WEBVTT - Bloomberg Surveillance TV: May 5, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and am Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.000 Bloomberg Terminal and the Bloomberg Business App. Joining us now 0:00:37.080 --> 0:00:39.199 Chris Harvey of wels Fargo, Chris, go to see a 0:00:39.240 --> 0:00:41.320 circuit morning, Good morning. You said it a number of 0:00:41.360 --> 0:00:44.240 weeks ago, we had a crisis of confidence last month. 0:00:44.280 --> 0:00:46.160 Have we addressed that crisis of confidence? 0:00:46.600 --> 0:00:47.519 We've addressed it. 0:00:47.640 --> 0:00:50.600 So the big issue was was the administration hearing the 0:00:50.600 --> 0:00:54.640 feedback loop from the markets, from individuals, from people in Congress. 0:00:54.680 --> 0:00:56.760 And the answer is yes, they've heard that, right, and 0:00:56.800 --> 0:00:58.200 they've adjusted their behavior. 0:00:58.320 --> 0:01:00.560 That's a good thing. To your point. 0:01:00.320 --> 0:01:02.600 About what does a trade deal look like, that's a 0:01:02.640 --> 0:01:05.240 big question, right. So what we're saying is, hey, you're 0:01:05.240 --> 0:01:07.479 at the high end of the range. If you get 0:01:07.600 --> 0:01:10.199 some granularity and a trade deal, guess we can break 0:01:10.240 --> 0:01:11.600 out at the high end of the range. 0:01:11.680 --> 0:01:14.640 But you need granularity and what does that exactly look like? 0:01:14.880 --> 0:01:15.720 That's the big question. 0:01:15.840 --> 0:01:18.000 And with who a space economists and let's still worried 0:01:18.040 --> 0:01:20.399 about the heart data catching down to the self spaces 0:01:20.440 --> 0:01:22.120 to investors and they wanted to look through some of 0:01:22.160 --> 0:01:24.800 it focused on the forward look comfort by the policy 0:01:24.840 --> 0:01:27.600 moves down in Washington. How about you write one versus 0:01:27.680 --> 0:01:27.960 the other. 0:01:28.160 --> 0:01:29.760 You can look through the data if you start to 0:01:29.800 --> 0:01:32.279 have confidence that we're moving forward and we're making big 0:01:32.400 --> 0:01:36.640 granular games with folks in Asia, folks in Europe, North America. 0:01:36.680 --> 0:01:38.720 If you believe in that, you'll look through the data. 0:01:38.800 --> 0:01:40.640 If you think, ah, this is kind of a hiccup 0:01:40.640 --> 0:01:41.560 and we're back. 0:01:41.400 --> 0:01:43.600 To tier of tarer of tariff, then you're not going 0:01:43.680 --> 0:01:44.399 to look through it. 0:01:44.400 --> 0:01:47.520 It's that simple trade deals might happen with most of 0:01:47.560 --> 0:01:50.440 the trading partners barring China, though, how do you look 0:01:50.680 --> 0:01:53.160 through any of this when you don't know how the 0:01:53.240 --> 0:01:55.640 trade deal is going to look with China and where 0:01:55.680 --> 0:01:57.760 that final rate is going to settle on. 0:01:58.040 --> 0:02:00.639 Yeah, so I would agree with you that China. 0:02:00.720 --> 0:02:03.280 The administration believes, or seems to believe, the Chinese the 0:02:03.320 --> 0:02:05.840 existential threat, and so you really don't want to deal 0:02:05.880 --> 0:02:08.000 with them. I think a lot of the rhetoric around 0:02:08.040 --> 0:02:10.760 China in the US, that's all that is. I'm not 0:02:10.840 --> 0:02:14.680 expecting anything really positive. But if you do get some 0:02:14.760 --> 0:02:18.600 positive or constructive development from Asia, from the EU, from 0:02:18.600 --> 0:02:22.040 North America, you can start to make some real gains 0:02:22.440 --> 0:02:24.440 and you're not as worried about the economy. The other 0:02:24.480 --> 0:02:27.120 thing that I think the administration is saying is, hey, 0:02:27.160 --> 0:02:29.600 if we're going to dis intermediate China, you're going to 0:02:29.639 --> 0:02:30.880 get some of those spoils. 