April 14, 2025 • 42 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump said he is exploring possible temporary exemptions to his tariffs on imported vehicles and parts to give auto companies more time to set up US manufacturing.
“I’m looking at something to help car companies with it,” Trump told reporters Monday in the Oval Office. “They’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here.”
The president was asked what short-lived product exclusions he was considering but did not specify how long a potential pause or lowering of auto levies would remain in place.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Kailey speaks with:
- Bloomberg's Tyler Kendall.
- Bloomberg's Ed Ludlow.
- Franklin Templeton Investments Global Equity Portfolio Manager Katrina Dudley.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Bloomberg Intelligence Senior Commodities Strategist Mike McGlone.
- Beacon Global Strategies Managing Director Michael Allen.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
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Speaker 2 (00:25):
The White House, of course releasing a statement the title
which reads as follows, Clarification of Exemptions under Executive Order
one four two five seven of April second, twenty twenty five,
as amended. The word exemptions is in there, but President
Trump says it's fake news to describe this as exemptions
or exceptions to his tariffs, because tariffs on these goods
(00:45):
things like iPhones other consumer electronics are still coming, just
in a different bucket, as he calls it, semiconductor tariffs,
which he says are on the way in the not
so distant future, in addition to other tariffs he just
talked about in the Oval Office as well. So on
that note, we go to Bloomberg Tyler Kendall, who is
live at the White House, with what we are understanding
(01:05):
at this point from the administration when it comes to tariffs.
Speaker 3 (01:08):
It's not just chip tariffs. Tyler that are on the way.
The President's looking at pharma too.
Speaker 4 (01:13):
Yeah, hey, Kelly, some big headlines, particularly when it comes
to those sector specific tariffs, in just the last thirty
minutes or so out of the Oval Office. As you mentioned,
President Trump doubling down on the idea that pharmaceutical tariffs
could be coming. So not necessarily surprising. He's really been
talking about this, but we should note the timing is
also interesting because the Italian Prime Minister, Georgia Maloney will
be here at the White House later this week. We
know that the European Union in particular is bracing to
(01:36):
get hard, is bracing to get hit hard when it
comes to those pharmaceutical tariffs. Then he also made some
news about some other sector specific tariffs, saying that he
might be interested in granting a reprieve when it comes
to automakers who are moving production from Mexico and Canada
in a bid to give him a little bit more
time when it comes to reshoring. So some big headlines
there about how this White House is looking at the
(01:58):
timeline and whether or not we could actually see a
more long, longer lasting reprieve. The other industry, of course,
that is getting at least a fleeting reprieve for now
or those tech imports that you mentioned, while we wait
for potentially a Section two thirty two investigation to get
underway so that those chip products can be a tariff
instead under sector specific tariffs instead of the broader, so
(02:22):
called reciprocal tariff plan. But when asked on Air Force
one last night about if he was willing to grant
any exemptions to certain products, here's what President Trump had
to say.
Speaker 5 (02:32):
Well, there's going to be an anspert soon and we'll
we'll be discussing it, but we'll also talk to companies.
You know, you have to show a certain flexibility. Nobody
should be so rigent. Will you have to have a
certain flexibility. And we're doing really well, and financially, our
country is going to be stronger than it sever been.
Speaker 6 (02:51):
So some products might lose flexibility for some products, for
some products, yeah, maybe.
Speaker 4 (02:57):
Of course, the big question is just how flex will
this White House be. In the past, when they've imposed
Section two thirty two tariffs, they've been at a twenty
five percent rate. President Trump declined to comment on what
the rate will be when it comes to these chip
specific products. But we also have to keep in mind
how sector specific tariffs are designed to be stacked on
top of existing levies, and Kaylee, President Trump made clear
(03:18):
that all of these tech imports are still subject to
that baseline twenty percent tariff that was levied against Beijing
back in February.
Speaker 2 (03:26):
Yep, over Fentanel Bloomberg's Tyler tend to live at the
White House, thank you so much. And on that flexibility
point that Tyler was just making, we heard that reiterated
by President Trump in the Oval Office earlier today, in
which he also noted that he's been talking to the
CEO of Apple, Tim Cook, and that he doesn't want
to hurt anybody. Apple shares right now, well off the
highs of the session, they're still up about two point
(03:46):
six percent. And it's on that note we turned to
Ed Ludlow, co host of Bloomberg Technology. So Ed, when
we consider that obviously Apple was stuck in a very
difficult place with the tariffs that are that were put
into place, especially if China tariffs applied to them, how
much can they take advantage of this reprieve if the
reprieve is only temporary.
Speaker 7 (04:07):
Yeah, I think the technology sector kind of accepts that
there will be a bucket specific tariff, right, and that
the biggest outstanding questions are on timeline because you have
the written communication from the White House, which you quite
rightly point out literally uses the word exemption. And then
take in aggregate the commentary of Trump's cabinet members on
(04:27):
weekend television. But something specific at the semiconductor level also
branches out to the rest of the electronics industry, right,
because the smartphones's laptops all have chips in them, you
need to understand what that's going to be. And you
know better than I. The biggest kind of unknown here
is this section two thirty two investigation, which looks at
the impact of tariff policy on national security. Essentially it's
(04:52):
a tool that's been used in the steel industry, for example.
But you know, looking at history, those investigations take the
better part of a year. So answer your question, Apple,
you know clearly their strategy has been to shift priority
of iPhones built outside of China, largely in India, and
move them to the US. But it's just a temporary measure.
(05:13):
The other question, and the one that probably in video
is the better case study of is what is the
end goal of the President's policy. Is it to generate
revenue for the country. No, it's probably to onshore manufacturing
in America, which is a whole other question.
Speaker 2 (05:27):
Well, and the President was talking about that earlier in
the Oval, touting the announcement today of how in Video
is using its pledged billions hundreds of billions of dollars
in investment in the US.
Speaker 3 (05:36):
This is what the President said at It's.
Speaker 8 (05:39):
One of the great companies of the world, modern, super
modern companies controls segments that nobody, you know, sort of
controls the world in a sense. And they're coming in
here in the biggest way with hundreds of billions of dollars,
not like millions of dolls, hundreds of billions of dollars.
Speaker 9 (05:57):
And I'm honored by it, and.
Speaker 8 (06:01):
I want to thank Jensen and all of the people
that we deal with.
Speaker 2 (06:06):
My question, ad is one thing. It's one thing to
make the pledge of investment. It's another for that investment
to actually be realized and result in capacity in the
United States. How long is this going to take, not
just for in Video, but any tech company who wants
to do this.
Speaker 7 (06:20):
Well, according to Invidia's announcement this morning, four years to
develop a US manufacturing capacity for their server designs that
go in Stata centers, power AI training. There's an element
of fact check here. Yes, the President is right that
Invidia essentially has a monopoly on the market for AI accelerators,
the chips that train models. He is sort of incorrect
(06:42):
to say that it is an investment of hundreds of
billions of dollars. What Invidia is saying is that they
are moving to establish manufacturing in the States that will
produce hundreds of billions dollars value of goods. That is
the cost of doing business here in America. But I
think most people I speak to in the technology industry,
directly involved and related to InVideo investors is this is
(07:05):
the result of tariff policy. Because think about Nvidia, right,
if you make your high performance systems here in America,
they probably cost twenty to twenty five percent more. The
cost of doing business here is greater, but then there's
a tariff on doing business elsewhere, probably in the long run,
and so netnet, if you're in video or you're one
of Nvidia's customers, you have to choose what is the
(07:26):
best place for us to do business here? And clearly
reading the statement from Jensen Wog. He talks about supply
chain resilience and talks about making the business more robust.
This is a response to the political actions of this administration.
Speaker 3 (07:40):
All right, Ed.
Speaker 2 (07:41):
Ludlaw in San Francisco, Thank you so much, co host
of course of Bloomberg Technology.
Speaker 3 (07:46):
Much appreciated.
Speaker 2 (07:47):
This, of course is Bloomberg's balance of power as we
consider the intersection of these tariff policies, how they're filtering
into the decision making of companies like Nvidia, and ultimately
how all that feeds back into financial markets, which have
seen at least in the equity market at the relief
rally fading. As we've moved through this Monday trading session,
and we want to talk more about the outlook now,
and turned to Katrina Dudley, who is live in our
(08:08):
studios at Global Headquarters in New York. She's Global equity
portfolio manager at Franklin Templeton Investments. Joining me here on
Bloomberg TV and Radio. Katrina, it's been a while, obviously,
it has been a month, a week, a year that
has been absolutely wild when we're contending with tariff policy.
I wonder what you make of this conversation around tech
(08:29):
knowledgy oriented exemption, specifically the idea that there is a
bit of a reprieve here that the President suggests he
will have some flexibility in carving out certain goods from
these tariffs. Do you see all of that as good
news or is there still enough bad news in terms
of the baseline tariff rate that is still in place,
the tariffs on China that will remain with no real
(08:50):
progress see toward a deal. Is all of that still
enough to be dragging on risk appetite?
Speaker 10 (08:54):
I think, look, when we look at tariffs and the conversation,
the key, as you're talking about, is flexibility that the
president is willing to listen. He's watching the market, he's
watching the reaction, and he's listening to CEOs and he's
listening to what they're telling him. And in this case,
we've got some CEOs of reacting in terms of we
are going to make investments in America, and that from
(09:18):
a perspective of an American is really good from us
from a resiliency perspective as well as that reassuring if
jobs and helping that middle class. And then you've got
on the other side the fact that these factories don't
just get built overnight, and I think that there is
a need to phase in some of these tariffs and
phase in those those measures, which I think he's going
to do through that exemption mechanism.
Speaker 2 (09:42):
Well, I guess there's a question of what happens in
the interim when we're actually considering the health of these
corporations and their financial picture. Knowing we're now in the
heart of earning season. I wonder, Katrina, how you expect
the uncertainties around this policy that remain the difference in
the short and the long term outlook to manifest themselves.
And what we're hearing not just about the results looking backward,
(10:04):
but what kind of guidance companies are really able to
provide going forward.
Speaker 10 (10:08):
Look, the impact is being felt actually more in the
small and the meadcap sector. If you look at our
large cab companies, they've got much more resilience in terms
of the balance sheet, their ability to flex their manufacturing.
So it's actually going to be in that lower end
of the market that you need to focus on the
comments that are coming out of them. That's the first side.
