Latest / Trumponomics / Live from Davos: Greenland Shock Tests Europe’s Spine—and Strategy—at Davos

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Live from Davos: Greenland Shock Tests Europe’s Spine—and Strategy—at Davos · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 2: President Trump is taking this economy in a different direction.
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Speaker 2: He ran on that, he promised it, and now he's delivering.
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Speaker 3: We're in the process of imposing reciprocal tariffs.
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Speaker 4: This is going to hurt our economy before we get
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Speaker 4: to any possible retaliation.
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Speaker 2: Thank you for being such a pro business and pronovation president.
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Speaker 3: We're very excited to see what you're doing to make
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Speaker 3: all of our companies in our entire country so successful.
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Speaker 5: The big promise was that he was going to bring
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Speaker 5: down prices and make America affordable again, and everything he's
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Speaker 5: done is the opposite of that.
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Speaker 4: We have the greatest economy in history.
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Speaker 6: This economy, in my opinion, is going to blow it away.
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Speaker 6: That's what this one.
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Speaker 4: It's going to be a very interesting demos.
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Speaker 7: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
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Speaker 7: and welcome to trump Panomics from Davos, the podcast that
1:11
Speaker 7: looks at the economic world of Donald Trump. This week
1:14
Speaker 7: from the top of a mountain, how he's already shaped
1:17
Speaker 7: the global economy for the movers and shakers, descending on
1:20
Speaker 7: Switzerland for the World Economic Forum this week, and what
1:24
Speaker 7: on Earth is going to happen next. We're recording this
1:27
Speaker 7: on Monday, nineteenth of January at Bloomberg House, close to
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Speaker 7: the main conference center in Davos, and I have some
1:34
Speaker 7: of Bloomberg's wisest with me to discuss the next chapter
1:38
Speaker 7: of trump Panomics, what the President might have in store
1:41
Speaker 7: for Davos men and women when he speaks here later
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Speaker 7: this week. First, welcome to the stage, Anne Marie Horden,
1:51
Speaker 7: who is familiar to many as a co host and
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Speaker 7: roving DC correspondent for Bloomberg Surveillance on Bloomberg Television. Frida Nataraja,
2:00
Speaker 7: who is bloomberg Uses chief Wall Street correspondent, and our
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Speaker 7: editor in chief John Micklquake. I was thinking on the
2:11
Speaker 7: way here, there is a sense of kind of deja
2:14
Speaker 7: vous because exactly, you know, turn the clock back twelve months, John,
2:18
Speaker 7: you and I were here, maybe some of the audience
2:21
Speaker 7: were here. But if you think of what has happened
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Speaker 7: in the last twelve months, I can't think of much
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Speaker 7: else that has stayed the same in this first year
2:30
Speaker 7: of Donald Trump's second term. We will have noticed that
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Speaker 7: quite a lot. In the World Economic Forum agenda, the
2:37
Speaker 7: names of the official sessions changed quite a lot, even
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Speaker 7: less about climate change, diversity inclusion, and I've noticed a
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Speaker 7: lot of dialogue and honest conversations. That seems to be
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Speaker 7: the sort of title of most of the sessions. John
2:52
Speaker 7: Since President Trump confirmed relatively early that he was going
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Speaker 7: to come, we have I think a record number of
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Speaker 7: world leaders who've all run, USh to rush to come
3:01
Speaker 7: to quite a few of them want to have an
3:03
Speaker 7: honest conversation about Greenland. This crisis over Greenland is happening
3:06
Speaker 7: in real time. But could it possibly be resolved this week?
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Speaker 7: Or given the mood music we're hearing, could this be
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Speaker 7: the week that Europe decides with Donald Trump. It's not
3:16
Speaker 7: really the art of the deal, it's the art of
3:17
Speaker 7: fighting back.
3:18
Speaker 3: I suppose well two things. It is a kind of
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Speaker 3: monarchical administration. So the king comes somewhere, everyone else immediately
3:25
Speaker 3: shuttles across. It's very similar to the kind of sixteenth
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Speaker 3: century or something, when the or Louis the fourteenth decides
3:31
Speaker 3: to go somewhere and everyone comes up. It was a
3:33
Speaker 3: bit later than the sixteenth century, but the same idea.
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Speaker 3: I think in terms of whether Europe fights yeah, I
3:40
Speaker 3: think this is I think this is the one thing
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Speaker 3: which even the somewhat jelly spined leaders of Europe they
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Speaker 3: really can't take someone just grabbing part of their territory.
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Speaker 3: And I think you've already seen in people like kirstarmer
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Speaker 3: Manuel Macrol Mertz a bit. You've seen people saying, look,
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Speaker 3: this really isn't going to work. The division is coming
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Speaker 3: about what exactly the response would be with this issue,
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Speaker 3: about whether they go to tariffs or whether.
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Speaker 6: They look for other means.
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Speaker 3: And I think the reason why is because this is
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Speaker 3: such a strange thing.
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Speaker 6: It's not really.
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Speaker 3: Possible to declare that this is within the normal bounds
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Speaker 3: of national security. It's just simply saying I want to
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Speaker 3: increase the land area of the United States of America,
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Speaker 3: because most of the things to do with security you
4:29
Speaker 3: can cover through bases and things like that. So I
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Speaker 3: think even for the Europeans, and let's be really honest,
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Speaker 3: no one has ever lost money betting against the Europeans caving.
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Speaker 3: Then actually, in this particular case, I think this is
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Speaker 3: such an outrageous thing they will do something. And the
4:47
Speaker 3: fact he's come out this morning with the thing about
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Speaker 3: which we reported first about being annoyed with the Norwegians
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Speaker 3: for not giving him the Nobel Peace Prize. That adds
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Speaker 3: to the general sense of it being a sort of
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Speaker 3: monarchical decision, and I think there's a certain point at
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Speaker 3: which other democracies can't really live with that.
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Speaker 7: Prime Minister Kirstarmer at a press conference today on Monday,
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Speaker 7: and you've got the sense that he just had felt
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Speaker 7: he had to respond because of the sheer weight of
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Speaker 7: public opinion over the weekend, and so.
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Speaker 8: Any decision about the future status of Greenland belongs to
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Speaker 8: the people of Greenland and the Kingdom of Denmark alone.
