Latest / Trumponomics / Live from NYC: What Is Trumponomics 2.0?

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Live from NYC: What Is Trumponomics 2.0? · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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Speaker 2: Welcome to Trump Andomics, the Bloomberg podcast that looks at
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Speaker 2: the economic world of Donald Trump, how he is shaping
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Speaker 2: the global economy, and what on Earth will happen next.
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Speaker 2: We're hosting this episode in front of a live audience.
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Speaker 2: I can't help emphasizing the word live because the last show,
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Speaker 2: the last show we did was at the World Economic
0:35
Speaker 2: Forum in Davos. But I think you're very alive and
0:37
Speaker 2: much more excitingly, you're at the New York Bloomberg headquarters.
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Speaker 2: We have put together top class panel of Bloomberg experts
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Speaker 2: to help us unpack the topic of the week. Kind
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Speaker 2: of hard to pick these days what the one topic is.
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Speaker 2: But I think what is trump Andomics two point oh?
0:57
Speaker 2: What have we actually learnt in the first few weeks
0:59
Speaker 2: of this administration? Is not a bad place to start.
1:03
Speaker 2: You know, Donald Trump has always made his own weather.
1:06
Speaker 2: People tend to talk a lot about him flooding the zone,
1:10
Speaker 2: because last weekend we had not so much flooding the
1:12
Speaker 2: zone as threatening to blow it up. In the case
1:14
Speaker 2: of the closest economic relationships that the US has with
1:19
Speaker 2: its neighbors, Canada and Mexico. We talked a bit about
1:23
Speaker 2: that in the last episode of Trump Andnomics, but we're
1:25
Speaker 2: going to broaden it out with this excellent panel we
1:29
Speaker 2: have here to consider. What have we learned about the
1:33
Speaker 2: way the president's making his decisions, Who's up, who's down?
1:38
Speaker 2: And especially important, I hope to Bloomberg subscribers, what's the
1:41
Speaker 2: impact on this for markets and for investors. So let's
1:45
Speaker 2: get to it. We have a couple of Trump Andomics regulars.
1:48
Speaker 2: This is only what the third or fourth episode, but
1:49
Speaker 2: we can still we can call you regulars. Nancy Cook,
1:52
Speaker 2: who I thank very much for taking the train from
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Speaker 2: DC to be with us tonight, our senior national political correspondent.
2:00
Speaker 2: Thanks Nancy, thanks for having me.
2:02
Speaker 1: It's so nice to be in New York.
2:03
Speaker 2: Did you get a moment of piece, touch a tiny
2:05
Speaker 2: moment of piece as you sat on the train or
2:07
Speaker 2: was it just hopeless to me?
2:09
Speaker 1: I went out to dinner last night and Trump said
2:11
Speaker 1: that he was going to take over Gaza, So I thought,
2:16
Speaker 1: we welcome to Trump to point out you can't go
2:19
Speaker 1: out to dinner, okay.
2:20
Speaker 2: And we have Tim o'briane, Senior Executiveloper of Bloomberg opinion,
2:23
Speaker 2: and crucially for the purpose of the podcast, author of
2:26
Speaker 2: Trump Nation, The Art of Being the Donald, Tim very
2:30
Speaker 2: good to see you, and later we're going to have
2:34
Speaker 2: Bloomberg and Ka Katie Gryfield and senior editor Ed Harrison.
2:38
Speaker 2: That'll be the more sort of money part of things.
2:43
Speaker 2: But part of the challenge with this administration, I was
2:45
Speaker 2: alluding to it before, is not so much distinguishing a
2:47
Speaker 2: signal from the noise as just kind of drawing breath.
2:50
Speaker 2: So I think it's particularly important for us, in sort
2:54
Speaker 2: of podcasts like this and events like this, to sort
2:57
Speaker 2: of step back and think what we've learned. So, Nancy,
3:00
Speaker 2: I know you've been tearing around reporting out how some
3:04
Speaker 2: of these decisions are being made, how the tariff news
3:09
Speaker 2: came together, So give us a bit of an insight
3:11
Speaker 2: into that.
3:12
Speaker 1: You Know, one thing I've learned i've covered Trump since
3:14
Speaker 1: twenty fifteen is often decisions are made on the fly,
3:18
Speaker 1: and I would say with the tariff decision, that was
3:21
Speaker 1: the case there as well. We wrote a story last
3:23
Speaker 1: week saying as of Thursday, they really hadn't made a decision,
3:26
Speaker 1: and that was true. There were some advisors calling for
3:30
Speaker 1: gradual tariffs, some people trying to say, well, let's just
3:33
Speaker 1: teariff certain industries or certain countries. There was a tiny
3:37
Speaker 1: group of people in the White House, including Stephen Miller,
3:40
Speaker 1: who many people know, who's one of the deputy chiefs
3:43
Speaker 1: of staff, who was advocating for things. The Treasury Secretary
3:46
Speaker 1: Scott Besson had just gotten in there. Trump was hearing
3:49
Speaker 1: from all these different people, also including Peter Navarro. We
3:52
Speaker 1: can't forget about him. He's quite hawkish on China and
3:55
Speaker 1: tariffs in general. But they were basically building the tariff policy,
4:00
Speaker 1: you know, as he was making the threats and sort
4:02
Speaker 1: of having all these meetings, and at the end of
4:05
Speaker 1: the day, Trump's decided that he was going to do it,
4:07
Speaker 1: and it was really like a sort of twelve hour decision. Okay,
4:10
Speaker 1: we're going to teariff these two major US allies.
