1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:37,000 Speaker 2: Bloomberg Terminal and the Bloomberg Business App. Joining us now 10 00:00:37,080 --> 00:00:39,199 Speaker 2: Chris Harvey of wels Fargo, Chris, go to see a 11 00:00:39,240 --> 00:00:41,320 Speaker 2: circuit morning, Good morning. You said it a number of 12 00:00:41,360 --> 00:00:44,240 Speaker 2: weeks ago, we had a crisis of confidence last month. 13 00:00:44,280 --> 00:00:46,160 Speaker 2: Have we addressed that crisis of confidence? 14 00:00:46,600 --> 00:00:47,519 Speaker 1: We've addressed it. 15 00:00:47,640 --> 00:00:50,600 Speaker 3: So the big issue was was the administration hearing the 16 00:00:50,600 --> 00:00:54,640 Speaker 3: feedback loop from the markets, from individuals, from people in Congress. 17 00:00:54,680 --> 00:00:56,760 Speaker 3: And the answer is yes, they've heard that, right, and 18 00:00:56,800 --> 00:00:58,200 Speaker 3: they've adjusted their behavior. 19 00:00:58,320 --> 00:01:00,560 Speaker 1: That's a good thing. To your point. 20 00:01:00,320 --> 00:01:02,600 Speaker 3: About what does a trade deal look like, that's a 21 00:01:02,640 --> 00:01:05,240 Speaker 3: big question, right. So what we're saying is, hey, you're 22 00:01:05,240 --> 00:01:07,479 Speaker 3: at the high end of the range. If you get 23 00:01:07,600 --> 00:01:10,199 Speaker 3: some granularity and a trade deal, guess we can break 24 00:01:10,240 --> 00:01:11,600 Speaker 3: out at the high end of the range. 25 00:01:11,680 --> 00:01:14,640 Speaker 1: But you need granularity and what does that exactly look like? 26 00:01:14,880 --> 00:01:15,720 Speaker 1: That's the big question. 27 00:01:15,840 --> 00:01:18,000 Speaker 2: And with who a space economists and let's still worried 28 00:01:18,040 --> 00:01:20,399 Speaker 2: about the heart data catching down to the self spaces 29 00:01:20,440 --> 00:01:22,120 Speaker 2: to investors and they wanted to look through some of 30 00:01:22,160 --> 00:01:24,800 Speaker 2: it focused on the forward look comfort by the policy 31 00:01:24,840 --> 00:01:27,600 Speaker 2: moves down in Washington. How about you write one versus 32 00:01:27,680 --> 00:01:27,960 Speaker 2: the other. 33 00:01:28,160 --> 00:01:29,760 Speaker 3: You can look through the data if you start to 34 00:01:29,800 --> 00:01:32,279 Speaker 3: have confidence that we're moving forward and we're making big 35 00:01:32,400 --> 00:01:36,640 Speaker 3: granular games with folks in Asia, folks in Europe, North America. 36 00:01:36,680 --> 00:01:38,720 Speaker 3: If you believe in that, you'll look through the data. 37 00:01:38,800 --> 00:01:40,640 Speaker 3: If you think, ah, this is kind of a hiccup 38 00:01:40,640 --> 00:01:41,560 Speaker 3: and we're back. 39 00:01:41,400 --> 00:01:43,600 Speaker 1: To tier of tarer of tariff, then you're not going 40 00:01:43,680 --> 00:01:44,399 Speaker 1: to look through it. 41 00:01:44,400 --> 00:01:47,520 Speaker 4: It's that simple trade deals might happen with most of 42 00:01:47,560 --> 00:01:50,440 Speaker 4: the trading partners barring China, though, how do you look 43 00:01:50,680 --> 00:01:53,160 Speaker 4: through any of this when you don't know how the 44 00:01:53,240 --> 00:01:55,640 Speaker 4: trade deal is going to look with China and where 45 00:01:55,680 --> 00:01:57,760 Speaker 4: that final rate is going to settle on. 46 00:01:58,040 --> 00:02:00,639 Speaker 1: Yeah, so I would agree with you that China. 47 00:02:00,720 --> 00:02:03,280 Speaker 3: The administration believes, or seems to believe, the Chinese the 48 00:02:03,320 --> 00:02:05,840 Speaker 3: existential threat, and so you really don't want to deal 49 00:02:05,880 --> 00:02:08,000 Speaker 3: with them. I think a lot of the rhetoric around 50 00:02:08,040 --> 00:02:10,760 Speaker 3: China in the US, that's all that is. I'm not 51 00:02:10,840 --> 00:02:14,680 Speaker 3: expecting anything really positive. But if you do get some 52 00:02:14,760 --> 00:02:18,600 Speaker 3: positive or constructive development from Asia, from the EU, from 53 00:02:18,600 --> 00:02:22,040 Speaker 3: North America, you can start to make some real gains 54 00:02:22,440 --> 00:02:24,440 Speaker 3: and you're not as worried about the economy. The other 55 00:02:24,480 --> 00:02:27,120 Speaker 3: thing that I think the administration is saying is, hey, 56 00:02:27,160 --> 00:02:29,600 Speaker 3: if we're going to dis intermediate China, you're going to 57 00:02:29,639 --> 00:02:30,880 Speaker 3: get some of those spoils. 58 00:02:31,120 --> 00:02:32,799 Speaker 1: You're going to step up to the plate and help 59 00:02:32,880 --> 00:02:34,520 Speaker 1: us out. And that's a good thing. 60 00:02:34,560 --> 00:02:36,120 Speaker 3: And the last thing I would say is that the 61 00:02:36,480 --> 00:02:39,399 Speaker 3: underlying economy, while it's slowing down, wasn't in a bad 62 00:02:39,440 --> 00:02:40,680 Speaker 3: place before all this started. 63 00:02:40,960 --> 00:02:43,399 Speaker 4: You sound positive on trade deals. Do you think we're 64 00:02:43,440 --> 00:02:44,680 Speaker 4: past peak uncertainty. 65 00:02:45,160 --> 00:02:48,880 Speaker 3: I think we're past peak uncertainty, and what we do 66 00:02:49,000 --> 00:02:50,160 Speaker 3: is we look at it this way. 67 00:02:50,680 --> 00:02:52,200 Speaker 1: He went very hard very early. 