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Bonus: How Markets Might Be Wrong About Trump · Trumponomics

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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Speaker 2: Hi Stephanie Flanders here with a bonus episode of our
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Speaker 2: Botonomics series, because well, we just couldn't resist. It's a
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Speaker 2: good one, and who knows, if you enjoy it, there
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Speaker 2: might be more to come. In this vein the focus
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Speaker 2: is trumpnomics, the economic world of Donald Trump, how he's
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Speaker 2: already shaped the global economy, and what on earth is
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Speaker 2: going to happen next. To help me tackle this subject,
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Speaker 2: I've recruited two of Bloomberg's finest, each with a unique
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Speaker 2: perspective on Donald Trump. Anna Wong, chief US economists for
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Speaker 2: Bloomberg Economics, and Josh Green, a national correspondent at Bloomberg
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Speaker 2: BusinessWeek based in DC who covers politics. Enjoy unless you've
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Speaker 2: been living in a very deep forest with bad WiFi.
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Speaker 2: You'll have noticed that investors have responded pretty favorably to
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Speaker 2: the reelection of Donald Trump. Stocks her up, so's the dollar,
1:04
Speaker 2: Tesla stock, Bitcoin is way up. In general, You'd have
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Speaker 2: to say Wall Street seems to think that Trump two
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Speaker 2: point zero will be good for them, good for capitalists.
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Speaker 2: But at the same time you have a long line
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Speaker 2: of economists, sometimes working for the same Wall Street institutions
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Speaker 2: telling us that Trump's economic policies, if implemented as advertised,
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Speaker 2: the stuff he promised on the stump, about tariffs on
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Speaker 2: all imports and mass deportations of illegal immigrants, all all
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Speaker 2: those things will raise inflation, slow growth, and stoke uncertainty,
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Speaker 2: which investors are supposed to hate. So I quite like
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Speaker 2: to tease out whether there's a contradiction between some of
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Speaker 2: those beliefs. Helping me with that is Anna Wong, Chief
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Speaker 2: US Economists for Bloomberg Economics. Before that, she's worked at
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Speaker 2: the Federal Reserve Board, and while she was at the FED,
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Speaker 2: she served in the Trump White House and twenty nineteen
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Speaker 2: twenty twenty on sircumment at the Council of Economic Advisors.
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Speaker 2: She's also worked at the US Treasury. We also have
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Speaker 2: Josh Green, national correspondent at Bloomberg BusinessWeek, author of several books,
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Speaker 2: including I Guess, most relevantly for this purpose, the number
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Speaker 2: one New York Times bestseller Devil's Bargain, Steve Bannon, Donald Trump,
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Speaker 2: and The Storming of the Presidency. Anna I mentioned those
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Speaker 2: two beliefs often held by the same person. Trump's economic
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Speaker 2: policies would raise inflation, slow growth, stoke uncertainty, but somehow
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Speaker 2: he's still going to be phenomenally good for US investors
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Speaker 2: and companies. Am I right? There is a bit of
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Speaker 2: a contradiction there.
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Speaker 1: I think Wall Street economist and Wall Street traders are
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Speaker 1: two different animals. So a lot of traders are very practical.
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Speaker 1: So they're basing their bets, pouring all the money and
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Speaker 1: stocks right now on the experience from the first Trump administration,
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Speaker 1: And if you looked at the stock performance at that period, indeed,
3:02
Speaker 1: it was quite phenomenal. So the S and P five
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Speaker 1: hundred rose fifty five percent from late twenty sixteen to
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Speaker 1: the end of twenty nineteen. Now, in terms of the
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Speaker 1: tension created by Donald Trump's threats on tariffs, indeed, it's
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Speaker 1: true that I think it's now well documented that every
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Speaker 1: time Trump tweets a threat on tariff, the stock market falls.
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Speaker 1: And if you add up all these tweets in his
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Speaker 1: first administration and looked at the cumulative stock decrease due
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Speaker 1: to his tweets, you actually would find that his tweets
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Speaker 1: are responsible for about ten percent lower stock market value.
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Speaker 2: Now that is news you can use.
