May 12, 2025 • 32 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Wall Street’s bets that the US-China trade truce marked the end to an all-out tariff war drove the S&P 500 up over 3%, while sinking defensive corners of the market from bonds to gold and haven currencies. The dollar saw its best day since November.
The rebound in risk appetite and diminished expectations of a recession drove the stock benchmark above Donald Trump’s April 2 “Liberation Day” level.
A surge in big techs drove the Nasdaq 100 back into a bull market just a month after it plunged 20% from a previous record. Amid a potential reset in inflation expectations, Treasury yields climbed as traders lowered their Federal Reserve wagers to just two rate cuts in 2025.
For big investors shocked into defensive measures at the height of April’s chaos, the swift recovery in markets has been a mixed blessing. Shorting the dollar, going long stock volatility and piling on bets premised on multiple Fed rate cuts were among the most popular trades in mid-April. Each has taken severe lumps. Indeed, their unwinding may be adding fuel to the bounce-back.
The US and China will temporarily lower tariffs on each other’s products, buying the world’s two largest economies three months to work toward a broader agreement. Trump said China had agreed to remove non-tariff barriers to US imports as he announced a de-escalation of his trade war with Beijing, suggesting even greater concessions could be in store if talks progress.
Today's show features:
- Nancy Lazar, Chief Economist at Piper Sandler
- Doug Ciocca, CEO and Partner at Kavar Capital Partners
- Jay Inslee, former Governor of Washington
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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 Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
All right, let's kind of stay with this theme. We
want to get more on the latest from kind of
the view in terms of the US China relationship, where
it goes in the broader global economic implication.
Speaker 4 (00:42):
The latest from one of the most important market economists
in the world, Nancy Lazar's with us.
Speaker 3 (00:46):
She's chief economist at Piper Sandler, leading the economic team
in view.
Speaker 5 (00:50):
There.
Speaker 3 (00:50):
She co founded Cornerstone Macro, also co founder and former
vice chairman of IASID Group. Nancy, I'm so delighted to
have you here with us. Does feel like a shift
between the US and China? How do you see it?
Speaker 1 (01:03):
Well, first, I think it does lower dramatically the odds
of a recession, something from forty five percent more our
odds pre yesterday down to about twenty five percent today. Two,
we're going to raise our GDP forecasts slightly as a result,
not strong growth, but a little bit better than what
we had, and keep the unemployment rate pretty tame.
Speaker 6 (01:23):
It seems like it's all about tariffs.
Speaker 1 (01:26):
But I would highlight it's more than just about terrafs. One,
it is also about getting clarity on tax legislation, which
we're going to see as we go through the summer. Two,
it's more and more signs of deregulation which are already happening.
Those two things are really important, as are lower terriffs
are really important to small medium sized businesses, and so
(01:48):
the tax cuts the deregulation are going to be offsets
to these tariff increases through the long haul. And then third,
there's also a huge manufacturing renaissance theme that's been unfold
for fifteen years by our count, and obviously the tariffs
are going to further increase the odds of more and
more on shoring. So at the end of the day, net,
(02:10):
we think this is such a pretty positive scenario for
the back half of this year, particularly the fourth quarter
and into twenty twenty six, things have changed.
Speaker 6 (02:18):
This has been very dynamic.
Speaker 1 (02:19):
It has not been a static analyis and we didn't
know on April second that we were going to get
China down to thirty, and there's potentially downward pressure on
that thirty if we can address the fetanyl issue. And
fentanyl shipments in the United States have indeed declined sharply,
So I would take the more positive view than your
prior guest.
Speaker 4 (02:39):
What about scarring is a term I heard a lot
of this morning, Nancy. So some things you just can't
unsay is how mirrapandit put it.
Speaker 3 (02:49):
It's like a bad fight right in a relationship. Things
that you just don't forget.
Speaker 7 (02:53):
Are our allies.
Speaker 4 (02:54):
I mean, you talk about reassuring right supply chains are
bound to move now that everyone you just can't trust
this administration. You just can't trust this country as a
as a business partner, as a steady business partner.
Speaker 1 (03:09):
I'm not sure I would say you can't trust the
United States. This has been a negotiating tactic. This has
not been It's been certainly has come across very very bullying,
I would agree, I would agree with that, but it's
been effective. There is a case to be made that
the Germans, for example, would not have increased defense spending
had we not put them in somewhat of a difficult situation.
(03:30):
And same for companies on shoing into the United States.
We need these strategic materials to come to the United States, pharmaceuticals, technology,
et cetera. They weren't moving. Well, actually they did move.
We saw what happened when you gave them a carrot
with the Chips Act. Indeed you did get some in conductors,
but it was limited to that. So the tax legislation
(03:51):
actually is going to potentially be a real boom to
companies on shoing into the United States.
Speaker 6 (03:56):
And that you will get full capex.
Speaker 1 (03:57):
EqP expensing and also the cost of the construction of
the factory immediately instead of over thirty instead of over
thirty thirty years. So I've traveled a lot internationally over
the past month, and I appreciate what you just said.
I certainly heard that a lot. But the United States
is still the largest economy in the world, biggest consumer
(04:20):
in the world. So increasingly, if you sell it here,
you make it.
Speaker 6 (04:24):
You make it here.
Speaker 7 (04:25):
Well.
Speaker 4 (04:25):
The biggest complaints, though, Nancy, that I've heard are not
international or from big multinational corporations. The complaints and the
concerns really the fear that I hear is from main street.
It's from small and medium sized businesses that, as we know,
also do the bulk of hiring and the bulk of
capex in this country. Those are the companies that just
(04:46):
can't make make it through two or three months of
this kind of uncertainty and a lot of whom are
going to be filing for bankruptcy this year. So how
do you deal with that hit on the economy.
Speaker 6 (05:00):
Yeah, so I totally agree with you.
Speaker 1 (05:02):
The smid space is a very very small, medium sized
businesses are a really important part of this economy. They
account for over eighty percent of the jobs in this country,
and it was one of the reasons why we were
so concerned that we were going to go into recession
with the egregious tariffs up until just this past past
past weekend. So totally share that view. That's where you
(05:23):
have to look at the whole picture. You do have
Maybe China's tariffs do come down a little bit further.
Ten percent apparently is the floor, and you get tax
relief and you get deregulation relief, helping to cushion that
that smid space from.
Speaker 6 (05:40):
The higher tariffs.
Speaker 3 (05:43):
Hey, Nancy I am curious, can we be both a
manufacturing hub here in the United States and be a
really innovative high tech company a country rather going forward?
Speaker 6 (05:53):
Can we be both?
Speaker 3 (05:54):
And I'm curious what kind of economy that together creates.
Speaker 1 (05:59):
So again, what they're strategically looking for are these industries
that we have to have in the United States.
Speaker 6 (06:05):
As we all learned during COVID. I don't need to
I don't need to review that, but.
Speaker 1 (06:10):
I've written about the manufacturing renaissance actually for fifteen years.
It's been ongoing and one of the and you need
it to be able to hire a diverse group of people.
People have different skills. Not everybody wants to work on
Wall Street. Not everyone wants to go to college, and
there's nothing wrong with that. So the key to the
manufacturing renaissance or manufacturing in general is the economic multiplier.
(06:32):
For every manufacturing job that's created, there have been six
non manufacturing jobs created.
Speaker 6 (06:38):
And again we've documented.
Speaker 1 (06:39):
This over the past over the past fifteen years, it
has been unfolding. And these policies, particularly the care particularly
the right off of your factory in the first year,
will further onsoing here in the United States. It's yes,
I mean innovation drives of factories today. Robot is key, uh,
(07:05):
software key in utilizing those innovations in in in factories.
Speaker 6 (07:12):
I'm kind of glad you went there.
