WEBVTT - The Dollar Declines amid Trump Frustration with Powell 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.320 --> 0:00:31.640 Julia Cornet on Now Micropolicy Perspectives on the Fed on 0:00:31.680 --> 0:00:35.640 our economy, Did Julia there's a dual mandate jobs inflation? 0:00:35.800 --> 0:00:39.479 I'm sorry, real economic growth matters too. Are you marking 0:00:39.560 --> 0:00:42.680 down your real GDP and your nominal GDP? 0:00:44.680 --> 0:00:48.680 Well, we're definitely marking down our real GDP. We do 0:00:48.880 --> 0:00:51.720 now expect a recession to start in the second half 0:00:51.760 --> 0:00:57.080 of this year in the United States. And nominal GDP 0:00:57.200 --> 0:00:59.600 that's another question, because we do expect a burst of 0:00:59.640 --> 0:01:02.760 infla from these tariffs. That's one of the things that 0:01:03.280 --> 0:01:05.640 one of the factors we expect we'll take the US 0:01:05.680 --> 0:01:08.440 economy into recession is the hit to profits, the hit 0:01:08.520 --> 0:01:13.039 to purchasing power. Yeah, it looks like it's a difficult 0:01:13.520 --> 0:01:14.000 road ahead. 0:01:14.200 --> 0:01:17.200 Could you model out a five percent and plus unemployment rate? 0:01:17.319 --> 0:01:19.679 Or someone this weekend said, can we go to six percent? 0:01:20.520 --> 0:01:23.679 Sure? Sure, I don't see I mean, there's two there's 0:01:23.680 --> 0:01:26.880 two ways to look at a potential recession in the US. 0:01:26.959 --> 0:01:29.800 On the one hand, the US economy has been an 0:01:29.880 --> 0:01:34.800 extraordinary shape going into this. There aren't obvious imbalances in 0:01:34.840 --> 0:01:37.760 the US economy. We don't have an over indebted consumer. 0:01:38.520 --> 0:01:41.680 The banking sector looks pretty healthy, so that would argue 0:01:41.720 --> 0:01:44.960 for maybe a milder recession. On the other hand, I mean, 0:01:45.000 --> 0:01:48.160 we're just seeing a generational change. This is an existential 0:01:48.480 --> 0:01:51.600 shift in the role of the US economy and the 0:01:51.640 --> 0:01:55.920 global economy and the global world order and capital markets, 0:01:55.960 --> 0:01:59.200 and that could certainly argue for a deeper recession. So 0:01:59.280 --> 0:02:03.520 on average, we put pencil in an average post war recession, 0:02:04.040 --> 0:02:06.560 and that certainly gives you an unemployment rate close to 0:02:06.600 --> 0:02:07.160 six percent. 0:02:08.280 --> 0:02:11.960 So, Julia, I guess if you think about these tariffs here, 0:02:12.760 --> 0:02:18.680 what are the upside from your perspective for this tariff policy. 0:02:18.760 --> 0:02:20.560 You know, I don't see a lot of upside. I 0:02:20.600 --> 0:02:25.800 don't see a coherent strategy. It is, you know, a 0:02:25.880 --> 0:02:30.600 strategy of pushing our allies away rather than pulling them 0:02:30.680 --> 0:02:34.400 closer to address maybe some of the real issues we 0:02:34.520 --> 0:02:40.000 have in terms of trading practices with China. So the 0:02:40.280 --> 0:02:44.400 and the method of on again, off again, not knowing 0:02:44.440 --> 0:02:48.639 what the ask is in terms of these bilateral negotiations, 0:02:49.120 --> 0:02:51.960 it just seems very chaotic. So in addition to the 0:02:52.040 --> 0:02:56.440 actual hit from the tariffs themselves, there's just tremendous uncertainty 0:02:56.480 --> 0:02:59.400 as to you know, what the policy will be if 0:02:59.400 --> 0:03:02.720 you negotiate a deal, will it stick or will that 0:03:02.800 --> 0:03:05.520 be renigged upon you know a few months down the road. 0:03:05.560 --> 0:03:09.800 The US has become an unreliable negotiating partner. 