0:02:31.120 --> 0:02:32.799 You're going to step up to the plate and help 0:02:32.880 --> 0:02:34.520 us out. And that's a good thing. 0:02:34.560 --> 0:02:36.120 And the last thing I would say is that the 0:02:36.480 --> 0:02:39.399 underlying economy, while it's slowing down, wasn't in a bad 0:02:39.440 --> 0:02:40.680 place before all this started. 0:02:40.960 --> 0:02:43.399 You sound positive on trade deals. Do you think we're 0:02:43.440 --> 0:02:44.680 past peak uncertainty. 0:02:45.160 --> 0:02:48.880 I think we're past peak uncertainty, and what we do 0:02:49.000 --> 0:02:50.160 is we look at it this way. 0:02:50.680 --> 0:02:52.200 He went very hard very early. 0:02:52.440 --> 0:02:54.680 In order to get that pressure back, I think you'd 0:02:54.720 --> 0:02:57.240 have to put us into recession. I don't think this 0:02:57.320 --> 0:03:00.680 administration wants to go into recession because what it would 0:03:00.720 --> 0:03:03.720 mean it would mean a higher deficit, more job losses, 0:03:04.360 --> 0:03:07.480 you'd have a negative wealth effect, and popularity won't be 0:03:07.560 --> 0:03:10.120 rising as you get closer to the midterm elections. So 0:03:10.160 --> 0:03:13.480 I think we have but it's not smooth selling from here. 0:03:13.520 --> 0:03:15.480 The stocks have recovered at the index level on the 0:03:15.520 --> 0:03:18.600 SMP since April second, the dollar has not recovered. As 0:03:18.600 --> 0:03:20.639 you look at things right now, given the dislocations of 0:03:20.680 --> 0:03:23.040 the last month, are the certain things being left behind, 0:03:23.120 --> 0:03:24.320 certain things you want to lean into. 0:03:25.160 --> 0:03:29.040 So our thought process isn't that different. We wanted to 0:03:29.280 --> 0:03:31.160 we want a good risk awards. We want to balance 0:03:31.160 --> 0:03:33.399 that with some low vol or defense of the thing 0:03:33.440 --> 0:03:35.920 that's new and different to us is at the margin, 0:03:36.280 --> 0:03:38.080 a lot of the AI trade is looking a lot 0:03:38.120 --> 0:03:39.600 more attractive. A lot of these names are in a 0:03:39.600 --> 0:03:43.480 bear market. The risk awards valuations have come down significantly. 0:03:43.760 --> 0:03:46.400 And we talk about the AI trade, it's things in utilities, 0:03:46.520 --> 0:03:49.400 it's things in industrials, it's things in tech. It's not 0:03:49.440 --> 0:03:51.880 just tech alone. And so what we're seeing on the 0:03:51.880 --> 0:03:54.600 margin is that AI trade or the risk awards is 0:03:54.600 --> 0:03:56.880 becoming a lot more attractive. And that's what we're seeing 0:03:57.000 --> 0:03:59.040 becoming more positive on on. 0:03:59.000 --> 0:04:01.720 The margin outside of the AI trade. Can you say 0:04:01.720 --> 0:04:03.440 the same about the rest of the market at the 0:04:03.440 --> 0:04:05.520 index level? If you look in ATO the SMP this morning, 0:04:05.520 --> 0:04:07.440 the risk reward profile of the s and P five 0:04:07.520 --> 0:04:11.040 hundred going into a couple of weeks of important trade negotiations, 0:04:11.320 --> 0:04:12.480 what's that profile now? 0:04:12.880 --> 0:04:15.280 The profile? So you can go one or two ways. 0:04:15.320 --> 0:04:16.880 Right, if you look at the second half of the year, 0:04:16.880 --> 0:04:18.559 do you believe the Fed is going to be cutting grades? 0:04:18.600 --> 0:04:20.440 We do? Do you believe that. 0:04:20.279 --> 0:04:22.320 The economy is going to go in and slow down? 0:04:22.360 --> 0:04:25.680 But not right, Let's talk about recession for a second. Right, 0:04:26.120 --> 0:04:28.440 If it's a recession because balance sheets are upside on 0:04:28.440 --> 0:04:29.719 the backwards, you can't pull out of that. 0:04:29.800 --> 0:04:32.040 You need the creative destructive process to stop that. 0:04:32.600 --> 0:04:35.920 Here, what we're doing is we're repricing risks, we're repricing expectations. 