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Speaker 2: Obviously, the question is how do you factor in any
Speaker 2: Trump policies? Right? Was a JP Morgan that said they're
Speaker 2: going to have like a tariff trade desk now working
Speaker 2: like twenty four hours a day, try to do on
Speaker 2: top of it, right, just try and like understand what
Speaker 2: the input means for their models. So we wanted to
Speaker 2: get more on that with Branda Murray, Bloomberg Global Trade Editor,
Speaker 2: on all these tariffs, Let's just start with what we
Speaker 2: know in terms of Mexico and Canada and what we
Speaker 2: could expect come February first.
Speaker 3: Yeah, so, so Trump in an Oval Office press briefing
Speaker 3: late yesterday said that he was going to put twenty
Speaker 3: five percent tariff on Mexico and Canada starting February five.
Speaker 3: So you know, less than two weeks from now, thirty
Speaker 3: percent of all US trade imports would have would have
Speaker 3: a what would be you know, a quoter more expensive. Uh. Now,
Speaker 3: whether those are threats that are aimed at driving those
Speaker 3: two countries to the negotiating table or I promise that
Speaker 3: he'll actually follow through on is We don't know. But
Speaker 3: he has the authority to do so. And uh and
Speaker 3: and and the currency markets at least are taking him
Speaker 3: at as word.
Speaker 4: Brendan, would these be enacted via an executive orders at
Speaker 4: simply signing a pen uh and they're put in place?
Speaker 3: Yeah, there's there's a there's some legal mumbo jumbo that
Speaker 3: he would have to go through and and declare quote
Speaker 3: unquote a national emergency. Uh and and and and you
Speaker 3: know that could be the fentanyl uh you know problem,
Speaker 3: or the migration illegal migration problem from from both countries,
Speaker 3: although Canada there's that's a lot that's a lot less
Speaker 3: acute from the northern border. He there is executive authority
Speaker 3: that the president has to put tariffs at least temporarily
Speaker 3: on countries that are causing you know, a big trade
Speaker 3: and balance or some kind of economic emergency.
Speaker 5: Right.
Speaker 2: That's what's really confusing, because if we look at tariff
Speaker 2: policy as a negotiating tool, and you could look at
Speaker 2: what wasn't said about China as a window into that.
Speaker 2: What is the US trying to negotiate with Canada?
Speaker 3: Yeah, I mean it's a good question. Trump basically looks
Speaker 3: at bilateral trade relationships and says, if you have a
Speaker 3: surplus for US, we're losing and we're going to fix those.
Speaker 3: So he would want, you know, Canada to to buy
Speaker 3: more US products or subsidize less of its own products
Speaker 3: at the expense of American producers. So it would be
Speaker 3: to drive you know, concessions the US MCA. This is
Speaker 3: the successor to the NAFTA agreement that was renegotiated in
Speaker 3: Trump's first term, is up for review in about a
Speaker 3: year and a half. So perhaps this is a tactic
Speaker 3: to you know, to kind of put put the US
Speaker 3: on the front foot in those talks that will undoubtedly
Speaker 3: start this year.
Speaker 4: It's only been a very short time for this administration,
Speaker 4: but we've not heard much as relates to China and Tarish.
Speaker 4: Where do you think that the policy wins are blowing there?
Speaker 3: Yeah, So lost in all all of the you know,
Speaker 3: Mexico Canada headlines yesterday was the actual executive action that
Speaker 3: the President put out on trade policy, and there were
Speaker 3: a number of things in that that he asked his
Speaker 3: departments heads, his cabinet secretaries to investigate or assess. And
Speaker 3: one of those is oversized trade imbalances, currency misalignments, and
Speaker 3: those kinds of things that you know, the code word
Speaker 3: you know, that's just code for for China there. So
Speaker 3: those will go through a more uh, you know, a
Speaker 3: longer department led review. The deadline is April first, so
Speaker 3: that's not too far out. That's you know, just a
Speaker 3: couple of months. And you know, and and those could
Speaker 3: be the legal justifications for a tougher tariff stance with China.
Speaker 2: What's so interesting is when we're starting to get company
Speaker 2: calls or even in the fourth quarter, when we were
Speaker 2: getting third quarter earnings out CEO is talking about tariffs,
Speaker 2: they all seem to say, like, we can handle it.
