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Trump Tariffs, ISM Data, Auto · Bloomberg Intelligence

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Speaker 2: You're looking at a market that's actually turning around, an
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Speaker 2: unbelievable move.
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Speaker 3: It's similar to what we saw yesterday.
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Speaker 2: Also, the NASTAC now up by five tenths of one percent,
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Speaker 2: joining us as Henry to treas Managing partner and director
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Speaker 2: of Economic Policy at Beta Partners, Henrietta. What the market
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Speaker 2: seems to want to understand is if tomorrow's going to
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Speaker 2: be a clearing event or the end of the beginning
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Speaker 2: before the next phase here of turmoil.
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Speaker 4: Yeah.
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Speaker 5: I mean that's obviously the critical question. I see no
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Speaker 5: indication that this is going to be a clearing event.
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Speaker 4: I'll give you a couple of reasons why.
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Speaker 5: Number one, we know that today the President instructed almost
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Speaker 5: three months ago, the.
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Speaker 4: Federal Trade agencies.
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Speaker 5: USTR, Commerce and Treasury to provide him with about fifteen
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Speaker 5: or more different reports about different components of our trade landscape,
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Speaker 5: trade relations, with twenty different countries, Not a single one
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Speaker 5: of those reports has been publicly released yet, So the
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Speaker 5: background to justify the forthcoming tariffs is something that you
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Speaker 5: would expect to see publicly released, formalized and a Federal
1:28
Speaker 5: Register update. We're even discussed with the media in advance
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Speaker 5: of a publication, should be all laid out if this
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Speaker 5: is going to be clear.
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Speaker 4: Cut and ready to go tomorrow.
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Speaker 5: So the disarray that we're seeing, the sort of knives
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Speaker 5: out reporting we're seeing for Howard Lutnick at Commerce, and
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Speaker 5: the general disarray and lack of cohesiveness from the White
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Speaker 5: House around this suggests that while we're going to get
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Speaker 5: a lot of tariffs announced tomorrow and implemented at midnight,
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Speaker 5: there's still going to be a substantial amount of uncertainty.
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Speaker 5: I'm especially concerned about India additional Section three h one investigations,
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Speaker 5: what it means to pull out of the Phase one
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Speaker 5: trade deal with China, declare them in violation, and how
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Speaker 5: that impacts the tariffs will see on China and obviously
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Speaker 5: Canada and Mexico, which is maybe the most discomforting of
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Speaker 5: all the tariffs, especially to the auto manufacturers right.
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Speaker 6: Now, Henrietta, maybe it's just me but I haven't heard
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Speaker 6: a whole lot from the US Congress either house about
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Speaker 6: their views on trade policies and potential changes and potential tariffs.
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Speaker 6: Is that unusual.
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Speaker 5: It's not unusual, but it is, you know, certainly notable,
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Speaker 5: and I think should be relatively embarrassing for a chamber
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Speaker 5: that used to pride itself on having authority over you know,
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Speaker 5: tax policy and trade policy and has been seating those
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Speaker 5: controls to the.
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Speaker 4: White House since the seventies, if not before.
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Speaker 5: However, I will say they are going to hold a
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Speaker 5: vote as early as this evening on the AIPA tariffs
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Speaker 5: against Canada, and there are a number of Republicans in
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Speaker 5: the Senate who are telegraphing that they're going to cross
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Speaker 5: party lines and vote against the President's declaration of national
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Speaker 5: emergency against Canada, including Senator.
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Speaker 4: Collins of Maine.
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Speaker 5: I wouldn't be surprised if Obviously Ram Paul, who's a
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Speaker 5: co sponsor of the legislation from Kentucky, will be there,
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Speaker 5: Chuck Grassley. Obviously, the farm state senators are the most
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Speaker 5: exposed here. We know that the USDA is already talking
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Speaker 5: about another bailout for farmers as we head into a
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Speaker 5: global transformation of trade that will hurt them substantially.
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Speaker 2: Do we get the sense that if there is a
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Speaker 2: short term pain for US companies that the administration is
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Speaker 2: going to help subsidize it, which is really what we
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Speaker 2: saw with farmers back in the first time of administration.
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Speaker 3: And is that kind of.