0:04:35.920 --> 0:04:37.960 You can pull out of that so the economy can improve. 0:04:38.400 --> 0:04:40.919 We haven't had M and A or real M and 0:04:40.960 --> 0:04:42.880 A in a while. We've talked about that. We haven't 0:04:42.880 --> 0:04:46.360 seen the benefits of the deregulation. We can talk about that, 0:04:46.600 --> 0:04:50.080 and then again, if we start moving from tariffs to taxes. 0:04:50.520 --> 0:04:53.000 Right, we go from stick to carrot. It's a lot 0:04:53.080 --> 0:04:53.719 different market. 0:04:54.040 --> 0:04:55.520 But how quickly do you think they actually get this 0:04:55.560 --> 0:04:56.960 tax pill over the finish line? 0:04:58.120 --> 0:05:00.159 How do I think it? Or when do I think it? 0:05:00.279 --> 0:05:00.839 When do you think? 0:05:01.600 --> 0:05:05.440 I think you have to get something granular by say January, 0:05:05.440 --> 0:05:07.680 because nobody wants to stick around in DC in August. 0:05:08.480 --> 0:05:10.520 The other thing is I also think you have to 0:05:10.760 --> 0:05:16.320 check that's the practicality. The other thing is I think 0:05:16.360 --> 0:05:17.839 you have to get it done. You have to get 0:05:17.839 --> 0:05:20.760 that vote on by fourth quarter. Right, If you're going 0:05:20.839 --> 0:05:23.160 to get it done by fourth quarter, you have to 0:05:23.200 --> 0:05:26.359 You're gonna you're gonna wrangle, you're gonna push, you're gonna pull, 0:05:26.520 --> 0:05:29.760 and all that has to happen in third quarter, in September, October, 0:05:30.040 --> 0:05:32.320 and then the votes start going November December, and it 0:05:32.320 --> 0:05:33.680 gets signed signed in December. 0:05:33.960 --> 0:05:36.160 John's asked this question before, which is a really good point. 0:05:36.279 --> 0:05:38.080 Is a removal of a headwind or do you think we're 0:05:38.080 --> 0:05:40.239 going to see a tailwind because they're talking about everything 0:05:40.320 --> 0:05:42.520 like no tax on tips and tax on Social Security. 0:05:43.839 --> 0:05:46.440 I think it's a I don't think it's a tailwin, right, 0:05:46.480 --> 0:05:48.479 It's just not bit for our view, it's just not 0:05:48.520 --> 0:05:49.000 big enough. 0:05:49.040 --> 0:05:50.440 It's just a removal of a headwind. 0:05:50.560 --> 0:05:53.279 And that's positive because you've got some really big headwinds 0:05:53.320 --> 0:05:53.640 in the. 0:05:53.520 --> 0:05:54.640 Form of tarifsontis. 0:05:54.640 --> 0:05:55.280 It's baked in. 0:05:56.360 --> 0:05:58.679 It is baked in. But again, if you you believe 0:05:58.760 --> 0:06:02.000 that deregulation, really you haven't seen the benefits of deregulation. 0:06:02.279 --> 0:06:03.760 You're going to have taxes out of way. What are 0:06:03.760 --> 0:06:06.880 we talking about. We're talking about uncertainty. Suddenly we have certainty. 0:06:07.120 --> 0:06:08.800 Now we can price things a lot differently. 0:06:09.040 --> 0:06:11.000 The Treasury Secretary rights and over the weekend in a 0:06:11.040 --> 0:06:14.000 Wall Street Journal Scot Besson saying this, the American people 0:06:14.040 --> 0:06:16.559 should expect to hear the engine humming during the second 0:06:16.600 --> 0:06:18.760 half of twenty twenty five, which is basically what Chris 0:06:18.760 --> 0:06:19.640 Harvey just told us then. 0:06:19.800 --> 0:06:21.719 And he's basically just talking about the fact that you 0:06:21.880 --> 0:06:24.599 have to look at all these policy proposals together. He 0:06:24.720 --> 0:06:27.360 talks about all the time, this three legged stool, and 0:06:27.440 --> 0:06:29.480 right now everyone's only been talking about tariffs. He's like, 0:06:29.480 --> 0:06:31.320 wait to we start talking about taxes. Wait till you 0:06:31.320 --> 0:06:34.560 start seeing deregulation actually usher itself through the economy. 