Speaker 2: We're monitoring it very closely. We've already diversified maybe our
Speaker 2: supply base after the last Trump administration. What are do
Speaker 2: you feel like companies are prepared this time around? Because
Speaker 2: I'm trying to see where the equity impact is going
Speaker 2: to be.
Speaker 3: Yeah, they would be, and I agree with you the
Speaker 3: lots of those reaped through those transcripts myself and and
Speaker 3: and try to see where the winds are blowing in
Speaker 3: the C suite, but they would be more more diversified
Speaker 3: in there in their supplier or supply chains. You know,
Speaker 3: a lot of a lot of companies started doing that
Speaker 3: well before Trump, uh, the move move outside China. That's
Speaker 3: sort of so called China plus plus one or plus
Speaker 3: two strategies. So there would be you know, a bit
Speaker 3: of a you know, a shock absorber built in since
Speaker 3: the first Trump administration. But still there's no there's no
Speaker 3: getting around the fact that if if you know, a
Speaker 3: universal tax that Trump has floated even yesterday, uh, you know,
Speaker 3: on on all US imports, would start chipping away at
Speaker 3: earnings outlooks, you know, quarter by quarter as we go
Speaker 3: through the year.
Speaker 6: Brennan, if we.
Speaker 4: Heard anything from Mexico and Canada about what they would
Speaker 4: do if, in fact, these twenty five percent tariffs do
Speaker 4: start on February first, maybe.
Speaker 3: Well Canada has Canada has said, you know, we'll retaliate
Speaker 3: in kind. And if you if you come at if
Speaker 3: you come at US with you know, a twenty five
Speaker 3: percent tariffs, then we have a list of US products
Speaker 3: that will that will do the same thing too. Mexico
Speaker 3: has I'm not sure, Mexico has threatened in kind retaliation,
Speaker 3: but Mexico has said, look, you're just going to hurt
Speaker 3: yourself because a lot of a lot of the imports
Speaker 3: at a lot of a lot of American companies are
Speaker 3: in Mexico. And if you start, if you start, you know,
Speaker 3: putting tariffs on those on those, on those companies, those
Speaker 3: companies products, then then you're just going to hurt you know,
Speaker 3: the business back in the US.
Speaker 4: Right, all right, we'll have to see how that plays out.
Speaker 4: Will follow it closely, of course. Brendan Murray, global trade editor,
Speaker 4: who's going to be busy going forward, that's for sure,
Speaker 4: Global Trade editor for Bloomberg News. He is based in London.
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Speaker 2: All right, now we want to go to the broader
Speaker 2: look on the market. Right, I'm getting all the notes
Speaker 2: of like Trump Day one had a position, what does
Speaker 2: it mean? The whiplash we've seen in the market, So
Speaker 2: how do you position if you're actually putting together an
Speaker 2: equity portfolio or an investment portfolio. Christopher Smart is managing
Speaker 2: partner at Abroth Group. He is joining us now. I
Speaker 2: guess the question really becomes, Chris, how do you model
Speaker 2: things we don't know but think are coming well?
Speaker 7: Good to be with you, Alex, I think the answer
Speaker 7: is very carefully and very slowly. And you know, we're
Speaker 7: not quite twenty four hours into this new administration. We've
Speaker 7: had a slew of decisions and executive orders and comments
Speaker 7: by the new president, but I think we're many of
Speaker 7: us still scratching our heads as to what this might
Speaker 7: mean for any given portfolio. You have a series of
Speaker 7: macro decisions that are looming, whether that's around the budget
Speaker 7: or taxes or FED policy that we're still not clear about.
Speaker 7: In terms of the president giving signals about what he
Speaker 7: has in store for what his preferences are for the
Speaker 7: upcoming budget. We have a lot of announcements on tax
Speaker 7: and tariff policy, which sort of takes you down to
Speaker 7: the corporate level. You know a lot of CFOs, as
Speaker 7: you were talking about earlier on your program, trying to
Speaker 7: figure out what this means for them, and then oh,
Speaker 7: by the way, this is earnings week, so there's just
Speaker 7: a whole lot for investors to digest. And as I
Speaker 7: talked to my clients, I know they're working very hard
Speaker 7: and feeling that flashback to four or five, six, seven
Speaker 7: years ago in the first Trump administration, where if you
Speaker 7: haven't checked your news feed in the last couple of hours,
Speaker 7: you feel like you may be out of date.