The second thing is that we've got these initial announcements,
(10:30):
but then we've had reversal some of these announcements. We've
had adjustments and everything. So I think that the commentary
coming out of earning season is going to be we
actually had a great quarter, spending held up and so
the numbers for the backward looking quarter are going to
be okay. It's just going to be that uncertainty that
relates to the forward outlook. And I think that CEOs
(10:51):
who talk about the variables and talk about what they're
looking at and what is causing that variability, will be
rewarded by the market.
Speaker 4 (11:00):
Well.
Speaker 2 (11:00):
And which would you be more concerned about when we
consider the different variables in the forward picture, the idea
that it's not clear what the tariff rates will be,
so therefore what kind of margin compression companies might be
dealing with, or the idea that it's not clear what
economic impact the tariffs will have in how much demand
there will still be that these corporations get to be
on the receiving end of Which would you say is
(11:22):
the greater risk here or are they just too entwined Katrina.
Speaker 10 (11:26):
Both They're actually both risks in the market. The first
of all, in terms of the amount of tariffs, the
question is how much of that gets passed on to
the consumer. The second part of this is how much
of the consumer is actually doing forward buying or has
been doing forward buying, like buying two or three Apple
iPhones ahead of the announcements. So you could have some
unevenness in terms of demand patterns, and that's something that
(11:48):
we're watching. But if that margin pressure, if you look
at corporate margins are very very strong and high levels,
so I think that there's some ability of them to
absorb some of those tariffs in their own margins. And
that doesn't worry us because we think that companies are
well positioned.
Speaker 9 (12:05):
Well.
Speaker 2 (12:06):
And I wonder what companies you see as best position here, Katrina,
Is it staples really that are the safest heven right now?
Where else would you be recommending you seek harbor in
what has been a pretty incredible storm.
Speaker 10 (12:17):
But when you talk about a staple, those staple companies
are still subject to goods that have got tariffs on them.
Speaker 3 (12:23):
We don't make all project.
Speaker 10 (12:25):
Produce here in America, and so they're subject to the
same characteristics as before. So I think it's actually very
unusual because there's so many different factors that people have
got to look at that are influencing this market that
haven't influenced it before. We talk about the partisanship that's
really impacting the ability to trust any type of forward
(12:46):
looking sentiment index because you've got that dichotomy between the
Republicans and the Democrats, as well as the fact that
you know, things like tariffs. We've had them in terms
of industry specific tariffs with long investigation periods. Now we've
got them, they've being implemented quickly, and they've been implemented
in a much more broad brush manner, and that's going
(13:07):
to impact the consumer. So it's just a different conversation,
and that's what we're kind of working through and listening
to companies to see how it impacts the bottom line.
Speaker 9 (13:17):
Well.
Speaker 3 (13:17):
And then there's the kind of wider macro picture as well.
Speaker 2 (13:20):
That is a constant conversation we're having here on Bloomberg
TV and Radio Katrina, which is how this all filters
into monetary policy, if at all. As the signal we're
still getting from the FED is they are in weight
and C mode, it doesn't seem that they are super
eager to see a FED put come into place here
of any kind. Are you anticipating that have you changed
your expectations, and and what if we are to get
(13:41):
a signal from the Fed that they're willing to step
in here would that do to risk appetite.
Speaker 10 (13:45):
It's very difficult for the FED to step in because
one of the metrics that they're watching is inflation, and
they've spent a long period of time getting inflation which
was at very high levels and very far away from
target back down close to two point six, very close
to their target level. And then what we're so that's
on the Fed that's kind of looking at. We've got
(14:05):
low unemployment numbers, we've got an inflation number that we've
kind of got under control, but tariffs potentially are a
headwind to that that they could cause inflationary pressure. So
the market, though, is pricing in three Fed cuts. I
think we're at less than that. We do think that
the Fed is going to be very cautious before they
step in. I think you've talked about a FED put.
(14:25):
I think that President Trump is more likely to make
commentary that supports the market versus the Fed.
Speaker 2 (14:31):
Well, a lot of people thought we found the Trump
put last week when he noted what was happening in
the bond markets and issued this ninety day delay in
our final minute here, Katrina, though, obviously what happened in
the bond market, as well as what we've seen in
the weakness of the dollar, has kind of contributed to this,
if not narrative question as to whether we are now
reconsidering US exceptionalism from an equity standpoint, Do you think the.
Speaker 3 (14:54):
End of US exceptionalism is upon us?
Speaker 10 (14:57):
Absolutely not. I think that the America and our resiliency
and our ability to adapt is what makes this country
so unique. And I don't think that anything that's happened
is actually undermined that. If I take a look at
the factors that support entrepreneurialism, and I look at the
factors that are encouraging investment back into this country by
(15:20):
a number of companies, Invidiari is just the latest company
that's doing that on top of a TSMC, I think
that the American story continues to work here.
Speaker 3 (15:30):
All right.
Speaker 2 (15:30):
We will leave it on that note. Katrina Dudley of
Franklin Templeton Investments, where she is a global equity portfolio manager,
joining us here on Bloomberg TV and Radio. Thank you
so much, really appreciate it, and we still have much
more ahead here on Balance of Power. Our political panel
will be joining me next. Rick Davis and Jeanie Shanzeno
will be with me as we consider how all of
this is playing out politically for President Trump. We've got
(15:53):
some interesting new polling from CBS and Yugov around how
people feel about tariffs, and also just a red headline
crossing the Bloomberg terminal Harvard rejecting a proposed agreement with
the Trump administration. Of course, we've seen a bit of
a jockeying between higher ed and this White House.
Speaker 3 (16:10):
We'll get into that with our political panel as well.
Up next. Right here on Bloomberg TV and Radio.
Speaker 1 (16:17):
You're listening to the Bloomberg Balance of Power podcast. Catch
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New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 2 (16:36):
Live in Washington, where we are focused on basically one thing,
and that is President Trump's tariff policy, and that seems
to be, if not the singular, the primary focus of
financial markets as well as Amy was just running US
through and it was a big topic of conversation on
the Sunday shows this weekend, where you had a number
of members of the Trump administration fanning out across the
networks to defend and explain President Trump's tariff policy. From
(17:00):
the Commerce Secretary Howard Lutnik to Trade Advisor Peter Navarro,
Kevin Hassett of the National Economic Council, and USTR Jamison
Greer all shared their thoughts this weekend.
Speaker 11 (17:13):
The President is on it.
Speaker 12 (17:14):
It's very very important for people to understand, you know,
why we're doing what we're doing.
Speaker 11 (17:18):
What President Trump is doing, and his vision and his
leadership is to completely realign the world economy, but in
so doing put America first. The world cheats us. They've
been cheating us for decades. We have been living under
a teriff regime, but it has been the regime of
other countries.
Speaker 13 (17:35):
The more importantly they cheat us with the so called
non tariff barriers.
Speaker 14 (17:39):
It's the vat tax, is the dumping, the currency manipulation.
Speaker 11 (17:42):
We can't be relying on China for fundamental things that
we need.
Speaker 15 (17:46):
What's going to be up to these countries to come
to the table, continue coming to the table.
Speaker 3 (17:50):
And make these kinds of offers.
Speaker 2 (17:53):
So the administration outlining its vision when it comes to trade.
The question is whether it's a vision that the majority
of the country and the American electorate actually shares as well.
And on that note, some interesting polling came out this
weekend from CBS News together with you goev that focused
on tariffs and the economy overall.
Speaker 3 (18:11):
Here's a few of the highlights for you.
Speaker 2 (18:13):
On tariffs, largely, fifty eight percent said they opposed President
Trump's new tariffs on imported goods, just forty two percent
said they favored them, and seventy five percent said the
tariffs will increase prices in the short term. Another forty
eight percent said they will increase prices in the long term.
Smaller minorities said they would have no impact, or they
weren't sure, or that they would decrease prices. Plus another
(18:36):
finding in this survey, nearly two thirds think the new
tariffs will make the economy worse in the short term.
All that said, when we consider President of Trump's overall
approval rating, forty seven percent approve, fifty three percent disapprove.
So I want to get into these figures now and
how the policy is playing politically and turned to our
political panel. Bloomberg Politics contributors Rick Davis and Genie Shanzeno
(18:59):
are with me here on Bloomberg TV and Radio. Rick,
of course as a partner at Stone Court Capital and
Republican strategist, Genie democratic analyst and Senior Democracy Fellow at
the Center for the Study of the Presidency and Congress.
Speaker 3 (19:11):
Rick, when you look at figures.
Speaker 2 (19:12):
Like this, it would suggest that these policies, as much
as President Trump believes them and continues to define tariffs
or say tariffs is his favorite word in the dictionary,
that it's not necessarily favored by the majority of the country.
Does it, ultimately, though, make a difference for this White House?
Speaker 15 (19:29):
You know, I think only on the margins. Does it
make a difference for this White House? In other words,
will they tweak their policies ninety day delays, things like
that in order to sort of satisfy consumer demand and
also the markets, because, of course, part of what is
driving consumers' attitudes is what they see in the market.
So the combination platter of you know, robust economy, strong markets,
(19:54):
and consumer support is something they have to be considering
on a daily basis. And seeing them tweaked their policies,
especially around tariffs. In that regard that being said, you know,
these consumers are pretty grumpy. We saw last week the
Michigan Consumer Sentiment Index came out very similar numbers, worse
(20:15):
expectations for inflation since nineteen eighty one.
Speaker 11 (20:19):
So the.
Speaker 15 (20:22):
Book is getting written pretty strongly right now that maybe
we can't necessarily depend upon consumers to keep this economy running.
They're doing a great job right now, but with their
concerns about the future, I would say the FED is
probably more worried about future inflation than it is inflation today.
Speaker 2 (20:44):
Well, and I guess it's a question of how far
into the future, because when we consider the kind of
language in this pulling data, Genie again seventy five percent
so that the tariffs will increase prices in the short term.
Nearly two thirds think new tariffs will make the economy
worse in the short term. House hasn't necessarily pushed back
on the idea of there being some detrimental impact in
the short term. They keep saying short term pain for
(21:07):
long term gain. I guess the question is is it
enough for consumers to tolerate that in the short term
if they believe in the long term game, or do
you think that belief still might be missing as they
consider what this is actually going to do to their
wallets in household balance sheets.
Speaker 12 (21:22):
Yeah, consumers are screaming, we don't want pain of any kind,
short term or long term. And quite frankly, the White
House isn't listening. And why the White House isn't listening?
Donald Trump doesn't have to run again. But who's gonna
listen are the Republican members of Congress because they will
hear from their constituents who say, hey, wait a minute,
(21:45):
all of these exemptions the president is handing out my
little store in Oklahoma. I'm not on his radar because
I didn't give a million dollars to his inaugural so
I can't get in his ear to claim an exemption.