0:03:10.720 --> 0:03:14.359 So Julia, let's you know, we talk about this economy, 0:03:14.360 --> 0:03:16.960 we have to talk about about the consumer here. How 0:03:16.960 --> 0:03:20.320 do you view the consumer here today? How precarious a position, 0:03:20.440 --> 0:03:22.320 if any, is the consumer facing right now? 0:03:23.320 --> 0:03:26.000 So going into this, you know, the labor market is 0:03:26.040 --> 0:03:28.840 pretty solid, but it has cooled a lot. And what 0:03:28.880 --> 0:03:32.320 we had seen was that we'd seen a rotation away 0:03:32.440 --> 0:03:37.119 from strength amongst the lower wage consumer towards the economy 0:03:37.160 --> 0:03:39.240 really being driven by kind of the wealth effects and 0:03:39.280 --> 0:03:43.560 the higher end consumer. Last year. So middle consumers had 0:03:43.600 --> 0:03:48.920 already gotten pretty budget conscious, pretty you know, they had 0:03:48.920 --> 0:03:52.720 been hit more disproportionately by higher interest rates, so they 0:03:52.720 --> 0:03:56.520 were already feeling a bit of a squeeze and hiring 0:03:56.560 --> 0:04:00.600 can consumers have been doing well and certainly had really 0:04:00.640 --> 0:04:04.560 strong portfolios going into this year, but now that foundation 0:04:05.440 --> 0:04:07.680 has taken a bit of a hit, and we would 0:04:07.760 --> 0:04:13.040 certainly affect some additional downside ahead in terms of asset valuations. 0:04:13.120 --> 0:04:16.040 We welcome all of you across the nation this morning. 0:04:16.080 --> 0:04:19.280 Paul Sweeny and Tom Kane. This is Bloomberg Surveillance on YouTube. 0:04:19.320 --> 0:04:23.520 Good morning, humbled by the global reach of YouTube. Subscribe 0:04:23.520 --> 0:04:27.040 to Bloomberg podcasts and of course on Android Auto Apple 0:04:27.120 --> 0:04:30.080 car play as well. Good morning to Bloomberg eleven three 0:04:30.080 --> 0:04:32.200 to zero in New. 0:04:32.160 --> 0:04:33.760 York, Julia Cornado with us. 0:04:33.960 --> 0:04:37.440 Megan Clark of Saint John's University will join us here 0:04:38.160 --> 0:04:43.320 in a bed, Doctor Coronado. The tumultuous time that we're in, 0:04:44.240 --> 0:04:47.599 does a FED find a new process, a new path, 0:04:48.320 --> 0:04:50.760 or do they just say we're going to get through 0:04:50.800 --> 0:04:56.200 April May June out to Jackson Hall. 0:04:56.360 --> 0:04:58.720 You know, I think the FED is going to approach 0:04:58.880 --> 0:05:01.840 its mandates the the way it always has. It's going 0:05:01.880 --> 0:05:04.960 to look at the state of the economy and the 0:05:05.120 --> 0:05:08.400 risks to the economy. I think what we've heard is 0:05:08.400 --> 0:05:11.719 a sort of stern message from share Powell in the 0:05:11.760 --> 0:05:14.240 sense that they're facing difficult trade offs, at least in 0:05:14.240 --> 0:05:17.680 the near term. They don't know. They see risks to 0:05:17.800 --> 0:05:21.080 their employment mandate, they see risks to their inflation mandate. 0:05:21.800 --> 0:05:25.440 They go in opposing directions in terms of the policy prescription. 0:05:26.080 --> 0:05:28.560 So they're just going to have to see which one 0:05:28.600 --> 0:05:32.320 is the dominant influence. But the starting point in terms 0:05:32.320 --> 0:05:34.760 of their own assessment is that we are in balance 0:05:34.760 --> 0:05:37.960 in the labor market. So they're checking the box on 0:05:38.000 --> 0:05:41.680 their full employment mandate right now, but they are not 0:05:41.839 --> 0:05:44.680 checking the box on their inflation mandate. We are not 0:05:44.800 --> 0:05:48.680 at two percent. We've gotten a lot closer. The underlying 0:05:48.760 --> 0:05:53.440 dynamics look okay, but if we experience an inflationary shock 0:05:53.560 --> 0:05:56.520 on top of that, that pushes them further away from 0:05:56.920 --> 0:05:59.919 already a gap that they're not particularly happy with. 0:06:00.240 --> 0:06:03.480 Doctor Cornetta, Thank you so much, Greatly appreciated, Julia cornetto 0:06:03.560 --> 0:06:05.200 micropolicy Perspectives. 