Speaker 4: So, Christopher, what do you think is some of the
Speaker 4: most important things for President Biden and his administration to
Speaker 4: achieve in the first one hundred days.
Speaker 7: I think you meant President Trump Trump.
Speaker 8: Yes, we're all going to get used to that.
Speaker 7: I think it's really the thing that investors, I think
Speaker 7: are going to want to really get clarity on is
Speaker 7: the tariff's issue. And I think we have maybe less
Speaker 7: clarity on it today than we did a couple of
Speaker 7: days ago. To my mind, the tariffs that are linked
Speaker 7: to non economic issues, whether it's ventanyl, or it's immigration
Speaker 7: Canada and Mexico, whether it's tariffs that were promised to China,
Speaker 7: you know, related to the byte dance, TikTok divestiture, those
Speaker 7: feel a lot like negotiating moves to kind of apply
Speaker 7: leverage to a non economic issue that will get resolved
Speaker 7: before big tariffs are applied. I think the real thing
Speaker 7: that investors need to keep their eyes on are these
Speaker 7: these studies that he's now commissioned from the Department of
Speaker 7: Commerce and others to look at currency manipulation, to look
Speaker 7: at market protection, to look at all of these other
Speaker 7: things that is likely to bring on the wave of
Speaker 7: tariffs again, maybe you know, not at the sixty or
Speaker 7: one hundred percent level that were talked about during the campaign,
Speaker 7: but really focused on countries where there is a trade imbalance,
Speaker 7: a bilateral deficit. Of the President is clearly focused on,
Speaker 7: even the most economists are not so much, and that
Speaker 7: those are the ones that I think we're gonna have
Speaker 7: to watch over time.
Speaker 2: I should point out that Scott Bessant has won a
Speaker 2: Senate Finance Committee backing for Treasury.
Speaker 8: A secretary job will of course.
Speaker 2: Keep you updated in any one of those headlines as
Speaker 2: they continue to come across. Chris Stang on that clearly
Speaker 2: what happens to Treasury and issuance will have very dramatic
Speaker 2: effects on the Treasury curve particularly. Also, many factor in
Speaker 2: the debt ceiling. What are you telling your clients about that?
Speaker 7: Well, we've of course got no word on any of
Speaker 7: that from the from the new president in the last
Speaker 7: in last twenty four hours in terms of what he
Speaker 7: may have in mind for debt's deficits and debt limits.
Speaker 7: I think again, this is going to be something that
Speaker 7: causes a lot of near term anxiety, but ultimately at
Speaker 7: the at the eleventh, twelfth or maybe thirteenth hour gets
Speaker 7: resolved in terms of both the debt limit and you know,
Speaker 7: keeping the government funded. I think we're all expecting there
Speaker 7: to be some kinds of tax cuts, probably, you know,
Speaker 7: not much to close the deficit, just because no matter
Speaker 7: what the president wants, there just a whole lot of
Speaker 7: people in Congress who have, you know, an interest in
Speaker 7: some sort of spending program and those are very hard
Speaker 7: to close. You know, it's very narrow majority of the
Speaker 7: Speaker Johnson has there. So I think not a lot
Speaker 7: of change, not a lot of change there in the
Speaker 7: budget trajectory.
Speaker 4: Chris, what do you think the president's policy will likely
Speaker 4: be as it relates to illegal immigrants, maybe returning some
Speaker 4: people back to their country of origin. How do you
Speaker 4: think that might play out, because that was certainly, if
Speaker 4: not the biggest, one of the biggest topics in the campaigns.
Speaker 7: I think it was, and I think we'll see some
Speaker 7: very high profile while moves on that front. You're already
Speaker 7: seeing some of it in terms of the executive orders,
Speaker 7: the emergency declared on the border, the return to Mexico
Speaker 7: policy being put back into place. I wonder, though, how
Speaker 7: much tolerance voters and Americans will have for a lot
Speaker 7: of disruption to law abiding citis, law abiding immigrants in
Speaker 7: this country, whether they are documented or undodocumented, how much
Speaker 7: disruption they will they will tolerate. You know, there are
Speaker 7: estimates of about eight to ten million undocumented Americans, some
Speaker 7: even higher estimates than that. It's really hard to see,
Speaker 7: you know, that number of people being removed from the
Speaker 7: country physically. So I think you're going to see a
Speaker 7: lot of drama around it and in the next few months,
Speaker 7: but maybe not so much to move the at least
Speaker 7: the economic needle in terms.