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Speaker 2: What the tax bill will be or is it going
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Speaker 2: to be something more beefy.
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Speaker 5: No, the tax bill should not be considered subsidization because
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Speaker 5: it's an extension of the status quo and it's so
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Speaker 5: expensive already four point six trillion dollars just to keep
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Speaker 5: things where they are that you should not expect additional
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Speaker 5: subsidization or tax cuts for either businesses or individuals. That
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Speaker 5: is a point blank declaration from Senate staff that I
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Speaker 5: speak with on Capitol Hill. I would go a little
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Speaker 5: bit further and say the endeavor they they endeavor to
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Speaker 5: cut the deficit by one and a half trillion dollars.
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Speaker 5: My expectation is they ultimately come in at around four
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Speaker 5: hundred to eight hundred billion dollars and more.
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Speaker 4: Paid lip service to deficit reduction.
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Speaker 5: But you cannot call it deficit reduction when you'll simultaneously
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Speaker 5: writing off a four point six trillion dollar extension of
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Speaker 5: the existing rates. So unless you consider, like many staffers do,
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Speaker 5: the idea that providing certainty and permanency for individual tax
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Speaker 5: rates constitute stimulus, there will not be stimulus in this
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Speaker 5: tax bill. So these TIFFs are coming, they are tax hikes.
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Speaker 5: There are not tax cuts coming.
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Speaker 6: Henriette, can you explain to politics of this tariff thing here?
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Speaker 6: I mean the markets, you know, stock markets down nine
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Speaker 6: to ten percent, the dollars trading lower. The markets are
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Speaker 6: just don't like the uncertainty, I guess more than anything else.
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Speaker 6: And the concern is it may slow down in this economy,
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Speaker 6: may push it into a recession, may cause some inflation.
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Speaker 6: Historically that's not been good politically, it's the economy stupid.
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Speaker 6: What's the political call here? On behalf of President Trump
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Speaker 6: and the administration.
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Speaker 5: The view from the White House is that they have
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Speaker 5: a mandate. They have the House, the Senate, and the presidency.
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Speaker 5: They won the swing states, and they have successfully come
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Speaker 5: back from a loss in twenty twenty. So they are
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Speaker 5: going as if this is something that all of America
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Speaker 5: and certainly their voters, are fully behind.
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Speaker 4: The polls suggest that that's not the case.
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Speaker 5: The lowest amount of support for President Trump comes on
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Speaker 5: his tariff's strategy. The American public is very aware that
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Speaker 5: tariffs are not tax cuts, as the President has proclaimed,
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Speaker 5: and they do not.
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Speaker 4: View tomorrow as liberation Day.
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Speaker 5: They view it as a scenario where we're going to
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Speaker 5: see more tariffs and taxes, mostly because, of course, that
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Speaker 5: is what is coming, and you can see it in
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Speaker 5: the pull forward purchases at auto sectors, for example, or
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Speaker 5: auto sales.
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Speaker 4: So you have a.
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Speaker 5: Pretty material disconnect between what the White House things that
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Speaker 5: does a mandate for, and what voters are suggesting they support.
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Speaker 5: But on Capitol Hill, as you point out, the Senators
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Speaker 5: and the House members, the best that they can do,
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Speaker 5: given President Trump's stranglehold on their voters and the incredible
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Speaker 5: popularity that he shares, is that they have to go
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Speaker 5: along with this now. And the best they can do
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Speaker 5: is expect that the uncertainty is really the problem here.
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Speaker 5: So once we get past tomorrow, you'll hear folks say
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Speaker 5: eighty percent of the whole market downturn is because things
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Speaker 5: are uncertain. It's much more likely that once we get
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Speaker 5: past tomorrow, things will calm down, and then they're very
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Speaker 5: optimistic that some of these tariffs on especially Canada and
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Speaker 5: Mexico will start to come off over the summer in
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Speaker 5: time for a turnaround going into the twenty twenty six
6:44
Speaker 5: midterm elections, which is about eighteen months away.
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Speaker 2: Is there any real data that points to the fact
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Speaker 2: that that could happen.
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Speaker 5: Well, there's no real data on anything except for what's
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Speaker 5: in Trump's.
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Speaker 4: Mind on what could come and what might come off.
