattled a

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Speaker 3: lot of investors that I've been speaking to this week,

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Speaker 3: also a lot of business executives, because I mean, you

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Speaker 3: just think about the automakers. We had forward report earnings

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Speaker 3: this afternoon. And maybe tariff's a negotiating tactic. It certainly

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Speaker 3: seems like the last week has proven that. But if

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Speaker 3: you're running a company, if you're putting money to work,

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Speaker 3: the will he won't he? When it comes to tariffs,

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Speaker 3: you still have to respond. You have to game plan,

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Speaker 3: you have to try to, you know, make decisions here.

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Speaker 3: You think about Ford, for example, and you think about, okay,

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Speaker 3: maybe we pushed out tariffs for a month. When it

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Speaker 3: comes to Canada and Mexico, the auto industry would be

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Speaker 3: so affected by those levies if they wanted to affect,

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Speaker 3: But also how long they lasted whether or not we

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Speaker 3: saw retaliation, and Jim Farley, I mean saying he said

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Speaker 3: on BTV actually just about an hour or two ago,

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Speaker 3: that they can see he's the CEE of Ford. They

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Speaker 3: can handle a couple weeks of tariffs, but if it

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Speaker 3: goes beyond that, it'll be billions and billions of dollars

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Speaker 3: in incremental profit headwinds. So those are real considerations, and

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Speaker 3: I think that optimism is still there. I mean, Farley

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Speaker 3: went on to say that he thinks Trump will be

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Speaker 3: overall positive for the auto industry, but there's question marks

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Speaker 3: around that. Just all out enthusiasm and felt like we

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Speaker 3: saw after the election.

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Speaker 5: I would agree with that. What I would say is

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Speaker 5: is that when he came on board, people were thinking

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Speaker 5: low tax is low regulation, that's good for business. But

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Speaker 5: with the tariffs, that's changed. And I think the thing

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Speaker 5: that's changed that's most obvious is inflation expectations. That is,

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Speaker 5: the expectations both from consumers and from the market that

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Speaker 5: inflation will stay low. As soon as Trump became more

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Speaker 5: likely to win, we saw from September forward the expectations

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Speaker 5: over the next two years of inflation that's market based

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Speaker 5: go from something in the one percentage area to now

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Speaker 5: three percent, which is quite a move, and interestingly, very

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Speaker 5: recently we've also seen an increased risk of recession, and

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Speaker 5: so that's a sign that perhaps he's not going to

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Speaker 5: be as friendly as we thought he was going to be.

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Speaker 2: How are people thinking about the FED in that context?

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Speaker 2: Because actually, well, Casey, you reminded me that we'd had

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Speaker 2: this very interesting comment from the President in the last

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Speaker 2: week about the FED, who's he'd always been keen on

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Speaker 2: having lower and lower interest rates.

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Speaker 3: Yeah, Trump loves the voliage erom pale. But this week,

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Speaker 3: I mean lost sort of in all the news that

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Speaker 3: we got over the weekend.

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Speaker 2: He did say that he thought that the.

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Speaker 3: FED made the right move last week at their meeting

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Speaker 3: to hold interest rates steady, which honestly was the most

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Speaker 3: surprising thing I saw over the weekend.

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Speaker 2: And it is interesting to think. I love the fact.

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Speaker 2: Can I just say I love the fact that you

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Speaker 2: thought that was more exciting than the twenty five.

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Speaker 3: Yeah, if I couldn't, I wish I could be a

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Speaker 3: fly on the wall to seedge roam palcy that headline.

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Speaker 5: But I don't know.

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Speaker 3: There's this idea of the FED put that has always percolated.