Speaker 6: Of the labor force.
Speaker 2: Is there any sector, Chris, before you let you go
Speaker 2: that feels really, really really not in a good place.
Speaker 2: And I'm just kind of setting you up to say
Speaker 2: offshore win, but doesn't have to be that.
Speaker 6: It can pretty much be anything.
Speaker 7: Well, you can start with offshore win you can start
Speaker 7: with anything that's related to renewables. You can go on
Speaker 7: to sort of, you know, anything that relies heavily on
Speaker 7: a single source of imports from China, and then you know,
Speaker 7: a lot of costs are going to go up. Whether
Speaker 7: you either have a customer living across the border or
Speaker 7: a supplier living across the border. You know it's going
Speaker 7: to be more and more difficult to operate in an
Speaker 7: international footprint than it was before. So there are some
Speaker 7: key pain points initially, as you point out, but I
Speaker 7: think more broadly speaking, you know these costs are going
Speaker 7: to rise.
Speaker 4: Chris, thanks so much for joining us. Really appreciated.
Speaker 6: Christopher Smart.
Speaker 4: He's a managing partner at our Growth Group, former Special
Speaker 4: Assistant to the President for International economics. Giving us the
Speaker 4: latest on some of these very very early hours of
Speaker 4: the Trump administration. Here day two of his administration, staying
Speaker 4: on top of some of the discussions around terrors and
Speaker 4: other economic policies that may emanate from this new administration.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us Live
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Speaker 2: Alex Youl here alongside Paul Sweeney. This is the Bloomberg
Speaker 2: Intelligence Radio, and we are broadcasting to live from our
Speaker 2: interactive Broker studio right here in the very cold midtown Manhattan.
Speaker 2: I did see someone running this morning in fourteen degrees,
Speaker 2: which was a whole bunch of crazy. I don't know
Speaker 2: how you do that, but apparently that's something that we do.
Speaker 7: Fortunate.
Speaker 2: Yeah, in the.
Speaker 6: Studio, it's called Anyway.
Speaker 2: We were just talking about how to understand President Trump's
Speaker 2: policies when it comes to the markets.
Speaker 6: Now, let's kind of pick apart.
Speaker 2: What are those most important policies, what's the noise, what's
Speaker 2: the reality? Joining us now is Jennifer Lawless, Professor at
Speaker 2: University of Virginia. We've had less than twenty four hours
Speaker 2: to dissect President Trump's second term. There was so much
Speaker 2: coming out. What stood out the most.
Speaker 8: To you, Well, yesterday really was a whirlwind.
Speaker 9: What was typical was that when a new president comes in,
Speaker 9: he typically issues executive orders, undoing a lot of what
Speaker 9: the previous administration did.
Speaker 8: So those kinds of things are pretty standard.
Speaker 9: What struck me yesterday was this speed with which Donald
Speaker 9: Trump is willing to follow through on some campaign promises
Speaker 9: that didn't matter that much to most people. So, for example,
Speaker 9: he used both his inauguration address and the power of
Speaker 9: the pen to say that, moving forward, the federal government
Speaker 9: only recognizes two genders. He moved forward saying that the
Speaker 9: federal government is going to require a hiring freeze for
Speaker 9: all open positions and that people working for the federal
Speaker 9: government have to return to work. These are not the
Speaker 9: reasons that people elected Donald Trump, but they're the quick
Speaker 9: things that he can do on day one.
Speaker 4: Jenifer, can he talk to us about presidential It seems
Speaker 4: like the last days of the Biden administration and now
Speaker 4: the first day that Trump administration, these presidents have just
Speaker 4: gone to extraordinary lengths in terms of the number of
Speaker 4: pardons and the severity and the types of pardons. Has
Speaker 4: this always been a part of the American presidency?
Speaker 6: What's happening?
Speaker 8: It has not.
Speaker 9: There have always been examples of pardons being issued. Sometimes
Speaker 9: it's to political friends, sometimes it's to people who were
Speaker 9: serving sentences that are no longer mainstream kinds of sentences
Speaker 9: because policy has evolved over time. What we've seen here
Speaker 9: from both the Biden and the Trump teams in terms
Speaker 9: of these pardons, are really a response to Donald Trump.