4:13
Speaker 2: And do you think, just to remind ourselves, the people
4:15
Speaker 2: that he'd said were officially in charge of trade policy
4:20
Speaker 2: are not confirmed, and when you didn't mention them in your.
4:23
Speaker 1: Description, just then yeah, they're not even there yet. So
4:26
Speaker 1: officially the Commerce Secretary, who if he's confirmed, will be
4:29
Speaker 1: Howard Luttnik, who was in charge of Canter Fitzgerald. He
4:32
Speaker 1: will be in charge of it, along with the US
4:34
Speaker 1: Trade Representative Jamerson Greer, who worked in the first Trump
4:37
Speaker 1: administration as the chief of staff to Bob Leittheiser. And
4:41
Speaker 1: they're supposed to be in charge, but they're not even
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Speaker 1: confirmed yet. And there was really not a political appointees
4:47
Speaker 1: at these agencies. And so right now these huge trade
4:51
Speaker 1: decisions are basically being made by Donald Trump and then
4:55
Speaker 1: three aids in the White House.
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Speaker 2: Do you get the impression on the Sunday and Monday
4:58
Speaker 2: as we trying to manage the blowback from this announcement,
5:04
Speaker 2: was there sort of an disagreement about how to respond,
5:08
Speaker 2: how quickly to give in?
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Speaker 1: Well, I think that there is. There was disagreement, a
5:11
Speaker 1: ton of disagreement in the first Trump administration about trade policy,
5:15
Speaker 1: and I think there continues to be disagreement. You know,
5:18
Speaker 1: Peter Navarro, who I mentioned, is much more sort of
5:21
Speaker 1: hawkish and wanting to teariff everything.
5:24
Speaker 3: You know.
5:24
Speaker 1: I would put Howard Lutnik, the incoming Commerce Secretary, in
5:27
Speaker 1: that camp, but Scott Besnt wanted to make it more gradual.
5:29
Speaker 1: But just one more example of how Trump makes these
5:31
Speaker 1: decisions on the fly. When he threatened the tariffs on Columbia.
5:35
Speaker 1: For instance, he was in Miami and golfing at his
5:38
Speaker 1: club in Durrell and you know, one source told me
5:42
Speaker 1: he was on the golf cart and pulled out his
5:45
Speaker 1: phone and on true social announced that he was going
5:48
Speaker 1: to terror.
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Speaker 2: He explains what he misspelled. Columbia.
5:51
Speaker 1: Yes, announced like while he was, you know, in his
5:53
Speaker 1: golf outfit, said he's going to put tariffs on Columbia,
5:56
Speaker 1: you know, and if they don't take action in one week,
5:59
Speaker 1: they will rise to fifty And then got back on
6:01
Speaker 1: the golf cart. And so that is really I think
6:03
Speaker 1: the perfect metaphor for how he is making these decisions.
6:06
Speaker 1: You know, you could sort of make fun of it,
6:08
Speaker 1: or you could say, oh, he's doing this on the fly.
6:09
Speaker 1: But I will say, having covered him for a long
6:11
Speaker 1: time and spent a lot of time with him on
6:13
Speaker 1: the campaign trail, he is like a much more self
6:17
Speaker 1: assured leader this time. And I do think knows what
6:20
Speaker 1: he wants even more so, I.
6:22
Speaker 2: Mean tim there is this sort of line developing of oh,
6:26
Speaker 2: this was again, you know, policy being done without the
6:28
Speaker 2: grown ups in charge some of these, or with the
6:31
Speaker 2: grown ups not in the room. He's on his golf court,
6:34
Speaker 2: car whatever. But I know you're always saying, we shouldn't
6:38
Speaker 2: be surprised by any of this. This is his modus oparendum.