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Speaker 8: That right is fundamental and we support it.
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Speaker 6: You have to feel amazingly sorry for Kirstarmer.
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Speaker 3: Not that we do that often, but Kirstarmer is sort
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Speaker 3: of four or five days ago, it wasn't looking too bad.
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Speaker 3: He thought the one part of his administration that had
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Speaker 3: gone reasonably well was foreign policy, and he had got
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Speaker 3: a special deal with America, and he got a sort of.
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Speaker 6: Deal with Europe.
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Speaker 3: And then to get exposed on something where even he
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Speaker 3: will find it difficult to back down, I think that
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Speaker 3: makes it very very hard. And taking territory, that is
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Speaker 3: the whole basis of why the West has rallied behind Ukraine.
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Speaker 3: It's very different. It's very difficult when one of your
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Speaker 3: allies does it.
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Speaker 7: I wanted to get onto the sort of corporate perspective
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Speaker 7: on this, but just one more on Greenland. I mean,
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Speaker 7: you're right that Europe doesn't actually have doesn't have a
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Speaker 7: reputation of having been really hard nosed on these things.
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Speaker 7: And the striking thing about the year since we were
6:24
Speaker 7: last here was how much of Europe caved to pretty
6:28
Speaker 7: much everything. There was no retaliation on tariffs. Now they're
6:32
Speaker 7: talking about red lines, but they're also only talking about
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Speaker 7: sending fifteen individuals to Greenland as opposed to fifteen.
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Speaker 3: I think Trump said, surely you know the French as
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Speaker 3: sent fifteen people, and you thought they meant fifteen thousand,
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Speaker 3: and then it turns out to be fifteen people.
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Speaker 7: I mean, realistically, how can there be a muscular responsible.
6:51
Speaker 3: There's division on that, and there is obviously people like
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Speaker 3: Aubermen in Hungary. You can make things difficult, But I
6:58
Speaker 3: think straightforwardly Trump's biggest problems at the moment, as many
7:02
Speaker 3: people would bet he's going to lose the midterms, what's
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Speaker 3: the biggest issue there?
7:05
Speaker 6: Affordability, a full on tariff war.
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Speaker 3: I think the Europeans, at least in this case have
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Speaker 3: the ability to call that in they've actually prepared or
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Speaker 3: the ammunition before. Again a jelly spined group of people
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Speaker 3: in this particular case, they actually have a weapon prepared
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Speaker 3: for themselves, so they don't have to go through all
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Speaker 3: that for varication.
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Speaker 7: Well, a Marie, we've mentioned the domestic front and affordability,
7:30
Speaker 7: which is a great buzzword in the US for this
7:32
Speaker 7: year as we go to the midterms. The President, to
7:35
Speaker 7: most people here on the world stage, seems to be
7:39
Speaker 7: at the peak of his powers, and he's extended those
7:42
Speaker 7: powers domestically enormously. But we have had in the last
7:46
Speaker 7: few weeks, as sort of sign of some pushback, you know,
7:49
Speaker 7: behind the scenes, a lot of the spending bills, spending
7:53
Speaker 7: cuts that the administration was hoping to see in domestic
7:56
Speaker 7: programs have all been sort of wound back. In Congress.
8:00
Speaker 7: We've had a pretty vigorous response, even from some senior
8:03
Speaker 7: Republicans to the further attack on the federal reserve. We
8:08
Speaker 7: may even get a decision this week, even before people
8:10
Speaker 7: are listening to this show, from the Supreme Court saying
8:13
Speaker 7: that he can't actually use tariffs for anything he wants.
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Speaker 7: I mean, is this possibly the high watermark for trumponomics
8:19
Speaker 7: domestically anyway.
8:21
Speaker 4: Including maybe these tariffs he's talking about for the Europeans.
8:24
Speaker 4: I think for Trump right now in the whole White House,
8:27
Speaker 4: they are just laser focused. Their north star is Tuesday,
8:31
Speaker 4: November third, for the midterm elections. To John's point, conventional wisdom,
8:35
Speaker 4: they're likely going to lose the House.
8:36
Speaker 2: This is last opportunity.
8:38
Speaker 4: And Poles continuously show that Trump ran on affordability. He
8:42
Speaker 4: ran on inflation being too high, and there's still price
8:45
Speaker 4: levels that are hurting everyday Americans, especially things like groceries,
8:48
Speaker 4: even though things like gasoline have come down. So in
8:51
Speaker 4: his speech here he will have the domestic audience in mind.
8:55
Speaker 4: They've already teased out a number of issues captain credit
8:58
Speaker 4: card fees, you know, shree'z go to talk about housing,
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Speaker 4: how to get more Americans on the housing market, going
9:04
Speaker 4: after defense contractors about their dividends and buybacks, given the
9:09
Speaker 4: fact that the United States has a trillion dollar defense
9:11
Speaker 4: budget and they are obviously privy to that.
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Speaker 2: So he's really going towards.
9:16
Speaker 4: These populist policies that you would hear from the likes
9:19
Speaker 4: of Senator Elizabeth Warren or Senator Bernie Sanders, who tried
9:22
Speaker 4: to attract Americans to stick with him ahead of the
9:26
Speaker 4: midterm elections. I think his biggest issue in Davos is
9:29
Speaker 4: does that message get completely muddled by what many in
9:32
Speaker 4: Washington would call a distraction for something like Greenland.
9:37
Speaker 7: He lives through how things will be seen on TV,
9:41
Speaker 7: and here you have a massive global stage. But to
9:43
Speaker 7: your point, he's also going to be speaking to a
9:46
Speaker 7: domestic audience. How is he going to balance those two things,
9:49
Speaker 7: especially when a lot of people here will be looking
9:51
Speaker 7: at the US economy and saying, whatever we say, it's
9:54
Speaker 7: performing better than most of ours.
9:56
Speaker 4: US economy is doing well, GDP's doing well.
9:58
Speaker 2: Stock markets at a record high.