Speaker 9: Over the course of the last four years, he's made
Speaker 9: it clear that he thinks he's been politically persecuted and
Speaker 9: that as a result, one of the first things he's
Speaker 9: going to do as president is seek retribution, and we've
Speaker 9: saw him yesterday continue to talk about that. We saw
Speaker 9: him pardon most of the January sixth insurrectionists.
Speaker 8: The Biden pardons are related.
Speaker 9: To all of this two though, because by pardoning members
Speaker 9: of his family and the January sixth committee, for example,
Speaker 9: what Biden was trying to do was inoculate those people
Speaker 9: from Trump's retribution. So it's unusual, but Biden and Trump's
Speaker 9: behavior is related to each other.
Speaker 2: There was also some narratives that came out of the
Speaker 2: last twenty four hours from analysts saying that it's hard
Speaker 2: to know which Trump we are going to see, like
Speaker 2: are we going to see the Trump that spoke amongst
Speaker 2: his peers right after he was inaugurated That seemed a
Speaker 2: much more measured approach to policy and a much more
Speaker 2: politically savvy individual. Or do you see the one that
Speaker 2: was talking to his supporters later that night that seemed
Speaker 2: much more kind of out for blood and retribution, and
Speaker 2: we got executive orders and pardons relating to both. How
Speaker 2: does that evolve you think over the next coming weeks.
Speaker 9: I think we're going to see both Donald Trump's We
Speaker 9: know that he's happiest when he's talking to his supporters,
Speaker 9: when he's in campaign mode and when he's generating and
Speaker 9: getting up that kind of populace sentiment that got him elected.
Speaker 8: But he's also aware of.
Speaker 9: The fact that in order to pass any of his
Speaker 9: legislative initiatives, he needs Congress on board. So I think
Speaker 9: he'll try to thread that needle. But when push comes
Speaker 9: to shove, we've now had nine solid years of evidence
Speaker 9: that he ultimately prefers the campaign trail style.
Speaker 4: Jennifer, what do you think in terms of some of
Speaker 4: these nominations to cabinet positions, which ones you think will
Speaker 4: be problematic?
Speaker 9: Well, let me first say that I think the Marco
Speaker 9: Rubio nomination getting through so quickly with unanimous Senate approval
Speaker 9: was a smart move on the part of the Democrats.
Speaker 9: So that when they do vote against other nominees. I
Speaker 9: think problematic will be people like Pete Hegseth, like Telsea Gabbert,
Speaker 9: like Robert F.
Speaker 8: Kennedy Junior.
Speaker 9: That the Republicans won't be in a position where they
Speaker 9: can simply say that the Democrats are obstructing everybody. But
Speaker 9: you know, Donald Trump knew that he was putting forward
Speaker 9: controversial names. He was doing it as a signal both
Speaker 9: to his base to Republicans in Congress that he is
Speaker 9: going to usher in a new kind of government.
Speaker 8: But I don't think what he.
Speaker 9: Realized is that Senators do take quite seriously the nomination process,
Speaker 9: the confirmation process, and the experience of a lot of
Speaker 9: these people. So you know, I think a lot of
Speaker 9: them will get through, especially the lower profile ones. But Gabert,
Speaker 9: Hegsteth and Kennedy. My bet is we'll face some tough
Speaker 9: times ahead.
Speaker 2: Talk to us about staffing currently in the White House,
Speaker 2: his White House chief of staff really in part, I
Speaker 2: mean drove through that election, that reelection campaign.
Speaker 8: What do we expect there.
Speaker 9: I think we'll see what we have generally seen with
Speaker 9: chiefs of staff early on, and then it'll just be
Speaker 9: a question of how long she can last. You know,
Speaker 9: we've seen this movie before, and people want to sort
Speaker 9: of protect Donald Trump from people that might otherwise want
Speaker 9: to get into the Oval office and influence him, who
Speaker 9: might want to move him away from what the administration's
Speaker 9: agenda is, might want to from away from sort of
Speaker 9: the normal way of dealing with Congress. She has her
Speaker 9: work cut out for her, and at some point Donald
Speaker 9: Trump will probably get frustrated and replace.
Speaker 8: Her, Jennifer.