Speaker 3 (07:13):
Our own Steve Mann, who covers the auto sector, said,
you know, one of the things that we have overlooked
is that auto, all of the production manufacturing automation that
China has done has helped it advance technologically in a
big way. And it's something that we haven't been doing,
uh and missing out what's the.
Speaker 4 (07:29):
Big by the way, those automakers that invested massively because
they loved Trump's.
Speaker 8 (07:37):
New version of.
Speaker 4 (07:38):
The North American Free Trade Agreement, right the us mc A. Yeah,
they're paying the price for trusting him now.
Speaker 6 (07:44):
Right, yeah, exactly right. Well that's the thing.
Speaker 4 (07:46):
That's the kind of uncertainty that's problematic, Yancy.
Speaker 3 (07:49):
Here's the thing Boas Weinstein of Seba Saba Capital, right
Sabbath forgive me. He has said the uncertainty genie is
out of the bottle here with President Trump, that we're
not going to really know things could change, make a
one to eighty.
Speaker 6 (08:03):
We know that. Do you still believe that we've.
Speaker 3 (08:06):
Got to be kind of aware of that even if
today fails, calmer and more optimistic.
Speaker 1 (08:13):
Absolutely, again, this is going to this that's clearly still
a period of uncertainty, but there's going to be more
clarity as we go through the year, and hopefully by
twenty six a lot of the uncertainty is gone. Clarity
and tariffs, taxes, deregulation.
Speaker 6 (08:28):
And on shoring.
Speaker 1 (08:29):
It's not unusual for a new president to come in
and shake the tree. We had it that first year
under Reagan. Vulker was tightening aggressively. They're squeezing inflation out
of the system. Reagan also wanted to cut taxes, which
indeed he succeeded in doing, trim back government spending. He
fired people, He brought an outsider, Greenspan to make Social
(08:52):
Security solvent, which he did. We threatened the Soviet Union,
he threatened Reagan, He's pardon me, Reagan threatened it was.
I started in the summer of nineteen eighty one, and
I thought maybe I made a mistake moving from Michigan
to to New York. But the people I worked with
were very senior. They understood the long haul for this
(09:14):
was going to be a healthier economy. I'm just comparing
the economic times. We needed a change back in nineteen
eighty one. We need a change in the economy today
to broaden the growth in labor force participation for all
types of people, all sorts of education. And you do
that most clearly through bringing manufacturing back to the United
(09:36):
to the United States.
Speaker 4 (09:37):
Now, I was going to ask about manufacturing because Ralph
Shlostein was in here the other day and he said,
you know, we peaked at like twenty percent manufacturing jobs
in the sixties and seventies. Now we're at eight, right,
even if we get a lot on shoring and maybe
it becomes eight and a half or nine. But I
love that you bring up Ronald Reagan, Nancy, because like
most other people, I have a problem scrolling through social
(09:58):
media all day long and I see all these clips.
Reagan was a huge proponent of free trade. Reagan was
a huge proponent of immigration. And since you started in
nineteen eighty one, how would you compare the Gipper to
Donald Trump?
Speaker 6 (10:16):
I am not comparing the men.
Speaker 1 (10:18):
I am comparing the economic the economic times, and careful
on that free trade idea. My colleague Karina actually discovered
an article highlighting that Reagan negotiated hard with the Japanese
to pull back sharply they're exports of autos to the
United States, which indeed they did. And then next thing
(10:39):
you know, the Japanese were indeed some of the first
foreign manufacturers to actually build plant in the United in
the United States. So I thought that was a very interesting,
interesting tidbits.
Speaker 7 (10:51):
I'm going to.
Speaker 4 (10:51):
Follow her on Instagram, Karina, what's her act?
Speaker 3 (10:54):
Follow her on social media. Hey, listen just twenty seconds.
You're optimistic today? Have you been up domestic since President
Trump came into the White House and we've seen the
volatility of the month of April, have you had optimism
throughout well?
Speaker 1 (11:08):
To be sure, on April second, we did go to
a recession call given the the the egregious, egregious nature.
I'm all for lower corporate taxes, deregulation, and again I've
been passionate about manufacturing renaissance. That was not a political
move on my part. It's from because I'm from Flint, Michigan.
I saw the destruction to my hometown from the gouging
(11:32):
out of manufacturing. It's one of the reasons i'm an
economist to better understand why factories are such an important
foundation for any for any country.
Speaker 6 (11:41):
China understood it.
Speaker 1 (11:43):
That's why they did wto and it did initially create
a pretty strong economic backdrop.
Speaker 3 (11:48):
We're going to talk more about the US labor market
and green and climate energy jobs. We're going to do
that with former Washington Governor j Insley on the other
side in just a moment. Have those Hey, yes, Nancy Lazar,
thank you so much, Chief economist at Piper Sandler.
Speaker 2 (12:04):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
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Speaker 3 (12:18):
All right, TikTok, everybody, About eighteen minutes to go until
we wrap up the trade on this Monday Carol Master
along with Matt Miller and for Tim Stanovic. On this Monday,
May twelfth, we're kind of hovering. Matt near our best
levels of the session of about three percent on the
S and P, two and a half percent higher on
the Dow Jones Industrial Average, Mazek one hundred charging ahead
by three point six er.
Speaker 4 (12:36):
It's so funny. You get used to this, You get
used to this kind of volatility over the past month
and or month and a half, and so today feels
like nothing, you know, and we're looking at this in
incredible rally. I mean it's so strong. Mag seven stocks
are up five or six percent. These are trillion dollars.
Speaker 6 (12:54):
Thus sort of like, yeah, no big deal, it's a
little boring.
Speaker 3 (12:58):
Let's see what Doug Sioka has to say about see
if he thinks it's boring. He's CEO and partner at
Kavar Capital Partners. They've got about one and a half
billion in assets under management with us. Once again from Leewood, Kansas'
diagnised to have you here with Matt and me, does
it feel a little boring? I mean it's a rally,
get it, but it feels a little mellow.
Speaker 7 (13:17):
Yeah, I think it is. I think Matt's right.
Speaker 9 (13:20):
I mean, you just get preconditioned to have this become
the more the rule than the exception.
Speaker 7 (13:24):
And you know, it's funny when we went.
Speaker 9 (13:26):
On that kind of magnificent nine day run of the
S and P in a letter half of last month,
and it was preceded by a thousand point down day
the Monday after Easter, which was preceded by a.
Speaker 7 (13:38):
Night HRBU on Holy Thursday.
Speaker 9 (13:40):
So yeah, I do think a little bit an esthetize
to the interday price swings, but yeah, there's no way.
I mean, from a historical outlier perspective, today is a
very significant extreme day and does really invoke this whole
concept of not trying to tie on the market, right,
I mean, you don't want to miss, as everyone knows,
those five, ten, fifteen best days of a year.
Speaker 7 (14:02):
I read something this morning.
Speaker 9 (14:03):
That really underscored that point that if you missed the
ten best days in twenty twenty three in twenty twenty four,
your return for the year as a stock investor was
three percent, where the S ANDP on average was up
twenty percent in both of those years. So that really does,
you know, create the understand that you've got to stay
invested in order to participate.
Speaker 4 (14:23):
Although have you talked with anyone, Doug, you know, after
April second, after we got the reciprocal tariffs on Liberation
Day and the market's just puked for like four days straight.
So many people that I talked to said, man, I
knew this was coming, and I stayed fully invested, and
I wish I'd gotten out. I wish I'd sold before
(14:44):
you know, these massive tariff announcements were coming out of
the rose garden, and now you've got a chance to
get out. Right now we're two percent above April second.
So have you talked to anybody who regretted not selling
and could do so today?
Speaker 7 (14:58):
Yeah?
Speaker 6 (14:58):
For sure.
Speaker 7 (14:59):
I mean I think there are a great is real easy.
Hindsight is always super clear.
Speaker 9 (15:02):
And then one thing I think, maybe Matt, that people
could be forgiven for thinking they have that on missions
is that this is trade war two point zher right.
