WEBVTT - US to Demand Putin Accept Ukraine’s Right to Military Force 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.840 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.040 us live on YouTube. 0:00:24.160 --> 0:00:28.040 The news again crossing the tape here geopolitical front. The 0:00:28.240 --> 0:00:31.280 US will demand that Russia accept Ukraine's right to have 0:00:31.360 --> 0:00:34.040 its own army and defense industry as part of the 0:00:34.080 --> 0:00:37.960 peace agreement between Moscow and keV. The Trump administration also 0:00:38.120 --> 0:00:44.280 wants Moscow to return Ukraine's nuclear power plant. In short, 0:00:44.600 --> 0:00:47.640 Ukraine has passage over the Debay River and return land 0:00:47.680 --> 0:00:50.159 occupied by Russia in the Kharkiv regen. So so it 0:00:50.200 --> 0:00:53.320 seems to like some really big news on this front. So 0:00:53.400 --> 0:00:55.120 let's get talkd to somebody who knows this stuff. Nick 0:00:55.160 --> 0:00:59.440 Wadams is a US national security reporter for a Bloomberg News. 0:00:59.440 --> 0:01:03.520 He is based in Washington, DC. Nick, this seems like 0:01:03.560 --> 0:01:06.600 big news coming from the administration. Put in context for. 0:01:06.640 --> 0:01:09.920 Us, please, yeah, I mean the big thing here is 0:01:09.959 --> 0:01:11.880 that a lot of what we've been hearing so far 0:01:12.000 --> 0:01:15.080 out of the administration and the conversations between the US, 0:01:15.200 --> 0:01:18.880 Ukraine and Russia have been a lot of demands on Ukraine. 0:01:19.040 --> 0:01:23.320 So we recently heard that the US wanted to recognize 0:01:23.400 --> 0:01:27.800 Russian sovereignty over Crimea, they wanted to block Ukraine from 0:01:27.800 --> 0:01:32.160 getting NATO membership, a host of other issues at Critical 0:01:32.200 --> 0:01:35.559 Minerals agreement, and that had provoked a lot of fears 0:01:35.600 --> 0:01:38.720 among European allies and critics of the Trump administration that 0:01:38.840 --> 0:01:41.400 essentially this deal was going to be really heavily favored 0:01:41.400 --> 0:01:45.440 towards Russia and Ukraine wasn't going to get anything in return. 0:01:45.920 --> 0:01:48.760 We are starting now to get some sense of what 0:01:48.880 --> 0:01:51.800 the US is asking Russia, and what we know so 0:01:51.960 --> 0:01:57.200 far from our reporters source based work is that they 0:01:57.240 --> 0:02:00.360 are going to rebuff or push back strongly against this 0:02:00.440 --> 0:02:04.200 Russian demand that Ukraine essentially demilitarized. This has been a 0:02:04.240 --> 0:02:07.640 central war aim that Russia has made clear since the 0:02:07.680 --> 0:02:10.720 start of its invasion in twenty twenty two, and the 0:02:10.840 --> 0:02:12.880 US is now saying, listen, we want to do this 0:02:12.960 --> 0:02:15.720 peace deal and you're not. We're not going to let 0:02:15.760 --> 0:02:17.760 you get away with that. This is going to be 0:02:17.760 --> 0:02:20.280 something you're going to have to agree to. And then 0:02:20.639 --> 0:02:23.160 this energy issue, we know energy has been very important 0:02:23.160 --> 0:02:27.320 to President Trump. So the Zaparisia power Plant, a massive, 0:02:27.480 --> 0:02:31.880 massive power plant in Ukraine that Russia seized during the war. 0:02:32.280 --> 0:02:34.640 The US is essentially saying, you've got to give it back. 0:02:34.720 --> 0:02:37.400 So we now understand the US is going to present 0:02:37.480 --> 0:02:42.600 these terms of a potential deal to Russia and we'll 0:02:42.600 --> 0:02:43.440 see what the answer is. 0:02:44.040 --> 0:02:46.160 And how do you think Russia will respond to that? 0:02:46.320 --> 0:02:50.680 Because the US is demanding this military right force. But 0:02:51.280 --> 0:02:53.080 will Russia agree to it? You think? 0:02:53.960 --> 0:02:56.960 I mean, that's the great question, and that's we're going 0:02:57.040 --> 0:03:01.080 to learn a lot about the viability of these negotiations. 