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Speaker 1: I like that stat We actually did this when I
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Speaker 1: was at the CEA. In fact, that was one of
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Speaker 1: the study we undertook to document what has the impact
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Speaker 1: of all this tariff announcement. Overall? Stock markets still increased
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Speaker 1: by fifty five percent, but it could have increased by
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Speaker 1: sixty five percent. So I guess in that sense there
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Speaker 1: is some tension, but I think the traders are still
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Speaker 1: thinking that on net it will be positive. But let's
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Speaker 1: keep in mind that in the first Trump administration, a
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Speaker 1: lot of the stock market increase was due to the
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Speaker 1: tax cuts in TICCHA, and at that time that was
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Speaker 1: clearly a big reform in the text code. So corporate
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Speaker 1: tax rate fall from you know, in the thirties to
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Speaker 1: the twenties, and that is a very sizable increase that
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Speaker 1: they're not going to be able to replicate.
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Speaker 2: No, I guess the big thing we're talking about in
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Speaker 2: that front is just to prevent those text cuts from expiring,
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Speaker 2: which you would have thought could not possibly have the
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Speaker 2: same kind of impact exactly.
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Speaker 1: So I think in one calculus they have to think
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Speaker 1: about this time around, is well, suppose that all these
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Speaker 1: trade drama knock down, you know, ten to fifteen percent
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Speaker 1: of the stock market will a boost from the other
5:00
Speaker 1: policies be able to more than offset that. I would
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Speaker 1: argue that right now, the stock market is already their
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Speaker 1: valuations are already very rich, and there's less upside, but
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Speaker 1: just more downside. But you know, I'm not equity a strategy.
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Speaker 2: No, Luckily, we don't have any equity statutist. In this conversation,
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Speaker 2: you've painted a fantastic sort of picture of people in
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Speaker 2: the Council Economic Advisors examining the tweets and then potentially
5:28
Speaker 2: going to the President to talk to him about the
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Speaker 2: impact on the stock market. And I want to get
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Speaker 2: into that and his view of Tariff's in a minute.
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Speaker 2: But Josh, I mean you're someone who, in writing that book,
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Speaker 2: you were very close to Trump and Steve Bannon as
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Speaker 2: as the campaign unfolded and as they went into the
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Speaker 2: White House. When you see what's happening at mare A Lago,
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Speaker 2: now the dynamics of this potentially this new administration, and
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Speaker 2: then think about what Wall Street seems to think about it,
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Speaker 2: do you think there'd be hopelessly optimistic?
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Speaker 3: I do, and with a proviser that I too, am
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Speaker 3: not an equity strategistic your political reporter, I do think
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Speaker 3: you know the way I think of it talking to
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Speaker 3: people down in mar Alago now, talking to some of
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Speaker 3: my Wall Street source. So it is clearly right now
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Speaker 3: Trump is in a honeymoon phase. Traders are exuberant. Everybody's
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Speaker 3: excited about tax cuts, the regulation mergers, the rise of crypto,
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Speaker 3: perhaps the fall of Lena Khan. Expectations are running sky high.
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Speaker 3: But I tend to analyze Trump like you have to
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Speaker 3: think about two categories. One is the expectations and then
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Speaker 3: there's the execution. I think what Wall Street might be
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Speaker 3: forgetting right now is that Trump always brings with him
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Speaker 3: a certain level of chaos. That means the expectation or
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Speaker 3: the execution is never as smooth as he'd like it
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Speaker 3: to be. He's an impulsive guy. He gets angry, things
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Speaker 3: go wrong, and I think that you know the fact
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Speaker 3: that he he's not president yet and he isn't running
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Speaker 3: the government yet, has led people perhaps to discount that
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Speaker 3: second part of the equation that once he gets in there,
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Speaker 3: especially given the types of people that he wants to
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Speaker 3: surround himself with in his new administration, things could go
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Speaker 3: off the rails very quickly. And that's something that every investor,
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Speaker 3: I think, is going to want to keep a close eye.
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Speaker 2: It's interesting that goes slightly against you know, the expectation
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Speaker 2: had been chaos Trump one point zero, and he's had
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Speaker 2: four years to know Licky's wounds, think about his mistakes.
7:34
Speaker 2: This is this little storyline. Now he's back, he's less
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Speaker 2: constrained in all the ways that we know, lack of
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Speaker 2: guard rails, etc. So potentially more radical, but also more disciplined.
7:47
Speaker 2: You know, he kind of knows his way around the
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Speaker 2: White House, he knows his way around government. You think
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Speaker 2: that's not going to make a difference.
