April 21, 2025 • 42 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
The Supreme Court is considering an emergency petition from President Donald Trump that could imperil the Federal Reserve’s ability to remain independent. And earlier today, President Donald Trump warned the US economy may slow if the Federal Reserve does not move to immediately reduce interest rates, in his latest broadside against Fed Chair Jerome Powell.
Trump said in a social media post Monday that “there is virtually No Inflation,” pointing to lower energy and food prices. “But there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump said, referring to Powell.
Economists widely expect Trump’s tariffs to boost inflation and slow growth, even if just temporarily. While inflation has cooled notably in recent years, it remains elevated. Powell, along with several of his colleagues, has underscored the central bank must ensure new levies don’t lead to a more persistent bout of inflation.
Trump has rattled Wall Street by repeatedly criticizing Powell and suggesting he had the ability to remove the Fed Chair before the end of his term. US equities sank on Monday as traders weighed the chances Powell gets axed, with the S&P 500 Index falling more than 3%.
Trump has privately asked his advisers about the possibility of removing Powell, while some administration officials have warned him against doing so, according to people familiar with the matter. National Economic Council Director Kevin Hassett on Friday told reporters that the president was studying the question of whether he’s able to fire Powell.
While the US economy grew at a healthy clip last year — at a 2.4% pace in the fourth quarter — economists see a tariff-induced drop in business investment and consumption driving a slowdown later this year. Meanwhile, progress on cooling inflation back to the Fed’s 2% target had stalled, but price growth slowed again in March, with the consumer price index rising 2.4% from a year earlier.
Today’s show features:
- Lev Menand, associate professor of law at Columbia Law School on his latest Bloomberg Opinion column How Supreme Court Could Imperil Fed Independence: Judge & Menand & Bloomberg News Economics Editor Molly Smith
- Bloomberg Economics US Economist Stuart Paul & Bloomberg News Global Economy Reporter Enda Curran on the global economic outlook with IMF spring meetings ahead
- Bloomberg Businessweek columnist and Elon Inc podcast cohost Max Chafkin on his Big Take: Trump’s Agenda Is Shaped by Project 2025 Author, Not Elon Musk
- And we Drive to the Close with Jeff McClean, CEO of Solidarity Wealth
Hosts: Carol Massar and Tim Stenovec
Producer: Justin Milliner
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):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:08):
This is Bloomberg Business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
As we've been saying, the Sell America trade definitely gathering
some momentum, Charlie, of course, just breaking down the numbers
concern President Trump will act upon his threat of firing
Fetcher J. Powell implement policies then that could lead to
a recession. President Trump reiterated his call for the Fed
to reduce rates earlier today on Truth Social Writing. Preemptive
cuts and interest rates are being called for my many
(00:55):
That again, Tim, of course, is President Trump's words.
Speaker 4 (00:57):
Well, let's get to it with us as a Bloomberg
News economics eder, Molly Smith.
Speaker 5 (01:01):
She joins us here in the studio.
Speaker 4 (01:02):
Also with us is Columbia Law School Associate Professor of
LA Levmonard, joining us from New York. Molly, I do
want to start with you in your world, how serious
is it with economists and the like talking what feels
like a threat by President Trump against the independence of
the Federal Reserve.
Speaker 6 (01:18):
I mean, it's definitely a serious consideration right now. And
the way that Trump just keeps going after Powell day
after day in all these different tweets, whether people are
taking seriously this idea of preemptive cuts quote being discussed
by many that is definitely refutable and not at all
being priced in. I mean, there's a roughly like, I
don't know, sixteen percent chance right now looking at the
(01:40):
Bloomberg warp screen of a rate cut in May, which
is coming in a week or two. So no one's
really thinking about that happening right now. And if raatecuts
are to happen, people are saying that's because the economy
is going to slow because of Trump's policies, not because
inflation is slowing. Key claims exactly.
Speaker 3 (01:59):
Professor man En In on all of this, the Supreme
Court considering a petition from the President that could allow
him to override some legislation establishing independent agencies such as
the FED and remove their leaders without cause or notice.
What exactly is this case about? Why are we talking
about it? Especially since this case does not involve any
(02:19):
FED officials and why is it, though potentially so significant
for the FED, for FED governors and perhaps other heads
of different organizations in the government.
Speaker 7 (02:30):
So if FED is one of many independent agencies in
the government, and its seven member board enjoy the same
sort of protection from at will removal by the president
as other agencies like the Federal Trade Commission, the National
Labor Relations Board, and President Trump, in his few months
in office so far, has already challenged the laws protecting
(02:53):
these officials from removal at pleasure by the president, and
those challenges he removes officials illegally. Those challenges are making
their way through the courts right now, and the Supreme
Court of the United States is currently considering a petition
from the government from Trump to allow him to push
(03:13):
these officials out of office until their cases make their
way through the whole courts, which could be months and months,
and that petition could be decided this week, and if
Trump were to prevail, then he could go ahead potentially
and fire the whole FED Board, not just chair Pale,
(03:34):
as soon as this week, and those officials, if they
wanted to challenge those removals, would be out of a
job during the tendency of the litigation, Professor.
Speaker 4 (03:42):
Man Aand given what you know about the case, what
you know about the arguments and the history, and of
course the justices as well, do you have a prediction
what is likely to happen if the Supreme cour Court
rules one way.
Speaker 5 (03:53):
Or the other.
Speaker 7 (03:55):
It's really hard to say, but based on the last segment,
I think markets are really not pricing in the risk here.
So already we have an administrative stay issued by Chief
Justice Roberts in this case Trumphy Wilcox last week, which
meant that Willcox, who had been put back in her
job at the NLRB by the lower courts, was taken
(04:16):
out of her job while the Supreme Court considers President
Trump's emergency application. That suggests to me that there are
many members of the Court who might consider granting this
stay pending appeal on an ongoing basis. I think that
(04:37):
there are members of the Court who have expressed in
prior cases real reservations about allowing the expansion of presidential
power to touch the FED. There's a desire to carve
out a FED exception. But the more uncertainty there is
in this space, the more likely we would see President
Trump potentially testing the boundaries, and so that might not
(05:00):
mean a removal of Chairpwell, but it could mean a
removal of Governor Barr, Governor Cook in the coming weeks.
Speaker 3 (05:08):
Whatever happened to checks and balances? Professor man Hanne, I'm
just curious. We always just thought this government, how incredible, right,
three separate branches, checks and balances? Are you, as someone
who teaches, who studies and the power of the Supreme Court, like,
are we losing that? Have we lost it?
Speaker 7 (05:28):
We are very much losing checks and balances. This is
not a new thing. This is the culmination of forty
plus years of efforts to reconceptualize the presidency under the
Constitution in such a way that Congress's laws attempting to
constrain presidential power can be violated by the president. And
(05:48):
Ronald Reagan was the first really to push this in
nineteen eighty one when he took office, and there was
a Democratic House, and there have been a Democratic House
as long as anybody could remember. In administration, officials sought
to assert presidential authority under the Constitution to do certain
things that they didn't have the votes for in Congress.
(06:11):
Those moves were ultimately embraced by the Clinton White House,
and we've had a sort of ever expanding conception that
the Supreme Court has validated at several points, starting in
twenty ten with the Roberts Court decision in a case
called Free Enterprise, which restricted the ability of Congress to
(06:33):
protect the independence of the PCAOB, the board within the
sec that regulates accountants. We had a series of cases
that validated more and more this once fring sort of
constitutional theory of the presidency. And now we have President
Trump in his second term trying to do a full
(06:54):
bear hog of this sort of of this presidentialist theory.
It's called unitary executive theory, and that is very inconsistent
with traditional checks and balances.
Speaker 6 (07:05):
Just to expand on this idea of checks and balances,
it's not so much one that's afforded by the law
and the different branches of government, but just within the FED.
Something that I don't think we speak about enough with
respect to who makes decisions on interest rates is that
the chair of the Fed does not act similarly to
the President of the United States. They don't have executive
(07:26):
power to just unilaterally make a decision for the entire
Federal Open Market Committee, which is comprised of twelve members,
which includes the six governors on the board, which Powell.
Speaker 8 (07:38):
Is one of those people.
Speaker 6 (07:40):
And to what the professor was just saying that if
Trump were to remove Powell, then that would also then
set a president. Is he going to go after all
these other governors? But again, this is a decision that
on interest rates, it's set by this whole committee. It
is not just by one person, And there would be
some real credibility concerns if people were to come in
(08:01):
that all these other people who are on the board
or on the committee rather, who have been advocating for
keeping interest rates to steady, are they really just going
to go along with this new person just because Howell
was fired.
Speaker 4 (08:12):
Look, I understand why the president wants interest rates to
be lower. He has a background in real estate. He
likes low rates. You know, we've talked about this in
the past, But Carol, I would think that a leader
of a country would want a strong, independent federal Reserve
because of the confidence it gives markets and because of
the way that historically the US has been looked at.
As as Eric just told us, the Central Bank for
(08:33):
the entire world.
Speaker 3 (08:34):
Gold standard like in terms of the US Central Bank.
And I do think about this, Molly, that if essentially,
if it's not just the FED chair but goes after
the other FED governors, that's a whole new ballgame just quickly.
Speaker 6 (08:44):
Yeah, of course, I mean this is we're talking about
half of the Federal Open Market Committee right there. If
he goes after all those other people, so right, and
again all of them are. And the thing though, that
I guess maybe gives me some confidence is that no
one is calling for these preemptive break cuts. I don't
know what economist Trump is going to find who is
calling for that.
Speaker 3 (09:03):
Right now, but it also plays into the game of
instability if we can constantly see this kind of movement.
Both of you, thank you so much. Professor Levmanan, thank you,
Thank you. Columbia Law School Associate Professor of Law. Joining
us along with our Bloomberg News Economics editor Mollie Smith
right here in studio.
Speaker 1 (09:18):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 4 (09:33):
Spring meetings of the IMF and World Bank. We got
Vice President Jade Vance holding trade talks with India's Prime minister.
We've got the anecdotes from the beij book comming the
President meeting with CEOs of major retailers.
Speaker 5 (09:43):
To talk tariffs.