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Speaker 3: There's the idea of the Trump put that's been out there,

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Speaker 3: the idea again that both of them, if things really

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Speaker 3: got out of hand in the markets, that you would

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Speaker 3: either see the Fed step in or Trump step in

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Speaker 3: to juice the s and P. Five hundred to put

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Speaker 3: it bluntly there. But when it comes to the Fed

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Speaker 3: this time around, it seems the consensus in markets is

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Speaker 3: that they're going they're in wait and see mode. We

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Speaker 3: were talking about executives. How do you make monetary policy

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Speaker 3: in this sort of environment, And it's maybe Treasury secretary

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Speaker 3: sounds like a cool job. It would be really hard

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Speaker 3: to be fedchair right now.

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Speaker 5: Let me I say that it's interesting because Scott Veston,

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Speaker 5: the Treasury Secretary, just recently said that they don't really

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Speaker 5: care about the FED funds rate, which is what the

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Speaker 5: FED controls. They care about the ten year treasury rate.

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Speaker 5: And I think that's very interesting for two reasons. One

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Speaker 5: the fact that he's mentioning the ten year treasury rate

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Speaker 5: instead of the stock market. Because if you remember, in

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Speaker 5: the last term, the President went up and kept on

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Speaker 5: talking about, look, stocks are up, obviously I'm doing a

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Speaker 5: great job. Suddenly it's the bond market that actually matters.

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Speaker 5: That's number one. The number two is is that they're

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Speaker 5: now focused on this long term interest rate. And the

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Speaker 5: reason is, I believe, because that's the rate that matters.

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Speaker 5: We saw when the Fed lowered interest rates last year

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Speaker 5: that actually long term interest rates went up. Thirty year

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Speaker 5: mortgages went up in concert with those long term interest rates.

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Speaker 5: If you get a corporate loan, that's also because of

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Speaker 5: those interest rates. And so that's what they're focused on now.

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Speaker 5: So now it's the bond market that matters much less

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Speaker 5: than the stock market.

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Speaker 2: He is having to But if you'll, Scott Best, one

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Speaker 2: of your jobs is going to be shoveling an enormous

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00:22:26,680 --> 00:22:29,280
Speaker 2: amount of treasuries in trying to sell an enormous number

435
00:22:29,280 --> 00:22:31,720
Speaker 2: of bombs that even does the the amount of debt

436
00:22:31,760 --> 00:22:34,200
Speaker 2: that even rolls over now in the US, let alone

437
00:22:34,280 --> 00:22:37,480
Speaker 2: the deficit each year. Surely that's why he's particularly focused

438
00:22:37,480 --> 00:22:38,520
Speaker 2: on the cost of borrowing.

439
00:22:38,800 --> 00:22:41,040
Speaker 5: And so you know, if John mickel Fate were asking

440
00:22:41,119 --> 00:22:44,040
Speaker 5: him proting questions over and over again, he'd probably have

441
00:22:44,119 --> 00:22:46,480
Speaker 5: to come clean about what he really means, because what

442
00:22:46,520 --> 00:22:48,199
Speaker 5: does it really mean that we care about the ten

443
00:22:48,280 --> 00:22:51,080
Speaker 5: year treasury Obviously, it's not that we want it to

444
00:22:51,119 --> 00:22:53,080
Speaker 5: go up. We don't want the treasure you able to

445
00:22:53,119 --> 00:22:56,120
Speaker 5: go up. We wanted to, let's say, stay in a range.

446
00:22:56,320 --> 00:22:58,320
Speaker 5: If it goes up too far, then that range will

447
00:22:58,320 --> 00:23:00,760
Speaker 5: be too it'll be too high. Wanted to go beyond

448
00:23:00,760 --> 00:23:02,600
Speaker 5: that range, and we don't want it to go too

449
00:23:02,720 --> 00:23:07,000
Speaker 5: low because then that's a recession. That's signaling recession. But

450
00:23:07,600 --> 00:23:09,479
Speaker 5: in the back of his mind he has to be thinking,

451
00:23:10,160 --> 00:23:12,280
Speaker 5: we're going to be shoving this dead out and we

452
00:23:12,359 --> 00:23:15,959
Speaker 5: needed to be lower than an otherwise would be. And

453
00:23:16,000 --> 00:23:19,840
Speaker 5: I think that there's that inconsistency that Tim was talking about.