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Speaker 5: But there is very real concrete data that I think
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Speaker 5: keeps being ignored, which is that the president has imposed
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Speaker 5: twenty percent tariffs on nearly five hundred billion dollars worth
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Speaker 5: of goods coming in from China and twenty five percent
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Speaker 5: tariffs on all trade coming from Canada and Mexico on
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Speaker 5: about forty percent of imports. There's also an underreported narrative
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Speaker 5: that I think we'll hear about in the coming months,
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Speaker 5: which is that the disruption at the border is incredibly
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Speaker 5: widespread and underappreciated because you have no one to go
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Speaker 5: to at USTR that you can get recourse for if
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Speaker 5: you want to explain that you are USMCA compliant or
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Speaker 5: seeking an exclusion.
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Speaker 4: So there's these.
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Speaker 5: Backlogs and confusion at the border taking place right now.
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Speaker 5: The most concrete example would be when the president be
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Speaker 5: executive order changed the deminimous rules and created such a
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Speaker 5: logjam we had to pull it off. That's actually occurring
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Speaker 5: at the border right now. It's being underreported, I think
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Speaker 5: in part because businesses are still trying to get exclusions
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Speaker 5: and they're not able to speak with anybody that they
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Speaker 5: don't want to rough feathers in the anticipation of hopefully
8:02
Speaker 5: being able to get an audience in the months ahead.
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Speaker 6: All Right, it's not just terifs. At some point, Congress
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Speaker 6: has got to fund the government and do all that
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Speaker 6: kind of stuff. How should we think about the to
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Speaker 6: do list for Congress in the coming days and weeks.
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Speaker 4: There's so much there, Okay, So first things.
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Speaker 5: First, I would say, the Senate budget that they're working
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Speaker 5: on right now, I understand, is going to include a
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Speaker 5: five trillion dollar hike to the debt ceiling.
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Speaker 4: Now, that is an exorbitant figure.
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Speaker 5: The last time we hiked the debt ceiling by any
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Speaker 5: dollar figure, it was one point two trillion dollars.
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Speaker 4: So five trillion is shocking.
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Speaker 5: This belies the reality that current policy baseline accounting for
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Speaker 5: extending the existing.
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Speaker 4: Tax rates is not free. It does matter to the Treasury.
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Speaker 5: They do need a five trillion dollar increase in the
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Speaker 5: debt ceiling, and by the way, that's only to get
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Speaker 5: through the.
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Speaker 4: Twenty twenty six midterms.
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Speaker 5: That's not for Trump's full term, which is what I
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Speaker 5: originally anticipated when I heard that number a month ago.
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Speaker 4: So first things first, we have to deal with that.
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Speaker 5: I expect it to be in the budget that we
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Speaker 5: should see from the Senate as early as tonight.
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Speaker 4: That'll come due in July.
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Speaker 5: Secretary Bessett will give us an update on that in May,
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Speaker 5: and then, as you point out, we do have a
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Speaker 5: government funding bill that's going to be due September thirtieth,
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Speaker 5: and I think that's where we're going to see the
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Speaker 5: farmers bailout, housed aid to California wildfires, and depending on
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Speaker 5: the scale and scope of this tax bill, it could
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Speaker 5: be where you see an expansion of the child tax
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Speaker 5: credit and extension of the ECA subsidies. The reality is
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Speaker 5: you need probably ten to twenty Democratic votes in the
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Speaker 5: Senate for any bill to keep the government open, and
9:34
Speaker 5: we all saw what happened to Minority Leader Schumer last
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Speaker 5: go around, so I expect that September period to be
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Speaker 5: really fraught with negotiations and a lot of tension, much
9:44
Speaker 5: of which we'll see play out as a result of
9:47
Speaker 5: the elections in Florida's sixth and first districts tonight. So
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Speaker 5: that'll be a fascinating precursor to how this will all
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Speaker 5: play out.
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Speaker 2: All right, Henrita, thanks a lot. We really appreciate your analysis,
9:56
Speaker 2: Henry A. Trist Managing partner and director of Economic Policy
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Speaker 2: of Beta Partners. Which then raised the question too, and
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Speaker 2: we talk about a clearing event with all that in store,
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Speaker 2: how could anything be a clearing event.