10:00
Speaker 4: Even though there have been concerns about fendependence, the market
10:04
Speaker 4: has shrugged it off. I mean, the Bard market only
10:06
Speaker 4: moved when Trump said on TV to Kevin has said,
10:09
Speaker 4: I think they're going to maybe keep you where you are,
10:11
Speaker 4: so they're potentially pricing in someone a little bit more credible,
10:14
Speaker 4: or someone like a more hawkish Kevin Walsh. I think
10:17
Speaker 4: Trump's main message is going to be talking to what
10:20
Speaker 4: he would call the global elite and how something like
10:22
Speaker 4: the World Economic Forum has some of the smartest, most
10:25
Speaker 4: elitist people in the world, but it hasn't delivered for
10:28
Speaker 4: everyday people. To your point earlier, you see the different
10:31
Speaker 4: names on the panels. It's not about diversity, equity, inclusion,
10:35
Speaker 4: and climate. It's actually about the basics what I think
10:38
Speaker 4: a lot of conservatives in America would say the World
10:41
Speaker 4: Economic Forum has strayed away from. I'm told the speech
10:43
Speaker 4: is still being written and maybe by the time he
10:45
Speaker 4: gives it's written a few more times and lots of tweaks, see.
10:48
Speaker 2: What they will take.
10:49
Speaker 7: He's working.
10:50
Speaker 4: Yeah, he likes to weave, so he definitely will go
10:53
Speaker 4: off script.
10:53
Speaker 2: I'm sure he'll call out individuals. You know, I've traveled
10:56
Speaker 2: with him now a lot.
10:57
Speaker 4: I'm sure if he sees Jensen Wong, he'll immediately say
11:00
Speaker 4: Jensen came to support me. So you definitely will go
11:02
Speaker 4: off script where sometimes you get more interesting comments. But
11:06
Speaker 4: I think that's how he's going to frame why he
11:09
Speaker 4: decided to come to bring the largest US delegation to Davos.
11:15
Speaker 2: And Strada.
11:26
Speaker 7: Amori mentioned that he's been lurching towards quite a lot
11:30
Speaker 7: of populous options for affordability, and often feels like every
11:34
Speaker 7: morning and there's a new one that's come from through
11:36
Speaker 7: social posts, whether it's capping credit card fees ten percent
11:41
Speaker 7: of stopping private companies from buying residential real estate. I
11:46
Speaker 7: mean some of these things, you know, they got used
11:48
Speaker 7: to tariffs, but some of these things really go to
11:51
Speaker 7: the business model or some of the world's most successful companies.
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Speaker 5: And the truth is, even though the US economy is
11:56
Speaker 5: doing so well, the company stocks are doing so well,
12:00
Speaker 5: are not going to bed every night not worried. They
12:04
Speaker 5: are waking up with a headache because there is real tension.
12:06
Speaker 5: John talks about the jelly spine political leaders in Europe.
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Speaker 5: What do you talk about corporate leaders corporate America across
12:13
Speaker 5: the globe invisible spine. We are dealing with a world
12:17
Speaker 5: of radical uncertainty for them. Former UK Prime Minister Richisuna
12:21
Speaker 5: talks about this idea that the old world order is gone,
12:24
Speaker 5: the order that business has got used to, the rules
12:27
Speaker 5: based system that we all got used to, that's gone.
12:29
Speaker 5: There's no point sitting around and moaning about it. So
12:32
Speaker 5: what's interesting is when you talk to the CEOs this week,
12:36
Speaker 5: the philosophy right now, at least seems to be don't
12:39
Speaker 5: think about Trump. They're trying to shrug it off. They
12:42
Speaker 5: are trying to focus at business's hand and saying, my
12:45
Speaker 5: job is to run the business. If the US were
12:47
Speaker 5: to attack Iran tonight tomorrow morning, I still will have
12:50
Speaker 5: to run a business that works until it doesn't, which
12:54
Speaker 5: is again when we talk about how this new year
12:56
Speaker 5: has started off, we've gone from Venezuela to house, to
13:01
Speaker 5: the ideas on credit cards to before Trump leftfoot doubles
13:04
Speaker 5: this threat about suing America's largest bank, JP Morgan. You
13:09
Speaker 5: can't hope that the fire will not come to your
13:12
Speaker 5: front door and operate your business that way, And I.
13:15
Speaker 7: Have to say full disclosure as a former employee of
13:17
Speaker 7: JP Morgan. You do notice that Jamie Dimond did actually
13:21
Speaker 7: come back pretty forcefully on that threat of ten percent
13:25
Speaker 7: of capping of credit card interest, and understandably since it
13:30
Speaker 7: is such a major part of JP Morgan's business. You
13:34
Speaker 7: say they're trying to just act as if it will
13:38
Speaker 7: go away, or just hope that it will go away,
13:41
Speaker 7: But they have to also observe that this is such
13:45
Speaker 7: an unpredictable administration that any amount of currying favor, and
13:49
Speaker 7: all the things that they'd done that they thought would
13:51
Speaker 7: protect them don't seem to protect companies. I mean, Exon
13:55
Speaker 7: has also been sort of punished for being a little
13:58
Speaker 7: bit honest about how long it might take to get
14:00
Speaker 7: oil production back in Venezuela. I mean, is that also
14:03
Speaker 7: causing some chief executives to think about Plan B rather
14:06
Speaker 7: than just being totally focused on the.
14:08
Speaker 5: US, which, also, by the way, goes back to the
14:11
Speaker 5: point about Jamie Damon forcefully responding to the credit card
14:15
Speaker 5: cap proposal, the rate cap proposal. What all the CEOs
14:18
Speaker 5: right now are doing are choosing to be silent by
14:21
Speaker 5: and large, but responding to very specific policy changes. But
14:26
Speaker 5: when you have a lot of craziness across the board,
14:29
Speaker 5: and you don't have a voice in unison, you don't
14:31
Speaker 5: have a corporate block as such, then they will get
14:34
Speaker 5: steamrolled again and again and again. The thing is, the
14:37
Speaker 5: pragmatic approach they seem to be taking right now is
14:40
Speaker 5: all the growth is in the US. Every extra dollar
14:43
Speaker 5: you have, you want to invest it back in the US.
14:45
Speaker 5: So it almost makes sense for them, and the most
14:47
Speaker 5: practical approach for them is right now, align themselves and
14:51
Speaker 5: line up behind the muscular and political will of the
14:53
Speaker 5: United States. Much harder for companies outside of the US
14:57
Speaker 5: to take such an approach, I.