68 00:02:52,440 --> 00:02:54,680 Speaker 3: In order to get that pressure back, I think you'd 69 00:02:54,720 --> 00:02:57,240 Speaker 3: have to put us into recession. I don't think this 70 00:02:57,320 --> 00:03:00,680 Speaker 3: administration wants to go into recession because what it would 71 00:03:00,720 --> 00:03:03,720 Speaker 3: mean it would mean a higher deficit, more job losses, 72 00:03:04,360 --> 00:03:07,480 Speaker 3: you'd have a negative wealth effect, and popularity won't be 73 00:03:07,560 --> 00:03:10,120 Speaker 3: rising as you get closer to the midterm elections. So 74 00:03:10,160 --> 00:03:13,480 Speaker 3: I think we have but it's not smooth selling from here. 75 00:03:13,520 --> 00:03:15,480 Speaker 2: The stocks have recovered at the index level on the 76 00:03:15,520 --> 00:03:18,600 Speaker 2: SMP since April second, the dollar has not recovered. As 77 00:03:18,600 --> 00:03:20,639 Speaker 2: you look at things right now, given the dislocations of 78 00:03:20,680 --> 00:03:23,040 Speaker 2: the last month, are the certain things being left behind, 79 00:03:23,120 --> 00:03:24,320 Speaker 2: certain things you want to lean into. 80 00:03:25,160 --> 00:03:29,040 Speaker 3: So our thought process isn't that different. We wanted to 81 00:03:29,280 --> 00:03:31,160 Speaker 3: we want a good risk awards. We want to balance 82 00:03:31,160 --> 00:03:33,399 Speaker 3: that with some low vol or defense of the thing 83 00:03:33,440 --> 00:03:35,920 Speaker 3: that's new and different to us is at the margin, 84 00:03:36,280 --> 00:03:38,080 Speaker 3: a lot of the AI trade is looking a lot 85 00:03:38,120 --> 00:03:39,600 Speaker 3: more attractive. A lot of these names are in a 86 00:03:39,600 --> 00:03:43,480 Speaker 3: bear market. The risk awards valuations have come down significantly. 87 00:03:43,760 --> 00:03:46,400 Speaker 3: And we talk about the AI trade, it's things in utilities, 88 00:03:46,520 --> 00:03:49,400 Speaker 3: it's things in industrials, it's things in tech. It's not 89 00:03:49,440 --> 00:03:51,880 Speaker 3: just tech alone. And so what we're seeing on the 90 00:03:51,880 --> 00:03:54,600 Speaker 3: margin is that AI trade or the risk awards is 91 00:03:54,600 --> 00:03:56,880 Speaker 3: becoming a lot more attractive. And that's what we're seeing 92 00:03:57,000 --> 00:03:59,040 Speaker 3: becoming more positive on on. 93 00:03:59,000 --> 00:04:01,720 Speaker 2: The margin outside of the AI trade. Can you say 94 00:04:01,720 --> 00:04:03,440 Speaker 2: the same about the rest of the market at the 95 00:04:03,440 --> 00:04:05,520 Speaker 2: index level? If you look in ATO the SMP this morning, 96 00:04:05,520 --> 00:04:07,440 Speaker 2: the risk reward profile of the s and P five 97 00:04:07,520 --> 00:04:11,040 Speaker 2: hundred going into a couple of weeks of important trade negotiations, 98 00:04:11,320 --> 00:04:12,480 Speaker 2: what's that profile now? 99 00:04:12,880 --> 00:04:15,280 Speaker 1: The profile? So you can go one or two ways. 100 00:04:15,320 --> 00:04:16,880 Speaker 3: Right, if you look at the second half of the year, 101 00:04:16,880 --> 00:04:18,559 Speaker 3: do you believe the Fed is going to be cutting grades? 102 00:04:18,600 --> 00:04:20,440 Speaker 1: We do? Do you believe that. 103 00:04:20,279 --> 00:04:22,320 Speaker 3: The economy is going to go in and slow down? 104 00:04:22,360 --> 00:04:25,680 Speaker 3: But not right, Let's talk about recession for a second. Right, 105 00:04:26,120 --> 00:04:28,440 Speaker 3: If it's a recession because balance sheets are upside on 106 00:04:28,440 --> 00:04:29,719 Speaker 3: the backwards, you can't pull out of that. 107 00:04:29,800 --> 00:04:32,040 Speaker 1: You need the creative destructive process to stop that. 108 00:04:32,600 --> 00:04:35,920 Speaker 3: Here, what we're doing is we're repricing risks, we're repricing expectations. 109 00:04:35,920 --> 00:04:37,960 Speaker 3: You can pull out of that so the economy can improve. 110 00:04:38,400 --> 00:04:40,919 Speaker 3: We haven't had M and A or real M and 111 00:04:40,960 --> 00:04:42,880 Speaker 3: A in a while. We've talked about that. We haven't 112 00:04:42,880 --> 00:04:46,360 Speaker 3: seen the benefits of the deregulation. We can talk about that, 113 00:04:46,600 --> 00:04:50,080 Speaker 3: and then again, if we start moving from tariffs to taxes. 114 00:04:50,520 --> 00:04:53,000 Speaker 1: Right, we go from stick to carrot. It's a lot 115 00:04:53,080 --> 00:04:53,719 Speaker 1: different market. 116 00:04:54,040 --> 00:04:55,520 Speaker 4: But how quickly do you think they actually get this 117 00:04:55,560 --> 00:04:56,960 Speaker 4: tax pill over the finish line? 118 00:04:58,120 --> 00:05:00,159 Speaker 1: How do I think it? Or when do I think it? 119 00:05:00,279 --> 00:05:00,839 Speaker 5: When do you think? 120 00:05:01,600 --> 00:05:05,440 Speaker 3: I think you have to get something granular by say January, 121 00:05:05,440 --> 00:05:07,680 Speaker 3: because nobody wants to stick around in DC in August. 122 00:05:08,480 --> 00:05:10,520 Speaker 3: The other thing is I also think you have to 123 00:05:10,760 --> 00:05:16,320 Speaker 3: check that's the practicality. The other thing is I think 124 00:05:16,360 --> 00:05:17,839 Speaker 3: you have to get it done. You have to get 125 00:05:17,839 --> 00:05:20,760 Speaker 3: that vote on by fourth quarter. Right, If you're going 126 00:05:20,839 --> 00:05:23,160 Speaker 3: to get it done by fourth quarter, you have to 127 00:05:23,200 --> 00:05:26,359 Speaker 3: You're gonna you're gonna wrangle, you're gonna push, you're gonna pull, 128 00:05:26,520 --> 00:05:29,760 Speaker 3: and all that has to happen in third quarter, in September, October, 129 00:05:30,040 --> 00:05:32,320 Speaker 3: and then the votes start going November December, and it 130 00:05:32,320 --> 00:05:33,680 Speaker 3: gets signed signed in December. 131 00:05:33,960 --> 00:05:36,160 Speaker 4: John's asked this question before, which is a really good point. 132 00:05:36,279 --> 00:05:38,080 Speaker 4: Is a removal of a headwind or do you think we're 133 00:05:38,080 --> 00:05:40,239 Speaker 4: going to see a tailwind because they're talking about everything 134 00:05:40,320 --> 00:05:42,520 Speaker 4: like no tax on tips and tax on Social Security. 135 00:05:43,839 --> 00:05:46,440 Speaker 3: I think it's a I don't think it's a tailwin, right, 136 00:05:46,480 --> 00:05:48,479 Speaker 3: It's just not bit for our view, it's just not 137 00:05:48,520 --> 00:05:49,000 Speaker 3: big enough. 138 00:05:49,040 --> 00:05:50,440 Speaker 1: It's just a removal of a headwind. 139 00:05:50,560 --> 00:05:53,279 Speaker 3: And that's positive because you've got some really big headwinds 140 00:05:53,320 --> 00:05:53,640 Speaker 3: in the. 141 00:05:53,520 --> 00:05:54,640 Speaker 1: Form of tarifsontis. 142 00:05:54,640 --> 00:05:55,280 Speaker 4: It's baked in. 143 00:05:56,360 --> 00:05:58,679 Speaker 3: It is baked in. But again, if you you believe 144 00:05:58,760 --> 00:06:02,000 Speaker 3: that deregulation, really you haven't seen the benefits of deregulation. 