6:41
Speaker 4: Yeah, I mean he's you know, he's been this way
6:44
Speaker 4: since he was seven. This shouldn't surprise anybody. He's not
6:49
Speaker 4: a linear thinker. He doesn't think strategically. He thinks emotionally,
6:54
Speaker 4: and everyone around him, you know it's calling it trade
6:58
Speaker 4: policy is almost a misnomer because I think what is
7:00
Speaker 4: real intention is to use it as a cudgel, at
7:04
Speaker 4: least in the near term, to have various groups that
7:09
Speaker 4: he wants to flex around. I think he's also, particularly
7:13
Speaker 4: on Mexico, there's this confluence of campaign promises he's trying
7:18
Speaker 4: to keep around trade, immigration, drugs, and they were all
7:24
Speaker 4: critiques he had of the Bided administration. So when one
7:27
Speaker 4: fell swot he's trying to say, I will solve immigration,
7:32
Speaker 4: trade and other things that ail US as quickly as
7:36
Speaker 4: possible and with as much blunt force as possible. But
7:40
Speaker 4: the advisors he has around has around him, none of
7:44
Speaker 4: them think massive tariffs are really good. They know it's
7:48
Speaker 4: bad for trade, they know it's bad for economies, they
7:51
Speaker 4: know it dense global diplomacy, but there's succoming because you
7:56
Speaker 4: don't become a member of Trump's White House unless you
7:59
Speaker 4: get the agenda.
8:00
Speaker 3: And so.
8:02
Speaker 4: Kevin Hassett was on CNBC yesterday saying, I guess I
8:06
Speaker 4: shouldn't say the any of our competitor another network saying
8:11
Speaker 4: that this isn't a trade war, it's a drug war.
8:14
Speaker 4: And some of that is threading an eel around the
8:16
Speaker 4: legalities that Trump would need to deploy in order to
8:19
Speaker 4: act unilaterally around this. And then Scott Bessens, who also
8:24
Speaker 4: knows better the Treasury secretary, is advocating a rigorous escalation
8:28
Speaker 4: of tariffs, even though for all of his adult life
8:32
Speaker 4: he understands the virtues and importance as of free trade,
8:35
Speaker 4: and Trump himself really does not have a sophisticated grasp
8:39
Speaker 4: of economics or trade. He is interested, I think, in
8:44
Speaker 4: creating chaos because it keeps people back on their heels
8:47
Speaker 4: and it gives him room to maneuver. He did it
8:51
Speaker 4: in his business life before Trump one point zero. He
8:54
Speaker 4: did it in his first term. He will do it
8:56
Speaker 4: for the next four years. And it generally is coming
9:00
Speaker 4: from a desire to occupy the spotlight and to keep
9:04
Speaker 4: everyone else guessing about what he wants to do next.
9:07
Speaker 4: And that's an effective campaign strategy, he's proven that. But
9:10
Speaker 4: as a governing strategy, or as a way of messaging
9:14
Speaker 4: to the business community that needs to think ahead about
9:17
Speaker 4: investing long term, hiring long term, having long term trading relationships,
9:22
Speaker 4: it's an utter disaster.
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Speaker 2: It's interesting. I would push back on a few this.
9:26
Speaker 2: I do think we learned. In fact, I'm allowed. I'm
9:29
Speaker 2: allowed to disagree with people. I disagree with you. No,
9:32
Speaker 2: I think we did learn actually from the president's interview
9:36
Speaker 2: with our own editor in chief John Wicklithwaite. Then he
9:39
Speaker 2: does have a theory of tariffs. I think he actually had,
9:41
Speaker 2: and he actually has an idea of using them for
9:43
Speaker 2: different things. Because we were pushing him back. John mclwaite was
9:46
Speaker 2: pushing him on isn't it inconsistent to say you're going
9:49
Speaker 2: to raise lots of money but also move production, because
9:51
Speaker 2: if you move production and reduce the amount of imports,
9:53
Speaker 2: you're not going to be able to raise the money.
9:55
Speaker 2: And he was quite clear he's like, some things we
9:57
Speaker 2: want to raise money on, we put it at a
9:58
Speaker 2: low rate. Other things we actually want to bring it
10:01
Speaker 2: back home. And that's what I think the danger that's
10:04
Speaker 2: not a theory, no, well, the Dane, well, it is
10:05
Speaker 2: that this is a selective tariff theory. I just made
10:08
Speaker 2: it up, but I think the and actually on the
10:12
Speaker 2: this week's episode of Trumponomics and A Wong, the Chief
10:14
Speaker 2: US Economists was introducing us the idea of optimal tariff theory,
10:17
Speaker 2: which I'm not sure he's read that book. It sounded
10:19
Speaker 2: way too complicated. But the difference this time is that
10:23
Speaker 2: he's also seeming to want to use it for any
10:26
Speaker 2: as a bludgeon, as you say, for lots of different things,
10:29
Speaker 2: and as a way he's using it in the same
10:31
Speaker 2: way that he used the kind of dramatic statements about
10:35
Speaker 2: Mexico paying for the wall in the first administration, or
10:38
Speaker 2: some of the sort of ground standing with NATO, and
10:41
Speaker 2: the economic costs of that could be quite significant.