Speaker 4 (09:44):
I didn't even mention anything about earnings, which we're going
to get to later in our program. But that's kind
of like the backdrop.
Speaker 5 (09:50):
Carol for it's a busy week. Yeah, what's happening? Spring
breaks over, spring break, spring break twenty five, move on.
Speaker 4 (09:58):
Oh, we're also seeing a sell off in US as
that's as the President stepped up criticism of J.
Speaker 5 (10:02):
Powell on social media.
Speaker 4 (10:03):
We just got the details from Charlie, but the S
and P five hundred still down three percent, though off
its worst levels of the day. We got a great
roundtable to help us make sense of what's happening in
the global economy right now. Stuart Paul is US economists
for Bloomberg Economics, and the Current is Global economy reporter
for Bloomberg News. Stuart joins us here in the studio
and joining us from Washington, d C. Stuart, We've got
(10:25):
longer data treasuries joining stocks, the dollar deepening, it's slump.
Speaker 5 (10:30):
What is concerning to you and what's.
Speaker 4 (10:32):
Not concerning to you when you look across what's happening
in the markets and in the economy.
Speaker 9 (10:37):
The thing that's most concerning to me is that the
US is basically retreating from the existing global commercial order.
Just this series of arrangements that we have for trading
across borders, for engaging with our allies and giving them
favored treatment, giving them access to the US markets. We're
retreating from that.
Speaker 5 (10:54):
Role, and you're seeing that with the dollar slump.
Speaker 9 (10:56):
And we're seeing where it's being reflected in the market
is in the dollar slump. Because as the US is
retreating from the global commercial order, folks are starting to
get a little bit worried about whether they should hold
dollar denominated assets. Period Usually, if there were a recession,
there could be a haven bid for something like treasuries,
and you wouldn't see the sell off in treasuries at
(11:17):
the same sign that you're seeing the selloff inequities, which
is being most clearly expressed by dollar weakness. Again, that
retreat from US dollar denominated assets. So it's that dynamic
that has me most fearful right now. The thing that
I actually find a heartening is that as an economist,
I just have this deep and profound belief that people
(11:38):
do not stay irrational. Irrationality cannot persist, and so when
you suffer the consequences of poor policy decisions, eventually you
reverse course. So just as just as I am frustrated
and you know, discouraged in one moment by exactly what
we're seeing in markets, maybe it's that economics bone that
(11:58):
just kicks in and keeps me from being totally perplexed
in perpetuity.
Speaker 3 (12:03):
So and do you do you share Stuart's I guess
enthusiasm that we could get kind of.
Speaker 5 (12:09):
Hiding under this desk right now. Let's just they will.
Speaker 3 (12:12):
Ultimately get a course correct, that things kind of find
their way in the right way. Or I'm curious if
you agree, But is it also depending on when that
course correct happens, because a lot of damage can be
done to the US economy, the global economy, and the
US is standing in the world the longer this this
goes on.
Speaker 10 (12:30):
Yes, No, I think Stuart has set to the table
very well there. I mean, for example, this week, Carol,
we will have all of these finance officials, economic policy
makers from around the world visiting DC, and it's going
to be useful for two reasons to your point. The
first is we get a temperature check in terms of
how much economic damage is being done. You know, how
real is the pain for their companies, for their exporters,
(12:52):
for the trading partners of the US, and how are
they viewing the US as the guardian of the global
economy by saying of that. So we're going to get
a good temperature check in terms of the perception and
US reputation in all of this through the comments we'll
get overcoming days. We'll also obviously get new growth forecasts
in IMF that we'll put numbers in terms of what
damage people see. But in the other part of this
(13:14):
week we'll also see, you know, how much of this
can be undone To your point, will there be scope
for deals. We'll have lots of finance ministers here and
we'll look am out and say, yep, we spoke with
the US officials. We see a way out of this,
and X y Z might come out of it over
the coming weeks. That's an optimistic take, or we might
we get more fractious comments. Making the point that. Look,
(13:34):
there's no easy way out of all of this. Tariffs
are easy to put on and take off, and the
mood might be more sour at the end of the
week than it is beginning. So I think in terms
of how this all plays plays out in the world economy,
this week is a pretty unique one, giving the amount
of visitors coming to DC. And I think by the
end of it, we'll have a sense both of US
reputation and the role in stoking this and if there's
(13:56):
a way out in new term at least.
Speaker 5 (13:58):
And what does you know?
Speaker 4 (13:59):
You mentionedial for deals, and maybe we'll start hearing about deals. Look,
it depends on a country specifically, but what could a
deal look like with a trading partner for example.
Speaker 10 (14:10):
Yeah, Look, as you say, a lot of specifics we
don't yet know. But broadly speaking to President Trump talks
a lot about not just tariffs but non tariff barriers.
He talks about exchange rates, he talks about subsidies, he
talks about IP theft. He had a figure or think
of one trillion worth lots of the US economy from
copper at night ip theft this morning. So one would
(14:31):
assume these are the topics on the table alongside the tariffs,
and you'll have to see now the finance ministers coming here,
and some of them will bring their trade officials who
will presumably be putting something on the table, providing the
US has specific asks. But remember there's two ways of
looking at this. If you want to call it the
war China, maybe maybe not their scope for some deals there.
I mean the music or the signals from Japan last
(14:53):
week were more mixed than the signals. President Trump said,
the EUS sent some fairly mixed signals. But let's just
say there's some scope for a meeting of minds when
it comes to the US and the rest of the
world ex China. But none of that solves what will
come after, which is a big piece in all of this,
the forty five percent tariffs on China. I mean, that's
a whole other story. No hint of negotiations kicking off there,
(15:16):
and I kin't of imagine we'll have much progress on
that here in DC this week.
Speaker 5 (15:21):
Either.
Speaker 3 (15:21):
Sometimes it's good to be in a category all your own,
and sometimes it's not. Certainly when it comes to tariff's.
Come on back in Stuart, because what is it that
the Bloomberg Economics team, how are you looking at the
US economy?
Speaker 8 (15:32):
Recession? No recession this year.
Speaker 3 (15:35):
A lot of people are also talking about twenty twenty
six and some downbeat expectations. I think we got a
little bit of that from some of our earlier guests,
So I'm just curious how you guys see it.
Speaker 9 (15:45):
We don't yet have a recession in our immediate in
our immediate forecast window, we are expecting material slow down
in growth full year growth.
Speaker 3 (15:54):
Well, let's feel it will be so slow that it'll
feel like a recession.
Speaker 9 (15:58):
It's definitely possible that the contour of how it feels
is going to change throughout the year. For example, this
year or in the first quarter, were front loading imports.
So one of the major items that's going to be
dragging on GDP growth is imports. It's not necessarily going
to be consumer spending in fixed investment. As we start
getting into the summer, I think it's going to hurt
(16:18):
quite a bit more where folks do start pulling back.
As Geno is saying, people or a lot of companies
are reporting disappointing top line numbers already. That was in
the first quarter. That's part of why we do think
that fixed investment is going to slow in the middle
of the year. Firms didn't realize that revenue in the
first quarter, so investment plans are going to slow in
the middle of the year end. When investment plans slow,
(16:40):
so too does hiring. So as we get into year end,
we're expecting to see five percent unemployment, But we don't
think it's until we get to basically that point that
the FED would then step in with another rate cut.
We think that the FED is going to stay pretty
laser focused throughout most of the year on the price
stability objective within its loual mandate before offering any sort
of relief in the quarter.
Speaker 4 (17:00):
And one more for you, stored on unemployment. And I
want to bring Enda back in here because he's got
a great story out today about the immigration crackdown, compounding
and the blow from tariffs. But how would you characterize
a rise in unemployment right now at a time where
we're actually seeing immigration slow down.
Speaker 9 (17:17):
Well, you have a few different dynamics. The first is
the availability of labor supply. So if you have less immigration,
then you're going to have relatively less labor supply. And
what really matters, though, is less immigration less labor supply,
is the existing supply going to be absorbed by firm's
demand and is that balance that we're looking for right
(17:38):
and right now we are seeing waning demand for labor.
We're starting to see less wage pressures emanating from the
labor market. Right now, the ratio of jobs that are
available to the number of unemployed workers is below that
which persisted pre COVID, when excuse me, and core inflation
was running under two percent. So the feedback that we're
(17:59):
getting from the labor market into price pressures just isn't there.
Speaker 11 (18:02):
The labor market is cool.
Speaker 9 (18:04):
The price pressures that we're seeing right now are from
undersaving and from the supply side.
Speaker 4 (18:09):
So and to come on in on this, because we
had a really interesting conversation earlier with Thomas Carroll. He's
over at Ballast Rock. They focus on multifamily in the Sunbelt,
and he mentioned that he's already seeing prices of stuff
they import to build these multifamilies go up as a
result of tariffs on Canada and on Mexico, so those
raw materials. And then also he's speaking to subcontractors who
(18:32):
are having trouble finding talent when it comes to those
skilled trades to actually do the work and get it done.
So he's sort of hearing and feeling this on both sides.
How does that kind of compound with what you and
the team wrote about today.
Speaker 10 (18:46):
Yeah, I mean there are definitely many aspects that it's
a steward just mentioned, but just put it on the
headline basis. The surge of immigration over the past few
years was considered to have been important to offset labor shortages,
keep a lid on inflation, and help the economy avoid recession. Now,
the concern at the moment is that even before we
(19:07):
get to the mass depretation phase, that the big crackdown
on immigration. Business people and the economists are not advocating for
illegal immigration or chaos on the border per se, but
the end result has been a big crackdown in immigration.
The concern is that some of those sectors like construction
for example, are going to struggle to find workers, some
of those most exposed for those kind of labor intensive jobs,
(19:29):
maybe in food processing sector, in the farming sector for example.
Those are areas that are going to find it hard
to get workers now at a time when they need them.
So that concern is there coming top of the tiers,
but of course short of saying the bigger picture is
the employment market is slowing too, of course, and that
will offset some of those pressures.
Speaker 3 (19:47):
Just quickly to wrap up in twenty seconds here, and
I mean, if the US goes into economy goes into
a recession, should we assume that the global economy will
also go into a recession just quickly?
Speaker 10 (19:58):
Definition of global session is quite I refer to Stuart,
But yeah, if US a recession, that's not good for
the world.