0:03:01.120 --> 0:03:04.799 I mean, you know, the Russian idea that Ukraine essentially 0:03:04.840 --> 0:03:10.480 demilitarized was always seen as an extremely maximalist goal. I mean, 0:03:11.480 --> 0:03:16.679 it's hard to conceive of the US or any other 0:03:16.800 --> 0:03:20.800 mediator basically acceding to the idea that a country be 0:03:21.160 --> 0:03:25.280 left totally demilitarized. I mean, that was something that you 0:03:25.360 --> 0:03:29.519 saw out of World War Two with Japan. But otherwise 0:03:29.639 --> 0:03:33.440 this has not been repeated in modern history, so it 0:03:33.480 --> 0:03:37.760 would have been an extremely difficult demand to meet. The 0:03:37.880 --> 0:03:40.640 US is saying, essentially, that's not going to fly, And 0:03:40.720 --> 0:03:43.320 you know, I think what we'll see is depending on 0:03:43.360 --> 0:03:46.480 how Russia responds, will have a better sense of whether 0:03:46.560 --> 0:03:49.720 they see these negotiations as a viable path toward an 0:03:49.760 --> 0:03:52.920 actual ceasefire or whether they have no interest in peace 0:03:52.960 --> 0:03:55.400 and are just going to press ahead with the war. 0:03:55.520 --> 0:03:57.880 So we should have a strong indication of the next 0:03:57.960 --> 0:03:59.840 of that in the next few days when President Trump's 0:03:59.840 --> 0:04:01.680 on boyheads to Moscow. 0:04:01.800 --> 0:04:04.400 Nick, is there any sense as to what kind of 0:04:04.760 --> 0:04:08.120 leveraged the US has here on the campaign trail, Kennedy, 0:04:08.200 --> 0:04:10.880 Trump at the time was very confident about his ability 0:04:11.200 --> 0:04:13.480 to get what he turned to a good piece deal 0:04:13.800 --> 0:04:14.920 and negotiated quickly. 0:04:15.800 --> 0:04:19.520 Do we have the leverage to actually do that? Well? 0:04:19.720 --> 0:04:23.000 I mean, the US definitely does have some points of leverage. 0:04:23.000 --> 0:04:25.159 It also has some weaknesses. I mean, the big leverage 0:04:25.160 --> 0:04:28.480 it has, obviously, for one thing, is the sanctions, the 0:04:28.520 --> 0:04:32.120 massive sanctions regime that have essentially choked off the Russian economy, 0:04:32.279 --> 0:04:35.520 separated it from the West. Though Russia has been able 0:04:35.520 --> 0:04:38.520 to keep its war machine going, the economy is in 0:04:38.600 --> 0:04:42.160 pretty grim shape, and the US could just keep up 0:04:42.200 --> 0:04:45.919 with the flow of weapons and support to Ukraine. You know, 0:04:46.040 --> 0:04:50.320 under the idea that hey like Russia, they did this 0:04:50.400 --> 0:04:52.960 invasion in twenty twenty two. They've taken over about a 0:04:52.960 --> 0:04:56.880 fifth of Ukraine's territory, but they did not topple proud 0:04:56.920 --> 0:05:01.080 of President Zelenski's government as they had hoped. Ukraine doesn't 0:05:01.120 --> 0:05:04.120 seem to be going anywhere, so the US could certainly 0:05:04.240 --> 0:05:07.479 exercise leverage in those ways. Russia, though, also sees that 0:05:07.560 --> 0:05:10.800 it has its own leverage. Trump does not want to 0:05:10.880 --> 0:05:13.719 give Ukraine the amount of military aid that it's gotten 0:05:13.760 --> 0:05:16.599 so far, and they have bide battlefield gains in the 0:05:16.640 --> 0:05:19.360 last several months. So in some ways for Russia, there 0:05:19.400 --> 0:05:22.159 is a continued interest in prolonging this thing and drawing 0:05:22.160 --> 0:05:24.599 it out, and hope that President Trump turns his ire 0:05:25.160 --> 0:05:28.839 again toward Vladimir Zelenski rather than toward Russia. Whether that's 0:05:28.839 --> 0:05:31.200 a gamble they're going to be willing to make, though, 0:05:31.400 --> 0:05:32.200 is another question. 0:05:32.360 --> 0:05:35.080 All Right, fascinating development here, Nick, thanks so much for 0:05:35.120 --> 0:05:37.960 your time. We appreciated. Nick Wadams, US national security reporter 0:05:38.279 --> 0:05:40.440 for Bloomberg News. He is based in Washington, DC. And 0:05:40.480 --> 0:05:43.640 again the headline crossing the Bloomberg terminal and a significant 0:05:43.640 --> 0:05:47.440 shift in this story in Ukraine US to demand putin 0:05:47.480 --> 0:05:51.840 except Ukraine's right to military force. So we'll continue on 0:05:51.880 --> 0:05:53.080 that reporting throughout the day. 0:05:54.800 --> 0:05:58.