And the interesting part is that if you look back
twenty eighteen, because remember Trump was inaugraded in seventeen, it
took a while to get some momentum.
Speaker 7 (15:19):
Shoot, it took five months to get his cabinet seated.
Speaker 9 (15:21):
But if you go to eighteen, you think, well, twenty
seventeen GDP was up two point nine percent. In twenty
twenty four GDP was up two point four to three percent,
depending on your last gage you want to look at.
And you look at twenty seventeen EPs gross with a
twelve percent of year year twenty four twenty five twelve
percent year of a year. So you had this precondition
that was mirroring what took place in trade port one
(15:41):
point zero two point zero.
Speaker 7 (15:43):
Why didn't we all sell knowing this was going to
be the result?
Speaker 9 (15:45):
We almost had the exact same draw out in twenty
eighteen in eight mius twenty point oh six twenty twenty
five minus twenty one point three five. But you have
to know then that this is the primary time to
get out. And if you take twenty nineteen and forget
pandemic piece of twenty but it was a great period
to stay invested once you got through those lows.
Speaker 7 (16:04):
And that's kind of where we are today.
Speaker 4 (16:05):
So what are the catalysts now? I mean, okay, ninety
days with China, that's probably like ninety days left for
TikTok catalysts everybody else, everybody else, Cause on the trade front,
maybe it doesn't get worse. But are you really looking
for a bump from tax cut extensions? Are you really
looking for a bump from deregulation? Do you think on
(16:27):
shoring is going to drive this economy? And twenty twenty
six what do you look forward to?
Speaker 7 (16:33):
So I think there are a lot of things.
Speaker 9 (16:34):
Number One, to your point of the ninety day reprieve,
it's happened really quickly, right, because trade war one POINTZI
lasted eighteen months right started in eighteen. In the trade
war a quarter agreeing with sign in January of twenty twenty.
Speaker 7 (16:48):
So this was much faster.
Speaker 9 (16:50):
But if you do overlay the one differential from the
other thing you mentioned about strong rings growth and strong
GDP growth eighteen versus.
Speaker 7 (16:56):
Twenty five, we have a FED that's not going to.
Speaker 9 (16:59):
Be reason rates. Right in twenty eighteen the Fed raised rates.
That's a headwind. We have, perspectively, a tailment. And how
smart does Paul look by now at this point by
waiting and not cutting when they met last week or
a couple months before that.
Speaker 7 (17:13):
I thought that was brilliant.
Speaker 9 (17:14):
I think valuations, while full from a market cap waited perspective,
are still really attractive going into today. Guys, forty three
and a half percent of the companies in the Russell
three thousand are still down thirty percent from the fifty
two week high.
Speaker 7 (17:28):
So if you broaden out.
Speaker 9 (17:29):
And consider investments, and you made mentioned Matt about a
four p five percent moving to Bang seven, the mag
seven stocks on average again before today, are still down
twelve percent from their.
Speaker 7 (17:38):
Peak, but at a peg ratio aren't all that expensive.
Speaker 9 (17:41):
So we think if you look down sort of the
cap spectrum and even continue to consider internationally, where you
have a dollar trend hugely positive US investments in international companies,
you have earnings moving in the right direction Europe, Japan,
and emericry markets, there's still places to effectively put some money,
oh in in the fixed income universe, you can lock
in with some duration, a very very handsome positive rate
(18:02):
to return.
Speaker 3 (18:04):
You note that investing since early April, Doug has been
more like playing video games and analytical decision making. So
can we now start doing those some analytical decision making
knowing that we have a White House and a president,
I'm just speaking the truth that can change his view
and mind and rhetoric and do a one tot eighty,
(18:27):
you know, in any given day or in any given week.
Speaker 6 (18:31):
So I'm just wondering the.
Speaker 9 (18:33):
Great question, Carolyn. Maybe it's just a different type of
video game. Maybe it's more like Minecraft and Frogger, where
there is going to be a little invocation of some strategy.
But I think when you go through periods like that
where trying to be effectively tactical is futile, you've got
to fall back on the three primary activities like that
(18:54):
encompass a very responsible strategic allocation.
Speaker 7 (18:58):
Right, there's still stuff to be.
Speaker 9 (18:59):
Done, loss targeting, quality overhauling, emphasizing beta. Right, if you
do feel like, because I just mentioned certain parts of
the market are undervalued, cast a wider net instead of
trying to be company or sector specific, because those are
the areas where you stand to have asymmetric risk with
whatever random true social tweet they might be coming down
(19:19):
the pike with God only knows what the catalyst would be.
Speaker 4 (19:23):
He changes his opinion on things, but he's loved tariffs
for decades. Right, Tariffs is one thing that he's not
that's straight on.
Speaker 3 (19:29):
But that's why I'm saying.
Speaker 6 (19:30):
It's not like he's going to back off completely. And
even if the.
Speaker 3 (19:32):
Tariffs come down, we're going to be in a higher
teriff rate environment. I mean, I think that's going to
be the net net does that Doug potentially, even if
it's ten percent, it's not the two and a half
percent that we've seen changes things fundamentally for a lot
of companies And just got about twenty five seconds here.
Speaker 7 (19:49):
Oh, I think it does.
Speaker 9 (19:50):
But I do think to Matt's question, earlier about is
onshore and going to be a catalyst. No. I mean,
we have a four percent unemployment rate in this country, right,
we are not going to be relying upon like domestic
manufacturing to be great sneaker producers.
Speaker 7 (20:04):
Right.
Speaker 9 (20:04):
We want to look for trade balances, and we know
that we're going to get different iterations of somebody's new agreements. Right,
So that's going to be better for growth. That's going
to be better to decline inflation. And frankly, that's probably
a point where the strength of the consumer and a
strong job market carroll these lumber tariffs can be absorbed
without being a huge impediment to growth.
Speaker 3 (20:22):
All Right, Dougi Okay, CEO and partner at Cavar Capital Partners.
Speaker 2 (20:27):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 3 (20:45):
All Right, I do want to point out everybody, just
a little bit of a backdrop, two US science organizations
are launching a new climate Research Initiative after the Trump
administration dismissed expert authors of the National Climate Assessment. Now,
the initiative will publish peer reviewed manuscripts and climate change
in the US, aiming to create a library of information
for government, academia, philanthropy, and business. The effort coming after
(21:06):
the Trump administration terminated the contract for staff working on
the sixth National Climate Assessment, which was expected to be
released next year. We know that there's been a lot
of moves pushback when it comes to green initiatives out
of the Trump administration. Our next guest, I'm assuming we'll
have some thoughts on all of this. Joining us to
Jay Insley, former three term governor of the state of Washington,
former member of the US Congress, a twenty twenty Democratic
(21:27):
presidential candidate, winner of twenty twenty five Time Earthward and
he's also leading the accountability project at the policy and
lobbying group of Climate Power, and he joins us from
Bainbridge Island, Washington. Great to have you here with us.
Governor Insley, Thank you, thank you.
Speaker 8 (21:44):
Thank you. Appreciate your attention to this topic.
Speaker 3 (21:47):
Well, there's a lot of what I talk to you about,
because I feel like you are someone who has seen
lots of political and economic cycles in the United States,
and before we get into jobs and green initiatives and
jobs in particular, the US China relationship, how do you
see it, how important is it, and how do you
assume it will ultimately have to play out because these
(22:11):
are the two largest US economies and they're intertwined.
Speaker 5 (22:16):
Well, obviously there's not much debate about how important this
relationship is.
Speaker 8 (22:21):
And we're all.
Speaker 5 (22:22):
Very disturbed and concerned about the President's desire to make
life more difficult for Americans by making them forcing them
to play pay the Trump Tariff tax, which we know
Americans will have to pay if he is successful of
imposing these large tariffs.
Speaker 8 (22:41):
We are all.