145 00:06:02,279 --> 00:06:03,760 Speaker 3: You're going to have taxes out of way. What are 146 00:06:03,760 --> 00:06:06,880 Speaker 3: we talking about. We're talking about uncertainty. Suddenly we have certainty. 147 00:06:07,120 --> 00:06:08,800 Speaker 3: Now we can price things a lot differently. 148 00:06:09,040 --> 00:06:11,000 Speaker 2: The Treasury Secretary rights and over the weekend in a 149 00:06:11,040 --> 00:06:14,000 Speaker 2: Wall Street Journal Scot Besson saying this, the American people 150 00:06:14,040 --> 00:06:16,559 Speaker 2: should expect to hear the engine humming during the second 151 00:06:16,600 --> 00:06:18,760 Speaker 2: half of twenty twenty five, which is basically what Chris 152 00:06:18,760 --> 00:06:19,640 Speaker 2: Harvey just told us then. 153 00:06:19,800 --> 00:06:21,719 Speaker 4: And he's basically just talking about the fact that you 154 00:06:21,880 --> 00:06:24,599 Speaker 4: have to look at all these policy proposals together. He 155 00:06:24,720 --> 00:06:27,360 Speaker 4: talks about all the time, this three legged stool, and 156 00:06:27,440 --> 00:06:29,480 Speaker 4: right now everyone's only been talking about tariffs. He's like, 157 00:06:29,480 --> 00:06:31,320 Speaker 4: wait to we start talking about taxes. Wait till you 158 00:06:31,320 --> 00:06:34,560 Speaker 4: start seeing deregulation actually usher itself through the economy. 159 00:06:34,600 --> 00:06:37,480 Speaker 2: We'll see more jobs more manufacturing, more growth, the more 160 00:06:37,560 --> 00:06:42,080 Speaker 2: robust national defense, higher wages, lower taxes, less burden, some regulation, 161 00:06:42,200 --> 00:06:45,640 Speaker 2: cheaper energy, less national debt, less dependence on China. It's 162 00:06:45,680 --> 00:06:47,920 Speaker 2: all of that achievable in the back half of this year. 163 00:06:48,360 --> 00:06:51,120 Speaker 1: That's a lot. Now, is all of that achievable? Probably? 164 00:06:51,200 --> 00:06:52,360 Speaker 1: Not all of that's achievable. 165 00:06:52,360 --> 00:06:54,479 Speaker 3: So some of that is achievable, and as long as 166 00:06:54,520 --> 00:06:57,120 Speaker 3: you make progress on a good chunk of that, I 167 00:06:57,160 --> 00:06:58,720 Speaker 3: think we're in a pretty good spot. 168 00:06:59,040 --> 00:07:01,400 Speaker 1: But yeah, that's that's a lot to do in a 169 00:07:01,480 --> 00:07:02,240 Speaker 1: very short period of talk. 170 00:07:02,360 --> 00:07:04,400 Speaker 4: He adds also one more point to that list, which 171 00:07:04,400 --> 00:07:07,200 Speaker 4: is also with a strong dollar, how is that possible? 172 00:07:07,560 --> 00:07:11,080 Speaker 1: Don't know. So what I do know is that they've 173 00:07:11,120 --> 00:07:12,200 Speaker 1: talked about lower oil. 174 00:07:12,440 --> 00:07:15,120 Speaker 3: We have lower oil. They've talked about lower rates. Rates 175 00:07:15,160 --> 00:07:17,000 Speaker 3: appear to be coming down. I do think we're going 176 00:07:17,000 --> 00:07:18,680 Speaker 3: to be cutting in the second half of the year. 177 00:07:19,920 --> 00:07:20,280 Speaker 5: Dollar. 178 00:07:21,160 --> 00:07:23,440 Speaker 1: I don't know how you get a stronger dollar from here. 179 00:07:23,480 --> 00:07:24,800 Speaker 1: It's questionable. 180 00:07:24,800 --> 00:07:27,280 Speaker 3: He could right, because coming into this year everyone thought 181 00:07:27,320 --> 00:07:30,680 Speaker 3: the dollar strong. It rolled over, so maybe expectations are wrong. 182 00:07:30,720 --> 00:07:31,840 Speaker 3: Once again, we'll see can we. 183 00:07:31,800 --> 00:07:34,160 Speaker 2: Finish on energy equity? So I can mention what's happening 184 00:07:34,160 --> 00:07:37,000 Speaker 2: in the commodity this morning. Brunches down, WTI is down, 185 00:07:37,040 --> 00:07:39,600 Speaker 2: opake plus is pushing. I should say the soundaries are 186 00:07:39,600 --> 00:07:42,720 Speaker 2: pushing more supply into the market. How difficult are things 187 00:07:42,720 --> 00:07:44,160 Speaker 2: on the equity side and energy? 188 00:07:44,680 --> 00:07:49,280 Speaker 3: So we've been underweight energy for a while. It's performed 189 00:07:49,280 --> 00:07:52,040 Speaker 3: pretty well, partly because a lot of stocks are value stocks, 190 00:07:52,080 --> 00:07:54,560 Speaker 3: but now they're beginning to underperform. I would say on 191 00:07:54,680 --> 00:07:58,480 Speaker 3: the energy side, it actually hasn't been a bad year. 192 00:07:58,600 --> 00:08:00,720 Speaker 3: You've seen some pretty good runs on the energy names, 193 00:08:00,840 --> 00:08:03,080 Speaker 3: but I think that's more because of the value stock 194 00:08:03,120 --> 00:08:05,720 Speaker 3: and their characteristics than the underlying fundamentals. 195 00:08:06,120 --> 00:08:08,560 Speaker 2: Chris, it's going to say goodness always. Thanks for dropping 196 00:08:08,600 --> 00:08:21,040 Speaker 2: by Chris Harvey of wels Farka. I guess now it's 197 00:08:21,040 --> 00:08:23,760 Speaker 2: the former Trump White House trade official Kate Klukowitz. Kate, 198 00:08:23,800 --> 00:08:25,720 Speaker 2: welcome back to the program. I just want to set 199 00:08:25,720 --> 00:08:27,640 Speaker 2: this scene because I think things this time around the 200 00:08:27,680 --> 00:08:30,400 Speaker 2: different to what we saw back in the president's first 201 00:08:30,440 --> 00:08:33,920 Speaker 2: term in the White House. The different buckets, the different 202 00:08:33,960 --> 00:08:36,280 Speaker 2: objectives that you've been focused on. Kate, Can we just 203 00:08:36,280 --> 00:08:36,800 Speaker 2: start there? 204 00:08:38,120 --> 00:08:41,640 Speaker 6: Absolutely, because there are many different buckets. You've just focused 205 00:08:41,640 --> 00:08:44,640 Speaker 6: on one, which of course, is China, which I think 206 00:08:44,679 --> 00:08:47,680 Speaker 6: I keep in a separate bucket for now. The President 207 00:08:47,760 --> 00:08:50,840 Speaker 6: is very incentivized at the moment to negotiate deals with 208 00:08:50,920 --> 00:08:54,920 Speaker 6: respect to a different bucket, the reciprocal terriffs. He's very anxious, 209 00:08:54,960 --> 00:08:56,920 Speaker 6: I think, to announce a deal this week to show 210 00:08:56,920 --> 00:08:59,800 Speaker 6: that these reciprocal tariffs are producing the sort of leverage 211 00:09:00,120 --> 00:09:02,960 Speaker 6: he has indicated they will to bring countries to the 212 00:09:03,000 --> 00:09:06,920 Speaker 6: table to resolve these long standing trade imbalances that he 213 00:09:06,960 --> 00:09:08,160 Speaker 6: has so prioritized. 