10:44
Speaker 4: That much uncertainty, and I think in a world that
10:48
Speaker 4: is naturally populated with uncertainties and threats, you, I think
10:52
Speaker 4: you want leaders in various and stakeholders across society to
10:56
Speaker 4: engage in certainty and rationality. And I don't think either
11:00
Speaker 4: one of those things are going to be his strong suits.
11:02
Speaker 4: So I think people trying to sort through how you
11:04
Speaker 4: make your own decisions, either as a business leader or
11:06
Speaker 4: an investor, as a citizen, it's just going to be
11:08
Speaker 4: constantly left on their heels, and that's exactly how we
11:11
Speaker 4: want it. I would also, I would say, though I
11:14
Speaker 4: don't think there's a theory. I think there is just
11:18
Speaker 4: a need to occupy the conversation. I think that's different.
11:23
Speaker 2: Just going back to Scott Beston, because you've both mentioned him,
11:26
Speaker 2: and it struck me. I mean, he had been he
11:29
Speaker 2: was one of the early members of the administration that
11:31
Speaker 2: was nominated and was felt to be gave that dose
11:37
Speaker 2: of normality along with Marco Rubio and particularly on the economics,
11:41
Speaker 2: on the trumpnomics, he's supposed to be this critical figure
11:43
Speaker 2: of sort of stability as Wall Street background and investing background.
11:48
Speaker 2: I feel like changed our view of him a bit
11:50
Speaker 2: over the last couple of weeks. It seems like he's
11:52
Speaker 2: signing the permission slips for Elon Musk's people, letting them
11:57
Speaker 2: resting him run wild in the Department of Treasury. I mean, Nasi,
12:00
Speaker 2: is that Do you think we should think of him
12:02
Speaker 2: as a different kind of figure in this administration or
12:05
Speaker 2: is it two early days.
12:06
Speaker 1: I think that it's a little bit early, but I
12:08
Speaker 1: will say my owner reporting from he's been Treasury Secretary
12:11
Speaker 1: for a week, and I think.
12:14
Speaker 2: It's been a really quiet week for the Treasury.
12:16
Speaker 1: But I do think that he has been in a
12:19
Speaker 1: tough spot. I would say he's been in charge of
12:22
Speaker 1: one of the key agencies for just a short period
12:24
Speaker 1: of time, and Elon Musk has rolled up in there
12:27
Speaker 1: and now has access to the Treasury payment system, and
12:31
Speaker 1: that is a huge thing to control or like even
12:34
Speaker 1: have access to. Scott Besson did not get his pick,
12:37
Speaker 1: for instance, for the IRS Commissioner. You know, have reporting
12:40
Speaker 1: that he did not want the former Congressman Billy Long
12:42
Speaker 1: to get that job, so he sort of overruled on that.
12:46
Speaker 1: You know, there was a lot of fighting during the
12:47
Speaker 1: transition between Scott Besson and Howard Lutnik over who would
12:52
Speaker 1: actually get the Treasury secretary job. So I'm looking ahead
12:55
Speaker 1: to that and what the tension is between the two
12:58
Speaker 1: of them both leading trade stuff, and also just you
13:01
Speaker 1: know how that level of infighting develops. So I think
13:04
Speaker 1: it's been a tricky week and Scott is someone who
13:08
Speaker 1: I would say Wall Street respects and bond market respects,
13:12
Speaker 1: and I think people did think he was going to
13:13
Speaker 1: be the grown up in the room, and he did
13:15
Speaker 1: a pretty good job of courting sort of fringe Trump
13:19
Speaker 1: allies and building his own coalition to get the Treasury
13:22
Speaker 1: secretary job. But now that he is in there, being
13:24
Speaker 1: in Trump world does require real survival skills and real
13:29
Speaker 1: sort of political infighting skills, and I will be curious
13:33
Speaker 1: to see how he fares in that political environment.
13:36
Speaker 2: How he fared Slash losts well.
13:39
Speaker 4: You know. The other thing is that the Treasury secretary
13:41
Speaker 4: is a weak cabinet position and FED chairman, you know,
13:46
Speaker 4: that was where the action is in terms of having
13:48
Speaker 4: I think real power to affect the economy. And I
13:50
Speaker 4: think Treasury secretaries are spokespeople for an administration's economic worldview.
13:57
Speaker 4: And the ones who've been I think very effective at it,
14:00
Speaker 4: Jim Baker during the Bush administration, Bob Rubin during the
14:05
Speaker 4: Clinton administration. They're in sync with their presidents. There's a
14:08
Speaker 4: unified philosophy, and they're the ones out in the world
14:11
Speaker 4: saying these are our economic goals. And it's very hard
14:15
Speaker 4: for Trump advisors to be in sync with Trump because
14:18
Speaker 4: he's unpredictable, and then secondly, I think whatever Bessen's is
14:24
Speaker 4: saying now about Trump and his approaches to these things,
14:29
Speaker 4: it runs up against how I think Bessant has rolled
14:32
Speaker 4: through most of his career, and so he's going to be,
14:34
Speaker 4: I think, constantly caught between Irock and a hard place philosophically.