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:58.560 --> 0:06:01.960 weekdays at ten am Eastern on Applecarplay and Android Auto 0:06:02.080 --> 0:06:05.120 with the Bloomberg Business App. Listen on demand wherever you 0:06:05.160 --> 0:06:08.120 get your podcasts, or watch us live on YouTube. 0:06:08.680 --> 0:06:12.080 Just get back to discussions on this market. Joey Yang 0:06:12.160 --> 0:06:15.080 Joints is here, head of index product management at market 0:06:15.320 --> 0:06:16.560 Vector Indexes. 0:06:16.800 --> 0:06:19.640 Joints is here in our Bloomberget Active Broker studio. Joy, 0:06:19.680 --> 0:06:21.000 thanks so much for joining us here. 0:06:21.520 --> 0:06:21.840 Thank you. 0:06:22.080 --> 0:06:25.400 How are you approaching these markets these days? The volatility 0:06:25.920 --> 0:06:26.680 is significant. 0:06:26.720 --> 0:06:29.200 We've got a VIS twenty seven, we've got to Move 0:06:29.600 --> 0:06:32.440 index very showing some volatility in the fixed income market. 0:06:32.720 --> 0:06:34.600 How are you guys approaching the markets? 0:06:35.200 --> 0:06:40.080 I think, you know, as with everybody, we're in new territories. 0:06:40.200 --> 0:06:44.080 Nobody is certain what the outcome of this tariff negotiation is. 0:06:44.520 --> 0:06:47.600 And even if we do reach a positive win win 0:06:47.839 --> 0:06:51.120 outcome for every party involved, which is the best case, 0:06:51.920 --> 0:06:54.400 I think there's still going to be uncertainty around how 0:06:54.440 --> 0:06:57.239 long will this last? You know, what are the second 0:06:57.279 --> 0:07:00.800 and third order impacts? So I think This is structurally 0:07:01.279 --> 0:07:05.960 a new environment for everyone, which is we're at elevated volatility, 0:07:06.200 --> 0:07:10.920 uncertainty will remain high. So I think for us, you know, 0:07:11.000 --> 0:07:16.720 we're watching indicators and those are gold prices, bitcoin prices, 0:07:17.040 --> 0:07:20.480 on what investors are thinking. And at the moment, you know, 0:07:20.920 --> 0:07:25.560 businesses can't make decisions, they can't give proper guidance, and 0:07:25.600 --> 0:07:29.360 those who have investors can't rely on those. So I 0:07:29.360 --> 0:07:32.800 think people are really either parking their money into safe 0:07:32.800 --> 0:07:36.640 havens or seeking liquid assets which they can move in 0:07:36.720 --> 0:07:39.600 and out without kind of structural damage that we're seeing 0:07:39.680 --> 0:07:40.840 across asset classes. 0:07:41.400 --> 0:07:44.080 I feel like with all this political rhetoric, people are 0:07:44.320 --> 0:07:46.760 maybe forgetting that it's earning season. NBRE in the thick 0:07:46.800 --> 0:07:49.040 of it, and around forty four percent of the SNP 0:07:49.080 --> 0:07:52.160 five hundred companies that have reported mentioned the word recession. 0:07:52.240 --> 0:07:54.720 That's a little higher than the previous quarter. What is 0:07:54.720 --> 0:07:57.040 your read on earning so far? It's also been interesting 0:07:57.080 --> 0:08:03.880 companies have withheld forward outlook or they've had two scenarios, 0:08:03.960 --> 0:08:06.280 the base case and the tariffic case. What is your 0:08:06.320 --> 0:08:06.680 read on it? 0:08:06.760 --> 0:08:09.440 I think it's probably impossible to rely on this quarter's 0:08:09.480 --> 0:08:12.200 you know, earnings, guidance, and this is going to be 0:08:12.240 --> 0:08:15.120 short term. So I think it's still proven for investors 0:08:15.120 --> 0:08:17.160 to focus on the long term and really focus on 0:08:17.200 --> 0:08:20.520 the fundamentals, which is, you know, we'll get over this. 0:08:20.960 --> 0:08:24.480 You know, there's got to be something after tariff negotiations. 