Speaker 5 (22:41):
Pleased this morning that some news that Trump is already
sort of giving up on this ruinous tariff of one
hundred and forty five percent. That's good news, you know,
But we shouldn't give him the Nobel Peace Prize because
it's like, guys, the arson is starting to fire and
then he wants credit for being the fire person to
put the fire out.
Speaker 8 (23:01):
He started this fire. We hope it gets put.
Speaker 5 (23:04):
Out and that we have more reasonable trade relationships on
a reasonable basis. We hope that that'll be the case.
Haven'tn't hasn't borne out yet.
Speaker 3 (23:13):
Having said that, I think both Democrats and Republicans for
several years now, and if you think about through the
Biden administration, some of the tariffs imposed on China were
certainly continued through the Biden White House, that most on
both sides of the political aisle have agreed that the
relationship between US and China maybe wasn't a fair one,
it wasn't balanced, and so something had to change, especially
(23:37):
as China's economic might has changed and grown.
Speaker 5 (23:41):
Well, listen, there are some reasonable things you can do,
and then you can do absolutely ruinous things of throwing
a grenade into a relationship.
Speaker 8 (23:48):
And Trump threw a grenade.
Speaker 5 (23:50):
And you know, one hundred and forty five percent tariffs
means that Americans are going to pay double for products
that they're buying from China. And that's a significant thing.
And it's already caused of job loss in my state
because we're down, you know, the no ships coming in,
no long sherman jobs, no trucking jobs itself. So yes,
there's always a spectrum of action. But I think that
(24:13):
what he has proposed would be really ruinous for Americans.
Hopefully this will get resolved, that he'll start to see
pressure from bond markets as he did the other day,
and that this will restrain his madness. We hope that
we will be successful in that regard.
Speaker 4 (24:29):
I have a little bit of a curve ball here,
if I may digress for a moment. God, you're ready,
and well, I don't know how you're going to answer this,
because Washington State, I don't believe you have an income tax. Right.
You made me think about the arson putting out the fire.
You made me think about the salt deduction, right because
(24:52):
President Trump and the Republicans capped the salt deduction that
had been American policy, hacks policy for over one hundred
years in twenty seventeen with the TCJA, And now there's
a question about whether or not it survives or in
what form it does. I wonder what you think about
that is a state, As a former governor of a
(25:13):
state that doesn't have an income tax, does it seem
fair to allow state and local taxes to be deducted?
Speaker 7 (25:21):
You know?
Speaker 4 (25:21):
Does it avoid double taxation? Or do you think that
we should have a cap?
Speaker 5 (25:26):
You know, it's something I have really thought that much about.
It's one of those things that when you have a
disaster looming, you pay less attention to your parochial issues.
Speaker 8 (25:38):
I will just say I hope it gets worked out.
Speaker 5 (25:40):
I will say that, and I hope that we don't
end up killing clean energy jobs just to finance tax
cuts for the rich. That's the thing that I'm focused on.
More parochial issues to me are subordinate, and the national
economic climate is so risk right now. That's what I
(26:01):
think we got to pitch attention to.
Speaker 6 (26:03):
All Right, so let's go there.
Speaker 3 (26:04):
Because your team did share with us a report from
Climate Power, you work with them, and it talks about
clean energy jobs in particular created and those that might
be clawed back as a result of President Trump's policies,
executive actions, tariffs and mark I will say, coming off
of Milkin and some of the discussions that I had
with folks when it comes to clean energy, green energy
(26:27):
in terms of investing, many said it's going to continue
because you know, if you're a global company, you have
to think about it on a global level, you have
to think about it beyond a four year presidential term.
And you know, just companies in many ways their initiatives
will continue going forward. But what's important about this report?
What do you think our Bloomberg audience needs to know?
Speaker 5 (26:46):
Well, what I think the audiencies know is that we
have to be very optimistic about the clean energy economy.
The growth is spectacular and the reason is is technology
is advancing. It's such a rapid clip. The solar energy
has come down forty percent in the last ten years.
When contin continue us to come down, we have ten
times as much installation as we did ten years ago.
(27:09):
So the rate of the the reindustrialization of America through
renewable energies is quite profound. But unfortunately the President, because
he has this phobia mania, you know, he says wind
turbines cause cancer, which is just nuts.
Speaker 8 (27:25):
It just caused jobs all over America.
Speaker 5 (27:28):
And that ideological fixation has already cost us, or jeopardized
sixty two thousand jobs in the United States, which is
a spectacular way to shoot yourself in the foot. And
the thing that's so disappointing to his multiple efforts, I
mean these are multiple efforts. He threw fifteen one hundred
people out of work who are building an offshore wind
(27:50):
turbines off the East Coast, over with twenty four hours notice.
And he's doing that by refusing to permit these clean
energy sources, by attacking the tax policies that allows these
industrial jobs to be created. It's just really killing the
number one job creator in the country right now is
(28:11):
clean energy. So that's really threatening this in this engine
of growth. And it doesn't make any sense whatsoever. You
know what, here's the thing is so frustrating. I mean,
he talks about he wants energy dominance. Well, if you
want energy dominance, you shouldn't sideline some of your best athletes,
(28:31):
which are folks building the clean energy economy. And so
it's very disturbing and I hope Congress will stop some
of his maniac activities to hurt jobs.
Speaker 8 (28:42):
In this country. Sixty two thousand jobs, a lot of
job loss. What about what is right in my state?
Speaker 4 (28:48):
You know, we were just talking to Nancy Lazar from
Piper Sandler. She's one of the most well respected economists
in the country, and she was applauding a reshoring of
manufacturing jobs. Is that not something that you could be
optimistic about that you think might benefit you know, the
people of Washington State, the people of the United States
(29:08):
of America.
Speaker 5 (29:10):
Well, there's two separate issues here. I think it's important
to keep them distinct. There's the terrif issue that you're
thinking of that potentially could get some reshoring. If that
someday could happen, that would be a fine thing. What
I'm referring to his efforts to basically kneecap these new
industries in a dozen different ways, starting why literally shutting
(29:32):
down the development and construction of these projects like offshore win,
like is a refusal to give permits for solar powers,
like his effort to deecap the Bundaville Power Administration, which
is a group charged with the responsibility of building transmission
lines so we can build these new energy generating capacity,
(29:54):
like telling the Pacific Coast we're not going to be
able to move forward with offshore wins.
Speaker 8 (29:59):
So separate issues, and what I'm addressing are the facial
attacks on the.
Speaker 5 (30:06):
Policies that we know do grow these jobs domestically, including
the tax cuts which he and the Republicans are threatening
right now to stop the tax breaks to allow these
industries to grow, just to give it folks, to tax
cuts for the wealthiest folks amongst us. And that's probably
one of the most dangerous things going on right now.
Speaker 3 (30:25):
Governor in Isley just got about a minute left here.
I mean, what we often find, you know, in terms
of coverage of global financial markets, is that money tends
to go where it makes sense. And ultimately, do you
have enough favor No, just in terms of you know,
if investors can make money, they're going to go there
if it makes sense, Investors will continue to commit to
green initiatives, and a lot of companies do think it
(30:47):
still makes sense. Might that pick up the slack even
if the political environment isn't supportive at this point. Just
unfortunately got about forty seconds here.
Speaker 8 (30:56):
Yeah, listen, climb clean energy.
Speaker 5 (30:58):
This revolution is going to continue, There's no question about
the technology. Is the cost curve coming down. This is
going to continue. But these policies that the President wants
to embrace in some degrees Republic.
Speaker 8 (31:09):
And Congress is going to retard that pace of change.
And we're in a race right now.
Speaker 5 (31:14):
Look, we're a race for jobs, We're a race for
the climate crisis won't make all our towns burn down
in the West too.
Speaker 8 (31:19):
We're in a race.
Speaker 5 (31:20):
We don't want to slow down. We're going to win,
but we rather run fast rather than slow.