0:06:05.360 --> 0:06:09.200 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:06:09.240 --> 0:06:12.279 starting at seven am Eastern on Apple Corplay and Android 0:06:12.279 --> 0:06:15.320 Auto with the Bloomberg Business app. You can also listen 0:06:15.400 --> 0:06:18.640 live on Amazon Alexa from our flagship New York station. 0:06:19.200 --> 0:06:22.560 Just say Alexa play Bloomberg eleven thirty Paul. 0:06:22.400 --> 0:06:24.720 Sween and I begin our coverage of the death of 0:06:24.800 --> 0:06:27.640 Pope Francis, and what we're trying to do is bring 0:06:27.680 --> 0:06:32.320 you informed people about his life, the present, and the 0:06:32.360 --> 0:06:35.520 future that we will see for the Catholic Church and 0:06:35.560 --> 0:06:39.919 it's reach across one point four billion people worldwide. We 0:06:40.040 --> 0:06:44.800 start strong with Excellence out of Fordham University, Boston College. 0:06:44.839 --> 0:06:49.039 Meghan Clark joins US now with Saint John's at University, 0:06:49.080 --> 0:06:55.559 where she does important work on moral theology, among others. Meghan, 0:06:55.600 --> 0:06:57.960 thank you so much for beginning our coverage of the 0:06:58.000 --> 0:07:02.000 death of the Pope. You wrote a while back on 0:07:02.360 --> 0:07:05.480 Thomas Aquinas and you said good is to be done 0:07:05.520 --> 0:07:10.520 and pursued, and evil is to be avoided. How permanent 0:07:11.280 --> 0:07:15.840 is the method, the process, the pastoral effort of Pope 0:07:15.880 --> 0:07:18.600 Francis or do you look at it as a one 0:07:18.640 --> 0:07:21.440 off pope versus what the future would bring. 0:07:23.520 --> 0:07:28.080 I think that Pope Francis, I don't think anyone it's 0:07:28.120 --> 0:07:30.640 wise to call him a one off in terms of 0:07:30.680 --> 0:07:33.840 the impact that he had on both the Roman Catholic 0:07:33.960 --> 0:07:38.600 Church and the world. What Pope Francis really showed us 0:07:38.760 --> 0:07:43.000 is how to take the method of Vatican two and 0:07:43.280 --> 0:07:48.880 really globalize it and live it in ways that inspired 0:07:49.120 --> 0:07:50.160 billions of people. 0:07:50.840 --> 0:07:54.920 Do we understand how unique he was? I've always thought 0:07:55.080 --> 0:07:58.160 from a distance from the church that we really don't 0:07:58.280 --> 0:08:03.320 understand the there where he took over from Pope Benedict. 0:08:03.600 --> 0:08:07.240 How unique was I believe thirteen twelve years ago. 0:08:09.080 --> 0:08:11.560 We knew something was a little bit different when he 0:08:11.680 --> 0:08:17.080 came out in all white and insisted that before he 0:08:17.200 --> 0:08:21.360 give the audi the Square his blessing, that he asked 0:08:21.400 --> 0:08:25.280 everyone to pray for him. I think that every pope 0:08:25.480 --> 0:08:28.400 is a little bit unique, and they bring all of 0:08:28.480 --> 0:08:31.880 their life experience and their challenges and their gifts and 0:08:31.880 --> 0:08:38.920 their graces. But there is something about Pope Francis's humility 0:08:38.960 --> 0:08:42.680 and humanity that just deeply connected with people. 0:08:43.960 --> 0:08:46.679 Megan Now, the Catholic Church, in the Holy See and 0:08:46.720 --> 0:08:48.960 the cardinals they turned their attention to electing. 0:08:48.679 --> 0:08:49.320 A new pope. 0:08:49.559 --> 0:08:52.640 What are the pulls and pushes in that we're going 0:08:52.679 --> 0:08:54.040 to see over the coming days. 0:08:55.520 --> 0:08:59.880 So it's going to take a while, and Pope Francis 0:09:00.080 --> 0:09:04.679 will have all of the papal funeral process, and a 0:09:04.720 --> 0:09:06.800 whole lot of people have to get to Rome before 0:09:06.840 --> 0:09:11.360 they will begin a conclave. But really the most important 0:09:11.400 --> 0:09:15.080 thing for everyone in that room is going to be 0:09:16.280 --> 0:09:20.840 really trying to figure out and pray where is the 0:09:20.880 --> 0:09:25.240 Holy Spirit guiding them to really figure out what the 0:09:25.360 --> 0:09:28.199 church needs? And that's you know, we're here in the 0:09:28.280 --> 0:09:31.600 United States, but it's a global church, and so kind 0:09:31.640 --> 0:09:34.560 of what we think of here often as kind of 0:09:34.559 --> 0:09:37.320 the big issues aren't always the big issues for the 0:09:37.360 --> 0:09:42.280 cardinals coming from places like Congo or Al Salvador or 0:09:43.280 --> 0:09:44.880 all across the world. 