And that's what I think we have to ask ourselves,
why all these exemptions, Why tariff policies that are so arbitrary?
(22:06):
Because Donald Trump wants the power to dole out crony,
give out to the people that he feels he are
in alignment with him, and he wants to withhold for others.
And that's really what this about. It's not about reshoring
because exemptions work against that. We are not in an
emergency that makes us pay more for sneakers than we
(22:28):
would for electronics.
Speaker 3 (22:30):
So people know this.
Speaker 12 (22:32):
I mean, people go to the store and pay more
for eggs as Easter is coming up. And we've all
heard the one answer people answer when you say, why
am I paying more Donald Trump's tariffs? And this will
hurt Republicans in the polls. It may not hurt Donald
Trump because quite frankly, he just wants the power. He
doesn't have to run again, so he doesn't really care
(22:52):
about these poles anymore.
Speaker 2 (22:54):
Well to that point, Rick, Congress is in recess for
the next two weeks for Easter. A lot of them
are back home and the districts. I don't know how
many of them are planning to get some FaceTime in
face to face with constituents in the form of town
halls because of concern around blowback around these policies. Just
how rough will it be for Republican members, especially in
terms of what they're hearing at home.
Speaker 15 (23:15):
Well, you know, getting back to these numbers, we haven't
seen these kinds of numbers in a long time. It
really does show frustration on the part of consumers consumers
or voters, and angry voters or angry consumers make angry voters.
And so if there are some sort of brave enough
Republican officeholders who are going to willingly participate in public
(23:40):
forums like town halls, they can expect blowback. I mean,
what we've seen recently in other breaks is people Republicans, Democrats,
Independence coming to these town halls and really expressing their
discontent for what they think is a sort of random
policy when it relates to just about everything. Prices, the
(24:00):
number of people getting slash in departments like Social Security,
their fears over Medicaid being cut, and these are all
things that we are telling them we're going to do.
So in that regard, I think that you're sort of
making the bed that you now have.
Speaker 9 (24:16):
To lay in well.
Speaker 2 (24:19):
And so then there's the other side of the partisan
equation Genie, which is how Democrats are playing this. You
look at the weekend activity of Senator Bernie Sanders and
congressom and Alexandria Cossio Cortez as they continue their swing
across the country. Bernie Sanders at Coachella. Producer James wishing
we had video of that.
Speaker 3 (24:36):
I too.
Speaker 2 (24:37):
Wish we could share that on Bloomberg TV and on YouTube,
but they are drawing massive crowds. Genie, is this the
messaging that is actually working?
Speaker 12 (24:46):
Yeah, they're hoping, and I agree with you and James.
I wish we had video of Bernie Sanders and Coachella.
It was very hot. I have no idea if he
was wearing his mittens or not, but he got quite
a crowd also in La with Alexandra Acosio Cortes, and
the message was all about an administration run them up,
picking up innocent young people off the streets and putting
(25:07):
them in detention for having a political opinion, destroying the economy,
breaking the markets, not wanting to support people who are
on Medicaid despite working at McDonald's and other jobs. And
so Bernie Sanders has a message, unfortunately for the Democratic Party.
You know, they don't have a leader right now, so
(25:28):
he is giving Democrats a way through this. But whether
they're listening or not is a big question. And by
the way, we had a sort of split screen with
Donald Trump at the UFC in Miami as well, so
they were all out sort of gearing up the crowds
this weekend.
Speaker 2 (25:45):
Yeah, I wish we had video of that too, entering
the arena kind of like a fight, er fists in
the air, Chance of USA. It's just a remarkable moment
we're in in American politics. Genie, knowing you study politics,
but you also, of course are professor of political science
at I own a university and a lot of time
in higher education. I do want to get your take
on the headline that just crossed the Bloomberg terminal, Harvard
(26:07):
rejecting a proposed agreement with the Trump administration, which of
course has threatened to halt nine billion dollars in funding
over demands that include things like governance and leadership reforms,
merit based hiring reform, merit based admissions reform. Harvard University's
lawyers saying they will not accept this deal, unlike Columbia, which,
of course, which acquiesced to a lot of demands of
(26:27):
the Trump administration.
Speaker 3 (26:28):
And I wonder what you make of the news.
Speaker 12 (26:31):
Very welcome news. You know, if Harvard cannot stand up,
who can amongst the universities in this country. And I
give the president and the faculty who filed a lawsuit
credit for this. This is an attempt to undermine the
freedom to engage in a liberal arts education, free speech.
Harvard does have issues. They've acknowledged that they've been working
(26:54):
on issues of anti Semitism, but the fact that Donald
Trump can threaten to take away their ability to control
their curriculum and other things unless they abide by his
wishes is a bridge way too far. And good for
Harvard for stepping up. I think Princeton and others will
be inspired by this and the law, and hopefully the
(27:16):
big shoe law firms will as well going down the road.
Speaker 2 (27:20):
Well, so, Rick, I'll give you a chance to swing
at this one as well. Is this ultimately a fight
that Harvard and these universities can win up against administration
that's threatening to pull funding.
Speaker 6 (27:30):
Well, let's just be clear.
Speaker 15 (27:31):
There is no freedom of speech right to spending taxpayer dollars,
and that's what this debate is all about. There is
an enormous amount of taxpayer dollars going into these institutions,
and it's up to government to decide what uses they are.
This is where elections matter and they have consequences, and
the consequences in this election is that Donald Trump wants
(27:54):
to turn the clock back to a period of time
when you know, people like minded like Donald Trump coett
decide what those taxpayer dollars are going to be used for.
So he can threaten, he can control, but at the
end of the day, his only real leverage is taking
away federal funding, and that's a taxpayer issue. So I
(28:15):
think that at the end of the day, it puts
universities in a very difficult position. They're used to, you know,
not being or being insulated against any kind of political pressure,
and in this case, that's that's not going to work
for them.
Speaker 2 (28:30):
All right, Rick Davis and Jeanie Shanzeno our political panel
joining us on this Monday here on Balance of Power.
Thank you so much, and we still have more coming
up as we turn to geopolitics. President Trump talked about
both iron and the Russia Ukraine War in the Oval earlier,
and we'll have the latest there next. On Bloomberg TV
and radio.
Speaker 1 (28:51):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Alpa Cockley and Android Otto with the boom Burg Business app.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (29:07):
We want to focus on commodities and oil specifically as well.
With WTI crew down about eight tens ofven percent on
the day, we're just shy of sixty one dollars a barrel,
so off the lows we experienced last week, but still
we're talking about some pretty depressed prices here. And in
the face of that, some interesting news from OPEC today,
which has cut its forecast for oil demand globally, not
(29:29):
just for this year, but next year as well, in
the face of President Trump's tariffs.
Speaker 3 (29:34):
The cartel projecting.
Speaker 2 (29:35):
An expansion of one point three million barrels a day,
or approximately one percent percent for each year.
Speaker 3 (29:42):
And we should note that even that reduced.
Speaker 2 (29:43):
Forecast is still higher than other forecasts that are out there.
So we want to get into this now with Mike mcgloan,
who covers commodities for a senior commodity strategist at Bloomberg Intelligence,
live in Miami. So, Mike, even with this reduced forecast,
do you get the sense that OPEK is still being
overly op mystic on demand here?
Speaker 9 (30:02):
Yes? I love your question, Kaylee, and your leading. It's perfect.
Speaker 13 (30:05):
They are just catching up to the rest of the world.
They obviously have a bias for Crudel to go up.
They're pointing out the facts of what's really happening. Crudel
is going down because it went up a lot to
the peak in twenty twenty two, and that shifted some
of the world ordered that centivies much more supply out
of the US, which is still the case accesses of supply,
and by the way, the cost of production US is
pushing now towards fifty dollars a barrel, so it's kind
(30:27):
of a gravity pool level. We have declining demand out
of China, and we have a paradigm shift in the
world's shifting to ev so this is a perfect storm
for normal reversion in crudeil. The last twenty years, the
loads have been around forty dollars a barrel after shooting
up above one hundred.
Speaker 9 (30:40):
Now it's got a good reason to do that.
Speaker 13 (30:41):
But the bottom line is the US stock market has
to go up now, and I think Crudel's realizing the
stock market is probably going to go down, which means
as amount of time Crudels gets below that.
Speaker 9 (30:50):
Cost of production to shut off those excesses.
Speaker 2 (30:54):
Well, so I guess it becomes a question of policy
decisions moving forward as well, and at a time when
opek is adding more so fly onto the market, cutting
instamand forecast, and President Trump is pushing for more supply
to come out of the US. Are we just going
to end up in a world in which we're incredibly
oversupplied or your producer is going to recognize that and
make decisions accordingly.
Speaker 13 (31:12):
Yeah, Well, the number one way they really shut off
all that except supplies for prices to go down, and
then it'll happen below fifty.
Speaker 9 (31:18):
Usually happens around forty. It's a matter of time.
Speaker 13 (31:20):
But I see the average price of gasoline this country
is still above three.
Speaker 9 (31:24):
Now it's driving season.
Speaker 13 (31:25):
We'll stay high for a little while, but by this
time next year or midterms drop to two. It's a
normal reversion diesel glowing. Lower energy price is also pressure
on inflation, and the stated goal of the Trumpet administration
have lower interest rates.
Speaker 9 (31:38):
So three, it's just a matter of time. The whole
tilt is going that way.
Speaker 13 (31:41):
I don't see what stops it, but I'll tell you
prerequisite for just stable stability, stock market has to stay up.
And if it continues downward, which Bloomer Economics base views
will drop down to four thousand s and B five hundred,
about another twenty percent. In the case of recession, we're
going to get normal deflation from the inflation.
Speaker 9 (31:57):
That's the trend right now.
Speaker 2 (31:59):
Well, and then of course there's the unknown factors to
consider here, including geopolitical factors. Mike, just quickly, as we
heard President Trump today talking about ongoing talks with Iran
over its nuclear program, if that somehow results in sanction
relief in more Iranian crude coming onto the market at
a time when these other dynamics we just discussed, or
and play, what would the impact of that be.
Speaker 9 (32:20):
Perfect storm, The risk is there some kind of supply shock.
Speaker 13 (32:23):
Krudeo basically needs a supply shock to go up, like
the grains need some kind of drought supply shock to
go up. Otherwise they're heading towards low price cures. So
you describe the whole trajectory.
Speaker 10 (32:32):
Now.