Speaker 3 (31:25):
All Right, We're going to have to leave it on
that note. Jay Insley, thank you so much. Former governor
of the state of Washington three times, three terms and
a former member of the US Congress, joining us here
on Bloomberg Business Week. He also leads the Accountability Project
at the policy and lobbying group Climate Power and.
Speaker 4 (31:40):
Tafe Say Beloved in the Pacific Northwest.
Speaker 3 (31:43):
I love the Pacific Northwest, having just gone to Seattle
in the last year.
Speaker 4 (31:46):
Pretty stunned, Jilke, you spent what two or three weeks
out west?
Speaker 6 (31:48):
Just now, well a week.
Speaker 2 (31:51):
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(32:11):
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Speaker 2 (00:08):
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Speaker 3 (00:32):
All right, let's kind of stay with this theme. We
want to get more on the latest from kind of
the view in terms of the US China relationship, where
it goes in the broader global economic implication.
Speaker 4 (00:42):
The latest from one of the most important market economists
in the world, Nancy Lazar's with us.
Speaker 3 (00:46):
She's chief economist at Piper Sandler, leading the economic team
in view.
Speaker 5 (00:50):
There.
Speaker 3 (00:50):
She co founded Cornerstone Macro, also co founder and former
vice chairman of IASID Group. Nancy, I'm so delighted to
have you here with us. Does feel like a shift
between the US and China? How do you see it?
Speaker 1 (01:03):
Well, first, I think it does lower dramatically the odds
of a recession, something from forty five percent more our
odds pre yesterday down to about twenty five percent today. Two,
we're going to raise our GDP forecasts slightly as a result,
not strong growth, but a little bit better than what
we had, and keep the unemployment rate pretty tame.
Speaker 6 (01:23):
It seems like it's all about tariffs.
Speaker 1 (01:26):
But I would highlight it's more than just about terrafs. One,
it is also about getting clarity on tax legislation, which
we're going to see as we go through the summer. Two,
it's more and more signs of deregulation which are already happening.
Those two things are really important, as are lower terriffs
are really important to small medium sized businesses, and so
(01:48):
the tax cuts the deregulation are going to be offsets
to these tariff increases through the long haul. And then third,
there's also a huge manufacturing renaissance theme that's been unfold
for fifteen years by our count, and obviously the tariffs
are going to further increase the odds of more and
more on shoring. So at the end of the day, net,
(02:10):
we think this is such a pretty positive scenario for
the back half of this year, particularly the fourth quarter
and into twenty twenty six, things have changed.
Speaker 6 (02:18):
This has been very dynamic.
Speaker 1 (02:19):
It has not been a static analyis and we didn't
know on April second that we were going to get
China down to thirty, and there's potentially downward pressure on
that thirty if we can address the fetanyl issue. And
fentanyl shipments in the United States have indeed declined sharply,
So I would take the more positive view than your
prior guest.
Speaker 4 (02:39):
What about scarring is a term I heard a lot
of this morning, Nancy. So some things you just can't
unsay is how mirrapandit put it.
Speaker 3 (02:49):
It's like a bad fight right in a relationship. Things
that you just don't forget.
Speaker 7 (02:53):
Are our allies.
Speaker 4 (02:54):
I mean, you talk about reassuring right supply chains are
bound to move now that everyone you just can't trust
this administration. You just can't trust this country as a
as a business partner, as a steady business partner.
Speaker 1 (03:09):
I'm not sure I would say you can't trust the
United States. This has been a negotiating tactic. This has
not been It's been certainly has come across very very bullying,
I would agree, I would agree with that, but it's
been effective. There is a case to be made that
the Germans, for example, would not have increased defense spending
had we not put them in somewhat of a difficult situation.
(03:30):
And same for companies on shoing into the United States.
We need these strategic materials to come to the United States, pharmaceuticals, technology,
et cetera. They weren't moving. Well, actually they did move.
We saw what happened when you gave them a carrot
with the Chips Act. Indeed you did get some in conductors,
but it was limited to that. So the tax legislation
(03:51):
actually is going to potentially be a real boom to
companies on shoing into the United States.
Speaker 6 (03:56):
And that you will get full capex.
Speaker 1 (03:57):
EqP expensing and also the cost of the construction of
the factory immediately instead of over thirty instead of over
thirty thirty years. So I've traveled a lot internationally over
the past month, and I appreciate what you just said.
I certainly heard that a lot. But the United States
is still the largest economy in the world, biggest consumer
(04:20):
in the world. So increasingly, if you sell it here,
you make it.
Speaker 6 (04:24):
You make it here.
Speaker 7 (04:25):
Well.
Speaker 4 (04:25):
The biggest complaints, though, Nancy, that I've heard are not
international or from big multinational corporations. The complaints and the
concerns really the fear that I hear is from main street.
It's from small and medium sized businesses that, as we know,
also do the bulk of hiring and the bulk of
capex in this country. Those are the companies that just
(04:46):
can't make make it through two or three months of
this kind of uncertainty and a lot of whom are
going to be filing for bankruptcy this year. So how
do you deal with that hit on the economy.
Speaker 6 (05:00):
Yeah, so I totally agree with you.
Speaker 1 (05:02):
The smid space is a very very small, medium sized
businesses are a really important part of this economy. They
account for over eighty percent of the jobs in this country,
and it was one of the reasons why we were
so concerned that we were going to go into recession
with the egregious tariffs up until just this past past
past weekend. So totally share that view. That's where you
(05:23):
have to look at the whole picture. You do have
Maybe China's tariffs do come down a little bit further.
Ten percent apparently is the floor, and you get tax
relief and you get deregulation relief, helping to cushion that
that smid space from.
Speaker 6 (05:40):
The higher tariffs.
Speaker 3 (05:43):
Hey, Nancy I am curious, can we be both a
manufacturing hub here in the United States and be a
really innovative high tech company a country rather going forward?
Speaker 6 (05:53):
Can we be both?
Speaker 3 (05:54):
And I'm curious what kind of economy that together creates.
Speaker 1 (05:59):
So again, what they're strategically looking for are these industries
that we have to have in the United States.
Speaker 6 (06:05):
As we all learned during COVID. I don't need to
I don't need to review that, but.
Speaker 1 (06:10):
I've written about the manufacturing renaissance actually for fifteen years.
It's been ongoing and one of the and you need
it to be able to hire a diverse group of people.
People have different skills. Not everybody wants to work on
Wall Street. Not everyone wants to go to college, and
there's nothing wrong with that. So the key to the
manufacturing renaissance or manufacturing in general is the economic multiplier.
(06:32):
For every manufacturing job that's created, there have been six
non manufacturing jobs created.
Speaker 6 (06:38):
And again we've documented.
Speaker 1 (06:39):
This over the past over the past fifteen years, it
has been unfolding. And these policies, particularly the care particularly
the right off of your factory in the first year,
will further onsoing here in the United States. It's yes,
I mean innovation drives of factories today. Robot is key, uh,
(07:05):
software key in utilizing those innovations in in in factories.
Speaker 6 (07:12):
I'm kind of glad you went there.
Speaker 3 (07:13):
Our own Steve Mann, who covers the auto sector, said,
you know, one of the things that we have overlooked
is that auto, all of the production manufacturing automation that
China has done has helped it advance technologically in a
big way. And it's something that we haven't been doing,
uh and missing out what's the.
Speaker 4 (07:29):
Big by the way, those automakers that invested massively because
they loved Trump's.
Speaker 8 (07:37):
New version of.
Speaker 4 (07:38):
The North American Free Trade Agreement, right the us mc A. Yeah,
they're paying the price for trusting him now.
Speaker 6 (07:44):
Right, yeah, exactly right. Well that's the thing.
Speaker 4 (07:46):
That's the kind of uncertainty that's problematic, Yancy.