14:58
Speaker 7: Mean for the rest of the world. And you're also
15:01
Speaker 7: someone who's kind of written books about the operations of capitalism.
15:06
Speaker 7: I mean, it's not just that Donald Trump has sort
15:08
Speaker 7: of taken us away from a rules based world and
15:10
Speaker 7: international norms and all of those things that we talk about.
15:12
Speaker 6: All the time.
15:13
Speaker 7: Sort of feels like it's also it's about everything being
15:16
Speaker 7: on the table all the time. Like if you're an
15:18
Speaker 7: electrician and you're trying to mend a bit of the circuit,
15:21
Speaker 7: you normally disconnect it from the rest of the circuit
15:23
Speaker 7: in order to fix it. But with him, everything is
15:25
Speaker 7: live all the time. Whether you've got the Peace Prize,
15:29
Speaker 7: can blow up your trade relationship or your defense relationship.
15:32
Speaker 7: I mean, how does that change the way the global
15:35
Speaker 7: economy works?
15:36
Speaker 6: Two different things.
15:37
Speaker 3: One is very much the word that true Darren and
15:39
Speaker 3: Marie we're talking about, which is kind of trump panomics.
15:42
Speaker 3: It's about Trump and as you say, everything is on
15:44
Speaker 3: the table, anything could happen. And I think that is
15:47
Speaker 3: a kind of monarchical thing. There is a king who
15:50
Speaker 3: any morning can wake up and decide to head in
15:52
Speaker 3: a particular direction, and on the whole you are basically
15:56
Speaker 3: best if you're running a business, kind of keeping your
15:58
Speaker 3: head down, as you say, taking longer term decisions where
16:01
Speaker 3: you can, and if he actually really physically attacks something
16:05
Speaker 3: which is absolutely crucial to you, like credit cards with
16:08
Speaker 3: JP Morgan, yes you fire back on that. But the
16:11
Speaker 3: general advice to CEOs at the moment is try and
16:14
Speaker 3: stay friends with him, try and take advantage of him
16:16
Speaker 3: when he's spending money for some particular reason, but don't
16:20
Speaker 3: do it. But the more difficult world, I think for CEOs,
16:23
Speaker 3: which you could argue goes back to COVID as much
16:25
Speaker 3: as anything, is this world where suddenly you are going
16:29
Speaker 3: to deal with the world where government of all sorts
16:31
Speaker 3: matters much more than it did, and you're also dealing
16:34
Speaker 3: with an America Trump is very keen on pushing China
16:38
Speaker 3: and he is protectionist. But you're going to come out
16:40
Speaker 3: of this, I think, regardless of whether you end up
16:43
Speaker 3: with son of Trump, daughter of Trump, or a Democrat,
16:47
Speaker 3: you're going to end up with America, which is still
16:49
Speaker 3: I think a much more protectionist and a much more
16:54
Speaker 3: keen to take on China in the international sphere, then
16:58
Speaker 3: you went into it. So I think that basically businesses
17:01
Speaker 3: are taking one set of decisions, which is just.
17:03
Speaker 6: How do we get through this next period?
17:06
Speaker 3: And the monarchy may last to November, or it may
17:10
Speaker 3: last all the way two and a bit years to
17:12
Speaker 3: the end of the presidency, and we'll wait and see
17:15
Speaker 3: what Hampson the midterms. But their betting will be that
17:18
Speaker 3: Trump will become gradually less powerful. But do you have
17:21
Speaker 3: this other, longer term world underneath it, which is much
17:25
Speaker 3: much harder I think for many companies, especially global companies,
17:29
Speaker 3: to try and navigate.
17:31
Speaker 7: That's why I wonder when when one talks about Plan
17:34
Speaker 7: B right now, at least in the advanced economies where
17:37
Speaker 7: the growth is in the US, but you see Canada
17:41
Speaker 7: others talking about diversifying their alliances, opening up new trade
17:46
Speaker 7: agreements with China. They may not be the most attractive partner,
17:50
Speaker 7: but they might well be the most predictable and reliable
17:54
Speaker 7: partner in this environment.
17:55
Speaker 3: And that's interesting if you look at where Canada has
17:57
Speaker 3: ended up. Because if you eye what I've said, and
18:01
Speaker 3: virtually every poll shows it, Americans feel China is a
18:05
Speaker 3: competitor in a big way. You could argue that if
18:08
Speaker 3: you were advising governments around the rest of the world,
18:11
Speaker 3: you would say, look, no matter what Trump does, it
18:14
Speaker 3: really doesn't make much sense for you to cozy up
18:17
Speaker 3: to China, because actually that's going to be an issue
18:19
Speaker 3: in American politics forever, and America is always, perhaps increasingly
18:24
Speaker 3: is going to get more and more strident about that.
18:26
Speaker 3: And yet there you see Canada beginning to move in
18:28
Speaker 3: that direction.
18:30
Speaker 6: Europe as well.
18:31
Speaker 3: You hear people, quite sensible people saying no, no, we
18:34
Speaker 3: need to have a plan B. Not just the conventional
18:38
Speaker 3: Harris consensus, one could call it that America is generally
18:41
Speaker 3: wrong about most things. Quite sensible people are saying, we
18:44
Speaker 3: do need an alternative. That is a consequence I think
18:46
Speaker 3: of Trump.
18:47
Speaker 5: But also just talking about your Plan B, just to
18:50
Speaker 5: prove how difficult it is to plan for all of this.
18:52
Speaker 5: If you were thinking about inauguration a year ago, you
18:55
Speaker 5: were pretty certain that China will face the brunt of
18:58
Speaker 5: the first year of Trump to point, or at least
19:00
Speaker 5: that was the rhetoric coming out one year later, what
19:03
Speaker 5: you have is record traite surplus for China, the maximum
19:05
Speaker 5: number of listings on the Hong Kong Exchange. They've come
19:08
Speaker 5: out pretty well. They don't look to be struggling as
19:11
Speaker 5: much as say your traditional allies, where all the pain
19:14
Speaker 5: point has been focused on focusing Europe, Canada and elsewhere.
19:18
Speaker 5: So how do you plan for a world like that
19:20
Speaker 5: where you come in with the assumption the one thing
19:22
Speaker 5: you were certain about is that Trump is bad news
19:25
Speaker 5: for China. But when you look at twenty five percent
19:27
Speaker 5: of the second term that's already passed, it's nowhere close
19:30
Speaker 5: to that.