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Speaker 3: That was the thought process going in. But I think
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Speaker 3: that the big revelation about Trump two point is that
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Speaker 3: he's not necessarily going to be surrounded by savvy veterans
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Speaker 3: of government. Look, the number that jumps out to me
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Speaker 3: is that Trump has nominated eleven Fox News personality to
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Speaker 3: serve in his administration, including his Secretary of State and
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Speaker 3: Attorney General, although the Attorney General, Matt Gates, has now
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Speaker 3: bowed out. I mean to me, that raises the question
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Speaker 3: of who's actually going to be running the government and
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Speaker 3: what happens when a crisis inevitably hits. Is Trump's administration
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Speaker 3: going to be able to perform as well as an
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Speaker 3: ordinary Democratic or Republican administration, or even Trump's last administration
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Speaker 3: where you did have military generals, you had a segment
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Speaker 3: of the Republican Party that wasn't MAGA, people like Mitt Romney.
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Speaker 3: All those people are gone this type around, this time around,
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Speaker 3: and Trump has made clear that he wants to come in.
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Speaker 3: He wants to aggressively impose tariffs, cut taxes, toport millions
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Speaker 3: of immigrants. I was talking to a Democratic source yesterday
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Speaker 3: who said, the thing that people aren't thinking about is
9:05
Speaker 3: Trump wants to drive one hundred miles an hour, but
9:08
Speaker 3: this time there are no guardrails in the highway. I
9:09
Speaker 3: think that's the right way to think about Trump.
9:12
Speaker 2: Anna. The Council of Economic Advisors was perhaps it was
9:14
Speaker 2: a haven of efficiency.
9:16
Speaker 3: But.
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Speaker 2: Absolutely not all right, So, I mean, what does that
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Speaker 2: ring true to you? Anna?
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Speaker 1: I have to disagree a bit with Josh here. I
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Speaker 1: have only been focused on the economic personnel nomination, and
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Speaker 1: I thought that the economic nominees that Trump has announced
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Speaker 1: so far sounds like business as usual. In fact, I
9:41
Speaker 1: think that the nomination of Scott Dissent and Kevin Hassett
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Speaker 1: actually felt more solid than the first administration and in
9:52
Speaker 1: terms of chaos, Josh, you mentioned chaos, I think there
9:57
Speaker 1: are other words to describe it. Maybe another you could
10:02
Speaker 1: think about it as a euphemism, but one word would
10:07
Speaker 1: be a team.
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Speaker 2: Of rifle.
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Speaker 1: Because I so, while I have not briefed the president
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Speaker 1: uh a former president, I had briefed principles on these
10:22
Speaker 1: potus meetings, and I got debriefed from it. And the
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Speaker 1: sense I got from it is that Donald Trump enjoys
10:30
Speaker 1: seeing his economic cabinet officials debates or fights. I think
10:37
Speaker 1: it's part of his style, this chaotic process, if you
10:40
Speaker 1: want to describe it that way, is for him to
10:44
Speaker 1: hear a range of views. So the idea that he
10:48
Speaker 1: is a just this out of touch emperor only listening
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Speaker 1: to this that he wants to hear, I think that
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Speaker 1: is not accurate. The chaos I personally experience in their
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Speaker 1: first administration, outside of just being there during the thick
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Speaker 1: of the pandemic while it was happening and during the
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Speaker 1: trade war. Outside of those policy related drama, the drama
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Speaker 1: I experience is the leaks whenever there is a policy proposal,
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Speaker 1: and in all administration there will be crazy economic proposals.
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Speaker 1: I mean the the the objective of CEA is to
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Speaker 1: do an objective analysis on any kind of crazy economic
11:35
Speaker 1: right and then shoot it down. We just shoot down
11:37
Speaker 1: a lot of stuff, right. But then what what in
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Speaker 1: a Trump administration, what will usually happen is when a
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Speaker 1: proposals come in and suddenly the next day it would
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Speaker 1: it will show up in the media. And in fact,
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Speaker 1: I remember one very specific incident where it actually showed
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Speaker 1: up in the Bloomberg and then the next day the
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Speaker 1: Chao is a order.
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Speaker 3: I really did appreciate all the lead as an insider.
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Speaker 1: What happened is actually sow's distrust between everybody because there's
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Speaker 1: only a small group of people who are in the
12:11
Speaker 1: in the no and then suddenly the story appears in
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Speaker 1: the media and the whole policy process just breaks down.
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Speaker 1: There's and then people started behaving in a way where
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Speaker 1: I don't trust you, you don't trust me. Let's control the information.