214 00:09:08,679 --> 00:09:11,320 Speaker 2: One way of addressing a trade imbalance, if you're purely 215 00:09:11,360 --> 00:09:14,160 Speaker 2: focused on one thing the trade deficit, would be to 216 00:09:14,240 --> 00:09:17,800 Speaker 2: revisit the purchase agreement struck several years ago. But Kay, 217 00:09:17,840 --> 00:09:20,720 Speaker 2: given the incentives and objectives elsewhere, I'm just wondering whether 218 00:09:20,760 --> 00:09:22,120 Speaker 2: that's sufficient this time around. 219 00:09:22,960 --> 00:09:25,679 Speaker 6: Well, look, I think the President is anxious to show 220 00:09:25,720 --> 00:09:29,080 Speaker 6: some wins here fairly soon. So if I'm a trading 221 00:09:29,120 --> 00:09:31,599 Speaker 6: partner and I'm thinking about what I can do to 222 00:09:32,200 --> 00:09:34,480 Speaker 6: get to the table to get a deal, in principal, 223 00:09:34,559 --> 00:09:38,160 Speaker 6: announce it's through these large scale purchases, because there's something 224 00:09:38,200 --> 00:09:41,920 Speaker 6: that can be achieved relatively quickly, especially when compared to 225 00:09:41,960 --> 00:09:44,440 Speaker 6: some of these long standing non tariff barriers that the 226 00:09:44,440 --> 00:09:47,760 Speaker 6: President has complained about. We heard Treasury Secretary of the 227 00:09:47,840 --> 00:09:52,000 Speaker 6: cent last week's signal that the Trump administration continues to 228 00:09:52,040 --> 00:09:55,160 Speaker 6: be concerned about the Phase one deal and the purchases 229 00:09:55,200 --> 00:09:57,800 Speaker 6: that China has not made. So I think that's a 230 00:09:57,840 --> 00:10:00,360 Speaker 6: fairly good signal that they'd be willing to accep that 231 00:10:00,440 --> 00:10:02,480 Speaker 6: as some down payments kate. 232 00:10:02,480 --> 00:10:04,040 Speaker 4: At the moment, a lot of smoke signals coming out 233 00:10:04,080 --> 00:10:06,520 Speaker 4: of Washington from the President himself almost insinuing that we're 234 00:10:06,520 --> 00:10:08,400 Speaker 4: going to get a deal as soon as this week. 235 00:10:08,720 --> 00:10:09,800 Speaker 4: Who was that going to be with? 236 00:10:11,080 --> 00:10:13,240 Speaker 6: That's a great question, you know, I think if I'm 237 00:10:13,240 --> 00:10:16,680 Speaker 6: a trading partner, I am also watching this press very 238 00:10:16,760 --> 00:10:20,800 Speaker 6: very closely. You know, the President is under increasing pressure 239 00:10:20,880 --> 00:10:24,120 Speaker 6: to produce a deal because, of course, the American public 240 00:10:24,120 --> 00:10:26,920 Speaker 6: are growing concerned about all of these tariffs. I think 241 00:10:26,960 --> 00:10:31,200 Speaker 6: congressional Republicans as well are weighing in privately wanting the 242 00:10:31,200 --> 00:10:33,480 Speaker 6: President to show that we are not going to be 243 00:10:33,559 --> 00:10:36,800 Speaker 6: under these teriff raids forever. So if I'm a foreign 244 00:10:36,840 --> 00:10:39,800 Speaker 6: trading partner and I see this pressure, it does increase 245 00:10:39,880 --> 00:10:43,160 Speaker 6: my leverage as well. You know, we have seen, of 246 00:10:43,200 --> 00:10:47,800 Speaker 6: course increased optimism around talks with Japan, Korea, and India, 247 00:10:47,880 --> 00:10:50,240 Speaker 6: so I suspect one of these nations will will be 248 00:10:50,320 --> 00:10:51,120 Speaker 6: the first to go. 249 00:10:51,800 --> 00:10:54,720 Speaker 4: John mentioned earlier the fact that trade deals take a 250 00:10:54,840 --> 00:10:56,760 Speaker 4: very long time, which is maybe why the administration is 251 00:10:56,800 --> 00:10:59,400 Speaker 4: going to lean on purchase agreements. We know the president 252 00:10:59,400 --> 00:11:02,120 Speaker 4: from the first administration does not like MOUs, but can 253 00:11:02,160 --> 00:11:04,319 Speaker 4: you give us a sense of what kind of outline 254 00:11:04,360 --> 00:11:07,480 Speaker 4: we could see when actually he announces an agreement with 255 00:11:07,520 --> 00:11:08,360 Speaker 4: a trading partner. 256 00:11:09,360 --> 00:11:11,760 Speaker 6: Yeah, you know, trade deals do take a long time, 257 00:11:11,920 --> 00:11:15,160 Speaker 6: and as a former trade negotiator, including with the European Union, 258 00:11:15,200 --> 00:11:19,680 Speaker 6: you know these comprehensive single undertakings take years and years 259 00:11:19,720 --> 00:11:22,640 Speaker 6: and years. These are not those trade deals though, and 260 00:11:22,720 --> 00:11:25,680 Speaker 6: I think it is important to remember the United States 261 00:11:25,720 --> 00:11:28,400 Speaker 6: is bringing to the table one offer, and that is 262 00:11:28,520 --> 00:11:31,720 Speaker 6: not to implement reciprocal tariffs. It's really up to the 263 00:11:31,760 --> 00:11:34,320 Speaker 6: trading partner to signal what it is prepared to do 264 00:11:34,400 --> 00:11:37,520 Speaker 6: in return. So I think the President would be willing 265 00:11:37,600 --> 00:11:41,360 Speaker 6: in principle to accept some very high level commitments that 266 00:11:41,520 --> 00:11:44,920 Speaker 6: it can pocket and then move on toward more regulatory 267 00:11:44,960 --> 00:11:48,679 Speaker 6: reform or longer term tariff reduction. So I do think 268 00:11:48,720 --> 00:11:51,640 Speaker 6: we could have, you know, some of these very high level, 269 00:11:51,679 --> 00:11:56,080 Speaker 6: in principal agreements, not MOUs per se, but agreements from 270 00:11:56,120 --> 00:11:59,080 Speaker 6: our trading partners, as you said, to make high value 271 00:11:59,120 --> 00:12:03,080 Speaker 6: purchases to bring tariffs down unilaterally. But in some ways 272 00:12:03,120 --> 00:12:05,560 Speaker 6: I think we can move faster than some of these 273 00:12:05,600 --> 00:12:08,040 Speaker 6: previous free trade agreements that we had done in the past. 274 00:12:08,120 --> 00:12:09,640 Speaker 2: Okay, you've been in the room. Can you just share 275 00:12:09,640 --> 00:12:11,360 Speaker 2: with us your experience. We all hear lots about the 276 00:12:11,360 --> 00:12:15,360 Speaker 2: European bureaucracy. How difficult is it to negotiate with the Europeans. 