Speaker 8 (20:04):
All right, the ball's in your court, Stuart. If we
get a US recession, should assume a global recessions coming.
Speaker 9 (20:09):
There's been so much stimulus that's been put forward in
the rest of the world. I think it's possible that
enough stimulus in China and Europe could stave off a
more material recession. But you know how it is, as
the US goes, so it does the rest of the world.
So if we do enter a US recession, it would
be difficult for me to be a long Europe for example.
Speaker 3 (20:28):
It makes me wonder if we could once again have
an earnings recession but not necessarily an economic recession. Because
Gina talked about the numbers being brought down certainly for
the rest of this year, but also starting to look
at I guess the early part of twenty twenty six.
Speaker 8 (20:40):
Folks, Thank you so much.
Speaker 3 (20:41):
Stuart paul Us economist for Bloomberg Economics and Endocurrent, is
global economy reporter for Bloomberg News Stewart here in our
New York.
Speaker 8 (20:48):
Studio and out there in DC. Guys, thank you so much.
Speaker 2 (20:52):
This is the Bloomberg Business Week Podcast. Listen live each
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New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 5 (21:11):
It is today's big Tig.
Speaker 4 (21:12):
It's also one of the most read stories on the
Bloomberg terminal. It's about this self described boring budget guy
who's best known for co authoring the nine hundred page
policy playbook of the Heritage Foundation's Project twenty twenty five.
It's become something of a bible for President Trump's second term.
And it's he, not Elon Musk, who's steering the Trump
(21:32):
administration's doje crusade business.
Speaker 5 (21:35):
We call himis.
Speaker 4 (21:36):
Max Chafkin writes about Russell Vote for Bloomberg BusinessWeek. He's
also the co host of the Elonink podcast and the
author of the contrarion Peter Tiel in Silicon Valley's Pursuit
of Power, he joins us from our Dallas bureau, Max,
who is Russell Vote?
Speaker 12 (21:52):
Yeah, Russell vote. Well, he is the director of the
Office of Management and Budget. But more than that, Tim,
as you said.
Speaker 8 (21:59):
He is one of the core.
Speaker 12 (22:03):
Idealogues behind this presidency.
Speaker 11 (22:06):
So russ vote.
Speaker 12 (22:07):
He served as the head of OMB at the end
of the last Trump presidency, and his big idea really
goes around executive power. And it's this idea that the
executive that's the president, Donald Trump, should be able to
have much much wider discretion to run the government and
really to run the country. Then I think most even
(22:31):
either Democrats or Republicans, have generally allowed in the past.
He's also a big time deficit hawk. You know, he
started his career working for Phil Graham. He was a
senator starting in the in the eighties. Was one of
the key people behind the effort to like balance the
budget in the in the eighties and the nineties, and
(22:52):
so Vote has these two threads, one deficit hawkery and
the other being executive power. And as you kind of
hinted in that intro, those two things work really nicely
with what Elon Musk is trying to do, because, of
course DOGE is about both of those things. It's about
cutting the deficit, but also sort of doing things more aggressively,
(23:15):
you know, with the power of the presidency. And so
so Vote and Elon Musk had this kind of interesting alliance,
and it's specially interesting because they're so different. They're like,
they couldn't be more different from one another.
Speaker 3 (23:27):
All Right, So, having said that, we focus so much
on Elon Musk, he's been the face out there in
public in the Oval office when Donald Trump is holding
the president Donald Trump of course is holding press conference
about what DOGE is doing, and so on and so forth.
Speaker 8 (23:40):
So I guess there's an assumption.
Speaker 3 (23:42):
That once maybe you know, there's been some speculation that
maybe Elon Musk his days at DOGE are numbered, that
that's it.
Speaker 8 (23:51):
And yet that's not the case, is it? If that
well plays out.
Speaker 12 (23:55):
You know, people within the Trump administertration definitely don't see
it that way. I mean, as you say, Carol. At
some point Elon Musk is going to have to give
up his full time role in the Trump administration because
he is a temporary government employee that is going to
sunset after one hundred and thirty days. We don't know
exactly what that'll be, how how exactly they're counting the days,
(24:17):
and it would not surprise me if it stretches on.
But at some point Musk is going to take a
step back. And and certainly within Trump world, this is
seen as being part of Russ Vote's domain and that
he and people around him are ready to pick up
where Elon Musk left off. And and and it's not
(24:39):
as if Elon. I don't think Elon Musk is going
to go away from from from the world of Trump.
I think he'll still be very vocal on social media,
but when you're talking about that day to day role,
it will go away. And if you're thinking that Musk
going away is going to change the trajectory of of
what Trump is trying to do, I think you would
be mistaken because Vote has been working on these issues
(25:02):
for years, long before Elon Musk proposed the idea of DOJE.
Vote was proposing sort of very similar things from his
perch as the head of this you know, MAGA think
Tank as being one of the kind of leading lights
intellectually in Trump world.
Speaker 3 (25:19):
All right, And as you talked about, I mean, he's
very different than Elon Musk, And so I do wonder, like,
what's the speculation about how these cuts and things might
play out if Elon Musk leaves.
Speaker 8 (25:33):
And vote is he's in charge?
Speaker 12 (25:36):
Yeah, I mean the difference is it's it's almost comical.
So Musk, of course, he's he loves to be front
and center, vote, very low profile, barely talks about himself,
you know, you know, rarely gives interviews, you know, rarely
gives up any any personal information. You know, we know
everything there is to know about Elon musk personal life. Musk,
of course, ideologically scattered. Vote is very, very disciplined. And
(26:00):
you know that you could see that in two different ways.
On one hand, I think there's some people who see
Musk kind of working against Vote and some of the
ideological components of Trump's space. On the other hand, Vote
and people close to him see Musk as this kind
of force multiplier, as this face of this otherwise maybe
political like difficult to sell operation. You have this very popular,
(26:25):
you know, out there guy and Elon Musk representing these
changes in the public. Meanwhile, behind the scenes you have
Russ Vote and his allies doing actual work.
Speaker 4 (26:34):
Well, so, what have they been able to accomplish thus far?
Because Project twenty twenty five was brought up during the
campaign quite a bit in fact by Democrats in the
president at that time distance himself from Project twenty twenty five.
Speaker 5 (26:49):
What have they been able to accomplish?
Speaker 12 (26:51):
Yeah, there's a lot there. I mean, Project twenty twenty
five has a large number of co authors in terms
of and there are different positions, Like if you look
at the tariff section of Project twenty twenty five, there
was a pro tariff section and an anti tariff section.
They're actually like two dueling proposals. Vote is pretty much
aligned with Trump on everything, so he was for the tariff.
(27:14):
He was publishing, you know, these very hawkish pieces about
tariffs in the years running up to the election. And
in terms of sort of executive power of this idea
that Trump should be able to run the government, I mean,
that is a place where they're making a lot of changes.
I mean we're seeing, you know, some of this has
been is caught up in court right now, and it's
(27:36):
unclear how many of these attempts to you know, drastically
close or reduce the size of federal agencies, how much
of that will stick. But you know, in the story
we talk about the CFPB, that's the Consumer of Financial
Protection Bureau. Vote is also running the cfp PB, And
right now this is locked up in court. It's not
(27:56):
clear what's going to happen. But when you talk to
people who work there, I mean nothing is happening right now.
You know, the agency has not been shuttered, but it
also is clear that its ability to do stuff has
been drastically reduced. And so in that sense, he's done
a lot. That said, there is this, there is there
are the questions around, you know, how much of this
is is going to stand in court? How much of
(28:19):
it will you know, stand up to congressional scrutiny, a
change of power and so on. So the jury is
still out there.
Speaker 4 (28:27):
Well before the jury was even out there, our team
spoke to Kevin Roberts, the president of the Heritage Foundation,
that was back just after President Trump won the election.
This was on November eleventh. He was on balance of
power check out what he had to say about the
opportunity that he saw.
Speaker 13 (28:42):
Then we think that this is the beginning of a
golden era of conservative reform. I will say that because
the work of Project twenty twenty five represents the conservative movement.
It would be very difficult for anybody to implement policies
on aed you cation, on the border, on taxation without
(29:03):
at least consulting those ideas in people.
Speaker 11 (29:05):
That's not some arrogant or hubristic comment on our part.
That's just the nature of how policy making works.
Speaker 4 (29:11):
That was Kevin Roberts, the president of the Heritage Foundation,
back on November eleventh, twenty twenty four, joining us on
a balance of power, Max. When you think about this
term versus Trump's first term, are there ideological differences because
of the influence of the Heritage Foundation of Project twenty
(29:32):
twenty five. Do you see differences in.
Speaker 5 (29:35):
The way that he's.
Speaker 4 (29:37):
Well making rules or the way that he's putting policy
into effect?
Speaker 5 (29:42):
Do you see it for sure?
Speaker 7 (29:44):
Now?
Speaker 12 (29:44):
I think the difference is that during the last Trump presidency,
Trump came in without this kind of broad base of support.
You know, it had been a closely contested nomination. You know,
there were a lot of competing factions within Trump World,
and in particular, you had this kind of business faction
(30:05):
right that was pushing against some of these policies that
we've been talking about a lot, you know, whether we're
talking about tariffs or you know, various erratic behavior on
the economy. And what's happened instead is you have this
kind of base of committed ideologues who have spent years
preparing for this moment. That's what Project twenty twenty five
(30:28):
was all about. It was like, let's well, you know,
the last time we had this, you know, as they
see at this like deep state that was thwarting them.
Speaker 11 (30:35):
Now now we're going to.
Speaker 12 (30:37):
Figure out how to actually do stuff. So what they're
trying to do is avoid the kind of checks of
these more moderate factions within Trump world. And Vote is
a really interesting person here because Vote was kind of
dead center of some of the biggest controversies of the
last term. So Vote was involved in holding the money up,
(30:59):
the aid to Ukraine up that happened through the Office
of Management and Budget. Now that led to obviously an
impeachment hearing and everything. As Vote saw it, that was
the deep state, you know, trying to stop Donald Trump.