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Speaker 2: Okay, But you started off disagreeing with Josh, and then
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Speaker 2: you may seem to be coming back to a slightly
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Speaker 2: more chaotic vision.
12:30
Speaker 3: And I made a great point there about the economic team.
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Speaker 3: That is the one exception to what I was talking
12:34
Speaker 3: about earlier. And let me emphasize to Scott Bess in
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Speaker 3: his Treasury secretary, a story that Bloomberg News broke. By
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Speaker 3: the way, I think the most positive.
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Speaker 2: You may have been on the byline I seem to
12:44
Speaker 2: I might have been. I might have been.
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Speaker 3: It's probably the most positive sign I think for Wall
12:48
Speaker 3: Streets and Marcus. A universal praise among my Democratic and
12:52
Speaker 3: Republican political sources that a quote unquote adult in the
12:55
Speaker 3: room is going to be Treasury Secretary. To me, however,
12:57
Speaker 3: as a political reporter, as somebody you know who writes
13:00
Speaker 3: about all the backstabbing, is the recipient of some of
13:02
Speaker 3: these leaks. The difficult thing is, at the end of
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Speaker 3: the day, Trump is still Trump, and the people around
13:08
Speaker 3: Trump behave in a certain kind of way that I
13:10
Speaker 3: don't think people like Scott Besson, who have no experience
13:13
Speaker 3: working for Trump are necessarily accustomed to. So the big
13:17
Speaker 3: question I have in my mind is I don't have
13:19
Speaker 3: any doubt that Scott Besson would be a steady hand
13:23
Speaker 3: on the tiller of the economy if he's allowed to
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Speaker 3: steer it. I want to know is what happens when
13:29
Speaker 3: Trump decides he wants to do something that Besson doesn't
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Speaker 3: think is necessarily a great idea for the economy, for
13:35
Speaker 3: global markets, what have you? Does he have the stature
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Speaker 3: and power and where we're all to stand up to
13:42
Speaker 3: Trump and to convince him to do otherwise, or is
13:46
Speaker 3: he in the position that a lot of Trump cabinet
13:49
Speaker 3: officials have been historically where you either get steamrolled or
13:53
Speaker 3: pushed out or layered over and aren't able to keep
13:57
Speaker 3: the car on the highway. To go back to my
13:58
Speaker 3: earlier metaphor.
14:00
Speaker 2: When we think about whether this administration will be broadly
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Speaker 2: good for the economy, good for Wall Street, or not,
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Speaker 2: I think there's a sort of a big question to
14:11
Speaker 2: be asked about one particular set policies, which is the tariffs.
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Speaker 2: So I just want to spend a little bit of
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Speaker 2: time on that. I mean, you're very interesting Anna on
14:18
Speaker 2: how that panned out in the first administration.
14:22
Speaker 1: Yeah, so, Stephanie. I think the main point that I
14:25
Speaker 1: would try to make is that it's important to separate
14:28
Speaker 1: the drama from the execution. As Sean Dannen wrote in
14:32
Speaker 1: Our Big Take earlier this week, I think that's a
14:35
Speaker 1: great way to describe how to think about the tariffs
14:38
Speaker 1: in the next four years. If you were a person
14:41
Speaker 1: who was in Mars in twenty sixteen to twenty twenty,
14:45
Speaker 1: and you came back, and so you didn't live through
14:47
Speaker 1: the Twitter all the tweets. I did watch TV at all.
14:52
Speaker 1: And then they are just looking at the numbers, looking
14:54
Speaker 1: at the escalation tranches of the tariffs, looking at the
14:58
Speaker 1: CPI data, looking at the unemployment, manufacturing employment data. You
15:04
Speaker 1: this person from MARS would think that, well, it turns
15:07
Speaker 1: out that most of the tariffs had very little negative
15:10
Speaker 1: impact on employment in twenty eighteen, and inflation in twenty
15:14
Speaker 1: nineteen ended up even below two percent. And this person
15:18
Speaker 1: would also look at the execution of the tariff and
15:21
Speaker 1: thinking that there is an internal logic and strategy to
15:25
Speaker 1: how they executed the tariffs. So if you look at it,
15:29
Speaker 1: the first tranches of tariffs were on solar panels and steel,
15:33
Speaker 1: and it happened in early twenty eighteen. And this was
15:36
Speaker 1: after the Republicans passed the Text Jobs and Cuts Act
15:42
Speaker 1: in December seventeen, right in the first year of the
15:45
Speaker 1: Trump administration. There was no tariffs at all. And I
15:49
Speaker 1: think there's a logic to why they want to sequence
15:52
Speaker 1: the tariffs increase after the tax cuts was passed, so
15:56
Speaker 1: that it could in case there was negative effect. So
15:59
Speaker 1: that's what observation that there's a strategic sequencing to when
16:04
Speaker 1: these escalation of tariffs will happen. The second part is
16:08
Speaker 1: that you also look at how these tariffs trunches are designed.