Speaker 4: How about Ukraine, that seems to be from an international perspective,
Speaker 4: one of the key areas for President Trump to act.
Speaker 9: What do you expect, Well, based on what President Zelenski
Speaker 9: has said, you know, he's hopeful that the United States
Speaker 9: will continue to provide funding and will continue.
Speaker 8: To you know, allow Ukraine to exist.
Speaker 9: But based on Donald Trump's relationship with Putin and his
Speaker 9: general view of you know, world powers right now and
Speaker 9: mentioning things like invading Greenland and taking back the panic
Speaker 9: from the canal, if I were the Ukraine or supporter
Speaker 9: of people in Ukraine, I'd be concerned because the talk
Speaker 9: that's coming out of Donald Trump is more consistent with
Speaker 9: Putin's agenda than Zelensky's.
Speaker 2: What are you watching for next so as we reap
Speaker 2: up the segment, like what's the number one thing on
Speaker 2: your radar right now, Jennifer, I.
Speaker 9: Would say that over the course of the next week,
Speaker 9: the biggest thing will be whether the Senate is willing
Speaker 9: to just accept everything that Donald Trump pushes forward when
Speaker 9: it comes to these nominees. Are they going to provide
Speaker 9: the check that it seems.
Speaker 8: Like they might be positioned too. If they don't, and
Speaker 8: they don't.
Speaker 9: Do it now, then He's basically going to be able
Speaker 9: to get whatever he wants for at least the next
Speaker 9: two years.
Speaker 8: Got it really interesting?
Speaker 2: All right, Jennifer, thanks so much, Really appreciate it. Jennifer
Speaker 2: Lola's professor at University of Virginia.
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Speaker 8: Let's go now to the policy part.
Speaker 2: I love what Paul was saying about the r between
Speaker 2: EV's between Tesla and everybody else that on a relative basis,
Speaker 2: it's less bad for Tesla. Ed Mills, Washington Policy analyst
Speaker 2: and managing director over Raymond James joins us, Hey, Ede,
Speaker 2: just on that point, what do you make of the
Speaker 2: fact you got Tesla down, like you know.
Speaker 8: Three percent?
Speaker 2: You have the EV mandate sort of being rolled back
Speaker 2: by President Trump. What do you make of that part
Speaker 2: of the policy and its impact.
Speaker 5: Yeah, Alex, it's a good question. I don't think there's
Speaker 5: going to be a lot of policies that are enacted
Speaker 5: that are not favorable to Elon Musk. So there is
Speaker 5: the EV mandate that's going away. There will be a
Speaker 5: conversation when Congress deals with tax cuts if the tax.
Speaker 6: Credits go away.
Speaker 5: But I do think that if Elon steps in and
Speaker 5: says this is important to me, they stay. Or if
Speaker 5: he says, look, I actually have a better position visa
Speaker 5: the everyone else. He's going to let the market decide
Speaker 5: and be able to compete there. So I don't view
Speaker 5: this as a huge issue. Three percent move in Tesla
Speaker 5: is not a huge move. And you look at some
Speaker 5: of the moves that have occurred since the election, those
Speaker 5: are the moves that matter to him.
Speaker 4: And what did your take away from day one? Yesterday?
Speaker 4: Very busy day for this administy for this new President.
Speaker 4: What were some of the things that kind of stood
Speaker 4: at it to you?
Speaker 5: Yeah, Paul, I think that the interesting thing to me
Speaker 5: is when I've talked to folks in and around the
Speaker 5: Trump administration, they are insisting that they are going to
Speaker 5: go much faster in Trump two point zero than they
Speaker 5: did in Trump one point zero. And so we've had
Speaker 5: a lot of questions about tarifs and that they didn't
Speaker 5: go in on day one. Don't have that as your
Speaker 5: takeaway that the tariffs are not coming. They are absolutely coming.
Speaker 5: They're going to be aggressive, and they are going to
Speaker 5: come this year. In Trump one point zero, he spent
Speaker 5: three years negotiating with China before he got a Phase
Speaker 5: one trade deal that was never implemented. So China very
Speaker 5: much on that list. Canada, Mexico. Real issues there on energy,
Speaker 5: big unleashing of opportunities and on energy. It's not about
Speaker 5: just oil and natural gas, but there was a lot
Speaker 5: of conversations about critical minerals as well as rare earth.