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Speaker 6: That's a great point.
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Speaker 3: Yeah, at this point, yep.
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Speaker 6: So I mean you're going to have tomorrow some terrors.
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Speaker 6: Hopefully that will provide a little bit of clarity for
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Speaker 6: some members of the marketplace.
10:13
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10:27
Speaker 6: Right now, let's go to Tim Fiori break it down
10:29
Speaker 6: the He's the chairman of the Manufacturing Business Survey for
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Speaker 6: the Institute for Supply Management. Tim talk to us about
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Speaker 6: this im data. The manufacturing headline came into forty nine,
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Speaker 6: below the consensus and below last month.
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Speaker 7: Yeah, I think we disappointed here, but there's no huge
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Speaker 7: surprise to this. I think the important thing is after
10:46
Speaker 7: I look through all the data, I had to step
10:48
Speaker 7: back and say what am I seeing here? And essentially
10:51
Speaker 7: what you got here is we're not sure what to
10:53
Speaker 7: do and we're so confused. So if you look at
10:57
Speaker 7: the three elements, outputs, demands, and input, this PMI is
11:01
Speaker 7: being supported again by the input strength, which is really
11:04
Speaker 7: being driven by the terriff issue.
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Speaker 6: So if you.
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Speaker 7: Remove that out, this month would have been about a
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Speaker 7: forty eight three, just like last month would have been
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Speaker 7: a forty eight three. Our demand is still non existent
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Speaker 7: really because we're waiting to make investments. But I think
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Speaker 7: the biggest the biggest story here in this month's report
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Speaker 7: is that revenue is down this month. We're continuing to
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Speaker 7: d staff and it's all being driven by the uncertainty
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Speaker 7: around the near term the moderate term market development as
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Speaker 7: tariffs get deployed. The good thing is tomorrow should shed
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Speaker 7: a lot more light.
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Speaker 2: Yes, well maybe tim to that point. If this uncertainty persists,
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Speaker 2: what's the end result to that, like is it more destocking,
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Speaker 2: is it more layoffs, is it less investment, or is
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Speaker 2: it just deferred.
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Speaker 7: Well, so you know our inventory number will drop because
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Speaker 7: we're probably trying to get two or three months with
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Speaker 7: the inventory in hand here to avoid the first hits
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Speaker 7: of the of the tariffs. But I think it's becoming
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Speaker 7: clear now that these things probably aren't going to go away.
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Speaker 7: So what's going to happen. Happening is is that it's
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Speaker 7: going to limit our willingness to invest in capital. We
12:03
Speaker 7: are investing in inventory, as you can see, we're not
12:07
Speaker 7: investing in capital goods to replace capital, to expand capital,
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Speaker 7: R and D capital. That's really all on hold here
12:13
Speaker 7: until this whole thing settles out. Here, we are one
12:15
Speaker 7: day before a major day and we're still not sure
12:18
Speaker 7: of the details, So a lot of uncertainty here. You know,
12:21
Speaker 7: the market manufacturer does not like uncertainty. We're in the
12:24
Speaker 7: middle of the uncertainty here. Going to need a little
12:26
Speaker 7: bit more time to see where this goes. But in
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Speaker 7: the meantime, you think this would have been a forty
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Speaker 7: eight to five forty eight three if it was denormalize
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Speaker 7: for a normal behavior here, which right now we don't have,
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Speaker 7: so we did disappoint I think we underperformed forty nine.
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Speaker 7: I think the average was supposed to be forty nine
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Speaker 7: to five. Not a huge difference. You know, we're not
12:44
Speaker 7: collapsing here, but we're still reducing our revenue and reducing
12:47
Speaker 7: our head count, which in a moderate term may not
12:50
Speaker 7: be good in any kind of recovery cycle.
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Speaker 6: All right, Tim, thank you so much for joining us.
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Speaker 6: Tim Fury, chairman of the Manufacturing Business Survey the Institute
12:56
Speaker 6: for Supply Management. Again the ICE in headline data, manufacturing
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Speaker 6: data came into forty nine. The consensus was forty nine
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Speaker 6: to five, so anything below fifty means a contraction into
13:05
Speaker 6: manufacturing economy. The ICE prices paid search the sixty nine
13:10
Speaker 6: point four, well above where folks were looking. And employment
13:14
Speaker 6: remains weak and actually weaker than expectations, so some issues
13:19
Speaker 6: there in the manufacturing sector as well.