16:13
Speaker 1: It turns out that the first three trunches on China,
16:17
Speaker 1: as well as the solar panel and the steel were
16:21
Speaker 1: mainly on intermediate goods and capital goods. Economic theory actually
16:26
Speaker 1: tells you that if of the tariffs is on these
16:30
Speaker 1: type of goods, it tends to be not as inflationary.
16:34
Speaker 1: So that's actually what the data was showing that throughout
16:37
Speaker 1: the first four waves of tariffs and twenty eighteen, manufacturing
16:42
Speaker 1: employment was climbing, and so I think Trump remember that
16:47
Speaker 1: part of the data. But what also happened is when
16:50
Speaker 1: he started imposing the really big Section three oh one
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Speaker 1: tariffs on China, and it starts getting into consumer goods
16:59
Speaker 1: because they just ran.
17:00
Speaker 2: Out, and those are the things that when you're putting
17:02
Speaker 2: tarifts on consumer goods just to sort of that's it's
17:05
Speaker 2: harder for the retailers to know, they end up having
17:07
Speaker 2: to pass it on to consumers exactly.
17:11
Speaker 1: So towards the last two waves, which are the Section
17:15
Speaker 1: three or one tariffs on Chinese goods. That's when you
17:18
Speaker 1: started seeing employment in manufacturing sectors dropping.
17:22
Speaker 2: It's very clear the.
17:23
Speaker 1: Moment three on one terrors are imposed, then you start
17:26
Speaker 1: seeing the manufacturing employment going down.
17:29
Speaker 2: Has he forgotten that?
17:31
Speaker 1: So I was about to get there going.
17:33
Speaker 2: Back, sorry, going back to.
17:36
Speaker 1: Josh point about who is Trump? Like, what is Trump?
17:39
Speaker 1: Is his own men at the end of the day,
17:41
Speaker 1: And I totally agree, right, I would not rely on
17:47
Speaker 1: the voice of Scott dissent as the sole countervailing voice.
17:52
Speaker 1: And I don't think anyone would have the power to
17:56
Speaker 1: like single handedly pull Trump away from whatever he decided,
18:01
Speaker 1: because Trump, after all, is the president. But I think
18:03
Speaker 1: Trump is a rational president putting outside the drama once again.
18:08
Speaker 1: So what happened in twenty nineteen is as I was
18:11
Speaker 1: saying that economic data start turning, business investments start flowing
18:15
Speaker 1: down meaningfully, yield curve inverted, manufacturing employments start plunging, and
18:22
Speaker 1: within the FED, there was a burgeoning body of literature
18:26
Speaker 1: looking at trade policy uncertainty and clearly tracing the impact
18:31
Speaker 1: of all these tariff announcements to lower investment. And so
18:35
Speaker 1: we presented all this evidence to Jared Kushner and then
18:40
Speaker 1: later to Trump, and he was actually quite receptive to
18:44
Speaker 1: it that he does look at economic evidence. He cares
18:48
Speaker 1: about the stock market, he cares about the performance of
18:51
Speaker 1: the economy. So if you do show him evidence, clear
18:55
Speaker 1: evidence that this is hurting the economy, then he will
18:59
Speaker 1: pull back. And that was the one of the key
19:01
Speaker 1: reason for why he decided to de escalate by accepting
19:05
Speaker 1: the Phase one deal in December of twenty nine.