Speaker 3 (07:49):
Here's the thing Boas Weinstein of Seba Saba Capital, right
Sabbath forgive me. He has said the uncertainty genie is
out of the bottle here with President Trump, that we're
not going to really know things could change, make a
one to eighty.
Speaker 6 (08:03):
We know that. Do you still believe that we've.
Speaker 3 (08:06):
Got to be kind of aware of that even if
today fails, calmer and more optimistic.
Speaker 1 (08:13):
Absolutely, again, this is going to this that's clearly still
a period of uncertainty, but there's going to be more
clarity as we go through the year, and hopefully by
twenty six a lot of the uncertainty is gone. Clarity
and tariffs, taxes, deregulation.
Speaker 6 (08:28):
And on shoring.
Speaker 1 (08:29):
It's not unusual for a new president to come in
and shake the tree. We had it that first year
under Reagan. Vulker was tightening aggressively. They're squeezing inflation out
of the system. Reagan also wanted to cut taxes, which
indeed he succeeded in doing, trim back government spending. He
fired people, He brought an outsider, Greenspan to make Social
(08:52):
Security solvent, which he did. We threatened the Soviet Union,
he threatened Reagan, He's pardon me, Reagan threatened it was.
I started in the summer of nineteen eighty one, and
I thought maybe I made a mistake moving from Michigan
to to New York. But the people I worked with
were very senior. They understood the long haul for this
(09:14):
was going to be a healthier economy. I'm just comparing
the economic times. We needed a change back in nineteen
eighty one. We need a change in the economy today
to broaden the growth in labor force participation for all
types of people, all sorts of education. And you do
that most clearly through bringing manufacturing back to the United
(09:36):
to the United States.
Speaker 4 (09:37):
Now, I was going to ask about manufacturing because Ralph
Shlostein was in here the other day and he said,
you know, we peaked at like twenty percent manufacturing jobs
in the sixties and seventies. Now we're at eight, right,
even if we get a lot on shoring and maybe
it becomes eight and a half or nine. But I
love that you bring up Ronald Reagan, Nancy, because like
most other people, I have a problem scrolling through social
(09:58):
media all day long and I see all these clips.
Reagan was a huge proponent of free trade. Reagan was
a huge proponent of immigration. And since you started in
nineteen eighty one, how would you compare the Gipper to
Donald Trump?
Speaker 6 (10:16):
I am not comparing the men.
Speaker 1 (10:18):
I am comparing the economic the economic times, and careful
on that free trade idea. My colleague Karina actually discovered
an article highlighting that Reagan negotiated hard with the Japanese
to pull back sharply they're exports of autos to the
United States, which indeed they did. And then next thing
(10:39):
you know, the Japanese were indeed some of the first
foreign manufacturers to actually build plant in the United in
the United States. So I thought that was a very interesting,
interesting tidbits.
Speaker 7 (10:51):
I'm going to.
Speaker 4 (10:51):
Follow her on Instagram, Karina, what's her act?
Speaker 3 (10:54):
Follow her on social media. Hey, listen just twenty seconds.
You're optimistic today? Have you been up domestic since President
Trump came into the White House and we've seen the
volatility of the month of April, have you had optimism
throughout well?
Speaker 1 (11:08):
To be sure, on April second, we did go to
a recession call given the the the egregious, egregious nature.
I'm all for lower corporate taxes, deregulation, and again I've
been passionate about manufacturing renaissance. That was not a political
move on my part. It's from because I'm from Flint, Michigan.
I saw the destruction to my hometown from the gouging
(11:32):
out of manufacturing. It's one of the reasons i'm an
economist to better understand why factories are such an important
foundation for any for any country.
Speaker 6 (11:41):
China understood it.
Speaker 1 (11:43):
That's why they did wto and it did initially create
a pretty strong economic backdrop.
Speaker 3 (11:48):
We're going to talk more about the US labor market
and green and climate energy jobs. We're going to do
that with former Washington Governor j Insley on the other
side in just a moment. Have those Hey, yes, Nancy Lazar,
thank you so much, Chief economist at Piper Sandler.
Speaker 2 (12:04):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (12:18):
All right, TikTok, everybody, About eighteen minutes to go until
we wrap up the trade on this Monday Carol Master
along with Matt Miller and for Tim Stanovic. On this Monday,
May twelfth, we're kind of hovering. Matt near our best
levels of the session of about three percent on the
S and P, two and a half percent higher on
the Dow Jones Industrial Average, Mazek one hundred charging ahead
by three point six er.
Speaker 4 (12:36):
It's so funny. You get used to this, You get
used to this kind of volatility over the past month
and or month and a half, and so today feels
like nothing, you know, and we're looking at this in
incredible rally. I mean it's so strong. Mag seven stocks
are up five or six percent. These are trillion dollars.
Speaker 6 (12:54):
Thus sort of like, yeah, no big deal, it's a
little boring.
Speaker 3 (12:58):
Let's see what Doug Sioka has to say about see
if he thinks it's boring. He's CEO and partner at
Kavar Capital Partners. They've got about one and a half
billion in assets under management with us. Once again from Leewood, Kansas'
diagnised to have you here with Matt and me, does
it feel a little boring? I mean it's a rally,
get it, but it feels a little mellow.
Speaker 7 (13:17):
Yeah, I think it is. I think Matt's right.
Speaker 9 (13:20):
I mean, you just get preconditioned to have this become
the more the rule than the exception.
Speaker 7 (13:24):
And you know, it's funny when we went.
Speaker 9 (13:26):
On that kind of magnificent nine day run of the
S and P in a letter half of last month,
and it was preceded by a thousand point down day
the Monday after Easter, which was preceded by a.
Speaker 7 (13:38):
Night HRBU on Holy Thursday.
Speaker 9 (13:40):
So yeah, I do think a little bit an esthetize
to the interday price swings, but yeah, there's no way.
I mean, from a historical outlier perspective, today is a
very significant extreme day and does really invoke this whole
concept of not trying to tie on the market, right,
I mean, you don't want to miss, as everyone knows,
those five, ten, fifteen best days of a year.
Speaker 7 (14:02):
I read something this morning.
Speaker 9 (14:03):
That really underscored that point that if you missed the
ten best days in twenty twenty three in twenty twenty four,
your return for the year as a stock investor was
three percent, where the S ANDP on average was up
twenty percent in both of those years. So that really does,
you know, create the understand that you've got to stay
invested in order to participate.
Speaker 4 (14:23):
Although have you talked with anyone, Doug, you know, after
April second, after we got the reciprocal tariffs on Liberation
Day and the market's just puked for like four days straight.
So many people that I talked to said, man, I
knew this was coming, and I stayed fully invested, and
I wish I'd gotten out. I wish I'd sold before
(14:44):
you know, these massive tariff announcements were coming out of
the rose garden, and now you've got a chance to
get out. Right now we're two percent above April second.
So have you talked to anybody who regretted not selling
and could do so today?
Speaker 7 (14:58):
Yeah?
Speaker 6 (14:58):
For sure.
Speaker 7 (14:59):
I mean I think there are a great is real easy.
Hindsight is always super clear.
Speaker 9 (15:02):
And then one thing I think, maybe Matt, that people
could be forgiven for thinking they have that on missions
is that this is trade war two point zher right.
And the interesting part is that if you look back
twenty eighteen, because remember Trump was inaugraded in seventeen, it
took a while to get some momentum.
Speaker 7 (15:19):
Shoot, it took five months to get his cabinet seated.
Speaker 9 (15:21):
But if you go to eighteen, you think, well, twenty
seventeen GDP was up two point nine percent. In twenty
twenty four GDP was up two point four to three percent,
depending on your last gage you want to look at.
And you look at twenty seventeen EPs gross with a
twelve percent of year year twenty four twenty five twelve
percent year of a year. So you had this precondition
that was mirroring what took place in trade port one
(15:41):
point zero two point zero.
Speaker 7 (15:43):
Why didn't we all sell knowing this was going to
be the result?