0:08:24.520 --> 0:08:27.760 And I think structurally every industry still has a story 0:08:27.960 --> 0:08:30.680 narrative that's focused on the long term. You know, if 0:08:30.680 --> 0:08:34.880 you're an AI, that's a real story. You know, innovation 0:08:34.960 --> 0:08:37.520 will not break down, disruption will not break down. But 0:08:37.720 --> 0:08:40.280 you know, at the moment, there's so many things shifting 0:08:40.679 --> 0:08:43.200 that to give any kind of short term guidance, it's 0:08:43.400 --> 0:08:44.479 really not reliable. 0:08:45.160 --> 0:08:49.000 Talk to us about the risk controlled indexes ETFs, the 0:08:49.040 --> 0:08:53.679 market vector, Gamma road US Equity Strategy Index, like what 0:08:53.800 --> 0:08:54.040 is that? 0:08:54.120 --> 0:08:56.440 Yes, So I think this is the type of strategies 0:08:56.480 --> 0:08:59.080 that I think investors should be focused on because I 0:08:59.080 --> 0:09:02.800 think we're so focused on equities and fixed income, right, 0:09:02.920 --> 0:09:06.320 But you know, you really have to think about other 0:09:06.440 --> 0:09:10.719 alternative ways of looking at the world and structuring portfolio solutions. 0:09:10.720 --> 0:09:13.760 And one is to look at these indicators out there 0:09:13.920 --> 0:09:18.200 that are independent of any single country or any single 0:09:18.280 --> 0:09:23.160 asse class. Is to understand how elevated uncertainty is or 0:09:23.280 --> 0:09:26.080 you know what sentiment is. And I think right now 0:09:26.480 --> 0:09:29.640 our Gamma Road index is telling us to get out 0:09:29.679 --> 0:09:32.160 of equities, you know. But if you're out of equities 0:09:32.160 --> 0:09:35.319 and you're sitting on cash, that's not a great place either, 0:09:35.400 --> 0:09:38.400 as we see the dollar weakening and weakening. So I 0:09:38.400 --> 0:09:43.240 think investors should also look at alternative assets like gold 0:09:43.320 --> 0:09:46.800 or bitcoin that are not driven by the same macro factors. 0:09:47.720 --> 0:09:50.200 It's interesting gold, as we know, is just ripping, but 0:09:50.280 --> 0:09:54.520 bitcoin as well. And I feel like with bitcoin it's 0:09:55.360 --> 0:09:58.600 you choose the narrative. Some people would say it moves 0:09:58.600 --> 0:10:00.679 and locks that with tech companies like cues, but some 0:10:00.800 --> 0:10:03.000 would say no, actually it's an inflation hedge. I feel 0:10:03.000 --> 0:10:05.439 like it's still figuring it out. But can you talk 0:10:05.440 --> 0:10:08.359 to us about how different this is, this global macroshop 0:10:08.400 --> 0:10:10.320 compared to others. Because I said, let's look at the 0:10:10.320 --> 0:10:10.760 long term. 0:10:10.840 --> 0:10:13.440 Yeah, So I think definitely when you mentioned you're choosing 0:10:13.440 --> 0:10:17.200 the narrative, because this is still a niscent asset class 0:10:17.559 --> 0:10:20.920 and we've seen a structural shift in bitcoin also because 0:10:20.960 --> 0:10:24.960 it is a very volatile asset. But you know, fundamentally 0:10:25.080 --> 0:10:27.679 it should act like a store value. So we're seeing 0:10:27.720 --> 0:10:31.840 this as speculative players move out and we get more 0:10:31.960 --> 0:10:37.160 institutional players and more clarity around regulation. We're seeing it 0:10:37.520 --> 0:10:41.000 bring out the strengths that bitcoin naturally has, which is 0:10:41.600 --> 0:10:48.120 it's it's immutable, it's decentralized, so it's not dependent on 0:10:48.200 --> 0:10:51.800 any single government, and it doesn't require trust because trust 0:10:51.840 --> 0:10:55.040 is built into the code. And fundamentally, you know, what 0:10:55.080 --> 0:10:58.400 we're seeing is that investors have lost trust, whether it's 0:10:58.720 --> 0:11:04.000 US acids or just the correlation that happens between equities 0:11:04.040 --> 0:11:07.000 and bonds. So they're looking for things that you know, 0:11:07.080 --> 0:11:09.960 they can actually depend on. Right now, we're seeing gold 0:11:10.960 --> 0:11:12.960 and bitcoin as one of those assets. 0:11:13.240 --> 0:11:14.559 How about international markets? 