19:09
Speaker 3: I actually spoke to Trump in July with some of
19:11
Speaker 3: my Bloomer Business we colleagues for the cover story we did,
19:13
Speaker 3: and we brought up the issues of terriffs, and to me,
19:16
Speaker 3: the interesting tension in Trump's mind that Anna did a
19:19
Speaker 3: really nice job of describing is that when we said
19:21
Speaker 3: most mainstream economists agree the inflation or the terroiffsre inflationary,
19:25
Speaker 3: Trump jumped in and said, no, they're not. And just
19:28
Speaker 3: look at my last administration imposed tariffs, and we didn't
19:30
Speaker 3: get the kind of runaway inflation that people warning about. Therefore,
19:34
Speaker 3: this is not something I'm worried about in the next
19:36
Speaker 3: Trump presidency. And I thought that was interesting. In speaking
19:39
Speaker 3: to people around Washington policy expert types, everybody seems to
19:44
Speaker 3: understand that this is Trump's belief, and so I think
19:47
Speaker 3: one of the worries that people have that investor should
19:50
Speaker 3: at least be aware of is that if Trump doesn't
19:52
Speaker 3: believe the tariffs are inflationary or the expectation is that
19:56
Speaker 3: he's going to push to impose them until the point
19:59
Speaker 3: comes that we really do see inflation or that the
20:01
Speaker 3: stock market falls. So I'd said earlier there really aren't
20:04
Speaker 3: any guardrails around Trump, but I do think that that
20:06
Speaker 3: one kind of guardrail, and alluded to was the stock market.
20:09
Speaker 3: Are oddly enough that Trump has always viewed the stock
20:12
Speaker 3: market as a measure, a gauge of his own success,
20:16
Speaker 3: and if he shoots too far on tariffs or any
20:18
Speaker 3: other kind of inflationary policy, if he does get a
20:20
Speaker 3: negative reaction to him the stock market, I think the
20:22
Speaker 3: evidence is that that he will pull back, or that
20:24
Speaker 3: he's at least willing to pull back. But I think
20:26
Speaker 3: what that means is we look ahead to a second
20:29
Speaker 3: Trump administration, is that it's going to be a really
20:31
Speaker 3: wild ride for either way, and like, really the smart
20:35
Speaker 3: thing to do is just to kind of buckle in
20:37
Speaker 3: and keep reading Bloomberg.
20:40
Speaker 2: Well, I think you've already won the award for most
20:42
Speaker 2: Bloomberg plug. Yeah episode.
20:44
Speaker 3: I've actually had sources during the transition reach out to
20:47
Speaker 3: me and say, hey, is it possible could you give
20:49
Speaker 3: me this? In fact, one of them is your report
20:51
Speaker 3: Anna and Bloomer Anna. Could you give me this Bloomberg
20:53
Speaker 3: story or this Bloomberg report. It's great, it's wonderful for
20:56
Speaker 3: source buildings. But it made me aware of just how
20:59
Speaker 3: closely people in my world, the kind of politics and finance,
21:02
Speaker 3: are paying attention to what's going to happen, what people
21:05
Speaker 3: are expecting, where the various effects might show up, because
21:08
Speaker 3: at the end of the day, none of us really
21:09
Speaker 3: know what's going to happen.
21:10
Speaker 2: Obviously, he cares a lot about the stock market. You've
21:13
Speaker 2: talked in the past about his need to be a
21:16
Speaker 2: plutocratic populist. You know, all these billionaires backing him, and
21:19
Speaker 2: certainly a lot of Wall Street think individual capitalists on
21:23
Speaker 2: Wall Street thinking they're going to be made better off
21:25
Speaker 2: by him. But also the great achievement of his reelection
21:29
Speaker 2: has been to bring into the Republican fold all of
21:33
Speaker 2: these very angry working class people who may stay angry
21:38
Speaker 2: if he's doing all the things he needs to do
21:40
Speaker 2: to keep the stock market high. So how does that work?
21:43
Speaker 3: I think the challenge for Trump is that he was
21:45
Speaker 3: elected by a multiracial, working class group of voters who
21:50
Speaker 3: very clearly sided with him because they were angry about
21:54
Speaker 3: high prices and inflation and thought Trump could do a
21:56
Speaker 3: better job than Joe Biden and Kamala Harris had And
22:00
Speaker 3: if Trump is too aggressive with tariffs, with cutting taxes,
22:04
Speaker 3: with doing things to drive up inflation, that coalition could
22:07
Speaker 3: quickly fall apart. Looking at what Trump seems to want
22:11
Speaker 3: to do in his first one hundred days, the focus
22:14
Speaker 3: is going to be on extending those Trump tax cuts,
22:17
Speaker 3: not the sort of thing I think that's going to
22:19
Speaker 3: excite a lot of the working class folks that are
22:22
Speaker 3: angry about prices at the grocery store. So the balancing
22:25
Speaker 3: act for Trump is going to be to do these
22:28
Speaker 3: exciting plutocratic things that have investors in Wall Street so happy,
22:34
Speaker 3: while not angering the group of voters who moved from
22:40
Speaker 3: Joe Biden to Donald Trump because they were expecting lower
22:43
Speaker 3: prices in a stronger economy.