0:06:34.600 --> 0:06:37.480 We'll see more jobs more manufacturing, more growth, the more 0:06:37.560 --> 0:06:42.080 robust national defense, higher wages, lower taxes, less burden, some regulation, 0:06:42.200 --> 0:06:45.640 cheaper energy, less national debt, less dependence on China. It's 0:06:45.680 --> 0:06:47.920 all of that achievable in the back half of this year. 0:06:48.360 --> 0:06:51.120 That's a lot. Now, is all of that achievable? Probably? 0:06:51.200 --> 0:06:52.360 Not all of that's achievable. 0:06:52.360 --> 0:06:54.479 So some of that is achievable, and as long as 0:06:54.520 --> 0:06:57.120 you make progress on a good chunk of that, I 0:06:57.160 --> 0:06:58.720 think we're in a pretty good spot. 0:06:59.040 --> 0:07:01.400 But yeah, that's that's a lot to do in a 0:07:01.480 --> 0:07:02.240 very short period of talk. 0:07:02.360 --> 0:07:04.400 He adds also one more point to that list, which 0:07:04.400 --> 0:07:07.200 is also with a strong dollar, how is that possible? 0:07:07.560 --> 0:07:11.080 Don't know. So what I do know is that they've 0:07:11.120 --> 0:07:12.200 talked about lower oil. 0:07:12.440 --> 0:07:15.120 We have lower oil. They've talked about lower rates. Rates 0:07:15.160 --> 0:07:17.000 appear to be coming down. I do think we're going 0:07:17.000 --> 0:07:18.680 to be cutting in the second half of the year. 0:07:19.920 --> 0:07:20.280 Dollar. 0:07:21.160 --> 0:07:23.440 I don't know how you get a stronger dollar from here. 0:07:23.480 --> 0:07:24.800 It's questionable. 0:07:24.800 --> 0:07:27.280 He could right, because coming into this year everyone thought 0:07:27.320 --> 0:07:30.680 the dollar strong. It rolled over, so maybe expectations are wrong. 0:07:30.720 --> 0:07:31.840 Once again, we'll see can we. 0:07:31.800 --> 0:07:34.160 Finish on energy equity? So I can mention what's happening 0:07:34.160 --> 0:07:37.000 in the commodity this morning. Brunches down, WTI is down, 0:07:37.040 --> 0:07:39.600 opake plus is pushing. I should say the soundaries are 0:07:39.600 --> 0:07:42.720 pushing more supply into the market. How difficult are things 0:07:42.720 --> 0:07:44.160 on the equity side and energy? 0:07:44.680 --> 0:07:49.280 So we've been underweight energy for a while. It's performed 0:07:49.280 --> 0:07:52.040 pretty well, partly because a lot of stocks are value stocks, 0:07:52.080 --> 0:07:54.560 but now they're beginning to underperform. I would say on 0:07:54.680 --> 0:07:58.480 the energy side, it actually hasn't been a bad year. 0:07:58.600 --> 0:08:00.720 You've seen some pretty good runs on the energy names, 0:08:00.840 --> 0:08:03.080 but I think that's more because of the value stock 0:08:03.120 --> 0:08:05.720 and their characteristics than the underlying fundamentals. 0:08:06.120 --> 0:08:08.560 Chris, it's going to say goodness always. Thanks for dropping 0:08:08.600 --> 0:08:21.040 by Chris Harvey of wels Farka. I guess now it's 0:08:21.040 --> 0:08:23.760 the former Trump White House trade official Kate Klukowitz. Kate, 0:08:23.800 --> 0:08:25.720 welcome back to the program. I just want to set 0:08:25.720 --> 0:08:27.640 this scene because I think things this time around the 0:08:27.680 --> 0:08:30.400 different to what we saw back in the president's first 0:08:30.440 --> 0:08:33.920 term in the White House. The different buckets, the different 0:08:33.960 --> 0:08:36.280 objectives that you've been focused on. Kate, Can we just 0:08:36.280 --> 0:08:36.800 start there? 