14:38
Speaker 1: Yeah, I think Besson has also recently told allies. I
14:41
Speaker 1: think he's trying to set expectations in Washington, and he
14:44
Speaker 1: has told people my number one priority for twenty twenty
14:47
Speaker 1: five is really getting through a sweeping tax bill. And
14:50
Speaker 1: so I think he's trying to steer clear of some
14:52
Speaker 1: of the landmines like trade policy and focus on this
14:55
Speaker 1: one thing. And I just think that's an interesting thing.
14:58
Speaker 1: Because I disagree with you. I think Treasury is is
15:00
Speaker 1: a great job. You're in charge of like sanctions, tax policy,
15:04
Speaker 1: international diplomacy, Like there's such a range of things that
15:07
Speaker 1: you're in charge of. You at your own plane, This.
15:09
Speaker 2: Is a cool job.
15:10
Speaker 1: I disagree with you. I don't want to be I'm
15:12
Speaker 1: happy as a reporter, but I think it's a big job.
15:14
Speaker 1: But I do think he is trying to set expectations
15:16
Speaker 1: like I will get through the tax bill, and that
15:18
Speaker 1: will be I'll be successful if I get that through.
15:22
Speaker 2: Well, I'm glad you said that. That's it. I agree
15:25
Speaker 2: with you, and I definitely have to agree with Tim
15:27
Speaker 2: because having worked for Bob Rumer, that's Treasury I saw,
15:30
Speaker 2: I think Treasury at a particularly powerful time. And we
15:33
Speaker 2: might just add that it was the last time we
15:35
Speaker 2: had a budget surplus. I'm just saying, all right, so
15:39
Speaker 2: we're going to get that gets us very nicely onto
15:41
Speaker 2: the sort of more economic y market bit of the discussion.
15:45
Speaker 2: But Nancy and Tim, thank you very much, and we're
15:47
Speaker 2: going to get you back for questions a bit later on.
15:49
Speaker 2: But thanks very much. Thanks, So we're going to bring
16:04
Speaker 2: on the other speakers. The last time we did do
16:06
Speaker 2: one of these events was at the World Economic Forum,
16:09
Speaker 2: though not with subscribers because the describers didn't make it
16:12
Speaker 2: up the hill. But the feeling there was that the
16:16
Speaker 2: investors were so incredibly positive about everything to do with
16:20
Speaker 2: the US. The markets were kind of pricing. I felt
16:23
Speaker 2: it was like pricing for the best of all possible trumps,
16:25
Speaker 2: you know, all the good things for markets, the deregulation,
16:28
Speaker 2: the extension of tax cuts, none of the bad things.
16:31
Speaker 2: And I don't know. I mean, one of the things
16:32
Speaker 2: we will get onto is whether the events of the
16:35
Speaker 2: last couple of weeks have sort of changed that feeling
16:38
Speaker 2: of a sort of fair weather for markets on Donald Trump,
16:40
Speaker 2: and I was very struck. One of my former colleagues
16:42
Speaker 2: at JP, Morgan Bruce Kasman, put out a note in
16:45
Speaker 2: the last couple of days saying this weekend's announcements point
16:48
Speaker 2: towards a materially different US policy mix than built into
16:52
Speaker 2: our outlook, and challenge the underlying view that the Trump
16:55
Speaker 2: administration will strive to limit disruptive policies. In fact, the
16:59
Speaker 2: risk is that the policy mix is tilting into a
17:01
Speaker 2: business unfriendly stance. So that's I think as sort of
17:05
Speaker 2: framing for this second part of the conversation. I'm very
17:08
Speaker 2: excited to welcome Katie Greifeld, Bloomberg TV hosts many of
17:11
Speaker 2: you will know, and co host of the Money Stuff podcast. Katie,
17:15
Speaker 2: thank you very much for joining us, Thanks for having
17:17
Speaker 2: me and Ed Harrison, senior editor and author of the
17:20
Speaker 2: Everything Risk newsletter, who's also come from Washington to be here.
17:24
Speaker 2: Katy on that, do you get the sense with all
17:27
Speaker 2: the guests that you talk to on Bloomberg TV and elsewhere,
17:29
Speaker 2: that the mood is shifting, that there is a fear
17:31
Speaker 2: that this is going to be a business unfriendly administration,
17:34
Speaker 2: at least with this kind of uncertainty.
17:36
Speaker 3: What I keep coming back to, both with guests and
17:40
Speaker 3: you know, with my Bloomberg team, is that it's only
17:42
Speaker 3: week two, so it's really hard to say, but I
17:45
Speaker 3: will say the experience with tariffs I think rattled a
17:48
Speaker 3: lot of investors that I've been speaking to this week,
17:50
Speaker 3: also a lot of business executives, because I mean, you
17:53
Speaker 3: just think about the automakers. We had forward report earnings
17:56
Speaker 3: this afternoon. And maybe tariff's a negotiating tactic. It certainly
18:01
Speaker 3: seems like the last week has proven that. But if
18:04
Speaker 3: you're running a company, if you're putting money to work,
18:07
Speaker 3: the will he won't he? When it comes to tariffs,
18:10
Speaker 3: you still have to respond. You have to game plan,
18:13
Speaker 3: you have to try to, you know, make decisions here.