0:09:45.160 --> 0:09:47.960 And Megan, you know, the Catholic Church, the Holy see 0:09:47.960 --> 0:09:50.480 it is not unlike or not too dissimilar to a 0:09:50.480 --> 0:09:53.200 lot of countries around the world where there are profound 0:09:53.480 --> 0:09:58.160 liberal elements of the church and profound conservative elements of 0:09:58.200 --> 0:10:01.840 the church. To what extent will they have to, I guess, 0:10:01.960 --> 0:10:05.079 agree on electing a next pope who was maybe the 0:10:05.160 --> 0:10:05.600 upper hand? 0:10:05.600 --> 0:10:06.000 Do you think? 0:10:07.920 --> 0:10:10.480 I think the realities the majority of the College of 0:10:10.559 --> 0:10:14.000 Cardinals were elevated to the status of cardinal by Pope 0:10:14.040 --> 0:10:18.240 Francis at this point, and so I think that's going 0:10:18.360 --> 0:10:22.840 to be something that because he has been pope for 0:10:22.840 --> 0:10:28.520 for quite time. I think the reality of how to 0:10:29.160 --> 0:10:34.280 continue the level of engagement globally, not just of kind 0:10:34.320 --> 0:10:39.520 of church leaders, but of the people. That happened over 0:10:39.520 --> 0:10:43.480 the last two three years with the Synod, you had 0:10:43.679 --> 0:10:48.920 really mobilizing and conversations starting in every small diocese across 0:10:48.960 --> 0:10:51.360 the world. And so I think there is going to 0:10:51.400 --> 0:10:56.600 be attention to continuing this to be a listening church, 0:10:57.840 --> 0:11:00.440 as Pope Francis has tried to show us how to 0:11:00.480 --> 0:11:02.839 be to be a listening Meghan. 0:11:02.640 --> 0:11:05.360 Clark at Saint John's with us as we continue our 0:11:05.400 --> 0:11:09.600 coverage of markets challenged this morning, looking to the events 0:11:09.600 --> 0:11:13.359 in Washington as well, and also the death of Pope Francis. 0:11:13.960 --> 0:11:17.040 Meghan Clark again out of Fordham in Boston College. Just 0:11:17.080 --> 0:11:20.600 with very early work, her book The Vision of Catholic 0:11:20.679 --> 0:11:25.920 Social Thought was profound in twenty fourteen, Megan, as simple 0:11:25.960 --> 0:11:27.920 as I can, this is a pope that had to 0:11:27.960 --> 0:11:31.560 deal with social media. I go back through my childhood, 0:11:31.679 --> 0:11:34.440 pauled all of us in our experience. These are popes 0:11:34.480 --> 0:11:35.720 that moved its slow motion. 0:11:36.360 --> 0:11:36.880 How does a. 0:11:36.880 --> 0:11:41.839 Catholic church and your study of its theology, how does 0:11:41.880 --> 0:11:44.320 it change in a world of social media. 0:11:46.800 --> 0:11:51.120 It has to be more responsive and more visibly present 0:11:51.200 --> 0:11:53.920 in ways it didn't have to before. And I think 0:11:53.960 --> 0:11:57.280 we saw that with Pope Francis's attention to the environment. 0:11:58.720 --> 0:12:02.800 He really focused our attention most on the environment, on 0:12:02.840 --> 0:12:06.920 the plight of migrants around the world, and did that. 0:12:07.080 --> 0:12:10.080 He knew how to do that by both what he said, 0:12:10.320 --> 0:12:12.880 but also where he went and who he met with, 0:12:13.200 --> 0:12:16.200 and he would go to the people in places and 0:12:16.240 --> 0:12:19.800 so things like his first visit was to migrants at 0:12:20.000 --> 0:12:25.240 Lampadusa was something that was a pastoral choice to do, 0:12:25.520 --> 0:12:28.199 but it also was in a global media world something 0:12:28.240 --> 0:12:29.079 that was astute. 