So there's a lot of ways in which these the
guys involved with Project twenty twenty five, including Russ Vote,
have been sort of preparing for this moment for years,
(31:19):
and I think that's one of the reasons this presidency
has been so much more hardline ideologically than the previous one.
Speaker 8 (31:27):
Well, that's what I find interesting.
Speaker 3 (31:28):
And you go into some great history about his time
working for Senator Phil Graham, I mean, pull out your
political history books, but Texas Republican fiscal hawk, and you
say he certainly had quite an impact on vote in
terms of where he got that from. But I think
what's really interesting is, you know, this idea of these
views on executive power.
Speaker 8 (31:48):
I mean, I think we thought.
Speaker 3 (31:50):
I mean that, I think is what's so fascinating right
about this second Trump term, consolidating executive power like we've
never seen before, and he certainly is helping the president
do this. And forgive me, we've got about fifty seconds here, Max.
Speaker 12 (32:04):
Yeah, and that's certainly where these kind of libertarian you know,
Phil Graham has a long and interesting career, but I'd
say he's more of the sort of libertarian bent than
somebody like Russ Vote that and that's where the difference is, right,
Whereas a lot of these deficit hawks, the old oldline
deficit hawks, were really interested in Congress as the forcing
(32:24):
function for russ vote. It's the executive. It's it's kind
of clearing the field and letting Donald Trump have as
much leeway as possible.
Speaker 13 (32:32):
You know.
Speaker 12 (32:32):
Of course critics are going to say too much leeway,
we're you know, bordering on an imperial presidency. And so
that's the kind of like ideological conflict that's playing out
behind the scenes, you know, as Trump does his thing.
Speaker 8 (32:45):
Yeah, it's just you know, fascinating a story like yours.
Speaker 3 (32:48):
You know, the people that are so instrumental in shaping
what this Trump term looks like.
Speaker 8 (32:55):
Just really amazing. Steph.
Speaker 3 (32:56):
Max, thank you so much, really appreciate maxchaff and Comus
at Bloomberg Business be co host of the Elon Inc.
Speaker 8 (33:01):
Podcast.
Speaker 3 (33:01):
Check out his story This is on the Bloomberg coming
also in the new issue.
Speaker 8 (33:06):
Of Bloomberg BusinessWeek magazine. You can find it at Bloomberg dot com.
Speaker 9 (33:08):
Toomucle how about you let me drive?
Speaker 5 (33:13):
Oh no, no, no, no, this is not a toy.
Speaker 2 (33:15):
Who's going to drive?
Speaker 8 (33:17):
Honey, Please gravel let's wait.
Speaker 7 (33:21):
I want to drive.
Speaker 9 (33:24):
It's a good question.
Speaker 1 (33:25):
Good this is the drive to the clothes punks, the
music well run on Bloomberg Radio.
Speaker 3 (33:36):
I love watching kind of the last hour of trading
because we'll see if this holds. But definitely off our
worst levels of the session. But you were just looking
at the S and P two. I mean, we've seen
broad based selling throughout the day, but right now you've
got I mean it's only twenty two names that are
actually higher in the S and P five hundred, four
hundred and eighty one to the downside. Thank you.
Speaker 8 (33:56):
Fingers cross, fingers crossed.
Speaker 4 (33:57):
Hey, I want to see what Jeff maclaan has to
say about the CEO saw Areity Wealth. He joins us
here in our Bloomberg Interactive Broker's studio in the wealth
management business. They've got just under seven hundred million dollars
in assets under management. Jeff, good to see you, welcome back.
When you walked in, you actually mentioned that they were
you were seeing some buying into the close. Taken together
everything we've seen over the last few weeks, what does
(34:19):
the environment look like to you right now?
Speaker 14 (34:21):
I mean, obviously the sentiment is so negative, I think
that's part of the frustrating thing because the data is
not there to support it. You're seeing consumer sentiment surveys
down at like two thousand and eight, two thousand and
nine levels.
Speaker 5 (34:32):
Yeah, do I.
Speaker 14 (34:33):
Think it's two thousand and eight two thousand and nine.
I do not, And so that's part of the surprise.
A bit of how do you think it's worse? No, definitely,
Oh imagine.
Speaker 4 (34:43):
Why are you so optimistic? I mean, we can go
over the list of concerns that people have today. Top
of mind for folks is fear about the independence of
the central bank here in the US and what the
President has said about the chair of the Federal Reserve.
There's the tariff concerns as the President meets with some
of the heads of the big retailers at the White
House today, and the concerns about as we heard from J.
(35:04):
Powell last week, price is rising as a result of
these tariffs.
Speaker 5 (35:08):
Yeah, growth flowing.
Speaker 14 (35:09):
There's a common adominator to everything you just said, tariffs,
which is President Trump, right, the Trump administration, and so
a lot of this it's not based on some market
fundamental It's not based on something broken like in two
thousand and eight, two thousand and nine, the housing sector
and credit default swaps and all the issues that came
up through that. It's all based on what's coming out
of the White House. Well, so that's why I'm both
(35:30):
nervous but also excited long term, because there's nothing fundamentally
broken right now. It is, it can be cleaned up now.
How he's going about it, it's not ideal, and it's
freaking out people. It's creating uncertainty, which is the buzzword.
Like we're talking about as a firm. Uncertainty is killing
the market right now. And you can point to any
(35:52):
of those policies you just said, that's what's driving it is.
People don't know what's happening next.
Speaker 5 (35:58):
I just want to remind you we're three months into
the administration.
Speaker 11 (36:01):
Yeah, and these are four year terms.
Speaker 14 (36:02):
Yeah, yeah, yeah, But I do think there is a
long term plan associated with tariffs. Of again, it's a
shock in awe he's going into I think long term
everyone but China. I think those tariff issues get worked
out here over the next twelve months. China I think
consistently will go for the life of his presidency.
Speaker 11 (36:21):
That trade war, trade battle issue.
Speaker 5 (36:24):
Yeah, one hundred and forty five percent tariff for the home.
Speaker 14 (36:27):
I think they'll be fighting over trade policy the entire time.
Present She President Trump are going to be battling because
he has this fundamental view present Trump does of how
unfair they are. Now, whether you agree with Trump or not,
the data is pretty clear that China has been very
lopsided in their trade policy of anti US, stealing intellectual
(36:47):
property and doing a variety of different things to hurt us.
But I think over time, again, a lot of this
can be corrected by President Trump. That's why I'm a
little bit bullish, because it's again, nothing's broken right now,
but it can lead to disaster. That's where he's on
a dangerous game right now. Consumer sentiment is so negative
(37:08):
that unless it turns, this will lead to a recession.
Without question, it has to turn or we're in a recession.
Speaker 3 (37:15):
Having said that, if we are seeing though, ultimately, even
if trade deals are worked out and there are tariffs
and goods that come into the United States, higher prices
for Americans, right, and that changes the dynamic of potentially
with the US economy, right, people have just so much
money to play around with, so something will be cut
back on potentially and that changes kind of the composition
(37:38):
and velocity within the US economy. So even though a
deal might be worked out and we cross that off
the list, you come back to different fundamentals.
Speaker 11 (37:47):
Yeah, and it really depends on the type of deals.
Speaker 5 (37:49):
Right.
Speaker 14 (37:49):
Even the ten percent tariffs on all the other countries
are a problem, right, And so if he can ten percent.
Speaker 3 (37:54):
Maybe sounds like not a lot, but what we're at
two percent, three percent, I mean that's a big jump.
Speaker 14 (37:59):
But if he can wipe out as part of this,
again it's not to go too much into the political side,
but if he can wipe out the tariffs that they
have on US and all the other non tear of
trade policies going country back country, that can be a huge.
Speaker 2 (38:13):
Moves is the long term burg An issue past his
short term can drive a Spotify And there's no way
you get your podcast.
Speaker 14 (38:20):
Being a reelected a half years from two if he
drives us in a deeper sent on Bloomberg Dot that
is that is had.
Speaker 11 (38:27):
So I think he's playing it is.
Speaker 8 (38:28):
That's concern, the recession that's on the US every week.
Speaker 11 (38:33):
His concern Bloomberg.
Speaker 3 (38:36):
Saying, like I think about the longer term damage right
of you know, do we have another generation that comes
out of college and can't get jobs and that means
you can't buy houses and you can't you've got student debt.
Speaker 8 (38:46):
Like I just I do wonder when do we move towards.
Speaker 3 (38:49):
Thinking all right, folks, there's going to be some longer
term impacts. Yeah, and certainly Americans and the American economy.
Speaker 14 (38:56):
Yeah, I think I think the American economy and specific
around like job market, I think those always turn in
a positive manner over time. The issue long term to
me is the international view of US investment. That is
concerning of where my worry lies of long term, especially
around the treasury market. So if you're a person coming
out right now or just an average worker trying to
(39:18):
get a new home and get a mortgage right now,
good luck. Right, your thirty year average is starting with
a seven handle roughly, right, that's really high than what
we're used to, a lot less than what our parents paid, right,
double digit mortgage rates, right, But like still, that is
a difference maker. And so I think that's why he's
trying to beat down the Fed chairman a little bit
(39:38):
and inappropriate ways to get those mortgage rates down, because
he knows. If he has a slowdown in the stock
market and the cost of buying a house is high,
jobs start being few and far between.
Speaker 11 (39:50):
He's creating a tempest to fight through.
Speaker 4 (39:54):
Speaking of beating down, yeah, segue to Novo Nordis, Yeah,
a stock that has been beaten down, but you're optimistic
on and you've taken a position.
Speaker 11 (40:01):
In Yeah, we took a position last week.
Speaker 14 (40:04):
We like Novo for this it's back down to almost
its pre golp one life.
Speaker 11 (40:09):
That's wild, right, and so huge decline.
Speaker 4 (40:12):
I mean we're reading stories in the last couple of
years like this is Mark's economy.
Speaker 14 (40:15):
Yeah, truly, Yeah, yeah, And the thing is the fundamental
business that they already had diabetes, insulin not going anywhere
right as the world gets wealthier, diabetes, insulin, OBC, all
those things go up. And so you're basically getting the
golp one business for free right now because it's back
down to roughly pre gop one taking off levels and
(40:37):
so for us down nearly sixty percent year every year.