19:31
Speaker 3: I think that ties very quickly into the first conversation
19:34
Speaker 3: because at least somebody close to Starmer, somebody close to Macro,
19:37
Speaker 3: and we say, look, China stood up to Trump and
19:40
Speaker 3: it did. Okay, Europe is not without some degree of
19:44
Speaker 3: leverage in these.
19:44
Speaker 4: Things, and China was able to have that surplus with
19:47
Speaker 4: actually their exports in the United States going down, which
19:50
Speaker 4: means they're pushing their products in other markets. And I
19:52
Speaker 4: think this is the problem Europe's in and this unintended counterquence.
19:55
Speaker 2: Of some of Trump's policies.
19:58
Speaker 4: You would want administration early on talked about like a
20:02
Speaker 4: North America fortress to combat China, but we just sort
20:05
Speaker 4: of lost Prime Minister Mark Karney, we lost the Prime
20:08
Speaker 4: Minister of Spain, Sanchez, and Europe is being hollowed out
20:11
Speaker 4: its industrial base by China. Look at all the deals
20:14
Speaker 4: that are being done with byd look at what's going
20:16
Speaker 4: on with Germany, and I think the Trump administration would
20:19
Speaker 4: want Europe the same way they acted about NATO anchor
20:23
Speaker 4: the conversation to this extreme reports. In his first term,
20:26
Speaker 4: is he going to leave NATO or not? The end
20:28
Speaker 4: goal was he got European countries to increase their defense.
20:32
Speaker 4: I think the end goal this administration would like to
20:34
Speaker 4: see is them take a harder line on China. But
20:36
Speaker 4: that's incredibly hard to do when you're talking talking about
20:39
Speaker 4: going after.
20:40
Speaker 7: This is the flip side of the This is the
20:41
Speaker 7: flip side that it's negative for the US of having
20:43
Speaker 7: everything be on the table. You can't expect your closest
20:47
Speaker 7: allies to back you, whether it's on Ukraine or in
20:50
Speaker 7: Gaza or on China, if you're attacking them on all
20:54
Speaker 7: these other fronts.
20:55
Speaker 4: Right, Although Trump might use it as points of leverage
21:00
Speaker 4: to get to end destinations, but it is true he
21:03
Speaker 4: use everything as negotiating.
21:04
Speaker 2: No deal's really ever done. It's just a constant conversation.
21:08
Speaker 7: But if no deal's ever done, what's the point.
21:10
Speaker 2: Of doing a deal? A great it's a great question.
21:15
Speaker 7: I think that might be for me. That's the question
21:17
Speaker 7: of this week, I think, or at least that chief exactly.
21:19
Speaker 6: Is our thing?
21:20
Speaker 3: Greenland A long time writing about conservative America. If Trump
21:24
Speaker 3: deals with Iran, if Trump deals with Cuba, he will
21:28
Speaker 3: go into the conservative.
21:30
Speaker 6: Halos of history.
21:31
Speaker 3: You know, he was the man who managed to change
21:33
Speaker 3: Cuba and Manumac changed Iran.
21:35
Speaker 6: Nowhere in all the.
21:38
Speaker 3: Millions of the world words that have been written in
21:40
Speaker 3: the Republican Party and Conservative America as the word Greenland
21:42
Speaker 3: appeared once. It's not It wasn't considered a core priority
21:48
Speaker 3: of the right in America to want these things. Venezuela
21:51
Speaker 3: may be quite useful. They were a pain in the neck,
21:54
Speaker 3: but it's not as big as some of these other things.
21:56
Speaker 3: So why exactly is he going this?
22:00
Speaker 7: It so just shifting back again a little bit to
22:15
Speaker 7: the domestic annery. If the Supreme Court does rule that
22:20
Speaker 7: the president can't just slap taris on any country he
22:22
Speaker 7: wants for any reason, or at least not without congressional approval,
22:26
Speaker 7: how does the administration respond to.
22:28
Speaker 4: That Trump has talked about out of the midterms, this
22:31
Speaker 4: thing called a tariff dividend, which is very circular. Set
22:35
Speaker 4: up high tariffs but then give out to American consumers
22:37
Speaker 4: two thousand dollars checks. I don't think there is any
22:41
Speaker 4: appetite for this in Congress, but it doesn't mean the
22:43
Speaker 4: President is not going to talk about it and make
22:45
Speaker 4: it a priority, so they won't be able to use
22:48
Speaker 4: that money. We potentially could see some movement in the
22:50
Speaker 4: bond market, which actually is something that has been a
22:54
Speaker 4: check on Trump. It was a massive check on Trump
22:56
Speaker 4: in April. That was the moment he decided he was
22:58
Speaker 4: going to reverse course on trade and not use it
23:02
Speaker 4: as a new rules of road, but.
23:03
Speaker 2: Actually start to negotiate.
23:05
Speaker 4: But whether or not the Supreme Court says AEPA, which
23:07
Speaker 4: is the justification he has. Most of these tariffs are reciprocal,
23:10
Speaker 4: and the fentanyl tariffs is legal or not. They have
23:13
Speaker 4: a slew of legal alternatives that they can use. There
23:17
Speaker 4: are tons of sections two thirty, twos three two's already
23:22
Speaker 4: they're enacted for other tariffs we have in the United
23:25
Speaker 4: States and other countries, and this administration is already preparing them.
23:29
Speaker 4: So a lot of people are just looking through it
23:31
Speaker 4: because regardless if they're using IEP as a justification or not,
23:35
Speaker 4: they'll just find another way to justify them.
23:37
Speaker 7: It's the bigger check potentially that they are very unpopular,
23:42
Speaker 7: and rightly or wrongly, tariffs are associated domestically with making
23:48
Speaker 7: the cost of living affordability problem worst. We had a
23:51
Speaker 7: report from the Keel Institute for the World Economy which
23:53
Speaker 7: was out this week saying that US consumers had paid
23:57
Speaker 7: ninety six percent of the tariffs. He is seemingly accepted
24:03
Speaker 7: that in suspending them in somewhere as beef and other things.