Speaker 13 (32:33):
The thing is everybody agrees with it. It was a little
bit difficult when it was at one hundred and it
was heading lower. Now that we're heading towards heading at
sixty and lower, everybody agrees.
Speaker 9 (32:40):
Which is a bit of a bullsh factor.
Speaker 13 (32:41):
But overall, the trends are very bad for very good
for lower energy prices.
Speaker 9 (32:46):
With it that way, consumers love it. It's all good
for consumers, all right.
Speaker 2 (32:50):
Mike mcloon of Bloomberg Intelligence joining us from Miami, Thank
you so much, and I want to focus more on
the subject of Iran. Now, of course, there were talks
held on Saturday in Oman between the US and around
the highest level diplomatic effort to address its nuclear program
we've seen in years, and while not much tangible, necessarily
was yielded by Steve Whitcoff, the Trump Administration's middlely so envoys,
(33:11):
meeting with the Iranian foreign minister. We did get confirmation
that there will be a second meeting that will happen
in Italy this coming Saturday. So is that alone enough
of a sign of progress on that? Returned to Michael Allen,
who was here with me in our Washington, d C studio.
He's managing director of Beacon Global Strategies, also former Special
Assistant to President George W. Bush in the national security sector.
(33:33):
Good to see you as always, Thanks for being here
on Bloomberg TV and radio. Is the idea that we're
having another round of talks in and of itself enough
progress to you? Or should we have had more come
out of this meeting.
Speaker 14 (33:45):
I guess it's progress to say that we've talked enough
to at least have a second meeting, But at some
point we really need to get to.
Speaker 6 (33:52):
The details of what they're discussing.
Speaker 14 (33:54):
I want to make sure, at least from my vantage point,
that Whitcoff is very serious about urin enrichment. He seemed
to say the red line was only weaponization, which is
the process by which you fashion a bomb out of
highly enriched uranium that's called weapons grade.
Speaker 6 (34:11):
So I want to make.
Speaker 14 (34:12):
Sure that we have a lot of expert technical expertise
into what they're talking about, because if we want to
be a deal too badly, we're going to get a
bad deal.
Speaker 2 (34:22):
Well, we heard President Trump in the Oval Office earlier
this afternoon saying that Iran has to get rid of
the concept of a nuclear weapon. They cannot have a
nuclear weapon. But you're suggesting it shouldn't just be about
the weapon itself.
Speaker 6 (34:33):
Yeah, that's right.
Speaker 14 (34:34):
I think if they continue to specialize in how to
make weapons grade uranium, that's a skill that you're not
going to forget. It's a learned technical skill that will
be with them forever. And so we'll always constantly be
trying to figure out are you burrowing into a new
mountain like they've done on two occasions to build centrifuge halls,
(34:55):
and what are you doing on weaponization? That's much harder
to track than a huge centri huge hall. So if
any deal results, it has to have any time, any
place inspections by the UN's watchdog agency, which is called
the IAEA. That's absolutely a fundamental part of any agreement
to be able to check Iran.
Speaker 6 (35:17):
And what they're up to.
Speaker 2 (35:18):
Well, so what position is Iran in coming in to this? Then,
when we're considering what an agreement could look like, Knowing
we've had many conversations with you, included about how it's
been weakened by the weakness of its proxies in the
face of ongoing fights with Israel or the US striking
the Huthis, what have you? Are they weakened enough that
they would actually agree to something that arguably, you could
say Iran might not see as super favorable to its
(35:40):
interesting So.
Speaker 14 (35:40):
I'm worried they're not enough adversely affected quite yet. Remember
last time, in the first Trump administration, there was a
long period of what they call massive sanctions and max pressure,
and honestly, I don't know that the Iranians felt it
enough or I think they're willing to really take some
serious pain before they're going to deal in a very
(36:03):
substantial way on the things that we care about very much.
And then, of course, as we've talked about with you before,
is the wild card of Israel. Israel may be much
less trustworthy of an Iranian deal than Trump might be.
Speaker 6 (36:16):
And so what do they do. Do they decide to
go ahead.
Speaker 14 (36:19):
And use military action, And I think that's something that's
a serious possibility this calendar gear.
Speaker 2 (36:24):
Well, there's also the question of US military action too.
President Trump was asked by a reporter today about that.
He said, if we have to do something harsh, we'll
do it. Then, when he was asked specifically if that
could include a strike on Iranian nuclear facilities, he said,
of course it does. Do you see that as actually
a likely possible scenario?
Speaker 6 (36:42):
I think it's possible.
Speaker 14 (36:43):
I think his predominant view is what he said in
his inaugural that he wants to have fewer wars, not more,
and not getting in another war in the Middle East
is one of his chief aims. But at the same time,
he has set the theater with B two bombers, extra carriers,
a lot of military force. I think that's more to
reinforce Steve Whitkoff's hand as he negotiates diplomatically.
Speaker 6 (37:06):
But I wouldn't rule it out.
Speaker 14 (37:07):
Because I think if President Trump feels like if he's
disrespected or Iran doesn't take this seriously, he might go
for it.
Speaker 2 (37:14):
I wonder if you feel that the President might be
disrespected by what we saw take place in Ukraine over
the weekend. Knowing to your point on him not being
a fan of wars, he very much wants to see
a negotiated outcome between Russia and Ukraine.
Speaker 3 (37:26):
He wants the war to end.
Speaker 2 (37:27):
And yet on Palm Sunday, Russia strikes inside Ukraine kills
more than thirty people, even as there are these efforts
towards some kind of peace deal. Does that signal to
you that Putin is not taking this seriously? And what
does that mean for the president?
Speaker 14 (37:39):
I don't think Putin is taking it very very seriously.
I think Putin is behaving like he has the whole time.
He did a deliberate attack on a civilian gathering on
Palm Sunday. I think this is par for the course
for him. I don't want us to bend over backwards
trying to get a deal with Putin. I think it's
fine that Witkoff is there trying to established some basic
(38:01):
rapport with Vladimir Putin. But at the end of the day,
I think the President might be a little bit too
saying it was everyone's fault here. I think he ought
to assign more blame to where it properly.
Speaker 6 (38:13):
Resigns well.
Speaker 2 (38:14):
On the subject of blame, we heard from him in
the Oval office, and it was an echo of what
he had already posted on true social the war between
Russia and Ukraine is Biden's.
Speaker 3 (38:23):
War, Yeah, not mine.
Speaker 2 (38:25):
What do you make of that language? This isn't language
we've heard from him before. He's noted frequently that this
war did not start under his presidency, which yes, is true.
But to characterize it as Biden's.
Speaker 14 (38:35):
War, yeah, I thought he was in a lot of
different places. In that press conference, he also seemed for
a second to say that it was Zelenski's fault that
they were even in the war.
Speaker 2 (38:44):
He suggested Ukraine started a war with the country twenty
times its size.
Speaker 14 (38:48):
But then he cleared it up by saying I blame
all three of them, and he at least rang Zelensky
in third place on that occasion. But I do think
that he's worried about the messages that he sends to
Vladimir Putin. He's trying to ties him into a serious negotiation.
So that might explain what Trump is up to when
he's trying to explain exactly what happened yesterday.
Speaker 2 (39:08):
So you think it's more about positioning himself for ongoing negotiations,
not that negotiations which he previously contended would take him
a day to sort out, aren't necessarily going his way,
and he's trying to blame to his predecessor.
Speaker 14 (39:20):
I think, oh, on the Biden thing, I definitely think
he's trying to say, hey, listen, Biden mismanaged this thing
all along. He poured gasoline on a raging fire. At
least I'm the one that's trying to make peace.
Speaker 3 (39:31):
Here, okay.
Speaker 2 (39:32):
And he's not just trying to make peace, he's also
trying to reach an economic deal with Ukraine on minerals
still a draft that obviously has been revised multiple times.
Do you think that will be resolved soon and if
it is, what ultimately does that open up?
Speaker 14 (39:45):
So I think it helps a little bit because it
helps with what Donald Trump is worried about, which is
has the United States been taken advantage of? Have we
overpaid for the defense of Ukraine. So I still think
it helps Ukraine in the sense that President Trump will
be able to say, you know what, we've gotten at
least some of our money repaid here. I know Zelensky
(40:06):
objects to that because he says that was a grant
and it was. But I think some of this is
just the politics of America first here in the United States,
and the President, in every relationship from tariffs to Iran,
is trying to make sure the United States gets a
good deal. So if he feels like we're being repaid
a little bit, I'm okay with that.
Speaker 2 (40:23):
We heard from President Zelensky. He sat down for an
interview with sixty Minutes which aired last night, in which
he invited President Trump again to come to Ukraine and
see for himself the devastation that has been wrought by
this years long war. Do you think there's any scenario
in which President Trump actually makes that trip.
Speaker 14 (40:39):
I really don't, unless it was for some crowning achievement
at the end of a longer negotiation, and that was
part of it all. I don't see it in the
cards for right now.
Speaker 3 (40:50):
Do you see a deal in the cards for right now?
Or we're getting.
Speaker 2 (40:53):
Overly optimistic with the speed with which this process could
actually work.
Speaker 14 (40:57):
So I think we're overly optimistic if we think we're
going to get all the way to a peace agreement.
Speaker 6 (41:02):
So there's a spectrum. For me.
Speaker 14 (41:04):
I think it's more likely you get some sort of
ceasefire that maybe is occasionally violated and we muddle through
for some period of time. I think that's more likely
than a full scale peace agreement, and that might be
good enough for Trump in the end, because look how
hard it is even to try and get them to
live up to the terms of the very modest ceasefire
(41:24):
they have today on energy resources and the Black Sea.
Speaker 2 (41:28):
But how do we get to any kind of agreement
on any peacekeeping force that would maintain a ceasefire, even
if it was just a kind of limited, muddled one.
Speaker 6 (41:35):
Yeah, I'm worried about that too.
Speaker 14 (41:37):
I think we've of course rejected that Ukraine would be
in NATO. It seems like it's increasingly unlikely that we'll
have NATO European allies inside of Ukraine. Where I think
and I hope we're going to go in terms of
security guarantees, is some longer term commitment, maybe not sixty
billion dollars a year, but some sort of commitment to
(41:58):
Ukraine that will continue to fund your military at some level,
at least up until the point where the Europeans can
really step up in a larger way. Now, maybe it's hopeful,
but I think at some point we have to acknowledge
that Ukraine has real security needs and we ought to
try and meet them.