Speaker 5: Minerals are definition of energies expanding. Those are opportunities to
Speaker 5: rebuild supply chain here in the United.
Speaker 2: States, right as long as you're not offshore with because
Speaker 2: that is Forbotten and that feels like that. It's definitely
Speaker 2: not nothing's going to come from that anytime soon from
Speaker 2: the Trump administration. Which you talk about critical minerals though,
Speaker 2: which makes the Canada thing even more of a head
Speaker 2: scratcher because they have all that stuff, even the non
Speaker 2: critical minerals like a rare earth, they still have the
Speaker 2: stuff that we need to build the things.
Speaker 6: Well, I was in Canada all last week.
Speaker 5: I was in Montreal, Toronto talking to investor after investor,
Speaker 5: and the thing that they focused on, and what I've
Speaker 5: been talking to clients at Raymond James about is if
Speaker 5: you have something that Donald Trump wants, that's part of
Speaker 5: the solution. So Trump is going to put tariffs on
Speaker 5: but a deal will be struck. And if we expand
Speaker 5: out the definition of energy to include things that you
Speaker 5: own or you have as a natural resource, you should
Speaker 5: get excited about that. So a deal with Canada that
Speaker 5: includes critical minerals and rare earth mineral extraction refinement in
Speaker 5: building a supply chain that is de risk from China
Speaker 5: is an opportunity, not necessarily a risk alex for Canada
Speaker 5: and other allies.
Speaker 4: Interesting, Hey, Ed, talk to us about how you think
Speaker 4: this immigration and border security policies will evolve over time.
Speaker 4: Obviously a big, big part of the campaign, a very
Speaker 4: big issue for many American voters. But boy, if you
Speaker 4: think about the economic impact, where do these migrant workers go?
Speaker 6: Will they go to?
Speaker 4: Agricultural and construction? Are the two big areas as well
Speaker 4: as hospitality. But those two big areas agricultural and construction,
Speaker 4: that could be a problem.
Speaker 6: How do you think that's going to play out?
Speaker 5: Paul, and I think you're right to point this out
Speaker 5: because when we think about some of the policies that
Speaker 5: can be market positive or market neutral negative, the immigration
Speaker 5: executive orders, probably for clients at Raymond James have been
Speaker 5: the area where we've gotten the most concerned. Is this
Speaker 5: going to lead to labor market shortages? Is this going
Speaker 5: to be read inflationary? We saw labor shortages as we
Speaker 5: came out of COVID that had a real market impact.
Speaker 5: I think this is an area where we're going to
Speaker 5: get headlines that are very aggressive, but the follow through actions,
Speaker 5: I guess I would take the under in terms of
Speaker 5: the actual number of immigrants that are deported from the
Speaker 5: United States as a result of this.
Speaker 6: I think they're going to be very flashy.
Speaker 5: They're going to have a signing of the Lake and
Speaker 5: Riley Act within the next day or two. It's going
Speaker 5: to be the first bill that Donald Trump signs into law.
Speaker 5: There will be deportations, but the first term of Donald
Speaker 5: Trump had fewer deportations than the second term of Barack Obama.
Speaker 5: So it is a conversation about there will be folks
Speaker 5: that are deported, but if it's folks with jobs, I
Speaker 5: think it's going to be less likely that there is
Speaker 5: going to be an actual labor market impact. I could
Speaker 5: be wrong, but that's what I'm tracking.
Speaker 2: We also know today in the next few hours that
Speaker 2: there may be quote, a massive announcement of things. So
Speaker 2: President Trump will start his first day in full in
Speaker 2: the office. He's a bunch of high level meetings. Literally
Speaker 2: in the afternoon, he's supposed to meet with two congressional partners,
Speaker 2: House Speaker Mike Johnson and Senate Majority Leader John Thune.
Speaker 2: And apparently they're going to discuss the legislative agenda and
Speaker 2: the approach to passing one or two reconcilient reconciliation bills.
Speaker 2: This is according to people familiar with the matter. Okay,
Speaker 2: what does that mean? Like what would a massive announcement
Speaker 2: mean with the three of them.