18:16
Speaker 3: You think about Ford, for example, and you think about, okay,
18:19
Speaker 3: maybe we pushed out tariffs for a month. When it
18:21
Speaker 3: comes to Canada and Mexico, the auto industry would be
18:25
Speaker 3: so affected by those levies if they wanted to affect,
18:28
Speaker 3: But also how long they lasted whether or not we
18:31
Speaker 3: saw retaliation, and Jim Farley, I mean saying he said
18:36
Speaker 3: on BTV actually just about an hour or two ago,
18:38
Speaker 3: that they can see he's the CEE of Ford. They
18:41
Speaker 3: can handle a couple weeks of tariffs, but if it
18:44
Speaker 3: goes beyond that, it'll be billions and billions of dollars
18:47
Speaker 3: in incremental profit headwinds. So those are real considerations, and
18:52
Speaker 3: I think that optimism is still there. I mean, Farley
18:55
Speaker 3: went on to say that he thinks Trump will be
18:57
Speaker 3: overall positive for the auto industry, but there's question marks
19:01
Speaker 3: around that. Just all out enthusiasm and felt like we
19:04
Speaker 3: saw after the election.
19:07
Speaker 5: I would agree with that. What I would say is
19:10
Speaker 5: is that when he came on board, people were thinking
19:12
Speaker 5: low tax is low regulation, that's good for business. But
19:17
Speaker 5: with the tariffs, that's changed. And I think the thing
19:20
Speaker 5: that's changed that's most obvious is inflation expectations. That is,
19:25
Speaker 5: the expectations both from consumers and from the market that
19:30
Speaker 5: inflation will stay low. As soon as Trump became more
19:35
Speaker 5: likely to win, we saw from September forward the expectations
19:39
Speaker 5: over the next two years of inflation that's market based
19:42
Speaker 5: go from something in the one percentage area to now
19:47
Speaker 5: three percent, which is quite a move, and interestingly, very
19:52
Speaker 5: recently we've also seen an increased risk of recession, and
19:56
Speaker 5: so that's a sign that perhaps he's not going to
20:00
Speaker 5: be as friendly as we thought he was going to be.
20:03
Speaker 2: How are people thinking about the FED in that context?
20:05
Speaker 2: Because actually, well, Casey, you reminded me that we'd had
20:07
Speaker 2: this very interesting comment from the President in the last
20:10
Speaker 2: week about the FED, who's he'd always been keen on
20:12
Speaker 2: having lower and lower interest rates.
20:14
Speaker 3: Yeah, Trump loves the voliage erom pale. But this week,
20:18
Speaker 3: I mean lost sort of in all the news that
20:19
Speaker 3: we got over the weekend.
20:21
Speaker 2: He did say that he thought that the.
20:23
Speaker 3: FED made the right move last week at their meeting
20:25
Speaker 3: to hold interest rates steady, which honestly was the most
20:29
Speaker 3: surprising thing I saw over the weekend.
20:31
Speaker 2: And it is interesting to think. I love the fact.
20:34
Speaker 2: Can I just say I love the fact that you
20:35
Speaker 2: thought that was more exciting than the twenty five.
20:39
Speaker 3: Yeah, if I couldn't, I wish I could be a
20:41
Speaker 3: fly on the wall to seedge roam palcy that headline.
20:43
Speaker 5: But I don't know.
20:44
Speaker 3: There's this idea of the FED put that has always percolated.
20:47
Speaker 3: There's the idea of the Trump put that's been out there,
20:50
Speaker 3: the idea again that both of them, if things really
20:53
Speaker 3: got out of hand in the markets, that you would
20:54
Speaker 3: either see the Fed step in or Trump step in
20:57
Speaker 3: to juice the s and P. Five hundred to put
21:00
Speaker 3: it bluntly there. But when it comes to the Fed
21:03
Speaker 3: this time around, it seems the consensus in markets is
21:05
Speaker 3: that they're going they're in wait and see mode. We
21:08
Speaker 3: were talking about executives. How do you make monetary policy
21:11
Speaker 3: in this sort of environment, And it's maybe Treasury secretary
21:15
Speaker 3: sounds like a cool job. It would be really hard
21:17
Speaker 3: to be fedchair right now.
21:19
Speaker 5: Let me I say that it's interesting because Scott Veston,
21:22
Speaker 5: the Treasury Secretary, just recently said that they don't really
21:26
Speaker 5: care about the FED funds rate, which is what the
21:28
Speaker 5: FED controls. They care about the ten year treasury rate.