24:07
Speaker 7: So if you're one of America's allies, aren't you just
24:09
Speaker 7: waiting for popular opinion to do what the Supreme Court
24:13
Speaker 7: may or may not do.
24:15
Speaker 4: Potentially, when it comes to places where we saw high
24:18
Speaker 4: tariff Trump has done one eighties, like in some imported
24:23
Speaker 4: food products. But for the most part Trump, I mean,
24:26
Speaker 4: the other day he reiterated that it's still his favorite
24:28
Speaker 4: word of all the words.
24:29
Speaker 2: I think he said this to you as well.
24:31
Speaker 8: John.
24:32
Speaker 4: He is the tariff man, and he truly believes it's
24:35
Speaker 4: important for rebuilding the American industrial base. I don't see
24:40
Speaker 4: them going away even if they show back up in polls.
24:43
Speaker 4: I remember the word tariff and a lot of consumer
24:45
Speaker 4: sentiments around last April kept coming up and people were
24:49
Speaker 4: really concerned over the summer, but that has started to wane,
24:52
Speaker 4: So it could be an issue if once again he's
24:55
Speaker 4: going back to trade negotiations because AIPA was struck down,
24:59
Speaker 4: and then that's to seep through again in consumer sentiment
25:02
Speaker 4: in polling ahead of the midterms, when he really needs
25:04
Speaker 4: to get the American consumer feeling well about their prospects
25:09
Speaker 4: because you can continuously in poll after poll Americans do
25:13
Speaker 4: not feel good about how expensive things are and the affordability,
25:17
Speaker 4: which is why we see him really go towards these
25:20
Speaker 4: populist messages.
25:22
Speaker 5: But that goes back to the corporate conversation, right, if
25:24
Speaker 5: you're a leader, how do you plan on the way over?
25:26
Speaker 5: I was reading Lloyd Blanc and the former Goldman CEO's
25:29
Speaker 5: his memoir, and he talks about the mid nineteen nineties
25:32
Speaker 5: after the fall of USSR and how excited they were
25:35
Speaker 5: about opening offices in Moscow and Seoul and Indonesia and
25:38
Speaker 5: other places. Right now, thirty years later, it seems like
25:42
Speaker 5: we're in the middle of if nothing else. We can
25:44
Speaker 5: call this a geopolitical recession. You have to focus local,
25:47
Speaker 5: and you have to think about that. And in that moment,
25:51
Speaker 5: can they still go back to talking about the thing
25:53
Speaker 5: that they've been talking about for the last thirty years.
25:56
Speaker 5: And it's not just the threat of Trump's uncertain policies
26:00
Speaker 5: that's weighing on them. If you come to this week,
26:03
Speaker 5: the other big conversation that we haven't talked about but
26:05
Speaker 5: is dominating most of the conversations artificial intelligence, because that
26:09
Speaker 5: is also going to have a big impact on these businesses.
26:12
Speaker 5: John and I were talking about this earlier, about every
26:15
Speaker 5: company having to think about this idea of a chief
26:17
Speaker 5: risk officer from a resiliency perspective. If anything, the lesson
26:21
Speaker 5: that you draw from post COVID is are you resilient
26:25
Speaker 5: enough as a company? That lesson has to be applied
26:28
Speaker 5: in Trump two point over the remaining Trump piers as well.
26:32
Speaker 5: That's a big challenge and that's perhaps one reason why
26:34
Speaker 5: this week is perhaps less about what's happening inside Congress
26:38
Speaker 5: Center and more about what's happening across the road at
26:40
Speaker 5: the Belvedere. It's more commercial, less virtual signal.
26:43
Speaker 4: I'm glad she brought this up because the President just
26:45
Speaker 4: had a White House event and he was flanked not
26:47
Speaker 4: just by Republican governors like Glenn Youngkin, but also Jos
26:51
Speaker 4: Shapiro of Pennsylvania, and the message of what he was
26:54
Speaker 4: talking about was electricity prices going up for consumers because
26:57
Speaker 4: of data centers coming in, which is huge in virgin
27:00
Speaker 4: which the mid midterm elections in Virginia, New Jersey we
27:03
Speaker 4: saw go to the Democrats and they ran on electricity prices.
27:07
Speaker 4: Trump basically is telling tech companies, you want data centers,
27:11
Speaker 4: you need to pay a higher fee, and you need
27:13
Speaker 4: to subsidize electricity for American consumers.
27:16
Speaker 2: So that's interesting.
27:17
Speaker 7: I'm glad you got onto AI because I was going
27:19
Speaker 7: to end up there because in any other year it
27:22
Speaker 7: would be the dominant the only thing we're thinking about.
27:25
Speaker 7: I suspect it will still be one of two things
27:28
Speaker 7: that we're mainly focused on.
27:29
Speaker 2: At Davos.
27:30
Speaker 7: We had a great piece this morning that was talking
27:33
Speaker 7: about going from rule based finance to power based finance,
27:37
Speaker 7: Survival of the richest, not survival of the fittest. In
27:41
Speaker 7: that world where there are a lot of people, certainly
27:45
Speaker 7: not a lot of countries getting together and writing rules
27:48
Speaker 7: and thinking about risks. How does that affect the way
27:52
Speaker 7: AI hits the global economy and is rolled out.
27:55
Speaker 3: I think it's possible, you know, we could look back
27:57
Speaker 3: on this Davos as peak Trump. One way you could
28:00
Speaker 3: look at it as peak tech is that you know,
28:03
Speaker 3: you we wander around here. Everyone here has seen pretty
28:06
Speaker 3: much every you know, every other shop has got some
28:10
Speaker 3: the words AI appearing above it, and there is a
28:12
Speaker 3: lot of money floating around everyone's building ever bigger data centers.
28:16
Speaker 3: I saw someone earlier said, you know, if you put
28:18
Speaker 3: fifty billion into your data center, do you worry that
28:21
Speaker 3: somebody else is putting sixty? And maybe something's this sort
28:23
Speaker 3: of bidding up going on. But in general, whenever you
28:27
Speaker 3: have a a revolution of the scale that we're talking about,
28:32
Speaker 3: and I think it does tie a little bit into
28:33
Speaker 3: the midterms in a very vague way at the moment,
28:36
Speaker 3: there will be a lot of people sitting thinking my
28:38
Speaker 3: job is at risk.