13:22
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Speaker 2: on the view outside of Bloomberg. Sarah Ponzik is financial
13:52
Speaker 2: officer at UBS Private Wealth Management. She joins us now
13:54
Speaker 2: from Boca Raton, Florida for her take on the market. Sarah,
13:58
Speaker 2: you have private wealth, so your clients are in this
14:00
Speaker 2: for the long term, but uncertainty can last for quite
14:03
Speaker 2: a long time. How do you rethink of portfolio to
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Speaker 2: take advantage of upside but also protection in this weird.
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Speaker 8: Time, uncertainty can last for a long time. And what's
14:13
Speaker 8: interesting is, although you can say ever since we entered
14:17
Speaker 8: the new year, ever since the new administration took over,
14:20
Speaker 8: there's been uncertainty, really hasn't been that long. It's only
14:23
Speaker 8: been a couple of months. But I think we can
14:25
Speaker 8: all agree it feels like a lifetime. And we have
14:28
Speaker 8: certainly seen it affect sentiment in sentiment surveys and also
14:32
Speaker 8: in you know, sentiment from our clients as well. Plenty
14:35
Speaker 8: of calls, plenty of emails are having conversations every day.
14:39
Speaker 8: But as your question Alex of how do you think
14:41
Speaker 8: about this in terms of long term portfolios and rejriggering portfolios,
14:45
Speaker 8: I think at the end of the day, we all
14:46
Speaker 8: have to understand volatilities here today.
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Speaker 4: It's not going away.
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Speaker 8: It's not as though tomorrow is Liberation Day. We're going
14:53
Speaker 8: to find out exactly what's happening with tariffs and all
14:55
Speaker 8: of a sudden it's going to be the sailing from here.
14:57
Speaker 8: That's not the case. There's still going to be a
14:59
Speaker 8: lot of back and forth, a lot of ups and
15:00
Speaker 8: downs in markets, a lot of inter day volatility, and
15:03
Speaker 8: we have to get used to it. But something that
15:05
Speaker 8: I do think is very important for people to understand
15:09
Speaker 8: here is that in the past ten percent corrections, which
15:13
Speaker 8: is just about where we are on the S and
15:15
Speaker 8: P five hundred, have been great entry points into the
15:19
Speaker 8: stock market.
15:20
Speaker 9: And yes, you have to.
15:21
Speaker 8: Have a very strong stomach to be able to weather
15:23
Speaker 8: the volatility.
15:24
Speaker 4: As it continues.
15:25
Speaker 8: But if you look at if you what have you know,
15:28
Speaker 8: phased into the stock market at a ten percent correction
15:31
Speaker 8: on average throughout history, you would have been well off
15:34
Speaker 8: into the future.
15:35
Speaker 6: What are your clients doing sir, are they going to cash,
15:38
Speaker 6: are they buying the dip? What are they doing?
15:40
Speaker 8: So we've had some clients ask about going to cash,
15:43
Speaker 8: but that's not necessarily our recommendation at this point in time.
15:47
Speaker 4: One.
15:48
Speaker 8: I also think it's important to point out if you're
15:51
Speaker 8: you know someone who's an investor, and you are well diversified,
15:55
Speaker 8: you're also diversified in high quality bonds, some private investments
15:59
Speaker 8: like private credit, private equity. You're not only invested in
16:02
Speaker 8: tech in the market. Yes, it might be a significant
16:04
Speaker 8: part of your portfolio, but that's not your only investment.
16:07
Speaker 8: I think a lot of people might be surprised to
16:09
Speaker 8: understand that if you look at your portfolios your to date,
16:12
Speaker 8: you're maybe flat to down two percent.
16:15
Speaker 1: We really have not.
16:16
Speaker 8: Seen big moves yet to the downside that would really
16:22
Speaker 8: qualify as something extremely scary or extremely extreme. So when
16:27
Speaker 8: you think about the flip side, if you're going to
16:28
Speaker 8: go sell investments that you've held for a long time,
16:31
Speaker 8: go to cash. One, you're probably going to be facing
16:34
Speaker 8: a big tax bill next year because you're going to
16:36
Speaker 8: be taking realize gains at the end of the day,
16:38
Speaker 8: and know you don't want the tax to tail to
16:40
Speaker 8: waighl the to wag of the investment dog.