Speaker 2 (42:14):
All right, Michael Allen, appreciate it as always joining us
from Beacon Global Strategies. I'm the latest on geopolitics.
Speaker 6 (42:25):
Thanks for listening to the Balance of Power podcast.
Speaker 14 (42:28):
Make sure to subscribe if you haven't already, at Apple,
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Speaker 15 (42:31):
Or wherever you get your podcasts, and you can find
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Speaker 2 (00:25):
The White House, of course releasing a statement the title
which reads as follows, Clarification of Exemptions under Executive Order
one four two five seven of April second, twenty twenty five,
as amended. The word exemptions is in there, but President
Trump says it's fake news to describe this as exemptions
or exceptions to his tariffs, because tariffs on these goods
(00:45):
things like iPhones other consumer electronics are still coming, just
in a different bucket, as he calls it, semiconductor tariffs,
which he says are on the way in the not
so distant future, in addition to other tariffs he just
talked about in the Oval Office as well. So on
that note, we go to Bloomberg Tyler Kendall, who is
live at the White House, with what we are understanding
(01:05):
at this point from the administration when it comes to tariffs.
Speaker 3 (01:08):
It's not just chip tariffs. Tyler that are on the way.
The President's looking at pharma too.
Speaker 4 (01:13):
Yeah, hey, Kelly, some big headlines, particularly when it comes
to those sector specific tariffs, in just the last thirty
minutes or so out of the Oval Office. As you mentioned,
President Trump doubling down on the idea that pharmaceutical tariffs
could be coming. So not necessarily surprising. He's really been
talking about this, but we should note the timing is
also interesting because the Italian Prime Minister, Georgia Maloney will
be here at the White House later this week. We
know that the European Union in particular is bracing to
(01:36):
get hard, is bracing to get hit hard when it
comes to those pharmaceutical tariffs. Then he also made some
news about some other sector specific tariffs, saying that he
might be interested in granting a reprieve when it comes
to automakers who are moving production from Mexico and Canada
in a bid to give him a little bit more
time when it comes to reshoring. So some big headlines
there about how this White House is looking at the
(01:58):
timeline and whether or not we could actually see a
more long, longer lasting reprieve. The other industry, of course,
that is getting at least a fleeting reprieve for now
or those tech imports that you mentioned, while we wait
for potentially a Section two thirty two investigation to get
underway so that those chip products can be a tariff
instead under sector specific tariffs instead of the broader, so
(02:22):
called reciprocal tariff plan. But when asked on Air Force
one last night about if he was willing to grant
any exemptions to certain products, here's what President Trump had
to say.
Speaker 5 (02:32):
Well, there's going to be an anspert soon and we'll
we'll be discussing it, but we'll also talk to companies.
You know, you have to show a certain flexibility. Nobody
should be so rigent. Will you have to have a
certain flexibility. And we're doing really well, and financially, our
country is going to be stronger than it sever been.
Speaker 6 (02:51):
So some products might lose flexibility for some products, for
some products, yeah, maybe.
Speaker 4 (02:57):
Of course, the big question is just how flex will
this White House be. In the past, when they've imposed
Section two thirty two tariffs, they've been at a twenty
five percent rate. President Trump declined to comment on what
the rate will be when it comes to these chip
specific products. But we also have to keep in mind
how sector specific tariffs are designed to be stacked on
top of existing levies, and Kaylee, President Trump made clear
(03:18):
that all of these tech imports are still subject to
that baseline twenty percent tariff that was levied against Beijing
back in February.
Speaker 2 (03:26):
Yep, over Fentanel Bloomberg's Tyler tend to live at the
White House, thank you so much. And on that flexibility
point that Tyler was just making, we heard that reiterated
by President Trump in the Oval Office earlier today, in
which he also noted that he's been talking to the
CEO of Apple, Tim Cook, and that he doesn't want
to hurt anybody. Apple shares right now, well off the
highs of the session, they're still up about two point
(03:46):
six percent. And it's on that note we turned to
Ed Ludlow, co host of Bloomberg Technology. So Ed, when
we consider that obviously Apple was stuck in a very
difficult place with the tariffs that are that were put
into place, especially if China tariffs applied to them, how
much can they take advantage of this reprieve if the
reprieve is only temporary.
Speaker 7 (04:07):
Yeah, I think the technology sector kind of accepts that
there will be a bucket specific tariff, right, and that
the biggest outstanding questions are on timeline because you have
the written communication from the White House, which you quite
rightly point out literally uses the word exemption. And then
take in aggregate the commentary of Trump's cabinet members on
(04:27):
weekend television. But something specific at the semiconductor level also
branches out to the rest of the electronics industry, right,
because the smartphones's laptops all have chips in them, you
need to understand what that's going to be. And you
know better than I. The biggest kind of unknown here
is this section two thirty two investigation, which looks at
the impact of tariff policy on national security. Essentially it's
(04:52):
a tool that's been used in the steel industry, for example.
But you know, looking at history, those investigations take the
better part of a year. So answer your question, Apple,
you know clearly their strategy has been to shift priority
of iPhones built outside of China, largely in India, and
move them to the US. But it's just a temporary measure.
(05:13):
The other question, and the one that probably in video
is the better case study of is what is the
end goal of the President's policy. Is it to generate
revenue for the country. No, it's probably to onshore manufacturing
in America, which is a whole other question.
Speaker 2 (05:27):
Well, and the President was talking about that earlier in
the Oval, touting the announcement today of how in Video
is using its pledged billions hundreds of billions of dollars
in investment in the US.
Speaker 3 (05:36):
This is what the President said at It's.
Speaker 8 (05:39):
One of the great companies of the world, modern, super
modern companies controls segments that nobody, you know, sort of
controls the world in a sense. And they're coming in
here in the biggest way with hundreds of billions of dollars,
not like millions of dolls, hundreds of billions of dollars.
Speaker 9 (05:57):
And I'm honored by it, and.
Speaker 8 (06:01):
I want to thank Jensen and all of the people
that we deal with.
Speaker 2 (06:06):
My question, ad is one thing. It's one thing to
make the pledge of investment. It's another for that investment
to actually be realized and result in capacity in the
United States. How long is this going to take, not
just for in Video, but any tech company who wants
to do this.
Speaker 7 (06:20):
Well, according to Invidia's announcement this morning, four years to
develop a US manufacturing capacity for their server designs that
go in Stata centers, power AI training. There's an element
of fact check here. Yes, the President is right that
Invidia essentially has a monopoly on the market for AI accelerators,
the chips that train models. He is sort of incorrect
(06:42):
to say that it is an investment of hundreds of
billions of dollars. What Invidia is saying is that they
are moving to establish manufacturing in the States that will
produce hundreds of billions dollars value of goods. That is
the cost of doing business here in America. But I
think most people I speak to in the technology industry,
directly involved and related to InVideo investors is this is
(07:05):
the result of tariff policy. Because think about Nvidia, right,
if you make your high performance systems here in America,
they probably cost twenty to twenty five percent more. The
cost of doing business here is greater, but then there's
a tariff on doing business elsewhere, probably in the long run,
and so netnet, if you're in video or you're one
of Nvidia's customers, you have to choose what is the
(07:26):
best place for us to do business here? And clearly
reading the statement from Jensen Wog. He talks about supply
chain resilience and talks about making the business more robust.
This is a response to the political actions of this administration.
Speaker 3 (07:40):
All right, Ed.
Speaker 2 (07:41):
Ludlaw in San Francisco, Thank you so much, co host
of course of Bloomberg Technology.
Speaker 3 (07:46):
Much appreciated.
Speaker 2 (07:47):
This, of course is Bloomberg's balance of power as we
consider the intersection of these tariff policies, how they're filtering
into the decision making of companies like Nvidia, and ultimately
how all that feeds back into financial markets, which have
seen at least in the equity market at the relief
rally fading. As we've moved through this Monday trading session,
and we want to talk more about the outlook now,
and turned to Katrina Dudley, who is live in our
(08:08):
studios at Global Headquarters in New York. She's Global equity
portfolio manager at Franklin Templeton Investments. Joining me here on
Bloomberg TV and Radio. Katrina, it's been a while, obviously,
it has been a month, a week, a year that
has been absolutely wild when we're contending with tariff policy.
I wonder what you make of this conversation around tech
(08:29):
knowledgy oriented exemption, specifically the idea that there is a
bit of a reprieve here that the President suggests he
will have some flexibility in carving out certain goods from
these tariffs. Do you see all of that as good
news or is there still enough bad news in terms
of the baseline tariff rate that is still in place,
the tariffs on China that will remain with no real
(08:50):
progress see toward a deal. Is all of that still
enough to be dragging on risk appetite?
Speaker 10 (08:54):
I think, look, when we look at tariffs and the conversation,
the key, as you're talking about, is flexibility that the
president is willing to listen. He's watching the market, he's
watching the reaction, and he's listening to CEOs and he's
listening to what they're telling him. And in this case,
we've got some CEOs of reacting in terms of we
are going to make investments in America, and that from
(09:18):
a perspective of an American is really good from us
from a resiliency perspective as well as that reassuring if
jobs and helping that middle class. And then you've got
on the other side the fact that these factories don't
just get built overnight, and I think that there is
a need to phase in some of these tariffs and
phase in those those measures, which I think he's going
to do through that exemption mechanism.
Speaker 2 (09:42):
Well, I guess there's a question of what happens in
the interim when we're actually considering the health of these
corporations and their financial picture. Knowing we're now in the
heart of earning season. I wonder, Katrina, how you expect
the uncertainties around this policy that remain the difference in
the short and the long term outlook to manifest themselves.
And what we're hearing not just about the results looking backward,
(10:04):
but what kind of guidance companies are really able to
provide going forward.
Speaker 10 (10:08):
Look, the impact is being felt actually more in the
small and the meadcap sector. If you look at our
large cab companies, they've got much more resilience in terms
of the balance sheet, their ability to flex their manufacturing.
So it's actually going to be in that lower end
of the market that you need to focus on the
comments that are coming out of them. That's the first side.
The second thing is that we've got these initial announcements,
(10:30):
but then we've had reversal some of these announcements. We've
had adjustments and everything. So I think that the commentary
coming out of earning season is going to be we
actually had a great quarter, spending held up and so
the numbers for the backward looking quarter are going to
be okay. It's just going to be that uncertainty that
relates to the forward outlook. And I think that CEOs
(10:51):
who talk about the variables and talk about what they're
looking at and what is causing that variability, will be
rewarded by the market.
Speaker 4 (11:00):
Well.