22:45
Speaker 2: Do you think you can do it with this team?
22:48
Speaker 1: Boy?
22:49
Speaker 3: As a political reporter, I'm not supposed to.
22:53
Speaker 2: What should we be looking for to get clues as
22:56
Speaker 2: to how he's squaring this.
22:57
Speaker 3: I would look at the feed, and I would look
22:58
Speaker 3: at inflation, right. You know, if inflation continues to fall,
23:01
Speaker 3: Trump will not hesitate to leap in and claim credit
23:04
Speaker 3: for it. You know, if voters are happy, then I
23:08
Speaker 3: think he'll be in pretty good shape. But with Trump,
23:12
Speaker 3: there's always the risk that there's some kind of a crisis,
23:14
Speaker 3: an economic crisis, a global crisis in his administration Stocked
23:20
Speaker 3: with people it looks like who aren't going to be
23:22
Speaker 3: veterans of government. You just don't know what's going to happen,
23:26
Speaker 3: and there's a lot of chance, I think, for things
23:27
Speaker 3: to go wrong. So certainly he could pull it off.
23:30
Speaker 3: Everybody was worried in the first Trump administration. As Anna
23:33
Speaker 3: said earlier, it wound up pretty good for the American economy,
23:36
Speaker 3: and so I think the hope is that the chaos
23:39
Speaker 3: will be contained and that we'll get another four years
23:42
Speaker 3: of positive economic growth.
23:43
Speaker 2: Anna, it's perfect symmetry. We've ended up with trusting the
23:47
Speaker 2: FED as the answer to whether or not he's going
23:50
Speaker 2: to pull things off. What do you think?
23:52
Speaker 1: I don't think clearly sho doing that.
23:56
Speaker 2: I think you know, I think you don't think so
23:58
Speaker 2: you don't think we should be trusted.
24:01
Speaker 1: I would rather not answer that question. Yes, some of
24:06
Speaker 1: the things that Trump wants to do create a tension
24:10
Speaker 1: between Wall Street and the working class multiracial working class
24:15
Speaker 1: coalition that Josh mentioned. But there's one thing that's not
24:18
Speaker 1: intention which is growth. If he manages through his deregulation,
24:24
Speaker 1: for example, because deregulation is almost like a free launch,
24:27
Speaker 1: it does not really increase the federal deficit and actually
24:31
Speaker 1: lower prices. It could lower prices. In fact, I just
24:36
Speaker 1: came across a very ancient document last week that it
24:40
Speaker 1: turned out that in nineteen seventy four, when inflation was
24:43
Speaker 1: running a double digit in US, the CEA pulled together
24:47
Speaker 1: a coalition of half Republicans have Democrats to come up
24:51
Speaker 1: with solutions for dealing with inflation. And the one agreement
24:55
Speaker 1: that both sides of the aisle come to is deregulation
24:59
Speaker 1: and energy and also financial sector. And that led to
25:03
Speaker 1: two decades of wave of deregulation. So I think if
25:07
Speaker 1: Trump manages to work that very narrow path where he's
25:11
Speaker 1: able to boost growth without increasing inflation, then there will
25:16
Speaker 1: be no tension between the stock market and the working
25:19
Speaker 1: class people.
25:21
Speaker 2: Fantastic note, optimistic note on which to end optimisty for
25:24
Speaker 2: all of us, let alone, Donald Trump, Anna Wong, Josh Green.
25:28
Speaker 2: Thank you so much, thank you, thank you, thanks for
25:37
Speaker 2: listening to this bonus edition of voter Nomics from Bloomberg.
25:40
Speaker 2: This episode was hosted by me Stephanie Flanders and was
25:43
Speaker 2: produced by Summer Sali, with production support by Moses and
25:47
Speaker 2: Dam and sound designed by Blake Maples. Brendan Francis Newnham
25:51
Speaker 2: is our executive producer, and Sage Bowman is Head of Podcasts.
25:55
Speaker 2: Special thanks obviously to Anna Wong and Josh Green.
26:17
Speaker 3: Umb