Speaker 9 (15:45):
We almost had the exact same draw out in twenty
eighteen in eight mius twenty point oh six twenty twenty
five minus twenty one point three five. But you have
to know then that this is the primary time to
get out. And if you take twenty nineteen and forget
pandemic piece of twenty but it was a great period
to stay invested once you got through those lows.
Speaker 7 (16:04):
And that's kind of where we are today.
Speaker 4 (16:05):
So what are the catalysts now? I mean, okay, ninety
days with China, that's probably like ninety days left for
TikTok catalysts everybody else, everybody else, Cause on the trade front,
maybe it doesn't get worse. But are you really looking
for a bump from tax cut extensions? Are you really
looking for a bump from deregulation? Do you think on
(16:27):
shoring is going to drive this economy? And twenty twenty
six what do you look forward to?
Speaker 7 (16:33):
So I think there are a lot of things.
Speaker 9 (16:34):
Number One, to your point of the ninety day reprieve,
it's happened really quickly, right, because trade war one POINTZI
lasted eighteen months right started in eighteen. In the trade
war a quarter agreeing with sign in January of twenty twenty.
Speaker 7 (16:48):
So this was much faster.
Speaker 9 (16:50):
But if you do overlay the one differential from the
other thing you mentioned about strong rings growth and strong
GDP growth eighteen versus.
Speaker 7 (16:56):
Twenty five, we have a FED that's not going to.
Speaker 9 (16:59):
Be reason rates. Right in twenty eighteen the Fed raised rates.
That's a headwind. We have, perspectively, a tailment. And how
smart does Paul look by now at this point by
waiting and not cutting when they met last week or
a couple months before that.
Speaker 7 (17:13):
I thought that was brilliant.
Speaker 9 (17:14):
I think valuations, while full from a market cap waited perspective,
are still really attractive going into today. Guys, forty three
and a half percent of the companies in the Russell
three thousand are still down thirty percent from the fifty
two week high.
Speaker 7 (17:28):
So if you broaden out.
Speaker 9 (17:29):
And consider investments, and you made mentioned Matt about a
four p five percent moving to Bang seven, the mag
seven stocks on average again before today, are still down
twelve percent from their.
Speaker 7 (17:38):
Peak, but at a peg ratio aren't all that expensive.
Speaker 9 (17:41):
So we think if you look down sort of the
cap spectrum and even continue to consider internationally, where you
have a dollar trend hugely positive US investments in international companies,
you have earnings moving in the right direction Europe, Japan,
and emericry markets, there's still places to effectively put some money,
oh in in the fixed income universe, you can lock
in with some duration, a very very handsome positive rate
(18:02):
to return.
Speaker 3 (18:04):
You note that investing since early April, Doug has been
more like playing video games and analytical decision making. So
can we now start doing those some analytical decision making
knowing that we have a White House and a president,
I'm just speaking the truth that can change his view
and mind and rhetoric and do a one tot eighty,
(18:27):
you know, in any given day or in any given week.
Speaker 6 (18:31):
So I'm just wondering the.
Speaker 9 (18:33):
Great question, Carolyn. Maybe it's just a different type of
video game. Maybe it's more like Minecraft and Frogger, where
there is going to be a little invocation of some strategy.
But I think when you go through periods like that
where trying to be effectively tactical is futile, you've got
to fall back on the three primary activities like that
(18:54):
encompass a very responsible strategic allocation.
Speaker 7 (18:58):
Right, there's still stuff to be.
Speaker 9 (18:59):
Done, loss targeting, quality overhauling, emphasizing beta. Right, if you
do feel like, because I just mentioned certain parts of
the market are undervalued, cast a wider net instead of
trying to be company or sector specific, because those are
the areas where you stand to have asymmetric risk with
whatever random true social tweet they might be coming down
(19:19):
the pike with God only knows what the catalyst would be.
Speaker 4 (19:23):
He changes his opinion on things, but he's loved tariffs
for decades. Right, Tariffs is one thing that he's not
that's straight on.
Speaker 3 (19:29):
But that's why I'm saying.
Speaker 6 (19:30):
It's not like he's going to back off completely. And
even if the.
Speaker 3 (19:32):
Tariffs come down, we're going to be in a higher
teriff rate environment. I mean, I think that's going to
be the net net does that Doug potentially, even if
it's ten percent, it's not the two and a half
percent that we've seen changes things fundamentally for a lot
of companies And just got about twenty five seconds here.
Speaker 7 (19:49):
Oh, I think it does.
Speaker 9 (19:50):
But I do think to Matt's question, earlier about is
onshore and going to be a catalyst. No. I mean,
we have a four percent unemployment rate in this country, right,
we are not going to be relying upon like domestic
manufacturing to be great sneaker producers.
Speaker 7 (20:04):
Right.
Speaker 9 (20:04):
We want to look for trade balances, and we know
that we're going to get different iterations of somebody's new agreements. Right,
So that's going to be better for growth. That's going
to be better to decline inflation. And frankly, that's probably
a point where the strength of the consumer and a
strong job market carroll these lumber tariffs can be absorbed
without being a huge impediment to growth.
Speaker 3 (20:22):
All Right, Dougi Okay, CEO and partner at Cavar Capital Partners.
Speaker 2 (20:27):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and Android Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (20:45):
All Right, I do want to point out everybody, just
a little bit of a backdrop, two US science organizations
are launching a new climate Research Initiative after the Trump
administration dismissed expert authors of the National Climate Assessment. Now,
the initiative will publish peer reviewed manuscripts and climate change
in the US, aiming to create a library of information
for government, academia, philanthropy, and business. The effort coming after
(21:06):
the Trump administration terminated the contract for staff working on
the sixth National Climate Assessment, which was expected to be
released next year. We know that there's been a lot
of moves pushback when it comes to green initiatives out
of the Trump administration. Our next guest, I'm assuming we'll
have some thoughts on all of this. Joining us to
Jay Insley, former three term governor of the state of Washington,
former member of the US Congress, a twenty twenty Democratic
(21:27):
presidential candidate, winner of twenty twenty five Time Earthward and
he's also leading the accountability project at the policy and
lobbying group of Climate Power, and he joins us from
Bainbridge Island, Washington. Great to have you here with us.
Governor Insley, Thank you, thank you.
Speaker 8 (21:44):
Thank you. Appreciate your attention to this topic.
Speaker 3 (21:47):
Well, there's a lot of what I talk to you about,
because I feel like you are someone who has seen
lots of political and economic cycles in the United States,
and before we get into jobs and green initiatives and
jobs in particular, the US China relationship, how do you
see it, how important is it, and how do you
assume it will ultimately have to play out because these
(22:11):
are the two largest US economies and they're intertwined.
Speaker 5 (22:16):
Well, obviously there's not much debate about how important this
relationship is.
Speaker 8 (22:21):
And we're all.
Speaker 5 (22:22):
Very disturbed and concerned about the President's desire to make
life more difficult for Americans by making them forcing them
to play pay the Trump Tariff tax, which we know
Americans will have to pay if he is successful of
imposing these large tariffs.
Speaker 8 (22:41):
We are all.
Speaker 5 (22:41):
Pleased this morning that some news that Trump is already
sort of giving up on this ruinous tariff of one
hundred and forty five percent. That's good news, you know,
But we shouldn't give him the Nobel Peace Prize because
it's like, guys, the arson is starting to fire and
then he wants credit for being the fire person to
put the fire out.
Speaker 8 (23:01):
He started this fire. We hope it gets put.
Speaker 5 (23:04):
Out and that we have more reasonable trade relationships on
a reasonable basis. We hope that that'll be the case.
Haven'tn't hasn't borne out yet.