16:42
Speaker 4: You don't want to be the only reason you don't
16:44
Speaker 4: do anything.
16:45
Speaker 8: But it's more so investors and clients of ours who
16:48
Speaker 8: have had cash on the sidelines and who have been
16:50
Speaker 8: waiting for an opportunity. It's more so you take advantage
16:54
Speaker 8: of the stock market. You take advantage of this volatility,
16:56
Speaker 8: You get your cash to work slowly, and you also,
16:59
Speaker 8: you know, do assessment. If you're someone who sees your
17:01
Speaker 8: portfolio down two percent year to date and you're freaking out,
17:04
Speaker 8: maybe you have too much risk in your portfolio, that
17:06
Speaker 8: is a reason to do risk.
17:08
Speaker 3: It's such a good point.
17:09
Speaker 2: The other side of it is if we see rates
17:11
Speaker 2: a little lower, a little higher for longer, and there's
17:14
Speaker 2: obviously a debate for that, because we're seeing a big
17:16
Speaker 2: bid into the bond market. Goldman Sachs now sees three
17:19
Speaker 2: cuts for the Fed this year. But if we don't
17:21
Speaker 2: get that because there is inflation and it's stickier, you
17:24
Speaker 2: need to diversify more into higher yielding products.
17:29
Speaker 8: Well, it gives you the ability to honestly sit in
17:32
Speaker 8: cash or buy bombs for longer and lock in interest rates.
17:37
Speaker 8: I know so many people have been talking about you know,
17:39
Speaker 8: locking and cash rates, locking and cash rates for really
17:42
Speaker 8: the past year and a half because the expectation where
17:44
Speaker 8: rates were going to come down and rates just didn't
17:46
Speaker 8: come down as quickly as expected. They've been, you know,
17:51
Speaker 8: pretty tough in staying where they are. So if you're
17:54
Speaker 8: an investor who still has plenty of cash, it's giving
17:56
Speaker 8: you this opportunity to lock and yields further into the
17:59
Speaker 8: future by quality bonds and make sure you do lock
18:02
Speaker 8: yields before rates come down. Our economists are of the
18:05
Speaker 8: view that, you know that Chair Powell has said that
18:08
Speaker 8: he expects any inflationary pressures from teriffs to be more so.
18:12
Speaker 8: I don't want to say transitory, because everyoney's that word.
18:14
Speaker 8: Now after a couple of years ago you put, you know,
18:17
Speaker 8: not long standing, and that if there are more so
18:21
Speaker 8: pressures on growth on the economy, if there are concerns
18:23
Speaker 8: about the teeriating growth in a recession, than our economists
18:26
Speaker 8: are of the view that the FED, even with tariffs
18:29
Speaker 8: in place, would probably start to cut rates at that
18:31
Speaker 8: point in time too.
18:32
Speaker 6: So dividends are they important in the UBS kind of
18:35
Speaker 6: equity allocation?
18:38
Speaker 8: They are I would say dividends are certainly important, especially
18:41
Speaker 8: if you are an income focused investor. I think the
18:43
Speaker 8: problem with solely focusing on dividends, you know, there are
18:46
Speaker 8: some investors who just think, Okay, I want to focus
18:49
Speaker 8: on equity income. I'm only going to invest in stocks
18:51
Speaker 8: that give me the highest dividend rates. A lot of
18:54
Speaker 8: times both stocks, as you know, are value companies, and.
18:58
Speaker 4: What's happened over the past five ten.
19:00
Speaker 8: Years, frankly, as if you've only invested or focused on
19:03
Speaker 8: that part of the market is you haven't been invested
19:07
Speaker 8: in the very companies that have driven much of the
19:11
Speaker 8: games over the last five to ten years, being big
19:14
Speaker 8: tech and growth companies. So yes, I think having you know,
19:18
Speaker 8: value in your portfolio is important, especially if you're an
19:22
Speaker 8: income oriented investor looking for different ways to get income
19:25
Speaker 8: in your portfolio and not just from the bond market
19:27
Speaker 8: is very important. But I think you also want to
19:30
Speaker 8: be very careful in not focusing too exclusively on evidents,
19:34
Speaker 8: because if you had done that, you would have underperformed
19:36
Speaker 8: the S and P five hundred pretty significantly, you know,
19:39
Speaker 8: over the last.