Still a great management team. They I think there's plenty
of space to be had in the golp one market.
Everyone's looking at Lily right now as the clear leader.
I think there's plenty to be had there. We're still
in the early innings of GLP one, remaking the health
area and having people as a contingent that.
Speaker 8 (40:59):
They are able to create a pill just like Lily.
Speaker 14 (41:02):
I think there's gonna be a lot of inization there.
I'm not worried about the method of intake, whether it's
a pill, a shot, whether it's something that dissolves in
your mouth right whatever, a patch like. I think the
method of intake is less concerning to me. It's more
just the business itself. And Wagavi has staining power, right,
(41:22):
and so I'm getting it for free. Essentially, I'm buying
the diabetes insulin business and we're getting GLP one for free.
I mean that to me is marketable. The management team
is good. I trust the Danes right. We'll see what
they can fall through on, but they look good.
Speaker 3 (41:39):
We had a run. Thank you so much. Yeah, good
to spend some time. Jeff McLain, CEO of Solidarity.
Speaker 11 (41:44):
Well.
Speaker 1 (41:45):
This is the Bloomberg Business Week Daily podcast, available on Apple,
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Speaker 2 (00:08):
This is Bloomberg Business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio.
Speaker 3 (00:32):
As we've been saying, the Sell America trade definitely gathering
some momentum, Charlie, of course, just breaking down the numbers
concern President Trump will act upon his threat of firing
Fetcher J. Powell implement policies then that could lead to
a recession. President Trump reiterated his call for the Fed
to reduce rates earlier today on Truth Social Writing. Preemptive
cuts and interest rates are being called for my many
(00:55):
That again, Tim, of course, is President Trump's words.
Speaker 4 (00:57):
Well, let's get to it with us as a Bloomberg
News economics eder, Molly Smith.
Speaker 5 (01:01):
She joins us here in the studio.
Speaker 4 (01:02):
Also with us is Columbia Law School Associate Professor of
LA Levmonard, joining us from New York. Molly, I do
want to start with you in your world, how serious
is it with economists and the like talking what feels
like a threat by President Trump against the independence of
the Federal Reserve.
Speaker 6 (01:18):
I mean, it's definitely a serious consideration right now. And
the way that Trump just keeps going after Powell day
after day in all these different tweets, whether people are
taking seriously this idea of preemptive cuts quote being discussed
by many that is definitely refutable and not at all
being priced in. I mean, there's a roughly like, I
don't know, sixteen percent chance right now looking at the
(01:40):
Bloomberg warp screen of a rate cut in May, which
is coming in a week or two. So no one's
really thinking about that happening right now. And if raatecuts
are to happen, people are saying that's because the economy
is going to slow because of Trump's policies, not because
inflation is slowing. Key claims exactly.
Speaker 3 (01:59):
Professor man En In on all of this, the Supreme
Court considering a petition from the President that could allow
him to override some legislation establishing independent agencies such as
the FED and remove their leaders without cause or notice.
What exactly is this case about? Why are we talking
about it? Especially since this case does not involve any
(02:19):
FED officials and why is it, though potentially so significant
for the FED, for FED governors and perhaps other heads
of different organizations in the government.
Speaker 7 (02:30):
So if FED is one of many independent agencies in
the government, and its seven member board enjoy the same
sort of protection from at will removal by the president
as other agencies like the Federal Trade Commission, the National
Labor Relations Board, and President Trump, in his few months
in office so far, has already challenged the laws protecting
(02:53):
these officials from removal at pleasure by the president, and
those challenges he removes officials illegally. Those challenges are making
their way through the courts right now, and the Supreme
Court of the United States is currently considering a petition
from the government from Trump to allow him to push
(03:13):
these officials out of office until their cases make their
way through the whole courts, which could be months and months,
and that petition could be decided this week, and if
Trump were to prevail, then he could go ahead potentially
and fire the whole FED Board, not just chair Pale,
(03:34):
as soon as this week, and those officials, if they
wanted to challenge those removals, would be out of a
job during the tendency of the litigation, Professor.
Speaker 4 (03:42):
Man Aand given what you know about the case, what
you know about the arguments and the history, and of
course the justices as well, do you have a prediction
what is likely to happen if the Supreme cour Court
rules one way.
Speaker 5 (03:53):
Or the other.
Speaker 7 (03:55):
It's really hard to say, but based on the last segment,
I think markets are really not pricing in the risk here.
So already we have an administrative stay issued by Chief
Justice Roberts in this case Trumphy Wilcox last week, which
meant that Willcox, who had been put back in her
job at the NLRB by the lower courts, was taken
(04:16):
out of her job while the Supreme Court considers President
Trump's emergency application. That suggests to me that there are
many members of the Court who might consider granting this
stay pending appeal on an ongoing basis. I think that
(04:37):
there are members of the Court who have expressed in
prior cases real reservations about allowing the expansion of presidential
power to touch the FED. There's a desire to carve
out a FED exception. But the more uncertainty there is
in this space, the more likely we would see President
Trump potentially testing the boundaries, and so that might not
(05:00):
mean a removal of Chairpwell, but it could mean a
removal of Governor Barr, Governor Cook in the coming weeks.
Speaker 3 (05:08):
Whatever happened to checks and balances? Professor man Hanne, I'm
just curious. We always just thought this government, how incredible, right,
three separate branches, checks and balances? Are you, as someone
who teaches, who studies and the power of the Supreme Court, like,
are we losing that? Have we lost it?
Speaker 7 (05:28):
We are very much losing checks and balances. This is
not a new thing. This is the culmination of forty
plus years of efforts to reconceptualize the presidency under the
Constitution in such a way that Congress's laws attempting to
constrain presidential power can be violated by the president. And
(05:48):
Ronald Reagan was the first really to push this in
nineteen eighty one when he took office, and there was
a Democratic House, and there have been a Democratic House
as long as anybody could remember. In administration, officials sought
to assert presidential authority under the Constitution to do certain
things that they didn't have the votes for in Congress.
(06:11):
Those moves were ultimately embraced by the Clinton White House,
and we've had a sort of ever expanding conception that
the Supreme Court has validated at several points, starting in
twenty ten with the Roberts Court decision in a case
called Free Enterprise, which restricted the ability of Congress to
(06:33):
protect the independence of the PCAOB, the board within the
sec that regulates accountants. We had a series of cases
that validated more and more this once fring sort of
constitutional theory of the presidency. And now we have President
Trump in his second term trying to do a full
(06:54):
bear hog of this sort of of this presidentialist theory.
It's called unitary executive theory, and that is very inconsistent
with traditional checks and balances.
Speaker 6 (07:05):
Just to expand on this idea of checks and balances,
it's not so much one that's afforded by the law
and the different branches of government, but just within the FED.
Something that I don't think we speak about enough with
respect to who makes decisions on interest rates is that
the chair of the Fed does not act similarly to
the President of the United States. They don't have executive
(07:26):
power to just unilaterally make a decision for the entire
Federal Open Market Committee, which is comprised of twelve members,
which includes the six governors on the board, which Powell.
Speaker 8 (07:38):
Is one of those people.
Speaker 6 (07:40):
And to what the professor was just saying that if
Trump were to remove Powell, then that would also then
set a president. Is he going to go after all
these other governors? But again, this is a decision that
on interest rates, it's set by this whole committee. It
is not just by one person, And there would be
some real credibility concerns if people were to come in
(08:01):
that all these other people who are on the board
or on the committee rather, who have been advocating for
keeping interest rates to steady, are they really just going
to go along with this new person just because Howell
was fired.
Speaker 4 (08:12):
Look, I understand why the president wants interest rates to
be lower. He has a background in real estate. He
likes low rates. You know, we've talked about this in
the past, But Carol, I would think that a leader
of a country would want a strong, independent federal Reserve
because of the confidence it gives markets and because of
the way that historically the US has been looked at.
As as Eric just told us, the Central Bank for
(08:33):
the entire world.
Speaker 3 (08:34):
Gold standard like in terms of the US Central Bank.
And I do think about this, Molly, that if essentially,
if it's not just the FED chair but goes after
the other FED governors, that's a whole new ballgame just quickly.
Speaker 6 (08:44):
Yeah, of course, I mean this is we're talking about
half of the Federal Open Market Committee right there. If
he goes after all those other people, so right, and
again all of them are. And the thing though, that
I guess maybe gives me some confidence is that no
one is calling for these preemptive break cuts. I don't
know what economist Trump is going to find who is
calling for that.
Speaker 3 (09:03):
Right now, but it also plays into the game of
instability if we can constantly see this kind of movement.
Both of you, thank you so much. Professor Levmanan, thank you,
Thank you. Columbia Law School Associate Professor of Law. Joining
us along with our Bloomberg News Economics editor Mollie Smith
right here in studio.
Speaker 1 (09:18):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 4 (09:33):
Spring meetings of the IMF and World Bank. We got
Vice President Jade Vance holding trade talks with India's Prime minister.
We've got the anecdotes from the beij book comming the
President meeting with CEOs of major retailers.
Speaker 5 (09:43):
To talk tariffs.
Speaker 4 (09:44):
I didn't even mention anything about earnings, which we're going
to get to later in our program. But that's kind
of like the backdrop.
Speaker 5 (09:50):
Carol for it's a busy week. Yeah, what's happening? Spring
breaks over, spring break, spring break twenty five, move on.
Speaker 4 (09:58):
Oh, we're also seeing a sell off in US as
that's as the President stepped up criticism of J.
Speaker 5 (10:02):
Powell on social media.
Speaker 4 (10:03):
We just got the details from Charlie, but the S
and P five hundred still down three percent, though off
its worst levels of the day. We got a great
roundtable to help us make sense of what's happening in
the global economy right now. Stuart Paul is US economists
for Bloomberg Economics, and the Current is Global economy reporter
for Bloomberg News. Stuart joins us here in the studio
and joining us from Washington, d C. Stuart, We've got
(10:25):
longer data treasuries joining stocks, the dollar deepening, it's slump.
Speaker 5 (10:30):
What is concerning to you and what's.
Speaker 4 (10:32):
Not concerning to you when you look across what's happening
in the markets and in the economy.
Speaker 9 (10:37):
The thing that's most concerning to me is that the
US is basically retreating from the existing global commercial order.