454
00:23:20,040 --> 00:23:22,920
Speaker 5: There's that policy incoherence. How are you going to get

455
00:23:22,920 --> 00:23:27,120
Speaker 5: three percent in growth, have a four point five percent

456
00:23:27,440 --> 00:23:32,960
Speaker 5: fed funds RAID and still get a lower interest rate.

457
00:23:33,119 --> 00:23:36,040
Speaker 5: It's just it's not feasible. And it'll be very interesting

458
00:23:36,080 --> 00:23:37,399
Speaker 5: to see how they play that.

459
00:23:37,720 --> 00:23:40,280
Speaker 3: Yeah, I thought those comments were so interesting. Scott Besson

460
00:23:40,320 --> 00:23:42,960
Speaker 3: said that, not to name another network, but on I

461
00:23:43,000 --> 00:23:45,399
Speaker 3: think it was Fox Business just this afternoon, and.

462
00:23:45,840 --> 00:23:48,280
Speaker 2: You know these are subscribed. As to Bloomberg, did you

463
00:23:48,320 --> 00:23:49,159
Speaker 2: not get the memoy?

464
00:23:49,200 --> 00:23:51,879
Speaker 3: But isn't it better to hear us talk about I

465
00:23:51,880 --> 00:23:54,119
Speaker 3: thought that was fascinating, and I do think there is

466
00:23:54,440 --> 00:23:57,480
Speaker 3: something to the idea that this time around, and for

467
00:23:57,600 --> 00:23:59,600
Speaker 3: only two weeks in that it seems like the bond

468
00:23:59,640 --> 00:24:02,320
Speaker 3: market is the focal poorum rather than the stock market.

469
00:24:02,359 --> 00:24:05,119
Speaker 3: But when it comes to the long end, it's you

470
00:24:05,320 --> 00:24:08,000
Speaker 3: have to wonder what the administration could even do other

471
00:24:08,080 --> 00:24:10,560
Speaker 3: than just watch the tenure treasury yield, because it's not

472
00:24:10,640 --> 00:24:14,040
Speaker 3: like the Federal Reserve itself even has control over that

473
00:24:14,760 --> 00:24:16,280
Speaker 3: side of the bond market.

474
00:24:16,560 --> 00:24:18,720
Speaker 2: In a way, this takes us to the dollar and

475
00:24:18,760 --> 00:24:22,000
Speaker 2: whether you can possibly have just the right bond yield,

476
00:24:22,600 --> 00:24:25,200
Speaker 2: just the right Fed funds, and just the right dollar.

477
00:24:25,280 --> 00:24:27,960
Speaker 2: For Donald Trump, he sounded on different signals on that

478
00:24:28,000 --> 00:24:29,800
Speaker 2: over the years. He kind of wants a strong dollar

479
00:24:29,880 --> 00:24:31,160
Speaker 2: when you think of it as more of a sort

480
00:24:31,160 --> 00:24:33,160
Speaker 2: of virility symbol. On the other hand, he thinks that's

481
00:24:33,200 --> 00:24:36,360
Speaker 2: a sign of the unfairness of the global economy. How

482
00:24:36,359 --> 00:24:37,280
Speaker 2: do you think about the dollar?

483
00:24:37,560 --> 00:24:40,080
Speaker 3: The dollar is really interesting because even you think back

484
00:24:40,080 --> 00:24:42,840
Speaker 3: to Scott Beston, I think it was in his confirmation

485
00:24:42,960 --> 00:24:46,600
Speaker 3: hearings he didn't endorse a strong dollar, but he did

486
00:24:46,760 --> 00:24:49,760
Speaker 3: talk about the importance of having the global reserve currency,

487
00:24:50,200 --> 00:24:52,239
Speaker 3: which I don't know how much to read into that,

488
00:24:52,320 --> 00:24:54,320
Speaker 3: but it did stick out to me at the time.