21:31
Speaker 5: And I think that's very interesting for two reasons. One
21:33
Speaker 5: the fact that he's mentioning the ten year treasury rate
21:36
Speaker 5: instead of the stock market. Because if you remember, in
21:39
Speaker 5: the last term, the President went up and kept on
21:42
Speaker 5: talking about, look, stocks are up, obviously I'm doing a
21:44
Speaker 5: great job. Suddenly it's the bond market that actually matters.
21:49
Speaker 5: That's number one. The number two is is that they're
21:52
Speaker 5: now focused on this long term interest rate. And the
21:57
Speaker 5: reason is, I believe, because that's the rate that matters.
22:01
Speaker 5: We saw when the Fed lowered interest rates last year
22:05
Speaker 5: that actually long term interest rates went up. Thirty year
22:07
Speaker 5: mortgages went up in concert with those long term interest rates.
22:12
Speaker 5: If you get a corporate loan, that's also because of
22:15
Speaker 5: those interest rates. And so that's what they're focused on now.
22:17
Speaker 5: So now it's the bond market that matters much less
22:21
Speaker 5: than the stock market.
22:22
Speaker 2: He is having to But if you'll, Scott Best, one
22:24
Speaker 2: of your jobs is going to be shoveling an enormous
22:26
Speaker 2: amount of treasuries in trying to sell an enormous number
22:29
Speaker 2: of bombs that even does the the amount of debt
22:31
Speaker 2: that even rolls over now in the US, let alone
22:34
Speaker 2: the deficit each year. Surely that's why he's particularly focused
22:37
Speaker 2: on the cost of borrowing.
22:38
Speaker 5: And so you know, if John mickel Fate were asking
22:41
Speaker 5: him proting questions over and over again, he'd probably have
22:44
Speaker 5: to come clean about what he really means, because what
22:46
Speaker 5: does it really mean that we care about the ten
22:48
Speaker 5: year treasury Obviously, it's not that we want it to
22:51
Speaker 5: go up. We don't want the treasure you able to
22:53
Speaker 5: go up. We wanted to, let's say, stay in a range.
22:56
Speaker 5: If it goes up too far, then that range will
22:58
Speaker 5: be too it'll be too high. Wanted to go beyond
23:00
Speaker 5: that range, and we don't want it to go too
23:02
Speaker 5: low because then that's a recession. That's signaling recession. But
23:07
Speaker 5: in the back of his mind he has to be thinking,
23:10
Speaker 5: we're going to be shoving this dead out and we
23:12
Speaker 5: needed to be lower than an otherwise would be. And
23:16
Speaker 5: I think that there's that inconsistency that Tim was talking about.
23:20
Speaker 5: There's that policy incoherence. How are you going to get
23:22
Speaker 5: three percent in growth, have a four point five percent
23:27
Speaker 5: fed funds RAID and still get a lower interest rate.
23:33
Speaker 5: It's just it's not feasible. And it'll be very interesting
23:36
Speaker 5: to see how they play that.
23:37
Speaker 3: Yeah, I thought those comments were so interesting. Scott Besson
23:40
Speaker 3: said that, not to name another network, but on I
23:43
Speaker 3: think it was Fox Business just this afternoon, and.
23:45
Speaker 2: You know these are subscribed. As to Bloomberg, did you
23:48
Speaker 2: not get the memoy?
23:49
Speaker 3: But isn't it better to hear us talk about I
23:51
Speaker 3: thought that was fascinating, and I do think there is
23:54
Speaker 3: something to the idea that this time around, and for
23:57
Speaker 3: only two weeks in that it seems like the bond
23:59
Speaker 3: market is the focal poorum rather than the stock market.
24:02
Speaker 3: But when it comes to the long end, it's you
24:05
Speaker 3: have to wonder what the administration could even do other
24:08
Speaker 3: than just watch the tenure treasury yield, because it's not
24:10
Speaker 3: like the Federal Reserve itself even has control over that
24:14
Speaker 3: side of the bond market.
24:16
Speaker 2: In a way, this takes us to the dollar and
24:18
Speaker 2: whether you can possibly have just the right bond yield,
24:22
Speaker 2: just the right Fed funds, and just the right dollar.
24:25
Speaker 2: For Donald Trump, he sounded on different signals on that
24:28
Speaker 2: over the years. He kind of wants a strong dollar
24:29
Speaker 2: when you think of it as more of a sort
24:31
Speaker 2: of virility symbol. On the other hand, he thinks that's
24:33
Speaker 2: a sign of the unfairness of the global economy. How
24:36
Speaker 2: do you think about the dollar?
24:37
Speaker 3: The dollar is really interesting because even you think back
24:40
Speaker 3: to Scott Beston, I think it was in his confirmation
24:42
Speaker 3: hearings he didn't endorse a strong dollar, but he did
24:46
Speaker 3: talk about the importance of having the global reserve currency,
24:50
Speaker 3: which I don't know how much to read into that,
24:52
Speaker 3: but it did stick out to me at the time.