Just this series of arrangements that we have for trading
across borders, for engaging with our allies and giving them
favored treatment, giving them access to the US markets. We're
retreating from that.
Speaker 5 (10:54):
Role, and you're seeing that with the dollar slump.
Speaker 9 (10:56):
And we're seeing where it's being reflected in the market
is in the dollar slump. Because as the US is
retreating from the global commercial order, folks are starting to
get a little bit worried about whether they should hold
dollar denominated assets. Period Usually, if there were a recession,
there could be a haven bid for something like treasuries,
and you wouldn't see the sell off in treasuries at
(11:17):
the same sign that you're seeing the selloff inequities, which
is being most clearly expressed by dollar weakness. Again, that
retreat from US dollar denominated assets. So it's that dynamic
that has me most fearful right now. The thing that
I actually find a heartening is that as an economist,
I just have this deep and profound belief that people
(11:38):
do not stay irrational. Irrationality cannot persist, and so when
you suffer the consequences of poor policy decisions, eventually you
reverse course. So just as just as I am frustrated
and you know, discouraged in one moment by exactly what
we're seeing in markets, maybe it's that economics bone that
(11:58):
just kicks in and keeps me from being totally perplexed
in perpetuity.
Speaker 3 (12:03):
So and do you do you share Stuart's I guess
enthusiasm that we could get kind of.
Speaker 5 (12:09):
Hiding under this desk right now. Let's just they will.
Speaker 3 (12:12):
Ultimately get a course correct, that things kind of find
their way in the right way. Or I'm curious if
you agree, But is it also depending on when that
course correct happens, because a lot of damage can be
done to the US economy, the global economy, and the
US is standing in the world the longer this this
goes on.
Speaker 10 (12:30):
Yes, No, I think Stuart has set to the table
very well there. I mean, for example, this week, Carol,
we will have all of these finance officials, economic policy
makers from around the world visiting DC, and it's going
to be useful for two reasons to your point. The
first is we get a temperature check in terms of
how much economic damage is being done. You know, how
real is the pain for their companies, for their exporters,
(12:52):
for the trading partners of the US, and how are
they viewing the US as the guardian of the global
economy by saying of that. So we're going to get
a good temperature check in terms of the perception and
US reputation in all of this through the comments we'll
get overcoming days. We'll also obviously get new growth forecasts
in IMF that we'll put numbers in terms of what
damage people see. But in the other part of this
(13:14):
week we'll also see, you know, how much of this
can be undone To your point, will there be scope
for deals. We'll have lots of finance ministers here and
we'll look am out and say, yep, we spoke with
the US officials. We see a way out of this,
and X y Z might come out of it over
the coming weeks. That's an optimistic take, or we might
we get more fractious comments. Making the point that. Look,
(13:34):
there's no easy way out of all of this. Tariffs
are easy to put on and take off, and the
mood might be more sour at the end of the
week than it is beginning. So I think in terms
of how this all plays plays out in the world economy,
this week is a pretty unique one, giving the amount
of visitors coming to DC. And I think by the
end of it, we'll have a sense both of US
reputation and the role in stoking this and if there's
(13:56):
a way out in new term at least.
Speaker 5 (13:58):
And what does you know?
Speaker 4 (13:59):
You mentionedial for deals, and maybe we'll start hearing about deals. Look,
it depends on a country specifically, but what could a
deal look like with a trading partner for example.
Speaker 10 (14:10):
Yeah, Look, as you say, a lot of specifics we
don't yet know. But broadly speaking to President Trump talks
a lot about not just tariffs but non tariff barriers.
He talks about exchange rates, he talks about subsidies, he
talks about IP theft. He had a figure or think
of one trillion worth lots of the US economy from
copper at night ip theft this morning. So one would
(14:31):
assume these are the topics on the table alongside the tariffs,
and you'll have to see now the finance ministers coming here,
and some of them will bring their trade officials who
will presumably be putting something on the table, providing the
US has specific asks. But remember there's two ways of
looking at this. If you want to call it the
war China, maybe maybe not their scope for some deals there.
I mean the music or the signals from Japan last
(14:53):
week were more mixed than the signals. President Trump said,
the EUS sent some fairly mixed signals. But let's just
say there's some scope for a meeting of minds when
it comes to the US and the rest of the
world ex China. But none of that solves what will
come after, which is a big piece in all of this,
the forty five percent tariffs on China. I mean, that's
a whole other story. No hint of negotiations kicking off there,
(15:16):
and I kin't of imagine we'll have much progress on
that here in DC this week.
Speaker 5 (15:21):
Either.
Speaker 3 (15:21):
Sometimes it's good to be in a category all your own,
and sometimes it's not. Certainly when it comes to tariff's.
Come on back in Stuart, because what is it that
the Bloomberg Economics team, how are you looking at the
US economy?
Speaker 8 (15:32):
Recession? No recession this year.
Speaker 3 (15:35):
A lot of people are also talking about twenty twenty
six and some downbeat expectations. I think we got a
little bit of that from some of our earlier guests,
So I'm just curious how you guys see it.
Speaker 9 (15:45):
We don't yet have a recession in our immediate in
our immediate forecast window, we are expecting material slow down
in growth full year growth.
Speaker 3 (15:54):
Well, let's feel it will be so slow that it'll
feel like a recession.
Speaker 9 (15:58):
It's definitely possible that the contour of how it feels
is going to change throughout the year. For example, this
year or in the first quarter, were front loading imports.
So one of the major items that's going to be
dragging on GDP growth is imports. It's not necessarily going
to be consumer spending in fixed investment. As we start
getting into the summer, I think it's going to hurt
(16:18):
quite a bit more where folks do start pulling back.
As Geno is saying, people or a lot of companies
are reporting disappointing top line numbers already. That was in
the first quarter. That's part of why we do think
that fixed investment is going to slow in the middle
of the year. Firms didn't realize that revenue in the
first quarter, so investment plans are going to slow in
the middle of the year end. When investment plans slow,
(16:40):
so too does hiring. So as we get into year end,
we're expecting to see five percent unemployment, But we don't
think it's until we get to basically that point that
the FED would then step in with another rate cut.
We think that the FED is going to stay pretty
laser focused throughout most of the year on the price
stability objective within its loual mandate before offering any sort
of relief in the quarter.
Speaker 4 (17:00):
And one more for you, stored on unemployment. And I
want to bring Enda back in here because he's got
a great story out today about the immigration crackdown, compounding
and the blow from tariffs. But how would you characterize
a rise in unemployment right now at a time where
we're actually seeing immigration slow down.
Speaker 9 (17:17):
Well, you have a few different dynamics. The first is
the availability of labor supply. So if you have less immigration,
then you're going to have relatively less labor supply. And
what really matters, though, is less immigration less labor supply,
is the existing supply going to be absorbed by firm's
demand and is that balance that we're looking for right
(17:38):
and right now we are seeing waning demand for labor.
We're starting to see less wage pressures emanating from the
labor market. Right now, the ratio of jobs that are
available to the number of unemployed workers is below that
which persisted pre COVID, when excuse me, and core inflation
was running under two percent. So the feedback that we're
(17:59):
getting from the labor market into price pressures just isn't there.
Speaker 11 (18:02):
The labor market is cool.
Speaker 9 (18:04):
The price pressures that we're seeing right now are from
undersaving and from the supply side.
Speaker 4 (18:09):
So and to come on in on this, because we
had a really interesting conversation earlier with Thomas Carroll. He's
over at Ballast Rock. They focus on multifamily in the Sunbelt,
and he mentioned that he's already seeing prices of stuff
they import to build these multifamilies go up as a
result of tariffs on Canada and on Mexico, so those
raw materials. And then also he's speaking to subcontractors who
(18:32):
are having trouble finding talent when it comes to those
skilled trades to actually do the work and get it done.
So he's sort of hearing and feeling this on both sides.
How does that kind of compound with what you and
the team wrote about today.
Speaker 10 (18:46):
Yeah, I mean there are definitely many aspects that it's
a steward just mentioned, but just put it on the
headline basis. The surge of immigration over the past few
years was considered to have been important to offset labor shortages,
keep a lid on inflation, and help the economy avoid recession. Now,
the concern at the moment is that even before we
(19:07):
get to the mass depretation phase, that the big crackdown
on immigration. Business people and the economists are not advocating for
illegal immigration or chaos on the border per se, but
the end result has been a big crackdown in immigration.
The concern is that some of those sectors like construction
for example, are going to struggle to find workers, some
of those most exposed for those kind of labor intensive jobs,
(19:29):
maybe in food processing sector, in the farming sector for example.
Those are areas that are going to find it hard
to get workers now at a time when they need them.
So that concern is there coming top of the tiers,
but of course short of saying the bigger picture is
the employment market is slowing too, of course, and that
will offset some of those pressures.
Speaker 3 (19:47):
Just quickly to wrap up in twenty seconds here, and
I mean, if the US goes into economy goes into
a recession, should we assume that the global economy will
also go into a recession just quickly?
Speaker 10 (19:58):
Definition of global session is quite I refer to Stuart,
But yeah, if US a recession, that's not good for
the world.
Speaker 8 (20:04):
All right, the ball's in your court, Stuart. If we
get a US recession, should assume a global recessions coming.
Speaker 9 (20:09):
There's been so much stimulus that's been put forward in
the rest of the world. I think it's possible that
enough stimulus in China and Europe could stave off a
more material recession. But you know how it is, as
the US goes, so it does the rest of the world.
So if we do enter a US recession, it would
be difficult for me to be a long Europe for example.
Speaker 3 (20:28):
It makes me wonder if we could once again have
an earnings recession but not necessarily an economic recession. Because
Gina talked about the numbers being brought down certainly for
the rest of this year, but also starting to look
at I guess the early part of twenty twenty six.
Speaker 8 (20:40):
Folks, Thank you so much.
Speaker 3 (20:41):
Stuart paul Us economist for Bloomberg Economics and Endocurrent, is
global economy reporter for Bloomberg News Stewart here in our
New York.
Speaker 8 (20:48):
Studio and out there in DC. Guys, thank you so much.