489
00:24:54,400 --> 00:24:58,639
Speaker 3: But bringing it back to corporate America in this earning season,

490
00:24:58,720 --> 00:25:00,600
Speaker 3: the strong dollar is a headache for a lot of

491
00:25:00,600 --> 00:25:04,520
Speaker 3: these internationally exposed businesses. You're seeing it pop up in

492
00:25:04,560 --> 00:25:07,800
Speaker 3: earnings calls, a lot of finger pointing out the strong dollar.

493
00:25:08,119 --> 00:25:10,480
Speaker 3: Something I always wonder about is how much corporates are

494
00:25:10,600 --> 00:25:13,720
Speaker 3: using it as an excuse, maybe exaggerating some of the

495
00:25:13,720 --> 00:25:17,159
Speaker 3: effects to make their numbers look better. But it's definitely

496
00:25:17,600 --> 00:25:18,200
Speaker 3: a headwind.

497
00:25:19,160 --> 00:25:20,920
Speaker 2: I mean, this is slightly putting you on the spot years.

498
00:25:20,960 --> 00:25:23,320
Speaker 2: But do you get the sense, you know, there was

499
00:25:23,359 --> 00:25:27,160
Speaker 2: an era in which sort of push for government efficiency,

500
00:25:27,840 --> 00:25:31,080
Speaker 2: you know, went with the deregulation agenda and was considered

501
00:25:31,119 --> 00:25:33,560
Speaker 2: in a very kind of positive way. You know, obviously

502
00:25:33,600 --> 00:25:36,760
Speaker 2: a lot of the press around events and the Treasury

503
00:25:37,000 --> 00:25:40,879
Speaker 2: and the way that Elon Musk's team has been approaching

504
00:25:40,960 --> 00:25:43,440
Speaker 2: the scaling back of government. Do you get the sense,

505
00:25:43,520 --> 00:25:46,919
Speaker 2: either of you that there were also business leaders or

506
00:25:47,040 --> 00:25:49,840
Speaker 2: market folks who are actually kind of like, hm, well

507
00:25:50,119 --> 00:25:51,960
Speaker 2: maybe this is actually going to do something. Maybe he

508
00:25:52,000 --> 00:25:53,959
Speaker 2: really is going to shrink the government by ten percent.

509
00:25:54,000 --> 00:25:57,160
Speaker 5: What do you think, well, I'm very interested in what Katie.

510
00:25:57,840 --> 00:25:58,800
Speaker 2: We haven't discussed this.

511
00:25:58,840 --> 00:26:03,000
Speaker 5: I'm just because I can tell you that in DC itself,

512
00:26:03,400 --> 00:26:07,520
Speaker 5: there's a palpable fear everywhere that you go about everything

513
00:26:07,520 --> 00:26:10,320
Speaker 5: that's going on. I know people who are in certain

514
00:26:10,359 --> 00:26:14,480
Speaker 5: agencies who thought that they were untouchable and then suddenly

515
00:26:15,080 --> 00:26:16,560
Speaker 5: they got the notices.

516
00:26:16,320 --> 00:26:20,320
Speaker 2: That would be music to Elon Muss presumably touch the.

517
00:26:20,280 --> 00:26:23,679
Speaker 5: Fact that we're going to see the voluntary cuts and

518
00:26:23,720 --> 00:26:27,760
Speaker 5: if you don't obviously voluntarily decide to leave, then we're

519
00:26:27,760 --> 00:26:30,800
Speaker 5: going to actually make the cuts ourselves at some point

520
00:26:30,800 --> 00:26:34,200
Speaker 5: in time. So there's a palpable fear that I think

521
00:26:34,320 --> 00:26:38,520
Speaker 5: pervades Washington that makes it more difficult to understand. Is

522
00:26:38,600 --> 00:26:42,359
Speaker 5: this helpful from a business leader perspective? But that's the

523
00:26:42,400 --> 00:26:43,600
Speaker 5: fear that we're seeing.