28:40
Speaker 6: There's a lot of you know, it's the.
28:42
Speaker 3: First time that's probably going to hit college educated white
28:46
Speaker 3: Americans on the coasts. That's a very different different group
28:50
Speaker 3: of people than have hitherto been hit. And I think
28:53
Speaker 3: on the whole you're going to end up with some
28:55
Speaker 3: kind of backlash against the tech companies. You've already seen it.
28:58
Speaker 3: I would argue completely, just viably in the ways they've
29:02
Speaker 3: done social media and the lack of rules they face
29:05
Speaker 3: there than actually we all do around this table. You
29:08
Speaker 3: don't head towards periods of disruption like this without political consequences.
29:12
Speaker 3: And I think Trump is sort of finding his way there.
29:16
Speaker 3: But you look back one hundred years ago, Teddy Roosevelt
29:19
Speaker 3: was condemning the robber barons and the malefactors of great wealth,
29:23
Speaker 3: and that in some ways was a much more stretched
29:25
Speaker 3: out transition that we're facing now, and so I would
29:28
Speaker 3: expect there to be there will be ever more political
29:31
Speaker 3: pressure building up in both parties on.
29:33
Speaker 7: That, and focused also on wealth. There's a spring of countries.
29:37
Speaker 7: I mean, obviously California is proposing wealth tax, a wealth tax,
29:41
Speaker 7: and across Europe there's a lot of voices and not
29:44
Speaker 7: just on the left, also from some of the far
29:46
Speaker 7: right parties talking about wealth taxes. How Worriedestreea do you
29:50
Speaker 7: think as anyone in Dallas about wealth taxes?
29:53
Speaker 2: Oh?
29:53
Speaker 5: Well, that's what's interesting to me is about this whole
29:55
Speaker 5: point about the tech sector is does the Trump administration
29:59
Speaker 5: and does Trump sour on that industry, Because if there's
30:02
Speaker 5: any corner of Corporate America or any sort of companies
30:05
Speaker 5: across the world, the sector that's most pleased with Donald
30:07
Speaker 5: Trump has to be the tech industry because he's put
30:11
Speaker 5: his shoulder into the infrastructure build out in the US
30:14
Speaker 5: deregulation push in some ways, using the US government to
30:17
Speaker 5: act as the chief salesperson to push for the full
30:21
Speaker 5: stack AI build out, you know, going to the Middle
30:24
Speaker 5: Eastern countries and saying you need to buy American over Chinese.
30:28
Speaker 5: That is in area where the tech titans are extremely
30:31
Speaker 5: happy as a reason their wealth has gone up so much.
30:36
Speaker 5: But when you factor that in against the twenty twenty
30:38
Speaker 5: six midterms and the populist term that Trump is taking,
30:42
Speaker 5: does he then also look at this sector and takes
30:44
Speaker 5: some other measures that were finally, much like everywhere else,
30:48
Speaker 5: he also sours on tech. And they have a serious
30:51
Speaker 5: problem that they will have to deal with and not
30:53
Speaker 5: the support of the administration.
30:55
Speaker 7: And Marie if Ai and worries about AI not just
30:59
Speaker 7: the higher cost of electricity for people, but also possible
31:02
Speaker 7: crowding out of other investments, other kinds of jobs, people
31:05
Speaker 7: worrying about their own jobs. If that becomes really politically
31:08
Speaker 7: salient going into the midterms. Isn't the President now very
31:13
Speaker 7: much joined in people's minds with AI, with the tech Titans,
31:17
Speaker 7: they were all there at the inauguration. He's kind of
31:20
Speaker 7: implicated in all of it, isn't he.
31:21
Speaker 3: Yeah?
31:21
Speaker 4: And to Shree's point, when it comes to they couldn't
31:24
Speaker 4: be happier with him.
31:25
Speaker 2: Jensen Wang and.
31:26
Speaker 4: Video were very frustrated with the Biden administration. They had
31:29
Speaker 4: this diffusion rule. Not to get to technical, but they
31:32
Speaker 4: basically divvied up the world in different parts. You're either
31:35
Speaker 4: tier one, two or three. Trump came in and said
31:38
Speaker 4: we're getting rid of the diffusion rule. And I saw
31:40
Speaker 4: Jensen Wong and Riot and he said, diffusion Rule's dead.
31:43
Speaker 2: He's like, this is.
31:43
Speaker 4: A whole new world, meaning they can go and bring
31:47
Speaker 4: their chips.
31:49
Speaker 7: But that was mainly about stopping them selling to people
31:50
Speaker 7: who might then give them to China.
31:52
Speaker 4: Right. So I always joked that Jensen Wong is running
31:55
Speaker 4: AI policy out of the White House because what in
31:58
Speaker 4: Video wanted they've got.
31:59
Speaker 2: And I think think maybe to that point, Trump this is.
32:01
Speaker 4: Why he feels like he can say to the tech
32:03
Speaker 4: companies with somethinglike electricity, Silicon Valley has done well. Main
32:08
Speaker 4: Street needs to do well, which is why you need
32:10
Speaker 4: to pay and subsidize for some of this electrical build out.
32:14
Speaker 4: It's the same way the Treasury Secretary will say Wall
32:16
Speaker 4: Street done as well, We're now focused on Main Street.
32:19
Speaker 4: They might take a similar tact when it comes to
32:22
Speaker 4: the tech companies because Trump has made it very easy
32:27
Speaker 4: for them to expand, not just in the United States
32:29
Speaker 4: but around the world.
32:30
Speaker 5: But that proposal in itself is not as harsh and
32:32
Speaker 5: as punitive as just reading out the headline makes it sound.
32:36
Speaker 5: Because tech companies right now are willing to pay for
32:39
Speaker 5: electricity because there isn't enough power generation, so right now
32:42
Speaker 5: that isn't a big problem for them.
32:44
Speaker 6: And again, this is.
