Single Best Idea with Tom Keene: Michael Darda & Elizabeth Economy

Tom Keene breaks down the Single Best Idea from the latest edition of Bloomberg Surveillance Radio.

In this episode, we feature conversations with Michael Darda & Elizabeth Economy.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:15):
Single best idea and front center is still tariffs. Michael
Darta joins from Off Capital to get right to it.
The linking here of tariffs in your own pals future.
It's uncertain. Let's listen.

Speaker 1 (00:29):
There is some risk that the interaction between tariffs and
monetary policy could create some problems. And really it would
be that the tariff disruption lowers the neutral rate, and
if the FED is tardy in lowering the policy rate,
the business cycle soft landing could slip away. Now that
these tariffs have been scaled back and moderated, that risk

(00:51):
has declined, and the risk of the FED potentially falling
behind the curve is also declined. I'm pretty comfortable with
where the FED is right now. If you look at
bondmar inflation expectations, they've been low and stable, consistent with
price stability. Nominal wage growth, which is not going to
be affected on a first order impact from the tariffs,
perfect running right in line with price stability. So the

(01:14):
FED has the flexibility to move if need be. But
with the tariff threat being scaled back, then there's going
to be less need for the FED to move. I
still think they will ultimately lower rates, but they're going
to want to see a few months of the hard data,
in my opinion, before they start to move, and that
could put us into July.

Speaker 2 (01:36):
Perhaps, just brilliant Michael Darter there a roth capital let
me explain the inside the baseball. Two thirds of the
way through that comment, I can't say enough about how
economics over the recent thirty years, I'll say, and this,
of course is with the recent death of Wayne Angel

(01:56):
of Kansas City, who was notorious in the eighties, has
become a real analysis inflation adjusted. Darta does that, but
he also refuses to ignore the top line statistics. What
are called nominal. Nominal is basically real, say GDP or

(02:16):
real wage plus inflation. And the reason I have an
affinity for nominal is because that's what my audience lives.
The audience, is a general statement, doesn't live in the
real environment, the inflation adjusted environment. So for Darta there
to talk about the nominal wage is just absolutely critical

(02:40):
with us today. What a pleasure to speak to Elizabeth
Economy all over wonderful books from the River runs Black.
She's at the Hoover Institution in Stanford now after her
public service to Secretary Romando and Commerce Elizabeth Economy on
this trade war and China.

Speaker 3 (02:58):
I'm not sure there was any real win in this.
I think China demonstrated that yes, it could go toe
to toe with the United States, but both sides, you know,
reduce the tariffs. You know, China had called for the
United States to completely erase the tariffs before it even
sat down at the table. I think people have forgotten that,

(03:18):
and the administration didn't do that. They did come to
the table with, you know, a pretty concrete proposal on
how to control the feedanyl precursor exports that has been
so central to the Trump administration, and they took off
all of the non tariff sort of punishments that they
had put on the administration, things like the export controls

(03:41):
on critical minerals and rare earths. In terms of where
China goes next, I think what we've seen already is
that China is going to move very aggressively to diversify
their exports away from the United States. You know, in part,
there was a twenty percent drop in Chinese exports to
the US. There was a twenty percent increase in Chinese

(04:01):
exports to Southeast Asia over the past month or so,
and even I think in the sort of low margin factories,
apparel boys, et cetera, they're all talking about how to move,
how to reduce their dependence on the US market. So
I think we've really introduced a pretty significant new factor

(04:21):
into the Chinese thinking about the dependence of the United
I mean about the liability of the United States. I
think that's the big next thing for China.

Speaker 2 (04:30):
Elizabeth Economy there from the Hoover Institution, Hargo Fellow out
at Stanford, much more to talk about here through a
busy week. It'll be an interesting Friday, to say the least,
across the nation on your commute, Bloomberg Surveillance, and again
on podcasts out there at all the different podcast services,
but particularly on YouTube podcasts. It's a single best idea

Speaker 1 (05:02):
Seven