277 00:12:16,440 --> 00:12:19,680 Speaker 6: It's incredibly difficult to add, not least of all, of course, 278 00:12:19,760 --> 00:12:24,400 Speaker 6: because the European Union is comprised of twenty seven individual countries. Now, 279 00:12:24,679 --> 00:12:28,400 Speaker 6: of course, they have allowed the European Commission to negotiate 280 00:12:28,440 --> 00:12:31,880 Speaker 6: trade deals on its behalf, but with very different economies 281 00:12:31,920 --> 00:12:36,080 Speaker 6: and very different personalities of these member states. Now, Europe, 282 00:12:36,160 --> 00:12:39,800 Speaker 6: of course, represents quite a lot of significant trade barriers 283 00:12:39,800 --> 00:12:43,040 Speaker 6: that the President often talks about, and these are based 284 00:12:43,600 --> 00:12:48,600 Speaker 6: in historically difficult regulatory environments. So it will be exceptionally 285 00:12:48,640 --> 00:12:51,480 Speaker 6: difficult for the European Union to produce the sort of 286 00:12:51,559 --> 00:12:55,160 Speaker 6: deal that the President is looking for unless the President 287 00:12:55,200 --> 00:12:58,240 Speaker 6: is willing, of course to include topics that are not 288 00:12:58,360 --> 00:13:02,640 Speaker 6: really trade related. Military spending issue always comes to the fore, 289 00:13:03,080 --> 00:13:04,880 Speaker 6: and we'll have to see if the Europeans are willing 290 00:13:04,920 --> 00:13:05,920 Speaker 6: to put that on the table. 291 00:13:06,160 --> 00:13:08,439 Speaker 2: And that has to be done also at the national level. So, Kate, 292 00:13:08,480 --> 00:13:10,360 Speaker 2: when you approach these talks with the Europeans, just what 293 00:13:10,400 --> 00:13:12,920 Speaker 2: do you do differently? Do you push on certain nations 294 00:13:12,920 --> 00:13:15,160 Speaker 2: to put pressure on the Commission on other countries? 295 00:13:15,200 --> 00:13:16,000 Speaker 1: How does this work? 296 00:13:16,920 --> 00:13:17,160 Speaker 5: Yeah? 297 00:13:17,200 --> 00:13:20,439 Speaker 6: Typically the United States, of course, because it has these 298 00:13:20,480 --> 00:13:24,360 Speaker 6: long standing relationships with members state governments, tends to approach 299 00:13:24,800 --> 00:13:28,400 Speaker 6: leader level discussions in that way. The European Commission is 300 00:13:28,440 --> 00:13:32,800 Speaker 6: not the natural counterpart for President Trump and so this 301 00:13:32,880 --> 00:13:35,640 Speaker 6: is another reason, of course that we've seen challenges here. 302 00:13:36,000 --> 00:13:36,200 Speaker 1: Now. 303 00:13:36,240 --> 00:13:38,920 Speaker 6: President Trump, as we saw in his visit to Italy, 304 00:13:39,080 --> 00:13:42,480 Speaker 6: has a very close relationship with the Italians, the Germans, 305 00:13:42,480 --> 00:13:44,560 Speaker 6: and the French and their roles. Of course, we'll play 306 00:13:44,640 --> 00:13:47,560 Speaker 6: leader level discussions as well, and all of this will 307 00:13:47,559 --> 00:13:50,520 Speaker 6: be to create some political pressure on the European Commission 308 00:13:50,520 --> 00:13:51,400 Speaker 6: to come to the table. 309 00:13:51,679 --> 00:13:54,360 Speaker 2: Kay Caluqwitz, Kay, thank you. As always, the former Trump 310 00:13:54,559 --> 00:14:06,520 Speaker 2: has strite official the former sen Lewis FED President Jim 311 00:14:06,559 --> 00:14:08,680 Speaker 2: Fillot joined US for more. Jim, welcome back to the program, 312 00:14:08,760 --> 00:14:11,480 Speaker 2: my friend. How would you approach a meeting like this 313 00:14:11,520 --> 00:14:15,439 Speaker 2: week's meeting given all the information additional information you've had 314 00:14:15,440 --> 00:14:18,080 Speaker 2: to take in over the last month or so. 315 00:14:18,880 --> 00:14:21,080 Speaker 5: I think the committee's in good shape for this meeting. 316 00:14:21,600 --> 00:14:24,480 Speaker 5: Markets aren't expecting a move, and I don't think there 317 00:14:24,560 --> 00:14:26,400 Speaker 5: is going to be a move. A lot of the 318 00:14:26,520 --> 00:14:27,360 Speaker 5: debate will. 319 00:14:27,200 --> 00:14:30,600 Speaker 7: Be about how to approach the meetings through the summer, 320 00:14:31,400 --> 00:14:35,720 Speaker 7: and that's a traditional dynamic of the FAT. But you know, 321 00:14:35,800 --> 00:14:39,040 Speaker 7: they did lower one hundred basis points in the second 322 00:14:39,040 --> 00:14:40,600 Speaker 7: half of twenty twenty four. 323 00:14:41,280 --> 00:14:44,360 Speaker 5: That put them in great position for this year. 324 00:14:44,520 --> 00:14:47,840 Speaker 7: You got the strong jobs report on Friday, You've got 325 00:14:48,120 --> 00:14:51,480 Speaker 7: inflation still coming down, so it's actually looking pretty good 326 00:14:51,560 --> 00:14:52,040 Speaker 7: for the FAT. 327 00:14:52,480 --> 00:14:54,680 Speaker 5: There are things could go a lot of ways. 328 00:14:54,760 --> 00:14:56,880 Speaker 7: In the trade work could go very badly, but I 329 00:14:56,880 --> 00:14:59,080 Speaker 7: think it could also go very well. 330 00:14:59,240 --> 00:15:01,240 Speaker 5: And markets are starting to price that in. 331 00:15:01,920 --> 00:15:05,120 Speaker 7: They're starting to realize this not the US as protectionists, 332 00:15:05,120 --> 00:15:05,920 Speaker 7: to see other. 333 00:15:05,800 --> 00:15:08,120 Speaker 5: Countries that are protectionists, and the. 334 00:15:08,080 --> 00:15:10,840 Speaker 7: Other countries, I think are starting to realize that they 335 00:15:10,840 --> 00:15:11,880 Speaker 7: could come to the table. 336 00:15:13,000 --> 00:15:15,960 Speaker 5: They could probably reduce some of their trade. 