32:44
Speaker 5: An industry with some serious and intense internal rivalries. And
32:49
Speaker 5: yet when all of them can band together and say
32:51
Speaker 5: everything that the President has done has been great for us,
32:53
Speaker 5: tells you how much this has been a pro ai
32:57
Speaker 5: pro us tech administration. That is why when you someone
33:00
Speaker 5: like Mark Benioff coming into Switzerland and talking about I
33:03
Speaker 5: am extremely keen to hear the President continue to force
33:07
Speaker 5: as see yourself force continuing to prioritize US companies. I
33:12
Speaker 5: also want to hear remarks from European regulatory officials because
33:16
Speaker 5: they made some seriously controversial remarks last year. That's not
33:20
Speaker 5: how business leaders usually talk about the regulatory landscape and
33:24
Speaker 5: another continent. But they feel emboldened to be able to
33:26
Speaker 5: say that because they know they have the backing of
33:28
Speaker 5: these I.
33:28
Speaker 3: Think there's a very clear division though that from the
33:30
Speaker 3: tech titans point of view, people like Mark Great, you know,
33:34
Speaker 3: why not make as much use of this man whilst
33:36
Speaker 3: you can. On the other hand, Trump is a populist.
33:40
Speaker 3: I think the more this goes on, the more unpopular
33:43
Speaker 3: this particular group of people come. The idea that he
33:47
Speaker 3: is gaining politically by being seen to be close to them.
33:51
Speaker 3: I think maybe Trump continues that, but the people who
33:54
Speaker 3: want to be his successors, I think will be much
33:56
Speaker 3: less willing to do it. And I think if you
33:59
Speaker 3: look at other originally, the Robert Barons were great people
34:03
Speaker 3: if you were a politician to be associated with previous things.
34:06
Speaker 3: People have banged on about the white you know, the
34:08
Speaker 3: white heat of technology was one British Prime minister talked
34:11
Speaker 3: about and it makes you look trendy and good and
34:13
Speaker 3: ahead of things.
34:14
Speaker 6: But once you get.
34:16
Speaker 3: Associated with lots of people losing their jobs exactly with
34:19
Speaker 3: electricity prices going up or whatever then suddenly, and also
34:22
Speaker 3: with enormous inequality, then it gets more difficult. So I
34:26
Speaker 3: would be even if the business people are making the
34:29
Speaker 3: most out of it, and good luck to them, I
34:32
Speaker 3: think from Trump's point of view, actually strangely, he'll be
34:35
Speaker 3: ever less keen to get a photograph with it when.
34:37
Speaker 2: People start losing their jobs.
34:38
Speaker 4: I think that's when it will get a lot harsher.
34:41
Speaker 2: To John's point.
34:41
Speaker 4: Steve Bannon, who is pretty far right, talks about this
34:46
Speaker 4: all the time. He's very anti companies like open AI
34:49
Speaker 4: and anthropic. He says, it's going to be taking people's jobs,
34:52
Speaker 4: and that is I think when you actually start to
34:55
Speaker 4: see that happen. Though you haven't truly seen AI steel jobs.
34:58
Speaker 4: It's a very high unemployment rate right now actually for
35:01
Speaker 4: college grads, but no one has really been able to pinpoint.
35:04
Speaker 2: Is it specifically because of AI.
35:07
Speaker 4: But once that happens, you'll see I don't even think
35:09
Speaker 4: just a distance from the White House, you're going to
35:11
Speaker 4: see some fierce criticism as well from both sides of
35:14
Speaker 4: the parties from Congress.
35:16
Speaker 7: Okay, so that would be my last question. We can
35:17
Speaker 7: run out of times so very briefly. But I think
35:20
Speaker 7: for all of you the question that people who are
35:22
Speaker 7: not on this mountain will most often ask. I'm sure
35:24
Speaker 7: they ask all of you, they ask me, is with
35:28
Speaker 7: all this going on, having listened to this conversation about
35:31
Speaker 7: the end of global norms and the lack of rulemaking unpredictability.
35:34
Speaker 7: If we'd gone into it, we could have also talked
35:36
Speaker 7: about no longer having immigration, seemingly in the US, which
35:40
Speaker 7: has been entirely reliant on immigration for a lot of
35:42
Speaker 7: its growth in the last few years, getting in the
35:45
Speaker 7: way of more electricity generation because of not wanting to
35:47
Speaker 7: have renewables and that push all of those things. They
35:51
Speaker 7: would hear that and say, how on earth are the
35:53
Speaker 7: markets still so high? How can all these business people
35:56
Speaker 7: here be so calm and confident in the future, sure
36:00
Speaker 7: of the economy? Will all of these things happening? Can
36:03
Speaker 7: that last? That ability for the wall streets and a
36:07
Speaker 7: big part of the economy to somehow still be independent
36:10
Speaker 7: of these concerns.
36:11
Speaker 5: A lot of these business people are happy when you're
36:14
Speaker 5: making one hundred dollars off of eight people instead of
36:18
Speaker 5: eighty people. So the technology and the embrace of that
36:20
Speaker 5: technology has helped them, but sooner or later they will
36:23
Speaker 5: have to worry about the trickle down effects of it,
36:26
Speaker 5: and which is why, perhaps a little shocking, but when
36:29
Speaker 5: Klaus Schwab, the ultimate champion of this conflict, the one
36:32
Speaker 5: who set up this velvet rope summit and what it
36:34
Speaker 5: has been for over fifty years, and last year he
36:37
Speaker 5: resigned from the boredom in a series of scandals. But
36:40
Speaker 5: he's out with the book last week where he actually
36:42
Speaker 5: says when bad decisions are made, that is when the
36:46
Speaker 5: common man, that is when the citizen starts to think
36:49
Speaker 5: about malicious intent, and that's what you have to.
36:52
Speaker 6: Be really, really careful about.
36:55
Speaker 7: The money.
36:56
Speaker 3: I'm very bad on market timing, but one of the
36:58
Speaker 3: sort of basic rules of that economics as if something
37:01
Speaker 3: cannot carry on forever, it will stop. And my instinct
37:06
Speaker 3: is the world you depicted is one that cannot carry
37:09
Speaker 3: on forever.
37:09
Speaker 6: So from that point of view, I'm bearish, well bearish.
37:13
Speaker 7: But remembering the slogan we had from a big DeVos
37:16
Speaker 7: curtain raiser this morning, of it still the survival of
37:19
Speaker 7: the riches. I suspect the rich will still be with
37:21
Speaker 7: us in a year's time. John Stree and Marie, thank
37:24
Speaker 7: you very much.
37:25
Speaker 1: Thank you.
38:01
Speaker 7: Then the cover left so that we returned