Speaker 2 (20:52):
This is the Bloomberg Business Week Podcast. Listen live each
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New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 5 (21:11):
It is today's big Tig.
Speaker 4 (21:12):
It's also one of the most read stories on the
Bloomberg terminal. It's about this self described boring budget guy
who's best known for co authoring the nine hundred page
policy playbook of the Heritage Foundation's Project twenty twenty five.
It's become something of a bible for President Trump's second term.
And it's he, not Elon Musk, who's steering the Trump
(21:32):
administration's doje crusade business.
Speaker 5 (21:35):
We call himis.
Speaker 4 (21:36):
Max Chafkin writes about Russell Vote for Bloomberg BusinessWeek. He's
also the co host of the Elonink podcast and the
author of the contrarion Peter Tiel in Silicon Valley's Pursuit
of Power, he joins us from our Dallas bureau, Max,
who is Russell Vote?
Speaker 12 (21:52):
Yeah, Russell vote. Well, he is the director of the
Office of Management and Budget. But more than that, Tim,
as you said.
Speaker 8 (21:59):
He is one of the core.
Speaker 12 (22:03):
Idealogues behind this presidency.
Speaker 11 (22:06):
So russ vote.
Speaker 12 (22:07):
He served as the head of OMB at the end
of the last Trump presidency, and his big idea really
goes around executive power. And it's this idea that the
executive that's the president, Donald Trump, should be able to
have much much wider discretion to run the government and
really to run the country. Then I think most even
(22:31):
either Democrats or Republicans, have generally allowed in the past.
He's also a big time deficit hawk. You know, he
started his career working for Phil Graham. He was a
senator starting in the in the eighties. Was one of
the key people behind the effort to like balance the
budget in the in the eighties and the nineties, and
(22:52):
so Vote has these two threads, one deficit hawkery and
the other being executive power. And as you kind of
hinted in that intro, those two things work really nicely
with what Elon Musk is trying to do, because, of
course DOGE is about both of those things. It's about
cutting the deficit, but also sort of doing things more aggressively,
(23:15):
you know, with the power of the presidency. And so
so Vote and Elon Musk had this kind of interesting alliance,
and it's specially interesting because they're so different. They're like,
they couldn't be more different from one another.
Speaker 3 (23:27):
All Right, So, having said that, we focus so much
on Elon Musk, he's been the face out there in
public in the Oval office when Donald Trump is holding
the president Donald Trump of course is holding press conference
about what DOGE is doing, and so on and so forth.
Speaker 8 (23:40):
So I guess there's an assumption.
Speaker 3 (23:42):
That once maybe you know, there's been some speculation that
maybe Elon Musk his days at DOGE are numbered, that
that's it.
Speaker 8 (23:51):
And yet that's not the case, is it? If that
well plays out.
Speaker 12 (23:55):
You know, people within the Trump administertration definitely don't see
it that way. I mean, as you say, Carol. At
some point Elon Musk is going to have to give
up his full time role in the Trump administration because
he is a temporary government employee that is going to
sunset after one hundred and thirty days. We don't know
exactly what that'll be, how how exactly they're counting the days,
(24:17):
and it would not surprise me if it stretches on.
But at some point Musk is going to take a
step back. And and certainly within Trump world, this is
seen as being part of Russ Vote's domain and that
he and people around him are ready to pick up
where Elon Musk left off. And and and it's not
(24:39):
as if Elon. I don't think Elon Musk is going
to go away from from from the world of Trump.
I think he'll still be very vocal on social media,
but when you're talking about that day to day role,
it will go away. And if you're thinking that Musk
going away is going to change the trajectory of of
what Trump is trying to do, I think you would
be mistaken because Vote has been working on these issues
(25:02):
for years, long before Elon Musk proposed the idea of DOJE.
Vote was proposing sort of very similar things from his
perch as the head of this you know, MAGA think
Tank as being one of the kind of leading lights
intellectually in Trump world.
Speaker 3 (25:19):
All right, And as you talked about, I mean, he's
very different than Elon Musk, And so I do wonder, like,
what's the speculation about how these cuts and things might
play out if Elon Musk leaves.
Speaker 8 (25:33):
And vote is he's in charge?
Speaker 12 (25:36):
Yeah, I mean the difference is it's it's almost comical.
So Musk, of course, he's he loves to be front
and center, vote, very low profile, barely talks about himself,
you know, you know, rarely gives interviews, you know, rarely
gives up any any personal information. You know, we know
everything there is to know about Elon musk personal life. Musk,
of course, ideologically scattered. Vote is very, very disciplined. And
(26:00):
you know that you could see that in two different ways.
On one hand, I think there's some people who see
Musk kind of working against Vote and some of the
ideological components of Trump's space. On the other hand, Vote
and people close to him see Musk as this kind
of force multiplier, as this face of this otherwise maybe
political like difficult to sell operation. You have this very popular,
(26:25):
you know, out there guy and Elon Musk representing these
changes in the public. Meanwhile, behind the scenes you have
Russ Vote and his allies doing actual work.
Speaker 4 (26:34):
Well, so, what have they been able to accomplish thus far?
Because Project twenty twenty five was brought up during the
campaign quite a bit in fact by Democrats in the
president at that time distance himself from Project twenty twenty five.
Speaker 5 (26:49):
What have they been able to accomplish?
Speaker 12 (26:51):
Yeah, there's a lot there. I mean, Project twenty twenty
five has a large number of co authors in terms
of and there are different positions, Like if you look
at the tariff section of Project twenty twenty five, there
was a pro tariff section and an anti tariff section.
They're actually like two dueling proposals. Vote is pretty much
aligned with Trump on everything, so he was for the tariff.
(27:14):
He was publishing, you know, these very hawkish pieces about
tariffs in the years running up to the election. And
in terms of sort of executive power of this idea
that Trump should be able to run the government, I mean,
that is a place where they're making a lot of changes.
I mean we're seeing, you know, some of this has
been is caught up in court right now, and it's
(27:36):
unclear how many of these attempts to you know, drastically
close or reduce the size of federal agencies, how much
of that will stick. But you know, in the story
we talk about the CFPB, that's the Consumer of Financial
Protection Bureau. Vote is also running the cfp PB, And
right now this is locked up in court. It's not
(27:56):
clear what's going to happen. But when you talk to
people who work there, I mean nothing is happening right now.
You know, the agency has not been shuttered, but it
also is clear that its ability to do stuff has
been drastically reduced. And so in that sense, he's done
a lot. That said, there is this, there is there
are the questions around, you know, how much of this
is is going to stand in court? How much of
(28:19):
it will you know, stand up to congressional scrutiny, a
change of power and so on. So the jury is
still out there.
Speaker 4 (28:27):
Well before the jury was even out there, our team
spoke to Kevin Roberts, the president of the Heritage Foundation,
that was back just after President Trump won the election.
This was on November eleventh. He was on balance of
power check out what he had to say about the
opportunity that he saw.
Speaker 13 (28:42):
Then we think that this is the beginning of a
golden era of conservative reform. I will say that because
the work of Project twenty twenty five represents the conservative movement.
It would be very difficult for anybody to implement policies
on aed you cation, on the border, on taxation without
(29:03):
at least consulting those ideas in people.
Speaker 11 (29:05):
That's not some arrogant or hubristic comment on our part.
That's just the nature of how policy making works.
Speaker 4 (29:11):
That was Kevin Roberts, the president of the Heritage Foundation,
back on November eleventh, twenty twenty four, joining us on
a balance of power, Max. When you think about this
term versus Trump's first term, are there ideological differences because
of the influence of the Heritage Foundation of Project twenty
(29:32):
twenty five. Do you see differences in.
Speaker 5 (29:35):
The way that he's.
Speaker 4 (29:37):
Well making rules or the way that he's putting policy
into effect?
Speaker 5 (29:42):
Do you see it for sure?
Speaker 7 (29:44):
Now?
Speaker 12 (29:44):
I think the difference is that during the last Trump presidency,
Trump came in without this kind of broad base of support.
You know, it had been a closely contested nomination. You know,
there were a lot of competing factions within Trump World,
and in particular, you had this kind of business faction
(30:05):
right that was pushing against some of these policies that
we've been talking about a lot, you know, whether we're
talking about tariffs or you know, various erratic behavior on
the economy. And what's happened instead is you have this
kind of base of committed ideologues who have spent years
preparing for this moment. That's what Project twenty twenty five
(30:28):
was all about. It was like, let's well, you know,
the last time we had this, you know, as they
see at this like deep state that was thwarting them.
Speaker 11 (30:35):
Now now we're going to.
Speaker 12 (30:37):
Figure out how to actually do stuff. So what they're
trying to do is avoid the kind of checks of
these more moderate factions within Trump world. And Vote is
a really interesting person here because Vote was kind of
dead center of some of the biggest controversies of the
last term. So Vote was involved in holding the money up,
(30:59):
the aid to Ukraine up that happened through the Office
of Management and Budget. Now that led to obviously an
impeachment hearing and everything. As Vote saw it, that was
the deep state, you know, trying to stop Donald Trump.
So there's a lot of ways in which these the
guys involved with Project twenty twenty five, including Russ Vote,
have been sort of preparing for this moment for years,
(31:19):
and I think that's one of the reasons this presidency
has been so much more hardline ideologically than the previous one.
Speaker 8 (31:27):
Well, that's what I find interesting.
Speaker 3 (31:28):
And you go into some great history about his time
working for Senator Phil Graham, I mean, pull out your
political history books, but Texas Republican fiscal hawk, and you
say he certainly had quite an impact on vote in
terms of where he got that from. But I think
what's really interesting is, you know, this idea of these
views on executive power.
Speaker 8 (31:48):
I mean, I think we thought.
Speaker 3 (31:50):
I mean that, I think is what's so fascinating right
about this second Trump term, consolidating executive power like we've
never seen before, and he certainly is helping the president
do this. And forgive me, we've got about fifty seconds here, Max.
Speaker 12 (32:04):
Yeah, and that's certainly where these kind of libertarian you know,
Phil Graham has a long and interesting career, but I'd
say he's more of the sort of libertarian bent than
somebody like Russ Vote that and that's where the difference is, right,
Whereas a lot of these deficit hawks, the old oldline
deficit hawks, were really interested in Congress as the forcing
(32:24):
function for russ vote. It's the executive. It's it's kind
of clearing the field and letting Donald Trump have as
much leeway as possible.