19:39
Speaker 2: Cycle, with the exception of the last three months, or
19:42
Speaker 2: value actually being with the extend.
19:46
Speaker 4: Over the last three months.
19:47
Speaker 8: But you know, I'm still not counting growth out, in
19:50
Speaker 8: counting chech out. We still see the long term growth
19:53
Speaker 8: potential of tech and growth or we don't think that.
19:56
Speaker 8: What we've seen over the last couple of months is
19:58
Speaker 8: you know, a death now to these megacap tech companies.
20:02
Speaker 8: Oh my gosh, they're no longer what they were. We'd
20:04
Speaker 8: rather see this as an opportunity to write size exposure
20:07
Speaker 8: if you've been under exposed all these years.
20:10
Speaker 3: Yeah, Sarah, great stuff. Really appreciate it. Thank you so much.
20:12
Speaker 3: Always good to get your perspective.
20:13
Speaker 2: Sarah Ponzik, Financial Advisor, ubs A Private wealth management.
20:19
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20:23
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20:33
Speaker 6: Let's stay on the topic of global auto Steve Man
20:35
Speaker 6: joins US Global Autos and Industrials research channels for Bloomberg Intelligence. Steve,
20:40
Speaker 6: what are you telling clients about the impact we may
20:44
Speaker 6: see tomorrow from President Trump and tariffs on the global
20:48
Speaker 6: auto business.
20:51
Speaker 9: I've been telling clients that.
20:53
Speaker 10: I think we're pretty much done for all terriffs for now.
20:56
Speaker 9: I think the big big thing that's going to come
20:58
Speaker 9: up next is really on how parts are going to
21:01
Speaker 9: be taxed going forward, and you know, it's it's a
21:08
Speaker 9: big chunk. We had a report out there today. You know,
21:11
Speaker 9: Tesla even though they make cars, a lot of cars here,
21:15
Speaker 9: but about a third of their parts actually are imported
21:18
Speaker 9: from elsewhere, mainly low cost country like Mexico. And surprisingly
21:24
Speaker 9: Ford does build Ford Motor Company does build a lot
21:26
Speaker 9: of companies here, a lot of cars here in the US,
21:30
Speaker 9: but they only have some thirty percent content that's actually
21:36
Speaker 9: based in the US. So lots to come on on
21:39
Speaker 9: the auto parts section of the tariffs.
21:42
Speaker 2: Yeah, so let's just understand that a little bit more
21:45
Speaker 2: so you have the actual whole imported car versus the
21:48
Speaker 2: car part, and the whole imported car stuff should happen
21:51
Speaker 2: tomorrow or Thursday, whereas the car park is amazing? Am
21:56
Speaker 2: I getting that relatively correct?
21:59
Speaker 9: Yeah, that's right. So it's it could be really huge.
22:03
Speaker 9: For example, we talked about I was just talking about Ford, right,
22:07
Speaker 9: anything that comes in from Mexico, for example, the Machi
22:11
Speaker 9: which they're losing tons of money on already comes from Mexico.
22:15
Speaker 9: And then you know, if on top of that the
22:19
Speaker 9: parts are actually coming from Mexico or any other low
22:22
Speaker 9: cost country, that could actually lift the price of the
22:25
Speaker 9: vehicle even even higher.
22:28
Speaker 6: So are the US automakers is this going to benefit them?
22:32
Speaker 6: And if so, how on to what degree? I'm not
22:35
Speaker 6: I'm unclear here.