0:11:14.960 --> 0:11:17.800 If people have been selling the US, whether it's the dollar, stocks, 0:11:17.840 --> 0:11:20.440 and maybe putting their money internationally, how do you think 0:11:20.480 --> 0:11:20.839 about that. 0:11:21.640 --> 0:11:24.360 I think we've you know, if you take a step back, 0:11:24.520 --> 0:11:27.480 I think the problem was people had too much bias 0:11:27.720 --> 0:11:31.680 towards US assets and weren't really reflecting on where relative 0:11:31.800 --> 0:11:35.640 value is happening. And if you still look at international markets, 0:11:35.679 --> 0:11:39.800 even though globally every market has dropped, international markets still 0:11:39.840 --> 0:11:43.000 look cheap. You know, they still look better from a 0:11:43.080 --> 0:11:46.920 pevaluation point of place. So if you're focused on fundamentals 0:11:46.960 --> 0:11:49.439 and not sentiment, this is a better place. 0:11:49.240 --> 0:11:49.520 To be in. 0:11:50.040 --> 0:11:51.520 Does that include emerging markets as well? 0:11:51.600 --> 0:11:54.640 It includes emerging market but all all markets will be 0:11:54.880 --> 0:11:56.199 impacted by terrorists. 0:11:56.240 --> 0:11:59.880 Yep. So that's that's kind of the issue here. But 0:12:00.520 --> 0:12:02.160 so we'll see how it plays out. But again we've 0:12:02.160 --> 0:12:04.160 got Green on the screen here today. Joey Yang, thank 0:12:04.200 --> 0:12:06.079 you so much for being with us. Joey Yang is 0:12:06.120 --> 0:12:10.400 head of Index Product Management and Market vector Indexes, joining 0:12:10.440 --> 0:12:13.400 us live here in our Bloomberg Interactive, a broker's studio. 0:12:15.120 --> 0:12:18.839 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:18.920 --> 0:12:22.280 weekdays at ten am Eastern on Applecarplay and Android Auto 0:12:22.400 --> 0:12:25.480 with the Bloomberg Business App. Listen on demand wherever you 0:12:25.520 --> 0:12:28.480 get your podcasts, or watch us live on YouTube. 0:12:29.200 --> 0:12:31.720 Is Beldie sitting in for Alex Steele on Paul Swinging. 0:12:31.720 --> 0:12:33.960 We're live here in our Bloomberg Interactive broker studio. We 0:12:34.000 --> 0:12:35.800 are streaming live on YouTube as well, so go over 0:12:35.800 --> 0:12:40.120 to YouTube dot com search Bloomberg Podcasts Live and all 0:12:40.120 --> 0:12:41.880 that kind of stuff you'll find us there. Let's get 0:12:41.880 --> 0:12:45.120 the latest reporting from Washington, DC on the tariffs. It 0:12:45.200 --> 0:12:48.319 is a fluid situation, to say the least. Tyler Kendall, 0:12:48.360 --> 0:12:50.720 she's been following it for she's a reporter for Bloomberg News. 0:12:51.200 --> 0:12:54.880 She is down in Washington, DC. So, Tyler, is there 0:12:54.880 --> 0:12:59.040 a sense in DC at the White House that perhaps 0:12:59.679 --> 0:13:04.480 is tariff policy could be more I don't know, measured, 0:13:04.559 --> 0:13:07.439 or more consistent or more formal. It seems to be 0:13:07.480 --> 0:13:09.320 a little bit ad hoc here, and that's one of 0:13:09.320 --> 0:13:11.040 the reasons maybe the markets are a little spooked. 0:13:11.960 --> 0:13:14.640 Yeah, Hey, Paul, there's a lot of mixed messaging currently 0:13:14.679 --> 0:13:17.360 at the moment when it comes to a tariff policy 0:13:17.440 --> 0:13:21.160 related to China, even with China saying earlier today that 0:13:21.200 --> 0:13:26.240 there currently are no negotiations happening between Beijing and Washington, 0:13:26.360 --> 0:13:29.960 calling reports about recent developments to be groundless. That was 0:13:29.960 --> 0:13:33.800 particularly interesting after President Trump yesterday in the Oval Office 0:13:33.880 --> 0:13:36.560 contended when he was asked if he's actively involved in 0:13:36.600 --> 0:13:40.439 negotiations with China, he said that, quote, everything is active now. 0:13:40.440 --> 0:13:42.880 We do know that there were some preconditions that Beijing 0:13:42.960 --> 0:13:45.319 does need to see before talks can really kick off, 0:13:45.320 --> 0:13:48.640 