24:54
Speaker 3: But bringing it back to corporate America in this earning season,
24:58
Speaker 3: the strong dollar is a headache for a lot of
25:00
Speaker 3: these internationally exposed businesses. You're seeing it pop up in
25:04
Speaker 3: earnings calls, a lot of finger pointing out the strong dollar.
25:08
Speaker 3: Something I always wonder about is how much corporates are
25:10
Speaker 3: using it as an excuse, maybe exaggerating some of the
25:13
Speaker 3: effects to make their numbers look better. But it's definitely
25:17
Speaker 3: a headwind.
25:19
Speaker 2: I mean, this is slightly putting you on the spot years.
25:20
Speaker 2: But do you get the sense, you know, there was
25:23
Speaker 2: an era in which sort of push for government efficiency,
25:27
Speaker 2: you know, went with the deregulation agenda and was considered
25:31
Speaker 2: in a very kind of positive way. You know, obviously
25:33
Speaker 2: a lot of the press around events and the Treasury
25:37
Speaker 2: and the way that Elon Musk's team has been approaching
25:40
Speaker 2: the scaling back of government. Do you get the sense,
25:43
Speaker 2: either of you that there were also business leaders or
25:47
Speaker 2: market folks who are actually kind of like, hm, well
25:50
Speaker 2: maybe this is actually going to do something. Maybe he
25:52
Speaker 2: really is going to shrink the government by ten percent.
25:54
Speaker 5: What do you think, well, I'm very interested in what Katie.
25:57
Speaker 2: We haven't discussed this.
25:58
Speaker 5: I'm just because I can tell you that in DC itself,
26:03
Speaker 5: there's a palpable fear everywhere that you go about everything
26:07
Speaker 5: that's going on. I know people who are in certain
26:10
Speaker 5: agencies who thought that they were untouchable and then suddenly
26:15
Speaker 5: they got the notices.
26:16
Speaker 2: That would be music to Elon Muss presumably touch the.
26:20
Speaker 5: Fact that we're going to see the voluntary cuts and
26:23
Speaker 5: if you don't obviously voluntarily decide to leave, then we're
26:27
Speaker 5: going to actually make the cuts ourselves at some point
26:30
Speaker 5: in time. So there's a palpable fear that I think
26:34
Speaker 5: pervades Washington that makes it more difficult to understand. Is
26:38
Speaker 5: this helpful from a business leader perspective? But that's the
26:42
Speaker 5: fear that we're seeing.
26:43
Speaker 2: In like guess Casey, some of the people, the business
26:46
Speaker 2: people that you speak to, if they've ever done any
26:48
Speaker 2: cuts or rounds of redundances, they know that if you
26:51
Speaker 2: do the bias, you lose all the best people, potentially
26:53
Speaker 2: all the people who have the most options.
26:55
Speaker 3: Yeah, absolutely, there's potentially some painful medicine there. But when
26:59
Speaker 3: we speak to as about especially when we first learned
27:02
Speaker 3: about Doge and Elon Musk's role here in this administration.
27:07
Speaker 3: The question that we always asked investors and still are
27:10
Speaker 3: is how seriously do you take some of these pledges,
27:13
Speaker 3: some of these goals that they've set out to accomplish
27:15
Speaker 3: when it comes to spending cuts, and it just feels
27:18
Speaker 3: like so many other things right now, it's really wait
27:20
Speaker 3: and see mode. And you also there's also the question
27:24
Speaker 3: there is many how much of this is an investible scene.
27:29
Speaker 3: Maybe we do shrink the government by ten percent. I'm
27:32
Speaker 3: not sure what that math looks like, but what does
27:34
Speaker 3: that trade even look like?
27:36
Speaker 2: So there's a.
27:37
Speaker 3: Lot of questions and I haven't quite gotten one satisfying
27:41
Speaker 3: answer there.
27:43
Speaker 2: We everyone has to just tune into more and more podcasts.
27:45
Speaker 2: I think that's what most people are doing. But you
27:46
Speaker 2: wouldn't want to be trading on every single headline, that's
27:49
Speaker 2: for sure. Well, this has been brilliant, Casey and Ed,
27:53
Speaker 2: thank you very much, Thank you, thank you all for
28:05
Speaker 2: joining us for this taping of Trumpernomics from Bloomberg Headquarters.
28:09
Speaker 2: It was hosted by me Stephanie Flanders, and I was
28:11
Speaker 2: joined by Tim O'Brien, Nancy Cook Katie Greifield and Edward Harrison,
28:16
Speaker 2: and we hope everyone here had fun. Thank you for
28:19
Speaker 2: listening at home, and subscribe, rate, and review this show
28:23
Speaker 2: wherever you get your podcasts. Thanks very much,