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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Single best idea and front center is still tariffs. Michael

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Speaker 2: Darta joins from Off Capital to get right to it.

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Speaker 2: The linking here of tariffs in your own pals future.

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Speaker 2: It's uncertain. Let's listen.

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Speaker 1: There is some risk that the interaction between tariffs and

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Speaker 1: monetary policy could create some problems. And really it would

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Speaker 1: be that the tariff disruption lowers the neutral rate, and

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Speaker 1: if the FED is tardy in lowering the policy rate,

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Speaker 1: the business cycle soft landing could slip away. Now that

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Speaker 1: these tariffs have been scaled back and moderated, that risk

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Speaker 1: has declined, and the risk of the FED potentially falling

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Speaker 1: behind the curve is also declined. I'm pretty comfortable with

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Speaker 1: where the FED is right now. If you look at

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Speaker 1: bondmar inflation expectations, they've been low and stable, consistent with

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Speaker 1: price stability. Nominal wage growth, which is not going to

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Speaker 1: be affected on a first order impact from the tariffs,

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Speaker 1: perfect running right in line with price stability. So the

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Speaker 1: FED has the flexibility to move if need be. But

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Speaker 1: with the tariff threat being scaled back, then there's going

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Speaker 1: to be less need for the FED to move. I

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Speaker 1: still think they will ultimately lower rates, but they're going

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Speaker 1: to want to see a few months of the hard data,

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Speaker 1: in my opinion, before they start to move, and that

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Speaker 1: could put us into July.

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Speaker 2: Perhaps, just brilliant Michael Darter there a roth capital let

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Speaker 2: me explain the inside the baseball. Two thirds of the

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Speaker 2: way through that comment, I can't say enough about how

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Speaker 2: economics over the recent thirty years, I'll say, and this,

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Speaker 2: of course is with the recent death of Wayne Angel

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Speaker 2: of Kansas City, who was notorious in the eighties, has

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Speaker 2: become a real analysis inflation adjusted. Darta does that, but

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Speaker 2: he also refuses to ignore the top line statistics. What

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Speaker 2: are called nominal. Nominal is basically real, say GDP or

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Speaker 2: real wage plus inflation. And the reason I have an

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Speaker 2: affinity for nominal is because that's what my audience lives.

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Speaker 2: The audience, is a general statement, doesn't live in the

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Speaker 2: real environment, the inflation adjusted environment. So for Darta there

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Speaker 2: to talk about the nominal wage is just absolutely critical

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Speaker 2: with us today. What a pleasure to speak to Elizabeth

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Speaker 2: Economy all over wonderful books from the River runs Black.

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Speaker 2: She's at the Hoover Institution in Stanford now after her

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Speaker 2: public service to Secretary Romando and Commerce Elizabeth Economy on

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Speaker 2: this trade war and China.

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Speaker 3: I'm not sure there was any real win in this.

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Speaker 3: I think China demonstrated that yes, it could go toe

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Speaker 3: to toe with the United States, but both sides, you know,

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Speaker 3: reduce the tariffs. You know, China had called for the

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Speaker 3: United States to completely erase the tariffs before it even

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Speaker 3: sat down at the table. I think people have forgotten that,

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Speaker 3: and the administration didn't do that. They did come to

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Speaker 3: the table with, you know, a pretty concrete proposal on

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Speaker 3: how to control the feedanyl precursor exports that has been

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Speaker 3: so central to the Trump administration, and they took off

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Speaker 3: all of the non tariff sort of punishments that they

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Speaker 3: had put on the administration, things like the export controls

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Speaker 3: on critical minerals and rare earths. In terms of where

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Speaker 3: China goes next, I think what we've seen already is

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Speaker 3: that China is going to move very aggressively to diversify

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Speaker 3: their exports away from the United States. You know, in part,

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Speaker 3: there was a twenty percent drop in Chinese exports to

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Speaker 3: the US. There was a twenty percent increase in Chinese

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Speaker 3: exports to Southeast Asia over the past month or so,

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Speaker 3: and even I think in the sort of low margin factories,

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Speaker 3: apparel boys, et cetera, they're all talking about how to move,

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Speaker 3: how to reduce their dependence on the US market. So

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Speaker 3: I think we've really introduced a pretty significant new factor

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Speaker 3: into the Chinese thinking about the dependence of the United

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Speaker 3: I mean about the liability of the United States. I

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Speaker 3: think that's the big next thing for China.

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Speaker 2: Elizabeth Economy there from the Hoover Institution, Hargo Fellow out

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Speaker 2: at Stanford, much more to talk about here through a

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Speaker 2: busy week. It'll be an interesting Friday, to say the least,

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Speaker 2: across the nation on your commute, Bloomberg Surveillance, and again

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Speaker 2: on podcasts out there at all the different podcast services,

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Speaker 2: but particularly on YouTube podcasts. It's a single best idea

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Speaker 1: Seven