22:36
Speaker 9: Well, I mean it's philosophical, there's I think debate on
22:40
Speaker 9: both sides. Uh, you know, automated, but automobiles are high
22:45
Speaker 9: value products. There's no argument against that. And you know,
22:50
Speaker 9: the design of the vehicle, the production of the vehicle,
22:53
Speaker 9: the manufacturing of the vehicles creates a lot of jobs
22:56
Speaker 9: in the US in the manufacturing alone bym you know,
23:00
Speaker 9: quoting some economists, every job that manufacturing creates, it creates
23:07
Speaker 9: another point four jobs, you know, peripheral jobs for that
23:12
Speaker 9: to support that manufacturing. So it does create a lot
23:14
Speaker 9: of jobs. It does create a lot of innovation. Example,
23:18
Speaker 9: you know, we just had Rivian on a lot of
23:22
Speaker 9: these peer plays like Rivian of Tesla.
23:26
Speaker 11: Uh, they make a lot of the high value components
23:30
Speaker 11: in house and in the US already, and that has
23:33
Speaker 11: created a lot of innovation around cars.
23:37
Speaker 9: And around how to.
23:38
Speaker 10: Make cars as in a cheap way a less expensive way.
23:45
Speaker 10: And you know, I.
23:46
Speaker 9: Think there's debate right a lot of the likeas the
23:49
Speaker 9: automakers have you know, outsource that manufacturing to low cost
23:54
Speaker 9: country and maybe that's why they're facing a lot of
23:56
Speaker 9: the competition around the world where they can ain't really
24:00
Speaker 9: built cars cheaply to the masses.
24:06
Speaker 2: Is it possible that some of the winners are actually
24:08
Speaker 2: going to be other foreign companies, Like we're talking about
24:11
Speaker 2: Paul just at least a hybrid that was built either
24:15
Speaker 2: in Ohio or what was it, Virginia? Some US based
24:19
Speaker 2: so but it's a Honda. You can make the same
24:22
Speaker 2: argument for Toyota, like are those cars actually going to
24:25
Speaker 2: be the bigger winners here?
24:27
Speaker 9: It could be like Japanese if you look at you know,
24:31
Speaker 9: potentially increasing prices for consumer from an automaker's perspective, you know,
24:37
Speaker 9: I think the Japanese are in a better position because
24:39
Speaker 9: the there's huge still a lot of demand for their vehicles.
24:43
Speaker 9: Their inventory is relatively low, around thirty days to forty
24:48
Speaker 9: days of sales versus the average industry is like seventy days.
24:53
Speaker 9: Some automakers are over one hundred days. So in terms
24:57
Speaker 9: of pricing, I think the consumers will be willing to
25:01
Speaker 9: pay a little bit extra, and so Honda and you
25:05
Speaker 9: know examples of Honda and Toyota may be able to
25:09
Speaker 9: get the consumers to absorb some of the higher tear
25:11
Speaker 9: of costs.
25:12
Speaker 6: Have we heard any US auto manufacturer announced plans for
25:16
Speaker 6: new factories or they're going to add jobs. What have
25:20
Speaker 6: we heard from the US manufacturers?
25:23
Speaker 9: Not yet? Not yet. I think there's a lot of
25:25
Speaker 9: discussion on you know, can we you know, with Trump
25:30
Speaker 9: about not taxing parts certain parts auto parts, but there
25:35
Speaker 9: we haven't heard of restoring. But you know, we've also
25:38
Speaker 9: had a lot of analysis. We've done a lot of analysis
25:41
Speaker 9: on restoring. It's going to be a huge cash flow
25:45
Speaker 9: headwind for the automakers, you know, if they have to
25:49
Speaker 9: if the automaker have to build a green field plant
25:53
Speaker 9: back in the US, that could cost upwards of four
25:56
Speaker 9: billion dollars just for one plant. So that's that's humongous.
26:01
Speaker 10: So we haven't heard.
26:03
Speaker 9: I think I think the automakers are hoping that these
26:06
Speaker 9: terrorists don't last forever.
26:09
Speaker 10: But you know, it's you know, I'm sure in the
26:12
Speaker 10: boardrooms they're thinking about the contingencies around how to manage
26:17
Speaker 10: that cap ax and probably asking the administration for financial
26:22
Speaker 10: support if they do have to bring back a lot
26:25
Speaker 10: of that manufacturing into the US.
26:27
Speaker 3: All Right, we really appreciate Steve. Thanks so much.
26:29
Speaker 2: Steve Mann, Bloomberg Intelligence, Senior autos Analyst.
26:32
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Speaker 6: You