Speaker 2 (11:00):
And which would you be more concerned about when we
consider the different variables in the forward picture, the idea
that it's not clear what the tariff rates will be,
so therefore what kind of margin compression companies might be
dealing with, or the idea that it's not clear what
economic impact the tariffs will have in how much demand
there will still be that these corporations get to be
on the receiving end of Which would you say is
(11:22):
the greater risk here or are they just too entwined Katrina.
Speaker 10 (11:26):
Both They're actually both risks in the market. The first
of all, in terms of the amount of tariffs, the
question is how much of that gets passed on to
the consumer. The second part of this is how much
of the consumer is actually doing forward buying or has
been doing forward buying, like buying two or three Apple
iPhones ahead of the announcements. So you could have some
unevenness in terms of demand patterns, and that's something that
(11:48):
we're watching. But if that margin pressure, if you look
at corporate margins are very very strong and high levels,
so I think that there's some ability of them to
absorb some of those tariffs in their own margins. And
that doesn't worry us because we think that companies are
well positioned.
Speaker 9 (12:05):
Well.
Speaker 2 (12:06):
And I wonder what companies you see as best position here, Katrina,
Is it staples really that are the safest heven right now?
Where else would you be recommending you seek harbor in
what has been a pretty incredible storm.
Speaker 10 (12:17):
But when you talk about a staple, those staple companies
are still subject to goods that have got tariffs on them.
Speaker 3 (12:23):
We don't make all project.
Speaker 10 (12:25):
Produce here in America, and so they're subject to the
same characteristics as before. So I think it's actually very
unusual because there's so many different factors that people have
got to look at that are influencing this market that
haven't influenced it before. We talk about the partisanship that's
really impacting the ability to trust any type of forward
(12:46):
looking sentiment index because you've got that dichotomy between the
Republicans and the Democrats, as well as the fact that
you know, things like tariffs. We've had them in terms
of industry specific tariffs with long investigation periods. Now we've
got them, they've being implemented quickly, and they've been implemented
in a much more broad brush manner, and that's going
(13:07):
to impact the consumer. So it's just a different conversation,
and that's what we're kind of working through and listening
to companies to see how it impacts the bottom line.
Speaker 9 (13:17):
Well.
Speaker 3 (13:17):
And then there's the kind of wider macro picture as well.
Speaker 2 (13:20):
That is a constant conversation we're having here on Bloomberg
TV and Radio Katrina, which is how this all filters
into monetary policy, if at all. As the signal we're
still getting from the FED is they are in weight
and C mode, it doesn't seem that they are super
eager to see a FED put come into place here
of any kind. Are you anticipating that have you changed
your expectations, and and what if we are to get
(13:41):
a signal from the Fed that they're willing to step
in here would that do to risk appetite.
Speaker 10 (13:45):
It's very difficult for the FED to step in because
one of the metrics that they're watching is inflation, and
they've spent a long period of time getting inflation which
was at very high levels and very far away from
target back down close to two point six, very close
to their target level. And then what we're so that's
on the Fed that's kind of looking at. We've got
(14:05):
low unemployment numbers, we've got an inflation number that we've
kind of got under control, but tariffs potentially are a
headwind to that that they could cause inflationary pressure. So
the market, though, is pricing in three Fed cuts. I
think we're at less than that. We do think that
the Fed is going to be very cautious before they
step in. I think you've talked about a FED put.
(14:25):
I think that President Trump is more likely to make
commentary that supports the market versus the Fed.
Speaker 2 (14:31):
Well, a lot of people thought we found the Trump
put last week when he noted what was happening in
the bond markets and issued this ninety day delay in
our final minute here, Katrina, though, obviously what happened in
the bond market, as well as what we've seen in
the weakness of the dollar, has kind of contributed to this,
if not narrative question as to whether we are now
reconsidering US exceptionalism from an equity standpoint, Do you think the.
Speaker 3 (14:54):
End of US exceptionalism is upon us?
Speaker 10 (14:57):
Absolutely not. I think that the America and our resiliency
and our ability to adapt is what makes this country
so unique. And I don't think that anything that's happened
is actually undermined that. If I take a look at
the factors that support entrepreneurialism, and I look at the
factors that are encouraging investment back into this country by
(15:20):
a number of companies, Invidiari is just the latest company
that's doing that on top of a TSMC, I think
that the American story continues to work here.
Speaker 3 (15:30):
All right.
Speaker 2 (15:30):
We will leave it on that note. Katrina Dudley of
Franklin Templeton Investments, where she is a global equity portfolio manager,
joining us here on Bloomberg TV and Radio. Thank you
so much, really appreciate it, and we still have much
more ahead here on Balance of Power. Our political panel
will be joining me next. Rick Davis and Jeanie Shanzeno
will be with me as we consider how all of
this is playing out politically for President Trump. We've got
(15:53):
some interesting new polling from CBS and Yugov around how
people feel about tariffs, and also just a red headline
crossing the Bloomberg terminal Harvard rejecting a proposed agreement with
the Trump administration. Of course, we've seen a bit of
a jockeying between higher ed and this White House.
Speaker 3 (16:10):
We'll get into that with our political panel as well.
Up next. Right here on Bloomberg TV and Radio.
Speaker 1 (16:17):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on Apple,
Cocklay and Android Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 2 (16:36):
Live in Washington, where we are focused on basically one thing,
and that is President Trump's tariff policy, and that seems
to be, if not the singular, the primary focus of
financial markets as well as Amy was just running US
through and it was a big topic of conversation on
the Sunday shows this weekend, where you had a number
of members of the Trump administration fanning out across the
networks to defend and explain President Trump's tariff policy. From
(17:00):
the Commerce Secretary Howard Lutnik to Trade Advisor Peter Navarro,
Kevin Hassett of the National Economic Council, and USTR Jamison
Greer all shared their thoughts this weekend.
Speaker 11 (17:13):
The President is on it.
Speaker 12 (17:14):
It's very very important for people to understand, you know,
why we're doing what we're doing.
Speaker 11 (17:18):
What President Trump is doing, and his vision and his
leadership is to completely realign the world economy, but in
so doing put America first. The world cheats us. They've
been cheating us for decades. We have been living under
a teriff regime, but it has been the regime of
other countries.
Speaker 13 (17:35):
The more importantly they cheat us with the so called
non tariff barriers.
Speaker 14 (17:39):
It's the vat tax, is the dumping, the currency manipulation.
Speaker 11 (17:42):
We can't be relying on China for fundamental things that
we need.
Speaker 15 (17:46):
What's going to be up to these countries to come
to the table, continue coming to the table.
Speaker 3 (17:50):
And make these kinds of offers.
Speaker 2 (17:53):
So the administration outlining its vision when it comes to trade.
The question is whether it's a vision that the majority
of the country and the American electorate actually shares as well.
And on that note, some interesting polling came out this
weekend from CBS News together with you goev that focused
on tariffs and the economy overall.
Speaker 3 (18:11):
Here's a few of the highlights for you.
Speaker 2 (18:13):
On tariffs, largely, fifty eight percent said they opposed President
Trump's new tariffs on imported goods, just forty two percent
said they favored them, and seventy five percent said the
tariffs will increase prices in the short term. Another forty
eight percent said they will increase prices in the long term.
Smaller minorities said they would have no impact, or they
weren't sure, or that they would decrease prices. Plus another
(18:36):
finding in this survey, nearly two thirds think the new
tariffs will make the economy worse in the short term.
All that said, when we consider President of Trump's overall
approval rating, forty seven percent approve, fifty three percent disapprove.
So I want to get into these figures now and
how the policy is playing politically and turned to our
political panel. Bloomberg Politics contributors Rick Davis and Genie Shanzeno
(18:59):
are with me here on Bloomberg TV and Radio. Rick,
of course as a partner at Stone Court Capital and
Republican strategist, Genie democratic analyst and Senior Democracy Fellow at
the Center for the Study of the Presidency and Congress.
Speaker 3 (19:11):
Rick, when you look at figures.
Speaker 2 (19:12):
Like this, it would suggest that these policies, as much
as President Trump believes them and continues to define tariffs
or say tariffs is his favorite word in the dictionary,
that it's not necessarily favored by the majority of the country.
Does it, ultimately, though, make a difference for this White House?
Speaker 15 (19:29):
You know, I think only on the margins. Does it
make a difference for this White House? In other words,
will they tweak their policies ninety day delays, things like
that in order to sort of satisfy consumer demand and
also the markets, because, of course, part of what is
driving consumers' attitudes is what they see in the market.
So the combination platter of you know, robust economy, strong markets,
(19:54):
and consumer support is something they have to be considering
on a daily basis. And seeing them tweaked their policies,
especially around tariffs. In that regard that being said, you know,
these consumers are pretty grumpy. We saw last week the
Michigan Consumer Sentiment Index came out very similar numbers, worse
(20:15):
expectations for inflation since nineteen eighty one.
Speaker 11 (20:19):
So the.
Speaker 15 (20:22):
Book is getting written pretty strongly right now that maybe
we can't necessarily depend upon consumers to keep this economy running.
They're doing a great job right now, but with their
concerns about the future, I would say the FED is
probably more worried about future inflation than it is inflation today.
Speaker 2 (20:44):
Well, and I guess it's a question of how far
into the future, because when we consider the kind of
language in this pulling data, Genie again seventy five percent
so that the tariffs will increase prices in the short term.
Nearly two thirds think new tariffs will make the economy
worse in the short term. House hasn't necessarily pushed back
on the idea of there being some detrimental impact in
the short term. They keep saying short term pain for
(21:07):
long term gain. I guess the question is is it
enough for consumers to tolerate that in the short term
if they believe in the long term game, or do
you think that belief still might be missing as they
consider what this is actually going to do to their
wallets in household balance sheets.
Speaker 12 (21:22):
Yeah, consumers are screaming, we don't want pain of any kind,
short term or long term. And quite frankly, the White
House isn't listening. And why the White House isn't listening?
Donald Trump doesn't have to run again. But who's gonna
listen are the Republican members of Congress because they will
hear from their constituents who say, hey, wait a minute,
(21:45):
all of these exemptions the president is handing out my
little store in Oklahoma. I'm not on his radar because
I didn't give a million dollars to his inaugural so
I can't get in his ear to claim an exemption.
And that's what I think we have to ask ourselves,
why all these exemptions, Why tariff policies that are so arbitrary?
(22:06):
Because Donald Trump wants the power to dole out crony,
give out to the people that he feels he are
in alignment with him, and he wants to withhold for others.