Speaker 5: So I think if it is one big beautiful bill
Speaker 5: as they've talked about, it is an extension of the
Speaker 5: tax cuts, but it's also a package that is immigration funding,
Speaker 5: defense funding, in permitting reform, under energy, and more leasing
Speaker 5: than what was released yesterday through the executive orders. If
Speaker 5: they want to do something quick, you separate the immigration, defense,
Speaker 5: energy out of that. And what's really interesting there, Alex,
Speaker 5: is that we've had this focus on DOZE and that
Speaker 5: really impacted the defense contractors in government service contractors to
Speaker 5: the extent that we could see one hundred to two
Speaker 5: hundred billion dollars plus up in the defense budget this year.
Speaker 5: And when you look at the executive order for DOSE,
Speaker 5: they want a massive upgrade in it spend in systems
Speaker 5: within the federal government for efficiency. That sounds like a
Speaker 5: lot more spending than a lot of cuts from where
Speaker 5: I sit. And on the tax cuts they absolutely get extended.
Speaker 5: The big conversation right now in DC is can you
Speaker 5: get a score that actually allows you to make them
Speaker 5: permanent by just saying all the current policy. Just extending
Speaker 5: that out is technically zero dollars because we're not making
Speaker 5: changes that's not priced into this market.
Speaker 4: So all right, we've got a bunch of issues that
Speaker 4: you know, with the administration would like to get through.
Speaker 4: The question, though, is, while the Republicans control both houses
Speaker 4: of Congress, very very slight edge, is there in reality,
Speaker 4: giving your experience their ed what percentage of the stuff
Speaker 4: can they get done? Can they get some of the
Speaker 4: hard stuff done?
Speaker 6: Do you think so?
Speaker 5: I think that the base case, Paul, is that extension
Speaker 5: of the tax cuts, in adding something on that defense, immigration,
Speaker 5: energy provisions. I think it is going to be very difficult.
Speaker 5: I don't think we look at the majority in the
Speaker 5: House and have any concept that that is not going
Speaker 5: to be a fragile flower of consensus, very difficult to
Speaker 5: hold together one or two votes and it all gets sunk.
Speaker 6: A different way of thinking about it.
Speaker 5: Though, is when you are the one or two individuals
Speaker 5: that is standing in way of the Trump agenda, the
Speaker 5: pressure on you is going to be so difficult to
Speaker 5: vote no is to vote to get yourself unelected next term.
Speaker 5: So the fact that so snarrow actually could be something
Speaker 5: at the end of the day, the more you get
Speaker 5: the Trump Agenda on the line to vote know on
Speaker 5: that besides Massy, probably everyone is on board.
Speaker 2: Interesting, right, so that would be a definite something to stomach.
Speaker 2: And we were talking earlier to a professor at the
Speaker 2: University of Virginia about how Congress deals with the confirmation
Speaker 2: process of all of the nominees. Will also tell us
Speaker 2: how willing Republicans may or may not be to go
Speaker 2: against that agenda. What sector are you telling clients to
Speaker 2: focus on the most, if.
Speaker 5: You had to pick financials, I think we're going to
Speaker 5: see massive consolidation, especially among smaller banks. We're going to
Speaker 5: see a recision of some of the merger guidance that
Speaker 5: went in just in September. We see a massive deregulatory
Speaker 5: push something that really was under the radar. On Christmas Eve,
Speaker 5: the banks sue to overturn the stress test that the
Speaker 5: Federal Reserve does. See car If that gets overturned and
Speaker 5: banks have more capital kind of freedom that they're not
Speaker 5: worried that the Fed could come in in a year
Speaker 5: from now and change that stress test and deny them
Speaker 5: the ability to return shareholder capital, I think you get
Speaker 5: a rerating in the banks. And one of the biggest
Speaker 5: debates at Raymond James is there was a lot of
Speaker 5: optimism in twenty seventeen and a lot of promises. What's
Speaker 5: different this time in the fact that the Supreme Court
Speaker 5: made several rulings in the last several years, especially last year,
Speaker 5: just up ends what you can do on regulation and
Speaker 5: Trump two point zero versus what you were able to
Speaker 5: do in one point zero, So it's going to be
Speaker 5: much more aggressive in those heavily regulated areas. I put
Speaker 5: banks at the top of that as a keywinner.
Speaker 9: Great stuff ed.
Speaker 4: I'm sure we're gonna be talking to you a lot
Speaker 4: going forward at Mills, Managing Director, Washington Policy Anaels for
Speaker 4: Raymond and James.
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