Speaker 3 (23:13):
Having said that, I think both Democrats and Republicans for
several years now, and if you think about through the
Biden administration, some of the tariffs imposed on China were
certainly continued through the Biden White House, that most on
both sides of the political aisle have agreed that the
relationship between US and China maybe wasn't a fair one,
it wasn't balanced, and so something had to change, especially
(23:37):
as China's economic might has changed and grown.
Speaker 5 (23:41):
Well, listen, there are some reasonable things you can do,
and then you can do absolutely ruinous things of throwing
a grenade into a relationship.
Speaker 8 (23:48):
And Trump threw a grenade.
Speaker 5 (23:50):
And you know, one hundred and forty five percent tariffs
means that Americans are going to pay double for products
that they're buying from China. And that's a significant thing.
And it's already caused of job loss in my state
because we're down, you know, the no ships coming in,
no long sherman jobs, no trucking jobs itself. So yes,
there's always a spectrum of action. But I think that
(24:13):
what he has proposed would be really ruinous for Americans.
Hopefully this will get resolved, that he'll start to see
pressure from bond markets as he did the other day,
and that this will restrain his madness. We hope that
we will be successful in that regard.
Speaker 4 (24:29):
I have a little bit of a curve ball here,
if I may digress for a moment. God, you're ready,
and well, I don't know how you're going to answer this,
because Washington State, I don't believe you have an income tax. Right.
You made me think about the arson putting out the fire.
You made me think about the salt deduction, right because
(24:52):
President Trump and the Republicans capped the salt deduction that
had been American policy, hacks policy for over one hundred
years in twenty seventeen with the TCJA, And now there's
a question about whether or not it survives or in
what form it does. I wonder what you think about
that is a state, As a former governor of a
(25:13):
state that doesn't have an income tax, does it seem
fair to allow state and local taxes to be deducted?
Speaker 7 (25:21):
You know?
Speaker 4 (25:21):
Does it avoid double taxation? Or do you think that
we should have a cap?
Speaker 5 (25:26):
You know, it's something I have really thought that much about.
It's one of those things that when you have a
disaster looming, you pay less attention to your parochial issues.
Speaker 8 (25:38):
I will just say I hope it gets worked out.
Speaker 5 (25:40):
I will say that, and I hope that we don't
end up killing clean energy jobs just to finance tax
cuts for the rich. That's the thing that I'm focused on.
More parochial issues to me are subordinate, and the national
economic climate is so risk right now. That's what I
(26:01):
think we got to pitch attention to.
Speaker 6 (26:03):
All Right, so let's go there.
Speaker 3 (26:04):
Because your team did share with us a report from
Climate Power, you work with them, and it talks about
clean energy jobs in particular created and those that might
be clawed back as a result of President Trump's policies,
executive actions, tariffs and mark I will say, coming off
of Milkin and some of the discussions that I had
with folks when it comes to clean energy, green energy
(26:27):
in terms of investing, many said it's going to continue
because you know, if you're a global company, you have
to think about it on a global level, you have
to think about it beyond a four year presidential term.
And you know, just companies in many ways their initiatives
will continue going forward. But what's important about this report?
What do you think our Bloomberg audience needs to know?
Speaker 5 (26:46):
Well, what I think the audiencies know is that we
have to be very optimistic about the clean energy economy.
The growth is spectacular and the reason is is technology
is advancing. It's such a rapid clip. The solar energy
has come down forty percent in the last ten years.
When contin continue us to come down, we have ten
times as much installation as we did ten years ago.
(27:09):
So the rate of the the reindustrialization of America through
renewable energies is quite profound. But unfortunately the President, because
he has this phobia mania, you know, he says wind
turbines cause cancer, which is just nuts.
Speaker 8 (27:25):
It just caused jobs all over America.
Speaker 5 (27:28):
And that ideological fixation has already cost us, or jeopardized
sixty two thousand jobs in the United States, which is
a spectacular way to shoot yourself in the foot. And
the thing that's so disappointing to his multiple efforts, I
mean these are multiple efforts. He threw fifteen one hundred
people out of work who are building an offshore wind
(27:50):
turbines off the East Coast, over with twenty four hours notice.
And he's doing that by refusing to permit these clean
energy sources, by attacking the tax policies that allows these
industrial jobs to be created. It's just really killing the
number one job creator in the country right now is
(28:11):
clean energy. So that's really threatening this in this engine
of growth. And it doesn't make any sense whatsoever. You
know what, here's the thing is so frustrating. I mean,
he talks about he wants energy dominance. Well, if you
want energy dominance, you shouldn't sideline some of your best athletes,
(28:31):
which are folks building the clean energy economy. And so
it's very disturbing and I hope Congress will stop some
of his maniac activities to hurt jobs.
Speaker 8 (28:42):
In this country. Sixty two thousand jobs, a lot of
job loss. What about what is right in my state?
Speaker 4 (28:48):
You know, we were just talking to Nancy Lazar from
Piper Sandler. She's one of the most well respected economists
in the country, and she was applauding a reshoring of
manufacturing jobs. Is that not something that you could be
optimistic about that you think might benefit you know, the
people of Washington State, the people of the United States
(29:08):
of America.
Speaker 5 (29:10):
Well, there's two separate issues here. I think it's important
to keep them distinct. There's the terrif issue that you're
thinking of that potentially could get some reshoring. If that
someday could happen, that would be a fine thing. What
I'm referring to his efforts to basically kneecap these new
industries in a dozen different ways, starting why literally shutting
(29:32):
down the development and construction of these projects like offshore win,
like is a refusal to give permits for solar powers,
like his effort to deecap the Bundaville Power Administration, which
is a group charged with the responsibility of building transmission
lines so we can build these new energy generating capacity,
(29:54):
like telling the Pacific Coast we're not going to be
able to move forward with offshore wins.
Speaker 8 (29:59):
So separate issues, and what I'm addressing are the facial
attacks on the.
Speaker 5 (30:06):
Policies that we know do grow these jobs domestically, including
the tax cuts which he and the Republicans are threatening
right now to stop the tax breaks to allow these
industries to grow, just to give it folks, to tax
cuts for the wealthiest folks amongst us. And that's probably
one of the most dangerous things going on right now.
Speaker 3 (30:25):
Governor in Isley just got about a minute left here.
I mean, what we often find, you know, in terms
of coverage of global financial markets, is that money tends
to go where it makes sense. And ultimately, do you
have enough favor No, just in terms of you know,
if investors can make money, they're going to go there
if it makes sense, Investors will continue to commit to
green initiatives, and a lot of companies do think it
(30:47):
still makes sense. Might that pick up the slack even
if the political environment isn't supportive at this point. Just
unfortunately got about forty seconds here.
Speaker 8 (30:56):
Yeah, listen, climb clean energy.
Speaker 5 (30:58):
This revolution is going to continue, There's no question about
the technology. Is the cost curve coming down. This is
going to continue. But these policies that the President wants
to embrace in some degrees Republic.
Speaker 8 (31:09):
And Congress is going to retard that pace of change.
And we're in a race right now.
Speaker 5 (31:14):
Look, we're a race for jobs, We're a race for
the climate crisis won't make all our towns burn down
in the West too.
Speaker 8 (31:19):
We're in a race.
Speaker 5 (31:20):
We don't want to slow down. We're going to win,
but we rather run fast rather than slow.
Speaker 3 (31:25):
All Right, We're going to have to leave it on
that note. Jay Insley, thank you so much. Former governor
of the state of Washington three times, three terms and
a former member of the US Congress, joining us here
on Bloomberg Business Week. He also leads the Accountability Project
at the policy and lobbying group Climate Power and.
Speaker 4 (31:40):
Tafe Say Beloved in the Pacific Northwest.
Speaker 3 (31:43):
I love the Pacific Northwest, having just gone to Seattle
in the last year.
Speaker 4 (31:46):
Pretty stunned, Jilke, you spent what two or three weeks
out west?
Speaker 6 (31:48):
Just now, well a week.
Speaker 2 (31:51):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(32:11):
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