0:08:38.120 --> 0:08:41.640 Absolutely, because there are many different buckets. You've just focused 0:08:41.640 --> 0:08:44.640 on one, which of course, is China, which I think 0:08:44.679 --> 0:08:47.680 I keep in a separate bucket for now. The President 0:08:47.760 --> 0:08:50.840 is very incentivized at the moment to negotiate deals with 0:08:50.920 --> 0:08:54.920 respect to a different bucket, the reciprocal terriffs. He's very anxious, 0:08:54.960 --> 0:08:56.920 I think, to announce a deal this week to show 0:08:56.920 --> 0:08:59.800 that these reciprocal tariffs are producing the sort of leverage 0:09:00.120 --> 0:09:02.960 he has indicated they will to bring countries to the 0:09:03.000 --> 0:09:06.920 table to resolve these long standing trade imbalances that he 0:09:06.960 --> 0:09:08.160 has so prioritized. 0:09:08.679 --> 0:09:11.320 One way of addressing a trade imbalance, if you're purely 0:09:11.360 --> 0:09:14.160 focused on one thing the trade deficit, would be to 0:09:14.240 --> 0:09:17.800 revisit the purchase agreement struck several years ago. But Kay, 0:09:17.840 --> 0:09:20.720 given the incentives and objectives elsewhere, I'm just wondering whether 0:09:20.760 --> 0:09:22.120 that's sufficient this time around. 0:09:22.960 --> 0:09:25.679 Well, look, I think the President is anxious to show 0:09:25.720 --> 0:09:29.080 some wins here fairly soon. So if I'm a trading 0:09:29.120 --> 0:09:31.599 partner and I'm thinking about what I can do to 0:09:32.200 --> 0:09:34.480 get to the table to get a deal, in principal, 0:09:34.559 --> 0:09:38.160 announce it's through these large scale purchases, because there's something 0:09:38.200 --> 0:09:41.920 that can be achieved relatively quickly, especially when compared to 0:09:41.960 --> 0:09:44.440 some of these long standing non tariff barriers that the 0:09:44.440 --> 0:09:47.760 President has complained about. We heard Treasury Secretary of the 0:09:47.840 --> 0:09:52.000 cent last week's signal that the Trump administration continues to 0:09:52.040 --> 0:09:55.160 be concerned about the Phase one deal and the purchases 0:09:55.200 --> 0:09:57.800 that China has not made. So I think that's a 0:09:57.840 --> 0:10:00.360 fairly good signal that they'd be willing to accep that 0:10:00.440 --> 0:10:02.480 as some down payments kate. 0:10:02.480 --> 0:10:04.040 At the moment, a lot of smoke signals coming out 0:10:04.080 --> 0:10:06.520 of Washington from the President himself almost insinuing that we're 0:10:06.520 --> 0:10:08.400 going to get a deal as soon as this week. 0:10:08.720 --> 0:10:09.800 Who was that going to be with? 0:10:11.080 --> 0:10:13.240 That's a great question, you know, I think if I'm 0:10:13.240 --> 0:10:16.680 a trading partner, I am also watching this press very 0:10:16.760 --> 0:10:20.800 very closely. You know, the President is under increasing pressure 0:10:20.880 --> 0:10:24.120 to produce a deal because, of course, the American public 0:10:24.120 --> 0:10:26.920 are growing concerned about all of these tariffs. I think 0:10:26.960 --> 0:10:31.200 congressional Republicans as well are weighing in privately wanting the 0:10:31.200 --> 0:10:33.480 President to show that we are not going to be 0:10:33.559 --> 0:10:36.800 under these teriff raids forever. So if I'm a foreign 0:10:36.840 --> 0:10:39.800 trading partner and I see this pressure, it does increase 0:10:39.880 --> 0:10:43.160 my leverage as well. You know, we have seen, of 0:10:43.200 --> 0:10:47.800 course increased optimism around talks with Japan, Korea, and India, 0:10:47.880 --> 0:10:50.240 so I suspect one of these nations will will be 0:10:50.320 --> 0:10:51.120 the first to go. 0:10:51.800 --> 0:10:54.720 John mentioned earlier the fact that trade deals take a 0:10:54.840 --> 0:10:56.760 very long time, which is maybe why the administration is 0:10:56.800 --> 0:10:59.400 going to lean on purchase agreements. We know the president 0:10:59.400 --> 0:11:02.120 from the first administration does not like MOUs, but can 0:11:02.160 --> 0:11:04.319 you give us a sense of what kind of outline 0:11:04.360 --> 0:11:07.480 we could see when actually he announces an agreement with 0:11:07.520 --> 0:11:08.360 a trading partner. 