And that's really what this about. It's not about reshoring
because exemptions work against that. We are not in an
emergency that makes us pay more for sneakers than we
(22:28):
would for electronics.
Speaker 3 (22:30):
So people know this.
Speaker 12 (22:32):
I mean, people go to the store and pay more
for eggs as Easter is coming up. And we've all
heard the one answer people answer when you say, why
am I paying more Donald Trump's tariffs? And this will
hurt Republicans in the polls. It may not hurt Donald
Trump because quite frankly, he just wants the power. He
doesn't have to run again, so he doesn't really care
(22:52):
about these poles anymore.
Speaker 2 (22:54):
Well to that point, Rick, Congress is in recess for
the next two weeks for Easter. A lot of them
are back home and the districts. I don't know how
many of them are planning to get some FaceTime in
face to face with constituents in the form of town
halls because of concern around blowback around these policies. Just
how rough will it be for Republican members, especially in
terms of what they're hearing at home.
Speaker 15 (23:15):
Well, you know, getting back to these numbers, we haven't
seen these kinds of numbers in a long time. It
really does show frustration on the part of consumers consumers
or voters, and angry voters or angry consumers make angry voters.
And so if there are some sort of brave enough
Republican officeholders who are going to willingly participate in public
(23:40):
forums like town halls, they can expect blowback. I mean,
what we've seen recently in other breaks is people Republicans, Democrats,
Independence coming to these town halls and really expressing their
discontent for what they think is a sort of random
policy when it relates to just about everything. Prices, the
(24:00):
number of people getting slash in departments like Social Security,
their fears over Medicaid being cut, and these are all
things that we are telling them we're going to do.
So in that regard, I think that you're sort of
making the bed that you now have.
Speaker 9 (24:16):
To lay in well.
Speaker 2 (24:19):
And so then there's the other side of the partisan
equation Genie, which is how Democrats are playing this. You
look at the weekend activity of Senator Bernie Sanders and
congressom and Alexandria Cossio Cortez as they continue their swing
across the country. Bernie Sanders at Coachella. Producer James wishing
we had video of that.
Speaker 3 (24:36):
I too.
Speaker 2 (24:37):
Wish we could share that on Bloomberg TV and on YouTube,
but they are drawing massive crowds. Genie, is this the
messaging that is actually working?
Speaker 12 (24:46):
Yeah, they're hoping, and I agree with you and James.
I wish we had video of Bernie Sanders and Coachella.
It was very hot. I have no idea if he
was wearing his mittens or not, but he got quite
a crowd also in La with Alexandra Acosio Cortes, and
the message was all about an administration run them up,
picking up innocent young people off the streets and putting
(25:07):
them in detention for having a political opinion, destroying the economy,
breaking the markets, not wanting to support people who are
on Medicaid despite working at McDonald's and other jobs. And
so Bernie Sanders has a message, unfortunately for the Democratic Party.
You know, they don't have a leader right now, so
(25:28):
he is giving Democrats a way through this. But whether
they're listening or not is a big question. And by
the way, we had a sort of split screen with
Donald Trump at the UFC in Miami as well, so
they were all out sort of gearing up the crowds
this weekend.
Speaker 2 (25:45):
Yeah, I wish we had video of that too, entering
the arena kind of like a fight, er fists in
the air, Chance of USA. It's just a remarkable moment
we're in in American politics. Genie, knowing you study politics,
but you also, of course are professor of political science
at I own a university and a lot of time
in higher education. I do want to get your take
on the headline that just crossed the Bloomberg terminal, Harvard
(26:07):
rejecting a proposed agreement with the Trump administration, which of
course has threatened to halt nine billion dollars in funding
over demands that include things like governance and leadership reforms,
merit based hiring reform, merit based admissions reform. Harvard University's
lawyers saying they will not accept this deal, unlike Columbia, which,
of course, which acquiesced to a lot of demands of
(26:27):
the Trump administration.
Speaker 3 (26:28):
And I wonder what you make of the news.
Speaker 12 (26:31):
Very welcome news. You know, if Harvard cannot stand up,
who can amongst the universities in this country. And I
give the president and the faculty who filed a lawsuit
credit for this. This is an attempt to undermine the
freedom to engage in a liberal arts education, free speech.
Harvard does have issues. They've acknowledged that they've been working
(26:54):
on issues of anti Semitism, but the fact that Donald
Trump can threaten to take away their ability to control
their curriculum and other things unless they abide by his
wishes is a bridge way too far. And good for
Harvard for stepping up. I think Princeton and others will
be inspired by this and the law, and hopefully the
(27:16):
big shoe law firms will as well going down the road.
Speaker 2 (27:20):
Well, so, Rick, I'll give you a chance to swing
at this one as well. Is this ultimately a fight
that Harvard and these universities can win up against administration
that's threatening to pull funding.
Speaker 6 (27:30):
Well, let's just be clear.
Speaker 15 (27:31):
There is no freedom of speech right to spending taxpayer dollars,
and that's what this debate is all about. There is
an enormous amount of taxpayer dollars going into these institutions,
and it's up to government to decide what uses they are.
This is where elections matter and they have consequences, and
the consequences in this election is that Donald Trump wants
(27:54):
to turn the clock back to a period of time
when you know, people like minded like Donald Trump coett
decide what those taxpayer dollars are going to be used for.
So he can threaten, he can control, but at the
end of the day, his only real leverage is taking
away federal funding, and that's a taxpayer issue. So I
(28:15):
think that at the end of the day, it puts
universities in a very difficult position. They're used to, you know,
not being or being insulated against any kind of political pressure,
and in this case, that's that's not going to work
for them.
Speaker 2 (28:30):
All right, Rick Davis and Jeanie Shanzeno our political panel
joining us on this Monday here on Balance of Power.
Thank you so much, and we still have more coming
up as we turn to geopolitics. President Trump talked about
both iron and the Russia Ukraine War in the Oval earlier,
and we'll have the latest there next. On Bloomberg TV
and radio.
Speaker 1 (28:51):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Alpa Cockley and Android Otto with the boom Burg Business app.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 2 (29:07):
We want to focus on commodities and oil specifically as well.
With WTI crew down about eight tens ofven percent on
the day, we're just shy of sixty one dollars a barrel,
so off the lows we experienced last week, but still
we're talking about some pretty depressed prices here. And in
the face of that, some interesting news from OPEC today,
which has cut its forecast for oil demand globally, not
(29:29):
just for this year, but next year as well, in
the face of President Trump's tariffs.
Speaker 3 (29:34):
The cartel projecting.
Speaker 2 (29:35):
An expansion of one point three million barrels a day,
or approximately one percent percent for each year.
Speaker 3 (29:42):
And we should note that even that reduced.
Speaker 2 (29:43):
Forecast is still higher than other forecasts that are out there.
So we want to get into this now with Mike mcgloan,
who covers commodities for a senior commodity strategist at Bloomberg Intelligence,
live in Miami. So, Mike, even with this reduced forecast,
do you get the sense that OPEK is still being
overly op mystic on demand here?
Speaker 9 (30:02):
Yes? I love your question, Kaylee, and your leading. It's perfect.
Speaker 13 (30:05):
They are just catching up to the rest of the world.
They obviously have a bias for Crudel to go up.
They're pointing out the facts of what's really happening. Crudel
is going down because it went up a lot to
the peak in twenty twenty two, and that shifted some
of the world ordered that centivies much more supply out
of the US, which is still the case accesses of supply,
and by the way, the cost of production US is
pushing now towards fifty dollars a barrel, so it's kind
(30:27):
of a gravity pool level. We have declining demand out
of China, and we have a paradigm shift in the
world's shifting to ev so this is a perfect storm
for normal reversion in crudeil. The last twenty years, the
loads have been around forty dollars a barrel after shooting
up above one hundred.
Speaker 9 (30:40):
Now it's got a good reason to do that.
Speaker 13 (30:41):
But the bottom line is the US stock market has
to go up now, and I think Crudel's realizing the
stock market is probably going to go down, which means
as amount of time Crudels gets below that.
Speaker 9 (30:50):
Cost of production to shut off those excesses.
Speaker 2 (30:54):
Well, so I guess it becomes a question of policy
decisions moving forward as well, and at a time when
opek is adding more so fly onto the market, cutting
instamand forecast, and President Trump is pushing for more supply
to come out of the US. Are we just going
to end up in a world in which we're incredibly
oversupplied or your producer is going to recognize that and
make decisions accordingly.
Speaker 13 (31:12):
Yeah, Well, the number one way they really shut off
all that except supplies for prices to go down, and
then it'll happen below fifty.
Speaker 9 (31:18):
Usually happens around forty. It's a matter of time.
Speaker 13 (31:20):
But I see the average price of gasoline this country
is still above three.
Speaker 9 (31:24):
Now it's driving season.
Speaker 13 (31:25):
We'll stay high for a little while, but by this
time next year or midterms drop to two. It's a
normal reversion diesel glowing. Lower energy price is also pressure
on inflation, and the stated goal of the Trumpet administration
have lower interest rates.
Speaker 9 (31:38):
So three, it's just a matter of time. The whole
tilt is going that way.
Speaker 13 (31:41):
I don't see what stops it, but I'll tell you
prerequisite for just stable stability, stock market has to stay up.
And if it continues downward, which Bloomer Economics base views
will drop down to four thousand s and B five hundred,
about another twenty percent. In the case of recession, we're
going to get normal deflation from the inflation.
Speaker 9 (31:57):
That's the trend right now.
Speaker 2 (31:59):
Well, and then of course there's the unknown factors to
consider here, including geopolitical factors. Mike, just quickly, as we
heard President Trump today talking about ongoing talks with Iran
over its nuclear program, if that somehow results in sanction
relief in more Iranian crude coming onto the market at
a time when these other dynamics we just discussed, or
and play, what would the impact of that be.
Speaker 9 (32:20):
Perfect storm, The risk is there some kind of supply shock.
Speaker 13 (32:23):
Krudeo basically needs a supply shock to go up, like
the grains need some kind of drought supply shock to
go up. Otherwise they're heading towards low price cures. So
you describe the whole trajectory.
Speaker 10 (32:32):
Now.
Speaker 13 (32:33):
The thing is everybody agrees with it. It was a little
bit difficult when it was at one hundred and it
was heading lower. Now that we're heading towards heading at
sixty and lower, everybody agrees.
Speaker 9 (32:40):
Which is a bit of a bullsh factor.
Speaker 13 (32:41):
But overall, the trends are very bad for very good
for lower energy prices.
Speaker 9 (32:46):
With it that way, consumers love it. It's all good
for consumers, all right.