including that they would like appoint person other than President 0:13:48.679 --> 0:13:51.400 Trump to lead the negotiations. But he still says that 0:13:51.440 --> 0:13:54.040 he is very much directly involved here, even though we 0:13:54.040 --> 0:13:57.800 haven't gotten any real confirmation that Jijingping is willing to 0:13:57.920 --> 0:14:00.840 pick up the phone. Moving forward the moment, the latest 0:14:00.960 --> 0:14:03.440 escalation is that Beijing is now calling on the US 0:14:03.640 --> 0:14:07.240 to eliminate all unilateral tariffs, something that the Treasury Secretary 0:14:07.280 --> 0:14:11.040 Scott Vesant said yesterday really is just not an option 0:14:11.559 --> 0:14:13.680 on the table. But when it comes to this back 0:14:13.720 --> 0:14:15.880 and forth, in the mixed messaging yesterday again in the 0:14:15.920 --> 0:14:18.440 Oval Office, President Trump saying that he does think that 0:14:18.520 --> 0:14:21.400 one hundred and forty five percent levee on Chinese imports 0:14:21.440 --> 0:14:23.800 is very high, and that it's leading to essentially a 0:14:23.840 --> 0:14:26.200 trade embargo, which has prompted some to think that that 0:14:26.320 --> 0:14:30.600 level that levee very much will end up being. 0:14:30.320 --> 0:14:31.200 A lower here. 0:14:31.280 --> 0:14:33.560 But then at the same time he followed that remark 0:14:33.600 --> 0:14:35.520 by saying that if a trade deal with Beijing is 0:14:35.560 --> 0:14:38.720 not reached, that will ultimately be okay because the US 0:14:38.720 --> 0:14:41.080 will just set what he called a quote fair price. 0:14:41.400 --> 0:14:43.840 He then suggested that the White House is preparing to 0:14:43.880 --> 0:14:48.520 release some revised teriff rates for all countries, including China, 0:14:48.600 --> 0:14:51.680 in the next two to three weeks, ultimately so I'll 0:14:51.680 --> 0:14:54.320 have to see how that ends up developing here, but 0:14:54.480 --> 0:14:56.520 it's something that we're closely watching. If we are going 0:14:56.560 --> 0:14:59.080 to get some potentially new tariff rates. 0:14:58.920 --> 0:15:01.240 Talk to us more about china attempt to repair tize 0:15:01.240 --> 0:15:03.960 with the European Union and as it proves to be 0:15:04.000 --> 0:15:05.680 as it tries to prove itself to be the more 0:15:05.720 --> 0:15:09.000 reliable trading partner compared to the US. What exactly is 0:15:09.000 --> 0:15:09.920 Beijing doing. 0:15:11.040 --> 0:15:13.240 Right exactly so trying to reach out here to the 0:15:13.280 --> 0:15:15.200 European Union in a bid to try to shore up 0:15:15.240 --> 0:15:18.320 ties as a counter against the US. Most recently we 0:15:18.360 --> 0:15:21.640 have reporting, for example that European Union leaders as well 0:15:21.680 --> 0:15:24.640 as Ujingpain we're actually together on a call having to 0:15:24.680 --> 0:15:26.920 do with climate change. Now, there has been sort of 0:15:26.960 --> 0:15:30.880 a distance between the European Union and China, particularly when 0:15:30.880 --> 0:15:33.600 it comes to their criticism of how China has assisted 0:15:33.880 --> 0:15:36.560 of Vladimir Putin amid the ongoing war in Ukraine. But 0:15:36.640 --> 0:15:38.720 there does appear to be some easy here, particularly when 0:15:38.760 --> 0:15:41.720 it comes to negotiations around electric vehicles. So this is 0:15:41.720 --> 0:15:44.960 a very important partner that we are watching, particularly as 0:15:44.960 --> 0:15:47.280 there hasn't really been that much movement when it comes 0:15:47.280 --> 0:15:49.920 to talks between the US and the European Union, re'll 0:15:49.960 --> 0:15:52.360 called just a few weeks ago, the Eaves Trade chief 0:15:52.400 --> 0:15:56.000 left Washington with a very little clarity, according to our reporting, 0:15:56.040 --> 0:15:58.680 about exactly what this White House needs to see done 0:15:58.960 --> 0:16:00.600 in order to get a deal. And then I would 0:16:00.600 --> 0:16:03.040 also just quickly highlight one other trading partner, and that 0:16:03.120 --> 0:16:05.760 is Japan. There is new reporting this morning from Bloomberg 0:16:05.800 --> 0:16:08.840 News according to Japanese officials that if the US ends 0:16:08.880 --> 0:16:11.760 up asking Japan to corbett's own trade against China, they 0:16:11.760 --> 0:16:12.880 will push back on that. 0:16:12.960 --> 0:16:15.080 We should make clear our reporting. 