0:12:29.240 --> 0:12:32.760 Okay, But his parents were Italian, he was in Argentina, 0:12:33.400 --> 0:12:37.760 the first pope since the fifteenth century I believe to 0:12:38.360 --> 0:12:43.160 be outside of the Italian European orbit. You're saying that 0:12:43.240 --> 0:12:47.120 it is now entrenched with his work of twelve years. 0:12:48.040 --> 0:12:53.880 I think the institutional changes that Pope Francis made, as 0:12:53.960 --> 0:12:59.280 well as the pastoral message of really focusing our attention 0:13:00.080 --> 0:13:03.640 on the margins of society and the world and on 0:13:04.280 --> 0:13:06.359 the need to protect our common home. 0:13:07.280 --> 0:13:08.720 Are they were. 0:13:08.760 --> 0:13:13.720 They were priorities before Francis, but he moved them to 0:13:13.800 --> 0:13:17.040 the center. And I think that that's that's something that's 0:13:17.040 --> 0:13:18.360 going to stick around. 0:13:18.679 --> 0:13:21.280 Megan, is there a front runner to be the next hope? 0:13:21.400 --> 0:13:23.680 Is there maybe a geographic part of the world that 0:13:23.800 --> 0:13:26.120 maybe needs to show leadership. 0:13:27.520 --> 0:13:33.080 I think that there's really no way. I'm a scholar 0:13:33.400 --> 0:13:38.600 and uh a theologians, so I'm not going to I'm 0:13:38.600 --> 0:13:41.920 not I'm not going to play into the politics. I 0:13:41.960 --> 0:13:45.480 will say that, you know, with Pope Francis, the Holy 0:13:45.520 --> 0:13:49.800 Spirit certainly surprised everybody. So we will see. 0:13:50.160 --> 0:13:54.040 Megan, that was beautifully answered, and that a compliance at 0:13:54.040 --> 0:13:57.800 Saint John's University is in of your ability to dodge 0:13:57.800 --> 0:13:59.960 Pole's difficult question. 0:14:00.080 --> 0:14:03.560 And Megan, what to me is so interesting? 0:14:03.600 --> 0:14:05.920 And thank you so much for forgetting our coverage of 0:14:05.960 --> 0:14:10.440 this process, if you will, of the Catholic Church. We 0:14:10.480 --> 0:14:12.520 all have our images, but one of them is a 0:14:12.559 --> 0:14:13.400 recent movie. 0:14:13.760 --> 0:14:15.439 Did you see Conclave? 0:14:16.440 --> 0:14:16.880 I did? 0:14:17.120 --> 0:14:17.480 I did? 0:14:17.600 --> 0:14:19.680 How often? Mark was it? Professor? 0:14:22.080 --> 0:14:25.720 Well, Hollywood always takes its liberties. But the thing that 0:14:25.840 --> 0:14:29.600 I will say about that movie is that I do 0:14:29.680 --> 0:14:33.600 think you get a sense of the difficulty that lays 0:14:33.640 --> 0:14:38.520 before the cardinals in the coming weeks, as well as 0:14:39.680 --> 0:14:42.640 everything else aside everybody who will be in that room 0:14:43.040 --> 0:14:48.400 to determine who will lead my church. It is going 0:14:48.480 --> 0:14:53.120 to be people who, in goodwill are prayerfully trying to 0:14:53.160 --> 0:14:57.280 figure out who is the best, because it's not about ideologies, 0:14:57.320 --> 0:15:02.680 it's not about positions theological or political. You know, you're 0:15:02.880 --> 0:15:09.680 you're electing a person and the person that Mark Sorry 0:15:09.800 --> 0:15:15.160 for him, Mario Bergoglio had had the grace to lead 0:15:15.200 --> 0:15:20.720 the church really powerfully and beautifully. One of the highlights 0:15:21.080 --> 0:15:24.440 most important moments of my life is getting to meet 0:15:24.440 --> 0:15:29.600 Pope Francis after working on a project in twenty twenty two. 0:15:29.760 --> 0:15:29.920 And. 0:15:31.920 --> 0:15:32.720 You know, there. 0:15:34.080 --> 0:15:38.360 There is just something that was communicated by just being 0:15:38.920 --> 0:15:43.440 around a holy man that yeah, they got to try 0:15:43.480 --> 0:15:47.440 and figure out who has the grace and the strength. 