Speaker 2 (32:50):
Mike mcloon of Bloomberg Intelligence joining us from Miami, Thank
you so much, and I want to focus more on
the subject of Iran. Now, of course, there were talks
held on Saturday in Oman between the US and around
the highest level diplomatic effort to address its nuclear program
we've seen in years, and while not much tangible, necessarily
was yielded by Steve Whitcoff, the Trump Administration's middlely so envoys,
(33:11):
meeting with the Iranian foreign minister. We did get confirmation
that there will be a second meeting that will happen
in Italy this coming Saturday. So is that alone enough
of a sign of progress on that? Returned to Michael Allen,
who was here with me in our Washington, d C studio.
He's managing director of Beacon Global Strategies, also former Special
Assistant to President George W. Bush in the national security sector.
(33:33):
Good to see you as always, Thanks for being here
on Bloomberg TV and radio. Is the idea that we're
having another round of talks in and of itself enough
progress to you? Or should we have had more come
out of this meeting.
Speaker 14 (33:45):
I guess it's progress to say that we've talked enough
to at least have a second meeting, But at some
point we really need to get to.
Speaker 6 (33:52):
The details of what they're discussing.
Speaker 14 (33:54):
I want to make sure, at least from my vantage point,
that Whitcoff is very serious about urin enrichment. He seemed
to say the red line was only weaponization, which is
the process by which you fashion a bomb out of
highly enriched uranium that's called weapons grade.
Speaker 6 (34:11):
So I want to make.
Speaker 14 (34:12):
Sure that we have a lot of expert technical expertise
into what they're talking about, because if we want to
be a deal too badly, we're going to get a
bad deal.
Speaker 2 (34:22):
Well, we heard President Trump in the Oval Office earlier
this afternoon saying that Iran has to get rid of
the concept of a nuclear weapon. They cannot have a
nuclear weapon. But you're suggesting it shouldn't just be about
the weapon itself.
Speaker 6 (34:33):
Yeah, that's right.
Speaker 14 (34:34):
I think if they continue to specialize in how to
make weapons grade uranium, that's a skill that you're not
going to forget. It's a learned technical skill that will
be with them forever. And so we'll always constantly be
trying to figure out are you burrowing into a new
mountain like they've done on two occasions to build centrifuge halls,
(34:55):
and what are you doing on weaponization? That's much harder
to track than a huge centri huge hall. So if
any deal results, it has to have any time, any
place inspections by the UN's watchdog agency, which is called
the IAEA. That's absolutely a fundamental part of any agreement
to be able to check Iran.
Speaker 6 (35:17):
And what they're up to.
Speaker 2 (35:18):
Well, so what position is Iran in coming in to this? Then,
when we're considering what an agreement could look like, Knowing
we've had many conversations with you, included about how it's
been weakened by the weakness of its proxies in the
face of ongoing fights with Israel or the US striking
the Huthis, what have you? Are they weakened enough that
they would actually agree to something that arguably, you could
say Iran might not see as super favorable to its
(35:40):
interesting So.
Speaker 14 (35:40):
I'm worried they're not enough adversely affected quite yet. Remember
last time, in the first Trump administration, there was a
long period of what they call massive sanctions and max pressure,
and honestly, I don't know that the Iranians felt it
enough or I think they're willing to really take some
serious pain before they're going to deal in a very
(36:03):
substantial way on the things that we care about very much.
And then, of course, as we've talked about with you before,
is the wild card of Israel. Israel may be much
less trustworthy of an Iranian deal than Trump might be.
Speaker 6 (36:16):
And so what do they do. Do they decide to
go ahead.
Speaker 14 (36:19):
And use military action, And I think that's something that's
a serious possibility this calendar gear.
Speaker 2 (36:24):
Well, there's also the question of US military action too.
President Trump was asked by a reporter today about that.
He said, if we have to do something harsh, we'll
do it. Then, when he was asked specifically if that
could include a strike on Iranian nuclear facilities, he said,
of course it does. Do you see that as actually
a likely possible scenario?
Speaker 6 (36:42):
I think it's possible.
Speaker 14 (36:43):
I think his predominant view is what he said in
his inaugural that he wants to have fewer wars, not more,
and not getting in another war in the Middle East
is one of his chief aims. But at the same time,
he has set the theater with B two bombers, extra carriers,
a lot of military force. I think that's more to
reinforce Steve Whitkoff's hand as he negotiates diplomatically.
Speaker 6 (37:06):
But I wouldn't rule it out.
Speaker 14 (37:07):
Because I think if President Trump feels like if he's
disrespected or Iran doesn't take this seriously, he might go
for it.
Speaker 2 (37:14):
I wonder if you feel that the President might be
disrespected by what we saw take place in Ukraine over
the weekend. Knowing to your point on him not being
a fan of wars, he very much wants to see
a negotiated outcome between Russia and Ukraine.
Speaker 3 (37:26):
He wants the war to end.
Speaker 2 (37:27):
And yet on Palm Sunday, Russia strikes inside Ukraine kills
more than thirty people, even as there are these efforts
towards some kind of peace deal. Does that signal to
you that Putin is not taking this seriously? And what
does that mean for the president?
Speaker 14 (37:39):
I don't think Putin is taking it very very seriously.
I think Putin is behaving like he has the whole time.
He did a deliberate attack on a civilian gathering on
Palm Sunday. I think this is par for the course
for him. I don't want us to bend over backwards
trying to get a deal with Putin. I think it's
fine that Witkoff is there trying to established some basic
(38:01):
rapport with Vladimir Putin. But at the end of the day,
I think the President might be a little bit too
saying it was everyone's fault here. I think he ought
to assign more blame to where it properly.
Speaker 6 (38:13):
Resigns well.
Speaker 2 (38:14):
On the subject of blame, we heard from him in
the Oval office, and it was an echo of what
he had already posted on true social the war between
Russia and Ukraine is Biden's.
Speaker 3 (38:23):
War, Yeah, not mine.
Speaker 2 (38:25):
What do you make of that language? This isn't language
we've heard from him before. He's noted frequently that this
war did not start under his presidency, which yes, is true.
But to characterize it as Biden's.
Speaker 14 (38:35):
War, yeah, I thought he was in a lot of
different places. In that press conference, he also seemed for
a second to say that it was Zelenski's fault that
they were even in the war.
Speaker 2 (38:44):
He suggested Ukraine started a war with the country twenty
times its size.
Speaker 14 (38:48):
But then he cleared it up by saying I blame
all three of them, and he at least rang Zelensky
in third place on that occasion. But I do think
that he's worried about the messages that he sends to
Vladimir Putin. He's trying to ties him into a serious negotiation.
So that might explain what Trump is up to when
he's trying to explain exactly what happened yesterday.
Speaker 2 (39:08):
So you think it's more about positioning himself for ongoing negotiations,
not that negotiations which he previously contended would take him
a day to sort out, aren't necessarily going his way,
and he's trying to blame to his predecessor.
Speaker 14 (39:20):
I think, oh, on the Biden thing, I definitely think
he's trying to say, hey, listen, Biden mismanaged this thing
all along. He poured gasoline on a raging fire. At
least I'm the one that's trying to make peace.
Speaker 3 (39:31):
Here, okay.
Speaker 2 (39:32):
And he's not just trying to make peace, he's also
trying to reach an economic deal with Ukraine on minerals
still a draft that obviously has been revised multiple times.
Do you think that will be resolved soon and if
it is, what ultimately does that open up?
Speaker 14 (39:45):
So I think it helps a little bit because it
helps with what Donald Trump is worried about, which is
has the United States been taken advantage of? Have we
overpaid for the defense of Ukraine. So I still think
it helps Ukraine in the sense that President Trump will
be able to say, you know what, we've gotten at
least some of our money repaid here. I know Zelensky
(40:06):
objects to that because he says that was a grant
and it was. But I think some of this is
just the politics of America first here in the United States,
and the President, in every relationship from tariffs to Iran,
is trying to make sure the United States gets a
good deal. So if he feels like we're being repaid
a little bit, I'm okay with that.
Speaker 2 (40:23):
We heard from President Zelensky. He sat down for an
interview with sixty Minutes which aired last night, in which
he invited President Trump again to come to Ukraine and
see for himself the devastation that has been wrought by
this years long war. Do you think there's any scenario
in which President Trump actually makes that trip.
Speaker 14 (40:39):
I really don't, unless it was for some crowning achievement
at the end of a longer negotiation, and that was
part of it all. I don't see it in the
cards for right now.
Speaker 3 (40:50):
Do you see a deal in the cards for right now?
Or we're getting.
Speaker 2 (40:53):
Overly optimistic with the speed with which this process could
actually work.
Speaker 14 (40:57):
So I think we're overly optimistic if we think we're
going to get all the way to a peace agreement.
Speaker 6 (41:02):
So there's a spectrum. For me.
Speaker 14 (41:04):
I think it's more likely you get some sort of
ceasefire that maybe is occasionally violated and we muddle through
for some period of time. I think that's more likely
than a full scale peace agreement, and that might be
good enough for Trump in the end, because look how
hard it is even to try and get them to
live up to the terms of the very modest ceasefire
(41:24):
they have today on energy resources and the Black Sea.
Speaker 2 (41:28):
But how do we get to any kind of agreement
on any peacekeeping force that would maintain a ceasefire, even
if it was just a kind of limited, muddled one.
Speaker 6 (41:35):
Yeah, I'm worried about that too.
Speaker 14 (41:37):
I think we've of course rejected that Ukraine would be
in NATO. It seems like it's increasingly unlikely that we'll
have NATO European allies inside of Ukraine. Where I think
and I hope we're going to go in terms of
security guarantees, is some longer term commitment, maybe not sixty
billion dollars a year, but some sort of commitment to
(41:58):
Ukraine that will continue to fund your military at some level,
at least up until the point where the Europeans can
really step up in a larger way. Now, maybe it's hopeful,
but I think at some point we have to acknowledge
that Ukraine has real security needs and we ought to
try and meet them.
Speaker 2 (42:14):
All right, Michael Allen, appreciate it as always joining us
from Beacon Global Strategies. I'm the latest on geopolitics.
Speaker 6 (42:25):
Thanks for listening to the Balance of Power podcast.
Speaker 14 (42:28):
Make sure to subscribe if you haven't already, at Apple,
Spotify
Speaker 15 (42:31):
Or wherever you get your podcasts, and you can find
us live every weekday from Washington, DC at noontime Eastern
at Bloomberg dot com.
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