524
00:26:43,359 --> 00:26:46,080
Speaker 2: In like guess Casey, some of the people, the business

525
00:26:46,359 --> 00:26:48,720
Speaker 2: people that you speak to, if they've ever done any

526
00:26:48,760 --> 00:26:51,199
Speaker 2: cuts or rounds of redundances, they know that if you

527
00:26:51,280 --> 00:26:53,639
Speaker 2: do the bias, you lose all the best people, potentially

528
00:26:53,640 --> 00:26:55,200
Speaker 2: all the people who have the most options.

529
00:26:55,280 --> 00:26:59,320
Speaker 3: Yeah, absolutely, there's potentially some painful medicine there. But when

530
00:26:59,359 --> 00:27:02,920
Speaker 3: we speak to as about especially when we first learned

531
00:27:02,960 --> 00:27:07,080
Speaker 3: about Doge and Elon Musk's role here in this administration.

532
00:27:07,200 --> 00:27:10,080
Speaker 3: The question that we always asked investors and still are

533
00:27:10,200 --> 00:27:13,000
Speaker 3: is how seriously do you take some of these pledges,

534
00:27:13,040 --> 00:27:15,879
Speaker 3: some of these goals that they've set out to accomplish

535
00:27:15,960 --> 00:27:18,640
Speaker 3: when it comes to spending cuts, and it just feels

536
00:27:18,680 --> 00:27:20,760
Speaker 3: like so many other things right now, it's really wait

537
00:27:20,840 --> 00:27:24,560
Speaker 3: and see mode. And you also there's also the question

538
00:27:24,600 --> 00:27:28,720
Speaker 3: there is many how much of this is an investible scene.

539
00:27:29,119 --> 00:27:32,080
Speaker 3: Maybe we do shrink the government by ten percent. I'm

540
00:27:32,119 --> 00:27:34,440
Speaker 3: not sure what that math looks like, but what does

541
00:27:34,440 --> 00:27:35,879
Speaker 3: that trade even look like?

542
00:27:36,000 --> 00:27:37,720
Speaker 2: So there's a.

543
00:27:37,680 --> 00:27:41,520
Speaker 3: Lot of questions and I haven't quite gotten one satisfying

544
00:27:41,560 --> 00:27:42,080
Speaker 3: answer there.

545
00:27:43,040 --> 00:27:45,400
Speaker 2: We everyone has to just tune into more and more podcasts.

546
00:27:45,440 --> 00:27:46,879
Speaker 2: I think that's what most people are doing. But you

547
00:27:46,880 --> 00:27:49,600
Speaker 2: wouldn't want to be trading on every single headline, that's

548
00:27:49,600 --> 00:27:53,080
Speaker 2: for sure. Well, this has been brilliant, Casey and Ed,

549
00:27:53,160 --> 00:28:05,560
Speaker 2: thank you very much, Thank you, thank you all for

550
00:28:05,640 --> 00:28:09,280
Speaker 2: joining us for this taping of Trumpernomics from Bloomberg Headquarters.

551
00:28:09,320 --> 00:28:11,480
Speaker 2: It was hosted by me Stephanie Flanders, and I was

552
00:28:11,560 --> 00:28:16,160
Speaker 2: joined by Tim O'Brien, Nancy Cook Katie Greifield and Edward Harrison,

553
00:28:16,200 --> 00:28:19,280
Speaker 2: and we hope everyone here had fun. Thank you for

554
00:28:19,359 --> 00:28:23,840
Speaker 2: listening at home, and subscribe, rate, and review this show

555
00:28:23,960 --> 00:28:26,720
Speaker 2: wherever you get your podcasts. Thanks very much,