0:16:14.760 --> 0:16:17.240 Indicates that the US has not asked Japan to do 0:16:17.600 --> 0:16:20.400 that's just yet, but we do know it's something that 0:16:20.440 --> 0:16:23.560 this White House has been mulling. And also importantly, China 0:16:23.600 --> 0:16:25.960 has come out and said that it will take its 0:16:25.960 --> 0:16:29.360 own countermeasures against any countries that try to realign here, 0:16:29.840 --> 0:16:32.720 particularly when it comes with the US, and what Treasury 0:16:32.760 --> 0:16:35.400 Secretary Scott Besson has floated could be a plan to 0:16:35.440 --> 0:16:38.520 then approach China as a block. One statistic that I'll 0:16:38.600 --> 0:16:40.560 leave you with is that China does about twenty percent 0:16:40.600 --> 0:16:43.520 of its commerce. Japan does about twenty percent of its 0:16:43.560 --> 0:16:45.600 commerce with China. That is more than it does in 0:16:45.640 --> 0:16:47.840 trade with the US, but at the same time, the 0:16:47.880 --> 0:16:50.320 country does export more material. 0:16:49.960 --> 0:16:50.680 To the US. 0:16:51.120 --> 0:16:53.560 Tyler, thank you very much for your reporting. Appreciate you 0:16:53.600 --> 0:16:56.080 taking a few minutes. Tyler Kendall. She's a reporter for 0:16:56.080 --> 0:16:58.800 Bloomberg News. She is based down there in Washington, DC. 0:16:58.960 --> 0:17:02.680 Giving us the latest on the tariff situation is a 0:17:02.720 --> 0:17:04.440 fluid situation, to say the least. 0:17:06.200 --> 0:17:09.920 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:17:10.000 --> 0:17:13.080 weekdays at ten am Eastern on Apple, Cocklay and Android 0:17:13.119 --> 0:17:16.399 Auto with the Bloomberg Business App. Listen on demand wherever 0:17:16.480 --> 0:17:19.560 you get your podcasts, or watch us live on YouTube. 0:17:20.119 --> 0:17:22.440 Merk what it's some earnings. 0:17:22.680 --> 0:17:25.560 They actually put a number on the tariff costs for them, 0:17:25.760 --> 0:17:27.840 two hundred million dollars. I mean for Mark, I mean 0:17:27.920 --> 0:17:29.840 it's got a market cap of like two hundred million dollars, 0:17:29.880 --> 0:17:31.560 So two hundred million doesn't seem like that big a deal, 0:17:31.600 --> 0:17:34.000 but at least it's a company putting a number on 0:17:34.200 --> 0:17:36.800 what they see as maybe some of their their cost there. 0:17:36.880 --> 0:17:39.040 Damien Garde joins us here. He's a healthcare reporter for 0:17:39.080 --> 0:17:42.040 Bloomberg News. Joinings live here in our Bloomberg Interactive Brokers 0:17:42.040 --> 0:17:44.280 Studio Damian. What did we hear from MERK today, what 0:17:44.320 --> 0:17:46.199 did a what did they report and how did they 0:17:46.240 --> 0:17:48.440 talk about tariffs and maybe some of the costs they see. 0:17:48.600 --> 0:17:50.440 Well, it's interesting because, yeah, as you mentioned, they disclosed 0:17:50.440 --> 0:17:52.600 that two hundred million dollars that's what they expect in 0:17:52.600 --> 0:17:55.840 twenty twenty five to pay on account of teriffs. But 0:17:55.840 --> 0:17:59.159 these are just already announced tariffs. So principally the ones 0:17:59.680 --> 0:18:02.479 affecting imports from China of certain goods and then obviously 0:18:02.480 --> 0:18:06.280 exports to China the retaliatory tariffs that we know about. 