337 00:15:15,600 --> 00:15:19,360 Speaker 7: Barriers and some of their non TEARFF trade barriers, and 338 00:15:19,400 --> 00:15:22,360 Speaker 7: they could probably get a deal at least a sketch 339 00:15:22,360 --> 00:15:24,320 Speaker 7: of a deal pretty shortly here. 340 00:15:24,440 --> 00:15:27,560 Speaker 5: So so we'll see exactly how this plays out. 341 00:15:27,600 --> 00:15:29,760 Speaker 7: But from the FEDCE point of view, why do anything 342 00:15:30,200 --> 00:15:32,480 Speaker 7: until you get a little more of the uncertainty result. 343 00:15:32,800 --> 00:15:35,280 Speaker 2: So, Jim, that's an important perspective, and it's a perspective 344 00:15:35,280 --> 00:15:37,440 Speaker 2: that I haven't had much stuff from the FED chat 345 00:15:37,520 --> 00:15:40,840 Speaker 2: j Powell, do you think he has acknowledged sufficiently the 346 00:15:40,920 --> 00:15:43,480 Speaker 2: potential that this goes okay, this goes right. In fact, 347 00:15:43,520 --> 00:15:44,200 Speaker 2: they could be good. 348 00:15:46,720 --> 00:15:50,080 Speaker 5: I haven't heard people talk about it very much. I 349 00:15:50,080 --> 00:15:52,880 Speaker 5: think actually this is yeah. It can go two ways. 350 00:15:52,880 --> 00:15:56,720 Speaker 5: It can go very badly. For sure. You could have let's. 351 00:15:56,560 --> 00:15:58,960 Speaker 7: Say, the Chinese just throw up their hands and say, 352 00:16:00,360 --> 00:16:02,600 Speaker 7: you know, we just can't do it and we're going 353 00:16:02,600 --> 00:16:03,720 Speaker 7: to go some other direction. 354 00:16:05,320 --> 00:16:07,120 Speaker 5: But I don't think they're going to do that. 355 00:16:07,200 --> 00:16:10,560 Speaker 7: I think all the incentives are for them to them 356 00:16:10,680 --> 00:16:13,960 Speaker 7: and many others to come to the table offer something. 357 00:16:14,000 --> 00:16:16,600 Speaker 7: They probably have been two protectionists over the years. They 358 00:16:16,600 --> 00:16:19,720 Speaker 7: have had too many non tear trade barriers. They can 359 00:16:19,760 --> 00:16:23,600 Speaker 7: probably put something on the table that would get a deal, 360 00:16:24,200 --> 00:16:26,880 Speaker 7: and that would be better for everybody. You'd get faster 361 00:16:27,000 --> 00:16:31,840 Speaker 7: growth globally, you'd get faster growth in the US, and 362 00:16:31,880 --> 00:16:32,960 Speaker 7: it would be a good outcome. 363 00:16:33,000 --> 00:16:35,200 Speaker 5: So there is some upside potential. 364 00:16:35,240 --> 00:16:38,160 Speaker 7: That's why I think you've got the stock market sniffing 365 00:16:38,240 --> 00:16:41,200 Speaker 7: this out and moving up nine sessions in a row. 366 00:16:41,280 --> 00:16:42,960 Speaker 4: This is more of a constructive view on what the 367 00:16:42,960 --> 00:16:45,720 Speaker 4: administration is trying to do. Do you think we could 368 00:16:45,720 --> 00:16:49,440 Speaker 4: see the Fed potentially offer two versions dual guidance like 369 00:16:49,440 --> 00:16:51,840 Speaker 4: we've seen from some companies. 370 00:16:53,320 --> 00:16:54,480 Speaker 5: That's been discussed. 371 00:16:54,800 --> 00:16:58,520 Speaker 7: Scenario analysis is a good thing to do in a 372 00:16:58,600 --> 00:17:03,080 Speaker 7: time of high uncertainty, and then you could kind of map. 373 00:17:02,920 --> 00:17:06,280 Speaker 5: Out some potential outcomes. 374 00:17:05,720 --> 00:17:10,000 Speaker 7: And then let the market put its own probabilities on 375 00:17:10,000 --> 00:17:13,879 Speaker 7: those various paths. It's hard to get the committee to 376 00:17:14,119 --> 00:17:16,720 Speaker 7: sort of agree of, well, which scenarios should. 377 00:17:16,400 --> 00:17:19,520 Speaker 5: We have and so on, so it's not the easiest 378 00:17:19,560 --> 00:17:22,280 Speaker 5: thing to do. But if you look at older. 379 00:17:23,920 --> 00:17:27,080 Speaker 7: Staff guidance that goes into the meeting, they have scenario 380 00:17:27,119 --> 00:17:30,320 Speaker 7: analysis in there, and you can look at the ones 381 00:17:30,359 --> 00:17:34,960 Speaker 7: that were released five years ago or so. 382 00:17:33,760 --> 00:17:35,040 Speaker 5: So they do do that. 383 00:17:35,680 --> 00:17:38,359 Speaker 7: It's kind of hard to talk about it at other 384 00:17:38,440 --> 00:17:40,119 Speaker 7: than individual members talking about it. 385 00:17:40,640 --> 00:17:42,960 Speaker 4: Well, we have the of course, the Trader secretary talking 386 00:17:42,960 --> 00:17:46,880 Speaker 4: about things like strategic uncertainty. How difficult does that make 387 00:17:47,440 --> 00:17:50,720 Speaker 4: the FED look not just the next few months, but 388 00:17:50,760 --> 00:17:53,800 Speaker 4: also this entire four years of the Trump administration where 389 00:17:54,080 --> 00:17:56,560 Speaker 4: that is going to be a feature, not a bug. 390 00:17:58,119 --> 00:18:03,480 Speaker 7: The strategic uncertainty, Well, you know, part of a negotiation 391 00:18:04,119 --> 00:18:08,000 Speaker 7: is to take a stake out an extreme position initially 392 00:18:08,400 --> 00:18:11,920 Speaker 7: and stick to it, and that's how you get good 393 00:18:12,000 --> 00:18:15,840 Speaker 7: outcomes from a negotiating perspective. From a monetary policy perspective, 394 00:18:15,960 --> 00:18:19,159 Speaker 7: you always want everything to be perfectly smooth and no 395 00:18:19,320 --> 00:18:22,320 Speaker 7: uncertainty at any point, and so there is a bit 396 00:18:22,359 --> 00:18:24,600 Speaker 7: of a clash and that's just the way it's going 397 00:18:24,680 --> 00:18:26,440 Speaker 7: to be, I think for the next four years. 398 00:18:26,600 --> 00:18:28,640 Speaker 2: Jim, what's on your dashboard at the moment? We mentioned 399 00:18:28,680 --> 00:18:30,520 Speaker 2: that we caught up with the Port of La director 400 00:18:30,960 --> 00:18:32,960 Speaker 2: just before the weekend on Friday, and he mentioned the 401 00:18:33,000 --> 00:18:35,200 Speaker 2: amount of volume that was coming off the rivals this 402 00:18:35,280 --> 00:18:37,360 Speaker 2: week and we were trying to work out the next 403 00:18:37,400 --> 00:18:40,119 Speaker 2: dominoes to fall from there, whether that started a process 404 00:18:40,119 --> 00:18:42,840 Speaker 2: which could spill negatively into the economy. What's on your 405 00:18:42,920 --> 00:18:46,800 Speaker 2: dashboard at the moment for you personally, yeah, I think. 