0:15:47.800 --> 0:15:50.920 And thank you so much, we hope we can call 0:15:50.960 --> 0:15:53.720 on you in the next coming days. A full bite 0:15:53.760 --> 0:15:56.600 scholar out of Fordham and Boston College and now at 0:15:56.640 --> 0:16:01.600 Saint John's University. It's shocking Paul hurt accomplishments in so 0:16:01.720 --> 0:16:05.000 many short years. The only equivalent I can think of 0:16:05.360 --> 0:16:06.680 is Elizabeth. 0:16:06.120 --> 0:16:10.760 Economy on China. It's just overwhelming what Megan. 0:16:10.480 --> 0:16:15.520 Clark has accomplished within the academics of the Catholic shirt. 0:16:20.720 --> 0:16:24.320 You're listening to the Bloomberg surveillance podcast. Catch US live 0:16:24.360 --> 0:16:27.560 weekday afternoons from seven to ten am Eastern Listen on 0:16:27.600 --> 0:16:31.000 Apple Karplay and Android Auto with the Bloomberg Business app, 0:16:31.200 --> 0:16:32.920 or watch US live on YouTube. 0:16:33.200 --> 0:16:35.040 Got to Makunda with us this morning. 0:16:35.040 --> 0:16:39.160 He's at Yale University with some outstanding books out, including 0:16:39.200 --> 0:16:43.280 Picking Presidents. Thrilled that he could join us today. Very 0:16:43.280 --> 0:16:45.760 busy news cycle here the Vick's thirty one point eighty 0:16:45.760 --> 0:16:50.600 two dollar in retreat. So at Yale, you can't get 0:16:50.600 --> 0:16:55.800 admitted unless you read eight hundred seventy six pages of 0:16:55.920 --> 0:17:00.960 Jonathan Spence. The Search for Modern China can't go to Yell. 0:17:01.560 --> 0:17:03.800 I've actually read it cover to cover every word it was, 0:17:04.000 --> 0:17:07.440 you know, to write a passage in all that if 0:17:07.560 --> 0:17:11.320 you know, forget about giving the Chinese leadership. Jonathan Spence 0:17:11.440 --> 0:17:14.480 is a search for modern China. What if we gave 0:17:14.560 --> 0:17:19.000 him your book Picking Presidents? What do you see out 0:17:19.000 --> 0:17:23.080 of Beijing? Is they look back on the presidency You've 0:17:23.119 --> 0:17:24.000 studied so well? 0:17:24.520 --> 0:17:24.720 Oh? 0:17:25.640 --> 0:17:28.840 I will quote so I lived in Beijing in twenty sixteen, 0:17:28.880 --> 0:17:30.679 the first time Trump won, And I will quote a 0:17:30.720 --> 0:17:33.840 senior Chinese official who said to me, if you guys 0:17:33.960 --> 0:17:35.560 want to give US leadership of the world. 0:17:35.600 --> 0:17:36.359 We will take it. 0:17:37.359 --> 0:17:40.200 And that's basically the simplest answer, except this time it's 0:17:40.200 --> 0:17:43.440 that on steroids. If there is a source of American 0:17:43.640 --> 0:17:46.400 influence and power relative to China that has been weakened 0:17:46.440 --> 0:17:48.560 by that has not been wetted by this administration, I 0:17:48.560 --> 0:17:49.199 don't know what it is. 0:17:49.480 --> 0:17:53.280 Urgent message here for surveillance World. David Gura sends it 0:17:53.359 --> 0:17:55.840 a note thank you, David for listening this morning. 0:17:55.880 --> 0:17:59.359 In your three hour work week. Gura also read every 0:17:59.400 --> 0:18:01.959 page China. 0:18:02.119 --> 0:18:05.240 So in twenty sixteen you were in Beijing and those 0:18:05.320 --> 0:18:08.320 red doors were shocked at what was happening. How do 0:18:08.400 --> 0:18:11.879 they negotiate? I don't people say we're negotiating. I'm like, 0:18:12.200 --> 0:18:16.040 after the Japanese news this weekend, really are we negotiating? 0:18:16.119 --> 0:18:16.600 Professor? 0:18:17.400 --> 0:18:19.840 I mean, I'm sure that they're talking, because they'll be 0:18:19.960 --> 0:18:23.960 back channel discussions at all times. But yeah, it is 0:18:24.000 --> 0:18:26.200 a cliche to quote Sansu about the Chinese. I'm not 0:18:26.200 --> 0:18:27.240 going to do that, but I'll say it is a 0:18:27.280 --> 0:18:29.760 general rule of strategy that when your enemy is making 0:18:29.800 --> 0:18:31.879 a mistake, get out of the way, exactly, and I 0:18:31.880 --> 0:18:33.520 think the Chinese see that quite clearly. 