0:18:06.480 --> 0:18:08.439 And so there's a lot of interest in this because 0:18:08.520 --> 0:18:12.600 in the pharmaceutical world in particular, there's a huge anxiety 0:18:12.680 --> 0:18:15.439 over how the kind of like sort of damicles of 0:18:15.480 --> 0:18:18.880 specific pharmaceutical tariffs might affect the industry, what the percentage 0:18:18.920 --> 0:18:21.800 will be, how they might shake out. So Mirk giving 0:18:21.880 --> 0:18:24.560 us at least some sense of how it's been so 0:18:24.680 --> 0:18:28.160 far is helpful. But listening to the earnings call, it's 0:18:28.280 --> 0:18:31.280 like a certain form of theater where analysts find new 0:18:31.320 --> 0:18:33.880 and inventive ways to ask the company, will you tell 0:18:33.960 --> 0:18:37.760 us what you're actually expecting from pharmaceutical tariffs if they 0:18:37.760 --> 0:18:40.800 come through as the President has promised to bring them about, 0:18:41.040 --> 0:18:43.760 and Merk kind of artfully dodging actually committing to that. 0:18:44.359 --> 0:18:47.560 How exposed is Merk do China and maybe broader pharma 0:18:47.640 --> 0:18:50.320 companies in general, because they do have this drug and 0:18:50.359 --> 0:18:52.679 they're facing stiff competition in China, and that's one of 0:18:52.720 --> 0:18:55.600 the really downfalls that the company face in a previous quarter. 0:18:55.840 --> 0:18:58.600 Yeah, I think Merk in particular faces teriff issues on 0:18:58.640 --> 0:19:02.480 two fronts. Staliatory tariffs imposed by China make it difficult 0:19:02.520 --> 0:19:05.000 to sell products into China for any American company. They 0:19:05.040 --> 0:19:07.639 are sort of in the crosshairs of what Beijing is 0:19:07.680 --> 0:19:10.399 doing in retaliation to the White House. But then you know, 0:19:10.480 --> 0:19:13.520 maybe an even larger headwind for them is the potential 0:19:13.560 --> 0:19:17.119 of the United States imposing tariffs on the importation of pharmaceuticals. 0:19:17.280 --> 0:19:19.679 Because Mirk, like most of its peers, has a huge 0:19:19.680 --> 0:19:23.520 global manufacturing network and in many cases will ship products 0:19:23.600 --> 0:19:26.239 to the US from, for example, Ireland, where they have 0:19:26.520 --> 0:19:28.600 a lot of manufacturing. And then this gets a little 0:19:28.640 --> 0:19:32.119 into the weeds of trade policy. But Mirk, like many companies, 0:19:32.359 --> 0:19:35.560 has offshore the intellectual property behind some of its biggest drugs, 0:19:35.600 --> 0:19:38.280 So ki Trudah the biggest drug in pharmaceutical history, which 0:19:38.280 --> 0:19:41.639 is Mark's cancer drug. The IP lives in Ireland, and 0:19:41.720 --> 0:19:46.520 so that gets cop Ireland. That gets complicated in the 0:19:46.680 --> 0:19:48.480 if and these are all ifs because we don't know. 0:19:48.680 --> 0:19:50.879 But if, for example, the President were to impose a 0:19:50.920 --> 0:19:54.159 twenty five percent tariff on pharmaceuticals, then Mirk could end 0:19:54.240 --> 0:19:57.440 up paying quite a bit simply to import its own 0:19:57.520 --> 0:20:00.000 product and basically the intellectual property of its own produc 0:20:00.359 --> 0:20:02.520 from Ireland to the United States. So that's really the 0:20:02.600 --> 0:20:04.720 number that analyst are trying to get their heads around, 0:20:04.720 --> 0:20:06.960 both in terms of Merk and in global pharmaceuticals in general. 0:20:07.000 --> 0:20:10.000 And it remains a mystery because we don't know Merk 0:20:10.240 --> 0:20:11.320 based where. 0:20:11.200 --> 0:20:13.840 John Tucker, that would be New Jersey, that would be 0:20:14.040 --> 0:20:17.080 New Jersey. Yes, it would be Rawway, New Jersey. Johnson Johnson, 0:20:17.119 --> 0:20:20.040 New Brunswick, New Jersey. Just for those out there wondering, 0:20:20.080 --> 0:20:22.840 And we got sharing Plow, Bristol, March Squib all over 0:20:23.000 --> 0:20:23.320 the state. 0:20:23.400 --> 0:20:27.000 I still have to visit New Jersey. 0:20:26.400 --> 0:20:28.399 Have to visit New Jersey. How long have you been 0:20:28.440 --> 0:20:33.880 in New York? Seven years? But I stay in the City. Absolutely. Jeez, 0:20:33.920 --> 0:20:37.000 all right, Damien, let's so frame out Merk. 0:20:37.440 --> 0:20:40.240 I mean, the stock is down twenty one percent this 0:20:40.680 --> 0:20:44.280 year to date. That's the worst of the big pharma here. 0:20:45.240 --> 0:20:46.800