406 00:18:46,720 --> 00:18:50,320 Speaker 5: These the terraces between TRAINA and the US are prohibitive. 407 00:18:50,520 --> 00:18:54,080 Speaker 7: So this isn't about g you can raise your price 408 00:18:54,840 --> 00:18:57,320 Speaker 7: either in China or in the US a little bit that. 409 00:18:57,560 --> 00:18:59,240 Speaker 5: People will still buy your good. 410 00:19:00,400 --> 00:19:03,520 Speaker 7: You're not going to sell anything with these kinds of tariffs, 411 00:19:03,560 --> 00:19:06,200 Speaker 7: so I think you guys have the right language. 412 00:19:07,000 --> 00:19:09,600 Speaker 5: This is like a trade embargo. 413 00:19:10,640 --> 00:19:14,480 Speaker 7: That's very serious and can't go on for very long, 414 00:19:15,800 --> 00:19:18,600 Speaker 7: so that's something we're certainly watching. I was looking at 415 00:19:18,600 --> 00:19:21,879 Speaker 7: some charts this morning about number of ships coming and 416 00:19:22,240 --> 00:19:25,480 Speaker 7: piling up in Long Beach and so on, so. 417 00:19:27,880 --> 00:19:29,520 Speaker 5: That's definitely something to watch. 418 00:19:29,880 --> 00:19:33,440 Speaker 7: I do think that these management teams of big companies, 419 00:19:33,520 --> 00:19:36,520 Speaker 7: especially again smaller ones as well, really. 420 00:19:36,600 --> 00:19:39,480 Speaker 5: Are very sophisticated. They've been through a trade war before. 421 00:19:39,640 --> 00:19:42,640 Speaker 7: They've got some strategies about how to handle this, so 422 00:19:43,119 --> 00:19:46,600 Speaker 7: in some ways there's some insurance there, there's some mitigation, 423 00:19:46,880 --> 00:19:51,080 Speaker 7: but you can't go on too long at this level 424 00:19:51,080 --> 00:19:53,120 Speaker 7: of tariffs, and that's why I think many of these 425 00:19:53,160 --> 00:19:56,280 Speaker 7: countries will see the light and come to the table. 426 00:19:56,520 --> 00:19:59,399 Speaker 2: Hi Jim, I appreciate the update. As always, Jimble out 427 00:19:59,440 --> 00:20:11,840 Speaker 2: that the fullmas and Lewis FED President from McLachlan. Then 428 00:20:11,880 --> 00:20:14,400 Speaker 2: at the conference board rights the following the focus needs 429 00:20:14,400 --> 00:20:16,520 Speaker 2: to be on getting a China trade deal. The current 430 00:20:16,560 --> 00:20:19,640 Speaker 2: tariff level is unsustainable. Eron joined us now for more. 431 00:20:19,720 --> 00:20:21,919 Speaker 2: Eric and Mornic, good morning on the good news. The 432 00:20:21,920 --> 00:20:24,960 Speaker 2: administration agrees with you, Yes, unsustainable. Does that may the 433 00:20:24,960 --> 00:20:26,879 Speaker 2: tariff's are coming down then in the next few weeks, 434 00:20:27,440 --> 00:20:27,680 Speaker 2: you know. 435 00:20:27,640 --> 00:20:29,600 Speaker 8: I think it'll be really interesting. I think what we're 436 00:20:29,600 --> 00:20:32,280 Speaker 8: going to see is that there are going to be 437 00:20:32,480 --> 00:20:36,679 Speaker 8: deals struck potentially with the other Asian economies while we 438 00:20:36,800 --> 00:20:39,119 Speaker 8: sort of wait for China. You know, we keep hearing 439 00:20:39,640 --> 00:20:41,639 Speaker 8: that there is discussions with China, then we hear that 440 00:20:41,720 --> 00:20:46,040 Speaker 8: maybe there isn't. So my sort of my thinking is 441 00:20:46,080 --> 00:20:48,240 Speaker 8: that we're going to see deals with the other Asian 442 00:20:48,280 --> 00:20:49,359 Speaker 8: countries ahead of time. 443 00:20:49,240 --> 00:20:51,120 Speaker 2: Before we get the bigger deals. How distort it will 444 00:20:51,119 --> 00:20:53,000 Speaker 2: this economic type a big through the summer? 445 00:20:53,680 --> 00:20:54,480 Speaker 1: Well, and that's. 446 00:20:54,280 --> 00:20:56,359 Speaker 8: Really what we're waiting for is the data, Just like 447 00:20:56,400 --> 00:20:59,280 Speaker 8: the FED is one data point which is you know, 448 00:20:59,320 --> 00:21:01,840 Speaker 8: not directly about consumer spending that we look at is 449 00:21:01,880 --> 00:21:05,800 Speaker 8: our own consumer confidence index and the expectations part of 450 00:21:05,840 --> 00:21:09,200 Speaker 8: that index which continues to be at you know, more 451 00:21:09,240 --> 00:21:12,600 Speaker 8: than a decade low. It's in sort of that recessionary territory. 452 00:21:12,640 --> 00:21:16,160 Speaker 8: We're also looking at port numbers, including the fact that 453 00:21:16,240 --> 00:21:18,760 Speaker 8: the Port of la is taking in about a third 454 00:21:18,920 --> 00:21:21,720 Speaker 8: less cargo right now than it usually does in this 455 00:21:21,960 --> 00:21:22,600 Speaker 8: time of year. 456 00:21:22,800 --> 00:21:25,600 Speaker 4: What it looks at the expectations of consumers. What does 457 00:21:25,600 --> 00:21:28,040 Speaker 4: this environment remind you of? What other point in time 458 00:21:28,080 --> 00:21:30,439 Speaker 4: have you seen some of this survey data look like 459 00:21:30,480 --> 00:21:31,960 Speaker 4: we have today. 460 00:21:32,040 --> 00:21:35,399 Speaker 8: It looks like the Great Recession or the years after 461 00:21:35,440 --> 00:21:38,840 Speaker 8: the Great Recession, which took a lot of time, you know, 462 00:21:38,920 --> 00:21:41,680 Speaker 8: to come out of that moment. It doesn't necessarily look 463 00:21:41,720 --> 00:21:46,119 Speaker 8: like the pandemic because the pandemic obviously was something that 464 00:21:46,359 --> 00:21:49,120 Speaker 8: sort of gumming up of supply chains was caused by 465 00:21:49,160 --> 00:21:53,920 Speaker 8: an external factor. This is obviously something that is policy 466 00:21:54,000 --> 00:21:58,320 Speaker 8: related and something that could change, can change potentially. 467 00:21:58,640 --> 00:22:01,000 Speaker 4: We know that consumers are nervous been inflation and prices 468 00:22:01,040 --> 00:22:03,440 Speaker 4: going higher because of the terriffs. But what you're also 469 00:22:03,520 --> 00:22:07,240 Speaker 4: seeing is employment deterioration. This idea that prospects for getting 470 00:22:07,240 --> 00:22:09,200 Speaker 4: a job is also challenging. 