0:11:09.360 --> 0:11:11.760 Yeah, you know, trade deals do take a long time, 0:11:11.920 --> 0:11:15.160 and as a former trade negotiator, including with the European Union, 0:11:15.200 --> 0:11:19.680 you know these comprehensive single undertakings take years and years 0:11:19.720 --> 0:11:22.640 and years. These are not those trade deals though, and 0:11:22.720 --> 0:11:25.680 I think it is important to remember the United States 0:11:25.720 --> 0:11:28.400 is bringing to the table one offer, and that is 0:11:28.520 --> 0:11:31.720 not to implement reciprocal tariffs. It's really up to the 0:11:31.760 --> 0:11:34.320 trading partner to signal what it is prepared to do 0:11:34.400 --> 0:11:37.520 in return. So I think the President would be willing 0:11:37.600 --> 0:11:41.360 in principle to accept some very high level commitments that 0:11:41.520 --> 0:11:44.920 it can pocket and then move on toward more regulatory 0:11:44.960 --> 0:11:48.679 reform or longer term tariff reduction. So I do think 0:11:48.720 --> 0:11:51.640 we could have, you know, some of these very high level, 0:11:51.679 --> 0:11:56.080 in principal agreements, not MOUs per se, but agreements from 0:11:56.120 --> 0:11:59.080 our trading partners, as you said, to make high value 0:11:59.120 --> 0:12:03.080 purchases to bring tariffs down unilaterally. But in some ways 0:12:03.120 --> 0:12:05.560 I think we can move faster than some of these 0:12:05.600 --> 0:12:08.040 previous free trade agreements that we had done in the past. 0:12:08.120 --> 0:12:09.640 Okay, you've been in the room. Can you just share 0:12:09.640 --> 0:12:11.360 with us your experience. We all hear lots about the 0:12:11.360 --> 0:12:15.360 European bureaucracy. How difficult is it to negotiate with the Europeans. 0:12:16.440 --> 0:12:19.680 It's incredibly difficult to add, not least of all, of course, 0:12:19.760 --> 0:12:24.400 because the European Union is comprised of twenty seven individual countries. Now, 0:12:24.679 --> 0:12:28.400 of course, they have allowed the European Commission to negotiate 0:12:28.440 --> 0:12:31.880 trade deals on its behalf, but with very different economies 0:12:31.920 --> 0:12:36.080 and very different personalities of these member states. Now, Europe, 0:12:36.160 --> 0:12:39.800 of course, represents quite a lot of significant trade barriers 0:12:39.800 --> 0:12:43.040 that the President often talks about, and these are based 0:12:43.600 --> 0:12:48.600 in historically difficult regulatory environments. So it will be exceptionally 0:12:48.640 --> 0:12:51.480 difficult for the European Union to produce the sort of 0:12:51.559 --> 0:12:55.160 deal that the President is looking for unless the President 0:12:55.200 --> 0:12:58.240 is willing, of course to include topics that are not 0:12:58.360 --> 0:13:02.640 really trade related. Military spending issue always comes to the fore, 0:13:03.080 --> 0:13:04.880 and we'll have to see if the Europeans are willing 0:13:04.920 --> 0:13:05.920 to put that on the table. 0:13:06.160 --> 0:13:08.439 And that has to be done also at the national level. So, Kate, 0:13:08.480 --> 0:13:10.360 when you approach these talks with the Europeans, just what 0:13:10.400 --> 0:13:12.920 do you do differently? Do you push on certain nations 0:13:12.920 --> 0:13:15.160 to put pressure on the Commission on other countries? 