0:18:33.600 --> 0:18:36.160 Oh, I just don't see negotiation going on, whether it's 0:18:36.160 --> 0:18:38.280 with Vietnam or Poland, I just don't get. 0:18:38.720 --> 0:18:40.720 I don't know, but yeah, I guess one of the 0:18:40.800 --> 0:18:45.080 questions if you talk the administration, what we're experiencing now 0:18:45.160 --> 0:18:48.720 is short term pain for a longer term gain of 0:18:49.000 --> 0:18:52.760 re ordering global economics where more manufacturing comes back to 0:18:52.800 --> 0:18:53.399 the US. 0:18:54.000 --> 0:18:56.280 Is that a how do you kind of view that? 0:18:56.400 --> 0:18:56.640 Look? 0:18:56.880 --> 0:18:59.520 So I find this astonishing that they have made a 0:18:59.560 --> 0:19:02.600 diagnosis that's not crazy, right, Like, the US probably should 0:19:02.600 --> 0:19:04.680 have a lot more manufacturing, both for economic and for 0:19:04.760 --> 0:19:07.639 national security reasons. That's something you'd find a consensus on 0:19:07.640 --> 0:19:11.639 across the political spectrum. Except every policy they've adopted is 0:19:11.680 --> 0:19:14.600 going to take us further away from that goal, not closer. Taxing, 0:19:14.600 --> 0:19:16.880 intermediate imports. Much of the stuff that the United States 0:19:16.920 --> 0:19:20.320 imports is things that are used as components in manufacturing. 0:19:20.560 --> 0:19:22.919 This is going to cripple American manufacturing. It's not going 0:19:22.960 --> 0:19:23.399 to help it. 0:19:24.280 --> 0:19:27.840 So how do you think this plays out here? 0:19:27.880 --> 0:19:33.880 I mean, at some point the economic pushback, whether it's inflation, 0:19:34.040 --> 0:19:36.879 whether it's slower economic. 0:19:36.359 --> 0:19:39.239 Growth, that's going to become an issue for people. How 0:19:39.240 --> 0:19:40.560 do you think that's going to play out. 0:19:40.680 --> 0:19:43.480 It is I'm Thorston's slock from Apollo yesterday or just 0:19:43.480 --> 0:19:46.320 set on emails, and he's predicting a four percent drop 0:19:46.359 --> 0:19:50.040 in US GDP this year with nonlinearities that could make 0:19:50.080 --> 0:19:52.200 it much worse, right, because that doesn't account for, say, 0:19:52.320 --> 0:19:54.880 supply chain collapses that are worse than anything we saw 0:19:54.880 --> 0:19:56.640 in COVID, which we're already starting to see the first 0:19:56.680 --> 0:20:01.480 lines up that's about the same size decrease in GDP 0:20:01.560 --> 0:20:03.640 is the two thousand and eight financial crisis with more 0:20:03.640 --> 0:20:07.960 potential on the downside than the arsen This administration is 0:20:08.000 --> 0:20:11.040 not insensitive political pressures. We just saw that back off 0:20:11.080 --> 0:20:13.360 with the tariffs, when the bond market clearly frightened even 0:20:13.400 --> 0:20:15.520 Donald Trump into saying we can't, we need to back off. 0:20:16.280 --> 0:20:18.320 But this is not primarily, from what I can tell, 0:20:18.320 --> 0:20:22.280 a set of economic policies. This is a cultural reorientation 0:20:22.359 --> 0:20:25.159 of the country, you know, a cultural revolution. Al Krugman 0:20:25.200 --> 0:20:26.880 said this morning, which a lot of people are starting 0:20:26.880 --> 0:20:28.959 to make a comparison. I'm not sure economics are going 0:20:29.000 --> 0:20:30.240 to be a driver in the short term. 0:20:30.280 --> 0:20:32.719 I Gotama Kundu with us here at Yale University, with 0:20:32.760 --> 0:20:35.439 wonderful books and the presidency. This is off your remit, 0:20:35.480 --> 0:20:38.040 but I got to ask Hannah Jang writing it up 0:20:38.119 --> 0:20:44.359 in Secondaries Investors, which is a wicked internal investment website. 