471 00:22:08,760 --> 00:22:12,959 Speaker 8: Yes, and that makes consumers more nervous than anything, you know, 472 00:22:13,119 --> 00:22:15,520 Speaker 8: having a job. And we've seen in our history of 473 00:22:15,520 --> 00:22:18,360 Speaker 8: looking at this, when consumers have a job, they're going 474 00:22:18,400 --> 00:22:20,560 Speaker 8: to spend. But when they don't have a job, or 475 00:22:20,600 --> 00:22:24,080 Speaker 8: they really think that their job, you know, is at risk, 476 00:22:24,640 --> 00:22:27,119 Speaker 8: then they will sort of pull back spending and just 477 00:22:27,160 --> 00:22:29,600 Speaker 8: concentrate on sort of the necessities. 478 00:22:29,080 --> 00:22:31,119 Speaker 2: And they won't be asking for pyros. What does that 479 00:22:31,200 --> 00:22:34,040 Speaker 2: time you the attitude towards the labor market right now? 480 00:22:34,040 --> 00:22:36,399 Speaker 2: What does that tell you about the risk the safe 481 00:22:36,480 --> 00:22:40,159 Speaker 2: risk of second round effects from the tariffs and what 482 00:22:40,160 --> 00:22:41,200 Speaker 2: it could make the prices? 483 00:22:41,840 --> 00:22:44,840 Speaker 8: I think it means that well on the company side, 484 00:22:44,840 --> 00:22:47,480 Speaker 8: you know, the conference board, our members are companies, so 485 00:22:47,640 --> 00:22:50,640 Speaker 8: many of them are right now trying to figure out 486 00:22:50,680 --> 00:22:54,240 Speaker 8: how to best communicate and analyze how to pass on 487 00:22:54,320 --> 00:22:59,360 Speaker 8: prices or how not to and really how to message 488 00:22:59,400 --> 00:23:02,600 Speaker 8: with their concer zumers. And I think for consumers themselves, 489 00:23:03,359 --> 00:23:05,560 Speaker 8: it's really a matter of sort of pulling back and 490 00:23:05,600 --> 00:23:08,359 Speaker 8: wait and see. But that's sort of that continual uncertainty 491 00:23:08,359 --> 00:23:10,879 Speaker 8: that sort of you know, makes it increasingly risky. 492 00:23:11,040 --> 00:23:12,639 Speaker 2: It's sort of particular dying on the calendar that you're 493 00:23:12,640 --> 00:23:15,240 Speaker 2: worried about an air pocket in the data. Is it 494 00:23:15,240 --> 00:23:16,520 Speaker 2: weeks away, months away. 495 00:23:17,040 --> 00:23:20,280 Speaker 8: I think it is somewhere between weeks and months. I 496 00:23:20,320 --> 00:23:22,600 Speaker 8: think it is six to eight weeks away, which is 497 00:23:22,720 --> 00:23:25,240 Speaker 8: you know, at the conference board, similar to Goldman Sachs, 498 00:23:25,320 --> 00:23:28,359 Speaker 8: we are thinking that July may be the first meeting 499 00:23:28,760 --> 00:23:30,800 Speaker 8: where the Fed, you know, takes another look at industry. 500 00:23:30,920 --> 00:23:33,399 Speaker 4: The Polar CEO last week said that they're implementing a 501 00:23:33,680 --> 00:23:37,439 Speaker 4: recession playbook. Do you see other companies having to do 502 00:23:37,520 --> 00:23:40,000 Speaker 4: that now? And how self fulfilling is that? 503 00:23:40,000 --> 00:23:43,600 Speaker 8: That's a great question. It can be self fulfilling from 504 00:23:43,640 --> 00:23:46,480 Speaker 8: a consumer side. Obviously we're still in a consumer based economy. 505 00:23:46,720 --> 00:23:49,520 Speaker 8: I think it's very interesting that companies are having, you know, 506 00:23:49,600 --> 00:23:51,640 Speaker 8: as we've seen with some of the earnings reports, they 507 00:23:51,640 --> 00:23:55,199 Speaker 8: almost have two scenarios, the scenario A, scenario B. But 508 00:23:55,280 --> 00:23:58,680 Speaker 8: no matter what, four companies to plan to onshore production 509 00:23:58,760 --> 00:24:01,320 Speaker 8: if that really is the goal. Here is something that 510 00:24:01,400 --> 00:24:04,439 Speaker 8: takes years, if not up to a decade, depending on 511 00:24:04,480 --> 00:24:07,080 Speaker 8: what you produce. So it's very very hard to have 512 00:24:07,160 --> 00:24:10,200 Speaker 8: a long term playbook if you really don't know how 513 00:24:10,280 --> 00:24:12,880 Speaker 8: long these trade and tariffs are going to be in place. 514 00:24:12,760 --> 00:24:14,520 Speaker 4: Right you just wait on the sideline. So you think 515 00:24:14,520 --> 00:24:16,960 Speaker 4: we're going to see this hard data in July, but 516 00:24:17,080 --> 00:24:20,040 Speaker 4: companies are already saying they're doing things like a recession playbook. 517 00:24:20,760 --> 00:24:23,040 Speaker 4: Do you just feel like the FED then is bound 518 00:24:23,119 --> 00:24:23,600 Speaker 4: to be late. 519 00:24:25,760 --> 00:24:29,280 Speaker 8: It's hard to tell because obviously the employment numbers are 520 00:24:29,320 --> 00:24:32,960 Speaker 8: still strong, inflation is still pretty flat or coming down. 521 00:24:33,400 --> 00:24:34,760 Speaker 8: So what is there? 522 00:24:35,280 --> 00:24:35,800 Speaker 1: What is there? 523 00:24:36,000 --> 00:24:38,080 Speaker 8: They have to have a reason, a data point in 524 00:24:38,200 --> 00:24:40,080 Speaker 8: order to make an adjustment. 525 00:24:40,560 --> 00:24:42,480 Speaker 2: We'll get more DAYTA later on this morning, ten am 526 00:24:42,520 --> 00:24:45,080 Speaker 2: Eastern Time, you'll get the ISM Services print. And it's 527 00:24:45,080 --> 00:24:47,600 Speaker 2: good to say thank you Aeron McLoughlin there at the 528 00:24:47,600 --> 00:24:51,960 Speaker 2: conference board. This is the Bloomberg Sevenans podcast, bringing you 529 00:24:52,200 --> 00:24:55,600 Speaker 2: the best in markets, economics, angio politics. You can watch 530 00:24:55,600 --> 00:24:58,400 Speaker 2: the show live on Bloomberg TV weekday mornings from six 531 00:24:58,400 --> 00:25:02,000 Speaker 2: am to nine am Eastern. Subscribe to the podcast on Apple, 532 00:25:02,280 --> 00:25:05,119 Speaker 2: Spotify or anywhere else you listen, and as always on 533 00:25:05,119 --> 00:25:07,600 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app 534 00:25:11,560 --> 00:25:11,600 Speaker 7: M