0:13:15.200 --> 0:13:16.000 How does this work? 0:13:16.920 --> 0:13:17.160 Yeah? 0:13:17.200 --> 0:13:20.439 Typically the United States, of course, because it has these 0:13:20.480 --> 0:13:24.360 long standing relationships with members state governments, tends to approach 0:13:24.800 --> 0:13:28.400 leader level discussions in that way. The European Commission is 0:13:28.440 --> 0:13:32.800 not the natural counterpart for President Trump and so this 0:13:32.880 --> 0:13:35.640 is another reason, of course that we've seen challenges here. 0:13:36.000 --> 0:13:36.200 Now. 0:13:36.240 --> 0:13:38.920 President Trump, as we saw in his visit to Italy, 0:13:39.080 --> 0:13:42.480 has a very close relationship with the Italians, the Germans, 0:13:42.480 --> 0:13:44.560 and the French and their roles. Of course, we'll play 0:13:44.640 --> 0:13:47.560 leader level discussions as well, and all of this will 0:13:47.559 --> 0:13:50.520 be to create some political pressure on the European Commission 0:13:50.520 --> 0:13:51.400 to come to the table. 0:13:51.679 --> 0:13:54.360 Kay Caluqwitz, Kay, thank you. As always, the former Trump 0:13:54.559 --> 0:14:06.520 has strite official the former sen Lewis FED President Jim 0:14:06.559 --> 0:14:08.680 Fillot joined US for more. Jim, welcome back to the program, 0:14:08.760 --> 0:14:11.480 my friend. How would you approach a meeting like this 0:14:11.520 --> 0:14:15.439 week's meeting given all the information additional information you've had 0:14:15.440 --> 0:14:18.080 to take in over the last month or so. 0:14:18.880 --> 0:14:21.080 I think the committee's in good shape for this meeting. 0:14:21.600 --> 0:14:24.480 Markets aren't expecting a move, and I don't think there 0:14:24.560 --> 0:14:26.400 is going to be a move. A lot of the 0:14:26.520 --> 0:14:27.360 debate will. 0:14:27.200 --> 0:14:30.600 Be about how to approach the meetings through the summer, 0:14:31.400 --> 0:14:35.720 and that's a traditional dynamic of the FAT. But you know, 0:14:35.800 --> 0:14:39.040 they did lower one hundred basis points in the second 0:14:39.040 --> 0:14:40.600 half of twenty twenty four. 0:14:41.280 --> 0:14:44.360 That put them in great position for this year. 0:14:44.520 --> 0:14:47.840 You got the strong jobs report on Friday, You've got 0:14:48.120 --> 0:14:51.480 inflation still coming down, so it's actually looking pretty good 0:14:51.560 --> 0:14:52.040 for the FAT. 0:14:52.480 --> 0:14:54.680 There are things could go a lot of ways. 0:14:54.760 --> 0:14:56.880 In the trade work could go very badly, but I 0:14:56.880 --> 0:14:59.080 think it could also go very well. 0:14:59.240 --> 0:15:01.240 And markets are starting to price that in. 0:15:01.920 --> 0:15:05.120 They're starting to realize this not the US as protectionists, 0:15:05.120 --> 0:15:05.920 to see other. 0:15:05.800 --> 0:15:08.120 Countries that are protectionists, and the. 0:15:08.080 --> 0:15:10.840 Other countries, I think are starting to realize that they 0:15:10.840 --> 0:15:11.880 could come to the table. 0:15:13.000 --> 0:15:15.960 They could probably reduce some of their trade. 0:15:15.600 --> 0:15:19.360 Barriers and some of their non TEARFF trade barriers, and 0:15:19.400 --> 0:15:22.360 they could probably get a deal at least a sketch 0:15:22.360 --> 0:15:24.320 of a deal pretty shortly here. 0:15:24.440 --> 0:15:27.560 So so we'll see exactly how this plays out. 0:15:27.600 --> 0:15:29.760 But from the FEDCE point of view, why do anything 0:15:30.200 --> 0:15:32.480 until you get a little more of the uncertainty result. 0:15:32.800 --> 0:15:35.280 So, Jim, that's an important perspective, and it's a perspective 0:15:35.280 --> 0:15:37.440 that I haven't had much stuff from the FED chat 0:15:37.520 --> 0:15:40.840 j Powell, do you think he has acknowledged sufficiently the 0:15:40.920 --> 0:15:43.480 potential that this goes okay, this goes right. In fact, 0:15:43.520 --> 0:15:44.200 they could be good. 0:15:46.720 --> 0:15:50.080 I haven't heard people talk about it very much. I 0:15:50.080 --> 0:15:52.880 think actually this is yeah. It can go two ways. 0:15:52.880 --> 0:15:56.720 It can go very badly. For sure. You could have let's. 0:15:56.560 --> 0:15:58.960 Say, the Chinese just throw up their hands and say, 0:16:00.360 --> 0:16:02.600 you know, we just can't do it and we're going 0:16:02.600 --> 0:16:03.720 to go some other direction. 