Speaker 13 (32:32):
You know.
Speaker 12 (32:32):
Of course critics are going to say too much leeway,
we're you know, bordering on an imperial presidency. And so
that's the kind of like ideological conflict that's playing out
behind the scenes, you know, as Trump does his thing.
Speaker 8 (32:45):
Yeah, it's just you know, fascinating a story like yours.
Speaker 3 (32:48):
You know, the people that are so instrumental in shaping
what this Trump term looks like.
Speaker 8 (32:55):
Just really amazing. Steph.
Speaker 3 (32:56):
Max, thank you so much, really appreciate maxchaff and Comus
at Bloomberg Business be co host of the Elon Inc.
Speaker 8 (33:01):
Podcast.
Speaker 3 (33:01):
Check out his story This is on the Bloomberg coming
also in the new issue.
Speaker 8 (33:06):
Of Bloomberg BusinessWeek magazine. You can find it at Bloomberg dot com.
Speaker 9 (33:08):
Toomucle how about you let me drive?
Speaker 5 (33:13):
Oh no, no, no, no, this is not a toy.
Speaker 2 (33:15):
Who's going to drive?
Speaker 8 (33:17):
Honey, Please gravel let's wait.
Speaker 7 (33:21):
I want to drive.
Speaker 9 (33:24):
It's a good question.
Speaker 1 (33:25):
Good this is the drive to the clothes punks, the
music well run on Bloomberg Radio.
Speaker 3 (33:36):
I love watching kind of the last hour of trading
because we'll see if this holds. But definitely off our
worst levels of the session. But you were just looking
at the S and P two. I mean, we've seen
broad based selling throughout the day, but right now you've
got I mean it's only twenty two names that are
actually higher in the S and P five hundred, four
hundred and eighty one to the downside. Thank you.
Speaker 8 (33:56):
Fingers cross, fingers crossed.
Speaker 4 (33:57):
Hey, I want to see what Jeff maclaan has to
say about the CEO saw Areity Wealth. He joins us
here in our Bloomberg Interactive Broker's studio in the wealth
management business. They've got just under seven hundred million dollars
in assets under management. Jeff, good to see you, welcome back.
When you walked in, you actually mentioned that they were
you were seeing some buying into the close. Taken together
everything we've seen over the last few weeks, what does
(34:19):
the environment look like to you right now?
Speaker 14 (34:21):
I mean, obviously the sentiment is so negative, I think
that's part of the frustrating thing because the data is
not there to support it. You're seeing consumer sentiment surveys
down at like two thousand and eight, two thousand and
nine levels.
Speaker 5 (34:32):
Yeah, do I.
Speaker 14 (34:33):
Think it's two thousand and eight two thousand and nine.
I do not, And so that's part of the surprise.
A bit of how do you think it's worse? No, definitely,
Oh imagine.
Speaker 4 (34:43):
Why are you so optimistic? I mean, we can go
over the list of concerns that people have today. Top
of mind for folks is fear about the independence of
the central bank here in the US and what the
President has said about the chair of the Federal Reserve.
There's the tariff concerns as the President meets with some
of the heads of the big retailers at the White
House today, and the concerns about as we heard from J.
(35:04):
Powell last week, price is rising as a result of
these tariffs.
Speaker 5 (35:08):
Yeah, growth flowing.
Speaker 14 (35:09):
There's a common adominator to everything you just said, tariffs,
which is President Trump, right, the Trump administration, and so
a lot of this it's not based on some market
fundamental It's not based on something broken like in two
thousand and eight, two thousand and nine, the housing sector
and credit default swaps and all the issues that came
up through that. It's all based on what's coming out
of the White House. Well, so that's why I'm both
(35:30):
nervous but also excited long term, because there's nothing fundamentally
broken right now. It is, it can be cleaned up now.
How he's going about it, it's not ideal, and it's
freaking out people. It's creating uncertainty, which is the buzzword.
Like we're talking about as a firm. Uncertainty is killing
the market right now. And you can point to any
(35:52):
of those policies you just said, that's what's driving it is.
People don't know what's happening next.
Speaker 5 (35:58):
I just want to remind you we're three months into
the administration.
Speaker 11 (36:01):
Yeah, and these are four year terms.
Speaker 14 (36:02):
Yeah, yeah, yeah, But I do think there is a
long term plan associated with tariffs. Of again, it's a
shock in awe he's going into I think long term
everyone but China. I think those tariff issues get worked
out here over the next twelve months. China I think
consistently will go for the life of his presidency.
Speaker 11 (36:21):
That trade war, trade battle issue.
Speaker 5 (36:24):
Yeah, one hundred and forty five percent tariff for the home.
Speaker 14 (36:27):
I think they'll be fighting over trade policy the entire time.
Present She President Trump are going to be battling because
he has this fundamental view present Trump does of how
unfair they are. Now, whether you agree with Trump or not,
the data is pretty clear that China has been very
lopsided in their trade policy of anti US, stealing intellectual
(36:47):
property and doing a variety of different things to hurt us.
But I think over time, again, a lot of this
can be corrected by President Trump. That's why I'm a
little bit bullish, because it's again, nothing's broken right now,
but it can lead to disaster. That's where he's on
a dangerous game right now. Consumer sentiment is so negative
(37:08):
that unless it turns, this will lead to a recession.
Without question, it has to turn or we're in a recession.
Speaker 3 (37:15):
Having said that, if we are seeing though, ultimately, even
if trade deals are worked out and there are tariffs
and goods that come into the United States, higher prices
for Americans, right, and that changes the dynamic of potentially
with the US economy, right, people have just so much
money to play around with, so something will be cut
back on potentially and that changes kind of the composition
(37:38):
and velocity within the US economy. So even though a
deal might be worked out and we cross that off
the list, you come back to different fundamentals.
Speaker 11 (37:47):
Yeah, and it really depends on the type of deals.
Speaker 5 (37:49):
Right.
Speaker 14 (37:49):
Even the ten percent tariffs on all the other countries
are a problem, right, And so if he can ten percent.
Speaker 3 (37:54):
Maybe sounds like not a lot, but what we're at
two percent, three percent, I mean that's a big jump.
Speaker 14 (37:59):
But if he can wipe out as part of this,
again it's not to go too much into the political side,
but if he can wipe out the tariffs that they
have on US and all the other non tear of
trade policies going country back country, that can be a huge.
Speaker 2 (38:13):
Moves is the long term burg An issue past his
short term can drive a Spotify And there's no way
you get your podcast.
Speaker 14 (38:20):
Being a reelected a half years from two if he
drives us in a deeper sent on Bloomberg Dot that
is that is had.
Speaker 11 (38:27):
So I think he's playing it is.
Speaker 8 (38:28):
That's concern, the recession that's on the US every week.
Speaker 11 (38:33):
His concern Bloomberg.
Speaker 3 (38:36):
Saying, like I think about the longer term damage right
of you know, do we have another generation that comes
out of college and can't get jobs and that means
you can't buy houses and you can't you've got student debt.
Speaker 8 (38:46):
Like I just I do wonder when do we move towards.
Speaker 3 (38:49):
Thinking all right, folks, there's going to be some longer
term impacts. Yeah, and certainly Americans and the American economy.
Speaker 14 (38:56):
Yeah, I think I think the American economy and specific
around like job market, I think those always turn in
a positive manner over time. The issue long term to
me is the international view of US investment. That is
concerning of where my worry lies of long term, especially
around the treasury market. So if you're a person coming
out right now or just an average worker trying to
(39:18):
get a new home and get a mortgage right now,
good luck. Right, your thirty year average is starting with
a seven handle roughly, right, that's really high than what
we're used to, a lot less than what our parents paid, right,
double digit mortgage rates, right, But like still, that is
a difference maker. And so I think that's why he's
trying to beat down the Fed chairman a little bit
(39:38):
and inappropriate ways to get those mortgage rates down, because
he knows. If he has a slowdown in the stock
market and the cost of buying a house is high,
jobs start being few and far between.
Speaker 11 (39:50):
He's creating a tempest to fight through.
Speaker 4 (39:54):
Speaking of beating down, yeah, segue to Novo Nordis, Yeah,
a stock that has been beaten down, but you're optimistic
on and you've taken a position.
Speaker 11 (40:01):
In Yeah, we took a position last week.
Speaker 14 (40:04):
We like Novo for this it's back down to almost
its pre golp one life.
Speaker 11 (40:09):
That's wild, right, and so huge decline.
Speaker 4 (40:12):
I mean we're reading stories in the last couple of
years like this is Mark's economy.
Speaker 14 (40:15):
Yeah, truly, Yeah, yeah, And the thing is the fundamental
business that they already had diabetes, insulin not going anywhere
right as the world gets wealthier, diabetes, insulin, OBC, all
those things go up. And so you're basically getting the
golp one business for free right now because it's back
down to roughly pre gop one taking off levels and
(40:37):
so for us down nearly sixty percent year every year.
Still a great management team. They I think there's plenty
of space to be had in the golp one market.
Everyone's looking at Lily right now as the clear leader.
I think there's plenty to be had there. We're still
in the early innings of GLP one, remaking the health
area and having people as a contingent that.
Speaker 8 (40:59):
They are able to create a pill just like Lily.
Speaker 14 (41:02):
I think there's gonna be a lot of inization there.
I'm not worried about the method of intake, whether it's
a pill, a shot, whether it's something that dissolves in
your mouth right whatever, a patch like. I think the
method of intake is less concerning to me. It's more
just the business itself. And Wagavi has staining power, right,
(41:22):
and so I'm getting it for free. Essentially, I'm buying
the diabetes insulin business and we're getting GLP one for free.
I mean that to me is marketable. The management team
is good. I trust the Danes right. We'll see what
they can fall through on, but they look good.
Speaker 3 (41:39):
We had a run. Thank you so much. Yeah, good
to spend some time. Jeff McLain, CEO of Solidarity.
Speaker 11 (41:44):
Well.
Speaker 1 (41:45):
This is the Bloomberg Business Week Daily podcast, available on Apple,
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