0:20:43.720 --> 0:20:47.360 If you will. For like private credit, private equity, your. 0:20:47.280 --> 0:20:51.520 Yale is rumored from four sources to sell up to 0:20:51.600 --> 0:20:56.640 six billion of private equity portfolio. Harvard's been turned upside 0:20:56.640 --> 0:20:59.280 down fourteen. Oh, this was maybe Yale's out dodged a 0:20:59.320 --> 0:21:02.480 bullet so far. And I don't want you to speak 0:21:02.520 --> 0:21:06.800 for Yale on the unleashing of private equity, but I 0:21:06.840 --> 0:21:09.520 do want you to speak about your study of the 0:21:09.680 --> 0:21:14.160 silence of leverage that's out there. We're all walking around, Oh, 0:21:14.200 --> 0:21:17.280 we're not leveraged like eighty seven or ninety eight, really 0:21:17.880 --> 0:21:18.239 are we? 0:21:18.960 --> 0:21:21.720 So there's so much of the market that has become 0:21:21.960 --> 0:21:25.399 less and less transparent over time, right between private credit, 0:21:25.480 --> 0:21:28.720 sort of different things. I'm actually my greatest concern is 0:21:28.920 --> 0:21:31.520 we don't know. We don't know, right, Yeah, that the 0:21:31.560 --> 0:21:33.399 FED is going to try to make policy in the 0:21:33.520 --> 0:21:36.679 dark to an extent that is not like you know, 0:21:37.280 --> 0:21:39.480 it's not new, but it's not easy. At the same 0:21:39.520 --> 0:21:41.439 time that the President is putting enormous pressure on it, 0:21:41.480 --> 0:21:44.240 and threatening to fire the chairman of the FED. That's 0:21:44.240 --> 0:21:45.080 not a great combination. 0:21:46.040 --> 0:21:48.960 So where do you think we go over the next 0:21:49.000 --> 0:21:49.960 six to twelve months here? 0:21:50.000 --> 0:21:52.919 Is there a role for Congress to push back or 0:21:52.960 --> 0:21:54.640 do we just kind of sit back and say, let's 0:21:54.640 --> 0:21:56.680 see how these policies play out. 0:21:57.080 --> 0:22:00.359 I mean, of course there's a role for Congress, sure 0:22:00.400 --> 0:22:03.639 that I see them taking it, partly because of jerry mandering, 0:22:03.680 --> 0:22:06.200 partly because the Senate is such a favorable terrain for 0:22:06.240 --> 0:22:08.879 the Republicans in this midterm that a lot of the 0:22:08.920 --> 0:22:10.440 Republican senators are going to say, hey, I'm fine, my 0:22:10.480 --> 0:22:13.520 only challenge is from the right. That being said, if 0:22:13.520 --> 0:22:16.200 we really take a two thousand and eight style downturn 0:22:16.520 --> 0:22:18.680 or worse as was in the offing a couple of 0:22:18.720 --> 0:22:21.119 weeks ago, Republicans are going to be worried. They're going 0:22:21.160 --> 0:22:23.080 to see something that looks a lot like nineteen thirty two, 0:22:23.359 --> 0:22:25.600 right where essentially a Republican power was wiped out for 0:22:25.600 --> 0:22:29.320 a generation. And at that point the party may respond, 0:22:29.520 --> 0:22:31.000 it's just my fears it'll be too late. 0:22:31.600 --> 0:22:34.400 There's a lot of portraits in the Oval Office right now, 0:22:35.240 --> 0:22:40.000 which is the most important presidential portrait for President Trump, 0:22:40.080 --> 0:22:43.480 is it Andrew Jackson or someone else I'm missing, so. 0:22:43.400 --> 0:22:45.080 It used to be Andrew Jackson. I don't think he 0:22:45.119 --> 0:22:47.680 put the portrait up. But he has somehow become obsessed 0:22:47.680 --> 0:22:51.400 with William McKinley, who he believes that McKinley's tariffs made 0:22:51.440 --> 0:22:53.320 the United States more prosperous than it's ever been. He 0:22:53.320 --> 0:22:55.880 says this over and over again. It's I genuinely think 0:22:55.880 --> 0:23:00.560 he's like, maybe only secure policy belief is the value tariffs, 0:23:00.760 --> 0:23:03.280 but just not that that McKinley's tariffs. Any economists will 0:23:03.320 --> 0:23:05.240