0:16:05.320 --> 0:16:07.120 But I don't think they're going to do that. 0:16:07.200 --> 0:16:10.560 I think all the incentives are for them to them 0:16:10.680 --> 0:16:13.960 and many others to come to the table offer something. 0:16:14.000 --> 0:16:16.600 They probably have been two protectionists over the years. They 0:16:16.600 --> 0:16:19.720 have had too many non tear trade barriers. They can 0:16:19.760 --> 0:16:23.600 probably put something on the table that would get a deal, 0:16:24.200 --> 0:16:26.880 and that would be better for everybody. You'd get faster 0:16:27.000 --> 0:16:31.840 growth globally, you'd get faster growth in the US, and 0:16:31.880 --> 0:16:32.960 it would be a good outcome. 0:16:33.000 --> 0:16:35.200 So there is some upside potential. 0:16:35.240 --> 0:16:38.160 That's why I think you've got the stock market sniffing 0:16:38.240 --> 0:16:41.200 this out and moving up nine sessions in a row. 0:16:41.280 --> 0:16:42.960 This is more of a constructive view on what the 0:16:42.960 --> 0:16:45.720 administration is trying to do. Do you think we could 0:16:45.720 --> 0:16:49.440 see the Fed potentially offer two versions dual guidance like 0:16:49.440 --> 0:16:51.840 we've seen from some companies. 0:16:53.320 --> 0:16:54.480 That's been discussed. 0:16:54.800 --> 0:16:58.520 Scenario analysis is a good thing to do in a 0:16:58.600 --> 0:17:03.080 time of high uncertainty, and then you could kind of map. 0:17:02.920 --> 0:17:06.280 Out some potential outcomes. 0:17:05.720 --> 0:17:10.000 And then let the market put its own probabilities on 0:17:10.000 --> 0:17:13.879 those various paths. It's hard to get the committee to 0:17:14.119 --> 0:17:16.720 sort of agree of, well, which scenarios should. 0:17:16.400 --> 0:17:19.520 We have and so on, so it's not the easiest 0:17:19.560 --> 0:17:22.280 thing to do. But if you look at older. 0:17:23.920 --> 0:17:27.080 Staff guidance that goes into the meeting, they have scenario 0:17:27.119 --> 0:17:30.320 analysis in there, and you can look at the ones 0:17:30.359 --> 0:17:34.960 that were released five years ago or so. 0:17:33.760 --> 0:17:35.040 So they do do that. 0:17:35.680 --> 0:17:38.359 It's kind of hard to talk about it at other 0:17:38.440 --> 0:17:40.119 than individual members talking about it. 0:17:40.640 --> 0:17:42.960 Well, we have the of course, the Trader secretary talking 0:17:42.960 --> 0:17:46.880 about things like strategic uncertainty. How difficult does that make 0:17:47.440 --> 0:17:50.720 the FED look not just the next few months, but 0:17:50.760 --> 0:17:53.800 also this entire four years of the Trump administration where 0:17:54.080 --> 0:17:56.560 that is going to be a feature, not a bug. 0:17:58.119 --> 0:18:03.480 The strategic uncertainty, Well, you know, part of a negotiation 0:18:04.119 --> 0:18:08.000 is to take a stake out an extreme position initially 0:18:08.400 --> 0:18:11.920 and stick to it, and that's how you get good 0:18:12.000 --> 0:18:15.840 outcomes from a negotiating perspective. From a monetary policy perspective, 0:18:15.960 --> 0:18:19.159 you always want everything to be perfectly smooth and no 0:18:19.320 --> 0:18:22.320 uncertainty at any point, and so there is a bit 0:18:22.359 --> 0:18:24.600 of a clash and that's just the way it's going 0:18:24.680 --> 0:18:26.440 to be, I think for the next four years. 0:18:26.600 --> 0:18:28.640 Jim, what's on your dashboard at the moment? We mentioned 0:18:28.680 --> 0:18:30.520 that we caught up with the Port of La director 0:18:30.960 --> 0:18:32.960 just before the weekend on Friday, and he mentioned the 0:18:33.000 --> 0:18:35.200